royal bank of canada 2013 scotiabank financials … · 2013 scotiabank financials summit 10 wealth...

Royal Bank of Canada 2013 Scotiabank Financials SummitGord Nixon, President and Chief Executive Officer

September 4th, 2013

All amounts are in Canadian dollars and are based on financial statements prepared in compliance with International Accounting Standard 34 Interim Financial Reporting, unless otherwise noted. Financial information for full year 2010, 2011 and 2012 is presented on a continuing operations basis.

12013 Scotiabank Financials Summit

Caution regarding forward-looking statements

From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. We may make forward-looking statements in this presentation, in filings with Canadian regulators or the SEC, in reports to shareholders and in other communications. Forward-looking statements in this presentation include, but are not limited to, statements relating to our financial performance objectives, vision and strategic goals. The forward-looking information contained in this presentation is presented for the purpose of assisting the holders of our securities and financial analysts in understanding our financial position and results of operations as at and for the periods ended on the dates presented, and our financial performance objectives, vision and strategic goals, and may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as “believe”, “expect”, “foresee”, “forecast”, “anticipate”, “intend”, “estimate”, “goal”, “plan” and “project” and similar expressions of future or conditional verbs such as “will”, “may”, “should”, “could” or “would”.

By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct and that our financial performance objectives, vision and strategic goals will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. These factors – many of which are beyond our control and the effects of which can be difficult to predict – include: credit, market, liquidity and funding, operational, legal and regulatory compliance, insurance, reputation and strategic risks and other risks discussed in the Risk management and Overview of other risks sections of our 2012 Annual Report and in the Risk management section of our Q3 2013 Report to Shareholders; the impact of changes in laws and regulations, including relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations issued and to be issued thereunder, the Basel Committee on Banking Supervision’s global standards for capital and liquidity reform, over-the-counter derivatives reform, the payments system in Canada, consumer protection measures and regulatory reforms in the U.K. and Europe; general business and economic market conditions in Canada, the United States and certain other countries in which we operate, including the effects of the European sovereign debt crisis, and the high levels of Canadian household debt; cybersecurity; the effects of changes in government fiscal, monetary and other policies; the effects of competition in the markets in which we operate; our ability to attract and retain employees; the accuracy and completeness of information concerning our clients and counterparties; judicial or regulatory judgments and legal proceedings; development and integration of our distribution networks; and the impact of environmental issues.

We caution that the foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results. When relying on our forward- looking statements to make decisions with respect to us, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Material economic assumptions underlying the forward looking-statements contained in this presentation are set out in the Overview and outlook section and for each business segment under the heading Outlook and priorities in our 2012 Annual Report, as updated by the Overview section in our Q3 2013 Report to Shareholders. Except as required by law, we do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by us or on our behalf.

Additional information about these and other factors can be found in the Risk management and the Overview of other risks sections in our 2012 Annual Report and in the Risk management section of our Q3 2013 Report to Shareholders.

Information contained in or otherwise accessible through the websites mentioned does not form part of this presentation. All references in this presentation to websites are inactive textual references and are for your information only.

Royal Bank of CanadaSECTION I


Strong financial profile

Revenue($ billions)

Net Income ($ billions)

Return on Equity Q3/2013 Basel III Capital ratios – “All-in” basis(1)

(1) Capital calculated to include all regulatory adjustments that will be required by 2019 but retaining the phase-out rules for non-qualifying capital. Please refer to the Capital Management section of our Q3 2013 Report to Shareholders for details on Basel III requirements. (2) Based on long-term senior debt ratings.

� Common Equity Tier 1

� Tier 1 Capital

� Total Capital

9.2%

11.3%

13.7%

Credit ratings(2)

Moody’s S&P Fitch DBRS

Aa3 AA- AA AAStable Stable Stable Stable

* Based on Canadian GAAP.



26.1 27.629.8

22.922.3

2010* 2011 2012 YTD Q3/2012 YTD Q3/2013

5.7

7.07.6

6.35.6

2010* 2011 2012 YTD Q3/2012 YTD Q3/2013

16.5%

19.5%20.3% 19.7%19.6%

2010* 2011 2012 YTD Q3/2012 YTD Q3/2013


� On August 29, 2013, RBC announced a quarterly dividend increase of $0.04 or 6% to $0.67 per share

� RBC has increased the dividend 5 times since May 2011, a total increase of 34%

History of delivering value to our shareholders

Maximizing shareholder returns

Dividend history ($ per share)

$0.86$1.01

$1.18

$1.44

$1.82

$2.00 $2.00 $2.00$2.08

$2.28

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

CAGR +10.2%

Total shareholder return (TSR)(1)

RBC Peer Avg.3 Year5 Year10 Year

12%11%12%

10%4%6%

Dividend

� Current quarterly dividend: $0.63

� YTD payout ratio of 44%, in line with our target of 40-50%

Share buybacks

� Repurchased $408 million (6.8 million common shares) as at August 23rd, 2013

(1) Annualized TSR as at Aug 22, 2013. Based on the global peer group approved by our Board of Directors. For the list of peers, please refer to our 2012 Annual Report.


Extending our lead in Canada with selective global growth

(1) Amounts exclude Corporate Support. For further information, see the Business segment results and Results by geographic segment sections of our Q3 2013 Report to Shareholders.(2) Excluding specified items. These are non-GAAP measures. For additional information, please see slide 15 and our Q3 2013 Report to Shareholders.

Earnings by business segment(1)(2)Latest twelve months ended July 31, 2013

65%

18%

17% CanadaU.S.

International

Revenue by geography(1)Latest twelve months ended July 31, 2013

4%

21%

9%

11%

55%

Personal & Commercial

Banking

WealthManagement

Insurance

Capital MarketsInvestor & Treasury Services

Strategic goals

� In Canada, to be the undisputed leader in financial services

� Globally, to be a leading provider of capital markets, investor and wealth management solutions

� In targeted markets, to be a leading provider of select financial services complementary to our core strengths

Business SegmentsSECTION II


Canadian Q3/13 volume growth (2)

($ billions)

Canadian market share(1)

Product Market share Rank

Consumer lending 23.6% #1

Personal core deposits 20.1% #2

Long-Term Mutual Funds 14.2% #1

Business loans ($0-$250M) 27.8% #1

Business loans ($250M-$25MM) 24.3% #1

Business deposits & investments 26.0% #1

(1) Market share is calculated using most current data available from OSFI (M4), Investment Funds Institute of Canada (IFIC) and Canadian Bankers Association (CBA). OSFI, IFIC and Consumer Lending and Business Loans CBA data is at May 2013 and May 2012.

(2) Volume growth excludes the impact of acquisitions for RBC and RBC’s peers (Ally, ING)(3) Peer group consists of TD, CIBC, BMO and BNS.

Personal & Commercial Banking

Strategic Priorities

� Building on leading Canadian market positions

� Extending our sales power in Canada

� Managing costs and reinvesting for the future

� Building on strengths in innovation and technology to differentiate the client experience in the Caribbean and U.S.

Gold Medal - Shoppers Retail Awards

Best Retail Bank in North America

(2nd Year in a row)

$0$5

$10$15$20$25$30$35$40$45$50

RBC Peer Average

$17.5

5.8% YoY

4.9% YoY

$31.4 Leading the Industry

Awards & Recognition

82013 Scotiabank Financials Summit(1) Canadian Financial Monitor by Ipsos Reid – 12,000 Canadian households annually – data based on Financial Group for the 12 month period ending March 2013. Peers include: BMO, BNS,

CIBC and TD. (2) MLM and Maritz (3) Peers include: BMO, BNS, CIBC and TD. (4) This is a non-GAAP measure. For additional information, please see slide 15 and our Q3 2013 Report to Shareholders.

Efficiency ratio (%)

49.3%49.0%

47.3%

45.4%

44.5%

48.6%

49.8%

44.5%

2010* 2011 2012 Q3/2013

Peer Average (3)

Cross-selling(Households with transaction accounts, investments and

borrowing products)(1)

22%

15%

RBC Peer Average

Superior cross- sell ability

Personal & Commercial Banking – Canada

44.2% Excluding Ally Canada

Acquisition (4)


#1 Online Bank 6th year in a row

Winner of the 2013 Innovation in Customer

Service AwardVisa Infinite Avion (2)

#1 in overall satisfaction

Pillars of Customer Service

Convenience Advice

Value for MoneyService



Insurance

� Improving distribution efficiency

� Deepening client relationships

� Making it easier for clients to do business with us

� Pursuing select international opportunities to grow our reinsurance business

2013 Medium -Term

Deepening client relationships (Cross-selling) (Insurance products per client)

1.5

3.0

Proprietary Sales Forces

Online

GeneralInsurance

Advice

Contact Centres

Retail Insurance

Stores

Authorized Partners & 3rd Party Channels

Strategic Priorities Direct-to-Consumer Focus


Wealth Management


� Building a high-performing global asset management business

� Focusing on high and ultra-high net worth clients to build global leadership

� Leveraging RBC and RBC Wealth Management strengths and capabilities

103 108 124

11 97

14.1% 14.5%

13.3%14.1% 14.2%

14.6%

0

30

60

90

120

150

180

Jun-11 Jun-12 Jun-13

$ bi

llion

s

0.0%

4.0%

8.0%

12.0%

16.0%

Money Market Funds

Long-term Funds

All-in Market Share

LT Market Share

Global Asset Management (GAM) (Canadian mutual fund balances and market share (1)

(1) Investment Funds Institute of Canada as at June 30, 2013 and RBC reporting.

Analysts’ Choice Fund Company of the Year

Fixed Income Manager of the Year (PH&N)

Best Fund Group Overall for 6 of the past 7 years

Best Bond Fund Group for the past 7 years

Awards & Recognition - GAM


Wealth Management

A clear vision in every geography

� Driving to 20% high net worth market share in Canada

� At scale in the U.S., shifting to a fee-based model

� Focusing on serving U.K and emerging markets high and ultra-high net worth clients through key international centres

$XX

Canadian fee-based assets per advisor (1)

($ millions)

$22

$49

RBC Cdn Peer Average

Over 2.2x the peer average

Canadian revenue per advisor (1)

($ millions)

$1MM

RBC Cdn Peer Average

45% above the peer average

(1) Investor Economics as of March 31, 2013.

Ranked #1 in Canada high net worth market share

Top 6 Global Wealth Manager by assets



Assets under administration($ billions)

Investor & Treasury Services


� Establishing a specialist custody bank that provides excellence in asset servicing, with an integrated funding and liquidity business

� Focusing on organic growth through deeper client relationships, cross-selling and promoting the RBC brand

� Leveraging Investor & Treasury Services as a driver of enterprise growth strategies

A top 10 global custodian

Strong long-term industry fundamentals

Transfer Agent of the Year

Best Custodian Overall (2013)

Top FX Service Provider

13% Growth


2,7442,887

2,671

3,094

2011 2012 Q3/2012 Q3/2013

(1)

(1) As measured by assets under administration.


Capital Markets


� Extending our leadership position in Canada

� Expanding and strengthening client relationships in the U.S.

� Building on core strengths and capabilities in Europe and Asia

� Optimizing capital use to earn high risk-adjusted returns on assets and equity

$XX

Lending revenue and loans outstanding by region (1)

Deepening client relationships (# of products per client)

Ranked #2 for Retail M&A with recent deals

Best Investment Bank in Canada across Equity, Debt

and M&A for 6th consecutive year

(1) Loans outstanding. Average loans & acceptances, and letters of credit and guaranteed for our Capital Markets portfolio, on single name basis. It excludes mortgage investments, securitized mortgages and other non-core items. Lending revenue includes loan syndication fees.

24 17 15 16 18 19

1211 10

1621 24

8

64

57

6

0.80.9 1.0 1.1

1.3

1.6

2008 2009 2010 2011 2012 LTMQ3/2013

Canada U.S. Other International Lending Revenue

1

6+

2 - 5

Lendingrelationship

initiated

Time / Depth of Relationship

1 Year 1-3 Years 3+Years

Client products:

• Advisory• Debt Origination• Equity Origination• Lending• Fixed Income• Equities• FX• Securitization


2934

4637

4449

($ billions)


$4.9bn

$35.6bn

$896mm

$702mm

$3.4bn$558mm

$4.2bn

$756mm

$2.1bn

$900mm

$14.8bn

Asia PacificUK & EuropeCanada

$232mm

Aligned with ~85% of the global investment banking fee pool

Capital Markets

(1) Fee Pool Source: Thomson Reuters Deals Intelligence 2012.

$442mm

2012 Global Fee Pool: $74.8bn(1)

North American focus with select global reach

Primarily distribution withselect M&A advisory and

origination

Asia PacificM&A advisory and

origination in key sectors with fixed income, equity

and FX sales & trading

UK & EuropeFull service investment

bank with equity and fixed income sales & trading

United StatesFull suite of products and services across all sectors

Canada


Our Strengths

� Strong financial position, diversified businesses and leading market share are a clear competitive advantage

� The right balance between investing in our businesses for long term growth and returning capital to shareholders

� Domestic leadership and global strategy combined with a focus on delivering high quality and sustainable earnings

Extending our lead in Canada with selective global growth

Going forward


Note to users

Karen McCarthy, Director (416) 955-7809Lynda Gauthier, Director (416) 955-7808Robert Colangelo, Associate Director (416) 955-2049

www.rbc.com/investorrelations

Investor Relations Contacts

We use a variety of financial measures to evaluate our performance. In addition to generally accepted accounting principles (GAAP) prescribed measures, we use certain non-GAAP measures we believe provide useful information to investors regarding our financial condition and result of operations. Readers are cautioned that non-GAAP measures, such as earnings excluding specified items and measures excluding the impact of Ally Canada do not have any standardized meanings prescribed by GAAP, and therefore are unlikely to be comparable to similar measures disclosed by other financial institutions.

Specified ItemsResults and measures excluding specified items are non-GAAP measures. Specified items include a favourable income tax adjustment of $90 million in Q3 2012, a restructuring charge of $44 million ($31 million after-tax) in Q2 2013, and net favourable adjustments of $262 million after-tax in Q3 2012 including the release of a $128 million tax uncertainty provision and net interest income of $72 million ($53 million after-tax) related to the settlement of several tax matters, a change in estimate of mortgage prepayment interest of $125 million ($92 million after-tax), and a loss of $12 million ($11 million after-tax)related to our acquisition of the remaining 50% interest in RBC Dexia.

Additional information about our non-GAAP measures can be found under the “Key performance and non-GAAP measures” section of our Q3 2013 Report to Shareholders and our 2012 Annual Report.

Definitions can be found under the “Glossary” sections in our Q3 2013 Supplementary Financial Information and our 2012 Annual Report.

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