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May 27, 2021

RBC Q2 2021 beats forecasts with net income of C$4.0bn

By Douglas Blakey

RBC Q2 2021 net income of C$4.0bn compares with C$1.5bn for the year ago period and beats analyst forecasts for the three months to end April.

Pre-provision, pre-tax earnings of C$5.1bn are up 11% from a year ago. This mainly reflects constructive markets and strong volume growth. But second quarter earnings are partially offset by the impact of low interest rates, and higher expenses largely due to higher variable compensation on improved results and higher stock-based compensation. Personal & Commercial Banking and Capital Markets generates solid earnings growth, with Capital Markets reporting record earnings this quarter.

Higher results in Wealth Management and Insurance also contribute to the increase. These factors are partially offset by lower results in Investor & Treasury Services.

RBC’s capital position remains robust, with a Common Equity Tier 1 (CET1) ratio of 12.8%.

RBC Q2 2021 Personal & Commercial banking highlights

Net income of C$1.91bn increases C$1.38bn from a year ago, primarily attributable to lower PCL. Pre-provision, pre-tax earnings of C$2.61bn are up 6% from a year ago. This mainly reflects strong average volume growth of 11% (+16% in deposits and +6% in loans), higher card service revenue, and higher mutual fund distribution fees in Canadian Banking. But this is partially offset by lower spreads.

Compared to last quarter, net income increases 6%, primarily due to lower PCL resulting from higher releases of provisions on performing loans in the current quarter. Average volume growth of 1% in Canadian Banking and lower staff-related costs also contribute to the increase.

RBC Q2 2021 Wealth management highlights

Net income of C$691m increases C$267m or 63% from a year ago, primarily due to average loan growth as well as higher average fee-based client assets. This reflects market appreciation and net sales, net of the associated variable compensation. Lower PCL and higher transactional revenue also contribute to the increase. These factors are partially offset by the impact of lower interest rates. Compared to last quarter, net income increases 6%, largely attributable to higher average fee-based client assets.

Digital key metrics

Digital usage continues to grow with 90-day Active Mobile users increasing 9% from a year ago to 5.3 million. Meantime, mobile sessions are up 22% from a year ago to 111.6 million. Digital adoption increases to 56.8%, and self-serve transactions increase 150 bps from last year to 93.5%.

“The strong momentum we’ve achieved reflects our focused strategy to deliver exceptional experiences and create more value for clients. RBC brings this to life through the combination of our powerful scale, strong market share growth, prudent risk management, and significant multi-year investments in talent and technology. We remain firmly committed to helping our clients thrive and communities prosper. And to being an enabler of a more inclusive and sustainable future,” says RBC President & CEO Dave McKay.

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