RBC Q2 2023 net profit is down by 14% year-on-year to C$3.6bn, reflecting higher provisions for credit losses. This is largely driven by unfavourable changes in credit quality and the macroeconomic outlook. The current quarter also reflects higher provisions on impaired loans. The bank’s PCL on loans ratio of 30 basis points is up by 5 basis points from the prior quarter.
RBC Q2 2023 highlights
RBC increases its quarterly dividend by 2% to C$1.35 per share. Second quarter highlights include a 16% y-o-y in net interest income to C$3.61bn. This is driven by the impact of higher interest rates and solid loan growth in Canadian Banking and Wealth Management. It is however partially offset by unfavourable changes in deposit mix and lower results in Capital Markets. The bank’s Canadian Personal & Commercial unit net interest margin rises by 20 basis points to 2.65%. The cost-income ratio inches up by 20 basis points to 41.4%.
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Compared to last quarter, net income is up 14% reflecting the impact of the Canada Recovery Dividend (CRD) and other tax related adjustments in the prior quarter. Adjusted net income is down 13%. This reflects lower results in Capital Markets, Personal & Commercial Banking, Wealth Management and Insurance.
CEO Dave McKay said: “As our second quarter results demonstrate, RBC will never compromise on doing right by our clients and delivering sustainable, long-term value to them, our communities and shareholders. Our focused growth strategy, prudent risk and capital management, and diversified business mix exemplify our strength and stability amidst a complex macro environment.
“As we continue to realise the benefits of our strategic investments in technology and our incredible talent, we are confident in our ability to slow expense growth and drive greater efficiencies while supporting our clients’ needs.”
RBC Q2 2023 Personal & Commercial
Net income of C$1.91bn is down 14% from a year ago. This is primarily attributable to higher PCL mainly reflecting provisions taken on performing loans in the current quarter as compared to releases of provisions on performing loans in the prior year. Other factors include higher staff and technology related costs and digital initiatives. The higher effective tax rate reflecting the 1.5% increase in the Canadian corporate tax rate also contributes to the decrease. These factors are partially offset by higher net interest income. This reflects higher spreads and average volume growth of 8% in deposits and loans in Canadian Banking.
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By GlobalDataRetail mortgages are ahead by 6.5% y-o-y. Credit cards and business lending both rise by 15.6%.
RBC Q2 2023 Wealth management
Net income of C$742m is down by 8% y-o-y. This is mainly due to lower average fee-based client assets driven by unfavourable market conditions. Higher PCL, professional fees and staff costs also contribute to the decrease. These factors were partially offset by an increase in net interest income. This is driven by higher spreads reflecting higher interest rates, which also drive an increase in revenue from sweep deposits.
US Wealth Management, including City National, posts revenue up 13% y-o-y. The inclusion of RBC Brewin Dolphin results in international wealth management revenue rising significantly.
RBC Capital Markets Q2 2023 net income of C$939m is ahead by 10% y-o-y. This is primarily driven by a lower effective tax rate reflecting changes in earnings mix, higher revenue in Corporate & Investment Banking and the impact of foreign exchange translation. These factors are partially offset by higher PCL and lower revenue in Global Markets.
RBC Caribbean and US banking net income of C$90m is down 4% YoY, mainly due to higher PCL partly offset by higher net interest income.
RBC Q2 2023 channel highlights
Active RBC digital users rise by 6% y-o-y to 8.77 million. Active mobile banking users are ahead by 10% to 6.43 million. Meantime, mobile sessions rise by 2% to 124 million. RBC ends the quarter with a branch network of 1,150 outlets, down from 1,177 a year ago.
RBC is a global leader within the banking sector in terms of its rewards and loyalty strategy. It is now to open up Avion Rewards to all Canadians in the coming year. Over 30 million Canadians will be able to access the programme and become a member whether they have a bank product or not.
