RBC (RY) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $4.5 billion, up 16% year-over-year, with adjusted net income at $4.7 billion, up 18% year-over-year, and diluted EPS of $3.09, up 13% year-over-year; adjusted diluted EPS was $3.26, up 15% year-over-year.

• Results benefited from the inclusion of HSBC Canada, contributing $239 million to net income and $292 million in adjusted earnings, with 50% of targeted annualized cost synergies realized and $120 million in expense synergies achieved year-to-date.

• Strong performance in Personal & Commercial Banking, Wealth Management, and Capital Markets, partially offset by lower Insurance and Corporate Support results.

• Return on equity was 15.5% (16.4% adjusted), with a CET1 ratio of 13.0%, up 20 bps from last quarter, and robust capital generation.

• Positive operating leverage of 2% and pre-provision, pre-tax earnings growth of 16% year-over-year.

Financial highlights

• Total revenue for Q3 2024 was $14.6 billion, up 13% year-over-year, driven by higher net interest income and fee-based revenue.

• Net interest income increased 17% year-over-year, with HSBC Canada contributing $569 million.

• Non-interest expenses rose 11% year-over-year, mainly due to HSBC Canada integration and higher variable compensation.

• Provision for credit losses (PCL) on loans was $659 million, with a PCL ratio of 27 bps.

• Adjusted diluted EPS reached a record $3.26, up 15% year-over-year.

Outlook and guidance

• Management expects continued solid revenue growth, supported by a strong balance sheet and prudent risk management.

• On track to achieve $740 million in targeted HSBC Canada cost synergies, with most shared services and IT synergies expected in Year 1 and distribution/product support synergies in 2025.

• CET1 ratio at 13.0% supports increasing share buybacks and ongoing capital returns.

• Guidance for all-bank core expense growth, including HSBC Canada, at the top of mid-single digit range for the fiscal year.

• Provisions on impaired loans expected to remain elevated and increase through 2025.