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RBC Results: Revenues Missed But Credit Quality Appears Solid. Likely Credit Neutral.

FINANCIALS

RBC (RY CN) 4Q23 results: revenues missed marginally but, if HSBC deal impacts are excluded, underlying profits are very slightly ahead. Positively asset quality looks reasonable with no CRE blow-up in evidence. Appears relatively credit neutral to us.


  • Key credit metrics: credit losses were up 3bp from Oct-23 (to 37bp) and non-performers were 6bp higher (at 48bp, Canada residential unhelpful) but CRE-related were relatively flat q/q. CET1 is up 40bp (to 14.9%) with total capital and leverage ratios both marginally better.
  • Revenues were 1% ahead y/y but 1% below consensus (NII and NIM miss), costs were +9% y/y, 5% worse than consensus but credit losses were, at least, in line. Net profit, therefore, missed expectations by 9.7%. Adjusted net profit was better as the HSBC Canada deal impacts are stripped out.
  • Outlook: HSBC Canada deal synergies are set to flow through more slowly than previously guided, there is little other guidance than noting the macro inputs to the credit loss model have been downgraded.
Conf call is 1300 London time at https://edge.media-server.com/mmc/p/eozvedyj
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