RBC: Reborn in the USA?
Canada's leading bank is increasingly leaning over its neighbour's fence
RBC has good reason to feel pretty smug about 2017. It ended the year with a record set of results from a strategy that is, on the face of it, fairly straightforward: be number one or two in every domestic banking category and be diversified across businesses and regions.
It ended the year with record earnings of C$11.5 billion ($7.57 billion), up 10% year on year, a return on equity of 17% and common equity tier-1 of 10.9%. It also returned C$8.2 billion to shareholders in dividends and buybacks.
“We are operating in a very competitive environment and have had revenue growth of more than 5% for five straight quarters,” Rod Bolger, chief financial officer at RBC, tells Euromoney, proudly. “One of our strengths is our diversified business model. We have several businesses with double digit earnings growth.”
In truth, that diversification is US-dependent. RBC’s dominant position in its home market is entrenched, so its large southern neighbour is integral to this growth story. Chief executive Dave McKay has made no secret of his desire to build the bank’s US network following the acquisition of Los Angeles-based City National two years ago.