Royal Bank of Canada (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, driven by strong performance in Canadian banking, wealth management, and capital markets.

• Diluted EPS rose 13% to $3.09, and adjusted diluted EPS increased 15% to $3.26 year-over-year.

• HSBC Canada acquisition contributed $239 million in net income (adjusted $292 million), with cost synergies and strong client engagement.

• Return on equity was 15.5% (16.4% adjusted), with a CET1 ratio of 13.0%.

• Book value per share increased 11% year-over-year.

Financial highlights

• Total revenue for Q3 2024 was $14.6 billion, up 13% year-over-year, with net interest income up 17% and non-interest income up 9%.

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

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

• Pre-provision, pre-tax earnings grew 16% year-over-year (8% excluding HSBC and specified items).

• Efficiency ratio in Canadian banking was 39%; overall adjusted efficiency ratio was 56.6%.

Outlook and guidance

• Management expects continued solid revenue growth, supported by strong capital generation 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.

• Maintain medium-term objectives: ROE of 16%+ and diluted EPS growth of 7%+.

• Canadian banking NIM expected to decline slightly in Q4, in line with prior guidance.

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