Royal Bank of Canada (NYSE:RY) Q4 2023 Earnings Conference Call November 30, 2023 8:30 AM ET

Company Participants

Asim Imran - Head of IR

David McKay - President & CEO

Nadine Ahn - CFO

Neil McLaughlin - Group Head, Personal & Commercial Banking

Graeme Hepworth - Chief Risk Officer

Doug Guzman - Group Head, Wealth Management and Insurance

Derek Neldner - Group Head, Capital Markets

Conference Call Participants

Gabriel Dechaine - National Bank Financial

Meny Grauman - Scotiabank

Ebrahim Poonawala - BofA Securities

Paul Holden - CIBC Capital Markets

Doug Young - Desjardins Capital Markets

Sohrab Movahedi - BMO Capital Markets

Mario Mendonca - TD Securities

Lemar Persaud - Cormark Securities

Nigel D'Souza - Veritas Investment Research

Operator

Good morning, ladies and gentlemen. Welcome to RBC's Conference Call for the Fourth Quarter 2023 Financial Results. Please be advised that this call is being recorded. I would now like to turn the meeting over to Asim Imran, Head of Investor Relations. Please go ahead, Mr. Imran.

Asim Imran

Thank you, and good morning, everyone. Speaking today will be Dave McKay, President and Chief Executive Officer; Nadine Ahn, Chief Financial Officer; and Graeme Hepworth, Chief Risk Officer. Also joining us today for your question, Neil McLaughlin, Group Head, Personal & Commercial Banking; Doug Guzman, Group Head, Wealth Management and Insurance; and Derek Neldner, Group Head, Capital Markets.

As noted on Slide 1, our comments may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially. I would also remind listeners that the bank assesses its performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance.

With that, I'll turn it over to Dave.

David McKay

Thank you, Asim, and good morning, everyone. Thank you for joining us. Today, we reported fourth quarter earnings of $4.1 billion. We also announced a $0.03 or 2% increase in our quarterly dividend, continuing our policy of increasing dividends every other quarter. Our revenues were up 4% from last year, reflecting the strength of our diversified business model, including market share gains in both Investment Banking and Global Markets, solid volume growth in Canadian Banking and higher fee-based revenue from Wealth Management.

Reported expense growth of 13% year-over-year was impacted by several factors, which Nadine will speak to later. Importantly, core expense growth declined to 5% year-over-year or about 2% sequentially. This is a trend that underscores our heightened focus on expense control includes higher-than-normal severance costs. Our results were also impacted by higher PCL impaired loans. We added a further $194 million of PCL on performing loans this quarter in recognition of the evolving macro environment and more challenging credit conditions. Our allowance for credit losses now covers 3x the Stage 3 PCL that we incurred over the last 12 months. Looking back at the 2023 fiscal year, RBC delivered earnings of nearly $15 billion in a very challenging operating and macro environment. We met all our medium-term objectives while investing to further strengthen our core businesses. As part of our regular strategic review, we also simplified our business model by exiting our Investor Services franchise in Europe.