Exhibit 99.1

 

		FOURTH QUARTER 2022
		EARNINGS RELEASE

 

ROYAL BANK OF CANADA REPORTS FOURTH QUARTER AND 2022 RESULTS

All amounts are in Canadian dollars and are based on our audited Annual and unaudited Interim Consolidated Financial Statements for the year and quarter ended October 31, 2022 and related notes prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board, unless otherwise noted. Our 2022 Annual Report (which includes our audited Annual Consolidated Financial Statements and accompanying Management’s Discussion & Analysis), our 2022 Annual Information Form and our Supplementary Financial Information are available on our website at: http://www.rbc.com/investorrelations.

 

TORONTO, November 30, 2022 – Royal Bank of Canada⁷ (RY on TSX and NYSE) today reported net income of $15.8 billion for the year ended October 31, 2022, down $243 million or 2% from the prior year. Diluted EPS of $11.06 remained unchanged from the prior year. Our consolidated results include total PCL of $484 million compared to $(753) million last year, primarily reflecting lower releases of provisions on performing loans in Personal & Commercial Banking and Capital Markets due to unfavourable changes in our macroeconomic outlook in the current year. Lower earnings in Capital Markets and Insurance were partly offset by higher results in Personal & Commercial Banking, Wealth Management and Investor & Treasury Services.

Pre-provision, pre-tax earnings⁸ of $20.6 billion were up 4% from a year ago, mainly reflecting higher net interest income driven by strong volume growth and higher spreads in Canadian Banking and Wealth Management. These factors were partially offset by lower revenue in Capital Markets, including the impact from loan underwriting markdowns in Q3 2022, largely driven by challenging market conditions. Results also reflected higher salaries, technology investments and discretionary costs to support strong client-driven growth.

The PCL on loans ratio of 6 bps increased 16 bps from the prior year. The PCL on impaired loans ratio was 10 bps, flat from the prior year.

Our capital position remained robust, with a Common Equity Tier 1 (CET1) ratio of 12.6% supporting strong client-driven organic growth. In addition, this year we returned $12.4 billion to our shareholders through common share buybacks and dividends. And today, we declared a quarterly dividend of $1.32 per share reflecting an increase of $0.04 or 3%.

 

“While market conditions continue to be tough, our 2022 results reflect a resilient bank that is well-positioned to pursue strategic growth and deliver long-term shareholder value. Our premium businesses, strong balance sheet, prudent risk management and diversified business model mean we can deliver advice and services that help our clients navigate all cycles. RBC colleagues remain focused on building more exceptional experiences for our clients and supporting sustainable and prosperous communities.” – Dave McKay, RBC President and Chief Executive Officer

2022 Full-Year Business Segment Performance

◾

7% earnings growth in Personal & Commercial Banking, primarily attributable to higher net interest income, driven by average volume growth of 9% in both loans and deposits in Canadian Banking, and higher spreads. As a result of the rising interest rate environment (Bank of Canada raised the benchmark interest rate by 350 bps from March to October 2022), we saw higher spreads as compared to the prior year. Higher non-interest income, including higher foreign exchange revenue, card service revenue and service charges driven by increased client activity also contributed to the increase in earnings. These factors were partially offset by higher PCL, and higher staff and technology related costs. Our Canadian Banking franchise generated strong positive operating leverage of 3.8% while continuing to invest in digital initiatives to improve the client experience and deliver personalized advice.

 

◾

20% earnings growth in Wealth Management, mainly due to higher net interest income driven by average volume growth of 19% in loans and 11% in deposits largely in U.S. Wealth Management (including City National), and higher interest rates. Higher average fee-based client assets primarily reflecting net sales, as well as the impact of a legal provision taken in U.S. Wealth Management (including City National) in the prior year that was partially released in the first quarter of 2022, also contributed to the increase. These factors were partially offset by higher staff-related costs and variable compensation.

 

 

1	Earnings per share (EPS).

2	Provision for credit losses (PCL).

3	Basis points (bps).

4	Return on equity (ROE). For further information, refer to the Key performance and non-GAAP measures section on page 11 of this Earnings Release.

5	This ratio is calculated by dividing Common Equity Tier 1 (CET1) by risk-weighted assets, in accordance with OSFI’s Basel III Capital Adequacy Requirements guideline.

6	Leverage ratio is calculated using OSFI’s Leverage Requirements guideline.

7	When we say “we”, “us”, “our”, or “RBC”, we mean Royal Bank of Canada and its subsidiaries, as applicable.

8

Pre-provision, pre-tax earnings is calculated as income (2022: $15,807 million; 2021: $16,050 million) before income taxes (2022: $4,302 million; 2021: $4,581 million) and PCL (2022: $484 million; 2021: $(753) million). This is a non-GAAP measure. For further information, refer to the Key performance and non-GAAP measures section on page 11 of this Earnings Release.

 

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◾	4% lower earnings in Insurance, largely due to the impact of lower new longevity reinsurance contracts, partially offset by higher favourable investment-related experience.

 

◾	17% earnings growth in Investor & Treasury Services, mainly due to higher revenue from client deposits reflecting improved margins, partially offset by higher technology-related costs.

 

◾

30% lower earnings in Capital Markets, primarily driven by lower revenue in Corporate & Investment Banking, larger releases of provisions on performing assets in the prior year and lower revenue in Global Markets. Global investment banking fee pools were impacted by weakness in credit and equity markets beginning in the second fiscal quarter of 2022, resulting in an approximately 30% decline in global investment banking fee pools9 this fiscal year compared to record levels in fiscal 2021.

Q4 2022 Performance

Earnings of $3.9 billion remained relatively flat from a year ago, with diluted EPS growth of 2% over the same period. Our consolidated results reflect $381 million of provisions, primarily taken on loans in the current quarter, as compared to $(227) million in the prior year, due to releases of provisions on performing loans, primarily in Personal & Commercial Banking. Higher earnings in Wealth Management and Personal & Commercial Banking reflected higher interest rates and robust client-driven volume growth. Earnings in Insurance and Investor & Treasury Services were largely unchanged. These were offset by lower earnings in Capital Markets.

Pre-provision, pre-tax earnings¹⁰ of $5.2 billion were up 10% from a year ago, mainly reflecting higher net interest income driven by higher spreads and strong volume growth in Canadian Banking and Wealth Management. This was partially offset by lower market-related revenue in Capital Markets and Wealth Management. Results were also impacted by higher staff-related costs, including higher salaries and variable compensation.

Earnings were up $305 million or 9% from last quarter due to higher earnings in Capital Markets, Personal & Commercial Banking, Insurance, and Wealth Management. These were partially offset lower earnings in Investor & Treasury Services. The PCL on loans ratio of 18 bps was up 1 bp from 17 bps last quarter. The PCL on impaired loans ratio of 12 bps was up 4 bps from last quarter.

 

Q4 2022   compared to           Q4 2021				•    Net income of $3,882 million		è 0%
				•    Diluted EPS of $2.74		é 2%
				•    ROE of 15.6%		ê 130 bps
				•    CET1 ratio of 12.6%		ê 110 bps
Q4 2022   compared to           Q3 2022				•    Net income of $3,882 million		é 9%
				•    Diluted EPS of $2.74		é 9%
				•    ROE of 15.6%		é100 bps
				•    CET1 ratio of 12.6%		ê 50 bps

Q4 2022 Business Segment Performance

 

Personal & Commercial Banking

Net income of $2,139 million increased $106 million or 5% from a year ago, primarily attributable to higher net interest income reflecting higher spreads from higher interest rates and strong average volume growth of 10% in loans (including strong mortgage and business loan growth of 10% and 15%, respectively) and 9% in deposits in Canadian Banking. Higher non-interest income, including higher card service and foreign exchange revenue from increased client activity, also contributed to the increase. These factors were partially offset by higher PCL, higher staff and technology related costs, including digital initiatives, as well as higher marketing costs.

Compared to last quarter, net income increased $116 million or 6%, primarily due to higher net interest income reflecting higher spreads and volume growth. Lower PCL also contributed to the increase. These factors were partially offset by higher staff-related and marketing costs, as well as the timing of professional fees.

 

Wealth Management

Net income of $822 million increased $264 million or 47% from a year ago, primarily due to higher net interest income reflecting higher interest rates and average volume growth in loans and deposits, and the impact of a legal provision taken in U.S. Wealth Management (including City National) in the prior year. These factors were partially offset by lower fee-based revenues mainly driven by unfavourable market conditions.

Compared to last quarter, net income increased $45 million or 6%, mainly due to higher net interest income largely reflecting higher interest rates. This factor was partially offset by lower average fee-based client assets, largely driven by unfavourable market conditions.

 

 

9	Dealogic, based on global investment bank fees, Fiscal 2022.

10

Pre-provision, pre-tax earnings is calculated as income (Q4 2022: $3,882 million; Q4 2021: $3,892 million) before income taxes (Q4 2022: $979 million; Q4 2021: $1,096 million) and PCL (Q4 2022: $381 million; Q4 2021: $(227) million). This is a Non-GAAP measure. For further information, refer to the Key Performance and Non-GAAP measures section on page 11 of this Earnings Release.

 

- 2 -

Insurance

Net income of $268 million remained relatively flat, largely reflecting the impact of offsetting items between revenue and PBCAE (policyholder benefits, claims and acquisition expense). PBCAE also included the impact of favourable annual actuarial assumption updates.

Compared to last quarter, net income increased $82 million or 44%, mainly due to favourable annual actuarial assumption updates.

 

Investor & Treasury Services

Net income of $110 million remained relatively flat as the impact of higher revenue reflecting improved margins mainly driven by higher interest rates from client deposits, was largely offset by lower funding and liquidity revenue and lower revenue from our asset services business.

Compared to last quarter, net income decreased $54 million or 33%, mainly driven by lower funding and liquidity revenue, including the impact of a funding cost adjustment.

 

Capital Markets

Net income of $617 million decreased $303 million or 33% from a year ago, primarily due to the timing of true-ups related to our variable compensation plans. Lower revenue in Corporate & Investment Banking reflecting lower debt and equity origination as well as lower loan syndication revenue and higher PCL, also contributed to the decrease. These factors were partially offset by a lower effective tax rate reflecting changes in the earnings mix as well as higher fixed income trading revenue in Global Markets.

Compared to last quarter, net income increased $138 million or 29%, mainly due to higher fixed income trading revenue as the prior quarter included the impact from loan underwriting markdowns, primarily in the U.S., largely driven by challenging market conditions. This factor was partially offset by higher compensation on increased results and the timing of true-ups related to our variable compensation plans.

 

Capital, Liquidity and Credit Quality

Capital – As at October 31, 2022, our CET1 ratio was 12.6%, down 110 bps from last year, mainly reflecting risk-weighted asset growth (excluding FX), share repurchases, the impact of our Brewin Dolphin acquisition, and the unfavourable impact of fair value other comprehensive income adjustments. These factors were partially offset by net internal capital generation, favourable net credit migration and model updates.

Liquidity – For the quarter ended October 31, 2022, the average liquidity coverage ratio (LCR) was 125%, which translates into a surplus of approximately $73 billion, compared to 123% and a surplus of approximately $66 billion in the prior quarter. LCR has increased compared to last quarter as loan growth was more than offset by an increase in volume and change in mix of client deposits, as well as by issuances of term funding.

The Net Stable Funding Ratio (NSFR) as at October 31, 2022 was 112%, which translates into a surplus of approximately $95 billion, compared to 113% and a surplus of approximately $100 billion in the prior quarter. NSFR remained relatively flat compared to last quarter as growth in loans and securities was offset by issuance of term funding and increases in client deposits.

Credit Quality

Q4 2022 vs. Q4 2021

Total PCL was $381 million compared to $(227) million last year, reflecting provisions taken on performing loans and higher provisions on impaired loans in the current quarter, as compared to releases of provisions on performing loans in the prior year, primarily in Personal & Commercial Banking. The PCL on loans ratio of 18 bps compared to (12) bps last year increased 30 bps.

PCL on performing loans was $126 million compared to $(355) million last year, primarily attributable to releases of provisions in the prior year driven by improvements in our macroeconomic and credit quality outlook, as compared to provisions taken in the current quarter in our Canadian Banking portfolios mainly reflecting unfavourable changes in our macroeconomic and credit quality outlook.

PCL on impaired loans increased $117 million, primarily due to higher provisions in Personal & Commercial Banking, largely in our Canadian Banking portfolios.

Q4 2022 vs. Q3 2022

Total PCL was $381 million and increased $41 million or 12% from last quarter, largely due to higher provisions on loans in Wealth Management and Capital Markets, partially offset by lower provisions on loans in Personal & Commercial Banking. The PCL on loans ratio increased 1 bp.

PCL on performing loans decreased $51 million or 29%, primarily due to lower provisions in Personal & Commercial Banking, largely in our Caribbean Banking portfolios, mainly reflecting the recovery from the COVID-19 pandemic and model updates. This was partially offset by higher provisions in U.S. Wealth Management (including City National), mainly reflecting unfavourable changes in our credit outlook.

 

- 3 -

PCL on impaired loans increased $84 million or 49%, largely due to higher provisions in Personal & Commercial Banking in our Canadian Banking portfolios, partially offset by lower provisions in our Caribbean Banking portfolios. Provisions taken in Capital Markets in the current quarter, mainly in the other services sector, as compared to recoveries last quarter, also contributed to the increase.

 

- 4 -

Selected financial and other highlights

 

		As at or for the three months ended																For the year ended
(Millions of Canadian dollars, except per share, number of and percentage amounts)		October 31  2022				July 31 2022				October 31 2021								October 31 2022				October 31 2021
Total revenue		$	12,567			$	12,132			$	12,376							$	48,985			$	49,693
Provision for credit losses (PCL)			381				340				(227	)							484				(753	)
Insurance policyholder benefits, claims and acquisition expense (PBCAE)			116				850				1,032								1,783				3,891
Non-interest expense			7,209				6,386				6,583								26,609				25,924
Income before income taxes			4,861				4,556				4,988								20,109				20,631
Net income		$	3,882			$	3,577			$	3,892							$	15,807			$	16,050
Segments - net income
Personal & Commercial Banking		$	2,139			$	2,023			$	2,033							$	8,370			$	7,847
Wealth Management			822				777				558								3,144				2,626
Insurance			268				186				267								857				889
Investor & Treasury Services			110				164				109								513				440
Capital Markets			617				479				920								2,921				4,187
Corporate Support			(74	)			(52	)			5								2				61
Net income		$	3,882			$	3,577			$	3,892							$	15,807			$	16,050
Selected information
Earnings per share (EPS) - basic		$	2.75			$	2.52			$	2.68							$	11.08			$	11.08
- diluted			2.74				2.51				2.68								11.06				11.06
Return on common equity (ROE) (1)			15.6	%			14.6	%			16.9	%							16.4	%			18.6	%
Average common equity (1)		$	97,150			$	95,750			$	89,500							$	94,700			$	84,850
Net interest margin (NIM) - on average earning assets, net (2)			1.56	%			1.52	%			1.43	%							1.48	%			1.48	%
PCL on loans as a % of average net loans and acceptances			0.18	%			0.17	%			(0.12	)%							0.06	%			(0.10	)%
PCL on performing loans as a % of average net loans and acceptances			0.06	%			0.09	%			(0.19	)%							(0.04	)%			(0.20	)%
PCL on impaired loans as a % of average net loans and acceptances			0.12	%			0.08	%			0.07	%							0.10	%			0.10	%
Gross impaired loans (GIL) as a % of loans and acceptances			0.26	%			0.25	%			0.31	%							0.26	%			0.31	%
Liquidity coverage ratio (LCR) (3)			125	%			123	%			123	%							125	%			123	%
Net stable funding ratio (NSFR) (3)			112	%			113	%			116	%							112	%			116	%
Capital ratios and Leverage ratio (4)
Common Equity Tier 1 (CET1) ratio			12.6	%			13.1	%			13.7	%							12.6	%			13.7	%
Tier 1 capital ratio			13.8	%			14.3	%			14.9	%							13.8	%			14.9	%
Total capital ratio			15.4	%			15.9	%			16.7	%							15.4	%			16.7	%
Leverage ratio			4.4	%			4.6	%			4.9	%							4.4	%			4.9	%
TLAC ratio (5)			26.4	%			27.6	%			n.a.								26.4	%			n.a.
TLAC leverage ratio (5)			8.5	%			8.8	%			n.a.								8.5	%			n.a.
Selected balance sheet and other information (6)
Total assets		$	1,917,219			$	1,842,092			$	1,706,323							$	1,917,219			$	1,706,323
Securities, net of applicable allowance			318,223				298,795				284,724								318,223				284,724
Loans, net of allowance for loan losses			819,965				796,314				717,575								819,965				717,575
Derivative related assets			154,439				122,058				95,541								154,439				95,541
Deposits			1,208,814				1,178,604				1,100,831								1,208,814				1,100,831
Common equity			100,746				96,570				91,983								100,746				91,983
Total risk-weighted assets			609,879				589,050				552,541								609,879				552,541
Assets under management (AUM) (2)			999,700				937,700				1,008,700								999,700				1,008,700
Assets under administration (AUA) (2), (7)			5,649,700				5,748,900				6,347,300								5,649,700				6,347,300
Common share information
Shares outstanding (000s)         - average basic			1,386,925				1,396,381				1,424,534								1,403,654				1,424,343
- average diluted			1,388,548				1,398,667				1,427,225								1,406,034				1,426,735
- end of period			1,382,911				1,390,629				1,424,525								1,382,911				1,424,525
Dividends declared per common share		$	1.28			$	1.28			$	1.08							$	4.96			$	4.32
Dividend yield (2)			4.0	%			3.9	%			3.3	%							3.7	%			3.8	%
Dividend payout ratio (2)			47	%			51	%			40	%							45	%			39	%
Common share price (RY on TSX) (8)		$	126.05			$	124.86			$	128.82							$	126.05			$	128.82
Market capitalization (TSX) (8)			174,316				173,634				183,507								174,316				183,507
Business information (number of)
Employees (full-time equivalent) (FTE)			91,427				88,541				85,301								91,427				85,301
Bank branches			1,271				1,283				1,295								1,271				1,295
Automated teller machines (ATMs)			4,368				4,364				4,378								4,368				4,378
Period average US$ equivalent of C$1.00 (9)		$	0.739			$	0.783			$	0.796							$	0.774			$	0.796
Period-end US$ equivalent of C$1.00		$	0.734			$	0.781			$	0.808							$	0.734			$	0.808

 

(1)	Average amounts are calculated using methods intended to approximate the average of the daily balances for the period. This includes average common equity used in the calculation of ROE. For further details, refer to the Key performance and non-GAAP measures section of this Earnings Release.

(2)	See the Glossary section of our 2022 Annual Report for composition of this measure.

(3)

The LCR and NSFR are calculated in accordance with the Office of the Superintendent of Financial Institutions’ (OSFI) Liquidity Adequacy Requirements (LAR) guideline. LCR is the average for the three months ended for each respective period. For further details, refer to the Liquidity and funding risk section. For further details, refer to the Liquidity and funding risk section of our 2022 Annual Report.

(4)	Capital ratios are calculated using OSFI’s Capital Adequacy Requirements (CAR) guideline and the Leverage ratio is calculated using OSFI’s Leverage Requirements (LR) guideline.

(5)	Effective Q1 2022, OSFI requires Canadian Domestic Systemically Important Banks (D-SIBs) to meet minimum risk-based TLAC ratio and TLAC leverage ratio requirements which are calculated using OSFI’s TLAC guideline. For further details, refer to the Capital management section.

(6)	Represents period-end spot balances.

(7)	AUA includes $15 billion and $6 billion (July 31, 2022 – $14 billion and $5 billion, October 31, 2021 – $15 billion and $3 billion) of securitized residential mortgages and credit card loans, respectively.

(8)	Based on TSX closing market price at period-end.

(9)	Average amounts are calculated using month-end spot rates for the period.

n.a.	not applicable

 

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Personal & Commercial Banking

 

		As at or for the three months ended
		October 31				July 31				October 31
(Millions of Canadian dollars, except percentage amounts and as otherwise noted)		2022				2022				2021
Net interest income		$	3,901			$	3,655			$	3,169
Non-interest income			1,518				1,527				1,436
Total revenue			5,419				5,182				4,605
PCL on performing assets			56				141				(342	)
PCL on impaired assets			230				183				134
PCL			286				324				(208	)
Non-interest expense			2,270				2,130				2,087
Income before income taxes			2,863				2,728				2,726
Net income		$	2,139			$	2,023			$	2,033
Revenue by business
Canadian Banking		$	5,179			$	4,974			$	4,414
Caribbean & U.S. Banking			240				208				191
Selected balances and other information
ROE			30.5	%			29.2	%			32.5	%
NIM			2.72	%			2.61	%			2.42	%
Efficiency ratio (1)			41.9	%			41.1	%			45.3	%
Operating leverage (2)			8.9	%			4.8	%			2.5	%
Average total assets		$	597,600			$	582,700			$	543,900
Average total earning assets, net			569,000				555,400				518,900
Average loans and acceptances, net			574,300				560,300				522,200
Average deposits			570,200				555,300				524,300
AUA (3), (4)			336,400				346,500				367,700
Average AUA			338,300				343,500				363,500
AUM (4)			5,600				5,400				5,400
PCL on impaired loans as a % of average net loans and acceptances			0.16	%			0.13	%			0.10	%
Other selected information - Canadian Banking
Net income		$	1,999			$	1,971			$	1,970
NIM			2.70	%			2.60	%			2.42	%
Efficiency ratio			40.3	%			39.7	%			43.8	%
Operating leverage			9.2	%			4.5	%			2.7	%

 

(1)	Calculated as non-interest expense divided by total revenue.

(2)	Defined as the difference between our revenue growth rate and non-interest expense growth rate.

(3)	AUA includes securitized residential mortgages and credit card loans as at October 31, 2022 of $15 billion and $6 billion, respectively (July 31, 2022 – $14 billion and $5 billion, October 31, 2021 – $15 billion and $3 billion).

(4)	Represents period-end spot balances.

Q4 2022 vs. Q4 2021

Net income increased $106 million or 5% from a year ago, primarily attributable to higher net interest income reflecting higher spreads and average volume growth of 9% in Canadian Banking. Higher non-interest income also contributed to the increase. These factors were partially offset by higher PCL, higher staff and technology related costs, including digital initiatives, as well as higher marketing costs.

Total revenue increased $814 million or 18%.

Canadian Banking revenue increased $765 million or 17%, primarily due to higher net interest income reflecting higher spreads and average volume growth in Canadian Banking of 10% in loans and 9% in deposits. Increased client activity contributed to higher card service and foreign exchange revenue. These factors were partially offset by lower average mutual fund balances driving lower distribution fees.

Caribbean & U.S. Banking revenue increased $49 million or 26%, mainly due to higher net interest income reflecting higher spreads and the impact of foreign exchange translation.

Net interest margin was up 30 bps, mainly due to the impact of the rising interest rate environment.

PCL was $286 million compared to $(208) million last year, primarily attributable to releases of provisions on performing loans in the prior year reflecting the recovery from the COVID-19 pandemic as compared to provisions taken in the current quarter in our Canadian Banking portfolios, mainly reflecting unfavourable changes in our macroeconomic and credit quality outlook. Higher provisions on impaired loans, primarily in our Canadian Banking portfolios, also contributed to the increase, resulting in a 6 bps increase in the PCL on impaired loans ratio.

Non-interest expense increased $183 million or 9%, mainly attributable to higher staff and technology related costs, including digital initiatives, higher marketing costs, as well as professional fees.

Q4 2022 vs. Q3 2022

Net income increased $116 million or 6% from last quarter, primarily due to higher net interest income reflecting higher spreads. Lower PCL also contributed to the increase. These factors were partially offset by higher staff-related and marketing costs, as well as the timing of professional fees.

Net interest margin was up 11 bps, mainly due to the impact of the rising interest rate environment.

 

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Wealth Management
		As at or for the three months ended
		October 31				July 31				October 31
(Millions of Canadian dollars, except number of and percentage amounts and as otherwise noted)		2022				2022				2021
Net interest income		$	1,149			$	960			$	675
Non-interest income			2,827				2,695				2,769
Total revenue			3,976				3,655				3,444
PCL on performing assets			52				12				(7	)
PCL on impaired assets			11				1				12
PCL			63				13				5
Non-interest expense			2,858				2,618				2,718
Income before income taxes			1,055				1,024				721
Net income		$	822			$	777			$	558
Revenue by business
Canadian Wealth Management		$	1,095			$	1,070			$	1,032
U.S. Wealth Management (including City National)			2,068				1,878				1,628
U.S. Wealth Management (including City National) (US$ millions)			1,529				1,470				1,296
Global Asset Management			644				609				711
International Wealth Management			169				98				73
Selected balances and other information
ROE			15.6	%			16.0	%			13.1	%
NIM			3.08	%			2.75	%			2.06	%
Pre-tax margin (1)			26.5	%			28.0	%			20.9	%
Selected average balance sheet information
Average total assets		$	165,100			$	154,700			$	146,600
Average total earning assets, net			148,000				138,700				130,000
Average loans and acceptances, net			109,200				101,100				87,000
Average deposits			157,900				156,800				151,500
Other information
AUA - total (2), (3)			1,387,900				1,295,100				1,322,300
- U.S. Wealth Management (including City National) (2)			700,100				683,400				704,200
- U.S. Wealth Management (including City National) (US$ millions) (2)			513,700				533,600				568,800
AUM (2)			991,500				929,600				1,000,600
Average AUA			1,316,500				1,278,700				1,314,100
Average AUM			942,000				922,000				997,400
PCL on impaired loans as a % of average net loans and acceptances			0.04	%			0.01	%			0.05	%
Number of advisors (3)			6,158				5,622				5,548

 

		For the three months ended
Estimated impact of U.S. dollar, British pound and Euro translation on key income statement items (Millions of Canadian dollars, except percentage amounts)		Q4 2022 vs Q4 2021				Q4 2022 vs Q3 2022
Increase (decrease):
Total revenue		$	121			$	112
Non-interest expense			99				90
Net income			12				14
Percentage change in average US$ equivalent of C$1.00			(7	)%			(6	)%
Percentage change in average British pound equivalent of C$1.00			11	%			2	%
Percentage change in average Euro equivalent of C$1.00			9	%			0	%

 

(1)	Pre-tax margin is defined as Income before income taxes divided by Total revenue.

(2)	Represents period-end spot balances.

(3)	Represents client-facing advisors across all our Wealth Management businesses.

Q4 2022 vs. Q4 2021

Net income increased $264 million or 47% from a year ago, primarily due to higher net interest income reflecting higher interest rates.

Total revenue increased $532 million or 15%, primarily due to higher net interest income reflecting higher interest rates and average volume growth of 26% in loans and 4% in deposits. The impact of foreign exchange translation and higher revenue from sweep deposits also contributed to the increase. These factors were partially offset by lower average fee-based client assets, largely driven by unfavourable market conditions.

PCL increased $58 million, largely reflecting higher provisions on performing loans in U.S. Wealth Management (including City National), mainly driven by unfavourable changes in our macroeconomic outlook.

Non-interest expense increased $140 million or 5%, largely due to the impact of foreign exchange translation as well as the Brewin Dolphin acquisition and related costs in the current quarter. Higher staff and technology related costs also contributed to the increase. Partly offsetting these factors was the impact of a legal provision taken in U.S. Wealth Management (including City National) in the prior year that was partially released in the first quarter of 2022.

Q4 2022 vs. Q3 2022

Net income increased $45 million or 6% from last quarter, mainly due to higher net interest income largely reflecting higher interest rates. This factor was partially offset by lower average fee-based client assets, largely driven by unfavourable market conditions.

 

- 7 -

Insurance

 

		As at or for the three months ended
(Millions of Canadian dollars, except percentage amounts)		October 31 2022				July 31 2022				October 31 2021
Non-interest income
Net earned premiums		$	908			$	936			$	1,569
Investment income, gains/(losses) on assets supporting insurance policyholder liabilities (1)			(334	)			245				(128	)
Fee income			70				52				60
Total revenue			644				1,233				1,501
PCL			-				-				(1	)
Insurance policyholder benefits and claims (1)			42				773				939
Insurance policyholder acquisition expense			74				77				93
Non-interest expense			157				139				152
Income before income taxes			371				244				318
Net income		$	268			$	186			$	267
Revenue by business
Canadian Insurance		$	(130	)		$	597			$	796
International Insurance			774				636				705
Selected balances and other information
ROE			46.7	%			32.3	%			42.8	%
Premiums and deposits (2)		$	1,071			$	1,155			$	1,795
Fair value changes on investments backing policyholder liabilities (1)			(440	)			115				(266	)

 

(1)

Includes unrealized gains and losses on investments backing policyholder liabilities attributable to fluctuation of assets designated as fair value through profit or loss (FVTPL). The investments which support actuarial liabilities are predominantly fixed income assets designated as FVTPL. Consequently, changes in the fair values of these assets are recorded in Insurance premiums, investment and fee income in the Consolidated Statements of Income and are largely offset by changes in the fair value of the actuarial liabilities, the impact of which is reflected in Insurance policyholder benefits, claims and acquisition expense (PBCAE).

(2)	Premiums and deposits include premiums on risk-based individual and group insurance and annuity products as well as segregated fund deposits, consistent with insurance industry practices.

Q4 2022 vs. Q4 2021

Net income remained relatively flat largely reflecting the impact of offsetting items between revenue and PBCAE. PBCAE also included the impact of favourable annual actuarial assumption updates.

Total revenue decreased $857 million or 57%, primarily due to lower group annuity sales and the change in fair value of investments backing policyholder liabilities, both of which are largely offset in PBCAE as indicated below.

PBCAE decreased $916 million or 89%, primarily due to lower group annuity sales and the change in fair value of investments backing policyholder liabilities, both of which are largely offset in revenue. Higher favourable annual actuarial assumption updates largely related to economic assumption updates in the current year also contributed to the decrease.

Non-interest expense increased $5 million or 3%.

Q4 2022 vs. Q3 2022

Net income increased $82 million or 44% from last quarter, mainly due to favourable annual actuarial assumption updates.

 

Investor & Treasury Services

 

		As at or for the three months ended
(Millions of Canadian dollars, except percentage amounts)		October 31 2022				July 31 2022				October 31 2021
Net interest income		$	(1	)		$	188			$	155
Non-interest income			504				394				393
Total revenue			503				582				548
PCL on performing assets			-				1				(1	)
PCL on impaired assets			-				(4	)			-
PCL			-				(3	)			(1	)
Non-interest expense			377				374				412
Income before income taxes			126				207				137
Net income		$	110			$	164			$	109
Selected balances and other information
ROE			13.5	%			20.2	%			15.2	%
Average deposits		$	252,800			$	243,800			$	233,300
Average client deposits			59,400				59,900				65,700
Average wholesale funding deposits			193,400				183,900				167,600
AUA (1)			3,906,900				4,089,900				4,640,900
Average AUA			4,138,000				4,262,100				4,745,400

 

- 8 -

		For the three months ended
Estimated impact of U.S. dollar, British pound and Euro translation on key income statement items (Millions of Canadian dollars, except percentage amounts)		Q4 2022 vs Q4 2021				Q4 2022 vs Q3 2022
Increase (decrease):
Total revenue		$	(15	)		$	4
Non-interest expense			(18	)			-
Net income			2				3
Percentage change in average US$ equivalent of C$1.00			(7	)%			(6	)%
Percentage change in average British pound equivalent of C$1.00			11	%			2	%
Percentage change in average Euro equivalent of C$1.00			9	%			0	%

 

(1)	Represents period-end spot balances.

Q4 2022 vs. Q4 2021

Net income remained relatively flat as the impact of higher revenue from client deposits was largely offset by lower funding and liquidity revenue and lower revenue from our asset services business.

Total revenue decreased $45 million or 8%, mainly due to lower funding and liquidity revenue including the impact of a funding cost adjustment. Funding and liquidity revenue, as reflected in net interest income, includes funding costs, which were unfavourably impacted by increasing rates and offset by gains on related economic hedges in non-interest income. Lower revenue from our asset services business, the impact of repositioning initiatives and foreign exchange translation also contributed to the decrease. These factors were partially offset by higher revenue from client deposits, reflecting improved margins.

Non-interest expense decreased $35 million or 8%, mainly due to the impact of foreign exchange translation and lower costs associated with ongoing efficiency initiatives.

Q4 2022 vs. Q3 2022

Net income decreased $54 million or 33% from last quarter, mainly driven by lower funding and liquidity revenue, including the impact of a funding cost adjustment.

 

Capital Markets
		As at or for the three months ended
(Millions of Canadian dollars, except percentage amounts)		October 31 2022				July 31 2022				October 31 2021
Net interest income (1)		$	1,140			$	1,136			$	1,111
Non-interest income (1)			1,173				513				1,187
Total revenue (1)			2,313				1,649				2,298
PCL on performing assets			19				19				(11	)
PCL on impaired assets			13				(13	)			(11	)
PCL			32				6				(22	)
Non-interest expense			1,616				1,123				1,155
Income before income taxes			665				520				1,165
Net income		$	617			$	479			$	920
Revenue by business
Corporate and Investment Banking		$	1,168			$	625			$	1,225
Global Markets			1,255				1,142				1,122
Other			(110	)			(118	)			(49	)
Selected balances and other information
ROE			9.2	%			7.1	%			16.1	%
Average total assets		$	884,500			$	812,700			$	717,000
Average trading securities			126,800				128,400				125,300
Average loans and acceptances, net			130,800				126,000				106,100
Average deposits			81,300				75,700				73,700
PCL on impaired loans as a % of average net loans and acceptances			0.03	%			(0.04	)%			(0.04	)%

 

		For the three months ended
Estimated impact of U.S. dollar, British pound and Euro translation on key income statement items (Millions of Canadian dollars, except percentage amounts)		Q4 2022 vs Q4 2021				Q4 2022 vs Q3 2022
Increase (decrease):
Total revenue		$	73			$	78
Non-interest expense			30				40
Net income			40				33
Percentage change in average US$ equivalent of C$1.00			(7	)%			(6	)%
Percentage change in average British pound equivalent of C$1.00			11	%			2	%
Percentage change in average Euro equivalent of C$1.00			9	%			0	%

 

(1)	The taxable equivalent basis (teb) adjustment for the three months ended October 31, 2022 was $142 million (July 31, 2022 – $143 million, October 31, 2021 - $125 million).

Q4 2022 vs. Q4 2021

Net income decreased $303 million or 33% from a year ago, primarily due to the timing of true-ups related to our variable compensation plans. Lower revenue in Corporate & Investment Banking, and higher PCL also contributed to the decrease. These factors were partially offset by a lower effective tax rate reflecting changes in the earnings mix as well as higher revenue in Global Markets.

 

- 9 -

Total revenue increased $15 million or 1%, mainly due to higher fixed income trading revenue across most regions partially offset by lower debt origination across all regions.

PCL was $32 million compared to $(22) million last year, largely attributable to provisions on performing assets in the current year, reflecting unfavorable changes in our macroeconomic outlook as compared to releases in the prior year reflective of the recovery from the COVID-19 pandemic. Provisions taken on impaired loans in the current quarter, largely in the other services sector, as compared to recoveries in the prior year, mainly in the oil and gas sector, also contributed to the increase, resulting in an increase of 7 bps in the PCL on impaired loans ratio.

Non-interest expense increased $461 million or 40%, primarily due to the timing of true-ups related to our variable compensation plans. Higher technology-related costs and the impact of foreign exchange translation also contributed to the increase.

Q4 2022 vs. Q3 2022

Net income increased $138 million or 29% from last quarter, mainly due to higher fixed income trading revenue as the prior quarter included the impact from loan underwriting markdowns, primarily in the U.S., largely driven by challenging market conditions. This factor was partially offset by higher compensation on increased results and the timing of true-ups related to our variable compensation plans.

 

Corporate Support

 

		As at or for the three months ended
(Millions of Canadian dollars)		October 31 2022				July 31 2022				October 31 2021
Net interest income (loss) (1)		$	93			$	(49	)		$	(49	)
Non-interest income (loss) (1), (2)			(381	)			(120	)			29
Total revenue (1), (2)			(288	)			(169	)			(20	)
PCL			-				-				-
Non-interest expense (2)			(69	)			2				59
Income (loss) before income taxes (1)			(219	)			(171	)			(79	)
Income taxes (recoveries) (1)			(145	)			(119	)			(84	)
Net income (loss)		$	(74	)		$	(52	)		$	5

 

(1)	Teb adjusted.

(2)

Revenue for the three months ended October 31, 2022, included losses of $98 million (losses of $22 million in the prior quarter and gains of $41 million in the same quarter last year) on economic hedges of our U.S. Wealth Management (including City National) share-based compensation plans, and non-interest expense included $(81) million ($(15) million in the prior quarter and $42 million in the same quarter last year) of share-based compensation expense driven by changes in the fair value of liabilities relating to our U.S. Wealth Management (including City National) share-based compensation plans.

Due to the nature of activities and consolidation adjustments reported in this segment, we believe that a comparative period analysis is not relevant.

Total revenue and Income taxes (recoveries) in each period in Corporate Support include the deduction of the teb adjustments related to the gross-up of income from Canadian taxable corporate dividends and the U.S. tax credit investment business recorded in Capital Markets. The amount deducted from revenue was offset by an equivalent increase in Income taxes (recoveries).

The teb amount for the three months ended October 31, 2022 was $142 million, compared to $143 million in the prior quarter and $125 million in the same quarter last year. For further discussion, refer to the How we measure and report our business segments section of our 2022 Annual Report.

The following identifies the material items, other than the teb impacts noted previously, affecting the reported results in each period.

Q4 2022

Net loss was $74 million, primarily due to residual unallocated items and unfavourable tax adjustments.

Q3 2022

Net loss was $52 million, primarily due to residual unallocated items and unfavourable tax adjustments.

Q4 2021

Net income was $5 million.

 

- 10 -

Key performance and non-GAAP measures

We measure and evaluate the performance of our consolidated operations and each business segment using a number of financial metrics, such as net income, ROE and non-GAAP measures, including pre-provision, pre-tax earnings. Certain financial metrics, including ROE and pre-provision, pre-tax earnings do not have any standardized meanings under GAAP and may not be comparable to similar measures disclosed by other financial institutions. We use ROE, at both the consolidated and business segment levels, as a measure of return on total capital invested in our business. We use pre-provision, pre-tax earnings to assess our ability to generate sustained earnings growth outside of credit losses, which are impacted by the cyclical nature of a credit cycle. We believe that certain non-GAAP measures are more reflective of our ongoing operating results and provide readers with a better understanding of management’s perspective on our performance.

 

Calculation of ROE

 

		For the three months ended																																For the year ended
		October 31, 2022																																October 31, 2022
(Millions of Canadian dollars, except percentage amounts)		Personal & Commercial Banking				Wealth Management				Insurance				Investor & Treasury Services				Capital Markets				Corporate Support				Total								Total
Net income available to common shareholders		$	2,114			$	809			$	266			$	108			$	599			$	(87	)		$	3,809							$	15,547
Total average common equity (1), (2)		$	27,550			$	20,550			$	2,250			$	3,200			$	25,950			$	17,650			$	97,150							$	94,700
ROE (3)			30.5	%			15.6	%			46.7	%			13.5	%			9.2	%			n.m.				15.6	%							16.4	%

 

(1)	Total average common equity represents rounded figures.

(2)	The amounts for the segments are referred to as attributed capital.

(3)	ROE is based on actual balances of average common equity before rounding.

n.m.	not meaningful

Additional information about key performance and non-GAAP measures can be found under the Key performance and non-GAAP measures section of our 2022 Annual Report.

 

- 11 -

Consolidated Balance Sheets

 

		As at
(Millions of Canadian dollars)		October 31 2022 (1)				July 31 2022 (2)				October 31 2021 (1)
Assets
Cash and due from banks		$	72,397			$	89,110			$	113,846
Interest-bearing deposits with banks			108,011				98,145				79,638
Securities
Trading			148,205				141,986				139,240
Investment, net of applicable allowance			170,018				156,809				145,484
			318,223				298,795				284,724
Assets purchased under reverse repurchase agreements and securities borrowed			317,845				318,565				307,903
Loans
Retail			549,751				538,389				503,598
Wholesale			273,967				261,592				218,066
			823,718				799,981				721,664
Allowance for loan losses			(3,753	)			(3,667	)			(4,089	)
			819,965				796,314				717,575
Segregated fund net assets			2,638				2,690				2,666
Other
Customers’ liability under acceptances			17,827				17,360				19,798
Derivatives			154,439				122,058				95,541
Premises and equipment			7,214				7,142				7,424
Goodwill			12,277				10,933				10,854
Other intangibles			6,083				4,383				4,471
Other assets			80,300				76,597				61,883
			278,140				238,473				199,971
Total assets		$	1,917,219			$	1,842,092			$	1,706,323
Liabilities and equity
Deposits
Personal		$	404,932			$	392,267			$	362,488
Business and government			759,870				739,467				696,353
Bank			44,012				46,870				41,990
			1,208,814				1,178,604				1,100,831
Segregated fund net liabilities			2,638				2,690				2,666
Other
Acceptances			17,872				17,390				19,873
Obligations related to securities sold short			35,511				38,504				37,841
Obligations related to assets sold under repurchase agreements and securities loaned			273,947				281,149				262,201
Derivatives			153,491				119,868				91,439
Insurance claims and policy benefit liabilities			11,511				12,033				12,816
Other liabilities			95,235				77,745				70,301
			587,567				546,689				494,471
Subordinated debentures			10,025				10,111				9,593
Total liabilities			1,809,044				1,738,094				1,607,561
Equity attributable to shareholders
Preferred shares and other equity instruments			7,318				7,328				6,684
Common shares			16,984				17,092				17,655
Retained earnings			78,037				76,466				71,795
Other components of equity			5,725				3,012				2,533
			108,064				103,898				98,667
Non-controlling interests			111				100				95
Total equity			108,175				103,998				98,762
Total liabilities and equity		$	1,917,219			$	1,842,092			$	1,706,323

 

(1)	Derived from audited financial statements.

(2)	Derived from unaudited financial statements.

 

- 12 -

Consolidated Statements of Income

 

		For the three months ended																For the year ended
(Millions of Canadian dollars, except per share amounts)		October 31  2022 (1)				July 31 2022 (1)				October 31 2021 (1)								October 31  2022 (2)				October 31 2021 (2)
Interest and dividend income
Loans		$	8,540			$	6,761			$	5,412							$	26,565			$	21,654
Securities			2,465				1,822				1,200								7,062				4,877
Assets purchased under reverse repurchase agreements and securities borrowed			2,941				1,601				307								5,447				1,309
Deposits and other			952				553				95								1,697				305
			14,898				10,737				7,014								40,771				28,145
Interest expense
Deposits and other			5,197				2,786				1,270								10,751				5,448
Other liabilities			3,308				1,984				641								7,015				2,516
Subordinated debentures			111				77				42								288				179
			8,616				4,847				1,953								18,054				8,143
Net interest income			6,282				5,890				5,061								22,717				20,002
Non-interest income
Insurance premiums, investment and fee income			644				1,233				1,501								3,510				5,600
Trading revenue			451				(128	)			103								926				1,183
Investment management and custodial fees			1,900				1,857				1,888								7,610				7,132
Mutual fund revenue			1,010				1,028				1,142								4,289				4,251
Securities brokerage commissions			349				344				350								1,481				1,538
Service charges			512				499				475								1,976				1,858
Underwriting and other advisory fees			481				369				655								2,058				2,692
Foreign exchange revenue, other than trading			266				250				239								1,038				1,066
Card service revenue			310				314				247								1,203				1,078
Credit fees			337				301				418								1,512				1,530
Net gains (losses) on investment securities			(23	)			28				20								43				145
Share of profit in joint ventures and associates			24				33				34								110				130
Other			24				114				243								512				1,488
			6,285				6,242				7,315								26,268				29,691
Total revenue			12,567				12,132				12,376								48,985				49,693
Provision for credit losses			381				340				(227	)							484				(753	)
Insurance policyholder benefits, claims and acquisition expense			116				850				1,032								1,783				3,891
Non-interest expense
Human resources			4,383				3,858				3,988								16,528				16,539
Equipment			571				514				514								2,099				1,986
Occupancy			401				381				393								1,554				1,584
Communications			319				277				279								1,082				931
Professional fees			472				373				417								1,511				1,351
Amortization of other intangibles			354				342				330								1,369				1,287
Other			709				641				662								2,466				2,246
			7,209				6,386				6,583								26,609				25,924
Income before income taxes			4,861				4,556				4,988								20,109				20,631
Income taxes			979				979				1,096								4,302				4,581
Net income		$	3,882			$	3,577			$	3,892							$	15,807			$	16,050
Net income attributable to:
Shareholders		$	3,876			$	3,575			$	3,887							$	15,794			$	16,038
Non-controlling interests			6				2				5								13				12
		$	3,882			$	3,577			$	3,892							$	15,807			$	16,050
Basic earnings per share (in dollars)		$	2.75			$	2.52			$	2.68							$	11.08			$	11.08
Diluted earnings per share (in dollars)			2.74				2.51				2.68								11.06				11.06
Dividends per common share (in dollars)			1.28				1.28				1.08								4.96				4.32

 

(1)	Derived from unaudited financial statements.

(2)	Derived from audited financial statements.

 

- 13 -