Personal & Commercial Banking

Transcription

1 Personal & Commercial Banking Jim Rager Vice-Chairman Presentation to Analysts & Institutional Investors October 22, 2001 Toronto Strategic vision To grow profitable relationships with each one of our business and personal clients by: Creating a tailored client experience with our customers across North America Reducing costs Effectively managing risk and capital 1

2 North American profile of P&CB P&CB contributes over 50% of RBC Financial Group earnings 11 million personal and business customers Assets: $148B Deposits: $115B Contributed 53% of RBC Financial Group net income in 9 months 2001 Manages physical and electronic delivery network for RBC Financial Group Products: mortgages, loans, cards, deposits 35,300 employees (Full Time Equivalent) 2 Distribution channels across North America Physical Network Canada 1,132 urban /suburban/ rural branches 60 Business Banking Centres U.S. 241 branches in 143 communities in the Southeast U.S.A. Internet Banking Canada 1.8 million online clients U.S. 75,000 online clients Mobile Sales Canada 508 Investment Retirement Planners & Financial Planners 506 Commissioned Mortgage Reps Telephone Banking Canada 2.2 million customers; 7 million calls/month U.S. 800M calls/month 3 ATMs/ POS Canada 2,502 on-site ATMs 1,735 off-site ATMs 75% of clients with debits cards U.S. 213 on-site ATMs 48 off-site ATMs 35% of clients with debit cards Other Points of Sale e.g car dealerships

3 Performance tracking P&CB performance continued to strengthen through the first nine months of 2001 $MM (Excl. Special Items) Gross Revenue 9 Months ,166 Growth over 9 Months % Growth over 9 Months 2000 excl. Centura 9% NIE 2,994 9% 5% Net Income % 20% Cash Net Income % 21% Cash ROE 21.2% 170bp 394bp Operating Efficiency 57.7% 150bp 201bp 4 US GAAP Revenue, NIE & efficiency 64.5% Revenue (in $billions) NIE (in $billions) Efficiency (%) $6.3 $ % $ % $3.7 $3.7 $ Months Note: Excludes special items and includes Centura acquisition. Excluding Centura: Revenue = $5B; NIE $2.9B; Efficiency 57.2%. 5

4 Competitive P&CB performance: Canada Strongest performing retail banking franchise Cash net income growth for P&CB segment 1 (Q3/01 vs. Q3/00) 24.7% 17.5% 19.6% 0.0% 1.8% CM BNS BMO TD RY 1 cash earnings (accrual for CM and BNS as cash earnings not available), excluding one-time items for RY and BMO (other banks did not disclose segmented one-time items) 6 CND GAAP Competitive P&CB performance: Canada P&CB has a #1 or #2 market position in Canada June 2001 market position Personal deposits #2 Personal loans/credit cards #2 Business deposits #1 Residential mortgages #2 Business financing #1 Note: Positioning against top five Canadian FIs 7

5 Strategic priorities Ensure continued strong revenue growth in Canada Continue and reinforce P&CB s cost management focus Strengthen P&CB risk mitigation Accelerate U.S. revenue and earnings growth 8 Ensure continued strong Canadian revenue growth Ensure continued strong revenue growth in Canada, leveraging our ability to tailor the client experience through selling, crossselling and up-selling Achieve at least 5% domestic revenue growth per year Strategic Priority #1 9

6 Strategic Priority #1 Strong revenue growth Customer Relationship Management (CRM) What we know about our customers: Segmentation and modeling Insights on lifetime value, vulnerability, risk and propensity to buy, and channel preference What we do with this information: Organize to deliver Develop personalized strategy for every client How we implement: Optimize sales effectiveness and customer contact 10 Strategic Priority #1 Strong revenue growth Segment Economic Profit Economic Profit ($MM) Significant EP % improvement across all segments in Canada 32% 61% 138% 127% * Key Markets Prime Markets Growth Markets Commercial Markets Note: Segment results are based on internal financial reporting systems * 2001 information based on Q3/01 full year forecast. Growth is from 1999 to

7 Strategic Priority #1 Strong revenue growth Customer Information & Decisioning Customer segmentation/service differentiation H L Youth Nexus Small Small Wealth Wealth B&B* Agriculture Business Commercial Bus. Ag Accum. Preservers Markets Key Markets Prime Markets Growth Markets Centralized Customer Information & Decisioning - Canada Relationship Mgmt. through Expert Account Manager - Canada 12 H L Dedicated Professional Employee * Borrowers & Builders Strategic Priority #1 Strong revenue growth Launched One Financial Planning Sales Force Integrated P&CB and RBC Investments financial planning capabilities to competitively position RBC Financial Group as an industry leader in financial planning Develop financial planning and advice capability focused on: Retention of existing business Growth through cross-selling and consolidation opportunities of P&CB and RBC Investments with current client base Growth stemming from intergenerational transfers of wealth Development of a streamlined, efficient and best in class financial planning sales force 13

8 Strategic Priority #2 Continue & reinforce P&CB s cost management focus Flat Non-Interest Expense fund volume increases and new initiatives through cost reduction Eliminate duplicate and other process inefficiencies Strengthen e and other low-cost delivery capabilities Optimize physical network Pursue outsourcing/co-sourcing and divestiture opportunities 14 Strategic Priority #2 Cost management focus OnLine banking & trading Over 50% growth in online customers in Canada in a year # of Clients Enrolled by Service Millions OnLine Banking OnLine Trading Q1 Q2 Q3 Q4 Q1 Q2 Q3 10/

9 Strategic Priority #2 Cost management focus OnLine transactions Rapid increase in online transactions in Canada 2 Bill Payments Transfers Volume of OnLine Transactions (MM) Q1 Q2 Q3 Q4 Q1 Q2 Q Strategic Priority #2 Cost management focus eofferings Offering our customers a full range of self-service, easy and error-free etransactions and eaccount Information New OnLine Banking Functionality ecommerce SALES TRANSACTIONS CUSTOMER RSP Mutual Fund Purchase RSP Savings Purchase GIC Purchase & Renewal Foreign Exchange Self-Enrollment Cheque Orders Personal & Business LOYALTY Loan Payment Waive & Delay Mortgage Payment Skip & Double-Up Personal Information Changes 17

10 Strategic Priority #2 Cost management focus Optimizing Canada s physical branch network 1,552 1,291 1,231 1, Q3/01 Note: Excludes Business Banking Centres 18 Strategic Priority #2 Cost management focus Transaction volume by channel Over 90% of transactions in Canada are conducted through low cost channels Branch ABM Debit Card Telephone Internet Note: 2001 transaction volumes are based on annualized information 19

11 Strategic Priority #2 Cost management focus Outsourcing/co-sourcing/divestitures Outsourced Cards information processing operations to Total Systems Sold Commercial Cards portfolio to US Bancorp Outsourced ATM operations to NCR Created Moneris Solutions through joint venture with Bank of Montreal focused on merchant card acquiring business Q Q Q Q Strategic Priority #2 P&CB s billion $ cost reduction challenge: Efficiency has improved over 1,000 bps since Q1/99 Gross Cost Savings ($MM) % % % 58.0% 0 Q1/ Months % 68% 66% 64% 62% 60% 58% 56% Efficiency (%) Note: Efficiency excludes special items and includes Centura acquisition. 21

12 Strategic Priority #3 Strengthen P&CB risk mitigation Grow earnings and reduce income volatility, strengthening operational and credit risk processes Reduce operational risks Strengthen mitigation of credit risk Investment in advanced risk modeling technology Strengthen commercial portfolio 22 Strategic Priority #3 Risk mitigation Specific PCL and Gross NAL relatively stable through Q3/01 (in $ millions) 200 Specific PCL Q1/00 Q2/00 Q3/00 Q4/00 Q1/01 Q2/01 Q3/ Gross NAL Q1/00 Q2/00 Q3/00 Q4/00 Q1/01 Q2/01 Q3/01 Note: NAL excludes Centura in Q3/01. 23

13 P&CB U.S. Platform Strategic Priority #4 Accelerate U.S. revenue & earnings growth RBC Centura RBC Prism Mortgage RBC Builder Finance 24 Caution regarding forwardlooking statements Royal Bank of Canada, from time to time, makes written and oral forward-looking statements, included in this presentation, the Annual Report, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission, in reports to shareholders and in other communications, which are made pursuant to the safe harbor provisions of the United States Private Securities Litigation Reform Act of These forward-looking statements include, among others, statements with respect to the bank s objectives for 2001, and the medium to long term, and strategies to achieve those objectives, as well as statements with respect to the bank s beliefs, plans, expectations, anticipations, estimates and intentions. The words may, could, should, would, suspect, outlook, believe, anticipate, estimate, expect, intend, plan, and words and expressions of similar import are intended to identify forward-looking statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other forward-looking statements will not be achieved. The bank cautions readers not to place undue reliance on these statements as a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the strength of the Canadian economy in general and the strength of the local economies within Canada in which the bank conducts operations; the strength of the United States economy and the economies of other nations in which the bank conducts significant operations; the effects of changes in monetary and fiscal policy, including changes in interest rate policies of the Bank of Canada and the Board of Governors of the Federal Reserve System; changes in trade policy; the effects of competition in the markets in which the bank operates; inflation; capital market and currency market fluctuations; the timely development and introduction of new products and services by the bank in receptive markets; the impact of changes in the laws and regulations regulating financial services (including banking, insurance and securities); changes in tax laws; technological changes; the ability of the bank to complete strategic acquisitions and to integrate acquisitions; unexpected judicial or regulatory proceedings; unexpected changes in consumer spending and saving habits; and the bank s anticipation of and success in managing the risks implicated by the foregoing. The bank cautions that the foregoing list of important factors is not exhaustive. When relying on forward-looking statements to make decisions with respect to the bank, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The bank does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the bank. 25