Message from
Dave McKay

Message from Dave McKay

On behalf of my fellow RBCers, I’m honoured to share our story of a record 2018 – a year in which we continued to focus on creating more value for our clients, communities and shareholders.

In 2018, we reported record earnings of $12.4 billion, up 8% from last year. We met or exceeded all of our medium-term objectives, delivered double-digit earnings per share growth of 11%, raised our dividend by 8% and returned a further $1.5 billion of capital to shareholders through buybacks. We also strengthened our CET1 ratio to 11.5%.

Our financial performance demonstrates how we are building long-term client franchises and delivering a premium return on equity, even as we invest in creating the bank of the future and pursue our focused growth strategy in Canada, the U.S. and key global markets. It also illustrates the strength of our diversified business model and our disciplined approach to controlling costs, deploying capital and managing risk through the cycle.

But above all, our record performance highlights the power of our purpose to unify every colleague under the common goal of helping clients thrive and communities prosper.

Creating more value in a time of secular change

Over the past year, I repeatedly shared my belief that we’re at a seminal moment in our industry, a time of secular change. Social media, mobile devices and cloud computing have all contributed to the erosion of traditional walls between sectors, as consumer and business needs are being served by new entrants, both large and small. This is fundamentally altering client expectations and the way they interact with service providers.

Today, as we stand on the eve of our 150th anniversary, we’re clear that what has driven our success in the past won’t guarantee that same success in the future. This is why we’re continuing to invest significantly in our digital and innovation strategies across all of our businesses, building on the strength of our market-leading assets to deliver more value to clients.

For example, our world-class artificial intelligence (AI) capability is enabling us to enhance equity trading strategies for our institutional clients using Aiden and delivering automated savings and improved insights to our Canadian Banking customers through NOMI. And through our machine learning institute, Borealis AI, we’re ensuring we remain at the cutting edge of both fundamental and applied research, which will lead to many more innovative products in the future.

These innovations are enabling us to deliver value for our clients, increase customer satisfaction and gain market share in Canada. In our home market, we have a significant scale advantage. We hold the number one or two position in all key banking products; are the largest wealth and asset manager and bank-owned insurer in the country; and lead in capital markets, asset services and transaction banking.

Additionally, our technology leadership is allowing us to attract some of the best tech talent in the market. This is leading to superior business outcomes, improved operational efficiencies and exceptional client experiences. And with trust and security more important than ever, it’s also helping us increase our focus on cybersecurity and safeguarding our clients’ data.

Reimagining our role in clients’ lives

However, leveraging new technologies and creating an exceptional digital client experience is only one part of our strategy. We believe that in order to maintain customer relevancy and connectivity in the future, we also have to reimagine the role we play in our clients’ lives.

At our June Investor Day, we unveiled a bold strategy to create new, more relevant and deeper connections with Canadians. Through RBC Ventures and our unique loyalty and rewards platform, we are engaging earlier and more frequently with Canadians, and creating services that are open to everyone – whether or not they are clients of RBC.

Thanks to our market-leading position in Canada, we hold many crucial assets that others will find very difficult to replicate: our deep relationships with our clients; our scale; our secure data and AI advantage; the strength of our partnerships; and a trusted brand.

We are hugely excited by how this can transform our Canadian banking business, and have stated a bold goal to acquire five million new relationships and grow clients up to three times our current client acquisition rate, leading to 2.5 million-plus new clients by 2023.

Building momentum in the U.S. and in key global markets

I’m particularly proud of what we achieved in the U.S. this year, which drove 23% of our revenue. Earnings were up 13%, as we benefitted from tailwinds, including interest rate increases, tax cuts and positive fundamentals. This helped us invest in dynamic urban markets including New York, Washington D.C. and Los Angeles. We hired outstanding colleagues across our platforms to accelerate our growth, and realize our aim to be the preferred partner to corporate, institutional and high net worth clients in our second home market.

In the U.S. and in global financial centres in the U.K., Europe and Asia, we are committed to providing our clients with a truly differentiated experience tailored to their unique needs. We aim to further deepen our relationships with our clients, both by offering them the full strength and depth of RBC, and by delivering insights and value they can’t find elsewhere.

Leading the way for a better future

We are also bringing the full strength of our organization to help create a lasting positive social impact in our communities around the world, including supporting the transition to a low-carbon future and understanding the changing skills needs of young people through RBC Future LaunchTM. In my conversations with youth, business leaders and community leaders, I’ve repeatedly heard how we have a collective opportunity to better harness the potential of this generation and help them prepare for and navigate a new world of work.

Our people: driving innovation through inclusion

In the past year, we have witnessed how too many people are struggling to be treated equally and with dignity in our society. Diversity and inclusion has always been a core value at RBC and we’re committed to championing inclusion as a catalyst for the change we need in society. It’s also a source of competitive advantage for us. It’s the foundation of our Leadership Model, helping us drive a bolder, more nimble culture and encouraging an entrepreneurial spirit across the whole of RBC through a talented and diverse leadership team.

RBCers are continuing to rise to the challenge, driving new and innovative ideas every day. The results speak for themselves; employee engagement is at an all-time high and more than 95% of our colleagues say they are proud to be a part of RBC.

Thank you

For this, I would like to take this opportunity to thank my colleagues around the world. This report highlights just some of the stories that shaped our year – by serving our clients and the communities where we live and work. I continue to be inspired daily by their conviction, passion and imagination.

I also want to offer a sincere thank you to the 16 million clients who continue to put their trust in RBC. As ever, I appreciate the advice and guidance from Katie Taylor and the board of directors. And to you, our shareholders, I would like to thank you for your support and reaffirm our commitment to delivering high-quality earnings growth in line with our purpose.

David McKay

President and Chief Executive Officer

Group Executive Officers


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David McKay+


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Rod Bolger+


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Michael Dobbins+


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Helena Gottschling+


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Douglas Guzman+


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Graeme Hepworth+


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Douglas McGregor+


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Neil McLaughlin+


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Bruce Ross+


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Jennifer Tory+

Chair message

Message from
Katie Taylor

Message from Katie Taylor

Dear fellow shareholders,

Opportunities and challenges in the financial services industry continue to abound, as businesses face disruption from changing customer expectations, new sources of competition and rapidly-emerging technologies.

Your board plays a critical role in providing oversight and stewardship of RBC’s strategic direction, helping to innovate, grow and build the bank of the future. We provide guidance to management as they invest in areas of strategic growth, while continually assessing whether those plans are effectively balanced with the bank’s risk appetite. Our record financial results in 2018 reflect that focus, and reinforce RBC’s ability to achieve our medium-term objectives.

Of course, people are the cornerstone of our continued success. As part of our focus on talent management, the board takes a comprehensive approach to succession planning for senior executive positions. In line with the bank’s value of diversity and inclusion, we also ensure that this talent pipeline includes the wide variety of experiences, perspectives and backgrounds required to successfully lead RBC into the future.

The board also collaborates closely with management to set the tone and promote an open and transparent culture that influences RBC at every level, both within the organization as well as externally in our relationships with clients, community partners and other stakeholders. In particular, we encourage employees to speak up and challenge behaviour that does not align with our values. Not only is this the right thing to do, but it is a critical way to protect and enhance the reputation of RBC and ensure we achieve the bank’s vision of being one of the world’s most trusted financial institutions.

The board believes strongly that achieving sustainable growth goes beyond generating profits, and that RBC has an important role to play as a corporate citizen that is fully involved in each of the communities where we do business. Specifically, we recognize that climate change is the most pressing issue of our age, and we oversee the bank’s enterprise-wide approach to accelerating clean economic growth and supporting the transition to a low-carbon economy.

In 2018, we were pleased to have been recognized for our governance efforts with two awards from Governance Professionals of Canada: the Best Overall Corporate Governance award and the Best Practices to Enhance Boardroom Diversity award. This is a validation of our commitment to good governance, including our focus on engaging with clients, communities and investors, which is an integral part of ensuring the bank’s continuing success. It also highlights our strong determination to increase diverse representation both within RBC and at the board level.

On behalf of the entire board, I would like to thank Dave McKay and his leadership team for their continued dedication to RBC’s clients, colleagues and communities. We would also like to thank each and every RBC employee for their unwavering commitment to RBC’s purpose of helping clients thrive and communities prosper.

Kathleen Taylor

Chair of the Board

 

RBC Board of Directors

Andrew A. Chisholm
Jacynthe Côté
Toos N. Daruvala
David F. Denison
Alice D. Laberge
Michael H. McCain
David McKay
Heather Munroe-Blum
Kathleen Taylor
Bridget A. van Kralingen
Thierry Vandal
Jeffery W. Yabuki

For more information,
please visit RBC Governance