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.
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.
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.
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.
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.
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.
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.
President and Chief Executive Officer
Dave McKay is President and CEO of RBC, Canada’s biggest bank, and one of the largest in the world based on market capitalization. Dave is credited with helping transform the bank’s retail division and introduce new technology that has enabled RBC to adapt and evolve to rapidly-changing consumer demands. Appointed President and CEO in 2014, the following year he led the acquisition of City National Corporation, creating a platform for growth with institutional, corporate and high net worth clients in the U.S.
Dave started his career at RBC in 1988 as a computer programmer before moving to the organization’s retail banking arm. He then held progressively senior roles in Canada and Japan in retail and business banking, group risk management, and corporate banking, ultimately becoming Group Head, Personal & Commercial Banking in 2012. Dave was named ‘Retail Banker of the Year’ in 2012 and 2015 by Retail Banker International.
An unwavering champion for Canada’s innovation ecosystem, Dave is leading RBC’s support for and partnerships with universities, start-ups and accelerators, particularly in transformational technologies such as artificial intelligence and blockchain. He is also a passionate advocate for youth, promoting the benefits of work-integrated learning and supporting the development of RBC Future Launch, a 10-year, $500 million commitment to help young people build the skills and capabilities required to succeed in a changing world.
Dave holds a Bachelor of Mathematics and an honorary Doctor of Mathematics degree from the University of Waterloo. He also holds an MBA from the Richard Ivey School of Business at the University of Western Ontario and an honorary Doctor of Laws degree from Ryerson University. He serves on the Board of Trustees for the Hospital for Sick Children (Sick Kids) and is a member of the U.S. Financial Services Roundtable Board, the Business Council of Canada, and the Catalyst Canada Advisory Board. He is the co-chair of the Business/Higher Education Roundtable, which harnesses the strengths of Canada’s top businesses, universities and colleges to deepen collaboration and improve opportunities for young Canadians, with a particular focus on work-integrated learning.
Dave is a LinkedIn Influencer. You can follow him here.
As Chief Financial Officer, Rod Bolger is responsible for Finance, Taxation and Performance Management and Investor Relations, Corporate Treasury, and The Law Group. Together with other members of Group Executive, he is responsible for setting the overall strategic direction of RBC. In addition, Rod chairs RBC’s Asset-Liability Committee.
Prior to his current role, Mr. Bolger was Executive Vice-President Finance & Controller for RBC and was responsible for all external, board and management reporting, accounting policy, performance management, financial management systems and finance operational risk. In addition, Rod had finance responsibility for Wealth Management, Insurance and Investor & Treasury Services.
In 2011, Mr. Bolger joined RBC bringing with him significant financial services experience from Bank of America and Citigroup. At Bank of America, he served as the CFO for Global Technology & Operations, Global Corporate Bank, Global Product Solutions and Premier Banking and Investments. At Citigroup, he was Deputy CFO and Controller for the domestic retail bank, and head corporate accounting policy for mergers, acquisitions and divestitures, globally. Prior to that, he spent over a decade with PricewaterhouseCoopers in the U.S. and the U.K.
Mr. Bolger serves as Chair of Dixon Hall Neighbourhood Services, a multi-service not-for-profit agency that offers a wide range of supportive programs and services to several Toronto communities. He was a member of the Enhanced Disclosure Task Force established by the Financial Stability Board in Basel.
He is a graduate of Georgetown University in Washington, D.C., with a degree in Accounting. He also earned a M.B.A. from Columbia University in New York City. He earned his CPA (inactive) in the State of New Jersey in 1991. He is married with three children and lives in Toronto, Canada.
As Chief Strategy and Corporate Development Officer, Mike is responsible for working with RBC’s Group Executive to develop RBC’s overall strategic plan as well as providing leadership for mergers and acquisitions. Mike also heads RBC Ventures, a group focused on creating solutions that go beyond banking to build and deepen relationships with Canadians in new and innovative ways.
Mike chairs RBC’s Innovation Council that, in addition to overseeing investments in strategic partnerships, has responsibility for coordinating RBC’s Innovation Labs that focus on research and the development of advanced capabilities in the areas of data, security and client experience. Mike is also Chairman of RBC Bank U.S., a director of City National Bank and is responsible for RBC’s auto finance business.
As a member of Group Executive, Mike is one of nine executives responsible for setting the overall strategic direction of RBC.
Prior to this position, Mike served as Executive Vice President of Personal Financing Products, RBC’s largest banking segment. In addition, he had responsibility for U.S. strategy where he led both the acquisition and integration of City National Bank – RBC’s largest ever acquisition.
Mike joined RBC in 2010 from Capital One in the U.S. where he served as Executive Vice President, Consumer Banking Segment. Mike also held executive positions with Charter One Bank and Citibank during his 25 year career. Mike is a graduate of the University of Delaware.
Mike and his family are active supporters and fundraisers for WE and other local charities. Mike also sits on the board of directors for Futurpreneur Canada. Mike, his wife Nikki and their two sons live in Toronto.
Helena Gottschling is RBC’s Chief Human Resources Officer (CHRO) with global responsibility for Human Resources. Together with other members of Group Executive, Helena is responsible for setting the overall strategic direction of RBC – extending to over 80,000 employees in 37 countries.
Helena joined RBC in 1985, holding progressively senior roles in Retail Banking, Human Resources and National Office, which included positions in Vancouver, Calgary and Toronto. She re-joined Human Resources in 2006 and held a number of executive roles before being appointed CHRO in 2017.
Prior to her current role, Helena was Senior Vice President, Human Resources, responsible for executive and high potential talent management, including leadership development and succession planning. She was also accountable for RBC’s enterprise learning function and organizational effectiveness centre of expertise for change management and organizational design. In addition, Helena led the Human Resources business partner teams supporting Technology & Operations and Global Functions.
In her 32 years with RBC, Helena has distinguished herself as a trusted advisor, a change champion, and a devoted employee advocate – leadership qualities that help to unlock the potential of RBCers and strengthen our brand as a top employer of choice on a global scale.
Helena was a co-chair of RBC’s record-breaking 2016 National Employee Giving Campaign, inspiring employees to go above and beyond in their personal donations to help Canadian communities prosper. She has been a longtime supporter of the Juvenile Diabetes Research Foundation Ride for Research and is a past board member of The Mosaic Institute.
Helena holds a Bachelor of Business Administration degree from Simon Fraser University in Vancouver, British Columbia.
Helena is married with one son and lives in Oakville, Ontario, Canada.
As Group Head, RBC Wealth Management & RBC Insurance, Doug Guzman leads the RBC businesses that serve the wealth management needs of affluent and high net worth clients globally, and teams that provide asset management and trust products. He also oversees RBC Insurance, which provides a wide range of travel, life, health, home, auto, wealth and reinsurance products and solutions, as well as creditor and business insurance services, to individual, business and group clients. In addition, along with other members of Group Executive, Mr. Guzman is responsible for setting the overall strategic direction of RBC. Mr. Guzman also holds the role of Deputy Chair, RBC Capital Markets, where he continues to act as the lead relationship manager with a select number of key clients.
Prior to this appointment, Mr. Guzman was Managing Director and Head of Global Investment Banking, RBC Capital Markets, responsible for the firm’s Investment Banking teams globally, as well as U.S. Municipal Finance. He had senior client coverage responsibility for a number of RBC Capital Markets’ most important clients and was a member of the firm’s Operating Committee and Loan Commitments Committee.
Before joining RBC in 2005, he was a Managing Director at Goldman Sachs in New York and Toronto, where he had co-head responsibility for each of the Global Metals and Mining and the Canadian Investment Banking businesses.
He is a member of the Board of Directors of St. Michael’s Hospital and the Advisory Board of Ivey Business School at Western University.
Mr. Guzman has an HBA from Ivey and an MBA with high distinction (Baker Scholar) from Harvard Business School. He is married with two children and lives in Toronto, Canada.
As Chief Risk Officer, Graeme oversees the strategic management of risk on an enterprise-wide basis. He is a member of Group Executive, which sets the overall strategic direction of RBC. He was appointed Chief Risk Officer in 2018.
Graeme joined RBC in 1997 as an analyst in Group Risk Management, focusing on foreign exchange products. In 2001, he took on the role of Vice President for GRM’s Portfolio Management team focused on loan portfolio risk analysis, economic capital and policy. Graeme moved to New York in 2004 to become Head of Market Risk for the Capital Markets trading businesses in the U.S. In 2011, Graeme move to London to take on the role as Chief Risk Officer for Europe & Asia.
Most recently, Graeme was EVP, Retail & Commercial Credit Risk, where he led a number of teams that provide the primary risk management support to RBC’s Insurance, Wealth Management and Personal and Commercial Banking (P&CB) businesses.
Graeme is a qualified Chartered Financial Analyst and has a Masters in Mathematics from the University of Waterloo.
Doug McGregor is Group Head, RBC Capital Markets and RBC Investor & Treasury Services, Chairman and CEO of RBC Capital Markets, and is a member of RBC’s Group Executive. As Chairman and CEO of RBC Capital Markets, Doug has global oversight of the firm’s Corporate & Investment Banking and Global Markets activities conducted by its approximately 7,500 employees worldwide. He also directly leads the investment bank’s real estate lending businesses. As Group Head of RBC Investor & Treasury Services, Doug is responsible for this business’ custody, treasury and financing services for institutional clients globally.
Doug began his career in corporate finance and then institutional equity sales at Pitfield Mackay Ross Ltd. in 1979. In 1983, he became a real estate investment banker with Marcil Trust, which was later acquired by RBC Capital Markets in 1990. Doug holds an Honours BA (Business) and an MBA from the University of Western Ontario. While at university, his accomplishments as an athlete earned him the Purple Blanket for achievement in wrestling at the national level and induction into the “W” Club Hall of Fame. In 2016, Doug was recognized by Saint Mary’s University in Halifax, Nova Scotia with an Honorary Doctor of Commerce degree for his accomplishments in the financial services industry, contributions to the community and support for advanced learning.
An involved community member, Doug serves on the University Health Network’s Board of Trustees in Toronto and is a former Chairman of the Board of Directors of the Investment Industry Regulatory Organization of Canada. He is an active fundraiser for The United Way and for Ingles House, a home for young women recovering from addiction, and its parent organization, LOFT Community Services.
As Group Head, Personal & Commercial Banking, Neil McLaughlin is responsible for RBC’s banking businesses in Canada and the Caribbean, including personal and commercial financial services, credit cards and payments, digital solutions, as well as RBC’s sales and branch distribution, operations and advice centres. Together with other members of Group Executive, Mr. McLaughlin is responsible for setting the overall strategic direction of RBC.
Immediately prior to this position, as Executive Vice President, Business Financial Services for RBC’s Canadian Banking division, Neil was responsible for setting the strategic direction and leading all lines of business that serve small business and commercial clients through an extensive business banking network.
Neil joined RBC in 1998 and has held a wide range of senior management and executive positions within Canadian Banking, including roles in the Credit Card and Personal Lending lines of businesses and distribution and operations. As well, Neil was Senior Vice President Marketing & Channel Strategy, responsible for leading Brand, Marketing, Advertising and Sponsorship, with direct accountability for digital channels, the physical distribution network, client knowledge and insights and the client information management team. He also served as Senior Vice President, Risk Operations within Canadian Banking Operations, responsible for credit adjudication, fraud, collections, operational risk and the Commercial Advisory Group.
Neil holds a Bachelors of Commerce degree and an MBA. He lives in Toronto with his wife and their two children and currently serves on the board of the Children’s Wish Foundation, Ontario Chapter.
As Group Head, Technology & Operations, RBC, Bruce Ross is responsible for the strategy and overall management of global technology and operations for RBC, which includes applications development, infrastructure and enterprise operations. In addition, as a member of Group Executive, he is one of nine executives responsible for setting the overall strategic direction of RBC.
Bruce is a seasoned executive with more than 28 years of technology and business experience. Prior to joining RBC, he was the General Manager, Global Technology Services, North America at IBM. He was a member of IBM’s Performance Team setting the operational direction of the corporation. He was also a member of IBM’s Strategy Team which set the long term direction for the business including its investments in emerging markets, Cloud, and Analytics. His prior roles included General Manager, Global Technology Services, Europe for IBM, General Manager and President, IBM Canada, General Manager, Global Technology Services UK, Ireland, and South Africa. Bruce’s areas of responsibility have included providing thought leadership and services to financial institutions globally.
Bruce is active in a number of business and community organizations in Canada, serving as a Board Member for both the International Board of Advisors as well as the University of Western Ontario. He is also a member of the 2017 Toronto & York Region United Way Campaign Cabinet. In recent years, he served as the Chair of the Ontario Brain Institute Liaison Council. He also sat on the Board of Directors of the Conference Board of Canada, and was a member of the Canadian Council of Chief Executives.
Bruce is a professional engineer and a graduate of the University of Western Ontario. He is married with two children and lives in Toronto, Canada.
As RBC’s Chief Administrative Officer Jennifer Tory has responsibility for Brand, Citizenship, Communications, Procurement and Real Estate functions globally. Additionally, she provides leadership and oversight of transformational initiatives, with a particular focus on how the enterprise works together to further RBC’s success. Along with other members of Group Executive, Jennifer is responsible for setting the overall strategic direction of RBC.
Prior to her current role, Jennifer was Group Head, Personal & Commercial Banking responsible for RBC’s banking businesses in Canada and the Caribbean, including personal and financial services, credit cards and payments, digital solutions, as well as RBC’s sales and branch distribution, operations and advice centres. During her career, Jennifer has held successively senior leadership roles including Senior Vice President Sales Effectiveness, Senior Vice President Operations, and Regional President, Greater Toronto Region.
Awarded the Queen’s Jubilee Medal in 2012, Jennifer has a long history of supporting numerous community causes. She is Chair, Toronto International Film Festival Board and sits on the Sunnybrook Hospital Foundation Board; Jennifer is also a fundraiser for several other charitable organizations including WE (formerly Free the Children) and United Way.
A recipient of the 2011 Catalyst Canada Honour for championing women in business, Jennifer has been recognized by Women’s Executive Network (WXN) as one of Canada’s Most Powerful Women: Top 100 and was inducted into the WXN Hall of Fame in 2017. She has been acknowledged both internally and externally for her leadership in diversity and received a number of awards, including a Harry Jerome Award in 2013 and the Leading Executive Ally Award by Start Proud (formerly Out on Bay) in 2016.
Ms. Tory completed her ICD.D designation through the Institute of Corporate Directors at the Rotman School of Management. Jennifer has two daughters and resides in Toronto.
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.
Chair of the Board
Andrew A. Chisholm
Toos N. Daruvala
David F. Denison
Alice D. Laberge
Michael H. McCain
Bridget A. van Kralingen
Jeffery W. Yabuki