Royal Bank of Canada Q1 2022 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : I have two questions. Maybe I'll start with where I think Doug left off. Nadine or Dave, you've mentioned capital markets several times, I think, as a good source of, I guess, capital deployment. Is that -- would that be more so in the traditional banking businesses, credit underwriting and the like? Or could there also be some capital chewed up in market risk?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : And Derek, just to clarify with no real change even at the margin and risk appetite?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : And then my second question is for Neil. I think you talked -- you've provided some statistics. I think Dave did actually around market share gains, both in I think checking deposit stuff and mortgages and the revenue pickup. Is there any way, Neil, you could attribute how much of that is because of the kind of consistent emphasis on the RBC Venture's initiatives?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : At what point does inflation become a problem? I know we've talked about it as a headwind. But is there a very simple way of thinking through that over the course of 5, 6, 7 months over a year, whatever it is, Canadian inflation of 5% to 6% and U.S. inflation in the 7% range, does that becomes something that compels you to look at your credit models and start adding to provisions? And then from your business outlook standpoint, consumption, they're paying more for gas, people are paying more for gas and other stuff as opposed to TVs and cars like, when does that affect your revenue growth outlook?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : So there's a point at which you might have to (inaudible) signaling out Royal and in effect every bank, but is there a point at which you would have to maybe make an adjustment?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Well, yes, yes.

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. Great. I just wanted to actually go to Doug Guzman, which, Doug you've got the expanded responsibilities now that include, I think (inaudible). As you think about the opportunities there, should we be thinking you will be focused more on the top line or efficiency improvements? And maybe you can talk a little bit across the geographies as well? Douglas Antony Guzman - Royal Bank of Canada - Group Head of Wealth Management, Insurance, Investor & Treasury Services Sure. Thanks. Yes. First of all, I don't think you should expect a radically new strategies across these businesses at all. The Wealth Businesses, so U.S. Wealth and Brokerage business and our Canadian Wealth Management business, also a brokerage model, have had the parts of their operations that made sense to be centralized have been throughout. So our operations function, we run on the same rails on the operations side, the products and strategy function. At the margin, maybe there's a little more room for more communication, but I don't think you're going to see much really different there. Dave's talked to City National. Top line growth is really important there, growing the infrastructure into the size of the revenue base is also important and expenses are important. So I don't think I'd pick between revenue and expense, but we're optimistic. Both those businesses in the U.S. have shown really strong growth, big investments in technology in the U.S. Wealth Management and Brokerage. Very attractive destination for FAs, financial advisers, in the U.S., we've had good growth on that side and expense controls throughout on the Canadian businesses. You continue to see us outselling the competition. Our market share in Global Asset Management and the Retail Mutual Fund business remains 50% above #2, and it's actually gapping out because our sales exceed our underlying market share. Similarly, in Wealth Management Canada where we've had great success attracting advisers and a very low direct expense growth. So I think kind of both. The caveat, of course, is markets. We can't control markets, but we feel like we're positioned for any eventuality. Historically, in market disruptions in our home market, we've benefited because we've been able to remain consistent, and we've got a higher level of advice content in our delivery. There remains considerable cash on retail customer individual balance sheet and that cash needs to move to longer-term investments for their life planning, and we're working on that as well. So we feel pretty good about all the bits I just covered.