All amounts are in Canadian dollars and are based on financial statements presented in compliance with International Accounting Standard 34 Interim Financial Reporting, unless otherwise noted. Effective November 1, 2023, we adopted IFRS 17 Insurance Contracts (IFRS 17). Comparative amounts have been restated from those previously presented. Our Q2 2024 Report to Shareholders and Supplementary Financial Information are available at http://www.rbc.com/investorrelations and on https://www.sedarplus.com/. Net income$4.0 BillionUp 7% YoY Diluted EPS1$2.74Up 5% YoY Total PCL2$920 MillionPCL on loans ratio3up 4 bps4 QoQ ROE514.5%Down 40 bps YoY CET1 ratio612.8%Above regulatory requirements Adjusted net income7$4.2 BillionUp 11% YoY Adjusted diluted EPS7$2.92Up 9% YoY Total ACL8$6.1 BillionACL on loans ratio9down 2 bps QoQ Adjusted ROE715.5%Up 20 bps YoY LCR10128%Down from 132% last quarter TORONTO, May 30, 2024 /CNW/ - Royal Bank of Canada11 (TSX:RY) (NYSE:RY) today reported net income of $4.0 billion for the quarter ended April 30, 2024, up $270 million or 7% from the prior year. Diluted EPS was $2.74, up 5% over the same period. Record earnings in Capital Markets as well as higher results in Personal & Commercial Banking, Wealth Management and Insurance were partially offset by lower results in Corporate Support. Adjusted net income7 and adjusted diluted EPS7 of $4.2 billion and $2.92 were up 11% and 9%, respectively, from the prior year. On March 28, 2024, we completed the acquisition of HSBC Bank Canada (HSBC Canada). The inclusion of HSBC Canada results12 decreased net income by $51 million, reflecting $200 million ($145 million after-tax) of initial PCL on purchased performing financial assets. Total PCL increased $320 million from a year ago. The PCL on loans ratio of 41 bps increased 11 bps from the prior year. The PCL on impaired loans ratio13 was 30 bps, up 9 bps from the prior year as provisions continue to trend upwards, reflecting the impact of higher interest rates and rising unemployment. Results also reflected the impact of specified items relating to the acquisition of HSBC Canada (HSBC Canada transaction). Transaction and integration costs ($358 million before-tax and $282 million after-tax) had an unfavourable impact, while management of closing capital volatility ($155 million before-tax and $112 million after-tax) benefitted the results. Pre-provision, pre-tax earnings7 of $5.8 billion were up $801 million or 16% from last year, mainly due to higher revenue in our Capital Markets business, higher net interest income reflecting higher spreads and solid volume growth, and higher fee-based client assets reflecting market appreciation and net sales. These factors were partially offset by higher expenses driven by higher variable compensation and continued investments in our franchises. Compared to last quarter, net income was up 10%, reflecting higher results in Wealth Management, Corporate Support and Capital Markets, partially offset by lower results in Insurance and Personal & Commercial Banking. The prior quarter included an unfavourable impact from the specified item relating to the management of closing capital volatility ($286 million before-tax and $207 million after-tax) as well as the cost of the Federal Deposit Insurance Corporation (FDIC) special assessment ($159 million before-tax and $115 million after-tax). Adjusted net income7 was up 3% over the same period. Pre-provision, pre-tax earnings7 were up 13% on higher revenue and well-controlled expenses. We maintained a strong capital position, with a CET1 ratio6 of 12.8%, down 210 bps from the prior quarter, largely reflecting the impact from closing the HSBC Canada transaction. Today, we declared a quarterly dividend of $1.42 per share reflecting an increase of $0.04 or 3%. "This quarter marked a pivotal milestone in RBC's long-term growth story as we completed our acquisition of HSBC Bank Canada, welcoming thousands of colleagues and clients from across the country. This historic acquisition, along with our solid results driven by our strong balance sheet, expense control and volume growth across our premium franchises, shows that RBC has the right strategy in place to continue building the bank of the future and our position as a global competitor. We're confident in our ability to build on this momentum and keep delivering sustainable, long-term value to our clients, communities and shareholders." – Dave McKay, President and Chief Executive Officer of Royal Bank of Canada ________________________________________________ 1 Earnings per share (EPS). 2 Provision for credit losses (PCL). 3 PCL on loans ratio is calculated as PCL on loans as a percentage of average net loans and acceptances. 4 Basis points (bps).5 Return on equity (ROE) is calculated as net income available to common shareholders divided by average common equity. For further information, refer to the Key performance and non-GAAP measures section on pages 4 to 5 of this Earnings Release.6 This ratio is calculated by dividing Common Equity Tier 1 (CET1) by risk-weighted assets (RWA), in accordance with Office of the Superintendent of Financial Institutions' (OSFI) Basel III Capital Adequacy Requirements (CAR) guideline.7 These are non-GAAP measures. For further information, including a reconciliation, refer to the Key performance and non-GAAP measures section on pages 4 to 5 of this Earnings Release. 8 Allowance for credit losses (ACL).9 ACL on loans ratio is calculated as ACL on loans as a percentage of total loans and acceptances. 10 The liquidity coverage ratio (LCR) is calculated in accordance with OSFI's Liquidity Adequacy Requirements (LAR) guideline. For further details, refer to the Liquidity and funding risk section of our Q2 2024 Report to Shareholders.11 When we say "we", "us", "our", "the bank" or "RBC", we mean Royal Bank of Canada and its subsidiaries, as applicable.12 HSBC Canada results reflect revenue, PCL, non-interest expenses and income taxes associated with the acquired operations and clients, which include the acquired assets, assumed liabilities and employees with the exception of assets and liabilities relating to treasury and liquidity management activities. For further details, refer to the Key corporate events section of our Q2 2024 Report to Shareholders.13 PCL on impaired loans ratio is calculated as PCL on impaired loans as a percentage of average net loans and acceptances Q2 2024Compared to Q2 2023   Reported: •      Net income of $3,950 million •      Diluted EPS of $2.74 •      ROE of 14.5% •      CET1 ratio14 of 12.8%   ↑ 7% ↑ 5% ↓ 40 bps ↓ 90 bps Adjusted15: •      Net income of $4,198 million •      Diluted EPS of $2.92 •      ROE of 15.5%     ↑ 11% ↑ 9% ↑ 20 bps   Q2 2024Compared toQ1 2024   •      Net income of $3,950 million •      Diluted EPS of $2.74 •      ROE of 14.5% •      CET1 ratio14 of 12.8% ↑ 10% ↑ 10% ↑ 140 bps ↓ 210 bps •      Net income of $4,198 million •      Diluted EPS of $2.92 •      ROE of 15.5%   ↑ 3% ↑ 2% ↑ 60 bps   YTD 2024 Compared toYTD 2023    •      Net income of $7,532 million •      Diluted EPS of $5.25 •      ROE of 13.8%   ↑ 11% ↑ 9% ↑ 10 bps   •      Net income of $8,264 million •      Diluted EPS of $5.77 •      ROE of 15.2%   ↑ 3% ↑ 1% ↓ 110 bps   _________________________________________________________14 This ratio is calculated by dividing CET1 by RWA, in accordance with OSFI's Basel III CAR guideline.15 These are non-GAAP measures. For further information, including a reconciliation, refer to the Key performance and non-GAAP measures section on pages 4 to 5 of this Earnings Release. Personal & Commercial Banking  Net income of $2,051 million increased $136 million or 7% from a year ago. The inclusion of HSBC Canada results decreased net income by $61 million, primarily attributable to $131 million (after-tax) of initial PCL on the performing loans purchased in the HSBC Canada transaction. Excluding HSBC Canada results, net income increased $197 million or 10%, primarily driven by higher net interest income reflecting higher spreads and average volume growth of 9% in deposits and 6% in loans in Canadian Banking, partially offset by higher PCL.  Compared to last quarter, net income decreased $10 million. The inclusion of HSBC Canada results decreased net income by $61 million, as noted above. Excluding HSBC Canada results, net income increased $51 million or 2%, primarily driven by lower PCL reflecting favourable changes to our macroeconomic forecast. In net interest income, higher spreads in Canadian Banking were largely offset by the impact of two less days in the current quarter. Wealth Management Net income of $769 million increased $50 million or 7% from a year ago, primarily due to higher fee-based client assets reflecting market appreciation and net sales, which also drove higher variable compensation.  Compared to last quarter, net income increased $163 million or 27%, as the prior quarter included $115 million ($159 million before-tax) relating to the cost of the FDIC special assessment. Higher fee-based client assets, reflecting market appreciation and net sales, also contributed to the increase. Insurance Net income of $177 million increased $7 million or 4% from a year ago, largely due to higher insurance investment result from favourable investment-related experience. The results in the prior period are not fully comparable as we were not managing our asset and liability portfolios under IFRS 17. Compared to last quarter, net income decreased $43 million or 20%, primarily due to lower insurance investment result as the prior quarter benefitted from the repositioning of our portfolio for the transition to IFRS 17. This factor was partially offset by higher insurance service result from improved claims experience in disability and life retrocession products. Capital Markets Net income of $1,262 million increased $300 million or 31% from a year ago, primarily driven by higher revenue in Corporate & Investment Banking, mainly due to higher M&A activity, loan syndication activity, as well as equity and debt origination across most regions. Higher Global Markets revenue, largely due to higher debt and equity origination across all regions and higher fixed income trading revenue in North America, also contributed to the increase. These factors were partially offset by higher compensation on increased results. Compared to last quarter, net income increased $108 million or 9%, mainly due to higher equity and debt origination, as well as higher M&A activity across all regions. The impact of fair value changes in our legacy U.S. portfolios and higher loan syndication activity across most regions also contributed to the increase. These factors were partially offset by lower fixed income trading revenue across most regions and higher taxes.    Corporate Support Net loss was $309 million for the current quarter, primarily due to the after-tax impact of the HSBC Canada transaction and integration costs of $282 million, partially offset by the after-tax impact of management of closing capital volatility related to the HSBC Canada transaction of $112 million, both of which are treated as specified items. Unallocated costs also contributed to the net loss. Net loss was $459 million in the prior quarter, primarily due to the after-tax impact of the HSBC Canada transaction and integration costs of $218 million and the after-tax impact of management of closing capital volatility related to the HSBC Canada transaction of $207 million, both of which are treated as specified items. Net loss was $86 million in the prior year, primarily due to residual unallocated items, as well as the after-tax impact of the HSBC Canada transaction and integration costs of $43 million, which is treated as a specified item. Capital, Liquidity and Credit Quality Capital – As at April 30, 2024, our CET1 ratio16 was 12.8%, down 210 bps from last quarter, primarily reflecting the impact of the HSBC Canada transaction and RWA growth (excluding FX), partially offset by net internal capital generation and share issuances under the Dividend reinvestment plan (DRIP). Liquidity – For the quarter ended April 30, 2024, the average LCR17 was 128%, which translates into a surplus of approximately $83 billion, compared to 132% and a surplus of approximately $94 billion in the prior quarter. Average LCR17 decreased from the prior quarter due to the HSBC Canada transaction and a change in securities mix, relating to both on-balance sheet securities and securities financing transactions. Loan growth also contributed to the decrease. These factors were partially offset by retail deposit growth. Average LCR for the current quarter reflects outflows associated with the HSBC Canada transaction 30 days prior to close. The Net Stable Funding Ratio18 (NSFR) as at April 30, 2024 was 111%, which translates into a surplus of approximately $105 billion, compared to 113% and a surplus of approximately $112 billion in the prior quarter. NSFR decreased compared to the previous quarter primarily due to higher funding requirements on loans.  ________________________________________________________16 This ratio is calculated by dividing CET1 by RWA, in accordance with OSFI's Basel III CAR guideline.17 The LCR is calculated in accordance with OSFI's LAR guideline. For further details, refer to the Liquidity and funding risk section of our Q2 2024 Report to Shareholders.18 The NSFR is calculated in accordance with OSFI's LAR guideline. For further details, refer to the Liquidity and funding risk section of our Q2 2024 Report to Shareholders. Credit Quality Q2 2024 vs. Q2 2023Total PCL of $920 million increased $320 million or 53% from a year ago, mainly reflecting higher provisions in Personal & Commercial Banking. The PCL on loans ratio of 41 bps increased 11 bps. The PCL on impaired loans ratio of 30 bps increased 9 bps. PCL on performing loans of $244 million increased $71 million or 41%, mainly reflecting $193 million of initial PCL on the performing loans purchased in the HSBC Canada transaction. This was partially offset by favourable changes to our macroeconomic forecast in Personal & Commercial Banking, as well as lower provisions in Capital Markets and ...