RBC Financial Group reported net income of $4.1 billion for all operations in the first quarter of 2022, which ran from November 1, 2021 to January 31, 2022.

This result was up 6.4 per cent or $248 million from the net income of $3.8 billion reported in Q1 2021. “Our results reflected earnings growth in Personal & Commercial Banking and Wealth Management, partially offset by lower results in Capital Markets, Investor & Treasury Services and Insurance,” says RBC.

Wealth management  

For its wealth management business, RBC reported net income of $795 million in the first quarter of 2022, up from $641 million in Q1 2021. The increase of 24 per cent or $154 million is “mainly due to higher average fee-based client assets, as well as a partial release of a legal provision taken in U.S. Wealth Management (including City National) in the prior quarter. Higher net interest income driven by strong, double-digit average volume growth that more than offset lower spreads also contributed to the increase” RBC explains.

“These factors were partially offset by higher variable compensation and higher staff-related costs,” the company adds.

Insurance  

For its insurance business segment, RBC reported net income of $197 million in the first quarter of 2022, compared with $201 million in Q1 2021. The decline of 2 per cent or $4 million is “largely due to claims experience and the impact of lower new longevity reinsurance contracts,” RBC says, adding that “these factors were partially offset by business growth and higher favourable investment-related experience.” 

RBC insurance has not seen a downturn since Q4 2020. 

Insurance revenue  

RBC's insurance revenue was $1.4 billion in the first quarter of 2022, versus $1.8 billion in the first quarter of 2021. This slump of 22.7 per cent or $410 million primarily reflects “the change in fair value of investments backing policyholder liabilities, which is largely offset in PBCAE (policyholder benefits, claims and acquisition expense).”

The financial institution mentions that “This was partially offset by higher group annuity sales and business growth.”

Looking at the results in closer detail, in Canada, insurance revenue was $693 million in the first quarter of 2022, compared with $1.2 billion in Q1 2021. This corresponds to a decrease of 40.1 per cent or $464 million.

International insurance revenue was $706 million in Q1 2022, up from $652 million in Q1 2021. It thus grew by 8.3 per cent or $54 million.

PBCAE 

Insurance policyholder benefits, claims and acquisition expense fell 29.1 per cent or $409 million, from $1.4 billion in Q1 2021 to $997 million in Q1 2022.

This decline primarily reflects “the change in fair value of investments backing policyholder liabilities, which is largely offset in revenue,” RBC says, adding that “Higher favourable investment-related experience also contributed to the decrease.”

“These factors were partially offset by higher group annuity sales, business growth, claims experience mainly in life retrocession, and the impact of lower new longevity reinsurance contracts,” the financial institution explains.

Premiums and deposits  

RBC’s insurance premiums and deposits were $1.8 billion in the first quarter of 2022, versus $1.4 billion in Q1 2021. This represents an increase of 25.6 per cent or $370 million.

Looking at the results in closer detail, premiums and deposits in Canada totalled $1.2 billion in the first quarter of 2022, compared with $816 million in Q1 2021. This amounts to an increase of 42.8 per cent or $349 million.

International premiums and deposits were $649 million in Q1 2022, up from $628 million in Q1 2021, for an increase of 3.3 per cent or $21 million.