RBC Financial Group reported net income of $3.9 billion for the fourth quarter of 2022, which ran from August 1 to October 31. This result is down 0.3 per cent or $10 million from Q4 2021.

For all of 2022, the financial institution’s net income was $15.8 billion, versus $16 billion in 2021. The corresponding decrease is 1.5 per cent or $243 million.

“Our earnings reflect lower results in Capital Markets and Insurance, partially offset by higher earnings in Personal & Commercial Banking, Wealth Management, and Investor & Treasury Services” RBC explains, referring to its annual performance.

Insurance  

For its insurance business, RBC reported net income of $857 million in 2022, compared with $889 million in 2021. This decline of 3.6 per cent or $32 million is “largely due to the impact of lower new longevity reinsurance contracts, partially offset by higher favourable investment-related experience.”

In the fourth quarter of 2022 alone, net income for this segment was $268 million, up 0.4 per cent or $1 million from Q4 2021.

Wealth management  

In its Wealth management segment, RBC reported net income of $3.1 billion in 2022, up from $2.6 billion in 2021. This increase of 19.7 per cent or $518 million is “mainly due to higher net interest income driven by average volume growth of 19 per cent in loans and 11 per cent in deposits largely in U.S. Wealth Management (including City National), and higher interest rates.”

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

In the fourth quarter of 2022 alone, net income for this segment was $822 million, up 47.3 per cent or $264 million from Q4 2021.

Insurance revenue

RBC’s insurance revenue was $3.5 billion in 2022, down from $5.6 billion in 2021. This decline of 37.3 per cent or $2.1 billion is “mainly due to the change in fair value of investments backing policyholder liabilities and lower group annuity sales, both of which are largely offset in PBCAE [policyholder benefits, claims and acquisition expense]” says RBC, adding that “these factors were partially offset by business growth in Canadian Insurance across the majority of our products.” 

Looking at the results in closer detail, insurance revenue increased internationally, but declined in Canada.

In Canada, insurance revenue was $653 million in 2022, compared with $2.9 billion in 2021, for a decrease of 77.6 per cent or $2.3 billion.

Internationally, insurance revenue was $2.9 billion in 2022, compared with $2.7 billion in 2021. This represents an increase of 6.5 per cent or $174 million.

PBCAE 

Insurance policyholder benefits, claims and acquisition expense was $1.8 billion in 2022, down from $3.9 billion in 2021. This decrease of 54.2 per cent or $2.1 billion was “primarily due to lower group annuity sales and the change in fair value of investments backing policyholder liabilities, both of which are largely offset in revenue.”

“Higher favourable annual actuarial assumption updates largely related to economic assumption updates in the current year also contributed to the decrease,” RBC continues.

“These factors were partially offset by the impact of lower new longevity reinsurance contracts, as well as business growth in Canadian Insurance.”

Insurance premiums and deposits 

RBC’s insurance premiums and deposits were $5.5 billion in 2022, compared with $5.7 billion in 2021. This amounts to a decrease of 3.9 per cent or $223 million.

Looking at the results in closer detail, premiums and deposits declined both internationally and domestically.

In Canada, insurance premiums and deposits totalled $3 billion in 2022, versus $3.2 billion in 2021. This decrease of 5.2 per cent or $163 million is “mainly due to group annuity and individual life products.”

Internationally, insurance premiums and deposits were $2.5 billion in 2022, compared with $2.6 billion in 2021. They thus edged downward 2.3 per cent or $60 million.