RBC’s wealth management profits rise 27% in 2024

In the fourth quarter of fiscal 2024, ended October 31, the Royal Bank of Canada (RBC) reported an increase in its net income attributable to ordinary shareholders for its Wealth Management segment and an improvement in profits for its insurance segment compared to the fourth quarter of the previous fiscal year.

On the wealth management side, net income available to common shareholders amounted to $950 million in the fourth quarter of 2024, compared to the $256 million announced for the same quarter in 2023. This represents an increase of 271% over one year. 

For the entire 2024 fiscal year, net income attributable to common shareholders for its Wealth Management segment totaled $3.4 billion, compared to the $2.6 billion announced during the 2024 fiscal year. This is an increase of $718M or 27.2% over 12 months.

This segment's results for the 2024 and 2024 quarters have been revised due to a change in RBC's portfolio segmentation. From Q4 2024, the Personal Banking and Commercial Banking segments became separate. With this change, direct investments are now presented in the Wealth Management sector. 

As was the case in the previous two quarters, RBC states the fourth quarter result was “primarily due to higher fee-based client assets reflecting market appreciation and net sales, which also drove higher variable compensation. Higher transactional revenue and lower PCL (provision for credit losses) also contributed to the increase.” 

Revenues from the wealth management segment totaled $5.2 billion in the fourth quarter of fiscal 2024. This represents an increase of $854 million compared to revenues of $4.3 billion announced for the same quarter of the previous year.

Insurance  

For its insurance sector, RBC reported net income attributable to common shareholders of $160 million in the fourth quarter of 2024, compared to $95 million announced for the same quarter in 2023. 

“The results in the prior period are not fully comparable as we were not managing our asset and liability portfolios under IFRS 17,” specifies RBC.

The net income attributable to common shareholders for the entire year of the insurance sector was $724 million in 2024, compared to the $544 million reported in 2023. This represents an increase of $180 million or 33%.

The financial institution states this result is “mainly due to higher insurance investment result, largely attributable to lower capital funding costs and favourable investment-related experience as we repositioned our portfolio for the transition to IFRS 17. Higher insurance service result, primarily due to business growth across the majority of our products, also contributed to the increase. The results in the prior period are not fully comparable as we were not managing our asset and liability portfolios under IFRS 17,” stated RBC in its press release published on December 4, 2024. 

Insurance income amounted to $278 million in the fourth quarter of 2024, while it was $248 million for the fourth quarter of 2023.

For the entire fiscal year ended October 31, 2024, insurance income reached $1.2 billion in 2024, compared to revenues of $1 billion in 2023. The increase is $214 million or 21%.

Regarding the 2024 operating environment, rising interest rates and a slowdown in the economy have impacted insurance affordability, the company points out in its annual report.

It also mentions the strong growth in premiums linked to new sales of term insurance products, for which the application process has been accelerated.

Premiums and deposits  

Premiums and deposits from insurance activities stood at $1.5 billion in the fourth quarter of 2024, an increase of $205 million or 22%, compared to the same period in 2023. 

For the full year 2024, premiums and deposits from insurance activities totaled $6 billion, compared to $5.9 billion in 2023. This represents an increase of $75 million or 1.3%.

In its 2024 annual report, RBC presents its outlook for the insurance sector, which is expected to continue to experience demographic changes and technological advances. Due to the aging of the population, the bank expects an increase in demand for life insurance, health insurance and savings products adapted to the needs of various clienteles.

The Group  

For all of its operations, RBC reports net income attributable to common shareholders of $4.2 billion in the fourth quarter of fiscal 2024. For the full year 2024, profit totaled $16.2 billion.

In 2023, net income available to common shareholders reached $3.9 billion in the fourth quarter and $14.6 billion for the full year. 

The integration of HSBC Canada increased pre-provision, pre-tax earnings by $995 million. The transaction took effect on March 28, 2024.

The provision for credit losses stood at $848 million in the fourth quarter of 2024, an increase of $115M or 16% compared to the same quarter of fiscal 2023.

For the entire year, the provision for credit losses totaled $3.2 billion in 2024, compared to $2.5 billion in 2023. This is an increase of $764 million or by 31%. Provisions for credit losses linked to impaired loans in the banking services sectors, both personal and commercial, are responsible for this increase, indicates the annual report.

The provision for credit losses ratio related to impaired loans reached 28 basis points at the end of fiscal 2024. This is an increase of 7 basis points compared to a year ago.