royal bank financial group background briefing session for ... · 4/3/2000 · dividend payout...

Royal Bank Financial Group Royal Bank Financial Group Background Background

Briefing SessionBriefing SessionFor Key Financial MediaFor Key Financial Media

Toronto, April 3, 2000Toronto, April 3, 2000

John E. CleghornJohn E. Cleghorn

Chairman & Chief Executive Officer

Chairman & Chief Executive Officer

Key prioritiesKey priorities

1. Strong fundamentals1. Strong fundamentals

2. eBusiness leadership2. eBusiness leadership

3. Expansion outside Canada3. Expansion outside Canada

4. Growth of high-return 4. Growth of high-return businessesbusinesses

Leadership and growthLeadership and growth

Priority #1Priority #1

vv ProfitabilityProfitabilityvv return on equityreturn on equityvv growth in earnings per sharegrowth in earnings per share

vv Revenue growthRevenue growthvv Cost controlCost controlvv Asset qualityAsset qualityvv Capital managementCapital management

Objective:Objective: Deliver financial performance Deliver financial performance in top quartile of North American banksin top quartile of North American banks

Strong fundamentalsStrong fundamentals

Priority #1Priority #1Strong Q1/00 performanceStrong Q1/00 performance

Core profitability measuresCore profitability measuresROEROEEPS growth (fully diluted)EPS growth (fully diluted)Revenue growthRevenue growthExpense growthExpense growthEfficiency Efficiency Spec. prov. for credit losses/Spec. prov. for credit losses/

avg. loans, BAs & reposavg. loans, BAs & reposDividend payout ratioDividend payout ratio

Capital adequacy ratios Capital adequacy ratios Common equity toCommon equity to

risk-adjusted assetsrisk-adjusted assetsTier 1 capitalTier 1 capitalTotal capitalTotal capital

Cdn. GAAPCdn. GAAP 3-5 year3-5 yeargoalgoal

17-20%17-20%--------

0.35-0.40%0.35-0.40%30-40%30-40%

7.0%7.0%8.0%8.0%

11.0-12.0%11.0-12.0%

Q1/00Q1/00

18.7%18.7%22%22%10%10%7%7%

62.4%62.4%

0.31%0.31%33%33%

7.1%7.1%8.1%8.1%11.4%11.4%

Target forTarget for20002000

17-20%17-20%12-14%12-14%

mid-single digitsmid-single digits< revenue growth< revenue growthexit year at 59.5%exit year at 59.5%

0.30-0.40%0.30-0.40%--

------

PerformancePerformance

*Growth is over core numbers (i.e. excluding one-time items) a year ago *Growth is over core numbers (i.e. excluding one-time items) a year ago

Q1/99Q1/99

16.6%16.6%(4)%(4)%4%4%7%7%

64.4%64.4%

0.40%0.40%35%35%

6.8%6.8%7.9%7.9%11.3%11.3%

Priority #1Priority #1Analysts commend RY on strong Q1/00 performanceAnalysts commend RY on strong Q1/00 performance

ROE: ROE: ““Royal’s performance may be regarded asRoyal’s performance may be regarded asexcellent with respect to this key objective....excellent with respect to this key objective....””

- TD Securities, February 24, 2000- TD Securities, February 24, 2000

EPS growth: EPS growth: ““...we believe Royal Bank is displaying...we believe Royal Bank is displayinga turnaround in earnings momentum witha turnaround in earnings momentum withback-to-back strong quarterly results.back-to-back strong quarterly results.””

- Warburg Dillon Read, February 24, 2000- Warburg Dillon Read, February 24, 2000

Revenue growth: Revenue growth: ““...we conclude that Royal again...we conclude that Royal againdemonstrated it delivers among the most reliabledemonstrated it delivers among the most reliablerevenue streams of the banks.revenue streams of the banks.””

- Merrill Lynch, March 6, 2000- Merrill Lynch, March 6, 2000

““... revenue growth is beginning to surface from the... revenue growth is beginning to surface from theBank’s expansion of its operating platform throughBank’s expansion of its operating platform throughniche acquisition.niche acquisition.””

- Scotia Capital, February 23, 2000- Scotia Capital, February 23, 2000

Priority #1Priority #1Analysts commend RY on strong Q1/00 performanceAnalysts commend RY on strong Q1/00 performance

Cost control: Cost control: ““We believe RY was most effective at costWe believe RY was most effective at costcontrol this quarter. RY’s efficiency ratio saw one of thecontrol this quarter. RY’s efficiency ratio saw one of thelargest improvements among its peers...largest improvements among its peers...””

- Morgan Stanley Dean Witter, March 14, 2000- Morgan Stanley Dean Witter, March 14, 2000

Asset quality: Asset quality: ““Credit quality is one aspect of Royal Bank’sCredit quality is one aspect of Royal Bank’sstrong balance sheet, capitalization is another.strong balance sheet, capitalization is another.””

- TD Securities Inc., February 24, 2000- TD Securities Inc., February 24, 2000

Capital management: Capital management: ““These buybacks and future buybacksThese buybacks and future buybacksare expected to be reflected in earnings and return on equityare expected to be reflected in earnings and return on equityin a significant manner in the next few years.in a significant manner in the next few years.””

- Scotia Capital, February 23, 2000- Scotia Capital, February 23, 2000

Priority #1Priority #1Market rewards RY for strong Q1 resultsMarket rewards RY for strong Q1 results

85

100

115

15-F

eb

17-F

eb

21-F

eb

23-F

eb

25-F

eb

29-F

eb

2-M

ar

6-M

ar

8-M

ar

10-M

ar

14-M

ar

16-M

ar

20-M

ar

22-M

ar

24-M

ar

28-M

ar

30-M

ar

RYRY BMOBMO CMCM BNSBNS TDTD

TDTD RYRY NANABMO/BMO/BNSBNS CMCM

RYRYBMOBMOCMCM

BNSBNS

Earnings release datesEarnings release dates

TDTD

Priority #2Priority #2eBusiness leadershipeBusiness leadership

ObjectiveObjective

vv Be leading eBusinessBe leading eBusinessfinancial institution infinancial institution inCanada, with strong linkCanada, with strong linkto the USto the US

Priority #3Priority #3Expansion outside CanadaExpansion outside Canada

Q1/00 earningsQ1/00 earnings vv Highest contributionHighest contributionfrom Europe – strongfrom Europe – strongprivate banking,private banking,corporate & investmentcorporate & investmentbanking and custodybanking and custodyoperationsoperations

vv Profitable CaribbeanProfitable Caribbeanretail operationsretail operations

vv Growing US operationsGrowing US operations

vv Focused Latin AmericanFocused Latin American& Asian operations& Asian operations

65% 35%

Domestic International


Royal Investment ServicesRoyal Investment Services Personal & Commercial BankingPersonal & Commercial Banking

vv Credit Suisse Private BankingCredit Suisse Private Bankingvv Coutts GroupCoutts Groupvv Bull & Bear SecuritiesBull & Bear Securitiesvv Hartley PoyntonHartley Poyntonvv Connor ClarkConnor Clarkvv Ernst & Young - GuernseyErnst & Young - Guernseyvv Ernst & Young - JerseyErnst & Young - Jersey

vv Security First Network BankSecurity First Network Bankvv S1 TechnologiesS1 Technologiesvv AOL CanadaAOL Canadavv ErnexErnexvv E-routeE-routevv PrimeStreetPrimeStreetvv Prism FinancialPrism Financial

Corporate & Investment BankingCorporate & Investment Banking InsuranceInsurance

vv Hambros Bond BusinessHambros Bond Businessvv U.S. High Yield TeamU.S. High Yield Teamvv U.S. Energy TeamU.S. Energy Team

vv Mutual of OmahaMutual of Omahavv Prudential CanadaPrudential Canada

•• Total CanadianTotal Canadian $360 MM$360 MM•• Total InternationalTotal International $540 MM$540 MM•• Total InvestmentsTotal Investments $900 MM$900 MM

Investments in past two yearsInvestments in past two years


vv Intend to continue expanding Intend to continue expanding outside Canadaoutside Canada

vv Largely targeting the US through Largely targeting the US through a niche approach:a niche approach:vv where we have competitive advantagewhere we have competitive advantagevv where we can generate top tier value where we can generate top tier value

and growth for our shareholdersand growth for our shareholdersvv through combination of acquisitions, through combination of acquisitions,

alliances and expansion of existing operationsalliances and expansion of existing operations

vv Each business segment has a global mandateEach business segment has a global mandate

Priority #4Priority #4Growth of high-return, high P/E multiple businessesGrowth of high-return, high P/E multiple businesses

P&CBP&CB RISRIS C&IBC&IB

$231

$280

$66

$116 $119$141

Q1/99 Q1/00 Q1/99 Q1/00 Q1/99 Q1/00

21%21%

76%76%18%18%


Q1/00 earningsQ1/00 earnings

P&CBP&CB52%52%

RISRIS22%22%

C&IBC&IB27%27%

Business segments – contributions to Business segments – contributions to net incomenet income


BusinessesBusinessesGlobal Securities Services (from RIS)Global Securities Services (from RIS)

Cash Management (from P&CB)Cash Management (from P&CB)Correspondent Banking (from C&IB)Correspondent Banking (from C&IB)

Payments & Settlement Services (from Other)Payments & Settlement Services (from Other)

Global Integrated SolutionsGlobal Integrated SolutionsNewly created segmentNewly created segment


Old businessOld businesssegmentssegments

New businessNew businesssegmentssegments

vv Personal & CommercialPersonal & CommercialBankingBanking

vv Royal InvestmentRoyal InvestmentServicesServices

vv Corporate &Corporate &Investment BankingInvestment Banking

vv OtherOther

vv Personal & CommercialPersonal & CommercialBanking Banking (Jim Rager)(Jim Rager)

vv Insurance Insurance (Jim Westlake)(Jim Westlake)

vv Royal Investment ServicesRoyal Investment Services(Reay Mackay)(Reay Mackay)

vv Corporate & InvestmentCorporate & InvestmentBanking Banking (Gord Nixon)(Gord Nixon)

vv Global Integrated SolutionsGlobal Integrated Solutions(Marty Lippert)(Marty Lippert)

vv OtherOther


P&CBP&CB RISRIS C&IBC&IB

19.9% 20.0%

38.9%43.7%

21.8% 23.2%

Q1/99 Q1/00 Q1/99 Q1/00 Q1/99 Q1/00

Business segments – returns on equityBusiness segments – returns on equity


vv Royal Investment Services Royal Investment Services (wealth management)(wealth management)vv highest priorityhighest priorityvv grow to 25% of total earnings, grow to 25% of total earnings,

and higher over timeand higher over time

vv Niche segments of Personal & Niche segments of Personal & Commercial Banking and Commercial Banking and Corporate & Investment BankingCorporate & Investment Banking

vv Global Integrated SolutionsGlobal Integrated Solutions

Responsive to stakeholder needsResponsive to stakeholder needs

vv Customers, employees, shareholders Customers, employees, shareholders and the communityand the community

vv Customer satisfaction ratings improved – Customer satisfaction ratings improved – now rated highest among the Big 6 banksnow rated highest among the Big 6 banks

vv High quality employee baseHigh quality employee base

vv Named top corporation in Canada Named top corporation in Canada in in ““corporate social responsibilitycorporate social responsibility”” for fifth year in a rowfor fifth year in a row(ROB Magazine, April 2000 issue)(ROB Magazine, April 2000 issue)

W. Reay MackayW. Reay Mackay

Royal Investment ServicesRoyal Investment Services

Vice-ChairmanVice-Chairman

Royal Investment Services organizationRoyal Investment Services organization

Canadian PrivateClient Group

W. Reay Mackay

Global PrivateBanking

Investment Management,Royal Mutual Funds & Trust

Marketing &Strategy

RBC DS PrivateClient Division

Action Direct

Royal FinancialPlanning

Royal PrivateCounsel

Royal Service Corp

Finance

Technology

RiskManagement

Human Resourcesand Training

Financial resultsFinancial results

($ Millions) 1996 1997 1998 1999

Total Revenue 1,463 2,044 2,175 2,283 Net Income 200 241 289 330

18% compound annual growth rate in earnings18% compound annual growth rate in earnings

vv Number 1 or 2 in every domestic businessNumber 1 or 2 in every domestic business

vv Strong niche position globally, except in Strong niche position globally, except in the United States the United States

vv On a global basis, industry is in a growth mode On a global basis, industry is in a growth mode and a state of transition due to:and a state of transition due to:vv the baby boom entering peak investment years the baby boom entering peak investment years

and becoming more sophisticatedand becoming more sophisticated

vv the wealth generated by the the wealth generated by the long US bull market long US bull market

vv the Internet changing how people investthe Internet changing how people invest

vv convergence in the industry which has led convergence in the industry which has led to new or merged competitorsto new or merged competitors

vv changes to government social benefit planschanges to government social benefit plans

Market positionMarket position

vv Canadian market leader with Canadian market leader with a strong niche global positiona strong niche global position

vv Best peopleBest people

vv Full range of services/segments Full range of services/segments under one roofunder one roof

vv Proven success at asset gatheringProven success at asset gathering

vv Ability to leverage largest client base Ability to leverage largest client base in Canadain Canada

vv Demonstrated ability to sustain Demonstrated ability to sustain wealth management businesses wealth management businesses

Competitive strengthsCompetitive strengths


Personal assets under administrationPersonal assets under administration

0

50

100

150

200

1995 1996 1997 1998 1999

Average annual growth of 23%Average annual growth of 23%

$Bill

ions

$Bill

ions


0

25

50

75

100

1995 1996 1997 1998 1999

Assets under managementAssets under management


$Bill

ions

$Bill

ions

Royal Mutual FundsRoyal Mutual Funds

(as at Feb. 29, 2000)Assets

($ Billions)Market

shareInvestors Group $39.7 10.02%

Royal MutualFunds

33.5 8.45%

Mackenzie 32.1 8.09%Fidelity 30.5 7.70%TD Canada Trust 28.5 7.20%Trimark 24.5 6.18%C.I. 21.9 5.53%AGF 20.9 5.27%Templeton 20.1 5.06%CIBC 17.4 4.39%

(as at Feb. 29, 2000)Assets

($ Billions)Market

shareInvestors Group $39.7 10.02%

Royal MutualFunds

33.5 8.45%

Mackenzie 32.1 8.09%Fidelity 30.5 7.70%TD Canada Trust 28.5 7.20%Trimark 24.5 6.18%C.I. 21.9 5.53%AGF 20.9 5.27%Templeton 20.1 5.06%CIBC 17.4 4.39%

Action DirectAction Direct

0

2

4

6

8

10

1995 1996 1997 1998 1999

Assets under administrationAssets under administration


$Bill

ions

$Bill

ions


0

50

100

150

200

250

300

350

400

1995 1996 1997 1998 1999

Thou

sand

sTh

ousa

nds


Number of accountsNumber of accounts

0

20

40

60

80

100

1997 1998 1999 Feb 2000

% of trades done electronically% of trades done electronically


22%

40%

58%69%

Full-service brokerageFull-service brokerage

Personal assets under administrationPersonal assets under administration

0

25

50

75

100

1995 1996 1997 1998 1999


$Bill

ions

$Bill

ions

Global Private BankingGlobal Private Banking

MONTEVIDEO

ISLE OF MANLONDON

GUERNSEY

JERSEY

GENEVA

TOKYO

TAIPEI

HONG KONG

SINGAPORE

DUBAI

JOHANNESBURG

MONTREAL

BARBADOS

CAYMAN ISLANDS

NEW YORK

TORONTO

CALGARY

VANCOUVER

BERMUDA

MIAMI

BAHAMAS

OTTAWA

““Local presence - global reachLocal presence - global reach””23 offices in major financial centres

RBFG Global Private Banking ranks in the top 20 in the worldRBFG Global Private Banking ranks in the top 20 in the worldand has been named and has been named Financial TimesFinancial Times’’ best offshore bankbest offshore bank

vv ““eInvestmenteInvestment””

vv convergence of banking and investment, convergence of banking and investment, due to Internet due to Internet

vv Strong market growth potentialStrong market growth potentialvv driven by demographics driven by demographics

(aging baby boomers)(aging baby boomers)

vv shift from shift from ““saverssavers”” to to ““investorsinvestors””

vv Shift from paying for transaction to Shift from paying for transaction to paying for advicepaying for advice

vv 89% of investors with $100,000+ 89% of investors with $100,000+ still want advicestill want advice

Changing market dynamicsChanging market dynamics

VisionVisionProvide affluent clients with a unique, integrated service experienceProvide affluent clients with a unique, integrated service experience

Easy for YouEasy for You

TrustTrust SecuritySecurity ExcellentExcellentExecutionExecution

BroadBroadSelectionSelection

Comprehensive ExpertiseComprehensive Expertise

Personalized ServicePersonalized Service

Foundational AttributesFoundational Attributes

vvMaintain leadership position Maintain leadership position domesticallydomestically

vv Earnings growth averaging Earnings growth averaging at least 15% per yearat least 15% per year

vv ROE in excess of 30%ROE in excess of 30%

Focus on shareholder valueFocus on shareholder value

vv Revenue growth Revenue growth

vv Cost saving/efficiency Cost saving/efficiency improvementimprovement

vv Invest to build self-managed Invest to build self-managed businessbusiness

vv E-enable the businessE-enable the business

vv Expand internationallyExpand internationally

Key strategiesKey strategies

vv Increase emphasis on proven strengths Increase emphasis on proven strengths vv Leverage the largest affluent Leverage the largest affluent

client base in Canadaclient base in Canadavv Roll out the Personal Financial Advisor Roll out the Personal Financial Advisor

strategystrategyvv Increase emphasis on best clientsIncrease emphasis on best clientsvv Increase product range – give clients choice Increase product range – give clients choice vv Be an integrated provider with Be an integrated provider with

a choice of channelsa choice of channelsvv Deliver demonstrated valueDeliver demonstrated value


Revenue GrowthRevenue Growth

vv Integrate common support functions Integrate common support functions for efficiency for efficiency

vv Leverage technology investments Leverage technology investments across Royal Investment Servicesacross Royal Investment Services

vv Exploit economies of scale for Exploit economies of scale for cost advantagescost advantages

vv Royal Service Corp.Royal Service Corp.


Cost saving/efficiency improvementCost saving/efficiency improvement

vv Significantly increase capacitySignificantly increase capacity

vv Increased staffingIncreased staffing

vv Expand service offeringExpand service offering

vv Leverage resources from across Leverage resources from across Royal Investment ServicesRoyal Investment Services


Invest to build self-managed businessInvest to build self-managed business

vv Increase on-line access for full serviceIncrease on-line access for full service

vv Increase convenience – 7/24 accessIncrease convenience – 7/24 access

vv Leverage RBFG initiativesLeverage RBFG initiatives


e-enable the businesse-enable the business

vv Niche international acquisitionsNiche international acquisitions

vv Leverage SFNB, Bull & Bear Securities Leverage SFNB, Bull & Bear Securities and Prismand Prism

vv Expand in the United StatesExpand in the United States


Expand internationallyExpand internationally

Gord M. NixonGord M. NixonDeputy Chairman & CEORBC Dominion SecuritiesDeputy Chairman & CEORBC Dominion Securities

Corporate & Investment BankingCorporate & Investment Banking

RBCRBCDominionDominionSecuritiesSecurities

Canadian leadership,global expertise

Canadian leadership,global expertise

RBC Dominion SecuritiesRBC Dominion Securities

Leading Canadian provider of financial services Leading Canadian provider of financial services to corporations, governments and institutions, to corporations, governments and institutions, offering full service in all Canadian markets offering full service in all Canadian markets and global expertise in selected industries and global expertise in selected industries and productsand products

Global BankingGlobal Banking Global EquityGlobal Equity Global MarketsGlobal Markets

•• OriginationOrigination •• Sales & tradingSales & trading •• Fixed incomeFixed income•• Debt productsDebt products •• ResearchResearch •• Money marketsMoney markets•• Equity capital marketsEquity capital markets •• Equity derivativesEquity derivatives •• Foreign exchangeForeign exchange•• Mergers & acquisitionsMergers & acquisitions

Global networkGlobal network

2,600 employees worldwide

Vancouver

Calgary

Mexico City

Santiago

New York

Toronto

Amsterdam

MadridTokyo

Beijing

Regina

Ottawa

Montreal

London

SeoulHouston Paris

Singapore

Sydney

Dubai

Johannesburg

Lausanne

Frankfurt

Global bankingGlobal banking

vv Formerly Corporate and Investment Banking divisionFormerly Corporate and Investment Banking division – restructured in February 2000 – restructured in February 2000

vv Provides a full range of credit, Provides a full range of credit, financial advisory and intermediary servicesfinancial advisory and intermediary services

vv Offers global expertise in communications, Offers global expertise in communications, technology, energy and miningtechnology, energy and mining

vv Cultivates partnerships with clients through Cultivates partnerships with clients through a network of origination specialistsa network of origination specialists

vv Debt products include corporate loans, Debt products include corporate loans, syndicated loans, securitization, syndicated loans, securitization, project & tax-structured finance project & tax-structured finance and debt capital markets productsand debt capital markets products

vv Corporate finance products include debt Corporate finance products include debt and equity underwriting, private placements, and equity underwriting, private placements, real estate brokerage and M&A advisory servicesreal estate brokerage and M&A advisory services

Global bankingGlobal banking

vv Top-ranked underwriter of debt and equity Top-ranked underwriter of debt and equity securities in Canada for the past 11 yearssecurities in Canada for the past 11 years

vv Largest provider of syndicated loans in Canada, Largest provider of syndicated loans in Canada, among the top 25 in North America and among the top 25 in North America and among the top 10 non-US banks globally among the top 10 non-US banks globally

vv The leading mergers & acquisitions advisor The leading mergers & acquisitions advisor in Canada for the past 11 years, in Canada for the past 11 years, advising on 11 of the 25 largest transactions advising on 11 of the 25 largest transactions involving Canadian corporations in 1999involving Canadian corporations in 1999

vv Among the world's top 10 energy banksAmong the world's top 10 energy banks

Global equityGlobal equity

vv Provides sales, trading and research coverage Provides sales, trading and research coverage in Canadian equities to institutional clients in Canadian equities to institutional clients on a global basison a global basis

vv Sectoral expertise in non-domestic equities – Sectoral expertise in non-domestic equities – mining, energy, communications and technologymining, energy, communications and technology

vv Research coverage of more than 400 companies Research coverage of more than 400 companies across all major industry sectorsacross all major industry sectors

vv Global Equity Derivatives group, based in Global Equity Derivatives group, based in New York, offers creative equity-based New York, offers creative equity-based derivatives products to major corporations, derivatives products to major corporations, institutional and retail investors, and institutional and retail investors, and less traditional users such as hedge funds; less traditional users such as hedge funds; platform covers North America and Europe platform covers North America and Europe and is expanding to Asiaand is expanding to Asia

Global equityGlobal equity

vv Ranked number one in Canada Ranked number one in Canada by Reuters/Tempest, Greenwich Associates by Reuters/Tempest, Greenwich Associates and Brendan Wood International surveys and Brendan Wood International surveys of institutional investors in 1999of institutional investors in 1999

vv Credited with the largest number of Credited with the largest number of ““all-starall-star”” research analysts (those who number among research analysts (those who number among the top three analysts in a given industry sector)the top three analysts in a given industry sector)

vv Offers clients real-time, self-serve access Offers clients real-time, self-serve access to equity research through a proprietary to equity research through a proprietary website, RBC DSXpresswebsite, RBC DSXpress

vv Global Equity Derivatives team designed Global Equity Derivatives team designed the first "clone fund" for RRSP investors the first "clone fund" for RRSP investors on behalf of Mackenzie Financial Corporationon behalf of Mackenzie Financial Corporation

Global marketsGlobal markets

vv Canada's top-ranked dealer for fixed income, Canada's top-ranked dealer for fixed income, money markets and foreign exchangemoney markets and foreign exchange

vv Fixed income - underwriting of investment-grade Fixed income - underwriting of investment-grade corporate and government debt, corporate and government debt, secondary bond trading, derivatives capability secondary bond trading, derivatives capability and Eurobondsand Eurobonds

vv Money markets - transactions in the full range Money markets - transactions in the full range of short-term capital markets products, of short-term capital markets products, including treasury bills, bankers acceptances, including treasury bills, bankers acceptances, commercial paper, repos, securities lending commercial paper, repos, securities lending and fundingand funding

vv Foreign exchange - service delivered globally Foreign exchange - service delivered globally through trading hubs in Toronto, New York, through trading hubs in Toronto, New York, London, Singapore and Sydney and through London, Singapore and Sydney and through its market-leading Internet dealing its market-leading Internet dealing platform, FX Directplatform, FX Direct

Global marketsGlobal markets

vv Pre-eminent money market dealer in Canada Pre-eminent money market dealer in Canada by all measuresby all measures

vv Bond group ranked #1 in more than Bond group ranked #1 in more than 20 categories, including market share20 categories, including market share

vv #1 Canadian dollar dealer worldwide#1 Canadian dollar dealer worldwidevv #9 FX bank globally by revenue#9 FX bank globally by revenuevv Eurobonds – largest market maker in domestic Eurobonds – largest market maker in domestic

Canadian dollar bonds and #1 in Euro-Australian Canadian dollar bonds and #1 in Euro-Australian and New Zealand dollar bonds, Euro rand bonds and New Zealand dollar bonds, Euro rand bonds and Euro Greek drachma bondsand Euro Greek drachma bonds

vv FX Direct - the world's most advanced FX Direct - the world's most advanced auto-dealing systemauto-dealing system

vv Credit Derivatives – executed the first-ever Credit Derivatives – executed the first-ever credit trade over the Internetcredit trade over the Internet

Evolution of the business – Evolution of the business – 1996 to 20001996 to 2000

vv Acquisition of Richardson Greenshields Inc.Acquisition of Richardson Greenshields Inc.vv Formation of Global Markets, uniting RBC DS Formation of Global Markets, uniting RBC DS

fixed income operations with all Royal Bank fixed income operations with all Royal Bank global trading activitiesglobal trading activities

vv Global Equity Derivatives and Eurobond businesses Global Equity Derivatives and Eurobond businesses launchedlaunched

vv Private Client Division moved to Royal Investment Private Client Division moved to Royal Investment Services platformServices platform

vv Royal Bank's corporate banking and Royal Bank's corporate banking and global financial institutions businesses global financial institutions businesses integrated with RBC DS Investment Banking divisionintegrated with RBC DS Investment Banking division

vv International network streamlined to focus International network streamlined to focus on targeted industries and productson targeted industries and products

vv Corporate and Investment Banking division Corporate and Investment Banking division restructured to form Global Bankingrestructured to form Global Banking

vv In 1996, close to 100 per cent of earnings In 1996, close to 100 per cent of earnings were domesticwere domestic

vv In 1999, more than 55 per cent of earnings In 1999, more than 55 per cent of earnings came from outside of Canadacame from outside of Canada

vv Today, more than 90 per cent of earnings Today, more than 90 per cent of earnings come from businesses that were not come from businesses that were not contributing profits in 1996contributing profits in 1996

The “new” RBC DS – The “new” RBC DS – a global businessa global business

vv Since 1996, the business has generated Since 1996, the business has generated compounded annual growth in excess of 20% compounded annual growth in excess of 20% in net income after tax in net income after tax

vv Return on Equity for Q1 2000 is 23%Return on Equity for Q1 2000 is 23%vv Corporate & Investment Banking contributed Corporate & Investment Banking contributed

27% of Royal Bank Financial Group’s 27% of Royal Bank Financial Group’s total profitability in Q1 2000total profitability in Q1 2000

vv Strategic reduction of our international network Strategic reduction of our international network allowed us to save $85 million without allowed us to save $85 million without materially reducing our revenue potentialmaterially reducing our revenue potential

vv Integration has led to leadership positions Integration has led to leadership positions in transactions involving such clients as in transactions involving such clients as Quebecor Printing, Celestica, GT Group Telecom, Quebecor Printing, Celestica, GT Group Telecom, Nortel Networks, Apache Corporation, Nortel Networks, Apache Corporation, Kerr McGee and ImascoKerr McGee and Imasco

The strength of The strength of an integrated businessan integrated business

vv Dominance domestically and in Dominance domestically and in domestic products globallydomestic products globally

vv Full service in selected US Full service in selected US vertical marketsvertical markets

vv Global niche expertiseGlobal niche expertise

RBC DS strategy – RBC DS strategy – 2000 and beyond2000 and beyond

vv Commitment of additional resources Commitment of additional resources to mid-market and smaller to mid-market and smaller companies, particularly technology-basedcompanies, particularly technology-based

vv Improvement in Internet delivery strategy Improvement in Internet delivery strategy for all productsfor all products

vv Reorganization of RBFG's private Reorganization of RBFG's private equity functions and expansion of equity functions and expansion of mezzanine/bridge, leveraged mezzanine/bridge, leveraged lending capabilitylending capability

vv Optimum use of balance sheet strengthOptimum use of balance sheet strength

Maintaining domestic dominanceMaintaining domestic dominance

vv Activity in the US refocused on Activity in the US refocused on the energy, communications and technology the energy, communications and technology sectors; team of senior energy specialists sectors; team of senior energy specialists and an Oilfield Services research team and an Oilfield Services research team hired to join our expanding Houston officehired to join our expanding Houston office

vv Global Equity Derivatives, based in Global Equity Derivatives, based in New York, continues to expand and New York, continues to expand and is currently the single most profitable is currently the single most profitable product line in the firmproduct line in the firm

vv High Yield bond group formed in New YorkHigh Yield bond group formed in New York

vv Global Banking origination group Global Banking origination group run from New Yorkrun from New York

Building the US franchiseBuilding the US franchise

vv Solid Canadian dollar franchiseSolid Canadian dollar franchise

vv ““World Top 10World Top 10”” ranking in foreign exchange ranking in foreign exchange

vv Strong Eurobond capabilityStrong Eurobond capability

vv Global Banking business aligned Global Banking business aligned with key industries worldwidewith key industries worldwide

vv Among the world's top 10 energy banksAmong the world's top 10 energy banks

vv Global mining initiativeGlobal mining initiative

Expanding internationallyExpanding internationally

vv Long history of international businessLong history of international business

vv Solid earnings baseSolid earnings base

vv Strongest home market leadership in our historyStrongest home market leadership in our history

vv Willingness to export some of our best talent Willingness to export some of our best talent to build international businessto build international business

vv AA-rated balance sheet and the backing AA-rated balance sheet and the backing of Canada's leading financial services franchiseof Canada's leading financial services franchise

vv A culture of professionalism and teamwork A culture of professionalism and teamwork that attracts top performersthat attracts top performers

vv Proven models – Global Equity Derivatives, Proven models – Global Equity Derivatives, Eurobonds, FXEurobonds, FX

Expanding internationallyExpanding internationally

W. Jim WestlakeW. Jim WestlakePresident & CEO

RBC Insurance Holdings Inc.President & CEO

RBC Insurance Holdings Inc.

InsuranceInsurance

The Canadian insurance marketThe Canadian insurance market

vv Very competitive marketVery competitive marketvv 129 life companies129 life companiesvv 230 p&c companies230 p&c companies

vv Over $50 billion in premiums annuallyOver $50 billion in premiums annually

vv $36 billion in life & health$36 billion in life & healthvv $18 billion p&c$18 billion p&c

vv About 68% of the p&c and 10% of the life marketAbout 68% of the p&c and 10% of the life marketis foreign-ownedis foreign-owned

vv Life companies are focussed on wealth managementLife companies are focussed on wealth managementvv more than half of income derived from annuitiesmore than half of income derived from annuities

and investment productsand investment products

vv Canada’s 4th largest issuer Canada’s 4th largest issuer of new individual life insurance of new individual life insurance policiespolicies

vv #1 provider of travel insurance#1 provider of travel insurance

vv #1 distributor of creditor #1 distributor of creditor insurance productsinsurance products

vv More than 2.5 million sales in 1999More than 2.5 million sales in 1999

RBC InsuranceRBC Insurance

HistoryHistory

vv 1987 — Royal Bank of Canada Insurance Company Ltd. 1987 — Royal Bank of Canada Insurance Company Ltd. (Barbados)(Barbados)

vv 1993 — Voyageur Insurance Company1993 — Voyageur Insurance Company

vv 1996 — Westbury Canadian Life Insurance Company1996 — Westbury Canadian Life Insurance Company

vv 1997 — RBC General Insurance Company 1997 — RBC General Insurance Company & RBC Life Insurance Company& RBC Life Insurance Company

vv 1998 — Mutual of Omaha1998 — Mutual of Omaha

vv 1999 — RBC Reinsurance (Ireland) Ltd.1999 — RBC Reinsurance (Ireland) Ltd.

vv 2000 — PruCan/PPI (to close by April 30, 2000)2000 — PruCan/PPI (to close by April 30, 2000)

Lines of businessLines of business

vv LifeLifevv life and health insurancelife and health insurancevv creditorcreditorvv life retrocessionlife retrocession

vv Non-lifeNon-lifevv home and autohome and autovv traveltravelvv property and casualty reinsuranceproperty and casualty reinsurance

vv OtherOthervv assistanceassistancevv structured reinsurancestructured reinsurance

Total premiums/feesTotal premiums/fees

Life Non-Life Other

0

100

200

300

400

500

600

700

800

19992000F

Premium growthPremium growth

1995 1996 1997 1998 1999 2000F

0

200

400

600

800

1000

1200

(pre

miu

ms

$ m

illi

on

s)

Distribution channelsDistribution channels

Life Home &Auto

Travel Creditor Reinsurance

Life Brokers 4P&C Brokers 4ProprietarySales Force

4 4

Travel Agents 4Telephone 4 4 4 4Direct Mail 4 4Internet 4 4Bank Branches 4 4

FTE & sales agentsFTE & sales agents

FTE & sales agents

0

500

1000

1500

2000

1995 1996 1997 1998 1999 2000F

FTE Sales Agents

vv Continued domestic expansionContinued domestic expansion

vv Growth in select international Growth in select international marketsmarkets

vv eCommerce initiativeseCommerce initiatives

vv Development of a single brand Development of a single brand identityidentityvv consolidation of officesconsolidation of officesvv company name changescompany name changesvv national advertising programnational advertising program

2000 priorities2000 priorities

vv $9-million initiative$9-million initiative

vv 3 TV commercials (began January 31) 3 TV commercials (began January 31) plus a print campaign (April 1)plus a print campaign (April 1)

vv Target Canadians 25-54 with a focus Target Canadians 25-54 with a focus on families and a secondary focus on families and a secondary focus on small businesseson small businesses

vv Broad range of insurance solutions Broad range of insurance solutions for Canadians’ unique needsfor Canadians’ unique needs

Branding initiativeBranding initiative

royal bank financial group background briefing session for ... · 4/3/2000 · dividend payout...

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