RBC's U.S. wealth management revenue rose in the bank's first quarter, driven by net asset inflows and appreciating markets.
Royal Bank of Canada reported Thursday that revenue in its U.S. wealth arm, RBC Wealth Management, rose by 7% year over year to $1.7 billion in the first quarter of its fiscal year, which runs from November through January. Driving that increase was $5.2 billion in net new assets (that's $7.6 billion in Canadian dollars), along with appreciation in stocks and other investments.
Those factors pushed the U.S. unit's assets under management up 17% year over year to $228 billion. Its assets under administration, which include those held for safekeeping and recordkeeping purposes, rose by 16% year over year to $695 billion.
"U.S. net new assets represented an annualized 3% of opening [assets under administration], excluding the reinvestment of interest and dividend income," RBC CEO David McKay told analysts on an earnings call.
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RBC said its U.S. wealth unit has added $159 billion in assets under administration over the past two years. Those include assets from RBC's purchase of
Gains from not having to pay the FDIC
The U.S. wealth unit's expenses meanwhile remained flat year over year at $1.5 billion, leaving it $211 million in net income. That latter figure was up a whopping 56%, largely because RBC had to pay a large "special assessment" in the same period a year ago to help shore up the U.S. banking system following the collapse of Silicon Valley Bank and other regional institutions in spring 2023. RBC reported for
RBC Wealth Management reported an "efficiency ratio" — meaning expenses as a percentage of revenue — of 87.7% That was 6.2 percentage points year over year.
Firmwide results and advisor headcount
The U.S. results helped push the firm's revenue for all of its wealth management units, including its U.S., Canada and international businesses, up 19% year over year to nearly $5.6 billion in Canadian dollars. Its expenses rose 9% to CA$4.2 billion — driven by "higher variable compensation commensurate with increased results and higher staff costs." RBC also booked an additional $70 million charge for possible losses on loans made through its wealth management units, including City National. Some of those possible losses were related to the recent California wildfires, RBC said.
RBC's wealth units ended the first quarter with CA$980 million in net income, a figure up 48%. Again, the bank benefited from not having to pay the FDIC special assessment imposed on it in the same period a year ago.
The wealth units' assets under management were up 24% year over year to just over CA$1.4 trillion, and their assets under administration were up 14% to nearly CA$4.9 trillion. RBC reported ending its first quarter with 6,180 advisors, barely up from the 6,125 it had at the same time a year ago.
