The Royal Bank is Canada’s largest bank. It is a diversified financial services company providing private and commercial banking, asset management, insurance, investor services, and capital market products and services.

Royal Bank is a leading provider of select global financial services and one of the top five global asset managers by wealth.

In terms of market capitalization, the Royal Bank is one of the largest banks in the world. It serves 17 million customers in Canada, the United States, and 34 other countries. Geographically, Canada is the largest market with 59% of sales, followed by the US (25%) and other countries (16%). It operates 35 offices in 23 US states.

The Royal Bank has five lines of business – retail and business customers (47% of half-yearly net income), capital markets (27%), asset management (17%), insurance (5%) and investor and treasury services (3%). ).

The bank maintains a balanced wealth of nearly 50% retail and 50% institutional assets. It operates through the largest financial distribution and branch network in Canada, along with leading customer franchises. The Royal Bank serves a large number of diversified clients, ranging from corporate and institutional clients to wealthy clients.

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Plant data

Sales growth & market presence

RBC holds strong market positions in its five businesses, including the largest full-service wealth advisory business. As the leading retail bank in Canada, Royal Bank is known for providing the best in services and a wide range of products to its retail and business customers.

It also offers Canadian customers cross-border banking in the United States through online channels. Expanding its presence in the US market remains a top priority for Royal Bank’s future growth. RBC has a highly diversified source of income. P&CB, Wealth Management, Insurance, I&TS and Capital Markets are leading companies in Canada.

The bank uses its extensive portfolio of products and digitally supported services for cross-selling to existing customers as well as for the acquisition of new customers. Digital usage continued to grow: 90-day active mobile users increased year-on-year by 9% to 5.3 million and mobile sessions increased by 22% year-on-year to 111.6 million.

RBC is also big with its rewards program and has partnered with iconic brands like Expedia, WestJet, Petro-Canada, Indigo, etc. to bring a one-of-a-kind rewards program to its customers.

Royal Bank’s private and commercial banking division is the leading financial services business in Canada, with a # 1 or 2 market share in key product categories. About 4-5x accounts are more likely to consolidate their businesses with RBC in the private banking segment.

The bank is also further developing its branch format in order to increase customer relevance. The assets under management and management have grown continuously over the years. The Royal Bank has also built a strong global wealth management business.

The strategic alliance between RBC Global Asset Management and BlackRock Canada continues to expand its customer base. The bank continues to focus on growth in investment capacity and innovative solutions for both institutional clients and retail investors.

The bank saw strong volume growth and market share gains in its largest businesses. The bank continued to deepen customer relationships in Canadian banking and wealth management. The company saw net profit increases in all of its businesses except I&T services.

Due to its leading position in the Canadian market and its deep understanding of client needs, Royal Bank is well positioned to benefit from Canada’s growing economy. Sales have increased 10% + CAGR over the past decade.

As one of the largest companies on the TSX, RBC happens to be a double-listed stock and can also be bought on the NYSE.

Dividends

The Royal Bank has an average payout ratio of 55% and has paid dividends of around $ 35 billion over the past decade. It paid out $ 6 billion in dividends last year itself. Royal Bank is a Canadian dividend aristocrat with a solid track record of dividend growth.

Most recently, it increased its dividend payout by 2.8% in February of last year and currently has a juicy yield of 3.4%. The bank has grown its dividends by more than 7% CAGR over the decade. With a current payout ratio of ~ 44%, Royal Bank has kept it in the 40% to 50% range for the past five years, which also means plenty of room for future growth.

The strong balance sheet has allowed Royal Bank to continue investing in leading franchises while navigating an uncertain macro environment. A diversified business model with leading customer businesses, a solid capital and liquidity position, stable earnings and stable dividends are strong competitive advantages. RBC increased its capital buffers by nearly $ 6 billion at close last year and currently has a robust CET1 ratio of 12.8%.

Royal Bank’s book value per share grew 7.8% year over year. Improvements in the macroeconomic outlook and credit quality, as well as RBC’s robust capital markets, are a strong tailwind for the bank.

The Royal Bank continues to invest in technology to increase efficiency and provide a better customer experience. In addition, the company is concentrating on increasing customer acquisition in all important segments while at the same time deepening existing relationships.

Royal Bank (RY) historical return
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competition

The bank competes with other leading Canadian banks such as TD Bank, Bank of Montreal, Scotiabank, Canadian Imperial Bank of Commerce, and the National Bank.

National Bank is one of the six largest commercial banks in Canada, while CIBC serves 11 million retail, small business, commercial, corporate and institutional customers in Canada, the US and worldwide.

Scotiabank is a leading international financial services company with a rich history spanning 185 years, and the Bank of Montreal is the eighth largest bank in North America by assets.

Bottom line

The bank continues to expand its commercial market share through industry-specific lending strategies and aims for a high-growth pension segment and corporate succession planning for future growth.

The pandemic accelerated digital adoption, changed consumer behavior and added value. Lately there has been customer-driven volume growth and improved customer activity, and the bank’s efforts to add digitally-assisted features to its portfolio should continue to support customer growth.

The bank is well positioned to continue providing value-added services to its existing customers while using its market-leading capabilities in various segments to attract new customers. Royal Bank’s industry-leading market share and strong balance sheet are well positioned for economic recovery.

The bank is expected to begin its dividend hike soon after receiving a green signal from the government.

Royal Bank (RY) Historic PE
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