RBC U.S. Annual Profit to Double Within 7 Years, McKay Saysby
Royal Bank of Canada had $1 billion in U.S. earnings last year
City National, capital markets offer growth opportunities: CEO
Royal Bank of Canada, which had $1 billion of earnings from its U.S. businesses last year, expects to double that within seven years after buying City National Bank, Chief Executive Officer David McKay said.
McKay told reporters Wednesday in Montreal after the lender’s annual investors meeting that he’s optimistic about the growth prospects for RBC Capital Markets in the U.S. and contributions from the City National acquisition to its wealth business. Royal Bank bought the Los Angeles-based private and commercial bank in November for more than $5 billion in its largest takeover.
“We certainly see a very strong trajectory for growth in the U.S. and we expect to have two very strong franchises contribute to RBC for some time," said McKay, 52. “We see ourselves doubling our profitability in that market over roughly a five- to seven-year time frame."
Royal Bank posted annual profit of C$10 billion ($7.6 billion) for the fiscal year ended Oct. 31, with about half of that coming from Canadian banking, according to the company. RBC Capital Markets was the second-biggest contributor, accounting for about 23 percent of earnings for 2015.
City National generated more than C$100 million in profit for Royal Bank in the fiscal quarter ended Jan. 31, McKay said. The deal was “the largest strategic move in our history and positions us well for growth in some of the most dynamic U.S. centers,” he said.