RBC investors weigh growth plans as US trade feud worsens

By nivedita balu

Toronto (Reuters) -When Royal Bank of Canada holds its first invested day in seven years on Thursday, shareholders will focus on growth, as commercial tensions with its main American market increase.

The United States represents 26 % of RBC revenues, and the CEO of Dave MCKAY often described as the bank’s local market. “Where does the royal bank grow?” Kevin Burkett, the director of the portfolio in Victoria, asked the British -based Burkett. “If the discourse coming from the United States makes this more complicated, how will you be presented to investors in terms of this growth?”

RBC, the largest lender in Canada and among the top 10 in North America, has focused on its southern neighbor in recent years, strengthening the American capital market and wealth management. He also injected more than $ 3 billion to save her City National, a California -based lender that meets the needs of Hollywood customers.

MCKAY has also sought to make RBC “simpler, faster and more innovative” by adding the range, reducing the complexity and investment in talent, according to the employees’ notes seen in Reuters.

The messages come after the MCKAI carried out the RBC purchase of $ 10 billion for Canadian HSBC operations, and the Supreme Command and the company’s personal and commercial banking sectors in Canada shook.

The HSBC acquisition has expanded its size and stake in the market, giving it more than 80 billion Canadian dollars in the market value on the largest lender in Canada, TD Bank.

“How do they rise?” Chalang Garg, a Veritas investment analyst, asked, noting that RBC was able to avoid “main landmarks” that afflicted other Canadian banks, including the growth of slower profits and organizational problems. “On a global basis, I think they can do a lot.”

Garb said that RBC has $ 2.1 trillion of assets, which puts it in a group of major lenders in North America alongside Jpmorgan Chase, which is more than $ 4 trillion.

RBC 12.02 times from its front profits, overcoming TD 10.82 times, Montreal 11.48 times, Nova Scotia Bank 9.46 times and CIBC 10.01 times, according to LSEG data.

Since the last day of RBC investors in June 2018, the stock gained 66 %. Shares of the best five other Canadian banks made mixed offers at the time, which ranged from 8 % loss to 43 %.

All five banks in the United States invested. Meanwhile, US president Donald Trump questioned the lack of banks in Canada, destroying consumer banks and changing some immigration policies for Canadians.

Investors who attended Thursday in Toronto expect that RBC will turn its strategy into new markets such as Europe. They will also focus on the executives’ comment on the bank’s return on property rights and its plans to deploy capital, and perhaps in the higher margin companies that collect fees.

Anthony Fizano, the Kingsuist Administrative Director, said it is more logical for RBC to buy the assets of the smaller wealth management of large retailers.

“They strongly suggested that they have organic ways to spread capital in the south of the border,” Vizano said.

(Participate in Nightedita Balu reports in Toronto; Liberation by Lananh Nguyen and Mark Porter)