Global Banking Benchmark Series — RBC (Royal Bank of Canada): RBC, a Canadian retail banking benchmark with outstanding profitability

Royal Bank of Canada (RBC), founded in 1864, evolved from a regional bank into a leading retail bank through mergers, acquisitions, and technology-driven transformation. Today, it is one of Canada’s largest banks by market capitalization and total assets, with retail banking as its core business and notable achievements in wealth management. RBC serves a vast customer base across Canada. As of the end of October 2021, RBC employed approximately 89,000 people and operated branches and offices in 29 countries, delivering financial services to over 17 million clients. Currently, RBC ranks as Canada’s top-tier retail bank and among North America’s leading banks. As of the end of October 2021, RBC’s total assets amounted to CAD 1.71 trillion (with 1 CAD ≈ RMB 5.2), and its loan portfolio stood at CAD 717.6 billion. The impact of the COVID-19 pandemic on RBC’s operations has been largely mitigated: in fiscal year 2021, its operating revenue reached CAD 49.693 billion, and net profit totaled CAD 16.05 billion—comparable in scale to China’s Bank of Communications. Unless otherwise specified, all references to “year” herein denote RBC’s fiscal year, ending on October 31. 1.1 Expanding Horizons: Evolution into Canada’s Premier Retail Bank RBC boasts a long history, tracing its origins back to 1864, when Merchants Bank commenced operations along the Halifax waterfront, offering short-term credit to merchants engaged in trade. As its business expanded, the company received a royal charter in 1869, becoming the Merchants’ Bank of Halifax; in 1901, it was renamed the Royal Bank of Canada, and relocated its headquarters from Halifax to Montreal. Given Canada’s robust agricultural economy, RBC initially focused on agricultural banking and continuously innovated. In 1937, following the enactment of Canada’s Home Improvement Loan Guarantee Act—which aimed to meet farmers’ borrowing needs for home renovation—RBC launched its Home and Farm Improvement Program in response. In 1967, amendments to Canada’s Bank Act enabled financial institutions to lend directly to farmers; accordingly, RBC introduced Farmplan—a one-stop agricultural lending program—in 1968. Simultaneously, RBC established its Prairie Agricultural Division, becoming the first Canadian bank to serve prairie-region farmers. In 1972, RBC pioneered the concept of “agricultural banking” for the Canadian banking industry. RBC has consistently expanded its footprint in the United States. As early as 1899, RBC’s predecessor opened an agency in New York City. In 1929, RBC Dominion Securities Corporation Limited incorporated its U.S. subsidiary in New York.

Latest Q3 earnings reports from global asset management giants: TSMC—the ‘new favorite’ of Warren Buffett—has become a ‘crowded-trade stock,’ with BlackRock as the largest buyer and Bridgewater increasing positions in consumer stocks

Data shows that Amazon’s market capitalization declined by over USD 1 trillion in 2022—the largest single-year market cap loss ever recorded for a U.S. company, and the first time any publicly listed company suffered such a massive decline. Microsoft ranked second, with its market cap falling roughly USD 950 billion from peak to trough. Within BlackRock’s portfolio, Microsoft and Amazon rank as its second- and fourth-largest holdings, respectively. Microsoft is also Tiger Global Management’s second-largest holding. Apple stands out as the sole bright spot amid the broader tech sector’s valuation correction. Driven by record Mac sales, Apple reported a 8% year-on-year increase in Q3 revenue, reaching USD 90.1 billion; net income totaled USD 20.7 billion, or USD 1.29 per share—up from USD 1.24 per share a year earlier and exceeding analysts’ consensus estimate of USD 1.27 per share. Apple is BlackRock’s and Berkshire Hathaway’s top holding, accounting for 4.66% and 41.89% of their respective portfolios. Unsurprisingly, the weakness in tech stocks’ secondary markets has weighed on major asset managers’ performance. This stems from mounting recession risks in the U.S. economy, prompting corporations worldwide to cut advertising budgets—pressuring the earnings of ad-revenue-dependent tech firms. Moreover, enterprises’ reduced cloud spending amid economic slowdown has caused growth in tech companies’ cloud businesses to plateau. Nonetheless, Carl Icahn has significantly increased his stake in Twitter. In Q3, Carl Icahn initiated a new position in Twitter, holding a total market value of USD 549 million by quarter-end—making it his sixth-largest holding. Recent market chatter surrounding Elon Musk’s proposed acquisition of Twitter has intensified, yet the question of who will ultimately lead Twitter remains unresolved. Executive departures, widespread layoffs, and announcements by several major advertisers halting collaborations have collectively signaled growing turmoil at Twitter. However, judging from Icahn’s portfolio allocation, the communications sector—including Twitter—is not a primary focus of his investment strategy. According to his Q3 holdings report, industrials constitute Icahn’s largest sector weighting at 67.52%. Yet he has publicly expressed strong enthusiasm for Twitter. Carl Icahn recently stated that, had he been invited, his investment in Twitter could already have reached USD 1 billion. In early November, Carl Icahn remarked that U.S. equities remain in a bear market and that inflation is far from over. During Q3, his firm notably increased positions in industrial and energy companies. Its largest addition was Crown Holdings, Inc. (CCK)—a global leader in packaging, producing aluminum and steel cans for food, beverages, household goods, and other consumer products, as well as metal vacuum closures and caps. Icahn’s stake in CCK surged by 880%. Financial results show that CCK’s revenue rose 19% in the first three quarters of the year, while net income climbed 44.67% year-on-year. Nevertheless, the company’s stock price has continued to decline—down 27.81% year-to-date through November 16, and down 21.23% over the past three months. From a broad market perspective, as of November 16, 2022, the Dow Jones Industrial Average had fallen 7.66%, making it the best-performing index among the three major U.S. indices.

Crown Holdings (CCK) Receives Buy Rating from RBC Capital

4 days ago

RBC Capital maintained a Buy rating on Crown Holdings with a $135 price target, citing strong quarterly results including $3.67 billion in revenue and $245 million in net profit.

The Globe and Mail

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