Monday, October 24, 2011

RBC Hosts Investor Day Focusing on RBC Wealth Management

  
Scotia Capital, 24 October 2011

• RY hosted an analyst and investor conference on Friday focusing on the bank's wealth management segment, RBC Wealth Management.

Implications

• The main theme of the conference was RY's strategic focus of becoming a global leader in wealth and asset management and achieving a very aggressive five-year objective of growing earnings to $2 billion in 2015 from $0.7 billion in 2010, representing a CAGR of 23% and adding $0.90/share to annual earnings in 2015.

• RY's plans to achieve this objective through organic growth (40%-50%) by improving operating margins in Wealth Management U.S., leveraging acquisitions (20%-30%) such as PH&N, BlueBay, and other potential future small to medium-sized bolt-on acquisitions, and a return to more normalized market conditions (25%-35%).

Recommendation

• Our earnings estimates are unchanged. We maintain our 1-Sector Outperform rating and one-year share price target of $57/share.
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