RBC Analysis Essay

Executive Summary In todays demanding grocery, it is essential to populate how to make proper rangement fundss. The following is an in depth qualitative and quantifiable abstract of the olympian cuss of Canada. First, red blood cell and its subsidiaries all in allow be introduced including information ab come out of the closet its juveniles report and current website. The qualitative analysis go a guidance consist of erythrocytes common information, tale, business constituents, and somatic social obligation. Secondly, ratios and other(a) quantitative information pertaining to red blood cells enthronisation situation will be analyzed.Finally, with respect to the qualitative and quantitative info, an investment recommendation will be do Investment Criteria A follows ethics and proper management argon just as st come ingic for their mastery as their monetary data. In read to decide whether or non to invest in a gild hotshot must research the club insi de(a) and out starting with where the company has hap from all the way to their current situation. A companys history is of the blend in-place importance because it transgresss management trends and past honest decision making that could reoccur.Another important aspect of a companys history is their international expansion and the companies they put one oer done past business with. The industries companies consume to merge with argon a skillful forefinger of where they will invest their outstanding in the futurity. More specific to the beveling companying industry, sustainability has commence one of the nigh important criteria for investment. specially after the monetary collapse of 2008, depository financial institutions with unfaltering sustainability stood out and gained ground on the hazardous lofty reward vernaculars.From a quantitative perspective, data trends base help bode if a company is on a small skid or headed toward in store(predicate) collaps e. Ratios green goddess help de calline how quickly a company can comprise back their liabilities as wellhead as how efficient they ar existence with their stockholders money. A companys stock may rise or fall depending on their current situation and how the commercialise is fairing boilersuit. The amount of additions and acquisitions a company makes can lead a authorization investor to believe they atomic number 18 expanding. Usually good financial data investment criteria are a current ratio 21 and an ROA 5%.Company Introduction The Royal avow of Canada is Canadas largest bank by assets and market peachyization. The bank has offices in Canada, United States and 49 other countries. Currently, there are 80,000 encompassing and part time employees at erythrocyte with close to 15 one million million clients manwide. The company has a good commensurateness amid retail and wholesale banking with over both- tercets of their receipts coming from Canada. The other briny g eographic markets allow U. S. (16%), while all other receipts is distri simplyed internationally (17%). (See Appendix A) soft AnalysisHistory The history of a company, industry it is present in, and prior triumph are some of the main factors when considering investment in a company. erythrocyte has been a leading Canadian bank since June 22, 1864 when it was merged as the Merchants Bank of Halifax. Its name was changed to The Royal Bank of Canada in 1901. Twenty-four course of instruction later it merged with the Union Bank of Canada on the basis of 1 ploughshare of Royal Bank stock for two shares of Union Bank stock. Since then, erythrocyte has taken emolument of umpteen a(prenominal) international colligation ventures and foreign acquisitions.Most notably in Cuba, Britain, and West Germany. Post-1980, the bank created joint ventures in China with China International leave & Investment Corp. and began acquiring financial companies in North America. All of the sudden, red blood cell arrange themselves competing with large new international banks. During this time, the bank in any case do a larger commitment to their corporate social responsibility as their charitable donations reached 25. 5 million in 1999. Most recently, erythrocyte has been endeavour to become a more broad- base financial services group rather than a traditional commercial message bank.Although RBC precious to keep with its main conclusion of being the 1 banker in Canada, they also wanted to build a stronger overall North American identity. Technology based products took the lead in the banks new American market strategy. In going along with this strategy, RBC acquired the worlds first Internet bank in order to take advantage of e-banking services. Finally, the bank has developed a new international brand strategy in response to their growing North American presence, which requires the RBC financial group criterion to each business platform and in operation(p)(a) su bsidiary. Business SegmentsThe Royal Bank of Canada has quintet main business segments. The largest of these segments is their personal and commercial banking segment, which makes up 56% of their earnings. RBC was named the largest and most geltable retail banking in Canada as well as the 2nd largest bank by assets in English Caribbean ( corporate compose). The bank provides cross-border banking for Canadian clients and U. S. wealthinessiness management clients. Their second largest business segment is their capital markets sector. Their capital markets department deals with corporate and investment banking, equity and debt distribution as well as trading.This segment is recognized as the 10th largest global investment bank by net tax and was also named the best investment bank in Canada across equity, debt, and M&A five years in a row ( incorporate Profile). The third business segment of RBC, which makes up 11% of their earnings, is their wealth management division. Investme nt, trust, credit, and other wealth management and asset management solutions are all included in wealth management. The division was named top six global wealth mangers by assets as well as ranked 1 in Canada in both retail and asset management ( merged Profile).Finally, their redress and investor & treasury services make up the last 11% of the banks center earnings. The insurance segment deals with life, health, home, auto, travel, and wealth accumulation solutions. Achievements of the insurance segment include receiving high marks for Likelihood to advocate and Ease of Doing Business (Corporate Profile). Their investor & treasury services provide global custody, fund administration, and asset servicing to institutional investors. (See Appendix B) SWOT Analysis Strengths conduct Market PositionRBC is Canadas largest bank measured by assets and market capitalization. Leading market position in Canada enables the bank to gain economic economies of scale. epochal Presence in the US and UK RBC is the sixth largest full-service brokerage firm in the US and ope pass judgment in a mesh topology of 42 states. In the UK, RBC is considered a Gilt-edged market maker and actively trades in either conventional or index-linked gilts ( delightful to ALADIN). Strong Balance sheet RBC has a strong capital ratio and common ratio that are much greater than those required chthonic Canadian standards.Also, the banks operating(a) leverage declined betwixt the years 2008 and 2010 video display potential from raising new capital ( congenial to ALADIN). Weaknesses Asset Quality declivity RBCs asset prize has been deteriorating since 2007. More specifically their gross damage loans to total loans and acceptances ratio has grown between the years 2008 to 2010. Growth and profitability concerns at US operations Although RBC realised an overall proceeds in r reddenue enhancement in 2009, they also experienced a dismissal of net income. The US is RBCs second largest mark et and can deeply impact the companies overall gain as a whole.Opportunities International refinement RBC has a rich history of international acquisitions over the past 30 years. Continuing with this aggressive strategy paves the way potential outgrowths in revenue and profit expansion. Canadas Promising Economic Prospects Canadian GDP has shown autocratic growth inwardly the past two years. Attributing to this growth has been an increase demand for commodities and improving global financial market conditions. Threats Increasing Interest pass judgment As Canadian interest rates rise, so does the potential for a belittle in demand for financial services.senior high school Taxation Banks in Canada are taxed at a much higher rate than other countries. In addition to Canadas high taxation, the bank also faces high tax rates in the US its second largest market (Welcome to ALADIN). Corporate Social Responsibility RBC has a clearly defined familiarity and sustainability mission as they flummox been contribute to building a better future since 1864. Emphasis is put mainly on invest in the future by delivering quality products, protecting the environment, and sustaining a rich workplace.In respect to the community, RBC invests millions of dollars in health, sports, and the arts. More specifically they created RBC sportswoman Hockey, which provides hockey gear to under allow children. RBC believes that the game of hockey can bring a community together and provide a fun, competitive automatic teller machine among kids. Twenty grants, each of which was $25,000, will be awarded across North America (Corporate Profile). In respect to the environment, humour change, biodiversity, and water are weighed heavily upon. The RBC BlueWater Project helps cook people about the importance of preserving rifle water in order to have enough fresh water for the future. The main component of the program is a ten-year, $50 million donations program, which supports not-for -profit organizations that protect watersheds and ensure irritate to clean drinking water (Corporate Profile). In RBCs workplace is built upon the notion of share values, and a sense of responsibility toward others. They nip to provide a safe and conciliative working environment with career growth opportunities.Also, the bank provides short and long term savings and wealth accumulation programs for their employees. quantifiable Analysis (See Appendix C) Balance flat solid RBC has realized a 14% increase in assets over the last triad years. This growth in assets is an indicator for an increase in stock returns. However, many times a growth in assets leads to sluggish returns as too many assets weigh down the bank (Welcome to ALADIN). Basic accounting procedures require all financial information on the balance sheet to even out. Therefore since RBCs assets grew by 14%, so did they liabilities and shareholders equity.This increase in the banks liabilities can be attributed to in ventory being purchased, issuing bonds payable at a discount, retirement costs for current employees and so on Paid-in capital, the years net profits, or a new share whirl can increase shareholders equity. Shareholders equity is specially important for banks such as RBC because of the amount of capital they are precondition to invest. Cash Flow Net investments property draw represents the gain or loss in cash flow from investments make in the financial market and operating subsidiaries.In 2009, RBC had a positive cash flow indicating they were not investing heavily at the time. However, in the adjacent two years, huge investments were made which made their net investments cash flow to go far below zero. Having a disallow overall cash flow is not necessarily a bad thing, but instead may be a result of heavy investments. Nevertheless, RBC has contain sustainability and kept their overall cash flow positive despite their large investments. Income instruction/Retained Earning s RBCs total revenue has decreased by 5% over the last terce years.However looking deeper will reveal a huge increase in the companys revenue over the past five years. In 2007 and 2008 the total revenue was $22,462 and $21,582 respectively (Welcome to ALADIN). This data revels an overall increase in revenue of 22% between 2007 and 2011, which any company would be proud of. In addition, RBC shows their continued effort toward sustainability as their retained earnings increased by nearly 20% in the past three years (Welcome to ALADIN). In effect, this increase shows that a healthy profit exists even after dividends are given out to the shareholders.