Royal Bank of Canada (NYSE:RY) Q2 2023 Earnings Call Transcript

And that allows us to do both organic and inorganic execution the way we thought. Having said that, we were caught out on a couple of things which have hurt our results, one answer that length, too, we didn’t foresee this environment nine months ago. We didn’t see — the velocity of deposits moving out of core demand into higher yield at that rate, it started before the U.S. banking crisis. It accelerated during the crisis. And that caused a real shot to our overall forecast and what the revenue was to be would be off our balance sheet. And the second way we were cloud we have to adjust to is on our cost structures. We knew we’re going to have these big programs are complex and expensive, but we did not forecast the rapid change in hiring markets where we were hiring aggressively given attrition levels were 2x, 3x what they would normally be in the latter part of 2022 only to see that stop almost overnight.

And we overshot. We overshot by thousands of people. It’s a real drag in our cost structure. It’s a big part, as you can see in our waterfall of the overall cost moving up 8%, and we’re committed to getting that down. And as Dean walked us through, we’re we have a line of sight, it’s mid-single digits and below. We’re on that. We have a number of levers. But that’s kind of the tail of tape from my perspective, strong client franchise, great opportunity with HSBC, Brewin Dolphin. We feel confident in executing against those benefits. But we got caught out on the magnitude of the revenue drop and the expense increase. And we’re going to manage that and we’re going to manage it like all good teams do, and we’re going to get a hold of it and we’re going to drive shareholder value.

So thank you very much for your attendance today and your questions, and we’ll see you in another three months.

Operator: Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.