Royal Bank of Canada’s (RBC) fourth-quarter expenses were up year over year, driven by its focus on digitalization and growth in digital usership. 

WHY IT MATTERS: The $1.4 trillion USD bank attributed the rise in expenses to “[investing] in the business around our application development, our technology costs and providing for our clients,” RBC Chief Financial Officer Nadine Ahn said during Wednesday’s Q4 earnings call. The bank did not break out technology spend in its earnings presentation.

THE BIG PICTURE: The Toronto-based bank’s recent technology investments include its AI-powered digital assistant NOMI and mobile insights feature Vantage Snapshot, both launched within the last two years. RBC went into detail about its overarching tech plans during last quarter’s earnings call, with President and Chief Executive Dave McKay saying the bank was “investing in our people and technology to create more value for our clients”. 

BY THE NUMBERS: RBC reported for its fiscal Q4 2022: 

• Noninterest expenses climbed 8.5% YoY to $5.3 billion; 
• Total revenue grew 2% YoY to $9.3 billion; and 
• Net income increased 7% YoY to $1.5 billion. 

A portion of the bank’s increase in expenses was focused on “improving the profitability and technology infrastructure and the framework of the bank,” Ahn said. 

NOTEWORTHY: RBC’s digital channels have grown alongside its increased tech investment, with the number of active digital users in Q4 increasing 5% YoY to 8.4 million, and active mobile users jumping 10% YoY to 6.1 million.  

The bank’s digital adoption rate rose in Q4 to 58.3%, up nearly 2% YoY, and the bank reported a 13% YoY increase in mobile sessions to 129 million. 

RBC over the past two years has also focused on talent acquisition, adding 50 managing directors within the health care and technology sectors with the aim to add more, McKay said during the Q4 earnings call. 

THE BOTTOM LINE: As the bank continues its technology investments, RBC is focused on digitalization of its channels to generate revenue and support increased digital usership, McKay noted. 

“Given its outsized growth over the years, our focus is increasingly on improving both the profitability and technology infrastructure, and framework of the bank,” he said. 

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