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Royal Bank of Canada (NYSE:RY)
Q1 2020 Earnings Call
Feb 21, 2020, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, welcome to RBC's Conference Call for the First Quarter 2020 Financial Results. Please be advised that this call is being recorded. I would now like to turn your meeting over to Nadine Ahn, Head of Investor Relations. Please go ahead, Ms. Ahn.

Nadine Ahn -- Senior Vice President, Wholesale Finance & Investor Relations

Thank you and good morning everyone. Speaking today will be Dave McKay, President and Chief Executive Officer; Rod Bolger, Chief Financial Officer; and Graeme Hepworth, Chief Risk Officer. Then we'll open the call for questions. To give everyone a chance to ask a question, we ask that you limit your questions and then requeue. We also have with us in the room, Neil McLaughlin, Group Head, Personal and Commercial Banking; Doug Guzman, Group Head, Wealth Management, Insurance and I&TS and Derek Neldner, Group Head, Capital Markets.

As noted on Slide 1, our comments may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially. I would also remind listeners that the Bank assesses its performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. With that, I'll turn it over to Dave.

David McKay -- President and Chief Executive Officer

Thanks, Nadine. Good morning everyone and thank you for joining us. We had a great start to the year, delivering record quarterly earnings of CAD3.5 billion. We reported record results in Canadian Banking and Capital Markets and very strong results in Wealth Management, despite interest rate headwinds and a good quarter in Insurance. Our results were driven by strong volume growth across our leading client franchises, lower PCL and prudent expense management. We continue to win market share while maintaining our risk profile at the lower end of our appetite and generating an ROE of 17.6%, a premium relative to our global peers.

I'm pleased to announce a CAD0.03 increase to our dividend, bringing our quarterly dividend to CAD1.08 per share. Our strong capital generation and robust 12% CET1 ratio are proof of our disciplined capital deployment strategy which is one of RBC's core strengths. Along with the dividend increase, we bought back 7 million shares this quarter supporting our focus on delivering long term value for our shareholders. Our share buybacks will always be an effective and flexible lever to improve returns. Allocating capital for net income growth will continue to be our primary focus. Our leading scale and diversity of revenue streams enables us to invest concurrently in technology, sales capacity and client value, positioning us to succeed in this period of secular change and macro uncertainty.

In addition, we constantly review our portfolio of businesses to ensure they provide long term sustainable growth opportunities and meet our return hurdle rates. Along with repositioning part of our international custody business, as announced in Q4, we entered into agreements to sell all of our banking operations in the Eastern Caribbean this quarter. Similarly, we actively managed our Capital Markets loan book to build sustainable relationships and returns.

Before moving to segment results, I want to touch on the macro environment for a minute. Our start of the fiscal year saw a reduction in global trade tensions which was positively impacting market sentiment and yield curves. Recent uncertainty related to the coronavirus is reigniting downside risk to the global economic outlook, given the potential for disruption to global supply chains. We are monitoring the situation closely. While we have limited direct exposure to the regions impacted hardest by the virus, we are concerned for those affected by the recent outbreak.

Turning to our domestic business, The Bank of Canada's tone has become more cautious given recent economic data showing weaker business investment, exports and consumer spending despite positive business sentiment and low unemployment levels. A key strength of the Canadian economy is housing. We continue to see strengthening in Toronto's housing market with low interest rates and constrained supply pushing prices higher. We are also seeing signs of recovery in Vancouver and high activity levels continuing in Montreal and Ottawa. With household demand being supported by economic and population growth, including immigration, we would support measures to address an increasingly limited housing supply. Against this backdrop, I want to update you on our business segment performance.

Canadian Banking reported another record quarter with net income of over CAD1.6 billion. We continue to leverage our multi-year investments in sales capacity and digital capabilities to drive strong client driven volumes. Over the last year, we added over CAD60 billion in total volumes across loans and deposits. With respect to deposits, our growth in checking accounts accelerated to 6% over last year. As a key Canadian Banking product, this has been a core focus for us as we continue to deepen relationships with our clients. 18% of RBC clients of all four transaction account -- all four of transaction accounts, credit cards, investments and borrowing products with RBC higher than the peer average of 12%.

Along with the personal checking account, Canadian residential mortgages are a core long term product and we're seeing strong client acquisition and retention. Over the last year, our leading distribution and differentiated value proposition has added over CAD21 billion in mortgage volumes to our market leading franchise. And nearly 95% of our mortgage clients have more than one product with RBC. While our mortgage growth has impacted Canadian Banking's total margins, Canadian markets remain a high ROE product, given their low risk weighting generating returns well in excess of our medium-term ROE objectives. We're still originating prime Canadian retail credit. The credit risk indicators and profile of our new mortgage originations are as strong as our existing portfolio. With strong offers and integrated campaigns, we've deepened the value proposition of our proprietary loyalty program and we're seeing higher credit card acquisitions year-over-year. We remain committed to meeting our client acquisition target of 2.5 million new Canadian Banking clients by 2023. With net new client acquisitions up 30% from last year, we have had a good start to 2020.

Turning to Wealth Management, we had a third consecutive quarter with earnings over CAD600 million and revenue over CAD3 billion, benefiting from strong -- both, strong markets and net sales. In Global Asset Management, we added another 40 basis points to our leading Canadian retail market share over the last 12 months. With an uncertain macroeconomic and geopolitical backdrop, our clients continue to come to us for trusted advice and exceptional service. With 83% of AUM outperforming the benchmark on a three-year basis, we added to our track record of superior net flows generating a further CAD11 billion of retail sales -- of retail net sales over the last 12 months.

In Canadian Wealth Management, we continue to grow our top-tier distribution adding more than 50 investment advisors over the last 12 months building on the capabilities of our existing team of over 2000 advisors. Going forward, we expect to continue to leverage our distribution scale to drive sustained growth.

Our U.S. Wealth Management franchise continues to perform well, despite headwinds from lower interest rates. We continue to see very strong double-digit volume growth across AUA, AUM, loans and deposits, as we execute on our accelerated organic growth strategy. With double-digit growth in deposits, we are seeing the results of a wide range of initiatives we spoke about in the first half of 2019, including the rollout of our new treasury management platform and investments into Exactuals, FilmTrack and Datafaction.

A priority for us is to grow our U.S. private client group and City National franchises giving funding synergies and opportunities for increased client referrals including over CAD1 billion of mortgage flow through our U.S. Wealth Management channels. Similar to Canadian Banking, mortgages are an important low risk anchor product that allows us to build deeper long term relationships with our City National clients. We are also increasingly focused on leveraging our strengths to boost City National's digital bank offerings. We continue to expect strong loan and deposit growth, given the multi-year investments in sales capacity.

Our Capital Markets business delivered record earnings this quarter, more than CAD100 million higher than our previous record. We benefited from the closing of landmark transactions, including BB&T's merger with SunTrust, Apollo's acquisition of Cox Media assets and Broadcom's acquisition of Symantec assets. Our strong results this quarter, propelled us to 9th in the Global League Tables. The quarter provided a more favorable environment for the industry relative to last year. Narrowing credit spreads and low interest rates, created a favorable environment for companies looking for financing. Likewise dovish global central banks and low equity volatility helped provide a constructive backdrop for equity markets and deal flow. Our investments over a number of years in strengthening our talent has been an important driver in the rising strength of our capital markets franchise, the benefits of which can be seen by increased roles in global mandates.

Our investment banking pipeline remains healthy reflecting reasonably strong market conditions. However, the conversion of deals to realize revenue remains dependent on market and regulatory conditions, which could be volatile through the year, given the uncertainty around the geo-political landscape and concerns over the coronavirus.

Global Markets had an impressive quarter with strong performance in our fixed business reflecting healthy client engagement and the strength of our client-focused franchise.

Overall, we delivered a very strong quarter and are starting 2020 from a position of strength. We have scale, leading market share and momentum across our core franchises. We are well-positioned to continue providing value-added advice and service to our existing clients, while attracting new clients and gaining market share across our segments. While we faced challenging headwinds from lower interest rates, moderating global growth and normalizing credit conditions, we remain committed to balancing our investments and continuing to create long term value for our clients and shareholders. And with that I'll pass it over to Rod.

Rod Bolger -- Chief Financial Officer

Thanks, Dave and good morning everyone. Starting on slide 5, we had record earnings of CAD3.5 billion, up 11% from last year. Diluted EPS of CAD2.40 was up 12% year-over-year. I'll start with a few comments on cost management. Expenses were up 8% year-over-year, however, most of the growth was driven by staff related costs such as variable and stock-based compensation, which was commensurate with strong revenue growth in Capital Markets and Wealth Management. Excluding these, expenses were up 3% year-over-year. Total head count across the Bank declined from last quarter, as we remained vigilant on controlling costs and driving efficiencies.

Moving on to capital on slide 6, as Dave noted, with the CET1 ratio of 12%, we remain well-positioned to fund organic growth opportunities in our leading franchises and to return capital to our shareholders. Our strong earnings allowed us to generate 38 basis points of internally generated capital more than offsetting the combined impact of previously disclosed accounting and regulatory changes. Strong client-driven RWA growth in Canadian Banking, City National and Capital Markets as well as the impact of lower discount rates in determining pension and post-employment benefit obligations was partially offset by normal course parameter and methodology updates.

We also distributed CAD2.2 billion dollars to our common shareholders in the form of share buybacks and dividends this quarter. Our share count is now at its lowest level since 2010.

Moving to our business segment performance on slide 7, Personal and Commercial Banking reported earnings of nearly CAD1.7 billion. Canadian Banking net income of over CAD1.6 billion was up 5% from a year ago. Our commitment to exceptional client experience and innovative digital offerings continue to resonate with clients. Strong volume growth across our Canadian Banking businesses led to 5% year-over-year growth in total revenue. We are seeing increased momentum in our mortgage portfolio up a strong 9% year-over-year. Total real estate secured lending was up 7% net of lower HELOC balances. Similar to last quarter, mortgage volumes were driven by strong origination volumes, up 40% year-over-year and strong client retention of over 91%.

Following double-digit growth in commercial lending over the last year, as expected, we saw a moderation in the growth rate across a number of sectors. However, we still added over CAD5.5 billion of volumes. GIC growth rate's moderated somewhat to a still strong 10% year-over-year as our clients shifted into mutual funds. Higher fee income this quarter was largely driven by strong double-digit growth in assets under administration, helping offset some pressure from lower margins. Net interest margin declined 4 basis points from last quarter, largely from compressed spreads from competitive pricing on both mortgages and GICs. Should we see continued pricing competition and strong mortgage growth through the spring housing season, our NIM could compress a further 3 to 5 basis points for the rest of the year.

Expense growth was contained at 4% year-over-year, driving positive operating leverage of 0.7%. We saw a reduction in headcount through attrition and continue to reduce branch square footage. We still expect positive operating leverage for the full year, but expect to see increased pressure in the back half of the year from upcoming changes in the credit card landscape and continued pressures on loan and deposit spreads. We do not expect any material impact to earnings from the sale of our banking operations in the Eastern Caribbean that Dave highlighted earlier.

Turning to Slide 8, Wealth Management earnings of CAD623 million were up 4% year-over-year. Adjusting for the favorable accounting adjustment related to Canadian Wealth Management in Q1 2019, earnings were up 9% year-over-year, largely in line with recent quarters. Both, Global Asset Management AUM and Canadian Wealth Management AUA were up double-digits year-over-year, largely due to North American equity markets rebounding from challenging market conditions last year. We continue to gain market share in Global Asset Management adding nearly CAD3 billion of Canadian retail net sales this quarter. While equity markets drove market appreciation, the majority of our retail flows were long term fixed income and balanced solutions.

In U.S., Wealth Management revenues were up 12% year-over-year in U.S. dollars. Assets under administration grew a strong 16% year-over-year, reflecting both market appreciation and net sales, partly due to our successful recruitment of experienced financial advisors. Net income was relatively flat year-over-year as robust volume growth was offset by the cumulative impact of the three Fed rate cuts from July to October, as well as by higher cost to support organic business growth.

Loan growth of 19%, at City National continue to be led by commercial lending. However, we also saw continued very strong mortgage growth at 24% year-over-year. On a geographic basis, we are seeing an increased contribution from our East Coast expansion with loans in the region, up 40% year-over-year. Expansion in new markets contributed a quarter of total loan growth. Total deposit growth at City National was up 19% year-over-year or 11%, excluding suite balances.

City National NIM was down 17 basis points quarter-over-quarter, largely due to the average Fed funds rate declining 45 basis points. Given the asset sensitive nature of City National's balance sheet and continued competitive pressures on deposit pricing, we expect margins to tick lower throughout the remainder of 2020, albeit at a much slower pace.

Moving on to Insurance, on slide 9, net income of CAD181 million was up 9% from last year, mainly due to the new longevity reinsurance contracts, partly offset by the lower impact from reinsurance contract renegotiations. While Insurance first quarter earnings are seasonally lower from a strong Q4, earnings this Q1 were higher relative to prior first quarter results. Expenses in this segment are well controlled and remained fairly consistent at around CAD150 million over the last two years, even as we grow revenue.

Looking forward, we continue to target modest earnings growth for the full year. This segment continues to generate a high ROE, which is well in excess of our bankwide medium-term objectives.

Investor and Treasury Services results are highlighted on slide 10, earnings of CAD143 million were down 11% from last year. Total revenue decreased mainly due to lower client deposit revenue, largely because of the short term interest rate environment. Asset services revenue was lower due to reduced client activity and continued pricing pressures, reflecting secular market and industry headwinds. Recall, our funding and liquidity revenue was seasonally higher in the first quarter, driven by increased money market opportunities. The business has also experienced some earnings compression, when we see the flattening of the yield curve.

Going forward, we expect seasonally lower earnings next quarter and hope to see increasing levels of profitability toward the end of 2020 and into 2021 as we work through the repositioning of the business that we announced in Q4.

Turning to Capital Markets to slide 11, the segment generated record net income of CAD882 million, up 35% from last year, benefiting from strong revenue growth as an unusually elevated number of transactions closed in the quarter. Earnings also benefited from lower PCL as the prior year included provisions related to one account in the utility sector. Also, Capital Markets generated positive operating leverage of 4.7%. Expense growth outside of the performance-based compensation was modest amid record revenue. Capital Markets ROE expanded this quarter, as we generated higher revenue off a lower RWA footprint. Corporate investment banking revenue was up 23% year-over-year as we realized revenue from the closing of significant transactions in line with guidance provided in our year-end call. The constructive market conditions that Dave highlighted also drove higher debt and equity origination results, especially in North America. We increased our market share in the global fee pools across M&A, DCM and ECM.

Global Markets revenue was up a strong 18% from last year, largely due to higher fixed income trading revenue across all regions. We had particular strength in credit trading benefiting from secondary flow from strong debt underwriting results and narrowing credit spreads. Rates trading also performed well in a volatile interest rate environment. In addition, we deployed balance sheet toward our repo business. Equities trading had a solid quarter, despite lower volatility. And recall that Q1 last year was a record quarter for this business.

Overall, we had a strong start to the year. We continue to focus on our strategy of creating more value for our clients and shareholders, while driving premium growth in a prudent manner. And with that, I'll turn it over to Graeme.

Graeme Hepworth -- Chief Risk Officer

Thank you, Rod, and good morning everyone. I'll begin my remarks starting on slide 13. This quarter, our provisions on performing loans of CAD83 million or 5 basis points were flat quarter-over-quarter, albeit at the higher end of our expected range of 3 to 5 basis points. This mainly reflects portfolio growth in the quarter, especially in our cards portfolio which typically sees an increase following the holiday season. It also reflects changes in our macroeconomic forecast where moderately higher long term interest rates, weaker oil and gas markets and higher unemployment rates were offset by favorable housing trends in Canada.

On the other hand, our provisions on impaired loans of CAD338 million or 21 basis points were down 6 basis points from last quarter and were below our expected range of 25 to 30 basis points. This is mainly due to lower provisions in Personal and Commercial Banking and Wealth Management.

Let me now provide some additional color on PCL for some businesses. In Canadian Banking, PCL on loans decreased by CAD33 million from last quarter, largely reflecting lower provisions on impaired loans in our commercial portfolio across a number of sectors. This was partially offset by the increase in provisions on performing loans this quarter mainly in our cards and commercial portfolios due to the factors I noted earlier. In Caribbean Banking, PCL on loans decreased by CAD18 million from last quarter due to recoveries in our commercial portfolio and lower provisions in our residential mortgage portfolio. In City National, PCL on loans decreased by CAD40 million from last quarter, reflecting provisions we took last quarter in our consumer discretionary sector and high recoveries this quarter. Lastly, while PCL on loans in Capital Markets were stable quarter-over-quarter, we did have higher provisions in both the oil and gas and other services sectors.

Turning to slide 14, gross impaired loans of CAD2.9 billion was down CAD40 million from last quarter. In City National, we had higher impairments, mainly due to new formations in our consumer staples of discretionary sectors, partially offset by repayments across a number of sectors this quarter. In Canadian Banking, we had higher impairments this quarter at the level of new formations in both our retail and commercial portfolios and the level of write-offs in our commercial portfolio have declined from last quarter. In Caribbean Banking, we had high recoveries, which I noted earlier, and lower allowances in our residential mortgage portfolio, which was partially offset by an increase in new formations this quarter.

In Capital Markets, we continue to see elevated impairments in the oil and gas sector this quarter as the sector remains under pressure. However, consistent with last quarter, we are seeing the trend moderating with high repayments and fewer new formations this quarter. While, impairment levels in Capital Markets and City National remained elevated this quarter, the need for material provisions were mitigated by the strength of our underwriting, both in terms of collateral and guarantees supporting our loans.

Turning to slide 16, PCL across most of our retail portfolios, including our residential mortgage portfolio, were generally stable quarter-over-quarter. We did see ongoing weakness in our unsecured portfolios in certain regions. In Alberta, unemployment levels remained elevated at 7.3% due to ongoing weakness in the oil and gas sector, which both impacted our personal lending portfolio. In Quebec, the impact of the minimum credit card payments implemented last August continue to lead to higher insolvencies, mainly in the form of consumer proposals impacting both our cards and unsecured lending portfolios. While the impact of rising consumer proposals was most pronounced in Alberta and Quebec, we do see a modest degree of weakness in other regions as well.

To conclude, our retail portfolios continue to be generally stable and areas of weakness have been manageable. Our wholesale portfolios continue to benefit from our strong underwriting practices, industry diversification and geographic mix. However, ongoing challenges such as the weakness in the oil and gas sector and global geopolitical risks, as well as, the emerging concerns related to COVID-19 and rail blockades will create considerable uncertainties that we are monitoring closely and actively managing. Overall, while our portfolios have performed slightly better than expected this quarter, in light of the noted uncertainty, we are maintaining our previous guidance on PCL. With that, operator, let's open the lines for Q&A.

Questions and Answers:

Operator

Thank you. We will now take questions from telephone lines. [Operator Instructions] Our first question is from Ebrahim Poonawala with Bank of America Merrill Lynch, please go ahead.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Good morning. I guess my question is on capital allocation and just trying to understand whether we should expect the CET1 to build from the 12% in the context of, I think, Dave's comments around priority on capital allocation remains net income growth. And what I'm trying to understand is in the world where organic growth remains relatively steady state, do we assume buybacks ratchet up or is your motivation to do a deal rise. If you can talk about that, that would be helpful.

David McKay -- President and Chief Executive Officer

Maybe, Ebrahim, I'll start and then I'll hand it over to Rod for your questions. So our strategy on capital allocation hasn't changed over the last couple of years. You see the strong organic growth that we're generating, we're investing in further growth which will require capital. So I think from that perspective, it becomes the best way to drive shareholder returns and we'll continue to allocate capital there. You saw us buy back shares at a greater rate in the last quarter and returning capital to shareholders. And you can expect that we'll use that tool as an ongoing capability to manage our capital base and our returns for shareholders. So I don't think there's any real change in strategy. We continually look for opportunities to grow our business inorganically. And we've got very strong criteria for that and now either the time is not right, or the opportunity is not right. So there is nothing in the pipeline right now that would cause us to allocate capital along those lines. So I think that's generally a consistent perspective for us with our strong momentum inorganic growth and driving shareholder value from it. We're going to continue to run this playbook.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Got it. And I guess, Dave or Rod, should we expect a meaningful build up from the 12% CET1 levels or is -- or you are reluctant to do that? Just your thought process there.

Rod Bolger -- Chief Financial Officer

Yeah, I think -- it's Rod. I think, Ebrahim, if you go back a couple of years, we were at 10.6% in mid-2017, by mid 2018 we were kind of at the 11%, even a year ago, we were at the 11.5%, 11.4% in Q1 '19. And so we got -- we've built up to 12%, given some of the macro economic uncertainty that Dave was talking about and we're very comfortable at 12% when we ran all of our stress test, 12% gives us adequate buffer for even the most severe scenario. So we are quite comfortable and do not see a need for it to go up above it. It might go up, there's always a 10 basis points up or down on a given quarter, depending on how RWA comes out or interest rates with the pension discount rate, but we don't see a need to build from here.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Got it. That was helpful. I'll requeue. Thank you.

Operator

Thank you. Our next question is from Meny Grauman with Cormark Securities. Please go ahead.

Meny Grauman -- Cormark Securities -- Analyst

Hi, good morning. Wondering what you expect the impact of the changes to the stress test on insured mortgages to be and then if you could also comment on what change or similar change to uninsured mortgage stress test would be as well.

Neil McLaughlin -- Group Head, Personal and Commercial Banking

Thanks for the questions, it's Neil. I guess maybe the first point you make on the stress test that we've said in the past, we've been quite supportive of the policies and by both of the government and the regulatory changes. I think our first priority is to really have a strong housing market. With that said, the change that was announced recently, we view it as actually quite -- having quite a minimal impact. Our analysis, so far, it looks like it would be about 25 to 30 basis points reduction in the qualifying rate, that will really translate into a fairly small increase in purchasing power for the average borrower, probably in the neighborhood of about CAD20,000, CAD25,000 on an average mortgage. So I think right now the focus still -- you see a lot of commentary in the marketplace is around supply and I think the lack of supply in the major urban markets is still the real focus for where the policy needs to go.

Meny Grauman -- Cormark Securities -- Analyst

And if the rule -- it looks like the rule will be extended to the uninsured markets, do you think that will have a bigger impact?

Neil McLaughlin -- Group Head, Personal and Commercial Banking

I wouldn't -- I think it would have -- at this point, we would think it would have the exact same impact.

Meny Grauman -- Cormark Securities -- Analyst

Okay and then just as a related question, you're now consistently growing mortgages well above the market and I'm wondering is there a gap between you and the market where you would start to get concerned and what would that gap be?

Neil McLaughlin -- Group Head, Personal and Commercial Banking

Well, I think in terms of the market there, there was a player, a couple of years ago that was originating at an exceptionally high clip. And I would also look back, in 2018, we were not -- we wouldn't say we were at our best in terms of running the mortgage business. So we've commented in the past after 2018 at the back half of that year, we did a full end-to-end review and we're now really seeing the gains from that review right from additional sales power with more mortgage specialists on the ground meeting with customers right through to our operational processes, how we underwrite and specifically, how we're turning around and getting back to customers. So one of the things that's been a big improvement is just turnaround times and really having a customer centricity. So those would be the levers we have pulled. Graeme mentioned and Dave mentioned, as well in his comments, our origination profile, we've not, at all, gone down the risk curve. We have exactly the same FICO profile and LTV profile that we've had. So I mean at this point we're feeling really good about what we're originating. Some of what you're also seeing is that activity is up and in stressing the first quarter, you're seeing home price -- home prices jumping has also led to some increases. So that's really, I guess, the underlying rationale for our performance and we'll have to wait and see what the back half of the year looks like.

Meny Grauman -- Cormark Securities -- Analyst

Thank you.

Operator

Thank you. Our next question is from Steve Theriault with Eight Capital. Please go ahead.

Steve Theriault -- Eight Capital -- Analyst

Thanks. I had a question on Capital Markets. But maybe, Neil, since we have you, just a couple of quick follow-ups. Could you speak just to the mix of HELOC versus mortgages? I guess that -- has that come as a function of some of the considerations since 2018? Is it something proactive...

David McKay -- President and Chief Executive Officer

Steve, you're limited to one question, so do you want to ask a Capital Markets question or a retail question? Why don't you ask just your Capital Markets question?

Steve Theriault -- Eight Capital -- Analyst

All right, fair enough. The fixed income and rate trading, you mentioned the strength there, but it's pretty close to 2 times run rate levels and looking at the U.S. peers and what they did, FIC [Phonetic] was up 40% to 50%, it looks like. So it does seem to be on another level of growth. So maybe, Derek, you could talk a bit about the drivers there and maybe remind us about the mix of credit versus rates at -- within your portfolio versus some of your competitors.

Derek Neldner -- Chief Executive Officer and Group Head, RBC Capital Markets

Sure. Thanks, Steve. I appreciate the question. I think if you -- obviously from a starting point, if you look at the environment in the quarter, it was a very strong environment for the industry overall. And as you noted, a number of our U.S. peers that reported saw increases in that business. So we did have a strong environment that we were working within. If I break that down into a few different components, obviously, the low rates and the tightening of credit spreads we saw drove a very strong new issue environment that drove higher primary origination for us really across our various geographies. On the back of that, then, we did see a heightened client trading activity building on the DCM issuances as well, just given the strong secondary markets in general. So that drove very good ongoing secondary trading revenue for us in credit and in rates.

I would say the third driver was an increased focus on our corporate and FI Risk Solutions Group. So working on interest rate, foreign exchange hedging and I think that's really been a function of just driving improved collaboration across our businesses and across our geographies. As well, I would say, behind our trading businesses, the team has made a number of investments over the last year in people, in some systems and, frankly, I think, has just brought a very good execution and risk management that's being reflected in the trading results that you're seeing this quarter.

Steve Theriault -- Eight Capital -- Analyst

And is that, for the most part, carried on into the first few weeks of February?

Derek Neldner -- Chief Executive Officer and Group Head, RBC Capital Markets

Well, obviously, the market environment in terms of low rates and credit spreads remaining tight has continued. To the extent that it continues in place, we expect that will be a positive backdrop for us and others, but as Dave and Rod had mentioned, there certainly are some potential risks on the horizon. And so we'll just continue to monitor that carefully and see how it impacts our client trading flow. I would just maybe finally add related to one of your questions, we are carefully managing the risk profile of the trading book and as you'll see in one of the slides, our VAR for the quarter was actually down. So we don't -- we don't see the improved results being driven by any change to our risk profile or risk appetite.

Steve Theriault -- Eight Capital -- Analyst

Great...

David McKay -- President and Chief Executive Officer

Thanks, Steve. Yeah, please requeue for your retail question. We'll try to get through this.

Operator

Thank you. Our next question is from Gabriel Dechaine with National Bank Financial. Please go ahead.

Gabriel Dechaine -- National Bank Financial -- Analyst

Good morning. My question is for Graeme. Thanks for the outlook commentary on the factors that could affect your provisioning. I'm wondering if maybe you can fine tune that guidance COVID-19, rail blockade, will that keep your loss rate on performing loans at the upper end of that range or may be even above? And are you seeing any, maybe, issues in the nonperforming due to the rail blockades probably showing up?

Graeme Hepworth -- Chief Risk Officer

Yeah. Thanks, Gabriel. It's Graeme. I'll try and maybe address a few points around the COVID-19 and the rail blockades. I'd say our risk focus has been on kind of just three elements there. One, first and foremost is just the health and safety of our employees and then ensuring that we have the operational continuity and resiliency to work through this period and work through a period where it could potentially get worse. So displayed some great leadership by our teams there and working with external bodies to deal with these challenges. And then you look at the financial side of it, in terms of the direct risk there, we are not an operator player in Mainland China, so we have really no direct exposure to what's happening in the most acute part of this in China itself. And so that really brings us back to kind of the -- probably the area we are most focused on which is that kind of secondary risk as a consequence of what's happening.

And there's really two elements there that we're kind of focusing on. One is the impact of the Chinese consumer kind of disappearing for a period here. And then the second part would be the supply chain impact with China as the manufacturer to the world. Right now, I'd say, we're monitoring that, we're looking at evaluating the sectors that we think are most impacted, we're engaging with our clients. But the reality of this is, too early, too soon to really have a view as to the real impact here. I mean it's going to really depend on the duration of this and the severity going forward. And right now that's highly uncertain.

We're not seeing any impact on our portfolio at this point in time. And so really, as I said, we're just wondering for potential at this point. You did comment on stage one and two, with whether it's COVID-19 or the rail blockades, that would be the place it would manifest itself first, and so that would be something we'll be considering in Q2. But right now it's, as I said, it's too uncertain and it's too early to provide any guidance as to how material that could be.

Gabriel Dechaine -- National Bank Financial -- Analyst

And then the rail blockade, are you seeing anything in the stage three near-term horizon?

Graeme Hepworth -- Chief Risk Officer

No, my comment would apply to both the COVID-19 and the rail blockade. It's too soon to see impact. We've been to the road talking to clients and certainly clients are being impacted. But it really depends on the duration of this, and whether it has any staying power or not.

Gabriel Dechaine -- National Bank Financial -- Analyst

Thank you. I might requeue.

Operator

Thank you. Our next question is from Sumit Malhotra with Scotia Capital. Please go ahead.

Sumit Malhotra -- Scotia Capital -- Analyst

Thank you. Good morning. My question is for Rod. It's going to relate to margin and mix in City National. When the bank bought that business a few years ago and I have here, according to my notes, the mixture of the loan book was about 80% floating rate or adjustable. Has that mix changed significantly since Royal took over the business? And, relatedly, I think your logic that, Rod, was you expect margins to tick lower. Obviously, we've seen a substantial move over the course of the past year, as we've had three rate hikes. Is the more moderate outlook for margin compression based on your view on what the Fed does or is the variability of this book based more on, let's call it, market raise like SEDAR as opposed to the Fed?

Rod Bolger -- Chief Financial Officer

Yeah, Sumit. Thanks for that. So, I believe my comments were that we expected a continued decrease in Q1 because of the Fed decreases the two of them in our fiscal fourth quarter has to flow through for the full quarter, including the one in October and then we thought it would tick lower from there. And we continue to see that. We saw, obviously the pronounced decrease of 70 basis points quarter-over-quarter in Q1, we expect that to moderate. Right now, if you look at the Fed futures, there is a 86% -- this is as of yesterday afternoon, 86% chance of a Fed cut by July, that gets priced in the Fed futures and so therefore that gets priced into our modeling into the out quarters. So it might be 3 to 5 basis points on the Fed funds, which is not going to impact us as much. We still have a majority of our loans on the variable rate, as you cited, but part of this is also mix. So we've been growing that mortgage book in the 20% -- over 20% range which tends to have a lower margin than some of the other products. Also its funding sources.

So, yes, we've had very strong deposit growth, but when City National was acquired four-plus years ago, the majority of the funding was a non-interest bearing deposits. And as we've continued to grow the loan book double-digits, the mix of non-interest bearing deposits was over 50% as recently as first quarter last year. It's mid-40s now, so as that shifts a little bit, it will have a modest impact on your NIM and cause a few basis points of NIM compression here and there. But, overall, you're -- we're adding new profitable client relationships, strong client relationships, bringing more product and more services from a stronger platform both from City National's platform, as well as, RBCs platform. So this is all part of the strategy and we can't control the Fed funds, but we're still very comfortable with the business that we're at.

Sumit Malhotra -- Scotia Capital -- Analyst

And just to be clear, I'll stop here, your comments on what Fed funds future is, as far as pricing for your commercial portfolio is concerned, is it SEDAR that's the governing factor or is it specific movements by the Fed that drive that, meaning market rates or actual Fed fund movements for the most part?

Rod Bolger -- Chief Financial Officer

Most lending in the U.S. is based on LIBOR-based product at this point. So that changes, but that is influenced by Fed funds and so it might be more direct in other countries than it is in the U.S. but there still is a correlation there.

Sumit Malhotra -- Scotia Capital -- Analyst

Appreciate it. Thanks for your time.

Operator

Thank you. Our next question is from Doug Young with Desjardins Capital. Please go ahead.

Doug Young -- Desjardins Capital Markets -- Analyst

Hi, good morning. Just thinking about the U.S. wealth Management business, we've seen some changes by some of your peers. I mean Goldman has come out and said that they want to be bigger mass affluent and we see Morgan Stanley going into E*Trade, and I think Royal's focus has been mostly high net worth. Just want to get a sense of the strategy for that wealth business and I think we always talk mostly about the banking side, but maybe just the strategy for the wealth side of the business and it does not have to pivot here as well.

David McKay -- President and Chief Executive Officer

Yeah, thanks for the question, I'll take it. Certainly, as we think about our strategy and how we want to grow the business and how we want balance sheet to look at a CAD100 billion bank in the U.S. versus the CAD50 billion bank it is today. Now, as Rod alluded to, and we talked in our comments, we are shifting to a high net worth consumer balance sheet as a different balance from largely a commercial driven cash management organization with a Wealth Management cross sell.

Hence, we now are really focused on products like mortgage and cross-selling into core checking and cross-selling into advisory and Wealth Management products. So that strategy continues to build out. We are opening branches in New York and expanding into Washington and Nashville, as you've heard us tell that story, and that growth has accelerated. At the same time, the loan book has been growing faster than deposit book. So growing our deposit strategy has become of paramount importance. So you'll see us likely launch a direct-to-consumer bank in the United States sometime at the end of this year, or early next year, really focused on a higher net worth customer, not just similar to some of our competitors in the U.S., what they've done.

We have a number of strategies to looking at that to move it from high-beta to mid-beta type relationships and I think that strategy will help us fund our longer-term growth. So as we evolve in the U.S., we shift from a largely commercial cross sold into Wealth to a balance between kind of a high net worth -- ultra high net worth client, we'll move down a little bit down market into super affluent and look at the direct-to-consumer strategy filling in behind there. So you'll see us bring in some new capability around that to make sure that we're able to continue to grow both our loans and deposits at a strong ratio that you're seeing today. So that would be the shift for us and we feel good about the organic strategy versus having to go out and acquire deposits through an acquisition.

Doug Young -- Desjardins Capital Markets -- Analyst

Great, thank you.

Operator

Thank you. Our next question is from Mario Mendonca with TD Securities. Please go ahead.

Mario Mendonca -- TD Securities -- Analyst

Good morning. Probably for Graeme. When you look at the performing loan PCLs, the numbers have been small from the very beginning from when these new standards came to be. What I'm thinking about is, when you test the models, when you run scenarios through the models, what sort of -- what do you have to build in, in terms of unemployment or an outlook for rates or oil and gas or any variable really to make these numbers meaningful? And meaningful to me would be something, not 5 or 5 basis points, more like 15 or 20 basis points. What sort of environment do we need to see to make these numbers meaningful?

Graeme Hepworth -- Chief Risk Officer

Thanks, Mario. It's a good question. I think we -- a couple of things that I responded there. So to some extent we actually already do build some variability into that. We -- as part of our performing loan analysis, we build in five different scenarios into that. There is the base case and the pessimistic, which we provided some disclosure on historically, but in addition to those, we do run two other scenarios that -- one that focuses on kind of a much more depressed oil and gas environment and one that focuses on a much more depressed housing environment, and so those are factored in. And we weigh those accordingly. Because we do deals with lower probability events. And so when we bring those into play, that is why our overall allowance is materially higher than what our base case would articulate.

As the environment shifts and unemployment moves with that -- certainly unemployment, interest rates would be some of the bigger factors that would drive that allowance. But the sensitivity of that's really going to be dependent on the portfolio and depending on the business mix that we're looking at. But I don't think, to date, we've really disclosed the more specific than what you've seen in our disclosures in Q4.

Mario Mendonca -- TD Securities -- Analyst

So if I could just paraphrase, if Royal's business mix were to shift toward, say, aggressively into leverage lending, I'm not suggesting that's what's happening, but if the business mix were to shift into something that was a lot riskier and you moved your weightings toward the -- those unfavorable scenarios meaningfully, because you saw a big deterioration coming, is that the scenario -- are those the scenarios or conditions under which those performing loan PCLs would rise meaningfully?

Graeme Hepworth -- Chief Risk Officer

Well, there is a lot of difference. It's -- if we adjusted our base case in a meaningful way, that would drive it. And as I said, unemployment would be one of the biggest factors there just because of the sheer size of our retail business. Businesses like cards are inherently more volatile than other businesses. So again some of the factors there that will be driving that will be things like unemployment. On the wholesale side, it is factors like interest rates and actual market performance, commercial real estate industries that drive the models there more, so different factors driving different parts of our portfolio. Credit quality will drive that, so we see deterioration in our credit quality will see an impact there. But as I said earlier in the comments, growth is what drove it on one side this quarter and some of the macro changes we made this quarter drove it, credit quality this quarter, for example, it wasn't really a contributor to the overall allowance.

Mario Mendonca -- TD Securities -- Analyst

Okay. Thank you, Graeme.

Operator

Thank you. Our next question is from Sohrab Movahedi with BMO Capital Markets. Please go ahead.

Sohrab Movahedi -- BMO Capital Markets -- Analyst

Thanks. Neil, I'm sorry if you mentioned this and I missed it, but can you just provide a little bit of additional detail as to geographically, where the mortgage growth is coming from? And when you share the statistics around, I think Dave may have mentioned it around how many new customers you're picking up, is this a measure against that? In other words, are you picking up new mortgage customers and it's counting toward your, I think, goal of getting to around 2.3 million net new customers by 2023? Thanks.

Neil McLaughlin -- Group Head, Personal and Commercial Banking

Sure. Thanks for the question. Mortgage growth is really being driven out of the Eastern part of the country. So Ontario being the strongest, we're seeing really strong performance around the Toronto and the GTA. Southwestern Ontario, strong housing markets and places like Hamilton have been very supportive. And then in Quebec, where we have a very -- we're the number three player in Quebec, we've got a strong footprint there. And well described is the strong housing market in Montreal. So those would be the fastest growing regions in the portfolio. We have seen DC start to pick up, as that market start to recover from the price corrections we saw a little over a year ago.

In terms of -- so the second part of your question was around new clients. In terms of new clients, I guess a couple of comments we'd make building on Dave's commentary. We set out a plan to get to the targets that we laid out for 2023. We have an action plan in place. So we're feeling confident about the plan. We're up about 10% in terms of new client origination and specifically your question around, is mortgage -- is new mortgage clients part of it, it is. But the primary sort of first products while onboarding clients into would be the core checking account as well as the credit card. So those would be the two largest but, absolutely, new mortgage clients would go into those totals.

Sohrab Movahedi -- BMO Capital Markets -- Analyst

Thank you.

Operator

Thank you. Our next question is from Scott Chan with Canaccord Genuity. Please go ahead.

Scott Chan -- Canaccord Genuity -- Analyst

Good morning. Maybe just switching to the U.S. side, product mortgage growth up 20% year-over-year, is that driven by kind of core City National Bank in terms of its core location or is it kind of new branches or is it just the U.S. housing fundamentals are picking up momentum as well?

David McKay -- President and Chief Executive Officer

Our growth is across our markets. Our core market of Los Angeles and California, in general, continues to perform very well, when you look at MSAs. We are growing the number of branches we have in New York and it's become a core kind of lead product to acquire client relationships similarly and in our other cities that we've expanded to and that was part of the strategy that we articulated from day one as we could accelerate our expansion and our breakeven expansion by bringing new products to bear. So this is part of strategy, we've been talking about for four years. It's fantastic to see the team execute it. We've spent a significant amount of time building the back office to handle this type of volume growth and to deliver an exceptional experience and a quality experience for our clients and you're acquiring a lower risk customers. So this is exactly what we are looking for and how we want to grow the bank.

We're adding new branches in New York City this year and into next year, including into Hudson Yards. And this will be a core part of the growth strategy for our business.

Scott Chan -- Canaccord Genuity -- Analyst

Thank you.

Operator

Thank you. Our next question is from Mike Rizvanovic with Credit Suisse. Please go ahead.

Mike Rizvanovic -- Credit Suisse -- Analyst

Hi, good morning. I just wanted to go back to the margin guidance for Canadian Banking and I think the guidance was for 3 to 5 basis points of further compression potentially if we see the same sort of trends. Would that incorporate, not just the competition that was cited, but also low mix?

Rod Bolger -- Chief Financial Officer

Yeah, it's Rod. It factors in the pricing competition, it factors in what we're seeing out of the Bank of Canada in terms of the forward rate curve as well as product mix and so similar to a year ago, when in the kind of the fall-winter season, mortgage fixed rate -- mortgage spreads kind of came to a low point. They rebounded a bit last year in December and then into January and into the spring season. This year, that rebound was delayed, it didn't happen until January, but we've seen that those spreads rebound in January and again in February.

So we would expect that to hopefully continue again. It's a dynamic marketplace, so yes, you have mix, you have the markets and you have competitive pricing pressure and competitive pricing pressure has been the biggest driver of the last two quarter's decreases and what we're seeing in the marketplace right now is for that to abate somewhat for the rest of the year.

Mike Rizvanovic -- Credit Suisse -- Analyst

Okay. So that does incorporate some sort of spread pick up. I'm just looking at what's happened in the last two quarters and you've had about an 8 basis point decline. So is it fair to say you're expecting a little bit of improvement in the actual spread relative to where it was or something to mitigate what we've seen in the last two quarters, I guess, what I'm getting at?

Rod Bolger -- Chief Financial Officer

Well, what you've seen in the last two quarters, in Q4, you saw a mix. So that was mix and pricing competition. So that was a combination of the GIC growth and the mortgage growth being the predominance of our volume growth in Q4, which are lower spread products, so that's a mix issue. You also saw some of the fall into winter season spread compression that we've seen the last two years on the mortgage side. So that was the predominance of the 4 basis point in Q4.

This quarter it is the -- again, the weakness in the marketplace from a pricing perspective on the mortgage side is the primary factor this quarter and now that we're seeing spreads normalize a bit, as we saw in January and into February as well as last year, we expect that impact to moderate similar to what we saw last year. Last year rates were still going up, so you didn't actually see all of this because you thought rates were going up last year. But now that rates are coming down, this is more dynamic and what you're seeing. But we don't expect that 4 basis points each quarter to continue. In fact, we think it's going to be the 3 to 5 basis points for the rest of the way.

Mike Rizvanovic -- Credit Suisse -- Analyst

Okay, that's very helpful. Thanks very much for that.

Operator

Thank you. Our next question is from Nigel D'Souza with Veritas Investment Research. Please go ahead.

Nigel D'Souza -- Veritas Investment Research -- Analyst

Thank you. Good morning. If I could point you to slide or page 16 of your presentation slide. So you mentioned -- Graeme mentioned weakness in your unsecured retail portfolios and when I'm looking at your personal lending 90-day delinquency rate, it's relatively stable along with PCL. So I'm wondering if you could provide some color first on what's driving that stability, given also lower mix of HELOCs in that lending bucket.

And then second on credit cards, there is a sizable increase quarter-over-quarter in your 90-day delinquency rate. I'm wondering if you could provide some insights on to how much of that is being driven by the real change you noted in Quebec and also when we look at the PCLs and write-off rates for credit cards, they're actually down sequentially. So, could you provide some color on what's driving that divergence there between delinquencies and pre-sales and write-offs?

Graeme Hepworth -- Chief Risk Officer

Yeah. So this is Graeme. Let me also address that. I guess maybe just reiterating some of the comments I think we -- I made in my speech earlier that the two main effects we're seeing are one in Quebec, specifically, is the impact of the change in the minimum card payment amount and so that's translating through both uniquely to credit cards there, but it's also impacting overall insolvencies in the form of consumer proposals.

And as I said earlier, the personal lending -- we see Alberta influencing that in part and that's at the weakness in the Alberta situation there. And additionally, we are seeing rising insolvencies and consumer proposals more broadly than that. That's, I think, driven by a few things outside of Alberta, where, say, in Toronto we've got a very strong employment situation in Toronto, but you are seeing a rising cost of living. There is a latent affect associated with rising rates from 2018 and then more recently, you'd see rising rental costs that are influencing the cost of living for clients that, despite strong employment, is trickling through into the personal lending piece.

And so those are some of the factors that we're seeing. So maybe I'll -- Neil might have some comments here just on the growth side that could be influencing that as well.

Neil McLaughlin -- Group Head, Personal and Commercial Banking

Yeah, the one other thing I'll just add to Graeme's comments, on the personal lending, we talked in previous calls. That was a portfolio that was flat to actually had negative growth and that's returned to about a 3% growth. So you're starting to see kind of just the denominator effect of growth on the PCL as well. And then the credit card book, just the seasonality is one of the biggest drivers there and Graeme mentioned that in his comments, coming off the holiday season, very predictable.

Rod Bolger -- Chief Financial Officer

And it's Rod, I'm just going to give you, for what it's worth, in Q1 of '16 and Q1 of '17 and in Q1 of '18, the 90 days past due for credit cards was 80 basis points each quarter. So very similar to what we're seeing today. I think what you saw last year in Q1 was more of a cyclical low.

Nigel D'Souza -- Veritas Investment Research -- Analyst

Okay. That's really helpful, I appreciate the color. Thanks.

David McKay -- President and Chief Executive Officer

I think we'll either take one maybe two more. I think there's a couple in the queue. So, try to answer quickly and ask quickly. Next?

Operator

Thank you. Our next question is from Ebrahim Poonawala with Bank of America Merrill Lynch. Please go ahead.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

So we'll make it quick. Just for Graeme, following up on credit, I mean I think when you talk to sort of global investors, a lot's made out of the consumer proposals and insolvencies rising. I think you addressed that a little bit in some of the questions you answered, but outside of the coronavirus, outside of the rail strike, just if you can talk about one, should those proposal and the insolvency increase worries your shareholders and investors around sort of increasing credit risk around the consumer or you think that's kind of a little bit more bouncing off the lows idiosyncratic in nature. I think that would be helpful.

Graeme Hepworth -- Chief Risk Officer

Okay. If you look at our consumer portfolio, overall, on the secured products and to that extent, trends overall are very strong, they're very consistent, what we see in our origination has been a very consistent profile. When we look at the mix of our credit ratings on the consumer books, it's been very consistent. I mean the delinquency trends have been stronger. And so I called out specifically the effects that we're seeing on the unsecured because that's really the one pocket of weakness that we're seeing, driven by the rising consumer proposals and the facts that drive those are really the ones we've talked about here, the weakness in Alberta on one hand the card -- the payment effect in Quebec and then the general cost of living impact elsewhere. And so outside of those pieces that we've called out, again, I would say the consumer portfolio has been a very, very stable credit profile for us. We have not changed our origination strategies there. And so we've been very persistent and consistent in what we're bringing into the front door, and so I think those are the key messages that I would continue to leave you with on the consumer side.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

And do you think the three things that you pointed out, do they get worse or do you think that should be relatively stable?

David McKay -- President and Chief Executive Officer

Ebrahim, we'll cut you short there. We'll take one more question, sorry.

Operator

Thank you. Our next question is from Steve Theriault with Eight Capital. Please go ahead.

David McKay -- President and Chief Executive Officer

So you're back, Steve.

Steve Theriault -- Eight Capital -- Analyst

Hey. I'll keep it quick. Part of it was asked and answered. But Neil, if you could just complete the loop a bit for us in terms of some commentary around the HELOC versus the interest rate mortgage mix.

Neil McLaughlin -- Group Head, Personal and Commercial Banking

Right. Yeah, I think, Rod actually made a -- touched on it in his comments. We have seen -- so the HELOC book is actually shrinking. We're seeing customers move those into fixture mortgages, partly because I think clients outlook on rates and really wanting to have a predictable payment and then also as they work with our team, if that's the right advice for the clients, there is -- Rod touched on business mix, there is a margin reduction we take on that. But we do focus on the client, if that's the best advice for the client, then that's what we do. And we did see an acceleration of that in Q1 versus our sort of run rate for 2019.

Steve Theriault -- Eight Capital -- Analyst

Okay, thank you.

Operator

Thank you. I will now turn the meeting back over to Mr. McKay.

David McKay -- President and Chief Executive Officer

Well, thank you everyone for attending today's call and for your comments. There's a couple of things we really wanted you to take away from today's results and call that we just finished. And that is around strong volumes across all our core franchises. You look at Capital Markets results, out of our global markets business, out of our investment banking business, you look at our Canadian Banking franchise for mortgages to cards to commercial, you look at the Wealth Management results, which no one in Canada, which no one asked about but generating great, great core volume, great share gains, very strong results there that we didn't touch on in any of the questions, you look at the City National volumes just pushing 20% from both deposits and lending, or the strong insurance results.

So it really talks to core momentum from the investments we've made in capacity, in digital capabilities and investing in value for our customers have really delivered a core volume growth. We've done all of that, while maintaining high ROEs. So there's a lot of questions about margin, but at the end of the day, we drove 17.5% ROEs on a 12% CET1 base, talks to the returns we're getting off of the business we're booking, the cross-sell ratios we're getting, all done within a consistent credit appetite. So we feel very good about our start to the year. Thank you for your questions. We look forward to speaking with you in Q2.

Operator

[Operator Closing Remarks]

Duration: 65 minutes

Call participants:

Nadine Ahn -- Senior Vice President, Wholesale Finance & Investor Relations

David McKay -- President and Chief Executive Officer

Rod Bolger -- Chief Financial Officer

Graeme Hepworth -- Chief Risk Officer

Neil McLaughlin -- Group Head, Personal and Commercial Banking

Derek Neldner -- Chief Executive Officer and Group Head, RBC Capital Markets

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Meny Grauman -- Cormark Securities -- Analyst

Steve Theriault -- Eight Capital -- Analyst

Gabriel Dechaine -- National Bank Financial -- Analyst

Sumit Malhotra -- Scotia Capital -- Analyst

Doug Young -- Desjardins Capital Markets -- Analyst

Mario Mendonca -- TD Securities -- Analyst

Sohrab Movahedi -- BMO Capital Markets -- Analyst

Scott Chan -- Canaccord Genuity -- Analyst

Mike Rizvanovic -- Credit Suisse -- Analyst

Nigel D'Souza -- Veritas Investment Research -- Analyst

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