This report provides a comprehensive analysis of the financial strength of Royal Bank of Canada, including an overview of the company, its mission and vision, marketing strategy, and a ratio analysis to assess its financial performance.
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Running head: FINANCIAL ANALYSIS OF ROYAL BANK OF CANADA Financial Analysis of Royal Bank of Canada Name of the Student Name of the University Author’s note
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1FINANCIAL ANALYSIS OF ROYAL BANK OF CANADA Executive summary The aim of the report is to analyse the financial strength of the company. The report gives details of the overview of the company and the mission and vision of the bank. The report also contains the details of marketing strategy of the company and the elaboration of the products of the organisation. Lastly, a ratio analysis has been made which will give an idea about the financial strength of the bank.
2FINANCIAL ANALYSIS OF ROYAL BANK OF CANADA Table of Contents Introduction................................................................................................................................3 Discussion..................................................................................................................................3 Overview of the bank.................................................................................................................3 Management policy of the bank.................................................................................................3 Marketing analysis.....................................................................................................................5 Financial analysis.......................................................................................................................7 Conclusion..................................................................................................................................8 References..................................................................................................................................9
3FINANCIAL ANALYSIS OF ROYAL BANK OF CANADA Introduction Banks are the main institutes, which controls the entire economy of a country. The performance of the banks are the indicators of the economic condition of the country. The Royal bank of Canada being the largest bank in the country. The main motive of the bank is to provide efficient banking service to the people of Canada and to improve the economic condition of the country. Discussion Overview of the bank The Royal bank of Canada is the largest bank in Canada by market capitalisation. At present, the bank is giving service to more than 16 million customers and has 80000 employees to serve them. The bank was formed in the year 1864 in Halifax Nova Scotia and it’s headquarter is situated in Toronto Ontario and in Montreal Quebec. The bank has 1209 branches all over the world to serve sixteen million customers. The bank was declared as the largest Canadian company by revenues and market capitalisation and was ranked 50 in the Forbes global 2000 listing. Currently the value of the bank’s assets under management is about 673.20 billion dollars(Maiorano Mook & Quarter2017). Management policy of the bank The main objective of the bank is to provide service to its customers. The strategic goals of the organisation are stated below: To become the undisputed leader in the financial sector in Canada To become the leading service provider of capital market wealth management and banking services by establishing high quality of infrastructure and technology(McKeown 2017). To understand the strategic goal of the bank it is required to make a SWOT analysis. The SWOT analysis is a tool to get an idea about the strength , weakness that the bank have in its internal environment and the opportunity and threat that the bank may face from the external environment of th market(Begley Purnanandam & Zheng2017). The strength weakness opportunity and threat of the royal bank of Canada is shown in the tabular form:
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4FINANCIAL ANALYSIS OF ROYAL BANK OF CANADA Strength Successfully completed merger and acquisition with the other firms. Long-term presence in the market create strong brand images. Successfulrecordof accomplishmenttodevelopnew banking products. Strongnetworkinthelocaland international market. Weakness The expansion strategy of the bank haslimitations,whichcreates barrier in the growth of the bank. Efficient financial planning is not there in the internal control system. Thecompanyfailtotacklethe challenges from the new entrants. Opportunities New customer base generated from the online channel. The economic growth in Canada has creatednewopportunitiesforthe bank. Stabilityinthecashinflowhas given the opportunity to the bank to invest in adjacent product segments. Threat As the company operates in various countries the currency fluctuation of these countries, affect the business of the bank. Thepoliticalsituationofvarious countries is a challenge for the bank. Employee benefit scheme of the company The bank believes in the fact that it is necessary to keep the employees satisfied and in return, the employees will effective service to the customers. The main benefits that the bank provides to its employees are stated below Creation of multicultural workspace The employees of the bank enjoys the multicultural working environment in the bank. Work life balance
5FINANCIAL ANALYSIS OF ROYAL BANK OF CANADA The bank always look after the fact that a balance can be made between the work and personal life of the employees. For this reason, this has made the company popular for the job seekers(Salvioni & Gennari 2016). Financial benefits The banks provide various financial benefits to the employees like the employee stock option scheme and incentives, which encourages the employees to work with more efficiency and deliver their best potentiality(Mohsni & Otchere 2017). Marketing analysis Due to the long presence in the market, the bank has created a strong brand image. The name of the bank has become a symbol of trust for the clients. The company has very diversified product line for which it become possible for them to serve their customers efficiently for a long period(Hoqueet al2017). Some of the products of the bank are Wealth management service Investment banking Retail banking Cash management and foreign exchange management Asset based finance Borrowing and credit solution The bank’s potential customers are the young and aspirants who have recently joined their services and need financial planning and the organisations who need loan to run their business.Some of the demographic behaviours of the clients of the bank are stated below: Age : the age of the customers should be between the range of 30 to 45 Income :the income standard should be high Education: highly educated Occupation: must be working at least at the managerial position of any reputed company.
6FINANCIAL ANALYSIS OF ROYAL BANK OF CANADA Psychographics behaviour includes the following Activities Value Lifestyle. The bank is using the internet as the main source to reach its customers. Marketing mix of Royal bank of Canada covers the following 4Ps Product:the bank has diversified product mix, which makes it popular among the customers. Price:it provide services at affordable price Place:the huge network of the bank in all over the world has made it popular among the customers Promotion:the bank use its string brand image as the main promotional tool. The major competitors of the Royal bank of Canada are mentioned below: Toronto dominion bank Bank of Nova Scotia Bank of Montreal The strong brand image of the bank gives the bank the competitive advantage over the other banks. The bank by providing efficient services to its clients competes with the other competitors of the market. Financial analysis
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7FINANCIAL ANALYSIS OF ROYAL BANK OF CANADA From the above financial analysis, it can be observe that the net income of the bank increased in the last three years, which indicates that the bank is performing well in the recent days. In the last financial year, also the profit of the bank increased. Beside that the banks return on equity is also in an increasing trend that means that the bank is providing good returntotheshareholders. In the last one year, the share price of royal bank of Canada has increased from 98.05 to 103.16, which means the share of the company is in an increasing trend. The current performance of the company indicates that in future also the company will give more return to its shareholders. Besides that, the company also give positive return on investment in the last three years. Conclusion From the above discussion, it can be concluded that the royal bank of Canada has all the potential to grow in the future and give good return to its investors. The royal bank of Canada through its long-term presence in the market has been able to reach more customers. The strong satisfied customer base of the bank has affected the price of the shares of the company. The wide range of products and the effective marketing strategy of the company has also improved the future prospect of the company.
8FINANCIAL ANALYSIS OF ROYAL BANK OF CANADA References Begley, T. A., Purnanandam, A., & Zheng, K. (2017). The strategic underreporting of bank risk.The Review of Financial Studies,30(10), 3376-3415. Hoque, K., Earls, J., Conway, N., & Bacon, N. (2017). Union representation, collective voice and job quality: An analysis of a survey of union members in the UK finance sector.Economic and Industrial Democracy,38(1), 27-50. Maiorano,J.,Mook,L.,&Quarter,J.(2017).IsThereaCreditUnionDifference? Comparing Canadian Credit Union and Bank Branch Locations.Canadian journal of nonprofit and social economy research,7(2). McKeown, R. (2017).An overview of the Canadian banking system: 1996 to 2015(No. 2110- 2018-4515). Mohsni, S., & Otchere, I. (2017). Does regulatory regime matter for bank risktaking? A comparativeanalysisofUSandCanada.d/SeasWorkingPapers-ISSN2611- 0172,1(1), 28-28. Salvioni,D.M.,&Gennari,F.(2016).Corporategovernance,ownershipand sustainability.Corporate Ownership and Control,13(2), 606-614.