DBRS Morningstar Assigns Ratings of AA (high)/R-1 (high), Stable, to the Royal Bank of Canada – New York Branch

DBRS, Inc. (DBRS Morningstar) assigned a Long-Term Senior Debt rating of AA (high) and a Short-Term Instruments rating of R-1 (high) to the Royal Bank of Canada – New York Branch (RBC-New York Branch). Both trends are Stable. Consistent with its standard practice of equalizing ratings on foreign bank branches in countries with low cross-border risk, DBRS Morningstar equalized the ratings of RBC-New York Branch to those of the Royal Bank of Canada (RBC).

These ratings apply to RBC’s $40.0 billion commercial paper notes and interest-bearing extendable notes program issued out of RBC-New York Branch.

RATING DRIVERS
The ratings of RBC-New York Branch are expected to move in tandem with the ratings of RBC. Given RBC’s high rating level and the current economic environment, an upgrade of the ratings is unlikely. Ratings would be downgraded if there is a prolonged adverse impact from the Coronavirus Disease (COVID-19) pandemic resulting in a sustained deterioration in asset quality, especially due to deficiencies in risk management. Additionally, a sustained weakening of profitability metrics would also result in a downgrade of ratings.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

The Grid Summary Grades for RBC are as follows: Franchise Strength – Very Strong; Earnings Power – Very Strong/Strong; Risk Profile – Strong; Funding & Liquidity – Strong; Capitalization – Very Strong/Strong.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (June 8, 2020) https://www.dbrsmorningstar.com/research/362170/global-methodology-for-rating-banks-and-banking-organisations.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

The primary sources of information used for this rating include Company Documents. DBRS Morningstar considers the information available to it for the purposes of providing this rating was of satisfactory quality.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This rating is endorsed by DBRS Ratings Limited for use in the European Union. The following additional regulatory disclosures apply to endorsed ratings:

The last rating action on RBC took place on June 11, 2020, when DBRS Morningstar confirmed its ratings on RBC.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are monitored.

For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Lead Analyst: John Mackerey, Senior Vice President
Rating Committee Chair: Lisa Kwasnowski, Senior Vice President
Initial Rating Date: August 12, 2020

For more information on this credit or on this industry, visit www.dbrsmorningstar.com.

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