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Levels of Optimism Hit Rock Bottom TORONTO, February 2, 2009 — Chartered Accountants in executive corporate positions whoresponded to the CICA/RBC Business Monitor (Q4 2008) survey indicated that on average, their profitsand revenues are estimated to decline in the year ahead. This is the first time that corporate profits havebeen estimated to decline since the inception of the study in Q2 2007. In Q4 (2007) profits for the next 12 months were projected to increase three per cent. When compared to Q4(2008), profits are now expected to decrease 2.4 per cent. Similarly, in Q4 (2007), revenues for the next 12 months were projected to increase three per cent. Whencompared to Q4 (2008), revenues are now expected to decrease 1.6 per cent. In addition – and not surprisingly – the survey also found that optimism in the Canadian economy has hitrock bottom. Only two per cent of the respondents were optimistic about the economy over the next twelvemonths compared to 63 per cent a year ago. RBC Economics is forecasting that the Canadian economy likelydeclined in the fourth quarter of 2008 with these recessionary conditions continuing into the first quarterof 2009. Optimism about their own business has also declined. Only 23 per cent were optimistic about the prospectsfacing their companies over the next 12 months, compared to 57 per cent in Q4 2007. “These are certainly volatile times and that uncertainty is impacting optimism in the Canadian economy,”said Kevin Dancey, FCA, CICA president and CEO. “Businesses are looking at ways to ensure that theiroperations remain viable. The most creative will be the most successful.” From a regional perspective provincial optimism has dropped drastically in each of the followingprovinces: British Columbia (four per cent compared to 87 per cent in Q4 2007); Alberta (15 per cent versus60 per cent in Q4 2007); Quebec (six per cent compared to 44 per cent in Q4 2007); and Ontario (zero per centversus 28 per cent in Q4 2007). Declines in business optimism on a year over year basis are at least down 25per cent in each province. “While RBC Economics forecasts a rocky start for 2009 for Canadian businesses, it’s important to rememberthat our economic fundamentals are much stronger than that of our largest trading partner, the UnitedStates,” added Shauneen Bruder, executive vice president, Business and Commercial Banking, RBC Royal Bank.”As a result, there are significant opportunities available for well positioned businesses here inCanada.” The CICA/RBC Business Monitor is issued quarterly, based on a survey conducted by The CanadianInstitute of Chartered Accountants (CICA). The report draws upon business insights of CAs in leadershippositions in privately and publicly held companies across Canada.
For this Q4 2008 report, emailed surveys were completed by 426 CAs of 3,974 identified by CICA as holdingsenior positions (CFOs, CEOs and COOs) in publicly or privately held companies in Canada. The response ratewas 11 per cent, with a margin of error associated with this type of study at ± 4.7 per cent, with aconfidence level of 95 per cent. The CICA/RBC Business Monitor (Q4 2008) is part of an international initiative. The AmericanInstitute of Certified Public Accountants (AICPA) in the United States and the Institute of CharteredAccountants in England and Wales (ICAEW) in the United Kingdom also undertake quarterly studies that tap theinsights of members in senior positions to provide a barometer of economic activity in their nations and as abasis for future comparative analysis across countries. The CICA/RBC Business Monitor (Q4 2008) is availableonline at www.cicarbcbusinessmonitor.com. About CICA
The Canadian Institute of Chartered Accountants (CICA), together with the provincial, territorialand Bermuda Institutes/Ordre of Chartered Accountants, represents a membership of approximately 74,000 CAsand 10,000 students in Canada and Bermuda. The CICA conducts research into current business issues andsupports the setting of accounting, auditing and assurance standards for business, not-for-profitorganizations and government. It issues guidance on control and governance, publishes professionalliterature, develops continuing education programs and represents the CA profession nationally andinternationally. CICA is a founding member of the International Federation of Accountants (IFAC) and theGlobal Accounting Alliance (GAA). About RBC Royal Bank
RBC Royal Bank delivers a wide range of financial services through a variety of channels toindividuals, small and medium-sized businesses and commercial clients, including deposit accounts,investments and mutual funds, credit and debit cards, business and personal loans, and residential andcommercial mortgages. Through its focus on industry specialization, RBC Business and Commercial Bankingprovides industry-specific financial and business advice to help clients successfully start up, sustain, growand transition their businesses. RBC Royal Bank is the personal and commercial banking division of Royal Bankof Canada (RY on TSX and NYSE).- 30 - – 30 – Interviews can be arranged with Kevin Dancey, CICA president & CEO, by contacting:
Tobin Lambie, CICA, (416) 204-3228 or c/o tobin.lambie@cica.ca Interviews can be arranged with Shauneen Bruder, executive vice-president, RBC Business andCommercial Banking, by contacting:
Jackie Braden, (416) 974-2124 or c/o jackie.braden@rbc.com; or
Janet Gibson Eichner, (416) 974-7622 or c/ojanet.gibson-eichner@rbc.com
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