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(Bloomberg) — Rapid technology advancements are fueling “insatiable appetite” for all forms of capital, according to Royal Bank of Canada Chief Executive Officer Dave McKay, who said his firm still has enough balance-sheet capacity to meet lending demand for the artificial-intelligence buildout.
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“These emerging technologies in space and satellites — and absolutely the push for AI compute capacity — is driving the insatiable appetite for all forms of capital,” McKay said Tuesday at a Bloomberg Newsmakers event in Toronto.
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McKay, who has led Canada’s largest lender since 2014, said the syndicated-loan market for AI infrastructure — for everything from air-conditioning systems to leases and computing chips — is very active, noting, “you’re seeing our book grow significantly.”
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“We have capacity though,” McKay said. “We have capacity in the overall structure of our balance sheet.”
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SpaceX shares have continued to surge since its trading debut on Friday following its record initial public offering, and its market capitalization was neck and neck with that of Amazon.com Inc. Tuesday morning. Anthropic PBC and OpenAI are also planning to go public later this year, and hyperscalers such as Alphabet Inc. and Meta Platforms Inc. have been raising massive amounts of capital to fuel AI investments.
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Royal Bank, which has committed to create C$1 billion ($715 million) in enterprise value from AI by 2027, has an in-house AI research center and built one of the country’s largest private farms for graphics processing units, or GPUs. McKay said it also has its own AI software “tokens,” which have become a cost concern for some companies as employees embrace AI use.
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McKay said he’s using custom-built CEO agents to analyze macroeconomic and financial data, starting every work day with about an hour of combing over the results. The tools are “condensing” the conversations he has with staff but not replacing them, he said.
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The Royal Bank CEO said he sees AI contributing to inflation in the near term but productivity enhancements will ultimately be “deflationary.”
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“It is unbelievable how fast these models are training” Royal Bank’s employees, he said. Over time, “we’ll maybe need less people, but a lot of that is coming through attrition and through demographic change,” he said. “We need that in society. We need these tools.”
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—With assistance from Lisa Abramowicz.
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English (US)