RBC profit climbs 6% on gains in retail banking loans, wealth management fees - The Globe and Mail

A Royal Bank branch in Toronto.CARLOS OSORIO/Reuters

Royal Bank of Canada RY-T reported a 6-per-cent rise in first-quarter profit driven by increases in retail banking loans and wealth management fees.

For the three months that ended Jan. 31, RBC earned $4.1-billion, or $2.84 per share, compared with nearly $3.9-billion, or $2.66 per share, in the same quarter last year.

Adjusted to exclude certain items, RBC said it earned $2.87 per share, which was well ahead of the average estimate of $2.71 per share among analysts, according to Refinitiv.

The bank kept its quarterly dividend unchanged at $1.20 per share, and bought back $1.2-billion of shares in the quarter.

Profit of $2-billion from personal and commercial banking, which is RBC’s largest division, was up 10 per cent year over year. The increase was driven partly by higher fees from distributing mutual funds. But loans also increased by 8 per cent on average, led by a 10.8-per-cent rise in residential mortgages amid busy housing markets. Business loans increased 8.4 per cent from a year earlier, and lagging credit card balances showed signs that they are rebounding, up 3.5 per cent.

Wealth management profits surged by 24 per cent to $795-million as strong equity markets drove fees higher. The bank also released $80-million of a $116-million legal provision it had recorded in its U.S. wealth division in the previous quarter, which helped the division’s results.

The bank’s capital markets arm reported profit of $1-billion, down 3 per cent from an unusually strong first quarter last year, as mergers remained hot but fixed income trading trailed off.

Profits from the bank’s insurance arm and its investor and treasury services division declined by 2 per cent and 4 per cent respectively.

RBC benefited from low provisions for credit losses – the money banks set aside to cover loans that may default – of $105-million, consistent with analysts’ estimates.

Revenue increased 1 per cent to $13.1-billion, and expenses were relatively flat at $6.5-billion, even as the bank paid higher compensation and bonuses to bankers.

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2022-02-24 11:56:53Z
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