Royal Bank of Canada beat analysts’ estimates on strong performance from the company’s capital-markets business and lower-than-expected provisions for potential loan losses.
Canada’s biggest lender earned $2.92 a share on an adjusted basis in the fiscal second quarter, it said in a statement Thursday, topping the $2.76 average estimate of analysts in a Bloomberg survey. The bank’s provisions for credit losses totaled $920 million, less than the $929 million analysts had forecast.
That comes after Bank of Montreal’s shares tumbled Wednesday after reporting higher provisions than expected. Bank of Nova Scotia and Toronto-Dominion Bank earlier reported loan-loss provisions of more than $1 billion each. Set-asides at both Toronto-Dominion and National Bank of Canada came in higher than analysts had forecast.
At Royal Bank, net income in the firm’s capital-markets business rose 31 per cent from a year earlier to $1.26 billion, primarily owing to higher revenue in corporate and investment banking.
Royal Bank saw costs increase 12 per cent from a year earlier as it digests the purchase of HSBC Holdings Plc’s Canadian assets, the biggest takeover in its history. Non-interest expenses totaled $8.31 billion in the three months through April, more than the $7.95 billion analysts were expecting.
Royal Bank closed its $13.5 billion takeover of HSBC Canada on March 28, with about one month left to go in the quarter, and immediately began converting branches to the Royal Bank banner and switching customers and employees over to its own systems. The lender has also grappled with higher costs at its Los Angeles-based City National Bank subsidiary, where it’s investing in improved risk controls after being hit with a regulatory fine over lapses in compliance practices.
Overall net income at Toronto-based Royal Bank was up 7.3 per cent to $3.95 billion.
The lender’s Common Equity Tier 1 ratio was 12.8 per cent at the end of the quarter, higher than the 12.5 per cent level it forecast it would hit after closing the HSBC deal. It announced a 4-cent increase in its quarterly dividend to $1.42 per share.
Also during the quarter, Royal Bank fired Chief Financial Officer Nadine Ahn, a shock exit that came after the bank said she’d violated its code of conduct by having an undisclosed “close personal relationship” with a colleague who was given preferential treatment. Katherine Gibson was named interim CFO.
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2024-05-30 10:37:40Z
CBMiZWh0dHBzOi8vd3d3LmJubmJsb29tYmVyZy5jYS9yYmMtdG9wcy1lc3RpbWF0ZXMtYXMtcHJvZml0LXN1cmdlcy1pbi1jYXBpdGFsLW1hcmtldHMtZGl2aXNpb24tMS4yMDc5MDU40gEA
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