RBC grows first-quar­ter profit

The Hamilton Spectator - - BUSINESS - ALEXAN­DRA POSADZKI

Royal Bank of Canada, the coun­try’s largest lender, re­ported strongerthan-ex­pected first-quar­ter re­sults Fri­day on the back of solid earn­ings from its Cana­dian bank­ing, wealth man­age­ment and cap­i­tal mar­kets busi­nesses.

RBC, the sec­ond of the five big banks to re­port quar­terly earn­ings, had $3.03 bil­lion of net in­come dur­ing the quar­ter, up 24 per cent from a year ago. That amounted to $1.97 per di­luted share, up 39 cents over the same pe­riod.

“Credit qual­ity across our port­fo­lios also im­proved, ben­e­fit­ing from sta­ble eco­nomic con­di­tions in Canada and higher oil prices,” CEO David McKay said dur­ing a con­fer­ence call to dis­cuss the bank’s re­sults.

RBC re­duced the amount of money it has set aside for bad loans to $294 mil­lion, down 18 per cent from the pre­vi­ous quar­ter thanks in part to re­cov­er­ies in the oil and gas sec­tor.

To­tal gross im­paired loans came in at $3.56 bil­lion, down $344 mil­lion from the fourth quar­ter of last year.

The Toronto-based bank shuf­fled its man­age­ment ranks, mov­ing Jen­nifer Tory, the sis­ter of Toronto mayor John Tory, to the role of chief ad­min­is­tra­tive of­fi­cer.

For the past three years Tory has served as group head of per­sonal and com­mer­cial bank­ing at RBC, a role that will be taken over by Neil McLaugh­lin, cur­rently the ex­ec­u­tive vice-pres­i­dent of busi­ness fi­nan­cial ser­vices.

The lender cau­tioned that it’s keep­ing an eye on its port­fo­lio of mort­gage loans in Toronto and Van­cou­ver, two mar­kets that econ­o­mists have cau­tioned could be in a bub­ble.

“Given ac­cel­er­ated house price ap­pre­ci­a­tion in both of these mar­kets we con­tinue to closely mon­i­tor this port­fo­lio with ex­tra due dili­gence for higher value mort­gages,” chief risk of­fi­cer Mark Hughes told an­a­lysts.

“Over­all, we re­main com­fort­able with our res­i­den­tial mort­gage port­fo­lio given our clients’ abil­ity to re­pay and the strong un­der­ly­ing credit qual­ity of this port­fo­lio.”

Bar­clays an­a­lyst John Aiken said RBC’s re­sults re­flected some of the trends seen in CIBC’s earn­ings on Thurs­day.

“Royal’s first quar­ter ben­e­fited from stronger-than-an­tic­i­pated credit qual­ity, trad­ing rev­enues and cost con­trols, which is quickly be­com­ing the theme of the quar­ter,” Aiken said in a note to clients.

CIBC, Canada’s fifth largest bank by mar­ket cap, also beat ex­pec­ta­tions, re­port­ing net in­come of $1.41 bil­lion as trad­ing rev­enues re­bounded and credit losses were bet­ter than an­tic­i­pated. Sco­tia­bank and the Bank of Mon­treal will re­port on Tues­day; TD Bank will end the earn­ings pa­rade on Thurs­day.

RBC said rev­enue for the three months ended Jan. 31 was $9.55 bil­lion, up from $9.36 bil­lion dur­ing the same pe­riod last year.

Af­ter ad­just­ments the lender had $1.87 per share of earn­ings, higher than the $1.77 per share that an­a­lysts had ex­pected, ac­cord­ing to Thomson Reuters.

Af­ter strip­ping out the sale of the U.S. op­er­a­tions of Moneris, RBC said it earned $2.82 bil­lion, up 15 per cent from a year ago.

RBC also boosted its div­i­dend by four cents, or five per cent, to 87 cents per share, payable on May 24.

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