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Royal Bank Profit Rises 4.9% on Consumer Lending, Trading

Royal Bank of Canada, the country’s largest lender, said second-quarter profit rose 4.9 percent on higher Canadian consumer lending and increased trading revenue.

Profit from continuing operations excluding a loss tied to buying out its RBC Dexia Investor Services partner rose to C$1.77 billion ($1.73 bilion), or C$1.15 a share, the Toronto- based lender said in a statement. That compares with profit of C$1.68 billion, or C$1.10 a share, in the year-earlier period.

Higher earnings from Canadian consumer banking on growth in deposits, mortgages and business loans, as well as a 26 percent increase in trading revenue helped lift profit after excluding results from its U.S. lending unit sold in March.

Including the C$202 million acquisition loss from buying a 50 percent stake in RBC Dexia, Royal Bank said profit for the period ended April 30 fell 7 percent to C$1.56 billion, or C$1.01 a share. That’s down from C$1.68 billion, or C$1.10 a share, a year earlier.

Royal Bank said it earned C$1.17 a share excluding items, missing the C$1.18-a-share average estimate of 15 analysts surveyed by Bloomberg News on that measure.

The bank said April 3 that the majority of the loss from its C$1.1 billion takeover of the RBC Dexia stake from Banque Internationale a Luxembourg SA would be taken in the second quarter. Continuing operations excludes the Raleigh, North Carolina-based RBC Bank, which Royal Bank sold to PNC Financial Services Group Inc.

Bad Loans

Net income fell 6.2 percent to C$1.53 billion, or 99 cents, from C$1.63 billion, or C$1.06 a share, in the year-earlier period, according to financial statements.

Royal Bank set aside C$348 million for bad loans, 27 percent higher than a year ago.

Canadian banking profit rose 4.7 percent to C$937 million, from C$895 million a year ago, on growth of deposits, mortgages and business loans. International banking, which includes RBC Dexia and Caribbean banking, had a net loss of C$196 million after the acquisition costs.

The RBC Capital Markets investment-banking business rose 11 percent to C$449 million, on higher trading and corporate and investment banking. Trading revenue across the bank rose to C$761 million from C$602 million a year ago, led by trading of equities and interest rate and credit securities.

Wealth management profit fell 6.6 percent to C$212 million, while insurance rose 23 percent to C$151 million on volume growth and lower claims costs on Canadian insurance products.

(Royal Bank will hold a conference call to discuss results at 8 a.m. at +1-416-340-2217 or 1-866-696-5910 passcode 1853457 or at www.rbc.com/investorrelations/ir_events_presentations.html)

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; David Scanlan at dscanlan@bloomberg.net

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