Royal Bank of Canada, the country’s largest lender, lifted its dividend after reporting a 4 percent gain in fiscal third-quarter profit on record earnings from domestic banking.
Net income for the period ended July 31 rose to C$2.48 billion ($1.86 billion), or C$1.66 a share, from C$2.38 billion, or C$1.59, a year earlier, the Toronto-based company said Wednesday in a statement. Adjusted profit, which excludes some items, was C$1.68 a share, beating the C$1.67 average estimate of 14 analysts surveyed by Bloomberg. Royal Bank boosted its dividend 2.6 percent to 79 cents.
RBC’s stock has dropped 10 percent this year as Canada’s resource-driven economy sputters, with the collapse in oil prices pressuring earnings amid a consumer-lending slowdown. Profit from Canadian banking rose 4.6 percent from a year earlier, helping counter declines from capital markets and insurance.
“People have underestimated the resiliency of their earnings,” said Ian Nakamoto, director of research at MacDougall MacDougall & MacTier Inc. in Toronto, which oversees about C$5 billion. “Personal and commercial banking continues to deliver, even though we’re in a weak economic environment.”
Profit from personal and commercial banking, which includes the Caribbean and the U.S., rose 13 percent to C$1.28 billion, Royal Bank said.
The bank’s earnings reflect “underlying strength across our businesses and strong execution in a challenging environment,” Chief Executive Officer David McKay, 51, said in the statement.
Revenue slipped 1.8 percent from a year earlier to C$8.83 billion, Royal Bank said. The lender set aside C$270 million for bad loans, a decrease of 4.6 percent.
Capital markets earnings fell 15 percent to C$545 million on lower revenue from trading and investment-banking fees. Underwriting and advisory fees slid 3.8 percent to C$531 million, while trading revenue across the bank fell 21 percent to C$679 million, pulled down by bonds and equities trading.
Wealth-management profit was little changed at C$285 million, and insurance declined 19 percent to C$173 million. Investor and treasury services, which includes Royal Bank’s global custodial business, rose 52 percent to C$167 million.
Royal Bank, the second Canadian lender to report quarterly results, follows Bank of Montreal in beating analysts’ profit estimates. Bank of Montreal yesterday posted record profit of C$1.19 billion, up 5.9 percent from a year earlier, on retail banking and wealth management gains.
RBC, like Bank of Montreal, showed a spike in impaired oil and gas loans. Impaired loans in the industry almost quadrupled to C$183 million in the quarter from C$46 million in the second quarter, and were only C$5 million in the first quarter.
National Bank of Canada also reported results that beat estimates Wednesday. The Montreal-based lender posted third-quarter profit of C$453 million, up from C$441 million a year earlier. Adjusted earnings were C$1.25 a share, topping the C$1.19 estimate.