RBC Profit Beats Estimates on Gains in Wealth Management, Retail

  • Royal Bank posts record earnings in personal and commercial
  • CIBC earlier beats estimates on higher profit from retail

Royal Bank of Canada posted fiscal second-quarter profit that beat analysts’ estimates on record earnings in personal and commercial banking and gains from last year’s U.S. takeover of City National Bank.

Net income for the period ended April 30 climbed 2.8 percent to C$2.57 billion ($1.98 billion), or C$1.66 a share, from C$2.5 billion, or C$1.68, a year earlier, the Toronto-based firm said Thursday in a statement. Adjusted profit, which excludes some items, was C$1.71 a share, beating the C$1.64 average estimate of 13 analysts surveyed by Bloomberg.

Royal Bank’s $5 billion purchase of Los Angeles-based City National in November helped bolster earnings of its wealth-management business. The lender reported an 8 percent increase in personal and commercial banking to C$1.3 billion, and a 44 percent surge in insurance results to C$177 million.

“We delivered a solid quarter, with earnings of over C$2.5 billion, reflecting underlying strength across our businesses,” Chief Executive Office Dave McKay said in the statement.

Impaired Loans

The bank set aside C$460 million for bad loans, up from C$282 million a year earlier. Impaired loans to oil and gas firms were C$1.04 billion, compared with C$310 million in the first quarter and C$46 million a year ago. Royal Bank had about C$8 billion of oil-and-gas loans in the second quarter, compared with C$8.38 billion at the end of January and C$7 billion a year earlier.

Royal Bank plans to repurchase as many as 20 million of its common shares, or about 1.3 percent of shares outstanding, the lender said in a separate statement.

Earlier Thursday, Canadian Imperial Bank of Commerce said second-quarter profit rose 3.3 percent on gains in retail and business banking. The lender boosted its quarterly dividend 2.5 percent to C$1.21 a share, its seventh consecutive increase.

Net income climbed to C$941 million, or C$2.35 a share, from C$911 million, or C$2.25, a year earlier, the Toronto-based bank said in a statement. Profit excluding some items was C$2.40 a share, beating the C$2.31 average estimate of 14 analysts surveyed by Bloomberg.

Profit from retail and business banking rose 12 percent to C$652 million from a year earlier, while earnings from CIBC’s capital-markets unit increased 5 percent to C$252 million. Wealth-management earnings were down 12 percent to C$113 million after the bank announced in December that it was selling its stake in American Century Investments, according to the statement.

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