RBC increases the dividend, records gains when bank profits begin

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The Royal Bank of Canada reported a 5% increase in quarterly earnings and increased its dividend as strong results in personal and commercial banking and asset management offset a weak quarter in capital markets.

For the three months ended July 31, RBC's earnings were $ 3.26 billion, or $ 2.22 per share, compared to $ 3.11 billion, or $ 2.10, a year ago.

Adjusted to exclude certain elements, RBC said it earned $ 2.26 per share, while analysts expected $ 2.31 per share, according to Refinitiv data.

The story continues under the announcement

RBC increased its quarterly dividend by 3 cents per share, to $ 1.05.

Toronto-based RBC, which is Canada's largest asset bank, is the first major bank to report results for the third fiscal quarter. Analysts had considered the bank's results as a crisis factor for the sector, as the prospects for banks are overshadowed by global trade tensions and the weakening of economic conditions in some large economies.

RBC's provisions for credit losses, or monetary banks set aside to cover bad debts, amounted to $ 425 million in the third quarter, an increase of 23% compared with the previous year. But this compares with historically low levels a year ago and the ratio of RBCs to provisions and overall loans has slightly decreased compared to the second quarter.

Profits from personal and commercial banks increased 10% to $ 1.66 billion, compared to a year earlier, while asset management profits rose 11% to $ 693 million. But profits from capital markets fell by 6% to $ 653 million as the division recorded expected losses on higher loans among those that the bank called "difficult market conditions".

Last Wednesday, RBC also announced that Doug McGregor, the head of his capital market arm, will retire at the end of January after 37 years in the bank. Since 2008 he directs RBC Capital Markets, the brand for the investment and corporate banking unit of RBC Dominion Securities Inc., and also oversees the bank's group of investors and treasury services.

"Doug will leave the company well-positioned for continued success," RBC CEO Dave McKay said in a press release. Mr. McKay also praised Mr. McGregor's leadership as a "specimen".

Mr. McGregor's success as head of the capital markets group is Derek Neldner, who has long been seen as a rising RBC star and has been responsible for the bank's global banking investment business since last year.

The story continues under the announcement

Mike Bowick, who is responsible for RBC's global markets activities, will be named President of RBC Capital Markets in November, reporting to Mr. Neldner. And Doug Guzman, who leads wealth management, will assume Mr. McGregor's responsibilities for investor and treasury services.

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