Royal Bank Misses Estimates
Royal Bank of Canada, the country’s largest lender, reported quarterly earnings that missed analysts’ estimates as trading revenue declined and loan losses increased.
Revenue and Earnings
The bank reported revenue of C$12.2 billion ($9.6 billion) for the quarter ended April 30, down from C$12.7 billion a year earlier. Net income fell to C$3.3 billion from C$3.5 billion a year earlier. Earnings per share were C$2.25, missing the C$2.31 average estimate of analysts surveyed by Bloomberg.
Trading Revenue Declines
Trading revenue fell to C$1.2 billion from C$1.5 billion a year earlier, as the bank’s capital markets business was hurt by lower client activity. Revenue from the bank’s wealth-management business also declined, to C$1.2 billion from C$1.3 billion a year earlier.
Loan Losses Increase
The bank’s loan-loss provisions rose to C$1.2 billion from C$1 billion a year earlier, as the bank set aside more money to cover potential losses from bad loans. The bank said it expects loan losses to remain elevated in the coming quarters.
Capital Ratios Improve
The bank’s capital ratios improved during the quarter, with its common equity tier 1 ratio rising to 12.3% from 11.9% a year earlier. The bank said it expects its capital ratios to remain strong in the coming quarters.
Dividend Increase
The bank also announced a dividend increase of 4.2%, to C$1.10 per share. The dividend increase was in line with analysts’ expectations.
Outlook
Royal Bank of Canada said it expects the economic environment to remain challenging in the coming quarters, with low interest rates and elevated loan losses. The bank said it is well-positioned to weather the current environment and is focused on delivering long-term value to its shareholders.