Royal Bank of Canada earnings beat expectations for wealth and loan growth

TORONTO, Feb 24 (Reuters) – Royal Bank of Canada (RY.TO) kicked off first-quarter results for Canadian lenders with a stronger-than-expected 6% rise in adjusted earnings, led by wealth management and loan growth.

Canada’s largest lender by market capitalization reported adjusted earnings of C$2.87 per share, up from C$2.69 a year earlier. Analysts had expected C$2.73 per share, according to IBES data from Refinitiv.

Canadian banks posted several quarters of better-than-expected results, largely due to fee income and the release of provisions for credit losses taken at the start of the COVID-19 pandemic. Analysts and investors had been bracing for a somewhat softer first quarter, partly due to higher spending expectations. Read more

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Royal Bank’s non-interest expense was a positive surprise, with little change from a year and a quarter ago as higher compensation costs were offset by lower certain management expenses heritage in the United States.

Profits for Royal Bank’s personal and commercial banking unit rose 10% from a year earlier and wealth management profits jumped 24%, helped by higher lending volumes in Canada and the increase in assets and release of provisions in the latter’s US unit.

Although mortgage growth again outpaced business loan growth in the quarter, Royal Bank continued to see a recovery in the latter, as well as credit card balances.

The results boosted despite an 11 basis point year-over-year decline in net interest margins and a 3% decline in profits at its capital markets unit, which had posted record profits a year earlier. earlier.

In the capital markets sector, lower fixed income trading revenue offset record corporate and investment banking revenue.

Provisions for credit losses remained stable compared to the previous year, although they increased compared to the previous quarter, when the bank released part of the reserves taken earlier.

Royal Bank reported overall net profit of C$4.1 billion ($3.20 billion), or C$2.84 per share, compared to C$3.8 billion, or C$2.66 per share, a year ago.

($1 = 1.2826 Canadian dollars)

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Reporting by Nichola Saminather in Toronto and Manya Saini in Bengaluru Editing by Krishna Chandra Eluri, David Goodman and Susan Fenton

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