Royal Bank Of Canada Profit Beats Expectations On Wealth, Loan Growth

Royal Bank of Canada kicked off Canadian lenders' first-quarter results with a stronger than expected 6% rise in adjusted earnings, driven by wealth management and loan growth.

Canada's biggest 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 a share, according to IBES data from Refinitiv.

Canadian banks have had several quarters of better than expected results, much of it driven by fee revenue and the release of provisions for credit losses taken early in the COVID-19 pandemic. Analysts and investors had been braced for a somewhat more muted first quarter, particularly due to expectations of higher expenses.

Royal Bank's non-interest expenses offered a positive surprise, with little change from both a year and a quarter ago, as higher compensation costs were offset by a decline in some U.S. wealth management expenses.

Earnings from Royal Bank's personal and commercial banking unit climbed 10% from a year earlier and wealth management profit jumped 24%, driven by higher loan volumes in Canada and increased assets and the release of provisions at the latter's U.S. unit.

While growth in mortgages still outpaced business loans during the quarter, Royal Bank continued to see recovery in the latter, as well as in credit card balances.

These boosted results despite an 11 basis point year-on-year decline in net interest margins and a 3% drop in profit from its capital markets unit, which posted record earnings a year earlier.

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

Provisions for credit losses were flat from a year earlier, although they increased from the prior quarter, when the bank released some of the reserves taken earlier.

Royal Bank reported overall net income of C$4.1 billion ($3.20 billion), or C$2.84 a share, up from C$3.8 billion, or C$2.66 share, a year ago.

($1 = 1.2826 Canadian dollars)