Royal Bank of Canada beat earnings expectations in the fourth quarter amid sharply rising profits from its trading and investment banking businesses that helped mitigate the impact of COVID-19 on others branches of the lender.
The bank’s total net profit edged up one percent year-over-year to $ 3.25 billion in the three months ending Oct. 31. On an adjusted basis, RBC said Wednesday it earned $ 2.27 per share. Analysts on average expected $ 2.04 in earnings per share. For the year, RBC’s net income fell 11% to $ 11.44 billion.
The unmistakable star performance of the quarter was RBC’s capital markets division, whose earnings climbed 44% to $ 840 million. In a statement, RBC attributed the growth to favorable market conditions and an increase in debt and equity offerings that boosted its investment banking team.
Credit quality also improved for RBC in the quarter, with the bank setting aside $ 427 million for potentially deteriorating loans, compared to $ 675 million in the prior quarter and $ 499 million in provisions a year earlier.
RBC’s core personal and commercial banking (P&C) businesses saw profits drop 7% to $ 1.5 billion in the quarter. Like the banks that reported on Tuesday, RBC noted the impact of lower interest rates as central banks tried to cushion the economic blow of the pandemic by easing borrowing costs. Rising technology costs also weighed on RBC P&C earnings during the period.
Wealth management profit declined 25% year over year, mainly due to a substantial gain from an asset sale that boosted the division a year earlier.
“Looking ahead, while it is difficult to predict how the coming year will unfold, RBC has the strength, stability and operational resilience to face a range of scenarios and continue to create value. sustainable over the long term, ”said Dave McKay, CEO of RBC. an exit.