RBC lifts profit, helped by wealth management strength

Royal Bank of Canada on Wednesday reported a rise in third-quarter profit, helped by double-digit growth at its wealth management business which offset a weaker showing in its capital markets unit.

Net income at Canada`s biggest lender, excluding one-off items such as a gain on the sale of its home and auto insurance business last year, increased to C$2.8 billion ($2.2 billion) for the quarter to June 30, 5 percent higher than a year earlier.

Earnings per share reached C$1.89 compared with an average analyst forecast of C$1.87, according to Thomson Reuters I/B/E/S data. A year earlier, RBC posted an EPS of C$1.72.

Net income including one-time items rose by 6 percent to C$1.4 billion at the bank’s retail business. At its wealth management unit, it increased by 25 percent to C$486 million, helped by robust earnings at City National, a U.S.-based bank which RBC acquired last November

The bank announced a 5 percent increase in its quarterly dividend to C$0.91 per share, ahead of the average analyst forecast of C$0.89, according to Thomson Reuters I/B/E/S data.

"Royal Bank of Canada managed to exceed expectations on the back of impressive performances in its retail bank and wealth management platforms," said Barclays analyst John Aiken.

"This solid performance, in conjunction with the better than forecast increase in its dividend, will likely be rewarded by investors today," he said.

The bank has beaten market expectations in every quarter so far this year.

Its shares are up 1.25 percent since the start of the year.

Canadian banks are expected to benefit from rising interest rates, but their shares have slowed their advance over concerns that the country`s housing market is cooling down.

RBC said net income from its capital markets business, including one-off items, fell 4 percent to C$611 million. The bank reported a decline in fixed-income trading activity, reflecting less volatility in that market.

Its core Tier 1 ratio, a key measure of a bank`s financial strength, increased by 30 basis points to 10.9 percent.

RBC is the first of Canada`s biggest banks to post quarterly results.

Canadian Imperial Bank of Commerce is due to report on Thursday, followed by Bank of Montreal, Toronto-Dominion Bank and Bank of Nova Scotia next week. ($1 = 1.2571 Canadian dollars)

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)