Royal Bank of Canada RY-T reported higher fourth-quarter profit that beat analysts’ estimates as a surge capital markets earnings and lower taxes offset climbing loan loss provisions.
RBC earned $4.1-billion, or $2.90 per share, in the three months that ended Oct. 31. That compared with $3.9-billion, or $2.74 per share, in the same quarter last year.
Adjusted to exclude certain items, the bank said it earned $2.78 per share. That edged out the $2.65 per share analysts expected, according to Refinitiv.
“In a year defined by uncertainty, RBC served as a stabilizing force for our clients, communities, colleagues and shareholders,” RBC chief executive officer Dave McKay said in a statement. “Our overall performance in 2023 exemplifies our standing as an all-weather bank.”
The bank raised its quarterly dividend to $1.38 per share.
RBC is the third major Canadian bank to report earnings for the fiscal fourth quarter. Canadian Imperial Bank of Commerce CM-T and Toronto-Dominion Bank TD-T also released financial results early Thursday. On Tuesday, Bank of Nova Scotia BNS-T posted lower profit that missed analyst expectations. Bank of Montreal BMO-T and National Bank of Canada NA-T will release results on Friday.
In the quarter, RBC set aside $720-million in provisions for credit losses - the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included $194-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, RBC had a set aside of $381-million in provisions.
Total revenue rose 4 per cent in the quarter, to $13-billion, while expenses increased 13 per cent to $8.14-billion.
Profit from personal and commercial banking was $2.1-billion, down 2 per cent from a year earlier, on higher provisions for loan defaults and staff-related costs, largely in severance.
The wealth management division generated $607-million in profit, down 74 per cent as impairment losses, higher staff costs, and legal provisions offset higher average fee-based client assets.
Profit from insurance was up 8 per cent at $289-million. And capital markets profit rose 36 per cent to $987-million as lower taxes and higher revenue in corporate and investment banking offset larger provisions and lower revenue in global markets.