Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

An RBC bank on Bay Street, Toronto. August 15, 2013.

Gloria Nieto/The Globe and Mail

Royal Bank of Canada's profit soared to new heights in the third quarter as the bank reported record earnings of $2.3-billion.

It is the second time this year that RBC has posted a profit of more then $2-billion.

RBC's net income amounted to $1.52 per share, handily beating analyst expectations of $1.37.

Story continues below advertisement

While the quarterly profit is a rise of just 3 per cent from the same period in 2012, last year's earnings were very strong. Taking a longer-term view, the bank's profits for the first three quarters of 2013 climbed 12 per cent from the same time frame last year.

RBC raised its quarterly dividend Thursday by 4 cents to 67 cents, a 6-per-cent jump. While the hike was widely expected, chief executive officer Gord Nixon said on a conference call that such a substantial raise "reflects the confidence we have in our ability to continue to generate solid earnings growth and successfully execute on our disciplined growth strategy by leveraging our strengths, scale and strong capital position."

Both personal and commercial bank and wealth management reported record earnings this quarter.

RBC's personal and commercial banking profit of $1.18-billion came in 7-per-cent higher than the previous year, and after adjusting for a mortgage prepayment in the same quarter in 2012, the earnings jumped 17 per cent.

However, part of that growth comes from RBC's acquisition of Ally Canada. The bank was also aided by an 18-per-cent drop in loan loss provisions, a non-cash benefit.

Wealth management's profit jumped to $236-million, as RBC benefited from stronger fund sales and higher account values, which boosted its fee-based earnings.

Both capital markets and insurance suffered last quarter. Weaker investment banking activity and tough fixed-income markets brought capital markets' profit down by 10 per cent from 2012, and the insurance unit took a hit on claims from flood damage in Alberta and the Greater Toronto Area.

Story continues below advertisement

Despite fears of a Canadian banking slowdown because of high household debt levels, RBC posted a quarterly profit of more than $2-billion in the first quarter, and coming close to that again in the second.

While the bank earns just over half of its revenues from Canadian retail and commercial banking, where loan growth is slowing, it has substantial wealth management and capital markets arms in the U.S. and Europe. That can help offset weakness in the Canadian lending environment.

RBC's investment bank has hired bankers and analysts from major U.S. rivals, giving the lender more clout in that market, and has been diversifying its wealth management business with acquisitions that include London-based BlueBay Asset Mangement in 2010.

However, such diversity can also expose the banks to more risks. RBC posted healthy fixed-income profits in the second quarter, though Mark Standish, co-CEO of the capital markets arm, said Europe's results dragged on the unit. "We basically didn't make any money" in Europe, he said on a conference call.

Just over a month later, RBC closed its European government bond trading desk.

While RBC is pleased with its organic growth, the bank is still open to acquisitions – namely in wealth management. However, Mr. Nixon said RBC will be "extremely disciplined" on this front because it is hard to make new deals meet the double-digit return thresholds that RBC currently realizes across the bank.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies