Loading articles...

Royal Bank first-quarter net income rises to $2.09B

Royal Bank of Canada says its first-quarter net income was $2.09 billion, up two per cent from a year earlier despite recording a loss on the sale of RBC Jamaica.

Royal Bank chief executive Gordon Nixon, who has announced plans to retire in August, said RBC had good growth across most of its business units.

“We believe our focus on developing innovative products and services, and our ongoing discipline in managing costs, remain clear competitive advantages in today’s environment,” Nixon said.

He also announced RBC’s quarterly dividend will increase by six per cent to 71 cents per common share.

Later in the day, Royal Bank holds its annual shareholders meeting in Toronto. Nixon’s successor, Dave McKay, is to be formally appointed RBC’s president ahead of becoming CEO on Aug. 1.

McKay has been the group head of RBC personal and commercial banking, which generated more than half of the company’s overall profit during the first quarter.

Royal is the third of Canada’s big banks to report improved net income for the three months ended Jan. 31.

In RBC’s case, it earned $1.38 per common share of net income under standard accounting, up four cents from $1.34 per share a year earlier.

Excluding some items, RBC had $1.47 of adjusted diluted earnings, which was above the general analyst estimate.

Net income, which is less closely monitored by analysts, was four cents below the general estimate of $1.42 per share.

The quarter included the financial impact of selling two Jamaican subsidiaries, which resulted in a writedown of RBC’s assets.

As a result of the transaction, RBC’s net income from its overall personal and commercial banking division was down $33 million or three per cent from last year.

However, net income from Canadian banking was up $47 million or four per cent to $1.137 billion in the quarter.

Royal said its Canadian banking unit benefited from the addition of Ally Canada, partially offset by a higher provision for credit losses.

Its other major divisions were generally more profitable than last year, with the exception RBC Insurance, which had $157 million of net income, down four per cent from a year earlier.

RBC said the insurance division was affected by higher disability and weather-related claims.

Net income from wealth management was $235 million, up $6 million or three per cent from a year before, net income from investor and treasury services was $106 million, up $27 million or 34 per cent, while net income at RBC Captial Markets was $505 million, up 43 million or nine per cent from a year earlier.

Royal said the improvement at its capital markets division was the result of several factors, including lower provisions for credit losses, a lower tax rate and the impact of foreign exchange fluctuations.