RBC posts higher profit in its first full quarter since HSBC merger
The Royal Bank of Canada reported a higher profit and met analysts’ expectation in its first full quarter since it completed the purchase of HSBC Holdings PLC’s Canadian business.
The Toronto-based bank reported adjusted net income of $4.7 billion for the three-month period that ended on July 31, up 18 per cent from the same period last year. This resulted in an adjusted earnings per share of $3.26, up 15 per cent year over year.
The company reported higher results in each of its segments except for Corporate Support and Insurance. The inclusion of HSBC increased its net income by $239 million.
“Our Q3 results demonstrate that RBC continues to operate from a position of strategic and financial strength with solid revenue growth,” Dave Mckay, the company’s chief executive said in a statement on Aug.28.
The company’s reported net income was $4.5 billion for the quarter, up $626 million or 16 per cent from last year, leading to an earnings per share of $3.09.
The bank’s earnings per share was above the consensus of $2.95, while its revenue of $14.6 billion was in line with analysts’ expectations.
“Expenses were $300 million better than what we had. Provisions for credit losses at $659 million were also $250 million lower than our estimated,” Matthew Lee, an analyst at Canaccord Genuity Group Inc, said in a note on Wednesday.
Jefferies Financial Group Inc. analyst John Aiken in a note on Wednesday said that RBC reported a “standout quarter, coming in well ahead” of expectations.
“Given the market’s reaction to Scotia’s essentially in-line quarter yesterday, we would expect to see Royal’s valuation well rewarded for the strength of the beat and the quality of its earnings today,” he said.
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