Royal Bank of Canada Interest Income Rises as Provisions Fall

Royal Bank of Canada reported second-quarter fiscal 2018 net income of C$3.1 billion up 9% from the prior-year quarter from lower provisions and higher net interest income. However investors worry on escalating expenses and lower fee income.

Royal Bank of Canada reported second-quarter fiscal 2018 net income of C$3.1 billion up 9% from the prior-year quarter from lower provisions and higher net interest income. However investors worry on escalating expenses and lower fee income.

RBC

Earnings

Second-quarter fiscal 2018 (ended Apr 30, 2018) net income of C$3.1 billion ($2.4 billion), up 9% from the prior-year quarter. Total revenues of  C$10.1 billion ($7.9 billion) down 2.9% on a year-over-year basis. Revenues were negatively impacted by lower non-interest income, partly offset by higher net interest income.

  • Net interest income came in at C$4.4 billion ($3.5 billion), up 4.8% from the prior-year quarter.
  • Non-interest income was C$5.6 billion ($4.4 billion), down 9.7% year over year.
  • Non-interest expenses were C$5.5 billion ($4.3 billion), up 3.8% from the year-ago quarter. The rise came primarily due to an increase in almost all the components.

Royal Bank of Canada NYSE: RY

Reaction· May 25,Close $76.03 ▼ 0.88 (1.14%)

Segment Net Income Performance Year-Over-Year

  • Wealth Management, +24.6%
  • Investor & Treasury Services, +9.8%
  • Personal & Commercial Banking, +7.4%
  • Insurance +3.6%
  • Canadian Banking  8.3%
  • Net income in the Capital Markets segment declined slightly. 

Loans and Deposits at Apr 30, 2018,

  • Royal Bank of Canada’s total loans came in at C$561.9 billion ($437.8 billion), up 4% from the prior-year quarter.
  • Deposits totaled C$822 billion ($640.5 billion), up 4.6% year over year.
  • Total assets were C$1.27 trillion ($0.99 trillion), up 5.8% from the year-earlier quarter.
  • Total provision for credit losses was C$274 million ($214.8 million) in the quarter, down 9.3% year over year, mainly due to benefit recorded in the Wealth Management and Capital Markets.
  • This was partially offset by higher provisions in Personal; Commercial Banking as well as Canadian Banking.

Strong Capital Position

As of Apr 30, 2018, Royal Bank of Canada’s Tier 1 capital ratio came in at 12.3%, up from 12.0% in the prior-year quarter. Total capital ratio came in at 14.1%, in line with the year-earlier quarter. The company’s estimated Common Equity Tier 1 (CET1) ratio came in at 10.9%, up 30 basis points from the prior-year quarter. 

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