RBC profit rises 22 percent, bank eyes international growth

Thu Nov 29, 2012 2:38pm EST
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By Cameron French

TORONTO (Reuters) - Royal Bank of Canada's (RY.TO: Quote) quarterly profit rose 22 percent on a sharp jump in fixed-income trading revenue and steady loan growth, suggesting the long-awaited slowdown in Canadian consumer lending has yet to materialize.

The bank, Canada's largest, also is exploring "strategic" wealth management acquisitions, and is seeking to significantly boost its share of international revenue, its chief executive said.

RBC, Canada's largest bank and the first Canadian lender to report year-end results, earned C$1.9 billion ($1.92 billion), or C$1.25 a share, in the fourth quarter ended October 31. That compared with a year-earlier profit of C$1.6 billion, or C$1.02 a share.

Excluding certain items, the bank earned C$1.27 a share, just ahead of analysts' average estimate of C$1.26, according to Thomson Reuters I/B/E/S.

"It was a solid quarter, but we're characterizing it as unspectacular," said John Aiken, an analyst at Barclays Capital Markets, noting that credit quality weakened in the quarter, with loan loss provisions rising 31 percent to C$362 million.

Capital markets income more than tripled to C$410 million, benefiting from fixed-income trading results that compared with an abnormally weak quarter a year earlier. Among Canadian banks, RBC has the largest capital markets-related business.

Personal and commercial banking income rose 9 percent to C$1.0 billion, as a 7 percent rise in loan volumes more than offset higher expenses.

The bank's shares were up 0.5 percent at C$58.61 on the Toronto Stock Exchange, moving roughly in line with other Canadian banks.   Continued...

A Royal Bank of Canada (RBC) sign is seen in downtown Toronto March 3, 2011. REUTERS/Mark Blinch