RBC, CIBC profits rise, shares fall on growth doubts
By Cameron French
TORONTO (Reuters) - Royal Bank of Canada (RY.TO: Quote) and Canadian Imperial Bank of Commerce (CM.TO: Quote) posted second-quarter results that met or beat analyst estimates, but shares of both companies declined on uncertainty about future growth.
Shares of RBC, Canada's largest lender, were off 2 percent after it reported profits that were up 26 percent rise from a messy year-before quarter but down from the bank's blockbuster first quarter of 2013.
"It was an in-line quarter ... but we did see some weakness in Canadian banking," National Bank Financial analyst Peter Routledge said, pointing to narrower interest margins and sluggish loan growth.
"It's something we've seen from Royal's peers for several quarters now, and Royal's always avoided it. So, I guess gravity caught up with them."
RBC earned C$1.94 billion ($1.87 billion), or C$1.27 a share, in the second quarter ended April 30, up from a year-earlier profit of C$1.53 billion, or 99 Canadian cents a share.
Excluding a restructuring charge, the bank earned C$1.31 a share in the latest quarter, matching analysts' estimates, according to Thomson Reuters I/B/E/S.
CIBC, Canada's fifth-largest bank, earned C$876 million, or C$2.12 per share, up from C$811 million, or C$1.90 per share. The bank said the increase driven by gains in wholesale banking, which consists of trading, investment banking and corporate lending.
That result topped analysts' estimates of a profit of C$2.08 a share, and CIBC also surprised with a modest 2.1 percent dividend increase. Continued...