RBC profit up as domestic gains offset U.S. losses
By Andrea Hopkins
TORONTO (Reuters) - Royal Bank of Canada said on Friday its quarterly profit rose 10 percent as strong domestic banking offset losses at its big U.S. operations.
Even so, shares of Canada's largest bank fell in early trade after analysts said its performance failed to measure up to stronger-than-expected results posted by other big banks.
RBC's core cash earnings come in at just over C$1.06 a share, matching the average analysts' estimate compiled by Thomson Reuters I/B/E/S.
The headwinds were just as expected: RBC set aside more money to cover bad loans as consumers and businesses struggled to repay debts amid the recession, especially in the United States, and trading revenues cooled from the red-hot pace of previous quarters.
Once again, RBC's strong domestic retail banking operation, with branches in nearly every city and town in Canada, muscled past the obstacles, pushing net income up 6 percent from a year earlier.
"The domestic bank performance was impressive. When you look at volume growth, margin expansion across the board, it really signifies the strength of the domestic operation for RBC. The flip side is the U.S. unit continues to be very weak," Edward Jones analyst Craig Fehr said.
While provisions for loan losses in Canada rose from a year earlier, they declined from the third quarter as the bank set aside less money to cover bad business loans. The quarter-to-quarter drop in loan losses suggests credit woes are beginning to ebb, at least in Canada.
The overall amount of money set aside by RBC to cover bad loans rose to C$883 million from C$619 million, mostly due to credit woes in the company's big U.S. retail banking group, which is concentrated in the recession-hit U.S. Southeast. Continued...