RBC profit up 35 percent on lower loan losses
By Andrea Hopkins
TORONTO (Reuters) - Royal Bank of Canada said on Wednesday that first-quarter profit rose about 35 percent on strong domestic banking and lower loan losses, but the results were weaker than some had expected and shares were expected to ebb when trading opens in Toronto.
Canada's largest bank showed profit growth across most segments -- except for perennially weak U.S. banking -- but domestic rivals had surpassed market expectations with earlier results, so RBC's looked slightly less robust by comparison.
"With expectations likely raised by the results of the previous three banks, we cannot help but believe the market will be disappointed by these results," Barclays Capital analyst John Aiken said in a note to clients.
"Unless we get some very reassuring answers on the conference call this morning, we would expect the lack of revenue growth and rising expenses to offset the benefit of the declining (credit loss) provisions, and begin to eat away at some of (RBC's) premium valuation," Aiken said.
The company's shares closed at C$58.24 on Tuesday, near the 52-week high of C$58.66 reached in November. The stock has more than doubled in value from its year-low C$28.56 at this time last year.
Toronto-based RBC said net income increased to C$1.5 billion ($1.5 billion), or C$1.00 a share, for the first quarter ended January 31 from C$1.1 billion, or C$0.78 a share, a year earlier.
Cash earnings per share, which include the amortization of intangibles like acquisitions, were C$1.03, the bank said.
That's just below average analysts' expectations of C$1.04 per share, according to Thomson Reuters I/B/E/S. Continued...