RBC upbeat about U.S. future despite Q4 impact

Fri Nov 30, 2007 5:03pm EST
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By Lynne Olver

TORONTO (Reuters) - Royal Bank of Canada is comfortable with its U.S. loan portfolio and committed to its pending acquisition of Alabama National BanCorp, bank executives said on Friday, after the slumping U.S. housing market dented Royal's fourth-quarter profit.

"We are very positive on the Alabama National acquisition," Chief Executive Gord Nixon said on a conference call, referring to the US$1.6 billion deal that is expected to close in early 2008.

Royal Bank's plans for its U.S. retail business over the next year include integrating Alabama National and managing "the real estate issues" as best it can, Nixon said.

"We think we'll come out of that with a good platform and a good asset base."

The deteriorating U.S. housing market hurt fourth quarter profit, as Royal took higher U.S. provisions for credit losses and recorded a C$160 million writedown on securities related to the U.S. subprime mortgage market.

Royal, Canada's largest bank, said overall profit rose 5 percent to C$1.32 billion ($1.32 billion) in the three months ended October 31, or C$1.01 a share.

That was up from C$1.26 billion, or 96 Canadian cents a share, in the same 2006 period, but marked a slowdown from double-digit profit growth earlier in the year.

Fourth-quarter profit slid 73 percent in Royal's U.S. and international banking segment, to C$21 million, as loan loss provisions jumped to C$72 million from C$5 million a year earlier. That was almost entirely due to the residential builder finance business of its RBC Centura unit in the U.S. Southeast.   Continued...