Company News

CORRECTED-UPDATE 2-RBC posts 7 percent increase in first quarter earnings

(Corrects net income in bullet point to 5 percent from 2 pct)

* Q1 EPS C$2.19, in line with market forecasts

* Net income up 5 percent to C$3.17 billion

TORONTO, Feb 22 (Reuters) - Royal Bank of Canada on Friday reported a 7 percent rise in earnings in the first quarter, with growth in personal and commercial banking partially offset by lower earnings at its capital markets division.

Canada’s biggest lender by market value said earnings per share rose to C$2.15 in the three months to Jan. 31. Adjusted earnings per share were C$2.19, in line with analysts’ expectations, according to IBES data from Refinitiv.

Chief Executive Dave McKay said the bank had delivered solid results against a challenging market backdrop.

The bank said net income rose 5 percent to C$3.17 billion ($2.40 billion) during the period. That included growth of 3 percent at its personal and commercial banking business, helped by increased sales and improved margins thanks to higher Canadian interest rates. Like other Canadian banks, RBC has benefited from the Bank of Canada raising rates five times since July 2017.

The bank said net income at its capital markets division declined by 13 percent during the period due to an increase in funds set aside to cover bad loans and a decline in revenue from corporate and investment banking due to challenging market conditions. Global stock markets declined during the period due to investor concerns about rising interest rates and escalating trade tensions between the U.S. and China.

Net income at the bank’s wealth management business was unchanged from a year ago, RBC said, with increased sales offset by higher costs and increases in funds set aside to cover bad loans. Net income at the bank’s insurance business rose by 31 percent from a year ago, partly reflecting lower claims costs.

$1 = 1.3209 Canadian dollars Reporting by Matt Scuffham Editing by David Goodman and Kirsten Donovan