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TORONTO (Reuters) - Royal Bank of Canada (RY.TO), Canada's biggest bank, reported quarterly earnings that beat market forecasts and it took lower charges than many analysts had expected, helping to boost its shares 4.2 percent.
Third-quarter net profit fell 10 percent after C$498 million in writedowns, to C$1.26 billion ($1.2 billion).
"What's interesting is the very strong numbers coming out of retail (banking) in Canada, up 19 percent. That is a clear leader in the space," said Darko Mihelic, an analyst at CIBC World Markets.
Canada's largest bank reported earnings of 92 Canadian cents per share for the three months ended July 31.
That compared with C$1.06 per share in the same period of 2007 when the bank reported a profit of C$1.39 billion.
Excluding capital market writedowns and amortization of intangibles, Royal's earnings were C$1.14 a share, analysts said, which beat the mean analysts' estimate of C$1.07 before items, according to Reuters Estimates.
"Having seen all of the Big Six banks report, I would say that the winner of the reporting season is Royal," Mihelic said.
RBC logged pre-tax writedowns of C$342 million, or C$153 million after tax, in its capital markets segment, as well as C$53 million, or C$33 million after tax, on its U.S. banking investment portfolio.
Some analysts had expected capital-markets writedowns to be as high as C$1 billion in the quarter.
Provisions for credit losses rose 88 percent to C$334 million from C$178 million a year earlier. All of Canada's big banks boosted their loan-loss provisions this quarter.
In its core Canadian banking business, net income surged 19 percent to C$709 million, which the bank said reflected strong volume growth across all business lines and "cost containment efforts."
Return on equity, a key profit measure, was 19.4 percent in the quarter, down from 24.4 percent a year earlier.
Royal Bank did not increase its dividend in the quarter.
The bank's shares were trading at C$47.21, up C$1.91.
Reporting by Lynne Olver and Jennifer Kwan; Editing by Ted Kerr