Robust performance drew on the sustained strength of the bank's businesses
Royal Bank of Canada has reported net income of $4.3 billion for the quarter ending April 30, representing an annual increase of $238 million (6%).
The same period also saw RBC exhibit strong diluted EPS growth of 7%. The quarterly results included releases of provisions on performing loans of $504 million, much higher than the $260 million of provisions released last year.
The provisions were mainly driven by “reduced uncertainty relating to the COVID-19 pandemic which was partially tempered by increased downside risks, including rising inflation and interest rates,” RBC said. “Net income also benefitted from net favourable tax adjustments in the current quarter.”
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RBC’s strength drew on the robust performances of its personal and commercial banking, wealth management, and insurance businesses. On the other hand, investor and treasury services results were largely static, while RBC's capital markets business posted weaker results from its record-setting Q2 earnings last year.
Pre-provision, pre-tax earnings fell by 2% annually (down by $124 million), which stemmed from lower capital markets revenue, lower spreads, higher salaries, and greater spending on technology investments and discretionary costs to support strong client-driven growth.
“Changes in the fair value of hedges related to our US share-based compensation plans also impacted revenue. These factors were partially offset by strong growth in volumes and fee-based client assets, and lower variable and share-based compensation,” RBC said.
RBC reported that its capital position remained robust, with a Common Equity Tier 1 (CET1) ratio of 13.2%. The quarter also saw RBC return $3.6 billion to its shareholders through common share buybacks and dividends.
“The resilience of our diversified business model, prudent risk and capital management, and strategic investments in talent and technology continued to define our performance in the second quarter,” said Dave McKay, president and chief executive officer of RBC.
“We remain well-positioned for future growth, and to deliver differentiated long-term value for our clients, employees and shareholders. At a time when geopolitical tensions, inflationary pressures and global supply chain issues are creating an uncertain macroeconomic backdrop, I’m proud of how RBC employees continue to drive positive change in our communities and deliver trusted advice and insights for those we serve,” McKay added.
