Results release comes amid an "unparalleled year"
In its latest data release, Royal Bank of Canada today reported earnings of $3.246 billion during the fourth quarter, increasing by 1% (or roughly $40 million) annually.
“In what has been an unparalleled year due to the global pandemic, RBC demonstrated the strength and resilience of our franchise,” said Dave McKay, president and CEO of RBC. “The combination of prudent risk management, a strong balance sheet and diversified business model, and our purpose-led approach to supporting employees, clients and communities, defined our success in a challenging operating environment.”
The bank said that this stemmed from strong performances in its capital markets, corporate support, and investor/treasury services arms. However, lower earnings in wealth management, personal and commercial banking, and insurance posed significant drags.
“Q4 2019 results included a gain on the sale of the private debt business of BlueBay ($134 million after-tax) in wealth management,” RBC said. “This gain was largely offset by higher severance and related costs ($83 million after-tax) associated with the repositioning of our Investor & Treasury Services business, as well as by an unfavourable accounting adjustment ($41 million after-tax) in corporate support included in the prior year.”
On a quarterly basis, earnings grew by 1% (or roughly $45 million) due to stronger personal and commercial banking, insurance, and investor and treasury services – although these were also partially offset by lower earnings in capital markets, corporate support, and wealth management.
For the year ending October 31, RBC reported net income of $11.437 billion, down 11% ($1.434 billion) from the year before.
“Our consolidated results reflect higher provisions for credit losses (increased by $2.5 billion from the prior year), as we prudently built reserves given the unprecedented challenges brought on by the COVID-19 pandemic, in addition to the impact of lower interest rates,” RBC said. “Lower results in personal & commercial banking and wealth management were partially offset by robust earnings in Capital Markets, as well as higher results in investor & treasury services and insurance.”
McKay offered assurances that RBC is well-placed to maintain its strong momentum moving forward.
“Looking ahead, while it is difficult to predict how the coming year will unfold, RBC has the strength, stability and operational resilience to face a range of scenarios, and to continue creating long-term sustainable value,” McKay said.
