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Royal Bank of Canada posts robust 3Q results on booming personal and commercial businesses

Growth in the bank's residential mortgages suggests tighter lending regulations introduced earlier this year are not crimping business

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Royal Bank of Canada is the first of the Canadian banks to post quarterly results

Canada’s biggest bank Royal Bank of Canada (NYSE:RY) posted third-quarter results that exceeded Wall Street’s projections as its robust results benefited from the success of its retail, commercial and wealth management businesses.

The bank reported that in the three months ended July 31, its net income jumped by 11% from the year-ago quarter to C$3.1bn while its per-share earnings rose by 14% to C$2.10. On an adjusted basis, its earnings came in at C$2.14, crushing the consensus forecast of C$2.11.

On the personal and commercial side of the bank’s business, net income jumped 8% from last year to C$1.51bn, as deposit spreads improved thanks to higher Canadian interest rates. Residential mortgages also had a strong quarter, which suggests tighter mortgage lending rules introduced by Canada’s banking regulator early in the year are not crimping the sector’s growth.

Elsewhere, the bank’s wealth management division saw its net income jump 19% from last year to C$578mln due higher fees on assets in Canada as well as the US. 

Net income from its capital markets group also climbed by 14% to C$698mln thanks partly to higher revenue from corporate and investment banking.

The bank’s insurance and investor & treasury services group, meanwhile, fared poorly in the quarter.

The insurance group saw its net income fall 2% to C$158mln on increased costs while its investor & treasury service group posted a 13% decline from last year to C$155 mln due to lower funding and liquidity revenue.

Royal Bank of Canada is the first of the Canadian banks to post quarterly results. Canadian Imperial Bank of Commerce will post its earnings tomorrow while Toronto-Dominion Bank, Bank of Nova Scotia and Bank of Montreal report results next week.

Royal Bank of Canada shares rose slightly in the pre-market session to US$78.73.

Contact Ellen Kelleher at [email protected]

Quick facts: Royal Bank of Canada

Price: 95.4 CAD

TSX:RY
Market: TSX
Market Cap: $135.76 billion
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