Profit at the Royal Bank of Canada rose by more than a third to $4.3 billion in the three months up to the end of July, as Canada’s biggest lender saw higher income in just about every facet of its business.
The bank was the third of Canada’s big major banks to post quarterly results, and as was the case with BMO and Scotiabank a day before, it was a story of rising profits at Royal.
RBC said profits were up in the core personal and commercial banking division, but also in its capital markets, wealth management and insurance businesses.
A major factor in the uptick was the bank being able to release $540 million it had previously set aside to cover loans it was worried may go bad. Known as provisions for credit losses, this time last year the bank had set aside $675 million to cover its loan book.
But as it turns out, those loans didn’t need to be written off, so that cash was able to go back to the positive side of the ledger.
“Our diversified businesses and disciplined approach to risk and cost management underpinned our results, supported by the significant investments we’ve made in technology and talent to fuel our momentum and deliver differentiated value to those we serve,” CEO Dave McKay said in a release. “We remain cautiously optimistic about the macroeconomic outlook and focused on supporting clients and communities through the ongoing recovery.”
The profit increase came even as the bank’s revenues declined, albeit slightly. Revenue came in at $12.8 billion during the quarter, down from $12.9 billion a year ago.
Fee income went up, too
While it wasn’t a major factor in the profit uptick, there was an increase in something that bank customers love to complain about: fees
The bank took in more than $4 billion worth of so-called “core fees” during the month. That number comes from Paul Holden, an analyst at CIBC who covers the banks, and he says it strips out some of the more volatile fees and focuses on the ones that customers are most familiar with — bank fees, credit card fees, investment management fees and mutual fund fees.
RBC took in $4.08 billion worth of such fees during the quarter. That’s a 6.4 per cent increase from the just over $3.8 billion the bank took in during the previous three-month period.
Source From CBC News