TORONTO: Royal Bank of Canada, the country's top lender, posted a better-than-expected quarterly profit on Wednesday, driven by significant gains in its personal and commercial banking and capital markets businesses.
The bank, which also boosted its dividend payout, said it was confident that its diversified operations, and risk and cost management would help it navigate the macroeconomic headwinds it is facing in Canada.
The results could improve investor sentiment towards Canadian banks, which took a hit after Bank of Montreal, Canada's fourth-largest lender, reported weaker-than-expected results on Tuesday.
"Royal posted exceptionally strong results today, which should be well rewarded," said Barclays Capital analyst John Aiken, noting that the biggest positive surprise from the bank was the strong performance from the trading side of its capital markets business.
Net income rose to C$2.46 billion ($1.98 billion) or C$1.65 per share, in the first quarter ended Jan. 31 from C$2.09 billion, or C$1.38 per share, a year earlier.
Excluding one-time items related to the sale of certain assets and restructuring charges the bank posted earnings of C$1.65 a share.
The bank said its cash diluted earnings per share were C$1.67.
Analysts, on average, had expected earnings of C$1.58 a share, according to Thomson Reuters I/B/E/S.
RBC said on Wednesday personal and commercial banking net income jumped 17 percent to C$1.26 billion, while net income at the capital markets business rose 18 percent to C$594 million.
Wealth management net income fell 2 percent to C$230 million, as higher earnings were more than offset by additional restructuring costs related to its US and international wealth management businesses.
RBC said it had set aside C$270 million for credit losses, 8 percent less than a year earlier.
The bank also raised its quarterly dividend payout by 2 Canadian cents to 77 Canadian cents a share.
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