Shares Royal Bank of Canada RY gained nearly 1% on the NYSE in response to third quarter results for fiscal 2021 (ended July 31). The company reported adjusted net income of C $ 4.28 billion ($ 3.48 billion), up 34.6% from the figure for the previous year quarter.
Negative provisions and higher loan and deposit balances supported results. The increase in expenses and the decrease in income have been on the decline.
Year over year, Wealth Management, Personal and Commercial Banking, Canadian Banking and Insurance grew 31.3%, 54.6%, 52.2% and 8.3%, respectively , of their net profit. Net income from Investor Services and Treasury increased 15.8%, as did Capital Markets by 19%. In contrast, Corporate Support recorded a net loss during the quarter.
Declining revenues, increasing expenses
Total revenue was C $ 12.76 billion ($ 10.38 billion), down 1.3% year-over-year.
Net interest income was Can $ 5.05 billion ($ 4.11 billion), down 1.7%. Non-interest income was Can $ 7.7 billion ($ 6.27 billion), down almost 1%.
Non-interest expense was C $ 6.42 billion ($ 5.22 billion), up slightly from the prior year quarter.
The Company recorded a negative allowance for credit losses of Cdn $ 540 million ($ 439.4 million) during the quarter compared to provisions in the prior year quarter. This is primarily the result of reduced provisions in Personal and Commercial Banking, Capital Markets and Wealth Management.
As of July 31, 2021, Royal Bank of Canada net lending was C $ 698 billion ($ 559.2 billion), up 3.6% from the previous quarter. Deposits totaled C $ 1.08 trillion ($ 0.87 trillion), up 5% sequentially. Total assets stood at Can $ 1.69 trillion ($ 1.35 trillion), up 4.8%.
Strong capital ratios
As at July 31, 2021, Royal Bank of Canada’s Tier 1 capital ratio was 15%, up from 13.3% in the previous year quarter. The total capital ratio was 16.7%, compared to 15.3%.
The company’s estimated Common Equity Tier 1 (CET1) ratio stood at 13.6%, up from 12% in the previous year quarter.
Our point of view
We believe that improving loan balances and a diversified product line will continue to drive organic growth for Royal Bank of Canada. However, falling interest rates remain a major concern.
Royal Bank of Canada price, consensus and surprise EPS
Royal Bank of Canada price-consensus-eps-surprise-chart | Royal Bank of Canada quotation
Royal Bank of Canada currently holds a Zacks Rank # 4 (Sell).
You can see The full list of today’s Zacks # 1 Rank (Fort Buy) stocks here.
Bank of MontrealBMO’s adjusted net income for the third quarter of fiscal 2021 (ended July 31) of C $ 2.29 billion ($ 1.86 billion) increased 82% year-over-year .
Barclays BCS reported second quarter 2021 net profit attributable to common shareholders of £ 2.11 billion ($ 2.95 billion), up sharply from the previous year’s quarter.
German BankDB’s second quarter 2021 net profit of 828 million euros ($ 997.5 million) increased significantly from 66 million euros in the previous year quarter. In addition, the German lender reported pre-tax profit of 1.17 billion euros ($ 1.4 billion) compared to 158 million euros in the previous year’s quarter.
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