As expected RBC announced good results for the past quarter. Loan Loss Provisions are up from the same quarter a year ago, which was expected, but still lower than some of the other Banks are reporting. National Bank reported this morning too and posted strong results as well.
TORONTO, Feb. 28, 2024 /CNW/ - Royal Bank of Canada11 (TSX: RY) (NYSE: RY) today reported net income of $3.6 billion for the quarter ended January 31, 2024, up $449 million or 14% from the prior year, which included the $1,050 million impact of the Canada Recovery Dividend (CRD) and other tax related adjustments. Diluted EPS was $2.50, up 12% over the same period. Adjusted net income7 and adjusted diluted EPS7 of $4.1 billion and $2.85 were down 5% and 6%, respectively, from the prior year.
Our consolidated results reflect an increase in total PCL of $281 million from a year ago, mainly reflecting higher provisions in Personal & Commercial Banking and Capital Markets, partially offset by lower provisions in Wealth Management. The PCL on loans ratio of 37 bps increased 12 bps from the prior year. The PCL on impaired loans ratio was 31 bps, up 14 bps from the prior year as provisions continue to trend upwards, reflecting the impact of higher interest rates and rising unemployment.
Results also reflected the impact of specified items relating to the planned acquisition of HSBC Bank Canada (HSBC Canada), including transaction and integration costs ($265 million before-tax and $218 million after-tax), and management of closing capital volatility ($286 million before-tax and $207 million after-tax). The cost of the Federal Deposit Insurance Corporation (FDIC) special assessment of $159 million before-tax ($115 million after-tax) also impacted results.
Pre-provision, pre-tax earnings of $5.2 billion were down $607 million or 11% from last year, mainly due to higher expenses, and lower revenue in Capital Markets, largely reflecting lower trading revenue compared to a strong prior year. These factors were partially offset by higher insurance investment results from favourable investment performance as we repositioned our portfolio for transition to IFRS 17. Results benefitted from higher net interest income driven by solid volume growth, as well as higher fee-based client assets reflecting market appreciation and net sales in Wealth Management.
Compared to last quarter, net income was down 9%, partly reflecting a higher effective tax rate, as results in the prior quarter included the favourable impact of the specified item relating to certain deferred tax adjustments, and higher PCL on impaired loans. Lower results in Corporate Support and Personal & Commercial Banking were partially offset by higher results in Wealth Management, Capital Markets and Insurance. Adjusted net income was up 8% over the same period. Pre-provision, pre-tax earnings were up 12% as higher revenue more than offset expense growth.
Our capital position remains robust, with a CET1 ratio of 14.9%, supporting solid volume growth and $1.9 billion in common share dividends.
"As our first quarter results show, RBC has the right strategy in place to grow today while also generating long-term value for shareholders. Underpinned by our balance sheet strength, prudent approach to risk management and diversified business model, we delivered solid, client-driven volume growth and a continued focus on expense control. As we look towards the completion of our planned HSBC Canada acquisition, we remain focused on being a trusted advisor to clients through the delivery of new and differentiated banking experiences."
– Dave McKay, President and Chief Executive Officer of Royal Bank of Canada
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