Royal Bank of Canada Q4 2023 Exceeds Expectations Despite Credit Loss Provision Bump
Royal Bank of Canada (TSX: RY) announced a stronger-than-expected quarterly profit on Thursday, propelled by robust performance in its corporate and investment banking division. This positive outcome counteracted the impact of increased provisions for bad loans.
The capital markets unit of the largest Canadian bank experienced a significant boost, with net income from the business soaring by 36% to $987 million. The success was attributed to the resilience of corporate and investment banking, as highlighted by the bank.
Despite these gains, RBC adopted a more cautious stance by increasing provisions for credit losses (PCLs), reaching $720 million compared to $381 million the previous year. This move was influenced by a growing concern stemming from a dimming economic outlook, particularly in light of the central bank’s assertive rate hikes amidst a teetering Canadian economy.
RBC also took measures to fortify liquidity at its U.S. unit, City National Bank. According to a report filed with regulators last month, RBC infused approximately $2.95 billion into the bank throughout the year.
The bank’s adjusted earnings of $2.78 per share surpassed expectations of $2.62, according to LSEG data. Net income for the quarter ended October 31 rose to $4.13 billion or $2.90 per share, compared to $3.88 billion or $2.74 per share in the same period the previous year.
For RBC’s fiscal fourth quarter, the bank reported a profit of $3.04 billion, translating to $2.14 per share. Adjusted earnings, accounting for non-recurring gains, were $2.05 per share, surpassing the average estimate of three analysts surveyed by Zacks Investment Research, which was $1.90 per share.
The bank’s reported revenue for the period was $22.82 billion, with a net revenue, excluding interest expenses, of $9.59 billion, both exceeding Street forecasts. For the entire year, RBC disclosed a profit of $11.02 billion, or $7.78 per share, with reported revenue amounting to $41.62 billion.
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