- Royal Bank of Canada ( NYSE: RY ), often referred to as RBC, posted lower-than-expected fiscal Q3 earnings due to higher reserves set aside for bad loans as well as lower earnings at its Capital Markets, Personal & Commercial Banking, and Insurance units.
- Increased earnings from its Investor & Treasury Services and Wealth Management divisions helped to blunt some of the earnings decline from a year ago.
- Preprovision pretax earnings for the quarter ended July 31, 2022 were C$4.89B (US$3.77B), down 1% from the prior quarter and 5% from the year-ago quarter.
- Q3 adjusted EPS of C$2.55, trailing the C$2.67 consensus estimate, fell from C$3.00 in Q2 and from C$3.01 in Q3 2021.
- Q3 net interest income rose to C$5.89B increased from C$5.27B in Q2 and from C$5.05B in Q3 2021. Net interest margin of 1.52% increased from 1.45% in the prior quarter and 1.51% in the year-ago quarter.
- RBC ( RY ) bumped up the reserves it sets aside for bad loans due to a dimmer macroeconomic outlook. Its provision for credit losses was C$340M, compared with a release of C$342M in Q2 and a release of C$540M in the year-ago quarter.
- Q3 return on common equity was 14.6%, down from 18.4% in the prior quarter and from 19.6% in Q3 2021.
- Personal & Commercial Banking preprovision, pretax earnings of C$3.00B increased 13% Q/Q and 15% Y/Y; net income of C$1.97B fell 8% Q/Q and 3% Y/Y.
- Wealth Management preprovision pretax earnings of C$1.04B increased 8% Q/Q and 10% Y/Y, while net income of C$777M increased 4% both Q/Q and Y/Y.
- Insurance preprovision pretax earnings of C$244M fell 9% Q/Q and 17% Y/Y, and net income of C$186M fell 10% Q/Q and 21% Y/Y.
- Investor & Treasury Services preprovision pretax earnings of C$208M jumped 36% Q/Q and 79% Y/Y, while net income of C$164M rose 36% Q/Q and 86% Y/Y.
- Capital Markets preprovision pretax earnings of C$526M dropped 47% Q/Q and 52% Y/Y, while net income of C$479M sank 40% Q/Q and 58% Y/Y.
- Conference call at 8:00 AM ET.
- Earlier, Royal Bank of Canada ( RY ) GAAP EPS of C$2.51 misses by C$0.16, revenue of C$12.13B beats by C$40M
For further details see:
Royal Bank of Canada fiscal Q3 earnings hit by reserve build, challenging markets