RBC earns $1.936-billion in Q2 2013
RBC earns $1.936-billion in Q2 2013
2013-05-30 06:28 ET - News Release
Mr. Gordon Nixon reports
ROYAL BANK OF CANADA REPORTS SECOND QUARTER 2013 RESULTS
Royal Bank of Canada had net income of $1,936-million for the second quarter ended April 30, 2013, up 26 per cent compared to net income of $1,533-million last year.
Excluding certain items, net income was $1,967 million(1), up $232 million or 13% compared to the prior year, driven by solid earnings growth across all business segments, with particular strength in our Canadian Banking, corporate and investment banking and asset management businesses.
"We grew earnings this quarter in each of our segments compared to last year, driven by the strength and diversification of our businesses," said Gordon M. Nixon, RBC President and CEO. "We continue to extend our leadership position by successfully executing our strategy and making focused investments to deliver long-term shareholder value."
Q2 2013 compared to Q2 2012 A Net income of $1,936 million (up 26% from $1,533 million) A Diluted earnings per share (EPS) of $1.27 (up $0.28 from $0.99) A Return on common equity (ROE) of 18.5% (up from 16.1%) A Basel III Common Equity Tier 1 (CET1) ratio of 9.1% Excluding items of note(1): Q2 2013 compared to Q2 2012 A Net income of $1,967 million (up 13% from $1,735 million) A Diluted EPS of $1.29 (up $0.16 from $1.13) A ROE of 18.8 % (up from 18.4%) YTD 2013 compared to YTD 2012 A Net income of $4,006 million (up 18% from $3,388 million) A Diluted EPS of $2.62 (up $0.41 from $2.21) A ROE of 19.1% (up from 17.9%) Excluding items of note(1): YTD 2013 compared to YTD 2012 A Net income of $4,037 million (up 12% from $3,590 million) A Diluted EPS of $2.64 (up $0.29 from $2.35) A ROE of 19.2% (up from 19.1%)
Results excluding a restructuring charge of $31 million ($44 million before-tax) in the current period related to the integration of RBC Investor Services (RBCIS) and a loss of $202 million ($212 million before-tax) in the prior year related to the acquisition of the remaining 50% interest in RBC Dexia Investor Services, renamed RBC Investor Services, are non-GAAP measures. For further details on results excluding these items, refer to the non-GAAP measures section below.
Q2 2013 Business Segment Performance
Personal & Commercial Banking net income was $1,057 million, up $117 million or 12% compared to last year, reflecting solid volume growth across all businesses in Canada and lower provision for credit losses (PCL), partially offset by spread compression. Compared to the prior quarter, net income decreased $63 million or 6%, largely due to the negative impact of seasonal factors, including fewer days in the quarter, lower credit card transaction volumes and higher marketing costs.
Our Ally Canada acquisition(2) contributed earnings of $12 million, which reflected revenue of $60 million, non-interest expense of $41 million, including $17 million ($12 million after-tax) of integration costs and amortization of intangibles, and PCL of $4 million.
Wealth Management net income was $225 million, up $13 million or 6% compared to last year, driven by higher average fee-based client assets, resulting from net sales and capital appreciation, and higher transaction volumes. Compared to last quarter, net income was down $8 million or 3%, as higher average fee-based client assets was more than offset by the seasonality of performance fees recognized primarily in the first and third quarters.
Insurance net income was $166 million, up $15 million or 10% from a year ago, mainly due to a favourable change in actuarial adjustments, favourable life policyholder experience and net investment gains, partially offset by higher disability claims costs. Compared to the prior quarter, net income was relatively flat as lower reinsurance claims costs were largely offset by the favourable impact in the prior quarter of interest rates and investment activity on policyholder liabilities.
Investor & Treasury Services net income was $67 million compared to a net loss of $121 million a year ago. Excluding certain items related to RBCIS, net income of $98 million(1) increased $17 million or 21%, largely due to improved results in RBCIS and incremental earnings related to our additional 50% ownership, which were partially offset by lower funding and liquidity revenue. Compared to last quarter, net income was down $13 million or 16%. Excluding the restructuring charge this quarter, net income increased $18 million(1) or 23%, reflecting improved results in RBCIS.
Capital Markets net income was $386 million, up $15 million or 4% compared to last year. Strong growth in our corporate and investment banking businesses, particularly in loan syndication and lending in the U.S., were largely offset by lower fixed income trading revenue reflecting lower client volumes and narrower bid/ask spreads, primarily in Europe. Lower variable compensation also contributed to the increase. Compared to last quarter, net income decreased $78 million or 17%, mainly due to lower fixed income trading revenue, primarily in the latter half of the quarter, driven by challenging trading conditions primarily in the U.S. and Europe. These factors were partially offset by decreased variable compensation and lower PCL.
Capital - As at April 30, 2013, our Basel III "all-in" CET1 ratio was 9.1%, down 20 basis points compared to last quarter, as strong internal capital generation was more than offset by the 45 bps impact from the Ally Canada acquisition.
Credit Quality -Total PCL of $288 million decreased $60 million from the prior year, largely reflecting lower PCL in our Canadian Banking personal loan and credit card portfolios, and in our Caribbean wholesale portfolios. PCL decreased $61 million from the prior quarter primarily due to lower provisions in Capital Markets.
We seek Safe Harbor.