Royal Bank of Canada posts dip in Q4 income amid macroeconomic uncertainty

By Scott Kanowsky

Investing.com -- Royal Bank of Canada (NYSE:RY) has reported a marginal decline in fourth-quarter earnings, as weakness at its capital markets division was offset by a rise in profit in personal and commercial banking.

Net income during the three months to October 31 fell slightly to C$3.88 billion ($1 = C$1.3501), down from C$3.89B during the corresponding timeframe last year. However, when excluding one-off expenses, earnings per share came in at C$2.78, above analysts' estimates of C$2.68.

Profit at the capital markets unit slumped by a third annually, in a reflection of the impact a recent spike in inflation and souring trading conditions have taken on corporate deal activity that generated strong fees for banks in 2021.

Provisions for credit losses, which RBC are setting aside to hedge against the impact of possible loan defaults, also jumped to C$381M, up from a C$227M release registered last year.

But personal and commercial banking, which has become a key business for RBC as equity markets have reeled from economic headwinds and the Bank of Canada has hiked interest rates, saw net income rise by 5% to just under C$2.14B.

"While market conditions continue to be tough, our 2022 results reflect a resilient bank that is well-positioned to pursue strategic growth and deliver long-term shareholder value," said RBC president and chief executive officer Dave McKay in a statement.

U.S.-listed shares in RBC, which also agreed to buy the Canadian unit of U.K. lender HSBC earlier this week for C$13.5B, dipped on Wednesday.

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