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RBC reports Q2 profit up, returning more cash to shareholders after closing HSBC deal

The Canadian Press

TORONTO — Royal Bank of Canada says it's rewarding shareholders as its second-quarter profit rose from last year and it successfully closed its HSBC Canada acquisition.

The bank said Thursday it will now pay a quarterly dividend of $1.42 per share, an increase of four cents. It also said it plans to buy back up to 30 million of its shares.

The moves came as RBC said it earned $3.95 billion or $2.74 per diluted share for the quarter ended April 30, up from $3.68 billion or $2.60 per diluted share a year earlier, helped in part by record capital markets revenue.

"This quarter, we saw strong growth across diversified revenue streams," said chief executive Dave McKay on an earnings call.

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He said the bank's capital generation means it has options ahead for growth, including potential acquisitions, even as the bank returns more money to shareholders.

"This enormous capital that we are generating gives us significant strategic flexibility inorganically."

The bank also has a wide range of growth options within the bank now, including making the most of its $13.5-billion HSBC Canada acquisition.

The roughly 4,500 employees RBC took on with the acquisition are now free from the uncertainty around the deal, and the barriers it posed to bringing on clients, he said.

"They've been on the defence for 18 months, and now we're on the offence and you can see the excitement in their eyes to get back," said McKay.

Revenue totalled $14.15 billion, up from $12.45 billion in the same quarter last year.

The bank's provision for credit losses amounted to $920 million for the quarter, up from $600 million a year ago.

On an adjusted basis, RBC said it earned $2.92 per diluted share, up from an adjusted profit of $2.68 per diluted share a year earlier.

Analysts on average had expected a profit of $2.75 per share, according to LSEG Data & Analytics.

The results put Royal Bank as the best banking performer of the quarter, said Scotiabank analyst Meny Grauman.

"With all the Big 6 Canadian banks now having reported, we would put RY at the top of the class this quarter," he said in a note.

RBC said its personal and commercial banking business earned $2.05 billion, up from $1.92 billion in the same quarter last year, while its wealth management business earned $769 million, up from $719 million a year ago.

The bank's insurance business earned $177 million in the second quarter, up from $170 million in the same quarter last year.

RBC's capital markets business earned $1.26 billion, up from $962 million a year ago, helped by higher merger and acquisition activity, loan syndications, as well as equity and debt origination.

The bank's corporate support segment reported a loss of $309 million for its latest quarter compared with a loss of $86 million a year ago.

This report by The Canadian Press was first published May 30, 2024.

Companies in this story: (TSX:RY)

Ian Bickis, The Canadian Press