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Royal Bank of Canada (RY) Q4 Earnings Impress, Expenses Down
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Royal Bank of Canada (RY - Free Report) reported fourth-quarter fiscal 2020 (ended Oct 31, 2020) net income of C$3.2 billion ($2.4 billion), up 1% from the prior-year quarter’s reported tally.
The bank witnessed fall in expenses and provisions. However, lower revenues, along with decline in loans and deposit balances, were on the downside.
Furthermore, on a year-over-year basis, Wealth Management, Personal & Commercial Banking, Insurance, Corporate Support and Canadian Banking reported a decline of 25%, 7%, 10%, 58.1% and 5.8%, respectively, in the quarterly net income. Nevertheless, net income in the Capital Markets climbed 44%, while increasing significantly at Investor & Treasury Services on a year-over-year basis.
For the fiscal year ended Oct 31, 2020, net income came in at C$11.4 billion ($8.6 billion), down 11.6% from the prior-year’s reported tally.
Revenues Down, Expenses & Provisions Decline
Total revenues came in at C$11.1 billion ($8.4 billion) during the August-October quarter, down 2.6% on a year-over-year basis. Revenues were unfavorably impacted by lower non-interest as well as net interest income.
Net interest income came in at C$5 billion ($3.8 billion), down 2% from the prior-year quarter. Non-interest income was C$6.1 billion ($4.6 billion), down 3.2% year on year.
Non-interest expenses came in at C$6.1 billion ($4.6 billion), down 3.2% from the year-ago quarter. This decline primarily resulted from fall in human resources, communication and other expenses.
As of Oct 31, 2020, Royal Bank of Canada’s average total loans came in at C$675.2 billion ($506.7 billion), declining slightly from the prior quarter. Additionally, deposits totaled C$1.01 trillion ($0.76 trillion), down around 1% sequentially. Total assets were C$1.62 trillion ($1.22 trillion), down 3.6% from the previous quarter.
Total provision for credit losses was C$427 million ($323 million) in the quarter, down 14.4% year over year, primarily due to reduction in provisions in Personal & Commercial Banking and Capital Markets, partially muted by elevated provisions in Wealth Management.
Solid Capital Position
As of Oct 31, 2020, Royal Bank of Canada’s Tier 1 capital ratio came in at 13.5%, up from the prior-year quarter’s 13.2%. Total capital ratio came in at 15.5%, up from the 15.2% reported in the year-earlier quarter.
The company’s estimated Common Equity Tier 1 (CET1) ratio came in at 12.5%, expanding 40 basis points from the prior-year quarter.
Our Viewpoint
We believe improvement in loan balances and a diversified product mix will drive Royal Bank of Canada’s organic growth in the days to come. Though stringent regulatory reforms, along with reduction in revenues, keep us skeptical about the company’s sustainable growth over the long term, Canada’s export-driven economy is anticipated to gain from the recovery of the U.S. economy that has been hit hard by the coronavirus mayhem, thereby aiding the bank. Moreover, cost management and lower expenses remain impressive.
Royal Bank Of Canada Price, Consensus and EPS Surprise
Barclays (BCS - Free Report) reported third-quarter 2020 net income attributable to ordinary equity holders of £611 million ($789 million) against the net loss recorded in the prior-year quarter. Results were primarily hurt by an increase in credit impairment charges as well as lower revenues. Moreover, an increase in operating expenses was a major headwind.
UBS Group AG (UBS - Free Report) reported third-quarter net profit attributable to shareholders of $2.09 billion, up significantly from the prior-year quarter’s $1.05 billion. The company’s performance was supported by an increase in net fee and commission income (up 8% year over year), along with a rise in net interest income (up 39%). However, higher expenses posed as a headwind.
HSBC Holdings’ (HSBC - Free Report) third-quarter 2020 pre-tax profit of $3.1 billion marked a plunge of 36.4% from the prior-year quarter’s reported number. The company recorded lower revenues in the quarter along with a decline in expenses. Capital ratios were decent.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Royal Bank of Canada (RY) Q4 Earnings Impress, Expenses Down
Royal Bank of Canada (RY - Free Report) reported fourth-quarter fiscal 2020 (ended Oct 31, 2020) net income of C$3.2 billion ($2.4 billion), up 1% from the prior-year quarter’s reported tally.
The bank witnessed fall in expenses and provisions. However, lower revenues, along with decline in loans and deposit balances, were on the downside.
Furthermore, on a year-over-year basis, Wealth Management, Personal & Commercial Banking, Insurance, Corporate Support and Canadian Banking reported a decline of 25%, 7%, 10%, 58.1% and 5.8%, respectively, in the quarterly net income. Nevertheless, net income in the Capital Markets climbed 44%, while increasing significantly at Investor & Treasury Services on a year-over-year basis.
For the fiscal year ended Oct 31, 2020, net income came in at C$11.4 billion ($8.6 billion), down 11.6% from the prior-year’s reported tally.
Revenues Down, Expenses & Provisions Decline
Total revenues came in at C$11.1 billion ($8.4 billion) during the August-October quarter, down 2.6% on a year-over-year basis. Revenues were unfavorably impacted by lower non-interest as well as net interest income.
Net interest income came in at C$5 billion ($3.8 billion), down 2% from the prior-year quarter. Non-interest income was C$6.1 billion ($4.6 billion), down 3.2% year on year.
Non-interest expenses came in at C$6.1 billion ($4.6 billion), down 3.2% from the year-ago quarter. This decline primarily resulted from fall in human resources, communication and other expenses.
As of Oct 31, 2020, Royal Bank of Canada’s average total loans came in at C$675.2 billion ($506.7 billion), declining slightly from the prior quarter. Additionally, deposits totaled C$1.01 trillion ($0.76 trillion), down around 1% sequentially. Total assets were C$1.62 trillion ($1.22 trillion), down 3.6% from the previous quarter.
Total provision for credit losses was C$427 million ($323 million) in the quarter, down 14.4% year over year, primarily due to reduction in provisions in Personal & Commercial Banking and Capital Markets, partially muted by elevated provisions in Wealth Management.
Solid Capital Position
As of Oct 31, 2020, Royal Bank of Canada’s Tier 1 capital ratio came in at 13.5%, up from the prior-year quarter’s 13.2%. Total capital ratio came in at 15.5%, up from the 15.2% reported in the year-earlier quarter.
The company’s estimated Common Equity Tier 1 (CET1) ratio came in at 12.5%, expanding 40 basis points from the prior-year quarter.
Our Viewpoint
We believe improvement in loan balances and a diversified product mix will drive Royal Bank of Canada’s organic growth in the days to come. Though stringent regulatory reforms, along with reduction in revenues, keep us skeptical about the company’s sustainable growth over the long term, Canada’s export-driven economy is anticipated to gain from the recovery of the U.S. economy that has been hit hard by the coronavirus mayhem, thereby aiding the bank. Moreover, cost management and lower expenses remain impressive.
Royal Bank Of Canada Price, Consensus and EPS Surprise
Royal Bank Of Canada price-consensus-eps-surprise-chart | Royal Bank Of Canada Quote
Royal Bank of Canada currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
Barclays (BCS - Free Report) reported third-quarter 2020 net income attributable to ordinary equity holders of £611 million ($789 million) against the net loss recorded in the prior-year quarter. Results were primarily hurt by an increase in credit impairment charges as well as lower revenues. Moreover, an increase in operating expenses was a major headwind.
UBS Group AG (UBS - Free Report) reported third-quarter net profit attributable to shareholders of $2.09 billion, up significantly from the prior-year quarter’s $1.05 billion. The company’s performance was supported by an increase in net fee and commission income (up 8% year over year), along with a rise in net interest income (up 39%). However, higher expenses posed as a headwind.
HSBC Holdings’ (HSBC - Free Report) third-quarter 2020 pre-tax profit of $3.1 billion marked a plunge of 36.4% from the prior-year quarter’s reported number. The company recorded lower revenues in the quarter along with a decline in expenses. Capital ratios were decent.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>