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Royal Bank of Canada (RY) Stock Down 2.5% as Q3 Earnings Fall
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Shares of Royal Bank of Canada (RY - Free Report) tanked 2.5% on the NYSE in response to the third-quarter fiscal 2022 (ended Jul 31) results. Adjusted net income of C$3.56 billion ($2.78 billion) declined 16.8% from the prior-year quarter.
Results were adversely impacted by a rise in provisions, lower non-interest income on weak capital markets performance and a worsening economic backdrop. Also, capital ratios deteriorated during the quarter. However, a marginal fall in expenses, rise in net interest income and solid loans and deposit balances acted as tailwinds.
Revenues & Expenses Down
Total revenues came in at C$12.13 billion ($9.47 billion), down 4.9% on a year-over-year basis.
Net interest income came in at C$5.89 billion ($4.6 billion), growing 16.6%. Non-interest income was C$6.24 billion ($4.87 billion), which plunged 19% mainly on weak capital markets performance.
Non-interest expenses were C$6.39 billion ($4.99 billion), down marginally from the year-ago quarter.
The company’s provision for credit losses was C$340 million ($265.5 million) in the quarter against negative provisions in the year-ago quarter. This was largely due to unfavorable changes in the overall macroeconomic outlook.
As of Jul 31, 2022, Royal Bank of Canada’s net loans came in at C$796.3 billion ($622 billion), up 2.8% from the prior quarter. Deposits totaled C$1.18 trillion ($0.92 trillion), up 2.3% sequentially. Total assets were C$1.84 trillion ($1.44 trillion), down slightly.
Capital Ratios Deteriorate
As of Jul 31, 2022, Royal Bank of Canada’s Tier 1 capital ratio came in at 14.3%, down from the prior-year quarter’s 15%. Total capital ratio was 15.9%, down from 16.7%.
The company’s Common Equity Tier 1 ratio came in at 13.1%, down from 13.6% in the prior-year quarter.
Our View
Improvement in loan balances, rising rates and a diversified product mix will keep driving Royal Bank of Canada’s organic growth. However, higher provisions on the worsening economic outlook and weak capital markets remain major near-term concerns.
Royal Bank Of Canada Price, Consensus and EPS Surprise
Performance & Earnings Date of Other Canadian Banks
The Bank of Nova Scotia (BNS - Free Report) reported third-quarter fiscal 2022 (ended July 31) adjusted net income of C$2.61 billion ($2.04 billion), which rose 2% year over year. Results excluded certain one-time items.
Higher net interest income driven by rising rates and improving loan demand mainly supported the results. Moreover, the balance sheet position remained strong during the quarter. However, lower non-interest income and a rise in expenses were the headwinds. Further, an increase in provisions on worsening economic outlook hurt BNS’ financials.
Another Canadian bank slated to report quarterly numbers soon is Bank of Montreal (BMO - Free Report) . Bank of Montreal is scheduled to report on Aug 30.
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Royal Bank of Canada (RY) Stock Down 2.5% as Q3 Earnings Fall
Shares of Royal Bank of Canada (RY - Free Report) tanked 2.5% on the NYSE in response to the third-quarter fiscal 2022 (ended Jul 31) results. Adjusted net income of C$3.56 billion ($2.78 billion) declined 16.8% from the prior-year quarter.
Results were adversely impacted by a rise in provisions, lower non-interest income on weak capital markets performance and a worsening economic backdrop. Also, capital ratios deteriorated during the quarter. However, a marginal fall in expenses, rise in net interest income and solid loans and deposit balances acted as tailwinds.
Revenues & Expenses Down
Total revenues came in at C$12.13 billion ($9.47 billion), down 4.9% on a year-over-year basis.
Net interest income came in at C$5.89 billion ($4.6 billion), growing 16.6%. Non-interest income was C$6.24 billion ($4.87 billion), which plunged 19% mainly on weak capital markets performance.
Non-interest expenses were C$6.39 billion ($4.99 billion), down marginally from the year-ago quarter.
The company’s provision for credit losses was C$340 million ($265.5 million) in the quarter against negative provisions in the year-ago quarter. This was largely due to unfavorable changes in the overall macroeconomic outlook.
As of Jul 31, 2022, Royal Bank of Canada’s net loans came in at C$796.3 billion ($622 billion), up 2.8% from the prior quarter. Deposits totaled C$1.18 trillion ($0.92 trillion), up 2.3% sequentially. Total assets were C$1.84 trillion ($1.44 trillion), down slightly.
Capital Ratios Deteriorate
As of Jul 31, 2022, Royal Bank of Canada’s Tier 1 capital ratio came in at 14.3%, down from the prior-year quarter’s 15%. Total capital ratio was 15.9%, down from 16.7%.
The company’s Common Equity Tier 1 ratio came in at 13.1%, down from 13.6% in the prior-year quarter.
Our View
Improvement in loan balances, rising rates and a diversified product mix will keep driving Royal Bank of Canada’s organic growth. However, higher provisions on the worsening economic outlook and weak capital markets remain major near-term concerns.
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 #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Earnings Date of Other Canadian Banks
The Bank of Nova Scotia (BNS - Free Report) reported third-quarter fiscal 2022 (ended July 31) adjusted net income of C$2.61 billion ($2.04 billion), which rose 2% year over year. Results excluded certain one-time items.
Higher net interest income driven by rising rates and improving loan demand mainly supported the results. Moreover, the balance sheet position remained strong during the quarter. However, lower non-interest income and a rise in expenses were the headwinds. Further, an increase in provisions on worsening economic outlook hurt BNS’ financials.
Another Canadian bank slated to report quarterly numbers soon is Bank of Montreal (BMO - Free Report) . Bank of Montreal is scheduled to report on Aug 30.