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Royal Bank of Canada (RY) Stock Gains 5.3% as Q2 Earnings Rise
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Shares of Royal Bank of Canada (RY - Free Report) have gained 5.3% since the release of its fiscal second-quarter 2024 (ended Apr 30) results late last week. Quarterly adjusted net income of C$4.2 billion ($3.09 billion) grew 11% from the prior-year quarter.
During the reported quarter, RY completed the previously announced deal to acquire HSBC Bank Canada for C$13.5 billion. Results were driven by higher revenues and loans and deposit balances. However, an increase in expenses and provisions acted as a headwind.
Revenues Improve, Expenses Rise
Total revenues were C$14.15 billion ($10.43 billion), up 14% year over year.
Net interest income (NII) was C$6.62 billion ($4.88 billion), growing 9% from the prior-year quarter. Non-interest income was C$7.53 billion ($5.55 billion), surging 19%.
Non-interest expenses were C$8.31 billion ($6.12 billion), up 12%.
The company’s provision for credit losses was C$920 million ($677.9 million), jumping 58%.
Balance Sheet Solid
As of Apr 30, 2024, Royal Bank of Canada’s total loans were C$966.25 billion ($704.3 billion), up 12% from the prior quarter. Deposits totaled C$1.33 trillion ($1 trillion), rising 7%. Total assets were C$2.03 trillion ($1.5 trillion), up 3%.
Capital Ratios Deteriorate
As of Apr 30, 2024, Royal Bank of Canada’s Tier 1 capital ratio was 14.1%, down from the prior-year quarter’s 14.9%. Total capital ratio was 16.1%, falling from 16.8%.
The company’s Common Equity Tier 1 ratio was 12.8%, down from 13.7% in the prior-year quarter.
Our View
Solid loan balances, higher rates and a diversified product mix will likely keep driving Royal Bank of Canada’s financials. However, higher provisions on the uncertain economic outlook are major near-term concerns.
Royal Bank Of Canada Price, Consensus and EPS Surprise
The Bank of Nova Scotia's (BNS - Free Report) second-quarter fiscal 2024 (ended Apr 30) adjusted net income was C$2.11 billion ($1.55 billion), which declined 2.6% year over year.
A rise in expenses and a surge in provisions for credit losses hurt the results. However, higher revenues, an increase in loan balance and solid capital ratios were tailwinds for BNS.
Toronto-Dominion Bank (TD - Free Report) reported second-quarter fiscal 2024 (ended Apr 30) adjusted net income of C$3.79 billion ($2.79 billion), which increased 2.2% from the prior-year quarter.
Results benefited from higher non-interest income and growth in loans and deposit balance. However, an increase in expenses and provision for credit losses were the undermining factors for TD.
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Royal Bank of Canada (RY) Stock Gains 5.3% as Q2 Earnings Rise
Shares of Royal Bank of Canada (RY - Free Report) have gained 5.3% since the release of its fiscal second-quarter 2024 (ended Apr 30) results late last week. Quarterly adjusted net income of C$4.2 billion ($3.09 billion) grew 11% from the prior-year quarter.
During the reported quarter, RY completed the previously announced deal to acquire HSBC Bank Canada for C$13.5 billion. Results were driven by higher revenues and loans and deposit balances. However, an increase in expenses and provisions acted as a headwind.
Revenues Improve, Expenses Rise
Total revenues were C$14.15 billion ($10.43 billion), up 14% year over year.
Net interest income (NII) was C$6.62 billion ($4.88 billion), growing 9% from the prior-year quarter. Non-interest income was C$7.53 billion ($5.55 billion), surging 19%.
Non-interest expenses were C$8.31 billion ($6.12 billion), up 12%.
The company’s provision for credit losses was C$920 million ($677.9 million), jumping 58%.
Balance Sheet Solid
As of Apr 30, 2024, Royal Bank of Canada’s total loans were C$966.25 billion ($704.3 billion), up 12% from the prior quarter. Deposits totaled C$1.33 trillion ($1 trillion), rising 7%. Total assets were C$2.03 trillion ($1.5 trillion), up 3%.
Capital Ratios Deteriorate
As of Apr 30, 2024, Royal Bank of Canada’s Tier 1 capital ratio was 14.1%, down from the prior-year quarter’s 14.9%. Total capital ratio was 16.1%, falling from 16.8%.
The company’s Common Equity Tier 1 ratio was 12.8%, down from 13.7% in the prior-year quarter.
Our View
Solid loan balances, higher rates and a diversified product mix will likely keep driving Royal Bank of Canada’s financials. However, higher provisions on the uncertain economic outlook are 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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Canadian Banks
The Bank of Nova Scotia's (BNS - Free Report) second-quarter fiscal 2024 (ended Apr 30) adjusted net income was C$2.11 billion ($1.55 billion), which declined 2.6% year over year.
A rise in expenses and a surge in provisions for credit losses hurt the results. However, higher revenues, an increase in loan balance and solid capital ratios were tailwinds for BNS.
Toronto-Dominion Bank (TD - Free Report) reported second-quarter fiscal 2024 (ended Apr 30) adjusted net income of C$3.79 billion ($2.79 billion), which increased 2.2% from the prior-year quarter.
Results benefited from higher non-interest income and growth in loans and deposit balance. However, an increase in expenses and provision for credit losses were the undermining factors for TD.