By The Canadian Press
{TORONTO - Royal Bank of Canada (TSX:RY) reported third-quarter financial results that beat analysts' expectations on Thursday as a strong performance by its capital markets division offset losses in international banking and a sharp rise in provisions for credit losses.
The Toronto-based bank reported net income of $1.6 billion or $1.05 per share for the quarter ended July 31, up 24 per cent from year-earlier profits of $1.3 billion or 92 cents per share.
Cash net income, which excludes certain one-time items, totalled $1.21, soundly beating estimates of 92 cents per share from analysts at Thomson Reuters.
"Global capital markets continued to improve from last quarter and we have seen some signs of recovery in the general economy," Royal Bank chief executive Gordon Nixon said on a conference call with analysts.
"Of course, higher unemployment levels have had an impact on loan portfolios and the low-interest environment in keeping pressure on retail margins."
Third-quarter gains were led by a 52 per cent increase in net income from Royal Bank's capital markets group, which reported profits of $562 million for the quarter.
Net income in the Canadian banking segment edged down to $669 million, while profits from insurance increased 18 per cent to $167 million.
Net losses at international banking widened to $95 million from $16 million the year before, due in part to higher provisions for credit losses in U.S. banking, but the "credit profile is showing signs of improvement as the rate of deterioration of our loan portfolios has slowed," Nixon said.
Overall provisions surged more than 40 per cent to $770 million, a $436-million increase over year-earlier levels.
The bank said its Tier 1 capital ratio, a key performance metric measuring the amount of money held in reserve, was 12.9 per cent at quarter's end.
The bank also held its quarterly dividend steady at 50 cents per share.}
http://ca.news.yahoo.com/s/capress/090827/business/royal_bank
