Royal Bank of Canada Posts Profit, Still Getting Beaten with Losses

Tuesday, September 01, 2009 , , , 4 Comments

Stupendous profits are not limited to banks under FASB jurisdiction (yeah, we did see what you did there and no we didn't find it to be entertainment), kids. Welcome to the wacky world of exceptional banking!

CBC News:

Royal Bank of Canada beat analysts' expectations by posting a 24 per cent surge in third-quarter profits on Thursday.

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. The bank posted profits of $1.3 billion, or 92 cents per share, during the same period last year.

Cash net income, which excludes certain one-time items, totalled $1.21, soundly beating estimates of 92 cents per share from analysts surveyed by Thomson Reuters.

"Our record results this quarter reflect the strength of our franchise and our ability to take advantage of opportunities and drive efficiencies," Royal Bank chief executive officer Gordon Nixon said

"We are building on our strong competitive positions and successfully executing against our long-term strategy. Our performance this quarter demonstrates the competitive advantage of our diverse business mix."

The capital markets division drove gains, posting $562 million in profits for the quarter, up 52 per cent from last year's level.

See, I'm always a little wary of this analyst expectation line.

The Canadian banking division's profit declined to $669 million.

"Higher unemployment levels have had an impact on loan portfolios and the low-interest environment in keeping pressure on retail margins," Nixon said on a conference call to discuss the results.

The international banking division's net losses increased to $95 million, a big spike from the $16-million loss last year. Higher provisions for credit losses in U.S. banking was blamed for the loss.

Oh, I get it now!

Net income: $1.6 billion + Net losses: $95 million = profit extravaganza? Me thinks not. And what "one time items" are we referring to here? RBC has been through this before and is no better off than it was in February so don't go getting all pissed off just yet.

Apparently there are grumblings of outrage from Royal Bank of Canada customers who claim they are being bent over with fees so if one takes that into account, I might suggest RBC keep this hush hush lest the unwashed masses grab their icy pitchforks and start a riot.

P.S. RBC: Despite what you may have heard, writedowns count.

(h/t @Myogis and please please please let me know just how outraged you are. Sounds like RBC has been bending you kids over for quite some time...)

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


Krupo said...

Finally - you prompted me to check what that thing was about.

David said...

"Our record results this quarter reflect the strength of our franchise and our ability to take advantage of opportunities and drive efficiencies."

What is this, some kind of drinking game?

For a financial institution (true story) who cannot even set up a simple savings account in a 4 month period and who finally returns the initial deposit cheque as 'stale dated' and thanks me for my interest but informs me that I will have to complete my application in order to have an RBC account - when I think of all that, I can believe just about anything from that institution.

Oh and one more thing. I was privileged to sit in through one of their invitation only investor conferences and not only was the presentation wrong headed and full of factual errors, I could get better investment advice from any random paragraph written by JR.

/rant off


none of anything i say should be construed as investment advice. i'm glad i was enlightened to this RBC outrage, I had absolutely no idea.