Reports

RBC Posts Record Net Income, Wealth Earnings Fall

Eliane Chavagnon Editor Americas 2 December 2015

RBC Posts Record Net Income, Wealth Earnings Fall

Wealth earnings took a fall at Royal Bank of Canada, although net income for the whole group hit a record in its latest quarter for results.

Royal Bank of Canada has today reported that wealth management net income was C$255 million ($190.7 million) for the fourth quarter of 2015, down C$30 million, or 11 per cent, compared to last year.

The decline in wealth management income was due mainly to lower transaction volumes, driven by unfavorable market conditions and restructuring costs of C$46 million ($38 million after tax), which was largely related to its US and international business, including the sale of RBC Suisse. The Toronto-listed bank has disposed of a number of wealth business units as part of a strategic review to focus on more profitable markets.

“These factors were partly offset by a lower effective tax rate reflecting income tax adjustments related to the current year, and higher earnings from growth in average fee-based client assets,” RBC said.

Wealth management net income was also down C$30 million – 11 per cent – on the previous quarter, due primarily to the same restructuring costs as well as lower fee-based client assets and lower transaction volumes, again driven by unfavorable market conditions.

On 2 November, RBC finalised its acquisition of City National Bank, deepening its wealth management presence in the US. 

As of 31 October, 2015, RBC said its Basel III Common Equity Tier 1 ratio was 10.6 per cent, up 70 bps from the prior year, as it continued to strengthen its capital position for the acquisition of City National.

Royal Bank of Canada as a group reported record net income of C$10 billion for the year ended October 31, 2015, up C$1 billion or 11 per cent from the prior year. Results were driven by record earnings in personal and commercial banking, capital markets, and investor and treasury services, partially offset by lower earnings in insurance and wealth management, RBC said.

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