Net income at the wealth management arm fell from a year ago. Developments such as lower interest rates hit results at this part of RBC. Across the banking group as a whole, the capital markets business posted stronger figures.

The wealth management arm of Royal Bank of Canada sustained a 12 per cent year-on-year fall in net income to C$562 million ($427 million) in the three months to July 31. The fall was largely caused by falling net interest income as volume growth was offset by lower interest rates. 

Compared with the previous quarter of 2020, net income increased by C$138 million or 33 per cent, primarily from the reversal of unfavorable changes in the fair value of interest rate derivatives, seed capital investments and the net impact of RBC’s US share-based compensation plans driven by the improvement of market conditions in the latest quarter. Lower staff-related costs also contributed to the quarter-on-quarter increase. These factors were somewhat offset by lower client transactional activity, including the impact of elevated market volatility on volumes in the prior quarter. 

For RBC as a whole, the Toronto/New York-listed firm reported net income of C$3.201 billion for the quarter, down by 2 per cent from the prior year. 

The group said it booked record earnings in its capital markets business and made “solid earnings” in insurance. However, these results were offset by lower earnings in personal and commercial banking, wealth management and investor and treasury services, largely due to the impact of lower interest rates.

As has been seen in a number of bank results, the heightened volatility amid the pandemic actually boosted earnings in the capital markets and more transactional business arms.