Net Income At RBC Wealth Management Flat In Three Months To End-Oct Vs Year Ago

Eliane Chavagnon

5 December 2013

Fourth quarter net income of $205 million at was “relatively flat” year-on-year and down 13 per cent from $236 million in this year's previous quarter.

(In RBC's case, its fourth quarter relates to the three months to the end of October, as opposed to the conventional calendar points adopted by most banks.)

The Canadian firm attributed the quarterly decline to higher average fee-based client assets that were “more than offset by higher PCL and a higher effective tax rate.” Compared to the fourth quarter of 2012, net income is down slightly from $207 million, according to the firm’s latest earnings release.

Total revenue increased $154 million, or 12 per cent, which the firm said was mainly due to higher average fee-based client assets, reflecting net sales, capital appreciation and the “favorable impact” of a weaker Canadian dollar.

Non-interest expense, meanwhile, rose 12 per cent. This was primarily a result of higher variable compensation, driven by higher revenue, increased staff levels and infrastructure investments, RBC said.

Broken down, revenue at RBC’s US and international wealth management business was $560 million at end-October 2013, up from $545 million and $515 million on the previous quarter and year-on-year respectively.

For the group as a whole, RBC reported “record net income” of $8.4 billion for the year ended October 31, 2013, up $890 million or 12 per cent from the prior year. These results were driven by earnings in personal and commercial banking, wealth management and capital markets, as well as higher earnings in investor and treasury services, the firm said.

Meanwhile, net income for the fourth quarter was $2.1 billion, up 11 per cent from the prior year. This reflects “strong growth” in capital markets and personal and commercial banking, on top of higher earnings in investor and treasury services.