3rd Quarter Results

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Royal Bank of Canada | Third Quarter 2016

Helping clients thrive and communities prosper

Royal Bank of Canada third quarter 2016 results

All amounts are in Canadian dollars and are based on financial statements prepared in compliance with International Accounting Standard 34 Interim Financial Reporting, unless otherwise noted.

TORONTO, August 24, 2016 - Royal Bank of Canada (RY on TSX and NYSE) today reported record net income of $2,895 million for the third quarter ended July 31, 2016, up $420 million or 17% from a year ago and up $322 million or 13% from last quarter. In addition, today we announced an increase to our quarterly dividend of $0.02 or 2% to $0.83 per share.

Excluding an after-tax gain of $235 million from the sale of RBC General Insurance Company, our home and auto insurance business, to Aviva Canada Inc. (Aviva), net income of $2,660 million(1) was up $185 million or 7% from the prior year. Results reflect strong earnings in Wealth Management, which benefited from the inclusion of City National Bank (City National), and strong earnings in Capital Markets and higher earnings in Personal & Commercial Banking. These factors were partially offset by lower results in Insurance excluding the gain on sale, and in Investor & Treasury Services as the prior year included an additional month of earnings. Our performance also reflects benefits from our ongoing focus on efficiency management activities. Our capital position was strong with a Basel III Common Equity Tier 1 (CET1) ratio of 10.5%.

Compared to last quarter, excluding the gain on sale as noted above, net income was up $87 million or 3%(1), mainly reflecting higher earnings across most of our segments. Results reflect improved credit quality, with our provision for credit losses (PCL) ratio of 0.24%, down 12 bps, mainly due to lower PCL in the oil & gas sector.

"RBC had a record third quarter, delivering reported earnings of over $2.8 billion and $7.9 billion for the first nine months of the year, demonstrating the strength of our diversified business model and our disciplined risk and efficiency management. Our strong capital position enabled us to repurchase $292 million of common shares in the third quarter and I'm pleased to announce a 2% increase to our quarterly dividend," said Dave McKay, RBC President and Chief Executive Officer. "We remain focused on prudently managing risks and costs while innovating to enhance the client experience and deliver long-term shareholder value."

Q3 2016 compared to Q3 2015
• Net income of $2,895 million (up 17% from $2,475 million)
• Diluted earnings per share (EPS) of $1.88 (up $0.22 from $1.66)
• Return on common equity (ROE)(2) of 18.0% (down 10 bps from 18.1%)
• Basel III CET1 ratio of 10.5% (up 40 bps from 10.1%)

YTD 2016 compared to YTD 2015
• Net income of $7,915 million (up 6% from $7,433 million)
• Diluted EPS of $5.13 (up $0.14 from $4.99)
• ROE of 16.5% (down 240 bps from 18.9%)

Excluding specified items(1): Q3 2016 compared to Q3 2015
• Net income of $2,660 million (up 7% from $2,475 million)
• Diluted EPS of $1.72 (up $0.06 from $1.66)
• ROE of 16.5% (down 160 bps from 18.1%)

Excluding specified items(1): YTD 2016 compared to YTD 2015
• Net income of $7,680 million (up 5% from $7,325 million)
• Diluted EPS of $4.97 (up $0.05 from $4.92)
• ROE of 16.0% (down 260 bps from 18.6%)

Specified items comprise: In Q3 2016, a gain of $287 million ($235 million after-tax) from the sale of RBC General Insurance Company to Aviva and, in Q2 2015, a gain of $108 million (before- and after-tax) from the wind-up of a U.S.-based subsidiary that resulted in the release of foreign currency translation adjustment that was previously booked in other components of equity.

(1) These measures are non-GAAP. For further information, including a reconciliation, refer to the Key performance and non-GAAP measures section of this Q3 2016 Report to Shareholders.
(2) This measure does not have a standardized meaning under GAAP. For further information, refer to the Key performance and non-GAAP measures section of this Q3 2016 Report to Shareholders.

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