Royal Bank of Canada on Wednesday reported a forecast-beating 17 percent jump in fourth-quarter earnings, helped by growth in its retail banking and wealth management divisions. Canada's biggest lender by market value posted earnings per share of C$2.20 in the three months to Oct. 31, ahead of a consensus analyst forecast of C$2.12, according to IBES data from Refinitiv.
The bank reported a 15 percent increase in net income to C$3.25 billion ($2.45 billion) during the quarter. That included a 10 percent rise in net income from retail banking to C$1.54 billion, benefiting from improved margins and growth in residential mortgages, commercial lending and deposits. Like other Canadian banks, RBC has benefited from the Bank of Canada hiking interest rates five times since last summer.
RBC reported a 13 percent increase in net income at its wealth management business to C$553 billion, reflecting higher average fees from clients. Net income from insurance rose 20 percent from a year ago to C$318 million. The bank's investment banking business increased net income by 14 percent from a year ago to C$666 million, driven by beneficial US tax reforms and higher trading revenue arising from market volatility.
For the full year, RBC reported record net income of C$12.4 billion, up 8 percent on the year before. The bank's core tier 1 ratio, a key measure of its financial strength, rose 60 basis points during the year to 11.5 percent. Toronto-Dominion Bank, RBC's biggest rival, reports fourth-quarter earnings on Thursday. Bank of Nova Scotia on Tuesday reported earnings which missed market expectations.