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Bloomberg
Royal Bank of Canada’s (RCB) acquisition of City National Bank is paying dividends.
The Los Angeles-based lender contributed C$77 million ($57 million) in profit for the fiscal second quarter, helping fuel a 12 percent jump in earnings for Royal Bank’s wealth-management division. This marks the fifth quarter of results since the Canadian lender bought Hollywood’s “bank to the stars†in
November 2015.
The $5 billion City National purchase allowed Royal Bank to diversify into U.S. private and commercial banking at a time when consumer lending in Canada was slowing. Founded in 1954, City National was long known for its show-business connections, funding movies and catering to Hollywood VIPs including actor Kirk Douglas, director Steven Spielberg and celebrity chef Wolfgang Puck. Chief Executive Officer David McKay said in January that expanding City National is a priority.
A 15 percent jump in earnings from its RBC Capital Markets business and a drop in loan-loss provisions also helped drive results at Canada’s second-largest lender by assets.
Net income for the period ended April 30 rose 9.2 percent to C$2.81 billion, or C$1.85 a share, from C$2.57 billion, or C$1.66, a year earlier, the Toronto-based lender said Thursday in a statement. Royal Bank said adjusted profit, which excludes some items, was C$1.89 a share, beating the C$1.81 average estimate of 14 analysts surveyed by Bloomberg.
Toronto-Dominion Bank, Canada’s largest lender, also posted higher profit that beat analysts’ estimates, led by gains in U.S. retail banking and lower loan-loss provisions. Second-quarter net income rose 22 percent to C$2.5 billion, or C$1.31 a share, from C$2.05 billion, or C$1.07 from the year earlier, the Toronto-based lender said in a statement. Adjusted earnings were C$1.34 a share, compared with the C$1.25 average estimate of 14
analysts surveyed by Bloomberg.
“All of our business segments performed very well, reflecting strong revenue growth, reduced credit losses and good expense management,” Toronto-Dominion Chief Financial Officer Riaz Ahmed said in a phone interview.
Canadian Imperial Bank of Commerce earlier reported that net income rose 12 percent to C$1.05 billion, or C$2.59 a share, on wealth management and lower provisions. Adjusted profit of $2.64 a share exceeded analysts’ C$2.58 estimated.