Royal Bank of Canada (NYSE: RY – $77.04) reported net income of C(anadian)$3.06 billion for the second quarter, up C$251 million or 9% from the prior year with double-digit earnings per share growth of 11%. Results reflect strong earnings growth in Wealth Management, Personal & Commercial Banking and Investor & Treasury Services along with solid earnings in the company’s Insurance business. Capital Markets performance was stable amidst less favorable market conditions. Strong credit quality also contributed to results reflecting a benign credit environment. Compared to last quarter, net income was up C$48 million or 2%, though market-related revenue moderated from strong first quarter levels. On a per share basis, Royal Bank earned US$2.10, four cents ahead of Street estimates and compared to US$1.89 a year ago. Continued margin expansion and strong loan growth on both sides of the border helped to offset the impact of less favorable market conditions and fewer days in the current quarter.
RBC’s California-based City National Bank, which it acquired in 2015, will add recent expansions in the New York and Washington DC markets. The private bank opened its first branch in DC in February. It opened a new office in New York in 2016 and boosted its commercial bank operations there in 2017. City National earnings jumped 68% year over year, helped by lower US taxes and business growth.
Royal Bank continues to have wide appeal. It boasts an attractive dividend yielding 3.8% and should outperform the broader market averages in the coming year and remains a sound holding for conservative income investors over the longer term as well.