Canada’s largest lender, Royal Bank of Canada (NYSE: RY – $77.39), reported fiscal first quarter earnings slightly below expectations while revenue topped views, as the firm said “challenging market conditions” impacted several parts of its business. Adjusted earnings per share increased to C$2.19 up 7% from a year ago, but the consensus was for C$2.20. Revenue in the period rose to C$11.59 billion from C$10.83 billion, which was ahead of expectations of about C$11 billion. The Personal and Commercial Banking business revenue rose to C$4.17 billion from C$3.93 billion a year earlier. Net income was up 3% year-over-year amid client-driven volume growth and stronger deposit spreads from higher interest rates in Canada. The gains, however, were offset by higher staff and technology related costs and a hike in the bank’s provisions for credit losses. Wealth Management segment revenue remained unchanged from a year ago but increased 8% from the last quarter. Insurance segment revenue increased to C$1.58 billion from C$1.14 billion, but its Capital Markets business revenue slowed to C$2.1 billion or 13% from last year’s first period. Investor and Treasury Services revenue fell to C$631 million from C$676 million and net income decreased 26%, primarily due to lower funding and liquidity revenue and higher costs.
The company declared an increase to its quarterly dividend of four cents to C$1.02 per share payable on May 24, 2019, to shareholders of record at the close of business on April 25, 2019, and will yield investors about 4% on an annual basis. Investors may find the shares appealing as prospects over the next several years appear decent. Hence, positions can continue to be considered for a well-diversified income-seeking account.