(August 22 – 10:30 ET) – Royal Bank of Canada is reporting improved earnings for the third quarter ended July 31. The bank says the robust results are driven by strong contributions from all four operating segments.
The bank says net income for the third quarter was $574 million, up from $476 million in last year’s third quarter. Fully diluted earnings per share was $1.76, up from $1.36 a year ago. Return on common equity was of 19.7%, up from 16.6%.
The bank’s Tier 1 capital ratio of 8.5% and total capital ratio of 11.5%, increased 40 and 30 basis points, respectively, from October 31, 1999.
Gross revenues were $3.017 billion up 14% from last year’s third quarter. The bank says personal and commercial financial services and Royal Investment Services accounted for well over 80% of the total revenue growth over last year’s third quarter. Net interest income was $1.3 billion. Other income was $1.7 billion.
Royal says the increase in net income over last year’s third quarter reflects strong earnings growth in each operating segment. Despite weaker capital markets, net income remained flat compared to last quarter reflecting solid performances from personal and commercial financial services, transaction-based services and trading operations.
Commenting on the results, John E. Cleghorn, chairman and CEO said, “We are pleased with our strong third quarter results. Our entire team has performed well during 2000, with particular success in revenue generation and cost reduction initiatives. We are building on this performance for the balance of the year and into 2001.”
Contributions to this quarter’s net income were 55% from personal & commercial financial services, 17% from Royal Investment Services, 22% from corporate & investment banking, 7% from Global Integrated Solutions and (1)% from the “other” segment. These compared to 51%, 15%, 21%, 6% and 7%, respectively, a year ago.
Royal Bank announced the appointment of Douglas T. Elix to its board of directors. Elix is senior vice president and group executive of IBM Global Services, headquartered in Somers, N.Y.
The bank also announced the declaration of a stock dividend of one common share for each outstanding common share of the bank. The effect of this one-for-one stock dividend is the same as a two-for-one split of the bank’s common shares.
John Cleghorn said “We expect this to make our common shares more attractive to retail shareholders. There has been a substantial growth in retail investing in the past few years, and we’d like to continue to attract retail investors, as we’ve done successfully in the past”.
The bank’s common shares are expected to commence trading on a post-stock dividend basis on September 25.
-IE Staff