By Romina Maurino
TORONTO (CP) - Royal Bank of Canada (TSX:RY), the country's biggest bank, expects to continue gobbling business from competitors after beating forecasts with a 27.6 per cent jump in quarterly profit to $1.5 billion and raising its dividend.
CEO Gordon Nixon attributed the results to all business segments and strength in its three core divisions: Canadian banking, international banking and capital markets.
"One of the things that really pleases me about our results is that they're very diversified and well spread," he said Friday after the bank's annual meeting in Toronto.
"We continue to gain market share in a lot of our products in Canada . . . and as we continue to build that share, it continues to make us feel pretty optimistic with respect to future growth prospects."
Royal Bank is hoping to support growth through a new corporate structure recently changed to bolster wealth management.
Chief operating officer Barbara Stymiest told shareholders that the 70,000-employee bank will grow the new division aggressively as global demand grows for wealth management products and services "and will continue to increase as global economies develop and demographics shift."
Consumer lending is expected to moderate as personal spending eases, she added, but business lending should remain robust.
"We think the overall financial services sector is going to continue to grow at a very good pace," Nixon said in a call with analysts. "Forecasters expect it to quadruple by 2020 and we think we're very well positioned with this structure going forward."
The comments came as RBC reported earnings of $1.5 billion or $1.14 per share for its first quarter ended Jan. 31, up from $1.2 billion or 89 cents per share a year ago.
Analysts' consensus forecast was for 99 cents per share before one-time items, according to Thomson Financial.
The quarterly common share dividend will rise six cents, or 15 per cent, to 46 cents.
Revenue of $5.7 billion was up 15 per cent, or $738 million, from a year earlier.
Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier, called the earnings "extraordinarily strong," saying RBC has "been gaining market share at the expense of other banks, like the Bank of Montreal (TSX:BMO) and probably the Bank of Commerce (TSX:CM) too."
"It's a bank that keeps their costs under control," he added. "Look at the Bank of Montreal - where they're reducing headcount because their costs are growing at a faster rate than their revenue - and the Bank of Commerce just went through their exercise where their costs were too high relative to their revenue.
"But the Royal Bank always seems to have a cost-containment exercise, and that's why small increases in the revenue translate into pretty big increases in the earnings."
During the meeting, Nixon expressed concern about Canadian companies' ability to compete on a global scale, urging politicians to "look beyond reactionary policies and short-term politics" and work with industry.
"There are areas of concern, such as the accelerating growth in public spending, a tax structure that is biased against investment, a fragmented and expensive regulatory structure, and deterioration in our relative competitive position."
He cited the current debate over bank machine fees as "a small issue that is being used politically" and misses a broader point about the expansion of the financial industry.
"To adjust regulations, I think you will get exactly the opposite result than is intended," he said. "Regulations to the banks will likely result in less service across the country at a higher cost."
Royal Bank shares closed up 98 cents or 1.8 per cent at $54.86.
Copyright © 2007 Canadian Press
TORONTO (CP) - Royal Bank of Canada (TSX:RY), the country's biggest bank, expects to continue gobbling business from competitors after beating forecasts with a 27.6 per cent jump in quarterly profit to $1.5 billion and raising its dividend.
CEO Gordon Nixon attributed the results to all business segments and strength in its three core divisions: Canadian banking, international banking and capital markets.
"One of the things that really pleases me about our results is that they're very diversified and well spread," he said Friday after the bank's annual meeting in Toronto.
"We continue to gain market share in a lot of our products in Canada . . . and as we continue to build that share, it continues to make us feel pretty optimistic with respect to future growth prospects."
Royal Bank is hoping to support growth through a new corporate structure recently changed to bolster wealth management.
Chief operating officer Barbara Stymiest told shareholders that the 70,000-employee bank will grow the new division aggressively as global demand grows for wealth management products and services "and will continue to increase as global economies develop and demographics shift."
Consumer lending is expected to moderate as personal spending eases, she added, but business lending should remain robust.
"We think the overall financial services sector is going to continue to grow at a very good pace," Nixon said in a call with analysts. "Forecasters expect it to quadruple by 2020 and we think we're very well positioned with this structure going forward."
The comments came as RBC reported earnings of $1.5 billion or $1.14 per share for its first quarter ended Jan. 31, up from $1.2 billion or 89 cents per share a year ago.
Analysts' consensus forecast was for 99 cents per share before one-time items, according to Thomson Financial.
The quarterly common share dividend will rise six cents, or 15 per cent, to 46 cents.
Revenue of $5.7 billion was up 15 per cent, or $738 million, from a year earlier.
Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier, called the earnings "extraordinarily strong," saying RBC has "been gaining market share at the expense of other banks, like the Bank of Montreal (TSX:BMO) and probably the Bank of Commerce (TSX:CM) too."
"It's a bank that keeps their costs under control," he added. "Look at the Bank of Montreal - where they're reducing headcount because their costs are growing at a faster rate than their revenue - and the Bank of Commerce just went through their exercise where their costs were too high relative to their revenue.
"But the Royal Bank always seems to have a cost-containment exercise, and that's why small increases in the revenue translate into pretty big increases in the earnings."
During the meeting, Nixon expressed concern about Canadian companies' ability to compete on a global scale, urging politicians to "look beyond reactionary policies and short-term politics" and work with industry.
"There are areas of concern, such as the accelerating growth in public spending, a tax structure that is biased against investment, a fragmented and expensive regulatory structure, and deterioration in our relative competitive position."
He cited the current debate over bank machine fees as "a small issue that is being used politically" and misses a broader point about the expansion of the financial industry.
"To adjust regulations, I think you will get exactly the opposite result than is intended," he said. "Regulations to the banks will likely result in less service across the country at a higher cost."
Royal Bank shares closed up 98 cents or 1.8 per cent at $54.86.
Copyright © 2007 Canadian Press