Royal Bank of Canada Profit Rises 43%

TORONTO ( TheStreet) -- Royal Bank of Canada ( RY) on Friday reported a 43% year-over-year increase in fourth-quarter net income.

Net income for the quarter ended Oct. 31 was $1.6 billion (Canadian), or $1.07 a share, increasing from C$1.1 billion, or 74 cents a share, in the fiscal fourth quarter of 2010.

Earnings from continuing operations for the fiscal fourth quarter were C$1.6 billion, or C$1.09 a share, increasing from C$1.4 billion, or 91 cents a share, a year earlier. The fiscal fourth-quarter operating results came in ahead of the consensus estimate of earnings of 98 cents a share, among analysts polled by Thomson Reuters.

Income in the Canadian Banking segment was C$904 million during the fiscal fourth quarter, rising 18% year over year, and reflecting "solid volume growth in home equity products, personal and business deposits, business loans," and lower credit costs. The fiscal fourth-quarter provision for credit losses was C$235 million, declining from C$283 million in the year-earlier period. Average loans and acceptances in the Canadian Banking segment increased 7% from a year earlier, to C$296 billion. The net interest margin -- defined by Royal Bank of Canada as net interest income divided by average total assets -- narrowed slightly to 2.73% in the fiscal fourth quarter, from 2.75% a year earlier.

Royal Bank of Canada's insurance income increased 58% year over year to C$196 million in the fiscal fourth quarter, "driven by strong volume growth across most products, including $26 million (before and after-tax) related to the timing of U.K. annuity reinsurance earnings and lower claims costs.

Capital Markets earnings were down 25% year over year to C$278 million, "as significantly lower fixed income trading results driven by challenging market conditions, particularly in the early part of the current quarter, were partially offset by continued growth in our corporate and investment banking businesses."

For all of fiscal 2011, Royal Bank of Canada reported a record C$6.7 billion, or C$4.45 a share, in earnings from continued operations, increasing by C$918 million, or 16% from the prior year, and coming in ahead of the consensus EPS estimate of C$4.28. -- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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