By Scott Kanowsky
Investing.com -- Royal Bank of Canada (NYSE:RY) has reported a marginal decline in fourth-quarter earnings, as weakness at its capital markets division was offset by a rise in profit in personal and commercial banking.
Net income during the three months to October 31 fell slightly to C$3.88 billion ($1 = C$1.3501), down from C$3.89B during the corresponding timeframe last year. However, when excluding one-off expenses, earnings per share came in at C$2.78, above analysts' estimates of C$2.68.
Profit at the capital markets unit slumped by a third annually, in a reflection of the impact a recent spike in inflation and souring trading conditions have taken on corporate deal activity that generated strong fees for banks in 2021.
Provisions for credit losses, which RBC (TSX:RY) are setting aside to hedge against the impact of possible loan defaults, also jumped to C$381M, up from a C$227M release registered last year.
But personal and commercial banking, which has become a key business for RBC as equity markets have reeled from economic headwinds and the Bank of Canada has hiked interest rates, saw net income rise by 5% to just under C$2.14B.
"While market conditions continue to be tough, our 2022 results reflect a resilient bank that is well-positioned to pursue strategic growth and deliver long-term shareholder value," said RBC president and chief executive officer Dave McKay in a statement.
U.S.-listed shares in RBC, which also agreed to buy the Canadian unit of U.K. lender HSBC earlier this week for C$13.5B, dipped on Wednesday.