Royal Bank of Canada saw its earnings grow by 20% annually in Q4, reaching $3.9 billion largely due to lower provisions for credit losses.
Other factors in this surge include higher earnings in RBC’s personal and commercial banking arms (up 54%), coupled with strong activity in the bank’s capital markets division (up 51%).
“Solid earnings growth in investor and treasury services, insurance, and wealth management also contributed to the increase,” RBC said. “Pre-provision, pre-tax earnings of $4.8 billion were up 4% from a year ago.”
This robustness contributed to RBC’s net income spiking by 40% annually in the year ending October 31, totalling $16.1 billion.
“Our results this year included releases of provisions on performing loans of $1.4 billion, primarily driven by improvements in our macroeconomic and credit quality outlook,” RBC said. “In comparison, the prior year reflected elevated provisions on performing loans of $2.6 billion due to the impact of the COVID-19 pandemic.”
Diluted earnings per share stood at $11.06, up 41% from the prior year. Pre-provision, pre-tax earnings were up 6% annually, reaching $19.9 billion and benefiting from “strong client-driven growth in volumes and fee-based assets, constructive markets, record investment banking revenue, and prudent management of discretionary spend,” RBC said.
“Across our businesses, we saw elevated growth in client activity and our teams responded with differentiated ideas and offerings to meet our clients’ needs and create long-term value,” said Dave McKay, president and CEO of RBC. “As a result, our overall performance in 2021 reflected strong earnings, premium shareholder performance, and highlighted our ability to successfully navigate a complex operating environment while continuing to invest in talent and innovations to support future growth.”
