TORONTO — Royal Bank racked up a $1.5-billion profit in the first quarter of fiscal 2010, 35 per cent more than it reported a year earlier and its second-highest quarterly profit ever but not enough to impress investors keen to see booming numbers.
Shares in Canada’s largest bank fell almost two per cent on the Toronto Stock Exchange, even as RBC RBC (TSX:RY) reported reduced load loss provisions, saw better performances from its main businesses and its chief executive expressed optimism that the worst of the recession is over.
“We are seeing signs of improvement in market and economic conditions,” president and chief executive Gordon Nixon said Wednesday.
RBC’s net earnings amounted to $1 per share, up from 78 cents per share or $1.1 billion a year earlier. Cash earnings per share, a measure used to compare profits and performance among the big banks, came in at $1.03 in the first quarter, slightly below a consensus analyst forecast of $1.04 per share.
“You can see from our results that we have made significant strides on the cost side,” Nixon said. “At the same time we are continuing to invest in our business for the long term.”
Of Canada’s big banks to report quarterly earnings so far, RBC was the first to come up short against analyst predictions. CIBC (TSX:CM), National Bank (TSX:NA) and Bank of Montreal (TSX:BMO) all beat analyst estimates when they announced their results over the past week.
CI Capital Markets analyst Brad Smith characterized the RBC earnings as “moderately disappointing” and noted that revenues at the bank — $ 7.33 billion versus a year-earlier $7.06 billion — were below the brokerage’s expectation, mostly due to a 5.5 per cent decline in net interest income.