Royal Bank of Canada share price up, reports growing sales and profit

Royal Bank of Canada posted Q3 earnings today, beating estimates and logging the best results on record in its capital markets, insurance and wealth management divisions.

RBC, Canadas second-largest banks by assets, logged sales of 8.98 billion Canadian dollars (~$8.20bn), up 25% from a year ago. Net income was C$2.38bn, up 3.9% on an annual basis. Adjusted profit per share was at C$1.64.

Key to the upbeat performance were the banks wealth management and insurance divisions, where earnings climbed 22% and 34%, respectively, while capital markets revenue grew 66% to a record C$641 million.

“These results demonstrate the strength of our diversified business model,” said Dave McKay, outgoing RBC President and Chief Executive Officer. “Our ability to innovate and use capital effectively while managing costs positions us well to execute our client-focused strategy and extend our leadership positions across our key businesses.”

The bank also raised its quarterly dividend by 6% to C$0.75.

Canadas other top banks will report Q3 earnings next week, and analysts expect robust performance from all five, as improving market conditions and a stock market rally allow for squeezing larger margins.

“We view this as an exceptionally strong quarter with very little to poke holes in, on our first cut,” Barclays analyst John Aiken said in a note on Friday, cited by Reuters. “While we are decidedly positive on the results, naysayers will question the sustainability of the trading revenues and insurance earnings.”

Royal Bank of Canada shared closed at C$81.66 yesterday, up 0.07%, for a one-year increase of 26.45% and valuing the company at C$117.71bn(~$107.53bn). According to the Financial Times, 17 analysts offering 12 month price targets for Royal Bank of Canada have a median target of C$83.00, with a high estimate of C$92.00 and a low estimate of C$77.00. The median estimate represents a 1.64% increase from the last price of C$81.66