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Royal Bank's profit jumps

Globe and Mail Update

The Royal Bank of Canada, the country's largest company, said Friday third-quarter earnings rose 32 per cent, bolstered by higher earnings at its personal banking and global capital markets divisions.

Profit for the quarter rose to $979-million or $1.48 a diluted share from $743-million or $1.12 a share a year earlier.

The shares rose as much as 2.1 per cent as the results topped expectations and after the bank boosted its quarterly dividend to 64 cents from 61 cents.

“I am pleased with the performance of all of our business segments and with our continued strong credit quality this quarter,” said the bank's president and chief executive Gordon Nixon in a statement.

Revenue rose 9.6 per cent to $4.9-billion, while return on equity was 20 per cent, an increase of 390 basis points.

Stripping out one-time items, the bank said it earned $1.51 a share on a cash basis. On that basis, analysts polled by Bloomberg News had expected earnings of $1.41 a share.

Among its divisions, net income from RBC's Canadian personal and business division rose 31 per cent to $688-million. Earnings at its U.S. and international personal and business segment were flat at $81-million while global capital markets earnings rose 33 per cent to $249-million.

Provisions for credit losses from continuing operations were little changed at $128-million from $125-million a year ago.

Unlike rivals Canadian Imperial Bank of Commerce and Toronto-Dominion Bank, RBC's third-quarter results weren't as affected by Enron Corp. settlements. RBC said on July 28 that it agreed to pay $25-million to settle its part of the so-called “megaclaims” litigation. But Enron interim chief executive officer Stephen Cooper has acknowledged that RBC played a relatively minor part in the energy giant's 2001 collapse.

On nine-month basis, the bank said it “met or exceeded almost all of our financial objectives.”

Royal Bank shares, which have climbed about 20 per cent this year, rose $1.67 or 2.2 per cent to $78.53 in Toronto.

© The Globe and Mail

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