RBC Q2 earnings fall short of consensus, hurt by PCL, wealth management

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Royal Bank of Canada’s (NYSE:RY) fiscal Q2 earnings declined from both Q1 and the year-ago quarter as it set aside more money for potential bad debt amid an uncertain economic outlook. Meanwhile, compared with the year-ago quarter, Wealth Management earnings dropped as Canadian Banking and Capital Markets earnings improved.

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Q2 adjusted EPS of C$2.65 (US$1.95), trailing the C$2.82 consensus estimate, declined from C$3.10 in the prior quarter and from C$2.99 in the year-ago period.

The bank, called RBC for short, also raised its quarterly dividend to C$1.35 per share from C$1.32.

RBC (RY) stock dropped 2.2% in Thursday morning trading.

Net interest income for the quarter ended April 30, 2023 rose to C$6.10B (US$4.48B) from C$6.20B in Q1 2023 and fell from C$5.27B in Q2 2022. Net interest margin of 1.53% widened from 1.47% in the prior quarter and from 1.45% in the year-earlier period.

RBC (RY) provision for credit losses was C$600M vs. C$532M in the previous quarter and a benefit of C$342M in the same quarter a year ago.

Preprovision pretax earnings of C$5.02B declined from C$5.87B in Q1 and increased from C$4.97B in Q2 2022.

Canadian Banking preprovision pretax earnings of C$2.95B dropped from C$3.23B in Q1 and increased from C$2.66B in Q2 2022.

Wealth Management preprovision pretax earnings of C$977M declined from C$1.15B in the prior quarter and from C$1.03B in the year-ago quarter.

Insurance preprovision pretax earnings of C$182M declined from C$190M in Q1 and from C$269M in Q2 2022.

Capital Markets preprovision pretax earnings of C$1.12B fell from C$1.42B in the prior quarter and increased from C$1.08B in the year-ago period.

Earlier, Royal Bank of Canada (RY) non-GAAP EPS of C$2.65 misses by C$0.17, revenue of C$13.52B beats by C$340M.

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