(Bloomberg) -- RBC posted fiscal first-quarter profit that missed analysts' estimates as earnings from insurance and capital markets fell and the lender set aside more money for soured energy loans. The bank raised its quarterly dividend 2.5%.
Net income for the period ended Jan. 31 fell 0.4% to C$2.45 billion ($1.77 billion), or C$1.58 a share, from C$2.46 billion, or C$1.65, a year earlier, the Toronto-based firm said Wednesday in a statement. Adjusted profit, which excludes some items, was C$1.64 a share, trailing the C$1.66 average estimate of 14 analysts surveyed by Bloomberg. Revenue fell 3% to C$9.36 billion.
Profit from its RBC Capital Markets business dropped 4% to C$570 million from a year earlier on lower trading revenue and investment-banking fees and higher provisions for energy companies. Insurance profit fell 29% to C$131 million, partly on higher claims costs, the bank said.
"Even though they have a well-diversified business mix, the earnings are still slightly down due to lower levels of capital markets and higher levels of loan losses," says Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier, which manages about C$5 billion, including RBC shares. "That's still going to be a factor in the next couple of quarters."
Personal and commercial banking had record profit of C$1.29 billion, and wealth management net income jumped 32% to C$303 million after adding contributions from the November purchase of Los Angeles-based City National, RBC's largest-ever acquisition. The lender increased its quarterly dividend to 81 cents a share from 79 cents.
RBC shares have fallen 6.1% this year, trailing the 4.4% decline of the eight-company Standard & Poor's/TSX Composite Commercial Banks Index.
The lender set aside C$410 million for bad loans, up 52% from a year earlier. Impaired loans to oil and gas firms rose to C$310 million from C$156 million in the fourth quarter and C$5 million a year earlier.
RBC is the third Canadian lender to post quarterly results. Bank of Montreal, Canada's fourth-largest lender, and Montreal-based National Bank of Canada on Tuesday posted profit that topped analysts' estimates. Toronto-Dominion Bank and Canadian Imperial Bank of Commerce are scheduled to report Thursday, followed by Bank of Nova Scotia on March 1.
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