Canadian financial services provider Royal Bank of Canada (RY,RY.TO) reported Thursday a decline in second-quarter profit, reflecting mainly a loss related to the company's agreement to acquire remaining 50 percent in its joint venture RBC Dexia Investor Services Ltd.
Last month, the company agreed to buyout the remaining 50 percent stake in its 50:50 joint venture RBC Dexia for 837.5 million euros or C$1.1 billion in cash. The institutional investment joint venture was formed in January 2006 and was equally owned by Royal Bank of Canada and Franco-Belgian financial institution Dexia Group (DEX.L, DXBGF.PK).
For the second quarter ended April 30, the Toronto, Canada-based company posted net income attributable to shareholders of C$1.443 billion, lower than C$1.542 billion in the previous year.
Net income from continuing operations was down at C$1.56 billion compared to C$1.68 billion last year. Excluding previously announced loss of C$202 million related to the company's agreement to acquire the other 50 percent in RBC Dexia, net income from continuing operations was C$1.76 billion, up 5 percent from last year.
On a per share basis, earnings declined to C$0.99 from C$1.06 in the prior-year quarter. Excluding items, adjusted earnings per share from continuing operations improved to C$1.14 from last year's C$1.12 per share.
Gordon Nixon, president and CEO of the company said, "Our solid second quarter results reflect continued business growth and an investment in a strategic acquisition with attractive growth prospects. We continue to take advantage of our strength, scale and strong capital position to drive cost efficiencies and invest in our businesses to deliver long-term growth."
Total revenues for the quarter grew to C$6.92 billion from C$6.83 billion in the same quarter last year. Net interest income was C$3.03 billion, higher than C$2.72 billion a year earlier. Meanwhile, total non-interest income declined to C$3.89 billion from C$4.11 billion in the prior year.
Canadian Banking revenues increased, Wealth Management revenues were flat with last year, and revenues from Insurance dropped to C$926 million from C$1.09 billion a year ago. International revenues also declined from last year.
Non-interest expense was C$3.86 billion, higher than C$3.55 billion in the prior year. The company also posted income taxes totaling C$516 million, up from C$482 million in the previous year.
Provision for credit losses increased to C$348 million from C$273 million last year. Tier 1 capital ratio was 13.2 percent, compared to 13.6 percent in the preceding year.
Separately, Royal Bank of Canada declared a quarterly common share dividend of 57 cents per share, payable on August 24, 2012, to shareholders of record on July 26, 2012.
RY closed Wednesday's regular trading at $51.72 on the NYSE. On the Toronto Stock Exchange, RY.TO ended at C$52.90.
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