Royal Bank of Canada (RY) posted its second consecutive quarter of declining profits after reporting writedowns related to mortgage-backed securities totalling C$855 million. Canada’s largest bank reported EPS of C$0.72 on C$4.95 billion in revenue, well short of consensus of C$1.00. Bloomberg:
Royal Bank is the fourth Canadian lender to post lower second-quarter profit, as a sluggish economy, rising provisions for bad loans and a slump in capital markets fees erode earnings. Canada’s economy is expected to grow at its slowest pace in 16 years in 2008 as a strong dollar and weak U.S. economy curb exports, according to Bank of Montreal.
Royal Bank rose 48 cents to C$49.46 yesterday on the Toronto Stock Exchange. The stock has fallen 2.5 per cent this year, compared with a 3.5 per cent decline for the nine-member Standard & Poor’s/TSX Banks Index.