Royal Bank of Canada (TSE:RY) has reported a 43% increase in its quarterly profit following the completion of its strategic acquisition of HSBC Bank Canada.
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Canada’s largest lender announced a Fiscal first quarter profit of C$5.13 billion (US$3.56 billion), up 43% from C$3.58 billion in the same quarter a year earlier. Royal Bank said the profit amounted to C$3.54 per share for the quarter ended on Jan. 31, up from a profit of C$2.50 a year earlier.
The bank’s profit topped the consensus estimate among analysts that had called for earnings per share (EPS) of C$3.26. Revenue in the latest quarter totaled C$16.74 billion, up 24% from C$13.49 billion the previous year.
Big Acquisition
Management at Royal Bank of Canada largely attributed the strong results to the completion of its C$13.50 billion takeover of HSBC Bank Canada. The purchase of HSBC Bank Canada provided Royal Bank with 130 additional branches and about 750,000 retail and commercial customers nationwide.
Additionally, Royal Bank of Canada reported that the provisions it set aside for credit losses during its Fiscal Q1 totaled $1.05 billion, up from $813 million a year earlier. Canada’s commercial banks have been putting aside more money to cover potentially bad loans as mortgage interest rates reset at higher levels and the U.S. continues to threaten trade tariffs of up to 25%.
Royal Bank’s stock has risen 33% over the past 12 months.
Is RY Stock a Buy?
Royal Bank of Canada’s stock has a consensus Strong Buy rating among 11 Wall Street analysts. That rating is based on nine Buy and two Hold recommendations issued in the past three months. The average RY price target of $204.67 implies 22.23% upside from current levels. These ratings are likely to change after the bank’s latest financial results.
