Royal Bank Q1 Profit Rises 6%, Beats Expectations

Royal Bank of Canada (TSE: RY) (NYSE: RY) reported a higher profit in the first quarter of 2022, thanks to gains in retail banking loans and wealth management fees.

Revenue & Earnings 

Revenue totaled C$13.07 billion in the first quarter, up from C$12.94 billion in the prior-year quarter. Analysts expected revenue of C$12.12 billion. 

Net income came in at C$4.1 billion (C$2.84 per diluted share) for Q1 2022, up 6% from a net income of C$3.85 billion (C$2.66 per diluted share) in Q1 2021. Analysts expected RBC to report EPS of C$2.74 in the three months ended December 31. 

Profit from Personal & Commercial Banking amounted to C$1.97 billion in the quarter, up 10% from a year ago. Wealth Management profit increased 24% to C$795 million, while Capital Markets profit decreased 3% to C$1.03 billion. 

Return on common equity fell to 17.3% from 18.6%, while common equity Tier 1 ratio rose to 13.5 % from 12.5%.

CEO Commentary 

Royal Bank of Canada president and CEO Dave McKay said, “RBC’s first quarter performance reflects the significant momentum we continue to build while facing change and uncertainty in the current operating environment. This is a testament to our scale, diversified business model, and strategic investments in technology, talent and innovation to create differentiated value for our clients and shareholders. While the Omicron variant has created headwinds to the global economic recovery over the past quarter, RBC employees remained unwavering in their commitment to supporting our clients and communities. I’m proud of how they continue to make a difference in the lives of those we serve. Looking forward, we remain focused on our Purpose-led approach to delivering the advice, products and services our clients need in a changing world, while also accelerating our commitments to enable a sustainable and inclusive future.”

Wall Street’s Take 

On February 23, National Bank Financial analyst Gabriel Dechaine kept a Buy rating on RY and raised the price target to C$147 (from C$140). This implies 7.6% upside potential. 

The rest of the Street is cautiously optimistic on RY with a Moderate Buy consensus rating based on five Buys and four Holds. The average Royal Bank of Canada price target of C$153.13 implies 12% upside potential to current levels. 

TipRanks’ Smart Score 

RY scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns are likely to beat the overall market. 

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