Royal Bank of Canada Earnings: Strong Results Offset Impact of Rising Credit Costs

Wide-moat-rated Royal Bank of Canada reported solid second-quarter earnings as strong results, particularly in the bank’s capital markets segments, offset rising credit costs. Net revenue increased 13.7% from last year and 5% from last quarter to CAD 14.15 billion, though this does include CAD 245 million in incremental revenue from the acquisition of HSBC Canada at the end of March. Meanwhile, adjusted diluted earnings per share increased 9% from last year to CAD 2.92, which translates to a return on equity of 15.5%. As we incorporate these results, we do not plan to materially alter our CAD 134/USD 101 fair value estimate.