Royal Bank of Canada Earnings: Strong Results as the Bank Continues to Deliver Strong Growth

Wide-moat-rated Royal Bank of Canada reported strong third-quarter earnings as the bank’s wealth management and capital markets businesses delivered impressive results. Net revenue increased 13% from last year and 3% from last quarter to CAD 14.6 billion. Meanwhile, net income increased 16% year over year to CAD 4.5 billion, though this does include an extra CAD 239 million in net income from the acquisition of HSBC Canada. These results translate to a return on equity of 15.5%. As we incorporate these results, we do not plan to materially alter our fair value estimates of CAD 139/USD 102. While Royal Bank of Canada has delivered good results in recent quarters, we see the shares as modestly overvalued at the current price.