Topic: How To Invest

The Successful Investor Hotline – Friday, May 29, 2020

Article Excerpt

ROYAL BANK OF CANADA, $89.33, Toronto symbol RY, is a buy. Canada’s largest bank by market cap reported lower-than-expected quarterly results this week as the COVID-19 pandemic forced it to set aside more funds for potential future loan losses. In its fiscal 2020 second quarter, ended April 30, 2020, Royal’s loan-loss provision soared to $2.83 billion from $426 million a year earlier. As a result, the bank’s earnings fell 54.1%, to $1.48 billion from $3.23 billion. Per-share earnings dropped 54.5%, to $1.00 from $2.20. If you factor out unusual items, the bank earned $1.03 a share in the latest quarter. That missed the consensus estimate of $1.53. As a result of the higher loss provisions, earnings from retail banking (36% of the total) dropped 66.2%. Earnings at the wealth management division (29%) also fell 28.3% on higher loss provisions and a drop in the value of the securities it administers. As well, earnings at the capital markets business (6%) fell 88.6% on higher provisions and…

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