Royal Bank Stock Dips Despite Record Profit and Strong Earnings

Royal Bank of Canada (NYSE:RY) stock took a hit on Tuesday, but the bank's recent earnings report provided some reassuring news. The Toronto-based bank reported better-than-expected third-quarter earnings and record profit last week. Royal Bank's adjusted earnings of $3.07 per share beat analyst estimates of $2.89.

Revenue reached $13.282 billion, topping the forecasted $12.9 billion. Net income increased 11% to 6.02 billion Canadian dollars, while diluted earnings rose 13% to 4.23 Canadian dollars per share. Adjusted net income rose 10% to 6.1 billion Canadian dollars.

The bank's wealth management profit surged 32% to 1.44 billion Canadian dollars, driven by market gains and net sales that boosted fee-based client assets. Capital markets profit increased 16% to 1.54 billion Canadian dollars, thanks to stronger debt and equity underwriting. However, personal banking profit slipped 1% due to higher expenses and credit-loss provisions.

The bank ended the quarter with a common equity Tier 1 ratio of 13.5%. Royal Bank returned $4 billion to shareholders, including $1.6 billion in share repurchases and $2.4 billion in common dividends. The board declared a quarterly common dividend of $1.76 Canadian dollars per share.