Royal Bank of Canada (TSX:RY) is raising its quarterly dividend by 11% to $1.20 per share despite reporting a quarterly profit that missed analysts’ expectations.
RBC also said it is seeking approval from the Office of the Superintendent of Financial Institutions (OSFI) to buy back up to 45 million of its common stock.
RBC is following Bank of Nova Scotia (TSX:BNS), which announced yesterday (November 30) that it plans to raise its dividend payment by 11% and buyback its shares. Both banks are doing so after OSFI lifted its pandemic-era prohibition on share repurchases and buybacks.
The move by RBC comes despite the financial institution missing expectations in its most recent quarter.
RBC reported that its fiscal year profit climbed 40% year-over-year to $16.1 billion. In the fiscal fourth quarter, which ended October 31, the bank’s net income rose 20% to $3.89 billion.
That bottom-line performance was supported by a release of $227 million from funds that were previously set aside for loans that could go bad during the pandemic. It’s the third consecutive quarter that RBC moved cash out of its provisions for credit losses and put the money into its profit stream.
RBC’s quarterly profit amounted to $2.71 per share. Analysts were expecting earnings per share (EPS) of $2.81.
RBC’s personal and commercial banking unit was the primary profit driver in the latest quarter, as net income in that division rose 35% year-over-year to $2.03 billion.
Fourth-quarter profit from the bank’s capital markets division rose 10% to $920 million, while earnings from RBC’s wealth management business inched up 2% year-over-year to $558 million.