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RBC boosts payout, shuffles executives as profit jumps 24%

Corporate logos for the Royal Bank of Canada are displayed on their office buildings in downtown Toronto in this file photo. (Norm Betts/Bloomberg)

Royal Bank of Canada, the country’s largest bank by assets, reported a larger fiscal first-quarter profit and hiked its quarterly dividend by 5 per cent, while also shuffling two senior executives to new roles.

Toronto-based RBC is the second straight lender to post a stronger-than-expected profit as well as a dividend increase this earnings season, bucking a sluggish Canadian economy to report strong earnings across its four largest divisions.

RBC earned $3-billion in profit, or $1.97 a share, for the quarter that ended January 31. That was up 24 per cent from nearly $2.5-billion, or $1.58 a share, a year earlier.

Adjusted to exclude certain items, including a $212-million gain from the sale of U.S. operations of Moneris Solutions Corp., RBC said it earned $1.83 a share. Analysts polled by Bloomberg were expecting an adjusted profit of $1.76 a share.

“We remain committed to returning capital to our shareholders and I’m pleased to announce a 5-per-cent increase to our quarterly dividend,” chief executive officer David McKay said in a news release. “As the operating landscape evolves, we are focused on our strategy of building a digitally-enabled relationship bank to meet the changing expectations of our clients.”

RBC increased its quarterly dividend by 4 cents per share to 87 cents.

On Friday, RBC said it has named Jennifer Tory to the role of chief administrative officer. Ms. Tory spent the last three years as group head of the bank’s personal and commercial banking division.

“Her relentless focus on the customer and her deep understanding of the bank and what it takes to provide exceptional client experiences, positions her well to provide oversight and alignment for initiatives that cross various businesses and functions,” Mr. McKay said in a statement.

Taking over Ms. Tory’s old job at the helm of Canadian banking is Neil McLaughlin, who already worked within the division as executive vice-president of business and financial services. He has been with the bank since 1998.

“Throughout his career, Neil has acquired a breadth of experience across Canadian Banking, consistently demonstrating his strong leadership, outstanding business acumen, and an ability to develop and execute new strategies to effectively acquire market share,” Mr. McKay said.

Provisions for credit losses, or money the bank sets aside to cover bad loans, fell to $294-million, down 28 per cent from $410-million a year earlier, when fears about loans going sour in the oil and gas sector were much greater. The bank attributed the decrease in part to recoveries in capital markets and lower provisions in personal and commercial banking.

Earnings in RBC’s cornerstone Canadian banking operations climbed 23 per cent from the same quarter a year ago, to $1.6-billion. On an adjusted basis, excluding certain items, profit rose 8 per cent. Capital markets earnings were 16 per cent better than a year earlier, at $662-million. Profit in its wealth-management arm, meanwhile, increased by 42 per cent from the first quarter last year, to $430-million.

On Thursday, Canadian Imperial Bank of Commerce, Canada’s fifth-largest bank, kicked off the sector’s earnings season with a first-quarter profit that increased 43 per cent over last year to $1.4-billion. On an adjusted basis, excluding certain items, CIBC profit climbed by 13 per cent.