Net Income Falls Slightly At RBC's Wealth Arm

29 May 2012

Royal Bank of Canada logged net income of C$212 million ($207 million) in its wealth management division for the three months to 30 April, C$15 million lower than a year earlier.

Compared with the three months before, the Canadian bank’s first quarter, net income increased by C$24 million or 13 per cent.

RBC said the wealth management results were driven by higher average fee-based client assets. The wealth arm had C$322 billion in assets under management on 30 April, up from C$313 billion at the end of the first quarter. The firm’s assets under administration went up from C$534 billion to C$560 billion between February and April.

Net income from continuing operations at the bank as a whole rose 5 per cent on a year-on-year basis to $1.765 billion for the three month-period.

Last week, RBC’s fellow Canadian bank BMO Financial Group logged net income of C$145 million in its private client segment, up by C$54 million of 60 per cent from a year earlier. Assets under management and administration in the private client arm at BMO grew by C$159 billion from a year ago to C$445 billion.

Busy period for RBC

In March, RBC said it intended to acquire the Latin American, Caribbean and African private banking business of Coutts, the wealth division of Royal Bank of Scotland Group, with client assets of about $2 billion. “Our agreement to acquire certain private banking assets from Coutts aligns with our strategy to increase market share in high net worth segments within key emerging markets,” said Gordon Nixon, president and chief executive of RBC.

The bank has continued in the same expansionary mood this month. At the start of May, Capgemini, the consulting firm which has partnered with Merrill Lynch in producing a closely-watched global wealth report, announced that it will from now on work with RBC instead to produce the survey. The new partnership of the World Wealth Report, which is now in its sixteenth year, also includes the annual Asia-Pacific survey.

What is more, unconfirmed media reports have mentioned RBC as one of the banks that is trying to buy the non-US wealth management businesses of Bank of America Merrill Lynch. BoA has reportedly put its non-US wealth business up for sale, a unit that includes divisions in Asia excluding Japan, Europe and the Middle East and Latin America, but the bank has so far declined to comment on the matter. The deal could be worth around $2 billion.