Charges cut profit, but RBC expects to make $1.1B in Q4

Royal Bank said Monday that its bottom line for the quarter will be cut by $360 million because of charges related to the credit crunch, although the bank is still forecasting a profit of $1.1 billion.

RBC's overall profit for the last quarter of its fiscal year will be off from the $1.3 billion it made in the same period of last year.

"These are challenging times, with extreme volatility in the global financial markets and an uncertain outlook," said Gord Nixon, RBC's president and CEO. "However, RBC continues to be in a strong financial position."

The bank's charge included $645 million in losses on securities related to stock market volatility.

RBC also said it would post a one-time gain of $250 million after tax for a reduction in the bank's provision for litigation related to the collapse of Enron Corp.

Royal also bumped up its provision for loan losses to $620 million for the quarter, from $334 million in the third quarter. Deterioration in the bank's U.S. portfolios and the falling Canadian dollar against the U.S. dollar account for about $150 million in the increase, while the bank's general provision has been bumped up by $135 million.

Shares of Royal Bank rose $1.02, or 2.8 per cent, to $37.50 in the wake of the announcement. The U.S. government's bailout of Citigroup was giving a lift to stocks.

Royal is the latest of Canada's biggest banks to disclose expected charges and gain for the fourth quarter. Scotiabank and TD have already made similar announcements.

Royal stock closed up $2.52 at $39 in TSX trading.

Bank of Montreal is set to begin the parade of bank earnings when it announces its fourth-quarter and year-end results on Tuesday.