Royal Bank Q4 profit drops 15%

Three-month Royal Bank TSX trading

Fourth-quarter profit at the Royal Bank fell 15 per cent, mainly due to writedowns related to international and market turmoil, and a higher provision for credit losses, the bank said Friday.

Pre-tax writedowns were just over $1 billion, but after adjusting for tax, compensation and increases in debt held for trading, the writeoff fell to $362 million.

Profit for the three months ended Oct. 31 was $1.12 billion (81 cents a diluted share), compared to $1.32 billion ($1.01 a diluted share) in the same quarter in 2007.

Revenue was $5.07 billion, down about 10 per cent from $5.62 billion.

The bank said return on equity fell to 16.1 per cent, down from 23 per cent.

The bank is prediciting that the U.S. economy will shrink by one per cent next year, while the Canadian economy will grow 0.3 per cent.

The bank said it expects the massive government actions around the world to support markets, and the financial system will "eventually" work.

"We anticipate that recent government and central bank measures such as interest rate cuts, financial market rescue packages and enhanced interbank lending guarantees will eventually work to improve market stability."

For the full year, profit fell 17 per cent to $4.56 billion ($3.38 a diluted share), compared with $5.49 billion ($4.19) in fiscal 2007.

Revenue was $21.58 billion, down four per cent from $22.46 billion.

The bank's stock fell 67 cents to $36.50 in TSX trading. The 52-week range is $33.39 to $53.67.