Saturday, May 30, 2009

RBC loses $50M in Q2 due to U.S. economic fallout

RBC loses $50M in Q2 due to U.S. economic falloutRoyal Bank 3-month TSX chart

A $1-billion goodwill impairment charge related to its U.S. business pushed Royal Bank to a second-quarter loss of $50 million, the bank said Friday.

The loss, which translated to seven cents a share, compared to a profit of $928 million, or 70 cents a share, a year earlier.

The bank first reported on April 16 that it would take the $1-billion impairment charge, which comes from its international banking unit. The bank said at the time that the impairment stemmed from declines in the U.S. housing market, the deterioration in the American economy and the decline in the market value of banks in the country.

RBC also said Friday that "market environment-related losses" cut its earnings for the most-recent quarter by $296 million, or 21 cents a share, while its general provision for loan losses cut its bottom line by $146 million, or 10 cents a share.

"The environment remains challenging, but our company is strong and we are taking advantage of opportunities in the marketplace," said Gordon M. Nixon, RBC's president and CEO.

The bank is keeping its dividend unchanged at 50 cents a share.

Shares of Royal Bank closed down $1.80 to $43.70 on the TSX Friday.