DBRS: RBC Reports Solid Q2 2018 Earnings, NIM Expansion and Lower PCLs

Royal Bank of Canada (RBC or the Bank) reported Q2 2018 net income of $3.1 billion, up 2% sequentially and 9% year over year (YoY). On a quarter-over-quarter (QoQ) basis, improved results reflected last quarter’s write down of net deferred tax assets following U.S. tax reform and higher earnings in insurance, partially offset by generally lower earnings across most segments. DBRS notes that the RBC’s Canadian real estate secured personal lending portfolio was flat QoQ. The full impact of the new B-20 mortgage underwriting rules (effective January 1, 2018) will be more evident in H2 2018, as this quarter still contained some activity booked prior to the rules coming into effect.