TORONTO -- Royal Bank of Canada (TSX:RY) says it is focusing on increasing the market share of its capital markets business in the U.S., where it generates "significantly" more revenue than north of the border.
"Our solid results in that market are helping offset the impact of the prolonged recession affecting many European countries, as well as some softness in commodity markets in Canada," president and chief executive Gordon Nixon said during a conference call.
Royal Bank and CIBC both reported substantially higher profits Thursday, wrapping up the Canadian banking sector's second-quarter earnings.
Trimming expenses and looking to the U.S., where lower unemployment and higher home values suggest the economy is improving, have been common themes for the Canadian banks as they cope with a slowdown in consumer lending in Canada.
Royal Bank reported Thursday a profit of $1.9 billion in the second quarter, up 26 per cent from a year earlier. The profit amounted to $1.27 share while adjusted diluted EPS was $1.31 -- in line with analyst estimates.
CIBC had a second-quarter profit of $876-million profit, which was up eight per cent and better than analysts expected.
Both banks said each of their main divisions showed year-to-year growth.
"We grew earnings this quarter in each of our segments compared to last year, driven by the strength and diversification of our businesses," said Nixon.
"We continue to extend our leadership position by successfully executing our strategy and making focused investments to deliver long-term shareholder value."
Royal's main personal and commercial banking segment accounted for about $1 billion of total net income, up $117 million or 12 per cent year-to-year.
The bank says the increase reflected solid volume growth across all businesses in Canada and a lower provision for credit losses.
RBC's wealth management segment contributed $225 million in net income, up $13 million or six per cent, while the insurance segment contributed $166 million, up $15 million or 10 per cent, and RBC Capital Markets contributed $386 million, up $15 million or four per cent.
The bank's relatively new investor and treasury services segment contributed $67 million of net income -- contrasting with a $121 million loss a year earlier.
At CIBC (TSX:CM), the second-quarter profit was $876 million, which was up eight per cent from last year. Its net income and adjusted net income both came in at $2.12 per share -- above the consensus estimate.
CIBC said its quarterly dividend will be increased by two cents to 96 cents per common share, which will be paid July 29 to shareholders of record as of June 28.
