By David Berman – Banking Reporter From The Globe and Mail

Royal Bank of Canada boosted its dividend after reporting that its profits rose 4 per cent in the third quarter to nearly $2.5-billion, providing an offset to an increasingly gloomy outlook for the economy.

Dave McKay, RBC’s chief executive officer, said in a statement that the better-than-expected results reflected “strong execution in a challenging environment.”
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Video: RBC beats the street, boosts dividend

Earnings were $1.66 a share, or $1.68 a share after making some adjustments, a penny ahead of analysts’ expectations – which had been exceptionally cautious heading into the reporting season after the price of oil plummeted and the Bank of Canada slashed its key interest rate after five straight months of deteriorating economic activity.

“Is the fact that RBC put up another solid quarter enough to convince investors that their fears of the future are overblown?” asked Meny Grauman, an analyst at Cormark Securities, in a note.

Canadian bank stocks have been struggling for most of the past year amid dismal domestic economic news. But now the global outlook is also shaking investor enthusiasm, rattling major indexes this week. The S&P/TSX commercial bank index had fallen as much as 18 per cent from its highs in 2014.

In early trading on Wednesday, RBC shares rose 0.3 per cent.

The bank’s results were particularly strong in personal and commercial banking, where net income rose 13 per cent from last year. However, income from wealth management was flat and income from capital markets – a strength at RBC – fell 15 per cent because of lower fixed income and equity trading.

As well, RBC said that impaired loans associated with the energy sector rose about $140-million during the quarter, as low oil prices has hit energy producers hard. However, the bank said that it remained committed to energy companies.

“We continue to participate in the industry,” said Doug McGregor, RBC’s group head of capital markets. “We’ve been in this business for a long time. We think that we have good processes, in terms of determining companies’ ability to pay.”

“We’re not afraid of this sector,” added Mark Hughes, RBC’s chief risk officer. “We’ve dealt with it for decades.”
For more on this story go to: http://www.theglobeandmail.com/report-on-business/rbc-profit-climbs-4-raises-dividend/article26106351/