Profit picture crowns Royal AGM report
Investors rapidly drove up the price of Royal Bank stock to a record high yesterday after the country's largest bank turned around last year's sluggish performance, particularly in its American operations.
One of the country's most widely held stocks rocketed up nine per cent after the Royal reported its first-quarter earnings jumped 25 per cent to $979 million.
The shares closed up $6.10 at $73.10 on the Toronto Stock Exchange.
The intraday jump was the biggest for RBC stock since January 1998, when the bank proposed a merger with Bank of Montreal that was later scuttled by Ottawa, said Nick Majendie, vice-president of portfolio strategy at Canaccord Capital in Vancouver.
"The Royal Bank has disappointed for several quarters," Majendie said. "But these were blowout results right across the board."
Gordon Nixon, the bank's chief executive, told a sparsely attended annual meeting in Halifax that the Royal's U.S. mortgage and retail banking interests are breaking even or making money - a significant turnaround.
The American mortgage division lost about $40 million in the final quarter of the bank's 2004 financial year ended Oct. 31, but Nixon said: "The bleeding has stopped."
"We've made significant changes at RBC Centura," he said of the American banking subsidiary. "There's been management changes across the board. We've closed some of the less profitable branches."
Delegate registration before the meeting was briefly enlivened by a small number of local activists protesting the presence of bank board member J. Pedro Reinhard, who has ties to both The Coca-Cola Co. and Dow Chemical Co.
Shouting "No Killer Coke," the protesters were quickly escorted from the World Trade Centre by security personnel and Halifax police. The protesters posed for photos in front of a police car before quietly dispersing.
The Campaign to Stop Killer Coke accuses Coca-Cola and Dow of a long list of human-rights and environmental abuses, mostly in developing countries.
The bank has held its annual meeting several times in Halifax, a tribute to its roots in this city. The Royal Bank was founded in Halifax in 1869 as the Merchant's Bank. In the last quarter, RBC Centura took a $13 million writedown for staff reductions and closed 11 of its 275 branches.
At the meeting, shareholders raised questions about Nixon's compensation.
He was paid $3.2 million in salary and bonuses in 2004, plus $1.3 million in long-term incentive payouts and $2.7 million in deferred shares, for a total of $7.3 million excluding stock options. He also is in line for a pension of $1.46 million a year at age 65.
David O'Brien, chairman of the Royal board, defended the compensation, saying Nixon spent much of the year making painful decisions that resulted in the first-quarter improvement.
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