* Q4 EPS C$1.65 vs C$1.71 market view
* RoE medium-term target cut to 16 pct from 18 pct
* CFO sees opportunities under Trump administration
* Shares down 3.4 percent
(Adds comments from interview with CFO, updated shares)
By Matt Scuffham
TORONTO, Nov 30 Royal Bank of Canada on
Wednesday reported a bigger-than-expected decline in
fourth-quarter profit and said it was trimming back a key
financial target, sending its shares lower.
RBC said earnings per share fell to C$1.65 from C$1.74 the
year before, reflecting a decline in profit at its capital
markets division. The earnings were below the C$1.71 average
analyst forecast, according to Thomson Reuters I/B/E/S.
Shares in RBC, Canada's largest bank, were down 3.4 percent
in afternoon trading.
Speaking to analysts, Chief Executive Officer Dave McKay
said the bank had decided to revise its medium-term target for
return on equity (RoE), a key measure of how well it uses
shareholder capital to earn profits. McKay said the decision was
made because of "the pressure on returns in the market including
persistently low interest rates and uncertainty on regulatory
RBC is now aiming for RoE of at least 16 percent, compared
with 18 percent before, a level which is still higher than the
majority of large banks around the world.
In an interview, Chief Financial Officer Janice Fukakusa
said the previous target had been set last year at a time when
the bank had expectations of further U.S. interest rate rises
which failed to materialise. She expects the bank will get back
to a RoE of at least 18 percent in two to three years.
"We still want to strive for the 18 percent. It's just going
to take a bit longer," she said.
Fukakusa also said she saw potential opportunities arising
from Donald Trump's victory in the U.S. presidential election,
saying his policies could set the right conditions for
"favorable growth" in the United States.
"They're talking about growing the economy and stimulating
growth through infrastructure spending which will be good and
we've already seen some positive influences in terms of
November's pipeline being stronger, companies doing debt
issuance and loan facilities in anticipation of rate increases
there," she said.
McKay said RBC would continue to pursue smaller
acquisitions in the United States to help expand Los
Angeles-based City National, which it bought for C$5 billion
RBC said its overall net income fell by 2 percent to C$2.54
billion ($1.90 billion). Earnings at its capital markets
business fell 13 percent, which the bank said was partly due to
it benefiting from a lower tax rate the year before.
($1 = 1.3388 Canadian dollars)
(Reporting by Matt Scuffham; Editing by Meredith Mazzilli and