Royal Bank still sees future in U.S.

The Royal Bank has no plans to sell any of its American assets, despite their being a drag on recent earnings, CEO Gordon Nixon said Thursday.

Nixon gave analysts on a conference call a subdued outlook for the bank's U.S. operations amid continuing concerns about the strength of the American economic recovery.

"Our footprint in the U.S. southeast encompasses some of the hardest-hit areas in the recent economic downturn, including Georgia and Florida," he said.

"We are not a distressed seller of assets as we believe our strategy of working out problem loans over time will result in a better economic outcome."

The Royal's U.S. business is weighted toward financing commercial real estate development and lending to residential builders.

Nixon's comments came as the bank reported an 18 per cent drop in third quarter earnings, including a major erosion in returns from its investment banking division and continued losses on its international operations.

Those foreign operations tightened losses to $76 million in the quarter from $95 million last year, reflecting improved credit losses at its U.S. banking division in the southeastern United States.

Earns $1.28B

Canada's largest bank earned $1.28 billion in the three months ended July 31, down from a record $1.56 billion in the same period last year.

Cash earnings were 87 cents per share, falling short of analyst estimates of $1.02 per share, according to Thomson Reuters.

Profits from Canadian retail banking jumped 14 per cent to $766 million while income from managing the wealth of individuals rose 10 per cent to $185 million.

Earnings from handling investor trading fell to $201 million from $562 million a year ago, largely reflecting a decline in trading activity from record levels last year.

Skittish investors have kept stock market trading restrained in recent months as economic uncertainty particularly in Europe wore down their confidence and often left returns at a minimum.

Royal shares closed down 3.4 per cent, or $1.74, to $48.95 on the Toronto Stock Exchange.