Fitch Ratings has affirmed all of Royal Bank of Canada’s ratings, and it removed the ratings on its RBC Centura Banks Inc.subsidiary from Rating Watch Negative.

“In removing RBC Centura Banks, Inc. from Rating Watch Negative, Fitch recognizes the progress made by the organization since the Rating Watch was assigned in September 2004,” it says.

“Following a substantial restructuring and associated charges in the fourth quarter of 2004, RBC Centura recorded a loss of US$116 million for 2004 as outlined in its regulatory filings. Since that time, RBC Centura has exited its mortgage banking operation, which had been a source of a significant portion of the firm’s problems and consequently a management distraction,” Fitch notes. “In addition, RBC Centura has slowed its expansion efforts to focus on improving the efficiency and profitability of its existing franchise.”

Fitch says it views the steps that the company has taken thus far in the U.S to be appropriate, and “the company appears to be on the right track to show an improved performance”. The rating agency expects 2006 to be a year of digestion and rationalization, and says it is likely that RBC Centura will resume its expansion plans in the southeast in the intermediate term.

“RBC Centura rebounded from the 2004 loss, posting earnings of US$92 million in 2005. Profitability levels, while clearly improving, remain weak in comparison to many peers,” it concludes. “This is somewhat mitigated by the firm’s strong capitalization, solid funding and good asset quality.”