RBC, National Bank report higher profits. What to know
Global News
Royal Bank of Canada and National Bank of Canada were the latest big banks to report earnings on Wednesday. Here is what their reports show.
Royal Bank of Canada on Wednesday beat analysts’ estimates for quarterly profit as higher interest rates helped the bank earn more on its interest-bearing assets.
Still, the lender set aside more funds to cover for potentially souring loans in an uncertain economy highlighting economic uncertainties ahead.
Canadian households are feeling the squeeze of higher interest rates and high costs of living since the Bank of Canada began a series of rate hikes to curb inflation.
It has fueled concerns of outsized credit losses and dampened loan growth, a big worry for the banks which last year set aside $3.54 billion in reserves.
However, higher rates generate more income for the banks that bring in more interest on mortgages and other loans.
“Results benefited from higher net interest income driven by solid volume growth, as well as higher fee-based client assets reflecting market appreciation,” the bank said in a statement.
RBC’s total provisions for credit losses increased to $813 million, or 53 per cent, from a year ago. Analysts had forecast $728.7 million, according to LSEG data.
Net interest income, the difference between the interest banks earn on loans and pay out on deposits, rose 2.1 per cent.