Evacuation order issued for some Fort McMurray neighbourhoods as wildfire nears
Four Fort McMurray neighbourhoods were ordered to evacuate on Tuesday as a wildfire gets closer to the city.
Royal Bank of Canada is taking measures to prepare for a more uncertain year ahead, but results from the past quarter still show gains in key areas like loans and new client additions.
The bank, which on Tuesday announced it had reached a deal to buy HSBC Bank Canada for $13.5 billion, said Wednesday it was raising its quarterly dividend, but because of economic uncertainty it said it will defer further share repurchases until the close of the HSBC deal.
RBC also announced a two per cent discount on dividend reinvestments to help boost its balance sheet.
Given the potential slowdown ahead, the bank also set aside $381 million for potentially bad loans, compared with a reversal of $227 million last year, which offset gains elsewhere in the quarter to leave earnings of $3.88 billion just $10 million shy from a year earlier.
The actions on loan provisions and dividend discounts come as elevated housing and energy prices, geopolitical instability, and rising interest rates put pressure on growth, affect asset valuations and adds to market volatility, said RBC chief executive Dave McKay.
"We maintain our cautious stance on the outlook for economic growth," he said on an analyst call.
"Although higher interest rates are needed to preserve long term economic stability, the lagging impact of monetary policy, combined with strong employment and significant liquidity in the system, has likely delayed what may end up being a brief and moderate recession."
While rising rates put pressure on the economy, RBC is especially well positioned to benefit from them as the net interest margins on its sizable deposit base grows.
The bank said it saw net income in personal and commercial banking grow five per cent from a year ago to $2.14 billion, mostly due to those higher margins along with average volume growth of 10 per cent in loans, and wealth management also got a boost from higher net interest income and loan volume growth.
The boost from rising interest margins come as a benefit of RBC's scale, which it continues to push to increase, both through the HSBC Canada acquisition, and more organic growth.
HSBC Canada gives the potential for RBC to add some 800,000 clients if it goes through as expected in late 2023, while this year the bank added 400,000 clients, and expects its client referral deal with the Canadian division of India's ICICI Bank to direct some 50,000 more customers as immigration levels reach record highs.
The bank is well-positioned to add more clients, and deposits, next year to provide lower-cost funding for its loans, said McKay.
"We believe our largely deposit-funded balance sheet will be a key driver of profitability in a rising rate environment," he said.
The bank's capital markets business shows the clearest indications of volatility, with net income of $617 million down 33 per cent from a year earlier, but up 29 per cent from the third quarter.
Revenue totalled $12.57 billion, up from $12.38 billion a year earlier.
The quarter showed strong loan growth and no signs of a credit spike for RBC, said Scotiabank analyst Meny Grauman in a note, but he wondered about what the bank's move on the discounted dividend reinvestment plan (DRIP) shows for the bank's capital outlook, given the expected tougher economic conditions next year.
"In that context a defensive move on the DRIP raises questions about downside risks," said Grauman.
He said the bank's better-than-expected earnings, which came in at an adjusted $2.78 per diluted share for the quarter compared with a consensus of $2.68, according to Refinitiv, was from higher revenues and smaller loan provisions than expected.
Bank expenses however, which were up 9.5 per cent for the quarter compared with last year on higher staffing costs and some acquisition-related increase, came in higher than expected.
For its full financial year, RBC said it earned $15.81 billion or $11.06 per diluted share on $48.99 billion in revenue compared with a record profit of $16.05 billion or $11.06 per diluted share on $49.69 billion in revenue in the same period last year.
This report by The Canadian Press was first published Nov. 30, 2022.
Four Fort McMurray neighbourhoods were ordered to evacuate on Tuesday as a wildfire gets closer to the city.
Canadian LifeLabs customers who filed an application for a class-action settlement began receiving their payments this week, though at a much lower amount than initially expected.
Saskatchewan RCMP have revealed that a historic sexual assault investigation has led to the discovery of alleged crimes against children dating back to 2005.
Nearly 1,000 wildfires have burned across Canada so far this year. Here's an overview of the situation in Canada.
Less than a week after two public sculptures featuring a livestream between Dublin, Ireland, and New York City debuted, 'inappropriate behaviour' in real-time interactions between people in the two cities has prompted a temporary shutdown.
An American accused of sexually assaulting a Pennsylvania college student in 2013 and later sending her a Facebook message that said, 'So I raped you,' has been detained in France after a three-year search.
The annual list of Canada's top restaurants in the country was just released and here are the places that made the 2024 cut.
Captain John Tavares scored 15 seconds into overtime and saved his teammates some embarrassment as Canada held on for a 6-5 win over Austria on Tuesday at the world hockey championship.
The doctor who led Toronto through the COVID-19 pandemic as the city’s top public health official is stepping down.
A team is ready to help an entangled North Atlantic right whale in the Gulf of St. Lawrence.
A $200 reward is being offered by a North Vancouver family for the safe return of their beloved chicken, Snowflake.
Two daughters and a mother were reunited online 40 years later thanks to a DNA kit and a Zoom connection despite living on three separate continents and speaking different languages.
Mother's Day can be a difficult occasion for those who have lost or are estranged from their mom.
YES Theatre Young Company opened its acclaimed kids’ show, One Small Step, at Sudbury Theatre Centre on Saturday.
An Ottawa pizzeria is being recognized as one of the top 20 deep-dish pizzas in the world.
A family of fifth generation farmers from Ituna, Sask. are trying to find answers after discovering several strange objects lying on their land.
A Listowel, Ont. man, drafted by the Hamilton Tigercats last week, is also getting looks from the NFL, despite only playing 27 games of football in his life.
The threat of zebra mussels has prompted the federal government to temporarily ban watercraft from a Manitoba lake popular with tourists.