Royal Bank reports $3.23 billion Q2 profit, provisions for credit losses climb
A Royal Bank of Canada sign is shown in the financial district in Toronto on Tuesday, August 22, 2017. THE CANADIAN PRESS/Nathan Denette
TORONTO -- Royal Bank of Canada saw a big bump in profits last quarter, propelled by loan growth and higher interest rates at its personal and commercial banking business.
The seven per cent boost in net income came despite a big uptick in provisions on impaired loans.
Chief executive David McKay expressed confidence in the housing market and the domestic economy, despite record levels of household debt among Canadians late last year and a "softened" gross domestic product.
"Regulatory changes have helped some of the Canadian major housing markets stabilize, particularly in Ontario and to the East. Western Canadian markets remain under downward pressure overall, making housing more affordable," McKay said Thursday on a conference call with investors.
"If we see slower volume growth and slower revenue growth as we hit a cycle, we have plans to manage...in that type of cycle too," he added.
The Bank of Canada has hiked interest rates five times between mid-2017 and last fall, helping to make them a "big driver" behind RBC's 14 per cent year-over-year revenue boost to $11.5 billion, said chief financial officer Rod Bolger.
Total provisions for credit losses climbed 55 per cent to $426 million, up from $274 million in the same quarter last year, due to higher provisions in personal and commercial banking, wealth management and capital markets.
The country's biggest bank by market value earned $3.23 billion in its latest quarter, helped by growth in its capital markets, personal and commercial banking and wealth management businesses.
RBC said the profit amounted to $2.20 per diluted share for the quarter ended April 30.
The result compared with a profit of $3.06 billion or $2.06 per diluted share a year ago.
On an adjusted basis, RBC reported $2.23 in diluted cash earnings per share for the quarter, up from $2.10 per share a year ago.
Analysts on average had expected a profit of $2.21, according to Thomson Reuters Eikon.