(Reuters) -Royal Bank of Canada on Thursday reported better than expected quarterly profit after a strong performance in its corporate and investment banking arm offset a hit from bigger provisions against bad loans.
A rebound in dealmaking helped the biggest Canadian bank’s capital markets unit. Net income from the business jumped 36% to C$987 million ($725.3 million), helped by strength in corporate and investment banking, the bank said.
However, it built up provisions for credit losses (PCLs) as a darkening economic outlook prompted further caution. PCLs at the bank surged to C$720 million from C$381 million a year earlier.
The Canadian economy has been teetering on the brink of a recession, underscoring the impact of the central bank’s aggressive rate hikes.
RBC has also been shoring up liquidity at its U.S. unit, City National Bank. In a report filed with regulators last month, City National said RBC had injected about $2.95 billion into the bank this year.
RBC reported adjusted earnings of C$2.78 per share, comfortably beating expectations of C$2.62, according to LSEG data.
Net income rose to C$4.13 billion or C$2.90 per share for the three months ended Oct. 31, compared with C$3.88 billion, or C$2.74 per share, a year earlier.
The smaller Canadian Imperial Bank of Commerce also beat profit expectations as it set aside smaller-than-expected provisions for souring loans and slashed costs through a 5% reduction in its workforce and other expenses.
The lender, Canada’s fifth biggest, reported adjusted earnings of C$1.57 per share, compared with expectations of C$1.53.
($1 = 1.3603 Canadian dollars)
(Reporting by Niket Nishant in Bengaluru and Nivedita Balu in Toronto; Editing by Shinjini Ganguli, Kirsten Donovan)
