Royal Bank of Canada reports $3.2B third-quarter profit, beats expectations
Royal Bank of Canada believes the next few months will be difficult for the economy, despite detecting signs of a rebound.
Dave McKay, the Toronto bank's chief executive, said Wednesday that all eyes should be on the fall season as Canada continues to plot a recovery from the COVID-19 pandemic.
"While we are seeing early and encouraging signs of an economic rebound from the depths of March, uncertainty remains over the timing and shape of the recovery," McKay told financial analysts.
"The real test of the recovery will come once government support programs start to wind down. We anticipate the fall will be a challenging time."
To help Canadians cope, RBC has approved about 500,000 payment deferrals to customers and put aside $675 million for bad loans in its third quarter. That's up from $425 million at the same time last year, but down from $2.83 billion in the quarter before.
McKay expects most clients will resume making payments as soon as their deferrals expire, and said the bank's risk level from the deferrals has been reduced "significantly" as many clients saw their deferral programs wrap at the end of July.
His comments came as the bank reported a profit of $3.20 billion — or $2.20 per diluted share — in its third quarter, compared with $3.26 billion — or $2.22 per diluted share — a year earlier.
Revenue totalled $12.92 billion, up from $11.54 billion in the same quarter last year.
On an adjusted basis, RBC says it earned $2.23 per diluted share in its latest quarter, compared with an adjusted profit of $2.26 per diluted share a year ago.
Analysts on average had expected an adjusted profit of $1.81 per share, according to financial markets data firm Refinitiv.
The result was bolstered by record earnings in RBC capital markets and solid earnings in insurance.