RBC plans job cuts after profit beat, TD misses on higher expenses
By Nivedita Balu and Manya Saini
(Reuters) — Royal Bank of Canada (RBC) warned of a softer economy ahead and plans to cut about 1,800 job after Canada's largest bank beat analysts' estimates for the third quarter on Thursday helped by cost cutting measures.
Chief Executive Officer Dave McKay forecast slowing growth and lower inflation due to the lagging impact of monetary policy, combined with a slowdown in China and elevated climate and geopolitical risks.
«We are seeing evidence of slowing labor markets as evidenced by slowing wage growth, lower job postings and an increase in Canadian unemployment. Consequently, our base case forecasts a softer economic outlook,» he told analysts.
«The operating environment is changing at a faster pace than we've seen for over a decade.»
McKay in May said the lender would slow hiring after it overshot by thousands of people. The bank said the number of full-time employees was down 1% from the prior quarter, and it expects to further reduce headcount by about 1% to 2%. The bank had 93,753 full-time employees as of July 31.
«The bank did a commendable job in managing expenses, with an improvement in its overall efficiency ratio,» Barclays (LON:BARC) analyst John Aiken said, noting the lender's earnings beat.
The country's second-largest bank Toronto-Dominion Bank, however, missed analysts' estimates for quarterly profit, which was hurt by higher expenses, rainy day funds to cover for unpaid loans and weakness in its U.S. business.
TD set aside C$766 million, a jump from C$351 million a year ago, while RBC set aside C$616 million for credit losses, up from C$340 million, as consumers struggle to make payments amid high costs of living.
The Bank of Canada has raised interest rates 10
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