RBC warns of more job cuts after beating profit estimates; TD misses
Canada’s largest bank Royal Bank of Canada (RBC) beat analysts’ estimates for third-quarter profit on Thursday, helped by cost cutting and higher interest rates and warned of more layoffs ahead as it tackles elevated expenses.
The strong results come after RBC’s CEO Dave McKay had said in May the bank would slow hiring after it overshot by thousands of people.
The bank said the number of full-time employees was down one per cent from the prior quarter, and expects to further reduce headcount by about one per cent to two per cent.
“The bank did a commendable job in managing expenses, with an improvement in its overall efficiency ratio,” Barclays analyst John Aiken said.
The country’s second-largest bank Toronto-Dominion Bank, however, missed Bay Street estimates for quarterly profit hurt by higher expenses and rainy-day funds to cover for unpaid loans.
The bank’s earnings were also impacted by a C$306 million charge related to the termination of its First Horizon acquisition.
The Bank of Canada has raised interest rates 10 times since March of last year to tackle sticky inflation, boosting profitability for banks’ consumer businesses as they benefit from higher earnings from loans.
That helped boost earnings at RBC’s retail business by five per cent. At TD, however, income from its Canadian personal and commercial banking segment fell 1% and fell 9% at its U.S retail unit.
“The higher interest rate would put pressure on the consumer. But we’re seeing so far they continue to be resilient… but we’re continuously monitoring very closely,” TD CFO Kelvin Tran said in an interview.
The banks set aside more money for bad loans compared to the prior quarter as consumers struggle to make payments amid high costs of living.
RBC
Read more on globalnews.ca
