By Allison Prang and Vipal Monga
Royal Bank of Canada and TD Bank Group, two of Canada's largest banking entities, separately reported rises in profit in the latest quarter.
Earnings for the second quarter at the Royal Bank of Canada, the country's largest bank, rose 5.7% to C$3.23 billion ($2.4 billion). Earnings per share were C$2.20, up from C$2.06. Banking, capital markets and wealth-management divisions helped drive profit, the bank said.
Royal Bank of Canada's revenue rose 14% to C$11.5 billion as net interest income and noninterest income increased.
Interest rates are likely to stall, or perhaps fall, during the second half of the year, as central banks take a more dovish view, said Rod Bolger, RBC's chief financial officer, during an interview. That could limit revenue growth, and the bank will compensate by easing expense growth in areas like technology and hiring salespeople. "We're done with the growth," he said.
At RBC, the credit-loss provision rose 55%. The company attributed the rise to impaired loans on accounts in its commercial Canadian banking portfolio.
TD's earnings rose 8.8% to C$3.17 billion as net income in its U.S. retail division climbed. TD's investment in TD Ameritrade also helped increase profits. The bank said its earnings were C$1.70 a share, up from C$1.54 a share.
TD's revenue rose 7.9% to C$10.23 billion as net interest income climbed along with noninterest income.
Commercial-banking revenue grew in both the U.S. and Canada from last year, reflecting strong economies, said Riaz Ahmed, TD's finance chief.
"We're growing at a very comfortable rate," he said. "Both economies are producing lots of jobs."
TD's provision for credit losses rose 14%. Its provision as a percent of net average loans and acceptances rose to 0.39%.
Although provisions for credit losses rose in Canada from last year, Mr. Ahmed said the increase reflected a bigger loan book, as opposed to borrowers' weakness. Delinquency and charge-off rates remain stable, he said. "There's no upward pressure."
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