"As we approach a year into the global pandemic, we are encouraged by both the number and efficacy of vaccines," McKay told analysts on a conference call on Wednesday.
"This — in addition to significant pent up demand, rising prospects of further stimulus programs, expectations of a gradual easing of lockdown measures and pledges of continued low interest rates — to support the sustained economic recovery,"
Executives also pointed to mortgages and the stock markets as factors that boosted the bank's outlook and profit.
"Canadian housing activity also remains elevated," said McKay, pointing to an increase in construction permits. "We expect a lack of supply, low interest rates, elevated savings rates, continuing work from home arrangements, and a potential resumption of immigration to underpin continued demand."
Meanwhile, chief financial officer
But Bolger noted that the pandemic has made it harder to grow RBC's commercial and credit card businesses.
"Travel is our biggest category and we are just not seeing consumers spending there," McLaughlin added. "They are paying down debt."
McLaughlin said that while the lower credit card balances were providing real challenges for the company, he expects the spending to bounce back.
"I think as the economy opens up and entrepreneurs gain confidence, you'll start to see commercial lending start to come back, hopefully in the back part of the year," McLaughlin added.
RBC is one of four big Canadian banks so far to report better-than-expected profit growth for the quarter ended
Overall, RBC says it earned net income of
On an adjusted basis, RBC says it earned
Analysts on average had expected an adjusted profit of
RBC, like many of its rivals, reported a decline in provisions for credit losses. In the second quarter last year, RBC significantly hiked reserves amid an expectation for credit losses, "guided by a rapid deterioration of economic indicators, caused by the significant uncertainty around the pandemic," said
In the latest quarter, the provisions at RBC amounted to
"Notably, this is the first quarter since the onset of the pandemic we have released reserves in relation to our performing loans," said Hepworth.
"For context though, this represents less than four per cent of the reserves taken during 2020."
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