Royal Bank of Canada reported a jump in second-quarter profit on Thursday, as the country’s biggest bank benefited from the acquisition of HSBC’s domestic business and strength in its wealth management business.
The $13.5 billion acquisition of HSBC Canada, the largest deal in RBC’s history, has tightened the bank’s grip at home and positioned it for more growth and scale.
The inclusion of HSBC’s Canadian operations boosted RBC’s net income by $258 million.
“We saw the strength of our diversified business model reflected across our largest segments in Q2, underpinned by our robust capital position, balance sheet strength and prudent, through-the-cycle approach to risk management,” said CEO Dave McKay.
Canadian banks such as Bank of Nova Scotia and Bank of Montreal are also shoring up loan loss reserves as they prepare for the economic impact of U.S. tariffs and the global trade war.
The changing economic outlook is expected to fan caution among consumers, leading to loan growth pressures and higher credit losses.
RBC’s provision for credit losses jumped to $1.42 billion in the reported quarter, from $920 million a year earlier.
In its wealth management unit, profit jumped 11 per cent on the back of higher fee-based client assets.
The bank posted adjusted profit of $4.53 billion, or $3.12 per share, in the three months ended April 30, compared with $4.2 billion, or $2.92 per share, a year earlier.
Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Devika Syamnath, Reuters
