RBC CEO Dave McKay said that while lending volume increased by double digits in both Canada and the US, market volatility had a negative impact on the bank’s capital markets, causing a 58% year-over-year decline in net income to $479 million.
“Our market-sensitive businesses reported a challenging set of results against the backdrop of one of the toughest environments for financial markets,” McKay said during a conference call on Wednesday morning.
The bank said its decision to increase provisions on poorly performing loans this year led to a 4% year-on-year fall in the personal and commercial banking segment’s net income to $2.02 billion.
Analysts anticipate that more banks will set aside reserves given the less certain economic climate as RBC joins Bank of Nova Scotia in taking a conservative stance with credit-loss provisions.
Responding RBC’s earnings, Scott Chan, an analyst at Canaccord Genuity Group Inc., offered a tempered take. He pointed to challenging market conditions, loan underwriting markdowns, and a challenged capital markets business. At the same time, he highlighted stronger-than-expected trends in its core personal and commercial banking businesses.
