Did the two major banks meet expectations?
Royal Bank of Canada (RBC) and CIBC Canada are the latest big banks to release their second-quarter 2024 earnings results.
RBC Q2 profit
RBC announced net income of $4 billion for the quarter ended April 30th, an increase of $270 million or 7% year-over-year. The bank saw record earnings from its capital markets division along with higher results across personal and commercial banking, wealth management and insurance segments.
"As our first quarter results show, RBC has the right strategy in place to grow today while also generating long-term value for shareholders," RBC president and CEO Dave McKay said in a statement. "Underpinned by our balance sheet strength, prudent approach to risk management and diversified business model, we delivered solid, client-driven volume growth and a continued focus on expense control."
RBC's adjusted net income of $4.2 billion and adjusted diluted earnings per share of $2.92 were up 11% and 9%, respectively, compared to Q2 2023. The results included a $51 million hit from the recently completed $13.5 billion acquisition of HSBC Bank Canada.
Provisions for credit losses rose $320 million from a year ago to $832 million as the bank increased reserves in anticipation of higher loan delinquencies amidst rising interest rates and unemployment.
RBC maintained a strong 12.8% CET1 capital ratio, while increasing its quarterly dividend by 4 cents to $1.42 per share.
Looking ahead, McKay said, "As we look towards the completion of our planned HSBC Canada acquisition, we remain focused on being a trusted advisor to clients through the delivery of new and differentiated banking experiences."
CIBC results
CIBC registered a net income of $1.493 billion, down 2% compared to the same quarter last year, due to higher provisions for credit losses.
Provisions for credit losses rose $76 million from Q2 2023 to $514 million as the bank shored up reserves, particularly for impaired loans across its US commercial and Canadian retail portfolios.
However, CIBC's Canadian personal and business banking reported net income of $649 million, up $11 million or 2% from the previous year, driven by higher revenue from net interest margin and volume growth.
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Its Canadian commercial banking and wealth management delivered a net income of $456 million, up $4 million or 1% from the previous year, due to higher fee-based revenue and increased client activity in wealth management.
"Our team's ability to attract and deepen client relationships across our bank, including in high growth segments and markets is supporting our momentum," said CIBC president and CEO Victor Dodig. "Combined with expense discipline, our robust capital position and disciplined risk management, as well as our ongoing strategic investments, we remain well positioned to navigate the current operating environment."
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