On Thursday, the Royal Bank of Canada (RY.TO) and CIBC (CM.TO) announced a decline in second-quarter earnings as harsh economic conditions forced the lenders to construct bigger provisions to brace for more borrowers defaulting.
On Wednesday, the Bank of Montreal and the Bank of Nova Scotia announced reduced earnings due to greater provisions, weaker top-line growth, and increased expenses.
Unlike last year, RBC set aside C$600 million ($449 million) in bad loan provisions. As a result, CIBC’s second-quarter credit loss provision was C$438 million, up C$135 million from last year.
For the three months ended April 30, RBC’s net income declined 14% to C$3.65 billion, or C$2.58 per share.
CIBC’s adjusted net income dipped to C$1.63 billion from C$1.65 billion a year ago but topped estimates per share. According to Refinitiv data, it earned C$1.70 per share. Analysts expected C$1.63.
Technology and labor costs increased at both institutions.