The boss of the Royal Bank expressed optimism on Wednesday about the post-pandemic economic recovery, as the real estate market shows strong activity and the capital markets sector posted record results in the most recent quarter.

“As we approach a year of a global pandemic, we are encouraged by the number and effectiveness of vaccines,” CEO David McKay told analysts on a conference call. “This – in addition to strong pent-up demand, growing prospects for new stimulus packages, expectations of a gradual easing of containment measures and promises to keep interest rates low – to support a sustained economic recovery.” “

Executives also found that mortgages and the stock markets boosted the bank’s outlook and profits. “Real estate activity in Canada also remains strong,” said McKay, noting an increase in building permits. “We foresee a shortage of supply, low interest rates, high savings rates, the continuation of teleworking and a resumption ofimmigration to support demand. “

Meanwhile, CFO Rod Bolger reported that the average transaction volume of individual investors on the RBC Online Investing service increased 200% from the same period last year, and that personal chequing accounts had increased. increased by more than 30%.

But Bolger noted that the pandemic has made it more difficult for the establishment to grow the business and credit card activities. Neil McLaughlin, the bank’s personal and business banking manager, also said auto loans declined significantly last year. “Travel is our most important category and we just don’t see consumers spending in it,” added McLaughlin. “They are paying off their debt. “

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McLaughlin added that while declining credit card balances posed real challenges for the business, he expects spending to rebound. “I think as the economy opens up and entrepreneurs gain confidence, we’ll start to see commercial loans come back, hopefully, in the second half of the year,” Mr. McLaughlin.

Decrease in provisions for loan losses

The Royale is one of four big Canadian banks to have reported better-than-expected earnings growth for the quarter ended Jan. 31 so far compared to the same period a year ago, before the pandemic COVID-19 is taking hold in the country.

Royal Bank reported net income of $ 3.85 billion, or $ 2.66 per share, in the most recent quarter, compared with a profit of 3.51 billion, or $ 2.40 per share, a year earlier. On an adjusted basis, the bank says it earned $ 2.69 per share, up from $ 2.44 per share a year ago.

La Royale, like many of its competitors, reported a decline in provisions for credit losses. In the second quarter of last year, it had significantly increased its reserves against a backdrop of expectation of credit losses, “guided by a rapid deterioration in economic indicators, caused by the considerable uncertainty surrounding the pandemic”, explained the the bank’s chief risk officer, Graeme Hepworth.

In the most recent quarter, Royal’s provisions were $ 110 million, down from $ 419 million in the same quarter last year. But Mr Hepworth added that the bank expected defaults to increase until the end of 2021, as many government support programs are expected to end this summer.

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