Two more of Canada’s big banks reported lower quarterly profits as economic uncertainty outweighs gains from higher interest rates.

Royal Bank of Canada (TSX:RY) reported a fiscal Q1 2023 profit of $3.21 billion, down 22 per cent from $4.10 billion a year earlier, as it increased its loan loss provisions.

At the head of the pack as Canada’s biggest lender, RBC said the profit amounted to $2.29 per share for the quarter ending January 31, 2023, down from $2.84 per share a year earlier. This clocks in well below analyst expectations of a $2.94 per share profit.

Even so, revenue in the quarter totalled $15.09 billion, up 16 per cent from $13.07 billion a year ago.

The bank’s provision for loan losses amounted to $532 million in the latest quarter compared with a provision of $105 million in the fiscal Q1 2022.

Also making news on Wednesday was the National Bank of Canada (TSX:NA), which beat analyst expectations in Q1 2023 despite higher expenses, with revenues rising among its core banking and wealth management segments.

However, its profit fell five per cent to $881 million in the quarter. Net income slipped over two per cent to $905 million on an adjusted basis, or adjusted earnings of $2.56 per share. Analysts had expected $2.39 per share.

National Bank set aside $86 million in provisions, compared with last year’s release of $2 million.

The Bank of Canada hiked its key interest rate to a 15-year high in January, but the central bank had said it would hold off on further increases if prices eased.

This follows Tuesday’s reports from BMO & Scotiabank about their own loan losses and declines in quarterly profits. Banks continue to fortify provisions in case of delays or defaults in loan repayments by borrowers struggling with high inflation.


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