RBC plans thousands of job cuts after profit beat; TD misses on higher expenses

RBC plans thousands of job cuts after profit beat; TD misses on higher expenses

Royal Bank of Canada (RBC) has announced plans to cut approximately 1,800 jobs in order to reduce costs. This comes after the bank beat analysts’ estimates for the third quarter. CEO Dave McKay has warned of a softer economy ahead, citing slowing growth, lower inflation, and various risks. He stated that the operating environment is changing at a faster pace than seen in over a decade.

In May, McKay had already mentioned that the bank would slow hiring after exceeding its target for new hires. The bank’s number of full-time employees decreased by 1% from the previous quarter, and it expects further reductions of 1% to 2%. As of July 31, RBC had 93,753 full-time employees. Analysts have praised the bank for managing expenses and improving its overall efficiency ratio.

On the other hand, Toronto-Dominion Bank (TD) missed analysts’ estimates for quarterly profit. The bank attributed this to higher expenses, rainy day funds for unpaid loans, and weakness in its U.S. business. TD set aside C$766 million for credit losses, while RBC set aside C$616 million. Both banks have seen consumers struggle with high costs of living.

The Bank of Canada has raised interest rates multiple times to tackle inflation, benefiting banks’ consumer businesses. RBC’s retail business saw a 5% increase in earnings, while TD’s Canadian personal and commercial banking segment fell 1% and its U.S. retail unit fell 9%. TD’s CFO Kelvin Tran stated that they are closely monitoring the impact of higher interest rates on consumers.

RBC reported adjusted earnings of C$2.84 per share, surpassing analysts’ estimates. The results were also boosted by a low tax rate due to the Canada Recovery Dividend. TD’s adjusted earnings of C$1.99 per share fell below the estimate and were impacted by a charge related to the termination of its First Horizon acquisition.

RBC and TD together account for half of the market share among the big six Canadian banks. However, their stocks have underperformed this year compared to the broader index. RBC’s shares were up 1.7% while TD’s shares were down nearly 2% on Thursday morning.

In conclusion, RBC plans to cut jobs to reduce costs after beating analysts’ estimates for the third quarter. CEO Dave McKay warns of a softer economy ahead and highlights various risks. TD, on the other hand, missed estimates for quarterly profit due to higher expenses and weakness in its U.S. business. Both banks have set aside funds for credit losses as consumers struggle with high costs of living. The Bank of Canada’s interest rate hikes have had mixed impacts on the banks’ earnings. RBC’s earnings exceeded estimates, while TD’s fell short. The stocks of both banks have underperformed this year.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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