National Bank of Canada (TSE: NA) and Royal Bank of Canada (TSE: RY) said Wednesday that their fourth quarter earnings for the fiscal year were better than expected due to lower provisions for potential credit losses.
The country’s largest lender, the Royal Bank of Canada, valued its provision for credit losses at £247.57 million in the quarter ended October, a decrease of more than 33% quarter-on-quarter and a 14% decline on an annualized basis. Analysts had expected the bank to make higher provisions of £463.84 million instead.
Royal Bank of Canada’s shares fell nearly 1% when the market opened on Wednesday. On an annual basis, the bank has now risen by about 3% on the stock market. At the time of writing this article, it is valued at £87.70 billion and has a price-earnings ratio of 13.68.
The National Bank of Canada values the reserves at 63.71 million pounds sterling.
The National Bank of Canada, on the other hand, estimated the reserves at 63.71 million pounds, while the experts estimated them at 92.67 million pounds, which is much higher.
The coronavirus pandemic, which has so far infected more than 385,000 people in Canada and caused over 12,000 deaths, has prompted Canadian banks this year to set aside billions of pounds in capital to cover credit losses.
The Royal Bank of Canada and the National Bank of Canada reported just one day after rivals Bank of Nova Scotia and Bank of Montreal exceeded profit forecasts.
Gross impaired loans, the Royal Bank said on Wednesday, recorded a 17% decline in the fourth quarter. The National Bank, on the other hand, reported a 3% growth in gross impaired loans in the fourth quarter. At £1.31 per share, Royal Bank said its adjusted net profit was better than analysts’ estimates of £1.19.
National Bank reports 98 pence per share of Q4 adjusted net profit
The National Bank’s adjusted fourth quarter profit was 98 pence per share compared to the expected 88 pence per share. In the previous quarter (Q3) the bank reported a net profit of £348 million.
The National Bank of Canada opened on Wednesday with the stock market down more than 0.5%. In the year to date, the bank’s shares have now risen by around 2%. At the time of writing this article, the National Bank of Canada has a market capitalization of 14.13 billion pounds and a price-earnings ratio of 12.10.