(Reuters) -Royal Bank of Canada and CIBC reported a drop in second-quarter profit on Thursday, as tough economic conditions spurred the lenders into building higher provisions to prepare for more borrowers falling behind on repayments.
The results follow those of peers Bank of Montreal and Bank of Nova Scotia on Wednesday that reported a fall in earnings weighed by higher provisions, slower top-line growth and an increase in expenses.
RBC said it set aside C$600 million ($449 million) in bad loan provisions, compared with a provision reversal a year ago. CIBC’s provision for credit losses stood at C$438 million in the second quarter, up C$135 million from a year ago.
RBC’s net income fell 14% to C$3.65 billion, or C$2.58 per share, for the three months ended April 30.
CIBC’s adjusted net income fell to C$1.63 billion from C$1.65 billion a year ago, but beat expectations on a per share basis. It earned C$1.70 per share, compared with analysts’ estimate of C$1.63 per share, according to Refinitiv data.
Both banks noted a rise in expenses related to technology investments and employee-related costs.
($1 = 1.3372 Canadian dollars)
(Reporting by Nivedita Balu in Toronto, Niket Nishant and Mehnaz Yasmin in Bengaluru; Editing by Rashmi Aich and Mark Potter)
