© Reuters. A sign for the Royal Bank of Canada in Toronto, Ontario, Canada December 13, 2021. REUTERS/Carlos Osorio/File Photo
(Reuters) – Royal Bank of Canada reported a lower first-quarter profit on Wednesday, hurt by bigger provisions for loans that can sour in a tough economy.
Lenders have been steadily raising the capital they set aside in case customers default on their mortgages and credit card debt as higher interest rates and elevated inflation pressure household budgets.
RBC’s total provisions for credit losses (PCLs) increased C$281 million, or 53%, from a year ago.
Even so, elevated interest rates have helped banks charge customers more on their mortgages, personal loans and credit card debt.
“Results benefited from higher net interest income driven by solid volume growth, as well as higher fee-based client assets reflecting market appreciation,” the bank said in a statement.
The country’s no. 1 lender reported adjusted profit of C$4.07 billion, or C$2.85 per share, for the three months ended Jan. 31, compared with C$4.26 billion or C$3.04 per share, a year ago.
