Canada’s largest bank by assets, Royal Bank of Canada (RBC) has reported record earnings of C$10.46bn ($7.82bn) for the 12 months to end October 2016, up by 4.3% year-on-year driven by the strength of its diversified business model.

Net income at RBC’s Personal & Commercial banking unit rose by 3.6% year-on-year to C$5.18bn for fiscal 2016.

RBC’s total revenue for the year rose by 8.7% to C$38.4bn but provisions for credit losses rose sharply by 40.9% to C$1.55bn.

Unusually for RBC, analyst forecasts were missed for the fourth quarter with a 2% decline in earnings to C$2.54bn. Loan-loss provisions increased by 30% to C$358m in Q4 against C$275m in the year-ago quarter.

By contrast, Scotiabank posted Q4 earnings that beat analyst expectations.

Dave McKay, RBC President and CEO said: “Looking ahead, while the industry faces headwinds and an accelerating pace of change, we believe we are well positioned to deliver long-term shareholder value by leveraging innovation, our values-based culture which supports strong client relationships, and prudent capital and risk management.”

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RBC held its quarterly dividend steady at C$0.83 per common share.

“Our record earnings of C$10.5bn billion were driven by strong results in Wealth Management, higher earnings in Insurance, solid results in Personal & Commercial Banking, and record earnings in Investor & Treasury Services,” he added.

Personal & Commercial Banking earnings mainly reflected solid volume growth across most businesses in Canada, strong fee-based revenue growth, and higher earnings in the Caribbean, partially offset by higher costs to support business growth and lower spreads.

In Canada, RBC retail banking highlights in 2016 included:

·         Solid volume growth across most products with particular strengths in home equity supported by a focus on key newcomer and first time home buyer segments, coupled with its Employee Pricing campaigns;

·          Credit cards through strong account and balance growth in RBC’s Avion card;

·         RBC was the first Canadian bank to offer free Interac e-Transfer payments for all personal chequing accounts.

·         Online and mobile customer numbers grew to 5.2 million active clients

·         RBC was the first North American financial institution to provide an in-branch, real-time, multi-language video capability available in more than 200 languages

·         Launched “Add It”, whereby pre-approved customers can set up their Royal Credit Line with just four clicks, and without the need for paperwork or a branch visit;

·         Touch ID Login (iPhone) and  iWatch app releases provide more options for clients to bank securely anywhere, anytime; and

·          launched contactless point-of-sale at participating merchants by making Apple Pay available to RBC debit and credit cardholders.

·         A decline in the Personal & Commercial Banking unit cost-income ratio for fiscal 2016 by 70 basis points to 45.5%

RBC ended the financial year with a Canadian branch network of 1,268, down only a net 7 outlets on the year.

Scotiabank kicked off the banking reporting season, beating analyst forecasts in the fourth quarter with net income up 9.2% year-on-year to C$2.01bn.

For the year to end October, Scotiabank’s net income rose by 2.2% to C$7.37bn.

Provision for credit losses increased by 24.2% to C$2.41bn.

Canadian retail banking highlights in 2016 included:

·         The launch of two new customer-focused branch formats – Scotiabank Express in Guelph and Montreal and Scotiabank Solutions in Guelph and Kitchener;

·         Rolling out the Network Transformation Wave Pilot to improve the customer and employee experience;

·         The launch of two co-brand credit cards– the Scotiabank GM Visa Infinite card and the Scotiabank SCENE Visa card, and

·         The debut of  Scotiabank More Rewards Visa in partnership with the grocer Overwaitea Food Group

·         Canadian retail savings deposits were up 11% and chequing was up 8% year-on-year;

·         Net Interest Margin was up 13 bps to 2.39%, driven primarily from higher earning assets and improved deposit margin.

“During 2016, continued strong performances in our personal, commercial and wealth businesses, both in Canada and in our key Pacific Alliance markets drove solid earnings growth,” said Brian Porter, Scotiabank President and CEO.  

“Canadian Banking had another strong year of operating performance and earnings growth. We continue to deliver valued advice, services and products to our base of more than 10 million retail and commercial customers. By deepening existing relationships and adding new customers, we further improved our asset and deposit mix, while generating improved returns for shareholders.

“International Banking delivered strong results, with annual earnings exceeding C$2bn for the first time.