Royal Bank of Canada (RBC) is set to cut approximately 1,800 jobs as part of its ongoing efforts to reduce costs, according to recent reports. The news comes after RBC beat analysts’ estimates for the third quarter, but CEO Dave McKay warned of a softer economy ahead.
McKay cited factors such as slowing growth, lower inflation, and increased geopolitical risks as reasons for the cautious outlook. He also noted that the operating environment is changing at a faster pace than seen in over a decade.
RBC had already announced plans to slow hiring after oversupplying by thousands of people. The bank’s number of full-time employees was down 1% from the prior quarter, and it expects further reductions of 1% to 2% in headcount.
In a similar vein, Toronto-Dominion Bank (TD) recently missed analysts’ estimates for quarterly profit. The bank attributed this to higher expenses, rainy day funds, and weakness in its U.S. business. Both RBC and TD have set aside significant amounts of money to cover credit losses as consumers struggle with high living costs.
Despite these challenges, 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%. RBC’s net interest income rose 6.7% to C$6.29 billion, while TD’s rose 3.5% to C$7.29 billion.
RBC reported adjusted earnings of C$2.84 per share, beating estimates, while TD’s adjusted earnings of C$1.99 per share fell below expectations. Together, RBC and TD account for half of the market share among the big six Canadian banks.
However, the stocks of both banks have underperformed this year. RBC’s shares are down 5%, and TD’s are down 6% so far. On Thursday morning, RBC’s shares were up 1.7%, while TD’s were down nearly 2%.
These developments indicate a challenging period for Canadian banks, as they navigate a changing economic landscape. The combination of cost-cutting measures and strategic adjustments is aimed at ensuring long-term stability and profitability for RBC and TD.
