Canada’s largest bank RBC warns of softer economy, plans job cuts

Royal Bank of Canada (RBC) warned of a softer economy ahead and plans to cut about 1,800 jobs after Canada’s largest bank beat analysts’ estimates for the third quarter on Thursday, helped by cost-cutting measures.

Chief Executive Officer Dave McKay forecast slowing growth and lower inflation due to the lagging impact of monetary policy, combined with a slowdown in China and elevated climate and geopolitical risks.“We are seeing evidence of slowing labour markets as evidenced by slowing wage growth, lower job postings and an increase in Canadian unemployment. Consequently, our base case forecasts a softer economic outlook,” he told analysts.

“The operating environment is changing at a faster pace than we’ve seen for over a decade.”

McKay in May said the lender would slow down hiring after it overshot by thousands of people. The bank said the number of full-time employees was down 1 percent from the prior quarter, and it expects to further reduce headcount by about 1 to 2 percent. The bank had 93,753 full-time employees as of July 31.

“The bank did a commendable job in managing expenses, with an improvement in its overall efficiency ratio,” Barclays analyst John Aiken said, noting the lender’s earnings beat.

“The higher interest rate would put pressure on the consumer. But we’re seeing so far they continue to be resilient … but we’re continuously monitoring very closely,” TD’s Chief Financial Officer Kelvin Tran said in an interview.