RBC, National Bank beat profit estimates on capital markets strength

Royal Bank of Canada and National Bank of Canada beat profit estimates on Wednesday, as lower provisions for credit losses and record earnings from their capital markets units helped them surpass their pre-pandemic performance.

The largest and smallest of Canada's six major lenders joined rivals Bank of Montreal and Bank of Nova Scotia , which also reported profit beats on Tuesday driven by similar factors.

Royal Bank of Canada (RBC) and National Bank also posted higher profits from a year earlier in their wealth management units, with RBC also reporting strong domestic lending growth.

Canadian banks have also largely avoided an increase in soured loans thanks to several government assistance measures.

While loan impairments are expected to increase in the coming quarters, investors and executives are optimistic that sufficient reserves as well as an economic recovery boosted by the rollout of coronavirus vaccines will help the banks bounce back from the profit declines of 2020.

RBC's capital markets division, which includes trading, investment banking and advisory, saw net income soar 21% to C$1.07 billion ($852.25 million), helped by increased volatility and equity trading in US markets.

Net income from personal and commercial banking - RBC's biggest source of income - rose 6% to C$1.79 billion.

National Bank, the smallest of Canada's six largest lenders, reported an 8% rise in personal and commercial banking net income to $262 million.

RBC reported adjusted income of C$2.69 per share versus analysts' expectations of C$2.26. National Bank saw adjusted income rise to C$2.15 per share, compared with estimates of C$1.71.