TD Bank, RBC profits helped by rising rates

TORONTO — Two of Canada’s biggest banks reported second-quarter earnings that benefited from bigger profit margins on the back of rising interest rates, though the bump could be less pronounced in coming quarters as pressure mounts for banks to raise the interest rates they pay on deposits.

Toronto-Dominion Bank and Royal Bank of Canada handily beat analysts expectations with double-digit growth in the quarter ended Apr. 30, helped by a strong economy and growing net interest margins — or the profit made on loans — as interest rates rose on both sides of the border.

TD reported a bigger quarterly bump of the two, with net income attributable to common shareholders of $2.85 billion for the quarter, up 17 per cent from a year earlier, while RBC reported a nine per cent increase to $2.98 billion.

On an adjusted basis, TD and RBC earned $1.62 and $2.10 per diluted share for the period, respectively, beating analyst expectations of $1.50 and $2.05, according to Thomson Reuters Eikon.

TD’s chief executive Bharat Masrani said it was “another terrific quarter” for the bank, with all its businesses on both sides of the border performing well.

Both TD and RBC saw increases in net interest margins, the difference between the money they earn on loans they make and interest they pay out to savers, in both their Canadian and U.S. businesses.