Low oil prices take a toll on Canada's largest bank
Weakening loans in the oil and gas sector took a toll on quarterly results for RBC, who missed earnings estimates for the second time in 2 years.
The company reported a net income of $2.45B in the first quarter, down from $2.59B in the fourth quarter of last year. The country's largest bank took a $410 million provision in credit losses, most of it attributed to low oil prices. Personal and commercial banking provisions climbed to $284 million.
RBC has $8.4 billion in outstanding oil and gas loans representing 1.6% of its total loans. Under a $30 oil scenario, the company thinks 9 Canadian energy companies are at risk of bankruptcy. At $25 oil, RBC projects housing prices to decline by as much as 25% nationwide.
Despite the negative headwinds, Canada's largest bank boosted its dividend by 3%.