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Royal Bank of Canada beats expectations on record capital markets earnings – Financial Post

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The bank’s net income for the three-month period ended Jan. 31 was approximately $3.85 billion, an increase of 10 per cent from a year earlier

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The chief executive of Canada’s biggest bank said Wednesday that they anticipate weak supply, rock-bottom interest rates and stockpiles of savings to keep driving demand for residential real estate, which comes as policymakers are starting to see froth in the housing markets. 

Canadian housing activity “remains elevated,” according to Dave McKay, Royal Bank of Canada’s president and CEO.

“While rising permit issuance is building up the new construction pipeline, we expect a lack of supply, low interest rates, elevated savings rates, continuing work-from-home arrangements and the potential resumption of immigration to underpin continued demand,” McKay said during a conference call for analysts and investors.

The comments followed Toronto-based RBC reporting first-quarter earnings that were better than expected, helped by both loan growth and a drop in the amount of money it had to set aside for potential loan losses. The base-case economic outlook that the bank uses for calculating expected credit losses also foresees Canadian housing prices to rise by 4.9 per cent over the next 12 months. 

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Yet the same kind of factors that RBC sees driving demand in the housing market are the same ones that policymakers are beginning to eye warily. 

Bank of Canada Governor Tiff Macklem on Tuesday said that they are seeing some signs of “excess exuberance” in the housing market, albeit not to the level that prompted past policy actions such as mortgage stress tests. The governor noted that the economy is still coping with the coronavirus pandemic and said that “we need the growth we can get.” 

Even so, Macklem said that even they were surprised by the strength of the housing market’s rebound, which has been driven by factors such as a COVID-19-related desire for more space, helping to drive up demand and prices for suburban real estate. According to the Canadian Real Estate Association, home sales set another all-time record in January, with the actual national average sale price increasing by 22.8 per cent from a year earlier. 

Macklem told reporters on Tuesday that the central bank looks for signs of “extrapolative expectations,” which would involve people counting on “unsustainable” increases in home prices to continue. 

“If people start to … think that those are going to go on indefinitely, that becomes a concern,” the governor said. “We are acutely aware that in a world of very low interest rates, there is a risk that housing prices could get stretched, households could get stretched, and certainly that’s a risk we want to guard against.” 

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RBC, however, sees some debt-related risk abating, which helped the lender to beat earnings expectations. 

The bank’s net income for the three-month period ended Jan. 31 was approximately $3.85 billion, an increase of 10 per cent from a year earlier. When adjusted for certain items, Canada’s biggest bank said first-quarter earnings per share were $2.69, up 10 per cent year-over-year and better than the $2.28 consensus of analyst estimates.

Profit from RBC’s personal and commercial banking unit rose six per cent from a year ago, to nearly $1.8 billion, as it grew both Canadian deposits and loans during the quarter. An improved outlook for credit quality also allowed RBC to release $97 million in reserve funds, with the bank’s total provisions for credit losses for the quarter $110 million, down 74 per cent from a year earlier.

McKay pointed to the progress being made on vaccines as a reason for its improving outlook. 

“We’re growing in confidence in the trajectory of the vaccination of our population and the mitigation of risk,” he said in response to an analyst’s question. “We’re not there yet, so we’re still waiting to see the execution of this, but we’re getting more confident that the timing is starting to narrow around when this will happen.” 

RBC also said its most recent financial results were boosted by a flurry of stock trading earlier this year and in late 2020, as the lender managed to beat first-quarter earnings expectations.

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The bank’s capital-markets business reported net income of approximately $1.07 billion for the first quarter, up 21 per cent from a year ago.This, the bank said, was mostly because of higher revenue, “largely driven by higher equity trading primarily in the U.S. reflecting increased client activity, partially offset by lower, albeit strong M&A revenue, which was the second highest following the historical high in Q1 2020.”

Market conditions gave RBC’s insurance business a lift as well, with the unit’s net income increasing 11 per cent year-over-year, to $201 million. This was chiefly because of “improved claims experience and higher favourable investment-related experience,” the bank said in a press release.

Also reporting an earnings beat on Wednesday was Montreal-based National Bank of Canada, which said its adjusted EPS for the quarter ended Jan. 31 were $2.15, better than the $1.71 analysts had been anticipating. 

In keeping with what its rivals have been reporting this earnings season, National said that its loan-loss provisions had fallen in the quarter, decreasing nine per cent year-over-year to $81 million.

“While uncertainty remains on the exact path and timing of a full recovery, the economy is adapting to a new reality and creating an environment conducive to revenue growth,” said Louis Vachon, president and CEO of National, during his bank’s conference call on Wednesday. “With more people working from home, coupled with historically low interest rates, we continue to see significant pent-up demand in the housing market.”

• Email: gzochodne@postmedia.com | Twitter:

In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

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Voluntary recall issued for Frank’s RedHot Buffalo Ranch Seasoning – Global News

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A voluntary recall has been issued for Frank’s RedHot Buffalo Ranch Seasoning over a possible Salmonella contamination.

McCormick & Company, Inc. says the recall covers 153g bottles with a best before date of September 6, 2022.

Read more:
18 more hand sanitizers added to Health Canada’s growing recall list

The bottles were shipped to British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Quebec.

No illnesses have been reported, and McCormick says the potential risk was brought to their attention by the FDA during routine testing.

Read more:
Health Canada recalls children’s jewellery over lead, cadmium levels

Salmonella poisoning can result in a wide range of symptoms, from short-term fever, headache and nausea to more serious issues including severe arthritis and, in rare cases, even death.

© 2021 The Canadian Press

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Pfizer sells $7.8 billion in Covid shots in the second quarter, raises 2021 guidance on vaccine sales – CNBC

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A person walks past the Pfizer building in New York City, March 2, 2021.
Carlo Allegri | Reuters

Pfizer said Wednesday it sold $7.8 billion in Covid-19 shots in the second quarter and raised its 2021 sales forecast for the vaccine to $33.5 billion from $26 billion, as the delta variant spreads and scientists debate whether people will need booster shots.

The company’s second-quarter financial results also beat Wall Street expectations on earnings and revenue. Here’s how Pfizer did compared with what Wall Street expected, according to average estimates compiled by Refinitiv:

  • Adjusted earnings per share: $1.07 per share vs. 97 cents per share expected
  • Revenue: $18.98 billion vs. $18.74 billion forecast

Pfizer expects an adjusted pretax profit in the high 20% range of revenue for the vaccine.

The company now expects full-year earnings in the range of $3.95 to $4.05 per share. That’s up from its prior range of $3.55 to $3.65 per share. It expects revenue in the range of $78 billion to $80 billion, up from its previous estimate of $70.5 billion to $72.5 billion.

Shares of Pfizer dipped 0.4% in premarket trading.

“The second quarter was remarkable in a number of ways,” Pfizer CEO Albert Bourla said in a statement. “Most visibly, the speed and efficiency of our efforts with BioNTech to help vaccinate the world against COVID-19 have been unprecedented, with now more than a billion doses of BNT162b2 having been delivered globally.”

Pfizer’s other business units also saw strong sales growth. Revenue from its oncology unit rose by 19% year over year to $3.1 billion. The company’s hospital unit generated $2.2 billion in revenue, up 21% from the prior year. Its internal medicine unit grew by 5% from a year ago to $2.4 billion.

Pfizer said earlier this month it was seeing signs of waning immunity induced by its Covid vaccine with German drugmaker BioNTech, and planned to ask the Food and Drug Administration to authorize a booster dose. It also said it is developing a booster shot to target the delta variant.

In slides posted Wednesday alongside its earnings report, Pfizer said it could potentially file for an emergency use authorization for a booster dose with the FDA as early as August. It expects to begin clinical studies testing its delta variant vaccine in the same month.

It expects full approval for its two-dose vaccine by January 2022.

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Pearson airport won’t sort arriving passengers based on COVID-19 vaccination status – CityNews Toronto

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Canada’s largest airport is no longer splitting arriving international passengers into different customs lines based on their vaccination status.

Toronto’s Pearson International Airport announced last week it may be sorting travellers arriving from the U.S. or other international locations into vaccinated and partially or non-vaccinated queues.

But a spokesperson for the Greater Toronto Airports Authority says the practice has been discontinued as of Monday.

Beverly MacDonald says in a statement that the airport has determined separating vaccinated and partially or non-vaccinated travellers into different customs lines “results in minimal operational efficiencies.”

She says entry requirements related to vaccination status will now be enforced once a passenger reaches a customs officer.

Fully vaccinated Canadian citizens and permanent residents are now able to forgo a 14-day quarantine when arriving in Canada from abroad.

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