Fitch affirms RBC at “AA”

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@RBC @RBC_newsroom @FitchRatings has affirmed Royal Bank of Canada’s (RBC) Long- and Short-Term Issuer Default Ratings (IDRs) at  “AA” and F1+ respectively. The Rating Outlook remains Negative on persistent downside risks related to the timing and scope of credit losses in Canada.

The affirmation follows the periodic review of Canada’s largest banks and reflects Fitch’s view that the banking system has absorbed the brunt of the negative earnings impact stemming from the coronavirus pandemic, the American credit rating agency said in a new report. However, conditions in the Canadian operating environment remain unfavorable relative to the pre-pandemic period, contributing to incrementally higher risk and lower earnings potential over the rating horizon, which could lead to negative rating action, it added.

RBC’s weighted operating assessment score includes both Canada and the United States but is primarily weighted to that of Canada.

Fitch believes fiscal, monetary and liquidity programs launched by authorities in Canada, the United States and elsewhere, have materially mitigated downside risk to banks” asset quality, earnings and capitalization. However, Canadian households and non-financial corporates entered the downturn with elevated levels of indebtedness relative to peer countries.

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