Royal Bank of Canada chief executive David McKay expressed optimism in the economic recovery from Covid-19 on Wednesday, amid a hot housing market and a quarter of record earnings from capital markets.

“As we approach a year into the global pandemic, we are encouraged by both the number and efficacy of vaccines,” McKay told analysts on a conference call on Wednesday.

“This — in addition to significant pent-up demand, rising prospects of further stimulus programs, expectations of a gradual easing of lockdown measures and pledges of continued low interest rates — to support the sustained economic recovery,”

Executives also pointed to mortgages and the stock markets as factors that boosted the bank’s outlook and profit.

“Canadian housing activity also remains elevated,” said McKay, pointing to an increase in construction permits. “We expect a lack of supply, low interest rates, elevated savings rates, continuing work from home arrangements, and a potential resumption of immigration to underpin continued demand.”

Meanwhile, chief financial officer Rod Bolger said RBC’s Direct Investing saw average trading volumes from individual investors rise 200% compared with the same period last year, and that personal chequing accounts grew by more than 30%.

But Bolger noted that the pandemic has made it harder to grow RBC’s commercial and credit card businesses. Neil McLaughlin, the bank’s head of personal and commercial banking, also said that auto lending was down dramatically last year.

“Travel is our biggest category and we are just not seeing consumers spending there,” McLaughlin added. “They are paying down debt.”

McLaughlin said that while the lower credit card balances were providing real challenges for the company, he expects the spending to bounce back.

“I think as the economy opens up and entrepreneurs gain confidence, you’ll start to see commercial lending start to come back, hopefully in the back part of the year,” McLaughlin added.

RBC is one of four big Canadian banks so far to report better-than-expected profit growth for the quarter ended Jan. 31 compared with the same period a year ago, before the Covid-19 virus spread was declared a pandemic.

Overall, RBC says it earned net income of $3.85 billion or $2.66 per diluted share for the quarter ended Jan. 31, up from $3.51 billion or $2.40 per diluted share a year earlier. Revenue totalled $12.94 billion, up from $12.84 billion.

On an adjusted basis, RBC says it earned $2.69 per diluted share, up from $2.44 per diluted share a year ago.

Analysts on average had expected an adjusted profit of $2.27 per share, according to financial data firm Refinitiv. Barclays analyst John Aiken said the bank had “strong growth in domestic lending and very impressive results in wealth management,” as well as a “very strong quarter in capital markets.”

RBC, like many of its rivals, reported a decline in provisions for credit losses. In the second quarter last year, RBC significantly hiked reserves amid an expectation for credit losses, “guided by a rapid deterioration of economic indicators, caused by the significant uncertainty around the pandemic,” said Graeme Hepworth, the bank’s chief risk officer.

In the latest quarter, the provisions at RBC amounted to $110 million, down from $419 million in the same quarter last year. But Hepworth added that the bank expects loan delinquencies to increase through the remainder of 2021, as many government support programs are scheduled to conclude this summer.

“Notably, this is the first quarter since the onset of the pandemic we have released reserves in relation to our performing loans,” said Hepworth.

“For context though, this represents less than 4% of the reserves taken during 2020.”