(Bloomberg) -- Royal Bank of Canada said it plans to cut as much as 2% of its full-time equivalent staff in the coming quarter after a surge in expenses weighed on third-quarter results. 

Non-interest expenses climbed 23% to C$7.86 billion ($5.8 billion) for the fiscal third quarter, compared with the C$7.31 billion average of analyst estimates compiled by Bloomberg. Royal Bank’s moves to trim headcount will come after it ended the quarter with 93,753 employees after it shed about 645 jobs in the period.

“The FTE reductions are a component of an overall expense reduction exercise that’s much more significant,” Chief Executive Officer Dave McKay said on a conference call with investors Thursday. “It is part of a bigger program and a more ambitious program that you’ll hear more from us over the coming quarter.”

RBC and its rivals have turned to trimming their workforces as a way to cut costs while central-bank activity around the world boosts interest expenses and crimps margins industrywide.

Royal Bank’s wealth-management division bore the brunt of the reductions in the second quarter, according to filings. The unit’s headcount plummeted by almost 1,300 in the quarter, when the company sold a European asset-servicing business to a joint venture of Credit Agricole SA and Banco Santander SA. That countered a 667-person increase in Royal Bank’s capital-markets division.

The company’s shares rose 1.6% to C$122.18 at 9:36 a.m. in Toronto trading. They’ve slumped 3.8% this year, compared with a 4.1% decline for the S&P/TSX Commercial Banks Index.

Royal Bank is planning to use attrition as well as “targeted reductions” in its initial plans to further trim headcount.

“Obviously, there’s going to be some severance costs that comes with that in the fourth quarter,” Chief Financial Officer Nadine Ahn said on the call. “We are going to look to slow down significantly our growth in NIE into next year,” she said, referring to noninterest expenses.

A jump in earnings from the firm’s traders and investment bankers helped boost firmwide net income 8.2% to C$3.87 billion for the three months through July, and per-share earnings beat estimates. Net income from the firm’s capital-markets division soared 57% to C$938 million, topping the C$805 million average of analysts’ estimates. 

Trading desks in recent weeks have benefited from an increase in client activity as investors wrestle with the impacts of rising interest rates globally. Investment bankers, too, are seeing a pickup in deals compared with the doldrums of a year ago.

At Royal Bank, revenue from the firm’s trading of interest-rate and credit products helped counter continued weakness in equities, foreign-exchange and commodities trading. 

Canada’s largest bank has been on a dealmaking spree. Earlier this year, the Toronto-based firm announced it would acquire HSBC Holdings Plc’s Canadian unit for C$13.5 billion to extend its lead in domestic retail banking. Royal Bank has warned the acquisitions would boost costs in the coming quarters.

(Updates with details of job cuts, executive comments, shares starting in second paragraph.)

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