Royal Bank of Canada, after posting record profit in capital markets in the fiscal third quarter, will probably see more gains from advising on mergers and acquisitions, initial public offerings and leveraged financing, Chief Financial Officer Rod Bolger said.

The bank expects “more equity and equity-linked activity for follow-ons as well as IPOs” for companies “that have proven resilient or benefited from some of the trends related to COVID-19,” Bolger said Wednesday in a phone interview. “M&A activity has slowly begun to pick up in recent months as financial markets started showing early signs of improvement, but it’s still expected to remain relatively less active.”

The high-yield market remains “very active” and Bolger expects that to continue, helping the Toronto-based lender’s leveraged-finance business. In other areas of credit, investment-grade activity is expected to moderate “slightly” after the record issuance from what Bolger described as “significant” balance sheet buildup during the pandemic.

Earnings at RBC Capital Markets rose 45 per cent to $949 million in the three months through July, helping Canada’s largest lender by assets post profit that beat analysts’ estimates.

“We saw strong debt and equity underwriting fees, which benefited from low interest rates and elevated equity markets,” Bolger said. “And we also saw some strong IPO activity.”