Royal Bank of Canada reported a rise in fourth-quarter profit on Thursday, as strong performance from its corporate and investment banking divisions offset the impact of higher default provisions.

A pick-up in trading has helped the capital markets division of Canada’s largest bank. Net income from that business rose 36% to C$987 million, driven by strength in corporate and investment banking, the bank said.

However, it increased its provisions for credit losses (PCL) as the deteriorating economic outlook encouraged it to be cautious. The bank’s provisions for loan losses rose to C$720 million from C$381 million a year ago.

The Canadian economy is on the brink of recession, underscoring the impact of the central bank’s aggressive interest rate hikes.

RBC also strengthened the liquidity of its American subsidiary City National Bank. In a report filed with regulators last month, City National said RBC had injected about $2.95 billion into the bank this year.

The bank reported net income of 4.13 billion Canadian dollars (3.04 billion euros), or 2.90 Canadian dollars per share, for the quarter ended October 31, up from 3.88 billion Canadian dollars, or 2.74 Canadian dollars Dollars per share in the previous year.

($1 = 1.3603 Canadian dollars)