Royal Bank Q4 net income rises 16% to $1.6 billion

On a cash basis, earnings were $1.11, beating analyst expectations of 98 cents per share, according to a poll by Thomson Reuters.

Total revenue held relatively steady at $6.8 billion from $6.78 billion.

President and CEO Gord Nixon told analysts on a conference call that the bank benefited from improvement in its Canadian banking division, wealth management and insurance and strong results in corporate and investment banking.

However, he also pointed to weakness in the capital markets division which faced a 25% decline in profit to $278 million on “significantly lower” results from its fixed income trading, affected partly by weakness in the European economy.

“Our global fixed income business continued to be impacted by challenging markets,” Nixon said.

“We did, however, take steps to reduce risk and scale of the business in response to a contraction in this market and we’re already seeing a benefits in this business from these actions.”

“When there is more clarity around European sovereign debt issues and the state of the global economy, we believe improved market conditions will result in a more stable trading environment,” he added.

For the year, Royal Bank earned a record $6.7 billion from its continuing operations, while total net income dropped to $4.85 billion from $5.22 billion in 2010. Revenue grew to $27.43 billion from $26.08 billion.

Its shares ran up $1.77 or 3.8% to $48.80 in morning trading on the Toronto Stock Exchanged.

In October, Luxembourg Finance Minister Luc Frieden told a news conference that Canada’s biggest bank was in talks to acquire the remaining stake of its joint venture with Dexia, the Franco-Belgian lender that had to be bailed out by the government last month.

While Frieden said that the discussions were in a “very advanced stage” a Royal Bank representative declined to comment and an agreement has yet to materialize.

The company is equally owned by Royal Bank and Dexia and provides institutional investors a range of products and services — from fund and pension administration to securities lending and shareholder services.

Royal Bank operates under the RBC Bank banner in the U.S., with more than 400 branches throughout North Carolina, South Carolina, Virginia, Georgia, Florida and Alabama.

The banks were formerly part of the Centura and other brands that were acquired by Royal starting a decade ago. However, the Canadian bank’s rapid expansion struck a major hurdle when the U.S. housing bubble burst and hit mortgage markets hard in southern U.S. states where the former Centura bank operated.

Royal Bank is the country’s largest bank by assets and market capitalization, and has 77,000 employees serving more than 18 million clients. The bank has operations across North America and 52 other countries.