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Royal Bank of Canada saw a 12% jump in its fourth-quarter net income, to $2.84 billion, which pushed its net income for the full 2017 year to a record $11.47 billion.

RBC’s results for the three-month period ended Oct. 31 were driven by double-digit increases, year-on-year, in wealth management, personal and commercial banking, and capital markets.

“We had a great year in 2017, with record earnings of $11.5 billion, driven by robust growth across our businesses,” RBC president and CEO Dave McKay said in a statement Wednesday.

Canada’s biggest lender by market capitalization on Wednesday reported $10.52 billion in revenue for the quarter, up 12.3% from $9.36 billion a year earlier.

The bank’s profit for the three-month period ended Oct. 31 amounted to $1.88 per diluted share, up 14% from $1.65 during the same period in 2016.

That was helped by its personal and commercial banking division, which saw net income rise 10% to $1.4 billion.

RBC’s wealth management and capital markets divisions saw even bigger bumps in the fourth quarter, with net income of $491 million and $584 million, up 24% and 21%, respectively, from the same period in the previous year.

In its earnings release, the bank says wealth management results were “driven by growth in average fee-based client assets, reflecting positive equity market performance and higher net interest income, mainly in the U.S.”

Higher net interest income was the result of “rising U.S. short-term interest rates and volume growth,” says the release. “These factors were partially offset by higher variable compensation on improved results and increased costs in support of business growth.”

RBC also reported $234 million in provisions for credit losses, or money set aside for bad loans, compared with $358 million a year earlier.

Its key measure of financial health, called the Common Equity Tier 1 ratio (CET1), was 10.9%, up 10 basis points from a year ago but unchanged from the third quarter.

Barclays analyst John Aiken said RBC beat expectations in part due to a smaller amount of money set aside for bad loans.

“If the better-than-expected corporate provisions and actuarial reserve release is taken into account, [RBC] notionally missed expectations,” he said in a note to clients Wednesday.

“We believe that the underlying business growth is evident, particularly in domestic lending and [assets under management] growth in wealth management; however, spending and other factors continue to mute the impact to the bottom line. ”

For its full financial year, Royal Bank reported record net income of $11.47 billion, up more than $1 billion or 10% from $10.46 billion in 2016.

That annual profit amounted to $7.56 per diluted share, up 12% from $6.78 in the previous year.

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Originally published on Advisor.ca
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