(Bloomberg) -- Royal Bank of Canada is getting a lift from its capital-markets business, fueled by surging equity markets and record merger activity in its home market.

• Fiscal second-quarter net income from Royal Bank’s capital-markets unit rose 10-fold to C$1.07 billion ($885 million), helped by investment banking. Overall profit topped analysts’ estimates.

Key Insights

• Royal Bank has been one of the more conservative banks in terms of setting aside capital to protect itself against potential loan losses. The lender’s common equity tier 1 capital ratio was the second-highest of Canada’s six largest banks at the end of the first quarter. The bank set released C$96 million in loan-loss provisions in the second quarter. Analysts estimated C$275.6 million in set-asides.
• The rising market has also boosted Royal Bank’s wealth-management business. Profit in the unit rose 63% to C$691 million, helped by gains in both Canada and the U.S.
• Net income from Royal Bank’s personal and commercial banking unit more than tripled to C$1.91 billion, driven by the strength of the Canadian mortgage market.

Market Reaction

• Royal Bank shares have advanced 19% this year, compared with a 23% gain for the S&P/TSX Commercial Banks Index.

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• Net income rose 171% to C$4.02 billion, or C$2.76 a share, in the three months through April. Excluding some items, profit was C$2.79 a share. Analysts estimated C$2.51, on average.
• Click here for more on Royal Bank of Canada’s second-quarter results.

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