(Bloomberg) -- The debt-trading malaise that hurt U.S. lenders last quarter has extended north of the border, though Royal Bank of Canada’s equities traders helped soften the blow.

The company saw a 12 percent slump in trading revenue from fixed income, currencies and commodities in the three months through January, advancing the trend that affected U.S. banks including JPMorgan Chase & Co. and Citigroup Inc. in the fourth quarter. The decline was countered by a 47 percent surge in equities trading. Investment banking fees at Royal Bank’s RBC Capital Markets division were down 36 percent, contributing to lower earnings in the investment-banking business.

Royal Bank, Canada’s second-largest lender by assets, posted fiscal first-quarter earnings that matched analysts’ expectations.

Key Insights

  • Royal Bank is the first Canadian lender to report first-quarter results. Canada’s six biggest lenders are expected to post earnings growth of 6 percent for the first quarter, the median of estimates compiled by Bloomberg Intelligence.
  • Chief Executive Officer David McKay vowed last month to do better on domestic mortgages after what he called a couple years of disappointing performance. He need not worry: Royal Bank, Canada’s largest mortgage lender, had C$250.2 billion of home loans as of Jan. 31, up 4.9 percent from a year earlier even as residential-mortgage growth has shrunk to a 17-year low in Canada.
  • Royal Bank’s profit growth was lifted by gains in personal and commercial banking and insurance, countering the 13 percent decline in RBC Capital Markets and a drop in investor and treasury services.
  • Wealth management earnings were unchanged from a year earlier. The company’s wealth business includes Los Angeles-based City National Bank, which is now being led by Kelly Coffey, who joined Hollywood’s “bank to the stars” earlier this month after five years as CEO of JPMorgan’s U.S. private-banking unit.

Market Reaction

  • Royal Bank’s stock is little changed in the 12 months through Thursday, on par with the eight-company S&P/TSX Commercial Banks Index.

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  • Fiscal first-quarter net income rose 5.3 percent to C$3.17 billion, or C$2.15 a share, from C$3.01 billion, or C$2.01, a year earlier, Royal Bank said Friday in a statement. Adjusted per-share earnings were C$2.19, matching the average estimate of 12 analysts in a Bloomberg survey.
  • Royal Bank raised its per-share quarterly dividend 4.1 percent to C$1.02.
  • Read more about Royal Bank’s quarterly results here.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, ;David Scanlan at dscanlan@bloomberg.net, Daniel Taub, Dan Reichl

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