Kicking off the fourth-quarter reporting season with good news, the Royal Bank of Canada (NYSE:RY) (TSE:RY) has reported that profits are up 22 percent on the previous year.

The news of the significant rise in profits for the bank is slightly ahead of analyst’s expectations, and has been helped by a strengthening of fixed-income trading results, as well as volume growth in its domestic banking operations.

Royal Bank of Canada

Royal Bank of Canada (NYSE:RY) (TSE:RY) said the strong results reflected higher interest and non-interest income in improved market conditions. Its results benefited from good volume growth across the businesses, combined with stable margins and positive operating leverage.

The RBC, which Canada’s largest bank by assets, reported earnings of CAN $1.91 billion (US $1.93), equivalent to C$1.25 per share, in its most recent financial quarter. A year earlier the company had earnings of C$1.57 billion, while shares traded at C$1.02.

Adjusted earnings were reported to be at C$1.27 per share – a penny better than Thomson Reuters estimate of C$1.26.

The bank also reported that personal and commercial banking earnings were up by 9 percent, at C$1.03 billion, while wealth-management earnings rose 16 percent. Net income from capital markets also received a boost, more than tripling to reach the figure of C$410.

Loan-loss provisions were reported by the Royal Bank to have increased to C$362 million, up from C$276 million. The bank said this reflects a single account in its wholesale portfolio, and increased provisions in its Canadian personal and business lending portfolios.

The Royal Bank of Canada (NYSE:RY) (TSE:RY) also reported that profits were up by 17 percent this year, hitting a record C$7.5 billion. The bank said that the record breaking results were due to its personal and commercial banking, capital markets, and insurance operations.

Gord Nixon, president and CEO of the company, said “While the financial industry is expected to face headwinds in 2013, we are confident in our ability to weather these challenges given our strong financial and competitive position.”

“Our record earnings from continuing operations of $7.6 billion this year were driven by exceptional growth in Canadian Banking, Capital Markets and Insurance, demonstrating the earnings power of our diversified business model,” said Nixon.

BAML analysts note that in Canadian Banking, the net interest margin was unchanged QoQ at 2.72% due to lower mortgage breakage costs that were offset by the impact of the low rate environment. The efficiency ratio was 44.9%, up from 43.0% last quarter but down from 45.7% YoY (BofAMLe 44.5%). In terms of negative surprises, small business loss rates increased to 1.92% from 1.59% QoQ.