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File photo of Royal Bank of Canada (RBC) CEO Gordon Nixon.

MARK BLINCH/REUTERS

Royal Bank of Canada CEO Gord Nixon says a slowdown in the Canadian real estate market is affecting mortgage lending but the softness is not a crisis since he expects the country's housing market will remain solid.

The head of Canada's largest bank told a RBC banking conference Tuesday that he expects the bank's consumer lending growth will slow to mid single digits but it should see an increase in commercial loans.

Mr. Nixon said the bank has relatively small exposure to the condominium market and has requirements that protect it from troubled lenders.

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However, he said there would be an impact on the broader economy from a significant decline in the real estate market.

Faced with a continuing low margin environment, he said the bank will continue to focus on containing costs.

While he's confident with most parts of the bank's businesses, Mr. Nixon said it will focus on improving its Caribbean operations which he said have been underperforming.

Bank of Montreal CEO Bill Downe told the conference the bank deliberately curtailed its exposure to the Canadian condo construction market after watching some of the problems surface in the United States in 2007 and 2008.

Mr. Downe expects the overall U.S. housing market will show considerable strength this spring which will stimulate commercial loans.

After a strong fourth quarter with U.S. mortgages, he's anticipating that the American economy will be much stronger this year.

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