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File photo of a Royal Bank of Canada branch in Old Montreal.

Ryan Remiorz/The CANADIAN PRESS

Even after a banner year when each of its major businesses reported record annual profits, Royal Bank of Canada is convinced it can continue to grow at a fast clip.

Despite industry headwinds, such as persistently low interest rates, RBC believes it is diversified enough to keep growing its bottom line by 7 per cent annually. The bank's profit climbed 8 per cent in the past fiscal year.

Wealth management will be key to this expansion. Although the unit's profit already jumped 22 per cent in 2014, chief executive officer Dave McKay thinks there is much more money to be made. "Investment and savings products are expected to grow three times faster than credit over the next decade," he said on a conference call Wednesday.

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Generating additional growth is a particularly tough task for RBC because the bank has already performed so well. The lender reported its sixth successive profit of more than $2-billion in the fourth quarter, and investors have come to love dividends hikes such as the 12-per-cent jump during the fiscal year.

But RBC believes it is well prepared for the fundamental shifts in the market, particularly the structural switch from consumer borrowing to savings and investment.

"As expected, we saw consumer lending moderate following many years of strong credit growth," Mr. McKay said on the call, "but we've been planning for this shift for some time. In fact, we spent the last decade enhancing our suite of savings and investment solutions and increasing the number of investment professionals."

Although he expects the bank's Canadian operations to expand across all three levels of clients – consumer, commercial and corporate – he is particularly keen on what could transpire in the U.S. "We see a very strong U.S. economy that will help drive Canada through exports. We're well positioned in the U.S. in our capital markets business and in our wealth business to capitalize on that growth," Mr. McKay said, echoing the beliefs of Bank of Montreal, which reported a day earlier.

RBC's recent success has come with some hiccups. The bank's capital markets arm saw its profit tumble in the fourth quarter, largely owing to volatility in bond markets that sent revenue from interest rate and credit trading down 70 per cent from a year earlier.

The bank also incurred a $105-million charge to the value of its derivatives portfolio in line with new global standards – BMO faced a similar expense – as well as $75-million in lower revenue and costs associated with exiting some proprietary trading strategies.

After months of silence, RBC finally announced plans for its proprietary trading arm. To comply with the Volcker Rule, which bans banks from engaging in most forms of proprietary trading (trading for their own benefit, rather than for commissions) in the U.S., RBC exited roughly half of its "prop" positions last quarter – a move that came just as credit markets went haywire, leading to an "unusual" number of days with trading losses, according to chief risk officer Mark Hughes.

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RBC made $2.3-billion in the fourth quarter, up 11 per cent from the previous year. The earnings amounted to $1.59 a share, in line with analyst expectations. For the whole year, profit topped $9-billion for the first time.

Although loan growth has cooled, RBC's personal and commercial banking arm continues to churn out encouraging results. The unit's $1.2-billion quarterly profit came in 11 per cent higher than the same period a year earlier, boosted by favourable accounting adjustments and better fees. Revenue from cards and payment solutions, for instance, jumped 9 per cent.

Much like its peers, RBC was buoyed this year by wealth management and capital markets, as hot markets propelled companies to finance and do deals, and higher equity values helped asset managers earn more fees.

Recently, RBC suggested it was looking to retool to rein in costs and better allocate its capital. In November, the bank announced plans to refocus its wealth management arm and cut jobs by parting ways with the division's Caribbean business and launching a strategic review of its RBC Suisse operation.

The changes will also affect some private banking groups in Canada and the United States that have an international focus. RBC incurred $27-million worth of restructuring costs related to its U.S. and international wealth management businesses in the fourth quarter.

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