UPDATE 4-Royal Bank of Canada profit tops estimates; watching energy borrowers

Wed Dec 2, 2015 3:37pm EST
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(Adds interview with CFO)

By John Tilak

TORONTO Dec 2 (Reuters) - Royal Bank of Canada posted an 11 percent rise in fourth-quarter profit that topped market expectations on Wednesday as gains in retail banking and capital markets more than offset bad loans in the oil and gas sector.

For the year, the lender, Canada's most valuable company by market capitalization, recorded C$10.03 billion ($7.49 billion) in earnings, the first time a Canadian company has topped C$10 billion in a fiscal year.

Shares of RBC rose in the morning session but were down slightly in afternoon trading.

Canadian banks have managed to largely shrug off a soft domestic economy, concerns about the housing market and fallout from an oil price slump.

But Barclays analyst John Aiken cautioned he expects RBC's domestic operations to come under pressure next year because of a weak outlook for the Canadian economy.

"When we look into 2016, it doesn't dissuade our thesis that there will be ongoing challenges," he said.

The oil price slump has had a mixed effect on Canadian bank results. Bank of Nova Scotia reported a rise in bad energy-sector loans for the quarter, while the number was essentially flat for Bank of Montreal.   Continued...