* Adj profit C$1.31/share vs Street view C$1.18
* Retail lending, trading drive big profit gain
* Bank surprises with 5 pct dividend hike
TORONTO, Aug 30 (Reuters) - Royal Bank of Canada profit rose 73 percent in the fiscal third quarter, topping estimates on the back of higher loan volumes and fixed income trading results, prompting the bank to unexpectedly raise its quarterly dividend.
RBC, Canada's largest bank, said on Thursday it earned C$2.2 billion, or C$1.47 a share, in the May-July period. That compared with a year-earlier profit of C$1.3 billion, or 83 Canadian cents a share, when the bank took a big charge related to the sale of its U.S. bank.
On a continuing operations basis, which excludes results related to assets sold off over the past year, profit rose 18 percent to C$1.8 billion.
The bank raised its quarterly dividend by 5 percent to 60 Canadian cents a share, making it the fourth Canadian bank to raise its dividend this quarter.
Excluding one-time items, the bank earned C$1.31 a share in the quarter, while analysts had expected C$1.18, according to Thomson Reuters I/B/E/S.
Canadian banking income rose to a record C$1.1 billion from C$888 million A year earlier, helped by strong volume growth in deposits, mortgages and other loans.
Capital markets income, which includes investment banking, trading and advisory fees, leapt to C$486 million from C$259 million, driven by higher fixed income trading and client growth in the bank's lending and loan syndication businesses.