TORONTO - The Royal Bank (TSX:RY) reported Thursday a record annual profit for its latest year, including $1.9 billion in the fourth quarter, powered by its personal banking business.

The first of Canada's big banks to report its fourth-quarter results said personal and commercial banking business earnings topped $1 billion for the quarter.

Chief executive Gord Nixon said the bank would use its size to continue to grow despite expectations for the pace to slow.

"While we anticipate that the strong growth in consumer lending that we experienced this year will moderate, we continue to have good momentum in the higher margin commercial business," he said.

"Overall we believe that we can continue to achieve volume growth at a 25 per cent premium to the market."

The housing market started to cool in the summer after changes by the federal government tightened the lending rules for home buyers.

Consumer borrowing has also been stretched as personal debt levels have reached record levels, a key concern raised by both Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney.

However Royal Bank suggested its loan portfolio appears strong.

Morten Friis, the bank's chief risk officer, said even if interest rates rise or if unemployment rates jump, the bank does not expect a significant change.

"While we see some weakening in the housing market we do not for see the recent cooling as a sign of a U.S.-style downturn," he said.

The quarterly profit at the bank amounted to $1.25 per diluted share compared with a profit of $1.57 billion or in the fourth quarter of 2011.

Royal Bank reported a adjusted profit of 1.27 per diluted share compared with analyst expectations of $1.26 per share.

Total revenue amounted to $7.5 billion, up from $6.7 billion for the quarter.

Nixon says the company had solid earnings from most of its businesses including Canadian banking — which contributed more than $1 billion of earnings during the quarter.

"Looking ahead to 2013, there's no question that financial services companies will continue to face headwinds," Nixon said.

"In addition to regulatory changes, I believe the economic headwinds will continue until there is more improvement in the global economy and we see resolutions to both the European sovereign debt issues as well as the U.S. issues, particularly the imminent fiscal cliff situation."

Personal and commercial banking earned $1.03 billion in the quarter, up from $947 million a year ago, while the bank's wealth management business earned $207 million, up from $179 million.

Royal Bank's insurance arm earned $194 million, down from $200 million a year ago, while the capital markets business earned $410 million, up from $125 million.

The bank increased its provisions for credit losses in the fourth quarter to $362 million, up $86 million from last year.

It attributed the increased provisions to a single account at its RBC Capital wholesale division as well as business lending in its Canadian banking business.

For the full-year ended Oct. 31, Royal Bank earned $7.5 billion or $4.93 per diluted share, up from $6.4 billion or $4.19 per diluted share in 2011.

On an adjusted basis, Royal Bank earned $5 per diluted share compared with expectations of $4.99 per diluted share.

Annual revenue grew to $29.8 billion, up from $27.6 billion.

Royal Bank shares were up 42 cents at $58.77 on the Toronto Stock Exchange on Thursday.

Earlier on HuffPost:

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