Royal Bank of Canada and Toronto-Dominion Bank, Canada's two biggest banks, posted first-quarter profits that topped analysts' estimates as a rebounding economy boosted fees from consumer lending.

Royal Bank, the country's largest lender, posted record profits of $1.89 billion for the period that ended Jan. 31. Toronto-Dominion's profit rose 19%, to $1.59 billion, and the bank raised its quarterly dividend for the first time in almost three years.

Toronto-Dominion reported that U.S. consumer banking, where the lender operates under the name TD Bank, climbed 77%, to $319.5 million.

Royal Bank said that international banking, which includes RBC Bank in Raleigh, N.C., earned $24 million, its first profit in 11 quarters. Royal Bank has spent almost two years reorganizing RBC Bank as Canadian rivals Bank of Montreal and Toronto-Dominion expanded by buying troubled U.S. lenders.

The six Canadian banks that have reported first-quarter results beat estimates as loan losses fell and consumer lending rose after Canada's economy grew more than economists forecast. Capital markets helped earnings at Royal Bank and others as fees rose from mergers, stock and bond sales.

"All economic indicators are starting to improve," Colleen Johnston, Toronto-Dominion's chief financial officer, said Thursday in an interview. "We're starting to see decent growth in Canada, and we're seeing better strength in the United States as well."

Canada's economy accelerated 3.3% from October to December, on the biggest jump in exports since 2004 and faster consumer spending. Canada has recovered all jobs lost from the recession, driving demand for consumer loans and mortgages at the biggest banks, while reducing loan losses.

"I think this bodes well for the rest of this year," said Ian Nakamoto, the director of research at MacDougall MacDougall & MacTier Inc. "The percentage increases may not be as strong going forward, but there should be improvement."

Royal Bank said Canadian consumer-banking earnings rose 14% on higher loans and deposits and lower loan-loss provisions. The Toronto bank set aside $333.4 million for bad loans, or 32% less than a year earlier.

"While all of the segments reported an increase in contributions, the lift generated in its U.S. retail banking segment is a distinct positive," John Aiken, an analyst at Barclays Capital Markets, wrote Thursday in a note to clients.

Earnings from the RBC Capital Markets investment banking unit rose 7.4%, to C$612 million from a year earlier, as underwriting and advisory fees surged 59%. Trading revenue was $998.3 million. Wealth management rose 1%, to $220.6 million from a year earlier.

Toronto-Dominion said consumer banking profit in Canada surged 26%, to $903.5 million on higher personal and commercial deposits and real estate loans. Canadian consumer lending is at a "sustainable" level, Johnston said.

Investment banking profit at Toronto-Dominion fell 36%, to $236.6 million, on lower fixed-income and credit trading. Asset management, including a stake in TD Ameritrade Holding Corp., rose 26%, to $180.7 million.

"There's been lots of activity ... in terms of raising capital, lots of new issues, lots of security trading," said Tony Demarin, the chief investment officer of BCV Asset Management. "The markets have been active, money's flowing into financial assets."

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