The Royal Bank's Toronto headquarters are shown in this file photo. (Canadian Press)

Royal Bank of Canada had a $1.3-billion profit in its second quarter, much better than in the same period last year but below analyst estimates.

On a diluted, per-share basis, the bank's net income was 88 cents. Cash earnings per share were 96 cents.

Analysts had been expecting $1.08 per share.

Revenue was $6.97 billion, up $200 million from the second quarter of 2009 but about $100 million below analyst estimates compiled by Thomson Reuters.

Royal said the strength of the Canadian dollar had a negative impact on both its profit and revenue, especially in capital markets and wealth management.

The bank's U.S. retail operations did not fare as well, posting a $27-million loss, compared to a $1.1 billion loss a year earlier. That large loss was mainly due to a $1 billion impairment charge.

"We're very comfortable with our mix of business and the relative proportionate contribution of our capital markets businesses," CEO Gord Nixon said.

RBC's profit was still a big improvement on the $50-million loss it reported a year ago, when it recorded a $1-billion impairment of goodwill assets.

The bank hopes to expand the presence of its wealth management division, it said Thursday.

Nixon also said the bank sees opportunity to expand in its core Canadian retail unit, which is generally perceived to be saturated and static.

"We think there are ways that we can invest capital in these businesses either through business growth or acquisition that will allow us to continue to build on our platform," he said.

With files from The Canadian Press