Dec. 5 (Bloomberg) -- Royal Bank of Canada scrapped its annual earnings forecast and said profit fell for the fourth straight quarter, the longest streak of declines in nine years, on writedowns and rising loan losses.

Net income for the fourth quarter fell 15 percent to C$1.12 billion ($870 million), or 81 cents a share, from C$1.32 billion, or C$1.01, a year earlier, the Toronto-based bank said today in a statement. Profit matched estimates released Nov. 24.

Royal Bank joins Bank of Montreal, Toronto-Dominion Bank and National Bank of Canada in forgoing annual profit targets, citing economic uncertainty amid the worst financial crisis since the Great Depression. Bank of Nova Scotia is the only Canadian lender to set specific targets for 2009.

“The glory days for the banks are over,” said John Kinsey, who helps oversee about C$1 billion for Caldwell Securities Ltd. in Toronto. “The key now will be the Canadian economy and how deep and broad the recession becomes, and how long it’s going to last.”

Royal Bank fell 20 cents to C$36.40 at 4:10 p.m. in Toronto Stock Exchange trading. It has fallen 28 percent this year, compared with a 33 percent decline for the 9-company Standard & Poor’s/TSX Banks Index.

Canadian consumer banking may slow next year because of weakening job and housing markets, Royal Bank said. The U.S. economy will shrink by 1 percent next year as deteriorating markets and volatility dampen spending, causing a recession to deepen, the bank predicted.

More Writedowns

Royal Bank recorded C$1 billion in writedowns tied to U.S. subprime mortgages and debt investments, reducing earnings for the period ended Oct. 31 by C$362 million. Canadian banks reported C$4.57 billion in writedowns in the quarter, adding to C$11.6 billion taken in the past year.

The world’s banks and brokers have taken almost $720 billion in credit losses and writedowns since the collapse of the U.S. subprime market last year, according to Bloomberg data.

Royal Bank set aside C$619 million for bad loans, up from C$263 million a year earlier. Revenue fell 9.7 percent to C$5.07 billion.

Consumer banking profit in Canada fell 15 percent to C$676 million from a year ago, when the company had a C$269 million gain related to Visa Inc. International consumer banking, which includes Raleigh, North Carolina-based RBC Bank, had a loss of C$206 million on rising loan defaults among homebuilders and higher provisions.

Loan Losses

“There will be a recession in the U.S. and it will impact our U.S. business,” Chief Operating Officer Barbara Stymiest said in an interview. “We are seeing increasing loan losses in both our retail books and our commercial books in the U.S.”

Earnings from the RBC Capital Markets investment-banking unit more than tripled to C$584 million, led by fixed-income and foreign-exchange businesses. Gains from credit-derivative contracts and a C$540 million pretax reduction in money originally set aside for claims related to failed energy trader Enron Corp. also helped earnings.

Wealth management fell 36 percent to C$116 million as investors fled markets amid plunging stock prices. Insurance fell 42 percent to C$59 million from a year earlier.

Royal Bank said it missed four of its five financial goals for 2008. The bank said it’s replacing annual targets with “medium-term” objectives over three-to-five years. Those new targets include earnings-per-share growth of 7 percent.

Optimistic Estimates

“Street estimates of C$4.35 for 2009 look particularly optimistic,” BMO Capital Markets analyst Ian de Verteuil wrote in a note. “Even our estimate of C$4.20 appears too high and is under review.”

Royal Bank is the last of Canada’s biggest banks to report results. Yesterday, Canadian Imperial Bank of Commerce said net income fell 51 percent to C$436 million, while Toronto-Dominion Bank, the second-biggest lender, said profit fell 7.3 percent to C$1.01 billion. National Bank of Canada, the sixth-biggest bank, reported profit of C$70 million, compared with a year-earlier loss of C$175 million.

Bank of Nova Scotia said Dec. 2 that earnings dropped 67 percent to C$315 million. Last week, Bank of Montreal said profit climbed 24 percent to C$560 million after it had year-earlier trading losses and credit writedowns.

Laurentian Bank of Canada, the country’s seventh-biggest bank, said today that fourth-quarter profit dropped 9.6 percent to C$27.3 million, or C$1.02 a share. The Montreal-based bank expects to earn C$3.70 a share to C$4.40 a share in fiscal 2009, compared with C$3.80 a share this year.

“Laurentian Bank closed out a banner 2008 (we have not been able to write that many times in the last week),” Merrill Lynch & Co. analyst Sumit Malhotra said in a note.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

Last Updated: December 5, 2008 16:12 EST