TORONTO, Aug 28 (Reuters) - Royal Bank of Canada ( RY )

executives on Wednesday said they were cautious about the impact

economic uncertainties would have on consumers after the

country's No. 1 lender surpassed quarterly profit estimates that

pushed shares higher.

CEO Dave McKay told analysts the caution came amid

uncertainty on the pace of interest rate cuts that could affect

consumers repricing their mortgages next year and the bank's net

interest income as deposit costs rise.

"We are trying to express it's uncertain and it's volatile

... there are some unknowns out there that we're trying to

manage, but we feel we can manage them quite well," McKay said.

"It's hard to see exactly how fast rates come down and it

impacts consumers, but we wanted to be just a little bit

cautious there."

Bank of Canada has cut its interest rates this year, with

money markets expecting a couple more later this year, while the

U.S. Federal Reserve is expected to begin its cuts later this

year.

While low interest rates reduce the burden for mortgage

owners, banks will have to spend more to retain deposits from

consumers as they move their money to investments that could pay

more. That in turn, could hurt margins, while the banks continue

to set aside funds to shield against bad loans.

Third quarter results were also powered by a 17% rise in

earnings at RBC's personal and commercial banking segment to

C$2.49 billion ($1.85 billion), of which C$198 million came from

its C$13.5 billion acquisition of HSBC's domestic operations.

Canada's biggest bank by market capitalisation, RBC has

moved to rejig its upper ranks and change its reporting segments

while absorbing HSBC's 780,000 clients and C$71 billion loan

book in the country.

"Royal reported a standout quarter ... (its) earnings are

gaining the lift of a full quarter's inclusion from HSBC,"

Jefferies analyst John Aiken wrote.

The lender's shares rose 2.6%.

A resurgence in dealmaking activity amid expectations of a

soft landing drove a 23% jump in net income at RBC's capital

market business.

Smaller peer National Bank of Canada ( NTIOF ) also reported

better-than-expected quarterly earnings, helped by a smaller

loan-loss provision for the quarter and growth at its capital

markets unit. Shares were up about 5%.

The Montreal-based lender is also focusing on growth at

home, expanding from Canada's east coast to west coast through

its C$2.5 billion acquisition of Canadian Western Bank ( CWESF ).

The deal is awaiting regulatory approval.

The results are in contrast with others from Canada's big

five banks that have reported so far, which were dragged down by

credit pressures or provisions for penalties related to U.S.

investigations.

RBC's net interest income (NII) - the difference between

what a bank earns on loans and pays out on deposits - rose

16.5%.

Provisions for credit losses came in at C$659 million,

compared with analysts' estimate of C$903 million, according to

LSEG data.

On a per share basis, the bank earned C$3.26 compared with

the average analyst estimate of C$2.95.

National Bank's earnings of C$2.68 per share were more than

the expected C$2.49 per share.

($1 = 1.3457 Canadian dollars)