UPDATE 2-Royal Bank of Canada quarterly earnings beat expectations

* Q3 EPS C$2.14 vs forecast C$2.11

* Net income up 11 percent to C$3.1 billion (Recasts, adds further details on divisional performances)

TORONTO, Aug 22 (Reuters) - Royal Bank of Canada, the country's biggest lender, reported third-quarter earnings that were ahead of market expectations, helped by strong results from its retail, wealth management and investment banking businesses.

The bank said earnings per share rose by 14 percent to C$2.10 in the quarter ended July 31. Excluding one-off items, earnings per share were C$2.14. Analysts had on average forecast earnings of C$2.11 per share, according to Thomson Reuters I/B/E/S.

Net income increased by 11 percent from a year ago to C$3.1 billion. That included an 8 percent rise in net income at the bank's Canadian retail business to C$1.51 billion, which the bank said was driven by improved margins as a result of higher Canadian interest rates. Canadian banks have benefited from four interest rate hikes by the Bank of Canada since July 2017.

The bank also said it had seen solid growth in sales of Canadian residential mortgages, shrugging off concerns over the impact of tougher mortgage lending rules which were introduced by the country's banking regulator at the start of the year.

Net income at the bank's capital markets business rose by 14 percent, helped in part by benefits from U.S. tax reforms, and net income at its wealth management business rose 19 percent, with strong equity markets enabling the bank to collect higher fees.

Those performances offset a 13 percent decline in net income at the bank's investor & treasury services division and a 2 percent fall in net income at its insurance business.

The bank reported a quarterly dividend increase of 4 percent to C$0.98 per share.

RBC is the first Canadian bank to report third-quarter earnings. Canadian Imperial Bank of Commerce is due to report on Thursday followed by Toronto-Dominion Bank, Bank of Nova Scotia and Bank of Montreal next week. (Reporting by Matt Scuffham Editing by Edmund Blair and David Evans)