Royal Bank of Canada on Thursday posted a rise in third-quarter profit as a high-interest rate environment boosted its lending business.

The bank's profit came in at C$3.81 billion, or C$2.73 per share, in the three months ended July 31, compared with C$3.52 billion ($2.60 billion), or C$2.51 per share, a year earlier.

The Bank of Canada hiked its overnight rate to a 22-year high in June and again by 25 basis points in July.

Net income in RBC's personal and commercial banking unit rose 5% in the quarter.

While lenders have benefited from a sharp rise in interest rates, that has also raised the risks of loan defaults, prompting banks to increase their buffers for credit-loss provisions.

RBC set aside C$616 million as provision for credit losses.

(Reporting by Sri Hari N S in Bengaluru; Editing by Shilpi Majumdar)