Royal Bank of Canada (NYSE:RY) will release its quarterly report on Thursday, and for bank investors who've looked for greater stability than is available from the U.S., the Canadian bank has been a reasonable bet for modest but steady returns in recent years. Yet with some economists pointing to signs of a possible housing bubble in Canada, are RBC earnings potentially vulnerable to a Northern version replay of the financial crisis?

For the most part, investors have looked at the Canadian banking system as a model for other countries to follow, with RBC and other banks having avoided the massive housing bets that U.S. banks made during the housing boom -- and which subsequently came back to bite them when the housing market crashed. With the resource-dependent economy now struggling from low prices on commodities like gold and other metals, the big question is whether Canada and its banking system will stay strong going forward. Let's take an early look at what's been happening with Royal Bank of Canada over the past quarter and what we're likely to see in its report.

Stats on Royal Bank of Canada

Analyst EPS Estimate

$1.38

Change From Year-Ago EPS

5.3%

Revenue Estimate

$7.93 billion

Change From Year-Ago Revenue

2.2%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Can RBC earnings keep growing?
Analysts have been optimistic in recent months about the long-term prospects for RBC earnings. Although they've kept their July quarter estimates stable, they've added a nickel per share to their fiscal 2014 year projections. The stock, meanwhile, has held its own, climbing about 1% since late May.

Royal Bank of Canada actually started the quarter off on a disappointing note, with its April-quarter results having largely disappointed investors. Even though the bank fell short of analysts' estimates for earnings, it showed double-digit percentage figures for returns on equity and adjusted earnings growth from the year-ago quarter. Similar results from Bank of Nova Scotia (NYSE:BNS) and Bank of Montreal (NYSE:BMO) showed that investors aren't willing to forgive Canadian banks that don't outpace expectations, perhaps because their shares are relatively expensive compared to their American counterparts.

But one interesting way in which RBC has sought to stand out from the crowd comes from its treatment of high-frequency trading. Rather than embracing the profitable practice, RBC has actually imposed restrictions on high-frequency trading among its customers, seeking to attract a clientele that's interested in avoiding being victimized by the practice. The strategy has helped RBC grow the size of its American operations, and in June, it said that it's looking to partner with other Canadian banks to build an exchange that's less conducive to high-frequency trading. Such a long-term perspective is admirable and could result in more business down the road.

The big question facing both RBC and most other Canadian banks is whether they can live up to high expectations. For its part, ScotiaBank fell 1.5% yesterday after its report, which featured a 3% dividend boost and earnings that matched expectations on higher revenue than expected. Yet without boosted guidance, investors were disappointed with the results. On the other hand, Bank of Montreal climbed as it successfully topped earnings estimates, with adjusted earnings up 13% year over year, and with a boost in returns on equity helping send the stock higher.

In the RBC earnings report, watch to see whether the bank can live up to what shareholders want to see from its operations. Anything short of a strong performance could send the stock downward even if earnings continue to grow.

Click here to add Royal Bank of Canada to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends The Bank of Nova Scotia. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.