July 23 (Reuters) - Raymond James Financial RJF.N reported a decline in third-quarter profit on Wednesday, as reduced interest income offset strong performance in its capital markets division.

U.S. banks have faced pressure on interest income as elevated interest rates prompt customers to move cash into higher-yielding alternatives, such as money market funds, in pursuit of better returns.

In the company's private client group unit, assets under administration rose 11% to about $1.57 trillion, while domestic net new assets totaled $11.7 billion for the third quarter ended June 30.

The quarterly net revenue in the private client group unit increased 3% to about $2.49 billion, driven by higher asset management and related administrative fees.

Net interest income and fees from company's Bank Deposit Program with third-party banks for the quarter fell 2.4% to $656 million compared to the same period last year.

Capital markets revenue increased 15% year-on-year to $381 million, while total investment banking revenue climbed 17% to $203 million.

Raymond James Financial's adjusted net income available to common shareholders fell to $449 million, or $2.18 per share, from $508 million, or $2.39 per share, compared to a year earlier.

(Reporting by Prakhar Srivastava in Bengaluru; Editing by Mohammed Safi Shamsi)

((Prakhar.srivastava2@thomsonreuters.com;))