Royal Bank of Canada Janice Fukakusa, Chief Administrative Officer and Chief Financial Officer September 13 th, 2013 All amounts are in Canadian dollars and are based on financial statements prepared in compliance with International Accounting Standard 34 Interim Financial Reporting, unless otherwise noted. Financial information for full year 2010, 2011 and 2012 is presented on a continuing operations basis.
Caution regarding forward-looking statements From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including the safe harbour provisions of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. We may make forward-looking statements in this presentation, in filings with Canadian regulators or the SEC, in reports to shareholders and in other communications. Forward-looking statements in this presentation include, but are not limited to, statements relating to our financial performance objectives, vision and strategic goals. The forward-looking information contained in this presentation is presented for the purpose of assisting the holders of our securities and financial analysts in understanding our financial position and results of operations as at and for the periods ended on the dates presented, and our financial performance objectives, vision and strategic goals, and may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as believe, expect, foresee, forecast, anticipate, intend, estimate, goal, plan and project and similar expressions of future or conditional verbs such as will, may, should, could or would. By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct and that our financial performance objectives, vision and strategic goals will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. These factors many of which are beyond our control and the effects of which can be difficult to predict include: credit, market, liquidity and funding, operational, legal and regulatory compliance, insurance, reputation and strategic risks and other risks discussed in the Risk management and Overview of other risks sections of our 2012 Annual Report and in the Risk management section of our Q3 2013 Report to Shareholders; the impact of changes in laws and regulations, including relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations issued and to be issued thereunder, the Basel Committee on Banking Supervision s global standards for capital and liquidity reform, over-the-counter derivatives reform, the payments system in Canada, consumer protection measures and regulatory reforms in the U.K. and Europe; general business and economic market conditions in Canada, the United States and certain other countries in which we operate, including the effects of the European sovereign debt crisis, and the high levels of Canadian household debt; cybersecurity; the effects of changes in government fiscal, monetary and other policies; the effects of competition in the markets in which we operate; our ability to attract and retain employees; the accuracy and completeness of information concerning our clients and counterparties; judicial or regulatory judgments and legal proceedings; development and integration of our distribution networks; and the impact of environmental issues. We caution that the foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results. When relying on our forwardlooking statements to make decisions with respect to us, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Material economic assumptions underlying the forward looking-statements contained in this presentation are set out in the Overview and outlook section and for each business segment under the heading Outlook and priorities in our 2012 Annual Report, as updated by the Overview section in our Q3 2013 Report to Shareholders. Except as required by law, we do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by us or on our behalf. Additional information about these and other factors can be found in the Risk management and the Overview of other risks sections in our 2012 Annual Report and in the Risk management section of our Q3 2013 Report to Shareholders. Information contained in or otherwise accessible through the websites mentioned does not form part of this presentation. All references in this presentation to websites are inactive textual references and are for your information only. 1
Royal Bank of Canada SECTION I
RBC Among the largest banks globally Canada s largest bank by assets and market capitalization Offices in Canada, United States and 44 other countries ~80,000 full- and part-time employees who serve more than 15 million clients worldwide 226 197 157 North American ranking (1) (Market capitalization, US$ billion) 152 226 226 201 197 188 Global ranking (1,2) (Market capitalization, US$ billion) #5 #11 157 152 132 120 88 80 77 74 69 67 51 40 40 36 31 30 25 104 88 88 85 83 80 77 74 58 Wells Fargo JP Morgan Bank of America Citigroup RBC American Express TD Goldman Sachs US Bancorp Scotiabank Morgan Stanley BMO PNC Financial Bank of NY Mellon State Street CIBC BB&T ICBC Wells Fargo HSBC JP Morgan CCB Bank of America Citigroup ABC Bank of China CBA RBC Westpac Mitsubishi Santander American Exp TD Goldman Itau Unibanco (1) Market data from Bloomberg as at August 22, 2013. (2) ABC: Agriculture Bank of China; CBA: Commonwealth Bank of Australia; CCB: China Construction Bank Corporation; ICBC: Industrial and Commercial Bank of China; and, Santander: Banco Santander, S.A. 3
Strong financial profile Revenue ($ billions) Net Income ($ billions) 26.1 27.6 29.8 22.3 22.9 5.7 7.0 7.6 5.6 6.3 2010* 2011 2012 YTD Q3/2012 YTD Q3/2013 * Based on Canadian GAAP. 2010* 2011 2012 YTD Q3/2012 YTD Q3/2013 * Based on Canadian GAAP. Return on Equity Q3/2013 Basel III Capital ratios All-in basis (1) Common Equity Tier 1 9.2% 16.5% 20.3% 19.5% 19.6% 19.7% Tier 1 Capital Total Capital 11.3% 13.7% Credit ratings (2) 2010* 2011 2012 YTD Q3/2012 YTD Q3/2013 * Based on Canadian GAAP. Moody s S&P Fitch DBRS Aa3 AA- AA AA Stable Stable Stable Stable (1) Capital calculated to include all regulatory adjustments that will be required by 2019 but retaining the phase-out rules for non-qualifying capital. Please refer to the Capital Management section of our Q3 2013 Report to Shareholders for details on Basel III requirements. (2) Based on long-term senior debt ratings. 4
History of delivering value to our shareholders Total shareholder return (TSR) (1) 3 Year 5 Year 10 Year Dividend RBC 12% 11% 12% Peer Avg. 10% 4% 6% Current quarterly dividend: $0.63 YTD payout ratio of 44%, in line with our target of 40-50% Dividend history ($ per share) On August 29, 2013, RBC announced a quarterly dividend increase of $0.04 or 6% to $0.67 per share RBC has increased the dividend 5 times since May 2011, a total increase of 34% CAGR +10.2% $1.44 $1.82 $2.00 $2.00 $2.00 $2.08 $2.28 Share buybacks Repurchased $408 million (6.8 million common shares) as at August 23 rd, 2013 $0.86 $1.01 $1.18 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Maximizing shareholder returns (1) Annualized TSR as at Aug 22, 2013. Based on the global peer group approved by our Board of Directors. For the list of peers, please refer to our 2012 Annual Report. 5
Extending our lead in Canada with selective global growth Strategic goals In Canada, to be the undisputed leader in financial services Globally, to be a leading provider of capital markets, investor and wealth management solutions In targeted markets, to be a leading provider of select financial services complementary to our core strengths Earnings by business segment (1)(2) Latest twelve months ended July 31, 2013 Revenue by geography (1) Latest twelve months ended July 31, 2013 Investor & Treasury Services Capital Markets 21% 4% Insurance 9% Personal & Commercial Banking 55% International 18% U.S. 17% Canada 65% Wealth Management 11% (1) Amounts exclude Corporate Support. For further information, see the Business segment results and Results by geographic segment sections of our Q3 2013 Report to Shareholders. (2) Excluding specified items. These are non-gaap measures. For additional information, please see slide 15 and our Q3 2013 Report to Shareholders. 6
Strong Canadian fundamentals Strong credit rating as a result of fiscal prudence, conservative bank lending practices and solid economy Lowest net debt to GDP ratio among G-7 peers Proactively responded to financial crisis with strong fiscal stimulus and monetary policy #1 for soundness of banks for the 6 th consecutive year (1) Canada lowest net debt of all G7 countries (4) 0.4 Italy 0.9 Japan G7 Real GDP Growth (%) (2) 2000-2012 1.3 Germany 1.3 France Canadian Government Budget Balance (3) ($ billion) 3 6 14 20 8 7 9 1 1.7 U.K. 1.9 U.S. 13 14 10 2.2 4 5 140% Japan x (as a % of nominal GDP, 2012) UK x France x USA x S&P Rating AAA AA+ AA x Germany 100% 75 50% 35 % % A+ Gov Net Debt (% of GDP) -30-9 -6-7 -2-33 -26-26-19-56 Italy x A '95-96 '97-98 '99-00 '01-02 '03-04 '05-06 '07-08 '09-10 '11-12 '13-14F '15-16F '17-18F Canada 1.8 Cda 2013F 2.9 Cda 2014F x Canada BBB+ (1) World Economic Forum, 2013. (2) National statistics offices, RBC Economics Research. (3) Department of Finance Canada, RBC Economics Research (4) S&P, International Monetary Fund (IMF), RBC Economics Research. 7
Business Segments SECTION II
Personal & Commercial Banking Strategic Priorities Building on leading Canadian market positions Extending our sales power in Canada Managing costs and reinvesting for the future Building on strengths in innovation and technology to differentiate the client experience in the Caribbean and U.S. Best Retail Bank in North America (2 nd Year in a row) Awards & Recognition Gold Medal - Shoppers Retail Awards Product Canadian market share (1) Market share Canadian Q3/13 volume growth (2) ($ billions) Rank Consumer lending 23.6% #1 Personal core deposits 20.1% #2 Long-Term Mutual Funds 14.2% #1 Business loans ($0-$250M) 27.8% #1 Business loans ($250M-$25MM) 24.3% #1 Business deposits & investments 26.0% #1 $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 5.8% YoY $31.4 Leading the Industry RBC 4.9% YoY $17.5 Peer Average (1) Market share is calculated using most current data available from OSFI (M4), Investment Funds Institute of Canada (IFIC) and Canadian Bankers Association (CBA). OSFI, IFIC and Consumer Lending and Business Loans CBA data is at May 2013 and May 2012. (2) Volume growth excludes the impact of acquisitions for RBC and RBC s peers (Ally, ING) (3) Peer group consists of TD, CIBC, BMO and BNS. 9
Personal & Commercial Banking Canada Convenience Pillars of Customer Service Advice Cross-selling (Households with transaction accounts, investments and borrowing products) (1) 22% Superior crosssell ability Service Value for Money 15% Awards & Recognition RBC Peer Average Efficiency ratio (%) Visa Infinite Avion (2) #1 in overall satisfaction Winner of the 2013 Innovation in Customer Service Award 49.3% 47.3% 49.8% 49.0% 48.6% Peer Average (3) 45.4% 44.5% #1 Online Bank 6th year in a row 44.5% 44.2% Excluding Ally Canada Acquisition (4) 2010* 2011 2012 Q3/2013 * Based on Canadian GAAP. (1) Canadian Financial Monitor by Ipsos Reid 12,000 Canadian households annually data based on Financial Group for the 12 month period ending March 2013. Peers include: BMO, BNS, CIBC and TD. (2) MLM and Maritz (3) Peers include: BMO, BNS, CIBC and TD. (4) This is a non-gaap measure. For additional information, please see slide 15 and our Q3 2013 Report to Shareholders. 10
Insurance Strategic Priorities Direct-to-Consumer Focus Improving distribution efficiency Deepening client relationships Making it easier for clients to do business with us Pursuing select international opportunities to grow our reinsurance business Retail Insurance Stores Proprietary Sales Forces Online Deepening client relationships (Cross-selling) (Insurance products per client) 3.0 Contact Centres General Insurance Advice 1.5 Authorized Partners & 3 rd Party Channels 2013 Medium -Term 11
Wealth Management Strategic Priorities Awards & Recognition - GAM Building a high-performing global asset management business Focusing on high and ultra-high net worth clients to build global leadership Leveraging RBC and RBC Wealth Management strengths and capabilities Analysts Choice Fund Company of the Year Fixed Income Manager of the Year (PH&N) Best Fund Group Overall for 6 of the past 7 years Best Bond Fund Group for the past 7 years 180 14.1% Global Asset Management (GAM) (Canadian mutual fund balances and market share (1) 14.6% 14.5% 16.0% $ billions 150 120 90 60 30 14.1% 14.2% 13.3% 7 11 9 124 103 108 12.0% 8.0% 4.0% Money Market Funds Long-term Funds All-in Market Share LT Market Share 0 Jun-11 Jun-12 Jun-13 0.0% (1) Investment Funds Institute of Canada as at June 30, 2013 and RBC reporting. 12
Wealth Management A clear wealth vision in every geography Driving to 20% high net worth market share in Canada At scale in the U.S., shifting to a fee-based model Focusing on serving U.K and emerging markets high and ultra-high net worth clients through key international centres Awards & Recognition Canadian fee-based assets per advisor (1) ($ millions) $49 $XX RBC Over 2.2x the peer average $22 Cdn Peer Average Canadian revenue per advisor (1) ($ millions) $1MM 45% above the peer average Top 6 Global Wealth Manager by assets Ranked #1 in Canada high net worth market share RBC Cdn Peer Average (1) Investor Economics as of March 31, 2013. 13
Investor & Treasury Services Strategic Priorities Establishing a specialist custody bank that provides excellence in asset servicing, with an integrated funding and liquidity business Focusing on organic growth through deeper client relationships, cross-selling and promoting the RBC brand 2,744 Assets under administration ($ billions) 2,887 13% Growth 2,671 3,094 Leveraging Investor & Treasury Services as a driver of enterprise growth strategies 2011 2012 Q3/2012 Q3/2013 Awards & Recognition A top 10 global custodian (1) Transfer Agent of the Year Best Custodian Overall (2013) Top FX Service Provider Strong long-term industry fundamentals (1) As measured by assets under administration. 14
Capital Markets Strategic Priorities Extending our leadership position in Canada Expanding and strengthening client relationships in the U.S. Building on core strengths and capabilities in Europe and Asia Revenue by geography (YTD Q3/2013) U.K. & Europe $XX 12% Canada 31% Asia Pacific 3% U.S. 54% Optimizing capital use to earn high riskadjusted returns on assets and equity Ranked #2 for Retail M&A with recent deals Awards & Recognition Best Investment Bank in Canada across Equity, Debt and M&A for 6th consecutive year Lending relationship initiated Deepening client relationships 1 (# of products per client) 2-5 Time / Depth of Relationship 6+ 1 Year 1-3 Years 3+Years Client products: Advisory Debt Origination Equity Origination Lending Fixed Income Equities FX Securitization (1) Loans outstanding. Average loans & acceptances, and letters of credit and guaranteed for our Capital Markets portfolio, on single name basis. It excludes mortgage investments, securitized mortgages and other non-core items. Lending revenue includes loan syndication fees. 15
Capital Markets Aligned with ~85% of the global investment banking fee pool $702mm $4.9bn $14.8bn $35.6bn $442mm $3.4bn $558mm $756mm $900mm $4.2bn $896mm $232mm $2.1bn Canada 2012 Global Fee Pool: $74.8bn (1) UK & Europe Asia Pacific Canada United States UK & Europe Asia Pacific Full suite of products and services across all sectors Full service investment bank with equity and fixed income sales & trading M&A advisory and origination in key sectors with fixed income, equity and FX sales & trading Primarily distribution with select M&A advisory and origination North American focus with select global reach (1) Fee Pool Source: Thomson Reuters Deals Intelligence 2012. 16
Going forward Our Strengths Strong financial position, diversified businesses and leading market share are a clear competitive advantage The right balance between investing in our businesses for long-term growth and returning capital to shareholders Domestic leadership and global strategy combined with a focus on delivering high quality and sustainable earnings Extending our lead in Canada with selective global growth 17
Q&A Session
Note to users We use a variety of financial measures to evaluate our performance. In addition to generally accepted accounting principles (GAAP) prescribed measures, we use certain non-gaap measures we believe provide useful information to investors regarding our financial condition and result of operations. Readers are cautioned that non-gaap measures, such as earnings excluding specified items and measures excluding the impact of Ally Canada do not have any standardized meanings prescribed by GAAP, and therefore are unlikely to be comparable to similar measures disclosed by other financial institutions. Specified Items Results and measures excluding specified items are non-gaap measures. Specified items include a favourable income tax adjustment of $90 million in Q3 2012, a restructuring charge of $44 million ($31 million after-tax) in Q2 2013, and net favourable adjustments of $262 million after-tax in Q3 2012 including the release of a $128 million tax uncertainty provision and net interest income of $72 million ($53 million after-tax) related to the settlement of several tax matters, a change in estimate of mortgage prepayment interest of $125 million ($92 million after-tax), and a loss of $12 million ($11 million after-tax) related to our acquisition of the remaining 50% interest in RBC Dexia. Additional information about our non-gaap measures can be found under the Key performance and non-gaap measures section of our Q3 2013 Report to Shareholders and our 2012 Annual Report. Definitions can be found under the Glossary sections in our Q3 2013 Supplementary Financial Information and our 2012 Annual Report. Investor Relations Contacts Karen McCarthy, Director (416) 955-7809 Lynda Gauthier, Director (416) 955-7808 Robert Colangelo, Associate Director (416) 955-2049 www.rbc.com/investorrelations 19