4th Quarter Results

Management's Discussion and Analysis

Management's   Discussion and Analysis (MD&A) is provided to enable a reader to assess   our results of operations and financial condition for the fiscal year ended   October 31, 2017, compared to the preceding fiscal year. This MD&A   should be read in conjunction with our 2017 Annual Consolidated Financial   Statements and related notes and is dated November 28, 2017. All amounts   are in Canadian dollars, unless otherwise specified, and are based on   financial statements prepared in accordance with International Financial   Reporting Standards (IFRS) as issued by the International Accounting   Standards Board (IASB), unless otherwise noted.Additional information   about us, including our 2017 Annual Information Form, is available free of   charge on our website at rbc.com/investorrelations, on the Canadian   Securities Administrators' website at sedar.com and on the EDGAR section of   the United States (U.S.) Securities and Exchange Commission's (SEC) website   at sec.gov.Information contained   in or otherwise accessible through the websites mentioned does not form part   of this report. All references in this report to websites are inactive   textual references and are for your information only.

Table of contents

Caution regarding forward-looking statements 11
Overview and outlook 12
Selected   financial and other highlights 12
About   Royal Bank of Canada 13
Vision   and strategic goals 13
Economic,   market and regulatory review and outlook 14
Defining   and measuring success through total shareholder returns 15
Key corporate events of 2017 15
Financial performance 16
Overview 16
Impact   of foreign currency translation 16
Total   revenue 17
Provision   for credit losses 18
Insurance   policyholder benefits, claims and acquisition expense 18
Non-interest   expense 19
Income   and other taxes 19
Client   assets 20
Business segment results 21
Results   by business segment 21
How   we measure and report our business segments 21
Key   performance and non-GAAP measures 22
Personal &   Commercial Banking 25
Wealth   Management 31
Insurance 36
Investor &   Treasury Services 39
Capital   Markets 41
Corporate   Support 45
Quarterly financial information 45
Fourth   quarter performance 45
Quarterly   results and trend analysis 46
Financial condition 47
Condensed   balance sheets 47
Off-balance   sheet arrangements 48
Risk management 51
Overview 51
Top   and emerging risks 53
Enterprise   risk management 54
Transactional/positional risk drivers 58
Credit   risk 58
Market   risk 68
Liquidity   and funding risk 74
Insurance   risk 84
Execution risk drivers 84
Operational   risk 84
Regulatory   compliance risk 87
Strategic risk drivers 87
Strategic   risk 87
Reputation   risk 87
Legal   and regulatory environment risk 87
Competitive   risk 89
Macroeconomic risk drivers 89
Systemic   risk 89
Overview of other risks 90
Capital management 91
Accounting and control matters 101
Critical   accounting policies and estimates 101
Regulatory   developments 107
Controls   and procedures 107
Related party transactions 108
Supplementary information 108
Enhanced Disclosure Task Force recommendation   index 116


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 2017 Annual Report, in other filings with Canadian regulators or the SEC, in other reports to shareholders and in other communications. Forward-looking statements in this document include, but are not limited to, statements relating to our financial performance objectives, vision and strategic goals, the Economic, market, and regulatory review and outlook for Canadian, U.S., European and global economies, the regulatory environment in which we operate, the Strategic priorities and Outlook sections for each of our business segments, and the risk environment including our liquidity and funding risk, and includes our President and Chief Executive Officer's statements. The forward-looking information contained in this document 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, as well as 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, insurance, operational, regulatory compliance, strategic, reputation, legal and regulatory environment, competitive and systemic risks and other risks discussed in the risks sections of our 2017 Annual Report; including global uncertainty and volatility, elevated Canadian housing prices and household indebtedness, information technology and cyber risk, regulatory change, technological innovation and new entrants, global environmental policy and climate change, changes in consumer behaviour, the end of quantitative easing, the business and economic conditions in the geographic regions in which we operate, the effects of changes in government fiscal, monetary and other policies, tax risk and transparency and environmental and social risk.

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 forward-looking 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 2017 Annual Report are set out in the Economic, market, and regulatory review and outlook section and for each business segment under the Strategic priorities and Outlook headings. 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 risks sections of our 2017 Annual Report.

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