3rd Quarter Results

Royal Bank of Canada third quarter 2013 results

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.

TORONTO, August 29, 2013 - Royal Bank of Canada (RY on TSX and NYSE) today reported record net income of $2,304 million for the quarter ended July 31, 2013, up $64 million or 3% from the prior year and up $368 million or 19% from last quarter. We also announced an increase to our quarterly dividend of $0.04 or 6%, to $0.67 per share.

Excluding specified items as discussed below, net income was $2,214 million, up $236 million or 12%(1) from last year and up $247 million or 13%(1) from last quarter. Our solid results were driven by continued strength across most of our businesses, including record earnings in Personal & Commercial Banking and Wealth Management.

"We continue to deliver solid performance, with record earnings of over $2.3 billion, as we leverage our strength, scale, and strong capital position to successfully execute on our disciplined growth strategy through a slow growth environment," said Gordon M. Nixon, RBC President and CEO. "Today we are also pleased to announce a 6% increase in our quarterly dividend".

Q3 2013 compared to Q3 2012
•  Net income of $2,304 million (up 3% from $2,240 million)
•  Diluted earnings per share (EPS) of $1.52 (up $0.05 from $1.47)
•  Return on common equity (ROE) of 20.9% (down from 22.7%)
•  Basel III Common Equity Tier 1 (CET1) ratio of 9.2%

YTD 2013 compared to YTD 2012
•  Net income of $6,310 million (up 12% from $5,628 million)
•  Diluted EPS of $4.15 (up $0.47 from $3.68)
•  ROE of 19.7% (up from 19.6%)

Results and measures excluding specified items(1) include a favourable income tax adjustment of $90 million in the current quarter, a restructuring charge of $44 million ($31 million after-tax) in the prior quarter and net favourable adjustments of $262 million after-tax in the prior year. For further details on our results excluding these specified items, refer to the Key Performance and non-GAAP measures section of this report.

Excluding specified items(1): Q3 2013 compared to Q3 2012
•  Net income of $2,214 million (up 12% from $1,978 million)
•  Diluted EPS of $1.46 (up $0.17 from $1.29)
•  ROE of 20.0% (up from 19.9%)

Excluding specified items(1): YTD 2013 compared to YTD 2012
•  Net income of $6,251 million (up 12% from $5,568 million)
•  Diluted EPS of $4.11 (up $0.47 from $3.64)
•  ROE of 19.5% (up from 19.3%)

(1)       These measures are non-GAAP. For further information, including a reconciliation, refer to the Key performance and non-GAAP measures section of this report.

Table of contents
  1   Third quarter highlights
  2   Management's Discussion and Analysis 
  2   Caution regarding forward-looking statements 
  2   Overview
       2    About Royal Bank of Canada
       3    Selected financial and other highlights
       4    Economic, market and regulatory review and outlook 
  4   Key corporate events of 2013 
  5   Financial performance
       5    Overview 
  8   Business segment results 
       8    How we measure and report our business segments
       8    Key performance and non-GAAP measures
       14  Personal & Commercial Banking
       17  Wealth Management
       18   Insurance
       19   Investor & Treasury Services
       20   Capital Markets
       21   Corporate Support 
  22  Quarterly results and trend analysis
  23  Results by geographic segment
  24  Financial condition 
       24   Condensed balance sheets
       25   Off-balance sheet arrangements
  27 Risk management
       27   Credit risk
       32   Credit quality performance
       34   Market risk
       36   Liquidity and funding management
  40 Capital management
  45 Additional financial information
       45   Exposures to selected financial instruments
  46 Accounting and control matters
  46 Related party transactions
  47 Interim Condensed Consolidated Financial Statements (unaudited)
  53 Notes to the Interim Condensed Consolidated Financial Statements (unaudited) 
  80 Shareholder information

Management's Discussion and Analysis (MD&A) is provided to enable a reader to assess our results of operations and financial condition for the three and nine month periods ended or as at July 31, 2013, compared to the corresponding periods in the prior fiscal year and three month period ended April 30, 2013. This MD&A should be read in conjunction with our unaudited Interim Condensed Consolidated Financial Statements for the quarter ended July 31, 2013 (Condensed Financial Statements) and related notes and our 2012 Annual Report to Shareholders. This MD&A is dated August 28, 2013. All amounts are in Canadian dollars, unless otherwise specified, and are based on financial statements prepared in compliance with International Accounting Standard (IAS) 34, Interim Financial Reporting, unless otherwise noted.

Additional information about us, including our 2012 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 U.S. Securities and Exchange Commission's (SEC) website at sec.gov.

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 Q3 2013 Report to Shareholders, 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 outlook and priorities for each of our business segments, and the risk environment including our liquidity and funding management. 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 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 the Risk management section of this 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 (BCBS) 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 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 Q3 2013 Report to Shareholders 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 of this 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 Overview of other risks sections of our 2012 Annual Report and the Risk management section of this Q3 2013 Report to Shareholders.

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.

Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate under the master brand name RBC. We are Canada's largest bank as measured by assets and market capitalization, and are among the largest banks in the world, based on market capitalization. We are one of North America's leading diversified financial services companies, and provide personal and commercial banking, wealth management services, insurance, and investor services and wholesale banking on a global basis. We employ approximately 80,000 full- and part-time employees who serve more than 15 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 44 other countries. For more information, please visit rbc.com.