#1RBC 2011 and Fourth Quarter Results December 2, 2011 Financial information is presented on a continuing operations basis, in Canadian dollars and is based on Canadian GAAP, unless otherwise indicated. Caution regarding forward-looking statements RBC 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 and in the accompanying management's comments and responses to questions during the December 2, 2011 analyst conference call (Q4 presentation), in other 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 vision, aspiration, 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 vision, aspiration, 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 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, operational, and liquidity and funding risks, and other risks discussed in the Risk management section of our 2011 Annual Report to Shareholders; general business, economic and financial market conditions in Canada, the United States and certain other countries in which we conduct business, including the effects of the European sovereign debt crisis and the lowering of the U.S. long-term sovereign credit rating by Standard & Poor's; changes in accounting standards, policies and estimates, including changes in our estimates of provisions, allowances and valuations; the effects of changes in government fiscal, monetary and other policies; changes to and new interpretations of risk-based capital and liquidity guidelines; the impact of changes in laws and regulations including relating to the payments system in Canada, consumer protection measures and the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations to be issued thereunder; the effects of competition in the markets in which we operate; our ability to attract and retain employees; judicial or regulatory judgments and legal proceedings; the accuracy and completeness of information concerning our clients and counterparties; our ability to successfully execute our strategies and to complete and integrate strategic acquisitions and joint ventures successfully; 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. 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 2011 Annual Report to Shareholders. Information contained in or otherwise accessible through the websites mentioned does not form part of this Q4 presentation. All references in this Q4 presentation to websites are inactive textual references and are for your information only. RBC 2011 AND FOURTH QUARTER RESULTS 2#2Overview Gordon M. Nixon President and Chief Executive Officer Record Earnings for 2011 (1) Results from Continuing Operations (1) $ millions, except EPS and ROE 2011 2010 YOY Net income ($ millions) Diluted earnings per share (EPS) $ 6,650 $ 5,732 $ 918 $4.45 $ 3.82 $ 0.63 Return on Equity (ROE) 18% 16.5% +1.5% RBC Record results in Canadian Banking, Wealth Management and Insurance and growth in our corporate and investment banking businesses. • Lower provisions for credit losses (PCL) reflecting continued improvement in asset quality. • Challenging trading conditions in the latter half of the year negatively impacted our fixed income trading businesses. RBC Results from continuing operations do not include results related to our U.S. regional retail banking operations and Liberty Life Insurance Company, which are now classified as discontinued operations. Refer to our 2011 Annual Report to Shareholders for additional information. 4 RBC |2011 AND FOURTH QUARTER RESULTS#3Strong financial position RBC ✓ Strong capital position (1) ➤ Tier 1 Capital Ratio of 13.3% Tier 1 Common Equity Ratio of 10.6% Asset to Capital Multiple of 16.1X ✓ High quality, liquid balance sheet ➤ De-risked and enhanced the strength of our balance sheet in 2011: The announced sale of RBC Bank (USA) Closed the sale of Liberty Life ✓ Strong culture and disciplined approach to risk management 5 RBC 2011 AND FOURTH QUARTER RESULTS (1) Capital measures represent consolidated (combined continuing and discontinued) operations. 2011 financial highlights RBC 2011 net income from continuing operations were a record $6.7 billion, up 16% YoY Net Income (1) ($ millions) Canadian Banking Wealth Management Insurance International Banking Capital Markets 3,492 3,044 1,647 1,575 809 669 601 491 173 92 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 RBC 2011 AND FOURTH QUARTER RESULTS (1) Corporate Support not included 6#4Shareholder returns 5% 3-year 13% 5-year RBC 4% 4% Global peers (2) S&P/TSX bank index 1% (6)% Total Shareholder Return (1) 3-year 5-year Quartile 2nd Quartile RBC rank vs. global peers (2) 8 Top Quartile 5 (1) (2) TSR is calculated based on common share price appreciation plus reinvested dividend income. Source: Bloomberg. As at October 31, 2011. See page 10 of our 2011 Annual Report to Shareholders for our global peer group. RBC 2011 AND FOURTH QUARTER RESULTS Strategic goals ✓ In Canada, to be the undisputed leader in financial services Globally, to be a leading provider of capital markets and wealth management solutions ✓ In targeted markets, to be a leading provider of select financial services complementary to our core strengths RBC 2011 AND FOURTH QUARTER RESULTS RBC 7 RBC 8#5Risk Review Morten Friis Chief Risk Officer Specific provision for credit losses (PCL) Specific PCL of $235 million ($ millions) Specific PCL Ratio (1) RBC RBC 282 275 241 Q4/10 235 222 0.40% 0.35% 0.38% 0.31% 0.31% 0.41% 1.96% (0.31)% Q1/11 Q2/11 Q3/11 0.36% 0.36% 0.35% 0.53% 0.61% 1.82% (0.37)% (0.06)% Q4/11 0.30% 1.46% 0.10% 0.04% 287 257 247 254 222 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Capital Markets International Banking ■Canadian Banking Corporate Support Specific PCL Ratio • Canadian Banking PCL decreased $32 million or 13% QoQ, largely due to lower provisions in our commercial lending portfolio as asset quality continued to improve. • International Banking PCL of $31 million was down $6 million or 16% QoQ, largely reflecting lower provisions in our Caribbean commercial portfolio. Capital Markets PCL of $4 million was down from $8 million in the prior quarter. RBC 2011 AND FOURTH QUARTER RESULTS (1) Specific PCL Ratio: specific PCL as a percentage of average net loans and acceptances (annualized). 10#6Exposure to Europe RBC (C$ millions) Loans Outstanding (2) Securities Other Gross drawn exposure to Europe (1) $ 6,880 $ 18,167 $ 1,736 Repo-style transactions $ 892 OTC Derivatives Total Exposure Less: Collateral held against derivatives $9,213 $ (5,461) $ 36,888 $ (5,461) Add: Trading securities $ 11,826 $ 11,826 (3) Net exposure to Europe $ 6,880 $ 29,993 $ 1,736 $ 892 $ 3,752 $ 43,253 • • Majority of exposure is to large and well-rated European countries, including the U.K. and Germany - Minimal exposure to peripheral Europe As a global investment bank and wealth manager, we have exposures related to our client-driven businesses - Loans to strong corporate and individual credits - Trading securities related to client market-making activities - Derivatives which are well-collateralized and marked to market Certain securities are also related to our funding and liquidity management Exposures to Europe are manageable and we remain committed to serving our global clients in these markets (1) Gross drawn exposure is calculated on a more comparable basis to the gross funded exposures reported by a number of U.S. banks. (2) (3) Securities include $9.5 billion of AFS securities, $11.8 billion of trading-related securities and $8.7 billion of deposits. Net exposure incorporates collateral held against OTC derivatives (primarily cash and cash equivalents) and adds trading securities which are captured under market risk measures. RBC 2011 AND FOURTH QUARTER RESULTS Financial Review Janice Fukakusa Chief Administrative Officer and Chief Financial Officer ส RBC 11#7Q4 2011 earnings review Results from Continuing Operations (1) Q4 2011 Q3 2011 Q4 2010 Net income millions) $ 1,631 $ 1,564 $ 1,372 Diluted earnings per share (EPS) $ 1.09 $ 1.04 $ 0.91 Return on common equity (ROE) 17.1% 16.7% 15.2% • Net income of $1.6 billion driven by record earnings in both Canadian Banking and Insurance and strong results in our corporate and investment banking businesses. ⚫ In Q4/11, challenging market conditions negatively impacted our fixed income trading businesses and led to lower transaction volumes in Wealth Management. • Q4/11 benefitted from lower PCL, primarily in Canadian Banking. (1) Results from continuing operations do not include results related to our U.S. regional retail banking operations and Liberty Life Insurance Company, which are now classified as discontinued operations. Refer to our 2011 Annual Report to Shareholders for additional information. RBC 2011 AND FOURTH QUARTER RESULTS Q4 2011 business segment highlights Q4 2011 net income of $1.6 billion, up 19% YoY and 4% QoQ Canadian Banking 904 855 765 Wealth Management Net Income (1) ($ millions) Insurance International Banking Capital Markets 196 175 179 189 142 124 373 278 277 RBC 13 RBC 31 12 (7) Q4/10 Q3/11 Q4/11 Q4/10 Q3/11 Q4/11 Q4/10 Q3/11 Q4/11 Q4/10 Q3/11 Q4/11 Q4/10 Q3/11 Q4/11 RBC 2011 AND FOURTH QUARTER RESULTS (1) Corporate Support not included 14#8IFRS - Estimated impact from adoption • Estimated 2011 net income from continuing operations under IFRS would have been ~3% higher than Canadian GAAP. • Tier 1 Capital impact under IFRS will be minimized as it will be phased-in over a five-quarter period and our quarterly earnings could also serve to offset the impact. Transition Impacts to Shareholders' Equity* 38,951 ($ millions) (1,364) (1,261) 35,381 (488) (255) (148) (54) Canadian Employee Goodwill GAAP Benefits Securitization Special Hedging Classification Purpose Entities IFRS and Other of Financial Instruments Oct. 31, 2010 Nov. 1, 2010 RBC 2011 AND FOURTH QUARTER RESULTS *Please see pg. Annual Report to Shareholders for further information. IFRS - Transition and ongoing impacts RBC 15 RBC Accounting Employee Benefits Securitization VIES / SPES Hedge Accounting Transition Impact • Cumulative actuarial gains/losses recognized in opening retained earnings. • Most assets in our securitization transactions will be reported on-balance sheet. • Previously recorded gains will be recognized in opening retained earnings. • Certain entities will be consolidated, and others will be deconsolidated. • Earnings previously recognized and unrecognized will be recognized in opening retained earnings. • Certain cash flow hedges on a portion of our deposit liabilities will not qualify under IFRS. • Accumulated losses on these hedged items will be recognized in retained earnings. Impact to Ongoing Earnings • Reduced expense as accumulated. unrecognized loss is no longer being amortized. • Reduced 2011 expenses under IFRS by $315MM (pre-tax). • No longer recognizing gains on securitization activities. • Recognition of earnings on the mortgages over their remaining term. • Recognition of earnings of newly consolidated entities, which could give rise to accounting volatility. • No longer recognizing earnings of deconsolidated entities. • Reduced expenses as accumulated losses are not being amortized. Going forward, ROE target revised to 18%+ from 16%-20% to reflect the reduction in average common equity RBC 2011 AND FOURTH QUARTER RESULTS 16#9RBC 2011 AND FOURTH QUARTER RESULTS Appendix Canadian Banking volume growth Combined full year-over-year loan and deposit growth of 9% Average Loans and Acceptances Average Deposits $ billions 300 250 200 150 100 50 50 7% YoY % growth: 250 11% Business (includes small business): 7% 200 ■Credit Cards: (2)% Personal: 9% Residential Mortgages: 7% $ billions 150 100 50 50 RBC 17 71 RBC 0 0 Q4/10 Q4/11 Q4/10 Q4/11 RBC 2011 AND FOURTH QUARTER RESULTS 18#10Canadian Banking retail momentum Leadership in most personal products and in all business products RBC Q4 2011 Q4 2010 Rank Market Share (1) Rank Market Share (1) Consumer lending (2) 1 23.6% 1 23.4% Personal core deposits 2 21.8% 2 20.6% Personal investments (3) 1 15.8% 1 15.7% Business loans (4) $0 - $250M 1 25.2% 1 25.9% $250M $5MM 1 25.8% 1 26.6% Business deposits & investments (5) 1 25.0% 1 24.8% (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 and IFIC data is at September 2011 and CBA data is at June 2011. Market share is of total Chartered Banks unless otherwise noted. GETN (2) Comprises residential mortgages excluding acquired portfolios, personal loans and credit cards. (3) Comprises GICs and mutual funds. Mutual fund market share is per IFIC. (4) (5) Market share is of the nine Chartered Banks that submit business loan tiered data to CBA on a quarterly basis. Excluded Fixed Term, Government and Deposit Taking Institution balances. RBC 2011 AND FOURTH QUARTER RESULTS Canadian Banking net interest margin 2.9% 2.80% 2.78% 2.78% 2.76% 2.74% 2.75% 2.74% 2.73% 2.70% 2.7% 2.5% Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 NIM (1) was down 2 bps YoY and 1 bp QoQ due primarily to competitive pricing, largely offset by a favourable shift in our product mix. 19 RBC 20 (1) Net interest margin (NIM): net interest income as a percentage of total average earning assets. RBC 2011 AND FOURTH QUARTER RESULTS#11Canadian Banking retail portfolio credit quality 65% Average Retail Loans of $253 billion Credit cards (2) Small business 5% Specific PCL Ratio by Product (1) 3.79% 3.64% 29% 3.52% 3.45% 3.17% 2.08% 1.77% 1.60% 1.57% 1% 1.16% Personal Residential mortgages (2) 0.66% 0.61% 0.59% 0.55% 0.54% 0.01% 0.01% 0.00% 0.00% 0.00% Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 (1) Specific PCL Ratio: specific PCL as a percentage of average net loans and acceptances, annualized. (2) Includes securitized balances. RBC 2011 AND FOURTH QUARTER RESULTS Wealth Management – asset management growth - Canadian mutual fund balances and market share RBC Mutual fund balances ($ billions) (1) Market share (%) (1) 180 18.0% 15.9% 160 15.5% 15.2% 15.2% 15.1% 15.0% 15.0% 15.1% 15.3% 15.0% 140 120 13.7% 13.8% 13.8% 13.9% 14.0% 14.1% 100 13.4 16.3 14.6 22.1 18.5 12.3 97.8 14.3% 11.1 102.9 14.5% 10.4 101.7 14.7% 12.0% 10.1 100.6 92.6 9.0% 80 87.0 86.3 81.0 77.7 60 6.0% 40 3.0% 20 0 0.0% Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Long-Term Funds Money Market Funds Q1/11 Q2/11 Q3/11 Q4/11 All-in Market Share LT Market Share • • RBC GAM is ranked number one in market share for both all-in and long term fund assets. (2) Long-term fund assets increased 29% since Q4/09, with RBC GAM capturing over 25% of industry long-term sales. RBC 2011 AND FOURTH QUARTER RESULTS (1) Source: IFIC and RBC reporting. (2) IFIC, as of September 2011. 22 21 RBC#12Capital Markets revenue by product RBC $ millions Q4 2011 Q3 2011 Q4 2010 FY 2011 FY 2010 Fixed income, currencies and $ 264 $ 195 $ 396 $ 1,708 $2,077 commodities (FICC) Global Equities 224 228 229 1,033 968 Treasury services and funding 139 148 200 707 757 Global Markets (teb) 627 571 825 3,448 3,802 Investment banking and lending 534 594 488 2,273 1,838 Commercial and correspondent banking 61 64 70 261 270 Corporate and Investment Banking 595 658 558 2,534 2,108 Other 2 (66) 110 (51) (23) Capital Markets total revenue (teb) $ 1,224 $ 1,163 $ 1,493 $ 5,931 $5,887 Corporate and Investment Banking Revenue 7% ($ millions) 20% 2,534 558 595 2,108 Q4 2010 Q4 2011 RBC 2011 AND FOURTH QUARTER RESULTS 2010 2011 Capital Markets trading revenue •Strong growth in 2011 was driven by higher origination, increased lending activity and loan syndication as well as strong M&A activity. 23 RBC $ millions Q4 2011 Q3 2011 Q4 2010 FY 2011 FY 2010 Capital Markets total revenue (teb) $1,224 $ 1,163 $ 1,493 $ 5,931 $ 5,887 Capital Markets non-trading revenue (1) 900 861 754 3,503 2,750 Capital Markets trading revenue (teb) 324 302 739 2,428 3,137 Excluding certain items (Add) / Deduct: CVA - MBIA 99 102 137 BOLI (36) (66) 66 (115) 75 CVA - other 47 (34) (49) 50 (133) Fair value adjustment on RBC debt 50 50 (3) (36) 63 18 Capital Markets trading revenue excl. certain items (teb) (2) $263 $ 405 $659 $2,328 $3,040 • Trading revenue excluding certain items was lower in Q4 reflecting significantly lower client volumes and reduced market liquidity, particularly in fixed income trading in the U.S. and Europe due to uncertainty over the weakening global economy and heightened European sovereign debt concerns. (1) Non-trading revenue primarily includes Corporate and Investment Banking and Global Markets origination and cash equities businesses. (2) Non-GAAP measure, which we believe better reflects our trading revenue. See slide 28 for discussion of non-GAAP measures. RBC 2011 AND FOURTH QUARTER RESULTS 24 24#13Capital Markets revenue by geography $ millions Geographic revenue Canada U.S. Europe Asia and Other Geographic revenue excluding certain items (1) RBC Q4 2011 Q3 2011 Q4 2010 FY 2011 FY 2010 $ 500 $ 547 $ 620 $ 2,445 $ 2,305 450 563 514 2,434 2,415 194 120 212 795 859 19 36 67 157 211 1,163 1,266 1,413 5,831 5,790 Add/(Deduct): CVA MBIA (2) 99 102 137 BOLI (3) (36) (66) 66 (115) 75 CVA other (4) 47 (34) (49) 50 (133) Fair value adjustment on RBC debt (4) 50 (3) (36) 63 18 Capital Markets total revenue (teb) $ 1,224 $ 1,163 $ 1,493 $ 5,931 $ 5,887 • In Canada, full year revenue growth was driven by higher debt and equity origination and M&A activity; down YoY and QoQ reflecting a weaker issuance and M&A environment in Q4/11. • Full year revenue growth in investment banking in the U.S. was driven by stronger syndicated finance, equity origination and M&A. In Europe, growth in investment banking was driven by higher M&A activity. ⚫U.S. and Europe were significantly impacted by lower fixed income trading reflecting deteriorating market conditions in the latter half of the year. (1) Non-GAAP measure: see slide 28 for discussion of non-GAAP measures. RBC 2011 AND FOURTH QUARTER RESULTS (2) Excluded from Europe. (3) Excluded from U.S. (4) Excluded from all geographies. Gross impaired loans (GIL) 25 25 RBC 0.95% 0.85% 0.79% 0.79% 0.78% $ millions GIL Ratio 2,679 2,428 2,287 2,364 2,387 Corporate Support Capital Markets 731 649 634 722 784 International Banking Canadian Banking 1,406 1,410 1,388 1,313 1,270 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 GIL Ratio (1) Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 0.51% 0.50% 0.49% 0.45% 0.43% 7.87% 7.71% 7.97% 9.08% 9.34% 1.41% 0.82% 0.70% 0.88% 0.83% (1) GIL Ratio: gross impaired loans as a percentage of related average net loans and acceptances, annualized. RBC 2011 AND FOURTH QUARTER RESULTS 26#14Other- other income $ millions Q4 2011 Q3 2011 Q4 2010 YOY QoQ RBC Other income - segments $134 $93 $127 $7 $41 FV adjustments on RBC debt 16 (4) 16 CDS on corporate loans 31 9 (17) 48 20 222 20 22 Funding related items 27 (20) (35) 62 62 47 Other misc. items (13) (18) 10 (23) 5 Other- other income $ 195 $ 60 $85 $ 110 $ 135 RBC 2011 AND FOURTH QUARTER RESULTS Note to users 27 27 RBC We use a variety of financial measures to evaluate our performance. In addition to 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 Capital Markets trading revenue excluding certain items and Capital Markets geographic revenue excluding certain items do not have any standardized meanings prescribed by Canadian GAAP, and therefore are unlikely to be comparable to similar measures disclosed by other companies. Additional information about our non-GAAP measures can be found under the "Key performance and Non-GAAP measures" section in our 2011 Annual Report to Shareholders and our Q4 2011 Supplementary Financial Information. Definitions can be found under our "Glossary" section in our 2011 Annual Report to Shareholders and in our Q4 2011 Supplementary Financial Information. Investor Relations Contacts Amy Cairncross, VP & Head Karen McCarthy, Director (416) 955-7803 (416) 955-7809 Robert Colangelo, Associate Director (416) 955-2049 www.rbc.com/investorrelations RBC 2011 AND FOURTH QUARTER RESULTS 28