Royal Bank of Canada reports record third quarter 2009 results

    All amounts are in Canadian dollars, and are based on our unaudited
    Interim Consolidated Financial Statements and related notes prepared in
    accordance with Canadian generally accepted accounting principles (GAAP),
    unless otherwise noted. Our Q3 2009 Report to Shareholders and
    supplementary financial information are available on our website at

    TORONTO, Aug. 27 /CNW/ - Royal Bank of Canada (RY on TSX and NYSE)
reported record net income of $1,561 million for the third quarter ended July
31, 2009, up $299 million or 24% from a year ago. Earnings were driven by
strong results from Capital Markets and solid performances in Canadian
Banking, Wealth Management and Insurance. Market environment-related losses
continued to subside reflecting improving capital market conditions.
    "Our record results this quarter reflect the strength of our franchise,
and our ability to take advantage of opportunities and drive efficiencies,"
said Gordon M. Nixon, RBC President and CEO. "We are building on our strong
competitive positions and successfully executing against our long term
strategy. Our performance this quarter demonstrates the competitive advantage
of our diverse business mix," Nixon said.

    Third quarter 2009 compared to third quarter 2008

    -   Net income of $1,561 million (up from $1,262 million)
    -   Diluted earnings per share (EPS) of $1.05 (up from $.92)
    -   Return on common equity (ROE) of 19.5% (unchanged)
    -   Tier 1 capital ratio of 12.9%

    First nine months of 2009 compared to first nine months of 2008

    -   Net income of $2,564 million (down from $3,435 million)
    -   Cash net income of $3,699 million (up from $3,520 million)(1)
    -   Diluted EPS of $1.70 (down from $2.57)
    -   Cash diluted EPS of $2.51 (down from $2.63)(1)
    -   ROE of 10.7% (down from 18.8%)
    -   Cash ROE of 15.3% (down from 19.1%)(1)

    (1) We compute "cash" measures by excluding the goodwill impairment
        charge in Q2 2009 and the after-tax impact of amortization of other
        intangibles. Cash measures are non-GAAP measures. See page 2 of this
        release for more information including a reconciliation.

    Canadian Banking net income was $669 million, down $40 million from last
year due to higher provision for credit losses (PCL) and spread compression
reflecting sharply lower interest rates. Compared to last quarter, earnings
were up $88 million primarily reflecting seasonal factors, continued volume
growth and higher mutual fund distribution fees due to capital appreciation.
We drove operating leverage of 3% and an efficiency ratio of 47.1%, with
expenses flat compared to last quarter and slightly down from last year.
    "Canadian Banking grew volumes by 11% over last year and continues to
profitably gain market share. Importantly, we have been able to support this
double-digit growth without increasing operating costs, reflecting our ongoing
cost discipline," Nixon said.

    Wealth Management net income was $168 million, down $18 million from last
year mainly due to the impact of the market decline. Compared to the prior
quarter, net income was up $42 million due to higher transaction volumes and
fee-based client assets reflecting an improvement in capital market
    "In our Wealth Management segment, we started to see asset levels recover
and investor confidence return to the market. We had industry-leading long
term fund sales in Canada and added over 100 experienced advisors globally,"
Nixon said.

    Insurance net income was $167 million, up $30 million over last year
reflecting growth in all businesses and lower funding charges. Net income was
up $54 million from last quarter due to favourable actuarial adjustments
reflecting management actions and assumption changes, favourable claims
experience, business growth and the impact of a new U.K. reinsurance annuity
    "Insurance contributes to our diversified earnings stream and complements
our retail product offering. We continue to grow across all businesses and
expand our distribution network," Nixon said

    International Banking net loss of $95 million compares to a net loss of
$16 million last year and a net loss of $1,126 million last quarter. The
change from last year is due to higher PCL, largely in U.S. banking and
reduced revenue at RBC Dexia IS. The change from last quarter is largely due
to a goodwill impairment charge of $1 billion (US$838 million) taken in the
second quarter of 2009 and lower PCL in U.S. banking this quarter.
    "The credit profile in our US retail operations is showing signs of
improvement as the rate of deterioration in our loan portfolios slowed. We
remain committed to refining our U.S. banking operating model to become more
efficient and competitive. Our Caribbean banking business continues to perform
well," Nixon said.

    Capital Markets net income was $562 million, up $293 million from a year
ago due to stronger trading revenue particularly in U.K., U.S. and Canadian
fixed income and money markets, and U.S.-based equity businesses. Lower market
environment-related losses also contributed to the increase. Compared to last
quarter, net income was up $142 million primarily due to higher trading
revenue, particularly in our U.S.-based equity and fixed income businesses and
lower market environment-related losses.
    "Capital Markets again displayed the benefits of its robust and diverse
platform. RBC Capital Markets continues to rank number one or two domestically
in virtually every league table. Moreover, as Canada's only global investment
bank, we believe we are extremely well positioned to take advantage of market
opportunities," Nixon said.

    Credit quality - Total PCL of $770 million increased $436 million from a
year ago largely due to higher specific PCL of $384 million, reflecting higher
loss rates consistent with the current economic environment, and an addition
of $61 million to the general provision in the current quarter. Compared to
last quarter, total PCL decreased $204 million as discussed below.

    In Canadian Banking, specific PCL of $340 million decreased $11 million
over last quarter due to lower business lending provisions, partially offset
by higher loss rates in unsecured retail portfolios including credit cards.
    In International Banking, specific PCL of $230 million decreased $59
million compared to last quarter mainly attributable to U.S. banking,
particularly in our residential builder finance, residential mortgages and lot
loan portfolios as a result of the declining pace of credit deterioration. The
impact of the stronger Canadian dollar on U.S. dollar denominated PCL also
contributed to the decrease. These factors were partially offset by higher
impaired loans in our commercial portfolio.
    In Capital Markets, specific PCL of $177 million increased $32 million
from last quarter primarily related to a single loan as well as a few other
impaired loans mainly in our Canadian corporate lending portfolio.
    The general provision of $61 million ($40 million after-tax) related to
U.S. banking. This compares to $223 million ($146 million after-tax) last
quarter, which reflected higher provisions predominately in U.S. banking and,
to a lesser extent, our Canadian retail lending portfolio.

    Non-GAAP measures

    We believe that excluding the goodwill impairment charge and the impact
of amortization of other intangibles from net income will provide readers with
a better understanding of management's perspective on our performance. Cash
measures do not have standardized meanings under GAAP and are not necessarily
comparable with similar information disclosed by other financial institutions.
The calculation of these cash measures found in the following table should
also enhance the comparability of our financial performance with the
corresponding prior periods.

                                    For the three             For the nine
                                     months ended             months ended
    (C$ millions, except    ----------------------------- -------------------
     per share and           July 31  April 30   July 31   July 31   July 31
     percentage amounts)        2009      2009      2008      2009      2008
    ----------------------------------------------------- -------------------
    Net income              $  1,561  $    (50) $  1,262  $  2,564  $  3,435
        Goodwill impairment
         charge                    -     1,000         -     1,000         -
        After-tax effect of
         amortization of
         other intangibles(1)     41        43        36       135        85
    ----------------------------------------------------- -------------------
    Cash net income         $  1,602  $    993  $  1,298  $  3,699  $  3,520
    ----------------------------------------------------- -------------------
    ----------------------------------------------------- -------------------
    Diluted earnings per
     share(2)               $   1.05  $   (.07)      .92  $   1.70  $   2.57
        Impact of goodwill
         impairment charge         -       .71         -       .71         -
        After-tax effect of
         amortization of
         other intangibles(1)    .03       .03       .03       .10       .07
    ----------------------------------------------------- -------------------
    Cash diluted earnings
     per share(2)           $   1.07  $    .66       .95  $   2.51  $   2.63
    ----------------------------------------------------- -------------------
    ----------------------------------------------------- -------------------
    ROE(2)                     19.5%    (1.4)%     19.5%     10.7%     18.8%
    Cash ROE(2)                19.0%     12.3%     19.7%     15.3%     19.1%
    ----------------------------------------------------- -------------------
    ----------------------------------------------------- -------------------
    (1) Excludes the amortization of computer software intangibles.
    (2) Based on actual balances before rounding.


    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 earnings release, in other filings with
Canadian regulators or the United States Securities and Exchange Commission
(SEC), in reports to shareholders and in other communications. Forward-looking
statements include, but are not limited to, statements relating to our
medium-term objectives, our strategic goals and priorities, and the economic
and business outlook for us, for each of our business segments and for the
Canadian, United States and international economies. The forward-looking
information contained in this earnings release 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 strategic priorities and
objectives, and may not be appropriate for other purposes. Forward-looking
statements are typically identified by words such as "believe", "expect",
"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, strategic goals and
priorities will not be achieved. We caution readers not to place undue
reliance on these statements as a number of important 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, liquidity and funding risks, and other risks
discussed in the Risk, capital and liquidity management section of our Q3 2009
Report to Shareholders and in our 2008 Annual Report to Shareholders; market
environment impacts, including the impact of the volatility in the financial
markets and potential lack of liquidity in certain credit markets, and our
ability to effectively manage our liquidity and our capital ratios and
implement effective risk management procedures; general business and economic
conditions, including recessionary conditions in Canada, the United States and
certain other countries in which we conduct business; changes in accounting
standards, policies and estimates, including changes in our estimates of
provisions, allowances and valuations; the impact of the movement of the
Canadian dollar relative to other currencies, particularly the U.S. dollar,
British pound and Euro; the effects of changes in government fiscal, monetary
and other policies; the effects of competition in the markets in which we
operate; the impact of changes in laws and regulations, including tax laws;
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; changes to our credit
ratings; and development and integration of our distribution networks.
    We caution that the foregoing list of important 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, capital and liquidity management section of our Q3 2009 Report to
Shareholders, and in our 2008 Annual Report to Shareholders.
    Information contained in or otherwise accessible through the websites
mentioned does not form part of this earnings release. All references in this
earnings release to websites are inactive textual references and are for your
information only.


    Interested investors, the media and others may review this quarterly
earnings release, quarterly results slides, supplementary financial
information and our Q3 2009 Report to Shareholders on our website at

    Quarterly conference call and webcast presentation

    Our quarterly conference call is scheduled for Thursday, August 27, 2009
at 7:30 a.m. (EST) and will feature a presentation about our third quarter
results by RBC executives. It will be followed by a question and answer period
with analysts.
    Interested parties can access the call live on a listen-only basis at: or by telephone
(416-340-2217 or 1-866-696-5910). Please call between 7:20 a.m. and 7:25 a.m.
    Management's comments on results will be posted on our website shortly
following the call. Also, a recording will be available by 5:00 pm (EST) on
August 27 until November 30, 2009 at: or by telephone (416-695-5800
or 1-800-408-3053, passcode 4024572 followed by the number sign).


    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, one of North America's leading diversified
financial services companies and among the largest banks in the world, as
measured by market capitalization. We provide personal and commercial banking,
wealth management services, insurance, corporate and investment banking and
transaction processing services on a global basis. We employ approximately
80,000 full- and part-time employees who serve more than 18 million personal,
business, public sector and institutional clients through offices in Canada,
the U.S. and 53 other countries. For more information, please visit

    Trademarks used in this release include the LION & GLOBE Symbol, ROYAL
    BANK OF CANADA and RBC which are trademarks of Royal Bank of Canada used
    by Royal Bank of Canada and/or by its subsidiaries under license. RBC
    Dexia IS and affiliated Dexia companies are licensed users of the RBC

For further information:

For further information: Media Relations Contact: Stephanie Lu, Head,
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Toronto) or 1-888-880-2173 (toll-free outside Toronto); Investor Relations
Contacts: Marcia Moffat, VP & Head, Investor Relations,,
(416) 955-7803; Bill Anderson, Director, Investor Relations,, (416) 955-7804; Josie Merenda, Director, Investor
Relations,, (416) 955-7809

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