Second Quarter 2018 - rbc.com

1 Royal Bank of Canada | Second Quarter 2018 Royal Bank of Canada Second Quarter 2018 resultsAll amounts are in Canadian dollars and are based on financial statements prepared in compliance with International Accounting Standard 34 Interim FinancialReporting, unless otherwise noted. Effective November 1, 2017, we adopted IFRS 9 financial Instruments. Prior period amounts are prepared in accordancewith IAS 39 financial Instruments: Recognition and Income$ BillionStrong earningsgrowth of 9% YoYDiluted EPS$ growthof 11% capital deploymentfor premium ROECET1 $224 million of sharerepurchases in Q2 2018 TORONTO, May 24, 2018 Royal Bank of Canada (RY on TSX and NYSE) today reported net income of $3,060 million for the Second Quarter ended April 30,2018, up $251 million or 9% from the prior year with double-digit diluted EPS(1)growth of 11%.

2 Results reflect strong earnings growth in Wealth Management,Personal & Commercial Banking, and Investor & Treasury Services, and solid earnings in Insurance. Capital Markets performance was stable amidst lessfavourable market conditions. Strong credit quality also contributed to results, with provision for credit losses (PCL) on impaired loans ratio of 22 basis points(bps) reflecting a benign credit to last Quarter , net income was up $48 million or 2%, though market-related revenue moderated from strong first Quarter levels. Continued marginexpansion and strong loan growth on both sides of the border helped to offset the impact of a less favourable market environment and fewer days in thecurrent Quarter . The prior Quarter also included the write-down of net deferred tax assets related to the Tax Reform(2).

3 We maintained good momentum in the Second Quarter , delivering earnings of $ billion. Our businesses executed on client-focused growth strategieswhile continuing to demonstrate strong risk management. As we transform the bank to create more value for our clients, we re proud to once again beranked highest in overall customer satisfaction by Power. Dave McKay, RBC President and Chief Executive OfficerQ2 2018compared toQ2 2017 Net income of $3,060 million Diluted EPS of $ ROE(3)of CET1(4)ratio of 9% 11% 90 bps 30 bpsQ2 2018compared toQ1 2018 Net income of $3,060 million Diluted EPS of $ ROE of CET1 ratio of 2% 2% 70 bps 10 bpsYTD 2018compared toYTD 2017 Net income of $6,072 million Diluted EPS of $ ROE of 4% 7% 0 bpsExcluding specified item(5): Net income of $6,072 million Diluted EPS of $ ROE of 8% 11% 70 bps(1) Earnings per share (EPS).

4 (2) In December 2017, the 1 ( Tax Reform) was passed into law.(3) Return on Equity (ROE). This measure does not have a standardized meaning under GAAP. For further information, refer to the Key performance and non-GAAP measures section of this Q2 2018 Report to Shareholders.(4) Common Equity Tier 1 (CET1) ratio.(5) The specified item reflects our share of a gain related to the sale of the operations of Moneris Solutions Corporation (Moneris) to Vantiv, Inc., which was $212 million (before- and after-tax). Results and measures excluding the specified item are non-GAAP measures. For further information, including a reconciliation, refer to the Key performance and non-GAAP measuressection of this Q2 2018 Report to of contents1 Second Quarter highlights2 Management s Discussion and Analysis2 Caution regarding forward-looking statements2 Overview and outlook2 About Royal Bank of Canada3 Selected financial and other highlights4 Economic.

5 Market and regulatory reviewand outlook5 financial performance5 Overview10 Business segment results10 How we measure and report our businesssegments10 Key performance and non-GAAP measures14 Personal & Commercial Banking15 Wealth Management17 Insurance18 Investor & Treasury Services19 Capital Markets20 Corporate Support21 Quarterly results and trend analysis23 financial condition23 Condensed balance sheets24 Off-balance sheet arrangements24 Risk management24 Credit risk32 Market risk37 Liquidity and funding risk44 Capital management48 Capital, liquidity, and other regulatorydevelopments49 Accounting and control matters49 Summary of accounting policies andestimates49 Change in accounting policies anddisclosures49 Controls and procedures49 Related party transactions50 Enhanced Disclosure Task Forcerecommendations index51 Interim Condensed Consolidated FinancialStatements(unaudited)57 Notes to the Interim Condensed ConsolidatedFinancial Statements(unaudited)88 Shareholder Information2 Royal Bank of CanadaSecond Quarter 2018 Management s Discussion and AnalysisManagement s Discussion and Analysis (MD&A)

6 Is provided to enable a reader to assess our results of operations and financialcondition for the three and six month periods ended or as at April 30, 2018, compared to the corresponding periods in the prior fiscalyear and the three month period ended January 31, 2018. This MD&A should be read in conjunction with our unaudited InterimCondensed Consolidated financial Statements for the Quarter ended April 30, 2018 (Condensed financial Statements) and relatednotes and our 2017 Annual Report. This MD&A is dated May 23, 2018. All amounts are in Canadian dollars, unless otherwisespecified, and are based on financial statements prepared in accordance with International financial Reporting Standards (IFRS) asissued by the International Accounting Standards Board (IASB), unless otherwise information about us, including our 2017 Annual Information Form, is available free of charge on our website at , on the Canadian Securities Administrators website at and on the EDGAR section of the United States( ) Securities and Exchange Commission s (SEC) website at contained in or otherwise accessible through the websites mentioned does not form part of this report.

7 All references inthis report to websites are inactive textual references and are for your information regarding forward-looking statementsFrom time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including the safeharbour provisions of theUnited States Private Securities Litigation Reform Act of 1995and any applicable Canadian securitieslegislation. We may make forward-looking statements in this Q2 2018 Report to Shareholders, in other filings with Canadian regulatorsor the SEC, in other reports to shareholders and in other communications. Forward-looking statements in this document include, but arenot limited to, statements relating to our financial performance objectives, vision and strategic goals, the Economic, market, andregulatory review and outlook for Canadian, , European and global economies, the regulatory environment in which we operate, theStrategic priorities and Outlook sections for each of our business segments, and the risk environment including our liquidity andfunding risk, and includes our President and Chief Executive Officer s statements.

8 The forward-looking information contained in thisdocument is presented for the purpose of assisting the holders of oursecurities and financial analysts in understanding our financialposition and results of operations as at and for the periods ended on the dates presented, as well as our financial performanceobjectives, vision and strategic goals, and may not be appropriate for other purposes. Forward-looking statements are typicallyidentified by words such as believe , expect , foresee , forecast , anticipate , intend , estimate , goal , plan and project and similar expressions of future or conditional verbssuch 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 anduncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not proveto be accurate, that our assumptions may not be correct and that our financial performance objectives, vision and strategic goals willnot be achieved.

9 We caution readers not to place undue reliance on these statements as a number of risk factors could cause ouractual results to differ materially from the expectations expressed in such forward-looking statements. These factors many of whichare 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 otherrisks discussed in the risks sections of our 2017 Annual Report and the Risk management section of this Q2 2018 Report toShareholders; including global uncertainty and volatility, elevated Canadian housing prices and household indebtedness, informationtechnology and cyber risk, including the risk of cyber-attacks or other information security events at or impacting our service providersor other third parties with whom we interact, regulatory change, technological innovation and non-traditional competitors, globalenvironmental policy and climate change, changes in consumer behaviour, the end of quantitative easing, the business andeconomic conditions in the geographic regions in which we operate, the effects of changes in government fiscal, monetary and otherpolicies.

10 Tax risk and transparency and environmental and social caution that the foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results. Whenrelying on our forward-looking statements to make decisions with respect to us, investors and others should carefully consider theforegoing factors and other uncertainties and potential events. Material economic assumptions underlying the forward-lookingstatements contained in this Q2 2018 Report to Shareholders are set out in the Overview and outlook section and for each businesssegment under the Strategic priorities and Outlook headings in our 2017 Annual Report, as updated by the Overview and outlooksection of this Q2 2018 Report to Shareholders. Except as required by law, we do not undertake to update any forward-lookingstatement, whether written or oral, that may be made from time to time by us or on our information about these and other factors can be found in the risk sections of our 2017 Annual Report and the Riskmanagement section of this Q2 2018 Report to and outlookAbout Royal Bank of CanadaRoyal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leadingperformance.