Exhibit 99.2

 
 
Royal Bank of Canada second quarter 2024 results
 
 
 
All amounts are in Canadian dollars and are based on financial statements presented in compliance with International Accounting Standard 34
Interim Financial Reporting
, unless otherwise noted. Effective November 1, 2023, we adopted IFRS 17
Insurance Contracts
(IFRS 17). Comparative amounts have been restated from those previously presented. Our Q2 2024 Report to Shareholders and Supplementary Financial Information are available at http://www.rbc.com/investorrelations and on https://www.sedarplus.com/.
 
 
Net income
$4.0 Billion
Up 7% YoY
 
    
 
Diluted EPS
1
$2.74
Up 5% YoY
 
   
 
 
Total PCL
1
$920 Million
PCL on loans ratio
1
Up 4 bps
1
QoQ
 
   
 
 
 
ROE
1, 2
14.5%
Down 40 bps YoY
 
   
 
 
CET1 Ratio
1
12.8%
Above regulatory
requirements
 
                
 
 
Adjusted
net income
3
$4.2 Billion
Up 11% YoY
 
    
Adjusted
diluted EPS
3
$2.92
Up 9% YoY
   
 
 
Total ACL
1
$6.1 Billion
ACL on loans ratio
1
down 2 bps
 
QoQ
 
   
 
 
Adjusted ROE
3
15.5%
Up 20 bps YoY
 
   
 
 
LCR
1
128%
Down from 132%
last quarter
 
TORONTO, May
 30, 2024
– Royal Bank of Canada
4
(RY on TSX and NYSE) today reported net income of $4.0 billion for the quarter ended April 30, 2024, up $270 million or 7% from the prior year. Diluted EPS was $2.74, up 5% over the same period. Record earnings in Capital Markets as well as higher results in Personal & Commercial Banking, Wealth Management and Insurance were partially offset by lower results in Corporate Support. Adjusted net income
3
and adjusted diluted EPS
3
of $4.2 billion and $2.92 were up 11% and 9%, respectively, from the prior year.
On March 28, 2024, we completed the acquisition of HSBC Bank Canada (HSBC Canada). The inclusion of HSBC Canada results
5
decreased net income by $51 million, reflecting $200 million ($145 million after-tax) of initial PCL on purchased performing financial assets.
Total PCL increased $320 million from a year ago. The PCL on loans ratio of 41 bps increased 11 bps from the prior year. The PCL on impaired loans ratio was 30 bps, up 9 bps from the prior year as provisions continue to trend upwards, reflecting the impact of higher interest rates and rising unemployment.
Results also reflected the impact of specified items relating to the acquisition of HSBC Canada (HSBC Canada transaction). Transaction and integration costs ($358 million before-tax and $282 million after-tax) had an unfavourable impact, while management of closing capital volatility ($155 million before-tax and $112 million after-tax) benefitted the results.
Pre-provision, pre-tax earnings
6
of $5.8 billion were up $801 million or 16% from last year, mainly due to higher revenue in our Capital Markets business, higher net interest income reflecting higher spreads and solid volume growth, and higher fee-based client assets reflecting market appreciation and net sales. These factors were partially offset by higher expenses driven by higher variable compensation and continued investments in our franchises.
Compared to last quarter, net income was up 10%, reflecting higher results in Wealth Management, Corporate Support and Capital Markets, partially offset by lower results in Insurance and Personal & Commercial Banking. The prior quarter included an unfavourable impact from the specified item relating to the management of closing capital volatility ($286 million before-tax and $207 million after-tax) as well as the cost of the Federal Deposit Insurance Corporation (FDIC) special assessment ($159 million before-tax and $115 million after-tax). Adjusted net income
3
was up 3% over the same period. Pre-provision, pre-tax earnings
6
were up 13% on higher revenue and well-controlled expenses.
We maintained a strong capital position, with a CET1 ratio of 12.8%, down 210 bps from the prior quarter, largely reflecting the impact from closing the HSBC Canada transaction.
Today, we declared a quarterly dividend of $1.42 per share reflecting an increase of $0.04 or 3%.
 
 
This quarter marked a pivotal milestone in RBC’s long-term growth story as we completed our acquisition of HSBC Bank Canada, welcoming thousands of colleagues and clients from across the country. This historic acquisition, along with our solid results driven by our strong balance sheet, expense control and volume growth across our premium franchises, shows that RBC has the right strategy in place to continue building the bank of the future and our position as a global competitor. We’re confident in our ability to build on this momentum and keep delivering sustainable, long-term value to our clients, communities and shareholders.
– Dave McKay, President and Chief Executive Officer of Royal Bank of Canada
 
 
     
 
Q2 2024
Compared to
Q2 2023
 
 
   

Reported:
•   Net income of $3,950 million
•   Diluted EPS of $2.74
•   ROE of 14.5%
•   CET1 ratio of 12.8%
 


h
  7%
h
  5%
i
  40 bps
i
  
90 bps
 
 

Adjusted
1
, 3
:
•   Net income of $4,198 million
•   Diluted EPS of $2.92
•   ROE of 15.5%
 


h
  11%
h
  9%
h
  20 bps
             
       
 
Q2 2024
Compared to
Q1 2024
 
 
   
•   Net income of $3,950 million
•   Diluted EPS
 
of $2.74
•   ROE of 14.5%
•   CET1 ratio of 12.8%
 
h
  
10%
h
  10%
h
  140 bps
i
  210 bps
 
 
•   Net income of $4,198 million
•   Diluted EPS
 
of $2.92
•   ROE of 15.5%
 
 
h
  3%
h
  2%
h
  60 bps
 
             
       
 
YTD 2024
Compared to
YTD 2023
 
 
   
•   Net income of $7,532 million
•   Diluted EPS
 
of $5.25
•   ROE of 13.8%
 
 
h
  
11%
h
  9%
h
  10 bps
 
 
•   Net income of $8,264 million
•   Diluted EPS
 
of $5.77
•   ROE of 15.2%
 
 
h
  3%
h
  1%
i
  110 bps
 
             
 
(1)
See Glossary section of this Q2 2024
 
Report to Shareholders for composition of these measures.
(2)
Return on equity (ROE). This measure does not have a standardized meaning under generally accepted accounting principles (GAAP). For further information, refer to the Key performance and
non-GAAP
measures section of this Q2 2024
 
Report to Shareholders.
(3)
These are
non-GAAP
measures. For further information, including a reconciliation, refer to the Key performance and
non-GAAP
measures section of this Q2 2024
 
Report to Shareholders.
(4)
When we say “we”, “us”, “our”, “the bank” or “RBC”, we mean Royal Bank of Canada and its subsidiaries, as applicable.
(5)
HSBC Canada results reflect revenue, PCL, non-interest expenses and income taxes associated with the acquired operations and clients, which include the acquired assets, assumed liabilities and employees with the exception of assets and liabilities relating to treasury and liquidity management activities. For further details, refer to the Key corporate events section of this Q2 2024 Report to Shareholders.
(6)
Pre-provision, pre-tax (PPPT) earnings is calculated as income (April 30, 2024: $3,950 million; January 31, 2024: $3,582 million; April 30, 2023: $3,680 million) before income taxes (April 30, 2024: $976 million; January 31, 2024: $766 million; April 30, 2023: $765 million) and PCL (April 30, 2024: $920 million; January 31, 2024: $813 million; April 30, 2023: $600 million). This is a non-GAAP measure. PPPT earnings do not have a standardized meaning under GAAP and may not be comparable to similar measures disclosed by other financial institutions. We use PPPT earnings to assess our ability to generate sustained earnings growth outside of credit losses, which are impacted by the cyclical nature of a credit cycle. We believe that certain non-GAAP measures are more reflective of our ongoing operating results and provide readers with a better understanding of management’s perspective on our performance.

Table of Contents
2     
Royal Bank of Canada
  Second Quarter 2024  
 
 
 
Table of contents
 
1
 
2
 
2
 
3
 
  3   About Royal Bank of Canada
  4   Selected financial and other highlights
  5   Economic, market and regulatory review and outlook
6
 
7
 
  7   Overview
12
 
  12   How we measure and report our business segments
  12   Key performance and non-GAAP measures
  15   Personal & Commercial Banking
  17   Wealth Management
  19   Insurance
  20   Capital Markets
  21   Corporate Support
22
 
23
 
  23   Condensed balance sheets
  24   Off-balance sheet arrangements
24
 
  24   Credit risk
  28   Market risk
  32   Liquidity and funding risk
40
 
45
 
  45   Summary of accounting policies and estimates
  45   Changes in accounting policies and disclosures
  46   Controls and procedures
46
 
47
 
50
 
51
  (unaudited)
57
  (unaudited)
85
 
 
 
 
 
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 three and six month periods ended or as at April 30, 2024, compared to the corresponding periods in the prior fiscal year and the three month period ended January 31, 2024. This MD&A should be read in conjunction with our unaudited Interim Condensed Consolidated Financial Statements for the quarter ended April 30, 2024 (Condensed Financial Statements) and related notes and our 2023 Annual Report. This MD&A is dated May 29, 2024. All amounts are in Canadian dollars, unless otherwise specified, and are based on financial statements presented 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 2023 Annual Information Form, is available free of charge on our website at rbc.com/investorrelations, on the Canadian Securities Administrators’ website, SEDAR+, at sedarplus.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 herein does not form part of this report. All references in this report to websites are inactive textual references and are for your information only.
 
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 Q2 2024 Report to Shareholders, in other filings with Canadian regulators or the
SEC
, in other reports to shareholders, and in other communications. In addition, our representatives may communicate forward-looking statements orally to analysts, investors, the media and others. 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., United Kingdom (U.K.), European and global economies, the regulatory environment in which we operate, the expected impacts of the HSBC Bank Canada transaction, including transaction and integration costs, the risk environment including our credit risk, market risk, liquidity and funding risk, as well as the effectiveness of our risk monitoring, and includes statements made by our President and Chief Executive Officer and other members of management. The forward-looking statements contained in this document represent the views of management and are 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, strategic goals and priorities and anticipated financial performance, and may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as “believe”, “expect”, “suggest”, “seek”, “foresee”, “forecast”, “schedule”, “anticipate”, “intend”, “estimate”, “goal”, “commit”, “target”, “objective”, “plan”, “outlook”, “timeline” and “project” and similar expressions of future or conditional verbs such as “will”, “may”, “might”, “should”, “could”, “can”, “would” or negative or grammatical variations thereof.
By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, both general and specific in nature, 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 that our financial performance, environmental & social or other objectives, vision and strategic goals will not be achieved and that our actual results may differ materially from such predictions, forecasts, projections, expectations or conclusions.


Table of Contents
    
Royal Bank of Canada
  Second Quarter 2024  
    3  
 
We caution readers not to place undue reliance on our forward-looking 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, but are not limited to: credit, market, liquidity and funding, insurance, operational, regulatory compliance (which could lead to us being subject to various legal and regulatory proceedings, the potential outcome of which could include regulatory restrictions, penalties and fines), strategic, reputation, legal and regulatory environment, competitive, model, systemic risks and other risks discussed in the risk sections of our 2023 Annual Report and the Risk management section of this Q2 2024 Report to Shareholders, including business and economic conditions in the geographic regions in which we operate, Canadian housing and household indebtedness, information technology, cyber and third-party risks, geopolitical uncertainty, environmental and social risk (including climate change), digital disruption and innovation, privacy and data related risks, regulatory changes, culture and conduct risks, the effects of changes in government fiscal, monetary and other policies, tax risk and transparency, and our ability to anticipate and successfully manage risks arising from all of the foregoing factors. Additional factors that could cause actual results to differ materially from the expectations in such forward-looking statements can be found in the risk sections of our 2023 Annual Report and the Risk management section of this Q2 2024 Report to Shareholders, as may be updated by subsequent quarterly reports.
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, as well as the inherent uncertainty of forward-looking statements. Material economic assumptions underlying the forward-looking statements contained in this Q2 2024 Report to Shareholders are set out in the Economic, market and regulatory review and outlook section and for each business segment under the Strategic priorities and Outlook sections in our 2023 Annual Report, as updated by the Economic, market and regulatory review and outlook section of this Q2 2024 Report to Shareholders. Such sections may be updated by subsequent quarterly reports. Assumptions about the duration and complexity of technological builds, and estimates of costs required for post-close synergy impacts were considered in the estimation of transaction and integration costs. 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 sections of our 2023 Annual Report and the Risk management section of this Q2 2024 Report to Shareholders, as may be updated by subsequent quarterly reports.
 
Overview and outlook
 
 
About Royal Bank of Canada
 
Royal Bank of Canada is a global financial institution with a purpose-driven,
principles-led
approach to delivering leading performance. Our success comes from the 98,000+ employees who leverage their imaginations and insights to bring our vision, values and strategy to life so we can help our clients thrive and communities prosper. As Canada’s biggest bank and one of the largest in the world, based on market capitalization, we have a diversified business model with a focus on innovation and providing exceptional experiences to our more than 18 million clients in Canada, the U.S. and 27 other countries. Learn more at rbc.com.

Table of Contents
4     
Royal Bank of Canada
  Second Quarter 2024  
 
 
Selected financial and other highlights
 
 
     As at or for the three months ended          As at or for the six months ended  
(Millions of Canadian dollars, except per share,
number of and percentage amounts)
 
April 30
2024
(1)
   
January 31
2024
   
April 30
2023
(2)
        
April 30
2024
(1)
   
April 30
2023
(2)
 
Total revenue
 
$
14,154
 
  $ 13,485     $ 12,445      
$
27,639
 
  $ 25,802  
Provision for credit losses (PCL)
 
 
920
 
    813       600      
 
1,733
 
    1,132  
Non-interest
expense
 
 
8,308
 
    8,324       7,400      
 
16,632
 
    14,989  
Income before income taxes
 
 
4,926
 
    4,348       4,445    
 
 
 
9,274
 
    9,681  
Net income
 
$
3,950
 
  $ 3,582     $ 3,680    
 
 
$
7,532
 
  $ 6,813  
Net income adjusted
(3), (4)
 
$
4,198
 
  $ 4,066     $ 3,789    
 
 
$
8,264
 
  $ 8,051  
Segments – net income
           
Personal & Commercial Banking
 
$
2,051
 
  $ 2,061     $ 1,915      
$
4,112
 
  $ 4,041  
Wealth Management
(5)
 
 
769
 
    606       719      
 
1,375
 
    1,549  
Insurance
 
 
177
 
    220       170      
 
397
 
    237  
Capital Markets
(5)
 
 
1,262
 
    1,154       962      
 
2,416
 
    2,203  
Corporate Support
 
 
(309
    (459     (86  
 
 
 
(768
    (1,217
Net income
 
$
3,950
 
  $ 3,582     $ 3,680    
 
 
$
7,532
 
  $ 6,813  
Selected information
           
Earnings per share (EPS) – basic
 
$
2.75
 
  $ 2.50     $ 2.60      
$
5.25
 
  $ 4.83  
            – diluted
 
 
2.74
 
    2.50       2.60      
 
5.25
 
    4.83  
Earnings per share (EPS) – basic adjusted
(3), (4)
 
 
2.92
 
    2.85       2.68      
 
5.77
 
    5.73  
            – diluted adjusted
(3), (4)
 
 
2.92
 
    2.85       2.68      
 
5.77
 
    5.72  
Return on common equity (ROE)
(4), (6)
 
 
14.5%
 
    13.1%     14.9%    
 
13.8%
 
    13.7%  
Return on common equity (ROE) adjusted
(3), (4)
 
 
15.5%
 
    14.9%     15.3%    
 
15.2%
 
    16.3%  
Average common equity
(6)
 
$
108,650
 
  $ 107,100     $ 99,450      
$
107,850
 
  $ 98,350  
Net interest margin (NIM) – on average earning assets, net
(4)
 
 
1.50%
 
    1.41%     1.53%    
 
1.45%
 
    1.50%  
PCL on loans as a % of average net loans and acceptances
 
 
0.41%
 
    0.37%     0.30%    
 
0.39%
 
    0.27%  
PCL on performing loans as a % of average net loans and acceptances
 
 
0.11%
 
    0.06%     0.09%    
 
0.08%
 
    0.08%  
PCL on impaired loans as a % of average net loans and acceptances
 
 
0.30%
 
    0.31%     0.21%    
 
0.31%
 
    0.19%  
Gross impaired loans (GIL) as a % of loans and acceptances
 
 
0.55%
 
    0.48%     0.34%    
 
0.55%
 
    0.34%  
Liquidity coverage ratio (LCR)
(4), (7)
 
 
128%
 
    132%     135%    
 
128%
 
    135%  
Net stable funding ratio (NSFR)
(4), (7)
 
 
111%
 
    113%     113%  
 
 
 
111%
 
    113%  
Capital, Leverage and Total loss absorbing capacity (TLAC) ratios 
(4), (8), (9)
           
Common Equity Tier 1 (CET1) ratio
 
 
12.8%
 
    14.9%     13.7%    
 
12.8%
 
    13.7%  
Tier 1 capital ratio
 
 
14.1%
 
    16.3%     14.9%    
 
14.1%
 
    14.9%  
Total capital ratio
 
 
16.1%
 
    18.1%     16.8%    
 
16.1%
 
    16.8%  
Leverage ratio
 
 
4.2%
 
    4.4%     4.2%    
 
4.2%
 
    4.2%  
TLAC ratio
 
 
27.5%
 
    31.4%     31.0%    
 
27.5%
 
    31.0%  
TLAC leverage ratio
 
 
8.1%
 
    8.5%     8.7%  
 
 
 
8.1%
 
    8.7%  
Selected balance sheet and other information
(10)
           
Total assets
 
$
 2,031,050
 
  $  1,974,405     $  1,942,223      
$
 2,031,050
 
  $  1,942,223  
Securities, net of applicable allowance
 
 
412,553
 
    405,813       319,828      
 
412,553
 
    319,828  
Loans, net of allowance for loan losses
 
 
960,539
 
    858,316       831,187      
 
960,539
 
    831,187  
Derivative related assets
 
 
130,199
 
    105,038       124,149      
 
130,199
 
    124,149  
Deposits
 
 
1,327,603
 
    1,241,168       1,210,053      
 
1,327,603
 
    1,210,053  
Common equity
 
 
112,065
 
    108,360       101,528      
 
112,065
 
    101,528  
Total risk-weighted assets (RWA)
(4), (8), (9)
 
 
653,702
 
    590,257       593,533      
 
653,702
 
    593,533  
Assets under management (AUM)
(4)
 
 
1,223,300
 
    1,150,100       1,083,600      
 
1,223,300
 
    1,083,600  
Assets under administration (AUA)
(4), (11), (12)
 
 
4,546,200
 
    4,490,100       5,915,300    
 
 
 
4,546,200
 
    5,915,300  
Common share information
           
Shares outstanding (000s) – average basic
 
 
1,412,651
 
    1,406,324       1,388,388      
 
1,409,452
 
    1,385,525  
– average diluted
 
 
1,414,166
 
    1,407,641       1,390,149      
 
1,410,842
 
    1,387,295  
– end of period
 
 
1,414,304
 
    1,408,257       1,389,730      
 
1,414,304
 
    1,389,730  
Dividends declared per common share
 
$
1.38
 
  $ 1.38     $ 1.32      
$
2.76
 
  $ 2.64  
Dividend yield
(4)
 
 
4.1%
 
    4.5%     4.0%    
 
4.4%
 
    4.0%  
Dividend payout ratio
(4)
 
 
50%
 
    55%     51%    
 
53%
 
    55%  
Common share price (RY on TSX)
(13)
 
$
133.19
 
  $ 131.21     $ 134.51      
$
133.19
 
  $ 134.51  
Market capitalization (TSX)
(13)
 
 
188,371
 
    184,777       186,933    
 
 
 
188,371
 
    186,933  
Business information
(number of)
           
Employees (full-time equivalent) (FTE)
 
 
94,480
 
    90,166       94,398      
 
94,480
 
    94,398  
Bank branches
 
 
1,348
 
    1,248       1,258      
 
1,348
 
    1,258  
Automated teller machines (ATMs)
 
 
4,447
 
    4,341       4,357    
 
 
 
4,447
 
    4,357  
Period average US$ equivalent of C$1.00
(14)
 
 
0.734
 
    0.745       0.737      
 
0.740
 
    0.741  
Period-end
US$ equivalent of C$1.00
 
 
0.727
 
    0.744       0.738    
 
 
 
0.727
 
    0.738  
 
(1)   On March 28, 2024, we completed the HSBC Canada transaction. HSBC Canada results have been consolidated from the closing date, and are included in our Personal & Commercial Banking, Wealth Management and Capital Markets segments. For further details, refer to the Key corporate events section.
(2)   Amounts have been restated from those previously presented as part of the adoption of IFRS 17, effective November 1, 2023. For further details on the impacts of the adoption of IFRS 17 including the description of accounting policies selected, refer to Note 2 of our Condensed Financial Statements.
(3)   These are non-GAAP measures. For further details, including a reconciliation, refer to the Key performance and non-GAAP measures section.
(4)   See Glossary for composition of these measures.
(5)   Effective the fourth quarter of 2023, we moved the Investor Services lending business from our Wealth Management segment to our Capital Markets segment. Therefore, comparative results for the three and six month periods ended April 30, 2023 have been revised from those previously presented.
(6)   Average amounts are calculated using methods intended to approximate the average of the daily balances for the period. This includes average common equity used in the calculation of ROE. For further details, refer to the Key performance and non-GAAP measures section.
(7)   The LCR and NSFR are calculated in accordance with the Office of the Superintendent of Financial Institutions’ (OSFI) Liquidity Adequacy Requirements (LAR) guideline. LCR is the average for the three months ended for each respective period. For further details, refer to the Liquidity and funding risk section.
(8)   Capital ratios and RWA are calculated using OSFI’s Capital Adequacy Requirements (CAR) guideline, the Leverage ratio is calculated using OSFI’s Leverage Requirements (LR) guideline, and both the TLAC and TLAC leverage ratios are calculated using OSFI’s TLAC guideline. The periods ended April 30, 2024 and January 31, 2024 reflect our adoption of the revised market risk and credit valuation adjustment (CVA) frameworks that came into effect on November 1, 2023. For further details, refer to the Capital management section.
(9)   As prior period restatements are not required by OSFI, there was no impact from the adoption of IFRS 17 on regulatory capital, RWA, capital ratios, leverage ratio, TLAC available and TLAC ratios for periods prior to November 1, 2023.
(10)   Represents period-end spot balances.
(11)   AUA includes $16 billion and $6 billion (January 31, 2024 – $14 billion and $6 billion; April 30, 2023 – $15 billion and $8 billion) of securitized residential mortgages and credit card loans, respectively.
(12)   Comparative amounts for April 30, 2023 have been revised from those previously presented.
(13)   Based on TSX closing market price at period-end.
(14)   Average amounts are calculated using month-end spot rates for the period.

Table of Contents
    
Royal Bank of Canada
  Second Quarter 2024  
    5  
 
Economic, market and regulatory review and outlook – data as at May 29, 2024
 
The predictions and forecasts in this section are based on information and assumptions from sources we consider reliable. If this information or these assumptions are not accurate, actual economic outcomes may differ materially from the outlook presented in this section.
Economic and market review and outlook
The economic backdrop has continued to soften across most advanced economies, including Canada, the Euro area and the U.K. The U.S. economy has remained resilient despite higher interest rates with GDP and employment continuing to rise. However, U.S. inflationary pressures have shown signs of re-acceleration with robust consumer spending despite higher interest rates. Growth in the U.S. economy is expected to slow as excess household savings accumulated during the pandemic are depleted, job openings decline, and wage growth slows. Strong recent economic data and higher inflation readings are expected to delay the first interest rate reduction from the Federal Reserve (Fed) until the fourth calendar quarter of 2024. The Bank of Canada (BoC) is expected to shift to interest rate reductions earlier than the Fed in the second calendar quarter of 2024 with the Canadian economy underperforming the U.S. and Canadian inflationary pressures showing further signs of moderating. The Bank of England (BoE) and European Central Bank (ECB) are also expected to make the first reductions to their respective policy rates by the end of the summer.
Canada
Canadian GDP is expected to have risen 2.5%
1
in the first calendar quarter of 2024, following an increase of 1.0%
1
in the final calendar quarter of 2023. Amidst a rapidly increasing population,
per-capita
output is expected to continue to remain weak after declining for six consecutive quarters to Q4 2024. The unemployment rate increased to 6.1% in April 2024, up 1% from a year earlier and is expected to continue to rise over the first half of calendar 2024 as rising household debt servicing costs continue to reduce household purchasing power. Inflation has continued to slow towards the BoC’s 2% target rate with the breadth of goods and services with significant above-target price growth narrowing. GDP growth is expected to strengthen but remain historically low over the second half of calendar 2024, supported by a shift to interest rate reductions from the BoC by mid calendar year, and strong levels of immigration and population growth.
U.S.
U.S. GDP grew by 1.6%
1
in the first calendar quarter of 2024 following a 3.4%
1
increase in the final calendar quarter of 2023. Household spending and employment have continued to show strength despite higher interest rates. GDP growth is expected to slow over the second half of calendar year 2024. The unemployment rate remains low but increased to 3.9% in April. Job openings have continued to decline and wage growth has slowed. Inflationary pressures have shown signs of re-acceleration in early 2024 after slowing in calendar 2023, driven by higher growth in prices for services. The combination of stronger than expected economic growth and inflation in early calendar 2024 has made a near-term shift to interest rate reductions from the Fed less likely. The Fed is not expected to increase interest rates further, however we do not expect the first reduction to the Fed funds target range until December.
Europe
Euro area GDP rose 0.3% in the first calendar quarter of 2024 from the last calendar quarter of 2023 as strength in the service sector offset persistent weakness in manufacturing. GDP growth is expected to remain slow but positive in the second calendar quarter of 2024 before strengthening in the second half of the calendar year. Unemployment rates remain very low across countries in the Euro area but are expected to rise modestly through the rest of calendar 2024. Year-over-year consumer price growth has continued to slow, and the ECB is expected to start to move the deposit rate lower by the end of the second calendar quarter of 2024. A more pronounced rebound in services activities in the U.K. supported GDP growth in the first calendar quarter of 2024. U.K. output increased by 0.6% in the first calendar quarter of 2024 following a 0.3% contraction in the final calendar quarter of 2023. Inflation trends have continued to moderate but progress especially with services inflation is still lagging that of other advanced economies. We expect the BoE will begin to shift the Bank Rate lower by the end of the third calendar quarter of 2024.
Financial markets
Government bond yields have moved higher recently amid an unexpected
re-acceleration
in inflation trends in the U.S. and expectations that the Fed will need to hold interest rates at higher levels for longer than previously assumed. Equity markets weakened in April but have recovered back to close to record highs. Oil prices have risen in calendar year 2024 given concerns about supply availability that are tied to global geopolitical uncertainties. Other global commodity prices have moderated from peak pandemic levels in calendar 2022, and supply chain challenges have continued to unwind.
 
1
 
  Annualized rate

Table of Contents
6     
Royal Bank of Canada
  Second Quarter 2024  
 
 
Regulatory environment
We continue to monitor and prepare for regulatory developments and changes in a manner that seeks to ensure compliance with new requirements while mitigating adverse business or financial impacts. Such impacts could result from new or amended laws or regulations and the expectations of those who enforce them. A high level summary of the key regulatory changes that have the potential to increase or decrease our costs and the complexity of our operations is included in the Legal and regulatory environment risk section of our 2023 Annual Report and updates are listed below.
Global uncertainty
In April 2024, the International Monetary Fund (IMF) projected global growth of 3.2% for calendar 2024, up 0.1% from its January forecast, in part due to resiliency in the global economy. Interest rate increases implemented by central banks aimed at slowing inflation have been largely successful in guiding the economy toward a “soft landing”. However, significant uncertainty continues to pose risks to the global economic outlook, driven by: growing geopolitical tensions, including those between Russia and Ukraine, the conflict in the Middle East, and those between China and the West; deepening economic concerns in China, particularly in the real estate sector, that could have an impact on global growth; the persistence of inflation and elevated interest rates and the associated impact on economic growth; extreme weather-related events; potential restrictive fiscal policies in response to high government debt; the potential re-emergence of financial sector instability as banks face regulatory reform in the U.S.; and the U.S. election. Our diversified business model, as well as our product and geographic diversification, continue to help mitigate the risks posed by global uncertainty.
Climate-related regulatory activity
On March 20, 2024, OSFI released updates to its Guideline
B-15
– Climate Risk Management. The guideline sets out expectations for the management and disclosure of climate-related risks for federally regulated financial institutions (FRFIs) and aims to support FRFIs in developing greater resilience to, and management of, these risks. The updated guideline includes additional climate-related disclosure requirements aligned with IFRS S2 and will be effective for fiscal
year-end
2024. We are currently assessing the impact of the updated guideline and continue to work towards meeting the requirements by the effective date.
For a discussion on risk factors resulting from these and other developments which may affect our business and financial results, refer to the risk sections of our 2023 Annual Report. For further details on our framework and activities to manage risks, refer to the risk and Capital management sections of this Q2 2024 Report to Shareholders.
 
Key corporate events
 
HSBC Bank Canada
On March 28, 2024, we completed the acquisition of HSBC Bank Canada (HSBC Canada). The acquisition of HSBC Canada (the HSBC Canada transaction) gives us the opportunity to enhance our existing businesses in line with our strategic goals and better positions us to be the bank of choice for commercial clients with international needs, newcomers to Canada and globally connected clients. HSBC Canada results have been consolidated from the closing date and are included in our Personal & Commercial Banking, Wealth Management and Capital Markets segments.
Total consideration of $15.5 billion in cash included $13.5 billion for 100% of the common shares of HSBC Canada, $2.1 billion for the preferred shares and subordinated debt held directly or indirectly by HSBC Holdings plc, $(0.5) billion for the settlement of
pre-existing
relationships with HSBC Canada and $0.4 billion for an additional amount that accrued from August 30, 2023 to the closing date. This additional amount was calculated based on the $13.5 billion
all-cash
purchase price for the common shares of HSBC Canada and the Canadian Overnight Repo Rate Average. Relatedly, under a locked box mechanism, HSBC Canada’s earnings from June 30, 2022 to the closing date accrued to RBC and were reflected in the acquired net assets on closing. For further details, refer to Note 6 of our Condensed Financial Statements.
As the fair values of HSBC Canada’s fixed rate financial assets and liabilities are sensitive to changes in market interest rates, increases in interest rates prior to closing would have reduced the net fair value of the financial assets and liabilities to be acquired, which would have increased the goodwill recognized on closing and reduced our capital ratios. To manage this, we had previously
de-designated
certain interest rate swaps in cash flow hedging relationships such that future mark-to-market gains (losses) were recorded in net income, instead of Other comprehensive income (OCI), to mitigate closing capital ratio volatility. For the six months ended April 30, 2024, we recognized $222 million of
mark-to-market
losses in
Non-interest
income – Other on the swaps and $91 million in Net interest income related to the reclassification of amounts previously accumulated in OCI, both of which are treated as specified items and reflected in Corporate Support. Subsequent to closing, we
re-designated
these interest rate swaps into cash flow hedging relationships. Adjusted results excluding specified items are
non-GAAP
measures. For further details, including a reconciliation, refer to the Key performance and
non-GAAP
measures section.

Table of Contents
    
Royal Bank of Canada
  Second Quarter 2024  
    7  
 
The following table provides details on the impact of the HSBC Canada transaction on our Personal & Commercial Banking segment and consolidated results, and reflects revenue, PCL,
non-interest
expenses and income taxes associated with the acquired operations and clients, which include the acquired assets, assumed liabilities and employees with the exception of assets and liabilities relating to treasury and liquidity management activities (HSBC Canada results).
 
    
For the three months ended April 30, 2024
 
    
Segment results – Personal & Commercial Banking
          
Consolidated results
 
(Millions of Canadian dollars)  
Excluding
HSBC Canada
   
HSBC
Canada
   
Total
          
Excluding
HSBC Canada
   
HSBC
Canada
   
Total
 
Net interest income
 
$
4,229
 
 
$
171
 
 
$
4,400
 
   
$
6,444
 
 
$
179
 
 
$
6,623
 
Non-interest
income
 
 
1,555
 
 
 
35
 
 
 
1,590
 
         
 
7,465
 
 
 
66
 
 
 
7,531
 
Total revenue
 
 
5,784
 
 
 
206
 
 
 
5,990
 
   
 
13,909
 
 
 
245
 
 
 
14,154
 
PCL
(1)
 
 
552
 
 
 
202
 
 
 
754
 
   
 
703
 
 
 
217
 
 
 
920
 
Non-interest
expense
 
 
2,339
 
 
 
89
 
 
 
2,428
 
         
 
8,209
 
 
 
99
 
 
 
8,308
 
Income (loss) before income taxes
 
 
2,893
 
 
 
(85
 
 
2,808
 
   
 
4,997
 
 
 
(71
 
 
4,926
 
Income taxes (recoveries)
 
 
781
 
 
 
(24
 
 
757
 
         
 
996
 
 
 
(20
 
 
976
 
Net income
 
$
2,112
 
 
$
(61
 
$
2,051
 
         
$
4,001
 
 
$
(51
 
$
3,950
 
 
(1)   Segment results – Personal & Commercial Banking include initial PCL on purchased performing financial assets of $186 million, of which $181 million relates to purchased performing loans. Consolidated results include initial PCL on purchased performing financial assets of $200 million, of which $193 million relates to purchased performing loans.
 
Financial performance
 
 
Overview
 
Q2 2024 vs. Q2 2023
Net income of $3,950 million was up $270 million or 7% from a year ago. Diluted EPS of $2.74 was up $0.14 or 5% and ROE of 14.5% was down from 14.9% last year. Our CET1 ratio of 12.8% was down 90 bps from a year ago.
Adjusted net income of $4,198 million was up $409 million or 11% from a year ago. Adjusted diluted EPS of $2.92 was up $0.24 or 9% and adjusted ROE of 15.5% was up from 15.3% last year.
Our earnings reflect higher results in Capital Markets, Personal & Commercial Banking, Wealth Management and Insurance. This was partially offset by lower results in Corporate Support, mainly reflecting the HSBC Canada transaction and integration costs, which is treated as a specified item.
Q2 2024 vs. Q1 2024
Net income of $3,950 million was up $368 million or 10% from last quarter. Diluted EPS of $2.74 was up $0.24 or 10% and ROE of 14.5% was up from 13.1% in the prior quarter. Our CET1 ratio of 12.8% was down 210 bps from last quarter.
Adjusted net income of $4,198 million was up $132 million or 3% from last quarter. Adjusted diluted EPS of $2.92 was up $0.07 or 2% and adjusted ROE of 15.5% was up 60 bps from 14.9% last quarter.
Our earnings reflect higher results in Wealth Management and Capital Markets, partially offset by lower results in Insurance and Personal & Commercial Banking. Our results also reflect higher earnings in Corporate Support, primarily due to management of closing capital volatility related to the HSBC Canada transaction, which is treated as a specified item.
Q2 2024 vs. Q2 2023 (Six months ended)
Net income of $7,532 million was up $719 million or 11% from the same period last year. Diluted EPS of $5.25 was up $0.42 or 9% and ROE of 13.8% was up from 13.7% in the prior year.
Adjusted net income of $8,264 million was up $213 million or 3% from the same period last year. Adjusted diluted EPS of $5.77 was up $0.05 or 1% and adjusted ROE of 15.2% was down from 16.3% in the prior year.
Our earnings were up from the same period last year, as the prior year results reflected the impact of the Canada Recovery Dividend (CRD) and other tax related adjustments, which is treated as a specified item and reported in Corporate Support. Earnings in the current period also include specified items relating to the HSBC Canada transaction in Corporate Support. Our results also reflect higher earnings in Capital Markets, Insurance and Personal & Commercial Banking, partially offset by lower earnings in Wealth Management.
For further details on our business segment results and CET1 ratio, refer to the Business segment results and Capital management sections, respectively.
Adjusted results
Adjusted results exclude specified items and the
after-tax
impact of amortization of acquisition-related intangibles. Adjusted results are
non-GAAP
measures. For further details, including a reconciliation, refer to the Key performance and
non-GAAP
measures section.

Table of Contents
8   
Royal Bank of Canada
  Second Quarter 2024
 
Impact of foreign currency translation
The following table reflects the estimated impact of foreign currency translation on key income statement items:
 
     For the three months ended          For the six months ended  
(Millions of Canadian dollars, except per share amounts)
 
Q2 2024 vs.
Q2 2023
   
Q2 2024 vs.
Q1 2024
        
Q2 2024 vs.
Q2 2023
 
Increase (decrease):
       
Total revenue
 
$
45
 
 
$
98
 
   
$
80
 
PCL
 
 
1
 
 
 
2
 
   
 
3
 
Non-interest
expense
 
 
28
 
 
 
54
 
   
 
56
 
Income taxes
 
 
1
 
 
 
4
 
   
 
 
Net income
 
 
15
 
 
 
38
 
     
 
21
 
Impact on EPS
       
Basic
 
$
0.01
 
 
$
0.03
 
   
$
   0.01
 
Diluted
 
 
0.01
 
 
 
0.03
 
     
 
0.01
 
The relevant average exchange rates that impact our business are shown in the following table:
 
     For the three months ended          For the six months ended  
(Average foreign currency equivalent of C$1.00) (1)
 
April 30
2024
    
January 31
2024
    
April 30
2023
        
April 30
2024
   
April 30
2023
 
U.S. dollar
 
 
0.734
 
     0.745        0.737      
 
0.740
 
    0.741  
British pound
 
 
0.583
 
     0.588        0.599      
 
0.586
 
    0.605  
Euro
 
 
0.682
 
     0.683        0.681        
 
0.683
 
    0.690  
 
  (1)   Average amounts are calculated using
month-end
spot rates for the period.
 
Total revenue
 
     For the three months ended          For the six months ended  
(Millions of Canadian dollars, except percentage amounts)
 
April 30
2024
   
January 31
2024
   
April 30
2023 
(1)
        
April 30
2024
   
April 30
2023 
(1)
 
Interest and dividend income
 
$
 25,754
 
  $  25,609     $  20,318      
$
 51,363
 
  $ 39,655  
Interest expense
 
 
19,131
 
    19,277       14,219        
 
38,408
 
     27,354  
Net interest income
 
$
6,623
 
  $ 6,332     $ 6,099      
$
12,955
 
  $ 12,301  
NIM
 
 
1.50%
    1.41%     1.53%      
 
1.45%
    1.50%
Insurance service result
 
$
203
 
  $ 187     $ 225      
$
390
 
  $ 417  
Insurance investment result
(2)
 
 
59
 
    141       14      
 
200
 
    (59
Trading revenue
 
 
633
 
    804       430      
 
1,437
 
    1,499  
Investment management and custodial fees
 
 
2,257
 
    2,185       2,083      
 
4,442
 
    4,139  
Mutual fund revenue
 
 
1,067
 
    1,030       1,000      
 
2,097
 
    2,015  
Securities brokerage commissions
 
 
431
 
    388       377      
 
819
 
    738  
Service charges
 
 
557
 
    554       511      
 
1,111
 
    1,022  
Underwriting and other advisory fees
 
 
734
 
    606       458      
 
1,340
 
    970  
Foreign exchange revenue, other than trading
 
 
287
 
    262       322      
 
549
 
    755  
Card service revenue
 
 
291
 
    326       279      
 
617
 
    604  
Credit fees
 
 
434
 
    395       357      
 
829
 
    736  
Net gains on investment securities
 
 
59
 
    70       111      
 
129
 
    164  
Share of profit in joint ventures and associates
 
 
18
 
    12       12      
 
30
 
    41  
Other
 
 
501
 
    193       167        
 
694
 
    460  
Non-interest
income
 
 
7,531
 
    7,153       6,346        
 
14,684
 
    13,501  
Total revenue
 
$
14,154
 
  $ 13,485     $ 12,445        
$
27,639
 
  $ 25,802  
Additional trading information
           
Net interest income
(3)
 
$
403
 
  $ 344     $ 469      
$
747
 
  $ 655  
Non-interest
income
 
 
633
 
    804       430        
 
1,437
 
    1,499  
Total trading revenue
 
$
1,036
 
  $ 1,148     $ 899        
$
2,184
 
  $ 2,154  
 
  (1)   Amounts have been restated from those previously presented as part of the adoption of IFRS 17, effective November 1, 2023. Refer to Note 2 of our Condensed Financial Statements for further details on these changes.  
  (2)   The 2023 restated results may not be fully comparable to the current period as we were not managing our asset and liability portfolios under IFRS 17.  
  (3)   Reflects net interest income arising from trading-related positions, including assets and liabilities that are classified or designated at fair value through profit or loss (FVTPL).  
Q2 2024 vs. Q2 2023
Total revenue increased $1,709 million or 14% from a year ago, mainly due to higher net interest income, other revenue, underwriting and other advisory fees, trading revenue and investment management and custodial fees. The inclusion of HSBC Canada revenue contributed $245 million to total revenue.
Net interest income increased $524 million or 9%, of which $179 million reflects the inclusion of HSBC Canada revenue. The remaining increase of $345 million or 6% was largely due to higher spreads and average volume growth in Canadian Banking.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   9
 
NIM was down 3 bps compared to last year, mainly driven by Capital Markets, primarily reflecting lower trading net interest income and higher average earning assets. This factor was partially offset by the benefit of higher interest rates and favourable asset mix that more than offset competitive pricing pressures in Canadian Banking, a favourable impact associated with the sale of RBC Investor Services
®
operations, and favourable asset yields in U.S. Wealth Management (including City National).
Trading revenue increased $203 million or 47%, mainly due to higher equity trading revenue in North America.
Investment management and custodial fees increased $174 million or 8%, mainly due to higher fee-based client assets reflecting market appreciation and net sales.
Underwriting and other advisory fees increased $276 million or 60%, largely due to higher M&A activity across most regions as well as higher debt and equity origination across all regions.
Other revenue increased $334 million, mainly attributable to the impact of management of closing capital volatility related to the HSBC Canada transaction, which is treated as a specified item. Changes in the fair value of certain instruments in our non-trading portfolios and the hedges related to our U.S. share-based compensation plans, which was largely offset in Non-interest expense, also contributed to the increase.
Q2 2024 vs. Q1 2024
Total revenue increased $669 million or 5% from last quarter, largely due to higher other revenue, net interest income, and underwriting and other advisory fees. These factors were partially offset by lower trading revenue. The inclusion of HSBC Canada revenue contributed $245 million to total revenue.
Net interest income increased $291 million or 5%, of which $179 million reflects the inclusion of HSBC Canada revenue. The remaining increase of $112 million or 2% was primarily due to higher spreads in Canadian Banking, the impact of which was largely offset by two less days in the current quarter. Higher fixed income trading revenue primarily in Europe in Capital Markets also contributed to the increase.
Trading revenue decreased $171 million or 21%, primarily due to lower fixed income trading revenue primarily in Europe.
Underwriting and other advisory fees increased $128 million or 21%, mainly due to higher equity and debt origination and higher M&A activity across all regions.
Other revenue increased $308 million, primarily attributable to impact of management of closing capital volatility related to the HSBC Canada transaction, which is treated as a specified item. This factor was partially offset by changes in the fair value of the hedges related to our U.S. share-based compensation plans, which was largely offset in Non-interest expense.
Q2 2024 vs. Q2 2023 (Six months ended)
Total revenue increased $1,837 million or 7% from the same period last year, primarily driven by higher net interest income, underwriting and other advisory fees, investment management and custodial fees, insurance investment result and other revenue. These factors were partially offset by lower foreign exchange revenue, other than trading. The inclusion of HSBC Canada revenue contributed $245 million to total revenue.
Net interest income increased $654 million or 5%, of which $179 million reflects the inclusion of HSBC Canada revenue. The remaining increase of $475 million or 4% was largely due to higher spreads and average volume growth in Canadian Banking.
Insurance investment result increased $259 million, primarily due to favourable investment-related experience as we repositioned our portfolio for the transition to IFRS 17. The results in the prior period are not fully comparable as we were not managing our asset and liability portfolios under IFRS 17.
Investment management and custodial fees increased $303 million or 7%, mainly due to higher fee-based client assets reflecting market appreciation and net sales.
Underwriting and other advisory fees increased $370 million or 38%, mainly due to higher M&A activity across most regions, as well as higher debt and equity origination across all regions.
Foreign exchange revenue, other than trading decreased $206 million or 27%, largely driven by reduced revenue following the sale of RBC Investor Services operations and foreign currency translation gains in the prior year associated with certain foreign currency denominated funding, which was offset by the impact of economic hedges in Other revenue.
Other revenue increased $234 million or 51%, mainly attributable to the impact of economic hedges in Corporate Support, which was largely offset in Foreign exchange revenue, other than trading and changes in the fair value of the hedges related to our U.S. share-based compensation plans, which was largely offset in Non-interest expense. These factors were partially offset by impact of management of closing capital volatility related to the HSBC Canada transaction, which is treated as a specified item.

Table of Contents
10   
Royal Bank of Canada
  Second Quarter 2024
 
Provision for credit losses
(1)
 
     For the three months ended            For the six months ended  
(Millions of Canadian dollars, except percentage amounts)
 
April 30
2024
   
January 31
2024
   
April 30
2023
          
April 30
2024
   
April 30
2023
 
Personal & Commercial Banking
 
$
243
 
  $ 149     $ 124      
$
392
 
  $ 264  
Wealth Management
 
 
(19
    (27     2      
 
(46
    26  
Capital Markets
 
 
19
 
    10       47      
 
29
 
    56  
Corporate Support and other
(2)
 
 
1
 
    1                  
 
2
 
     
PCL on performing loans
 
 
244
 
    133       173            
 
377
 
    346  
Personal & Commercial Banking
 
$
511
 
  $ 486     $ 302      
$
997
 
  $ 564  
Wealth Management
 
 
46
 
    38       26      
 
84
 
    68  
Capital Markets
 
 
115
 
    161       113            
 
276
 
    166  
PCL on impaired loans
 
 
672
 
    685       441            
 
1,357
 
    798  
PCL – Loans
 
 
916
 
    818       614      
 
1,734
 
    1,144  
PCL – Other
(3)
 
 
4
 
    (5     (14          
 
(1
    (12
Total PCL
 
$
920
 
  $ 813     $ 600            
$
1,733
 
  $ 1,132  
PCL on loans is comprised of:
           
Retail
 
$
107
 
  $ 137     $ 97      
$
244
 
  $ 231  
Wholesale
 
 
137
 
    (4     76            
 
133
 
    115  
PCL on performing loans
 
 
244
 
    133       173            
 
377
 
    346  
Retail
 
 
396
 
    359       249      
 
755
 
    488  
Wholesale
 
 
276
 
    326       192            
 
602
 
    310  
PCL on impaired loans
 
 
672
 
    685       441            
 
1,357
 
    798  
PCL – Loans
 
$
916
 
  $ 818     $ 614            
$
1,734
 
  $ 1,144  
PCL on loans as a % of average net loans and acceptances
 
 
 0.41%
     0.37%        0.30%    
 
 0.39%
     0.27%
PCL on impaired loans as a % of average net loans and acceptances
 
 
0.30%
    0.31%       0.21%          
 
0.31%
    0.19%
 
(1)   Information on loans represents loans, acceptances and commitments.
(2)   Includes PCL recorded in Corporate Support and Insurance.
(3)   PCL – Other includes amounts related to debt securities measured at fair value through other comprehensive income (FVOCI) and amortized cost, accounts receivable, and financial and purchased guarantees.
Q2 2024 vs. Q2 2023
Total PCL increased $320 million or 53% from a year ago, mainly reflecting higher provisions in Personal & Commercial Banking. The PCL on loans ratio increased 11 bps.
PCL on performing loans increased $71 million or 41%, mainly reflecting $193 million of initial PCL on the performing loans purchased in the HSBC Canada transaction. This was partially offset by favourable changes to our macroeconomic forecast in Personal & Commercial Banking, as well as lower provisions in Capital Markets and releases of provisions in Wealth Management.
PCL on impaired loans increased $231 million or 52%, primarily due to higher provisions in our Canadian Banking retail and commercial portfolios.
Q2 2024 vs. Q1 2024
Total PCL increased $107 million or 13% from last quarter, mainly reflecting higher provisions in Personal & Commercial Banking, partially offset by lower provisions in Capital Markets. The PCL on loans ratio increased 4 bps.
PCL on performing loans increased $111 million or 83%, mainly reflecting $193 million of initial PCL on the performing loans purchased in the HSBC Canada transaction. This was partially offset by favourable changes to our macroeconomic forecast in Personal & Commercial Banking.
PCL on impaired loans decreased $13 million or 2%, mainly due to lower provisions in Capital Markets, partially offset by higher provisions in Personal & Commercial Banking and Wealth Management.
Q2 2024 vs. Q2 2023 (Six months ended)
Total PCL increased $601 million or 53% from the same period last year, mainly reflecting higher provisions in Personal & Commercial Banking. The PCL on loans ratio increased 12 bps.
PCL on performing loans increased $31 million or 9%, mainly reflecting $193 million of initial PCL on the performing loans purchased in the HSBC Canada transaction and unfavourable changes in credit quality in Personal & Commercial Banking. This was partially offset by the impact of favourable changes to our macroeconomic forecast in Personal & Commercial Banking, U.S. Wealth Management (including City National) and Capital Markets.
PCL on impaired loans increased $559 million or 70%, primarily due to higher provisions in our Canadian Banking portfolios and Capital Markets.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   11
 
Non-interest
expense
 
     For the three months ended            For the six months ended  
(Millions of Canadian dollars, except percentage amounts)
 
April 30
2024
   
January 31
2024
   
April 30
2023 
(1)
          
April 30
2024
   
April 30
2023
(1)
 
Salaries
 
$
2,145
 
  $ 2,078     $ 2,069      
$
4,223
 
  $ 4,079  
Variable compensation
 
 
2,161
 
    2,083       1,811      
 
4,244
 
    3,837  
Benefits and retention compensation
 
 
606
 
    605       561      
 
1,211
 
    1,105  
Share-based compensation
 
 
179
 
    397       132            
 
576
 
    402  
Human resources
 
 
5,091
 
    5,163       4,573      
 
10,254
 
    9,423  
Equipment
 
 
615
 
    619       589      
 
1,234
 
    1,158  
Occupancy
 
 
441
 
    407       405      
 
848
 
    809  
Communications
 
 
358
 
    321       318      
 
679
 
    596  
Professional fees
 
 
697
 
    624       506      
 
1,321
 
    888  
Amortization of other intangibles
 
 
373
 
    352       383      
 
725
 
    745  
Other
 
 
733
 
    838       626            
 
1,571
 
    1,370  
Non-interest
expense
 
$
8,308
 
  $ 8,324     $ 7,400      
$
16,632
 
  $ 14,989  
Efficiency ratio
(2)
 
 
58.7%
    61.7%     59.5%    
 
60.2%
    58.1%
Adjusted efficiency ratio
(3)
 
 
56.0%
    57.9%     58.4%          
 
57.0%
    57.2%
 
  (1)   Amounts have been restated from those previously presented as part of the adoption of IFRS 17, effective November 1, 2023. Refer to Note 2 of our Condensed Financial Statements for further details on these changes.  
  (2)   Efficiency ratio is calculated as
Non-interest
expense divided by Total revenue.
 
  (3)   This is a
non-GAAP
ratio. For further details, refer to the Key performance and
non-GAAP
measures section.
 
Q2 2024 vs. Q2 2023
Non-interest expense increased $908 million or 12% from a year ago, of which $99 million reflects the inclusion of HSBC Canada non-interest expense. The remaining increase of $809 million or 11% was largely due to the HSBC Canada transaction and integration costs, which is treated as a specified item, as well as higher variable compensation costs commensurate with increased revenue. Higher staff costs, ongoing technology investments and the change in the fair value of our U.S. share-based compensation plans, which was largely offset in Other revenue, also contributed to the increase. These factors were partially offset by reduced expenses following the sale of RBC Investor Services operations.
Our efficiency ratio of 58.7% decreased 80 bps from 59.5% last year. Our adjusted efficiency ratio of 56.0% decreased 240 bps from 58.4% last year.
Q2 2024 vs. Q1 2024
Non-interest expense decreased $16 million from last quarter, mainly reflecting the change in the fair value of our U.S. share-based compensation plans, which was largely offset in Other revenue. The prior quarter also included $159 million ($115 million after-tax) relating to the FDIC special assessment. These factors were largely offset by the inclusion of HSBC Canada non-interest expense, as noted above, as well as the HSBC Canada transaction and integration costs, which is treated as a specified item.
Our efficiency ratio of 58.7% decreased 300 bps from 61.7% last quarter. Our adjusted efficiency ratio of 56.0% decreased 190 bps from 57.9% last quarter.
Q2 2024 vs. Q2 2023 (Six months ended)
Non-interest
expense increased $1,643 million or 11% from the same period last year, largely due to the HSBC Canada transaction and integration costs, which is treated as a specified item, as well as higher variable compensation costs commensurate with increased revenue and higher staff costs. The cost of the FDIC special assessment, as well as the change in the fair value of our U.S. share-based compensation plans, which was largely offset in Other revenue, also contributed to the increase. These factors were partially offset by reduced expenses following the sale of RBC Investor Services operations.
Our efficiency ratio of 60.2% increased 210 bps from 58.1% last year. Our adjusted efficiency ratio of 57.0% decreased 20 bps from 57.2% last year.
Adjusted efficiency ratio is a
non-GAAP
ratio. For further details, including a reconciliation, refer to the Key performance and
non-GAAP
measures section.
Income taxes
 
     For the three months ended            For the six months ended  
(Millions of Canadian dollars, except percentage amounts)
 
April 30
2024
   
January 31
2024
   
April 30
2023 
(1)
          
April 30
2024
   
April 30
2023 
(1)
 
Income taxes
 
$
976
 
  $ 766     $ 765            
$
1,742
 
  $ 2,868  
Income before income taxes
 
 
4,926
 
    4,348       4,445            
 
9,274
 
    9,681  
Effective income tax rate
 
 
 19.8%
     17.6%      17.2%          
 
 18.8%
     29.6%
Adjusted results
(2), (3)
           
Adjusted income taxes
 
$
1,037
 
  $ 913     $ 794      
$
1,950
 
  $ 1,865  
Adjusted income before income taxes
 
 
5,235
 
    4,979       4,583      
 
10,214
 
    9,916  
Adjusted effective income tax rate
 
 
19.8%
    18.3%     17.3%          
 
19.1%
    18.8%
 
  (1)   Amounts have been restated from those previously presented as part of the adoption of IFRS 17, effective November 1, 2023. Refer to Note 2 of our Condensed Financial Statements for further details on these changes.  
  (2)   These are
non-GAAP
measures. For further details, including a reconciliation, refer to the Key performance and
non-GAAP
measures section.
 
  (3)   See Glossary for composition of these measures.  

Table of Contents
12   
Royal Bank of Canada
  Second Quarter 2024
 
Q2 2024 vs. Q2 2023
Income tax expense increased $211 million or 28% from a year ago, primarily due to higher income before income taxes this quarter. Adjusted income tax expense increased $243 million or 31%.
The effective income tax rate of 19.8% increased 260 bps, primarily due to the impact of changes in earnings mix. The adjusted effective income tax rate of 19.8% increased 250 bps.
Q2 2024 vs. Q1 2024
Income tax expense increased $210 million or 27% from last quarter, primarily due to higher income before income taxes this quarter. Adjusted income tax expense increased $124 million or 14%.
The effective income tax rate of 19.8% increased 220 bps, primarily due to the impact of changes in earnings mix. The adjusted effective income tax rate of 19.8% increased 150 bps.
Q2 2024 vs. Q2 2023 (Six months ended)
Income tax expense decreased $1,126 million or 39%, from the same period last year, primarily due to the impact of the CRD and other tax related adjustments, which was treated as a specified item in the prior year. Adjusted income tax expense increased $85 million or 5%.
The effective income tax rate of 18.8% decreased 1,080 bps, primarily due to the impact of the CRD and other tax related adjustments noted above. The adjusted effective income tax rate of 19.1% increased 30 bps.
For further details on specified items, including a reconciliation, refer to the Key performance and
non-GAAP
measures section.
 
Business segment results
 
 
How we measure and report our business segments
 
The key methodologies and assumptions used in our management reporting framework are periodically reviewed by management to ensure they remain valid. Effective November 1, 2023, we prospectively revised our attributed capital methodology to include the allocation of leverage to our business segments to further align our allocation processes with evolving regulatory capital requirements. Our methodology for allocating capital to our business segments is intended to consistently measure and align economic costs with the underlying benefits and risks associated with the activities of each business segment, allowing for a uniform base for performance measurement among our business segments to facilitate management decisions in resource allocation in conjunction with other factors. For Insurance, the allocation of capital remains unchanged and continues to be based on fully diversified economic capital.
For further details on the key methodologies and assumptions used in our management reporting framework, refer to the How we measure and report our business segments section of our 2023 Annual Report.
 
Key performance and
non-GAAP
measures
 
Performance measures
We measure and evaluate the performance of our consolidated operations and each business segment using a number of financial metrics, such as net income and ROE. Certain financial metrics, including ROE, do not have a standardized meaning under generally accepted accounting principles (GAAP) and may not be comparable to similar measures disclosed by other financial institutions.
Return on common equity
We use ROE, at both the consolidated and business segment levels, as a measure of return on total capital invested in our business. Management views the business segment ROE measure as a useful measure for supporting investment and resource allocation decisions because it adjusts for certain items that may affect comparability between business segments and certain competitors.
Our consolidated ROE calculation is based on net income available to common shareholders divided by total average common equity for the period. Business segment ROE calculations are based on net income available to common shareholders divided by average attributed capital for the period. For each segment, with the exception of Insurance, average attributed capital includes the capital and leverage required to underpin various risks and amounts invested in goodwill and intangibles and other regulatory deductions. For Insurance, the allocation of capital is based on fully diversified economic capital.
The attribution of capital involves the use of assumptions, judgments and methodologies that are regularly reviewed and revised by management as deemed necessary. For further details on changes to our attributed capital methodology, refer to the How we measure and report our business segments section. Changes to such assumptions, judgments and methodologies can have a material effect on the business segment ROE information that we report. Other companies that disclose information on similar attributions and related return measures may use different assumptions, judgments and methodologies.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   13
 
The following table provides a summary of our ROE calculations:
 
     For the three months ended  
   
April 30
2024
       
January 31
2024
       
April 30
2023
 
(Millions of Canadian dollars,
except percentage amounts)
 
Personal &
Commercial
Banking 
(1)
   
Wealth
Management 
(1)
   
Insurance
   
Capital
Markets 
(1)
   
Corporate
Support
   
Total
         Total          Total (2)  
Net income available to common shareholders
 
$
2,029
 
 
$
755
 
 
$
177
 
 
$
1,244
 
 
$
(324
 
$
3,881
 
    $ 3,522       $ 3,612  
Total average common equity
 (3), (4)
 
 
 35,600
 
 
 
 22,700
 
 
 
 2,050
 
 
 
 30,950
 
 
 
 17,350
 
 
 
 108,650
 
         107,100            99,450  
ROE 
(5)
 
 
23.2%
 
 
13.5%
 
 
34.7%
 
 
16.3%
 
 
n.m.
 
 
14.5%
        13.1%         14.9%
                   
     For the six months ended      
   
April 30
2024
       
April 30
2023
            
(Millions of Canadian dollars,
except percentage amounts)
 
Personal &
Commercial
Banking 
(1)
   
Wealth
Management 
(1)
   
Insurance
   
Capital
Markets 
(1)
   
Corporate
Support
   
Total
         Total (2)             
Net income available to common shareholders
 
$
4,071
 
 
$
1,350
 
 
$
396
 
 
$
2,381
 
 
$
(795
 
$
7,403
 
    $ 6,699      
Total average common equity 
(3), (4)
 
 
 33,400
 
 
 
 22,600
 
 
 
 2,100
 
 
 
 31,000
 
 
 
 18,750
 
 
 
 107,850
 
         98,350        
ROE
(5)
 
 
24.5%
 
 
12.0%
 
 
37.9%
 
 
15.4%
 
 
n.m.
 
 
13.8%
        13.7%      
 
(1)   Effective November 1, 2023, our attributed capital methodology incorporates leverage requirements to allocate capital to our business segments. For further details on changes to our attributed capital methodology, refer to the How we measure and report our business segments section.
(2)   Amounts have been restated from those previously presented as part of the adoption of IFRS 17, effective November 1, 2023. Refer to Note 2 of our Condensed Financial Statements for further details on these changes.
(3)   Total average common equity represents rounded figures.
(4)   The amounts for the segments are referred to as attributed capital.
(5)   ROE is based on actual balances of average common equity before rounding.
n.m.   not meaningful
Non-GAAP
measures
We believe that certain
non-GAAP
measures (including
non-GAAP
ratios) are more reflective of our ongoing operating results and provide readers with a better understanding of management’s perspective on our performance. These measures enhance the comparability of our financial performance for the three and six months ended April 30, 2024 with the corresponding periods in the prior year and the three months ended January 31, 2024.
Non-GAAP
measures do not have a standardized meaning under GAAP and may not be comparable to similar measures disclosed by other financial institutions.
The following discussion describes the
non-GAAP
measures we use in evaluating our operating results.
Adjusted results
We believe that providing adjusted results as well as certain measures and ratios excluding the impact of the specified items discussed below and amortization of acquisition-related intangibles enhances comparability with prior periods and enables readers to better assess trends in the underlying businesses.
Our results for all reported periods were adjusted for the following specified item:
 
HSBC Canada transaction and integration costs.
Our results for the three and six months ended April 30, 2024 and the three months ended January 31, 2024 were adjusted for the following specified item:
 
Management of closing capital volatility related to the HSBC Canada transaction. For further details, refer to the Key corporate events section.
Our results for the six months ended April 30, 2023 were adjusted for the following specified item:
 
CRD and other tax related adjustments: reflects the impact of the CRD and the 1.5% increase in the Canadian corporate tax rate applicable to fiscal 2022, net of deferred tax adjustments, which were announced in the Government of Canada’s 2022 budget and enacted in the first quarter of 2023.

Table of Contents
14   
Royal Bank of Canada
  Second Quarter 2024
 
Consolidated results, reported and adjusted
The following table provides a reconciliation of our reported results to our adjusted results and illustrates the calculation of adjusted measures presented. The adjusted results and measures presented below are
non-GAAP
measures or ratios.
 
     As at or for the three months ended          As at or for the six months ended  
(Millions of Canadian dollars,
except per share, number of and percentage amounts)
 
April 30
2024
   
January 31
2024
   
April 30
2023 
(1)
        
April 30
2024
   
April 30
2023 
(1)
 
Total revenue
 
$
14,154
 
  $ 13,485     $ 12,445      
$
27,639
 
  $ 25,802  
PCL
 
 
920
 
    813       600      
 
1,733
 
    1,132  
Non-interest
expense
 
 
8,308
 
    8,324       7,400      
 
16,632
 
    14,989  
Income before income taxes
 
 
4,926
 
    4,348       4,445      
 
9,274
 
    9,681  
Income taxes
 
 
976
 
    766       765      
 
1,742
 
    2,868  
Net income
 
$
3,950
 
  $ 3,582     $ 3,680      
$
7,532
 
  $ 6,813  
Net income available to common shareholders
 
$
3,881
 
  $ 3,522     $ 3,612    
 
 
$
7,403
 
  $ 6,699  
Average number of common shares (thousands)
 
 
1,412,651
 
    1,406,324       1,388,388      
 
1,409,452
 
    1,385,525  
Basic earnings per share (in dollars)
 
$
2.75
 
  $ 2.50     $ 2.60    
 
 
$
5.25
 
  $ 4.83  
Average number of diluted common shares (thousands)
 
 
1,414,166
 
    1,407,641       1,390,149      
 
1,410,842
 
    1,387,295  
Diluted earnings per share (in dollars)
 
$
2.74
 
  $ 2.50     $ 2.60    
 
 
$
5.25
 
  $ 4.83  
ROE
(2)
 
 
14.5%
    13.1%     14.9%    
 
13.8%
 
    13.7%
Effective income tax rate
 
 
19.8%
    17.6%     17.2%  
 
 
 
18.8%
    29.6%
Total adjusting items impacting net income
(before-tax)
 
$
309
 
  $ 631     $ 138      
$
940
 
  $ 235  
Specified item: HSBC Canada transaction and integration costs
(3), (4)
 
 
358
 
    265       56      
 
623
 
    67  
Specified item: Management of closing capital volatility related to the HSBC Canada transaction 
(3), (5)
 
 
(155
    286            
 
131
 
     
Amortization of acquisition-related intangibles
(6)
 
 
106
 
    80       82    
 
 
 
186
 
    168  
Total income taxes for adjusting items impacting net income
 
$
61
 
  $ 147     $ 29      
$
208
 
  $ (1,003
Specified item: HSBC Canada transaction and integration costs
(3)
 
 
76
 
    47       13      
 
123
 
    16  
Specified item: Management of closing capital volatility related to the HSBC Canada transaction 
(3), (5)
 
 
(43
    79            
 
36
 
     
Specified item: CRD and other tax related adjustments 
(3), (7)
 
 
 
               
 
 
    (1,050
Amortization of acquisition-related intangibles
(6)
 
 
28
 
    21       16    
 
 
 
49
 
    31  
Adjusted results
(8)
           
Income before income taxes – adjusted
 
$
5,235
 
  $ 4,979     $ 4,583      
$
10,214
 
  $ 9,916  
Income taxes – adjusted
 
 
1,037
 
    913       794      
 
1,950
 
    1,865  
Net income – adjusted
(8)
 
$
4,198
 
  $ 4,066     $ 3,789      
$
8,264
 
  $ 8,051  
Net income available to common shareholders – adjusted
(8)
 
$
4,129
 
  $ 4,006     $ 3,721    
 
 
$
8,135
 
  $ 7,937  
Average number of common shares (thousands)
 
 
 1,412,651
 
     1,406,324        1,388,388      
 
 1,409,452
 
     1,385,525  
Basic earnings per share (in dollars) – adjusted
(8)
 
$
2.92
 
  $ 2.85     $ 2.68    
 
 
$
5.77
 
  $ 5.73  
Average number of diluted common shares (thousands)
 
 
1,414,166
 
    1,407,641       1,390,149      
 
1,410,842
 
    1,387,295  
Diluted earnings per share (in dollars) – adjusted
(8)
 
$
2.92
 
  $ 2.85     $ 2.68    
 
 
$
5.77
 
  $ 5.72  
ROE – adjusted
(8)
 
 
15.5%
    14.9%     15.3%    
 
15.2%
 
    16.3%
Adjusted effective income tax rate
(8)
 
 
19.8%
    18.3%     17.3%  
 
 
 
19.1%
    18.8%
           
Adjusted efficiency ratio
(8)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenue
 
$
14,154
 
  $ 13,485     $ 12,445      
$
27,639
 
  $ 25,802  
Add specified item: Management of closing capital volatility related to the HSBC Canada transaction
(before-tax) 
(3), (5)
 
 
(155
    286            
 
131
 
     
Total revenue – adjusted
 
$
13,999
 
  $ 13,771     $ 12,445      
$
27,770
 
  $ 25,802  
Non-interest
expense
 
$
8,308
 
  $ 8,324     $ 7,400      
$
16,632
 
  $ 14,989  
Less specified item: HSBC Canada transaction and integration costs
(before-tax)
(3)
 
 
358
 
    265       56      
 
623
 
    67  
Less: Amortization of acquisition-related intangibles
(before-tax)
(6)
 
 
106
 
    80       82      
 
186
 
    168  
Non-interest
expense – adjusted
 
$
7,844
 
  $ 7,979     $ 7,262      
$
15,823
 
  $ 14,754  
Efficiency ratio
 
 
58.7%
    61.7%     59.5%    
 
60.2%
    58.1%
Efficiency ratio – adjusted
 
 
56.0%
    57.9%     58.4%  
 
 
 
57.0%
    57.2%
 
(1)   Amounts have been restated from those previously presented as part of the adoption of IFRS 17, effective November 1, 2023. Refer to Note 2 of our Condensed Financial Statements for further details on these changes.
(2)   ROE is based on actual balances of average common equity before rounding.
(3)   These amounts have been recognized in Corporate Support.
(4)   As at April 30, 2024, the cumulative HSBC Canada transaction and integration costs
(before-tax)
incurred were $1 billion and it is currently estimated that an additional $0.5 billion will be incurred, for a total of approximately $1.5 billion.
(5)   Beginning the first quarter of 2024, we included management of closing capital volatility related to the HSBC Canada transaction as a specified item for
non-GAAP
measures and
non-GAAP
ratios. Refer to the Key corporate events section for further details.
(6)   Represents the impact of amortization of acquisition-related intangibles (excluding amortization of software), and any goodwill impairment.
(7)   The impact of the CRD and other tax related adjustments does not include $0.2 billion recognized in other comprehensive income.
(8)   See Glossary for composition of these measures.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   15
 
Personal & Commercial Banking
 
 
     As at or for the three months ended          As at or for the six months ended  
(Millions of Canadian dollars,
except percentage amounts and as otherwise noted)
 
April 30
2024
(1)
   
January 31
2024
   
April 30
2023
        
April 30
2024
(1)
   
April 30
2023
 
Net interest income
 
$
4,400
 
  $ 4,216     $ 3,817      
$
8,616
 
  $ 7,824  
Non-interest
income
 
 
1,590
 
    1,578       1,481      
 
3,168
 
    3,015  
Total revenue
 
 
5,990
 
    5,794       5,298      
 
11,784
 
    10,839  
PCL on performing assets
 
 
245
 
    150       122      
 
395
 
    263  
PCL on impaired assets
 
 
509
 
    484       300      
 
993
 
    560  
PCL
 
 
754
 
    634       422      
 
1,388
 
    823  
Non-interest
expense
 
 
2,428
 
    2,339       2,257      
 
4,767
 
    4,486  
Income before income taxes
 
 
2,808
 
    2,821       2,619      
 
5,629
 
    5,530  
Net income
 
$
2,051
 
  $ 2,061     $ 1,915        
$
4,112
 
  $ 4,041  
Revenue by business
           
Canadian Banking
 
$
5,704
 
  $ 5,516     $ 5,040      
$
11,220
 
  $ 10,324  
Caribbean & U.S. Banking
 
 
286
 
    278       258        
 
564
 
    515  
Selected balance sheet and other information
           
ROE
(2)
 
 
23.2%
    26.0%     26.5%    
 
24.5%
    28.2%
NIM
 
 
2.82%
 
    2.77%     2.70%    
 
2.79%
 
    2.73%
Efficiency ratio
(3)
 
 
40.5%
    40.4%     42.6%    
 
40.5%
    41.4%
Operating leverage
(3)
 
 
5.5%
    (0.3)%       (0.2)%      
 
2.4%
    2.5%
Average total earning assets, net
 
$
634,900
 
  $ 605,500     $ 579,800      
$
620,000
 
  $ 577,800  
Average loans and acceptances, net
 
 
643,500
 
    614,100       586,700      
 
628,600
 
    584,300  
Average deposits
 
 
664,800
 
    630,600       588,000      
 
647,600
 
    583,800  
AUA
(4), (5)
 
 
405,400
 
    362,700       355,300      
 
405,400
 
    355,300  
Average AUA
 
 
385,700
 
    357,200       347,900      
 
371,300
 
    345,600  
PCL on impaired loans as a % of average net loans and acceptances
 
 
0.32%
    0.31%     0.21%    
 
0.32%
    0.19%
Other selected information – Canadian Banking
                                           
Net income
 
$
1,959
 
  $ 1,967     $ 1,825      
$
3,926
 
  $ 3,881  
NIM
 
 
2.76%
 
    2.72%     2.65%    
 
2.74%
 
    2.69%
Efficiency ratio
 
 
39.3%
    39.2%     41.4%    
 
39.3%
    40.2%
Operating leverage
 
 
5.8%
    (0.7)%       (0.6)%        
 
2.5%
    2.3%
 
(1)   On March 28, 2024, we completed the HSBC Canada transaction. HSBC Canada results have been consolidated from the closing date, which impacted results, balances and ratios for the three months and six months ended April 30, 2024. For further details, refer to the Key corporate events section.
(2)   Effective November 1, 2023, our attributed capital methodology incorporates leverage requirements to allocate capital to our business segments. For further details on changes to our attributed capital methodology, refer to the How we measure and report our business segments section.
(3)   See Glossary for composition of this measure.
(4)   AUA represents
period-end
spot balances and includes securitized residential mortgages and credit card loans as at April 30, 2024 of $16 billion and $6 billion, respectively (January 31, 2024 – $14 billion and $6 billion; April 30, 2023 – $15 billion and $8 billion).
(5)   Comparative amounts for the three months and six months ended April 30, 2023 have been revised from those previously presented.
Financial performance
Q2 2024 vs. Q2 2023
Net income increased $136 million or 7% from a year ago. The inclusion of HSBC Canada results decreased net income by $61 million, primarily attributable to $131 million
(after-tax)
of initial PCL on the performing loans purchased in the HSBC Canada transaction. Excluding HSBC Canada results, net income increased $197 million or 10%, primarily driven by higher net interest income reflecting higher spreads and average volume growth of 7% in Canadian Banking, partially offset by higher PCL.
Total revenue increased $692 million or 13%.
Canadian Banking revenue increased $664 million or 13%, of which $206 million reflects the inclusion of HSBC Canada revenue. The remaining increase of $458 million or 9% was primarily due to higher net interest income reflecting higher spreads and average volume growth of 9% in deposits and 6% in loans.
Caribbean & U.S. Banking revenue increased $28 million or 11%, mainly due to higher net interest income reflecting improved spreads.
NIM was up 12 bps, mainly due to the impact of the higher interest rate environment and changes in asset mix. The inclusion of HSBC Canada also contributed to the increase reflecting the accretion of fair value adjustments. These factors were partially offset by competitive pricing pressures.
PCL increased $332 million or 79%, mainly due to higher provisions on impaired loans in our Canadian Banking retail and commercial portfolios in a few sectors, including the industrial products, consumer discretionary and other services sectors. The PCL on impaired loans ratio increased 11 bps. Higher provisions on performing loans also contributed to the increase, mainly reflecting $181 million of initial PCL on the performing loans purchased in the HSBC Canada transaction, partially offset by favourable changes to our macroeconomic forecast.
Non-interest
expense increased $171 million or 8%, of which $89 million reflects the inclusion of HSBC Canada
non-interest
expense. The remaining increase of $82 million or 4% was primarily due to higher marketing costs largely associated with new client acquisition campaigns, ongoing technology investments and higher professional fees.

Table of Contents
16   
Royal Bank of Canada
  Second Quarter 2024
 
Q2 2024 vs. Q1 2024
Net income decreased $10 million from last quarter. The inclusion of HSBC Canada results decreased net income by $61 million, as noted above. Excluding HSBC Canada results, net income increased $51 million or 2%, primarily driven by lower PCL reflecting favourable changes to our macroeconomic forecast. In net interest income, higher spreads in Canadian Banking were largely offset by the impact of two less days in the current quarter.
NIM was up 5 bps, mainly due to the impact of the higher interest rate environment and changes in asset mix. The inclusion of HSBC Canada also contributed to the increase reflecting the accretion of fair value adjustments. These factors were partially offset by competitive pricing pressures.
Q2 2024 vs. Q2 2023 (Six months ended)
Net income increased $71 million or 2% from the same period last year. The inclusion of HSBC Canada results decreased net income by $61 million, as noted above. Excluding HSBC Canada results, net income increased $132 million or 3%, primarily driven by higher net interest income reflecting higher spreads and average volume growth of 7% in Canadian Banking, partially offset by higher PCL.
Total revenue increased $945 million or 9%, of which $206 million reflects the inclusion of HSBC Canada revenue. The remaining increase of $739 million or 7% was primarily due to higher net interest income reflecting higher spreads and average volume growth of 9% in deposits and 6% in loans in Canadian Banking.
PCL increased $565 million or 69%, mainly due to higher provisions on impaired loans in our Canadian Banking retail and commercial portfolios across a few sectors, resulting in an increase of 13 bps in the PCL on impaired loans ratio. Higher provisions on performing loans also contributed to the increase, mainly reflecting $181 million of initial PCL on the performing loans purchased in the HSBC Canada transaction and unfavourable changes in credit quality, partially offset by favourable changes to our macroeconomic forecast.
Non-interest
expense increased $281 million or 6%, of which $89 million reflects the inclusion of HSBC Canada
non-interest
expense. The remaining increase of $192 million or 4% was primarily due to higher marketing costs largely associated with new client acquisition campaigns, ongoing technology investments and higher staff-related costs.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   17
 
Wealth Management
 
 
     As at or for the three months ended          As at or for the six months ended  
(Millions of Canadian dollars, except number of,
percentage amounts and as otherwise noted)
 
April 30
2024 
(1)
   
January 31
2024
   
April 30
2023
(2)
        
April 30
2024 
(1)
   
April 30
2023 
(2)
 
Net interest income
(3)
 
$
1,136
 
  $ 1,150     $ 1,089      
$
2,286
 
  $ 2,305  
Non-interest
income
(3)
 
 
3,482
 
    3,387       3,305      
 
6,869
 
    6,649  
Total revenue
 
 
4,618
 
    4,537       4,394      
 
9,155
 
    8,954  
PCL on performing assets
 
 
(19
    (27     2      
 
(46
    26  
PCL on impaired assets
 
 
46
 
    38       26      
 
84
 
    68  
PCL
 
 
27
 
    11       28      
 
38
 
    94  
Non-interest
expense
 
 
3,653
 
    3,768       3,447      
 
7,421
 
    6,881  
Income before income taxes
 
 
938
 
    758       919      
 
1,696
 
    1,979  
Net income
 
$
769
 
  $ 606     $ 719        
$
1,375
 
  $ 1,549  
Revenue by business
           
Canadian Wealth Management
 
$
1,222
 
  $ 1,177     $ 1,094      
$
2,399
 
  $ 2,205  
U.S. Wealth Management (including City National)
 
 
2,211
 
    2,158       2,005      
 
4,369
 
    4,133  
U.S. Wealth Management (including City National) (US$ millions)
 
 
1,622
 
    1,609       1,477      
 
3,231
 
    3,062  
Global Asset Management
 
 
705
 
    725       634      
 
1,430
 
    1,317  
International Wealth Management
 
 
300
 
    317       323      
 
617
 
    611  
Investor Services
(4)
 
 
180
 
    160       338        
 
340
 
    688  
Selected balance sheet and other information
           
ROE
(5)
 
 
13.5%
    10.5%     11.9%    
 
12.0%
    12.6%
NIM
 
 
3.06%
 
    3.07%     2.53%    
 
3.06%
 
    2.63%
Pre-tax
margin
(6)
 
 
20.3%
    16.7%     20.9%    
 
18.5%
    22.1%
Number of advisors
(7)
 
 
6,128
 
    6,125       6,246      
 
6,128
 
    6,246  
Average total earning assets, net
 
$
151,100
 
  $ 149,000     $ 176,600      
$
150,000
 
  $ 177,000  
Average loans and acceptances, net
 
 
112,400
 
    111,900       114,200      
 
112,200
 
    114,200  
Average deposits
(4)
 
 
156,700
 
    155,400       158,600      
 
156,100
 
    172,400  
AUA
(4), (8)
 
 
4,120,600
 
    4,108,400       5,540,900      
 
4,120,600
 
    5,540,900  
U.S. Wealth Management (including City National)
(8)
 
 
840,700
 
    803,400       737,500      
 
840,700
 
    737,500  
U.S. Wealth Management (including City National) (US$ millions)
(8)
 
 
610,800
 
    597,800       544,300      
 
610,800
 
    544,300  
Investor Services
(8)
 
 
2,456,300
 
    2,508,700       4,067,800      
 
2,456,300
 
    4,067,800  
AUM
(8)
 
 
1,214,100
 
    1,141,200       1,074,900      
 
1,214,100
 
    1,074,900  
Average AUA
(4)
 
 
4,159,400
 
    4,065,000       5,499,000      
 
4,111,700
 
    5,460,500  
Average AUM
 
 
1,200,000
 
    1,122,100       1,060,300      
 
1,160,600
 
    1,043,600  
PCL on impaired loans as a % of average net loans and acceptances
 
 
0.17%
    0.14%     0.10%      
 
0.15%
    0.11%
 
Estimated impact of U.S. dollar, British pound
and Euro translation on key income statement items
(Millions of Canadian dollars, except percentage amounts)
 
For the three
months ended
       
For the six
months ended
 
 
Q2 2024 vs.
Q2 2023
   
Q2 2024 vs.
Q1 2024
        
Q2 2024 vs.
Q2 2023
 
Increase (decrease):
       
Total revenue
 
$
21
 
 
$
41
 
   
$
39
 
PCL
 
 
 
 
 
 
   
 
 
Non-interest
expense
 
 
17
 
 
 
33
 
   
 
34
 
Net income
 
 
4
 
 
 
7
 
     
 
5
 
Percentage change in average U.S. dollar equivalent of C$1.00
 
 
–%
 
 
 
(1)%
 
   
 
–%
 
Percentage change in average British pound equivalent of C$1.00
 
 
(3)%
 
 
 
(1)%
 
   
 
(3)%
 
Percentage change in average Euro equivalent of C$1.00
 
 
–%
 
 
 
–%
 
     
 
(1)%
 
 
(1)   On March 28, 2024, we completed the HSBC Canada transaction. HSBC Canada results have been consolidated from the closing date, which impacted results, balances and ratios for the three months and six months ended April 30, 2024. For further details, refer to the Key corporate events section.
(2)   Effective the fourth quarter of 2023, we moved the Investor Services lending business from our Wealth Management segment to our Capital Markets segment. Therefore, comparative results for the three months and six months ended April 30, 2023 have been revised from those previously presented.
(3)   Amounts for the three months and six months ended April 30, 2023 have been revised from those previously presented.
(4)   We completed the sale of RBC Investor Services operations in Europe, Jersey and the U.K. to CACEIS on July 3, 2023, December 1, 2023 and March 25, 2024, respectively (the sale of RBC Investor Services operations). For further details, refer to Note 6 of our Condensed Financial Statements.
(5)   Effective November 1, 2023, our attributed capital methodology incorporates leverage requirements to allocate capital to our business segments. For further details on changes to our attributed capital methodology, refer to How we measure and report our business segments section.
(6)  
Pre-tax
margin is defined as Income before income taxes divided by Total revenue.
(7)   Represents client-facing advisors across all of our Wealth Management businesses.
(8)   Represents
period-end
spot balances.

Table of Contents
18   
Royal Bank of Canada
  Second Quarter 2024
 
Financial performance
Q2 2024 vs. Q2 2023
Net income increased $50 million or 7% from a year ago, primarily due to higher
fee-based
client assets reflecting market appreciation and net sales, which also drove higher variable compensation.
Total revenue increased $224 million or 5%.
Canadian Wealth Management revenue increased $128 million or 12%, primarily due to higher
fee-based
client assets reflecting market appreciation and net sales.
U.S. Wealth Management (including City National) revenue increased $206 million or 10%. In U.S. dollars, revenue increased $145 million or 10%, mainly due to higher
fee-based
client assets reflecting market appreciation and net sales. Higher net interest income largely driven by higher spreads also contributed to the increase.
Global Asset Management revenue increased $71 million or 11%, mainly due to higher
fee-based
client assets reflecting market appreciation and net sales and changes in the fair value of seed capital investments.
International Wealth Management revenue decreased $23 million or 7%, primarily due to lower net interest income. This factor was partially offset by the impact of foreign exchange translation as well as higher
fee-based
client assets reflecting market appreciation.
Investor Services revenue decreased $158 million or 47%, primarily reflecting reduced revenue following the sale of RBC Investor Services operations.
PCL decreased $1 million or 4%. Releases of provisions on performing loans in the current quarter in U.S. Wealth Management (including City National), mainly driven by favourable changes in credit quality, were largely offset by higher provisions on impaired loans primarily in the consumer staples sector. The PCL on impaired loans ratio increased 7 bps.
Non-interest
expense increased $206 million or 6%, primarily driven by higher variable compensation commensurate with increased commissionable revenue. Higher staff costs mainly reflecting continued investments in the operational infrastructure of City National also contributed to the increase. These factors were partially offset by reduced expenses following the sale of RBC Investor Services operations.
Q2 2024 vs. Q1 2024
Net income increased $163 million or 27% from last quarter, as the prior quarter included $115 million ($159 million
before-tax)
relating to the cost of the FDIC special assessment. Higher
fee-based
client assets, reflecting market appreciation and net sales, also contributed to the increase.
Q2 2024 vs. Q2 2023 (Six months ended)
Net income decreased $174 million or 11% from the same period last year, mainly due to the cost of the FDIC special assessment, as noted above, and higher staff costs. These factors were partially offset by higher
fee-based
client assets, which also drove higher variable compensation.
Total revenue increased $201 million or 2%, largely due to higher
fee-based
client assets reflecting market appreciation and net sales. This factor was partially offset by reduced revenue following the sale of RBC Investor Services operations.
PCL decreased $56 million or 60%, mainly due to releases of provisions on performing loans in the current period in U.S. Wealth Management (including City National), primarily driven by favourable changes to our macroeconomic forecast as compared to provisions taken in the same period last year. This was partially offset by higher provisions on impaired loans. The PCL on impaired loans ratio increased 4 bps.
Non-interest
expense increased $540 million or 8%, mainly due to higher variable compensation commensurate with increased commissionable revenue. The cost of the FDIC special assessment, as noted above, and higher staff costs mainly reflecting continued investments in the operational infrastructure of City National also contributed to the increase. These factors were partially offset by reduced expenses following the sale of RBC Investor Services operations.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   19
 
Insurance
 
 
     As at or for the three months ended          As at or for the six months ended  
(Millions of Canadian dollars, except percentage amounts and as otherwise noted)
 
April 30
2024
   
January 31
2024
   
April 30
2023 
(1), (2)
        
April 30
2024
   
April 30
2023 
(1), (2)
 
Non-interest
income
           
Insurance service result
 
$
203
 
  $ 187     $ 225      
$
390
 
  $ 417  
Insurance investment result
 
 
59
 
    141       14      
 
200
 
    (59
Other income
 
 
36
 
    35       33      
 
71
 
    68  
Total revenue
 
 
298
 
    363       272      
 
661
 
    426  
PCL
 
 
 
    1            
 
1
 
     
Non-interest
expense
 
 
69
 
    71       65      
 
140
 
    135  
Income before income taxes
 
 
229
 
    291       207      
 
520
 
    291  
Net income
 
$
177
 
  $ 220     $ 170        
$
397
 
  $ 237  
Selected balances and other information
           
ROE
 
 
34.7%
    40.5%     32.7%    
 
37.9%
    22.7%
Premiums and deposits
(3)
 
$
 1,610
 
  $  1,346     $  1,419      
$
 2,956
 
  $  2,658  
Contractual service margin (CSM)
(4)
 
 
1,980
 
    1,977       1,804        
 
1,980
 
    1,804  
 
(1)   Amounts have been restated from those previously presented as part of the adoption of IFRS 17, effective November 1, 2023. Refer to Note 2 of our Condensed Financial Statements for further details on these changes.
(2)   The 2023 restated results may not be fully comparable to the current period as we were not managing our asset and liability portfolios under IFRS 17.
(3)   Premiums and deposits include premiums on risk-based individual and group insurance and annuity products as well as segregated fund deposits, consistent with insurance industry practices.
(4)   Represents the CSM of insurance contract assets and liabilities net of reinsurance contract held assets and liabilities. For insurance contracts, the CSM represents the unearned profit (net inflows) for providing insurance coverage. For reinsurance contracts held, the CSM represents the net cost or net gain of purchasing reinsurance. The CSM is not applicable to contracts measured using the premium allocation approach.
Financial performance
Q2 2024 vs. Q2 2023
Net income increased $7 million or 4% from a year ago, largely due to higher insurance investment result from favourable investment-related experience. The results in the prior period are not fully comparable as we were not managing our asset and liability portfolios under IFRS 17.
Total revenue increased $26 million or 10%, primarily due to higher insurance investment result, as noted above.
Non-interest
expense increased $4 million or 6%.
Q2 2024 vs. Q1 2024
Net income decreased $43 million or 20% from last quarter, primarily due to lower insurance investment result as the prior quarter benefitted from the repositioning of our portfolio for the transition to IFRS 17. This factor was partially offset by higher insurance service result from improved claims experience in disability and life retrocession products.
Q2 2024 vs. Q2 2023 (Six months ended)
Net income increased $160 million or 68% from the same period last year, primarily due to higher insurance investment result from favourable investment-related experience as we repositioned our portfolio for the transition to IFRS 17. The results in the prior period are not fully comparable as we were not managing our asset and liability portfolios under IFRS 17.
Total revenue increased $235 million or 55%, primarily due to higher insurance investment result, as noted above.
Non-interest
expense increased $5 million or 4%.

Table of Contents
20   
Royal Bank of Canada
  Second Quarter 2024
 
Capital Markets
 
 
     As at or for the three months ended            As at or for the six months ended  
(Millions of Canadian dollars, except
percentage amounts and as otherwise noted)
 
April 30
2024 
(1)
   
January 31
2024
   
April 30
2023 
(2)
          
April 30
2024 
(1)
   
April 30
2023 
(2)
 
Net interest income
(3)
 
$
764
 
  $ 661     $ 951      
$
1,425
 
  $ 1,743  
Non-interest
income
(3)
 
 
2,390
 
    2,290       1,711      
 
4,680
 
    4,065  
Total revenue
(3)
 
 
3,154
 
    2,951       2,662      
 
6,105
 
    5,808  
PCL on performing assets
 
 
22
 
    6       37      
 
28
 
    49  
PCL on impaired assets
 
 
115
 
    161       113      
 
276
 
    166  
PCL
 
 
137
 
    167       150      
 
304
 
    215  
Non-interest
expense
 
 
1,722
 
    1,642       1,510      
 
3,364
 
    3,211  
Income before income taxes
 
 
1,295
 
    1,142       1,002      
 
2,437
 
    2,382  
Net income
 
$
1,262
 
  $ 1,154     $ 962            
$
2,416
 
  $ 2,203  
Revenue by business
           
Corporate & Investment Banking
 
$
1,672
 
  $ 1,369     $ 1,363      
$
3,041
 
  $ 2,686  
Global Markets
 
 
1,498
 
    1,742       1,393      
 
3,240
 
    3,278  
Other
 
 
(16
    (160     (94          
 
(176
    (156
Selected balance sheet and other information
           
ROE
(4)
 
 
16.3%
    14.6%     13.9%    
 
15.4%
    14.8%
Average total assets
 
$
 1,154,300
 
  $  1,194,900     $  1,002,200      
$
 1,174,800
 
  $  1,099,100  
Average trading securities
 
 
179,200
 
    204,100       143,000      
 
191,800
 
    149,100  
Average loans and acceptances, net
 
 
149,900
 
    142,100       146,400      
 
145,900
 
    146,600  
Average deposits
 
 
294,100
 
    292,500       296,800      
 
293,300
 
    301,900  
PCL on impaired loans as a % of average net loans and acceptances
 
 
 0.31%
    0.45%     0.32%          
 
 0.38%
    0.24%
 
Estimated impact of U.S. dollar, British pound
and Euro translation on key income statement items
(Millions of Canadian dollars, except percentage amounts)
 
For the three
months ended
         
For the six
months ended
 
 
Q2 2024 vs.
Q2 2023
          
Q2 2024 vs.
Q1 2024
          
Q2 2024 vs.
Q2 2023
 
Increase (decrease):
         
Total revenue
 
$
22
 
   
$
46
 
   
$
42
 
PCL
 
 
1
 
   
 
2
 
   
 
2
 
Non-interest
expense
 
 
11
 
   
 
17
 
   
 
22
 
Net income
 
 
10
 
         
 
24
 
         
 
17
 
Percentage change in average U.S. dollar equivalent of C$1.00
 
 
–%
 
   
 
(1)%
 
   
 
–%
 
Percentage change in average British pound equivalent of C$1.00
 
 
(3)%
 
   
 
(1)%
 
   
 
(3)%
 
Percentage change in average Euro equivalent of C$1.00
 
 
–%
 
         
 
–%
 
         
 
(1)%
 
 
(1)   On March 28, 2024, we completed the HSBC Canada transaction. HSBC Canada results have been consolidated from the closing date, which impacted results, balances and ratios for the three months and six months ended April 30, 2024. For further details, refer to the Key corporate events section.
(2)   Effective the fourth quarter of 2023, we moved the Investor Services lending business from our Wealth Management segment to our Capital Markets segment. Therefore, comparative results for the three months and six months ended April 30, 2023 have been revised from those previously presented.
(3)   The taxable equivalent basis (teb) adjustment for the three months ended April 30, 2024 was $(4) million (January 31, 2024 – $54 million; April 30, 2023 – $213 million) and for the six months ended April 30, 2024 was $50 million (April 30, 2023 – $329 million). For further discussion, refer to the How we measure and report our business segments section of our 2023 Annual Report.
(4)   Effective November 1, 2023, our attributed capital methodology incorporates leverage requirements to allocate capital to our business segments. For further details on changes to our attributed capital methodology, refer to the How we measure and report our business segments section.  
Financial performance
Q2 2024 vs. Q2 2023
Net income increased $300 million or 31% from a year ago, primarily driven by higher revenue in Corporate & Investment Banking and Global Markets, partially offset by higher compensation on increased results.
Total revenue increased $492 million or 18%.
Corporate & Investment Banking revenue increased $309 million or 23%, mainly due to higher M&A activity, loan syndication activity, as well as equity and debt origination across most regions. The prior year also included the reversal of loan underwriting markdowns primarily in the U.S.
Global Markets revenue increased $105 million or 8%, largely due to higher debt and equity origination across all regions and higher fixed income trading revenue in North America. These factors were partially offset by lower gains from the disposition of certain investment securities.
Other revenue improved $78 million or 83%, reflecting lower unallocated funding and capital costs, as well as the impact of fair value changes in our legacy U.S. portfolios.
PCL decreased $13 million or 9%, mainly due to lower provisions on performing loans, largely driven by favourable changes in credit quality, partially offset by initial PCL on the performing loans purchased in the HSBC Canada transaction.
Non-interest expense increased $212 million or 14%, mainly driven by higher compensation on increased results and ongoing technology investments.
Q2 2024 vs. Q1 2024
Net income increased $108 million or 9% from last quarter, mainly due to higher equity and debt origination, as well as higher M&A activity across all regions. The impact of fair value changes in our legacy U.S. portfolios and higher loan syndication activity across most regions also contributed to the increase. These factors were partially offset by lower fixed income trading revenue across most regions and higher taxes.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   21
 
Q2 2024 vs. Q2 2023 (Six months ended)
Net income increased $213 million or 10% from the same period last year, mainly driven by higher revenue in Corporate & Investment Banking and lower taxes reflecting changes in earnings mix. These factors were partially offset by higher PCL, higher compensation on increased results and lower revenue in Global Markets.
Total revenue increased $297 million or 5%, mainly due to higher M&A activity across most regions, as well as higher debt and equity origination across all regions.
PCL increased $89 million or 41%, mainly reflecting higher provisions on impaired loans in a few sectors, including the real estate and related sector, partially offset by lower provisions in the consumer discretionary sector and higher recoveries in the oil and gas sector, resulting in an increase of 14 bps in the PCL on impaired loans ratio. This was partially offset by lower provisions on performing loans, mainly due to favourable changes to our macroeconomic forecast and credit quality.
Non-interest expense increased $153 million or 5%, mainly driven by higher compensation on increased results, ongoing technology investments, higher trade execution costs and the impact of foreign exchange translation.
 
Corporate Support
 
 
     For the three months ended            For the six months ended  
(Millions of Canadian dollars)
 
April 30
2024
   
January 31
2024
   
April 30
2023
          
April 30
2024
   
April 30
2023
 
Net interest income (loss)
(1), (2)
 
$
323
 
  $ 305     $ 242      
$
628
 
  $ 429  
Non-interest
income (loss)
(1), (2), (3)
 
 
(229
    (465     (423    
 
(694
    (654
Total revenue
(1), (3)
 
 
94
 
    (160     (181    
 
(66
    (225
PCL
 
 
2
 
               
 
2
 
     
Non-interest
expense
(3)
 
 
436
 
    504       121      
 
940
 
    276  
Income (loss) before income taxes
(1)
 
 
(344
    (664     (302    
 
(1,008
    (501
Income taxes (recoveries)
(1)
 
 
(35
    (205     (216    
 
(240
    716  
Net income (loss)
 
$
(309
  $ (459   $ (86          
$
(768
  $ (1,217
 
(1)   Teb adjusted.
(2)   Amounts for the three and six months ended April 30, 2023 have been revised from those previously presented.
(3)   Revenue for the three months ended April 30, 2024 included gains of $64 million (January 31, 2024 and April 30, 2023 – gains of $222 million and gains of $11 million, respectively) on economic hedges of our U.S. Wealth Management (including City National) share-based compensation plans, and non-interest expense included $60 million (January 31, 2024 and April 30, 2023 – $206 million and $19 million, respectively) of share-based compensation expense driven by changes in the fair value of liabilities relating to our U.S. Wealth Management (including City National) share-based compensation plans. Revenue for the six months ended April 30, 2024 included gains of $286 million (April 30, 2023 – gains of $132 million) on economic hedges of our U.S. Wealth Management (including City National) share-based compensation plans, and non-interest expense included $266 million (April 30, 2023 – $119 million) of share-based compensation expense driven by changes in the fair value of liabilities relating to our U.S. Wealth Management (including City National) share-based compensation plans.
Due to the nature of activities and consolidation adjustments reported in this segment, we believe that a comparative period analysis is not relevant.
Total revenue and Income taxes (recoveries) in each period in Corporate Support include the deduction of the teb adjustments related to the
gross-up
of income from Canadian taxable corporate dividends and the U.S. tax credit investment business recorded in Capital Markets. The amount deducted from revenue was offset by an equivalent increase in Income taxes (recoveries).
The teb amount for the three months ended April 30, 2024 was $(4) million, compared to $54 million in the prior quarter and $213 million in the same quarter last year. The teb amount for the six months ended April 30, 2024 was $50 million, compared to $329 million in the same period last year.
The following identifies the material items, other than the teb impacts noted previously, affecting the reported results in each period.
Q2 2024
Net loss was $309 million, primarily due to the after-tax impact of the HSBC Canada transaction and integration costs of $282 million, partially offset by the after-tax impact of management of closing capital volatility related to the HSBC Canada transaction of $112 million, both of which are treated as specified items. Unallocated costs also contributed to the net loss.
Q1 2024
Net loss was $459 million, primarily due to the
after-tax
impact of the HSBC Canada transaction and integration costs of $218 million and the
after-tax
impact of management of closing capital volatility related to the HSBC Canada transaction of $207 million, both of which are treated as specified items.
Q2 2023
Net loss was $86 million, primarily due to residual unallocated items, as well as the after-tax impact of the HSBC Canada transaction and integration costs of $43 million, which is treated as a specified item.

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22   
Royal Bank of Canada
  Second Quarter 2024
 
Q2 2024 (Six months ended)
Net loss was $768 million, primarily due to the after-tax impact of the HSBC Canada transaction and integration costs of $500 million and the after-tax impact of management of closing capital volatility related to the HSBC Canada transaction of $95 million, both of which are treated as specified items. Unallocated costs also contributed to the net loss.
Q2 2023 (Six months ended)
Net loss was $1,217 million, primarily due to the impact of the CRD and other tax related adjustments of $1,050 million, which is treated as a specified item.
For further details on specified items, refer to the Key performance and
non-GAAP
measures section.
 
Quarterly results and trend analysis
 
Our quarterly results are impacted by a number of trends and recurring factors, which include seasonality of certain businesses, general economic and market conditions, and fluctuations in the Canadian dollar relative to other currencies. The following table summarizes our results for the last eight quarters (the period):
Quarterly results
(1), (2)
 
    
2024
           2023 
(3)
           2022  
(Millions of Canadian dollars,
except per share and percentage amounts)
 
Q2 
(4)
           Q1            Q4     Q3     Q2     Q1            Q4     Q3  
Personal & Commercial Banking
 
$
5,990
 
    $ 5,794       $ 5,718     $ 5,563     $ 5,298     $ 5,541       $ 5,419     $ 5,182  
Wealth Management
(5)
 
 
4,618
 
      4,537         4,188       4,402       4,394       4,560         4,287       3,997  
Insurance
(2)
 
 
298
 
      363         248       336       272       154         644       1,233  
Capital Markets
(5), (6)
 
 
3,154
 
      2,951         2,564       2,679       2,662       3,146         2,505       1,889  
Corporate Support
(6)
 
 
94
 
            (160             (33     (3     (181     (44             (288     (169
Total revenue
 
 
 14,154
 
       13,485          12,685        12,977        12,445        13,357          12,567        12,132  
PCL
 
 
920
 
      813         720       616       600       532         381       340  
PBCAE
(7)
 
 
n.a.
 
      n.a.         n.a.       n.a.       n.a.       n.a.         116       850  
Non-interest
expense
 
 
8,308
 
            8,324               8,059       7,765       7,400       7,589               7,209       6,386  
Income before income taxes
 
 
4,926
 
      4,348         3,906       4,596       4,445       5,236         4,861       4,556  
Income taxes
 
 
976
 
            766               (33     736       765       2,103               979       979  
Net income
 
$
3,950
 
          $ 3,582             $ 3,939     $ 3,860     $ 3,680     $ 3,133             $ 3,882     $ 3,577  
EPS  – basic
 
$
2.75
 
    $ 2.50       $ 2.77     $ 2.73     $ 2.60     $ 2.23       $ 2.75     $ 2.52  
   – diluted
 
 
2.74
 
            2.50               2.76       2.73       2.60       2.23               2.74       2.51  
Effective income tax rate
 
 
19.8%
 
      17.6%       (0.8)%       16.0%     17.2%     40.2%       20.1%     21.5%
Period average US$ equivalent of C$1.00
 
$
0.734
 
          $ 0.745             $ 0.732     $ 0.750     $ 0.737     $ 0.745             $ 0.739     $ 0.783  
 
(1)   Fluctuations in the Canadian dollar relative to other foreign currencies have affected our consolidated results over the period.
(2)   Effective November 1, 2023, we adopted IFRS 17. The quarterly trend for the Insurance segment will not be fully comparable across the periods presented as they have been prepared under a different basis of accounting. The 2023 results have been restated as part of our adoption of IFRS 17 while results for the fiscal 2022 periods are reported in accordance with IFRS 4
Insurance Contracts
.
(3)   Amounts have been restated from those previously presented as part of the adoption of IFRS 17, effective November 1, 2023. Refer to Note 2 of our Condensed Financial Statements for further details on these changes.
(4)   On March 28, 2024, we completed the HSBC Canada transaction. HSBC Canada results have been consolidated from the closing date, and are included in our Personal & Commercial Banking, Wealth Management and Capital Markets segments. For further details, refer to the Key corporate events section.
(5)   Effective the fourth quarter of 2023, we moved the Investor Services lending business from our Wealth Management segment to our Capital Markets segment. Therefore, comparative results have been revised from those previously presented.
(6)   Teb adjusted. For further discussion, refer to the How we measure and report our business segments section of our 2023 Annual Report.
(7)   As part of our adoption of IFRS 17, Insurance policyholder benefits, claims and acquisition expense (PBCAE) is no longer applicable. 2023 amounts have been restated from those previously presented.
n.a.   not applicable
Seasonality
Seasonal factors may impact our results in certain quarters. The first quarter has historically been stronger for our Capital Markets businesses. The second quarter has fewer days than the other quarters, which generally results in a decrease in net interest income and certain expense items. The third and fourth quarters include the summer months, which generally results in lower client activity and may negatively impact the results of our Capital Markets trading business.
Trend analysis
Earnings over the period have been impacted by the factors noted below.
Personal & Commercial Banking revenue has benefitted from solid volume growth in loans and deposits over the period. NIM has been favourably impacted over the majority of the period by the higher interest rate environment. NIM was adversely impacted by a shift in deposit mix over fiscal 2023 and 2024. HSBC Canada revenue has been included since the transaction closed on March 28, 2024.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   23
 
Wealth Management revenue has generally benefitted from growth in average
fee-based
client assets, which was impacted by market conditions, and volume growth in loans. The higher interest rate environment also favourably impacted revenue over the majority of the period. The revenue of RBC Brewin Dolphin has been included since the acquisition closed on September 27, 2022. On July 3, 2023, we completed the sale of the European asset servicing activities of RBC Investor Services and its associated Malaysian centre of excellence. The fourth quarter of 2023 reflected impairment losses on our interest in an associated company.
As part of our adoption of IFRS 17, effective November 1, 2023, fluctuations in Insurance revenue are reflective of market conditions and insurance experience, while new business gains are deferred through CSM.
Capital Markets revenue is influenced, to a large extent, by market conditions that impact client activity. In the second half of fiscal 2022, there was a decline in global investment banking fee pools amidst challenging market conditions, including the impact of loan underwriting markdowns in the third quarter. In 2023, we saw strong client activity, driving higher sales & trading revenues which continued in the first quarter of 2024. We also saw an increase in investment banking activity in the second quarter of 2024.
PCL is comprised of provisions taken on performing assets and provisions taken on impaired assets. PCL on performing assets fluctuated over the period as it is impacted by changes in credit quality, macroeconomic conditions, and exposures. Provisions on performing assets over the period have generally been reflective of unfavourable changes in credit quality and our macroeconomic forecast. The second quarter of 2024 includes initial PCL on the performing loans purchased in the HSBC Canada transaction. PCL on impaired assets was low during the early part of the period, but has generally trended upwards over the remainder of the period.
As part of our adoption of IFRS 17, effective November 1, 2023, PBCAE is no longer applicable, and 2023 amounts have been restated from those previously presented (refer to Note 2 of our Condensed Financial Statements for further details on these changes).
Non-interest
expense has been impacted by fluctuations in variable compensation over the period, commensurate with fluctuations in revenue and earnings. Changes in the fair value of our U.S. share-based compensation plans, which are largely offset in revenue, have also contributed to fluctuations over the period and are impacted by market conditions. While we continue to focus on efficiency management activities, expenses over the period also reflect investments in staff and technology.
Non-interest
expenses of RBC Brewin Dolphin have been included since the acquisition closed on September 27, 2022. Beginning in fiscal 2023, expenses have also included HSBC Canada transaction and integration costs. HSBC Canada non-interest expenses have been included since the transaction closed on March 28, 2024.
Our effective income tax rate has fluctuated over the period, mostly due to varying levels of tax adjustments and changes in earnings mix. The first quarter of 2023 reflects the impact of the CRD and other tax related adjustments. The fourth quarter of 2023 reflects the recognition of deferred tax assets relating to realized losses in City National associated with the intercompany sale of certain debt securities.
 
Financial condition
 
 
Condensed balance sheets
 
 
        As at      
(Millions of Canadian dollars)
 
April 30
2024
   
October 31
2023
(1)
 
Assets
   
Cash and due from banks
 
$
61,373
 
  $ 61,989  
Interest-bearing deposits with banks
 
 
38,459
 
    71,086  
Securities, net of applicable allowance
(2)
 
 
412,553
 
    409,730  
Assets purchased under reverse repurchase agreements and securities borrowed
 
 
301,797
 
    340,191  
Loans
   
Retail
 
 
612,687
 
    569,951  
Wholesale
 
 
353,567
 
    287,826  
Allowance for loan losses
 
 
(5,715
    (5,004
Other – Derivatives
 
 
130,199
 
    142,450  
     – Other
 
 
126,130
 
    128,312  
Total assets
 
$
2,031,050
 
  $  2,006,531  
Liabilities
   
Deposits
 
$
 1,327,603
 
  $ 1,231,687  
Other – Derivatives
 
 
136,568
 
    142,629  
     – Other
 
 
431,811
 
    505,682  
Subordinated debentures
 
 
13,464
 
    11,386  
Total liabilities
 
 
1,909,446
 
    1,891,384  
Equity attributable to shareholders
 
 
121,504
 
    115,048  
Non-controlling
interests
 
 
100
 
    99  
Total equity
 
 
121,604
 
    115,147  
Total liabilities and equity
 
$
2,031,050
 
  $ 2,006,531  
 
(1)   Amounts have been restated from those previously presented as part of the adoption of IFRS 17, effective November 1, 2023. Refer to Note 2 of our Condensed Financial Statements for further details on these changes.
(2)   Securities are comprised of trading and investment securities.

Table of Contents
24   
Royal Bank of Canada
  Second Quarter 2024
 
Q2 2024 vs. Q4 2023
Total assets increased $25 billion or 1% from October 31, 2023. Foreign exchange translation decreased total assets by $24 billion.
Interest-bearing deposits with banks decreased $33 billion or 46%, primarily due to lower deposits with central banks reflecting short-term cash management activities.
Securities, net of applicable allowance, increased $3 billion or 1%, mainly due to the HSBC Canada transaction. For further details, refer to Note 6 of our Condensed Financial Statements. Higher equity trading securities reflecting favourable market conditions also contributed to the increase. These factors were largely offset by lower government debt trading securities and the impact of foreign exchange translation.
Assets purchased under reverse repurchase agreements (reverse repos) and securities borrowed decreased $38 billion or 11%, reflecting decreased client demand.
Loans (net of Allowance for loan losses) increased $108 billion or 13%, primarily attributable to the HSBC Canada transaction and volume growth in wholesale loans.
Derivative assets decreased $12 billion or 9%, mainly attributable to the impact of foreign exchange translation and lower fair values on interest rate contracts, partially offset by higher fair values on foreign exchange and equity contracts.
Other assets decreased $2 billion or 2%, largely due to lower customers’ liability under acceptances partially offset by higher goodwill and intangible assets from the HSBC Canada transaction.
Total liabilities increased $18 billion or 1%. Foreign exchange translation decreased total liabilities by $24 billion.
Deposits increased $96 billion or 8%, primarily due to the HSBC Canada transaction and an increase in retail term deposits attributable to clients’ investment preferences.
Derivative liabilities decreased $6 billion or 4%, mainly attributable to the impact of foreign exchange translation and lower fair values on interest rate contracts, partially offset by higher fair values on foreign exchange and equity contracts.
Other liabilities decreased $74 billion or 15%, primarily due to lower obligations related to repurchase agreements (repos) reflecting decreased client demand and lower acceptances.
Total equity increased $6 billion or 6%, reflecting earnings, net of dividends, and the issuance of limited recourse capital notes and common shares.
 
Off-balance
sheet arrangements
 
In the normal course of business, we engage in a variety of financial transactions that, for accounting purposes, are not recorded on our consolidated balance sheets.
Off-balance
sheet transactions are generally undertaken for risk, capital and funding management purposes which benefit us and our clients. These include transactions with structured entities and may also include the purchase or issuance of guarantees. These transactions give rise to, among other risks, varying degrees of market, credit, liquidity and funding risks, which are discussed in the Risk management section of this Q2 2024 Report to Shareholders.
The following provides an update to our significant off-balance sheet transactions, which are described on pages 60 to 63 of our 2023 Annual Report.
Involvement with unconsolidated structured entities
RBC-administered multi-seller conduits
We administer multi-seller conduits which are used primarily for the securitization of our clients’ financial assets. Our maximum exposure to loss under these transactions primarily relates to backstop liquidity and partial credit enhancement facilities extended to the conduits. As at April 30, 2024, the total assets of the multi-seller conduits were $57 billion (October 31, 2023 – $54 billion) and our maximum exposure to loss was $58 billion (October 31, 2023 – $55 billion). The increase reflects higher securitization activities since October 31, 2023, primarily in the auto and truck loans and leases asset class.
As at April 30, 2024, the total asset-backed commercial paper (ABCP) issued by the conduits amounted to $38 billion (October 31, 2023 – $37 billion). The rating agencies that rate the ABCP rated 100% (October 31, 2023 – 100%) of the total amount issued within the top ratings category.
 
Risk management
 
 
Credit risk
 
Credit risk is the risk of loss associated with an obligor’s potential inability or unwillingness to fulfill its contractual obligations on a timely basis and may arise directly from the risk of default of a primary obligor (e.g., issuer, debtor, counterparty, borrower or policyholder), indirectly from a secondary obligor (e.g., guarantor or reinsurer), through
off-balance
sheet exposures, contingent credit risk, associated credit risk and/or transactional risk. Credit risk includes counterparty credit risk arising from both trading and
non-trading
activities.
Our Enterprise Credit Risk Management Framework (ECRMF) and supporting credit policies are designed to clearly define roles and responsibilities, acceptable practices, limits and key controls. There have been no material changes to our ECRMF as described in our 2023 Annual Report.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   25
 
Residential mortgages and home equity lines of credit (insured vs. uninsured)
 
(1)
Residential mortgages and home equity lines of credit are secured by residential properties. The following table presents a breakdown by geographic region.
 
    
As at April 30, 2024
 
(Millions of Canadian dollars,
except percentage amounts)
 
Residential mortgages
       
Home equity
lines of credit 
(2)
 
 
Insured
(3)
        
Uninsured
        
Total
        
Total
 
Region
(4)
                 
Canada
                 
Atlantic provinces
 
$
8,484
 
 
 
43
   
$
11,094
 
 
 
57
   
$
19,578
 
   
$
1,659
 
Quebec
 
 
12,107
 
 
 
26
 
   
 
34,488
 
 
 
74
 
   
 
46,595
 
   
 
3,251
 
Ontario
 
 
32,467
 
 
 
15
 
   
 
183,690
 
 
 
85
 
   
 
216,157
 
   
 
17,773
 
Alberta
 
 
19,246
 
 
 
45
 
   
 
23,656
 
 
 
55
 
   
 
42,902
 
   
 
4,465
 
Saskatchewan and Manitoba
 
 
8,542
 
 
 
41
 
   
 
12,050
 
 
 
59
 
   
 
20,592
 
   
 
1,752
 
B.C. and territories
 
 
13,040
 
 
 
15
 
     
 
74,466
 
 
 
85
 
     
 
87,506
 
     
 
7,861
 
Total Canada
(5)
 
 
93,886
 
 
 
22
 
   
 
339,444
 
 
 
78
 
   
 
433,330
 
   
 
36,761
 
U.S.
 
 
 
 
 
 
   
 
32,893
 
 
 
100
 
   
 
32,893
 
   
 
2,119
 
Other International
 
 
 
 
 
 
     
 
3,152
 
 
 
100
 
     
 
3,152
 
     
 
1,521
 
Total International
 
 
 
 
 
 
     
 
36,045
 
 
 
100
 
     
 
36,045
 
     
 
3,640
 
Total
 
$
93,886
 
 
 
20
     
$
375,489
 
 
 
80
     
$
469,375
 
     
$
40,401
 
                 
     As at January 31, 2024  
(Millions of Canadian dollars,
except percentage amounts)
  Residential mortgages         Home equity
lines of credit (2)
 
  Insured (3)          Uninsured          Total          Total  
Region
(4)
                 
Canada
                 
Atlantic provinces
  $ 8,448       44     $ 10,840       56     $ 19,288       $ 1,637  
Quebec
    11,708       27         31,778       73         43,486         3,137  
Ontario
    30,167       15         169,410       85         199,577         16,744  
Alberta
    18,714       45         22,602       55         41,316         4,352  
Saskatchewan and Manitoba
    8,473       42         11,846       58         20,319         1,741  
B.C. and territories
    11,737       16           62,374       84           74,111           7,083  
Total Canada
(5)
    89,247       22         308,850       78         398,097         34,694  
U.S.
                  32,374       100         32,374         1,986  
Other International
                    3,093       100           3,093           1,582  
Total International
                    35,467       100           35,467           3,568  
Total
  $  89,247       21       $  344,317       79       $  433,564         $  38,262  
 
  (1)   Disclosure is provided in accordance with the requirements of OSFI’s Guideline
B-20
(Residential Mortgage Underwriting Practices and Procedures).
 
  (2)   Includes $40,383 million and $18 million of uninsured and insured home equity lines of credit, respectively (January 31, 2024 – $38,242 million and $20 million, respectively), reported within the personal loan category. The amounts in U.S. and Other International include term loans collateralized by residential properties.  
  (3)   Insured residential mortgages are mortgages whereby our exposure to default is mitigated by insurance through the Canadian Mortgage and Housing Corporation or other private mortgage default insurers.  
  (4)   Region is based upon the address of the property mortgaged. The Atlantic provinces are comprised of Newfoundland and Labrador, Prince Edward Island, Nova Scotia and New Brunswick; B.C. and territories are comprised of British Columbia, Nunavut, Northwest Territories and Yukon.  
  (5)   Total consolidated residential mortgages in Canada of $433 billion (January 31, 2024 – $398 billion) includes $12 billion (January 31, 2024 – $12 billion) of mortgages with commercial clients in Canadian Banking, of which $9 billion (January 31, 2024 – $9 billion) are insured, and $18 billion (January 31, 2024 – $18 billion) of residential mortgages in Capital Markets, of which $18 billion (January 31, 2024 – $18 billion) are held for securitization purposes. All of the residential mortgages held for securitization purposes are insured (January 31, 2024 – all insured).  
Residential mortgages portfolio by amortization period
(1)
The following table provides a summary of the percentage of residential mortgages that fall within the remaining amortization periods based upon current customer payment amounts, which incorporate payments larger than the minimum contractual amount and/or higher frequency of payments.
 
         As at     
    
April 30
2024
     
January 31
2024
     
Canada 
(2)
 
U.S. and other
International
  
Total
       Canada (2)   U.S. and other
International
  Total
Amortization period
               
25 years
  
 
58
 
 
28
  
 
56
      58     27     55
> 25 years
30 years
  
 
21
 
 
 
72
 
  
 
25
 
      21       73       25  
> 30 years
35 years
  
 
2
 
 
 
 
  
 
1
 
      1             1  
> 35 years
  
 
19
 
 
 
 
  
 
18
 
        20             19  
Total
  
 
100
 
 
100
  
 
100
        100     100     100
 
  (1)   Disclosure is provided in accordance with the requirements of OSFI’s Guideline
B-20
(Residential Mortgage Underwriting Practices and Procedures).
 
  (2)   Our policy is to originate mortgages with amortization periods of 30 years or less. Amortization periods greater than 30 years reflect the impact of increases in interest rates on our variable rate mortgage portfolios. For these loans, the amortization period resets to the original amortization schedule upon renewal. We do not originate mortgage products with a structure that would result in negative amortization, as payments on variable rate mortgages automatically increase to ensure accrued interest is covered.  

Table of Contents
26   
Royal Bank of Canada
  Second Quarter 2024
 
Average
loan-to-value
(LTV) ratios
(1)
The following table provides a summary of our average LTV ratios for newly originated and acquired uninsured residential mortgages and RBC Homeline Plan
®
products by geographic region, as well as the respective LTV ratios for our total Canadian Banking residential mortgage portfolio outstanding.
 
     For the three months ended          For the six months ended  
   
April 30
2024
       
January 31
2024
     
April 30
2024
 
   
Uninsured
         Uninsured       
Uninsured
 
    
Residential
mortgages 
(2)
   
RBC Homeline
Plan products 
(3)
       Residential
mortgages (2)
  RBC Homeline
Plan products (3)
      
Residential
mortgages 
(2)
   
RBC Homeline
Plan products 
(3)
Average of newly originated and acquired for the period, by region 
(4)
               
Atlantic provinces
 
 
61
 
 
66
      70     69    
 
65
 
 
67
Quebec
 
 
55
 
 
 
60
 
      69       68      
 
58
 
 
 
63
 
Ontario
 
 
56
 
 
 
56
 
      70       62      
 
58
 
 
 
57
 
Alberta
 
 
59
 
 
 
61
 
      72       68      
 
60
 
 
 
63
 
Saskatchewan and Manitoba
 
 
62
 
 
 
66
 
      71       71      
 
65
 
 
 
68
 
B.C. and territories
 
 
45
 
 
 
46
 
      67       61      
 
47
 
 
 
49
 
U.S.
 
 
71
 
 
 
n.m.
 
      72       n.m.      
 
72
 
 
 
n.m.
 
Other International
 
 
69
 
 
 
n.m.
 
        73       n.m.        
 
71
 
 
 
n.m.
 
Average of newly originated and acquired for the period
(5), (6), (7)
 
 
52
 
 
53
        70     64      
 
55
 
 
56
Total Canadian Banking residential mortgages portfolio
(8), (9)
 
 
57
 
 
49
        58     48      
 
57
 
 
49
 
  (1)   Disclosure is provided in accordance with the requirements of OSFI’s Guideline
B-20
(Residential Mortgage Underwriting Practices and Procedures).
 
  (2)   Residential mortgages exclude residential mortgages within the RBC Homeline Plan products.  
  (3)   RBC Homeline Plan products are comprised of both residential mortgages and home equity lines of credit.  
  (4)   Region is based upon the address of the property mortgaged. The Atlantic provinces are comprised of Newfoundland and Labrador, Prince Edward Island, Nova Scotia and New Brunswick; B.C. and territories are comprised of British Columbia, Nunavut, Northwest Territories and Yukon.  
  (5)   The average LTV ratios for newly originated and acquired uninsured residential mortgages and RBC Homeline Plan products are calculated on a weighted basis by mortgage amounts at origination.  
  (6)   For newly originated mortgages and RBC Homeline Plan products, LTV is calculated based on the total facility amount for the residential mortgage and RBC Homeline Plan product divided by the value of the related residential property.  
  (7)   Includes the acquired HSBC Canada portfolio. Excluding the acquired HSBC Canada portfolio, the average of newly originated and acquired residential mortgages and RBC Homeline Plan products for the three months ended April 30, 2024 was 70% and 65%, respectively, and for the six months ended April 30, 2024 was 70% and 64%, respectively.  
  (8)   Weighted by mortgage balances and adjusted for property values based on the Teranet-National Bank
House Price Index
.
 
  (9)   Includes the acquired HSBC Canada portfolio. Excluding the acquired HSBC Canada portfolio, the total Canadian Banking residential mortgages portfolio for residential mortgages and RBC Homeline Plan products for the three months ended April 30, 2024 was 58% and 49%, respectively, and for the six months ended April 30, 2024 was 58% and 49%, respectively.  
  n.m.   not meaningful  
Net International wholesale exposure by region, asset type and client type
 
(1), (2)
The following table provides a breakdown of our credit risk exposure by region, asset type and client type.
 
     As at  
   
April 30
2024
       
January 31
2024
 
   
Asset type
       
Client type
                     
(Millions of Canadian dollars)  
Loans
Outstanding
   
Securities 
(3)
   
Repo-style
transactions
   
Derivatives
        
Financials
   
Sovereign
   
Corporate
        
Total
         Total  
Europe (excluding U.K.)
 
$
14,380
 
 
$
28,137
 
 
$
6,048
 
 
$
4,005
 
   
$
21,838
 
 
$
13,471
 
 
$
17,261
 
   
$
52,570
 
    $ 48,913  
U.K.
 
 
10,458
 
 
 
12,018
 
 
 
5,777
 
 
 
2,888
 
   
 
16,113
 
 
 
4,960
 
 
 
10,068
 
   
 
31,141
 
      44,991  
Caribbean
 
 
6,834
 
 
 
12,144
 
 
 
1,887
 
 
 
1,784
 
   
 
10,372
 
 
 
4,293
 
 
 
7,984
 
   
 
22,649
 
      20,092  
Asia-Pacific
 
 
5,509
 
 
 
30,688
 
 
 
3,052
 
 
 
1,458
 
   
 
16,735
 
 
 
19,821
 
 
 
4,151
 
   
 
40,707
 
      49,585  
Other
(4)
 
 
1,763
 
 
 
1,638
 
 
 
2,164
 
 
 
23
 
     
 
2,182
 
 
 
1,546
 
 
 
1,860
 
     
 
5,588
 
        6,800  
Net International exposure
(5), (6)
 
$
 38,944
 
 
$
 84,625
 
 
$
 18,928
 
 
$
 10,158
 
     
$
 67,240
 
 
$
 44,091
 
 
$
 41,324
 
     
$
 152,655
 
      $  170,381  
 
(1)   Geographic profile is based on country of risk, which reflects our assessment of the geographic risk associated with a given exposure. Typically, this is the residence of the borrower.
(2)   Exposures are calculated on a fair value basis and net of collateral, which includes $362 billion against repo-style transactions (January 31, 2024 – $383 billion) and $16 billion against derivatives (January 31, 2024 – $15 billion).
(3)   Securities include $14 billion of trading securities (January 31, 2024 – $14 billion), $31 billion of deposits (January 31, 2024 – $50 billion), and $40 billion of investment securities (January 31, 2024 – $41 billion).
(4)   Includes exposures in the Middle East, Africa and Latin America.
(5)   Excludes $6,846 million (January 31, 2024 – $5,789 million) of exposures to supranational agencies.
(6)   Reflects $3,788 million of mitigation through credit default swaps, which are largely used to hedge single name exposures and market risk (January 31, 2024 – $2,211 million).

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   27
 
Credit quality performance
The following credit quality performance tables and analysis provide information on loans, which represents loans, acceptances and commitments, and other financial assets:
Gross impaired loans
 
     As at and for the three months ended  
(Millions of Canadian dollars, except percentage amounts)
 
April 30
2024
   
January 31
2024
   
October 31
2023
 
Personal & Commercial Banking
 
$
2,908
 
  $ 2,402     $ 1,905  
Wealth Management
 
 
586
 
    554       514  
Capital Markets
 
 
1,838
 
    1,242       1,285  
Total GIL
 
$
5,332
 
  $ 4,198     $ 3,704  
Impaired loans, beginning balance
 
$
4,198
 
  $ 3,704     $ 3,284  
Classified as impaired during the period (new impaired)
(1)
 
 
1,712
 
    1,494       1,063  
Net repayments
(1)
 
 
(146
    (165     (166
Amounts written off
 
 
(546
    (610     (466
Other
(2)
 
 
114
 
    (225     (11
Impaired loans, balance at end of period
 
$
  5,332
 
  $   4,198     $   3,704  
GIL as a % of related loans and acceptances
     
Total GIL as a % of related loans and acceptances
 
 
0.55%
 
    0.48%     0.42%
Personal & Commercial Banking
 
 
0.42%
 
    0.39%     0.31%
Canadian Banking
 
 
0.38%
 
    0.35%     0.26%
Caribbean Banking
 
 
3.27%
 
    3.29%     3.45%
Wealth Management
 
 
0.51%
 
    0.50%     0.44%
Capital Markets
 
 
1.17%
 
    0.85%     0.89%
 
(1)   Certain GIL movements for Canadian Banking retail and wholesale portfolios are generally allocated to new impaired, as Net repayments and certain Other movements are not reasonably determinable. Certain GIL movements for Caribbean Banking retail and wholesale portfolios are generally allocated to Net repayments and new impaired, as Net repayments and certain Other movements are not reasonably determinable.
(2)   Includes return to performing status during the period, recoveries of loans and advances previously written off, sold, and foreign exchange translation and other movements.
Q2 2024 vs. Q1 2024
Total GIL increased $1,134 million or 27% from last quarter, and the total GIL ratio increased 7 bps, primarily due to higher impaired loans in Capital Markets and Personal & Commercial Banking which includes credit impaired loans of $173 million purchased in the HSBC Canada transaction.
GIL in Personal & Commercial Banking increased $506 million or 21%, primarily due to higher impaired loans in our Canadian Banking commercial and retail portfolios, as well as credit impaired loans purchased in the HSBC Canada transaction.
GIL in Wealth Management increased $32 million or 6%, mainly due to higher impaired loans in a few sectors including the utilities and investments sectors, partially offset by lower impaired loans in the telecom and media sector.
GIL in Capital Markets increased $596 million or 48%, primarily due to higher impaired loans in the financing products and real estate and related sectors.
Allowance for credit losses (ACL)
 
     As at  
(Millions of Canadian dollars)
 
April 30
2024
   
January 31
2024
   
October 31
2023
 
Personal & Commercial Banking
 
$
4,390
 
  $ 3,980     $ 3,718  
Wealth Management
 
 
563
 
    548       618  
Capital Markets
 
 
1,119
 
    1,101       1,012  
Corporate Support and other
 
 
2
 
    1        
ACL on loans
 
 
6,074
 
    5,630       5,348  
ACL on other financial assets
(1)
 
 
23
 
    20       18  
Total ACL
 
$
6,097
 
  $ 5,650     $  5,366  
ACL on loans is comprised of:
     
Retail
 
$
2,837
 
  $  2,725     $ 2,591  
Wholesale
 
 
1,732
 
    1,605       1,609  
ACL on performing loans
 
$
4,569
 
  $ 4,330     $ 4,200  
ACL on impaired loans
 
 
1,505
 
    1,300       1,148  
 
(1)   ACL on other financial assets mainly represents allowances on debt securities measured at FVOCI and amortized cost, accounts receivable and financial guarantees.
Q2 2024 vs. Q1 2024
Total ACL increased $447 million or 8% from last quarter, primarily reflecting an increase of $444 million in ACL on loans.
ACL on performing loans increased $239 million or 6%, primarily reflecting $193 million of initial allowances on the performing loans purchased in the HSBC Canada transaction.
ACL on impaired loans increased $205 million or 16%, primarily due to higher ACL in Personal & Commercial Banking.
For further details, refer to Note 5 of our Condensed Financial Statements.

Table of Contents
28   
Royal Bank of Canada
  Second Quarter 2024
 
Market risk
 
Market risk is defined to be the impact of market factors and prices upon our financial condition. This includes potential financial gains or losses due to changes in market-determined variables such as interest rates, credit spreads, equity prices, commodity prices, foreign exchange rates and implied volatilities. There have been no material changes to our Market Risk Management Framework from the framework described in our 2023 Annual Report. Using that framework, we continuously seek to ensure that our market risk exposure is consistent with risk appetite constraints set by the Board of Directors.
Market risk controls include limits on probabilistic measures of potential loss in trading positions, such as
Value-at-Risk
(VaR) and stress testing. Market risk controls are also in place to manage Interest Rate Risk in the Banking Book (IRRBB). To monitor and control IRRBB, we assess two primary metrics, Net Interest Income (NII) risk and Economic Value of Equity (EVE) risk, under a range of market shocks, scenarios, and time horizons. There has been no material change to the VaR or IRRBB measurement methodology, controls, or limits from those described in our 2023 Annual Report. For further details on our approach to the management of market risk, refer to the Market risk section of our 2023 Annual Report.
Market risk measures – FVTPL positions
VaR and Trading VaR
The following table presents our Market risk VaR and Trading VaR figures:
 
    
April 30, 2024
         January 31, 2024          April 30, 2023 (1)  
         
For the three
months ended
              For the three
months ended
              For the three
months ended
 
(Millions of Canadian dollars)  
As at
   
Average
   
High
   
Low
         As at     Average          As at     Average  
Equity
 
$
12
 
 
$
10
 
 
$
16
 
 
$
6
 
    $ 10     $ 9       $ 10     $ 11  
Foreign exchange
 
 
3
 
 
 
4
 
 
 
6
 
 
 
2
 
      3       4         2       3  
Commodities
 
 
7
 
 
 
5
 
 
 
7
 
 
 
5
 
      5       5         4       5  
Interest rate
(2)
 
 
36
 
 
 
26
 
 
 
36
 
 
 
22
 
      30       34         28       31  
Credit specific
(3)
 
 
7
 
 
 
7
 
 
 
9
 
 
 
7
 
      8       7         5       5  
Diversification
(4)
 
 
(33
 
 
(24
 
 
n.m.
 
 
 
n.m.
 
        (31     (29         (30     (33
Trading VaR
 
$
32
 
 
$
28
 
 
$
41
 
 
$
20
 
      $ 25     $ 30         $ 19     $ 22  
Total VaR
 
$
45
 
 
$
86
 
 
$
121
 
 
$
35
 
      $ 123     $ 122         $ 41     $ 47  
                   
    
April 30, 2024
         April 30, 2023 (1)                  
         
For the six
months ended
              For the six
months ended
                 
(Millions of Canadian dollars)  
As at
   
Average
   
High
   
Low
         As at     Average                  
Equity
 
$
12
 
 
$
9
 
 
$
16
 
 
$
6
 
    $ 10     $ 13        
Foreign exchange
 
 
3
 
 
 
4
 
 
 
7
 
 
 
2
 
      2       3        
Commodities
 
 
7
 
 
 
5
 
 
 
7
 
 
 
4
 
      4       6        
Interest rate
(2)
 
 
36
 
 
 
30
 
 
 
44
 
 
 
22
 
      28       31        
Credit specific
(3)
 
 
7
 
 
 
7
 
 
 
9
 
 
 
7
 
      5       5        
Diversification
(4)
 
 
(33
 
 
(26
 
 
n.m.
 
 
 
n.m.
 
        (30     (34      
Trading VaR
 
$
32
 
 
$
29
 
 
$
41
 
 
$
20
 
      $ 19     $ 24        
Total VaR
 
$
45
 
 
$
104
 
 
$
138
 
 
$
35
 
      $ 41     $ 51        
 
(1)   Amounts have been revised from those previously presented to align with a trading VaR view.
(2)   General credit spread risk and funding spread risk associated with uncollateralized derivatives are included under interest rate VaR.
(3)   Credit specific risk captures issuer-specific credit spread volatility.
(4)   Trading VaR is less than the sum of the individual risk factor VaR results due to risk factor diversification.
n.m.   not meaningful
Q2 2024 vs. Q2 2023
Average Trading VaR of $28 million increased $6 million from a year ago, primarily driven by a reduced benefit from diversification, partially offset by exposure changes in our fixed income portfolios.
Average total VaR of $86 million increased $39 million, primarily driven by the impact of management of closing capital volatility related to the HSBC Canada transaction, partially offset by reduced exposures in loan underwriting commitments and fixed income portfolios.
Q2 2024 vs. Q1 2024
Average Trading VaR of $28 million decreased $2 million from last quarter, primarily driven by exposure changes in our interest rate derivative and fixed income portfolios.
Average total VaR of $86 million decreased $36 million, primarily due to the impact of management of closing capital volatility related to the HSBC Canada transaction.
Q2 2024 vs. Q2 2023 (Six months ended)
Average Trading VaR of $29 million increased $5 million from the same period last year, largely driven by a reduced benefit from diversification, partially offset by exposure changes in our equity derivatives portfolio.
Average total VaR of $104 million increased $53 million, primarily due to the impact of management of closing capital volatility related to the HSBC Canada transaction.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   29
 
The following chart displays a bar graph of our daily trading profit and loss and a line graph of our daily market risk VaR. We incurred no net trading losses in the three months ended April 30, 2024 and January 31, 2024.
 
 

 
  (1)   Trading revenue (teb) in the chart above excludes the impact of loan underwriting commitments.
  (2)   In Q4 2023, VaR amounts in the chart above were revised from those previously presented to reflect Trading VaR corresponding to our trading portfolios.
Market risk measures for assets and liabilities of RBC Insurance
®
1
We offer a range of insurance products to clients and hold investments to meet the future obligations to policyholders. The investments which support actuarial liabilities are predominantly fixed income assets measured at FVTPL. Consequently, changes in the fair values of these assets are largely offset by changes in the discount rates used in the measurement of insurance and reinsurance contract assets and liabilities, and the impacts of both are reflected in Insurance investment result in the Consolidated Statements of Income. As at April 30, 2024, we held assets in support of $19 billion of insurance contract liabilities net of insurance contract assets and reinsurance contracts held balances (January 31, 2024 – $19 billion).
Market risk measures – IRRBB sensitivities
The following table shows the potential
before-tax
impact of an immediate and sustained 100 bps increase or decrease in interest rates on projected EVE and
12-month
NII, assuming no subsequent hedging. Interest rate risk measures are based on current on- and
off-balance
sheet positions which can change over time in response to business activity and management actions.
 
    
April 30
2024
        
January 31
2024
        
April 30
2023
 
   
EVE risk
       
NII risk
(1)
                                 
(Millions of Canadian dollars)  
Canadian
dollar
impact
   
U.S.
dollar
impact
   
Total
        
Canadian
dollar
impact
   
U.S.
dollar
impact
   
Total
         EVE risk     NII risk (1)          EVE risk     NII risk (1)  
Before-tax
impact of:
                         
100 bps increase in rates
 
$
 (1,879
 
$
 (270
 
$
 (2,149
   
$
 134
 
 
$
191
 
 
$
325
 
    $  (1,649   $ 535       $  (1,726   $ 824  
100 bps decrease in rates
 
 
1,801
 
 
 
2
 
 
 
1,803
 
 
 
 
 
(190
 
 
 (268
 
 
 (458
 
 
    1,309        (622  
 
    1,507        (894
 
(1)   Represents the
12-month
NII exposure to an instantaneous and sustained shift in interest rates.
As at April 30, 2024, an immediate and sustained
-100
bps shock would have had a negative impact to our NII of $458 million, down from $622 million last quarter. An immediate and sustained +100 bps shock as at April 30, 2024 would have had a negative impact to the bank’s EVE of $2,149 million, up from $1,649 million last quarter. The quarter-over-quarter changes in NII and EVE sensitivities are largely attributed to net growth in fixed rate assets. During the second quarter of 2024, NII and EVE risks remained within approved limits.
 
1
 
  Amounts have been restated from those previously presented as part of the adoption of IFRS 17, effective November 1, 2023. Refer to Note 2 of our Condensed Financial Statements for further details on these changes.

Table of Contents
30   
Royal Bank of Canada
  Second Quarter 2024
 
Linkage of market risk to selected balance sheet items
The following tables provide the linkages between selected balance sheet items with positions included in our trading market risk and
non-trading
market risk disclosures, which illustrates how we manage market risk for our assets and liabilities through different risk measures:
 
    
As at April 30, 2024
         
Market risk measure
     
(Millions of Canadian dollars)  
Balance
sheet amount
   
Traded risk 
(1)
   
Non-traded

risk 
(2)
   
Non-traded
risk
primary risk sensitivity
Assets subject to market risk
       
Cash and due from banks
 
$
61,373
 
 
$
 
 
$
61,373
 
 
Interest rate
Interest-bearing deposits with banks
 
 
38,459
 
 
 
1
 
 
 
38,458
 
 
Interest rate
Securities
       
Trading
 
 
173,566
 
 
 
151,456
 
 
 
22,110
 
 
Interest rate, credit spread
Investment, net of applicable allowance
 
 
238,987
 
 
 
 
 
 
238,987
 
 
Interest rate, credit spread, equity
Assets purchased under reverse repurchase
agreements and securities borrowed
 
 
301,797
 
 
 
266,802
 
 
 
34,995
 
 
Interest rate
Loans
       
Retail
 
 
612,687
 
 
 
 
 
 
612,687
 
 
Interest rate
Wholesale
 
 
353,567
 
 
 
16,297
 
 
 
337,270
 
 
Interest rate
Allowance for loan losses
 
 
(5,715
 
 
 
 
 
(5,715
 
Interest rate
Other
       
Derivatives
 
 
130,199
 
 
 
127,529
 
 
 
2,670
 
 
Interest rate, foreign exchange
Other assets
 
 
110,346
 
 
 
11,197
 
 
 
99,149
 
 
Interest rate
Assets not subject to market risk
(3)
 
 
15,784
 
                   
Total assets
 
$
 2,031,050
 
 
$
 573,282
 
 
$
 1,441,984
 
   
Liabilities subject to market risk
       
Deposits
 
$
1,327,603
 
 
$
57,145
 
 
$
1,270,458
 
 
Interest rate
Other
       
Obligations related to securities sold short
 
 
31,487
 
 
 
31,219
 
 
 
268
 
 
Interest rate, equity
Obligations related to assets sold under repurchase agreements and securities loaned
 
 
279,721
 
 
 
258,589
 
 
 
21,132
 
 
Interest rate
Derivatives
 
 
136,568
 
 
 
126,473
 
 
 
10,095
 
 
Interest rate, foreign exchange
Other liabilities
 
 
95,744
 
 
 
14,203
 
 
 
81,541
 
 
Interest rate
Subordinated debentures
 
 
13,464
 
 
 
 
 
 
13,464
 
 
Interest rate
Liabilities not subject to market risk
(4)
 
 
24,859
 
                   
Total liabilities
 
$
1,909,446
 
 
$
487,629
 
 
$
1,396,958
 
   
Total equity
 
 
121,604
 
     
Total liabilities and equity
 
$
2,031,050
 
     
 
(1)   Traded risk includes positions that are classified or designated as FVTPL and positions whose revaluation gains and losses are reported in revenue within our trading portfolios. Market risk measures of VaR and stress tests are used as risk controls for traded risk.
(2)  
Non-traded
risk includes positions used in the management of IRRBB and other
non-trading
portfolios. Other material
non-trading
portfolios include positions from RBC Insurance and investment securities, net of applicable allowance, not included in IRRBB.
(3)   Assets not subject to market risk include physical and other assets.
(4)   Liabilities not subject to market risk include payroll related and other liabilities.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   31
 
     As at January 31, 2024
          Market risk measure      
(Millions of Canadian dollars)   Balance
sheet amount
    Traded risk (1)    
Non-traded

risk (2)
   
Non-traded
risk
primary risk sensitivity
Assets subject to market risk
       
Cash and due from banks
  $ 74,347     $     $ 74,347     Interest rate
Interest-bearing deposits with banks
    61,080       1       61,079     Interest rate
Securities
       
Trading
    193,597       171,135       22,462     Interest rate, credit spread
Investment, net of applicable allowance
    212,216             212,216     Interest rate, credit spread, equity
Assets purchased under reverse repurchase agreements and securities borrowed
    347,871       312,834       35,037     Interest rate
Loans
       
Retail
    569,894       2       569,892     Interest rate
Wholesale
    293,721       7,144       286,577     Interest rate
Allowance for loan losses
    (5,299           (5,299   Interest rate
Other
       
Derivatives
    105,038       101,688       3,350     Interest rate, foreign exchange
Other assets
    106,130       9,017       97,113     Interest rate
Assets not subject to market risk
(3)
    15,810                      
Total assets
  $ 1,974,405     $ 601,821     $ 1,356,774      
Liabilities subject to market risk
       
Deposits
  $ 1,241,168     $ 56,202     $ 1,184,966     Interest rate
Other
       
Obligations related to securities sold short
    35,012       35,007       5     Interest rate, equity
Obligations related to assets sold under repurchase agreements and securities loaned
    334,490       313,197       21,293     Interest rate
Derivatives
    106,974       98,998       7,976     Interest rate, foreign exchange
Other liabilities
    107,065       13,166       93,899     Interest rate
Subordinated debentures
    11,525             11,525     Interest rate
Liabilities not subject to market risk
(4)
    21,683                      
Total liabilities
  $  1,857,917     $  516,570     $  1,319,664      
Total equity
    116,488        
Total liabilities and equity
  $ 1,974,405        
 
(1)   Traded risk includes positions that are classified or designated as FVTPL and positions whose revaluation gains and losses are reported in revenue within our trading portfolios. Market risk measures of VaR and stress tests are used as risk controls for traded risk.
(2)  
Non-traded
risk includes positions used in the management of IRRBB and other
non-trading
portfolios. Other material
non-trading
portfolios include positions from RBC Insurance and investment securities, net of applicable allowance, not included in IRRBB.
(3)   Assets not subject to market risk include physical and other assets.
(4)   Liabilities not subject to market risk include payroll related and other liabilities.

Table of Contents
32   
Royal Bank of Canada
  Second Quarter 2024
 
Liquidity and funding risk
 
Liquidity and funding risk (liquidity risk) is the risk that we may be unable to generate sufficient cash or its equivalents in a timely and cost-effective manner to meet our commitments. Liquidity risk arises from mismatches in the timing and value of
on-balance
sheet and
off-balance
sheet cash flows.
Our liquidity risk management activities are conducted in accordance with internal frameworks and policies, including the Enterprise Risk Management Framework (ERMF), the Enterprise Risk Appetite Framework (ERAF), the Enterprise Liquidity Risk Management Framework (LRMF), the Enterprise Liquidity Risk Policy, and the Enterprise Pledging Policy. Collectively, our frameworks and policies establish liquidity and funding management requirements appropriate for the execution of our strategy and ensuring liquidity risk remains within our risk appetite. There have been no material changes as described in our 2023 Annual Report.
Liquidity reserve
Our liquidity reserve consists only of available unencumbered liquid assets. Although unused wholesale funding capacity could be another potential source of liquidity, it is excluded in the determination of the liquidity reserve.
 
    
As at April 30, 2024
 
(Millions of Canadian dollars)  
Bank-owned

liquid assets
   
Securities
received
as collateral
from securities
financing
and derivative
transactions
          
Total liquid
assets
   
Encumbered
liquid assets
   
Unencumbered
liquid assets
 
Cash and deposits with banks
 
$
99,832
 
 
$
 
   
$
99,832
 
 
$
3,395
 
 
$
96,437
 
Securities issued or guaranteed by sovereigns, central banks or multilateral development banks
(1)
 
 
313,620
 
 
 
327,290
 
   
 
640,910
 
 
 
384,177
 
 
 
256,733
 
Other securities
 
 
146,643
 
 
 
124,589
 
   
 
271,232
 
 
 
158,033
 
 
 
113,199
 
Other liquid assets
(2)
 
 
33,214
 
 
 
 
         
 
33,214
 
 
 
28,047
 
 
 
5,167
 
Total liquid assets
 
$
593,309
 
 
$
451,879
 
         
$
1,045,188
 
 
$
573,652
 
 
$
471,536
 
 
 
    
As at January 31, 2024
 
(Millions of Canadian dollars)   Bank-owned
liquid assets
    Securities
received
as collateral
from securities
financing
and derivative
transactions
           Total liquid
assets
    Encumbered
liquid assets
    Unencumbered
liquid assets
 
Cash and deposits with banks
  $ 137,887     $       $ 137,887     $ 3,075     $ 134,812  
Securities issued or guaranteed by sovereigns, central banks or multilateral development banks
(1)
    320,261       373,167         693,428       438,250       255,178  
Other securities
    138,801       126,761         265,562       157,158       108,404  
Other liquid assets
(2)
    27,886                     27,886       24,768       3,118  
Total liquid assets
  $  624,835     $  499,928             $  1,124,763     $  623,251     $  501,512  
 
 
     As at                              
(Millions of Canadian dollars)
 
April 30
2024
   
January 31
2024
                         
Royal Bank of Canada
 
$
228,869
 
  $ 215,036          
Foreign branches
 
 
50,871
 
    76,053          
Subsidiaries
 
 
191,796
 
    210,423          
Total unencumbered liquid assets
 
$
471,536
 
  $ 501,512          
 
(1)   Includes liquid securities issued by provincial governments and U.S. government-sponsored entities working under U.S. Federal government’s conservatorship (e.g., Federal National Mortgage Association and Federal Home Loan Mortgage Corporation).
(2)   Encumbered liquid assets amount represents cash collateral and margin deposit amounts pledged related to
over-the-counter
and exchange-traded derivative transactions.
The liquidity reserve is typically most affected by routine flows of retail and commercial client banking activities, where liquid asset portfolios reflect changes in deposit and loan balances, as well as business strategies and client flows related to the activities in Capital Markets. Corporate Treasury also affects liquidity reserves through the management of funding issuances, which could result in timing differences between when debt is issued and funds are deployed into business activities.
Q2 2024 vs. Q1 2024
Total unencumbered liquid assets decreased $30 billion or 6% from last quarter, mainly due to a decrease in cash and deposits with banks, reflecting lower deposits with central banks for short-term cash management activities as well as loan growth.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   33
 
Asset encumbrance
The table below provides a summary of our
on-
and
off-balance
sheet amounts for cash, securities and other assets, distinguishing between those that are encumbered, and those available for sale or use as collateral in secured funding transactions. Other assets, such as mortgages and credit card receivables, can also be monetized, albeit over longer timeframes than those required for marketable securities. As at April 30, 2024, our unencumbered assets available as collateral comprised 24% of total assets (January 31, 2024 – 25%).
 
     As at  
   
April 30
2024
       
January 31
2024
 
   
Encumbered
       
Unencumbered
                  Encumbered         Unencumbered        
(Millions of Canadian dollars)  
Pledged as
collateral
   
Other
(1)
        
Available as
collateral
(2)
   
Other
(3)
        
Total
         Pledged as
collateral
    Other (1)          Available as
collateral (2)
    Other (3)     Total  
Cash and deposits with banks
 
$
 
 
$
3,395
 
   
$
96,437
 
 
$
 
   
$
99,832
 
    $     $ 3,075       $ 134,812     $     $ 137,887  
Securities
                           
Trading
 
 
80,608
 
 
 
 
   
 
100,152
 
 
 
2,400
 
   
 
183,160
 
      94,705               108,905       2,302       205,912  
Investment, net of applicable allowance
 
 
15,584
 
 
 
 
   
 
223,403
 
 
 
 
   
 
238,987
 
      7,850               204,366             212,216  
Assets purchased under reverse repurchase agreements and securities borrowed
(4)
 
 
470,479
 
 
 
29,326
 
   
 
9,980
 
 
 
1,541
 
   
 
511,326
 
      512,994       27,480         10,936       1,986       553,396  
Loans
                           
Retail
                           
Mortgage securities
 
 
28,729
 
 
 
 
   
 
29,559
 
 
 
 
   
 
58,288
 
      26,090               28,879             54,969  
Mortgage loans
 
 
74,336
 
 
 
 
   
 
39,948
 
 
 
296,803
 
   
 
411,087
 
      72,716               34,489       271,390       378,595  
Non-mortgage
loans
 
 
6,272
 
 
 
 
   
 
 
 
 
137,040
 
   
 
143,312
 
      5,997                     130,333       136,330  
Wholesale
 
 
 
 
 
 
   
 
27,476
 
 
 
326,091
 
   
 
353,567
 
                    24,279       269,716       293,995  
Allowance for loan losses
 
 
 
 
 
 
   
 
 
 
 
(5,715
   
 
(5,715
                          (5,299     (5,299
Segregated fund net assets
 
 
 
 
 
 
   
 
 
 
 
 
   
 
 
                                 
Other
                           
Derivatives
 
 
 
 
 
 
   
 
 
 
 
130,199
 
   
 
130,199
 
                          105,038       105,038  
Others
(5)
 
 
28,047
 
 
 
 
     
 
5,167
 
 
 
92,916
 
     
 
126,130
 
        24,768                 3,118       91,320       119,206  
Total assets
 
$
 704,055
 
 
$
 32,721
 
     
$
 532,122
 
 
$
 981,275
 
     
$
 2,250,173
 
      $  745,120     $  30,555         $  549,784     $  866,786     $  2,192,245  
 
(1)   Includes assets restricted from use to generate secured funding due to legal or other constraints.
(2)   Represents assets that are immediately available for use as collateral, including National Housing Act Mortgage-Backed Securities (NHA MBS), our unencumbered mortgage loans that qualify as eligible collateral at Federal Home Loan Banks (FHLB), as well as loans that qualify as eligible collateral for discount window facility available to us and lodged at the Federal Reserve Bank of New York (FRBNY).
(3)   Other unencumbered assets are not subject to any restrictions on their use to secure funding or as collateral but would not be considered immediately available.
(4)   Includes bank-owned liquid assets and securities received as collateral from
off-balance
sheet securities financing, derivative transactions, and margin lending. Includes $29 billion (January 31, 2024 – $27 billion) of collateral received through reverse repurchase transactions that cannot be rehypothecated in its current legal form.
(5)   The Pledged as collateral amount represents cash collateral and margin deposit amounts pledged related to OTC and exchange-traded derivative transactions.
Q2 2024 vs. Q1 2024
Total unencumbered assets available as collateral decreased $18 billion or 3% from last quarter, mainly due to a reduction in cash and deposits with banks, partially offset by an increase in on-balance sheet securities as well as higher available loan balances eligible as collateral at FHLB.
Funding
Funding strategy
Maintaining a diversified funding base is a key strategy for managing our liquidity risk profile.
Core funding, comprising capital, longer-term wholesale liabilities and a diversified pool of personal as well as the stable portion of our commercial and institutional deposits, is the foundation of our structural liquidity position.
Wholesale funding activities are well-diversified by geography, investor segment, instrument, currency, structure and maturity. We maintain an ongoing presence in different funding markets, which allows us to continuously monitor market developments and trends, identify opportunities and risks and take appropriate and timely actions.
We continuously evaluate opportunities to expand into new markets and untapped investor segments since diversification expands our wholesale funding flexibility, minimizes funding concentration and dependency and generally reduces financing costs.
We regularly assess our funding concentration and have implemented limits on certain funding sources to support diversification of our funding base.
Deposit and funding profile
As at April 30, 2024, relationship-based deposits, which are the primary source of funding for retail and commercial lending, were $943 billion or 57% of our total funding (January 31, 2024 – $847 billion or 52%). Relationship-based deposits attributable to the HSBC Canada transaction were $75 billion, or 5% of our total funding. The remaining portion is comprised of short- and long-term wholesale funding.
Funding for highly liquid assets consists primarily of short-term wholesale funding that reflects the monetization period of those assets. Long-term wholesale funding is used mostly to fund less liquid wholesale assets and to support liquid asset buffers.

Table of Contents
34   
Royal Bank of Canada
  Second Quarter 2024
 
Senior long-term debt issued by the bank on or after September 23, 2018, that has an original term greater than 400 days and is marketable, subject to certain exceptions, is subject to the Canadian Bank Recapitalization
(Bail-in)
regime. Under the
Bail-in
regime, in circumstances when the Superintendent of Financial Institutions has determined that a bank may no longer be viable, the Governor in Council may, upon a recommendation of the Minister of Finance that he or she is of the opinion that it is in the public interest to do so, grant an order directing the Canada Deposit Insurance Corporation (CDIC) to convert all or a portion of certain shares and liabilities of that bank into common shares. As at April 30, 2024, the notional value of issued and outstanding long-term debt subject to conversion under the
Bail-in
regime was $109 billion (January 31, 2024 – $106 billion).
For further details on our wholesale funding, refer to the Composition of wholesale funding tables below.
Long-term debt issuance
We operate long-term debt issuance registered programs. The following table summarizes our registered programs and their authorized limits by geography:
 
Programs by geography
 
 
Canada
 
U.S.
  
Europe/Asia
•  Canadian Shelf Program – $25 billion
 
•  U.S. Shelf Program – US$75 billion
  
•  European Debt Issuance Program – US$75 billion
    
•  Global Covered Bond Program –
75 billion
 
 
 
  
•  Japanese Issuance Programs – ¥1 trillion
We also raise long-term funding using Canadian Senior Notes, Kangaroo Bonds (issued in the Australian domestic market by foreign firms) and Yankee Certificates of Deposit (issued in the U.S. domestic market by foreign firms).
As presented in the following charts, our current long-term debt profile is well-diversified by both currency and product.
 

 

(1)   Includes unsecured and secured long-term funding and subordinated debentures with an original term to maturity greater than 1 year
 
(1)   Includes unsecured and secured long-term funding and subordinated debentures with an original term to maturity greater than 1 year
 
(2)  Mortgage-backed securities and Canada Mortgage Bonds
The following table shows the composition of wholesale funding based on remaining term to maturity:
Composition of wholesale funding
(1)
 
    
As at April 30, 2024
 
(Millions of Canadian dollars)  
Less than
1 month
   
1 to 3
months
   
3 to 6
months
   
6 to 12
months
   
Less than 1
year sub-total
   
1 year to
2 years
   
2 years and
greater
   
Total
 
Deposits from banks
(2)
 
$
3,947
 
 
$
312
 
 
$
 
 
$
116
 
 
$
4,375
 
 
$
 
 
$
 
 
$
4,375
 
Certificates of deposit and commercial paper 
(3)
 
 
12,883
 
 
 
19,008
 
 
 
18,663
 
 
 
15,599
 
 
 
66,153
 
 
 
 
 
 
 
 
 
66,153
 
Asset-backed commercial paper
(4)
 
 
4,329
 
 
 
3,873
 
 
 
8,101
 
 
 
1,069
 
 
 
17,372
 
 
 
 
 
 
 
 
 
17,372
 
Senior unsecured medium-term notes
(5)
 
 
2,589
 
 
 
11,435
 
 
 
5,007
 
 
 
20,148
 
 
 
39,179
 
 
 
15,666
 
 
 
53,963
 
 
 
108,808
 
Senior unsecured structured notes
(6)
 
 
858
 
 
 
1,822
 
 
 
2,347
 
 
 
5,812
 
 
 
10,839
 
 
 
3,980
 
 
 
17,470
 
 
 
32,289
 
Mortgage securitization
 
 
 
 
 
1,066
 
 
 
405
 
 
 
1,815
 
 
 
3,286
 
 
 
1,307
 
 
 
12,720
 
 
 
17,313
 
Covered bonds/asset-backed securities
(7)
 
 
 
 
 
 
 
 
1,720
 
 
 
3,620
 
 
 
5,340
 
 
 
13,401
 
 
 
47,647
 
 
 
66,388
 
Subordinated liabilities
 
 
 
 
 
1,500
 
 
 
 
 
 
1,500
 
 
 
3,000
 
 
 
3,273
 
 
 
7,698
 
 
 
13,971
 
Other
(8)
 
 
4,794
 
 
 
268
 
 
 
1,706
 
 
 
1,890
 
 
 
8,658
 
 
 
16,945
 
 
 
145
 
 
 
25,748
 
Total
 
$
 29,400
 
 
$
 39,284
 
 
$
 37,949
 
 
$
 51,569
 
 
$
 158,202
 
 
$
 54,572
 
 
$
 139,643
 
 
$
 352,417
 
Of which:
               
– Secured
 
$
9,019
 
 
$
5,023
 
 
$
10,975
 
 
$
6,504
 
 
$
31,521
 
 
$
14,708
 
 
$
60,367
 
 
$
106,596
 
– Unsecured
 
 
20,381
 
 
 
34,261
 
 
 
26,974
 
 
 
45,065
 
 
 
126,681
 
 
 
39,864
 
 
 
79,276
 
 
 
245,821
 

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   35
 
     As at January 31, 2024  
(Millions of Canadian dollars)   Less than
1 month
    1 to 3
months
    3 to 6
months
    6 to 12
months
    Less than 1
year
sub-total
    1 year to
2 years
    2 years and
greater
    Total  
Deposits from banks
(2)
  $ 6,568     $ 136     $ 344     $ 20     $ 7,068     $     $     $ 7,068  
Certificates of deposit and commercial paper 
(3)
    7,850       12,466       26,019       22,190       68,525                   68,525  
Asset-backed commercial paper
(4)
    4,466       5,417       6,025       1,666       17,574                   17,574  
Senior unsecured medium-term notes
(5)
    43       691       13,797       16,683       31,214       17,205       56,171       104,590  
Senior unsecured structured notes
(6)
    1,483       1,362       1,980       3,205       8,030       5,726       16,270       30,026  
Mortgage securitization
          362       1,065       841       2,268       2,243       10,297       14,808  
Covered bonds/asset-backed securities
(7)
                      3,831       3,831       11,780       45,799       61,410  
Subordinated liabilities
                1,500       1,500       3,000       3,266       5,700       11,966  
Other
(8)
    6,637       2,223       1,728       1,612       12,200       15,658       133       27,991  
Total
  $  27,047     $  22,657     $  52,458     $  51,548     $  153,710     $  55,878     $  134,370     $  343,958  
Of which:
               
– Secured
  $ 10,998     $ 7,811     $ 8,553     $ 6,338     $ 33,700     $ 14,023     $ 56,096     $ 103,819  
– Unsecured
    16,049       14,846       43,905       45,210       120,010       41,855       78,274       240,139  
 
(1)   Excludes bankers’ acceptances and repos.
(2)   Excludes deposits associated with services we provide to banks (e.g., custody, cash management).
(3)   Includes bearer deposit notes (unsecured).
(4)   Only includes consolidated liabilities, including our collateralized commercial paper program.
(5)   Includes deposit notes and floating rate notes (unsecured).
(6)   Includes notes where the payout is tied to movements in foreign exchange, commodities and equities.
(7)   Includes covered bonds collateralized with residential mortgages and securities backed by credit card receivables.
(8)   Includes tender option bonds (secured) of $4,835 million (January 31, 2024 – $4,987 million), other long-term structured deposits (unsecured) of $20,022 million (January 31, 2024 – $17,774 million), FHLB advances (secured) of $688 million (January 31, 2024 – $5,040 million) and wholesale guaranteed interest certificates of $203 million (January 31, 2024 – $190 million).
Credit ratings
Our ability to access unsecured funding markets and to engage in certain collateralized business activities on a cost-effective basis are largely dependent on maintaining competitive credit ratings. Credit ratings and outlooks provided by rating agencies reflect their views and methodologies. Ratings are subject to change, based on a number of factors including, but not limited to, our financial strength, competitive position, liquidity and other factors not completely within our control.
The following table presents our major credit ratings:
Credit ratings
(1)
 
     
As at May 29, 2024
 
     
Short-term

debt
    
Legacy senior
long-term debt 
(2)
      
Senior long-
term debt 
(3)
      
Outlook
 
Moody’s
(4)
  
 
P-1
 
  
 
Aa1
 
    
 
A1
 
    
 
stable
 
Standard & Poor’s
(5)
  
 
A-1+
 
  
 
AA-
 
    
 
A
 
    
 
stable
 
Fitch Ratings
(6)
  
 
F1+
 
  
 
AA
 
    
 
AA-
 
    
 
stable
 
DBRS
(7)
  
 
R-1 (high)
 
  
 
AA (high)
 
    
 
AA
 
    
 
stable
 
 
  (1)   Credit ratings are not recommendations to purchase, sell or hold a financial obligation in as much as they do not comment on market price or suitability for a particular investor. Ratings are determined by the rating agencies based on criteria established from time to time by them and are subject to revision or withdrawal at any time by the rating organization.  
  (2)   Includes senior long-term debt issued prior to September 23, 2018 and senior long-term debt issued on or after September 23, 2018 which is excluded from the
Bail-in
regime.
 
  (3)   Includes senior long-term debt issued on or after September 23, 2018 which is subject to conversion under the
Bail-in
regime.
 
  (4)   On November 6, 2023, Moody’s affirmed our ratings with stable outlook.  
  (5)   On May 25, 2023, Standard & Poor’s affirmed our ratings with a stable outlook.  
  (6)   On June 20, 2023, Fitch Ratings affirmed our ratings with a stable outlook.  
  (7)   On May 10, 2024, DBRS affirmed our ratings with a stable outlook.  
Additional contractual obligations for rating downgrades
We are required to deliver collateral to certain counterparties in the event of a downgrade from our current credit rating. The following table shows the additional collateral obligations required at the reporting date in the event of a
one-,
two-
or three-notch downgrade. These additional collateral obligations are incremental requirements for each successive downgrade and do not represent the cumulative impact of multiple downgrades. The amounts reported change periodically due to several factors, including the transfer of trading activity to centrally cleared financial market infrastructures and exchanges, the expiration of transactions with downgrade triggers, the imposition of internal limitations on new agreements to exclude downgrade triggers, as well as normal course
mark-to-market.
There is no outstanding senior debt issued in the market that contains rating triggers that would lead to early prepayment of principal.
 
      As at     
   
April 30
2024
       
January 31
2024
 
(Millions of Canadian dollars)  
One-notch

downgrade
   
Two-notch

downgrade
   
Three-notch

downgrade
        
One-notch

downgrade
   
Two-notch

downgrade
   
Three-notch

downgrade
 
Contractual derivatives funding or margin requirements
 
$
228
 
 
$
137
 
 
$
218
 
    $ 327     $ 90     $ 186  
Other contractual funding or margin requirements
(1)
 
 
44
 
 
 
46
 
 
 
87
 
 
 
    45       55       50  
 
(1)   Includes Guaranteed Investment Certificates (GICs) issued by our municipal markets business out of New York.

Table of Contents
36   
Royal Bank of Canada
  Second Quarter 2024
 
Liquidity Coverage Ratio (LCR)
The LCR is a Basel III metric that measures the sufficiency of high-quality liquid assets (HQLA) available to meet liquidity needs over a
30-day
period in an acute stress scenario. The Basel Committee on Banking Supervision (BCBS) and OSFI regulatory minimum coverage level for LCR is 100%.
OSFI requires Canadian banks to disclose the LCR using the standard Basel disclosure template and calculated using the average of daily LCR positions during the quarter.
Liquidity coverage ratio common disclosure template
(1)
 
     For the three months ended  
   
April 30
2024
 
(Millions of Canadian dollars, except percentage amounts)  
Total unweighted
value (average) 
(2)
   
Total weighted
value (average)
 
High-quality liquid assets
   
Total high-quality liquid assets (HQLA)
 
 
 
 
 
$
382,663
 
Cash outflows
   
Retail deposits and deposits from small business customers, of which:
 
$
 375,052
 
 
$
36,853
 
Stable deposits
(3)
 
 
125,024
 
 
 
3,751
 
Less stable deposits
 
 
250,028
 
 
 
33,102
 
Unsecured wholesale funding, of which:
 
 
422,454
 
 
 
 207,964
 
Operational deposits (all counterparties) and deposits in networks of cooperative banks
(4)
 
 
153,638
 
 
 
36,134
 
Non-operational
deposits
 
 
237,238
 
 
 
140,252
 
Unsecured debt
 
 
31,578
 
 
 
31,578
 
Secured wholesale funding
   
 
43,768
 
Additional requirements, of which:
 
 
361,291
 
 
 
80,486
 
Outflows related to derivative exposures and other collateral requirements
 
 
63,479
 
 
 
17,733
 
Outflows related to loss of funding on debt products
 
 
11,706
 
 
 
11,706
 
Credit and liquidity facilities
 
 
286,106
 
 
 
51,047
 
Other contractual funding obligations
(5)
 
 
29,721
 
 
 
29,721
 
Other contingent funding obligations
(6)
 
 
757,701
 
 
 
12,680
 
Total cash outflows
 
 
 
 
 
$
411,472
 
Cash inflows
   
Secured lending (e.g., reverse repos)
 
$
358,940
 
 
$
56,626
 
Inflows from fully performing exposures
 
 
18,300
 
 
 
10,761
 
Other cash inflows
 
 
44,832
 
 
 
44,832
 
Total cash inflows
 
 
 
 
 
$
112,219
 
         
Total
adjusted value
 
Total HQLA
   
$
382,663
 
Total net cash outflows
 
 
 
 
 
 
299,253
 
Liquidity coverage ratio
 
 
 
 
 
 
128%
                 
   
January 31
2024
 
(Millions of Canadian dollars, except percentage amounts)          Total
adjusted value
 
Total HQLA
    $  392,630  
Total net cash outflows
 
 
 
 
    298,384  
Liquidity coverage ratio
 
 
 
 
    132%
 
(1)   The LCR is calculated in accordance with OSFI’s LAR guideline, which, in turn, reflects liquidity-related requirements issued by the BCBS. The LCR for the quarter ended April 30, 2024 is calculated as an average of 62 daily positions.
(2)   With the exception of other contingent funding obligations, unweighted inflow and outflow amounts are items maturing or callable in 30 days or less. Other contingent funding obligations also include debt securities with remaining maturity greater than 30 days.
(3)   As defined by the BCBS, stable deposits from retail and small business customers are deposits that are insured and are either held in transactional accounts or the bank has an established relationship with the client making the withdrawal unlikely.
(4)   Operational deposits from customers other than retail and small and
medium-sized
enterprises, are deposits which clients need to keep with the bank in order to facilitate their access and ability to use payment and settlement systems primarily for clearing, custody and cash management activities.
(5)   Other contractual funding obligations primarily include outflows from unsettled securities trades and outflows from obligations related to securities sold short.
(6)   Other contingent funding obligations include outflows related to other
off-balance
sheet facilities that carry low LCR runoff factors (0% – 5%).
We manage our LCR position within a target range that reflects our liquidity risk tolerance, business mix, asset composition and funding capabilities. The range is subject to periodic review, considering changes to internal requirements and external developments.
We maintain HQLA in major currencies with dependable market depth and breadth. Our treasury management practices are designed to ensure that the levels of HQLA are actively managed to meet target LCR objectives. Our Level 1 assets, as calculated according to OSFI LAR and the BCBS LCR requirements, represent 87% of total HQLA. These assets consist of cash, placements with central banks and highly rated securities issued or guaranteed by governments, central banks and supranational entities.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   37
 
LCR captures cash flows from
on-
and
off-balance
sheet activities that are either expected or could potentially occur within 30 days in an acute stress scenario. Cash outflows result from the application of withdrawal and
non-renewal
factors to demand and term deposits, differentiated by client type (wholesale, retail and small- and
medium-sized
enterprises). Cash outflows also arise from business activities that create contingent funding and collateral requirements, such as repo funding, derivatives, short sales of securities and the extension of credit and liquidity commitments to clients. Cash inflows arise primarily from maturing secured loans, interbank loans and
non-HQLA
securities.
LCR does not reflect any market funding capacity that we believe would be available in a stress situation. All maturing wholesale debt is assigned 100% outflow in the LCR calculation.
Q2 2024 vs. Q1 2024
The average LCR for the quarter ended April 30, 2024 was 128%, which translates into a surplus of approximately $83 billion, compared to 132% and a surplus of approximately $94 billion in the prior quarter. Average LCR decreased from the prior quarter due to the HSBC Canada transaction and a change in securities mix, relating to both on-balance sheet securities and securities financing transactions. Loan growth also contributed to the decrease. These factors were partially offset by retail deposit growth. Average LCR for the current quarter reflects outflows associated with the HSBC Canada transaction 30 days prior to close.
Net Stable Funding Ratio (NSFR)
NSFR is a Basel III metric that measures the sufficiency of available stable funding relative to the amount of required stable funding. The BCBS and OSFI regulatory minimum coverage level for NSFR is 100%.
Available stable funding is defined as the portion of capital and liabilities expected to be reliable over the
one-year
time horizon considered by the NSFR. Required stable funding is a function of the liquidity characteristics and residual maturities of various bank assets and
off-balance
sheet exposures.
OSFI requires Canadian Domestic Systemically Important Banks
(D-SIBs)
to disclose the NSFR using the standard Basel disclosure template. Amounts presented in this disclosure template are determined in accordance with the requirements of OSFI’s LAR guideline and are not necessarily aligned with the classification requirements prescribed under IFRS.

Table of Contents
38   
Royal Bank of Canada
  Second Quarter 2024
 
Net Stable Funding Ratio common disclosure template
(1)
 
    
As at April 30, 2024
 
   
Unweighted value by residual maturity
(2)
       
(Millions of Canadian dollars, except percentage amounts)  
No maturity
   
< 6 months
   
6 months to
< 1 year
   
 1 year
   
Weighted value
 
Available Stable Funding (ASF) Item
         
Capital:
 
$
122,644
 
 
$
 
 
$
 
 
$
12,910
 
 
$
135,554
 
Regulatory Capital
 
 
122,644
 
 
 
 
 
 
 
 
 
12,910
 
 
 
135,554
 
Other Capital Instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail deposits and deposits from small business customers:
 
 
323,265
 
 
 
128,497
 
 
 
51,898
 
 
 
66,906
 
 
 
521,010
 
Stable deposits
(3)
 
 
97,366
 
 
 
55,906
 
 
 
26,913
 
 
 
31,536
 
 
 
202,711
 
Less stable deposits
 
 
225,899
 
 
 
72,591
 
 
 
24,985
 
 
 
35,370
 
 
 
318,299
 
Wholesale funding:
 
 
317,433
 
 
 
431,839
 
 
 
64,348
 
 
 
154,611
 
 
 
372,138
 
Operational deposits
(4)
 
 
181,621
 
 
 
 
 
 
 
 
 
 
 
 
90,810
 
Other wholesale funding
 
 
135,812
 
 
 
431,839
 
 
 
64,348
 
 
 
154,611
 
 
 
281,328
 
Liabilities with matching interdependent assets
(5)
 
 
89
 
 
 
2,946
 
 
 
2,431
 
 
 
22,540
 
 
 
 
Other liabilities:
 
 
48,251
 
 
 
238,518
 
 
 
16,317
 
NSFR derivative liabilities
   
 
35,119
 
 
All other liabilities and equity not included in the above categories
 
 
48,251
 
 
 
186,199
 
 
 
1,766
 
 
 
15,434
 
 
 
16,317
 
Total ASF
                                 
$
 1,045,019
 
Required Stable Funding (RSF) Item
         
Total NSFR high-quality liquid assets (HQLA)
         
$
49,954
 
Deposits held at other financial institutions for operational purposes
 
 
 
 
 
1,485
 
 
 
 
 
 
 
 
 
743
 
Performing loans and securities:
 
 
253,430
 
 
 
300,032
 
 
 
126,107
 
 
 
551,901
 
 
 
762,474
 
Performing loans to financial institutions secured by Level 1 HQLA
 
 
 
 
 
116,034
 
 
 
10,929
 
 
 
6
 
 
 
11,772
 
Performing loans to financial institutions secured by
non-Level
1 HQLA and unsecured performing loans to financial institutions
 
 
4,979
 
 
 
89,984
 
 
 
31,479
 
 
 
22,587
 
 
 
54,497
 
Performing loans to
non-financial
corporate clients, loans to retail and small business customers, and loans to sovereigns, central banks and PSEs, of which:
 
 
167,619
 
 
 
53,963
 
 
 
36,221
 
 
 
175,374
 
 
 
337,049
 
With a risk weight of less than or equal to 35% under the Basel II standardized approach for credit risk
 
 
 
 
 
811
 
 
 
628
 
 
 
2,640
 
 
 
2,435
 
Performing residential mortgages, of which:
 
 
39,115
 
 
 
37,262
 
 
 
46,031
 
 
 
318,384
 
 
 
291,361
 
With a risk weight of less than or equal to 35% under the Basel II standardized approach for credit risk
 
 
39,115
 
 
 
37,239
 
 
 
45,997
 
 
 
317,201
 
 
 
290,327
 
Securities that are not in default and do not qualify as HQLA, including exchange-traded equities
 
 
41,717
 
 
 
2,789
 
 
 
1,447
 
 
 
35,550
 
 
 
67,795
 
Assets with matching interdependent liabilities
(5)
 
 
89
 
 
 
2,946
 
 
 
2,431
 
 
 
22,540
 
 
 
 
Other assets:
 
 
5,167
 
 
 
338,333
 
 
 
94,620
 
Physical traded commodities, including gold
 
 
5,167
 
       
 
4,392
 
Assets posted as initial margin for derivative contracts and contributions to default funds of CCPs
   
 
21,248
 
 
 
18,061
 
NSFR derivative assets
   
 
33,793
 
 
 
 
NSFR derivative liabilities before deduction of variation margin posted
   
 
66,853
 
 
 
3,343
 
All other assets not included in the above categories
 
 
 
 
 
150,421
 
 
 
67
 
 
 
65,951
 
 
 
68,824
 
Off-balance
sheet items
         
 
849,009
 
 
 
32,610
 
Total RSF
                                 
$
940,401
 
Net Stable Funding Ratio (%)
                                 
 
111%
 
         
     As at January 31, 2024         
(Millions of Canadian dollars, except percentage amounts)                              
Weighted
value
 
Total ASF
                                  $  974,825  
Total RSF
                                    862,347  
Net Stable Funding Ratio (%)
                                    113%
 
(1)   The NSFR is calculated in accordance with OSFI’s LAR guideline, which, in turn, reflects liquidity-related requirements issued by the BCBS.
(2)   Totals for the following rows encompass the residual maturity categories of less than 6 months, 6 months to less than 1 year, and greater than or equal to 1 year in accordance with the requirements of the common disclosure template prescribed by OSFI: Other liabilities, NSFR derivative liabilities, Other assets, Assets posted as initial margin for derivative contracts and contributions to default funds of central counterparties (CCPs), NSFR derivative assets, NSFR derivative liabilities before deduction of variation margin posted and
Off-balance
sheet items.
(3)   As defined by the BCBS, stable deposits from retail and small business customers are deposits that are insured and are either held in transactional accounts or the bank has an established relationship with the client making the withdrawal unlikely.
(4)   Operational deposits from customers other than retail and small- and
medium-sized
enterprises, are deposits which clients need to keep with the bank in order to facilitate their access and ability to use payment and settlement systems primarily for clearing, custody and cash management activities.
(5)   Interdependent assets and liabilities represent NHA MBS liabilities, including liabilities arising from transactions involving the Canada Mortgage Bond program and their corresponding encumbered mortgages.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   39
 
Available stable funding is comprised primarily of a diversified pool of personal and commercial deposits, capital and long-term wholesale liabilities. Required stable funding is driven mainly by the bank’s mortgage and loan portfolio, secured loans to financial institutions and to a lesser extent by other less liquid assets. NSFR does not reflect any unused market funding capacity that we believe would be available.
Volume and composition of available stable funding is actively managed to optimize our structural funding position and meet NSFR objectives. Our NSFR is managed in accordance with our comprehensive LRMF.
Q2 2024 vs. Q1 2024
The NSFR as at April 30, 2024 was 111%, which translates into a surplus of approximately $105 billion, compared to 113% and a surplus of approximately $112 billion in the prior quarter. NSFR decreased compared to the previous quarter primarily due to higher funding requirements on loans.
Contractual maturities of financial assets, financial liabilities and
off-balance
sheet items
The following tables provide remaining contractual maturity profiles of all our assets, liabilities, and
off-balance
sheet items at their carrying value (e.g., amortized cost or fair value) and maturity profiles of assets and liabilities of insurance contracts and reinsurance contracts held at their carrying value based on the estimated timing of when the cash flows are expected to occur at the balance sheet date.
Off-balance
sheet items are allocated based on the expiry date of the contract.
Details of contractual maturities and commitments to extend funds are a source of information for the management of liquidity risk. Among other purposes, these details form a basis for modelling a behavioural balance sheet with effective maturities to calculate liquidity risk measures. For further details, refer to the Risk measurement and internal liquidity section within the Liquidity and funding risk section of our 2023 Annual Report.
 
    
As at April 30, 2024
 
(Millions of Canadian dollars)  
Less than
1 month
   
1 to 3
months
   
3 to 6
months
   
6 to 9
months
   
9 to 12
months
   
1 year
to 2 years
   
2 years
to 5 years
   
5 years
and greater
   
With no
specific
maturity
   
Total
 
Assets
                   
Cash and deposits with banks
 
$
97,580
 
 
$
11
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
2,241
 
 
$
99,832
 
Securities
                   
Trading (1)
 
 
87,638
 
 
 
225
 
 
 
300
 
 
 
191
 
 
 
29
 
 
 
57
 
 
 
686
 
 
 
10,782
 
 
 
73,658
 
 
 
173,566
 
Investment, net of applicable allowance
 
 
5,158
 
 
 
8,386
 
 
 
4,412
 
 
 
5,188
 
 
 
7,599
 
 
 
45,901
 
 
 
76,182
 
 
 
85,011
 
 
 
1,150
 
 
 
238,987
 
Assets purchased under reverse repurchase agreements and securities borrowed (2)
 
 
124,533
 
 
 
71,600
 
 
 
39,967
 
 
 
28,174
 
 
 
17,906
 
 
 
1
 
 
 
 
 
 
 
 
 
19,616
 
 
 
301,797
 
Loans, net of applicable allowance
 
 
48,164
 
 
 
32,869
 
 
 
41,487
 
 
 
51,113
 
 
 
50,861
 
 
 
243,493
 
 
 
313,973
 
 
 
77,250
 
 
 
101,329
 
 
 
960,539
 
Other
                   
Customers’ liability under acceptances
 
 
6,560
 
 
 
2,543
 
 
 
 
 
 
2
 
 
 
 
 
 
 
 
 
5
 
 
 
 
 
 
(51
 
 
9,059
 
Derivatives
 
 
10,115
 
 
 
12,843
 
 
 
7,860
 
 
 
8,177
 
 
 
6,419
 
 
 
15,184
 
 
 
27,909
 
 
 
41,692
 
 
 
 
 
 
130,199
 
Other financial assets
 
 
38,392
 
 
 
3,200
 
 
 
1,820
 
 
 
709
 
 
 
966
 
 
 
164
 
 
 
671
 
 
 
1,987
 
 
 
3,881
 
 
 
51,790
 
Total financial assets
 
 
418,140
 
 
 
131,677
 
 
 
95,846
 
 
 
93,554
 
 
 
83,780
 
 
 
304,800
 
 
 
419,426
 
 
 
216,722
 
 
 
201,824
 
 
 
1,965,769
 
Other
non-financial
assets
 
 
8,062
 
 
 
2,333
 
 
 
1,791
 
 
 
159
 
 
 
131
 
 
 
2,745
 
 
 
2,612
 
 
 
9,598
 
 
 
37,850
 
 
 
65,281
 
Total assets
 
$
426,202
 
 
$
134,010
 
 
$
97,637
 
 
$
93,713
 
 
$
83,911
 
 
$
307,545
 
 
$
422,038
 
 
$
226,320
 
 
$
239,674
 
 
$
2,031,050
 
Liabilities and equity
                   
Deposits (3)
                   
Unsecured borrowing
 
$
91,143
 
 
$
80,798
 
 
$
83,610
 
 
$
80,978
 
 
$
64,877
 
 
$
59,440
 
 
$
79,604
 
 
$
33,161
 
 
$
638,515
 
 
$
1,212,126
 
Secured borrowing
 
 
4,802
 
 
 
6,893
 
 
 
9,644
 
 
 
2,105
 
 
 
2,245
 
 
 
6,683
 
 
 
16,086
 
 
 
9,966
 
 
 
 
 
 
58,424
 
Covered bonds
 
 
 
 
 
 
 
 
1,722
 
 
 
2,154
 
 
 
1,427
 
 
 
11,876
 
 
 
34,979
 
 
 
4,895
 
 
 
 
 
 
57,053
 
Other
                   
Acceptances
 
 
6,560
 
 
 
2,543
 
 
 
 
 
 
2
 
 
 
 
 
 
 
 
 
5
 
 
 
 
 
 
 
 
 
9,110
 
Obligations related to securities sold short
 
 
31,487
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31,487
 
Obligations related to assets sold under repurchase agreements and securities loaned (2)
 
 
192,996
 
 
 
43,991
 
 
 
12,306
 
 
 
40
 
 
 
8,596
 
 
 
5
 
 
 
 
 
 
 
 
 
21,787
 
 
 
279,721
 
Derivatives
 
 
9,432
 
 
 
15,297
 
 
 
8,632
 
 
 
10,408
 
 
 
7,561
 
 
 
15,926
 
 
 
28,281
 
 
 
41,031
 
 
 
 
 
 
136,568
 
Other financial liabilities
 
 
39,024
 
 
 
2,925
 
 
 
3,320
 
 
 
1,852
 
 
 
2,073
 
 
 
1,067
 
 
 
2,378
 
 
 
16,393
 
 
 
1,507
 
 
 
70,539
 
Subordinated debentures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,947
 
 
 
 
 
 
11,517
 
 
 
 
 
 
13,464
 
Total financial liabilities
 
 
375,444
 
 
 
152,447
 
 
 
119,234
 
 
 
97,539
 
 
 
86,779
 
 
 
96,944
 
 
 
161,333
 
 
 
116,963
 
 
 
661,809
 
 
 
1,868,492
 
Other
non-financial
liabilities
 
 
2,347
 
 
 
982
 
 
 
98
 
 
 
4,597
 
 
 
199
 
 
 
1,264
 
 
 
1,260
 
 
 
19,574
 
 
 
10,633
 
 
 
40,954
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
121,604
 
 
 
121,604
 
Total liabilities and equity
 
$
377,791
 
 
$
153,429
 
 
$
119,332
 
 
$
102,136
 
 
$
86,978
 
 
$
98,208
 
 
$
162,593
 
 
$
136,537
 
 
$
794,046
 
 
$
2,031,050
 
Off-balance
sheet items
                   
Financial guarantees
 
$
1,075
 
 
$
2,340
 
 
$
3,858
 
 
$
4,073
 
 
$
4,657
 
 
$
987
 
 
$
7,699
 
 
$
843
 
 
$
19
 
 
$
25,551
 
Commitments to extend credit
 
 
4,261
 
 
 
12,228
 
 
 
14,509
 
 
 
17,925
 
 
 
22,640
 
 
 
62,144
 
 
 
208,876
 
 
 
25,822
 
 
 
4,685
 
 
 
373,090
 
Other credit-related commitments
 
 
29,105
 
 
 
1,992
 
 
 
2,383
 
 
 
2,353
 
 
 
2,437
 
 
 
572
 
 
 
1,026
 
 
 
109
 
 
 
83,484
 
 
 
123,461
 
Other commitments
 
 
6
 
 
 
11
 
 
 
16
 
 
 
17
 
 
 
18
 
 
 
62
 
 
 
152
 
 
 
193
 
 
 
965
 
 
 
1,440
 
Total
off-balance
sheet items
 
$
34,447
 
 
$
16,571
 
 
$
20,766
 
 
$
24,368
 
 
$
29,752
 
 
$
63,765
 
 
$
217,753
 
 
$
26,967
 
 
$
89,153
 
 
$
523,542
 
 
(1)   With the exception of debt securities within the Insurance segment, trading debt securities classified as FVTPL have been included in the less than 1 month category as there is no expectation to hold these assets to their contractual maturity.
(2)   Open reverse repo and repo contracts, which have no set maturity date and are typically short-term, have been included in the with no specific maturity category.
(3)   A major portion of relationship-based deposits are repayable on demand or at short notice on a contractual basis while, in practice, these customer balances form a core base for our operations and liquidity needs, as explained in the preceding Deposit and funding profile section.

Table of Contents
40   
Royal Bank of Canada
  Second Quarter 2024
 
     As at January 31, 2024  
(Millions of Canadian dollars)   Less than
1 month
    1 to 3
months
    3 to 6
months
    6 to 9
months
    9 to 12
months
    1 year
to 2 years
    2 years
to 5 years
    5 years
and greater
    With no
specific
maturity
    Total  
Assets
                   
Cash and deposits with banks
  $ 132,774     $ 5     $     $     $     $     $     $     $ 2,648     $ 135,427  
Securities
                   
Trading (1)
    116,462       317       224       45       42       65       644       11,155       64,643       193,597  
Investment, net of applicable allowance
    3,568       5,477       5,230       2,497       5,256       43,151       67,090       78,731       1,216       212,216  
Assets purchased under reverse repurchase agreements and securities borrowed (2)
    153,149       81,540       55,243       16,142       20,274       294                   21,229       347,871  
Loans, net of applicable allowance
    33,721       25,246       35,402       40,527       48,927       206,339       302,877       75,492       89,785       858,316  
Other
                   
Customers’ liability under acceptances
    12,613       4,216                   2             5             (43     16,793  
Derivatives
    7,533       8,518       5,694       4,695       6,271       13,128       26,658       32,541             105,038  
Other financial assets
    35,206       5,883       2,703       324       622       229       268       2,387       3,669       51,291  
Total financial assets
    495,026       131,202       104,496       64,230       81,394       263,206       397,542       200,306       183,147       1,920,549  
Other
non-financial
assets
    6,335       2,510       2,035       155       123       2,087       2,410       9,506       28,695       53,856  
Total assets
  $  501,361     $  133,712     $  106,531     $  64,385     $  81,517     $  265,293     $  399,952     $  209,812     $  211,842     $  1,974,405  
Liabilities and equity
                   
Deposits (3)
                   
Unsecured borrowing
  $ 97,982     $ 59,352     $ 91,861     $ 64,454     $ 73,303     $ 58,648     $ 77,653     $ 35,045     $ 576,489     $ 1,134,787  
Secured borrowing
    4,208       7,152       8,936       2,455       1,321       6,997       13,421       8,881             53,371  
Covered bonds
                      1,705       2,130       10,465       33,778       4,932             53,010  
Other
                   
Acceptances
    12,613       4,216                   2             5                   16,836  
Obligations related to securities sold short
    35,012                                                       35,012  
Obligations related to assets sold under repurchase agreements and securities loaned (2)
    223,426       66,813       21,780       5       46       290                   22,130       334,490  
Derivatives
    6,992       10,924       6,126       5,134       8,001       13,373       25,702       30,722             106,974  
Other financial liabilities
    39,291       8,200       3,021       1,551       1,695       983       2,289       15,209       1,460       73,699  
Subordinated debentures
                                  1,920             9,605             11,525  
Total financial liabilities
    419,524       156,657       131,724       75,304       86,498       92,676       152,848       104,394       600,079       1,819,704  
Other
non-financial
liabilities
    1,096       1,013       175       134       3,679       940       1,574       19,502       10,100       38,213  
Equity
                                                    116,488       116,488  
Total liabilities and equity
  $ 420,620     $ 157,670     $ 131,899     $ 75,438     $ 90,177     $ 93,616     $ 154,422     $ 123,896     $ 726,667     $ 1,974,405  
Off-balance
sheet items
                   
Financial guarantees
  $ 1,228     $ 2,477     $ 3,432     $ 4,472     $ 3,409     $ 880     $ 7,594     $ 639     $ 25     $ 24,156  
Commitments to extend credit
    3,984       10,766       12,593       13,918       20,943       57,965       198,205       25,485       4,204       348,063  
Other credit-related commitments
    15,281       1,143       1,814       1,666       1,528       149       386       66       80,653       102,686  
Other commitments
    5       10       16       15       17       61       151       196       909       1,380  
Total
off-balance
sheet items
  $ 20,498     $ 14,396     $ 17,855     $ 20,071     $ 25,897     $ 59,055     $ 206,336     $ 26,386     $ 85,791     $ 476,285  
 
(1)   With the exception of debt securities within the Insurance segment, trading debt securities classified as FVTPL have been included in the less than 1 month category as there is no expectation to hold these assets to their contractual maturity.
(2)   Open reverse repo and repo contracts, which have no set maturity date and are typically short-term, have been included in the with no specific maturity category.
(3)   A major portion of relationship-based deposits are repayable on demand or at short notice on a contractual basis while, in practice, these customer balances form a core base for our operations and liquidity needs, as explained in the preceding Deposit and funding profile section.
 
Capital management
 
We continue to manage our capital in accordance with our Capital Management Framework as described in our 2023 Annual Report. In addition, we continue to monitor for new regulatory capital developments, including OSFI guidance, in order to ensure compliance with these requirements as disclosed in the Capital management section in our 2023 Annual Report, as updated below.
OSFI expects Canadian banks to meet the Basel III targets for CET1, Tier 1, and Total capital ratios. Under Basel III, banks select from two main approaches, the Standardized Approach (SA) or the Internal Ratings Based (IRB) Approach, to calculate their minimum regulatory capital required to support credit, market and operational risks. We apply the IRB approach to credit risk to determine minimum regulatory capital requirements for the majority of our portfolios, including most of the exposures acquired from the HSBC Canada transaction. Certain credit risk portfolios are subject to SA, primarily in Wealth Management including our City National wholesale portfolio, our Caribbean Banking operations and certain non-mortgage retail portfolios acquired through the HSBC Canada transaction. For consolidated regulatory reporting of market risk capital and operational risk capital, we use the revised SA based on OSFI rules as further noted below.
The Financial Stability Board (FSB) has
re-designated
us as a Global Systemically Important Bank
(G-SIB).
This designation requires us to maintain a higher loss absorbency requirement (common equity as a percentage of RWA) of 1% consistent with the
D-SIB
requirement. In addition to the Basel III targets, OSFI established a Domestic Stability Buffer (DSB) applicable to all Canadian
D-SIBs
to further ensure the financial stability of the Canadian financial system. The current OSFI requirement for the DSB is set at 3.5% of total RWA.
Under OSFI’s Total Loss Absorbing Capacity (TLAC) guideline,
D-SIBs
are required to maintain a risk-based TLAC ratio which builds on the risk-based capital ratios described in the CAR guideline, and a TLAC leverage ratio which builds on the leverage ratio described in OSFI’s LR guideline. The TLAC requirement is intended to address the sufficiency of a
D-SIB’s
loss absorbing capacity in supporting its recapitalization in the event of its failure. TLAC is defined as the aggregate of Tier 1

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Royal Bank of Canada
  Second Quarter 2024   41
 
capital, Tier 2 capital and external TLAC instruments, which allow conversion in whole or in part into common shares under the CDIC Act and meet all of the eligibility criteria under the TLAC guideline.
Effective Q2 2023 we implemented OSFI’s first phase of the adoption of the final BCBS Basel III reforms consisting of revised capital, leverage, and disclosure guidelines. The second phase of OSFI’s implementation of the final BCBS Basel III reforms relating to the revised credit valuation adjustment (CVA) and market risk chapters of the CAR guideline came into effect in Q1 2024. The adoption of the revised CVA and market risk rules reflects adoption of a revised SA framework for CVA and a revised SA for market risk, as well as the discontinuation of our existing internal models-based approach used for market risk RWA determination. The revised Pillar 3 disclosure requirements effective upon adoption of these revised rules were reflected in our Q1 2024 standalone Pillar 3 Report. In addition, as prescribed by the CAR guidelines, effective Q1 2024 our regulatory capital floor transitioned to a new regulatory capital floor of 67.5% of RWA for fiscal 2024 from 65% of RWA in fiscal 2023. This new regulatory floor will be further transitioned over two years, reflecting a regulatory capital floor requirement of 70% and 72.5% in fiscal 2025 and 2026, respectively.
Our methodology for allocating capital to our business segments is based on the Basel III regulatory capital requirements, with the exception of Insurance. Effective November 1, 2023, our attributed capital methodology incorporates leverage requirements to allocate capital to our business segments. Our insurance platform will continue to be allocated capital based on fully diversified economic capital, similar to past quarters. For further details on changes to our attributed capital methodology, refer to the How we measure and report our business segments section.
For further details, refer to the Capital management section of our 2023 Annual Report.
The following table provides a summary of OSFI’s current regulatory target ratios under Basel III and Pillar 2 requirements. We are in compliance with all current capital, leverage and TLAC requirements imposed by OSFI:
 
Basel III
capital,
leverage and TLAC
ratios
 
 
OSFI regulatory target requirements for large banks under Basel III
   
 
Domestic
Stability
Buffer 
(3)
   
 
Minimum
including
Capital Buffers,
D-SIB/G-SIB
surcharge and
Domestic
Stability
Buffer as at
April 30, 2024 
(4)
   
RBC capital,
leverage and
TLAC ratios
as at
April 30, 2024
 
 
Minimum
   
Capital
Buffers
   
Minimum
including
Capital
Buffers
   
D-SIB/G-SIB
surcharge 
(1)
   
Minimum including
Capital Buffers
and
D-SIB/G-SIB

surcharge
(1), (2)
 
                 
Common Equity Tier 1     4.5%       2.6%       7.1%       1.0%       8.1%       3.5%       11.6%       12.8%  
Tier 1 capital     6.0%       2.6%       8.6%       1.0%       9.6%       3.5%       13.1%       14.1%  
Total capital     8.0%       2.6%       10.6%       1.0%       11.6%       3.5%       15.1%       16.1%  
Leverage ratio     3.5%       n.a.       3.5%       n.a.       3.5%       n.a.       3.5%       4.2%  
TLAC ratio     21.6%       n.a.       21.6%       n.a.       21.6%       3.5%       25.1%       27.5%  
TLAC leverage ratio     7.25%       n.a.       7.25%       n.a.       7.25%       n.a.       7.25%       8.1%  
 
(1)   A capital surcharge, equal to the higher of our
D-SIB
surcharge and the BCBS’s
G-SIB
surcharge, is applicable to risk-weighted capital.
(2)   The capital buffers include the capital conservation buffer of 2.5% and the countercyclical capital buffer (CCyB) as prescribed by OSFI. The CCyB, calculated in accordance with OSFI’s CAR guidelines, was 0.05% as at April 30, 2024 (January 31, 2024 – 0.06%; October 31, 2023 – 0.06%).
(3)   The DSB can range from 0% to 4% of total RWA and is currently set at 3.5%.
(4)   Minimum target requirements reflect CCyB requirements as at April 30, 2024 which are subject to change based on exposures held at the reporting date.
n.a.   not applicable

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42   
Royal Bank of Canada
  Second Quarter 2024
 
The following table provides details on our regulatory capital, TLAC available, RWA, and on ratios for capital, leverage and TLAC. Our capital position remains strong and our capital, leverage and TLAC ratios remain well above OSFI regulatory targets.
 
     As at  
(Millions of Canadian dollars, except percentage amounts and as otherwise noted)
 
April 30
2024
   
January 31
2024
   
October 31
2023
 
Capital
(1), (2)
     
CET1 capital
 
$
83,497
 
  $ 88,106     $ 86,611  
Tier 1 capital
 
 
92,444
 
    96,140       93,904  
Total capital
 
 
105,353
 
    106,865       104,952  
RWA used in calculation of capital ratios
(1), (2)
     
Credit risk
 
$
531,381
 
  $ 474,677     $ 475,842  
Market risk
 
 
35,156
 
    30,980       40,498  
Operational risk
 
 
87,165
 
    84,600       79,883  
Total RWA
 
$
653,702
 
  $ 590,257     $ 596,223  
Capital ratios and Leverage ratio
(1), (2)
     
CET1 ratio
 
 
12.8%
    14.9%     14.5%
Tier 1 capital ratio
 
 
14.1%
    16.3%     15.7%
Total capital ratio
 
 
16.1%
    18.1%     17.6%
Leverage ratio
 
 
4.2%
    4.4%     4.3%
Leverage ratio exposure
 
$
2,219,019
 
  $ 2,173,419     $ 2,179,590  
TLAC available and ratios
(1), (3)
     
TLAC available
 
$
  179,902
 
  $   185,556     $   184,916  
TLAC ratio
 
 
27.5%
    31.4%     31.0%
TLAC leverage ratio
 
 
8.1%
    8.5%     8.5%
 
  (1)   As prior period restatements are not required by OSFI, there was no impact from the adoption of IFRS 17 on regulatory capital, RWA, capital ratios, leverage ratio, TLAC available and TLAC ratios for periods prior to November 1, 2023.  
  (2)   Capital, RWA, and capital ratios are calculated using OSFI’s CAR guideline and the Leverage ratio is calculated using OSFI’s LR guideline. Both the CAR guideline and LR guideline are based on the Basel III framework. The period ended October 31, 2023 reflects our adoption of the revised CAR and LR guidelines that came into effect in Q2 2023, as further updated on October 20, 2023 as part of OSFI’s implementation of the Basel III reforms. The periods ended January 31, 2024 and April 30, 2024 also reflect our adoption of the revised market risk and CVA frameworks that came into effect on November 1, 2023.  
  (3)   TLAC available and TLAC ratios are calculated using OSFI’s TLAC guideline. The TLAC standard is applied at the resolution entity level which for us is deemed to be Royal Bank of Canada and its subsidiaries. A resolution entity and its subsidiaries are collectively called a resolution group. The TLAC ratio and TLAC leverage ratio are calculated using the TLAC available as a percentage of total RWA and leverage exposure, respectively.  

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Royal Bank of Canada
  Second Quarter 2024   43
 
Q2 2024 vs. Q1 2024
 
 

 
(1)   Represents rounded figures.
(2)   Includes capital deductions for goodwill and intangible assets of (139) bps, initial PCL on the purchased performing loans of (2) bps and RWA resulting from the HSBC Canada transaction of (99) bps.
(3)   Represents net internal capital generation of $2.2 billion or 38 bps consisting of Net income available to shareholders excluding the impact of specified items, less common and preferred share dividends and distributions on other equity instruments.
(4)   Excludes specified items for transaction and integration costs relating to the HSBC Canada transaction and the management of closing capital volatility related to the HSBC Canada transaction.
(5)   Excludes the impact of the HSBC Canada transaction.
(6)   For further details about the Dividend reinvestment plan (DRIP), refer to Note 11 of our Condensed Financial Statements.
(7)   Includes the impact of specified items noted above.
Our CET1 ratio was 12.8%, down 210 bps from last quarter, primarily reflecting the impact of the HSBC Canada transaction and RWA growth (excluding FX), partially offset by net internal capital generation and share issuances under the DRIP.
Total RWA increased by $63 billion, mainly driven by the $44 billion impact of the HSBC Canada transaction, which was primarily reflected in credit and operational risk. Business growth primarily in wholesale lending, market risk and personal lending in Canada, as well as the impact of foreign exchange translation and net credit migration also contributed to the increase. In our CET1 ratio, the impact of foreign exchange translation on RWA is largely mitigated with economic hedges.
Our Tier 1 capital ratio of 14.1% was down 220 bps, mainly reflecting the factors noted above under the CET1 ratio, partially offset by the issuance of limited recourse capital notes (LRCNs).
Our Total capital ratio of 16.1% was down 200 bps, mainly reflecting the factors noted above under the Tier 1 capital ratio, partially offset by the issuance of subordinated debentures.
Our Leverage ratio of 4.2% was down 20 bps, primarily due to the impact of the HSBC Canada transaction, partially offset by lower business-driven leverage exposures, net internal capital generation and share issuances under the DRIP.
Leverage exposures increased by $45,600 million, primarily due to the impact of the HSBC Canada transaction and foreign exchange translation, partially offset by lower business-driven leverage exposures. Business-driven leverage exposures declined mainly in repo-style transactions, interest-bearing deposits with banks, securities and cash, partially offset by growth in wholesale loans.
Our TLAC ratio of 27.5% was down 390 bps, reflecting the factors noted above under the Total capital ratio, as well as an unfavourable impact from a net decrease in eligible external TLAC instruments.
Our TLAC leverage ratio of 8.1% was down 40 bps, reflecting the factors noted above under the Leverage ratio, as well as an unfavourable impact from a net decrease in eligible external TLAC instruments.
External TLAC instruments include long-term debt subject to conversion under the
Bail-in
regime. For further details, refer to Deposit and funding profile in the Liquidity and funding risk section.
Selected capital management activity
The following table provides our selected capital management activity:
 
    
For the three months ended
April 30, 2024
          
For the six months ended
April 30, 2024
 
(Millions of Canadian dollars, except number of shares)  
Issuance or
redemption date
   
Number of
shares 
(000s)
   
Amount
          
Number of
shares 
(000s)
   
Amount
 
Tier 1 capital
           
Common shares activity
           
Issued in connection with share-based compensation plans
(1)
   
 
228
 
 
$
22
 
   
 
628
 
 
$
60
 
Issued under the DRIP
(2)
   
 
5,715
 
 
 
740
 
   
 
11,850
 
 
 
1,460
 
Redemption of preferred shares, Series
C-2
(3)
 
 
November 7, 2023
 
 
 
 
 
 
 
   
 
(15
 
 
(23
Issuance of preferred shares, Series BU
(3), (4)
 
 
January 25, 2024
 
 
 
 
 
 
 
   
 
750
 
 
 
750
 
Issuance of LRCN Series 4
(3), (4), (5)
 
 
April 24, 2024
 
 
 
1,000
 
 
 
1,370
 
   
 
1,000
 
 
 
1,370
 
Tier 2 capital
           
Issuance of April 3, 2034 subordinated debentures
(3), (4)
 
 
April 2, 2024
 
         
$
 2,000
 
                 
$
 2,000
 
 
  (1)   Amounts include cash received for stock options exercised during the period and fair value adjustments to stock options.
  (2)   During the three and six months ended April 30, 2024, the requirements of the DRIP were satisfied through shares issued from treasury. On February 28, 2024, we announced our intention to satisfy requirements of the DRIP through open market share purchases with no discount from the Average Market Price (as defined in the DRIP) for our May 24, 2024 dividend and for future dividends declared until further notice.  
  (3)   For further details, refer to Note 11 of our Condensed Financial Statements.
  (4)  
Non-Viability
Contingent Capital (NVCC) instruments.
  (5)   For the LRCNs, the number of shares represents the number of notes issued.

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44   
Royal Bank of Canada
  Second Quarter 2024
 
As at April 30, 2024, we did not have an active normal course issuer bid (NCIB).
On November 7, 2023, we redeemed all 15 thousand of our issued and outstanding
Non-Cumulative
First Preferred Shares
Series
C-2
at a redemption price of US$ 1,000 per share. Concurrently, we redeemed all 615 thousand Series
C-2
depositary shares, each of which represents a
one-fortieth
interest in a Series
C-2
share.
On January 25, 2024, we issued 750 thousand
Non-Cumulative
5-Year
Fixed Rate Reset First Preferred Shares Series BU (NVCC) to certain institutional investors at a price of $1,000 per share.
On April 2, 2024, we issued $2,000 million of NVCC subordinated debentures. The notes bear interest at a fixed rate of
5.096% per annum until April 3, 2029, and at the Daily Compounded Canadian Overnight Repo Rate Average plus 1.56% thereafter until their maturity on April 3, 2034.
On April 24, 2024, we issued US$1,000 million of LRCN Series 4 at a price of US$1,000 per note. The LRCN Series 4 bear interest at a fixed rate of 7.5% per annum until May 2, 2029. Thereafter, the interest rate on the LRCN Series 4 will reset every five years at a rate per annum equal to the prevailing 5-Year U.S. Treasury Rate plus 2.887% until their maturity on May 2, 2084.
On May 24, 2024, we redeemed all 20 million of our issued and outstanding
Non-Cumulative
First Preferred Shares Series AZ at a redemption price of $25 per share.
Selected share data
(1)
 
    
As at April 30, 2024
 
(Millions of Canadian dollars,
except number of shares and as otherwise noted)
 
Number of
shares 
(000s)
   
Amount
   
Dividends
declared per
share
 
Common shares issued
 
 
1,414,850
 
 
$
 20,918
 
 
$
1.38
 
Treasury shares – common shares
(2)
 
 
(546
 
 
(71
       
Common shares outstanding
 
 
1,414,304
 
 
$
20,847
 
       
Stock options and awards
     
Outstanding
 
 
8,731
 
   
Exercisable
 
 
4,309
 
               
First preferred shares issued
     
Non-cumulative
Series AZ
(3), (4)
 
 
20,000
 
 
$
500
 
 
$
0.23
 
Non-cumulative
Series BB
(3), (4)
 
 
20,000
 
 
 
500
 
 
 
0.23
 
Non-cumulative
Series BD
(3), (4)
 
 
24,000
 
 
 
600
 
 
 
0.20
 
Non-cumulative
Series BF
(3), (4)
 
 
12,000
 
 
 
300
 
 
 
0.19
 
Non-cumulative
Series BH
(4)
 
 
6,000
 
 
 
150
 
 
 
0.31
 
Non-cumulative
Series BI
(4)
 
 
6,000
 
 
 
150
 
 
 
0.31
 
Non-cumulative
Series BO
(3), (4)
 
 
14,000
 
 
 
350
 
 
 
0.37
 
Non-cumulative
Series BT
(3), (4), (5)
 
 
750
 
 
 
750
 
 
 
4.20%
Non-cumulative
Series BU
(3), (4), (5)
 
 
750
 
 
 
750
 
 
 
7.41%
Other equity instruments issued
     
Limited recourse capital notes Series 1
(3), (4), (6), (7)
 
 
1,750
 
 
 
1,750
 
 
 
  4.50%
Limited recourse capital notes Series 2
(3), (4), (6), (7)
 
 
1,250
 
 
 
1,250
 
 
 
4.00%
Limited recourse capital notes Series 3
(3), (4), (6), (7)
 
 
1,000
 
 
 
1,000
 
 
 
3.65%
Limited recourse capital notes Series 4
(3), (4), (6), (7)
 
 
1,000
 
 
 
1,370
 
 
 
7.50%
Preferred shares and other equity instruments issued
 
 
108,500
 
 
 
9,420
 
 
Treasury instruments – preferred shares and other equity instruments
(2)
 
 
15
 
 
 
19
 
       
Preferred shares and other equity instruments outstanding
 
 
108,515
 
 
$
9,439
 
       
Dividends on common shares
   
$
1,953
 
 
Dividends on preferred shares and distributions on other equity instruments
(8)
 
 
       
 
 
 
67
 
       
 
  (1)   For further details about our capital management activity, refer to Note 11 of our Condensed Financial Statements.  
  (2)   Positive amounts represent a short position and negative amounts represent a long position.  
  (3)   Dividend rate will reset every five years.  
  (4)   NVCC instruments.  
  (5)   The dividends declared per share represent the per annum dividend rate applicable to the shares issued as at the reporting date.  
  (6)   For LRCN Series, the number of shares represent the number of notes issued and the dividends declared per share represent the annual interest rate percentage applicable to the notes issued as at the reporting date.  
  (7)   In connection with the issuance of LRCN Series 1, on July 28, 2020, we issued $1,750 million of First Preferred Shares Series BQ (Series BQ); in connection with the issuance of LRCN Series 2, on November 2, 2020, we issued $1,250 million of First Preferred Shares Series BR (Series BR); in connection with the issuance of LRCN Series 3, on June 8, 2021, we issued $1,000 million of First Preferred Shares Series BS (Series BS); and in connection with the issuance of LRCN Series 4 on April 24, 2024, we issued US$1,000 million of First Preferred Shares Series BV (Series BV). The Series BQ, BR and BS preferred shares were issued at a price of $1,000 per share and the Series BV preferred shares were issued at a price of US$1,000 per share. The Series BQ, BR, BS and BV preferred shares were issued to a consolidated trust to be held as trust assets in connection with the LRCN structure. For further details, refer to Note 20 of our 2023 Annual Consolidated Financial Statements.  
  (8)   Excludes distributions to
non-controlling
interests.
 
As at May 24, 2024, the number of outstanding common shares was 1,413,598,227, net of treasury shares held of 1,394,872, and the number of stock options and awards was 8,588,644.
NVCC provisions require the conversion of the capital instrument into a variable number of common shares in the event that OSFI deems a bank to be
non-viable
or a federal or provincial government in Canada publicly announces that a bank has accepted or agreed to accept a capital injection. If a NVCC trigger event were to occur, our NVCC capital instruments as at

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Royal Bank of Canada
  Second Quarter 2024   45
 
April 30, 2024, which were the preferred shares Series AZ, BB, BD, BF, BH, BI, BO, BT, BU, LRCN Series 1, LRCN Series 2, LRCN Series 3, LRCN Series 4 and subordinated debentures due on January 27, 2026, July 25, 2029, December 23, 2029, June 30, 2030, January 28, 2033, November 3, 2031, May 3, 2032, February 1, 2033, and April 3, 2034 would be converted into common shares pursuant to an automatic conversion formula with a conversion price based on the greater of: (i) a contractual floor price of $5.00, and (ii) the current market price of our common shares at the time of the trigger event
(10-day
weighted average).
Based on a floor price of $5.00 and including an estimate for accrued dividends and interest, these NVCC capital instruments would convert into a maximum of approximately 6.1 billion common shares, in aggregate, which would represent a dilution impact of 81.1% based on the number of common shares outstanding as at April 30, 2024.
 
Accounting and control matters
 
 
Summary of accounting policies and estimates
 
Our Condensed Financial Statements are presented in compliance with International Accounting Standard 34
Interim Financial Reporting
. Our significant accounting policies are described in Note 2 of our audited 2023 Annual Consolidated Financial Statements and Note 2 of our Condensed Financial Statements.
 
Changes in accounting policies and disclosures
 
Changes in accounting policies
During the first quarter of 2024, we adopted IFRS 17
Insurance Contracts
(IFRS 17), replacing IFRS 4
Insurance Contracts
(IFRS 4). Our updated critical accounting policies and estimates for insurance and reinsurance contracts are described below. We have applied IFRS 17 retrospectively and restated comparative period results beginning November 1, 2022. Adjustments to the carrying amounts of insurance and reinsurance contracts at the transition date of November 1, 2022 were recognized in Retained earnings. The comparative period information for insurance and reinsurance contracts prior to November 1, 2022 is presented in accordance with our previous accounting policies.
As permitted by the transition provisions of IFRS 17, we reclassified certain financial assets between fair value classification categories at the date of initial application of IFRS 17. The reclassifications resulted in no adjustments to the carrying amounts of financial assets as at November 1, 2023. Retained earnings and Other components of equity as at November 1, 2023 were adjusted as a result with no net impact to total equity. As permitted, we elected not to restate comparative period results for these changes and accordingly, comparative period information for the impacted financial assets prior to November 1, 2023 is presented in accordance with our previous classifications.
Refer to Note 2 of our Condensed Financial Statements for details of these changes.
Insurance and reinsurance contracts
For insurance and reinsurance contracts measured using the general measurement method or variable fee approach, the carrying amount of a group of contracts is measured as the sum of the fulfilment cash flows and CSM. The fulfilment cash flows consist of the present value of future cash flows and a risk adjustment for
non-financial
risk, discounted using the current rates as at the reporting date determined using the discount rate methodologies below. The estimates of future cash flows consider probability-weighted scenarios and include all future cash flows that are within the contract boundary. The risk adjustment for
non-financial
risk is estimated using the margin approach and represents the compensation that we require for bearing the uncertainty about the amount and timing of cash flows that arise from
non-financial
risk as the insurance contract is fulfilled. The measurement of the group of contracts requires the use of judgment in setting methodologies and assumptions for mortality, morbidity, policy lapses and other policyholder behaviour, discount rates, policy dividends, and directly attributable expenses including acquisition expenses allocated using a systematic and rational method. Changes to the underlying assumptions and estimates may have a significant effect on
Non-interest
income – Insurance service result and Insurance investment result.
Discount rates used reflect the time value of money and are based on the characteristics of the insurance and reinsurance contracts. Cash flows that vary based on the returns on underlying items are discounted at rates reflecting that variability. For cash flows that do not vary based on the returns on underlying items, we predominantly apply the
top-down
approach in determining discount rates. Under this approach, the discount rates for the observable periods are determined using yield curves implied from a reference portfolio of assets adjusted to eliminate factors (market and credit risk of the financial assets) that are not relevant to the insurance contracts. For unobservable periods, the discount rates are interpolated using the last observable point and the ultimate discount rate that is composed of a risk-free rate and illiquidity premium. For a selected portfolio, the
bottom-up
approach is applied in determining the discount rate, which uses a risk-free rate plus an illiquidity premium to reflect the characteristics of the contracts. Management judgment is required in estimating the market and credit risk factors and illiquidity premiums in determining the discount rates.
For insurance contracts, the CSM represents the unearned profit (net inflows) for providing insurance coverage. For reinsurance contracts held, the CSM represents the net cost or net gain of purchasing reinsurance. The CSM for insurance and reinsurance contacts are released into income based on coverage units, which represent the quantity of service (insurance coverage as well as investment-return and investment-related services) provided by a group of contracts and are determined by considering the quantity of benefits provided under each contract and the expected coverage duration.
Refer to Note 2 of our Condensed Financial Statements for further information.

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46   
Royal Bank of Canada
  Second Quarter 2024
 
Future changes in accounting policies and disclosures
IFRS 18
Presentation and Disclosure in Financial Statements (IFRS 18)
In April 2024, the IASB issued IFRS 18 which sets out requirements for the presentation and disclosure of information in the financial statements. IFRS 18 will replace IAS 1
Presentation of Financial Statements
and accompanies limited amendments to other standards which will be effective upon the adoption of the new standard. The standard introduces new defined subtotals to be presented in the Consolidated Statements of Income, disclosure of management-defined performance measures and requirements for grouping of information. This standard will be effective for us on November 1, 2027. We are currently assessing the impact of adopting this standard on our Consolidated Financial Statements.
 
Controls and procedures
 
Disclosure controls and procedures
As of April 30, 2024, management evaluated, under the supervision of and with the participation of the President and Chief Executive Officer and the Interim Chief Financial Officer, the effectiveness of our disclosure controls and procedures as defined under rules adopted by the Canadian securities regulatory authorities and the U.S. SEC. Based on that evaluation, the President and Chief Executive Officer and the Interim Chief Financial Officer concluded that our disclosure controls and procedures were effective as of April 30, 2024.
Internal control over financial reporting
No changes were made in our internal control over financial reporting during the quarter ended April 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. While we implemented and modified certain internal controls over financial reporting as a result of the HSBC Canada transaction and the November 1, 2023 adoption of the IFRS 17 standard, these changes did not have a material impact on our internal control over financial reporting.
 
Related party transactions
 
In the ordinary course of business, we provide normal banking services and operational services, and enter into other transactions with associated and other related corporations, including our joint venture entities, on terms similar to those offered to
non-related
parties. We grant loans to directors, officers and other employees at rates normally accorded to preferred clients. In addition, we offer deferred share and other plans to
non-employee
directors, executives and certain other key employees. For further information, refer to Notes 12 and 26 of our audited 2023 Annual Consolidated Financial Statements.

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Royal Bank of Canada
  Second Quarter 2024   47
 
Glossary
 
 
Adjusted Results and Measures
We believe that providing adjusted results as well as certain measures and ratios enhances comparability with prior periods and enables readers to better assess trends in the underlying businesses. For further details, including a reconciliation, refer to the Key performance and
non-GAAP
measures section.
 
Adjusted effective income tax rate
– calculated as effective income tax rate excluding the impact of specified items and amortization of acquisition-related intangibles.
 
Adjusted income before income taxes
– calculated as income before income taxes excluding the impact of specified items and amortization of acquisition-related intangibles.
 
Adjusted income taxes
– calculated as income taxes excluding the impact of specified items and amortization of acquisition-related intangibles.
 
Adjusted net income
– calculated as net income excluding the impact of specified items and amortization of acquisition-related intangibles.
 
Adjusted net income available to common shareholders
– calculated as net income available to common shareholders excluding the impact of specified items and amortization of acquisition-related intangibles.
 
Adjusted
non-interest
expense
– calculated as
non-interest
expense excluding the impact of specified items and amortization of acquisition-related intangibles.
 
Adjusted total revenue
– calculated as total revenue excluding the impact of specified items.
Acceptances
A bill of exchange or negotiable instrument drawn by the borrower for payment at maturity and accepted by a bank. The acceptance constitutes a guarantee of payment by the bank and can be traded in the money market. The bank earns a “stamping fee” for providing this guarantee.
Allowance for credit losses (ACL)
The amount deemed adequate by management to absorb expected credit losses as at the balance sheet date. The allowance is established for all financial assets subject to impairment assessment, including certain loans, debt securities, customers’ liability under acceptances, financial guarantees, and undrawn loan commitments. The allowance is changed by the amount of provision for credit losses recorded, which is charged to income, and decreased by the amount of write-offs net of recoveries in the period.
ACL on loans ratio
ACL on loans ratio is calculated as ACL on loans as a percentage of total loans and acceptances.
Asset-backed securities (ABS)
Securities created through the securitization of a pool of assets, for example auto loans or credit card loans.
Assets under administration (AUA)
Assets administered by us, which are beneficially owned by clients, unless otherwise noted. Services provided in respect of assets under administration are of an administrative nature, including safekeeping, collecting investment income, settling purchase and sale transactions, and record keeping.
Assets under management (AUM)
Assets managed by us, which are beneficially owned by clients, unless otherwise noted. Services provided in respect of assets under management include the selection of investments and the provision of investment advice. We have assets under management that are also administered by us and included in assets under administration.
Attributed capital
Attributed capital to our business segments is based on the Basel III regulatory capital and leverage requirements other than for our insurance segment for which we attribute capital based only on economic capital.
Auction rate securities (ARS)
Debt securities whose interest rates are regularly reset through an auction process.
Average earning assets, net
Average earning assets include interest-bearing deposits with other banks, securities, net of applicable allowance, assets purchased under reverse repurchase agreements and securities borrowed, loans, net of allowance, cash collateral and margin deposits. Insurance assets, and all other assets not specified are excluded. The averages are based on the daily balances for the period.
Basis point (bp)
One
one-hundredth
of a percentage point (.01%).
Collateral
Assets pledged as security for a loan or other obligation. Collateral can take many forms, such as cash, highly rated securities, property, inventory, equipment and receivables.
Collateralized debt obligation (CDO)
Securities with multiple tranches that are issued by structured entities and collateralized by debt obligations including bonds and loans. Each tranche offers a varying degree of risk and return so as to meet investor demand.
Commercial mortgage-backed securities (CMBS)
Securities created through the securitization of commercial mortgages.
Commitments to extend credit
Unutilized amount of credit facilities available to clients either in the form of loans, bankers’ acceptances and other
on-balance
sheet financing, or through
off-balance
sheet products such as guarantees and letters of credit.
Common Equity Tier 1 (CET1) capital
A regulatory Basel III capital measure comprised mainly of common shareholders’ equity less regulatory deductions and adjustments for goodwill and intangibles, defined benefit pension fund assets, shortfall in allowances and other specified items. The CET1 capital is calculated in accordance with OSFI’s CAR guideline. For more details, refer to the Capital management section.
Common Equity Tier 1 capital ratio
A risk-based capital measure calculated as CET1 capital divided by risk-weighted assets. The CET1 ratio is calculated in accordance with OSFI’s CAR guideline.
Contractual service margin (CSM)
For insurance contracts, the CSM represents the unearned profit (net inflows) for providing insurance coverage. For reinsurance contracts held, the CSM represents the net cost or net gain of purchasing reinsurance.
Covered bonds
Full recourse
on-balance
sheet obligations issued by banks and credit institutions that are fully collateralized by assets over which investors enjoy a priority claim in the event of an issuer’s insolvency.
Credit default swaps (CDS)
A derivative contract that provides the purchaser with a
one-time
payment should the referenced entity/entities default (or a similar triggering event occur).
Derivative
A contract between two parties, which requires little or no initial investment and where payments between the parties are dependent upon the movements in price of an underlying instrument, index or financial rate. Examples of derivatives include swaps, options, forward rate agreements and futures. The notional amount of the derivative is the contract amount used as a reference point to calculate the payments to be exchanged between the two parties, and the notional amount itself is generally not exchanged by the parties.
Dividend payout ratio
Common dividends as a percentage of net income available to common shareholders.
Dividend yield
Dividends per common share divided by the average of the high and low share price in the relevant period.
Earnings per share (EPS), basic
Calculated as net income available to common shareholders divided by the average number of shares outstanding. Adjusted EPS, basic is calculated in the same manner, using adjusted net income available to common shareholders.
Earnings per share (EPS), diluted
Calculated as net income available to common shareholders divided by the average number of shares outstanding adjusted for the dilutive effects of stock options and other convertible securities. Adjusted EPS, diluted is calculated in the same manner, using adjusted net income available to common shareholders.
Efficiency ratio
Non-interest
expense as a percentage of total revenue. Adjusted efficiency ratio is calculated in the same manner, using adjusted
non-interest
expense and adjusted total revenue.
Expected credit losses
The difference between the contractual cash flows due to us in accordance with the relevant contractual terms and the cash flows that we expect to receive, discounted to the balance sheet date.
Fair value
Fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

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48   
Royal Bank of Canada
  Second Quarter 2024
 
Funding valuation adjustment
Funding valuation adjustments are calculated to incorporate cost and benefit of funding in the valuation of uncollateralized and under-collateralized OTC derivatives. Future expected cash flows of these derivatives are discounted to reflect the cost and benefit of funding the derivatives by using a funding curve, implied volatilities and correlations as inputs.
Guarantees and standby letters of credit
These primarily represent irrevocable assurances that a bank will make payments in the event that its client cannot meet its financial obligations to third parties. Certain other guarantees, such as bid and performance bonds, represent
non-financial
undertakings.
Hedge
A risk management technique used to mitigate exposure from market, interest rate or foreign currency exchange risk arising from normal banking operations. The elimination or reduction of such exposure is accomplished by establishing offsetting positions. For example, assets denominated in foreign currencies can be offset with liabilities in the same currencies or through the use of foreign exchange hedging instruments such as futures, options or foreign exchange contracts.
Hedge funds
A type of investment fund, marketed to accredited high net worth investors, that is subject to limited regulation and restrictions on its investments compared to retail mutual funds, and that often utilize aggressive strategies such as selling short, leverage, program trading, swaps, arbitrage and derivatives.
High-quality liquid assets (HQLA)
HQLA are cash or assets that can be converted into cash quickly through sales (or by being pledged as collateral) with no significant loss of value.
Impaired loans
Loans are classified as impaired when there has been a deterioration of credit quality to the extent that management no longer has reasonable assurance of timely collection of the full amount of principal and interest in accordance with the contractual terms of the loan agreement. Credit card balances are not classified as impaired as they are directly written off after payments are 180 days past due.
Insurance contracts
Contracts under which we accept significant insurance risk from a policyholder by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder. Insurance contracts also include reinsurance contracts issued by us to compensate another company for claims arising from underlying insurance contracts issued by that other company.
Insurance investment result
Calculated as Net investment income from the Insurance segment, Insurance finance income (expense) from insurance contracts and Reinsurance finance income (expense) from reinsurance contracts held.
Insurance service result
Calculated as Insurance revenue less Insurance service expense from insurance contracts and Net income (expense) from reinsurance contracts held.
International Financial Reporting Standards (IFRS)
IFRS are principles-based standards, interpretations and the framework adopted by the International Accounting Standards Board.
Leverage ratio
A Basel III regulatory measure, the ratio divides Tier 1 capital by the leverage exposure measure. The leverage ratio is a
non-risk
based measure and is calculated in accordance with OSFI’s LR guideline.
Leverage ratio exposure
The leverage ratio exposure is calculated in accordance with OSFI’s LR guideline and is defined as the sum of total assets plus
off-balance
sheet items after certain adjustments.
Liquidity Coverage Ratio (LCR)
The LCR is a Basel III standard that aims to ensure that an institution has an adequate stock of unencumbered HQLA that consists of cash or assets that can be converted into cash at little or no loss of value in private markets, to meet its liquidity needs for a 30 calendar day liquidity stress scenario. The LCR is calculated in accordance with OSFI’s LAR guideline.
Loan-to-value
(LTV) ratio
Calculated based on the total facility amount for the residential mortgage and RBC Homeline Plan product divided by the value of the related residential property.
Master netting agreement
An agreement between us and a counterparty designed to reduce the credit risk of multiple derivative transactions through the creation of a legal right of offset of exposure in the event of a default.
Net interest income
The difference between what is earned on assets such as loans and securities and what is paid on liabilities such as deposits and subordinated debentures.
Net interest margin (NIM) on average earning assets, net
Calculated as net interest income divided by average earning assets, net.
Net Stable Funding Ratio (NSFR)
The NSFR is a Basel III standard that requires institutions to maintain a stable funding profile defined as available amount of stable funding (ASF) in relation to the composition of their assets and
off-balance
sheet activities defined as required amount of stable funding (RSF). The ratio should be at least equal to 100% on an ongoing basis. The NSFR is calculated in accordance with OSFI’s LAR guideline.
Normal course issuer bid (NCIB)
A program for the repurchase of our own shares for cancellation through a stock exchange that is subject to the various rules of the relevant stock exchange and securities commission.
Notional amount
The contract amount used as a reference point to calculate payments for derivatives.
Off-balance
sheet financial instruments
A variety of arrangements offered to clients, which include credit derivatives, written put options, backstop liquidity facilities, stable value products, financial standby letters of credit, performance guarantees, credit enhancements, mortgage loans sold with recourse, commitments to extend credit, securities lending, documentary and commercial letters of credit, sponsor member guarantees, securities lending indemnifications and indemnifications.
Office of the Superintendent of Financial Institutions Canada (OSFI)
The primary regulator of federally chartered financial institutions and federally administered pension plans in Canada. OSFI’s mission is to safeguard policyholders, depositors and pension plan members from undue loss.
Operating leverage
The difference between our revenue growth rate and
non-interest
expense growth rate.
Options
A contract or a provision of a contract that gives one party (the option holder) the right, but not the obligation, to perform a specified transaction with another party (the option issuer or option writer) according to specified terms.
Provision for credit losses (PCL)
The amount charged to income necessary to bring the allowance for credit losses to a level determined appropriate by management. This includes provisions on performing and impaired financial assets.
PCL on loans ratio
PCL on loans ratio is calculated using PCL on loans as a percentage of average net loans and acceptances.
RBC Homeline Plan products
This is comprised of residential mortgages and secured personal loans whereby the borrower pledges real estate as collateral.
Reinsurance contracts held
Contracts under which we transfer significant insurance risk to a reinsurer that compensates us for claims relating to underlying insurance contracts issued by us and are accounted for separately from the underlying insurance contracts to which they relate.
Repurchase agreements
These involve the sale of securities for cash and the simultaneous repurchase of the securities for value at a later date. These transactions normally do not constitute economic sales and therefore are treated as collateralized financing transactions.
Return on common equity (ROE)
Net income available to common shareholders, expressed as a percentage of average common equity. Adjusted ROE is calculated in the same manner, using adjusted net income available to common shareholders.
Reverse repurchase agreements
These involve the purchase of securities for cash and the simultaneous sale of the securities for value at a later date. These transactions normally do not constitute economic sales and therefore are treated as collateralized financing transactions.

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Royal Bank of Canada
  Second Quarter 2024   49
 
Risk-weighted assets (RWA)
Assets adjusted by a regulatory risk-weight factor to reflect the riskiness of on- and
off-balance
sheet exposures. Certain assets are not risk-weighted, but deducted from capital. The calculation is defined by OSFI’s CAR guideline. For more details, refer to the Capital management section.
Securities lending
Transactions in which the owner of securities agrees to lend it under the terms of a prearranged contract to a borrower for a fee. Collateral for the loan consists of either high quality securities or cash and collateral value must be at least equal to the market value of the loaned securities. Borrowers pay a negotiated fee for loans collateralized by securities, whereas for cash collateral lenders pay borrowers interest at a negotiated rate and reinvest the cash collateral to earn a return. An intermediary such as a bank often acts as agent lender for the owner of the security in return for a share of the revenue earned by the owner from lending securities. Most often, agent lenders indemnify the owner against the risk of the borrower’s failure to redeliver the loaned securities – counterparty credit risk if a borrower defaults and market risk if the value of the
non-cash
collateral declines. The agent lender does not indemnify against the investment risk of
re-investing
cash collateral which is borne by the owner.
Securities sold short
A transaction in which the seller sells securities and then borrows the securities in order to deliver them to the purchaser upon settlement. At a later date, the seller buys identical securities in the market to replace the borrowed securities.
Securitization
The process by which various financial assets are packaged into newly issued securities backed by these assets.
Standardized Approach (SA) for credit risk
Risk weights prescribed by OSFI are used to calculate RWA for the credit risk exposures. Credit assessments by OSFI-recognized external credit rating agencies of Standard & Poor’s Financial Services LLP; Moody’s Investor Service, Inc.; Fitch Ratings, Inc.; and DBRS Limited are used to risk-weight our Sovereign and Bank exposures based on the standards and guidelines issued by OSFI.
Structured entities
A structured entity is an entity in which voting or similar rights are not the dominant factor in deciding who controls the entity, such as when the activities that significantly affect the entity’s returns are directed by means of contractual arrangements. Structured entities often have restricted activities, narrow and well defined objectives, insufficient equity to finance their activities, and financing in the form of multiple contractually-linked instruments.
Taxable equivalent basis (teb)
Income from certain specified tax advantaged sources (eligible Canadian taxable corporate dividends) is increased to a level that would make it comparable to income from taxable sources. There is an offsetting adjustment in the tax provision, thereby generating the same
after-tax
net income.
Tier 1 capital and Tier 1 capital ratio
Tier 1 capital comprises predominantly of CET1 capital, with additional Tier 1 items such as preferred shares, limited recourse capital notes and
non-controlling
interests in subsidiaries Tier 1 instruments. The Tier 1 capital ratio is calculated in accordance with OSFI’s CAR guideline by dividing Tier 1 capital by risk-weighted assets.
Tier 2 capital
Tier 2 capital consists mainly of subordinated debentures that meet certain criteria, certain loan loss allowances and
non-controlling
interests in subsidiaries’ Tier 2 instruments.
Total loss absorbing capacity (TLAC)
The aggregate of Tier 1 capital, Tier 2 capital, and external TLAC instruments which allow conversion in whole or in part into common shares under the Canada Deposit Insurance Corporation Act and meet all of the eligibility criteria under the guideline.
TLAC ratio
The risk-based TLAC ratio is defined as TLAC divided by total risk-weighted assets. The TLAC ratio is calculated in accordance with OSFI’s TLAC guideline.
TLAC leverage ratio
The TLAC leverage ratio is defined as TLAC divided by the Leverage ratio exposure. The TLAC leverage ratio is calculated in accordance with OSFI’s TLAC guideline.
Total capital and total capital ratio
Total capital is defined as the total of Tier 1 and Tier 2 capital. The total capital ratio is calculated in accordance with OSFI’s CAR guideline by dividing total capital by risk-weighted assets.
Tranche
A security class created whereby the risks and returns associated with a pool of assets are packaged into several classes of securities offering different risk and return profiles from those of the underlying asset pool. Tranches are typically rated by ratings agencies, and reflect both the credit quality of underlying collateral as well as the level of protection based on the tranches’ relative subordination.
Unattributed capital
Unattributed capital represents common equity in excess of common equity attributed to our business segments and is reported in the Corporate Support segment.
Value-at-Risk
(VaR)
A generally accepted risk-measurement concept that uses statistical models based on historical information to estimate within a given level of confidence the maximum loss in market value we would experience in our financial portfolio from an adverse
one-day
movement in market rates and prices.

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50   
Royal Bank of Canada
  Second Quarter 2024
 
Enhanced Disclosure Task Force recommendations index
 
We aim to present transparent, high-quality risk disclosures by providing disclosures in our 2023 Annual Report, Q2 2024 Report to Shareholders (RTS), Supplementary Financial Information package (SFI), and Pillar 3 Report, in accordance with recommendations from the FSB’s Enhanced Disclosure Task Force (EDTF). Information within the SFI and Pillar 3 Report is not and should not be considered incorporated by reference into our Q2 2024 Report to Shareholders.
The following index summarizes our disclosure by EDTF recommendation:
 
            
Location of disclosure
Type of Risk
 
Recommendation
 
Disclosure
  
RTS
page
 
Annual
Report page
  
SFI
page
General
  1  
Table of contents for EDTF risk disclosure
   50   132    1
  2  
Define risk terminology and measures
    
65-70,

130-131
  
  3  
Top and emerging risks
    
63-65
  
  4  
New regulatory ratios
   40-43  
109-114
  
 
Risk governance, risk management and business model
  5  
Risk management organization
    
65-70
  
  6  
Risk culture
    
65-70
  
  7  
Risk in the context of our business activities
     117   
  8  
Stress testing
  
 
 
68-69,
81
  
Capital adequacy and risk-weighted assets (RWA)
  9  
Minimum Basel III capital ratios and Domestic systemically important bank surcharge
   41  
109-114
  
  10  
Composition of capital and reconciliation of the accounting balance sheet to the regulatory balance sheet
        *
  11  
Flow statement of the movements in regulatory capital
        19
  12  
Capital strategic planning
    
109-114
  
  13  
RWA by business segments
        20
  14  
Analysis of capital requirement, and related measurement model information
    
71-74
   *
  15  
RWA credit risk and related risk measurements
        *
  16  
Movement of RWA by risk type
        20
  17  
Basel back-testing
  
 
  68,
71-73
   31
 
Liquidity
  18  
Quantitative and qualitative analysis of our liquidity reserve
   32  
88-89, 94-95
  
Funding
  19  
Encumbered and unencumbered assets by balance sheet category, and contractual obligations for rating downgrades
   33, 35   90, 93   
  20  
Maturity analysis of consolidated total assets, liabilities and
off-balance
sheet commitments analyzed by remaining contractual maturity at the balance sheet date
   39-40  
97-98
  
  21  
Sources of funding and funding strategy
   33-35  
90-92
  
Market risk
  22  
Relationship between the market risk measures for trading and
non-trading
portfolios and the balance sheet
   30-31  
85-86
  
  23  
Decomposition of market risk factors
   28-29  
81-86
  
  24  
Market risk validation and back-testing
     81   
  25  
Primary risk management techniques beyond reported risk measures and parameters
  
 
 
81-84
  
Credit risk
  26  
Bank’s credit risk profile
   24-27  
71-81, 178-185
  
21-31,*
   
Quantitative summary of aggregate credit risk exposures that reconciles to the balance sheet
   69-74  
124-129
   *
  27  
Policies for identifying impaired loans
    
73-75, 119, 149-151
  
  28  
Reconciliation of the opening and closing balances of impaired loans and impairment allowances during the year
        23, 28
  29  
Quantification of gross notional exposure for
over-the-counter
derivatives or exchange-traded derivatives
     76    32
  30  
Credit risk mitigation, including collateral held for all sources of credit risk
  
 
 
74-75
   *
 
Other
  31  
Other risk types
    
100-109
  
  32  
Publicly known risk events
  
 
 
104-105, 223-224
  
 
*   These disclosure requirements are satisfied or partially satisfied by disclosures provided in our Pillar 3 Report for the quarter ended April 30, 2024 and for the year ended October 31, 2023.

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Royal Bank of Canada
  Second Quarter 2024   51
 
 
 
Interim Condensed Consolidated Financial Statements
(unaudited)
 
 
Interim Condensed Consolidated Balance Sheets
(unaudited)
 
 
      As at   
(Millions of Canadian dollars)
  
April 30
2024
    
October 31
2023
(Restated – Note 2)
 
Assets
     
Cash and due from banks
  
$
61,373
 
   $ 61,989  
Interest-bearing deposits with banks
 
  
 
 
 
38,459
 
 
    
 
71,086
 
 
 
Securities
     
Trading
  
 
173,566
 
     190,151  
Investment, net of applicable allowance
(Note 4)
  
 
238,987
 
     219,579  
    
 
412,553
 
     409,730  
Assets purchased under reverse repurchase agreements and securities borrowed
 
  
 
 
 
301,797
 
 
    
 
340,191
 
 
 
Loans
(Note 5)
     
Retail
  
 
612,687
 
     569,951  
Wholesale
  
 
353,567
 
     287,826  
  
 
966,254
 
     857,777  
Allowance for loan losses
(Note 5)
  
 
(5,715
     (5,004
    
 
960,539
 
     852,773  
Other
     
Customers’ liability under acceptances
  
 
9,059
 
     21,695  
Derivatives
  
 
130,199
 
     142,450  
Premises and equipment
  
 
6,908
 
     6,749  
Goodwill
  
 
19,031
 
     12,594  
Other intangibles
  
 
8,133
 
     5,903  
Other assets
  
 
82,999
 
     81,371  
    
 
256,329
 
     270,762  
Total assets
  
$
2,031,050
 
   $ 2,006,531  
Liabilities and equity
     
Deposits
(Note 7)
     
Personal
  
$
499,882
 
   $ 441,946  
Business and government
  
 
794,934
 
     745,075  
Bank
  
 
32,787
 
     44,666  
    
 
1,327,603
 
     1,231,687  
Other
     
Acceptances
  
 
9,110
 
     21,745  
Obligations related to securities sold short
  
 
31,487
 
     33,651  
Obligations related to assets sold under repurchase agreements and securities loaned
  
 
279,721
 
     335,238  
Derivatives
  
 
136,568
 
     142,629  
Insurance contract liabilities
(Note 8)
  
 
21,199
 
     19,026  
Other liabilities
  
 
90,294
 
     96,022  
    
 
568,379
 
     648,311  
Subordinated debentures
(Note 11)
 
  
 
 
 
13,464
 
 
    
 
11,386
 
 
 
Total liabilities
  
 
1,909,446
 
     1,891,384  
Equity attributable to shareholders
     
Preferred shares and other equity instruments
  
 
9,439
 
     7,314  
Common shares
(Note 11)
  
 
20,847
 
     19,167  
Retained earnings
  
 
83,774
 
     81,715  
Other components of equity
  
 
7,444
 
     6,852  
  
 
121,504
 
     115,048  
Non-controlling
interests
  
 
100
 
     99  
Total equity
  
 
121,604
 
     115,147  
Total liabilities and equity
  
$
2,031,050
 
   $ 2,006,531  
The accompanying notes are an integral part of these Interim Condensed Consolidated Financial Statements.

Table of Contents
52   
Royal Bank of Canada
  Second Quarter 2024
 
Interim Condensed Consolidated Statements of Income
(unaudited)
 
 
(Millions of Canadian dollars, except per share amounts)   For the three months ended            For the six months ended  
 
April 30
2024
   
April 30
2023
(Restated – Note 2)
          
April 30
2024
   
April 30
2023
(Restated – Note 2)
 
Interest and dividend income
(Note 3)
         
Loans
 
$
12,933
 
  $ 10,384      
$
25,202
 
  $ 20,381  
Securities
 
 
4,194
 
    3,178      
 
8,748
 
    6,181  
Assets purchased under reverse repurchase agreements and securities borrowed
 
 
7,011
 
    4,907      
 
14,232
 
    9,673  
Deposits and other
 
 
1,616
 
    1,849            
 
3,181
 
    3,420  
   
 
25,754
 
    20,318            
 
51,363
 
    39,655  
Interest expense
(Note 3)
         
Deposits and other
 
 
11,488
 
    8,656      
 
22,793
 
    16,428  
Other liabilities
 
 
7,454
 
    5,394      
 
15,240
 
    10,619  
Subordinated debentures
 
 
189
 
    169            
 
375
 
    307  
   
 
19,131
 
    14,219            
 
38,408
 
    27,354  
Net interest income
 
 
6,623
 
    6,099            
 
12,955
 
    12,301  
Non-interest
income
         
Insurance service result
(Note 8)
 
 
203
 
    225      
 
390
 
    417  
Insurance investment result
(Note 8)
 
 
59
 
    14      
 
200
 
    (59
Trading revenue
 
 
633
 
    430      
 
1,437
 
    1,499  
Investment management and custodial fees
 
 
2,257
 
    2,083      
 
4,442
 
    4,139  
Mutual fund revenue
 
 
1,067
 
    1,000      
 
2,097
 
    2,015  
Securities brokerage commissions
 
 
431
 
    377      
 
819
 
    738  
Service charges
 
 
557
 
    511      
 
1,111
 
    1,022  
Underwriting and other advisory fees
 
 
734
 
    458      
 
1,340
 
    970  
Foreign exchange revenue, other than trading
 
 
287
 
    322      
 
549
 
    755  
Card service revenue
 
 
291
 
    279      
 
617
 
    604  
Credit fees
 
 
434
 
    357      
 
829
 
    736  
Net gains on investment securities
 
 
59
 
    111      
 
129
 
    164  
Share of profit in joint ventures and associates
 
 
18
 
    12      
 
30
 
    41  
Other
 
 
501
 
    167            
 
694
 
    460  
   
 
7,531
 
    6,346            
 
14,684
 
    13,501  
Total revenue
 
 
14,154
 
    12,445            
 
27,639
 
    25,802  
Provision for credit losses
(Notes 4 and 5)
 
 
920
 
    600            
 
1,733
 
    1,132  
Non-interest
expense
         
Human resources
(Note 9)
 
 
5,091
 
    4,573      
 
10,254
 
    9,423  
Equipment
 
 
615
 
    589      
 
1,234
 
    1,158  
Occupancy
 
 
441
 
    405      
 
848
 
    809  
Communications
 
 
358
 
    318      
 
679
 
    596  
Professional fees
 
 
697
 
    506      
 
1,321
 
    888  
Amortization of other intangibles
 
 
373
 
    383      
 
725
 
    745  
Other
 
 
733
 
    626            
 
1,571
 
    1,370  
   
 
8,308
 
    7,400            
 
16,632
 
    14,989  
Income before income taxes
 
 
4,926
 
    4,445      
 
9,274
 
    9,681  
Income taxes
 
 
976
 
    765            
 
1,742
 
    2,868  
Net income
 
$
3,950
 
  $ 3,680            
$
7,532
 
  $ 6,813  
Net income attributable to:
         
Shareholders
 
$
3,948
 
  $ 3,679      
$
7,528
 
  $ 6,810  
Non-controlling
interests
 
 
2
 
    1            
 
4
 
    3  
   
$
3,950
 
  $ 3,680            
$
7,532
 
  $ 6,813  
Basic earnings per share
(in dollars) (Note 12)
 
$
2.75
 
  $ 2.60      
$
5.25
 
  $ 4.83  
Diluted earnings per share
(in dollars) (Note 12)
 
 
2.74
 
    2.60      
 
5.25
 
    4.83  
Dividends per common share
(in dollars)
 
 
1.38
 
    1.32            
 
2.76
 
    2.64  
The accompanying notes are an integral part of these Interim Condensed Consolidated Financial Statements.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   53
 
Interim Condensed Consolidated Statements of Comprehensive Income
(unaudited)
 
 
(Millions of Canadian dollars)   For the three months ended          For the six months ended  
 
April 30
2024
   
April 30
2023
(Restated – Note 2)
        
April 30
2024
   
April 30
2023
(Restated – Note 2)
 
Net income
 
$
3,950
 
  $ 3,680    
 
 
$
7,532
 
  $ 6,813  
Other comprehensive income (loss), net of taxes
         
Items that will be reclassified subsequently to income:
         
Net change in unrealized gains (losses) on debt securities and loans at fair value through other comprehensive income
         
Net unrealized gains (losses) on debt securities and loans at fair value through other comprehensive income
 
 
82
 
    (20    
 
870
 
    612  
Reclassification of net losses (gains) on debt securities and loans at fair value through other comprehensive income to income
 
 
(43
    (81  
 
 
 
(92
    (113
 
 
 
39
 
    (101  
 
 
 
778
 
    499  
Foreign currency translation adjustments
         
Unrealized foreign currency translation gains (losses)
 
 
1,831
 
    1,537      
 
(320
    582  
Net foreign currency translation gains (losses) from hedging activities
 
 
(827
    (611    
 
95
 
    (547
Reclassification of losses (gains) on net investment hedging activities to income
 
 
 
       
 
 
 
1
 
     
 
 
 
1,004
 
    926    
 
 
 
(224
    35  
Net change in cash flow hedges
         
Net gains (losses) on derivatives designated as cash flow hedges
 
 
293
 
    (193    
 
(309
    (591
Reclassification of losses (gains) on derivatives designated as cash flow hedges to income
 
 
(128
    84    
 
 
 
(309
    86  
 
 
 
165
 
    (109  
 
 
 
(618
    (505
Items that will not be reclassified subsequently to income:
         
Remeasurement gains (losses) on employee benefit plans (Note 9)
 
 
104
 
    (129    
 
146
 
    (359
Net gains (losses) from fair value changes due to credit risk on financial liabilities designated at fair value through profit or loss
 
 
(313
    309      
 
(1,014
    (487
Net gains (losses) on equity securities designated at fair value through other comprehensive income
 
 
19
 
    8    
 
 
 
74
 
    18  
 
 
 
(190
    188    
 
 
 
(794
    (828
Total other comprehensive income (loss), net of taxes
 
 
1,018
 
    904    
 
 
 
(858
    (799
Total comprehensive income (loss)
 
$
4,968
 
  $ 4,584    
 
 
$
6,674
 
  $ 6,014  
Total comprehensive income attributable to:
         
Shareholders
 
$
4,963
 
  $ 4,580      
$
6,670
 
  $ 6,011  
Non-controlling
interests
 
 
5
 
    4    
 
 
 
4
 
    3  
 
 
$
      4,968
 
  $        4,584    
 
 
$
     6,674
 
  $        6,014  
The income tax effect on the Interim Condensed Consolidated Statements of Comprehensive Income is shown in the table below.
 
     For the three months ended          For the six months ended  
(Millions of Canadian dollars)
 
April 30
2024
   
April 30
2023
        
April 30
2024
   
April 30
2023
 
Income taxes on other comprehensive income
         
Net unrealized gains (losses) on debt securities and loans at fair value through other comprehensive income
 
$
(7
  $           20      
$
296
 
  $          191  
Provision for credit losses recognized in income
 
 
 
    1      
 
 
    1  
Reclassification of net losses (gains) on debt securities and loans at fair value through other comprehensive income to income
 
 
(12
    (21    
 
(28
    (30
Unrealized foreign currency translation gains (losses)
 
 
7
 
    1      
 
(10
    1  
Net foreign currency translation gains (losses) from hedging activities
 
 
(307
    (226    
 
33
 
    (64
Net gains (losses) on derivatives designated as cash flow hedges
 
 
137
 
    (76    
 
(125
    (140
Reclassification of losses (gains) on derivatives designated as cash flow hedges to income
 
 
(47
    33      
 
(115
    34  
Remeasurement gains (losses) on employee benefit plans
 
 
       30
 
    (49    
 
52
 
    (72
Net gains (losses) from fair value changes due to credit risk on financial liabilities designated at fair value through profit or loss
 
 
(119
    119      
 
(390
    (187
Net gains (losses) on equity securities designated at fair value through other comprehensive income
 
 
7
 
    3    
 
 
 
27
 
    15  
Total income tax expenses (recoveries)
 
$
(311
  $ (195  
 
 
$
(260
  $ (251
The accompanying notes are an integral part of these Interim Condensed Consolidated Financial Statements.

Table of Contents
54   
Royal Bank of Canada
  Second Quarter 2024
 
Interim Condensed Consolidated Statements of Changes in Equity
(unaudited)
 
 
    
For the three months ended April 30, 2024
 
                                 
Other components of equity
                   
(Millions of Canadian dollars)
 
Preferred
shares and
other equity
instruments
   
Common
shares
   
Treasury –
preferred
shares and
other equity
instruments
   
Treasury –
common
shares
   
Retained
earnings
   
FVOCI
securities
and loans
   
Foreign
currency
translation
   
Cash flow
hedges
   
Total other
components
of equity
   
Equity
attributable to
shareholders
   
Non-controlling
interests
   
Total
equity
 
Balance at beginning of period
 
$
   8,050
 
 
$
20,156
 
 
$
   (19
 
$
   (84
 
$
82,049
 
 
$
 (1,121
 
$
  5,387
 
 
$
1,973
 
 
$
   6,239
 
 
$
116,391
 
 
$
     97
 
 
$
116,488
 
Changes in equity
                       
Issues of share capital and other equity instruments
 
 
1,370
 
 
 
762
 
 
 
 
 
 
 
 
 
(8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,124
 
 
 
 
 
 
2,124
 
Sales of treasury shares and other equity instruments
 
 
 
 
 
 
 
 
404
 
 
 
1,112
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,516
 
 
 
 
 
 
1,516
 
Purchases of treasury shares and other equity instruments
 
 
 
 
 
 
 
 
(366
 
 
(1,099
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,465
 
 
 
 
 
(1,465
Share-based compensation awards
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends on common shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,953
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,953
 
 
 
 
 
(1,953
Dividends on preferred shares and distributions on other equity instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(67
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(67
 
 
(2
 
 
(69
Other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(5
 
 
 
 
 
(5
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,948
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,948
 
 
 
2
 
 
 
3,950
 
Total other comprehensive income (loss), net of taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(190
 
 
39
 
 
 
1,001
 
 
 
165
 
 
 
1,205
 
 
 
1,015
 
 
 
3
 
 
 
1,018
 
Balance at end of period
 
$
9,420
 
 
$
20,918
 
 
$
19
 
 
$
(71
 
$
83,774
 
 
$
(1,082
 
$
6,388
 
 
$
2,138
 
 
$
7,444
 
 
$
121,504
 
 
$
100
 
 
$
121,604
 
                       
     For the three months ended April 30, 2023 (Restated – Note 2)  
                                  Other components of equity                    
(Millions of Canadian dollars)
  Preferred
shares and
other equity
instruments
    Common
shares
   
Treasury –
preferred
shares and
other equity
instruments
   
Treasury –
common
shares
    Retained
earnings
   
FVOCI
securities
and loans
    Foreign
currency
translation
    Cash flow
hedges
   
Total other
components
of equity
    Equity
attributable to
shareholders
   
Non-controlling
interests
   
Total
equity
 
Balance at beginning of period
  $ 7,323     $ 17,342     $ 10     $ (389   $ 75,929     $ (1,757   $ 4,800     $ 1,998     $ 5,041     $ 105,256     $ 103     $ 105,359  
Changes in equity
                       
Issues of share capital and other equity instruments
          642                                                 642             642  
Sales of treasury shares and other equity instruments
                112       1,335                                     1,447             1,447  
Purchases of treasury shares and other equity instruments
                (126     (1,073                                   (1,199           (1,199
Share-based compensation awards
                            (1                             (1           (1
Dividends on common shares
                            (1,836                             (1,836           (1,836
Dividends on preferred shares and distributions on other equity instruments
                            (67                             (67     (9     (76
Other
                            25                               25             25  
Net income
                            3,679                               3,679       1       3,680  
Total other comprehensive income (loss), net of taxes
                            188       (101     923       (109     713       901       3       904  
Restated balance at end of period
  $ 7,323     $ 17,984     $ (4   $ (127   $ 77,917     $ (1,858   $ 5,723     $ 1,889     $ 5,754     $ 108,847     $ 98     $ 108,945  

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   55
 
    
For the six months ended April 30, 2024
 
                                 
Other components of equity
                   
(Millions of Canadian dollars)
 
Preferred
shares and
other equity
instruments
   
Common
shares
   
Treasury –
preferred
shares and
other equity
instruments
   
Treasury –
common
shares
   
Retained
earnings
   
FVOCI
securities
and loans
   
Foreign
currency
translation
   
Cash flow
hedges
   
Total other
components
of equity
   
Equity
attributable to
shareholders
   
Non-controlling
interests
   
Total
equity
 
Balance at beginning of period
 
$
   7,323
 
 
$
19,398
 
 
$
(9
 
$
   (231
 
$
81,715
 
 
$
 (2,516
 
$
  6,612
 
 
$
2,756
 
 
$
   6,852
 
 
$
115,048
 
 
$
     99
 
 
$
115,147
 
Transition adjustment (Note 2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(656
 
 
656
 
 
 
 
 
 
 
 
 
656
 
 
 
 
 
 
 
 
 
 
Restated balance at beginning of period
 
$
7,323
 
 
$
19,398
 
 
$
(9
 
$
(231
 
$
81,059
 
 
$
(1,860
 
$
6,612
 
 
$
2,756
 
 
$
7,508
 
 
$
115,048
 
 
$
99
 
 
$
115,147
 
Changes in equity
                       
Issues of share capital and other equity instruments
 
 
2,120
 
 
 
1,520
 
 
 
 
 
 
 
 
 
(14
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,626
 
 
 
 
 
 
3,626
 
Redemption of preferred shares and other equity instruments
 
 
(23
 
 
 
 
 
 
 
 
 
 
 
2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(21
 
 
 
 
 
(21
Sales of treasury shares and other equity instruments
 
 
 
 
 
 
 
 
517
 
 
 
2,339
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,856
 
 
 
 
 
 
2,856
 
Purchases of treasury shares and other equity instruments
 
 
 
 
 
 
 
 
(489
 
 
(2,179
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(2,668
 
 
 
 
 
(2,668
Share-based compensation awards
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8
 
 
 
 
 
 
8
 
Dividends on common shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3,897
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3,897
 
 
 
 
 
(3,897
Dividends on preferred shares and distributions on other equity instruments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(125
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(125
 
 
(3
 
 
(128
Other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
 
 
 
 
 
 
7
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,528
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,528
 
 
 
4
 
 
 
7,532
 
Total other comprehensive income (loss), net of taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(794
 
 
778
 
 
 
(224
 
 
(618
 
 
(64
 
 
(858
 
 
 
 
 
(858
Balance at end of period
 
$
9,420
 
 
$
20,918
 
 
$
     19
 
 
$
(71
 
$
83,774
 
 
$
(1,082
 
$
6,388
 
 
$
2,138
 
 
$
7,444
 
 
$
121,504
 
 
$
100
 
 
$
121,604
 
                       
     For the six months ended April 30, 2023 (Restated – Note 2)  
                                  Other components of equity                    
(Millions of Canadian dollars)
  Preferred
shares and
other equity
instruments
    Common
shares
   
Treasury –
preferred
shares and
other equity
instruments
   
Treasury –
common
shares
    Retained
earnings
   
FVOCI
securities
and loans
    Foreign
currency
translation
    Cash flow
hedges
   
Total other
components
of equity
    Equity
attributable to
shareholders
   
Non-controlling
interests
   
Total
equity
 
Balance at beginning of period
  $ 7,323     $ 17,318     $ (5   $ (334   $ 78,037     $ (2,357   $ 5,688     $ 2,394     $ 5,725     $ 108,064     $ 111     $ 108,175  
Transition adjustment (Note 2)
                            (2,359                             (2,359           (2,359
Restated balance at beginning of period
  $ 7,323     $ 17,318     $ (5   $ (334   $ 75,678     $ (2,357   $ 5,688     $ 2,394     $ 5,725     $ 105,705     $ 111     $ 105,816  
Changes in equity
                       
Issues of share capital and other equity instruments
          666                   1                               667             667  
Redemption of preferred shares and other equity instruments
                                                                       
Sales of treasury shares and other equity instruments
                389       2,077                                     2,466             2,466  
Purchases of treasury shares and other equity instruments
                (388     (1,870                                   (2,258           (2,258
Share-based compensation awards
                            4                               4             4  
Dividends on common shares
                            (3,665                             (3,665           (3,665
Dividends on preferred shares and distributions on other equity instruments
                            (111                             (111     (16     (127
Other
                            28                               28             28  
Net income
                            6,810                               6,810       3       6,813  
Total other comprehensive income (loss), net of taxes
                            (828     499       35       (505     29       (799           (799
Restated balance at end of period
  $ 7,323     $ 17,984     $ (4   $ (127   $ 77,917     $ (1,858   $ 5,723     $ 1,889     $ 5,754     $ 108,847     $ 98     $ 108,945  
The accompanying notes are an integral part of these Interim Condensed Consolidated Financial Statements.

Table of Contents
56   
Royal Bank of Canada
  Second Quarter 2024
 
Interim Condensed Consolidated Statements of Cash Flows
(unaudited)
 
 
     For the three months ended          For the six months ended  
(Millions of Canadian dollars)
 
April 30
2024
   
April 30
2023
(Restated – Note 2)
        
April 30
2024
   
April 30
2023
(Restated – Note 2)
 
Cash flows from operating activities
         
Net income
 
$
     3,950
 
  $       3,680      
$
     7,532
 
  $       6,813  
Adjustments for
non-cash
items and others
         
Provision for credit losses
 
 
920
 
    600      
 
1,733
 
    1,132  
Depreciation
 
 
338
 
    313      
 
658
 
    628  
Deferred income taxes
 
 
(246
)
    (96    
 
(852
)
    (357
Amortization and impairment of other intangibles
 
 
385
 
    395      
 
739
 
    768  
Net changes in investments in joint ventures and associates
 
 
(18
)
    (11    
 
(30
)
    (40
Losses (Gains) on investment securities
 
 
(59
)
    (111    
 
(129
)
    (164
Losses (Gains) on disposition of businesses
 
 
(1
)
         
 
(5
)
     
Adjustments for net changes in operating assets and liabilities
         
Insurance contract liabilities
 
 
(143
)
    435      
 
2,173
 
    1,426  
Net change in accrued interest receivable and payable
 
 
1,414
 
    1,556      
 
1,589
 
    1,953  
Current income taxes
 
 
(430
)
    (314    
 
(115
)
    569  
Derivative assets
 
 
(21,796
)
    5,971      
 
15,616
 
    30,127  
Derivative liabilities
 
 
26,053
 
    (7,184    
 
(9,602
)
    (29,183
Trading securities
 
 
21,141
 
    9,310      
 
18,620
 
    11,998  
Loans, net of securitizations
 
 
(27,878
)
    (7,726    
 
(33,716
)
    (12,430
Assets purchased under reverse repurchase agreements and securities borrowed
 
 
46,518
 
    (6,860    
 
38,838
 
    (17,394
Obligations related to assets sold under repurchase agreements and securities loaned
 
 
(60,433
)
    1,191      
 
(61,181
)
    17,611  
Obligations related to securities sold short
 
 
(4,433
)
    801      
 
(3,072
)
    537  
Deposits, net of securitizations
 
 
209
 
    6,211      
 
9,690
 
    22,356  
Brokers and dealers receivable and payable
 
 
505
 
    (2,033    
 
8
 
    (3,004
Other
 
 
(1,599
)
    4,178        
 
(5,740
)
    (5,181
Net cash from (used in) operating activities
 
 
(15,603
)
    10,306        
 
(17,246
)
    28,165  
Cash flows from investing activities
         
Change in interest-bearing deposits with banks
 
 
22,621
 
    11,615      
 
32,627
 
    7,949  
Proceeds from sales and maturities of investment securities
 
 
43,051
 
    42,915      
 
108,531
 
    77,197  
Purchases of investment securities
 
 
(46,833
)
    (48,318    
 
(107,720
)
    (88,833
Net acquisitions of premises and equipment and other intangibles
 
 
(410
)
    (706    
 
(892
)
    (1,404
Net proceeds from (cash transferred for) dispositions
 
 
 
1
 
 
 
 
 
 
 
 
 
10
 
 
 
 
Cash used in acquisitions, net of cash acquired
 
 
(12,716
)
           
 
(12,716
)
     
Net cash from (used in) investing activities
 
 
5,714
 
    5,506        
 
19,840
 
    (5,091
Cash flows from financing activities
         
Issuance of subordinated debentures
 
 
2,000
 
         
 
2,000
 
    1,500  
Repayment of subordinated debentures
 
 
 
         
 
 
    (60
Issue of common shares, net of issuance costs
 
 
20
 
    20      
 
56
 
    42  
Issue of preferred shares and other equity instruments, net of issuance costs
 
 
1,362
 
         
 
2,106
 
     
Redemption of preferred shares and other equity instruments
 
 
 
         
 
(21
)
     
Sales of treasury shares and other equity instruments
 
 
1,516
 
    1,447      
 
2,856
 
    2,466  
Purchases of treasury shares and other equity instruments
 
 
(1,465
)
    (1,199    
 
(2,668
)
    (2,258
Dividends paid on shares and distributions paid on other equity instruments
 
 
(1,262
)
    (1,252    
 
(2,502
)
    (3,093
Dividends/distributions paid to
non-controlling
interests
 
 
(2
)
    (9    
 
(3
)
    (16
Change in short-term borrowings of subsidiaries
 
 
(4,352
)
    (2,109    
 
(3,819
)
    2,382  
Repayment of lease liabilities
 
 
(157
)
    (163      
 
(310
)
    (329
Net cash from (used in) financing activities
 
 
(2,340
)
    (3,265      
 
(2,305
)
    634  
Effect of exchange rate changes on cash and due from banks
 
 
(745
)
    375        
 
(905
)
    3,094  
Net change in cash and due from banks
 
 
(12,974
)
    12,922      
 
(616
)
    26,802  
Cash and due from banks at beginning of period
(1)
 
 
74,347
 
    86,277        
 
61,989
 
    72,397  
Cash and due from banks at end of period
(1)
 
$
61,373
 
  $ 99,199        
$
61,373
 
  $ 99,199  
Cash flows from operating activi
tie
s include:
         
Amount of interest paid
 
$
16,788
 
  $ 11,801      
$
35,708
 
  $ 23,027  
Amount of interest received
 
 
24,930
 
    19,190      
 
49,880
 
    36,682  
Amount of dividends received
 
 
798
 
    788      
 
1,856
 
    1,620  
Amount of income taxes paid
 
 
1,221
 
    972        
 
2,076
 
    2,408  
 
(1)   We are required to maintain balances due to regulatory requirements or contractual restrictions from central banks, other regulatory authorities, and other counterparties. The total balances were $2 billion as at April 30, 2024 (January 31, 2024 – $3 billion; October 31, 2023 – $3 billion; April 30, 2023 – $3 billion; October 31, 2022 – $2 billion).
The accompanying notes are an integral part of these Interim Condensed Consolidated Financial Statements.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   57
 
Note 1 General information
 
Our unaudited Interim Condensed Consolidated Financial Statements (Condensed Financial Statements) are presented in compliance with International Accounting Standard (IAS) 34
Interim Financial Reporting
. The Condensed Financial Statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with our audited 2023 Annual Consolidated Financial Statements and the accompanying notes included on pages 140 to 234 in our 2023 Annual Report. Unless otherwise stated, monetary amounts are stated in Canadian dollars. Tabular information is stated in millions of dollars, except as noted. On May 29, 2024, the Board of Directors authorized the Condensed Financial Statements for issue.
 
Note 2 Summary of significant accounting policies, estimates and judgments
 
Except as indicated below, the Condensed Financial Statements have been prepared using the same accounting policies and methods used in the preparation of our audited 2023 Annual Consolidated Financial Statements. Our significant accounting policies and future changes in accounting policies and disclosures that are not yet effective for us are described in Note 2 of our audited 2023 Annual Consolidated Financial Statements and updates are provided below.
Changes in accounting policies
During the first quarter of 2024, we adopted IFRS 17
Insurance Contracts
(IFRS 17), replacing IFRS 4
Insurance Contracts
(IFRS 4). Our updated accounting policies for insurance and reinsurance contracts are described below. We have applied IFRS 17 retrospectively and restated comparative period results beginning November 1, 2022, where applicable. Adjustments to the carrying amounts of insurance and reinsurance contracts at the transition date of November 1, 2022 were recognized in Retained earnings.
As permitted by the transition provisions of IFRS 17, we reclassified certain financial assets between fair value classification categories at the date of initial application of IFRS 17 as described below. The reclassifications resulted in no adjustments to carrying amounts of financial assets as at November 1, 2023. Retained earnings and Other components of equity as at November 1, 2023 were adjusted as a result with no net impact to total equity. We elected not to restate comparative period results for these changes and accordingly, comparative period information for the impacted financial assets prior to November 1, 2023 is presented in accordance with our previous classifications.
Insurance and reinsurance contracts
Contracts under which we accept significant insurance risk from a policyholder by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder are insurance contracts, which includes reinsurance contracts issued. Contracts under which we transfer significant insurance risk to a reinsurer that compensates us for claims relating to underlying insurance contracts issued by us are reinsurance contracts held, and are accounted for separately from the underlying insurance contracts to which they relate. Embedded derivatives, investment components and promises to provide
non-insurance
services are separated from the insurance or reinsurance contract provided specific criteria are met. Insurance and reinsurance contracts are aggregated into portfolios that are subject to similar risks and are managed together, and then divided into groups based on the period of issuance and expected profitability. Groups are separately recognized and measured using one of three measurement models depending on the characteristics of the contracts:
 
For insurance contracts with direct participating features (applicable primarily to our segregated fund insurance contracts), the variable fee approach (VFA) is applied.
 
For insurance contracts and reinsurance contracts held with a short duration of one year or less (applicable primarily to our creditor reinsurance contracts issued, group life and health insurance contracts and travel insurance contracts), the premium allocation approach (PAA) is applied.
 
The general measurement method (GMM) is applied to all remaining contracts.
Under the GMM and VFA, the carrying amount of a group of insurance or reinsurance contracts is measured as the sum of the fulfilment cash flows and the contractual service margin (CSM). The carrying amount is also the sum of the balance for remaining coverage and the balance for incurred claims. The balance for remaining coverage comprises the fulfilment cash flows that relate to services that will be provided under the contracts in future periods and any remaining CSM at that date. The balance for incurred claims includes the fulfilment cash flows for incurred claims and expenses that have not yet been paid, including claims that have been incurred but not yet reported. The fulfilment cash flows consist of the present value of future cash flows and a risk adjustment for
non-financial
risk, discounted using the current rates as at the reporting date determined using the discount rate methodology below. The estimates of future cash flows consider probability-weighted scenarios and include all future cash flows that are within the contract boundary. The risk adjustment for
non-financial
risk is estimated using the margin approach and represents the compensation that we require for bearing the uncertainty about the amount and timing of cash flows that arise from
non-financial
risk as the insurance contract is fulfilled. The measurement of the groups of contracts requires the use of judgment in setting methodologies and assumptions for mortality, morbidity, policy lapses and other policyholder behaviour, policy dividends and directly attributable expenses, including acquisition costs allocated using a systematic and rational method. Changes to the underlying assumptions and estimates may have a significant effect on
Non-interest
income – Insurance service result and Investment insurance result. Subsequent changes in fulfilment cash flows related to future services adjust the CSM, unless the group is onerous in which case such changes are recognized in
Non-interest
income – Insurance service result along with changes related to past or current services.

58   
Royal Bank of Canada
  Second Quarter 2024
 
Note 2 Summary of significant accounting policies, estimates and judgments
(continued)
 
 
Discount rates used reflect the time value of money and are based on the characteristics of the insurance and reinsurance contracts. Cash flows that vary based on the returns on underlying items are discounted at rates reflecting that variability. For cash flows that do not vary based on the returns on underlying items, we predominantly apply the
top-down
approach in determining discount rates. Under this approach, the discount rates for the observable periods are determined using yield curves implied from a reference portfolio of assets adjusted to eliminate factors (credit and market risk of the financial assets) that are not relevant to the insurance contracts. For unobservable periods, the discount rates are interpolated using the last observable point and the ultimate discount rate, composed of a risk-free rate and illiquidity premium. For a selected portfolio, the
bottom-up
approach is applied in determining the discount rate, which uses a risk-free rate plus an illiquidity premium to reflect the characteristics of the contracts. Management judgment is required in estimating the market and credit risk factors and illiquidity premiums in determining the discount rates.
For insurance contracts, the CSM represents the unearned profit (net inflows) for providing insurance coverage. If there is a net outflow at the initial recognition of the group, the group is onerous and the net outflow is recognized in
Non-interest
income – Insurance service result immediately. For reinsurance contracts held, the CSM represents the net cost or net gain of purchasing reinsurance. The CSM for insurance and reinsurance contacts are released into income based on coverage units, which represent the quantity of service (insurance coverage as well as investment-return and investment-related services) provided by a group of contracts and are determined by considering the quantity of benefits provided under each contract and the expected coverage duration. Under the GMM, the CSM is adjusted for interest accretion using the discount rates that were
locked-in
at initial recognition of the groups or the discount rates that were
locked-in
at the transition date for groups where the fair value approach was applied. Under the VFA, the CSM is adjusted for changes in the amount of our share of the fair value of the underlying items, while the changes to the fair value of the underlying items, reflecting changes in the obligation to pay the policyholder, are recognized in
Non-interest
income – Insurance investment result.
Under the PAA, the liability for remaining coverage for each group is measured as the premiums received less insurance revenue recognized for services provided, while the liability for incurred claims is measured as the fulfillment cash flows for incurred claims.
Losses from the recognition of onerous groups of insurance contracts, regardless of the measurement model applied, are recognized in
Non-interest
income – Insurance service result immediately. Any losses recognized relating to future service can be reversed in subsequent periods if the group of contracts is no longer onerous.
The insurance and reinsurance contract balances are remeasured at the end of each reporting period. We have elected to update the accounting estimates made in the previous interim period when remeasuring the insurance and reinsurance contracts in subsequent interim and annual reporting periods.
An insurance or reinsurance contract is derecognized when it is extinguished or modified such that the modification results in a change in the measurement model, a substantially different contract boundary or a change in the scope of the applicable standard for measuring a component of the contract.
Insurance service result comprises Insurance revenue less Insurance service expense and Net income (expense) from reinsurance contracts held.
 
Insurance revenue is recognized as we provide insurance contract services under the groups of insurance contracts. For contracts measured using the PAA, the insurance revenue is generally recognized based on allocating expected premium receipts over the passage of time. For contracts measured using the GMM and VFA, insurance revenue represents the amount of consideration we expect to be entitled to in exchange for services in the period, which includes expected claims and expenses directly attributable to fulfilling insurance contracts (excluding any investment components), release of the risk adjustment for the period, CSM amortization to reflect services provided in the period, an allocation of premiums that relates to recovering insurance acquisition expenses and experience adjustments for premium receipts relating to current or past services.
 
Insurance service expense arising from insurance contracts include incurred claims and other directly attributable expenses in the current period (excluding investment components), amortization and impairment losses relating to insurance acquisition cash flows where applicable, changes relating to past or current services and changes in loss components of onerous groups of contracts.
 
Net income (expense) from reinsurance contracts held represents the amounts recovered from the reinsurers less the allocation of premiums paid on reinsurance contracts held.
Insurance investment result comprises Net investment income, Net insurance finance income (expense) and Net reinsurance finance income (expense) from reinsurance contracts held.
 
Net investment income primarily comprises interest and dividend income and net gains (losses) on financial assets, including segregated fund assets, and derivatives relating to the Insurance segment. Financial assets supporting the Insurance segment are primarily measured at FVTPL and FVOCI.
 
Insurance and reinsurance finance income (expense) represents the net effect of and changes in the time value of money (including the time value of money relating to risk adjustment on
non-financial
risks) and financial risks on insurance contracts and reinsurance contracts held
respectively
.

Royal Bank of Canada
  Second Quarter 2024   59
 
Impact of IFRS 17 transition excluding the impact of reclassifications of financial assets
Upon the adoption of IFRS 17, we applied IFRS 17 retrospectively by adjusting our Consolidated Balance Sheets as at November 1, 2022 and restating the comparative information for the year ended October 31, 2023. The full retrospective approach was applied for all insurance and reinsurance contracts unless it was impracticable to do so. The full retrospective approach was applied to all contracts measured using the PAA and all new contracts issued on and after November 1, 2022 measured using the GMM and VFA as if IFRS 17 had always been applied. Due to data availability and the inability to use hindsight, the fair value approach was applied to contracts issued before November 1, 2022 that were measured under the GMM and VFA. Under the fair value approach, each portfolio comprises only one group, and the CSM was calculated as the difference between the fair value of a group of contracts and the fulfilment cash flows using reasonable and supportable information available at the transition date. To determine the fair value of a group of contracts, the requirements of IFRS 13
Fair Value Measurement
were applied based on the present value of expected future cash flows within the contract boundary using assumptions adjusted for market participants’ views, and includes a profit margin beyond the risk adjustment for
non-financial
risk to reflect what a market participant would require for accepting such contract obligations. The fulfilment cash flows and discount rates were determined as at the transition using the policies applicable to new business described above.
The adoption of IFRS 17 resulted in a reduction in Retained earnings of $2.4 billion, net of taxes, as at November 1, 2022. This is attributable to the establishment of the CSM and other remeasurement changes to insurance and reinsurance contracts and related tax effects. The CSM of all insurance contracts net of reinsurance contracts held as at November 1, 2022 was $1.8 billion. The following details the selected balances and totals impacted on our Consolidated Balance Sheets as at November 1, 2022:
 
(Millions of Canadian dollars)   As at November 1, 2022
before transition
    Transition
adjustments
    As at November 1, 2022
after transition
 
Assets
     
Segregated fund net assets
(1)
  $ 2,638     $ (2,638   $  
Other
     
Other assets
(2)
    80,300       4,261       84,561  
Total assets
  $ 1,917,219     $ 1,623     $ 1,918,842  
Liabilities
     
Segregated fund net liabilities
(3)
  $ 2,638     $ (2,638   $  
Other
     
Insurance claims and policy benefit liabilities
(4)
    11,511       (11,511      
Insurance contract liabilities
(4)
          18,226       18,226  
Other liabilities
(5)
    95,235       (95     95,140  
Total liabilities
  $ 1,809,044     $ 3,982     $ 1,813,026  
Total equity
    108,175       (2,359     105,816  
Total liabilities and equity
  $ 1,917,219     $    1,623     $ 1,918,842  
 
(1)   Segregated fund net assets are now presented within Other assets.
(2)   The increase is primarily attributable to the inclusion of segregated fund net assets, the increase in insurance contract assets, reinsurance contract held assets and the tax effects of the IFRS 17 transition adjustment.
(3)   Segregated fund insurance contracts are now presented within Insurance contract liabilities.
(4)   Insurance claims and policy benefit liabilities measured under IFRS 4 is replaced with Insurance contract liabilities measured under IFRS 17. The increase in these balances is attributable to presentation changes and remeasurement impacts including the establishment of the CSM for
in-force
contracts at transition.
(5)   Certain liabilities that were previously presented in Other liabilities are now included in the measurement of insurance contracts or reinsurance contracts held.
Impact of reclassifications of financial assets from IFRS 17 transition
As permitted by IFRS 17, we reclassified certain eligible financial assets held in respect of activities that relate to insurance contracts upon the adoption of IFRS 17. The changes were primarily a result of changes to the business models based on facts and circumstances that existed as at November 1, 2023, the date of the initial application of IFRS 17. We have applied these changes retrospectively by adjusting our Consolidated Balance Sheet as at November 1, 2023 with no restatement of comparative information. The following were reclassified as at November 1, 2
023
:
   
$8.3 billion of securities and $2.0 billion of loans from designated as FVTPL to classified as FVTPL;
   
$0.5 billion of securities and $0.3 billion of loans from designated as FVTPL to classified as FVOCI;
   
$1.7 billion of securities from classified as FVOCI to classified as FVTPL; and
   
$0.3 billion of securities from classified as FVTPL to designated as FVOCI.
The impacts of the reclassifications resulted in an increase in Other components of equity by $656 million, net of taxes, and a decrease in Retained earnings by the same amount, with no net impact to our total equity nor the carrying amounts of those assets.
Future changes in accounting policy and disclosure
IFRS 18
Presentation and Disclosure in Financial Statements
(IFRS 18)
In April 2024, the IASB issued IFRS 18 which sets out requirements for the presentation and disclosure of information in the financial statements. IFRS 18 will replace IAS 1
Presentation of Financial Statements
and accompanies limited amendments to other standards which will be effective upon the adoption of the new standard. The standard introduces new defined subtotals to be presented in the Consolidated Statements of Income, disclosure of management-defined performance measures and requirements for grouping of information. This standard will be effective for us on November 1, 2027. We are currently assessing the impact of adopting this standard on our Consolidated Financial Statements.

60   
Royal Bank of Canada
  Second Quarter 2024
 
Note 3 Fair value of financial instruments
 
Carrying value and fair value of financial instruments
The following tables provide a comparison of the carrying values and fair values for fi
nancial instrum
ents classified or designated as fair value through profit or loss (FVTPL) and fair value through other comprehensive income (FVOCI)
, and financial instruments measured at amortized cost
. Embedded derivatives are presented on a combined basis with the host contracts. Refer to Note 2 and Note 3 of our audited 2023 Annual Consolidated Financial Statements for a description of the valuation techniques and inputs used in the fair value measurement of our financial instruments. There have been no significant changes to our determination of fair value during the quarter.
 
    
As at April 30, 2024
 
   
Carrying value and fair value
       
Carrying value
       
Fair value
             
(Millions of Canadian dollars)  
Financial
instruments
classified as
FVTPL
   
Financial
instruments
designated as
FVTPL
   
Financial
instruments
classified as
FVOCI
   
Financial
instruments
designated as
FVOCI
        
Financial
instruments
measured at
amortized cost
        
Financial
instruments
measured at
amortized cost
   
Total carrying
amount
   
Total fair value
 
Financial assets
                   
Interest-bearing deposits
 
with banks
 
$
 
 
$
30,259
 
 
$
 
 
$
 
 
 
 
$
8,200
 
 
 
 
$
8,200
 
 
$
38,459
 
 
$
38,459
 
Securities
                   
Trading
 
 
172,641
 
 
 
925
 
 
 
 
 
 
 
   
 
 
   
 
 
 
 
173,566
 
 
 
173,566
 
Investment, net of applicable allowance
 
 
 
 
 
 
 
 
138,417
 
 
 
1,171
 
 
 
 
 
99,399
 
 
 
 
 
93,443
 
 
 
238,987
 
 
 
233,031
 
 
 
 
172,641
 
 
 
925
 
 
 
138,417
 
 
 
1,171
 
 
 
 
 
99,399
 
 
 
 
 
93,443
 
 
 
412,553
 
 
 
406,597
 
Assets purchased under reverse repurchase agreements and securities borrowed
 
 
246,911
 
 
 
 
 
 
 
 
 
 
 
 
 
 
54,886
 
 
 
 
 
54,886
 
 
 
301,797
 
 
 
301,797
 
Loans, net of applicable allowance
                   
Retail
 
 
598
 
 
 
 
 
 
538
 
 
 
 
   
 
608,407
 
   
 
597,432
 
 
 
609,543
 
 
 
598,568
 
Wholesale
 
 
25,524
 
 
 
1,838
 
 
 
947
 
 
 
 
 
 
 
 
322,687
 
 
 
 
 
317,447
 
 
 
350,996
 
 
 
345,756
 
 
 
 
26,122
 
 
 
1,838
 
 
 
1,485
 
 
 
 
 
 
 
 
931,094
 
 
 
 
 
914,879
 
 
 
960,539
 
 
 
944,324
 
Other
                   
Derivatives
 
 
130,199
 
 
 
 
 
 
 
 
 
 
   
 
 
   
 
 
 
 
130,199
 
 
 
130,199
 
Other assets
(1)
 
 
10,159
 
 
 
8
 
 
 
 
 
 
 
 
 
 
 
54,908
 
 
 
 
 
54,908
 
 
 
65,075
 
 
 
65,075
 
Financial liabilities
                   
Deposits
                   
Personal
 
$
258
 
 
$
28,701
 
       
$
470,923
 
   
$
470,299
 
 
$
499,882
 
 
$
499,258
 
Business and government
(2)
 
 
205
 
 
 
148,861
 
       
 
645,868
 
   
 
646,013
 
 
 
794,934
 
 
 
795,079
 
Bank
(3)
 
 
 
 
 
4,341
 
 
 
 
 
 
 
 
 
 
 
 
 
28,446
 
 
 
 
 
28,447
 
 
 
32,787
 
 
 
32,788
 
 
 
 
463
 
 
 
181,903
 
 
 
 
 
 
 
 
 
 
 
 
 
1,145,237
 
 
 
 
 
1,144,759
 
 
 
1,327,603
 
 
 
1,327,125
 
Other
                   
Obligations related to securities sold short
 
 
31,487
 
 
 
 
       
 
 
   
 
 
 
 
31,487
 
 
 
31,487
 
Obligations related to assets sold under repurchase agreements and securities loaned
 
 
 
 
 
246,702
 
       
 
33,019
 
   
 
33,019
 
 
 
279,721
 
 
 
279,721
 
Derivatives
 
 
136,568
 
 
 
 
       
 
 
   
 
 
 
 
136,568
 
 
 
136,568
 
Other liabilities
(4)
 
 
(1,280
 
 
2
 
       
 
76,004
 
   
 
76,223
 
 
 
74,726
 
 
 
74,945
 
Subordinated debentures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13,464
 
 
 
 
 
13,484
 
 
 
13,464
 
 
 
13,484
 

Royal Bank of Canada
  Second Quarter 2024   61
 
     As at October 31, 2023 (Restated – Note 2)  
    Carrying value and fair value         Carrying value         Fair value              
(Millions of Canadian dollars)   Financial
instruments
classified as
FVTPL
    Financial
instruments
designated as
FVTPL
    Financial
instruments
classified as
FVOCI
    Financial
instruments
designated as
FVOCI
         Financial
instruments
measured at
amortized cost
         Financial
instruments
measured at
amortized cost
    Total carrying
amount
    Total fair value  
Financial assets
                   
Interest-bearing deposits
with banks
  $     $ 60,856     $     $    
 
  $ 10,230    
 
  $ 10,230     $ 71,086     $ 71,086  
Securities
                   
Trading
    180,651       9,500                                   190,151       190,151  
Investment, net of applicable
allowance
                127,624       842    
 
    91,113    
 
    83,667       219,579       212,133  
 
    180,651       9,500       127,624       842    
 
    91,113    
 
    83,667       409,730       402,284  
Assets purchased under reverse repurchase agreements and
securities borrowed
    285,869                      
 
    54,322    
 
    54,322       340,191       340,191  
Loans, net of applicable allowance
                   
Retail
    114       362       280               566,376         542,480       567,132       543,236  
Wholesale
    5,629       3,619       597          
 
    275,796    
 
    268,843       285,641       278,688  
 
    5,743       3,981       877          
 
    842,172    
 
    811,323       852,773       821,924  
Other
                   
Derivatives
    142,450                                         142,450       142,450  
Other assets
(1)
    7,579       5                
 
    68,450    
 
    68,450       76,034       76,034  
Financial liabilities
                   
Deposits
                   
Personal
  $ 109     $ 26,702           $ 415,135       $ 412,886     $ 441,946     $ 439,697  
Business and government
(2)
    174       137,454             607,447         605,260       745,075       742,888  
Bank
(3)
          11,462    
 
 
 
 
 
 
 
 
 
    33,204    
 
    33,160       44,666       44,622  
 
    283       175,618    
 
 
 
 
 
 
 
 
 
    1,055,786    
 
    1,051,306       1,231,687       1,227,207  
Other
                   
Obligations related to securities sold short
    33,651                                 33,651       33,651  
Obligations related to assets sold under repurchase agreements and securities loaned
          298,679             36,559         36,559       335,238       335,238  
Derivatives
    142,629                                 142,629       142,629  
Other liabilities
(4)
    (937     11             92,539         92,441       91,613       91,515  
Subordinated debentures
             
 
 
 
 
 
 
 
 
 
    11,386    
 
    11,213       11,386       11,213  
 
(1)   Includes Customers’ liability under acceptances and financial instruments recognized in Other assets.
(2)   Business and government deposits include deposits from regulated deposit-taking institutions other than banks.
(3)   Bank deposits refer to deposits from regulated banks and central banks.
(4)   Includes Acceptances and financial instruments recognized in Other liabilities.

62   
Royal Bank of Canada
  Second Quarter 2024
 
Note 3 Fair value of financial instruments
(continued)
 
 
Fair value of assets and liabilities measured at fair value on a recurring basis and classified using the fair value hierarchy
 
         As at     
   
April 30, 2024
        October 31, 2023 (Restated – Note 2)  
   
Fair value measurements using
   
Netting
adjustments
     
 
        Fair value measurements using    
Netting
adjustments
     
 
 
(Millions of Canadian dollars)  
Level 1
   
Level 2
   
Level 3
   
Fair value
         Level 1     Level 2     Level 3     Fair value  
Financial assets
                     
Interest-bearing deposits with banks
 
$
   –
 
 
$
30,259
 
 
$
   –
 
 
$
    
 
 
$
30,259
 
      $   –     $ 60,856     $   –     $         $ 60,856  
Securities
                     
Trading
                     
Debt issued or guaranteed by:
                     
Canadian government
(1)
                     
Federal
 
 
16,894
 
 
 
2,133
 
 
 
 
   
 
19,027
 
      26,675       2,581               29,256  
Provincial and municipal
 
 
 
 
 
15,795
 
 
 
 
   
 
15,795
 
            16,389               16,389  
U.S. federal, state, municipal and
agencies
(1), (2)
 
 
1,570
 
 
 
33,957
 
 
 
 
   
 
35,527
 
      2,249       50,439               52,688  
Other OECD government
(3)
 
 
2,345
 
 
 
2,002
 
 
 
 
   
 
4,347
 
      2,055       2,577               4,632  
Mortgage-backed securities
(1)
 
 
 
 
 
1
 
 
 
 
   
 
1
 
            2               2  
Asset-backed securities
                     
Non-CDO
securities
(4)
 
 
 
 
 
1,200
 
 
 
 
   
 
1,200
 
            1,245               1,245  
Corporate debt and other debt
 
 
 
 
 
24,011
 
 
 
 
   
 
24,011
 
            22,615               22,615  
Equities
 
 
68,988
 
 
 
2,278
 
 
 
2,392
 
         
 
73,658
 
        58,826       2,232       2,266               63,324  
   
 
89,797
 
 
 
81,377
 
 
 
2,392
 
         
 
173,566
 
        89,805       98,080       2,266               190,151  
Investment
                     
Debt issued or guaranteed by:
                     
Canadian government
(1)
                     
Federal
 
 
4,408
 
 
 
10,312
 
 
 
 
   
 
14,720
 
      2,731       3,528               6,259  
Provincial and municipal
 
 
 
 
 
3,542
 
 
 
 
   
 
3,542
 
            2,748               2,748  
U.S. federal, state, municipal and agencies
(1)
 
 
865
 
 
 
70,701
 
 
 
 
   
 
71,566
 
      275       73,020               73,295  
Other OECD government
 
 
2,007
 
 
 
7,684
 
 
 
 
   
 
9,691
 
            6,192               6,192  
Mortgage-backed securities
(1)
 
 
 
 
 
2,454
 
 
 
30
 
   
 
2,484
 
            2,672       29         2,701  
Asset-backed securities
                     
CDO
 
 
 
 
 
8,532
 
 
 
 
   
 
8,532
 
            8,265               8,265  
Non-CDO
securities
 
 
 
 
 
494
 
 
 
 
   
 
494
 
            441               441  
Corporate debt and other debt
 
 
 
 
 
27,244
 
 
 
144
 
   
 
27,388
 
            27,574       149         27,723  
Equities
 
 
391
 
 
 
304
 
 
 
476
 
         
 
1,171
 
        38       338       466               842  
   
 
7,671
 
 
 
131,267
 
 
 
650
 
         
 
139,588
 
        3,044       124,778       644               128,466  
Assets purchased under reverse repurchase agreements and securities borrowed
 
 
 
 
 
246,911
 
 
 
 
   
 
246,911
 
            285,869               285,869  
Loans
 
 
 
 
 
27,608
 
 
 
1,837
 
   
 
29,445
 
            8,742       1,859         10,601  
Other
                     
Derivatives
                     
Interest rate contracts
 
 
 
 
 
33,524
 
 
 
257
 
   
 
33,781
 
            39,243       290         39,533  
Foreign exchange contracts
 
 
 
 
 
80,109
 
 
 
19
 
   
 
80,128
 
            89,644       4         89,648  
Credit derivatives
 
 
 
 
 
242
 
 
 
 
   
 
242
 
            224               224  
Other contracts
 
 
2,577
 
 
 
16,216
 
 
 
22
 
   
 
18,815
 
      2,352       13,927       111         16,390  
Valuation adjustments
 
 
 
 
 
(1,296
 
 
2
 
         
 
(1,294
              (1,805     4               (1,801
Total gross derivatives
 
 
2,577
 
 
 
128,795
 
 
 
300
 
   
 
131,672
 
      2,352       141,233       409         143,994  
Netting adjustments
                         
 
(1,473
 
 
(1,473
                                (1,544     (1,544
Total derivatives
         
 
130,199
 
              142,450  
Other assets
 
 
5,001
 
 
 
5,157
 
 
 
9
 
         
 
10,167
 
        4,152       3,421       11               7,584  
   
$
105,046
 
 
$
651,374
 
 
$
5,188
 
 
$
(1,473
 
$
760,135
 
      $ 99,353     $ 722,979     $ 5,189     $  (1,544   $ 825,977  
Financial liabilities
                     
Deposits
                     
Personal
 
$
 
 
$
28,326
 
 
$
633
 
 
$
 
 
 
$
28,959
 
    $     $ 26,428     $ 383     $       $ 26,811  
Business and government
 
 
 
 
 
149,066
 
 
 
 
   
 
149,066
 
            137,628               137,628  
Bank
 
 
 
 
 
4,341
 
 
 
 
   
 
4,341
 
            11,462               11,462  
Other
                     
Obligations related to securities sold short
 
 
13,549
 
 
 
17,938
 
 
 
 
   
 
31,487
 
      14,391       19,260               33,651  
Obligations related to assets sold under repurchase agreements and securities loaned
 
 
 
 
 
246,702
 
 
 
 
   
 
246,702
 
            298,679               298,679  
Derivatives
                     
Interest rate contracts
 
 
 
 
 
34,411
 
 
 
904
 
   
 
35,315
 
            41,249       952         42,201  
Foreign exchange contracts
 
 
 
 
 
72,939
 
 
 
46
 
   
 
72,985
 
            81,750       53         81,803  
Credit derivatives
 
 
 
 
 
209
 
 
 
 
   
 
209
 
            176               176  
Other contracts
 
 
2,982
 
 
 
26,779
 
 
 
320
 
   
 
30,081
 
      3,119       17,306       549         20,974  
Valuation adjustments
 
 
 
 
 
(557
 
 
8
 
         
 
(549
              (982     1               (981
Total gross derivatives
 
 
2,982
 
 
 
133,781
 
 
 
1,278
 
   
 
138,041
 
      3,119       139,499       1,555         144,173  
Netting adjustments
                         
 
(1,473
 
 
(1,473
                                (1,544     (1,544
Total derivatives
         
 
136,568
 
              142,629  
Other liabilities
 
 
451
 
 
 
(1,729
 
 
 
         
 
(1,278
        370       (1,296                   (926
   
$
16,982
 
 
$
578,425
 
 
$
1,911
 
 
$
(1,473
 
$
595,845
 
      $ 17,880     $ 631,660     $ 1,938     $ (1,544   $ 649,934  
 
(1)   As at April 30, 2024, residential and commercial mortgage-backed securities (MBS) included in all fair value levels of trading securities were $14,233 million and $nil (October 31, 2023 – $14,345 million and $nil), respectively, and in all fair value levels of Investment securities were $24,951 million and $2,324 million (October 31, 2023 – $24,365 million and $2,618 million), respectively.
(2)   United States (U.S.).
(3)   Organisation for Economic
Co-operation
and Development (OECD).
(4)   Collateralized debt obligations (CDO).

Royal Bank of Canada
  Second Quarter 2024   63
 
Fair value measurements using significant unobservable inputs (Level 3 Instruments)
A financial instrument is classified as Level 3 in the fair value hierarchy if one or more of its unobservable inputs may significantly affect the measurement of its fair value. In preparing the financial statements, appropriate levels for these unobservable input parameters are chosen so that they are consistent with prevailing market evidence or management judgment. Due to the unobservable nature of the prices or rates, there may be uncertainty about the valuation of these Level 3 financial instruments.
During the three months ended April 30, 2024, there were no significant changes made to the valuation techniques and ranges and weighted averages of unobservable inputs used in the determination of fair value of Level 3 financial instruments. As at April 30, 2024, the impacts of adjusting one or more of the unobservable inputs by reasonably possible alternative assumptions did not change significantly from the impacts disclosed in our audited 2023 Annual Consolidated Financial Statements.
Changes in fair value measurement for instruments measured on a recurring basis and categorized in Level 3
 
    
For the three months ended April 30, 2024
 
(Millions of Canadian dollars)  
Fair value
at beginning
of period
   
Gains (losses)
included
in earnings
   
Gains (losses)
included in
OCI 
(1)
   
Purchases
(issuances)
   
Settlement
(sales) and
other 
(2)
   
Transfers
into
Level 3
   
Transfers
out of
Level 3
   
Fair value
at end of
period
   
Gains
(losses) included
in earnings for
positions still held
 
Assets
                 
Securities
                 
Trading
                 
Debt issued or guaranteed by:
                 
U.S. state, municipal and agencies
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
Asset-backed securities
                 
Non-CDO
securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt and other debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equities
 
 
2,286
 
 
 
(36
 
 
28
 
 
 
131
 
 
 
(16
 
 
 
 
 
(1
 
 
2,392
 
 
 
(12
 
 
 
2,286
 
 
 
(36
 
 
28
 
 
 
131
 
 
 
(16
 
 
 
 
 
(1
 
 
2,392
 
 
 
(12
Investment
                 
Mortgage-backed securities
 
 
30
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30
 
 
 
n.a.
 
Corporate debt and other debt
 
 
148
 
 
 
 
 
 
1
 
 
 
 
 
 
(5
 
 
 
 
 
 
 
 
144
 
 
 
n.a.
 
Equities
 
 
462
 
 
 
 
 
 
9
 
 
 
3
 
 
 
 
 
 
2
 
 
 
 
 
 
476
 
 
 
n.a.
 
 
 
 
640
 
 
 
 
 
 
10
 
 
 
3
 
 
 
(5
 
 
2
 
 
 
 
 
 
650
 
 
 
n.a.
 
Loans
 
 
1,815
 
 
 
(8
 
 
12
 
 
 
202
 
 
 
(47
 
 
3
 
 
 
(140
 
 
1,837
 
 
 
(4
Other
                 
Net derivative balances
(3)
                 
Interest rate contracts
 
 
(535
 
 
(77
 
 
 
 
 
(26
 
 
(3
 
 
(5
 
 
(1
 
 
(647
 
 
(62
Foreign exchange contracts
 
 
(49
 
 
10
 
 
 
4
 
 
 
10
 
 
 
(2
 
 
2
 
 
 
(2
 
 
(27
 
 
13
 
Other contracts
 
 
(349
 
 
8
 
 
 
(8
 
 
(33
 
 
3
 
 
 
(79
 
 
160
 
 
 
(298
 
 
 
Valuation adjustments
 
 
4
 
 
 
 
 
 
 
 
 
(2
 
 
(8
 
 
 
 
 
 
 
 
(6
 
 
 
Other assets
 
 
10
 
 
 
 
 
 
 
 
 
 
 
 
(1
 
 
 
 
 
 
 
 
9
 
 
 
 
 
 
$
3,822
 
 
$
(103
 
$
46
 
 
$
285
 
 
$
(79
 
$
(77
 
$
16
 
 
$
3,910
 
 
$
(65
Liabilities
                 
Deposits
 
$
(429
 
$
(4
 
$
(2
 
$
(235
 
$
25
 
 
$
(89
 
$
101
 
 
$
(633
 
$
6
 
 
 
$
(429
 
$
(4
 
$
(2
 
$
(235
 
$
25
 
 
$
(89
 
$
101
 
 
$
(633
 
$
6
 

64   
Royal Bank of Canada
  Second Quarter 2024
 
Note 3 Fair value of financial instruments
(continued)
 
 
     For the three months ended April 30, 2023  
(Millions of Canadian dollars)   Fair value
at beginning
of period
    Gains (losses)
included
in earnings
    Gains (losses)
included in
OCI (1)
    Purchases
(issuances)
    Settlement
(sales) and
other (2)
    Transfers
into
Level 3
    Transfers
out of
Level 3
    Fair value
at end of
period
    Gains
(losses) included
in earnings for
positions still held
 
Assets
                 
Securities
                 
Trading
                 
Debt issued or guaranteed by:
                 
U.S. state, municipal and agencies
  $     $     $     $     $     $     $     $     $  
Asset-backed securities
                 
Non-CDO
securities
                                                     
Corporate debt and other debt
                      2             17             19        
Equities
    2,106       (108     19       171       (12     1             2,177       (87
 
    2,106       (108     19       173       (12     18             2,196       (87
Investment
                 
Mortgage-backed securities
    28             (2     1                         27       n.a.  
Corporate debt and other debt
    149             8             (7                 150       n.a.  
Equities
    420             16                               436       n.a.  
 
    597             22       1       (7 )                 613       n.a.  
Loans
    2,597       26       30       46       (261           (28     2,410       27  
Other
                 
Net derivative balances
(3)
                 
Interest rate contracts
    (654     (1           12       2       5       (2     (638     (4
Foreign exchange contracts
    (63     (4     3       (3                 11       (56     (24
Other contracts
    (547     92       (7     (30     4       (28     103       (413     21  
Valuation adjustments
    17                         (1                 16        
Other assets
    13                                           13        
 
  $ 4,066     $ 5     $ 67     $ 199     $ (275   $ (5   $ 84     $ 4,141     $ (67
Liabilities
                 
Deposits
  $ (250   $ (7   $ (1   $ (42   $ 4     $ (17   $ 63     $ (250   $ (4
 
  $ (250   $ (7   $ (1   $ (42   $ 4     $ (17   $ 63     $ (250   $ (4
 
    
For the six months ended April 30, 2024
 
(Millions of Canadian dollars)  
Fair value
at beginning
of period
   
Gains (losses)
included
in earnings
   
Gains (losses)
included in
OCI 
(1)
   
Purchases
(issuances)
   
Settlement
(sales) and
other 
(2)
   
Transfers
into
Level 3
   
Transfers
out of
Level 3
   
Fair value
at end of
period
   
Gains
(losses) included
in earnings for
positions still held
 
Assets
                 
Securities
                 
Trading
                 
Debt issued or guaranteed by:
                 
U.S. state, municipal and agencies
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
Asset-backed securities
                 
Non-CDO
securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt and other debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equities
 
 
2,266
 
 
 
(54
 
 
(8
 
 
229
 
 
 
(40
 
 
 
 
 
(1
 
 
2,392
 
 
 
(8
 
 
 
2,266
 
 
 
(54
 
 
(8
 
 
229
 
 
 
(40
 
 
 
 
 
(1
 
 
2,392
 
 
 
(8
Investment
                 
Mortgage-backed securities
 
 
29
 
 
 
 
 
 
1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30
 
 
 
n.a.
 
Corporate debt and other debt
 
 
149
 
 
 
 
 
 
4
 
 
 
 
 
 
(9
 
 
 
 
 
 
 
 
144
 
 
 
n.a.
 
Equities
 
 
466
 
 
 
 
 
 
5
 
 
 
3
 
 
 
 
 
 
2
 
 
 
 
 
 
476
 
 
 
n.a.
 
 
 
 
644
 
 
 
 
 
 
10
 
 
 
3
 
 
 
(9
 
 
2
 
 
 
 
 
 
650
 
 
 
n.a.
 
Loans
 
 
1,859
 
 
 
(54
 
 
4
 
 
 
367
 
 
 
(240
 
 
41
 
 
 
(140
 
 
1,837
 
 
 
(50
Other
                 
Net derivative balances
(3)
                 
Interest rate contracts
 
 
(662
 
 
3
 
 
 
 
 
 
(14
 
 
13
 
 
 
12
 
 
 
1
 
 
 
(647
 
 
17
 
Foreign exchange contracts
 
 
(49
 
 
(1
 
 
5
 
 
 
15
 
 
 
3
 
 
 
2
 
 
 
(2
 
 
(27
 
 
3
 
Other contracts
 
 
(438
 
 
(115
 
 
6
 
 
 
(48
 
 
1
 
 
 
(86
 
 
382
 
 
 
(298
 
 
(64
Valuation adjustments
 
 
3
 
 
 
 
 
 
 
 
 
(1
 
 
(8
 
 
 
 
 
 
 
 
(6
 
 
 
Other assets
 
 
11
 
 
 
 
 
 
 
 
 
 
 
 
(2
 
 
 
 
 
 
 
 
9
 
 
 
 
 
 
$
3,634
 
 
$
(221
 
$
17
 
 
$
551
 
 
$
(282
 
$
(29
 
$
240
 
 
$
3,910
 
 
$
(102
Liabilities
                 
Deposits
 
$
(383
 
$
(51
 
$
1
 
 
$
(357
 
$
38
 
 
$
(90
 
$
209
 
 
$
(633
 
$
(28
 
 
$
(383
 
$
(51
 
$
1
 
 
$
(357
 
$
38
 
 
$
(90
 
$
209
 
 
$
(633
 
$
(28

Royal Bank of Canada
  Second Quarter 2024   65
 
     For the six months ended April 30, 2023  
(Millions of Canadian dollars)   Fair value
at beginning
of period
    Gains (losses)
included
in earnings
    Gains (losses)
included in
OCI (1)
    Purchases
(issuances)
    Settlement
(sales) and
other (2)
    Transfers
into
Level 3
    Transfers
out of
Level 3
    Fair value
at end of
period
    Gains
(losses) included
in earnings for
positions still held
 
Assets
                 
Securities
                 
Trading
                 
Debt issued or guaranteed by:
                 
U.S. state, municipal and agencies
  $ 4     $     $     $     $ (4   $     $     $     $  
Asset-backed securities
                 
Non-CDO
securities
    2                         (2                        
Corporate debt and other debt
    7                   2             17       (7     19        
Equities
    1,874       (122     (6     421       (32     42             2,177       (111
 
    1,887       (122     (6     423       (38     59       (7     2,196       (111
Investment
                 
Mortgage-backed securities
    28             (2     1                         27       n.a.
Corporate debt and other debt
    151             7             (8                 150       n.a.
Equities
    397             40             (1                 436       n.a.
 
    576             45       1       (9                 613       n.a.
Loans
    1,692       (26     23       1,239       (381     28       (165     2,410       3  
Other
                 
Net derivative balances
(3)
                 
Interest rate contracts
    (859     4       5       (8     175       23       22       (638     9  
Foreign exchange contracts
    (132     1       11       1       37             26       (56     (4
Other contracts
    (785     37       10       (38     66       (59     356       (413     30  
Valuation adjustments
    53                         (37                 16        
Other assets
    15                         (2                 13        
 
  $ 2,447     $ (106   $ 88     $ 1,618     $ (189   $ 51     $ 232     $ 4,141     $ (73
Liabilities
                 
Deposits
  $ (241   $ (27   $     $ (77   $ 6     $ (51   $ 140     $ (250   $ (15
 
  $ (241   $ (27   $     $ (77   $ 6     $ (51   $ 140     $ (250   $ (15
 
(1)   These amounts include the foreign currency translation gains or losses arising on consolidation of foreign subsidiaries relating to the Level 3 instruments, where applicable. The unrealized gains or losses on Investment securities recognized in other comprehensive income (OCI) were $nil for the three months ended April 30, 2024 (April 30, 2023 – gains of $12 million) and gains of $10 million for the six months ended April 30, 2024 (April 30, 2023 – gains of $30 million), excluding the translation gains or losses arising on consolidation.
(2)   Other includes amortization of premiums or discounts recognized in net income.
(3)   Net derivatives as at April 30, 2024 included derivative assets of $300 million (April 30, 2023 – $362 million) and derivative liabilities of $1,278 million (April 30, 2023 – $1,453 million).
n.a.   not applicable
Transfers between fair value hierarchy levels for instruments carried at fair value on a recurring basis
Transfers between Level 1 and Level 2, and transfers into and out of Level 3 are assumed to occur at the end of the period. For an asset or a liability that transfers into Level 3 during the period, the entire change in fair value for the period is excluded from the Gains (losses) included in earnings for positions still held column of the above reconciliation, whereas for transfers out of Level 3 during the period, the entire change in fair value for the period is included in the same column of the above reconciliation.
Transfers between Level 1 and 2 are dependent on whether fair value is obtained on the basis of quoted market prices in active markets (Level 1).
During the three months ended April 30, 2024, transfers out of Level 1 to Level 2 included Investment U.S. federal, state, municipal and agencies debt of $498 million and Trading U.S. federal, state, municipal and agencies debt of $258 million. During the three months ended April 30, 2023, transfers out of Level 1 to Level 2 included Trading U.S. federal, state, municipal and agencies debt of $112 million.
During the three months ended April 30, 2024 and April 30, 2023, there were no significant transfers out of Level 2 to Level 1.
During the six months ended April 30, 2024, transfers out of Level 1 to Level 2 included Investment U.S. federal, state, municipal and agencies debt of $621 million and Trading U.S. federal, state, municipal and agencies debt of $258 million. During the six months ended April 30, 2023, transfers out of Level 1 to Level 2 included Investment U.S. federal, state, municipal and agencies debt of $435 million and Trading U.S. federal, state, municipal and agencies debt of $112 million.
During the six months ended April 30, 2024 and April 30, 2023, there were no significant transfers out of Level 2 to Level 1.
Transfers between Level 2 and Level 3 are primarily due to either a change in the market observability for an input, or a change in an unobservable input’s significance to a financial instrument’s fair value.
During the three months ended April 30, 2024 and April 30, 2023, there were no significant transfers out of Level 2 to Level 3.

66   
Royal Bank of Canada
  Second Quarter 2024
 
Note 3 Fair value of financial instruments
(continued)
 
 
During the three months ended April 30, 2024, transfers out of Level 3 to Level 2 included Other contracts, Loans and Deposits due to changes in the significance of unobservable inputs and changes in the market observability of inputs. During the three months ended April 30, 2023, transfers out of Level 3 to Level 2 included Other contracts due to changes in the significance of unobservable inputs.
During the six months ended April 30, 2024 and April 30, 2023, there were no significant transfers out of Level 2 to Level 3.
During the six months ended April 30, 2024, transfers out of Level 3 to Level 2 included Other contracts, Deposits and Loans due to changes in the significance of unobservable inputs and changes in the market observability of inputs. During the six months ended April 30, 2023, transfers out of Level 3 to Level 2 included Other contracts and Loans due to changes in the market observability of inputs and changes in the significance of unobservable inputs.
Net interest income from financial instruments
Interest and dividend income arising from financial assets and financial liabilities and the associated costs of funding are reported in Net interest income.
 
     For the three months ended          For the six months ended  
(Millions of Canadian dollars)
 
April 30
2024
   
April 30
2023
        
April 30
2024
   
April 30
2023
 
Interest and dividend income
(1), (2)
         
Financial instruments measured at fair value through profit or loss
 
$
9,431
 
  $ 6,948      
$
18,905
 
  $ 13,657  
Financial instruments measured at fair value through other comprehensive income
 
 
1,627
 
    1,114      
 
3,235
 
    2,056  
Financial instruments measured at amortized cost
 
 
14,696
 
    12,256        
 
29,223
 
    23,942  
   
 
25,754
 
    20,318        
 
51,363
 
    39,655  
Interest expense
(1)
         
Financial instruments measured at fair value through profit or loss
 
 
8,711
 
    6,275      
 
17,795
 
    12,515  
Financial instruments measured at amortized cost
 
 
10,420
 
    7,944        
 
20,613
 
    14,839  
   
 
19,131
 
    14,219        
 
38,408
 
    27,354  
Net interest income
 
$
6,623
 
  $ 6,099        
$
12,955
 
  $ 12,301  
 
(1)   Excludes interest and dividend income for the three months ended April 30, 2024 of $162 million (April 30, 2023 – $225 million) and for the six months ended April 30, 2024 of $434 million (April 30, 2023 – $368 million), and interest expense for the three months ended April 30, 2024 of $12 million (April 30, 2023 – $13 million) and for the six months ended April 30, 2024 of $23 million (April 30, 2023 – $17 million) presented in Insurance investment result in the Interim Condensed Consolidated Statements of Income.
(2)   Includes dividend income for the three months ended April 30, 2024 of $776 million (April 30, 2023 – $801 million) and for the six months ended April 30, 2024 of $1,733 million (April 30, 2023 – $1,593 million) presented in Interest and dividend income in the Interim Condensed Consolidated Statements of Income.
 
Note 4 Securities
 
Unrealized gains and losses on securities at FVOCI
(1), (2)
 
               As at              
   
April 30, 2024
(3)
        October 31, 2023  
(Millions of Canadian dollars)  
Cost/
Amortized
cost
   
Gross
unrealized
gains
   
Gross
unrealized
losses
   
Fair value
         Cost/
Amortized
cost
    Gross
unrealized
gains
    Gross
unrealized
losses
    Fair value  
Debt issued or guaranteed by:
                 
Canadian government
                 
Federal
 
$
14,736
 
 
$
7
 
 
$
(23
 
$
14,720
 
    $ 6,609     $ 1     $ (351   $ 6,259  
Provincial and municipal
 
 
3,553
 
 
 
25
 
 
 
(36
 
 
3,542
 
      3,396       2       (650     2,748  
U.S. federal, state, municipal and agencies
 
 
72,997
 
 
 
299
 
 
 
(1,730
 
 
71,566
 
      75,326       343       (2,374     73,295  
Other OECD government
 
 
9,710
 
 
 
13
 
 
 
(32
 
 
9,691
 
      6,200       1       (9     6,192  
Mortgage-backed securities
 
 
2,512
 
 
 
2
 
 
 
(30
 
 
2,484
 
      2,762             (61     2,701  
Asset-backed securities
                 
CDO
 
 
8,525
 
 
 
8
 
 
 
(1
 
 
8,532
 
      8,308       3       (46     8,265  
Non-CDO
securities
 
 
496
 
 
 
2
 
 
 
(4
 
 
494
 
      444       2       (5     441  
Corporate debt and other debt
 
 
27,352
 
 
 
99
 
 
 
(63
 
 
27,388
 
      27,774       44       (95     27,723  
Equities
 
 
719
 
 
 
458
 
 
 
(6
 
 
1,171
 
        493       357       (8     842  
   
$
140,600
 
 
$
913
 
 
$
 (1,925
 
$
139,588
 
      $ 131,312     $ 753     $  (3,599   $ 128,466  
 
(1)   Excludes $99,399 million of
held-to-collect
securities as at April 30, 2024 that are carried at amortized cost, net of allowance for credit losses (October 31, 2023 – $91,113 million).
(2)   Gross unrealized gains and losses includes $(33) million of allowance for credit losses on debt securities at FVOCI as at April 30, 2024 (October 31, 2023 – $(33) million) recognized in income and Other components of equity.
(3)   These amounts reflect certain reclassifications made upon the adoption of IFRS 17 as at November 1, 2023 with no restatement of comparative information. Refer to Note 2 for further details.

Royal Bank of Canada
  Second Quarter 2024   67
 
Allowance for credit losses on investment securities
The following tables reconcile the opening and closing allowance for debt securities at FVOCI and amortized cost by stage. Reconciling items include the following:
 
Transfers between stages, which are presumed to occur before any corresponding remeasurement of the allowance.
 
Purchases, which reflect the allowance related to assets newly recognized during the period, including those assets that were derecognized following a modification of terms.
 
Sales and maturities, which reflect the allowance related to assets derecognized during the period without a credit loss being incurred, including those assets that were derecognized following a modification of terms.
 
Changes in risk, parameters and exposures, which comprise the impact of changes in model inputs or assumptions, including changes in forward-looking macroeconomic conditions; partial repayments; changes in the measurement following a transfer between stages; and unwinding of the time value discount due to the passage of time.
Allowance for credit losses – securities at FVOCI
(1)
 
     For the three months ended  
   
April 30, 2024
          April 30, 2023  
   
Performing
         
Impaired
                Performing           Impaired        
(Millions of Canadian dollars)  
Stage 1
   
Stage 2
          
Stage 3 
(2)
   
Total
           Stage 1     Stage 2            Stage 3 (2)     Total  
Balance at beginning of period
 
$
4
 
 
$
 
   
$
(37
 
$
(33
    $ 4     $ 1       $ (24   $ (19
Provision for credit losses
                     
Transfers to stage 1
 
 
 
 
 
 
   
 
 
 
 
 
                           
Transfers to stage 2
 
 
 
 
 
 
   
 
 
 
 
 
                           
Transfers to stage 3
 
 
 
 
 
 
   
 
 
 
 
 
                           
Purchases
 
 
3
 
 
 
 
   
 
   –
 
 
 
3
 
      1                   –          1  
Sales and maturities
 
 
(1
 
 
 
   
 
 
 
 
(1
      (1                   (1
Changes in risk, parameters and exposures
 
 
(1
 
 
 
   
 
(2
 
 
(3
            2         (3     (1
Exchange rate and other
 
 
1
 
 
 
 
         
 
 
 
 
1
 
            (1     (1             2        
Balance at end of period
 
$
  6
 
 
$
 –
 
         
$
(39
 
$
 (33
          $   3     $   2             $ (25   $ (20
 
     For the six months ended  
   
April 30, 2024
          April 30, 2023  
   
Performing
         
Impaired
                Performing           Impaired        
(Millions of Canadian dollars)  
Stage 1
   
Stage 2
          
Stage 3 
(2)
   
Total
           Stage 1     Stage 2            Stage 3 (2)     Total  
Balance at beginning of period
 
$
4
 
 
$
 
   
$
(37
 
$
(33
    $ 3     $ 1       $ (23   $ (19
Provision for credit losses
                     
Transfers to stage 1
 
 
 
 
 
 
   
 
 
 
 
 
                           
Transfers to stage 2
 
 
 
 
 
 
   
 
 
 
 
 
                           
Transfers to stage 3
 
 
 
 
 
 
   
 
   –
 
 
 
 
                             –  
Purchases
 
 
6
 
 
 
 
   
 
 
 
 
6
 
      3                     3  
Sales and maturities
 
 
(2
 
 
 
   
 
 
 
 
(2
      (1                 –       (1
Changes in risk, parameters and exposures
 
 
(3
 
 
 
   
 
(4
 
 
(7
      (1     2         (5     (4
Exchange rate and other
 
 
1
 
 
 
 
         
 
2
 
 
 
3
 
            (1     (1             3       1  
Balance at end of period
 
$
  6
 
 
$
 –
 
         
$
(39
 
$
 (33
          $   3     $   2             $ (25   $ (20
 
(1)   Expected credit losses on debt securities at FVOCI are not separately recognized on the balance sheet as the related securities are recorded at fair value. The cumulative amount of credit losses recognized in income is presented in Other components of equity.
(2)   Reflects changes in the allowance for purchased credit impaired securities.

68   
Royal Bank of Canada
  Second Quarter 2024
 
Note 4 Securities
(continued)
 
Allowance for credit losses – securities at amortized cost
 
     For the three months ended  
   
April 30, 2024
          April 30, 2023  
   
Performing
         
Impaired
                Performing           Impaired        
(Millions of Canadian dollars)  
Stage 1
   
Stage 2
          
Stage 3
   
Total
           Stage 1     Stage 2            Stage 3     Total  
Balance at beginning of period
 
$
9
 
 
$
14
 
   
$
 
 
$
23
 
    $ 10     $ 13       $     $ 23  
Provision for credit losses
                     
Transfers to stage 1
 
 
 
 
 
 
   
 
 
 
 
 
                           
Transfers to stage 2
 
 
 
 
 
 
   
 
 
 
 
 
                           
Transfers to stage 3
 
 
 
 
 
 
   
 
 
 
 
   –
 
                             –  
Purchases
 
 
1
 
 
 
 
   
 
 
 
 
1
 
      1                     1  
Sales and maturities
 
 
 
 
 
 
   
 
 
 
 
 
                           
Changes in risk, parameters and exposures
 
 
(2
 
 
(1
   
 
 
 
 
(3
      (3                 –       (3
Exchange rate and other
 
 
 
 
 
 
         
 
 
 
 
 
            1                           1  
Balance at end of period
 
$
  8
 
 
$
13
 
         
$
   –
 
 
$
21
 
          $   9     $ 13             $     $ 22  
 
     For the six months ended  
   
April 30, 2024
          April 30, 2023  
   
Performing
         
Impaired
                Performing           Impaired        
(Millions of Canadian dollars)  
Stage 1
   
Stage 2
          
Stage 3
   
Total
           Stage 1     Stage 2            Stage 3     Total  
Balance at beginning of period
 
$
8
 
 
$
15
 
   
$
 
 
$
23
 
    $ 8     $ 14       $     $ 22  
Provision for credit losses
                     
Transfers to stage 1
 
 
 
 
 
 
   
 
 
 
 
 
                           
Transfers to stage 2
 
 
 
 
 
 
   
 
 
 
 
 
                           
Transfers to stage 3
 
 
 
 
 
 
   
 
 
 
 
   –
 
                           
Purchases
 
 
4
 
 
 
 
   
 
 
 
 
4
 
      5                     5  
Sales and maturities
 
 
 
 
 
 
   
 
 
 
 
 
                        –          –  
Changes in risk, parameters and exposures
 
 
(4
 
 
(1
   
 
 
 
 
(5
      (5     (1             (6
Exchange rate and other
 
 
 
 
 
(1
         
 
 
 
 
(1
            1                           1  
Balance at end of period
 
$
  8
 
 
$
13
 
         
$
   –
 
 
$
21
 
          $   9     $ 13             $     $ 22  
Credit risk exposure by internal risk rating
The following table presents the fair value of debt securities at FVOCI and gross carrying amount of securities at amortized cost. Risk ratings are based on internal ratings used in the measurement of expected credit losses as at the reporting date, as outlined in the internal ratings maps in the Credit risk section of our 2023 Annual Report.
 
  
 
As at      
 
 
 
April 30, 2024
 
 
 
 
 
October 31, 2023
 
 
 
Performing
 
 
 
 
 
Impaired
 
 
 
 
 
 
 
 
Performing
 
 
 
 
 
Impaired
 
 
 
 
(Millions of Canadian dollars)
 
Stage 1
 
 
Stage 2
 
 
  
 
 
Stage 3 
(1)
 
 
Total
 
 
  
 
 
Stage 1
 
 
Stage 2
 
 
  
 
 
Stage 3 (1)
 
 
Total
 
Investment securities
 
 
 
 
 
 
 
 
 
 
 
Securities at FVOCI
                     
Investment grade
 
$
 
 
137,417
 
 
$
8
 
   
$
  –
 
 
$
137,425
 
    $ 126,732     $ 1       $     $ 126,733  
Non-investment
grade
 
 
849
 
 
 
 
   
 
 
 
 
849
 
      742                     742  
Impaired
 
 
 
 
 
 
         
 
143
 
 
 
143
 
                                149       149  
 
 
138,266
 
 
 
8
 
   
 
143
 
 
 
138,417
 
      127,474          1            149       127,624  
Items not subject to impairment 
(2)
                                 
 
1,171
 
                                            842  
                                   
$
139,588
 
                                          $ 128,466  
Securities at amortized cost
                     
Investment grade
 
$
98,500
 
 
$
 
   
$
 
 
$
98,500
 
    $ 89,947     $       $     $ 89,947  
Non-investment
grade
 
 
761
 
 
 
159
 
   
 
 
 
 
920
 
      990       199               1,189  
Impaired
 
 
 
 
 
 
         
 
 
 
 
 
                                       
 
 
99,261
 
 
 
159
 
   
 
 
 
 
99,420
 
      90,937       199               91,136  
Allowance for credit losses
 
 
8
 
 
 
13
 
         
 
 
 
 
21
 
            8       15                     23  
   
$
99,253
 
 
$
 
 
146
 
         
$
 
 
$
99,399
 
          $ 90,929     $ 184             $     $ 91,113  
 
(1)   Reflects $143 million of purchased credit impaired securities (October 31, 2023 – $149 million).
(2)   Investment securities at FVOCI not subject to impairment represent equity securities designated as FVOCI.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   69
 
Note 5 Loans and allowance for credit losses
 
Allowance for credit losses
 
     For the three months ended  
   
April 30, 2024
        April 30, 2023  
(Millions of Canadian dollars)  
Balance at
beginning
of period
   
Provision
for credit
losses
   
Net
write-offs
   
Exchange
rate and
other
   
Balance at
end of
period
         Balance at
beginning
of period
    Provision
for credit
losses
    Net
write-offs
    Exchange
rate and
other
    Balance at
end of
period
 
Retail
                     
Residential mortgages
 
$
542
 
 
$
28
 
 
$
(5
 
$
4
 
 
$
569
 
    $ 469     $ 11     $ (4   $ 4     $ 480  
Personal
 
 
1,287
 
 
 
213
 
 
 
(134
 
 
5
 
 
 
1,371
 
      1,129       136       (98     (2     1,165  
Credit cards
 
 
1,101
 
 
 
223
 
 
 
(185
 
 
 
 
 
1,139
 
      926       169       (115           980  
Small business
 
 
212
 
 
 
39
 
 
 
(19
 
 
(2
)
 
 
230
 
      204       30       (7     (2     225  
Wholesale
 
 
2,445
 
 
 
405
 
 
 
(133
 
 
(3
)
 
 
2,714
 
      1,680       269       (54     (9     1,886  
Customers’ liability under acceptances
 
 
43
 
 
 
8
 
   
   
 
 
 
 
51
 
        41       (1           1       41  
   
$
5,630
 
 
$
916
 
 
$
 (476
 
$
4
 
 
$
6,074
 
      $ 4,449     $ 614     $  (278   $ (8   $ 4,777  
Presented as:
                     
Allowance for loan losses
 
$
5,299
 
       
$
5,715
 
    $ 3,999           $ 4,332  
Other liabilities – Provisions
 
 
282
 
       
 
302
 
      403             397  
Customers’ liability under acceptances
 
 
43
 
       
 
51
 
      41             41  
Other components of equity
 
 
6
 
                         
 
6
 
        6                               7  
                                                                 
     For the six months ended  
   
April 30, 2024
        April 30, 2023  
(Millions of Canadian dollars)  
Balance at
beginning
of period
   
Provision
for credit
losses
   
Net
write-offs
   
Exchange
rate and
other
   
Balance at
end of
period
         Balance at
beginning
of period
    Provision
for credit
losses
    Net
write-offs
    Exchange
rate and
other
    Balance at
end of
period
 
Retail
                     
Residential mortgages
 
$
481
 
 
$
102
 
 
$
(6
 
$
(8
 
$
569
 
    $ 432     $ 62     $ (9   $ (5   $ 480  
Personal
 
 
1,228
 
 
 
415
 
 
 
(273
   
1
 
 
 
1,371
 
      1,043       305       (181     (2     1,165  
Credit cards
 
 
1,069
 
 
 
406
 
 
 
(335
   
(1
)
 
 
1,139
 
      893       305       (217     (1     980  
Small business
 
 
194
 
 
 
76
 
 
 
(34
 
 
(6
 
 
230
 
      194       47       (16           225  
Wholesale
 
 
2,326
 
 
 
734
 
 
 
(282
 
 
(64
)
 
 
2,714
 
      1,574       430       (71     (47     1,886  
Customers’ liability under acceptances
 
 
50
 
 
 
1
 
   
   
 
 
 
 
51
 
        45       (5           1       41  
   
$
5,348
 
 
$
1,734
 
 
$
 (930
 
$
 (78
 
$
6,074
 
      $ 4,181     $ 1,144     $  (494   $ (54   $ 4,777  
Presented as:
                     
Allowance for loan losses
 
$
5,004
 
       
$
5,715
 
    $ 3,753           $ 4,332  
Other liabilities – Provisions
 
 
288
 
       
 
302
 
      378             397  
Customers’ liability under acceptances
 
 
50
 
       
 
51
 
      45             41  
Other components of equity
 
 
6
 
                         
 
6
 
        5                               7  
The following table reconciles the opening and closing allowance for each major product of loans and commitments as determined by our modelled, scenario-weighted allowance and the application of expert credit judgment as applicable. Reconciling items include the following:
 
Transfers between stages, which are presumed to occur before any corresponding remeasurements of the allowance.
 
Originations, which reflect the allowance related to assets newly recognized during the period, including those assets that were derecognized following a modification of terms.
 
Maturities, which reflect the allowance related to assets derecognized during the period without a credit loss being incurred, including those assets that were derecognized following a modification of terms.
 
Changes in risk, parameters and exposures, which comprise the impact of changes in model inputs or assumptions, including changes in forward-looking macroeconomic conditions; partial repayments and additional draws on existing facilities; changes in the measurement following a transfer between stages; and unwinding of the time value discount due to the passage of time in stage 1 and stage 2.

70   
Royal Bank of Canada
  Second Quarter 2024
 
Note 5 Loans and allowance for credit losses
(continued)
 
 
Allowance for credit losses – Retail and wholesale loans
 
     For the three months ended  
   
April 30, 2024
        April 30, 2023  
   
Performing
       
Impaired
              Performing         Impaired        
(Millions of Canadian dollars)  
Stage 1
   
Stage 2
        
Stage 3
   
Total
         Stage 1     Stage 2          Stage 3     Total  
Residential mortgages
                     
Balance at beginning of period
 
$
245
 
 
$
110
 
   
$
187
 
 
$
542
 
    $ 254     $ 82       $ 133     $ 469  
Provision for credit losses
                     
Transfers to stage 1
 
 
16
 
 
 
(16
   
 
 
 
 
 
      19       (19              
Transfers to stage 2
 
 
(4
 
 
8
 
   
 
(4
 
 
 
      (13     15         (2      
Transfers to stage 3
 
 
(1
 
 
(8
   
 
9
 
 
 
 
      (1     (2       3        
Originations
(1)
 
 
32
 
 
 
 
   
 
 
 
 
32
 
      13                     13  
Maturities
 
 
(4
 
 
(3
   
 
 
 
 
(7
      (4                   (4
Changes in risk, parameters and exposures
 
 
(43
 
 
27
 
   
 
19
 
 
 
3
 
      (31     26         7       2  
Write-offs
 
 
 
 
 
 
   
 
(7
 
 
(7
                    (8     (8
Recoveries
 
 
 
 
 
 
   
 
2
 
 
 
2
 
                    4       4  
Exchange rate and other
 
 
4
 
 
 
 
 
 
 
 
 
 
 
4
 
 
 
    1       1    
 
    2       4  
Balance at end of period
 
$
245
 
 
$
118
 
 
 
 
$
206
 
 
$
569
 
 
 
  $ 238     $ 103    
 
  $ 139     $ 480  
Personal
                     
Balance at beginning of period
 
$
280
 
 
$
843
 
   
$
164
 
 
$
1,287
 
    $ 286     $ 725       $ 118     $ 1,129  
Provision for credit losses
                     
Transfers to stage 1
 
 
134
 
 
 
(134
   
 
 
 
 
 
      147       (146       (1      
Transfers to stage 2
 
 
(18
 
 
19
 
   
 
(1
 
 
 
      (20     21         (1      
Transfers to stage 3
 
 
 
 
 
(31
   
 
31
 
 
 
 
      (1     (12       13        
Originations
(1)
 
 
39
 
 
 
 
   
 
 
 
 
39
 
      25                     25  
Maturities
 
 
(9
)
 
 
(40
   
 
 
 
 
(49
)
      (10     (25             (35
Changes in risk, parameters and exposures
 
 
(128
)
 
 
226
 
   
 
125
 
 
 
223
 
      (130     184         92       146  
Write-offs
 
 
 
 
 
 
   
 
(166
 
 
(166
                    (124     (124
Recoveries
 
 
 
 
 
 
   
 
32
 
 
 
32
 
                    26       26  
Exchange rate and other
 
 
(2
 
 
4
 
 
 
 
 
3
 
 
 
5
 
 
 
    1          
 
    (3     (2
Balance at end of period
 
$
296
 
 
$
887
 
 
 
 
$
188
 
 
$
1,371
 
 
 
  $ 298     $ 747    
 
  $ 120     $ 1,165  
Credit cards
                     
Balance at beginning of period
 
$
188
 
 
$
913
 
   
$
 
 
$
1,101
 
    $ 184     $ 742       $     $ 926  
Provision for credit losses
                     
Transfers to stage 1
 
 
138
 
 
 
(138
   
 
 
 
 
 
      125       (125              
Transfers to stage 2
 
 
(27
 
 
27
 
   
 
 
 
 
 
      (22     22                
Transfers to stage 3
 
 
 
 
 
(118
   
 
118
 
 
 
 
      (1     (98       99        
Originations
(1)
 
 
10
 
 
 
 
   
 
 
 
 
10
 
      3                     3  
Maturities
 
 
(1
 
 
(13
   
 
 
 
 
(14
      (1     (8             (9
Changes in risk, parameters and exposures
 
 
(116
 
 
277
 
   
 
66
 
 
 
227
 
      (89     248         16       175  
Write-offs
 
 
 
 
 
 
   
 
(201
)
 
 
(201
)
                    (159     (159
Recoveries
 
 
 
 
 
 
   
 
16
 
 
 
16
 
                    44       44  
Exchange rate and other
 
 
 
 
 
(1
 
 
 
 
1
 
 
 
 
 
 
             
 
           
Balance at end of period
 
$
192
 
 
$
947
 
 
 
 
$
 
 
$
1,139
 
 
 
  $ 199     $ 781    
 
  $     $ 980  
Small business
                     
Balance at beginning of period
 
$
72
 
 
$
74
 
   
$
66
 
 
$
212
 
    $ 73     $ 73       $ 58     $ 204  
Provision for credit losses
                     
Transfers to stage 1
 
 
7
 
 
 
(7
   
 
 
 
 
 
      8       (8              
Transfers to stage 2
 
 
(4
 
 
4
 
   
 
 
 
 
 
      (4     4                
Transfers to stage 3
 
 
 
 
 
(3
   
 
3
 
 
 
 
      (1     (2       3        
Originations
(1)
 
 
11
 
 
 
 
   
 
 
 
 
11
 
      8                     8  
Maturities
 
 
(4
 
 
(5
   
 
 
 
 
(9
      (3     (4             (7
Changes in risk, parameters and exposures
 
 
(8
 
 
15
 
   
 
30
 
 
 
37
 
      (6     15         20       29  
Write-offs
 
 
 
 
 
 
   
 
(22
 
 
(22
                    (10     (10
Recoveries
 
 
 
 
 
 
   
 
3
 
 
 
3
 
                    3       3  
Exchange rate and other
 
 
 
 
 
 
 
 
 
 
(2
 
 
(2
 
 
    1       1    
 
    (4     (2
Balance at end of period
 
$
74
 
 
$
78
 
 
 
 
$
78
 
 
$
230
 
 
 
  $ 76     $ 79    
 
  $ 70     $ 225  
Wholesale
                     
Balance at beginning of period
 
$
709
 
 
$
853
 
   
$
883
 
 
$
2,445
 
    $ 600     $ 612       $ 468     $ 1,680  
Provision for credit losses
                     
Transfers to stage 1
 
 
52
 
 
 
(51
)
   
 
(1
 
 
 
      49       (49              
Transfers to stage 2
 
 
(40
)
 
 
41
 
   
 
(1
 
 
 
      (15     15                
Transfers to stage 3
 
 
(1
)
 
 
(38
)
   
 
39
 
 
 
 
      (1     (13       14        
Originations
(1)
 
 
245
 
 
 
 
   
 
 
 
 
245
 
      159                     159  
Maturities
 
 
(95
)
 
 
(95
)
   
 
 
 
 
(190
)
      (98     (58             (156
Changes in risk, parameters and exposures
 
 
(90
)
 
 
201
 
   
 
239
 
 
 
350
 
      (31     119         178       266  
Write-offs
 
 
 
 
 
 
   
 
(150
 
 
(150
)
                    (60     (60
Recoveries
 
 
 
 
 
 
   
 
17
 
 
 
17
 
                    6       6  
Exchange rate and other
 
 
(23
 
 
13
 
 
 
 
 
7
 
 
 
(3
)
 
 
    5       6    
 
    (20     (9
Balance at end of period
 
$
  757
 
 
$
  924
 
 
 
 
$
  1,033
 
 
$
2,714
 
 
 
  $   668     $   632    
 
  $   586     $ 1,886  
 
(1)   Includes the impact of the HSBC Canada transaction. Refer to Note 6 for further details.

Royal Bank of Canada
  Second Quarter 2024   71


     For the six months ended  
   
April 30, 2024
        April 30, 2023  
   
Performing
       
Impaired
              Performing         Impaired        
(Millions of Canadian dollars)  
Stage 1
   
Stage 2
        
Stage 3
   
Total
         Stage 1     Stage 2          Stage 3     Total  
Residential mortgages
                     
Balance at beginning of period
 
$
223
 
 
$
90
 
   
$
168
 
 
$
481
 
    $ 235     $ 65       $ 132     $ 432  
Provision for credit losses
                     
Transfers to stage 1
 
 
33
 
 
 
(33
   
 
 
 
 
 
      32       (32              
Transfers to stage 2
 
 
(10
 
 
18
 
   
 
(8
 
 
 
      (19     25         (6      
Transfers to stage 3
 
 
(2
 
 
(16
   
 
18
 
 
 
 
      (1     (5       6        
Originations
(1)
 
 
51
 
 
 
 
   
 
 
 
 
51
 
      43                     43  
Maturities
 
 
(8
 
 
(7
   
 
 
 
 
(15
      (8     (2             (10
Changes in risk, parameters and exposures
 
 
(44
 
 
67
 
   
 
43
 
 
 
66
 
      (44     51         22       29  
Write-offs
 
 
 
 
 
 
   
 
(11
 
 
(11
                    (16     (16
Recoveries
 
 
 
 
 
 
   
 
5
 
 
 
5
 
                    7       7  
Exchange rate and other
 
 
2
 
 
 
(1
 
 
 
 
(9
 
 
(8
 
 
          1    
 
    (6     (5
Balance at end of period
 
$
245
 
 
$
118
 
 
 
 
$
206
 
 
$
569
 
 
 
  $ 238     $ 103    
 
  $ 139     $ 480  
Personal
                     
Balance at beginning of period
 
$
280
 
 
$
793
 
   
$
155
 
 
$
1,228
 
    $ 285     $ 661       $ 97     $ 1,043  
Provision for credit losses
                     
Transfers to stage 1
 
 
259
 
 
 
(259
   
 
 
 
 
 
      297       (296       (1      
Transfers to stage 2
 
 
(37
 
 
39
 
   
 
(2
 
 
 
      (43     44         (1      
Transfers to stage 3
 
 
(1
 
 
(59
   
 
60
 
 
 
 
      (1     (25       26        
Originations
(1)
 
 
61
 
 
 
 
   
 
 
 
 
61
 
      48                     48  
Maturities
 
 
(21
)
 
 
(86
   
 
 
 
 
(107
)
      (22     (50             (72
Changes in risk, parameters and exposures
 
 
(242
)
 
 
455
 
   
 
248
 
 
 
461
 
      (268     415         182       329  
Write-offs
 
 
 
 
 
 
   
 
(335
 
 
(335
)
                    (236     (236
Recoveries
 
 
 
 
 
 
   
 
62
 
 
 
62
 
                    55       55  
Exchange rate and other
 
 
(3
 
 
4
 
 
 
 
 
 
 
 
1
 
 
 
    2       (2  
 
    (2     (2
Balance at end of period
 
$
296
 
 
$
887
 
 
 
 
$
188
 
 
$
1,371
 
 
 
  $ 298     $ 747    
 
  $ 120     $ 1,165  
Credit cards
                     
Balance at beginning of period
 
$
203
 
 
$
866
 
   
$
 
 
$
1,069
 
    $ 177     $ 716       $     $ 893  
Provision for credit losses
                     
Transfers to stage 1
 
 
275
 
 
 
(275
   
 
 
 
 
 
      289       (289              
Transfers to stage 2
 
 
(55
 
 
55
 
   
 
 
 
 
 
      (42     42                
Transfers to stage 3
 
 
(1
 
 
(226
   
 
227
 
 
 
 
      (1     (192       193        
Originations
(1)
 
 
13
 
 
 
 
   
 
 
 
 
13
 
      7                     7  
Maturities
 
 
(2
 
 
(21
   
 
 
 
 
(23
      (2     (15             (17
Changes in risk, parameters and exposures
 
 
(241
 
 
549
 
   
 
108
 
 
 
416
 
      (228     519         24       315  
Write-offs
 
 
 
 
 
 
   
 
(460
)
 
 
(460
)
                    (301     (301
Recoveries
 
 
 
 
 
 
   
 
125
 
 
 
125
 
                    84       84  
Exchange rate and other
 
 
 
 
 
(1
 
 
 
 
 
 
 
(1
)
 
 
    (1        
 
          (1
Balance at end of period
 
$
192
 
 
$
947
 
 
 
 
$
 
 
$
1,139
 
 
 
  $ 199     $ 781    
 
  $     $ 980  
Small business
                     
Balance at beginning of period
 
$
70
 
 
$
66
 
   
$
58
 
 
$
194
 
    $ 73     $ 73       $ 48     $ 194  
Provision for credit losses
                     
Transfers to stage 1
 
 
12
 
 
 
(12
   
 
 
 
 
 
      18       (18              
Transfers to stage 2
 
 
(9
 
 
9
 
   
 
 
 
 
 
      (7     7                
Transfers to stage 3
 
 
 
 
 
(5
   
 
5
 
 
 
 
      (1     (4       5        
Originations
(1)
 
 
20
 
 
 
 
   
 
 
 
 
20
 
      16                     16  
Maturities
 
 
(7
 
 
(10
   
 
 
 
 
(17
      (7     (10             (17
Changes in risk, parameters and exposures
 
 
(13
 
 
30
 
   
 
56
 
 
 
73
 
      (18     28         38       48  
Write-offs
 
 
 
 
 
 
   
 
(40
 
 
(40
                    (21     (21
Recoveries
 
 
 
 
 
 
   
 
6
 
 
 
6
 
                    5       5  
Exchange rate and other
 
 
1
 
 
 
 
 
 
 
 
(7
 
 
(6
 
 
    2       3    
 
    (5      
Balance at end of period
 
$
74
 
 
$
78
 
 
 
 
$
78
 
 
$
230
 
 
 
  $ 76     $ 79    
 
  $ 70     $ 225  
Wholesale
                     
Balance at beginning of period
 
$
774
 
 
$
785
 
   
$
767
 
 
$
2,326
 
    $ 597     $ 585       $ 392     $ 1,574  
Provision for credit losses
                     
Transfers to stage 1
 
 
102
 
 
 
(101
)
   
 
(1
 
 
 
      100       (100              
Transfers to stage 2
 
 
(95
)
 
 
99
 
   
 
(4
 
 
 
      (35     36         (1      
Transfers to stage 3
 
 
(4
 
 
(47
   
 
51
 
 
 
 
      (4     (27       31        
Originations
(1)
 
 
369
 
 
 
 
   
 
 
 
 
369
 
      312                     312  
Maturities
 
 
(192
)
 
 
(182
)
   
 
 
 
 
(374
)
      (216     (129             (345
Changes in risk, parameters and exposures
 
 
(191
)
 
 
374
 
   
 
556
 
 
 
739
 
      (86     269         280       463  
Write-offs
 
 
 
 
 
 
   
 
(310
 
 
(310
                    (86     (86
Recoveries
 
 
 
 
 
 
   
 
28
 
 
 
28
 
                    15       15  
Exchange rate and other
 
 
(6
 
 
(4
)
 
 
 
 
(54
)
 
 
(64
)
 
 
          (2  
 
    (45     (47
Balance at end of period
 
$
  757
 
 
$
  924
 
 
 
 
$
  1,033
 
 
$
2,714
 
 
 
  $   668     $   632    
 
  $   586     $ 1,886  
 
(1)   Includes the impact of the HSBC Canada transaction. Refer to Note 6 for further details.

72   
Royal Bank of Canada
  Second Quarter 2024
 
Note 5 Loans and allowance for credit losses
(continued)
 
 
Key inputs and assumptions
The following provides an update on the key inputs and assumptions used in the measurement of expected credit losses. For further details, refer to Note 2 and Note 5 of our audited 2023 Annual Consolidated Financial Statements.
Our base scenario reflects rising unemployment rates in the near-term and central bank policy interest rate cuts beginning in calendar Q2 2024
 
in Canada as inflation declines towards target levels and beginning in calendar Q4 2024 in the U.S.
 
due to ongoing inflation pressures.
Downside scenarios, including two additional and more severe downside scenarios designed for the energy and real estate sectors, reflect the possibility of a more severe macroeconomic shock beginning in calendar Q3 2024 relative to our base scenario. In these scenarios, conditions are expected to deteriorate from calendar Q2 2024 levels for up to 18 months, followed by a recovery for the remainder of the period.
 
These scenarios assume monetary policy responses that return the economy to a
long-run,
sustainable growth rate within the forecast period.
The upside scenario reflects slightly stronger economic growth than the base scenario, without prompting a further offsetting monetary policy response as compared to our base scenario, followed by a return to a
long-run
sustainable growth rate within the forecast period.
The following provides additional detail about our calendar quarter forecasts for certain key macroeconomic variables used in the models to estimate the allowance for credit losses:
 
 
Unemployment rates
 
– In our base forecast, we expect the Canadian unemployment rate to rise to 6.2% by calendar Q2 2024, peaking at 6.5% in calendar Q3 2024 and returning to its long run equilibrium level by the end of 2026. The U.S. unemployment rate is expected to rise to 3.9% by calendar Q2 2024, and to continue increasing to its long run equilibrium level by calendar Q3 2026.
 
LOGO  
 
 
Gross Domestic Product (GDP
)
– In our base forecast, we expect both Canadian and U.S. GDP to continuously grow in calendar Q2 2024 and thereafter. GDP in calendar Q4 2024 is expected to be 1.8% and 1.7% above Q4 2023 levels in Canada and the U.S., respectively.
 

 

Royal Bank of Canada
  Second Quarter 2024   73
 
 
Oil price (West Texas Intermediate in US$)
 
– In our base forecast, we expect oil prices to average $79 per barrel over the next 12 months from calendar Q2 2024 and $67 per barrel in the following 2 to 5 years. The range of average prices in our alternative downside and upside scenarios is $28 to $101 per barrel for the next 12 months and $42 to $73 per barrel for the following 2 to 5 years. As at October 31, 2023, our base forecast included an average price of $81 per barrel for the next 12 months and $67 per barrel for the following 2 to 5 years.
 
 
Canadian housing price index
– In our base forecast, we expect housing prices to increase by 2.4% over the next 12 months from calendar Q2 2024, with a compound annual growth rate of 3.3% for the following 2 to 5 years. The range of annual housing price growth (contraction) in our alternative real estate downside and upside scenarios is (30.0)% to 10.9% over the next 12 months and 4.2% to 9.6% for the following 2 to 5 years. As at October 31, 2023, our base forecast included housing price growth of 1.6% for the next 12 months and 5.0% for the following 2 to 5 years.

74   
Royal Bank of Canada
  Second Quarter 2024
 
Note 5 Loans and allowance for credit losses
(continued)
 
 
Credit risk exposure by internal risk rating
The following table presents the gross carrying amount of loans measured at amortized cost, and the full contractual amount of undrawn loan commitments subject to the impairment requirements of IFRS 9
Financial Instruments
. Risk ratings are based on internal ratings used in the measurement of expected credit losses as at the reporting date, as outlined in the internal ratings maps for Wholesale and Retail facilities in the Credit risk section of our 2023 Annual Report.
 
  
 
As at    
 
 
 
April 30, 2024
 
 
 
 
October 31, 2023
 
(Millions of Canadian dollars)
 
Stage 1
 
 
Stage 2
 
 
Stage 3 
(1)
 
 
Total
 
 
  
 
Stage 1
 
 
Stage 2
 
 
Stage 3 (1)
 
 
Total
 
Retail
 
 
 
 
 
 
 
 
 
Loans outstanding – Residential mortgages
 
 
 
 
 
 
 
 
 
Low risk
 
$
379,025
 
 
$
2,328
 
 
$
 
 
$
381,353
 
    $ 349,001     $ 1,630     $     $ 350,631  
Medium risk
 
 
21,141
 
 
 
2,003
 
 
 
 
 
 
23,144
 
      19,126       1,610             20,736  
High risk
 
 
1,838
 
 
 
6,122
 
 
 
 
 
 
7,960
 
      1,582       4,927             6,509  
Not rated
(2)
 
 
53,947
 
 
 
1,390
 
 
 
 
 
 
55,337
 
      54,247       1,220             55,467  
Impaired
 
 
 
 
 
 
 
 
983
 
 
 
983
 
                    682       682  
   
 
455,951
 
 
 
11,843
 
 
 
983
 
 
 
468,777
 
        423,956       9,387       682       434,025  
Items not subject to impairment
(3)
                         
 
598
 
                                476  
Total
                         
$
469,375
 
                              $ 434,501  
Loans outstanding – Personal
                 
Low risk
 
$
79,713
 
 
$
1,739
 
 
$
 
 
$
81,452
 
    $ 75,572     $ 1,676     $     $ 77,248  
Medium risk
 
 
6,423
 
 
 
2,870
 
 
 
 
 
 
9,293
 
      5,587       2,915             8,502  
High risk
 
 
576
 
 
 
2,211
 
 
 
 
 
 
2,787
 
      477       2,088             2,565  
Not rated
(2)
 
 
9,904
 
 
 
332
 
 
 
 
 
 
10,236
 
      9,982       157             10,139  
Impaired
 
 
 
 
 
 
 
 
367
 
 
 
367
 
                    280       280  
Total
 
$
96,616
 
 
$
7,152
 
 
$
367
 
 
$
104,135
 
      $ 91,618     $ 6,836     $ 280     $ 98,734  
Loans outstanding – Credit cards
                 
Low risk
 
$
16,932
 
 
$
168
 
 
$
 
 
$
17,100
 
    $ 16,331     $ 135     $     $ 16,466  
Medium risk
 
 
1,888
 
 
 
2,342
 
 
 
 
 
 
4,230
 
      1,771       2,132             3,903  
High risk
 
 
51
 
 
 
2,113
 
 
 
 
 
 
2,164
 
      41       1,734             1,775  
Not rated
(2)
 
 
862
 
 
 
32
 
 
 
 
 
 
894
 
        856       35             891  
Total
 
$
19,733
 
 
$
4,655
 
 
$
 
 
$
24,388
 
      $ 18,999     $ 4,036     $     $ 23,035  
Loans outstanding – Small business
                 
Low risk
 
$
9,233
 
 
$
879
 
 
$
 
 
$
10,112
 
    $ 8,641     $ 920     $     $ 9,561  
Medium risk
 
 
2,412
 
 
 
986
 
 
 
 
 
 
3,398
 
      2,238       936             3,174  
High risk
 
 
141
 
 
 
839
 
 
 
 
 
 
980
 
      99       592             691  
Not rated
(2)
 
 
8
 
 
 
 
 
 
 
 
 
8
 
      11                   11  
Impaired
 
 
 
 
 
 
 
 
291
 
 
 
291
 
                    244       244  
Total
 
$
11,794
 
 
$
2,704
 
 
$
291
 
 
$
14,789
 
      $ 10,989     $ 2,448     $ 244     $ 13,681  
Undrawn loan commitments – Retail
                 
Low risk
 
$
277,233
 
 
$
794
 
 
$
 
 
$
278,027
 
    $ 266,209     $ 610     $     $ 266,819  
Medium risk
 
 
10,211
 
 
 
367
 
 
 
 
 
 
10,578
 
      10,759       298             11,057  
High risk
 
 
786
 
 
 
503
 
 
 
 
 
 
1,289
 
      956       434             1,390  
Not rated
(2)
 
 
7,366
 
 
 
187
 
 
 
 
 
 
7,553
 
        6,686       138             6,824  
Total
 
$
295,596
 
 
$
1,851
 
 
$
 
 
$
297,447
 
      $ 284,610     $ 1,480     $     $ 286,090  
Wholesale – Loans outstanding
                 
Investment grade
 
$
110,383
 
 
$
1,724
 
 
$
 
 
$
112,107
 
    $ 89,037     $ 416     $     $ 89,453  
Non-investment
grade
 
 
173,627
 
 
 
23,301
 
 
 
 
 
 
196,928
 
      156,211       19,210             175,421  
Not rated
(2)
 
 
12,741
 
 
 
738
 
 
 
 
 
 
13,479
 
      10,968       238             11,206  
Impaired
 
 
 
 
 
 
 
 
3,691
 
 
 
3,691
 
                    2,498       2,498  
   
 
296,751
 
 
 
25,763
 
 
 
3,691
 
 
 
326,205
 
        256,216       19,864       2,498       278,578  
Items not subject to impairment
(3)
                         
 
27,362
 
                                9,248  
Total
                         
$
353,567
 
                              $ 287,826  
Undrawn loan commitments – Wholesale
                 
Investment grade
 
$
331,809
 
 
$
300
 
 
$
 
 
$
332,109
 
    $ 312,178     $ 186     $     $ 312,364  
Non-investment
grade
 
 
149,957
 
 
 
11,382
 
 
 
 
 
 
161,339
 
      130,994       13,947             144,941  
Not rated
(2)
 
 
4,232
 
 
 
13
 
 
 
 
 
 
4,245
 
        4,176                   4,176  
Total
 
$
485,998
 
 
$
11,695
 
 
$
 
 
$
497,693
 
      $ 447,348     $ 14,133     $     $ 461,481  
 
(1)   Includes $173 million of purchased credit-impaired loans acquired in the HSBC Canada transaction.
(2)   In certain cases where an internal risk rating is not assigned, we use other approved credit risk assessment or rating methodologies, policies and tools to manage our credit
risk
.
(3)   Items not subject to impairment are loans held at FVTPL.
Loans past due but not impaired
(1), (2)
  
  
 
As at   
 
 
 
April 30, 2024
 
 
 
 
October 31, 2023
 
(Millions of Canadian dollars)
 
30 to 89 days
 
 
90 days
and greater
 
 
Total
 
 
  
 
30 to 89 days
 
 
90 days
and greater
 
 
Total
 
Retail
 
$
2,112
 
 
$
255
 
 
$
2,367
 
    $ 1,840     $ 208     $ 2,048  
Wholesale
 
 
1,133
 
 
 
9
 
 
 
1,142
 
        1,823       49       1,872  
   
$
3,245
 
 
$
264
 
 
$
3,509
 
      $ 3,663     $ 257     $   3,920  
 
(1)   Excludes loans less than 30 days past due as they are not generally representative of the borrowers’ ability to meet their payment obligations.
(2)   Amounts presented may include loans past due as a result of administrative processes, such as mortgage loans on which payments are restrained pending payout due to sale or refinancing, which can fluctuate based on business volumes. Past due loans arising from administrative processes are not representative of the borrowers’ ability to meet their payment obligations.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   75
 
Note 6 Significant acquisition and disposition
 
Acquisition
HSBC Bank Canada
On March 28, 2024, we completed the acquisition of HSBC Bank Canada (HSBC Canada). The acquisition of HSBC Canada (the HSBC Canada transaction) gives us the opportunity to enhance our existing businesses in line with our strategic goals and better positions us to be the bank of choice for commercial clients with international needs, newcomers to Canada and globally connected clients. HSBC Canada results have been consolidated from the closing date and are included in our Personal & Commercial Banking, Wealth Management and Capital Markets segments.
Total consideration of $15.5 billion in cash included $13.5 billion for 100% of the common shares of HSBC Canada, $2.1 billion for the preferred shares and subordinated debt held directly or indirectly by HSBC Holdings plc, $(0.5) billion for the settlement of pre-existing relationships with HSBC Canada and $0.4 billion for an additional amount that accrued from August 30, 2023 to the closing date. This additional amount was calculated based on the $13.5 billion all-cash purchase price for the common shares of HSBC Canada and the Canadian Overnight Repo Rate Average. Relatedly, under a locked box mechanism, HSBC Canada’s earnings from June 30, 2022 to the closing date accrued to RBC and were reflected in the acquired net assets on closing.
Based on the estimated fair values, our preliminary purchase price allocation assigns $108.1 billion to assets and $99.1 billion to liabilities on the acquisition date. Goodwill of $6.4 billion reflects the expected expense synergies from our Personal & Commercial Banking, Wealth Management and Capital Markets operations, expected growth of the platforms, and the ability to cross-sell products between segments. Goodwill is not expected to be deductible for tax purposes.
The following table presents the estimated fair value of the assets acquired and liabilities assumed as at the acquisition date. The estimates for the fair values of the assets acquired and liabilities assumed may be retroactively adjusted to reflect new information obtained about facts and circumstances that existed as at the acquisition date during the measurement period.
 
(Millions of Canadian dollars, except percentage amounts)
 
Percentage of shares acquired
  
 
100
%
 
Purchase consideration
  
$
15,488
 
Fair value of identifiable assets acquired
  
Cash and due from banks
  
$
2,772
 
Securities
  
Trading
  
 
1,110
 
Investment
  
 
21,305
 
Loans
(1)
  
Retail
(2)
  
 
35,353
 
Wholesale
  
 
39,408
 
Derivatives
  
 
3,365
 
Intangible assets
(3)
  
 
2,402
 
Other
(4)
  
 
2,405
 
Total fair value of identifiable assets acquired
  
$
108,120
 
Fair value of identifiable liabilities assumed
  
Deposits
  
Personal
  
 
42,037
 
Business and government
(2)
  
 
44,065
 
Bank
  
 
124
 
Obligations related to assets sold under repurchase agreements and securities loaned
  
 
5,664
 
Derivatives
  
 
3,541
 
Other
(5)
  
 
3,639
 
Total fair value of identifiable liabilities assumed
  
$
99,070
 
Fair value of identifiable net assets acquired
  
$
9,050
 
Goodwill
  
 
6,438
 
Total purchase consideration
  
$
15,488
 
 
(1)   The fair value of loans reflects estimates of incurred and expected future credit losses as at the acquisition date and interest rate premiums or discounts relative to prevailing market rates. As at March 28, 2024, the gross contractual value of the loans is $
75,920
million. The estimate of contractual cash flows not expected to be collected is $
587
 million, of which $
147
million relates to purchased credit-impaired loans.
(2)   Loans – Retail includes $
1.7
billion of Canadian residential mortgages sold with recourse to a mutual fund that do not qualify for derecognition, and Deposits – Business and government includes $
1.7
billion of the related secured borrowing liability.
(3)   Intangible assets include $
1,973
million of core deposit intangibles and $
110
million of customer relationships, which are amortized on a straight-line basis over estimated useful lives of
7
years, and $319 million of mutual fund management contracts with indefinite useful lives.
(4)   Includes Assets purchased under reverse repurchase agreements and securities borrowed, Customers’ liability under acceptances, and Other assets.
(5)   Includes Acceptances, Obligations related to securities sold short, and Other liabilities.

Table of Contents
76   
Royal Bank of Canada
  Second Quarter 2024
 
Note 6 Significant acquisition and disposition
(continued)
 
 
Since the acquisition date, the HSBC Canada transaction contributed revenue of $
245
million and a net loss of $
51
 million to RBC’s consolidated results. The net loss of $
51
million includes initial PCL on purchased performing financial assets of $
200
 million ($
145
million after-tax).
Assuming we acquired HSBC Canada on November 1, 2023, using the same fair value estimates and not reflecting any potential synergies, we estimate that RBC’s consolidated revenue and net income for the six months ended April 30, 2024 would be $
28.9
billion and $
8.0
billion, respectively.
RBC’s consolidated results include transaction and integration costs of $
358
million for the three months ended April 30, 2024 and $
623
million for the six months ended April 30, 2024, recognized in Non-interest expense.
Disposition
Wealth Management
On December 1, 2023, we completed the previously announced sale of the RBC Investor Services
®
business in Jersey to CACEIS, the asset servicing banking group of Crédit Agricole S.A. and Banco Santander, S.A. On March 25, 2024, we completed the previously announced sale of the business of the U.K. branch of RBC Investor Services Trust to CACEIS. The transaction did not have a significant impact on our Interim Condensed Consolidated Statements of Income.
 
Note 7 Deposits
 
 
        As at      
   
April 30, 2024
        October 31, 2023  
(Millions of Canadian dollars)  
Demand
(1)
   
Notice
(2)
   
Term
(3)
   
Total
         Demand (1)     Notice (2)     Term (3)     Total  
Personal
 
$
198,437
 
 
$
61,226
 
 
$
240,219
 
 
$
499,882
 
    $ 186,530     $ 57,614     $ 197,802     $ 441,946  
Business and government
 
 
350,716
 
 
 
18,616
 
 
 
425,602
 
 
 
794,934
 
      316,200       19,056       409,819       745,075  
Bank
 
 
8,865
 
 
 
655
 
 
 
23,267
 
 
 
32,787
 
        7,996       769       35,901       44,666  
   
$
558,018
 
 
$
80,497
 
 
$
689,088
 
 
$
1,327,603
 
      $ 510,726     $ 77,439     $ 643,522     $ 1,231,687  
Non-interest-bearing
(4)
                 
Canada
 
$
145,770
 
 
$
6,739
 
 
$
181
 
 
$
152,690
 
    $ 132,994     $ 6,107     $ 168     $ 139,269  
United States
 
 
36,917
 
 
 
 
 
 
 
 
 
36,917
 
      40,646                   40,646  
Europe
(5)
 
 
11
 
 
 
 
 
 
 
 
 
11
 
      17                   17  
Other International
 
 
7,349
 
 
 
 
 
 
 
 
 
7,349
 
      7,265                   7,265  
Interest-bearing
(4)
                 
Canada
 
 
338,103
 
 
 
14,701
 
 
 
557,810
 
 
 
910,614
 
      302,746       14,641       493,347       810,734  
United States
 
 
19,916
 
 
 
58,106
 
 
 
73,057
 
 
 
151,079
 
      16,210       55,895       78,837       150,942  
Europe
(5)
 
 
4,329
 
 
 
877
 
 
 
41,421
 
 
 
46,627
 
      5,353       726       51,812       57,891  
Other International
 
 
5,623
 
 
 
74
 
 
 
16,619
 
 
 
22,316
 
        5,495       70       19,358       24,923  
   
$
558,018
 
 
$
80,497
 
 
$
689,088
 
 
$
1,327,603
 
      $ 510,726     $ 77,439     $ 643,522     $ 1,231,687  
 
(1)   Demand deposits are deposits for which we do not have the right to require notice of withdrawal, which include both savings and chequing accounts.
(2)   Notice deposits are deposits for which we can legally require notice of withdrawal. These deposits are primarily savings accounts.
(3)   Term deposits are deposits payable on a fixed date, and include term deposits, guaranteed investment certificates and similar instruments.
(4)   The geographical splits of the deposits are based on the point of origin of the deposits and where the revenue is recognized. As at April 30, 2024, deposits denominated in U.S. dollars, British pounds, Euro and other foreign currencies were $458 billion, $32 billion, $50 billion and $30 billion, respectively (October 31, 2023 – $445 billion, $34 billion, $49 billion and $32 billion, respectively).
(5)   Europe includes the United Kingdom and the Channel Islands.
Contractual maturities of term deposits
 
      As at     
(Millions of Canadian dollars)
 
April 30
2024
   
October 31
2023
 
Within 1 year:
   
less than 3 months
 
$
183,636
 
  $ 182,373  
3 to 6 months
 
 
94,976
 
    69,868  
6 to 12 months
 
 
153,786
 
    151,079  
1 to 2 years
 
 
77,999
 
    76,232  
2 to 3 years
 
 
58,863
 
    49,965  
3 to 4 years
 
 
43,241
 
    36,774  
4 to 5 years
 
 
28,565
 
    36,506  
Over 5 years
 
 
48,022
 
    40,725  
   
$
689,088
 
  $ 643,522  
Aggregate amount of term deposits in denominations of one hundred thousand dollars or more
 
$
619,000
 
  $ 586,000  

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   77
 
Note 8 Insurance and reinsurance
 
Insurance and reinsurance contracts by measurement components
(1)
The following table presents the measurement components of assets and liabilities for insurance contracts issued and reinsurance contracts held by estimates of present value of future cash flows, risk adjustment for
non-financial
risk and CSM. These contracts are presented on a portfolio basis such that portfolios of contracts that are in an asset position are presented separately from those that are in a liability position. Financial assets held in support of the insurance and reinsurance contracts are not reflected in this table.
 
        As at  
   
April 30, 2024
        October 31, 2023  
(Millions of Canadian dollars)  
Estimates of
present value
of future
cash flows
   
Risk
adjustment for
non-financial

risk
   
CSM
   
Total
         Estimates of
present value
of future
cash flows
    Risk
adjustment for
non-financial

risk
    CSM     Total  
Insurance contract assets
(2)
 
$
1,929
 
 
$
(595
 
$
(549
 
$
785
 
      $ 1,790     $ (544   $ (565   $ 681  
Insurance contract liabilities 
(3)
                 
Insurance contract liabilities for segregated funds
 
$
(3,071
 
$
(19
 
$
(71
 
$
(3,161
    $ (2,553   $ (15   $ (64   $ (2,632
Insurance contract liabilities excluding segregated funds
 
 
(13,943
 
 
(1,978
 
 
(2,117
 
 
(18,038
        (11,955     (2,308     (2,131     (16,394
   
$
(17,014
 
$
(1,997
 
$
 (2,188
 
$
 (21,199
      $ (14,508   $ (2,323   $ (2,195   $ (19,026
Reinsurance contract held assets 
(2), (3)
 
$
391
 
 
$
538
 
 
$
731
 
 
$
1,660
 
      $ 327     $ 469     $    786     $    1,582  
Reinsurance contract held liabilities
(4)
 
$
(68
 
$
10
 
 
$
26
 
 
$
(32
      $ (42   $ 6     $ 18     $ (18
CSM for insurance contracts, net of reinsurance contracts held
                 
$
(1,980
                              $ (1,956        
 
(1)   Includes contracts measured using the GMM and VFA that have CSM and contracts measured using the PAA in which CSM is not applicable.
(2)  
Presented in Other assets.
(3)   Insurance contract liabilities and reinsurance contract held assets primarily relate to balances for remaining coverage for future services on contracts measured using the GMM or VFA.
(4)  
Presented in Other liabilities.
Insurance service and insurance investment results
The following table provides the composition of Insurance service result and Insurance investment result for insurance contracts issued and reinsurance contracts held.
 
     For the three months ended     For the six months ended  
(Millions of Canadian dollars)
 
April 30
2024
   
April 30
2023
 (1)
   
April 30
2024
   
April 30
2023
(1)
 
Insurance service result
       
Insurance revenue
 
$
1,247
 
  $ 1,205    
$
2,452
 
  $ 2,309  
Insurance service expense
 
 
(1,000
    (930  
 
(1,984
    (1,783
Net income (expense) from reinsurance contracts held
 
 
(44
    (50  
 
(78
    (109
   
$
203
 
  $ 225    
$
390
 
  $ 417  
Insurance investment result
       
Net investment income
 
$
86
 
  $ 144    
$
2,104
 
  $ 1,163  
Insurance finance income (expense)
 
 
(20
    (167  
 
(1,996
    (1,301
Reinsurance finance income (expense)
 
 
(7
    37    
 
92
 
    79  
   
$
59
 
  $ 14    
$
200
 
  $ (59
Insurance service and insurance investment results
 
$
262
 
  $ 239    
$
590
 
  $ 358  
 
(1)   The 2023 amounts may not be fully comparable to the current period as we were not managing our asset and liability portfolios under IFRS 17 and Net investment income was not restated for the reclassifications of certain eligible financial assets. Refer to Note 2 for further details.

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78   
Royal Bank of Canada
  Second Quarter 2024
 
Note 9 Employee benefits – Pension and other post-employment benefits
 
We offer a number of defined benefit and defined contribution plans which provide pension and post-employment benefits to eligible employees. The following tables present the composition of our pension and other post-employment benefit expense and the effects of remeasurements recorded in OCI:
Pension and other post-employment benefit expense
 
     For the three months ended  
    Pension plans        
Other post-employment benefit plans
 
(Millions of Canadian dollars)
 
April 30
2024
   
April 30
2023
        
April 30
2024
   
April 30
2023
 
Current service costs
 
$
47
 
  $ 49      
$
8
 
  $ 8  
Net interest expense (income)
 
 
(37
    (40    
 
20
 
    20  
Remeasurements of other long-term benefits
 
 
 
         
 
(1
    1  
Administrative expense
 
 
4
 
    3    
 
 
 
 
     
Defined benefit pension expense
 
 
14
 
    12      
 
27
 
    29  
Defined contribution pension expense
 
 
98
 
    76    
 
 
 
 
     
 
 
$
112
 
  $ 88    
 
 
$
27
 
  $ 29  
 
     For the six months ended  
    Pension plans        
Other post-employment benefit plans
 
(Millions of Canadian dollars)
 
April 30
2024
   
April 30
2023
        
April 30
2024
   
April 30
2023
 
Current service costs
 
$
93
 
  $ 98      
$
16
 
  $ 16  
Net interest expense (income)
 
 
(75
    (81    
 
40
 
    39  
Remeasurements of other long-term benefits
 
 
 
         
 
9
 
    3  
Administrative expense
 
 
8
 
    6    
 
 
 
 
     
Defined benefit pension expense
 
 
26
 
    23      
 
65
 
    58  
Defined contribution pension expense
 
 
204
 
    161    
 
 
 
 
     
 
 
$
230
 
  $ 184    
 
 
$
65
 
  $ 58  
Pension and other post-employment benefit remeasurements
(1)
 
     For the three months ended  
    Defined benefit pension plans        
Other post-employment benefit plans
 
(Millions of Canadian dollars)
 
April 30
2024
   
April 30
2023
        
April 30
2024
   
April 30
2023
 
Actuarial (gains) losses:
         
Changes in financial assumptions
(2)
 
$
(548
  $ 132      
$
(50
  $ 15  
Experience adjustments
 
 
 
         
 
(1
    (2
Return on plan assets (excluding interest based on discount rate)
 
 
465
 
    33    
 
 
 
 
     
 
 
$
(83
  $ 165    
 
 
$
(51
  $ 13  
 
     For the six months ended  
    Defined benefit pension plans        
Other post-employment benefit plans
 
(Millions of Canadian dollars)
 
April 30
2024
   
April 30
2023
        
April 30
2024
   
April 30
2023
 
Actuarial (gains) losses:
         
Changes in financial assumptions
(2)
 
$
723
 
  $ 904      
$
70
 
  $ 90  
Experience adjustments
 
 
 
         
 
 
    (2
Return on plan assets (excluding interest based on discount rate)
 
 
(1,004
    (561  
 
 
 
 
     
 
 
$
(281
  $ 343    
 
 
$
70
 
  $ 88  
 
(1)   Market based assumptions, including Changes in financial assumptions and Return on plan assets, are reviewed on a quarterly basis. All other assumptions are updated during our annual review of plan assumptions.
(2)   Changes in financial assumptions in our defined benefit pension plans primarily relate to changes in discount rates.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   79
 
Note 10 Income taxes
 
Tax examinations and assessments
During the second quarter of 2024, we received proposal letters (the Proposals) from the Canada Revenue Agency (CRA) in respect of the 2019 taxation year, which suggested that Royal Bank of Canada owes additional taxes of approximately $277 million as the CRA denied the deductibility of certain dividends. This amount represents the maximum additional taxes owing for that year. The Proposals are consistent with the previously received reassessments as described in Note 22 of our 2023 Annual Consolidated Financial Statements. It is possible that the CRA will reassess us for significant additional income taxes for subsequent years on the same basis. In all cases, we are confident that our tax filing position was appropriate and intend to defend ourselves vigorously.
Pillar Two model rules
The 2023 and 2024 Canadian Federal budgets reinforced the Government of Canada’s commitment to the Organisation for Economic
Co-operation
and Development’s
two-pillar
plan for international tax reform, including a global
 
15
%
minimum tax on multinational enterprises (under the Pillar Two model rules), and the associated draft legislation for a Global Minimum Tax Act was first released by the Government on August 4, 2023. The timing of the enactment of these proposed rules in Canada remains uncertain, and the legislation remains subject to amendment prior to enactment. While the Pillar Two model rules are not yet substantively enacted in Canada, certain
non-Canadian
jurisdictions where we have operations have enacted or substantively enacted legislation implementing these rules. The impact on RBC continues to be assessed and will depend on numerous variables including, among others, the final legislation enacted across the various jurisdictions in which we operate. We continue to actively monitor developments. 
 
Note 11 Significant capital and funding transactions
 
Preferred shares and other equity instruments
On November 7, 2023, we redeemed all 15 thousand of our issued and outstanding
Non-Cumulative
First Preferred Shares Series
C-2
at a redemption price of US$1,000 per share. Concurrently, we redeemed all 615 thousand Series
C-2
depositary shares, each of which represents a
one-fortieth
interest in a Series
C-2
share.
On January 25, 2024, we issued 750 thousand
Non-Cumulative
5-Year
Fixed Rate Reset First Preferred Shares Series BU to certain institutional investors, at a price of $1,000 per share, for total gross proceeds of $750 million. For the initial period ending February 24, 2029, the shares pay semi-annual cash dividends, if declared, at a rate of 7.408% per annum. The dividend rate will reset every fifth year at a rate equal to the
5-year
Government of Canada bond yield plus a premium of 3.90%. Subject to the consent of the Office of the Superintendent of Financial Institutions (OSFI) and the requirements of the
Bank Act
(Canada), we may redeem the Series BU Preferred Shares in whole or in part at par during the period from January 25, 2029, to and including February 24, 2029, and during the period from January 24 to and including February 24 every fifth year thereafter. The shares include
non-viability
contingency capital (NVCC) provisions necessary for them to qualify as Tier 1 regulatory capital under Basel III.
On April 24, 2024, we issued US$1,000 million of Limited Recourse Capital Notes Series 4 (LRCN Series 4) with recourse limited to assets (Trust Assets) held by a third-party trustee in a consolidated trust (Limited Recourse Trust). The Trust Assets consist of US$1,000 million of our First Preferred Shares, Series BV (Series BV Preferred Shares), issued concurrently with LRCN Series 4 at a price of US$1,000 per Series BV Preferred Share.
The price per LRCN Series 4 note is US$1,000 and will bear interest paid quarterly at a fixed rate of 7.5% per annum until May 2, 2029 and thereafter at a rate per annum, reset every fifth year, equal to the U.S. Treasury Rate plus 2.887% until maturity on May 2, 2084. In the event of (i) non-payment of interest on any interest payment date, (ii) non-payment of the redemption price in case of a redemption of LRCN Series 4, (iii) non-payment of principal at the maturity of LRCN Series 4, or (iv) an event of default on the notes, noteholders will have recourse only to the Trust Assets and each noteholder will be entitled to receive its pro rata share of the Trust Assets. In such an event, the delivery of the Trust Assets will represent the full and complete extinguishment of our obligations under LRCN Series 4.
LRCN Series 4 are redeemable on or prior to maturity to the extent we redeem Series BV Preferred Shares on certain redemption dates as set out in the terms of Series BV Preferred Shares and subject to the consent and approval of OSFI.
The terms of Series BV Preferred Shares and LRCN Series 4 include NVCC provisions necessary for them to qualify as Tier 1 regulatory capital under Basel III. NVCC provisions require the conversion of the instrument into a variable number of common shares in the event that OSFI deems the Bank non-viable or a federal or provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection. In such an event, LRCN Series 4 will be automatically redeemed and the redemption price will be satisfied by the delivery of the Trust Assets, which will consist of common shares pursuant to an automatic conversion of Series BV Preferred Shares. The terms of Series BV Preferred Shares include an automatic conversion
formula with a conversion price based on the greater of: (i) a floor price of $
5.00
and (ii) the current market price of our common shares based on the volume weighted average trading price of our common shares on the Toronto Stock Exchange. The number of common shares issued in respect of each Series BV Preferred Share will be determined by dividing the share value of Series BV Preferred Shares (including declared and unpaid dividends) by the conversion price. The number of common shares delivered to each noteholder will be based on such noteholder’s pro rata interest in the Trust Assets.
LRCN Series 4 are compound instruments with both equity and liability features as payments of interest and principal in cash are made at our discretion. Non-payment of interest and principal in cash does not constitute an event of default and will trigger a delivery of Series BV Preferred Shares. The liability component of the notes has a nominal value and, as a result, the full proceeds received have been presented as equity.
On May 24, 2024, we redeemed all
20
 million of our issued and outstanding Non-Cumulative 5-Year Rate Reset First Preferred Shares Series AZ at a price of $
25.00 per share.

80   
Royal Bank of Canada
  Second Quarter 2024
 
Note 11 Significant capital and funding transactions
(continued)
 
 
Subordinated debentures
On April 2, 2024, we issued $2,000 million of NVCC subordinated debentures. The notes bear interest at a fixed rate of 5.096% per annum until April 3, 2029, and at the Daily Compounded Canadian Overnight Repo Rate Average plus 1.56% thereafter until maturity on April 3, 2034.
Common shares issued
 
     For the three months ended  
   
April 30, 2024
        April 30, 2023  
(Millions of Canadian dollars, except number of shares)  
Number of
shares
(thousands)
   
Amount
         Number of
shares
(thousands)
    Amount  
Issued in connection with share-based compensation plans
(1)
 
 
228
 
 
$
22
 
      235     $ 21  
Issued in connection with dividend reinvestment plan
(2)
 
 
5,715
 
 
 
740
 
        4,604       621  
   
 
5,943
 
 
$
762
 
        4,839     $ 642  
 
     For the six months ended  
   
April 30, 2024
        April 30, 2023  
(Millions of Canadian dollars, except number of shares)  
Number of
shares
(thousands)
   
Amount
         Number of
shares
(thousands)
    Amount  
Issued in connection with share-based compensation plans
(1)
 
 
628
 
 
$
60
 
      504     $ 45  
Issued in connection with dividend reinvestment plan
(2)
 
 
11,850
 
 
 
1,460
 
        4,604       621  
   
 
12,478
 
 
$
1,520
 
        5,108     $ 666  
 
(1)   Amounts include cash received for stock options exercised during the period and the fair value adjustment to stock options.
(2)   The requirements of our dividend reinvestment plan (DRIP) are satisfied through either open market share purchases or shares issued from treasury. During the three and six months ended April 30, 2024 our DRIP requirements were satisfied through shares issued from treasury. During the three months ended April 30, 2023 our DRIP requirements were satisfied through shares issued from treasury. During the three months ended January 31, 2023 our DRIP requirements were satisfied through open market share purchases.
 
Note 12 Earnings per share
 
 
     For the three months ended          For the six months ended  
(Millions of Canadian dollars, except share and per share amounts)  
April 30
2024
   
April 30
2023
(Restated – Note 2)
        
April 30
2024
   
April 30
2023
(Restated – Note 2)
 
Basic earnings per share
         
Net income
 
$
3,950
 
  $ 3,680      
$
7,532
 
  $ 6,813  
Dividends on preferred shares and distributions on other equity
instruments
 
 
(67
    (67    
 
(125
    (111
Net income attributable to
non-controlling
interests
 
 
(2
    (1      
 
(4
    (3
Net income available to common shareholders
 
$
 
3,881
 
  $ 3,612        
$
7,403
 
  $ 6,699  
Weighted average number of common shares (in thousands)
 
 
 
1,412,651
 
    1,388,388      
 
1,409,452
 
    1,385,525  
Basic earnings per share (in dollars)
 
$
2.75
 
  $ 2.60        
$
5.25
 
  $ 4.83  
Diluted earnings per share
         
Net income available to common shareholders
 
$
3,881
 
  $ 3,612        
$
7,403
 
  $ 6,699  
Weighted average number of common shares (in thousands)
 
 
1,412,651
 
    1,388,388      
 
1,409,452
 
    1,385,525  
Stock options
(1)
 
 
1,489
 
    1,735      
 
1,364
 
    1,744  
Issuable under other share-based compensation plans
 
 
26
 
    26        
 
26
 
    26  
Average number of diluted common shares (in thousands)
 
 
1,414,166
 
    1,390,149      
 
1,410,842
 
    1,387,295  
Diluted earnings per share (in dollars)
 
$
2.74
 
  $ 2.60        
$
5.25
 
  $ 4.83  
 
(1)   The dilutive effect of stock options was calculated using the treasury stock method. When the exercise price of options outstanding is greater than the average market price of our common shares, the options are excluded from the calculation of diluted earnings per share. For the three months ended April 30, 2024, no outstanding options were excluded from the calculation of diluted earnings per share. For the six months ended April 30, 2024, an average of 1,060,719 outstanding options with an average exercise price of $131.64 were excluded from the calculation of diluted earnings per share. For the three and six months ended April 30, 2023, no outstanding options were excluded from the calculation of diluted earnings per share.

Table of Contents
Royal Bank of Canada
  Second Quarter 2024   81
 
Note 13 Legal and regulatory matters
 
We are a large global institution that is subject to many different complex legal and regulatory requirements that continue to evolve. We are and have been subject to a variety of legal proceedings, including civil claims and lawsuits, regulatory examinations, investigations, audits and requests for information by various governmental regulatory agencies and law enforcement authorities in various jurisdictions. Some of these matters may involve novel legal theories and interpretations and may be advanced under criminal as well as civil statutes, and some proceedings could result in the imposition of civil, regulatory enforcement or criminal penalties. We review the status of all proceedings on an ongoing basis and will exercise judgment in resolving them in such manner as we believe to be in our best interest. In many proceedings, it is inherently difficult to determine whether any loss is probable or to reliably estimate the amount of any loss. This is an area of significant judgment and uncertainty and the extent of our financial and other exposure to these proceedings after taking into account current provisions could be material to our results of operations in any particular period though we do not believe that the ultimate resolution of any such matter will have a material effect on our consolidated financial condition.
Our significant legal proceedings and regulatory matters are described in Note 25 of our audited 2023 Annual Consolidated Financial Statements and as updated below. Based on the facts currently known, except as may otherwise be noted, it is not possible at this time for us to predict the ultimate outcome of these proceedings or the timing of their resolution.
London interbank offered rate (LIBOR) litigation
On December 12, 2023, the settlement agreement resolving one of the LIBOR class actions brought on behalf of certain plaintiffs that purchased U.S. dollar LIBOR-based instruments was granted final court approval. Royal Bank of Canada remains a defendant in other LIBOR class actions.
Royal Bank of Canada Trust Company (Bahamas) Limited proceedings
On December 11, 2023, the U.S. Department of Labor published a technical correction to the prior
one-year
exemption reflecting the fact that the pending French Court of Appeal’s decision would be rendered by an appellate court, and not the district court.
On March 5, 2024, the Court of Appeal rendered a judgment of conviction (the Conviction) against Royal Bank of Canada Trust Company (Bahamas) Limited (RBC Bahamas) and the other parties. RBC Bahamas was ordered by the Court of Appeal to pay a fine of
5,000
in connection with the Conviction. In addition, the Court of Appeal ordered that certain of those convicted of complicity in the matter, including RBC Bahamas, are jointly liable for the allegedly unpaid inheritance taxes owing, plus penalties and interest (such aggregate amount will be determined in separate proceedings before the tax courts, to which RBC Bahamas is not a party). RBC Bahamas believes that its actions did not violate French law, and has appealed the Conviction to the French Supreme Court. Under French law, upon the filing of an appeal by RBC Bahamas, the Conviction, as well as its effects (fine and joint liability) were stayed pending the outcome of the appeal.
As previously disclosed, in 2016 Royal Bank of Canada was granted an exemption by the U.S. Department of Labor that allows Royal Bank of Canada and its current and future affiliates to continue to qualify for the Qualified Professional Asset Manager (QPAM) exemption under the Employee Retirement Income Security Act despite any potential conviction of RBC Bahamas in the French proceeding for a temporary one-year period from the date of conviction. As a result of the Conviction, the temporary one-year period commenced on March 5, 2024. Royal Bank of Canada is seeking longer term relief from the Department of Labor.

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82   
Royal Bank of Canada
  Second Quarter 2024
 
Note 14 Results by business segment
 
Composition of business segments
For management purposes, based on the products and services offered, we are organized into four business segments: Personal & Commercial Banking, Wealth Management, Insurance and Capital Markets.
 
    
For the three months ended April 30, 2024
 
(Millions of Canadian dollars)  
Personal &
Commercial
Banking 
(1)
   
Wealth
Management 
(1)
   
Insurance
   
Capital
Markets 
(1), (2)
   
Corporate
Support
(2)
   
Total
 
Net interest income
(3)
 
$
4,400
 
 
$
1,136
 
 
$
 
 
$
764
 
 
$
323
 
 
$
6,623
 
Non-interest
income
 
 
1,590
 
 
 
3,482
 
 
 
298
 
 
 
2,390
 
 
 
(229
 
 
7,531
 
Total revenue
 
 
5,990
 
 
 
4,618
 
 
 
298
 
 
 
3,154
 
 
 
94
 
 
 
14,154
 
Provision for credit losses
 
 
754
 
 
 
27
 
 
 
 
 
 
137
 
 
 
2
 
 
 
920
 
Non-interest
expense
 
 
2,428
 
 
 
3,653
 
 
 
69
 
 
 
1,722
 
 
 
436
 
 
 
8,308
 
Income (loss) before income taxes
 
 
2,808
 
 
 
938
 
 
 
229
 
 
 
1,295
 
 
 
(344
 
 
4,926
 
Income taxes (recoveries)
 
 
757
 
 
 
169
 
 
 
52
 
 
 
33
 
 
 
(35
 
 
976
 
Net income
 
$
2,051
 
 
$
769
 
 
$
177
 
 
$
1,262
 
 
$
(309
 
$
3,950
 
Non-interest
expense includes:
           
Depreciation and amortization
 
$
280
 
 
$
309
 
 
$
(1
 
$
130
 
 
$
(7
 
$
711
 
           
     For the three months ended April 30, 2023 (Restated – Note 2)  
(Millions of Canadian dollars)   Personal &
Commercial
Banking
    Wealth
Management (4), (5)
    Insurance     Capital
Markets (2), (5)
    Corporate
Support (2), (4)
    Total  
Net interest income
(3)
  $ 3,817     $ 1,089     $     $ 951     $ 242     $ 6,099  
Non-interest
income
    1,481       3,305       272       1,711       (423     6,346  
Total revenue
    5,298       4,394       272       2,662       (181     12,445  
Provision for credit losses
    422       28             150             600  
Non-interest
expense
    2,257       3,447       65       1,510       121       7,400  
Income (loss) before income taxes
    2,619       919       207       1,002       (302     4,445  
Income taxes (recoveries)
    704       200       37       40       (216     765  
Net income
  $ 1,915     $ 719     $ 170     $ 962     $ (86   $ 3,680  
Non-interest
expense includes:
           
Depreciation and amortization
  $ 240     $ 312     $ 16     $ 128     $     $ 696  

Royal Bank of Canada
  Second Quarter 2024   83

 
    
For the six months ended April 30, 2024
 
(Millions of Canadian dollars)  
Personal &
Commercial
Banking 
(1)
   
Wealth
Management 
(1)
   
Insurance
   
Capital
Markets 
(1), (2)
   
Corporate
Support
(2)
   
Total
 
Net interest income
(3)
 
$
8,616
 
 
$
2,286
 
 
$
 
 
$
1,425
 
 
$
628
 
 
$
12,955
 
Non-interest
income
 
 
3,168
 
 
 
6,869
 
 
 
661
 
 
 
4,680
 
 
 
(694
 
 
14,684
 
Total revenue
 
 
11,784
 
 
 
9,155
 
 
 
661
 
 
 
6,105
 
 
 
(66
 
 
27,639
 
Provision for credit losses
 
 
1,388
 
 
 
38
 
 
 
1
 
 
 
304
 
 
 
2
 
 
 
1,733
 
Non-interest
expense
 
 
4,767
 
 
 
7,421
 
 
 
140
 
 
 
3,364
 
 
 
940
 
 
 
16,632
 
Income (loss) before income taxes
 
 
5,629
 
 
 
1,696
 
 
 
520
 
 
 
2,437
 
 
 
(1,008
 
 
9,274
 
Income taxes (recoveries)
 
 
1,517
 
 
 
321
 
 
 
123
 
 
 
21
 
 
 
(240
 
 
1,742
 
Net income
 
$
4,112
 
 
$
1,375
 
 
$
397
 
 
$
2,416
 
 
$
(768
 
$
7,532
 
Non-interest
expense includes:
           
Depreciation and amortization
 
$
515
 
 
$
620
 
 
$
3
 
 
$
254
 
 
$
(9
 
$
1,383
 
           
     For the six months ended April 30, 2023 (Restated – Note 2)  
(Millions of Canadian dollars)   Personal &
Commercial
Banking
    Wealth
Management (4), (5)
    Insurance     Capital
Markets (2), (5)
    Corporate
Support (2), (4)
    Total  
Net interest income
(3)
  $ 7,824     $ 2,305     $     $ 1,743     $ 429     $ 12,301  
Non-interest
income
    3,015       6,649       426       4,065       (654     13,501  
Total revenue
    10,839       8,954       426       5,808       (225     25,802  
Provision for credit losses
    823       94             215             1,132  
Non-interest
expense
    4,486       6,881       135       3,211       276       14,989  
Income (loss) before income taxes
    5,530       1,979       291       2,382       (501     9,681  
Income taxes (recoveries)
    1,489       430       54       179       716       2,868  
Net income
  $ 4,041     $ 1,549     $ 237     $ 2,203     $ (1,217   $ 6,813  
Non-interest
expense includes:
           
Depreciation and amortization
  $ 481     $ 613     $ 24     $ 255     $     $ 1,373  
 
(1)   On March 28, 2024, we completed the HSBC Canada transaction. HSBC Canada results have been consolidated from the closing date, and are included in our Personal & Commercial Banking, Wealth Management and Capital Markets segments. For further details, refer to Note 6.
(2)   Taxable equivalent basis.
(3)   Interest revenue is reported net of interest expense as we rely primarily on net interest income as a performance measure.
(4)   Amounts for the three months and six months ended April 30, 2023 have been revised from those previously presented.
(5)   Effective the fourth quarter of 2023, we moved the Investor Services lending business from our Wealth Management segment to our Capital Markets segment. Therefore, comparative results for the three months and six months ended April 30, 2023 have been revised from those previously presented.
Total assets and total liabilities by business segment
 

  
 
As at April 30, 2024
 
(Millions of Canadian dollars)
 
Personal &
Commercial
Banking 
(1)
 
 
Wealth
Management 
(1)
 
 
Insurance
 
 
Capital
Markets 
(1)
 
 
Corporate
Support
 
 
Total
 
Total assets
 
$
729,204
 
 
$
176,140
 
 
$
27,715
 
 
$
1,011,787
 
 
$
86,204
 
 
$
2,031,050
 
Total liabilities
 
 
729,106
 
 
 
174,502
 
 
 
27,681
 
 
 
1,011,172
 
 
 
(33,015
 
 
1,909,446
 
                                     
     As at October 31, 2023 (Restated – Note 2)  
(Millions of Canadian dollars)   Personal &
Commercial
Banking
   
Wealth
Management
    Insurance    
Capital
Markets
    Corporate Support     Total  
Total assets
  $ 636,046     $ 179,227     $ 24,130     $ 1,100,172     $ 66,956     $ 2,006,531  
Total liabilities
    635,952       177,389       24,895       1,099,893       (46,745     1,891,384  
 
(1)   Includes the impact of the HSBC Canada transaction. Refer to Note 6 for further details.

Table of Contents
84   
Royal Bank of Canada
  Second Quarter 2024
 
Note 15 Capital management
 
Regulatory capital and capital ratios
OSFI formally establishes risk-based capital and leverage minimums and Total Loss Absorbing Capacity (TLAC) ratios for deposit-taking institutions in Canada. During the second
 
quarter of 2024, we complied with all applicable capital, leverage and TLAC requirements, including the Domestic Stability Buffer, imposed by OSFI.
 
      As at   
(Millions of Canadian dollars, except percentage amounts and as otherwise noted)
 
April 30
2024
   
October 31
2023
 
Capital
(1), (2)
   
CET1 capital
 
$
83,497
 
  $ 86,611  
Tier 1 capital
 
 
92,444
 
    93,904  
Total capital
 
 
105,353
 
    104,952  
Risk-weighted assets (RWA) used in calculation of capital ratios
(1), (2)
   
Credit risk
 
$
531,381
 
  $ 475,842  
Market risk
 
 
35,156
 
    40,498  
Operational risk
 
 
87,165
 
    79,883  
Total RWA
 
$
653,702
 
  $ 596,223  
Capital ratios and Leverage ratio
(1), (2)
   
CET1 ratio
 
 
12.8%
 
    14.5%  
Tier 1 capital ratio
 
 
14.1%
 
    15.7%  
Total capital ratio
 
 
16.1%
 
    17.6%  
Leverage ratio
 
 
4.2%
 
    4.3%  
Leverage ratio exposure
 
$
2,219,019
 
  $ 2,179,590  
TLAC available and ratios
(1), (3)
   
TLAC available
 
$
179,902
 
  $ 184,916  
TLAC ratio
 
 
27.5%
      31.0%
TLAC leverage ratio
 
 
8.1%
      8.5%
 
(1)   As prior period restatements are not required by OSFI, there was no impact from the adoption of IFRS 17 on regulatory capital, RWA, capital ratios, leverage ratio, TLAC available and TLAC ratios for periods prior to November 1, 2023.
(2)   Capital, RWA, and capital ratios are calculated using OSFI’s Capital Adequacy Requirements (CAR) guideline and the Leverage ratio is calculated using OSFI’s Leverage Requirements (LR) guideline. Both the CAR guideline and LR guideline are based on the Basel III framework. The period ended October 31, 2023 reflects our adoption of the revised CAR and LR guidelines that came into effect in Q2 2023, as further updated on October 20, 2023 as part of OSFI’s implementation of the Basel III reforms. The period ended April 30, 2024 also reflects our adoption of the revised market risk and CVA frameworks that came into effect on November 1, 2023.
(3)   TLAC available and TLAC ratios are calculated using OSFI’s TLAC guideline. The TLAC standard is applied at the resolution entity level which for us is deemed to be Royal Bank of Canada and its subsidiaries. A resolution entity and its subsidiaries are collectively called a resolution group. The TLAC ratio and TLAC leverage ratio are calculated using the TLAC available as percentage of total RWA and leverage exposure, respectively.