Always earning the right to be our clients' first choice

152 Pages·2005·1.62 MB·English

Royal Bank of Canada 2005 Annual Report
Always
earning the right
to be our clients’
first choice
Our vision Values Strategic goals
• Always earning the right to be • Excellent service to clients and • To be the undisputed leader in
our clients’ first choice each other the financial services industry
in Canada
• Working together to succeed
• To build onour strengths in
• Personal responsibility
banking, wealth management
for high performance
and capital markets in the
United States
• Diversity for growth and
innovation
• To be a premier provider
of selected global financial
• Trust through integrity in
services
everything we do
1 Financial highlights 12 RBCU.S. and International 29 Financial review
2 Chairman’s message Personal andBusiness 141 Glossary
3 Chief Executive Officer’s 16 RBCCapital Markets 143 Directors and executive officers
message 20 CorporateSupport 144 Corporate governance
7 Performancecompared to 21 Responding to you – Frequently 146 Principal subsidiaries
objectives asked questions 147 Shareholder information
8 RBCCanadian Personal and 25 Corporate responsibility
Business
This annual report contains forward-looking statements within the meaning of certain securities laws, including the “safe harbour” provisions of the
Securities Act(Ontario) and the United States Private Securities Litigation Reform Actof 1995.We caution readers not to place undue reliance on
these statements as a number of important factors could cause our actual results to differ materially from the beliefs, plans, objectives, expectations,
anticipations, estimates, and intentions expressed in such forward-looking statements.Additional information about these factors can be found
under“Caution regarding forward-looking statements” on page 29.
RBC at a glance RBC Canadian Personal and Business RBC U
and B
RBC corporate profile Business profile Busines
Royal Bank of Canada (TSX, NYSE: RY), and its subsidiaries TheRBCCanadian Personal and Business segment is a premier TheRBC
operate under the master brand name of RBCFinancial manufacturer, marketer and distributor of financial products and consists
Group, and may be referred to inthistextas RBC. We are services, achieving leading market share in most key markets U.S.), Ca
Canada’s largest bank as measured by assetsandmarket with an extensive distribution network of proprietary, third-party manage
capitalizationand one of North America’s leading
and specialized sales forcesand strong client analytics.
diversified financial services companies. We provide
personal and commercial banking, wealth management
Brands
services, insurance, corporate and investment banking
RBCCen
and transaction processing services on a global basis. Brands
RBCDain
Ourcorporate support team enables business growth with RBCRoyal Bank
RBCBuil
expert professional advice and state of the art processes RBCInvestments
Royal Ba
and technology. We employ approximately69,000 people
RBCDominion Securities
who serve more than 14 million personal, business and RBCRoy
RBCInsurance
public sector clients throughoutoffices in North America
RBCLibertyInsurance
and some 30 countries around the world.
Strategy
In Canada, we have strong marketpositions in all ofour • Leverage
businesses. In personalandbusinessbanking, we rank Strategy for our in
first or second in most retail products. In wealthmanage- • Optimize our distribution channels. • Focus on
ment, we have the leading full-service brokerage operation • Simplify processes and structures. build a le
(by assets),the top mutual fund provider among Canadian
• Focus on high-returnmarkets. • Enhance
banks and the second-largest self-directed broker (by
• Delivera
assets). We are the largest Canadian bank-owned insurer,
solution
one of the top 10Canadian life insurance producers, and a
Key operating highlights aroundt
leader in travel insurance, creditor products and individual
disability insurance. In corporate and investment banking, • RBCAsset Management was the industry leader in sales of long-
we continue to be the top-ranked securities underwriter term mutual funds with more than $6billion in net sales in 2005.
Key ope
and theleading mergers and acquisitions advisor. • Introduction of innovative credit card products like the Starbucks
We also have by far the largest Canadian custody DuettoVisaCard and the RBCCathay Pacific VisaPlatinum Card • Improve
operations (by assets under administration). Our domestic loans an
contributed to growth in our credit card business.
delivery network includes 1,104branches and 3,906 • Generate
• RBCInsurance opened its first two new concept multi-line
automatedbanking machines,437investmentretirement salesma
insurance outlets located next to RBCRoyal Bank branches.
planners, 1,063financialplanners,371insuranceagents • Increase
and975mortgagespecialists. Currently, we have • Introduc
3.5million online and 2.5million telephone clients. Private B
Change
(C$ millions, except percentage amounts) 2005/2004 2005 2004
In the United States, we provide personal and commercial
Total revenue 12% $ 12,550 $ 11,223
banking, insurance, full-service brokerageand corporate
Non-interest expense 4% $ 5,872 $ 5,630
and investment banking services to about1.5million clients (C$ millions,
Insurance policyholder benefits,
through RBCCentura, RBCBuilderFinance,RBCInsurance, claims and acquisition expense 24% $ 2,625 $ 2,124 Total reve
RBCLibertyInsurance,RBCDain Rauscher and RBCCapital Net income 14% $ 2,337 $ 2,052 Non-inter
Markets. Return on equity (ROE) (1) 270 bps 27.5% 24.8% Net incom
Averageloans and acceptances 10% $150,700 $137,100 Return on
Averagedeposits 4% $138,800 $133,700 Averagel
Outside North America, wehave a banking network in the
Assets under administration 15% $180,300 $157,300 Assets un
Caribbeananda presence in niche markets. In Europe,
Assets under management 21% $ 63,400 $ 52,300 Assets un
SouthAmericaand the Middle East, we provide private # of branches 6 1,104 1,098 # of branc
banking, international estate planning and wealth
(1) ROEiscalculated using month-end balances for the period, and isanon-GAAPfinancial (1) ROE i
management services tailored for high net worth individuals, measure. For a further discussion and reconciliation, refer to theKeyfinancialmeasures meas
sophisticated investors and corporate andinstitutional (non-GAAP)sectionintheManagement’sDiscussionandAnalysis. (non-
clients. We also offer investment banking, trading, capital
Business segment’scontributionto Busines
markets, reinsurance, securities custody and trade finance
to corporate, institutional and business clients. 2005consolidatednetincome 2005 con
In the Asia-Pacific region and Australia, we provide
corporate and investment banking, trade finance,
correspondent banking, treasury and securities custody
68%
services to corporateclients,reinsurance to institutional
and business clientsand private banking services to
individual clients.
RBC U.S. and International Personal RBC Capital Markets
and Business
Business profile Business profile
TheRBCU.S.and International Personal and Business segment TheRBCCapital Markets segmentprovides a wide range of
consistsofRBCCentura (personal and business banking in the investment banking, sales and trading, research and related
U.S.), Caribbean banking, RBCDain Rauscher (U.S.wealth products and services to corporations, governments,large
management) and Global Private Banking. commercialand institutional clients. It is comprised of Global
Markets, Global Investment Banking and Equity Markets,
Institutional & Investor Services and Otherlineofbusiness, which
Brands consistsofNationalClientsgroup,Research,and, aggregated
RBCCentura underGlobalCredit,thenon-strategiclendingportfolioand
RBCDain Rauscher centralizedmanagementassociatedwiththesegment’score
RBCBuilderFinance lendingportfolios.
Royal Bank of Canada Global Private Banking
RBCRoyal Bank of Canada
Brands
RBCCapital Markets
Strategy
• Leverage the global resources of RBCto develop local solutions
for our individual and businessclients. Strategy
• Focus on businesses, business owners and professionals to • Advanceourleadership in Canada.
build a leading banking position in the Southeast U.S.market. • Achievesustainable leadership in the U.S.midmarket.
• Enhance our market position in theCaribbean. • Becomealeading traderandstructurerofconvergingasset
• Delivera broad range of integratedadvisory and balance sheet classes.
solutions forour wealth management clientsacrosstheU.S.and • Buildatop-tier global fixed income bank.
aroundtheglobe.
Key operating highlights
Key operating highlights • Strengthened our global distribution and fixed income
capabilities through the integration of RBCDain Rauscher’s fixed
• Improved business performance at RBCCentura by increasing
income operations.
loans and deposits, while reducingexpenses.
• Continued to build our presence in U.S.investment banking
• Generatedstrongrevenuein the Caribbeanreflectingimproved
with such landmark transactions as the US$600 million stock
salesmanagement processes.
issue for Southwestern EnergyCompany, the largest secondary
• Increasedfee-basedassetsatRBCDainRauscherby24percent.
financing in the U.S.energy sector this year.
• Introduced an integrated wealth management model for Global
• Announcedthecreationofa joint venture, RBCDexia Investor
Private Banking high net worth clients.
Services, which will rankamong the world’s top 10 global
custodians.Thistransactionisexpectedtocloseinfiscal2006.
Change
(C$ millions, except percentage amounts) 2005/2004 2005 2004
Total revenue 1% $ 2,823 $ 2,786 Change
(C$ millions, except percentage amounts) 2005/2004 2005 2004
Non-interest expense (6)% $ 2,226 $ 2,360
Net income from continuing operations 63% $ 395 $ 242 Total revenue (teb) (1) 3% $ 3,984 $ 3,875
Return onequity (ROE) (1) 580 bps 12.0% 6.2% Non-interest expense 15% $ 3,257 $ 2,831
Averageloans and acceptances 9% $ 20,500 $ 18,800 Net income (9)% $ 725 $ 801
Assets under administration .3% $234,300 $233,700 Return onequity (ROE) (1) (160)bps 17.4% 19.0%
Assets under management 2% $ 42,300 $ 41,300 Assets under administration 13% $1,361,100 $1,202,900
# of branches (2) 315 317 Gross underwriting and advisory fees 9% $ 1,003 $ 918
(1) ROE iscalculated using month-end balances for the period, andisanon-GAAPfinancial (1) Total revenueonataxableequivalentbasis(teb) and ROE are non-GAAP financial
measure. For a further discussion and reconciliation, refer to theKey financial measures measures. For a further discussion and reconciliation, refer to theKey financial measures
(non-GAAP)sectionin the Management’s Discussion and Analysis. (non-GAAP) sectionin the Management’s Discussion and Analysis.
Business segment’s contribution to Business segment’s contribution to
2005 consolidated net income 2005 consolidated net income
21%
11%
Financial highlights
(1)
(C$ millions, except per share, Change
number and percentage amounts) 2005/2004 2005 2004 2003 2002 2001
Earningsfromcontinuingoperations
Net interest income 6% $ 6,770 $ 6,398 $ 6,336 $ 6,773 $ 6,111
Non-interest income 9 12,445 11,404 10,652 10,319 9,765
Total revenue 8 19,215 17,802 16,988 17,092 15,876
Provision for credit losses 32 455 346 721 1,065 1,119
Insurance policyholder benefits,
claims and acquisition expense 24 2,625 2,124 1,696 1,535 1,344
Non-interest expense 5 11,388 10,833 10,165 10,420 9,717
Business realignment charges n.m. 45 177 – – –
Net income from continuing operations 14 3,437 3,023 2,955 2,702 2,307
Net income (loss) from discontinued operations n.m. (50) (220) 13 n.a. n.a.
Net income 21 3,387 2,803 2,968 2,702 2,307
Return on common equity (ROE)(2) 240 bps 18.0% 15.6% 16.7% 15.8% 16.4%
Balance sheet data
Loans (before allowance for loan losses) 11% 191,914 172,560 162,449 167,773 168,381
Assets 10 469,521 426,222 399,847 375,474 358,939
Deposits 13 306,860 270,959 259,145 243,476 233,447
Subordinated debentures 1 8,167 8,116 6,243 6,614 6,513
Common equity 10 19,149 17,372 17,543 17,238 16,141
Capital ratios(3)
Tier 1 capital 70 bps 9.6% 8.9% 9.7% 9.3% 8.7%
Total capital 70 13.1% 12.4% 12.8% 12.7% 11.8%
Common share information
Sharesoutstanding (in thousands)
End of year – % 646,751 644,748 656,021 665,257 674,021
Average basic (1) 641,717 646,732 662,080 672,571 641,516
Average diluted – 652,340 655,508 669,016 678,120 647,216
Earnings per share
Basic 22 $ 5.22 $ 4.29 $ 4.44 $ 3.96 $ 3.55
Diluted 21 5.13 4.23 4.39 3.93 3.52
Share price
High(4) 32 86.68 65.90 65.00 58.89 53.25
Low(4) 5 60.90 58.04 53.26 45.05 41.60
Close 31 83.33 63.40 63.48 54.41 46.80
Dividends per share 16 2.35 2.02 1.72 1.52 1.38
Book value per share – year end 10 29.77 27.15 26.74 25.91 23.95
Market capitalization (C$ millions) 32 53,894 40,877 41,644 36,197 31,544
Number of:
Employees (full-time equivalent) (991) 60,012 61,003 60,812 59,549 57,568
Automated banking machines (155) 4,277 4,432 4,469 4,572 4,697
Bank branches
Canada 6 1,104 1,098 1,104 1,117 1,125
U.S. (2) 273 275 240 236 240
International – 42 42 42 42 43
(1) FinancialinformationisderivedfromourConsolidatedFinancialStatements,unlessotherwisenoted.SelectdefinitionsareavailableintheGlossaryonpages141to142.
(2) ReturnoncommonequityisdefinedintheGlossaryonpage142.
(3) Calculatedusingguidelinesissued bytheOfficeoftheSuperintendentofFinancialInstitutionsCanada.
(4) Intradayhighand lowshareprices.
n.m. not meaningful
n.a. Comparableinformationnotavailableforperiods2001and2002.
Total revenue* Diluted earnings Dividends Market capitalization
(C$ billions) per share (C$) per share (C$) (C$ billions)
15.9 17.1 17.0 17.8 19.2 3.52 3.93 4.39 4.23 5.13 1.38 1.52 1.72 2.02 2.35 31.5 36.2 41.6 40.9 53.9
2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005
*Fromcontinuingoperations
ANNUAL REPORT 2005 > FINANCIAL HIGHLIGHTS ROYAL BANK OF CANADA 1
Chairman’s message
“Good governance, in its broadest sense, is
a competitive advantage. To maximize share-
holder value on a sustainable basis, principles
of good governance must extend beyond the
Board of Directors into every segment of
business activity.”
David O’Brien, Chairman of the Board
The performance of Royal Bank of shareholder’s lens. My fellow directors stifling management’s creativity and
Canada in the past year reflected the have demonstrated a strong sense of ability to grow shareholder value.
ingenuity and commitment of manage- integrity, corporate responsibility and a
As Chairman, my goal is to provide
ment and employees in living up to our willingness to work hard on all issues.
leadership that will enable the Board
clients’ highest expectations.
We believe that good governance, of Directors to continue to add value to
The Board of Directors is pleased with in its broadest sense, is a competitive the company’s performance. In the
the tremendous performance of the advantage. To maximize shareholder coming year, we remain committed
organization in 2005, especially in light value on a sustainable basis, principles to providing independent and
of significant strategic and organiza- of good governance must extend constructive advice to management
tional changes undertaken during the beyond the Board of Directors into in their efforts to enhance long-term
year. As active participants in the major every segment of business activity. shareholder value.
decisions guiding the organization’s Indeed, a foundation of ethics, integrity
I want to thank the directors and
strategy and business activities, your and good governance guides all of
management for their efforts in 2005.
board has an important role to play in our activities across ourdiverse
I also want to extend my appreciation
ensuring management’s plans and operations.
to all 69,000employees of Royal Bank
tactics are prudent and focused on
While we are proud contributors to of Canada around the world for their
generating shareholder value without
management’s success, your board strong commitment to doing what’s
exposure to undue risk.
takes seriously its independence, and best for clients and shareholders. On
In today’s marketplace of continually does not hesitate to challenge manage- behalf of the Board of Directors, I wish
evolving regulatory and investor expec- ment when warranted. In a world where all of them every success for 2006.
tations, your board has focused on both regulations and opportunities are
corporate objectives and performance increasing in volume and complexity,
in the context of doing what is right and this sound foundation of good gover-
ethical. The board has provided a nance allows your board to oversee
critical eye on management activities, management in a manner that
David O’Brien
evaluating matters through a assesses and mitigates risk without
Chairman of the Board
2 ROYAL BANK OF CANADA ANNUAL REPORT 2005 > CHAIRMAN’S MESSAGE
Chief Executive Officer’s message
“This past year, we launched our Client First
Initiative. We realigned our organization,
focused more resources on helping our
employees enhance client service and improve
our efficiency and effectiveness by working to
eliminate excess processes and duplication.
I am proud of the progress we have made in
advancing ourreputation as a client-focused
competitor. Our employees’ efforts have
produced exciting results – greater client
satisfaction and superior shareholder returns.”
Gordon M. Nixon, President and Chief Executive Officer
This report is titled after our vision, further enhanced our best-in-class risk, expanding the use of offshore informa-
Always earning the right to be our capital and human resource practices – tion technology. Our Global Functions
clients’ first choice. Our accomplish- all important contributorsto share- group alsoenhancedefficiencywhile
ments are detailed in this report and holder returns. Most importantly, maintainingour risk profile, lowering
they demonstrate ourstrengths and our business growth and enhanced our cost of capital and elevatingour
the power of our Client First Initiative, efficiency was achieved while our client performance management capabilities.
a strategy designed to generate value satisfaction strengthened.
We have taken steps to provide our
for clients and shareholders.
All business segments and corporate clients with greater access to our
I am pleased to report to you that we support areas identified numerous services and products. For example,
delivered record performance in 2005, cost initiatives with specific targets to our Canadian business clients can now
and an impressive 35 per cent total improve our productivity and flexibility open a new business account the same
return to common shareholders (the and they delivered on a number of day they walk into mostbranches
combination of share price apprecia- them in 2005. Savings from these across the country. Our personal
tion and dividends). We streamlined initiatives are being reinvested into clients with smaller investment
all of our operations to make us more both product and client facing initiatives accounts now have access to world-
cost-effective while each of our in order to fuel further revenue growth. class, structured investment solutions
business segments grew revenueby designed to meet their investment
Our Global Technology and Operations
successfully executing theirstrategies objectives. A detailed discussion of our
group delivered savings by bringing
infavourableeconomicconditions. RBC Canadian Personal and Business
together all of ourtechnology and
Together, these efforts resulted in segment’sefforts to serve our
operations capabilities, by consoli-
impressive operating leverage (the 13 million clients better and key
dating operation centres, creating
difference between revenue growth operating highlights for 2005 are
centres of excellence or expertise such
and non-interest expense growth rates) provided on pages 8 to 11.
as contact centres and securities
for the year and a solid foundation for
processing centres, and by selectively
our future growth. In addition, we
ANNUAL REPORT 2005 > CHIEF EXECUTIVE OFFICER’S MESSAGE ROYAL BANK OF CANADA 3
Barbara G.Stymiest Martin J. Lippert Elisabetta Bigsby
Chief Operating Officer Group Head,Global Technology Group Head,Human Resources
and Operations andTransformation
“Our specialized professionals will “In 2006, we will focus on making it “The root of our competitive advantage
continue to manageall aspects of our easier for our clients to do business with is the wealth of our people’s insights and
financial performanceandriskprofile us by continuing to deliver high-quality abilities to develop better and different
whiledrivingourclient-focused sales and service within an industry- ways of creating value for clients and
enterprisestrategy.” leading environment that is secure, shareholders.”
responsive, flexible and innovative.”
In the U.S., our commercial and small We have investedand will continue to
business clients were given more invest in our businesses, in ways to
options and greater flexibility to better service our clients, whether
managetheir businesses with through more accessible channels,
enhancements to our suite of products more branches in high-growth
and services such as new longer-term markets, more people to serve clients
mortgages on owner-occupied real in keymarketsor more innovative
estate at fixed rates. In addition, our products. Ourobjectiveistomaintain
U.S.clients in their pre-retirement thehighestlevelofclientsatisfaction
years received enhanced solutions to whileprovidingtop-tier returns to
help them better plan fortheir retire- our shareholders.
ment through the launch of our
Converting Wealth to Income initiative. 2005 Performance review
A detailed discussion of our RBC U.S. We met or exceeded most of our
and International Personal and objectives in 2005. Diluted earnings
Businesssegment’s2005 operating per share growth was in excess of
highlights is provided on pages 12 20 per cent and return on common
to 15. equity of 18 per cent was within our
targeted range. Revenue growth of
In 2005, our institutional clients gained
8per cent reflected successful execu-
better access to ourglobal distribution
tion of a number of carefully planned
and world-class fixed income expertise
initiatives in Canada, the United States
through the integration of RBCDain
and outside North Americaand
Rauscher’s fixed income operations
favourableeconomicconditions.
into our global markets business.
While our non-interest expenses were
A detailed discussion of RBC Capital
up 5per cent, they were flat excluding a
Marketsand thesegment’s2005
litigation reserve taken for pending
operating highlights are provided on
EnronCorp.-related actions. Strong risk
pages 16 to 19.
management,a relativelybenign credit
environment andhighercorporate
recoveriesresulted in good portfolio
4 ROYAL BANK OF CANADA ANNUAL REPORT 2005 > CHIEF EXECUTIVE OFFICER’S MESSAGE
W. James Westlake Peter Armenio Charles M. Winograd
Group Head,RBCCanadianPersonal Group Head, RBC U.S. and International Group Head, RBC Capital Markets
and Business PersonalandBusiness
“We are building on our industry “Our RBCU.S. and International businesses “Everything we do is focused on building
leadership position to be number one are very focused. We’ve put the right a deeper understanding of our clients’
with our clients and truly differentiate business models and management teams funding and investing strategies and then
ourselves in the Canadian financial in place to be successful in the U.S. and helping them accomplish their goals.”
services marketplace.” around the globe.”
quality performance. In addition, we durablegoods. Business lending is We have narrowed our medium-term
strengthened our capital position to expected to grow at a similar rate as in (defined as three to five years)
remain comfortably above our 2005 given continued investment in objectives down to one goal –to
objectives, while achieving a dividend inventories. consistentlygenerate top quartile total
payout ratio of 45 per cent, within our shareholder returnsinrelationtoour
We made changes to our return on
target range. Our common share CanadianandU.S.peergroup. We
equity (ROE), expense control, portfolio
dividend was up 16per cent in 2005. expect to continue providing financial
quality and capital management
objectives on an annual basis.
In 2005, our shareholders benefited objectives for 2006 compared to the
from a 31 per cent increase in our objectives we had in place during 2005. RBCstrategic goals
common share price and from three We have raised the ROEobjective to Our three enterprisegoals are:
dividend increases, resulting in a total 20 per cent plus from 18 to 20 per cent
1. To be the undisputed leader in
shareholderreturn of more than and replaced the expense control
financial services in Canada.
35 per cent. Over the past 10 years, objective with an operating leverage
2.To build on our strengths in banking,
we have delivered an annualized total objective as we believe it is more
wealth management and capital
return to common shareholders of meaningful to look at expense growth
markets in the United States.
22 per cent. in relation to revenue growth. We have
3.To be a premier provider of selected
also increasedthe portfolio quality
2006 Outlook and objectives global financial services.
(specificprovisionratio)objective
We believe we have set aggressive
reflecting our view that 2006 will We performed well against these goals
financial objectives for 2006, as shown
present fewerrecovery opportunities. in 2005, increasing market shares in
on page 7, on the expectation that the
In addition, we have set a floor for the many key products in Canada,
Canadian economy will remainstrong
Tier 1 capital objective of 8per cent improving our positions and perfor-
while the U.S.economy may slow
rather than a range, and removed the mance in key businesses in the
moderately in response to higher
Total capital ratio objective as ourkey United States, and growing in select
interest rates. We expect the pace of
stakeholdersconsider the Tier 1 capital globalareas, such as the Caribbean,
growth in retail lending to slow next
ratio theprimarymeasureofcapital Global Private Banking and interna-
year given increases in interest rates,
strength. Needless to say, it is our tional capital markets operations.
higher energy costs and the expected
objectiveto continue to consistently
softening of the housing marketand We are committed to makingfurther
generate strong returns for our
theresultingeffectonthedemandfor progress against our key goals in
shareholders.
the future, mindful of the challenges
ANNUAL REPORT 2005 > CHIEF EXECUTIVE OFFICER’S MESSAGE ROYAL BANK OF CANADA 5
“We are building on the core strengths
that make RBC distinctive – our
people, our clients and our ability
to deliver deep financial insight –
to deliver value to our clients.”
the upcoming year poses, including We believe that good governance and Our employees
increasedcompetition in the corporate responsibility require Our strong performance this past year
Canadian market, volatile capital controls and programs to promote a reflects the tremendous dedication,
markets activity, the potential for proactive governance culture within commitment and hard work of all of
higher energy prices and rising interest our global network. At RBC, our ethical our employees. Our employees are
rates. Our response to these and other and corporate leadership is founded continually looking for ways to earn the
challenges will be rooted in our on controls, policies and practices right to be our clients’ first choice. Our
abilityto leverage our competitive directed at strengthening the Board of renewed strategic direction, sharpened
advantages, continually seek new Directors’ supervision of management focus on clients, revenue growth and
ways to grow revenueand maintain and creation of value for shareholders, cost management are the right steps to
disciplinedcost management, and employees, clients and communities. enable us to continue providing top
optimizeouruse of capital. A discussion of our approach to corpo- returns for our shareholders. When
rate responsibility and how we operate these actions are combined with the
Corporate responsibility and
our business, support economic pros- quality, diversity, insight and abilities
governance
perity and contribute to communities is of our employees, we believe we can
Our approach to sound corporate
outlined on pages 25 to 28. increase the distance between us and
governance starts at the top with a
our competitors.
non-executive Chairman and knowl- The strength of our corporate responsi-
edgeable, well-informed directors bility is founded on our commitment to
whose main focus includes overseeing high standards of governance and
management,strategic planning, integrity in all facets of our business
ensuring standards exist to promote activities. Our employees understand
ethical behaviour and continuous that our success is founded on ethical
improvement to governance practices. behaviour, teamwork and our Gordon M. Nixon
A description of our corporate commitment to providing value to all President and Chief Executive Officer
governance system and board stakeholders.
committee mandates and activities is
on pages 144to 145.
6 ROYAL BANK OF CANADA ANNUAL REPORT 2005 > CHIEF EXECUTIVE OFFICER’S MESSAGE