6-K - RY - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

For the month of May 2022

Commission File Number: 001-13928

Royal Bank of Canada

(Translation of registrant’s name into English)

200 Bay Street<br><br>Royal Bank Plaza<br><br>Toronto, Ontario<br><br>Canada M5J 2J5<br><br>Attention: Senior Vice-President,<br><br>Associate General Counsel<br><br>& Secretary	1 Place Ville Marie<br><br>Montreal, Quebec<br><br>Canada H3B 3A9<br><br>Attention: Senior Vice-President,<br><br>Associate General Counsel<br><br>& Secretary

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☐ Form

40-F ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

This report on Form 6-K, management’s discussion and analysis and unaudited interim condensed consolidated financial statements included in exhibit 99.2, and exhibit 99.3 hereto are incorporated by reference as exhibits into the Registration Statement on Form F-3 (File No. 333-259205) and the Registration Statements on Form S-8 (File Nos. 333-12036,

333-12050,

333-13052,

333-13112,

333-117922,

333-207754,

333-207750,

333-207748 and 333-252536).

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ROYAL BANK OF CANADA
Date: May 26, 2022	By:	/s/ Nadine Ahn
	Name:	Nadine Ahn
	Title:	Chief Financial Officer

EXHIBIT INDEX

Exhibit	Description of Exhibit
99.1	Second Quarter 2022 Earnings<br><br>Release
99.2	Second Quarter 2022 Report to Shareholders (which includes management’s discussion and analysis and unaudited interim condensed consolidated financial statements)
99.3	Return on Equity and Assets Ratios
	Rule <br>13a-14(a)/15d-14(a)<br> Certifications
31.1	- Certification of the Registrant’s Chief Executive Officer
31.2	- Certification of the Registrant’s Chief Financial Officer
101	Interactive Data File (formatted as Inline XBRL)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

EX-99.1

Exhibit 99.1

SECOND QUARTER 2022

EARNINGS RELEASE

ROYAL BANK OF CANADA REPORTS SECOND QUARTER 2022 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. Our Q2 2022 Report to Shareholders and Supplementary Financial Information are available at: http://www.rbc.com/investorrelations.

Net Income<br> <br><br><br><br>$4.3 Billion<br> <br><br><br><br>Up 6% YoY	Diluted EPS^1^<br><br><br><br> <br>$2.96<br><br><br><br> <br>Up 7% YoY	PCL^2^<br><br><br><br> <br>$(342) Million<br><br><br><br> <br>PCL on loans<br><br><br>ratio^3^ down<br><br><br>23 bps^4^ QoQ	ROE^5^<br><br><br><br> <br>18.4%<br><br><br><br> <br>Down 100 bps YoY	CET1 Ratio^6^<br><br><br><br> <br>13.2%<br><br><br><br> <br>Robust capital levels,up<br> <br>40 bps YoY

TORONTO, May 26, 2022 – Royal Bank of Canada (RY on TSX and NYSE) today reported net income of $4.3 billion for the quarter ended April 30, 2022, up $238 million or 6% from the prior year, with strong diluted EPS growth of 7% over the same period. Our results this quarter included releases of provisions on performing loans of $504 million, higher than the $260 million of provisions released last year, mainly driven by reduced uncertainty relating to the COVID-19 pandemic which was partially tempered by increased downside risks, including rising inflation and interest rates. Net income also benefitted from net favourable tax adjustments in the current quarter. Personal & Commercial Banking, Wealth Management and Insurance saw strong earnings growth. Investor & Treasury Services results were largely unchanged from last year, and Capital Markets results were down from record second quarter earnings last year.

Pre-provision, pre-tax earnings^7^ of $5.0 billion were down $124 million or 2% from a year ago, mainly reflecting lower Capital Markets revenue compared to elevated levels last year, lower spreads, and higher salaries, technology investments and discretionary costs to support strong client-driven growth. Changes in the fair value of hedges related to our U.S. share-based compensation plans also impacted revenue. These factors were partially offset by strong growth in volumes and fee-based client assets, and lower variable and share-based compensation.

Compared to last quarter, net income was up $158 million or 4% with higher results in Personal & Commercial Banking, Corporate Support, Insurance and Investor & Treasury Services, partially offset by lower results in Capital Markets and Wealth Management.

The PCL on loans ratio of (18) bps was down 23 bps from last quarter, primarily due to releases of provisions in Personal & Commercial Banking in the current quarter as compared to provisions taken in the prior quarter. The PCL on impaired loans ratio of 9 bps was unchanged from last quarter.

Our capital position remained robust, with a Common Equity Tier 1 (CET1) ratio of 13.2% while supporting strong client-driven organic growth. In addition, this quarter we returned $3.6 billion to our shareholders through common share buybacks and dividends. And today, we declared a quarterly dividend of $1.28 per share reflecting an increase of $0.08 or 7%. We also had a strong average Liquidity Coverage Ratio (LCR) of 121%.

“The resilience of our diversified business model, prudent risk and capital management, and strategic investments in talent and technology continued to define our performance in the second quarter. We remain well-positionedfor future growth, and to deliver differentiated long-term value for our clients, employees and shareholders. At a time when geopolitical tensions, inflationary pressures and global supply chain issues are creating an uncertain macroeconomicbackdrop, I’m proud of how RBC employees continue to drive positive change in our communities and deliver trusted advice and insights for those we serve. We will continue to leverage our scale and financial strength, and the powerfulcombination of our people and culture, to play a leading role in shaping a thoughtful transition to net zero and an inclusive post-pandemic future.”<br><br><br>– Dave McKay, RBC President and Chief ExecutiveOfficer
Q2 2022<br> <br>Compared to<br> <br>Q2 2021	• Net income of $4,253 million<br><br><br>• Diluted EPS of $2.96<br><br><br>• ROE^^of 18.4%<br><br><br>• CET1 ratio of 13.2%	h 6%<br><br> <br>h 7%<br><br> <br>i 100<br>bps<br><br><br>h 40<br>bps
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Q2 2022<br> <br>Compared to<br> <br>Q1 2022	• Net income of $4,253 million<br><br><br>• Diluted EPS of $2.96<br><br><br>• ROE^^of 18.4%<br><br><br>• CET1 ratio of 13.2%	h 4%<br><br> <br>h 4%<br><br> <br>h 110<br>bps<br><br><br>i 30<br>bps
**<br><br><br>YTD 2022<br> <br>Compared to<br> <br>YTD 2021**	• Net income of $8,348 million<br><br><br>• Diluted EPS of $5.80<br><br><br>• ROE^^of 17.9%	h 6%<br><br> <br>h 7%<br><br> <br>i 110<br>bps
1	Earnings per share (EPS).
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2	Provision for credit losses (PCL).
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3	PCL on loans ratio is calculated as PCL on loans as a percentage of average net loans and acceptances.<br>
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4	Basis points (bps).
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5	Return on equity (ROE). For further information, refer to the Key performance and<br>non-GAAP measures section on page 3 of this Earnings Release.
6	This ratio is calculated by dividing Common Equity Tier 1 (CET1) by risk-weighted assets, in accordance with OSFI’s<br>Basel III Capital Adequacy Requirements guideline.
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7	Pre-provision, pre-tax earnings is<br>calculated as income (Q2 2022: $4,253 million; Q2 2021: $4,015 million) before income taxes (Q2 2022: $1,055 million; Q2 2021: $1,171 million) and PCL (Q2 2022: $(342) million; Q2 2021: $(96) million). This is a non-GAAP measure. For further information, refer to the Key performance and non-GAAP measures section on page 3 of this Earnings Release.
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Personal & Commercial Banking
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Net income of $2,234 million increased $326 million or 17% from a year ago, primarily attributable to lower PCL. Higher net interest income in Canadian Banking reflecting volume growth of 10% in average deposits and 9% in average loans (including strong business volume and residential mortgage growth benefitting from housing activity) that more than offset the impact of lower spreads also contributed to the increase.

Compared to last quarter, net income increased $260 million or 13%, primarily attributable to lower PCL, largely driven by higher releases of provisions on performing loans in the current quarter reflecting reduced uncertainty relating to the COVID-19 pandemic, partially tempered by increased downside risks. Lower staff-related costs also contributed to the increase. Net interest income remained relatively flat as higher spreads, reflecting the rising interest rate environment, and average volume growth of 1% more than offset the impact of three less days in the current quarter. These factors were partially offset by the impact of realized gains from commercial mortgage securitization activities in the prior quarter and lower average mutual fund balances, driving lower distribution fees.

Wealth Management

Net income of $750 million increased $67 million or 10% from a year ago, primarily due to higher average fee-based client assets reflecting net sales and market appreciation. Higher net interest income driven by average volume growth also contributed to the increase. These factors were partially offset by higher variable compensation, higher staff-related costs, as well as lower transactional revenue.

Compared to last quarter, net income decreased $45 million or 6%, mainly reflecting the impact of a partial release of a legal provision in U.S. Wealth Management (including City National) in the prior quarter. Lower average fee-based client assets largely reflecting unfavourable market conditions, as well as a decline in transactional revenue also contributed to the decrease. These factors were partially offset by gains on the sale of certain non-core affiliates, as well as higher net interest income reflecting the rising interest rate environment.

Insurance

Net income of $206 million increased $19 million or 10% from a year ago, primarily due to higher favourable investment-related experience.

Compared to last quarter, net income increased $9 million or 5%, primarily due to improved claims experience. This was partially offset by the impact of changes in new business mix, including lower new longevity reinsurance contracts.

Investor & Treasury Services

Net income of $121 million remained relatively flat as higher client deposit revenue was offset by higher technology-related costs, a favourable sales tax adjustment in the prior year and higher legal costs.

Compared to last quarter, net income increased $3 million or 3%, mainly driven by higher client deposit revenue reflecting improved client deposit margins. The impact of annual regulatory costs in the prior quarter and lower taxes also contributed to the increase. These factors were largely offset by lower funding and liquidity revenue reflecting a benefit from money market opportunities in the prior quarter.

Capital Markets

Net income of $795 million decreased $276 million or 26% from a year ago, mainly due to lower Global Markets revenue largely resulting from lower fixed income and equity trading revenue primarily in the U.S. Higher PCL and lower revenue in Corporate and Investment Banking also contributed to the decrease. These factors were partially offset by lower compensation on decreased results.

Compared to last quarter, net income decreased $235 million or 23%, mainly due to lower fixed income and equity trading revenue across most regions as the prior quarter benefitted from stronger client activity. Lower equity and debt origination across most regions, as well as lower M&A and loan syndication activity largely in the U.S., also contributed to the decrease. These factors were partially offset by lower compensation on decreased results.

Capital, Liquidity and Credit Quality

Capital – As at April 30, 2022, our CET1 ratio was 13.2%, down 30 bps from last quarter, mainly reflecting risk-weighted asset growth (excluding FX), share repurchases and the unfavourable impact of fair value other comprehensive income adjustments, partially offset by net internal capital generation.

Liquidity – For the quarter ended April 30, 2022, the average LCR was 121%, which translates into a surplus of approximately $64 billion, compared to 124% and a surplus of approximately $70 billion in the prior quarter. LCR has moderately declined compared to the prior quarter mainly reflecting growth in retail and wholesale loans that was largely offset by increases in client deposits and issuance of term funding.

The Net Stable Funding Ratio (NSFR) as at April 30, 2022 was 113%, which translates into a surplus of approximately $97 billion, compared to 113% and a surplus of approximately $98 billion in the prior quarter. NSFR remained flat compared to the prior quarter as growth in retail and wholesale loans was offset by increases in client deposits, issuance of term funding as well as changes in the composition of our securities portfolios.

Credit Quality

Q2 2022 vs. Q2 2021

Total PCL of $(342) million decreased $246 million from a year ago. PCL on loans of $(330) million decreased $247 million, largely due to releases of provisions in Personal & Commercial Banking in the current quarter as compared to provisions taken in the prior year. This was partially offset by lower releases of provisions in Capital Markets. The PCL on loans ratio of (18) bps decreased 13 bps. The PCL on impaired loans ratio of 9 bps decreased 2 bps.

PCL on performing loans of $(504) million decreased $244 million, primarily due to higher releases of provisions in Personal & Commercial Banking. Reduced uncertainty relating to the COVID-19 pandemic drove a higher release, partially tempered by increased downside risks including rising inflation and interest rates. This was partially offset by lower releases of provisions in Capital Markets.

PCL on impaired loans of $174 million decreased $3 million or 2%. Lower provisions in Personal & Commercial Banking were offset by provisions in the current year as compared to recoveries in the prior year in Capital Markets.

Q2 2022 vs. Q1 2022

Total PCL decreased $447 million from last quarter. PCL on loans was $(330) million as compared to $100 million last quarter, primarily due to releases of provisions in Personal & Commercial Banking in the current quarter as compared to provisions taken in the prior quarter. The PCL on loans ratio decreased 23 bps. The PCL on impaired loans ratio remained flat.

PCL on performing loans decreased $424 million, primarily reflecting higher releases of provisions in the current quarter in Personal & Commercial Banking. Reduced uncertainty relating to the COVID-19 pandemic drove a higher release, partially tempered by increased downside risks including rising inflation and interest rates.

PCL on impaired loans decreased $6 million or 3%, primarily due to lower provisions in Personal & Commercial Banking, partially offset by provisions taken in the current quarter as compared to recoveries in the prior quarter in Capital Markets.

Key performance and non-GAAP 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, ROE and non-GAAP measures, including pre-provision, pre-tax earnings. Certain financial metrics, including ROE and pre-provision, pre-tax earnings do not have any standardized meanings under GAAP and may not be comparable to similar measures disclosed by other financial institutions. We use ROE, at both the consolidated and business segment levels, as a measure of return on total capital invested in our business. We use pre-provision, pre-tax earnings to assess our ability to generate sustained earnings growth outside of credit losses, which are impacted by the cyclical nature of the 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.

Additional information about ROE and other key performance and non-GAAP measures can be found under the Key performance and non-GAAP measures section of our Q2 2022 Report to Shareholders.

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 Earnings Release, in other filings with Canadian regulators or the SEC, in other reports to shareholders, and in other communications, including statements by our President and Chief Executive Officer. Forward-looking statements in this document include, but are not limited to, statements relating to our financial performance objectives, vision and strategic goals. The forward-looking information contained in this Earnings Release is presented for the purpose of assisting the holders of our securities and financial analysts in understanding our financial position and results of operations as at and for the periods ended on the dates presented, as well as our financial performance objectives, vision and strategic goals, and may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as “believe”, “expect”, “foresee”, “forecast”, “anticipate”, “intend”, “estimate”, “goal”, “plan” and “project” and similar expressions of future or conditional verbs such as “will”, “may”, “should”, “could” or “would”.

By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct and that our financial performance objectives, vision and strategic goals will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. These factors – many of which are beyond our control and the effects of which can be difficult to predict – include: credit, market, 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, competitive, legal and regulatory environment, and systemic risks and other risks discussed in the risk sections and Impact of COVID-19 pandemic section of our annual report for the fiscal year ended October 31, 2021 (the 2021 Annual Report) and the Risk management section of our Q2 2022 Report to Shareholders; including business and economic conditions in the geographic regions in which we operate, information technology and cyber risks, environmental and social risk (including climate change), digital disruption and innovation, Canadian housing and household indebtedness, geopolitical uncertainty, privacy, data and third party related risks, regulatory changes, culture and conduct, the effects of changes in government fiscal, monetary and other policies, tax risk and transparency, and the emergence of widespread health emergencies or public health crises such as pandemics and epidemics, including the COVID-19 pandemic and its impact on the global economy, financial market conditions and our business operations, and financial results, condition and objectives. In addition, as we work to advance our climate goals, external factors outside of RBC’s reasonable control may act as constraints on their achievement, including varying decarbonization efforts across economies, the need for thoughtful climate policies around the world, more and better data, reasonably supported methodologies, and technological advancements, the evolution of consumer behavior, the challenges of balancing interim emissions goals with an orderly and just transition, and other significant considerations such as legal and regulatory obligations.

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. Material economic assumptions underlying the forward-looking statements contained in this Earnings Release 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 2021 Annual Report, as updated by the Economic, market and regulatory review and outlook section of our Q2 2022 Report to Shareholders. 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 and Impact of COVID-19 pandemic section of our 2021 Annual Report and the Risk management section of our Q2 2022 Report to Shareholders. Information contained in or otherwise accessible through the websites mentioned does not form part of this Earnings Release. All references in this Earnings Release to websites are inactive textual references and are for your information only.

ACCESS TO QUARTERLY RESULTS MATERIALS

Interested investors, the media and others may review this quarterly Earnings Release, quarterly results slides, supplementary financial information and our Q2 2022 Report to Shareholders at rbc.com/investorrelations.

Quarterly conference call and webcast presentation

Our quarterly conference call is scheduled for May 26, 2022 at 8:30 a.m. (EST) and will feature a presentation about our second quarter results by RBC executives. It will be followed by a question and answer period with analysts. Interested parties can access the call live on a listen-only basis at rbc.com/investorrelations/quarterly-financial-statements.html or by telephone (416-340-2217, 866-696-5910, passcode 1408176#). Please call between 8:20 a.m. and 8:25 a.m. (EST).

Management’s comments on results will be posted on our website shortly following the call. A recording will be available by 5:00 p.m. (EST) from May 26, 2022 until August 23, 2022 at rbc.com/investorrelations/quarterly-financial-statements.html or by telephone (905-694-9451 or 800-408-3053, passcode 7934665#).

Media Relations Contacts

Gillian McArdle, Senior Director, Communications, Group Risk Management and Finance, gillian.mcardle@rbccm.com, 416-842-4231

Christine Stewart, Director, Financial Communications, christine.stewart@rbc.com, 416-456-5322

Investor Relations Contacts

Asim Imran, Vice President, Head of Investor Relations, asim.imran@rbc.com, 416-955-7804

Marco Giurleo, Senior Director, Investor Relations, marco.giurleo@rbc.com, 437-239-5374

ABOUT RBC

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 89,000+ 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 17 million clients in Canada, the U.S. and 27 other countries. Learn more at rbc.com.

We are proud to support a broad range of community initiatives through donations, community investments and employee volunteer activities. See how at rbc.com/community-social-impact.

Trademarks used in this earnings release include the LION & GLOBE Symbol, ROYAL BANK OF CANADA and RBC which are trademarks of Royal Bank of Canada used by Royal Bank of Canada and/or by its subsidiaries under license. All other trademarks mentioned in this earnings release, which are not the property of Royal Bank of Canada, are owned by their respective holders.

EX-99.2

Exhibit 99.2

Royal Bank of Canada second quarter 2022 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.

Net Income<br> <br>$4.3 Billion<br> <br>Up 6% YoY	Diluted EPS<br>(1)<br> <br>$2.96<br> <br>Up 7% YoY	PCL<br>(1)<br> <br>$(342) Million<br> <br>PCL on loans ratio<br><br>(1)<br> <br>down 23 bps<br><br>(1)<br><br>QoQ	ROE<br>(2)<br> <br>18.4%<br> <br>Down 100 bps YoY	CET1 Ratio<br>(1)<br> <br>13.2%<br> <br>Robust capital levels,<br><br>up 40 bps<br><br>YoY

TORONTO, May

26, 2022 — Royal Bank of Canada (RY on TSX and NYSE) today reported net income of $4.3 billion for the quarter ended April 30, 2022, up $238 million or 6% from the prior year, with strong diluted EPS growth of 7% over the same period. Our results this quarter included releases of provisions on performing loans of $504 million, higher than the $260 million of provisions released last year, mainly driven by reduced uncertainty relating to the COVID-19 pandemic which was partially tempered by increased downside risks, including rising inflation and interest rates. Net income also benefitted from net favourable tax adjustments in the current quarter. Personal & Commercial Banking, Wealth Management and Insurance saw strong earnings growth. Investor & Treasury Services results were largely unchanged from last year, and Capital Markets results were down from record second quarter earnings last year.

Pre-provision, pre-tax earnings 3 of $5.0 billion were down $124 million or 2% from a year ago, mainly reflecting lower Capital Markets revenue compared to elevated levels last year, lower spreads, and higher salaries, technology investments and discretionary costs to support strong client-driven growth. Changes in the fair value of hedges related to our U.S. share-based compensation plans also impacted revenue. These factors were partially offset by strong growth in volumes and fee-based client assets, and lower variable and share-based compensation.

“The resilience of our diversified business model, prudent risk and capital management, and strategic investments in talent and technology continued to define our performance in the second quarter. We remain well-positioned for future growth, and to deliver differentiated long-term value for our clients, employees and shareholders. At a time when geopolitical tensions, inflationary pressures and global supply chain issues are creating an uncertain macroeconomic backdrop, I’m proud of how RBC employees continue to drive positive change in our communities and deliver trusted advice and insights for those we serve. We will continue to leverage our scale and financial strength, and the powerful combination of our people and culture, to play a leading role in shaping a thoughtful transition to net zero and an inclusive post-pandemic future.”<br> <br>–<br><br><br><br>Dave McKay, RBC President and Chief Executive Officer
Q2 2022<br> <br>Compared to<br> <br>Q2 2021	• Net income of $4,253 million<br> <br>• Diluted EPS of $2.96<br> <br>• ROE of 18.4%<br> <br>• CET1 ratio of 13.2%	h<br> 6%<br> <br>h<br> 7%<br> <br>¯<br> 100 bps<br> <br>h<br> 40 bps
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Q2 2022<br> <br>Compared to<br> <br>Q1 2022	• Net income of $4,253 million<br> <br>• Diluted EPS of $2.96<br> <br>• ROE of 18.4%<br> <br>• CET1 ratio of 13.2%	h<br> 4%<br> <br>h<br> 4%<br> <br>h<br> 110 bps<br> <br>¯<br> 30 bps
YTD 2022<br> <br>Compared to<br> <br>YTD 2021	• Net income of $8,348 million<br> <br>• Diluted EPS of $5.80<br> <br>• ROE<br><br>of 17.9%	h<br> 6%<br> <br>h<br> 7%<br> <br>¯<br> 110 bps
(1)	See Glossary section of this Q2 2022 Report to Shareholders for composition of this measure.
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(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 <br>non-GAAP<br> measures section of this Q2 2022<br><br>Report to Shareholders.
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(3)	Pre-provision,<br> <br>pre-tax<br> (PPPT) earnings is calculated as income (April 30, 2022: $4,253 million; April 30, 2021: $4,015 million) before income taxes (April 30, 2022: $1,055 million; April 30, 2021: $1,171 million) and PCL (April 30, 2022: $(342) million; April 30, 2021: $(96) million). This is a <br>non-GAAP<br> 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 <br>non-GAAP<br> measures are more reflective of our ongoing operating results and provide readers with a better understanding of management’s perspective on our performance.
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Table of contents

1	Second quarter highlights
2	Management’s Discussion and Analysis
2	Caution regarding forward-looking statements
2	Overview and outlook
	2	About Royal Bank of Canada
	3	Selected financial and other highlights
	4	Economic, market and regulatory review and outlook
5	Key corporate events of 2022
6	Financial performance
	6	Overview
11	Business segment results
	11	How we measure and report our business segments

	11	Key performance and non-GAAP measures
	13	Personal & Commercial Banking
	15	Wealth Management
	16	Insurance
	17	Investor & Treasury Services
	18	Capital Markets
	20	Corporate Support
21	Quarterly results and trend analysis
22	Financial condition
	22	Condensed balance sheets
	23	Off-balance sheet arrangements
23	Risk management
	23	Credit risk
	27	Market risk
	31	Liquidity and funding risk

41	Capital management
45	Accounting and control matters
	45	Summary of accounting policies and estimates
	45	Controls and procedures
45	Related party transactions
46	Glossary
48	Enhanced Disclosure Task Force recommendations index
49	Interim Condensed Consolidated Financial Statements<br>(unaudited)
55	Notes to the Interim Condensed Consolidated Financial Statements<br>(unaudited)
79	Shareholder Information

2 Royal Bank of Canada Second Quarter 2022

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 months periods ended or as at April 30, 2022, compared to the corresponding periods in the prior fiscal year and the three month period ended January 31, 2022. This MD&A should be read in conjunction with our unaudited Interim Condensed Consolidated Financial Statements for the quarter ended April 30, 2022 (Condensed Financial Statements) and related notes and our 2021 Annual Report. This MD&A is dated May 25, 2022. 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 2021 Annual Information Form, is available free of charge on our website at rbc.com/investorrelations, on the Canadian Securities Administrators’ website at sedar.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 2022 Report to Shareholders, in other filings with Canadian regulators or the SEC, in other reports to shareholders, and in other communications. 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., European and global economies, the regulatory environment in which we operate, and the risk environment including our credit risk, market risk, liquidity and funding risk, and the potential continued impacts of the coronavirus (COVID-19) pandemic on our business operations, financial results, condition and objectives and on the global economy and financial market conditions and includes our President and Chief Executive Officer’s statements. The forward-looking information contained in this document is presented for the purpose of assisting the holders of our securities and financial analysts in understanding our financial position and results of operations as at and for the periods ended on the dates presented, as well as our financial performance objectives, vision and strategic goals, and may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as “believe”, “expect”, “foresee”, “forecast”, “anticipate”, “intend”, “estimate”, “goal”, “plan” and “project” and similar expressions of future or conditional verbs such as “will”, “may”, “should”, “could” or “would”.

By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct and that our financial performance objectives, vision and strategic goals will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. These factors – many of which are beyond our control and the effects of which can be difficult to predict – include: credit, market, 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, competitive, legal and regulatory environment, and systemic risks and other risks discussed in the risk sections and Impact of COVID-19 pandemic section of our 2021 Annual Report and the Risk management section of this Q2 2022 Report to Shareholders; including business and economic conditions in the geographic regions in which we operate, information technology and cyber risks, environmental and social risk (including climate change), digital disruption and innovation, Canadian housing and household indebtedness, geopolitical uncertainty, privacy, data and third-party related risks, regulatory changes, culture and conduct, the effects of changes in government fiscal, monetary and other policies, tax risk and transparency, and the emergence of widespread health emergencies or public health crises such as pandemics and epidemics, including the COVID-19 pandemic and its impact on the global economy, financial market conditions and our business operations, and financial results, condition and objectives. In addition, as we work to advance our climate goals, external factors outside of RBC’s reasonable control may act as constraints on their achievement, including varying decarbonization efforts across economies, the need for thoughtful climate policies around the world, more and better data, reasonably supported methodologies, technological advancements, the evolution of consumer behaviour, the challenges of balancing interim emissions goals with an orderly and just transition, and other significant considerations such as legal and regulatory obligations.

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. Material economic assumptions underlying the forward-looking statements contained in this Q2 2022 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 2021 Annual Report, as updated by the Economic, market and regulatory review and outlook section of this Q2 2022 Report to Shareholders. 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.

Overview and outlook
About Royal Bank of Canada
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Royal Bank of Canada Second Quarter 2022 3

Selected financial and other highlights
									As at or for the six months ended
---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars, except per share,number of and percentage amounts)			January 31<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Total revenue	11,220		$	13,066		$	11,618		$	24,286		$	24,561
Provision for credit losses (PCL)	(342	)		105			(96	)		(237	)		14
Insurance policyholder benefits, claims and acquisition expense (PBCAE)	(180	)		997			149			817			1,555
Non-interest expense	6,434			6,580			6,379			13,014			12,921
Income before income taxes	5,308			5,384			5,186			10,692			10,071
Net income	4,253		$	4,095		$	4,015		$	8,348		$	7,862
Segments – net income
Personal & Commercial Banking	2,234		$	1,974		$	1,908		$	4,208		$	3,701
Wealth Management (1)	750			795			683			1,545			1,324
Insurance	206			197			187			403			388
Investor & Treasury Services	121			118			120			239			243
Capital Markets	795			1,030			1,071			1,825			2,138
Corporate Support (1)	147			(19	)		46			128			68
Net income	4,253		$	4,095		$	4,015		$	8,348		$	7,862
Selected information
Earnings per share (EPS) – basic	2.97		$	2.84		$	2.76		$	5.81		$	5.42
– diluted	2.96			2.84			2.76			5.80			5.42
Return on common equity (ROE) (2)	18.4%			17.3%			19.4%			17.9%			19.0%
Average common equity (2)	93,300		$	92,450		$	83,450		$	92,850		$	82,050
Net interest margin (NIM) – on average earning assets, net (3)	1.45%			1.39%			1.50%			1.42%			1.50%
PCL on loans as a % of average net loans and acceptances	(0.18)%			0.05%			(0.05)%			(0.06)%			0.01%
PCL on performing loans as a % of average net loans and acceptances	(0.27)%			(0.04)%			(0.16)%			(0.15)%			(0.11)%
PCL on impaired loans as a % of average net loans and acceptances	0.09%			0.09%			0.11%			0.09%			0.12%
Gross impaired loans (GIL) as a % of loans and acceptances	0.27%			0.28%			0.40%			0.27%			0.40%
Liquidity coverage ratio (LCR) (4)	121%			124%			133%			121%			133%
Net stable funding ratio (NSFR) (4)	113%			113%			118%			113%			118%
Capital, Leverage and Total loss absorbing capacity (TLAC) ratios (5)
Common Equity Tier 1 (CET1) ratio	13.2%			13.5%			12.8%			13.2%			12.8%
Tier 1 capital ratio	14.4%			14.8%			14.1%			14.4%			14.1%
Total capital ratio	16.0%			16.6%			15.8%			16.0%			15.8%
Leverage ratio	4.7%			4.8%			5.0%			4.7%			5.0%
TLAC ratio (6)	27.0%			26.4%			n.a.			27.0%			n.a.
TLAC leverage ratio (6)	8.7%			8.5%			n.a.			8.7%			n.a.
Selected balance sheet and other information (7)
Total assets	1,848,572		$	1,752,469		$	1,615,316		$	1,848,572		$	1,615,316
Securities, net of applicable allowance	298,315			303,095			255,152			298,315			255,152
Loans, net of allowance for loan losses	774,464			740,031			673,511			774,464			673,511
Derivative related assets	156,204			92,319			97,236			156,204			97,236
Deposits	1,151,597			1,142,842			1,033,323			1,151,597			1,033,323
Common equity	97,006			94,469			85,544			97,006			85,544
Total risk-weighted assets (RWA)	585,839			569,285			555,607			585,839			555,607
Assets under management (AUM) (3)	958,200			1,021,500			929,800			958,200			929,800
Assets under administration (AUA) (3), (8)	6,118,900			6,445,900			6,111,000			6,118,900			6,111,000
Common share information
Shares outstanding (000s) – average basic	1,409,702			1,421,807			1,424,889			1,415,855			1,424,107
– average diluted	1,412,552			1,424,602			1,427,107			1,418,676			1,426,183
– end of period	1,401,800			1,416,020			1,424,727			1,401,800			1,424,727
Dividends declared per common share	1.20		$	1.20		$	1.08		$	2.40		$	2.16
Dividend yield (3)	3.5%			3.5%			3.9%			3.5%			4.1%
Dividend payout ratio (3)	40%			42%			39%			41%			40%
Common share price (RY on TSX) (9)	129.75		$	144.93		$	117.31		$	129.75		$	117.31
Market capitalization (TSX) (9)	181,884			205,224			167,135			181,884			167,135
Business information (number of)
Employees (full-time equivalent) (FTE)	86,007			85,211			83,709			86,007			83,709
Bank branches	1,290			1,287			1,307			1,290			1,307
Automated teller machines (ATMs)	4,377			4,368			4,469			4,377			4,469
Period average US equivalent of C1.00 (10)	0.789			0.787			0.798			0.788			0.789
Period-end US equivalent of C1.00	0.778			0.787			0.813			0.778			0.813

All values are in US Dollars.

(1)	Effective Q4 2021, gains (losses) on economic hedges of our U.S. share-based compensation plans, which are reflected in revenue, and related variability in share-based compensation expense driven by changes in the fair value of liabilities relating to our U.S. share-based compensation plans have been reclassified from our Wealth Management segment to Corporate Support. Comparative amounts have been reclassified to conform with this presentation.
(2)	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 <br>non-GAAP<br> measures section.
---	---
(3)	See Glossary for composition of this measure.
---	---
(4)	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.
---	---
(5)	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.
---	---
(6)	Effective Q1 2022, OSFI requires Canadian Domestic Systemically Important Banks <br>(D-SIBs)<br> to meet minimum risk-based TLAC ratio and TLAC leverage ratio requirements which are calculated using OSFI’s TLAC guideline. For further details, refer to the Capital management section.
---	---
(7)	Represents <br>period-end<br> spot balances.
---	---
(8)	AUA includes $14 billion and $4 billion (January 31, 2022 – $15 billion and $3 billion; April 30, 2021 – $15 billion and $3 billion) of securitized residential mortgages and credit card loans, respectively.
---	---
(9)	Based on TSX closing market price at <br>period-end.
---	---
(10)	Average amounts are calculated using <br>month-end<br> spot rates for the period.
---	---
n.a.	not applicable
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4 Royal Bank of Canada Second Quarter 2022

Economic, market and regulatory review and outlook – data as at May 25, 2022

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

Inflation has surged higher and unemployment rates have continued to fall, prompting central banks in Canada, the U.S. and the United Kingdom (U.K.) to increase interest rates and to reduce asset holdings. The conflict between Russia and Ukraine has exacerbated global supply chain challenges and pushed key commodity prices higher, intensifying inflationary pressures. The economic impact from the COVID-19 pandemic has eased in most regions with recoveries in travel and hospitality sectors contributing to near-term growth momentum. However, the COVID-19 pandemic continues to impact goods manufacturing and supply, including economic disruptions in China resulting from stringent efforts to control virus spread. Low unemployment and strong demand for workers are driving wages higher. Central banks are expected to continue raising interest rates at the most aggressive pace in decades, which is expected to slow GDP growth later this year and into calendar 2023.

Canada

Canadian GDP is expected to have risen 4.5% 1 in the first calendar quarter of 2022, despite Omicron-related disruptions, following an increase of 6.7% 1 in the final calendar quarter of 2021. Growth is expected to remain strong in the near-term driven by a rebound in spending in the travel and hospitality sectors. Inflation has surged higher, with year-over-year Canadian consumer price index (CPI) growth rising to 6.8% in April 2022 from 4.8% in December 2021, in part reflecting higher global commodity prices due to the conflict between Russia and Ukraine. Pricing pressures are also broadening over a wider array of goods and services as demand outpaces supply. The labour market has continued to improve with the unemployment rate falling to a multi-decade low of 5.2% in April 2022, and intensifying labour shortages have shown signs of strengthening wage growth. High inflation and strong labour markets are pushing the Bank of Canada (BoC) to raise interest rates more quickly than previously expected. The BoC has increased the overnight interest rate by 75 bps over March 2022 and April 2022 and has begun to reduce asset holdings. We expect the BoC to continue raising interest rates through to the end of calendar 2022. High levels of household savings are expected to support spending in the near-term, but elevated inflation and rising interest rates are expected to continue to slow down housing markets and dampen GDP growth later this year and into calendar 2023.

U.S.

U.S. GDP contracted 1.4% 1 in the first calendar quarter of 2022 following a 6.9% 1 increase in the final calendar quarter of 2021. While the economic impact of the COVID-19 pandemic has eased, global supply chain disruptions and growing labour shortages are expected to continue moderating GDP growth in calendar 2022. The unemployment rate fell to 3.6% in March and April 2022 and strong demand for workers has pushed wage growth higher. Inflation has continued to accelerate, with year-over-year U.S. CPI growth surging above 8% in March and April 2022, driven by broadening pressures across a widening array of goods and services as well as higher gasoline and vehicle prices. Low unemployment levels, rising wages and increasing inflation pressures have led the Federal Reserve (Fed) to raise interest rates by 75 bps since March 2022. We expect the Fed to continue increasing interest rates through to the end of calendar 2022 and in calendar 2023.

Europe

Euro area GDP grew 0.3% in the first calendar quarter of 2022 following an increase of 0.3% in the final calendar quarter of 2021, with growth limited by the rapid spread of the Omicron variant and the impact of containment measures in some regions. The conflict between Russia and Ukraine is expected to weigh on GDP growth as a result of more direct trade linkages in comparison to North America. Rising inflation is expected to negatively impact consumer purchasing power and both the manufacturing and service sectors are seeing rising input prices. With inflation accelerating and unemployment low, the European Central Bank (ECB) is expected to increase interest rates beginning in the second half of calendar 2022. U.K. GDP increased 0.8% in the first calendar quarter of 2022 following a 1.3% increase in the final calendar quarter of 2021. Labour market shortages and inflation pressures are expected to persist. The Bank of England increased interest rates by 90 bps starting in December 2021 and we expect further increases this year and into calendar 2023.

Financial markets

Government bond yields remain low by historical standards, but have increased substantially as the global economic recovery has continued and inflation rates have risen. Equity markets have declined from the beginning of calendar 2022, with rising interest rates and inflation adding concerns to the growth outlook. Prices for some raw materials, including crude oil, remain well above pre-pandemic levels reflecting limited supply and rising demand and the impact of the conflict between Russia and Ukraine.

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 2021 Annual Report and updates are listed below. A summary of the

1	Annualized rate

Royal Bank of Canada Second Quarter 2022 5

additional regulatory changes and relief instituted by governments globally and by OSFI in response to the COVID-19 pandemic is included in the Impact of COVID-19 pandemic and Capital management sections of our 2021 Annual Report, with updates provided in the Capital management section of this Q2 2022 Report to Shareholders.

Global uncertainty

The uncertainty around the COVID-19 pandemic has generally eased in most of our operating regions, in part due to the lifting of containment measures, greater availability of vaccines, strong labour markets and GDP growth. However, there remains some level of uncertainty, particularly around supply chain disruptions from recent COVID-19 related lockdowns in many large cities in China. Supply chain disruptions have been further exacerbated by geopolitical tensions, in particular the conflict between Russia and Ukraine, as have inflationary and trade policy pressures, which all pose risks to the global economic outlook. In April 2022, the International Monetary Fund (IMF) projected global growth of 3.6% in calendar 2022, down 0.8% from its January forecast, reflecting downward revisions to the forecast due to the economic effects caused by the conflict between Russia and Ukraine. While tensions between Russia and Ukraine remain elevated and the outcome of the conflict remains uncertain, our exposure to Russia and Ukraine is extremely limited, as we do not have operations in these countries, consistent with our strategy and risk appetite. Our diversified business model, as well as our product and geographic diversification, continue to help mitigate the risks posed by global uncertainty.

Interest Rate Benchmark Reform

On May 16, 2022, Refinitiv Benchmark Services (UK) Limited (RBSL), the administrator of the Canadian Dollar Offered Rate (CDOR), announced that the calculation and publication of all remaining tenors of CDOR will permanently cease after June 28, 2024. Concurrently, OSFI published their expectation that Federally Regulated Financial Institutions transition all new derivatives and securities to an alternative benchmark rate by June 30, 2023, with no new CDOR exposure after that date, with limited exceptions for risk management requirements. Furthermore, OSFI also expects all loan agreements referencing CDOR to be transitioned by June 28, 2024. The cessation of CDOR will be managed within our enterprise-wide interest rate benchmark reform program.

Government of Canada Budget 2022

On April 7, 2022, the Government of Canada presented its 2022 Budget, which included measures focused on ensuring banking and life insurers’ groups help pay a portion of the costs of the Canadian federal government’s COVID-19 pandemic response. These proposed measures include a Canada Recovery Dividend (CRD), a one-time 15% tax for 2022 determined based on 2021 taxable income above $1 billion and payable in equal installments over five years, as well as a permanent increase in the corporate income tax rate of 1.5% on taxable income above $100 million that would apply to taxation years that end after April 7, 2022.

Legislation relating to these proposed measures has yet to be issued and timing of enactment remains uncertain. While the ultimate impact will depend on the final legislation, the CRD is expected to reduce our net income when substantively enacted. The CRD is also expected to reduce our CET1 ratio.

Climate-related regulatory activity

Climate change regulations, frameworks, and guidance that apply to banks, insurers and asset managers are rapidly evolving. We continue to monitor the development of applicable laws in this area and the evolution of disclosure requirements for public issuers, including the Government of Canada’s recent announcement requiring banks and insurance companies to provide disclosures on their climate-related risks and exposures beginning in 2024, the proposed National Instrument 51-107 – Disclosure of Climate-related Matters issued by the Canadian Securities Administrators intended to introduce climate-related disclosure requirements for reporting issuers in Canada, the SEC’s proposed rule changes that would require many registrants to include certain climate-related disclosures in their regulatory filings, including the financial statements, and the International Sustainability Standards Board’s proposed standards for climate-related disclosures and general sustainability-related disclosures.

For a discussion on risk factors, including our framework and activities to manage these risks and other regulatory developments which may affect our business and financial results, refer to the Impact of COVID-19 pandemic section, including the Impact of pandemic risk factor, and the Risk management – Top and emerging risks and Legal and regulatory environment risk sections of our 2021 Annual Report and the Risk and Capital management sections of this Q2 2022 Report to Shareholders.

Key corporate events of 2022

Brewin Dolphin Holdings PLC

On March 31, 2022, we announced our intention via our subsidiary, RBC Wealth Management (Jersey) Holdings Limited, to acquire Brewin Dolphin Holdings PLC (Brewin Dolphin) by way of a recommended cash offer of 515 pence per share for the entire issued and to be issued share capital of Brewin Dolphin, which values Brewin Dolphin at approximately £1.6 billion ($2.6 billion) on a fully diluted basis as at March 30, 2022. Brewin Dolphin provides discretionary wealth management services in the U.K. and Ireland. The transaction is expected to close by the end of the third calendar quarter of 2022, subject to regulatory approvals and other customary closing conditions. For further details, refer to Note 6 of our Condensed Financial Statements.

6 Royal Bank of Canada Second Quarter 2022

Financial performance
Overview
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Q2 2022 vs. Q2 2021

Net income of $4,253 million was up $238 million or 6% from a year ago. Diluted EPS of $2.96 was up $0.20 or 7% and ROE of 18.4% was down from 19.4% last year. Our CET1 ratio of 13.2% was up 40 bps from a year ago.

Our earnings reflect higher results in Personal & Commercial Banking, Corporate Support, Wealth Management, Insurance and Investor & Treasury Services, partially offset by lower results in Capital Markets.

Q2 2022 vs. Q1 2022

Net income of $4,253 million was up $158 million or 4% from last quarter. Diluted EPS of $2.96 was up $0.12 or 4% and ROE of 18.4% was up from 17.3% in the prior quarter. Our CET1 ratio of 13.2% was down 30 bps from last quarter.

Our earnings reflect higher results in Personal & Commercial Banking, Corporate Support, Insurance and Investor & Treasury Services, partially offset by lower results in Capital Markets and Wealth Management.

Q2 2022 vs. Q2 2021 (Six months ended)

Net income of $8,348 million was up $486 million or 6% from the same period last year. Diluted EPS of $5.80 was up $0.38 or 7% and ROE of 17.9% was down from 19.0% in the prior year.

Our earnings reflect higher results in Personal & Commercial Banking, Wealth Management, Corporate Support and Insurance, partially offset by lower results in Capital Markets and Investor & Treasury Services.

For further details on our business segment results and CET1 ratio, refer to the Business segment results and Capital management sections, respectively.

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 2022 vs.<br> <br>Q2 2021			Q2 2022 vs.<br> <br>Q1 2022			Q2 2022 vs.<br> <br>Q2 2021
Increase (decrease):
Total revenue	$	(16	)	$	(43	)	$	(82	)
PCL		(4	)		(1	)		(3	)
Non-interest<br> expense		(18	)		(34	)		(70	)
Income taxes		2			(1	)		(2	)
Net income		4			(7	)		(7	)
Impact on EPS
Basic	$	–		$	(0.01	)	$	(0.01	)
Diluted		–			(0.01	)		(0.01	)

The relevant average exchange rates that impact our business are shown in the following table:

(Average foreign currency equivalent of C$1.00) (1)	For the three months ended						For the six months ended
	April 30<br> <br>2022		January 31<br> <br>2022		April 30<br> <br>2021		April 30<br> <br>2022		April 30<br> <br>2021
U.S. dollar		0.789		0.787		0.798		0.788		0.789
British pound		0.605		0.586		0.577		0.595		0.575
Euro		0.721		0.695		0.669		0.708		0.656
(1)	Average amounts are calculated using <br>month-end<br> spot rates for the period.
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Royal Bank of Canada Second Quarter 2022 7

Total revenue

	For the three months ended						For the six months ended
(Millions of Canadian dollars, except percentage amounts)	April 30<br> <br>2022		January 31<br> <br>2022		April 30<br> <br>2021		April 30<br> <br>2022		April 30<br> <br>2021
Interest and dividend income	$	7,758	$	7,378	$	6,898	$	15,136	$	14,134
Interest expense		2,484		2,107		2,044		4,591		4,245
Net interest income	$	5,274	$	5,271	$	4,854	$	10,545	$	9,889
NIM		1.45%		1.39%		1.50%		1.42%		1.50%
Insurance premiums, investment and fee income	$	234	$	1,399	$	536	$	1,633	$	2,345
Trading revenue		289		314		377		603		901
Investment management and custodial fees		1,892		1,961		1,711		3,853		3,414
Mutual fund revenue		1,086		1,165		1,014		2,251		2,014
Securities brokerage commissions		389		399		431		788		832
Service charges		480		485		460		965		918
Underwriting and other advisory fees		507		701		747		1,208		1,337
Foreign exchange revenue, other than trading		251		271		292		522		581
Card service revenue		288		291		281		579		553
Credit fees		398		476		368		874		700
Net gains on investment securities		23		15		82		38		117
Share of profit in joint ventures and associates		24		29		24		53		49
Other		85		289		441		374		911
Non-interest<br> income		5,946		7,795		6,764		13,741		14,672
Total revenue	$	11,220	$	13,066	$	11,618	$	24,286	$	24,561
Additional trading information
Net interest income <br>(1)	$	642	$	720	$	642	$	1,362	$	1,382
Non-interest<br> income		289		314		377		603		901
Total trading revenue	$	931	$	1,034	$	1,019	$	1,965	$	2,283
(1)	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).
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Q2 2022 vs. Q2 2021

Total revenue decreased $398 million or 3% from a year ago, mainly due to lower other revenue and insurance premiums, investment and fee income (Insurance revenue). Lower underwriting and other advisory fees also contributed to the decrease. These factors were partially offset by higher net interest income as well as higher investment management and custodial fees.

Net interest income increased $420 million or 9%, largely due to volume growth that more than offset the impact of lower spreads in Canadian Banking and U.S. Wealth Management (including City National). Higher lending revenue in Capital Markets also contributed to the increase.

NIM was down 5 bps compared to last year, mainly due to spread compression primarily in repo and secured financing products.

Insurance revenue decreased $302 million or 56%, mainly due to the change in fair value of investments backing policyholder liabilities, which is largely offset in PBCAE. This was partially offset by higher group annuity sales and business growth across most products.

Investment management and custodial fees increased $181 million or 11%, primarily due to higher average fee-based client assets reflecting net sales and market appreciation.

Underwriting and other advisory fees decreased $240 million or 32%, largely driven by lower equity and debt origination primarily in the U.S.

Other revenue decreased $356 million or 81%, mainly attributable to 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 2022 vs. Q1 2022

Total revenue decreased $1,846 million or 14% from last quarter, mainly due to lower insurance revenue. Lower other revenue as well as underwriting and other advisory fees also contributed to the decrease.

Net interest income remained relatively flat. Higher spreads offset the impact of three less days in the current quarter in Canadian Banking and U.S. Wealth Management (including City National).

Insurance revenue decreased $1,165 million or 83%, primarily reflecting the change in fair value of investments backing policyholder liabilities and lower group annuity sales, both of which are largely offset in PBCAE.

Underwriting and other advisory fees decreased $194 million or 28%, mainly attributable to lower equity and debt origination across most regions, and lower M&A activity in the U.S.

Other revenue decreased $204 million or 71%, largely due to gains in our non-trading portfolios in the prior quarter, 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. The prior quarter also included realized gains from commercial mortgage securitization activities. These factors were partially offset by gains on the sale of certain non-core affiliates.

8 Royal Bank of Canada Second Quarter 2022

Q2 2022 vs. Q2 2021 (Six months ended)

Total revenue decreased $275 million or 1% from the same period last year, primarily driven by lower insurance and other revenue. Lower trading revenue also contributed to the decrease. These factors were partially offset by higher net interest income, investment management and custodial fees as well as mutual fund revenue.

Net interest income increased $656 million or 7%, largely due to volume growth that more than offset lower spreads in Canadian Banking and Wealth Management. Higher lending revenue in Capital Markets also contributed to the increase.

Insurance revenue decreased $712 million or 30%, mainly due to the change in fair value of investments backing policyholder liabilities, which is largely offset in PBCAE. This was partially offset by higher group annuity sales and business growth across most products.

Trading revenue decreased $298 million or 33%, mainly due to lower fixed income trading in the U.S. and Europe as the prior period benefitted from stronger client activity.

Investment management and custodial fees increased $439 million or 13%, largely driven by higher average fee-based client assets reflecting net sales and market appreciation.

Mutual fund revenue increased $237 million or 12%, primarily due to higher average fee-based client assets reflecting net sales and market appreciation in Wealth Management, and higher average mutual fund balances driving higher distribution fees in Canadian Banking.

Other revenue decreased $537 million or 59%, primarily attributable to 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.

Provision for credit losses

(1)

	For the three months ended									For the six months ended
(Millions of Canadian dollars, except percentage amounts)	April 30<br> <br>2022			January 31<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Personal & Commercial Banking	$	(419	)	$	(63	)	$	(164	)	$	(482	)	$	(223	)
Wealth Management		(30	)		(13	)		(5	)		(43	)		(6	)
Capital Markets		(56	)		(4	)		(87	)		(60	)		(124	)
Corporate Support and other<br>(2)		1			–			(4	)		1			(4	)
PCL on performing loans		(504	)		(80	)		(260	)		(584	)		(357	)
Personal & Commercial Banking	$	147		$	191		$	203		$	338		$	430
Wealth Management		–			1			3			1			(24	)
Capital Markets		27			(12	)		(29	)		15			(11	)
PCL on impaired loans		174			180			177			354			395
PCL – Loans		(330	)		100			(83	)		(230	)		38
PCL – Other financial assets<br><br>(3)		(12	)		5			(13	)		(7	)		(24	)
Total PCL	$	(342	)	$	105		$	(96	)	$	(237	)	$	14
PCL on loans is comprised of:
Retail	$	(188	)	$	(58	)	$	(104	)	$	(246	)	$	(167	)
Wholesale		(316	)		(22	)		(156	)		(338	)		(190	)
PCL on performing loans		(504	)		(80	)		(260	)		(584	)		(357	)
Retail		146			138			166			284			346
Wholesale		28			42			11			70			49
PCL on impaired loans		174			180			177			354			395
PCL – Loans	$	(330	)	$	100		$	(83	)	$	(230	)	$	38
PCL on loans as a % of average net loans and acceptances		(0.18)%			0.05%			(0.05)%			(0.06)%			0.01%
PCL on impaired loans as a % of average net loans<br>and acceptances		0.09%			0.09%			0.11%			0.09%			0.12%
(1)	Information on loans represents loans, acceptance and commitments.
---	---
(2)	Includes PCL recorded in Corporate Support, Insurance and Investor & Treasury Services.
---	---
(3)	PCL on other financial assets mainly represents provisions on debt securities measured at fair value through other comprehensive income (FVOCI) and amortized cost, accounts receivable and financial guarantees.
---	---

Q2 2022 vs. Q2 2021

PCL on performing loans of $(504) million decreased $244 million, primarily due to higher releases of provisions in Personal & Commercial Banking, in our Canadian Banking and Caribbean Banking portfolios. Reduced uncertainty relating to the COVID-19 pandemic drove a higher release, partially tempered by increased downside risks including rising inflation and interest rates. This was partially offset by lower releases of provisions in Capital Markets.

PCL on impaired loans of $174 million decreased $3 million or 2%. Lower provisions in Personal & Commercial Banking, primarily in our Canadian Banking portfolios, were offset by provisions in the current year as compared to recoveries in the prior year in Capital Markets, mainly in the oil and gas sector.

Royal Bank of Canada Second Quarter 2022 9

Q2 2022 vs. Q1 2022

Total PCL decreased $447 million from last quarter. PCL on loans was $(330) million, compared to $100 million last quarter, primarily due to releases of provisions in Personal & Commercial Banking in the current quarter as compared to provisions taken in the prior quarter. The PCL on loans ratio decreased 23 bps.

PCL on performing loans decreased $424 million, primarily reflecting higher releases of provisions in the current quarter in Personal & Commercial Banking, mainly in our Canadian Banking portfolios. Reduced uncertainty relating to the COVID-19 pandemic drove a higher release, partially tempered by increased downside risks including rising inflation and interest rates.

PCL on impaired loans decreased $6 million or 3%, mainly due to lower provisions in Personal & Commercial Banking, primarily in our Canadian Banking commercial portfolios. This was largely offset by provisions taken in the current quarter in Capital Markets, mainly in the consumer staples sector, as compared to recoveries in the prior quarter.

Q2 2022 vs. Q2 2021 (Six months ended)

Total PCL of $(237) million decreased $251 million from the same period last year. PCL on loans was $(230) million, compared to $38 million in the same period last year, largely due to releases of provisions in Personal & Commercial Banking in the current period as compared to provisions taken in the same period last year. This was partially offset by lower releases of provisions in Capital Markets. The PCL on loans ratio of (6) bps decreased 7 bps.

PCL on performing loans of $(584) million decreased $227 million or 64%, primarily due to higher releases of provisions in Personal & Commercial Banking, in our Canadian Banking and Caribbean Banking portfolios. Reduced uncertainty relating to the COVID-19 pandemic drove a higher release, partially tempered by increased downside risks including rising inflation and interest rates. This was partially offset by lower releases of provisions in Capital Markets as downside risks and portfolio growth tempered our releases in the current period as compared to the same period last year.

PCL on impaired loans of $354 million decreased $41 million or 10%, largely due to lower provisions in Personal & Commercial Banking, mainly in our Canadian Banking portfolios. This was partially offset by provisions taken in the current period as compared to recoveries in the same period last year in Capital Markets and Wealth Management.

Insurance policyholder benefits, claims and acquisition expense (PBCAE)

Q2 2022 vs. Q2 2021

PBCAE decreased $329 million from a year ago, primarily reflecting the change in fair value of investments backing policyholder liabilities, which is largely offset in revenue. Higher favourable investment-related experience also contributed to the decrease. These factors were partially offset by higher group annuity sales and business growth.

Q2 2022 vs. Q1 2022

PBCAE decreased $1,177 million from last quarter, primarily reflecting the change in fair value of investments backing policyholder liabilities and lower group annuity sales, both of which are largely offset in revenue. Investment-related experience and improved claims experience also contributed to the decrease. These factors were partially offset by the impact of changes in new business mix, including lower new longevity reinsurance contracts.

Q2 2022 vs. Q2 2021 (Six months ended)

PBCAE decreased $738 million or 47% from the same period last year, mainly reflecting the change in fair value of investments backing policyholder liabilities, which is largely offset in revenue. Higher favourable investment-related experience also contributed to the decrease. These factors were partially offset by higher group annuity sales, business growth, higher claims costs, as well as the impact of lower new longevity reinsurance contracts.

Non-interest expense

	For the three months ended						For the six months ended
(Millions of Canadian dollars, except percentage amounts)	April 30<br> <br>2022		January 31<br> <br>2022		April 30<br> <br>2021		April 30<br> <br>2022		April 30<br> <br>2021
Salaries	$	1,748	$	1,748	$	1,641	$	3,496	$	3,296
Variable compensation		1,754		1,941		1,874		3,695		3,678
Benefits and retention compensation		483		549		503		1,032		1,046
Share-based compensation		17		47		134		64		420
Human resources		4,002		4,285		4,152		8,287		8,440
Equipment		513		501		487		1,014		980
Occupancy		386		386		400		772		804
Communications		258		228		212		486		425
Professional fees		347		319		314		666		605
Amortization of other intangibles		336		337		318		673		637
Other		592		524		496		1,116		1,030
Non-interest<br> expense	$	6,434	$	6,580	$	6,379	$	13,014	$	12,921
Efficiency ratio<br><br>(1)		57.3%		50.4%		54.9%		53.6%		52.6%
Efficiency ratio adjusted<br><br>(2)		52.1%		48.8%		52.3%		50.3%		52.1%
(1)	Efficiency ratio is calculated as <br>Non-interest<br> expense divided by Total revenue.
---	---
(2)	This is a <br>non-GAAP<br> ratio. This measure has been adjusted by excluding the change in fair value of investments backing policyholder liabilities from total revenue. For further details, refer to the Key performance and <br>non-GAAP<br> measures section.
---	---

10 Royal Bank of Canada Second Quarter 2022

Q2 2022 vs. Q2 2021

Non-interest expense increased $55 million or 1% from a year ago, mainly attributable to higher staff and technology related costs. Higher marketing and other discretionary spend also contributed to the increase. These factors were partially offset by the change in the fair value of our U.S. share-based compensation plans, which was largely offset in Other revenue.

Our efficiency ratio of 57.3% increased 240 bps from 54.9% last year. Excluding the change in fair value of investments backing policyholder liabilities, our efficiency ratio of 52.1% decreased 20 bps from 52.3% last year.

Q2 2022 vs. Q1 2022

Non-interest expense decreased $146 million or 2% from last quarter, primarily due to lower variable compensation on decreased revenue and the change in the fair value of our U.S. share-based compensation plans, which was largely offset in Other revenue. The impact of foreign exchange translation also contributed to the decrease. Partly offsetting these factors was the partial release in the prior quarter of a legal provision taken in U.S. Wealth Management (including City National).

Our efficiency ratio of 57.3% increased 690 bps from 50.4% last quarter. Excluding the change in fair value of investments backing policyholder liabilities, our efficiency ratio of 52.1% increased 330 bps from 48.8% last quarter.

Q2 2022 vs. Q2 2021 (Six months ended)

Non-interest expense increased $93 million or 1% from the same period last year, mainly attributable to higher variable compensation commensurate with increased results, as well as higher staff and technology related costs. These factors were partially offset by the change in the fair value of our U.S. share-based compensation plans, which was largely offset in Other revenue.

Our efficiency ratio of 53.6% increased 100 bps from 52.6% last year. Excluding the change in fair value of investments backing policyholder liabilities, our efficiency ratio of 50.3% decreased 180 bps from 52.1% last year.

Efficiency ratio excluding the change in fair value of investments backing policyholder liabilities 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<br> <br>2022		January 31<br> <br>2022		April 30<br> <br>2021		April 30<br> <br>2022		April 30<br> <br>2021
Income taxes	$	1,055	$	1,289	$	1,171	$	2,344	$	2,209
Income before income taxes		5,308		5,384		5,186		10,692		10,071
Effective income tax rate		19.9%		23.9%		22.6%		21.9%		21.9%

Q2 2022 vs. Q2 2021

Income tax expense decreased $116 million or 10% from a year ago, primarily due to net favourable tax adjustments in the current quarter.

The effective income tax rate of 19.9% decreased 270 bps, primarily due to the impact of the tax adjustments noted above.

Q2 2022 vs. Q1 2022

Income tax expense decreased $234 million or 18% from last quarter, primarily due to the net impact of tax adjustments.

The effective income tax rate of 19.9% decreased 400 bps, primarily due to the impact of the tax adjustments noted above.

Q2 2022 vs. Q2 2021 (Six months ended)

Income tax expense increased $135 million or 6% from the same period last year, primarily due to higher income before income taxes, partially offset by the net impact of tax adjustments.

The effective income tax rate of 21.9% was unchanged from the same period last year.

Royal Bank of Canada Second Quarter 2022 11

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. They remain unchanged from October 31, 2021. For further details on our key methodologies and assumptions used in our management reporting framework, refer to the How we measure and report our business segments section of our 2021 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, average attributed capital includes the capital required to underpin various risks as described in the Capital management section and amounts invested in goodwill and intangibles.

The attribution of capital involves the use of assumptions, judgments and methodologies that are regularly reviewed and revised by management as deemed necessary. 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.

The following table provides a summary of our ROE calculations:

	For the three months ended
	April 30<br> <br>2022														January 31<br> <br>2022		April 30<br> <br>2021
(Millions of Canadian dollars,<br> <br>except percentage amounts)	Personal &<br> <br>Commercial<br> <br>Banking		Wealth<br> <br>Management		Insurance		Investor &<br> <br>Treasury<br> <br>Services		Capital<br> <br>Markets		Corporate<br> <br>Support		Total		Total		Total
Net income available to common shareholders	$	2,211	$	737	$	204	$	119	$	778	$	133	$	4,182	$	4,039	$	3,938
Total average common equity <br>(1), (2)		26,400		18,100		2,400		3,000		25,000		18,400		93,300		92,450		83,450
ROE <br>(3)		34.4%		16.7%		34.6%		16.1%		12.8%		n.m.		18.4%		17.3%		19.4%
	For the six months ended
	April 30<br> <br>2022														April 30<br> <br>2021
(Millions of Canadian dollars,<br> <br>except percentage amounts)	Personal &<br> <br>Commercial<br> <br>Banking		Wealth<br> <br>Management		Insurance		Investor &<br> <br>Treasury<br> <br>Services		Capital<br> <br>Markets		Corporate<br> <br>Support		Total		Total
Net income available to common shareholders	$	4,168	$	1,522	$	400	$	235	$	1,793	$	103	$	8,221	$	7,725
Total average common equity <br>(1), (2)		26,250		17,850		2,400		3,000		24,750		18,600		92,850		82,050
ROE<br>(3)		32.0%		17.2%		33.5%		15.9%		14.6%		n.m.		17.9%		19.0%
(1)	Total average common equity represents rounded figures.
---	---
(2)	The amounts for the segments are referred to as attributed capital.
---	---
(3)	ROE is based on actual balances of average common equity before rounding.
---	---
n.m.	not meaningful
---	---

12 Royal Bank of Canada Second Quarter 2022

Non-GAAP measures

We believe that certain non-GAAP measures described below 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, 2022 with the corresponding periods in the prior year and the three months ended January 31, 2022. Non-GAAP measures (including non-GAAP ratios) 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 efficiency ratio

Our efficiency ratio is impacted by the change in fair value of investments backing policyholder liabilities, which is reported in revenue and largely offset in PBCAE. The adjusted efficiency ratio is a non-GAAP ratio and is calculated using adjusted total revenue, which is a non-GAAP measure as it excludes the impact from the change in fair value of investments backing policyholder liabilities. We believe the adjusted efficiency ratio is a useful measure as changes in the fair value of investments backing policyholder liabilities can lead to volatility in total revenue that could obscure trends in underlying business performance and reduce comparability with prior periods.

The following table provides calculations of our consolidated efficiency ratio excluding the change in fair value of investments backing policyholder liabilities:

	For the three months ended
	April 30<br> <br>2022						January 31<br> <br>2022						April 30<br> <br>2021
			Item excluded						Item excluded						Item excluded
(Millions of Canadian dollars,<br>except percentage amounts)	As reported		Change in fair value of<br> <br>investments backing<br> <br>policyholder liabilities		Adjusted		As reported		Change in fair value of<br> <br>investments backing<br>policyholder liabilities		Adjusted		As reported		Change in fair value of<br> <br>investments backing<br> <br>policyholder liabilities		Adjusted
Total revenue	$	11,220	$	1,133	$	12,353	$	13,066	$	430	$	13,496	$	11,618	$	568	$	12,186
Non-interest<br> expense		6,434		–		6,434		6,580		–		6,580		6,379		–		6,379
Efficiency ratio		57.3%				52.1%		50.4%				48.8%		54.9%				52.3%
							For the six months ended
							April 30<br> <br>2022						April 30<br> <br>2021
									Item excluded						Item excluded
(Millions of Canadian dollars, except percentage amounts)							As reported		Change in fair value of<br> <br>investments backing<br> <br>policyholder liabilities		Adjusted		As reported		Change in fair value of<br>investments backing<br> <br>policyholder liabilities		Adjusted
Total revenue							$	24,286	$	1,563	$	25,849	$	24,561	$	222	$	24,783
Non-interest<br> expense								13,014		–		13,014		12,921		–		12,921
Efficiency ratio								53.6%				50.3%		52.6%				52.1%

Royal Bank of Canada Second Quarter 2022 13

Personal & Commercial Banking
	As at or for the three months ended									As at or for the six months ended
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars, except<br> <br>percentage amounts and as otherwise noted)	April 30<br> <br>2022			January 31<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Net interest income	$	3,234		$	3,229		$	3,085		$	6,463		$	6,246
Non-interest<br> income		1,505			1,574			1,442			3,079			2,844
Total revenue		4,739			4,803			4,527			9,542			9,090
PCL on performing assets		(420	)		(60	)		(166	)		(480	)		(226	)
PCL on impaired assets		144			189			201			333			426
PCL		(276	)		129			35			(147	)		200
Non-interest<br> expense		2,015			2,022			1,915			4,037			3,893
Income before income taxes		3,000			2,652			2,577			5,652			4,997
Net income	$	2,234		$	1,974		$	1,908		$	4,208		$	3,701
Revenue by business
Canadian Banking	$	4,531		$	4,598		$	4,341		$	9,129		$	8,693
Caribbean & U.S. Banking		208			205			186			413			397
Selected balance sheet and other information
ROE		34.4%			29.8%			31.8%			32.0%			31.0%
NIM		2.46%			2.41%			2.56%			2.43%			2.56%
Efficiency ratio		42.5%			42.1%			42.3%			42.3%			42.8%
Operating leverage <br>(1)		(0.5)%			3.1%			4.5%			1.3%			1.9%
Average total earning assets, net	$	540,100		$	530,800		$	493,400		$	535,400		$	491,600
Average loans and acceptances, net		544,000			534,400			497,400			539,200			495,400
Average deposits		543,400			539,300			495,000			541,300			492,500
AUA <br>(2)		355,800			371,100			339,000			355,800			339,000
Average AUA		368,400			372,600			334,400			370,600			325,000
PCL on impaired loans as a % of average net loans and acceptances		0.11%			0.14%			0.17%			0.13%			0.18%
Other selected information – Canadian Banking
Net income	$	2,140		$	1,914		$	1,872		$	4,054		$	3,626
NIM		2.45%			2.41%			2.55%			2.43%			2.55%
Efficiency ratio		41.2%			40.8%			40.8%			41.0%			41.3%
Operating leverage		(1.2)%			2.8%			4.7%			0.8%			1.5%
(1)	See Glossary for composition of this measure.
---	---
(2)	AUA represents <br>period-end<br> spot balances and includes securitized residential mortgages and credit card loans as at April 30, 2022 of $14 billion and $4 billion, respectively (January 31, 2022 – $15 billion and $3 billion; April 30, 2021 – $15 billion and $3 billion).
---	---

Financial performance

Q2 2022 vs. Q2 2021

Net income increased $326 million or 17% from a year ago, primarily attributable to lower PCL and higher net interest income reflecting average volume growth of 9% in Canadian Banking that more than offset the impact of lower spreads.

Total revenue increased $212 million or 5%.

Canadian Banking revenue increased $190 million or 4%, primarily due to higher net interest income reflecting average volume growth of 10% in deposits and 9% in loans that more than offset the impact of lower spreads. Higher average mutual fund balances driving higher distribution fees also contributed to the increase. These factors were partially offset by lower securities brokerage commissions as the prior year benefitted from increased client activity.

Caribbean & U.S. Banking revenue increased $22 million or 12% mainly due to higher net interest income reflecting average volume growth as well as gains related to a sale and leaseback transaction in the current quarter. Higher card service and foreign exchange revenue also contributed to the increase.

NIM was down 10 bps, mainly due to competitive pricing pressures and lower prepayment revenue in our mortgage portfolios, partially offset by the impact of the rising interest rate environment.

PCL decreased $311 million, primarily reflecting higher releases of provisions on performing loans in our Canadian Banking and Caribbean Banking portfolios. Reduced uncertainty relating to the COVID-19 pandemic drove a higher release compared to last year, partially tempered by increased downside risks including rising inflation and interest rates. Lower provisions on impaired loans, largely in our Canadian Banking portfolios, also contributed to the decrease, resulting in a decrease of 6 bps in the PCL on impaired loans ratio.

Non-interest expense increased $100 million or 5%, mainly attributable to higher technology-related costs, including digital initiatives, as well as higher staff-related and marketing costs.

14 Royal Bank of Canada Second Quarter 2022

Q2 2022 vs. Q1 2022

Net income increased $260 million or 13% from last quarter, primarily attributable to lower PCL, largely driven by higher releases of provisions on performing loans in the current quarter reflecting reduced uncertainty relating to the COVID-19 pandemic, partially tempered by increased downside risks. Lower staff-related costs also contributed to the increase. Net interest income remained relatively flat as higher spreads and average volume growth of 1% more than offset the impact of three less days in the current quarter. These factors were partially offset by the impact of realized gains from commercial mortgage securitization activities in the prior quarter and lower average mutual fund balances driving lower distribution fees.

NIM was up 5 bps, mainly due to the impact of interest rate increases in the current quarter.

Q2 2022 vs. Q2 2021 (Six months ended)

Net income increased $507 million or 14% from the same period last year, primarily attributable to lower PCL, higher non-interest income and higher net interest income reflecting average volume growth of 9% in Canadian Banking that more than offset the impact of lower spreads. These factors were partially offset by higher staff and technology-related costs, including digital initiatives.

Total revenue increased $452 million or 5%, largely due to higher net interest income reflecting average volume growth in Canadian Banking of 10% in deposits and 9% in loans that more than offset the impact of lower spreads. Higher average mutual fund balances driving higher distribution fees, higher service charges and foreign exchange revenue reflecting increased client activity, as well as realized gains from commercial mortgage securitization activities also contributed to the increase. These factors were partially offset by lower securities brokerage commissions as the prior year benefitted from increased client activity.

PCL decreased $347 million, largely reflecting higher releases of provisions on performing loans in our Canadian Banking and Caribbean Banking portfolios. Reduced uncertainty relating to the COVID-19 pandemic drove a higher release compared to the same period last year, partially tempered by increased downside risks including rising inflation and interest rates. Lower provisions on impaired loans, largely in our Canadian Banking portfolios, also contributed to the decrease, resulting in a decrease of 5 bps in the PCL on impaired loans ratio.

Non-interest expense increased $144 million or 4%, mainly attributable to higher staff and technology-related costs, including digital initiatives, as well as increased marketing costs.

Royal Bank of Canada Second Quarter 2022 15

Wealth Management
									As at or for the six months ended
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars, except number of, percentage amounts and as otherwise noted)			January 31<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Net interest income	780		$	745		$	666		$	1,525		$	1,332
Non-interest income (1)	2,825			2,868			2,594			5,693			5,147
Total revenue (1)	3,605			3,613			3,260			7,218			6,479
PCL on performing assets	(30	)		(13	)		(5	)		(43	)		(7	)
PCL on impaired assets	–			1			3			1			(24	)
PCL	(30	)		(12	)		(2	)		(42	)		(31	)
Non-interest expense (1)	2,644			2,581			2,371			5,225			4,777
Income before income taxes (1)	991			1,044			891			2,035			1,733
Net income (1)	750		$	795		$	683		$	1,545		$	1,324
Revenue by business
Canadian Wealth Management	1,071		$	1,072		$	964		$	2,143		$	1,864
U.S. Wealth Management (including City National) (1)	1,775			1,727			1,566			3,502			3,100
U.S. Wealth Management (including City National) (US millions) (1)	1,399			1,359			1,250			2,758			2,446
Global Asset Management	678			736			628			1,414			1,323
International Wealth Management	81			78			102			159			192
Selected balance sheet and other information
ROE	16.7%			17.7%			17.0%			17.2%			16.2%
NIM	2.32%			2.11%			2.38%			2.21%			2.36%
Pre-tax margin (1), (2)	27.5%			28.9%			27.3%			28.2%			26.7%
Number of advisors (3)	5,623			5,564			5,459			5,623			5,459
Average total earning assets, net	137,900		$	139,900		$	114,800		$	138,900		$	113,800
Average loans and acceptances, net	95,700			92,900			83,100			94,300			82,500
Average deposits	158,800			161,500			139,700			160,200			138,800
AUA (4)	1,301,900			1,341,100			1,227,000			1,301,900			1,227,000
U.S. Wealth Management (including City National) (4)	681,600			712,700			651,300			681,600			651,300
U.S. Wealth Management (including City National) (US millions) (4)	530,400			560,800			529,800			530,400			529,800
AUM (4)	949,800			1,013,100			922,300			949,800			922,300
Average AUA	1,326,100			1,351,300			1,218,200			1,338,900			1,194,400
Average AUM	980,300			1,021,200			910,400			1,001,100			896,800
PCL on impaired loans as a % of average net loans and acceptances	0.00%			0.00%			0.02%			0.00%			(0.06)%

All values are in US Dollars.

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 six<br> <br>months ended
			Q2 2022 vs.<br> <br>Q1 2022			Q2 2022 vs.<br> <br>Q2 2021
Increase (decrease):
Total revenue	12		$	(12	)	$	(12	)
PCL	(1	)		–			(1	)
Non-interest expense	8			(10	)		(11	)
Net income	3			(2	)		(1	)
Percentage change in average U.S. dollar equivalent of C1.00	(1)%			–%			–%
Percentage change in average British pound equivalent of C1.00	5%			3%			3%
Percentage change in average Euro equivalent of C1.00	8%			4%			8%

All values are in US Dollars.

(1)	Effective Q4 2021, gains (losses) on economic hedges of our U.S. share-based compensation plans, which are reflected in revenue, and related variability in share-based compensation expense driven by changes in the fair value of liabilities relating to our U.S. share-based compensation plans have been reclassified from our Wealth Management segment to Corporate Support. Comparative amounts have been reclassified to conform with this presentation.
(2)	Pre-tax<br> margin is defined as Income before income taxes divided by Total revenue.
---	---
(3)	Represents client-facing advisors across all of our Wealth Management businesses.
---	---
(4)	Represents <br>period-end<br> spot balances.
---	---

Financial performance

Q2 2022 vs. Q2 2021

Net income increased $67 million or 10% from a year ago, primarily due to higher average fee-based client assets. Higher net interest income driven by average volume growth also contributed to the increase. These factors were partially offset by higher variable compensation, higher staff-related costs, as well as lower transactional revenue.

Total revenue increased $345 million or 11%.

Canadian Wealth Management revenue increased $107 million or 11%, primarily due to higher average fee-based client assets reflecting net sales and market appreciation.

U.S. Wealth Management (including City National) revenue increased $209 million or 13%. In U.S. dollars, revenue increased $149 million or 12%, mainly due to higher average fee-based client assets reflecting net sales and market appreciation and gains on the sale of certain non-core affiliates. Higher net interest income also contributed to the increase, reflecting average volume growth of 12% in loans and 13% in deposits that more than offset the impact of lower spreads. These factors were partially offset by lower transactional revenue, mainly driven by client activity.

16 Royal Bank of Canada Second Quarter 2022

Global Asset Management revenue increased $50 million or 8%, primarily due to higher average fee-based client assets reflecting net sales and market appreciation.

International Wealth Management revenue decreased $21 million.

PCL decreased $28 million in U.S. Wealth Management (including City National), primarily reflecting higher releases of provisions on performing loans. Reduced uncertainty relating to the COVID-19 pandemic drove a higher release compared to last year, partially tempered by increased downside risks.

Non-interest expense increased $273 million or 12%, mainly due to higher variable compensation commensurate with increased results. Higher staff and technology related costs also contributed to the increase.

Q2 2022 vs. Q1 2022

Net income decreased $45 million or 6% from last quarter, mainly reflecting the impact of a partial release of a legal provision in U.S. Wealth Management (including City National) in the prior quarter. Lower average fee-based client assets largely reflecting unfavourable market conditions, as well as a decline in transactional revenue also contributed to the decrease. These factors were partially offset by gains on the sale of certain non-core affiliates, as well as higher net interest income reflecting the rising interest rate environment.

Q2 2022 vs. Q2 2021 (Six months ended)

Net income increased $221 million or 17% from the same period last year, primarily due to higher average fee-based client assets and higher net interest income driven by average volume growth that more than offset lower spreads. These factors were partially offset by higher variable compensation and higher staff-related costs.

Total revenue increased $739 million or 11%, primarily due to higher average fee-based client assets reflecting net sales and market appreciation, as well as higher net interest income driven by average volume growth of 14% in loans and 15% in deposits that more than offset the impact of lower spreads. These factors were partially offset by lower transactional revenue, mainly driven by client activity.

PCL decreased $11 million or 35%, mainly reflecting higher releases of provisions on performing loans. Reduced uncertainty relating to the COVID-19 pandemic drove a higher release compared to the same period last year, partially tempered by increased downside risks. This was partially offset by higher provisions and lower recoveries on impaired loans in the current period as compared to the same period last year, resulting in an increase of 6 bps in the PCL on impaired loans ratio.

Non-interest expense increased $448 million or 9%, primarily due to higher variable compensation commensurate with increased results. Higher staff and technology related costs also contributed to the increase. Partly offsetting these factors was the partial release of a legal provision taken in U.S. Wealth Management (including City National) in the prior year.

Insurance
	As at or for the three months ended									As at or for the six months ended
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars, except<br> <br>percentage amounts and as otherwise noted)	April 30<br> <br>2022			January 31<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Non-interest<br> income
Net earned premiums	$	1,210		$	1,599		$	929		$	2,809		$	2,177
Investment income, gains/(losses) on assets supporting insurance policyholder liabilities <br>(1)		(1,022	)		(252	)		(432	)		(1,274	)		92
Fee income		46			52			39			98			76
Total revenue		234			1,399			536			1,633			2,345
Insurance policyholder benefits and claims <br>(1)		(261	)		914			59			653			1,390
Insurance policyholder acquisition expense		81			83			90			164			165
Non-interest<br> expense		145			147			140			292			289
Income before income taxes		269			255			247			524			501
Net income	$	206		$	197		$	187		$	403		$	388
Revenue by business
Canadian Insurance	$	(507	)	$	693		$	(172	)	$	186		$	985
International Insurance		741			706			708			1,447			1,360
Selected balances and other information
ROE		34.6%			32.4%			32.1%			33.5%			33.3%
Premiums and deposits <br>(2)	$	1,458		$	1,814		$	1,161		$	3,272		$	2,605
Fair value changes on investments backing policyholder liabilities <br>(1)		(1,133	)		(430	)		(568	)		(1,563	)		(222	)
(1)	Includes unrealized gains and losses on investments backing policyholder liabilities attributable to fluctuation of assets designated as FVTPL. The investments which support actuarial liabilities are predominantly fixed income assets designated as FVTPL. Consequently, changes in the fair values of these assets are recorded in Insurance premiums, investment and fee income in the Consolidated Statements of Income and are largely offset by changes in the fair value of the actuarial liabilities, the impact of which is reflected in PBCAE.
---	---
(2)	Premiums and deposits include premiums on risk-based insurance and annuity products, and individual and group segregated fund deposits, consistent with insurance industry practices.
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Royal Bank of Canada Second Quarter 2022 17

Financial performance

Q2 2022 vs. Q2 2021

Net income increased $19 million or 10% from a year ago, primarily due to higher favourable investment-related experience.

Total revenue decreased $302 million or 56%.

Canadian Insurance revenue decreased $335 million, mainly due to the change in fair value of investments backing policyholder liabilities, which is largely offset in PBCAE as indicated below. This was partially offset by higher group annuity sales and business growth across most products.

International Insurance revenue increased $33 million or 5%, primarily due to business growth in longevity reinsurance.

PBCAE decreased $329 million, primarily reflecting the change in fair value of investments backing policyholder liabilities, which is largely offset in revenue. Higher favourable investment-related experience also contributed to the decrease. These factors were partially offset by higher group annuity sales and business growth.

Non-interest expense increased $5 million or 4%.

Q2 2022 vs. Q1 2022

Net income increased $9 million or 5% from last quarter, primarily due to improved claims experience. This was partially offset by the impact of changes in new business mix, including lower new longevity reinsurance contracts.

Q2 2022 vs. Q2 2021 (Six months ended)

Net income increased $15 million or 4% from the same period last year, largely due to higher favourable investment-related experience, and business growth. These factors were partially offset by the impact of lower new longevity reinsurance contracts, as well as higher claims costs.

Total revenue decreased $712 million or 30%, mainly due to the change in fair value of investments backing policyholder liabilities, which is largely offset in PBCAE as indicated below. This was partially offset by higher group annuity sales and business growth across most products.

PBCAE decreased $738 million or 47%, mainly reflecting the change in fair value of investments backing policyholder liabilities, which is largely offset in revenue. Higher favourable investment-related experience also contributed to the decrease. These factors were partially offset by higher group annuity sales, business growth, higher claims costs, as well as the impact of lower new longevity reinsurance contracts.

Non-interest expense increased $3 million or 1%.

Investor & Treasury Services
	As at or for the three months ended							As at or for the six months ended
---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars, except<br> <br>percentage amounts and as otherwise noted)	April 30<br> <br>2022		January 31<br> <br>2022		April 30<br> <br>2021			April 30<br> <br>2022		April 30<br> <br>2021
Net interest income	$	148	$	163	$	87		$	311	$	178
Non-interest<br> income		403		424		447			827		921
Total revenue		551		587		534			1,138		1,099
PCL on performing assets		–		–		(2	)		–		(4	)
PCL on impaired assets		–		–		–			–		–
PCL		–		–		(2	)		–		(4	)
Non-interest<br> expense		398		420		375			818		776
Income before income taxes		153		167		161			320		327
Net income	$	121	$	118	$	120		$	239	$	243
Selected balance sheet and other information
ROE		16.1%		15.7%		14.3%			15.9%		14.8%
Average deposits	$	239,100	$	244,000	$	220,400		$	241,600	$	212,200
Average client deposits		61,400		66,300		64,000			63,900		63,600
Average wholesale funding deposits		177,700		177,700		156,400			177,700		148,600
AUA <br>(1)		4,443,800		4,716,500		4,530,100			4,443,800		4,530,100
Average AUA		4,515,400		4,659,100		4,579,400			4,588,400		4,604,500
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 six<br> <br>months ended
---	---	---	---	---	---	---	---	---
			Q2 2022 vs.<br> <br>Q1 2022			Q2 2022 vs.<br> <br>Q2 2021
Increase (decrease):
Total revenue	(16	)	$	(9	)	$	(32	)
PCL	–			–			–
Non-interest expense	(15	)		(8	)		(31	)
Net income	(1	)		(1	)		(1	)
Percentage change in average U.S. dollar equivalent of C1.00	(1)%			–%			–%
Percentage change in average British pound equivalent of C1.00	5%			3%			3%
Percentage change in average Euro equivalent of C1.00	8%			4%			8%

All values are in US Dollars.

(1)	Represents <br>period-end<br> spot balances

18 Royal Bank of Canada Second Quarter 2022

Financial performance

Q2 2022 vs. Q2 2021

Net income remained relatively flat as higher client deposit revenue was offset by higher technology-related costs, a favourable sales tax adjustment in the prior year and higher legal costs.

Total revenue increased $17 million or 3%, mainly due to higher client deposit revenue largely reflecting improved client deposit margins, partially offset by the impact of foreign exchange translation.

Non-interest expense increased $23 million or 6%, largely driven by higher technology-related costs. A favourable sales tax adjustment in the prior year and higher legal costs also contributed to the increase. These factors were partially offset by the impact of foreign exchange translation.

Q2 2022 vs. Q1 2022

Net income increased $3 million or 3% from last quarter, mainly driven by higher client deposit revenue reflecting improved client deposit margins. The impact of annual regulatory costs in the prior quarter and lower taxes also contributed to the increase. These factors were largely offset by lower funding and liquidity revenue reflecting a benefit from money market opportunities in the prior quarter.

Q2 2022 vs. Q2 2021 (Six months ended)

Net income decreased $4 million or 2% from the same period last year as higher revenue from client deposits, funding and liquidity and our asset services business was more than offset by higher non-interest expenses mainly driven by higher technology-related costs.

Total revenue increased $39 million or 4%, primarily due to higher client deposit revenue mainly reflecting improved client deposit margins. Higher funding and liquidity revenue reflecting a heightened impact from elevated enterprise liquidity in the prior period and increased market opportunities, partially offset by lower gains from the disposition of investment securities, and higher revenue from increased client activity in our asset services business, also contributed to the increase. These factors were partially offset by the impact of foreign exchange translation.

Non-interest expense increased $42 million or 5%, largely attributable to higher technology-related costs. A favourable sales tax adjustment in the prior period, higher legal costs, and changes in the fair value of our share-based compensation plans also contributed to the increase. These factors were partially offset by the impact of foreign exchange translation.

Capital Markets
	As at or for the three months ended									As at or for the six months ended
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars, except<br> <br>percentage amounts and as otherwise noted)	April 30<br> <br>2022			January 31<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Net interest income<br><br><br>(1)	$	1,181		$	1,241		$	1,121		$	2,422		$	2,320
Non-interest<br> income<br><br><br>(1)		1,167			1,569			1,597			2,736			3,106
Total revenue<br><br>(1)		2,348			2,810			2,718			5,158			5,426
PCL on performing assets		(66	)		(6	)		(98	)		(72	)		(139	)
PCL on impaired assets		29			(6	)		(29	)		23			(11	)
PCL		(37	)		(12	)		(127	)		(49	)		(150	)
Non-interest<br> expense		1,350			1,472			1,468			2,822			2,909
Income before income taxes		1,035			1,350			1,377			2,385			2,667
Net income	$	795		$	1,030		$	1,071		$	1,825		$	2,138
Revenue by business
Corporate and Investment Banking	$	1,123		$	1,393		$	1,197		$	2,516		$	2,309
Global Markets		1,350			1,498			1,562			2,848			3,188
Other		(125	)		(81	)		(41	)		(206	)		(71	)
Selected balance sheet and other information
ROE		12.8%			16.4%			18.9%			14.6%			18.7%
Average total assets	$	794,600		$	806,600		$	694,600		$	800,700		$	719,200
Average trading securities		137,300			139,600			120,900			138,500			123,100
Average loans and acceptances, net		118,800			111,100			97,300			114,900			97,800
Average deposits		83,200			75,900			72,600			79,500			73,100
PCL on impaired loans as a % of average net loans and acceptances		0.09%			(0.04)%			(0.13)%			0.03%			(0.02)%
(1)	The taxable equivalent basis (teb) adjustment for the three months ended April 30, 2022 was $145 million (January 31, 2022 – $142 million; April 30, 2021 – $135 million) and for the six months ended April 30, 2022 was $287 million (April 30, 2021 – $263 million). For further discussion, refer to the How we measure and report our business segments section of our 2021 Annual Report.
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Royal Bank of Canada Second Quarter 2022 19

Financial performance

Q2 2022 vs. Q2 2021

Net income decreased $276 million or 26% from a year ago, mainly due to lower revenue in Global Markets. Higher PCL and lower revenue in Corporate and Investment Banking also contributed to the decrease. These factors were partially offset by lower compensation.

Total revenue decreased $370 million or 14%.

Corporate and Investment Banking revenue decreased $74 million or 6%, largely driven by lower equity and debt origination as well as the impact from

unrealized

loan underwriting markdowns, all primarily in the U.S. These factors were partially offset by higher M&A activity across most regions, higher loan syndication activity in the U.S. and Europe, and higher lending revenue largely in the U.S.

Global Markets revenue decreased $212 million or 14%, mainly due to lower fixed income and equity trading revenue primarily in the U.S. as the prior year benefitted from stronger client activity. Lower equity origination across all regions, lower gains from the disposition of certain investment securities and lower debt origination across most regions also contributed to the decrease. These factors were partially offset by higher commodities trading revenue in Canada.

Other revenue decreased $84 million, mainly reflecting higher residual funding costs.

PCL increased $90 million or 71%, mainly reflecting provisions taken on impaired loans in the current quarter as compared to recoveries in the prior year, both largely in the oil and gas sector, resulting in an increase of 22 bps in the PCL on impaired loans ratio. Lower releases of provisions on performing loans also contributed to the increase as downside risks and portfolio growth tempered our releases in the current quarter as compared to last year.

Non-interest expense decreased $118 million or 8%, mainly due to lower compensation on decreased results.

Q2 2022 vs. Q1 2022

Net income decreased $235 million or 23% from last quarter, mainly due to lower fixed income and equity trading revenue across most regions as the prior quarter benefitted from stronger client activity. Lower equity and debt origination across most regions as well as lower M&A and loan syndication activity largely in the U.S. also contributed to the decrease. These factors were partially offset by lower compensation on decreased results.

Q2 2022 vs. Q2 2021 (Six months ended)

Net income decreased $313 million or 15% from the same period last year, largely driven by lower revenue in Global Markets. Higher taxes reflecting favourable tax adjustments in the prior period and higher PCL also contributed to the decrease. These factors were partially offset by higher revenue in Corporate & Investment Banking.

Total revenue decreased $268 million or 5%, mainly due to lower fixed income trading revenue in the U.S. and Europe as the prior period benefitted from stronger client activity, as well as lower equity and debt origination primarily in the U.S. These factors were partially offset by higher loan syndication activity in the U.S. and Europe, higher M&A activity across most regions and higher lending revenue in the U.S. and Europe.

PCL increased $101 million or 67%, mainly reflecting lower releases of provisions on performing loans as downside risks and portfolio growth tempered our releases in the current period as compared to the same period last year. Provisions on impaired loans in the current period as compared to recoveries in the same period last year also contributed to the increase, resulting in an increase of 5 bps in the PCL on impaired loans ratio.

Non-interest expense decreased $87 million or 3%, primarily driven by lower compensation on decreased results.

20 Royal Bank of Canada Second Quarter 2022

Corporate Support
	For the three months ended									For the six months ended
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars)	April 30<br> <br>2022			January 31<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Net interest income (loss)<br><br><br>(1)	$	(69	)	$	(107	)	$	(105	)	$	(176	)	$	(187	)
Non-interest<br> income (loss)<br><br><br>(1), (2)		(188	)		(39	)		148			(227	)		309
Total revenue<br><br>(1), (2)		(257	)		(146	)		43			(403	)		122
PCL		1			–			–			1			(1	)
Non-interest<br> expense <br>(2)		(118	)		(62	)		110			(180	)		277
Income (loss) before income taxes<br><br>(1), (2)		(140	)		(84	)		(67	)		(224	)		(154	)
Income taxes (recoveries)<br><br><br>(1), (2)		(287	)		(65	)		(113	)		(352	)		(222	)
Net income (loss)<br><br>(2)	$	147		$	(19	)	$	46		$	128		$	68
(1)	Teb adjusted.
---	---
(2)	Effective Q4 2021, gains (losses) on economic hedges of our U.S. share-based compensation plans, which are reflected in revenue, and related variability in share-based compensation expense driven by changes in the fair value of liabilities relating to our U.S. share-based compensation plans have been reclassified from our Wealth Management segment to Corporate Support. Comparative amounts have been reclassified to conform with this presentation.
---	---

Due to the nature of activities and consolidation adjustments reported in this segment, we believe that a comparative period analysis is not relevant. The following identifies material items affecting the reported results in each period.

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, 2022 was $145 million, compared to $142 million in the prior quarter and $135 million in the same quarter last year. The teb amount for the six months ended April 30, 2022 was $287 million, compared to $263 million in the same period last year. For the three months ended April 30, 2022, revenue included losses of $154 million (January 31, 2022 and April 30, 2021 – losses of $89 million and gains of $134 million, respectively) on economic hedges of our U.S. Wealth Management (including City National) share-based compensation plans, and non-interest expense included $(122) million (January 31, 2022 and April 30, 2021 – $(71) million and $124 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.

The following identifies the material items, other than the teb impacts noted previously, affecting the reported results in each period.

Q2 2022

Net income was $147 million, primarily due to net favourable tax adjustments.

Q1 2022

Net loss was $19 million, primarily due to unfavourable tax adjustments, partially offset by residual unallocated items.

Q2 2021

Net income was $46 million, primarily due to asset/liability management activities.

Q2 2022 (Six months ended)

Net income was $128 million, mainly due to net favourable tax adjustments.

Q2 2021 (Six months ended)

Net income was $68 million, mainly due to asset/liability management activities.

Royal Bank of Canada Second Quarter 2022 21

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)

	2022						2021											2020
(Millions of Canadian dollars,<br> <br>except per share and percentage amounts)	Q2			Q1			Q4			Q3			Q2			Q1		Q4			Q3
Personal & Commercial Banking	$	4,739		$	4,803		$	4,605		$	4,651		$	4,527		$	4,563	$	4,373		$	4,348
Wealth Management <br>(2)		3,605			3,613			3,444			3,373			3,260			3,219		3,061			3,008
Insurance		234			1,399			1,501			1,754			536			1,809		958			2,212
Investor & Treasury Services		551			587			548			517			534			565		521			484
Capital Markets <br>(3)		2,348			2,810			2,298			2,463			2,718			2,708		2,275			2,748
Corporate Support <br>(2), (3)		(257	)		(146	)		(20	)		(2	)		43			79		(96	)		120
Total revenue		11,220			13,066			12,376			12,756			11,618			12,943		11,092			12,920
PCL		(342	)		105			(227	)		(540	)		(96	)		110		427			675
PBCAE		(180	)		997			1,032			1,304			149			1,406		461			1,785
Non-interest<br> expense		6,434			6,580			6,583			6,420			6,379			6,542		6,058			6,380
Income before income taxes		5,308			5,384			4,988			5,572			5,186			4,885		4,146			4,080
Income taxes		1,055			1,289			1,096			1,276			1,171			1,038		900			879
Net income	$	4,253		$	4,095		$	3,892		$	4,296		$	4,015		$	3,847	$	3,246		$	3,201
EPS – basic	$	2.97		$	2.84		$	2.68		$	2.97		$	2.76		$	2.66	$	2.23		$	2.20
– diluted		2.96			2.84			2.68			2.97			2.76			2.66		2.23			2.20
Effective income tax rate		19.9%			23.9%			22.0%			22.9%			22.6%			21.2%		21.7%			21.5%
Period average US$ equivalent of C$1.00	$	0.789		$	0.787		$	0.796		$	0.812		$	0.798		$	0.779	$	0.756		$	0.737
(1)	Fluctuations in the Canadian dollar relative to other foreign currencies have affected our consolidated results over the period.
---	---
(2)	Effective Q4 2021, gains (losses) on economic hedges of our U.S. share-based compensation plans, which are reflected in revenue, and related variability in share-based compensation expense driven by changes in the fair value of liabilities relating to our U.S. share-based compensation plans have been reclassified from our Wealth Management segment to Corporate Support. Comparative amounts have been reclassified to conform with this presentation.
---	---
(3)	Teb adjusted. For further discussion, refer to the How we measure and report our business segments section of our 2021 Annual Report.
---	---

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 have generally trended upward over the period and have been impacted by the factors noted below. Quarterly earnings are affected by the impact of foreign exchange translation.

Personal & Commercial Banking revenue has benefitted from solid volume growth over the period. NIM has been negatively impacted by margin compression over the period from the lower interest rate environment, however the end of the period saw increasing interest rates.

Wealth Management revenue has benefitted from growth in average fee-based client assets and volume growth over the period. The low interest rate environment has negatively impacted revenue over the majority of the period, however the end of the period saw increasing interest rates.

Insurance revenue has fluctuated over the period, primarily due to the impact of changes in the fair value of investments backing policyholder liabilities as well as the timing of group annuity sales, both of which are largely offset in PBCAE. Group annuity sales are generally higher in the first and fourth quarters.

Investor & Treasury Services revenue has been impacted by interest rate movements, market volatility and client activity over the period, including heightened fluctuations in the third quarter of 2020.

Capital Markets revenue is influenced, to a large extent, by market conditions that impact client activity, with first quarter results generally stronger than those in the remaining quarters. Trading revenue across the first half of the period benefitted from increased client activity. During the latter half of the period, trading results began to be impacted by market normalization, albeit remaining above pre-pandemic levels. The period starting from the first quarter of 2021 generally saw strong results from M&A and loan syndication activity.

PCL is comprised of provisions taken on performing assets and provisions taken on impaired assets. PCL on performing assets has fluctuated over the period as it is impacted by macroeconomic conditions, changes in exposures and credit quality. Provisions on performing assets in the second half of 2020 continued to reflect the impact of the COVID-19 pandemic. Throughout 2021 and the first half of 2022, we saw improvements in our macroeconomic and credit quality outlook resulting in releases of provisions on performing assets. PCL on impaired assets trended lower over the period. The recovery that has been underway since the sharp drop of economic activity in calendar 2020 as well as the impact of the COVID-19 related government support and calendar 2020 payment deferral programs resulted in lower provisions on impaired loans, largely in our Canadian Banking retail portfolios, beginning in the second half of 2020. Provisions on impaired loans in Capital Markets trended lower since the second half of 2020, largely due to recoveries.

PBCAE has fluctuated over the period reflecting changes in the fair value of investments backing policyholder liabilities, which is impacted by changes in market conditions, as well as group annuity sales, both of which are largely offset in revenue. PBCAE has also fluctuated due to the impact of investment-related experience and claims costs over the period. Actuarial adjustments, which generally occur in the fourth quarter of each year, also impact PBCAE.

22 Royal Bank of Canada Second Quarter 2022

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 include investments in staff and technology. The fourth quarter of 2021 included a legal provision in U.S. Wealth Management (including City National) that was partially released in the first quarter of 2022.

Our effective income tax rate has fluctuated over the period, mostly due to varying levels of tax adjustments and changes in earnings mix. The second quarter of 2022 reflected the impact of net favourable tax adjustments.

Financial condition
Condensed balance sheets
---
	As at
---	---	---	---	---	---	---
(Millions of Canadian dollars)	April 30<br> <br>2022			October 31<br> <br>2021
Assets
Cash and due from banks	$	115,929		$	113,846
Interest-bearing deposits with banks		68,829			79,638
Securities, net of applicable allowance <br>(1)		298,315			284,724
Assets purchased under reverse repurchase agreements and securities borrowed		316,698			307,903
Loans
Retail		525,183			503,598
Wholesale		252,847			218,066
Allowance for loan losses		(3,566	)		(4,089	)
Other – Derivatives		156,204			95,541
– Other <br>(2)		118,133			107,096
Total assets	$	1,848,572		$	1,706,323
Liabilities
Deposits	$	1,151,597		$	1,100,831
Other – Derivatives		151,541			91,439
– Other <br>(2)		430,753			405,698
Subordinated debentures		10,276			9,593
Total liabilities		1,744,167			1,607,561
Equity attributable to shareholders		104,304			98,667
Non-controlling<br> interests		101			95
Total equity		104,405			98,762
Total liabilities and equity	$	1,848,572		$	1,706,323
(1)	Securities are comprised of trading and investment securities.
---	---
(2)	Other – Other assets and liabilities include Segregated fund net assets and liabilities, respectively.
---	---

Q2 2022 vs. Q4 2021

Total assets increased $142 billion or 8% from October 31, 2021. Foreign exchange translation increased total assets by $53 billion.

Cash and due from banks was up $2 billion or 2%, primarily due to higher deposits with central banks, reflecting our short-term cash and liquidity management activities.

Interest-bearing deposits with banks decreased $11 billion or 14%, primarily due to lower deposits with central banks, reflecting our cash and liquidity management activities.

Securities, net of applicable allowance, were up $14 billion or 5%, mainly due to higher government and corporate debt securities reflecting short-term market opportunities and the impact of foreign exchange translation. These factors were partially offset by lower equity trading securities.

Assets purchased under reverse repurchase agreements (reverse repos) and securities borrowed increased $9 billion or 3%, largely due to the impact of foreign exchange translation and increased client demand.

Loans (net of Allowance for loan losses) were up $57 billion or 8%, primarily due to volume growth in wholesale loans and residential mortgages.

Derivative assets were up $61 billion or 63%, mainly attributable to the impact of foreign exchange translation and higher fair values on foreign exchange contracts.

Other assets were up $11 billion or 10%, largely reflecting higher cash collateral.

Royal Bank of Canada Second Quarter 2022 23

Total liabilities increased $137 billion or 8%. Foreign exchange translation increased total liabilities by $53 billion.

Deposits increased $51 billion or 5%, largely due to higher retail deposits as a result of increased client activity and issuances of fixed term notes due to funding requirements. The impact of foreign exchange translation also contributed to the increase.

Derivative liabilities were up $60 billion or 66%, mainly attributable to the impact of foreign exchange translation and higher fair values on foreign exchange contracts.

Other liabilities were up $25 billion or 6%, mainly attributable to higher obligations related to repurchase agreements (repos) largely reflecting increased client activity, as well as higher cash collateral and the impact of foreign exchange translation.

Total equity increased $6 billion or 6%, mainly reflecting earnings, net of dividends, and other comprehensive income (OCI), including foreign currency translation adjustments. These factors were partially offset by share repurchases.

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 issuance of guarantees. These transactions give rise to, among other risks, varying degrees of market, credit, and liquidity and funding risk, which are discussed in the Risk management section of this Q2 2022 Report to Shareholders.

The following provides an update to our significant off-balance sheet transactions, which are described on pages 50 to 52 of our 2021 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, 2022, the total assets of the multi-seller conduits were $43 billion (October 31, 2021 – $40 billion) and our maximum exposure to loss was $43 billion (October 31, 2021 – $41 billion). The increase reflects the impact of foreign exchange translation, as well as higher securitization activities since October 31, 2021, primarily in the Consumer loans and Credit cards asset classes.

As at April 30, 2022, the total asset-backed commercial paper (ABCP) issued by the conduits amounted to $28 billion (October 31, 2021 – $25 billion). The rating agencies that rate the ABCP rated 100% (October 31, 2021 – 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 2021 Annual Report.

24 Royal Bank of Canada Second Quarter 2022

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, 2022
(Millions of Canadian dollars,<br> <br>except percentage amounts)	Residential mortgages										Home equity<br>lines of credit<br>(3)
	Insured<br>(2)				Uninsured				Total		Total
Region<br><br>(4)
Canada
Atlantic provinces	$	8,324	47	%	$	9,458	53	%	$	17,782	$	1,610
Quebec		12,539	30			29,177	70			41,716		3,175
Ontario		32,174	18			146,554	82			178,728		16,473
Alberta		20,083	48			21,394	52			41,477		5,159
Saskatchewan and Manitoba		8,962	45			10,913	55			19,875		1,939
B.C. and territories		12,694	18			56,011	82			68,705		7,490
Total Canada <br>(5)		94,776	26			273,507	74			368,283		35,846
U.S.		–	–			27,245	100			27,245		1,437
Other International		–	–			2,842	100			2,842		1,558
Total International		–	–			30,087	100			30,087		2,995
Total	$	94,776	24	%	$	303,594	76	%	$	398,370	$	38,841
	As at January 31, 2022
(Millions of Canadian dollars,<br> <br>except percentage amounts)	Residential mortgages										Home equity<br>lines of credit (3)
	Insured (2)				Uninsured				Total		Total
Region<br><br>(4)
Canada
Atlantic provinces	$	8,392	48	%	$	9,195	52	%	$	17,587	$	1,603
Quebec		12,618	31			28,397	69			41,015		3,142
Ontario		33,305	19			141,413	81			174,718		16,014
Alberta		20,458	49			21,144	51			41,602		5,249
Saskatchewan and Manitoba		9,133	46			10,820	54			19,953		1,959
B.C. and territories		13,035	19			54,071	81			67,106		7,359
Total Canada <br>(5)		96,941	27			265,040	73			361,981		35,326
U.S.		–	–			25,309	100			25,309		1,434
Other International		–	–			2,811	100			2,811		1,624
Total International		–	–			28,120	100			28,120		3,058
Total	$	96,941	25	%	$	293,160	75	%	$	390,101	$	38,384
(1)	Disclosure is provided in accordance with the requirements of OSFI’s Guideline <br>B-20<br> (Residential Mortgage Underwriting Practices and Procedures).
---	---
(2)	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.
---	---
(3)	Includes $38,815 million and $26 million of uninsured and insured home equity lines of credit, respectively (January 31, 2022 – $38,357 million and $27 million, respectively), reported within the personal loan category. The amounts in the U.S. and Other International include term loans collateralized by residential mortgages.
---	---
(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 $368 billion (January 31, 2022 – $362 billion) includes $11 billion (January 31, 2022 – $11 billion) of mortgages with commercial clients in Canadian Banking, of which $8 billion (January 31, 2022 – $8 billion) are insured, and $17 billion (January 31, 2022 – $18 billion) of residential mortgages held for securitization purposes in Capital Markets. All of the residential mortgages held for securitization purposes are insured (January 31, 2022 – 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<br> <br>2022									January 31<br> <br>2022
	Canada			U.S. and other<br>International			Total			Canada			U.S. and other<br>International			Total
Amortization period
≤<br> 25 years		66	%		26	%		63	%		74	%		26	%		71	%
> 25 years <br>≤<br> 30 years		22			74			26			26			74			29
> 30 years <br>≤<br> 35 years		12			–			11			–			–			–
Total		100	%		100	%		100	%		100	%		100	%		100	%
(1)	Disclosure is provided in accordance with the requirements of OSFI’s Guideline <br>B-20<br> (Residential Mortgage Underwriting Practices and Procedures).
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Royal Bank of Canada Second Quarter 2022 25

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<br> <br>2022						January 31<br> <br>2022						April 30<br> <br>2022
	Uninsured						Uninsured						Uninsured
	Residential<br>mortgages<br>(2)			RBC Homeline<br>Plan<br>®<br> products<br>(3)			Residential<br>mortgages (2)			RBC Homeline<br>Plan<br>®<br> products (3)			Residential<br>mortgages<br>(2)			RBC Homeline<br>Plan<br>®<br> products<br>(3)
Average of newly originated and acquired for the period, by region<br><br>(4)
Atlantic provinces		73	%		74	%		73	%		74	%		73	%		74	%
Quebec		72			72			72			73			72			73
Ontario		70			66			71			67			70			67
Alberta		73			73			73			72			73			73
Saskatchewan and Manitoba		74			75			74			75			74			75
B.C. and territories		68			66			68			66			68			66
U.S.		73			n.m.			76			n.m.			75			n.m.
Other International		73			n.m.			72			n.m.			72			n.m.
Average of newly originated and acquired for the period<br><br>(5), (6)		71	%		68	%		71	%		68	%		71	%		68	%
Total Canadian Banking residential mortgages portfolio<br><br>(7)		50	%		45	%		52	%		46	%		50	%		45	%
(1)	Disclosure is provided in accordance with the requirements of OSFI’s Guideline <br>B-20<br> (Residential Mortgage Underwriting Practices and Procedures).
---	---
(2)	Residential mortgages exclude residential mortgages within the RBC Homeline Plan<br>®<br> products.
---	---
(3)	RBC Homeline Plan<br>®<br> 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<br>®<br> products are calculated on a weighted basis by mortgage amounts at origination.
---	---
(6)	For newly originated mortgages and RBC Homeline Plan<br>®<br> products, LTV is calculated based on the total facility amount for the residential mortgage and RBC Homeline Plan<br>®<br> product divided by the value of the related residential property.
---	---
(7)	Weighted by mortgage balances and adjusted for property values based on the Teranet – National Bank National Composite House Price Index.
---	---
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<br> <br>2022																January 31<br> <br>2022
	Asset type								Client type
(Millions of Canadian dollars)	Loans<br> <br>Outstanding		Securities<br>(3)		Repo-style<br>transactions		Derivatives		Financials		Sovereign		Corporate		Total		Total
Europe (excluding U.K.)	$	16,399	$	34,289	$	1,220	$	2,737	$	20,306	$	20,771	$	13,568	$	54,645	$	51,773
U.K.		9,562		27,157		837		3,552		14,439		16,920		9,749		41,108		45,815
Latin America and the Caribbean		8,315		11,789		325		70		7,466		5,112		7,921		20,499		20,161
Asia-Pacific		6,315		34,400		866		1,134		9,474		28,432		4,809		42,715		38,680
Other <br>(4)		164		96		391		22		457		12		204		673		573
Net International exposure<br><br>(5), (6)	$	40,755	$	107,731	$	3,639	$	7,515	$	52,142	$	71,247	$	36,251	$	159,640	$	157,002
(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 $376 billion against repo-style transactions (January 31, 2022 – $351 billion) and $13 billion against derivatives (January 31, 2022 – $9 billion).
---	---
(3)	Securities include $16 billion of trading securities (January 31, 2022 – $20 billion), $57 billion of deposits (January 31, 2022 – $57 billion), and $35 billion of investment securities (January 31, 2022 – $33 billion).
---	---
(4)	Includes exposures in the Middle East and Africa.
---	---
(5)	Excludes $3,685 million (January 31, 2022 – $3,160 million) of exposures to supranational agencies.
---	---
(6)	Reflects $2,137 million of mitigation through credit default swaps, which are largely used to hedge single name exposures and market risk (January 31, 2022 – $1,801 million).
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26 Royal Bank of Canada Second Quarter 2022

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<br> <br>2022			January 31<br> <br>2022			October 31<br> <br>2021
Personal & Commercial Banking	$	1,449		$	1,524		$	1,590
Wealth Management		226			199			233
Capital Markets		462			418			485
Total GIL	$	2,137		$	2,141		$	2,308
Impaired loans, beginning balance	$	2,141		$	2,308		$	2,561
Classified as impaired during the period (new impaired) <br>(1)		398			263			298
Net repayments <br>(1)		(103	)		(125	)		(106	)
Amounts written off		(260	)		(237	)		(286	)
Other <br>(2)		(39	)		(68	)		(159	)
Impaired loans, balance at end of period	$	2,137		$	2,141		$	2,308
GIL as a % of related loans and acceptances
Total GIL as a % of related loans and acceptances		0.27%			0.28%			0.31%
Personal & Commercial Banking		0.26%			0.28%			0.30%
Canadian Banking		0.20%			0.22%			0.24%
Caribbean Banking		4.43%			4.54%			4.65%
Wealth Management		0.22%			0.21%			0.26%
Capital Markets		0.37%			0.37%			0.45%
(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 2022 vs. Q1 2022

Total GIL decreased $4 million from last quarter, and the total GIL ratio of 27 bps decreased 1 bp, due to lower impaired loans in Personal & Commercial Banking, largely offset by higher impaired loans in Capital Markets and Wealth Management.

GIL in Personal & Commercial Banking decreased $75 million or 5%, largely due to lower impaired loans in our Canadian Banking commercial portfolios, mainly in the real estate and related and other services sectors. Lower impaired loans in our Canadian Banking retail portfolios also contributed to the decrease.

GIL in Wealth Management increased $27 million or 14%, primarily reflecting higher impaired loans in U.S Wealth Management (including City National), mainly in the consumer discretionary sector.

GIL in Capital Markets increased $44 million or 11%, due to higher impaired loans in the consumer staples and other services sectors, partially offset by lower impaired loans in the oil and gas sector.

Allowance for credit losses (ACL)

	As at
(Millions of Canadian dollars)	April 30<br> <br>2022		January 31<br> <br>2022		October 31<br> <br>2021
Personal & Commercial Banking	$	3,029	$	3,462	$	3,478
Wealth Management		299		324		320
Capital Markets		557		602		620
Corporate Support and other <br>(1)		2		1		1
ACL on loans		3,887		4,389		4,419
ACL on other financial assets<br><br>(2)		39		53		52
Total ACL	$	3,926	$	4,442	$	4,471
ACL on loans is comprised of:
Retail	$	2,053	$	2,236	$	2,287
Wholesale		1,114		1,428		1,435
ACL on performing loans	$	3,167	$	3,664	$	3,722
ACL on impaired loans		720		725		697
(1)	Includes PCL recorded in Corporate Support, Insurance and Investor & Treasury Services.
---	---
(2)	ACL on other financial assets mainly represents allowances on debt securities measured at FVOCI and amortized cost, accounts receivable and financial guarantees.
---	---

Royal Bank of Canada Second Quarter 2022 27

Q2 2022 vs. Q1 2022

Total ACL of $3,926 million decreased $516 million or 12% from last quarter, primarily reflecting a decrease of $502 million in ACL on loans.

ACL on performing loans of $3,167 million decreased $497 million or 14%, primarily due to lower ACL in Personal & Commercial Banking. Reduced uncertainty relating to the COVID-19 pandemic drove releases in the current quarter, partially tempered by increased downside risks including rising inflation and interest rates.

ACL on impaired loans of $720 million decreased $5 million or 1%, primarily due to lower ACL in Personal & Commercial Banking, partially offset by higher ACL in Capital Markets.

For further details, refer to Note 5 of our Condensed Financial Statements.

Market risk

Market risk is defined to be the impact of market prices upon our financial condition. This includes potential 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 2021 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), Stressed Value-at-Risk (SVaR), stress testing and Incremental Risk Charge (IRC). 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 IRRBB measurement methodology, controls, or limits from those described in our 2021 Annual Report. For further details of our approach to the management of market risk, refer to the Market risk section of our 2021 Annual Report.

Market risk measures – FVTPL positions

VaR and SVaR

The following table presents our Market risk VaR and Market risk SVaR figures.

	April 30, 2022										January 31, 2022						April 30, 2021
				For the three<br> <br>months ended										For the three<br>months ended						For the three<br>months ended
(Millions of Canadian dollars)	As at			Average			High		Low		As at			Average			As at			Average
Equity	$	46		$	33		$	46	$	21	$	39		$	34		$	20		$	18
Foreign exchange		3			4			6		3		4			5			5			4
Commodities		4			4			5		4		4			4			2			2
Interest rate <br>(1)		22			22			42		17		29			39			48			44
Credit specific <br>(2)		7			8			9		7		8			9			9			8
Diversification <br>(3)		(27	)		(25	)		n.m.		n.m.		(33	)		(35	)		(30	)		(34	)
Market risk VaR	$	55		$	46		$	57	$	37	$	51		$	56		$	54		$	42
Market risk Stressed VaR	$	101		$	80		$	130	$	47	$	65		$	71		$	58		$	53
	April 30, 2022										April 30, 2021
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
				For the six<br> <br>months ended										For the six<br>months ended
(Millions of Canadian dollars)	As at			Average			High		Low		As at			Average
Equity	$	46		$	33		$	48	$	21	$	20		$	17
Foreign exchange		3			4			7		3		5			4
Commodities		4			4			5		3		2			2
Interest rate (1)		22			31			62		17		48			42
Credit specific (2)		7			8			10		7		9			8
Diversification (3)		(27	)		(29	)		n.m.		n.m.		(30	)		(33	)
Market risk VaR	$	55		$	51		$	87	$	34	$	54		$	40
Market risk Stressed VaR	$	101		$	75		$	130	$	47	$	58		$	54
(1)	General credit spread risk and funding spread risk associated with uncollateralized derivatives are included under interest rate VaR.
---	---
(2)	Credit specific risk captures issuer-specific credit spread volatility.
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(3)	Market risk VaR is less than the sum of the individual risk factor VaR results due to risk factor diversification.
---	---
n.m.	not meaningful
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Q2 2022 vs. Q2 2021

Average market risk VaR of $46 million increased $4 million from a year ago. This was driven by the impact of heightened market volatility in the current quarter on our equity derivatives portfolio and a reduced impact from diversification, partially offset by the impact of the Q2 2020 period of significant market volatility no longer being reflected in our two-year historical VaR period.

Average SVaR of $80 million increased $27 million, mainly driven by increased exposures in our fixed income and interest rate derivative portfolios from client-driven activities, and unfavourable market conditions in the current quarter which impacted loan underwriting commitments.

28 Royal Bank of Canada Second Quarter 2022

Q2 2022 vs. Q1 2022

Average market risk VaR of $46 million decreased $10 million from last quarter, mainly due to the impact of the Q2 2020 period of significant market volatility no longer being reflected in our two-year historical VaR period, partially offset by a reduced impact from diversification.

Average SVaR of $80 million increased $9 million, mainly driven by unfavourable market conditions in the current quarter which impacted loan underwriting commitments.

Q2 2022 vs. Q2 2021 (Six months ended)

Average market risk VaR of $51 million increased $11 million from the same period last year, largely driven by increased exposures in our fixed income and interest rate derivative portfolios from client-driven activities, and the impact of heightened market volatility in the current period on our equity derivatives portfolio, partially offset by the impact of the Q2 2020 period of significant market volatility no longer being reflected in our two-year historical VaR period.

Average SVaR of $75 million increased $21 million, largely driven by increased exposures in our fixed income and interest rate derivative portfolios from client-driven activities, and the impact of heightened market volatility in the current period on our equity derivatives portfolio.

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, 2022 and January 31, 2022.

(1)	Includes loan underwriting commitments.

Market risk measures for assets and liabilities of RBC Insurance ®

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 designated as FVTPL. Consequently, changes in the fair values of these assets are recorded in the Consolidated Statements of Income and are largely offset by changes in the fair value of the actuarial liabilities, the impact of which is reflected in Insurance policyholder benefits, claims and acquisition expense. As at April 30, 2022, we held assets in support of $12 billion of liabilities with respect to insurance obligations (January 31, 2022 – $13 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 12-month NII and EVE, assuming no subsequent hedging. Rate floors are applied within the declining rates scenarios which prevent EVE valuation and NII simulation rate levels from falling below a minimum average level of negative 25 bps across major currencies. 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<br> <br>2022																		January 31<br> <br>2022						April 30<br> <br>2021
	EVE risk									NII risk<br>(1)
(Millions of Canadian dollars)	Canadian<br>dollar<br>impact			U.S.<br> <br>dollar<br>impact			Total			Canadian<br>dollar<br>impact			U.S.<br> <br>dollar<br>impact			Total			EVE risk			NII risk (1)			EVE risk			NII risk (1)
Before-tax<br> impact of:
100 bps increase in rates	$	(1,460	)	$	(594	)	$	(2,054	)	$	712		$	375		$	1,087		$	(2,162	)	$	853		$	(2,064	)	$	858
100 bps decrease in rates		1,386			342			1,728			(850	)		(364	)		(1,214	)		1,519			(964	)		1,771			(858	)
(1)	Represents the <br>12-month<br> NII exposure to an instantaneous and sustained shift in interest rates.
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Royal Bank of Canada Second Quarter 2022 29

As at April 30, 2022, an immediate and sustained -100 bps shock would have had a negative impact to our NII of $1,214 million, up from $964 million last quarter and an immediate and sustained +100bps shock would have had a positive impact to our NII of $1,087 million, up from $853 million last quarter. An immediate and sustained +100 bps shock as at April 30, 2022 would have had a negative impact to the bank’s EVE of $2,054 million, down from $2,162 million last quarter. The quarter-over-quarter NII sensitivity increased as a higher proportion of our floating rate assets were funded by low cost deposits in the current quarter, while the quarter-over-quarter EVE sensitivity decreased reflecting higher NII sensitivity. During the second quarter of 2022, NII and EVE risks remained within approved limits.

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, 2022
				Market risk measure
(Millions of Canadian dollars)	Balance sheet<br>amount			Traded risk<br>(1)		Non-traded<br><br>risk<br>(2)			Non-traded<br> risk<br>primary risk sensitivity
Assets subject to market risk
Cash and due from banks	$	115,929		$	–	$	115,929			Interest rate
Interest-bearing deposits with banks		68,829			58,319		10,510			Interest rate
Securities
Trading		143,766			132,464		11,302			Interest rate, credit spread
Investment, net of applicable allowance		154,549			–		154,549			Interest rate, credit spread, equity
Assets purchased under reverse repurchase agreements and securities borrowed		316,698			271,184		45,514			Interest rate
Loans
Retail		525,183			5,382		519,801			Interest rate
Wholesale		252,847			9,839		243,008			Interest rate
Allowance for loan losses		(3,566	)		–		(3,566	)		Interest rate
Segregated fund net assets		2,659			–		2,659			Interest rate
Other
Derivatives		156,204			152,811		3,393			Interest rate, foreign exchange
Other assets		101,282			9,076		92,206			Interest rate
Assets not subject to market risk<br><br>(3)		14,192
Total assets	$	1,848,572		$	639,075	$	1,195,305
Liabilities subject to market risk
Deposits	$	1,151,597		$	132,342	$	1,019,255			Interest rate
Segregated fund liabilities		2,659			–		2,659			Interest rate
Other
Obligations related to securities sold short		39,464			39,464		–
Obligations related to assets sold<br>under repurchase agreements and<br>securities loaned		279,338			252,307		27,031			Interest rate
Derivatives		151,541			143,679		7,862			Interest rate, foreign exchange
Other liabilities		91,069			10,424		80,645			Interest rate
Subordinated debentures		10,276			–		10,276			Interest rate
Liabilities not subject to market risk<br><br>(4)		18,223
Total liabilities	$	1,744,167		$	578,216	$	1,147,728
Total equity		104,405
Total liabilities and equity	$	1,848,572
(1)	Traded risk includes positions that are classified or designated as FVTPL and positions whose revaluation gains and losses are reported in revenue. Market risk measures of VaR, SVaR, IRC and stress testing are used as risk controls for traded risk.
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(2)	Non-traded<br> risk includes positions used in the management of IRRBB and other <br>non-trading<br> portfolios. Other material <br>non-trading<br> portfolios include positions from RBC Insurance<br>®<br> and investment securities, net of applicable allowance, not included in IRRBB.
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(3)	Assets not subject to market risk include physical and other assets.
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(4)	Liabilities not subject to market risk include payroll related and other liabilities.
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30 Royal Bank of Canada Second Quarter 2022

	As at January 31, 2022
				Market risk measure
(Millions of Canadian dollars)	Balance sheet<br>amount			Traded risk (1)		Non-traded<br><br>risk (2)			Non-traded<br> risk<br>primary risk sensitivity
Assets subject to market risk
Cash and due from banks	$	131,163		$	–	$	131,163		Interest rate
Interest-bearing deposits with banks		63,420			50,222		13,198		Interest rate
Securities
Trading		149,525			137,203		12,322		Interest rate, credit spread
Investment, net of applicable allowance		153,570			–		153,570		Interest rate, credit spread, equity
Assets purchased under reverse repurchase agreements and securities borrowed		312,126			270,142		41,984		Interest rate
Loans
Retail		513,970			4,538		509,432		Interest rate
Wholesale		230,108			11,348		218,760		Interest rate
Allowance for loan losses		(4,047	)		–		(4,047	)	Interest rate
Segregated fund net assets		2,730			–		2,730		Interest rate
Other
Derivatives		92,319			90,252		2,067		Interest rate, foreign exchange
Other assets		95,890			9,101		86,789		Interest rate
Assets not subject to market risk<br><br>(3)		11,695
Total assets	$	1,752,469		$	572,806	$	1,167,968
Liabilities subject to market risk
Deposits	$	1,142,842		$	140,180	$	1,002,662		Interest rate
Segregated fund liabilities		2,730			–		2,730		Interest rate
Other
Obligations related to securities sold short		41,544			41,544		–
Obligations related to assets sold<br>under repurchase agreements and securities loaned		265,009			238,833		26,176		Interest rate
Derivatives		88,102			85,474		2,628		Interest rate, foreign exchange
Other liabilities		81,297			9,620		71,677		Interest rate
Subordinated debentures		10,561			–		10,561		Interest rate
Liabilities not subject to market risk<br><br>(4)		18,376
Total liabilities	$	1,650,461		$	515,651	$	1,116,434
Total equity		102,008
Total liabilities and equity	$	1,752,469
(1)	Traded risk includes positions that are classified or designated as FVTPL and positions whose revaluation gains and losses are reported in revenue. Market risk measures of VaR, SVaR, IRC and stress testing are used as risk controls for traded risk.
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(2)	Non-traded<br> risk includes positions used in the management of IRRBB and other <br>non-trading<br> portfolios. Other material <br>non-trading<br> portfolios include positions from RBC Insurance<br>®<br> and investment securities, net of applicable allowance, not included in IRRBB.
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(3)	Assets not subject to market risk include physical and other assets.
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(4)	Liabilities not subject to market risk include payroll related and other liabilities.
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Royal Bank of Canada Second Quarter 2022 31

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 Framework (LRMF) is designed to ensure that we have sufficient liquidity to satisfy current and prospective commitments in both normal and stressed conditions. There have been no material changes to our LRMF as described in our 2021 Annual Report.

We continue to maintain liquidity and funding that we believe is appropriate for the execution of our strategy. Liquidity risk remains well within our risk appetite.

Liquidity reserve

Our liquidity reserve consists of available unencumbered liquid assets. Although unused wholesale funding capacity, which is regularly assessed, could be another potential source of liquidity to mitigate stressed conditions, it is excluded in the determination of the liquidity reserve. Similarly, uncommitted and undrawn central bank borrowing facilities that could be accessed subject to satisfying certain preconditions as set by various central banks (e.g., BoC, the Fed, Bank of England, and Bank of France), as well as amounts that qualify as eligible collateral at the Federal Reserve Bank of New York (FRBNY) and Federal Home Loan Bank (FHLB) are also excluded from the determination of the liquidity reserve.

	As at April 30, 2022
(Millions of Canadian dollars)	Bank-owned<br>liquid assets		Securities<br>received<br>as collateral<br>from securities<br>financing<br>and derivative<br>transactions		Total liquid<br>assets		Encumbered<br>liquid assets		Unencumbered<br>liquid assets
Cash and due from banks	$	115,929	$	–	$	115,929	$	3,612	$	112,317
Interest-bearing deposits with banks		68,829		–		68,829		–		68,829
Securities issued or guaranteed by sovereigns, central banks or multilateral development banks <br>(1)		224,391		329,058		553,449		376,291		177,158
Other securities		117,767		124,085		241,852		141,199		100,653
Other liquid assets <br>(2)		37,950		–		37,950		35,338		2,612
Total liquid assets	$	564,866	$	453,143	$	1,018,009	$	556,440	$	461,569
	As at January 31, 2022
(Millions of Canadian dollars)	Bank-owned<br>liquid assets		Securities<br>received<br>as collateral<br>from securities<br>financing<br>and derivative<br>transactions		Total liquid<br>assets		Encumbered<br>liquid assets		Unencumbered<br>liquid assets
Cash and due from banks	$	131,163	$	–	$	131,163	$	3,438	$	127,725
Interest-bearing deposits with banks		63,420		–		63,420		–		63,420
Securities issued or guaranteed by sovereigns, central banks or multilateral development banks <br>(1)		222,651		323,397		546,048		363,498		182,550
Other securities		126,888		124,251		251,139		143,135		108,004
Other liquid assets <br>(2)		29,604		–		29,604		27,529		2,075
Total liquid assets	$	573,726	$	447,648	$	1,021,374	$	537,600	$	483,774
	As at
(Millions of Canadian dollars)	April 30<br> <br>2022		January 31<br> <br>2022
Royal Bank of Canada	$	204,567	$	234,654
Foreign branches		85,933		82,729
Subsidiaries		171,069		166,391
Total unencumbered liquid assets	$	461,569	$	483,774
(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).
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(2)	Encumbered liquid assets amount represents cash collateral and margin deposit amounts pledged related to <br>over-the-counter<br> (OTC) and exchange-traded derivative transactions.
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The liquidity reserve is typically most affected by routine flows of client banking activity where liquid asset portfolios reflect changes in deposit and loan balances, as well as by activities in Capital Markets and Investor & Treasury Services, where business strategies and client flows may also affect liquidity reserve balances. Corporate Treasury also affects liquidity reserves through the management of funding issuances where reserves absorb timing mismatches between debt issuances and deployment into business activities.

32 Royal Bank of Canada Second Quarter 2022

Q2 2022 vs. Q1 2022

Total unencumbered liquid assets decreased $22 billion or 5% from last quarter, mainly due to a reduction in cash and due from banks, reflecting a decrease in deposits with central banks, which was largely driven by changes in our balance sheet composition, primarily strong loan growth. A reduction in unencumbered securities, including the impact from collateral pledged under repurchase agreements, also contributed to the decrease.

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 that are 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, 2022, our unencumbered assets available as collateral comprised 24% of total assets (January 31, 2022 – 26%).

	As at
	April 30<br> <br>2022												January 31<br> <br>2022
	Encumbered				Unencumbered								Encumbered				Unencumbered
(Millions of Canadian dollars)	Pledged as<br>collateral		Other<br>(1)		Available as<br>collateral<br>(2)		Other<br>(3)			Total			Pledged as<br>collateral		Other (1)		Available as<br>collateral (2)		Other (3)			Total
Cash and due from banks	$	–	$	3,612	$	112,317	$	–		$	115,929		$	–	$	3,438	$	127,725	$	–		$	131,163
Interest-bearing deposits with banks		–		–		68,829		–			68,829			–		–		63,420		–			63,420
Securities
Trading		63,774		–		85,663		3,156			152,593			63,438		–		92,821		3,384			159,643
Investment, net of applicable allowance		11,305		–		143,244		–			154,549			12,020		–		141,550		–			153,570
Assets purchased under reverse repurchase agreements and securities borrowed <br>(4)		462,771		22,688		4,506		3,873			493,838			447,021		22,711		13,448		3,616			486,796
Loans
Retail
Mortgage securities		28,484		–		28,702		–			57,186			29,786		–		29,921		–			59,707
Mortgage loans		52,261		–		32,863		256,060			341,184			49,007		–		31,211		250,176			330,394
Non-mortgage<br> loans		4,082		–		8,483		114,248			126,813			3,297		–		7,290		113,282			123,869
Wholesale		–		–		–		252,847			252,847			–		–		–		230,108			230,108
Allowance for loan losses		–		–		–		(3,566	)		(3,566	)		–		–		–		(4,047	)		(4,047	)
Segregated fund net assets		–		–		–		2,659			2,659			–		–		–		2,730			2,730
Other
Derivatives		–		–		–		156,204			156,204			–		–		–		92,319			92,319
Others <br>(5)		35,338		–		2,612		77,524			115,474			27,529		–		2,075		77,981			107,585
Total assets	$	658,015	$	26,300	$	487,219	$	863,005		$	2,034,539		$	632,098	$	26,149	$	509,461	$	769,549		$	1,937,257
(1)	Includes assets restricted from use to generate secured funding due to legal or other constraints.
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(2)	Represents assets that are readily available for use as collateral, including NHA MBS, our unencumbered mortgage loans that qualify as eligible collateral at FHLB, as well as loans that qualify as eligible collateral for the discount window facility available to us and lodged at the FRBNY.
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(3)	Other unencumbered assets are not subject to any restrictions on their use to secure funding or as collateral but would not be considered readily available.
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(4)	Includes bank-owned liquid assets and securities received as collateral from <br>off-balance<br> sheet securities financing, derivative transactions, and margin lending. Includes $23 billion (January 31, 2022 – $23 billion) of collateral received through reverse repurchase transactions that cannot be rehypothecated in its current legal form.
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(5)	The Pledged as collateral amount represents cash collateral and margin deposit amounts pledged related to OTC and exchange-traded derivative transactions.
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Funding

Funding strategy

Core funding, comprising capital, longer-term wholesale liabilities and a diversified pool of personal and, to a lesser extent, commercial and institutional deposits, is the foundation of our structural liquidity position.

Deposit and funding profile

As at April 30, 2022, relationship-based deposits, which are the primary source of funding for retail loans and mortgages, were $793 billion or 54% of our total funding (January 31, 2022 – $786 billion or 54%). 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.

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, 2022, the notional value of issued and outstanding long-term debt subject to conversion under the Bail-in regime was $68 billion (January 31, 2022 – $60 billion).

For further details on our wholesale funding, refer to the Composition of wholesale funding tables below.

Royal Bank of Canada Second Quarter 2022 33

Long-term debt issuance

Our 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 operate long-term debt issuance registered programs. The following table summarizes these programs with their authorized limits by geography.

Programs by geography
Canada	U.S.	Europe/Asia
---	---	---
• Canadian Shelf Program – $25 billion	• U.S. Shelf Program – US$50 billion	• European Debt Issuance Program – US$40 billion
		• Global Covered Bond Program – <br>€<br>60 billion
		• Japanese Issuance Programs – ¥1 trillion

We also raise long-term funding using Canadian Senior Notes, Canadian National Housing Act MBS, Canada Mortgage Bonds, credit card receivable-backed securities, 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). 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. As presented in the following charts, our current long-term debt profile is well-diversified by both currency and product. Maintaining competitive credit ratings is also critical to cost-effective funding.

(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

34 Royal Bank of Canada Second Quarter 2022

The following table provides our composition of wholesale funding based on remaining term to maturity:

Composition of wholesale funding

(1)

	As at April 30, 2022
(Millions of Canadian dollars)	Less than 1<br>month		1 to 3<br>months		3 to 6<br>months		6 to 12<br>months		Less than 1<br><br>year sub-total		1 year<br>to 2 years		2 years and<br>greater		Total
Deposits from banks <br>(2)	$	5,923	$	8	$	90	$	344	$	6,365	$	–	$	–	$	6,365
Certificates of deposit and commercial paper		7,321		19,306		29,054		24,362		80,043		771		–		80,814
Asset-backed commercial paper <br>(3)		3,167		3,400		4,422		1,152		12,141		–		–		12,141
Senior unsecured medium-term notes <br>(4)		38		68		2,465		8,510		11,081		15,483		46,795		73,359
Senior unsecured structured notes <br>(5)		165		396		319		1,617		2,497		2,781		8,035		13,313
Mortgage securitization		–		482		432		1,662		2,576		3,516		9,935		16,027
Covered bonds/asset-backed securities <br>(6)		–		3,280		1,928		3,093		8,301		5,796		32,679		46,776
Subordinated liabilities		–		194		–		57		251		110		10,333		10,694
Other <br>(7)		6,416		1,295		617		3,093		11,421		10,353		436		22,210
Total	$	23,030	$	28,429	$	39,327	$	43,890	$	134,676	$	38,810	$	108,213	$	281,699
Of which:
– Secured	$	9,047	$	7,409	$	7,008	$	5,907	$	29,371	$	9,312	$	43,030	$	81,713
– Unsecured		13,983		21,020		32,319		37,983		105,305		29,498		65,183		199,986
	As at January 31, 2022
(Millions of Canadian dollars)	Less than 1<br>month		1 to 3<br>months		3 to 6<br>months		6 to 12<br>months		Less than 1<br><br>year sub-total		1 year<br>to 2 years		2 years and<br>greater		Total
Deposits from banks <br>(2)	$	7,487	$	69	$	–	$	51	$	7,607	$	–	$	–	$	7,607
Certificates of deposit and commercial paper		12,238		15,408		22,873		26,854		77,373		–		–		77,373
Asset-backed commercial paper <br>(3)		3,114		2,909		3,930		2,616		12,569		–		–		12,569
Senior unsecured medium-term notes <br>(4)		2,297		6,777		83		8,123		17,280		17,088		38,172		72,540
Senior unsecured structured notes <br>(5)		622		327		369		613		1,931		3,189		7,224		12,344
Mortgage securitization		–		1,300		482		1,673		3,455		3,538		9,842		16,835
Covered bonds/asset-backed securities <br>(6)		–		508		3,345		3,018		6,871		7,426		28,029		42,326
Subordinated liabilities		–		–		192		56		248		110		10,292		10,650
Other <br>(7)		7,580		1,032		1,052		1,353		11,017		8,977		491		20,485
Total	$	33,338	$	28,330	$	32,326	$	44,357	$	138,351	$	40,328	$	94,050	$	272,729
Of which:
– Secured	$	9,553	$	4,901	$	8,083	$	7,307	$	29,844	$	10,964	$	38,342	$	79,150
– Unsecured		23,785		23,429		24,243		37,050		108,507		29,364		55,708		193,579
(1)	Excludes bankers’ acceptances and repos.
---	---
(2)	Excludes deposits associated with services we provide to banks (e.g., custody, cash management).
---	---
(3)	Only includes consolidated liabilities, including our collateralized commercial paper program.
---	---
(4)	Includes deposit notes.
---	---
(5)	Includes notes where the payout is tied to movements in foreign exchange, commodities and equities.
---	---
(6)	Includes credit card and mortgage loans.
---	---
(7)	Includes tender option bonds (secured) of $6,771 million (January 31, 2022 – $7,419 million), bearer deposit notes (unsecured) of $4,174 million (January 31, 2022 – $3,235 million), other long-term structured deposits (unsecured) of $11,265 million (January 31, 2022 – $9,831 million).
---	---

Royal Bank of Canada Second Quarter 2022 35

Credit ratings

Our ability to access unsecured funding markets and to engage in certain collateralized business activities on a cost-effective basis are primarily dependent upon 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.

Other than as noted below, there have been no changes to our major credit ratings as disclosed in our 2021 Annual Report.

Credit ratings

(1)

	As at May 25, 2022
	Short-term<br><br>debt		Legacy senior<br><br>long-term debt<br>(2)		Senior long-<br>term debt<br>(3)		Outlook
Moody’s <br>(4)		P-1		Aa1		A1		stable
Standard & Poor’s <br>(5)		A-1+		AA-		A		stable
Fitch Ratings <br>(6)		F1+		AA		AA-		stable
DBRS <br>(7)		R-1 (high)		AA (high)		AA		stable
(1)	Credit ratings are not recommendations to purchase, sell or hold a financial obligation inasmuch 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 <br>Bail-in<br> regime.
---	---
(3)	Includes senior long-term debt issued on or after September 23, 2018 which is subject to conversion under the <br>Bail-in<br> regime.
---	---
(4)	On January 27, 2022, Moody’s upgraded our long-term debt ratings and assessments, as well as affirmed our short-term debt ratings. Following this rating action, our outlook is stable. This rating action concludes the review for upgrade initiated by Moody’s on October 7, 2021.
---	---
(5)	On May 13, 2022, Standard & Poor’s affirmed our ratings with a stable outlook.
---	---
(6)	On July 15, 2021, Fitch Ratings downgraded our legacy senior long-term debt rating to AA from AA+ and our senior long-term debt rating to <br>AA-<br> from AA and revised our ratings outlook to stable from negative.
---	---
(7)	On May 13, 2022, 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 to our current credit rating. The following table provides the additional collateral obligations required at the reporting date in the event of a one-,

two- or three-notch downgrade to our credit ratings. 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 as a result of 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<br> <br>2022						January 31<br> <br>2022
(Millions of Canadian dollars)	One-notch<br><br>downgrade		Two-notch<br><br>downgrade		Three-notch<br><br>downgrade		One-notch<br><br>downgrade		Two-notch<br><br>downgrade		Three-notch<br><br>downgrade
Contractual derivatives funding or margin requirements	$	101	$	148	$	181	$	158	$	76	$	136
Other contractual funding or margin requirements <br>(1)		164		14		23		169		17		14
(1)	Includes Guaranteed Investment Certificates (GICs) issued by our municipal markets business out of New York.
---	---

36 Royal Bank of Canada Second Quarter 2022

Liquidity Coverage Ratio (LCR)

The LCR is a Basel III metric that measures the sufficiency of high-quality liquid assets 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<br> <br>2022
(Millions of Canadian dollars, except percentage amounts)	Total unweighted<br>value (average)<br>(2)		Total weighted<br>value (average)
High-quality liquid assets
Total high-quality liquid assets (HQLA)			$	362,827
Cash outflows
Retail deposits and deposits from small business customers, of which:	$	382,297	$	35,946
Stable deposits<br> <br>(3)		131,261		3,938
Less stable deposits		251,036		32,008
Unsecured wholesale funding, of which:		449,829		214,638
Operational deposits (all counterparties) and deposits in networks of cooperative banks<br><br>(4)		190,938		45,356
Non-operational<br> deposits		227,014		137,405
Unsecured debt		31,877		31,877
Secured wholesale funding				31,497
Additional requirements, of which:		293,324		69,847
Outflows related to derivative exposures and other collateral requirements		55,689		19,468
Outflows related to loss of funding on debt products		9,284		9,284
Credit and liquidity facilities		228,351		41,095
Other contractual funding obligations<br><br>(5)		27,352		27,352
Other contingent funding obligations<br><br>(6)		671,446		10,832
Total cash outflows			$	390,112
Cash inflows
Secured lending (e.g., reverse repos)	$	289,024	$	47,749
Inflows from fully performing exposures		15,913		10,000
Other cash inflows		33,233		33,233
Total cash inflows			$	90,982
			Total adjusted<br>value
Total HQLA			$	362,827
Total net cash outflows				299,130
Liquidity coverage ratio				121%
	January 31<br> <br>2022
(Millions of Canadian dollars, except percentage amounts)			Total adjusted<br>value
Total HQLA			$	366,789
Total net cash outflows				296,383
Liquidity coverage ratio				124%
(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, 2022 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 <br>medium-sized<br> 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 <br>off-balance<br> sheet facilities that carry low LCR runoff factors (0% – 5%).
---	---

Royal Bank of Canada Second Quarter 2022 37

We manage our LCR position within a target range that reflects our liquidity risk tolerance and takes into account business mix, asset composition and funding capabilities. The range is subject to periodic review in light of changes to internal requirements and external developments.

We maintain HQLAs in major currencies with dependable market depth and breadth. Our treasury management practices 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 88% 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.

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 2022 vs. Q1 2022

The average LCR for the quarter ended April 30, 2022 was 121%, which translates into a surplus of approximately $64 billion, compared to 124% and a surplus of approximately $70 billion in the prior quarter. LCR has moderately declined compared to the prior quarter mainly reflecting growth in retail and wholesale loans that was largely offset by increases in client deposits and issuance of term funding.

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 time horizon considered by the NSFR, which extends to one year. Required stable funding is a function of the liquidity characteristics and residual maturities of the various assets held by the bank as well as those of its off-balance sheet exposures.

OSFI requires Canadian 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.

38 Royal Bank of Canada Second Quarter 2022

Net Stable Funding Ratio common disclosure template

(1)

	As at April 30, 2022
	Unweighted value by residual maturity<br>(2)
(Millions of Canadian dollars, except percentage amounts)	No maturity		< 6 months		6 months to<br>< 1 year		≥<br><br>1 year		Weighted<br>value
Available Stable Funding (ASF) Item
Capital:	$	104,293	$	–	$	–	$	9,526	$	113,819
Regulatory Capital		104,293		–		–		9,526		113,819
Other Capital Instruments		–		–		–		–		–
Retail deposits and deposits from small business customers:		352,267		58,827		22,276		22,933		421,221
Stable deposits <br>(3)		112,511		29,821		12,598		10,280		157,463
Less stable deposits		239,756		29,006		9,678		12,653		263,758
Wholesale funding:		319,734		428,139		44,749		112,909		317,608
Operational deposits<br><br>(4)		195,531		–		–		–		97,766
Other wholesale funding		124,203		428,139		44,749		112,909		219,842
Liabilities with matching interdependent assets<br><br>(5)		–		1,811		3,322		24,181		–
Other liabilities:		42,178				229,626				13,437
NSFR derivative liabilities						26,339
All other liabilities and equity not included in the<br>above categories		42,178		189,684		332		13,271		13,437
Total ASF									$	866,085
Required Stable Funding (RSF) Item
Total NSFR high-quality liquid assets (HQLA)									$	38,359
Deposits held at other financial institutions for<br>operational purposes		–		1,531		–		–		766
Performing loans and securities:		188,789		285,502		98,260		472,324		621,246
Performing loans to financial institutions secured by<br>Level 1 HQLA		–		119,825		17,455		412		15,981
Performing loans to financial institutions secured by<br><br>non-Level<br> 1 HQLA and unsecured performing loans to<br>financial institutions		4,446		77,950		29,310		23,487		51,285
Performing loans to <br>non-financial<br> corporate clients, loans to retail and small business customers, and loans to sovereigns, central banks and PSEs, of which:		115,760		66,259		31,112		138,577		262,895
With a risk weight of less than or equal to 35% under the Basel II standardized approach for credit risk		–		997		624		2,767		2,609
Performing residential mortgages, of which:		37,885		20,957		19,830		287,190		245,207
With a risk weight of less than or equal to 35% under the Basel II standardized approach for credit risk		37,885		20,929		19,803		286,122		244,271
Securities that are not in default and do not qualify as HQLA, including exchange-traded equities		30,698		511		553		22,658		45,878
Assets with matching interdependent liabilities<br><br>(5)		–		1,811		3,322		24,181		–
Other assets:		2,612				313,878				83,403
Physical traded commodities, including gold		2,612								2,220
Assets posted as initial margin for derivative contracts and contributions to default funds of CCPs				23,492						19,968
NSFR derivative assets						29,013				2,674
NSFR derivative liabilities before deduction of variation margin posted						56,323				2,816
All other assets not included in the above categories		–		151,533		252		53,265		55,725
Off-balance<br> sheet items						673,181				24,836
Total RSF									$	768,610
Net Stable Funding Ratio (%)										113%
	As at January 31, 2022
(Millions of Canadian dollars, except percentage amounts)									Weighted<br> <br>value
Total ASF									$	846,859
Total RSF										749,310
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 <br>Off-balance<br> 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 <br>medium-sized<br> 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 National Housing Act Mortgage-Backed Securities (NHA MBS) liabilities, including liabilities arising from transactions involving the Canada Mortgage Bond program and their corresponding encumbered mortgages.
---	---

Royal Bank of Canada Second Quarter 2022 39

Available stable funding is comprised primarily of a diversified pool of personal and commercial deposits, capital, as well as 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 is available to the bank.

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 2022 vs. Q1 2022

The NSFR as at April 30, 2022 was 113%, which translates into a surplus of approximately $97 billion, compared to 113% and a surplus of approximately $98 billion in the prior quarter. NSFR remained flat compared to the prior quarter as growth in retail and wholesale loans was offset by increases in client deposits, issuance of term funding as well as changes in the composition of our securities portfolios.

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) 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 section within the Liquidity and funding risk section of our 2021 Annual Report.

	As at April 30, 2022
(Millions of Canadian dollars)	Less than<br>1 month		1 to 3<br>months		3 to 6<br>months		6 to 9<br>months			9 to 12<br>months		1 year<br>to 2 years		2 years<br>to 5 years		5 years<br>and greater		With no<br>specific<br>maturity			Total
Assets
Cash and deposits with banks	$	182,555	$	1	$	–	$	10		$	–	$	–	$	–	$	–	$	2,192		$	184,758
Securities
Trading <br>(1)		75,935		594		102		18			18		50		205		9,119		57,725			143,766
Investment, net of applicable allowance		1,736		8,339		5,535		5,543			9,497		15,256		36,216		71,854		573			154,549
Assets purchased under reverse repurchase agreements and securities borrowed <br>(2)		143,064		78,531		43,186		15,378			16,937		935		–		–		18,667			316,698
Loans, net of applicable allowance		31,177		21,822		26,059		28,668			29,276		145,911		338,180		67,381		85,990			774,464
Other
Customers’ liability under acceptances		9,541		7,022		–		2			5		–		–		–		(41	)		16,529
Derivatives		17,191		16,374		8,931		11,857			6,573		17,265		33,768		44,235		10			156,204
Other financial assets		44,463		1,986		1,172		197			482		222		204		2,113		3,204			54,043
Total financial assets		505,662		134,669		84,985		61,673			62,788		179,639		408,573		194,702		168,320			1,801,011
Other <br>non-financial<br> assets		6,929		1,601		402		(183	)		542		2,133		2,296		5,391		28,450			47,561
Total assets	$	512,591	$	136,270	$	85,387	$	61,490		$	63,330	$	181,772	$	410,869	$	200,093	$	196,770		$	1,848,572
Liabilities and equity
Deposits (3)
Unsecured borrowing	$	89,041	$	47,195	$	51,344	$	42,657		$	52,637	$	31,955	$	54,428	$	18,741	$	670,475		$	1,058,473
Secured borrowing		4,561		5,282		6,165		3,703			950		8,771		15,786		6,730		–			51,948
Covered bonds		–		2,608		1,927		1,050			2,041		4,370		24,298		4,882		–			41,176
Other
Acceptances		9,541		7,021		–		2			5		–		–		–		1			16,570
Obligations related to securities sold short		39,464		–		–		–			–		–		–		–		–			39,464
Obligations related to assets sold under repurchase agreements and securities loaned <br>(2)		224,827		33,129		1,856		129			381		932		–		–		18,084			279,338
Derivatives		16,413		18,114		8,439		9,674			6,231		17,192		32,923		42,555		–			151,541
Other financial liabilities		44,766		1,042		1,708		425			602		857		2,385		11,913		1,033			64,731
Subordinated debentures		–		194		–		–			–		110		1,847		8,125		–			10,276
Total financial liabilities		428,613		114,585		71,439		57,640			62,847		64,187		131,667		92,946		689,593			1,713,517
Other <br>non-financial<br> liabilities		1,075		1,042		185		4,071			264		1,010		923		12,610		9,470			30,650
Equity		–		–		–		–			–		–		–		–		104,405			104,405
Total liabilities and equity	$	429,688	$	115,627	$	71,624	$	61,711		$	63,111	$	65,197	$	132,590	$	105,556	$	803,468		$	1,848,572
Off-balance<br> sheet items
Financial guarantees	$	594	$	2,250	$	2,433	$	2,864		$	3,523	$	1,778	$	4,357	$	879	$	33		$	18,711
Commitments to extend credit		5,454		8,622		8,922		14,748			19,057		48,839		175,832		18,664		3,930			304,068
Other credit-related commitments		2,083		1,056		1,353		1,602			1,722		250		736		36		102,046			110,884
Other commitments		32		15		17		26			17		71		148		214		658			1,198
Total <br>off-balance<br> sheet items	$	8,163	$	11,943	$	12,725	$	19,240		$	24,319	$	50,938	$	181,073	$	19,793	$	106,667		$	434,861
(1)	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.
---	---

40 Royal Bank of Canada Second Quarter 2022

	As at January 31, 2022
(Millions of Canadian dollars)	Less than<br>1 month		1 to 3<br>months		3 to 6<br>months		6 to 9<br>months		9 to 12<br>months		1 year<br>to 2 years		2 years<br>to 5 years		5 years<br>and greater		With no<br>specific<br>maturity			Total
Assets
Cash and deposits with banks	$	192,271	$	2	$	–	$	–	$	10	$	–	$	–	$	–	$	2,300		$	194,583
Securities
Trading (1)		67,761		2,519		848		6		8		32		174		10,197		67,980			149,525
Investment, net of applicable allowance		3,059		8,821		5,807		6,364		6,901		19,393		33,100		69,576		549			153,570
Assets purchased under reverse repurchase agreements and securities borrowed (2)		122,904		92,846		29,606		27,554		12,936		776		–		–		25,504			312,126
Loans, net of applicable allowance		33,606		19,223		29,413		27,831		29,737		140,174		312,950		64,557		82,540			740,031
Other
Customers’ liability under acceptances		13,672		5,280		–		–		2		5		–		–		(83	)		18,876
Derivatives		6,098		7,379		5,099		3,262		6,205		8,813		17,098		38,353		12			92,319
Other financial assets		35,028		1,704		959		171		129		266		279		2,103		3,447			44,086
Total financial assets		474,399		137,774		71,732		65,188		55,928		169,459		363,601		184,786		182,249			1,705,116
Other <br>non-financial<br> assets		6,821		1,612		267		256		552		2,380		2,314		5,865		27,286			47,353
Total assets	$	481,220	$	139,386	$	71,999	$	65,444	$	56,480	$	171,839	$	365,915	$	190,651	$	209,535		$	1,752,469
Liabilities and equity
Deposits (3)
Unsecured borrowing	$	100,325	$	53,231	$	43,700	$	36,878	$	45,970	$	30,950	$	49,037	$	16,702	$	674,323		$	1,051,116
Secured borrowing		2,342		7,803		6,410		3,908		2,783		7,991		15,257		6,174		–			52,668
Covered bonds		–		–		2,686		1,918		1,111		6,687		17,949		8,707		–			39,058
Other
Acceptances		13,663		5,280		–		–		2		5		–		–		9			18,959
Obligations related to securities sold short		41,544		–		–		–		–		–		–		–		–			41,544
Obligations related to assets sold under repurchase agreements and securities loaned (2)		189,351		43,348		6,404		1,347		2		676		–		–		23,881			265,009
Derivatives		6,120		7,296		5,071		3,206		4,949		8,897		17,347		35,216		–			88,102
Other financial liabilities		32,915		1,592		915		328		479		830		2,272		11,272		841			51,444
Subordinated debentures		–		–		191		–		–		110		1,924		8,336		–			10,561
Total financial liabilities		386,260		118,550		65,377		47,585		55,296		56,146		103,786		86,407		699,054			1,618,461
Other <br>non-financial<br> liabilities		1,308		1,080		222		172		3,530		1,053		965		13,561		10,109			32,000
Equity		–		–		–		–		–		–		–		–		102,008			102,008
Total liabilities and equity	$	387,568	$	119,630	$	65,599	$	47,757	$	58,826	$	57,199	$	104,751	$	99,968	$	811,171		$	1,752,469
Off-balance<br> sheet items
Financial guarantees	$	1,072	$	1,863	$	2,739	$	2,561	$	2,735	$	1,312	$	3,972	$	1,121	$	29		$	17,404
Commitments to extend credit		2,081		9,097		13,303		9,424		16,780		52,011		172,026		16,153		3,833			294,708
Other credit-related commitments		970		1,102		1,473		1,386		1,576		323		698		36		99,991			107,555
Other commitments		27		11		17		17		20		70		164		303		605			1,234
Total <br>off-balance<br> sheet items	$	4,150	$	12,073	$	17,532	$	13,388	$	21,111	$	53,716	$	176,860	$	17,613	$	104,458		$	420,901
(1)	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.
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Royal Bank of Canada Second Quarter 2022 41

Capital management

We continue to manage our capital in accordance with our Capital Management Framework as described in our 2021 Annual Report. In addition, we continue to monitor for new regulatory capital developments, including OSFI guidance relating to the BCBS Basel III reforms and guidance issued in response to the COVID-19 pandemic, in order to ensure timely and accurate compliance with these requirements as disclosed in the Capital management section in our 2021 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.

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.

Effective November 1, 2021, OSFI’s Total Loss Absorbing Capacity (TLAC) guideline establishes two minimum standards: the risk-based TLAC ratio, which builds on the risk-based capital ratios described in the CAR guideline, and the 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 capital, Tier 2 capital, and other 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 guideline.

In Q2 2020, OSFI announced a series of regulatory adjustments and guidance to support the financial and operational resilience of the banking sector in response to the ongoing COVID-19 pandemic and subsequently continued, as needed, to release guidance implementing, clarifying, updating or unwinding certain aspects or requirements. While some measures and guidance issued in response to the COVID-19 pandemic have been unwound, certain measures and guidance continue to remain in place, such as:

•	Modifications for increases in expected credit loss provisions on CET1 capital by applying a 25% <br>after-tax<br> exclusion rate for growth in Stage 1 and Stage 2 allowances between Q1 2020 and the respective quarters of fiscal 2022. The exclusion rate was reduced to the current 25% in fiscal 2022 from 50% in fiscal 2021, and will cease to apply beginning in fiscal 2023. These modifications are not available for a financial institution’s IRB portfolio in any quarter in which the financial institution has a shortfall in allowances.
•	Exclusion of central bank reserves that qualify as HQLA from leverage ratio exposure amounts.
---	---
•	Reduction in the current regulatory capital floor for financial institutions using the IRB approach to 70% of RWA under the SA. The reduced floor factor will remain in place until the adoption of the Basel III reforms in Q2 2023.
---	---
•	Clarification of the applicable capital and leverage ratio treatment of certain government relief programs.
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For further details, refer to the Capital management section of our 2021 Annual Report. OSFI has assessed and will continue to assess the need for these measures. We have incorporated the effective adjustments and guidance, as applicable, into our results and in our ongoing capital planning activities.

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<br> <br>capital,<br> <br>leverage and TLAC<br>ratios	OSFI regulatory target requirements for large banks under Basel III
	Minimum		Capital<br> <br>Buffers<br><br>(1)		Minimum<br> <br>including<br> <br>Capital<br> <br>Buffers		D-SIB/G-SIB<br> <br>surcharge<br><br>(2)		Minimum including<br>Capital Buffers<br> <br>and <br>D-SIB/G-SIB<br><br>surcharge<br><br>(2)
Common Equity Tier 1		4.5%		2.5%		7.0%		1.0%		8.0%	13.2%	2.5%	10.5%
Tier 1 capital		6.0%		2.5%		8.5%		1.0%		9.5%	14.4%	2.5%	12.0%
Total capital		8.0%		2.5%		10.5%		1.0%		11.5%	16.0%	2.5%	14.0%
Leverage ratio		3.0%		n.a.		3.0%		n.a.		3.0%	4.7%	n.a.	3.0%
TLAC ratio <br>(4)		21.5%		n.a.		21.5%		n.a.		21.5%	27.0%	2.5%	24.0%
TLAC leverage ratio <br>(4)		6.75%		n.a.		6.75%		n.a.		6.75%	8.7%	n.a.	6.75%
(1)	The capital buffers include the capital conservation buffer and the countercyclical capital buffer as prescribed by OSFI.
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(2)	A capital surcharge, equal to the higher of our <br>D-SIB<br> surcharge and the BCBS’s <br>G-SIB<br> surcharge, is applicable to risk-weighted capital.
---	---
(3)	The Domestic Stability Buffer can range from 0% to 2.5% of total RWA and is currently set at 2.5%, reaffirmed by OSFI on December 10, 2021.
---	---
(4)	Effective November 1, 2021, OSFI requires <br>D-SIBs<br> to meet minimum risk-based TLAC ratio and TLAC leverage ratio requirements which are calculated using OSFI’s TLAC guideline.
---	---
n.a.	not applicable
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42 Royal Bank of Canada Second Quarter 2022

The following table provides details on our regulatory capital and 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<br> <br>2022		January 31<br> <br>2022		October 31<br> <br>2021
Capital<br><br>(1)
CET1 capital	$	77,069	$	77,080	$	75,583
Tier 1 capital		84,345		84,493		82,246
Total capital		93,871		94,502		92,026
RWA used in calculation of capital ratios<br><br>(1)
Credit risk	$	472,516	$	452,697	$	444,142
Market risk		37,851		41,812		34,806
Operational risk		75,472		74,776		73,593
Total RWA	$	585,839	$	569,285	$	552,541
Capital ratios and Leverage ratio<br><br>(1)
CET1 ratio		13.2%		13.5%		13.7%
Tier 1 capital ratio		14.4%		14.8%		14.9%
Total capital ratio		16.0%		16.6%		16.7%
Leverage ratio		4.7%		4.8%		4.9%
Leverage ratio exposure (billions)	$	1,812	$	1,761	$	1,662
TLAC available and ratios<br><br>(2)<br><br>,<br><br>(3)
TLAC available	$	158,140	$	150,136		n.a.
TLAC ratio		27.0%		26.4%		n.a.
TLAC leverage ratio		8.7%		8.5%		n.a.
(1)	Capital, RWA, and capital ratios are calculated using OSFI’s CAR guideline and the Leverage ratio is calculated using OSFI’s LR guideline as updated in accordance with the regulatory guidance issued by OSFI in response to the <br>COVID-19<br> pandemic. Both the CAR guideline and LR guideline are based on the Basel III framework.
---	---
(2)	Effective November 1, 2021, OSFI requires <br>D-SIBs<br> to meet minimum risk-based TLAC ratio and TLAC leverage ratio requirements which are calculated using OSFI’s TLAC guideline.
---	---
(3)	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. Both the TLAC ratio and TLAC leverage ratio are calculated using the TLAC available as percentage of total RWA and leverage exposure, respectively.
---	---
n.a.	not applicable
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Q2 2022 vs. Q1 2022

(1)	Represents rounded figures.
(2)	Represents net internal capital generation of $2.5 billion or 44 bps consisting of Net income available to shareholders, less common and preferred share dividends and distributions on other equity instruments.
---	---

Our CET1 ratio was 13.2%, down 30 bps from last quarter, mainly reflecting RWA growth (excluding FX), share repurchases and the unfavourable impact of fair value OCI adjustments, partially offset by net internal capital generation.

RWA increased by $17 billion, mainly reflecting business growth in wholesale lending, derivatives, residential mortgages, and market risk. These factors were partially offset by net model updates, mainly due to the impact of the Q2 2020 period of significant market volatility no longer being reflected in our two-year historical VaR period.

Our Tier 1 capital ratio of 14.4% was down 40 bps and our Total capital ratio of 16.0% was down 60 bps, mainly reflecting the factors noted above under the CET1 ratio.

Our Leverage ratio of 4.7% was down 10 bps, mainly due to business-driven growth in leverage exposures and share repurchases, partially offset by net internal capital generation.

Leverage exposures increased by $51 billion, mainly driven by business growth in wholesale loans and residential mortgages, undrawn commitments and derivatives.

Our TLAC ratio of 27.0% was up 60 bps, reflecting a favourable impact from the net issuance of other TLAC instruments, partially offset by the factors noted above under the Total capital ratio.

Our TLAC leverage ratio of 8.7% was up 20 bps, reflecting a favourable impact from the net issuance of other TLAC instruments, partially offset by the factors noted above under the Leverage ratio.

Other 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.

Royal Bank of Canada Second Quarter 2022 43

Selected capital management activity

The following table provides our selected capital management activity:

	For the three months ended<br> <br>April 30, 2022								For the six months ended<br>April 30, 2022
(Millions of Canadian dollars, except number of shares)	Issuance or<br>redemption date		Number of<br>shares<br>(000s)			Amount			Number of<br>shares<br>(000s)			Amount
Tier 1 capital
Common shares activity
Issued in connection with share-based compensation plans <br>(1)				105		$	8			512		$	42
Purchased for cancellation <br>(2)				(13,700	)		(171	)		(22,571	)		(282	)
Issuance of preferred shares, Series BT <br>(2)<br>, <br>(3)		November 5, 2021		–			–			750			750
Redemption of preferred shares, Series BJ <br>(2)<br>, <br>(3)		February 24, 2022		(6,000	)		(150	)		(6,000	)		(150	)
Tier 2 capital
Issuance of May 3, 2032 subordinated debentures <br>(2)<br>, <br>(3)		January 25, 2022				$	–					$	1,000
(1)	Amounts include cash received for stock options exercised during the period and fair value adjustments to stock options.
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(2)	For further details, refer to Note 10 of our Condensed Financial Statements.
---	---
(3)	Non-Viability Contingent Capital (NVCC) instruments.
---	---

On December 6, 2021, we announced a normal course issuer bid (NCIB) to purchase up to 45 million of our common shares, commencing on December 8, 2021 and continuing until December 7, 2022, or such earlier date as we complete the repurchase of all shares permitted under the bid. For the three-months ended April 30, 2022, the total number of common shares repurchased and cancelled under our NCIB program was approximately 14 million. The total cost of the shares repurchased was $1,892 million. Since the inception of this NCIB, the total number of common shares repurchased and cancelled was approximately 23 million, at a cost of approximately $3,106 million.

We determine the amount and timing of purchases under the NCIB, subject to prior consultation with OSFI. Purchases may be made through the TSX, the NYSE and other designated exchanges and alternative Canadian trading systems. The price paid for repurchased shares is the prevailing market price at the time of acquisition.

On November 5, 2021, we issued 750 thousand of Non-Cumulative

5-Year Fixed Rate Reset First Preferred Shares Series BT to certain institutional investors at a price of $1,000 per share.

On January 25, 2022, we issued $1,000 million of NVCC subordinated debentures. The notes bear interest at a fixed rate of 2.94% per annum until May 3, 2027, and at the three-month Canadian Dollar Offered Rate plus 0.76% thereafter until their maturity on May 3, 2032.

On February 24, 2022, we redeemed all 6 million of our issued and outstanding Non-Cumulative First Preferred Shares Series BJ at a price of $25.75 per share.

44 Royal Bank of Canada Second Quarter 2022

Selected share data

(1)

	As at April 30, 2022
(Millions of Canadian dollars,<br> <br>except number of shares and as otherwise noted)	Number of<br>shares<br>(000s)			Amount			Dividends<br> <br>declared per<br>share
Common shares issued		1,403,128		$	17,488		$	1.20
Treasury shares – common shares <br>(2)		(1,328	)		(174	)
Common shares outstanding		1,401,800		$	17,314
Stock options and awards
Outstanding		8,310
Exercisable		3,677
First preferred shares issued
Non-cumulative<br> Series AZ <br>(3)<br>,<br>(4)		20,000		$	500		$	0.23
Non-cumulative<br> Series BB <br>(3)<br>, <br>(4)		20,000			500			0.23
Non-cumulative<br> Series BD <br>(3)<br>, <br>(4)		24,000			600			0.20
Non-cumulative<br> Series BF <br>(3)<br>, <br>(4)		12,000			300			0.19
Non-cumulative<br> Series BH <br>(4)		6,000			150			0.31
Non-cumulative<br> Series BI <br>(4)		6,000			150			0.31
Non-cumulative<br> Series BO <br>(3)<br>, <br>(4)		14,000			350			0.30
Non-cumulative<br> Series BT <br>(3)<br>, <br>(4)<br>, <br>(5)		750			750			4.20%
Non-cumulative<br> Series <br>C-2<br> <br>(6)		15			23		US$	16.88
Other equity instruments issued
Limited recourse capital notes Series 1 <br>(3)<br>, <br>(4)<br>, <br>(7)<br>, <br>(8)		1,750			1,750			4.50%
Limited recourse capital notes Series 2 <br>(3)<br>, <br>(4)<br>, <br>(7)<br>, <br>(8)		1,250			1,250			4.00%
Limited recourse capital notes Series 3 <br>(3)<br>, <br>(4)<br>, <br>(7)<br>, <br>(8)		1,000			1,000			3.65%
Preferred shares and other equity instruments issued		106,765			7,323
Treasury instruments – preferred shares and other equity instruments <br>(2)		(38	)		(25	)
Preferred shares and other equity instruments outstanding		106,727		$	7,298
Dividends on common shares				$	1,686
Dividends on preferred shares and distributions on other equity instruments <br>(9)					68
(1)	For further details about our capital management activity, refer to Note 10 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 per annum dividend rate applicable to the shares issued as at the reporting date.
---	---
(6)	Represents 615,400 depositary shares relating to preferred shares Series <br>C-2.<br> Each depositary share represents <br>one-fortieth<br> interest in a share of Series <br>C-2.
---	---
(7)	For Limited Recourse Capital Notes (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.
---	---
(8)	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); and 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). The Series BQ, BR and BS preferred shares were issued at a price of $1,000 per share and were issued to a consolidated trust to be held as trust assets in connection with the LRCN structure. For further details, refer to Note 19 of our 2021 Annual Consolidated Financial Statements.
---	---
(9)	Excludes distributions to <br>non-controlling<br> interests.
---	---

As at May 20, 2022, the number of outstanding common shares was 1,402,108,019, net of treasury shares held of 1,037,346, and the number of stock options and awards was 8,293,016.

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 April 30, 2022, which were the preferred shares Series AZ, BB, BD, BF, BH, BI, BO, BT, LRCN Series 1, LRCN Series 2, LRCN Series 3 and subordinated debentures due on January 27, 2026, July 25, 2029, December 23, 2029, June 30, 2030, January 28, 2033, November 3, 2031, and May 3, 2032 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 4,505 million common shares, in aggregate, which would represent a dilution impact of 76.27% based on the number of common shares outstanding as at April 30, 2022.

Royal Bank of Canada Second Quarter 2022 45

Accounting and control matters
Summary of accounting policies and estimates
---

Our Condensed Financial Statements are presented in compliance with International Accounting Standard (IAS) 34 Interim Financial Reporting . Our significant accounting policies are described in Note 2 of our audited 2021 Annual Consolidated Financial Statements.

Application of critical accounting judgments, estimates and assumptions

While the impacts of the COVID-19 pandemic have eased in most regions, the economic outlook remains subject to ongoing uncertainty due to higher inflation, supply chain disruptions and heightened geopolitical risks, which could impact our financial results. We continue to monitor and assess the impacts of these factors on our critical accounting judgments, estimates and assumptions, which are described in Note 2 of our audited 2021 Annual Consolidated Financial Statements.

Future changes in accounting policies and disclosures

Future changes in accounting policies and disclosures that are not yet effective for us are described in Note 2 of our audited 2021 Annual Consolidated Financial Statements.

Controls and procedures

Disclosure controls and procedures

As of April 30, 2022, management evaluated, under the supervision of and with the participation of the President and Chief Executive Officer and the Chief Financial Officer, the effectiveness of our disclosure controls and procedures as defined under rules adopted by the U.S. SEC. Based on that evaluation, the President and Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of April 30, 2022.

Internal control over financial reporting

No changes were made in our internal control over financial reporting during the quarter ended April 30, 2022 that have materially affected, or are reasonably likely to materially affect, 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 11 and 25 of our audited 2021 Annual Consolidated Financial Statements.

46 Royal Bank of Canada Second Quarter 2022

Glossary

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.

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, as at October 31, 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, as at October 31, 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 is based on the Basel III regulatory capital requirements and 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.

Common Equity Tier 1 capital ratio

A risk-based capital measure calculated as CET1 capital divided by risk-weighted assets.

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.

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.

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.

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)

Assets are considered to be HQLA if they can be easily and immediately converted into cash at little or no loss of value during a time of stress.

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.

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 sum of total assets plus specified off-balance sheet items.

Liquidity Coverage Ratio (LCR)

The Liquidity Coverage Ratio is a Basel III metric that measures the sufficiency of HQLA available to meet net short-term financial obligations over a thirty day period in an acute stress scenario.

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.

Royal Bank of Canada Second Quarter 2022 47

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 (on average earning assets, net)

Calculated as net interest income divided by average earning assets, net.

Net Stable Funding Ratio (NSFR)

The Net Stable Funding Ratio is a Basel III metric that measures the sufficiency of available stable funding to meet the minimum coverage level of required stable funding.

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, note issuances and revolving underwriting facilities, 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.

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.

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.

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 guidelines issued by OSFI. 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

Risk weights prescribed by OSFI are used to calculate risk-weighted assets for the credit risk exposures. Credit assessments by OSFI-recognized external credit rating agencies of Standard & Poor’s, Moody’s, Fitch, DBRS and Kroll Bond Rating Agency are used to risk-weight our Sovereign and Bank exposures based on the standards and guidelines issued by OSFI. For our Business and Retail exposures, we use the standard risk weights prescribed 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

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.

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 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 by dividing total capital by risk-weighted assets.

Total Loss Absorbing Capacity (TLAC)

The aggregate of Tier 1 capital, Tier 2 capital, and other TLAC instruments, which allows conversion in whole or in part into common shares under the Canada Deposit Insurance Corporation Act and meets 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.

TLAC leverage ratio

The TLAC leverage ratio is defined as TLAC divided by the Leverage ratio exposure.

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 trading portfolio from an adverse one-day movement in market rates and prices.

48 Royal Bank of Canada Second Quarter 2022

EDTF recommendations index

We aim to present transparent, high-quality risk disclosures by providing disclosures in our 2021 Annual Report, Q2 2022 Report to Shareholders (RTS), Supplementary Financial Information package (SFI), and Pillar 3 Report, in accordance with recommendations from the Financial Stability Board’s (FSB) 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 2022 Report to Shareholders.

The following index summarizes our disclosure by EDTF recommendation:

			Location of disclosure
Type of Risk	Recommendation	Disclosure	RTS<br> <br>page	Annual<br>Report page	SFI<br> <br>page
General	1	Table of contents for EDTF risk disclosure	48	123	1
	2	Define risk terminology and measures		55-60,<br><br> <br>121-122	–
	3	Top and emerging risks		52-54	–
	4	New regulatory ratios	41-42	100-105	–
Risk governance, risk management and business model	5	Risk management organization		55-60	–
	6	Risk culture		56-60	–
	7	Risk in the context of our business activities		108	–
	8	Stress testing		57-58, 73	–
Capital adequacy and risk-weighted assets (RWA)	9	Minimum Basel III capital ratios and Domestic systemically important bank surcharge	41	100-105	–
	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		–	20
	12	Capital strategic planning		100-105	–
	13	RWA by business segments		–	21
	14	Analysis of capital requirement, and related measurement model information		61-64	*
	15	RWA credit risk and related risk measurements		–	*
	16	Movement of RWA by risk type		–	21
	17	Basel back-testing		57, 61	32
Liquidity	18	Quantitative and qualitative analysis of our liquidity reserve	31-32	80-81,<br><br> <br>85-86	–
Funding	19	Encumbered and unencumbered assets by balance sheet category, and contractual obligations for rating downgrades	32, 35	81, 84	–
	20	Maturity analysis of consolidated total assets, liabilities and <br>off-balance<br> sheet commitments analyzed by remaining contractual maturity at the balance sheet date	39-40	88-89	–
	21	Sources of funding and funding strategy	32-34	81-83	–
Market risk	22	Relationship between the market risk measures for trading and <br>non-trading<br> portfolios and the balance sheet	29-30	77-78	–
	23	Decomposition of market risk factors	27-29	72-76	–
	24	Market risk validation and back-testing		73	–
	25	Primary risk management techniques beyond reported risk measures and parameters		72-76	–
Credit risk	26	Bank’s credit risk profile	23-27	60-72,<br><br> <br>170-177	22-32,*
		Quantitative summary of aggregate credit risk exposures that reconciles to the balance sheet	66-72	115-120	*
	27	Policies for identifying impaired loans		62-65,<br><br> <br>110,<br> <br>143-146	–
	28	Reconciliation of the opening and closing balances of impaired loans and impairment allowances during the year		–	24, 29
	29	Quantification of gross notional exposure for over-the-counter derivatives or exchange-traded derivatives		66	33
	30	Credit risk mitigation, including collateral held for all sources of credit risk		64-65	*
Other	31	Other risk types		91-99	–
	32	Publicly known risk events		94-95,<br><br> <br>215-216	–
*	These disclosure requirements are satisfied or partially satisfied by disclosures provided in our Pillar 3 Report for the quarter ended April 30, 2022 and for the year ended October 31, 2021.
---	---

Royal Bank of Canada Second Quarter 2022 4 9

Interim Condensed Consolidated Financial Statements<br>(unaudited)
Interim Condensed Consolidated Balance Sheets<br>(unaudited)
---
	As at
---	---	---	---	---	---	---
(Millions of Canadian dollars)	April 30<br><br>2022			October 31<br><br>2021
Assets
Cash and due from banks	$	115,929		$	113,846
Interest-bearing deposits with banks		68,829			79,638
Securities
Trading		143,766			139,240
Investment, net of applicable allowance <br>(Note 4)		154,549			145,484
		298,315			284,724
Assets purchased under reverse repurchase agreements and securities borrowed		316,698			307,903
Loans<br><br>(Note 5)
Retail		525,183			503,598
Wholesale		252,847			218,066
		778,030			721,664
Allowance for loan losses <br>(Note 5)		(3,566	)		(4,089	)
		774,464			717,575
Segregated fund net assets		2,659			2,666
Other
Customers’ liability under acceptances		16,529			19,798
Derivatives		156,204			95,541
Premises and equipment		7,225			7,424
Goodwill		10,981			10,854
Other intangibles		4,416			4,471
Other assets		76,323			61,883
		271,678			199,971
Total assets	$	1,848,572		$	1,706,323
Liabilities and equity
Deposits<br><br>(Note 7)
Personal	$	382,881		$	362,488
Business and government		724,978			696,353
Bank		43,738			41,990
		1,151,597			1,100,831
Segregated fund net liabilities		2,659			2,666
Other
Acceptances		16,570			19,873
Obligations related to securities sold short		39,464			37,841
Obligations related to assets sold under repurchase agreements and securities loaned		279,338			262,201
Derivatives		151,541			91,439
Insurance claims and policy benefit liabilities		12,073			12,816
Other liabilities		80,649			70,301
		579,635			494,471
Subordinated debentures<br><br>(Note 10)		10,276			9,593
Total liabilities		1,744,167			1,607,561
Equity attributable to shareholders
Preferred shares and other equity instruments <br>(Note 10)		7,298			6,684
Common shares <br>(Note 10)		17,314			17,655
Retained earnings		75,931			71,795
Other components of equity		3,761			2,533
		104,304			98,667
Non-controlling interests		101			95
Total equity		104,405			98,762
Total liabilities and equity	$	1,848,572		$	1,706,323

The accompanying notes are an integral part of these Interim Condensed Consolidated Financial Statements.

50 Royal Bank of Canada Second Quarter 2022

Interim Condensed Consolidated Statements of Income<br>(unaudited)
	For the three months ended						For the six months ended
---	---	---	---	---	---	---	---	---	---	---	---
	April 30			April 30			April 30			April 30
(Millions of Canadian dollars, except per share amounts)	2022			2021			2022			2021
Interest and dividend income<br><br>(Note 3)
Loans	$	5,707		$	5,296		$	11,264		$	10,803
Securities		1,396			1,217			2,775			2,493
Assets purchased under reverse repurchase agreements <br>and securities borrowed		556			322			905			711
Deposits and other		99			63			192			127
		7,758			6,898			15,136			14,134
Interest expense<br><br>(Note 3)
Deposits and other		1,473			1,392			2,768			2,900
Other liabilities		953			609			1,723			1,250
Subordinated debentures		58			43			100			95
		2,484			2,044			4,591			4,245
Net interest income		5,274			4,854			10,545			9,889
Non-interest income
Insurance premiums, investment and fee income		234			536			1,633			2,345
Trading revenue		289			377			603			901
Investment management and custodial fees		1,892			1,711			3,853			3,414
Mutual fund revenue		1,086			1,014			2,251			2,014
Securities brokerage commissions		389			431			788			832
Service charges		480			460			965			918
Underwriting and other advisory fees		507			747			1,208			1,337
Foreign exchange revenue, other than trading		251			292			522			581
Card service revenue		288			281			579			553
Credit fees		398			368			874			700
Net gains on investment securities		23			82			38			117
Share of profit in joint ventures and associates		24			24			53			49
Other		85			441			374			911
		5,946			6,764			13,741			14,672
Total revenue		11,220			11,618			24,286			24,561
Provision for credit losses<br><br>(Notes 4 and 5)		(342	)		(96	)		(237	)		14
Insurance policyholder benefits, claims and acquisition expense		(180	)		149			817			1,555
Non-interest expense
Human resources <br>(Note 8)		4,002			4,152			8,287			8,440
Equipment		513			487			1,014			980
Occupancy		386			400			772			804
Communications		258			212			486			425
Professional fees		347			314			666			605
Amortization of other intangibles		336			318			673			637
Other		592			496			1,116			1,030
		6,434			6,379			13,014			12,921
Income before income taxes		5,308			5,186			10,692			10,071
Income taxes		1,055			1,171			2,344			2,209
Net income	$	4,253		$	4,015		$	8,348		$	7,862
Net income attributable to:
Shareholders	$	4,250		$	4,014		$	8,343		$	7,859
Non-controlling interests		3			1			5			3
	$	4,253		$	4,015		$	8,348		$	7,862
Basic earnings per share<br><br>(in dollars) (Note 11)	$	2.97		$	2.76		$	5.81		$	5.42
Diluted earnings per share<br><br>(in dollars) (Note 11)		2.96			2.76			5.80			5.42
Dividends per common share<br><br>(in dollars)		1.20			1.08			2.40			2.16

The accompanying notes are an integral part of these Interim Condensed Consolidated Financial Statements.

Royal Bank of Canada Second Quarter 2022 51

Interim Condensed Consolidated Statements of Comprehensive Income<br>(unaudited)
	For the three months ended						For the six months ended
---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars)	April 30<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Net income	$	4,253		$	4,015		$	8,348		$	7,862
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		(892	)		(79	)		(1,145	)		290
Provision for credit losses recognized in income		(4	)		15			(11	)		13
Reclassification of net losses (gains) on debt securities and loans at fair value through other comprehensive income to income		(18	)		(66	)		(29	)		(102	)
		(914	)		(130	)		(1,185	)		201
Foreign currency translation adjustments
Unrealized foreign currency translation gains (losses)		198			(2,466	)		1,672			(4,634	)
Net foreign currency translation gains (losses) from hedging activities		137			1,035			(370	)		1,827
Reclassification of losses (gains) on foreign currency translation to income		–			(7	)		(18	)		(7	)
Reclassification of losses (gains) on net investment hedging activities to income		–			–			17			–
		335			(1,438	)		1,301			(2,814	)
Net change in cash flow hedges
Net gains (losses) on derivatives designated as cash flow hedges		869			669			967			796
Reclassification of losses (gains) on derivatives designated as cash flow hedges to income		117			33			148			78
		986			702			1,115			874
Items that will not be reclassified subsequently to income:
Remeasurements of employee benefit plans <br>(Note 8)		765			938			1,048			1,719
Net fair value change due to credit risk on financial liabilities designated at fair value through profit or loss		853			88			1,033			(36	)
Net gains (losses) on equity securities designated at fair value through other comprehensive income		4			(5	)		43			(1	)
		1,622			1,021			2,124			1,682
Total other comprehensive income (loss), net of taxes		2,029			155			3,355			(57	)
Total comprehensive income (loss)	$	6,282		$	4,170		$	11,703		$	7,805
Total comprehensive income attributable to:
Shareholders	$	6,278		$	4,173		$	11,695		$	7,810
Non-controlling interests		4			(3	)		8			(5	)
	$	6,282		$	4,170		$	11,703		$	7,805

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<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Income taxes on other comprehensive income
Net unrealized gains (losses) on debt securities and loans at fair value through other comprehensive income	$	(291	)	$	(49	)	$	(368	)	$	(2	)
Provision for credit losses recognized in income		(1	)		6			(2	)		6
Reclassification of net losses (gains) on debt securities and loans at fair value through other comprehensive income to income		(3	)		(10	)		(4	)		(23	)
Unrealized foreign currency translation gains (losses)		–			–			–			2
Net foreign currency translation gains (losses) from hedging activities		52			354			(118	)		620
Reclassification of losses (gains) on net investment hedging activities to income		–			–			6			–
Net gains (losses) on derivatives designated as cash flow hedges		329			238			363			283
Reclassification of losses (gains) on derivatives designated as cash flow <br>hedges to income		42			12			53			28
Remeasurements of employ<br>e<br>e benefit plans		267			331			367			608
Net fair value change due to credit risk on financial liabilities designated at fair value through profit or loss		302			31			366			(13	)
Net gains (losses) on equity securities designated at fair value through other comprehensive income		(5	)		(1	)		(1	)		(1	)
Total income tax expenses (recoveries)	$	692		$	912		$	662		$	1,508

The accompanying notes are an integral part of these Interim Condensed Consolidated Financial Statements.

5 2 Royal Bank of Canada Second Quarter 2022

Interim Condensed Consolidated Statements of Changes in Equity<br>(unaudited)
	For the three months ended April 30, 2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
																Other components of equity
(Millions of Canadian dollars)	Preferred<br>shares and<br>other equity<br>instruments			Common<br>shares			Treasury –<br>preferred<br>shares and<br>other equity<br>instruments			Treasury –<br> <br>common<br> <br>shares			Retained<br>earnings			FVOCI<br>securities<br>and loans			Foreign<br>currency<br>translation			Cash flow<br>hedges			Total other<br>components<br>of equity			Equity<br>attributable to<br>shareholders			Non-controlling<br>interests			Total<br>equity
Balance at beginning of period	$	7,473		$	17,651		$	(32	)	$	(79	)	$	73,542		$	(359	)	$	3,019		$	695		$	3,355		$	101,910		$	98		$	102,008
Changes in equity
Issues of share capital and other equity instruments		–			8			–			–			–			–			–			–			–			8			–			8
Common shares purchased for cancellation		–			(171	)		–			–			(1,721	)		–			–			–			–			(1,892	)		–			(1,892	)
Redemption of preferred shares and other equity instruments		(150	)		–			–			–			(5	)		–			–			–			–			(155	)		–			(155	)
Sales of treasury shares and other equity instruments		–			–			152			1,191			–			–			–			–			–			1,343			–			1,343
Purchases of treasury shares and other equity instruments		–			–			(145	)		(1,286	)		–			–			–			–			–			(1,431	)		–			(1,431	)
Share-based compensation awards		–			–			–			–			–			–			–			–			–			–			–			–
Dividends on common shares		–			–			–			–			(1,686	)		–			–			–			–			(1,686	)		–			(1,686	)
Dividends on preferred shares and distributions on other equity instruments		–			–			–			–			(68	)		–			–			–			–			(68	)		(1	)		(69	)
Other		–			–			–			–			(3	)		–			–			–			–			(3	)		–			(3	)
Net income		–			–			–			–			4,250			–			–			–			–			4,250			3			4,253
Total other<br><br>comprehensive income<br><br>(loss),<br>net of taxes		–			–			–			–			1,622			(914	)		334			986			406			2,028			1			2,029
Balance at end of period	$	7,323		$	17,488		$	(25	)	$	(174	)	$	75,931		$	(1,273	)	$	3,353		$	1,681		$	3,761		$	104,304		$	101		$	104,405
	For the three months ended April 30, 2021
																Other components of equity
(Millions of Canadian dollars)	Preferred<br> shares and<br> other equity<br> instruments			Common<br> shares			Treasury –<br> preferred<br> shares and<br> other equity<br> instruments			Treasury –<br> common<br> shares			Retained<br> earnings			FVOCI<br> securities<br> and loans			Foreign<br> currency<br> translation			Cash flow<br> hedges			Total other<br> components<br> of equity			Equity<br> attributable to<br> shareholders			Non-controlling<br> interests			Total<br> equity
Balance at beginning of period	$	7,198		$	17,664		$	17		$	(26	)	$	62,751		$	192		$	3,260		$	(907	)	$	2,545		$	90,149		$	100		$	90,249
Changes in equity
Issues of share capital and other equity instruments		–			25			–			–			–			–			–			–			–			25			–			25
Common shares purchased for cancellation		–			–			–			–			–			–			–			–			–			–			–			–
Redemption of preferred shares and other equity instruments		–			–			–			–			–			–			–			–			–			–			–			–
Sales of treasury shares and other equity instruments		–			–			153			1,039			–			–			–			–			–			1,192			–			1,192
Purchases of treasury shares and other equity instruments		–			–			(177	)		(1,004	)		–			–			–			–			–			(1,181	)		–			(1,181	)
Share-based compensation awards		–			–			–			–			(2	)		–			–			–			–			(2	)		–			(2	)
Dividends on common shares		–			–			–			–			(1,540	)		–			–			–			–			(1,540	)		–			(1,540	)
Dividends on preferred shares and distributions on other equity instruments		–			–			–			–			(76	)		–			–			–			–			(76	)		(1	)		(77	)
Other		–			–			–			–			(5	)		–			–			–			–			(5	)		(9	)		(14	)
Net income		–			–			–			–			4,014			–			–			–			–			4,014			1			4,015
Total other comprehensive income<br><br>(loss),<br>net of taxes		–			–			–			–			1,021			(130	)		(1,434	)		702			(862	)		159			(4	)		155
Balance at end of period	$	7,198		$	17,689		$	(7	)	$	9		$	66,163		$	62		$	1,826		$	(205	)	$	1,683		$	92,735		$	87		$	92,822

Royal Bank of Canada Second Quarter 2022 5 3

	For the six months ended April 30, 2022
																Other components of equity
(Millions of Canadian dollars)	Preferred<br> shares and<br> other equity<br> instruments			Common<br> shares			Treasury –<br> preferred<br> shares and<br> other equity<br> instruments			Treasury –<br> <br>common<br> <br>shares			Retained<br> earnings			FVOCI<br> securities<br> and loans			Foreign<br> currency<br> translation			Cash flow<br> hedges			Total other<br> components<br> of equity			Equity<br> attributable to<br> shareholders			Non-controlling<br> <br>interests			Total<br> equity
Balance at beginning of period	$	6,723		$	17,728		$	(39	)	$	(73	)	$	71,795		$	(88	)	$	2,055		$	566		$	2,533		$	98,667		$	95		$	98,762
Changes in equity
Issues of share capital and other equity instruments		750			42			–			–			(1	)		–			–			–			–			791			–			791
Common shares purchased for cancellation		–			(282	)		–			–			(2,824	)		–			–			–			–			(3,106	)		–			(3,106	)
Redemption of preferred shares and other equity instruments		(150	)		–			–			–			(5	)		–			–			–			–			(155	)		–			(155	)
Sales of treasury shares and other equity instruments		–			–			308			2,707			–			–			–			–			–			3,015			–			3,015
Purchases of treasury shares and other equity instruments		–			–			(294	)		(2,808	)		–			–			–			–			–			(3,102	)		–			(3,102	)
Share-based compensation awards		–			–			–			–			2			–			–			–			–			2			–			2
Dividends on common shares		–			–			–			–			(3,388	)		–			–			–			–			(3,388	)		–			(3,388	)
Dividends on preferred shares and distributions on other equity instruments		–			–			–			–			(122	)		–			–			–			–			(122	)		(2	)		(124	)
Other		–			–			–			–			7			–			–			–			–			7			–			7
Net income		–			–			–			–			8,343			–			–			–			–			8,343			5			8,348
Total other<br>comprehensive<br>income<br>(loss),<br><br>net of taxes		–			–			–			–			2,124			(1,185	)		1,298			1,115			1,228			3,352			3			3,355
Balance at end of period	$	7,323		$	17,488		$	(25	)	$	(174	)	$	75,931		$	(1,273	)	$	3,353		$	1,681		$	3,761		$	104,304		$	101		$	104,405
	For the six months ended April 30, 2021
																Other components of equity
(Millions of Canadian dollars)	Preferred<br> shares and<br> other equity<br> instruments			Common<br> shares			Treasury –<br> preferred<br> shares and<br> other equity<br> instruments			Treasury –<br> common<br> shares			Retained<br> earnings			FVOCI<br> securities<br> and loans			Foreign<br> currency<br> translation			Cash flow<br> hedges			Total other<br> components<br> of equity			Equity<br> attributable to<br> shareholders			Non-controlling<br> interests			Total<br> equity
Balance at beginning of period	$	5,948		$	17,628		$	(3	)	$	(129	)	$	59,806		$	(139	)	$	4,632		$	(1,079	)	$	3,414		$	86,664		$	103		$	86,767
Changes in equity
Issues of share capital and other equity instruments		1,250			61			–			–			(3	)		–			–			–			–			1,308			–			1,308
Common shares purchased for cancellation		–			–			–			–			–			–			–			–			–			–			–			–
Redemption of preferred shares and other equity instruments		–			–			–			–			–			–			–			–			–			–			–			–
Sales of treasury shares and other equity instruments		–			–			199			1,942			–			–			–			–			–			2,141			–			2,141
Purchases of treasury shares and other equity instruments		–			–			(203	)		(1,804	)		–			–			–			–			–			(2,007	)		–			(2,007	)
Share-based compensation awards		–			–			–			–			(4	)		–			–			–			–			(4	)		–			(4	)
Dividends on common shares		–			–			–			–			(3,079	)		–			–			–			–			(3,079	)		–			(3,079	)
Dividends on preferred shares and distributions on other equity instruments		–			–			–			–			(134	)		–			–			–			–			(134	)		(2	)		(136	)
Other		–			–			–			–			36			–			–			–			–			36			(9	)		27
Net income		–			–			–			–			7,859			–			–			–			–			7,859			3			7,862
Total other<br>comprehensive<br>income<br>(loss),<br><br>net of taxes		–			–			–			–			1,682			201			(2,806	)		874			(1,731	)		(49	)		(8	)		(57	)
Balance at end of period	$	7,198		$	17,689		$	(7	)	$	9		$	66,163		$	62		$	1,826		$	(205	)	$	1,683		$	92,735		$	87		$	92,822

The accompanying notes are an integral part of these Interim Condensed Consolidated Financial Statements.

5 4 Royal Bank of Canada Second Quarter 2022

Interim Condensed Consolidated Statements of Cash Flows<br>(unaudited)
	For the three months ended						For the six months ended
---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars)	April 30<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Cash flows from operating activities
Net income	$	4,253		$	4,015		$	8,348		$	7,862
Adjustments for non-cash items and others
Provision for credit losses		(342	)		(96	)		(237	)		14
Depreciation		314			318			627			632
Deferred income taxes		418			454			645			786
Amortization and impairment of other intangibles		340			319			679			639
Net changes in investments in joint ventures and associates		(24	)		(24	)		(52	)		(48	)
Losses (Gains) on investment securities		(23	)		(82	)		(38	)		(123	)
Losses (Gains) on disposition of businesses		(89	)		(26	)		(89	)		(26	)
Adjustments for net changes in operating assets and liabilities
Insurance claims and policy benefit liabilities		(900	)		(645	)		(743	)		(106	)
Net change in accrued interest receivable and payable		(68	)		(138	)		(79	)		(359	)
Current income taxes		(372	)		394			(3,090	)		673
Derivative assets		(63,885	)		13,681			(60,663	)		16,252
Derivative liabilities		63,439			(13,669	)		60,102			(17,525	)
Trading securities		5,759			22,295			(4,526	)		10,343
Loans, net of securitizations		(34,093	)		(605	)		(56,957	)		(11,980	)
Assets purchased under reverse repurchase agreements and securities borrowed		(4,572	)		3,002			(8,795	)		4,984
Obligations related to assets sold under repurchase agreements and securities loaned		14,329			(17,858	)		17,137			(17,182	)
Obligations related to securities sold short		(2,080	)		(752	)		1,623			2,532
Deposits, net of securitizations		9,358			(21,296	)		51,369			21,368
Brokers and dealers receivable and payable		(914	)		440			1,099			(698	)
Other		9,889			3,718			2,811			6,220
Net cash from (used in) operating activities		737			(6,555	)		9,171			24,258
Cash flows from investing activities
Change in interest-bearing deposits with banks		(5,409	)		(29,700	)		10,809			(24,418	)
Proceeds from sales and maturities of investment securities		24,394			33,637			47,495			63,310
Purchases of investment securities		(27,559	)		(28,584	)		(56,223	)		(61,765	)
Net acquisitions of premises and equipment and other intangibles		(553	)		(496	)		(1,143	)		(925	)
Proceeds from dispositions		95			78			95			78
Net cash from (used in) investing activities		(9,032	)		(25,065	)		1,033			(23,720	)
Cash flows from financing activities
Issuance of subordinated debentures		–			–			1,000			1,000
Repayment of subordinated debentures		–			–			–			(1,500	)
Issue of common shares, net of issuance costs		7			22			38			53
Common shares purchased for cancellation		(1,892	)		–			(3,106	)		–
Issue of preferred shares and other equity instruments, net of issuance costs		–			–			749			1,247
Redemption of preferred shares and other equity instruments		(155	)		–			(155	)		–
Sales of treasury shares and other equity instruments		1,343			1,192			3,015			2,141
Purchases of treasury shares and other equity instruments		(1,431	)		(1,181	)		(3,102	)		(2,007	)
Dividends paid on shares and distributions paid on other equity instruments		(1,756	)		(1,597	)		(3,364	)		(3,210	)
Dividends/distributions paid to non-controlling interests		(1	)		(1	)		(2	)		(2	)
Change in short-term borrowings of subsidiaries		1			(1	)		1			(8	)
Repayment of lease liabilities		(154	)		(152	)		(317	)		(298	)
Net cash from (used in) financing activities		(4,038	)		(1,718	)		(5,243	)		(2,584	)
Effect of exchange rate changes on cash and due from banks		(2,901	)		(1,943	)		(2,878	)		(2,535	)
Net change in cash and due from banks		(15,234	)		(35,281	)		2,083			(4,581	)
Cash and due from banks at beginning of period <br>(1)		131,163			149,588			113,846			118,888
Cash and due from banks at end of period<br> <br>(1)	$	115,929		$	114,307		$	115,929		$	114,307
Cash flows from operating activities include:
Amount of interest paid	$	1,757		$	2,161		$	3,528		$	4,295
Amount of interest received		6,775			6,692			13,601			13,471
Amount of dividends received		678			696			1,545			1,351
Amount of income taxes paid		1,657			1,248			5,336			2,274
(1)	We are required to maintain balances with central banks and other regulatory authorities. The total balances were $2<br><br>billion as at April 30, 2022 (January 31, 2022 – $2<br><br>billion; October 31, 2021 – $2<br><br>billion; April 30, 2021 – $2<br><br>billion; October 31, 2020 – $3<br><br>billion).
---	---

The accompanying notes are an integral part of these Interim Condensed Consolidated Financial Statements.

Royal Bank of Canada Second Quarter 2022 5 5

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 2021 Annual Consolidated Financial Statements and the accompanying notes included on pages 133 to 225 in our 2021 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 25, 2022, the Board of Directors authorized the Condensed Financial Statements for issue.

Note 2 Summary of significant accounting policies, estimates and judgments

The Condensed Financial Statements have been prepared using the same accounting policies and methods used in the preparation of our audited 2021 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 2021 Annual Consolidated Financial Statements.

Interest Rate Benchmark Reform

As part of the interest rate benchmark reform, the publication of all non-USD London Interbank Offered Rate (LIBOR) settings ceased on December 31, 2021. As at April 30, 2022 and consistent with our transition plan, our exposure to financial instruments referencing non-USD LIBOR interest rates is not material to our financial statements.

5 6 Royal Bank of Canada Second Quarter 2022

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 financial instruments classified or designated as fair value through profit or loss (FVTPL) and fair value through other comprehensive income (FVOCI). Embedded derivatives are presented on a combined basis with the host contracts. Refer to Note 2 and Note 3 of our audited 2021 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, 2022
	Carrying value and fair value								Carrying value		Fair value
(Millions of Canadian dollars)	Financial<br>instruments<br>classified as<br>FVTPL		Financial<br>instruments<br>designated as<br>FVTPL		Financial<br>instruments<br>classified as<br>FVOCI		Financial<br>instruments<br>designated as<br>FVOCI		Financial<br>instruments<br>measured at<br>amortized cost		Financial<br>instruments<br>measured at<br>amortized cost		Total carrying<br>amount		Total fair value
Financial assets
Interest-bearing deposits<br><br>with banks	$	–	$	57,963	$	–	$	–	$	10,866	$	10,866	$	68,829	$	68,829
Securities
Trading		133,183		10,583		–		–		–		–		143,766		143,766
Investment, net of applicable allowance		–		–		80,208		573		73,768		69,784		154,549		150,565
		133,183		10,583		80,208		573		73,768		69,784		298,315		294,331
Assets purchased under reverse repurchase agreements and securities borrowed		271,184		–		–		–		45,514		45,514		316,698		316,698
Loans, net of applicable allowance
Retail		54		244		189		–		522,562		509,443		523,049		509,930
Wholesale		8,342		3,074		529		–		239,470		234,812		251,415		246,757
		8,396		3,318		718		–		762,032		744,255		774,464		756,687
Other
Derivatives		156,204		–		–		–		–		–		156,204		156,204
Other assets <br>(1)		4,041		–		–		–		66,309		66,309		70,350		70,350
Financial liabilities
Deposits
Personal	$	309	$	18,267					$	364,305	$	363,185	$	382,881	$	381,761
Business and government <br>(2)		591		143,147						581,240		580,134		724,978		723,872
Bank <br>(3)		–		10,647						33,091		33,080		43,738		43,727
		900		172,061						978,636		976,399		1,151,597		1,149,360
Other
Obligations related to securities sold short		39,464		–						–		–		39,464		39,464
Obligations related to assets sold under repurchase agreements and securities loaned		–		252,308						27,030		27,030		279,338		279,338
Derivatives		151,541		–						–		–		151,541		151,541
Other liabilities <br>(4)		294		82						75,315		75,224		75,691		75,600
Subordinated debentures		–		–						10,276		10,119		10,276		10,119

Royal Bank of Canada Second Quarter 2022 5 7

	As at October 31, 2021
	Carrying value and fair value								Carrying value		Fair value
(Millions of Canadian dollars)	Financial<br>instruments<br>classified as<br>FVTPL		Financial<br>instruments<br>designated as<br>FVTPL		Financial<br>instruments<br>classified as<br>FVOCI		Financial<br>instruments<br>designated as<br>FVOCI		Financial<br>instruments<br>measured at<br>amortized cost		Financial<br>instruments<br>measured at<br>amortized cost		Total carrying<br>amount		Total fair value
Financial assets
Interest-bearing deposits<br><br>with banks	$	–	$	56,896	$	–	$	–	$	22,742	$	22,742	$	79,638	$	79,638
Securities
Trading		125,801		13,439		–		–		–		–		139,240		139,240
Investment, net of applicable allowance		–		–		77,802		533		67,149		66,823		145,484		145,158
		125,801		13,439		77,802		533		67,149		66,823		284,724		284,398
Assets purchased under reverse repurchase agreements and securities borrowed		265,011		–		–		–		42,892		42,892		307,903		307,903
Loans, net of applicable allowance
Retail		–		241		327		–		500,621		502,277		501,189		502,845
Wholesale		8,428		2,769		813		–		204,376		204,683		216,386		216,693
		8,428		3,010		1,140		–		704,997		706,960		717,575		719,538
Other
Derivatives		95,541		–		–		–		–		–		95,541		95,541
Other assets <br>(1)		4,109		–		–		–		58,483		58,483		62,592		62,592
Financial liabilities
Deposits
Personal	$	321	$	18,328					$	343,839	$	344,040	$	362,488	$	362,689
Business and government <br>(2)		739		131,630						563,984		565,106		696,353		697,475
Bank <br>(3)		–		17,251						24,739		24,743		41,990		41,994
		1,060		167,209						932,562		933,889		1,100,831		1,102,158
Other
Obligations related to securities sold short		37,841		–						–		–		37,841		37,841
Obligations related to assets sold under repurchase agreements and securities loaned		–		236,147						26,054		26,054		262,201		262,201
Derivatives		91,439		–						–		–		91,439		91,439
Other liabilities <br>(4)		654		171						64,746		64,749		65,571		65,574
Subordinated debentures		–		–						9,593		9,601		9,593		9,601
(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.
---	---

5 8 Royal Bank of Canada Second Quarter 2022

Note 3 Fair value of financial instruments<br><br>(continued)

Fair value of assets and liabilities measured at fai r value on a recurring basi s and classified using the fair value

hierarchy

	As at
	April 30, 2022															October 31, 2021
	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
Financial assets
Interest-bearing deposits with banks	$	–	$	57,963		$	–					$	57,963			$	–		$	56,896			$	–				$	56,896
Securities
Trading
Debt issued or guaranteed by:
Canadian government <br>(1)
Federal		8,179		1,785			–						9,964				8,977			2,380				–					11,357
Provincial and municipal		–		11,111			–						11,111				–			11,068				–					11,068
U.S. federal, state, municipal and agencies <br>(1)		960		32,284			16						33,260				215			22,738				25					22,978
Other OECD government <br>(2)		3,032		4,012			–						7,044				2,729			5,730				–					8,459
Mortgage-backed securities <br>(1)		–		8			–						8				–			4				–					4
Asset-backed securities
Non-CDO securities <br>(3)		–		1,126			2						1,128				–			891				2					893
Corporate debt and other debt		–		23,521			5						23,526				–			23,085				25					23,110
Equities		52,685		3,281			1,759						57,725				56,826			3,015				1,530					61,371
		64,856		77,128			1,782						143,766				68,747			68,911				1,582					139,240
Investment
Debt issued or guaranteed by:
Canadian government <br>(1)
Federal		1,960		1,969			–						3,929				1,973			1,730				–					3,703
Provincial and municipal		–		2,980			–						2,980				–			3,132				–					3,132
U.S. federal, state, municipal and agencies <br>(1)		109		31,273			–						31,382				12			34,815				–					34,827
Other OECD government		–		6,542			–						6,542				–			5,956				–					5,956
Mortgage-backed securities <br>(1)		–		2,844			21						2,865				–			2,727				20					2,747
Asset-backed securities
CDO		–		7,159			–						7,159				–			7,074				–					7,074
Non-CDO securities		–		539			–						539				–			586				–					586
Corporate debt and other debt		–		24,663			149						24,812				–			19,625				152					19,777
Equities		42		182			349						573				46			153				334					533
		2,111		78,151			519						80,781				2,031			75,798				506					78,335
Assets purchased under reverse repurchase agreements and securities borrowed		–		271,184			–						271,184				–			265,011				–					265,011
Loans		–		11,650			782						12,432				–			11,501				1,077					12,578
Other
Derivatives
Interest rate contracts		–		33,883			381						34,264				–			33,857				320					34,177
Foreign exchange contracts		–		102,847			42						102,889				–			41,224				74					41,298
Credit derivatives		–		256			–						256				–			34				–					34
Other contracts		3,979		18,994			108						23,081				3,175			17,955				26					21,156
Valuation adjustments		–		(1,523	)		20						(1,503	)			–			(819	)			9					(810	)
Total gross derivatives		3,979		154,457			551						158,987				3,175			92,251				429					95,855
Netting adjustments										)			(2,783	)													)		(314	)
Total derivatives													156,204																95,541
Other assets		1,414		2,612			15						4,041				1,474			2,635				–					4,109
	$	72,360	$	653,145		$	3,649			)		$	726,371			$	75,427		$	573,003			$	3,594			)	$	651,710
Financial liabilities
Deposits
Personal	$	–	$	18,419		$	157					$	18,576			$	–		$	18,498			$	151				$	18,649
Business and government		–		143,738			–						143,738				–			132,369				–					132,369
Bank		–		10,647			–						10,647				–			17,251				–					17,251
Other
Obligations related to<br> securities sold short		17,067		22,397			–						39,464				18,345			19,496				–					37,841
Obligations related to assets<br> sold under repurchase agreements and securities loaned		–		252,308			–						252,308				–			236,147				–					236,147
Derivatives
Interest rate contracts		–		31,039			1,044						32,083				–			28,566				955					29,521
Foreign exchange contracts		–		99,539			18						99,557				–			40,484				27					40,511
Credit derivatives		–		102			–						102				–			120				–					120
Other contracts		7,019		15,544			544						23,107				3,699			17,456				419					21,574
Valuation adjustments		–		(517	)		(8	)					(525	)			–			38				(11	)				27
Total gross derivatives		7,019		145,707			1,598						154,324				3,699			86,664				1,390					91,753
Netting adjustments										)			(2,783	)													)		(314	)
Total derivatives													151,541																91,439
Other liabilities		387		(14	)		3						376				258			560				7					825
	$	24,473	$	593,202		$	1,758			)		$	616,650			$	22,302		$	510,985			$	1,548			)	$	534,521

All values are in US Dollars.

(1)	As at April 30, 2022, residential and commercial mortgage-backed securities (MBS) included in all fair value levels of trading securities were $12,651 <br>million<br>and $nil <br>(October 31, 2021 – <br>$<br>13,124 million and $nil), respectively, and in all fair value levels of Investment securities were $13,103 <br>million<br>and $2,916 <br>million<br>(October 31, 2021 – $13,542 <br>million<br>and $2,592 million), respectively.
(2)	Organisation for Economic Co-operation and Development (OECD).
---	---
(3)	Collateralized debt obligations (CDO).
---	---

Royal Bank of Canada Second Quarter 2022 5 9

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, 2022, 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, 2022, 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 2021 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, 2022
(Millions of Canadian dollars)	Fair value<br>at beginning<br>of period			Gains (losses)<br>included<br>in earnings			Gains (losses)<br>included in<br>OCI<br>(1)			Purchases<br>(issuances)			Settlement<br>(sales) and<br>other<br>(2)			Transfers<br>into<br>Level 3			Transfers<br>out of<br>Level 3			Fair value<br>at end of<br>period			Gains<br>(losses) included<br>in earnings for<br>positions still held
Assets
Securities
Trading
Debt issued or guaranteed by:
U.S. state, municipal and agencies	$	22		$	–		$	–		$	–		$	(6	)	$	–		$	–		$	16		$	–
Asset-backed securities
Non-CDO securities		2			–			–			–			–			–			–			2			–
Corporate debt and other debt		15			(1	)		–			–			–			–			(9	)		5			–
Equities		1,689			4			11			79			(25	)		1			–			1,759			(4	)
		1,728			3			11			79			(31	)		1			(9	)		1,782			(4	)
Investment
Mortgage-backed securities		20			–			1			–			–			–			–			21			n.a.
Corporate debt and other debt		155			–			(6	)		–			–			–			–			149			n.a.
Equities		349			–			(2	)		2			–			–			–			349			n.a.
		524			–			(7	)		2			–			–			–			519			n.a.
Loans		679			(23	)		(24	)		161			(1	)		9			(19	)		782			38
Other
Net derivative balances <br>(3)
Interest rate contracts		(555	)		(146	)		(3	)		99			(16	)		–			(42	)		(663	)		(163	)
Foreign exchange contracts		7			(17	)		–			21			16			–			(3	)		24			(12	)
Other contracts		(448	)		123			(3	)		(12	)		6			(117	)		15			(436	)		107
Valuation adjustments		39			–			–			–			(11	)		–			–			28			–
Other assets		–			–			–			15			–			–			–			15			–
	$	1,974		$	(60	)	$	(26	)	$	365		$	(37	)	$	(107	)	$	(58	)	$	2,051		$	(34	)
Liabilities
Deposits	$	(122	)	$	(3	)	$	–		$	(52	)	$	12		$	(16	)	$	24		$	(157	)	$	8
Other
Other liabilities		(7	)		–			–			–			4			–			–			(3	)		–
	$	(129	)	$	(3	)	$	–		$	(52	)	$	16		$	(16	)	$	24		$	(160	)	$	8

Ro yal Bank of Canada Second Quarter 2022

Note 3 Fair value of financial instruments<br><br>(continued)
	For the three months ended April 30, 2021
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars)	Fair value<br>at beginning<br>of period			Gains (losses)<br>included<br>in earnings			Gains (losses)<br>included in<br>OCI (1)			Purchases<br>(issuances)			Settlement<br>(sales) and<br>other (2)			Transfers<br>into<br>Level 3			Transfers<br>out of<br>Level 3			Fair value<br>at end of<br>period			Gains<br>(losses) included<br>in earnings for<br>positions still held
Assets
Securities
Trading
Debt issued or guaranteed by:
U.S. state, municipal and agencies	$	39		$	–		$	(2	)	$	–		$	(4	)	$	–		$	–		$	33		$	–
Asset-backed securities
Non-CDO securities		2			–			–			–			–			–			–			2			–
Corporate debt and other debt		36			(1	)		–			–			(4	)		–			(13	)		18			(1	)
Equities		1,332			30			(33	)		55			(43	)		25			–			1,366			50
		1,409			29			(35	)		55			(51	)		25			(13	)		1,419			49
Investment
Mortgage-backed securities		21			–			(1	)		–			–			–			–			20			n.a.
Corporate debt and other debt		154			–			(9	)		–			1			–			–			146			n.a.
Equities		336			–			(14	)		–			–			–			–			322			n.a.
		511			–			(24	)		–			1			–			–			488			n.a.
Loans		1,113			(18	)		(15	)		51			(4	)		54			(36	)		1,145			18
Other
Net derivative balances <br>(3)
Interest rate contracts		(643	)		(32	)		–			15			(2	)		(6	)		2			(666	)		(32	)
Foreign exchange contracts		42			12			(2	)		10			(8	)		6			(14	)		46			12
Other contracts		(100	)		14			2			(39	)		–			(232	)		14			(341	)		6
Valuation adjustments		36			–			–			–			(15	)		–			–			21			–
Other assets		9			–			–			–			(7	)		–			–			2			–
	$	2,377		$	5		$	(74	)	$	92		$	(86	)	$	(153	)	$	(47	)	$	2,114		$	53
Liabilities
Deposits	$	(169	)	$	(26	)	$	2		$	(47	)	$	34		$	(5	)	$	141		$	(70	)	$	9
Other
Other liabilities		(13	)		–			–			–			2			–			–			(11	)		–
	$	(182	)	$	(26	)	$	2		$	(47	)	$	36		$	(5	)	$	141		$	(81	)	$	9

Royal Bank of Canada Second Quarter 2022 61

	For the six months ended April 30, 2022
(Millions of Canadian dollars)	Fair value<br>at beginning<br>of period			Gains (losses)<br>included<br>in earnings			Gains (losses)<br>included in<br>OCI<br>(1)			Purchases<br>(issuances)			Settlement<br>(sales) and<br>other<br>(2)			Transfers<br>into<br>Level 3			Transfers<br>out of<br>Level 3			Fair value<br>at end of<br>period			Gains<br>(losses) included<br>in earnings for<br><br>positions still held
Assets
Securities
Trading
Debt issued or guaranteed by:
U.S. state, municipal and agencies	$	25		$	–		$	1		$	–		$	(10	)	$	–		$	–		$	16		$	–
Asset-backed securities
Non-CDO securities		2			–			–			–			–			–			–			2			–
Corporate debt and other debt		25			(2	)		–			–			(5	)		–			(13	)		5			–
Equities		1,530			78			34			161			(45	)		1			–			1,759			93
		1,582			76			35			161			(60	)		1			(13	)		1,782			93
Investment
Mortgage-backed securities		20			–			1			–			–			–			–			21			n.a.
Corporate debt and other debt		152			–			(3	)		–			–			–			–			149			n.a.
Equities		334			–			43			8			(1	)		–			(35	)		349			n.a.
		506			–			41			8			(1	)		–			(35	)		519			n.a.
Loans		1,077			(13	)		(32	)		217			(462	)		16			(21	)		782			(46	)
Other
Net derivative balances <br>(3)
Interest rate contracts		(635	)		(157	)		(2	)		100			66			–			(35	)		(663	)		108
Foreign exchange contracts		47			(47	)		1			21			12			–			(10	)		24			53
Other contracts		(393	)		184			(11	)		(115	)		48			(193	)		44			(436	)		166
Valuation adjustments		20			–			–			–			(11	)		19			–			28			–
Other assets		–			–			–			15						–			–			15			–
	$	2,204		$	43		$	32		$	407		$	(408	)	$	(157	)	$	(70	)	$	2,051		$	374
Liabilities
Deposits	$	(151	)	$	(9	)	$	(1	)	$	(79	)	$	17		$	(36	)	$	102		$	(157	)	$	(9	)
Other
Other liabilities		(7	)		–			–			–			4			–			–			(3	)		–
	$	(158	)	$	(9	)	$	(1	)	$	(79	)	$	21		$	(36	)	$	102		$	(160	)	$	(9	)

6 2 Royal Bank of Canada Second Quarter 2022

Note 3 Fair value of financial instruments<br><br>(continued)
	For the six months ended April 30, 2021
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars)	Fair value<br> at beginning<br> of period			Gains (losses)<br> included<br> in earnings			Gains (losses)<br> included in<br> OCI (1)			Purchases<br> (issuances)			Settlement<br> (sales) and<br> other (2)			Transfers<br> into<br> Level 3			Transfers<br> out of<br> Level 3			Fair value<br> at end of<br> period			Gains<br>(losses) included<br>in earnings for<br>positions still held
Assets
Securities
Trading
Debt issued or guaranteed by:
U.S. state, municipal and agencies	$	44		$	–		$	(3	)	$	–		$	(8	)	$	–		$	–		$	33		$	–
Asset-backed securities
Non-CDO securities		2			–			–			–			–			–			–			2			–
Corporate debt and other debt		30			(1	)		–			3			(4	)		14			(24	)		18			(1	)
Equities		1,261			48			(66	)		164			(66	)		25			–			1,366			89
		1,337			47			(69	)		167			(78	)		39			(24	)		1,419			88
Investment
Mortgage-backed securities		27			–			(7	)		–			–			–			–			20			n.a.
Corporate debt and other debt		160			–			(16	)		–			2			–			–			146			n.a.
Equities		335			–			(15	)		–			2			–			–			322			n.a.
		522			–			(38	)		–			4			–			–			488			n.a.
Loans		1,070			(23	)		(9	)		133			–			70			(96	)		1,145			38
Other
Net derivative balances <br>(3)
Interest rate contracts		(588	)		(31	)		(2	)		12			(40	)		(9	)		(8	)		(666	)		(23	)
Foreign exchange contracts		22			25			1			15			(14	)		7			(10	)		46			29
Other contracts		(301	)		3			13			(56	)		47			(224	)		177			(341	)		20
Valuation adjustments		40			–			–			–			(19	)		–			–			21			–
Other assets		53			(39	)		(2	)		–			(10	)		–			–			2			(39	)
	$	2,155		$	(18	)	$	(106	)	$	271		$	(110	)	$	(117	)	$	39		$	2,114		$	113
Liabilities
Deposits	$	(139	)	$	(55	)	$	5		$	(92	)	$	47		$	(77	)	$	241		$	(70	)	$	12
Other
Other liabilities		(38	)		22			1			–			4			–			–			(11	)		22
	$	(177	)	$	(33	)	$	6		$	(92	)	$	51		$	(77	)	$	241		$	(81	)	$	34
(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 losses on Investment securities recognized in <br>other comprehensive income (OCI)<br>were $1 <br>million<br>for the three months ended April 30, 2022 (April 30, 2021 – losses of $8 million) and gains of $44 million for the six months ended April 30, 2022 (April 30, 2021 – losses of $11 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, 2022 included derivative assets of $551 <br>million<br>(April 30, 2021 – $378 million) and derivative liabilities of $1,598 <br>million<br>(April 30, 2021 – $1,318 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, 2022, there were no significant transfers out of Level 1 to Level 2 or 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, 2022, significant transfers out of Level 2 to Level 3 included $117 million of OTC equity options in Other contracts comprised of $57 million of derivative related assets and $174 million of derivative related liabilities, due to changes in the market observability of inputs.

During the three months ended April 3 0 , 2022, there were no significant transfers out of Level 3 to Level 2.

Royal Bank of Canada Second Quarter 2022 6 3

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<br><br>2022		April 30<br><br>2021		April 30<br><br>2022		April 30<br><br>2021
Interest and dividend income<br><br>(1), (2)
Financial instruments measured at fair value through profit or loss	$	1,575	$	1,080	$	2,994	$	2,252
Financial instruments measured at fair value through other comprehensive income		124		92		201		194
Financial instruments measured at amortized cost		6,059		5,726		11,941		11,688
		7,758		6,898		15,136		14,134
Interest expense<br><br>(1)
Financial instruments measured at fair value through profit or loss		1,085		702		1,946		1,439
Financial instruments measured at amortized cost		1,399		1,342		2,645		2,806
		2,484		2,044		4,591		4,245
Net interest income	$	5,274	$	4,854	$	10,545	$	9,889
(1)	Excludes the following amounts related to our insurance operations and included in Insurance premiums, investment and fee income in the Interim Consolidated Statements of Income: for the three months ended April 30, 2022, Interest income of $147 million (April 30, 2021 – $139 million), and Interest expense of $2 million (April 30, 2021 – $1 million); for the six months ended April 30, 2022, Interest income of $343 million (April 30, 2021 – $288 million), and Interest expense of $3 million (April 30, 2021 – $2 million).
---	---
(2)	Includes dividend income for the three months ended April 30, 2022 of $690 million (April 30, 2021 – $609 million) and for the six months ended April 30, 2022 of $1,440 million (April 30, 2021 – $1,217 million), which is presented in Interest and dividend income in the Interim Consolidated Statements of Income.
---	---
Note 4 Securities
---

Unrealized gains and losses on securities at FVOCI

(1), (2)

	As at
	April 30, 2022									October 31, 2021
(Millions of Canadian dollars)	Cost/<br>Amortized<br>cost		Gross<br>unrealized<br>gains		Gross<br>unrealized<br>losses			Fair value		Cost/<br>Amortized<br>cost		Gross<br>unrealized<br>gains		Gross<br>unrealized<br>losses			Fair value
Debt issued or guaranteed by:
Canadian government
Federal <br>(3)	$	4,194	$	2	$	(267	)	$	3,929	$	3,841	$	1	$	(139	)	$	3,703
Provincial and municipal		3,441		1		(462	)		2,980		3,328		3		(199	)		3,132
U.S. federal, state, municipal and agencies <br>(3)		32,156		235		(1,009	)		31,382		34,678		353		(204	)		34,827
Other OECD government		6,547		3		(8	)		6,542		5,949		8		(1	)		5,956
Mortgage-backed securities <br>(3)		2,902		–		(37	)		2,865		2,757		2		(12	)		2,747
Asset-backed securities
CDO		7,213		–		(54	)		7,159		7,074		1		(1	)		7,074
Non-CDO securities		543		1		(5	)		539		580		6		–			586
Corporate debt and other debt		24,858		32		(78	)		24,812		19,731		57		(11	)		19,777
Equities		275		301		(3	)		573		242		292		(1	)		533
	$	82,129	$	575	$	(1,923	)	$	80,781	$	78,180	$	723	$	(568	)	$	78,335
(1)	Excludes $73,768 million of held-to-collect securities as at April 30, 2022 that are carried at amortized cost, net of allowance for credit losses (October 31, 2021 – $67,149 million).
---	---
(2)	Gross unrealized gains and losses includes $(13) million of allowance for credit losses on debt securities at FVOCI as at April 30, 2022 (October 31, 2021 – $(9) million) recognized in income and Other components of equity.
---	---
(3)	The majority of the MBS are residential. Cost/Amortized cost, Gross unrealized gains, Gross unrealized losses and Fair value related to commercial MBS are $2,962 million,<br>$nil, $46 million and $2,916 million, respectively as at April 30, 2022 (October 31, 2021 – $2,603 million, $1 million, $12 million and $2,592 million, respectively).
---	---

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.
---	---

6 4 Royal Bank of Canada Second Quarter 2022

Note 4 Securities<br><br>(continued)

Allowance for credit losses – securities at FVOCI

(1)

	For the three months ended
	April 30, 2022											April 30, 2021
	Performing					Impaired						Performing						Impaired
(Millions of Canadian dollars)	Stage 1			Stage 2		Stage 3<br>(2)			Total			Stage 1			Stage 2			Stage 3 (2)			Total
Balance at beginning of period	$	2		$	1	$	(14	)	$	(11	)	$	7		$	3		$	(5	)	$	5
Provision for credit losses
Transfers to stage 1		–			–		–			–			–			–			–			–
Transfers to stage 2		–			–		–			–			–			–			–			–
Transfers to stage 3		–			–		–			–			–			–			–			–
Purchases		1			–		–			1			3			–			–			3
Sales and maturities		(1	)		–		–			(1	)		(3	)		(1	)		–			(4	)
Changes in risk, parameters and exposures		1			–		(3	)		(2	)		–			–			(2	)		(2	)
Exchange rate and other		(1	)		1		–			–			–			(1	)		–			(1	)
Balance at end of period	$	2		$	2	$	(17	)	$	(13	)	$	7		$	1		$	(7	)	$	1
	For the six months ended
	April 30, 2022											April 30, 2021
	Performing					Impaired						Performing						Impaired
(Millions of Canadian dollars)	Stage 1			Stage 2		Stage 3<br>(2)			Total			Stage 1			Stage 2			Stage 3 (2)			Total
Balance at beginning of perio<br>d	$	2		$	1	$	(12	)	$	(9	)	$	12		$	–		$	(4	)	$	8
Provision for credit losses
Transfers to stage 1		–			–		–			–			–			–			–			–
Transfers to stage 2		–			–		–			–			–			–			–			–
Transfers to stage 3		–			–		–			–			–			–			–			–
Purchases		1			–		–			1			5			–			–			5
Sales and maturities		(1	)		–		–			(1	)		(7	)		(1	)		–			(8	)
Changes in risk, parameters and exposures		1			–		(5	)		(4	)		(2	)		3			(4	)		(3	)
Exchange rate and other		(1	)		1		–			–			(1	)		(1	)		1			(1	)
Balance at end of period	$	2		$	2	$	(17	)	$	(13	)	$	7		$	1		$	(7	)	$	1
(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.
---	---

Allowance for credit losses – securities at amortized cost

	For the three months ended
	April 30, 2022											April 30, 2021
	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		$	17		$	–	$	26		$	8		$	18		$	–	$	26
Provision for credit losses
Transfers to stage 1		–			–			–		–			–			–			–		–
Transfers to stage 2		–			–			–		–			–			–			–		–
Transfers to stage 3		–			–			–		–			–			–			–		–
Purchases		2			–			–		2			4			–			–		4
Sales and maturities		–			–			–		–			(1	)		–			–		(1	)
Changes in risk, parameters and exposures		(2	)		(1	)		–		(3	)		–			(1	)		–		(1	)
Exchange rate and other		–			–			–		–			–			–			–		–
Balance at end of period	$	9		$	16		$	–	$	25		$	11		$	17		$	–	$	28
	For the six months ended
	April 30, 2022											April 30, 2021
	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	$	5		$	18		$	–	$	23		$	10		$	19		$	–	$	29
Provision for credit losses
Transfers to stage 1		–			–			–		–			–			–			–		–
Transfers to stage 2		–			–			–		–			–			–			–		–
Transfers to stage 3		–			–			–		–			–			–			–		–
Purchases		8			–			–		8			7			–			–		7
Sales and maturities		(1	)		–			–		(1	)		(1	)		–			–		(1	)
Changes in risk, parameters and exposures		(3	)		(2	)		–		(5	)		(5	)		–			–		(5	)
Exchange rate and other		–			–			–		–			–			(2	)		–		(2	)
Balance at end of period	$	9		$	16		$	–	$	25		$	11		$	17		$	–	$	28

Royal Bank of Canada Second Quarter 2022 6 5

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 2021 Annual Report.

	As at
	April 30, 2022								October 31, 2021
	Performing				Impaired				Performing				Impaired
(Millions of Canadian dollars)	Stage 1		Stage 2		Stage 3<br>(1)		Total		Stage 1		Stage 2		Stage 3 (1)		Total
Investment securities
Securities at FVOCI
Investment grade	$	79,395	$	36	$	–	$	79,431	$	77,147	$	82	$	–	$	77,229
Non-investment grade		617		14		–		631		423		–		–		423
Impaired		–		–		146		146		–		–		150		150
		80,012		50		146		80,208		77,570		82		150		77,802
Items not subject to impairment <br>(2)								573								533
							$	80,781							$	78,335
Securities at amortized cost
Investment grade	$	72,764	$	–	$	–	$	72,764	$	66,033	$	–	$	–	$	66,033
Non-investment grade		813		216		–		1,029		928		211		–		1,139
Impaired		–		–		–		–		–		–		–		–
		73,577		216		–		73,793		66,961		211		–		67,172
Allowance for credit losses		9		16		–		25		5		18		–		23
Amortized cost	$	73,568	$	200	$	–	$	73,768	$	66,956	$	193	$	–	$	67,149
(1)	Reflects $146 million of purchased credit impaired securities (October 31, 2021 – $150 million).
---	---
(2)	Investment securities at FVOCI not subject to impairment represent equity securities designated as FVOCI.
---	---

6 6 Royal Bank of Canada Second Quarter 2022

Note 5 Loans and allowance for credit losses

Allowance for credit losses

	For the three months ended
	April 30, 2022													April 30, 2021
(Millions of Canadian dollars)	Balance at<br> beginning<br> of period		Provision<br> for credit<br> losses			Net<br> <br>write-offs			Exchange<br> rate and<br> other			Balance at<br> end of<br> period		Balance at<br> beginning<br> of period		Provision<br> for credit<br> losses			Net<br> <br>write-offs			Exchange<br> rate and<br> other			Balance at<br> end of<br> period
Retail
Residential mortgages	$	409	$	(16	)	$	(7	)	$	2		$	388	$	512	$	2		$	(7	)	$	(12	)	$	495
Personal		1,038		(39	)		(56	)		–			943		1,315		42			(79	)		(3	)		1,275
Credit cards		870		8			(83	)		–			795		1,201		17			(81	)		(2	)		1,135
Small business		178		5			(6	)		2			179		143		1			(5	)		50			189
Wholesale		1,811		(246	)		(15	)		(9	)		1,541		2,622		(143	)		(36	)		(132	)		2,311
Customers’ liability under acceptances		83		(42	)		–			–			41		121		(2	)		–			1			120
	$	4,389	$	(330	)	$	(167	)	$	(5	)	$	3,887	$	5,914	$	(83	)	$	(208	)	$	(98	)	$	5,525
Presented as:
Allowance for loan losses	$	4,047										$	3,566	$	5,478										$	5,146
Other liabilities – Provisions		251											275		309											227
Customers’ liability under acceptances		83											41		121											120
Other components of equity		8											5		6											32

	For the six months ended
	April 30, 2022													April 30, 2021
(Millions of Canadian dollars)	Balance at<br> beginning<br> of period		Provision<br> for credit<br> losses			Net<br> <br>write-offs			Exchange<br> rate and<br> other			Balance at<br> end of<br> period		Balance at<br> beginning<br> of period		Provision<br> for credit<br> losses			Net<br> <br>write-offs			Exchange<br> rate and<br> other			Balance at<br> end of<br> period
Retail
Residential mortgages	$	416	$	(22	)	$	(12	)	$	6		$	388	$	518	$	17		$	(14	)	$	(26	)	$	495
Personal		1,079		(21	)		(112	)		(3	)		943		1,309		111			(138	)		(7	)		1,275
Credit cards		875		73			(154	)		1			795		1,246		42			(150	)		(3	)		1,135
Small business		177		8			(10	)		4			179		140		9			(10	)		50			189
Wholesale		1,797		(234	)		(21	)		(1	)		1,541		2,795		(154	)		(122	)		(208	)		2,311
Customers’ liability under acceptances		75		(34	)		–			–			41		107		13			–			–			120
	$	4,419	$	(230	)	$	(309	)	$	7		$	3,887	$	6,115	$	38		$	(434	)	$	(194	)	$	5,525
Presented as:
Allowance for loan losses	$	4,089										$	3,566	$	5,639										$	5,146
Other liabilities – Provisions		241											275		363											227
Customers’ liability under acceptances		75											41		107											120
Other components of equity		14											5		6											32

The following table reconciles the opening and closing 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.
---	---

Royal Bank of Canada Second Quarter 2022 6 7

Allowance for credit losses – Retail and wholesale loans

	For the three months ended
	April 30, 2022												April 30, 2021
	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	$	187		$	85		$	137		$	409		$	192		$	162		$	158		$	512
Provision for credit losses
Transfers to stage 1		36			(31	)		(5	)		–			46			(41	)		(5	)		–
Transfers to stage 2		(4	)		5			(1	)		–			(4	)		4			–			–
Transfers to stage 3		–			(8	)		8			–			(1	)		(14	)		15			–
Originations		29			–			–			29			23			–			–			23
Maturities		(5	)		(1	)		–			(6	)		(10	)		(14	)		–			(24	)
Changes in risk, parameters and exposures		(60	)		20			1			(39	)		(52	)		55			–			3
Write-offs		–			–			(10	)		(10	)		–			–			(10	)		(10	)
Recoveries		–			–			3			3			–			–			3			3
Exchange rate and other		1			1			–			2			(2	)		(4	)		(6	)		(12	)
Balance at end of period	$	184		$	71		$	133		$	388		$	192		$	148		$	155		$	495
Personal
Balance at beginning of period	$	404		$	547		$	87		$	1,038		$	476		$	721		$	118		$	1,315
Provision for credit losses
Transfers to stage 1		157			(157	)		–			–			145			(144	)		(1	)		–
Transfers to stage 2		(39	)		39			–			–			(25	)		25			–			–
Transfers to stage 3		–			(13	)		13			–			–			(18	)		18			–
Originations		22			–			–			22			28			–			–			28
Maturities		(17	)		(25	)		–			(42	)		(25	)		(42	)		–			(67	)
Changes in risk, parameters and exposures		(<br>216	)		159			38			(19	)		(108	)		140			49			81
Write-offs		–			–			(89	)		(89	)		–			–			(112	)		(112	)
Recoveries		–			–			33			33			–			–			33			33
Exchange rate and other		(1	)		–			1			–			–			(2	)		(1	)		(3	)
Balance at end of period	$	310		$	550		$	83		$	943		$	491		$	680		$	104		$	1,275
Credit cards
Balance at beginning of period	$	226		$	644		$	–		$	870		$	353		$	848		$	–		$	1,201
Provision for credit losses
Transfers to stage 1		129			(129	)		–			–			152			(152	)		–			–
Transfers to stage 2		(28	)		28			–			–			(28	)		28			–			–
Transfers to stage 3		–			(81	)		81			–			–			(76	)		76			–
Originations		2			–			–			2			1			–			–			1
Maturities		(2	)		(7	)		–			(9	)		(2	)		(7	)		–			(9	)
Changes in risk, parameters and exposures		(159	)		172			2			15			(149	)		168			6			25
Write-offs		–			–			(126	)		(126	)		–			–			(121	)		(121	)
Recoveries		–			–			43			43			–			–			40			40
Exchange rate and other		1			(1	)		–			–			(1	)		–			(1	)		(2	)
Balance at end of period	$	169		$	626		$	–		$	795		$	326		$	809		$	–		$	1,135
Small business
Balance at beginning of period	$	87		$	56		$	35		$	178		$	74		$	33		$	36		$	143
Provision for credit losses
Transfers to st<br>a<br>ge 1		4			(4	)		–			–			26			(26	)		–			–
Transfers to stage 2		(6	)		6			–			–			(5	)		5			–			–
Transfers to stage 3		–			(1	)		1			–			–			–			–			–
Originations		8			–			–			8			8			–			–			8
Maturities		(6	)		(5	)		–			(11	)		(5	)		(3	)		–			(8	)
Changes in risk, parameters and exposures		(13	)		13			8			8			(39	)		32			8			1
Write-offs		–			–			(9	)		(9	)		–			–			(7	)		(7	)
Recoveries		–			–			3			3			–			–			2			2
Exchange rate and other		3			1			(2	)		2			22			30			(2	)		50
Balance at end of period	$	77		$	66		$	36		$	179		$	81		$	71		$	37		$	189
Wholesale
Balance at beginning of period	$	580		$	765		$	466		$	1,811		$	895		$	1,145		$	582		$	2,622
Provision for credit losses
Transfers to stage 1		160			(158	)		(2	)		–			126			(123	)		(3	)		–
Transfers to stage 2		(23	)		23			–			–			(40	)		52			(12	)		–
Transfers to stage 3		(1	)		(23	)		24			–			(1	)		(22	)		23			–
Originations		127			–			–			127			153			–			–			153
Maturities		(92	)		(84	)		–			(176	)		(133	)		(135	)		–			(268	)
Changes in risk, parameters and exposures		(267	)		64			6			(197	)		(194	)		163			3			(28	)
Write-offs		–			–			(26	)		(26	)		–			–			(51	)		(51	)
Recoveries		–			–			11			11			–			–			15			15
Exchange rate and other		(1	)		3			(11	)		(9	)		(42	)		(56	)		(34	)		(132	)
Balance at end of period	$	483		$	590		$	468		$	1,541		$	764		$	1,024		$	523		$	2,311

6 8 Royal Bank of Canada Second Quarter 2022

Note 5 Loans and allowance for credit losses<br><br>(continued)
	For the six months ended
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	April 30, 2022												April 30, 2021
	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	$	186		$	92		$	138		$	416		$	206		$	160		$	152		$	518
Provision for credit losses
Transfers to stage 1		60			(50	)		(10	)		–			120			(110	)		(10	)		–
Transfers to stage 2		(6	)		7			(1	)		–			(10	)		12			(2	)		–
Transfers to stage 3		(1	)		(15	)		16			–			(1	)		(27	)		28			–
Originations		59			–			–			59			53			–			–			53
Maturities		(12	)		(4	)		–			(16	)		(16	)		(18	)		–			(34	)
Changes in risk, parameters and exposures		(104	)		39			–			(65	)		(156	)		141			13			(2	)
Write-offs		–			–			(20	)		(20	)		–			–			(19	)		(19	)
Recoveries		–			–			8			8			–			–			5			5
Exchange rate and other		2			2			2			6			(4	)		(10	)		(12	)		(26	)
Balance at end of period	$	184		$	71		$	133		$	388		$	192		$	148		$	155		$	495
Personal
Balance at beginning of period	$	422		$	569		$	88		$	1,079		$	480		$	733		$	96		$	1,309
Provision for credit losses
Transfers to stage 1		327			(326	)		(1	)		–			342			(340	)		(2	)		–
Transfers to stage 2		(61	)		61			–			–			(52	)		52			–			–
Transfers to stage 3		(1	)		(25	)		26			–			(1	)		(32	)		33			–
Originations		48			–			–			48			61			–			–			61
Maturities		(38	)		(50	)		–			(88	)		(47	)		(69	)		–			(116	)
Changes in risk, parameters and exposures		(387	)		321			85			19			(290	)		338			118			166
Write-offs		–			–			(175	)		(175	)		–			–			(206	)		(206	)
Recoveries		–			–			63			63			–			–			68			68
Exchange rate and other		–			–			(3	)		(3	)		(2	)		(2	)		(3	)		(7	)
Balance at end of period	$	310		$	550		$	83		$	943		$	491		$	680		$	104		$	1,275
Credit cards
Balance at beginning of period	$	233		$	642		$	–		$	875		$	364		$	882		$	–		$	1,246
Provision for credit losses
Transfers to stage 1		275			(275	)		–			–			378			(378	)		–			–
Transfers to stage 2		(51	)		51			–			–			(58	)		58			–			–
Transfers to stage 3		(1	)		(151	)		152			–			(2	)		(136	)		138			–
Originations		6			–			–			6			3			–			–			3
Maturities		(3	)		(14	)		–			(17	)		(4	)		(15	)		–			(19	)
Changes in risk, parameters and exposures		(291	)		373			2			84			(354	)		399			13			58
Write-offs		–			–			(238	)		(238	)		–			–			(227	)		(227	)
Recoveries		–			–			84			84			–			–			77			77
Exchange rate and other		1			–			–			1			(1	)		(1	)		(1	)		(3	)
Balance at end of period	$	169		$	626		$	–		$	795		$	326		$	809		$	–		$	1,135
Small business
Balance at beginning of period	$	88		$	55		$	34		$	177		$	78		$	29		$	33		$	140
Provision for credit losses
Transfers to stage 1		9			(9	)		–			–			39			(39	)		–			–
Transfers to stage 2		(8	)		8			–			–			(6	)		6			–			–
Transfers to stage 3		–			(2	)		2			–			–			(1	)		1			–
Originations		17			–			–			17			17			–			–			17
Maturities		(11	)		(12	)		–			(23	)		(11	)		(6	)		–			(17	)
Changes in risk, parameters and exposures		(23	)		24			13			14			(59	)		52			16			9
Write-offs		–			–			(15	)		(15	)		–			–			(14	)		(14	)
Recoveries		–			–			5			5			–			–			4			4
Exchange rate and other		5			2			(3	)		4			23			30			(3	)		50
Balance at end of period	$	77		$	66		$	36		$	179		$	81		$	71		$	37		$	189
Wholesale
Balance at beginning of period	$	566		$	794		$	437		$	1,797		$	995		$	1,132		$	668		$	2,795
Provision for credit losses
Transfers to stage 1		268			(265	)		(3	)		–			255			(252	)		(3	)		–
Transfers to stage 2		(41	)		41			–			–			(87	)		113			(26	)		–
Transfers to stage 3		(2	)		(27	)		29			–			(2	)		(37	)		39			–
Originations		283			–			–			283			360			–			–			360
Maturities		(198	)		(191	)		–			(389	)		(298	)		(274	)		–			(572	)
Changes in risk, parameters and exposures		(396	)		224			44			(128	)		(401	)		420			39			58
Write-offs		–			–			(49	)		(49	)		–			–			(149	)		(149	)
Recoveries		–			–			28			28			–			–			27			27
Exchange rate and other		3			14			(18	)		(1	)		(58	)		(78	)		(72	)		(208	)
Balance at end of period	$	483		$	590		$	468		$	1,541		$	764		$	1,024		$	523		$	2,311

Royal Bank of Canada Second Quarter 2022 6 9

Key inputs and assumptions

The following provides an update on the key inputs and assumptions used in the m e asurement of expected credit losses. For further details, refer to Note 2 and Note 5 of our audited 2021 Annual Consolidated Financial Statements.

While the economic impact from the COVID-19 pandemic has eased in most regions with recoveries in travel and hospitality sectors contributing to near-term growth momentum, the COVID-19 pandemic continues to impact goods manufacturing and supply. Supply chain disruptions and rising commodity prices, further impacted by the conflict between Russia and Ukraine, are adding to inflationary pressures. Central banks are expected to continue raising interest rates at an aggressive pace in response to rising inflation and low unemployment rates. In light of the ongoing uncertainty of the impact of these factors on the economic outlook, our allowances continue to require the application of heightened judgment.

To reflect relevant risk factors not captured in our modelled results, we applied expert credit judgment in determining significant increases in credit risk since origination and our weighted allowance for credit losses. While the degree of uncertainty associated with the impact of the COVID-19 pandemic on our allowance estimates has reduced, the level of expert credit judgment applied in measurement of our allowances remains elevated as compared to pre-pandemic levels. We applied quantitative and qualitative adjustments for the impacts of the unprecedented macroeconomic environment, including the continued impact of government support programs in offsetting the effect of COVID-19 related unemployment on the economy and on mitigating the losses for the sectors most sensitive to the economic impact of the COVID-19 pandemic.

The easing economic impact from the COVID-19 pandemic, tempered by intensifying inflationary pressures, accelerated central bank interest rate increases, and heightened geopolitical risks, have been reflected through changes to our scenario design and weights.

Our base scenario reflects low unemployment rates, high inflation, supply chain pressures, and increased expectations for central banks to increase interest rates at an aggressive pace. Rising interest rates are expected to slow GDP growth later this year and into calendar 2023.

Downside scenarios, including two additional and more severe downside scenarios designed for the energy and real estate sectors, reflect the possibility of a macroeconomic shock beginning in calendar Q3 2022. Conditions are expected to deteriorate from Q2 2022 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 possibility of a prolonged recovery period following the macroeconomic shock, including further monetary policy responses to elevated inflation rates which may increase credit risk as compared to our base scenario, is reflected in our general downside scenario.

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.

70 Royal Bank of Canada Second Quarter 2022

Note 5 Loans and allowance for credit losses<br><br>(continued)

The following provides additional detail about our forecasts for certain key macroeconomic variables used in the models to estimate ACL:

•

Unemployment – In our base forecast, calendar Q2 2022 unemployment rates are expected to decrease to 5.4% in Canada, and remain unchanged from Q1 2022 at 3.8% in the U.S. Both Canadian and U.S. unemployment rates have improved to below long run equilibrium and are expected to return to equilibrium by the end of calendar 2023 in Canada and end of calendar 2025 in the U.S.

•	Gross Domestic Product (GDP)<br> – In our base forecast, we expect Canadian and U.S. GDP growth to slow later this year and into calendar 2023, as the economy stabilizes and unemployment rates rise slightly. GDP in calendar Q4 2022 is expected to be 3.8% above Q4 2021 levels in Canada, and 2.3% above such levels in the U.S.
•	Oil price (West Texas Intermediate in US$)<br> – In our base forecast, we expect oil prices to average $94 per barrel over the next 12 months and $75 per barrel in the following 2 to 5 years. The range of average prices in our alternative downside and upside scenarios is $30 to $120 per barrel for the next 12 months and $43 to $80 per barrel for the following 2 to 5 years. As at January 31, 2022, our base case forecast included an average price of $76 per barrel for the next 12 months and $58 per barrel for the following 2 to 5 years. As at October 31, 2021, our base case forecast included an average price of $71 per barrel for the next 12 months and $56 per barrel for the following 2 to 5 years.
---	---
•	Canadian housing price index<br> – In our base forecast, we expect housing prices to <br>de<br>crease by (3.6)% over the next 12 months, with a compound annual growth rate of 4.3% for the following 2 to 5 years. The range of annual housing price growth (contraction) in our alternative downside and upside scenarios is (30.0)% to 10.9% over the next 12 months and 4.2% to 9.5% for the following 2 to 5 years. As at January 31, 2022, our base case forecast included housing price growth of 0.5% for the next 12 months and 4.2% for the following 2 to 5 years. As at October 31, 2021, our base case forecast included housing price growth of 0.1% for the next 12 months and 4.1% for the following 2 to 5 years.
---	---

Royal Bank of Canada Second Quarter 2022 71

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. Risk ratings are based on internal ratings used in the measurement of expected credit losses as at the reporting date, as o u tlined in the internal ratings maps for Wholesale and Retail facilities in the Credit risk section of our 2021 Annual Report.

	As at
	April 30, 2022								October 31, 2021
(Millions of Canadian dollars)	Stage 1		Stage 2		Stage 3		Total		Stage 1		Stage 2		Stage 3		Total
Retail
Loans outstanding – Residential mortgages
Low risk	$	325,157	$	3,295	$	–	$	328,452	$	310,334	$	1,507	$	–	$	311,841
Medium risk		14,173		1,965		–		16,138		15,152		2,051		–		17,203
High risk		1,090		2,711		–		3,801		3,343		634		–		3,977
Not rat<br>e<br>d <br>(1)		48,111		982		–		49,093		45,512		913		–		46,425
Impaired		–		–		588		588		–		–		645		645
		388,531		8,953		588		398,072		374,341		5,105		645		380,091
Items not subje<br>c<br>t to impairment <br>(2)								298								241
Total							$	398,370							$	380,332
Loans outstanding – Personal
Low risk	$	73,935	$	1,195	$	–	$	75,130	$	72,267	$	698	$	–	$	72,965
Medi<br>u<br>m risk		5,265		4,025		–		9,290		4,974		4,551		–		9,525
High risk		354		1,385		–		1,739		687		1,045		–		1,732
Not rated <br>(1)		9,610		96		–		9,706		8,934		88		–		9,022
Impaired		–		–		203		203		–		–		197		197
Total	$	89,164	$	6,701	$	203	$	96,068	$	86,862	$	6,382	$	197	$	93,441
Loans outstanding – Credit cards
Low risk	$	13,639	$	34	$	–	$	13,673	$	12,864	$	24	$	–	$	12,888
Medium risk		1,648		1,524		–		3,172		1,646		1,645		–		3,291
High risk		49		1,104		–		1,153		136		937		–		1,073
Not rated <br>(1)		597		73		–		670		527		43		–		570
Total	$	15,933	$	2,735	$	–	$	18,668	$	15,173	$	2,649	$	–	$	17,822
Loans outstanding – Small business
Low risk	$	8,657	$	332	$	–	$	8,989	$	8,609	$	274	$	–	$	8,883
Medium risk		1,486		1,040		–		2,526		1,583		979		–		2,562
High risk		131		316		–		447		227		218		–		445
Not rated <br>(1)		5		–		–		5		4		–		–		4
Impaired		–		–		110		110		–		–		109		109
Total	$	10,279	$	1,688	$	110	$	12,077	$	10,423	$	1,471	$	109	$	12,003
Undrawn loan commitments – Retail
Low risk	$	240,043	$	1,151	$	–	$	241,194	$	229,516	$	574	$	–	$	230,090
Medium risk		8,552		162		–		8,714		9,475		133		–		9,608
High risk		942		306		–		1,248		1,205		97		–		1,302
Not rated <br>(1)		5,157		84		–		5,241		4,854		90		–		4,944
Total	$	254,694	$	1,703	$	–	$	256,397	$	245,050	$	894	$	–	$	245,944
Wholesale – Loans outstanding
Investment grade	$	77,597	$	545	$	–	$	78,142	$	62,975	$	226	$	–	$	63,201
Non-investment grade		137,064		13,761		–		150,825		117,396		15,146		–		132,542
Not rated <br>(1)		10,875		353		–		11,228		9,339		430		–		9,769
Impaired		–		–		1,236		1,236		–		–		1,357		1,357
		225,536		14,659		1,236		241,431		189,710		15,802		1,357		206,869
Items not subject to impairment <br>(2)								11,416								11,197
Total							$	252,847							$	218,066
Undrawn loan commitments – Wholesale
Investment grade	$	260,284	$	592	$	–	$	260,876	$	246,539	$	1,122	$	–	$	247,661
Non-investment grade		114,890		10,687		–		125,577		108,063		12,377		–		120,440
Not rated <br>(1)		3,589		–		–		3,589		3,476		1		–		3,477
Total	$	378,763	$	11,279	$	–	$	390,042	$	358,078	$	13,500	$	–	$	371,578
(1)	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.
---	---
(2)	Items not subject to impairment are loans held at FVTPL.
---	---

7 2 Royal Bank of Canada Second Quarter 2022

Note 5 Loans and allowance for credit losses<br><br>(continued)

Loans past due but not impaired

(1), (2)

	As at
	April 30, 2022						October 31, 2021
(Millions of Canadian dollars)	30 to 89 days		90 days<br> and greater		Total		30 to 89 days		90 days<br> and greater		Total
Retail	$	929	$	162	$	1,091	$	1,105	$	137	$	1,242
Wholesale		1,489		18		1,507		1,230		–		1,230
	$	2,418	$	180	$	2,598	$	2,335	$	137	$	2,472
(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 refinance, 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.
---	---
Note 6 Significant acquisition
---

Acquisition

Wealth Management

515

pence per share for the entire issued and to be issued share capital of Brewin Dolphin, which values Brewin Dolphin at approximately

£ 1.6 billion ($ 2.6

billion) on a fully diluted basis as at March 30, 2022. Brewin Dolphin provides discretionary wealth management services in the U.K. and Ireland.

The transaction is expected to close by the end of the third calendar quarter of 2022, subject to regulatory approvals and other customary closing conditions. The results of the acquired business will be consolidated from the date of close.

Note 7 Deposits
	As at
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	April 30, 2022								October 31, 2021
(Millions of Canadian dollars)	Demand<br>(1)		Notice<br>(2)		Term<br>(3)		Total		Demand (1)		Notice (2)		Term (3)		Total
Personal	$	215,310	$	67,988	$	99,583	$	382,881	$	207,493	$	64,613	$	90,382	$	362,488
Business and government		357,482		18,288		349,208		724,978		356,020		20,800		319,533		696,353
Bank		11,185		222		32,331		43,738		12,549		449		28,992		41,990
	$	583,977	$	86,498	$	481,122	$	1,151,597	$	576,062	$	85,862	$	438,907	$	1,100,831
Non-interest-bearing<br><br>(4)
Canada	$	160,319	$	8,338	$	461	$	169,118	$	151,475	$	8,051	$	713	$	160,239
United States		56,437		–		–		56,437		54,021		–		–		54,021
Europe <br>(5)		424		–		–		424		632		–		–		632
Other International		8,837		–		–		8,837		8,002		–		–		8,002
Interest-bearing<br><br>(4)
Canada		315,156		20,362		336,744		672,262		315,464		19,857		312,987		648,308
United States		7,396		57,277		87,043		151,716		6,978		57,260		77,597		141,835
Europe <br>(5)		30,127		521		43,604		74,252		34,278		693		36,788		71,759
Other International		5,281		–		13,270		18,551		5,212		1		10,822		16,035
	$	583,977	$	86,498	$	481,122	$	1,151,597	$	576,062	$	85,862	$	438,907	$	1,100,831
(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, 2022, deposits denominated in U.S. dollars, British pounds, Euro and other foreign currencies were $433<br><br><br>billion,<br> $32<br><br><br>billion,<br> $48 <br>billion<br>and $27<br><br><br>billion,<br> respectively (October 31, 2021 – $399 billion, $35 billion, $43 billion and $27 billion, respectively).
---	---
(5)	Europe includes United Kingdom, Luxembourg, the Channel Islands, and France.
---	---

Contractual maturities of term deposits

	As at
(Millions of Canadian dollars)	April 30<br> <br>2022		October 31<br> <br>2021
Within 1 year:
less than 3 months		$ 148,687	$	133,776
3 to 6 months		59,436		64,062
6 to 12 months		103,038		83,871
1 to 2 years		45,096		45,532
2 to 3 years		38,498		29,204
3 to 4 years		23,629		24,573
4 to 5 years		32,385		25,329
Over 5 years		30,353		32,560
	$	481,122	$	438,907
Aggregate amount of term deposits in denominations of one hundred thousand dollars or more	$	451,000	$	416,000

Royal Bank of Canada Second Quarter 2022 7 3

Note 8 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 other comprehensive income.

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<br> <br>2022			April 30<br> <br>2021		April 30<br> <br>2022			April 30<br> <br>2021
Current service costs	$	78		$	90	$	7		$	11
Past service costs		(1	)		–		–			–
Net interest expense (income)		(21	)		2		15			14
Remeasurements of other long-term benefits		–			–		(14	)		(11	)
Administrative expense		4			3		–			–
Defined benefit pension expense		60			95		8			14
Defined contribution pension expense		56			57		–			–
	$	116		$	152	$	8		$	14
	For the six months ended
---	---	---	---	---	---	---	---	---	---	---	---
	Pension plans					Other post-employment benefit plans
(Millions of Canadian dollars)	April 30<br> <br>2022			April 30<br> <br>2021		April 30<br> <br>2022			April 30<br> <br>2021
Current service costs	$	155		$	180	$	17		$	22
Past service costs		(1	)		–		2			–
Net interest expense (income)		(42	)		4		31			28
Remeasurements of other long-term benefits		–			–		(13	)		(10	)
Administrative expense		7			6		–			–
Defined benefit pension expense		119			190		37			40
Defined contribution pension expense		130			123		–			–
	$	249		$	313	$	37		$	40

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<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Actuarial (gains) losses:
Changes in financial assumptions <br>(2)	$	(2,337	)	$	(1,380	)	$	(218	)	$	(113	)
Experience adjustments		1			–			(3	)		(3	)
Return on plan assets (excluding interest based on discount rate)		1,525			227			–			–
	$	(811	)	$	(1,153	)	$	(221	)	$	(116	)
	For the six months ended
---	---	---	---	---	---	---	---	---	---	---	---	---
	Defined benefit pension plans						Other post-employment benefit plans
(Millions of Canadian dollars)	April 30<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Actuarial (gains) losses:
Changes in financial assumptions <br>(2)	$	(2,998	)	$	(1,392	)	$	(258	)	$	(135	)
Experience adjustments		1			–			(3	)		(3	)
Return on plan assets (excluding interest based on discount rate)		1,843			(797	)		–			–
	$	(1,154	)	$	(2,189	)	$	(261	)	$	(138	)
(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.
---	---

7 4 Royal Bank of Canada Second Quarter 2022

Note 9 Income taxes

Government of Canada budget 2022

On April 7, 2022, the Government of Canada pres e nted its 2022 budget, which included proposals for a Canada Recovery Dividend (CRD), a one-time 15% tax for 2022 determined based on 2021 taxable income above $1 billion and payable in equal installments over five years, as well as a permanent increase in the corporate income tax rate of 1.5% on taxable income above $100 million that would apply to taxation years that end after April 7, 2022. For our tax year ending October 31, 2022, the additional 1.5% tax would be prorated based on the number of days in the taxation year after April 7, 2022.

Legislation

relating to these proposed measures has yet to be issued and timing of enactment remains uncertain. While the ultimate impact will depend on the final legislation, the CRD is expected to reduce our net income when substantively enacted.

Tax examinations and assessments

During the second quarter of 2022, we received proposal letters (the Proposals) from the Canada Revenue Agency (CRA), in respect of the 2017 taxation year, which suggest that Royal Bank of Canada owes additional taxes of approximately $237 million as they 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 21 of our 2021 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.

Note 10 Significant capital and funding transactions

Preferred shares

On November 5, 2021, we issued 750 thousand Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares Series BT to certain institutional investors, at a price of $1,000 per share, for total gross proceeds of $750 million. For the initial five year period to the earliest redemption date of February 24, 2027, the shares pay semi-annual cash dividends, if declared, at a rate of 4.2% per annum. The dividend rate will reset on the earliest redemption date and every fifth year thereafter at a rate equal to the 5-year Government of Canada bond yield plus a premium of 2.71%. 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 BT Preferred Shares in whole or in part at a price per share of $ 1,000 on the earliest redemption date and 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 February 24, 2022, we redeemed all 6 million Non-Cumulative First Preferred Shares Series BJ, at a price of $25.75 per share.

Subordinated debentures

Common shares issued

(1)

	For the three months ended
	April 30, 2022						April 30, 2021
(Millions of Canadian dollars, except number of shares)	Number of<br> shares<br> (thousands)			Amount			Number of<br> shares<br> (thousands)		Amount
Issued in connection with share-based compensation plans <br>(2)		105		$	8			324	$	25
Purchased for cancellation <br>(3)		(13,700	)		(171	)		–		–
		(13,595	)	$	(163	)		324	$	25
	For the six months ended
---	---	---	---	---	---	---	---	---	---	---
	April 30, 2022						April 30, 2021
(Millions of Canadian dollars, except number of shares)	Number of<br> shares<br> (thousands)			Amount			Number of<br> shares<br> (thousands)		Amount
Issued in connection with share-based compensation plans <br>(2)		512		$	42			820	$	61
Purchased for cancellati<br>o<br>n <br>(3)		(22,571	)		(282	)		–		–
		(22,059	)	$	(240	)		820	$	61
(1)	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, 2022 and April 30, 2021, our DRIP’s requirements were satisfied through open market share purchases.
---	---
(2)	Amounts include cash received for stock options exercised during the period and the fair value adjustment to stock options.
---	---
(3)	During the three months ended April 30, 2022, we purchased for cancellation common shares at a total fair value of $1,892 million (average cost of $138.04 per share), with a book value of $171 million (book value of $12.46 per share). During the six months ended April 30, 2022, we purchased for cancellation common shares at a total fair value of $3,106 million (average cost of $137.57 per share), with a book value of $282 million (book value of $12.46 per share). During the three months and six months ended April 30, 2021, we did not purchase for cancellation any common shares.
---	---

Royal Bank of Canada Second Quarter 2022 7 5

Note 11 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<br> <br>2022			April 30<br> <br>2021			April 30<br> <br>2022			April 30<br> <br>2021
Basic earnings per share
Net income	$	4,253		$	4,015		$	8,348		$	7,862
Dividends on preferred shares and distributions on other equity instruments		(68	)		(76	)		(122	)		(134	)
Net income attributable to non-controlling interests		(3	)		(1	)		(5	)		(3	)
Net income available to common shareholders	$	4,182		$	3,938		$	8,221		$	7,725
Weighted average number of common shares (in thousands)		1,409,702			1,424,889			1,415,855			1,424,107
Basic earnings per share (in dollars)	$	2.97		$	2.76		$	5.81		$	5.42
Diluted earnings per share
Net income available to common shareholders	$	4,182		$	3,938		$	8,221		$	7,725
Weighted average number of common shares (in thousands)		1,409,702			1,424,889			1,415,855			1,424,107
Stock options <br>(1)		2,247			1,533			2,219			1,362
Issuable under other share-based compensation plans		603			685			602			714
Average number of diluted common shares (in thousands)		1,412,552			1,427,107			1,418,676			1,426,183
Diluted earnings per share (in dollars)	$	2.96		$	2.76		$	5.80		$	5.42
(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. <br>For the three and six months ended April 30, 2022,<br>and April 30<br>,<br> 2021, no outstanding options were excluded from the calculation of diluted earnings per share.
---	---

Note 12 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. 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 accruals could be material to our results of operations in any particular period.

Our significant legal proceeding and regulatory matters are described in Note 24 of our audited 2021 Annual Consolidated Financial Statements and as updated below.

London Interbank Offered Rate litigation

In respect of the consolidated class action in New York, on December 30, 2021, the United States Court of Appeals for the Second Circuit issued an opinion affirming in part and reversing in part certain district court rulings that had dismissed a substantial portion of the consolidated class action on jurisdictional grounds and lack of standing. The Second Circuit remanded the matter to the district court for further proceedings consistent with its decision. Based on the facts currently known, it is not possible at this time for us to predict the ultimate outcome of these proceedings or the timing of their resolution.

In respect of the New York class action relating to the setting of LIBOR after its administration was taken over by the Intercontinental Exchange, following the withdrawal of the named plaintiffs and the substitution of the plaintiff in 2021, the United States Court of Appeals for the Second Circuit dismissed the plaintiff’s appeal on February 14, 2022 for lack of jurisdiction.

Interchange fees litigation

The courts in all five provinces have approved the global settlement of the Canadian banks, including RBC, and this resolves all pending Canadian class actions involving interchange fees.

Royal Bank of Canada Trust Company (Bahamas) Limited proceedings

The November 3, 2020 opinion issued by the Solicitor of Labor of the U.S. Department of Labor has been withdrawn. The October 28, 2016 exemption granted to Royal Bank of Canada and its current and future affiliates by the U.S. Department of Labor remains unaffected.

7 6 Royal Bank of Canada Second Quarter 2022

Note 13 Results by business segment
	For the three months ended April 30, 2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars)	Personal &<br> Commercial<br> Banking			Wealth<br> Management			Insurance			Investor &<br> Treasury<br> Services		Capital<br> Markets<br>(1)			Corporate<br> Support<br>(1)			Total
Net interest income <br>(2)	$	3,234		$	780		$	–		$	148	$	1,181		$	(69	)	$	5,274
Non-interest income		1,505			2,825			234			403		1,167			(188	)		5,946
Total revenue		4,739			3,605			234			551		2,348			(257	)		11,220
Provision for credit losses		(276	)		(30	)		–			–		(37	)		1			(342	)
Insurance policyholder benefits, claims and acquisition expense		–			–			(180	)		–		–			–			(180	)
Non-interest expense		2,015			2,644			145			398		1,350			(118	)		6,434
Income (loss) before income taxes		3,000			991			269			153		1,035			(140	)		5,308
Income taxes (recoveries)		766			241			63			32		240			(287	)		1,055
Net income	$	2,234		$	750		$	206		$	121	$	795		$	147		$	4,253
Non-interest expense includes:
Depreciation and amortization	$	232		$	228		$	14		$	50	$	124		$	2		$	650

	For the three months ended April 30, 2021
(Millions of Canadian dollars)	Personal &<br>Commercial<br>Banking		Wealth<br>Management (3)			Insurance		Investor &<br>Treasury<br>Services			Capital<br>Markets (1)			Corporate<br>Support (1), (3)			Total
Net interest income <br>(2)	$	3,085	$	666		$	–	$	87		$	1,121		$	(105	)	$	4,854
Non-interest income		1,442		2,594			536		447			1,597			148			6,764
Total revenue		4,527		3,260			536		534			2,718			43			11,618
Provision for credit losses		35		(2	)		–		(2	)		(127	)		–			(96	)
Insurance policyholder benefits, claims and acquisition expense		–		–			149		–			–			–			149
Non-interest expense		1,915		2,371			140		375			1,468			110			6,379
Income (loss) before income taxes		2,577		891			247		161			1,377			(67	)		5,186
Income taxes (recoveries)		669		208			60		41			306			(113	)		1,171
Net income	$	1,908	$	683		$	187	$	120		$	1,071		$	46		$	4,015
Non-interest expense includes:
Depreciation and amortization	$	229	$	218		$	15	$	47		$	126		$	1		$	636
	For the six months ended April 30, 2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
(Millions of Canadian dollars)	Personal &<br> Commercial<br> Banking			Wealth<br> Management			Insurance		Investor &<br> Treasury<br> Services		Capital<br> Markets<br>(1)			Corporate<br> Support<br>(1)			Total
Net interest income <br>(2)	$	6,463		$	1,525		$	–	$	311	$	2,422		$	(176	)	$	10,545
Non-interest income		3,079			5,693			1,633		827		2,736			(227	)		13,741
Total revenue		9,542			7,218			1,633		1,138		5,158			(403	)		24,286
Provision for credit losses		(147	)		(42	)		–		–		(49	)		1			(237	)
Insurance policyholder benefits, claims and acquisition expense		–			–			817		–		–			–			817
Non-interest expense		4,037			5,225			292		818		2,822			(180	)		13,014
Income (loss) before income taxes		5,652			2,035			524		320		2,385			(224	)		10,692
Income taxes (recoveries)		1,444			490			121		81		560			(352	)		2,344
Net income	$	4,208		$	1,545		$	403	$	239	$	1,825		$	128		$	8,348
Non-interest expense includes:
Depreciation and amortization	$	465		$	456		$	29	$	99	$	247		$	4		$	1,300

Royal Bank of Canada Second Quarter 2022 7 7

	For the six months ended April 30, 2021
(Millions of Canadian dollars)	Personal &<br> Commercial<br> Banking		Wealth<br> Management (3)			Insurance		Investor &<br> Treasury<br> Services			Capital<br> Markets (1)			Corporate<br> Support (1), (3)			Total
Net interest income <br>(2)	$	6,246	$	1,332		$	–	$	178		$	2,320		$	(187	)	$	9,889
Non-interest income		2,844		5,147			2,345		921			3,106			309			14,672
Total revenue		9,090		6,479			2,345		1,099			5,426			122			24,561
Provision for credit losses		200		(31	)		–		(4	)		(150	)		(1	)		14
Insurance policyholder benefits, claims and acquisition expense		–		–			1,555		–			–			–			1,555
Non-interest expense		3,893		4,777			289		776			2,909			277			12,921
Income (loss) before income taxes		4,997		1,733			501		327			2,667			(154	)		10,071
Income taxes (recoveries)		1,296		409			113		84			529			(222	)		2,209
Net income	$	3,701	$	1,324		$	388	$	243		$	2,138		$	68		$	7,862
Non-interest expense includes:
Depreciation and amortization	$	453	$	438		$	29	$	96		$	251		$	2		$	1,269
(1)	Taxable equivalent basis.
---	---
(2)	Interest revenue is reported net of interest expense as we rely primarily on net interest income as a performance measure.
---	---
(3)	Effective Q4 2021, gains (losses) on economic hedges of our U.S. share-based compensation plans, which are reflected in revenue, and related variability in share-based compensation expense driven by changes in the fair value of liabilities relating to our U.S. share-based compensation plans have been reclassified from our Wealth Management segment to Corporate Support. Comparative amounts have been reclassified to conform with this presentation.
---	---

Total assets and total liabilities by business segment

	As at April 30, 2022
(Millions of Canadian dollars)	Personal &<br> Commercial<br> Banking		Wealth<br> Management		Insurance		Investor &<br> Treasury<br> Services		Capital<br> Markets		Corporate<br> Support			Total
Total assets	$	574,412	$	155,948	$	21,932	$	255,046	$	783,628	$	57,606		$	1,848,572
Total liabilities		574,328		156,198		22,466		254,929		782,934		(46,688	)		1,744,167
	As at October 31, 2021
(Millions of Canadian dollars)	Personal &<br> Commercial<br> Banking		Wealth<br> Management		Insurance		Investor &<br> Treasury<br> Services		Capital<br> Markets		Corporate<br> Support			Total
Total assets	$	549,702	$	148,990	$	22,724	$	240,055	$	692,278	$	52,574		$	1,706,323
Total liabilitie<br>s		549,619		149,096		22,966		239,960		691,767		(45,847	)		1,607,561

7 8 Royal Bank of Canada Second Quarter 2022

Note 14 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 2022, we complied with all 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<br> <br>2022		October 31<br> <br>2021
Capital<br><br>(1)
CET1 capital	$	77,069	$	75,583
Tier 1 capital		84,345		82,246
Total capital		93,871		92,026
Risk-weighted assets (RWA) used in calculation of capital ratios<br><br>(1)
Credit risk	$	472,516	$	444,142
Market risk		37,851		34,806
Operational risk		75,472		73,593
Total RWA	$	585,839	$	552,541
Capital ratios and Leverage ratio<br><br>(1)
CET1 ratio		13.2%		13.7%
Tier 1 capital ratio		14.4%		14.9%
Total capital ratio		16.0%		16.7%
Leverage ratio		4.7%		4.9%
Leverage ratio exposure (billions)	$	1,812	$	1,662
TLAC available and ratios<br><br>(2), (3)
TLAC available	$	158,140		n.a.
TLAC ratio		27.0%		n.a.
TLAC leverage ratio		8.7%		n.a.
(1)	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 as updated in accordance with the regulatory guidance issued by OSFI in response to the COVID-19 pandemic. Both the CAR guideline and LR guideline are based on the Basel III framework.
---	---
(2)	Effective November 1, 2021, OSFI requires Canadian Domestic Systemically Important Banks to meet minimum risk-based TLAC ratio and TLAC leverage ratio requirements which are calculated using OSFI’s TLAC guideline.
---	---
(3)	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. Both the TLAC ratio and TLAC leverage ratio are calculated using the TLAC available as percentage of total RWA and leverage exposure, respectively.
---	---
n.a.	not applicable
---	---

Royal Bank of Canada Second Quarter 2022 7 9

Shareholder Information
Corporate headquarters<br> <br>Street address:<br> <br>Royal Bank of Canada<br> <br>200 Bay Street<br> <br>Toronto, Ontario M5J 2J5<br> <br>Canada<br> <br>Tel: <br>1-888-212-5533<br> <br><br> <br>Mailing address:<br> <br>P.O. Box 1<br> <br>Royal Bank Plaza<br> <br>Toronto, Ontario M5J 2J5<br> <br>Canada<br> <br>website: rbc.com<br> <br><br> <br>Transfer Agent and Registrar<br> <br>Main Agent:<br> <br>Computershare Trust Company of Canada<br> <br>1500 Robert-Bourassa Blvd.<br> <br>Suite 700<br> <br>Montreal, Quebec H3A 3S8<br> <br>Canada<br> <br>Tel: <br>1-866-586-7635<br> (Canada and the U.S.) or <br>514-982-7555<br> <br>(International)<br> <br>Fax: <br>514-982-7580<br> <br>website: computershare.com/rbc<br> <br><br> <br>Co-Transfer<br> Agent (U.S.):<br> <br>Computershare Trust Company, N.A.<br> <br>250 Royall Street<br> <br>Canton, Massachusetts 02021<br> <br>U.S.A.<br> <br><br> <br>Co-Transfer<br> Agent (U.K.):<br> <br>Computershare Investor Services PLC<br> <br>Securities Services – Registrars<br> <br>P.O. Box 82, The Pavilions,<br> <br>Bridgwater Road,<br> <br>Bristol BS99 6ZZ<br> <br>U.K.<br> <br><br> <br>Stock exchange listings<br> <br>(Symbol: RY)<br> <br><br> <br>Common shares are listed on:<br> <br>Canada – Toronto Stock<br> <br>Exchange (TSX)<br> <br>U.S. – New York Stock Exchange<br> <br>(NYSE)<br> <br>Switzerland – Swiss Exchange<br> <br>(SIX)<br> <br><br> <br>Preferred shares AZ, BB, BD, BF, BH, BI and BO are listed on the TSX. The related depository shares of the series C-2 preferred shares are listed on the NYSE.	Valuation day price<br> <br>For Canadian income tax purposes, Royal Bank of Canada’s common stock was quoted at $29.52 per share on the Valuation Day (December 22, 1971). This is equivalent to $7.38 per share after adjusting for the <br>two-for-one<br> stock split of March 1981 and the <br>two-for-one<br> stock split of February 1990. The <br>one-for-one<br> stock dividends in October 2000 and April 2006 did not affect the Valuation Day amount for our common shares.<br> <br><br> <br>Shareholder contacts<br> <br>For dividend information, change<br> <br>in share registration or address,<br> <br>lost stock certificates, tax forms,<br> <br>estate transfers or dividend<br> <br>reinvestment, please contact:<br> <br>Computershare Trust Company of<br> <br>Canada<br> <br>100 University Avenue, 8th Floor<br> <br>Toronto, Ontario M5J 2Y1<br> <br>Canada<br> <br><br> <br>Tel: <br>1-866-586-7635<br> (Canada and<br> <br>the U.S.) or <br>514-982-7555<br> <br>(International)<br> <br>Fax: <br>1-888-453-0330<br> (Canada and the U.S.) or <br>416-263-9394<br> <br>(International)<br> <br>email: service@computershare.com<br> <br><br> <br>Financial analysts, portfolio<br> <br>managers, institutional<br> <br>investors<br> <br>For financial information inquiries, please contact: <br>Investor Relations<br> <br>Royal Bank of Canada<br> <br>200 Bay Street<br> <br>South Tower<br> <br>Toronto, Ontario M5J 2J5<br> <br>Canada<br> <br>Tel: <br>416-955-7802<br> <br>or visit our website at<br> <br>rbc.com/investorrelations<br> <br><br> <br>Direct deposit service<br> <br>Shareholders in Canada and the U.S. may have their common share dividends deposited directly to their bank account by electronic funds transfer. To arrange for this service, please contact our Transfer Agent and Registrar, Computershare Trust Company of Canada.	Eligible dividend designation<br> <br>For purposes of the <br>Income Tax Act<br> (Canada) and any corresponding provincial and territorial tax legislation, all dividends (and deemed dividends) paid by RBC to Canadian residents on both its common and preferred shares, are designated as “eligible dividends”, unless stated otherwise.<br> <br><br> <br>Common share repurchases<br> <br>We are engaged in a normal course issuer bid (NCIB) which allows us to repurchase for cancellation up to 45 million common shares during the period spanning from December 8, 2021 to December 7, 2022, when the bid expires, or such earlier date as we may complete the purchases pursuant to our Notice of Intention filed with the Toronto Stock Exchange.	We determine the amount and timing of purchases under the NCIB, subject to prior consultation with the Office of the Superintendent of Financial Institutions Canada. For further details, refer to the Capital management section.<br> <br><br> <br>A copy of our Notice of Intention to file a NCIB may be obtained, without charge, by contacting our Corporate Secretary at our Toronto mailing address.<br> <br><br> <br>2022 Quarterly earnings release dates<br> <br>First quarter February 24<br> <br>Second quarter May 26<br> <br>Third quarter August 24<br> <br>Fourth quarter November 30
---	---	---	---	---
		Dividend dates for 2022<br> <br>Subject to approval by the Board of Directors
			Record<br> <br>dates	Payment<br><br> <br>dates
		Common and preferred shares series AZ, BB, BD, BF, BH, BI and BO	January 26<br> <br>April 25<br> <br>July 26<br> <br>October 26	February 24<br><br> <br>May 24<br> <br>August 24<br> <br>November 23
		Preferred shares series C-2<br> <br>(US$)	January 28<br> <br>April 26<br> <br>July 29<br> <br>October 28	February 7<br><br> <br>May 6<br> <br>August 8<br> <br>November 7
		Preferred shares series BT	February 16<br> <br>August 17	February 24<br><br> <br>August 24
		Governance<br> <br>Summaries of the significant ways in which corporate governance practices followed by RBC differ from corporate governance practices required to be followed by U.S. domestic companies under the NYSE listing standards are available on our website at rbc.com/governance.

Information contained in or otherwise accessible through the websites mentioned in this report to shareholders does not form a part of this report. All references to websites are inactive textual references and are for your information only.

Trademarks used in this report include the LION & GLOBE Symbol, ROYAL BANK OF CANADA, RBC, RBC INSURANCE and RBC HOMELINE PLAN which are trademarks of Royal Bank of Canada used by Royal Bank of Canada and/or by its subsidiaries under license. All other trademarks mentioned in this report, which are not the property of Royal Bank of Canada, are owned by their respective holders.

EX-99.3

Exhibit 99.3

Return on Equity and Assets Ratios


Return on Assets	0.95	%	0.88	%	0.92	%	0.96	%
Return on Equity	18.4	%	17.3	%	17.9	%	18.6	%
Dividend Payout Ratio	40	%	42	%	41	%	39	%

EX-31.1

Exhibit 31.1

SOX 302 Certification

I, David McKay, certify that:

1.	I have reviewed this quarterly report for the period ended April 30, 2022 (the “report”) of<br>Royal Bank of Canada (the “registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a<br>material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.	Based on my knowledge, the financial statements, and other financial information included in this report,<br>fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining<br>disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act<br>Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
---	---
a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be<br>designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is<br>being prepared;
---	---
b.	Designed such internal control over financial reporting, or caused such internal control over financial<br>reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting<br>principles;
---	---
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this<br>report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that<br>occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of<br>internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.	All significant deficiencies and material weaknesses in the design or operation of internal control over<br>financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in<br>the registrant’s internal control over financial reporting.
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Date: May 26, 2022

/s/ David McKay
Name:	David McKay
Title:	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

SOX 302 Certification

I, Nadine Ahn, certify that:

1.	I have reviewed this quarterly report for the period ended April 30, 2022 (the “report”) of<br>Royal Bank of Canada (the “registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a<br>material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.	Based on my knowledge, the financial statements, and other financial information included in this report,<br>fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining<br>disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act<br>Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be<br>designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is<br>being prepared;
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b.	Designed such internal control over financial reporting, or caused such internal control over financial<br>reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting<br>principles;
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c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this<br>report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that<br>occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of<br>internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.	All significant deficiencies and material weaknesses in the design or operation of internal control over<br>financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in<br>the registrant’s internal control over financial reporting.
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Date: May 26, 2022

/s/ Nadine Ahn
Name:	Nadine Ahn
Title:	Chief Financial Officer