Directors As of October 31, 1997

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directors as of October 31, 1997

Directors

JOHN E. CLEGHORN, F.C.A. L.YVES FORTIER, C.C., Q.C. GUY SAINT-PIERRE,O.C. (1990) April 1995, was President of McCain (1987) (1992) Montreal Foods Limited, Mr. David P.O’Brien Toronto Montreal Chairman of the Board who, prior to May 1996, was President Chairman and Chairman SNC-Lavalin Group Inc. and Chief Operating Officer of Canadian Pacific Limited, prior to February 1995, Chief Executive Officer Ogilvy Renault ROBERT T.STEWART (1988) was Chairman and Chief Executive Royal Bank of Canada THE HON. PAULE GAUTHIER, Vancouver Officer of Pan Canadian Petroleum Limited and prior to December 1994 THEODORE M.ALLEN (1992) P.C., O.C., Q.C. (1991) Company Director was Chairman, President and Chief Winnipeg Quebec City ALLAN R.TAYLOR, O.C. (1983) Executive Officer of Pan Canadian President and Partner Toronto Petroleum Limited, Mr. Robert B. Chairman of the Board Desjardins Ducharme Stein Retired Chairman and Peterson who, prior to July 1994, was United Grain Growers Limited Monast Chairman and Chief Executive Officer Chief Executive Officer and prior to September 1992 was * SIR JAMES BALL (1990) * CHARLES H. KNIGHT (1983) Royal Bank of Canada President and Chief Operating Officer London, England Regina of Imperial Oil Limited, Mr. Hartley T. JOHN A.TORY,Q.C. (1971) Emeritus Professor Chief Executive Officer Richardson who, prior to April 1993, Toronto London Business School Denro Holdings Ltd. was President of the Real Estate Division Deputy Chairman of James Richardson & Sons, Limited, JACQUES BOUGIE, O.C. (1991) * THE HON. E. PETER The Thomson Corporation Mr. Kenneth C. Rowe who, prior to Montreal LOUGHEED,P.C., C.C., Q.C. July 1997, was also President of I.M.P. SHEELAGH D.WHITTAKER President and (1986) Group International Inc., Mr. Guy (1993) Chief Executive Officer Calgary Saint-Pierre who, prior to May 1996, Toronto was President and Chief Executive Alcan Aluminium Limited Senior Partner President and Officer of SNC-Lavalin Group Inc., Bennett Jones Verchere RONALD L. CLIFF,C.M., F.C.A. Chief Executive Officer Mr. Robert T.Stewart who, prior to (1987) G.WALLACE F.McCAIN, O.C. EDS Canada January 1994, was Chairman, President and Chief Executive Officer of Scott Vancouver (1986) VICTOR L.YOUNG, O.C. (1991) Paper Limited, Mr.Allan R.Taylor Chairman, President and Toronto St. John’s who, prior to January 26, 1995, was Chief Executive Officer Chairman Chairman and Chairman of Royal Bank of Canada BC Gas Inc. Maple Leaf Foods Inc. and prior to November 1, 1994 was Chief Executive Officer Chairman and Chief Executive Officer GEORGE A. COHON, O.C. (1988) * DAWN R. McKEAG (1978) Fishery Products International and Ms. Sheelagh D.Whittaker who, Toronto Winnipeg Limited prior to November 1993, was President Senior Chairman and Chairman President and Chief Executive Officer of Canadian of the Executive Committee Walford Investments Ltd. * Not standing for re-election on March 5, Satellite Communications Inc. McDonald’s Restaurants of 1998 J. EDWARD NEWALL, O.C. (1984) To the knowledge of the bank, the Canada Limited Calgary The date appearing after the name of each directors and senior officers, as a group, G.N. (MEL) COOPER, C.M., Vice-Chairman and director indicates the year in which the beneficially own or exercise control or O.B.C. (1992) Chief Executive Officer individual became a director.The term of direction over less than [1%] of the common shares of the bank. None of Victoria NOVA Corporation office of each director will expire at the next annual meeting, scheduled for the directors or senior officers of the bank Chairman and DAVID P.O’BRIEN (1996) March 5, 1998. holds shares of its subsidiaries except Chief Executive Officer Calgary where required for qualification as a direc- Seacoast Communications tor of a subsidiary and except with respect Chairman, President and Since November 1, 1991, the directors Group Inc. have held the principal occupations as to RBC Dominion Securities Limited. Chief Executive Officer listed, except Mr. John E. Cleghorn who, To the knowledge of the bank, the senior JOHN R. EVANS, C.C., M.D.(1984) Canadian Pacific Limited prior to January 26, 1995 was President officers of the bank, as a group, beneficially Toronto and Chief Executive Officer and prior own or exercise control or direction over, ROBERT B. PETERSON (1992) Chairman, to November 1, 1994, was President and less than [1.9%] of the outstanding Toronto Alcan Aluminium Ltd. and Chief Operating Officer of the bank, Series One Participating shares Chairman, President and [ ] Chairman,Torstar Corporation Mr. Ronald L. Cliff who, prior to (“P Shares”) or 0.5% of the votes Chief Executive Officer September 1997, was Chairman of attaching to all outstanding voting JOHN T.FERGUSON, F.C.A. Imperial Oil Limited BC Gas Inc., Mr. John T.Ferguson who, securities of RBC Dominion Securities (1990) prior to April 1996, was President and Limited.The bank is required to have HARTLEY T.RICHARDSON Edmonton Chief Executive Officer of Princeton an audit committee (see page 105). (1996) Developments Ltd., Mr. L.Yves Fortier Chairman and Winnipeg who, prior to January 1992, was Chief Executive Officer President Canada’s Ambassador and Permanent Princeton Developments Ltd. James Richardson & Sons, Representative to the United Nations, Mr. G.Wallace F.McCain who, prior to Limited KENNETH C. ROWE, F.C.I.S. (1985) Halifax Chairman and Chief Executive Officer I.M.P.Group International Inc.

ROYAL BANK of CANADA  annual information form

Annual Information Form December 3, 1997

Incorporation Royal Bank of Canada (the “bank”) is a Schedule I bank under the Bank Act, and the Act is its charter.The head office is located at Royal Bank of Canada Building, 1 Place Ville-Marie, Montreal, Quebec, Canada.

Property At October 31, 1997, the bank owned or leased 1,453 service delivery units in Canada and 105 units in 36 other countries. The bank also owns 7 central processing centres across Canada and major office complexes in Toronto and Ottawa.At October 31, 1997, the net book value of land and buildings worldwide totalled $910 million or .4% of total assets.

Additional Information Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of securities, options to purchase securities, and interests of insiders in material transactions is contained in the bank’s information circular for its most recent annual meeting of shareholders.Additional financial information is provided in the bank’s comparative financial statements for the year ended October 31, 1997.The bank will provide to any person, upon request to the Vice-President of Investor Relations at 123 Front St.West,6th Floor,Toronto, Ontario, M5J 2M2, a copy of this annual information form and any documents incorporated by reference, a copy of the comparative financial statements for the year ended October 31, 1997 together with the accompanying report of the auditors, a copy of any interim financial statements subsequent to the financial statements for the year ended October 31, 1997, and a copy of any other documents incorporated by reference in a preliminary short form prospectus or short form prospectus if securities of the bank are in the course of a distribution.

Documents Incorporated by Reference Additional items comprising the bank’s annual information form are disclosed in portions of this Annual Report and are incorporated by reference as set out below.

ITEM REFERENCE

Principal subsidiaries ...... page 100

General development of the business ...... page 19

Narrative description of business and competitive conditions...... pages 16-17 and 19-35

Impaired loans...... Note 1, page 74; Note 5, page 80; table 14, page 49; table 15, page 50

Foreign loans ...... Note 4, page 79

Allowance for credit losses ...... Note 1, page 75; Note 5, page 80; page 49; table 16, page 51; table 17, page 52

Mortgage operations ...... table 8, page 43; table 15, page 50; table 16, page 51

Employees ...... page 4

Cash dividends ...... page 4; Note 11, page 84

Selected consolidated financial information ...... page 4

Quarterly financial information ...... page 98

Dividend policy ...... page 39

Management’s discussion and analysis ...... pages 25, 27, 31, 35, 36-68

Market for securities of the bank ...... inside back cover

Directors ...... pages 101, 105

Officers ...... pages 106-107

 ROYAL BANK of CANADA corporate governance

Corporate Governance Profound and rapid change in global markets has placed increasing demands on Canadian corporations as they face unprecedented competition.A strong and effective board of directors can play a key role in meeting this challenge. The question of how corporations are governed is therefore one of widespread interest. It is of particular interest to shareholders, the legal owners of corporations, for it is on their behalf that the board supervises the management of the business and affairs of the corporation. The question is, how can corporate governance practices be improved so as to increase board effectiveness? Royal Bank has been examining this question in detail for many years and has long been pro-active in adopting industry-leading practices. In 1980, and again in 1993-94, special board committees reviewed the role of the Board of Directors.Their recommendations formed the basis of Royal Bank’s corporate governance system – a set of principles, structures and processes that enables the board to carry out its responsibilities effectively,and to evaluate and further improve its own performance. In 1994, the board established the following principles upon which Royal Bank’s governance system continues to evolve.

1 Royal Bank has been and intends to remain a leader in adopting best practices in corporate governance.

Royal Bank’s system of gover- governance must improve The Committee advises and The Committee also tracks nance is consistent with the continuously. assists the board in applying developments in corporate Guidelines for Improved At Royal Bank, ensuring the bank’s existing corporate governance and adapts best Corporate Governance of the the effectiveness of the board governance principles and practices to the needs and Toronto and Montreal Stock is an on-going process, at the practices. It monitors the circumstances of Royal Bank. Exchanges. But to serve the centre of which is a strong, effectiveness of the Board interests of shareholders and independent Corporate of Directors, its committees other stakeholders, corporate Governance Committee. and individual directors.

2 The directors must work as a cohesive team with shared responsibilities that are clearly defined, understood and respected.

The board supervises the management of ➤ approving compensation of senior The Bank Act specifies certain matters the business and affairs of Royal Bank. Its officers and compensation policies that must be dealt with by the board. mandate of duties and objectives includes: for Royal Bank; The board has reserved the right to ➤ enhancing shareholder value; ➤ identifying business risks and ensur- approve certain additional matters and ➤ making major policy decisions for the ing those risks will be managed; has delegated to management other bank; ➤ establishing investment and lending matters, including the authority to enter ➤ approving Royal Bank’s strategic plan policies, standards and procedures; into various types of transactions, subject and overseeing its implementation; ➤ overseeing a policy for communica- to specific limitations. ➤ approving the operating plans, tions with shareholders, the investment The board holds 10 regular meetings capital budgets and major capital community and the public; each year, as well as special meetings as expenditures; ➤ assessing the integrity of internal required. Much of the work of the board ➤ setting performance objectives and control and management information is done through its committees, which monitoring results; systems; and report to the full board after each com- ➤ overseeing the planning of succession ➤ setting the dividend policy of mittee meeting. for senior management; Royal Bank.

3 The optimal size for the board represents a balance: there is a business need for strong geographical, professional and industry sector representation – and yet the board must be small enough to facilitate open and effective dialogue.

The Board of Directors has This year, the board revised experience, qualities, skills experience, knowledge of therefore adopted a goal to its tenure guidelines to and diversity of directors. local, national and interna- reduce the size of the board, provide that directors would Nominees are selected for tional issues, residency,and over the next few years, from not stand for re-election at their business judgment, familiarity with a geographic 22 directors to be nominated the Annual Meeting integrity,ability to generate region relevant to Royal by management in March, following their 69th birthday. public confidence, business Bank’s strategic priorities. 1998, to a number within the The strength of the board or professional activity and range of 18 to 21 directors. is built upon the background, experience, international

ROYAL BANK of CANADA  corporate governance

Apart from these charac- within the meaning of the Board of Directors first made of “unrelated” in the teristics, regulatory require- Bank Act. the determination that any Exchange Guidelines and ments must be followed. In addition, the Exchange director who was “affiliated” information provided by the The Bank Act provides that no Guidelines state that a major- (as defined in the Bank Act) directors as to their individual more than two-thirds of the ity of directors should be with Royal Bank would be circumstances, it has been directors can be “affiliated” “unrelated”, as that term is considered “related” for the determined that the majority with the bank. Currently, defined in the Guidelines. In purpose of the Exchange of the members of the Board fewer than one-third of the applying the principles under- Guidelines. Based on this of Directors are “unrelated” directors are “affiliated” lying this definition, the analysis and the definition to Royal Bank.

4 The effectiveness of the board demands independence from management.

As the Exchange Guidelines note, there Board has a more detailed knowledge of est in and refrain from voting in respect are different ways to ensure indepen- the business and activities of Royal Bank of material contracts with Royal Bank; dence. One is to have a board chairman than would be possible for a chairman ➤ the Human Resources Committee who is not a member of management. who was not a member of management. and the board select and annually Another is to give a board committee or This is consistent with general practices evaluate the CEO, and determine the a director, sometimes called the “lead within the banking industry in North CEO’s compensation.The board is director”, responsibility for ensuring that America. also responsible for succession plan- the board functions independently. The independence of the board from ning for senior management, and Royal Bank has adopted the second management is further protected in the approves their remuneration. In this approach, giving this responsibility to the following ways: way the CEO and other members chairman of the Corporate Governance ➤ board policy permits no more than of senior management are account- Committee and its members.The chair- two directors from management. able to the board; man of the Corporate Governance Of the 26 members of the board as ➤ to align the interests of directors and Committee serves as an informal liaison of October 31, 1997, only one is an shareholders, directors’ retainers are on corporate governance matters among executive of the bank (the CEO) and paid in shares until they own Royal the directors and between the board and one is a former officer of the bank; Bank stock with a value equal to six senior management, and following each ➤ management directors do not serve as times their annual retainer; and board meeting chairs meetings of non- members of any board committee; ➤ the board has adopted a policy that management directors at which any ➤ a majority of the directors on each enables an individual director, with concerns may be freely expressed. committee are both “unaffiliated” the consent of the chairman of the This system protects board indepen- and “unrelated”; Corporate Governance Committee, dence and at the same time allows the ➤ the Bank Act and the Board of to engage an outside advisor at the bank to retain the benefits of having a Directors itself impose requirements expense of the bank. Chairman who is also Chief Executive on the directors regarding conflicts of Officer.The combination of the two interest and related party transactions positions means the Chairman of the and directors must disclose their inter-

5 Effective decision-making can take place only in an environment of quality information.

The board must have timely ➤ directors receive a weekly for routine matters in communication is made access to the knowledge package of information order to free up the by Royal Bank to its share- and information it needs to with press releases, articles, board’s time for matters holders. Royal Bank’s investor carry out its responsibilities. videos and analysts’ reports of strategic importance; relations department provides To ensure this: on Royal Bank and the ➤ directors attend seminars information to potential ➤ an on-going education financial services industry; relating to banking and and existing investors and program has been devel- ➤ prior to each board the financial services responds to investor inquiries oped for all directors with meeting, the directors industry; and and concerns. It is the policy a focus on the corporate receive a comprehensive ➤ annual off-site sessions of Royal Bank that every governance system and the information package are held where directors shareholder inquiry receive roles and responsibilities including the agenda, review and assess a prompt response from an of the board; minutes of the previous Royal Bank’s strategic appropriate officer.The Chief ➤ each new director is pre- meeting, presentations direction.These meetings Executive Officer, the Chief sented with a Director’s and other information on are attended by the full Financial Officer and other Guide and has an oppor- items to be discussed at board and the heads of the senior executives also meet tunity to meet with senior the meeting; bank’s business units. periodically with financial management to discuss the ➤ the board utilizes a The same commitment to analysts and institutional activities of Royal Bank; consent agenda process excellence and timeliness in investors.

 ROYAL BANK of CANADA corporate governance

Mandates and Activities of Board Committees ➤ reviews the amount and the form of compensation of The board committees are described below: directors and makes recommendations for appropriate adjustments; and Audit Committee ➤ advises management in the planning of the annual strategic ➤ reviews matters prescribed by the Bank Act, including annual meeting attended by the directors and senior management. and quarterly statements, and returns specified by the Members: J. Bougie, J.R. Evans (Chair), L.Y.Fortier,E.P.Lougheed, Superintendent of Financial Institutions; D.R. McKeag, J.A.Tory,V.L.Young ➤ reviews investments and transactions that could adversely affect the well-being of Royal Bank; Human Resources Committee ➤ reviews prospectuses and offering documents relating to the ➤ reviews and approves principles for the recruitment, hiring, issue of shares and subordinated indebtedness; training, compensation and evaluation of employees; ➤ meets separately with the shareholders’ auditors, the chief ➤ reviews Royal Bank’s pension plan performance; internal auditor and senior management, to monitor the ➤ reviews management succession plans for executive officers; effectiveness of the internal control procedures and manage- ➤ reviews the major compensation policies of Royal Bank ment information systems, controls, procedures and and recommends to the board the incentive programs accounting practices; for executives; ➤ reviews measures implemented to ensure compliance with ➤ reviews the position description for the CEO and approves the Canada Deposit Insurance Corporation (“CDIC”) the corporate objectives the CEO is responsible for Internal Control Standards, which include guidelines on meeting; information technology controls, valuation policies and ➤ selects and annually evaluates the performance of the CEO; procedures, safeguarding controls, accounting and record ➤ recommends to the board the remuneration of the CEO keeping controls, management information systems, and and of certain other senior executive officers. independent inspections and audits; and Members: J. Bougie, D.P.O’Brien, H.T.Richardson, ➤ reviews and approves policies related to liquidity manage- J.A.Tory (Chair), S.D.Whittaker,V.L.Young ment and capital management as provided for in the related CDIC Standards and the Standards Assessment and Public Policy Committee Reporting Program concerning adherence to these CDIC ➤ ensures the business of Royal Bank is conducted in an Standards. ethical and socially responsible way; Members: Sir James Ball, R.L. Cliff (Chair), L.Y.Fortier, ➤ oversees Royal Bank’s communications policy,including G.W.F.McCain, J.E. Newall, K.C. Rowe processes for communicating with customers, employees, shareholders and the community; Conduct Review Committee ➤ reviews the policies designed to create a positive corporate ➤ ensures that procedures are established to review transactions image; with “related parties” of Royal Bank and that these trans- ➤ reviews Royal Bank’s charitable contributions policy. actions meet market terms and conditions; Members of the Committee are also directors of ➤ ensures that any of these transactions having a material effect Royal Bank of Canada Charitable Foundation. on the stability or solvency of the bank are identified; and Members: G.A. Cohon, G.N. Cooper,P.Gauthier (Chair), ➤ establishes and monitors procedures for disclosing informa- D.R. McKeag,A.R.Taylor tion to customers, restricting the use of confidential information, dealing with complaints, and resolving conflicts Risk Policy Committee of interest. ➤ establishes lending and investment policies, standards and Members:T.M.Allen, J.T.Ferguson, C.H. Knight, procedures; R.B. Peterson (Chair), G. Saint-Pierre, R.T.Stewart ➤ reviews the policies, standards and procedures for the management of key risks; Corporate Governance Committee ➤ reviews loans which involve directors; ➤ is responsible for the development and maintenance of ➤ approves policies related to the management of credit risk Royal Bank’s corporate governance practices; and Royal Bank’s securities portfolio; ➤ reviews the credentials and performance of each of the ➤ reviews trends in portfolio quality and the adequacy of directors standing for re-election; provisions for credit losses; ➤ identifies and recommends to the board candidates suitable ➤ reviews the credit risk management, real estate appraisal and for nomination as directors; foreign exchange and interest rate risk management policies ➤ assesses the performance of the Board of Directors and its and programs to ensure they meet CDIC standards; and committees.As part of this process, the directors periodically ➤ reviews and approves the Standards Assessment and complete a written evaluation of the performance of the Reporting Program to ensure it meets CDIC standards. board; Members:T.M.Allen, J.T.Ferguson, C.H. Knight, ➤ works with management to develop a “forward agenda”, R.B. Peterson (Chair),G. Saint-Pierre, R.T.Stewart of subjects to be discussed at board and committee meetings over the coming year;

ROYAL BANK of CANADA  executive officers

Executive Officers

Group office RBC Insurance Royal Trust Investment Financial Institutions Management JOHN E. CLEGHORN Holdings Inc. and Trade Chairman & W.JAMES WESTLAKE B. LEE BENTLEY MICHAEL K.TAYLOR Chief Executive Officer President & President & Senior Vice-President Toronto Chief Executive Officer Chief Executive Officer Toronto Toronto J. EMILIEN BOLDUC Mississauga, Ont. Vice-Chairman Business Banking Royal Mutual Funds Inc. Geographies – Montreal CHARLES S. COFFEY SIMON LEWIS Canada GORDON J. FEENEY Executive Vice-President President Alberta Vice-Chairman Toronto Toronto Toronto GORD G.TALLMAN GEORGE A.A. DICKSON RBC Dominion Senior Vice-President & ANTHONY S. FELL Senior Vice-President Securities Inc. Vice-Chairman General Manager Product Management Calgary Toronto Toronto ANTHONY S. FELL Chairman & with an executive office also in BRUCE C. GALLOWAY ED J. LUNDY Chief Executive Officer Edmonton Vice-Chairman Senior Vice-President Toronto Toronto Toronto Atlantic W.REAY MACKAY ROBERT J. SUTHERLAND ANNE L.B.SUTHERLAND President CLAY J. COVEYDUCK Vice-Chairman Senior Vice-President Chief Operating Officer Senior Vice-President & Toronto Small & Medium Toronto General Manager PETER W.CURRIE Size Businesses Halifax BRYCE W.DOUGLAS Executive Vice-President & Toronto with executive offices also in Deputy Chairman Chief Financial Officer Saint John and with an executive office also in Toronto Toronto Winnipeg St. John’s CHARLES M.WINOGRAD Royal Trust Deputy Chairman British Columbia & Businesses Yu ko n ANTHONY A.WEBB Toronto Personal Financial President & with executive offices also in ROD S. PENNYCOOK Services Chief Executive Officer London, England, Senior Vice-President & JIM T.RAGER Toronto Singapore, General Manager Executive Vice-President Honk Kong and Vancouver GREG R. BRIGHT Tokyo, Japan Toronto Senior Vice-President with executive offices also in Langley, ELISABETTA BIGSBY Wealth Management RBC Dominion Securities New Westminster, Senior Vice-President Toronto Corporation Prince George and Products Global Private Banking GORDON M. RITCHIE Victoria Toronto President & MICHAEL J. LAGOPOULOS JUDITH M.S. HATLEY Chief Executive Officer Manitoba Senior Vice-President New York Senior Vice-President Global Private Banking DENNICE M. LEAHEY Sales Toronto Royal Bank Action Senior Vice-President & Toronto with executive offices also in Direct Inc. General Manager SHAUNEEN E. BRUDER Miami, Florida Winnipeg MICHAEL A. BASTIAN Senior Vice-President Geneva, Switzerland, Metropolitan Toronto Marketing President & Singapore, Chief Executive Officer Toronto Guernsey and GEORGE F.GAFFNEY Richmond Hill, Ont. Executive Vice-President & with an executive office also in Jersey,Channel Islands General Manager Montreal, Quebec Corporate Banking Global Securities Services Toronto BERNIE SCHRODER Card Services DAVID W.S. DUNLOP with executive offices also in Executive Vice-President Senior Vice-President Etobicoke, MARK K.TONNESEN Toronto Executive Vice-President Global Securities Services Mississauga, Toronto Toronto MARK R. HUGHES North York, with executive offices also in Senior Vice-President Richmond Hill, and JANE S. FERSHKO Calgary,Alta Financial Services Scarborough, Ontario Senior Vice-President London, Ont. Toronto Toronto Ontario (outside Toronto) Montreal, Que WALTER MURRAY Ottawa, Ont Senior Vice-President PAM G. PITZ Vancouver, B.C. Toronto Senior Vice-President & and London, England General Manager with executive offices also in Burlington Calgary, Montreal and with executive offices also in Vancouver Kitchener, London, and Ottawa, Ontario  ROYAL BANK of CANADA executive officers

Quebec Functions ROBERT H.AYLWARD Strategic Investments Senior Vice-President MONIQUE F.LEROUX DON S.WELLS Corporate Affairs Strategic Sourcing Senior Vice-President & Executive Vice-President Toronto General Manager BRYAN P.DAVIES Montreal Montreal Senior Vice-President A. ROGER CREASOR Toronto Systems & Technology with executive offices also in Senior Vice-President Quebec City Corporate Secretary Service Delivery MARTIN J. LIPPERT Toronto Executive Vice-President & Saskatchewan JANE E. LAWSON HAROLD E. ELSIE Chief Information Officer Senior Vice-President & Toronto ANNE LOCKIE Corporate Secretary Senior Vice-President Senior Vice-President & Toronto Operations J. DOUG DIXON General Manager Toronto Senior Vice-President Regina Corporate Treasury PIERRE LEBRUN Personal Client Technology SUZANNE B. LABARGE Senior Vice-President Toronto Geographies – Executive Vice-President Delivery Channel Management BOB M. JUNEAU International Toronto Toronto Senior Vice-President & Deputy Asia BRYAN P.GRIFFITHS Real Estate Operations Senior Vice-President Toronto RON A. MASLECK J. PHILIP W.BREWSTER Funding, Liquidity & JOHN K.TRUMAN Senior Vice-President Senior Vice-President & Portfolio Management Senior Vice-President Toronto General Manager Toronto Business Client Technology & Singapore Finance & Audit Risk Management New Business Ventures with executive offices also in Toronto Hong Kong, PETER W.CURRIE MURRAY A. CORLETT MIKE H.VELSHI Executive Vice-President & Executive Vice-President Shanghai, China, Senior Vice-President & Chief Financial Officer Toronto Seoul, Korea, Chief Technology Officer Toronto Taipei,Taiwan, and NORM C.ACHEN Toronto Tokyo, Japan JANICE FUKAKUSA Senior Vice-President Caribbean Senior Vice-President & New York All of the officers of the bank have Chief Internal Auditor FRANCINE P.BLACKBURN been engaged for more than five years DAVID C. GALE Toronto Senior Vice-President in various capacities in the affairs of the Vice-President bank, Royal Trust and their affiliates Toronto Bahamas and Cayman JOHN MERRIAM except P.W.Currie, who prior to April Nassau, Bahamas Senior Vice-President RONALD J.J. CATHCART 1997 was Senior Vice-President & Chief Finance Senior Vice-President Financial Officer, Northern Telecom C. DOUG MALONEY Toronto Toronto Limited, Brampton; B.P.Davies, who Vice-President prior to May 1994 was Vice-president, Barbados and Human Resources DAVID W.DOUGHERTY Business Affairs & Chief Administration Eastern Caribbean Senior Vice-President Officer, University of Toronto; E. GAY MITCHELL Bridgetown, Barbados Toronto S.B. Labarge, who prior to April 1995 Executive Vice-President was Deputy Superintendent, Deposit- Europe Toronto MORTEN N. FRIIS Taking Institutions Sector, Office of the Senior Vice-President Superintendent of Financial Institutions, JIM J. GANNON RONALD E. STANLEY Toronto Ottawa; M.F.Leroux, who prior to Senior Vice-President & Senior Vice-President July 1995 was a Partner & Associate General Manager Human Resource Development DONALD A.B. GRAHAM with Caron, Belanger, Ernst & Young, London, England Toronto Senior Vice-President Montreal; M.J. Lippert, who prior to Singapore August 1997 was Executive Vice- PETER H.TUCKER with an executive office also in President, Information Management & Paris, France Senior Vice-President R.G. (BOB) HALL Research Department, Mellon Bank Compensation & Organization Senior Vice-President Corporation, Pittsburgh, Pennsylvania; Latin America Toronto Toronto J. McCallum, who prior to June 1994 ALAN A. BOWBYES JOHN MCCALLUM was Dean, Faculty of Arts, McGill Law University; M.K.Tonnesen,who prior to Senior Vice-President & Senior Vice-President & General Manager TED K.WEIR February 1997 was Chief Development Chief Economist Officer, Banc One Corporation, Toronto Senior Vice-President & Toronto Columbus, Ohio; E.K.Weir, who prior to General Counsel with executive offices also in September 1994 was a Senior Partner Toronto GEZA P.Z.TATRALLYAY Mexico City,Mexico and Senior Vice-President with McMillan Binch,Toronto; Sao Paulo, Brazil Ombudsman W.J.Westlake, who prior to January 1995 London, England was Vice-president & Chief Operating U.S.A. VERNE G. MCKAY Strategic Development Officer, Metropolitan Life Insurance Senior Vice-President Company,Toronto. DAVID L. ROBERTSON Toronto JIM C.WALZ Senior Vice-President & Senior Vice-President General Manager Operations & Toronto New York Service Delivery with executive offices also in DON A. BERARDINUCCI Chicago, Los Angeles and Executive Vice-President Houston Toronto

ROYAL BANK of CANADA  serving diverse groups

Trade-marks used in this report include the LION & GLOBE Design, ROYAL BANK, ROYAL BANK OF CANADA, ROYAL BANK CREDITLINE FOR SMALL BUSINESS, ROYAL BANK FINANCIAL GROUP, ROYAL BUSINESS LEASE, ROYAL BUSINESS LEASELINE, ROYAL DIRECT, ROYAL DIRECT PC, ROYAL CREDIT LINE, ROYAL EMPLOYEE SAVINGS AND SHARE OWNERSHIP PLAN, ROYAL LEARN- ING NETWORK, RESEARCH SOURCE, TRADEVIEW, TRAVEL HEALTHPROTECTOR Litho Acme, Montreal AND AUDIO BANKING MACHINE which are trade-marks of Royal Bank of Canada. ACTION serving diverse groups DIRECT, ACTION DIRECT INVESTOR, ACTION DIRECT VALUE RSP, ACTION DIRECT SELECT SERVICE and PCACTION are trade-marks of Royal Bank of Canada used under licence by Royal Bank Action Direct Inc. ROYAL PRINTING Royal Bank believes that positive results for shareholders are ultimately MUTUAL FUNDS, ROYAL PREMIUM MONEY MARKET FUND and ROYAL MONTHLY INCOME FUND are trade-marks of Royal Bank of Canada determined by the quality of relationship the bank maintains with its used under licence by Royal Mutual Funds Inc. GLOBAL SECURITIES SERVICES is a trade-mark of Royal Bank of Canada used under license by other key stakeholders: clients, employees and the communities it serves. The Royal Trust Company. RBC and RBC LIFE are trade-marks of Royal Bank of Canada used under licence by Life Insurance Company of We believe that corporations committed to the positive well-being of Royal Bank of Canada. ADVISOR ACCOUNT is a trade-mark of RBC Dominion Securities. VOYAGEUR INSURANCE COMPANY is a eteTp,Montreal Typo, Centre these key stakeholders will also deliver the best returns to their share- trade-mark of Royal Bank of Canada used under licence by Voyageur Insurance Company. ROYAL TRUST and BENCHMARK are trade- holders.This page highlights Royal Bank’s commitment to its other marks of The Royal Trust Company. VISA is a registered trade-mart of Visa International Association used under licence by Royal Bank of stakeholders. Canada. MANAGING YOUR MONEY is a trade- mark of Meca Software, L.L.C. used under licence by Royal Bank of Canada. INTERAC is a TYPOGRAPHY trade-mark of Interac Inc. used under licence by Royal Bank of Canada. MONDEX is a trade- mark of Mondex International Limited used clients under licence by Royal Bank of Canada. Linda Frichtel Royal Bank’s success is dependent on the satisfaction and loyalty of its clients.To meet the ever-changing needs of our 10 million customers, we are raising the targets for customer satisfaction by providing our

employees with the training, technology and the time to devote care ILLUSTRATION COVER and attention to their clients. We are investing in new products, services and delivery channels and conducting acquisitions to provide our customers with the most comprehensive offering of products and services that meet their needs for speed, convenience and returns. Clients today have more choices than ever before for their financial services needs. By investing in new initiatives in each of the bank’s three major business segments (see review by business segment, pages 22-35, of this report), Royal Bank believes it can

employees continue to deliver leading-edge financial services to its clients. Design Communications,Nolin Larosée Montreal

Royal Bank believes that building a mutually rewarding partnership which lets people meet their workplace DESIGN goals will permit us to meet our business goals. In addition to leading edge Work/Family/Life, diversity and gender gap policies and programs, in 1997, the bank invested more than $100 million on employee development programs to ensure that it can meet the changing needs of its clients. Royal Bank employees, in addition to being front line contact for our customers, are also shareholders committed to the success of the bank. 94% of management employees and 89% of total employees own shares in Royal Bank through participation in the Royal Employee Savings and Share Ownership Plan. All employees are also eligible for vari- able compensation through a Quality Performance Incentive plan, based on employee performance and the bank’s return on equity,revenue growth, customer satisfaction and employee commitment. communities Employer, taxpayer, goods and services donated $18 million to 2,400 charities buyer, corporate donor. These are a few across Canada, primarily in health and of the ways Royal Bank is involved in the welfare, education and federated appeals. communities it serves. In 1997, the bank In addition to spending many volunteer employed 58,000 people with a direct hours in their communities, Royal Bank payroll of $3.4 billion, purchased more employees donated in excess of $3 million than $1.8 billion in goods and services, to the Royal Bank Employee Charitable and paid more than $1.5 billion in Trust Fund which benefits United Way, income and other taxes.The bank also Centraide and other select organizations.

Never rest on success. In 1997, Royal Bank won the Valuing Differences Award for Leveraging Diversity for Enhanced Performance in the Marketplace from the prestigious American Society for Training and Development. But, we continue to raise our sights and have set 6 objectives and 15 actions in motion to meet our vision of Many People, One Team:Growth and Prosperity through Diversity.

 ROYAL BANK of CANADA