One of our key strategic priorities is to grow high-return or high P/E multiple businesses. While our major focus is on expanding RBC Banking and RBC Investments, each of the other business platforms has also targeted priority areas for expansion. The following pages highlight initiatives undertaken by each of our five business platforms to enhance the products and services offered to clients and the channels through which the products are delivered. These initiatives are in addition to those discussed in the North American expansion section on pages 9–12.

RBC Banking

We continued to enhance our already-strong CRM and client segmentation capabilities this year. The Direct Marketing Association Financial Services Council recognized our CRM capabilities when it named us its Company of the Year in April. We also continued to develop programs to meet the needs of specialized client segments. For example, we became the first financial institution to provide automotive dealers and independent leasing/daily rental companies with the capacity to process transactions online – at their place of business in a real-time environment. The RBC-Overdrive system, rolled out in January, also provides information pertaining to current borrowing rates, vehicle detail, interim statements and month-end reports.

We also launched a pilot of a new channel and brand to improve service to lower income urban neighbourhoods with the October opening of the Cash & Save outlet. The test site, located in the Parkdale area of Toronto, offers longer hours and quick access to a basic set of transaction services, such as cheque cashing, bill payments, wire transfers and money orders. The concept was developed in partnership with St. Christopher House, a local social services agency, and Bain & Company, a global business strategy consultancy. Further Canadian locations will be considered if the model proves sustainable.

We first introduced online banking in 1996 and have been consistently recognized by external sources as best in class. In September, we introduced a redesigned Online Banking service that offers new features and enhancements to our online banking and trading clients. We surpassed our previously established 2002 enrollment target of over 2 million clients in the second quarter of the year, and as of the end of 2002, 2.3 million clients had online access to services.

We were awarded top honours in Investment Executive’s 2002 Account Managers’ Report Card in July. The Canadian industry publication ranked Canada’s major banks and credit unions by the satisfaction of their personal banking account managers.

RBC Insurance

New products focused on specialized markets and enhanced distribution capabilities characterized key initiatives taken to grow our presence in the insurance industry. Our Canadian operations expanded in 2002, with the opening of five new life insurance business development offices – in Vancouver, Regina, Mississauga, Ottawa and Halifax – and four new career sales offices located in British Columbia and Ontario.

To better support and serve the needs of Canadian life insurance professionals who sell our products, we established a new online sales resource centre in May. The Web site
rbcinsurance.com/businesspartners/life provides valuable sales tools and information to help these professionals grow their businesses. They can access current news releases, bulletins and feature articles; a knowledge centre with trade articles and presentations, product information and forms; and a sales support area that provides effective sales tools that can be sent to clients as value-added support.

Addressing a growing insurance need among Canadians who travel domestically, we introduced our Travel Within Canada program. Rolled out in February, it provides access to competitively priced comprehensive emergency medical, baggage and trip cancellation coverage for Canadians who travel within the country.

Further product development includes a critical illness insurance offering that pays out a lump sum benefit for clients who survive a wide range of specified critical illnesses, including heart attack, stroke, cancer and kidney failure. This new product, launched in November 2001, is a significant addition to our comprehensive portfolio of living benefits, complementing our industry-leading long-term care products.

Taking advantage of new distribution opportunities, RBC Liberty Insurance introduced a new term insurance product for direct consumer sales, including through the Web at rbcterminsurance.com.

RBC Investments

We enhanced our product and service offerings for Canadian clients and made moves to improve and maintain the capability of our operations in the U.S. and Latin America.

With our December 2001 launch of Fixed Income Online, clients of RBC Action Direct, our Canadian direct investing service, have been able to purchase T-bills, guaranteed investment certificates (GICs) and bonds from the largest inventory in Canada. In June, we introduced Asset Mix, an online tool to help RBC Action Direct clients calculate the appropriate asset allocation for reaching their financial objectives.

In the U.S., the strength of RBC Dain Rauscher’s fixed income business was evident across the municipal and taxable arenas in 2002, particularly with Tier 2 and Tier 3 institutional investors, including depositories, investment managers, insurance companies and public funds. The fixed income business continued to achieve top 10 status in the U.S. national rankings and our national municipal rankings placed us in the top 10 in all 3 major industry measures (Lead, Co-managed and Financial Advisor). In addition, Fixed Income Capital Markets opened an RBC Products Desk in Chicago in July, providing an expanded offering of RBC Investments products for RBC Dain Rauscher’s clients.

RBC Global Private Banking completed the integration of the Channel Islands trust businesses acquired from Ernst & Young in Guernsey in 1999 and Jersey in 2000, with the implementation of a common technology and single operations platform. RBC Global Private Banking also expanded its business by securing in excess of $1.5 billion of deposits and $2 billion of private client assets that were previously serviced by third-party banks.

RBC Capital Markets

More focused research coverage, which now extends to some 500 traded companies, and our move to centralize our U.S. equity sales and trading expertise in New York, were significant strides toward our primary objective of building a strong business among U.S. mid-market clients. Further, investment banking activities have been reinforced with a strengthened private equity capability and the consolidation of our senior mezzanine, syndication and high-yield lending activities within one origination group.

In Canada, we maintained our leading position in 2002, despite intensified competition from foreign dealers, global consolidation, currency consolidation and the steady decline in the number of top-tier Canadian firms. Our success lies in a strong relationship focus and the ability to provide clients with a full suite of investment banking services. Throughout the year, we were ranked number one or two in virtually every business according to published league tables.

We continued to build the global scope of our businesses. Our London fixed income group expanded operations through the development of a direct client e-trading system. Volumes increased substantially following the addition of the euro-denominated bonds in March, with clients able to trade electronically in over 2,000 securities in 9 currencies. Our foreign exchange business is a significant revenue producer and enjoys a world-class ranking.

Since June our newly created Alternative Investments division has responded to client needs for non-traditional opportunities to diversify their long-term investment portfolios. The unit offers clients access to private equity and hedge funds, as well as Collateralized Debt Obligations (CDO) and managed futures.

RBC Global Services

Innovations in products and services have allowed us to build upon past successes and become a leader in Canada and around the world.

We demonstrated continued leadership in providing financial services to the Canadian public sector when we launched paytickets.ca in January with Teranet Enterprises Inc., an innovator and leader in e-government solutions. This Web portal enables consumers to pay parking tickets and moving violations online using credit cards.

We established the infrastructure, security protocol and initial service offerings for our new Treasury Management & Trade Web platform in 2002. Our clients began accessing balance reporting and account transfers in August and, throughout 2003, they will have access to other cash management and trade services.

We successfully developed and marketed a nostro service to settle Canadian dollar transactions for Continuous Linked Settlement (CLS), our global foreign exchange settlement system. As of September, when CLS went live, we had won 50 per cent of Canadian dollar mandates for financial institutions around the world, a larger percentage than any other nostro provider of CLS services.

Our reputation for excellence in client service and product innovation led to a number of custody mandates awarded, including those by Mackenzie Financial Corporation and AIM Funds Management, Inc., representing approximately $70 billion in assets under administration. We also expanded our outsourcing arrangement with Toronto-based CI Mutual Funds Inc., taking on responsibility for a recently acquired $11 billion fund portfolio. We now provide services for CI’s entire $29 billion portfolio.

Major international client satisfaction surveys continued to recognize our performance. GSCS Benchmarks presented us with the award for best securities lending program. Global Investor’s Global Custody Survey ranked us number one in the world for service to European clients, number one in the world for service to European institutional asset managers and number three in the world for client service quality. R&M Consultants’ Global Custody Survey rated us number four in the world for client service. For the fourteenth consecutive year, we achieved top-rated status for Canadian custody services in Global Custodian’s Agent Bank Review.

RBC Financial Group

In all of these instances, our success flowed from our strengths, including our values and employees, our client focus and our diversified business base. Our platforms’ strategies and activities are guided not only by their own goals but also by RBC’s overall objectives – to be the undisputed leader of integrated financial services in Canada, a best in class provider of select financial services in the U.S. and a premier provider of specialized global financial services.

As an organization, we are proud to be recognized by industry peers and observers for our innovations and strengths. Citing our successful expansion into the U.S. market and our being one of the first North American banking companies to embrace CRM, American Banker honoured RBC CEO Gord Nixon with the 2001 Innovator of the Year Award.

We were one of 10 organizations selected in August to be profiled in iQ Magazine’s annual Leaders in Internet Business. The Cisco publication recognizes companies and individuals that it believes use Internet strategies to increase productivity, build client loyalty and improve efficiencies. RBC was credited for using the Web “to improve its interactions with clients, develop new lines of business and cut costs of its operations and internal processes.”

We were listed in the Dow Jones Sustainability World Index for the third year in a row. DJSI World companies are chosen from 2,500 of the largest capitalized companies in the Dow Jones Global Index and recognized for leading their industries in best practices and superior environmental, social and economic performance.

We were honoured for the third year in a row and for the fifth time by CIO Magazine as a CIO-100 organization in its August issue. RBC was recognized for our innovative approach to meeting business objectives through the efficient and effective use of technology.

Other major citations for strategy and performance include:

• Best Financial Reporting award for Canadian public companies, Investor Relations Magazine, third consecutive year. Winners are chosen following feedback from Canadian portfolio managers, analysts and brokers as well as U.S. money managers and more than 500 individual investors across Canada
  
  
• Best board of directors in Canada, Canadian Business magazine, second consecutive year. RBC was credited for the separation of chairman and CEO offices, director independence and performance measurement, and the board’s business intelligence
  
  
• Award for Excellence 2002 for best bank in Canada, Euromoney, on the basis of a “combination of good management and a diversified platform”
  
  
• Best bank in Canada, Global Finance, in their roundup of best banks in the world for 2002