Our focus is to establish ongoing relationships with clients by providing them with innovative and timely products and services that meet their needs.

For example, the sale of mortgage products frequently leads to opportunities for us to develop stronger relationships and increase product holdings with our clients, such as providing other financing or investment products.

We strengthened our position in home mortgage financing in Canada in 2004. Overall, our residential mortgage market share increased to 15.12 per cent as at August 31, 2004, a 62 basis point lead over the next strongest competitor and a 24 basis point improvement over 2003, reinforcing our leadership position in Canada.

In 2004, we exceeded $90 billion in home financing to Canadians delivered through our mobile specialized mortgage sales force and our branch network. Several product innovations contributed to this growth, including RBC Homeline Plan, launched in April. This product provides clients a home equity borrowing solution that combines a credit line and one or more mortgage tiers. As clients pay down their mortgage, their available credit increases, giving them access to additional credit at favourable rates without having to re-apply. Also introduced was Canada’s first vacation home mortgage, providing clients up to 90 per cent financing. We also launched the RBC No Down Payment Mortgage, allowing homebuyers with steady cash flow and good credit to obtain financing without the required minimum 5 per cent down payment.

Product and service innovations are critical to our ability to continually enhance our offering to clients. In July, we became the first major Canadian bank to give clients the ability to view cheques online through RBC Online Banking. Additional innovative features to RBC Online Banking introduced in 2004 include online stop payments, enhanced capability to receive and pay bills electronically, secure e-mail communication to our staff and Interac* Email Money Transfers to other individuals that have a bank account at any Canadian bank.
* Registered trademark of Interac Inc. Used under licence.

At present, we are the only major Canadian financial institution to offer its clients the ability to view online their accounts held at other North American financial institutions. In addition, in October, we became the first major Canadian financial institution to offer our clients the ability to use their debit cards to access their primary Canadian chequing account for purchases at over a million retailers in the U.S.

Overall, the number of clients enrolled in RBC Online Banking and Investing continues to grow; with over a quarter of our clients enrolled at the end of 2004, an 18 per cent increase over a year ago.

New product enhancements and effective marketing resulted in credit card sales volume and balance growth of 16 per cent and 14 per cent, respectively, in 2004. The introduction of the RBC Rewards Visa Classic card, with no annual fee, gives clients the ability to earn points towards travel, merchandise and gift certificates, and contributions to registered retirement savings plans and registered education savings plans. Our premium RBC Royal Bank Visa Platinum Avion card realized strong growth attributable to effective direct promotion to clients, selective credit limit increases, balance transfer programs and the marketing of its competitive strengths, such as no travel blackouts or reward seat capacity restrictions.

In 2004, we ranked number one in the Canadian mutual fund industry in total and long-term net sales and increased our mutual funds market share by 13 basis points for total market share of 9.54 per cent as at October 31, 2004. We crafted a strategy for clients seeking to maximize retirement income by helping clients optimize their deposit and investment mix and cash flow in the face of low interest rates, which contributed to profitable growth of our investment business while reinforcing client loyalty.

Clients recognize the value of our fee-based wealth management services relative to traditional transactional relationships as it helps to ensure alignment of the advisors’ interests with their wealth management objectives. We maintained our leadership position in fee-based assets among full-service brokerages in Canada with $26.43 billion in fee-based assets under administration.

In 2004, we continued to expand our insurance operations in Canada and the U.S., both through acquisition and organic growth. In May 2004, we completed the acquisition of the Canadian operations of Provident Life and Accident Insurance Company (UnumProvident), a wholly owned subsidiary of UnumProvident Corporation. Based on 2003 in-force premiums, this acquisition makes RBC Insurance the leading provider in Canada of individual critical illness, disability and long-term care insurance products – also known as living benefits products. The UnumProvident deal also provided us with a considerable position in group long-term disability insurance.

As a result of our acquisition of UnumProvident, our life and living benefits distribution network has expanded, with insurance products and services now distributed through more than 17,000 independent brokers, up from 7,000 distributors prior to the transaction. Integration of the UnumProvident business is completed and we have launched regional resource centres in Vancouver, Montreal and Toronto to serve this business. These centres include 75 insurance professionals and are focused on providing distributors with superior sales support and service across the group, life and living benefits product lines.

In Canada, we launched a new life insurance product, Foundational Life, in January. This product offers clients the security of permanent life insurance with the benefits of flexible investment options. Clients are given an economical option for purchasing permanent life insurance protection in a variety of amounts that are lower than most traditional universal life insurance policies.

We have also introduced two new products to meet the insurance needs of U.S. clients. RBC LevelTERM, an enhancement of the RBC DirectTERM product, has four available term periods and continues to offer extremely competitive rates for tobacco users. This product is offered through Internet quoting services as well as the RBC Insurance website (rbcterminsurance.com) and leading term insurance aggregators. We also introduced Clarity 2+2 Variable Annuity, a versatile retirement planning vehicle that combines the tax benefits of variable annuities with unique features designed to satisfy short- and long-term financial needs.

In 2004, our home and auto insurance business continued to grow as we expanded our group insurance program, enhanced our online quoting capabilities and further improved our levels of client service. We also enhanced the travel insurance product and service options we offer to better meet the needs of travellers, launched new travel insurance technology solutions such as an eTool website for travel agents, and integrated our travel insurance products into Softvoyage’s SAX web-booking engine, a technology solution for tour operators, travel agencies and consolidators. In addition, we extended our travel insurance distribution capabilities to channels outside of our traditional network of travel agencies to include brokers, online distributors and the RBC Insurance career sales force.

We are leveraging our Canadian leadership in travel insurance to serve U.S. clients. We are now licensed to offer travel insurance products in 48 states as well as the District of Columbia. In addition, we signed agreements with key travel agency organizations to become their preferred travel insurance provider and in summer 2004, we were added to the Amadeus Travel Assistance and Worldspan systems. Through these agreements, our travel insurance products and services are now available to U.S. travel agents through all major global distribution systems.

RBC Centura expanded its reach in the Southeast U.S. through the opening of 21 branches and three commercial banking centres in 2004. A significant proportion of the growth occurred in the fast-growing regions of Atlanta and Florida – markets where significant numbers of Canadians who are familiar with our RBC brand live permanently or for part of the year. One of the new branches includes a bilingual (English- and French-speaking) banking location in Hollywood, Florida, which opened in February 2004. We plan to further optimize our branch network by continuing to open new branches selectively in high-growth markets and also by closing 10 low-return branches in 2005. A significant number of “Snowbirds” (including vacationers from Quebec) spend the winters in the Hollywood area. Each of RBC Centura’s Florida branches now has a “cross-border” focused specialist with expertise to meet the banking, mortgage and other borrowing needs of our Canadian clients.

Supplementing this branch network, we launched a proprietary North American Online Banking platform, leveraging our Canadian Online Banking technology. This provides clients who bank at both RBC Centura and RBC Royal Bank access to all their accounts at the same time with a single sign-on, as well as the ability to instantly transfer funds cross-border. This is the first time in North America that this type of cross-border banking has been offered by any institution.

From an operational perspective, we have almost completed restructuring our technology infrastructure in the U.S. to extend our client reach and capability, standardize operations and realize greater efficiencies.

RBC Builder Finance, focused on residential builder and construction financing, has also expanded its network, opening three new loan production offices in Florida and Ohio in 2004. Its 35 loan production offices now serve over 90 markets across the U.S.

Voyageur Asset Management, our U.S.-based asset management company, formed through the strategic combination of businesses from our Dain Rauscher Corporation, Centura Banks, Inc. and Business Men’s Assurance Company of America acquisitions, achieved a record US$25.4 billion in assets under management at the end of fiscal 2004.

Across the U.S., RBC Dain Rauscher continues to broaden its wealth management focus, with an emphasis on managed money programs, new product development and enhanced training. Wealth management is a comprehensive financial approach that anticipates and adapts to clients’ ongoing needs through proactive planning. During 2004, RBC Dain Rauscher provided managed money programs to more than 3,786 new households, adding 9,692 accounts and US$2.9 billion in assets under administration. RBC Dain Rauscher ranks as the eighth-largest U.S. wealth management firm by number of advisors.

We sought better ways to make our services accessible to clients. We co-located RBC Centura and RBC Dain Rauscher employees into our Global Private Banking Miami office, providing enhanced brokerage capability and domestic banking services for international clients who have U.S. connections. The move also strengthens our ties to the Latin American community in Southern Florida – further leveraging our 100-year history in the Caribbean and Latin American markets.

Joint marketing of term lending between Global Private Banking and RBC Dain Rauscher for high net worth clients since the second quarter resulted in approximately US$100 million in new loans being booked during 2004.

Increasingly, clients with international financial needs view Canada and member companies of RBC Financial Group as a safe and stable place for the management of their wealth.

In 2004, Global Private Banking opened new offices in Madrid and Istanbul. We also recruited 10 new investment advisors to cover new markets in Latin America – bringing the total number of international Global Private Banking investment advisors to 70, including private bankers and business developers in the Middle East and onshore U.K. markets.