RBC Online Annual Report 2004




		2004 objectives	2004 performance	2005 objectives	Medium–term goals (3-5 year)


1	Valuation
	Maintain top quartile valuation levels:
	• Share price/
	book value:	1st quartile of S&P/TSX Composite Banks Index	3rd quartile of S&P/TSX Composite Banks Index (1)	1st quartile of S&P/TSX Composite Banks Index	N/A

	• Share price/
	earnings:	1st quartile of S&P/TSX Composite Banks Index	3rd quartile of S&P/TSX Composite Banks Index (2)	1st quartile of S&P/TSX Composite Banks Index

	Share price growth:	Above S&P/TSX Composite Banks Index	Below S&P/TSX Composite Banks Index	Above S&P/TSX Composite Banks Index



2	Earnings growth Grow diluted earnings per share by:	10–15%	4% (3)	20%+	15%+



3	Return on common equity (ROE) Achieve an ROE of:	17–19%	15.9% (4)	18–20%	20%+



4	Revenue growth Achieve revenue growth of:	5–8%	2%	6–8% (5)	8–10%



5	Non-interest expense control
	Non-interest expense versus revenue:	Expense growth less than revenue growth	Expense growth 8% and revenue growth 2%	Expense growth of less than 3% (5)	No more than half of revenue growth



6	Portfolio quality Achieve a ratio of specific provisions for credit losses to average loans, acceptances and reverse repurchase agreements:	.35–.45%	.22%	N/A	N/A

	Achieve a ratio of specific provisions for credit losses to average loans and acceptances:	N/A	.27%	.35–.45%	.40–.50%



7	Capital management
	Capital ratios (6):	Maintain strong capital ratios	8.9% Tier 1 capital ratio 12.4% Total capital ratio	8–8.5% Tier 1 capital ratio 11–12% Total capital ratio	8–8.5% Tier 1 capital ratio 11–12% Total capital ratio



8	Dividend payout ratio (7)	40–50% (8)	47%	40–50%	40–50%



(1) Computed by us on October 31, 2004, based on book values at July 31, 2004. (2) Computed by us on October 31, 2004, based on analysts’ average diluted earnings per share estimates for 2005. (3) Including 429 and 447 basis point reductions due to business realignment and goodwill impairment charges, respectively. (4) Including 70 and 73 basis point reductions due to business realignment and goodwill impairment charges, respectively. (5) Based on our expectation of an average Canadian dollar value of US$.80 in 2005. (6) Calculated based on guidelines issued by the Superintendent of Financial Institutions Canada. (7) Common dividends as a percentage of net income after preferred dividends. (8) Raised from 35–45% at the end of the first quarter of 2004.