Chairman’s message

As stewards of the organization, we believe the foremost purpose of the Board of Directors is to create an environment for management that demands integrity while promoting long-term shareholder value. Good governance, which enables the creation and enhancement of shareholder value, is as important to the success of RBC as the operational achievements of the company.

We are committed to the continuous improvement of our leading corporate governance practices. My goal as Chairman is to provide leadership to the board so it can continue to provide management with sound and independent advice. In 2006, our approach to corporate governance continued to receive recognition from our peers. In an annual ranking by chief executive officers of Canada’s major companies, RBC was again named Most Respected Canadian Corporation, placing first in the category of Corporate Governance for the fourth consecutive year.

We are key advisors to management in the development of strategy. Every board meeting over the past year included presentations on aspects of RBC’s strategy, taking into account the opportunities and risks of the businesses. We participated with management in an annual session dedicated to strategic planning and approved the enterprise strategy. In supervising management’s implementation of strategy, we approved major transactions and capital expenditures that were aligned with the strategic plan and regularly reviewed corporate performance against objectives.

Our ability to contribute from a diversity of thought and backgrounds enhances the value we provide to RBC management and shareholders. The Corporate Governance and Public Policy Committee regularly reviews and assesses the board’s existing strengths and the evolving needs of the organization. We are pleased to welcome our newest directors whose experience will add an important dimension to the board. Timothy Hearn, Alice Laberge and Michael McCain are all well-recognized in their respective fields, and we are already benefiting from the contributions they are making to our discussions based on their experience in the Canadian and international business markets.

To fulfill our responsibilities to you, our shareholders, we must have the expertise to make knowledgeable decisions concerning RBC’s global businesses in a rapidly evolving regulatory and business environment. As part of our ongoing director education program, we participated over the past year in sessions on specialized and complex aspects of RBC’s business operations, the implications of the Basel II Capital Accord for RBC’s capital management framework, methodologies used in assessing risk, and the impact of new standards on financial statements and disclosure controls and certifications.

I am pleased that the board has been able to contribute to the success of RBC in 2006. Further details of the governance principles and practices of the Board of Directors and RBC are available in the following pages and on our website at rbc.com/governance.

On behalf of the Board of Directors, I extend appreciation to management and all 69,480 employees around the world for their contribution to RBC’s strong performance over the past year and their commitment to meeting our clients’ highest expectations.

David P. O’Brien
Chairman of the Board