To view this Management's Discussion and Analysis in PDF, please click on the following link: http://www.rns-pdf.londonstockexchange.com/rns/2890B_-2014-2-28.pdf Royal Bank of Canada first quarter 2014 results All amounts are in Canadian dollars and are based on financial statements prepared in compliance with International Accounting Standard 34Interim Financial Reporting, unless otherwise noted. TORONTO, February 26, 2014 - Royal Bank of Canada (RY on TSX and NYSE) today reported net income of $2,092 million for the quarter ended January 31, 2014, up $45 million or 2% from the prior year and relatively flat from last quarter. Our results were driven by continued strength in Canadian Banking, and higher earnings in Capital Markets, Investor & Treasury Services and Wealth Management. We also announced an increase to our quarterly dividend of $0.04 or 6%, to $0.71 per share. "We delivered first quarter earnings of over $2 billion, reflecting solid client volume growth across most businesses as we continue to extend our leadership position in Canada while growing our businesses globally," said Gordon M. Nixon, RBC Chief Executive Officer. "We believe our focus on developing innovative products and services, and our ongoing discipline in managing costs, remain clear competitive advantages in today's environment. This morning we also announced a 6% increase to our quarterly dividend." Q1 2014 compared to Q1 2013 • Net income of $2,092 million (up 2% from $2,047 million) • Diluted earnings per share (EPS) of $1.38 (up $0.04 from $1.34) • Return on common equity (ROE) of 18.1% (down from 20.0%) • Basel III Common Equity Tier 1 (CET1) ratio of 9.7% Q1 2014 compared to Q4 2013 • Net income of $2,092 million (compared to $2,101 million) • Diluted EPS of $1.38 (down $0.01 from $1.39) • ROE of 18.1% (down from 18.8%) Table of contents 1 First quarter highlights 2 Management's Discussion and Analysis 2 Caution regarding forward-looking statements 2 Overview 2 About Royal Bank of Canada 3 Selected financial and other highlights 4 Economic, market and regulatory review and outlook 4 Key corporate events of 2014 5 Financial performance 5 Overview 8 Business segment results 8 How we measure and report our business segments 8 Key performance and non-GAAP measures 9 Personal & Commercial Banking 11 Wealth Management 12 Insurance 13 Investor & Treasury Services 14 Capital Markets 15 Corporate Support 16 Quarterly results and trend analysis 17 Results by geographic segment 18 Financial condition 18 Condensed balance sheets 19 Off-balance sheet arrangements 21 Risk management 21 Credit risk 26 Credit quality performance 28 Market risk 32 Liquidity and funding management 39 Capital management 43 Additional financial information 43 Exposures to selected financial instruments 44 Accounting and control matters 44 Related party transactions 45 Enhanced Disclosure Task Force recommendations index 46 Interim Condensed Financial Statements (unaudited) 51 Notes to the Interim Condensed Financial Statements (unaudited) 76 Shareholder information Management's Discussion and Analysis Management's Discussion and Analysis (MD&A) is provided to enable a reader to assess our results of operations and financial condition for the three month period ended or as at January 31, 2014, compared to the three month periods ended January 31, 2013 and October 31, 2013. This MD&A should be read in conjunction with our unaudited Interim Condensed Consolidated Financial Statements for the quarter ended January 31, 2014 (Condensed Financial Statements) and related notes and our 2013 Annual Report. This MD&A is dated February 25, 2014. All amounts are in Canadian dollars, unless otherwise specified, and are based on financial statements prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB), unless otherwise noted. Additional information about us, including our 2013 Annual Information Form, is available free of charge on our website at rbc.com/investorrelations, on the Canadian Securities Administrators' website at sedar.com and on the EDGAR section of the United States (U.S.) Securities and Exchange Commission's (SEC) website at sec.gov. Caution regarding forward-looking statements From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. We may make forward-looking statements in this Q1 2014 Report to Shareholders, in other filings with Canadian regulators or the SEC, in other reports to shareholders and in other communications. Forward-looking statements in this document include, but are not limited to, statements relating to our financial performance objectives, vision and strategic goals, the economic and market review and outlook for Canadian, U.S., European and global economies, the regulatory environment in which we operate, the outlook and priorities for each of our business segments, and the risk environment including our liquidity and funding management. The forward -looking information contained in this document is presented for the purpose of assisting the holders of our securities and financial analysts in understanding our financial position and results of operations as at and for the periods ended on the dates presented and our financial performance objectives, vision and strategic goals, and may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as "believe", "expect", "foresee", "forecast", "anticipate", "intend", "estimate", "goal", "plan" and "project" and similar expressions of future or conditional verbs such as "will", "may", "should", "could" or "would". By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct and that our financial performance objectives, vision and strategic goals will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. These factors - many of which are beyond our control and the effects of which can be difficult to predict - include: credit, market, liquidity and funding, insurance, regulatory compliance, operational, strategic, reputation and competitive risks and other risks discussed in the Risk management and Overview of other risks sections of our 2013 Annual Report and the Risk management section of this Q1 2014 Report to Shareholders; the impact of regulatory reforms, including relating to the Basel Committee on Banking Supervision's (BCBS) global standards for capital and liquidity reform, the Dodd -Frank Wall Street Reform and Consumer Protection Act and the regulations issued and to be issued thereunder, over-the-counter derivatives reform, the payments system in Canada, the U.S. Foreign Account Tax Compliance Act (FATCA), and regulatory reforms in the United Kingdom (U.K.) and Europe; the high levels of Canadian household debt; cybersecurity; the business and economic conditions in Canada, the U.S. and certain other countries in which we operate; the effects of changes in government fiscal, monetary and other policies; our ability to attract and retain employees; the accuracy and completeness of information concerning our clients and counterparties; the development and integration of our distribution networks; model, information technology and social media risk; and the impact of environmental issues. We caution that the foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results. When relying on our forward-looking statements to make decisions with respect to us, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Material economic assumptions underlying the forward looking statements contained in this Q1 2014 Report to Shareholders are set out in the Overview and outlook section and for each business segment under the heading Outlook and priorities in our 2013 Annual Report, as updated by the Overview section of this Q1 2014 Report to Shareholders. Except as required by law, we do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by us or on our behalf. Additional information about these and other factors can be found in the Risk management and Overview of other risks sections of our 2013 Annual Report and the Risk management section of this Q1 2014 Report to Shareholders. Information contained in or otherwise accessible through the websites mentioned does not form part of this report. All references in this report to websites are inactive textual references and are for your information only. Overview About Royal Bank of Canada Royal Bank of Canada (RY on TSX and NYSE) is Canada's largest bank and one of the largest banks in the world, based on market capitalization. We are one of North America's leading diversified financial services companies, and provide personal and commercial banking, wealth management services, insurance, investor services and capital markets products and services on a global basis. We employ approximately 79,000 full- and part-time employees who serve more than 16 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 42 other countries. For more information, please visit rbc.com.