All amounts are in Canadian dollars and are based on our audited Annual and unaudited Interim Consolidated Financial Statements for the year and quarter ended October 31, 2015 and related notes prepared in accordance with International Financial Reporting Standards (IFRS). Our 2015 Annual Report (which includes our audited annual Consolidated Financial Statements and accompanying Management's Discussion & Analysis), our 2015 Annual Information Form and our Supplementary Financial Information are available on our website at: http://www.rbc.com/investorrelations.

TORONTO, Dec. 2, 2015 /CNW/ - Royal Bank of Canada (RY on TSX and NYSE) today reported record net income of $10,026 million for the year ended October 31, 2015, up $1,022 million or 11% from the prior year. Excluding specified items⁽¹⁾ noted below and discussed on page 11 of this Earnings Release, net income was up $782 million or 9%. Results were driven by record earnings in Personal & Commercial Banking, Capital Markets, and Investor & Treasury Services, partially offset by lower earnings in Insurance and Wealth Management. Results also reflect strong credit quality, with a provision for credit loss (PCL) ratio of 0.24%, and the positive impact of foreign exchange translation.

As of October 31, 2015, our Basel III Common Equity Tier 1 (CET1) ratio was 10.6%, up 70 bps from the prior year, as we continued to strengthen our capital position for the acquisition of City National Corporation (City National), which we completed on November 2, 2015. In addition, we increased our quarterly dividend twice during 2015, for an annual dividend increase of 8%.

"We had record earnings of $10 billion in 2015, reflecting the strength of our diversified business model and our ability to execute our growth strategy in a changing environment," said Dave McKay, RBC President and CEO. "Looking ahead to 2016, while we face industry headwinds, we remain focused on delivering an exceptional client experience and driving long-term shareholder value, while contributing meaningfully to the success of our employees and communities."

2015 Business Segment Performance

• 12% earnings growth in Personal & Commercial Banking, on improved trends in Caribbean Banking and solid results in Canadian Banking;
• 4% lower earnings in Wealth Management, driven by higher costs in support of business growth, restructuring costs largely related to our U.S. & International Wealth Management business, and lower transaction volumes, partly offset by higher earnings from growth in average fee-based client assets;
• 10% lower earnings in Insurance, mainly due to a change in Canadian tax legislation which became effective November 1, 2014;
• 26% earnings growth in Investor & Treasury Services, reflecting higher earnings from our foreign exchange businesses, an additional month of earnings in Investor Services, and increased custodial fees; and,
• 13% earnings growth in Capital Markets, driven by growth in our global markets businesses, continued solid performance in our corporate and investment banking businesses, and the favourable impact of foreign exchange translation.

Specified items⁽¹⁾ as detailed on page 11 comprise: In Q2 2015, a gain of $108 million (before- and after-tax) from the wind-up of a U.S.-based funding subsidiary that resulted in the release of foreign currency translation adjustment (CTA) that was previously booked in other components of equity (OCE); in Q3 2014, a loss of $40 million (before- and after-tax), related to the closing of the sale of RBC Jamaica on June 27, 2014; and in Q1 2014, a loss of $60 million (before- and after-tax) also related to the sale of RBC Jamaica, and a provision related to post-employment benefits and restructuring charges in the Caribbean of $40 million ($32 million after-tax).

Q4 2015 Performance

Record earnings of $2,593 million were up $260 million, or 11% from last year, driven by solid earnings growth in Capital Markets and Personal & Commercial Banking, and a lower effective tax rate reflecting net favourable tax adjustments in Corporate Support. These factors were partially offset by lower earnings in Investor & Treasury Services driven by lower funding and liquidity results due to widening credit spreads and unfavourable market conditions, lower earnings in Insurance mainly due to a change in Canadian tax legislation as noted above, and lower earnings in Wealth Management largely reflecting lower transaction volumes and restructuring costs largely related to our U.S. & International Wealth Management business, including the sale of RBC Suisse.

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¹ These are non-GAAP measures. For further information, including a reconciliation, refer to the non-GAAP measures section on page 11 of this Earnings Release.
² This measure does not have a standardized meaning under GAAP. For further information, refer to the Key performance and non-GAAP measures section on page 11 of this Earnings Release.

Earnings were up $118 million, or 5% from last quarter, largely due to net favourable tax adjustments as noted above, and higher earnings in Insurance reflecting favourable actuarial adjustments and lower net claims costs. These factors were partially offset by lower earnings in Investor & Treasury Services driven by lower funding and liquidity results as noted above, and lower earnings in Wealth Management largely reflecting restructuring costs as noted above.

Q4 2015 Business Segment Performance

Personal & Commercial Banking net income was $1,270 million, up $119 million or 10% compared to last year. Canadian Banking net income was $1,227 million, up $17 million or 1% compared to last year, primarily due to solid volume growth across most of our businesses and higher fee-based revenue growth, partly offset by lower spreads. The prior year included favourable net cumulative accounting adjustments of $55 million ($40 million after-tax). Caribbean & U.S. Banking net income was $43 million compared to a net loss of $59 million last year reflecting higher earnings driven by lower PCL, continuing benefits from our efficiency management activities, and the favourable impact of foreign exchange translation.

Compared to last quarter, Personal & Commercial Banking net income was down $11 million or 1%. Canadian Banking net income was down $12 million or 1% as strong volume growth across most businesses and lower PCL was more than offset by higher marketing and technology costs to support business growth. Caribbean & U.S. Banking net income was relatively flat compared to last quarter.

Wealth Management net income was $255 million, down $30 million or 11% compared to last year, mostly due to lower transaction volumes driven by unfavourable market conditions, and restructuring costs of $46 million ($38 million after-tax) largely related to our U.S. & International Wealth Management business, including the sale of RBC Suisse. These factors were partly offset by a lower effective tax rate reflecting income tax adjustments related to the current year, and higher earnings from growth in average fee-based client assets.

Compared to last quarter, net income was down $30 million or 11%, primarily due to restructuring costs as noted above, lower fee-based client assets and lower transaction volumes driven by unfavourable market conditions.

Insurance net income was $225 million, down $31 million or 12% from a year ago, mainly due to a change in Canadian tax legislation impacting certain foreign affiliates which became effective November 1, 2014.

Compared to last quarter, net income was up $52 million or 30% mainly due to favourable actuarial adjustments reflecting management actions and assumption changes, and lower net claims costs.

Investor & Treasury Services net income was $88 million, down $25 million or 22% from last year, largely reflecting lower funding and liquidity results due to widening credit spreads and unfavourable market conditions. This factor was partially offset by a lower effective tax rate mainly reflecting income tax adjustments, and higher net interest income from growth in client deposits.

Net income was down $79 million or 47% from a record in Q3 2015, mainly due to lower funding and liquidity results as noted above, and lower results in our foreign exchange businesses primarily due to lower volumes and client activity. In addition, the prior quarter included an additional month of earnings in Investor Services of $42 million ($28 million after-tax)⁽¹⁾.

Capital Markets net income was $555 million, up $153 million or 38% compared to last year, primarily due to a lower effective tax rate reflecting income tax adjustments related to the current year, growth in our global markets businesses, and the positive impact of foreign exchange translation. In addition, our results in the prior year included the unfavourable impact of the implementation of a one-time funding valuation adjustment (FVA) of $105 million ($51 million after-tax and variable compensation), and $75 million ($46 million after-tax and variable compensation) in lower trading revenue and costs associated with the exit from certain proprietary trading strategies.

Compared to last quarter, net income was up $10 million or 2%, as lower variable compensation, the income tax adjustments as noted above, and higher equity trading revenue were mostly offset by lower debt and equity origination reflecting decreased client issuance activity, and lower fixed income trading revenue due to unfavourable market conditions.

Corporate Support net income was $200 million, largely reflecting net favourable tax adjustments and asset/liability management activities, partially offset by transaction costs of $29 million ($23 million after-tax) related to our acquisition of City National. Net income last year was $126 million, largely reflecting gains on private equity investments related to the sale of a legacy portfolio, and asset/liability management activities.

Capital - As at October 31, 2015, Basel III CET1 ratio was 10.6%, up 50 bps from last quarter, mainly reflecting strong internal capital generation and lower risk-weighted assets.

Credit Quality - Total PCL of $275 million decreased $70 million or 20% from a year ago, mainly reflecting lower PCL in Caribbean banking. Compared to last quarter, PCL was up $5 million or 2% mainly due to higher PCL in Capital Markets, partially offset by lower provisions in Canadian Banking. Our PCL ratio was 0.23%, down 8 bps compared to last year and flat compared to last quarter.

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¹ Effective Q3 2015, we aligned the reporting period of Investor Services, which resulted in an additional month of results being included in Q3 2015.

Q4 2015 vs. Q4 2014
Net income of $1,270 million increased $119 million or 10% compared to the prior year, primarily due to solid volume growth across most of our businesses in Canada, higher fee-based revenue growth, and higher earnings in the Caribbean, partly offset by lower spreads. The prior year included favourable net cumulative accounting adjustments of $55 million ($40 million after-tax) in Canadian Banking.

Total revenue increased $98 million or 3%, reflecting solid volume growth of 6% across most businesses in Canada and the positive impact of foreign exchange translation. Higher fee-based revenue primarily attributable to strong mutual fund asset growth resulting in higher mutual fund distribution fees, as well as higher volumes driving higher card service revenue, also contributed to the increase. The prior year included favourable net cumulative accounting adjustments as noted above.

Net interest margin decreased 1 bp primarily due to the low interest rate environment and competitive pressures.

PCL decreased $74 million, with the PCL ratio improving 10 bps, largely reflecting lower provisions in our Caribbean portfolios as the prior year included provisions of $50 million on our impaired residential mortgage portfolio. Lower provisions in our Canadian commercial lending portfolio also contributed to the decrease.

Non-interest expense increased $31 million or 2%, mainly due to higher technology and staff costs to support business growth in Canadian Banking, and an increase due to the impact of foreign exchange translation, which were partially offset by continuing benefits from our efficiency management activities. The prior year included provisions related to restructuring charges of $17 million in the Caribbean.

Q4 2015 vs. Q3 2015
Net income decreased $11 million or 1% from the prior quarter, mainly driven by higher marketing and technology costs to support business growth in Canadian Banking, partially offset by strong volume growth across most of our businesses in Canada, and lower PCL.

Q4 2015 vs. Q4 2014
Net income increased $17 million or 1% compared to the prior year, primarily due to solid volume growth across most of our businesses and higher fee-based revenue growth, partly offset by lower spreads. The prior year included favourable net cumulative accounting adjustments of $55 million ($40 million after-tax).

Total revenue increased $63 million or 2%, mainly reflecting solid volume growth of 6% across most businesses and higher fee-based revenue primarily attributable to strong mutual fund asset growth resulting in higher mutual fund distribution fees, as well as higher volumes driving higher cards service revenue. The prior year included favourable net cumulative accounting adjustments as noted above.

Net interest margin decreased 1 bp primarily due to the low interest rate environment and competitive pressures.

PCL decreased $8 million, with the PCL ratio improving 2 bps, largely reflecting lower provisions in our commercial lending portfolio, partially offset by higher provisions in our personal lending portfolio and higher write-offs in our credit card portfolio.

Non-interest expense increased $50 million or 3%, mostly due to higher technology and staff costs to support business growth, partially offset by continuing benefits from our efficiency management activities.

Q4 2015 vs. Q3 2015
Net income decreased $12 million or 1% compared to the prior quarter, mainly driven by higher marketing and technology costs to support business growth, partially offset by strong volume growth across most businesses, and lower PCL.

Q4 2015 vs. Q4 2014
Net income decreased $30 million or 11% from a year ago, mostly due to lower transaction volumes driven by unfavourable market conditions, and restructuring costs of $46 million ($38 million after-tax) largely related to our U.S. & International Wealth Management business, including the sale of RBC Suisse. These factors were partly offset by a lower effective tax rate reflecting income tax adjustments related to the current year, and higher earnings from growth in average fee-based client assets.

Total revenue increased $14 million or 1%, mainly due to the positive impact of foreign exchange translation and higher revenue from growth in average fee-based client assets reflecting capital appreciation and strong net sales. These factors were partly offset by lower transaction volumes, and a change in the fair value of our U.S. share-based compensation plan, which was largely offset in non-interest expense.

Non-interest expense increased $72 million or 6%, mainly due to the impact of foreign exchange translation, restructuring costs as noted above, and higher costs in support of business growth. These factors were partly offset by lower variable compensation and a change in the fair value of our U.S shared-based compensation plan, which was largely offset in revenue.

Q4 2015 vs. Q3 2015
Net income decreased $30 million or 11% compared to the prior quarter, primarily due to restructuring costs as noted above, lower fee-based client assets and lower transaction volumes driven by unfavourable market conditions.

Q4 2015 vs. Q4 2014
Net income decreased $31 million or 12% from a year ago, mainly due to a change in Canadian tax legislation impacting certain foreign affiliates which became effective November 1, 2014.

Total revenue decreased $457 million or 39%, mainly due to the change in fair value of investments backing our policyholder liabilities resulting from the increase in long-term interest rates, and lower revenue related to our retrocession contracts, both of which were largely offset in PBCAE. These factors were partially offset by business growth primarily in our life, annuity, home and auto insurance businesses.

PBCAE decreased $460 million or 61%, largely reflecting the change in fair value of investments backing our policyholder liabilities, and a reduction of PBCAE related to our retrocession contracts, both of which were largely offset in revenue. These factors were partially offset by business growth as noted above.

Non-interest expense increased $9 million or 6%, primarily due to higher costs in support of business growth.

Q4 2015 vs. Q3 2015
Net income increased $52 million or 30% from the prior quarter, mainly due to favourable actuarial adjustments reflecting management actions and assumption changes, and lower net claims costs.

Q4 2015 vs. Q4 2014
Net income decreased $25 million or 22%, largely reflecting lower funding and liquidity results due to widening credit spreads and unfavourable market conditions. This factor was partially offset by a lower effective tax rate mainly reflecting income tax adjustments, and higher net interest income from growth in client deposits.

Total revenue decreased $28 million or 6%, mainly related to lower funding and liquidity revenue as a result of widening credit spreads and unfavourable market conditions. This factor was partially offset by the positive impact of foreign exchange translation.

Non-interest expense increased $21 million or 7%, largely reflecting higher costs in support of business growth, and the impact of foreign exchange translation.

Q4 2015 vs. Q3 2015
Net income decreased $79 million or 47% as compared to record results last quarter, mainly due to lower funding and liquidity results in the current quarter as noted above, and lower results in our foreign exchange businesses primarily due to lower volumes and client activity. In addition, the prior quarter included an additional month of earnings in Investor Services of $42 million ($28 million after-tax).

Q4 2015 vs. Q4 2014
Net income increased $153 million or 38% from last year, primarily due to a lower effective tax rate reflecting income tax adjustments related to the current year, growth in our global markets businesses, and the positive impact of foreign exchange translation. These factors were partially offset by higher staff and support costs. In addition, our results in the prior year included the unfavourable impact of the implementation of a one-time funding valuation adjustment (FVA) of $105 million ($51 million after-tax and variable compensation), and $75 million ($46 million after-tax and variable compensation) in lower trading revenue and costs associated with the exit from certain proprietary trading strategies.

Total revenue increased $238 million or 16%, mainly due to the positive impact of foreign exchange translation, higher equity trading revenue reflecting increased client activity and more favourable market conditions, and higher M&A activity. These factors were largely offset by lower equity origination reflecting decreased client issuance activity primarily in Canada and the U.S.

PCL increased $4 million or 13%, mainly due to provisions taken in the oil & gas and consumer goods sectors.

Non-interest expense increased $173 million or 19%, mainly due to the impact of foreign exchange translation, and higher staff and support costs.

Q4 2015 vs. Q3 2015
Net income increased $10 million or 2% from the prior quarter. Lower variable compensation, income tax adjustments as noted above, and higher equity trading revenue were mostly offset by lower debt and equity origination reflecting decreased client issuance activity, lower fixed income trading revenue due to unfavourable market conditions, and lower loan syndication activity.

Due to the nature of activities and consolidated adjustments reported in this segment, we believe that a comparative period analysis is not relevant. The following identifies material items affecting the reported results in each period.

Net interest income (loss) and income taxes (recoveries) in each period in Corporate Support include the deduction of the teb adjustments related to the gross-up of income from Canadian taxable corporate dividends recorded in Capital Markets. The amount deducted from net interest income (loss) was offset by an equivalent increase in income taxes (recoveries). The teb amount for the three months ended October 31, 2015 was $213 million as compared to $133 million in the prior quarter and $101 million in the prior year period. For further discussion, refer to the How we measure and report our business segments section of our 2015 Annual Report.

In addition to the teb impacts noted above, the following identifies the other material items affecting the reported results in each period.

Q4 2015
Net income was $200 million largely reflecting favourable tax adjustments and asset/liability management activities. This quarter also included transaction costs of $29 million ($23 million after-tax) related to our acquisition of City National.

Q3 2015
Net income was $24 million largely reflecting asset/liability management activities.

Q4 2014
Net income was $126 million largely reflecting gains on private equity investments related to the sale of a legacy portfolio and asset/liability management activities.

KEY PERFORMANCE AND NON-GAAP MEASURES

Additional information about these and other key performance and non-GAAP measures can be found under the Key performance and Non-GAAP Measures section of our 2015 Annual Report.

Return on Equity
We measure and evaluate the performance of our consolidated operations and each business segment using a number of financial metrics such as net income and return on equity (ROE). ROE does not have a standardized meaning under GAAP. We use ROE as a measure of return on the capital invested in our business.  The following table provides a summary of our ROE calculations:

Non-GAAP measures
Results and measures excluding specified items are non-GAAP measures. Specified items comprise:

• In Q2 2015, a gain of $108 million (before- and after-tax) from the wind-up of a U.S.-based funding subsidiary that resulted in the release of CTA that was previously booked in OCE.
• In Q3 2014, a loss of $40 million (before- and after-tax), related to the closing of the sale of RBC Jamaica on June 27, 2014.
• In Q1 2014, a loss of $60 million (before- and after-tax) also related to the sale of RBC Jamaica, and a provision related to post-employment benefits and restructuring charges in the Caribbean of $40 million ($32 million after-tax).

Given the nature and purpose of our management reporting framework, we use and report certain non-GAAP financial measures, which are not defined in and do not have a standardized meaning under GAAP, and may not be comparable with similar information disclosed by other financial institutions. We believe that excluding these specified items from our results is more reflective of our ongoing operating results, provides readers with a better understanding of our performance, and should enhance the comparability of our comparative periods. For further information, refer to the Key Performance and non-GAAP measures section of our 2015 Annual Report.