Good morning, ladies and gentlemen. Welcome to the RBC 2013 Fourth Quarter Results Conference Call. I would now like to turn the meeting over to Ms. Karen McCarthy, Director of Investor Relations. Please go ahead, Ms. McCarthy.

Good morning, and thank you for joining us. Presenting to you this morning are Gord Nixon, President and CEO; Dave McKay, Group Head, Personal and Commercial Banking; Morten Friis, Chief Risk Officer; and Janice Fukakusa, CAO and CFO. Following their comments, we will open the call for questions from analysts. The call will be approximately 1 hour long and will end just before 9:30. [Operator Instructions] We'll be posting management's remarks on our website shortly after the call. Joining us on the call: George Lewis, Wealth Management and Insurance; Doug McGregor, Capital Markets and Investor & Treasury Services; Mark Standish, Capital Markets and Investor & Treasury Services; Zabeen Hirji, Chief Human Resource Officer; and Mark Hughes, Deputy Chief Risk Officer. As noted on Slide 2, our comments may contain forward-looking statements, which have all applying assumptions and have inherent risks and uncertainties. Actual results could differ materially from these statements. I will now turn the call over to Gord Nixon.

Thank you, Karen, and good morning, everyone. As you've seen in the press release issued early this morning, we announced that I will be retiring on August 1, 2014, after 13 years as CEO. You will also have read that Dave McKay will take on the role of President at our annual meeting on February 26 and will assume the role of President and CEO on August 1, 2014. I can't tell you how delighted I am by this announcement. Many of you on the call know Dave well. In my opinion, he is one of the best retail bankers in the world and has been recognized as such and is universally supported and respected across our organization. In addition, his risk management and international corporate banking experience round him out nicely. Dave is a strong leader and innovator. He is client-focused and collaborative and, like me, believes our employees are the core of this great organization. So let me turn to the obvious question, "Why now?" I think that the time is right for a transition. When I retire, I will have been CEO for over 13 years. I'm very proud of what we have accomplished but feel it is a great time to look to the future and build for the longer term. When we presented our 5-year strategy to the board this summer, it was clear to me that someone else should take the lead, as they would ultimately have the accountability for its performance. Dave just turned 50. He's at the right age and stage of his career to hopefully have a good 10-year run at leading this incredible organization. Dave has earned the opportunity, and he has the full support of our management team, which is fully committed and has never been stronger. I'd just…

Thank you for your kind words, Gord. Let me start by saying how honored I am by the confidence the board has placed in me to take over the stewardship of this incredible organization. It is an exciting time to be asked to take on the role of President and then CEO. As Gord said, we have tremendous momentum. Momentum that I think is created not only by the success of our diversified business mix, but also by our 79,000 employees who are focused on our clients and deliver on our brand and our values each and every day. I'd like to take a minute to thank Gord for his ongoing support and guidance throughout my career. He's played a very important role in providing me with development opportunities. He set a high standard for me and all of the senior executives to follow. Let me close by saying that I'm excited not only about this new challenge, but also by the fact that I will continue to work with an excellent senior leadership team. I believe that together we can continue to build on our great success to date. Thanks.

Thank you, Dave. And now to the more important matter of the morning, which is our record results for 2013. As you've seen, we reported net income of $8.4 billion, which was up 12% from last year. We delivered a return on equity of over 19% and our all-in common equity Tier 1 ratio remains strong at 9.6%. We achieved all of our financial performance objectives for the year. Our results were underpinned by the strength and diversity of our businesses, led by record performances in Personal & Commercial Banking, Wealth Management and Capital Markets. During the year, we launched new products and partnerships, won new clients and gained market share in our key Canadian and global businesses, all while increasing efficiencies. Looking at the fourth quarter, we delivered earnings of $2.1 billion, up 11% from last year. Our fourth quarter results were driven by strong growth in our corporate and investment banking businesses, solid volume growth in Canadian Banking, higher average fee-based client assets in Wealth Management and improved business performance in Investor & Treasury Services. We did have a charge, as was reported a couple of weeks ago, in our Insurance segment, which had an impact. But we also had a favorable tax adjustment this quarter related to prior periods, both of which Janice will discuss in her remarks. Turning to our business segments. I will provide an overview of our annual segment performance, and following, Morten and Janice will comment more fully on our fourth quarter results. Starting with Personal & Commercial Banking, our Canadian Banking business delivered record earnings of over $4.4 billion, up 9% from last year, reflecting solid volume growth across all businesses, improved credit quality and our ongoing focus on efficiency and management activities. Our Canadian Banking fourth quarter earnings were $1.1 billion,…

Thank you, Gordon. That's very kind. Maybe people are focused on other retirements than mine. Turning to credit on Slide 8. We saw an uptick in provisions this quarter, overall -- but overall credit quality remained sound. Provisions for credit losses on impaired loans of $335 million, or 32 basis points, increased $68 million, or 6 basis points, from the prior quarter. With respect to gross impaired loans, while impairment provisions have increased this quarter, gross impaired loans are down $50 million over the year, and our impairment level is lower than our Canadian peers. Looking at credit performance in more detail. Turning to Slide 9. Provisions in Canadian Banking were $250 million, up $37 million over last quarter, or 4 basis points. At 29 basis points, this remains at the low end of our historical range. The increase in provisions primarily reflected higher impairment on our personal lending portfolio and higher impairments in our business portfolio, as we grew volumes in both businesses. Provisions in our credit card portfolio decreased quarter-over-quarter, reflecting fewer bankruptcies. Provisions on our residential mortgages remained low at 3 basis points, consistent with our historic performance. Gross impaired loans increased slightly over the last quarter, but remained within our historical range. Turning to the Caribbean. Provisions on impaired loans were $26 million, up $13 million from the previous quarter, largely related to a couple of accounts. While credit quality in our Caribbean portfolio has been stabilizing, challenges are likely to persist in the near term until we see sustained improvements in the regional economic environment. We incurred provisions of $42 million in Wealth Management this quarter related to a few accounts. As I mentioned last quarter, growing the credit book forms part of this segment's long-term growth strategy and provisions at moderate levels are an…

Thanks, Morten, and good morning. Turning to Slide 11. We had a solid fourth quarter with earnings of $2.1 billion, up $208 million or 11% over last year. Continuing our momentum, performance this quarter was underpinned by strong fundamentals. I would note that while we had a relatively clean quarter, we had 2 items that largely offset each other. The first item is the $118 million after-tax charge in our Insurance segment discussed earlier. The second item is a favorable income tax adjustment of $124 million related to prior years. While this tax adjustment reduced our effective tax rate this quarter from 23% to 18%, we continue to expect our effective tax rate to be in the low 20% range going forward. Compared to the prior quarter, earnings were down $185 million, or 8%. Moving on to capital. We completed our first year under Basel III with our capital ratios remaining strong and in excess of regulatory requirements. For 2013, our common equity Tier 1 ratio was 9.6%, largely driven by strong internal capital generation. This quarter, we also built our capital levels in anticipation of several notable regulatory and accounting changes scheduled to come into effect in the first quarter of 2014. As I mentioned on our last call, the first phase of the credit valuation adjustment, or CVA, is expected to negatively impact our common equity Tier 1 ratio by approximately 30 basis points. Effective November 1, we adopted a new accounting standard related to pensions and other post-employment benefits, which is expected to negatively impact our ratio by approximately 10 basis points. As we transition to the new standard, we will be restating our financials next quarter, including an increase in pension expense of $70 million for 2012 and $125 million for 2013. Going forward, we anticipate…

[Operator Instructions] The first question is from Robert Sedran from CIBC.

Not sure if the question is for Morten or for George, but I wanted to come back to the issue of the Wealth Management loan losses. I know, George, you've talked in the past about wanting to grow the loan book. And I guess with -- there's no such thing as a riskless loan, as we found out this quarter. But can you maybe give us a little more color in terms of what the security is behind these kind of loans, what kind of lending this is and whether we should expect these kind of provisions to kind of now bounce in and out of the segment, as the odd one goes impaired?

So it's Morten, Robert. I'll start and Gord may want to fill in a few business details. But -- so if you look at the supplementals, you'll see on the Wealth Management breakdown that we got about $13 billion in loans for this segment. There's another $3 billion or so letters of credit that represent the total amount of credit risk that we have in that business. More than half of those loans are in North America. The majority of them are traditional margin loans that you'd find in a broker-dealer or private banking operation. So the vast majority of the loans are secured by liquid collateral. There is a small portion of less than 10% that is secured by commercial and residential real estate, and a tiny fraction of 1% or so that is unsecured. So the nature of this portfolio is one where you should not expect ongoing significant provisions. I would say if you look at the chart that we're having this quarter, it reflects a small number of loans with a large concentration in a small number of securities, where there was a significant fall in value, and that's what drove the significant provision. So as I was saying in my comments, this is very much outside of the range of losses that we'd expect to see in the portfolio and does not affect our view of the credit quality of the portfolio as such. I would say that our historical experience is way more indicative of what you should expect than what you've seen in the last quarter or 2. But when you have a $16 billion portfolio, you have growth objectives, obviously, you will have losses here and there, but at more modest levels than we've seen this quarter, would be my expectation.

So, Morten, when you talk about having the traditional margins secured by highly liquid securities, I'm assuming then that you're able to run numbers in terms of how much concentration you might have in a specific asset class or a specific security in terms of what's backing these loans. Is that -- is it just that this was an abnormal quarter that it just happened to be in a pocket of the book? Or is it that maybe we're still developing the infrastructure to support some of this business?

No. So this is a business we've been in for a long time. And there's a -- it's a daily mark-to-market process. There are securities listed on public exchanges with daily margin calls and so on. I mean, what was unusual this time was we had, as I said, a small number of loans with similar securities backing them up and large concentrations in specific securities, where those securities saw a large drop in value.

Okay. And, Janice, just a very quick numbers question. The Q4 Insurance segment is, you mentioned, actuarial adjustments plus a gain. Is that pretty much responsible for all of the year-on-year increase? Or is there actually something else in there?

That's what it is. And you'll recall that, once a year, we formally revise all of our actuarial adjustments, so you get a bit of volatility in the fourth quarter related to that. And then, of course, the gain on the sale of our travel business this quarter.

The next question is from Gabriel Dechaine from Crédit Suisse. Gabriel Dechaine - Crédit Suisse AG, Research Division: Just a clarification for Janice. First of all, on the -- you said the pension expense would have a modest impact, so I get to -- after tax, it works to about $0.07 in 2014. I'm just wondering if you're thinking of offsetting that item somehow with savings in other areas. And then, second one, first of all, Dave, congrats on the promotion. Just want to talk about your pattern every 3 years, and this is across the bank, but it impacts Canadian Banking, of undergoing big initiative spending to generate better efficiency down the road. Is 2014 going to be one of those years? And should we expect some softer operating leverage as a result in the near term until you yield those savings?

So, Gabriel, it's Janice. I'll start first with the pension explanation. So what I said is that it would be relatively flat in 2014. And just for -- you should recall that we are restating 2012 and 2013 because the pension accounting is -- it's a retroactive accounting. That's why there's an immediate hit to the common equity Tier 1 ratio. And the -- so the ramp-up in expense that you see, what we're saying is it will be relatively flat year-over-year. And of course, on a cash basis, we are generating a higher expense rate, and we look at all the expenses when we look at our efficiency programs and our investment programs. And, Dave, you can comment on some of the investment efficiency programs? Gabriel Dechaine - Crédit Suisse AG, Research Division: Actually, if you don't -- the $125 million, is it pretax or post tax?

It's pretax. It's an actual expense number.

Gabriel, it's Dave. We're still targeting an operating leverage of 1% to 2%. As this large program comes to a successful conclusion and we deploy it across our network over the coming quarter, we [Audio Gap] systems and our technology, and we will do so going forward, focusing on our commercial systems, particularly our commercial deposit systems, but not to the level that you've seen historically with the retail credit transformation. So it will be a smaller project, but it's something that we continuously invest in our back-office capabilities, our front-office technology capabilities. And we are watching our costs and our revenues very closely and driving positive operating leverage. Gabriel Dechaine - Crédit Suisse AG, Research Division: So there is a program taking place in Q1, but it's going to be smaller than prior years?

Yes, it's in the normal course of business for us.

The next question is from Peter Routledge from National Bank Financial.

A couple of questions for Dave. First of all, Dave, I noticed, just in loan growth generally in Canadian Banking, but retail loan growth in particular, Royal is a little bit slower than peers, which -- over the last couple quarters. Wonder if you have any thoughts over why that might be.

Yes. Certainly, if you look at where the source of growth is in the marketplace, we do not book any mortgage whole loans from third parties nor brokers. So -- but particularly, if you were to extract whole loan mortgage purchases from the growth of our peers, you would see a dramatically different number, I would believe. So our growth is core proprietary channel growth. And if you look at the -- in the appendices of the slides, I think the first appendix, we're gaining market share in all our core segments, with the exception of commercial deposits. But when you look at commercial and consumer lending growth, market shares are up. So our core channels are continuing to perform, we believe, at a premium to the market.

The uptick in third-party and broker channel originations, in your view, is that classic end-of-cycle adverse selection? I mean, are folks just gathering up weak credits at the end of a turn and -- at the end of a long credit cycle?

I'll answer that one. It's Gord. Because personally, I don't think we should comment on what other financial institutions do. But what I would say is we -- as Dave reiterated, John (sic) [Peter], I mean, as you know we've been a long-time believer in core originations and not buying third-party mortgages. And we think, through the cycle, that's going to be positively reflected in terms of both margin and performance. So I don't think we should say it's end-of-cycle behavior on behalf of competitors, but it's something that we just don't -- have never subscribed to.

And just, Dave, on the mobile payment strategy, can you talk about how that aligns with your Avion strategy? And how do the economics compare?

They're somewhat distinct strategies. I mean, Avion is a credit card product. The mobile payment strategy encompasses all payment products, including debit, in particular debit. We were the first bank to launch a mobile debit payment with McDonald's this year, which we're extremely proud of. So I wouldn't link, necessarily, Avion specifically to a mobile payments because it's a multi-card, multiproduct umbrella strategy. We're very proud of our mobile strategy, particularly the innovation around our secure cloud, which we announced this year, which we feel is the strongest customer offer in the marketplace, particularly around security and ease of use. We'll be deploying that over the next 30 to 60 days in the marketplace. So we are extremely happy where we are in mobile payments, but I wouldn't necessarily link our Avion strategy, which is very much about building on, we believe, Canada's #1 premium credit card, taking advantage of the mild disruption that's in the marketplace and acquiring more customers.

I guess where I was going with that is a certain part of the Avion clientele uses the card for just a transactional basis, does the mobile payment strategy risk cannibalizing that revenue stream?

And the fact that a customer might choose debit over credit? I would say no. I think the #1 driver of a consumer, particularly in Canada, in choosing which payment vehicle to use, is loyalty. Canadians are very attached to the loyalty programs on their credit cards, particularly the Avion loyalty program, and that is the #1 driver of which payment card, debit or credit, you choose to use. So whether that fits in a digital wallet or it fits in your physical wallet, that same driver should -- will cause you to pull it out and use it either through your phone or direct at the terminal.

The next question is from Michael Goldberg from Desjardins Securities.

First of all, congratulations to all of the people on the changes in your careers. My first question is for Morten. As Royal grows its lending in the U.S. and Europe, are you comfortable that credit discipline among banks there has become comparable to Canada and that discipline will continue in the future?

So, I mean, a couple of comments. First of all, I guess, we're driven by our discipline more than the market discipline. And where we have been able to grow the business on the lending side is where there's enough of an overlap between how we are prepared to do business and what allows us to win business in the market. I would certainly say that the -- it is -- it's been fairly good expansion in those areas from an overall market standpoint. If you look at the leveraged lending business, in particular, we've had great success there and worked very hard to do that within our credit standards. I would say the regulatory wins would suggest that some of the aggressive practices in that business are likely to diminish somewhat over the next year or 2. And as for Europe, I think it's -- the question, from my standpoint, is a question of whether you have a decent risk-return relationship. I think for the kind of credit transactions we're looking at, we have not been going after business that's been outside of what we can do within our risk appetite and our standards. And I'm sure -- just as a footnote, I mean, so Mark is coming out of having managed a lot of that business. I mean, so you've got a guy in the chief risk officer chair who's extremely well equipped to deal with those credit issues going forward.

Okay. Another question I have is -- this is about Insurance and the charge that you took. Is there any reason that we should think that there's anything different about your 10/8 product and the policyholder behavior that you expect that, that should be different from anything else in the industry, in terms of resulting policyholder behavior?

Thanks, Michael. It's George Lewis here. I think given our focus on high-net-worth clients and business owners, we are a significant player in the 10/8 market. Because of that, these policies were sold as part of financial plans, and we expect a high degree of conversion to our replacement product because of that.

That being said, among other sellers of the 10/8 product to affluent customers, was there anything different about your product that would result in a different policyholder behavior in response to the changes that are taking place?

Michael, not that we're aware of, no.

Okay. I also have, I guess, a couple of people questions. First, could you give us some background on Bruce Ross and why is he being brought in and what are his objectives?

Sure. I'd be happy to. It's Gord, Michael. To be honest, when you -- I think when you look at our industry going forward, technology is going to be an equally important part of strategy of just about any other part of the industry. I would describe Bruce as one of the top technology people, particularly as it relates to financial services in the industry globally. As you know, he ran -- not only was he of IBM Canada a ways back, but most recently ran their business in North America and prior to that, Europe. He has great experience in the financial services sector and has a tremendous understanding of not only technology from an engineering perspective, but technology from a strategic perspective. And we have been, for a while, looking for the right individual to take on responsibility for technology and ops. As I say, extremely important part of the backbone of banking but also an extremely important part of strategy for banking going forward. And in Bruce, we think we have an absolutely -- not only a world leader, but a remarkable GE partner, who's going to be instrumental in terms of leading this section of the bank for us going forward. Remember, tech and ops has -- Janice, how many people in our technology and operations?

8,000 people.

8,000 people, and it's a big part of banking going forward. So we're very excited to have Bruce on board as an addition to GE.

Okay. And lastly, for Dave McKay, again, congratulations. What would you like to do -- or how would you like to further increase RBC's business diversity? And aside from that, how should we expect that RBC's strategies may evolve, given your different background from Gord's? And please don't say no change because, invariably, there's always differences.

Thanks, Michael, for your comments. The first thing I'll say is our success has been driven by our diversified business model, and that will continue to be the tenet of our success going forward. And if you look at each and every one of our existing businesses, they're undergoing enormous change as it is. The Canadian Banking business model is evolving through technology, the Capital Market's model is evolving and the Wealth Management model is evolving. So when you say no change, we're already going through an enormous amount of change, as each individual leader looks to the future and builds a competitive model. So the world changes and our models will change going forward. But the tenet of our success is diversification across those core businesses, including Insurance.

The next question is from John Reucassel from BMO Capital Markets.

Just a clarification for George or Morten on this Wealth Management loss. Was this in Canada or the U.S. or internationally? And was it through the broker-dealers? Or was it through the private banking? Could you just qualify that a bit more for us?

It's Morten. It was through a private banking unit internationally. I mean, in terms of from an operational standpoint, whether it's a broker-dealer or the private banking unit, the operational infrastructure is pretty much identical and the processes are the same.

Okay. So was it outside of North America?

That's correct.

Okay. And then for Gord and Dave, just -- since we're running out of time here, just could you talk about your medium-term EPS guidance of 7%? Are you going to stick with that? And in the transition period here, would you say that the balance between acquisitions or buyback is likely to sit with buybacks in the transition period?

Yes. I mean, I wouldn't say that, John. I would say that during the transition period for the bank, generally speaking, it's business as usual. As I said in my comments, I think we exit this year with all 5 businesses performing well. They've all got strong growth objectives and plans going forward and, as I say, they're all in pretty good shape. There's not a lot of issues with respect to them. In terms of our strategic agenda, going forward, there is nothing major on the front burner, but I would say it's business as usual. We continue and will continue to look at opportunities to deploy capital between repatriation to shareholders, investing in the business, which, as you know, is my favorite way to invest capital and I'd love to give the businesses even more, but they can only take so much, and investments through acquisitions. And our program around that front is not going to be any different over the next 8 months than it would otherwise have been other than -- obviously, we're not going to do anything that Dave doesn't 150% subscribe to because, ultimately, he's going to be accountable for the execution and performance of that. But as I say, I think it's business as usual. I mean, I'm -- one thing that I am certainly very pleased and happy about is sort of our whole succession process. We've got, as I say, businesses firing well. But in place -- the GE is very strong, very established. The transition process, I think, will go very, very smoothly. And as I say, pretty much, it's going to be business as usual. I mean, I guess I would disagree a little bit with Michael Goldberg's sort of last comment that don't say it's business as usual. I think one of the things we're trying to make sure that it is, is that it's business as usual. And I think you can expect more of the same going forward at least during the transition period that we've had in the past.

The 7% still stands, Gord?

Yes, absolutely. I mean, our midterm objectives are midterm objectives, and it's what we use to measure our benchmark. They are minimum objectives, as you know. And we have tended to exceed them, and I hope that will continue to be the case. But they are what's as described. They are midterm objectives. They're not an 8-month or a 1-year forecast. Okay. I guess that brings this call to a conclusion, and we appreciate everybody's participation. And we look forward not only to the next quarterly call but, hopefully, everybody's participation at our annual meeting, which is where it will take place from. So thanks very much, and we'll see everybody soon.

The conference has now ended. Please disconnect your lines at this time. We thank you for your participation.