v3.24.3
Capital management
 12 Months Ended
Oct. 31, 2024
Text Block [Abstract]  
Capital management
Note 28 Capital management
Regulatory capital and capital ratios
OSFI formally establishes risk-based capital and leverage minimums and Total Loss Absorbing Capacity (TLAC) ratios for deposit-taking institutions in Canada. We are required to calculate our capital ratios using the Basel III framework. Under Basel III, regulatory capital includes Common Equity Tier 1 (CET1), Tier 1 and Tier 2 capital. CET1 capital mainly consists of common shares, retained earnings and other components of equity. Regulatory adjustments under Basel III include deductions of goodwill and other intangibles, certain deferred tax assets, defined benefit pension fund assets, investments in banking, financial and insurance entities, the shortfall of provisions to expected losses, prudential valuation adjustments, prepaid portfolio insurance assets, non payment and non delivery of trades and equity investment in funds subject to the fall-back approach. Tier 1 capital comprises predominantly CET1 and Additional Tier 1 items including non-cumulative preferred shares and LRCNs that meet certain criteria. Tier 2 capital includes subordinated debentures that meet certain criteria, certain loan loss allowances and
non-controlling
interests in subsidiaries’ Tier 2 instruments. Total capital is the sum of Tier 1 and Tier 2 capital. TLAC available is defined as the sum of Total capital and external TLAC instruments. External TLAC instruments comprise predominantly senior bail-in debt, which includes eligible senior unsecured debt with an original term to maturity of greater than 400 days and remaining term to maturity of greater than 365 days.
 
Regulatory capital ratios are calculated by dividing CET1, Tier 1, Total capital and TLAC available by risk-weighted assets. The leverage ratio is calculated by dividing Tier 1 capital by an exposure measure. The exposure measure consists of total assets (excluding items deducted from Tier 1 capital) and certain off-balance sheet items converted into credit exposure equivalents. Adjustments are also made to derivatives and secured financing transactions to reflect credit and other risks. The TLAC leverage ratio is calculated by dividing TLAC available by the leverage ratio exposure.
During 2024 and 2023, we complied with all applicable capital, leverage and TLAC requirements, including the domestic stability buffer, imposed by OSFI.
 
    
      As at  
  
(Millions of Canadian dollars, except percentage amounts and as otherwise noted)
  
October 31
2024
    
October 31
2023
  
Capital
(1), (2)
    
CET1 capital
  
$
88,936
 
   $ 86,611  
Tier 1 capital
  
 
97,952
 
     93,904  
Total capital
  
 
110,487
 
     104,952  
Risk-weighted assets (RWA) used in calculation of capital ratios
(1), (2)
    
Credit risk
  
$
548,809
 
   $ 475,842  
Market risk
  
 
33,930
 
     40,498  
Operational risk
  
 
89,543
 
     79,883  
Total RWA
  
$
672,282
 
   $ 596,223  
Capital ratios and Leverage ratio
(1), (2)
    
CET1 ratio
  
 
13.2%
 
     14.5%
Tier 1 capital ratio
  
 
14.6%
 
     15.7%
Total capital ratio
  
 
16.4%
 
     17.6%
Leverage ratio
  
 
4.2%
 
     4.3%
Leverage ratio exposure
  
$
 2,344,228
 
   $  2,179,590  
TLAC available and ratios
(1), (3)
    
TLAC available
  
$
 196,659
 
   $ 184,916  
TLAC ratio
  
 
29.3%
 
     31.0%
TLAC leverage ratio
  
 
8.4%
 
     8.5%
(1)   As prior period restatements are not required by OSFI, there was no impact from the adoption of IFRS 17 on regulatory capital, RWA, capital ratios, leverage ratio, TLAC available and TLAC ratios for periods prior to November 1, 2023.
(2)   Capital, RWA, and capital ratios are calculated using OSFI’s Capital Adequacy Requirements (CAR) guideline and the Leverage ratio is calculated using OSFI’s Leverage Requirements (LR) guideline. Both the CAR guideline and LR guideline are based on the Basel III framework. The results for the year ended October 31, 2023 reflect our adoption of the revised CAR and LR guidelines that came into effect in the second quarter of 2023, as further updated on October 20, 2023 as part of OSFI’s implementation of the Basel III reforms. The results for the year ended October 31, 2024 also reflect our adoption of the revised market risk and CVA frameworks that came into effect on November 1, 2023.
(3)   TLAC available and TLAC ratios are calculated using OSFI’s TLAC guideline. The TLAC standard is applied at the resolution entity level which for us is deemed to be Royal Bank of Canada and its subsidiaries. A resolution entity and its subsidiaries are collectively called a resolution group. The TLAC ratio and TLAC leverage ratio are calculated using the TLAC available as a percentage of total RWA and leverage exposure, respectively.