Q4 2021 National Bank of Canada Earnings Call

December 1, 2021

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Speaker 1: de bien vouloir patienter. La conférence débutera sous peu. Nous vous prions de bien vouloir attendre quelques instants et nous vous remercions de patienter.

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All participants thank you for standing by. The conference is ready to begin. Good afternoon, ladies and gentlemen. Welcome to National Bank of Canada fourth quarter results conference call. I would now like to turn the meeting over to Mrs. Linda Boulanger, Senior Vice President of Investor Relations. Please go ahead, Mrs. Boulanger.

Speaker 3: All participants, thank you for standing by. The conference is ready to begin.

Speaker 3: Good afternoon ladies and gentlemen and welcome to National Bank of Canada's fourth quarter results conference call. I would now like to turn the meeting over to Mrs. Linda Boulanger, Senior Vice President of Investor Relations.

Good afternoon, ladies and gentlemen.

Welcome to National Bank of Canada.

the fourth quarter results conference call. I would now like to turn the meeting over to Mrs. Linda Boulanger, Senior Vice President of Investor Relations. Please go ahead, Mrs. Boulanger.

Thank you, operator, good afternoon, everyone and welcome to our fourth-quarter presentation. Presenting this afternoon Louis Vachon, President and CEO of the Bank, [inaudible], Chief Financial Officer, and Bill Bonello, Chief Risk Officer.

Speaker 4: Thank you, operator. Good afternoon, everyone, and welcome to our fourth quarter presentation.

Speaker 4: Presenting this afternoon are Laurent Ferreira, President and CEO of the bank, Justine Parent, Chief Financial Officer, and Bill Bonnell, Chief Risk Officer.

Presenting this afternoon Arnaud if I forgot president and CEO of the Bank did you say about Huh, Chief Financial Officer, and Bill Bonello, Chief Risk Officer.

Speaker 4: Also joining us for the Q&A session are Stéphane Achard and Lucie Blanchet, co-heads of PNC Banking, Martin Gagnon, head of Wealth Management, Denis Giroir, head of Financial Markets, and Jean Dagenais, senior VP Finance.

Also joining us for the Q&A session are [Lucie Blanchet] co-head of P&C banking [Mustang Daniel] head of wealth management, [inaudible] head of financial markets and [Jean Dagenais,] Senior VP finance.

Speaker 4: Before we begin, I refer you to Slide 2 of our presentation, providing National Bank's caution regarding forward-looking statements. With that, let me now turn the call over to Laura.

Before we begin, I refer you to slide two of our presentation, providing National Bank's caution regarding forward-looking statements with that let me now turn the call over to [inaudible]. And thank you everyone for joining us.

Speaker 5: Merci, Linda, and thank you everyone for joining us.

Yes.

And thank you everyone for joining us.

It is a pleasure for me to be speaking with you on my first earnings call as the bank's CEO. Over the last 23 years, I've had the privilege of working alongside great people at National Bank. I am proud of our culture, our employees, the relationships we've built with our clients and our constant focus on value creation.

Speaker 5: Over the last 23 years, I've had the privilege of working alongside great people at National Bank.

Over the last 23 years I've had the privilege of working alongside great people at National Bank.

I am proud of our culture our employees.

Speaker 5: the relationships we've built with our clients, and our constant focus on value creation.

The relationships, we built with our clients and our constant focus on value creation.

It is with excitement and a great sense of responsibility that I, along with our management team will lead the bank. On a personal note, I wanted to fairly thank my predecessor, Louis who retired after 15 years as our CEO. Louis' leadership will have a lasting impact on all of us, the industry and the broader base business community.

Speaker 5: It is with excitement and a great sense of responsibility that I, along with our management team, will lead the bank.

Okay.

Speaker 5: On a personal note, I want to sincerely thank my predecessor, Louis, who retired after 15 years as our CEO .

On a personal note.

I wanted to fairly thank my predecessor, Louis who.

Retired after 15 years as our CEO.

Speaker 5: Louie's leadership will have a lasting impact on all of us, the industry, and the broader based business community.

Louise leadership will have a lasting impact on all of us the industry and the broader base business community.

Speaker 5: Moving on to our results. This morning, we reported a strong fourth quarter, capping off a great year for the bank.

Moving onto our results. This morning, we reported a strong fourth quarter capping off a great year for the bank. For fiscal 2021 pre-tax pre-provision earnings were up 12% year over year, reflecting superior loan growth strong client asset growth and the resilience of our capital markets franchise.

Speaker 5: fiscal 2021, pre-tax pre-provision earnings were up 12% year over year, reflecting superior loan growth, strong client asset growth, and the resilience of our capital markets franchise. Our performance

For fiscal 2021 pre.

Pre tax pre provision earnings were up 12% year over year, reflecting superior loan growth strong client asset growth and the resilience of our capital markets franchise.

Our performance demonstrates the strength of the bank. Supported by our culture, the strategic positioning of our businesses and our discipline. The bank generated a leading, excuse me, an industry-leading return on equity while maintaining strong capital levels and prudent credit reserves.

Speaker 5: supported by our culture, the strategic positioning of our businesses, and our disabilities.

Supported by our culture, the strategic positioning of our businesses and our discipline.

The bank generated a leading excuse me at an industry, leading return on equity, while maintaining strong capital levels and prudent credit reserves.

Speaker 5: The bank generated an industry-leading return on equity while maintaining strong capital levels and prudent credit reserves.

Our credit quality remains strong and our portfolios have performed very well since the beginning of the pandemic. Regarding capital deployment, our strategy has always been driven by discipline, and that remains unchanged. Our number one priority is to generate strong organic growth while maintaining solid capital levels.

Speaker 5: Our credit quality remains strong and our portfolios have performed very well since the beginning of the pandemic.

Speaker 5: Regarding capital deployment, our strategy has always been driven by discipline and that remains unchanged.

Regarding capital deployment, our strategy has always been driven by discipline and that remains unchanged.

Speaker 5: Our number one priority is to generate strong organic growth while maintaining soil.

Our number one priority is to generate strong organic growth.

While maintaining solid capital levels.

[inaudible] to see strong momentum in our businesses in this regard. Following [Aussies] announcement on November 4th, this morning, we announced a 23% increase to our common share dividend. Our objective was to reset our dividend towards the lower end of our medium-term payout target range of 40% to 50% in line with historical practice. Following this increase, we remain committed to delivering sustainable dividend growth to our shareholders demonstrating our confidence in the earnings power of the bank.

Speaker 5: continue to see strong momentum in our businesses in this regard.

Following <unk> announcement on November 4th.

This morning, we announced a 23% increase to our common share dividend.

Speaker 5: This morning we announced a 23% increase to our common share dividend.

Our objective was to reset our dividend towards the lower end of our medium term payout target range of 40% to 50% in.

Speaker 5: Our objective was to reset our dividend towards the lower end of our medium-term payout target range of 40 to 50 percent, in line with...

In line with historical practice.

Following this increase we remain committed to delivering sustainable dividend growth to our shareholders demonstrating our confidence in the earnings power of the bank.

Speaker 5: Following this increase, we remain committed to delivering sustainable dividend growth to our shareholders, demonstrating our confidence in the earnings power of the bank.

Okay.

Speaker 5: We also announced our intention to launch a normal course issuer bid, providing us with the flexibility to buy back common shares as a program.

We also announced our intention to launch a normal course issuer bid, providing us with the flexibility to buy back common shares as appropriate. As communicated in the past, we view buybacks as a complement to organic growth, not as a substitute. National Bank has a strong record of delivering superior value to its shareholders over time and that will remain a key focus going forward.

Providing us with the flexibility to buy back common shares as appropriate.

Speaker 5: As communicated in the past, we view buybacks as a complement to organic growth, not as a supplement.

As communicated in the past.

We view buybacks as a complement to organic growth.

As a substitute.

Speaker 5: National Bank has a strong record of delivering superior value to its shareholders over time, and that will remain a key focus going forward.

National Bank has a strong record of delivering superior value to its shareholders over time and that will remain a key focus going forward.

Speaker 5: Turning now to the performance of our business segments for fiscal 2021.

Turning now to the performance of our business segments for fiscal 2021. P&C banking had a very good year with PTPP up 10%. Our performance was characterized by strong volume growth on both sides of the balance sheet. We expect the strength in residential mortgages to continue due to factors such as the imbalances in the housing market, labor market recovery, immigration picking up. The low interest rate environment, and strong household balance sheets.

P&C banking had a very good year with PTP be up 10%.

Speaker 5: PNC Banking had a very good year with PTPP up 10%.

Speaker 5: Our performance was characterized by strong volume growth on both sides of the balance sheet.

Our performance was characterized by strong volume growth on both sides of the balance sheet.

Speaker 5: We expect the strength in residential mortgages to continue due to factors such as the imbalance in the housing market, labour market recovery, and...

We expect the strength in residential mortgages to continue due.

Due to factors such as the imbalances in the housing market.

Labor market recovery.

Immigration picking up.

Speaker 5: the low interest rate environment, and strong household balance sheets.

The low interest rate environment, and strong household balance sheets.

Speaker 5: On the commercial banking side, we experienced particularly strong growth in residential insured commercial real estate in 2021.

On the commercial banking side, we experienced particularly strong growth in our residential insured commercial real estate in 2021. Looking forward, we see good momentum with broad-based pickup in several sectors. Wealth management delivered solid results in 2021 with PTPP up 22% from last year.

Speaker 5: Looking forward, we see good momentum with broad-based pickup in several sectors.

Looking forward, we see good momentum with broad based pickup in several sectors.

Wealth management delivered solid results in 2021 with P. T P P up 22% from last year.

Speaker 5: Wealth management delivered solid results in 2021 with PTPP up 22% from last year.

Client assets grew close to 30% and reached a record level of 650 billion, reflecting record net sales across our channels and favorable markets. In fiscal 2021, our wealth management segment represented 24% of the bank's total revenues. And generated superior return on equity.

Speaker 5: Applied assets grew close to 30% and reached a record level of $650 billion, reflecting record net sales across our channels and favorable markets.

Speaker 5: In fiscal 2021, our wealth management segment represented 24% of the bank's total revenues and generated superior return on equity.

In fiscal 2021, our wealth management segment represented 24% of the bank's total revenues.

And generated superior return on equity.

We are pleased with the strategic positioning of our wealth franchise. A key growth lever and a strategic focus for the bank. Financial markets delivered solid results in 2021. Our corporate and investment banking group was well-positioned to take advantage of strong market conditions. And had a record year with revenues up 24%. Global markets did well following an exceptional performance in 2020.

Speaker 5: We are pleased with the strategic positioning of our wealth franchise, a key growth lever, and a strategic focus for the Bank.

Our key growth lever and a strategic focus for the bank.

Financial markets delivered solid results in 2021.

Speaker 5: Our corporate and investment banking group was well-positioned to take advantage of strong market conditions.

Our corporate and investment banking group was well positioned to take advantage of strong market conditions.

Speaker 5: and had a record year with revenues up 24%.

And had a record year with revenues up 24%.

Speaker 5: Global markets did well following an exceptional performance in 2020.

Global markets did well following an exceptional performance in 2020.

Our results this year truly demonstrate the resilience and diversification of our earnings stream. As we enter the new fiscal year, we are seeing strong momentum in our financial markets business. Turning to our international segment, we are very satisfied with our strategy focused on credit G and ABA Bank. Both have consistently delivered strong growth and superior returns. As we look ahead, our international strategy is unchanged. Our focus remains on these two activities. The strategy delivered solid returns in fiscal 2021. Asset growth has been picking up in recent months and we expect double-digit asset growth in 2022.

Speaker 5: Our results this year truly demonstrate the resilience and diversification of our earning stream.

And diversification of our earnings stream.

Speaker 5: As we enter the new fiscal year, we are seeing strong momentum in our financial markets.

As we enter the new fiscal year, we are seeing strong momentum in our financial markets business.

Turning to our international segment, we are very satisfied with our strategy focused on credit G and a b a bank.

Speaker 5: Turning to our international segment, we are very satisfied with our strategy focused on Credigy and ABA Bank.

Speaker 5: Both have consistently delivered strong growth and superior returns.

Both have consistently delivered strong growth and superior returns.

Speaker 5: As we look ahead, our international strategy is unchanged. Our focus remains on these...

As we look ahead, our international strategy is unchanged.

Our focus remains on these two activities.

Speaker 5: Strategy delivered solid returns in fiscal 2021. Asset growth has been picking up in recent months, and we expect double-digit asset growth in 2022.

<unk> delivered solid returns in fiscal 2021.

I said growth has been picking up in recent months and we expect double digit asset growth in 2022.

Revenues are expected to be relatively stable in 2022, given the $26 million gain on the sale of a portfolio in the first quarter. This translates into high single-digit revenue growth for 2022, excluding that gain. ABA Bank had another strong year with revenues up 24%. Loans up 31% and deposits up 34% on a year over year basis. Conditions have greatly improved in Cambodia. Lockdown measures have been lifted and borders have reopened. Looking ahead, we expect double-digit growth for 2022.

Speaker 5: Revenues are expected to be relatively stable in 2022 given the $26 million gain on the sale of a portfolio in the first quarter.

In the first quarter.

Speaker 5: This translates into high single-digit revenue growth for 2022, excluding that gain.

This translate into high single digit revenue growth for 2022, excluding that gain.

Yeah.

A b a bank had another strong year with revenues up 24%.

Speaker 5: ABA Bank had another strong year with revenues up 24%.

Speaker 5: loans up 31% and deposits up 34% on a year-over-year basis. Conditions have greatly improved.

Loans up 31% and deposits up 34% on a year over year basis.

Conditions have greatly improved in Cambodia lock.

Lockdown measures have been lifted lifted and borders have reopened.

Speaker 5: Looking ahead, we expect double-digit growth for 2020.

King ahead, we expect double digit growth for 2022.

Speaker 5: I would like to share a few thoughts on the economy. While the pace of the economic recovery remains dependent on the path of the pandemic and the emergence of new variants, Canada is doing well compared to the rest of the world.

I would like to share a few thoughts on the economy. While the pace of the economic recovery remains dependent on the path of the pandemic and the emergence of new variants, Canada is doing well compared to the rest of the world.

Employment has regained all of the ground lost after only 19 months. The fastest recovery in the last four recessions. Supply chain disruption and inflation are risks under current conditions, but high commodity prices are strengths for the Canadian economy. In addition, household savings are high. Providing a good cushion to absorb a rise in interest rates in 2022. Quebec remains well-positioned given the diversification of its economy and the resilience of its households.

Speaker 5: Employment has regained all of the ground lost after only 19 months, the fastest recovery in the last four recessions.

Speaker 5: Supply chain disruption and inflation are risks under current conditions but high commodity prices are a strength for the Canadian economy.

Supply chain disruption and inflation are risks under current conditions, but high commodity prices our strengths for the Canadian economy.

In addition household savings are high.

Speaker 5: In addition, household savings are high, providing a good cushion to absorb a rise in interest rates in 2022.

Providing a good cushion to absorb a rise in interest rates in 2022.

Quebec remains well positioned given the diversification of its economy and the resilience of its households.

Speaker 5: Quebec remains well positioned given the diversification of its economy and the resilience of its health.

Speaker 5: which will continue to benefit from the fiscal flexibility of the provincial government who has just introduced more stimulus.

Which will continue to benefit from the physical flexibility of the provincial government, who has just introduced more stimulus. The current business environment is positive. We are optimistic but remain prudent in our approach given uncertainties related to the pandemic inflation and labor shortages. Based on what we are seeing today. Our best case is that we will achieve mid-single-digit PTPP growth for fiscal 2022.

The current business environment is positive.

Speaker 5: We are optimistic, but remain prudent in our approach, given uncertainties related to the pandemic, inflation, and labor shortages.

We are optimistic but remain prudent in our approach given uncertainties related to the pandemic inflation.

Labor shortages.

Speaker 5: Based on what we are seeing today, our base case is that we will achieve mid-single digit PTPP growth for fiscal 2022.

Based on what we are seeing today.

Our base case is that we will achieve mid single digit P. TPP growth for fiscal 2022.

To recap, the bank delivered outstanding results in 2021. And we are all positioned. And we are well-positioned heading into 2022. The bank's sustained performance reinforces our plan to continue to build on our strength, our culture, our strategic positioning. Our discipline when it comes to capital risk and cost and our commitment to performance. These have served us well. And we'll continue to be central to our decision making in the future.

Speaker 5: To recap, the bank delivered outstanding results in 2021.

Speaker 5: And we are all positioned heading and we're well positioned heading into 2020.

And we are all positioned.

And we are well positioned heading into 2022.

Speaker 5: The bank's sustained performance reinforces our plan to continue to build on our strength, our culture, our strategic positioning, our discipline when it comes to capital, risk, and cost, and our commitment to performance.

The bank's sustained performance reinforces our plan to continue to build on our strength, our culture, our strategic positioning or.

Our discipline when it comes to capital risk and cost and our commitment to performance.

These have served us well.

Speaker 5: These assert as well and will continue to be central to our decision making in the future.

And we'll continue to be central to our decision making in the future.

Speaker 5: Now let me outline some thoughts on where we plan to put more emphasis as we look ahead. First,

Now, let me outline some thoughts on where we plan to put more emphasis as we look ahead. First, our culture remains critical. We are committed to investing in our people and providing winning conditions for our employees. We want to offer our clients the best service and advice. We will continue to focus on deepening relationships and gaining market share. Both in our core Quebec market and across Canada.

First.

Our culture remains critical.

We are committed to investing in our people and providing winning conditions for our employees.

Speaker 5: We are committed to investing in our people and providing winning conditions for our employees.

We want to offer our clients the best service and advice.

Speaker 5: We want to offer our clients the best service and advice.

Speaker 5: We will continue to focus on deepening relationships and gaining market share, both in our core Quebec market and across Canada.

We will continue to focus on deepening relationships and gaining market share.

Both in our core Quebec market and across Canada.

We are also focused on continuing our transformation. Digital innovation and automation are key to enhancing client experience and gaining operational efficiencies. As we continue to grow all of our segments. We're looking to further leverage our wealth management and commercial banking franchises.

Speaker 5: We are also focused on continuing our transformation.

Speaker 5: Digital innovation and automation are key to enhancing client experience and gaining operational efficiency.

Digital innovation and automation are key to enhancing client experience and gaining operational efficiencies.

Speaker 5: As we continue to grow all our segments, we are looking to further leverage our wealth management and commercial banking franchises. We like our strategic positioning in these businesses.

As we continue to grow all of our segments. We're looking to further leverage our wealth management and commercial banking franchises.

We like our strategic positioning in these businesses. As well as their growth potential. We believe in collaborative models between our businesses and our plan is to do more in the coming years and all of our client segments. Sustainability is also a key part of our strategy across the bank. And we will continue to support our communities and our clients and the transition of a net-zero carbon Canadian economy.

As well as their growth potential.

Speaker 5: We believe in collaborative models between our businesses and our plan is to do more in the coming years in all of our client segments.

We believe in collaborative models between our businesses and our plan is to do more in the coming years and all of our client segments.

Speaker 5: Sustainability is also a key part of our strategy across the bank and we will continue to support our communities and our clients in the transition of a net zero carbon Canadian economy.

Sustainability is also a key part of our strategy across the bank.

And we will continue to support our communities and our clients and the transition of a net zero carbon Canadian economy.

Okay.

Speaker 5: Finally, we will continue to deploy relentless energy towards a diverse and inclusive workplace where people can develop and thrive.

Finally, we will continue to deploy our relentless energy towards a diverse and inclusive workplace, where people can develop and thrive. The bank is in great shape. It is well-positioned to generate solid growth and to deliver superior returns to our shareholders. National Bank team is excited about the future and ready to adapt to the challenges and opportunities ahead. On that, I will now turn it over to [Ghislain].

The bank is in great shape it.

Speaker 5: The bank is in great shape. It is well positioned to generate solid growth and to deliver superior returns to our shareholders.

It is well positioned to generate solid growth and to deliver superior returns to our shareholders.

Speaker 5: The National Bank team is excited about the future and ready to adapt to the challenges and opportunities ahead.

National Bank team is excited about the future and ready to adapt to the challenges and opportunities ahead.

On that I will now turn it over to you Sir.

Speaker 5: On that, I will now turn it over to Gisele.

Speaker 6: Thank you, Laura, and good afternoon, everyone. Turning to page 8.

Thank you and good afternoon, everyone turning to page eight. The bank delivered a very strong performance this year, our pretax pre provision earnings grew by 12%, reflecting strong performance across the bank and positive operating leverage of one 2%. All business segments performed well in 2021, reflecting the resilience and diversification of our business.

Speaker 6: The bank delivered a very strong performance this year. Our pre-tax, pre-provision earnings grew by 12%, reflecting strong performance across the bank and positive operating leverage of 1.2%.

<unk> delivered a very strong performance this year, our pretax pre provision earnings grew by 12%.

<unk>, reflecting strong performance across the bank and positive operating leverage of one 2%.

Speaker 6: All business segments perform well in 2021, reflecting the resilience and diversification of our business.

All business segments performed well in 2021, reflecting the resilience and diversification of our business.

Speaker 6: Expenses were up 9.8% in 2021 due to the strong performance of our teams throughout the bank, which resulted in higher variable compensation.

Expenses were up 9.8% in 2020, one due to the strong performance of our teams throughout the bank, which resulted in higher variable compensations. Excluding variable compensation, expenses were up 4% driven by talent and technology. We expect continued pressure on costs as we enter 2022 in the context of inflation, especially on wages.

Speaker 6: Excluding variable compensation, expenses were up 4% driven by talent and technology.

Excluding variable compensation.

Expenses were up 4% driven by talent and technology.

We expect continued pressure on costs as we enter 2022 in the context of inflation, especially on the wages.

Speaker 6: We expect continued pressure on costs as we enter 2022 in the context of inflation, especially on wages.

Speaker 6: Cost management continues to be a priority at the bank over the

Cost management continues to be a priority at the bank. Over the past five years, we have improved the efficiency ratio by more than 500 basis points. And over the same period, we delivered positive operating leverage every year. The entire management team remains highly committed to transformation and long time disciplined approach to cost management.

Speaker 6: We have improved the efficiency ratio by more than 500 basis points.

Speaker 6: And over the same period, we delivered positive operating leverage every year.

Speaker 6: The entire management team remains highly committed to transformation and a long-time disciplined approach to cost management.

The entire management team remains highly committed to transformation and long time disciplined approach to cost management.

Looking ahead, we are confident that we can achieve positive operating leverage in fiscal 2022. However, operating leverage may be pressured in the first quarter due to the timing of certain expenses and a lower expense level in Q1 of last year.

Speaker 6: Looking ahead, we are confident that we can achieve positive operating leverage in Fiscal 2022.

Speaker 6: However, operating leverage may be pressured in the first quarter due to the timing of certain expenses and a low expense level in Q1 of last year.

However.

<unk> leverage may be pressured in the first quarter due to the timing of certain expenses and a lower expense level in Q1 of last year.

We continue to move forward with our transformation in 2021, as we adapt to the changing needs of our customers and reinforce our culture of change and operational agility. In fiscal 2022, our main focus will be on enhancing client experience, supporting new business initiatives and simplifying our systems and processes.

Speaker 6: We continue to move forward with our transformation in 2021 as we adapt to the changing needs of our customers and reinforce our culture of change and operational agility.

Speaker 6: In fiscal 2022, our main focus will be on enhancing client experience, supporting new business initiatives, and simplifying our systems and processes.

In fiscal 2022, I'll remain focus will be on enhancing client experience supporting new business initiatives and simplifying our systems and processes.

Now turning to capital on page nine. The bank ended fiscal 2021 in a solid position with a strong CET1 ratio of 12.4%, a robust risk-weighted asset growth for the year and industry, leading ROE and significant credits reserves. In the fourth quarter, net income generation at just 46 basis points to our CET1 ratio, reflecting the solid performance of our businesses. As well as our strong credit performance.

Speaker 6: Now turning to page, to Capital on page 9.

To capital on page nine.

Speaker 6: The bank handed fiscal 2021 in a solid position with a strong CT1 ratio of 12.4%, a robust risk-weighted asset growth for the year, an industry-leading ROE, and significant credits results.

The bank ended fiscal 2021 in a solid position with a strong CET one ratio of 12, 4% a robust risk weighted asset growth for the year and industry, leading ROE and significant credits reserves.

Speaker 6: In the fourth quarter, net income generation added 46 basis points to our CT1 ratio, reflecting the solid performance of our businesses as well as our strong credit performance.

In the fourth quarter net income generation at just 46 basis points to our CET, one ratio, reflecting the solid performance of our businesses as well as.

As well as our strong credit performance.

Speaker 6: Excluding the impact of foreign exchange, risk-weighted assets growth amounted to 17 basis points of CT1.

Excluding the impact of foreign exchange, risk-weighted asset growth amounted to 17 basis points of CET 1. As anticipated the acquisition of <unk> to reduce our CET1 by 11 basis points. Now turning to page 10, our total capital ratio stands at 15.9% this quarter, our liquidity ratios remained strong with LCR of 154% and a net stable funding ratio of 117%.

Speaker 6: As anticipated, the acquisition of flinks reduced our CT1 by 11 basis.

As anticipated the acquisition of <unk> to reduce our CET, one by 11 basis points.

Now turning to page 10, our total capital ratio stands at 15, 9% this quarter, our liquidity ratios remained strong with LCR of 154% and net stable funding ratio of 117%.

Speaker 6: Now turning to page 10, our total capital ratio stands at 15.9% this quarter. Our liquidity ratios remain strong with an LCR of 154% and a net stable funding ratio of 170%.

The bank delivered an outstanding performance in 2021. All businesses performed well contributing to a superior return on equity of twin 20.8%. With solid capital levels, our strong credit position and diversified growth levers, the bank enters 2022 from a position of strength. On that, I'm, turning the call over to Bill. Good afternoon, everyone.

Speaker 6: The bank delivered an outstanding performance in 2021. All businesses performed well, contributing to a superior return on equity of 20.8%.

Speaker 6: With solid capital levels, a strong credit position and diversified growth levers, the bank enters 2022 from a position of strength. On that, I'm turning the call over to Bill. Merci, Gisela, and good afternoon, everyone.

With solid capital levels are strong credit position and diversified growth levers. The bank enters 2022 from a position of strength on that I'm, turning the call over to Bill.

Seizures Lam and good afternoon, everyone.

Speaker 6: start on slide 12 with a look back on the credit performance for the full year of 2021.

Starting on slide 12, with a look back on the credit performance for the full year of 2021. We finished the year with a total PCL of just $2 million driven by impaired provisions of 11 basis points and the release of performing provisions of nine basis points. This strong performance reflects three factors. First, the solid footing with which we entered the crisis with strong credit quality, a defensive positioning in our product and sector mix and a resilient geographic footprint.

Speaker 7: We finished the year with total PCLs of just $2 million, driven by impaired provisions of 11 basis points and a release of performing provisions of nine basis points.

Finished the year with total PCL of just $2 million driven by impaired provisions of 11 basis points and to release, the performing provisions of nine basis points.

Speaker 7: This strong performance reflects three factors. First, the solid footing with which we entered the crisis with strong credit quality, a defensive positioning in our product and sector mix, and a resilient geographic footprint.

This strong performance reflects three factors first the <unk>.

Solid footing with which we entered the crisis with strong credit quality, a defensive positioning and our product and sector mix and a resilient geographic footprint.

Second, the strong economic recovery, which has already brought Canadian employment back to pre-pandemic levels amid a supportive monetary and fiscal policy backdrop. And finally, our proactive approach to building and maintaining prudent allowances in the face of significant uncertainty.

Speaker 7: Second, the strong economic recovery, which has already brought Canadian employment back to pre-pandemic levels amid a supportive monetary and fiscal policy backdrop.

Speaker 7: And finally, our proactive approach to building and maintaining prudent allowances in the face of significant uncertainty.

And finally, our proactive approach to building and maintaining prudent allowances in the face of significant uncertainty.

Speaker 7: We were pleased with this performance in fiscal 2021, and while the pandemic continues to generate uncertainty, we believe our risk profile and prudent allowances continue to position us well for the year ahead. Now, looking at the.

We were pleased with this performance in fiscal 2021, and while the pandemic continues to generate uncertainty, we believe our risk profile and prudent allowances continue to position us well for the year ahead. Now looking at the performance in the fourth quarter. The positive trends that began earlier last year continued across the portfolio last quarter.

Now looking at the performance in the fourth quarter.

Speaker 7: The positive trends that began earlier last year continued across the portfolio last quarter. Impaired PCLs declined to $19 million, or four basis points, driven by retail and international provisions remaining at cyclical lows, a decline in corporate banking provisions quarter over quarter, and a second consecutive quarter of net recoveries in commercial banking.

The positive trends that began earlier last year continued across the portfolio last quarter.

Impaired PCLs declined to $19 million or 4 basis points, driven by retail and international provisions remaining at cyclical lows, a decline in corporate banking provisions quarter over quarter. And the second consecutive quarter of net recoveries in commercial banking. Performing loan provisions saw a net release of $58 million or 13 basis points.

Performing loan provisions saw a net release of $58 million or 13 basis points.

Speaker 7: Performing loan provisions saw a net release of $58 million or 13 basis points.

Speaker 7: Updates in portfolio quality and economic scenarios were the main drivers of performing provisions this quarter.

Updates in portfolio quality and economic scenarios were the main drivers are performing provisions this quarter. Both our retail and non-retail portfolios benefited from releases, while good portfolio growth in the international sector generated a performing loan provision of $3 million.

Speaker 7: Both our retail and non-retail portfolios benefited from releases, while good portfolio growth in the international sector generated a performing loan provision of $3 million.

Our retail and non retail portfolios benefited from re leases, while good portfolio growth in the international sector generated a performing loan provision of $3 million.

Now looking ahead to next year. For impaired loan provisions, we should begin to see a return to more normalized levels during the year. In both retail and international portfolios, this normalization is likely to happen over the next year and into 2023. In non-retail portfolios, we also expect some normalization recognizing that impaired provisions or recoveries can be lumpy from quarter to quarter.

Speaker 7: For impaired loan provisions, we should begin to see a return to more normalized levels during the year.

For impaired loan provisions, we should begin to see a return to more normalized levels during the year.

Speaker 7: In both retail and international portfolios, this normalization is likely to happen over the next year and into 2023.

In both retail and international portfolios. This normalization is likely to happen over the next year and into 2023.

And non retail portfolios. We also expect some normalization recognizing that impaired provisions or recoveries can be lumpy from quarter to quarter.

Speaker 7: In non-retail portfolios, we also expect some normalization, recognizing that impaired provisions or recoveries can be lumpy from quarter to quarter.

Speaker 7: Given the positive trends we saw at the end of 2021, in terms of delinquencies, formations, and savings rates, impaired PCLs could remain unusually low in the early part of next year.

Given the positive trends we saw at the end of 2021 in terms of delinquencies formations in savings rates, impaired PCL could remain unusually low in the early part of next year. For the full year of 2022, we are targeting a range in impaired PCL of 15 to 25 basis points and currently expect to be towards the bottom part of that range.

Speaker 7: For the full year of 2022, we are targeting a range in impaired PCLs of 15 to 25 basis points and currently expect to be towards the bottom part of that range.

For the full year of 2022, we are targeting a range in impaired PCL of 15 to 25 basis points and currently expect to be towards the bottom part of that range.

Our performing loan provisions should continue to be driven by changes to macroeconomic scenarios, portfolio growth and migration. Absent a significant deterioration in the macroeconomic outlook, we would expect additional releases from our performing allowances next year.

Speaker 7: Our performing loan provisions should continue to be driven by changes to macroeconomic scenarios, portfolio growth, and migration. Absent a significant deterioration in the macroeconomic outlook, we would expect additional releases from our performing allowances next year.

Absent a significant deterioration in the macroeconomic outlook, we would expect additional releases from our performing allowances next year.

Turning to slide 13. Our total allowances for credit losses declined by $70 million quarter over quarter and remain about 52% above the pre-pandemic level. Performing loan allowances declined by $59 million, taking our cumulative release to 238% up to performing allowances we built during the pandemic.

Speaker 7: Our total allowances for credit losses declined by $70 million quarter over quarter and remain about 52% above the pre-pandemic level.

Our total allowances for credit losses declined by $70 million quarter over quarter and remain about 52% above the pre pandemic level.

Speaker 7: Performing loan allowances declined by $59 million, taking our cumulative release to 38% of the performing allowances we built during the pandemic.

Performing loan allowances declined by $59 million, taking our cumulative release, 238% up to performing allowances, we built during the pandemic.

The remaining $879 million provides strong coverage of impaired PCL. Impaired loan allowances declined by $9 million quarter over quarter and provide good coverage of gross impaired loans. On slide 14, we have provided some key metrics that demonstrate the adequacy of our allowances. We remain very comfortable with the prudent level of our allowances.

Speaker 7: The remaining $879 million provides strong coverage of impaired PCL.

Speaker 7: Impaired loan allowances decline by $9 million quarter over quarter and provide good coverage of gross impaired loans.

Impaired loan allowances declined by $9 million quarter over quarter and provide good coverage of gross impaired loans.

Speaker 7: On slide 14, we have provided some key metrics that demonstrate the adequacy of our allowance.

On slide 14, we have provided some key metrics that demonstrate the adequacy of our allowances.

Speaker 7: we remain very comfortable with the prudent level of our law.

We remain very comfortable with the prudent level of our allowances.

Turning now to slide 15. Our gross impaired loans declined to $662 million or 36 basis points in the quarter. Totaled formations also declined driven by net repayments in the commercial and corporate loan portfolios. Both skills and formations are well below their pre-pandemic levels. So we could expect some normalization next year and into 2023.

Speaker 7: Turning now to slide 15, our gross impaired loans declined to $662 million or 36 basis points in the quarter. Total formations also declined, driven by net repayments in the commercial and corporate loan portfolios.

Our gross impaired loans declined to $662 million or 36 basis points in the quarter totaled formations also declined driven by net repayments in the commercial and corporate loan portfolios.

Speaker 7: Both gills and formations are well below the pre-pandemic levels, so we could expect some normalization next year and into 2023.

Both skills and formations are well below their pre pandemic levels. So we could expect some normalization next year and into 2023.

Speaker 7: On slide 16, the mix in our Canadian RESL portfolio remains stable with 33% being insured and 54% being in the province of Quebec.

On slide 16, the mix in our Canadian [rental] portfolio remained stable with 33% being insured and 54% being in the province of Quebec. In the appendices, you'll find further information on our loan portfolio and market risks. In conclusion, we have been very pleased with the performance of our loan portfolios this year. We recognize that uncertainty remains in the future path of the economy. However, our disciplined approach to risk, our portfolio's defensive positioning and our prudent levels of allowances. We are very confident that we're well-positioned to continue delivering strong performance in the year ahead. On that, I will turn it over to the operator for the Q&A.

Speaker 7: In the appendices, you'll find further information on our loan portfolio and market risk.

In the appendices, you'll find further information on our loan portfolio and market risks.

Speaker 7: In conclusion, we have been very pleased with the performance of our loan portfolios this year. We recognize that uncertainty remains in the future path of the economy. However, our disciplined approach to risk, our portfolio's defensive positioning, and our prudent levels of allowances

In conclusion, we have been very pleased with the performance of our loan portfolios. This year, we recognize that uncertainty remains in the future path of the economy. However, our disciplined approach to risk our portfolio is defensive positioning and our prudent levels of allowances we.

Speaker 7: we are very confident that we're well positioned to continue delivering strong performance in the year ahead. On that, I will turn it over to the operator.

We are very confident that we're well positioned to continue delivering strong performance in the year ahead.

On that I will turn it over to the operator for the Q&A.

Thank you, we'll now take questions from the telephone lines. If you have a question and using a speakerphone, please lift your handset before making your selection. If you have a question, please press star one on your device's keypad. You may cancel your question at any time by pressing star two. Please press star one at this time, if you have a question. Thank you for your patience. The first question is from Doug Young from the [inaudible] capital markets. Please go ahead.

Speaker 3: Thank you. We'll now take questions from the telephone lines. If you have a question and you're using a speakerphone, please lift your handset before making your selection. If you have a question, please press star 1 on your device's keypad. You may cancel your question at any time.

Speaker 3: please press star one at this time if you have a question. There will be a brief pause while the participants register for questions. Thank you for your patience.

Please press star one at this time, if you have a question there won't be a responsible of the participants register for questions. Thank you for your patience.

Yeah.

Speaker 3: The first question is from Doug Young from Desjardins Capital Markets, please go ahead.

The first question is from Doug Young from the short end capital markets. Please go ahead.

Hi, good afternoon. Just on Canadian P&C banking commercial loan balances increasing 18% year over year, 5% quarter over quarter. I guess I have a few questions around this. One, can you dig a little bit more into what drove the growth?

Just on Canadian P&C banking commercial loan balances, increasing 18% year over year, 5% quarter over quarter, I guess I have a few questions around this one can you dig a little bit more into what drove the growth.

Speaker 8: On Canadian PNC banking, I mean, commercial loan balance is increasing 18% year over year 5% quarter over quarter, I guess.

Speaker 8: And then second, as it relates to NIMS, your commercial loan growth clearly outpaced your mortgage loan growth.

And then second, as it relates to NIM, your commercial loan growth clearly outpaced your mortgage loan growth. There was an indication that the NIM compression was mix related and so I'm just trying to get a little bit more information or a little bit more color as to why mix would have had such a big impact on NIM given the commercial growth relative to mortgage. Is there something else that's going on within the book? Thank you.

As it relates to NIM your commercial loan growth clearly outpaced your mortgage loan growth.

Speaker 8: But I think there was an indication that the NIM compression was mixed related. And so I'm just trying to get a little bit more information or a little bit more color as to why mixed would have had such a big impact on NIMS given, you know, the commercial growth relative to mortgages. There's something else that's going on within the book. Thank you.

There was an indication that the NIM compression was mix related and so I'm just trying to get a little bit more information a little bit more color as to why mix would have had such a big impact on nims given.

The commercial growth relative to mortgage is there something else that's going on within the book.

Thank you.

Hi, Doug, it's Stephen. So so you're right. The growth was phenomenal last year at 18% and it was largely driven by the book of insured real estate and that book has almost doubled over the last year. We took the opportunity in the market.

Speaker 9: You're right, the growth was phenomenal last year at 18% and it was largely driven by the

Growth was phenomenal last year at 18% and it was largely driven by the the book of insured real estate and that book has almost doubled over the last year, we took opportunity in the.

Speaker 9: the book of insured real estate, and that book has almost doubled over the last year. We took opportunity in the market and we wanted to grow that book outside of Quebec particularly. And obviously those loans call for much smaller premiums because of their insured nature. They still provide an excellent ray rock and that influenced the loan margins substantially. So that element combined with the...

And we wanted to grow that book outside of Quebec, particularly. And obviously, those loans call for much smaller premiums because of their insured nature. They still provide an excellent ray rock and that influenced the loan margins substantially so that element combined with the deposit mix, if I may say, it actually explains the NIMs for the last year.

With the.

Speaker 9: The deposit mix, if I may say, actually explains the NIMS for last year.

The deposit mix if I.

Let me say actually explains the nims for the last year.

Speaker 8: And maybe just what is your outlook for NIMS as we look at, I mean I know there's a lot of moving pieces in it, but you know if you had a crystal ball and what do you, how do you think NIMS unfold through fiscal 22 for Canadian banks?

And maybe just what is your outlook for Nims as we look at it I mean, I know, there's a lot of moving pieces here, but. If you had a crystal ball what do you how do you think NIMs unfold to fiscal '22 for Canadian banking? For Canadian banking of D. C. You want to maybe I can jump in and so thank you for that question.

If you had a crystal ball what do you how do you think nims in fall to fiscal 'twenty two for Canadian banking.

Speaker 10: For Canadian Banking, Elissie, you want to? Maybe I can jump in. So thank you for the question. Obviously, expected increases in interest rates are positive for the PNC NIMS, but NIMS are also impacted by other factors than interest rates and business mix and market competitiveness being two important ones.

Canadian banking of D. C. You want to maybe I can jump in and so thank you for that question.

Obviously, expected increases in interest rates are positive for P&C NIMs but NIMs are also impacted by other factors that interest rate than the business makes it might get competitiveness being two important ones. So I would stay prudent and say it's early to see clearly where NIMS will go in 2022.

Speaker 10: So I would stay prudent and say that it's early to see clearly where names will go in 2022.

So I would stay prudent and said it's early to see clarity, where nims will go in 2022.

Speaker 10: In 2021, we grew the balance sheet, kept our pricing discipline and risk discipline, and generated net interest income growth of 6% despite a 7-beeps decline in NIMS. So our objective is really to continue to generate organic growth, grow the franchise, and deliver consistent NII growth. So for Q1, though, we expect NIMS to remain stable in a sequential basis.

And in 2021, with a balance sheet kept our pricing discipline and with discipline and generated net interest income growth of 6%. Despite a seven [BP] decline in NIM. Our objective is really to continue to generate organic growth going to franchise and deliver consistent NII growth. So for Q1, though we expect NIM to remain stable on a sequential basis.

Our objective is really to continue to generate organic growth going to franchise and deliver consistent NII growth. So far in Q1, though we expect NIM to remain stable on a sequential basis.

A lot of that Doug is going to be contingent as well on the deposits, so what's going to happen with commercial deposits amongst other things they've been really sticky up to now. But I mean, all our peers at the same consideration and uncertainty. No, that's fair and then maybe I guess just when I look at the dividend.

Speaker 9: A lot of that, Doug, is going to be contingent as well on the deposits, what's going to happen with commercial deposits, amongst other things. They've been really sticky up to now, but I mean, all our peers have the same consideration and uncertainty.

I mean, all our peers at the same consideration and uncertainty.

No that's fair and then.

Speaker 8: No, that's fair. And then, Laura, maybe I could just, when I look at the dividend, and I modeled it when you could have increased it and still remained at the bottom end, I was thinking the dividend increase could have been a little bit higher. So I'm just trying to get a sense, is this the step up, one big step up, or is this kind of a gradual step up, and then every second quarter, you're gonna continue to increase dividends, and you've left yourself some room to further push the dividend up. I'm just trying to get a sense of that.

Maybe I guess, just when I look at the dividend.

And I model that you could have increased it and still remained at the bottom end. I was thinking the dividend increase could have been a little bit higher. So I'm just trying to get a sense is this the step up one big step up or is this kind of a gradual step up and then every second quarter you're going to continue to increase dividends? And you've let yourself some room to further push the dividend up? I'm just trying to get a sense of that.

Thinking the dividend increase could have been a little bit higher so I'm just trying to get a sense is this the step up one big step up or is this kind of a gradual step up and then every second quarter youre going to continue to increase dividends.

And you've let yourself some room to further push the dividend up? I'm just trying to get a sense of that.

Thank you for your question. I mean, we've always positioned it towards the lower end of the range historically. Because that provides us with flexibility. And obviously, the objective that we've always had is to maintain sustainable increases and we do have obviously, confidence in the earnings power of the bank to do that. So yes, that remains the objective on the dividend side.

Speaker 5: Thank you for your question. I mean, we've always positioned it towards the lower end of the range, historically, because that provides us with flexibility.

Thank you for your question I mean, we've always positioned it towards the lower end of the range historically.

Because that provides us with flexibility.

Speaker 5: And look, obviously the objective that we've always had is to maintain sustainable increases and we do have obviously confidence in the earnings power of the bank to do that, but so yeah, that remains the objective on the dividend side.

And obviously the objective that we've always had is to maintain.

Sustainable increases and we do have obviously confidence in the earnings power of the bank to do that but.

So yes that remains the objective on the dividend side.

Yeah.

Speaker 8: And you're still every second quarter is the plan to increase.

And so every second quarter is the plan to increase? That's the plan. Yes. Okay, and then just lastly, maybe on PCLs. So you had 15 to 25 basis point wide range. We're kind of indicating more towards the low end of that. But what would have to happen for you to add 25 basis points of impaired PCL? Yes. Thanks for the question.

Speaker 8: That's, that's the plan. Yes. Oh, okay. And then just lastly, maybe on PCLs, Bill, you know, the 15 to 25 basis point wide range, you're, you're, you're kind of indicating more towards the low end of that. What, what would have to happen for you to hit 25 basis points of impaired PCL?

That's the plan.

Yes.

Okay, and then just lastly, maybe on Pcl's.

So the 15 to 25 basis point wide range here.

We're kind of indicating more towards the low end of that but what would have to happen for you to add 25 basis points of impaired PCL.

Yes.

Speaker 7: Yeah, well, Doug, thanks. Thanks for the question. You know, I think that you've seen us remain prudent through the, through the whole pandemic in terms of our, our guidance. And we try to give you insights based on the facts that we know. So certainly, that our expectation is to be close to the bottom end of that range. The, the

Thanks, Thanks for the question.

I think that you've seen us remain prudent through the through the whole pandemic in terms of our guidance and we tried to give you insights based on the facts that we know. So certainly our expectation is to be close to the bottom end of that range.

Our expectation is to be close to the bottom end of that range.

The.

Uh huh.

Speaker 7: the what would have to happen to be at the top of the range would be a significant deterioration and one that we certainly don't see and that's why we give you guidance on the towards the low end. I think last year you will have seen that from the beginning of the year through the year as we got more visibility on the path of the pandemic we did adjust our our range and and we'll see how it goes this year we'll we'll try to give as much visibility as the as the facts allow.

What would have to happen to be at the top of the range would be a significant deterioration in one that we certainly don't see. And that's why we gave you guidance on the towards the low end. I think last year, you will have seen that from the beginning of the year through the year as we got more visibility on the path of the pandemic, we did adjust our range.

Our range in.

And we'll see how it goes this year, we'll try to give as much visibility as the facts alone. From where we sit now, the portfolio trends, the macro outlook, the level of uncertainty it's really. We feel very confident that the lower end of the range is the target and if there isn't a significant deterioration in the macro outlook. We would expect to see continued releases in the performing allowance.

Speaker 7: You know, from where we sit now, the portfolio trends, the macro outlook, the level of uncertainty, it's really – we feel very confident that the lower end of the range is the target. And if there isn't a significant deterioration in the macro outlook, we would expect to see continued releases in the performing allowance.

From where we sit now the portfolio trends the macro outlook the level of uncertainty it's really.

We feel very confident that the lower end of the range is the target and if there isn't a significant deterioration in the macro outlook. We would expect to see continued releases in the performing allowance.

Great. Thanks. Thank you. The next question is from Nigel D'souza from Veritas Investment Research. Please go ahead.

Thank you.

The next question is from Nigel D'souza from Veritas investment Research. Please go ahead.

Speaker 3: The next question is from Nigel D'Souza from Veritas Investment Research, please go ahead.

Speaker 11: Uh, thank you. Good afternoon. I wanted to follow up on the, uh, line of question on your allowances.

Thank you, good afternoon. I wanted to follow up on the line of question on your allowances and I'm wondering why you haven't been more aggressive in the leasing [inaudible]? The reason I asked that is when I look at your disclosure on 100% weighting to your base case allowances, it's closer to $600 million.

Speaker 11: I'm wondering why you haven't been more aggressive in releasing the current performance allowance. The reason I ask that is when I look at your disclosure on 100% weighting to your base case allowances, it's closer to $600 million. When I look at 100% weighting to the pessimistic, it's closer to $1.3 billion. So your current allowances are somewhere halfway in the middle between your 100% base and $100 million.

I'm wondering why you haven't been more aggressive in the leasing.

Well the reason I asked that is when I look at your disclosure on 100% weighting to your base case allowances, it's closer to $600 million.

When I look at the 100% weighting to the pessimistic, it's closer to 1.3 billion. So your current allowances are somewhere halfway in the middle between your 100% basis, 100% pessimistic, which suggests a fairly higher or substantial weight into the pessimistic scenario. That's one would walk down double-digit unemployment that negative GDP growth. So I'm just trying to get a sense of, do you actually think that's a possible outcome with this material risk probability of that happening? And maybe you can explain why you're still apparently holding those higher reserves and weighting the pessimistic scenario higher.

Speaker 11: Pessimistic, which suggests a fairly higher or substantial weight into the pessimistic scenario. And that's 1 with lockdown and double digital employment and negative GDP growth. So I'm just trying to get a sense of, do you actually think that's a possible outcome where there's material risk probability of that happening? And you can explain why you're still apparently holding those higher reserves and.

Pessimistic, which suggests a fairly higher or substantial weight into the pessimistic scenario. That's one would walk down double digit unemployment that negative GDP growth. So I'm just trying to get a sense of do you actually think that's a possible outcome with this material risk probability of that happening and maybe you can explain why youre still apparently holding goes higher.

weighting the pessimistic scenario higher.

Waiting the pessimistic scenario here.

Speaker 7: Yeah, thanks, Nigel. I think I'll just go back to my comments from last quarter, which were that we haven't been through a pandemic cycle before. And the in this environment, uncertainty remains high. So we want to remain prudent.

Yes. Thanks, Nigel. I think I'll just go back to my comments from last quarter, which were that we haven't been through a pandemic cycle before. And in this environment uncertainty remains high. So we wanted to remain prudent. Okay. Fair enough, so maybe I could switch to another question on how you're thinking about pricing your assets and loans given current interest rate uncertainty. And I ask that because yields bond yields for government bonds. For example, are probably reflecting interest rate hike expectations. And the spread did you see that in the spread between the variable rate and fixed-rate mortgages. So how do you think about pricing your products in this environment where there is considerable interest rate uncertainty? Are you waiting more on the policy rate pathway and visibility or you are looking at what the market yields are telling you?

So we wanted to remain prudent.

Okay Fair.

Speaker 11: Okay, fair enough. So maybe I could switch to another question on how you're thinking about pricing your assets and loans, given current interest rate uncertainty, you know, and ask that because, you know, yields bond yields for government bonds, for example, are probably reflecting interest rate high expectations.

Fair enough, so maybe I could switch to another question on how you're thinking about pricing.

assets and loans given current interest rate uncertainty. And I ask that because yields bond yields for government bonds. For example, are probably reflecting interest rate hike expectations. And the spread did you see that in the spread between the variable rate and fixed-rate mortgages. So how do you think about pricing your products in this environment where there is considerable interest rate uncertainty? Are you waiting more on the policy rate pathway and visibility or you are looking at what the market yields are telling you?

And I ask that because yields bond yields for government bonds. For example are probably reflecting interest rate hike expectations.

Speaker 11: And the spread, you see that in the spread between the variable rate and then the fixed rate for mortgages. So, how do you think about pricing your, your products in this environment where this considerable interest rate uncertainty? Are you waiting more on the policy rate pathway to tabs and visibility? Or are you looking at what the market yields?

And the spread did you see that in the spread between the variable rate and fixed rate mortgages. So how do you think about pricing.

Your products in this environment, where there is considerable interest rate uncertainty are you are you waiting more on the policy rate pathway.

And visibility or you are looking at what the market yields are telling you.

Speaker 5: Nigel, this is Laurent. Could you just be a little bit more specific? Which products are you talking about?

Nigel, could you just be a little bit more specific? Which product are you talking about specifically? I think we could maybe focus on residential mortgages, but if you could touch on the commercial products that'd be helpful too. Yeah, so it's Lucy and obviously since Q2 inbound rates have been most popular at origination given the difference in price and pricing that we see. Here, we follow consumer behavior and consumer appetite on the interest rate volatility.

Nigel This is al could you just be a little bit more specific which product are you talking about specifically.

Speaker 11: I think we could be focused on residential mortgages, but if you could touch on the commercial products, that'd be helpful.

I think we could maybe focus on residential mortgages, but if you could touch on the commercial products that'd be helpful too.

Yeah, So Lucy and obviously since Q2 inbound rates I've been most popular at origination.

Speaker 10: Yes, so it's Lucy. Obviously, since Q2, variable rates have been most popular at Origination, given the difference in pricing that we see. I mean, here we follow consumer behavior and consumer appetite on interest rate volatility. And with what we see right now, it's also a positive on the margin side.

The difference in price and pricing.

We see them.

Here, we follow.

Consumer and.

Here in consumer appetite on the on the interest rate volatility.

And with what we see right now it's also a positive on the margine side. And on the commercial side. I will say, Nigel, that we've got a balanced portfolio so pricing strategy on products is not going to be a function of whether we've got rising interest rates or not but it's actually what may happen as much like Lucy mentioned, as clients moving on for the first time in maybe 10 or 15 years moving onto longer terms than before. [inaudible] for higher spreads, but and we've seen that in the market over the last three or four months as the discussion on potential rate hikes says has emerged. Okay. That's helpful. Thanks for the comments. Thank you.

And on the commercial side.

Speaker 9: I'll say, Nigel, that we've got a balanced portfolio, so pricing strategy on products is not going to be a function of whether we've got rising interest rates or not, but it's actually...

I will say.

Nigel that we've got a balanced portfolio so pricing.

Our strategy on products is not going to be a function of whether we've got rising interest rates or not but it's actually.

Speaker 9: What may happen is, much like Lucy mentioned, is clients moving on for the first time in maybe 10 or 15 years, moving on to longer terms than before, that call for higher spreads. And we've seen that in the market over the last three, four months as the discussion on potential rate hikes has emerged.

What may happen as much like Lucy mentioned as clients moving on for the first time in maybe 10 or 15 years moving onto longer terms than before.

Coffer for higher spreads, but and we've seen that in the market over the last three or four months as the discussion on potential rate hikes says has emerged.

Okay. That's helpful. Thanks for the comments.

Thank you.

The next question is from [Grumman] from Scotiabank. Please go ahead.

Speaker 3: The next question is from Mina Grohmann from Scotiabank, please go ahead.

Hi. Good afternoon, I have a question on the run rate earnings power of the financial markets business. I think we've talked about this before how we should think about those. The run rate earnings power in that business would be higher after the pandemic than pre-pandemic. And I just wanted to get your updated thoughts on that. Especially in the context of thinking about 2022, but beyond as well.

Speaker 12: Hi, good afternoon. I have a question on the run rate earning power of the financial markets.

Speaker 12: I think we've talked about this before, how we should think about the run rate earnings power in that business as being higher after the pandemic than pre-pandemic. And I just wanted to get your updated thoughts on that, especially in the context of thinking about 2022, but beyond this.

I think we've talked about this before how we should think about those.

The run rate earnings power in that business would be higher after the pandemic.

And then pre pandemic and I just wanted to.

Get your updated thoughts on that.

Especially in the context of thinking about 2022, but beyond as well.

Speaker 13: Yes, thanks for the question. As you see, you know,

Yes, thanks for the question. As you see, looking forward as always. We're going to science, but what I can see right now is that for CIB, we saw 2021 was a record year for us. Okay, ripping off the benefits of our past investments. We expect the activity level to remain elevated. Our M&A pipeline is very strong after a softer August and September and then some continue on DSM on the ECL sorry. Global markets, the trading activity level pick up in light of lingering COVID-19 and the economic uncertainty, meaning increased volatility. And we will continue to operate in our risk appetite. And I can tell you in our fourth quarter or was it kind of a tough for us in the sense that the August and September our client activity was quite low compared to the rest of the year, but since mid-October, we saw a huge pick up in activity and it's quite interesting for the coming months.

As you see.

Looking forward as.

Speaker 13: Looking forward is always more an art than a science, but what I can say right now is that for CIB, we saw 2021 was a record year for us, ripping off the benefits of the past investments.

Always.

We're going to science, but what I can see right now is that for.

For CIB, we saw 2021 was a record year for US Okay ripping off the benefits of our past investments, we expect the activity level to remain elevated our M&A pipeline is very strong after a softer August and September and then some continue on DSM on the ECL sorry.

Speaker 13: We expect the activity level to remain elevated. Our M&E pipeline is very strong after a softer August and September , and momentum continues on the ECM. Global markets, you know, the trading activity level...

Global markets trading activity level.

Speaker 13: pickup in light of lingering COVID and economic uncertainty, meaning increased volatility.

Pickup in light of lingering COVID-19 and the economic uncertainty, meaning increased volatility.

Speaker 13: And we will continue to operate in our risk appetite.

And we will continue to operate.

And in our risk appetite and I can tell you in our fourth quarter or was it kind of a tough for us in the sense that the August and September our client activity was quite low compared to the rest of the year, but since mid October we saw a huge pick up in activity and it's quite interesting for the coming months.

Speaker 13: And I can tell you, the fourth quarter was kind of tough for us in the sense that August and September client activity was quite low compared to the rest of the year. But since mid-October, we saw a huge pickup in activity and it's quite interesting for the coming months.

Hopefully, things will remain as they are right now. A lot of volatility a lot of planning to a client presence in the market and we're going to be ready for that. That being said, you know, as demonstrated in the past we tend to be agile. We are pursuing a further diversification of our revenue stream, we invest quite a lot in the business in the last year. That's why you saw expenses going up.

Speaker 13: Hopefully things will remain as they are right now, a lot of utility, a lot of client presence in the market and we're going to be ready for that.

Ready for that that being said you know as demonstrated in the past we tend to be agile. We are pursuing a further diversification of our revenue stream, we invest quite a lot in the business in the last year. That's why you saw expenses going up.

Speaker 13: That being said, as demonstrated in the past, we tend to be agile, we are pursuing further diversification of our revenue stream, we invest quite a lot in the business in the last year, that's why you saw expenses going up, that's not something that we used to, but not least, cost management is a constant focus and we continue to target an industry leading efficiency ratio in the low 40s, and that's what we're aiming for.

That's not something that we used to, but not least cost management is a constant focus and we continue to target an industry-leading efficiency ratio in the low 40, and that's what we're aiming for. I hope it's answering a little bit to your question.

I hope, it's entering at a little bit to your question.

Speaker 12: Yeah and maybe just to follow up, the guidance was given about mid-single digit pre-tax pre-provision earnings growth in 2022. How does financial markets line up? I would imagine that at the lower end of that, but I just wanted to check.

And maybe just a follow-up. The guidance was given about mid-single-digit pretax pre-provision earnings growth in 2022. How do financial markets line up? I would imagine that the lower end of that. And then just wanted to check. Well, it's probably in the middle of that same as the bank. Mid single digits. This is what we're aiming for on a constant basis I would say so. Some years are better than some other years is less but that's what we're aiming for. And just broadening that out into the other business segments, how did that pre-tax pre-provision earnings guidance look for the P&C business and four wells in for the specialty finance business? Looking at above or below.

The guidance was given about mid single digit pretax pre provision earnings growth in 2022.

Financial markets lineup.

I would imagine that the lower end of that.

And then just wanted to check.

Speaker 13: Well, it's probably in the middle of that, same as the bank, you know?

Well yeah.

Normally in the middle of that same as the bank.

Mid single digits. This is what we're aiming for it on a constant basis I would say so.

Speaker 13: Mid-single digit, this is what we're aiming for, on a constant basis, I would say. Some years is better, some other years is less, but that's what we're aiming for.

Some years are better than some other years is less but that's what we're aiming for.

Speaker 12: And just broadening that out into the other business segments, how did that pre-tax pre-provision earnings guidance look for the P&C business and for wealth and for the specialty finance business, above or below?

And just broaden that broadening that out into the other business segments, how how did that pre tax pre provision earnings guidance.

I didn't look for the P&C business and four wells in for the specialty finance business.

Looking at above or below.

Speaker 5: Manny, it's Laurent. I'm not prepared to go into specifics into each and every business, but I think overall the fact that we gave some guidance here means that we're quite positive in all of our businesses for next year. You know, PNC, we still see some good momentum on mortgages.

Many its law.

Hum.

I'm not prepared to go into specifics into each and every business. But I think overall the fact that we gave some guidance here. It means that we're quite positive on all of our businesses for next year. In P&C, we see we still see some good momentum on mortgages. We're seeing a bit of a pickup in cards with a discretionary spend going out. And commercial lending trends that you've seen are still strong. Wealth, you saw our performance this year.

I think overall.

The fact that we we gave some guidance here.

It means that were were quite positive.

All of our businesses for next year.

In P&C, we we see we still see some good momentum on on mortgages.

Speaker 5: You know, we're seeing a bit of a pick-up in cards with discretionary spend going up, and the commercial lending trends that you've seen are still strong. Wealth, you saw our performance this year. That momentum is still there. You know, I think Martin has always indicated in the past that, you know, we target double digit earnings growth. That hasn't changed in our...

We're seeing a bit of a pickup in cards with a discretionary spend.

And the commercial lending.

Trends that you've seen are still are still strong.

Well you saw our performance this year.

That momentum is still there. I think [inaudible] has always indicated in the past that we target double-digit earnings growth. That hasn't changed in our wealth business. You just heard from. <unk> on our financial markets business, and that's where the international we're very well positioned we have in our ABA in an economy that's a high growth economy. We expect double-digit growth in 2022, four ABA. And for credit you, while we have very good visibility on asset growth. So it should be also a good year for [inaudible].

I think my phone is always indicated in the past that.

We target double digit earnings growth.

That hasnt changed and our wealth business.

Speaker 5: You just heard from Denis on our financial markets business. And as for the international, we're very well positioned. We have.

Just heard from.

<unk> on our financial markets business, and Thats, where the international we're very well positioned we have.

Speaker 5: Now, ABA in an economy that's a high-growth economy, we expect double-digit growth in 2022 for ABA. And for Credigy, well, we have very good visibility on asset growth, so it should be also a good year for Credigy.

A b a N a and <unk>.

Economy that that's a that's in a high growth economy.

We expect double digit growth in 2022, four <unk> and.

For credit you, while we have very good visibility on asset growth. So it should be also a good year for <unk>.

Thanks, Brian. we always try and get more. I'm just trying to basically understand which businesses are going to drive that number in which are going to lag, but I understand that the detail. Thank you. The next question is from Paul Holden from CIBC. Please go ahead.

Speaker 12: Thanks for you know, we always try and get more. I'm just trying to basically understand, you know, which businesses are going to drive that number and which are going to lag, but I understand the detail.

Thank you.

Speaker 3: Thank you. The next question is from Paul Holden from CIBC, please go ahead.

The next question is from Paul Holden from CIBC. Please go ahead.

Speaker 11: Thanks. I want to go back to the mortgage conversation. I guess a specific question I want to ask is, did competitive forces at all play a role in the lower NIM this quarter and particularly the impact it's had on new mortgage origination?

Thanks, I wanted to go back to the mortgage conversation. I guess the specific question I want to ask is did competitive forces at all play a role in the lower NIM this quarter? And particularly the impact it's had on new mortgage originations.

I guess the specific question I want to ask is did competitive forces at all play a role in the lower NIM this quarter and particularly the impact it's had on the <unk>.

On new mortgage originations.

Yes, it's Lucie. So we all know that the mortgage business is probably one of the most competitive one. And sometimes navigating in that environment is like you said is half art and half and science. And what do we see, what's important for us is to send a consistent message to our stakeholders on our price positioning and avoid stepping dual messages.

Speaker 10: Yes, it's Lucy. So we all know that the mortgage business is probably one of the most competitive ones. And sometimes navigating in that environment, like Denise said, is half art and half science.

Sometimes navigating in that environment is like you said is that alright and science.

Speaker 10: What's important for us is to send a consistent message to our stakeholders on our price positioning and avoid stop and go messages.

And what do we see.

What's important for us is to send a consistent message to our stakeholders on our price positioning and avoid stepping dual messages.

Speaker 10: So our strategy is not to lead with price, but be more of a smart follower with a competitive positioning for our clients.

Our strategy is not to lead with price, but to be more of a smartphone wearing with a competitive positioning for our clients. So we've seen some fears with superior mortgage growth being more aggressive since last summer. But we always try to remain very disciplined on our approach. And so in the past quarter, we've seen some margin compression due to competitiveness for sure but also in the last two quarters there's been some lag between cost of fund increase and increases in science rate. So there's a bit of that of what we see right now. Understood. That's helpful. Then I just wanted to follow up on an earlier discussion around the growth in business deposits and the impact that's having on NIM.

Speaker 10: So we've seen some fears with superior mortgage growth being more aggressive since last summer, but we always try to remain very disciplined on our approach, as you know. So in the past quarter, we've seen some margin compression due to competitiveness, for sure, but also in the last two quarters, there's been some lag between custom fund increase and increases in client rates, so there's a bit of that of what we see.

Just trying to remain very disciplined on our.

And as you know.

And so in the past quarter, we've seen some margin compression due to competitiveness for sure but also in the last two quarters. There's been some lag between cost of fund increase and increases in <unk>. So there's a bit of that.

What we see right now.

Speaker 14: Understood. That's helpful. And then I also want to follow up on earlier discussion around

Understood.

That's helpful.

Then I just wanted to follow up on earlier discussion around the growth in business deposits and the impact that that's having on NIM. So.

Speaker 14: the growth in business deposits and the impact that that's having on NIMS. So I guess the first question there would be...

I guess the first question there would be what could what factors could reverse the growth and business deposits? Is it simply business customers getting more comfortable with the macro environment? Starting to invest again or maybe if there's other factors at play? And then two, if those deposits to reverse should we simply think about that as positive to NIM, but perhaps a net negative to NII overall?

Speaker 14: what factors could reverse the growth in business deposits? Is it simply business customers getting more comfortable with the macro environment, starting to invest again, or maybe there's other factors at play? And then two, if those deposits do reverse, should we simply think about that as positive to NIM, but perhaps a net negative to NII overall?

Business customers getting more comfortable with the macro environment is starting to invest again or maybe if there's other factors at play and then two if those deposits to reverse should we simply think about that as positive to nam, but perhaps a net negative to NII overall.

So.

Speaker 9: So thanks, Paul. The first element, yeah, the use of these deposits and any potential reduction would likely come firstly from, yeah, positive outlook from Canadian businesses reinvesting. And the second element, obviously, we can't...

Thanks, Bob. The first element yes. Use of these deposits in any potential reduction would likely come firstly from a positive outlook from Canadian businesses reinvesting. And the second element, obviously, we can't, we need to highlight as well as supply chain issues. So a lot of Canadian businesses are not investing in their working capital the way they should be at the level because there is not availability as it should be. And we're seeing that as well on the drawings and the up in the operating lines of credit. It is starting to creep up over the last two or three months, but it remains very low relative to normal pre-pandemic levels. So I think the deposits and drawings on the HELOC will go hand in hand, while one will go down the other one will go up. That's the first element. And with regard to the impact on the NIM, it's been largely liquidity premiums on deposits that affected the NIMs in the last year. So overall NIM for P&C could be affected although we have an outlook of stable by the asset mix overall as these deposits moved down.

First element yes.

Use of these deposits in any potential reduction would likely come firstly from positive outlook from Canadian businesses reinvesting.

And in.

And the second element, obviously, we can't.

Speaker 9: We need to highlight as well the supply chain issues. So a lot of Canadian businesses are not investing in their working capital the way they should be at the level because there's not availability as it should be. And we're seeing that as well on the drawings in the operating lines of credit. It's starting to creep up over the last two or three months, but it remains very low relative to normal.

We need to highlight as well as supply chain issues. So a lot of Canadian businesses.

Are not investing in their working capital the way they should be at the level because he is not availability as it should be and we're seeing that as well on the drawings and the up in the operating lines of credit is starting to creep up over the last two or three months, but it remains very low relative to normal pre pandemic levels. So I think the <unk>.

Speaker 9: pre-pandemic levels. So I think the deposits and drawings on the HELOCs will go hand in hand while one will go down, the other one will go up. That's the first.

<unk> and drawings on the HELOC will go hand in hand, while one will go down the other one will go up.

That's the first element.

Speaker 9: And with regard to the impact on the NIM, it's been largely liquidity premiums on deposits that affected the NIM.

And with regard to the impact on the NIM, it's been largely liquidity premiums on deposits that affected the NIMs in the last year. So overall NIM for P&C could be affected although we have an outlook of stable by the asset mix overall as these deposits moved down.

Speaker 9: in the last year. Overall, NEM for P&C could be affected, although we have an outlook of stable by the asset mix overall as these deposits move down.

Speaker 14: Great, that's helpful. Thank you. And final question for me is with respect to inflation, again, something that's already come up in this call, but just curious, is there a risk at all to your PTPP guidance and expectation around operating leverage if wage inflation accelerates more than any of us would expect? Or

Great. That's helpful. Thank you. And final question for me is with respect to inflation. I got something that's already come upon this call, but just curious is there a risk at all to your PTPP guidance and expectation around operating leverages, wage inflation accelerates more than any of us would expect? Or are there offsets in the expense base that you could use to offset that type of scenario? Overall, we view a little bit of inflation, and obviously, increases in interest rates fairly good for our business this year. No, I think what's important is the mindset that you have around the table here in terms of discipline on cost at all times and also a mindset that constantly delivers positive operating leverage year over year. So you could see from time to time, timing issues, which could be the case at the beginning of the year. I mean we're fairly confident at this point in time I would say in terms of inflation, anticipation, and our business growth. And obviously, we're very focused on building our businesses in on that as I mentioned before, we feel pretty confident in our outlook is positive in terms of revenue growth. I'll leave it there, thank you. Thank you. The next question is from Scott Chan from Canaccord Genuity. Please go ahead.

Curious is there a risk at all to your PTP P.

Our guidance and expectation around operating leverage, yes wage inflation accelerates more than any of us would expect or are there offsets in the expense base that you could use to offset that type of scenario.

Speaker 14: Are there offsets in the expense base that you could use to offset that type of scenario?

Yeah.

This is law.

Speaker 5: Overall, we view a little bit of inflation and obviously increases in interest rates are fairly good for our business this year. I think what's important is the mindset that you have around the table here in terms of discipline on cost at all times.

Overall, we view a little bit of inflation, and obviously, increases in interest rates fairly good for our business this year. No, I think what's important is the mindset that you have around the table here in terms of discipline on cost at all times and also a mindset that constantly delivers positive operating leverage year over year. So you could see from time to time, timing issues, which could be the case at the beginning of the year.

A little bit of inflation, and obviously any increases in interest rates.

Fairly good for our business this year.

No I think I think what's important is the mindset.

You have around the table here in terms of discipline on cost at all times.

Speaker 5: Also a mindset that constantly delivers positive operating leverage year over year. So you could see from time to time timing issues, which could be the case at the beginning of the year.

Also a mindset.

Constantly.

<unk> delivers positive operating leverage year over year.

So you could see from time to time.

Timing issues, which could be the case at the beginning of the year.

Speaker 5: But, I mean, we're fairly confident at this point in time, I would say, in terms of, you know, inflation anticipation and our business growth. And, you know, obviously, we're very focused on building our businesses. And on that, as I mentioned before, we feel pretty confident.

I mean we're fairly confident at this point in time I would say in terms of inflation, anticipation, and our business growth. And obviously, we're very focused on building our businesses in on that as I mentioned before, we feel pretty confident in our outlook is positive in terms of revenue growth. I'll leave it there, thank you. Thank you. The next question is from Scott Chan from Canaccord Genuity. Please go ahead.

Our business growth and obviously, we're very focused on building our businesses in on that as I mentioned before where we feel pretty confident in.

Speaker 5: uh... our outlook is positive in terms of uh... revenue growth

Our outlook is positive in terms of.

Our revenue growth.

I'll leave it there thank you.

Okay.

Thank you. The next question is from Scott Chan from Canaccord Genuity. Please go ahead.

Speaker 3: you. The next question is from Scott Chan from Canaccord Genuity. Please go ahead.

Thank you, good afternoon. Well, wealth management is now a larger portion. I think you said it's 24% of earnings. And it's just digging down a little bit on the revenue side. When I look at fee-based revenue, which is a large portion of the revenues. Is it fair to say a lot, most of that line item is based on assets or asset growth or market? Hi, it's Martin here. Thanks for the question. You're right that fee-based is an important source of revenue. I always say that looking at AUA and AUM is the key driving indicator for this. And the balanced portfolio was up about 17% and you see how much we grew AUA and AUM. So that gives you a very good indication of how we performed and how we have gained market share in many of our businesses in 2021. And we're really happy about that performance.

Speaker 15: Thank you. Good afternoon. So wealth management is now, you know, a larger portion. I think you said it's 24% of earnings and just digging down a little bit on the revenue side. When I look at fee based revenue, which is a large portion of the revenues, is it fair to say a lot, most of that line item?

Wealth management is now.

A larger portion I think you said the 24%.

Earnings and then just digging down a little bit on the revenue side when I look at sea based revenue, which is a large portion of the revenues is it fair to say a lot.

Hi.

Speaker 15: on assets, traffic, growth, or market.

On assets.

Hello, all market.

Speaker 7: Hi, it's Martin here. Thanks for the question. You're right that fee base is an important source of revenue. I always say that looking at AUA and AUM is the key driving indicator for this.

Hi, its mark here thanks for the question.

Youre right that our fee base.

An important source of revenue I always say that looking at.

And <unk>.

Is the key driving indicator for dish.

Speaker 7: and you know the balance portfolio was up about 17% and you see how much we grew AUA and AUM so that gives you a very good indication of how we've performed and how we have gained market share in many of our businesses in 2021 and we're really happy about that performance.

The balanced portfolio was up about 17% and you see how much we grew.

And so that gives you a very good indication of how we perform and how we have.

Gain market share in many of our businesses in 2021 and.

really happy about that performance.

And just a follow-up. So your fee base is up 21% year over year. And your AUA and AUM was up 28% and 34%. And you said a record net sales, I mean I kind of see that chart that you showed. Can you kind of describe what you're [inaudible], but why you've been outperforming other financial institutions in terms of Wealth Management and Asset Management? I think you call that distribution, but if you think about anything else that'd be helpful. Thanks. I think there's a long explanation to this but the industry focuses a lot on AUM. Where it is, we have a very large AUA business. And for us, the AUA is key. And there's a lot of differences in basis points you can capture. As there are different types of AUM and different types of AUA, but it's a mix of all of this that explains the variation. But overall, we're gaining market share. NBF is doing exceptionally well growing their AUA. It's been a really, really good year. NBIN keeps producing amazing numbers. So those two businesses are the main drivers of our AUA. And on the AUM front, yes, record net sales. We distinguish ourselves if you look at many different numbers like investor economics, or so on and we're doing really well there too. Okay. Thank you very much.

Speaker 15: And just to follow up, so your P base is up 21% year over year annual and your was up 28 and 34% and you set a record that sales and we can kind of see that that chart that you showed what can you can you kind of just.

Well.

It was up 28 and 34%.

And you said a record net sales and I'm glad to see that.

That chart that you showed.

Can you can you kind of describe that.

What you're seeking.

Speaker 16: you can toss, but why you've been outperforming other.

But why why you've been outperforming.

No other other financial institutions in terms of our wealth management and asset management I think you called out distribution, but if you think about anything else that'd be helpful. Thanks.

Speaker 15: in terms of wealth management and asset management. I think you call that distribution, but if you've got anything else, that'd be helpful.

I think there's a long explanation to this but the industry focuses a lot on AUM. Where it is, we have a very large AUA business. And for us, the AUA is key. And there's a lot of differences in basis points you can capture. As there are different types of AUM and different types of AUA, but it's a mix of all of this that explains the variation. But overall, we're gaining market share. NBF is doing exceptionally well growing their AUA. It's been a really, really good year. NBIN keeps producing amazing numbers. So those two businesses are the main drivers of our AUA. And on the AUM front, yes, record net sales. We distinguish ourselves if you look at many different numbers like investor economics, or so on and we're doing really well there too. Okay. Thank you very much.

Speaker 17: I think there's a long explanation to this, but the industry focuses a lot on AUM, whereas we have a very large AUA business.

The industry focuses a lot on AUM.

Where he is we have a very large <unk> business.

Speaker 17: And for us, the AUA is key. And, you know, there's a lot of differences in basis points you can capture as there are different types of AUM and different types of AUA, but it's a mix of all of this that explains.

And for US the EUA is key and.

There's a lot of differences in basis points you can capture.

There are different types of AUM in different types of a UA, but its a mix of all of this that explains.

Speaker 17: uh you know the variation but but overall we're gaining market share nbf is doing exceptionally well

The variation, but overall, we're gaining market share <unk> is doing exceptionally well.

Speaker 17: growing their AUA. It's been a really, really good year.

Growing <unk>, it's been a really really good year.

Speaker 17: NBIN keeps producing amazing numbers, so those two businesses are the main drivers of our AUA. And on the AUM front, record net sales, we've

NPI and keeps our keeps producing amazing numbers. So those two businesses are the main drivers of our <unk> and on the AUM front.

Record net sales we've.

Speaker 17: distinguish ourselves if you look at many different numbers.

Distinguish ourselves if you look at many different numbers.

Speaker 17: uh... like investor economics or so on and uh... we're doing really well there too

<unk> Investor economics, or so on and we're doing really well there too.

Okay. Thank you very much.

Speaker 18: Thank you. The next question is from Gabrielle Deschain from National Bank Financial. Please go ahead. Good afternoon. Just want to go back to that PTPP guidance. I don't want to go into too much detail on segmented views, but just maybe more of a seasonal view similar to the comments about operating leverage maybe being a bit softer in Q1.

Thank you. The next question is from Gabriel Dechaine from National Bank Financial. Please go ahead. Good afternoon, just wanted to go back to that PTPP guidance. I don't want to go into too much detail on segmented views, but just maybe more of a seasonal view similar to the comments Ghislain made about the operating leverage, maybe being a bit softer in Q1. Due to the timing of expenses that are going to be reflected in maybe a ramp-up of PTPP growth over the course of the year or what?

Good afternoon, just wanted to go back to the <unk> guidance.

I don't want to go into too much detail on segment that views, but just maybe more of a seasonal view similar to the comments I made about the operating leverage maybe being a bit softer in Q1.

Speaker 18: Due to the timing of expenses, is that going to be reflected in maybe a ramp-up of PPP growth over the course of the year?

Due to the timing of expenses.

To be reflected in maybe a ramp up of <unk> growth over the course of the year or.

<unk>.

Speaker 6: So what I mentioned is you're probably remembered at the Q1 21.

Hi, Gabriel. This is Ghislain. So what I mentioned as you probably remember that in Q1 '21, that was, I think, in terms of expenses, our lowest quarter of the year. And we had probably one of the best quarters in terms of revenue of the year. So, especially because of the gain of Credigy. So of course, we should not expect the same kind of PTPP in Q1 this year. But if you look at 20, but the rest of the year should be better than Q1. But Q1 would be a challenge, I would say, even though I mean. Sorry, go ahead. It's okay. I was just saying that your comments on operating leverage applicable about PTPP as well. Then a question about the Flinks actually. What does this enable for the bank strategically? Or as we are heading down in the future anyway to an open banking system in Canada. What advantages of being bank-owned does that business have? Generally, what does it provide you in that sort of environment we are heading to? And then what are the advantages of, if any, of being owned by a bank?

Speaker 6: That was, I think in terms of expenses, our lowest quarter of the year, and we had probably one of the best quarter in terms of revenue of the year.

That was it.

Think in terms of expenses, our lowest quarter of the year.

We add probably one of the best quarter in terms of revenue of the year, so, especially because of the gain of crazy So of course.

Speaker 6: so especially because of the gain of CREGI. So of course, we should not expect the same kind of PTPP in Q1 this year, but if you look at 20, but the rest of the year should be better than Q1. But Q1 would be a challenge, I would say. Right.

We should not expect the same kind of PT pp in Q1 this year, but.

But if you look at 'twenty.

But the rest of the year should be better than Q1, but Q1 would be a challenge I would say, even though I mean.

Sorry go ahead.

Speaker 18: No, it's OK. It's OK. I was just saying your comments on operating leverage.

Okay. Okay.

I was just saying that your comments on operating leverage.

With <unk> as well.

Speaker 18: Then, a question about the flanks, actually.

Then a question about the links actually.

You know what.

Speaker 18: What does this enable for the bank strategically?

This.

In April for the bank strategically.

Speaker 18: we are heading down in the future anyway to an open banking system in Canada.

We are heading down in the future anyway.

And open banking.

System in Canada.

What.

What advantages.

Okay.

Banco and does that.

That business.

Speaker 18: I'll generally what does it provide you in that sort of in the

Generally what does it provide you in that sort of in sort of environment. We are heading to and then what are the advantages of if any of being owned by a bank.

Speaker 18: environment we're heading to and what are the advantages, if any, of being owned by

Speaker 5: So Gabriel, I'll start, maybe it's a bit early also, but I'll go back to, and I think I answered that question in the last call. For us, it's a positioning in the fintech market, it's more of a fintech play. Flinks is a data aggregator that provides services to over 250 fintechs in the Canadian market and the U.S. market.

Gabriel, I'll start. Maybe it's a bit early also but I'll go back to, and I think I answered that question in the last call. For us, it's our positioning in the fintech market, it's more of a fintech play. Flinks is a data aggregator that provides services to over 250 fintechs in the Canadian market and the U.S. market. We were early investors in Flinks in 2016 or '17 and we gradually increased our position. So for us, it's, look, we're looking at the fragmentation of financial services, the growth that they've had during that period of time. So we obviously think that there's more potential going forward given that, that fragmentation has really increased in the U.S. and could potentially increase more. So it's more right now an option that we have. Maybe I can add to that, Laurent. So Gabriel, for sure, the open banking discussion, it's at its infancy in Canada but it is happening out there. It is there. So Flinks being the main data aggregator in Canada, is also very well connected with the fintech, the current fintech ecosystem that is out there. So certainly, the Flinks acquisition gives us opportunities and also options from an IT perspective. I mean it's, I don't want to overblow it or anything, but I did get a few investors asking about that today, so. All right, thanks.

Ill start.

Maybe it's a bit early also but I'll go back to.

And I think I answered that question in the last call.

For us it's.

Our positioning.

In the Fintech market, it's more of a fintech play.

<unk> is a data aggregator that provides services to over 250 fintech in the Canadian market and the U S market.

Speaker 5: We were early investors in slinks in 2016 or 17, and we gradually increased our position. So for us, it's, look, we're looking at the fragmentation of the financial services, the growth that they've had during that period of time.

We were early investors in <unk> 2016, or 17, and we gradually increased our position. So for US. It's look we're looking at the fragmentation of the financial services.

The growth that <unk> had during that period of time.

Speaker 5: So, we obviously think that there's more potential going forward, given that fragmentation has really increased in the U.S. and could potentially increase more. So, it's more right now an option that we have.

So we obviously think that there's more potential going forward given that.

That fragmentation has really increased in the U S and could potentially increase more.

So it's more right now.

And auction.

That we have.

Speaker 10: Maybe I can add to that, Laurent. So, Gabrielle, for sure the open banking discussion is at its infancy in Canada, but it is happening out there. It is there. So, Flink being the main data aggregator in Canada is also very well connected with the current FinTech ecosystem that is out there. So, certainly the Flink acquisition gives us opportunities and also options from an IT perspective.

Maybe I can add to that.

And so yes.

First are the open banking discussion it's Andy.

At its infancy in kind of that but it is happening out there it is there.

So.

<unk> being the main data aggregator in Canada is also very well connected with the Fintech detour and Fintech ecosystem that is out there so.

Certainly the things like this and it gives us the opportunity and also option from the 19 perspective.

Overblow, it or anything, but I did get a few investors asking about that.

Speaker 18: blow it or anything, but I did get a few investors asking about that today.

Alright. Thanks.

Yeah.

Thank you.

Speaker 3: The next question is from Lamar Persaud from Cormac Securities. Please go ahead.

Thank you. The next question is from Lemar Persaud from Cormark Securities. Please go ahead. Thanks. I just got a point of clarification for Laurent. Laurent, I think I heard you mention that you're expecting double-digit growth at ABA. Just to be clear there, are you referring to earnings growth or something else like loan growth? Well, this is Ghislain here. I can answer that. So just before we go there, so we have very positive things to say about ABA, especially the country, with the pandemic. So as Laurent mentioned, at the beginning, there's no lockdowns anymore, borders have reopened. And there's no more quarantine for fully vaccinated travelers, so which is very good news, especially for the tourism sector. And another good point also is manufacturing, retail, construction sectors are almost back to where they were before the pandemic, so which is once again a very good thing. And Cambodia recently signed a free trade agreement with Asian countries, including China. So we think that it could be positive for Cambodia, for the Cambodian economy in the coming years. So to go to your question, we see very good momentum for ABA in the coming years and especially for 2022. And we expect another year of double growth, double-digit growth in terms of loans, deposits, revenues and also net income.

Speaker 14: Thanks. I just have a point of clarification for Laurent. Laurent, I think I heard you mention that you're expecting double digit growth at ABA. Just to be clear there, are you referring to earnings growth or something else like loan growth?

Thanks, guys a point of clarification for law I think I heard you mentioned.

Expect a double digit growth at AEP does this just to be clear there are you referring to earnings growth or something else like loan growth.

Okay.

Well, this is Ghislain here. I can answer that. So just before we go there, so we have very positive things to say about ABA, especially the country, with the pandemic. So as Laurent mentioned, at the beginning, there's no lockdowns anymore, borders have reopened. And there's no more quarantine for fully vaccinated travelers, so which is a very good news, especially for the tourism sector. And another good point also is manufacturing, retail, construction sectors are almost back to where they were before the pandemic, so which is once again a very good thing. And Cambodia recently signed a free trade agreement with Asian countries, including China. So we think that it could be positive for Cambodia -- for the Cambodian economy in the coming years. So to go to your question, we see very good momentum for ABA in the coming years and especially for 2022. And we expect another year of double growth -- double-digit growth in terms of loans, deposits, revenues and also net income.

Speaker 6: Well, this is just laying here. I can't answer that.

Well. This is just lay here I can answer that.

Speaker 6: So, just before to go there, you know, so we have very positive things to say about ABA, especially the country.

So just before to go with there.

You know.

So we are very positive.

Things to say about <unk>, especially to country.

Speaker 6: you know, with the pandemic. So as Laura mentioned, you know, at the beginning, there's no lockdowns anymore, borders have reopened, and there's no more quarantine for fully vaccinated travelers, so which is a very good news, especially for the tourism sector.

We're dependent they make Suez.

And you know at the beginning there so no lockdowns anymore borders reopen and Theres no more quarantine for a fully vaccinated travelers, so which is a very good news efficient, especially Florida the tourism sector.

Speaker 6: And another good point also is manufacturing, retail, construction sectors are almost back to where they were before the pandemic.

And another good point also is manufacturing retail and construction sectors.

We're almost back to where they were before the pandemic.

Speaker 6: So, which is once again a very good thing and Cambodia recently signed a free trade agreement with Asian countries, including China, so we think that it could be positive for Cambodia, for the Cambodian economy in the coming years.

So which is once again, a very good thing in Cambodia recently sign a free trade agreement with Asian countries, including China. So we think that it could be positive for Cambodia, Florida, Cambodian economy in the coming years.

Speaker 6: So, to go to your question,

So two to go to your question.

Speaker 6: We see very good momentum for ABA in the coming years and especially for 2022 and we expect another year of double digit growth in terms of loans, deposit, revenues and also net income.

We see very good momentum for EBITDA.

In years, and especially for 2022.

And we expect another year of double growth double digit growth in terms of loans deposits revenues and also net income.

Okay, that answers that. And then, one thing that really stands out, just sticking with ABA is the significant decline in the efficiency ratio. So one from the low 40s to the mid-30s in 2021. So could you talk a bit about what drove that improvement? And how is it expected to trend over time? Then, I guess maybe some comments on the earnings power, guys. Looking out not just 2022 but even beyond that. I guess what I'm going at is, if you look at the start of 2020, earnings are in the $40 million to $50 million range a quarter. Mix ratio is in the low 40s. We go through COVID, the efficiency ratio drop to a low 30s, then earnings have gone up to the 70s. So I'm just thinking about what's the outlook for ABA specifically?

Speaker 19: Okay. Okay. That answers that. And then, you know, one thing that really stands out, just sticking with ADA, is the significant decline in the efficiency ratio. So, I'm from the low 40s to the mid 30s in 2021. So, could you talk...

The significant decline in the efficiency ratio, so I'm from the low <unk> to the mid <unk> in 2021.

So could you talk a bit about.

What drove that improvement.

Speaker 19: What drove that improvement and how is it expected to trend over time? Then I guess, maybe some comments on the earnings power. Guys looking out, not just 2022, but even beyond that, I guess what I'm going at is.

How is it expected that trend over time, and then I guess, maybe some comments on the earnings power.

Looking out not just 2022, but even beyond that I guess, where I'm going at it.

Speaker 19: look at the start of 2020, earnings are in the $40 to $50 million range a quarter. Mixed ratio is in the low $40s. We go through COVID, the efficiency ratio drops to the low $30s and earnings have gone up to the $70s. So, I'm just thinking about what's the outlook for ABA.

At the start of 2020 earnings are in the $40 million to $50 million range a quarter Nix ratio was in the low 40 as we go through Covid. The efficiency ratio dropped below 30, then earnings have gone up to Stephanie So.

I'm, just thinking about whats the outlook for AG specifically.

Yes. So once again, it's Ghislain. So the first part of your question is related to the pandemic and the fact that activities have slowed down over the last 18 months. So there were few investments. So this is basically why they have this. Well, and also, they worked on their expenses during the pandemic. So, this is why you saw a decrease or an increase or an improvement in terms of efficiency ratio. But this would go back probably in the 40% range in 2022 and the coming years, because they will resume their investment, especially in their retail network. So this is for the first part. The second part, we always said in the past, you know that over time, what we're seeing for ABA is around 20%, 20% plus growth every year. So we think that it's feasible. Knowing that the country is still on the Bank. There is a favorable demographic there, 65% of the population is under or is below 35 years old. So, we think, and the country is very well positioned in Southeast Eastern Asia. So we think that it's feasible. And I think that the 20% that we gave before still holds for the future at this point in time. Great, thanks. That's it for me.

Speaker 6: Yeah, so once again, it's just nice. So the first part of your question.

Speaker 6: It's related to the pandemic and the fact that you know, activities have slowed down over the last 18 months. So there was

Activities have slowed down over the last 18 months. So there was.

There was.

Speaker 6: There was, you know, few investments. So this is basically why they have this. Well, and also they worked on their expenses during the pandemic. So this is why you saw a decrease or an increase or an improvement.

Few investments. So this is basically why.

And also they worked on their expenses during the pandemic. So this is why you saw a decrease or an increase or an improvement in terms of efficiency ratio, but this would go back probably in the 40% range.

Speaker 6: in terms of efficiency ratio. But this would go back probably in the 40% range in 2022 in the coming years because they will resume their investment, especially in their retail network.

In 2022 in the coming years, because they will they will resume.

They are investments, especially in their retail network. So this is for the first part.

Speaker 6: So this is for the first part. The second part, we always said in the past, you know, that,

The second part we are we always said in the past you know that.

Speaker 6: Over time, what we're seeing for EBA is 20, around 20%, 20% plus.

Overtime, what we're seeing for EMEA is 20 around 20%, 20% plus growth every year. So we think that is feasible.

<unk> that the country is still under bank, there's a favorable devote our fixed their 65% of the population is under <unk> below 35 years old.

So we've taken the country's very well position in South East Asia. So, we think that it's feasible and and.

<unk>.

I think that the 20% that we gave before still holds for for the future at this point of time.

Speaker 6: I think that the 20% that we gave before still holds for the future at this point of time.

Great. Thanks, that's it for me.

Thank you. The next question is from Darko Mihelic from RBC Capital Markets. Please go ahead. Hi, thank you. Good afternoon. I think I'm going to start with a philosophical question for Laurent. Now at your first quarter as a CEO, I would have never expected a big change and anything. So this really is aimed at the moratorium on emerging markets. What I'm just curious about is do you just generally, do you generally like that business? Do you have a team of people scouring emerging markets for opportunities? Do you ever see a point in time where you would reverse course and remove that moratorium? Just want to understand sort of your mindset when it comes to the emerging markets business and capital deployment there.

Speaker 3: Thank you. The next question is from Darko mehalallck from RBC Capital Markets. Please go ahead.

Hi, Thank you good afternoon.

Speaker 13: Hi, thank you. Good afternoon. I think I'm going to start with a philosophical question for Laurent. The first quarter as a CEO , I would have never expected a big change in anything. So this really is aimed at the moratorium on emerging markets. What I'm just curious about is

I think I'm going to start with a philosophical question for Iran.

Like the first quarter as CEO I would have never expected a big change in anything so.

This release is aimed at the moratorium on emerging markets I'm.

Im just curious about is.

Speaker 20: You know, do you just generally, do you generally like that business? You know, do you have a team of people scouring emerging markets for opportunities? Do you ever see a point in time where you would reverse course and remove that moratorium? I just want to understand sort of your mindset when it comes to the emerging markets business and capital deployment.

No.

Do you just generally do you generally like that business.

Do you have a team of people scouring emerging markets for opportunities.

Do you ever see.

A point in time, where you would reverse course.

And remove that moratorium I just want to understand sort of your mindset.

When it comes to the emerging markets business and capital deployment there.

Okay.

Speaker 5: Thank you for your question Darko. I mean, I think I was pretty clear in my my script We have we have a team that manages obviously our our investment, but it is currently not a priority to to

Thank you for your question, Darko. I mean I think I was pretty clear in my script. We have a team that manages obviously, our investments. But it is currently not a priority to invest outside of our current investments. So we're very happy with, as I mentioned, our ABA franchise. Obviously, Credigy as well. And the focus is really on ABA outside of Credigy to really keep growing our bank in Cambodia, solidify our position there. But in the near future, there's definitely from, on my side and the management team, there's no intention on investing abroad at this point in time. Okay. But I'm going to press you a little bit on it. And the question is, why? So I understand that right now, you may not want to do it but you've got a team, scouring. There could be a great opportunity. I just want to, just trying to understand the mindset.

I was pretty clear in my.

My script.

We have we have a team that manages obviously are our investments, but it is currently not a priority too.

To invest outside of our current investments so we're very happy with.

Speaker 5: outside of our current investments. So we're very happy with

Speaker 5: As I mentioned, our ABA franchise, obviously Credigit.

As I mentioned our R.

Our.

Franchise.

Obviously credits as well and the focus is really on <unk>.

Speaker 5: And the focus is really on ABA outside of Credigy to really keep growing our bank in Cambodia, solidify our position there.

Outside of credit G. Two really.

Keep growing our banking Cambodia solidify our position there.

Speaker 21: But, you know, in the near future, there's definitely from on my side and the management team, there's no intention on investing abroad at this time.

But.

In the near future there is definitely from from on my side and the management team. There is no intention on.

On investing abroad at this point in time.

Okay, I'm going to press you a little bit on it and the question is why so you know I understand that right now you may not want to do it but you've got a team scouring.

Speaker 20: Okay, I'm going to press you a little bit on it, and the question is why?

Speaker 20: So I understand that right now you may not want to do it, but you've got a team scouring.

And it could be great opportunity I, just want I'm, just trying to understand the mindset.

Speaker 21: It could be a great opportunity. I'm just trying to understand the mindset. It's a question of focus. You know, you just heard Giuseppe talk about the potential growth for ABA, so we want to make sure that we, you know, grow that.

It's a question of focus. As you heard Ghislain talk about the potential growth for ABA. So we want to make sure that we grow that, the ABA bank prudently. That we make sure that we follow that growth as it goes through economic cycles potentially. So that's really where our mindset is. And as you heard it on, as I talked a little bit about the future. One of the things that where we see a lot of potential is actually here in Canada and in our domestic franchise. So we want to also put more emphasis in terms of growth in some of our businesses in Canada. So you can keep challenging me. I have no problem with that. I think we are very comfortable with our current business mix. The strategic choices that we've taken within those business mix, we're very very comfortable with that. We're going to remain disciplined in terms of capital allocation, risk management, cost control. And we're going to commit to performance as we always did. You should not expect that to change with us.

If you just heard <unk> talk about the potential growth for <unk>. So we want to make sure that we.

Grow that.

Speaker 21: the ABA bank prudently, that we make sure that we...

Yeah.

The bank.

Bank prudently.

That.

We make sure that we.

Speaker 21: Follow that growth as it goes through economic cycles, potentially. So that's really where our mindset is.

<unk>, followed that growth as it go through economic cycles potentially.

So that's that's really where our mindset is.

Speaker 21: And as you heard it on, you know, as I talked a little bit about, you know, the future, you know, one of the things that where we see a lot of potential is actually here in Canada and in our domestic franchise. So we want to also put, you know, more emphasis in terms of growth in some of our businesses.

And as you heard it on.

I talked a little bit about the.

Future.

One of the things that where we see a lot of potential is actually here in Canada and in our domestic franchise. So we want to also put.

More emphasis in terms of growth in some of our businesses in Canada.

Speaker 5: So you can keep challenging me, I have no problem with that, but I think we're very comfortable with our current business mix.

So you can keep challenging me I have no problem with that.

I think we are very comfortable with.

Our current business mix.

Speaker 21: The strategic choices that we've taken within those business mix, we're very, very comfortable with that. We're going to remain disciplined in terms of capital allocation, risk management, cost control, and we're going to commit to performance as we always did. You should not expect that to change with us.

The strategic choices that we've taken within those business mix, we're very very comfortable with that.

We're going to remain disciplined in terms of capital allocation risk management and cost control.

And we're going to commit to performance as we always did.

You should not expect that to change with us.

Speaker 20: Okay, great. Thank you for that. And I just wanted to sort of switch gears a little bit. One of the things, again, I've only got three banks to compare again so far with respect to Q4.

Okay, great. And I just wanted to sort of switch gears a little bit. One of the things, again, I've only got three banks to compare against so far with respect to Q4. But one thing that does set your Bank apart is risk-weighted asset growth, total risk-weighted asset growth at NA, 10% this year, Scotia flat, Royal effectively flat. Now one of the things that we saw at the other banks, though, is there are opportunities for modeling, sort of updates, changes. Are there any opportunities that for NA at all as you see, maybe this is a question for Bill or Ghislain? But is there any opportunity for model updates, parameter updates, any sort of help on the risk-weighted asset side, because the 10% growth in this year, I can only imagine as the economy takes flight, how much RWA growth you could achieve unless, of course, there are opportunities to reduce RWA density?

The only got three banks to compare against so far.

With respect to Q4.

But one thing that does set your bank apart is.

Speaker 20: But one thing that does set your bank apart is risk-weighted asset growth, total risk-weighted asset growth in NA.

The risk weighted asset growth total risk weighted asset growth and a 10% this year Scotia flat royal effectively flat.

Speaker 20: 10% this year, Scotia flat, Royal effectively flat. Now, one of the things that we saw at the other banks, though, is there were opportunities for modeling, sort of updates, changes.

Now one of the things that we saw at the other banks, though is there are opportunities for modeling sort of updates changes.

Speaker 20: Are there any opportunities like that for NA at all, as you see, maybe this is a question for Bill or for Ziswan, but is there any opportunity for model updates, parameter updates, any sort of help on the risk-weighted asset side, because a 10% growth in this year.

Are there any opportunities that for M&A at all.

As you see it maybe just a question for bill or is this land but.

Is there any opportunity for model updates parameter updates any sort of help on on the risk weighted asset side, because we had 10% growth in this year.

Speaker 20: I can only imagine, as the economy takes flight, how much RWA work you could achieve unless, of course, there are opportunities to reduce RWA density.

I can only imagine is as the economy takes flight. How much <unk> work you could achieve unless of course, there are opportunities to reduce our. <unk> density.

How much <unk> work you could achieve unless of course, there are opportunities to reduce our.

<unk> density.

Speaker 7: So, thanks, Darko. Maybe I'll start off. It's Bill, and if Jean or just Lance, any follow-ups they can add in, but thanks for pointing out, we were really pleased with the growth in RWA coming from the growth in organic business, and that includes commercial banking, includes financial markets, both on the lending side, but also on the risk management products and the derivative side, so lots of client activity, growth in the franchise, franchises generating,

So thanks, Darko. Maybe I'll start off. It's Bill. And then Laurent or Ghislain, any follow-ups they can add in. But thanks for pointing out. We were really pleased with the growth in RWA coming from the growth in the organic business and that includes commercial banking, includes financial markets, both on the lending side but also on the risk management products and the derivative side. So lots of client activity, growth in the franchise, franchises generating increases in RWA. And I'll point out as well that, that happened with a superior ROE. So the opportunities to grow organically, loan growth, RWA at really good ROE levels. We would like that to continue into the new year. So certainly, there are always potential opportunities with data refinement and model updates that could give some tailwinds to the RWA calculations. However, I don't have anything to signal and I'll just remind you that given the results that we've seen on the revenue side and the risk-weighted risk/reward equation on that RWA growth, we don't see it as an impediment for continuing the future growth. Does that answer your question, Darko?

Or is this labs any any follow ups that can add in but thanks for pointing out we were really pleased with that.

Growth in <unk> coming from the growth in the organic business.

Includes commercial banking includes financial markets, both on the lending side, but also on the risk management products on the derivative side. So so lots of client activity growth in the franchise franchises generating.

Speaker 7: increases in RWA and a point as well that happened with a superior ROE. So the opportunities to grow organically, long growth RWA at really good ROE levels, we would like that to continue into the new year.

Increases in our WMA and I'll point out as well that that.

That happened with a with a superior ROE so the opportunities to grow organically.

Loan growth our IWA patch.

Really really good ROE levels we.

We would like that to continue into the new year. So certainly there is.

Speaker 7: There are always potential opportunities with data refinement and model updates that could give some tailwinds to the RWA calculations, however, I don't have anything to signal and I'll just remind you that the

There are always potential opportunities with data refinement to model updates that could give.

Some some some tailwind to.

Our WAM calculations however.

I don't have anything to signal and I'll, just remind you that the.

Speaker 7: given the results that we've seen on the revenue side and the risk reward equation on that RWA growth, we don't see it as an impediment for continuing the future growth. Does that answer your question, Darko? Yep.

Given the.

The results that we've seen on the revenue side. There was created with the risk reward equation on that <unk> growth, we don't see it as an impediment for continuing the future growth does that answer your question Darko.

Yes, that's great. Thanks, very much for that. Thank you. As a reminder, you may press star one if you have a question. The next question is from Sohrab Movahedi from BMO Capital Markets. Please go ahead. Yes, thank you. Actually, maybe I can just pick up where Bill left off there. When, or when you and Darko, I guess, left off there. When you, Bill, when you give us this outlook on impaired PCLs, for example, you gave it to us in basis point terms. What sort of loan growth is implicit in that guidance? You're looking at the denominator, I suppose, of that calculation. Yes. So, given the, thanks for the question, Sohrab. But the denominator, the delta and, the potential delta in the denominator isn't the biggest certainly factor in that equation. It's really how I would frame the 15 to 25 basis points is, if you think, historically pre-pandemic, we were within that 15 to 25, mainly on the top end of the range

Yes.

Speaker 3: Thank you. As a reminder, you may press star 1 if you have a question.

Thank you as a reminder, you May press Star one if you have a question. The next question is from Sohrab <unk> from BMO capital markets. Please go ahead.

Speaker 3: This question is from Saurabh Maldehadi from BMO Capital Markets, please go ahead.

Yes. Thank you. Thanks, Jay maybe I can just pick up that we're building that software.

Speaker 22: Yeah, thank you. Actually, maybe I can just pick up where Bill left off there. When or when you and Darko, I guess, left off there, when you, Bill, when you give us this outlook on impaired PCLs, for example, you give it to us in.

When or when you indirectly I guess I left off there when you.

Bill when you gave us this outlook on impaired PCL as for example that you gave it to us.

Basis points terms at what's the what's sort of loan growth is implicit in that guidance.

Speaker 22: basis points terms. What sort of loan growth is implicit in that guide?

Youre looking at the denominator I suppose a back calculation yet so so given the.

Speaker 7: You're looking at the denominator, I suppose, of that calculation? Yes. So, given the, thanks for the question, Sora, but the...

Thanks for the question, Sarah but the denominator the delta in the denim potential delta in the Dominator isn't the biggest certainly factor in that.

Speaker 7: The denominator, the delta in the denominator, potential delta in the denominator isn't the biggest factor in that equation.

Equation Thats really it.

Speaker 7: How I would frame the 15 to 25 basis points is.

How I would.

How I would frame the 15% to 25 basis points is if you think historically pre pandemic, we were within that 15 to 25, mainly on the top end of the range.

Speaker 7: If you think historically pre-pandemic, we were within that 15 to 25, mainly on the top end of the range.

Speaker 7: During last year, we were below that 15 basis points. We ended up with 11 basis points. And our discussion looking forward is, we think we'll be at the low end of that range. And at some point in 22, 23, we should get back into the normal run rate and pre-pandemic.

During last year, we were below that 15 basis points. We ended up with 11 basis points. And our discussion looking forward is we think we'll be at the low end of that range. And at some point in '22, '23, we should get back into the normal run rate in pre-pandemic. So the variability and/or the uncertainty in terms of the macro-environment is certainly got more of an impact than the denominator of the calculation. Okay. So when you combine that with how the performance kind of allowances may also contribute to the total number. I think if I read your message correctly, there could still be some performing allowance releases. That's correct. And I guess what I'm trying to get, to get a feel for, Bill. And I think in quarters past, you guys have been pretty clear that you're comfortable growing into your allowances. I'm just trying to kind of get a sense of how much of that guidance implicit in your kind of performing is like are you growing into it? Or are you releasing it? So, I'm trying to figure out how much of it, how much is happening in each one of those buckets? Maybe both, Sohrab, I think probably the fuller answer, both. I think we saw even in the fourth quarter, we saw growth in performing allowances from international as growth in assets were quite strong. And yet we had releases from the performing allowance. I think if you look at the coverage ratio, kind of indicators about how the adequacy of the allowances that we have. I think as you can see, there is room for both growth in the balance sheet and as uncertainty is removed and gets smaller, certainly some releases coming from those allowances as well.

And at some point in 'twenty two 'twenty three.

Good.

Get back into the into the normal run rate in pre pandemic. So.

Speaker 7: So the variability on or the uncertainty in terms of the macro environment is certainly got more of an impact than the denominator of the calculation.

The variability on the uncertainty in terms of the macro environment is certainly got a more of an impact on the denominator of the calculation.

Okay. So so when you combine that with.

Speaker 22: Okay, so when you combine that with, you know, with how the performance

How that performance.

Speaker 22: allowances may also contribute to the total number. I think if I read the

Allowances may may also contribute to the total total number I think if I read.

Your message correctly, there could still be some performing allowance.

Speaker 22: your message correctly, you know, there could still be some performing allowances.

Speaker 22: allowance releases. That's correct. I guess what I'm trying to get a feel for, Bill, and I think, you know, in quarters past...

Allowance releases, that's correct and I guess, what I'm trying to get to get a feel for bill and I think.

And in quarters past.

Speaker 22: Uh, you guys have been pretty clear that you're comfortable growing into your allowances. I'm just trying to kind of get a sense of

You guys have been pretty clear that youre comfortable growing into your allowance is I'm, just trying to kind of get a sense of. How much of that guidance implicit in your kind of performing. Is that are. Are you growing into it are you releasing I guess, what I'm trying to figure out how much of it how much is happening in each one of those buckets. Maybe both Sarah. You can see is the I think probably the fuller answer both. I think we saw. Even in the fourth quarter, we saw growth in performing allowances from international as growth in assets were quite strong. And yet we had. Excuse me releases from the performing allowance I think if you look at the coverage ratio has kind of been indicators about how the adequacy of the allowances that we have I think as you can see there is room for both growth in the in the balance sheet and. As uncertainty is removed and get smaller certainly some some releases coming from those allowances as well.

How much of that guidance implicit in your kind of performing.

Speaker 22: you know, how much of that guidance implicit in your kind of performing.

Speaker 22: is like, are you growing into it or are you releasing it? Yes, I'm trying to figure out how much of it, how much is happening in each one of those buckets.

Is that are.

Are you growing into it are you releasing I guess, what I'm trying to figure out how much of it how much is happening in each one of those buckets.

Maybe both Sarah.

You can see is the I think probably the fuller answer both.

Speaker 7: the fuller answer, both. I think we saw, even in the fourth quarter, we saw growth in performing allowances from international as growth in assets were quite strong and yet we had releases from the performing allowance.

I think we saw.

Even in the fourth quarter, we saw growth in performing allowances from international as growth in assets were quite strong.

And yet we had.

Excuse me releases from the performing allowance I think if you look at the coverage ratio has kind of been indicators about how the adequacy of the allowances that we have I think as you can see there is room for both growth in the in the balance sheet and.

Speaker 7: the coverage ratios kind of indicators about how the adequacy of the allowances that we have. I think that you can see there is room for both.

Speaker 7: growth in the balance sheet and as uncertainty is removed and gets smaller, certainly some releases coming from those allowances as well.

As uncertainty is removed and get smaller certainly some some releases coming from those allowances as well.

That's helpful. If I can just come, I know we're over time but if I can just come at it from a slightly different angle here. Laurent, you mentioned mid-single-digit pretax pre-provision growth at the total bank level. What sort of balance sheet growth is implicit in that assumption? I think it's around 7%. And Sohrab, just one further addition as I see now a little where you're going, the nature of the growth is important as well. Just like for RWA growth in residential mortgages doesn't have the same consumption or insured real estate in Stephane's World. So it does depend on the nature of the growth in terms of the, you think about risk density, you can think about ECL density as well.

Speaker 22: Okay, and maybe that's helpful. Yeah, if I can just come, I know we're over time, but if I can just come at it from a slightly different angle here, Laura, you mentioned.

Speaker 22: mid-single-digit pre-tax, pre-provision growth at the total bank level. What sort of balance sheet growth is implicit in that assumption?

Mid single digit pretax pre provision growth.

At the total bank level, what sort of balance sheet growth is implicit in that assumption.

I think it's around 7%.

Okay, and sorry, I've just just.

Speaker 7: Okay. And Saurabh, just one further addition as I see now a little where you're going. The nature of the growth is important as well, just like for RWA, growth in residential mortgages that doesn't have the same consumption or insured real estate in Stéphane's world. So it does depend on the nature of the growth in terms of the, you know, you think about risk density, you can think about ECL density as well.

One further additions I see now a little where you're going the the nature of the growth is important as well just like for our <unk> growth in residential mortgages.

It doesn't have the same.

Same consumption or insured.

Real estate and stuff adds world. So it does depend on the nature of the growth in terms of the you think about risk density, but ECL density as well.

Speaker 22: Perfect. And can you just remind us what's ABA's market share in Cambodia?

Perfect. And then can you just remind us what's ABA's market share in Cambodia? Well, Sohrab, this is Ghislain. Well, it depends on the products but they are third. They are the third bank in terms of asset size in Cambodia. But for some digital products, they are either second or first. And Ghislain, am I right that a few years ago when you had ABA kind of discussion with the investment community, they would have said they're probably ranked fifth in market share by assets? Yes, yes. I think that when we first invested in ABA, they were like seventh or eighth. At the moment of the Investor Day, they were fifth and now they are third. Thank you very much.

Well, Sarah decision, saying well it depends.

Speaker 6: Well, it depends on the products, but they are third, they are the third bank in terms of asset size in Cambodia.

On the products, but they are third.

<unk> bank in terms of asset size in Cambodia.

Speaker 6: But for some digital products, they are either second or first.

But for some.

Digital products.

They are either second or first.

As you sat in my right that a few years ago when you had.

Speaker 22: As you said, am I right that a few years ago when you had a kind of discussion with the investment community, they would have said they're probably ranked fifth in market share by asset?

Kind of discussion with.

The investment community day would have set there'll probably ranked fifth in market share by assets.

Yes, yes, I think thats. When we first invested in a b a day. We're like seven or eight at the moment of the Investor Day, there were fifth and all of their target. Thank you very much.

Speaker 6: Yeah, yeah. I think that when we first invested in ABA, they were like seventh or eighth. At the moment of the investor day, they were fifth and now they're third.

When we first invested in a b a day.

We're like seven or eight at the moment of the Investor Day, there were fifth and all of their target.

Thank you very much.

Speaker 3: Thank you. The owner for the questions registered at this time, I would like to turn the meeting back over to Mr. Ferreira.

Thank you. There are no further questions registered at this time. I would like to turn the meeting back over to Mr. Ferreira. Well, thank you very much, everyone. Happy holidays to all and we'll speak to you next quarter. Thank you. The conference has now ended. Please disconnect your lines at this time and thank you for your participation.

Speaker 5: Thank you very much everyone. Happy holidays to all and we'll speak to you next quarter.

Well. Thank you very much everyone happy holidays to all and well speak to you next quarter.

Yeah.

Thank you. The conference has now ended please disconnect your lines at this time and thank you for your participation.

Speaker 3: Thank you. The conference has now ended. Please disconnect your lines at this time and thank you for your participation.

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