Q2 2024 Royal Bank of Canada Earnings Call

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Speaker Change: This conference is being recorded so it's gonna stay home if they don't go as you see.

Speaker Change: All participants please standby your only thing is ready to begin.

Speaker Change: Good morning, ladies and gentleman and welcome to all D. C 2024 second quarter financial results Conference call.

Operator: Please be advised that this call is being recorded. I would now like to turn the meeting over to Asim Imran, Head of Investor Relations. Please go ahead, Mr. Imran.

Speaker Change: Do you have to be advised that this call is being recorded.

Speaker Change: I would like to turn the meeting over to S. M. Enron Edo of Investor Relations. Please go ahead, Mr. Jim Ryan.

Asim Imran: Thank you, and good morning everyone. Speaking today will be Dave McKay, President and Chief Executive Officer, Katherine Gibson, Interim Chief Financial Officer, and Graeme Hepworth, Chief Risk Officer. Also joining us today for your questions are Neil McLaughlin, Group Head, Personal and Commercial Banking; Doug Guzman, Group Head, Wealth Management and Insurance; and Derek Neldner, Group Head, Capital Markets. As noted on slide one, our comments may contain forward-looking statements that involve assumptions and have inherent risks and uncertainties.

Speaker Change: And good morning, everyone I'm speaking.

Speaker Change: Speaking today will be Dave Mckay, President and Chief Executive Officer, Catherine Gibson interim Chief Financial Officer, and Graeme Hepworth Chief Risk Officer also joining us today for your question, Neil Mclaughlin Group head personal and commercial banking, Doug Guzman group head wealth manager.

Speaker Change: And insurance and Derek Elder group head capital markets.

Asim Imran: Actual results could differ materially. I would also remind listeners that the bank assesses its performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. To give everyone a chance to ask questions, we ask that you limit your questions and then re- With that, I'll turn it over to Dick.

Speaker Change: As noted on slide one our comments may contain forward looking statements, which involve assumptions and have inherent risks and uncertainties actual results could differ materially.

Speaker Change: I would also remind listeners that the bank assesses this performance on a reported and adjusted basis.

Speaker Change: It was both to be useful in assessing underlying business performance.

Speaker Change: To give everyone a chance to ask questions. We ask that you limit your questions and then re queue.

David McKay: With that I'll turn it over to Dave.

David McKay: Thank you, awesome, and good morning everyone. Thank you for joining us today. Today we reported second quarter earnings of $4 billion, or adjusted earnings of $4.2 billion. Return on equity, which is the key pillar of our shareholder value creation framework, increased to 14.5% this quarter, adjusted ROE increased to 15.5% as we successfully executed our strategic priorities, including client-driven organic growth, expense discipline, maintaining a strong balance sheet, and accretive capital allocation, including the acquisition of HSBC Bank Canada. This quarter, we saw strong growth across diversified revenue streams. Capital markets reported record revenue of $3.2 billion as we gained market share in key areas of focus, such as advisory and origination.

David McKay: Thank you Austin and good morning, everyone. Thank you for joining us today.

David McKay: Today, we reported second quarter earnings of $4 billion or adjusted earnings of $4 $2 billion.

David McKay: Return on equity, which is a key pillar of our shareholder value creation framework increased to 14, 5% this quarter.

David McKay: Adjusted ROE increased to 15, 5% as we successfully executed our strategic priorities, including client driven organic growth expense discipline, maintaining a strong balance sheet and accretive capital allocation, including the acquisition of HSBC Bank of Canada.

David McKay: This quarter, we saw strong growth across the diversified revenue streams capital markets reported record revenue of $3 $2 billion as we gained market share in key areas of focus such as advisory and at origination.

David McKay: Canadian banking revenue growth was driven by strong volume growth and higher interest rates, reflecting benefits of our structurally advantaged balance sheet. Asset Management and North American Wealth Management Advisory revenue benefited from double-digit fee-based asset growth. Our increasing scale advantages and disciplined cost management helped drive all bank operating leverage of 1.4% or a strong 4.5% adjusting for specified items. Canadian Banking reported a 39% efficiency ratio.

David McKay: In banking revenue growth was driven by strong volume growth and higher interest rate.

David McKay: The benefits of our structurally advantaged balance sheet.

David McKay: Asset management, and North American wealth management advisory revenue benefited from double digit fee based asset growth.

David McKay: Our increasing scale advantages and disciplined cost management helped drive all bank operating leverage of one 4%.

David McKay: <unk>, 4.5% adjusting for specified items.

David McKay: Canadian banking reported a 39% efficiency ratio.

David McKay: While we focused on creating efficiencies, we continued to invest in improving the client experience. RBC was the first Canadian bank to be awarded the Digital CX Award for Excellence in Omni-Channel Customer Experiences by the Digital Banker, along with being awarded the Cellent Model Bank Award for Digital Onboarding. We are also actively investing in artificial intelligence beyond retail banking and risk management. In U.S. wealth management, we're using the power of AI to help financial advisors identify and act on new opportunities to provide even more value to clients.

David McKay: While we focused on creating efficiencies we continued to invest in improving the client experience. Obviously it was the first Canadian bank to be awarded the digital CX Award for excellence in Omni channel customer experiences by the digital banker.

David McKay: Along with being awarded the selling model Bank Award for digital Onboarding.

David McKay: We're also actively investing in artificial intelligence beyond retail banking and risk management.

David McKay: U S wealth management, we're using the power of AI to help financial advisors to identify and act on new opportunities to provide even more value to clients and in capital markets. We are seeing continued success with eight and our well established AI powered trading platform.

David McKay: And in capital markets, we're seeing continued success with AIDEN, our well-established AI-powered trading platform. Our balance sheet remains strong, even after successfully closing the largest acquisition in our 155-year history. We reported a common equity, tier one ratio of 12.8%.

David McKay: Our balance sheet remains strong even after successfully closing the largest acquisition of our 155 year history.

David McKay: We reported common equity tier one ratio of 12, 8%.

David McKay: Our Canadian banking loan-to-deposit ratio improved to 98% as we continue to attract new clients to our client value proposition. Furthermore, we diversified our funding profile with the launch of our U.S. cash management business, which I will speak to shortly. And we continue to prudently add to our reserves with PCL on performing loans of $244 million.

Our Canadian banking loan to deposit ratio improved to 98% as we continued to attract new clients to our client value propositions.

David McKay: Furthermore, we diversified our funding profile with a launch of our U S cash management business, which I will speak to shortly.

David McKay: And we continue to prudently add to our reserves with PCL on performing loans of $244 million.

David McKay: Our results continue to demonstrate our ability to generate long-term value. Our premium return on equity drove gross internal capital generation of over 70 basis points and book value growth of 8%. This morning, we announced a 4 cent, or 3 percent, increase in our quarterly dividend.

David McKay: Our results continue to demonstrate our ability to generate long term value.

David McKay: Our premium return on equity drove gross internal capital generation of over 70 basis points and book value growth of 8%.

David McKay: This morning, we announced a four cent or 3% increase in our quarterly dividend.

David McKay: We also announced our intention to repurchase up to 30 million common shares under a normal course issuer bid as we look to offset the dilution from the shares issued under the Dividend Reinvestment Plan. I will now speak to the acquisition of HSBC Canada, which we completed on March 28th. This was a pivotal milestone as we continue to focus on driving premium long-term ROE and growth. We are excited to welcome 780,000 clients from HSBC Canada, which added approximately $75 billion of both loans and relationship-based deposits to our balance sheet. I would like to thank our employees who made an extremely complex close and conversion integration possible, all within a single weekend.

David McKay: We also announced our intention to repurchase repurchase up to 30 million common shares under our normal course issuer bid as we look to offset the dilution from the shares issued under the dividend reinvestment plan.

David McKay: The smooth integration also demonstrates the power of the technology investments we've made in recent years. The level of employee engagement is high, and we're excited about the journey ahead. As a combined organization, we are well positioned as the bank of choice for commercial clients with international needs, newcomers to Canada, and retail clients who need global capability. A significant percentage of the acquired retail accounts are affluent clients. And through HSBC Canada, we also acquired a well-established premier commercial bank with a leading trade finance value proposition and one that skews to a larger client segment than we have historically competed in.

David McKay: I will now speak to the acquisition of HSBC, Canada, which we completed on March 28th this was a pivotal milestone as we continue to focus on driving premium long term Roe and growth.

David McKay: We're excited to welcome 780000 clients from HSBC, Canada, which added approximately $75 billion of both loans and relation based deposits to our balance sheet.

I would like to thank our employees, who made an extremely complex closings and avert integration possible all within a single weekend.

David McKay: The smooth integration also demonstrates the power of the technology investments we've made in recent years.

David McKay: The level of employee engagement is high and we're excited about the journey ahead.

David McKay: As a combined organization, we are well positioned as the bank of choice for commercial clients with international needs newcomers to Canada and retail clients.

David McKay: Who need global capabilities.

David McKay: A significant percentage of the acquired retail accounts are affluent clients through.

David McKay: Through HSBC, Canada, we also acquired a well established premier commercial bank with a leading trade finance value proposition and one which skews to a larger client segment than we were than we have historically competed.

David McKay: We are pleased that the client-based and acquired loan portfolio, which can be seen on slide 28, is largely within levels forecasted when we announced the transaction 18 months ago. These loans continue to be supported by a high-quality, low-cost deposit franchise, which is largely within forecasted levels. This includes the expected repayment of non-interest-bearing SIBA deposits.

David McKay: We are pleased that the client base and acquired loan portfolio, which can be seen on slide 28 is largely within levels forecasted when we announced the transaction 18 months ago.

David McKay: These loans continued to be supported by a high quality low cost deposit franchise, which is largely within forecasted levels.

David McKay: Including the expected repayment of noninterest bearing deposits.

David McKay: Similar to our own experience, net interest margins were impacted by a shift in deposit mix towards term products and more intense competition for mortgages and deposits than we'd initially assumed. Since the acquisition date, HSBC Canada reported a loss of $51 million, or a loss of $33 million, adjusting for amortization of intangible assets. As you can see on the bottom of slide 6, underlying HSBC Canada's net income of $63 million dollars represented approximately one month of earnings.

David McKay: Similar to my own experience net interest margins were impacted by a shift in deposit mix towards term products and more intense competition for mortgages and deposits.

David McKay: Initially assumed.

David McKay: Since the acquisition date, HSBC, Canada reported a loss of $51 million or a loss of $33 million adjusting for amortization of intangibles.

As you see on the bottom of slide six underlying HSBC tend to net income of $63 million represented approximately one month of earnings.

David McKay: This quarter's results further benefited from the accretion of purchase price accounting marks, which Catherine will speak to shortly. In addition, we realized $30 million of before-tax expense synergies this quarter, equating to an annualized run rate savings of $360 million, or approximately 50% of our stated target. In contrast, results were negatively impacted this quarter by the recognition of Day 1 PCL, which Graeme will speak to shortly, as well as the cost of a short-term special welcome offer for qualifying HSBC Canada High Interest Savings Account clients.

Speaker Change: This quarter's results further benefited from the accretion of purchase price accounting marks, which Katherine will speak to shortly.

In addition, we realized $30 million of before tax expense synergies this quarter equating to an annualized run rate savings of $360 million or approximately 50% of our stated target.

Speaker Change: In contrast results were negatively impacted this quarter by the recognition of day, one P. C L, which graeme will speak to shortly as well as the cost of a short term special welcome offered for qualifying HSBC, Canada high interest savings account clients.

David McKay: We continue to expect approximately $740 million of expense synergies within the two-year timeline we provided last quarter. Following the uncertainty of a long approval process, which led to a slowdown in new sales, the re-energized sales force is rebuilding pipelines with clients with whom they have long-standing relationships. They're also leveraging the added benefits that come with RBC's technology ecosystem and an AA balance sheet. Furthermore, we believe our combined product and service offerings should drive compelling cross-sell revenue synergies across retail and business banking.

Speaker Change: We continue to expect approximately $740 million of expense synergies within the two year timeline, we provided last quarter.

Paul: Paul and the uncertainty of a long approval, which led to a slowdown in net new sales a reenergized sales force is rebuilding pipelines with clients with whom they have long standing relationships.

Paul: They're also leveraging the added benefits that come with Rbcs technology ecosystem, and a double a balance sheet.

Paul: Furthermore, we believe our combined product and service offerings should drive compelling cross sell revenue synergies across retail and business banking and while it's early we are seeing positive signs.

David McKay: And while it's early, we are seeing positive signs. We continue to estimate the transaction will generate $1.4 billion of fully synergized adjusted earnings, excluding the accretion of purchase price accounting marks. However, the initial lower-than-expected margins may push out the realization of our previously stated two-year target by a couple of quarters.

Paul: We continue to estimate the transaction will generate $1.4 billion of fully synergize adjusted earnings excluding the accretion of purchase price accounting marks.

Paul: However, the initial lower than expected margins may push out the realization of our previously stated two year target by a couple of quarters.

David McKay: Should we see mortgage and deposit spreads recover, we expect that realization timeline to accelerate. Before discussing the expanding client value proposition in our businesses, I will provide my perspective on the macro environment. The relative strength of the U.S. economy, including a tighter labor market and healthy consumer spending, has kept U.S. inflation persistently above the targeted range. In contrast, Canada continues to lag its peers in GDP growth per capita, with a higher impact as the impact of higher interest rates and rising unemployment begins to weigh on housing, which Graeme will speak to in his remarks. Canadian inflation metrics are now within the 1-3% target range. The bifurcation in trends suggests the Bank of Canada should move earlier than the Fed and start lowering interest rates over the coming months.

Paul: Should we see mortgage and deposit spreads recover we expect that realization timeline will accelerate.

Paul: Before discussing expanding client value proposition and our businesses I will provide my perspective on the macro environment there.

Paul: The relative strength of the U S economy, including a tighter labor market and healthy consumer spending has kept U S inflation persistently above the targeted range.

Paul: Contrast, Canada continues to lag its peers in GDP growth per capita the higher impact of the.

Speaker Change: The impact of higher interest rates and rising unemployment begins to weigh on households, which Graeme will speak to in his remarks Canadian inflation metrics are now within the 1% to 3% target range.

Speaker Change: A bifurcation in trends suggest the bank of Canada should move earlier than the fed and start lowering interest rates over the coming months.

David McKay: The expectation of central bank rate cuts has led to strong equity market returns this year and should also have positive implications for loan growth and M&A deal flow, while also providing relief for Canadians. With this in mind, we are executing on our growth strategy across our largest franchises, starting with Canadian banking. Deposits were up double digits from last year, or a strong 9%, excluding the benefit of the HSBC Canada acquisition.

Speaker Change: The expectation of Central Bank rate cuts has led to strong equity market returns. This year and should also have positive implications for loan growth and M&A deal flow, while also providing relief for Canadians.

Speaker Change: With this context, we are executing on our growth strategy across our largest franchises starting with Canadian banking.

Speaker Change: <unk> were up double digits from last year, our strong 9%, excluding the benefit of the H S. P. C. Canada acquisition, we welcomed a record number of new comer clients this quarter, reflecting a 30% increase year over year.

David McKay: We welcome a record number of newcomer clients this quarter, reflecting a 30% increase year-over-year. More broadly, new to RBC account acquisition was approximately 40% higher than last year due to our innovative client value propositions, which now include: Thanks to the expansion of our partnership with Metro and its Moire Rewards Program in Ontario, this partnership will continue to build on the successful launch of our co-brand credit card in Quebec. Additionally, RBC announced the launch of a new loyalty partnership with Pattinson Food Group and its More Rewards loyalty program, which has more than 3.5 million household members in Western Canada. Furthermore, since launching our Avion Select tier for non-clients, we've registered nearly half a million new members.

Speaker Change: Broadly new to RBC account acquisition was approximately 40% higher than last year due to our innovative client value proposition, which now include expansion of our partnership with Metro and it's more of a rewards program in Ontario. This partnership will continue to build on the successful launch of our co brand credit card in Quebec.

Speaker Change: Additionally, RBC announced the launch of a new loyalty partnership with pass and food group and its more rewards loyalty program, which is more than $3 5 million household members in Western Canada.

Speaker Change: Furthermore, since launching our abbvie on select here for non clients, we've registered nearly a half a million new members.

David McKay: We remain focused on attracting new primary client deposits, which provide a foundation for profitable loan growth, credit insights, deepening relationships, and earnings stability through the cycle. Commercial loans are up 25% or up 14% excluding HSBC Canada loans. Our growth strategy remains focused amongst a diversified set of existing clients we know well. Turning to our record results in capital markets, investment banking revenue grew 45% from last year.

Speaker Change: We remain focused on attracting new primary client deposits, which provide a foundation for profitable loan growth credit insights deepening relationships and earning stability through the cycle.

Speaker Change: Commercial loans were up 25% or up 14%, excluding HSBC Candida alone our growth strategy remains focused amongst a diversified set of existing clients you know well.

Speaker Change: Turning to our record results in capital markets.

Speaker Change: Investment banking revenue grew 45% from last year, our market share is up 40 basis points over the last 12 months, reflecting gains across all major products. We continue to focus on multi product mandates and improved sector diversification.

David McKay: Our market shares are up 40 basis points over the last 12 months, reflecting gains across all major products. We continue to focus on multi-product mandates and improved sector diversification. While geopolitical risks in an evolving regulatory environment create uncertainty, the market backdrop is creating opportunities for increased dialogue with clients and a healthy M&A pipeline that continues to build. Global markets reported $1.5 billion in revenue, largely due to higher debt and equity origination and higher fixed income trading revenue.

Speaker Change: While geopolitical risks and an evolving regulatory environment creates uncertainty the market backdrop is creating opportunities for increased dialogue with clients and a healthy M&A pipeline that continues to build.

Speaker Change: Global markets reported $1 $5 billion in revenue largely due to higher debt and equity origination and higher fixed income trading revenue.

David McKay: We also recently launched RBCClear, our cloud-native, next-generation U.S. cash management business with a digital end-to-end onboarding platform and ability to offer enriched insights to corporate treasurers. Our initial focus is to increasingly diversify our U.S. funding sources to reduce reliance on costlier wholesale funding and, in turn, improve ROE. Moving to our wealth management side, RBC Global Asset Management's AUM increased 11% from last year, particularly in Canadian strategies, benefiting both from higher markets and inflows from institutional mandates.

Speaker Change: We also recently launched RBC clear our cloud Native next generation U S cash management business with a digital end to end onboarding platform and ability to offer an enriched insights to corporate treasurers.

Speaker Change: Our initial focus is to increasingly diversify our U S funding sources to reduce reliance on costly wholesale funding and in turn improve ROA.

Speaker Change: Now moving to our wealth management segment.

Speaker Change: Global asset management, AUM increased 11% from last year, particularly in Canadian strategies, but it has been.

Speaker Change: Fitting both from higher markets and inflows from institutional mandates.

David McKay: An easing of monetary policy may also start a shift away from term deposits and cash ETFs towards fixed income opportunities, which is one of the core strengths of RBC Global Asset Management. In Europe, RBC Blue Bay has been recognized by Morningstar's Excellence Awards and the Lipper Awards for its Fixed Income Strategy. RBC GAM was also named the Top Gun Investment Team of the Year in Canada for the 9th time in 11 years.

Speaker Change: And easing of monetary policy, but you also start to shift away from term deposits and cash etfs towards fixed income opportunities, which is one of the core strengths of RBC global asset management.

Speaker Change: And Europe RMC Bluebay has been recognized by Morningstar's Excellence awards in the Lipper awards for its fixed income strategies.

Speaker Change: RBC Gam was also named the top gun investment team of the year in Canada for the ninth time in 11 years.

David McKay: Assets under administration in our leading Canadian wealth management business were up 15%, or nearly $80 billion, from last year, increasing to a record level of nearly $620 billion, benefiting from higher equity markets and net sales of $16 billion over the last 12 months. Assets under administration, a U.S. wealth management platform, including the sixth-largest wealth advisor in the U.S., also increased 12% year-over-year to $610 billion U.S. dollars, another record.

Speaker Change: Assets under administration, and our leading Canadian wealth management business were up 15% or nearly 80 billion from last year, increasing to a record level of nearly $620 billion benefiting from higher equity markets and net sales of $16 billion over the last 12 months.

Speaker Change: Assets under administration in our U S wealth management platform, including the six largest wealth adviser in the U S. Also increased 12% year over year to 610 billion U S dollars another record.

David McKay: One of our ongoing key strategic objectives for the wealth management businesses is to attract and retain top performing financial advisors. To close, our premium ROE reflects efficient capital deployment, diversified funding, prudent risk management, disciplined expense control, and the execution of our client-focused strategies, including the acquisition of HSBC Canada. In turn, our strong internal capital generation through economic cycles allows us to invest in organic growth while also returning capital to shareholders. Now, I'd like to turn it over to Catherine Gibson, our Interim CFO, and welcome her to our first quarterly call. Catherine brings deep financial sector experience and knowledge of RBC. Catherine, over to you.

Speaker Change: One of our ongoing key strategic objectives for our wealth management businesses to attract and retain top performing financial advisors.

Speaker Change: To close our premium ROE reflects sufficient capital deployment diversified funding prudent risk management disciplined expense control and the execution of our client focused strategies, including the acquisition of HSBC, Canada.

Speaker Change: In turn our strong internal capital generation through economic cycles allows us to invest in organic growth, while also returning capital to shareholders.

Speaker Change: Now I'd like to turn it over to Katherine Gibson, our interim CFO and welcome her to her first quarterly call Catherine brings deep financial sector experience and knowledge of RBC Catherine overdue.

Catherine Gibson: Thanks, Dave, and good morning, everyone. Overall, our results benefited from strong revenue momentum across all our states, underscoring the bank's diversified business model. Disciplined cost management also drove robust operating leverage. Starting on slide 8, we reported earnings per share of $2.74.

David McKay: Thanks, Dave and good morning, everyone.

Catherine Gibson: Overall, our results benefited from strong revenue momentum across all our statement underscoring the bank's diversified business model.

Catherine Gibson: Disciplined cost management also drove robust operating leverage.

Speaker Change: On slide eight we reported earnings per share of $2.74 this quarter.

Catherine Gibson: Adjusted diluted earnings per share was $2.92, up 9% from last year. These adjusted results included a net loss from HSBC Canada of $33 million, reflecting the Day 1 PCL impact of $145 million after tax. We are excited by the earnings power from this transaction, as it will provide yet another source of internal capital generation. Turning to capital on slide 9, we reported a CET1 ratio of 12.8%, down 210 basis points from last quarter, reflecting the impact of the HSBC Canada transaction and strong client-driven volume growth.

Speaker Change: Adjusted diluted earnings per share was $2.90.

Speaker Change: 9% from last year.

Speaker Change: These adjusted results included a net loss from HSBC, Canada, 33 million, reflecting a day, one PCL impact of 145 million after tax.

Speaker Change: We are excited by the earnings power from this transaction as it will provide yet another source of internal capital generation.

Speaker Change: Turning to capital on slide nine we reported a CET one ratio of 12, 8% down 210 basis points from last quarter, reflecting the impact of the HSBC, Canada transaction and strong client driven volume growth.

Catherine Gibson: This was partly offset by the ongoing strength in internal capital generation. We do not expect the Basel III floors to be binding in fiscal 2024 and anticipate a minimal impact in the second half of 2025 absent any optimization action.

Speaker Change: It's partly offset by the ongoing strength in internal capital generation.

Speaker Change: We do not expect the Basel III, Florida city binding in fiscal 'twenty, 'twenty, four and anticipate a minimal impact in the second half of 2020 five absent optimization actions.

Catherine Gibson: Moving to slide 10, all bank net interest income was up 9% year-over-year or up 10% excluding trading revenue. These results were largely driven by higher spread and average volume growth in Canadian banking, as well as the addition of HSBC Canada. We also recognize purchase accounting fair value adjustments on HSBC Canada loans, which will accrete to net interest income over time. This quarter, the benefit was $45 million.

Speaker Change: Moving to slide 10, I'll think net interest income was up 9% year over year or up 10% excluding trading revenue.

Speaker Change: These results were largely driven by higher spreads and average volume growth in Canadian banking.

Speaker Change: Well as the addition of HSBC Canada.

Speaker Change: We also recognized purchase accounting fair value adjustments on HSBC, Candida alone, which will accrete to net interest income overtime.

Speaker Change: This quarter the benefit with 45 million.

Catherine Gibson: All Bank NIM, excluding trading revenue, was up three basis points from last quarter, driven by tailwinds in Canadian banking. However, this was partly offset by the dilutive impact of HSBC Canada's lower-yielding $21 billion securities portfolio that has been consolidated into our existing portfolios in corporate support. Canadian Banking NIM was up four basis points from last quarter. HSBC Canada added two basis points to NIM this quarter as a benefit from the accretion of purchase accounting fair value adjustment was partly offset by modest dilution from the HSBC Canada portfolio. Core Banking NIMS was a few basis points sequentially.

Speaker Change: All bank NIM, excluding trading revenue was up three basis points from last quarter, driven by tailwind in Canadian banking.

Speaker Change: This was partly offset by the dilutive impact of HSBC, Canada, lower yielding 21 billion securities portfolio that has been consolidated into our existing portfolios and corporate support.

Speaker Change: Canadian banking NIM was up four basis points from last quarter.

Speaker Change: S. P C. Canada added two basis points in NIM this quarter as it benefit from the accretion of purchase accounting fair value adjustment was partly offset by modest dilution from the HSBC candidate portfolio.

Speaker Change: Core banking in place.

Speaker Change: Two basis points sequentially.

Catherine Gibson: This structural advantage of our Tractored Core Personal Banking Deposit Portfolio continued to come through this quarter, reflecting the latent benefit of interest rate hikes. Additionally, we saw benefits from changes in asset mix associated with seasonally higher credit card revolve rates, which we anticipate will come off next quarter. These benefits were partly offset by ongoing intense competition for deposits. Going forward, with five-year swap rates up approximately 200 basis points from five years ago, our core deposit portfolio is well-positioned for continued benefits from tractor maturities rolling on at higher yields. We expect this benefit to be partly offset by ongoing market competition and a moderating client-driven shift into higher-yielding deposits.

Speaker Change: The structural advantage of very attractive core personal banking deposit portfolio continue to come through this quarter, reflecting the latent benefit of interest rate hike.

Speaker Change: Additionally, we saw benefits from changes in asset mix associated with seasonally higher credit card revolve rate, which we anticipate will come off next quarter.

Speaker Change: These benefits were partly offset by ongoing intense competition for deposit.

Speaker Change: Going forward with five year swap rates up approximately 200 basis points from five years ago. Our core deposit portfolio is well positioned for continued benefit from tractor maturities rolling on at higher yields.

Speaker Change: We expect this benefit to be partly offset by ongoing market competition, and a moderating client driven shifts into higher yielding deposit while the migration of bankers' acceptances to core Baseload, maybe marginally dilutive to NIM, we expect the impact will be net neutral to total revenue.

Catherine Gibson: While the migration of bankers' acceptances to core-based loans may be marginally diluted to NIMS, we expect the impact will be net neutral to total revenue. In addition, the benefit of HSBC Canada purchase price marks will continue to accrete into net interest income, adding approximately $135 million per quarter in 2024, followed by $110 million benefit per quarter in 2025. This will partially offset modest dilution from a relatively lower-yielding HSBC Canada portfolio.

Speaker Change: In addition, the benefit of HSBC candidate purchase price marks will continue to accrete into net interest income, adding approximately $135 million per quarter in 'twenty 'twenty four followed by a 110 million benefit per quarter in 2020 five.

Speaker Change: Partially offset modest dilution from our relatively lower spread HSBC, Canada portfolio.

Catherine Gibson: Taken all together, we anticipate Canadian banking net interest margins to be slightly higher in the back half of the year. Moving to slide 11, non-interest expenses were up 12% from last year. Adjusted expense growth was 8%, excluding HSBC Canada transaction and integration costs, as well as the impact of amortization of intangibles. Further, excluding macro-driven factors such as FX and share-based compensation and the addition of HSBC Canada run rate expenses, core expense growth was 6% year-over-year.

Speaker Change: Taken all together, we anticipate Canadian banking net interest margin to be slightly higher in the back half of the year.

Moving to slide 11.

Speaker Change: Non interest expenses were up 12% from last year.

Speaker Change: Expense growth was 8%, excluding HSBC, Canada transaction and integration costs as well as the impact of amortization of intangible.

Speaker Change: Further excluding the macro driven factors such as FX and share based compensation and the addition of HSBC candidate run rate expenses.

Speaker Change: Core expense growth was 6% year over year.

Catherine Gibson: Higher variable compensation, driven by strong results in capital markets and wealth management, made up 4% of the core expense growth. Looking forward, all bank core expense growth, inclusive of HSBC Canada business costs, is expected to come in at the top of the mid-single-digit range for fiscal 2024.

Speaker Change: Higher variable compensation driven by strong results in capital markets and wealth management made up 4% of the court and scrubbed.

Speaker Change: Looking forward all bank core expense growth inclusive of HSBC, Canada business car is expected to come in at the top of the mid single digit range for fiscal 'twenty 'twenty four.

Catherine Gibson: Turning now to our Q2 segment results, beginning on slide 12, personal and commercial banking reported earnings of $2.1 billion. Canadian banking net income was up 7% year-over-year, including a day-one PCL of $181 million. My following comments will now exclude any impact on Canadian banking from HSBC Canada.

Speaker Change: Turning now to our Q2 segment results beginning on slide 12, personal and commercial banking reported earnings of $2 1 billion Canadian banking net income was up 7% year over year, including a day one P. C out of 181 million Mike.

Mike: My following comments will now exclude any impact to Canadian banking from HSBC, Canada.

Catherine Gibson: Canadian banking's earnings were up a strong 11% year-over-year. Net interest income was up 11% from last year. Non-interest income was up 5% year-over-year as increased client activity underpinned higher service revenue and FX revenue, while market appreciation drove higher mutual fund distribution. Expenses were up 3% from last year, helping to drive 6% operating leverage. For the full year, including the benefit from the HSBC candidate transaction, we now expect Canadian banking operating leverage to come in above our historical 1-2% target range.

Mike: Canadian Banking's earnings were up a strong 11% year over year net interest income was up 11% from last year.

Mike: Noninterest income was up 5% year over year as increased client activity underpinned higher service revenue and FX revenue well, Mike market appreciation drove higher mutual fund distribution fees.

Mike: Expenses were up 3% from last year, helping to drive 6% operating leverage for the full year, including the benefit from the HSBC candidate transaction, we now expect Canadian banking operating leverage to come in above our historical one to two per cent target range.

Catherine Gibson: Turning to slide 13, wealth management's earnings were up 7% from last year. The underlying performance of our wealth management advisory and asset management business benefited from the higher fee-based client assets across each of our businesses, largely reflecting market appreciation and net sales. These factors were partly offset by higher variable compensation and lower net interest income in our Canadian and international wealth management businesses. City National generated $73 million in adjusted earnings this quarter, or $86 million excluding the impact of the FDIC special assessment.

Mike: Turning to slide 13 wealth management earnings were up 7% from last year.

Mike: Underlying performance of our wealth management advisory and asset management business benefited from the higher fee based client assets across each of our businesses.

Mike: Largely reflecting market appreciation and net sales.

Mike: These factors were partly offset by higher variable compensation and lower net interest income in our Canadian and international wealth management businesses.

Mike: Any national generated 73 million U S. In adjusted earnings this quarter or 86 million U S. Excluding the impact of the FDIC Special assessment.

Catherine Gibson: Looking forward, our efforts to enhance expense and capital efficiency and deepen client relationships should allow City National to achieve more normalized profitability as we exit 2025. However, the path to normalized profitability may not be linear from quarter to quarter. Turning to capital markets results on slide 14, pre-provisioned pre-tax earnings of $1.4 billion increased 24% from last year. Corporate and investment banking revenue was up 23% from last year, reflecting record investment banking fees, underpinned by market share gains across all major products and a recovery in fee pools. Global markets revenue was up 8% from last year, including higher fixed income trading revenue led by mortgages and secured financing.

Mike: Looking forward, our efforts to enhance expense and capital efficiency and deepen client relationships should allow city national to achieve more normalized profitability as we exit 2025.

Mike: However, the path to normalized profitability may not be linear from quarter to quarter.

Mike: Turning to capital markets results on slide 14, pre provision pre tax earnings of $1 4 billion increased 24% from last year.

Mike: Corporate and investment banking revenue was up 23% from last year, reflecting record investment banking fees underpinned by market share gains across all major products and a recovery in fee pool.

Mike: Global markets revenue was up 8% from last year, including higher fixed income trading revenue led by mortgages and secured financing. This was partially offset by normalization in rates trading from a very robust quarter last year.

Catherine Gibson: This was partially offset by normalization in rates trading from a very robust quarter last year. However, strong results year-to-date benefited from very robust investment banking activity and higher volumes in global markets. While we continue to see good client activity levels and momentum in our business performance, we expect results in the second half to be seasonally lower. Turning to insurance, on slide 15, net income of $177 million was up 4% from last year, driven by a higher insurance investment result from favorable investment-related experience.

Mike: Strong results year to date benefited from very robust investment banking activity.

Mike: Higher volumes in global markets, while we continue to see good client activity levels and momentum in our business performance. We expect results in the second half to be seasonally lower.

Mike: Yeah.

Mike: Turning to insurance on Slide 15, net income of 177 million was up 4% from last year, driven by a higher insurance investment results from favorable investment related experience.

Catherine Gibson: It is important to note that the results for the prior year period are not fully comparable as we were not managing our asset and liability portfolios under IFRS 17. Turning to slide 33, this quarter, we included additional details on our corporate support cycle. Results for corporate support mainly reflect enterprise-level activities, which are not allocated to business segments, and therefore represent a modest 3% of all bank-average assets. Results in the first half of the year included slightly elevated earnings on excess capital we were holding ahead of the HSBC Canada transaction close.

Mike: It is important to note that the results in the prior year period are not fully comparable as we were not managing our asset and liability portfolios under Ifr 17.

Mike: Turning to slide 33. This quarter. We included additional details on our corporate support segment.

Mike: Results for corporate support mainly reflect enterprise level activities, which are not allocated to business segments, and therefore represent a modest 3% of all bank average asset.

Mike: Results in the first half of the year included slightly elevated earnings on excess capital. We were holding ahead of the H S. P. C candidate transaction close.

Catherine Gibson: As we look to the rest of the year, we expect corporate support to generate a net loss of approximately $100 to $150 million per quarter. To conclude, our focus on thoughtful capital allocation and ongoing discipline around cost containment contributed to this quarter's strong results and remains a key priority going forward. With that, I'll now turn it over to Graeme.

Mike: As we look to the rest of the year, we expect corporate support to generate a net loss of approximately 102 hundred $50 million per quarter.

Speaker Change: To conclude our focus on thoughtful capital allocation and ongoing discipline around cost containment contributed to this quarter's strong results and remains a key priority going forward with that I'll now turn it over to grant.

Graeme Hepworth: Thank you, Catherine, and good morning, everyone. Starting on slide 17, I'll discuss our allowances in the context of both the macroeconomic environment and the HSBC Canada acquisition. As Dave noted earlier, the economies of Canada and the U.S. continue to diverge. In Canada, relatively weaker consumer demand, higher unemployment rates, and the impact of almost two years of elevated interest rates are continuing to weigh on consumers and businesses. In the U.S., more persistent inflation means forwards may have to cope with a more prolonged period of higher interest rates.

Grant: Thank you Catherine and good morning, everyone.

Grant: On slide 17, I will discuss our allowances in the context of both the macroeconomic environment and the HSBC Canada acquisition.

Grant: As Dave noted earlier, the economies of Canada, and the U S continue to diverge in Canada relatively weaker consumer demand higher unemployment rates and the impact of almost two years ago that had interest rates, we're continuing to wait when consumers and businesses.

Grant: In the U S. More persistent inflation. These words they'd have to cope with a more prolonged period of higher interest rates.

Graeme Hepworth: With this backdrop, we saw credit quality continue to weaken this quarter with net credit downgrades, additions to our watch list, and elevated delinquency rates. These outcomes are in line with our expectations for where we are in the credit cycle. As we were consistent with last quarter, we added reserves on performing loans reflecting weaker credit quality, partially offset by a release of reserves reflecting an improving macroeconomic outlook. During the quarter, we also added reserves for the performing loans we acquired from HSBC Canada.

Speaker Change: We can start truck we saw critical quality continue to weaken this quarter with net credit downgrades additions to our watch list.

Speaker Change: With your rates.

Speaker Change: These outcomes are in line with our expectations for where we are in the credit cycle.

Speaker Change: Consistent with last quarter, we added reserves on performing loans, reflecting weaker credit quality, partially offset by a release of reserves, reflecting an improving macroeconomic outlook.

Speaker Change: During the quarter. We also added reserves for performing loans, we acquired from HSBC, Canada.

Graeme Hepworth: As a reminder, the Acquired Impaired Loan came onto our balance sheet at its fair value, net of any credit impairment. Additionally, under IFRS 9 accounting rules, we are required to take provisions on the acquired performing portfolio.

Speaker Change: As a reminder, we acquired impaired loan came onto our balance sheet at their fair value net of any credit impairments.

Graeme Hepworth: These initial provisions are over and above the credit mark embedded in the fair value adjustment established for the purchase. This resulted in an initial provision on performing loans of $193 million this quarter. As this portfolio is all deemed to be Stage 1 in acquisition, provisions in the coming quarters will reflect credit migration moving more of the portfolio into Stage 2. Since the transaction closed, our analysis has confirmed the credit quality of the acquired portfolio is strong and in line with our expectations from due diligence.

Speaker Change: Really under I personally and accounting rules, we are required to take provisions on the acquired performing portfolio.

Speaker Change: These additional provisions are over and above the credit more competitive than the fair value adjustment established for the purchase.

Speaker Change: This resulted in an initial provision on performing loans of 193 million in this quarter.

Speaker Change: This portfolio was all deemed to be stage wanted acquisition provisions in the coming quarters will reflect credit migration moving more of the portfolio into stage two.

Speaker Change: Since the transaction close our analysis has confirmed a critical you'll be acquired before our portfolio is strong and in line with our expectations from due diligence.

Graeme Hepworth: Relative to our Canadian banking commercial portfolio, the acquired commercial loans have a similar ratings profile, are skewed towards larger exposures, and are more diversified by sector. Compared to our Canadian banking retail portfolio, the acquired retail loans are more concentrated in residential mortgages. However, the acquired mortgages have a lower average loan-to-value ratio and are supported by clients with relatively higher incomes and better FICO scores. Across acquired loans and our existing portfolio, we took a total of $244 million of provisions on performing loans this quarter.

Speaker Change: Relative to our Canadian banking commercial portfolio.

Speaker Change: Commercial loans with similar ratings profile are skewed towards larger exposures are more diversified by sector.

Speaker Change: Compared to our Canadian banking retail portfolio.

Speaker Change: Retail loans are more concentrated in residential mortgages.

Speaker Change: For the acquired mortgages have a lower average loan to value ratio.

Speaker Change: Courted by clients with relatively higher incomes and better FICO scores.

Speaker Change: Across the acquired loans in our existing portfolio, we took a total of $244 million of provisions on performing loans this quarter.

Graeme Hepworth: Our total ACL on loans and acceptances increased by $444 million to $6.1 billion and represents over 2.8 times our PCL on impaired loans over the last 12 months. Moving to slide 18, growth-impaired loans were up $1.1 billion, or seven basis points this quarter, primarily due to increases in capital markets and Canadian banking. In capital markets, new formations of $809 million were largely a function of two loans.

Speaker Change: Our total ACL on loans and acceptances increased by 444 million to $6 1 billion and represents over 2.8 times, our PCL on impaired loans over the last 12 months.

Speaker Change: Moving to slide 18, gross impaired loans were up $1 1 billion or seven basis points this quarter.

Speaker Change: Due to increases in capital markets and Canadian basins.

Speaker Change: And capital markets, New formations of 809 million were largely a function of two loans.

Graeme Hepworth: One loan was in the commercial real estate sector, which I'll speak to shortly. And the other loan was a securitization transaction related to a corporate board that defaulted last quarter in the automotive sector. As with relatively large impaired loans, securitization facilities are structured to minimize loss in the event of default. In Canadian banking, new formations were lower compared to last quarter.

Speaker Change: Within the commercial real estate sector, which I'll speak to shortly and the other loan was a securitization transaction related to our corporate board of defaulted last quarter in the automotive sector.

Speaker Change: This is a relatively large impaired loans securitization facilities are structured to minimize loss have you been to the fold.

Speaker Change: You could even breaking new formations were lower compared to last quarter, we remain elevated reflecting both the macroeconomic environment that I noted earlier and he appeared loans, we acquired from HSBC, Canada.

Graeme Hepworth: We remain elevated, reflecting both the macroeconomic environment that I noted earlier and the impaired loans we acquired from HSBC Canada. Despite higher formations of gross impaired loans this quarter, you can see on slide 19 that provisions on impaired loans were down $13 million over one basis point relative to last quarter. Monopoly higher provisions in Canadian banking and wealth management were more than offset by lower provisions in capital markets. In our Canadian banking retail portfolio, provisions were up $24 million, driven by higher provisions on credit. In our Canadian baking commercial portfolio, provisions were down $9 million compared to last quarter, remaining above pre-pandemic levels.

Speaker Change: Despite higher formations of gross impaired loans. This quarter you can see on slide 19, the provisions on impaired loans were down $13 million or one basis point relative to last quarter.

Speaker Change: One of the higher provisions in Canadian banking and wealth management were more than offset by lower provisions in capital markets.

Speaker Change: And our Canadian banking retail portfolio provisions were up $24 million driven by higher provisions on credit cards.

Speaker Change: And anybody can commercial portfolio provisions were down 9 million compared to last quarter were made up of pre pandemic levels.

Graeme Hepworth: Current outcomes in the commercial portfolio are in line with our expectations, with stress in the portfolio skewed to smaller borrowers, borrowers in sectors that are closely tied to consumer spending, and borrowers still recovering from the impacts of the pandemic. In capital markets, provisions were down $46 million compared to last quarter, primarily due to a reversal on a previously impaired loan in the oil and gas sector. This quarter, nearly three-quarters of our capital markets provisions were taken on a multi-family commercial real estate loan backed by a portfolio of rent-controlled properties in San Francisco.

Speaker Change: But until it comes in the commercial portfolio are in line with our expectations with stress in the portfolio skewed to smaller borrowers borrowers in sectors that are closely tied to consumer spending and where we're still recovering from the impact of the pandemic.

Speaker Change: In capital markets provisions were down 46 million compared to last quarter, primarily due to a reversal of a previously impaired loan can be oil and gas sector.

Speaker Change: This quarter nearly three quarters of our capital markets provisions were taken in the multifamily commercial real estate loan backed by a portfolio.

Speaker Change: Rent control properties in San Francisco.

Graeme Hepworth: We have now had two large impairments in provisions of our U.S. multifamily commercial real estate portfolio, so we have provided some additional details on our exposure on slide 20. This sector has generally been performing well, supported by strong demand for housing. However, pockets of geographic weakness have surfaced on rent-controlled properties in places like New York and San Francisco.

Speaker Change: We've now had two large impairments and provisions of our U S multifamily commercial real estate portfolio. So we have provided some additional details of our exposure on slide 20.

Speaker Change: The sector has generally been performing well supported by strong demand for housing.

Speaker Change: There are pockets of geographic weakness have surfaced on rent control properties in places like New York and San Francisco.

Graeme Hepworth: Our exposure to U.S. multifamily commercial real estate loans of $8.3 billion represents less than 1% of total loans accepted. Almost two-thirds of our exposure is in wealth management, where loans typically benefit from amortization and additional recourse outside of the properties held as collateral. Today, impairments and losses have been in our capital markets portfolio on rent-controlled properties in San Francisco, following a deep dive into our remaining $1.9 billion performing capital markets exposure to the sector.

Speaker Change: For exposure to U S multifamily commercial real estate loans of $8 3 billion represents less than 1% of total acceptances.

Speaker Change: Almost two thirds of our exposures in wealth management where loans.

Speaker Change: We benefit from amortization and additional recourse outside of the properties held as collateral.

Speaker Change: Today's impairments and losses have been another capital markets portfolio on rent control properties in San Francisco.

Speaker Change: For a deep dive into our remaining 1.9 billion performing couple Martha market's exposure to the sector.

Graeme Hepworth: We remain comfortable with the risk, and we are not expecting any additional impairments at this time. Stepping back from the multifamily sector and looking at commercial real estate more broadly, as I noted last quarter, impairments of losses have been consistent with our expectations and are well within our risk tolerance. We remain prudently provisioned for exposure to this sector, with our downside provisioning scenarios accounting for a reduction in commercial real estate prices of $25 to $40 billion.

Speaker Change: We remain comfortable with the risk we were not expecting any additional impairments at this time.

Speaker Change: Stepping back from the multifamily sector looking at commercial real estate more broadly because I noted last quarter impairments of losses have been consistent with our expectations and are well within our risk appetite.

Speaker Change: We remain prudently provision with for exposure to this sector with our downside provisioning cereals accounting for a reduction in commercial real estate prices are 25% to 40%.

Graeme Hepworth: To conclude, credit performance this quarter remained in line with our expectations, and we will continue to expect provisions on impaired loans between 30 and 35 basis points for the year. We are pleased with the quality of the loans we acquired from HSBC Canada, and, as Dave noted earlier, we are thrilled with how well the integration is going. Alongside provisions we took on the acquired loans, we continue to prudently build reserves on performing loans, reflecting the credit outcomes of the software macroeconomic environment we are currently experiencing.

Speaker Change: To conclude crude credit performance this quarter remained in line with our expectations.

Speaker Change: Continue to expect provisions on impaired loans between 30, and 35 basis points for the year.

Speaker Change: We are pleased with the quality of the loans, we acquired from HSBC, Canada and as Steve noted.

Speaker Change: Earlier, we were thrilled with how well the integration has gone.

Speaker Change: Alongside provisions we took on the acquired loans, we continue to prudently build reserves on performing loans, reflecting the credit though it comes with the softer macroeconomic environment. We're currently experiencing.

Graeme Hepworth: Moving forward, credit outcomes will continue to be dependent on the magnitude and change in unemployment rates, the direction and magnitude of changes in income, and residential and commercial real estate prices. And as always, we continue to proactively manage risk through the cycle. We remain well-capitalized to withstand plausible, yet more severe macroeconomic outcomes. With that, Operator, let's open the lines for Q&A. Thank you.

Speaker Change: Moving forward credit outcomes, we will continue to be dependent on the magnitude of change and unemployment rates direction and magnitude of changes in interest rates in residential and commercial real estate prices.

As always we continue to proactively manage risk through the cycle, we remain well capitalized with stern plausible worst severe macroeconomic outcomes.

Speaker Change: So with that operator, let's open the lines for Q&A.

Operator: Thank you. We will now take questions from the telephone lines. If you have a question, please press Star 1 on your device's keypad. You may cancel your question at any time by pressing Star 2. Please press star 1 at this time if you have a question. There will be a brief pause while the participants register their questions. Thank you for your patience. The first question is from John Aiken from Jeffreys; please go ahead. Good morning. Well, I'd like to

Thank you we will now take questions from the telephone lines. If you have a question. Please press star one on your devices keep them you might can solve your question at any time by pressing star two P. M.

Speaker Change: Press Star one at this time, if you have a question there wouldn't be a brisk balls windup they spend with this stuff all questions. Thank you for your patience.

Speaker Change: The first question is from John Kim from Jefferies. Please go ahead.

John Aiken: Good morning, I would like to kick this off with a question not related to HSBC, Canada.

Speaker Change: Derek a very strong performance in capital markets. This quarter I know Kathleen mentioned in her prepared remarks that we should expect some level of moderation, but in terms of having us try to triangulate what that what that means can you give us a sense in terms of what the pipeline is for your advisory work and how comfortable you are with the.

Speaker Change: Current quarter's run rate stuff on trading.

Derek Neldner: Sure. Thanks, John. I appreciate the question.

John: Sure. Thanks, John I appreciate the question.

Speaker Change: Obviously, we're very pleased we had a very strong second quarter results in capital markets and that really reflected as Dave touched on most of the improvement in the overall client activity, but also continued a fairly significant market share gains that we saw across all of our products as we look forward we can.

Derek Neldner: Obviously, we're very pleased. We had very strong second quarter results in capital markets, and that really reflected, as Dave touched on, both an improvement in the overall client activity but also continued and fairly significant market share gains that we saw across all of our products. As we look forward, we continue to think the environment will remain quite constructive. If we look at the fundamentals for investment banking, for example, as we're starting to see a little further clarity on the economic environment and outlook for the next two years, stabilization in the rate environment, obviously improving capital markets, and availability of financing.

Speaker Change: To think the environment will remain quite constructive if we look at the fundamentals for investment banking for example, as we're starting to see a little further clarity on the economic environment and outlook over the next two years.

Speaker Change: Stabilization in the rate environment is obviously, improving capital markets and availability of financing that is all coming together to drive.

Derek Neldner: That is all coming together to drive further both strategic M&A activity but also associated financing with that. We think those fundamentals will continue and create a healthy environment. That being said, and to Catherine's comments, obviously we've had a very strong first half. We do tend to see some slower seasonality as we go into the second half. As well, when you just look at some of the ongoing uncertainty around the exact trajectory of rates if we're in a higher for longer scenario and financing costs remain a little elevated combined with probably some uncertainty as we look at a range of global elections underway we think that will likely moderate activity a little bit as we go into h2 but as we look at our you know previously stated guidance of 1.1 billion a quarter pre-provision pre-tax we remain very comfortable the strategic steps we're taking will continue to allow us to help perform that kind of Great, thanks for the call.

Catherine Gibson: There are both strategic M&A activity, but also associated financing with that are we think those fundamentals will continue and create a healthy environment that being said and to Catherine's comments. Obviously, we've had a very strong first half we do tend to see some slower.

Catherine Gibson: Analogy as we go into the second half.

Catherine Gibson: And as well when you just look at some of the ongoing.

Catherine Gibson:

Catherine Gibson: Uncertainty around the exact trajectory of rates.

Catherine Gibson: If we're at a higher for longer scenario and financing costs remain a little elevated combined with probably some uncertainty as we look at a range of global elections underway, we think that will likely moderate activity a little bit as we go into H two.

Catherine Gibson: As we look at our previously stated guidance of $1 1 billion a quarter pre provision pre tax we remain very comfortable that the strategic steps. We're taking will continue to allow us to outperform that kind of a benchmark.

Speaker Change: Great. Thanks for the color Derik I'll requeue.

Operator: Thank you. The next question is from Ebrahim Poonawala, from Bank of America. Please go ahead.

Thank you.

Speaker Change: Next question is from you Brian now Mueller Bank of America. Please go ahead.

Ebrahim Poonawala: Good morning. I guess maybe a question, Dave, for you. With HSBC now done, like, I was just thinking about strategy for oil. The opinions rendered herein are those of the guests, and not necessarily those of Douglas. Just in terms of the mindset, where do you think you can play offense to drive growth? Is it in Canada? Is it in the U.S.?

Brian: Hey, good morning I.

Speaker Change: I guess maybe question Dave for you.

Speaker Change: With each as we see now done like I was just thinking about strategically for oil.

15, 5% auto E capital levels, where they are today, just give us a sense of how you're thinking about capital allocation from here.

Speaker Change: Just in terms of the mine seem where you think you can play offense to drive growth is it in Canada is it in the U S. And also just maybe if you can double click on the opportunity created by RBC clear in kind of cross selling to your sort of capital markets. Thank you.

David McKay: And also, just maybe, if you could double-click on the opportunity created by RBC Clear for some kind of cross-selling to your sort of capital markets plans. Thank you.

David McKay: Great, thanks, Ebrahim. I'll answer the first part and ask Derek to start off with RBC Clear, which we're really excited about and off to a great start. As far as our ROEs and capital generation are concerned, we are in a very good place. As you saw, on an adjusted basis, 15.5% ROE. We have a strong path to our target range of 16 plus percent when you start looking at executing on the remaining HSBC synergies, fee-based income opportunities, we have margin expansion, roll-on, roll-offs in our books, cross-sell, all of that gives us a strong path to 16 plus percent.

Speaker Change: Great. Thanks, Ebrahim and I'll answer the first part and as Derek to start off with with RBC clear, which we're really excited about it.

Derek Neldner: Off to a great start now as far as our are always in any capital generation. We are in a very good places you saw it on adjusted basis 15, 5% Roe.

Derek Neldner: We have a strong path to our target range of 16% when you start looking at extra executing on the remaining HSBC synergies fee based income opportunities, we have margin expansion and roll on roll off our books cross sell all of that.

Derek Neldner: Give us a strong path to the 16 plus percent. So as you think about the capital generation, that's coming off that strong ROA gives us enormous strategic flexibility as you point out to return capital to our shareholders, but also to continue to build out our core wealth franchises.

David McKay: And so as you think about the capital generation that's coming off that strong ROE, it gives us enormous strategic flexibility, as you point out, to and commercial franchises in the U.S. and in Europe. So as we think about those opportunities and we prepare, we'll have that capital that will allow us to, in a timely way, do that. Having said that, our current focus is on the enormous organic opportunities in front of us, whether it's the work that we're doing in simplifying and working in the U.S. through Derek and the team there, the opportunities with Citi National, as we talked about the opportunities for executing the synergies with Bruin Dolphin internationally, bringing HSBC into the fold, and going on the offense after being on defense for 18 months.

Derek Neldner: Commercial franchises in U S and in Europe. So as we think about those opportunities and we prepare we'll have that capital generation that will allow us to in a timely way to do that having said that our current focus is on the enormous organic opportunities in front of us whether it's the work that we're doing and simplifying.

Derek Neldner: And working on the U S through through Derek and the team there the opportunities with city Nashville, as we talked about the opportunities and executing the synergies with Brewin dolphin internationally, bringing HSBC into the fold in and going on the offense after being on defense for 18 months.

David McKay: And I'd like to thank the HSBC Canada team for really holding this bank together through a very prolonged, uncertain approval period and execution period. They've been on the defense for 18 months, and now we're on the offense, and you can see the excitement in their eyes to get back. As you can imagine, it's hard to replace people who retire or leave when you're going through an acquisition conversion. It's even harder to bring in a new client when they're going to change banks and go through a conversion.

Derek Neldner: Like to thank the HSBC, Canada team for for really holding this bank together through a very prolonged uncertain approval period and execution period and they've been on the defense for 18 months and now we're on the offense and you can see the excitement in there is to get back.

Derek Neldner: Imagine, it's hard to replace people, who retire or leave when you're going through an acquisition conversion, it's even harder to bring a new client and when theyre going to change banks and go through conversion. So the team's done a great job and now we're back onto the offense. There so all of that drives opportunity and capital generation to grow organically, but also.

David McKay: So, the team did a great job, and now we're back on the offense there. So, all of that drives opportunity and capital generation to grow organically, but also, this enormous capital that we are generating gives us significant strategic flexibility in organics.

Derek Neldner: This enormous capital that we're generating gives us significant strategic flexibility inorganically.

Derek Neldner: Abraham, it's Derek. I'll address the question just on RBC Clear. Really, four key reasons we were really excited about the business, and we saw it as an attractive opportunity. First, it's a very large addressable market amongst our corporate clients, in particular. Second, it's another opportunity for us to further support our clients and deepen our relationships with them. Third, as Dave touched on, it provides a very important source of incremental funding and diversification of funding for our businesses in the U.S. And, then finally, at its core, it's a very attractive ROE business, an attractive efficiency ratio, and one that we think we can drive good earnings growth with over time at a compelling ROE.

Derik: Abraham it's Derik I'll address the question just on RBC clear.

Derek Neldner: <unk>.

Speaker Change: There's really four key reasons. We are we were really excited about the business and we saw it as an attractive opportunity first it's a very large addressable market amongst our corporate clients in particular second it's another opportunity for us to further support our clients and deepen our relationships with them.

Speaker Change: Third as Dave touched on it provides a very important source of incremental funding and diversification of funding for our businesses in the U S.

Speaker Change: And then finally at its core it's it's it's a a very attractive ROE business attractive efficiency ratio and one that we think we can drive good earnings growth with over time at a compelling Roe.

Derek Neldner: We've obviously had a multi-year initiative to launch the business. We're very excited to formally launch it in April. We very much partnered with a number of our clients along the journey to get their feedback on what was working in the market today, but also where they were seeing pain points and opportunities for a new entrant to provide a differentiated offering. In this case, we had the benefit in the U.S. of coming at this with a bit of a blank sheet of paper, and so we were able to build a very digitally enabled system based on the feedback from our clients.

We've obviously had a multi year initiative to to launch the business and we're very excited to formally launch it in April we very much partnered with a number of our clients along the journey to get their feedback on what was working in the market today, but as well where they were seeing pain points and.

Speaker Change: <unk> for a new entrant to provide a differentiated offering our in this case, we had the benefit in the U S. I'm coming at this with a bit of a a blank sheet of paper and so we're able to build.

Speaker Change: Build a very digitally enabled system based on the feedback from our clients and it's early days given we just launched in April but a very positive very favorable result to date it will be a multi year journey to continue to build this out but I think a very attractive standalone opportunity obviously the U S dollar funding it provide.

Derek Neldner: And it's early days given we just launched in April, but a very positive, very favorable result to date. It will be a multi-year journey to continue to build this out, but I think it is a very attractive standalone opportunity. Obviously, the U.S. dollar funding it provides will be an important enabler for how we can continue to support clients through the loan book and other products we offer, and then you get a number of areas where it will connect into things like our foreign exchange offering and otherwise where it ties into existing products we offer to clients and allows us to serve them in an even more integrated and holistic way. So, very excited about it.

Speaker Change: <unk> will be an important enabler for how we can continue to support clients through the loan book and other products. We offer and then you get a number of areas, where it will connect into things like our foreign exchange offering and otherwise where it ties into existing products. We offer to clients that allows us to serve them in an even more integrated and holistic way so.

Speaker Change: I'm very excited about it.

Derek Neldner: And does this business need to be global in scale to kind of clearly get the full benefit of what your clients might need? Or can you be a U.S.-only business in cash management and still pick up a decent amount of market?

And does this business need to be global and skills to kind of really get the full benefit from what your clients might need or can you be a U S only business and cash management and still pick up a decent amount of market share.

Derek Neldner: I think there's a very strong opportunity in the U.S. We obviously do have a very strong and leading Canadian cash management platform today that, over time, we can connect between the geographies. We think there's a huge opportunity in the U.S. As we execute on that, we can obviously look at further places we can expand the offer.

Speaker Change: I think there's a very very strong opportunity in the U S. We obviously do have they are very very strong and leading Canadian cash management platform today that over time, we can connect between the geographies are we think there's a huge opportunity in the U S. As we execute on that we can obviously look at you know further places we can expand the offering.

David McKay: Thank you, Ebrahim. The plan is more to move it downmarket into mid-corporate and mid-commercial as well. There's a significant opportunity in the United States to look at different target segments. So this platform is extendable horizontally and vertically, which is great.

Ebrahim: I think ebrahim if the plan is more to move it down market into the mid corporate mid commercial as well as there's a significant opportunity in the United States to look at different target segments. So this platform is extendable horizontally and vertically which is great.

Ebrahim Poonawala: That's helpful. Thank you.

Speaker Change: That's helpful. Thank you.

Operator: Thank you. The next question is from Meny Grauman from Scotiabank. Please go ahead.

Speaker Change: Thank you next question is from many girl man from Scotiabank. Please go ahead.

Meny Grauman: Hi, good morning. Graeme, you're guiding to 30 to 35 basis points on the impaired PCL loan ratio. You've been trending at the low end of that. I'm wondering... The expectations for the second half of the year, do you see a reasonable chance that we could get to the higher end of that, given your rate outlook? And in terms of where you see that peaking, whether it's this year or next year on a quarterly basis in terms of that impaired PCL ratio?

Speaker Change: Hi, Good morning, Glenn you're guiding to 30 to 35 basis points on the impaired PCL loan ratio you've been trending at the low end of that so I'm wondering.

Speaker Change: Expectations for the second half of the year, you see reasonable chance that we could get to the higher end of that given your rate outlook.

Speaker Change: And.

Speaker Change: In terms of where you see that peaking whether its this year next year on a quarterly basis in terms of that impaired PCL ratio.

Graeme Hepworth: Thanks for the question. Overall, I wouldn't say our outlook on the path of credit here has changed tremendously from Q1. I think we're very much kind of progressing on that path that we kind of had seen previously. You know, I think when we break that down by businesses and just reiterate some of those kind of similar themes.

Yeah. Thanks.

Speaker Change: Thanks for the question.

Speaker Change: So overall I wouldn't say our outlook on the path of credit here has changed tremendously from from Q1, I think we're pretty much kind of progressing on that path that we had seen previously.

You know what I think when you break that down by businesses and just reiterate some of those it was kind of similar themes I.

Graeme Hepworth: I think certainly when we think about retail credit and retail credit in Canada, I think we're still on kind of the upswing there, particularly led by the unsecured retail products, your cards, and your unsecured RCL products. That's where we kind of see the most impact kind of rolling forward here. And so, you know, and then if you kind of go on the other end, the kind of large corporate wholesale side of it, that's been running it kind of, I would say, at the higher end and more elevated levels for the last kind of, you know, year and change. And I don't really expect that necessarily to accelerate; in fact, it might be an opportunity the other way around.

Speaker Change: I think certainly when we think about retail credit in retail credit in Canada, I think we're still in kind of the upswing there, particularly led by the unsecured retail products your cards and your unsecured unsecured household products and that's where we kind of see the most impact to kind of rolling forward here and so you know I don't know if.

Speaker Change: If you could kind of go together and kind of large corporate wholesale side of it that's been running at kind of I would say at the higher end and were elevated levels for the last kind of you know you're in change and I don't really expect that necessarily to accelerate.

We'd be opportunity the other way there and so I think when you put all that together, we still see in aggregate that are that the stage three PCL probably continues to increase to some degree through 2024 and kind of peaks out at the end of this year and maybe in the first half of next year, and then stage one and two obviously, it's on top of that and we've been building that up for quite some time we've been in.

Graeme Hepworth: And so I think when you put all that together, you know, we still see an aggregate that the stage three PCL probably continues to increase to some degree through 2024 and kind of peaks out at the end of this year and maybe in the first half of next year. And then stage one and two, obviously, are on top of that, and we've been building that for quite some time. We've been in, you know, in conjunction with this kind of rate hiking cycle and the kind of economic consequences that that's creating, have been building reserves for two years on that.

Speaker Change: And you know in conjunction with this kind of rate hiking cycle and kind of the economic consequences that that's creating has been building reserves for two years on that you know that.

Graeme Hepworth: You know, how that moves forward really depends on kind of every quarter we reassess that forward outlook and reassess where our kind of credit quality sits. But at some point, we would expect that to start to fluctuate as that kind of peak period really comes into play, and we move from a building stage into a releasing stage. So, you know, I think that 30 to 35 we still feel good about this year, and I think 2025 will kind of reassess itself as we get closer to the end of the year.

Speaker Change: How that moves forward it really depend on kind of every quarter, we reassessed the forward outlook and reassessed for kind of credit quality sits.

Speaker Change: But at some point, we would expect that to start to toggle is that kind of peak period really comes in to play in and we moved from a building stage into a releasing stage. So you know I think that 30 to 35, we still feel good about this year and I think 'twenty 'twenty five we'll kind of reassess as we get closer to the end of the year.

Graeme Hepworth: And just a follow-up to that, if we see rate cuts, how long do you expect it to take for that to have a meaningful impact in terms of the behavior of the impaired PCL ratio? Yeah, I mean, right.

Speaker Change: And just a follow up to that if we see rate cuts how long do you expect it to take for that to have a meaningful impact in terms of the behavior.

Speaker Change: Peach TV.

Yeah, I mean, Rick.

Graeme Hepworth: rates, the rate environment, whether higher for longer or whether we're facing cuts is always a hard one to assess because it really Asim Imran, Douglas Guzman, Lemar Persaud, Asim Imran, Douglas Guzman, Douglas Guzman, Asim Imran, Douglas Guzman, Asim Imran, Douglas Guzman, Asim Imran, Douglas Guzman, Asim Imran, Douglas Guzman, As The next question is from Matthew Lee, Canaccord; please go ahead.

Speaker Change: Rates the rate environment, where there are higher for longer or whether we're facing cuts is always a hard one to south because it really.

Speaker Change: And so that by itself. It really is what's going on in the rest of the economy, there and so it's going to be much more driven by what's happening with unemployment, what's happening with home prices in conjunction with that.

Speaker Change: Certainly you know in our base case forecast in Canada, we do expect rate cuts to start to begin here shortly and that we do expect kind of 100 basis points of rate cuts.

Speaker Change: By the end of this year and then another hundred into next year on the U S side, we're obviously much more cautious about the rate environment. There I think we only have about 25 basis point cut in our forecast this year and that's at the tail end of the year and only another 50 next year and on the long end, we're not really anticipating much change there so more impact on the U S side.

Speaker Change: Those are in our baseline you know.

Speaker Change: P C O forecasts for her first nine modeling, we do have a pessimistic sooner that kind of looks at more severe outcomes, but it really kind of takes the interest rate environment it looks like.

Speaker Change: Things going wrong in that in an unemployment really picking up and GDP really pulling back on that so that's already kind of reflected in our ACO that since but again, it's hard to comment on the rates by itself. It really is dependent on what's happening with other key macroeconomic variables out there.

Speaker Change: Okay. Thank you very much.

Speaker Change: Thank you. The next question is from Matthew Lee Canaccord. Please go ahead.

Operator: Thank you. The next question is from Matthew Lee of Canaccord. Please go ahead.

Speaker Change: Hey, good morning, guys and welcome to the call Catherine I will ask one on HSBC can you maybe just talk about the early results and our customer retention strategy, maybe relative to your initial expectations and then provide some specifics that the way we're seeing the early cross sell opportunities post acquisition.

Neil Mclaughlin: Yeah, Matt, it's Neil. I'll take that one. Thanks for the question. Maybe we'll just start with retention. I think the headline really across all the businesses is that early retention is above our expectations. So we're quite pleased across all the businesses. And that's despite what Dave touched on, which was the extended approval timeline.

Neil Mclaughlin: Yeah, Matt, it's Neil I'll I'll pick that one thanks for the question, maybe I'll just start with retention and I think the headline really across all the businesses is that early retention is above our expectations. So we're quite pleased.

Neil Mclaughlin: Across all the businesses and that's despite what Dave touched on which was the extended approval timelines. So that did give us some concern I'd say, leading up to it but really pleased where we are on.

Neil Mclaughlin: On the consumer business overall.

Neil Mclaughlin: Overall client count is very strong the team actually grew the consumer client count in the quarter before migration, which we thought was a great outcome. Yeah, we're seeing some minor requests for consolidation amongst some of the larger borrowers.

Neil Mclaughlin: So that did give us some concern, I'd say, leading up to it, but we are really pleased where we are. On the consumer business, you know, overall client counts are very strong. The team actually grew the consumer client count in the quarter before migration, which we thought was a great outcome. You know, we're seeing some minor requests for consolidation amongst some of the larger borrowers, just to balance the sort of some of those syndications. Beyond that, I think we're really pleased. And that's entirely reasonable, I think, on the client's part.

Neil Mclaughlin: Just to balance the sort of some of those syndications beyond that I think where we're really pleased.

Speaker Change: And that's entirely reasonable I think on the clients are apart Dave spoke to business deposits and there was a couple of things there that we saw which were really non revenue generating lots.

Neil Mclaughlin: Dave spoke about business deposits, and there were a couple things there that we saw which were really non-revenue-generating roll-offs of business deposits, as HSBC held the EDC deposits for the CEBA account, which were really not providing any revenue, but there were about $5 billion of deposits that rolled off to pay off those CEBA loans. And we did see, as well, in the deposit business, some clients actually choose to come to RBC a bit early. And again, net net, a positive and just had both relationships and came to us, and just wanted to sidestep the migration.

Speaker Change: Well lots of business deposits as HSBC, how the E. D C deposits for the Ciba account, which we're really not providing any revenue, but there was about $5 billion deposits that rolled off to pay off those loans.

Speaker Change: And we did see as well in the deposit business some clients actually choose to come to RBC a bit early and again net net a positive and just had both relationships and came to us and just wanted to sidestep the migration, so topline and thank each of the businesses feel good about retention.

Neil Mclaughlin: So, top line, I think each of the businesses feel good about retention. Pivot to your question about cross-sell. I think it's a very similar story there.

Neil Mclaughlin: Each of the businesses identified opportunities where we think we've got a lot of revenue in the relationship, you know, the depth we can provide. In the consumer business, we identified things like just the credit card portfolio; we have a very strong lineup. We see an opportunity to really deepen it there. HSBC has not had a strong penetration of the HELOC product, which we really view as a much stickier lending product, so we would put that in the mix as well.

Speaker Change: But to your question about cross sell I think very similar story there each of the business is identified.

Speaker Change: Opportunities, where we think we've got a lot of revenue and relationship.

Speaker Change: You know that we can provide and the consumer business. We've identified things like just the credit card portfolio, we have a very strong lineup.

Speaker Change: We see an opportunity to really deepen it there.

Speaker Change: <unk> has not had a strong penetration of the HELOC product, which we really view as a much stickier lend.

Speaker Change: Lending products. So we would we would put that in the mix as well Dave touched on the commercial business just access to capital and growing the loan book.

Neil Mclaughlin: Dave touched on the commercial business, just access to capital and growing the loan book. We would see that as an opportunity going forward. And working with Derek's team, FX is something that this obviously brings us, I think, a real new vector of growth for FX. And maybe just the last one into Doug's business, we're already seeing some great referrals as we look at what Graeme touched on, which is a high-income, affluent customer base that hasn't had the leading wealth management platform that Doug's team leads. So those would be just a few of them.

Speaker Change: We would see that as an opportunity on the go forward and working with Derek's team.

Speaker Change: FX is something that this obviously brings us I think a real new vector of growth.

Speaker Change: Around FX and maybe just the last one into doug's business already seen some great referrals as we look at what Graham touched on which is a high income affluent customer base that hasn't had the leading wealth management platform that doug's team leads so those would you be just a few of them.

Speaker Change: Yeah.

Speaker Change: Alright, that's very helpful I'll pass the line.

Thank you.

Operator: Thank you. The next question is from Gabriel Dechaine, National Bank Financial. Please go ahead.

Speaker Change: The next question is from Gabrielle are the sign National Bank financial. Please go ahead.

Gabriel Dechaine: Hi, good morning. We're talking about client retention in the HSBC portfolio. I want to talk about the mortgage book there, where they were known as a price leader. Is retention really an objective there, or is it more of a recycling phenomenon and using that funding to grow the overall mortgage book, and could see some margin expansion on the back of that? Maybe you could talk about that. And then, on the commercial side, the buzz ahead of that deal and before the closing anyway was that a lot of HSBC customers needed cross-border cash management capabilities. I know you've invested in that over the past year. If you could talk a bit about those investments and what the experience has been from the client side.

Gabrielle: Hi, Good morning, Oh, we're talking about client retention on the HSBC portfolio I wanted to talk about the mortgage book, there, where they were a known as a price leader as retention really an objective there or kind of like a more of a recycling phenomenon and using our funding to Oh, you're a you know the.

Gabrielle: Overall mortgage book and could see some margin expansion on the back of that maybe you could talk about that and then on the commercial side.

Gabrielle: Those around you know how did that deal with them. During the you know before the closing anyway was that a lot of the HSBC customers, where you now need to cross border cash management capabilities I know you've invested in that over the past year. If you could talk a bit about those investments.

Speaker Change: And what the experience has been from the client.

Speaker Change: Syed.

Neil Mclaughlin: Thanks, Gabe. It's Neil.

Speaker Change: Thanksgiving meal and so maybe just on the on the mortgage book, we've actually touched on this before HSBC just didn't have the strong proprietary sales force. We did so they did have a tactic that was to lead with an aggressive price.

Speaker Change: But they really did not discount once they started the conversation with the clients. So we're happy with the spreads in the mortgage book and we've been I can I can say going at it quite aggressively.

Neil Mclaughlin: So maybe just on the mortgage book, we've actually touched on this before. HSBC just didn't have, you know, the strong proprietary sales force we did. So they did have a tactic that was to lead with an aggressive price, but they really did not discount once they started the conversation with the client.

Neil Mclaughlin: So we're happy with the spreads in the mortgage book. And we've been, I can say, going at it quite aggressively to retain that business. And in the first month, we actually saw renewal rates actually a little bit above our own. And we feel quite good about that.

Speaker Change: Aggressively.

Speaker Change: Pain that business and in the first month, we actually see our renewal rates actually a little bit above our own and we feel quite good about that so I'd say definitely put that in the opportunity category.

Neil Mclaughlin: So I'd definitely put that in the opportunity category. Um... As you talked about in the commercial business and cross-border cash management, yeah, this is what we would say is an opportunity. We've added a couple of products to our shelf to make sure we have all those value propositions they're used to. I'd say the headlines have been more sophisticated trade finance capabilities and, at the upper end, liquidity management. So for corporates that, you know, just work in a lot of different jurisdictions and want to be able to move that liquidity around.

Speaker Change:

Speaker Change: And you talked about on the on the commercial business and cross border cash management.

Speaker Change: Yeah. This is what we would say is an opportunity. We've we've added a couple of products to our shelf to make sure. We have all of those value propositions that are used to I'd say the headlines have been a more sophisticated trade finance capabilities.

Speaker Change: And then.

Speaker Change: The upper end liquidity management, so for corporates that you know just work and a lot of different jurisdictions and want to be able to move that liquidity around so not only will it be there for those HSBC clients, but obviously, we can cross sell that into our commercial clients are here.

Neil Mclaughlin: So not only will it be there for those HSBC clients, but obviously, we can cross-sell that to our commercial clients here in Canada. Just where we are on that is there is a very small TSA that we've got, about 2,600 clients. And that'll, that'll roll off in the first year. And so far, it has just been exceptionally smooth.

Speaker Change: Here in Canada.

Speaker Change: Just where we are and that is a there is a very small TSA that we've got about 2600 clients and that'll that'll roll off in the first year and so far I'm just been exceptionally smooth.

David McKay: All right, great. And if I could throw another one in there, if I may. There's a lot of attention paid to AML these days. Can you talk about the, you know, you're clearly investing in CMB capabilities there, you know any additional investment required across the rest of the bank and HSBC itself, the Canada part.

Speaker Change: Alright, great and then if I can throw another one in there if I may.

Speaker Change: There's a lot of attention paid on AML. These days can you talk about the you know you're clearly investing in and see them you see them visa.

Speaker Change: Our capabilities there.

Speaker Change: I mean, you know additional investment required across the rest of the bank and HSBC itself.

Speaker Change: They're kind of a part anyway.

Speaker Change: Yeah.

Graeme Hepworth: I'll start, and then Dave here, and then Graeme. We continue to invest in our AML systems and in the overall ecosystem. Obviously, it takes all banks to protect the overall payment system, and we do. Paul Holden, Douglas Guzman, Asim Imran, Douglas Guzman, Asim Imran, Douglas Guzman, Asim Imran, And all our agencies to protect the financial system. So it's a journey, and the world changes, and we adjust to that. And I would say we always have. We make it the highest priority in our organization, and we're all focused on it in every jurisdiction.

Speaker Change: Maybe I'll start and then Dave here, then and Graham we continue to invest in in our AML systems and in the overall.

Ecosystem, obviously, it's it takes all banks to protect the overall payment system and we do.

Speaker Change: Collaborate around that we do invest in technology AI helps us protect the system. So we're we're constantly on guard and investing in new systems, and using technology and training to make sure that we we.

Speaker Change: No play our role in the overall financial system and we protect the system against this type of crime complex world and it's a difficult world, but we constantly invest to do that and we work with our regulators and we work with our our governments.

And all of our agencies to to protect the financial system. So it's a journey and the world changes and we adjust to that and I would say we are.

Graham: We make it the highest priority in our organization and we're all focused on it and every jurisdiction Graham do you want to add yeah, I think David the key headlines there it's cool area, we treated it like the weather.

David McKay: And I think Dave hit the key headlines there. It's a crucial issue. We treat it like no other, no different than any other risk area. It's a key part of our risk management program, and we make huge investments in that area to make sure not only that we're meeting the obligations and expectations that our partners in the public sector have on us but that we use that to make sure that we're managing this institution in a safe and sound way.

Graham: The view of the risk areas. It's a key part of our risk management program and we may.

Graham: Huge investments in that area to make sure not only that we're meeting obligations and expectations.

Speaker Change: But our partners in the public sector have on us.

David McKay: You asked about HSBC in that context. Certainly, they have an international client base that presents other unique risks there, and that was a key part of our diligence. We spent a lot of time looking at their AML program that HSBC had invested a lot of time in. One of the benefits of the close and convert is that we bring that into our AML infrastructure and are now in the process of reviewing all those clients and making sure it's to our standards and specifications.

Speaker Change: You've got to make sure that we're managing this institution is safe and sound way.

Speaker Change: You asked about HSBC within that certainly they have a they have a international client base of presents other unique risks there and that was a key part of our diligence and we spent a lot of time looking at their email program with HSBC had invested a lot of time and so we know what the benefits of the close and convert as we bring that into our email kind of infrastructure in and are the only.

Speaker Change: And that process of reviewing all of those clients and making sure it's gonna daughters standard and specs.

David McKay: The other thing I would just say, as Dave mentioned earlier, we're also bringing in a lot of really seasoned professionals from HSBC on the AML side and really leaning into their knowledge and experience as well, so that's a real benefit for us on that side as well. Okay, well...

Speaker Change: And the only thing I would just say that you talked about the H H.

Speaker Change: HSBC quiet bases and deep referenced earlier, we're also bringing in a lot of really seasoned professionals from HSBC on the AML side, and really really lean into their knowledge and experience as well in this and and so that's a real benefit for us on that side as well.

Operator: Okay, well, thanks for the HSBC disclosures and commentary; very transparent and much appreciated.

Speaker Change: Okay, well, thanks for your HSBC disclosures and commentary very transparent and much appreciate it.

Gabriel: Thanks Gabriel.

Operator: Thank you. The next question is from Mario Mendonca, TD Securities. Please go ahead.

Speaker Change #101: Thank you next question is from Mario Mendonca TD Securities. Please go ahead.

Mario Mendonca: Dave, let me start with a quick question for you. Hopefully, this is straightforward.

David McKay: Dave Let me start a quick question for you hopefully this is straightforward.

David McKay: You've announced the NCIB, and in your opening comments, you said it was the NCIB that was there to offset the shares issued under the DRIP. So the obvious question for me is, why did you set up the DRIP if you're just now going to offset it, unless something has improved in your outlook? So maybe that's the question. What's improved in your outlook that would cause you to want to offset what you just completed doing in the DRIP?

Hugh Hugh: Hugh Hugh you've announced the EM CIB and in your comments. Your opening comments you said it was the NCB is there to offset the shares issued under the drip.

Mario Mendonca: So the obvious question for me is why do the drip if you're just now going to offset it unless something has improved and your outlook. So maybe that's the question what's improved in your outlook that would cause you to want to offset what you just completed doing on the drip.

David McKay: Yeah, so thanks for that question. Obviously, when we undertook this transaction, we announced it 18 months ago. That was a long approval journey, and we had to plan a buffer for our capital and make sure that we could close this transaction on a cash basis without having to do an equity raise. In all conservatism, we had to put on a drip to make sure that we could grow the organization.

Speaker Change #104: Yeah. So thanks for that question. So obviously when we undertook.

Speaker Change #104: This transaction.

Speaker Change #105: Announced at 18 months ago.

Speaker Change #106: That was a long approval journey and we had to plan a buffer for our capital and make sure that we could close this transaction as we articulated on a cash basis without having to do an equity raise into it.

Speaker Change #106: All conservatism, we had to put on a drip to make sure that we could grow the organization.

David McKay: Executed all the work that we had in front of us and delivered this transaction. So, there were a lot of moving pieces Mario as we took this on. As we came through that, our earnings have been so strong, and our ROEs have been really strong. And we did produce more capital than we actually planned through the process, and therefore exited it very strongly, as you just saw, at 12.8%. So it does give us the opportunity, as we look at the organic momentum that we have, we look at strong ROEs, we're able to generate capital, and therefore, we are going to use buybacks as a strategic tool, including this year, to buy back 30 million shares to start.

Speaker Change #106: Executing on all the work that we had in front of us and deliver this transaction. So there was a lot of moving pieces Mario as we took this on in 'twenty.

Speaker Change #106: It was a year and a half ago. So as we came through that our earnings have been so strong and our roe's have been really strong and we did produce a more capital than we actually planned through the process and therefore exited its very strongly as you. Just saw is 12, 8%. So it does give us the opportunity is.

Speaker Change #106: We look at the organic momentum that we have we look at strong or we were able to generate capital and therefore, we are going to use buybacks as a strategic tool, including this year to buyback a 30 million shares to start so I think it's a start it's our plan and we're going to see what our game.

David McKay: So I think it's a start, it's our plan, and we're going to see organic growth, we're going to see what the inorganic opportunities are, and we're going to see what the state of the economy is and where we should run our actual capital levels. So I think all those things are in play, and it gave us an opportunity to return capital to you to offset the dilution, and therefore it's part of a normal planning process when you have uncertainty.

Speaker Change #106: That growth, we're going to see what the inorganic opportunities are I went to see what the state of the economy is and where we should run our actual capital levels. So I think all those things are in play and it gave us an opportunity to return capital to you to offset the dilution and therefore, it's part of our normal planning process. So when you have uncertainty we ended up in a better place and.

Speaker Change #106: We're going to drive very strong Tsi, Australia through it.

Mario Mendonca: I think I understand that. One quick question before I leave this topic. I've come to think of 13% as the bogeyman for our banks in Canada, for our CT1 ratio. Do you have a different impression? Is the appropriate level more like twelve and a half? Yes. Okay, that's different.

Speaker Change #107: I think I understand that no. One quick question before I leave this topic I've come to think of 13% at the bogie for our banks in Canada.

Speaker Change #108: Tier one ratio.

Speaker Change #109: Do you have a different impression is is the.

Speaker Change #109: The appropriate level more like 12 and a half.

Speaker Change #109: Yes.

Mario Mendonca: Okay, one quick thing then, and maybe not so quick, but I want to focus on... Catherine, the comments you made about the spread between the five-year today and where it was years ago are something that's near and dear to me, something I've been focusing a lot on. Is it conceivable, then, if, let's say, the deposit pricing environment slows, like this shift to the high-cost deposit slows a little bit, but the high end of the curve remains relatively high, as we see today, even in the context of a lower short end of the curve, so a steeper curve, does that environment, could that environment drive royalties, all bank margin up? Somewhere between one to two basis points a quarter, let's say over the next year or so. Is that reasonable, a reasonable expectation that tractors will drive that kind of improvement? Assuming the deposit environment plays ball.

Speaker Change #110: Okay. That's that's definitely okay. One quick thing then maybe not so great, but I want to focus on <unk>.

Speaker Change #111: Kathy on the comments you made around the spread between the five year today than where it was years.

Speaker Change #112: Years ago, that's something that's near and Dear to me is something I've been focusing a lot on is it conceivable that if let's say that deposit pricing environment slows like the shift to the high cost deposit slows a little bit at the high end of the curve remains relatively high as we see today, even in the context of a of a shorter.

Speaker Change #112: Lower short end of the corpus So a steeper curve does that environment could that environment drive Royals all bank margin up.

Speaker Change #112: Somewhat like one to two basis points a quarter, let's say over the next year or so is that is that reasonable a reasonable expectation that the tractors drive that kind of improvement assuming the deposit environment plays ball.

Catherine Gibson: Thank you for the question. It's Catherine.

Katherine Gibson: Thank you for that [noise] excuse me. Thank you for the question it's Katherine.

Katherine Gibson: Yes, I would agree with your assessment as you laid that out.

Catherine Gibson: Yes, I would agree with your assessment as you've laid that out. As mentioned in my notes, we are definitely seeing that positive benefit come through from our deposit portfolio. And as you've laid it out, I would expect to see continued margin expansion flow through, through the Canadian Banking Department, and the Aalbeg. And the expectation is that it would flow through to your overall bank NIM as well.

Speaker Change #114: As mentioned in my notes, we are definitely seeing that positive benefit come through I'm, sorry deposit portfolio and as you've laid it out I would expect to see continued margin expansion and flow through.

Speaker Change #114: Median thanking them.

Speaker Change #114: And the all bank them.

Speaker Change #115: And the expectation is that it would flow through to your all bank NIM as well right.

Speaker Change #116: Thank you.

Operator: Thank you. The next question is from Paul Holden, CIBC. Please go ahead.

Speaker Change #117: Thank you next question is from Paul Holden CIBC. Please go ahead.

Paul Holden: Hi, thanks. Good morning.

Paul Holden: Hi, Thanks. Good morning, maybe just a quick question for me just to better understand the additional P cells performing PCL as you would have for HSBC.

Paul Holden: Maybe just a quick question from me. Just to better understand the additional performing PCLs you have for HSBC, is that a matter of just putting on some additional conservatism as you close a transaction? Is that a matter of Royal applying its own credit models to the HSBC portfolio? Really, what I'm getting at is just trying to better understand what the probability is that those PCLs ultimately get released back into earnings.

Paul Holden: Is that a matter of just putting on some additional conservatism as you close a transaction is that a matter of royal applying its own credit models to the HSBC portfolio really what I got them.

Paul Holden: Just trying to better understand what is the probability that those T cells. Ultimately you get released back into earnings.

Graeme Hepworth: Yeah, thanks, Paul. I wouldn't say this isn't conservatism.

Speaker Change #119: Yeah. Thanks, Paul.

Speaker Change #120: So this isn't a conservatism. This is the first nine rules, we're playing in so there you can pick them up with the way the purchase accounting works. It's like we originated these as new loans. It affects so they're kind of mark to market as they come across that Mark to market goes through the you know all sits in a goodwill if you will and so it's really originate loans, we treat them a little different than the other when we originate and sell.

Graeme Hepworth: This is the IFRS 9 rules we're applying. And so you should think about the way that purchase accounting works. It's like we originated these as new loans, in effect. So they're kind of mark-to-market as they come across. That mark-to-market goes through the faucets in the goodwill, if you will.

Graeme Hepworth: And so as newly originated loans, we treat them no different than any other loans we originate. And so they're Stage 1, and we have to establish an allowance for that. And so that's really what that is. And again, the benefits of the Close and Convert, we brought them over.

Stage, one and we have to establish an allowance for that and so that's really what that is and again the benefits of the close them convert we brought them over we put our RBC ratings on all of those we'd run those rollover, Ohio first nine models and all of our governance and review on that and done our own analysis on that and so we've established those day one piece you all very much.

Graeme Hepworth: We put our RBC ratings on all of those. We've run those for all of our IFRS 9 models and all of our governance and regulatory review on that, and done our own analysis on that. And so we've established those Day 1 PCLs very much in line and consistent with how we would do all of our other products and portfolios at RBC. The only note I'd make on that, as I noted in my speech, is that they are all Stage 1 on Day 1 because they are newly originated, and we would expect in the coming quarters to see the kind of natural migrations and delinquencies in that portfolio. And so some additional Stage 1 and 2 there, just as it kind of migrates to a more natural state in that regard.

Speaker Change #120: And consistent with how we would do all of our other products and portfolios at RBC.

Speaker Change #120: Only note I'd made on that as I noted in my speech is that.

Speaker Change #121: You know, it's all stage one it might be one because they were newly originated and we would expect in coming quarters to see that kind of natural migrations in delinquencies in that portfolio and put some additional stage one and two there just as it kind of migrate to a more natural state in that regard got it. Okay. There's just apply your own <unk> nine models to HSBC Buck, Okay that makes sense.

Paul Holden: Okay, so you just applied your own IFRS 9 models to the HSBC book. Okay, that makes sense. Maybe one quick follow-up, one, Graeme, while I have you. You can kind of talk through some of the cash flow experience in and out you're seeing for your Canadian consumers and how they are grappling with higher costs of living and higher costs of borrowing. Thanks.

Speaker Change #122: Maybe one quick follow up one grandmother have you you can kind of talk through some of the cash flow experience and I know, what you're seeing for your Canadian consumers and how they are grappling with a higher cost of living and higher cost of borrow. Thanks.

Graeme Hepworth: Yeah, it's a good question there, Paul. I mean, we have a number of tools we kind of look at to kind of better understand the health of our client base and their consumers. Certainly, you know, we put our own ratings on each of our clients, and those ratings are inherently tied to what we see happening in their kind of cash flow and their savings and their deposits. We kind of have some, you know, we obviously have really rich information to understand our clients' overall savings and deposit profiles that kind of give us an overall health there. You know, one of the reasons the Canadian consumer has been quite resilient is that they built up a lot of savings and a lot of, if you will, buffer against the start of the pandemic.

Paul Holden: Yeah. It's a good question there Paul I mean, so you know we have a number of tools, we kind of look out to kind of better understand the health of our client base and our consumers certainly.

Paul Holden: We put our own readings on the on each of our clients in those readings are inherently tied to what we see happening and they're kind of cash flow and their savings in their deposits.

Paul Holden: Kind of have some some we obviously haven't really rich information to understand and kind of clients overall phasings of deposit profile that kind of gives us an overall health there.

One of the reasons the Canadian consumer has been quite resilient as they built up a lot of savings and a lot of people will buffer of starting the pandemic, we haven't seen that in the aggregate draw down over the last few years, you know, but I would still say it's kind of.

Graeme Hepworth: We have seen that in aggregate draw down over the last few years, you know, but I would still say it's kind of elevated in aggregate, somewhat elevated beyond kind of what would be more of a normal growth in that. But what that does also tell us, it does point to those clients that are facing more stress, right? And that goes back to the mortgage clients that have faced those, you know, those payment triggers and don't have quite the same resilience.

Paul Holden: In aggregate elevated somewhat elevated beyond kind of what would be more of a normal growth in that.

Paul Holden: But what that does also tell us it does point to those clients that are facing more stress right and those who know it goes back to the mortgage clients, who face those you know those payment triggers and don't have quite the same resilience you really do see those cash buffers and reserve start to draw down on that.

Graeme Hepworth: We really do see those cash buffers and reserves start to draw down on that. And so, you know, again, overall, I would say we still see a pretty healthy Canadian consumer out there. But those pockets of stress are exactly those ones we've identified. And that really is just tied to kind of where we're increasing our allowances and reserves accordingly.

Paul Holden: So that's you know getting overall I would say, we still see a pretty healthy Canadian consumer I'm out there, but but those pockets of stress are exactly those once we've identified and that really is tied to kind of where we're increasing our allowances and reserves are accordingly.

Paul Holden: Got it. Okay, that's it for me. Thank you. Thank you. The next question is from Sohrab Movahedi.

Speaker Change #123: Got it okay. That's it for me thank you.

Operator: Thank you. The next question is from Sohrab Movahedi of BMO Capital Markets. Okay, thank you. I know we're tight on time. Hopefully, three quick questions. Dave, are you price sensitive on the NCIB, or is it just intended to offset the dilution period? That was a good question.

Speaker Change #124: Thank you. The next question is Suraj Alrighty BMO capital markets. Please go ahead.

Speaker Change #125: Okay. Thank you I know, we're tight on time, hopefully three quick questions.

Speaker Change #126: Are you price sensitive on Tien CIB or is it just intended to offset the dilution period.

David McKay: That's a good question. You know, you always think about the overall value. And, you know, you'll look at where your intrinsic value per share is, and you make that call. So we'd obviously like to accelerate on any dips, we don't want dips, obviously, but you'd accelerate on a dip, and you know price does come into it, but we do have an overall strategy of how to return capital to shareholders to create the overall premium total shareholder return that we are going to deliver. So I can't give you more guidance because it's obviously a personal thing.

Speaker Change #127: No. It's a good question Yeah, you always think about the overall value and you know you look at where your you know your intrinsic value per share is and you you make that call. So we'd obviously like to accelerate on any deaths, we don't want dips asleep, but you'd accelerate on a dip.

Speaker Change #127: And you know price does come into it but we do have an overall strategy of how to return capital to shareholders to create the overall premium total shareholder return that.

Speaker Change #127: We are we're going to deliver so I can't give you more guidance. It's obviously a variable you think.

David McKay: Okay, I appreciate that. That's helpful. Catherine, you had mentioned that by the end of 2025, City National will be back to more normalized earnings levels. What would that be compared to where you are today?

Speaker Change #128: Okay. I appreciate that that's helpful. Katherine you had mentioned that you hope by the end of 2025 city national will be back to more normalized.

Speaker Change #129: Earnings levels, what would that what would that be compared to.

Speaker Change #130: Where you are today, you know obviously you've had to make some extra spendings and what have you to to rectify some some stuff down there I'm just curious as to what does that normalize look like.

David McKay: Obviously, you've had to make some extra spending and what have you to rectify some stuff down there. I'm just curious as to what that normalized look like. Sohrab, maybe I'll take that. It's Dave.

David McKay: Sure, sure. I spent a lot of time on it. So, as I talked about, you can see that the expense trajectory has the full run rate of our remediation efforts and our overall building of heightened standards and our re-platforming of C and B. So, you've seen, as we talked about, I think a significant amount of work we're doing is embedded in the current run rates, which gives you kind of a line of sight on the cost line.

Speaker Change #131: Yeah, So Rob maybe I'll take that Dave.

Speaker Change #132: They spent a lot of time on it.

Rob: So as I talked about you can see that the our expense trajectory.

Rob: As you know has the full run rate of our remediation efforts center overall building a heightened standards and are re platforming of C. N. B. So you're seeing as we talked about a significant amount of work. We're doing is embedded in the current run rates, which gives you a kind of a line of sight on on the cost line.

David McKay: Our revenue line is stable, and higher interest rates will help us. We are putting on some tractors to protect that revenue line in the event of a declining rate environment. So I think that's a positive as well. The line items that will have a little bit of volatility going forward that could accelerate or decelerate will be that there are a number of opportunities for us to simplify this business, whether it's selling non-core parts of CMB or..., taking out real estate that all have positive run rate benefits and positive shareholder value creation.

Rob: Our revenue line is stable and higher interest rates will help us we are putting on some tractors.

Rob: Protect that revenue line in the event of a declining rate environment. So I think that's a positive as well the lineup. The line items that will have a little bit of volatility going forward that could accelerate or decelerate.

Rob: M will be but there are a number of opportunities for us to simplify this business, whether it's selling noncore parts of C M b or taking out.

Rob: Real estate that had all have positive run rate benefits and positive shareholder value creation. So you may see the catherines point. The odd one time are not material, but the odd one time that that will impact a quarter, where we're able to create long term shareholder value by simplifying selling something or taking out leases what it is.

David McKay: So you may see, to Catherine's point, the odd one time, not material, but the odd one time, that that will impact a quarter where we're able to create long-term shareholder value by simplifying selling something or taking out leases, whatever it happens to be. So I think Catherine's kind of point was on there being a little bit of bumpiness towards that getting to kind of where are we going to come out of this. I think you can look at where we are now.

Speaker Change #134: Happens to be so I think Kathryn kind of point was on there'll be a little bit of bumping us towards that getting to kind of where are we going to come out of this I think he can look at to where kind of peer.

Speaker Change #134: Peer are always are and look at our balance sheet. There's no reason why we can't achieve that and therefore for us to get to that peer our away we have to complete our remediation and start to bring a very significant cost structure down, which we plan to do.

Speaker Change #134: And that will happen you know we hope over the next roughly 18 months. So I think that is all the things that have to kind of go well, but you should take comfort that our run rates reflect you know full cost run rate of of Remediated and building a stronger platform.

David McKay: [inaudible] roughly 18 months. So I think that's all the things that have to kind of go well, but you know, it should take comfort that our run rates reflect the full cost run rate of remediating and building a stronger platform. Thank you for squeezing in my questions. Thank you. We will take one more question from Lemar Persaud. Curromax Securities, please limit yourself to

Speaker Change #135: Thank you for squeezing my question to you.

Operator: Thank you. We will take one more question from Lemar Persaud, of Cormac Securities. Please limit yourself to one question. Please go ahead.

Speaker Change #136: Thank you.

Speaker Change #137: We will take one more question from them off or sold Comex Securities. Please limit yourself to one question. Please go ahead.

Speaker Change #138: Yeah. Thanks, just use my one question here on.

Speaker Change #139: It seems like you guys are highlighting these cross selling opportunities that HSBC. So.

Speaker Change #140: It really does beg. The question can you guys put some numbers around that and what that would be potential upside to the $1 4 billion and earnings I think the answer is yes. So any numbers you can put around that and and timeline to achieve it just sounds like you guys are very excited about this.

Speaker Change #140:

Neil Mclaughlin: Thanks, Lemar. It's Neil. Yeah, I mean, you can probably sense that we do think there's a real opportunity here. Recently, when we stepped into it, we felt that the cross-sell opportunities would be as much or more than any of the attrition risk. I think we feel quite confident that that is going to be the case, but it's not something we're going to put numbers around at this point.

Neil Mclaughlin: Thanks, Omar it's Neil Yeah, I mean, you can probably sense that we do think there's a real opportunity here.

Speaker Change #141: Suddenly he stepped into it we felt that the cross sell opportunities would be as much or more than any of the attrition risk I think we feel quite confident that that is going to be the case, but it's not something we're going to put numbers around at this point.

David McKay: Yeah, it's Dave. I think as we – you've got to give us a quarter or so to get a deeper knowledge of the client base we brought in. We know it's an affluent client base. Neil, I think, outlined really well the opportunities across all the businesses and services, from investments to credit cards to core operating accounts to treasury management to cross-border, all that exists.

Steve: Yeah, It's Steve I think as we you got to give us a quarter or so to get.

Speaker Change #143: Get a deeper knowledge of the client base, we brought in we know what's in affluent client base Neal I think outlined really well the opportunities across all the businesses and services from an investments to credit cards to core operating accounts to Treasury management to cross border all that exists. So we're just going to go through a process over the next quarter.

David McKay: So we're just going to go through a process over the next quarter or so of testing that, and then we'll size that for you, and we will talk about that in the coming quarters. But just give us a quarter to make sure we're solid on our expectations of the valuation of that cross-sell. We want to get it right for you. But we're very excited about it.

Speaker Change #143: So of testing that and then we're going to size that for you and we will talk about that in the coming quarters, but just give us a quarter to make sure. We're solid on our expectations of the monitor the valuation of that cross sell we want to get it right for you, but we're very excited about it.

Speaker Change #144: I appreciate the time.

David McKay: Thank you. I would now like to turn the meeting over to Mr. Dave McKay. Please go ahead.

Speaker Change #145: Thank you I would now like to turn the meeting over to Mr. Dave Mackay. Please go ahead.

David McKay: Yes, so just to wrap up, thanks for all your questions, and the message that we want to get across, which I think we did, is really along the lines that not only did we close one of the most complex transactions and we did a close and convert seamlessly, but we didn't lose any momentum in the business. In fact, we accelerated the momentum in the core business across capital markets, across wealth, and particularly across commercial and consumer banking.

David McKay: Yeah, So just to wrap up thanks for all your questions now that the theme I wanted to.

David McKay: The team to get across say, which I think we did is.

Speaker Change #146: It's really along the lines that not only did we close one of the most complex transactions and we did a close and convert.

Seamlessly.

Speaker Change #146: We didn't lose any momentum in the business in fact, we accelerated the momentum in the core business across capital markets across wealth, and a crime and particularly across commercial and consumer banking you see it in the volume growth you see it in the profitability growth you see it in a very strong operating leverage of the business the core business accelerated over the past year, we did not lose.

David McKay: You see it in the volume growth. You see it in the profitability growth. You see it in the very strong operating leverage. The business, the core business, accelerated over the past year. We did not lose momentum, and we've got HSBC opportunities now. We've got RBC Clear. We're building on it very strong. Thank you for your questions, and we look forward to seeing you at the end of the summer in August. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.

Speaker Change #146: Momentum and we've got now HSBC opportunities, we've got RBC clear, where we're building on very strong.

Speaker Change #146: Core momentum with these additional.

Speaker Change #146: Inorganic investments and therefore, when you think about the ROE potential of the bank. When you think about the capital generation of the bank. When you think about the EPS trajectory.

Speaker Change #146: We feel very strongly that we've got momentum we've got great investments and we're going to continue to build from one strength in that so I think that was the message that we really wanted to deliver it today. Thank you for your questions and we look forward to seeing you at the end of the summer and August.

Speaker Change #146: Thank you.

Speaker Change #147: Thanks Melinda.

Operator: The conference is now over. Please disconnect your lines at this time, and we thank you for your participation.

Speaker Change #148: Connect your lines at this time and we thank you for your participation.

Speaker Change #149: So France is now please disconnect your lines at this time and we thank you for your participation.