Q3 2024 Laurentian Bank of Canada Earnings Call

Unknown Executive: and the new position, Ed of customer experience. This role will improve and enhance the customer experience and brings our employees and decision-making closer to the customer. In commercial banking, the seasonality impact in inventory financing was strong, bringing the utilization ratio to 43%, about 10% below historical levels. It is great our proof of our dealer's ability to turn their inventory as well as their prudence in restocking. Furthermore, our sales team kept their momentum in increasing our footprint, reaching 440 new unborted dealers year over year, representing an increase of 7%.

Ahead of customer experience this role will improve and enhance the customer experience and brings our employees and decision making closer to the customer.

Unknown Executive: This role will improve and enhance the customer experience and brings our employees and decision-making closer to the customer.

Unknown Executive: In commercial banking, the seasonality impact in inventory financing was strong, bringing the utilization ratio to 43 percent, about 10 percent below historical levels.

Speaker Change: In commercial banking, the seasonality impact and the inventory financing was strong, bringing the utilization ratio to 43% about 10% below historical levels.

Unknown Executive: The lower utilization rate are proof of our dealer's ability to turn their inventory, as well as their prudence in restocking. Furthermore, our sales team kept their momentum in increasing our footprint, reaching 440 new unborted dealers year-over-year, representing an increase of 7 percent.

Your utilization rate are proof of our dealers' ability to turn their inventory as well as their prudence in restocking.

Speaker Change: Furthermore, our sales team kept their momentum.

Speaker Change: In increasing our footprint, reaching 440, new onboarding dealers year over year, representing an increase of 7%.

Unknown Executive: As for commercial real estate, we're still observing low levels of new projects being launched. Our pipeline remains LT with insured multi-residential projects, particularly strong. Our teams are well positioned for the rebound, which remains dependent on the pace and level of interest rate reductions in Canada and the United States.

Speaker Change: As for commercial real estate, we're still observing low levels of new projects being launched our pipeline remains LT with insured multi residential projects, particularly particularly strong.

Unknown Executive: As for commercial real estate, we're still observing low levels of new projects being launched, our pipeline remains LT with insured multi-residential projects, particularly strong. Our teams are well positioned for the rebound, which remains dependent on the pace and level of interest rate reductions in Canada and the United States.

Our teams are well positioned for the rebound, which remains dependent on the pace and level of interest rate reductions in Canada and United States.

Unknown Executive: Concerning the leadership team, following the announcement of Liam's Mason upcoming retirement at the end of the fiscal year, we're thrilled to welcome back to Laurentian Bank as our new Chief Risk Officer. The staff which used to be Laurentian Bank Chief Credit Officer returns to us after having spent over four years at a global specialty finance company. He brings over more than 30 years of experience in the variety of risk oversight management and banking roles. We're delighted to add them on board and look forward to leveraging his deep credit knowledge and extensive expertise in risk management.

Speaker Change: Concerning the leadership team following the announcement of Liam's Mason upcoming retirement at the end of the fiscal year, we're thrilled to welcome back <unk> Laurentian Bank as our new Chief risk Officer.

Unknown Executive: Concerning the leadership team, following the announcement of Liam's Mason upcoming retirement at the end of the fiscal year, we're thrilled to welcome back Kissander Brute to Laurentian Bank as our new Chief Risk Officer. Kissander, which used to be Laurentian Bank Chief Credit Officer, returns to us after having spent over 4 years at a global specialty finance company. He brings over more than 30 years of experience in a variety of risk oversight management and banking roles.

Speaker Change: Yes, Sir which used to be Laurentian Bank, Chief credit officer returns to us after having spent over four years at a global specialty Finance company.

Speaker Change: He brings over more than 30 years of experience in the <unk> of risk oversight management and banking rules. We're delighted to have him on board and look forward to leveraging his deep credit knowledge and extensive expertise in risk management.

Unknown Executive: We're delighted to add them on board and look forward to leveraging his deep credit knowledge and extensive expertise in risk management, which respect to earnings, our third quarter results were relatively consistent with the previous quarter on an adjusted basis. As mentioned earlier, we continued to face Edwin's in loan volumes, which decreased by 1.2 billion last quarter. Which regards to deposits, they are being effectively managed in alignment with our loan and secretization activities.

Unknown Executive: Which respect to earnings, our third quarter results were relatively consistent with the previous quarter on an adjusted basis. As mentioned earlier, we continued to face Edwin's in loan volumes, which decreased by 1.2 billion last quarter.

Speaker Change: With respect to earnings our third quarter results were relatively consistent with the previous quarter on an adjusted basis.

Speaker Change: As mentioned earlier, we continued to face headwinds in loan volumes, which decreased by $1 2 billion last quarter.

Unknown Executive: Which regards to deposits, they are being effectively managed in alignment with our loan and secretization activities. Despite challenging macroeconomic conditions, our portfolio remains robust. Our conservative underwriting standards, as well as the quality and eye level of collateral, are contributing to a relatively stable level of loan losses. As such, provision for credit losses was down two basis points, quarter over quarter, now standing at 18 basis points.

Speaker Change: With regards to deposits they are being effectively managed and their alignment with our loan and securitization activities. Despite.

Unknown Executive: Despite challenging macroeconomic conditions, our portfolio remains robust. Our conservative underwriting standards, as well as the quality and eye level of collateral are contributing to a relatively stable level of loan losses. As such, provision for credit losses was down two basis points, quarter over quarter, now standing at 18 basis points.

Speaker Change: <unk> macroeconomic conditions, our portfolio remains robust robust.

Speaker Change: Our conservative underwriting standards as well as the quality and high level of collateral are contributing to a relatively stable level of loan losses as such provision for credit losses was down two basis points quarter over quarter now standing at 18 basis points.

Unknown Executive: Expenses remain elevated as we invest in and support a stronger foundation and our path to improve digital capabilities, as laid out in the investor day in May. Despite this, our adjusted efficiency ratio for the quarter improves to 73.3%, a 50 basis point reduction from the previous quarter. Regarding capital, our common equity tier one ratio increased to 10.9% from 10.4% last quarter, reflecting the reduction in loan volumes.

Speaker Change: Expenses remain elevated as we invest in technology and other strategic priorities to support a stronger foundation and our path to improve digital capabilities as laid out in the Investor day in May.

Unknown Executive: Expenses remain elevated as we invest in technology and other strategic priorities to support a stronger foundation and our path to improve digital capabilities as laid out in the investor day in May. Despite this, our adjusted efficiency ratio for the quarter improved to 73.3%, a 50 basis point reduction from the previous quarter. Regarding capital, our common equity tier 1 ratio increased to 10.9% from 10.4% last quarter, reflecting the reduction in loan volumes.

Speaker Change: Despite this our adjusted efficiency ratio for the quarter improved to 73, 3%, a 50 basis point reduction from the previous quarter.

Speaker Change: Regarding capital our common equity tier one ratio increased to 10, 9% from 10, 4% last quarter, reflecting the reduction in loan volumes, we are well positioned to redeploy capital later in 2025 when loan growth resumes fueled by the <unk>.

Unknown Executive: We are well positioned to redeploy capital later in 2025 when loan growth resumes, fueled by the expected additional rate reductions.

Unknown Executive: We are well-positioned to redeploy capital later in 2025 when loan growth resumes fueled by the expected additional rate reductions.

Speaker Change: Additional rate reductions.

Eva: I would now like to turn the call over to Eva to review our financial performance. I would like to begin by turning to slide seven, which highlights the bank's financial performance for the third quarter. Total revenue was 257 million dollars, down 2% compared to last year and up 2% quarter of a quarter. On a reported basis, net income and diluted the P.S. were 34.1 million dollars and 67 cents, respectively. We have recorded adjusting items for the quarter which totaled 8.9 million dollars after tax or 21 cents per share and include resorturing and other impairment charges of 6.7 million dollars after tax related to the headcount reduction announced in May and amortization of acquisition related intangible assets of 2.2 million dollars after tax.

Eva: I would now like to turn the call over to Eva to review our financial performance. I would like to begin by turning to slide 7 which highlights the bank's financial performance for the third quarter. Total revenue was 257 million dollars down 2% compared to last year and up 2% quarter of a quarter. On a reported basis net income and diluted EPS were 34.1 million dollars and 67 cents respectively. We have recorded adjusting items for the quarter which total 8.9 million dollars after tax or 21 cents per share and include resortering and other impairment charges of 6.7 million dollars after tax related to the head count reduction announced in May and amortization of acquisition related intangible assets of 2.2 million dollars after tax.

I would now like to turn the call over to Eva to review our financial performance.

Speaker Change: Yes.

I would like to begin by turning to slide seven which highlights the bank's financial performance for the third quarter.

Eva: Total revenue was $257 million down, 2% compared to last year and up 2% quarter over quarter.

Speaker Change: On a reported basis net income and diluted EPS were $34 $1 million and 67% respectively.

Speaker Change: We have recorded adjusting items for the quarter, which totaled $8 $9 million after tax or <unk> 21 per share and include <unk>.

Speaker Change: Restructuring and other impairment charges of $6 $7 million after tax related to the head count reduction announced in May.

Speaker Change: And the amortization of acquisition related intangible assets of $2 $2 million after tax.

Eva: Additional details are available on slide 21 and in the third quarter report to shareholders. The remainder of my comments will be on an adjusted basis. Diluted the P.S. of 88 cents decreased by 28% year over year and 2% quarter over quarter. Please note that this quarter includes an LRCN interest payment, which had an impact of 6 cents on DPS. Net income of 43.1 million dollars was down by 25% compared to last year and up 6% compared to last quarter. The bank's efficiency ratio increased by 480 basis points compared to last year and decreased by 50 basis points sequentially.

Speaker Change: Additional details are available on slide 21, and in the third quarter report to shareholders.

Eva: Additional details are available on slide 21 and in the third quarter report to shareholders. The remainder of my comments will be on an adjusted basis. Diluted EPS of 88 cents decreased by 28% year over year and 2% quarter over quarter. Please note that this quarter includes an LRCN Interest Payment which had an impact of 6 cents on DPS. Net income of 43.1 million dollars was down by 25% compared to last year and up 6% compared to last quarter.

Speaker Change: The remainder of my comments will be on an adjusted basis.

Speaker Change: Diluted EPS of <unk>, 88 decreased by 28% year over year, and 2% quarter over quarter.

Speaker Change: Please note that this quarter includes an RCM interest payments, which had an impact of <unk> on the EPS.

Speaker Change: Net income of $43 1 million was down by 25% compared to last year and up 6% compared to last quarter.

Speaker Change: Bank's efficiency ratio increased by 480 basis points compared to last year and decreased by 50 basis points sequentially.

Eva: The bank's efficiency ratio increased by 480 basis points compared to last year and decreased by 50 basis points sequentially. Increase year over year reflects our ongoing investments in strategic priorities and the impact of lower loan volumes.

Eva: Increase year over year reflects our ongoing investments in strategic priorities and the impact of lower loan volumes. Are we for the quarters to that 6.2% up 10 basis points sequentially? Slide 8 shows net interest income down by 11.4 million dollars or 6% year over year, mainly due to lower loan volume. On a sequential basis, net interest income was up by 1.2 million dollars or 1%, mainly reflecting the positive impact of two additional days in the quarter. The quarter partly offset by lower loan volumes. Our net interest margin was down 5 basis points year over year and 1 basis point sequentially at 1.79%, impacted by lower commercial loan volumes.

Speaker Change: The increase year over year reflects our ongoing investments in strategic priorities and the impact of lower loan volumes.

Eva: Are we for the quarters to that 6.2% up 10 basis points sequentially? Slide 8 shows net interest income down by 11.4 million dollars or 6% year over year mainly due to lower loan volume. On a sequential basis net interest income was up by 1.2 million dollars or 1% mainly reflecting the positive impact of two additional days in the quarter and the quarter partly offset by lower loan volumes. Our net interest margin was down 5 basis points year over year and 1 basis points sequentially at 1.79% impacted by lower commercial loan volumes.

Speaker Change: Our ROE for the quarter stood at six 2% up 10 basis points sequentially.

Speaker Change: Slide eight shows net interest income down by $11 4 million or 6% year over year, mainly due to lower loan volume.

Speaker Change: On a sequential basis net interest income was up by $1 $2 million or 1%, mainly reflecting the positive impact of two additional days in the quarter the quarter, partially offset by lower loan volumes.

Speaker Change: Our net interest margin was down five basis points year over year, and one basis point sequentially at 179% impacted by lower commercial loan volumes.

Eva: Slide 9 highlights the bank's funding position. We are managing our funding in line with our loan book. A sequential basis told funding was down 1.2 million dollars. Partnership deposit decreased by $300 million dollars as customers continue to allocate funds back into market activity. Deposit source from advisors and brokers channel were managed down by $500 million dollars, and wholesale funding decreased by $400 million dollars as we did not replace senior deposit notes and maturity, considering our liquidity position. The bank maintained a healthy liquidity coverage ratio through the quarter, which remains materially above the industry average. Light 10 presents other income of $75.7 million dollars, which was higher by 10% compared to last year.

Slide nine highlights the banks funding position.

Eva: Slide 9 highlights the bank's funding position. We are managing our funding in line with our loan book. A sequential basis told funding was down 1.2 million dollars Partnership deposits decreased by $300 million as customers continue to allocate funds back into market activity. Deposit source from advisors and brokers channel were managed down by $500 million and wholesale funding decreased by $400 million as we did not replace senior deposit notes and maturity considering our liquidity position. The bank maintained a healthy liquidity coverage ratio through the quarter which remains materially above the industry average.

Speaker Change: We are managing our funding in line with our loan book.

Speaker Change: Sequential basis total funding was down $1 billion.

Speaker Change: Partnership deposits decreased by $300 million as customers continued to allocate funds back into market activity.

Speaker Change: Deposits sourced from advisers and brokers channel were managed down by $500 million in wholesale funding decreased by $400 million as we did not replace senior deposit note maturity, considering our liquidity position.

Speaker Change: The bank maintained a healthy liquidity coverage ratio for the quarter, which remains materially above the industry average.

Speaker Change: Slide 10 presents other income of $75 $7 million, which was higher by 10% compared to last year.

Eva: Flight 10 presents other income of $75.7 million which was higher by 10% compared to last year. Higher income from financial instruments benefiting from constructive financial markets was partly offset by lower lending fees due to tempered commercial real estate activity. On a sequential basis other income was higher by 4% for the same reasons. By 11 shows adjusted non-interest expenses of $188.1 million up 5% compared to last year mainly due to professional fees and other costs to support our strategic priorities as well as our regulatory expenses and other costs related to various compliance projects. On a sequential basis non-interest expenses were up by 1% mainly from higher technology costs.

Eva: Higher income from financial instruments benefiting from constructive financial markets was partly offset by lower lending fees due to tempered commercial real estate activity. On a sequential basis, other income was higher by 4% for the same reasons. By 11 shows adjusted non-interest expenses of $188.1 million dollars, up 5% compared to last year, mainly due to professional fees and other costs to support our strategic priorities, as well as our regulatory expenses and other costs related to various compliance projects. On a sequential basis, non-interest expenses were up by 1%, mainly from higher technology costs. On flight 12, you'll see that our CT1 ratio has increased by 50 basis points to 10.9%, primarily due to a decrease in risk weighted assets.

Higher income from financial instruments benefiting from constructive financial markets was partially offset by lower lending fees due to temporary commercial real estate activity.

Speaker Change: On a sequential basis other income was higher by 4% for the same reasons.

Speaker Change: Slide 11 shows adjusted non interest expenses of $188 $1 million up 5% compared to last year, mainly due to professional fees and other costs to support our strategic priorities as well as higher regulatory expenses and other costs related to various comply.

Speaker Change: <unk> projects.

On a sequential basis non interest expenses were up by 1% mainly from higher technology costs.

Speaker Change: On slide 12, Youll see that our CET one ratio has increased by 50 basis points to 10, 9%, primarily due to a decrease in risk weighted assets.

Eva: On flight 12 you'll see that our CT1 ratio has increased by 50 basis points to 10.9%, primarily due to a decrease in risk weighted assets. We experienced strong and healthy seasonality during the summer for inventory financing and continued softness in real estate projects. We see these as temporary in our wealth position to redeploy capital later in 2025 as growth will resume based on time and speed of the expected rate reductions. Like 13 highlights our commercial loan portfolio which was down $1.3 billion or 7% year over year and down $700 million on a sequential basis for the reasons I just mentioned.

Unknown Executive: We experienced strong and healthy seasonality during the summer for inventory financing and continued softness in real estate projects. We see these as temporary in our wealth position to redeploy capital later in 2025 as growth will resume based on time and speed of the expected rate reductions. Like 13 highlights our commercial loan portfolio, which was down 1.3 billion dollars or 7% year over year, and down $70 million on a sequential basis for the reasons I just mentioned. Flight 14 provides details of our inventory financing portfolio. The quarter utilization rates were 43%, primarily due to dealers taking a more conservative approach to inventory restocking because of the microeconomic conditions.

Speaker Change: We experienced strong and healthy seasonality during the summer for inventory financing and continued softness in our real estate projects.

Speaker Change: We see these as temporary and are well positioned to redeploy capital later in 2025 as growth will resume based on time and speed of the executed the expected the rate reductions.

Speaker Change: Slide 13 highlights our commercial loan portfolio, which was down $1 $3 billion or 7% year over year and down $709 on a sequential basis for the reasons I just mentioned.

Eva: Flight 14 provides details of our inventory financing portfolio. The quarter utilization rates were 43%, primarily due to dealers taking a more conservative approach to inventory restocking because of the microeconomic conditions. The volume reductions in Q3 also showed consumer resilience in terms of purchasing power despite the current microeconomic uncertainty. Our commercial real estate pipeline remains healthy but we continue to see developers delaying the start of projects awaiting further rate reductions. Like 15 illustrates that most of our portfolio is focused on multi-residential housing with our exposure to the office segment holding steady at 3% of our commercial loan portfolio. As noted in previous quarters, the bulk of our portfolio consists of multi-tenant properties with minimal exposure to single-tenant buildings.

Speaker Change: Slide 14 provides the details of our inventory financing portfolio.

Speaker Change: Quarter utilization rates were 43%.

Speaker Change: Primarily due to dealers, taking a more conservative approach to inventory restocking because of the macro economy conditions.

Unknown Executive: The volume reductions in Q3 also showed consumer resilience in terms of purchasing power despite the current microeconomic uncertainty. Our commercial real estate pipeline remains healthy, but we continue to see developers delaying the start of projects awaiting further rate reductions. Like 15 illustrates that most of our portfolio is focused on multi-residential housing, with our exposure to the office segment holding steady at 3% of our commercial loan portfolio. As noted in previous quarters, the bulk of our portfolio consists of multi-tenant properties with minimal exposure to single-tenant buildings. By 16, presents the bank's residential mortgage portfolio. Residential mortgage loans were stable year over year and slightly down by 2% on a sequential basis.

The volume reductions in Q3 also showed consumer resilience in terms of purchasing power. Despite the current macro economy uncertainty.

Speaker Change: Our commercial real estate pipeline remains healthy, but we continue to see Devil offers delaying the start of projects awaiting further rate reductions.

Speaker Change: Slide 15 illustrates that most of our portfolio is focused on multi residential housing with our exposure to the office segment holding steady at 3% of our commercial loan portfolio.

Speaker Change: As noted in previous quarters, the bulk of our portfolio consist of multi tenant properties with minimal exposure to single tenant buildings.

Speaker Change: Slide 16 please.

Eva: By 16, presents the bank's residential mortgage portfolio. Residential mortgage loans were stable year over year and slightly down by 2% on a sequential basis. We adhere to cautious on the writing standards in our confident the quality of our portfolio. This is reflected in our 58% proportion of insured mortgages and a low loan to value ratio of 48% on the uninsured portion.

Speaker Change: The bank's residential mortgage portfolio.

Speaker Change: <unk> mortgage loans were stable year over year, and slightly down by 2% on a sequential basis.

Unknown Executive: We adhere to cautious on the writing standards in our content and the quality of our portfolio. This is reflected in our 58% proportion of insured mortgages and a low loan-to-value ratio of 48% on the uninsured portion. Louncers for credit losses on flight 17 totaled $224 million, up $7.1 million compared to last year, mainly due to higher allowances on impaired commercial loans. Learning to flight 18, provision of credit losses was $16.3 million and increase of $3 million from a year ago, impacted by a credit migration on commercial loans. Equentially, PCLs were down $1.6 million from higher releases and provisions and on performing loans.

Speaker Change: We adhere to cautious underwriting standards and are confident in the quality of our portfolio.

Speaker Change: This is reflected in our 58% proportion of insured mortgages and a low loan to value ratio of 48% on the uninsured portion.

Speaker Change: Allowances for credit losses on slide 17 totaled $224 million up $7 $1 million compared to last year, mainly due to higher allowances on impaired commercial loans.

Eva: Louncers for credit losses on flight 17 totaled $224 million, up $7.1 million compared to last year, mainly due to higher allowances on impaired commercial loans. According to slide 18, provision of credit losses was $16.3 million in increase of $3 million from a year ago, impacted by a credit migration on commercial loans. Equentially, PCLs were down $1.6 million from higher releases in provisions and on performing loans. As a percentage of average loans and acceptances, PCLs decreased by 2 basis points to 18 basis points.

Speaker Change: Turning to slide 18.

Vision of credit losses was $16 $3 million, an increase of $3 million from a year ago impacted by a credit migration on commercial loans.

Speaker Change: Sequentially <unk> were down $1 $6 million from higher releases in provisions on performing loans.

Unknown Executive: As a percentage of average loans and acceptances, PCL decreased by 2 basis points to 18 basis points. By 19, provides an overview of impaired loans. On a year earlier basis, growth impaired loans increased by $175.5 million due to credit migration and commercial loans, and were up $74 million sequentially for the same reasons. Our underwriting this discipline, including the quality and the high level of collateralization on our loan book at about 93%, allow us to weather the microeconomic conditions and the related credit migration without materially impacts on our ACL and PCL results. We remain committed to a prudent and disciplined approach to risk management.

Speaker Change: As a percentage of average loans and acceptances PCL decreased by two basis points to 18 basis points.

Speaker Change: Slide 19 provides an overview of impaired loans.

Eva: By 19, provides an overview of impaired loans. On a year earlier basis, growth impaired loans increased by $175.5 million due to credit migration and commercial loans, and were up $74 million sequentially for the same reasons. Our underriding discipline, including the quality and the high level of collateralization on our loan book at about 93%, allow us to weather the microeconomic conditions and the related credit migration without materially impacts on our ACL and PCL results.

Speaker Change: On a year over year basis, gross impaired loans increased by $175 $5 million due to credit migration and commercial loans and were up $74 million sequentially for the same reasons.

Speaker Change: Our underwriting discipline, including the quality and the high level of Collateralization on our loan book at about 93% allowed.

Speaker Change: Allow us to weather the macroeconomic conditions and the related credit migration without material impacts on our ACL and <unk> results.

Speaker Change: We remain committed to our prudent and disciplined approach to risk management.

Eva: We remain committed to a prudent and disciplined approach to risk management.

Unknown Executive: As we look ahead to Q4, I would like to note a few key points focused on the next quarter. We expect our loan book to be just slightly down, putting pressure on an IOT. We expect growth to resume later in 2025 with the pace and extent of the anticipated rate reductions. Other income were reduced next quarter due to two main factors. First, the closing of the sale of our retail full brokerage activities to IA on August 2 will negatively impact brokerage fee revenues by about $45 million. Second, the income from financial instruments was at a record high in Q3 and may normalize.

Speaker Change: As we look ahead to Q4 I would like to note a few.

Unknown Executive: As we look ahead to Q4, I would like to note a few key points focused on the next quarter. We expect our loan book to be just slightly down-putting pressure on an ION.

Speaker Change: A few key points focus on the next quarter.

Unknown Executive: We expect growth to resume later in 2025 with the pace and extent of the anticipated rate reductions.

Speaker Change: We expect our loan book to be just slightly down putting pressure on the NII.

Speaker Change: We expect growth to resume later in 2025 with the pace and extent of the anticipated rate reductions.

Other income will reduce next quarter due to two main factors.

Unknown Executive: Other income were reduced next quarter due to two main factors. First, the closing of the sale of our retail full brokerage activities to IA on August 2, will negatively impact brokerage fee revenues by about $45 million. Second, the income from financial instruments were at a record high in Q3 and may normalize. Name is expected to remain relatively stable, but it will depend on the overall business mix. Regarding the efficiency ratio, it is expected to be slightly up from Q3 due to revenue pressure just mentioned and the ongoing investments in our strategic priorities.

Speaker Change: <unk> the closing of the sale of our retail brokerage activities to E. On August 2nd will negatively impact brokerage fee revenues by about $45 million.

Speaker Change: Second the income from financial instruments were at a record high in Q3 and May normalize.

Unknown Executive: Name is expected to remain relatively stable, but it will depend on the overall business mix. Regarding the efficiency ratio, it is expected to be slightly up from Q3 due to revenue pressure just mentioned and the ongoing investments in our strategic priorities. Considering the microeconomic environment, PCL are expected to remain in the i-teens to load 20s. Capital and liquidity levels are solid and expected to remain strong. for Q4.

Speaker Change: NIM is expected to remain relatively stable, but it will depend on the overall business mix.

Speaker Change: Regarding the efficiency ratio is expected to be slightly up from Q3 due to revenue pressure just mentioned and the ongoing investments in our strategic priorities.

Speaker Change: Considering the macroeconomic environment PCL are expected to remain in the high teens to low twenties.

Unknown Executive: Considering the microeconomic environment, PCL are expected to remain in the I-teens to low 20s. Capital and liquidity levels are solid and expected to remain strong, for Q4.

Speaker Change: Capital and liquidity levels are solid and expected to remain strong for Q4.

Unknown Executive: I will now turn the call back to the operator.

Speaker Change: I will now turn the call back to the operator.

Unknown Executive: I will now turn the call back to the offer here.

Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear a three-tone prop acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please set the hands up before pressing any keys. One moment, please, for your first question.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone you will hear a three ton prop acknowledging your request and your questions will be pulled in the order. They are received could you wish to decline from the polling process. Please press star followed by the team.

Operator: Thank you, ladies and gentlemen, we will now begin the question and after session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear a three-tone prop acknowledging your request and your questions will be pulled in the order they are received.

Operator: Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please set the hands up before pressing any keys. One moment please.

Speaker Change: If you are using a speaker phone please lift the handset before pressing and one moment. Please for your first question.

Operator: Please be your first question.

Meny Grauman: Your first question comes from Meny Grauman with Scotiabank. Your line is now open. Hi, good morning. Just wanted to ask about the timing of the rebound and long growth that you see for 25. Presumably, it takes time for activity to react to rate cuts, and it sounds like you don't believe that rate cuts have fallen enough yet to kind of stimulate the demand that your forecast has been so. Just if you could help us sort of narrow sort of the focus in terms of timing in 25.

Mandy Roman: Your first question comes from many Roman with Scotiabank. Your line is now open.

Meny Grauman: Your first question comes from Meny Grauman with Scotia Bank. Your line is now open. Hi, good morning. Just wanted to ask about the timing of the rebound and long growth that you see for 25. Presumably, it takes time for activity to react to to rate cuts. And it sounds like you don't believe that rate cuts are have fallen enough yet to kind of stimulate the demand that you're forecasting. So just if you could help us sort of narrow sort of the focus in terms of timing in 25.

Meny Grauman: Hi, Good morning, just wanted to ask about the timing of the rebound in loan growth that you see from 'twenty five.

Eric Provost: Is this more of a late 25 story you're envisioning in terms of seeing long growth come back here? Yeah, thank you, Meny. It's Eric and good morning to you too. Yeah, this is pretty much what we expect. And again, like depending on both Canada and US rates, the pace and scale of the reduction, it will depend. And as you know, two of our key growth engines, a commercial real estate here in Canada, we still have a healthy pipeline, most of it in multi residential of unfunded, but but we still see developers being on the sidelines, awaiting for those further rate cuts.

<unk> It takes time for activity to react to a rate cut and it sounds like you don't believe that rate cuts are.

Speaker Change: Fallen enough yet to kind of stimulate the demand that youre forecasting. So just if you could help us sort of narrow.

Speaker Change: The focus in terms of timing and 25 is this more of a late 'twenty five story Youre envisioning in terms of seeing.

Eric Provost: Is this more of a late 25 story you're envisioning in terms of seeing, seeing long growth come back here? Yeah, thank you, Meny. It's Eric, and good morning to you too. Yeah, this is pretty much what we expect. And again, like depending on both Canada and US rates, the pace and scale of the reduction, it will depend. As you know, two of our key growth engines, so commercial real estate here in Canada, we still have a healthy pipeline, most of it in multi-residential of unfunded. But we still see developers being on the sidelines, awaiting for those further rate cuts.

Speaker Change: Loan growth come back here.

Speaker Change: Yes. Thank you mini it's Eric and good morning to you too.

Speaker Change: Yes. This is pretty much what we expect and again, depending on both Canada and U S.

Speaker Change: Rates, the pace and scale of the reduction.

Speaker Change: It will depend as you know two of our key growth engines for commercial real estate here in Canada.

Speaker Change: We still have a healthy pipeline most of it in multi residential of unfunded.

Speaker Change: But we still see developers being on the sidelines waiting for those further rate cuts. So so before those projects are launched.

Eric Provost: So before those projects are launched, expected to impact our growth probably later in 25. As for inventory financing, as I mentioned in my opening remarks, dealers have actually been strong in cells this summer. And the good story there is that we've been able to increase our dealer base by seven percent year on year. So, Celsius is working to expend those opportunities for future growth, but we're awaiting that easing in interest rate as well from the Fed. So that should have an impact, but dealers will remain cautious.

Eric Provost: So so before those projects are launched, expected to impact our growth, probably later in 25. As for inventory financing, as I mentioned in my opening remarks, dealers have actually been strong in in cells this summer. And the good story there is that we've been able to increase our dealer base by 7% year over year. So South team is working to expand those opportunity for future growth. But we're awaiting that that easing in interest rate as well from the fed. So so that should have an impact, but dealers will remain cautious. We expect in terms of restocking at this fall season.

Speaker Change: Expected to impact our growth probably later in 'twenty five as for inventory financing as I mentioned in my opening remarks.

Speaker Change: <unk> have actually been.

Speaker Change: Strong in sales this summer.

Speaker Change: The good story there is that we've been able to increase our dealer base by 7% year over year. So sales team is working to expand.

Speaker Change: Those opportunity for future growth, but we're awaiting that easing in interest rates as well from the fed so so that should have an impact.

Speaker Change: <unk> will remain cautious we expect in terms of restocking at this fall season.

Eric Provost: We expect in terms of restocking at this fall season.

Eric Provost: And what portfolios do you expect to be more sensitive to rate, meaning where do you expect to see the reaction first, and then what portfolios might lag? Well, here, the demand is still very strong; many, in terms of all housing across Canada, is just that the developers are waiting to make sure that the economy makes sense for their projects in terms of returns. And so I believe that if we do feel a pace of steady reduction, those developers are really waiting to launch new projects. So that could have impact. And again, like consumer confidence in the US, as remains strong in terms of purchases throughout the summer, as we see in my utilization that are.

Meny Grauman: And what portfolios do you expect to be more sensitive to rate, meaning where do you see or do you expect to see the reaction first and then what portfolios might lag? Well here the the the men is still very strong many in terms of all housing across Canada is just that the developers are are waiting to make sure that the kind of makes makes sense for their projects in terms of in terms of returns.

Speaker Change: And what portfolios do you expect to be more sensitive to rates, meaning where do you see where do you expect to see the reaction first.

Speaker Change: And then what portfolios might lag.

Speaker Change: Well here is the.

Speaker Change: The demand is still very strong many in terms of.

Speaker Change: Housing across Canada, just the developers are waiting to make sure that the economics makes sense for new projects in terms of in terms of returns so.

Meny Grauman: And so I believe that if we do feel a pace of steady reduction, those developers are really waiting to launch new projects. So that could have impact. And again, like consumer confidence in the US as as remains strong in terms of of purchases throughout the summer as we see in my utilization that are, are way below historical level at 43% for that period. So we believe that if we see an easing, it could be a good story there in terms of rebuilding inventory for the next season, but still to be dependent on the pace of the fed reduction. Understood. Thank you.

Speaker Change: I believe that if we do feel that base of.

Speaker Change: Steady reduction.

Speaker Change: Those developers are really waiting too.

Speaker Change: To launch new projects, so that could have impact and again like consumer confidence in the U S has remained strong in terms of.

Operator: Okay.

Speaker Change: Of purchases throughout the summer as we see in mind Utilizations that are way below historical level at 42% for that period. So.

Eric Provost: are way below historical level at 43% for that period. So we believe that if we see an easing, it could be a good story there in terms of rebuilding inventory for the next season, but still to be dependent on the pace of the Fed reduction.

Speaker Change: We believe that if we see an easing.

Speaker Change: It could be a good story there in terms of rebuilding inventory for for the next season.

Speaker Change: Sales still to be dependent on the pace of the fed reduction.

Meny Grauman: Understood. Thank you.

Speaker Change: Understood. Thank you.

Sohrab Movahedi: Okay. Your next question comes from Sohrab Movahedi, Be with BMO Capital Markets. Your line is now open. Okay, thank you. Yvan, I assume the higher capital ratios are an anticipation of future loan growth, but what's the risk that some of these impairments may result in higher than model or expected loss given default. I mean, we've seen this as an issue with some other banks that are also very good lending culture strong underwriters of credit, but they're getting surprised a little bit with recovery rates when defaults are happening. So can you give us some comfort that similar things are not about to happen at Laurentian?

Speaker Change: Okay.

Sohrab <unk>: Your next question comes from Sohrab <unk> with BMO capital markets. Your line is now open.

Sohrab Movahedi: Your next question comes from Sohrab Movahedi, with BMO capital markets. Your line is now open. Okay, thank you. Yvan, I assume the higher capital ratios are an anticipation of future loan growth, but what's the risk that some of these impairments may result in higher than model or expected loss given default. I mean, we've seen this as an issue with some other banks that are also very good lending culture strong on the writers of credit, but they're getting surprised a little bit with recovery rates when defaults are happening.

Sohrab <unk>: Okay. Thank you.

Hi, Ivan I assumed the higher cap capital ratios are in anticipation of future loan growth.

Sohrab <unk>: What's the risk.

Speaker Change: Did some of these impairments may result in.

Speaker Change: Higher than modeled or expected.

Speaker Change: Loss, given defaults I mean, we've seen this.

Speaker Change: An issue with some other banks that are also very good.

Speaker Change: <unk> culture strong underwriters of credit, but they're getting surprised a little bit with.

Speaker Change: Recovery rates when defaults are happening so can you give us some comfort that.

Sohrab Movahedi: So can you give us some comfort that similar things are not about to happen at Laurentian, and then if you could just get a little bit more commentary as to what's the outlook for formations, do you anticipate. Continue negative migration here in the portfolio. Thank you. Thank you, Sohrab. So I'll start and maybe you're saying I'm going to have to the answer. So the 10.9% as you mentioned of CT1, this quarter, 50-bit point increase came from the loan volume reduction, so reduction in the RWA.

Speaker Change: Similar things are not about tap Laurentian and then if I could just get a little bit more commentary as to what's the outlook for.

Sohrab Movahedi: And then if you could just get a little bit more commentary as to what's the outlook for formations, do you anticipate continued negative migration here in the portfolio. Thank you. Thank you, Sohrab.

Speaker Change: Formations do you anticipate.

Speaker Change: Continued negative migration here.

Speaker Change: The portfolio. Thank you.

Speaker Change: Thank you Suraj, so I'll start and maybe it sounds you're going to have to the answers. So the 10, 9% as you mentioned that <unk> won this quarter 50 basis point increase came from the loan volume reduction so a reduction in <unk> and as Eric mentioned, we're awaiting the rate cuts and we expect.

Yvan Deschamps: So I'll start, and maybe you're saying I'm going to have to the answer. So the 10.9% as you mentioned, the city one is quarter 50 point increase came from the loan volume reduction, so reduction in the RWA. And as I mentioned, we're waiting the rate cuts, and we expected, you know, to end up demand in inventory fines and create, including those that will come back and take some of that capital. So we're currently extremely well positioned from a capital perspective to sustain that and sustain the plan that we're launching as well. So from a credit perspective, our guidance has been clearly for less quarters and is still maintain that the same thing low tea low 20s to high teams. And we pretty much it's what we see for the next quarter or next quarter.

Sohrab Movahedi: And as I mentioned, we're waiting the rate cuts, and we expected, you know, pump up demand in inventory financing, create including those that will come back and take some of that capital. So we're currently extremely well positioned from a capital perspective to sustain that and sustain the plan that we're launching as well. From a credit perspective, our guidance has been clearly for less quarters, and it's still maintained at the same time low 20s to high teens.

Speaker Change: Pent up demand and inventory refinancing Korea, including dose.

That will come back and take some of that capital. So we're currently we're extremely well positioned from a capital perspective to sustain that.

Speaker Change: Sustained the plan that we're launching as well from a credit perspective, our guidance has been clearly for last few quarters and is still maintaining the same thing.

Keith: Teen low twenty's to teens and we've pretty much it's what we see for the next quarter or next few quarters. So there is no indication at this point that we would see anything material that will diverge from this and maybe Keith if.

Sohrab Movahedi: And we pretty much it's what we see for the next quarter or next quarter. So there's no indication at this point that we would see anything material that would diverge from this. And maybe Christian, if you want to add to this. Thank you, Ivan, and good morning. So what I would say is you have to understand that the increase in our impaired are coming from well-collegged, new formations and commercial. And there's a minimum bite size required to play in commercial markets, and this creates volatility and gills.

Christian Broux: So there's no indication at this point that we would see anything material that would diverge from this, and maybe if you want to add to this.

Keith: If you want to add to this.

Christian Broux: Thank you, Ivan, and good morning. So what I would say is you have to understand that the increase in our impaired are coming from well collateralized new formations and commercial. And there's a minimum bite size required to play in commercial markets, and this creates volatility and gills. That being said, we have been and we continue to be disciplined in our underwriting. And that's why you're not seeing variations in the ACL or PCL. And like Ivan said, we are still comfortable with our guidance of high teams, low 20s for PCLs going forward. As to the forward view on gills, it's hard to predict in the short term, but longer term, with interest rate reductions forecasted, we're expecting our impaired loans to normal.

Keith: Thank you Ivan and good morning.

Keith: So what I would say is you have to understand that the increase in our impaired are coming from well collateralized new formations in commercial.

Keith: And there is a minimum byte size required to play in commercial markets and this creates volatility and gifts that being said, we have been and we continue to be disciplined in our underwriting and thats why youre not seeing variations in the ACL alert PCL and like <unk> said.

Sohrab Movahedi: That being said, we have been, and we continue to be disciplined in our underwriting, and that's why you're not seeing variations in the ACL or PCL. And like Ivan said, we are still comfortable with our guidance of high teens, low 20s for PCLs going forward. As to the forward view on gills, it's hard to predict in the short term, but longer term with interest rate reductions forecasted. We're expecting our impaired loans to normal. Okay, so that's very helpful, Christian. I just want to put a finer point on this.

Speaker Change: We are still comfortable with our guidance of high teens low <unk> for <unk> going forward.

Speaker Change: The forward view.

Speaker Change: On on deals it's hard to predict in the short term, but longer term with interest rate reductions forecasted we're expecting our impaired loans to normalize.

Speaker Change: Okay, that's very helpful Christian.

Christian Broux: I just want to put a finer point on this. You are saying I am naive or I'm thinking too hard if I'm worried about the risk, for example, of you next quarter telling us that you were surprised about the recovery rates on some of these impaired loans. Well, the other thing you have to remember were a collateral; you know, we focused strongly on having collateral behind our loans. 93% of our book is collateralized. So I think sometimes the surprise comes from cash flow loans. That's not where we play, right? We play in collateralized loans and so not expecting to be surprised.

Speaker Change: Just wanted to put a finer point on this.

Speaker Change: You are saying I am naive or.

Sohrab Movahedi: You are saying I am naive or I'm thinking too hard if I'm worried about the risk, for example, of you next quarter telling us that you were surprised about the recovery rates on some of these impaired notes. Well, the other thing you have to remember, we're a collateral, you know, we focus strongly on having collateral behind our loans, 93% of our book is collateralized. So I think sometimes the surprise come from cash flow loans, that's not where we play, right.

Speaker Change: Im thinking too hard.

Speaker Change: I am worried about the risk for example, a few next quarter, telling us that you were surprised about the recovery rates on some of these impaired loans.

Speaker Change: Well the only thing you have to remember.

Speaker Change: A collateral.

Speaker Change: No.

We focused strongly on having collateral behind our loans, 93% of our book is collateralized.

Speaker Change: So I think sometimes the surprise come from cash flow loans.

Speaker Change: Not where we play we play in collateralized loans and so.

Sohrab Movahedi: We play in collateralized loans, and so not expecting to be surprised. And the collateral is usually what, heart, real estate, or can you can you talk a little bit about some of the new formations this quarter and what's the collateral behind? It's well diversified the new formations, right. It's not concentrated in, you know, geographically or by vintage or industry. It's well diversified across the portfolio, so it'll be a mix of all our business lines.

Speaker Change: Not expecting to be surprised.

Christian Broux: And the collateral is usually what, heart real estate, or can you talk a little bit about some of the new formations this quarter and what's the collateral behind it? It's well diversified; the new formations, right? It's not concentrated in, you know, geographically or by vintage or industry. It's well diversified across the portfolio. So it'll be a mix of all our business lives. But can you comment on what sort of collateral is behind it behind the facilities? Real estate will be equipment. That's basically what we're going to have behind our underpinning our loans. Thank you very much.

Speaker Change: And the collateral is usually what heart real estate or can you can you talk a little bit about some of the new formations this quarter and what's the collateral behind it.

Speaker Change: It's well diversified the new formation, it's not concentrated in.

Speaker Change: Geographically or by vintage or industry.

Speaker Change: It's well diversified across our portfolio. So it will be a mix of all our business lines.

Speaker Change: But can you comment on what sort of collateral is behind it.

Sohrab Movahedi: But can you comment on what sort of collateral is behind it, behind the facilities? You know, real estate will be equipment. That's basically what we're going to have behind our underpinning our loans. Okay, thank you very much.

Speaker Change: Behind that facility.

Speaker Change: Yeah.

Speaker Change: Real estate it will be equipment.

Speaker Change: So that's basically what we're going to have behind are underpinning our loans.

Speaker Change: Okay. Thank you very much.

Gabriel Dechaine: Your next question comes from Gabrielle Deschein with National Bank Financial. Your line is now open. Good morning. Thanks for all the Q4 guidance and the longer-term guidance on long growth. Can you tell me about the income from financial instruments? You're clear there that there was a new and the highest quarter. What is that, anyway?

Kevin <unk>: Your next question comes from Kevin <unk> with National Bank Financial Your line is now open.

Gabriel Dechaine: Your next question comes from Gabrielle Deschein with National Bank Financial. Your line is now open. Good morning. Thanks for all the Q4 guidance and the longer term guidance on long growth. Just want to, can you tell me about the income from financial instruments? You're clear there that it was the newly highest quarter, what was the, you know, what is that anyway? Yeah, thank you Gabrielle. So I would say in line with a few of our peers, capital markets have been our financial markets.

Kevin <unk>: Hi, good morning.

Speaker Change: Thanks for all the Q4 guidance.

Speaker Change: Uh huh.

Speaker Change: But longer term guidance on loan growth.

Speaker Change: Just wanted to go.

Speaker Change: Can you tell me about the income from financial instruments, you are clear there that there was unusually high this quarter what was the.

Speaker Change: What is that anyway.

Gabriel Dechaine: Thank you, Gabrielle. So I would say, in line with a few of our peers, capital markets have been our final markets; I would say, have been constructive over the last few months, last few quarters. So what we see here is that we have good trading activities in our capital markets, team, good fixed income and press, which is essentially the portfolio that we have to support our customers. I've been gaining traction as the interest rates have reduced and the spread as well. So good performance, strong team that generated great results this quarter.

Speaker Change: Yes. Thank you everybody else. So I'd say in line with a few of our peers capital markets have been our financial markets I would say I've been constructive over the last few months last few quarters. So what we see here is that we had good trading activities in our capital markets team good fixed income.

Gabriel Dechaine: I would say have been constructive over the last few months, last few quarters. So what we see here is that we have good trading activities in our capital markets, team, good fixed income and press, which is essentially the portfolios that we have to support our customers. Have been gaining traction as the interest rates have reduced and the spread as well. So good performance, strong team that generated great results, the squatter. Okay, and I know this is a kind of a silly question because it's a line item that moves around a lot and the term normal doesn't mean anything these days.

Speaker Change: And press, which is essentially the portfolios that we have to support our customers have been gaining traction as the interest rates have reduced and the spreads as well. So good performance strong team that generated great results this quarter.

Gabriel Dechaine: Okay, and I know this is a silly question because it's a line item that moves around a lot, and the term "normal" doesn't mean anything these days. But what would be kind of a run rate number for that line item based on your historical experience? We have right now. I would say last quarter was a good quarter at 15; this quarter 19 is a record quarter for the results of this line. So going back to the 15, and if it's a worse quarter, it could be a bit lower than that; is a more normalized. in number.

Speaker Change: Okay.

Speaker Change: I know this is a kind of a silly question because Bob.

Speaker Change: Line item that moves around a lot.

Bob: Term normal doesn't mean anything these days, but what would be kind of a run rate number for that line item based on your historical experience.

Gabriel Dechaine: But what would be kind of a run rate number for that, that that line item based on your, you know, historical experience? Yeah, I would say last quarter was was a good quarter at 15 this quarter 19 is a record quarter for the results of this line. So going back to the 15 and if it's a worse quarter, it could be a bit lower than that is a more normalized, in number.

Speaker Change: Yes, we have.

Speaker Change: Right now I would say last quarter was was a good quarter at 15. This COVID-19 is a record quarter for the results of this line so going back to the 15 and if it's a worst quarter it could be a bit lower than that as a more normalized number.

Gabriel Dechaine: Okay.

Gabriel Dechaine: And in response to, I'm not sure I quite understood, but in response to some of the questions there, Zora was asking, did you give a sense of what to expect in Q4, in terms of credit performance, like similar to this quarter, or obviously things can happen at the very last day of the quarter, but how do you see things shaping up based on what you know today? But we see, as I mentioned, Gabriel, in my guidance, we see still the itines to low 20. So essentially, a quarter that will look pretty much like Q2, Q3; we're still in the same ballpark with what we see at this.

Gabriel Dechaine: Okay, and in response to, I'm not sure I quite understood, but in response to some of the questions there, Sohrab was asking, did you give a sense of what to expect in Q4 from in terms of credit performance, like similar to this quarter or, you know, obviously, things can happen up, you know, very last day of the quarter, but how do you see things shaping up based on what you know today? But we see, as I mentioned, Gabriel, in my guidance, we see still the items to low 20. So essentially, a quarter that was pretty much like Q2, Q3, we're still in the same ballpark with what we see at this. Got it.

Speaker Change: Okay, and then in response to I'm not sure.

Speaker Change: Quite understood, but in response to some of the questions there sorry about that.

Speaker Change: Did you give a sense of what to expect in Q4 from in terms of credit performance like similar to this quarter or obviously things can happen.

Speaker Change: And very last day of the quarter, but.

Speaker Change: How do you see things shaping up based on what you know today.

Speaker Change: What we see.

As I mentioned earlier in my guidance, we see still the high teens to low 20, so essentially.

Speaker Change: Pretty much like Q2 Q3, we're still in the same ballpark with what do we see it.

Gabriel Dechaine: Got it.

Gabriel Dechaine: Last one, just a clarification: you talked about the mortgage servicing business that you sold on August 2nd, and you said $4 to $5 million of revenue. Is that a quarter or a year? Yeah. First, the business we sold is brokers that were doing full brokerage services to our customers. You know, the brokers when you buy bonds or stock market. That's what we sold to IA. On a yearly basis, that business, including discount business that we announced that we're going to sell to CI. That's roughly about 20 million a year, $4 to $5 million a quarter.

Speaker Change: Got it last one just a clarification you talked about the mortgage servicing business that you sold.

Gabriel Dechaine: Last one, just a clarification, you talked about the mortgage servicing business that you sold, that closed on August 22nd, and you said $4 to $5 million of revenue, is that a quarter or a year? Yeah, first, the business we sold is brokers that were doing full brokerage services to our customers. You know, the brokers when you buy bonds or stock market. Oh, sorry, yeah, that's what we sold to IA. On a yearly basis, that business, including discount business that we announced that we're going to sell to CI, that's roughly about 20 million a year, $4 to $5 million of quarter, and most of that will be on the other income brokerage fee revenues.

On August 2nd and you said $4 million to $5 million of revenue is that a quarter or a year.

Speaker Change: First the business, we sold as brokers that we're doing full brokerage services to our customers brokers, when you buy bonds or stock market I'm sorry.

Speaker Change: That's what we sold to <unk> on a yearly basis that business, including discount business that we announced that we're going to sell to <unk>.

Speaker Change: Roughly about $20 million, a year $4 million to $5 million a quarter and most of that will be on the other income brokerage.

Gabriel Dechaine: And most of that will be on the other income brokerage fee revenues. You're on it.

Speaker Change: <unk> revenues got.

Gabriel Dechaine: And what's the bottom line contribution from that business? Yeah, the bottom line is that that business, if we sold it, it's because it's not a space where we could win. So it wasn't making that much money. The impact short term is probably a cent or so on the next quarter. Got it. All right. Well, thanks.

Gabriel Dechaine: You're on it, and what's the bottom line contribution from that business? Yeah, the bottom line that that business, if we sold it, it's because it's not a space where we could win, so it wasn't making that much money. The impact short term is probably a cent or so on the next quarter. Got it. All right.

Speaker Change: Got it and what's the bottom line contribution from that business.

Speaker Change: Yes, the bottom line that business, if we sold it because it's not a space where we could win so it wasn't making that much money in fact short term, it's probably a centers so on the next quarter.

Speaker Change: Got it alright, well, thanks, I'm enjoying what's left through the summer.

Unknown Executive: And enjoy what's left of the summer. Yeah, thank you.

Gabriel Dechaine: Well, thanks, and enjoy what's left of the summer. Thank you.

Speaker Change: Yes. Thank you.

Unknown Executive: Next question comes from Nigel. Thank you.

Speaker Change: Your next question comes from Nigel.

Stephen Boland: The next question comes from Nigel. Who's out with Visita Investment Research. Your line is now open. Thank you. Good morning. I wanted to touch on your visions for performing loans this quarter and the reversal there. I looked like a good chunk of out-and-striven buy reduction in provisions for stage two commercial loans, so wondering if you could elaborate on, was that primarily migration out of stage two or changes to your model assumptions that led to those lower provisions?

Speaker Change: With <unk> investment research your line is now open.

Nigel: Thank you good morning, I wanted to touch on your visions for performing loans this quarter and the reversal there.

Stephen Boland: Good morning. I wanted to touch on your visions for performing loans this quarter and the reversal there. I looked like a good chunk of that was driven by the reduction in provisions for stage two commercial loans. So wondering if you could elaborate on was that primarily migration out of stage two or changes to your model assumptions that led to those lower provisions?

Looks like a good chunk of that was driven by.

Speaker Change: The reduction in provisions for stage two.

Speaker Change: Loans. So wondering if you could elaborate on was that primarily migration either stage III or.

Speaker Change: Changes to your model assumptions that led to lower provisions.

Stephen Boland: I, Christian, here. It's mainly migration from the performing to non-performing PCL bucket. But there's also a volume impact, obviously, on performing that's playing there. And volume represents somewhere around $3 million for the quarters of four bits. So, still keeping us in our guidance range. And then I guess the macroeconomic piece of this you are seeing you're cited week or macroeconomic conditions currently. It's impacting your own growth. How is that expected to feed into performing provisions going forward? And I ask that because if you look at your PCL ratio, this quarter, the 20 basis points are shown.

Stephen Boland: Hi, Christian here. It's mainly migration from the performing to non-performing PCL bucket, but there's also a volume impact, obviously, on performing. That's playing there. And volume represents somewhere around $3 million for the quarters of four bips, so still keeping us in our guidance range. And then I guess the macroeconomic piece of this, you are seeing, you know, you're cited a week or macroeconomic conditions currently. It's impacting your own growth. How is that expected to feed into performing provisions going forward?

Christian: Hi, Christian here.

Speaker Change: It's mainly migration from the performing to nonperforming PCL bucket.

Speaker Change: But there is also a volume impact obviously on performing Thats playing there.

Speaker Change: And volume represents somewhere around $3 million for the quarter. So four bps, so still keeping us in our guidance range.

Speaker Change: And then I guess the macroeconomic piece of this you are seeing.

Speaker Change: Cited weak weaker macroeconomic conditions currently it's impacting loan growth.

Speaker Change: How is that expected to feed into performing provisions going forward.

Stephen Boland: And I ask that because, you know, if you look at your PCL ratio, this quarter will look at the 20 basis points or show, you know, if you exclude the reversals on performing, it would be closer to 30 basis points. So just wondering how does performing provisions trend from here? Overall, the PCL rate, we're sticking the guidance of high teams to low 20s. You'll see if the economic cycle, when it turns, you'll see a little bit of performing PCLs come on board, and they'll be offset by lowered PCLs on the non-performing. So very short term, hard to predict how that will play out, but longer terms, that's how we're seeing it.

Speaker Change: And I ask that because if you look at your PCL ratio this quarter 20 basis points or so.

Stephen Boland: If you exclude the reversals on performing, it would be closer to 30 basis points. So just wondering how does performing provisions trend from here? Overall, the PCL rate, we're sticking to the guidance of high teams to low 20s. You'll see if the economic cycle, when it turns, you'll see a little bit of performing PCLs come on board, and they'll be offset by lowered PCLs on the non-performing. So very short term, hard to predict how that will play out, but longer terms, that's how we're seeing.

Speaker Change: <unk>.

Speaker Change: Excluding the reversals outperforming it would be closer to 30 basis points I'm just wondering how it is performing conditions trend from here.

Stephen Boland: Okay, I'll leave it there. Thank you.

Speaker Change: Overall, the PCL rate.

We're sticking the guidance to the guidance of a.

Speaker Change: High teens to low twenties, you'll see.

If.

Speaker Change: The economic cycle when it turns youll see a little bit of performing PCL come onboard and that'll be offset by lower PCL on the nonperforming so.

Speaker Change: Very short term hard to predict how that will play out but longer term, that's how we're seeing it.

Stephen Boland: Okay, I'll leave it there. Thank you.

Speaker Change: Okay I'll leave it there thank you.

Doug Young: General. Next question comes from Doug Young with Desjardins Capital Markets. Your line is now open. Good morning. Just going back to the set one ratio, and I kind of understand how it reflects with volume growth, and you know, you're sitting at a healthy level right now, but I'm just curious why I have a discounted drip in place given where you stand today. I'll start there. Yeah, thank you for the question. This is Yvan.

Joe: Hey, Joe.

Speaker Change: Your next question comes from Doug Young with Desjardin capital markets. Your line is now open.

Doug Young: Your next question comes from Doug Young with Desjardins Capital Market. Your line is now open. Hi, good morning.

Doug Young: Hi, good morning.

Doug Young: Just going back to the set one ratio, and I kind of understand how it flexes with volume growth, and you know you're sitting at a healthy level right now, but I'm just curious why, why have a discounted drip in place given where you stand today? I'll start there. Yeah, thank you for the question. This is Yvan, so the rip, if I knock it directly, I would say it's a program that we try not to stop and start too often.

Doug Young: I just went back to the set one ratio and I kind of understand how it flexes with volume growth.

Doug Young: You're sitting at a healthy level right now, but I'm just curious why why havent discounted drip in place given where you stand today.

Speaker Change: I'll start there.

Speaker Change: Yes. Thank you for the question this is Eva so.

Yvan Deschamps: So the rip, if I knock it directly, I would say it's a program that we try not to stop and start too often. So, at this point, we just decide to play prudent. As we mentioned, we have pump up demand that we expect is going to come back. We need to support the plan that we're launching. So we're playing safe in terms of capital at this point, and that includes a drip of not trying to turn it on enough, you know, depending on a quarterly basis, what's happening. And how much would that add to the set one ratio per quarter, roughly?

Speaker Change: If I knock them directly I would say, it's a program that we try not to stop and start too often so at this point, we just decided to really prudent as we mentioned we have pent up demand that we expect is going to come back we need to support the plan that we're launching so we're playing safe in terms of capital.

Doug Young: So at this point we just decide to play prudent, as we mentioned, we have pump-up demand that we expect is going to come back. We need to support the plan that we're launching, so we're playing safe in terms of capital at this point, and that includes the drip of not trying to turn it on enough, you know, depending on a quarterly basis, what's happening. And how much would that add to the set one ratio per quarter roughly, I can kind of roughly think I'm just curious if you've got that handy? Yeah, it's relatively small, though it's a few basis points on a quarterly basis. Okay, that's fine.

At this point.

Speaker Change: And that includes the drip not trying to turn it on enough.

Speaker Change: Ending on a quarterly basis, what's happening.

Speaker Change: And how much would that add.

Speaker Change: One ratio per quarter roughly.

Yvan Deschamps: I can kind of roughly think I'm just curious if you've got that handy. Yeah, it's relatively small dog. It's a few basis points on a quarterly basis. Okay. That's fine.

Speaker Change: Kind of roughly think I'm, just curious if you've got that handy.

Speaker Change: It's relatively small dog, it's a few basis points on a quarterly basis.

Speaker Change: Yeah.

Speaker Change: That's that's fine and then just on the expense so mark going back and thinking through some of the prepared remarks and thinking of the revenue outlook over the next year before we start to see a pivot.

Eric Provost: And then just on the expensive look and going back and thinking through some of the prepared remarks and picking up the, you know, the expected to remain around where we are today, or, you know, as you kind of peel off some of these businesses, you know, this obviously some cost reduction there, or is there some other projects that are rolling off that, you know, you should get some efficiencies. I would have just trying to think of how to think of expenses and the expense ratio. Yeah, in what's otherwise going to be like a lot loan growth Platinum environment.

Doug Young: And then just on the expensive look and going back and thinking through some of the prepared remarks and thinking of the revenue outlook over the next year before we start to see a pivot in loan growth, you know, it is our expenses expected to remain around where we are today, or you know, as you kind of peel off some of these businesses, you know, there's obviously some cost reduction there, or is there some other projects that are rolling off that, you know, you should get some efficiencies? I would just try to think of how to think of expenses and the expense ratio, you know, in what's otherwise going to be like a lot loan growth platinum environment.

Speaker Change: And loan growth.

Speaker Change: Our expenses expected to remain around where we are today.

Speaker Change: Or as you kind of Peel off some of these businesses.

Speaker Change: There's obviously some cost reduction there or is there. Some other projects that are rolling off that you should get some efficiencies I would I'm just trying to think of how to think of expenses and the expense ratio.

Speaker Change: In what's otherwise going to be like a flat loan growth.

Speaker Change: Flattened NIM environment.

Eric Provost: Yeah, thank you, Doug. It's Eric. For, for, for the line of sight we have in the upcoming quarters, expense level should remain pretty much where they are right now. And this is due to the investment needed in our foundational technology. And those are the ones that will trigger and drive the most of the efficiency impact. So further down into the execution of the plan. And of course, the team is still working on opportunities, just like you saw in the divesting of the two capital market groups in terms of brokerage. But, but for us, it's ready to combine the efficiencies created by our projects as well as opportunistically revisiting our cost structure.

Doug Young: Yeah, thank you, Doug. It's Eric. For the line of sight we have in the upcoming quarters, expense levels should remain pretty much where they are right now. And this is due to the investment needed in our foundational technology. And those are the ones that will trigger and drive the most of the efficiency impact. So further down into the execution of the plan. Of course, the team is still working on opportunities, just like you saw in the divesting of the two capital market groups in terms of brokerage.

Speaker Change: Yes, Thank you Doug it's Eric.

Speaker Change: Yeah.

For a line of sight, we have in the upcoming quarters expense level should remain.

Pretty much where they are right now and this is due to the investment.

Needed in our foundational technology and those are the ones that will trigger and drive the most of the efficiency impact. So so further down into the execution of the plan of course, the team is still working on opportunities.

Speaker Change: Just like you saw in the divesting of the two capital markets groups in terms of brokerage but.

Doug Young: But for us, it's free to combine the efficiencies created by our projects as well as as opportunistically revisiting our cost structure. So to be expected, still, I expenses with the investments we're making over the next few quarters. So expense ratio is roughly around where we're seeing them today. That's kind of what we should be thinking. Yeah, and then and probably just a could be a little bit more into four, just to the fact of the pressure we just mentioned on top line from a revenue perspective. So expect to still put pressure on the overall efficiency ratio. Appreciate the color. Thank you.

Speaker Change: For us, it's really to combine the efficiencies created by our projects as well as Opportunistically revisiting our cost structure. So so to be expected still high.

Eric Provost: So to be expected, still I expenses with the investments we're making over the next few quarters. So expense ratio is roughly around where we're seeing them today. That's kind of what we should be thinking.

Speaker Change: Expenses with the investments, we're making over the next few quarters.

Speaker Change: So expense ratios roughly around where we're seeing them today.

Speaker Change: Kind of what we should be thinking.

Eric Provost: Yeah, and then, and probably just a could be a little bit more into four. Just to the fact. So expect of the pressure we just mentioned on top line from a revenue perspective. So expect to still put pressure on the overall efficiency ratio. Appreciate the color. Thank you.

Speaker Change #100: Yeah and then.

Speaker Change #101: And probably just.

Could be a little bit more in Q4, just to the effect of the pressure. We just mentioned on top line from a revenue perspective so.

Expect to still put pressure on the overall efficiency.

Speaker Change #101: The efficiency ratio.

Speaker Change #102: I appreciate the color. Thank you. Thank.

Speaker Change #103: Thank you.

Paul Holden: Your next question comes from Paul Holden with CIDC. Your line is now. Thank you. Good morning. A question with respect to the retail bank, like when I look at the positive trends or, you know, the decline in deposits and then also the decline in development loan categories. I can't help but wondering if you're seeing customer tradition in terms of sort of I think about core branch customers. So maybe you can start with addressing that, please. Paul, this is about like that one. You know, the retail and the deposit. So let's start by the deposit, definitely a reduction deposit this quarter, which is a line as we mentioned with the loan. We try to manage those in line.

Paul Holden: Your next question comes from Paul Holden with CIBC. Your line is now. Thank you. Good morning. A question with respect to the retail bank. Like when I look at the deposit trends or, you know, the decline into deposits and then also the decline in the relevant loan categories. I can't help but wondering if you're seeing customer tradition in terms of sort of I think about core branch customers.

Speaker Change #103: Your next question comes from Paul Holden with CIBC. Your line is now.

Paul Holden: Thank you good morning.

Paul Holden: A question with respect to the retail bank like when I look at deposit trends are.

Paul Holden: The decline in deposits and then also the decline in.

Speaker Change #105: The relevant.

Speaker Change #106: Loan categories.

Speaker Change #107: But wondering if you're seeing.

Speaker Change #108: Customer attrition in terms of sort of if I think about core branch customers.

Paul Holden: So maybe you can start with addressing that please. Paul, this is about take that one. You know, the retail and the deposit. So let's start by the deposit, definitely a reduction deposit, this quarter, which is a line as we mentioned with the loan, we try to manage those in line. But if you look at the retail deposits, which is read the key factor in terms of where our focuses in retail and where we track, you know, the inflows and outflows, we've been pretty much table this year in terms of retail deposits.

Speaker Change #109: You can start with addressing that please.

Paul Holden: Paul This is evolved to take that one.

Paul Holden: The.

Speaker Change #110: The retail and the deposit so let's start by the deposit definitely a reduction in deposits this quarter, which is allowing as we mentioned with the loan we try to manage those in line, but if you look at the retail deposits, which is really the key factor in terms of where our focus is in retail and where are we tracking odeon.

Yvan Deschamps: But if you look at the retail deposits, which is read the key factor in terms of where our focus is in retail and where we track, you know, the inflows and outflows, we've been pretty much stable this year in terms of retail deposits. We grew those over the last few years, so we've been successful on that side. On the loan side, the margins currently, or the market, I would say even in mortgages and some other products, are impacted by the state of the market. So mortgages is more slow these days. But we're really, really focusing on retail for the deposit, and we had good success in keeping and protecting those over the last many quarters.

Speaker Change #110: Closing outflows, we've been pretty much stable.

Speaker Change #110: This year in terms of retail deposits. We grew those over the last few years. So we've been successful on that side.

Paul Holden: We grew those over the last few years. So we've been successful on that side. Don't on the loan side, the margins currently or the market, I would say even in mortgages and some other products are impacted by the state of the market. So mortgages is more slow these days. But we're really, really focusing on the retail for the deposits and we had good success in keeping and protecting those over the last many quarters.

Speaker Change #110: On the loan side the margins currently or the market I would say even in mortgages and some other products are impacted by the state of the market. So mortgages is more slow these days.

Speaker Change #110: But we're really really focusing on our retail for the deposits and we had good success in keeping and protecting those over the last many quarters.

Eric Provost: And you remind me, based on what you're presented at the investor day, sort of when you might expect an inflection, and I would call it retail deposits increase with your digital initiative. I think that's still probably maybe a 2026 story, but is there any possibility could become a 2025 story?

Speaker Change #110: Okay.

Paul Holden: Okay. And you remind me based on what you're presented at the investor day, sort of when you might expect an inflection and I call it retail deposits, the increase with your digital initiative. I think that's still probably maybe a 2026 story, but is there any possibility could become a 2025 story. Hi, Paul, it's Eric. I think that 26 guidance is the best horizon right now we're seeing in front of us. It does require the right level of investments into our foundation before we're able to actually launch and see real impact there.

Speaker Change #111: And can you remind me based on.

What you presented at the Investor Day is sort of when you might expect an inflection in.

Speaker Change #112: Call it retail deposits the increase with your digital initiatives I think thats still probably maybe at 2026 story, but is there any possibility could become 2025 story.

Eric Provost: Hi, Paul, it's Eric. I think that 26 guidance is the best horizon right now we're seeing in front of us. It does require the right level of investments into our foundation before we're able to actually launch and see real impact there. So more to come on that front, but definitely, as Ivan said, making sure that we protect that we grow our actual base is aligned also with the plan.

Eric: Hi, Paul it's Eric.

Eric: I think the 26 guidance as the best Horizon right now we're seeing in front of us.

Speaker Change #114: It does require to the right level of investments into our foundation before we're able to actually launch in and see real impact there. So so more to come.

Paul Holden: So more to come on that front. But definitely as Ivan said, making sure that we protect that we grow our actual base is is aligned also with the plan. And this is why we created a head of customer experience in retail. We're bringing back our employees and leaders closer to our retail customer base and that I hope we'll feel also into the into the mix in the coming.

Speaker Change #114: On that front, but definitely as Ivan said.

Ivan: Making sure that we protect that we grow our actual base is is aligned also with the plan and this is why we created <unk>.

Eric Provost: And this is why we created a Head of Customer Experience in retail. We're bringing back our employees and leaders closer to our retail customer base, and that I hope will feel also into the mix in the coming. 10 years. Okay, thanks.

Speaker Change #116: Head of.

Speaker Change #117: The customer experience in retail, we're bringing back our employees and leaders closer to to a retail customer base and that I hope.

Speaker Change #117: We will feel also into the into the mix.

In the coming years.

Speaker Change #118: Okay. Okay. Thanks.

Paul Holden: And last question, it kind of follows up on Doug's question regarding the, the, the drip, right? Like when I look at the current valuation, still trading at, you know, less than half times book, I look at the RWE, let's call it six and a half percent, give or take. Like, it doesn't; I struggle with the issuing shares at that level. In fact, I would argue, you know, why shouldn't be buying back shares? I get it strategically, you want to grow in commercial loans, but, you know, the RWE, the implied RWE, implied return of buying back stock today seems pretty compelling.

Paul Holden: And last question, it kind of follows up on Doug's question regarding the drip, right? When I look at the current valuation, still trading at less than half time's book, I look at the RWE, let's call it 6.5% give or take, it doesn't, I struggle with the issuing shares at that level. In fact, I would argue why shouldn't be buying back shares? I get it strategically. You want to grow in commercial loans, but the RWE, the implied return of buying back stock today seems pretty compelling.

Speaker Change #119: Last question kind of follows up on Doug's question regarding the drip right when.

Speaker Change #120: When I look at the current valuation.

Speaker Change #120: We're still trading at less than half times book.

Speaker Change #120: Or are we let's call it six 5% give or take.

Speaker Change #121: It doesn't I struggle with the issuing.

Speaker Change #121: Shares at that level in fact, I would argue why shouldn't be buying back shares I guess strategically do you want to grow in commercial loans, but the.

Speaker Change #122: <unk> <unk> the implied ROE on implied return of buying back stock today seems pretty compelling so.

Yvan Deschamps: So, you know, I think I've asked you this question before, but I'm going to ask you again. Like, why not go down that route? Thank you, Paul.

Paul Holden: So I think I've asked you this question before, but I'm going to ask you again, why not go down that route? Thank you Paul, this is Yvonne, it's going to be difficult for me to give you a different answer to this one, but if I look by example, just to give you an example, an eventorifying thing is that 43% right now. Normally, it should be at 50% for this. So just that volume, well, would represent something like 30, 40 beats just to sustain, and I'm not talking about the potentials is not increased during the winter season after they've restocked.

I think I've asked you this question before but I'm going to ask it again.

Speaker Change #123: Why why why not go down that route.

Yvan Deschamps: This is Yvan. It's going to be difficult for me to give you a different answer to this one. But if I look by example, just to give you an example, inventory financing is at 43 percent right now. Normally, it should be at 50 percent for this. So, just that volume, well, would represent something like 30, 40 beats, just sustain. And I'm not talking about the potential season, or the increase during the winter season after the risk stock. Same thing on commercial real estate. We say that we expect that market to resume as rates are going down.

Ivan: Thank you Paul this is Ivan it's going to be difficult for me to give you a different answer to this one but if I look by example, just to give you. An example inventory financing is at 43% right now normally it should be at 50% for this so just that volume alone would represent something like 30 40 bps.

Ivan: Just sustain and I'm not talking about the potential seasonal increase during the winter season. After they have restocked same thing on commercial real estate, we say that we expect that market to resume as the rates are going down. So again, we have open lines with several offers that are open and we need to make sure that.

Paul Holden: Same thing on commercial real estate, we say that we expect that market to resume as rates are going down. So again, we have open lines with the developers that are open, and we need to make sure that we're there. So maybe you can argue that we're playing safe in the environment, but I don't want to be in a place where I have capital issues and I would need to issue obviously we're not there at all, but I don't want to play risky on the other side and we're comfortable with where we are.

Yvan Deschamps: So, again, we have open lines with the developers that are open, and we need to make sure that we're there. So, maybe you can argue that we're playing safe in the environment, but I don't want to be in a place where I have capital issues, and I would need to issue. Obviously, we're not there at all, but I don't want to play risky on the other side, and we're comfortable with where we are. We believe it's a good place to be to sustain the organic road that's going to come back with this business. And we're doing that because we also expect a good return from these investments in inventory, financing, commercial real estate, or the rest of it.

Speaker Change #124: Were there. So maybe you can argue that were playing safe in the environment, but I don't want to be in a place where I have capital issues and I would need to.

Speaker Change #124: Obviously, we're not there at all but I don't want to flee risky on the outer side than we're comfortable with where we are we believe it's a good place to be to sustain the organic growth that's going to come back with this business and we're doing that because we also expect a good return from these investments inventory financing commercial real estate or the rest of it so.

Paul Holden: We believe it's a good place to be to sustain the organic road that's going to come back with this business, and we're doing that because we also expect a good return from these investments in the eventorifying thing commercial real estate or the rest of it. So I guess I would avoid repeating the same I mentioned to Doug for the rest of the answer, but differently, we don't want to turn on enough that the rip. And the rip is relatively small in our capital, so it's not like it was a huge impact on a quarterly basis.

Yvan Deschamps: So, I guess I would avoid repeating the same I mentioned to Doug for the rest of the answer, but differently. We don't want to turn on enough that the rip. And the rip is relatively small in our capital, so it's not like it was a huge impact on a quarterly basis.

Speaker Change #125: I guess I'll avoid repeating the same I mentioned to Doug for the rest of the answer but differently. We don't want to turn on enough that the risks and the drip is a relatively small and our capital. So it's not like it was a huge impact on a quarterly basis.

Paul Holden: Okay, I'm sorry, I'm just going to have to pull up on this for a minute because I guess the way I look at it as a financial analyst, right? Like, I mean, if you're buying back stock at, you know, roughly half bulk, and with a six and a half percent R.E. that tells me simply, you know, 13 percent return on that capital. Are you suggesting that you can earn something higher than 13 percent in by growing commercial loans because then that would make sense to me. So, is that fair to assume you'd be expecting something higher than 13 percent on our organic capital deployment into commercial loans?

Speaker Change #126: Okay, I'm, sorry, I'm, just going to follow up on that.

Paul Holden: Okay, I'm sorry, I'm just going to have to follow up on this for a minute because I guess the way I look at it as a financial analyst, right? Like, I mean, if you're buying back stock at roughly half a half book and with a six and a half percent are we that tells me simply, you know, 13% return on that on that capital. Are you suggesting that you can earn something higher than 13% in by growing commercial loans because then that would make sense to me.

Speaker Change #126: For a minute because I guess the way I look at it as a financial analyst right.

Speaker Change #127: If youre buying back stock at roughly half half book with a six 5% ROE that tells me simply you know 13% return on that on that capital are you, suggesting that you can earn something higher than 13% and by growing commercial loan. Because then that would make sense to me. So is that fair to assume.

Paul Holden: So is that fair to assume you'd be expecting something higher than 13% on our organic capital deployment into commercial loans? Yeah, Paul, it's Eric. I'm going to take this one. I have to put emphasis on the fact that the specialized niche we're in are delivering very LT margins and return for our businesses. So that's the logic and rational that Ivan just explained. We believe that being position and then we are well positioned in terms of capital right now, we believe that redeploying that capital towards those specialty businesses will bring the return, to reward the Shareholder, so that's why we keep that position.

Speaker Change #128: You would be expecting something higher than 13% on organic capital deployment into commercial loans.

Eric Provost: Yeah, Paul, it's Eric. I'm going to take this one. I have to put emphasis on the fact that the specialized niche we're in is delivering very L.T. margins and return for our businesses. So that's the logic and rational that Ivan just explained. We believe that being positioned and then we are well positioned in terms of capital right now. We believe that redeploying that capital towards those specialty businesses will bring the return. to reward the shareholder, so that's why we keep that position.

Speaker Change #128: Yes, Paul it's Eric I'm going to take this one.

I have to put emphasis on the fact that the specialized niche we're in are delivering.

Speaker Change #129: Very healthy margins in return for our businesses.

Speaker Change #130: That's the logic and rationale that I just explained we believe that being position and then we are well positioned in terms of capital right now, we believe that redeploying that capital towards those specialty businesses.

Speaker Change #130: Bring the.

Speaker Change #130: The return.

Speaker Change #130: Two two to reward the shareholders. So so thats why we are we keep that position.

Paul Holden: Okay, that's it from me. Thank you.

Speaker Change #131: Okay. Okay. That's it from me thank you.

Unknown Executive: Okay, okay, that's it from me, thank you.

Stephen Boland: Next question comes from Stephen Boland, with Raymond James. Your line is now open. A couple of quick questions, maybe the first, there's something in your non-interest expense line that said, you'll cross-ropped through because of higher regulatory expenses. Can you clarify what that means? In fact, the line includes more items than that. What we said is that the other non-interest expenses over the last year, because it's down quarter to quarter, but over the last year, it came from higher professional fees, which is pretty much half of it, and you can expect that it's related to the strategic projects we have, but our regulatory expenses are compliance, compliance project.

Speaker Change #131: Super.

Stephen Boland: Next question comes from Stephen Boland with Raymond James. Your line is now open. A couple of quick questions, maybe the first, there's something in your non-interess expense line that said your cost is up to because of higher regulatory expenses. Can you clarify what that means? In fact, the line includes more items than that. What we said is that the other non-interess expenses over the last year because it's down quarter to quarter.

Speaker Change #131: Next question comes from Stephen Boland with Raymond James Your line is now open.

Stephen Boland: But over the last year, it came from higher professional fees, which is pretty much half of it, and you can expect that it's related to the strategic projects we have. But our regulatory expenses are compliance project. You can look in the environment right now, and it's just not us, right? It's the whole industry would be 10, 13, 15, 20, and I can keep going. There's federal budget elements, there's changes in the Quebec language as well.

Stephen Boland: A couple of quick questions, maybe the first.

Speaker Change #131: Sure.

Stephen Boland: Something in your non interest expense line that said.

Stephen Boland: Costs were up because of higher regulatory expenses could you can you clarify what that means.

Speaker Change #133: And in fact the line.

Speaker Change #133: Includes more items and that's what we said.

Speaker Change #135: The other is non interest expenses over the last year, because it's down quarter over quarter.

Speaker Change #136: Over the last year it came from higher professional fees, which is pretty much half of it and you can expect that it's related to the strategic.

Speaker Change #136: Projects, we have but our regulatory expenses are compliance project.

Yvan Deschamps: You can look in the environment right now, and it's just not us, right? It's the whole industry with B10, B13, B15, B20, and I can keep going. There's federal budget elements; there's changes in the Quebec language as well. There's a ton of elements that we want to make sure that we're compliant, and we're just staying at a good level in terms of our regulatory obligation. So definitely, it does put pressure. We have to stay a good citizen, and that's what we're doing with those investments.

Speaker Change #137: Can look in the environment right now and it's just not US right at the whole industry would be 10 to $13 15, 20, and I can keep going there is federal budgets elements. There is changes in the Quebec language as well there is some development that we wanted to make sure that we're compliant and we're just thing.

Stephen Boland: There's a ton of elements that we want to make sure that we're compliant, and we're just staying at a good level in terms of our regulatory obligation. So definitely, it does put pressure. We have to stay a good citizen, and that's what we're doing with those investments.

Speaker Change #137: At a good level in terms of our regulatory obligations. So definitely it does put pressure we have to see a good citizen and thats what were doing with those investments.

Stephen Boland: Okay, that's great.

Stephen Boland: Okay, that's great.

Speaker Change #138: Okay, that's great.

Stephen Boland: And then just maybe a little bit more granularity on that construction and land portfolio. I know you mentioned developers are waiting, meaning for rate cuts. Is that, is your anticipation that that is, you know, 25 basis points or 50 basis points? I mean, you're talking to these same developers, I presume, on a regular basis. Like, is it, you know, again, is it 50 basis points or 100 basis points before they start moving on some of the, you know, some of the new projects. I'm just trying to get an idea of how sensitive that, you know, that portfolio is to, you know, minor moves in the rates.

Stephen Boland: And then just maybe a little bit more granularity on that construction and land portfolio. I know you mentioned developers are waiting. I mean, for rate cuts, is that, is your anticipation that that is 25 basis points or 50 basis points? I mean, you're talking to these same developers at present on a regular basis. Like, is it, you know, again, is it 50 basis points or 100 basis points before they start moving on some of the, you know, some of the new projects.

Speaker Change #139: And then just maybe a little bit more granularity on the construction and land portfolio.

Speaker Change #140: I know you mentioned the developers are waiting.

Speaker Change #139:

Speaker Change #141: For rate cuts is that is your anticipation that that is.

Speaker Change #142: 25 basis points or 50 basis points. I mean, you were talking to these seem to be seem developers I presume on a regular basis like is it.

Speaker Change #142: Again is it 50 basis points to 100 basis points before they start moving on some of the some of the new projects I'm, just trying to get an idea how sensitive.

Stephen Boland: Yeah, so just try to get an idea of how sensitive that, you know, that portfolio is to, you know, minor moves in the rates. Yes, even if Eric, I'll take this one. It's a great question. Like, I think that's right now what we're feeling and seeing in the market. It is definitely on the low rise multi res. There's definitely a start and momentum. And this is where our pipeline is the most active some townhouse projects, Alberta being strong right now in terms of, of restart and launch of projects.

Got it.

Speaker Change #142: The portfolio is too.

Speaker Change #143: Minor moves in the rates.

Eric: Yes, Stephen it's Eric.

Unknown Executive: I'll take this one. It's a great question. Like, I think that's right now what we're feeling and seeing in the market. There's definitely on the low rise multi res. There's definitely a start in momentum. And this is where our pipeline is the most active. Some townhouse projects, Alberta being strong right now in terms of restart. And in launch of projects, but, but for sure to see new condo projects being launched like is going to take a deeper cut in terms of interest rate. Like inventory levels are still pretty high in the various GTAs. So again, depending on the product in that sense, the different elasticity.

Eric: I'll take this one.

It's a great question I think Thats right now, which we are feeling and seeing in the market. There is definitely on the low rise multi res.

Eric: Definitely.

Speaker Change #144: I'll start and momentum and this is where our pipeline is the most active some townhouses protests.

Speaker Change #144: <unk> being strong.

Speaker Change #144: Right now in terms of.

Speaker Change #144: Of restart and launch of <unk>.

Stephen Boland: But, but for sure to see new condo projects being launched like it's going to take a deeper cut in terms of interest rate like inventory levels are still pretty high in the various GTA. So again, depending on the product in that sense, the different elasticity. So, so, so we feel good about the positioning of the team. But again, we'll, we'll have to wait and see how did the rate cuts impact the return of the developers to The scale it was in the past.

Projects, but but for sure to see new condo <unk>.

Speaker Change #144: Projects being launched like.

Speaker Change #145: Take a deeper cut in terms of interest rates.

Speaker Change #145: Inventory levels are still pretty high.

Speaker Change #145: And then very various GTA, so again, depending on the product and in that sense.

Speaker Change #145: <unk> elasticity. So so so we feel good about the positioning of the team, but again, we'll have to wait and see.

Unknown Executive: So, so we feel good about the positioning of the team. But again, we'll, we'll have to wait and see how did the rate cuts impact the return of the developers to the scale it was in the past.

Speaker Change #145: The rate cuts impact.

Speaker Change #145: Return of the developers to to the scale that was in the past.

Yvan Deschamps: Okay, let's hope that I don't sneak one more in. Just on the impairment charges, obviously sold off, you know, other businesses. Is it, you know, is this kind of the end of it now? I know you're looking to restart growth, but is there, you know, a possibility that other non-core businesses, you know, get, you know, sold off and there's further impairment charges or restructuring charges? Yeah, thank you for your question. If you look at what we announced this quarter, the nine million bucks, we had, we gave you a preview at the end of May that we had done headcount reductions in May.

Stephen Boland: Okay, let's help one. I'll speak one more. And just on the impairment charges, obviously sold off, you know, other businesses. Is it, you know, is this kind of the end of it now? I know you're looking to restart growth, but is there, you know, it's a possibility that other non-core businesses, you know, get, you know, sold off and there's further impairment charges or restructuring charges? Thank you for your question. If you look at what we announced this quarter, the nine million bucks, we had, we gave you a preview at the end of May that we had done account reductions in May.

Speaker Change #146: Okay. That's helpful and I'll sneak one more in just on the impairment charges, obviously, you sold off other businesses.

Speaker Change #147: Is this kind of at the end of it now I know youre looking to re start growth but.

There was a possibility, but other non core businesses.

Speaker Change #147: Yes.

Speaker Change #147: Sold off and the further impairment charges or restructuring charges.

Speaker Change #148: Thank you for your question if you look at what we announced this quarter. The 9 million Bucks. We have we gave you a preview at the end of May that we have done head count reductions and Lee most of it relates to that out of the $9 million. There was $1 million that relates to the sale that we've done to ie theirs.

Yvan Deschamps: Most of it relates to that. Out of the nine million dollars, there's one million that relates to the sale that we've done to IA. There's going to be an additional million dollar you're going to see in Q4 related to that sale, that sale, sorry. So those are an explanation of the numbers. In terms of going forward. We have an elevated efficiency ratio. We need to invest in the business, as we mentioned. We're looking at all parts of the business in terms of where can we improve? We may have to restructure some others if we see there's a good return and good things for us to do.

Stephen Boland: Most of it relate to that. Out of the nine million dollars, there's one million that relates the sale that we've done to IA. There's going to be an additional million dollar you're going to see in Q4 related to that sale. That sale, sorry. So those are an explanation of the numbers. In terms of going forward, we have an elevated efficiency ratio. We need to invest in the business as we mentioned. We're looking at all parts of the business in terms of where can we improve.

Speaker Change #148: <unk> be an additional million dollars you've done this in Q4 related to that sale.

Speaker Change #148: That sales sorry.

Speaker Change #148: So those are an explanation of the numbers in terms of going forward.

Speaker Change #148: We have an elevated efficiency ratio, we need to invest in the business as we mentioned we're looking at all parts of the business in terms of where can we improve we may have to restructure some others. If we see theres good return and good things for us to do we may incur additional restructurings.

Stephen Boland: We may have to restructure some others if we see there's good return and good things for us to do. We may ensure additional restructuring in terms of things that this point and projects cannot give you much more than that.

Yvan Deschamps: We may incur additional restructuring in terms of things that this point and projects cannot give you much more than that.

Unknown Executive: Okay.

Speaker Change #149: In terms of things at this point in projects cannot give you much more.

Speaker Change #148: <unk>.

Unknown Executive: Okay, thanks very much, guys. Thank you.

Speaker Change #150: Okay. Thanks, very much guys.

Operator: Thanks very much, guys. Thank you.

Speaker Change #151: Thank you.

Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one.

Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one.

Speaker Change #152: Ladies and gentlemen, as a reminder, should you have a question. Please press star followed by the one.

Charcoal Me, Helik: Your next question comes from Charcoal Me, Helik with RBC Capital Markets. Your line is now open. Hi, my bad. I'm sorry. I wanted to revisit credit quality. And I wanted to sort of dovetail this into both questions that were asked earlier. One is on the collateral, and the other is on your stage two. I'm going to approach this widely differently. So when I look at your gross and paired loans as a proportion of your loan book at a hundred and eight basis points, that's almost doubled year over year. And last year at this time, when you were at 55, the bigger banks were at 49.

Darko Mihelic: Your next question comes from charcoal. Me, I looked with RBC capital markets. Your line is now open, charcoal, your line is now open. Hi, my bad. I'm sorry. I wanted to revisit credit quality and I wanted to sort of dovetail this into both questions that were asked earlier. One is on the collateral and the other is on your stage two. I'm going to approach this widely differently. So when I look at your gross and paired loans as a proportion of your loan book, at 108 basis points, that's almost doubled year over year.

Darko <unk>: Your next question comes from Darko <unk> with RBC capital markets. Your line is now open.

Darko <unk>: Darko Your line is now open.

Speaker Change #154: Alright, my bad I'm sorry.

Darko Mihelic: And last year at this time, when you were at 55, the bigger banks were at 49, so you were close to, let's say, average. And today, the others are around 66 points and you're at 100. So what this tells me is that you're getting more impairments than others. And it's fine that it's collateralized well. But that tells me that the probability of you eventually hitting a few files where the collateral was not maybe as well as you thought it was or it is rising.

Speaker Change #155: I wanted to revisit.

Darko <unk>: Credit quality.

Speaker Change #156: And I wanted to sort of dovetail this into.

Speaker Change #157: Both questions that were asked earlier one is on the collateral and the other is on your stage two.

Speaker Change #158: I'm going to approach it slightly differently. So when I look at your <unk>.

Speaker Change #158: Gross impaired loans as a proportion.

Speaker Change #158: Your loan book.

Speaker Change #159: At 108 basis points, that's almost doubled year over year and.

Speaker Change #159: And last year at this time.

Speaker Change #160: When you were at 55.

Speaker Change #161: The bigger banks were at 49, So you were close to let's say average and today.

Darko Mihelic: So you were close to, let's say, average. And today, the others are around 66 points. And you're at 100. So what this tells me is that you're getting more impairments than others. And it's fine that it's collateralized well. But that tells me that the probability of you eventually hitting a few files where the collateral is not maybe as well as you thought it was, or it is rising. And so the chances of you having a high outsized law is increasing over time because you're simply having more impaired loans. And therefore, I would have thought. You would actually be increasing your stage two despite the migration out of stage two.

Speaker Change #162: Others are around 66 basis points and you were at 100.

Speaker Change #163: So what this tells me is that youre getting more impairments than others and it's fine that it's collateralized.

Speaker Change #163: Well.

Speaker Change #164: That tells me that the probability of you eventually hitting a few files, where the collateral is not maybe as well as you thought it was or is right.

Darko Mihelic: And so the chances of you having a high outsized law is increasing over time because you're simply having more impaired loans. And therefore, I would have thought You would actually be increasing your stage two despite the migration out of stage two. So, am I thinking about this incorrectly? Or is it maybe perhaps that you now have a good handle on the watch list, and you see that it should be subsiding relatively quickly?

Speaker Change #164: And so the chances of you.

Speaker Change #164: Having a high outsized loss is increasing over time, because you're simply having more impaired loans and therefore I would've thought.

Speaker Change #164: You would actually be increasing your stage two despite the migration out of stage two.

Darko Mihelic: So am I thinking about this incorrectly? Or is it maybe, perhaps, that you now have a good handle on the watch list and you see that it should be subsiding relatively quickly? And that gives you comfort that, okay, no, we're not going to have a higher, you know, a chance of us hitting a loan or a file here or there that surprises us?

Speaker Change #165: Am I thinking about this incorrectly or is it maybe perhaps that you now have a good handle on the watch list.

Speaker Change #166: And you see that.

Speaker Change #166: It should be subsiding relatively quickly and that gives you comfort that okay. No we're not going to have a higher.

Darko Mihelic: And that gives you comfort that, okay, no, we're not going to have a higher, you know, a chance of us hitting a loan or a file here or there that surprises us. Hopefully my question makes sense and maybe you can talk to the elevated impairments, not just the collateral and how that's not affecting your performing provision.

Speaker Change #167: A chance of us hitting a loan or a file here or there that surprises us hopefully my question makes sense and maybe you can talk to the elevated impairments.

Christian Broux: Hopefully my question makes sense, and maybe you can talk to the elevated impairments, not just the collateral, and how that's not affecting your performing provision. Thank you, Darko. This is Christian, so a few things I can say on that, and it's great questions. In our larger commercial files, our average ticket is about 15 million. So just a few files can move the needle, either side every quarter. You know the other thing too that I would point out to you is on our watch list it is trending down year to date, so it's confirming the quality of our portfolio.

Speaker Change #168: Just the collateral and how thats not affecting your performing provision.

Darko Mihelic: Thank you, Darko, this is Christian. So, a few things I can say on that and it's great questions. In our larger commercial files, our average ticket is about 15 million. So, just a few files can move the needle, either side, every quarter. You know, the other thing too that I would point out to you is on our watch list, it is trending down year to date so it's confirming the quality of our portfolio.

Speaker Change #168: Thank you Darko this is Christian so.

Christian: The few things I can say on that and it's great questions.

Darko <unk>: In our larger commercial files.

Darko <unk>: Our average ticket is about $15 million. So just a few files can move the needle.

Darko <unk>: Either side every quarter.

Darko <unk>: The other thing too that I would point out to you is is on our watch list.

Darko <unk>: It is trending down year to date, so it's confirming the quality of our portfolio. So we've seen some migration out of watch list two impaired but watch list is not back filling at this stage. So we feel pretty good about the state of the portfolio and.

Christian Broux: So we've seen some migration out of watch list to impaired, but watch list is not backfilling at this stage, so we feel pretty good about the state of the portfolio. And you know, again we've been running at half the PCL level of other banks, and we're not seeing anything to change that at, you know, going forward. Okay, and so in my reading, it into it incorrectly though. I mean the one read is you're very careful and you have good collateral, but on the other hand, because you have more impairments, maybe the ability of your borrowers to pay, maybe that side of underwriting is showing some relative weakness or in, or am I very incorrect enough to early in the cycle, or maybe you can just correct the way I should be thinking about that.

Darko Mihelic: So, we've seen some migration out of watch list to impaired, but watch list is not backfilling at this stage. So, we feel pretty good about this state of the portfolio. And, you know, again, we've been running at half the PCL level of other banks and we're not seeing anything to change that, you know, going forward. Okay, and so, am I reading it into it incorrectly though? I mean, the one read is, you're very careful and you have good collateral.

Darko <unk>: Again.

Darko <unk>: We've been running at half the PCL level of other banks.

And we're not seeing anything to change that going forward.

Speaker Change #169: Okay and so.

Speaker Change #170: Am I reading it into two and incorrectly though I mean, the one read as you are very careful and you have good collateral but.

Darko Mihelic: But on the other hand, because you have more impairments, maybe the ability of your borrowers to pay, maybe that side of underwriting is showing some relative weakness or, and or am I very incorrect enough to early in the cycle or maybe you can just correct the way I should be thinking about that. Well, there are headwinds affecting all of commercial at this point. Like I indicated earlier, you know, the bite size required for us to play in these larger commercial files brings a certain volatility that can affect our impaired loans.

Speaker Change #171: But on the other hand, because you have more impairments.

Speaker Change #172: Maybe the ability of your borrowers to pay maybe that side of underwriting is showing some relative weakness or.

Speaker Change #172: And where am I very incorrect in that it's too early in the cycle or.

Speaker Change #173: Maybe you can just correct the way I should be thinking about that.

Christian Broux: Well, there are headwinds affecting all of commercial at this point. Like I indicated earlier, you know the bite size required for us to play in these larger commercial files brings a certain volatility that can affect our impaired loans. That's what we're seeing now. We have to play through the cycle, and we're sticking with our PCL guidance: high teens, low 20s. You know, if there's one thing where I'm not worried, it's the credit book. Okay all right great thank you.

Speaker Change #174: Well there are headwinds affecting all of commercial at this point.

Speaker Change #175: Like I indicated earlier.

Speaker Change #176: The bite size required for us to play in these larger commercial files brings a certain volatility that can affect our impaired loans. That's what we're seeing now we have to play through the cycle.

Darko Mihelic: That's what we're seeing now. We have to play through the cycle and we're sticking with our PCL guidance, high teens, low 20s. You know, if there's one thing where I'm not worried, it's the credit book. Okay, all right. Great. Thank you. Thank you, Dr. Thank you.

And we're sticking with our PCL guidance high teens low twenties.

Speaker Change #176: If there's one thing where I'm not worried as the credit book.

Speaker Change #177: Okay, Alright, great. Thank you.

Doug Young: Sure Doug.

Eric Provost: Thank you. That's all the time we have for questions. I would now like to turn the meeting over to Eric.

Speaker Change #178: Thank you that's all the time, we have for questions I would now like to turn the meeting over to Eric.

Unknown Executive: That's all the time we have for questions.

Eric Provost: I would now like to turn the meeting over to Eric. Thank you for joining us on this call today. We remain steady fast on our commitment to executing our strategic plan. The opportunities ahead are vast and the challenges we face have only strengthened our determination. We recognize the importance of investing to lay a solid foundation for our organization. And our focus is on building a more digital and efficient organization to ensure long-term success for all our stakeholders, and others.

Eric Provost: Thank you for joining us on this call today. We remain steadfast in our commitment to executing our strategic plan. The opportunities ahead are vast, and the challenges we face are only strengths.

Unknown Executive: Thank you for joining us today.

Eric: Thank you for joining us on this.

Speaker Change #179: Our call today.

Eric: We remain steadfast on our commitment to executing our strategic plan and the opportunities ahead are vast and the challenges we face I have only strengthened our determination we recognize the importance of investing to lay a solid foundation for our organization and our focus is on building.

Eric Provost: We recognize the importance of investing to lay a solid foundation for our organization, and our focus is on building a more digital and efficient organization to ensure long-term success for all our stakeholders. and others.

Eric: A more digital and efficient organization to ensure long term success for all our stakeholders. Thank you for joining us today.

Eric Provost: Thank you for joining us today.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in SAE. Please disconnect your minds.

Operator: Ladies and gentlemen, this concludes your conference call for today.

Speaker Change #180: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.

Operator: We thank you for participating in SAE Please Disconnect Your Minds.

Speaker Change #180: [music].