Q1 2026 National Bank of Canada Earnings Call

February 25, 2026

Speaker #2: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question at that time, simply press star, then the number 1 on your telephone keypad.

Speaker #2: And if you'd like to withdraw your question, again, press star 1. Thank you. I would now like to turn the conference over to Marianne Ratte, please go ahead.

Speaker #2: Merci, and welcome, everyone. We will begin the call with remarks from Laurent Ferreira, President and CEO; Marie-Chantal Gingras, CFO; and Jean-Sébastien Grise, Chief Risk Officer.

Rachel Smith: Merci, and welcome, everyone. We will begin the call with remarks from Laurent Ferreira, President and CEO, Marie-Chantal Gingras, CFO, and Jean-Sébastien Grisé, Chief Risk Officer. Our business heads are also present for the Q&A session, including Julie Lévesque, Personal Banking, Judith Ménard, Commercial and Private Banking, Nancy Paquette, Wealth Management, Etienne Dubuc, Capital Markets, and William Bonnell, International... Before we begin, please refer to slide two of our presentation for forward-looking statements and non-GAAP measures. Management will refer to adjusted results unless otherwise noted. I will now pass the call to Laurent.

Operator: Merci, and welcome, everyone. We will begin the call with remarks from Laurent Ferreira, President and CEO, Marie-Chantal Gingras, CFO, and Jean-Sébastien Grisé, Chief Risk Officer. Our business heads are also present for the Q&A session, including Julie Lévesque, Personal Banking, Judith Ménard, Commercial and Private Banking, Nancy Paquette, Wealth Management, Etienne Dubuc, Capital Markets, and William Bonnell, International... Before we begin, please refer to slide two of our presentation for forward-looking statements and non-GAAP measures. Management will refer to adjusted results unless otherwise noted. I will now pass the call to Laurent.

Speaker #2: Our business heads are also present for the Q&A session, including Julie Levesque, Personal Banking; Judith Ménard, Commercial and Private Banking; Nancy Paquette, Wealth Management; Étienne Dubuc, Capital Markets; and Bill Bonnell, International.

Speaker #2: Before we begin, please refer to slide 2 of our presentation for forward-looking statements and non-GAAP measures. Management will refer to adjusted results unless otherwise noted.

Speaker #2: I will now pass the call to Laurent.

Speaker #3: Merci, Marianne, and thank you, everyone, for joining us. For the first quarter of 2026, we generated EPS of $3.25, representing an 11% year-over-year increase.

Laurent Ferreira: Merci, Marianne. Thank you everyone for joining us. For Q1 2026, we generated EPS of CAD 3.25, representing an 11% year-over-year increase. Our results were driven by strong performance across our retail and business segments, as well as cost and funding synergies related to the CWB transaction and share buybacks. We generated a return on equity of 16.6%, and our CET1 ratio is solid at 13.7%. This morning, we announced that we are upsizing our NCIB to repurchase up to 14.5 million shares from 8 million currently pending regulatory approval. To date, we have repurchased 6.4 million shares under our program. Earlier this month, we closed the syndicated loan transaction with Laurentian Bank. The retail SME portfolios are on track to close by late 2026, subject to regulatory approvals.

Speaker #3: Our results were driven by strong performance across our retail and business segments, as well as cost and funding synergies related to the CWB transaction and share buybacks.

Speaker #3: We generated a return on equity of 16.6%, and our CET1 ratio is solid at 13.7%. This morning, we announced that we are upsizing our NCIB to repurchase up to 14.5 million shares from 8 million currently, pending regulatory approval.

Speaker #3: To date, we have repurchased 6.4 million shares under our program. Earlier this month, we closed the syndicated loan transaction with Laurentian Bank. The retail SME portfolios are on track to close by late 2026, subject to regulatory approvals.

Speaker #3: Our capital deployment priorities are to drive organic business growth and operational efficiency. And to grow dividends at sustainable levels. This will be complemented by share buybacks and, depending on opportunities, selective tuck-in acquisitions in P&C and wealth.

Laurent Ferreira: Our capital deployment priorities are to drive organic business growth and operational efficiency, to grow dividends at sustainable levels. This will be complemented by share buybacks and, depending on opportunities, selective tuck-in acquisitions in PNC and Wealth. We want to operate with strong capital levels and continue to target a CET1 ratio converging towards 13% by the end of 2027. Turning to our economic outlook. The geopolitical and economic backdrop continues to weigh on the economy. We are far from our GDP potential. Trade tensions and uncertainty around CUSMA are affecting our country. Business investment has slowed down. Our economy must take a different strategic direction and go through structural changes. We are encouraged by our government's actions and by momentum across the country to reestablish our economic sovereignty.

Speaker #3: We want to operate with strong capital levels and continue to target a CET1 ratio converging towards 13% by the end of 2027. Turning to our economic outlook, the geopolitical and economic backdrop continues to weigh on the economy.

Speaker #3: We are far from our GDP potential. Trade tensions and uncertainty around COSMO are affecting our country and business investment has slowed down. Our economy must take a different strategic direction and go through structural changes.

Speaker #3: We are encouraged by our government's actions and by momentum across the country to re-establish our economic sovereignty. We are particularly pleased to see concrete actions towards our reindustrialization including Canada's initiative to welcome the Defense Security and Resilience Bank, as well as the announcement of Canada's Defense Industrial Strategy.

Laurent Ferreira: We are particularly pleased to see concrete actions towards our reindustrialization, including Canada's initiative to welcome the Defense, Security, and Resilience Bank, as well as the announcement of Canada's Defence Industrial Strategy. Turning now to our business segments. With revenues of more than $1.5 billion and net income of $442 million, PNC Banking delivered strong performance in Q1. We executed on CWB's integration with a focus on client transition and are realizing on cost and funding synergies. We have also made early gains on revenue synergies from capital market solutions. Our balance sheet is growing. Personal mortgages grew 3% sequentially, a strong start against a mid-single-digit growth target for 2026. Commercial loans grew 1% sequentially, and we still expect to start growing the CWB portfolio in the second half of the year.

Speaker #3: Turning now to our business segments, with revenues of more than $1.5 billion and net income of $442 million, P&C Banking delivered strong performance in Q1.

Speaker #3: We executed on CWB's integration with a focus on client transition, and our realizing on cost and funding synergies. And we have also made early gains on revenue synergies from capital market solutions.

Speaker #3: Our balance sheet is growing. Personal mortgages grew 3% sequentially, a strong start against a mid-single-digit growth target for 2026. Commercial loans grew 1% sequentially, and we still expect to start growing the CWB portfolio in the second half of the year.

Speaker #3: Net income in our wealth management segment increased 13% year over year, to $274 million, supported by strong growth in fee-based and transaction revenues. Assets under administration grew 3% sequentially to reach close to $900 billion, with resilient equity markets and strong net sales.

Laurent Ferreira: Net income in our wealth management segment increased 13% year-over-year to CAD 274 million, supported by strong growth in fee-based and transaction revenues. Asset under administration grew 3% sequentially to reach close to CAD 900 billion, with resilient equity markets and strong net sales. Capital markets generated net income of CAD 443 million, up 6% year-over-year, driven by strong contributions from both our trading and non-trading businesses. In global markets, our strong performance in equities was supported by opportunities in securities finance and elevated issuances in structured products. We also continue to see steady opportunities in our rates and credit business as expected. Corporate activity, supported by strong equity and debt issuances and banking revenues in our CIB franchise.

Speaker #3: Capital markets generated net income of $443 million, up 6% year over year, driven by strong contributions from both our trading and non-trading businesses. In global markets, our strong performance in equities was supported by opportunities in securities finance and elevated issuances in structured products.

Speaker #3: We also continue to see steady opportunities in our rates and credit business as expected. Meanwhile, corporate activity was supported by strong equity and debt issuances, and banking revenues in our CIB franchise.

Laurent Ferreira: Credigy delivered net income of CAD 47 million, with average assets up 9% year-over-year and 1% sequentially, as we continue to benefit from recurring flows from established partnerships. We remain highly disciplined in pursuing new deals, given the prevailing competitive market dynamics and pricing conditions. At ABA Bank, net income increased 9% year-over-year, reflecting balance sheet growth and a bill in performing PCLs. Revenues were up 13% over the same period, with deposits and loans up 18% and 11%, respectively. I will now pass the call to Marie-Chantal.

Speaker #3: $47 million, with average assets up 9% year over year, and 1% sequentially, as we continue to benefit from recurring flows from established partnerships. We remain highly disciplined in pursuing new deals, given the prevailing competitive market dynamics and pricing conditions.

Speaker #3: At ABA Bank, net income increased 9% year over year, reflecting balance sheet growth and a build-in performing PCLs. Revenues were up 13% over the same period, with deposits and loan up 18% and 11%, respectively.

Speaker #3: I will now pass the call to Marie-Chantal.

Speaker #4: Thank you, Laurent, and good morning, everyone. We delivered strong results in the first quarter. Revenues rose 21% year over year, and PTPP grew 23%, driven by solid organic performance across all segments and by the CWB transaction.

Marie-Chantal Gingras: Thank you, Laurent. Good morning, everyone. We delivered strong results in Q1. Revenues rose 21% year-over-year, PTPP grew 23%, driven by solid organic performance across all segments and by the CWB transaction. Operating leverage was positive at 2%, supporting through focused execution and synergy realization. Excluding CWB, revenues increased 11% year-over-year, PTPP rose 12%. Expenses were up 10.2%, driven mainly by higher variable compensation. Excluding variable compensation, expenses rose 8.6%, in part driven by salaries and benefits. Moving to Slide 9. Net interest income, excluding trading, grew 5% sequentially. Prepayment revenues of CAD 12 million were generated in Credigy, contributing 1 basis point to the all bank margin.

Speaker #4: Operating leverage was positive at 2%, supporting through focused execution and synergy realization. Excluding CWB, revenues increased 11% year over year, and PTPP rose 12%.

Speaker #4: Expenses were up 10.2%, driven mainly by higher variable compensation. Excluding variable compensation, expenses rose 8.6%, in part driven by salaries and benefits. Moving to slide 9, net interest income excluding trading grew 5% sequentially.

Speaker #4: Prepayment revenues of $12 million were generated in Credigy, contributing 1 basis point to the All Bank margin. The P&C segment benefited from strong balance sheet growth and margin expansion of 2 basis points sequentially, driven by higher margins on both loans and deposits.

Marie-Chantal Gingras: The PNC segment benefited from strong balance sheet growth and margin expansion of 2 basis points sequentially, driven by higher margins on both loans and deposits. In Q1, we reclassified $30 million NII from trading to non-trading, which had no impact on the bank's total revenues. Excluding this, non-trading NII grew 4% sequentially, while the margin was up 2 basis points. Looking at next quarter, we expect the PNC NIM to remain relatively stable from Q1 levels. A better deposit margin is expected to be largely offset by balance sheet mix as loan growth continues to outpace deposit growth. Turning to Slide 10. We continued to grow both sides of the balance sheet. Loans rose 23% year-over-year, or 9%, excluding CWB, reflecting contributions from all segments. Deposits increased $5 billion or 2% sequentially.

Speaker #4: In Q1, we reclassified $30 million in II from trading to non-trading, which had no impact on the bank's total revenues. Excluding this, non-trading NII grew 4% sequentially, while the margin was up 2 basis points.

Speaker #4: Looking at next quarter, we expect the P&C NIM to remain relatively stable from Q1 levels. A better deposit margin is expected to be largely offset by balance sheet mix as loan growth continues to outpace deposit growth.

Speaker #4: Turning to slide 10, we continue to grow both sides of the balance sheet. Loans rose 23% year over year, or 9% excluding CWB, reflecting contributions from all segments.

Speaker #4: Deposits increased $5 billion or 2% sequentially. Personal deposits grew 1.5 billion dollars, mostly driven by wealth management and ABA. Now moving to capital on slide 11.

Marie-Chantal Gingras: Personal deposits grew $1.5 billion, mostly driven by wealth management and ABA. Now moving to capital on Slide 11. We ended the quarter with a CT1 ratio of 13.74%, supported by capital generation of 41 basis points. RWA growth consumed 14 basis points of capital. Business growth of approximately 26 basis points was partly offset by a reduction in credit risk RWA from refinements, as well as a change in the CAR 2026 methodology for market risk. Share buybacks during the quarter reduced the CT1 ratio by 33 basis points. Since the launch of our current NCIB, we have repurchased 6.4 million shares, representing 80% of the current program. Now turning to Slide 12.

Speaker #4: We ended the quarter with a CT1 ratio of 13.74%, supported by capital generation of $41 basis points. RWA growth consumed 14 basis points of capital.

Speaker #4: Business growth of approximately 26 basis points was partly offset by a reduction in credit risk RWA from refinements, as well as a change in the CAR 2026 methodology for market risk.

Speaker #4: Share buybacks during the quarter reduced the CT1 ratio by 33 basis points. Since the launch of our current NCIB, we have repurchased $6.4 million shares representing 80% of the current program.

Speaker #4: Now turning to slide 12. We have realized $176 million of cost and funding synergies to date, exceeding our year-one target of $135 million. We continue to build strong momentum on synergy realization and remain on track to deliver $270 million by the end of fiscal 2026.

Marie-Chantal Gingras: We have realized CAD 176 million of cost and funding synergies to date, exceeding our year one target of CAD 135 million. We continue to build strong momentum on synergy realization and remain on track to deliver CAD 270 million by the end of fiscal 2026. On revenue synergies, we are progressing as planned towards our CAD 50 million target by year-end. We delivered a strong start to the year, supported by solid underlying performance across all business, ongoing cost execution, and realization of CWB synergies, all while credit remained aligned with expectations. In addition, we accelerated share buybacks under our existing share repurchase program. Accordingly, EPS growth in 2026 is now expected to be at the top end of our 5% to 10% outlook.

Speaker #4: On revenue synergies, we are progressing as planned towards our $50 million target by year-end. We delivered a strong start to the year, supported by solid underlying performance across all business.

Speaker #4: Ongoing cost execution and realization of CWB synergies all while credit remained aligned with expectations. In addition, we accelerated share buybacks under our existing share repurchase program.

Speaker #4: Accordingly, EPS growth in 2026 is now expected to be at the top end of our 5 to 10 percent outlook. Reflecting these factors, we are raising our 2026 ROE target to around 16% from around 15% previously.

Marie-Chantal Gingras: Reflecting these factors, we are raising our 2026 ROE target to around 16% from around 15% previously. On Slide 13, we outline a path to our ROE objective of 17% plus in fiscal 2027. We forecast that organic earnings growth over 2026 will add approximately 110 basis points to ROE. We also assume incremental CWB revenue synergies will contribute 20 basis points in 2027. The previously announced EPS accretion of 1.5 to 2% from the Laurentian transaction will add approximately 30 basis points to ROE. Reaching a CT1 ratio of 13% by the end of fiscal 2027, helped by share buybacks, accounts for approximately 40 basis points of the increase. Finally, ROE will be reduced by approximately 100 basis points, reflecting the capital required to support RWA growth.

Speaker #4: On slide 13, we outline a path to our ROE objective of $17% plus in fiscal 2027. We forecast that organic earnings growth over 2026 will add approximately $110 basis points to ROE.

Speaker #4: We also assume incremental CWB revenue synergies will contribute 20 basis points in 2027. The previously announced EPS accretion of 1.5% to 2% from the Laurentian transaction will add approximately 30 basis points to ROE.

Speaker #4: Reaching a CT1 ratio of 13% by the end of fiscal 2027 helped by share buybacks accounts for approximately 40 basis points of the increase.

Speaker #4: Finally, ROE will be reduced by approximately 100 basis points, reflecting the capital required to support RWA growth. So together, these drivers are expected to deliver a ROE of 17% plus.

Marie-Chantal Gingras: Together, these drivers are expected to deliver a ROE of 17% plus. With that, I will now turn the call over to Jean-Sébastien.

Speaker #4: With that, I will now turn the call over to Jean-Sebastien.

Speaker #5: Merci, Marie-Chantal, and good morning, everyone. Since our last call, Canadian economic growth has remained modest, and the labour market continues to be soft. Headwinds persist, including trade tensions and uncertainty around CUSMA.

Jean-Sébastien Grisé: Merci, Marie-Chantal. Good morning, everyone. Since our last call, Canadian economic growth has remained modest, and the labor market continues to be soft. Headwinds persist, including trade tensions and uncertainty around CUSMA. However, a lower interest rate environment, diversification of trading partners, and plans to fast-track nation-building projects should help support economic activity. In this complex environment, our resilient portfolio mix, disciplined risk management, and prudent provisioning underpinned our strong credit performance. Now, turning to the Q1 results on slide 15. Total PCLs were CAD 244 million, or 32 basis points, down 1 basis point quarter-over-quarter. We added 3 basis points on performing provisions in Q1, primarily driven by portfolio growth, partially offset by more favorable macroeconomic scenarios.

Speaker #5: However, a lower interest rate environment, diversification of trading partners, and plans to fast-track nation-building projects should help support economic activity. In this complex environment, our resilient portfolio mix, disciplined risk management, and prudent provisioning underpinned our strong credit performance.

Speaker #5: Now turning to the first quarter results, on slide 15, total PCLs were $244 million or 32 basis points, down 1 basis point quarter over quarter.

Speaker #5: We added 3 basis points on performing provisions in Q1, primarily driven by portfolio growth, partially offset by more favourable macroeconomic scenarios. PCL on impaired loans were $215 million, or 28 basis points, stable quarter over quarter and within our guidance of 25 to 35 basis points for the full year.

Jean-Sébastien Grisé: PCL on impaired loans were $215 million, or 28 basis points, stable quarter-over-quarter, and within our guidance of 25 to 35 basis points for the full year. At CWB, impaired PCLs were 33 basis points, down 36 basis points quarter-over-quarter. Personal banking provisions were $3 million higher sequentially, mainly driven by consumer credit. Commercial banking provisions were primarily driven by 3 files and were down $9 million quarter-over-quarter. Capital markets provision rose by $15 million, largely reflecting 1 previously impaired file in the mining sector. At Credigy, provisions increased by $6 million US, in line with expectations, resulting from the normal seasoning of residential mortgages and consumer loans. At ABA, impaired provisions were down by $8 million US sequentially to $17 million US, in line with lower formations.

Speaker #5: At CWB, impaired PCLs were 33 basis points down 36 basis points quarter over quarter. Personal banking provisions were $3 million higher sequentially, mainly driven by consumer credit.

Speaker #5: Commercial banking provisions were primarily driven by three files, and were down $9 million quarter over quarter. Capital markets provision rose by $15 million largely reflecting one previously impaired file in the mining sector.

Speaker #5: At Credigy, provisions increased by $6 million (US), in line with expectations resulting from the normal seasoning of residential mortgages and consumer loans. At ABA, impaired provisions were down by $8 million (US) sequentially to $17 million (US), in line with lower formations.

Speaker #5: Turning to slide 16, our total allowances for credit losses were $2.5 billion representing 5.9 times coverage of our net charge-off. Our performing allowances were $1.6 billion demonstrating a strong performing ACL coverage ratio of 2.1 times.

Jean-Sébastien Grisé: Turning to slide 16, our total allowances for credit losses were $2.5 billion, representing 5.9x coverage of our net charge-off. Our performing allowances were $1.6 billion, demonstrating a strong performing ACL coverage ratio of 2.1x. We have been building allowances for the past 15 quarters and continue to be comfortable with our prudent and defensive provisioning levels. Turning to slide 17, our gross impaired loan ratio was 111 basis points, excluding USSF&I. GILs were 81 basis points and remained flat quarter-over-quarter. Net formations were down 8 basis points compared to last quarter, primarily driven by commercial and capital markets. In conclusion, we are pleased with the credit performance in Q1 and continue to expect that impaired provisions will be within the 25 to 35 basis points range for the full year.

Speaker #5: We have been building allowances for the past 15 quarters, and continue to be comfortable with our prudent and defensive provisioning levels. Turning to slide 17, our gross impaired loan ratio was 111 basis points excluding USSFNI, GILs were 81 basis points, and remained flat quarter over quarter.

Speaker #5: Net formations were down 8 basis points compared to last quarter, primarily driven by Commercial and Capital Markets. In conclusion, we are pleased with the credit performance in the first quarter, and continue to expect that impaired provisions will be within the 25 to 35 basis points range for the full year.

Speaker #5: While we remain cautious as we navigate ongoing uncertainty, our defensive qualities, resilient business mix, and prudent allowances position us well for the rest of the year.

Jean-Sébastien Grisé: While we remain cautious as we navigate ongoing uncertainty, our defensive qualities, resilient business mix, and prudent allowances position us well for the rest of the year. With that, I will now turn the call back to the operator for the Q&A.

Speaker #5: And with that, I will now turn the call back to the operator for the Q&A.

Speaker #6: Thank you. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw that question, again, press star one. Your first question comes from Matthew Lee with Canaccord Genuity. Please go ahead.

Speaker #6: And if you'd like to withdraw that question, again, press star one. Your first question comes from Matthew Lee with Canaccord Genuity. Please go ahead.

Matthew Lee: Hi. Morning, guys. Thanks for taking my question. Maybe want to start on the new segmented ROE breakdown you've provided. Canadian PNC looks a little bit lower than some of the peers at 13%. Can you just talk about why that might be and what opportunities you have to get closer to industry levels?

Speaker #7: Hi, morning, guys. Thanks for taking my question. Maybe I want to start on the new segmented ROE breakdown you've provided. Canadian P&C looks a little bit lower than some of the peers at 13%.

Speaker #7: Can you just talk about why that might be and what opportunities you have to get closer to industry levels?

Jean-Sébastien Grisé: Matt, thank you very much for your question. This is Lauren. Look, it is subpar versus our peers, and we're aware of that, not surprised. What I think we want to highlight here is there's going to be upside for us. We have started a strategic review of the sector. We plan to do this throughout the year, and we'll be able to provide you updates maybe towards the end of the year. At this point in time, I guess the message is there's upside in terms of our performance in PNC ROE, but it is too early to provide you with the outcomes and the magnitude that we think we're gonna be able to deliver.

Speaker #8: Matt, thank you very much for your question. This is Laurent. Look at it—subpar versus our peers. And we're aware of that; not surprised.

Speaker #8: But what I think we want to highlight here is there's going to be an upside for us. We have started a strategic review of the sector.

Speaker #8: We plan to do this throughout the year. And we'll be able to provide you updates maybe towards the end of the year. But at this point in time, I guess the message is there's upside in terms of our performance in P&C, ROE, but it is too early to provide you with the outcomes and the magnitude that we think we're going to be able to deliver.

Speaker #7: Okay, got it. And then, yeah, maybe on the new ROE guidance for 2026—I think the delta is probably about half of it to the buyback.

Matthew Lee: Okay, got it.

Jean-Sébastien Grisé: Does that help?

Matthew Lee: Maybe on the new ROE guidance for 2026, I think the delta is probably about half related to the buyback. Can you maybe talk about what's changing the operations from the last 80 days or so that make you comfortable to change 2026 and then keep 2027?

Speaker #7: But can you maybe talk about what's changed in the operations from the last 80 days or so that make you comfortable to change 26, and then keep 27?

Speaker #6: Hi, Matthew. It's Marie-Chantal. I can follow up with your question, so thanks for that. There's a significant amount of information on that slide, so maybe let me break down the key components underlying our path to 17% plus ROE by 2027.

Marie-Chantal Gingras: Hi, Matthew, it's Marie-Chantal. I can follow up with your question. Thanks for that. There's significant amount of information on that slide. Maybe let me break down the key components underlying our path to 17% plus ROE by 2027. I'll start with 2026. As you heard us say, we're increasing our target for 2026 from 15 previously to 16, approximately 16%. We did have a very strong start to the year, and we are very pleased with the performance of the Q1 and encouraged also by the trajectory that we're seeing for the rest of the year. We've had solid underlying performance across all our businesses. We continue to execute with discipline the CWB synergies.

Speaker #6: And I'll start with 2026. So as you heard us say, we're increasing our target for 2026 from 15% previously to approximately 16%. So we did have a very strong start to the year, and we are very pleased with the performance of the first quarter and encouraged also by the trajectory that we're seeing for the rest of the year.

Speaker #6: We've had solid underlying performance across all our businesses, and we continue to execute with discipline the CWB synergies credit remains within our guidance, and we as you saw continue to be very active on the CIB the NCIB program that we just increased.

Marie-Chantal Gingras: Credit remains within our guidance, we, as you saw, continue to be very active on the CIB, the NCIB program that we just increased. Those are the different drivers that brings us to the 16 for the end of fiscal 2026. When we move on to 2027, we do plan for organic earnings growth at the midpoint of our 5% to 10% growth in net income to common shareholders. This represent 110 basis points on the increase, it factors in efficiency improvement at historical level. Anything above that would be upside. When we look at revenue synergies, we reflected in 2027, CAD 90 million incremental revenues, which is in line with the midpoint of our target. Again, anything above that would also be upside.

Speaker #6: So those are the different drivers that brings us to the 16 for the end of fiscal 2026. When we move on to 2027, we do plan for organic earnings growth at the midpoint of our 5 to 10 percent growth in net income to common shareholders.

Speaker #6: This represents 110 basis points on the increase, and it factors in efficiency improvement at historical levels. So anything above that would be upside. When we look at revenue synergies, we reflected in 2027, $90 million incremental revenues.

Speaker #6: Which is in line with the midpoint of our target. So again, anything above that would also be upside. Those revenue synergies when net of applicable expenses, PCL and taxes, they contribute for 20 basis points to our increase in 2027.

Marie-Chantal Gingras: Those revenue synergies, when net of applicable expenses, PCL and taxes, they contribute for 20 basis points to our increase in 2027. Moving on with the Laurentian Bank transaction. As disclosed last quarter, generating EPS accretion of about 1.5 to 2% in the first year, and that's equivalent to 30 basis points of ROE. That's assuming that we close by the end of 2026, which is still our target. Lastly, on capital, we continue to converge to a CT1 ratio of 13% by the end of 2027, and that would generate 40 basis points of ROE. The CT1 required to support our RWA growth, net of benefit from the AIRB conversion, is 100 basis points. That brings us to our 17+ ROE objective for 2027.

Speaker #6: Moving on with the Laurentian Bank transactions. So as this closed last quarter, it's generating EPS accretion of about 1.5% to 2% in the first year.

Speaker #6: And that's equivalent to 30 basis points of ROE. And that's assuming that we close by the end of 2026, which is still our target.

Speaker #6: And then lastly, on capital, we continue to converge to a CT1 ratio of 13% by the end of 2027. And that would generate 40 basis points of ROE.

Speaker #6: And then the CT1 required to support our RWA growth, net of benefits from the AIFB conversion, is 100 basis points. So that brings us to our 17-plus ROE objective for 2027.

Speaker #6: So let me tell you now what it does not include. It does not include any credit improvement. And as Laurent said earlier, it does not include any potential upside in the P&C segment coming from our strategic plan.

Marie-Chantal Gingras: Let me tell you now what it does not include. Does not include any credit improvement, and as Lauren said earlier, it does not include any potential upside in the PNC segment coming from our strategic plan. Those are the main drivers contributing to our 17% plus ROE for 2027.

Speaker #6: So, those are the main drivers contributing to our 17% plus ROE for 2027.

Speaker #7: Sounds like a lot of upside. I'll pass the line. Thanks.

Operator: Sounds like a lot of upside. I'll pass the line. Thanks.

Speaker #6: You are next question. You are next question comes from the line of John Aiken with Jefferies. Please go ahead. John, your line is open.

Operator: Your next question comes from the line of John Aiken with Jefferies. Please go ahead. John, your line is open.

Speaker #8: Apologies about that. Hopefully, a couple of quick questions on Credigy. We're almost prepared—comments talked about the market and the pricing conditions. Can we expect, then, to see possibly lower volume growth because of that, similar to what we saw in Q4 over Q3?

John Aiken: Apologies about that. Hopefully a couple of quick questions on Credigy. You know, well, prepared comments talked about the market and the pricing conditions. Can we expect then to see possibly lower volume growth because of that, similar to what we saw Q4 over Q3? Secondarily, it looks like there was wider net interest margins for Credigy in the quarter. Was there anything unusual that was driving that?

Speaker #8: And then secondarily, it looks like there was wider niche margins for credigy in the quarter. Was there anything unusual that was driving that?

Marie-Chantal Gingras: Hi, John. Thanks. It's Etienne. To maybe describe the quarter for Credigy and what the outlook looks like. We had strong deal flow in Q1 with more than $700 billion deployed, and that led to a solid quarter-over-quarter growth in average assets, including the prepayment that we alluded to in the script. Specifically, we had a loan prepayment of close to $300 million, and that impacted sequential growth, and that impacted margins. If we look at the outlook, because you're right. There's strong deal flow.

Speaker #9: Hi, John. Thanks. It's Etienne. So to maybe describe the quarter for credigy and what the outlook looks like. So we had strong deal flow in Q1 with more than 700 billion deployed.

Speaker #9: And that led to a solid quarter-over-quarter growth in average assets, including the prepayment that we alluded to in the script. So, specifically, we had the loan prepayment of close to $300 million.

Speaker #9: And that impacted sequential growth, and that impacted margins. So if we look at the outlook—because you're right—there's strong deal flow. There was good momentum, but the current deal pipeline suggests deal activity could be a bit slower in Q2 2026.

Marie-Chantal Gingras: There was good momentum. The current deal pipeline suggests deal activity could be a bit slower in Q2 2026. That's really a function of the markets still being very competitive and not meeting really our pricing thresholds right now in most cases. For the full year, we expect growth to remain on our long-term target range of 5% to 10%, with margins expected to be fairly stable and to continue to be really attractive and accretive for the bank.

Speaker #9: And that's really a function of the markets still being very competitive and not meeting, really, our pricing thresholds right now in most cases. But for the full year, we expect growth to remain on our long-term target range of 5 to 10 percent, with margins expected to be fairly stable and to continue to be really attractive and accretive for the bank.

Speaker #8: Understood. Thanks for the help, Etienne.

John Aiken: Understood. Thanks for the help, Etienne.

Speaker #6: You are next question comes from the line of Sohrab Movahedi with BMO Capital Markets. Please go ahead.

Operator: Your next question comes from the line of Sohrab Movahedi with BMO Capital Markets. Please go ahead.

Speaker #10: Okay. Thank you, Mari Chantal. Thank you very much for the ROE waterfall. Etienne, the pre-tax preprovision in capital markets in '25 was very strong.

Sohrab Movahedi: Okay. Thank you, Marie-Chantal, thank you very much for the ROE waterfall. Etienne, the pre-tax, pre-provision in capital markets in 2025 was a very strong, I think, CAD 2.2 billion or thereabouts. Coming into this year, I think, you know, I think you were trying to guide us to CAD 1.8 to 2 billion. Having the Q1 under your belt, is there any revisions or updates to the pre-tax, pre-provision for capital markets for the full year?

Speaker #10: I think 2.2 billion or thereabouts. Coming into this year, I think I think you were trying to guide us to 1.8 to 2 billion.

Speaker #10: Having the first quarter under your belt, is there any revisions or updates to the pre-tax preprovision for capital markets for the full year?

Speaker #9: Hi, Sohrab. It's Etienne. Thanks for the question. So maybe I'll walk you through our thinking in terms of the outlook because yeah, quick answers that we feel increasingly good about our gen outlook that was calling for, like you said, a PTPP number in the 1.8 to 2 billion range.

Marie-Chantal Gingras: Hi, Sohrab, it's Etienne. Thanks for the question. Maybe I'll walk you through our thinking in terms of the outlook, because, yeah, quick answer is that we feel increasingly good about our gen outlook. That was calling for, like you said, a PTPP number in the CAD 1.8 to 2 billion range.

Etienne Dubuc: You still have macro uncertainty, you still have geopolitical uncertainty. We see client dialogue remaining active and a really good deal pipeline. There is pent-up demand, there's corporate balance sheets that are strong, and you have attractive funding conditions. Also, we feel the November 2025 federal budget priorities will catalyze M&A as companies reposition around these strategic areas. On the market side, investor interest remains high. Market making activity in equities and rates continues to be robust. This bodes well for the next few months in trading. Considering all that, with this healthy momentum we see across the businesses, we feel good about our ability to hit the upper part of this range of CAD 1.8 to 2 billion. Does that help?

Speaker #9: You still have macro uncertainty. You still have geopolitical uncertainty. But we see client dialogue remaining active, and a really good deal pipeline. There is pent-up demand.

Speaker #9: There's corporate balance sheets that are strong, and you have attractive funding conditions. Also, we feel the November 2025 federal budget priorities will catalyze M&A as companies reposition around these strategic areas.

Speaker #9: And on the market side, investor interest remains high. Market-making activity in equities and rates continues to be robust. So this bodes well for the next few months in trading.

Speaker #9: So, considering all that, with this healthy momentum we see across the businesses, we feel good about our ability to hit the upper part of this range of $1.8 to $2 billion.

Speaker #8: Does that help?

Judith Ménard: Thank you very much. Yeah, it's very helpful and comprehensive. Just 1 quick one for Jean-Sébastien Grisé. I mean, Jean-Sébastien Grisé, you know, you've talked about the economic outlook and the sluggish kind of backdrop. 2 questions: Do you still feel as skewed, I'll call it, when it comes to credit risk to Quebec post CWB acquisition? Do you still feel that that Quebec skew is a relative positive for you as you look through the next 12, 18, 24 months?

Speaker #10: Thank you very much. Yeah, it's very helpful and comprehensive. And then just one quick one for Jean-Sebastien. I mean, Jean-Sebastien, you've talked about the economic outlook and the sluggish kind of backdrop.

Speaker #10: Does the two questions. Do you still feel as skewed, I'll call it, when it comes to credit risk to Quebec post-CWB acquisition? And do you still feel that that Quebec skew is a relative positive for you as you look through the next 12, 18, 24 months?

Etienne Dubuc: Thank you for your question, Sohrab. Obviously, very pleased with the results that we've had in our Q1. You know, lower part of our guidance. When you look at our different types of portfolio, I think my answer would be a little bit different for all the different portfolios. Obviously, our retail portfolio, and whether you look specifically at our residential portfolio, we do see, you know, a difference in performance in terms of delinquency between Quebec and between the rest of Canada. Obviously, when you look at our book there, we're 52%, 53% Quebec, 27% insured. I think we're exactly where we're supposed to be. When you look at commercial, obviously, we bought a bank that has a commercial footprint, and we're comfortable with the performance.

Speaker #9: Thank you for your question, Sohrab. So obviously, very pleased with the results that we've had in our first quarter. So lower part of our guidance.

Speaker #9: And when you look at our different types of portfolio, I think my answer would be a little bit different for all the different portfolios.

Speaker #9: Obviously, our retail portfolio—and when you look specifically at our residential portfolio—we do see a difference in performance in terms of delinquency between Quebec and between the rest of Canada.

Speaker #9: So obviously, when you look at our book there, we're 52, 53 percent Quebec, 27 percent insured. I think we're exactly where we're supposed to be.

Speaker #9: Then when you look at commercial, obviously, we bought a bank that has a commercial footprint, and we're comfortable with the performance. You saw this quarter also a vast improvement in terms of the PCL performance of CWB.

Etienne Dubuc: You saw this quarter also a vast improvement in terms of the PCL performance of CWB. It's a more lumpy portfolio because it's a portfolio that has more commercial side to it. I would say there, we will follow the strategy we've been talking about before, which was we will grow in general commercial more than in real estate, and we're pleased with where we're going right now.

Speaker #9: It's a more lumpy portfolio because it's a portfolio that has more commercial side to it. But I would say there we will follow the strategy we've been talking about before which was we will grow in general commercial more than in real estate.

Speaker #9: And we're pleased with where we're going right now.

Judith Ménard: Well, thank you very much.

Speaker #10: Well, thank you very much.

Speaker #6: You are next question comes from the line of Doug Young with Desjardins Capital Markets. Please go ahead.

Operator: Your next question comes from the line of Doug Young with Desjardins Capital Markets. Please go ahead.

Speaker #11: Hi, good morning. Laurent, you're prepared remarks. You talked about CWB revenue synergies, and I think you talked about early gains in capital markets and solutions.

Doug Young: Hi, good morning. Laurent, your prepared remarks, you talked about CWB revenue synergies, and I think you talked about early gains in capital markets and solutions, and then starting to grow the CWB, I think, loan book in maybe the back half of this year. Just hoping you can flesh this out a little bit more.

Speaker #11: And then starting to grow the CWB, I think loan book and maybe the back half of this year. Just hoping you can flesh this out a little bit more.

Speaker #8: Judith, do you want to take that one? Judith is going to take the question, Doug.

Etienne Dubuc: Judith, do you want to take that one?

Judith Ménard: Yeah, I can take that one.

Etienne Dubuc: Judith is going to take the question, Doug.

Speaker #6: Yes. Well, thanks Doug for your question. So as expected as Laurent said in his script, we're seeing revenue synergy mostly in non-interest income coming from capital markets.

Judith Ménard: Yes.

Doug Young: Yeah.

Judith Ménard: Well, thanks, Doug, for your question. As expected, as Laurent said in his script, we're seeing revenue synergy, mostly non-interest income coming from capital markets. Mostly, RMS, M&A private company, which is a group we formed two years ago, but they are active in the market right now. We expect an NII synergy to start materializing in the second half of 2026, and we're still on track to reach the target of CAD 50 million for 2026. Our key levers include enhanced risk management solution, as I said, balance sheet expansion within existing and new client relationship, which we're seeing right now. We see some good wins around that. Deployment of our cash management capabilities and leveraging CWB's equipment financing expertise for National Bank Alliance.

Speaker #6: So mostly RMS, M&A private company, which is a group we formed two years ago, but they are active in the market right now. So we expect NII synergy to start materializing in the second half of 2026.

Speaker #6: And we're still on track to reach the target of 50 million for 2026. So our key levers include enhanced risk management solution, as I said, balance sheet expansion within existing and new client relationship, which we're seeing right now.

Speaker #6: We see some good winds around that. Deployment of our cash management capabilities and leveraging CWB's equipment financing expertise for national bank alliance. So we just formed a group in Quebec to leverage CWB equipment finance, which is also a positive in our integration.

Judith Ménard: We just formed a group in Quebec to leverage CWB Equipment Finance, which is also a positive in our integration.

Speaker #11: Just a follow-up. I mean, relative to the targets that you set when you did the deal—we saw the expense side. But on the revenue side in particular, how do you feel about your ability to kind of get this?

Doug Young: Just a follow-up. I mean, relative to, you know, the targets that you set when you did the deal, you know, we saw the expense side. On the revenue side in particular, how are you feeling about your ability to kind of get this? You were ahead of plan on the cost side. Are you ahead of plan in terms of where you thought you'd be on the revenue synergy side?

Speaker #11: You were ahead of plan on the cost side. Are you ahead of plan in terms of where you thought you'd be on the revenue synergy side?

Speaker #6: Yeah, we're slightly ahead of plan for Q1. And I'm feeling very positive for our target which is the pipeline is good. With CWB, we're still in the integration phase.

Judith Ménard: Yeah, we're slightly ahead of plan for Q1, I'm feeling very positive for our target, which is, you know, like the pipeline is good with CWB. We're still in the integration phase, and that's why we said that we're going to grow on the last two quarters. Conversion is finished, so this is a big milestone that we just achieved last weekend. Conversion is finished. We're still training people. There's a lot of things that we need to train people on, processes, platforms, client value proposition as well. How do you pitch National Bank when you're in CWB? All of that is happening. For me, I'm very positive, and there's a very good momentum in the field right now.

Speaker #6: And that's why we said that we're going to grow on the last two quarters. So conversion is finished. So this is a big milestone that we just achieved last weekend.

Speaker #6: So conversion is finished. We're still training people. There's a lot of things that we need to train people on: processes, platforms, client value proposition as well.

Speaker #6: How do you pitch National Bank when you're in CWB? So, all of that is happening. For me, I'm very positive, and there's a very good momentum in the field right now.

Speaker #11: Okay. And then just second question. In the think I've got this right, but you can correct me if I've got it wrong. But it looked like there was a 10% quarter over quarter sequential increase in market risk RWA.

Doug Young: Okay, just second question. I think I've got this right, you can correct me if I've got it wrong. It looked like there was a 10% quarter-over-quarter sequential increase in market risk RWA. What would have driven that?

Speaker #11: What would have driven that?

Speaker #8: Hi, Doug. It's Etienne. So that market risk increase, I don't I cannot point you to a specific factor. What else is that FRTB? Because it does not take into account the different correlations and optionalities we have in terms of protection, especially on the downside.

Etienne Dubuc: Hi, Doug. It's Etienne. That market risk increase, I cannot point you to a specific factor. What else is that FRTB, because it does not take into account the different correlations and optionalities we have in terms of protection, especially on the downside. FRTB tends to move in ways that are less intuitive. We don't get the benefit of our diversifications. For example, we could have more downside protection, but run a slightly longer delta exposure, and that would show up as higher RWA. And it's also very point in time, so it tends to move.

Speaker #8: FRTB tends to move in ways that are less intuitive. We don't get the benefit of our diversification. So for example, we could have more downside protection, but run a slightly longer delta exposure.

Speaker #8: And that would show up as higher RWAs at every point in time. So it tends to move. So that's really what I see in terms of explanation for that RWA there.

Etienne Dubuc: That's really what I see in terms of explanation for that RWA, that I don't think I would make I would conclude from that movement.

Speaker #8: I don't think I would make I would conclude from that movement.

Speaker #11: Okay. So this is an unusual quarter. You wouldn't expect this level of expansion, I would assume. Quarter in, quarter out.

Doug Young: Okay, this is an unusual quarter. You wouldn't expect this level of expansion, I would assume, quarter in, quarter out?

Speaker #8: I'm sorry I did not get your question.

Etienne Dubuc: I'm sorry, I did not get your question.

Speaker #11: No, just like it sounds like this isn't abnormal increase in market that what you're trying to say?

Doug Young: No, just like it sounds like this isn't a normal increase in market RWA. Is that what you're trying to say? Like.

Speaker #8: No, I don't think so. I think market RWA moves up and down in that kind of amplitude a lot. It's just that it's very difficult for me to point you to, oh, there was a it's because of volatilities or it's because of our different positioning.

Etienne Dubuc: No, I don't think so. I think market RWA moves up and down in that kind of amplitude a lot. It's just that it's very difficult for me to point you to, oh, there was a, it's because of volatilities or it's because of our different positioning.

Doug Young: Okay.

Etienne Dubuc: Which is why it's very tough to conclude there's something really specific.

Speaker #8: Which is why it's very tough to conclude something really specific.

Etienne Dubuc: Which is why it's very tough to conclude there's something really specific.

Speaker #11: Okay. I just want maybe last quick one. In your ROE waterfall, I mean, you talked about share buybacks. Can you quantify what I see the impact of buybacks, but what level of buybacks are you assuming?

Doug Young: Okay, just one, maybe last quick one. In your ROE waterfall, I mean, you talked about share buybacks. Can you quantify, like, I see the impact of buybacks, like, what level of buybacks are you assuming? I don't know if you can quantify it.

Speaker #11: I don't know if you can quantify it.

Speaker #6: Yeah. Hi, Doug. It's Marie-Chantal. So what we've included in our buyback is for 2026, we're planning to execute on our NCIB program that we've just increased this morning.

Marie-Chantal Gingras: Yeah. Hi, Doug, it's Marie-Chantal. What we've included in our buyback is for 2026, we're planning to execute on our NCIB program that we've just increased this morning, and that's up till September 2026. When you look at 2027, what we're expecting to do is really, as I explained earlier, is continue buybacks to converge towards a CET1 ratio of 13% by the end of 2027. In line with what we had also shared last Q.

Speaker #6: And that's up till September 2026. And then when you look at 2027, what we're expecting to do is really, as I explained earlier, is continue buybacks to converge towards a TT1 ratio of 13% by the end of 2027.

Speaker #6: So in line with what we had also shared last quarter.

Speaker #11: Okay. That makes sense. Okay. Thank you.

Doug Young: Okay, that makes sense. Okay, thank you.

Speaker #6: You're welcome.

Marie-Chantal Gingras: You're welcome.

Speaker #1: Your next question comes from the line of Paul Holden with CIBC. Please go ahead.

Operator: Your next question comes from the line of Paul Holden with CIBC. Please go ahead.

Speaker #12: Thank you. Good morning. First question is with respect to that ROE waterfall guide for 2027. Just want to understand the assumption behind no improvement in PCL.

Paul Holden: Thank you. Good morning. First question is with respect to that ROE waterfall guide for 2027. Just want to understand the assumption behind no improvement in PCL. Is that just because you're baking in conservatism, or are you suggesting that sort of the 25 to 35 basis points should be, you know, sort of the good run rate for National Bank long term?

Speaker #12: Is that just because you're baking in conservatism or are you suggesting that sort of the 25 to 35 basis points should be sort of the good run rate for national long-term?

Speaker #11: Hey, Paul. It's JS. I'll take this one. Obviously, we don't give guidance to 2027. We're keeping our guidance for 2026. We're very comfortable with that 25 to 35.

Jean-Sébastien Grisé: Hey, Paul, it's J.S. I'll take this one. Obviously, we don't give guidance to 2027. We're keeping our guidance for 2026. We're very comfortable with that 25 to 35. You know, I think your assumptions are correct. It's somewhere within the guidance that we have this year, that we're applying for next year.

Speaker #11: So I think your assumptions are correct. It's somewhere within the guidance that we have this year that we're applying for next year.

Speaker #12: Okay. Okay. Because I thought I heard an earlier comment that there was no benefit in the ROE waterfall for 2027 from PCLs. So again, just trying to understand why that assumption would be made.

Paul Holden: Okay. Okay, I thought I heard an earlier comment that there was, there is no benefit in the ROE waterfall for 2027 from PCLs. Again, just trying to understand why-

Jean-Sébastien Grisé: Yeah.

Paul Holden: why that assumption would be made, if it's conservatism...

Speaker #12: If it's conservatism, or if you're suggesting something else.

Jean-Sébastien Grisé: Yeah.

Paul Holden: if you're suggesting something else.

Speaker #6: Hi, Paul. It's Marie-Chantal. So just to make sure that I was clear earlier, there are no upside in 2027 included in our waterfall coming from credit improvement.

Marie-Chantal Gingras: Hi, Paul, it's Marie-Chantal. Just to make sure that I was clear earlier, there are no upside in 2027 included in our waterfall coming from credit improvement. I guess that's what Jean-Sébastien was explaining, that we're keeping our 25 to 35 basis point target similar for next year.

Speaker #6: So I guess that's what Jean-Sebastien was explaining that we're keeping our 25 to 35 basis point target similar for next year.

Speaker #12: Okay. Okay.

Paul Holden: Okay. Okay.

Speaker #11: So you could see it's good. So you could see it's prudent.

Jean-Sébastien Grisé: You could say it's prudent.

Speaker #12: Got it. Okay. Okay. Another question for you, and maybe going back to one of the original questions on the ROE for Canadian P&C banking.

Paul Holden: Got it. Okay. Okay. Another question for you know, maybe going back to one of the original questions on the ROE for Canadian PNC banking. When I think about the different levers, one of them clearly is net interest margins and particularly as it relates to low-cost funding. On that point, when I look at the average deposit balances for personal, I see it's declined the last couple quarters, not by a large magnitude, but still sort of two quarters in a row, and that's typically where I tend to look for low-cost deposits. One, can you kind of address what's driving that decline? It might just be term rolling off. Two, is it right to assume you'd obviously want that to go in the other direction?

Speaker #12: When I think about the different levers, one of them clearly is net interest margins and particularly as it relates to low-cost funding. So on that point, when I look at the average deposit balances for personal, I see it's declined the last couple quarters.

Speaker #12: Not by a large magnitude, but still sort of two quarters in a row. And that's typically where I tend to look for low-cost deposits.

Speaker #12: So one, can you kind of address what's driving that decline? It might just be term rolling off. And two, is it right to assume you'd obviously want that to go in the other direction?

Speaker #12: And if you can give any kind of sense on plans around that. I know Laurent said it's early, but love to hear any thoughts on planned deposit growth.

Paul Holden: If you can give any kind of sense on plans around that, I know, Lauren said it's early, but love to hear any thoughts on planned deposit growth.

Speaker #6: Hi. This is Julie. I will start by giving you the personal deposit view, and then I'll pass it along to Judith and Nancy to provide a holistic view.

Marie-Chantal Gingras: Hi, this is Julie. I will start by giving you the personal deposit view. Then I'll pass it along to Judith and Nancy to provide a listing view. On the personal deposit side, we're down about 1% quarter-over-quarter. That movement is largely explained by the CWB portfolio. As expected, we saw higher attrition in the CWB deposit books, which was built really around higher rate offerings. Therefore attracts a more non-core monoproduct customer segment. Some runoff is natural. It's fully consistent with our expectations at the time of the acquisition. From an NBC point of view, when you look at deposit and mutual funds together, total clients' assets continue to grow, which is also a good measure of franchise momentum. With rates expected to remain low, deposit growth will stay neutral. Giselle?

Speaker #6: So on the personal deposit side, we're down about 1% Q over Q. And that movement is largely explained by the CWB portfolio. As expected, we saw higher attrition in the CWB deposit books, which was built really around higher rate offerings.

Speaker #6: And therefore, it attracts a more non-core monoproduct customer segment. Some runoff is natural, and it's fully consistent with our expectations at the time of the acquisition.

Speaker #6: From an NBC point of view, when you look at deposit in multiple funds together, total clients' assets continue to grow, which is also a good measure of franchise momentum.

Speaker #6: With rate expected to remain low, deposit growth will stay neutral. Judith?

Speaker #2: Yeah. So on the commercial banking side, so deposit growth was strong in Q1. And it made a clear acceleration versus 2025. So I'm very pleased about that.

Julie Lévesque: Yeah, on the commercial banking side, deposit growth was strong in Q1, and it made a clear acceleration versus 2025. I'm very pleased about that. Growth was broad-based across all segments, supported not only by the government and public sector, but also by a stronger contribution from general commercial, confirming solid and sustainable funding momentum. This is something that we wanted to see, and we're starting seeing. Again, I'm really pleased about that. Nancy, you want to complement on wealth?

Speaker #2: Growth was broad-based across all segments, supported not only by the government and public sector, but also by a stronger contribution from general commercial confirming solid and sustainable funding momentum.

Speaker #2: This is something that we wanted to see, and we're starting seeing. So again, I'm really pleased about that. So Nancy, you want to compliment on the wealth?

Speaker #6: Yes. Yes. So for wealth management, demand deposit growth is consistent with what we see when client-based and advisor-based expend. More client relationship typically means more operating and investment cash balances obviously.

Marie-Chantal Gingras: Yes. Yes. For wealth management, demand deposit growth is consistent with what we see when client base and advisor base expand. More client relationship typically means more operating and investment cash balances, obviously. The relation of demand deposit to AUA in each business is more stable. As our AUA grow, our demand deposit grows as well. We're very happy with the trend that we see and positive for the year.

Speaker #6: So the relation of demand deposit to AUA in each business is more stable. So as our AUA grow, our demand deposit growth as well.

Speaker #6: So we're very happy with the trend that we see and positive for the year.

Speaker #12: Okay. Just one follow-up on that. I don't think you break down deposit margins versus loan margins or if you do, correct me. But just on the deposit margin, should we view even though the personal deposits declined, it sounds like it's high cost.

Paul Holden: Okay, just one follow-up on that. I don't think you break down deposit margins versus loan margins, or if you do, correct me. How, just on the deposit margin, should we view, even though the personal deposits declined, it sounds like it's high cost? Was that positive for deposit margins? Is that how we should read that?

Speaker #12: Was that positive for deposit margins? Is that how we should read that?

Speaker #6: So Paul, it's Marie-Chantal here. So when you look at the P&C NIM for the quarter, we saw a strong balance sheet growth with higher margin on both loans and deposits.

Marie-Chantal Gingras: Paul, it's Marie-Chantal here. On, when you look at the PNC NIM for the quarter, we saw a strong balance sheet growth, with higher margin on both loans and deposits. Yes, in the quarter, it's something that we've seen.

Speaker #6: So yes, in the quarter, it's something that we've seen.

Speaker #12: Okay. Okay. Perfect. That's all the questions for me. Thank you.

Paul Holden: Okay. Okay, perfect. That's all the questions from me. Thank you.

Speaker #1: You are next. Question comes from the line of Mike Rizvanovic with Scotiabank. Please go ahead.

Operator: Your next question comes from the line of Mike Rizvanovic with Scotiabank. Please go ahead.

Speaker #13: Hi. Good afternoon. First one for Marie-Chantal. Just wanted to go back to the 270 million given that that guidance was provided a while ago.

Mike Rizvanovic: Hi, good afternoon. First one for Marie-Chantal. Just wanted to go back to the CAD 270 million. Given that that guidance was provided a while ago, obviously, you're more in the thick of things in terms of getting to where you want to be, and you're obviously ahead of schedule on that. I'm wondering, is this a function of, you know, maybe that CAD 270 was potentially a bit conservative, or you've just gotten there quicker, you've been able to execute quicker on getting those cost and funding synergies? I think a lot of investors have the same question that I have, and just in terms of... I'm not trying to pin you on new guidance, but-

Speaker #13: Obviously, you're more in the thick of things in terms of getting to where you want to be. And you're obviously ahead of schedule on that.

Speaker #13: So, I'm wondering, is this a function of maybe that $270 million was potentially a bit conservative, or you've just gotten there quicker? You've been able to execute quicker on getting those costs and funding synergies.

Speaker #13: I think a lot of investors have the same question that I have. And just in terms of I'm not trying to pin you on new guidance, but how should we look at the 270?

Marie-Chantal Gingras: Yeah.

Mike Rizvanovic: How should we look at the 270? Is there a possibility that it could be beyond that, beyond 2026?

Speaker #13: Is there a possibility that it could be beyond that, beyond 2026?

Speaker #6: So thanks, Mike, for the question. So you're right. We are executing more rapidly than what we had expected. And we continue to track ahead of plan in terms of execution.

Marie-Chantal Gingras: Thanks, Mike, for the question. You're right. We are executing more rapidly than what we had expected, and we continue to track ahead of plan in terms of execution. That supports our confidence that the full target will be achieved, as expected, before the end of fiscal 2026. As Giselle was saying, we just finalized our fourth and final client migration last weekend, so we are now very confident in achieving that target.

Speaker #6: So that supports our confidence that the full target will be achieved. As expected, before the end of fiscal 2026, as Judith was saying, we just finalized our fourth and final client migration last weekend.

Speaker #6: So, we are now very confident in achieving that target in 2026.

Mike Rizvanovic: Okay.

Marie-Chantal Gingras: in 2026.

Speaker #13: So no color on potentially going beyond that at this point. Too early, maybe?

Mike Rizvanovic: No, no color on potentially going beyond that at this point. Too early, maybe?

Marie-Chantal Gingras: No, not at this point.

Speaker #6: No. No, not at this point. As I said, we're just finalized the last conversion, and then we'll see what brings what this brings next.

Marie-Chantal Gingras: No, not at this point.

Mike Rizvanovic: Okay.

Marie-Chantal Gingras: As I said, we just finalized the last conversion, and then we'll see what this brings next.

Speaker #13: Okay. Fair enough. And then maybe just one for Julie. Just on the mortgage growth in the quarter, I think 3% sequentially that's actually a very impressive number just in the context of what's happening in the housing market.

Mike Rizvanovic: Okay, fair enough. Maybe just one for Julie. Just on the mortgage growth in the quarter, I think 3% sequentially. That's actually a very impressive number just in the context of what's happening in the housing market. I'm just wondering: Is this largely the Quebec-focused dynamic? Just Quebec, it just happens to be a much better market for growth these days, or is it more so that you're doing something to win market share and just doing something better than your competitors currently?

Speaker #13: And I'm just wondering, is this largely the Quebec-focused dynamic? Just Quebec just happens to be a much better market for growth these days, or is it more so that you're doing something to win market share and just doing something better than your competitors currently?

Speaker #6: So thank you for the question. Obviously, we're doing something better. We delivered 11% year-over-year portfolio growth, which is impressive, driven by market conditions, being more favorable.

Julie Lévesque: Thank you for the question. Obviously, we're doing something better. We delivered 11% year-over-year portfolio growth, which is impressive, driven by market conditions being more favorable. We delivered growth while improving our margins, thus the business generates strong NII. As always, we maintain a disciplined and stable pricing strategy that supports sustainable penetration. Specifically in Quebec, our market share continues to expand, supported by strong brand positioning and deep, long-standing real estate relationship.

Speaker #6: We delivered growth while improving our margins. Thus, the business generates strong NII. As always, we maintain a disciplined and stable pricing strategy that supports sustainable penetration.

Speaker #6: And specifically in Quebec, our market share continues to expand. Supported by strong brand positioning and deep, long-standing real estate relationship.

Speaker #13: Okay. And just one really quick follow-up on that. So what about the Optimum portfolio that was acquired? I'm wondering if that book is growing as well.

Mike Rizvanovic: Okay, just one really quick follow-up on that. What about the Optimum portfolio that was acquired? I'm wondering if that book is growing as well. I'm guessing that's embedded in the overall resi mortgage balances. I don't recall the size of Optimum. I think CAD 3 billion at purchase, but is that being expanded as well?

Speaker #13: I'm guessing that's embedded in the overall resy mortgage balances. I don't recall the size of optimum. I think 3 billion at purchase, but is that being expanded as well?

Speaker #6: So currently, thank you for the question. Currently, the optimum as of around 4% part of our real estate book for on the personal side.

Julie Lévesque: Currently, thank you for the question. Currently, the Optimum, as of around 4%, part of our, of the real estate book, for on the personal side. We demonstrate through Optimum's strong performance-

Speaker #6: We demonstrate through optimum strong performance. And it's at the core strategy. Short to mid-term, it's discipline growth. So our main objective remains quality over volume.

Giselle: ... it's at the core of our diversified strategy. Short to midterm, it's disciplined growth. Our main objective remains quality over volume.

[Company Representative] (National Bank of Canada): ... it's at the core of our diversified strategy. Short to midterm, it's disciplined growth. Our main objective remains quality over volume.

Speaker #13: Okay. So part of that growth is inclusive of optimum balances as well, correct?

Operator: Okay, so part of that growth is inclusive of Optimum balances as well, correct?

Speaker #6: Yes.

Giselle: Yes.

[Company Representative] (National Bank of Canada): Yes.

Speaker #13: Okay. Perfect. Okay. Thank you for the caller. Appreciate it. Thanks for the time.

Operator: Okay, perfect. Okay, thank you for the call. I appreciate it. Thanks for the time.

Speaker #1: You are next. The question comes from the line of Ibrahim Punawala with Bank of America. Please go ahead.

Operator: Your next question comes from the line of Ebrahim Poonawala with Bank of America. Please go ahead.

Speaker #14: Good morning. I guess just a follow-up question, one, on the ROEs. I guess one more question on the ROEs. But when we think about the capital markets, the 20th slide, 23, one, do you see the mid-20s ROE as a sustainable ROE actually?

Ebrahim Poonawala: Good morning. I guess, just a follow-up question, one, on the ROEs. I guess one more question on the ROEs. When we think about the capital markets, slide 23, one, do you see the mid-20s ROE as a sustainable ROE? Actually, this is the other side of the P&C business where you see upside. When we think about the capital markets business and the mid-20s ROE, is that sustainable? Could that get better, worse? Like, how should we think about it? Second, I think, Etienne, you talked about FRTB impact on RWA. As we think about the Fed maybe putting out new Basel III Endgame proposals in the US, is there any discussion with the OSFI around FRTB rules or any discussions around whether that could be revisited in Canada? Thank you.

Speaker #14: This is the other side of the P&C business where you see upside. When we think about the capital markets business and the mid-20s ROE, is that sustainable?

Speaker #14: Could that get better, worse? How should we think about it? And second, I think ETN, you talked about FRTB impact on RWA. As we think about the Fed, maybe putting out a new Basel endgame proposals in the US, is there any discussion with the OSFI around FRTB rules, or any discussions around whether that could get revisited in Canada?

Speaker #14: Thank you.

Speaker #13: Yeah. Thanks for the question, Ibrahim. So I'll start with the ROE. And give you some color because, yeah, mid-20s is obviously a very good number.

Etienne Dubuc: Yeah, thanks for the question, Ebrahim. I'll start with the ROE and give you some color because, yeah, mid-twenties is obviously a very good number. We want to keep it in the twenties. The way that we think about it, I think the biggest driver is our business mix. We want to continue to focus on scaled businesses in global markets where we generate strong records, strong returns through the cycle, including in more volatile period. When you get volatile markets, activity usually increases, spread widens, dislocations create opportunities, and those are environments where these franchises can be very resilient. Also part of how we think about it is how we've been disciplined about where we deploy capital.

Speaker #13: We want to keep it in the 20s. And the way that we think about it, I think the biggest driver is our business mix.

Speaker #13: We want to continue to focus on scaled businesses and global markets when we where we generate strong records strong returns through the cycle, including in more volatile period.

Speaker #13: And when you get volatile markets, activity usually increases, spread widens, dislocations create opportunities, and those are environments where these franchises can be very resilient.

Speaker #13: And also, part of how we think about it is how we've been disciplined about where we deploy capital. We stay nimble and allocate capital dynamically based on client demand, and based on risk-adjusted returns, rather than trying to do everything.

Etienne Dubuc: We stay nimble and allocate capital dynamically based on client demand and based on risk-adjusted returns, rather than trying to do everything. I think that discipline matters a lot, and we'll continue to do that. There's also an efficiency part. We've maintained a strong focus on cost discipline as we've scaled the franchise, and we've continued to invest in technology, particularly in our trading and issuance businesses. On the Corporate and Investment Banking side, there is upside there because we've made focused investments over several years that are paying off. We strengthen connectivity with the markets teams, we've increased our share of wallet, share of leads, and we've been very intentional about prioritizing sectors where we see long-term strategic importance and where we can build real franchise strength. It's a consistent strategy.

Speaker #13: And I think that discipline matters a lot, and we'll continue to do that. There's also an efficiency part. We've maintained a strong focus on cost discipline.

Speaker #13: As we've scaled the franchise, and we've continued to invest in technology, particularly in our trading and issuance businesses. And on the corporate and investment banking side, there's upside there because we've made focused investments over several years that are paying off.

Speaker #13: We strengthened connectivity with the Markets teams. We've increased our share of wallet, share of leads, and we've been very intentional about prioritizing sectors where we see long-term strategic importance and where we can build real franchise strength.

Speaker #13: So it's a consistent strategy. Ideally, we want to maintain it where it is now. I think that trading will not always be that good, but there's upside on the corporate and investment banking side.

Etienne Dubuc: Ideally, we want to maintain it where it is now. I think that trading will not always be that good, but there's upside on the Corporate and Investment Banking side. We'll continue to stay focused on scaled, high return activities and maintain cost control and invest in the right client franchises. I think for your second question, Laurent has more of the discussions with OSFI than I have, so I think he could give you color on the FRTB.

Speaker #13: So, we'll continue to stay focused on scaled, high-return activities and maintain cost control, and invest in the right client franchises. I think for your second question, Laurent has more of the discussions with OSFI than I have.

Speaker #13: So I think he could give you color on the FRTB. So Ibrahim, thank you for your question. And you're right on point. I think Etienne talked a bit about FRTB before and that it has certain volatility and it doesn't capture all the risk the way I think it should capture the risk.

Laurent Ferreira: Ebrahim, thank you for your question, and you're right on point. I think, you know, Etienne talked a bit about FRTB before, and that it has certain volatility as, and it doesn't capture all the risks the way I think it should capture the risk. With our peers, we have brought it up to OSFI, as something that, one, we think does not capture the risk. That's one with, you know, US banks or European banks, which are not subject to FRTB at this point in time. We have a healthy discussion with our regulators about FRTB.

Speaker #13: With our peers, we have brought it up to OSFI. As something that one, we think does not capture the risk. So that's one. With US banks or European banks, which are not subject to FRTB at this point in time.

Speaker #13: So we have a healthy discussion with our regulators about FRTB.

Speaker #14: Got it. Well, that sounds healthy. And I guess maybe following up on a question I think Paul Holden was trying to ask: as we think about—I get that you don't expect PCLs to decline next year versus this year—but maybe just give us a mark-to-market as you think about the Canadian economy and your loan book.

Ebrahim Poonawala: Got it. Well, that sounds healthy. I guess, maybe following up on a question I think Paul Holden was trying to ask was, as we think about, I get you that you don't expect PCLs to decline next year versus this year, but maybe just give us a mark to market as you think about the Canadian economy and your loan book. Do you expect in PCLs or impaired PCLs to improve as the year moves and as we think about just fundamental credit quality, or is it still too uncertain, too soon to tell?

Speaker #14: Do you expect PCLs or impaired PCLs to improve as the year moves and as we think about just fundamental credit quality? Or is it still too uncertain, too soon to tell?

Etienne Dubuc: I think it's the latter. When you look, we're starting at a very strong position, right? We're starting at 28 basis points, strong credit quarter. We're also very pleased with the lower level of formations, it's an environment to stay humble. We're still in a credit cycle. We're still seeing low recuperation rates in non-retail, the big one is CUSMA. As long as CUSMA is still in flux, there's still some risks. It's very aligned to what I said about our 2025, where we could see swings between quarters of 10 basis points between the ups and downs, we are maintaining our 25 to 35 basis points guidance for the year.

Speaker #13: I think it's the latter. But when you look, we're starting at a very strong position, right? So we're starting at 28 basis points. So strong credit quarter.

Speaker #13: We're also very pleased with the lowest level of formations. But it's an environment to stay humble. We're still in a credit cycle. We're still seeing low recuperation rates in non-retail.

Speaker #13: And the big one is CUSMA. So as long as CUSMA is still in flux, there's still some risks. And it's very aligned to what I said about our 2025, where we could see swings between quarters of 10 basis points between ups and downs.

Speaker #13: But we are maintaining our 25 to 35 basis points guidance for the year.

Speaker #14: Got it. Thank you.

Ebrahim Poonawala: Got it. Thank you.

Speaker #15: Your next question comes from the line of Mario Mendonca with TD Securities. Please go ahead.

Operator: Your next question comes from the line of Mario Mendonca with TD Securities. Please go ahead.

Speaker #16: Good morning. First, a question on the advisory business, the underwriting advisory. It would appear that you've reached an entirely new level. The last three quarters, the underwriting advisory revenue is up something like, what is it, 50 to 90 percent relative to comparable quarters.

Operator: Good morning. First, a question on the advisory business, the underwriting advisory.

Mario Mendonca: that you've reached an entirely new level. The last 3 quarters, the underwriting advisory revenue is up something like, what is it? 50% to 90% relative to comparable quarters. I figure to some extent this is what the market's given you, but it seems like there's more going on here. Can you talk about what National's done specifically, either it's bankers, geographies, products, something new you've done over the last 3 quarters that's driving this?

Speaker #16: I figured, to some extent, this is what the market's given you. But it seems like there's more going on here. Can you talk about what National's done specifically?

Speaker #16: Either it's bankers, geographies, products, something new you've done over the last three quarters that's driving this?

Speaker #13: Thanks for the question, Mario. It's Etienne. It's true that in CNIB, you saw broad-based strength across the franchise. And that led to, well, more than a 30% increase of revenues from last year.

Etienne Dubuc: Thanks for the question, Mario. It's Etienne. It's true that in C&IB, you saw broad-based strength across the franchise, and that led to more than 30% increase of revenues from last year. I think, where we saw much higher activity year-over-year is in deal flow and advisory mandates across equity capital markets and M&A. These were really slow last year, if you remember, at this time of year, and it's gotten really active this year. That's across multiple sectors. It's not just metals and mining, as some people think. It's been very diversified. We think really that M&A backdrop remains constructive. We've had our best M&A year ever last year, and that fueled activity across the broader franchise.

Speaker #13: I think where we saw much higher activity, year over year, is in deal flow and advisory mandates. Across equity, capital markets, and M&A, these were really slow last year for a member.

Speaker #13: At this time of year, and it's gotten really active this year. And that's across multiple sectors. It's not just metals and mining, as some people think it's been very diversified.

Speaker #13: And we take really that M&A backdrop remains constructive we've had our best M&A year ever last year. And that fueled activity across the broader franchise.

Speaker #13: And I think that's also including ancillary activity like risk management solutions. So that's also very encouraging. So we've advised on several mandates, including both public and private companies across infrastructure, power, energy, mining, industrials.

Etienne Dubuc: I think, and that's also including ancillary activity like Risk Management Solutions. That's also very encouraging. We've advised on several mandates, including both public and private companies across infrastructure, power, energy, mining, industrials. We also continue to see activity building with private companies. That's something we're working on. With the ongoing integration of CWB, I think that positions us to further deepen our penetration in Western Canada. That capital market, it's been really consistent. The growth has continued as client took advantage throughout the quarter of very open and attractive funding markets. Yeah, the franchise has evolved. As I was saying in my answer to Ebrahim, we've really increased the number of leads, the number of share wallets. We've continued to make some investments on that side.

Speaker #13: We also continue to see activity building with private companies. That's something we're working on. And with the ongoing integration of CWB, I think that positions us to further deepen our penetration in Western Canada.

Speaker #13: And in that capital market, it's been really consistent. The growth has continued as clients took advantage throughout the quarter of very open and attractive funding markets.

Speaker #13: So yeah, the franchise, as evolved, as I was saying in my answer to Ibrahim, we've really increased the number of leads, the number of shareholder wallets.

Speaker #13: We've continued to make some investments on that side. And I think this is partly explains why we've had a bit of a higher tick in the expenses this quarter.

Etienne Dubuc: I think this partly explains why we've had a bit of a higher take in the expenses this quarter. I think we continue to build to accompany the growth especially in Canada.

Speaker #13: I think we continue to build to accompany the growth, especially in Canada.

Speaker #16: So it sounds like your answer is both. The market's been super helpful, but you've made a bunch of investments in this business as well.

Mario Mendonca: It sounds like your answer is both. Like, the market's been super helpful, but you've made a bunch of investments in this business as well. Those are both-

Speaker #16: Those are both.

Etienne Dubuc: yeah, I think that's accurate, Mario. Yep.

Speaker #13: Yeah, I think that's accurate, Mario. Yeah.

Etienne Dubuc: yeah, I think that's accurate, Mario. Yep.

Speaker #16: All right. Now, going to this ROE disclosure. It raises more questions, frankly, than it answers because the segment ROE domestic is, what, 6, 7, 800 basis points lower than most of the other banks.

Mario Mendonca: All right. Now, going to this ROE disclosure, it, you know, it raises more questions, frankly, than it answers. The segment ROE domestic is, what? 6, 7, 800 basis points lower than most of the other banks. Your capital markets ROE is probably 6 or 700 basis points higher than of the other banks. When you present disclosure like this, do you put any effort or thought into whether your capital allocation is different or the same as your peers? Like, how can we be comfortable, or maybe the answer is we shouldn't be. How can we be comfortable that these ROE calculations are even comparable to the other banks? They're so wildly different.

Speaker #16: And you're capital markets ROE is probably 6 or 700 basis points higher than the other banks. When you present disclosure like this, do you put any effort or thought into whether your capital allocation is different or the same as your peers?

Speaker #16: How can we be comfortable—or maybe the answer is we shouldn't be—how can we be comfortable that these ROE calculations are even comparable to the other banks?

Speaker #16: Because they're so wildly different.

Speaker #13: So maybe I'll take this one, Mario. I think the scale has something to do with it, in terms of our performance at PNC. We knew that from a long time.

Laurent Ferreira: Maybe I'll take this one, Mario. I think the scale has something to do with it in terms of our performance at PNC. We knew that for a long time. We approached this as an opportunity. Part of the reason why we disclosed ROE per segment is because we believe that we could improve it significantly over time. That's something that, you know, we started working on. Julie has been with the bank for a very long time and has started in her role and is looking at that specifically right now. They are comparable. I mean, all banks are different.

Speaker #13: But we approached this as an opportunity. Part of the reason why we disclosed ROE per segment is because we believe that we could improve it significantly over time.

Speaker #13: And that's something that we've started working on. Julie has been with the bank for a very long time, and has started her new role and is looking at that specifically right now.

Speaker #13: So they are comparable. I mean, all banks are different. And I think it is something that we are going to focus on over the next several years.

Laurent Ferreira: I think, you know, it is something that we are, you know, going to focus on over the next several years. We do believe that we are going to be able to deliver more. Again, early days, we're, you know, we're starting a strategic review of our segment. We'll, as always, you know, we're gonna provide updates on potential outcomes and upside.

Speaker #13: And we do believe that we are going to be able to deliver more. Again, early days—we're starting a strategic review of our segment.

Speaker #13: And we'll, as always, we're going to provide updates on potential outcomes and upside.

Mario Mendonca: Just to be clear, you're suggesting that the 12.7% ROE in PNC banking at National is comparable to the 20% plus from some of the larger banks, and that scale accounts for that difference? You don't really see it in the... Well, no, that's not fair. You do see it in the efficiency ratio. Perhaps that's the answer. It's the efficiency ratio of 51 versus some of these larger ones around 44.

Speaker #16: So just to be clear, you're suggesting that the 12.7% ROE in PNC banking at National is comparable to the 20% plus from some of the larger banks, and that scale accounts for that difference?

Speaker #16: Because you don't really see it in the well, no, that's not fair. You do see it in the efficiency ratio. So perhaps that's the answer.

Speaker #16: It's the efficiency ratio of 51 versus some of these larger ones, around 45. That's the point. Okay. I think I get it. Thank you.

Laurent Ferreira: You got it.

Mario Mendonca: That's the point. Okay, I think I get it. Thank you.

Speaker #17: Your next question comes from the line of Darko Mihelic with RBC Capital Markets. Please go ahead.

Operator: Your next question comes from the line of Darko Mihelic with RBC Capital Markets. Please go ahead.

Speaker #13: Hi. Thank you. Good morning. Maybe before I hit my question, just on that point, I mean, it looks like you're using an 11.5% ratio to allocate capital.

Etienne Dubuc: Hi. Thank you. Good morning. Maybe before I hit my question, just on that point, I mean, it looks like you're using an 11.5% ratio to allocate capital. Presumably, as you get benefits from CWB and ARB, that would flow through as well. Would that be fair?

Darko Mihelic: Hi. Thank you. Good morning. Maybe before I hit my question, just on that point, I mean, it looks like you're using an 11.5% ratio to allocate capital. Presumably, as you get benefits from CWB and ARB, that would flow through as well. Would that be fair?

Speaker #13: So presumably, as you get benefits from CWB on AIRB, that would flow through as well? Would that be fair?

Speaker #17: Yeah. That's correct, Darko. We are using 11.5 for the capital allocation on the ROE segment that we've started to disclose this quarter.

William Bonnell: Yeah, that's correct, Darko. We are using 11.5 for the capital allocation on the ROE segment that we've started to disclose this quarter.

Speaker #13: Okay. Thank you. And then just maybe just my question really is just for modeling purposes. I just want to sort of visit the other segment.

Nancy Paquette: Okay. Thank you. Just, maybe, my question really is just for modeling purposes. I just want to, sort of visit the, other segment. I mean, there was help from treasury, some gains in there. How should I think about that help in the quarter, and, you know, a modest loss? What should I think about it going forward?

Darko Mihelic: Okay. Thank you. Just, maybe, my question really is just for modeling purposes. I just want to, sort of visit the, other segment. I mean, there was help from treasury, some gains in there. How should I think about that help in the quarter, and, you know, a modest loss? What should I think about it going forward?

Speaker #13: I mean, it was help from Treasury, some gains in there. How should I think about that help in the quarter and a modest loss?

Speaker #13: And what should I think about it going forward?

Marie-Chantal Gingras: Thanks, Darko Mihelic, for the question. I'll answer the best I can do for your modeling. On the revenue side, we've experienced two things this quarter for the other segment. Larger investment gains that we've realized compared to prior periods. We've seen the overall level of performance from treasury also improving. On the expense side, we expect lower levels in 2026, mainly from variable compensation, which was elevated in 2025. Remember, last quarter, we've given a guidance of a PTPP loss for the other segments, ranging between CAD 225 to 275 million. We're pointing now more towards CAD 225.

Speaker #17: So thanks, Darko, for the question. So I'll answer the best I can do for your modeling. So on the revenue side, we've experienced two things.

Speaker #17: This quarter, for the other segment, we had larger investment gains that we realized compared to prior periods, and we've seen the overall level of performance from Treasury also improving.

Speaker #17: On the expense side, we expect lower levels in 2026, mainly from variable compensation, which was elevated in 2025. And remember, last quarter we gave guidance of a PTPP loss for the other segments ranging between $225 million to $275 million.

Speaker #17: We're pointing now more towards 225.

Speaker #13: Okay. Okay. That's helpful. And just with respect to Treasury activities, what is it that's helping you there? And how should we think about that for the rest of the year?

Nancy Paquette: Okay, that's helpful. Just with respect to treasury activities, what is it that's helping you there? How should we think about that for the rest of the year?

Darko Mihelic: Okay, that's helpful. Just with respect to treasury activities, what is it that's helping you there? How should we think about that for the rest of the year?

Speaker #17: Well, as you know, in your other segment, our banking book interest rate risk is centralized into our Treasury group. So you can see some variation from quarter to quarter in the performance so volatility is expected.

Marie-Chantal Gingras: Well, as you know, in your other segment, our banking book interest rate risk is centralized into our treasury group. You can see, some, you know, variation from quarter to quarter in the performance. Volatility is expected, and we're comfortable with what we're seeing so far.

Speaker #17: And we're comfortable with what we're seeing so far.

Speaker #13: Okay. Great. Thank you. Those are my questions.

Nancy Paquette: Okay, great. Thank you. Those are my questions.

Darko Mihelic: Okay, great. Thank you. Those are my questions.

Speaker #17: Thank you, Darko. See you next week. Your next question comes from the line of Jill Shea with UBS. Please go ahead.

Marie-Chantal Gingras: Thank you, Darko. See you next week.

Operator: Your next question comes from the line of Jill Shea with UBS. Please go ahead.

Speaker #18: Thanks for taking the question. I just wanted to follow up once more on the ROE waterfall. Thank you so much for the detail there.

Jill Shea: Thanks for taking the question. I just wanted to follow up once more on the ROE waterfall. Thank you so much for the detail there. Just in terms of the RWA growth piece, that's impacting the ROE by 100 basis points, can you just talk about the piece of organic growth embedded in there? Does that embed an acceleration in loan growth relative to what you're pacing currently? Just realizing that that number is actually net of the AIRB conversion benefit. Just trying to think through the balance sheet growth component versus the benefit from AIRB that's embedded in that number. That would be helpful. Thank you.

Speaker #18: Just in terms of the RWA growth piece, that's impacting the ROE by 100 basis points, can you just talk about the pace of organic growth embedded in there?

Speaker #18: Does that embed an acceleration in loan growth relative to what you're pacing currently? Just realizing that that number is actually net of the AIRB conversion benefit.

Speaker #18: So just trying to think through the balance sheet growth component versus the benefit from AIRB that's embedded in that number. That would be helpful.

Speaker #18: Thank you.

Speaker #17: Thanks, Jill. It's Marie-Chantal. So yeah, on the RWA growth, we're expecting 100 basis points there. When you look at our RWA consumption historically, we've been disclosing approximately 30 basis points on average.

Marie-Chantal Gingras: Thanks, Jill. It's Marie-Chantal. Yes, on the RWA growth, we're expecting 100 basis points there. When you look at our RWA consumption, historically, we've been disclosing approximately 30 basis points on average every quarter. I guess that assumption would be the right one to think. As we're moving with the synergy, revenue synergy on the conversion of CWB, Judit was sharing that we're expecting high single digits in terms of loan growth. Etienne was talking about a good pipeline as well on the corporate side. On the mortgage side, we expect the portfolio to grow in the mid-single digit range.

Speaker #17: Every quarter. So I guess that assumption would be the right one to think. As we're moving with the synergy—revenue synergy—on the conversion of CWB, Judith was sharing that we're expecting high single-digit, in terms of loan growth.

Speaker #17: It was talking about a good pipeline as well on the corporate side. On the mortgage side, we expect the portfolio to grow in the mid-single-digit range.

Speaker #17: So those are some of the assumptions that you can continue to use for understanding our ROE target for 2027.

Marie-Chantal Gingras: Those are some of the assumptions that you can continue to use for understanding our ROE target for 2027.

Speaker #18: Okay. Thank you very much.

Jill Shea: Okay. Thank you very much.

Speaker #17: You're welcome.

Marie-Chantal Gingras: You're welcome.

Speaker #18: We have no further questions at this time. I will now turn the conference back over to Laurent Ferreira for closing comments.

Operator: We have no further questions at this time. I will now turn the conference back over to Laurent Ferreira for closing comments.

Speaker #13: Thank you, operator, and everyone on the call. Our Q1 performance was strong, and I'm very happy with our execution. And you should expect us to continue to focus on delivering sustainable earnings growth and a premium ROE on that.

Laurent Ferreira: Thank you, operator. Everyone in the call. Our Q1 performance was strong. I'm very happy with our execution. You should expect us to continue to focus on delivering sustainable earnings growth and a premium ROE. On that, thank you.

Speaker #13: Thank you.

Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect.

Q1 2026 National Bank of Canada Earnings Call

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