Royal Bank of Canada (RY) 2 Dec 202020 Q4 Earnings call transcript

Good morning, ladies and gentlemen. Welcome to RBC's conference call for the fourth quarter 2020 financial results. Please be advised that this call is being recorded. I would now like to turn the meeting over to Nadine Ahn, Head of Investor Relations. Please go ahead, Ms. Ahn.

morning, good and you everyone. Thank

will be Speaking Commercial and Markets. today Executive Chief are Neldner, President for Banking, we Chief Derek Neil Insurance McLaughlin, Personal Guzman, McKay, Rod today Risk Also Bolger, & us Then, Hepworth, Doug will Management, Officer, Graeme Chief and and Group I&TS Capital call Wealth Head, Dave and Financial joining the Head, open Group Group Officer. questions. Officer Head,

comments give everyone chance differ may questions, its and you your Dave. and ask listeners our forward-looking turn would noted ask considers statements, limit a that and assumptions one, As bank performance to on remind involve we to over basis will contain have and that, and reported in I both With uncertainties. which To slide assesses also a the then assessing it that re-queue. Actual materially. risks questions on inherent useful results to could adjusted performance. be underlying business I

and capital Thanks volume you XXXX. challenging we fourth-quarter I fee-based driven operating for from and share backdrop both quarter of underwriting on on how banking Nadine digit macro growth capital Despite businesses. then markets, in brought were near benefited year-over-year. context heading the some zero management management positioned continued our environment provide X% by and joining And wealth reported revenue trading in the strength in and markets We on significant wealth and impact the thank everyone. the strong and start Canadian National. with businesses in rate earnings up strength today. double COVID-XX interest revenue Canadian my growth banking, will and by us City in Today, pandemic, thoughts billion good we leading are per from into morning, and earnings fourth $X.X our

control. on continued this cost management benefited risk from and quarter also our results focus Our

on second in the given XXXX. expect The quarters growth next X%. thoughts Canadian down the has to-date. our few a rebounded of slip growth economic macroenvironment core the we into over wave in economy for economic project Now and of But XXXX couple of well over COVID-XX emergence to heading the markets,

project in However, The still pace GDP to trajectory to pandemic. rebound X% the we growth remains economic XXXX. recovery the on X% of contingent of uncertain

of positive on series news received vaccination of on development remains program. a of we a uncertainty While execution vaccines, of the the the timing much rollout and

the on continue to significant result, programs a need mitigating our we the of on and We will As applaud citizens. pandemic clients bridging to-date. have impact to the our to provided focus government support

flexible extended. remain the key particularly put to We small pleased also programs health first the spread and to and of to people economy the manage Measures businesses. foremost, dynamic to are damage done but disease and curb the see of safety the must to and

$XX billion RBC's support For to work the on clients, more our provided of to of continue time. through loans. the our including them than we pandemic, start support difficult with this clients to part, significant Since deferrals we will

$XX term loans, persist that stimulus individuals rates fiscal and of to levels speak will of with combined interest and for wave on interest majority this the low extended elevated and short the We constant. $X a year. of some the with against belief X%. both Therefore, remained payments minimized. billion risks a of to with While volatility provides the CETX the for over returned the move of later. minimum growth, clients past Common of higher, also the effect second a It of sheet the Low Graham further started once current and the X are ended manage making to been while buffer the past experience with liquidity with have we nearly year, rates the their will This strength of to period. term record difficulties has provides and Equity businesses ahead. have Throughout buffer long catalyst health ratio an year uncertain have operating will provide uncertainty year our billion Tier XX.X% rates a the a for regulatory monetary interest balance

of allowance year billion, $X our to billion and of increased X.X last this coverage times we over XX addition, loss write-offs represents basis points months and from loans nearly acceptances. nearly $X coverage In for our up last over XX credit and

but X% levels, we in economy XXXX, flexibility and into ahead a we allows create not up the in us shareholders, to our a returns. drive three only term XXXX. Heading Our common our spur for continue fourth capital year. in and we medium manage supporting increases ROE us up from value share significant growth of billion stressed strong in paid are continue delivered slightly clients, per five shareholders $X XX% This Despite dividend shareholder over and premium sheet quarter the to uncertainty our for tangible value to balance the gives the year maintaining in year, book objectives. our

EPS of However, cost meeting control. will interest rate capital will through be COVID-XX, our and deployment the path to the continued challenged that emphasis near for One by recognize challenging and ongoing ROE this be on we term growth target environment prolonged higher be the or restrictions. impacts low prudent

and Our manage ability and have management to and past our months cyber support in data underpinned with investments clients operational systems resilience. last our nine the capabilities, risk digital

I capability, more the full the matched easier volumes, businesses. All running by customer year, in our products and we remain expenses award-winning we for billion driven to use reported strong in strong Canadian force net to volume client resilient and client and our by driving reported our investment of to experience income businesses speak over underpinned technology, to core invest $X While now simpler, year banking performance on advice-led continue businesses an to with our want productivity. sales needs. containing our of growth. core bank our emphasis efficiently with strategies, committed

the have to core added share view goal We two XX accounts and by clients digital relationship alone. more relationship more of to product checking add a expanding and last over reach years our leveraging core capabilities points as scale We over remains our our basis market this and add in value.

InvestEase's Our segment our and investment and clients continuum partner the Canadian and banking wealth brokerage needs. full our continue clients, to spectrum platforms From teams to a up retail provide covering full-service wealth management. direct to management offerings of of discretionary our to robo-advisor and wealth

now wealth of cross-sell this and through expansion a relationships significant collaboration XX% management with banking product further having in Canadian progress. seen clients have closer over initiatives with client of We Canadian

We virtually role are an surpassed have proud digital where MyAdvisor, of XXXX. can client meet launch had we million advisory in two onboarded the specialists, its a financial clients with clients. personalized with since success in plan with

business. activity. increased detached Turning The contributed limited have smaller growth space, home been very and residential homes strong for desire as including XX% to have pent-up mortgage work housing We mortgage in Canadian driven from has market the A also supply housing of demand of markets. recorded suburban to and arrangements more an year-over-year. exceptionally strong areas

on specialists driving overall to are retention share we gain at focus client seeing nearly strong more new loyalty XXX market continue and rates originations where our We mortgage through an XX%.

as has bank cards, convert cool. by support volume slow travel. $XXX differentiate to going the Of XXXX RBC continue to the partnerships to which RBC rates our we While we base purchase membership banking. housing supported now low drove example, growth of reduction nearly business for alone. and credit expect Ownr, In creating to pent-up incorporation to buyers, new billion With incorporated, year mortgage business strategy to services despite forward advance begins starts interest continue those we digital demand to engaged our this we XX% able XX,XXX been Ventures, banking. in beyond value have in will provides

scale product subscription In addition,. book. offerings Founded, and higher-margin both recently Ownr our including existing new adding to services acquired

captured performance In solutions. Canadian by was XXXX. continues More basis. year-to-date funds flows our experienced industry investment a expanded strong Asset strong we XX% September. strong increased these performance AUM Management, capabilities Turning volatile of driven business, in AUM. sales Global retail of industry three-year advisory Canadian for while year, advice over as to management added outpacing line the outperforming with along in leading to we seeing our very of RBC limited partnership, and attrition hire to we our a active planning this iShares billion management Canadian rates. asset to wealth sales be over retail trends a with on and very in management are net XX% broadly, RBC The generated in our wealth share also seeing benchmark continue the XX% in investment management XX% advisors funds significant of capturing In wealth earnings times, net holistic an and demand where consistently market $X.X

Our industry-leading of in advisors in recruiting the franchise X,XXX nearly our average. franchises. Canadian We nearly years drive over advisor added investment revenue City higher yet organic XX and and saw AUA strong over per XX% the our have than National last efforts management billion is another year two U.S. growth wealth

experienced of financial billion private through hiring our XXXX client since group. $XX over AUA advisors in brought in have We U.S.

to the largest U.S. We account. organically the is advisory which up scale advisor by continue the wealth in platform, seventh

growth City we up XX% National XX% last continue grew to up growth with years also broad-based over two lines. client last We from deposits XX% relationships. these targeted across all by the nearly to will business drive volume efforts at relationships year deepen see National City its strong with and loans and

our also worth high We accelerator high complete strategy financial and ultra private bankers provide clients. to worth net to to to continued add solutions net

net earnings segment million insurance of rate continues This diversification our credit and generate interest generated to to XXXX. high a provides against $XXX Turning income ROE in of risk. source which and good segment

billion. sheet had total geographic profile retail of exceptional results insurance base XXXX. in with since to XXX,XXX added have a which diverse franchises ROE business clients than and XX.X% absorbing relationships earnings Our building generating near Canadian global $X.X risk of earnings diversified strong Capital optimization markets billion of together a balance and record and volatility average a other peers. $X.X results client year, an The lower our strong well-managed speak relative to while a PCL over and is mix,

navigated a strong businesses Our market from global they markets volatile environment. and results benefited activity successfully this robust reported client year very as

to desks to we last Markets Capital over expect X.X exceptionally strong value volumes XX moderate notional and engagement fixed an clients, billion XX over on Aiden, the which the income and AI-based was trading of already to ahead. year platform billion our in launched traded activity and ahead, has trading shares Client Looking further RBC equity electronic months.

the financing corporate clients' through stages also various banking needs We our investment supported of pandemic.

to markets our As our clients capital, take advantage liquidity to thereby revenue. continued low equity boosting interest concerns rates constructive raise of moderated, and underwriting

into elevated we pace do this not XXXX, activity of Looking underwriting see continuing.

was activity M&A of significant most Although some we on XXXX, have pause led through transactions. very

recently financial Nuvei's IPO as very RBC $XX on of to Husky. their RBC as Capital active financial ShopKeep. as In bookrunner Cenovus technology sector, For of on advisor to part the equals example, acted joint as the billion with acquisition advisor acted Lightspeed Markets merger and exclusive active of

our alternate Looking senior our supported M&A ahead, have relentless the communities the our resilience across our We seeing momentum, XXXX on to I coverage business value. our engaged more look to we years. made sectors. them. to grateful to Rod. we our we mobilized speaks operational clients strategy significant in want take And and value each to and over the our in performance Also, in I COVID-XX, impact remain also for our over such of in strength, our are balance resilience a clients, again. term their to advisory people strong to focused will diversified for conclusion, more opportunity well-capitalized In long the sheet, on extraordinary with will U.S. for number key and communities on to are the of core dedication strategic significant relationships Despite other than clients, thank and are and strengthen strengthened strength of seamlessly our support in continue build pipeline deepening we XX,XXX stability the our model client not in deliver invested start support dividends teams we to mandates this executing creating are XXXX investments and our scale, technology and we it shareholders, clients enter our franchises, supporting your with turn support bank an our colleagues also in and to to shareholders. paid to and year. and

billion. $X.X were impact on year, rates, Starting slide morning despite to last speak earnings per was Earnings up year quarterly everyone. interest billion ago. reported pre-tax absorbing from good of shortly. XX. Pre-provision, $X.X and will up which X% Dave We earnings X% share Thanks of of lower from $X.XX I of a the

will were within down down Before margins X% on I key capital, I&TS turn and and of time to the Starting income. segment topics, non-interest spend expenses, results, last which expenses, I net four X% costs excluding some when with related or impact year-over-year year. interest severance

to the was last This majority quarter management the commitment or year, capital with markets. expenses down from continued Variable significantly down either cost in prudent from largely in year. last our highlighted of compensation relatively vast quarter flat

in increases down ago enhance increase costs in discretionary We continued our from and and also clients' and marketing experience. benefit from than costs COVID-related to Offsetting we was to incremental cost which items $XX travel were more further technology an offset our as continued in year a solutions investment related digital reductions on approximately million costs.

As Dave on while investments project key mentioned, being in laser will also prioritization. including cost, we balance balancing areas growth focused

have containment also a We place across in number our of programs already businesses. cost

to pre-pandemic to commitment Looking slowing growth expense expense we with in well-controlled XXXX, line to expect our remain growth. ahead

XX. Moving to slide

strong XX Our basis points quarter-over-quarter XX.X%. ratio to a CETX increased

onset Our XX of now continued will was on strong again partly was by XX. underpinned RWA capital I added by to closer paydown discuss slide before which yet levels migration offset movements this pandemic. facilities points credit the those ratio capital our to to build risk corporate generation Negative quarter. of the basis

reminder, commercial expect quarter. Canadian related going on over majority modification to coming portfolios large basis quarter don't include the quarter, our expected our increase credit this net and we we material commercial of expected saw impact further downgrades we were next credit in portfolios commercial an forward. event, transitional driven a by vulnerable significant to capital that And a XX quarters Canadian and absent crystallize reduction We which approximately migration migration by CETX we is of a the our sectors. lending last OSFI's of will adverse quarter as XX% guided this to lending-related trend reviewed largely Now points. migration a in

of banking from more NIM X% interest declined points year-over-year NIM asset National slide a and quarter-over-quarter to City Now bank slightly as volume interest mix offset than albeit quarter last segment the two quarter. interest benefit Net increased lower to offset from relative level, impact enterprisewide points liquidity. rates seven lower, more business impact moving by and strong Canadian was deposit basis basis personal XX. income basis the benefiting still the lower rates. declined was All points as than of NIM growth. growth down from three elevated last strong At

by continued asset and This more to lower loan the nature partially the Given sensitive impact sheet, negatively of interest investment rates balance yields. offset funding was costs. lower

to continue expect Canadian forward, decline both National. to modestly City NIM and banking we Looking in

both by year be as expect by in income year-over-year than expect volume to our growth QX segments would interest growth. impact more of we lower the interest rates offset we However, net strong positive next

also through We programs and decline sheet liquidity levels roll begin the off continue see to Bank elevated to of balance levels in expect Canada optimization coming more as quarters. the to normal to

BlueBay's Turning private of to prior-year of gain fair sale income Non-interest down net debt change insurance value year-over-year on XX. the or up X% slide and the was X% business.

year management which of revenue with rates. this affected countercyclical was show our strong and over diversified revenue in capital of of non-interest impact of of lower revenue, by impact benefits providing wealth an model The of fee-based Strong nature offset the the of to market-related a COVID-XX. banking results representing Our total income offset performance streams. revenue XX% business non-interest income the markets Canadian the lower some non-interest also highlights our interest

service XX% rates growth. strong revenue lower credit over reported growth interest business beginning provisions volume year. than as was on billion. of from account billion, net lower our banking last card income XX. segment last Canadian was to performance of Core checking X% $X.X banking year slide Moving commercial and offset Personal losses the $X.X quarterly down impact over in earnings for more from up

In addition, digits. up GIC personal were mid single balances

We up banking business driving a digit in year-over-year. and year-over-year. of growth double direct seeing deposit loan our mortgages growth XX%. investment loan strong growth growth with was Commercial are robust This strength extended also balances X% total to declined X% to growth

However, with largely $XX was card service commercial in noted sustained last potential utilization The decline one-off items sequential to economic related upside year. lower of million rates levels volumes there remaining growth. in below March, also underlying from is spending revenue with with

opened as However, up balances we summer. in the slowly see card in uptick economy credit did an the

Wealth XX. down year. million, $XXX XX% from slide to quarterly Turning of earnings reported manager last

excluding interest loan lower on focus more with Retail two-thirds XX% sales sales the from term or City from jumbo net broad-based volume Very of impact of client year-over-year, and sales the of higher growth constructive loans. than loan strong total markets. by XX%, from and offset Excluding wealth expenses, was income net the impact largely year-over-year, interest higher offset revenue in X% XX% year's gain, by fee-based our gain by year-over-year management This management was $XX but due of the primarily mandates. rates. last was up year-over-year assets. U.S. increased Canadian XX% increased Commercial lower BlueBay AUM international impact mortgages. of driven Net the impact down National up underpinned year, by was two-thirds excluding interest BBB wealth asset institutional benefited growth the balances decreased over rates a to rates. last with were business. revenue was management by billion long up Global the rest at coming partially X%. over

up and both market year, net client U.S. in billion $XX also benefiting solid sales. growth higher from We group returns private last AUA saw with our from

update, insurance to $XXX related we quarter XX% due decreased experience. slide discuss primarily annual a Now year to from XX, mortality Net turning income results. assumption million to unfavorable ago, of actuarial this mainly

slide the $XX XX. business. treasury ago the Investment million related services prior-year repositioning as to Turning with costs severance and million included of increased net from a $XX income year associated

earnings were down this, Excluding XX% year-over-year.

Given act environment, to initiatives and this in revenue management assess headwinds challenging in cost this will strategic business. on continue we

$X record was XX. with slide million. $X quarter earnings fourth markets in row premium of a the over reported billion, reflecting in the Capital excess revenue earnings year-over-year over and $XXX financing reported up of we pre-provision, to This in of pre-tax our billion Turning quarter client investment continued strength with relationships another billion, to support XX% $X markets as banking quarter revenue Corporate yet capital franchise. needs. continue fourth deepen

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trading narrowing continue to activity. benefiting strong robust We decline higher credit in FX see and were trading. to trading by credit Rates offset from and commodities be continues and trading fees secondary spreads

the committed objectives. recorded of of year and growth four three X to on stated current significantly headwinds, remain a medium our on term three lower out final level our Despite record EPS of under this slide objectives our to medium and year. given while rates PCL financial IFRS falling thought a term turning We objectives. interest Now five we met short XX,

highlighted However, with differentiated new growth I basis mentioned around our Day. were and over committed to market through to And forward macroeconomic turn increasing services we XXXX remain materially improving XXXX Dave forecasts interest will GDP that, and in productivity, are our expectations. they as and where The curve it and products over our But Graham. Investor earlier, we at June clients cumulative share on a time. than suspending I are the targets consistently our current lower XXXX attracting

and of to impaired points XX markets morning of XX slide Rod Starting basis good from everyone. Gross business quarter, or you last all nearly XX. maybe the $XXX Thank down fewer million due on capital $X.X or two-thirds segments impairments billion decrease. were basis across accounting with loans for points

provision muted. Turning wealth million million quarter no or support loans flat of of to In kept loans impact nine but segments. In new $XXX last delinquencies and payment programs slide business basis was points PCL down points basis we markets, lower XX last down impairments offset Canadian PCL impaired quarter In required $XXX PCL or from of million quarter. on on million were was was impairments capital impaired impaired net all the from $XX and this loans relatively management, deferrals of points quarter on loans across the million PCL impaired XX. or previously as basis impaired provisions banking, $XXX to loans. eight $XX government due of last recoveries had for by to

$XXX XX. quarter, maintained at or mainly a allowance to portfolios loans slide and markets. down with million $XXX retail consistent loans This capital from We in performing strong our resulted in of which this credit billion by quarter quarter. and of from PCL acceptances, prior is the X.XX% banking last losses on Canadian million $X,X Turning out

bond of quarter as to well we regions XX% were U.S. there to prices scenarios resurgence due containment where we rise our give house weights equities for favorable elected the to GDP While yield, forecast and increase many our term COVID-XX the in near and of of operate. this downside the the growth, changes cases to as measures the U.S. Canadian by

relief starting early program This which off X% banking deferrals lows. October, those of billion less active have place. expected balances XX% $X.X represents a the slight Canadian X% are nearly stage less of from portfolio which At with delinquent, of as all by put deferrals LTV Alberata on the deferrals, our mostly on slide Of has the of prices comment of deferrals expired. our March greater of referral XXXX. by are residential were the have client HELOC. with mortgage offered delinquencies become in balance retail roll our Only December the QX remaining Canadian banking the third prior programs, of XX. than to XX% rolling relief active has delinquent in of retail off a in end in now Of from resulted which portfolio, me includes uptick to Let being over Nearly part a XX%. a are the current seen in the those X% are than decline deferrals, last over uninsured years. home than majority few And which of active these in balances the

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[Operator Instructions].

of Securities. first Please question Ebrahim Bank from with Poonawala Our go is America ahead.

for for outlook parts. expect think guess like the your I you, we year. migration it have listening question One, for banks you PCLs, to sounds as yesterday, accounted Two to next and morning. Good the see peers, the a we just about Graeme.

if go think And to you are is PCLs to it outlook, just we can the And used PCL performing? assume bips we Thank see when were terms that releases that expectations in could you. soon XXXX to actually of pre-COVID? to XX, we begin? So to in safe shift around about we back your what XX the speak reserve versus the impaired how

latter would and are that way your look out term short hand, the facing will certainly kind the it working an that and one into impact part a see on we like impact have headwinds of our second that and we on Thanks, question. impaired Ebrahim, vulnerable think then have question the as I wave recovery. of sectors. of certainly through as an But parts, are now, break means we two what XXXX, our kind will Sure. about talk the maybe piece bit overall. the we for I into that But

see off as those normalize. impairments things will getting deferrals time of increase of through a XXXX. and well, delinquencies over increase that. and to particularly XXXX, backend where see start support on delinquencies As thus And to And come levels will higher together, the starting of do we the government to we backend rolling world

through the see think have frankly the through and about of you And so and this uncertainties that's year. built kind provisions quite our we pandemic very mindful performing point. kind When it there, certainly up the XXXX, PCL that. with of flowing ACL how of associated we

And out two of there are factor are there about think and allowances. our that regard, a coming vaccine positive so stage go one the we number will that in while into how are like news pieces

that two. be the Stage future But in considerations that considerations it three, drive we future foremost, the to two will the actually is our our incurrence and drive we other one loans whether will incurrence expect to would address impaired will have of and about in that biggest that we I one stage of we in and materially as now. area think, driving changed the thinking we has world think there we would two. expect consistent that under and one there macro about really kind I has stage one manifests, been First put with from where stage is what To-date, factors how of been and are Housing largely, right trended forward. projections the forecast say materially we the started better the there, and books, particularly out through But are worry risk sectors those we with. the those some than work commercial had vulnerable about. kind as key consider what of we of that in areas

as how think as be of is are there. we somewhat high a a put we uncertainty all on out, real reluctant the And balancing through But things degree think plays there that we those pin so such XXXX. to to would I number

Got it. Thank you.

you. Thank

ahead. question next is Please Aiken go Barclays. from Our with John

Dave wanted not talk the and to the are asking what ratio, XX.X% to the for morning. capital. Rod, uses or capital usual Good I the

at if capital have in all And XXXX, I do go done? we I the more hopefully might is although I all think it out are been environment, Is saying a going where it you to know we long migrate? go to with that. of that coming now. time everything philosophy think when be terms sits your be in when think normalized But is are we would look we mean to of said what a going What And up? and able today? where Is down? going it comfortable to you for

the it's value And a leverage start accretion, are and buyback to whether world where John. as them start, regulators into or will are of capital, we in. Rod adds whatever want I we to chime buffers said, will to more or our you growth then let where Certainly, value. to restored able normalized shareholder I this shareholder as think

we go a as was, view would were that and surplus create roughly. capital, do world, of in through normalized that where therefore to to not more shareholder we the level value. run change we the as that, regulatory to like bank kind largely So XX.XX%, where back from If think pre-pandemic, to we we XX%, things where normalized would perspective, we that a like would

I Yes. Graeme from and But dividend year talk to $X.X we buybacks chime would the of on a I outlook the share that about And and billion. increasing gross makes the ago recall, we just about of impaired pandemic. are for loans sense had was listening allowances billion is, obviously as the total other given restricted about PCL, element $X and

Now we billion reserves, gross and impaired $X.X have of including loans acceptances, $X.X billion.

that our losses So billion well-positioned pandemic, we through initiatives as growth in to fortress as the a think about have balance excess we are capital plus our going strategic $XX our seen and $X.X this and come organic support strength sheet. billion And of forward.

for color, Thanks the Great. it. I appreciate guys.

Thank you.

Our with Bank question Dechaine National next is from go Please Financial. Gabriel ahead.

one it's banking, loss scenario do through all see not $XXX you programs? This Good that at for if your added morning. a support at look Canadian were by that there going that reserves rate basis be that's as be be as all? A point? releasing couple fair if Like, been. but a would at these the a you points Like, provision. Or million Is considering? what models you them, debate set just you XX might lowest would to, of performing your not you I worth questions this then Graeme. ever relatedly, And for in

support the see that the on start that really support provisions, And Certainly, new you loan said, by-product been as Gabriel. thanks decline place as quarter the in level clients out the put supporting provisions formations marketplace this our due part that's of this the really quarter to in we to Maybe of in consequence certainly three in see muted, So, of impaired that. the stage those a really level that's we then driving strong Canadian and clients. the government huge a I the being banking. very to programs deferral

form. reversals in is this So not about the that or recoveries

been, you asking at would is what three in, that. it PCL. otherwise as flow the you what our the point. So I you that's to kind context haven't if And look impact have pandemic would really I mean seen lens else-wise? normalized it kind stage more of a this could driving that through the And would consider be will, of we of are because through

on of, really client reflective it strong and very We drive super Additionally, our base the much we I focus think, I prime base think is prime at Canadian there. banking. client very

go client a that isn't won't at a that high-quality pandemic, And position all us I comments the thinking so think, base say again, we be it around my impacted but base, does, to in in which do have to to client earlier through And the go and around back this. very strong I stage then, one place question your of two. kind here. other mean, I

other This some our improvements quarter, had again, forecast in around modest we improvements in HPI, areas.

We positive wave that of second did get would are perspective. that from the kind seeing about manifest be likelihood concerned certainly the we So ACL an a more a itself. of and

were view and our an seen other. And kind in that our really, QX comes government us management's of And play how slight that's our to impacts all with overall the haven't of up a discretion took are we post roll increase like some there then, bulk out new we of so we each information come looking at materially. in what the adjustments back where built over come vaccine will light we kind of kind eventually work as really had took those that we important and off. in the information, performing competing weeks. view to forward that when really And have those and would think balances. things of QX We Certainly, QX change through we spot forecast, the into support of couple kind ACL. well through but the here in And comes is offset new as last in go analysis here

as lot and what economic carefully to a impact QX be all are those of means. to have there's that thinking a we into us led will that kind alluded as to there will Hopefully, be of we that to going that's Dave still kind in that, how unknown QX. through as the of will year. in So recovery line something of this But for thinking better all our sight factors information

with struggling Yes. is we the And it like just figure that. all out to off. all I everybody sounds look like trying these guess, support are roll programs what when ratios

thanks. So

Gabriel. the question. Take next Thanks

Thank you.

Grauman is ahead. go Scotiabank. Our Please with from next question Meny

morning. Good Hi.

do Just something there that say? buybacks case is, turning back be now, But in also believe understand that to is be for for I to view? allowing a the that your good would a let's is to Is want you made I buybacks. argument there valid cautious.

clients, to if next think, six kind I there is Meny, and extended and the listened you on uncertainty government around of the support. notwithstanding of the the all nine our months of this our timing impact Look, commentary to

I a in as we And client So very well. have are evaluate we trying really through largely have focused and client base sure-footed, existing that. understand you growth areas growth mortgage client. are where It's an where all particularly growth of that we think we on to seen,

saying, little So take if you we would think a were sitting capital, premature. if it's could, here today I back you

we want more see think still recovery. We rate. want to a more the to And caution I I should stable a see think day. stable unemployment rule

in a start regulator to now. it wouldn't world, see So the progress, stability would things we more push right as and be then as I appropriate. clarity But normalized

we to think I going the we out at bank. prudent So look and are in uncertainty it. manage There's you that's way still how there be have the to

that. follow-up a just on And

point other We used and the from an I workarounds. it's second consensus economic is that have first current to maybe hearing damaging. they are are wave think lockdown is the getting of This view People less a from be going teams wave. less and than management to it damaging

how cautious. terms would the the you you lockdowns? Or round But of that sort of share second risk in view? at sound You would look of here

Absolutely.

play. have sense of same and going comments will are Graeme's the was into we think how And the lot second I we in wave not lockdown. learned it a around

We There's have lost. unemployed. XXX,XXX jobs out X.X the million million of still three recovered

segment, remaining of narrower So forward. a big a of Many kind the are industry. step XXX,XXX a service that's in

in bolstered So impact extended by addition, absolutely, the second wave. wave, have will than first less support the government

that, businesses that growth That's and really a cautious taking products lending you said franchise just at Canadian capital volume have seeing very the and the seen you approach. across to banking our Having are franchise. are strong We to significant all deposit wealth from products. client growth growth markets

with our still that manifest are we operating in see profile. losses. risk conservative effectively, very a stage three can So itself And you

loan are posture our yet to this. the are we franchise it we very good As base talks at to that sheet and analyst I continuing those our our risk low client think previous commented, are our and balance and losses, grow

I net net, So this are to managing franchise create think long-term finding a we environment. to value while in grow way uncertain an

a Thanks lot.

you. Thank

Scott Chan Our with Canaccord ahead. Genuity. is question go from Please next

it go morning. right. Hi. and want just Good Rod, your got to I make I comments wanted to sure back I to

I is in hear that I to about think that, volume guess of targeting you talked correctly? or trends? talk with your the that And about I versus that could how NII kind get kind comments QX did that term one intertwines fiscal U.S. back and margin maybe you near on of growth compression line. bank XXXX are believe you on the the Canadian

Sure. for that. Scott, Sure. Thanks,

place, interest the think into income it when the So net middle on here about largest the player interest and of March. NIM which took was, the decreases rate the is

you about through in second fiscal XXXX. are our So quarter talking halfway

quarter the XXXX, comparison as half it we the to year are are second So higher rates has interest the have from in quarter the for full XXXX, our quarter. In in going for prior year-over-year the you of year. QX last

going So are comparables. those be to tough

sequential is just this basis, a year-over-year a the quarter. muted on On So compression severe. basis, it's NIM it was like

point. for going to four much at the year, seen year-over-year quarters we the as than we that lower be QX so next And roll into decline previous have what is

our has strong, And been will so growth, offset that. volume more therefore, which very than

interest see are basis, QX of sensitive. starting growth rate income so year-over-year will to which businesses in able both a on interest for you And those net be

good up And digit that for on next Rod, of fiscal well of I makes use Is kind level. XXXX, at just And bank the X.X% I sense. could costs look came if low if costs. That single you, to in kind year, range? in in more It the this metric all that were quarter. a sneak one at

Yes.

because next out targeting expenses, this that based than lower markets actually variable we comp see capital and Obviously, lower play We how wealth market-driven year. X.X% other than on element we forces. management that striving for will all But year. are are higher there's a

you very Thank Okay. much.

Thanks for question. your

you. Thank

Doug Our Markets. with Please Young ahead. go from question Desjardins next Capital is

Hi. Good morning.

you of like NIM so with it's the year-over-year that the on holding. think NIMs, all excluding what that side. you sticking the excluding and trading question, down But like we Rod, the bank pieces. that are I liquidity? of excess Just, as been has that is focus see liquidity the through maybe amount do get out? come the XX from impact because X.XX%, moving some all the look you in I to forward, points of on two anticipate how the your you being wondering, has basis different comes NIM, liquidity that of I two-part If as what And kind at trading, impact bank on some the unfolding Should of And next backed out? years just over would

Yes.

there's balance of So that. part now excess always sheet. in you on assets the part There's NIM. we the a right on a on that the cash on and bank have types the lot have of that just a noise is mix all liquidity Obviously, playing depending

little would and I there look a right. you in a businesses how of there's things, as as But growing bit well. it at are certain So few nuance certain levels

second we into year. next as are As quarters third some rolling and off programs of the government get the

to are liquidity. back, be is some to some So money and going some going be are repaying of of the those that going strip we excess which winding down to down of programs

would growth, element case our is we other to year. growth our wasn't that outpace this deposit the which expect The loan

happens, we will then comply going years. than lower that this was with into been next and that that be But some also previous year XXXX, lower expect of going as term and to year we lower TLAC. also, be be to And use it's to doing excess in liquidity. has So funding to it up going some are it

help. also going that's So to

not point have of be putting Yes, a bit. there's a it. that pressure the a whole from be the double a all going are low. But But upward digit those let's of going momentum little interest lot on basis to on exuberant So overly upward are not to bit rates perspective. up longer of come because get rates

And just -- to maybe follow-up,

We are here. over to for our let trying the get few know I everyone a year. minutes. were speeches the plan of do in at longer We on going end

try run the will to queue and clear we here. over So

and question. on move let's second please for So requeue a

you. Thank

next TD Please is Mario Mendonca Our Securities. with question from ahead. go

morning. other you. for line. at volatility on fairly really probably And be income, has but when I detailed, I there significant been Good so Rod, your look other wouldn't in that It's focused --

Mario, line. we lost your

are We operator, lost go the you. Maybe, will question we next we to -- and

Mendonca? this We connected got time, Mr.

now? me hear you can Guys,

Yes.

hear Can me now? you

Yes.

volatility I Sorry go sort about line that a significant, than of that. more the volatility Rod, all in that we Normally, income line in a so wanted the a past. number quarter? little other care in other and a question year? income. the it of this have can fairly had year, here income Could There's wouldn't a about pretty there's what's quarter-to-quarter. do And other on a nitpicky this I large talk lot this you swing lot caused maybe much. to But is fairly significant in bit specifically

to information right. year-over-year, Yes. which unfortunately, in accounting in help that. some and there of last BlueBay find is Because gain we key Sure. was thing And the should well, a kind to of this, lot is put had maybe you one million, $XXX year, the

event real one-time drivers. you QX on But a a then recurring So basis, was XXXX. in have that three

up what You and but up where moves employees wealth down, that expense wealth and have have invested U.S. as moves in the accumulation that. management, our down program in we hedge

the down, but expenses item. the side, hedge So and one up this the line through in comes side, and move the is other on revenue that revenue on

a typically. typically volatility, that's impact no driver has but So on large the that bottom it line of

income, lot the markets the the revenue that Again, or then, is And on of are versa. hedging, trading element on currencies platform. globally net is here some I&TS side. an through revenue capital some securitization one do element a side our other through third we and The of also liquidity our goes you funding in item and line the across this vice interest offset trading funding other in getting and and

to with gain. about covered So you items, a items exception X.XX% XXX% which I it's year-over-year the those that decrease of quarter-over-quarter assure one-time the And the the three XX% by basis, case. of is on are can also accounting

how on decrease that forth, better So no bit but there's economic that clue you probably we can provide saw and that a line of back goes item. little really

Yes.

just maybe there. the in help So the you. would there get probably understanding a of little offsets all way Thank bit me

Mario. Thanks,

Next question?

you. Thank

Movahedi with next question Capital BMO Please from Sohrab Our is ahead. go Markets.

of good Thanks. how volume mortgage business mortgage new Question business you spreads Like on mortgage is, are my understanding are us the that's can for sense the versus Neil. spreads Neil, growth. the give Obviously, rolling a old higher. off?

So just of circle trying pressure square I in why this Thanks. margin am continue to the on to you banking. Canadian kind feel

Yes. question. the Thanks for

is around touched touched of Rod think, interest Business overall this. I a very the really Rod think mix biggest small on I plays, driver that part on. rates

been say, the would slingshot performance business we there. year, And slowdown growth to would very mortgage our in we say, were that. hit, really XXXX the pleased still, that it's strong tighter. would mix the a earlier in compete and despite kind There specifically contribute are spreads driving of the terms In But market. in with originations I that mortgage terms of competitive has business, of well. out of the as extreme pandemic did really I some definitely relief

that renewed? on rolling or comment you business how what you spreads that new will the the the if getting can is on off, coming compares with So business on,

but month-to-month, even. it's change will It relatively

you. Thank

Thank you.

Our with next go question from Lemar Please ahead. Cormark Persaud is Securities.

Thanks.

a Scott's Just on like be XXXX. there seems question lot could puts into of It continuing expenses. takes on and

growth business could direction we investment-related COVID-related right then travel are come and costs more in And of towards back. tailwind. the some of expense normal presumably, heading the the become if operating some environment, a could So a

And that I your bigger expense do So then are what Thanks. attainable be all for and takes could operating think leverage somewhat puts you would you XXXX? finally, go talk into the in, outlook guess, about positive for XXXX?

It's will Rod. take that. Lemar. Thanks I

a be items. us for expenses, the natural there So uptick on few will on a

we that The amortize accounting As we in growing few have technology capitalize over spend you last and investing we the that. have been mentioned, to requires years. been and have

a the will impact been that. have spend we years have to a spent over but of going That's building cash headwind in us bit recent you amortize So last the that years, as little that continues forward. was that there few

think I folks lower of items overall, the year some this down compensation a for because of lot earnings. came

that have be better a might that and as therefore, performance next we year, headwind. so hopefully And reset

the year. mostly some on with We FTE, line full natural us also for those And this added are there. front the there's as headcount year, uptakes some

low have to that below there, an some why nuances is do you variable you that been overall digits. this programs our X.X% also to year natural we have growth but working compensation So guide single rate which some through, inflation I of able in efficiency increase, the absent the have was

to again, part because it the business And business going what terms of a so of are because the second positive be of again, margins going important that's it's But to two the It's of be of so mix at is halves year. half different. it's are for. big tale we by leverage, aiming year. in such And operating to it look the

the of are you half leverage. better going see operating to year, Second

going a leverage tougher First is half be to of of environment rates. the operating year because interest

All right. Thanks. And, sorry, go ahead.

Yes.

will Thanks. then. requeue We

Thanks.

Thank you.

is Our Mike from next ahead. question go Please with Rizvanovic Suisse. Credit

morning. Good been the growth for time seeing, A gains question for your market have now. wanted some mortgage have and back Hi. very been clearly quite I to strong share Neil. you specifically which to go

you what a picked maybe what your you And outlook does that tougher hanging much So low pricing what's forward, you driver am is forward? from And that if it going point sort of here that to I on I the sure peers? fruit? into have your be how mix. have But sustain not wondering that get am of some where foresee to will into going relative as helpful. can growth a you comment reached goes

regional out Sure. wouldn't leaders fruit. there. it's mean, the we I will any hanging I competitive question. definitely are say of is exceptionally Thanks low you the our tell for business I winning earlier in think Obviously, we don't distribution had to of competitor scale. expect competitors that year, one sort of hard would the us. was the come there I at say the all our back

consistently our grown I of have distribution consistently, really have we One, factors. guess, capability. sort two We

for and down. We looking sort staff are quality bar. we of mortgage So specialists. then up We a really set staff don't high

growing of are that sort that over force. clients. kind specialists we are always We of have sales And X,XXX mortgage out with connecting

I that's, first the So piece. think,

a times The really driving about is, second the growth market of last year. talked the piece we the of in and couple this share terms over

have part through and really gone often that business. optimized felt have we We each of

year lead I generation, lead from really pandemic compete get really the and how the started all are well. out to adjudication, cylinders we and firing the fulfillment, well-positioned come right feel So conversion, of we through on we through we think

capability think in with that seeing growing good So largest BC are that in you representation and really the growth. Ontario, Quebec, the are and then markets our sales where I

our going starting So that's do growth growth see we sorry, I Rod wouldn't what we think mentioned, coming rates Dave to are or but this really think a off come of rate. off, mentioned very say I see had to of I sort had level. to continue fundamentals success. high the is the

And just quick. real

to contributor major gains? is So your recent a pricing

would take say were basis say we It when uncompetitive. lead found outside would points be No. was because is very a is something not price make become few I triangulating price of I lot product-by-product, region-by-region. do constantly do fragmented, we the we and mean, ourselves price. with we And to we we we not a market But competition. what the are lead sure it's price. work with

target Our be advice price a competitive and offer better to with is better reach.

that. Thanks Okay. for

margins the that. you the on best previous that And heard mark have stable, been is which question

Next question, please?

you. Thank

from Please with ahead. Paul Our is question Holden next CIBC. go

question. Thanks taking for my

next six, risk you how being and of And pivot and pivot growth the so loud areas see? the that will you or a lower message your clear post-pandemic on what heard which nine for think to eventually we world, happens? growth to on I different opportunities. in months Do to? continue conservative be might pivot of So Wondering about when focus those you to areas you could need think

look share share and you in management the businesses our have good growth in the are to solid job a in continuing gains across capital we bank, market markets and I think serving gains all our the franchise customers. wealth we market if and doing exhibited at that of and Well, retail grow

not the risk we have it's on and books. defensive a any putting business gone like position into So aren't

We our well. very are serving customers

our driving a rate. allowed clients think growth. cross-sell investment And and that's to has I our retain I in greater us technology think to

So reengineering the rates that. historically when from focusing retention it's are, at you see on and mortgage the levels high they processes

I want are we position. a don't people that risk-off on So thinking

otherwise, indicate would think the posture. I growth Our

you income we come the that had to some time this growth as contributions out to a of going this, net from see So businesses of are hard have year. our

Our credit has pretty see, as card product $X using clients revolving are and payments, can down, business business, been activity the billion. aren't almost the balances can you way. stable, aren't but rebound. same Card our That

wealth the significant the our interest impact. States, had rates significant seen in on have You United franchise impact have

back be We have That's earned through that. to come going a contributor through that. we as to growth

at really growth. As volume client we look our activity drive levels

manage don't risk into We change how a change risk-on through through go appetite. our don't posture going are a and clients really our us we we big should We to So with Therefore, cycles. markets It's are. our capital our position. go that interact our we not to significantly drive cycle. the should DCM, clients what clients foot underwriting And drive more see mandates, their and commercial business certainly will front needs and that activity, and ECM. on M&A clients risk

levels, are really well-positioned for. And we so those activity

in franchise. invested have this We

you our see, as have As can referenced, front up. line numbers gone Rod

in staff. to We by capabilities, year accelerated with are investing the ourselves emerge end the investing in momentum an at positioning of

in how shifting and getting technology. more foot, demand, value front investing for client to that's So are ready client the signaling we

So relative position we today feel capture this. our coming to very are and further of out good about we growth momentum where on

you. Got it. Thank

Yes.

We to the clear queue. take and try will

questions. a got have We few more

you. Thank Okay.

go Please ahead. of Our next Poonawala Bank Ebrahim Securities. with is from America question

my Hi. Thanks for taking question again.

have on franchises I M&A. book. And to allocation. best and be of M&A? ruled that probably get a out expect stocks Give as out, get we to trading you it how times allocation stage? to little of when to we you comes get if you a buybacks bank fair want term. that to stock is us creative beyond two type again, of look capital mean, capital Just a more near you follow-up, of to the about looking bit sense think close I for you a cautious price Completely be a think, which to the bit more in But one valued Dave, when brick-and-mortar buybacks versus shareholders it kind in terms and But is I

We grow looking shareholder for value. to are opportunity always

you looking and we parameters returns the that shareholder make the at, we of to signaled We kind an are returns. and have the shareholder if those would acquisition of timing

First answer, to my I but it we significant growth foremost, opportunity. again, see go and organic won't previous through

have seeing across made. You growth And are the we our investments businesses. digit double that's from

use So the we are going highest to ROE. that's and capital

the got momentum synergies. drive franchise You we look there we focus shareholder have the have It for It ratio. QX absolutely, fit. opportunities. United But States. the driving XX.X% in looking us a we right a scale are on to CETX to to And value. seen has deliver have you cultural significant to we have tells XX% and in continue at ROE a It has

journey. back be in not doing that We and have anything. synergy not are confident it's like But to sitting we

We are looking.

We are thinking.

will an checks the growth that absolutely opportunity capital to we a that So surplus execute if itself there's presents trajectory. that boxes, use

We continue generate of And surplus plans capital. to meet to trade-offs growth are our and the just expect growth organic we that first. very organic have, conscious we

create you. perspective, flexibility value to So have I it that forward, use for and think to looking from we we are smartly significant strategic going

three So looking And absolutely, you Rod, want did are at in? we mechanisms. to jump all

that a price provide two to will value. Yes. to is I discount XX-year now XX-basis our point just are One Ebrahim, at points, right might help. we trading data historical book

So something that's in keep to mind.

book even is The over value shareholder this annually almost into other value which grown X% we driver key years, per at basis. last share, have CAGR a our is of pandemic, five on the element a

as has those that drive sort in. So come growth organically, are that of you that able Dave and factor are should all largely considerations cited, other to of you

question, your Ebrahim. for Thanks

Thank you.

a couple few to minutes here. maybe have more, We a go

Thank you.

Capital from is ahead. Movahedi BMO question go with Please Sohrab next Our Markets.

back as to well. again Thanks Neil, Yes. for affording requeue you. to me

amount get given way you see margin expenses, around do good margin without of know want segment for around? a interest can outlook and discussion this efficiency total net segment of turning the sense but you have a the there's improve forward that banking you I Just ratio to for a where the been

the is Well, I think, we Rod of basis point a just story. two a quarter Rod that A business sort year Operating or going like touched really specific building on other is as about, per rates comments, that things the Rod's midyear or into just on picking be half XXXX. on up to our impact. of beyond outlook of talked to back our for interchange signaled, leverage, NIM, couple things

fees. other of As rate. next we income waive half Things into we of, run our services card that get the in terms line, certain second fully now year in into would that right be

into We half will will business and occupancy off the rate fully see rolled take that of costs. the And Plexiglass We have on like XXXX cost. then us invest credit COVID interest sorts of the cards We in relief things to provided things. XXXX. in be don't back same type of need those that

positive the start gains leverage see when to that's do So the back half of come. start to will efficiency for opportunity operating next and year, see we you the

Thank you.

Okay.

queue. answered all have questions the think I in the we

So to businesses. I momentum just want And today. just to would our attending Number from one, and significant what today. away all we Q&A take thank client the to and everybody for you across speeches themes maybe like the summarize our

capital client and as the at performance, and year, AUM wealth market look trading, banking the And at will the exit investment in more in You that AUA normalized really you into continue markets, when grow. share growth that outstanding flows we growth. bank, look to franchise gains strong momentum, retail a

record you three at feel losses. very same good. At we low So look stage the almost time,

our We are franchise. growing

sheet. balance our growing are We

It to continue risk well normalized sheet world exceptionally very managing to We us work. are a positions balance in well. put our to

franchise management client the Graeme that risk would say our our capability, I works. quality So of

I take you comfort. think should So

We are level. growing this at premium franchise a

premium We ROE. are delivering a

in managing a fashion. risk are our premium We

We gives ratio. us have out enormous CETX of got It flexibility to very feel accelerate a good. I premium this. strategic And

ROE. that about you keeping our In talk levers heard addition a control are premium all low and with momentum focus cost on digits. value investments, Rod technology Those create at shareholder to single

we very I So think good. feel

that's the to and and we season to you you I talk story Have in think wanted will the holiday your today for thank questions. that we new tell great year. a certainly

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