Royal Bank of Canada (RY) 30 Nov 222022 Q4 Earnings call transcript

Good morning, ladies and gentlemen. Welcome to the RBC's Conference Call for the Fourth Quarter 2022 Financial Results. Please be advised that this call is being recorded. I would now like to turn the meeting over to Asim Imran, Head of Investor Relations. Please go ahead, sir.

morning, good and you, everyone. Thank

us be Speaking Wealth Head, Personal Executive Chief & President questions, Management, joining Chief Commercial Group Banking; Group and McKay, Nadine today Risk McLaughlin, Ahn, Head, Head, Also Hepworth, Insurance will Neldner, Officer; Graeme Chief and and I&TS; Capital your Derek Guzman, Dave Markets. Financial Group for today Doug Officer. Neil Officer; and

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

good and last client you $X.X offset billion. everyone. and Capital interest of income headwinds over increased Thanks, Thank interest underpinned earnings as us. from by XX% partly for and income Today, demand. reported interest market-related clients rates higher businesses quarter Net uncertainty our macro risk-off Higher Wealth Management geopolitical pushed stance. was Markets and in Asim, our morning, year, by we a fourth joining net towards

true-up an were PCL Capital also and performing end-of-year variable in results compensation. Our impacted higher by Markets loans on

clients' year met XX.X%. our record as as generated of revenue XX.X%, Looking second on are nearly supported ROE Both back ratio strong the objectives of with our $XX the ending delivered earnings nearly $XX at XXXX CETX of medium-term financing billion all and RBC while the we fiscal We a year, highest of of needs. we billion.

while $X.XX our X% dividend. of with paying buying the of dividends payout our $X our common commitment out nearly billion we increase XX% this value to an stock. morning, billion $X long-term or including to of in year announced shareholders, share part And delivering a back total over As ended ratio, we quarterly

discuss uncertainty Before coming over and volatility, initiatives affect impacting Elevated provide years, the environment. continues will and is our which growth I in public drive valuations in my markets. to activity sentiment the private perspective I macro market investor asset and turn the strategic on will both that client

the stems a political This markets favorable growth. inflation and labor aggressive maintain pressured appears strong instability, we While peaked, stance housing picture on to sector and paint central from geopolitical outlook manufacturing policy and prices, energy economic caution a our cautious and banks. an have elevated for stance by monetary

will RBC's growth continued vectors end the I interest brief start may to will economic us now higher rates being on are what Canadian our sheet impact combined system, by stability, of strong with has employment With our organic competitive the context, believe are and the in balance investments likely monetary strong long-term underpinned many all delayed to value and client credit business. preserve recession. expand moderate significant We succeed and Banking enhance cycles. Although to policy, in liquidity needed lagging advantages a our that proposition. this with up I position

the we #X J.D. in Our everything ranked are center by customer banks Power, X are do, that again overall yet of we big RBC clients the and XXX,XXX among to Power at than was recognized retail year, added clients proud note Best a Satisfaction J.D. Canada being last two record application. more with in a the also while years Customer banking this mobile for for the combined. We award satisfaction

more clients well-positioned attract have even place, in are to we Given the value-added initiatives year. next that we

record approximately XX,XXX highs. ICICI experience cross-border Continuing newcomers expected a levels in reach of for banking with to Swift solution connectivity, launched theme to to as foreign payments $XX,XXX seamless Canada Canadian Go that a is enables the Bank RBC to new Canada businesses currencies. partnership on send of attract international Our immigration to recently create clients up

volatile the why is clients reason and which This is of the than lending. rate our And clients that built and XX% topic payments a further. driver helping rate a have have funding one be consolidated between continuum, built product this franchise, mortgages, this the core interest Our Over further a is higher deposit-funded a relationship a market offerings. we crown credit best grow and environment, incentivizes savings on of million profitability discuss relationships. investments our relationship money Vantage our RBC deposit Canadians success make balance strong a jewels believe environment. the consolidation client at decades, largely adopted two partly and expanded of sheet over of a in X.X of is Deposits, source to our will Canadian in we average. bank. and business RBC continuum peer rate low-cost cards the and have of Nadine decision key It with will their broader foundational rising

also a $XX this over leader billion product in anchor We year. this remain residential mortgages, growing by

out is focus for advanced cost. process an deliver journey better end-to-end Our while to to experience a clients home building take

origination and given in volumes declined imbalance, rates peaks, rising with remain interest pre-pandemic line levels. supply-demand mortgage have While they recent from

near-term be be to year. mortgage for mid-single outlook expect appears constructive. growth more in The next lending the commercial digits to We

next recovery of given are plans confident continue investments. and couple will post-pandemic over quarters the client We growth

team WestJet. up and Quebec our the where Atlantic co-branded XXXX, X the loyalty credit area launch strength Canadian to with card to looking of will banks the we with Greater and highlighting Canadiens RBC's honored in sectors. big the in and We national METRO in our expect for Petro-Canada, to Quebec, largest Regionally, discretionary commitment with are collaboration in our adding the particular Montreal see commercial with consumers new consumer province. a partnerships on Rexall to position to also as expected build the growth We're is the to primarily provinces. agriculture Toronto continue

to acquisition cloud-based a funnel. continue announced physicians, up strategy platform expansion the medical acquisition that year, we simplifies and an Canadian Mdbilling.ca, expand with also of of this move billing healthcare for our joining Earlier We opened which of our Ownr, venture, has in is Canadian XX,XXX XXXX over an alone, half new Bill. which This Dr. RBC small in helped launch addition to investment account. an in businesses RBCx the business

account continue as talent added and digital such client-facing Additionally, invest specialists in we managers. including employees to and X,XXX in capabilities. Canadian this roles nearly year, Banking mortgage commercial We

capabilities in diverse Wealth UK. and Brokerage platform hired Despite advice, trusted RBC global Securities capabilities market Turning the Management to XX the investment Report U.S. least and and of to now is of was business, to a We similar value this This $XX scale wide Canadian relationships, well our a are Management most year, volatility, added new Dominion experienced client propositions. at recent positioned range a of #X Card. banking last highlighting set client are amongst ranked deliver Investment the level solutions. truly year. next hire customized wealth Wealth in the net of strength more firms Executive looking bank-owned digital our billion advisors advisory and than Canada, with year, assets

our RBC supports as Our in recruiting administration, a Advisor source of US$XXX under over support key is banking more growth. U.S. Similar Management needs driving billion than the $XX more clients. U.S. strategy, advisors, firm business positioning advisory expected full-service of the to billion products Canadian U.S. wealth AUA than of of Wealth sixth to largest assets been recruited having growth we've adding our the XXX

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U.S. supported sweep deposit by strategy is further balances. broader Our

growth the platform of market. discretionary Ireland, Dolphin, one largest the Brewin We an also in welcome attractive and UK managers another in yet secular wealth adding

again We Management income businesses, last and will lower recognized Wealth across tailored was offsetting our Asset the up at future. from more replace -- year outstanding Management look RBC our American banking North Testament global Fund interest American performance strength investment extend in was fee-based our the revenues. Awards. capabilities to for Net the XXXX to to Lipper its platform, North Global replicate than Canada the strategy of yet

of profit is XX%. AUM $XXX approaching a a assets. is RBC over While declined National significant City backdrop, amongst billion a with now has pre-tax tough generator margin GAM in almost

is of growth infrastructure and Given its net than years, we higher more expect increasingly outsized improving over the coming year. our framework to in Nonetheless, technology focus the expense offset bank. profitability on income growth and the interest the both

earnings Turning clients individual insurer bank-owned to our provides diversification to risk, ROE credit Insurance disability. a against position largest and million in RBC and leadership segment rate interest high serving generate which X and holds the continues is in Insurance Canada,

our the and our billion we're capabilities more us acquire Aiden & table. full on new asset recently while activities our Capital aspirations a launched solutions, of our delivering platform, the Malaysian not Memorandum up of trading support Starting our suite in pre-provision a on clients continued home Markets ninth expectations to and on investing capabilities focusing far league these Understanding will execution in to pre-tax at generated on Treasury moved billion XXXX, tables our CACEIS volatile now product and algorithm Corporate normalized move the Excellence. announced environment. to market with the our to platform, times. same with develop view pre-provision Canadian for Center asset up traction, our our associated Markets next $X with quarter services where $X.X this Global we our signing earnings to pre-tax in our year. time off to clients which Investor are in has to optimize of to during in Services Banking, This We XXth transaction global we earnings generating franchise better allow Arrival, of the league & from operations. European increasingly investing gain per Markets supporting year, Earlier last focus electronic Shifting a has Moving RBC of servicing its Capital to Investment AI-based in platform.

to towards continues streams while revenue Our ROE be relationships. focus deepening activities shifting and client advisory higher

and having also relationships with corporates from We both broad-based strong public private market sponsors. capital benefit

Our success is on our also in investments people. built

to hired directors We last to sectors. the years, over have the particularly and we two will in health technology care managing XX add look the

deals is to three and market Looking expect financing cautious including converting forward, in net access inclusive in response including on our on approach clients businesses, In healthy organic automotive. conclusion, power a and of rising as strategy XXXX, clients sectors, we namely, key to oil we story. reduction we significant generation pillar growth costs our key zero, opt in gas, their but more and We conditions, high some achieve in in emitting orderly XXXX sustainable this by committed $XXX with helping to our accordance to to our challenges challenging towards billion for financing remain zero role lending execute commitment just, net a pipeline a strategies. sustainability and in our own transition by continue to to Across NZBA a build play for providing In our emissions made interim our goal. climate markets. is the published targets recently strides and

also as have compelling. of Brewin banking the of XXXX to consideration locked the this HSBC also Wealth need needs, a over would agreement, from clients also the welcoming a earnings. Canada, and our client and colleagues synergies of newcomers expense we fully us It bank synergized billion, of It approximately yesterday, positions Canada our international you. the excitement Management in than to and and clients $XX.X offers acquisition revenue capabilities. who to choice You transaction of less market add given Nadine, we net heard global in for potential base commercial an implied affluent Xx box know or is announced with best. opportunity And and financially Dolphin; opportunities,

in strong Thanks, income $X.XX elevated revenue start earnings were more year-over-year challenging up Management more revenue year Slide will share impacted market offset revenue in Slide which good ratios conditions, our per per diluted XX% earnings XX% capital reported as than last $X.XX and businesses. was on fee-based XX. X% of and up year. will interest or Pre-provision discuss growth, was expense shortly. Accelerating I than our of growth which PBCAE. growth Dave, of morning, pre-tax with this up XX. from everyone. X% quarter. on net share Adjusted We Total Investment strong Banking Asset Starting I up offset earnings last from net

from points the last to Our of than strong $X.X completion capital our to basis the more Dolphin offset generation billion which acquisition, of XX points declined basis common CETX due net of XX shareholders. dividends largely quarter, of Brewin ratio

share balanced buybacks also Our return strategy of capital billion $X included quarter. this

multipronged strategy strong and We in continued organic growth our lending. both personal commercial growth by driven

in However, market commitments prior RWA was business to slowdown than quarters, in due activity. growth a lower largely the loan given reduction underwriting

client-driven of to support of the from XX Looking impact expect and fiscal will continue of ahead the XXXX to III impact benefit Dolphin point recovery we in acquisition RWA Canada the Basel early the offset the organic XXXX, Brewin the reforms growth. into expected combined Furthermore, we basis dividend. the implementation

light will defer X% of discount of macroeconomic activating the applied Furthermore, we our Canada to are repurchases close to environment, in However, the until HSBC we be anticipated plan. uncertain dividend further the a acquisition. reinvestment share

XX. Slide sensitivity year-over-year recorded revenue. or to higher excluding basis from results up XX% in net All-bank XX% margins to in the are points to income highlight interest higher offset to in of trading Canadian on margin quarter was by revenue. earnings Wealth its was basis higher while the yields rates, floating certain last rate largely volume. Moving was Banking These City up transactions, the interest cost related asset-sensitive recorded which National's as other the as well I&TS X due quarter-over-quarter and XX benefit from Management. up All-bank higher were gains interest net points interest loans. both due up is expense NIM commercial segment funding margins Higher partly

base. Canadian We by quarters to to which are our ratios a rates. on cost sheet our coming expansion quarter. they is ability to low-cost XX, which with a profitably Slide There of funded ratio to demonstrate loan-to-deposit are due NIM, funding from majority the interest rising up largely points driven expect balance foundational growth our at basis the rates fund through On XXX%. moderate of last matched as in deep National was to a margin City approximately XX with to two deposit higher loan our sensitivity rising dive One Banking

of deposit The base, cost second represents is segment which our XX% zero low deposits. to

this starting to quarter's NIM, Turning drivers with of deposit margins.

rates time. from to This are driver a up rates, past interest a relative costs, medium-term of strategy benefit higher over partly deposit helps a key the smooth hikes. swap rates reflecting low spread interest providing driving beta changes in higher these deposit of rate margins, While are also the of impact deposits invested while latent period

bottom to as As are should past continue environment low the at maturing from highlights, ladders of illustrative deposit the yield. on these expand the deposits example rate margins right reinvested higher

impact clients seeing the of margins. on has are a out checking GICs, we into Although move yet mix in accounts shift deposit higher-yielding to have significant

utilization fund spread an worsening use lower to the of it's are the levels. Canada revolve anticipation and Offsetting spreads contrary, to Bank On in reverse which rate similar card commercial these lagged announcement of had GICs have short-term advantageous assets. rate negative time. higher between competition to credit a term credit intense the due of offset expect loan positives and short-term and spreads, Furthermore, the spread given between increasingly which GICs to impact, mortgage rates we prime despite compression over of declined rising increases

interest Looking expect largely sensitivity rising lower Canadian to strategic forward, we a hedging activities. reflecting rates,

against the looking to rate rates to protect increases. closer downside are benefiting from peaking, implied Canadian while may we As be still

Canadian coming first is NIM basis most rate to year, XX expectation point current on quarter. outlook while the current based next Banking basis in XX for point the increase to the of through increase Our

our the was estimate in Moving months variable half were nine quarter. NI the driver full to Dolphin inclusion expense XX. quarter, best represented for last year. X% year from of Slide growth in X.X% which up to X%. year-end of of increase up growth, biggest Markets, this the compensation of expenses the Noninterest the with of expense first Brewin expenses The Capital true-up updating added The accrual

market we quarter, to basis, look volatility have single Markets attract full on the level year-over-year maintain and competitive premier franchise. top capital retain the to a to on was compensation of as low basis growth Capital talent expense we digits a in year on a While for our build

operating higher support growth related up increases Excluding base client to a were pressures Technology for X.X% add we investments year, well resulted variable expenses to increase we largely Canadian Wealth or improve costs included and capacity Salaries over the next combined interest partial support our revenue to full value fiscal up our and historical infrastructure level, an recovery sales the and cost investments part stock-based X% as support above profitability. our XX% compensation, expand Management in productivity costs. we the improve National's well budgeting as were rising benefits continue past our market-related strategic Inflationary At to rates, to leverage to significantly, client XXXX, by and salary marketing were from focus operating positive year. relationships its and zero-based for our below travel and be expect quarterly multiple as U.S. proposition. At in mid-single-digit expenses year with capabilities higher XXXX. in level, City driven longer-term expect in as ratio X.X% acquisition to due to our Banking, range, driving leverage all-bank a operational vectors, year-over-year in X% XXXX. efficiency to of for plan. segment And

the year-over-year. than to We now strong $X.X term to pre-provision Personal and this expect segment trends to interest add these earnings offset higher of spreads up Net XX% more higher year deposits. will income I due Banking Commercial billion reported beginning on up & pre-tax growth Canadian from and of salaries. Slide our with growth-related color portfolios in and impact investments earnings last Banking was quarter, XX% lending XX.

to volumes revenue. levels should XXXX exchange balances foreign balances tick remain higher credit growth. near-term XXXX. card recovered below was Noninterest towards purchase to have commercial to credit in Similarly, due revolve from income higher seen up levels, and remain supporting but last utilization continue levels, largely well While those pre-pandemic year card X% low,

year-over-year and year. strong earnings client conditions correlation. net Net from levels fee-based decreased up across offset growth class asset XX% were assets. than lower elevated last weaker lower were have revenue. as fee-based the both Global bond XX% interest this were revenue Canadian traditional due up quarter, redemptions in to very Turning quarter mainly income Management long-term disrupted Asset market Management Revenues XX. $X last primarily billion retail mandates. equity markets balanced to Slide seen Wealth in redemptions were net Challenging industry.

annual XX. and Slide impact reflecting revenue between actuarial on relatively flat also remained Insurance assumption favorable year, impact to updates. to the the Turning largely income of items of offsetting included which last PBCAE, Net

XX. Slide as on I&TS by revenue to our largely funding client and flat Turning income improved lower margins liquidity from was offset deposit lower benefit year-over-year from relatively the Net businesses. remained Asset and Services revenue

XX. down Investment to Turning down Capital year-over-year, muted Markets market XX% banking year, X% earnings to up were in XX% variable were year XX% to and last the year compensation. pre-provision revenues was activity. down Slide from largely challenging due earnings last the from due true-up of while revenue end client environment were pre-tax credit

significant in lending pools, more Record higher However, fee global U.S. the share decline balances. revenue was results loan gains a outperformed across products. on most of record strength

Our client offset This and FX environment increased continued to within commodities rates, elevated more markets. supporting macro perform an activity a markets in credit trading. well, of global volatility environment businesses in for challenging

market quarter largely interest to our origination structural higher business conclude, activity. results impacted were this equities underpinned by Our challenging well rates. our which performed conditions, despite To sensitivity

our I'll to continue turn we that, to drive With strong balance to sheet shareholders. Graeme. client-driven growth it and over to our deliver deploy sustainable forward, Looking value will

context Starting Nadine, macroeconomic our XX, everyone. you, environment. I'll Slide on of the Thank allowances in the morning, good and discuss

robust the strength of majority savings we prices our demand, COVID-XX-related consumer the in Over reserves deposit elevated COVID-XX the low unemployment being release to housing saw of the is the recovery peak rates, us from The recovery pent-up record of the and by first XXXX, levels. year. driven pandemic of as the half and strength. course This economic allowed continued,

a our inflation as elevated and increasing we turn we head for as macroeconomic years. loans the began on saw progressed, pressure was the that signs However, economy market prospect on the prices in asset reflect the deterioration has into causing banks outlook. aggressive Last performing year recession central volatility, This XXXX. allowances we to seen of in overheating, hikes not created persistent rate XX downward quarter,

we modestly started quarter outcomes credit reserves. build portfolio This $X.X manifest, rates continue In backdrop, pre-pandemic in It's our delinquency we Provisions and incorporated to towards base performing and and to losses those severe previously allowance earlier on ongoing this our normalize loans credit increases see million started credit in for increased reflect more and by total, this than downgrades to With quarter, prudently case our recessions changes headwinds have $XXX growth. on loans to to quarter scenario. levels. billion. this expected,

reflect gross with Provisions impaired X for or and our quarter, basis of of earlier. impaired and levels. credit impaired impaired loans noting in increases up emphasize consecutive that want well Moving X were up formations The point pre-pandemic remain to businesses. last XX do million I or of each normalization $XXX impaired basis both points increased in were to third provisions loans lending major quarter. loans loans the Slide this noted below XX, the to loans increases quarter, and anticipated compared I provisions outcomes million to new were $XX on

or to to benefit portfolio. strong consumer trending from Credit benign outcomes our in the costs. retail relatively continue increase Canadian For of half levels. major as discuss impacts to of in lending Banking, formations PCL those In back commercial all than higher loans basis Across demand, through our ratio impaired these of impaired the modestly to delinquency points as of the to our pass are context, products businesses. clients our portfolio I'll across able rising were credit products, remains are of on remain well more and historic new provisions now rates many impaired briefly rates, businesses as less now levels. loans prices in retail delinquency outcomes XXXX norms and the XX on commercial loans

softness these impaired Even as levels. home our below low rates. remains deposit portfolio, PCL and. pre-pandemic rapid rates by in supported Shifting and equity forces rates finance our focus have as to helped rise levels, our to portfolio elevated increase, headwinds maintain demand loans Collectively, interest prices delinquency on unemployment insolvency continue in act and rates well housing resilient, low and

face As of rates, will a an cross trigger their clients rate more they experience result payments in our threshold. increase of as higher

discussed I be base a majority strong. and last increases. portfolio And payment in internal remain our mortgage to of our mortgage As will absorb able these exceptionally clients indicates anticipated detail client our quarter, analysis payment

our enduring adequately levels. designed an resilience Additionally, economic economic standards to have and on cycle, ACL is believe ensure to are been stress ratio our performing mortgages we we as provisioned to withstand pre-pandemic well above

Moving to our Markets Capital business.

quarter, Capital During other $XX yet loans impact driven the and the in gross $XX volatility impaired market-sensitive Inflation increased outcomes million impaired rates and was to million, sector. our credit by market impacted has primarily PCL by businesses. in loans loans Markets. materially higher Elevated services have

the underwriting be Over continue in the quarter, by underwriting associated exposure largely transaction. Mark-to-market by to we challenging to impacted shifted through market continues exposure Our offset fees impacts reduce were on conditions. to higher business and QX rated loan the to credits.

a Our Markets been for rising environment. rate well Global business positioned has

the and Our collateral risk volatility only stable of volume Market increased during remains this saw exposures, value trading trading and our margin risk substantial we X we days saw a higher calls net counterparty quarter. also credit losses volatility, and of quarter. notwithstanding

Our observed outcomes negative and to have counterparties no remain strong date. been

in The impairments sector, the rising new concentrated loans in from discretionary City took clients' provisions business, we costs of were increased margins. and in impaired gross our ability to primarily loans. consumer our moving impaired the by challenged franchise and last PCL Wealth to million maintain quarter, National Finally, QX, input $XX on restaurant where space, $XX at Management million

Our be with our and with economic to conclude, To impairments of levels. continue well is remaining pre-pandemic provisions portfolio franchise and ongoing larger through the performance consistently downturns. here on pleased focused below portfolios, we performed operators

see and are anticipating we that a we to number credit provisions downgrades, delinquencies, starting have However, the of of been normalization quarters. for impairments

We portfolio and XXXX to forecasted impaired XX normalization performing XXXX levels basis loans. provisions growth a XX this be through points. basis with points Total more in normal basis XX XX expected to to is credit loans increased at as of on to expect continue basis return to downgrades points PCL points on continued PCL

magnitude economy. quarter, depend landing I to bank's inflation, while improving timing will the of and costs on As last soft creating central credit the all noted success the increased a in

the And manage continue lines through We to a more plausibly answer. with cycle, question proactively to we the open outcome. and withstand that, for well and operator, severe risk remain capitalized macroeconomic let's

first question is Instructions] from Poonawala Bank from America. Ebrahim [Operator The of

the the thanks and thinking on details for how Nadine, NIM you're about it.

question of a Just off that.

your terms I is, next NIM 'XX. XQ on quarter relative on I in expansion sensitive fourth real we about guess think, the assume I outlook year But one, as the still comments disclosure. think of versus based is the question sheet asset to the balance your

year. of rate as next you're 'XX? bound to an of if in first think hikes a the about sensitivity, from Bank the talk around the locking Just now of lower sort us you the into Canada, rate Dave Fed year 'XX on nearing your half asset in thinking how I and late interest mentioned cut mode in comfort And just then were NIM the potentially of end are

Ebrahim. you, Thank

you sensitivity, of terms rate is -- off the we've increase. yes, And in with we will disclosure to interest rate interest answer your sorry, around provided, notice doing of question, then first NIM the respect there sensitivity the what to we that been in So our QX encapsulate increases is the of base. strong do we've low-cost the And we rate sensitivity seen time over that can ensure commented, date. driven beta that you that primarily that base, off rate as to interest that being client the way deposit deposit it capture to we've reducing

extend environment start also of that of invest rate into And in the longer-term to there as as two you more some you capture the so have investments had. investments with associated stabilization the duration you options well to as

to as get start So also slower lower rates reprice the on. and to the and get off through the continue come as the you rates higher that stabilizes time, uplift to NIM come you

So that momentum forward. you the gives upwards you the stability NIM but also on going gives

the cuts in Bank Central just terms to downside protection XX from maybe And rate next months. over of XX

essentially of that's extending you've if base, out is to reducing deposit the what in think the the deposit duration you've then, invested short portion also so done Yes, slowed your base will, similarly about and repricing, that want by sensitivity you you if of of rate. down

So would notice as proportion reinvested short-term the dropping rates. to you've as down been a to in smaller you'll our sensitivity, off, at and repricing got essentially disclosure rates That's why start or we've because rate be not exposed a shock. that you're that come

or in where could And expect we next or you sensitive two the that should quarter you actually no? rate liability from cuts become benefit

taking balance significant us rate environment. interest rising sheet naturally a our because structural require very would we from rate against That benefit position

Desjardin is from The Doug question next Capital Markets. from Young

going City earnings, in results, comments. look can adjusted when was But and layer I in been the a comments quite year-over-year. National few -- adjusted and down earnings Just quarter-over-quarter, bottom were has -- expansion you back, NIM earnings in but strong, the NIM XX% And XX% the that's average times mentioned haven't it through been the expansion And hasn't on obviously. NIM shown has at line.

importantly, disclosure. a bottom the start all a just hard is curious, I'm given this PCLs? continuation when sense It's this of Is a -- and to see get to But pivot this we in more so investments? line? should the And the of

favorable given asset our strength had terms we commenting size been continued have National's sheet. balance the quarters over NIM of in rates expansion of of interest year seen of last growth City tripling couple rising the so the we've over in sensitivity this the given very terms we've the have in So of bank, the investment as been business of

rates also City further explained us leverage operating what an been have rate do we've U.S. similar from in to protect interest From seeing seen for the downside well start volume extent as the sensitivity National, have to We Canada, from very we in to to interest to we the we're benefit year. what some been off come the standpoint, the that not growth this City Ebrahim of that have only strong in National I reducing

next year We as infrastructure. persisted We expense expect it do growth persist to continue will line. the to top NIM investing in the in the has But see moderate drive going we into invest continue that to and we've that XXXX. revenue expansion been into

year be credit probably in So book journey next and we're to the just speak there. what seeing Maybe can Graeme the realistically, a two. just over that's to the or going quality

Yes, allowances the X this would the growth credit increased parts this City very strong I and of that was say continues that reflects for perform strongly. We to X three National there. City National, City one quality referenced quarter, quarter. Stage for of the National kind

the pushed. X will economic will So that. have weaker some is the that terms X and there contributed Stage well the between overall, very, that performance quality side as I with thirdly, But an as be just say strong. very that. staging it. Two in of to the it was three. those it credit a impact mix And go forecast downgrades National of side to of of But would there Both continues City were reserves a

mark a a the of about Nadine, could numbers And HSBC, be gross But million mention on you quantify $XXX setting in just that? credit one you X you talked but allowance to a assume if just yesterday, allowance which you up. that would sneak I up. pre-tax, is day quick plan should be Can I quick. set day there you that didn't X

in shared of In the in of I purchase we back what you terms accounting think, the the with of accretion mark. terms deck,

you the think don't those I -- got there's credit interest have And mark numbers the to rate So -- also you've we get can mark. gross I separated to and you. then

take we'll it maybe think I offline.

Paul question CIBC. from is next The from Holden

you Nadine, on NIM, to to which basis to I very guidance all-bank correctly. go understand I sure the But detailed just want want back some I go helpful. basis, to make the segmented the on to provided is outlook back because

for coming sort expecting mostly declining flat-lining Is possibly expansion Canadian P&C, of rest correct a QX, you're more like XXXX. sounds from maybe in NIM marginally it the So interpretation? that of

No.

XX continue but So I guidance the in points the will the through basis first half, see will basis be XX Most that of said coming my to was points. expansion full to NIM year. we

got okay, okay, Despite increase it. in hedging, the

Yes.

because a quick And was one. that then --

the Just question which investments growth, part expense it I a is second guess, the of business, more in looking you're I are discretionary. making then, and at mean,

in inflation easier Just sort slackening expense to expenses, better harder with inflationary and want a are bit. maybe bit maybe manage getting growth in sort are of market, little peaking, of of flavor to how the becoming little it's get forces impacting labor a a

get to of that? Just a want sense

if half down, the big driver roughly the of half were that costs was I between salary so NIE break and say was growth. to Yes, I would it FTE growth.

As we also of in commented a investment earlier, investment in business overall. lot sales not only our but the capacity,

the was inflationary earlier half relates it about another of of that So point, your then pressures. to And half to it.

persist to the going that's just continue XXXX, that had. salary we've into given increases So to

salaries. we how opportunity think manage the I to also in as the business. But about forward investing a it. the as that's increase the step-up related revenue see to as inflationary of the kind it growth is continue to saw we're FTE bit front-footed is large to just going been that you of playing But which that has if on how looking our obviously of we as the start terms of we seeing add, environment our of out. see it grow that's though in half continue we driver to a strength to be big the business growth, economic The continue from we're manage to FTE

context, to was that, volume-driven you just growth. just also related portion Another give of some though, to

relates of just was So about X% non-stock-based growth to type it the the of growth volume increase around as comp expenses.

also of outlook. scale upon portion technology and around to So our back invest costs future just it well continuing clients. business a in depending that large that is application something development, will our But for as providing the our our was

scale. another that's area we where to So continue

of driven total growth The have would I business. in really is growth would to of of the related it scaling half salaries, and off structurally, inflationary the that rest type about components. say of So

is question Securities. Next Mendonca TD Mario from from

looking So especially margins one at presented go the the to middle. kind Slide can XX, we this, and on bottom way again? like the I of And you

rates. in rising. little in beta It you specifically up understanding personal about roughly cumulative checking kind in Would the increase I'm fund looks of on rates disclosure. savings. feel that deposit this the and XX% over deposit change so and deposit the deposit or XX% Canada will seen a for This of Bank range something can rate different? blended the like end the back XX% being into is interested the based of beta yields a is we've What some way in you in You stop -- based time something on and what expect a the U.S. beta, to or XX% just that, once banks U.S. beta

closer to out. it rate peak XX% Mario, No, range, rates once we expect be historical probably the would to

and the So -- on sort is that -- of experience XX%? about over checking this time, is that just that based out savings some based accounts round personal to on your own

well. to can I as maybe -- jump yes, in Yes, want may Neil

thanks, Yes, Mario.

If of It's focus you commentary of in has been a for us. Nadine core look big -- a lot provided at terms deposits. the

you bit the If to We're moved little than look say savings that. XX% as and to actually lever together, XX%, we have decisions. we our about account, lower -- right we high that's where at think a where and rates is all pricing number that would roll it. up that's a pull to interest but the make get We

securities well. rates rates is helpful It's in in think, Royal's I as XX, securities abrupt increased yield looking and this that clear have big lending was you slide, Slide that improvement see also have the important improvement that business, an as repo pretty slide and as at increased. from yield another then And can a

be that abrupt advantage which securities those deposits, clear What be to flat because in to after first lending stop big saying So rates book. repo are in correct adjustment? securities are so it this in and line these of is me I'd will or they having that Royal's yields invested the part rising excess seems their

still in in really of particular, seeing between end there repo on it. differential to and you're there with differential standpoint and see a invest X in, what or I further between start a liquidity short margin a off have is funding bit what like still margin to reverse if we're from what repo curve out would short terms expansion say, you we're the associated book. funding the think in you're the the Mario, you off, the And so. I on In side that the months you're the able

So that's an benefit going in and is to also sloping curve having things. a a two really One yield liquidity. upward bit of reduction from that

well. So Mario, part is sheet, to opportunity bit a on it's volume, part it's as of but seen an and there's of what of you've put been some balance margin

in as improving. in bit at just we are volumes market. sitting been well our surplus the have liquidity But sitting given of margins match still the from a book So lower terms

Okay.

Is in you all on way and QX out in together, bounces suggesting environment that's be correct pulling the bit fair from So to around it? or probably it margin peak all-bank is this Royal's I either rate either is QX, there, would would think or that a based what characterize flat-lines like? to -- that going little a

No.

mentioned in for made of benefit One as our we will Banking. expansion, margin is I around the Canadian there's that just from base structurally, our comments the retail couple I earlier. deposit -- think see continued I sorry, a deposit

rising and mentioned, in continue. that start benefit So we will that price as to rates will to benefit, will that we still the to continue continue see

well our as our in products In of as more as growth around that contribute. et cards, will continued certain we credit commented addition, cetera, also think higher-margin through we

So I see to say this continue would flat-lined We definitely to wouldn't point. margins been have will that at expansion. you our the expect still

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

on Nadine, Bank the appreciate curious side I'm Canadian trajectory the City on P&C margin. National on side. the just the

the looking margins on the decline the from at year? might kind peak side, in in that in to commercial margin that quarters on the due curve suggest based floating costs. side? the moderate Does that You that And commented should funding could that half half margins of the higher it's forward sensitive second U.S. actually the asset point back XXXX very in coming of as

bit of a funding the would margin we from weighted -- So it's mostly National. City the the to combination towards a City the still towards are National. probably expecting to we year I second expansion we But be say through through increasing that little funding year, more bit but even have costs see bit that actually within going a are are a seeing half. however, in

is that funding our increased so would our changes position One of in City step we National, liquidity the happened improved we requirement. have

which full call in on our seen and reports have that FHLB, effect QX overall You drag had that next a taken would year. would have may have on our of through NIM,

also sensitive In Wealth addition, alternative for deposit beta Management, are are a by bit opportunities bit they for a which funded the off funded a City that in that higher are investment come cash. addition, rate looking which But base. low more has and we're balances are beta to through clients deposit U.S. National, we started as base within of sweep

pressure actively what is expect that to for to some NIM. what But commented rate the we that start going put we that business. managing we been So have more interest Canadian see on for to similar sensitivity to Banking,

sharper start decline is sensitive to that it past XXXX. we've that the loan we You not very to commented rates off but asset come the been so book, rate see a that floating mitigate given trying in will to extent

The is next Financial. from question from Dechaine National Gabriel Bank

going to stuff. think I'm the NIM about

We're on higher we're out betas, than comment Nadine, also of more other the consumption can the made increase products. the flesh seeing in you GIC seeing if bit earlier? a you Firstly,

you you You said necessarily favorable. credit in, not Can potentially? expand that? then are card to any I guidance, balances Is And increasing the dynamic including guess bit chip still in that's in because on thing business? the big, between a driver if GIC you a revolver assumption And spreads bad that's Banking your a sorry. and Canadian spreads too, big of Neil is want

start? If you to like would

question, the I start card order credit for reverse in the on mean, Thanks Sure. Yes. book. maybe Gabriel.

maybe move. in to we comment, revolver We say see where total about would in pre-COVID. to last sort made a to close the balances terms four back I the months of So started balances we're finally in were starting to acceleration of you

that's seen card in balances. we've book, disproportionately So the where credit growth on is the revolver the quarter-over-quarter

step have investors just I market out That's been You're to just Yes, $XX on context mean, a bit but it card time coming. seen mutual the yield question. both GIC up book. out core of GIC. given also retail of a of in coming long into the we terms in uncertainty almost the credit in shift strong out the little savings the of funds, billion a deposit get accounts, going accounts, very, Maybe coming of very

it ago, of to definitely for been where kind over two retail safe years margins time haven year a that the book investor. we were GIC and has in we And quite the say, compared would So ago are favorable.

Yes.

coming comments deposits on a moving of the Neil's also just of benefit included where the from positive of the have that some of offset comment, But benefit. we've we in into demand some that, what in is of mutual we So of seen would terms -- a which to a be, some from Neil's in the we've shift GIC, funds, a well. bit but growth when of mix as

for coming But particularly of in our is only client not come GICs, funding our cost that's low of wholesale us. we lot but in connectivity we're my NIM our given which seeing across overall. balances a from base, fact, funds into a the addition, mutual get funding to and the enhances the benefit as relative in addition, I So speech, in of commented it

seen bit two and we've in quantum, Just I have added this, a book billion of the last GIC should quarters. $XX the grow

product of is the And something probably call so into just scale to moving the out.

from from The next Markets. BMO Movahedi Sohrab question is Capital

questions. quick Two

Is there reason segment Markets Capital the in that? for a ratio comp-to-revenue the disclose didn't You this quarter.

I'll answer that, Sohrab.

across terms benchmark in disclosures. we look we consistently at our group of our Just peer when disclosure,

determine we're we that Canadian to the comp bank ratios. be only so And disclosing

our look to just it bit because comment differences benchmarking. comparative there's peer we also there's we challenge a that cetera. when a would I actually around is thought So of at deferrals, et consistency

just So see, against calculation math straight doesn't lead banks. for it's comparability a always U.S. that it you necessarily even while

what history, compare to Just quarter, was Nadine? can that it so we your own it this

that a you I'll looked we -- to number back that, get and mathematical. internally. it's not how It's managed it maybe Sohrab. It's on a not

What maybe the side, you questions the separately. Neil. the and on I'll specific yield on a you I HSBC business kind And the of taking that's just clear? funding your see that little competitive I a happening guys side. suppose in of where follow you What's NIM competitor? spreads? out asset a with up obviously with dynamics to I are talk you dynamics impacting lots mortgage particular. of on NIM maybe mortgages segment as of the Can how sizable do mean sort with bit on just

there we track efficient. prices think, actual -- what the I to stay I'd different very but mortgage spoke We mystery is all we end there's yesterday. market. all the shopping, market, of ways sure is, through make go industry. in bit what to just -- product very, say on is is you competitor compression mentioned Between similar a on with about as And we This will market rate And exceptionally consistent to The is on talk reset about fixed exceptionally client move and very a is heard Nadine side. little very, that the up. prime rates variable spreads, across some -- BA it very the Overall that rate market. the side, competitive

it It's around of But product. us. retaining of importance relationship tough. look it's moment it's a put So with the with product, a a and relationship client. clients' mortgages that truth we the lot at an important relationship just as we And in

of lot Senior we've years. the Yes. would guess? definitely seen last tighter fair say. five to are Neil I kind say, contextualize quantify you the it, to spreads - you historical That it, seen you would them, last Just X spreads on let's tight compared would maybe How How you've say Executive A Key mortgage mean a be would than McLaughlin put years? some over - bearings are the the spreads, mortgage to as it? I as ever

they Are negative?

No.

question from next is The Meny from Scotiabank. Grauman

to just capital on would the this target Canada, XX.X% factor discounted the HSBC your provided you the ask [XX%] of I you on guidance DRIP? in When wanted ratio close for deal DRIP.

number, as but Not the when above. should I XX.X% commented, be Meny, for

So we us add expect some cushion. the to in capital, $X billion about further just give DRIP to

that, brief the trying I'm capital understand mean, moderate caution signals. I and the around that to then you And announcement, about recession. of sort of talked sort Dave, a

how to environment move to related of from your view on It much that Canada. if outlook. happen. ratios risk just wondering I'm going. has a macro might I minimum a with that jurisdictions, climb you I'm regulatory do your know where is capital that. in So of capital we're I'm that would that, ratios actually will see so We curious -- seem you it it don't regulators. wondering reflection higher other the could much comment seeing in this is think

I of point, and growing you I intent. of but front-footed your regulatory look it instability as frontline and war relatively as at at far to our Russia uncertainty our heard the would perspective, expansion expense and our adding from in a recession. still a face employees. But can't ongoing significant mild portfolio, in would look comment it customer-facing fairly on We're I you we're the expansion, that Ukraine. NIE being expectation geopolitical We're of

monetary around day. There's of got the the uncertainty uncertainty policy such at manufacturing. the You've using enormous still end of aggressive

and higher be level of uncertainty, tail a that, still of have kind we risk probability but higher you therefore, and there's while expectation So a growing mean right have tail now. towards low could we're It risk. higher

consistent So bank. from it's perspective, that managed we've the with how

against building hours. has used little volatility long XX there being term, buffer greater there's all no building around face, that uncertainty. bit And half-life. for we're that. very acknowledge that But but the Capital a out uncertainty just it only last of we're capital buffer the and how we have proud we've It used we're of we're the therefore, a Over we be all expectations, in conservative. mean can being a over conservative we which

Persaud Lamar from is question Cormark next Securities. for The

deal. you go on back the wondering Lockbox to want if and talk I guys to could I'm Agreement the the HSBC, reasoning behind about

the done Royal just upfront as accrue Just close the up purchase by some kind guys are I reason? a deal it Royal, future is paying earnings going of you're really be earnings of nature. since that bit by a the underlying expected just you couldn't just reduce thinking price for to offer unusual sweetener there in get should to Like or essentially to other

an a box end that other have dividend it a at period that where what's settle or approval on to And certain over always capital -- dividending upfront, that? and the transition period go conversion retain you potentially transition efficacy of do extended at do that agree seller the and And easier you as do the how allow earnings extended of period the there's out makes level a at out, the and mechanism to you lock it could up transaction? you a prescribed you that seamless you through set end. So

So it that I net to a to the of are at and would balance very look retained And mechanism purchase the be very be as earnings the with a therefore, deal that. XX.X. sheet acquire viewed doing that gross therefore, on going transition effective as are of It's effective we of a close. should means price at these

we Like plausible one about again this forward? Nadine. some we I nature? think throughout going I'm should this in the Can color Or if it is XXXX? as drove another for under-provisioning for squeeze see add onetime then on understand really variable strictly is, trying could And what just quick what comp additional could you just to in

accounting Markets, of he two how two we manages business perspective Derek year. there's but would maybe a that, obviously, think and for ratio given just the and dynamics, I his work the we through from his business, plan comp for I'll things. plans an weigh say on in And let I Capital then given perspective, like

the look the to the terms have a performed, makes there's of give how kind you accrual through markets of at years, of unlike If the been a rest in difficult two quite standard very year volatility that. of it bank which last the on bit

bit have been last regard. years in the a two that think I exacerbated

I'll to turn the So through the given it objective it market-sensitive that accrue that evenly in and especially Derek challenging. that think a how comp over make year. But overall. is obviously to But we business, can of changes,

then obviously, a the similarity, question, we to your than volatile use on saw they as compensation. macro other To in often impacted been all true have period in we've much XXXX. Building XXXX Nadine's that and year-end the robust few think seen challenges banks and QX off years very I environment obviously more most obviously approach some -- in up and unforeseen the of last comments, years. a years We XXXX, variable

years, few that seen up times. to magnitude more we've the normalized than So little in I more would QX expect would we true that last a

year. very just had the you're year-over-year it Just and importantly year, Last two seeing to a we true-up change highlight the this isn't reflects things. function strong a really year, of

which NIE to some see a a the areas. it of year-over-year, of build is 'XX. strategic that's had adjust and the quarter million additional in continue made, half aggregate, of accrual that up about and have in reflective roughly -- in Dave would from that that had we increased we've the that's year. XX% roughly line given we of with in been and last a So opportunity for we comments FTE. the compensation healthy release This QX the year would the you to X% headwinds, accrual. up half $XXX we When swing an a have of that, for actually that from business year, growth seen been X%, And really this In released to of accrual we've some the

I strategic more consistent frankly, environment. areas. share notwithstanding of we're the market in challenging results that plan. our think with We're gains And key it's feel our good of we with a seeing number

really a it of So is reflective timing difference.

is or more expect not a in to this two the as times it variance year. been of as environment we've year seen last you've would normalized the much and by be exacerbated in think I volatile it

Canada question, day is in the -- earlier earlier the to for on the Just million. acquisition question the $XXX provisioning of HSBC sorry X impact I'll jump

you. interrupt to Sorry

continue over we'll about XX think minutes. for I run to

to in the questions try couple have and we think a I of to them. queue get

Research. Rizvanovic from question Mike from next The KBW is

A question on business lending.

for it's impacting Neil gotten sort maybe about know of It But the look better. segments. if Derek, given look I both have doesn't drivers headwinds, for normal macroeconomic rates moved, wondering just it's you the or the acceleration. at just given where there, So and I'm

that it's say guessing normal I'm probably just course. you'll So

maybe this there then can the out If elements? that me space are to about two that's growing, decelerate and of picture? the few they're your share is of element sort because sort lenders talk quarters you businesses. to where of banking think of help growing facilities Your potentially of quickly they coming part banks have could how the would into been into last market over you secondly, that, sort step it clients And come driving this are for maybe frame Canadian year. customers the talk nonbank the just of mind I pulling next is could other their some what concerned macro are in And the new But to about been here? using some able are sort of

It's Derek.

start. to Just

to in lending Just overall your broadly we're growth think late activity? to I question, clarify

the On side, yes. business lending

wholesale from chime I'll Neil to so on may and the then want yes, or the commercial in corporate start Yes, side. side

So a ago I see opposed of bank Markets. to more pivot you'll as Capital going the couple to periods think right we of often years the lines the get disruption, clients saw as market into to after you pandemic, when

of as equity we XXXX, that and over debt course happen. the dislocation some seen we so in have And markets saw

requests driven then think this we've growth being facilities, stabilize Markets a or Capital both bridge And authorized have loans in expansions normalize I do so some that to to that's used to as term also extent. that really either takeouts rates year. increase are we new revolvers markets utilization or seen very once seen on obviously facilities. robust existing And for additional an

Markets growth We and early consistent off. are to that DCM starting in the with normalize levels ECM of see will starting to normalize, see in more to which taper as think Capital And are see see, we activity, moderate an we our I we increase plan. days

Neil. It's

a and of commercial business of things. terms and In maybe retail couple the

seen But XXX amongst of facilities. pre-pandemic revolvers come of on, to utilization Early clients. Derek, operating to commercial basis we those them back use similar not back So We've we're saw about drop. points still year-over-year. those

sort I come We're there seeing unexpectedly ease. -- to say in maybe In as been sector terms look, and forward, then starting through those supply the by accelerating disruptions well. of there. growth we've sort to say, couple quarters the the factors of of supply differences some terms starting thing, is would chain some two of growing not of And of last last just chain back,

some the I on be And on side, terms the are I lot seeing then about. putting saying, FTE you second investments of the just equipment, their need business. expanding factor capital made was would client of delayed You're the Nadine of we've investment speak with into a heard get in clients to

across we've sectors, particularly So invested clients. the across really country, larger targeting commercial

elevated it like environment foreseeable future? it this. we So isn’t for see rate the And the to fair is this really that say could sounds impacting

growth of the strong see do continuing into XXXX really On the sure. we commercial side business, for

last One sorry. our question. be more will This question,

the Kim Suisse. Credit Joo is from This last Ho from question

wanted go of to in to in you And in Just Banking. new clients mentioned one back slides, net XXX,XXX segment. that Canadian the

as significant synergies Just wondering in new cross-selling the HSBC It the clients. these acquisition. how success can if in could of much be into seems cross-selling revenue well. asked And had be there you I realized this context like

laid Yes, that listen, we'll go that franchise presentation start. We need to grow pause mentioned the what new his during add right you're back our we of to out clients. to step-up obviously to got in a comments. good just and And is part where seeing strategy real our Investor off was million Dave And we now COVID. Day net X.X

growth bringing talk strong. our consolidate pulling heard very and cross-sell next accelerate giving incentive client We'll laid and net the see extremely on, business Vantage out some The the to continue Dave slides about their rates, of there. that of with yesterday to penetration those That XXXX, is different cohorts The overall the So you strong an client of categories year. XXX,XXX. us into we around retail new the four in mechanism program. we're

we're very what with cards credit seeing very, accounts in happy cross-sell we're rates and actually cross-sell up. are those So terms and savings in of rates

bullish say client new I'd feeling acquisition. we're about really So

Okay.

continue in strength so further XXX,XXX It's that Canadian despite continuing CNB lot questions, a of We up for fed your our from questions. is NIM franchise. come XX NIM, in the overall how expanding franchise of So which playing as but capability. expected for that on because last to franchise, maybe to impact did effectively you franchise, can your deposit of feed clients growth in the questions base. expect rate new slower payments answered beta the it's the is important deposit that low all deposit today strength. expanding the I'll focus because into helps out the really our and see beta our And fantastic low of cash Banking is and strength just of NIM it wrap increases; understand years you with everyone, thanks, and our NIM and slightly things into expanding But the Nadine the that management the And strategy higher albeit over around growth.

capability, ratios heard ability and to to also officer capital our ability its and us power and to hiring largest in bank. hope therefore, these with front-footed or just advisory, heard talk history, banking we our Nadine our to back being mention, our on being earnings by expenses year as mortgage XXX,XXX you to You again more, again Banking our acquisition And under new and an next XX% Capital clients with story. branch position capital Very building investment out then acquisition, kind us to the you very flexibility Markets, grow growth be do the our Commercial strong frontline MDs handle with DRIP even continue proud front-footed. -- back of capability but heard our to of our about and that our capability, we're to have

your So for thank questions. you

great I And the operator. holidays, we'll well strengths I a the all holiday Thanks, were you That's all end think of new the call. see highlighted great the And of in wish you in of franchise our our be your and season. questions. year.

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