Royal Bank of Canada (RY) Q2 2021 Earnings Call Transcript

Royal Bank of Canada (RY -0.41%)
Q2 2021 Earnings Call
May 27, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Please stand by. Your meeting is about to begin. Good morning, ladies and gentlemen. Welcome to RBC's conference call for the second-quarter 2021 financial results.

Please be advised that this call is being recorded. I would like to turn the meeting over to Nadine Ahn, head of investor relations. Please go ahead, Ms. Ahn.

Nadine Ahn -- Head of Investor Relations

Thank you, and good morning, everyone. Speaking today will be Dave McKay, president and chief executive officer; Rod Bolger, chief financial officer; and Graeme Hepworth, chief risk officer. Also joining us today for your questions, Neil McLaughlin, group head, personal and commercial banking; Doug Guzman, group head, wealth management, insurance, and INTS; and Derek Neldner, group head, capital markets. As noted on Slide 1, our comments may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties.

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

Dave McKay -- President and Chief Executive Officer

Thank you, Nadine, and good morning, everybody. Thank you for joining us in our Q2 call. Today, we reported earnings of $4 billion, driven by strong client activity across our businesses. Our results reflect market share gains in Canadian banking and wealth management, as well as record investment banking and equities performance in capital markets.

Even with heightened client activity, we leveraged our scale, past investments, and disciplined approach to cost management to drive positive operating leverage. Pre-provision, pre-tax earnings increased 11% year over year despite absorbing approximately $450 million of headwinds related to lower interest rates and a stronger Canadian dollar. Although uncertainty remains, credit and market risk indicators are relatively benign when compared to the start of the pandemic. Our portfolios have performed exceptionally well through the cycle with very low PCL on impaired loans.

We are confident that our wide range of strategic initiatives will enable us to continue growing our balance sheet well within our current risk appetite. We remain very well capitalized with a CET1 ratio of 12.8%. In addition, next quarter, we expect the implementation of parameter updates net of other items to add 55 to 70 basis points to our capital ratios, pushing our CET1 ratio to well above 13%. Even with these elevated capital levels, we generated a premium ROE of 19% for the first half of 2021.

We will continue to leverage the strength of our balance sheet, and recurring internal capital generation to further accelerate organic growth across our businesses. In addition, when regulatory restrictions are lifted, we will look to accelerate capital return to our shareholders through a mix of share buybacks and higher dividend given our payout ratio is currently at the bottom end of our 40% to 50% range. Highlighting our organic value creation, our book value per share grew 8% from last year, with tangible book value per share up over 11%. I will now speak to how we see the macro environment unfold.

While we're in the early stages of an economic recovery, there is still uncertainty about the risk posed by new variants and stresses in supply chains. The time horizon for how the recovery will evolve continues to be correlated to the success of the vaccination rollout. It remains uncertain when international borders will fully reopen. Although there's still work to be done to open up all parts of the economy, we are encouraged by the progress so far.

As vaccine distribution gains momentum, we anticipate an acceleration of economic activity alongside easing buyers' containment measures. So then fiscal and monetary stimulus remains in place to bridge the gap and stimulate the recovery. However, the combination of these actions and supply shortages is increasing the risk of inflation in certain asset classes. Consequently, there is a higher likelihood of central banks raising their benchmark interest rates in the second half of 2022.

With respect to Canadian housing, we continue to monitor supply demand imbalances across Canada. And we support recent actions taken by regulators to adjust mortgage stress tests to take some pressure off the demand side of the equation, but we encourage policymakers to also address the problems of limited supply, which are exacerbating house price inflation. As always, we manage risk through a cycle. And the credit metrics of our most recent mortgage originations remain strong and are consistent with our existing high-quality portfolio.

Next, I will speak to a number of drivers that position us for strong performance going forward, starting with two Canadian banking businesses that are poised to rebound. And then I will highlight the embedded profit growth in our core deposit and U.S. wealth management franchises followed by a number of initiatives we have to accelerate organic growth. I will start by commenting on our credit card and commercial banking businesses, which have disproportionately been impacted by suppressed economic activity.

For the last 12 months, total revenue associated with our credit card business was down approximately $400 million year over year, largely due to lower net interest income as utilization rates fell 300 basis points. A stimulative macro backdrop sets the stage for higher-yielding card balances and purchase volumes to recover alongside economic activity. This relationship is one that is highly correlated, and we are confident that it will hold coming out of the pandemic. As a result, we expect that our leading credit card franchise will see total revenue rebound toward pre-pandemic levels.

Business lending activity has also been restrained, even though we have added $60 billion of business deposits over the last two years. Commercial banking utilization rates on operating lines have fallen below pre-pandemic levels. However, we do expect to see commercial activity resume over the coming quarters, fueled by client investments, and inventory and receivable growth, and rising utilization rates. In addition, we have two businesses which are better positioned than most to benefit from rising interest rates.

Our strong growth in personal core deposits in Canadian banking has increased our sensitivity to higher interest rates and will drive outsized revenue growth in a rising rate environment. U.S. wealth management is also well-positioned to benefit from rising interest rates given the asset-sensitive nature of City National Bank's balance sheet, combined with nearly $40 billion of sweep deposits. I will now speak to the second pillar of future performance.

Our investment in technology goes well beyond just adding digital functionalities. These investments have helped create differentiated digital businesses and additional client touchpoints, accelerating cross-sell of existing clients and new client acquisition. We expect to see accelerated client growth through MyAdvisor, InvestEase, Insight Edge, NOMI, RBC Ventures, and Aiden, which have been in market for a number of years now. We made early and continuous investments in our distribution network and client-facing talent, including mortgage specialists, commercial account managers, and investment advisors.

The combination of these investments over a number of years is driving better outcomes for our clients, strong volume growth, deeper client relationships, and increasing scale and profitability. We are proud to note that RBC has yet again been ranked No. 1 in overall customer satisfaction among the big five retail banks by J.D. Power.

So specifically, Canadian banking added over $55 billion in mortgages, $45 billion in personal deposits, and increased AUA by over $50 billion over the last two years, leading to market share gains in these anchor products. Our long-term strategy to grow our core deposit business and provide exceptional service and advice is a core driver of our differentiated ability and building deeper relationships. The result is roughly 65% of our Canadian banking clients have more than just a transaction account with us, many of which also end up getting a credit card, a mutual fund, or a mortgage. And our mortgage relationships have higher retention rates for these multiproduct clients, with mortgage profitability up roughly two times higher when a client is retained for a second term.

Going forward, we're also excited about the potential of two new strategies to further accelerate client acquisition and growth in Canadian banking. We recently announced the national launch of RBC Vantage, a new everyday Canadian banking offering that brings together a comprehensive suite of powerful benefits for RBC clients, incentivizing even deeper client relationships. Our new offering gives clients the ability to use their debit cards to earn RBC rewards, save on monthly account fees, and earn more rewards than savings when they take advantage of partner offers. We launched our exclusive multi-year strategic partnership with the Royal College of Physicians and Surgeons in Canada to support the unique needs of Canada's medical specialists.

And furthermore, 45% of our Canadian high net worth retail client base has a relationship with both Canadian banking and Canadian wealth management. We expect this ratio to increase over time, as more of our clients shift surplus deposits into investment products, further accelerating the growth trajectory. Moving now to wealth management where we've added to our leading scale by investing and hiring experienced investment advisors and technology investment capabilities to meet our clients' evolving needs. And this quarter, RBC global asset management posted its strongest quarterly long-term mutual fund net sales performance ever and has increased its assets under management by over $100 billion over the last two years.

Furthermore, Canadian wealth management AUA has increased more than $80 billion over the last two years. We expect to similarly benefit from trends in U.S. wealth management where our past investments have included strong advisor recruiting. This quarter alone, we added a further $4 billion of assets under administration by hiring more experienced advisor teams.

This is on top of the US$22 billion added over the prior eight quarters. These seasoned advisors are attracted by our client-first culture, coupled with the capabilities and resources of a large bank, including an integrated technology platform. We also expect the strong loan growth in City National to continue as the U.S. economy opens up, leveraging past investments to add private and commercial bankers, expansion to new markets including our office in Hudson Yards in New York City.

Growth will be further accelerated by the recent launch of City National's new national corporate banking division, which specializes in meeting the complex needs of larger commercial and mid-sized companies across the United States. As you've seen in the last five quarters, we have benefited from the strong earnings provided by our capital markets business, which has delivered consecutive quarters of record results. Over half of RBC capital markets revenue is earned out of the United States and will continue to benefit from an improving economic outlook, constructive equity markets, and structural trends in technology and ESG mandates that are creating further opportunities in the world's deepest and most active market. To better leverage this opportunity, we've continued to strengthen and expand senior coverage teams in key sectors.

We are already seeing strong results with a solid pipeline of mergers and acquisitions, advisory, and equity underwriting revenue. We've also reorganized our global markets unit into newly created cross-platform groups, including the sales and relationship management group to further strengthen our client-centric approach. The digital solutions and clients insights group will work to further scale RBC's data science, artificial intelligence, and digital expertise across product lines. To sum up, we have strong momentum across our core franchises, and we will continue to focus on providing holistic solutions to grow and deepen client relationships with a goal of delivering long-term, sustainable value.

While we will continue to invest in new strategies, we remain committed to running our bank efficiently with an emphasis on driving productivity. We're also committed to delivering on our purpose of helping clients thrive and communities prosper. This includes our commitment to play an active and accelerated role in addressing climate change, supporting, and financing our clients' efforts in the transition to net-zero is central to our strategy. I'll now turn it over to Rod.

Rod Bolger -- Chief Financial Officer

Thanks, Dave, and good morning, everyone. Starting on Slide 9. We reported quarterly earnings per share of $2.76, up from $1 per share last year. Pre-provision pre-tax earnings of $5.1 billion were up 11% year over year despite significant headwinds from lower interest rates and a stronger Canadian dollar.

Moving to Slide 10. Our CET1 ratio of 12.8% was up 30 basis points from last quarter and a strong quarterly return on equity of over 19% grow record internal capital generation of 43 basis points even after paying out $1.5 billion in dividends to our common shareholders. This was partly offset by RWA growth, largely due to robust volume growth in Canadian banking and City National, and higher trading activities in capital markets. I'll now spend some time discussing the outlook for our CET1 ratio heading into the back half of 2021.

We expect the implementation of model parameter updates to increase our CET1 ratio by approximately 70 to 80 basis points next quarter. This benefit is expected to be modestly offset by an increase in SVaR multipliers effective next quarter, which is estimated to decrease our CET1 ratio by approximately 10 to 15 basis points. Also, we have seen net credit upgrades of approximately $3 billion in the first half of 2021, only partially offsetting a cumulative $13 billion impact from net credit downgrades between Q2 and Q4 last year. For the second half of this year, net credit upgrades could continue at the same pace as in the first half, contingent on the economic recovery.

And we expect to continue generating 15 to 20 basis points of capital per quarter, net of dividends, and RWA growth. Now moving on to Slide 11. Net interest income was down year over year largely due to the impact of lower interest rates, including lower repo and secured financing revenue in capital markets. More importantly, all bank net interest income continued its strong recovery effort bottoming out in Q3 of last year, driven by strong volume growth in Canadian banking and City National, and we expect core net interest income to continue to grow in 2022.

Moving to segment-level performance, Canadian banking NIM increased 1 basis point quarter over quarter but was down 1 basis point, excluding the higher-than-average mortgage prepayment revenue. While lower interest rates and credit card balances lowered Canadian banking NIM 15 basis points year over year, higher card payment rates have been positive for credit quality. Looking forward, we expect strong Canadian banking volume growth to drive higher net interest income even as NIM modestly contracts over the back half of 2021 partly due to a continued shift in asset mix. City National's NIM was up 4 basis points relative to last quarter, with the Paycheck Protection Program loans contributing most of the increase.

Net interest income of City National was up 4% year over year, driven by continued strong buying growth. And we expect this trend to continue going forward even as City National's NIM continues to narrow over the next two quarters, partly driven by continued build in excess deposits. City National's average loan to deposit ratio of 75% has decreased from pre-pandemic levels of 84% in Q1 2020. Turning to Slide 12.

While we don't expect short-term policy rates to increase in the near term, we have strong leverage to in -- to rising interest rates as half our deposits are zero or low-rate core deposits. In addition, the economic recovery is expected to see further growth in higher-yielding asset classes as credit cards and commercial loan utilization rates begin to kick higher in Canadian banking. City National has a more asset-sensitive balance sheet, with roughly 50% of its loans being floating rate commercial loans. Looking forward, a 25-basis-point increase in interest rates across the curve and a stable deposit data could generate an additional $135 million in Canadian banking net interest income over a 12-month period, and a 25-basis-point increase in U.S.

interest rates could generate a further US$90 million of revenue in U.S. wealth management, including the benefits from our sweep deposits. Turning to Slide 13. Our results this quarter continue to highlight the benefits of a diversified business model as market-related revenue across our large -- largest segments benefited from elevated client activity and constructive markets.

This continued to offset pandemic-related headwinds in our personal and commercial banking businesses. Strong capital markets activity boosted underwriting and advisory revenue, resulting in higher credit fees. And continued growth in both AUA and AUM helped drive higher mutual fund and investment management fees in wealth management and Canadian banking. Now, on Slide 14, noninterest expenses were up over 7% year over year, largely driven by higher compensation, commensurate with strong results in wealth management and capital markets, along with market-related movements in our U.S.

wealth accumulation plan. Our results in the current quarter also included a favorable sales tax adjustment of approximately 40 million across all businesses. Excluding variable and stock-based compensation, expenses were down 4% from last year. And further adjusting for FX, our controllable costs were largely flat year over year, and this is after already lowering the growth rate over the last two years.

As economies reopen, we remain focused on controlling key discretionary expenses like travel and prioritizing investments that drive client value. We'll also continue to execute our zero-based budgeting program that has resulted in a number of effective cost containment initiatives being implemented across RBC. Now, moving on to our business segment performance beginning on Slide 15. Personal commercial banking reported earnings of over $1.9 billion, largely driven by Canadian banking.

And Canadian banking pre-provision pre-tax earnings were up 8% from last year. Canadian banking revenue growth was up 4% year over year, driven by double-digit growth in mortgages, personal and business deposits, higher mutual fund distribution fees, and continued strength in direct investing volumes. Card service revenue was also up due to higher purchase volumes, as well as lower costs related to our rewards program. Canadian banks -- banking expenses were well controlled, down 1% from last year, helping to drive operating leverage of 4.7%.

Historically, we have targeted 1% to 2% operating leverage in Canadian banking through the cycle, and we would expect to be above the top end of that range over the next few quarters. Turning to Slide 16, wealth management reported quarterly earnings of $691 million, up 63% from last year. Canadian wealth manager revenue was up 15% year over year, with AUA up 22% or nearly $90 billion. Global asset management revenue increased 26% year over year, with AUM up 15% or over $70 billion.

RBC GAM net sales were nearly $15 billion in the quarter, with continued strength in institutional mandates, including BlueBay. Canadian long-term retail sales of over $7 billion remains healthy in a quarter where the Canadian mutual fund industry recorded a strong RRSP season. The majority of our retail net sales flowed into balanced mandates with lower net sales and fixed income strategies partly related to a pullback in North American bond returns. U.S.

wealth management AUA growth was also strong, up over 30% in U.S. dollars. Turning to insurance on Slide 17. Net income of $187 million, increased 4% from a year ago, mainly due to lower travel and disability claims costs and the favorable impact of actuarial adjustments.

Turning to Slide 18. Investor and treasury services net income of 121 -- $120 million decreased 47% from a year ago. Funding and liquidity and asset services revenue declined year over year as the prior year reflected a more constructive environment, as well as higher gains from the disposition of securities. Lower interest rates continue to negatively impact client deposit revenue.

Turning to Slide 19. Capital markets reported another record quarter with earnings of over $1 billion. Corporate investment banking reported record revenue of $1.2 billion, reflecting strong deal flow and elevated client activity. M&A advisory fees was the third highest on record as an improving macroeconomic climate has increased client confidence levels in boardrooms.

Robust ECM revenue was underpinned by strong IPO activity and constructive equity markets. Looking forward, we're seeing increased client activity and momentum in our M&A advisory and ECM businesses. Global markets had a very strong quarter, with revenue of $1.6 billion. We saw record equities results this quarter, benefiting from our participation in strong primary activity and derivatives flow.

FIC trading results were down from last year with lower volatility impacting rates and FX trading. This was partially offset by increased client activity and client trading, which benefited from constructive markets. Lower spreads hurt the repo and secured financing business, which benefited from elevated client funding demand and rate cuts last year. While primary issuance had a positive implication for secondary activity, we do expect both debt underwriting and FIC trading results to moderate from strong results over the last year.

To close, we have strong momentum across our core franchises. And with a robust capital position, disciplined expense management, and leverage to higher rates, we are well-positioned to continue delivering long-term growth. And with that, I'll turn it over to Graeme.

Graeme Hepworth -- Chief Risk Officer

Thank you, Rod, and good morning, everyone. Starting on Slide 21. Allowance for credit losses on loans of $5.5 billion is down $389 million compared to last quarter. This reflects PCL on impaired loans of $177 million, or 11 basis points, which was down 2 basis points from last quarter and at its lowest level in over 15 years.

It also reflects $260 million release of reserves on performing loans, primarily in Canadian banking and capital markets. Our macroeconomic forecast shows continued economic recovery as government support remains in place and vaccine distribution accelerated in our key markets this quarter. This is further supported by a significant level of savings in Canadian household that accumulated since the onset of the pandemic. At an estimated $212 billion, these savings should help support a strong economic recovery.

While the release of provisions this quarter was more than double our release in Q1, our ACL remains above pre-pandemic level at 0.79% of loans and acceptances. We continue to take a prudent posture allowance given the uncertainties associated with new COVID-19 variants, continued lockdown measures in a number of regions, and the significant government support that has suppressed defaults. I'll now speak to the credit performance of our key businesses starting with capital markets. Compared to last quarter, growth impaired loans of $700 million decreased $157 million as we continue to see good resolution of previously impaired accounts, largely in the oil and gas sector, which benefited from a more supportive oil price environment.

PCL on impaired loan with a net recovery of $29 million this quarter, reflecting recoveries on loans in the oil and gas and other services sectors, partially offset by impairment on the commercial real estate loan in the retail space. We also released reserves on performing loans and capital markets for the third consecutive quarter. This quarter's $87 million release reflects continuing improvement in macroeconomic forecasts, particularly for Canadian and U.S. GDP, global equity prices, and oil prices.

In wealth management, growth impaired loans of $338 million, increased $49 million from last quarter, due to higher new formations at City National from borrowers of the consumer discretionary and information technology sectors, and a few smaller borrowers in the commercial real estate sector. Despite these noted impairments, PCL in loans results to benign this quarter. And overall credit quality of the portfolio remains strong. In Canadian banking, gross impaired loans of $1.4 billion was stable from last quarter, and a $54 million increase in GIL in our retail portfolios was offset by a $55 million decrease in GIL in our commercial portfolios.

PCL on impaired loans of $195 million was down $22 million from last quarter, with decreases across all portfolios with the exception of our card's portfolio. Higher write-offs on cards are attributed to the end of our deferral programs in Q4 2020 with card balances written off after 180 days past due. I would note that delinquency rates for cards have decreased relative to last quarter as the impact of the client default program has largely migrated to the conclusion. Looking at our program, our portfolio more broadly, delinquency rates for all products and regions across Canadian banking are down compared to last quarter and remain at or below historical levels as government support programs remain in place, benefiting many of our clients both directly and indirectly.

This quarter, we also released 155 million of reserves on performing loans in Canadian banking. The release came primarily from our card's portfolio and our commercial portfolio, reflect the improvements in both macroeconomic forecasts, including GDP and short-term unemployment rates, and our overall credit outlook. Turning to the Canadian residential mortgage portfolio on Slide 25. As Dave touched on, we have been drilling a residential mortgage exposure and market share since the start of a pandemic while maintaining a prudent and consistent approach to risk management.

Origination metrics on loan to value, debt service, and FICO scores have remained largely unchanged compared to pre-pandemic levels. We've also stressed the portfolio for a higher interest rate environment, which demonstrates that the vast majority of our clients have the capacity to absorb a significant increase in interest rates. That said, we have taken a conservative approach to our reserves of performing residential mortgages, which are stable compared to last quarter as improvements to our house price forecasts were offset by an increase in the leading to our downside scenario given the rapid growth in house prices since the start of the pandemic. To conclude, while credit trends improved this quarter, we continue to maintain a cautious approach to reserve releases until a larger percentage of the population is vaccinated, vaccines prove effective against new COVID-19 variants, and the economic recovery takes hold.

At the onset of the pandemic, I noted that the prime nature of our retail portfolio and the diversity of our wholesale portfolio would serve as strong mitigants against the economic impact of COVID-19. And this remains true today. In our retail portfolio, FICO scores and LTV has remained strong, and our clients have increased savings and lower utilization rates on cards and personal lending products throughout the pandemic. And our wholesale portfolio, diversification across sectors has served as well, with just 4.5% of total loan acceptances to sectors most followed to COVID-19.

Additionally, we are seeing positive trends in many of our key credit indicators. Watch lists are declining, upgrades are outnumbering downgrades, and delinquency trends are stable. As well, both our retail and wholesale portfolios are well diversified geographically. It can help mitigate the risk of an uneven global economic recovery and has allowed us to benefit from the reopening of the economies in certain regions.

With many government programs scheduled to conclude in the fall, we do expect delinquencies and impairments to increase in Q4 and into the first half of 2022. However, we don't expect them to be as acute as we initially expected at the onset of the pandemic. Additionally, we expect GIL to draw down and the allowance in performing loans be built in 2020, just so our total PCL across all sectors will remain below their long-term averages. With that, operator, let's open the lines for Q&A.

Questions & Answers:

Operator

Thank you. We will now take questions from the telephone lines. [Operator instructions] And the first question is from Ebrahim Poonawala from Bank of America Securities. Please go ahead.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Well, I guess my question was tied to capital return. Dave, in your prepared remarks, you talked about the payout ratio being at the low end as far as the dividend is concerned. Understanding that there's some benefit from a lower PCLs, higher capital markets. Talk to us, one, in terms of the dividend yield as we look into next year, your appetite for the dividend tier being at the higher end, maybe 50% or even exceeding that.

And secondly, I think the one question given the significant capital build outlook that you outlined, can we see buybacks being significantly stronger than what we're used to from the Canadian banks or from oil over the last five or 10 years?

Dave McKay -- President and Chief Executive Officer

Yeah. Thank you for that question. We were expecting that question, so thanks. Certainly, as we look at how we best return capital to shareholders given the strong capital, we have more than enough organic capital creation over time to drive our RWA growth.

We see great opportunities for organic growth on the platform. That's first and foremost our objective that we always talk about. But even with that, we do obviously with our pro forma CET1 well over 13% in Q3. We see an opportunity to grow -- accelerate growth and return capital to shareholders at an accelerated rate.

So when it comes to your specific question around dividend payout ratio, our current philosophy, and that won't change in the long term, is to link our dividend payout to core earnings growth as you referenced. We've let that trail to the lower and given the inability to raise dividends. So you know, first and foremost, the signal and in our comments was we view our core earnings to be very strong. You heard me articulate a number of tailwinds that are already embedded in our business, better credit card performance, more active customers, we were down almost $4 billion in credit card balances and that's driving that $400 million revenue.

We expect that to come back, we've got strong embedded profitability in our core deposit book as we've talked about both in Canada and the U.S. All those provide tailwinds that are existing book of business that gives us confidence in our core earnings and ability to move that payout ratio back up to get to the top end of the range. So I would say from our strategy of returning earnings to -- and core earnings to shareholders that remains the same in his ability for us, given we feel the tailwinds and our ability to do that for the strong capital ratios. Then, you turn to the question of longer-term capital return to shareholders and we have a number of tools to do that.

And yes, we do expect to use accelerated buybacks as one of the core tools to return capital to shareholders. We will look at other mechanisms around dividend return and we're running a number of scenarios trying to optimize the return to our shareholders taking all factors into consideration. So the answer is yes to both. We think it's great to have the luxury to feed accelerated organic growth to increase our dividend based on current core earnings and to return increasingly excess capital to our shareholders.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Got it. Thank you.

Operator

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

Gabriel Dechaine -- National Bank Financial -- Analyst

Yeah. I have a similar question actually and more so on the organic RWA growth because you do have, I mean if a pro forma basis close to $12 billion of excess capital above 11%. You've got the buybacks, you've got the dividend but there are limitations there. I'm just wondering how you're thinking about capital assumptions the organic growth? And you know, what does accelerate growth look like to you, how long it could take to kind of chew through that excess capital, which is great to have but it also depresses your returns ironically during the quarter where you have a 90% ROE?

Dave McKay -- President and Chief Executive Officer

Maybe I'll start and maybe Rod wants to jump in after. So in all in my comments, obviously, we highlighted a couple of new platforms particularly the midmarket commercial in the United States where we're looking at largely private companies with revenues between anywhere from kind of $2 billion to $5 billion. Very attractive companies, we've got a whole team that we've stood up there, we've got our leader, Rich Roseto, who has built that business and other large banks and therefore we feel very confident of our ability. So there are new growth trajectories such as that.

We've got -- we expect drawdowns as I said in our operating lines, which are quite significant. The market leader in business financing and our operating lines are currently low utilization. So again, there's going to be drawers in that that are going to consume capital. We've got a fantastic global capital markets business particularly in a very large and active U.S.

marketplace that's going to need capital for underwriting and increased lending opportunities that we're seeing and we've got a very active pipeline. So we've got core businesses that we expect accelerated growth to come from. From new clients, from an existing business on a balance sheet, that all will start to consume, we think, a little more RWA than we previously put out there. So I think we feel very good about our growth opportunities and the getting to manage that well within our current risk appetite.

So having said that, to your point, that's not going to consume the excess capital on our balance sheet and therefore our core acquisition strategy remains focused and unchanged. We're looking to create shareholder value and grow through an acquisition strategy, we remain highly focused and very picky about how we would deploy any capital into an acquisition. Therefore, there is still remains a significant opportunity for us to do all of that and return capital to shareholders so it's a great position to be in. But those are businesses that we think will start accelerating that are going to consume more RWA and position us to perform on growth across our Canadian banking, U.S.

wealth management commercial banking, and global capital markets operations. All are seeing heightened client activity and all have very strong networks. We've invested in expanding capability to capture that growth. We're very excited about the opportunities going forward.

Gabriel Dechaine -- National Bank Financial -- Analyst

Thank you. 

Dave McKay -- President and Chief Executive Officer

Thanks.

Operator

The next question is so Meny Grauman from Scotiabank. Please go ahead.

Meny Grauman -- Scotiabank -- Analyst

 Hi, good morning. Just one clarification before my real question. How much of the 40 million sales tax adjustments that Rod called out were in Canadian banking?

Rod Bolger -- Chief Financial Officer

I think, you know, this goes across our Canadian businesses. We didn't disclose that but the Canadian banking business is a good share of our overall businesses in Canada. All of our businesses are obviously No.1 and No. 2 market share in Canada.

So you can roughly allocate that based on the size of the Canadian banking business. We're not disclosing that but it was a fair amount but not a substantial amount.

Meny Grauman -- Scotiabank -- Analyst

Thanks for that Rod. And then just wondering, you know, we've heard from a few peers, they talked about kind of post pandemics step function up in terms of the run rate of their capital markets business. I wonder from your perspective, how you view your capital market business coming out of the pandemic? In your commentary, you talked about maybe a little bit of moderation in terms of some of the trading revenue. Regardless of markets, is there a step function in your capital markets business? Do you feel like you've met headway through this volatile period?

Derek Neldner -- Group Head, Capital Markets

Sure. It's Derek Neldner. I'll take that question. Thank you for it.

I'll come at it two ways. I think if we look at the pipeline overall right now further to Rod and Dave's comments, we continue to see a very strong backlog and pipeline in our investment banking platform really driven by M&A as well as ancillary financing. Some of the flow financings have moderated a little bit from the peaks but we continue to see very good levels of activity. In our corporate banking business, while as you would have seen from prior quarter results our loan utilization and corporate banking came down significantly following the peak post-pandemic last year, we have seen that stabilize and we're seeing a lot of good incremental financing opportunities to support our corporate clients come up on the back of M&A and organic growth initiatives that our clients are pursuing.

In the market business, we've obviously had a very robust backdrop for the last 12 months. We do expect that will normalize from the peaks but continuing to see a very good growth equity and fixed income market. We do expect that while it will normalize, it will normalize above pre-pandemic levels. I think the second item I would highlight and further some of Dave's comments is, notwithstanding some normalization in the market, we feel we've got a very sound strategy to continue our growth in capital markets.

We've made some important investments in the talent side. We've done some reorganization of our business that David alluded to in his comments. And so we are -- we do think that through a number of our initiatives and investments, we are well-positioned to continue to grow our client businesses, increase our market share and that should move our business to a level above where it was pre-pandemic.

Meny Grauman -- Scotiabank -- Analyst

Thanks, Derek. I didn't want to leave you on. 

Operator

Thank you. The next question is from Doug Young from Desjardins Capital Markets. Please go ahead.

Doug Young -- Desjardins Capital Markets -- Analyst

Hi, good morning. Just my questions are focused on City National Bank. And Rod, I think I missed, maybe you didn't give it, but maybe I missed what impact would be from a 25-basis-point increase in rates just on that business. And I was hoping if you could kind of break that business out a little bit more, I don't think I can get to what pre-tax, pre-earnings was this quarter, but if you could elaborate on what that was and how the growth or if there was growth year over year.

And then if we kind of strip out the noise from PCLs, like what would be the outlook on a pre-tax, pre-provision basis for this business over the coming years? Thanks.

Rod Bolger -- Chief Financial Officer

Sure. Thanks for that, Doug. And you know, we did we disclosed the impact across the two businesses and it's -- which I think I said was worth US$85 million. And it's roughly half and half, if you will, between the private client business and City National business, given the sweet balances there.

And of course, the City National would be more beneficial if long rates also rise, given the loan book and that half of the book is variable but half the book is also a longer-term fix, including some growing mortgage book whereas the suite business is not. In terms of the, you know, the pre-tax, pre-provision for that business, you know, you're looking at roughly US$200 million, typically around there on a stand-alone basis, that's if you look at their call reports. Obviously, we have some purchase accounting other stuff, which mostly is just out anyway. So that is poised to grow.

We have been hampered by lower interest rates, our margins have come way down, right? We continue to invest in that business. We've taken the rate of expense growth down but we're still investing in that business and still growing the expense base. But whereas we had --  probably the first three and a half years after the acquisition we had very positive operating leverage but we will grow in expenses mid-teens, now with growing expenses in the single digits and we -- and the revenue growth was slowing because of interest rates. But now, we're basically ready for growth, with growing deposits and loans double digits to grow in the mortgage book.

We're still growing commercial loans and that should again expand as the U.S. economy goes up. So we should see higher earnings and we kind of hit the high point in Q3 of '19 if you will. But we should see growth throughout 2022 and in 2023. 

Doug Young -- Desjardins Capital Markets -- Analyst

OK. Thank you.

Operator

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

Scott Chan -- Canaccord Genuity -- Analyst

Good morning. Maybe going back to Derek on capital markets. You kind of cited U.S. is roughly half percent fixed rate, 50% of the revenue and the other half is non-U.S.

And maybe you can talk about some of the themes that you talked about within IB and in global markets if there are any differences. And you know, because you are a global markets platform, is there any revenue synergies that are that maybe you can have to speak to perhaps that arisen from the pandemic?

Derek Neldner -- Group Head, Capital Markets

Sure. A couple of questions in there that I'll try to address. And so from a geographic perspective, as Dave mentioned, over half of our revenue today would be in the U.S. We do also have a very strong platform in Europe, and obviously the strength of our domestic platform in Canada.

We're very happy with our geographic footprint. We see very good growth opportunities in the U.S. and it continues to be the primary focus but we'll invest in that in the global platform where we see good opportunities. But clearly, the U.S.

is where we see the most attractive opportunity at this point in time. Between corporate investment banking and global markets, in terms of differences, we see in terms of the outlook. As I mentioned, right now, the pipeline is very robust on the investment banking side. We are optimistic that will continue for some time, given the confidence that we've seen returned to corporate clients as the economy has reemerged.

We do see a little bit more normalization in the market business. You saw that quarter over quarter and we expect that that will continue. So a little more strength may be on the corporate investment banking side with a little more moderation in the market side of the business. I think finally, in terms of your comment on synergies, this is an area where we've continued to invest and grow our business.

We have really been focused on driving more synergies both across geographies and across our platform. You know, all these businesses are very interrelated. Our investment banking activities clearly supported by the loan book as we see primary issuance that drives secondary trading activity and that can then trigger cross-sell opportunities across the other businesses. So we feel we're doing a good job capitalizing on those synergies but we continue to believe there's more we can do there.

We've undertaken some reorganization of the business to allow us to better capture that and we feel good about the opportunity ahead to do so.

Scott Chan -- Canaccord Genuity -- Analyst

All right. Thank you very much.

Operator

Thank you. The next question is from Lemar Persaud from Cormark Securities. Please go ahead.

Lemar Persaud -- Cormark Securities -- Analyst

Thanks. I just wanted to get back in domestic mortgages. So domestic mortgage growth seemed to slow a bit sequentially relative to what we see in its peers. And when I see this and just knowing that Royal was actively taking market share, it just makes me wonder if you guys are intentionally tapping on the brakes because maybe the risk-reward is there,  or maybe there's something else? Just wondering if you could offer any commentary on that.

Neil McLaughlin -- Group Head, Personal & Commercial Banking

Yeah, thanks for the question. This is Neil. Yeah, I mean, I think we look at the mortgage business -- it's definitely not a question about risk. We like the risk.

To your point, we've been growing the mortgage business in double digits for over a year now and still consider it to have tremendous momentum. If you look at quarter over quarter, we did see some exceptionally aggressive pricing in the market both in terms of rates that were offered. We saw spreads really come in. And then also in terms of the offers, the acquisition offers that we saw, some competitors offering more than double over things standard in the marketplace.

So we did just take that opportunity with all the momentum to make a choice to say, we're going to continue to compete and protect our relationship clients but we were looking to really compete for them for the better spread deals, and that had to slow down, I'd say, marginally in the quarter. Now, we have zero concern, I'll tell you, in terms of our ability to continue to grow share in the mortgage business and I'd expect that momentum and you'll see a return in Q2, sorry, Q3.

Lemar Persaud -- Cormark Securities -- Analyst

Excellent. That's it for me. Thank you.

Operator

Thank you. The next question is from Sohrab Movahedi from BMO Capital Markets. Please go ahead.

Sohrab Movahedi -- BMO Capital Markets -- Analyst

Thanks. I just wanted to go back to Graeme, if I could. Graeme, I think you said you've taken a cautious approach to reserve releases or you are taking a cautious approach in this year. I just to get the total bank, the total PCL right and the net recovery.

If I look at your last five years, maybe the average has been more in the 35-ish percent, 25 basis point, I'm sorry. So I just want to make sure I understand it. Are you suggesting that quality zero or even recovery positions have the total PCL for the total bank could persist for the foreseeable future?

Graeme Hepworth -- Chief Risk Officer

So, thanks. Thanks for the question. Certainly, a good piece to talk to because there's a lot of complexity between the different stages of allowances here. Well, certainly, this quarter, in the total PCL perspective, we were in a net release position.

You know, when we say for the foreseeable future, obviously, we can't be in that kind of spot for an extended period. But if you look at how this, you know, curtail in the coming quarters, and certainly, this is very conditional onto those key proof points I referenced in my comments. You know, we're really dependent on how the vaccine rollout kind of, you know, precedes in the coming months that we really get the health outcomes we're looking for, how the economy reopens subsequent to that. And then thirdly, really how kind of the transition of government programs kind of concludes, if you will.

And so, obviously, a lot of dependencies on those. But, you know, we are seeing very good fundamental credit indicators in our portfolio and that's, you know, obviously, seen that translate into very low Stage 3 losses. You know, so all the data analytics would indicate in the near term that we will have a, you know, continued good Stage 3 performance. As we get more confident in those proof points I referenced, then that could yield further Stage 1 and 2 releases.

We do expect though, you know, over the latter half of this year and into kind of the earlier half of 2022 that those impairments and delinquencies will rise, and Stage 3 will rise with that. But again, I think we've got a very, very prudent, you know, loan put up in Stage 1 and 2. And so, that'll be more funded by kind of transition out of Stage 1 and 2 and into Stage 3. And so, that's my kind of comment and, you know, so the variability between those three stages, you know, could change depending on how those factors play out over the coming months.

But in aggregate, we feel quite confident that the total PCL will kind of remain within, you know, our long-term averages. And in the near term, could be a, you know, continued benefits.

Sohrab Movahedi -- BMO Capital Markets -- Analyst

OK. Thank you.

Operator

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

Mario Mendonca -- TD Securities -- Analyst

Good morning. Rod, if you can go to some comments you've offered in the past on the expense side, you suggested that operating leverage could be better in the second half of 2021 than it was in the first half. Now, looking at spends' trends in 2020, it does look like operating leverage should be a little better. Can you offer any outlook on operating leverage in the second half in the context of some of the expenses that some areas of the expense line that you should see some increases or maybe moderation expense growth?

Rod Bolger -- Chief Financial Officer

Yeah. Thanks, Mario. You know, I like to kind of bifurcate between stock-based comp, variable comp FX, and then all the other expenses, right, that are more controllable, which we've done in the chart that we added. You know, I would expect that we would have positive operating leverage into the second half of this year.

Canadian banking is well-positioned for positive operating leverage with good expense discipline. You know, I think our FTE might have been up year over year, but down quarter over quarter. So, we're managing that well and we're continuing to grow the client base. And now, revenue growth is accelerating.

And then you look at the wealth businesses, a lot of that depends on the markets. If we keep constructive equity markets, we should see continued positive operating leverage. And at the all-bank level, you know, a lot of it gets down to NICS. You know, you can run a scenario where you have positive operating leverage of 2% across all five segments and a negative at the top of the house.

Also, some of the accounting and insurance can confuse the top of the house, because you can get some big trades that have big revenue, but also PBCAE so it kind of disrupts the NII. So, but all in all, we should see positive operating leverage at the top of the house in the second half of the year, you know, absent some market disruption.

Mario Mendonca -- TD Securities -- Analyst

OK. And then just my final question is on the all-bank margin, I'd like to separate what I see from the domestic and the U.S. retail banking segments and what I see at the rest of the bank. And it does seem to me that we should see some progression in the margin because low-margin liquidities are coming down, rates are moving higher, cards might improve.

But I didn't get the sense from listening to your opening comments that you'd expect the all-bank margins to improve. I may have misunderstood, but what is that outlook? And if it's not going to improve, can you offer some reasons as to why?

Rod Bolger -- Chief Financial Officer

Yeah. Thanks for that. And, you know, it's important to look at that. There's a lot of complexity that it could get into, right? We're going to see positive net interest income at the Canadian banking level in the second half of the year.

We're going to see positive net interest income growth international in U.S. dollar terms, and we'll see positive for both of those for the full year, which I think is important. But what you might see because of the stronger Canadian dollar is you might see that benefit at the top of the house kind of evaporate as you convert it from U.S. dollars to Canadian dollars.

But we'll get a benefit on that and it's expensive, so it's not going to hurt earnings. Similarly, loan book margins and Derek's business have come down, utilization is down versus a year ago, and margins have come down. There's so much liquidity out there. So, you've got to look at some of those other businesses trading net interest income, might see a little bit of headwinds, but it's not a big driver.

Loan book and capital markets, again, not a big driver. So, when you add all that up, because of foreign exchange, because of trading book, you might see it moderate and be kind of zero-ish, but the core business is you're going to see net interest income growth in the core businesses and local currency. And that's what's going to drive the overall earnings at the top of the house.

Mario Mendonca -- TD Securities -- Analyst

OK. Thank you.

Operator

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

Paul Holden -- CIBC -- Analyst

Thank you. Good morning. So, I want to kind of go back to a point Rod just made in his answer regarding the amount of liquidity out there, and I appreciate your optimism regarding the outlook for NII and loan growth. I'm totally there with you given the economic data we're seeing out of the U.S.

But the concern, I guess, is that there's so much liquidity out there that maybe that return to loan growth at the industry level might take longer than we're originally thinking. So, wondering if you can put some thoughts around the timing on that, not to a specific quarter, but, you know, will it come later in 2021 or we have to wait for 2022, or we have to wait for later in 2022 just sort of a general -- some general thoughts around timing would be helpful.

Dave McKay -- President and Chief Executive Officer

Paul, maybe I'll start then Rod can jump in. So, you know, in my comments, we tried to signal that one of the big categories of loan growth for us and a bigger contributor is the return of our credit card balances back to the $19 billion, $20 billion range from $16 billion. And that is normally been highly correlated to economic activity in the economy and purchase activity on those cards. And as we do the analysis and we look at who's got excess deposits and who's using their credit cards, we do expect that that relationship will continue to hold going forward.

There may be a little bit of a lag that because of the excess liquidity out there, it's not -- it won't be a perfect correlation that you saw historically through economic cycles. So, there may be a lag, but we don't think it's a significant lag. The client behavior is client behavior and that will come back along with increased card purchases in the economy. So, I think there's an example of liquidity being out there like clients keeping liquidity, investing liquidity, and us getting the card growth.

On the business side, business financing side, certainly, liquidity and optimizing their cash flow probably will play a bit of a lag, and I think you're already seeing that. You're already seeing the economy certainly in the mid-market commercial end that utilization rates continue to be at kind of cyclical lows. And therefore, you know, I would have to expect that given some of the economic activity, that inventory receivable build would have led to drawdown and you're not seeing that, per se. So, there's an example of it already kind of lagging, but it will come, it will come through the cycle.

And then on the corporate side, certainly, you're seeing the liquidity lead in pay downs of those draws you saw last year. And as Derek just pointed out, now that they've come through that, there's a focus on growth among all clients and you're going to start to see drawdowns there. So, there's examples of walking through our, you know, three businesses where there is a certain lag and a couple of them, but you're starting to see the correlations rebuild. Rod, did you want to add anything to that?

Rod Bolger -- Chief Financial Officer

Yeah. I mean, you look structurally at some of the points Dave made, right, you've got the force working against you is the liquidity. You know, arguably 20 years of savings rate in both Canada and the U.S. over the last year, so that hurts loan growth.

But then you have structural with, you know, mid-single-digit GDP growth that everyone is forecasting, that's going to drive it up. Plus, I think companies are going to be less likely to play more just in time. Because of supply chain issues that are out there, they're going to hold more inventory. That's going to be positive.

And then you look at the mix of businesses, you know, even when we've had negative loan growth in capital markets over the last year, we've had positive top the house, because we have such strength and diversified business. City National strong double digits, that's a good starting point. Even with our mortgage business going from double digits to high-single digits, even if it falls to mid-single digits by the second half of next year, because you put it all together, we're still going to have good positive loan momentum.

Dave McKay -- President and Chief Executive Officer

And in the glass-half-full side, it could feed into our investment business, as we talked about, you know, in our speeches. So, there's as many positives or more positives than there are negatives to that liquidity.

Paul Holden -- CIBC -- Analyst

OK. OK. And just -- I want to go a little bit deeper here. Just on the business loan growth, you mentioned there could be a lag.

Again, you know, there's a little bit of guess for everyone. But do you think it's kind of a one- or two-quarter lag or could it be something that's, you know, a four-quarter lag like a little bit more significant?

Dave McKay -- President and Chief Executive Officer

Neil, do you want to take a stab at that?

Neil McLaughlin -- Group Head, Personal & Commercial Banking

Yeah, sure. I mean, just a little bit of color on the, you know, we're really seeing it in revolvers and particularly a couple of sectors. But in the core commercial business, we're seeing the revolver utilization rate down 10% from where we were pre-pandemic. I think, you know, you have to then look at the deposits, were up about $40 billion of deposits.

I think as you start to see the economy reopen, you'll start to see entrepreneurs' confidence to invest that capital. You know, I think we'd be much closer to that kind of, you know, one to two quarters. We don't expect it to be in the four-quarter range. I mean, there's also sectors like, for example, our auto finance business, there just isn't the inventory to finance.

And so, that's related to the supply chain issues that Rod referenced. We expect that supply to come back online, you know, into early next year. We get these microchips to the manufacturers and you'll see that really spring up, and we'll see strong growth there. So, it would be very similar, you know, comments as we look at our consumer lending business.

We think probably, you know, a four-month type of lag between when you'd see that direct lending come back. After the economy opens, people can start traveling and we see some of the consumer spending Dave talked about really tick up.

Paul Holden -- CIBC -- Analyst

That's helpful. Thank you. Appreciate it.

Dave McKay -- President and Chief Executive Officer

We have one more question in the queue. We'll go to that.

Operator

Thank you. The next question is Nigel D'Souza from Veritas Investment Research. Please go ahead.

Nigel D'Souza -- Veritas Investment Research -- Analyst

Thank you. Good morning. I wanted to ask the employee reduction in a different way. And I was wondering if, you know, persistent U.S.

dollar weakness, does that change how you evaluate your U.S. franchises? So, for example, if we turn into a world where the Canadian dollar is closer to parity, does your strategy in the U.S. change, and do you start prioritizing, you know, Canadian businesses more? Or does currency not have a major impact on your outlook here?

Dave McKay -- President and Chief Executive Officer

So, I would say -- sorry I'll use someone else's. Can you hear me? So, I would say that currency doesn't have a long-term impact. In fact, it may make capital deployment into these was a little easier at that point. But certainly, as you're looking at growing your franchise, you know, given the size of ROI and our goal to drive premium growth off of, you know, as you saw pre-tax pre-provisioned earnings of $5 billion.

We need a deep U.S. business and capital markets, we need a deep business and U.S. wealth management and commercial banking to continue to drive a, you know, profit performance. And therefore, the U.S.

market remains absolutely critical to overall growth strategy and our performance strategy regardless of where the U.S. dollar is. And in fact, it may accelerate our ability to grow. So, I think, you know, dollar is going to impact earnings obviously, impact RWA, but it's not impacting the overall need and our overall construct of how we want to balance growth between Canada, United States, and Europe.

Nigel D'Souza -- Veritas Investment Research -- Analyst

That makes sense. Thanks for the color. Thank you.

Dave McKay -- President and Chief Executive Officer

Is that it?

Operator

Thank you. This concludes today's question-and-answer session. I'd like to turn the meeting back over to Mr. McKay.

Dave McKay -- President and Chief Executive Officer

I just want to thank everybody for their questions. And, you know, just the core messages that I think came up both in the speeches but also in a lot of great questions that we received that we're, you know, very happy with our pre-tax pre-provision earnings of 11% and $5 billion. I think it really highlights the organic growth capability of this franchise. You saw strong performance across the board.

And then we had a chance to highlight where we see embedded profitability in business we've already earned from clients, whether that's, you know, the existing credit cards in customers hands, whether that's a significant number of operating lines that we already have with customers that will get drawn. And so, increased overall economic activity will drive growth without having to earn a new client. We've got the interest rate tailwind that we think differentiates ourselves both in Canada and U.S. already on our balance sheet.

And then you heard a number of strategies to acquire new clients and grow, whether that's, you know, a unique RBC badge and leveraging our differentiated loyalty platform to completely change the core client business. You know, we're having enormous success with the College of Surgeons and attracting high-net-worth medical professionals in Canada and we're very excited about that. You heard about our, you know, new growth strategy in the mid-market corporate on top of a very successful, as Rod pointed out, mortgage strategy in the U.S. that's really getting, you know, significant traction with already $15 billion of mortgages on our balance sheet in the U.S.

and growing, you know, core double-digit growth in our City National Bank we expect to continue. So, we feel that the investments we've made, we didn't back off, capital markets opportunities are significant, and our advisory M&A, ECM, and DCM business. So, we feel very well-poised now through historic investments to capitalize on the growth and the investments that are going to get made to transition and improve our society. So, thank you very much for your questions.

We look forward to seeing you in Q3. Have a good summer.

Operator

[Operator signoff]

Duration: 64 minutes

Call participants:

Nadine Ahn -- Head of Investor Relations

Dave McKay -- President and Chief Executive Officer

Rod Bolger -- Chief Financial Officer

Graeme Hepworth -- Chief Risk Officer

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Gabriel Dechaine -- National Bank Financial -- Analyst

Meny Grauman -- Scotiabank -- Analyst

Derek Neldner -- Group Head, Capital Markets

Doug Young -- Desjardins Capital Markets -- Analyst

Scott Chan -- Canaccord Genuity -- Analyst

Lemar Persaud -- Cormark Securities -- Analyst

Neil McLaughlin -- Group Head, Personal & Commercial Banking

Sohrab Movahedi -- BMO Capital Markets -- Analyst

Mario Mendonca -- TD Securities -- Analyst

Paul Holden -- CIBC -- Analyst

Nigel D'Souza -- Veritas Investment Research -- Analyst

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