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Laurentian Bank of Canada
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Good
day
and
welcome
to
the Laurentian
Bank
of
Canada
First
Quarter
Results
2022
Conference
Call.
Today's
conference
is
being
recorded.
At
this
time,
I
would
like
to
turn
the
conference
over
to
Ms.
Susan
Cohen,
Head
of
Investor
Relations
for
Laurentian
Bank.
Please
go
ahead,
ma'am.
Thank
you.
Bonjour
à
tous.
Good
morning,
and
thank
you
for
joining
us.
Today's
opening
remarks
will
be
delivered
by
Rania
Llewellyn,
President
and
CEO;
and
the
review
of
the
first
quarter
financial
results
will
be
presented
by
Yvan
Deschamps,
Executive
Vice
President
and
Chief
Financial
Officer.
After
which,
we
will
invite
questions
from
the
phone.
Also
joining
us
for
the
question
period
are
several
members
of
the
bank's
executive
leadership
team:
Liam
Mason,
Chief
Risk
Officer;
Eric
Provost,
Head
of
Commercial
Banking;
Karine
Abgrall-Teslyk,
Head
of
Personal
Banking;
and
Kelsey
Gunderson,
Head
of
Capital
Markets.
All
documents
pertaining
to
the
quarter
can
be
found
on
our
website
in
the
Investor
Center.
I
would
like
to
remind
you
that
during
this
conference
call,
forward-looking
statements
may
be
made
and
it's
possible
that
actual
results
may
differ
materially
from
those
projected
in
such
statements.
For
the
complete
cautionary
note
regarding
forward-looking
statements,
please
refer
to
our
press
release
or
to
slide
2
of
the
presentation.
I
will
also
remind
listeners
that
the
bank
assesses
its
performance
on
a
reported
and
adjusted
basis.
It
considers
both
to
be
useful
in
assessing
underlying
business
performance.
Rania
and
Yvan will
be
referring
to
adjusted
results
in
their
remarks,
unless
otherwise
noted,
as
reported.
It
is
now
my
pleasure
to
turn
the
call
over
to
Rania
Llewellyn.
Bonjour
à
tous.
Good
morning,
and
thank
you
for
joining
us
today.
Before
I
begin,
I
want
to acknowledge
the
significant
human
toll
of
the
current
conflict
in
Ukraine.
To
help
support
and
respond
to
the
humanitarian
needs
in
Ukraine
and
surrounding
countries,
we
have
made
a
donation
to
the
Red
Cross
Ukraine
Humanitarian
Crisis
Appeal.
Now,
turning
to
my
prepared
remarks,
at
the
end of
last
year,
we
unveiled
a
new
three-year
strategic
plan
for
the
bank
to
drive
long
term
sustainable
and
profitable
growth.
While
it
has only
been
a
few
short
months,
we
have
already
taken action
on
a
number
of
fronts.
And
I
want
to
sincerely
thank
all
of
the
Laurentian
Bank
employees
who
have
worked
together
as
one
team
to
deliver
on
our
new
strategy.
The
COVID-19
vaccination
rollout
in
developed
countries
continues
to
contribute
to
a
robust
economic
recovery.
In
Canada,
solid
GDP
growth
was
driven
by
robust
spending
intentions,
the
reopening
of
the
economy,
and
the continuation
of
targeted
federal
government
support
despite
high
CPI
inflation.
However,
the
onset
of
the
Omicron
variant
led
to
brief
shutdowns,
disrupting
the
initial
positive
momentum
in
the
quarter.
Notwithstanding
uncertainties
related
to
labor
shortages,
global
supply
chain
bottlenecks,
and
the
more
recent
geopolitical
risks,
we
continue
to
see
positive
momentum
heading
into
Q2.
I
would
now
like
to
review
our
Q1
2022
results.
The
bank
delivered
a
strong
start
to
the
year.
Fueled
by
top
line
revenue
growth
of
4%,
net
income
for
the
first
quarter
was CAD
59.5
million
or
25%
higher
than
a
year
earlier,
with
earnings
per
share
of
CAD
1.26,
up
22%
year-on-year.
ROE
reached
9.2%,
up
170
basis
points
from
a
year
ago.
Results
were
primarily
driven
by
strong
performance
in
Commercial
Banking,
our
continued
focus
on
cost
management,
and
sound
credit
quality.
Commercial
Banking
grew
its
loan
portfolio
by
CAD
2.2
billion
or
17%
year-over-year,
and
was
up
CAD
1.3
billion,
or
9%
quarter-over-quarter.
Inventory
financing
exceeded
our
expectations
with
loan
growth
of
39%
quarter-over-quarter,
as
manufacturers
delivered
more
equipment
to
our
dealerships.
This
quarter,
the
dealer
credit
utilization
rate
increased
to
43%,
which
is
up
from
35%
last
quarter,
but
still
below
the
historical
level
in
the
mid-50s.
Given
our
success in
increasing
our
dealer
network
over
the
past
year,
a
1%
increase
in
utilization
rate
is
currently
equivalent
to
CAD 60
million
in
assets
to
our
balance
sheet.
We
were
encouraged
by better
than
expected
Q1
results,
which
will
continue
to
have
a
positive
impact
on
Q2
before
projected
seasonal
reductions
occur
in
the
latter
half
of
the
year.
With
our
continued
focus
on
cost
management,
the
efficiency
ratio
improved
by
190
basis
points
year-over-year.
As
the
economy
reopens,
inflation
and
normalization
of
business
activities
may
put
some
pressure
on
costs
and
cause
some
variability
in
our
efficiency
ratio.
However,
our
focus
on
disciplined
expense
management
and
structural
cost
optimization
should
set
the
stage
for
continued
improvement
over
the
medium
term.
Our
sound credit
quality
was
evidenced
by
the
declining
trend
in
impaired
loans
and
low
provision
for
credit
losses.
While
the PCL
ratio
came
in
at
11
basis
points
this
quarter,
we
continue
to
expect
that the
evolving
business
mix
will
lead
to
a
PCL
ratio
in
the
mid-teens
this
year.
The
bank
continues
to
maintain
healthy
liquidity
levels
and
a
strong
capital
position
to
support
our
strategic
plan
with
a
CET1
ratio
of
9.8%.
As
outlined
at
our
Investor
Day,
our
business
lines
play
a
key
role
in
the
success
of
our
strategy.
To
recap,
Commercial
Banking
remains
our
growth
engine,
Capital
Markets
provides
a
focused
and
aligned
offering,
and
Personal
Banking
is
repositioning
for
growth.
This
is all
underpinned
by
a
strong
culture
and
focus
on
making
the
better
choice
by
living
our
values
and
integrating
ESG
best
practices.
2022
is
the
year
of
execution,
and
we
have
already
made
good
progress.
As
I
outlined
in
our
financial
results,
our
Commercial
Bank
continues
to
execute
on
a
proven
business
model
with
robust
loan
growth.
This
quarter,
our
focus
on
our
specializations
and
additional
relationship
managers
led
to
strong
origination
capacity,
allowing
us
to
grow
our
inventory
financing
credit
line
authorizations
by
13%
quarter-over-quarter,
reaching
CAD 6
billion,
expand
our
real
estate
pipeline
to
CAD 4.3
billion,
up
9%
versus
last
quarter
as
we
were
able
to
benefit
from
the
high
volume
of
new
construction
projects
in
the
Canadian real
estate
market,
and
generate
close
to
CAD
200 million
of
new
business
volume
in
equipment
financing,
bringing
us
back
to
pre-pandemic
origination
levels.
With
significant
growth
in
inventory
and
equipment
financing,
the
percent
of
commercial
loans
in
the
US
reached
17%,
in
line
with our
commitment
to
continue
to
diversify
our
portfolio
by
geography.
We
also
continue
to maintain
a
Net
Promoter
Score
of
over
50
or
excellent,
based
on
our
latest
customer
survey
conducted
in
November
with
both
our
equipment and
inventory
financing
customers.
These
scores
reflect
the
deep
relationships
we
continue
to
have
with
our
commercial
customers.
In
Capital Markets,
we
continue
to
offer
a
focused
and
aligned
approach
to
differentiate
ourselves
from
the
competition.
Q1
results
remained
solid,
particularly
in
fixed
income,
although
overall
have
moderated
somewhat
from
last
year's
strong
pace.
In
line with
our
strategy,
we
are
further
aligning
our
capabilities
with
the
broader
bank
and
have
hired
new
talent
in
our
diversified
group
to
augment
our
offering
and
provide
strategic
advice
to
commercial
clients.
Hired
a
new
real
estate
research
team,
which
is
a
key
focus
area
and
a
specialized
sector
for
the
Commercial
Bank,
allowing
us
to
triple
issuer
needs
under
coverage,
and
participated
in
multiple
government
green
bond
issuances
in
Canada
in
the
first
quarter,
including
those
issued
by
the
City
of
Ottawa
and
Province
of
Ontario,
in
line
with
our
strategy
to
offer
value-added
ESG
capabilities.
In
Personal
Banking,
we
are
focused
on
closing
key
foundational
gaps
to
drive
customer
retention
and
acquisitions,
while
deepening
existing
relationships.
I
would like
to provide
three
updates
related
to
our
strategy.
First,
efforts
related
to customer
retention
continued,
including
the
use
of
predictive
analytics,
and
the
launch
of
a
new
customer
loyalty
team.
The
virtual
team
was
launched,
onboarded,
and
trained
throughout
November
and
started
making
proactive
calls
to
our
customers
in
December.
This
team
is
initially
focusing
on
customers
with
mortgages
coming
to
maturity,
and
locking
them
into
new
terms.
Initial
results
are
encouraging,
and
the
team
is
gaining
momentum.
While
improving
the
performance
of
the
mortgage
business
is
expected
to
be
a
multi-year
journey,
we
are
confident
that
it
should
gradually
yield
benefits
along
the
way.
Second,
following
our
commitment to
transform
our
Visa
product
suite,
we
announced
a
new
strategic
partnership
with
Brim
Financial.
This
partnership
will
fuel
our
digital
transformation
and
enhance
the
end-to-end
customer
journey
for
our
suite
of
Visa
products.
By
the end
of
this year,
we
will
have
reduced
the
credit
card
adjudication
time
from
25
days
to
instantaneous,
while
also
delivering
a
robust
rewards
platform
aligned
to
our
new
brand
purpose. In
keeping
with
our focus
on
simplification,
the
partnership
also
reduces
the
number
of
vendors
we
use
to
issue
a
card
from
five
to
one
and
reduces
manual
processes
by
90%.
This
will
close a
key
foundational
gap
for
the
bank
and
will
allow
us
to
continue
to
grow
our
national
presence.
Third,
I
am
pleased
to
report
strong
customer
demand
for
our
recently
launched
mobile
app.
The
app
allows
customers
to
do
their
most
common
banking
transactions
on-the-go.
Using
an
agile
approach,
the
bank
will
continue
to
update
and
enhance
its
app
and
customers
will
see
improvements
[ph]
through (00:12:05)
ongoing
releases.
In
just
three
months,
over
25%
of
our
active
online
banking
customers
have
now
downloaded
the
app,
doubling
our
Q1
target.
Finally,
our
strategic
plan
is
underpinned
by
a
strong
culture
and
an
unwavering
commitment
to ESG.
I
will
now
outline
key
developments
related
to
these
priorities.
First,
as
part
of our
focus
on
cost
optimization
and
our
Future
of
Work
strategy,
I
am
pleased
to
report
that
we
have
made
significant
progress
on
reducing
our
leased
corporate
office
space
and
have signed
an
agreement
for
our
199
Bay
Street
location
in
Toronto.
This
is
in
line
with
our
objective
to
move
to
a
hybrid
work-from-home
first
model
for
all
tasks
that
can
be
performed
remotely.
Second,
as
part
of
our
commitment to
building
One
Winning
Team,
I
am
pleased
to
announce
that
Bindu
Cudjoe
has
joined
Laurentian
Bank
as
the
new
Chief
Legal
Officer
and
Corporate
Secretary.
Bindu
brings
over
20
years
of
experience
in
legal
and
regulatory
affairs,
corporate
and
board
governance,
strategic
partnerships
and
compliance.
Third,
in
line
with our
strategic
pillar
to
make
the
better
choice,
I
am
very
proud
that
today
we
published
Laurentian
Bank's
first
ever
ESG
report,
which
highlights
a
number
of
key
initiatives,
including
a
materiality
assessment
to
identify
key ESG
priorities
for
the
bank,
disclosures
aligned
to
the
TCFD recommendations,
including
a
climate
risk
assessment
and
heat
map,
and
new
equity,
diversity
and
inclusion
policies.
Additionally,
the
bank
has
also
joined
the
Partnership
for
Carbon
Accounting
Financials.
The
PCAF
initiative
enables
collaboration
among
the
world's
financial
institutions
to
develop
standardized
methods
for
measuring
and
disclosing
carbon
emissions
from
their
financing
and
investment
activities.
We
are
in the
early
stages
of
our
ESG
journey,
and
this
report
represents
another
key
step
towards
delivering
a
comprehensive
sustainability
program
across
the
organization.
To
conclude
my
opening
remarks,
I
am
pleased with
the
progress
we
have
made
this
quarter,
and
I
will
now
turn
the
call
over
to
Yvan.
Merci,
Rania.
Bonjour
à
tous.
I
would
like
to
begin
by
turning
to
slide
12,
which
highlights
the
bank's
strong
financial
performance
for
the
first
quarter
of
2022.
Reported
EPS
was
$1.17,
and
net
income
was
$55.5
million.
Adjusting
items
this
quarter
amounted
to
$5.4
million
before
taxes
and
included
$3
million
related
to
the
amortization
of
acquisition-related
intangible
assets,
and
$2.3
million
of
impairment
and
restructuring
charges.
The
latter
related
to
the
successful
completion
of
the
reduction
in
leased
corporate
office
space
in
Toronto,
which
required
a
$2.3
million
adjustment
to
the
charges
recorded
in
the
fourth
quarter
of
2021.
Details
of
adjusting
items
for
the
quarter
are
shown
on
slide
26.
The
remainder
of
my
comments
will
focus
on
adjusted
results.
EPS
and ROE
were
CAD
1.26
and
9.2%,
an
increase
of
22%
and
170
basis
points,
respectively,
compared
to
a
year
ago
and
ahead
of
our
2022
targets.
The
pre-tax
pre-provision
income
or
PTPP,
was
CAD 85
million,
a
10%
increase
compared
to
last
year,
driven
by
both
strong
revenue
growth
and
good
cost
discipline.
Compared
to
the
fourth
quarter
of
2021,
EPS
and
ROE
increased
by
19%
and
170
basis
points,
respectively,
mainly
due
to
lower
PCL.
Note
that
in
the
fourth
quarter
of
2021,
a
provision
for
investment
loans
of
CAD 19.3
million
was
taken.
PTPP
decreased
by
2%,
driven
by
higher
non-interest
expenses.
This
increase
was
mainly
the
result
of
higher
payroll
charges
due
to
a
higher
level
of
performance-based
compensation
paid
in
January.
Also,
noteworthy
semi-annual
payments
on
LRCN
are
made
in
the
first
and
third
quarters.
As
such,
we
made
a
payment
in
Q1,
which
accounted
for
CAD
0.06
per
share.
Slide
13
shows
the
improvement
in
net
interest
margin.
At
1.88%,
NIM
was
4
basis
points
higher
than
a
year
ago,
mainly
due
to
higher
inventory
financing
volumes
and
lower
funding
costs.
Net
interest
margin
increased
by
5
basis
points
versus
last
quarter,
mostly
due
to
the
strong
growth
in
inventory
financing
volumes
experienced
over
the
past
two
quarters.
Other
income,
as
presented
on
slide
14,
increased
by
3%
compared
with
a
year
ago,
mainly
due
to
higher
commissions
on
sales
of
mutual
funds,
reflecting
higher
asset
sales
and
net
sales,
as
well
as
higher
lending
fees,
primarily
driven
by
the
strength
in
real
estate
financing.
Sequentially,
other
income
was
1%
lower,
impacted
by
lower
fees
and
securities
broker
commissions
as
the
pace
of
Capital
Markets
activity
has
somewhat
moderated.
Slide
15
presents
non-interest
expenses
that
increased
by
CAD
2.2
million
or
1%,
compared
to
a
year
ago.
This
was
mainly
due
to
higher
payroll
charges
resulting
from
a
higher
level
of
performance-based
compensation
paid
in
January,
as
previously
mentioned,
and
higher
professional
fees
to
support
our
strategic
initiatives.
Partially
offsetting
these
increases
were
lower
amortization
charges
and
rent
expenses
stemming
from
our
decision
to
reduce
the
footprint
of
our
corporate
offices
by
50%.
Sequentially,
non-interest
expenses
increased
by
5%,
mainly
due
to
higher
salaries
and
employee
benefits.
The
efficiency
ratio
stood
at
67%
in
the
first
quarter
of
2022, an
improvement
of
190
basis
points
year-over-year
and
in
line
with
our
2022
target
of
less
than
68%.
Operating
leverage
was
positive
3%
year-over-year.
Sequentially,
the
efficiency
ratio
increased
by
150
basis
points.
While
we
continue
to
focus
on
cost
discipline,
as
well
as
revenue
growth,
there
can
be
variability
from
quarter-to-quarter
in
this
measure.
Slide
16
presents
our
well-diversified
sources
of
funding.
Our
objective
is
to
align
deposit
growth
and
loan
growth.
To this
end
in
the
first
quarter,
total
deposits
increased
by
CAD
1.1
billion
as
loans
increased
by
CAD
0.7
billion.
Growth
in
personal
notice
and
demand
deposits
was
particularly
strong,
reflecting
our
strategy
to
deepen
and
expand
the relationships
with
advisors
and
brokers.
Slide
17
highlights
our
healthy
capital
position.
The CET1
capital
ratio,
which
is
presented
under
the
standardized
approach,
stood
at
9.8%
at
the
end
of
the
first
quarter,
compared
to
10.2%
at
year
end.
During
the
first
quarter,
we
deployed
capital
to
support
organic
growth
which
is
our
priority.
We
also
repurchased
294,000
shares
under
the
NCIB
at
an
average
price
of
CAD
42.86
for
a
total
of
CAD
12.6
million.
Our
capital
position
remained
strong
and
supports
our
strategic
plan
towards
sustainable
profitable
growth.
Slide
18
highlights
the
commercial
loan
portfolio,
which
delivered
strong
growth.
Loans
increased
by
9%
quarter-over-quarter,
driven
by
growth
in
inventory
financing
of
over
CAD 700
million
or
39%
and
real
estate
financing
of
CAD
400 million
or
5%.
Slide
19
presents
the
Pan-Canadian
residential
mortgage
loan
portfolio.
Residential
mortgage
loans
declined
by
2%
sequentially.
We
previously
mentioned
that
improving
the
performance
of
the
mortgage
business
is
expected
to
be
a
multiyear
journey
as
we
take
actions
to
improve
the
customer
experience,
retain
customers,
and
renew
growth.
The
bank's
residential
mortgage
portfolio
remains
relatively
weighted
towards
insured
mortgages
when
compared
to
the
industry
at
56%,
and
combined
with
a
low
LTV
on
the
uninsured
portfolio
contributes
to
reducing
the
overall
risk
of
this
business.
Turning
to
slide
20,
allowances
for
credit
losses
totaled
CAD
208.9
million,
a
sequential
increase
of
CAD
6.3
million.
This
quarter,
the
bank
released CAD
5
million
in
ECL
for
performing
loans,
which
was
offset
by
growth
in
the
commercial
loan
portfolio,
as
well
as
the
normal
variation
in
a
few
commercial
loans
without
any
particular
trends.
As
shown on
slide
21,
the
provisions
for
credit
losses
was
CAD 9.4
million
in
the
first
quarter
of 2022,
decreasing
by
CAD
7.4
million
from
a
year
ago.
Lower
provisions
on
impaired
loans
and
lower
level
of
write-offs
were
partly
offset
by
higher
provisions
on
performing
loans.
Sequentially,
the
provision
for
credit
losses
decreased
by CAD
15.5
million,
as
the
prior
period
included
provisions
of
CAD 19.3
million
for
the
investment
loan
portfolio.
The
PCL
loan
ratio
stood
at
11
basis
points.
Slide
22
highlights
the
improving
trend
in
gross
impaired
loans,
which
decreased
by
15%
quarter-over-quarter.
Impaired
loans
declined
mainly
as
a
result
of
loans
returning
to
[ph]
performance
and (00:23:52)
performing
status
and
repayments.
We
remain
adequately
provisioned.
I
would
now
like
to offer
some
thoughts
on
how
we
see
the
second
quarter
of
2022
developing.
Shorter
quarter
effect
is
anticipated
to
be
offset
– partly
offset
by
the
impact
of
the
solid
loan
growth
experienced
in
Q1. NII
and
NIM
are
therefore
expected
to
remain
strong,
although
slightly
lower
than
in
Q1.
We
anticipate
good
performance
from
our
Capital
Markets
business
line,
but
remain
cautious
as
market
activity
has
moderated
somewhat
and
uncertainty
remains
elevated.
Our
focus
on
cost
discipline
will
continue.
We
aim
for
our
efficiency
ratio
to
remain
lower
than
68%,
even
though
overall
spending
will
increase
gradually
over
the
year
as
we
invest
in
our
growth
and
strategic
initiatives. Provisions
for
credit
losses
remain
difficult
to
predict
on
a
quarterly
basis.
We
continue
to
expect
that
the
evolving
business
mix
will
lead
the
PCL
ratio
to
gradually
increase
towards
the
mid-teens.
For
the rest
of
2022, uncertainties
remain
high,
including
the
developing
Russia-Ukraine
conflict,
the
potential
emergence
of
new
variants,
and
continuing
supply
chain
challenges.
Strong
Commercial
Banking
loan
growth
over
the
past
two
quarters
is
expected
to
moderate
in
Q2
and
then
contract
in
Q3.
The
latter
is
the
result
of
the
seasonality
of
our
inventory
financing
activities
as
a
large
portion
of
our
portfolio
is
in
RV
and
marine
products.
For
these
verticals,
our
dealer
base
is
signaling
a
high
level
of
presold
equipment,
which
is
expected
to
lead
to
a
reduction
in
credit
utilization
in
Q3.
This
anticipated
reduction
may
moderate
profitability
growth
in
the
second
half
of
2022. Overall,
despite
the
uncertainties
and
potential
quarterly
fluctuations,
we
believe
that
the
strong
results
delivered
in
Q1
position
the
bank
to
meet
or
exceed
its
performance
targets
for
2022.
I
will
now
turn
the
call
back
to
Susan.
At
this point,
I
would
like
to
turn
the
call
over
to
the
conference
call
operator
for
the
question-and-answer
session.
Jess?
Thank
you.
[Operator Instructions]
We'll
pause
for
just
a
moment
to
allow
everyone
an
opportunity
to
signal.
Our
first
question
comes
from
Meny
Grauman
at
Scotia
Capital.
Your
line
is
open.
Please
go
ahead.
Hi.
Good
morning.
First
question
is
just
on
the
inventory
finance
business.
The
growth
that
we
saw
even
outpaced
the
Q4.
You
talked
about
the
seasonality
last
time
around
and
emphasized
it
now
as
well.
And
I'm
just
wondering,
is
that
all
we're
seeing
here
seasonality
or
is
there
something
else
going
on
that
[ph]
surprised
you
to
the
upturn (00:27:34)?
Meny,
it's
Eric. Thank you.
Thanks
for
the
question.
Actually,
Q4
and
Q1
will
be
impacted
by
the
seasonality.
As
highlighted
by
Yvan,
like
over
50%
right
now
of
our
inventory
finance
business
is
towards
RV
and
marine,
and
we
saw
good
supply
capability
from
–
mostly
the
RV
side
of
the
business.
So,
right
now,
we
do
expect
this
to
continue
in
the
beginning
of
Q2,
but
definitely
with
product
demand
still
very
strong
out
there,
we
feel
that
credit
line
utilization
should
decline
end
of
Q2,
but
beginning
of
Q3
and
for
the
summer
period.
So,
Meny,
I
just want
to
make sure
we've answered
your
question.
So,
[ph]
it's part of
seasonality
unusually (00:28:33)
in
Q4
and
Q1.
And
then
based
on
the
presale,
as
Eric
was
saying, that's
when
you
start
seeing
utilization
rates
of
our
credit
lines
going
down
usually
in
Q2
and
Q3.
However,
we
have
strong
momentum.
So,
we've
already
started
seeing
the
moderated
pace
going
into
Q2,
but
we'll
probably
see
the
credit
utilization
lines
going
down
a
little
bit
more
in
Q3.
Now
what
the
business has
done
under
Eric's
leadership
is,
over
the
past
year,
we
grew
the
number
of
dealers
year-over-year,
and
so that's
helping
with
the
moderation,
as
well
as
starting
to
look
at
different
industries
outside
of
RV
and
marine.
So,
obviously,
we're
– it's
going to
continue to
be
a
growth
engine,
but,
yes,
there's
going to
be
seasonally
lower
utilization
in
Q3
because
of
the presold
inventory.
We
hear
a
lot
about
that.
From
your
perspective,
is
there
any
change
there
for
–
in
terms
of
things
improving
that
are
not
yet
obvious
to
us?
Are
you
seeing
anything
like
that
or
that's
not
the
case
at
all?
Could you
clarify
improving,
Meny,
just
to
make
sure?
Are
you
talking about
just
in terms
of
the
macro
trends,
yeah?
I'm
just
–
I'm
wondering
about
what
you're
seeing
in
your
business
in
terms
of
like
its
supply
chain
becoming
less
of
an
issue
in
that
business
or
is
that
not
really
what's
driving
these
numbers
at
all?
Well,
like
I
said,
like
we
–
some
business
lines
like
RV
is
more
consolidated
in
terms
of
OEMs,
so
they've
been
more
resilient
through
this
supply
chain
situation,
but
marine is
more
fragmented.
So,
there's
still
way
lower
credit
utilization
than
they
were
pre-pandemic
situation.
So,
right
now,
we
feel
we're
moving
towards
a
more
normalized
situation
in
some
industries,
but
still
some
pending
uncertainties
regarding
supply
chain
there.
Yeah. So,
Meny, maybe
just
a
few
additional
comments.
If
we
were
to –
if
we
were
to
just
break
it
down
as to
what
happened
in
the
inventory
financing
business,
so
this
quarter
alone
saw
an
increase
of
CAD
700
million
in
assets.
That's
up
39%
quarter-over-quarter.
70%
of
that
growth
came
from
existing
dealers,
30%
came
from
new
dealers,
so
that was
one
of
the
key
drivers.
The
second
driver
was,
as
Eric
mentioned,
we
were
pleasantly
surprised
with
the
supply
chain
kind
of easing
up,
in
particular
a
sub
segment.
And
so
that
boosted
the
credit
utilization
to
43%
versus
35%
in
the
last
quarter,
but
that
is
still below
pre-pandemic
utilization
in
the
mid-50s,
right.
And
so that's
why
what
we're
seeing
now is
there
will
be
moderation
in
Q2
and
then
liquidation
or
less
inventory
needed
because
they're
already
pre-sold,
but
we're
trying
to
minimize
that
seasonality
by
adding
more
dealers,
we're
trying
to
do
that
as
well
by
going
into
different
segments.
Now,
obviously,
the
Russia-Ukraine,
as
we've
heard
this
morning
in
terms
of
the
number
of
sanctions,
there's
still
a
lot
of
uncertainty.
And
that
may
have
a
bigger
impact
on
the
supply
chain.
And
so,
this
is
kind
of our
best
guesstimate
at
this
point
in
time.
That's
helpful,
and
especially
the
utilization
numbers.
The
second
question
I
had
was
just
on
capital.
We
see
the
CET1
ratio
go
down
a
little
bit
over
40
basis
points
quarter-over-quarter.
And
I'm
wondering
given
the
changing
business
mix
and
the
outlook
that
you
have,
is
there
a
risk
that
RWA
growth
will
continue
to
pull
down
your
CET1
as
that
business
mix
changes?
And
where
do
you
see
that
bottoming
out?
Yeah.
Thank
you
for
your
question,
Meny.
So,
deploying
capital
for
asset
growth,
internal
asset
growth
is
really
the
priority
of
the
bank.
And
that's
what's
happened
over the
last
quarter.
The
key
thing
also
there
is
that
we
have
a
very
strong
capital
base
at
[ph]
10.2% (00:32:55),
and
that
reflected
also
the
reduction
that
we
have
in
inventory
financing.
So,
we
were
anticipating
that
industry
to
come
back.
So,
it's
not
the
surprise.
In
fact,
it's
a
positive
surprise,
if
I
can
say
that,
as
it
came
relatively
quick.
But
the
point
there
is
that
there's
no
issue
on
the
capital.
We
[ph]
were
reserved (00:33:13),
and
we
have
enough
flexibility
to
take
that
going
forward.
And
if
you
look
at
the
flow
chart
that
we
have
in
the
presentation,
we
do
generate
good
internal
capital
growth
as
well
and
that's
probably 15
bps
to
20
bps
going
forward
order.
And
we
believe
that
that's
well
on
a
normal
basis
support
the
growth
that
we
have
in
the
mid-term.
So,
in
terms
of
the
outlook,
could
you
see
that
CET1
ratio
continuing
to
[ph]
follow
or
is it (00:33:41) likely,
especially
given
that
seasonality
you're
talking
about,
that
we
should
see
the
CET1
ratio
start
to
climb
again
from
here?
Yeah.
At
this
point,
Meny,
we –
definitely,
it's
going to
move
a little
bit
up
or
down,
depending
on
the
growth
we
get.
But
we
see
now
the
level
of
the
capital
to
stabilize
much
more.
And
that's
been
driven,
as
we
mentioned,
by
the
big
growth
we
have
in
inventory
financing
and
real
estate.
And
Eric
and
Rania
just
mentioned
that
that's
going
to
temper
in
Q2
and
reduce
in
Q3.
So
that
may
bump
a
little
bit
the
capital.
But
overall,
by
the
end of
the
year,
we
expect
to
be
relatively
in
the
same
order.
Got
it.
Thank
you
very
much.
We'll
go
next to
Paul
Holden
at
CIBC.
Your
line
is
open.
Please
go
ahead.
Thank
you.
Good
morning.
So,
I
do – I have
a
couple
more
questions
on
the
commercial
loan
growth,
but
maybe
sort
of
putting
seasonality
aside
and
sort
of
focusing
more
on
year-over-year
growth
rates,
so
my
first
question
there
is
how
should
we
be
thinking
about
the
ability
of
strong
commercial
loan
growth
to
impact
NIM?
And
I
guess,
specifically,
as
you
move
towards
that
2024
target
of
over
CAD
18
billion,
how
are
you
thinking
about
funding
mix
and
funding
costs
associated
with
that
loan
growth?
Yeah. Thank
you.
A
few
things
in
there.
In
terms
of
NIM,
definitely
we
see
that
the
growth
that
we
have
in
commercial
over
the
last
two
quarters
definitely
improved
and
fueled
the
NIM,
and
got
1.88%
this
quarter.
With
the
mix
that
we
see
and,
the
market
is
pretty
comfortable
about
there
as
well,
so
our
expectation
is
that
this
is
probably
going to
go
down
by
a
few
bps,
but
it's
going
to
be
sustained
at
a
very
good
level.
And
in
terms
of
funding,
I
would
say,
it
really
depends
where
the
growth is
coming
from.
But
the
good
thing
this
quarter
is
we
have
a
very
strong
growth
in
our
deposits,
which
is
definitely
core
for
the
bank
and
we
intend
to
continue
pushing
on
the
deposit
growth
as
well,
but
very
pleased
with
the
growth
we
had
this
quarter,
which
was
in
excess
of
the
growth
we
had
on
the
loan
side.
And,
Paul, just
to
add
to
that,
to
put
that
in
perspective
as
to
how
it
relates
to
the
Commercial
Banking
growth
in
the
business
mix
that
Yvan
was
mentioning,
inventory
financing
attracts
around
a
mid-single-digit
margin.
Now,
obviously,
because
of
competition,
there's
a
little
bit
of
margin
compression
that's
happening
there,
but
it's
a
higher
margin
business
than,
you
would
say,
our
real
estate
business
which
is
in
the
multi-res
and
construction.
So,
it
really depends
on
the
mix
of
growth
that
we're
going
to
be
reaching
on
a
quarterly
basis.
But
as
Yvan
said,
we're
very
comfortable
and
confident
in
terms
of
what
we're
forecasting
for
– from
a
guidance
perspective.
Got
it.
Okay.
And
then
second
question
again,
sort
of
related
to
that
commercial
loan
growth
and
maybe
also
importantly
the
mix. If
I
look
at
lending
fees,
they
were
down
1%
quarter-over-quarter,
like,
does
that
tell
me
inventory
finance
business
is
not
a
driver
of
lending
fees
or, I
guess,
more
importantly,
how
do I
think
about
the
correlation
between
your
commercial
loan
growth
objectives
and
lending
fees
over
time?
No,
you're
totally
right
in
your
assumption.
So,
the
inventory
financing
business
has
a
very
nice
margin,
but
does
not
generate
fees.
The
fees
that
we've
seen,
the
growth
that
we've
seen
in
lending
fees
very
strong
at
8%
over
the
last
year
came
in
is
related
to
the
real
estate business
growth
that
we
have.
That
business
generates
good
fees
and
that's
what
we've
seen
in
the
result.
The
small
reduction
of
1%
is
almost,
I
would
call
it,
a
rounding
impact
because
the
strong
[ph]
as
that
(00:37:51) strong –
sorry,
the
growth
of
commercial
has
been
pretty
strong
over
the last
two quarters.
So
both
of
those
quarters
were
very
strong
from
a
lending
fee
perspective.
Okay.
And
then
last
question
for
me
because
we've focused
here
a
lot
on
the
inventory
finance
businesses,
maybe
going
back
to
the
real
estate
finance
business.
I
mean,
from
what
I
can
read
in
terms
of
other
banks
and
industry
sources, it
looks
like
the
outlook
there
is
very
strong
for
the
year
ahead.
So,
maybe
you can
give
us
your
perspective
on
the
outlook
for
real
estate
finance
specifically?
Yeah.
Thank
you
for
the
questions.
[ph]
Eric
(00:38:33).
Right
now,
our
real
estate
pipeline
as
highlighted
in
the
opening
remarks
is
very
strong
at
CAD
4.3
billion,
so
9%
quarter-over-quarter
increase.
So,
we
feel
very
comfortable
right
now
with
the
demand
level.
The
team
is
well-deployed
across
Canada
to
benefit
from
that
strong
demand
and
we
feel
we're
very
well-positioned
to
continue
originating
in
commercial
real
estate
throughout
2022.
Okay.
I'll
leave
it
there.
Thank
you.
We'll
go next
to
Nigel
D'Souza
at
Veritas
Investment
Research.
Your line
is
open.
Please
go
ahead.
Thank
you.
Good
morning.
I
wanted to
follow
up
on
a
line
of
question.
If
I
look
at
your
outlook
that
you've
outlined
on
slide
28,
[ph]
I'm (00:39:30) trying
to
dig
a
little
deeper
on
your
net
interest
margin
forecast.
Year-to-date,
you
have
1.88%
and
you're
forecasting
low
1.9%.
And
I'm
trying to
understand
if
you
could
break
down
the
factors
driving
that
because
you
have
a
shift
in
low
mix
towards
commercial,
which
should
benefit
more
from
rising
interest
rates?
But
anything
else
at
play
there
that
[indiscernible]
(00:39:54)
more
conservative
outlook,
either
interest
rate
hedging
or
funding
mix
or
anything else
we
should
think
about?
Yeah. Thank
you. I'll
go
back,
Nigel,
to
some
comments
I
have
done
a
few
minutes
ago,
but
I'll
try
to
add
color
and
you
can
ask
more
if
you
want.
So,
1.88%
is
a
pretty
good
result
this
quarter.
And
as
mentioned,
it
was
fueled
by
the
growth
we
had
in
commercial,
so
you're
totally
right
about
that.
But
specifically,
as
mentioned
by
Rania,
inventory
financing
is
a
pretty
good
margin
business,
mid-single
digit,
so
movements
in
that
portfolio
does
move
the
NIM
as
well.
With
the
tempering
of
the
volume
in
Q2
and
the
reduction
in
Q3,
that
will
impact
the
NIM
by
a
few
basis
points.
So
that's
why
this
year,
our
objective
is
to
remain
above
1.85%
and
at
this
point,
we're
comfortable
with
that.
The
[ph]
1.9% (00:40:45)
that
I
think
you're
referring
is
on
the
mid-term.
So,
as
interest
rates
increase,
depending
of
course,
what's
happening
from
the
competitive
side
and
the
portfolio
mix,
that's
more
a
mid-term
objective.
But
I
agree
that
this
quarter,
we
were
getting
close
to
[ph]
190
bps (00:41:00).
Next
quarter,
I
would
see
the
NIM
probably
being
a
few
basis
points
lower
than
what
we
have
this
quarter
based
on
the
pipeline
that
we
have
and
the
competitive
nature
we
see
out
there.
Yeah.
And
just to
add,
the
target
for
this
year
is
greater
than
1.85%.
So,
we're
confident
that
we're
going
to
meet
or
exceed
that
target
Great.
And
how
many
rate
hike
assumptions
are
embedded
in
that
medium-term
outlook
for
1.9%
on
the
NIM?
Yeah.
The
1.9%
is
definitely
based
on
the
portfolio
mix
that
we
anticipate
having
in
terms
of
growth.
So,
I
cannot
really
go
in
much
more
detail
than
what
we
outlined
by
growing
commercial
about
45%
in
the
medium
term.
It's
definitely
a
factor
there,
and
it
does
also
embed
some
interest
rate
increases.
So,
the
markets,
to
be
clear,
did
change
a
little
bit
from
last
week.
So,
we'll
see
how
the
interest
rate
increases
play
out.
But
we
still
expect
four
interest
rate
increases
this
quarter,
two
in
the
next – sorry
– this
year
– two
in
the
next
quarter,
two
towards
the
end
of
the
year.
So
that
will
also
help
the
NIM.
But
the
main
impact
is
going to
be
towards
2023,
because
two
of
those
are
only
at
the
end
of
2022.
So,
[ph]
one
the
above
190
bps (00:42:23) on
the
medium
term
takes
into
account
the
portfolio
mix,
as
well
as
the
rate
increases.
Okay.
Got
it.
And
if
I
could
just
finish
on
your
credit
outlook
on
PCLs,
the
high-teen
number,
again,
that's
above
your
PCL
ratio
pre-pandemic.
And
is
that
entirely
driven
by
a
shift
in
mix
and
maybe
a
higher
[indiscernible]
(00:42:43)
inventory
financing?
And
we
also
noticed
that
deceleration
in the
commercial
book
was
a
little
bit
elevated
[ph]
here (00:42:50)
relative
to
prior
periods.
So,
just
any
more
color
on
why
you
expect
higher
credit
loss
provisioning
because
the
risk-adjusted
NIM
would
actually
be
moving
lower
based
on your
guidance.
Yeah.
Thank
you,
Nigel.
It's
Liam
Mason.
We
have
a
very
prudent,
disciplined
approach to
reserve
management.
You
saw
that
through
the
pandemic
and
with
our
approach
this
quarter.
The
credit
quality
is
really
strong.
We
do
expect,
as
Rania
said
in
her
remarks,
mid-teens,
that
reflects
the
good
underlying
credit
quality
and
also
the
business
mix. You're
going
to
get
ebbs
and
flows
in
that
as
the
economic
environment
evolves,
but
we're
very
comfortable with
where
we
are
today.
[ph]
I'm
(00:43:42) very
comfortable
with
that
target
of
mid-teens.
Well,
the
high-teens
target
for
the
medium
term,
any
comments
on
that?
It's – as
the
business
mix
evolves
and,
we
take
a
very
risk
return-based
approach
here
at
the
bank.
So,
if
the
PCLs
were
to
trend
up,
we
would
expect
that
more
than
offset
by
additional
revenues.
And
if
I
can
add
one
comment,
Nigel,
I
think
you
mentioned
the
growth
of
the
inventory
financing
if
it
was
impacting
this,
it's
not
related
to
inventory
financing.
It's
related
to
the
change
in
the
mix
and
commercial
is
usually
a
business
that
attracts
a
bit
higher
PCL.
Yes.
And
that's
normal,
but
we're
going
to
get
higher
return
and
higher
NIM
going
in
that
business
as
well.
So,
overall,
it's
positive,
it's
not
targeted
to
any
single
product.
Yeah.
And
in
the
medium
term,
as
we
build
out
our
credit
card
capabilities
as
well,
that
usually
attracts
a
higher
PCL
which
is
why
we
also
are
showcasing
a
little
bit
more
high-teens
in
the
medium
term,
because
we're
pretty
confident
that
once
we
launch
our
Brim
solution
and
start
marketing
it out
there,
that
portfolio
will
also
grow.
Okay.
That's
helpful.
Thanks.
We'll
go
next
to
Marcel
McLean
at
TD
Securities.
Your
line
is
open.
Please
go
ahead.
Okay.
Thank
you.
Most
of
my
questions
have
been
asked
and
answered
already,
but
just
looking
at
the
credit
a
little
bit
deeper,
the
performing
ratio
was
around
6
basis
points
this
quarter.
That
is
a
little
bit
higher
than
it has
been,
I
think,
in
a
more
normalized
environment.
How
do
we
think
about
this
going forward?
Is
that
the
new
mix
that
we're
dealing
with,
where
that
should
be
a
run
rate
I
should
expect
in my
model,
or
[indiscernible]
(00:45:38) it
could
come
down
sort
of
going forward
by
a
few
basis
points
anyways?
Yeah.
Marcel,
what's
really
driving
the
performing
ACL
is
the
commercial
loan
volume
increase.
So,
it
will
move
in
tandem
with
that.
I
would
note,
though,
that
a
portion
of
that
was
offset
by
the
reserve
release
of
CAD 5
million
that
we
indicated.
But
it
really
is,
exactly,
as
you
said,
driven
by
the
mix.
Okay.
Thanks
for
that.
And
then,
I
think
that's
– I
think
[ph]
is
all
I
have actually.
I
think
most of mine were (00:46:20)
answered
already.
Thank
you.
[Operator Instructions]
We'll
go
next
to
Joe
Ng
at
Barclays.
Your
line
is
open.
Please
go
ahead.
Yes.
Good
morning.
Thank
you for
taking
my
call.
Just
a
quick
question
on
CET1
ratio.
The
40
basis
points
drop
in
the
quarter
is
quite
a
stepdown.
How
should
we
look
about
the
[indiscernible]
(00:46:44)
for
CET1
and
its
evolution
through
the
year,
[ph]
I
mean,
end (00:46:48)
of
the
year?
Yeah.
Thank
you
for your
question,
Joe.
So
the
40
basis
points,
as
I
mentioned,
our
first
priority
is,
first –
in
fact,
I'll
step
back.
The
first
thing
is
we
have
a
strong
capital
base,
right.
And
that
allow
us
a
lot
of
flexibility.
Second
point is,
if
you
look
at
the
flow
chart
that
we
have
in
the
presentation,
you'll
see
that
the
reduction
is
coming
from
internal
RWA
deployment
and
that
came
from
the
strong
growth
that
we
had
in
commercial.
So,
as
previously
mentioned,
we
had
–
[ph]
if,
in
fact,
the
rate
or
the (00:47:26) –
of
the
CET1
was
high
with
the
fact
that
there
was
a
reduction
of
that
portfolio
in
the
past,
and
we
expected
that
it
would
get
back,
so
we
are
using
that
flexibility
to
grow
the
business,
which
will
benefit
the
profitability
going
forward.
But
as
we
mentioned
a
few
minutes
ago,
we
expect
the
growth
of
commercial
to
temper
in
Q2
and,
in
fact,
reduce
a
bit
in
Q3.
So,
the –
we
would
see
the
ratio
of
CET1
by
the
end
of
the
year
to
relatively
normalized
level
that
we
have
right
now,
maybe
a
bit
up
or
down.
But
the
internal
capital
generation
that
we
have
on
a
quarterly
basis
now
expects
to
fuel
normal
growth
of
that
business
for
the
coming
years.
And
just as
a
reminder,
Joe,
[ph]
it's (00:48:10)
calculated
on
a
standardized
approach
as
well.
And
so,
that's
an
important
distinction.
Okay.
So,
we
should
probably
see
a
bounce
around,
call
it,
[ph]
10%
to 9.8% (00:48:22)
level,
basically
[indiscernible]
(00:48:23)
No,
I
wouldn't –
yeah,
this –
at
this
point,
it's –
I
[ph]
wouldn't (00:48:29)
expect
it
to
be
around
the
same
level
that
we
have
by
the
end of
the
year.
Okay.
Okay.
Joe,
remember,
our
eternal,
our
internal
capital
targets
are
at
8.5%,
good
8.5%
to
9%.
That's
what
we
need
to
support
the
existing
business.
So,
we
have
a
very
strong
capital
level
with
adequate
–
more
than
adequate
to
support
the
business
growth
at
this
juncture.
Okay.
Thanks
for
the
added
color.
We'll
take our
next
question
from
Lemar
Persaud
at
Cormark.
Your
line
is
open.
Please
go
ahead.
Yeah.
Thanks.
I
just
want to
come
back
to
the
line
of questioning
on
margins
and
PCLs
when
I
look
at
your
slide
20
here.
So,
I
guess,
if
you
go
from
the
185
basis
point
to
190 basis points
on
NIM,
and
then
mid-teens
to
high-teens
PCL
ratio,
it
seems
like
you're
adding
additional
risk
to
loan
portfolio,
but
not
really
getting
compensated
for
it.
I suspect
that
you're
going
to tell
me that's
not
the
case,
so
maybe
some
helpful
commentary
on
why
this
strategy
makes
sense
would
be
very
helpful?
Thank
you.
Yeah.
Thank
you.
You
want to
go?
Thank
you for
your
question.
In
fact,
to
be
honest,
that's
a
question
we
get
regularly.
So,
I
think
we
may
have
been
a
bit
conservative
on
our
expectations.
That's
what
the
market
is
telling
us,
but
we
do
anticipate
that
the
growth
that
we
have
is
definitely
funding
more
than
the
PCL
increase.
So
that's
definitely
clear,
and
we
expect
that
that's
going
to grow
as
we
move
forward.
So,
we're
going to
reassess
it
at
the
end
of
the
year
and
we'll
come
out
with
a
new
objective.
Yeah.
So
again,
it's
the business
mix,
the
key
growth
engines
within
real
estate
– within
commercial
that
will
drive
the
higher
potential
PCL, as
well
as
margins
are
really
inventory
financing,
equipment
financing.
We
said
in
our
strategy
that
we're
looking
to
continue
to
grow
those
assets,
particularly
in
the
US.
And
then,
I
would say,
the
other
component
is
our
credit
card
business
as
well.
And
so, at
the
time
when
we
are
putting
our
strategy
together,
we
are
taking
a
prudent
conservative
approach,
but
that's
something
that
we
will
continuously
revisit.
Okay.
Then
just
on
that
line
of
– on your
answer
there,
what
do
you
think
is
the
more
reasonable
revision,
the
margin
side
or the
PCL
side
or
would
it
be
both?
Lemar, I
think
we have
to
do some
more
analysis
and
at
this
point,
so
we
can't
provide
any
guidance
at
this
point
on
that
front.
Okay.
Thanks. That's
fair.
All
I
can
say
is
that
we're
going
to
meet
[ph]
and/or (00:51:15)
exceed
our
2022 targets.
Okay.
Great.
Thank
you.
We'll
go
next
to Marcel
McLean at
TD
Securities.
Your
line
is
open.
Please
go
ahead.
Thanks.
I
had
a
follow-up
on
the
capital
side.
This
is
the
first
quarter you guys did a
buyback
in
quite
a
number
of
years.
Just
wondering
what
the
thoughts
are
on
that
going
forward.
Should
we –
you
still have
a
bit
of
room
on
the
NCIB.
Do
you
anticipate
completing
it
or
how
do
you
think
about
that
decision?
Yeah.
Thank
you
for your
question.
And
you're
right,
I
should
have
mentioned
it.
So,
we've
done
about
one-third
of
the
share
buyback
that
we
expect
to
do
this
year.
And
at
this
point,
we
believe
we
still
have
a
strong
capital
and
a
good
strategy
to
grow
the
assets
in
line
with
the
capital.
So,
we're
still
comfortable
of
continuing
the
share
buyback
as
we
planned.
Okay.
Thanks.
And
we'll go
next
to Nigel
D'Souza,
Veritas
Investment
Research.
Your
line
is
open.
Please
go
ahead.
Thanks
for
taking
my
follow-up.
I
just
wanted to
switch
to
a
different
line
of
questioning
on
[ph]
your (00:52:28) Capital
Markets.
I
believe
you
outlined
that
commissions
and
fees
[ph]
thereof
related (00:52:34) to
the
Capital
Markets
business
was a
bit
softer.
And
I'm
wondering,
in
the backdrop
of
your
peers
posting
pretty
strong
results
for
Capital
Markets
this
quarter,
is
there
something
structural
to
that?
And
how
do
you
expect
that
performance
to
evolve
as
you
[ph]
action (00:52:49)
your
strategic
transformation
for
the
business?
Yeah.
Thanks
for the
question,
Nigel.
It's
Kelsey
here.
Yeah,
we
had
a
solid
quarter
in
Capital
Markets,
in
particular
on
the
fee
side.
I
think
what
you're
seeing
there
is
a
bit
of
a
normalization.
Keep
in
mind,
we
had a
very
good
Q4
of
last
year,
so
we
had
a
couple of
big
transactions
closing,
of
course.
So,
the
quarter-to-quarter
comparison
was
a
little
bit
challenged
from
that
perspective
as
well,
but
we're
optimistic.
The
strategy
hasn't
changed.
We're
aligning
our
Capital
Markets
franchise,
including
our
banking
side
of
it,
with
the
rest
of
the
bank
under the
one
team
approach.
And
so,
I'm
optimistic
that
our
run
rate
will
continue
through
the
course
of
the
year
and
[ph]
we'll
finish
off
(00:53:28) strong.
Okay.
That's
helpful.
And I'm
going to
ask
a
bit
more
of a
granular
question,
but
when
I
look
at
your
balance
sheet,
interest
bearing
deposits
with
banks,
that
jumped
quite
a
bit
quarter-over-quarter,
I
believe
about
CAD
400 million
or
so,
and
that's
all
in
the
short
duration,
[ph]
zero
(00:53:47)to
three-month
bucket.
So
any
color
there on
what's
driving
that
jump
sequentially?
Yeah.
On
the deposits,
we're
really
happy
with
the
performance
we
have
this
quarter.
It's
increased
by
CAD 1.1
billion
and
we
do
recognize
that
we
have
a
need
for
a
strong
deposit
base.
And
as
mentioned,
we
– our
objective
in
2022
is
to
grow
that
in
line
with
the
asset
base
and
in
fact,
with
the
loan
base
and
that's
what
we've
done,
in
fact,
a little
bit
more
in
Q1.
The
biggest
increase
this
quarter
came
from
deepening
and
extending
the
relationships
that
we
have
in
the
advisors
and
brokers.
So,
we're
really
working
hard
in
that
segment
to
increase
and
continue
to
build the
relationships.
And
this
quarter,
we
have
pretty
good
results
on
that
side.
So,
we
intend
to
continue
doing
this
and
we
already
look
forward
for
additional
relationships.
Okay.
That's
it
for
me.
Thank
you.
[Operator Instructions]
With
no
other
questions
holding,
I'll
turn
the
conference
back
to
Rania
Llewellyn
for
any
closing
remarks.
Thank
you.
In
closing, I'm
pleased
with
our
strong
results
this
quarter
and
the
momentum
we
are
building
as
we
head
into
Q2.
Our
One
Winning
Team
is
engaged
and
focused
on
putting
our
customers
first
and
executing
against
the
bank's
new
three-year
strategic
plan
to
deliver
profitable
growth
and
drive
shareholder
value.
Despite
the
uncertainties
in
the
market,
we
are
confident
in
our
ability
to
continue
to
meet
or
exceed
our
targets
this
year.
Thank
you
for
joining
the
call
today.
Ladies
and
gentlemen, that
will
conclude
today's
conference.
We
thank
you
for your
participation.
You
may
disconnect
at
this
time.