Good morning, and welcome to Scotiabank’s 2018 Year-End and Fourth Quarter Results Presentation. My name is Phil Smith, Senior Vice President of Investor Relations. Presenting to you this morning is Brian Porter, Scotiabank’s President and Chief Executive Officer; Raj Viswanathan, our Chief Financial Officer; and Daniel Moore, our Chief Risk Officer. Following our comments, we will be glad to take your questions. Also present to take questions today are Scotiabank’s business line group heads: James O’Sullivan from Canadian Banking; Nacho Deschamps from International Banking; and Dieter Jentsch from Global Banking and Markets. Before we start and on behalf of those speaking today, I will refer you to Slide 2 of our presentation, which contains Scotiabank’s caution regarding forward-looking statements. With that, I will now turn the call over to Brian Porter.

Thank you, Phil, and good morning, everyone. I’ll be starting on Slide 4. The Bank reported strong results in 2018. Our team worked very hard to deliver our results. At the same time, we made significant investments to position the Bank for future growth. We completed major acquisitions, made important investments in technology and continue to invest in our people and attract high-quality talent to the Bank. I would like to take this opportunity to thank all our employees for their efforts over the past year. Our recently completed and announced acquisitions will provide value for our shareholders. On a cumulative basis, we estimate these acquisitions will add roughly $2.3 billion in annualized revenues to the Bank, contributing growth of 8% to our existing revenue base. We are proud the Bank was able to meet or exceed all of our medium-term objectives in 2018. Adjusted EPS was $7.11 per share, up 9% from 2017. Return on equity was 14.9%, up 20 basis points from last year. We generated positive operating leverage of 3.7% and our common equity Tier 1 ratio was strong at 11.1% and our capital rebuild is ahead of plan. In particular, this was a strong year for our core personal and commercial banking businesses. Canadian Banking generated 8% earnings growth year-over-year and closed two high-quality wealth acquisitions, MD Financial Management and Jarislowsky Fraser. Canadian Banking achieved good asset growth, increased margins and delivered positive operating leverage during a period of slowing mortgage growth. Our focus on core deposits has paid off with deposit growth exceeding loan growth. We also added approximately 160,000 net new primary customers, excluding acquisitions, good progress against the Canadian Bank’s multi-year target of 1 million new primary customers. Tangerine also performed strongly during the year. Tangerine contributed one-third of our net new primary…

Thanks, Brian. I’ll begin on Slide 8, which shows our key financial performance metrics for fiscal 2018. All of my comments will be on an adjusted basis, which excludes acquisition-related costs. The Bank ended the year with diluted earnings per share of $7.11, up 9% in 2018. Our P&C businesses that comprised approximately 80% of the Bank’s earnings, delivered a strong performance for the year up 11% collectively. Canadian Banking was up 8% in 2018, reflecting strong growth in assets, continued momentum in deposit gathering, margin expansion, prudent cost management and lower provisions for credit losses. Lower gains on sale of real estate and the impact from last year’s gain on the sale of HollisWealth were partially offset by the current year acquisitions and the alignment of reporting period impacted net income growth by 4%. International Banking delivered stronger results up 16% compared to last year. The results were driven mainly by the Pacific Alliance countries, where we experienced high net interest income growth and fees from good loan growth. The impact of recent acquisitions and the benefit of one additional month of earnings from the alignment of the reporting period in Chile and Thailand contributed 3% to the adjusted earnings growth. Global Banking and Markets declined 3% from last year, driven by lower capital markets revenue in the fixed income and commodities businesses, as well as higher non-interest expenses. These were partly offset by lower provisions for credit losses and higher lending and deposit revenues. We are actively focused on up-tiering our corporate lending relationships, strengthening our investment banking franchise and growing our customer base in Latin America. Operating leverage was solid for 2018 at positive 3.7%, or 2.4% if we exclude the first quarter 2018 benefits from remeasurement gains. This reflects very strong performance in our P&C businesses,…

Thank you, Raj, and we’ll turn now to Slide 16. We are comfortable with the fundamentals of the Bank’s risk portfolio. Our PCL ratio on impaired loans was referred to as Stage 3 was stable 42 basis points compared to last quarter and the comparable period a year ago. On a total loan book basis and excluding the Day 1 impact on acquired performing loans in the third quarter 2018, the all-bank PCL ratio was also stable versus last quarter. The results included a $47 million net reversal on performing loans, primarily in the International Banking, driven by the reversal of the hurricane-related provision, which is no longer required in the commercial portfolio, asset sale and credit quality improvements in the retail portfolio. Overall, we are seeing stable loan loss ratios in our Canadian personal and commercial banking business relative to last quarter, as higher impaired credit losses were driven mainly by higher commercial provisions. Moving on to International Banking. We continue to see good credit quality trends and the benefits of our diversification. Higher retail impaired losses were primarily due to higher provisions, driven by the full quarter impact of acquisitions, while lower commercial provisions were due to higher recoveries. In Global Banking and Markets, recoveries were driven mainly by impaired provision reversals in Europe, partly offset by new provisions in the U.S. This quarter, we also took additional provisions relating to the debt restructuring in Barbados, which is not material to the Bank and we expect our operations there to return to full profitability this year. Now looking at other credit metrics, gross impaired loans declined $5.1 billion from $5.3 billion last quarter, and the growth impaired loans ratio declined versus last quarter, while net formations of $713 million were nearest to two-year average. Turning now to Slide…

Thank you, Daniel. Before we open up the call for questions, I’d like to provide some thoughts on our outlook for 2019. We are optimistic that we will continue to perform strongly and again exceed our medium-term objectives. The economic outlook in our key markets is positive. The integration of our acquisitions is proceeding well. Our capital position is strong and the impact of our digital efforts is accelerating. We are in a rising interest rate environment, which is positive for margins. An important area of focus for us in the year ahead will be to successfully integrate our recent acquisitions. In fact, we think about integration as a key theme for the Bank in 2019, This will be critical to unlocking the full revenue and earnings potential of the acquisitions. On the macro front, while we are mindful of emerging risks, we are encouraged by the positive economic conditions in the Americas, including most of our Pacific Alliance countries, a region of 230 million people, where we are the leading Bank. I will now provide some specific comments on the outlook for each of our business lines. Canadian Banking is focused on optimizing its business mix, driving higher productivity and acquiring new primary customers. James and his team will be driving improved productivity towards our 49% target for 45% for Canadian Banking ex-wealth, supported by higher revenue growth and mid single-digit expense growth in 2019. Integrating our recent acquisitions in Wealth, while maintaining strong retention rates with our customers and advisors. Identifying opportunities to prudently advance our higher margin businesses by leveraging data analytics to increase credit card and small business banking, also increase in core deposits, which is an anchor product in our definition of primary customers. We expect margins to be higher in 2019, supported by higher…

Thanks, Brian. That concludes our prepared remarks. We’ll now be pleased to take your questions. Please limit yourself to one question and then rejoin the queue to allow everyone the opportunity to participate in the call. Operator, can we have the first question on the phone, please?

Thank you. We will now take our first question from Robert Sedran of CIBC Capital Markets. Please go ahead.

Okay, I’ll start again. Hi, good morning. James it’s – on the mortgage front, I know Brian mentioned sort of mid singles is the idea for 2019, it hasn’t been doing that at least not this quarter and perhaps there is some seasonal weakness in there. Can you talk a little bit about A, what’s going to bring that mortgage growth back? And B, and I think more importantly at this point, a little bit about the competitive environment and the margin you’re getting on the marginal mortgage that you’re adding considering how a few of them there are around right now? James O’Sullivan: Sure. Happy too, Rob. Good morning. So residential mortgage growth continues, I would say, more or less as expected. So we had 3% growth in average balances year-over-year and 5% for the full-year. So I think we’ve delivered on our outlook and our plans in this regard overall. For 2019, I think mid single-digit growth is also our outlook. So if that kind of 4% to 6%, Rob, I’d be thinking about the lower-end of that range, as we see the world today. So I think, there’s some room here for mortgage growth to decelerate from 2018’s levels overall. And I remind you, we discussed this on previous calls that a 1% reduction in mortgage growth has about $10 million to $15 million impact on net interest income depending on the spread. So it’s something that can be replaced certainly. On the competitive environment, look, I would readily say that we’re seeing a very competitive mortgage market, B20 and higher rates both necessary and we think both long-term positive have been disruptive in the short run. My view is participants in the mortgage industry spent probably much of 2018 defending the market share that they had before B20 and rising rates. So we’ll see how 2019 unfolds. We’ve always said that our appetite will be governed by our assessment of risk, our assessment of reward. And, look, we continue to see modest risk here, but recently, we’ve seen declining reward also. So sort of to sum up on mortgages, we like our position. We’ve talked in the past about our three channel strategy. You should expect us, I would say, to be a top three participant in this industry overall.

James, do you think that reward you talk about in terms of the margin and the marginal business, is it enough to color the outlook for the net interest margin for the segment as a whole, or is it a manageable impact and we should still be expecting to see that margin rise in 2019? James O’Sullivan: So if you look at margin kind of sequentially quarter-over-quarter, I describe it as stable, it was down 1 basis point sequentially. But if you peel back, we gained 1 basis points on credit cards and we lost 1 basis point on each of mortgages and broker deposits. So the mortgages are the big book, it’s the largest book by – quite a magnitude as you know. So it does have the potential and, in fact, does influence margin each and every quarter. Having said that, Rob, for 2019, we believe the direction is up certainly given our interest rate outlook. We’re planning for overnight rate increases to the low-end of the neutral rate range, so that’s 2.5%. So we expect good margin expansion in 2019. In fact, we’d expect more margin expansion in 2019 than we saw in 2018. And I think what’s going to offset that very competitive mortgage market is, I think, the pretty impressive momentum that we have in deposits. Deposits are now growing at 6% year-over-year, that’s faster than loan growth. And last quarter, we saw this on a spot basis this quarter, you see it in the averages. So look, competitive dynamics are going to be a factor for sure, but our momentum in deposits is certainly going to help margin overall.

All helpful. Thank you.

Operator, can we have the next question on the phone, please?

We will now take our next question from Meny Grauman of Cormark Securities. Please go ahead, sir.

Hi, good morning. I want to know how you would describe the change in your strategy in the Caribbean? And specifically, the considerations that you look at as you’re deciding, for instance, to bulk up in the Dominican and then on the other hand divest those nine markets that you revealed earlier this morning?

Yes, I’ll start, and then it’s Brian. Meny, thank you for the question. I’m not sure we have a comment as well. When you look at what we’ve retained in the Caribbean, that’s 90% of the population. And this strikes at the core of our strategy to bulk up and get scale in markets that – and geographies and businesses that we deem important where we can turn the dial for our customers and our shareholders. As far as the insurance business goes, we’ve always said that we didn’t want to be in the underwriting business. We want to be in the distribution business. This is a relatively small business, and so that made sense for us to dispose off that business. But in terms of the DR, DR is a bit different and it’s a country of over 11 million people in the contrast to Jamaica. Jamaica is 2.8 million people. So the DR has size. It has scale. It has average GDP growth over the last 10 years of 5.5%. It’s a dynamic market. We’ve operated there for over 90 years. We’re very comfortable operating in the DR, and we look forward to growing our business there.

And just as a follow-up just trying to understand, is the motivation here in terms of the timing of these announcements, is it really capital as the main motivation?

No, it’s core strategy, Meny. And so we’ve been working on this for sometime. And as I said in my text, I think the exact number is over the course of the last five years, we’ve exited 22 geographies or businesses that we viewed as non-core for the bank and we’re redeploying that capital in our major markets and our major businesses.

Thank you.

Operator, can we have the next question from phone, please?

We will now take our next question from Steve Theriault of Eight Capital. Please go ahead, sir.

Thanks very much. I have a question for Nacho. But if I could just follow-up on Rob’s question to James for a second, you talked about deposits helping with the margin next year. What about credit cards? Brian mentioned a focus on higher-margin products that – I’ve noticed some higher promotional activity on your cashback card. That 7% growth in cards this quarter, is that indicative of what you’d expect next year, or is there upside to that as you push on the gas a little bit here in terms of cards? James O’Sullivan: Hopefully, a bit of upside. So, average balances are up about 8% year-over-year,. 5% for the whole year. Purchase volumes are up actually quite a bit more than that. And we haven’t talked very much about Tangerine’s credit card, but its balances are up 31% for the whole year. So, as we think about next year, we’d be thinking about high single digits for credit card growth with a particular focus – a particular ongoing focus on A&B customers. And working with Daniel Moore’s credit risk analytics team, we have done a better and better job of targeting A&B customers and extending credit limit increases, for example, to the most credit worthy of our current customer base.

And I’d expect then we’ll hear more in your margin discussion like there’s potentially some upside to margin from cards?

Yes, absolutely. So I – margin will evolve as rates evolves and as business mix evolves, but cards certainly will be accretive to margin as we execute these plans.

Okay. And then just quickly for Nacho. Expenses in international, you’ve got some acquisitions that closed in the back-half of this year, some closing in the front-half of next year, maybe a bit of an outlook on expenses, Brian touched on it in his comments. But are – should we still expect positive operating leverage next year, or does it take a little time to get back on track with the acquisitions and integrations that are ongoing?

Thank you, Steve. While we are very pleased with the management of expenses and this year we have about 3% operating leverage. Going forward, we are confident we’ll continue to deliver positive operating leverage. Overall, we expect better economic conditions in the Pacific Alliance countries growth around 3%. And that will support our deposit growth, our asset growth, and we are confident on our guidance of 9% earnings growth for the Pacific Alliance countries and IB.

And Nacho, I notice that the GDP growth for Chile for 2019 is down almost 4% from what we saw three months ago. Are you feeling any less enthusiastic for what you can deliver next year on Chile with adding in BBVA, or is that – maybe just a little color on the lower expected GDP growth?

No, I’m feeling very confident about Chile. Let me update you on the transaction closed in Q3 60 days after the merger took place. Let me give you just a few examples of the progress. The first three levels of the organization have been integrated into one management team that is fully focused in the business and in our customers. We have had no customer attrition. Next year, we expected to grow 6% our assets. Now we’re thinking, we’ll be able to grow between 8% to 10%. And early this year, Brian and myself were in a very important event with 10,000 customers, the President of Chile and the Minister of Finance, there is a very positive business environment. There was some additional expectation of growth, but growth is going to be strong above 33% for Chile next year and we’re fully focused in our integration. We expect to capture around $40 million of synergies pre-tax. And overall, we expect also our earnings pickup to be around $70 million during the first year. So really a very positive development and the integration going very well.

So just to add to that, if I may, Steve, is that where Nacho and I met with the President and the Minister of Finance, this year GDP growth will close out at 4%. Next year, the country’s forecast is 3.8%. So still strong GDP growth.

Thank you.

Operator, can we have the next question on the phone, please?

We will now take our next question from Doug Young of Desjardins Capital Markets. Please go ahead, sir.

Hi, good morning. Just on the Pacific Alliance countries, and if I do just for the four Pac Alliance countries and I look at earnings for the quarter, it looks like it was up nicely. But then when I just compare overall to your Latin America earnings on Page 22, there seems to be a big delta. And so and again, I’m just going back to the envelope calculation here. But was there any noise in the smaller Latin American regions outside of the big four that any bumps or noise to think about here? And then along the same lines of what you did in the Caribbean, is there an opportunity to consolidate or get out of some of these smaller Latin American regions outside of the four big countries, which operate in similar to what you did in Caribbean? Thank you.

The only small – other smaller country in Latin America that would fit in that category is Uruguay and we’ve got a great operation, it’s very well around there. It’s very profitable and we don’t contemplate exiting that business. The noise is probably our wholesale operation in Brazil, which has been very profitable for us and as well run. And that business is really focused on investment-grade public companies, where we’re providing investment banking, corporate banking services. So we like that business. It’s consistently profitable. So, in terms of possible divestitures this year, where in terms of our non-core plan, as I said, we’ve exited 22 business or geographies in the last five years. We’ve got a couple more to go and you’ll hear more from us in 2019, but they don’t pertain to Latin America or Pacific Alliance.

And if I may add, Brian, our focus is in the Pacific Alliance countries and our growth have been strong 17% year-over-year. Full earnings growth was – has been very strong. And this is really a very positive development in term of assets and deposit growing around 13% and 15%, a nice pickup of growth in retail deposits, in commercial 3% – in retail, sorry, 3% Q-over-Q. So we are confident on our guidance for the Pacific Alliance countries going forward.

And Nacho, just while I have you, just one quick follow-up. The earnings in the quarter just from BBVA Chile, I think last quarter just for one month, it was $15 million, correct me if I’m wrong. What was it for Q4?

$20 million.

Great. Thank you. James O’Sullivan: Operator, can we have the next question on the phone, please?

We will now take our next question from Darko Mihelic of RBC Capital Markets. Please go ahead, sir.

Hi. Thank you. Good morning. A few questions here. I wanted to dive into the energy exposures just a little bit. First, I wonder if we can just revisit. Is it – the concern is obviously WCS, but nat gas as well. I mean, I guess, the question I have relates to the assumptions that you’re using on a go-forward basis. And last time, we had the oil prices, you guys kind of provided a bit of a stressed sort of scenario or sort of an outlook. Is there anything you could provide or give us some sort of ideas as to what assumptions or underlying your Stage 1 and Stage 2 allowances?

Sure, Darko. Thank you for the questions. It’s Daniel Moore here. So we do stress portfolios regularly and we draw comfort from the results, as well as we don’t see a material impact from either the move in WTI or in the Eco gas in our portfolios. I would stress you that the most important thing that drives our outlook on ECLs is obviously first with growth of the portfolio, and secondly, the book quality. We’ve been very, very focused on book quality for both WCS and for nat gas, you can see it from our disclosure here, you can see from the 65% investment-grade that we have in the book. And so our – right now, we think we are conservatively and adequately positioned for our book exposure.

I guess, in the past, what I’m getting at is, it was sort of like a view of, if prices were to stay at these levels, there would have been like cumulative losses of $450 million to $500 million over a period of a couple of years. That would be different now, right? I mean, presumably there would be no such thing. You would, in fact, take – if you were to assume that prices stayed as low, you would take the hit for Stage 1 and Stage 2 today. And so effectively what you’re kind of – am I to interpret this that if we assume these prices sort of stay, there’s still no losses built in the book that, that should have been recognized, I mean, I just just trying to reconcile that?

Yes. There – Darko, there is the positive IFRS 9. There’s also the capacity there for extra credit adjustment to look at where our models are lagging the exposure that we see internally from management perspective. We exercise that from a conservative and appropriate nature. But when we – again, when we look at our book right now and we focus on upstream E&P and WCS, which is 70% of overall E&P authorizations are exposed to WCS, 90% of that is investment-grade. Both companies have access to public market, many include refining operations that will benefit from the wider crack spread. So only 1% of our overall E&P exposures are to some investment companies that are exposed to WCS. And that’s where we look historically to see any losses and that wouldn’t be a material position for us today. Perhaps I can hand it over to Dieter to see to what he is seeing as his clientele.

Darko, I’ve been managing the majority of this portfolio last three years. And I have to say to you, even since 2015 and 2016, we’ve up-tiered our companies we deal with and our counterparties. And I have to say to you that our balance sheets that we see in the business never being as strong and the management teams are very cost-conscious both – and very revenue-efficient. And we feel very proud of the names that we’re a bank. And they know how to discipline – have a disciplined view of capital deployment. And look, I’m very confident that this will withstand a period of settlement in the commodities market.

Okay, that’s very helpful. I appreciate that. And then just one last question on it, Daniel. Just with respect to WCS if it stays this low, and we know that there’s a bit of a correlation with unemployment in Alberta with low oil. So – and I noticed that you actually have an overall upbeat view. In other words, Canada’s GDP is rising. So I’m curious with the 14% exposure in Alberta, are you assuming an uptick in unemployment in Alberta? And is – and I guess that’s just not material enough to impact the books?

Yes, unemployment will be one driver. And today, obviously, as you know, we’re not seeing an uptick in unemployment there, but we monitor that situation very closely. But the biggest thing that gives us comfort, Darko, is how 93% of our portfolio in Alberta from a retail perspective is secured. The other key message I’ll leave you with is that, we’ve been derisking this book and paying close attention to the portfolio quality since 2016 and we never took her eyes off the road. The derisking measures that we have in place after recession in Alberta in 2016, the significant investments in collections, scoring and credit analytics that we put in place are still in place today, and that’s from – that’s a position of comfort that we have in that retail portfolio. Our proactive measures are paying dividends, as James said, and it will continue to going forward.

Okay. Thanks very much.

Operator, can we have the next question on the phone, please?

We will now take our next question from Ebrahim Poonawala of Bank of America Merrill Lynch. Please go ahead, sir.

Good morning. One, I guess, I just want to follow-up first, Raj, with the question around the margin in Canada. So it’s – it sounds clear that the higher rate should be beneficial to the margin. What if we don’t get a rate hike in the first-half of next year? Where does that leave your expectations for the margin in Canadian Banking?

Yes. It’s – that’s a very difficult one to answer. There are so many moving pieces here. I have not seen a scenario in front of me, where we do not have more margin expansion in 2019 than 2018. I think that’s all I can say at this point kind of readily acknowledging that we don’t have a crystal ball and the timing of rate increases and clearly competitive dynamics in various lending and deposit markets are going to play be a significant factor here.

And you provided good color on loan pricing. Having said that, like deposit growth that you said has been robust. Can you talk about the pricing competition on the deposit side? Is it safe to assume that the incremental asset growth is happening at better spreads relative to where the margin was in the fourth quarter?

Well, on deposits what I would say is, it’s quite competitive there too. I think, we’re seeing money moving, both within institutions and between institutions as rates move higher. Within institutions, we’re seeing a preference for term deposits clearly and between institutions, we are seeing, as I’m sure you are, a lot of rate campaigns out there. But I just want to highlight. We look at this through three lens. We look at this through a customer lens, funding lens and an economic lens, so let’s go through those. Through the customer lens, we feel very strongly that an investment conversation that includes deposits is got to be a key part of our primary banking strategy. Through the funding lens, we continue to believe that good retail deposits remain a corporate priority. And through the economic lens, it looks in a rising rate environment which we’re in, deposit should be an increasing source of value to our shareholders. So, we – we’re going into 2019 very much with a plan to have deposit growth continue to exceed loan growth, that’s what we seek to achieve.

Got it. And I guess, sort of moving to sort of International Banking one, Nacho, you’re not one who wants to add to this, but expectations are on the margin relative to the 4.52% in the fourth quarter. Is it still kind of relatively flat, or should we expect that to trend lower?

No. Our markets are stable like they have been in the last 16 quarter, we’re plus/minus 10 bps variation due to our footprint. Now in this quarter, we have incorporated the assets of BBVA Chile. This is a more matured country. It has lower risk, lower margins. So now our margin is 4.52%, and we expect that to be stable going forward, again, with a plus/minus 10 bps variation.

And thanks for that, Nacho. And any thoughts on Mexico? I mean, obviously, we’ve seen some more political risk pickup over the last few weeks. Any – does that – that cause you to change in terms of how you approach growth in the near-term, any thought would be helpful?

Well, we have seen over the last few quarters some negative market sentiment around Mexico due to NAFTA due to the political situation. We see this really a few days before the inauguration, the transition is going to take place the government in – on December 1, where we continue to do very well in Mexico. We had full-year earnings growth above 30%, a strong growth of loan and operating leverage of 10%. I would also like to highlight that President Lopez Obrador has mentioned to us and publicly, the importance of the relationship of Canada. Canada was the only country, where he sent a mission of seven of his future ministers. We hosted here at Scotiabank in Toronto, The Minister of Economy and productive conversation with the automotive industry and the pension funds. So there we say, of course, some noise that also the President and his Finance Minister have been quick to clarify. We have expressed a solid commitment with macroeconomic fundamentals and disciplined public finances. So we continue to see an attractive medium-term growth profile for Mexico going forward.

That’s helpful. Thank you.

Operator, can we have the next question on the phone, please?

We will now take our next question from Gabriel Dechaine of National Bank Finance. Please go ahead, sir.

Good morning. And, Brian, you touched upon the disposition questions earlier, and you said there might be more in the year ahead outside of LatAm. I’m wondering if there’s an update on the Thanachart situation?

I can’t get into specifics, Gabriel, as you know. But we started a program, as I said, five years ago, we’re well through it and we’re focusing on our major markets, geographies and businesses. And it goes back to the theme as, there’s a pattern here is that, we’re the number three bank in Chile. We’re the number three bank in Peru. We’ll be the number three bank in the DR. We’ve added to our wealth businesses. as we said, that we would in terms of the institutional business and the high network category. So we’ve been bang on strategy on always, and this year, it’s going to be focused on integration. And our capital rebuild is ahead of plan, we’re proud of that. And this bank has the ability to generate a lot of capital internally. And so 2019 is an important year for us to get these acquisitions bed down, and you’ll hear more from this in subsequent quarters.

Okay. And then my next one is on the commercial lending growth in Canada. And I don’t want to single you guys out, it seems like we’re getting these double-digit growth numbers from pretty much every bank and you did quite well this quarter. I’m just wondering how do you still have – or what’s your outlook for commercial growth sustaining at – in the double-digit levels when we have Canadian GDP in the 2% range, what’s driving that? I see from your supplement here, Page 16, a big component of the growth has been the real estate and construction portfolio. And again, I see that across the group. So with mortgage growth slowing, starts falling off of peak levels, the economy now looking strong. How sustainable is that growth? And I know it’s not going to be the driver either, I don’t think. I’d like to hear your thoughts? Thanks.

Sure, a few thoughts. So first, on the real estate development, I think, that has pretty consistently represented about 25% of Chilean Riley’s business overall. I mean, if you – let me give you a couple of thoughts here then. So, look, our observation, as we travel the country is that companies are investing. Real interest rates are low. Capacity utilization is quite high, and labor markets are tight. So this is – I think many business owners are – have concluded that this is a time to be investing in the business. Gabriel, I did speak to our economists on this question – this good question of how long can business loan growth exceed nominal GDP growth? And their view or their observation would be this. The business loan growth typically does not run faster than nominal GDP for about more than a decade, say, when they look across OECD countries. And in Canada, we’ve seen high levels of business loan growth relative to GDP, we saw it in the late 1970s through the early 1980s, the late 1980s through the early 1990s, and this time it started kind of into 2012. So you put all of that together and our view is that, there’s a period of kind of heightened investment in businesses can and should continue. And that’s what we’re planning on as we invest across this country geographically and sectorally, including agriculture in a number of different areas that we’ve talked about in the past.

The acceleration in mortgage growth really doesn’t have any trickle effect into commercial or wholesale lending with other areas?

I would say, look, I think all markets are connected, so I’m not going to say they’re disconnected. But we are expecting our real estate commercial – our real estate development business, the financing of that to grow next year. That business is very much focused on kind of Tier 1 developers in Toronto and Tier 1 developers in Vancouver. I wouldn’t be surprised if it moderated – it moderated somewhat. But as I said, it’s 25% of the overall commercial business, and we’ve got a special focus on small business lending as well these days. So overall, Gabriel, we see business lending, if you want to call it that, it’s – our plan is for double-digit loan growth next year.

Okay. Thanks for taking the questions over time here.

Okay. Operator, can we have the next question on the phone, please?

We will now take our next question from Scott Chan of Canaccord Genuity. We will – please go ahead, sir.

Good morning. Perhaps I’ll switch over to wealth management, and maybe just big picture with the market volatility we’ve seen since October. Just in terms of kind of net flows on the institutional and the retail side. And if there’s any incremental commentary related to MD and JS as well? Thank you.

Yes. So on wealth, look, I think the wealth business overall is performing well. It is harder to see with the acquisition and the disposition activity over the past year with MD, Jarislowsky Fraser and HollisWealth. But if we looked at what we might call organic wealth, that business is up in earnings 14% year-over-year and 10% for the full-year. So, I think solid to a strong year overall on the organic business. Clearly underneath that, it is a bit of – there are different things going on. The wealth management side of the business is particularly strong. So as we’ve discussed in the past, delivering all of this organization holistically to clients who want need advice and solutions is clearly a driver of earning currently and going forward. The retail asset management side of the business is, I’d say, is dealing with the headwinds that you’re very familiar with and it certainly has more modest levels of growth. But overall, we think we have good product, good performance in that product too and I think a lot of channels to sell-through. So, again, if you look at organic wealth in AUM, in particular, that probably down 3% year-over-year. Organic AUA would be down about 2% year-over-year. So the market fall and lower sales to mutual funds are contributing here, but the business printed a pretty solid year. On the acquisition, I’d say, we’re very pleased to this point. MD Financial closed I believe on October 3. And I’ve said in the past, we’ve said in the past that job one is retention. That’s going very, very well. Job number two is going to be a defining and executing growth plans and that’s very much our intention to reach Jarislowsky Fraser and MD, as we head into 2019.

Perfect. That’s very helpful. Thank you very much.

Operator, can we have the next question on the phone, please?

We will now take our next question from Sohrab Movahedi of BMO Capital Markets. Please go ahead, sir.

Brian, I just wanted to see where buybacks are relative to the capital deployment plan now? I know you did $4 million or $5 million in the quarter, $8 million in the year. Do you expect that pace to pick up now that you’ve got the capital on a pro forma basis closer to 11.2%?

Yes, it’s always in the toolbox, Sohrab, and with the stock trading where it is, we view it as extremely attractive and that’s certainly an option for us. And we’re not in the business of acquiring anything this year. As you well know, we’re in the business of integrating what we’ve purchased. And as I said prior question, we have a strong ability to generate capital internally here. And so, we’re very comfortable with our capital levels here and certainly deploying it and share buybacks is an option that we have.

And the small dispositions that you’ve noted, they won’t have – will they have any earnings implications that we should think about?

It’s not material, Sohrab.

Thank you.

Thank you, everyone, for participating in our call today, and we look forward to speaking with you again in February next year. Have a great day.