Good afternoon, ladies and gentlemen. Welcome to the CIBC third quarter results conference call. (Operator Instructions). I would now like to turn the meeting over to John Ferren, Vice President, Investor Relations. Please go ahead.

Thank you. Good afternoon. Thank you everyone for joining us today. This afternoon our management team will discus CIBC's Q3 results released earlier this morning. This conference call is being audio webcast and will be archived later this evening on cibc.com. We'll follow the usual format of some prepared remarks from CIBC's senior management team followed by a question-and-answer period. Before we begin, let me remind you that any individual speaking on behalf of CIBC on today's call may make forward-looking statements that are subject to a variety of risks and uncertainties. Certain material factors or assumptions may be applied, which could cause CIBC's actual results in future periods to differ materially from the conclusions, forecasts or projections in these forward-looking statements. For more information, please refer to the note about forward-looking statements in today's press release. With that, let me now turn the meeting over to CIBC's President and Chief Executive Officer, Gerry McCaughey.

Thank you for joining us. Let me remind you that my comments may contain forward-looking statements and actual results could differ materially. Following my remarks, our senior officers will provide an update on their respective areas. Today, CIBC reported a net profit for the third quarter of C$434 million and cash earnings per share of C$1.4. Earnings apart from items of note were C$1.36 per share. In our items of note, we have reported a gain from our structured credit run-off portfolio that for many quarters has created losses for CIBC. This is somewhat encouraging as in the past we have highlighted structure credit as our area of greatest concern. We had a positive outcome this quarter from having decreased our positions through risk reducing transactions, settlements with our financial guarantor counterparties, right-off, as well as improved market conditions this quarter and some amortization. In the items of note, you'll find that the largest item was mark-to-market losses through our normal course loan hedging activities. In previous quarters, we had gains in this area due to deteriorating credit conditions. This quarter, as in previous quarters, narrowing credit spreads reduced the previous gains. While this did have a negative impact this quarter, over the longer term, it is very encouraging as we do own the offsetting loans that these items are hedging. These loans are not mark-to-market that will bode well for future credit performance in our loan portfolio. David Williamson will review these and other items of notes that impacted our results in his presentation. Loan losses were somewhat higher in the quarter. As we expected, we booked higher losses in our discontinued UK and US corporate loan portfolios as well as in our US commercial real estate portfolio. Card losses were also higher. As you will hear from Sonia…

Thank you, Gerry. My comments also contain forward-looking statements and I would remind you that actual results could differ materially. I'm going to refer to the slides that are posted on our website, starting with slide five, which is a summary of our results for the quarter. We reported earnings per share this quarter C$1.02 or C$1.04 on a cash basis. Our items of note for the quarter are listed on the top right of the slide, totaling C$0.32 per share and our cash EPS excluding these items is therefore C$1.36 per share. I'll summarize each of the items of note briefly. The largest item this quarter was C$0.27 per share of the loss resulting from the impact of improved credit conditions on our Canadian corporate loan hedging program. As Gerry said, the improvement in this credit conditions would indicate a better outlook for our Canadian corporate loan portfolio and should result in better loan loss experience in the longer term. In the short-term, improved credit conditions have a negative impact on our results through the mark-to-market of our corporate loan hedging program. Next, we reported the gains of C$0.17 per share on our structured credit run-off business. I'll cover this in more detail, when I turn to the next few slides. We had loan losses in our UK leverage loan and other run-off portfolios of C$0.15 per share and we increased our general allowance by C$0.07 per share. We had four other items of note that net to no impact on our per share basis and C$2 million pre-tax amount. The details associated with these four items are provided on slide 38 of the presentation. Excluding these items of note, third quarter results were helped by higher revenue in Wholesale Banking and higher volumes in our Retail Markets businesses,…

Thanks David. My comments also contain forward-looking statements and actual results could differ materially. With respect to credit risk on slide 43, specific loan loss provisions were C$505 million or 121 basis points of net loans in acceptances. The quarter-over-quarter growth of a C$176 million was due to first, an increase of a C$134 million in provisions for corporate and commercial loans. This was mainly due to losses in our UK run-off and US real estate finance portfolios. Second, an increase of C$42 million in consumer lending, where cards and personal lending losses accounted for most of the increase due to higher bankruptcies and delinquencies, flowing through to write-off. I'll discuss the cards portfolio further on the next slide. Gross impaired loans increased by C$405 million this quarter, primarily related to our UK run-off and US real estate finance portfolios. Otherwise, gross impaired loans in our consumer portfolios were up only marginally in this quarter. On slide 44, our current net credit loss rate in Q3 was 7.1% versus 5.6% last quarter. As we've discussed in our webcast for the last several quarters, we've deployed several account management initiatives in this area, while controlling the dollar value of losses, this is also constraining growth in balances outstanding, which has a tendency to increase today's loss rate in percentage terms. If we draw an industry growth rates in 2009, our NCO rate would have been 51 basis points lower. News that could prove to be encouraging, although not a certainty is that, delinquency rate started to improve during the quarter. Loan losses in future quarters will be driven largely by the extent towards the early signs of economic recovery take-hold, together within the case of our corporate loan, company-specific event, as you know, we've had over five years with very few…

Thanks Tom and good afternoon everyone. My remarks may also include forward looking information and actual results could differ materially. Revenue growth in our personal and business banking segment was up 8.8% quarter-over-quarter, while our wealth management business experienced revenue gains of just over 7% in the quarter in what was a better market environment from Q2. Across Retail Markets we continue to invest in our branch networks to provide even greater access to advisory solutions for our clients. Our investments and access not only included branch openings but extended hours in existing branches as well. We opened or expanded 11 branches this quarter, bringing our total year-to-date total to 28. We remain on track to open, relocate or expand 40 branches by the end of the year. We now have 39 branches operating on Sunday across the country, which will increase to 45 by the fourth quarter. Supplementing our branch strength is online banking. CIBC was again voted the best consumer internet bank in Canada with the best online consumer credit site in North America for the second year in a row by Global Finance Magazine. Personal banking funds managed increased 4.2% quarter-over-quarter with growth coming from deposits and secured lending. Strong growth in deposits with an 81 basis points increase in market share versus the prior quarter was driven by a new high interest savings account, which was launched in May. This new account is available to clients through the Wood Gundy brokerage network and also third-party brokerage channels. Our deposit growth was also supported by our strong checking accounts summer campaigns, and continued strong tax-free savings account sales. Combined, these initiatives contributed to strong balance growth. In personal lending and mortgages, real estate secured lending was up 6% on the year and 2% quarter-over-quarter. Unsecured lending was…

Thank you Sonia. My comments may also contain forward-looking statements and actual results could differ materially. I will review third quarter performance forward-looking for CIBC's Wholesale Banking business and provide an update on our business strategy. When we introduced our strategy last year we committed to repositioning our business for consistent profitability within a rapidly changing Wholesale Banking market place. This strategy focuses on traditional areas of strength in our capital markets and our corporate investment banking businesses. Results for the quarter show continuation of a trend with solid, high quality earnings aligned with CIBC's risk appetite. This is a positive signal for our business given our focus on client-driven growth and a disciplined approach to risk. In our corporate investment banking businesses, which are comprised of investment banking, corporate credit products, US real estate finance and our core merchant banking, revenue is up from posted increase revenues over Q2. The key driver of the performance in this area has been the decision we made earlier this year to manage our corporate lending capabilities separately from our investment banking activities. Now, lending supports all over activities across Wholesale Banking. Today, our corporate credit products business serves the entire large corporate Canadian market. At a time when many foreign banks have withdrawn from the market place and many Canadian banks are at limits on certain names, this initiative has worked very well. In addition to maintaining a high level of service to existing clients, we're adding a number of new accounts. We've added four new investment credit accounts already this year and we have a pipeline of at least half a dozen new accounts on the way. Revenues have steadily increased over the past three quarters and this is a strong core traditional business for CIBC that will continue to be…

Thank you, Richard. We are ready to take questions on the phone.

(Operator Instructions). The first question is from Steve Theriault from Bank of America. Please go ahead.

Sonia, the retail NIM was quite a bit higher this quarter. Can you talk a little about sustainability and what the biggest drivers were in Q3 to that improvement?

Yes, the primary factor in the retail NIM was reprising on credit and the prime BA on that front. So, I would expect it to remain pretty much in line with where it was this quarter on a go-forward basis.

Another quick one if I might. The US real estate finance exposure looks like it was about C$2.4 billion, probably a question for Tom. That split between, what you are calling a construction program and an interim program weighted quite heavily to the interim program. Should we think of those as any different or are they really just construction lending exposures?

They are a little different. I mean, construction is just as the name implies, it's starting from scratch. Interim is a little lower risk and that it's generally renovation, refurbishment where there is already lease up, but they are generally both pretty low risk given the relationships we've got with the sponsors and the locations, but interim is just one step further along.

If I could squeeze one more in just on the card securitization, I know that card securitizations were down about half a billion or so I think on the quarter, so anything going on there, anything that you would like to highlight or is it just timing or a replenishing issue with respect to those structures?

No, nothing, Steve going on there particularly just the rolling off; just maturities.

Thank you. The next question is from Andre Hardy from RBC Capital Markets. Please go ahead.

I just want to start with a clarification. I hear the comments that business loan losses are expected to decline from the current quarter on page nine of the report to shareholders in the outlook section. There was a comment about Wholesale Banking provisions expected to increase. Are we just dealing with a different starting point or did I mishear something?

We had to repay exactly 22 quarters where we've had essentially no loan losses in the state driven by the de-risking that we started in '02, '03. This quarter, although we do a very detailed review every quarter, we did a particularly detailed review this quarter and we've had an unusually high number, I think, it was a C$129 million. Now, about 83 of that within our run-off book, but even apart from that, a number of the loans that we impaired and this is reflected in the incremental allowances which have been put on at a comparatively low level, I think reflecting the quality of these impairments being better than the rest of our book. As we look out over the next two quarters and I've got a caveat this as I said in my comments. There is event risk in many of these but we look at that number we booked in Q3 and see at the moment, considerably a lower provisions going forward in the next two quarters.

Okay, so the report to shareholder is probably just using 2008 as a starting point whereas your comments are using Q3?

You are looking at the outlook for 2009; I think you are absolutely right. That's really looking at 2009 relative to sort of longer term trends and what Tom's comments are more the quarters he sees coming up relative to this quarter.

The other area I want to address is on page six of the sub-pack and it's the treasury allocation to the Retail division, where, if we were to look at the Q3 '07 and Q2 '08 experience and some of the subsequent quarters versus what we're seeing now, there is a big change. There's always going to be moving parts here, but are there any permanent things that would suggest lower treasury allocations? Some of the early private securitizations that you've done which might suggest at a lower treasury allocation in the past or should we just kind of take an average here and stick that in our models?

I'll make a couple of comments. So one vis-à-vis retail and treasury, this particular quarter, whether it's on a comparison to last year or comparison this quarter or the preceding quarter, treasury hasn't had a market impact on retail. It impacts retail in different places, but I'm talking about treasury allocations to total retail, it's not a market impact. However, I think you're broader question, Andre is kind of what's the trend line on treasury and how will it impact the bank and other elements of the bank this quarter and the quarters going forward? Is that fair to say?

Just I'm trying to figure out is were there decisions that didn't work out that were near-term decisions or were there some decisions whereby you might have crystallized some of the high wholesale funding costs that we've seen?

On a year-over-year basis overall treasury results, we've seen last quarter and this quarter are declining, like there total treasury revenue is lower, and your right on the markets to the cause of that. Funding costs in the market place we see more recently are declining. What we're seeing in treasury is the impact of some the actions that we've taken over the past two years to strengthen our balance sheet, from both the capital and liquidity perspective. Actions that are consistent, we've talked about in prior conference calls were our status strategy to enhance capital and enhance the balance sheet. So these actions they have been very positive for the balance sheet and to our overall quality and have been very good for our capital and our liquidity position. However, there is a lag effect in terms of the costs of these initiatives hitting our P&L in this quarter and for some quarters going forward.

Thank you. The next question is from Michael Goldberg from Desjardins Securities. Please go ahead. Mr. Goldberg, your line is now open.

I have a couple of questions and maybe I'll just stick with this theme on treasury and what seems sort of curious and maybe you can explain it is, how you could have lower treasury revenue in an environment of such a steep yield curve in both Canada and the United States?

Michael good point and I think there's opportunities that we and others and seizing to I think benefit from that yield curve and that could very well impact future treasury results and mitigate the comments that I just made to Andre. I think Andre's comments for, treasury results lower this quarter, lower last quarter what's going on and to that, I was just saying, we did take action to strengthen our balance sheet. We did take action over the two year period and that did have costs because, some of the raising was during period of higher credit speared. That's embedded in our book and we'll feel that for some period of time. You're right, Michael, there is a upper split in yield curve that provides opportunities and the strength I think of our balance sheet and capital position will allow us to participate in that opportunity.

To what extent do you think, you would take positions or leave yourself sensitive to rates on the yield curve?

Michael, I think give me a chance at this point to hand over to Gerry and maybe he could offer a comment or two, as well.

Michael, David has I think given a very good historical reference to the impacts that are taking a conservative funding posture might have through the last period of time, particularly when the issues around the marketplace were at the highest level of stress. Inline with our risk posture at CIBC, we did elect to take advantage a variety of funding opportunities during that period of time, and we took advantage fairly early on some of those funding opportunities, when the wholesale markets were not open we went to the securitization market, and did execute a number of transactions that freed up a fair bit of liquidity. Although, we're not necessarily at the peak price they were more expensive than usual. Those will run-off as David said overtime. When it comes to the topic of the yield curve it's actually kind of interesting because, there was a period of time when you had a very steep yield curve, but it was dependent on whether or not you were willing to go sovereigns or credit related. It's fairly recent that if you wish to tend towards the sovereigns or in the direction of the sovereigns that you had the type of steepness that, you have today. Very simply put, if you'd used in the US side, the 10-year US was at 2%ish at its low and touched 4%ish recently, and as now I don't have it at the top of my head, but I suspect it's in the 350ish range. One of the elements of any gapping that one might do is that needs to be considered is, what level of credit risk that you wanted to take into your gapping and our preference has been in this area. First of all, to be very balanced and to take a somewhat laddered…

A fairly robust answer, I don't think I can add too much for that, thank you Gerry.

I had another question for Sonia. Hello?

Yes, Michael.

Could you tell us if the growth in your new high interest deposit product came from money market funds and if it did, what's the impact on contribution?

It came from a number of places. Some of it came from money market, some of that came from straight deposit accounts. A fair amount of it came from entirely outside of the bank. So it was a broad mix. Any of that came from money market ultimately those funds would have migrated elsewhere as they already had been prior to the launch of that savings account just given the rates to customers. So, its not a -- it wasn't -- you could leave it in money market and it would stay there, it was a case of the funds would migrate regardless and would they migrate to a product we had or would they migrate outside of the bank.

Just the movement in to that new product accounts for much of the five plus billion dollar increase I guess it's about a five plus billion dollar increase in your personal notice deposits during the quarter?

Yes it does. The other items that were to account for the increase is the tax-free savings account and our unlimited checking accounts as a result of our campaign, but the largest share would be from that new account.

The next question is from Brad Smith from Blackmont Capital.

Just another question Sonia for you. You made some reference to the trend in delinquencies in that credit card portfolio. I was just wondering, are there actual numbers you can provide us with respect to those trends, just to give us an idea where you are at and where you started the year at?

Why don't I pass over to Tom in terms of the actual numbers on that? What I can tell you is every month throughout the quarter, they did continue to improve and the total would be about 12 basis points improvements. Tom may be able to provide additional detail about that.

Yes, Brad it is Tom. My colleague here is just pulling them. Maybe Ferren will let you read them. These are actually public numbers, files in connection with their securitization, which are essentially undivided interest in a broader pool. Are you guys ready now, or do you want to come back?

I will take that. Now Tom, in terms of our delinquency our cost per cards is down about 1.3% range now, that would be about nine basis points within the quarter.

Okay, perfect, that's helpful. Then the only other question I had was with respect to the general provisions that you took. It seems that the bulk of that provision ended up, it looks like going into generals opposite of the credit card portfolio. So I'm just trying to reconcile the commentary of the improvement in the delinquencies, with the decision to increase the generals. So maybe getting some comments as to how you are determining your general provisions? How you determine, how much and when to increase those?

Hi this is Ferren again. You are right there. Our general allowance is just about C$42 million this quarter, C$35 million of that would have been against the cards portfolio and a good part of that would relate to the question that was asked earlier about the cards securitization maturities coming back on balance sheet. So in those maturities, the curve you have to reestablish are general allowance. So about 15 million of that increase would be related to the securitization. Otherwise we have both of qualitative and quantitative approach to creating our general allowance. We look at both our delinquency trends but also bankruptcy trends in the portfolio and we review our methodology with our external auditors from time to time and I would say in terms of the qualitative component given the external environment, we've maintained a conservative stand at this point in time and that changes each quarter as market developments occur.

So I guess, safe to say, it would be a fair amount of discretion in established in the dollar amount at any given quarter?

To a certain degree of discretion for sure. Our methodology is linked back to our Basel II methodology, which have looked at the credit scores of our portfolio, Probability of Default distribution and Loss Given Default distribution.

The next question is from Sumit Malhotra from Macquarie Capital.

Good afternoon, start with David on Note 10 for the report to shareholders. I was just thinking about the tax reassessment. If I go back just three quarters, the bank had a C$486 million tax recovery associated with that file. I'd just like to know that at time when that recovery was taken back into earnings, was there consultation with the CRA at that point? I would think there would have to be in order for that to make its way to the income statement, and if that was the case, why has this reappeared in such a short order of time in terms of a potential reassessment.

Jeff, to answer your question, what was done back in Q4 is just what it should be with the valuation of what should be in our accounts, vis-à-vis this filing on Enron and our evaluation of it, and not having had some discussion, brokered kind of arrangement with the CRA. It's just us evaluating our perspective on what we should have on the books. So, just speaking to what the development is in this particular quarter and obviously you referred to note 10 and we've provided a fair amount of information there. So, I'd guide you or others to that information. However, I'd say, it's not surprising to me at least that the government would want to continue the process of discussing or debating the issue through a reassessment given the size of the balance involved. So the step of having a reassessment arrive right now is not frankly a surprise as how this process will evolve. A second comment I'd make is that, in our disclosure, we've noted our view which continues to be our view, which we believe will be successful and sustaining at least the amount that we have recorded as far as our accounting tax benefit that's in our books to-date, including what was booked in Q4. Beyond that, obviously, I'm not in a position to say much more because the matter is evolving and now that a process is commencing in some respect, and it's now between us and the CRA to see this through.

The thing is David, and obviously, I know we can't say too much, if I go back four years ago to when this charge was taken and maybe, Tom, who was in your role at that time could speak a little bit more on it. At that time the tax savings if I can call it that associated with this expense were quite low, and it was something that we have been told would have to be discussed with the CRA. So, to hear that the Q4 recovery was at the banks discretion is almost what it sounds like you are saying. It seems strange just given what we had heard four years ago when this was first set up.

This obviously has to be at our discretion to what we put in our accounts, but I think the best way to look at it is, these things evolve, so there is the event, there is the initial filing. My point being, not that we never talk to CRA regarding years that are open and subject to assessment. Those discussions do continue and through that we get a sense of how they are auditing our account and our confidence will expand or diminish through that process. So, I didn't want to leave the impression nor was this a right impression that the Q4 adjustment was as a result of the specific discussion with CRA, where they authorized or supported or whatever with respect to what we did then. What it was more a case of is that, [Dennis Delugen] and our tax team are continuing to work with CRA as they normally do through assessment, and it's their view as to how we feel about how the account or the filing is going to play out.

Lets leave it there and move over to credit; one for Tom Woods. If I look at the items that drove provisions higher on business lending, obviously, leverage loans and real estate, we see the real estate, construction, consumer goods and publishing being the bigger line items; certainly a large increase in those three categories for both provisions and non-performing loans. I did not see very much in any of them on your net charge-offs page. Is this a timing issue Tom and that were between the 90 and 180 day period or is there some measure of security that perhaps you can talk to here.

It's really timing and it's not so much 90 or 180 days, as it relates to corporate loans, you make provisions based on judgment as to collectability. Charge-offs occurs when there is a very high degree of certainty on collectability. These provisions as I said earlier were particularly high in Q3 and they are going to play out, and in some cases to be frank, we are in recap discussions with these borrowers and we'd expect to get some of that money back through the P&L, but in another case obviously, we'll have to go to write-off. It's really a question of timing and it will be typically some number of quarters before we resolve the charge-off outcomes.

That was really my point the fact that the provisions have been taken now, the charge-off hasn't. There are still in your view a decent opportunity to get a chunk of that back?

I don't want to leave you on too much. I mean, generally speaking, when you make a provision you get some recovery but you don't get a large percentage. There is often some percentage back, but it's really a timing question. If history repeats itself, we will get some back, but I don't want you to conclude that we are going to get a lot of it back, because that rarely happens.

Thank you. The next question is from Mario Mendonca from Genuity Capital Markets. Please go ahead.

Tom, just a very quick point of clarification. When you where concluding your comments, your opening comments, you concluded with something like, something else, we have a positive outlook on. Was it the corporate that you saw positive on a going-forward basis or was it on the consumer that you felt positive going forward.

Both, personal and secured, and I am comparing that with the reported provision in Q3 as well as the corporate. Let me just read the sentences. The line may have broken up. The outlook for other unsecured personal loans, i.e., other than cards, and corporate loans is positive relative to Q3. Now, that shouldn't be terribly surprising, particularly on the corporate side given the historically large number we booked but we wanted to just give you some comfort that. I had a bunch of questions through the day which I've put off until it's webcast about how we saw the future, so it was relative to that Q3 booking in both unsecured, personal and corporate.

Other than cards?

Correct.

For cards, you said you felt that the write-offs could decline going forward but that allowances could still increase because of bankruptcies and unemployment. Is that fair.

I didn't that say. I got to really reiterate the caution here. Typically we haven't given guidance on provisions just because it's the transparency or the visibility rather is harder to pin down, but I know there is a lot of interest in there. So our view is, on cards, we are going to see relative stability versus admittedly high number in Q3, just given the current unemployment, bankruptcy situation. We have relatively low increases to the allowance in Q3, but bankruptcies were high. So, although I didn't say this, I will say it now, which is essentially what you said, Mario. Changes to the allowance in Q4/Q1, if I had to make an estimate are probably going to be a little higher than the number we booked in Q3. We should start to see the benefit of these stable and now improving delinquencies that Sonia and I both referred to.

On the right-offs?

That's right.

That was how I interpreted it, before but thanks for your clarification. One final thing and if, I know this could open us up to a much broader, maybe even longer discussion, but if we could briefly touch on, just the speculation that CIBC would look as far foot as across the Atlantic. Given everything that's going on at the bank and the decisions rate made over the last few years to exit the UK and exit the US. Should we even entertain the notion that CIBC would consider looking at taking an important position in the bank in outside of Canada or outside of even North America, is that a reasonable thing for us to understand?

As we've stated previously and I repeated today, our first priority is to strengthen our core businesses and to manage down our structured credit exposures and continue to prudently deploy our capital base, keeping in mind the risk environment that we have out there. In terms of our core businesses, the opportunities at this time are very interesting within the markets that we are in. I would like to just touch on that for a moment. We are, as both Sonia in commercial banking and Richard referred to in terms of his corporate lending activities and securitizations, finding that the capacity to deploy capital in the asset, asset environment that we've seeing today is quite healthy. We do expect that to continue. One of the important reasons why we expect that to continue in the near-term is that in the low nominal rate environment and it could go up a bit from here and it would still be a low nominal rate environment, it is possible now to engage in investment in assets, securitizations, corporate lending, commercial lending, where our clients are receiving some of the best nominal rates that they have received in terms of doing business with us. At the same time, because of the low overall rate environment and the lower cost of funding, we can properly price these asset investments for the risk and profitability that we require. That environment where the balance between a healthy environment for our clients to borrow at good rates, while that's throwing off good risk adjusted spreads for us, in our core market places its something that is our primary interest. Furthermore as you have heard both Sonia and Richard talk about there are areas where CIBC either because we were absent from them in the past, due to a…

Very briefly then, would you take a minority stake in a company now to prepare for that time in the future when you're successful and are spitting out excess capital. Would you take the stake now so that you're ready for it later?

I think that one of the things that I'd like to do is avoid specificity as to the means and I'd like to focus on the opportunities because rightly or wrongly so, if I was specific as to the means, I think that people may read more or less into the response. Let me talk about the opportunities out there and the variety of ways that one can participate. There are opportunities many jurisdictions that we have and are looking at. One of the elements that is very important to us in anything that we do is that there is at the same time as we are becoming involved, that there is an element of first and foremost, making a decision around whether or not the better investment is assets or institutions. It's something that you've heard me say the past and I continue to say that. In the US marketplace one of the things that we have found as we have looked through a number of institutions is, we have found that there were assets that we understood extremely well, particularly since they required financing on a funding subordinated basis and that the returns that we could expect with a level of do diligence we were able to conduct and a much lower risk point were higher through engaging in asset investment rather than institutional investment due to the uncertainties that were involved, as well as the fact that it is not necessarily a game for those who are not fully involved and we are not deeply involved in the US due to the fact that programs that are available through governments are critical to understand in terms of investing in the environment in the US Therefore, our tendency in the US marketplace for instance would be to buy…

It does, thank you.

The next question is from Ian De Verteuil from BMO Capital Markets.

Thanks I am referring to page 24 of the sub-pack, the delinquency data. When I look at the card business this is the second quarter that the aggregate delinquencies are down. I mean those have sort of been up and down in all the various buckets. I would have thought that with the greater than 90 day bucket being down, that your charge offs would have been down as well. So that's one thing and the second I would have thought, with the overall delinquency sort of impaired but not yet, perhaps you would not impair with those declining for two consecutive quarters, I am surprised that you still have to build reserves against that. Am I missing something Tom in terms of what I should be linking charge-off and the allowance has reserve built too.

No Ian I think your inference is quite correct, but there is another part to it and that is bankruptcies and along with that is, even though our delinquencies on the face of it are declining, we've had a slightly higher sort of roll rate through to the 180 days in terms of collectability. So although, in Q3, we had a relatively low need to build up the allowance, because we built it up a fair bit a few quarters before that, bankruptcies were fairly high. It sort of feels like and this is why I am only saying that the outlook for Q4 -Q1 is for relative stability, it could even go up marginally. It's because, even though delinquencies on the face of it in percentage terms are stable in Q2, slightly better in Q3, slightly more of those delinquencies are rolling through to 180 from a collectability point of view and bankruptcies are a little higher. That has more than offset what you would otherwise think would be somewhat improvements due to the percentage bankruptcy coming down.

So when I think about the consumer bankruptcies which I look at, it doesn't seem as if the consumer bankruptcy rate has really moved for four months here. Am I missing something? Isn't it just the consumer bankruptcies that we get from, I see sort of 10,000 running a month. Is there any other thing I should be looking at there? Because it doesn't look as if it has changed much in four months now?

Yes, I don't know whether we have those industry statistics. Do you have them handy?

Maybe it's your own, the numbers you see internally and not those, but is there anything we could look at to give us an indication of what's going on with the book? Because it looks as if the delinquencies can go down, but then the charge-offs can still go up?

Okay. I will hand it over to Sonia. Let me just reiterate. Delinquencies can go down, but if a slightly higher component of those actually flows through to 180, the charge-offs do go up. Bankruptcies in our case were a little higher, and if in fact the industry data is flat, that means our bankruptcies were slightly higher than the industry. Sonia, do you want to add to that?

A couple of factors here. One is when you look at the provisioning, the modeling is based on a 12 month average, and so it is a lagging indicator, so that would be one factor that you should consider. The second is, on delinquency, it goes from 30 day to 180day cycle, which is why I emphasize improvements in both early and late stage delinquency, because the key in improved write-off is improved late stage delinquency, which is what we have experienced in the third quarter. So, that's what would drive decreasing write-offs from the flow of these delinquencies. So, what you would expect there is exactly what you've described. The third part that I would highlight is bankruptcies. Our actual bankruptcies would be exactly in line with the industry measure of bankruptcies based on the data that we see out of the main industry.

Sonia, three points you mentioned there. You have a 12 month roll, so to the extent things have deteriorated in the last six months, that's a negative. On delinquency, the news is good because your late stage delinquencies are getting better. The third, you would say your bankruptcies are pretty much on the industry average?

Correct.

The second question comes back to Sumit's question on the tax issue. In your annual report, you talked about the fact that you had actually entered into negotiations with CRA to resolve the Enron tax matter. I'm surprised that at year end, you would have already been in negotiations with them, would have released to C$0.5 billion of reserves and then how would be reassessed nine months later. I mean how could I not interpret this as the relationship or things have changed for the worst or it's less favorable today than it was nine months ago?

I think all that's happened today is the next kind of step in a process on the balance that fairly substantive which as we've filed the return back 2005 and some number of years later, we have been reassessed and than in fact, not formerly reassessed, we've had a draft reassessment. Once, we get the formal reassessment, we'd be in a position to, continue to process and we'll debate our points and go over this we'd likely go. I'm not too sure I followed your other?

I guess well my point is this, if I was in a debate with the CRA and I knew I may get reassessed, I wouldn't book you know C$0.5 billion gain if I knew I could reassessed. However, what you are saying is you took the C$0.5 billion and you knew you might get reassessed anyway. Isn't it normal that you would just say well don't bring in, don't book C$0.5 billion profit if you could get reassessed and if you'd know that's a pretty real, not even a probability, it's nothing about possibility it's a probability?

No I think Ian this is slightly different perspective, even at the beginning, we booked about 30% on this. I think, when we booked the 30%, given it is a C$1.0 billion amount, that we probably would have been anticipating then that a reassessment would be probably highly probable and then at the end of Q4 of last year, several years of review of our case, internal discussions and external law firms also gave us a good opinion about our perspective and prospects. We got that in Q4. So at that point, we looked at our situation and booked what we thought, again, was the right value to have on our books on this, again anticipating the most probable outcome wasn't that the government would write us a note and say, we couldn't agree more and your filing is going through as you put it. The anticipation would be that, for an amount such as this, there would be pretty probably a reassessment and a process thereafter.

Thank you. That concludes the question-and-answer session. I would like to return the meeting over to Mr. John Ferren.

Thanks, everyone, for joining us and we look forward to talking to you again at the end of the fiscal year. Thank you.