Good morning ladies and gentlemen. Welcome to the RBC 2012 Fourth Quarter Results Conference Call. I’d like to turn the meeting over to Ms. Amy Cairncross, Head of Investor Relations. Please go ahead Ms. Cairncross.

Good morning and thank you for joining us. Presenting to you this morning are Gord Nixon, President and CEO; Morten Friis, Chief Risk Officer; and Janice Fukakusa, Chief Administrative Officer and CFO. Following their comments, we will open the call for questions from analysts. The call is one hour long and will end at 9 AM. To give everyone a chance to participate, please keep it to one question and then re-queue. We will be posting management’s remarks on our website shortly after the call. Joining us for your questions today are George Lewis, Group Head, Wealth Management and Insurance; Doug McGregor, Chairman and Co-CEO, Capital Markets and Co-Head of Investor and Treasury Services; Dave McKay, Group Head, Personal and Commercial Banking; and Mark Standish, President and Co-CEO, Capital Markets and Co-Head of Investor and Treasury Services. As noted on Slide 2, our comments may contain forward-looking statements, which involve applying assumptions and have inherent risks and uncertainties. Actual results could differ materially from these statements. I will now turn the call over to Gord Nixon.

Thank you, Amy and good morning everyone. 2012 was a record year for RBC with net income of over $7.5 billion which was up 17% from a year ago. On a continuing basis our net income of $7.6 billion was up 9% over last year with record earnings in three of our businesses; Canadian Banking, Capital Markets and Insurance. We delivered a strong return on equity of 19.5% even with [tier] capital as we transition the Basel III which becomes expected for the Canadian Bank in the first quarter of 2013. Looking at our fourth quarter earnings grew over $1.9 billion up 19% over last year on a continuing operations basis with Canadian Banking earning over $1 billion for the second consecutive quarter. It was a clean quarter with earnings per share of $1.25 or $1.27 when you add back amortization of intangibles. It was also up 19% from last year. Our fourth quarter results also reflects strong fixed income trading driven by improved conditions compared to last year, strong corporate and investment banking results and solid performance from Wealth Management and Insurance. Overall, our fourth quarter and full-year results clearly demonstrate the earnings power of RBC and our ability to successfully execute our long-term strategy. By focusing on this strategy and maintaining strict risk and cost discipline we delivered strong earnings to a period of ongoing headwinds and we extended our leadership position in Canada while building on our momentum outside of our domestic market. As shown on Slide 4, our capital ratios remained strong and well above both internal and regulatory target. At year-end our Tier 1 capital ratio was just over 13% and our estimated Basel III pro forma common equity Tier 1 ratio was 8.4%. Turning to Slide 5, our objective over the medium-term is to…

Thank you, Gord. Starting with credit on Slide 9, while we saw a modest uptick in provisions this quarter, overall credit quality remained sound. Provisions for credit losses on impaired loans of $362 million increased 3 basis points to $37 million from the prior quarter to 37 basis points. This increase was driven by provisions related to a single account within Capital Markets as well as increased provisions in Canadian Banking partially offset by lower provisions in the Caribbean. With respect to Capital Markets, the higher provisions relate to a Canadian account of the technology and media sector which was originated five years ago right before the 2007 market turbulence. This was a syndicated transaction where we did not reach the target hold level because of market volatility at the time. As a result, our exposure is larger than normal for a name of this (inaudible). As we discussed on our Capital Markets Investor Day in June, our priority for this segment is to grow client relationships using the loan book and loan loss provisions at moderate levels and expected outcome of that business activity. Specific provisions for our Capital Markets business of 49 basis points this quarter is within the range of what we regard as normal provisioning levels. I would add that we continue to adhere to strict credit underwriting standards. Approximately 70% of the authorized portfolio is investment grade and our inventory of watch list and workout accounts remain at low levels. Turning to the Personal and Commercial Banking segment, the Caribbean provisions on impaired loans were $28 million. While credit quality has shown some signs of stabilizations, challenges are likely to persist in the near-term in this region until we see sustained improvements in the economic environment. In our Canadian Banking portfolio, provisions were $269 million…

Thanks Morten and good morning. Turning to Slide 13, as Gord mentioned, we had a strong fourth quarter with earnings of over $1.9 billion, up 22% over last year or 19% on a continuing operations basis. Compared to last quarter and excluding the items of note we highlighted in Q3, net income was down slightly. We had solid results this quarter across most business segments and overall it was a clean quarter with no items of note. I would highlight that last quarter included other favorable tax adjustment and corporate support consistent with the prior year’s third quarter. Turning to the performance of our business segments on Slide 14; Personal and Commercial Banking earned over $1 billion, an increase of $87 million or 9% from last year, driven by solid volume growth in Canadian Banking as well as a lower effective tax rate in Canada. Compared to last quarter, earnings were down $68 million or 6%. Excluding the mortgage prepayment interest adjustment in Q3, earnings were up $24 million or 2%. In our Canadian Banking business, excluding the prepayment adjustment, earnings were relatively flat over last quarter as seasonally higher expenses and increased provisions partly offset continued volume growth. Notwithstanding higher expenses, Canadian banking delivered operating leverage of 1.8% based on strong revenue growth and a strict focus on cost. Our efficiency ratio this quarter was 44.9%, an improvement of 80 basis points over last year. Margins were stable in Canadian Banking over last quarter reflecting our strict pricing discipline as well as our ability to grow volumes at a premium to the market and profitably gain market share. Looking ahead, we expect ongoing margin pressure as interest rates remained at historic lows and competitive pressures continue. Turning to Wealth Management on Slide 15, we earned $207 million this quarter,…

Thank you. (Operator Instructions) And the first question is from Steve Theriault from Bank of America/Merrill Lynch. Please go ahead.

For Gord and/or Mark and Doug. It’s been suggested in recent days that foreign banks and brokers operating in the United States could be forced to set up bank holding companies that would be required to fully comply with capital leverage and liquidity standards. So can you tell us a bit about your current legal structure in the United States and are we looking at a situation where there is a possibility you might have to scale back to some extent and/or have increased capital backing some of those businesses. I guess what I want to understand is how big a deal this could potentially be?

It’s Janice speaking. Yes, we did hear about the new bank holding company regulations and in fact, about a year ago when we still have the U.S. bank we were actually scoping out how we would comply and setup a bank holding company and yes there are additional capital requirements, but in the U.S. we’re very well capitalized, our business base is pretty solid. So we believe under any outcome with respect to this talks about new legislation we’re very well-positioned to continue to operate.

And Steve I’d just add to that because we did talk about it at our Corporate Governance meeting yesterday is that, if it’s something that we have to manage around, the impact will be more just in terms of how we’re structured and it may impact things like compliance and so forth in terms of businesses that will have no impact whatsoever.

The next question is from Rob Sedran from CIBC. Please go ahead.

Just a question on expenses if I may. Janice, if I exclude the variable comp, fixed expenses were up 5% quarter-on-quarter. Now, I know you mentioned a couple of different places about seasonally elevated expenses but of that quarter-over-quarter increase, how much of that would you expect to settle back down as we look into next year? And then second, in terms of the pension expense, I'm wondering under IFRS if there is any impact as we look into ‘13 from what was – in all likelihood a bad year on the pension side considering how low rates are, as your potentially higher pension expense that might eat into operating leverage as we look into next year as well?

Those are two good questions, Rob. And so I’ll start with the first one. When you look at our longer term commitment to expense containments, we are focused on positive operating leverage. In our retail platforms, Dave has scoped out that that means between 2.5 and 3%. So when you look at the change quarter-over-quarter, there are some seasonality in the expenses and remember this is the fourth quarter. So we have a lot more variability in the expense base as people true up things like comp accruals or like advertising and promotion in those discretionary expenses. So we expect our expenses to actually be at more of an average quarterly run rate. When you look at what the trajectory is, I think you have seen that our depreciation expense is inching up because of all of the large investments we’ve put in supporting all of the great revenue growth, especially in the Canadian Banking platform. So when we are looking at that trajectory, we are specifically targeting discretionary expenses like consultancy marketing to actually reduce the impact of that depreciation built so that we can still drive positive operating leverage. If you look at FTE and exclude the impact of RBC Dexia, we’re basically being flat on a trailing quarter basis. And if you look at how we’re managing that, we’re managing our FTE through attrition and that the margin putting in more front office staff and reducing some of the back and middle office as we benefit from a lot of the cost management initiatives in terms of the efficiency. For pension expense, definitely because of where interest rates are, our pension disclosure and valuation reflects an October 31 valuation, in accordance with IFRS. We definitely see that there is going to be an increase in our pension expense going forward into 2013 based on that valuation and where interest rates are. From our perspective, it’s a manageable increase. I think that the range is possibly maybe 20 to 30% over the pension expense and it’s taken into consideration in all of our cost management initiatives.

And is that come immediately in 2013 Janice on the pension side? Like the full impact that’s felt immediately under IFRS?

Well, the pension expense from an expense perspective is sized from a different sort of valuation asides from spending valuation. So you may see some impact towards the end of the first quarter of that rise. So we know potentially what that increase is, so you will see some impact in Q1.

The next question is from John Aiken from Barclays Capital. Please go ahead.

Gordon, in your prepared commentary, you talked about potential acquisitions in Global Asset Management. I was wondering if you could run down what your regions are in terms of order of preference. And secondarily, how do you view what the excess capital levels are within Royal?

Well, I will answer the second part of the question and then I think I will turn it over to George to answer the first part, John. The second part of the question is that and I’ll lump it in with acquisitions, because well we do highlight that the Wealth Management in area is the one area where if we did find the right strategic opportunity, we’d certainly be prepared, and we would like to find out right strategic opportunity. But I would also emphasize that that's extremely challenging to do in today's environment, and part of it is because of the capital issue. You had very little in the way of M&A activity generally in the financial services industry over the last number of years and my personal view is that’s going to continue going forward, because if you actually look at the capital rules, we live in an environment I sort of refer to it as the Hotel California elevator, you are allowed to go up but you are not allowed to come down in terms of capital. So when you look at potential M&A activity, it has to be financed with a lot of core equity to ensure that we continue to comply with the capital requirements going forward. And frankly, we live in an environment today where when you look, in my judgment, at least at our share price, our return on equity and our dividend, you measure those opportunities against things like buying back your own stock, I would say that M&A activity becomes even more challenging. So you've got a less friendly regulatory environment from an M&A perspective, you’ve got a much less friendly equity issuance environment from and dilution issue from an M&A perspective and you got a fairly attractive alternative in terms…

Thanks for the question and just to build on Gord’s comments about Asset Management being our highest margin business within the wealth segment; it’s also our most leverageable. So we have specific goals about increasing the penetration of our Asset Management Solutions throughout our Wealth Management business not only in Canada, but also around the world and we feel encouraged by the success of our Phillips, Hager & North acquisition in 2008 and to Gord’s comments BlueBay has had a stellar last six months in terms of asset growth it's in a new high watermark. If you look at our overall asset management business we would have a larger exposure to a global fixed income franchise, and so rather than answering your question from a geographic perspective, I would say that we’re more focused through both team hires and potential acquisition opportunities on building our exposure in the equity area.

The next question is from Peter Routledge from National Bank Financial. Please go ahead.

Gord, coming back to page 6 and just following on from the last question. It sounds like a big transformational acquisition, probably less likely just given the environment. I look at page 6 and I see revenue mix its two-thirds weighted towards Canada and the question I ask myself is can RBC which is a premium price or the premium price Canadian Bank today, can you stay at premium price bank with that revenue mix or your weighted rather in a pronounced way towards Canada. It seems like solving that mix problem with acquisitions probably isn't something that could be expected. So I mean do investors risk a relative decline in RBC’s valuation over the next five years and what's your response to that?

Well firstly, I would say from an objective perspective when you look at sort of where we’re growing globally and where we’re investing globally, the sort of way I look at the business is that we would like to essentially have a mix which would be above 50% banking, 50% non-banking and move towards roughly 50% Canada, 50% non-Canada in terms of our growth. Now, it may take us time to get there, but I think that would be a reasonable objective. We are currently getting very strong growth in our international markets in businesses like Capital Markets. Wealth Management is continuing, it has got very significant growth outlook for outside of Canada and when you look at our new division of Treasury & Investor Services, again a very good growth profile outside of the domestic marketplace. So firstly, I would say that from a going forward perspective, I think you’ll continue to see that percentage come down, although also acknowledging the fact that our returns in Canada continue to be very strong, our growth in Canada continues to be very strong and it continues to be a very favorable market environment. So to answer your question, absolutely, I think we can maintain that, although I would also suggest that if you actually look at where we are today, we’ve lost. I mean we don't really trade at a significant premium multiple least compared to the other Canadian Banking institutions. So, I think you will see that trend down. In terms of the wild card, I would say that and I’ve said this in the past, the one thing away from Wealth Management that we continue to look at from a macro perspective is given the fact that on the consumer and retail businesses in the United States we have…

Is 50-50 viable over a five-year period?

I don't like to put then people zero in on where you are. I think that we would like to trend towards that level and I think you will get there from a timing perspective depending very much on opportunity. And you don't want to be pressured into doing something that hit some sort of artificial target, but I think you'll see that trend move in that direction and that's probably a reasonable timeframe.

The next question is from Cheryl Pate from Morgan Stanley. Please go ahead.

I appreciate the color that you gave on expenses already, but just wondering if we could drill down a little bit more specifically into Canadian Banking and any color you can give in terms of specific initiatives to help manage down that efficiency ratio from say around 45% this year down to low 40% target?

Sure. Thanks Cheryl its Dave here. As Janice mentioned, there were some seasonality in our Q4 expense growth of 4%. As we look forward, over the next year, we are certainly managing an environment, where we expect kind of mid single-digit revenue growth. Therefore, we are very much targeting a 2.5 to 3% expense growth to drive positive operating leverage. So as we look at the initiatives that we have to continue to manage, as Janice referenced, we’ve invested a significant amount of technology in our back-office. You’ve heard of our retail credit transformation program that will be coming online mid next year. That will allow us to automate an end-to-end back-office capability that will allow us to create a more efficient processing of our mortgaging and consumer credit business as you rollout a number of products onto that platform over the coming years. So that was been one of our big investments that we’re yet to realize the full benefit. Having said that, on the journey we’ve realized already some good savings from process change, free technology implementation. I think that’s some of the benefits of pursuing these larger technology programs. We’ve done exceptional job of managing the efficiency of our sales network over the last three years. We’ve generated record growth, market-leading growth across our businesses (inaudible) 50% premium to our top competitors and we continue to do that with largely the same employee base as we’ve had for the last year to two years. So we’ve moved people to higher efficiency areas of the country, within markets, within branches as we drill down trying to maximize the efficiency of our network. And then with the addition of Shoppers Drug Mart ability to meet clients and non-clients in our third-party sites in a very efficient way is exciting for us and we’re in the infancy of a long-term relationship, we’re shoppers and we’re seeing some very good results as we pointed out in Gord’s comments. 85% of the Canadians that walk into a Shoppers Drug Mart outlet and they have I think almost 1,200 of them are not Royal Bank clients. It's our brand and our employees that are in their greeting and meeting Canadian. So we’ve been able to extend your distribution power candidate’s number one distribution network with partnership like Shoppers in a very cost-effective way gives us a confidence in being able to manage our efficiency going forward. So a combination of back-office, front-office is how we see reducing that efficiency ratio.

Just a quick follow on if I may. How do you think about investment spend in 2013 relative to 2012?

Certainly, to manage that 2.5 to 3% NIE growth target, we are looking at our investment profile very carefully. As Janice mentioned, our amortization of previous investments is creeping up. So we're looking at our discretionary spend and our long-term spend at the same time, and trying to manage both horizons. You can’t invest only in the short-term. You have to invest in the long-term and you need a balanced approach to short and long investments and we’re looking at both. We’re looking at long-term investments that create future drag as well as Janice mentioned short-term investments in marketing and sales growth and just trying to balance towards that positive offering leverage. And we constantly rebalance and it's a dynamic process within our division.

The next question is from Sumit Malhotra from Macquarie. Please go ahead.

First question is probably for some combination of Mark, Doug and Morten. When I think about the stability in Capital Markets revenue this year relative to the last two. It certainly seems like at least in my mind, a good part of the Global Capital Markets rollout Version 2.0, if I can call it, that is being led by the corporate loan book and that’s having a positive impact on investment banking, loan syndication, net interest income, things like that. I wonder if you can give us an idea and you can probably break some of this apart through your disclosure. But your corporate loan growth, how much of that is coming from outside of Canada and do you think this introduces additional credit risk in the interim.

Why don’t we start with the loan book. In the sup, I think you can see, I think we started the year off with about $38 billion of drawn loans in the business and we ended the year at about 50. Almost all of that loan book is in the U.S. So the number of names that we are lending to and the amount of lending we’re doing in Canada has been fairly stable. There has been churn in that book, but most of the growth is the U.S. I think the names, it’s about 160 names. We’ve been putting on our book about 40 new names a quarter. I think as Morten said in this remarks, it’s about 70% investment grade, 30% non-investment grade. So the loan book overall and I think Gord has made reference to this a couple of times over the last couple of quarters is a bit smaller than it was in the late 1990. So we had a small loan book going into the ‘97 or 2007, 2008 period, and we certainly decided in 2008, if we were going to build out this investment bank, it was a good time to put credit on because spreads were good and the competitive environment was quite favorable. The run rate from the loan book is now running a billion plus. So year-over-year the run rate is up about $200 million. That's adding a certain amount of stability, but of course it’s the business that we're doing with those clients away from the lending is really getting some traction. So if you look at the year-over-year revenue increase in Capital Markets we’ve almost doubled our revenues from a year prior. Now a year prior was a weak quarter, but there is no question most of our revenue growth year-over-year has come in the U.S. and that's to the earlier question about what's the opportunity. A lot of these names that we put on, we are now starting to get traction with because the bankers are put on the platform for three to five years. The names put in the books for a few years and now you're starting to see results. So we're pretty optimistic about where that's going to take us.

Sumit, I’d also add to that; when you look purely at the trading numbers, within that we've had quite a significant shift of emphasis not just the reduction in market risk that you’ve seen over the last 12 to 18 months, but also in the type of business. As we've talked about on a number of occasions, we've moved to a much greater focus on origination, but it is origination supporting sales and trading and supporting financing that's the complete package now for our clients. So we've had a significant focus on a business called Central Funding, which in a more traditional sense is repo, stock loan sort of prime services, but that business really supports the origination and sales and trading business and we have seen quite significant growth in that business, probably a 50% growth in Q4 this current quarter versus a year ago. So it's really been a matter of putting stability into the business through changing its mix and focus and really supporting the clients more fully than just in a pure sales and trading sense.

Do you feel the ability to deploy corporate credit or offer corporate credit as a differentiator for this bank right now compared to some of the other global broker-dealers and that is the biggest factor behind the increased stability in Capital Markets revenue this year?

Sumit, it’s Gord. The answer is absolutely. I would say that in this industry you don't get credit very often for what you didn't do. But between 2000 and 2007, we took our loan book in the U.S. down dramatically, because we weren’t getting paid for it, the lending terms were loose and the ability to leverage it was low and as a result, we find ourselves in a position with significant balance sheet capacity and if you look at the actual size of our book even relative to our Canadian competitors, it continues to remain quite small and if you look at individual statistics, I mean one that I like is, if you look at something like commercial real estate as a percentage of total assets were less than half the level of some of our even domestic let alone international competitors. So to some degree I think we’ve got balance sheet capacity because we’re at such a reduced level. But I would also emphasize that the discipline that I think we showed during that period, clearly remains today. I mean we’re being very disciplined, because you can be, but we’re being very disciplined to ensure that we are getting paid to lend money, that we’re lending to customers that we’re very comfortable with both from a credit perspective, but also from a relationship and from a leverage perspective going forward. And we’re ensuring that we’ve got very significant broad diversification across our book and our industry sector. So, it does if you sort of look at it from a timing perspective of where we were and where we are today. It clearly gives us an opportunity to leverage.

Just to add to Gordon’s comments I think the other big shift is that we’ve got we’ve doubled the number of bankers we have in the ground in the U.S. So that when it comes to understand comments, we’ve got the capability now in debt capital markets, equity capital markets loan syndications. To compete with anybody in that market and the customers are responding so the origination, the lending is really is in large part due to the fact that we’ve got a lot of good bankers on the ground.

Gord just since you jumped on I’ll wrap it up here. When I think about your 18% plus target for ROE you’ve achieved that in last couple of years even with the volatility that's been going on. I know you’re not in the business of forecasting the future, but it certainly seems like we’re in a very accommodating credit quality environment with your loan loss ratio around 35 basis points. Correct me if I'm wrong here, but unless you're forecasting a significant increase in loan losses it's hard to see why your ROE would be less than 18% as we think about 2013, 2014. Am I incorrect in stating that or is there another lever that I might be missing?

Well as you say, we’re not in that business of forecasting, but we do provide a mid-term objective and our mid-term objective is 18% plus in terms of ROE. So our mid-term objectives are based on our plans and our internal processes. So, I would just say your assumptions are certainly consistent with what our objectives are which are built from the ground up.

The next question is from Michael Goldberg from Desjardins Securities. Please go ahead.

I’m looking at Slide 20 in the presentation in the appendix, if you left out the GICs from deposits, what would your market share be and what’s been the trend in this market share over say the past couple of years?

I guess Mike you’re referring specifically to the personal core deposits in GIC line?

That’s right. So leaving out the GIC.

Actually our market share gain in the personal core deposit side has been much stronger than the market share gains in the GIC side. So our GIC book has been growing modestly after shrinking in the previous few years. So the majority of our market share gains have come in personal core deposits and our personal savings accounts and not on the GIC line. That’s driven by our very successful core deposits campaigns that we run year around that you see in the marketplace, we call it got it, has been extremely successful and we opened a record number of new accounts again this year as Canadians continue to switch to a more convenient network. And we’ve also been very successful on our high interest saving strategies, both in the branch channel and in the broker channel. Those are key drivers of market share gain, not GIC.

The next question is from Mario Mendonca from Canaccord Genuity. Please go ahead.

I just want to revisit something in the Annual Report, there was a reference to the Volcker rule and depending on how it’s implemented, it could impact certain products, it’s not so much that I thought the Volcker rule behind Royal, but I was a little surprised to see that there is a still a reference to the Volcker rule having an adverse effect and perhaps peeling away certain products. Could you address that?

It’s still somewhat of a fluid situation, I think it’s fair to say with everything that we are hearing that there will not be a reproposal of this regulation for additional public comment. So all the comment that’s been provided is what the regulators are now working on. We’re expecting an issue of the final regulation sometime during the first quarter of 2013. From what we are hearing the fed and the other banking agencies will ensure that the final regulation takes a more prudential approach within the proposed regulation that was issued back in October 2011. Some of the things that a number of institutions have addressed, we believe will be addressed and particularly the issue around sovereign debt and the market making and trading of sovereign debt being treated in the same way that U.S. debt is treated. But from a purely proprietary perspective, that’s really the remaining issue that we’ll be working around. The proprietary trading business has been a very successful business for many years here. In terms of percentage of results, it has been shrinking consistently, and you can see the shrinkage through market risk indicators such as VaR, etcetera. But when the final rule is out we will be looking at it to determine how certain strategies that we’re involved in market making in both equity and fixed income will be impacted and there is the potential for some modest impact. But until the rule is out, it’s very difficult to really comment on it. But we don’t think in the long run, it will be significant to the operations.

The other thing I would add is, if there are areas where we pair back from, the issue is what return do we redeploy that capital and we’re pretty comfortable that we can redeploy that capital at returns that are similar. So we sort of as Mark said, it may have some impact depending on how the rules are written, but we sort of got plan A, B and C to restructure around and I don’t think it will be overly significant, but it may impact how we’re structured in some of our businesses.

And just to be clear on this and I think what you’re saying is if you exclude the sovereign debt, if you set that aside and we assume if that’s addressed in the banks favor then all the other things that could be coming down the pipeline, that’s what you would call modest, having a modest effect going forward. Is that a fair way to paraphrase what you said?

That’s correct and as Gord said we have spent a lot of time looking at different alternatives. We feel pretty comfortable that these alternatives will be attractive in the medium and long-term, there may be some short-term transitional impacts, but we feel reasonably comfortable about what we’re hearing at this point.

I think we unfortunately I have a board meeting to go to, but I think we have time for one question. I think John Reucassel has a question.

Mr. Reucassel, please go ahead.

For Dave McKay, Dave. Just could you talk about the trend in new mortgage originations through the quarter and as you got towards the end of the quarter and where we’re heading in. And then maybe put that in context of overall loan growth and the top line that you’re thinking with narrower spreads, maybe just give us an update on that?

Well, I was going to make it through that the mortgage question, surprise came at the end. Absolutely, so mortgage growth as you saw in Q4 was strong, home equity growth is still over 6%. We certainly are seeing the effect of the B20 rules come into effect, they vary across the country obviously with different sentiments towards buying a home particularly first-time homebuyers. I think obviously you’ll see a slowing. I think the industry will still be positive and you should expect roughly 3, 4% growth in the industry going forward. It's hard to predict that exactly, I think the range is widening as we’re not sure the impact particularly on a first-time homebuyers as you read in a paper whether it’s the broker industry talking about their slowing trends. We expect to outperform the marketplace as we always have and going forward at a 25% premium. So I think the market there is still demand out there, there are still people that need to buy homes, there is no immigrants coming into the marketplace. So there always is a base of new demand that comes in every year. You have seen housing start slow by 10% so I think that’s a pretty good approximation about 10 to 15 to 20% slowing in the marketplace, but still positive, still really good customers out there buying homes and we expect growth going forward.

And on the spreads, Dave what do you think are we, is 274 a good number to think about or is there still pressure out there?

We have a posing forces in our business. We still are obviously the continued low rate environment as mortgages that were put on the book in 2008 and ‘09 and ‘10 come off. They’re coming off with higher spreads and being reinvested at lower spreads. So all banks have that reinvestment issue that they’re suppressing margins. On the other side of it, we've been very disciplined on our pricing strategies. I think our value propositions are strong that we’re creating enormous value for Canadian through a convenience and through revised message and we’re able to command a stronger price in the marketplace. So that strategy that consistent strategy has played well for us and as we mentioned in our opening comments. We've had very strong growth in our commercial lending business and in our credit card business now, I think we’re leading the market in growth in credit cards and those are high margin businesses that are helping offset some of the pressure on the mortgage side. So when you put it all together, you’re going to see I think overall against a modest compression in margins continuing on what we’ve seen over the past year, but nothing significant.

Thank you very much for your question John, and thank you everybody for joining us on this call. Nice to have a day where we are the only bank presenting, which has been a problem the last couple of quarters, but we look forward to talking with everybody next quarter at our Annual General meeting. So thank you very much.

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