Good morning, ladies and gentlemen. Welcome to RBC’s Conference Call for the First Quarter 2019 Financial Results. Please be advised that this call is being recorded. I would now like to turn the meeting over to Dave Mun, Head of Investor Relations. Please go ahead, Mr. Mun.

Thanks, Elaina and thanks for joining us this morning. Speaking today will be Dave McKay, President and Chief Executive Officer; Rod Bolger, Chief Financial Officer; and Graeme Hepworth, Chief Risk Officer. Then, we will open the call for questions. To give everyone a chance to ask a question, we ask that you please limit your questions and then re-queue. We also have with us in the room, Neil McLaughlin, Group Head of Personal & Commercial Banking; Doug Guzman, Group Head, Wealth Management and Insurance; and Doug McGregor, Group Head, Capital Markets and Investor & Treasury Services. As noted on Slide 2, our comments may contain forward-looking statements, which involve assumptions and have inherent risks and uncertainties. Actual results could differ materially. With that, I will turn it over to Dave.

Good morning, everyone. Thanks for joining us. We had a good start to the year. We delivered earnings of $3.2 billion, which was the second highest quarter on record. In the backdrop of strong employment and resilient economic growth, we saw solid volume growth across our retail businesses and our market related businesses performed well given some of the market volatility during the quarter. We have been investing at our frontline in all businesses to grow volumes and market share, which led to record revenue growth of $11.6 billion. Our PCL was up as we continue to prudently build our Stage 1 and Stage 2 allowances on performing assets and we also had one fallen angel in the utility sector. Overall, we view our credit position as strong. We continue to grow our balance sheet for clients across all businesses while maintaining a strong CET1 ratio of 11.4% and we delivered a return on equity of 16.7%. In addition, I am pleased to announce a $0.04 increase to our dividend this morning bringing our quarterly dividend to $1.02 a share. Our results are driven by consistent client growth backed by solid GDP growth in Canada and the U.S. Business investment remains active and unemployment rates remain near historic lows. Although market activity took a pause in December and equity markets were down, sentiment has improved over the past 7 weeks. For our Canadian banking business, this macro backdrop supported solid revenue growth and earnings of over $1.5 billion. Continued client activity drove volume growth particularly in deposits, credit cards and business lending. In cards, purchase volumes grew 7% driven by a number of factors, including the value of RBC Rewards for customers coupled with strong alliances such as WestJet and Petro-Canada. We continue to foster partnerships to create more value…

Thanks Dave and good morning everyone. Starting on Slide 6, first quarter earnings of $3.2 billion were up 5% year-over-year and diluted EPS was up 7%. Excluding last year’s write-down of $178 million related to U.S. tax reform EPS will be up 1%. In addition, growth would have been higher if not for 0342 favorable items last year which added $50 million after tax to Q1 earnings. This year we had small items which largely offset including an accounting adjustment in Canadian wealth management and a write-down of deferred tax assets in Caribbean. This quarter, our revenue growth was driven by solid client driven volume growth and higher spreads in our retail banking businesses, partly due to the solid economic fundamentals that Dave mentioned. However, the market volatility in November and December reduced market related revenue before improving in January. Given this temporary headwind operating leverage in several businesses was negative in the first quarter. Nonetheless we are still targeting to achieve positive operating leverage for the full year in our Canadian banking wealth management and capital markets franchises. Of course this will partly depend on market conditions for our clients in some of these businesses. Expenses were up 5% year-over-year as we invested in our distribution network and other initiatives to grow our customer base which supported our record revenue this quarter. Of that 5% expense growth over a third of that increase was from unfavorable impact of foreign exchange translation. Approximately 20% of the growth was due to investing in frontline sales and distribution to grow clients and revenue. 25% was due to digital data and ventures initiatives, add value and connect with more clients and the remaining 20% was for other operating costs, including risk and regulatory costs as well as inflation. Although we added FTE year-over-year,…

Thank you, Rod and good morning. Starting on Slide 13, in Q1 we continued to see market volatility due to greater vulnerability to the macro economic outlook coming from trade tensions, geopolitical uncertainty and revisions to global growth forecast for the downside. Given some unfavorable changes in near-term macroeconomic variables such as equity markets, oil prices and unemployment rates which serve as inputs to our provisioning models, PCL on performing loans exceeded our 3 basis point run-rate associated with volume growth as of last November to reach $93 million or 6 basis points this quarter. PCL on impaired loans of $423 million or 28 basis points increased by 8 basis points from last quarter mainly due to higher provisions related to one well publicized accounts in utilities sector. Excluding this account, PCL on impaired loans was in line with our expected range of 325 basis points, at 23 basis points. In Canadian banking, PCL on impaired loans of $292 million was up 1 basis point from last quarter. The credit performance for this business continues to be in line with expectations. In wealth management PCL on impaired loans increased $11 million or 3 basis points mainly due to higher provisions in City National. In capital markets, PCL on impaired loans increased $102 million mainly driven by higher provisions on the accounts I noted earlier. Turning to Slide 14, gross impaired loans increased to $2.8 billion, up by 9 basis points from last quarter largely due to a new permission in the utilities sector and seasonal factors in some of our retail products. Turning to Slide 16, PCL across all of our Canadian retail portfolios were generally stable quarter-over-quarter. In Alberta however, we have seen a slight increase in impairments in our residential mortgage portfolio as the region continues to recover…

Certainly. Thank you. [Operator Instructions] The first question is from Ebrahim Poonawala with Bank of America/Merrill Lynch. Please go ahead.

Good morning. So I guess first congratulations Dave and Doug on being the sole advisor to BB&T. I think it’s notable for the RBC franchise for being there for the largest bank deal that we have seen in the U.S. in 15 years? With that, I think it’s moving to I think the U.S. actually in City National, like I am looking at Slide 22 and net income contribution of City National about 5% to 6% of earnings. Earnings growth has been about 5% deposit growth have actually deposits have been flat and have grown up looking at banking franchises and the value coming from deposits. So when I think of what we are doing with City National and appreciate all the investments we are making to grow that organically. Can you talk a little bit strategically about how you view that contribution from U.S. retail banking playing out over the next 2 to 4 years? Where does U.S. M&A fit in given what we have seen and we could see more consolidation in the space, because like I don’t think of RBC as a French player in anything. And when I think about the U.S. strategy and the optionality for growth that the bank has, I am just trying to wrap my hands around like what is it that if serving as a hurdle to go much more in a bigger way into the U.S.?

Got it. So, let’s go back to the Investor Day and we laid out a path for the combined entity to grow to $1.5 billion, but strategically as we think about this. As we have grown this a lot more than 5%, we will send you the compounded growth is double-digits, it’s grown very well to over $1 billion of profit in our U.S. wealth franchise. We have been investing significantly in the infrastructure to grow. We have been investing in frontline commercial bankers. We have been investing in private bankers. We have been opening offices in Boston and New York, Washington and Nashville, trying to fill out California. So with this growth, it’s come a fair amount of investment for the future to continue this momentum. So as I have said over and over that we see significant opportunity given the market segment that we are in, the markets that we are focusing on in high net worth markets for organic growth. We continue to look at the marketplace to see if we can grow geographically through an acquisition of a bank that would have a cultural fit that would have obviously similar segment approach to what we are doing and we are looking at making sure we are in a return on investor money prices are still high and we look at the synergy playbook as I said before and we continue to think but we got a great franchise that can grow organically a double digits which it will continue to do at the investment that we have had we unfortunately took one charge off in the quick service restaurant space this quarter it surprised us obviously we may recover it but that book is been very strong if you take that out again very strong performance year-over-year from the City National franchise so the story [indiscernible] haven’t changed organic growth expansion of bankers expansion of markets that franchise is really strong [indiscernible] just taken over as a leader incredibly excited to take this bank to the next level and you know Michael Armstrong and Minneapolis has done a great job we really think that the playbook stays the same that we are going to grow this business as we talked about in our investor day 3 years ago.

Well thank you.

Thank you, the next question is from Meny Grauman with Cormark Securities. Please go ahead.

Hi good morning. Just hoping you could [indiscernible] more color on the specific variables that are driving the performing the increase in the performing loan provisions [indiscernible] you mentioned a few variables I don’t really catch it could you just go to more detail on what really pushed this up this quarter?

Sure. I can definitely take that question this quarter I think as we known at the last analyst call we are just [indiscernible] downturn in both equity markets and oil markets and those are really the two biggest factors that we saw driving our [indiscernible] provision this quarter which and those factors really impact the whole [indiscernible] increases in capital markets in seen this specifically so most notably the oil prices are baseline forecasted [indiscernible] last quarter [indiscernible] in equity market while certainly we saw [indiscernible] January quarter-over-quarter we [indiscernible] in our baseline scenario as well so if those are the key variables that we driving unemployment particularly [indiscernible] ahead of more minor impact but overall we would say those are the key variables this quarter.

And is there anything that’s less sort of formulaic that’s driving things that you could highlight?

No, I think that’s as a pretty much the driver this quarter that was into anything beyond that in the models I mean [indiscernible] indicated last quarter I mean the starting point each and every quarter is really growth associated [indiscernible] growth in our own portfolio and so we saw that this quarter with both 3 basis points over the half of the stage 1 and 2 allowances consistent with our volume growth and the other half are largely due to this macro factors that [indiscernible] in the quarter.

Meny this is Rob. What you might be asking also about is the credit quality within that Stage 1 and Stage 2 as Graeme pointed out it’s really the volume growth and the macro factors it’s not the [indiscernible] of credit quality within that you might see in future periods there is a economic downturn but that’s not the case now.

Okay that’s really helpful. And then just as a follow up I notice the uptick in the real estate book as well [indiscernible] real estate just wondering if you give the more detail on what region of the country that is in what gives you confidence that it’s a nice [indiscernible] incidence?

Sure. [indiscernible] that was account in out of couple markets in the U.S. that was in the as the retail segment of commercial real estate [indiscernible] is largely one particular accounts there overall I think we provided our disclosure I think we see a very well diversified portfolio in real estate retail is one of those segments that we do [indiscernible] big source of our growth and we are just [indiscernible] we are seeing there on the parts of the retail that we are concerned more concerned about [indiscernible] big part of our portfolio but we will face some bumps on that and let me turn it over to Doug [indiscernible] on that space.

Yes, the book [indiscernible] capital markets largest [indiscernible] would be example there is very little development risk in the book it is diversified across mostly the U.S. and Western Europe. And if I had to look at concentrations I would say we have a bigger concentration [indiscernible] far bigger than we would [indiscernible] we been careful around retail in this particular instance we are hopeful we can work [indiscernible] we are working with the borrower and we should sorted out one way or another over the next couple of quarters.

Thanks.

Thank you. The next question is from Robert Sedran with CIBC Capital Markets. Please go ahead.

Hi good morning Graeme. Seem to be all warmed up. So when we maybe stick with the loan mass line on your slide you say higher provisions in Canadian business lending offset by lower provisions in Canadian personal and I am wondering if that is just the seasoning of a portfolio that is being growing quite rapidly over the last little while or if there is something more interesting going on than that?

Thanks for question [indiscernible] some of the comments we made earlier becomes commercial I think this is just a bit we are normal quarter to quarter volatility that we are seeing we are not really seeing any we look through the fundamentals and not [indiscernible] we are not really seeing any material shift of the risk profile portfolio there growth that we have seen in commercial is really been related to existing clients where we are doing more with our best clients quality of our originations is been very consistent this past year [indiscernible] in previous years our [indiscernible] pretty consistent we are seeing any trends that are downgrade there so in the near term again we feel pretty comfortable with the nature that portfolio aren’t really seeing any really macro shift and so I wouldn’t use that as an indication that something that is materially changing there right now.

So, these provisions on impaired are just things are happened from time to time?

Right now [indiscernible].

And just as a follow up to the capital markets provision are you comfortable that the provision you have taken deals with it or is there a chance that there maybe at more to provide on that same loan?

Yes, on the utility account subsequent to quarter end we have exposure to different board’s within that name one [indiscernible] part of that we view to be much higher risk or risk [indiscernible] liability and uncertainty there we sold of that exposure probably do that risk we found a strong bid in the market and so we did sell of that exposure to reduce the overall risk there by about a third I mean that’s monetize part of the provision that we have taken with there but the remaining exposure we now have we feel much more comfortable with them [indiscernible] majority of the risk [indiscernible] now.

Okay thank you.

Thank you. The next question is from Sumit Malhotra with Scotia Capital. Please go ahead.

Thanks. Good morning. First question is around City National probably going to be for Rod. Rod first half we look at the provisions in the wealth segment is it fair to say that those are almost exclusively City National related?

Yes, I mean they have been since the acquisition the loan book and rest of the wealth business is quite small we haven’t had any chunky loses there so what you are seeing is due to City National yes.

So about 20 basis points this quarter?

You represented one account right?

Yes, that’s fine just wanted to make sure that’s the only thing there and then [indiscernible] last quarter you had mentioned that the run rate for net interest margin [indiscernible] this year you are expecting 5 to 10 basis points a quarter based on what the FED did [indiscernible] on your outlook obviously the commentary from Federal Reserve is been somewhat more [indiscernible] in terms of how rate hikes look and at the same time your deposit growth which you have talked about as key focus point for that business was flat sequentially kind of putting those things together how are you thinking about the [indiscernible] going forward?

Yes, thanks for that so yes the guidance that I gave last quarter as you [indiscernible] based on FED outlook which was much less down the shift you will so it is anticipating [indiscernible] we have the one which benefited this quarter I would say the rest of the next three quarters we would likely get to see a little bit of bump up in Q2 two elements of that one is the days and the quarter [indiscernible] just adds more [indiscernible] on a basis point perspective also we had a we are expecting little bit of a recovery on some legacy loans from back from the FDIC [indiscernible] that will boost that by 5 or 10 basis points but then I would expect it to come back to these levels for Q3 and Q4, we are then 2 basis points to 4 basis points higher or lower depending on mix and depending on competitive pricing and then depending on Fed outlook. But consider these levels pretty much appropriate for the rest of the year absent the nuances I mentioned in Q2.

Maybe I will jump and kind of reinforce some messages I did at the conference in January on growing our deposit base and making sure we are in a range that we are happy with long-term of our loans, deposits. We have three avenues to raise deposits, but we haven’t really pursued given we were so long deposits. One is to use our transaction capability that we acquired with [indiscernible] and our rollout of improved data faction. And our new cash management bundle that we are rolling out should improve our core low beta deposit gathering which has stalled a bit. The second one is we can roll more sweep deposits in from our web management franchise and from the City National wealth franchise that are off balance sheet, so we can utilize those to fund growth. And the third one is as I have mentioned before because we are so long deposits we haven’t been aggressive in bidding up non-standard deposits. And we always have the opportunity albeit it comes with some margin give, but overall there is a deep market with that type of client base that we are serving to go after deposits. So those are three strong avenues that we are continuing to build up. We haven’t had to use them for a while and now given the strong loan growth and the gaping to deposits we are going to have to pick up our effort.

Last one for me is probably for Doug maybe Rod as well, you had mentioned or you had certainly indicated on the call last quarter that you were expecting a tougher revenue environment for capital markets obviously your trading resulted a positive surprise, just to maybe put two things together that maybe they belong together, maybe they don’t, your equities number from a trading perspective was quite strong and we have seen this tie up from time to time, your tax rate in capital markets continued to declined I know last year when we had the benefit of tax reform we expected that to move lower, but it’s down to something like 10% in Q1, I know a lot of these tax advantage trades had run their course or at least I thought so, am I wrong to tie the decline in the tax rate to the strength in equity trading or maybe you can just help me understand what’s going on there?

It’s not related to equity trading, the equity trading numbers were good because the cash equities businesses did well especially in the U.S. and Canada. But we did very well in our equity derivative ops business facing clients and hedging risk for them and that teams just continued to improve and do well. In terms of the tax rate that’s more about where we are making money both in terms of tax advantage geographies and also in terms of having some assets that are tax advantaged as well. So the earnings mix changed a bit this quarter, that tax number is a little bit low, but I think that it’s – we will continue to have better tax cash pay in this business than we had say a year ago.

Thanks for your time.

Thank you. The next question is from John Aiken with Barclays. Please go ahead.

Good morning Graeme, I think you have had [indiscernible] I wanted to just circle back on the leveraged loans. Thank you very much for the disclosure, it was quite interesting. I wanted to ask though what’s the typical retention rate on your originations and then secondly did you have any losses or hung deals in the first quarter?

Again on the retention rate, we don’t typically pertain anything in the term loan of either bond piece. Those are fully distributed. So all we are attaining is of course of the revolving credit facility that really is held by the banks, the underwriting banks. And so that’s what I referenced and we say that’s you can roughly calculate the average hold there by taking the amounts we gave you and dividing it by the borrowers there. So our hold there are relatively small, it’s fairly granular portfolio, so we don’t get same chunkiness because of that. When you go to the market conditions certainly we saw in the markets in November and December the pricing protection I referred to were certainly valuable to us in that period, we typically get 125 basis points to 175 basis points protection and so we continue to see a market that operated though and got deals off our books. And in the end we had a few deals that we are hung with, but we’ve gotten those off the books now and I don’t think – basically we have a very small residual portfolio there. I don’t think there’s [ph] 9 anything further to add on that?

Very small. Like, certainly less than 1 billion in the hundreds of millions –

It’s like – yes, $100 million, $200 million I think at this point.

Yes. So, we got through – I think it’s a good – it’s a good test of the business actually. We’ve said for years now that we’ve got tight limits on our underwriting of single B credits, in particular, LBOs, and we had a very significant downdraft in single B and in credit generally in December and we managed our risk, we sold it off, and we continue to operate in that market. We think that it’s a good business for us as long as you manage the risk, you diversify the credits and you have the discipline to sell.

Great, thanks for the color. And Doug, if I can keep on with –

No, I think we’re going to have to go to one question just to get through everybody first, right, we have 20 minutes left sorry.

No, go ahead. I’ll re-queue.

Please re-queue. Yes, thanks.

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

Okay. Well, now that I’ve got one question, I’ll do my big picture one. Dave, you had some comments the other day in the paper about the under-tapped potential of resource economy and framing it in a broad context of Canada’s economy. I’m wondering if you could tie that back to your business, we can guess what the impact is of weak energy activity on the Capital Markets business, but more on the P&C business like how is that, I guess, weak market backdrop for the energy industry affecting your retail business? I mean, if I want to play devil’s advocate, I see you’re still going quite well in P&C, is it really that big of an issue?

I would say we’re going real well in P&C. Great volume growth and we’re investing in the future growth at the same time with expansion of our sales force and our service force and new channels like InvestEase. So, we’re feeling really good about P&C. You’re absolutely right, I mean, economic activity as Doug has mentioned a number of times, client activity in the energy sector is low. Generally, activity in the Capital Markets sector is low in Canada right now and our U.S. business is strong, but overall, Canada continues to perform very well for us. We’re gaining market share across most categories. I’m going to pass it to Neil to talk specifically about Alberta in that context as we see generally a strong Alberta, but we’re seeing a little bit of weakness at times. So, Neil, do you want to comment overall Canada looks really strong, about Alberta perspective?

Yes, I think the – yes, I think to Dave’s point, a strong Canadian economy obviously is going to support a mass retail business. So, I think there is the obvious linkage there. In terms of Alberta, I think there’s a couple of years ago, we would have looked at our retail business, our small business clients, our personal clients and even into commercial and said there was incredible resiliency as oil prices started to come off. And I think that they had been through that cycle before and they knew the levers to pull, but at some point, you do start to worry about that economy. And – so I think longer-term, that’s where I think some of the broader comments come from. In terms of, I guess, just the broad strength, I mean, we’re seeing across the country, good unemployment, underpinning Graeme’s comments about the credit performance of the book, the – in the terms of – we think we could actually do better in Alberta, strong performance there. So, we are not pulling back from Alberta at this point at all. We think we could actually do better in the mortgage business there. It hasn’t been an updraft market, obviously, we’re seeing prices come off, but our share there isn’t one of our strongest and our momentum could improve somewhat. Our commercial business similarly performing really well. We have lots of appetite for the type of entrepreneurs we’re supporting in the Alberta market. So, we continue to feel really good and we’re investing in Calgary and Edmonton in a very similar way we’re investing across the country. So, I think the comments are more broad-based about the support for the Canadian economy and we do have concerns just about the energy impact as it relates to the health of Canada, but right now, we feel strong about Alberta and we’ll continue to compete hard there.

No big credit concerns at this stage like it sounded a little bit like –

No, we’re seeing very, very modest uptick in delinquencies in early stage, but really nothing that gives us a cause for concern.

Thank you.

Also see that from our gross impaired loans across Canada and our performance, the credit – the retail credit book is very strong across the country.

Yes, I think it’s – generally, I think we see pockets like Alberta, it’s been offset by the broader strength of the national portfolio and the strong unemployment numbers overall, so very well managed in a broadly diversified portfolio.

Good answer to the question.

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

Hi good morning, maybe just going back to Graeme on the commercial real estate and you disclosed, you talked about growth last year being 17% year-over-year, it seems like a lot of higher than what we kind of tracked with peers, perhaps maybe you can give an outlook of what you are seeing for perhaps the next few years and if there is any growth differences between U.S. and Canadian markets?

Well, I think on the growth side maybe I defer to Neil and some of the business partners who are on the table so they can speak on that – on the forward side of that.

Yes. Maybe I will start and then I will pass it to Doug, it’s Neil. When we look at commercial real estate, the vast amount of our growth is coming in commercial mortgages. The developer or the developer book is a much smaller portion. We have only started to grow that in about the last year was relatively flat for the – about 24 months before that. In terms of the commercial mortgage segment, its growing double digit, it’s what’s powering that number on the retail side. Most of these or that book is really targeted in kind of the $1 million to $10 million loan segment. So broad based across the country, very diversified by asset and by region. These are income producing properties loans made to owner operators. We would like the risk over the cycle, has preformed really well. And we have – we have mentioned before we have a dedicated team who sells this product to these type of entrepreneurs. So that’s part of what’s growing it. In terms of the forward looking view we will – we don’t expect this to continue at this pace and we will start to see that slow over the next couple of years.

I would say in the investment banking book, the majority of the growth has been in a few very large cross collateralized portfolios for some of the large asset managers that I talked about earlier. Some of those were roll off and we will continue to work with them to try to replace the assets, but I would say going forward the growth would be maybe mid single-digits, but it would be slower than what you saw over the last 12 months.

Right. Thank you very much.

Thanks for the question.

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

Good morning, can we go back to capital markets, the growth in the balance sheet there, since I am looking at Page 14 of your sup, the numbers have been pretty substantial and especially this quarter adding over $1 billion of assets, the trading book growing I have been surprised by that kind of growth and if you could – if this ties in anyway to the growth in the equity trading we saw this quarter, if you could tie those and if in fact those are related?

No, they are not really – it’s not related to equities. There is a couple of things going on, on that page in the sup. One of them is the growth in the loans and the acceptances. And about half of that growth that you see year-over-year in the loans and acceptances is actually coming from loans. The balance is securitizations and so we had a reclassification of some – from securities to loans over the course of the quarter that just increased that number. So we took it off the trading balance sheet and put it in the lending balance sheet. So I would say the loans year-over-year have grown about 13% whereas that category in total grew 21%, half that growth is actually in the conduits and securities that we have reclassified. In terms of the growth, we had some significant growth in our repo books and we plan for that over the quarter. We had significant balance sheet demand and it’s almost entirely less than three months repo against our government securities. So we are looking at that. I think you can look forward to us sort of managing that much more tightly like you won’t see that kind of growth over the course of the year.

And just going to equities just for a moment, I appreciate your answer to Sumit’s question that the equity derivative trading isn’t what caused the tax rate to go down, but were the strategies essentially tax driven?

No, they weren’t. It’s about risk. It’s about customers who have exposures in the equity derivatives business hedge them and charge for that, but it’s not about tax.

Thank you.

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

Thanks. Rod, a few quarters ago, you had talked about some of capital being tied up in the underwriting businesses, generally speaking, in Capital Markets. Any chance you can give an update as to how much basis points of CET1 is still tied up in underwriting activity?

It would be negligible. I mean, as Doug mentioned, a lot of that book has come down. I think the underwriting has come down by 50% versus what it was 3 months, 4 months ago. So, that has actually freed up some capital and so it’s negligible impact.

So, nothing material coming from here?

No.

Okay. Thank you.

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

Hi, good morning. Just back to City National and I guess my question is fairly simple. You do have a target to hit $1 billion pre-tax earnings I think by 2020. And when I look at your Slide 22, I think that implies a fairly sizable growth from where we stand today. I’m just trying to get a better sense as to – and I understand the PCL bumpiness and higher expenses in the investments you’re making. I’m just trying to see, is that still a doable target and then how do you get from where you stand today to that target? Thank you.

As we go back to our Investor Day when we talked about the combination of wealth, the synergies between the two are getting booked on each of the P&L side. So, we look at the business in a combined fashion, obviously, given the same client base. So again, ceding that growth we’ve invested, I think, over $230 million – we’ll double-check that number, it is the number I’ve got in my head, and expanding into new markets, expanding the sales force. It takes a commercial banker and a private banker 12 months to 24 months to really get going and therefore there is a lag to that growth. So, we’re expecting more growth. We just opened in Boston, as I imagine, we’re expanding in Washington, we’re expanding significantly in New York. And therefore, we’re expecting that organic growth to continue to play out. We’ve got strong expansion into new markets on the national credit side of the business. We brought a team in on the food and beverage side, that’s about 18 months – 2 years and now that’s really starting to produce. So, it really is to continue to expand. The other component of that growth that’s been a bit slow in going, but we’re starting to see it, you saw it in my comments, is the jumbo mortgage growth. So, as we’re referring more businesses, we’re expanding and one of Kelly’s clear focuses is to use jumbo mortgage to accelerate our organic expansion in existing and new markets, and that is just starting to lift off. We saw I think 17% growth in our consumer mortgage portfolio and that’s going to be a strong source of organic growth for us and a really strong customer who we can cross-sell once they come in as a new client. So, we’re – we do not contemplate on doing acquisitions to get to that number, acquisitions should be net additive to the number that we’re targeting to get to. And I think we’ve gotten a good source of profit increase from the interest rate environment. We’re not expecting a whole lot more right now. It will continue to work its way in overtime as it would normally do as you move your deposits and loans and you reprice old loans. So, I think those are – that’s the trend, it’s the same playbook and we’re continuing to execute very well.

So, it doesn’t sound like Page or Slide 22 has all of the, I guess, earnings that you would apply towards that $1 billion target, I guess, some of it is in the rest of the Wealth Management. And if that’s the case, can you provide what – where you stand with that on pre-tax earnings relative to that $1 billion target, and then we can take that offline, I’m just curious? Thanks.

Yes, we’ll take it offline.

Thanks.

Yes, just real quickly, I mean, we have been growing since the acquisition. We’ve been growing earnings in the mid-teens. We had three one-time adjustments last year in three different quarters. If you adjust for that and adjust for the PCL this quarter, which I know you can always do, I mean, the earnings are earnings. But we’ve maintained that mid-teens earnings growth trajectory and if we maintain that for another 2 years, that would take the $800 million up to $1 billion just doing some simple math for you. There’s a lot of ups and downs and nuances to get there, but we are tracking towards that.

Thank you.

Thank you. The next question is from Nigel D’Souza with Veritas Investments. Please go ahead. Nigel D’Souza: Good morning. Thank you for taking my question. This question is for Neil. If I look at Slide 19 of your deck here at the loan balances for Canadian Banking, the HELOC line item there is down year-over-year in terms of the balance of HELOCs and that’s – you incur it last quarter as well. So, the industry seems to be growing at fairly, let’s say, robust rate for HELOC. So, how do we square that divergence? What’s driving the difference there? How should we think about it?

Yes, thanks for the question. I guess, the first thing would be, what’s driving our numbers is, when we start to see interest rates started to go – starting to go up, we saw clients move balances from the HELOC at the revolving portion of that product into the fixed portion, the traditional mortgage segment of the product. It’s good advice for the customer, takes down interest rate risk for them, provide some certainty. So that started – it was a little bit higher when interest rates started to go up, but we’re seeing it level off, but that’s the swap of where those loan balances are going. In terms of our HELOC book versus our competitors, one of our competitors, in particular, really hasn’t brought that product to market in the way we have. We’ve had this product in the market for I think about 14 years or 15 years. So, our customers have been offered the product for more than a decade and some of the competitors are just getting around are really growing it. We’ve enjoyed what we believe is higher retention rates and renewal rates because of the product construct and I think those are the two real drivers of that trend. Nigel D’Souza: Okay. And if I understand it correctly when the shift happens from revolving to amortizing that goes in your res mortgage book. So, just to understand the directionality, if we back out that conversion, would your residential mortgage balances, would that be up sequentially or lower sequentially, how should we think about it?

No, it would still be up, but it would be – it’d be just over – right around more like 4%, just over 4% when you combine them together. Nigel D’Souza: Thank you. Appreciate the color.

Thank you. The next question is a follow-up from Sohrab Movahedi with BMO Capital Markets. Please go ahead.

I guess, Graeme, when you think about your total PCL outlook in that 25 basis point to 30 basis point range. Can you just provide some color as to what if any expectations you have around the impact of Brexit on the lending portfolio of the Capital Markets has out there?

Yes, I think, certainly in the opening remarks, we talked about some of the geopolitical uncertainty. Brexit is one of those events that we’re thinking about. It’s certainly the kind of the trade uncertainty that we see in the U.S. with Asia, increases uncertainty, I think for us on Brexit, our operations aren’t as significant in Europe as some of the other global banks out there. We’ve been actively working for some time now to ready for potential negative outcomes there. So, there is an operational side to that. It’s I think we feel comfortable with as best we can given the uncertainty there. And then there is the macro side of it, I would say the macro side of it – I don’t – I wouldn’t see that being something that translates kind of in a nine-month timeframe – timeline like we’re kind of articulate in that outlook. But I think that presents more uncertainty as you go forward into 2020 and beyond if it just creates a broader slowdown in the UK economy. But I wouldn’t be quantifying that in that 25 basis points to 30 basis points at this point in time.

But would it be something that at some stage would be –would be noticeable in that PCL rate?

Well, I mean, you’ve asked me to speculate on an event where we really don’t know what that negative outcome looks like and this is really – it’s an uncertain event. The impact it’s going to have on the economies is uncertain. I mean, our loan book there is generally a higher quality loan book of any of our regions we have, it’s much more balanced, good investment grade book than it is in our other regions. So, we have a better starting spot, if you will, than in other spaces. But it’s really going to depend on what that – how that evolves and what that economic situation looks like.

Okay. Thank you.

Hi, operator. I assume there’s no more questions.

We do have one last question. Did you wish to take it?

Yes, we’ll take one more.

Yes, we’ll take the last one.

Certainly. So, the last question is from Gabriel Dechaine with National Bank Financial. Please go ahead.

Thanks. I’ll make it quick. The leverage loan balance you gave, the $10.7 billion. How do you classify that in your wholesale loan book breakdown in the industry, is it in a specific category or does it go by industry?

No, as I would say those are across all of industries. I think in my comments I made reference to the fact that no industry, no sector that represents more than 19% of that portfolio. So leverage lending is a product and we are engaged with clients across all the sectors there, so I will say it’s a very diversified portfolio, it’s not specific to anyone sector.

Okay. Because it is one category of investments, but I was wondering if that one – what is in that anyway?

No that’s unrelated to the leveraged lending specifically. I think there was an up-tick in investments, but that was more due to recent classification we were freeing up some holds on the other category and realigning those to the other categories more appropriately.

Yes. We have holding companies, investment offices high net worth and some vocational conglomerate in there, so.

Right. But I think it’s important also that people understand that $10 billion number isn’t all private equity buyout, that is leverage lending definition?

35% of it would be what we would call private equity financial sponsored backed activity.

I want to thank everyone for their questions. I will characterize it as a strong quarter the diversification – diversity of our franchise really showed through in a quarter that had significant volatility, particularly in December that impacted our capital markets activity levels that impact – certainly impacted our AUM, AUA, AUC levels across our I&TS in both management franchises, but underlying all that is significant client momentum market share gains and great productivity that we are able to earn through. And we feel as we pointed out very good about the activity levels in our business and the momentum our business has heading to the rest of the year kind of remain our confidence in our medium-term outlook for the business. So thanks for your questions and we will talk to you next quarter.

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