Morning and welcome to National Bank of Canada Third Quarter Results Co nference Call. I would now like to turn the meeting over to Marianne Ratté, Vice President and Head of Investor Relations. Please go ahead, Marianne.
Merci and welcome everyone. We will begin the call with remarks from Laurent Ferreira, President and CEO, Marie Chantal Gingras, CFO, and Jean-Sébastien Grisé, Chief Risk Officer. Our business heads are also present for the Q&A session, including Lucie Blanchet, Personal Banking, Judith Ménard, Commercial and Private Banking, Michael Denham, CWB Integration, Nancy Paquet, Wealth Management, Etienne Dubuc, Financial Markets, and Bill Bonnell, International. Before we begin, please refer to slide 2 of our presentation for forward-looking statements and non-GAAP measures. Management will refer to adjusted results unless otherwise noted. I will now pass the call to Laurent.
Merci, Marianne, and thank you, everyone, for joining us. This morning, we reported earnings per share of $2.68 and a return on equity of 14% for the third quarter of 2025. Our results reflect strong revenue fundamentals across our segments, firm traction in cost and funding synergies as we integrate Canadian Western Bank, and a strong credit performance. We also ended the quarter with a CET1 ratio of 13.9%. This solid capital position provides us with ample flexibility and optionality. This morning, we announced our intention to repurchase up to 8 million shares. Our decision to buy back shares at this point in time does not factor in benefits from Canadian Western Bank's AIRB conversion. We will also review our dividend next quarter, as per usual practice.
Turning to the economy, the Canadian economy has shown some resilience, but has been strained by tariff uncertainty, resulting in job losses in certain industries and an overall softer labor market. The USMCA trade agreement has been so far an effective safeguard for Canada. The full impact of tariffs is still unfolding and will continue to shape business confidence and investments. While the path of inflation and of long-term rates remain uncertain due to tariffs and growing government deficits, we have a more constructive view on the economy now that the initial tariff shock is behind us and that trade tensions are de-escalating. We are also encouraged by the focus of our federal and provincial governments on making structural changes to increase productivity and economic resilience. Investments in energy, security, and nation-building infrastructure will stimulate growth and put us on the right path.
As we look ahead, geopolitics and geoeconomics remain a source of instability, but we are encouraged by some of the positive outcomes of trade negotiations and the government focus on the Canadian economy. Turning to the Canadian Western Bank integration, I am very pleased with our momentum and strong execution. Funding and cost synergies continue to progress at a rapid pace. Earlier this month, we marked an integration milestone with the successful completion of our first client migrations onto the National Bank of Canada platform. On that, I would like to recognize our teams who are working seamlessly together to ensure a positive onboarding experience for clients. Our migration process will continue over the months ahead, setting the table for revenue synergies, which we will discuss in more detail on our Q4 call.
Looking now at our business segments, Personal Banking and Client Experience generated a net income of $386 million, including $784 million from the CWB transaction for the third quarter. Excluding Canadian Western Bank, revenues were up 2% year-over-year for the segment against a strong level of non-interest income in the prior year. We continue to grow our balance sheet. Our commercial loan book grew 13% year-over-year, with continued opportunities in insured residential real estate and broad-based growth across our industries and geographies. Personal mortgages grew 5% year-over-year, with strong origination levels as anticipated entering the second half of the year. Wealth Management grew third-quarter net income by 13% year-over-year on the back of strong organic growth. Net sales in our channels and rising equity markets supported double-digit growth in fee-based revenues. Financial Markets generated strong quarterly results, growing net income by 5% over the past year.
Corporate and Investment Banking delivered record revenues of $408 million for Q3. This was driven by strong performance across the franchise and a particularly active quarter for our M&A and DCM teams. Global Markets performance was resilient, growing revenues 3% year-over-year. This reflects broad-based growth in our REITs and commodities businesses, while equity trading activity and volatility were down quarter- over- quarter. Credigy delivered a net income of $43 million this quarter, up 2% year-over-year. While average assets remained relatively stable sequentially, investment volumes picked up at quarter end, resulting in balances increasing 5% quarter- over- quarter. The market remains competitive, but we are starting to see more deal flow and opportunities that meet our investment criteria, including a solid pipeline for Q4. At ABA Bank, net income increased by 16% year-over-year, deposits were up 21%, supported by a 34% increase in client growth, and loans were up 8%.
We are encouraged by the favorable outcome of a trade deal between the U.S. and Cambodia, which will keep the local economy competitive and set the stage for continued growth. I will now pass the call to Marie Chantal.
Thank you, Laurent, and good morning, everyone. My comments will begin on slide eight. The bank delivered strong performance in the third quarter. Organic growth across all segments was complemented by the CWB transaction. On an all-bank basis, revenue increased 19% year-over-year, PTPP rose 21%, and operating leverage was positive at 2%. Starting with results from CWB, the loan portfolio was stable compared to last quarter, while term deposits declined by $1 billion, mainly reflecting the planned roll-down of broker deposits. The CWB transaction added $284 million to revenues, including funding synergies of $13 million in NII and the amortization of the fair market of $27 million. It also added $142 million to expenses, reflecting momentum in the realization of cost synergy. PTPP was relatively unchanged quarter- over- quarter. Now moving to our results excluding CWB, revenue grew 10% year-over-year.
Corporate and investment banking delivered record advisory and DCM underwriting fees, and Wealth Management's record AUM drove double-digit fee income growth. Balance sheet growth was solid, while Treasury generated higher revenues. Expenses were up 8% year-over-year. Compensation and strategic investments in technology were the main drivers, as we continue to invest in our franchise. Recall that in Q3 2024, the bank had a lump sum reimbursement of $11 million that reduced expenses in the PNC segment. With strong revenue growth and positive operating leverage, PTPP increased by 11% year-over-year. Moving to slide 9, NII excluding trading grew 4% quarter- over- quarter, reflecting solid balance sheet growth, higher Treasury revenues, dividend recorded in USSFI, and the impact of fewer days in Q2. This was partially offset by the amortization of the fair value mark, which was $10 million higher than last quarter.
The all-bank NIM excluding trading remained relatively stable quarter- over- quarter at 2.22%. PNC NIM was down 5 basis points, primarily driven by asset mix in our underlying commercial portfolio, as well as by deposit mix. The all-bank NIM benefited from higher Treasury revenues and USSFI dividends. Turning now to slide 10, we continue to deliver solid expansion across the balance sheet with strong momentum throughout the franchise. Total loans reached $293 billion, up 7% year-over-year, excluding CWB. Deposits grew 11% year-over-year to $303 billion when excluding CWB. Looking at quarter over quarter performance, deposits rose by 3%. Personal demand deposits increased by almost $1 billion, driven primarily by strong growth in personal banking. Non-retail deposits were up 5%. Now turning to capital on slide 11, we ended the quarter with a CET1 ratio of 13.9%. Internal capital generation was strong, adding 33 basis points to CET1s.
RWA declined by 1 basis point sequentially, as solid loan growth was largely offset by continuous refinements and lower market risks. In addition, CET1 in Q3 benefited from other items, including a capital release from the divestiture of certain international investments, as well as an income tax recovery of $47 million. During the quarter, we benefited from the AIRB conversion of a small CWB portfolio, contributing 2 basis points to CET1. We are working closely with our regulators and following the CMAP process, the framework under which capital model applications are assessed, and we still expect the capital benefit from the conversion to the advanced method to be realized towards the end of 2026. Turning to slide 12, we are pleased with our progress in realizing synergies at a faster pace than expected.
We have realized synergies of $69 million to date, representing $173 million on an annualized basis, or 64% of our 3-year target. With this momentum, we anticipate achieving our year-one target of $135 million in December 2025. As Laurent noted, we successfully completed our first client migration wave in August. The next waves are planned over the upcoming months, and a majority of clients will migrate over this period. The ongoing migration continues to drive momentum in the realization of our synergies. To conclude, we are pleased with the strong performance and growth delivered year to date and are well-positioned to achieve the 2025 objectives outlined last quarter. Excluding the amortization of the fair value mark, we expect full-year EPS growth will be a bit higher than the mid-single-digit range, and we continue to anticipate full-year ROE to be around 15%.
With the strength of our capital and the strategic advantage CWB brings to our businesses, we are in a good position to capitalize on the opportunities that lie ahead. I will now turn the call over to Jean-Sébastien.
Merci, Marie Chantal, and good morning, everyone. Starting on slide 14, we are pleased with the strong credit performance this quarter. Total PCLs were $203 million, or 28 basis points, down 17 basis points sequentially. We added 7 basis points of performing provisions in Q3, primarily driven by portfolio growth and model calibration, partly offset by the macroeconomic outlook. PCL on impaired loans were $150 million, or 21 basis points, down 11 basis points quarter- over- quarter. Personal banking provisions were relatively flat sequentially. Commercial banking provisions declined quarter- over- quarter to $58 million. CWB portfolio continues to perform in line with expectations, with impaired provisions of $26 million, or 28 basis points. In Financial Markets, there was a recovery of $1 million. At Credigy, we saw lower PCL on POCI loans. At ABA Bank, impaired provisions declined to $11 million U.S..
Turning to slide 15, our total allowances for credit losses reached $2.3 billion, representing 5x coverage of our net charge-offs. Our performing allowances reached $1.6 billion, representing a strong performing ACL coverage ratio of 2.1x . We have been building allowances for the past 13 quarters and remain comfortable with our prudent provisioning levels. Turning to slide 16, our gross impaired loan ratio was 102 basis points, up 4 basis points sequentially. Excluding USSF and I, deals were 73 basis points, 2 basis points higher than in Q2. Net formations this quarter were lower sequentially. At ABA Bank, net formations declined quarter over quarter and remained below the level seen in Q4 last year. On slides 17 and 18, we highlight our Canadian RESL portfolio. Of note, approximately 80% of the portfolio has now been repriced at higher interest rates.
Upcoming renewals are showing a significantly reduced payment shock compared to a year ago, and our variable-rate mortgage portfolio has been benefiting from the lower interest rates. In conclusion, we are pleased with the credit performance in the quarter. While we continue to monitor the evolving market conditions, our defensive qualities, resilient business mix, and prudent levels of allowances position us well to navigate the current economic landscape. Looking ahead, while uncertainties remain in the forward path of the economy, we now expect impaired PCL to end up around the middle of the 25- 35 basis points range for the full year. I will now turn the call back to the operator for the Q&A.
Thank you. We'll now take questions from the telephone lines. If you have a question, please press star one. You may answer your question at any time by pressing star two. Please press star one at this time. If you have a question, there will be a brief pause while the participants register for questions. Thank you for your patience. The first question is from Sohrab Movahedi from BMO Capital Markets. Please go ahead.
Okay, thank you. Laurent, can you just talk us through how you decided to size the buyback? Why only 2% with a 39 CET1 and likely to go up?
Absolutely, and thank you for your question, Sohrab. I think our capital management over the past couple of years has been very prudent, going through post-pandemic, the inflation cycle, all the economic uncertainty. We did a lot of work over the past year on capital refinement. I think some of the information is on our slide as well as divestiture. We've been working on selling some of our assets over the past year in Africa so that came to fruition in Q3. We also had the first wave integration of CWB , but we're still not done. We still have some work to do over the next little while in capital optimization with conversion of models to AIRB. I think we came up with a number on buyback at this point in time, which I think is in line with our continued strategy to focus on organic growth.
We have really good momentum. You see it on our balance sheet growth. Buybacks are, in our view, a complement, not a growth strategy. At this point in time, given that we are at a very strong capital level, we feel like it was a good time for us to announce a buyback. As mentioned in my remarks, this is before conversion of our portfolios to AIRB. We still see some good momentum in our balance sheet growth, and teams are very focused on that. I think it's the appropriate level of share buyback that we think is the right balance with the rest of the business.
Okay, maybe we'll elaborate on that at a different time. Are you suggesting then that the organic growth opportunities ahead of you are likely to be more RWA intensive than historical growth? Is there going to be a shift in risk appetite here? I'm just trying to understand, you know, with this sort of a capital level, why an embarrassingly low 2% NCAV?
I think there's.
Growth opportunities, but I'm just trying to understand, is that growth going to be more capital intensive, or is there any reason not to believe this capital is going to continue to stockpile?
No, there's no change in strategy or RWA intensity going forward. Nothing has really changed in our focus on ongoing all of our business segments.
Emily, your internal capital generation, you did say at least 3 basis points this quarter. I mean, like, we could be sitting with 14%+ next quarter?
There are all sorts of factors that come into, you know, capital. You've seen a significant drop in market risk over the quarter. I'm not going to go into projections for the next quarter in terms of our CET1. Yeah, we're still seeing a lot of strong organic growth. We're going to give another update in terms of revenue synergies, our more elaborate capital plan as well at Q4. At this point in time, we think that the buyback that we announced is the appropriate number.
Okay, thank you very much for taking my question.
Thank you. The next question is from Doug Young from Desjardins Capital Markets. Please go ahead.
Hi, good morning. Yes, good morning. First question on Canadian banking, just trying to get a sense, it seemed like non-interest revenue was kind of flatlined. I figured it would be up a little bit more, but maybe there's something in there. Then lower NIMs sequentially. Just trying to get a sense, is this a new run rate for the NIM? I've got a few follow-ups. Thanks.
Yes, thank you. It's Lucie. If you look at the non-interest revenues, effectively, we had two non-recurring elements of last year. Again, in the insurance portfolio and also last year in the same period of time, we had very high commercial client activities in the international business. We compared that to lower than average activity this quarter. That's for the non-interest revenue, and we continue to deliver pretty good NII growth. If we go to the NIM, I think that's the other part of your question. When we look at the sequential decline, it's mainly driven by the combination of our overall PNC business mix, combined also with lower spreads on some of the assets and deposits class. I think it may be worth unpacking some of the elements for you. I'll start with deposit spread, maybe.
On the deposit spread, we had the strongest retail demand deposit growth this quarter since COVID, actually, adding close to $1 billion demand deposits. That was partly offset by the repricing of the fixed-term portfolio. However, there is seasonality in Q3 related to the government and municipality deposits due to the tax payments, and they've always been stronger in Q3. We brought in almost $1.5 billion sequentially, and these are lower margin deposits. They have contributed to one beat in lower deposit spread. You want me to, yeah.
No, yeah. Just, you know, is this kind of, it doesn't feel like this is an unusual quarter. It feels like this is kind of like more of the normal run rate. Did I get that right?
So far, we continue to see good balance sheet growth for Q4. The loan growth, both in retail and commercial, should continue to outpace the deposit growth. If we look at Q4, we could be potentially one or two basis points down in terms of NIM, but still with very good balance sheets and confident that we're going to generate good NII.
Good NII. Okay, that's fair. The portfolio has been now converted to AIRB.
Hi Doug, it's Marie Chantal. So far, we've done this quarter and the past quarter a small conversion of portfolio, totaling 5 basis points cumulative so far.
What percentage of CWB's loan book has been shifted over? Is it 80%, 10%, 5%, 1%?
Oh, it's very minimal. We've, yeah, we're very happy that we were able to convert small portions. As I said, it represented only 2 basis points this quarter. It's very minimal. We expect, as I said in my remarks, working on the process of converting the majority of the commercial portfolio. I'm saying majority because there are some portions of that portfolio that will remain unstandardized, for example, equipment finance. We're working very closely with our regulators for that conversion, and we expect to be able to benefit from that conversion mostly towards the end of 2026.
That's the first kind of, that's the first conversion that would happen. Is that, I guess, the preferred next timeframe is the end of fiscal 2026, and we would see another benefit from the AIRB conversion?
At the end of 2026, yes, would be the first important portion of that conversion happening.
Okay. Lastly, at Credigy, you know, average assets, I think were down quarter- over- quarter. You can correct me if I'm wrong, but I figured the environment would be pretty good for this business over the coming year and opportunities there. I know this can be lumpy, and maybe that's just the case. I'm just kind of curious if you're seeing increased competitive pressures in the certain businesses that Credigy is going after. Are they kind of gearing up to pivot again to another segment away from where they stand today? Maybe a little bit of an update on that business.
Yeah, hi, Doug. It fits in. You're right, it's still competitive out there. Credigy has continued to adapt the strategy and execute. We continue to have success buying and financing first and second mortgages. That's about two-thirds of the deal flow this quarter, and we love those. These mortgage deals continue to produce very solid risk-adjusted returns for us. We saw the pace of business accelerate during the second half of the quarter. We see some good things, some regulatory tailwinds that could drive more activity from U.S. regional banks, including increased M&A activity. That's often some source of opportunity there, and that's something that we're monitoring very closely. Generally, the core of our strategy is high FICO homeowners, and they're on solid ground with a very resilient labor market and solid home prices still in the U.S.
We're seeing increased deal flow, especially, like I said, starting in the second half of Q3, and that led to about a 5% growth in balances. Looking at the current deal pipeline, we think this momentum continues in the coming quarters. Overall, we feel really good about our guidance of average asset growth in the mid-single digits for full year 2025.
Okay, I appreciate the color. Thank you.
Thank you. The next question is from Matthew Lee from Canaccord Genuity. Please go ahead.
Hi, can you hear me now?
Yes.
Hi, thanks for squeezing me in here. I didn't think I was going to be on it. Maybe you can just talk a little bit about client migration and CWB. I think a couple of quarters ago, you kind of mentioned that you didn't expect to have any client losses as you brought customers onto the National system. Has that been the case?
Matthew, it's Michael Denham. The short answer is yes. We're very pleased with the client retention. As Laurent mentioned, we've just migrated the first set of clients a couple of weeks ago, and we're in very close touch with the team there and the clients, and we're very satisfied so far with our ability to retain Canadian Western Bank clients.
Okay. In the deck, you kind of mentioned that CWB commercial loan book has been sort of flat. Is that a conscious decision to slow growth while the integration occurs, or is that maybe more a reflection of a quiet commercial loan growth environment in general?
I'm going to take this question, Matthew. It's Judith. We are still growing the loan book at CWB as we speak because there's a lot of term loans that need to be replenished. Of course, the integration is very busy for the team, as you can imagine, training, understanding all the new systems. It is kind of a balanced approach of continuing generating new loans while people are getting trained.
Okay, got it. Thanks. I'll pass the line.
Thank you. The next question is from Jill Shea from UBS. Please go ahead.
Good morning. Thanks for taking the question. Perhaps just on credit quality, I really appreciate the color on the impaired PCLs landing closer to that middle of the range of the 25- 35 basis points. With the 21 basis points that you did this quarter, and just looking at your first half results, not to put too fine a point on it, it implies the impaired PCLs are back up around 30 basis points or so next quarter. Could you just walk us through the puts and takes this quarter and how you think about just the credit trends as we look forward into next quarter?
Thank you, Jill. It's Jess. I'll take that question. Obviously, we're pleased with the credit performance this quarter. You're right, it's not a new normal. We're still in the credit cycle, and the lumpiness that you would have seen in previous quarters is likely to continue. We are seeing early signs of improvements, and I'll give you a couple of examples. For retail, customers are showing resilience. We have about 80% of our RESOL portfolio that has been repriced, and the delinquency is still low. In wholesale, insolvency trends are stabilizing. We have downgrade rates that are reducing, and clients have more time to prepare for possible tariff shocks and the renegotiation of USMCA. We do need to stay cautious. For retail, the largest driver is always unemployment, and it continues to be the future driver of outcomes.
We are seeing some stress among unsecured borrowers who are renters, but for the homeowners, it's going pretty well. We're also seeing that younger customers are feeling more of an impact, given the higher unemployment numbers for that cohort. We're also continuing to see geographical differences with Connect outperforming in unsecured credit. What I look there is if we're well covered, and our ACL coverage for credit cards remains above 8%, which is very prudent. In wholesale, lumpiness is still expected, especially in industries where collateral and enterprise values have remained under pressures. We're talking about manufacturing, talking about transportation. There are still some tariff-related risks. Specifically, the USMCA right now is being used as a blanket or a shelter, and if it's significantly modified, there would be impacts.
In this environment, you've seen us continue to be prudent by building seven basis points of performing provisions, which brings our total coverage ratio to over 2x .
Okay, thank you very much. I'll pass the line.
Thank you. The next question is from Darko Mihelic from RBC Capital Markets. Please go ahead.
Hi, thank you. Good morning. I just have a couple of questions here on CWB. The first thing is, if I look at your shareholders' report, I can see the revenues, and I can make the adjustments for the mark and for the synergies. Where I land is a revenue number of around $298 million of CWB standalone. That would be a zero growth year- over year. I'm just wondering if you can maybe walk me through what it is that is sort of happening beyond loan growth at CWB that there would be zero revenue growth in this bank on a standalone basis.
Hi, Darko. I'm sorry about that. I'll take that question, and then maybe Judith can give some more color on what's happening in terms of the business. You're absolutely right that when you look at the revenue growth sequentially for CWB, it's stable. There is the effect of acquisition accounting that you have to take into consideration. Also, when you look at the CWB portfolio, because of the transaction that occurred, it's not necessarily 100% comparable quarter to quarter because of, most importantly, the fair value mark. When you look at the balance sheet on the loan, and I think that's what's most important, it remains pretty much stable sequentially quarter- over- quarter. Judith has given some color a bit earlier. We're pretty pleased with the way the portfolio is behaving, considering that we're in the middle of an integration.
I would add more color on the business side. The integration, as we see it now, is going very well so far with the first branch converted successfully, with more branches planned in the coming months. That was a success. I've met with many CWB clients, and overall sentiment toward the combination is very positive. CWB clients value our expanded offering and the additional services we now provide. They see the value. I want to emphasize, as I said at the last questionnaire, our CWB teams have been supporting clients in getting trained through the integration while also actively originating new loans. Having said that, we expect the CWB loan portfolio to be relatively stable during the integration period, as mentioned. Excluding the planned roll-down of broker GICs and wealth management, deposits have also remained stable.
We feel that we're very well positioned to accelerate growth and realize revenue synergies as the integration progresses.
Okay. Thank you for that. Can you maybe help me reconcile one other thing here with respect to your results as presented? I mean, one of the things, if I draw your attention to page four of your shareholders' report, in there, you showed sort of the CWB impact. In that consolidated results line, if I scroll down, I see provisions for credit losses adjusted of just $13 million. In your slide deck, you're suggesting that CWB's impairment on impaired loans is $26 million. Is that to say that the total PCL essentially has a reserve release at CWB of around $13 million, or is there something else that I should be thinking about?
In terms of there is a small reserve release in CWB, which is as expected, as when you look at the bank level, the performing provisions were really driven by growth of the portfolio. There hasn't been that growth at CWB, and we've seen less migration, or we continue to see migration from stage two to stage three, which also makes a release in stage two. Yes, there was a little release in the CWB provisions.
When you say little, is $13 million little, or what can you?
Darko, you need to remember we took $230 million of performing provisions last quarter also, right? It's normal that there's little puts and takes the quarter after.
Okay. Great.
Thank you.
Thank you. As a reminder, you may press star oner if you have a question. The next question is from Paul Holden from CIBC. Please go ahead.
Yeah, thank you. Good morning. A couple of questions for Étienne. I guess first off, looking at the equity trading results, not exactly what we would have expected versus what peers have produced. Equity trading down for National year- over- year, and just want to get a better sense of the drivers of that. I can look at the appendix 12 and see there were some trading day losses, but they look pretty small. Anyways, maybe that's part of the factor, but I imagine it's not the entire explanation.
Thanks for your question, Paul. It's Étienne. Maybe take a step back and talk about the quarter as a whole because we're really pleased with the third quarter results for Financial Markets. In a very different market environment than Q2, the platform delivered its third best quarter ever. I think that demonstrates the strength and the diversification of the platform. The results are consistent with the pacing we anticipated heading into the quarter. We knew there would be lower volumes due to seasonality. We anticipated lower equity volatility. Overall, a more normal market backdrop caused lower equity and FX trading results sequentially. Although our market share continues to progress in several key segments there, these businesses are doing well. As markets normalized, Corporate and Investment Banking caught some great tailwinds and delivered record revenues with, as Laurent alluded to, DCM and M&A leading the way.
All segments did well in CIB. Overall, total revenues for Financial Markets were up 13% year- over- year. I think the key highlight there is the resiliency and diversification of the platform. Paul, you alluded, yeah, there were a few down days during the quarter. I think I counted four. These are down days that occurred during equity market rallies. As you know, we have a very defensive positioning. This was extremely profitable for us in Q2. We are maintaining that defensive positioning because we think we want to maintain that diversification of cyclical and countercyclical market regimes and to do well in both. Since our focus is on liquidity providing and structuring, we won't benefit as much as some peers from when credit tightens a lot like it did this quarter. What you saw is the source of our defensive positioning in equities as a result. Overall, really pleased with the performance of the business.
I understand. Okay. It's consistent with National long-vault comment I think you gave us on the last quarter, and that makes sense. Second question for you, at least I think it's for you. Laurent, I think, highlighted that the market risk RWA was down Q- over- Q, and that helped the CET1. I get that you don't want to forecast the CET1 from quarter to quarter, but I think it would be helpful to understand why market risk RWA was down as much as it was quarter- over- quarter and if there is a potential for it to go back up to where it was in Q2.
There is definitely the potential, Paul. As volatilities go down, market risk tends to go down. Also, I'll make a comment that we tend to deploy more as markets get volatile. We're in there with clients providing liquidity, and we may raise density because of that. As markets go back to being volatile, because of our defensive positioning, we'll be well positioned and we'll be in there providing liquidity, being very active with clients. If markets go back to being more volatile, we think we're in a great position to profit from that, but look for market RWAs to creep back up.
Okay. Again, makes sense. Okay. Thank you for that, Étienne.
Thank you.
Thank you. There are no further questions at this time. I would like to turn the meeting back over to Mr. Ferreira.
Thank you. As we look ahead, the bank is in a strong financial position, and we are focused on the execution of our CWB integration as well as growth across all of our business segments. Thank you for joining us today.
Thank you. The conference has now ended. Please disconnect your lines at this time, and thank you for your participation.