Morning, everybody, and welcome. I would just reiterate Vinny's comments and thank all of you on behalf of my colleagues at RBC for joining us for our annual Financial Institutions Conference. It's a very important sector, very important venue, and event for us each and every year. So I really do thank all of you for your participation. This year, very pleased to say we've got record annual attendance, and so it certainly sets itself up for a very engaging two days of dialogue. And as Vinny said, I think it's very timely. As we reflect on 2023, it was certainly an eventful year in markets globally, but certainly, if you're a banker in the financial services sector, we saw pervasive inflationary pressures that obviously drove a multi-decade shift in interest rates and monetary policy.
On the back of that, we saw significant uncertainty on the outlook for employment, growth, whether inflation would be under control, the credit cycle, no shortage of other items. And almost a year ago today, we saw some of the pressures that created in terms of liquidity and funding on the banking sector drive the very unexpected, regional banking crisis, again, that was, almost, exactly a year ago from this conference. As Vinny mentioned, as we look to 2024, I think we're starting the year, with a lot more visibility, and a lot more reason for optimism. Although I think, for all of us watching the economic data week to week, it is still unclear exactly the path that we're going to see growth take, whether inflation is under control. And increasingly, we're starting to see more divergence across countries and regions around the globe.
So by no means do we have full transparency, you know, what the next 12-24 months is going to look like. Against that backdrop, some interesting things going on in financial services. We're seeing a lot of money in motion in the banking system as we saw funds shift, to some extent out of the banking system and also into higher yielding products. And now with the strength in markets, we're seeing a rotation back into equity, fixed income securities. The regulatory environment continues to change. And obviously, we've got a lot of ongoing geopolitical uncertainty. And with elections in over 50% of the world's countries this year, a lot potentially surprises on the horizon. So needless to say, this is a backdrop that creates a great forum for discussion. We look forward to the next couple of days engaging and sharing ideas with all of you.
To get going with our first session this morning, there's no better way, I don't think, to kick off this important discussion than with our own Dave McKay, President and CEO of RBC, to share his thoughts on the macro environment and how RBC is navigating through it, some of the challenges, but more importantly, the opportunities that that's creating for us. Just by way of a quick introduction, Dave joined RBC in 1983, and he became Group Head of Canadian Banking in 2008, where during his time, among many different things, through his leadership, he really brought a tremendous focus to technology and helped place RBC at the forefront of the digital transformation in our business. He assumed his current role as CEO in 2014, and since then, he's very successfully led RBC through many strategic initiatives.
But one of note is obviously our currently announced and pending acquisition of HSBC Bank Canada that I'm sure Dave will speak further to. Beyond his role as CEO, Dave also serves as a member of the Board of Directors of the Business Council of Canada, a member of the U.S. Business Council, and on the board of the Institute of International Finance and the Bank Policy Institute. He also serves on the Catalyst Canada Advisory Board and is the chair of the Business + Higher Education Roundtable. And in our home market north of the border, Dave has been a passionate advocate for Canada's future prosperity and preparing youth for the future of work. So please join me in welcoming to the stage Dave McKay. Morning, Dave.
Morning, everybody.
Look forward to our discussion. We've got a few minutes, 30 minutes to cover, a lot of different topics, but obviously made a few remarks just about the macro backdrop that we've experienced over last year, and that's pivoting. But certainly no full clarity on the horizon. Maybe we could just start there, Dave, and talk a little bit about your outlook for the economy, the business environment, what you're hearing for clients, and then importantly, what some of the implications are you see for banks globally.
Yeah, it's good to be back this year, and congratulations to Vinny and the team for putting together another record conference, record attendees. So we're very excited for the week and trying to figure some of these questions out. And macro, you know, macro and geopolitics seems to play heavier and heavier each year as we talk through the impacts on our businesses and our clients' businesses, even more importantly. And I think when you look at the factors at play, I think many of it, many of the impacts were evidenced in the Q1 bank results of the Canadian banks and RBC in particular. But I think there's a couple of differences. To your point in the opening, we're seeing regions diverge. The impact of higher rates is not being spread equally across the global economy.
We see it, you know, most evidently here in the United States, where, because of the 30-year fixed mortgage, note there's no consumer debt being repriced. There's strong salary increases, and therefore disposable income is very strong in the U.S. and continuing to fuel inflation and continuing to keep the economy going, along with a very substantial government deficit, I would add, at the end of the day. So very stimulative on both sides of the equation, and therefore the U.S. economy is outperforming. But inflation is coming down, so it's working. In Canada and Australia and the U.K. to an extreme. We do reprice mortgages. We are on a four or five year repricing cycle this year in Canada. Banks are repricing roughly 15% of the backbook. And those are fairly significant shocks to a consumer. And therefore it's pulling disposable income back from the consumer.
We're seeing that certainly in goods demand is way down. You're seeing economies that service the goods side, whether it's transportation in particular, struggle with that. You're seeing retail struggle with that. And you're seeing an equivalent slowdown in services, and therefore inflation is coming off given weaker demand much more quickly. And you saw that in our credit card portfolios consistently, revolve rates are up. And purchase volumes have moderated to down. So it belies an underlying slowing of the Canadian economy, the U.K. economy, the Australian economy. So and that's because, largely because of the difference in how the consumer's behaving, we're running large deficits in Canada, same in Australia, and the U.K. What's different about this cycle and what we're trying to figure out in the conversations I have with clients and.
And investors is around this new phenomena where we've had higher rates for longer. You're seeing it moderate inflation. Monetary policy is working. Yet we haven't seen much impact on employment. And I think that is one of the most significant changes that the U.S. is running at, what, two something percent unemployment. Canada's running at just over 6%. In Canada, we used to run 6% unemployment at the best part of the economy. And then, as you raise rates and went into a tightening cycle and went through a cycle, we would go up to 9%. So to have you know, high 5s, low 6% unemployment with rates being that high for that long is a unique phenomena. In this particular cycle, and the United States as well. So you're seeing consumers are working. They're struggling with their debt in Canada.
In some equations at the lower end of the spectrum, and you're starting to see a little bit of default, but net-net consumers are working, and therefore there's a lot with that banks can do with the consumer when they're working and help them manage through the stresses. So that's a different cycle of impact than we've seen in previous cycles where unemployment in all markets, with this level of rate and tightening going on was the way you slowed an economy, and it was the way you reduced demand in the economy. So I think, from that perspective, it's unique, and it's helping us engineer a softer landing. We had a positive print in Canada. The market forecasted a negative print for Q4, you know, putting us into a technical recession.
We avoided that yet again, the U.S. economy, is more directed in a much higher probability now towards a soft landing. And I bring that back to large government deficits cushioning the impact of monetary policy. At the same time, the consumer is continuing to spend because they're working, and therefore we're engineering a softer glide path. To do that, we do hope rates come down in the Canadian marketplace to alleviate some of that pressure going forward. We certainly expect, you know, roughly 100 basis points this year in our own forecast, and 100 next year, and we hope that starts no later than this summer or June, as we start to see a Canadian economy. And the one final point I'll add to that, which is important, is that some of the weakness in the Canadian economy from all of that consumer tightening.
Is masked by a significant number of immigrants coming into the country. We would normally bring in 250,000 immigrants historically. Run 1 million new immigrants into the country last year, and therefore the demand cycle from that immigration has helped support the economy. Yet you see it in the debt, the GDP per capita numbers are coming down, because we're not generating an equivalent number of GDP yet with all those new residents, and therefore you'd expect that in a growth mode that your average GDP per capita is coming down. The key for Canada is, when do you start to flatten that and start to grow it again, and get a greater contribution for everyone in the country. So I would say that's the tail of the tape. At the end of the day, generally a positive.
Outlook with a higher propensity for a soft versus hard landing. But don't rule out that. When you have rates at these levels, and they stay up there, even if you drop 100 points, you're still in a tightening cycle. Don't forget, and you drop another 50 points. The neutral rate's probably not gonna be reached until around 3%, right? 3.25%. So we're still in a tightening mode for a little while, even when we see rates come down. And I think that's the art in all of this versus the science that when do you start. When you're confident that you've got a trajectory is gonna be normally before you actually see the numbers, and therefore that's the art in being a central banker.
It's to move at the right time before the number sits on your desk and say, "Oh, it's okay now. It's probably a bit late, then. So I think it's a unique cycle in that sense. I think those are the factors that are helping engineer soft landing, which is good, I think, overall for the economy. Good for credit overall, even though we're seeing a little bit of credit weakness, as you'd expect with the tightening cycle. Therefore I think generally positive for the backdrop of this conference.
It's terrific. Thanks, Dave. One thing that it seems like every time we go through a cycle, one idiosyncratic question that comes up around Canada is the Canadian housing market. Yep. You touched on that a little bit. Differences in the mortgage structures between the U.S. and Canada. Yeah. We've seen obviously some pressure on pricing. We've seen, you know, activity slow down in the real estate market in Canada. But at the same time, you've got these dynamics like immigration and undersupply and affordability challenges that that create a really different dynamic, it feels like, versus some prior cycles. Can you maybe talk about just how do you see that playing out over the next few years.
Yeah, you look at. The reason why inflation is sticky in the country, and it's when you decompose it, the largest component of inflation right now is shelter inflation. Up on average, 8% year-over-year. So that's rent. You know, mortgage financing costs for an owned home. The other components are still a bit too high, but that is certainly boosting inflation. To your point, it's driven by demand up here and supply down there. The challenge is it's this vicious circle to create greater supply. You need lower rates. You need lower rates, so more consumers will be ready and apt to buy and finance and be able to finance that buy, and therefore they will be available for presale for a new building to go up.
And therefore you're in this vicious circle that supply's not being created because rates are high. And therefore demand's growing with new immigrants, and you're exacerbating that supply demand gap. So we do need rates to come down to really solve this in the short and medium term. And get more supply to market. And I think that's the challenge. We've enacted some policy around foreign students and trying to alleviate the short term nature of the demand increase until we figure out the supply side of the equation, and that's one of the reasons we made a commitment to more affordable housing in our communities as part of the HSBC deal. Because it's really needed. That funding's needed. So we're in this vicious circle of supply. But you can see why there's generally been really strong.
House price stability, even in a higher rate environment in Canada. We saw a 10% runoff in 2023. It's flattened, but that's after +20% to +25% runup in 2020 and 2021. So we're still net have grown. The average equity in Canadians' homes quite significantly since the pandemic. And we see that in our lending book. We see an average loan to value now in the low 50s. Low 50s on our CAD 400 billion mortgage book. There's significant equity that's built up in there. Consumers are working, and therefore they're able to manage for the most part on the secured side. They're able to manage their heavier debt load very, very well. So I think that's gonna work itself through. In addition, we need to get permitting more quickly through the municipal system and the provincial system so that we can create supply.
So if rates come down, and we don't get these projects permitted, then we're back into this delayed creation of supply. So I think it's managing the demand a little bit. Lower rates help supply the credits kind of there, I think, ready to go. And there's lots of builders that are sitting on their hands, just waiting to go into presale mode right now. I just had dinner with 40 of them a couple of days ago. And they're itching to go. Obviously they've got a lot of land in the bank, and they're in their land banks, and they're waiting to bring it to market. They need permitting, and they need lower rates to get consumers off the bench into presale mode. So I think all of that. I think both the instability in the short term but stability. I think, over time.
Got it. Maybe switching gears. I mentioned in my remarks. You just touched on it. The HSBC transaction. Yeah, obviously largest acquisition RBC's done, CAD 13.5 billion. Very exciting opportunity. Maybe you could just share, you know, what now we've been through a long regulatory process. We're getting closer to closing. You knew the bank well, but you get to know it better as you go through that process. How are you feeling today, Dave, about the benefit to clients, how that helps the offering we'll be taking to market, and then, obviously, the benefits to, you know, RBC and our shareholders.
Yeah, it's a very strong franchise, a franchise that we've gotten to know over years, competing against them, and over the last year and a bit more intimately, obviously, as we start to share conversion plans for the end of this month and prep that. Some of that was delayed until we got approval in December, and we've been able to accelerate that. So even if you look at their last quarterly results, they're a very strong credit bank. They manage their credit exceptionally well. Their credit performance was better than ours on their retail side over the last year. So they're a very good credit bank. They're a very good customer-centric bank, limited in their offering domestically on a number of fronts, which we think we can improve on. We'll bring a better suite of investment products.
We'll certainly bring a better suite of cash management product to them. We'll bring a broader credit card lineup to the forefront. We'll bring better digital capabilities to the forefront. So all of that. Their customers will benefit from by moving on to our platform. It's a closing conversion where we lift the bank out of HSBC Global, and we put it on top of our tech stack in 48 hours on a weekend. So it's a very complex conversion, but one that allows us to operate the bank from day one on our own tech stack. And therefore accelerates, certainly, the synergies around technology and operations for us to the start of the deal. So we're very excited about being able to offer clients more value.
At the same time, we're building new capabilities that we don't have that they've done very well, and particularly multicurrency accounts, cross-border trading, multicurrency trading, trade finance. All of those services that a global bank like HSBC is brought to the U.K. marketplace. We're replicating that on top of our platform. We've coded that over the last year, now sits on our tech stack, and we'll make sure that the HSBC customers get the best of RBC, plus the best of what they had at HSBC when they come over. And we'll be able to offer our 15 million clients who didn't have access through us to that to these multicurrency cross-border trade finance services. So, trying to bring the best of both banks to each of the customer bases as we bring it together is the strategy.
When you do an in-market rollup like we're doing, obviously the number one synergy is cost. We have a very significant opportunity when you eliminate their entire hardware and software of their firm, and some of their back office operations that support that. We've articulated a high degree of confidence in a CAD 740 million cost synergy on this, which is roughly 60% of their existing cost base. So I think, from that perspective, we feel very well-footed about that. We planned around that. You can see when you don't need any of their hardware, software, some of their operations, why you would get to that type of level, and therefore that is a very significant synergy that helps drive the deal. And then we have all those customer product synergies that I just talked about. We haven't articulated what the financial benefit of that is.
In our investor deck a year and a half ago, we put a 0 on that line because we didn't need it. But you'll see us articulate more clearly how we quantify the cross-sell and the customer penetration of all that capability. So, I think it's a wonderful deal for shareholders. It's highly creative. It's a higher deal. It's short-footed around cost and cross-sell synergies within the customer base alone. It's good for Canadians, in that we're gonna pay dividends in Canada versus those dividends of HSBC going to their global and largely Asian ownership base. It could be upwards of CAD 700+ million of dividends into the Canadian pension funds and U.S. shareholders, obviously, as well will benefit from that. Which is a large, you know, that's a good part of our overall shareholder base.
So that's meaningful money into retail investors, pension funds, asset managers that gets reinvested in your economy over time. And higher taxes. As you can see, it's good for our governments. We'll make more money and pay higher taxes domestically. So I think all that makes it good for customers, good for the government, and good for investors. And we're very proud of the deal, and we can't wait to get at this in about 20 days. It's come at us all of a sudden, right?
It's good. Long process. Almost there. Great. Dave, we're sitting here in New York. Obviously, the U.S. has been an important part of our strategy for a long time, but probably fair to say it's even going up in importance, just given the size of the market and opportunity here. Can you share some of your thoughts on just how you think about the U.S. opportunity for RBC.
Yeah, and I'll say a few words, and then turn it to yourself, as well as our head of the international holding company and responsible for bringing all of those businesses together. So it's three really strong businesses in the U.S., and three exciting growth opportunities for each of those businesses. The capital markets business that you run obviously is a wonderful business for us. CAD 4 billion in revenue, the ninth largest player globally and in the United States, and grew share both in markets and in investment banking last year, the result of investment over a number of years, particularly on the healthcare vertical and the tech vertical, but all strong FIG group under Vinny, strong real estate and energy banking practices and diversified. So.
Done a great job kind of building out a diversified business, and you're seeing the traction that that gets. So. You know, very excited about that. $4 billion of revenue and $1 billion of earnings in the U.S. with upside potential. And both sides of that equation in markets and in banking. We have probably the hidden gem in all of it is our U.S. wealth management franchise, the 6th largest wealth franchise in the United States by AUA. Over $550 billion of AUA, alongside roughly a small institutional asset management capability of over $100 billion. But the 6th largest distribution in every state. Good base of FAs and growing, and the lift out strategy for us has worked for the past six or seven years. We built a whole new tech platform under our FAs. And therefore we're able to cross-sell secured lending product.
We have a better advisory platform and financial planning platform, and we've got very high customer satisfaction and and advisor satisfaction. The franchise is winning, growing and benefiting from a runup in market. Significant opportunity to continue that growth trajectory with with one of the top platforms, but also to cross-sell other product into. In fact, we don't have any banking product the way a Morgan Stanley would have, and and FX products. So we're really looking at how do we start to horizontally add product to that that customer franchise, which is low-end high-net-worth high-end affluent customer franchise, and our City National franchise, which had a great seven-year run, and then got into trouble last year, as far as deposit beta is going up significantly during the March crisis, and the deposit beta staying high generally for regional banks.
We have high net worth clients there, and obviously. They've moved money around and seeking yield, and therefore we've had to match. You know, treasury yields and other yields and funding that book. But it's grown. That deposit base is stable through the crisis. We're quite proud of that. We have a very strong lending growth, and we tripled the size of this business in the last seven years, maybe too fast. And therefore we've got to stabilize kind of the operations base. And our processes before we get to the next phase of growth. But for us, the real opportunity in City National is to run this business much more efficiently and drive a much higher ROE. We grew, but we grew less than an optimal level of profitability. Sometimes we grew for growth sake, and there's a chance to reposition the balance sheet.
There's a chance to take out costs. There's a chance to run this business a lot better. And that's. We think really accretive for the shareholder. So from that perspective. That's a business that can generate. I think, as much profitability as our capital markets business is generating. So those are the three businesses. But maybe you can talk about how you're tying it all together, and how you're looking for synergies, and how you're looking for opportunity within that business.
Sure. Thanks, Dave. I'll just be really quick, in the interest of time. But in addition to three great franchises, as you've talked about, I think where the opportunity is for us going forward is for different reasons. Those businesses were all at various phases of maturation, and as a result to date, they've largely run in fairly distinct silos, and I think, as most of us know, there's implicit inefficiencies when you're running things in a more siloed way. And so, you know, four broad opportunities I see. You know, one obviously is on the client side. How can we take these three great franchises and better connect around shared clients, and whether that be you know, referrals from our Capital Markets or CNB commercial franchise into the wealth network, or the other way around.
Obviously lots of opportunity between, you know, commercial small businesses and wealth. Lots more we can do to connect the dots and create these flywheels on client cross-referral opportunities. Yeah. The second obviously is efficiencies. When you're effectively running three separate businesses, there's implicitly costs embedded in that you can do without. And so I think more things we can get at to try to drive the efficiency ratio down across the U.S. broadly. The 3rd is really on the investment front. That again, technology is a big part of banking. When we've got different products running on different systems across these three platforms. It's not the most efficient investment structure. And so, you know, as we look to build out best in class product capabilities. I think there's an opportunity for us to effectively look at.
Building or manufacturing in one spot, but then using that through different client distribution channels. Then, final point. I would just say you touched on, you know, earlier, is just the importance of funding. And you know, trying to simplify our structure, which will give us a little more flexibility and help us optimize our funding footprint and use of deposits across the U.S., I think, is so an exciting opportunity.
Right. So. Yes. Funding long-term growth in U.S. dollars is so critical to all banks, particularly regionals and foreign banks.
Maybe switching paths here again, Dave, but. Generative AI been obviously very topical. Lots of dialogue. Certainly among the financial services sector. There's opportunities both on the client front, and how can we better provide advice and services to our clients, but also as a lever to productivity and efficiency. You know, you've really been a thought leader on technology for decades, and I know we're spending an enormous amount of time thinking about the application of AI in our business. Can you just spend a few minutes, Dave, and talk a little bit about how you see that opportunity? And it's difficult for investors, I think, to you know where's the commercialization? Yeah, where's the commercialization path go?
I think that certainly the theme that you're hearing. You know, we're pivoting as a society and a tech society. That was very much the thematic in Davos like. The foundational models have already been optimized to such a huge level already that maybe within the next generation, two at the latest you will get rid of hallucinations. And therefore the accuracy and the veracity of the modeling from a Foundational Model basis will be really strong, and therefore the commercialization opportunity is where everybody's focused right now versus foundational models, and therefore I think it bodes well for not just banks, but all the industries we focus on commercializing large language models, and it's an enormous amount of data that we've corralled through these foundational models.
Trust layers have been built and are being built, and therefore we're in a place to, I think, really accelerate. In a much earlier stage of this technology that commercialized benefits. They come in similar formats. I don't think you're gonna find a CEO that doesn't cover off these macro pillars, but it's and how do you get at it. You need to have organized data. How your data is organized could be a big barrier to getting after this, and a number of players haven't organized their data very well. We'll have to go through a more expensive, elaborate reorganization of data, and we've done that. We've done that because we've been at these foundational and these commercialized models, whether it's reinforcement learning or machine learning or the evolution of AI. We've got over, you know, 80 PhDs.
In machine learning and reinforcement learning at RBC and our Borealis AI Institute, one of the largest in the world in Canada, but in North America. We are again ranked in the top three in, I think, North America around our AI commercialized capability. We're two last year. We're three this year. So it talks to investors and people look at what we're doing. We're one of the best in the world. So what does that mean? So getting at your data and organizing your data and getting value out of your data through these large language models and generative AI capabilities is really, really important. We've got that because of the precedents that we've invested in to. Then you have to, you know, marshal your business to focus on it and get after that and integrate it into your salesforce and integrate it into your functional opportunities.
Earliest benefits are coming in a Copilot around coding. I've seen it myself. You're getting upwards of a 30% benefit when you code alongside a generative AI capability and multiple languages. It's gonna help us with some of our legacy languages like COBOL as well. Well, it's hard to find COBOL. I'm a COBOL coder. That's how I started in the bank. I thought that would be my ticket to retirement. To code COBOL, because they're still around for about 60 years now. Now the machine's probably gonna do that, unfortunately. So I think, from that perspective, the Copilot co-coding. We're seeing really good benefit, and the codes come, you know, processing it efficiently, and therefore it's quality code. And because you always worry about low quality code at the end of the day. So it's a great opportunity.
I think everybody's playing with this, and how do you accelerate that and adopt that through your public and private cloud development structure. So I think it's really important. The key is large companies like us will have the ability to partner with some of the market leaders today, but also develop and save money and have control over our own tech stack. So this technology will be available to everybody. But the large companies who have a real foundational capability in AI, like we do, will be able to build our own tech stack and build our own LLMs and integrate pieces from the outside to the end. We won't be solely reliant on a partner, and I've had this conversation with a number of tech leaders, including at NVIDIA, and they've encouraged us to really pursue that tech stack.
But so you'll see a hybrid for us at RBC and partnering with the Anthropics of the world and the Coheres of the world and the OpenAIs of the world, but at the same time being able to build our own where it's more efficient, more operational, greater operational control, and whatnot. The big benefit is when you layer this on top of your own data for the benefit of your ultimately your customers, but for the benefit of your employees. Taking the complexity of our model, and this is where we struggle. We make mistakes. We have to retrain. We have to correct. We have enormous complexity in the delivery of our products, whether it's in wealth management or in the retail bank. You have turnover. And therefore you can deliver a better customer experience and more efficient customer experience with less cost.
Less effort, and therefore that's where we're really focused right now, whether it's in the contact center or in the branch. Deploying these models and piloting these models for the benefit of the shareholder and the customer. So I very excited about it. I think this is the real deal. It's not quite ready for prime time. But it's getting close, and I can't believe the progress that's happened in this space in the last 12 months. I mean, it really is quite mind-boggling.
Terrific big big opportunity, but it's not gonna be straightforward to capture.
Yep.
So we've got one minute left, Dave. We've covered a lot. Thank you. Any closing thoughts.
Yeah, I think just back to the macro. I think we're coming through this complexity, and while you can't predict all aspects of what might happen, you know, the probability for a softer landing, I think, has increased. You see that in the numbers. I think you're seeing, you know, certainly some stress on credit in the marketplace right now, whether it's consumer unsecured or commercial real estate will probably be a big part of the themes you'll see on stage all week. That's the first manifestation of it. But overall, when the majority of your customers are working, at the end of the day that provides a solid backdrop. And the other difference I forgot to point out between Canada and the U.S. right now is both consumer bases and commercial bases saved roughly the same amount of deposits through the pandemic.
$3.5 trillion in the United States, CAD 350 billion, 1/10 in Canada. 1/10 the economy. Because the U.S. consumer was more confident and it wasn't repricing their mortgages. They've gone and spent most of that. So that's $3.5 trillion, as you know, is down to about $0.5 billion, and that's been highly stimulative to the U.S. economy. In contrast, the Canadian consumer has not spent that. Concern about their mortgage, concern about their finances, a more conservative approach. That CAD 350 billion is largely intact. Not spread evenly through the population. It's more concentrated in the top 60%, but still available. For one of three things. One, to mitigate against higher credit or higher payments, and therefore as a buffer to credit. Two, w hen rates do start to come down, it's a savings. CAD 350 billion, or 15% of GDP.
Is there to purchase and consume and stimulate growth in the economy, and three, migration into equities and into other investment products. So, not sure the split of that. It'll depend on how the economy's doing and the pace of a rate decline. But again, that's a significant opportunity for banks to capture in the economy, to capture that savings that has not yet been spent in the Canadian economy, and obviously something the central bank has to think about is inflation comes down. Well, this gonna nudge inflation up in a bit of a spiky way, potentially. Depends on how that flows. So again, another variable that we're tracking. So net net, I think, you know, a pretty decent backdrop to the next two or three days.
Terrific. Well, those are great great comms to set up the dialogue over the next two days. So, Dave, thank you for taking the time to be here. Really appreciate it.
Thanks.
Thank all of you. Hopefully a good series of sessions over today and tomorrow.
Have a good conference. Thanks.