Okay, good morning, everyone, and happy New Year. My name is Darko Mihelic. I'm the research analyst here in Toronto in case you haven't met me yet. I cover the large-cap Canadian bank space as well as some smaller banks, and I'd like to formally welcome you all to the 2025 RBC Canadian Bank CEO Conference. Similar to prior years, the presentations will be in a fireside chat format, and like previous years, there is an opportunity for the audience Q&A through Slido, an app, and I intend to end each session a bit early so that I can ask the most popular questions that have been upvoted by you, the audience.
So if you'd like to submit questions during any of the sessions, please scan the QR code on your table to log into Slido with the password, and once you're in Slido, you can choose the room that corresponds with the session that we're in. So I'm going to keep my introductory remarks very brief here because I want to dive in as soon as possible, but I do want to say there's a couple of, you know, this is already shaping up to be a remarkable year, and there's going to be some uncertainty clearly on the horizon, but I do want to contrast that to last year when I stood up here, and the view was quite different. I mean, last year there was concern that mortgage payment shock was coming and that it might become problematic, and this year the outlook is clearly tempered and shifting.
Last year, banks had drip programs, and they were building capital. This year, when we look across the banks, there's a lot of NCIBs out there. Last year, the outlook for loan growth was very subdued with stable NIMs. Maybe it'll be the same for 2025, but I think you'll hear today that there's an expectation that loan growth will pick up at the end of 2025. Last year, for the most part, the banks predicted mild increases in PCLs, and that came true for the most part, and the bank stocks reacted in 2024. There were some stocks up there with very high double-digit returns, and so as I stand here today, the median P/E ratio of the big six banks stands at about 12x for 2025 against 2025 earnings. Last year, at this time, it was less than 10. So is their valuation upside?
Are consensus earnings too high or too low? Are risks greater or less than what's factored into these valuations? Please ask questions because I'm not sure that I'm going to get them all through, and I will save time for audience questions, so please ask questions to help me answer those questions for the CEOs today. So with that, I'd like to officially launch the conference, and I will invite Dave McKay from RBC to please join me on the stage. Good morning, Dave.
Good morning.
Good to see you.
Good morning, everybody. It's great to see a full room. Must be no snowstorm.
Yeah, that was another difference from last year.
This week, every year seems to bring weather challenges, but it's great to see everybody.
So before we begin, I just want to let you all know that Dave's comments today may include forward-looking statements. Actual results could differ materially from forecasts, projections, or conclusions in these statements. Listeners can find additional details in the public filings of Royal Bank. So Dave, with that out of the way, as I'd mentioned earlier, it was a pretty big year for bank stocks. Your stock did quite well. You closed the HSBC acquisition, attained synergies, really a strong year, and so I get a lot of questions in terms of what do you do for follow-up in 2025, and a lot of the questions inevitably lead towards what are your intentions with respect to capital in the U.S. market. There's a lot of debate going on that there's going to be some M&A, and there's some change possibly coming in the U.S.
Maybe just to kick off, maybe you can provide a bit of an overview of what you have in the U.S. and what you're really attempting to accomplish in 2025 and 2026, and what are the odds that we see some capital deployed there inorganically.
Yeah, so we'll jump right into it then. No macro. I think it's important maybe just to state something. I don't know if you're planning to cover macro, but we're heading into the year with generally a positive view on macro, particularly in the United States, outperformance, but still a soft landing in Canada, and then general views on interest rates to follow with that, which all feed into your overall profit and economic outlook. So I think we have a constructive backdrop. We can talk more about that if you want.
Yep.
So we're heading into a year where organically, before I get into that, we see enormous opportunity, to your point in your opening comments, significant loan growth opportunity both sides of the border as we start to see businesses invest. You start to see supply chains reorient themselves in the U.S. I mean, if you look at the investment in core manufacturing in the U.S., it's almost doubled, if not tripled, over the past two years, driven by policy, driven by narrative. Significant opportunity to invest in that expansion in the United States, so you're going to see greater loan growth, and we are well-positioned both on the senior market side and capital markets, but also in the mid-corporate and in the commercial side through City National to capture that growth trend.
So organically, we're seeing good opportunities, rates coming down, making business cases better, albeit rates will come down slower in the United States than they will in Canada for obviously economic performance and other challenges we might want to get to on the macro side. So overall, a positive organic backdrop for the United States in lending, investment banking activity, pipelines are filling, more confidence among sponsors, more confidence in corporate activity, whether it's M&A, ECM activity, obviously DCM activity as rates become more attractive, and therefore we're seeing strong pipelines exiting the year, and we're continuing to see and expect very good investment banking activity, corporate activity, trading activity in the United States. So the backdrop of our expectations for the coming year are really positive, and particularly in the United States, and we're well-poised across all our franchises, and in wealth management with market activity.
Our market-sensitive businesses will benefit from that as well. So the backdrop for us in the United States is organic activity across the lending businesses, across the advisory businesses, across the wealth franchises, and then the new piece that we have in the United States, which we're incredibly excited about, is our transaction banking cash management business, which we launched last year. We launched it early into 2024. We've gained very good momentum. We will give you much more detail about that momentum in our recent. We announced this morning we're going to have an investor day in March.
We've been holding back some of the detail from you so we could put that into the investor day, and you'll see very specific goals and guidelines where we are today, where we think we can get to across each of our businesses, but in specifically the cash management side, which we haven't disclosed too much yet. New modules will come on towards the end of 2025 and 2026 as well on the payment side. Therefore, we're very excited about overall treasury management at the senior market side, and we'll migrate that into the mid-corporate and commercial side with City National as well. So when you think about the organic opportunity in lending and off-balance sheet advisory, very excited about the U.S., and that's our primary focus.
We have so much organic opportunity, and then to remediate CNB as well. Important aspect to rebuild that infrastructure to remediate our regulatory gaps is a high, high priority, not the number one priority for City National over the coming year, and that, once that's completed over time, then that will be a tailwind for us as well. I think from that perspective, our focus is organic, but you wanted to talk about inorganic. As we move through the process of building out deposit-taking franchises, we build out our advisory platforms, particularly in wealth, there's always an opportunity to think about how do you accelerate deposit growth in the United States. Is there a franchise that accelerates deposit growth for you? There's obviously, we would like to see more scale in our wealth distribution business.
We are the sixth largest, sometimes fifth, sixth largest wealth advisory business in the United States and among banks, and therefore there's an opportunity to build more scale there that helps our capital markets business, that helps our deposit-taking and sweep deposit funding that goes into other businesses. So overall, those are two kind of strategic areas where we would look to build scale, and the third one I'd say is just more overall commercial lending scale. We can do that organically, but if there's a way to accelerate that. But having said all that, we're not organic is number one. We don't have any gaps that we have to fill. There's no beachheads that we need to build. It's all about accelerating scale only if it's a cultural fit and only if there's strong shareholder returns. Those are really high bars for us.
We set that bar really high with HSBC, and therefore to find something that fits all of those at the right time and the right cycle is kind of, they're rare. It doesn't mean it won't happen. It's not our focus. Our focus is organic, but we have the capital. We're building the platform to absorb these. We think we'd be a good acquirer, but everything has to line up, and you know we're not going to spend shareholder equity capital if it doesn't create significant shareholder value because there's other ways of doing that organically, and I don't want to distract the management team. So that's our view. This is where we'd invest.
There are opportunities outside of Canada as well, in the United States, that we think about, that we've talked about in Europe and U.K. wealth, but the majority of our focus would be in the United States where we're trying to build a larger, more successful bank, and we think there's enormous opportunity to do that.
That was a great overview of macro and what you intend to do in the organic growth opportunities. Maybe we'll just switch gears and start talking about macro in Canada. As I'd mentioned in my opening remarks, last year there was quite a big concern that rates weren't going to fall enough to help us on the mortgage side. Here we are, as we sit here today. We've had some rate drops. The outlook looks different. I wonder if you could maybe talk a little bit about the Great Renewal , as we're starting to call it, in Canada and how you see that developing over 2025 and into 2026, and if there's anything you can share with us in terms of how your outlook has changed on the mortgage market and what the opportunities are outside of that.
There's kind of three secular challenges with the mortgage market over the past year. To your point, we sat here last year and we worried about the capacity of consumers to absorb their payment increase, and we expected rates to come down, and we have stress tests. Rates have largely come down in line with what we expected. So from the first pillar, from a credit perspective, I think the risks have come off. The uncertainty has come off. We're always confident in our book, but the uncertainty has come off significantly. So of the cohort renewing in 2025, which is a larger cohort than it has been in the previous couple of years, 60% of our customers will renew at lower rates. 60% will renew at lower rates than their prescribed yield right now. 40% will renew at higher rates.
Of that 40%, 80% are within the B-20 stress test. So that leaves, which is a really good policy, which leaves only 20% of that 40% who are above, and we monitor, we watch that, and therefore Canadians have handled very well and have the capacity to handle the payment increases. That 40% that has a higher payment, the average is CAD 500 a month increased payment, roughly 10% of their income. So I think from that perspective, when we look at the cohorts that have higher payments, when we look at the overall payment shocks, it's decompressed significantly.
There still is pain, and consumers are still struggling, but you're going to see that from a credit pillar perspective manifest itself more mildly on the unsecured side versus the secured side of our book. So again, to your opening comments, I think the risk has come down on the back side.
It doesn't mean Canadians aren't struggling with higher payments still, and overall that has been a drag on the Canadian economy and why rates we think, particularly at the short end in Canada, will continue to come down more aggressively. I think market expectations are rates in Canada come down at the short end by another 50 points. We think at RBC it might be close to 7,500 points. It's going to come down, and you might see a short end rate in Canada two to two and a quarter next year. I don't think you're going to see as much off the five year, obviously, maybe a quarter point off the five year. So you're going to see a curve pivot in Canada, less so in the United States given the challenges, recognizing that inflation is below target levels.
There's an opportunity, and every 25 basis points of short end cut releases roughly CAD 7 billion of cash flow into the Canadian economy because you can see why Bank of Canada wants to get rates down to continue to stimulate discretionary spending and investment in the Canadian economy. That doesn't happen in the U.S. because everyone's locked into a 30-year rate, and therefore it doesn't move. You can see why Canada's tightened quickly and impacted growth and why loosening of that at the short end has such a positive contributor to Canadian growth. With that, we expect modest growth in Canada, roughly 1%, not a recession, lagging the U.S. That's an important backdrop to, again, how do you think about the consumer? How do you think about mortgages? How do you think about credit? The second pillar of mortgages then is demand.
So demand obviously soft as rates are higher, carrying costs are higher. We didn't see the same resale activity. Resale activity last year was off 50%. Now you're starting to see prices are firm in Canada, which is good for everybody, and you're starting to see a resurgence of demand. And again, with rates coming off a bit more, you'll start to see demand slowly pick up. So we're expecting better demand going into 2025 for mortgage activity, particularly in resale markets, but also in construction markets than we saw in 2024. So again, a positive there. And then the third pillar, which all feeds into kind of an NII narrative and growth, is kind of where do you see margins happening? It's an extremely competitive marketplace.
And for us, we saw an overall reduction in the profitability of our mortgage book of about 60%-70% over the last three years, given the competition, given higher rates, and we were at historic lows in profitability given the size of our book over the last couple of years, and therefore, there's a hope with a lower rate environment, with less hedging costs, given the rate uncertainty that there is an unlock of a bit of yield there as well, so I think all three of those pillars, risk, growth, margin, I think all point to potential upside for us in the industry in 2025. There's a lot of detail there.
Yeah, there's a lot of detail there. I'm still processing, and you're going to be, obviously, there's going to be, as you mentioned, this is a bigger cohort than normal, so there'll be a lot of discussions going on and other opportunities, I suppose, to work with your clients.
Yes, there's a big renewal strip coming through. We talked to other risk characteristics of that. We'll compete hard for that, and I think what we're really excited about is we've been on defense for the last two years absorbing HSBC. We have 2,500 fantastic colleagues in HSBC that have been playing defense, not offense, with their client base. We've now absorbed HSBC. We are going on offense with a significantly expanded sales force, which we haven't had before, and therefore, we're super excited about the opportunity. They're all going to have sales targets for the first time in our own franchise. That's a material increase. That's roughly a 10% increase in our overall sales force. They're going from defense to offense. They did a phenomenal job protecting the franchise, retaining customers, but they weren't able to attract new customers because of the conversion and the switch.
So, pipelines were empty, commercial pipelines, but private banking pipelines. Now we're getting both teams back onto offense. So, to help with that renewal strip and to go after potentially new customers, we have the largest growth in sales force activity of any bank.
And you touched on NII there, but you were a bit focused there on the mortgage book. What about just a general view on the NII? Because as rates come down, you'd figure there'd be some pressure. And I realize there's a bit of the Deposit Tractors. Maybe you can just touch on.
Yeah, so overall, you heard our comments in Q4. We think we're very positive on NII growth, but driven first and foremost by volume versus margin. While you'll see potential growth in the mortgage book, you'll see compression in other products overall if rates do come down at the short end, but much of that is kind of mitigated in the short term from the tractors that all banks, all Canadian banks, including ourselves, actively use transfers to put duration onto our deposit book, and therefore it's mitigated, and these tractors are like bond portfolio. They roll on, roll off, and therefore while rates, higher rates are very slow for the same reason to roll onto your portfolio, lower rates are very slow to come on as well, and it takes time. It takes two, three, four years sometimes to roll everything on and off.
So just like it was slow to come up, it'll be slower to come down. And therefore, at the short end of the, or the shorter timeframe, you've got a lot of mitigants against the short end of the curve. I think from that perspective, we feel generally stable margins with higher volumes lead to kind of overall positive sentiment on NII.
So we've got good NII growth, and I think you just touched on it earlier. Maybe you can just really quickly walk us through your view on the capital markets pipeline and how you see that developing for 2025. Should we be expecting? I mean, I've heard things are developing better across both jurisdictions, but maybe you can give us a sense of where you see the strength specifically in capital markets and even wealth.
I mean, the key to our capital markets business is the United States. Right now, we've got among Canadian banks the largest. We have the ninth largest global capital markets franchise, but that's built off being the ninth largest in the United States. And we have aspirations to be better than that. We're investing in that growth as far as MDs and coverage, expanding more MDs and upgrading coverage of key sectors. And that's been something we've been after for four or five years now, and you're seeing the benefit of the types of mandates we're winning. So we're feeling very good about our multi-sector capabilities within, obviously, the investment banking side. We've got opportunities that we'll outline, particularly in the investor day, around the markets activity, particularly in FX. Now, there's where we haven't performed well and that we were undersized in a number of key markets.
So FX for us is a big opportunity. Equity capital markets and equities trading in particular have not performed at par. And therefore, we've just made a recent change there, and we have upside there. So you'll see us outline the how we're going to go after that in the investor day, which we're really excited about. And those are big opportunities for us. So I think from that perspective, markets are improving. Fee pools seem to be improving. We're feeling the conversations that were happening over the past year are starting to lead to mandates. We're generally feeling we're off to a good start.
And so, is that possibly, I mean, one of the things that struck me as different for Royal at year-end was you sort of stuck to a high ROE target despite the higher denominator. And I know cap markets has a generally lower ROE. Is that part and parcel of sticking to that higher ROE target, or what is it that gives us? Maybe you can walk us through your ROE aspirations, how you get there, and some of the risks to it, and maybe some of the opportunities to exceed?
Yeah, we'll have a very detailed overview of that in the investor day in kind of 60 days. So to stick to maybe a high level as we communicated in Q4, we feel strongly that there are a number of levers that we can control and we can pull that can get us to that 16% target, even at higher capital CT1 levels. So you're going to see us continue to pull those levers. We're committed to that target range, and we think the opportunities, whether it's kind of remediating CNB and the tailwinds that will come from there to the capital markets activity to all the other levers that we're pulling, we have enough pieces in our control to feel confident that we can manage this bank at higher capital levels with a 16% ROE target.
And just you'll have to wait kind of another month or so to get the waterfall and to see all the detail behind that. I won't steal our thunder, but we wouldn't say it unless we had plans to execute against it, and we felt that we had a good margin of error to be wrong, notwithstanding that there could be some headwinds into the coming year from tariffs and other things. So I think overall we feel good about it, and that's the power, and that's the scale. That's where you start to see the scale of RBC. There are lower efficiency ratios than the other banks. Diversification of our businesses globally, the multi-product relationships that we have, our ability to cross-sell, all that's playing into being able to systematically drive a higher ROE at higher capital levels with lower volatility. That's pretty impressive, right?
We're not doing that at higher vols. We're doing that at lower volatility, lower PCL volatility if you look at zero loss trading days. We're able to manage risk, and that's because of our strength of our customer franchise, where we've invested, the types of customers we've invested in, which markets and products we've invested in, and the overall franchise strength allows you to drive a higher ROE, allows you to drive premium growth with lower volatility, and we do that. That's our investor thesis because so many of you are, we're your core holding through a cycle, and we understand that that is the parameters you need to hold a stock through a bank stock through an economic cycle. Therefore, we're consistent in our investor thesis and how we manage the bank to drive all three of those simultaneously, and we've done that.
And I think you've all been rewarded well for that. As you said off the top, it's been a very, very good run for the RY stock, and we feel very good about it.
In your discussion there, you didn't really talk about the NCIB. What are your intentions in the NCIB?
Certainly, we know where the intrinsic value of our firm is. We're going to continue to buy back stock. But the first use of our capital is going to be for all the organic growth that I just talked about, 2,500 new salespeople attracting new clients, commercial growth in Canada, senior markets growth in Canada and the US on the investment banking side, commercial banking growth on both sides of the border. So when we look at capital deployment and RWA growth and our ability to deploy capital organically, that's going to be the first source of deployment because that's where the highest ROEs are by far. And that allows us to sustain those targets that you talked about. At the same time, we will continue systematically to buy back our stock for a number of reasons. It's just part of the overall economic return.
It's overall how we're going to drive premium TSR and top, which is how we get paid. So it's an important part of the overall capital management strategy to continue to return capital to shareholders, but it won't be the primary lever. It'll be a secondary lever. And you'll see us in markets consistently buying back shares because we feel there's upside. So I think it's overall, we're not backing off. We slowed it down, obviously, because we saw some of the growth opportunities coming as we saw the strength of the U.S. economy and the stability of the Canadian economy. And we said, we're going to use our capital for growth.
So I wanted to take this opportunity to talk about something else that's come up last year, could be impactful as we go forward. As I think of it, it was quite a year where anti-money laundering became quite topical. It could become very interesting this year as well as Canada goes through an audit. Your company is rather large, traverses a lot of different geographies. So I wondered if you could maybe just spend a few minutes here on your overarching views on AML, where you sit, but also more importantly, where you think this could go and what's necessary for the system.
AML and cybercrime, they're all systemic threats that affect our society. And they're threats that evolve and increase, are increasing particularly outside threats into Canada and threats within Canada and the United States, as we've been seeing. And therefore, financial institutions have a very important role to play in the overall mitigation of that risk within our society. And the expectations on financial institutions in general, globally, but in Canada and the U.S. as well, are increasing from society and from regulators to the role that we have to play in protecting society from this crime. And therefore, the amount of investment that institutions have to make has been increasing over time. And in our case, investment has been increasing significantly to manage and mitigate these risks and to meet heightened expectations given the complexity of the world.
And a misstep, it's not just a misstep, a sustained misstep by an institution can have significant adverse effects to shareholder value. And I think we all see that clearly. And that word sustained is really important. And therefore, we're working extremely hard with all elements of the value chain, as I call it, around mitigating this type of risk. And I would say in the Canadian context, we could do better in integrating how we're working together across banks, across government, and across our policing forces. The coordination could be better. I think that's been the source of some problems, and that will probably. It already got pointed out in the Cullen Report, so I'm not saying anything that's not public already.
The Cullen Report highlighted that the banks are investing heavily in this, but there's a lack of coordination with various elements of the value chain from government to police, so we can get better at it as a country, which is a good thing, and there is a lot of attention now and effort to increase the coordination of that. We see in the markets sometimes we'll demarket a client. We do demarket clients only to find themselves at another bank, and how does the system allow that to happen, and I can't say whether some of the challenges that we experienced didn't manifest themselves or did manifest themselves, but the system can share information better. The system can participate better to enhance the effectiveness of the overall effort.
And therefore, I think that's where there's a lot of focus right now, and I think that's where we can be better. And I think that's the Cullen Report pointed that out. And I'd say there's a lot of attention from all elements of the participants and stakeholders in making that happen, and that's a real positive development.
I'm going to take a few questions from the audience here because we've got 13 questions, if you can believe it. Okay, so this one, top question upvoted. In light of recent departures of major U.S. banks from global climate alliances like the Net Zero Banking Alliance, how do you see it evolving in Canada?
So on the Net Zero, can we get that part again?
Yeah.
Is the overall commitment to Net Zero?
Yeah, the question is how do you see it evolving in Canada or for Canadian banks?
Yeah, all the Canadian banks have signed the NZBA agreement. And I would say it's in flux. I don't sense among multi-sectors, clients, banks that there is a waning commitment to climate change. I think there is a challenge in how we build a strategy to affect a successful program to address climate change and reduce the emissions in society. So whether NZBA is the right organization and mechanism, you've seen a number of US banks exit it saying it is not the right mechanism to affect the change we need. But we have to work with governments. We have to work with the citizens that we serve. That is, if our countries have an objective to get to a certain point, we will be part of that. And therefore, pulling out of NZBA hypothetically doesn't lead to a non-commitment to Net Zero or climate change.
It just means that mechanism, that organization that fostered oversight and policies and rules around what you can and can't do and how you report, maybe that is not the right mechanism to do it. But in itself, doesn't say you're not committed to supporting your economy and your society. And I would expect you have to do both, right? If that's not the mechanism, what is the mechanism? There's enough, I think, investor focus. There's enough reporting and external clarity on how we're doing. And I think you can expect us, as long as our societies are still committed to the journey, and I hope they are, you will see us continue to support that.
Another question that's been upvoted quite a bit is what are your thoughts on U.S. prime brokerage? Is this a space that you're excited about?
We do participate in components of prime brokerage now in the United States, but we don't have as holistic a program as the four top money center banks have. It's a massive flow and a massive scale business, operating scale business. Having said that, there are opportunities for us to move deeper into that, maybe not holistically. I don't know if that's the top four money center bank levels, but there are areas that we currently can compete in that we can expand. So as we come into the investor day, you'll hear more from us. But there is an opportunity for ROI in that space.
And is that opportunity, can it be all organic? Could you just work your way into it? It's nothing that would necessarily need.
Requires capital, obviously, underpin inventories, but doesn't require an acquisition capital.
What about just, there's a general question. I think it's kind of interesting. How are you thinking about the Trump tariffs or the threat of tariffs, I suppose? He's still not really in office, but.
The tariffs could have an economic impact on Canada and the U.S. I think you have to expect retaliatory tariffs, so it'll go both ways. It's disappointing to hear the rhetoric intensify when we thought it was de-intensifying or mitigating to an extent. So over the last 24 hours, 48 hours, the rhetoric has intensified. I think it's causing concern among everybody that it will do economic damage, and we're not sure the objectives it's trying to achieve. I'm hoping we find a better place for the sake of all our citizens. But the rhetoric has increased, and we're still trying to figure out the objective of that rhetoric. At the end of the day, there is a lot of opportunity to work together to create, I think, better economies and better integration. And I don't believe the tariffs achieve that.
I think the tariffs can do a lot of damage where I think we're trying to build something. I hope we're trying to build something different and more integrated and stronger between the two countries. So we'll have to see. I think I'm not in the prognosis business. I'm in the preparation business. So we prepare for multiple scenarios. And therefore, that's what we're doing. We're preparing for different outcomes. And you also have to say, if the tariffs do come on in more of a macro across the board, how long do they stay? So there's a duration question as well. I would say, as a base outcome, I would expect certain targeted tariffs at the end of the day to achieve some industrial policy objectives. And that may be an outcome that we have to expect.
I would be disappointed to see across the board tariffs because I don't think it achieves any of the policy objectives of either side and is unnecessary economic damage.
Okay. So we're coming up to the end of our time together. And as always, I like to throw it over to the CEO for the last word. So Dave, I'd love to hear what you think the key messages are for investors for 2025.
Notwithstanding the topic we just covered, the uncertainty of some of the crosswinds coming from trade and some of the geopolitical tension. We are expecting a constructive market backdrop that, particularly for our market-sensitive businesses, capital markets, U.S. wealth, Canadian wealth, strong opportunities. Don't forget, 50% of our revenue, which is unique to RBC among Canadian banks, is from non-interest income. Therefore, our market-sensitive businesses, whether it's wealth management fees, wealth management AUM, our advisory businesses, or other fee-based businesses, 50% of our revenue is market and non-interest income-based. And therefore, that secular tailwind that we're feeling, we are well, well positioned to benefit from. You heard on the NAI side, the NAI growth opportunity from lending into commercial, lending into consumer mortgages, north and south of the border. We feel very, very good about. And therefore, when you think about the constructive economic backdrop, lower rates help mitigate.
We feel very good about the momentum heading in on the revenue side into 2025. You heard our comments about there will be some slow creep, we feel, in PCL. We haven't changed our guidance between 30 and 35. You're going to see more of that on the unsecured consumer side, I think, and here and there on the commercial corporate side is some firms struggle with higher rates. You can't expect zero activity there, but net net, we've maintained our guidance there in a conservative way, so when you think about the constructive backdrop of economic activity overall, relatively stable credit side, slight increase ability. We've absorbed HSBC. Now we're going on the offense with expansion. We still have about a third of our synergies to deliver in 2025. We feel confident about that. We're feeling good about the franchise.
You'll hear a lot more specifics about that in another 60 days from us in the Investor Day. Every business leader is going to get up there and talk about their business and say, "Here's where we're going. Here's our marks for the next three years." We're excited about that storyline. Can't get to all today. Don't have time, sorry. Overall, we feel very, very good.
All right. Thank you very much for the first session. Great.
Thank you.
Thanks a lot, Dave.
Sure.