RBC Capital Markets Canadian Bank CEO Conference

Jan 11, 2021

Good morning. My name is Darko Mihelic. I am the research analyst in Toronto here, and I cover the large Canadian bank space for RBC Capital Markets. I would like to formally welcome you all to the 2021 RBC Canadian Bank CEO Conference. This is the first time we are holding this conference virtually. But similar to prior years, the presentations today will be in a fireside chat format, and we also have a keynote speaker from OSFI. We have put the biographies on the website. That gives me time to dive right into the Q&A and hold a lot of questions for our CEOs. Today's conference will kind of focus in on about three major themes. The first is the economic recovery. We really want to understand how the bank views the economic recovery, if in fact they are concerned about it. Does the bank actually have to pivot, make some alterations? What is the outlook for interest rates and loan growth, and effectively revenue growth? So what are the bank customers saying? We would love to get some insight here from the CEOs on the economic recovery. Clearly, a second theme would be credit, and we will ask our normal questions about credit quality and how we see that evolving. The third sort of theme that I think we will focus in on is capital. In Canada right now, we are under some capital relief and some restrictions on capital as well. We would like to see how the Canadian banks might navigate their way through that, and ultimately what they might be doing with what we think is excess capital. As always in these fireside chats, we like to give the CEO the last word. Let the CEO sort of say the key takeaway, the key messages they would like to leave with shareholders today. But before the CEOs wrap up, there is an opportunity for audience Q&A. We are going to be using the Slido app like we have used in previous years. On the website, you will see a link and instructions on how to use Slido. I have been professionally researching the Canadian banks for over 20 years. Of course, every economic cycle is different and creates unique challenges. But the events of the past year have been personally and professionally the most challenging that I have ever seen. Now, I am bullish on Canadian bank stocks and on the economic recovery. But I am also experienced enough to know that I could be dead wrong. The questions that I intend to pose to the CEOs today have in some part been influenced by my discussions with my valued clients, but they may also contain some of my own biases. It would therefore be extremely helpful if you, the audience, participate today with your questions. I suppose it keeps me honest and agnostic, but the real intent really is to make sure that I have not missed anything that may in fact be very important to the investment thesis for the Canadian banks. My intention is to make sure I ask the most popular questions as voted on by you, the audience. With that, I think we can now officially launch our conference, and we will start our fireside chat this morning with Dave McKay, the CEO of RBC. Good morning, Dave, and welcome. Morning, Darko. Can you hear me? Yes, I can hear you very well. Thank you. Before we begin, I've been asked to tell you that Dave McKay'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 the Royal Bank of Canada. Dave, with that, I think we'll kick it off with a discussion on the economic recovery. Really just curious to know, as a starter, how you sort of see it playing out. Are you bullish on the Canadian economic recovery relative to consensus? Do you harbor some concerns? Maybe just give us an overall view on how you think this is going to play out in 2021. Well, thanks, Darko, and I certainly wish I was looking out over the audience and seeing everybody. It's another year of doing this digitally. As I think about kind of the short term and then the medium term over the coming year, certainly we're challenged with a healthcare crisis here. In the short term, one that we have to get control of, one that's going to likely require us to have more stringent lockdowns, and therefore we'll have a very short term, kind of months into a quarter effect on the economy as we lose a few jobs and we slow our recovery. I think how 2021 progresses is really very much about how fast we can source vaccines and deliver them, obviously. How fast we can actually get our most vulnerable part of the population, those 70 years and older are the ones who are being hospitalized and where the mortality rate, as everyone knows, is something we have to manage very carefully and prevent the mortality in our society. So, we believe roughly 4.5 million Canadians, high-risk Canadians, have to be vaccinated before we could really get back to opening up the economy. We could achieve that in 100 days if we have the vaccine. So there's a little bit of, Darko, short-term uncertainty, but I certainly would say I'm on the more bullish side as far as the speed of recovery. We have significant pent-up demand in the economy. We have significant savings that are sitting on consumers' balance sheets, whether it is from not spending last year, which are a large part of the consumer base in Canada, or those who lost their jobs and haven't been able to recover yet. The government programs have certainly bridged that. We have commercial enterprises and corporations that have sat back and will start to use their lines to grow inventory and receivables. I think that if anything, there could be a little bit of pent-up inflation from excess demand in the economy. I am seeing we will manage through this in the short term. It could delay things 2, 3 months, hopefully not more, depending on how we manage the healthcare outcomes in the short term. But net, for the latter part of 2021 into 2022, I am expecting a really solid recovery. We are seeing that with really strong client activity across so many dimensions now, even kind of pre-health management of this contagion. I would say definitely feeling pretty good about things. You mentioned some inflation in there. Is it your anticipation that interest rates should rise as a result? Can you talk to maybe the impact that that might have on the bank? No, I think you have heard central banks certainly communicate that they are moving off to 2%, they are going to have a wider band around that. I think that is to accommodate a lower rate for longer, for obvious reasons, to ensure a strong recovery. I am not expecting rates to go up, but I do think you are going to see strong demand come out of this and a return to travel at some point. There will be strong demand. Those restaurants, food service, hospitality. We still haven't recovered around 600,000 jobs in Canada. We lost 3 million, as you know. There has been about an 80% recovery. We will lose a few more, as I said previously. Half of those jobs are in hospitality and accommodation, another 100,000 roughly in proximity-related services like gyms and yoga studios, and then another 100,000 almost in construction. Those jobs will come back over time, depending on the health outcomes that we can manage. But demand in the rest of the economy, where there is a lot of frustrated spending that is sitting on the sidelines, I think will come back quite quickly. Therefore, you could see a pressure build up in demand for travel, demand for other services. I do not expect rates to go up in the short term. I think you have seen that signal, but you will see a little bit of pressure. Certainly markets, bond markets, are starting to reflect that a little bit in some of the treasuries out there. Now, sticking with the economic recovery, your bank has had quite a strong year in mortgages. I think Canadian mortgage growth was somewhere around 11%. I think the peer average was around 7%. On the Q4 conference call, you mentioned that mortgage growth is expected to slow going forward. What is your longer-term outlook on the Canadian housing market, and how do you think your growth in 2021 will compare to peers? Yeah, as you saw, we entered for us. We had momentum across every one of our businesses, and we were able to carry that momentum even in a reduced economy that is very strong volume performance across all customer segments and business lines. We are feeling very good about the client activity that we are seeing. Specifically, as you talk about the mortgage market, as we exited the year, we certainly looked forward and we said, "Will this demand sustain itself?" Well, I think we have been surprised to the upside that certainly you have seen mortgage activity and resale activity, purchase activity continue to be very strong through the end of the year. So I would say if anything, we are feeling pretty confident we will beat that forecast of slower growth. We see growth continuing quite strongly right now in the mortgage market because client activity is there. If you go back to the drivers over the medium term in the mortgage market, we are certainly feeling good about where we are. You are seeing growth and demand driven by consumer changes in the type of housing they want, relocating. You are seeing more rural areas shift into high demand. You are seeing a little bit of softness in condo demand right now. But I expect that to come back because we have seen net emigrations over the last quarter. In Canada, we obviously slowed down immigration because of the pandemic. You will see a surge of immigration again come back in. Strong demand for a number of categories, but certainly for the condo and housing market in Canada. So we have always talked about demand-supply in the mortgage market in Canada, and we feel very good about consumer household formation, immigration, strong demands, smartly managed supply. If, in fact, a shortage of supply, particularly in single-family home, is still quite acute. You've seen house prices remain very strong too, are up double digits this year because of that shift in consumer behavior. I'm feeling very good about the mortgage market. The outperformance that we've shown is because we've re-engineered our entire process. We talked about moving up the funnel, trying to capture customers earlier on in their journey to find a home or to buy a new home, sell a home. We've managed our adjudication, our fulfillment, our retention processes are all a lot stronger. We've increased the sales force. All of that work over the last three or four years has really resulted in a very strong mortgage origination retention business for us. You've seen the outperformance, very significant outperformance in the mortgage business. I feel very good about the cards business. It's obviously one that's been most acutely hurt by the lack of spending we just talked about in the economy. I think our cards balances are off almost CAD 2 billion as our high-yield business for us. With a resurgent economy in the back end of 2021 into 2022, you're going to see that card business come back strongly, and I think that is a good source of earnings. You're seeing momentum across our wealth franchise, both in the United States with double-digit growth, commercial and wealth, and in Canada, very strong performance in markets. Client activity on the capital markets side is very strong. We had a very strong 2020. Momentum's there into 2021 as you start to see M&A activity pick up on both sides of the border and into Europe institutional, obviously on the trading side is very strong. We feel that that momentum is carrying through in many parts of still the riskier part of the health outcomes, and we expect that to accelerate through the year. We feel very strong about the positive client outcomes and client activity that we're seeing. You touched on a lot of things there. You touched on cap markets a little bit, but it sounded like you tilted a lot of your commentary there towards retail. Do you see this as a retail-led kind of recovery or commercial? From the outside looking in, we often have difficulty peering into seeing what the commercial borrower looks like. Are they in good shape? Are they confident? Are they willing to borrow and grow their businesses in 2021? Maybe you could talk a little bit about the commercial loan growth outlook for the industry, maybe, and RBC relative to that, too. So maybe I'll just say something quickly about this. The last 10 cycles over the last, what, 30, 40 years have all been retail-led, consumer-led recoveries. Again, I would say this is going to be a consumer and is a consumer-led recovery. You have not seen a resurgence of utilization of commercial lines. Utilization is still down quite significantly. You haven't seen an inventory build yet, but that confidence will start to come back. The consumer's in a very good position to lead this recovery. What I worried about as we were preparing for a cycle pre-pandemic, was the amount of debt that the consumer was carrying in relative to their cash flow. They didn't have a lot of surplus savings heading into this pandemic. Because they slowed down their spending, because of the strong government programs, I mean, we lost CAD 35 billion in wages. We replaced that with CAD 90-plus billion in government programs. So there's CAD 60 extra billion of discretionary income into the economy just from the government programs, plus the savings around lack of spending. All that is poised now to withstand the volatility in the short term, but also position us for consumer-led recovery coming out of that. I think that's really important. Very different than going through a normal cycle with high leverage, lack of savings. So that's why I have some of the confidence of exiting this that I was concerned heading into a potential recession as we looked forward to end of 2021, 2022, and what would the normal economic cycle look like. Commercial enterprises are surprisingly resilient, partly because the government programs, but largely because we had such a bull cycle at the mid-market level that they had conservative balance sheets. They've managed very well through this. They've reduced their inventory, obviously. They've managed their cost structure, and they're poised to exit this. There are some sectors that are obviously struggling in retail, hospitality, food, accommodation. We talked about proximity-based services. All of that will take some time to recover, and we will see that impact certainly on the small business market. We've talked a number of times how this is so hard on Main Street in Canada. They don't have access to the digital world to recoup and move where their customers move. We have to help them with that. Therefore, the longer it takes for us as a society to get back to opening up Main Street and opening up our businesses, it's going to be hard on the small business side of the economy, and that's where the government programs are going to have to be targeted to certain sectors like retail and helping them with their overall rent profile. Transportation obviously is going to need help and continued support, and we're going to have to help through programs like CEBA, continue to help those small businesses bridge what's going to be a little bit longer period of uncertainty around managing health outcomes. I think consumer-led. We have strong commercial corporates, good amount of equity on balance sheets. Therefore, with the window at the end of this tunnel and the strong liquidity on consumers' balance sheets, again, I'm feeling pretty good to very good about where we are in the overall credit quality of the country and at RY. Maybe we can bring all that together and think about balance sheet growth. I think maybe you can talk a little bit about, it sounds like clearly consumer might be stronger than commercial. But also maybe speak to some of the other pressures that we've seen on the income statement. I mean, net interest margins in the P&C, banking, and wealth segment decreased 17 basis points and 76 basis points, respectively. So what is your outlook for NIM in 2021? If you could bring in some thoughts on balance sheet growth as well, and I'm not sure if you're willing to talk about numbers around balance sheet growth, but anything you offer would certainly be welcome from the audience. Some of our strengths are actually our biggest challenges when you see such a rapid decline in rates. The rapid decline in short-term rates had certainly an impact, and obviously the decline in 10-year treasuries and long-term rates had an impact on our business in the U.S. and our wealth franchise had an impact on one of our core assets in Canada, which is the strength of our core checking business, and the yields continue to come down. So in the short term, year-over-year, we're still dealing with a lower rate environment than we were operating under in Q1 last year and into early Q2. So you will see a little bit of compression in Canada around that core checking business. I think the number one impact at the top of the house and at the Canadian banking level is certainly we're operating a lower income environment. As that normalizes and as the economy starts to come back, you should see that stable. When rates start to go up, we obviously expect to recoup that strongly. So I'm really happy how we've absorbed that net interest income shock and how the strong volume growth that we've shown has helped us show very good performance and outperformance from that perspective. The second driver of the NIM impact is a mix shift. If you look at Canadian banking mix shift, you're seeing that CAD 2 billion decline in our credit card balances, which is our highest margin product because of the risk and the cost of running the program. Therefore, that has an impact on NIMs. Then you've seen the largest category of growth in our mortgage business, which has lower margins, and therefore, that mix shift would be the second order of impact on our NIMs. That mix shift will start to kind of continue, I would think, in the first half of the year as we see more mortgage growth, slow recovery in the credit card business. But then that credit card business should help our NIMs towards the back half and certainly into 2022. The third impact at the top of the house, but certainly a little bit into the Canadian banking franchise, is the surplus liquidity that we're carrying. Obviously, we can't place that into higher margin credit card loans or mortgages or consumer loans or business loans. We're carrying that surplus liquidity in a very conservative profile. That overall at the top of the house lowers our overall NIM. So as some of that alleviates, as we put some of that money to work, as consumers spend that money, obviously you'll start to see NIMs recover a little bit from that. So those are the, Darko, the kind of three major parts that come from a source of strength, high deposit balances, very strong credit card business that's impacted in the short term, and significant growth in our mortgage business. So I would say our revenues have been solid. They've been almost flat to slightly growing despite the significant margin compression, which we'll recover. So I feel very good about why it's happened and where it's going to go. It sounds like the recovery really in the NIM sounds like it's a back half phenomenon for 2021. Maybe you can touch a little bit about fees, on the fee side, what you're seeing. I think people want to know a little bit about the capital markets and your outlook for revenues there. You touched on it a little bit earlier, but last year was a really good year in capital markets, and everybody's sending me emails about what are the odds that RBC can repeat. So maybe you can talk a little bit to that as well. Certainly, it's going to be a different year. Last year we had enormous strength in our fixed income business and our debt origination businesses. As we went through the first wave into the summer of this crisis, we saw so many of our clients shoring up their balance sheet, issuing debt primarily, some equity issuance and certainly the hedging that went on and overall trading primary and secondary within our trading businesses. You saw those results were so strong through Q2, Q3, and into Q4. You can't expect that type of debt origination to replace itself. But what is happening is you're seeing a resurgence of M&A activity, advisory activity. You're seeing good corporate lending opportunities within those same client needs. Therefore, I think you're going to see a strong year at our capital markets, but a different year. You'll see kind of better performance in the investment bank and the corporate lending book. Obviously, they won't have the same, knock on wood, we don't think in any shape or form that we're going to have the same credit environment that we're well provided for. It was quite impressive to see the global capital markets operation largely earn through those stage 1 and 2 provisions that we took last year. Therefore, as that comes off, that will be a little bit of a tailwind just on the performance side. So a good client activity across the board, but you can't expect the trading operation to do quite as well, and you'll have to earn some of that back in the investment bank. Thank you for that. That's a great segue, I think, to sort of get to credit quality and touch on that. Now, one of the things that we noted with RBC is in the fourth quarter, Royal did not specifically guide to any range or figures for PCLs in 2021, and some of your peers have. Maybe this is an opportunity. Could you provide maybe some additional details or color on your credit outlook for 2021 and beyond? It was a little harder to see towards the end of the year, and certainly we've been growing strongly, so we've been taking provisions for underperforming loans for growth. The whole IFRS 9 concept is to continue to do that when you grow your balance sheet, you provide for future loss. We downgraded our scenarios towards the end of the year slightly, as you heard. Took a little more negative pessimistic view, which caused us to top things up from that perspective. But because of the amount of liquidity that's on consumers' balance sheets, we started, I guess Q4, Q3, the uncertain journey of the CAD 50-plus billion of loan deferrals, how would they perform? I can tell you as of last week, we're down to less than CAD 1 billion of loan deferrals in the consumer book, mostly in the mortgage side with negligible losses. I think vast majority of these loans have all returned to payment status or have been restructured, renegotiated. But the vast majority have gone back to payment status. We didn't know six months ago how that was going to perform. That's because we've got 2.4 million of those jobs have recovered. So our clients are back to work. We've got strong support of the government programs. We've got liquidity, and that spending and that savings that have occurred has built the first buffer consumers have had in decades now. Consumers, as we've reported over and over again on the economic side, have been running very close to the line on the cash flow-to-debt ratio. The slowing the economy down because of this pandemic, spending less, building up a savings buffer is also good for the credit side of the business as there's more resilience built into your customer base. We're seeing all of that manifest itself in our credit losses and certainly in our deferrals and return to payments. We don't see a need. We think we're very well provided for on our performing loan book. We do not see a need to increase, other than for growth, in normal growth, our stage 1 and 2 provisions, unless there's a significant change that's from what we currently see. We'll see how we deal with the health outcomes over the next three months. We feel very good about our credit provisions. Going into the year, we see a stronger economy at the back half of the year. I think that's part of the reason why I'm optimistic. In your answer there, you mentioned that your deferrals are down to just CAD 1 billion. Is there and should there be an expectation that you mentioned that very few of the or most of them have returned to this sort of payment status. Should we, though, expect that some will still fall by the wayside at some point and go delinquent and fall into default? What is your view on an increase in impaired loans? If not, how does the release, how do you see the stage 2 being elevated? You mentioned you were very well reserved. How do you see that playing out over the year if we don't get the impairments coming? Is it going to be one great big giant release in one quarter, or is this something that will sort of ease its way through, and maybe we'll have elevated stage 2 allowances all the way through 2022? I think it's probably going to be a progression, obviously, the same way you've seen us kind of manage it over the last quarter or two. It's not going to be all of a sudden necessarily the world changes, and we revise all our five scenarios to extremely positive overnight. You'll see us watch the health outcomes. You'll see us watch the job recovery. You will see us watch the delinquency in the portfolio and how the economy's performing, and we'll revise our scenarios that drive our stage 1 and 2 perform loans provisions on a regular basis, certainly quarterly. So I would expect that would lead us to kind of moderately improve our outlook, and therefore, the change in those models will drive a reduced need for provisions on performing loans, and then those can be re-released into the P&L. I think that would be versus all of a sudden, we wake up, and all the models change, and we have a significant release. So it's going to be obviously a progression over time as we watch the economy recover. As far as delinquency, you have to expect that we're not going to recover all of those 600,000 jobs, or it'll take a long time. Some of those will migrate into non-performing, and therefore, we feel we're very well provided to move stage 1 and 2 provisions into stage 3 provisions at that point. Okay. Moving on then to our other theme, which is capital. Very curious, we get lots of questions all the time on capital. Clearly, we have some restrictions, but let's run under the assumption that restrictions will eventually be removed. When we think about deploying excess capital over the next couple of years, I guess we could sum it all down into what is your view on and what are you focusing on more? Is it going to be ROE improvement, or are you focusing on earnings per share growth? If you can give us some insight into that would be, I think, helpful for people to sort of see which way you're leaning with respect to what your preferences are in capital. We've certainly kind of reaffirmed our medium-term targets, which are really we want to be a premium ROE producer, and therefore, we feel we have the client franchise, the risk profile and strength and scale to be a premium ROE organization. I think investors have to look at this capital's not burning a hole in our pocket that we will put it to use productively to drive our performance towards those medium-term targets. We want to be a premium EPS grower, but not at a low ROE. Therefore, we are very much focused on being disciplined around our client franchises. So we feel we've got really very significant organic growth opportunities in the U.S. You've seen that with the 20-plus percent growth on deposit and lending side. We have a number of new strategies coming to market that we deferred because of the pandemic. We're opening new branches and new markets. You'll continue to see us really push for organic growth in all our markets. Canada, we're performing very significantly. Having said that's not going to consume all the capital that we can earn, plus the capital that we built up on our balance sheet. Therefore, we are very conscious of scaling our business, particularly in the U.S., in those focused customer segments that we've talked about, in the business segments that we want to grow and we feel we can compete in the long term that drive high ROE, premium ROE, low volatility growth. That's certainly in the wealth advisory business, that's in the private banking business, and that's in the commercial business in the U.S. We feel that we have a competitive advantage providing complex solutions to those customer groups. It's not an arms race on technology. Scale helps, but it's not mission-critical scale that you're seeing in the mass consumer side. There is an arms race to build scale because margins are coming down. There's new competitors coming in, technology leaders like the big three banks are pushing that business in a very different place. We're competing for a different customer with different needs where it's a different game, and we picked that purposefully to focus on private banking customers, high net worth, ultra high net worth, high end of affluent, commercial, specialized commercial banking and wealth advisory. Those businesses we feel very strongly about, and therefore we would put capital to work that allowed us to scale those businesses, whether it's in new geographic markets. But we're very much focused, Darko, on those customer segments and continue to be active in trying to find solutions. It has to work. I've seen far too many acquisitions not work in the marketplace, and therefore it has to be a cultural fit. There has to be synergies that drive that premium return over time. We're disciplined about that. Because we have strong growth opportunities without it, we're not going to make a mistake. But we're very active in thinking about how we can scale those franchises. Can you maybe just give us a bit of a reminder when you think about scaling those franchises, maybe some of the parameters around building scale. Does it mean that accretion comes in 2, 3, 4, 5 years? Does it mean how much dilution are you willing to accept in perhaps chasing up some scale? I think we have significant scale to grow organically, as you've seen. I'm not worried that I can't grow this business if I don't add an inorganic piece, which is why we made the City National acquisition, which is why we've invested we have. We can continue to do what we're doing for a long period of time, which I feel very good about. Scale would accelerate new markets for us and build a core base of brand and operations in markets like Washington or Nashville. New York, certainly are core markets for us outside of obviously our natural strength in California. I think those are markets that we really like, and I've talked about before. I think from that perspective, as far as the dilutive impact, it depends what the upside is to the investor and to the organization. If we see a very strong trajectory 3 years out, it's going to take us a little bit of work to consolidate, but the returns are going to be very strong. We're playing a long-term game here. We're not playing a short-term game. Therefore, I am very conscious of dilution in the medium term, and we certainly would look to accelerate the returns towards the shorter end of that curve. But it depends on the opportunity to really grow the business. But again, it all comes back into continuing to drive that premium ROE performance continuously throughout our medium-term objectives of 3 years. So we're trying to balance everything. Assets are, as you know, are pricier, getting pricier as we go, and you have to be sure-footed on your synergies. There's lots of strategic stories that hold at the top investor presentation that don't hold operationally. I think what we've done very well with City National, the discipline and the capability our teams have now is to drive very clear discipline, synergy strategies, and synergy maps that really execute well. I think that's the key. Strong operations, strong operational capability, and integrating and being very clear of what you're going to do with the franchise on day 2, I think leads to successful outcomes. I think that's where we spend our time. There's lots of things that are called strategic that don't feel very strategic a year later, and we're focused on that. Okay. Thank you for that answer, and I think we now will flip over to some of the questions that are being asked via our Slido app. The top voted question so far is an interesting one, given what COVID has done and forced people to really learn how to use the mobile apps and do a lot of things on the internet. So what is your thought process on the possibility of closing some branches? Can you talk about your branch strategy and any changes to it? I think clearly there's a short-term aspect to this question and a longer-term one. So Dave, over to you. We're still driven by customer preference, and our branch channels are still very strong client acquisition channels, and we can't forget that. We're outperforming on the client acquisition side because we've done well with our branches. Having said that, we've pared our branches back. We slowed that down, if not stopped that largely during 2020 because of the pandemic. I would expect to see us pare 3%, 4% of that over the coming year in 30 to 50 branches and continue to take a hard look at how clients are using branches. Certainly, we can reduce the footprint of the branches, and we shortened our leases to give us more flexibility. I think everything's positioned to watch how clients come back, how they use the branch. Does it continue to be a valuable part of our overall multi-channel or omni-channel strategy? So far it is. A lot of client activity still goes through the branch. We'll see what sticks with consumers and what changes through all of this. Our strategy's never been to try to change our customer and to close and see how they react. It's to really understand and watch how the customer's interacting with us, and then to retrofit the overall omni-channel experience. I think from that perspective, you'll see us continue to close branches, and the pace of that will be dictated by the customer. Okay. A related question is the next question. It's RBC is back in the market offering free iPads as part of customer acquisition strategy. Has competition for clients accelerated recently? It's always been a competitive environment. For us, we've always felt that we wanted to start our relationship with a core checking account if possible. We've I think I introduced the iPad program seven or eight or nine years ago. The fact that we're still doing it is a pretty strong signal that it works, and it's important to incent customers to try. We feel that we've got such a strong multi-channel experience. We've got great service brand. We're number one in JD Power in service. Your challenge in the category of retail banking is to create trial. Because once you see trial, once a customer experience is kind of the number one digital capability, the number one branch service capability, then we feel very good about our ability to grow that client, retain that client for a lifetime. The strategy is trial, and trial, we feel, starts best with the core checking business. It can start with a mortgage. It starts second best with credit card. But creating trial is really important, and it is a sticky category, so you have to make the investment in the customer acquisition side to start a relationship. We are trying to change that through ventures, as we have talked about, and ventures have been very successful in small business side and in the mortgage side in moving customers from other platforms onto ours. We will continue to invest in that capability to change the game. But still, the incentive to a customer to create, to try something different. Because of the lifetime value, because of our ability to cross-sell, and we have the number one cross-sell ratios of a transaction account into an investment product, a transaction account into a credit product. Those returns allow us to offer something like an iPad because we have got a decade of experience now in cross-selling successfully into that relationship and earning a strong ROE in return. Excellent. We are at that stage now where, Dave, I would like to turn it over to you for some final thoughts and what are the key messages you would like shareholders to take away from today? Yeah. As you heard, I am feeling very good about our position. We have got very strong balance sheet with our CET1 ratios, strong liquidity. We withstood this. Our credit profile is very strong, and it has played out. You saw a very strong performance in our stage 3, and obviously, we have been very prudent in taking stage 1 and 2 in performing loans. We have got enormous momentum in the business, and this is a momentum category. So strength and stability combined with strong momentum and scale, technology scale, brand scale, and data scale, I think is the winning combination to take advantage of the recovery in the economy and the growth profile. When you have the momentum, someone has to take it away from you. We delayed a number of things last year because customer incentives programs, new products. We pulled many things off the delivery schedule because customers weren't ready for it. We were very much focused on the pandemic and getting through. With the momentum we already have, we have plans to introduce a number of incentives to accelerate growth coming out of this in 2021 into 2022. Therefore, I feel very good about building on the current momentum we have and continuing the outperformance that we've seen across our businesses, retail, U.S. commercial and wealth management, capital markets, Canadian wealth management, asset management. We're seeing that strength across the franchise and the collaboration and the cross-sell among retail to wealth, commercial to capital markets, U.S. wealth and commercial to capital markets in the U.S. is only being enhanced right now. We can be even better than we are now. I think from that perspective, I feel very good about where we are, the decisions we've made, and that we've got this enormous flexibility and optionality because the amount of capital we have to do a number of things to position us to outperform going forward. Dave, thank you so much for participating today. It's always challenging to do these things virtually. I do look forward to seeing you and doing this again in person. But thanks very much for your commentary today. As do I. Good luck with the conference, Darko. Great. Thank you. Thanks. With that, we'll close this session. Thank you.