Barclays Global Financial Services Conference 2019

Sep 11, 2019

Okay, ladies and gentlemen, we'll start off with the next round. Very happy to have Rod Bolger, who's the Chief Financial Officer of Royal Bank. Rod, thanks for joining us. Thanks, John. Let me just start off with a broader question on macro. There's a lot of concerns right now in terms of what's going on, headlines, Twitter, what have you. What's Royal's stance on outlook? While it may not be the base case, how is the bank preparing for the possibility of an economic slowdown? Yeah. Well, part of our role is to prepare for that slowdown and be ready when it happens, and not necessarily try to time when it happens. When you look at the economic data out there, it continues to be strong. It continues to be robust, both in Canada and in the U.S. You look at the employment numbers, they're quite strong. You look at wage growth, wage growth has been strong. Consumer sentiment has come off a bit lately, but that is a survey. The consumers still seem to be buying. You look at the housing starts in Canada recently, were very strong. I mentioned payroll. If you look over the last 12 months, payroll growth in Canada has averaged 39,000 a month, and in the U.S., 173,000 a month. Just compare those two and think of the U.S. being 10X the population of Canada, so with 39,000 versus the 173. The Canadian employment picture is quite strong. Companies are investing, companies are hiring. So those headlines, they sell newspapers or get eyeballs to the websites, and that is how they sell ads. Help the Spotify. Exactly. It sells ads. But the underlying themes, especially when you look at credit trends and business activity, remain strong. Yes, there is always uncertainty. There is uncertainty with elections. The Brexit uncertainty is certainly greater. The trade uncertainty is strong, but trade uncertainty has been strong since 2016. It seems to ebb and flow on a day-to-day basis. Our job at RBC is to help clients manage through that, and to provide banking and advice and credit and cash payment services throughout those times, and to bring customers into the bank that we want to bank with over and through a cycle. We are not trying to time that cycle and shut out customers that we would want to otherwise attract. If you look at our third quarter results and our year-to-date results, we have been doing that. We have been growing market share. We have been increasing revenue. We have had record earnings in Q3, and that was in a choppy market period. So we had our market businesses underperformed versus the prior year. Our retail businesses, both our Canadian bank, our P&C banking business in Canada, and our wealth management business both in Canada and in the U.S. also had a record quarter. So we continue to manage through this cycle. I think one more thing about macro is, yes, this is the longest recovery on record in the U.S., and there is a lot of reasons why those recoveries are getting longer and longer due to manufacturing, service sector, supply chain, all that good stuff. But in Canada, there was no dot-com bubble burst, and so the previous recovery in Canada was over 18 years. So just to match that, Canada can go another 5 years. Now, will that happen? I do not know. We might exceed it, we might match it, we might fall short of it. But the activity is still strong. I think one of the things that gives myself and hopefully investors confidence in Royal is the strong capital position that I believe, if I am correct, 11.9% last quarter. Are we going towards 12% as the new norm or are we holding onto capital to be a little bit more defensive at this stage in the game? Or should we be waiting for the next big acquisition? You look at the capital ratio, and certainly if there was to be a downturn, if there was to be a moderate recession or a more severe recession, certainly liquidity is always front foremost for banks, but capital is also equally important. We want to have a little extra buffer if there is a downturn. So we consciously let our CET1 ratio sneak up towards that 11.9%. Do we need to get to 12%? I do not believe so. We base this off of our detailed and thorough stress test that we do under multiple scenarios annually and on a recurring basis when something new comes up in the economy. We want to make sure that we are well-positioned to absorb any sort of downturn, whether it be a market-related downturn and it impacts our market-related businesses, or a credit-related downturn and it increases our credit losses. We want to have that extra buffer, and we are comfortable with that. I would not say that it is anticipation of a pending acquisition. We continue to look at acquisitions. We are always curious. We are a very curious bank. You look at is there an acquisition out there that might be a strategic fit, a cultural fit is extremely important. Something that operationally makes sense, and something that is financially beneficial for our shareholders and our clients as well. We are on the lookout for that, but there is nothing that is imminent that would utilize that buffer that we have right now. I think I am going to try to preempt the audience by asking a question on credit. I think I know the answer, but I want to hear it from you. At this stage in the game, should we be actually concerned about the credit cycle turning? Because the strength that we have seen from not just Royal, but the Canadian bank system-wide, has been quite impressive. I think we are all waiting for something, but what are the indications and what are you seeing on the horizon? Yeah. I think if you look at the credit cycle over time, 2018 was a bit of an anomaly. Impaired loan formations, write-offs were at cyclical lows, and I think at lows that you are not going to see for some time. Not only that, but for the Canadian banks in particular, and for RBC in particular, we had written off a number of accounts in 2015, 2016 from the oil and gas downturn, and we actually saw recoveries from those. So you had an artificially low charge-off period in 2018 that was actually driven even lower by those recoveries. This year, when you see a quote, "normalization of credit" back to levels that I think are appropriate and reasonable for a recovery timeframe. They are still below what you would see in a downturn or a through the cycle type scenario. But they are right about where we would expect them to be. When you look at the trends, whether it is early-stage delinquencies, late-stage delinquencies, watch lists, the consumer continues to be healthy and commercial businesses and corporations continue to be healthy. Yes, you will see more, we call them one-off. All the banks had one-off credit issues in Q1. We had another one-off issue in Q2. But those were not really one-off issues. Those are what you would expect if you are lending at the levels that we are lending. In Q3, we saw a slight downtick versus where we were in Q1 and 2, and that is to be expected as well. It is not that everything got 100% rosier. We are right in the sweet spot of where you would expect to be in a continued recovery. Are you confident in your operations south of the border? I am sorry? Are you confident in your operations south of the border? In the U.S. Yeah. The trends in City National continue to be quite strong. I had dinner with a number of clients last night from across the U.S. and across multiple industries. They are still seeing strength in their client base. Again, the employment is strong. People are employed, and when people are employed, they are able to pay back their debts. In the U.S., we did see a slight uptick in City National. But again, the previous three or four years, we had almost negligible charge-offs in City National, and so to have some losses is what you would expect. But these are losses as what you would expect at a Canadian bank. Not many U.S. banks with commercial and private banking would have losses as low as City National does. So yes, the numbers are up, but the basis points are still very reasonable. Fantastic. Right before I open up to the audience if you have any questions, can we start with the first polling question, please? How likely do you view Royal executing the U.S. acquisition? Likely and positive for its valuation, likely but negative for its valuation, neutral, meaning you don't have any idea, unlikely but positive, or unlikely and negative for its valuation. Depending on how you look at the response, you can take to the board or not. I definitely think that even though your commentary about not being imminent, there is a belief that the capital ratio is there for a reason. But in terms of needing to do an acquisition, I don't think that's the case, but what do you see the outlook for City National in particular in the U.S. in growth? Well, I think you look at what's the strategic imperative there. We've actually done two small fintech acquisitions for City National since the acquisition and merger with RBC almost four years ago. We recently completed the FilmTrack acquisition. We've also completed the Exactuals acquisition. Before we acquired City National, they had also bought a fintech as well, which was critical to their success. These are the types of acquisitions that give them capability with clients and industry verticals to be more relevant to clients and to be able to provide intelligence for clients and the royalty systems in the film industry, the payments businesses. They help us attract more deposits as well. So we are willing and have done some acquisitions, but when you look at how necessary is it for us to do another acquisition, we believe that our growth path, and we call it the organic plus, organic growth plus. So we have accelerated that growth at City National by expanding into new markets at an accelerated rate. We've also filled out our presence in California. So yes, we've hired a lot of bankers, but many of them have been in California where we already have the brand, we already have the market share and the presence and the brand recognition. But we've also significantly increased our presence in New York. We've added offices and branches in Washington, D.C., Minneapolis, where we have a presence with our U.S. private client business. In Boston, we've expanded in Atlanta and Nashville. When you think about some of these markets, they're great markets with deep wealth, and they also have entertainment industry frequently. So these are industries that we do well. We have strong bankers and strong product, and we're able to build out that capability. Would an acquisition at the right price with a good cultural fit be something that we would like to do? Yes, at the right price. But it is not imperative, and we are not going to just shift value from our shareholders to another bank's shareholders unless it can be the platform for organic growth that City National has been for us. When you look at the current state of the U.S. economy in terms of banking and the interest rate headwinds that banks are facing, the prospects for growth for many of these banks are not as robust as they were. We benefited City National by having this expanded sales force, this expanded capability, and being able to generate double-digit loan growth means that if there are, and when there are interest rate headwinds, we still have high single-digit revenue growth rather than double-digit revenue growth. That is a good problem to have. Yeah. No, absolutely. You mentioned a couple of times, but I think that the cultural fit. How difficult is that? Because for me, that would almost be the key impediment, particularly with the asset that you have with City National. Yeah. I think cultural fit is absolutely essential. You see many deals that look good on paper, but because it was not a good cultural fit, the pro formas and all the benefits that were modeled out just do not come to fruition. If you cannot keep your customers or you cannot keep your bankers, it is not going to be a recipe for success. If you do not have that right cultural fit, you are not going to be able to do either of those. For us, when we were looking at City National and when Dave and Russell were talking for a couple of years, the cultural fit was essential for us. We felt that when we met with the leaders at City National, that we were almost looking in a mirror. The cultural fit was that strong, and as a result, it has been very beneficial and enabled us to generate outsized growth in City National since the acquisition. Fantastic. Rod, I'll pause here and see if we have any questions in the audience. No, it's a shy group. Rod, can we talk about growth expectations in Canada? One of the interesting things that I find with Royal is you've got top market share in most product categories across the line. How do you believe that you're still going to be able to take market share, particularly with the push for growth in Canada by all your competitors? Yeah, Canada's an extremely competitive market with very strong banks and very effective banks, and all the banks are quite good and all have very high satisfaction rates. As we look at it's how do we be more relevant to our clients? How do we add more value? How does the advice that we provide, or the tools and capabilities that we provide, attract new clients to us and then deepen the relationship with our existing clients? I think there's many routes to how we've been able to succeed at growing market share, which we have been doing this year in our core franchises. Part of it has been our investment. We have been investing faster than the industry, not only in technology, but in RBC Ventures, which we outlined at our Investor Day a year and a half ago. Have we seen a ton of new checking accounts come out of that yet? That's not necessarily the goal. The goal is to provide services and ideas for clients that are relevant, that may yield new checking accounts and new banking relationships down the road. But we're running it as an independent venture, and we now have 17 apps up and running that are attracting clients. We're going to be disclosing a little bit more of this in our fourth quarter results to give an update on the Investor Day. That's one way that we're doing this. Another way is we took a look at some of the data that we are seeing in our branch network, and that's always a hot topic with banks is what are you going to do with this branch network? How obsolete is it? As we took a look at the data, yes, we saw a consistent 5% decrease in foot traffic. But what does that mean? It actually didn't mean that customers were spending less time in our branches. They're actually spending more time because of our digitization, because of our effective and leading-edge mobile apps. They don't need to go into branches. Our clients don't need to go into branches for transactional needs. They are going in for advice, for problem-solving. We took a look at that and said we can't actually significantly reduce the headcount in branches, but we can reduce some of the square footage. But we need to also have associates in the branches who can meet those needs and provide advice and have more time for advice. As we've been investing in digitization, it's how do we take some of the clunkiness out of some of the renewal activity for clients and make that simpler without adding more risk to RBC, and actually lowering risk. If you're spending less time on mundane paper tasks and more time on providing advice and understanding a client, you can actually reduce your risk, reduce the time it takes, and increase your renewal rates, which then basically becomes a nice flow. If you increase your renewal rates, which we've done on mortgages by 4 points over the last couple of years, boom, your growth rate can improve dramatically, and that's why we've seen our mortgage growth rate accelerate from 4% last year to 5% to 6% in the most recent quarter. We see strong volumes continuing. We've seen strong volumes on the commercial side. We've seen strong volumes in wealth management, both in our asset management business and our DS private client business. We've seen several quarters where our clients and investors have been on the sidelines waiting to see what is happening out there in the economy, and yet we've seen net inflows, and the rest of the industry has seen net outflows. We like to look at where's our fair share of new client acquisition and volume growth. On the banking side, we've been up around a third of the volume growth in the market we've been able to achieve, which compares to our market share of 20%-25%. That's helping us grow the market share. When on the wealth management side, some of those numbers don't make sense if there's outflows in the rest of the industry. We continue to try to push for this. But again, it's driven by what's the client need and how can RBC differentiate what we're providing. That's fantastic. There's a couple items in there that I want to drill down, but touch on first the branch optimization. How far along are we on that path, and can we expect to see incremental synergies as you continue to optimize the, I guess, mainly the square footage? Well, when we bring the branch strategy to the board, we actually don't have one strategy. We have multiple paths that we might take depending on how our clients react. When you look at where we were 2, 3 years ago, we were taking headcount out of the branch. But we've actually, since then, we've actually added more into the branch because what we found is our colleagues in the branch didn't have enough time to provide that advice with clients. They were saying, "I can meet you in a week or 2 weeks' time." Well, that's not good. If a client is in their branch looking for advice and we can't meet with them in a timely manner, that is not a recipe for success for our client, for our employees, or for our shareholders. We took to stem that. We actually added FTE into the branches and resources into the branches, and also have gone through training and whatnot to make sure that they're skilled and enabled to meet those needs. So where is this going to be in 2 to 5 years? There's multiple paths it could take. I would also say things that surprise people from time to time is we have great mobile tools. Yes, you can open accounts just using your phone. But still, millennials and youth, young people still like to go into a branch to open that first account. Now, you and I would go into the branch to open the second and third account just because we're dinosaurs, right? Whereas they will not go into the branch to open a second or third account. Now that they have that connectivity, they don't need to, but they still oftentimes go into the branch, and it's a mobile assistant, but it's still a person assistant. We're a technologically enabled relationship bank, and that's very important. You also, if you look at customer satisfaction, the proximity to a branch, even for people who haven't been to a branch in the last year, is higher as they're closer to a branch. So just having that comfort level, knowing they could go into a branch even if they don't have to, is still important. So distribution matters. I don't want to preempt your disclosures on Q4 on RBC Ventures, but I find it absolutely fascinating and something that RBC has differentiated themselves with. Can you talk about a couple examples of what is in RBC Ventures for those that aren't familiar with it? But secondly, I guess from the CFO standpoint, how are these being funded and is there expectation of a payback even if you're not getting checking accounts out of this? Or is this more of an experiment to see how this evolves? Yeah. Well, I'll give an example. Ownr, which is O-W-N-R, so it's catchy, there's less vowels, and as CFO, it's cheaper to buy those apps. automatically. Yes. That's been one that's been quite effective, and that's one where we enable entrepreneurs to basically incorporate and fill out whatever province they're in, whatever type of business they're in. We let them know all the forms, the bureaucracy that they have to go through to open up a business. We had invested in taking a small stake in a fintech called Wave, which provided accounting software for small businesses. We also have AI tools there that help you with branding and logo and things like that. We can be a one-stop shop for entrepreneurs and small businesses to open their business in a much more refined timeframe. They don't have to pay all kinds of fees to figure out how to navigate the system. Oh, by the way, at the same time, we can do some credit checks and see if they qualify for a checking account and/or credit card. So that's an example where we are differentiating ourselves, and we're able to help the community, help entrepreneurs, help small businesses, help employment, at the same time as hopefully growing our share of new accounts in that addressable market well above our 20% to 25% market share, maybe 50%, 55%. Those would be the types of goals that we would have from that. When you look at the type of investment that's necessary, it's essential. We decided this, and Dave McKay, our CEO, decided this, and our board decided this, and our group executive and leaders within each of the businesses decided this several years ago, that this was necessary to fund. We have to become more relevant to our clients and be relevant 10, 15 years from now because banking will change. These are not things that banks that are easy to fast follow either. So we believe that we'll be demonstrably different in the marketplace through these ventures. The investment when you have the scale, that's another element. We have the scale to invest in this such that it is not noticeable to the outside eye from an operating leverage. We still have very strong operating leverage in this business. Since we're growing volume and revenue and earnings at a higher rate in our core Canadian banking business, we can afford this, and it will hopefully pay dividends for years to come. Fantastic. Give you a quick break. If we can do the second polling question, please. What's the most undervalued segment in Royal's operations? Capital markets, wealth management, domestic retail, Investor and Treasury Services, or insurance. That's interesting. Not necessarily Investor & Treasury Services, unfortunately, where we are today. I want you to touch on wealth management, but I actually find insurance very interesting. Usually, it's something that is almost an afterthought when it comes to Royal. Can you talk about your strategy in insurance and what you're seeing on a go forward? Sure. I think this points to what I touched on earlier, a diversified business model, right? If one business is in favor, another business is out of favor, and we're able to achieve through that. Over the course of a year and at a medium-term horizon, 3-5 years, businesses will perform well and grow market share. In terms of insurance, that's a smaller business. I think we made about CAD 780 million last year, which for Royal, it's not one of our bigger businesses, but it's essential for us. It's yet another product that we can bring to our clients that helps meet their financial services needs. One of the key elements there is about 50% of Canadians are under-insured. Part of what we're trying to do, and part of our purpose, to help clients thrive and communities prosper, is to ensure or help ensure that those clients of ours that are under-insured get that insurance they need. In Canada, for those of you not from Canada or not aware of the Bank Act, we actually can't sell insurance through our branch networks like you can in most countries, but we can through our insurance network. Here's a business where we continue to try to drive that insurance rate up so that people have that security they need. We've also de-risked that business by, years ago, exiting the P&C business. We recently also exited some of the underwriting on the home and auto. We're looking at where is RBC strong, and our RBC Insurance business is strong at providing advice and at distribution. We do less underwriting than we used to. It's also a very diversified model. We have mortality insurance, reinsurance risk in the U.S. We have longevity insurance, reinsurance risk in the United Kingdom. We have a lot of the different insurance risks that you have with diversification across different geographies and across the spectrum, with some being mortality and others being longevity, that kind of have a natural offset to one another. This has been a steady growth business for us, and it provides very strong returns as well. That's been a strong business for us. I'm glad that 25% of you do see the value in that, and hopefully, the rest of you will hopefully look at it a little differently. Insurance accounting is very complex, and actuarial rules are very complex, and they differ country by country. It's not a surprise that it's difficult for some investors to understand as well as others. Wealth management at 50%, I do think that is one of our very strong business, both in Canada and in the U.S. In the U.S., we did merge our private client business into our City National business, and we have seen a lot of benefits of being able to provide financial advisories, brokerage services, and banking services. It's a strong complement. We've brought in new leadership there. We've invested in technology. We've actually been bringing in more financial advisors into that platform than just about anyone else in the industry. It's kind of a unique, differentiated model because we're not at the wirehouse stage where we only have about 1,900 financial advisors. So we're small in comparison. But the financial advisors love the platform that they have. We have been improving the technology. We have a lot of energy in that business, and we've been attracting financial advisors that we hadn't attracted previously, and teams that are basically able to bring strong books of business into RBC Wealth Management. The productivity of the advisors that we have has been very strong and has grown significantly. We also have a very meaningful book of deposits and sweep accounts in that business. So it's very valuable from a banking perspective as well. So in the U.S., that along with our City National and the commercial and wealth business that we have there. Don't forget, we brought in Kelly Coffey, who is an expert in wealth management, to help turbocharge the growth of our wealth management business in City National. But then you go north of the border, and our global asset management business is quite strong. Again, number one market share. That's a business where our asset managers and our teams, our portfolio managers are outperforming the benchmark with over 80% of our assets under management. We charge a lower fee than the industry because we have more scale. So it's a win-win for our clients and for our shareholders. Then you look at our Dominion Securities, our private client business. We just met with the leader of that business, Dave Agnew, on Friday. We were looking at some of the industry numbers, and these are all publicly available numbers that we've dissected from some of the reporting. We have 18% of the financial advisors in Canada. We have 26% of the assets. So that ratio is good news, right? 26% versus 18%. That means our advisors tend to have bigger businesses and bigger books and wealthier clients than the competition. But almost 45% of the profits of the industry. That's where our scale comes into play. That's where our success enables success. We're able to attract more advisors, and we've added over the last six years, over 250 advisors when the industry as a whole is about neutral. So we continue to grow from an advisor standpoint. The productivity is stronger. We're able to take those profits and reinvest in technology and those new advisors that we attract. Come to our platform and say: "This is phenomenal technology that enables me to provide better advice to our clients." So they're happy to have joined. I've had friends who said: "Why didn't I come to DS or to RBC 20 years ago? That was my one regret, but I'm so happy I'm here now." Again, these are very strong businesses, but we don't take that for granted. We continue to invest and try to evolve those so that we can continue to grow market share. Fantastic. See if there's any questions in the audience at this stage. Apparently, you're being very comprehensive. I want to move along. We've touched on technology on quite a few pieces, but Royal has stated that it is and wants to continue to be a technology leader in the industry. How sustainable do you believe that is, and how do you measure the tangible benefits of that strategy? I guess part C would be, is there any advantages because of your operations cross-border, or is the technology kind of a little bit compartmentalized? That's three parts, and if I forget one of them, please re-ask me. I'll probably forget, too, so it's okay. But, yeah, I think it is sustainable. I think success begets success at one level, and we've been able to attract talent that previously wouldn't have gone to banks. We have a richer data set than most companies or most governments do. And so our ability to attract data scientists with that has been extremely successful. And because we've been able to set up Borealis AI and the ventures, we're able to attract different types of people who otherwise- Other places. Yes, who would not otherwise be attracted to working in a bank. And they are able to accomplish more and see the benefits of what they're working on much more directly. And I think that sort of creates energy, and we're able to then continue to attract stronger people. And this is an area where our scale gives us benefit, and it enables us to invest more and not have it be a big part, not have it disrupt our operating leverage, our ability to toggle expenses up or down with revenue growth. And so, part of that also, though, is holding ourselves accountable for delivering value. Delivering value for our customers, that they otherwise wouldn't have seen before. To provide advice to them that they otherwise wouldn't have received before. We've had a lot of Using some of our AI tools, we've been able to provide a lot of insights to clients that they otherwise wouldn't have had, and they might have had to go through marketing services and done all kinds of service studies previously that would cost a lot of money. Their bank is bringing that information to them, information about their customers. Of course, we do all this recognizing that privacy is critical and trust is critical. We make sure, A, that we have transparency with clients about their data. B, that they see the value of the data personally, and it's not just something at our benefit, it's something at their benefit. And three, that they can turn it on and off. We kind of have those guiding principles behind this such that we're not profiteering off of that data at the expense of our customers, because their privacy and their trust in us is paramount. I do think all of this is sustainable. From a north and south of the border perspective, those are some areas where, certainly in capital markets, that technology is easily transferable. Wealth management, that's an area where we're working to do more of that. We learned a long time ago that just because retail banking might work one way in Canada doesn't mean it's going to work that way in the U.S. Wealth management, they are similar businesses. Kelly Coffey is coming in from JPMorgan Chase. She understands the benefits of scale. She's identified, "Hey, let's leverage RBC and RBC technology more, and RBC wherewithal and skill sets." I think you're going to see more benefits of that coming cross-border in the wealth space. We also have benefits across our retail bank. You might not recall that we have what we call our Georgia bank, which is really our cross-border bank. This is a bank that we retained out of the sale of RBC Bank USA, the old Centura, back in 2012. At the time, I think we identified 160,000 snow bird clients. These are Canadians who had homes in Florida and Arizona and California, that had cross-border capability and the ability to send money north and south at the flick of a switch. We basically said we want to retain those clients because those are the Canadian clients. Now I think we're up to 300,000 or 400,000 cross-border clients, and that bank has grown significantly. We continue to build capability, and as an American living in Canada, it's a great product for me. A good friend of mine, in fact, he's so proud that his son, and he's Canadian, son got into Yale, until he converts the money from U.S. dollars into Canadian dollars and compares it to the cost of university in Canada, which is a fraction. I've been trying to get him to join RBC for years, and now he's an RBC customer because he needed that cross-border capability that we have, that we bring to the table. So that's another example of how we're leveraging technology to win new clients on a day-to-day basis. I will wrap up with one final question. For me, technology spend always goes into the expenses and operating leverage, and you have talked about scale being the advantage. But how critical is it for you as CFO to maintain positive operating leverage? How is your ability to be able to throttle back on projects in case revenue doesn't come in as strongly as you might have budgeted for? Yeah. At Investor Day a year and a half ago, some may recall that I mentioned that operating leverage will toggle up and down with revenue growth. So as revenue growth increases, we should be able to deliver more operating leverage. If revenue growth was to subside a bit, operating leverage, the goal would still be to be positive, but not necessarily as high as it was when the revenue growth was stronger. Do not forget, we manage operating leverage on a business-by-business basis because the different efficiency ratios across our businesses mean that you could have 2% positive operating leverage in all five businesses in one quarter and still have negative at the top of the house. So we look at it on a business-by-business basis. We do manage both for the short term and the long term, and we are not going to sacrifice the long term. We are not going to sacrifice our long-term success and growth just to meet a short-term operating leverage number. It is also important to think that, and to realize that operating leverage is looked at more effectively over multiple quarters. I always like when we finish our fiscal third quarter, so I like to see how we are doing on a year-to-date basis versus the competition. Some businesses where we might have been middle of the pack or lower of the pack in Q3 were actually on a year-to-date basis at the top of the pack because we had a strong first half of the year. Operating leverage is an example where revenue growth slowed for us at the top of the house in the third quarter because our markets-related businesses saw a natural decrease, as did all markets. If clients are doing less activity, we are going to have lower revenue in those businesses. But we were able to take down our expense growth from 6.5% in the first half of the year to a little over 2% in the third quarter. That is still growing expenses. We are still growing, we are still investing, and we have been investing for growth over the last five years. Our application development spend, which is kind of like a bank R&D, is up double digits five years in a row. So as CFO and as a leadership team, we also say we want to create a little tension in the system and not just fund every project that looks good on paper. Sometimes it is a little good to put a little tension into the system and make sure only the best projects get funded. Sometimes when there is the specter of lower interest rates, that enables us to kind of slow things down a little bit, and that's healthy. I think that's quite good and necessary, and it creates muscle in the company as opposed to the lack of muscle, I'll say. Fantastic. I'd carry this conversation on all day, but we've hit our end, so thank you very much for joining us. Thank you, Matt. Appreciate it.