Barclays Global Financial Services Conference 2018

Sep 13, 2018

We'll start the next session. Very pleased to have Rod Bolger, Chief Financial Officer of Royal Bank of Canada. Rod, thank you very much for joining us. Thank you, John. Rod, want to start off with something that has nothing to do with Canadian housing. I want you to talk about the rural strategy and expansion that you've had outside of the borders, notably the wealth management operations you have, which was, I guess, highlighted with the acquisition of City National. How do you see those operations growing on a go-forward basis and relative to, I guess, the rest of the bank? John, thanks for that question. We set out on a strategy a few years ago when we acquired City National Bank and integrated into the RBC franchise, and we already had two strong businesses in the U.S. to complement City National. We have a strong and growing capital markets presence, and although we have number one market share in Canada, we actually have higher revenue and higher earnings in our U.S. capital markets business. We also have a U.S. wealth management business headquartered in Minneapolis, the old U.S. Bank business, with approximately 1,800 financial advisors. That business has seen very strong growth. We put new leadership in there. We also integrated that into the City National business. Russell leads both the City National business as well as the U.S. wealth management business in Minneapolis. We've been able to get a lot of integration and cross-sell through that franchise as the client needs for both sets of businesses are met with different products and offerings from each of the businesses. The timing was also good. Certainly, the tax rate change has helped. Interest rates have gone up higher than we would've expected or the markets had anticipated at the time. But at the same time, we had very aggressive growth targets and objectives for the City National business. They had been very successful in the five years leading up to the acquisition, with double-digit growth rates in loans and deposits and certainly in earnings. Since then, not only have they exceeded our objectives with the benefits of taxes and interest rates, but they've also exceeded our objectives in terms of client acquisition, in terms of loan growth. The core key metrics that will help us sustain long-term profitable growth. We've also expanded much more aggressively than they had prior to the merger with RBC. We've expanded into a number of new markets that are quite attractive from a commercial and a wealth management perspective. We've also expanded in markets in California where we already had a very strong presence. But even in New York, we've doubled our presence in New York while adding meaningful new markets in Boston and in Washington, D.C., in Minneapolis, and expanding also in Nashville and Atlanta, all good markets for us. Do you have the opportunity to plant more flags with City National or now is it just growing within footprint? Certainly, we look at the key MSAs in the U.S., and there are a number of markets where we believe the City National franchise would do very well. But at the same time, we want to expand where it makes sense, where we can find banking teams that fit into the culture, both in terms of the client-first culture as well as the risk management culture and the brand, the City National brand, and would be attracting clients that would fit into our risk appetite. We're not going into markets just because those markets are great. We're going into those markets because when we can succeed there. Fantastic. Rod, in terms of the Investor Day that you had recently highlighted, the innovation and technology that Royal has got at the forefront. We can drill down in terms of technology spend and operating leverage, but what I actually wanted to talk to you about is Royal presented a strong case where you do believe that you are at the forefront within the Canadian banking landscape. How much of your investment in technology is table stakes versus something that you think can actually drive a sustainable competitive advantage relative to your peer group? Taking that further afield, you have got the largest tech spend in Canada by virtue of the strategy, but also your size. How do you see global competition within the technology forefront, and how are you trying to keep up with global players? Is that who you benchmark yourself against? Sure. Well, we benchmark ourselves with global players in Canada certainly, but also in the U.S., in Sweden and Scandinavia, and the U.K., and Australia, as well as China. We have sent a team to China to benchmark what is happening there. Obviously with how they have addressed technology and their platforms, they were able to leapfrog what a lot of other countries have done and integrate banking and payments into more traditional apps, non-banking apps. We certainly look at all those and benchmark against all of those. Yes, we have grown our investment and our technology spend. It is a core strategic emphasis for us, and we are looking at it in multiple aspects, right? We look at it from having an impact in the short term, so growing market share in the short term. We look at it certainly from an efficiency standpoint, and technology does enable, and digitization does enable efficiency. Everybody is doing that. That is almost table stakes now as well. We are also looking out 5, 10 years, and this gives us a chance after, we are almost 150 years old, and we have basically designed the bank from the inside out. Dave McKay, our CEO, has a technology background when he started out in banking, and then he went into banking, and he is at the forefront of this. As he likes to say, for 150 years, we have served our clients from the bank out. So we have products. Come take our products. You need our products. Now we get to reimagine the bank from the client in. We think this is a pivotal moment where we can serve clients in different ways. We can engage with clients in different ways. Part of what we highlighted at the Investor Day in June was the RBC Ventures gives us an opportunity to connect with millions of more customers, clients who would not otherwise engage with us because they like the bank that they are with. They are with a good bank. We may be, in our opinion, a better bank or give different offerings, but not enough to move the dial at times. So we want to engage with clients in different ways where it makes sense for them, and then at some point, we hope to bring a banking product into that equation. You think of small business owners. If you are starting out a small business or an entrepreneur, banking is not your first consideration. It is not why you are doing this. You're not doing this so you can open a checking account and get a credit card. You're doing this because of what you're innovating and trying to bring something to market that can impact your clients. So we want to take the stuff that is not important to clients who are starting these businesses and simplify it in an integrated way. So that's why we've invested in a fintech company called Wave that helps commercial and small businesses, both in the U.S. and Canada, do their back office in bookkeeping and accounting. We've integrated that into an offering with us so that we can take some of these problems away from our clients and give them an integrated solution and give them better data analytics because we have information on their revenues, on their inventory turnovers, on their receivable turnovers, things that matter to them to help them run and grow their business. That's not the way banks have traditionally gone to market. So we believe by making these investments, and we have been making these investments for the last couple of years, and it's embedded within our run rate, that if we continue to do that, we will continue to grow market share in the short term, but in the longer term, we have an outsized chance of gaining even more market share. Given that this is such a new philosophy or new way of looking at the bank, from the Chief Financial Officer's perspective, how do you benchmark the success of these investments that you're making? Can you actually do an IRR on things like this? Yeah. Well, when you get into fintech and technology, oftentimes the metrics that are used are not traditional financial metrics that a bank CFO might be accustomed to. But a simple way that I look at it is what's the addressable market. You can look at the addressable market, say, in Canada, where maybe 30 million people might have checking accounts at any given point. Most of those people are not going to change their checking account provider in any given year. It's going to be a small percentage. But Canada does have strong immigration. Immigration is part of public policy. It is an attractive place for people from outside of Canada to go to. So the newcomer market is one of those key battlegrounds where we want to win the outsized share of the addressable market. Also, people entering into the workforce. We want to win an outsized share of that addressable market, as well as those that there will be some turnover within the 30 million. We look to measure how much of each of those markets are we attracting and what are we offering each of those markets with our Arrive app in RBC Ventures. We have something that differentiates us, in our opinion, from our competitors in terms of bringing RBC to their attention before they get to the country, before they think about banking. The same thing with building branches and small kiosks and stuff on campus, and building out market-leading apps that does show to be attractive to millennials, and putting an AI feature into our mobile banking app that pushes ideas to help with financial literacy to our clients. We believe all of those items are enabling us to win more of that addressable market share. Fantastic. Well, right before I open it up to the audience for questions, can we actually start with the first polling, please? What's the most undervalued segment of Royal's operations? One, capital markets, two, wealth management, three, domestic retail, four, investor and treasury services, or five, insurance. One here actually used overvalued and insulted the user. Are you allowed to vote for all five? No. That's the beauty of the system. Wealth management. We touched upon City National, but on a broader scale, what is the approach on wealth management globally? Where do you see, outside of City National, growth coming from within the segment? Well, as you look at our wealth management business, and you ask that question about globally, there are certainly very attractive markets. But the way we think about it is where do we add value? Where does it make sense for somebody in the local market to bank and put their wealth management with RBC? That's why we acquired City National because we believe City National has a strategic competitive advantage in the markets that it's in with the offerings that we offer, with the brand that we have, and the bankers that we have. Similarly, in Canada, we have a very strong franchise, two key businesses. We call it RBC Global Asset Management, which has been growing at an above-market pace, growing market share. There are a couple of different ways that we're doing that. We price below our average competitor in terms of what the fees are for our customer base, and our funds, on average, about 80% of the assets in those funds have beaten their benchmark over a one, three, and five-year total. So by offering a high-quality service at a lower cost, we're able to grow that business as well as we have strong distribution both through our retail banking network as well as our Dominion Securities business, which is the second arm of our Canadian business, which is our Wealth Management Canada business. Which again, has a number one market share position that very much run in an owner/operator mindset in terms of bringing the best financial advisors to our clients, the best technology to our clients, the best financial planning to our clients in a client-centric manner that has enabled us to continue to grow market share there. We have two core franchises in Canada that have strong market share that are growing at above market pace. Then you add in the U.S. businesses that we covered, which again, have been growing high double digits. They're not going to grow at that level forever. There's going to be a point where we are at scale and low double-digit growth would be considered quite strong, and we could see that coming for the foreseeable future. Then you look at some of our other businesses in the Channel Islands and in Asia, where we have business. A lot of that, we're really focused on connecting wealthy clients with Canada. Where is a connectivity point? We don't want to necessarily go and try to compete with the local players who do have the strategic advantage of having been there for 100 years, have the relationships. We're not trying to disintermediate that. We're trying to add value with the connectivity back to Canada or where we have longstanding relationships with clients. Fantastic. I guess you'd agree with the audience. Is there any questions out there? We have one. There's been a lot, obviously, but maybe a lot about Canadian housing. It's obviously held in just fine. Could you just give us your thoughts on why that is? Everyone looks at some of the statistics of leverage of the Canadian consumer and gets concerned, and the Bank of Canada has talked about this. What's your perspective on? You obviously have good information. Why has this defied what people are looking at? Well, you have a number of factors, right? Certainly the leverage to the consumer leverage to GDP figure is something that has been growing. It's leveled off over the last few years, which is healthy. It's leveled off because wages are up, and GDP is up, and earnings are up. Borrowing has still remained robust but not at the growth levels that it was previously. If you also look at a number of other metrics, which includes if you add in government debt as a percent of GDP with the consumer debt, Canada is not an outlier. Also, if you look at consumer borrowing as a percent of household net worth, the figure is relatively constant over the last 20, 30 years. That shows, that demonstrates the wealth accumulation that's happened in Canada as it has happened here in the U.S. as well. Canada is not an outlier on that metric. You look at also the structural elements of the mortgage market in Canada. When we underwrite a loan in a new mortgage in Vancouver or Toronto, it is typically with at least 30% down payment. That is for any single-family home. Condos might be 25% if it is priced below the average in the marketplace. So we are getting strong down payments. We have also been underwriting with the stress test RBC has with the stress test in place for the last two and a half years before the new B-20 stress test came in, which basically had us add in basically six to eight rate increases for the customer at the time of origination. So when those mortgages do renew, at higher rates, the consumer could still carry that debt load. Employment has been very strong. Even in instances where employment spiked, such as Alberta a few years ago with the oil and gas downturn, unemployment more than doubled. It went from four and change to nine and change, and yet our losses topped out in the real estate, the mortgage book at six basis points. You go back to the early 90s, it was 10 basis points. There is a lot of key drivers for this. The tax policy is such that you do not get a deduction for interest, so Canadians are more likely to repay their mortgages sooner. In most provinces, there is recourse against the borrower. There is also the increase in dual family income. So if there is an increase in unemployment, there is the higher likelihood of people being able to pay back their loans. You package all that together, and it is beneficial from a bank standpoint and a borrower standpoint because borrowers, given the low default rate, get to borrow at lower rates. You add in what the government undertook, the governments in Ontario and in BC to try to temper some of the foreign investment and put some taxes on that. Then you layer in what our regulator put through, which is the so-called B-20 rules, which added a lot of stress tests, which made underwriting more difficult, which was a good thing. A lot of customers ended up buying smaller homes or putting up a higher down payment so that they could qualify. This has all enabled a softer landing in the Canadian housing market. The growth rate has slowed, and in certain key markets has declined. The volume of transactions of houses moving has declined. That does not mean the number of homes have slowed down. There is still immigration to these key cities. So the need for new homes has increased. There is building going on, but there is a lot of environmental permit issues in greenfield areas where you are not allowed to expand, plus there is a lot of water, certainly in the south of Ontario, in Toronto, with the lake, and then Vancouver is surrounded. So there is a lot of structural drivers that will cause, from a supply-demand perspective, the rate of housing costs to continue to go up. So it is welcome that the government and the regulator put these brakes on the prices because affordability is a concern for many Canadians if you are just starting out. A lot of Canadians have been able to have a nice nest egg. I mentioned the tax difference. You also do not get taxed on the capital gain on the sale of the home, a primary home in Canada as you would in the U.S. on a gain over 500,000. There is a lot of structural differences. Given the changes, I think it has been a positive for the market, and it is still something that we watch very closely. Right. Very consistently amongst you and your peers, the housing market, while it is being watched, it is not really on the top list of concerns. When you look at what could affect the outlook for GDP growth in Canada, what is near the top of the list for you in terms of concerns? Is it the NAFTA negotiations? Is it commodity pricing? What is out there that could actually put the current outlook at risk? Yeah. Certainly NAFTA and trade would be at the top of the list, especially these days. NAFTA is a key concern. It is something that we are very close to. When you look at the number of issues, the 6-8 issues, that there is kind of a bit difference between the U.S. and Canada. We do not believe that any one of those issues should be insurmountable. We believe that it is in the mutual benefit of both countries to get this ironed out. There are differences of opinion, certainly, and some of those differences of opinion are warranted. We just have to negotiate in good faith, and both parties negotiate in good faith and come up with an agreement. There is a lot of reasons why congressional leaders are supportive of NAFTA and continuing with a fair NAFTA, given that 35 states have Canada as their biggest export market, given the supply chain back and forth with a number of industries, and a number of industries requesting that their industry be relieved of any tariffs that might come in. That is certainly something that we watch very closely. Then the traditional items that you would expect, and it would be the same as in the United States with employment where it is, and some economists say below full employment, some say we are at full employment, putting wage pressure. Is there pressure on inflation? What will cause the reversal of job growth? How is that going to manifest itself? Obviously the shape of the yield curve. You look at a number of drivers, a number of inputs, and it suggests that we're late innings in the recovery. That said, it has been a slower recovery, both in Canada and in the U.S., than almost any previous recovery, which would suggest that it could be a longer recovery. So it's something that we look at quite closely. Right now, the economy and the outlook is strong in the medium term. Then in the context where expectations are for the Canadian GDP growth to lag the U.S., and with you having significant operations on both sides of the border, the expectation is for the U.S. operations to grow at a faster pace than Canada. Is there a level where you or Royal as an institution would become uncomfortable with the size in the U.S. relative to the domestic market size? Or is it just really you're willing to expand on the U.S. potential acquisitions, who knows, but are you willing to let that grow to a level that could actually be well more than half or a substantial part of the bank? Well, we have a long way to go to get to half. We'd certainly welcome that- That growth sustained double-digit growth to narrow that gap, but that would be some time away. We don't have a limit on. We think we've taken our revenue from the U.S. from 18% to 22%, the earnings from, say, 14% to 18%. We would like to see both of those continue to grow, but absent an acquisition, grow organically and one client at a time. That's how, if we are growing the right clients in the right way with the right business, we want to grow both the U.S. and the Canadian business, as well as our European business, our Australian business, our Asia business, and our Caribbean businesses, all of the businesses. But the U.S. in particular, we're not concerned about the shift in terms of earnings mix at this point. I'll stop hogging the podium. Are there any additional questions out there? Can you talk a little bit more about City National's underwriting standards? Is it a centralized process or decentralized? Why do you target a level of loan growth? I wouldn't say we target a level of loan growth because we wouldn't want to grow loans if we were making loans that weren't within our risk appetite and risk framework. When I give some of the forward-looking numbers, it is because we've been adding bankers, because we've been adding markets, and then you look at the productivity of the bankers that we have, and the markets that we're in, and we're very strong markets. Absent a recession, that's more what our expectation would be. But certainly if the market wasn't bearing loan opportunities or investment opportunities for our clients, or mostly commercial clients, that loan growth would not be at those levels. So we're not setting those as absolute targets. They're more indicative of what we believe the market will bear given our footprints, our bankers, and our underwriting standards. Which we want our bankers to be bankers, so we have a common set of underwriting practices and a central adjudication group. But we also want our bankers to be able to adjudicate within, say, guardrails, given parameters such that if they are in the guardrails, they can certainly make a loan. We found that when you pull back too much on allowing the bankers to have that determination, that they lose the ability to actually understand the market, understand their clients. So it is a natural tension that we go through, and we go through that with City National, and we go through that in our Canadian business as well with our Canadian bankers, our commercial bankers. So the goal is to set the risk framework to make sure we have the right information. A lot of our growth, certainly in Canada, has been with existing customers making more investments. So we already have for a lot of the underwriting growth that you have seen in Canada, where we had 13.5% growth year-over-year in the third quarter on the commercial loan book. A lot of that is deepening with existing customers where we have all their payment information, their cash flow information on a real-time basis and are leveraging AI tools to determine the financial strength of those clients. So slightly different underwriting in the U.S. and Canada. We have not basically homogenized that. But similar philosophy and similar concept of setting the guidelines and then allowing the bankers to be bankers. Can you maybe talk about some specific examples of sharing best practices between Canada and the U.S. and vice versa? Also, are you able, when you invest in a new technology or a new process, to leverage it across both geographies to maximize the bang for the buck that you get? Yeah. Certainly in the capital markets business, it is a lot easier to do that. They are running on common systems. So that is done as a normal course of business. I would say on the wealth side, we do have the technology build-out in both countries. Slightly different markets, slightly different regulations. We do leverage the capabilities where we can. The technology group for those two businesses are basically housed together. But you will use different technology platforms in each of those countries. So there are benefits, but I would not want to overstate the benefits and say they are completely integrated. City National, we have looked at that. We have intentionally gone to an integration light model, where we do not want to say, "You have done well for the last 50, 60 years, and Toronto is here to help. This is how you should run your bank," because they are very strong and great bankers. We want to make sure we integrate where we need to, where it is beneficial from a risk management standpoint, a regulatory standpoint, and an efficiency standpoint, but most importantly, where it makes sense for our clients. In areas like cybersecurity is an area where we would look to basically leverage the same type of spend, and that is an area where we have been growing spend significantly given the risk associated with it. That is an area where you could get better synergy, if you will. At the same time, we are not going to go in and try to say, "These systems work in Canada, so we want to use these in the U.S." City National's technology team is still somewhat independent. Something like Wave, which you mentioned, would that be deployed in both markets? It has the potential to. We are certainly looking at Canada first, given our scale there, our ability to continue to scale up and take market share. Then we are considering which of these ventures or apps would make sense in the U.S., and that would be a very different strategy. It would be a very different approach because it would be more of a digital approach or leveraging City National. City National is very interested in the Wave technology and opportunities with Wave. You may have seen that we recently completed a technology acquisition within City National, Exactuals. Prior to the merger with City National, City National had also bought a technology company called Datafaction. These are very similar concepts to what we are doing with Wave, which is in the entertainment industry. Take the nuisance, the back office, the accounting issues away from the agents, the clients, and simplify their lives. Basically, it brings a lot of value to the client. It makes them very sticky because they do not want to leave because then they would have to set up their own accounting shops, and their costs would go up, and the quality of their banking product would go down. City National has actually been on this path that we are on. They have just done it a little different way, but it is the same concept. It is how do you integrate and provide value to the client using technology solutions that is much broader than traditional banking. Right. We have seen on the domestic lending front, slowdown on consumer lending. Probably not as quickly as some, like myself, would have expected, but obviously, a very strong commercial lending growth offsetting that to a certain degree. In terms of outlook for margin and capital, how is the shifting dynamics going to change margins that require capital ratios, et cetera? Well, the mortgage growth has certainly slowed. The underwriting has, and new originations have slowed, but I think as I mentioned earlier, the immigration is still strong into these key markets. A lot of the slowdown has been people selling houses and then upgrading or moving or capitalizing on the tax-free gain that they had in their house that they have lived in for 20 years. Then figuring out how to leverage that for their retirement. There has been less activity of that front, but Canadians still are in homes. The amount of homes is going up, the amount of Canadians in homes and newcomers are going up. As a result, you do not see the decrease in our portfolio that you might think from slowdown in origination because the payoff is lower. It is more of a stock and flow issue. That is helping, certainly. In terms of the mix, I think that is a dynamic element. We have a very strong cards franchise. We have very strong rewards programs with our Avion program that we have built out over the last decade-plus, that it was very innovative in Canada at the time and still continues to attract a large number of new clients, and we believe to be the best in the market. We also have our WestJet card, which has been growing at double digits and has been a great success story. You may recall that the largest gas company, the largest fueling station company in Canada, Petro-Canada, we have a partnership with, and you link your Avion card to your Petro-Points, and you just flash your Avion card at the pump, and you get CAD 0.03 off a liter, which is like CAD 0.12 a gallon. You get extra points on both your Petro-Points as well as your Avion to make trips or use it however you wish. As that portfolio grows, we are going to see a NIM expansion. But if our mortgage portfolio grows in its weight, then we will see some NIM contraction because of the security there. I think we mentioned on the call that there is a little bit of pricing competition in Canada right now in the mortgage market, which you would expect. Again, simple economics, supply-demand. As the activity slows down there, we have a lot of mortgage specialists in the industry, and they are looking for volume as well. So you would expect pricing to come back a little bit, and we will see how long that lasts. But overall, we have tailwinds on our NIM both in the U.S. and Canada. We outlined at our Investor Day that we expect a five-year benefit from most rate increases, and that may not be intuitive to many investors, especially of U.S. banks, where a lot of the rate benefits comes through much more quickly. But given our structural balance sheet and the fact that the majority of our mortgage loans are five-year fixed rate loans, as the yield curve moves up, and it has moved up generally parallel, as the five-year moves up with the short end, we get to reprice that over five years. Therefore, we get a five-year benefit from Bank of Canada rate increases, which is a nice tailwind to have, as opposed to having it all in a short period of time. Then, switching on to capital, not that there is any concern in terms of yours or even the system-wide in Canada, but we are settling in now with the group in and around 11%. Is it your sense that this is the new normal, or are we going to actually see the capital ratios continue to inflate over time? Yeah. As you look through the capital requirements, the various buffers that we have out there, and you run through the number of stress tests that we go through all the time, we are very comfortable with the capital ratio where it is, and we do not believe there should be continued upward pressure. I do think you will see banks go. We have stated a range of 10.5-11, and we have guided towards the top end of that range. There are a couple of reasons for that. Again, if it is the late innings of the recovery, it would not be bad to have some extra capital going into recession. It gives you optionality. It enables you to grow organically. We have had strong organic risk-weighted asset growth the last two quarters. Again, that is client-driven organic growth. We do not want to slow that down because we are too close to our capital objective. You also have Basel IV coming in. There is going to be the CVA phase-in is going to kick in again in Q1, and you have some Basel IV elements, although arguably Basel III that is also going to kick in for us. Small items in Q1. So we want to be ready for that and have that be a non-event. Then I think the good thing is that Canadian banks and RBC specifically generates a lot of capital organically every quarter. What we want to do is be good stewards of that capital and basically use it in an efficient way. If we are not using it in an efficient way, that is when we would return it to shareholders. Fantastic. We are running a bit short. We have got time for one last question out of the audience if we have interest. No, I guess then it falls on me. Rod, we are now three quarters in with IFRS 9. It seems not terribly as exciting as we had a thought on coming into the implementation. Has there been any change in terms of the approach for the bank with the new provision accounting, or is it just steady state, and this is just something that is really just a reporting mechanism more than anything else? I would not say it is just a reporting mechanism. It will add to earnings volatility, and that is not an issue now with the strength in the economy. So part of that is transparency and education and making sure investors and stakeholders understand that when there is a downturn or even the expectation of a downturn, it is not even that the downturn happens, it is that the economists think there might be a downturn, the way the standard works, that there will be an acceleration of losses. But through the cycle, if you make a loan for four years, by the end of the four years, the loan is either repaid or it has not. The accounting is not going to change that. So the economics have not changed at all from a cash flow standpoint. It is just that the economics have changed because we have to hold more capital for that accounting-driven volatility. We have factored that into our capital planning and our stress testing. Certainly that has made stress tests more severe because of the front-ending of the losses. Then, of course, you are going to recover from those losses because you are using expected loss, which is overly conservative, and the loan economics, as I mentioned, have not changed. So over a 4 or 5-year period for that loan, our losses are not going up a penny. But the timing of the losses, it will look like we have higher losses, and it will look like we have higher recovery. So it is important for investors to understand to consider what is called stage 1, stage 2 losses, as opposed to stage 3, which is more traditional charge-offs and actual losses. Stage 1, stage 2, to consider that, yes, it is part of our numbers. Yes, it is indicative of where the market might be going, of where the credit quality might be going. But there is going to be an element, I think, of discounting the impact of that as well because it is not impacting cash flows. So stay tuned. It has added complexity to the system. But it is fully implemented. We are up and running, and we continue on. Fantastic. Rod, I really appreciate all the detail. Thanks. Thank you very much. Appreciate it.