Barclays 2017 Global Financial Services Conference

Sep 12, 2017

Okay, ladies and gentlemen, we're going to start the next session. Pleased to have Rod Bolger, who's the Chief Financial Officer here at Royal Bank of Canada, and Rod, who's recent in your new role. First time at your conference, Rod. Thank you very much for making the time. Thanks for having me. When we take a look at Royal, you've got a broad diversified banking model, a large geographic footprint. I was wondering, would you mind starting with an overview of what Royal strategy is, and I guess where you expect to see growth coming from over the next 3 years or so? Sure. So first part of the strategy is strength in Canada, with our strong client franchise in Canada, and whether it's our personal and commercial banking, our Capital Markets franchise, our Wealth Management franchise, our Investor & Treasury Services business, and also our insurance business. We have very strong market share, very high client satisfaction. We recently won the J.D. Power Customer Satisfaction Award for the second year in a row. Canada has been a strong market for us. The GDP growth has exceeded 4% in 2 out of the last 4 quarters and has been the highest GDP growth in the G7. So Canada's been a very good market for us. Also the U.S., where we bought City National Bank and merged with them last year, really to expand our presence in the U.S. Again, a good strong capital markets business that we've been growing over the last decade or so, significantly in the U.S. We also have a broker-dealer in the U.S. based in Minneapolis, and that we merged into City National, which is headquartered in Los Angeles, but expanding in new markets. Our U.S. business has done quite well. Even moving to Europe, we've been able to reposition the business a little bit, focus more on investment banking as well as some fixed income, but simplify the business a little bit. We also have strong investor services business there and wealth management business, and our returns have improved significantly in Europe. So we're seeing strength in all of our markets. To a lesser extent, we have business in Asia, but that is really mostly facilitating business with Canadian and U.S. and European clients as opposed to significant distribution in Asia itself. I think that you touched on City National, which has been the most recent large acquisition that you've done, and it's actually been a very strong contributor to the success within your wealth management franchise. Can you talk about how you're going about integrating it into the legacy Royal platforms, how the interconnectivity is going there, and what else you're doing to drive growth within the U.S. wealth management platform? Yeah. So we've left City National largely as a standalone business. We have merged our retail broker-dealer in the U.S. into City National, and those two businesses are working very well together, bringing the brokerage business and then the balance sheet that City National brings to the table, and just the U.S. wealth management business, for instance, our margins have doubled there over the last 2 years. We put new leadership in there. Michael Armstrong joined us from Morgan Stanley, and he reports to Russell Goldsmith, who runs City National and managed City National on a standalone basis for the last 20 years or so. Those two businesses are great complements and are growing together. Also with capital markets, City National is able to bring our capital markets business to their clients where they couldn't bring that sort of M&A and underwriting expertise to the table previously. Strong complementary businesses there. Across border with Canada, commercial clients, a lot of commercial clients are doing business north and south of the border. Both our commercial clients from the U.S. do a lot of business in Canada. Our commercial clients in Canada do a lot of business with the U.S. So the commercial banking benefit across both our Canadian P&C business as well as the City National business is a good complement. You touched upon the integration of capital markets, and I think one of the things that stands out for me in particular with Royal against your domestic peer group is the contribution of capital markets. Some view that as the outsized nature being a bit of a negative, but you've shown some very strong resiliency and consistency within the capital markets performance. When you look at capital markets on a global perspective, how are you driving that strategy forward, and has that changed since the financial crisis as the evolution of that business or the strategy evolved somewhat? Yeah. We added a lot of bankers since the financial crisis, and we added a lot of lending to our balance sheet and brought in a number of new clients. We've moved up to ninth in the global league tables. We continue to be number one in the market in Canada, and are involved in most transactions there. In the U.S., we have strong teams across most industries. We've also reduced our trading business and our capital that we allocate to the trading business, optimized that really. So we've focused our trading business more on client activity and our balance sheet, which we've grown. We've been able to grow our fee pools significantly. We've reduced the volatility in that business, which I think is very important because capital markets can be a volatile business, and certainly we've enjoyed the strong equity markets recently for the last decade or so. We have, last three quarters in a row, we've achieved CAD 2 billion of revenue and CAD 600 million of profit, and basically we've taken a lot of the risk out of that business. You still need to have some risk to make that sort of money. That's a business that we're quite pleased with and continue to grow, in the U.S. as well as Europe. We also have some strength in Australia and Asia. Canada is really where we have the strong market share. Well, I think some are surprised that after the initial push in Europe, that you are actually still legging it out there, given even with the difficulties in the markets. Can you talk to what the focus is in Europe, what businesses you are trying to penetrate and why you actually didn't retreat or retrace that initial investment? Well, we've grown our investment banking business as well as our FICC business. We had been broader in our FICC business in terms of some sovereign markets and being a market maker, and we've simplified that. That has really improved our profitability. Our returns used to be lagging there, and we've been double-digit returns from an ROE perspective in Europe. Which is lower than where we are, say, in Canada, or even some parts of the U.S., but that's quite a high return on equity for a European capital markets business. Fantastic. I guess, turning to the domestic marketplace, we had the Bank of Canada raise interest rates again for the second time last week. How does this impact your view on, I guess, both margins, but also anticipated lending growth if this Is this going to lead to a slowdown in consumer borrowing, I guess is where I'm going? Well, consumer borrowing has been slowing. It's still been strong. If you look at our mortgage book, you've been writing for years that our mortgage growth was slow, and it has. A couple of quarters ago, we were down to 5.5% growth. In this past quarter, we are at 6.1% growth in our mortgage book, and that's pretty good if that's a low point in a growth cycle. We had been high single digits on the mortgage book, but that's come back, and I think it's healthy that it's come back. I think the Canadian consumer needed to take a little bit of a pause. But still good growth. As you look at the NIM expansion, it's been a decade or more of NIM compression. While the Bank of Canada has moved and increased rates, real rates are negative. The Bank of Canada rate is below the inflation rate, and the markets are pricing in almost 100% chance by January of another rate increase, and by next May, two to three rate increases. There is the expectation that the Bank of Canada will continue to move, and that will benefit our margins based on our deposit book and the lending as the stock and flow of that rolls through. Given the duration of the loan book, should we assume that the 50 basis points right now is going to take a couple of years to filter through the system? Yeah, it does, and that's why you would see, and Dave McKay last week basically mentioned that we would expect for the 25 basis points, CAD 100 million of NIM benefit next year. And in five years, approximately CAD 300 million of benefit. So it does take some time to roll through. Yeah. Well, I guess, when we're talking about interest rates, one of the biggest concerns, particularly with us being down in New York right now, is Canadian housing. I would be remiss without asking a question around that. But I guess, what is the sense, what's the outlook for Canadian housing at this stage in the game? And talking about the Toronto area in particular, given the policy shift and the impact that we've seen, at least on volumes, if not fully on pricing. Yeah, I moved to Canada about six and a half years ago, and I live- You timed it right. I timed it right. Although I did sell in two down markets in two different cities in the U.S., so I've had a different experience than many Canadian consumers have had in terms of buying and selling homes at a profit. But the Canadian marketplace is different. The structural elements are very well defined to be different in terms of the security on the home as well as the right to go to the borrower if they do walk away from the home. The tax laws are different, both on buying and selling homes where there's no cap on the capital gains, but also there's no deductibility of interest. As a result, a good amount of ours, about a third, do prepay and accelerate payments on their mortgages. So the tenor of our mortgage book is a lot lower than what you'd expect. And we underwrite. We've been underwriting, and stress testing as we're underwriting on about 90% of our mortgages at a 2% rate increase. So we want to make sure that our customers and clients can stay in their homes if rates do continue to go up. And we also stress test our book quite frequently. If you think about our mortgage book, it's about CAD 265 billion-CAD 270 billion. If you look at the loan-to-value, that's below 70%, so it could withstand a 30% or more decrease, as well as the insured portion of our book, which is quite substantial. That's about CAD 241 billion of that. So you're left with CAD 26 billion that might pose some risk. If you look at three components there, clients who earn over CAD 150,000, as well as those that have had already longer tenor. Basically you can take 20 billion that are lower risk clients as well, and you are left with about 6 billion out of the 267 billion that we really take a hard look at. Of those, the majority, or almost 6.2 billion of that have FICO scores above 650. You look at the lower FICO scores and then this whole debt servicing, which I didn't mention is part of that healthier cohort as well. We are told that servicing is less than 35%, so clients are spending less than a third of their income on their homes. You are left, basically, if you take out all of that out of the $267 billion, you are left with $440 million that you might call at risk. The average LTV on that is close to 75%. Even if there was a 50% decrease in housing prices in Toronto, which these are not all homes in Toronto. We don't expect that to happen, so wouldn't want that out there. You are still left with about $100-$110 million write-off for us, which is four to five basis points. I was a skeptic moving up there, but this is a loan book that is quite strong, quite healthy. The Canadian consumer is quite healthy and paying their mortgages. Even in Alberta, where you saw the unemployment rate double a couple of years ago, we did not experience significant deterioration of our credit book, be it secured or unsecured. What's a little bit different, and again, this is on the margins for Royal's mortgage book is, you are skewed more towards the uninsured mortgages. Again, low loan-to-value, not risky, but what's the driving force behind that? What's the philosophy behind actually originating more uninsured versus the insured mortgages, particularly with the legacy portfolio was actually priced reasonably the same? Well, I think you're seeing less insurance in the market, so I think you're going to see that trend continue. I think that's healthy for the market. We do see a number of our clients that do not need the insurance. If you're talking about the greater Toronto or greater Vancouver, most of those mortgages, many of those homes are priced at CAD 1 million or more, and there you need a down payment of 25% or more, as opposed to 25%. A lot of our clients do not need insurance to take out their mortgage. Really, the insurance is put in place so that people who should be able to afford homes can afford homes with the tough underwriting standards that we have. A lot of our clients don't need that. It's insurance that we sometimes pay for, but we don't really feel that we need it. Mm-hmm. I guess touching on credit quality because the Canadian consumer has performed spectacularly well, much better than at least I was expecting, particularly with, as you mentioned, on Alberta. What is the outlook for credit quality on the domestic front first, and then we'll touch on the U.S. Yeah. Well, a lot of that depends on jobs, and the unemployment rate continues to improve, and it's still a little bit elevated in Alberta and the rest of the country. It's approaching what some might say is full employment, similar to the U.S. So if you have strong employment and reasonable wage gains and the borrowing levels that we're at, the credit quality looks the outlook continues to be benign. We'll have, for those of you who are U.S.-based, we're going to have to deal with this thing called IFRS 9 next year. So we'll see a little bit more volatility in our loan losses, but you've already dealt with some of that probably in the U.S. market, so it shouldn't be as a surprise to you. From an underlying credit worthiness and credit quality, we don't see any storm clouds on the horizon at this point. I think that that will happen when you see the next recession. Well, you touched on IFRS 9, and I know it's a little more technical, but do you think that implementing IFRS 9, it's actually better in this type of environment where you're already in what are historically low levels of credit loss provisioning? It will certainly mute the impact of adoption. For us, we have a large capital buffer already under the Basel deduction for expected loss that's CAD 1.5 billion. It's not on our balance sheet, but it's on our regulatory capital balance sheet. Hopefully, I'm not losing all of you. To the extent that our transition adjustment is below that- which we would expect given the benign environment that we're in and the strong economy that we're in, it would be, from that perspective, I guess, a good time to adopt. If you can touch on your outlook for credit quality in the U.S. because your book of business is very different in the U.S. than it is in Canada. Yeah. Our credit quality is strong in the U.S. So City National has a terrific risk appetite and underwriting standards and a very strong risk culture. In many ways they look like a Canadian bank during the downturn and the Great Recession. They had very strong performance. On the capital market side, you see some lumpiness from time to time, but you also see some recoveries as well. That's been, again, below what you would expect over the long term. But clients are, I think corporates and commercial clients have smarter balance sheets, if you will. They take leverage, and they're taking leverage appropriately, as opposed to too much of a cowboy type approach. Fantastic. Well, I'll give you a break. We have a sip. If we can queue up the polling question for the audience, please. Going through, how do you view Royal's acquisition of City National? Very positive, mostly positive, neutral, mostly negative, and no one's going to press five, right? That's Do I get to vote? No, that's why I was saying you might hit press 5. Yeah. Skewed towards. It's funny actually, if I remember correctly, when I think Janice was in right after the announcement, the distribution was definitely more skewed to the neutral negative side. I think that you have shown some exceptional performance, both pulling synergies out, but then growing. Is there anything left to pull out on the expense side, or are we just now on typical operating leverage within City National? This has been a successful acquisition and integration, and not all deals are like that. Apologies to the investment bankers in the room. I would say that this has not been a success as a result of expense synergies. We have basically left City National to do what it does well, to do more of it with the rest of RBC, and to bring City National clients to RBC and RBC clients to City National and grow in new markets. If anything, there's been, I would call it maybe negative expense synergies because you probably put City National under a greater regulatory spotlight. Coming into the bigger RBC. Certainly, our U.S. business is bigger, and as a result, the regulatory requirements are greater. Then we've probably expanded more rapidly than they might have as a standalone company. because the capital that they would've needed to grow organically to invest, we're basically taking that out because they wouldn't have wanted to issue equity and dilute the shareholders. They're probably growing a little faster than we otherwise would have, had they stayed independent. Can you talk about technology and what Royal's doing? Because I hear this from all global banks, but the Canadian banks seem to, and I'm going to say in the last 2 years, I know it's been longer than that, but fully embrace technology and change. What is Royal trying to do, and how is it accomplishing that? Obviously, the way banking is handled today and the way our clients interact with us today is not going to be the way that we interact with our clients 5 or 10 years from now. We also have to be ahead of the curve. We also have to be relevant to our clients. If you look at commercial clients, banking is not something that's front and center of their mind every day. They're worried about clients and market share and competition. How do we be more relevant to our retail and commercial clients? I think through digital means we can accomplish that. Also is absolutely necessary from an efficiency standpoint that we are able to do things differently today than we did 5 years ago, and then again in 5 years. We can't keep doing it this way. We have to take out manual low value added tasks and automate those, and you have to do that in any industry, and banking is no different. So, whether it's the way our clients interact with us, the way we operate in branches, the way we operate in call centers. Also, cybersecurity is obviously front and center as a risk to any company, but certainly a bank. So we are very committed to technology, and our CEO has a technology degree and started as a programmer. He's very thoughtful about how we grow and how we invest. Our Chief Technology Officer, Bruce Ross, is also quite strong. We've brought in a lot of talent around how we're going to do business kind of the next generation. When we think of different horizons, we used to talk about horizon one, two, and three, but really horizon three is now. We have to be doing that now. We have to be making those investments today. How does that change your budgeting process and the spend that you're doing on technology? I've got to believe that it's significantly higher today than it was even three years ago. How do you manage that process to make sure that the right priorities are getting funded, and that you're not spending money on technology that may be obsolete in three weeks? Yeah, that doesn't make my job any easier, but that's fine. It certainly is something that we focus a lot of time and attention to. Certainly, we're doing a better job of bringing all the initiatives together, and discussing them, and seeing how does this initiative in wealth management impact our retail bank, for example, and how could we better leverage that. So we are spending more time on that, and we are having to We took some severance costs this past quarter, and kind of transform our culture a little bit. We have a great culture. but you always have to keep changing it so that it makes it easier for us to do business. We do a lot more of our technology and innovation labs in an agile manner. The way we roll out technology is very different than it was even three years ago. We have to make those investment dollars available to make those investments, and we are doing that. Royal has, in Canada obviously, a strong universal banking model. I would make the argument that you are approaching a universal banking model in the U.S., and then also have wealth management and capital markets operations outside of Canada, U.S. Does the breadth and diversity of Royal's operations, does that actually help with the technology? Are you able to lever it across these platforms, or does it make it more difficult because you have to have separate systems for each of these areas or each of these regions? I think actually you are right on both fronts. Certainly with our scale, it helps us. If you look at the amount that we have to spend on cybersecurity, and the amount has doubled over the last two years. With our scale, we are able to absorb that a lot more easily than we would if we were a smaller player. But then when you look at the breadth of our businesses, as you mentioned, it does add complexity to it, and it means that we need, again, back to that culture point, we need to be more agile. We need to be more nimble. We have to communicate better. We have to think about where different investments can benefit more areas of the bank and pull that together and have those conversations. Bruce Ross, who I mentioned before, is two doors down from me, and I talk to him just about every day if we are in town. We talk about this as a leadership team across all the business heads as well as the functional heads. You talked about the restructure that took place. How difficult is it for Chief Financial Officer, for yourself, with the spending that is going on here, trying to manage the cost controls in other areas to generate positive operating leverage? Can you please remind us what you are committed to in terms of operating leverage or expenses on go forward? Sure. Well, I think that this is not new for us. We have been on this road for several years, and we have a lot of expense discipline. The owner/operator mindset where you act like you are spending your own money instead of some nebulous big company. I think we have been successful at that. So we have been driving efficiency for several years, and we have done that with significant FTE takeout, which is something that we manage through. A lot of the times we move people to other roles. We have been on that path for several years. So that helps in having that mindset, and it is necessary, and our stated efficiency objective. We look at it by business because as you look at it as a whole, it is great to have positive operating leverage at the RBC level, but certain businesses, such as capital markets or wealth management, have higher compensation and so therefore higher cost basis. So if we are growing those businesses faster, you could actually have positive operating leverage in all five businesses. But depending on the rate of growth by business, you could have negative at the top of the house. So we like it positive at the top of the house, but we really manage it by business. We are looking for positive operating leverage in all of our businesses. Canadian banking, which is almost half of our earnings, we have a stated objective of 1%-2%. We will be at the lower end this year, largely because of that reinvestment that we have been making. But we are committed. I think a good case in point was 2016. We acquired City National, so take that out because it was not in the 2015 numbers. But there we had revenue headwinds. The growth of lending had slowed. Fee income had slowed. Margins were under pressure. We actually had revenue growth of 1% as a whole, yet our costs came down by 1%. So we were able to manage through that time. Now we have seen growing revenue growth for the last five quarters. I do not know that that is going to continue. But that has been helping us as well. A better environment for a positive operating margin. Absolutely. But we were able to achieve, I think the hallmark is achieving it over a longer course rather than Quarter to quarter. individual quarters you might have an up or a down on an individual business based on what happened last year or what happened in the market this year. Can we talk about capital, first off, where Royal sits on the quarter. I think yourself as well as the CEO stated that you're very comfortable with your capital position. What's the outlook, and where do you see things heading? Because with the Canadian banks over the last 4 or 5 years, we have seen inflation in the capital ratios, but it does look like in 2017, the management teams as a whole are more comfortable around the 11% mark, whereas I thought that by the end of the year into 2018, we'd be inflating closer to 12% based on where things were heading. Well, our stated comfort level is 10.5% plus. We're comfortable in the 10.5% to 11% range. We stress our book continuously, and we set our capital targets and ratios based on where that stress is so that in a downturn, we don't have to issue shares and dilute the shareholder. So we're very comfortable in that 10.5% to 11% range. If you look just since the City National acquisition, we focus on capital very closely. I call it the velocity of earnings versus the velocity of capital. If you look since the City National acquisition in Q1 of 2016, our assets, our risk-weighted assets, our leverage exposures are all flat. You could say that may not be a good thing. A lot of that is through design by adding balances that were really client-driven and then optimizing balances that were not necessarily driving strong results or client-driven. But during that time, we've grown our dividends by 15%, our EPS by 15%. We've also grown our CET1 ratio that was diluted after the City National deal by 100 basis points. But even though we have that bigger capital, we've been growing ROE by 100 basis points over that timeframe, too. So ROE, return on equity, is something that's very important to us, and we manage that very closely. So we've had good earnings and capital and then return to shareholders at the same time as managing balance sheet very closely. It looks like OSFI has put the SIFI designation to rest if and when that happens for Royal. But do you as CFO have any concerns about the other parts of the regulatory environment that'd be coming down, Basel IV, et cetera? Yeah. We constantly monitor all of that. Basel IV we're certainly waiting to see what happens in Basel. We read about it the same way you do and hear the rumors. The Europeans and the Americans, are they going to come to the table together? We're looking for a level playing field, and I think that's very important. We don't want to be put at a disadvantage in the U.S. capital markets if the U.S. doesn't come along, as an example. So really, we're looking for what's fair and prudent. Our regulators done a very good job of balancing all of that and maintaining a strong financial services environment in Canada. Then to paraphrase, though, with the 10.5%-11% range, you're comfortable that that will be able to absorb anything that may or may not come down the pipeline. Yeah. We basically set that so that we look at all the buffers you need, whether it's the 4.5 to the 7 to the 8. The 8 is where we are as a D-SIB, where if we become a G-SIB, we'd also need to be. We certainly look at the risk in the book and stress test it 10 ways to Sunday through multiple scenarios. Okay. Well, as a Canadian, I can quite accurately use the phrase that I've been hogging the puck for most of this conversation. We'll open up to the audience now and see if we have any questions for Rod. Start in the back first, and we'll come. Just a quick question on your M&A appetite. I'm staring at the slide, looking at kind of 60% of the people in the room had a positive response to the City National deal, and you guys have done a tremendous job with that. I digested it. As we look forward, what are you interested in the U.S. right now, kind of building out that City National footprint? Or is it something at a larger scale? Doesn't seem like there's a lot of competition for you guys right now in the M&A side, so it might be an awesome opportunity for that. Just trying to get your thoughts on that. Thanks. We'd appreciate if you can name targets, too. Certainly something that we look at. I think if you go back a few months, valuations were very high. They've come back a bit. We are very comfortable with our strategy in the U.S. We are very comfortable with our businesses, our organic growth path in the U.S. I wouldn't rule out that we would do an acquisition, but we don't feel compelled to do an acquisition. There's no urgency to do one. If there's a good strategic fit, a good cultural fit at the appropriate price, that would be a nice way to continue the growth in new markets perhaps for our City National business. That would be something that we would consider. But it's not something that we're racing out to do. We have right at the front here. Thank you. Just a couple of quick questions. You had mentioned the securities business is now under City National. Is that within the IHC, or has that actually been pushed into the U.S. banking entity? I was referring more to our management structure. From a legal entity structure, it is still separate, so it is part of the broker-dealer. Both the broker-dealer, which is the Minneapolis business, as well as our New York Capital Markets business, as well as City National Bank, are both under the IHC. Okay. So you had to really separate that out. Not from a legal entity standpoint, just from a management standpoint. Okay. Thank you for that clarity. I know a lot of banks are having problems with that IHC and interlinking and separating the management structure. In regards to the City National deal, I personally was quite surprised that you used cash when you had what appeared to be a much more attractive currency. I guess two questions. If there were other M&A transactions, would you use cash again? Because when you bought City National, I think it was, what, a six or seven ROE? That seemed to put a lot of pressure on the business. Then dovetailing off that, what were the growth targets for City National, and are you hitting them? So a couple of questions there. Just to clarify, we actually used cash and shares for- But you still used cash. Yeah, we used a fair amount of cash. There's a dilutive impact from if we were to have issued all shares, and it would have put more strain on our return on equity, more strain on our EPS and share price, just from the math. We did a combination. We found what we believe was the right balance, and if we were to do another transaction, it would be based on the size of the transaction. What would the impact also to our CET1 ratio? We didn't want to have too much dilution to that, and we allowed that to fall to the 9.9%, 10% at the time of the close, and now we've gone from 9.9% up to 10.9%. We wouldn't have done all cash so that that would have fallen lower. We would do that on a deal-by-deal basis. Some of you may recall, we had an investor day on City National last year, probably about 15, 16 months ago. We set out some ambitious targets there, and we are tracking towards them. Although they are separate legal entities, we are managing those two businesses more closely aligned. We do have five-year earnings targets of over CAD 1 billion for those two businesses combined, and those are some pre-tax numbers, and we are tracking towards that. We have time for one last quick question. In the back there, please. Maybe a fixed income question, if I might. Moody's downgraded your rating, as well as a couple of your peers, a few months back, and left your outlook on negative at that same time. I want to get a sense for what you think is the outcome. Do they stabilize the rating, or do you believe your rating might be at further risk? What are your overall corporate targets and goals for credit rating? That is something we spent a lot of time on, and there is a disconnect between the rating agencies now. The other rating agencies do have us higher. If you look at our borrowing costs in the marketplace, the borrowing costs in the marketplace are more closely aligned to that higher rating. I think the marketplace is looking and understands the risk, and we did not feel that the downgrade was merited at the time, and that is part of the process and part of the dynamics of the marketplace. They have their opinion, and others have different opinions, and we look to funding the marketplace, and we are very comfortable with where we are funding at the spreads that we are funding at right now. Is AA important to you? It is important to us. With bail-in and other regimes coming in, it is going to be something that we continue to look at, and will there be less appetite for rating agencies to give out those ratings? Potentially. But again, the real story is where do we fund in the marketplace? Although we were downgraded, there was not a big cost to us for that because our credit spreads did not really widen very much. They have widened on the short-term for a little bit, but the longer end funding did not widen. Fantastic. Well, Rod, we will leave it there. Thank you very much. We appreciate it. For those of you that were too shy, I believe that Royal is going to be available in the Clinton breakout room, and we also have Bank of Montreal as the next presenter.