Ebrahim Poonawalla

Ebrahim Poonawala followed up on the margin outlook for Canadian banking, specifically asking about competitive dynamics in deposit pricing for term deposits versus acquiring new households, and their implications for margins over the next one to two years.

Answer

Group Head of RBC Personal Banking Erica Nielsen and Group Head of RBC Commercial Banking Sean Amato-Gauci responded. Erica Nielsen noted continued competitive pressure on GICs, with a focus on retaining client funds within RBC (GICs or mutual funds) and increasing rotation into mutual funds. She highlighted challenges in client acquisition due to lower immigration but emphasized aggressive competition for new clients. Sean Amato-Gauci observed a product mix shift in commercial banking from term to demand deposits, with term deposits decreasing from a 2023 peak of ~20% to ~14%, and customers maintaining higher liquidity.

Ebrahim Poonawalla asked about the fee growth outlook for 2026 under a steady macro backdrop, identifying key drivers such as Global Family Office (GFO) and Family Office Solutions. He also questioned opportunities for inorganic growth in asset management, considering recent leadership changes and the company's capital position.

Answer

David Fox (CFO) projected mid-single-digit revenue and trust fee growth for 2026 under stable market conditions, highlighting GFO's strong win rate and Family Office Solutions' traction. Michael O'Grady (Chairman and CEO) added that asset servicing onboarding and slowing index outflows in asset management would also contribute. O'Grady confirmed a focus on organic growth in asset management but is open to inorganic opportunities like acquisitions or partnerships, particularly in alternatives and expanding third-party distribution.

Ebrahim Poonawalla asked about the expected completion timeline for Regions Financial's systems conversion and whether this process practically restricts the bank's flexibility for M&A. He also questioned if tariff uncertainty or potential Supreme Court rulings might significantly alter customer sentiment regarding borrowing and investing plans.

Answer

CFO Anil Chadha stated that the systems conversion is expected to be completed toward the latter part of 2027. While technically not restricting M&A, he noted that practically it would be very challenging. Anil Chadha also indicated that customers currently have enough clarity and are not overly focused on tariff uncertainty or Supreme Court rulings regarding their borrowing and investing decisions.

Ebrahim Poonawalla asked about the expected completion timeline for Regions Financial's systems conversion and whether this project restricts the bank's flexibility for M&A. He also inquired if tariff uncertainty or potential Supreme Court rulings might materially alter customer sentiment regarding borrowing and investing.

Answer

CFO Anil Chadha stated that the systems conversion is expected to be completed in the latter part of 2027. He clarified that while technically it doesn't restrict M&A, practically it would be very challenging. CEO John M. Turner, Jr. indicated that customers currently have enough clarity and are not overly focused on tariff uncertainty or Supreme Court rulings.

Ebrahim Poonawalla from Bank of America asked about PNC's long-term competitiveness, specifically regarding investment in capital markets and wealth management capabilities, and sought Bill Demchak's perspective on the ongoing stablecoin and crypto legislation in D.C., including potential risks to industry deposits.

Answer

Bill Demchak, Chairman and CEO, outlined PNC's focus on private capital entities, aiming for better-organized, client-centric coverage. He noted continued investment in existing capital markets areas like derivatives, loan syndications, FX, and a growing fixed-income business, but no intention to invest in the equities business, which he sees as dominated by giant-scale players. He stated that PNC's capital markets business is substantial beyond Harris Williams. Regarding stablecoins, he explained the D.C. debate over whether rewards count as interest on stablecoins. He argued that if stablecoins want to pay interest, they should be regulated like investment vehicles (e.g., government money market funds), not just payment mechanisms, and expressed skepticism about the crypto industry's lobbying for 'having it all.' Rob Reilly, Executive Vice President and CFO, added that total capital markets revenue was a couple of billion in 2025.

Ebrahim Poonawalla asked if M&T Bank's growing core deposits organically and incremental balance sheet growth would be dilutive to the current net interest margin (NIM) of around 3.70%, and if there's an upside scenario for NIM to be closer to 3.80%.

Answer

Daryl Bible, Senior Executive Vice President and CFO, M&T Bank Corporation, explained that the bank evaluates returns based on the overall customer relationship, not just individual products. He acknowledged scenarios where growing loans and deposits might lead to a slightly lower NIM but still generate a good return on capital. Bible noted that M&T's NIM is among the top in its peer group, allowing room for it to decrease if needed for competitiveness. He emphasized balancing DDA and interest-bearing deposit growth with attractive spread loans and fee income, and expressed confidence in operating in the low 3.70s for 2026.

Ebrahim Poonawalla asked if M&T Bank's organic core deposit growth and incremental balance sheet expansion would be dilutive to the current net interest margin (NIM) of around 3.70%. He also inquired about any upside scenarios that could push the NIM closer to 3.80%.

Answer

Daryl Bible (VP, Senior Executive and CFO, M&T Bank Corporation) explained that M&T Bank evaluates returns based on the entire customer relationship, not just individual deposits or loans. He acknowledged that growing loans and deposits might result in a slightly lower NIM but would still yield a good return on capital. Mr. Bible stated confidence in operating in the low 3.70s for NIM in 2026, emphasizing the balance between DDA growth, interest-bearing deposits, attractive spread loans, and fee income.

Ebrahim Poonawalla asked about the commercial loan growth outlook, specifically in the U.S. regarding the impact of the tax bill on business investments and hiring, and potential risks from tariff uncertainties. He also questioned what is needed to lift the macro overhang in Canada, particularly concerning USMCA clarity.

Answer

Ernie Johannson, Head of U.S. Banking, noted general client optimism in the U.S., growing pipelines, and the expected benefit from new commercial bankers and technology investments, anticipating loan growth pickup by Q2/Q3 2026. Sharon Haward-Laird, Head of Canadian Commercial Banking, described the Canadian tone as cautiously optimistic with strong pipelines and momentum, emphasizing deposit growth and readiness for CapEx, while acknowledging that more certainty would be a positive contributor.

Ebrahim Poonawalla inquired about the drivers of Scotiabank's double-digit EPS growth outlook for the Canadian banking segment, focusing on PCL normalization, pre-tax pre-provision (PTPP) growth, and the bank's ROE trajectory and capital deployment strategy, including potential M&A.

Answer

CFO Raj Viswanathan and Group Head of Canadian Banking Aris Bogdaneris detailed Canadian banking's expected mid-single-digit PTPP growth from margin expansion, disciplined expenses, and strong fee income, with PCLs normalizing to the high 30s. President and CEO Scott Thomson expressed confidence in surpassing the 14%+ ROE target ahead of schedule, prioritizing organic capital deployment, share repurchases, and selective U.S. tuck-in acquisitions.