Jill Shea

Jill Shea asked about SoFi's long-term profitability outlook, specifically regarding its Return on Equity (ROE) target of 20%-30%, and whether the timing or target itself has changed given the company's recent progress and capital-light strategy.

Answer

Anthony Noto, CEO, reaffirmed the company's belief in achieving a superior ROE and Return on Tangible Common Equity (ROTCE) in the 20%-30% range. He emphasized that SoFi will continue to invest heavily in the business to support its rapid growth, aiming for a 30% incremental EBITDA margin rather than maximizing short-term ROE. Noto stated that under-investing would mean under-delivering on the significant growth opportunities ahead, given the current growth rates exceeding 30%.

Jill Shea inquired about RBC's progress on its adjusted efficiency ratio, which is at 54% against a 53% medium-term target. She asked if the bank sees potential for the ratio to go even lower than 53% given its scale, or if 53% represents a strategic reinvestment philosophy.

Answer

Katherine Gibson, CFO, confirmed that RBC is always striving for improvement and sees opportunities beyond the 53% target. She stated that while 53% is the Investor Day target for 2027, ongoing AI use cases and other initiatives could drive the efficiency ratio lower over time.

Jill Shea asked about RBC's progress on the adjusted efficiency ratio (54% vs. 53% target), questioning if it could go lower than 53% or if 53% represents a philosophical point for reinvestment in the business.

Answer

Katherine Gibson, CFO, stated that RBC is always striving to improve efficiency and sees opportunities beyond the 53% target, especially with AI use cases. She confirmed that 53% is the current Investor Day target for 2027, but the bank is continuously looking for opportunities to go further.

Jill Shea followed up on the deposit strategy progress, tying it to the net interest margin (NIM) outlook. She noted that the year-over-year margin had improved due to lower funding costs and asked if there was further room for funding costs to decrease or for a favorable mix shift away from term deposits to continue impacting NIM positively.

Answer

Raj Viswanathan (CFO) confirmed that deposits are a significant component of NIM expansion, alongside fixed-rate mortgage repricing. He stated that the all-bank NIM expanded 4 basis points quarter-over-quarter and is expected to continue expanding modestly each quarter throughout 2026. This expansion will primarily come from the Canadian bank, Global Transaction Banking (GTB) operations (which contributed 14 basis points to GBM's NIM this quarter), good quality deposit growth in the Canadian bank, and margin expansion on the mortgage book, rather than further benefits from lower wholesale funding costs, as no additional rate cuts are currently forecasted.

Jill Shea of UBS Group inquired about the forward-looking outlook for the net interest margin (NIM) in both the Canadian Banking and International Banking segments.

Answer

CFO Raj Viswanathan stated that the Canadian Banking NIM should see small, sequential improvements, absent any central bank rate cuts. For International Banking, he noted the Q3 result was boosted by opportunistic trades and reiterated a sustainable NIM expectation of 4.45% to 4.50%, with a focus on core deposit growth for future improvement.