Matthew James Lee

Matthew James Lee asked about client preferences in the mortgage market, specifically whether borrowers are leaning towards fixed-rate stability or variable-rate optionality. He also inquired how this trend informs RBC's product mix outlook for Net Interest Margin (NIM) and its mortgage retention strategy over the next few years.

Answer

Erica Nielsen, Group Head, Personal Banking, noted a current trend towards variable-rate mortgage acquisition, which shifts based on clients' expectations of Bank of Canada rates. She stated that RBC's products are priced appropriately to meet client demand, and the bank remains confident in its mortgage guidance for the upcoming year, irrespective of these oscillations.

Matthew James Lee asked Erica Nielsen about the mortgage front, specifically how healthy borrower equity positions and stabilizing rates are influencing client choices between fixed-rate stability and variable-rate optionality, and how this informs RBC's product mix outlook for NIM and mortgage retention strategy.

Answer

Erica Nielsen, Group Head, Personal Banking, noted a current shift towards more variable-rate mortgage acquisition, driven by client expectations of stable or declining Bank of Canada rates. She explained that this dynamic oscillates with rate expectations and that products are priced appropriately to meet client demand, supporting mortgage guidance without necessarily negatively impacting revenue generation.

Matthew James Lee asked about the significant efficiency improvements in Canadian Personal and Commercial Banking, inquiring about contributing factors beyond the stated HSBC synergies.

Answer

Group Head of Personal Banking Erica Nielsen cited strong general expense management and robust revenue growth from client acquisition and consolidation. Group Head of Commercial Banking Sean Amato-Gauci added that his segment also maintains strong cost discipline while continuing to invest for growth, expressing confidence in maintaining the current efficiency level.

Matthew James Lee from Canaccord Genuity asked how the TD Cowen integration is improving investment banking mandates, whether capital markets will be a larger growth driver, and which industries are seeing increased activity.

Answer

Tim Wiggan, Group Head of Wholesale Banking, stated that the segment's quarterly revenue run-rate has grown from ~$1.2 billion pre-Cowen to ~$2.0 billion, driven by a pickup in CIB, advisory, and U.S. equity capital markets. He noted that growth is broad-based, with particular strength in biotech, energy infrastructure, and TMT, demonstrating a well-diversified contribution.

Matthew James Lee from Canaccord Genuity Group questioned how the TD Cowen integration is improving investment banking mandates and whether capital markets will be a larger growth driver, asking which industries are showing momentum.

Answer

Tim Wiggan, Group Head - Wholesale Banking, stated that the TD Cowen platform has significantly scaled the business, with quarterly revenue growing from a pre-acquisition baseline of $1.2 billion to $2.0 billion. He confirmed capital markets will be a key growth driver and highlighted broad-based strength in advisory and capital markets, particularly in biotech, energy infrastructure, and TMT.

Matthew James Lee of Canaccord Genuity Group inquired about the timeline for the Canadian Banking business to achieve positive operating leverage and the role of the SCENE+ program in acquiring multi-product customers.

Answer

Aris Bogdaneris, Group Head of Canadian Banking, stated that the aim is for the segment to achieve sustainable positive operating leverage heading into 2026 as technology and productivity investments pay off. He also noted that the SCENE+ program is a valuable source for cross-selling, with ongoing work to better leverage its data to drive primacy.

Matthew James Lee of Canaccord Genuity Group Inc. asked about the performing credit loss (PCL) recovery in the U.S., questioning if it signals a more positive economic view and whether U.S. impaired PCLs have now peaked.

Answer

Chief Risk Officer Piyush Agrawal confirmed the performing release was due to an improved U.S. macroeconomic forecast and faster-than-expected stabilization in portfolio quality. He also stated his reasonable confidence that U.S. impaired PCLs have passed their peak, though he cautioned about potential quarter-to-quarter variability.

Matthew James Lee from Canaccord Genuity Group inquired about the U.S. commercial portfolio, asking what management is hearing from customers that provides comfort on credit risk and what tariff assumptions are in their models.

Answer

CRO Piyush Agrawal explained that the weaker macroeconomic outlook, including higher unemployment forecasts, drove the performing PCL build. Nadim Hirji, Group Head of Commercial Banking, added that client sentiment is improving as they navigate the environment well. Piyush Agrawal clarified that the base case model now incorporates a significant deterioration in Canadian GDP and a rise in unemployment to 8%, reflecting announced tariffs.