Capital Allocation Post-HSBC
Q: How are you allocating capital after the HSBC deal?
A: With HSBC now integrated, we have strong ROEs of 15.5% and robust capital levels, giving us strategic flexibility to return capital to shareholders and to build out our wealth and commercial franchises in the U.S. and Europe. Our current focus is on significant organic opportunities, including integrating HSBC, executing synergies with Brewin Dolphin, and opportunities with City National. The capital we generate will allow us to grow both organically and inorganically.

HSBC Acquisition Synergies
Q: What are the early results from the HSBC acquisition?
A: Retention is above expectations across all businesses despite the extended approval timeline. In consumer banking, client count is very strong, and we see opportunities to deepen relationships through products like credit cards and HELOCs. In commercial banking, we're focusing on access to capital and growing the loan book, while also capitalizing on FX opportunities. We're already seeing great referrals in wealth management. Overall, we believe there are significant cross-selling opportunities that could be as much or more than any attrition risks.

Net Interest Margin Outlook
Q: Will margins expand with current rate conditions?
A: Yes, the positive benefit from the wider spread between the five-year rate today and years ago is coming through our deposit portfolio. We expect continued margin expansion flowing through to the Canadian Banking NIM and also to the all-bank NIM.

Credit Losses and PCL Guidance
Q: What's the outlook for impaired PCL ratios?
A: We maintain our guidance of 30 to 35 basis points on the impaired PCL loan ratio for this year. We expect Stage 3 PCLs to continue increasing through 2024, potentially peaking at the end of this year or in the first half of next year.

Rate Cuts Impact on Credit
Q: How will rate cuts affect impaired PCL ratios?
A: The impact of rate cuts depends on other economic factors like unemployment. In our baseline forecast for Canada, we expect rate cuts of 100 basis points by year-end and another 100 basis points next year. These expectations are already reflected in our PCL models.

NCIB and Capital Levels
Q: Why buy back shares after issuing DRIP?
A: We used the DRIP to ensure we could close the HSBC transaction without an equity raise. Now that our earnings have been strong and we have more capital than planned, we're initiating a Normal Course Issuer Bid to return capital to shareholders and offset dilution.

Mortgage Retention Post-HSBC
Q: Are you retaining HSBC's mortgage clients?
A: Yes, we're actively working to retain that business. HSBC didn't have a strong proprietary sales force and led with aggressive pricing but didn't discount once engaging with clients. We're happy with the spreads in the mortgage book, and renewal rates are actually above our own.

Cross-Border Cash Management
Q: How are you addressing HSBC clients' cross-border needs?
A: We've added products to our offerings to match the value propositions that HSBC clients are used to. This includes sophisticated trade finance capabilities and liquidity management, which we're now offering to our commercial clients in Canada.

AML Investments
Q: Are you investing more in AML capabilities?
A: Yes, we continue to invest in AML systems to protect the financial system. We're constantly updating our technology and training, and we're bringing in seasoned professionals from HSBC to enhance our capabilities.

Capital Markets Outlook
Q: What is the outlook for Capital Markets activity?
A: We had a very strong second quarter in Capital Markets, reflecting improved client activity and significant market share gains. While we expect the environment to remain constructive, we anticipate some moderation in the second half due to seasonality and uncertainties around rates. However, we're comfortable with our guidance of $1.1 billion per quarter of pre-provision pre-tax earnings.

PCLs on HSBC Acquisition
Q: Why are there additional PCLs for HSBC?
A: The additional PCLs are due to applying IFRS 9 rules to the HSBC portfolio, treating them as newly originated loans. We established Stage 1 allowances in line with our practices, and we expect natural migrations and delinquencies to occur in coming quarters.

Consumer Cash Flows and Stress
Q: How are Canadian consumers coping with higher costs?
A: Overall, the Canadian consumer remains resilient, having built up savings during the pandemic. While aggregate savings have drawn down, they are still somewhat elevated. We do see pockets of stress, particularly among mortgage clients facing payment triggers, and we're increasing allowances accordingly.

RBC Clear Opportunities
Q: What is the potential of RBC Clear?
A: RBC Clear offers a large addressable market among corporate clients and allows us to deepen relationships. It provides important incremental funding and diversification in the U.S. and is an attractive ROE business. We've launched it in April and have had very positive results.

City National Earnings Normalization
Q: When will City National earnings normalize?
A: We expect City National to return to more normalized earnings levels by the end of 2025. We're completing remediation efforts and building a stronger platform, aiming to achieve peer-level ROAs.

Need for Global Scale in Cash Management
Q: Does cash management need global scale?
A: There's a significant opportunity in the U.S., and over time we can connect with our strong Canadian cash management platform. We believe we can serve clients effectively without needing global scale from the start.