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. "