Welcome to Equitable's second quarter analyst call and webcast on Thursday, July 29th, 2021. At this time, you are in a listen-only mode. Later, we will conduct a question and answer session for analysts. Instructions will be provided at that time. It's now my pleasure to turn the call over to Richard Gill, Senior Director, Corporate Development and Investor Relations at Equitable. Please go ahead, sir. Thanks, Audrey. Your hosts today are Andrew Moor, President and Chief Executive Officer, Chadwick Westlake, Chief Financial Officer, and Ron Tratch, Chief Risk Officer. For those on the phone lines only, we encourage you to log on to our webcast as well, as it includes our quarterly slide deck, including slide 2 regarding forward-looking statements. It is now my pleasure to turn the call over to Andrew. Thanks, Richard. Good morning, everyone. Equitable hit its stride in Q2 with strong growth across the bank. We're excited about the ongoing pace of digital innovation that fulfills our purpose of changing the way banking is done to enrich the lives of Canadians. Certainly, we believe there's more to do to ensure that our investors have a common understanding of the value creation embedded within our digital journey. In order to help with that understanding, we added more to our disclosures for EQ Bank to give you a better sense of the dramatic increases in platform usage and customer engagement. We're focused on creating more value for our customers, and in turn, driving deeper relationships, which include more products per customer and more transactions. On the asset side, our growth in Q2 was particularly strong in conventional and insured, led by alternative single-family. This gives us added confidence in our ambitious guidance for the year, with positive implications for earnings growth beyond 2021. As you know, it's the growth of our conventional loan assets that really fuels earnings. Beyond these positive developments, our credit book is in great shape, and our initiatives to lower our cost of funds are gaining more momentum with CMHC's recent approval of our CAD 2 billion legislative covered bond program. Chadwick will have more to say about this, but at full throttle, this program could result in annual costs of fund savings of about CAD 10 million. Our investments are made with the goal of superior long-term value creation and deliver strong ROE of between 15% and 17% in the years ahead, which is consistent with what the bank has delivered to date this year. Today, I will discuss our outlook. Chadwick will provide insights into the bank's results, and Ron is present to address any questions you have about risk management, and particularly support our positive perspectives around our credit outlook. Before we get started, I'd like to give credit where it's due to our exceptional team of over 1,000 challengers who are keeping true to our purpose as we serve almost 300,000 Canadians. With pandemic restrictions easing, more members of our team are returning to the office. This is welcome news as it is often easier to deliver elements of our product roadmap and enhance our customer experience when we are all together. We're moving ever closer to a post-pandemic world, and I can't wait to see what our larger team can do without the constraints we've experienced since March last year. Moving to our outlook, we are reaffirming the overall 2021 growth guidance we provided last quarter for both growth and efficiency. Naturally, our outlook invites comparisons to performance against our annual targets. As I mentioned at the outset, portfolio growth is strong. Assets were up 8% year-over-year, with loan principal up 6% in the personal bank and 14% in the commercial bank, both favoring wider spread conventional loans. It's worth noting that it was only in Q4 last year that we really regained confidence in the direction of the economy. After putting the brakes on loan growth, particularly in alternative single-family through much of last year in what could now be called an overreaction to the pandemic, we had to restore our standing with the broker community. We got things rolling in January, and with great support from our broker partners, delivered excellent growth in Q2 with even more momentum as we speak. Looking at loan production, which is one element of book growth, single-family alternatives generated record originations of CAD 1.8 billion in Q2, three times Q2 2020 levels. As noted, production in the year-ago period was constrained by our decision to slow capital deployment. Another way to gauge momentum is quarter-to-quarter production, which was 68% ahead of Q1. No matter the basis of comparison to single-family alternative, we are well on our way to achieving our growth target of 12%-15% for all of 2021. Exiting the quarter, our loan commitment pipeline certainly supports our guidance and speaks well to the status of our deep broker relationships. We're intent on continuously improving our service and experience for brokers and borrowers as part of our Challenger Bank ethos. In thinking about our outlook, we note that the Bank of Canada expects housing activity to ease back from historical highs. We see logic in that call. However, we also note that low interest rates, a freer flow of passage for newcomers to Canada, and the widespread undersupply of single-family and multi-unit properties we fund through our commercial bank, are tailwinds that will not diminish in the short run, and in some cases, for the foreseeable future. With more workers expected to return to their regular places of employment over the next few months, we expect that pandemic preferences that favored home purchasing activity in smaller towns and rural regions will dissipate. A revision to the norm will once again benefit real estate in Canada's large cities, where Equitable Bank has a very strong franchises and a constructive view of risk. Another growing contributor is our wealth accumulation business, comprised of Reverse Mortgage and Cash Surrender Value Lines of Credit. We set very ambitious goals for both ends of these portfolios, and again, through Q2, the teams delivered. Our Reverse Mortgage book grew 273% year-over-year. Recall our full-year growth target for 2021 is growth of 200%-plus. Our team has done a great job building distribution and market share by working with our broker partners. Going forward, we will complement those activities with direct client engagement. We believe low interest rates, high house prices, and the opportunity to fund retirement lifestyle choices through home equity are proving to be strong catalysts for Reverse Mortgages, as is the trend of aging in place. We aim to continue to expand our market share with product innovations, targeted marketing, and broader distribution to tackle this underserved market. CSV loans grew 180% year-over-year. Full-year guidance is 150%-plus. The bank has done quite a bit of work to develop distribution for our products, and these results demonstrate it. We now have lending arrangements with eight insurance companies, including Sun Life and Manulife, who recently joined us, and Desjardins Insurance, which came on board July. It takes time and effort to build trust with these companies, and we're working hard to repay that trust. As we scale up wealth accumulation, now CAD 165 million portfolio will become a bigger part of our value creation story. The commercial side of our bank also performed on plan in Q2. Once again, accounting for nearly half of our growing earnings. A strong contributor was conventional commercial, where production was up 16% year-over-year to CAD 653 million. Looking at key variances, the annual growth target for our Commercial Finance Group is 20%-25%, whereas growth over the past year was 14%. In Q2, the portfolio was flat to Q1. As we expected, funding was strong in Q2, and also as we expected, so too was the level of attrition due to elevated scheduled maturities. Because of the growth and strength of our commitment pipeline and the lower levels of attrition expected in the last six months of the year, we remain confident in our full-year guidance for Commercial Finance Group portfolio. Specialized Finance outpaced guidance growing at 31% year-over-year compared to 20%-25% target. This outperformance reflected increased drawdowns of the facilities put in place over recent quarters, as well as success in arranging new facilities. We guided you to expect 7%-10% growth in our Business Enterprise Solutions for 2021. We're experiencing strong demand here from entrepreneurs and small to medium-sized business customers, and really like how this part of our franchise is evolving. Within our Equipment Leasing portfolio, growth from Q2 2020 of 24% compares to a full-year target of 5%-8%. The drivers are transportation and logistics sectors of the economy, which will remain resilient throughout the pandemic and represent the lion's share of our Equipment Leasing activity. Stepping back, it's been two and a half years since we acquired Bennington, and the business is evolving exactly to plan with multiple back-to-back months of record success. Each month that goes by gives us greater confidence in the future growth and success of this business, and we couldn't be prouder of the efforts of the Bennington team. Their execution in fitting into the broader Equitable family, the need to adapt policies to bank-grade standards while keeping a singular focus on their market opportunity and customers has been quite outstanding. Overall, we are on track to achieve our stated guidance of 8%-12% growth in the bank's total loan book for the year, and much of that will come from wider spread conventional assets. Looking at insured loans, our guidance for the year calls for a slight decline in multi-unit, but in fact, the book grew 9% year-over-year on record quarterly originations and despite high derecognition volumes. We are working on an initiative with our trust company subsidiary to build capacity in this market, and this should start to yield benefits in Q4 of this year and be more meaningful in subsequent years. Prime single-family loans also increased over the prior year, thanks to the efforts of our prime team. Growth in Equitable-branded prime loans originated directly with brokers is running ahead of our expectations, which is great for the long-term franchise value creation. From time to time, we also purchase prime mortgages opportunistically with more favorable economics only released later in the life of the loan or renewal. This quarter, we didn't make any purchases. Our outlook also includes a positive trend in credit metrics with the gradual reopening of the economy. In spite of some modest releases in each of the past two quarters, our credit reserves remain elevated over what we would view as a baseline and relative to the quality of our assets, which has never been higher. We will see where our forward-looking indicators guide us to over the next couple of quarters. The biggest storyline is the rapid development of our digital platform and the fintech-related operations with the growth of EQ Bank being the most tangible outward indicator. We are pleased, though not surprised, that EQ Bank deposits grew 99% over 2020 to a record CAD 6.5 billion at June 30th against our full-year 30%-50% annual target. This reflects 79% year-over-year growth in our customer base, which now stands at 222,000 people. Demand for EQ Bank term deposits up 267% year-over-year. On slide 9 of our presentation, we show that digital transactions increased 101% over Q2 last year, while products to customer grew 44%. These are telltale signs of greater customer engagement, which is as important to us as adding new accounts. Since we launched the EQ Bank US Dollar Account during Q2, we've already achieved our US dollar deposit target for the entire year, as our customers are really finding tremendous values in features like the ability to fund their US dollar accounts from either an external bank account or from their EQ Bank Savings Plus Account, real-time exchange rates with full fee-free transparency, and I might note great rates, easier, cheaper, and faster money transfers in US dollars worldwide. Please do and try and use the EQ Bank US Dollar Account. It's a pretty fantastic digital execution, and whatever you think of the stock, it can certainly help you generate more value in the personal finance side of your life. Within our product roadmap, and now that we've launched an upgraded EQ Bank website, we're currently working aggressively on ways to cement Equitable's position as Canada's preeminent digital bank. This will involve many exciting innovations in the future, including in the area of payments. We'll have more to say on this topic next quarter. The evolution of EQ Bank has been driven by our obsession with making it easier for Canadians to reach their financial goals through constant internal innovation and collaboration with the world's leading fintech players. We are holding true to our model, and it's paying off for customers and for our bank. Customer lifetime value is now more than 10 times higher than the acquisition cost as customers use more products and increase activity levels. A final development I want to cover is our shareholder proposal to complete a 2-for-1 stock split. We've completed deep research on this topic and the electronic trading patterns for our common stock. We tend to experience higher trading volumes outside of the TSX, including in dark pools, more odd lot trading, wider bid-ask spreads, higher volatility within quarters, and possibly lower access for retail investors. Our understanding is that the lower stock price resulting from the split will encourage dealers to apply more capital holding inventory of shares and should shrink the bid-ask spread. Our management team firmly believes our stock continues to trade at a material discount to fair valuation, particularly considering our leading digital platform, consistently high ROE versus our price to book, diversification, and for being a high-growth Canadian bank with structural advantages. The stock split is part of an overall program of activities with the goal of closing that discount. This proposal has been approved by Equitable's board of directors, and we will seek shareholder approval at a special meeting. Details will follow next month. To wrap up, execution this quarter was strong. Our outlook is positive, and we are on track to achieve our ambitious longer-term objectives, which will create value in the years ahead. Hopefully, before too long, we will add a growing dividend to our performance, which is at the heart of our plan for long-term shareholder value creation. As you know, Canadian banks have been prohibited from raising dividends since the pandemic began. We're encouraged by improvements in financial markets that may create the stability OSFI is looking for to remove this restriction. Chadwick, over to you. Thank you, Andrew Moor. Good morning, everyone. As Andrew Moor said, last quarter, we provided updated guidance on what we intended to do, as you see in our Q2 results, we're getting it done. Our focus remains on ROE with the additional guideposts of book value per share, CET1, EPS growth, and efficiency. We continue to land each metric within our overall guidance. I want to make clear, as this is a period of important investment in the future of Equitable, we are focused on the long-term value creation of Canada's challenger bank. Even with the fact that much of Q2 featured pandemic lockdowns for Canadian businesses, we generated growth within these guideposts that we believe are leading amongst Canadian banks. For Q2 specifically, strategic deployment of capital resulted in growth of 9% year-over-year and 3% quarter-over-quarter in assets under management. We're on the right trend line for 2021. This reflects CAD 3.6 billion of originations, up CAD 1 billion from suppressed levels in Q2 last year and up CAD 900 million since last quarter. Important in these numbers is growth in higher margin conventional assets, which again in total were +6% quarter-over-quarter and +9% year-over-year, combined across personal and commercial, and these reflected 72% of the overall origination in the quarter. Growth is strong and in all the highest return asset classes. To fund this capital deployment, we have continued to generate a tailwind with funding diversification and growth. Total deposits of CAD 18.4 billion were up 18% year-over-year, and within that, our digital bank deposits grew 99%. Our fortress balance sheet, disciplined choices in our strategy, and investments translated into revenue growth of 21% year-over-year. The outcome here is diluted EPS of CAD 4.05, a strong showing, although slightly suppressed by an increase in shares outstanding in the quarter. On a year-over-year basis, the impact here was about a CAD 0.09 reduction in EPS due to higher share count over the past 12 months. Our bank delivered right in our target range at 16.5% ROE in Q2. If CET1 was back at our target level, quarterly ROE would have been 17.6%, above the top of our guidance. While we did have a PCL reversal in Q2 that I'll speak to shortly, it's important to note pre-provision, pre-tax income grew at a significant 17% year-over-year in Q2. Year-to-date, it is up 24% year-over-year. Book value per share crossed CAD 100 for the first time. In his outlook comments, Andrew Moor touched on growth against guidance. I'll just say that for slide 13, the markers show we're on track. To fund asset growth, we're continuing to diversify and improve our cost of funds. You see this on this slide, an updated perspective of what our funding stack looked like 3 years ago, 1 year ago, last quarter, and today. The diversification is evident and strategic with positive implications for cost of funds. Now that we've received approval from CMHC to launch our CAD 2 billion covered bond program, a program that will eventually increase in size as the assets of our bank continue to grow, we are set to benefit from additional cost of funds tailwind. We will do our first issuance of up to EUR 300 million in Europe. Strategically, we will most likely issue in early September to optimize pricing, which we continue to expect to be as much as 50 basis points cheaper than GIC pricing. As Andrew highlighted, this could translate into as much as CAD 10 million in annual cost of funds savings once the program is fully ramped up. We're well-positioned with liquidity of CAD 2.9 billion at the end of Q2 and a liquidity ratio of 9.1% versus Q2 last year of 6.4%. We also completed 1 additional deposit note offering in Q2 of CAD 150 million due in September 2023. This was done by way of adding to a previous deposit note with a spread of 90 basis points and a reopening yield of 1.384%. This offering was 4 times oversubscribed and with more new investors coming on board. The bank's deposit note program has more than CAD 1 billion outstanding, and we intend to remain regular in this funding market. These factors translated into Q2 NII growth of 19% to CAD 141.8 million and a NIM of 1.81%. NIM expanded quarter-over-quarter, driven by a shift in business mix to our alternative single-family mortgages, which enjoy wider margins than our insured mortgages, the benefit from an April EQB rate reduction, and higher levels of prepayment income. Once again, our Equipment Leasing business had the highest yield at 10.18%, and this business remains strong on a risk-adjusted margin basis, including as we grow more on the prime side. On the next slide, I'll note that we are early in the journey of diversifying our sources of non-interest income. You can see here that it was CAD 16.9 million, versus CAD 16.2 million in Q1, and up 34% year-over-year. We have initiatives underway to continue to expand non-interest income through the launch of new products, and we'll have more to say on this topic over coming quarters. Q2 includes CAD 2 million from our strategic investments into fintechs such as Portage Ventures and Framework. As a reminder, we make these investments for deeper insight into the fintech space, global innovation, and the leading-edge perspectives we gather through partnerships that help us to enrich our customer offerings as Canada's challenger bank. The additional benefit is that we also generate revenue from these investments. Gains on sale were CAD 8.6 million. We do expect these gains to be lower in the second half of the year. We benefited from high volume in Q2, but further normalized margins. Much of this depends on CMHC allocations each quarter. Moving on, non-interest expenses increased 13% quarter-over-quarter and 26% year-over-year. I signaled an expense increase on last quarter's call. We managed this higher investment exactly as we said we would. We scaled to the point of landing within our annual efficiency guidepost of 39%-41% for 2021. This now puts us at a 39.6% efficiency year to date, right on target. Our view of expenses is different than some other banks. While some spending is for maintenance, we consider much of it an investment that seeds future growth. As you know, we build a lot of our products and services internally, but we also partner with world-class fintechs and technology companies, including Wise, Blanc Labs, Nesto, and Microsoft, which allows us to move efficiently and with high velocity. Our investments will tend to be a bit uneven through the year, particularly on marketing and new products versus when the revenue is realized. I say this as a reminder that this is not a straight-line accounting exercise. We're investing in our 3 Ps of people, process, and platform. For people, our greatest asset, we increased compensation costs 15% year-to-date and 23% quarter-over-quarter. This reflects growth in FTE, but also more competitive compensation for our teams. When you have the best, they need to be compensated accordingly, and we need to keep pace with this priority. For processes, including across corporate and marketing categories, expenses were up 7% year-to-date and 32% quarter-over-quarter as a result of our Smart Money marketing campaign and a normal annual grant of Deferred Share Units. In platform, the 2 components of product cost and other technology were up 43% quarter-over-quarter and 17% quarter-over-quarter, respectively. These are critical investments supporting ongoing scaling of the bank, maximizing product launches, and readiness for innovations to come. We expect these investments will be paying off in 2022 and beyond. For outlook on expenses, I will say we did a big scale-up in Q2, and I now expect expense growth to return to low double-digit quarter-over-quarter in Q3 and Q4, respectively. On the next slide, you can see our trend line for provision for credit losses. In Q2, we had a CAD 5.3 million reversal at Stage 1 and Stage 2. The primary driver was continued positive trending in 2 key macroeconomic variables, overall GDP and HPI, specifically on the residential portfolio. These positive macro variable changes resulted in a CAD 1 billion migration from Stage 2 to Stage 1. While reversals occurred across all portfolios, proportionally, our single-family and leasing portfolios benefited to a greater extent from this positive trending than our commercial real estate book. Of note, we did not make any changes to our 5 scenario weights, and if our base case translates, we would be in a position to release potentially CAD 4.2 million over the coming year. Our overall ACL sits at CAD 56.8 million now, lower by 10% compared to Q1 and 23% year-over-year, but still up more than 40% from what we would view as potentially normalized level. Modest improvements in early delinquency are aligned with Q1 forecasts of an improved economic environment, and we view these levels as being in line with historic norms. Given the strength in the performance of our commercial book and barring unforeseen economic deterioration, we may look to reduce our commercial ECL in coming quarters. Gross impaired loans were down 20% year-over-year and up 15% in the quarter. The year-over-year improvement reflected the discharge of a CAD 39 million commercial loan in Vancouver without a loss, which we talked about on our Q2 call last year, and a loan in Alberta of CAD 17 million that returned to performing status in Q2 this year. The remaining year-over-year variance reflected a net reduction in single-family mortgages of CAD 16.5 million and impaired equipment leases of CAD 9.7 million. The increase in impaired loans compared to the prior quarter was mainly because of the addition of two commercial loans, CAD 23.1 million in Alberta, which was resolved in early July 2021, and CAD 8.9 million in Manitoba. We do not expect to incur a loss on the Manitoba loan. Moving to capital, this is a consistent and positive story. RWA increased by 5% to CAD 11.5 billion in the quarter, a little higher than the growth in CET1 capital, given the timing delay of earnings to capital deployment. The result was a CET1 ratio of 14.4%, down 10 basis points from Q1. This represents CAD 100 million or nearly CAD 6 per share of excess capital above the midpoint of our target. It's important to note here that when we share this math, the midpoint is simply a conservative target. It's not a regulatory floor. If there are great organic or non-organic growth opportunities, we would be okay to go below the 13%-14% range for a period of time strategically to create additional value for our stakeholders. We remain well above OSFI buffers and are well-positioned for capital treatment changes that come for us in 2023, which will unlock significant additional capital. In closing, this was a strong quarter of growth in new customer relationships across Equitable. Our digital platform and key growth metrics, good success with product launches and smart investments that will enhance our bank in the future periods. We expect good execution in Q3 and Q4 with no surprises or changes to guidance. This should result in ROE of 15%-17% for the year, and we're on track now at 16.8% year-to-date. As both Andrew and I have stated, our focus is to set ourselves up for more growth and more diversification in 2022 and beyond. With that, I'll ask the operator to open the line to your questions. Thank you, sir. Ladies and gentlemen, if you do have a question, please press star followed by 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request. And if you would like to withdraw your question, simply press star followed by 2. And if you're using a speakerphone, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star 1 now if you have any questions. Your first question will be from Meny Grauman at Scotiabank. Please go ahead. Hi, good morning. Just a first question on the impact of the changes to the stress tests on mortgage originations. Do you think it had any impact in anticipation of the change in Q2? I know it's early days in Q3, but are you seeing any impact in Q3 from that change? Certainly, thanks, Meny, for that question. These are hard things to actually kind of empirically assess. Based on our conversations with our broker partners, some analytics we've done around on the relatively small impact this would have on any of our book, we don't really believe so. We didn't see that. Of course, we were already dealing with fairly active housing markets when those changes went in, it certainly feels like that was a bit of a non-event from the perspective of the housing market itself and mortgage demand. Maybe just a broader question again, early days in Q3, but we've seen the reopening of economies across the country, especially in Ontario and Toronto. Are you seeing any changes in behavior, both on the deposit side or on the loan demand side, related to the broader reopening? Not yet. I think, as you've probably seen in the press, the actual transactions in the resale housing market have normalized, let's say. To say softened is not true. The market's still really active compared to where it was in March or April. I wouldn't be surprised, as I sort of made a comment in my notes, I think there might be a bit of a reset going on here. As people figure out what the new future of work and where they're expected to be changes over the next few months, there might be a bit of a lag. It may create a little bit of people pausing to think about that before they then make their next decision. Certainly, all the indications are the demand now for downtown condos, at least in the rental market, is starting to move up in a quite dramatic way. That potential reversion to preference for living in the major urban centers, seems to me that we're in the earlier stage of that reassertion of that preference. As with everything in forecast, you need to be careful and cautious about that kind of viewpoint. It does make sense when you think about the broader context of a reopening economy and economic patterns going in a more traditional direction. Thanks. Maybe just a question on expenses. Chadwick, you highlighted the increase on the compensation line in particular. I'm just wondering, can you give us a little bit more detail in terms of specific areas where you are hiring new people? You talked about keeping pace on the compensation side. Are there specific areas as well where that was identified as an issue or just a need to increase, or is it more broad-based? Good morning, Meny. Thanks for the question. The hiring is, there's lots on the technology side, so lots of technology and innovation that applies to both adding FTE, but also ensuring our compensation is competitive. As we've seen across Canada, I think a lot of companies are becoming more and more competitive for technology talent. We do view ourselves as one of the greatest places to work in the country, and we want to compensate and correlate it and make sure we're attracting that talent. Certainly hiring more in service teams and sales teams to help promote that growth. Across the Personal and Commercial Bank, including adding relationship managers. I'd say it's roles that are generating revenue or efficiency or further innovation for the bank are certainly a top priority, then making sure our infrastructure can keep up with that. Just a related front, just how you think about operating leverage internally, and I know you don't publish the targets, but what kind of guideposts do you have in terms of operating leverage? How important is it to kind of keep a certain level of positive operating leverage? Maybe we can answer that in two parts. I can provide some opening comments. Chadwick can kind of finish up. Certainly, Chadwick, coming from a senior executive, one of the major Canadian banks, thinks about it in a way that's not as traditional as we have internally. I think it's really added value as he brings that thinking to bear. What I would say is that our true north is ROE. I would say that operating leverage is an important signpost to how we drive to ROE. Clearly, there's a linkage when you actually sort of work through the math on how you drive ROE. When we think about some of the businesses we're building, I'd highlight Reverse Mortgages as a truly optimistic, an area that I think will be really important to shareholders over the years ahead. Our efficiency ratio would be in the 90% level. Having said that, when we run the NPV and the future ROEs that spin out of that business, it's very good. That efficiency ratio is effectively made up of an amalgam of the various businesses we have. Frankly, if we dove down in some of our more mature businesses, you'd see some really extraordinarily great efficiency ratios. Maybe I've already chewed over your comments there, Chadwick. No. You do think about it, though, I know in a few points. Yeah, no, I agree. It's a little less traditional to think about it here, and it's to our points on the amount of investment we're making and the lumpiness of some of the investments. Andrew Moor answered it precisely. Our number 1 money is the ROE and efficiency secondary to that. Operating leverage, I think as we saw, yes, in this quarter specifically, it was negative. Obviously in the last quarter, it was dramatically positive. Our expectation is that it's going to average out flat to positive. Some other banks may need to make sure that's positive given they're trying to get their efficiency and productivity ratios to improve. We're already by far best in class globally at a 39%-41% level and with a consistent ROE. That's why operating leverage, we're more accepting of it as we invest to be a little bit more volatile, but average out within those guideposts, if that makes sense. If I could just sort of follow up on that a little bit. A classic example, an easy example is around acquisition of new customers for EQ Bank, which obviously drive huge value. We think our customer lifetime value is around the CAD 800-CAD 1,000 per account. Roughly speaking, our cost of acquisition is less than a tenth of that. That cost of acquisition is expensed in the period while that customer lifetime value is realized over a number of years ahead. You can see that the accounting doesn't follow the economic value creation and doesn't help with efficiency ratio in the short term. Thank you very much. That's it for me. Thank you, Meny. Thank you. Next question is from Étienne Ricard at BMO Capital Markets. Please go ahead. Thank you and good morning. Morning, Étienne. You just raised a very interesting point on the net present value of a new customer at EQ Bank. With the cost of acquisition being a tenth of that, could you remind us how that cost of acquisition would have evolved in recent years? Is a tenth of that the marginal cost? Is that the right way to think about it? Yeah. We're really thinking about the marginal cost associated with, say, offering bounty for referrals from other customers, advertising cost in the period, so Internet search that then drives customer acquisition. I would say it can be volatile period to period, even that cost of customer acquisition. Again, these numbers sort of move around a little more than I would like to, but we certainly have that kind of fintech view of the world of what is our cost of customer acquisition. We're really focused on what is the cost of acquisition through the various channels that are open to us, and trying to drive that down with not traditional, but very much using A/B testing about how customers respond, trying to improve conversion ratios from people that come through the top of the funnel. Constantly looking at how many people we've got in the top of the funnel, and how many of those are then leading through to kind of landing and actually opening an account. Our teams have got a lot better at this over the last couple of years, I'd say. We see to that point, too, Étienne, we see expansion potential on the customer lifetime value side as we continue to expand more products. That 10x is a good average point and maybe lumpy, but we do see expansion potential, some of it what's in the pipeline. Okay, great. There was quite an impressive increase in the dollar value of term deposits at EQ Bank this past quarter. Could you comment on that success and the percentage of deposits at EQ Bank you would expect to have a term going forward? Yeah. I think you might see this as a bit of a high watermark in the shorter term. What we actually do is when we drop rates in the Savings Plus Account, to the extent that we've got some very rate-sensitive customers, or to the extent we have rate-sensitive customers, we offer a good offer to move into a term product that maintains that rate, roughly speaking. We found that that's been a good strategy to kind of blunt the impact of any rate drops. That's why you saw people moving into the term product. We also then see them, as those term products mature, coming back and being more comfortable leaving the money in the Savings Plus Account. It's been a good strategy for us. Of course, the other part is it encourages trial of how easy it is to buy a GIC on our platform. For those of you newer to the story, I absolutely stand by the claim this is the easiest way to buy a great rate GIC in the country, as it's a fantastic sort of three-click type of activity. We do think we've become a go-to place to buy term deposits through this activity. Great. Thank you for your comments. Thank you, Étienne. Next question is from Stephen Boland at Raymond James. Please go ahead. Morning, all. Andrew, in your, I guess maybe it's your prepared comments or maybe the written comments, sorry, you talk about risk tolerance getting back to pre-COVID levels. Is that consistent across all the lending verticals that you're in or is there some that are lagging in terms of your risk tolerance? I don't know about lagging. I think there's some structural changes, Steve, that we were already aware of before COVID came. We have, as you probably noted, very low exposure to retail shopping plazas, for example. That's kind of driven by the Amazon effect. You see the impact of the pandemic on the economy is going to create some permanent shifts in, say, purchasing patterns. It's accelerated the purchase of online product and made B malls much less competitive. We'd already identified this 5 or 6 years ago, this is nothing new to us. We'd all been moving away from that asset category. I think clearly today we'd be extremely leery about lending on any of that kind of retail asset. In general, I think it's fair to say, Ron, there may be areas where we're still a little concerned, but I think in general, our feeling is pretty positive about certainly where we lend in major Canadian cities, our major asset classes, I'm sure. Yeah, I would absolutely second that. I'd just summarize it by saying our risk appetite is back in our core lending areas to where it was pre-pandemic, and some of the product types are a little bit more niche in certain lending classes and leasing. Given the state of the market we remain very cautious with respect to food and beverage equipment. In those core asset classes that Andrew referred to, yeah, we've returned to our previous appetite levels. Again, Bennington, as I mentioned, it's seen good growth, but it's seen it almost all in transportation equipment, to Ron's point, which is really holding up well. In fact, the challenge within that business right now is you can't buy transportation assets. There's a shortage of them, so it's challenging for our customers to get hold of equipment. Okay. Second question is just on the multi-unit insured. Your outlook was a slight decline. I think you blamed that on, or not blamed it, but certainly competition was a factor. We've seen growth in that. Has something changed in that segment, or you won the right business at the right time? Well, for Q3 in particular, we had a couple of large loans that didn't close that because of the way the allocation works, would have given us even more allocation. That was just an operational issue, that those loans will close and that will go through in Q4. It's just a little bit of a timing issue. We are structurally changing this. I mentioned that we're using the trust company and setting up to give us more capacity. We have set up an aggregator within our trust company. What that will allow us to do over the longer term is actually securitize greater volumes of multifamily mortgages originated from people that we haven't traditionally worked with at potentially wider spreads than we have done historically. I think you'll really start to see that. You'll see it start to drive profits in Q4 and then into next year. Okay. I'll sneak one more in just on AIRB. You mentioned maybe a possible conversion early 2023. Maybe just give us the next steps because from what we've seen with Canadian Western Bank, they've had to run a parallel kind of book for a period of time. Is that the next steps for you in this process? Ron is on top of all that detail, so I'll let him onto that. Right. The commentary there wouldn't change quarter-over-quarter. Our next steps remain to file our application with OSFI in probably late Q1, early Q2 2022. The guidance that you've given beyond there into 2023 really just follows the regulatory prescriptive pattern, where you run parallel for a year while OSFI reviews your application and comes back with feedback. As we've noted in the past, we don't control OSFI. We suspect and we feel we're going to put in a very strong package and a very strong application, and we'll await their feedback. That's really where the timelines are set from. Okay. Thank you very much. Thank you. Next question will be from Gian Hunter at Stifel. Please go ahead. Hey, everyone. Good morning. Just to start off on EQ Bank, obviously really solid growth in your customer base. Just on the product launches that you've made recently and kind of what you have in the pipeline. First question, Andrew, could we get a little bit of an update on the uptake for Mortgage Marketplace? What's the consumer reaction been relative to your expectations, understanding that it's still pretty early days for that product? Could we get just an update on how that rollout has gone so far? Absolutely. It's a great question. It's an interesting area. I think we've seen a fair number of applications. We're seeing low conversion rates, I would say. This may be a learning exercise on our part on how to improve those conversion rates. Not that far from my expectations, frankly. I think we expected this to be a trial and learn, offer another product to our customer, create the brand franchise value through doing that, and try to move up that conversion ratio. Frankly, when you talk to all the banks the conversion ratios of e-mortgage origination platforms are still very low right across the ecosystem. We certainly want to make sure that if consumer preference starts to change where you see more of that we will be working in partnership with our brokers to be a beneficiary of that sort of shift. I would say it's still modest conversion at this point, but quite a lot of interest and activity on the part of our customer base. I think if you go, again, I always encourage people to look at the EQ Bank platform to really see what we're executing there. It's really quite a beautiful execution in my mind in that mortgage origination. Some really sort of elegant, relatively straightforward questions that are asked you get from thinking about a mortgage to what sort of offers might be available very quickly and easily. This is definitely a way forward for our institution, for sure. Appreciate that. Just staying in the theme of EQ Bank's product wealth, I think both Andrew, you and Chadwick alluded to future product launches. A couple things. Can you give us a sense of what verticals you're targeting in terms of additional value-add products to add to the ecosystem? Also not only just what the verticals are, but are you looking at it from a build versus acquire versus partnership distribution type platform? How do you think about bolting those new products onto the ecosystem? As we've spoken about many times before, we're very open to partnerships and we are working on partnerships. I would say the next bigger product launch, and I kind of alluded to in my comments, it would be around payments and how we're going to be bringing payment solutions to the EQ Bank customer. That's a next year story in terms of actual launch, but I think we'll be able to tell you a lot more in Q3 about what it means to you as an investor. I would point to the success we've had with that US Dollar Account. It's just been unbelievable to me how many people have picked it up so quickly. Even when we launched in kind of beta and quiet, we had lots of customers flooding in. The ability to send U.S. dollars to the U.S. on the Wise rails so quickly and so cheaply is a complete innovation in Canadian banking. For any of you that have got friends that are snowbirds that need U.S. dollars down in the United States, need to hold U.S. dollars here, or you've got U.S. dollars sitting in your discount brokerage accounts that need a little bit of interest, you've got to look at this platform. This is groundbreaking banking for sure. We're seeing that uptake. Fortunately, customers are recognizing that. I think what you might see over the next six months, I'm hoping over the next six months what we'll do is a much better job around really demonstrating all facets of the value of the platform to customers and potential customers. Rather than the stream of product innovations, I think we've been a bit rapid on delivering new product innovations and not enough energy yet in continuing to tweak those innovations and make sure that our customers really understand the value and utilize the full benefit of the platform. I think you'll hopefully see some interesting things on the marketing side. Call it marketing, call it project education, so that we're really bringing some of this vision we have of innovating Canadian banking to life. The platform is really fantastic, actually it was one of the things we'll definitely talk about in our investor meeting in the early part of next year. Some of the ethnography we're seeing and some of the ways some of our customers are thinking about using EQ Bank is tremendous, really insightful. We're learning so much from our customers at this point, it's really good. Yeah. The only thing I'd add, Gian, for the question, to Andrew's point, as we deepen and expand the service capabilities, we're launching integrated e-Transfer experience, automated chat support to enhance the onboarding experience. There's a lot of things to deepen the traction and the experience for existing customers. We'll share more of the additional verticals to your point, and I know where you're going with that. We'll share more as we're more ready to discuss that over coming quarters. There's certainly lots in the pipeline. Okay. Good to hear. Appreciate the color there. Just 1 more follow-up from me, shifting to the loan book and the alternative single-family business, up about 6% year-over-year. What are the steps involved to getting that growth number up to your full-year guidance of the 12%-15%? I know you're going through the exercise of revising your adjudication standards to better reflect current market conditions. Is it just that, or are there any other levers that you're still looking to pull to get that growth number up to the full-year guidance levels? I think if you look at that year-over-year growth, it actually doesn't tell you the more recent story. What you got to look at there, I think, is the growth in that portfolio over each of the last couple of quarters, and you'll see that the growth is very much tracking to our full-year guidance already. We really made the adjustments in November last year that we needed to do to be more proactive in the market, and it's just unfolding as we speak. When you quote that year-over-year figure, don't forget that we were very hunkered down from a credit perspective through last summer, very concerned about the potential impact of the pandemic on the economy and therefore the housing market, and were deliberately ceding share through last year. Now we have a feeling that our credit box works in the current environment, and we've kind of rebuilt that franchise. We believe based on the data we've seen more recently that we've again reasserted ourselves as the leading originator of alternative mortgage business in the country. Great. That's it for me. Thanks very much. Thank you, Gian. Once again, as a reminder, ladies and gentlemen, if you would like to ask a question, please press star followed by 1 on your touch-tone phone. Next question will be from Jeff Fenwick at Cormark Securities. Please go ahead. Hi. Good morning, everybody. I think most of my questions have been answered, but I just wanted to circle back to the EQ Bank deposits. Obviously been a source of a lot of growth for you over the last year and an interesting shift in the mix in the quarter. I guess the one question is the decline in the demand deposits is pretty substantial sequentially, and I'm just wondering how much of that was intentional. Was it due to some competition or rate changes on your end, and was that rate of change sort of in line with your expectations? Well, again, I think that's the switch to the term deposits. As we drop rates, people moving from demand to term. Again, shows how engaged people are with our platform, and I think it's a positive. Obviously, the net balances overall continue to grow very strongly. Frankly, to the extent we've got a bit more term in that book, clearly it reduces liquidity risk and so on. We're comfortable with it. You should expect to see that it could move quarter-to-quarter, certainly year-to-year, depending on the relative rates in the term markets vis-à-vis the demand rates. People tend to look at that face rate, and if the rate on a term product is higher than the day-to-day rate on the Savings Plus Account, they will move into term. That depends on the shape of the yield curve and other variables. This was more of a migration of customer accounts to a new product rather than losing some existing customers and gaining new ones. Oh, yeah. Absolutely. No, we've been gaining customers very consistently. We gain sort of 2 to 250 customers a day quite consistently. Would expect that to be a little bit softer in the summer months. People don't sit on the beach and try to open up a bank account kind of thing, quite rightly. Nonetheless, we're still seeing really good activity on our platforms. Right. Then maybe just one smaller area here, but meaningful, the gains on the strategic investments. Can you just give us a bit of description around how that comes in? Is that a fair value gain you're recording? Is it a share of income? Just trying to understand that line and the volatility we should expect from it. Yes. Morning, Jeff. Yeah, it's more timing of fair value gains on the investments within the fintech portfolios. For example, in the past quarter, a key to that was Portage and a gain that was in those funds as it relates to Diagram going public. Those won't be consistent quarter-over-quarter. Depends on the investments we're making. Again, the first priority is the learning and the partnership opportunities that we're getting from these fintech investments, just like we've done with nesto. Loan profits and more. The first priority is that, to bring into a product line, and the secondary benefit is these revenue gains. We do expect more this year, but I wouldn't give a consistent trend line yet on it. Okay. Yeah, that's helpful. That's all I had. Thank you. Next question will be from Jaeme Gloyn at National Bank Financial. Please go ahead. Yeah, thanks. Good morning. Good morning. I wanted to just follow up on the expense in the quarter, and then the outlook. Sounds like it's just going to increase in the low single digits for the rest of this year. I'm more curious about how it looks next year. Is this a new run rate level that we should be thinking about, or are there higher investments in 2021 that will roll off in 2022? I think Travis can speak to the rest of this year. We don't have our budgets put together for next year yet. I think that's a story we'll have to tell in more detail as we get towards the end of the year and we reset our guidance. What I can tell you is we have a very rigorous approach to the net present value of any expenses we make. If we do come up with our guidance that expenses are going to increase next year, it'll be based on some really detailed rigor on why that makes sense for shareholders and why that's a good capital allocation decision from management. I wouldn't change, Jaeme. I'd still keep, from a model perspective, 15%-17% ROE, similar range of guideposts for efficiency. I would say stick to the medium-term guidance, right, and work back from that. To Andrew's point, though, even as we scale up investments, we're still going to be thoughtful about hitting our North Star priority number 1. There may still be lumpiness as we make some of these investments, but this was an important scale-up that we made in Q2 for future growth momentum for sure. Ensuring those expenses match up with revenue, which we certainly expect to see some of that in 2022 on that. Okay, great. Fair enough. The other question around the gain on sale of securitized mortgages elevated this quarter, elevated for the last few quarters actually, after some commentary last quarter that might step down. Just curious how you're thinking about that as a long-term revenue driver, especially in a higher expense outlook here over the next few quarters. Is that something we should expect to see at these levels going forward and/or is that just a function of really solid prime insured mortgage origination over the last several months? I mean, it's really not much to do with Prime, it's all to do with the multifamily CMHC. I do think we found a new path to higher earnings from this portfolio than you might have seen 2 or 3 years ago. I think, as I mentioned earlier, that we might see a little bit of lumpiness in Q3, maybe a bit softer in Q3 perhaps, and stronger again in Q4. As we get the trust company set up as an aggregator for that business, there's definitely more economic value to be gained. Again, because of some of the complexities of the accounting, sometimes we recognize a gain up front if it's what's called a 966 non-prepayable pool, or if it's a 965 prepayable pool, we recognize that over the life of the loan. The accounting treatment for what's broadly a similar activity can result in sort of swings in the quarters, too. Okay, great. Last one, just want to get a little bit more color around the average products per customer on the EQ Bank platform up 44%. How is that defined? Is that a client holding a savings account and holding that money in that account or just using it temporarily or maybe using the transfer service 1 time? Does that count as a product per customer? Just want to get a sense as to how permanent is that increase and what you're seeing on that front from the various products. Chadwick could probably offer more color on the math. Clearly it means things like somebody that just had a non-registered account opening up a registered account, somebody that had an account in an individual name opening a joint account as well. These should be permanent changes to that stickiness. Yeah, exactly. We're transparent and true to it, right? It's really having greater than 1 non-zero balance product or more than 1 transaction in the last 30 days, excluding interest. These are real shifts in activity to Andrew's point. Same with transactions, right? It's all the total number of transactions during the period. Again, all movement of funds outside of interest earning. We track obviously our accounts as well as the customer growth. We have all those stats as well. Important is sharing the deepening as well as we continue to share the customer growth. Yeah, that's great. Thanks very much. Thank you. Next question will be from Graham Ryding at TD Securities. Please go ahead. Graham, if you're asking a question, you might be on mute. Actually, it appears that Mr. Ryding's line has disconnected, at this time we have no further questions. Mr. Moor, please proceed. Thanks, Sylvie. Just before we let you go, I'm very pleased with the work we've done to handle the bank's Scope 3 greenhouse gas emissions, which include financed emissions. No other Canadian bank has publicly released their Scope 3 emissions yet, but the financial services world is moving in that direction, as demonstrated by Vancity's recent leading edge disclosures. We followed a rigorous process here using methodologies from the GHG Protocol as a part of Partnership for Carbon Accounting Financials, with support from our external partner, WSP Canada. With this legwork behind us, we will set and disclose targets and progress on the bank's climate risk and diversity initiatives in a new environmental, social, and governance Annual Report next year. This is all part of doing our part for the betterment of society as Canada's challenger bank. Speaking of next year, we plan to host an in-person institutional investor day in early 2022. Since we hosted our last investor day, we've significantly strengthened our management team and we're excited to profile our people, processes, and platforms with the digital transformation that is powering our future. A save-the-date notice will be sent later this fall. In the meantime, if you'd like to engage on any of the topics, including ESG that I just discussed, our door is always open. Thank you for your time and attention. Enjoy the rest of the summer, and have a great day. Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.