Good afternoon, and welcome to National Bank of Canada's second quarter results conference call. I would now like to turn the meeting over to Marianne Ratté, Vice-President and Head of Investor Relations. Please go ahead, Marianne. Merci, and good afternoon, everyone. We will begin the call with remarks from Laurent Ferreira, President and CEO; Marie-Chantal Gingras, CFO; and Bill Bonnell, Chief Risk Officer. Also present for the Q&A session are Lucie Blanchet, Head of Personal Banking and Client Experience; Michael Denham, Head of Commercial and Private Banking; Nancy Paquette, Head of Wealth Management; Étienne Dubuc, Head of Financial Markets, also responsible for Credigy, and Stéphane Achard, Head of International, responsible for ABA Bank. Before we begin, I would like to refer you to slide two of our presentation for information on forward-looking statements and non-GAAP financial measures. The bank uses non-GAAP measures, such as adjusted results to assess its performance. Management will be referring to adjusted results unless otherwise noted. I will now turn the call over to Laurent. Merci, Marianne, and thank you everyone for joining us. This morning, National Bank reported strong financial results for the second quarter of 2024, with earnings per share of CAD 2.54, up 9% year-over-year, and a return on equity of 17%. This performance reflects the disciplined execution of our strategy across business segments and the diversified earnings power of the bank. Our capital level is strong, with a CET1 ratio of 13.2%. This allows us to invest in business growth and to return capital to shareholders through sustainable dividend increases. We've announced a 4 cent dividend increase this morning, bringing our quarterly dividend to CAD 1.10, effective Q3 2024. Looking at the Canadian economy, it continues to show signs of deceleration. We are seeing further normalization in the credit environment, and the unemployment rate has been on the rise since monetary tightening began and now stands above 6%. Interest rates have been holding year to date, and housing and rental costs remain high. As core inflation has eased in recent months, we believe the Bank of Canada may now be in a position to offer some interest rate relief in the second half of the year. With continued uncertainty as to the path of the economy, our disciplined, diversified business mix and defensive posture provide us with resiliency and flexibility. This is illustrated by our strong results across our business segments in Q2. Personal and commercial banking delivered solid revenue growth of 6% year over year, supported by concurrent growth in average loans and deposits. Our personal banking loan book grew 3% over last year, and we are seeing better volumes within our internal mortgage origination channels. Our commercial banking loan portfolio grew 12% year-over-year, reflecting broad-based growth. Our wealth segment generated net income of CAD 205 million in the second quarter, up 15% over last year on the back of double-digit revenue growth and positive operating leverage. Net income grew 7% over the year, over the same period, and 3% sequentially, reflecting a strong deposit base. Compared to last year, fee-based revenues were up 13%, and transaction revenues were up 12%, benefiting from strong markets and a growing franchise. Our financial markets business delivered net income of CAD 322 million for the quarter, up 20% year-over-year. Global markets revenues were up 18% from last year, led by continued momentum in securities finance and a strong performance in our rates business. Corporate and investment banking revenues were up 9% year over year, with a solid performance across the franchise and strong debt underwriting. Our financial markets business continues to benefit from a well-diversified business mix and disciplined risk management. Credigy generated solid returns in Q2, with 5% average asset growth sequentially, driving higher revenues and strong returns. Net interest income was up 6% quarter over quarter. Underlying performance, portfolio performance is in line with expectations, and the team continues to focus on opportunities with attractive risk-reward profiles, primarily in the secured space. Finally, ABA Bank generated net income growth of 16% year over year. Margins improved sequentially as a result of strong growth in demand deposits. Our customer base expansion translated into year-over-year growth in loans and deposits of 18% and 20%, respectively. These results reinforce the strength of ABA's financial ecosystem, underpinned by its leading position in digital transactions, deposit gathering, payments, and cash management. Looking ahead, we remain committed to our disciplined approach to capital, credit, and costs, and to generating long-term value to our shareholders. Before I turn it over to Marie-Chantal, a few weeks ago, we announced that Bill Bonnell will be retiring from his CRO role at the end of the fiscal year, and that Jean-Sébastien Grisé will be appointed his successor effective November first. JS has been a key member of the risk management and compliance team since he joined the bank in 2015. He quickly rose through the ranks since that time, thanks to both his technical expertise, but also his vision and leadership qualities. Having worked closely with him and Bill through those years, he brings deep experience and understanding of our risk landscape to the role. I look forward to welcoming him to the senior leadership team this fall. As for Bill, it goes without saying that he has made an indelible mark on the bank as a steward of our risk culture over the last 12 years. I am very happy and fortunate to count on him for a little while longer as our CRO, and then as a strategic advisor before a well-deserved retirement. Marie-Chantal, over to you. Thank you, Laurent, and good afternoon, everyone. My comments will begin on slide 7. The bank delivered strong results in the second quarter. PTPP grew 12% year-over-year, driven by solid organic growth across all business segments and underpinned by diversified revenue streams. Our balanced approach to growth and cost management across the bank contributes to our performance. Operating leverage was positive at 2%. Our highly efficient businesses generated an all-bank efficiency ratio below 52%. We remain disciplined around expense management. Revenue growth of 10% year-over-year generated higher variable compensation, particularly in financial markets and in wealth management. Excluding variable compensation, expenses rose 5% year-over-year, as we dynamically balanced business growth and investments to gain efficiency and improve the client experience. Salaries and benefits increased 5% year-over-year, mainly due to the annual salary increase. We continue to prudently manage the FTE count in Canada, which remained relatively stable compared to last quarter. Our actions towards simplifying and optimizing our products, processes, and channels continue to pay off. Now, in the other segment, total revenue from treasury activities was lower in the second quarter. This was primarily driven by the impact of interest rate volatility on asset and liability management, and to a lesser extent, from some pre-funding opportunities in the first half of the year, aligned with our prudent approach to liquidity and funding management. Higher expenses from variable compensation and a temporary overlap in occupancy costs as we transition to our new head office also lowered earnings for this segment in the second quarter. For the remainder of the year, we do not expect PTPP in the other segment to improve from Q2 levels. Looking at the results of the business segments and the bank as a whole, we are pleased with the performance in the first half of the year. Our balanced approach to growth and investment continues to serve us well, particularly in an economic environment that remains uncertain. Now turning to slide 8. Sequentially, non-trading NII was down approximately 1% and was up in wealth management, supported by its diversified deposit base, at Credigy, driven by robust asset growth year to date, and at ABA, benefiting from balance sheet growth and a favorable deposit mix. The all-bank non-trading NIM fell 4 basis points sequentially to 2.17%, largely reflecting lower NII from treasury. Our margin in PNC Banking remained stable again this quarter at 2.36%. As a management team, our primary focus is to grow the franchise with the right balance between volume growth, margins, and credit quality. We are pleased with our margin performance and expansion since the beginning of this rate cycle. Moving to slide 9. Loans were up 9% year-over-year and 2% quarter-over-quarter. In commercial banking, loans increased 3% sequentially, in part driven by continued opportunities in the residential insured segment. In personal banking, loans increased 1%, while corporate banking volumes were up 1% quarter-over-quarter, following several quarters of strong drawing. At Credigy, the sale of a loan portfolio offset organic growth this quarter, but bear in mind that the overall asset growth has been strong year to date. At ABA, loans grew 3% sequentially, mainly driven by net client acquisition. Deposits, excluding wholesale funding, grew 4% year-over-year and 2% quarter-over-quarter. Personal deposits rose 2% sequentially, with growth in term deposits across retail businesses and in demand deposits at ABA. In personal banking, demand deposits increased modestly over the quarter. Non-retail deposits were up CAD 2 billion sequentially, primarily driven by commercial banking. We maintained a strong loan-to-deposit ratio of 98% as at Q2. Our ratio is aligned with our diversified business model. Now turning to capital on slide 10. We ended Q2 with a CET1 ratio of 13.2%. Second quarter earnings, net of dividends, contributed 38 basis points to our ratio, underscoring our internal capital generation capacity. Robust organic business growth contributed to an increase of 29 basis points of RWA, excluding FX. Credit risk RWA was up, representing 30 basis points of CET1, mainly from strong balance sheet growth and, to a lesser extent, from credit migration in non-retail portfolios. To conclude, I am pleased that for the past few quarters, we have successfully been able to navigate a challenging backdrop and report solid financial performance. Our diversified business model, strong balance sheet, and disciplined execution provide a firm foundation for the bank to generate profitable growth. I will now turn the call over to Bill. Merci, Marie-Chantal, and good afternoon, everyone. I'll begin on slide 12 with comments on the macro environment and our credit performance in the second quarter. While core inflation has eased in recent months, significant uncertainties remain in the forward path of interest rates, economic growth, and unemployment. To echo Laurent's comments, the Canadian economy continues to show signs of deceleration. Against this macro backdrop, our credit portfolios have continued to demonstrate resilience in the second quarter, with total provisions for credit losses of CAD 138 million, or 24 basis points, versus 21 basis points in Q1. Impaired provisions increased 3 basis points sequentially to 20 basis points or CAD 114 million. Retail impaired provisions increased as normalization trends continued. Non-retail impaired provisions increased quarter-over-quarter, due primarily to a couple of files in the wholesale trade sector. At Credigy, continued seasoning of acquired portfolios generated stable impaired provisions. At ABA, impaired provisions declined quarter-over-quarter. However, as we discussed on prior calls, we think they could remain elevated for a few more quarters. Provisions on performing loans declined to CAD 22 million, or four basis points. The primary drivers this quarter were portfolio growth and migration. Looking ahead, we expect delinquencies and impaired provisions to continue their upward path. The retail portfolio should continue its normalization, and the non-retail book is subject to periodic lumpiness, as we saw this quarter. With these factors in mind, we maintain our 15-25 basis points guidance for full-year impaired provisions and still expect to end up around the middle of that range. Turning to slide 13. We continue to prudently build our total allowances for credit losses, which reached more than CAD 1.4 billion and represents a strong coverage of 4.5 times our last 12 months net chargeoffs. Performing ACLs increased for the eighth consecutive quarter and now represent 2.9 times the last 12 months impaired PCLs. In Appendix 10, additional metrics on our allowances are provided, which demonstrate our prudent coverage levels. Turning to slide 14. Our gross impaired loan ratio increased 6 basis points to 54 basis points. As we called out on the slide, the GIL ratio in our domestic loan portfolios was 36 basis points, still below pre-pandemic levels. Formations were higher quarter-over-quarter, with the main drivers being the commercial and corporate portfolios. As I've mentioned on prior calls, formations and recoveries in wholesale portfolios can be lumpy from quarter to quarter, and Q2 was unusually lumpy. The new formations were spread across a handful of regions and sectors, including wholesale trade, transportation, and real estate. I'll point out here that for a couple of those files, we took only a small or no specific provision, reflecting the quality of the collateral and loan structure. At ABA, formations were stable quarter over quarter in Canadian dollar terms due to currency impact, but in US dollar terms, declined to $28 million from $44 million last quarter. On slide 15, we present highlights from our Canadian resi portfolio. The geographic and product mix remained stable, with Quebec accounting for 54% and insured mortgages accounting for 29% of total resi. Higher-risk uninsured borrowers represent around 50 basis points of the total resi portfolio. Ninety-day delinquencies and uninsured mortgages in HELOCs remain low at 13 basis points and 10 basis points, respectively. You can find additional details on our Canadian mortgages on slide 16. I'll note that more than half of our mortgage portfolio has now been repriced at higher interest rates, and ninety-day delinquencies remain well below the pre-pandemic level. We've included additional insights on trends in ninety-day delinquencies for the entire Canadian retail portfolio in Appendix 26, and I'll take a moment to share a few comments on the trends across different products and segments or regions. First, delinquencies in credit cards, which is a relatively small portfolio for us, have increased the most since the 2022 lows, having exceeded pre-pandemic levels early this year. ... And diving deeper into that portfolio, we find that the segments most impacted are non-homeowners and clients outside Quebec. Second, variable rate mortgage delinquencies have also seen a significant increase over this period, with the insured segment and the outside Quebec regions showing the largest relative increase. And finally, diving deeper into the uninsured variable rate mortgage portfolio, we see that delinquencies in the Quebec region still remain below their pre-pandemic levels. In conclusion, we are pleased with the strong credit performance again this quarter, which reflects our defensive positioning, resilient mix, and prudent provisioning. And with that, I'll turn the call back to the operator for the Q&A. Thank you, Mr. Bonnell. We will now take questions from the telephone line. If you have a question, please press star one on your device's keypad. You may cancel your question at any time by pressing star two. Please press star one at this time if you have a question. There will be a brief pause while participants register for questions. We thank you for your patience. Our first question is from Matthew Lee from Canaccord. Please go ahead. Hey, good afternoon, and thanks for taking my question. Maybe starting with ABA, PCLs in that business continue to be very low, and I think they actually saw impaired decline quarter over quarter. Can you maybe just talk us through what gives you confidence in the current level of build for that business, and maybe what you're seeing in terms of economic indicators in that market? Yeah, sure, Matthew, it's Bill. Happy to, to answer that. So, in Cambodia, we have seen some recent strength. So far in the beginning of the year, exports have really picked up. We've seen foreign direct investment pick up, with U.S. being now the third largest foreign direct investor after Singapore. And just recently, Moody's upgraded their outlook for the country from negative to stable. So that reflects kind of some good things happening. However, we feel that it'll take some time for the benefits of that, those activities to really be felt through the economy, which is why we were calling out the fact that we expect elevated formations for the next, you know, two or three quarters. And you, you... Does that answer your question, or do you have another question? No, that answers that question. And then maybe on the financial markets side, another good quarter, and specifically called out DCM. But can you maybe just talk about the visibility you have into C&IB pipeline, going to the back half of the year? Sure. Thanks, Matthew, for the question. It's been a great quarter for us on the advisory side. Maybe if I comment on what the quarter was like, the star of the show was really DCM, where it was a great environment with Canadian borrowers being active on both sides of the border and Canadian investors actively deploying, and that provided a broad support for new issues in a rallying Canadian credit market. And then you have the government side. Because of the increasing borrowing requirements, the pace of new issue has been robust as issuers took advantage of strong demand in the fixed income markets, and we see that trend continuing in the next quarter. It was also busier on the equity new issue market, with significant activity, and notably in the mining sector, so encouraging trend there. And M&A was also a bit busier in Q2, although a bit slower than last year, and we're looking for an acceleration during the second half of the year. So that's really what we see. I mean, I touched on DCM. We see it getting quite busy on the equity side, especially in the last two weeks, and there was a lot of cash on the sidelines and a lot of pent-up demand. And I think that will provide a pretty strong picture for the second half of the year on the advisory side. All right. Thanks for taking my question. Thank you. Our following question is from Meny Grauman from Scotiabank. Please go ahead. Hi, good afternoon. Just following up on, on that discussion of Financial Markets, if we can take it to the outlook for net income for the year. I think year to date, up 11%. So, you know, I think in the past you talked about guidance being quite a bit lower, but obviously, you're highlighting some positives here, especially on the DCM side. Just wondering if you could update that guidance in terms of what to expect for the year as a whole, in terms of earnings growth for Financial Markets segment. Yeah. Thanks, Meny, for the question. So, we're really happy with the results so far, especially on the trading side. I think it's a combination of a good environment, strong client activity, and really solid execution from the teams. So on the fixed side, you're seeing volatility remaining high and all segments being really busy. So we're seeing a nice revenue progression in our liquidity-providing activity, and we continue to rank number 1 in total domestic bond trading for each month of the quarter. So really happy to see that. And rate structured products were also a nice tailwind this quarter, with record issuance and revenues. And on the equity side, we continue to benefit from strong market conditions, whether it is structured products, financing trades and market making. The strong equity markets have resulted in increased product sales, increased client flow and structured funding trades, and a pickup also on the securities lending side. If we look at what we see, so we feel real good about the first half of the year and how balanced the performance has been, and then we feel increasingly confident that the business- the businesses are well positioned to deliver net income growth for fiscal 2024. I think on the interest rate side, we will continue to see volatility as central banks will take diverging paths on their way to easing, and that bodes well for activity on trading, should have a lot of cross-border activity, but also in the debt capital markets, as I mentioned, as government and corporate issuers will continue to take advantage of improving borrowing conditions. The persistent strength of the equity markets, I feel, will continue to be a tailwind for our structured products franchise. So sales are strong, and that will compensate, we feel, for low equity trading volumes and low implied volatilities. And on the securities finance side, it's really a good environment. Clients are deploying aggressively at good spreads, and we all see we also see strong demand on structured funding trades. And that I think that that will offset for corporate lending, which where we see a possible slight slowdown in the pace, due really to the opening of capital markets. And but we're, we're like I said, we're looking for M&A to accelerate in the second half, so we have a really interesting pipeline there. So I think we'll be busy the next few months. Does that answer your question, Meny? Well, does that mean that the guidance that you provided before is probably no longer valid, that you're probably looking at quite a bit more earnings growth than what you had suggested earlier in the year? Well, like I said, we feel increasingly confident that we will achieve that guidance, but I don't think we want to update that guidance yet. Okay. And then just, a follow-up in terms of, you know, if I look at the TEB line across peers on a year-over-year basis, down, call it on average, 90% year-over-year, and it... I think that is the dividend received deduction coming through as expected. If I look at your TEB line, down 34% year-over-year, so a significant outlier there, and I'm just trying to understand, is there still more downside here related to the DRD? And then, if not, then what's going on here? Is it, is it there's other things offsetting an impact of the DRD, or are you able to somehow offset the DRD itself? I'm trying to understand, your performance here. It really stands out relative to peers. Yeah. So I think what you're referring to, Manny, is that it's the TEB adjustment in non-interest income, and that one is not related to dividends. It's related to income from our foreign trading operations, notably in Europe. And so, that TEB in relation to non-interest income, that reflects the difference in tax rates in various jurisdictions where we carry on business. So that TEB will fluctuate with changes in, well, the balance sheet we've deployed there and changes in interest rates. And it will also fluctuate as our trading revenues in those markets go up and down. So, I mean, just to be clear, in terms of the, you know, the line that I'm looking at here in terms of the TEB on trade, like if I'm looking at trading activity revenue and the TEB line at CAD 84 million in Q2, there's the DRD impact is not going through that specific line. Is that what you're suggesting? So you've seen the drop from previous TEB numbers, and so really, the drop in the dividend impact was in the interest income part of the TEB, where we went from something like 75 to 14. Okay. If I remember correctly. Okay. That's aligned with the guidance of about CAD 60 million per quarter that we gave in Q1. Okay, thank you. Thank you. Our following question is from Lemar Persaud from Cormark Securities. Please go ahead. Yeah, Bill, you mentioned taking small to no provisions on some of these non-retail formations. Can you expand on what gives you the confidence here? I'm assuming that these are clients you've done specific work on each of these files, and that's what gives you the confidence in these sectors you called out. So I think it was transportation, wholesale trade, and real estate. Just provide some thoughts there on what gives you the confidence to not provide. Yeah, sure, Lemar. I'm happy to. It certainly is not all of the formations that had low provision. Some of them certainly did, and as I said, it was a lumpy quarter. Specifically, I was referring to in the real estate sector, the new formation, the gross impaired loan increase, was driven primarily by one file. And we always look very specifically at the file when it becomes impaired, and we make our best judgment of what we think the end realized loss would be. And in this case, it's- ... one very well-located retail property that's in the process of redeveloping into multi-residential and retail mix. It had cash flow problems because of low occupancy in the retail portion, and higher interest rates, of course, hitting the cash flow. So that led to the impairment. But even at the refreshed valuation at the time of impairment, the current LTV is still in the 60s, and it provides ample coverage for the loan. So we don't expect to end up realizing a loss on that one. And in the transportation sector, although it's in the transportation sector, it's actually a few specific loans secured by properties that are multi-use or industrial. And they are used by the owner who guarantees the loans that is in the transportation sector. But our exposure is directly secured by these properties, and again, well located. They were structured as real estate loans, Canadian style. And you know, it's going through a process, and if necessary, if through the process, there needs to be an adjustment in evaluations, we'll make it, but currently we don't expect to take any material loss there. So that's how we go about you know, analyzing the specific provisions, and it really is case by case with all the factors considered. Does that help answer your question? Yeah, that's perfect. Thank you. And then just kind of moving on to my next question here. I just want to touch on the strength in commercial lending. So that's 3% sequential increase. Is this a Quebec-specific strength, a specific sector? And what do you kind of expect moving forward? Because that number stood out to me on the positive side. Yeah. So it is, it's Michael Denham here. So the growth has been across the country, Quebec, but Ontario, Western Canada. So a lot of the growth coming from real estate, multi-unit residential real estate, but it's also broad-based, and that's broad across the board. National accounts teams out west are accounting for a lot of the growth as well. So it's well diversified across geographies and across sectors. And again, it is, it is lumpy. We've been in the kind of high single digit, low double digit range for the past few quarters. And just based on the kind of pipelines level of activity we're seeing right now, we expect to be kind of more or less in that range going forward. Great. Thank you. Thank you. The following question is from Nigel D'Souza from Veritas Investment Research. Please go ahead. Thank you. Good afternoon. I wanted to follow up on the delinquency rate data you had on slide 26, and thoughts on the divergence we're seeing between the uninsured and insured variable rate mortgages. What I'm trying to understand here is that, you know, both the uninsured, insured portfolios would be stress tested. They both have a similar product structure with adjustable payments. So other than lower equity in the insured portfolio, what's driving the divergence in delinquency rates in those categories? Hi, Nigel, it's Bill. I think you've nailed it. The less equity in the loan typically means more leverage for the household. So when you think of insured mortgages, often it's first-time home buyers that have perhaps less ability to withstand sudden changes in rates and market values or changes in circumstances. And that's really the driver. We also see aligned with that, you see a pretty correlated—it's pretty correlated between the size of the mortgage and performance too, because the dollar impact of a, you know, 400 basis point increase on a CAD 300,000 mortgage in Quebec is different than on a CAD 800,000 mortgage in a more expensive city. So same interest rate change just doesn't hit the household budget as much and is more easily offset by wage growth and other aspects. Does that help answer your question? It does. Just to clarify, a little bit finer on that. So is the geographic mix in insured tilted more outside of Quebec? And, and also, are you seeing any other factors like vintages? Like, are there more recent vintages in the insured portfolios that are going delinquent? Any other differences there in the majority profile? Yeah. I'd say, Nigel, that the biggest correlation, it's less vintages. Maybe we can come back to you on that, but it really is the geography for those factors that I described. And I think in my prepared text, I called out that. Even after 400+ basis points of increase in the variable rate mortgages, in the uninsured variable rate mortgages, the Quebec borrower, the delinquency rate is still below the pre-pandemic level. And that's a factor of what we've talked about, about the Quebec households being more resilient with more dual-income families and with a more diversified economy, but primarily it's the lower house price has a real impact on the size of the payment shock when interest rates go up. So does that help answer your question? ... All right, that's really helpful. Then if I could switch to ABA Bank. I think there's an increase in the net interest margin for ABA this quarter. Just want to confirm if that's right, and if so, what drove that increase? And also, could you, you know, refresh me on what ROE is that business generating currently at ABA? So, with regard to the margin, just to tell you, the margin has indeed improved, and it's a factor of two elements, if you want. The first one is our pricing strategy, and we've seen rate decreases on the term deposits. That's the first element. But the first and foremost element has been the deposit mix that has changed among the clientele at ABA. So last year, we saw more deposits going into term, and this year, it's the second quarter in a row. We're seeing as the economy is taking a longer time to recover to its high levels of pre-pandemic, we've got a few lesser in degree of investments in term deposits. We're actually at 71% of our deposits are into current account and savings accounts. So that's the first element. As to the ROE of that subsidiary, we don't divulge ROE volumes specifically per subsidiary, but I'm sure you can make a guess that it's been a worthwhile investment for us. Great. And the reason why I ask that is, you know, strategic question here, but I'm sure that's a very healthy ROE. So is there any consideration that perhaps if that ROE is near the high end of its potential range to, you know, divest and reallocate that capital domestically or to grow financial markets or wealth? How do you think about that business, or is it something that's just not on the table? I'll answer, no, it's not on the table, and I'll answer with one element. It's still an extremely young market. Population is very young. The second element is only 10% of Cambodians have loans right now. So we've got the opportunity of driving this balance sheet for many years to come. But the demographics are excellent, and the returns on the margins exceed, you know, undoubtedly what we can see domestically. So I'll leave it to that. Okay. That's it for me. Thank you. Thank you. Following question is from Mike Rizvanovic from KBW Research. Please go ahead. Good afternoon. I want to go back to Bill on the impaired loan formations on commercial. And what I'm a little bit confused about is why such a substantial move during the quarter? I don't see anything on the macro side in terms of data that would have suggested anything like this move sequentially based on what we have for Feb, March, and April. So in your view, what was the key driver that really drove this big jump sequentially? Hey, Mike. It really goes to what I said. You can call it lumpiness. You can call it multiple idiosyncratic events that just happen at the same time. With a retail portfolio, you can, it's definitely more trends. Even from quarter to quarter, you can be pretty confident on the direction and the size of the trend change, because it's multiple small individual accounts. With wholesale, with corporate and commercial, it's just that files happen when they happen for multiple reasons. As we pointed out, these were different geographies, these were different sectors. From time to time, they happen within, you know, three-week or six-week period, and other times they are more evenly spread out. Really it just gets down to lumpiness. There's nothing else I'd call out here. Okay. So it sounds like you're confident this is not something to be alarmed about in terms of the direct correlation to your PCL. But what would you say to the premise that some investors may have when they sort of look at these impairments rise so quickly, and some may believe that the PCL is just a matter of time? Like, on the accounting side, is there much wiggle room? Is it factual that some banks may just be willing to put that PCL number up earlier than others? Like, I'm not sure if you have a view on that, but I'd love to hear your opinion on that. Sure. I would start off with saying that the nature of the portfolio does need to be considered when you're looking at gross impaired loan levels. We talked a bit about retail, and in retail, typically, you know, trying to equate impaired loans and Stage 3 provisions really depends on how much credit cards you have, because there aren't any impaired loans in credit cards. It goes through write-off, and so you can have higher Stage 3 provisions, but lower gross impaired loans. So the nature of the portfolio and business mix is one thing. Second, in looking at the nature of the loan portfolio, the percentage of insured loans does matter. As we pointed out, the delinquencies in insured variable rates have been going up. So over time, I would expect to see more impaired loans that are insured, sorry, as insured variable rates. It doesn't mean that the risk content leading into Stage 3 provisions is there, but it does impact an increase in in gross impaired loans. And you'll note that, we in our mortgage portfolio, we've got the highest percentage of insured mortgages. Second, in the commercial, we had a similar situation where a significant part of our growth coming out of 2021 was in the insured multi-residential portfolio. If there's deterioration and that becomes impaired, again, it will impact the gross impaired loans, but doesn't lead to risk content. And finally, for us, specifically, as we talked on, I think, the last two or three calls, in ABA, with the secured nature, the low LTV nature of it, there has been a significant increase in gross impaired loans, but we do continue to expect the net charge-offs or the realized loss at the end of the process to remain, that rate to remain relatively low. So it's not, it's not a one for one, gross impaired loans versus, what will be the stage three provisions or the write-offs, even if you get to the very, very end. It's needs to be a little more nuanced, based on the portfolio. Does that help? Yeah, that's super helpful. And just in case I missed earlier, I believe you did reiterate the roughly 20 basis point loss ratio for the current-- Was that for the current year? Yeah. So, my specific language, same as last quarter and last couple of quarters, was for the fiscal year, impaired PCLs between 15 and 25, and we still expect to end up around the middle of that range. And just on that, I don't want to give you the impression that, yeah, even after 12 years in the seats, I can forecast precisely within the, you know, second decimal point what provisions will be. That's not the case. However, we do look, so far this year, we're below 20. This quarter, it was a lumpy quarter, which I don't expect to happen every quarter or consecutive quarters. It can, but I, you know, I don't expect it. And the trends that we talked about driving some of the Canadian, the Canadian provisions are coming from those normalization trends. And where those normalization trends are the fastest are in areas that we are underweight, and where there's the most resilience, it's areas that we're overweight. So I also need to balance in Credigy and ABA, which aren't perfectly correlated, but you know, as we sit here today, my expectations for the full year is it should be pretty close to the middle of the range. We'll talk again in August, and I'll update it, but that's that's what I reaffirmed. Got it. Thank you. Very, very insightful. Thanks, Bill. Thank you. Our following question is from Sohrab Movahedi from BMO Capital Markets. Please go ahead. Okay, thank you. I just wanted to maybe just change channels here a little bit. It looks like Wealth, if I'm not mistaken, a record earnings quarter. You know, you've been around this CAD 200 million a quarter for the first half of this year, every quarter. Just, can I get a sense of how you see this business playing out over the next few quarters and what you think will help sustain this sort of performance? Yes, yes, thank you, Sohrab. So this is Nancy. You're right, this is our highest quarter in terms of revenue, this quarter. And, it's led mostly by fee-based and transactional revenues, as you've seen. We also have a growth momentum in terms of, clients, and assets under management. So, our unique positioning with our open architecture, there's still tons of potential for us in there. We like our diversified business mix. We like, our client acquisition. So I think those are the trends that we're gonna continue to, to build on, to grow for the next quarters. So just to be clear, Nancy, it doesn't sound like you're saying I need equity markets to be cooperating with me, necessarily. Well, as you know, our business is influenced by the markets as well. So definitely, markets are a growth contributor. But the fundamentals are good, and the diversified mix of our business will bring us good results no matter where markets goes in the long term. Okay. And if I can just ask Lucie to maybe talk a little bit about how she sees the second half of the year playing out, both in terms of lending volumes and net interest margin for the PNC segment. I would appreciate this. Thank you. Yes, thank you, Sohrab. When I look at the second half, I think we will have some more pickup in the mortgage business, and I believe we will end the year in the mid-single digit on the mortgage growth. I think our credit card growth will continue to be low double digits, which is a reflection also of the quality of our portfolio and the prudence that we see from consumers, and it's also helpful on the credit side. We will continue to have also good momentum in personal loans. Yeah, and do you expect margins to be trending higher, lower, stable? How do you see that playing out? Yeah. Thank you. So, the margin, I'll, we look at it from a PNC overall business, and, this quarter, we've seen more resiliency. The deposit spreads have continued to slightly benefit, and also the loan spreads have improved. So the margin environment on the loan side is positive. But, for the next quarter, we may see some pressure on the deposit side as the portfolio renew. ... we have, let's say, mostly the 2-year duration in the term deposit portfolio, and 2 years ago was probably the largest term deposit spread we've had. So it will impact, it will have a, an impact on some pressure on the deposit. And also, the business mix can play in also with a little more loan growth than deposit growth. Okay, thank you very much. Thank you. Our following question is from Doug Young, from Desjardins Capital Markets. Please go ahead. Yes, sir. Good afternoon. I just have a few, hopefully quick ones. Bill, to you, on the, on the guidance of, you know, mid part of that range, so implies, you know, compared PCLs of in the low 20 basis point range. And I get, I think, some of the comments you've made in past discussions here. Is there a line of sight, and I know commercial can be lumpier, is it more line of sight on some commercial stuff you see coming down the pipe? Is it more just a trend out of what you're seeing on the retail side, that pushes you to expect, you know, the low 20 basis points in Q3, Q4? Is this conservative? Because I'm just trying to kind of get a sense. Yeah, I think it's the, thanks for the question. I think it's the trend really that we've been talking about for, I think, at least three or four quarters, a normalization trend. As you know, the impact of monetary policy is delayed, so it should be no surprise of when the impact started being seen. We talked, I think, through last year, the second half of last year, about what we were seeing in early delinquencies, and now we're seeing those play out in the late-stage delinquencies. And the trends are moving pretty close to what we expected. As I said, commercial and corporate can be lumpy. Not wanting to call out any visibility on specific sectors or anything, because generally, our watch list has been relatively stable in the last quarter or two, so there's nothing really calling out. I would just say the trends have continued as we expected, albeit as I said, lumpy quarter in Q2. For those reasons, just confirming the same guidance I gave last quarter. Okay. And then ABA, can you update us with the LTV on the portfolio when the collateral is secured was last updated? I assume that's updated every quarter, but. It is, and hardly has changed. We're still in the forties, and it's actually, you know, very stable because the underwriting practices have not changed. And when we assess even the GIL LTV, it's actually lower than the average portfolio, so we're very pleased with that. Okay. And then lastly, you know, you talked a bit about the TEB and some stuff in Europe, and, I'm just curious of the impact or if you can provide what you think the impact would be on GMT, or if there's any impact from the GMT, as we look forward. Hi, Doug. It's Marie-Chantal here. Happy to take that question. So, in terms of global minimum tax, as you know, these rules were included in the Bill C-69 that was just announced early May. We are currently assessing our income tax exposure arising from these rules. We'll be in better position to comment later in the year. We're expecting some impact, but as always, our intention is to provide more clarity as soon as we have finalized our interpretation of these rules. Appreciate it. Thank you. You're welcome. Thank you. Once again, please press star one at this time if you have a question. Our following question is from Paul Holden from CIBC. Please go ahead. Thanks. Good afternoon. Bill, maybe a quick question for you, because I've heard a number of others ask on ABA and sort of the delinquency trends versus provisions. Maybe you can give us an update on collections to date, you know, given those low LTVs that have been highlighted on the portfolio. Yeah. Hi, Paul, thanks. I'll, I'll answer it in the first step. I'm okay. I think it's the same trends as we talked about, I think, in the last call or the last couple of calls. But, you know, year to date, for those files that have gone through and closed through the workout process, it's around 75% of them have had zero loss. And as I'll call out as well, you can see in our SFI, I think it's on page 28 in the SFI, where you see write-offs by business segment, and it's still under CAD 500 thousand a quarter. It's under CAD 250 thousand for the last two quarters. So the write-offs, the dollar amount, are still pretty small. You know, seeing that those facts continue as we expected is what gives us the confidence to say we think that the net charge off rate will remain relatively low. Does that help? That helps very much. Thank you. Next question is with respect to financial markets. See that the average loan balance is there, up 11% year-over-year. That's some pretty good growth. You know, I've heard from others that use of existing lines are relatively low or trending lower. So just wondering how you're generating that 11% growth. Is that coming from existing clients, or are you actually gaining new customers? And if you are gaining new corporate lending relationships, kind of give us a sense maybe where those are coming from geographically or by sector? Yeah, thanks for the question. It is 11% year-over-year, although it has trended lower sequentially. It is a very well-diversified book, and very well diversified across sectors. It is, and you're right that the utilization rate has been trending a bit lower, although it is still elevated historically. But because of the opening of capital markets, we're seeing that utilization rate now trending a bit lower, because in the low forties and historically it's in the high thirties. And we have been so a lot of new clients on the project finance side, definitely. So a lot of new clients in the new renewable sectors, but that's really the one major trend I would point out to, related to that. But otherwise, it is pretty stable across sectors and across geographies. Got it. Okay, thanks. And last one, similar question, I guess, around Credigy, also seeing quite good growth year-over-year and sequentially. Are there any kind of common themes there in terms of the types of portfolios, Credigy is acquiring? Who the sellers of those portfolios are, and then maybe that can give us some clues in terms of the outlook and if that strong growth can continue at Credigy. Thank you. Yeah, thanks, Paul. So, you're right that Credigy has delivered strong growth, notably in the first quarter. It's been a more normal pace in the second quarter. But, for the first half of the year, we've deployed about $1.8 billion, and that's really in high quality, long-term secured assets, and that's mostly mortgage, solar loans, and some life settlements also. We continue to see, looking forward, opportunities primarily in secured consumer assets. So, I mentioned mortgage, there's also home improvement loans, and I mentioned solar. And we like the insurance space also, because it is very uncorrelated with the overall economy. And so we see continued growth there, across a balance of both, indirect lending and direct portfolio acquisition. When you look at Credigy, it's really a set of real solid client relationship, and that creates, I think, a solid foundation for growth. This allows Credigy to really build a repeat customer business, and that means that we can remain competitive without being always highest on price. So does that answer your question, Paul? It does. Yeah, that's great. That's all the questions for me, so thanks for the time. Thank you. We have no further questions registered at this time. I would now like to turn the meeting back over to Laurent Ferreira. Well, thank you, operator, and thank you to, all employees and shareholders on, the call today for your support. Have a great summer. Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.