Q1 2026 EQB Inc Earnings Call

February 26, 2026

Speaker #2: Later, we will conduct a question-and-answer session for analysts. Instructions will be provided at that time. It is now my pleasure to turn the call over to Lamar Prasad, Vice President and Head of Investor Relations.

Speaker #2: Please go ahead. Thank you, Marissa, and good morning, everyone. Your host for today's Q1 results call are Chadwick Westlake, President and CEO, and Alisa Sonani, CFO, and Marlene Lenarduzzi, CRO.

Lemar Persaud: Thank you, Marissa. Good morning, everyone. Your hosts for today's Q1 results call are Chadwick Westlake, President and CEO, Anilisa Sainani, CFO, and Marlene Lenarduzzi, CRO. Also present for the Q&A session is Darren Lorimer, Group Head of Commercial Banking. After prepared remarks, we will open the lines for questions from our pre-qualified analysts. For those on the phone lines only, we encourage you to also log in to our webcast and view our quarterly presentation, which will be referenced during the prepared remarks. On slide 2 of our presentation, you will find EQB's caution regarding forward-looking statements, which involves assumptions that have inherent risks and uncertainties. Actual results may differ materially. I would remind listeners that all figures referenced today are on an adjusted basis, where applicable, unless otherwise noted. With that, I will now turn the call over to Chadwick.

Doug Young: Thank you, Marissa. Good morning, everyone. Your hosts for today's Q1 results call are Chadwick Westlake, President and CEO, Anilisa Sainani, CFO, and Marlene Lenarduzzi, CRO. Also present for the Q&A session is Darren Lorimer, Group Head of Commercial Banking. After prepared remarks, we will open the lines for questions from our pre-qualified analysts. For those on the phone lines only, we encourage you to also log in to our webcast and view our quarterly presentation, which will be referenced during the prepared remarks. On slide 2 of our presentation, you will find EQB's caution regarding forward-looking statements, which involves assumptions that have inherent risks and uncertainties. Actual results may differ materially. I would remind listeners that all figures referenced today are on an adjusted basis, where applicable, unless otherwise noted. With that, I will now turn the call over to Chadwick.

Speaker #2: Also present for the Q&A session is Darren Lorimer, Group Head of Commercial Banking. After prepared remarks, we will open the lines for questions from our pre-qualified analysts.

Speaker #2: For those on the phone lines only, we encourage you to also log into our webcast and view our quarterly presentation, which will be referenced during the prepared remarks.

Speaker #2: On slide 2 of our presentation, you will find EQB's caution regarding forward-looking statements, which involves assumptions that have inherent risks and uncertainties. Actual results may differ materially.

Speaker #2: I would remind listeners that all figures referenced today are on an adjusted basis where applicable, unless otherwise noted. With that, I will now turn the call over to Chadwick.

Speaker #3: Thanks, Lamar and good morning. We're building a purpose-like company, clear on why we exist, and intentional in how we deliver it. A challenge your bank is designed to bring customers more choice, and the change the way things work for the better, and when you challenge the status quo with clear intent, you don't just help people, you push the whole industry to compete harder and innovate faster.

Chadwick Westlake: Thanks, Lemar. Good morning. We're building a purpose-like company, clear on why we exist and intentional in how we deliver it. A challenger bank is designed to bring customers more choice and to change the way things work for the better. When you challenge the status quo with clear intent, you don't just help people, you push the whole industry to compete harder and innovate faster. We build for people's real needs and aspirations, especially where the incumbent system is falling short. It means being bold, moving faster, building on technology, and meeting people where they are, not simply where it's convenient or easy for us. It means putting the well-being of customers first.

Speaker #3: We build for people's real needs and aspirations, especially where the incumbent system is falling short. It means being bold, moving faster, building on technology, and meeting people where they are, not simply where it's convenient or easy for us.

Speaker #3: It means putting the well-being of customers first. We do this by owning a Schedule I bank that gives you the trust and comfort of how we are managed, the capital we hold, and the standards we hold ourselves to, as we emerge as one of the most distinct challenger banks in the world.

Chadwick Westlake: We do this by owning a Schedule I bank that gives you the trust and comfort of how we are managed, the capital we hold, and the standards we hold ourselves to, as we emerge as one of the most distinct challenger banks in the world. We have the strength of a regulated bank that endures through every cycle and the urgency of a challenger. Our purpose is to drive change in Canadian banking, and we enter 2026 more focused than ever on the strategy to deliver it. As a public company with a strong long-term track record, we remain focused on sustaining that performance, delivering on our strategy without compromising for short-term results. This is important to keep in mind as we prepare for the closing of PC Financial... and the start of an incredible partnership with Loblaw Companies.

Speaker #3: We have the strength of a regulated bank that endures through every cycle, and the urgency of a challenger. Our purpose is to drive change in Canadian banking, and we enter 2026 more focused than ever on the strategy to deliver it.

Speaker #3: As a public company with a strong long-term track record, we remain focused on sustaining that performance, delivering on our strategy without compromising for short-term results.

Speaker #3: This is important to keep in mind as we prepare for the closing of PC Financial. In the start of our incredible partnership with Loblaw companies, as we merge truly exceptional brands, teams, skill sets, and offerings, and create something materially different for our country.

Chadwick Westlake: As we merge truly exceptional brands, teams, skill sets, and offerings, and create something materially different for our country. In the interim, our performance has improved, and I believe that's evident in our Q1. Compared to Q4, we significantly improved our efficiency ratio, as we said we would. We took decisive action to return to efficiency as a competitive advantage, a key source of our historical peer average ROE outperformance. While we cannot control the operating environment, we can control our costs. We are a growth bank and will continue to invest in strategic, high-impact initiatives. However, expense growth must take its cue from revenue growth as a high-performing public company. Similarly, we said we expected PCLs should start a path to improvement, albeit with a more substantial recovery skewed to the back half of the year. That, too, happened, with total PCLs dropping 28% relative to Q4.

Speaker #3: In the interim, our performance has improved, and I believe that's evident in our first quarter. Compared to Q4, we significantly improved our efficiency ratio, as we said we would.

Speaker #3: We took decisive action to return to efficiency as a competitive advantage, a key source of our historical PER average, ROE outperformance. What we cannot control the operating environment, we can control our costs.

Speaker #3: We are a growth bank and will continue to invest in strategic, high-impact initiatives. However, expense growth must take its cue from revenue growth as a high-performing public company.

Speaker #3: Similarly, we said we expected TCLs should start a path to improvement, albeit with a more substantial recovery skew to the back half of the year.

Speaker #3: That too happened, with total PCLs dropping 28% relative to Q4. Further, we moderately increased our net interest margin and maintained a good revenue profile in a slower growth environment, while also expanding our loans under management.

Chadwick Westlake: Further, we moderately increased our net interest margin and maintained a good revenue profile in a slower growth environment, while also expanding our loans under management. We indicated our outlook for a 12% ROE in 2026, as we balance near-term investments and elevated PCL in a continued uncertain environment. While this is not linear through the year, we're applying a refreshed discipline to our decision-making. With nearly a 50% relative ROE improvement over Q4, we are progressing towards that outlook. We remain focused on a thoughtful return to our 15% to 17% plus ROE over the medium term. As soon as we close PC Financial in coming months, our growth profile will shift meaningfully. We'll be able to scale what makes us distinct. We'll lay out the full potential at an investor day later this year after closing.

Speaker #3: We indicated our outlook for a 12% ROE in 2026, as we balance near-term investments and elevated PCL in a continued uncertain environment. While this is not linear through the year, we're applying a refreshed discipline to our decision-making.

Speaker #3: And with nearly a 50% relative ROE improvement over Q4, we are progressing towards that outlook. We remain focused on a thoughtful return to our 15 to 17% plus ROE over the medium term.

Speaker #3: As soon as we close PC Financial in coming months, our growth profile will shift meaningfully. We'll be able to scale what makes us distinct, we'll lay out the full potential at an investor day later this year after closing, that will be important context for what it will mean to add new top talent literally quadruple our customers nearly double our revenue add new distribution channels become part of the largest loyalty program in Canada with national household awareness and significantly diversify our business.

Chadwick Westlake: That will be important context for what it will mean to add new top talent, literally quadruple our customers, nearly double our revenue, add new distribution channels, become part of the largest loyalty program in Canada with national household awareness, and significantly diversify our business. That's simply day one. Until then, our core business progress early into 2026 aims to stabilize growth in our pre-provision, pre-tax earnings, regardless of the operating environment. Before I pass it over to Anilisa to share more context for Q1, I'll offer a few more contexts, co-comments on how I think about progress and the objectives we shared previously of reigniting our core, completing our product shelf, and strengthening our capabilities. Reigniting our core means reinvigorating growth in our core business lines.

Speaker #3: And that's simply day one. Until then, our core business progress early into 2026 aims to stabilize growth in our pre-provision, pre-tax earnings, regardless of the operating environment.

Speaker #3: Before I pass it over to Annalisa to share more context for Q1, I'll offer a few more contacts comments on how I think about progress and the objectives we shared previously.

Speaker #3: I've reignited our core completing our product shelf and strengthening our capabilities. Reigniting our core means reinvigorating growth in our core business lines. As a challenger bank, we continue to focus on where we will win and where we can provide value-added options to underserved Canadians.

Chadwick Westlake: As a challenger bank, we continue to focus on where we will win and where we can provide value-added options to underserved Canadians. We were pleased to see the outcomes of our focus translate into a 48% improvement in EPS over Q4 to land at CAD 2.26 per share. Plus, that meant we built on our very strong capital position with a 30 basis point expansion to 13.6% CET1. Housing activity remains muted in Canada, which is no surprise. We're responding by staying disciplined and leaning into regions where we win, including notable success in Quebec this quarter, while maintaining our focus on credit quality and ROE-based pricing. In single family, competition is intense, but we choose quality and returns over volume. A key bright spot is renewals.

Speaker #3: We were pleased to see the outcomes of our focus translate into a 48% improvement in EPS over Q4 to land at $2.26 per share.

Speaker #3: Plus that meant we built on our very strong capital position with a 30 basis point expansion to 13.6% set one. Housing activity remains muted in Canada, which is no surprise.

Speaker #3: We're responding by staying disciplined and leaning into regions where we win, including notable success in Quebec this quarter, while maintaining our focus on credit quality and ROE-based pricing.

Speaker #3: In single family, competition is intense, but we choose quality and returns over volume. A key bright spot is renewals, we're spending more time with existing customers delivering their record of retention and seeing continued opportunity as we invest in and support our mortgage broker partners.

Chadwick Westlake: We're spending more time with existing customers, delivering near record of retention and seeing continued opportunity as we invest in and support our mortgage broker partners. Another bright spot is our reverse mortgage business. At 5% sequential growth, we gained market share and we're early in the benefits of some enhancements we made at the end of last year. There will be more investment into this business. Onto another pillar of our core franchise, commercial banking. We had a great quarter for new originations, up 11% sequentially on the strength of our CMHC program and sustained demand for multi-unit residential housing in Canada. Pipelines remain robust. We continue to believe that actions to raise the Canada Mortgage Bond issuance limit is a direct benefit to EQB.

Speaker #3: Another bright spot is our reverse mortgage business. At 5% sequential growth, we gain market share and we're early into the benefits of some enhancements we made at the end of last year.

Speaker #3: There will be more investment into this business. Onto another pillar of our core franchise, commercial banking. We had a great quarter for new originations, up 11% sequentially on the strength of our CMHC program and sustained demand for multi-unit residential housing in Canada.

Speaker #3: Pipelines remain robust and we continue to believe that actions to raise the Canada mortgage bond issuance limit is a direct benefit to EQB. And then our digital bank has become one of our most recognizable core businesses and now serves 633,000 Canadians.

Chadwick Westlake: Our digital bank has become one of our most recognizable core businesses and now serves 633,000 Canadians. While our deposit levels were relatively consistent, we remained focused on foundational investments and capabilities ahead of the closing of PC Financial. We have significant growth intention here and added another 26,000 customers, up 4% versus Q4. More customers than ever now rely on us for everyday banking, a clear sign of the deep primary relationships we're building. We're putting our capital to work with purpose, accelerating share buybacks while continuing our strong track record of dividend growth. In this vein, we were also pleased to see Loblaw Companies recently announced its intention to enter into an ASPP to purchase shares of EQB in advance of closing, underscoring its confidence in our ability to deliver long-term shareholder value.

Speaker #3: We'll let a posit levels were relatively consistent we remain focused on foundational investments and capabilities ahead of the closing of PC Financial. We have significant growth intention here and added another 26,000 customers, up 4% versus Q4.

Speaker #3: More customers than ever now rely on us for everyday banking, a clear sign of the deep primary relationships we're building. We're putting our capital to work with purpose.

Speaker #3: Accelerating share buybacks while continuing our strong track record of dividend growth. In this vein, we were also pleased to see Loblaw companies recently announced its intention to enter into an ASPP to purchase shares of EQB in advance of closing, underscoring its confidence in our ability to deliver long-term shareholder value.

Speaker #3: Now a few comments on progress completing our product shelf. Our current primary focus is execution readiness for PC Financial and our Loblaw partnership. We filed applications with OSFI and the Competition Bureau and have established an integration management office to ensure our integration progresses well.

Chadwick Westlake: Now, a few comments on progress completing our product shelf. Our current primary focus is execution readiness for PC Financial and our Loblaw partnership. We filed applications with OSFI and the Competition Bureau and have established an integration management office to ensure our integration progresses well. Achieving the strategic benefits of the transaction, including related synergies, remains our top priority. PC brings us distribution, payments, loyalty, insurance, and more. There's so much potential for completing our integrated EQ product shelf with all these combined. The demand for wealth management remains top of mind for EQ customers and for us to achieve our full potential. Lastly, on strengthening our capabilities. To us, that means leveraging our digital native platform to drive efficiencies and innovation grounded in AI. Against this pillar in Q1, we partnered with Microsoft to launch a proprietary commercial loan management platform....

Speaker #3: Achieving the strategic benefits of the transaction, including related synergies, remains our top priority. PC brings us distribution, payments, loyalty, insurance, and more. There's so much potential for completing our integrated EQ product shelf with all these combined.

Speaker #3: The demand for wealth management remains top of mind for EQ customers and for us to achieve our full potential. Lastly, on strengthening our capabilities, to us, that means leveraging our digital native platform to drive efficiencies and innovation grounded in AI.

Speaker #3: Against this pillar in Q1, we partnered with Microsoft, the launch of proprietary commercial loan management platform. This platform is a first of its kind innovation in Canadian financial services that consolidates the commercial loan lifecycle onto the Microsoft Dynamics platform with built-in AI capabilities.

Chadwick Westlake: This platform is a first of its kind innovation in Canadian financial services that consolidates the commercial loan lifecycle onto the Microsoft Dynamics platform with built-in AI capabilities. We're seeing promising results that have meaningfully cut cycle times and will drive differentiated customer service and efficiency. We are well-positioned to continue delivering where it matters most. What this means to us is balancing the need to deliver the best value for our customers and prospective customers, while strengthening profitability for shareholders. Now, over to our CFO, Anilisa.

Speaker #3: We're seeing promising results that have meaningfully cut cycle times and will drive differentiated customer service and efficiency. We are well positioned to continue delivering where it matters most, what this means to us is balancing the need to deliver the best value for our customers and prospective customers while strengthening profitability for shareholders.

Speaker #3: Now over to our CFO, Annalisa.

Speaker #4: Thanks, Chadwick, and good morning, everyone. As a reminder, my comments will be on an adjusted basis and you can find a summary of these adjustments on slide 22 of today's presentation.

Anilisa Sainani: Thanks, Chadwick. Good morning, everyone. As a reminder, my comments will be on an adjusted basis, and you can find a summary of these adjustments on slide 22 of today's presentation. Starting on slide 6 for a review of our Q1 results. Despite lower expenses and the positive impact of share buybacks, EPS and ROE were both down versus Q1 2025, reflecting a stronger growth in credit environment at this time last year. Given the significant change in the economy, changes in our leadership team last August, and the restructuring program completed in October, we believe looking at earnings sequentially is a more meaningful way of measuring our performance in Q1. We are pleased with the improvement in results. Client focus, disciplined expense management, and capital allocation drove meaningful progress towards our ROE, EPS, and efficiency targets.

Speaker #4: Starting on slide 6 for a review of our Q1 results. Despite lower expenses and the positive impact of share buybacks, EPS and ROE were both down versus Q1 2025, reflecting a stronger growth in credit environment at this time last year.

Speaker #4: Given the significant change in the economy, changes in our leadership team last August, and the restructuring program completed in October, we believe looking at earnings sequentially is a more meaningful way of measuring our performance in Q1.

Speaker #4: We are pleased with the improvement in results. Client focus, disciplined expense management, and capital allocation drove meaningful progress towards our ROE, EPS, and efficiency targets.

Speaker #4: Diluted EPS for the first quarter was up 73 cents to $226, and ROE was up 360 basis points to $11.1%, reflecting a 9% increase in pre-provision pre-tax earnings, a decrease in performing PCLs, and capital management actions.

Anilisa Sainani: Diluted EPS for Q1 was up CAD 0.73 to CAD 2.26, and ROE was up 360 basis points to 11.1%, reflecting a 9% increase in pre-provision, pre-tax earnings, a decrease in performing PCLs, and capital management actions. PPPT growth was driven by relatively flat revenues and a 9% drop in expenses, reflecting disciplined management against a soft growth backdrop. As a result, the efficiency ratio improved by a significant 450 basis points to 49.1%. Turning to the balance sheet on slide 7. We look to loans under management or LUM as a key performance metric, reflecting our market-leading position in insured multi-unit residential mortgages. LUM increased 9% year-over-year and 2% sequentially to CAD 75.7 billion, driven by continued strength in our multi-unit residential portfolio.

Speaker #4: PPPT growth was driven by relatively flat revenues and a 9% drop in expenses, reflecting disciplined management against a soft growth backdrop. And as a result, the efficiency ratio improved by a significant 450 basis points to 49.1%.

Speaker #4: Turning to the balance sheet on slide 7. We look to Loans Under Management, or LUM, as a key performance metric, reflecting our market-leading position in insured multi-unit residential mortgages.

Speaker #4: LUM increased 9% year over year and 2% sequentially to $75.7 billion, driven by continued strength in our multi-unit residential portfolio. This represents solid growth in a difficult economic environment and is in line with our 2026 outlook for high single-digit to low double-digit growth.

Anilisa Sainani: This represents solid growth in a difficult economic environment and is in line with our 2026 outlook for high single digit to low double-digit growth. Importantly, this growth also reflects intentional portfolio choices, including a pullback from certain areas such as widespread engagement in insured single-family residential mortgages and select equipment financing portfolios, where lending activity doesn't meet our ROE hurdle rates. Conventional loans, which are LUM, excluding the insured single-family residential and insured multi-unit residential portfolios, are the primary contributor of net interest income. Conventional loans increased 6% year-over-year, reflecting continued growth in our uninsured mortgages and reverse mortgage business on the personal side and higher construction loans in commercial. Compared to last quarter, personal uninsured mortgages grew just under 2%, largely offset by lower construction lending.

Speaker #4: Importantly, this growth also reflects intentional portfolio choices including a pullback from certain areas such as widespread engagement in insured single-family residential mortgages and select equipment financing portfolios where lending activity doesn't meet our ROE hurdle rates.

Speaker #4: Conventional loans, which are LUM excluding the insured single-family residential and insured multi-unit residential portfolios, are the primary contributor of net interest income. Conventional loans increased 6% year over year, reflecting continued growth in our uninsured mortgages and reverse mortgage business on the personal side and higher construction loans in commercial.

Speaker #4: Compared to last quarter, personal uninsured mortgages grew just under 2%, largely offset by lower construction lending. Turning to deposits, balances increased 9% year over year and 2% sequentially to 36.9 billion.

Anilisa Sainani: Turning to deposits, balances increased 9% year-over-year and 2% sequentially to CAD 36.9 billion. Growth in EQ Bank deposits remained strong, increasing 10% year-over-year and were flat sequentially. Year-over-year growth was driven by an 18% increase in the customer base, reflecting momentum in the everyday high interest personal account, notice savings accounts, and the EQ Business Banking platform that launched in October. Broker deposit growth was solid, increasing 9% year-over-year and 4% sequentially. This remains an attractive source of funding, providing additional benefits of diversification and a relatively lower cost alternative to other sources of funding. Wholesale funding increased 16% year-over-year and modestly, sequentially, and continues to play an important role in our diversified funding strategy. We are also focused on increasing the proportion of lower-cost funding, particularly deposits.

Speaker #4: Growth in EQ bank deposits remains strong, increasing 10% year over year and were flat sequentially. Year over year growth was driven by an 18% increase in the customer base reflecting momentum in the everyday high interest personal account, notice savings accounts, and the EQ business banking platform that launched in October.

Speaker #4: Broker deposit growth was solid, increasing 9% year over year and 4% sequentially. This remains an attractive source of funding, providing additional benefits of diversification and a relatively lower-cost alternative to other sources of funding.

Speaker #4: Wholesale funding increased 16% year over year and modestly sequentially, and continues to play an important role in our diversified funding strategy. We are also focused on increasing the proportion of lower-cost funding, particularly deposits, because we can control deposit pricing.

Anilisa Sainani: Because we can control deposit pricing, this provides meaningful flexibility to manage margins proactively and ensures that growth remains aligned with profitability. Turning to NII on slide 8. Net interest income was CAD 263 million, down 3% year-over-year and relatively flat versus last quarter. Net interest margins were down 8 basis points versus last year and increased 1 basis point sequentially. The sequential market margin expansion reflects the shift towards higher-yielding assets, not a funding cost. Looking forward into the rest of 2026, our expectation is for margins to remain in the 2% range. Turning to slide 9, non-interest revenue of CAD 43.4 million declined 17% year-over-year and was flat sequentially. The year-over-year decline was primarily driven by lower gains on hedging and derivatives.

Speaker #4: This provides meaningful flexibility to manage margins proactively and ensures that growth remains aligned with profitability. Turning to NII on slide 8. Net interest income was $263 million, down 3% year over year and relatively flat versus last quarter.

Speaker #4: Net interest margins were down 8 basis points versus last year and increased 1 basis point sequentially. The sequential margin expansion reflects the shift towards higher yielding assets, not a funding cost.

Speaker #4: Looking forward into the rest of 2026, our expectation is for margins to remain in the 2% range. Turning to slide 9, non-interest revenue of 43.4 million declined 17% year over year and was flat sequentially.

Speaker #4: The year-over-year decline was primarily driven by lower gains on hedging and derivatives. Securitization activity remained very strong compared to last year, and that strength continued into the first quarter with a 7% increase in volumes compared to Q4.

Anilisa Sainani: Securitization activity remained very strong compared to last year. That strength continued into Q1, with a 7% increase in volumes compared to Q4. This activity was partly offset by lower market rates. Turning to next on slide 10. The restructuring program completed last October marked a turning point in how we manage our expense base, sharpening our focus on our highest growth priorities, capital allocation, and cost discipline while continuing to invest for the future within our risk management framework. As a result, non-interest expenses declined 1% year-over-year and 9% sequentially. These cost savings were partially offset by continued investment in the business, including technology and innovation, as well as higher costs associated with EQB's new Toronto headquarters. We were pleased to deliver a 49.1% efficiency ratio.

Speaker #4: This activity was partly offset by lower market rates. Turning to NYX on slide 10. The restructuring program completed last October marked a turning point in how we manage our expense base.

Speaker #4: Sharpening our focus on our highest growth priorities, capital allocation, and cost discipline, while continuing to invest for the future within our risk management framework.

Speaker #4: As a result, non-interest expenses declined 1% year over year and 9% sequentially. These cost savings were partially offset by continued investment in the business, including technology and innovation, as well as higher costs associated with EQB's new Toronto headquarters.

Speaker #4: We were pleased to deliver a 49.1% efficiency ratio. As we shared on our Q4 call, going forward, we would continue to expect an efficiency ratio in the low 50s with low single-digit expens growth and neutral to slightly positive operating leverage for 2026.

Anilisa Sainani: As we shared on our Q4 call, going forward, we would continue to expect an efficiency ratio in the low 50s, with low single-digit expenses, expense growth, and neutral to slightly positive operating leverage for 2026. As a reminder, the Q1 tends to be typically lower for expenses, as merit increases take effect early in the calendar year, and investment spend builds as the year progresses. Finally, turning to capital on slide 11. Our capital allocation approach continues to prioritize reinvestment in organic growth, returning capital to shareholders through dividend growth and share repurchases, and the maintenance of capital flexibility to pursue strategic inorganic growth. The bank's CET1 ratio increased 30 basis points from last quarter, reflecting the benefits of strong internal capital generation. At 13.6%, our CET1 ratio is strong and remains well above our target and regulatory minimums.

Speaker #4: As a reminder, the first quarter tends to be typically lower for expenses, as merit increases take effect early in the calendar year, and investment spend builds as the year progresses.

Speaker #4: Finally, turning to capital on slide 11. Our capital allocation approach continues to prioritize reinvestment in organic growth, returning capital to shareholders through dividend growth and share repurchases, and the maintenance of capital flexibility to pursue strategic inorganic growth.

Speaker #4: The bank's CET1 ratio increased 30 basis points from last quarter, reflecting the benefits of strong internal capital generation. At 13.6%, our CET1 ratio is strong and remains well above our target and regulatory minimums.

Speaker #4: Yesterday, we announced a 4% dividend increase to 59 cents, up from 57 cents last quarter and 51 cents last year, as we continue our strong track record of dividend increases.

Anilisa Sainani: Yesterday, we announced a 4% dividend increase to CAD 0.59, up from CAD 0.57 last quarter and CAD 0.51 last year, as we continue our strong track record of dividend increases. We also repurchased a record 1.1 million shares in the quarter as part of our plan to return capital to shareholders. In January, we renewed our NCIB and also established an automatic securities purchase plan to allow for ongoing return of capital. I'll now turn the call over to Marlene to take us through risk.

Speaker #4: We also repurchased a record $1.1 million shares in the quarter as part of our plan to return capital to shareholders. In January, we renewed our NCIB and also established an automatic securities purchase plan to allow for ongoing return of capital.

Speaker #4: I'll now turn the call over to Marlene to take us through risk.

Speaker #5: Thank you, Annalisa, and good morning, everyone. I'll start on slide 13 with a discussion of the allowances for credit losses. Against an environment characterized by elevated macroeconomic uncertainty, I'm encouraged by our credit performance in Q1, as performing PCLs declined materially partially offset by a modest increase in impaired PCLs.

Marlene Lenarduzzi: Thank you, Anilisa, and good morning, everyone. I'll start on slide 13 with a discussion of the allowances for credit losses. Against an environment characterized by elevated macroeconomic uncertainty, I'm encouraged by our credit performance in Q1, as performing PCLs declined materially, partially offset by a modest increase in impaired PCLs. Performing PCLs were CAD 3.1 million, down 84% quarter-over-quarter, driven by a moderate build in allowances, as the prior quarter reflected a more pronounced deterioration in the forward-looking macroeconomic indicators. We also recorded a release in equipment financing, driven by improved credit quality arising from declines in higher credit risk segments such as long-haul trucking and a shift towards prime. By business, performing PCLs were CAD 1.4 million in personal, CAD 4.3 million in commercial, and a performing PCL release of CAD 2.6 million in equipment financing.

Speaker #5: Performing PCLs were 3.1 million, down 84% quarter over quarter, driven by a moderate build in allowances as the prior quarter reflected a more pronounced deterioration in the forward-looking macroeconomic indicators.

Speaker #5: We also recorded a release in equipment financing driven by improved credit quality arising from declines in higher credit risk segments such as long-haul trucking, and a shift towards prime.

Speaker #5: By business, performing PCLs were 1.4 million in personal, 4.3 million in commercial, and a performing PCL release of 2.6 million in equipment financing. Along with PCLs on impaired loans, realized losses, and write-offs, ACLs increased by 3.5 million or 2 basis points quarter over quarter and 15 basis points year over year.

Marlene Lenarduzzi: Along with PCLs on impaired loans, realized losses, and write-offs, ACLs increased by CAD 3.5 million or 2 basis points quarter-over-quarter, and 15 basis points year-over-year. Overall, our portfolio is appropriately provisioned, and we will continue to actively manage our allowances as we monitor macroeconomic conditions going forward. Now, please turn to slide 14. Impaired PCLs increased 2 basis points sequentially to 32 basis points, with higher provisions in the commercial portfolio, largely offset by lower provisions in the personal and equipment financing portfolios. In commercial, the sequential increase primarily related to 1 borrower group. Impaired PCLs in commercials can be lumpy by nature, given the size of individual exposures. That said, our primary focus remains for commercial growth to be on CMHC-insured lending, where we do not expect losses.

Speaker #5: Overall, our portfolio is appropriately provisioned and we will continue to actively manage our allowances as we monitor macroeconomic conditions going forward. Now, please turn to slide 14.

Speaker #5: Impaired PCLs increased 2 basis points sequentially to 32 basis points, with higher provisions in the commercial portfolio largely offset by lower provisions in the personal and equipment financing portfolios.

Speaker #5: In commercial, the sequential increase primarily related to one borrower group. Impaired PCLs in commercials can be lumpy by nature, given the size of individual exposures.

Speaker #5: That said, our primary focus remains for commercial growth to be on CMHC insured lending, where we do not expect losses. In single-family residential, trends were consistent with Q4, with continued softness from larger loans in Toronto and select surrounding suburbs, where prices have declined meaningfully from their peaks.

Marlene Lenarduzzi: In single-family residential, trends were consistent with Q4, with continued softness from larger loans in Toronto and select surrounding suburbs, where prices have declined meaningfully from their peaks. We remain attentive to the risks and have not observed this pressure spreading to other regions. As a result, we do not believe this represents a systemic issue across the portfolio. We are encouraged by the 3 basis points declined in impaired PCLs relative to Q4, which was in line with our expectations. Finally, impaired provisions in equipment financing were at their lowest level since the start of 2023, reflecting the portfolio repositioning discussed earlier, a decision that was made several quarters ago. Now, turning to slide 15. Against continued macroeconomic uncertainty, gross impaired loans increased 10% quarter-over-quarter to CAD 956 million.

Speaker #5: We remain attentive to the risks and have not observed this pressure spreading to other regions. As a result, we do not believe this represents a systemic issue across the portfolio.

Speaker #5: We are encouraged by the 3-basis-point decline in impaired PCLs relative to Q4, which was in line with our expectations. Finally, impaired provisions in equipment financing were at their lowest level since the start of 2023, reflecting the portfolio repositioning discussed earlier—a decision that was made several quarters ago.

Speaker #5: Now, turning to slide 15. Against continued macroeconomic uncertainty, gross impaired loans increased 10% quarter over quarter to $956 million. Gross impaired loans in personal lending increased to $421 million this quarter, up 15% quarter over quarter, primarily driven by credit migration.

Marlene Lenarduzzi: Gross impaired loans and personal lending increased to CAD 421 million this quarter, up 15% quarter-over-quarter, primarily driven by credit migration. The bank continues to review its underwriting practices to ensure the portfolio remains resilient across different real estate cycles. Our focus remains on first-lien lending in urban markets, where economic drivers such as employment are more diversified. This supports our ability to lend through the cycles. Gross impaired loans and commercial lending increased modestly quarter-over-quarter, driven primarily by new formations related to one borrower exposure. Equipment financing demonstrated improvement in the quarter, with impaired loans dropping 6% sequentially. Now I'll share some perspective on how we're thinking about credit for the remainder of the year. Macroeconomic uncertainty remains elevated, continuing to weigh on both consumer and business confidence as trade tensions remain elevated.

Speaker #5: The bank continues to review its underwriting practices to ensure the portfolio remains resilient across different real estate cycles. Our focus remains on first lien lending in urban markets, where economic drivers, such as employment, are more diversified, and this supports our ability to lend through the cycle.

Speaker #5: Gross impaired loans in commercial lending increased modestly quarter over quarter, driven primarily by new formations related to one borrower exposure. Equipment financing demonstrated improvement in the quarter with impaired loans dropping 6% sequentially.

Speaker #5: And now I'll share some perspective on how we're thinking about credit for the remainder of the year. Macroeconomic uncertainty remains elevated, continuing to weigh on both consumer and business confidence as trade tensions remain elevated.

Speaker #5: Delayed business investment, elevated unemployment rates, and soft housing markets remain headwinds for our portfolio. And while we continue to expect Bank of Canada rate cuts throughout 2024 and 2025 will support a recovery in housing activity, business investment, and employment, this remains dependent on the resolution of broader macroeconomic issues.

Marlene Lenarduzzi: Delayed business investment, elevated unemployment rates, and soft housing markets remain headwinds for our portfolio. While we continue to expect the Bank of Canada rate cuts throughout 2024 and 2025 will support a recovery in housing activity, business investment, and employment, this remains dependent on the resolution of broader macroeconomic issues. Barring any significant change in the macroeconomic environment, our outlook remains unchanged from Q4 2025. Resolution timelines remain protracted across all lending portfolios. In personal lending, performance remains sensitive to employment conditions and housing price movements. In commercial lending, exposures tend to be larger, which can result in quarter-over-quarter variability, as we experienced in Q1. As a reminder, approximately 85% of our commercial loans under management are comprised of CMHC-insured lending.

Speaker #5: Barring any significant change in the macroeconomic environment, our outlook remains unchanged from Q4 2025. Resolution timelines remain protracted across all lending portfolios. In personal lending, performance remains sensitive to employment conditions and housing price movements.

Speaker #5: In commercial lending, exposures tend to be larger which can result in quarter over quarter variability as we experienced in Q1. As a reminder, approximately 85% of our commercial loans under management are comprised of CMHC insured lending.

Speaker #5: In equipment financing, we are seeing the benefits of our prudent lending actions and portfolio diversification away from long-haul trucking and towards higher quality assets which is translating into the expected improved credit performance we see this quarter.

Marlene Lenarduzzi: In equipment financing, we are seeing the benefits of our prudent lending actions and portfolio diversification away from long-haul trucking and towards higher quality assets, which is translating into the expected improved credit performance we see this quarter. In terms of PCL expectations, and consistent with what we've previously communicated, we would expect some relief in the second half of the year, absent any additional macroeconomic headwinds. We remain confident in the credit quality of our portfolios and our disciplined approach towards managing risk through the cycle. With that, I'll turn it back over to Lamar for the Q&A portion of the call.

Speaker #5: In terms of PCL expectations and consistent with what we've previously communicated, we would expect some relief in the second half of the year, absent any additional macroeconomic headwinds.

Speaker #5: We remain confident in the credit quality of our portfolios and our disciplined approach towards managing risk through the cycle. With that, I'll turn it back over to Lamar for the Q&A portion of the call.

Speaker #1: Thanks, Marlene. I would ask that you limit yourself to one or two questions, and then please re-queue so that we can get to everyone.

Lemar Persaud: Thanks, Marlene. I would ask that you limit yourself to one or two questions, and then please re-queue so that we can get to everyone. With that, operator, can we have the first question from the lines?

Doug Young: Thanks, Marlene. I would ask that you limit yourself to one or two questions, and then please re-queue so that we can get to everyone. With that, operator, can we have the first question from the lines?

Speaker #1: With that, operator, can we have the first question from the lines?

Speaker #3: Absolutely. As we begin the question and answer session, I just want to remind you that you can press star followed by one on your touchtone phone.

Operator: Absolutely. As we begin the question-and-answer session, I just want to remind you that you can press star followed by one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to remove your hand from the queue, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Étienne Ricard with BMO Capital Markets. Please go ahead.

Speaker #3: You'll hear a prompt that your hand has been raised. Should you wish to remove your hand from the queue, please press star followed by two.

Speaker #3: If you're using a speakerphone, please lift the handset before pressing any keys. And your first question comes from Étienne Ricard with BMO Capital Markets.

Speaker #3: Please go ahead.

Speaker #1: Thank you. And good morning. So it's good to see the continued stability to the margin profile although I would believe the mix shift towards conventional loans would support a better margin.

Étienne Ricard: Thank you, good morning. It's good to see the continued stability to the margin profile. Although I would believe the mix shift towards conventional loans would support a better margin. How would you describe the competition and spreads in single family for single-family mortgages, and especially for renewal, given this tends to be a better return opportunity? Would you say spreads have been stable or maybe declining a little bit?

Speaker #1: So how would you describe the competition and spreads in single-family for single-family mortgages? And especially for renewal, given this tends to be a better return opportunity, would you say spreads have been stable or maybe declining a little bit?

Speaker #4: Hey, good morning, Étienne. Yeah, sure, I'll hop in. Yeah, the competition for sure is there. We're not chasing business, though. We're staying very disciplined to our ROE pricing.

Chadwick Westlake: Hey, good morning, Étienne. Yeah, sure. I'll hop in. Yeah, the competition for sure is there. We're not chasing business, though. We're staying very disciplined to our ROE pricing is number one. You are seeing conventional increase, but it's in our select areas of the market. There is growth in some parts of the market, but it's not growth that we're interested in. We're very comfortable with our market share stability, importantly. You know, for renewals, I'd say, you know, pricing is within our ROE calculator, and we are seeing renewal rates at now actually record levels as well. We're really spending that time with our existing borrowers.

Speaker #4: It's number one. You are seeing conventional increase, but it's in our select areas of the market. There is growth in some parts of the market, but it's not growth that we're interested in.

Speaker #4: So we're very comfortable with our market share stability. Importantly, and for renewals, I'd say pricing is within our ROE calculator. And we are seeing renewal rates at now actually record levels as well.

Speaker #4: So we're really spending that time with our existing borrowers, and we'll have opportunities coming up, as you know, with our transaction as well, to offer even more to those customers as well.

Chadwick Westlake: We'll have opportunities coming up, as you know, with our transaction as well, to offer even more to those customers as well.

Speaker #1: Okay. And on that topic of PC Financial, Lable mentioned in the past that it believes its underwriting policies have been very conservative. So, as you think about integrating that business, would you expect some tweaks to the credit tolerance of the card portfolio?

Étienne Ricard: Okay. On the topic of PC Financial, Loblaw mentioned in the past that it believes its underwriting policies have been very conservative. As you think about integrating that business, would you expect some tweaks to the credit tolerance of the card portfolio?

Speaker #4: Yeah, sure. I'd say strategically, we see we do see significant growth opportunity, but I know Marlene spent a lot of time on this with the team as well, maybe if Marlene want to.

Chadwick Westlake: Yeah, sure. I'd say strategically, we do see significant growth opportunity, but I know Marlene spent a lot of time on this with the team as well. Maybe Marlene, you want to...

Marlene Lenarduzzi: Yeah. Thank you, Chadwick. We have looked at their approach. They have an established process, a strong team in place from a credit strategy perspective. We do see that there could be potential for adjustments there. At this point, we think that the way they've been operating for now is going to be what we're going to go forward with, and we'll continue to review it as they come over.

Speaker #3: Yeah, thank you, Chadwick. We have looked at their approach. They have an established process, a strong team in place from a credit strategy perspective.

Speaker #3: And so we do see that there could be potential for adjustments there. But at this point, we think that the way they've been operating for now is going to be what we're going to go forward with, and we'll continue to review it as they come over.

Speaker #1: Great. Thank you very much.

Étienne Ricard: Great. Thank you very much.

Speaker #4: Thanks, Étienne.

Chadwick Westlake: Thanks, Étienne.

Speaker #3: Your next question comes from Doug Young with Desjardins Capital Markets. Please go ahead.

Operator: Your next question comes from Doug Young with Desjardins Capital Markets. Please go ahead.

Speaker #1: Hi, good morning. Maybe, Marlene, sticking with yourself just on credit—you mentioned in the commercial side equipment finance, there’s one borrower group where you saw some deterioration.

Lemar Persaud: Hi, good morning. Maybe Marlene, sticking with yourself, just on credit. You mentioned in the commercial side, you know, ex-equipment finances, you know, one borrower group where you saw some deterioration. I'm not looking for a name, but provide maybe some context as to what that is? Can you size that out? Where I'm trying to go with this is, like, what's the LTV? Is there a risk that, you know, we could see further adjustments for that particular borrower group?

Doug Young: Hi, good morning. Maybe Marlene, sticking with yourself, just on credit. You mentioned in the commercial side, you know, ex-equipment finances, you know, one borrower group where you saw some deterioration. I'm not looking for a name, but provide maybe some context as to what that is? Can you size that out? Where I'm trying to go with this is, like, what's the LTV? Is there a risk that, you know, we could see further adjustments for that particular borrower group?

Speaker #1: Can you provide I'm not looking for a name, but provide maybe some context as to what that is? Can you size that out? And where I'm trying to go with this is what's the LTV?

Speaker #1: Is there a risk that we could see further adjustments for that particular borrower group?

Speaker #3: Yeah, thanks for the question. I would say on this particular one, it is one borrower group with three loans. And these are real estate secured against apartment units that are considered micro.

Marlene Lenarduzzi: Yeah, thanks for the question. I would say on this particular one, it is a 1 borrower group with 3 loans. These are real estate secured against apartment units that are considered micro, and we have taken that into account in the provisions that we've taken on that property at this time. We feel that at this point in time, we are adequately provisioned.

Speaker #3: And we have taken that into account in the provisions that we've taken on that property at this time. So we feel that at this point in time, we are adequately provisioned.

Speaker #1: So, are these completed properties? Are these properties under construction?

Lemar Persaud: ... Are these completed properties? Are these properties under construction?

Doug Young: ... Are these completed properties? Are these properties under construction?

Speaker #3: Yeah, they're completed properties.

Marlene Lenarduzzi: Yeah, they're completed properties.

Speaker #1: Okay. So they're completed. And do you have a size of it or anything that you're willing to give?

Lemar Persaud: Okay, they're completed. Do you have a size of it or anything that you're willing to give?

Doug Young: Okay, they're completed. Do you have a size of it or anything that you're willing to give?

Speaker #3: Not something that we disclose.

Marlene Lenarduzzi: Not something that we disclose.

Speaker #1: Okay. But you think that you're appropriately provisioned for this. So we shouldn't next quarter to quarter after the expectation isn't there should be any leakage here at this point in time.

Lemar Persaud: Okay. You think that you're appropriately provisioned for this. We shouldn't next quarter, the quarter after, the expectation isn't there should be any leakage here at this point in time?

Doug Young: Okay. You think that you're appropriately provisioned for this. We shouldn't next quarter, the quarter after, the expectation isn't there should be any leakage here at this point in time?

Speaker #3: And.

Marlene Lenarduzzi: And-

Speaker #4: I'm happy to add a couple of comments. These loans have been with us through the workout process for some time. So we're fairly far along now in the resolution strategies.

Chadwick Westlake: I'm happy to add a couple comments. These loans have been with us through the workout process for some time, so we're fairly far along now in the resolution strategies. We feel good about where those are at, that, I think, gives, you know, alludes to Marlene's confidence in why we're comfortably provisioned at the current levels.

Speaker #4: We feel good about where those are at. And so that gives it alludes to Marlene's confidence in why we're comfortably provisioned at the current levels.

Speaker #1: Okay, and then just another one on credit. There was a sizable net write-off this quarter. I don't think you break that down between commercial and personal.

Lemar Persaud: Okay. Just another one on credit. Just there's a sizable write-off, net write-off this quarter. I don't think you break that down between commercial, personal, but I was wondering if you can give some context as to what drove that?

Doug Young: Okay. Just another one on credit. Just there's a sizable write-off, net write-off this quarter. I don't think you break that down between commercial, personal, but I was wondering if you can give some context as to what drove that?

Speaker #1: But I was wondering if you can give some context as to what drove that.

Marlene Lenarduzzi: We do have I can give you a bit of a breakdown offline if you'd like, but it's mostly about half of that is commercial and then commercial, a little bit on equipment financing as well. Sorry, half of it's commercial, but and then it's personal, followed by a little bit on equipment financing.

Speaker #3: We do have a bit I can give you a bit of a breakdown offline if you'd like. But it's mostly about half of that is commercial.

Speaker #3: And then commercial and a little bit on equipment financing as well. Sorry, half of it's commercial. And then it's personal followed by a little bit on equipment financing.

Speaker #1: Okay. Gives me a little bit. But maybe I'll follow up. And then just lastly, Analisa, just on expenses, you're at 49%. You're targeting low 50%.

Lemar Persaud: Okay. Gives me a little bit, but maybe I'll follow up. Lastly, Anilisa, just like on expenses, you're at 49%. You know, you're targeting fit low 50%. That's the guidance you give. You mentioned that you're going back. You're still sticking with that, you know, low 50%. Like, what takes you back from 49% this quarter to low fifties? Like, I'm just trying to understand. Like, I understand that there's the merit increase that you mentioned. I'm just trying to get a gauge. Is this that you're just being conservative, or are you trying to signal that there's some revenue pressure coming? If you could maybe flesh it out a little bit further.

Doug Young: Okay. Gives me a little bit, but maybe I'll follow up. Lastly, Anilisa, just like on expenses, you're at 49%. You know, you're targeting fit low 50%. That's the guidance you give. You mentioned that you're going back. You're still sticking with that, you know, low 50%. Like, what takes you back from 49% this quarter to low fifties? Like, I'm just trying to understand. Like, I understand that there's the merit increase that you mentioned. I'm just trying to get a gauge. Is this that you're just being conservative, or are you trying to signal that there's some revenue pressure coming? If you could maybe flesh it out a little bit further.

Speaker #1: That's the guidance you give. You mentioned that you're going back. You're still sticking with that low 50%. What takes you back from 49% this quarter to low 50s?

Speaker #1: I'm just trying to understand. And I understand that there's the merit increase that you mentioned. I'm just trying to get a gauge. Is this that you're just being conservative or are you trying to signal that there's some revenue pressure coming?

Speaker #1: If you could maybe flesh it out a little bit further.

Speaker #3: Yeah, of course. Thanks for the question. Our outlook on efficiency is entirely expense-driven, so we're not changing anything from a revenue side. We continue to expect the current revenue environment to persist into the second quarter.

Anilisa Sainani: Yeah, of course. Thanks for the question. Our outlook on efficiency is entirely expense-driven. We're not changing anything from a revenue side. We continue to expect the current revenue environment to persist into Q2, consistent with what we shared in Q4, with recovery and more growth skewed to the back half of the year. When we think about our expenses, Q1 does tend to be typically lower, exactly as you called out. Merit increases, they come into effect in January. You only see that for one month of the quarter, as opposed to the rest of the year, where you'll see it consistently through. There also tends to be seasonally lower spending just over the holiday period. The investments don't ramp up until afterwards. Third-party spend gets a little bit quiet over the holidays as well.

Speaker #3: A consistent with what we shared in Q4 with recovery and more growth skewed to the back half of the year. So when we think about our expenses, Q1 does tend to be typically lower, exactly as you called out, merit increases.

Speaker #3: They come into effect in January, so you only see that for one month of the quarter, as opposed to the rest of the year where you'll see it consistently through.

Speaker #3: They're also tends to be seasonally lower spending, just over the holiday period. The investments don't ramp up until afterwards. Third-party spend gets a little bit quiet over the holidays as well.

Speaker #3: And so investing in our business, continuing to enhance our technology capabilities and our connection with our clients and the products that we offer, that remains a priority.

Anilisa Sainani: Investing in our business, continuing to enhance our technology capabilities and our connection with our clients and the products that we offer, that remains a priority, and that will account for the ramp-up. Very similar to what we shared, 49.1%. We're very pleased with this quarter. We do expect that to tick up to low 50s for the remainder of the year, as we continue to reinvest some of the expense savings into the business.

Speaker #3: And that will account for the ramp-up. So very similar to what we shared: 49.1%. We're very pleased with this quarter. We do expect that to tick up to low 50s for the remainder of the year as we continue to reinvest some of the expense savings into the business.

Lemar Persaud: Appreciate the color. Thank you.

Doug Young: Appreciate the color. Thank you.

Speaker #1: Appreciate the color. Thank you.

Speaker #3: Thank you. Your next question comes from John Aiken with Jefferies. Please go ahead.

Anilisa Sainani: Thank you.

Operator: Your next question comes from John Aiken with Jefferies. Please go ahead.

Speaker #1: Good morning. In the context around the competitive pressures you're seeing in terms of the residential mortgages, what realistically can we expect for medium- and longer-term growth in that product line?

John Aiken: Good morning. In context around the pressure, the competitive pressures you're seeing in terms of the residential mortgages, you know, what realistically can we expect for medium and longer-term growth in that product line?

Speaker #4: Thanks, John. For we provided outlook for the year, right, for overall loans under management of high single digits. And we didn't break out the specific aspect just for conventional residential.

Chadwick Westlake: Thanks, John. We provided outlook for the year, right. For overall loans under management of high single digits, we didn't break out the specific aspect just for conventional residential. I wouldn't expect a lot of momentum right now past these current levels, where, you know, we just increased even on the conventional residential, a couple percent sequentially. I think the market's pretty muted. Like I said, I do believe there is growth out there, but we're staying very diligent in our early pricing and our risk lending parameters. It's probably consistency for now, and that's part of our outlook, though.

Speaker #4: But I wouldn't expect a lot of momentum right now past these current levels, where we just increased even on the conventional residential a couple of percent sequentially.

Speaker #4: I think the market's pretty muted. Like I said, I do believe there is growth out there, but we're staying very diligent in our ROE pricing and our risk lending parameters.

Speaker #4: So it's probably consistency for now. And that's part of our outlook, though.

Speaker #1: Great, thank you. And then just one follow-on. The performance that we saw within the long-haul transports on the credit side, as Marlene pointed out, the best that we've seen in quite some time— is the sense from your group now that we really have put this issue behind us?

John Aiken: Great. Thank you. Just one follow-on. The performance that we saw within the long-haul transport, on the credit side, as Marlene pointed out, the best that we've seen in quite some time, is the sense from your group now that we really have put this issue behind us? The portfolio should just be in run-off, and we're probably not going to see any more ripples in that?

Speaker #1: The portfolio should just be in runoff, and we're probably not going to see any more ripples on that.

Speaker #4: Yeah, we're really happy with what we've seen. Not surprised, though. And I think this really goes back to 2024. We've made a series of changes, including when we brought Ashley Yancey into take over as president and CEO.

Chadwick Westlake: Yeah, we're really happy with what we've seen. Not surprised, though, and I think this really goes back to 2024. We made a series of changes, including when we brought Ashley Yantzi in to take over as president and CEO. We've done a lot to really de-risk that portfolio, our move towards prime, our move away from a lot of long haul, focusing on different brokers. In addition, we've worked through a lot of those 2022 and prior vintages, so we are seeing a lot of improvement. We are seeing those defaults come down. We are also seeing generally improved trending in the early-stage delinquencies, lower NSFs. We do think it's sustainable.

Speaker #4: We've done a lot to really de-risk that portfolio. Our move towards Prime, our move away from a lot of long haul, focusing on different brokers, in addition, we've worked through a lot of those 2022 and prior vintages.

Speaker #4: So we are seeing a lot of improvement. We are seeing those defaults come down. We are also seeing generally improved trending in the early stage delinquencies, lower NSFs, so we do think it's sustainable.

Speaker #4: It may not be perfectly linear on a quarter-to-quarter basis, but have a high conviction level that the worst is behind us for sure.

Chadwick Westlake: It may not be perfectly linear on a quarter-to-quarter basis, but have a high conviction level that the worst is behind us for sure.

Speaker #1: Fantastic. Thanks for the color.

John Aiken: Fantastic. Thanks for the color.

Speaker #4: Thanks, John.

Chadwick Westlake: Thanks, John.

Speaker #3: Your next question comes from Steven Boland with Raymond James. Please go ahead.

Operator: Your next question comes from Stephen Boland with Raymond James. Please go ahead.

Marlene Lenarduzzi: Thanks. I'll leave the, maybe the credit questions to others. I'm more curious about with Loblaw and, you know, I guess, is this business going to remain a separate subsidiary under the parent company? The reason I ask that is just-

Speaker #1: Thanks. I'll leave maybe the credit questions to others. More curious about with Loblaws and I guess, is this business going to remain a separate subsidiary under the parent company?

Speaker #1: And the reason I ask that is just plans on funding. They use the trust. They issue some notes that may not be the most efficient from a rate perspective.

Stephen Boland: plans on funding. You know, they use the trust, they issue some notes that may not be the most efficient from a rate perspective. I'm just wondering, in your discussions, has that progressed to the point where you do have funding plans or changes in funding plans for the business?

Speaker #1: So, I'm just wondering—in your discussions, has that progressed to the point where you do have funding plans, or changes in funding plans, for the business?

Speaker #4: Thanks, Steven. Well, we absolutely have plans. . So the long-term intent, it wouldn't just be a subsidiary. We would intend to amalgamate that with EQ over time.

Chadwick Westlake: Thanks, Stephen. Well, we absolutely have plans. The long-term intent, it wouldn't just be a subsidiary. We would intend to amalgamate that with EQB over time. We have, call it 12 different funding levers. Our intent, first and foremost, is to grow EQ Bank core deposits. That's going to be an increasing component of our funding stack, and that's going to be our lowest source cost of funding over time. Plus, those assets that we bring in as part of the credit card portfolio will expand our capabilities for covered bond capacity and other options. Now, the Eagle Credit Card Trust you're referring to as part of the ABS asset-backed securitization, that will continue as well. It is an option for us.

Speaker #4: We have called it a dozen different funding levers. Our intent, first and foremost, is to grow EQ Bank core deposits. That's going to be an increasing component of our funding stack, and that's going to be our lowest source cost of funding over time, plus those assets that we bring in as part of the credit card portfolio will expand our capabilities for covered bond, capacity, and other options.

Speaker #4: Now, the Eagle Trust you're referring to as part of the asset-backed securitization, that will continue as well. It is an option for us. So I think it just expands our funding capacity, but we will, I think, have an opportunity to improve that overall then as part of the NIM equation over time.

Chadwick Westlake: I think it just expands our funding capacity, but we will, I think, have an opportunity to improve that overall and as part of the NIM equation over time.

Speaker #1: Okay. I won't go too much in the weeds at that point. I guess the second thing is on the sorry? Yeah. So.

Stephen Boland: Okay. I won't go touching the weeds at that point. I guess the second thing is on.

Chadwick Westlake: Happy to.

Stephen Boland: Sorry? Yeah,

Speaker #4: I'm happy to help you.

Chadwick Westlake: Happy to offline.

Speaker #1: Yeah. Okay. The second question is on the NCIB. Obviously, aggressive in the quarter. You've kind of stated here in your prepared remarks that it's expected to continue.

Stephen Boland: Yeah. Okay. The second question is on the NCIB, obviously aggressive in the quarter. You've just kind of stated here in your prepared remarks that that is expected to continue. I don't think I've ever seen another company, and, you know, major shareholder put an automatic, you know, purchase plan in place. I'm just wondering, have you had discussions with Loblaw in terms of their limits? 'Cause otherwise, you know, you've got two plans that are competing for, you know, limited liquidity in the market. I'm just wondering, has that discussion happened, or does it need to happen, if you're, if you're both trying to fulfill your, you know, your buyback plans?

Speaker #1: But I don't think I've ever seen another company and major shareholder put an automatic purchase plan in place. So I'm just wondering, have you had discussions with Loblaws in terms of their limits?

Speaker #1: Because otherwise, you've got two plans that are competing for limited liquidity in the market. So I'm just wondering: has that discussion happened, or does it need to happen?

Speaker #1: If you're both trying to fulfill your buyback plans.

Speaker #4: Thanks, Steven. As you know, our buyback intent is not only a reflection of our capital allocation strategy, but also what we view as a material discount on the value of our stock.

Chadwick Westlake: Thanks, Stephen. As you know, our buyback intent is not only a reflection of our capital allocation strategy and is what we view as a material discount on the value of our stock, so it's part of our capital allocation planning. For Loblaw, you really would have to direct those questions to Loblaw and how they would want to address that. What I would say is our overall purchase agreement has a certain intent where we would, they would have 17% ownership at close, and then they have certain guardrails within the ASPP that they shared publicly with the market. There's no. I wouldn't assume any coordination past that. They see an undervalued stock.

Speaker #4: So as part of our capital allocation planning, but for Loblaw, you really would have to direct those questions to Loblaw and how they would want to address that.

Speaker #4: What I would say is our overall purchase agreement has a certain intent, where we would, they would have 17% ownership at close. And then they have certain guardrails within the ASPP that they shared publicly with the market.

Speaker #4: But there's no I wouldn't assume any coordination past that. They see an undervalued stock. They have a plan and intent or an option to buy up to 25% after closing.

Chadwick Westlake: They have a plan and intent, or an option to buy up to 25% after closing, and then the rest should really be directed to them.

Speaker #4: And then the rest should really be directed to them.

Speaker #1: Okay. So basically, you're going to do your thing, and they're going to do their thing. Is that the way to at this point?

Stephen Boland: Okay, basically you're gonna do your thing, and they're gonna do their thing. Is that the way to, at this point?

Speaker #4: Pretty much.

Chadwick Westlake: Pretty much.

Speaker #1: Okay. Thanks very much, guys.

Stephen Boland: Okay. Thanks very much, guys.

Speaker #3: Your next question comes from Darko Mihelic with RBC Capital Markets. Please go ahead.

Operator: Your next question comes from Darko Mihelic with RBC Capital Markets. Please go ahead.

Speaker #1: Great. Thank you. My question's for Marlene. You made a comment that within the residential mortgage segment that you're not seeing this sort of spread to other jurisdictions in terms of just basically a few suburbs with some weakness.

Mike Rizvanovic: Great. Thank you. My question's for Marlene. You made a comment that within the residential mortgage segment, that you're not seeing this sort of spread to other jurisdictions in terms of, like, so just basically a few suburbs with some weakness. Can you maybe expand upon that? Do you mean to say that you're not seeing formations outside of those regions, or do you mean to say you're not seeing a prolonged workout or significant house price decline? If you could just flush that out for me, I'd just be interested. I have a follow-up on that.

Mike Riz: Great. Thank you. My question's for Marlene. You made a comment that within the residential mortgage segment, that you're not seeing this sort of spread to other jurisdictions in terms of, like, so just basically a few suburbs with some weakness. Can you maybe expand upon that? Do you mean to say that you're not seeing formations outside of those regions, or do you mean to say you're not seeing a prolonged workout or significant house price decline? If you could just flush that out for me, I'd just be interested. I have a follow-up on that.

Speaker #1: Can you maybe expand upon that? Do you mean to say that you're not seeing formations outside of those regions? Or do you mean to say you're not seeing prolonged workout or significant house price decline?

Speaker #1: If you could just flesh that out for me, I'm just be interested. And I have a follow-up on that.

Speaker #5: Sure. So we've been talking for some time now, for several quarters, about these pockets of vulnerability, which is GTA and certain surrounding suburbs. Those are consistently, when we dig into both the formations, the PCL and the impaireds, those continue to be the core of what is driving those numbers.

Marlene Lenarduzzi: Sure. We've been talking for some time now, for several quarters, about these pockets of vulnerability, which is the GTA and certain surrounding suburbs. Those are consistently when we dig into both the formations, the PCL and the impaired, those continue to be the core of what is driving those numbers. That hasn't changed. What we haven't seen is that spread into other regions and other geographies.

Speaker #5: That hasn't changed. But what we haven't seen is that spread into other regions and other geographies.

Speaker #1: Okay. So essentially, when I look at your slide 15, and I see 144 million in formations, which is higher, all of that's still in the same pockets.

Mike Rizvanovic: Okay. Essentially, when I look at your slide 15, and I see CAD 144 million in formations, which is higher, all of that's still in the same pockets. Is that a fair?

Mike Riz: Okay. Essentially, when I look at your slide 15, and I see CAD 144 million in formations, which is higher, all of that's still in the same pockets. Is that a fair?

Speaker #1: Is that a fair?

Speaker #5: That's right.

Marlene Lenarduzzi: That's right.

Speaker #1: Okay. But the loss rate is down, right? If I take your provision, against that 144, let's say 10 million and compare that to the 12 and a half against the 108 last quarter, it's down.

Mike Rizvanovic: Okay. The loss rate is down, right? If I take your provision against that CAD 144 million, let's say CAD 10 million, and compare that to the CAD 12.5 million against the CAD 108 million last quarter, it's down. What has changed? Is it that the perceived value of the homes is a little bit better or faster workout, or what's different?

Mike Riz: Okay. The loss rate is down, right? If I take your provision against that CAD 144 million, let's say CAD 10 million, and compare that to the CAD 12.5 million against the CAD 108 million last quarter, it's down. What has changed? Is it that the perceived value of the homes is a little bit better or faster workout, or what's different?

Speaker #1: So what has changed? Is it that the perceived value of the homes is a little bit better or faster workout? Or what's different?

Speaker #5: Yeah. We've got a few things going on. We're always investing in our collections and recoveries capabilities. And so we also have as you recall, we have had a fairly large performing build of 7.4 million last quarter, another 1.4 million this quarter.

Marlene Lenarduzzi: Yeah, we've got a few things going on. We're always investing in our collections and recoveries capabilities. We also have, as you recall, had a fairly large performing build of CAD 7.4 million last quarter, another CAD 1.4 million this quarter, lower, but still a build. We are ensuring that we're appropriately provisioned, both on the performing side and on the impaired side, to deal with the fact that we're in this uncertain market and there are still these pockets of vulnerability.

Speaker #5: Lower, but still a build. And so we are ensuring that we're appropriately provisioned, both on the performing side and on the impaired side, to deal with the fact that we're in this uncertain market and there are still these pockets of vulnerability.

Speaker #1: Okay.

Mike Rizvanovic: Okay.

Mike Riz: Okay.

Marlene Lenarduzzi: We look at our macroeconomic forecast, while for the next quarter, our forecast is effectively saying that, you know, we may still see some softness over the next quarter. We look at our macroeconomic scenarios, they are projecting slight improvements, not significant, but I would say slight improvements in HPI towards the back half of the year and into 2027.

Speaker #5: And we look at our macroeconomic forecast. While for the next quarter, our forecast is effectively saying that we may still see some softness over the next quarter, we look at our macroeconomic scenario as they are projecting slight improvements, not significant, but I would say slight improvements in HPI towards the back half of the year and into 2027.

Speaker #1: Okay. And then just finally, then on this my last question on this topic, and I'll leave it there. So at 144, in terms of formations, you're mentioning that there's still maybe a little bit of weakness.

Mike Rizvanovic: Okay. Just finally then on this, my last question on this topic, and I'll leave it there. At 144, in terms of formations, you're mentioning that there's still maybe a little bit of weakness. Can you size it for us? Is 144 a good number? Could it creep higher, and why would it creep higher or lower from here? Given that you know this, I mean, this is a specific vintage, right? Is there any kind of outlook you can provide on this, in regards to just how big the formations can get against the vintage that clearly must be declining in size, right?

Mike Riz: Okay. Just finally then on this, my last question on this topic, and I'll leave it there. At 144, in terms of formations, you're mentioning that there's still maybe a little bit of weakness. Can you size it for us? Is 144 a good number? Could it creep higher, and why would it creep higher or lower from here? Given that you know this, I mean, this is a specific vintage, right? Is there any kind of outlook you can provide on this, in regards to just how big the formations can get against the vintage that clearly must be declining in size, right?

Speaker #1: Can you size it for us? Is 144 a good number? Could it creep higher? And why would it creep higher or lower from here?

Speaker #1: Given that you know this, I mean, this is a specific vintage, right? So is there any kind of outlook you can provide on this in regards to just how big the formations can get against the vintage?

Speaker #1: Clearly, it must be declining in size, right?

Speaker #5: Yeah. So I would say when I look at this vintage, in particular, it is declining in size. And so you'll see in our it's not something that we talk about, but in the past, we said most of our stage three PCL is coming from that one vintage.

Marlene Lenarduzzi: Yeah. I would say, like, when I look at this vintage in particular, it is declining in size. You know, in our, it's not something that we talk about, but in the past, we said most of our Stage 3 PCL is coming from that one vintage, and in particular, some geographies in the GTA and surrounding areas and the 2022 vintage. That's gone from say, you know, almost 70%, 74% to 75% of the Stage 3 PCL, and it's down to about half of the PCL in Stage 3.

Speaker #5: And in particular, subgeographies in the GTA and surrounding areas. And the 2022 vintage. And that's gone from, say, almost 70%, 74 to 75 percent of the stage three PCL, and it's down to about half of the PCL in stage three.

Speaker #5: So that is part of what you'll see in our mix, is that the losses, that portfolio is shrinking as it would. And so we're seeing that reflected in the stage 3 PCL.

Marlene Lenarduzzi: That is part of what you'll see in our mix, is that the losses, that portfolio is shrinking as it would, and we're seeing that reflected in the stage three PCL. You know, headwinds are the ones that I talked about in my remarks, right? If we see the continued uncertainty, if we see increases in unemployment, if we see challenges in the GDP, those are all things, and continued housing price declines. Those are all headwinds to that forecast.

Speaker #5: Headwinds are the ones that I talked about in my remarks, right? We see the continued uncertainty. If we see increases in unemployment, if we see challenges in the GDP, those are all things and continued housing price declines.

Speaker #5: Those are all headwinds to that forecast.

Speaker #1: Okay. Great. Thank you very much for the caller.

Mike Rizvanovic: Okay, great. Thank you very much for the call.

Mike Riz: Okay, great. Thank you very much for the call.

Speaker #3: Your next question comes from Gabriel Deshane at National Bank. Please go ahead.

Operator: Your next question comes from Gabriel Dechaine at National Bank. Please go ahead.

Speaker #6: Hey, good morning. Just a couple of quick ones. Margin performance and I apologize if I didn't catch this in the opening remarks, but margins at around 2%, do you think you're going to be in and around that level until loan growth accelerates?

Gabriel Dechaine: Hey, good morning. Just a couple of quick ones. margin performance, and I apologize if I didn't catch this in the opening remarks, but margins at around 2%, do you think you're gonna be in and around that level until loan growth accelerates? Then the credit outlook, I get the descriptions and all that, but are you saying that this quarter is the high watermark for the year, and we should kinda gradually trend lower over the rest of the year? Sounds like at least in the mortgage book.

Speaker #6: And then the credit outlook—I get the descriptions and all that—but are you saying that this quarter is the high watermark for the year, and we should kind of gradually trend lower over the rest of the year?

Speaker #6: Sounds like at least the mortgage book.

Chadwick Westlake: Thanks, Gabe. On margin, you're right. Our look had been at 2% or greater for the year. I think the one thing to think about is how margin will further expand, and we'll give that outlook when we close PC Financial, which will, of course, be conducive to our immersion profile and asset mix diversification. That will be pretty meaningful. Marlene, on the credit side, did you want to add?

Speaker #4: Thanks, Gabe. So on margin, you're right. Our look had been at 2% or greater for the year. I think the one thing to think about is how margin will further expand.

Speaker #4: We'll give that outlook when we close PC Financial, which will, of course, be conducive to our margin profile and asset mix diversification. So that will be pretty meaningful.

Speaker #4: Marlene, on the credit side, did you want to add?

Speaker #5: Sure. So yeah, as I mentioned, the outlook for the rest of the year is consistent with what I said last quarter. So the first half will continue to be a little more challenging.

Marlene Lenarduzzi: Sure. Yeah, as I mentioned, the outlook for the rest of 2026 is consistent with what I said last quarter. The first half will be a little, will continue to be a little more challenging. We're elevated versus long-run historic norms, and we'll see that come down towards the back half.

Speaker #5: We’re elevated versus long-run historic norms, and we’ll see that come down towards the back half, as I mentioned, when you look at our macroeconomic forward-looking indicators.

Gabriel Dechaine: Yeah.

Marlene Lenarduzzi: As I mentioned, when you look at our macroeconomic forward-looking indicators, they're projecting improvement towards the back half.

Speaker #5: They're projecting improvement towards the back half.

Speaker #6: And then as it relates to the mortgage book growth so far, Alte, whatever you want to call it, you're still confident in hitting double digits in the second half?

Gabriel Dechaine: As it relates to the mortgage book growth, SFR, Alt-A, whatever we wanna call it, you're still confident in hitting double digits in the second half?

Speaker #4: Yeah. Well, we didn't yeah. So there's difference in asset growth as well, though, right? So the current momentum for single-family is what we expect.

Chadwick Westlake: Yeah, well, yeah, there's difference in asset growth as well, though, right? The current momentum for single family is what we expect. What we provided, Gabe, was that high single digit.

Speaker #4: What we provided, Gabe, was that high single digit to low double digit was total loans of arrangement. So that includes commercial. You look at businesses like reverse mortgages that we have high conviction and growing really well.

Gabriel Dechaine: Mm-hmm.

Chadwick Westlake: low double digit was total loans under management. That, that includes commercial. Like, you look at businesses like reverse mortgages, that we have high conviction and growing really well. That grew another 5% sequentially, what? 25%, 30% year-over-year. That includes all of it, Gabe.

Speaker #4: That grew another 5% sequentially—what, 25, 30 percent year over year. So that includes all of it, Gabe. So that's really important to us.

Gabriel Dechaine: All right.

Chadwick Westlake: That's really important to me.

Speaker #6: Okay. Yeah.

Gabriel Dechaine: Okay, yeah.

Speaker #4: But yes.

Chadwick Westlake: Yes, yeah.

Speaker #6: Apologies. Thanks.

Gabriel Dechaine: Apologies. Thanks.

Speaker #4: Thank you, Gabriel. Good day.

Chadwick Westlake: Thank you, Gabriel. Good day.

Speaker #3: Your next question comes from Mike Riz with Scotiabank. Please go ahead.

Operator: Your next question comes from Mike Riz with Scotiabank. Please go ahead.

Speaker #7: Good morning. A couple of quick ones. Just wanted to go back to Marlene on credit. And I'm trying to understand the GIL change sequentially, the 10% you referenced.

Mike Rizvanovic: Good morning. A couple of quick ones. Just wanted to go back to Marlene on credit, and I'm trying to understand the GIL change sequentially, the 10% you referenced. I think you had about 8% in commercial, 15% in your mortgage book. Trying to understand what happened during the quarter on the macro side, because I see a quite a bit of a divergence between what EQB is reporting on GILs and what the other banks are reporting. There's something anomalous about your customer base, and I'm trying to put my finger on what that might actually be. What is it that specifically you think drove this divergence between EQB? Not speaking to the other banks, but it is standing out quite a bit here.

Mike Riz: Good morning. A couple of quick ones. Just wanted to go back to Marlene on credit, and I'm trying to understand the GIL change sequentially, the 10% you referenced. I think you had about 8% in commercial, 15% in your mortgage book. Trying to understand what happened during the quarter on the macro side, because I see a quite a bit of a divergence between what EQB is reporting on GILs and what the other banks are reporting. There's something anomalous about your customer base, and I'm trying to put my finger on what that might actually be. What is it that specifically you think drove this divergence between EQB? Not speaking to the other banks, but it is standing out quite a bit here.

Speaker #7: I think you had about 8% in commercial, 15% in your mortgage book. Trying to understand what happened during the quarter on the macro side because I see quite a bit of a divergence between what EQB is reporting on GILs and what the other banks are reporting.

Speaker #7: So there's something anomalous about your customer base. And I'm trying to put my finger on what that might actually be. So what is it that specifically you think drove this divergence between EQB and not speaking to the other banks, but it is standing out quite a bit here.

Speaker #5: Yeah. You're right. I can't speak to the other banks, but I will say what is interesting about our customer base and our book is our customer base is 69% of our customers are self-employed.

Marlene Lenarduzzi: Yeah, you're right. I can't speak to the other banks, but I will say, you know, what is interesting about our customer base and our book is our customer base is 69% of our customers are self-employed. Our terms are much shorter than the larger banks' terms. We tend to have terms of 1 or 2 years. Our book does renew more frequently. The customers and the larger banks, they might have 5-year terms. They may have originated the bulk of their mortgage book, 5 years ago, when interest rates were incredibly low. Our customers have. You know, over 95% of our customers have renewed from those peak rates into lower rates. We've seen our portfolio change. It's much more dynamic.

Speaker #5: Our terms are much shorter than the larger banks’ terms. We tend to have terms of one or two years, so our book does renew more frequently.

Speaker #5: And so the customers and the larger banks, they might have five-year terms. They may have originated the bulk of their mortgage book five years ago when interest rates were incredibly low.

Speaker #5: Our customers have over 95% of our customers have renewed from those peak rates into lower rates. So we've seen our portfolio change; it's much more dynamic.

Marlene Lenarduzzi: We're, you know, we're not going to see the renewal cliff that others have. Our portfolio, as I said, has changed very, very dramatically. It's not really an apples to apples comparison, Mike.

Speaker #5: And so, we're not going to see the renewal cliff that others have. Our portfolio, as I said, has changed very, very dramatically. So it's not really an apples-to-apples comparison, Mike.

Speaker #7: But is there nothing you can point to that happened intra-quarter that would have driven the big GIL jump? It just seems like quite a bit of a jump.

Mike Rizvanovic: Is there nothing you can point to that happened intra-quarter that would have driven the big GIL jump? It just seems like quite a bit of a jump. It's increased at an accelerating pace this quarter. I'm just trying to understand a little bit in terms of what drove that.

Mike Riz: Is there nothing you can point to that happened intra-quarter that would have driven the big GIL jump? It just seems like quite a bit of a jump. It's increased at an accelerating pace this quarter. I'm just trying to understand a little bit in terms of what drove that.

Speaker #7: It's increased at an accelerating pace this quarter. I'm just trying to understand a little bit in terms of what drove that.

Speaker #5: Yeah. On the personal side, we did see I think there's a little bit of seasonality in those numbers, Mike. But also, that's just the nature of our portfolio.

Marlene Lenarduzzi: Yeah. On the personal side, we did see, you know, I think there's a little bit of seasonality in those numbers, Mike. Also, you know, that's just the nature of our portfolio. We still see customers impacted by higher unemployment rates, et cetera. As I said, 70, almost 70% of our customers are self-employed, they're seeing some of the slowness in business as well, and that would be impacting the growth in GILs.

Speaker #5: We still see customers impacted by higher unemployment rates, etc. And as I said, almost 70% of our customers are self-employed. So they're seeing some of this lowness in business as well.

Speaker #5: And that would be impacting the growth in GILs.

Speaker #7: Okay.

Mike Rizvanovic: Okay.

Mike Riz: Okay.

Speaker #4: Yeah. Just on the commercial. One point, Mike, on the speaking to the increase in the commercial. I think we noted in there that was really largely attributed, of course, to one large group.

Chadwick Westlake: Yeah, just on the commercial.

Mike Rizvanovic: Yes, please.

Mike Riz: Yes, please.

Chadwick Westlake: To your point, Mike, speaking to the increase in the commercial, I think we noted in there that was really largely attributed, of course, to one large group. You know, your comment back to the differences with the other banks, we don't speak to that, except I will say that in that particular exposure, that was a big bank-led transaction that we participated in.

Speaker #4: And your comment back to the differences with the other banks, we don't speak to that except I will say that in that particular exposure, that was a big bank-led transaction that we participated in.

Speaker #7: Okay. Appreciate that color. And then maybe one for Chadwick. Just wanted to talk a little bit about ROE. So when I look at the PCL ratio this quarter, the 32 basis points, I'm just playing around with numbers here, but if I take that down to zero PCL, the ROE still doesn't get to that 15% level, which maybe suggests a little bit of a structural hindrance on getting to 15.

Mike Rizvanovic: Okay. Maybe one for Chad. We just wanted to talk a little bit about ROE. When I look at the PCL ratio this quarter, the 32 basis points, I'm just playing around with numbers here, but if I take that down to 0 PCL, the ROE still doesn't get to that 15% level, which maybe suggests a little bit of a structural hindrance on getting to 15. Now, I'm not sure if it's PC Financial that's going to drive you back to that 15 to 17 that you sound confident you'll get to at some point. EQB as a standalone pre-deal, is it structurally impaired in terms of its ability to get to 15? If I'm wrong on that, why is that the case?

Mike Riz: Okay. Maybe one for Chad. We just wanted to talk a little bit about ROE. When I look at the PCL ratio this quarter, the 32 basis points, I'm just playing around with numbers here, but if I take that down to 0 PCL, the ROE still doesn't get to that 15% level, which maybe suggests a little bit of a structural hindrance on getting to 15. Now, I'm not sure if it's PC Financial that's going to drive you back to that 15 to 17 that you sound confident you'll get to at some point. EQB as a standalone pre-deal, is it structurally impaired in terms of its ability to get to 15? If I'm wrong on that, why is that the case?

Speaker #7: Now, I'm not sure if it's PC Financial that's going to drive you back to that 15 to 17 that you sound confident you'll get to at some point.

Speaker #7: But EQB is a standalone, pre-deal. Is it structurally impaired in terms of its ability to get to 15? And if I'm wrong on that, why is that the case?

Speaker #4: Thanks, Mike. Yeah. I don't know that I can validate your spreadsheet. Based on what you have, but I'd say it's a combination of factors, right?

Chadwick Westlake: Thanks, Mike. Yeah, I don't know that I can validate your spreadsheet based on what you have, but I'd say it's a combination of factors, right? We have revenue that would return to growth for a variety of factors. We have credit that goes down, and expenses are already on that solid momentum back, and then it obviously, it's depending on how you're deploying your capital. Otherwise, 15% to 17%, that obviously that's the medium term, right? We said 12% was our outlook for this year as well. You're getting there through it. Will PCF be part of it? Sure, but it's not actually, not necessary to get back to 15%.

Speaker #4: So we have revenue that would return to growth. For a variety of factors, we have credit that goes down. And expenses are already on that solid momentum back.

Speaker #4: And then it obviously, it's depending on how you're deploying your capital otherwise. 15 to 17 percent, that obviously, that's the medium term, right? We said 12% was our outlook for this year as well.

Speaker #4: So you're getting there through well, PCF, be part of it? Sure. But it's not actually not necessary to get back to 15%. That's as the market picks up and some of our outlook for the core businesses.

Chadwick Westlake: That says that the market picks up and some of our outlook for the core businesses. That's why we're focused so much on our core businesses as well, on revenue growth. It's you got to look at the numerator and denominator. 15%, we see in multiple ways, back to our medium-term perspective.

Speaker #4: And that's why we're focused so much on our core businesses as well. On revenue growth. So you got to look at the numerator and denominator.

Speaker #4: But 15%, we see in multiple ways back to our medium-term perspective.

Speaker #7: Okay. Thanks for that color.

Mike Rizvanovic: Okay, thanks for that color.

Mike Riz: Okay, thanks for that color.

Speaker #4: Thanks, Mike.

Chadwick Westlake: Thanks, Mike.

Speaker #3: Your next question comes from Fernando Torial Batazi with TD Securities. Please go ahead.

Operator: Your next question comes from Fernando Torralba Tauzip with TD Securities. Please go ahead.

Speaker #8: Hi. Yes. Thank you. Just two quick questions. The first, just to clarify, when earlier you mentioned that the formations from the 2022 vintages in and around the GTA, did I hear you right in saying that they used to represent 70 to 75 percent of stage three and other closer to 50% of stage three?

Fernando Torrealba: Yes, thank you. Just 2 quick questions. The first, just to clarify, when earlier you mentioned that the formations from the 2022 vintages, in and around the GTA, did I hear you right in saying that they used to represent 70% to 75% of stage three, and now they're closer to 50% of stage three? Do I have that right?

Speaker #8: Do I have that right?

Speaker #5: Yes. That's correct.

Marlene Lenarduzzi: Yes, that's correct.

Speaker #8: Okay. And then thank you for confirming that. And then the second question is, could you maybe give us a little bit of color on the recently announced partnership with Dominion Lending Centers?

Fernando Torrealba: Okay. Thank you for confirming that. The second question is, could you maybe give us a little bit of color on the recently announced partnership with Dominion Lending Centres? I'm just trying to get a sense of how big a partnership that is. Is that going to focus on a return to on-balance sheet growth for, you know, insured residential mortgages? If so, what kind of name pro-profile could we expect from that? Just a little bit more color on the partnership would be appreciated.

Speaker #8: I'm just trying to get a sense of how big a partnership that is. Is that going to focus on a return to on-balance sheet growth for in short residential mortgages?

Speaker #8: And if so, what kind of name profile could we expect from that? Just a little bit more color on the partnership would be appreciated.

Speaker #4: Yes. I'll take that one now. So we launched a program with a valued broker partner. One of our valued broker partners in January is an improved economics versus some other programs that we've run in the past.

Chadwick Westlake: Yes, I'll take that one. We launched a program with a valued broker partner, one of our valued broker partners in January. It is an improved economics versus some other programs that we've run in the past. It's not a materially large from the changes, the outlook that we provided in the past, but we do expect some healthy originations. It won't be enough to offset what has been a declining trend in our prime insured portfolio, but you will probably see the prime insured decline at a slower rate now as a result of launching this program.

Speaker #4: It's not a materially large from the changes the outlook that we provided in the past, but we do expect some healthy originations. It won't be enough to offset what has been a declining trend in our prime insured portfolio, but you will probably see the prime insured decline at a slower rate now as a result of launching this program.

Speaker #8: Got it. Okay. Perfect. That's all for me. Thank you.

Fernando Torrealba: Got it. Okay, perfect. That's all for me. Thank you.

Speaker #3: Thank you. There are no further questions at this time. I would like to turn the call back over to Mr. Chadwick Westlake.

Operator: Thank you. There are no further questions at this time. I would like to turn the call back over to Mr. Chadwick Westlake.

Speaker #4: Thank you, everyone, for joining us today. We could not be more enthusiastic about what the future holds for Canada's Challenger Bank and the significant growth ahead.

Chadwick Westlake: Thank you, everyone, for joining us today. We could not be more enthusiastic about what the future holds for Canada's Challenger Bank and the significant growth ahead. We look forward to welcoming you at our upcoming AGM on April eighth, where we will celebrate the accomplishments of our outgoing Board Chair, Vincenza Sera, and welcome our newest Director, Mike Pedersen, who has been nominated to become our next chair. All the best until then.

Chadwick Westlake: Thank you everyone, for joining us today. We could not be more enthusiastic about what the future holds for Canada's Challenger Bank and the significant growth ahead. We look forward to welcoming you at our upcoming AGM on April eighth, where we will celebrate the accomplishments of our outgoing Board Chair, Vincenza Sera, and welcome our newest Director, Mike Pedersen, who has been nominated to become our next chair. All the best until then.

Speaker #4: We look forward to welcoming you at our upcoming AGM on April 8th, where we will celebrate the accomplishments of our outgoing board chair, Vincenza Sera, and welcome our newest director, Mike Peterson, who has been nominated to become our next chair.

Speaker #4: All the best until then.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

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