Nadine Ahn: Yeah. No, thank you. I think one of the things, just to point out, in terms of when you look at it — when we specifically speak to interest rate sensitivity as we’ve outlined on Slide 26 that we do benefit from increases in interest rates. So, part of what we’ve been talking about the expansion in our NIM this quarter around the structural deposit base as rates continue to stay high or persist high or continue to go higher, you’ll continue to get that benefit — latent benefit coming through on your structural deposit base as it relates to the margin expansion there. And as Neil pointed out to the extent that from the asset side of things that we’re managing and focusing on our margins there, you’ll continue to see that overall margin expansion for the retail bank.
I think some of the other areas that it factors into, we’ve talked about Dave mentioned on the — we’ve got another offices side as it relates to the U.S. construct. And the question really is based on your mix in the U.S., are you able to benefit from that asset sensitivity? And in City National, we are exposed on an asset sensitivity basis. Now the deposit betas have been rising. But as we become more sensitive from an interest rate standpoint on the liability side, we will continue to be able to capture it on the asset side as well. So, we do expect for particularly our core banking, and that they will benefit on the interest rates, we can talk a bit more about the impact you’ve already seen inflation baked into our cost base. So, I think it’s really going to be a net-net benefit minus the impact for societally.
David McKay: Thanks, Doug.
Doug Young: Okay. Appreciate the color. Thanks.
Operator: Thank you. Our following question is from John Aiken from Barclays. Please go ahead.
John Aiken: Good morning. Graeme, I wanted to leave a nitpicking on commercial real estate to others but on Slide 33, you go through the past-due delinquencies in Canadian Banking. And not surprisingly, we’re seeing personal start to uptick, but a little bit unusual is the decline that we saw, we’ve seen in credit cards over the last couple of quarters. Can you talk to that? Is this just noise in the system or is there something fundamentally different that’s happening in cards versus mortgages, keylocks (ph), and other personal lending?
Graeme Hepworth: Yeah. Thanks, John for the question. I wouldn’t say there’s anything specifically happening in cards, I mean cards does have a seasonal effect to it and so you’re going to see it ebb and flow through the year. But overall, what’s driving all of this right now is a very strong employment backdrop. But the unsecured products overall, we do expect those to trend negatively. Why you see something like the personal lending, in particular, the RCL product trending more negatively now, is it more rate sensitive and directly rate sensitive, right? So there is a direct impact that flows through to the consumer on that. And as interest rates rise, you’ll see that kind of continue to trend that way. We do expect cards to trend more negatively as we kind of work our way through this year and into next year because there’s a unsecured client base that we think will be most impacted as we work our way through this cycle.
John Aiken: Thanks, Graeme. And I know that the — your U.S. book is dramatically different than the Canadian book, but are we seeing similar trends on the U.S. delinquencies as we are in Canada?
Graeme Hepworth: Are you asking, John, on the retail side or just in general?
John Aiken: Yes. No, on the retail side, please.
Graeme Hepworth: We don’t really have much of a retail book in the U.S. Our retail book in the U.S. is really tied to kind of a high net worth affluent client base. And so it’s largely a mortgage book, and we really haven’t seen any indicators of any negative trends there at all.
John Aiken: Perfect. Thank you.
Operator: Thank you. The following question is from Gabriel Dechaine from National Bank Financial. Please go ahead.
Gabriel Dechaine: Good morning. My daughter wanted me to ask if the Avion card really helps you get the Taylor Swift ticket, but I’ll stick to a couple of questions on the Canadian bank here. The deposit flows, and we’ve all seen the improvement there and stabilization of pricing and mix. I’m just wondering, one of your major competitors is — seems to be playing catch-up on GIC pricing in the last couple of months. And I’m wondering, if that could be at all disruptive to what has been an improving trend? And then my second question is on the mortgages. And correct me if I’m wrong, but I don’t believe your floating rate fixed payment mortgages negatively amortized. I’m wondering if that is correct, is there an accounting or capital impact because if I’m trying to simplify things, those borrowers aren’t actually paying you as much as they should but should otherwise be negatively amortizing.
Neil McLaughlin: Yes, listen. I’ll jump in and maybe take the questions in sequence. So the first one is, yes, your daughter is correct. The Avion program does get you the ability to get in the queue to get Taylor Swift ticket. In terms of the GST pricing, yeah, there has been, I’d say, competitive intensity has ticked up there. I think to your point, there has been one competitor who’s jumped back in. But I think you see strong competitive pressures across the board. But I think price is one — is only one side of it and just having the access and the sales force capability and the platform to reach those depositors is really differentiated, and we feel quite bullish about our ability to continue to win there. We have seen overall market share increases for the last 12 months in the GIC space.
And so I think we’re feeling quite strong there. In terms of your question on mortgages. Our variable rate mortgages — sorry, our variable rate mortgages do not negatively amortize. So that is the contract we have. So in terms — hopefully, that clarifies. There are different constructs across the street, but I really don’t do that. The other thing probably to keep in mind, I’d mentioned in the previous question, our GIC flow. The important part there is also just the new flow of clients that our GIC product is pulling in, in that platform. So we do also get a new client from that GIC origination.
Gabriel Dechaine: Just to follow up on the negatively. So if it did, what you would see is the loan balances would grow the excess payment that you’re not receiving. I’m just — there’s no accounting or capital impact for your particular product line?
Nadine Ahn: To be clear, the reason it doesn’t go negative amortizing is the client actually has their payment reset.
Gabriel Dechaine: Okay. All right. That makes sense.
Nadine Ahn: We’ll take next question.
Operator: Thank you. The following question is from Meny Grauman from Scotiabank. Please go ahead. And I just want to remind participants to limit yourself to one question. Please go ahead.
Meny Grauman: So the question is just for Neil, going back to the GIC trend that’s improving or that growth is slowing. Just trying to better understand what is driving that from a high-level perspective, is it just that the clients that have moved money have moved it already? And so that’s the fundamental question. Whether there’s a risk that changes, if the rate environment continues to move higher, is there still a risk here that you could see a reacceleration?
