Earnings call transcript: National Bank of Canada beats Q2 2025 earnings expectations

National Bank of Canada (NA:TSX) reported a robust financial performance for the second quarter of 2025, significantly surpassing earnings expectations. The bank’s earnings per share (EPS) reached $2.85, exceeding the forecasted $2.38, while revenue climbed to $3.65 billion, surpassing the anticipated $3.28 billion. Following the announcement, the bank’s stock rose by 3.65%, reflecting positive investor sentiment. According to InvestingPro data, the bank maintains a market capitalization of $60.09 million, with an overall Financial Health Score rated as "Weak." For deeper insights into the bank’s financial health metrics and exclusive analysis, investors can access the comprehensive Pro Research Report, available to InvestingPro subscribers.

Key Takeaways

• National Bank of Canada reported a 12% year-over-year increase in EPS for Q2 2025.
• Revenue increased by 33% compared to the same period last year.
• The bank’s stock price surged by 3.65% post-earnings announcement.
• The integration of CWB acquisition is progressing, with client migrations set to begin in summer 2025.
• The bank raised its quarterly dividend by $0.04, signaling strong financial health.

Company Performance

National Bank of Canada demonstrated strong performance in Q2 2025, with a notable increase in both earnings and revenue. The bank’s return on equity stood at 15.6%, reflecting efficient capital utilization. InvestingPro analysis indicates the bank is trading at a low P/E ratio relative to near-term earnings growth, suggesting potential value opportunity. The integration of the CWB acquisition is on track, enhancing the bank’s presence in Western Canada and contributing to its competitive advantage in the financial markets.

Financial Highlights

• Revenue: $3.65 billion, up 33% year-over-year.
• Earnings per share: $2.85, a 12% increase from the previous year.
• Positive operating leverage of 10% and a raised dividend by $0.04.

Earnings vs. Forecast

National Bank of Canada exceeded market expectations with an EPS of $2.85 against a forecast of $2.38, marking a 19.75% surprise. Revenue also beat projections, coming in at $3.65 billion compared to the expected $3.28 billion. This significant earnings beat highlights the bank’s strong operational performance and strategic execution.

Market Reaction

Following the earnings release, National Bank of Canada’s stock price increased by 3.65%, reflecting investor confidence in the bank’s financial health and future prospects. The stock is trading closer to its 52-week high, indicating strong market confidence. InvestingPro technical analysis reveals the RSI suggests the stock is in overbought territory, which investors should consider in their trading decisions. Access to over 12 additional exclusive ProTips and comprehensive technical analysis is available with an InvestingPro subscription.

Outlook & Guidance

The bank is targeting mid-single-digit EPS growth for 2025 and expects to maintain a positive operating leverage. Revenue synergies from the CWB acquisition are expected to accelerate in 2026, further boosting financial performance. Notable among the bank’s achievements is its 15-year consecutive dividend increase streak, as highlighted by InvestingPro data, demonstrating consistent shareholder value creation. The bank has maintained dividend payments for an impressive 47 consecutive years, showcasing its financial stability and commitment to shareholder returns.

Executive Commentary

"We are off to a strong start, and we are excited about the opportunities ahead," said Laurent Ferreira, President and CEO. He also emphasized the importance of collaboration with government entities, stating, "Everything that we’re hearing right now from federal, also provincial government in terms of working together and making the economy a priority is very encouraging."

Risks and Challenges

• Global trade tensions pose a risk to market stability and could impact the bank’s international operations.
• Macroeconomic factors, including a potential GDP decrease and rising unemployment, could affect consumer and business lending.
• The integration of the CWB acquisition must be managed carefully to realize anticipated synergies.

Q&A

During the earnings call, analysts inquired about the bank’s trading performance, which has been driven by market volatility and client activity. Executives also addressed capital allocation strategies and the focus on organic growth, expressing confidence in current credit loss provisions.

Full transcript - National Bank of Canada (NA) Q2 2025:

Conference Operator: Good morning and welcome to National Bank of Canada’s Second Quarter Results Conference Call. I would now like to turn the meeting over to Marianne Ratti, Vice President and Head of Investor Relations. Please go ahead, Marianne.

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada: Merci and welcome, everyone. We will begin the call with remarks from Laurent Ferreira, President and CEO Marie Santange Engra, CFO and Jean Sebastien Kruse, Chief Risk Officer. Also present for the Q and A session are Lucie Blanchet, EVP Personal Banking, Joseph Leonard, EVP Commercial and Private Banking, Michael Denham, EVP and Vice Chair, responsible for the integration of CWB, Nancy Paquette, EVP Wealth Management Etienne Dubuc, EVP Financial Markets and Bill Bonnet, EVP International, responsible for ABA Bank. Before we begin, please refer to Slide two of our presentation for information on forward looking statements. The bank uses non GAAP measures such as adjusted results to assess its performance.

Management will be referring to adjusted results unless otherwise noted. I will now turn the call over to Laurent.

Laurent Ferreira, President and CEO, National Bank of Canada: Merci, Marianne, thank you everyone for joining us. This morning, we reported second quarter results, which include CWB. We generated earnings per share of $2.85 up 12% year over year and return on equity of 15.6%. Our performance reflects organic growth in our business segments, including an excellent performance from financial markets driven by strong client activity and volatile markets, and as well early momentum in cost and funding synergies from the CWB acquisition. We ended the quarter with a CET1 ratio of 13.4% in line with expectations.

Our capital position is strong, allowing us to support business growth, and we also raised our quarterly dividend by $04 effective next quarter. Turning to the macroeconomic context. The uncertainty related to global trade tensions and ongoing negotiations continues to be an overhang on the economy. Increasing geopolitical and geo economic instability and projected fiscal deficits in major economies are making the path of growth and inflation difficult to forecast. This in turn is bringing instability to capital markets and is keeping long term interest rates high.

That being said, the latest developments regarding global trade negotiations seem to be progressing in the right direction. The effective tariff rate being absorbed by Canada is lower than initially anticipated. Canadian businesses have been quick to initiate USMCA compliance and as a result, the share of covered products has increased significantly. Despite the uncertainty, Canadian consumers and businesses are demonstrating resilience. As always, we will continue to support our clients providing advice in these challenging times, and we will support investments in domestic projects across the country.

Before turning to our results, I would like to say a few words on our acquisition of CWB. We are off to a strong start, and we are excited about the opportunities ahead. I am very pleased with the integration momentum as well as the positive reception from clients. Employees have all been onboarded and our teams across the country are working towards a smooth integration for our clients. Funding and cost synergies are progressing ahead of schedule.

And with the first wave of client migrations starting this summer, this sets the table for revenue synergies starting towards

Jean Sebastien Kruse, Chief Risk Officer, National Bank of Canada: the end of the year.

Laurent Ferreira, President and CEO, National Bank of Canada: Looking now at our business segment performance. P and C Banking generated net income of $316,000,000 including $45,000,000 from the CWB transaction. Excluding CWB, P and C delivered 4% revenue growth year over year as we continue to grow our balance sheet. Our commercial book grew 14% with sustained opportunities in insured residential real estate and broad based growth across our industries and geographies. Personal mortgages grew 4% year over year with strong origination levels and pointing to similar growth levels in the second half of twenty twenty five.

Wealth Management grew net income by 15% year over year on the back of strong organic growth. Net sales in our channels combined with market levels generated double digit fee based revenue growth, while our strong deposit base supported solid growth in net interest income. This quarter, operating leverage was negative for this segment because of the integration of CWB’s wealth business. However, cost synergies will support our attractive efficiency ratio, which came in under 60% again this fourth. Financial markets generated net income of more than $500,000,000 this quarter, with net income growth in the first half of the year well ahead of the expectations we had coming into 2025.

Global Markets benefited from volatility and higher than usual volumes in our trading businesses in the second quarter. Client activity remained robust despite macro uncertainty. Corporate and investment banking delivered resilient performance with revenues up 2% year over year. Clients remain active but prudent in the current context. Turning to The US, Credigy delivered net income of $40,000,000 this quarter.

Credigy grew net interest income 4% year over year, with underlying growth of 2% in average assets. We expect the market to remain competitive for the rest of the year. As always, Credigy will continue to be opportunistic as conditions evolve while maintaining discipline on new investments. At ABA Bank, we had a great quarter. Our client and deposit base grew 3321% respectively, and loan growth came in at 7% year over year.

I will now pass the call to Marie Chantal.

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada: Thank you, Laurent, and good morning, everyone. My comments will begin on Slide eight. The Bank delivered strong performance in the second quarter. Solid results in our business segments were complemented by the CWB addition. On an all bank basis, revenue increased by 33% and PTPP rose by 45% year over year.

Excluding CWB, revenue grew by 22% year over year. All segments contributed to this growth, with particular strength in financial markets. PPP increased by 34% year over year and operating leverage was positive at 10%. Also excluding CWB, expenses increased by 12% year over year, mainly driven by variable compensation in line with the strong financial markets performance. This was partly offset by a $22,000,000 reversal of a property tax provision.

Apart from these two items, expense growth was 9%. Additionally, technology costs reflect the continued evolution of our infrastructure and increased support for business growth. Turning to the impact of the CWB transaction. It contributed $298,000,000 to revenues and added $155,000,000 to expenses. As we completed our first quarter together, our focus remains on executing effectively and with impact as we pursue our integration plan.

We are pleased with the cost and funding synergies that are materializing already as we continue to build the foundation to fully realize the targeted synergies. To this end, CWB employees are actively learning our products, processes, and systems, and we opened a customer contact center in Edmonton. We are engaging with our clients, providing information on the full suite of National Bank offerings, and providing updates on the migration timeline. Moving to slide nine. Non trading net interest income in Q2 increased by 11% sequentially on an all bank basis.

The CWB transaction significantly contributed to NII, adding $251,000,000 Excluding CWB, NII was relatively stable sequentially after adjusting for the fewer number of days in the quarter and the $11,000,000 annual dividend recorded in USSFI in Q1. The all bank NIM excluding trading was 2.23%. CWB was accretive to NIM, adding four basis points. Excluding CWB, NIM was 2.19%, down seven basis points sequentially, reflecting a lower P and C NIM, lower commission fees in Corporate Banking and the Q1 USSFI dividend. The P and C NIM was impacted by the balance sheet mix as loan growth exceeded deposit growth.

We expect this trend to continue in Q3. Turning to slide 10. We continue to see solid expansion across the balance sheet. Total loans reached $286,000,000,000 up 22% year over year, including approximately $37,000,000,000 from the acquisition. Excluding CWB, loans grew 6% compared to last year.

The commercial loan book was most impacted by the addition of the CWB portfolio. Excluding CWB, commercial loan growth was a solid 14% year over year. Deposits, excluding wholesale funding, grew to reach $294,000,000,000 up 23% compared to last year. Excluding CWB, deposits increased by 10% year over year and were stable sequentially. Personal deposits rose by 9%, driven by continued growth in demand deposits and non retail deposits were up 11%.

While deposit pricing continues to be competitive, the Bank’s funding strategy remains disciplined and client centric, prioritizing stable relationship based deposits over rate sensitive flows. The acquisition of CWB meaningfully diversifies our deposit base, adding scale and expanding our reach across client segments. Now turning to capital on slide 11. We ended the quarter after closing the CWB transaction with a robust CET1 ratio at 13.4%. The day one impact of the transaction on capital was nine basis points.

Internal capital generation was strong, adding 41 basis points to CET1. Excluding the day one impact, credit risk RWA utilized 23 basis points of CET1, consistent with solid balance sheet growth, while market risk RWA accounted for nine basis points, primarily driven by business growth and underlying market volatility. During the quarter, we migrated one small CWB portfolio to AIRB, contributing three basis points to CET1. The majority of the capital benefit is still expected to be realized in 2026 as we migrate the client portfolios to our platform. In the meantime, we are very pleased with the strength of our CET1 ratio.

Slide 12 shows that we’re tracking ahead of our plan to deliver approximately $270,000,000 pretax of cost and funding synergies by the end of fiscal twenty twenty seven. We expect over $135,000,000 by the end of Q1 twenty twenty six. In the second quarter, we realized $14,000,000 in funding synergies with $9,000,000 through NII and $5,000,000 through lowered preferred share dividends and equity instrument distributions. This was accomplished by leveraging our rating profile and optimizing the capital structure. We have also realized $13,000,000 in cost synergies, mostly through the reduction of the IT infrastructure costs and consolidation of centralized functions.

The realized cost and funding synergies of $27,000,000 in Q2 represents $115,000,000 on an annual basis, which equates to approximately 43% of our three year target. Cost synergies will continue to materialize and accelerate as CWB clients are onboarded. Recall that the platform migration will be done in waves beginning this summer and continuing into early calendar 2026. In Q1, we highlighted areas where we see significant opportunities for revenue upside, both in NII and fee income. We are executing our strategy to achieve our targeted revenue synergies.

We continue to expect revenue opportunities to accelerate in 2026 following the completion of client migrations, with the full benefit to materialize in 2027 and beyond. Moving to slide 13. Our outlook, including CWB, remains unchanged from last quarter. Adjusted EPS growth will continue to be impacted by the amortization of the fair value and a larger share count. However, excluding this amortization and supported by our strong first half performance, we remain confident in delivering mid single digit EPS growth and adjusted ROE of approximately 15% for the year.

We also maintain our target for positive operating leverage in 2025. To conclude, we remain focused on driving sustained and profitable growth going forward. CWB will serve as a tailwind for our businesses for many years to come. While it is still early days, I am pleased with our progress and excited about opportunities that lie ahead. I will now turn the call over to Jean Philippe.

Jean Sebastien Kruse, Chief Risk Officer, National Bank of Canada: Good morning everyone. I’ll start with Slide 15. Since our last call, the Canadian economy has faced heightened uncertainty largely driven by tariffs and global trade tension. These challenges add complexity to an economy already showing signs of softening. While recent progress on several trade discussions with The U.

S. Is encouraging, the environment continues to be fluid. As such, we’re maintaining our cautious approach and remain prudently provisioned. In this context, our credit portfolios continue to perform in line with our expectation, supported by our defensive positioning, resilient mix and disciplined risk management. Now turning to the second quarter results.

Total PCLs were $545,000,000 or 79 basis points, which reflected the initial provision on performing loans of $230,000,000 related to the CWB transaction. Adjusted total PCLs were $315,000,000 or 45 basis points, which was four basis points higher quarter over quarter. We added 12 basis points of adjusted performing provisions in Q2 driven by model calibration, macroeconomic outlook and tariff uncertainty. This is in addition to the nine basis points we took last quarter. PCLs on impaired loans were $219,000,000 or 32 basis points, which was stable quarter over quarter.

Excluding CWB, impaired provision declined slightly to $192,000,000 from $196,000,000 last quarter. Looking at impaired PCL by segment. Personal banking provisions decreased sequentially to $53,000,000 mostly driven by uninsured mortgages. Commercial banking provisions were $71,000,000 reflecting a few files. Additionally, the CWB portfolio is performing in line with our expectations.

In Financial Markets, impaired PCL of $55,000,000 or eight basis points were related to a single file in the manufacturing sector. At Credigy, we continued to see a normal seasoning of portfolios. And at ADA, impaired provisions decreased to US14 million dollars Turning to Slide 16, our total allowances for credit losses reached $2,200,000,000 representing 5.7 times coverage of our net charge offs. Our performing allowance reached 1,500,000,000 representing a strong performing ACL coverage ratio of two times. We have been building allowances for the past twelve quarters and remain comfortable with our prudent provisioning levels.

Additional metrics on our allowances are provided in Appendix 10. Turning to Slide 17, our gross impaired loan ratio increased to 98 basis points, mainly driven by the CWB transaction and in line with our expectations. Excluding CWB and USSF and I, the ratio was 54 basis points, five basis points higher than last quarter. Formations this quarter reflect the CWB transaction. Removing this impact, total formations would have been down quarter over quarter.

At 88, net formations declined for the second consecutive quarter and remained below the peak observed at the end of twenty twenty four. On Slide eighteen and nineteen, we highlight our Canadian RESL portfolio. Quebec now accounts for 51% of the portfolio and insured mortgages account for 27% of total RESL. Average LTVs for HELOCs and uninsured mortgages remain in the 50s and higher risk uninsured borrowers represent less than 1% of the total RESL portfolio. Furthermore, approximately 75% of the portfolio has now been repriced at higher interest rates.

Ninety day mortgage delinquencies remain below the pre pandemic level with our clients continuing to demonstrate resilience in managing higher refinancing costs. Appendix eight provides an overview of our portfolio following the TWB transaction, along with an update on tariff sensitive sectors. Our exposure to these sectors remains limited with the most sensitive borrowers accounting for less than 1% of the bank’s total loan. Looking forward, uncertainty remains around the outlook for economic growth and unemployment. The impact of tariffs is still difficult to quantify and the range of potential outcomes remains wide.

That said, we continue to expect impaired PCL to be within the 25 to 35 basis point range for the full year. In conclusion, we are well positioned to navigate the ongoing volatility and uncertainty, giving our defensive attributes, resilient mix and prudent level of allowances. And with that, I will now turn the call back to the operator for the Q and A.

Conference Operator: Thank you. We will now take questions from the telephone lines. If you have a question, please press star one on your device’s keypad. You may cancel your question at any time by pressing star 2. So please press star one at this time if you have a question.

There will be a brief pause while the participants register. We thank you for your patience. The first question is from Matthew Lee from Canaccord Genuity. Please go ahead. Your line is open.

Various Analysts, Analysts, Various: Hi, morning. Thanks for taking my question. Maybe one on guidance. Q2 numbers, I’m going to assume, were better than you could have expected, but trading revenue is doing really well. So just a bit surprised you didn’t update earnings guidance for the year.

Are there any mitigating factors for us to consider in the back half? Or just maybe some conservatism built into the mid single digit growth expectation?

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada: Thanks Matthew for the question. It’s Marie Chantal here. So we are very confident in delivering our mid single digit EPS growth for fiscal twenty twenty five. That said, we do see upside dependent on market conditions. Obviously, we’re starting with a record first half, so we’re on solid footing.

And also remember, we’re facing a tough comp in Q3 this year. And I think most importantly, what’s important is our execution on the CWE integration is going very well and it’s creating tremendous upside for our growth across Canada. You can expect us to continue demonstrating strong discipline to navigate the evolving landscape and deliver robust performance. And maybe on the market condition, Etienne, do you want to give a few words?

Etienne Dubuc, EVP Financial Markets, National Bank of Canada: Yes. Thanks, Marie Chantal. Hi, Matthew. It’s Etienne. So I think maybe it’s probably good to talk a bit about the trading performance in Q2.

Obviously, we delivered an outstanding performance over what we felt was already a great quarter in Q1. When you look at market conditions in Q2, we probably had close to an ideal trading environment, especially for three groups, specifically in equities that operated really above trend. I’m referring to structured products, issuance and trading, equity finance, and option and ETF market making. So all three strategies benefited from market conditions where you saw intense but short volatility events, typically triggered by tariff announcements. And that created large but short lived moves that we were able to capture.

But these dislocations were not persistent enough to disrupt the fundamentals of these markets, which means that markets were functional well, trading volumes were strong, funding spreads remained elevated, and product issuance stayed robust. We were actually surprised by how well issuance activity held steady. And also really pleased with our trading and rates and our market share there. It was a volatile environment and we had strong client activity and strong results and it was also busy on the FX side with the rise of volatility and again a lot of active clients. So when you consider that resilience, looking at the rest of fiscal twenty twenty five, what we anticipate is a trading performance that is still solid, but lower sequentially and more aligned to long term trend.

Because on one hand, I think we can expect more volatility episodes, but that probably will come with lower issuance volumes and lower trading volumes because of seasonality. But then, if we look at other businesses that will pick up, I look on the corporate and investment banking side, what we see for Q3 and the rest of the year is fairly positive. There you could see sequential growth. The lending pipeline remains encouraging. There is strong demand in areas like renewable energy infrastructure, where we are well positioned.

Advisory, the tariff uncertainty is slowing down transaction closings, but deals are getting done and client dialogue is active. DCM, we anticipate healthy issuance early in the second half, especially from governments, and then followed probably by a seasonal slowdown a bit later in the summer months. And equity new issue, that’s still slow, although and that’s really tied to uncertainty, but that could accelerate really quickly. So against this backdrop for financial markets overall, we feel really constructive about our ability to achieve year over year growth in revenues for the second half of the year. Is that helpful?

Yes,

Various Analysts, Analysts, Various: that’s very helpful. I’ll pass the line.

Conference Operator: Thank you. The next question is from John Aiken from Jefferies. Please go ahead. Your line is open.

Laurent Ferreira, President and CEO, National Bank of Canada: Good morning. In terms of the ARB transition, happy to see that there was a small portfolio this quarter. Can you provide us any measure of quantum in terms of what the potential risk weighted asset relief could be and whether or not this is going be a slow burn into the latter part of 2026, or are we actually going to see an incremental step function more linear?

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada: Yeah, hi. It’s Matt Chattat. Thanks for the question. So we’re happy to migrate one small portfolio. This is really indicative of where we’re going.

However, as I said, majority of the benefit is coming in 2026. So therefore, we still are planning to give full capital plan update strategy later in the year. So, at Q4. So, stay tuned. This is what our plan is in terms of capital update.

Mike Rizvanovitch, Analyst, Scotiabank: Understood. Thank you.

Conference Operator: Thank you.

Jean Sebastien Kruse, Chief Risk Officer, National Bank of Canada: You’re welcome.

Conference Operator: Yes, thank you. And now the next question is from Doug Young from Desjardins Capital Markets. Please go ahead. Your line is open.

Various Analysts, Analysts, Various: Hi, good morning. Just going state on capital, 13.4% debt fund ratio, you seem confident in moving some of the CWD portfolio over the AIRB and getting a pickup in 2026. So why not put an NCIB in place? Why not be active on buybacks? And I know you talked about being and putting out the capital plan later this year.

What’s kind of stopping you from maybe doing so earlier?

Laurent Ferreira, President and CEO, National Bank of Canada: Doug, it’s Laurent. I’ll take that question. We think it’s a bit early to talk about buyback at this point in time. One, there’s uncertainty in the market and we do have sort of a prudent stance in general when it comes to macroeconomics. But having said that, our focus is organic growth.

Our focus is to grow our business out west. We’re going to be integrating portfolios starting this summer, and we’re engaging with a lot of those clients. And so we want to see how that flows through and the impact on organic growth as well. But Marie Jean Baptiste just mentioned, we’re going to provide a capital plan at Q4 and go over the full impact of AIRB at that point in time, we’ll talk about buybacks obviously. So we’re going to ask for a bit of patience on that, but our focus is really on growing our balance sheet.

Does that help?

Various Analysts, Analysts, Various: Yeah, it does. I mean, you feel that you organically can put the capital that gets freed up by moving CWB over to ARB, like to work Again,

Laurent Ferreira, President and CEO, National Bank of Canada: early, but the discussions that we are having with our clients and our new clients that are joining us are very encouraging. So just, you know, TWB clients joining us, there’s growth from that, and given our footprint now out west, we know that there’s going to be opportunities for us to grow. So yes, having said that, we are also in the middle of an integration. So we want to focus on that, we want to focus on making sure that the first wave of clients are coming onto our systems and with that we’ll be able to provide with a good capital update by the end of the year and our plans for 2026.

Various Analysts, Analysts, Various: Okay, that makes sense. And Laura, while I have you, maybe I’m chomping at the bit and asking stuff that’s going to come later in the year, you said set the stage for revenue synergies by the end of the year. Can you kind of flesh out what you need to see or what needs to happen to kind of start to get some line of sight on revenue synergies or for them to start to come through? And I assume it’s migration systems and getting people up to speed. But just hoping maybe you can flesh that out a little bit, what you meant by that.

Doug, it’s Michael Denham here. Your assumption is a good one. So what’s happening now is the teams are working together in the field and they’re bringing some new opportunities to life in terms of risk management services derivatives. We have a bigger balance sheet that’s room for increased hold. So stuff’s happening in the field, to your point, the real change takes place around revenue synergies once we get into the migrations.

And once we migrate and we’re doing this in a series of steps, so once clients migrate into our systems, you’re at a point where the CWB folks are fully trained at all things National Bank and the clients are able to access the full range of National Bank products and services and that happens post migration. So that’s when the real revenue synergy momentum will begin and that will happen in a series of steps beginning in the summer. Okay. And and when does PNC banking and when does wealth when are those migrations occurring? So the banking the the PNC banking, the personal and the commercial banking transition takes place at the same time over the course of the beginning of the summer.

Lynette, can you talk about wealth?

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada: Yeah, and for wealth, we’re aiming at late fall to migrate the three businesses that are now becoming wealth, which is the trust business, the investment and deposit business, as well as what they used to call their wealth businesses. And this will come in waves as well from the fall till early twenty twenty six.

Various Analysts, Analysts, Various: Okay, perfect. Appreciate the color.

Conference Operator: Thank you. The next question is from Sohrab Movahedi from BMO Capital Markets. Please go ahead. Your line is open.

Sohrab Movahedi, Analyst, BMO Capital Markets: You. Etienne, I wanted to start with you. Always good to see excellent results. Were you surprised by how well you did in the trading or how well the franchise was able to deliver, I guess, in

Various Analysts, Analysts, Various: the

Sohrab Movahedi, Analyst, BMO Capital Markets: environment? And, you know, can this cut both ways? Could there also be quarters where you may be surprised negatively to the extent you were surprised positively here?

Etienne Dubuc, EVP Financial Markets, National Bank of Canada: Yeah. Thanks, Saurabh. That’s a good question. And like I gave in my previous answer, these were very, very good trading conditions. Were we expecting what happened around Liberation Day?

No, that was not and these were a couple of the most profitable days in the history of the franchise. Following the deliberation day, you had markets going down 4% the day after and six percent two days after those announcements. Obviously, with the volatility positions we had on the book and the very defensive approach we had prior to this tariff announcement. That was pretty much ideal positioning. Now, could we what’s the downside?

I think that’s a fair question. And you remember SORAB Q3 in 2023, that was a social quarter for us. The reason for it was low volatility, low client activity. We are a franchise that’s about providing liquidity, providing structuring solutions, trading with clients, providing hedging solutions. When that dies down, that’s the downside could happen.

Typically it happens in the summer. I don’t see it happening this year because we still have a lot of tariff announcements and tariffs being pushed back. So I think the downside for us this year is limited. But if you look at the long term trend of where our performance should be, I think if we’re able to deliver year over year growth for the next two quarters, that still means that our long term positive trend to our business is in place. Is that helpful?

Sohrab Movahedi, Analyst, BMO Capital Markets: Yeah, that’s very helpful, Etienne. Maybe just for crystal clarity, when I look at your daily trading revenues and bar chart, there is a particularly strong day that I assume is liberation day. And can you just clarify it’s not one single trade, it would have been broad based?

Etienne Dubuc, EVP Financial Markets, National Bank of Canada: Yes, it would have been broad based and that’s April 4. So not the day after Liberation Day, but one day after that. So S and P was down 6%, TSX was down 5%. So that strength came from rates, came from FX, came from structured products where we had a big core volatility position and came from market making both in options and ETFs because volumes exploded and you had a lot of dislocations, bid ask spreads widen. And so that’s a really good environment for our trading businesses, especially as our technology continued to perform really admirably during that volatility.

Sohrab Movahedi, Analyst, BMO Capital Markets: Okay. Thank you. And I just maybe just for Jean Sebastien, I mean, gross impaired excluding Credigy Pokiloans. I mean, like, the trends are, you know, the trends are not necessarily comforting here. You know, they continue to kinda trend higher with or without CWB.

Why do you feel okay with these trends here, Jean Sebastien?

Jean Sebastien Kruse, Chief Risk Officer, National Bank of Canada: So I think first, thank you, Sharav, for your question. And as you correctly pointed out, the gross impaired loan increase this quarter is really driven by the CWB transaction and also the effects of the formations of CWB during the quarter and of National Bank during the quarter. And we’ve seen one of the largest drivers of total GIL being ABA for a while and this quarter we’ve seen a continued reduction in the level of formations. The book that we also bought from CWB is secured. And when you look at our GILs, most of our GILs are on secured transactions.

And secured transaction tend to stay in GILs longer before they are written off. Contrary to credit cards, for example, which will not show on GILs at all. And I’ll give you another example, Sohrab, if we had a commercial real estate insured transaction, it would also show in our GIL levels. So GIL levels do not necessarily translate in credit quality. So what I look at is really how’s our delinquency doing and our delinquencies trending fine.

I’m also looking at how our impaired loans performing and you’ve seen a stabilization in the performance and you’ve actually seen some improvements in our retail portfolios. And if you had excluded the CWB PCLs in commercial this quarter, we would have been down also. So I’m comfortable with where we are right now.

Various Analysts, Analysts, Various: Okay. Very helpful.

Sohrab Movahedi, Analyst, BMO Capital Markets: Thank you very much.

Conference Operator: Thank you. The next question is from Mario Mendonca from TD Securities. Please go ahead. Your line is open.

Etienne, EVP Financial Markets, National Bank of Canada: Sorry about that. Can you hear me okay? Yes. Yeah. Sorry, I just dropped the phone.

One sort of quick model question. The tax rate does seem a bit higher than it is seeing for your bank. Is it the addition of CDBB? Or is it more about the mix of revenue, the elevated trading in the quarter?

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada: Thanks, Mario. So tax rate, when you look at it on a year over year basis, obviously, is the impact of Pillar two. And as we explained in the past couple of quarters, we were expecting a little bit around 2% impact and that’s what you’re seeing. And in terms of the CWB impact, it won’t have a material impact on our results. And if you look at the P and C segment, probably wondering when you looked at the model, I’m sure you saw the impact Q2 for P and C and that’s really something related to the provisions that were higher this quarter for the P and C group.

So you can expect that to come back to regular tax rate for the next couple of quarters.

Etienne, EVP Financial Markets, National Bank of Canada: Okay. And then just if we could go to ABA for a moment, looking at some of what you what you guys call the ABA bank key metrics. The formations in the quarter, says here, just catch up. Formations of 47,000,000 in the quarter. This is formations gross pair loans at ABA.

But gross impaired loans as well were up. I mean, it could be mostly coincidence, but but a very similar amount in the quarter. Like, almost exactly, actually, 47,000,000 increase in gross impaired loans. How do I interpret that? Do I interpret that as there were no resolutions in the quarter or are there other moving parts I don’t know about?

Jean Sebastien Kruse, Chief Risk Officer, National Bank of Canada: Yeah, so the resolutions are remaining low. So the formations are really the largest driver of yields and those also effects. But does that mean there were no resolutions in the quarter?

Etienne, EVP Financial Markets, National Bank of Canada: Is that the way to

Jean Sebastien Kruse, Chief Risk Officer, National Bank of Canada: interpret No, there were resolutions. And as you know, our level of write offs at ABA remains low. So typically when you continue, you let me back it up. So when you look at the new formations, there’s three things you look at. The first is how are the newly impaired loan?

And these were down. When you look at the recoveries, these were down too. Not the recoveries, but the return to performing, these were better. And when you look at the resolutions, they were still low and our write off was still low. That’s why the increase matches.

Maybe we can take it offline if you have more detailed questions on that I think I follow. But is there something in

Etienne, EVP Financial Markets, National Bank of Canada: your supplement that actually shows that reconciliation? There’s a lot of paper in front of right now, so perhaps

Jean Sebastien Kruse, Chief Risk Officer, National Bank of Canada: We’ll take it offline.

Etienne, EVP Financial Markets, National Bank of Canada: All right. Thank you.

Conference Operator: Thank you. The next question is from Paul Holden from CIBC. Please go ahead. Your line is open.

Paul Holden, Analyst, CIBC: Thank you. Good morning. I

Conference Operator: just wanted

Paul Holden, Analyst, CIBC: to ask about your outlook for organic loan growth, particularly in commercial loans. I’m just wondering how it might be impacted by the focus on the CWB integration, I guess, if at all, or if you slow organic loan growth while you digest CWB? And then second part of that is, how does organic loan growth get impacted by the macro uncertainty? Do you believe it will remain for the industry low? Or do you think there’s a little bit of signs of stability and improved market conditions for the back half of the year?

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada: So I’ll take this one. It’s Judith. Thanks, Paul. So on our outlook on growth, we see growth in the low teens, mainly driven by insured real estate as it happened like many quarters back and diversified with large commercial clients across Canada. So this is on the national side.

With CWB, this is not a surprise that growth is very soft during the integration. We do expect growth to pick up once clients start migrating. And integration is really what we are focusing on, as Michael said at the beginning of the call. So concerning economy uncertainties, so we still see that uncertainties. But with the growth that we’ve been seeing with our insured real estate, it’s less affected, I would say.

So we still we’re still confident that our growth is going to continue.

Paul Holden, Analyst, CIBC: Okay. Thanks for that. And then second question is going back to Etienne and just looking at the regulatory capital supplemental, just noticed that the amount of capital required for FX risk has increased and increased quite significantly since the end of twenty twenty four. So just wondering if that’s just a product of market conditions and opportunities or if there is some kind of intentional build out of the FX trading platform?

Etienne Dubuc, EVP Financial Markets, National Bank of Canada: No, I think you nailed it, Paul. It’s mostly increased volatility tends to increase market risk exposures. I think that’s really the most of the answer there, both on the FX side and on the equity volatility side.

Paul Holden, Analyst, CIBC: Okay. Got it. And just maybe as a follow-up, it would be helpful to understand, Achim, sort of if you could list, I don’t know, two, three or four things that help us better understand sort of the long term growth trajectory for the trading business? Obviously, there’s a lot of volatility from quarter to quarter and this quarter being good volatility. But how do we think about sort of the longer term underlying growth trends and the major drivers behind that?

Etienne, EVP Financial Markets, National Bank of Canada: Well,

Etienne Dubuc, EVP Financial Markets, National Bank of Canada: so we’ll have to take a step back and look at the strategy. If we focus on trading, what are we, right? We’re a domestically focused operation that focuses on structuring liquidity providing being leaders in the different underlines in Canada. If something is trading in Canada, I want to be the lead market maker on it. We want a trader or an algorithm making a market on it, providing liquidity.

Same thing for structured products. We want to lead with deep expertise. And then, we want to cover clients through a cycle, which means that we want to adopt a defensive position so that we’re able to cover clients even during the tougher times when markets get dislocated and volatile, which is why we have this core defensive position, which we won’t deviate from. And I want to say another thing that I think is a feature of our strategy is innovation in terms of trading technology, in terms of pricing technology, in terms of operations. We won’t hesitate to build in house to when we see that technology can be a differentiator.

I don’t think you can hope to compete with vendor solutions in capital markets in 2025. So we don’t hesitate to build technology ourselves to generate scale. And I think that that’s what you’re seeing in quarters like this. It’s really scale being delivered by the trading businesses. And so you’re going to see it more and more central stack of technology being reused across asset classes and it can be in FX, it can be in rates, it can be in securities lending, for example, look for a lot more automation on the securities lending side.

So everywhere, look for us to add process power and add scale to our operation. And another feature of that is we took our ops team, Paul, and we brought it back really closer to the businesses. So ops is really part of the financial markets operation because we also see operational excellence as a potential differentiator. So that’s really how we think about how we want to build our trading operations going forward.

Paul Holden, Analyst, CIBC: All right. That’s great. I will leave it there. Thank you.

Conference Operator: Thank you. The next question is from Lamar Persaud from Cormark Securities. Please go ahead. Your line is open.

Various Analysts, Analysts, Various: Yeah. Thanks. I’m going to start off with Chan here. Obviously, big quarter for trading, and you can guess by the nature of the questions on the call so far that, you know, we’re all trying to really figure out, what’s kind of driving that. Is there let me ask it more specifically.

Is this something that’s changed structurally in your business that suggests we have to think about National as running at a higher trading level going forward? Or is there something special that’s going on in some of your maybe non Canadian geographies that’s really driving this big uplift in the equities business?

Etienne Dubuc, EVP Financial Markets, National Bank of Canada: Thanks, Lamar. That’s a good question. I don’t think there’s something fundamental that is going on for sure. And maybe to follow-up on the question I gave Paul is look for international to take a growing place in what we do, but we’ll do it organically and we’ll do it from a position of strength. Once we have built what we feel is an edge in a certain activity or a product, we will port that knowledge to some other jurisdictions.

But what we won’t do is go to another country and try to be everything for everybody. We want to specialize in the products we’re good at, but I think that this creates opportunity to be leaders in some niches in The US, in Europe, in Asia, as we move forward. So look for growth there. But as something fundamentally changed in our strategy or the way that we operate, no. Still think that trading will not probably grow sequentially the next two quarters.

But if I look at where we were five years ago and where we’re going, it’s a really interesting CAGR and look for more growth in the coming years.

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada0: Okay, thanks. And then maybe moving on to

Various Analysts, Analysts, Various: a different type of question, probably for Mary Chantel here. The amortization of this fair value mark was kind of lighter than I would expect just based on, I guess, what you guys disclosed last quarter that $9 quarterly impact. Based on my math, it looks like it was around a third of that. Do I have that right? And then secondly, maybe you can kind of talk about how you see P and C NIMs evolving relative to the 2.3% in Q2, and then also comment on all bank NIM expectations.

That would be helpful.

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada: Yeah. Thanks, Lenmark, for the question. So you’re right. Amortization was a bit lower in Q2. It’s primarily attributed to a modest markdown on assets that we did relatively to short maturities.

So the reduction is largely driven by specific segments within CWB, mortgages and retail leases. And if you look at the end of our material, you’ll see the appendix showing the future estimated amortization impact that we’ve updated for you guys. And on the P and C NIM, you want to start all banks? I can start with the all bank NIM and then I’ll pass it over to Lucie for a little bit of deep dive on the P and C NIM. So on the all bank basis, obviously CWB continues to be accretive to NIM.

Bear in mind though that because of what we just discussed, the impact of the amortization increase on the fair value in Q3 is a factor to consider in the L Bank NIM going forward. There are many elements obviously to consider. And as I said in my remarks, business mix could continue to impact the NIM going forward. And different moving parts will also be dependent on market conditions. So I think what’s most important to remember is that we continue to be focused on growing NII, growing the balance sheet, and growing the franchise.

I think that’s what the important messages are. Lucie, do you want to add anything on the P and C?

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada1: Yes. If we unpack some of the levers there of the directions, if we look at the asset spread, they’ve been mainly neutral this quarter and we expect them to continue to be neutral. We do have a good diversified asset mix between the retail and commercial products that should allow asset spread to remain resilient. And on the deposit spread, the deposit growth that we’ve delivered, let’s say for example, 14% demand deposit growth this quarter is expected to continue to be strong and that should help the deposit mix. But it’s expected to be mainly offset by the pressure on the term deposit that we see out there.

The market is very competitive for term deposits. So at the end of the day, the direction of the NIM in the P and C is really like Maishan then said, a factor of the good outlook we have on retail and commercial loan growth combined with an environment that is not conducive to term deposit growth. So that’s what will continue to put pressure on the NIM next quarter we expect.

Various Analysts, Analysts, Various: That’s very comprehensive. Thank you so much.

Conference Operator: Thank you. The next question is from Mike Rizvanovitch from Scotiabank. Please go ahead. Your line is open.

Mike Rizvanovitch, Analyst, Scotiabank: Hi. A quick one for John Shabatson. Just maybe going back to ABA, just trying to get an understanding of if anything’s changed in terms of, I think, the previous guidance being that two thirds of what gets resolved does not come with a write off. And I think your your write offs, they jumped a bit in the quarter. I I think it’s the highest we’ve seen at 9,000,000.

I I I get it. It’s still de minimis. But, in terms of of that prior guidance, has anything changed? And then a second part to the question is, what’s the reasonable time line as you learn more about the backlog in the court? Is this something that could last for another couple of years plus?

Or is this something like should you see some acceleration in workout maybe in the next few quarters? I’m just trying to understand the trajectory if you have a better sense of it today.

Jean Sebastien Kruse, Chief Risk Officer, National Bank of Canada: Good. So thank you, Mike, for your questions. For the first part, obviously the recovery rates on file vary a little bit from quarter to quarter. But the guidance that we had provided that formations in Q4 would be at the higher end of what we expected going forward that is proving to be true and we’re absolutely maintaining it. As for your other question is a bit kind of a peak gill type of question.

So for this, I won’t venture into predicting when the peak will be, but we are seeing a flattening of the curve and we have seen two consecutive quarters of formations decline, which we view positively. And looking at the formations, they’re really driven by a reduction in newly impaired and some return to performing. And we’re maintaining our guidance to what we said before, but we are also continuing to build impaired allowances. And you’ve also seen us this quarter build 33 bps of performing allowances to make sure we’re well positioned going forward.

Mike Rizvanovitch, Analyst, Scotiabank: Okay. So no change in the trajectory in the potential of seeing a bit of acceleration in that backlog. You don’t really have a better sense today than you did last quarter. Is that fair?

Jean Sebastien Kruse, Chief Risk Officer, National Bank of Canada: I would say it’s accurate.

Mike Rizvanovitch, Analyst, Scotiabank: Okay. And then quick one for Lucie. Just on the mortgage growth, I think you did suggest 4% year over year ex CWB. I don’t know if you disclosed or sorry if I missed it, but what was it quarter over quarter? Just trying to get a sense of what you’re seeing in the market in terms of spreads.

Any differentials in distribution channels, specifically the broker channel? Are you seeing any pressure there? We did have one of your peers suggest that they’re seeing a bit of competitive dynamics reducing spreads in the broker channel specifically. Any thoughts on that?

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada1: Yes. The broker channel is always a competitive channel. That’s for sure. What we’ve seen this quarter, the mortgage spreads have been neutral for us sequentially. Definitely, there has been pressure on the competitive side and the cost of funds side.

But for us, it was completely offset by the excellent momentum we had in volume origination and in our very good performance in renewal. So definitely there is a relative pressure out there, but our good performance was able to offset that. Does that answer your question?

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada0: Yes, that’s helpful. And then

Mike Rizvanovitch, Analyst, Scotiabank: just to kind of extrapolate from that 4% year over year growth ex CWB in mortgages, that would imply a relatively flat result quarter over quarter. Is that fair?

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada1: I would say yes, but keeping that result over quarter over quarter is also the result of still very strong origination year over year and even quarter to quarter as we get into the season. And so our teams are very much focused right now in responding to the demands out there because definitely we see the real estate market very differently across the country and different in terms of region and also different in terms of single dwelling and types of dwelling. And where our strengths are is where the market remains active. So we’re still very, very positive on the outlook on the mortgage front.

Mike Rizvanovitch, Analyst, Scotiabank: Okay. But you’re confirming that it was roughly flat sequentially on the balance side?

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada: Yes.

Laurent Ferreira, President and CEO, National Bank of Canada: Okay. Thank you for the insight.

Conference Operator: Thank you. The next question is from Ebrahim Poonawala from Bank of America. Please go ahead. Your line is open.

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada0: Hey, it is good afternoon now. But I just

Conference Operator: had a

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada0: quick follow-up on credit, looking at the slide 36 where you lay out the unemployment assumptions, I think about 7.1% for this year and next year versus the 6.9 today. Just talk to us when we think about the reserves at the end of the quarter, how should we think about the peak that you have in there at 9.6 versus the average of 7.1? Does that suggest that if unemployment moved to 7.3 or four over the coming months, the reserve requirement would have to go up by a lot? What’s the framework in which how we should look at these numbers and think about where the ACL is today?

Jean Sebastien Kruse, Chief Risk Officer, National Bank of Canada: Thank you, Ibrahim. I’ll take the question. And I’ll give you a long answer on this one because there’s a lot of factors to consider. And when assessing a build, the starting point of the allowances is important as is as the starting point of the macroeconomic factors that you have. And as I pointed out in my prepared remarks, we’ve had 12 consecutive quarters of build including nine bps last quarter.

When you look specifically at the build this quarter, the impacts of the macroeconomic factors were very limited given our already pessimistic assumptions and weights. When you go look at our scenarios and our pessimistic scenarios, they already called for a peak GDP decrease of minus 5.4%, unemployment at minus 9.6%, HPI down at 20% and SNPTSX at minus 26%. And we’re already weighted towards the pessimistic. So what we did this quarter to affect our performing PCL, it was really taking management actions. The first one was recalibrating the model and more precisely, we increased the PD calibrations on our models.

And second, we added a tariff uncertainty management overlay using two approaches. The first one is a global trade war scenario. And second is we simulated further downgrades of clients exposed to sub sectors. And these impacts created around 70% of our bills in our non retail book. And in our credit card book, which is where typically the macroeconomic factors are the most sensitive, we now have a total ACL coverage ratio of over 8.2%.

So we feel very comfortable with where we are right now.

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada0: Got it. Thanks for running through that. And I guess maybe just one quick one Laurent for you. You’re very vocal ahead of the elections in terms of the policies the new government should take to sort of be pro business, get activity going. Early days, but just give us your view around based on what you’ve seen today, are you optimistic?

What are you paying attention to as we think about data points that would make us optimistic about private sector investment, job growth in Canada?

Laurent Ferreira, President and CEO, National Bank of Canada: Thank you for your question, Ibrahim. I am very optimistic. Everything that we’re hearing right now from federal, also provincial government in terms of working together and making the economy a priority is very encouraging. So yes, it is early days, you just mentioned it, but I can tell you that from our standpoint, from also talking to our clients, they are engaging with the business community and figuring out what are the various paths that we should be taking in order to rejuvenate growth in our country. And I’m also encouraged with I think the early discussions that our government is having with the US administration, I do believe that we will have stronger ties once we sit down and figure out where do we land with what’s going on in the world.

So overall, it’s positive, Ibrahim.

Marianne Ratti, Vice President and Head of Investor Relations, National Bank of Canada0: That’s good to hear. Thank you.

Conference Operator: Thank you. The last question is from Darko Mihalic from RBC Capital Markets. Please go ahead. Your line is open.

Various Analysts, Analysts, Various: Hey, thank you for squeezing me in. I appreciate that. I wanted to go back to Etienne just for a little bit here on trading because it is so different from your peers and when I look at what your peers have done quarter over quarter, 44% drop at BMO, thirty percent at Scotia, Europe forty eight percent quarter over quarter. I won’t compare it at TD because they had the Schwab sale in the quarter which obviously helped them. And I wanted to connect this with some of your earlier commentary because you kept saying I think a couple of places that you have sort of this defensive position and it brings to mind the thought that perhaps what you have in essence is a put option on equity markets, and so the question is really threefold around that.

Am I correct in thinking that your base position is essentially a bit of a put option on equity markets? And if so, where is that coming from? And is there an element of proprietary trading in here that we may or may not be seeing from other banks?

Etienne Dubuc, EVP Financial Markets, National Bank of Canada: Yeah, thanks for the question, Darko. So first of all, no, there’s no proprietary trading. Everything there is client driven. That said, because we structure products where sometimes you don’t have the perfect hedge, you need to take views on the market so that you don’t cross the bid ask spread all the time to re hedge some of these more illiquid exposures that we sell to clients things like long term volatilities, long term correlations. So sometimes, and that’s a big part of the defensive positioning, we really bias the book towards being defensive.

Because, we know what can happen, right? Most of us have lived through the great financial crisis. We’ve lived through COVID. Models can describe risk at a given point, but when markets go down, everything bad happens at the same time. And so suddenly a lot of bad things happen once markets are down 20%, thirty %.

And experienced traders and we have a lot of those, they know that and they know how to orient their book accordingly. That said, your question is, is there a downside put option? Yes. In our structured products business, some of the products we sell do have essentially make us long downside volatility because we can sell soft protection to clients. The clients are protected maybe for the first thirty percent down move, but after that, they’re not protected anymore.

So you could see that as a downside put that clients sell us when they buy those products. I’ll say another thing is that, and I touched on the market making operation that we have in equities, ETFs, options, rates. We have a lot of in house technology that is very fast. And so when markets get volatile and that tends to happen when markets go down, markets become more volatile, bid ask spreads widen. If you have good technology, you can be first to market on a lot more opportunities as the slower players have to widen their strategy because they’re getting picked off.

The markets are going too fast. So in every trading business we have, want to install these optionalities where we’ll make more money when things get really out of normal condition. We really want to be anti fragile in the way that our trading businesses operate. And so technology, defensive, and that means, Arco, that we leave money on the table in the good times, right? Nothing is free.

So when markets are slowly going up or are very quiet, we’re not going to be the top performer. And we accept that because we want to manage this through a cycle and be there for clients when it counts. That’s really the philosophy around how we think about the trading businesses.

Various Analysts, Analysts, Various: Okay, that’s very helpful. I appreciate that answer and that granularity and it does help me think about sort of upward moving equity markets. And just as a last follow on to that, Etienne, when I look at the, you know, I mean, again, 42,000,000 in equities is a big number and it’s really up from last year. And yet, I don’t see a change in the bar. So so it it am I is there something that I’m missing?

Like like, you know, some sort of I mean, to to put that kind of number out, would it not require some higher element of risk or balance sheet? How should I think of it? Mentioned that there’s nothing really structural or fundamentally different. So I’m just trying to put it in perspective of, know, typically when I think of this kind of volatility helping you out so much with the same bar, I’m a bit confused by it.

Etienne Dubuc, EVP Financial Markets, National Bank of Canada: Yeah. That’s a complex question, Darko. One thing I’ll say is that sometimes because of our risk profile that is very geared towards making money on the downside, the VAR scenarios that generate losses will be rally scenarios, sharp rally scenarios. So that can flip depending on which position we have on. And then it really varies with the size of the positions and that’s also affected a lot by client activity.

So these books are not static. They are very active as client, as we trade against clients constantly. So VAR can be affected by many different things.

Various Analysts, Analysts, Various: Okay. Great. Thank you very much for the insights. Appreciate it.

Conference Operator: Thank you. There are no further questions registered at this time. I will turn the call back to mister Ferreira.

Laurent Ferreira, President and CEO, National Bank of Canada: Thank you, operator. I want to recognize all employees, including employees newly joined from TWB. I want to thank you for your dedication, hard work on the integration and the support you are bringing to our clients. The path we’re on gives me great confidence at this point in time. Finally, I would also like to thank our shareholders for their continued support.

Have a great summer.

Conference Operator: Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.

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