Piyush Agrawal: Yes. I think I would just add, as we’ve said before, it’s also a very active risk management tool that banks should employ. — among many others. So apart from creating capacity for new business, which you’re not seeing right now because it’s going to come in through NIM and other earnings over time. They help you in terms of managing portfolio concentration risks in this environment. So, I think in the collective suite of the things we are doing, this is a very efficient way in terms of managing our portfolio and at a capital cost that’s acceptable to us.
Gabriel Dechaine: Fair enough. I get the rationale. There’s a benefit. I just want to clarify the cost. So, 8% to 9% of whatever equity number I can associate with the RWA improvement, right, or
Tayfun Tuzun: That’s right. That’s correct.
Operator: The next question is from Mario Mendonca from TD Securities. Please go ahead. Your line is now open.
Mario Mendonca: I may have missed comments you offered on what the all bank margin will look like with Bank of the West because there was another call going on well, while your call was happening. Did you offer any outlook on the all bank margin, including Bank of the West?
Tayfun Tuzun: Yes, I did. I said that starting in Q2 and my comment applied to Q2 as well as the remainder of the year, there should be about a 10-basis point lift to our margin once we include Bank of the West.
Mario Mendonca: Yes, that’s all bank ex-trading. Is that right?
Tayfun Tuzun: That is correct.
Mario Mendonca: Okay. And then one other thing. I want to thank you for slides on Page 34 of your presentation. This is precisely the way I wish every bank would show their funding costs but — funding costs and loan margins. But it also, of course, creates a lot of questions, too. One thing I like doing when I look at slides like this is just comparing the change in the loan spread relative to the change in the customer deposit costs and what’s clear from looking at this is there was asset sensitivity early on, meaning the assets are repricing faster than the cost of customer deposits, but that has almost certainly changed from one quarter to — in the last few quarters. So, what we’re seeing now is that deposit costs are in there, the rise is not very, but actually rising faster than loan yields, is that a trend you expect to continue? And if so, would it really tell us that the margin expansion story is now over?
Tayfun Tuzun: Okay. So good question. I will relate to compliments on the slides to our IR group. In terms of the change and the pace of asset repricing versus deposit repricing, we are at the later stages of this rate cycle. So, this is a very natural result of the timing. And what we — as we look ahead, you start actually focusing on the other side of the rate cycle, and you want to make sure that you are protecting the downside while you continue to benefit especially from normalizing loan spreads because as rates move up, loan spreads tend to come under pressure. Now we are — as we look ahead to the last two, three quarters of the year, we are expecting loan spreads to slowly normalize, and we are also expecting this migration from transaction accounts to term deposits to also normalize.
We probably have another quarter or two with these moves. But what will help our NIM, and we’re not yet declaring that we’re past the peak in our NIM. We are still expecting some expansion in the second half of the year based on what I said while we keep an eye on the downside.
Mario Mendonca: Helpful. Thank you.
Operator: The next question is from Lemar Persaud from Cormark Securities. Please go ahead. Your line is now open.
