Nadim Hirji: So in terms of segments, I would say that when you look at segments that are more reliant on M&A activity, we’re seeing more softer loan growth in those areas versus our general diversified businesses, private equity, of course, has slowed down. Real estate has, of course, slowed down quite drastically. So those would be the segments that would have the biggest effects. But what we’re looking at right now is demand starting to increase. We’re seeing pipelines increasing as we move into Q4. So I expect that we’ll see better growth in the U.S. franchise as we go into fiscal ’24. But we can’t deny the macroeconomic background that we’re under. So when we look at deploying our capital, we are laser-focused on not just volume growth, but rather how do we optimize return for our shareholders.
How do we go after sole bank relationships or left lead where we get the treasury and payment services revenue, the cash management fee revenue and how do we also get share of wallet and make sure that we’re getting the trading products and one client referrals to our wealth and Capital Markets colleagues. So we’re not going after volume, we’re going after quality because these relationships, both existing and new, that add the most significant shareholder value. And when the commercial banking demand does come back, we are on both sides of the board are extremely well positioned to meet or probably beat what the market will be at that time, especially when we see the M&A activity increasing. And when you think about M&A activity, if I look at our mid-market M&A group pipeline right now, it’s probably the biggest pipeline that I’ve seen in two to maybe three years.
So, we’re starting to see the turn coming. But as always, when it comes to Q4, we’ll update you on growth numbers at that time.
Darryl White: Yes. I just — I’m going to complement that, Doug, it’s Darryl speaking. When I look at the quarter-over-quarter sequential commercial growth that you referred to in the U.S., on the surface, you might come to the conclusion that it’s a little bit below market, but I must buy it, and I’ll tell you why. Some of that is — and by the way, when I say a little bit, like a very little bit, some of that is explained by mix, which Nadim was just into. And some of it is actually explained by the fact that we have July in our quarter in the U.S. banks don’t. And I think when you adjust for those two things see that we’re pretty much right on market is my hypothesis. And more importantly, the point Nadim made just now when the sun comes out on the industry and it will one day, we’ve shown time and time again that when does we can perform better than market in commercial banking with the fourth largest book on the continent, and we expect that we’ll be able to do that again.
And the great news about that is that we will also simultaneously have the flow-through of the efficiency program that we announced today as well as the full flow-through of the efficiency of the Bank of the West synergies, and we put all of those things together for us. That’s what to me gets me excited because it’s a pretty differentiated outcome for our bank.
Tayfun Tuzun: And on your NIM question, Doug. In quarters when deposit growth exceeds loan growth, we see a positive impact of that on our NIM. This past quarter in Q3, our loan growth exceeded deposit growth. So therefore, that had a negative impact on our NIM. Next quarter, we are predicting a stable loan environment and potentially a better deposit environment which should be marginally helpful for our NIM in Q4.
Operator: Thank you. Our following question is from Paul Holden from CIBC. Please go ahead.
Paul Holden: A quick question on capital management. Just wondering the thought process behind the DRIP discount and when that might come off given you are seeing a build in the CET where you should be seeing a build in the CET1, I think, on an organic basis, given the slow loan growth environment. And then obviously, with the operating efficiency improvements expected that will also help organic capital generation. And then you’ve provided some pretty neutral/positive outlook for FRTB and Basel III impacts.
Tayfun Tuzun: Yes. It’s a good question. We will be finalizing our FRTB analysis over to this quarter, which will give us more clarity. As I said, we are pretty confident that it will have a modest impact on our capital. Look, I mean, when we started the year, we said that the assessment on DRIP is a quarterly process that management and the Board will go through together. We are maintaining our 12-plus percent CET1 ratio targets across the bank. And depending upon what we see in the environment with respect to RWA growth and the regulatory decisions that are still coming in, in the U.S., obviously, we’ve seen it, which as Darryl said, does not impact us much. The more clarity we have on the environment, both macro as well as regulatory, the closer we will get to a decision on DRIP.
Paul Holden: Got it. And then I guess my follow-up on that point would be kind of can you give us a sense of what your operating target range is for the CET1. We’ve heard some other banks sort of talk about maybe getting up to 12.5 plus. Are you sort of thinking the same thing over time?
Tayfun Tuzun: I think a reasonable range is between 12% and 12.5% and in the current environment. As I said before, the target level of capital is impacted by multiple factors including the environment and the regulatory regime and the peers. So, we will be very sensitive to all of those three. I think that the range is still 12%to 12.5% under the current OSP regime and potentially closer to that 12.5 point.
Operator: Our following question is from Lemar Persaud from Cormark Securities. Please go ahead.
Lemar Persaud: Maybe for Tayfun. Should we think about the severance charges as being a one quarter phenomenon? Or are there further charges coming down the pipeline?
