Hratch Panossian: Thanks for the question, Ebrahim. Thanks, Victor. So we’re very pleased with where CET1 has landed this quarter. And frankly, over the last four to five quarters, the progress we’ve made, right? And as we said in my remarks, Ebrahim, it is above our operating targets. We’ve always said what we’ve managed to is to be well clear of regulatory requirements and to be within the peer group. If you look at what we’ve done, over the last five quarters. We’ve built up 130 basis points of CET1 which is the equivalent of over $4 billion of capital. Yes, we’ve issued some, but we’ve issued just over $1.5 billion worth. The rest of it has been organic generation and discipline in our balance sheet and efficiency of the balance sheet.
We’ve stood some headwinds through that. We’ve increased our allowance by about $1 billion while doing that. And we’ve done all of that without constraining growth. We’ve delivered pre-tax pre-provision growth in our target range, and we’ve protected our ROE by being disciplined. And so when we end up at 13% this quarter, which is above our operating targets as we said, we feel very comfortable. And as we said, we intend to stop the DRIP discount that we can continue to generate that growth, while having enough capital through organic generation to fund that growth. And we will stabilize the CET1 around where there is no reason to keep building the CET1 from the current levels. We are comfortably where we need to be in. So the focus is really generating capital.
Victor described exactly how we believe ROE will continue enhancing over time. And that generation will keep our organic growth going. But certainly, we’re in a position to generate capital in excess of what we need to grow organically.
Ebrahim Poonawala: Okay. Thank you.
Operator: Thank you. The next question is from Darko Mihelic from RBC Capital Markets.
Darko Mihelic: Hi. Thank you. Just a question for Jon. I just wanted to sort of revisit the mortgages in Canada. I wanted to just ask that when we look at the amount of originations in the quarter, would you say that you would be gaining share or losing share in the mortgage market with the $7 billion of originations?
Jon Hountalas : Roughly in line with — Darko, it’s Jon, roughly in line with market.
Darko Mihelic: And so then when I look at Slide 32, and I see the inflow spread on mortgage, I question why not push for mortgage origination. Why not compete a little bit, given that that’s the highest inflow spread we’ve seen since Q2 of 2022?
Jon Hountalas: Thanks, Darko. I mean we’re in the mix. There just isn’t a lot of mortgage volume is one. Two, look we don’t chase kind of product per se, right? We are a relationship bank where we think we can build deep relationships, trust me, we price to win. If we think it’s going to be a mortgage and three to five years later, it will be gone. It’s not really our thing. So maybe a little less about market per se and more about building relationships with people that appreciate what we do and want to do more with us. And that we’re doing. So I think you’ll continue to see us grow roughly in the mix, but we will do it with clients that we think want to do more things with us. We have — I think we’ve smart people in the front line, they can figure that out, and we have a lot of data that helps us realize the potential that we have with clients outside of our bank and what we think we can bring inside our bank. That answers your question.
Darko Mihelic: Yes, it does. Would you argue that today, the credit quality of the mortgage being underwritten is very high, given the strict underwriting rules, the stress test being where it is, would you say that the credit quality of what’s coming in the door is solid? .
Jon Hountalas: Yes.
Darko Mihelic: Okay. I mean this is — this gets back to the whole question that everybody is sort of asking themselves, right? If I look at this very slide, and look at Q3 2022 when spreads were at almost their worst, your originations in that quarter were $17 billion. And today, we’re at $7 million, and you’re saying you’re roughly in the mix. I think back then, you were leading the pack in terms of mortgage growth. So it’s just — I guess, maybe what you’re saying to me is this is the newer — like this is a different sort of view on the mortgage portfolio and you’re roughly going to be inline with industry neither leading nor lagging, despite profitability metric because it really comes down to a more wholesome relationship. Would that be — I’m paraphrasing, Jon, so correct me if I’m wrong.
Jon Hountalas: I think that’s a very fair statement, Darko.
Darko Mihelic: Okay. All right. Thank you very much.
Operator: Thank you. The next question is from Doug Young from Desjardins Capital Markets. Please go ahead.
Doug Young: I’ll keep this quick. Just maybe back Hratch to the US NIMs, and I apologize if you’ve gone through this. But how many US. banks are showing NIM expansion sequentially and I get the deposit and loan part of it maybe you can kind of dial into the balance sheet mix and anything else that you’re doing that’s maybe different than peers that are giving you a better NIM result in the US?
Hratch Panossian: Yes, absolutely. Happy to take that question. Thank you. And I’m going to start, and I’m going to pass it on to Shawn because I think the business has done an excellent job managing our already strong deposit franchise and strengthening it and managing the margin. So Shawn can elaborate on that. But just to start with the slide, I think it’s a lot of what we’ve been saying all along, right? We do benefit from rising rates. We manage the balance sheet in the US the same as we do in Canada. And so you’ve seen since Q4 of 2022 to now, that is fairly stable in margins because what’s happened is we’ve slowly benefited from rising interest rates. What you see this quarter in terms of the negative 4 basis points impact from deposits is simply the catch-up of some of the deposits are still repricing up to the latest Fed hikes that we had.
