We’ve got guarantees or partial guarantees on 95% of those commercial mortgages. I just it’s an indicator of, again, the strength of the underwriting standards And so things will trend up, but they’re going to trend up from what’s been near 0 numbers in that portfolio for a long time. But right now, these are still, I would say, forward expectations, We’re not seeing a lot of real negative outcomes in that portfolio at this point in time.
Operator: Next question is from Doug Young, Desjardins Capital Markets.
Doug Young: Just on the CET1 specifically on RWA movements. It looked like market risk RWA was down 8% quarter-over-quarter. Counterparty RWA down 11%. Just hoping to get a little bit of color of what drove this? And should there be a reversion down the road? And Nadine, the Basel is going to be 70, 80 basis points positive come Q2. I think there’s further changes coming from a regulatory perspective, specifically around the trading book and maybe next year. Can you talk a bit about what the offset would be? Or is there any other negative items that are coming down the pipe on the CET1 ratio side?
Derek Neldner: Thanks for the question, Doug. It’s Derek Neldner. I’ll maybe start addressing your RWA question from a business perspective, and Graeme can chime in and Nadine may want to add as well. But in terms of the trading businesses, we obviously saw very, very strong levels of client activity in the quarter. It was a very robust environment. And against that, we were able to drive good velocity and turnover in our trading book inventories and also bring down some of those inventories in particular, in our credit trading businesses where, as you know, it was a tougher environment in 2022 — Our inventory levels went up a little bit, and we were able to bring those down against a very strong trading environment in Q1. And so that really was the largest contributor to a decline in our market risk RWA.
As you noted, we also did see a decline in our counterparty credit risk RWA. That was really, again, a function of improving credit environment, but as well some FX movement that helped bring RWA down. And then finally, we did see a moderation in commodity prices. And so that did bring down our counterparty RWA against some of our commodity trading positions. Go ahead, Graeme.
Graeme Hepworth: No, I think — I mean, on that part, I think Derek absolutely captured it right. It’s — this is a quarter with good liquidity. It allowed us to be much more in the moving business and not in the storage business trading side of it. So I think those are absolutely right factors. But I guess there are pieces were on the overall 70, 80 basis points.
Nadine Ahn: Yes. Just as it relates to on the horizon, we will be implementing the remaining components of Basel IV that are coming into effect next year. So that’s related to FRTB and We don’t expect those to have material impacts overall, Doug, in terms of our CET1 ratio.
Operator: Next question is from Mario Mendonca, TD Securities.
Mario Mendonca: Could we first go to the margin? I was a little surprised to the margin, but it clearly relates to that dynamic you described where the expense was reported in NII, but the income in noninterest income. Is there any way you can help us understand what effect that had on the all-bank margin in the quarter? It would be helpful to understand what that margin might have looked like, was it up 5 basis points sequentially if that dynamic hasn’t played out? Is that something you can quantify, Nadine?
