Nadine Ahn: Sure, Mario. So if I just start from the total bank NIM of down 9 basis points, — as you commented, a lot of that relates to the Capital Markets business, where we have the cost of funding, which obviously has gone up with interest rates going up, showing up in the NII line and then their offsets or other income. So when I break out the 2 main drivers of that primarily attributed to the repo business as well as some of our equities derivatives businesses, that takes our number down and what you’re getting from a capital markets perspective then on a total bank level, that would take that number down, which is roughly about 12 basis points down to 1 or 2, which is mainly on the loan book as margin impacted by higher funding costs.
When I look at it at the all-bank level then, so if you take out a substantial portion attributed to that, you’re looking at the increase of 1 basis point. Within that number, we are down a few basis points as it relates to our increased liquidity position. That relates, as we commented in terms of our LCR increase, but also we’ve increased our funding. That will get absorbed as we go through the year and the loan book growth contributes to the margin.
Mario Mendonca: Okay. So Nadine, maybe let me — I may have misunderstood it then. The 1 basis point lift in the margin all-bank already appropriately excludes that effect that you referred to, that effect of expensing in one area of revenue in another. Is that true?
Nadine Ahn: That is correct. What I would say was it represented a bit under where we would expect it to be is because of the higher liquidity position. In addition, there was one movement to anomaly between quarters another couple of basis points.
Mario Mendonca: Okay. So that really gets — that’s helpful. So now I think I understand why the margin — I think I understand these margin dynamics a little bit better. So it really does lead to my second question, which is the overall margin sensitivity and improvement for an asset-sensitive bank like Royal it appears to be diminishing over time. And it’s for all the reasons I think you offered, deposit betas, migration, maybe even deposit attrition. And that disclosure you provide in your presentation where you break out costs, funding costs and like the income where that breakout you do in your presentation, that’s awfully helpful. But the message I’m getting here is that, that asset sensitivity that Royal has benefited from like we’re in the final innings of that. Would you agree with that, that we’re in the final innings of the benefit for these asset-sensitive banks?
Nadine Ahn: No, we do expect to — I think if we go back to our structural deposit benefit that we have, which continue — which drives our assets in site higher rates, and we continue to expect to benefit from that going forward. I think what you’re seeing in terms of what you commented on the near-term movements as it related to the deposit migration, we expect that, that will have slowed given that the interest rates have gone up and they expect to level up. So a lot of that movement will have slowed down. We will continue to see the margin expansion benefit for our structural deposit base. And that is going to be a bit sensitive, Mario depending upon what happens to the longer end of the yield curve. And we’ve seen it move quite significantly just perspectives on where we’re at with rate increases.
So it’s obviously, we’re dealing with a bit of an inverted yield curve right now. That has been moving around to the tune of 30 to 50 basis points over the last quarter. And so that’s where the value driver as we start to think about that margin expansion coming from that structural deposit base.
