Mario Mendonca: Raj, on several times during this call, you referred to liquidity as potentially being a constraint or a binding administrate. Now I don’t think you were overstating it, but you did mention it a few times. So obviously, I went and looked at your LCR and your net stable funding ratio, both of which look no different from your peers and are pretty strong relative to regulatory requirements. So am I reading too much into it? Like, why are you mentioning liquidity as the binding constraint going forward?
Raj Viswanathan: Thank you, Mario, for the question. I think we think of liquidity and capital as one and the same in many, many respects. I think a lot of airtime is given to capital because it’s better understood by our external audience, I think. But liquidity is a big component of how we manage what we call financial resources. And for us, particularly now, I think Scott talked a lot about our wholesale funding exposure and how the balance is positioned. That’s all about liquidity — that’s probably why I probably overemphasized on a few questions when I answered, it’s not just about capital. Capital is actually well understood, and we’ve got a lot of data from 25 years, and we know how to manage it. Liquidity has also got to be part of the conversation. That’s how it goes.
Mario Mendonca: Okay. Can I just squeeze 1 more than related to that. When liquidity comes under pressure, let’s say, because deposits are running off, in a very, very simplistic way. Couldn’t a bank just go and raise longer-term wholesale funding to cope with that sort of arithmetic impact on your liquidity coverage ratio. And the point you’re making here that while that is an obvious solution to deal with declining liquidity coverage ratios, that’s not something Scotia wants to do today. Is that the reason why liquidity is more relevant now?
Raj Viswanathan: No, I think it’s 2 points, Mario, and I think you’re probably right. One is cost of liquidity will continue to go up the more time to access the market. And we talked a little bit in this call and you heard us talk more about profitable growth. So eventually, the more times you go to the wholesale funding market because you pay a credit spread on it. It’s always cheaper to go down the deposits route and maintain your spread, so to speak. And the more times you access the market, I think it’s going to be more difficult to manage what we would call as a wholesale funding ratio on the bank. It has been well managed, right? It used to be at 29% 4, 5 years back, we are at 22% now. So we like it. But we want to be even lower because that helps with profitable growth.
That’s why we focused on liquidity as well. It’s not about adequacy of liquidity or availability of liquidity. I think with the franchise value we have, we can access liquidity at any time. It’s about what are you willing to pay for and what is that you’re going to deploy it into so you can actually produce profitable growth.
Operator: There are no further questions on the phone lines at this time.
Scott Thompson: Great. Thank you, operator. On behalf of everyone here today, I want to thank you all for participating in our call. I look forward to speaking with you again at our Q2 ’23 call in May. Have a great day.
Operator: Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.
