And that’s actually something we can export into international. It’s not the exact same markets, but certainly the needs of the clients And so we’ve had good success in terms of building up the capabilities in partnership with Nacho’s team and Jake’s team with the clients that we have in international. So we think there’s very good runway there on the organic side.
Operator: The next question is from Nigel D’Souza from Veritas Investment Research.
Nigel D’Souza: Just a quick point of clarification on your NIM outlook and putting a finer point on it. it sounds like your expectation is that once rates peak and stabilize, you’ll be able to deliver margin expansion, you don’t require policy rate cuts for margin. I just want to make sure I understand that correctly.
Raj Viswanathan: Yes, it’s Raj, Nigel. Absolutely, you’re right. It’s actually quite simple. If rates stop rising, our term funding cost, which tends to be exposed to the short end of the curve will stop rising and our assets continue to reprice. So yes, if they stabilize, we should start seeing NIM benefiting from an NII benefiting from it and obviously will benefit much more when rate cuts start happening.
Nigel D’Souza: Got it. And just a quick question on the auto portfolio. Just your thoughts on what you’re seeing this quarter. Is that idiosyncratic? Is that how you think about it? Or do you think it’s a potential leading indicator for experience in the Canadian retail portfolio?
Phil Thomas: Yes. It’s Phil. I’ll start, Nigel, and if Dan wants to jump in. We have a big auto portfolio. We’re outsized in that versus where we would be versus peers in credit cards. And so as a risk manager, I always use this portfolio as a bit of a bellwether. So I would say if there’s stress coming through the portfolio, it’s mostly on the used car side, that’s where we’re seeing a little bit of attention. I’m watching the portfolio carefully as we look at potentially have residual values trend. But having said that, because we’re not seeing a lot of new vehicles, especially the Japanese and German manufacturers, there’s a little bit more on the American auto side. It’s keeping used car values higher than they would have been obviously pre-pandemic.
But if I go back to the numbers, again, delinquencies, net write-offs, gross impaired loans in this portfolio are still well below pre-pandemic levels. And I would probably close by saying through the pandemic, we did a lot of investment in our collections space in the — particularly in the auto book, and that remains in place today. So we — there’s big investments in analytics in dialer technology and people and loss mitigation tools and training. So I’m pretty confident that we’re in good shape in auto in terms of managing sort of future trends.
Dan Rees: Yes. The only thing I would add is I don’t see it as a front-runner for credit risk — in the credit card book either, which is obviously normally a contributor to net credit loss dollars. You haven’t seen pay down rates or revolve rates on the interest-earning receivable balances and credit cards, sort of reemerge as an issue. We’re still way below pre-COVID levels, and the majority of the growth in credit card accounts and balances continues to be purchase volume transactor style. So you don’t see that tending to flow through the credit line. And I think, Phil, on a mix basis, our super prime concentration has gone up at least 500 basis points year-over-year based on our focus, particularly with the advantage of the Scene program. So we’re focused on auto for the time being, and the growth has been good and the credit risk is being well managed.
Operator: The next question is from Mario Mendonca at TD Securities.
