Raj Viswanathan: I’ll take the second one first, and then I’ll start on the Canadian Bank. And I’m sure Dan will have more to say. No, we’re not looking to move any of those portfolios here any time soon, Gabe. I think that’s the short answer. On the Canadian Banking NIM, there’s a couple of nuances in this quarter. So we’ve called it out in the disclosure. On the movement one is the timing of prime CDOR. And that’s always going to be a factor not necessarily for Scotiabank, but for the other banks because the price of prime and then the CDOR moves in advance, particularly in a rising environment. So that should normalize next quarter once prime catches up, which happened in the last week of October. Mortgage prepayment. When rates go up, you expect to see less prepayment happening, and that’s what we’re seeing in the Canadian Bank’s net interest margin.
And like Dan talked a little bit earlier, that margin will continue to modestly expand in line with how the assets start to reprice and the pace at which a business mix changes will happen in the Canadian Bank as the mortgage volume growth will slow down in ’23 compared to what we saw in ’22.
Gabriel Dechaine : Right. No quantification of ?
Raj Viswanathan: We haven’t quantified it before. I don’t think it’s substantial. But if you back it through the NIM disclosed, you will probably be within the ballpark.
Operator: The following question is from Mario Mendonca from TD Securities.
Mario Mendonca : Good morning. And Brian, all the best to your retirement.
Brian Porter : Thank you, Mario.
Mario Mendonca : Sure. So Raj, just get started first with going back to Ebrahim’s opening question. He asked for whether the all-bank margin could only improve once rates decline. And the reason I want to go back to this is your disclosure indicates that the bank is positioned for falling rates. Higher rates lead to lower NII, lower rates lead to higher NII. So can we interpret from your disclosure that the all-bank margin can only improve once rates start to fall? Or is that too simple an interpretation?
Raj Viswanathan: I’d look at it two ways. Directionally, you’re right, Mario. Yes, we will benefit from falling rates. The balance sheet is positioned that way. One of the key factors which applies now is the pace of asset repricing. And depending on how fast that reprices, the benefit will be higher than what we show in that disclosure. But directionally, you’re right based on disclosure.
Mario Mendonca : Okay. Different type of question then. This is probably the most frequently asked question through this last quarter. It relates to debt service costs. We can all appreciate that unemployment is an important aspect of the Stage 1, Stage 2 performing loan provisions. But debt service costs and debt service ratios clearly are going materially higher. Could you talk about how that factors into your performing loan provisions and whether it’s really just a matter of time before all the banks have to start building performing loan reserves for their mortgage book?
