What it does have is two things. One is, we’re going to have a lot of the expense savings. We talked about the productivity initiatives, which kind of kicks in the second half of the year to be meaningful because a lot of the exits are still going to be effective in the first half of the year. So that’s a benefit. And the second thing is asset repricing. What you’ve already seen in the mortgage book in the Canadian bank as well as in international banking for that matter, that should continue to happen. Rate cuts are expected to be accelerated in the International Banking space. You already seen that margin expand this quarter. So those benefits will come in in the latter part of the year and that’s why we feel like the second half will be better than the first half.
Lemar Persaud: Gotcha. That makes sense. And then, maybe turning over to Phil, can you talk about what the biggest risks are for PCLs coming in above that 45 basis points to 55 basis points range? Like, based on where you sit today, would you suggest it’s simply unemployment because that’s obviously the most important input, but maybe you feel good about that assumption and maybe it’s the uncertainty in the path of interest rates? So, maybe talk about the inputs that give you the most forecast uncertainty and keep you up at night? And then, secondly, what geographies are you most concerned with? I suspect you’re going to point to the international portfolio, but maybe it’s domestic. Thanks.
Phil Thomas: Thanks, Lemar. Obviously, whenever you look at Canada and whenever you look at uncertainty, you have to look at unemployment. And so, you said you got it in one. I mean, we’re very — we’re laser-focused on watching unemployment. We’re also looking at the effects of higher rates. We’re looking at the — as I said in my earlier comments to Darko’s question, the variable rate mortgage portfolios and the fixed rate mortgage portfolios are performing very well right now. So, I’m very thoughtful about trade-offs. So, our customers making trading-off, paying another product to pay their mortgage. And so, we’re very focused on looking at payment flows off us outside the Bank and to see if customers are paying another product somewhere else and vice versa.
So, looking at the data, looking at payment flows, looking at how customers are weathering the higher for longer, and obviously very, very focused on interest rates. In terms of geography, I think IBs stabilized from where it was last year. As I said, I’m bullish about Mexico. I think there’s a great opportunity there. And right now, we’re very, very focused on what’s going on in the Canadian market.
Lemar Persaud: Gotcha. And then, is there any way that we can think about the top-end for the ACL ratio? Like, I think you guys touched 125 basis points at the peak of the pandemic. They are 85 basis points currently. Maybe it’s just an unreasonably high watermark, just given that that was a health crisis. That’s clearly not what we’re going into now. Like, is there any way we can kind of size up what that ratio could look like over time?
Phil Thomas: Yeah, listen, I think we’re comfortable with where we are right now. And as we look at expanding our business, as we look at our risk appetite, as we look at how our business develops, we’ll take the appropriate performing ACLs in-line with business growth moving forward. But I feel where we are right now is good.
Lemar Persaud: Yeah, thanks for the time, guys.
Phil Thomas: Okay, thanks, Lemar.
Operator: Thank you. We have no further questions on the line. Back to you.
Scott Thomson: Thank you. On behalf of the entire management team, I want to thank everyone for participating in our call today. We look forward to speaking again at our December 13th Investor Day. This concludes our fourth quarter results call. 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.
