Mike Rizvanovic: Okay, perfect. And then just to follow up on that, so, I guess what I’m sort of wondering about is, you have all this excess capital, and I would have imagined that any sort of additional costs that you have to bear now, would be — you’d be able to sort of offset with some of that excess capital. So I’m wondering, why can’t some of these costs be capitalized? It seems like they’re all just going to be related to people and hiring new people to get you through whatever process you’re working on, is that — is that the case?
Kelvin Tran: No, the accounting would not allow you to do that. The capital and expense on the P&L are just two different concepts. So you cannot reserve expenses and offset that to capital. So when you add people, for example, it would just be going through your P&L line as an expense item.
Mike Rizvanovic: Okay. Okay. That’s helpful. Thanks for the color.
Operator: Thank you. The next question is from Nigel D’Souza from Veritas Investment Research. Please go ahead.
Nigel D’Souza: Hi, good afternoon. Thank you for taking my questions. Just a couple of follow-ups for you on your mortgage portfolio. First, to clarify a point that was made earlier, I think I heard that there was some credit migration related to mortgages that have hit the trigger rate that may be vulnerable or may be expected to hit the trigger point. And just want to clarify that’s referring to your negatively amortizing portfolio and those balances potentially, your customers hitting a trigger point, where the effective loan to value hits an 80% threshold for the uninsured, is that what you were referring to?
Ajai Bambawale: Yes, that is exactly what I was referring to.
Nigel D’Souza: So does that include an expectation of home prices to decline? I know your economics team has put out a forecast, I believe, for home price declines. Just wondering how that’s factoring in the outlook for the credit?
Ajai Bambawale: I think we are assuming if the rates remain the same, you know, and clients will reach an 80% threshold over the next 12 months, we’ll book them at a higher rate of reserve. It is a conservative calculation.
Nigel D’Souza: Right. So I guess what the question I’m asking is that 80% being hit by the balances increasing through negative amortization or a decline in home prices, or a combination of both occurring?
Ajai Bambawale: It could be a combination.
Nigel D’Souza: And then last question on your — on that portfolio, I noticed that the percentage of your book that’s negatively amortizing declined from 18% to 14%. And correct me if those numbers are inaccurate, but if that’s correct, could you provide some color on what drove that decline in negatively amortizing balances?
Ajai Bambawale: Yes. I think the way I would describe it is we are seeing positive payment actions by clients that are reaching trigger rates. And we reach out to those clients well in advance of them reaching trigger rate. And they’re responding positively by either making lump sum payments or moving to a fixed rate or increasing the P&I. So, again, from a credit perspective, I would — I would attribute it to positive payment behavior.
Nigel D’Souza: Okay, that’s it for me. Thank you.
Operator: Thank you. The next question is from Sohrab Movahedi from BMO Capital Markets. Please go ahead.
Sohrab Movahedi: Okay, thank you. I appreciate you taking the call. I know, you’ve gone over time here. Just a couple of quickies. Kelvin, what was the average price for the shares you bought back in the quarter?
Kelvin Tran: Well, we’ll get back to you. We have those disclosed. Yes.
Sohrab Movahedi: Okay. And then presumably, Bharat, you said it’s dependent on market conditions as to the pace I assume, if the share price ends up drifting lower than that average share price then you would pick up the pace, is that the right way to think about it?
Bharat Masrani: Well, I don’t want to, you know, create a formula for you, Sohrab. You know, we look at, you know, how the market is behaving, look at what those conditions are, look at the flexibility we have. A lot of factors go into how we think about this, but, you know, we’ve been buying back. Kelvin, you know, gave you the numbers and our intent — our current intent is to continue doing that, but as to the pace and how we do it, would depend on market conditions.
Sohrab Movahedi: Okay, thank you. And I appreciate the investments that are getting done in risk and control and I think the quantification of the expenses and the duration over which probably that has to happen. Is there going to be — do you have an estimate as to what sort of an impact that may have on your operational risk RWAs, and over how quickly we’ll see that sort of any impact, if any, you’re anticipating?
