Please standby. Your meeting is about to begin. Please be advised that this conference call is being recorded. Good afternoon and welcome to the BMO Financial Group’s Q3 2018 Earnings Release and Conference Call for August 28, 2018. Your host for today is Ms. Jill Homenuk, Head of Investor Relations. Ms. Homenuk, Please go ahead.

Thank you. Good afternoon, everyone and thanks for joining us today. Our agenda for today’s investor presentation is as follows. We will begin the call with remarks from Darryl White, BMO’s CEO followed by presentations from Tom Flynn, the Bank’s Chief Financial Officer; and Surjit Rajpal, our Chief Risk Officer. After their presentations, we will have a question-and-answer period where we will take questions from pre-qualified analysts. To give everyone an opportunity to participate, please keep it to one or two questions. We have with us today Cam Fowler from Canadian P&C and Dave Casper from U.S. P&C. Pat Cronin is here for BMO Capital Markets and Gill Ouellette is representing BMO Wealth Management. On behalf of those speaking today, I note that forward-looking statements maybe made during this call. Actual results could differ materially from forecasts, projections or conclusions in these statements. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results to assess and measure performance by business and the overall bank. Management assesses performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. Darryl and Tom will be referring to adjusted results in their remarks, unless otherwise noted as reported. Additional information on adjusting items, the bank’s reported results and factors and assumptions related to forward-looking information can be found in our annual report and our third quarter report to shareholders. With that said, I will hand things over to Darryl.

Thank you, Jill and good afternoon to everyone on the call. The strong financial results we announced today reflect continued positive momentum through the first 9 months of the year. Net income for the third quarter grew 14% from last year to $1.6 billion and earnings per share grew 16% to $2.36. Return on equity improved to 15%. Performance was driven by good diversified revenue growth and the benefit of ongoing efficiency initiatives, but together delivered strong total bank operating leverage of 2.9% with positive operating leverage contribution from each operating group. Credit performance continues to be very good reflecting our well-diversified loan portfolio, deep understanding of our customers and a good economic environment. We maintained our strong capital position, increasing our CET1 ratio to 11.4%. Each of our operating groups performed well this quarter. Canadian P&C is delivering good and steady revenue and earnings growth driven by momentum in our commercial business, where loans grew 11% and deposits grew 8%. While the borrowing needs of our retail customers are moderating, we continue to attract new customers and expand relationships particularly through our digital channels which account for over 25% of sales this year and where we have seen an increase in mobile users of almost 20%. U.S. P&C had another strong quarter with earnings up 34% from last year. Pre-provision pre-tax earnings were also up a strong 15% as we continue to deliver leading commercial loan growth and expand our personal deposit franchise. Wealth management had a good underlying growth across its diversified businesses and positive operating leverage with particularly strong performance in full service investing and private banking. And as expected, we saw resumed momentum in capital markets going into the second half of the year with good growth in client activity in most of our businesses and…

Thank you, Darryl. My comments will start on Slide 8. Q3 reported EPS was $2.31 and net income was $1.5 billion. Adjusted EPS was $2.36, up 16% from last year and adjusted net income was $1.6 billion, up 14%. Adjusted return on equity was 15% in the quarter. Strong performance was driven by good revenue growth and positive operating leverage across all businesses. Adjusting items this quarter are similar to past quarters and are shown on Slide 24. Turning now to the quarterly results in more detail, net revenue of $5.6 billion was up 7% from last year, net interest income increased 3% and net non-interest revenue was up 10% with increases across most revenue categories. Expenses were well-managed up 4% with higher technology investments as the single largest contributor. As Daryl said, excluding technology-related spend, year-to-date expenses were up about 2% in constant currency. The efficiency ratio improved 180 basis points from last year to 60.3%. Net operating leverage was strong in the quarter at 2.9%, reflecting good revenue growth across businesses and continued focus on expense management, while investing in technology at the same time. The effective tax rate was 22% and was 25% on a teb basis both modestly lower compared to a year ago. Moving to Slide 9, the common equity Tier 1 ratio was 11.4%, up 10 basis points from Q2. As shown on the slide higher retained earnings was partially offset by higher risk-weighted assets from good business growth and the impact of share repurchases. We repurchased 1 million common shares during the quarter. And over the past year, we have repurchased a total of 10 million shares while maintaining a strong capital position. Moving now to our operating groups and starting on Slide 10, Canadian P&C net income was $642 million, up 5%.…

Thank you, Tom and good often everyone. Starting on Slide 16, the provision for credit losses on impaired loans was $177 million or 18 basis points flat compared to the prior quarter. The total provision for credit losses was $186 million, which included a $9 million provision for credit losses on performing loans. In Canadian P&C, PCL on impaired consumer loans decreased $22 million with lower credit losses across all product categories. As noted last quarter losses in Q2 were higher due to a one-time adjustment. The PCL on impaired commercial loans increased reflecting lower recoveries. PCL on impaired loans for U.S. P&C were down both in consumer and commercial portfolios. The reduction in consumer loans was largely due to recoveries in the HELOC book. In the commercial portfolio we saw little provisions across all business segments. Capital markets PCL on impaired loans of $3 million compared to a $16 million PCL recovery last quarter. The net $9 million provision on performing loans, this comprises of a number of factors. We modestly increased the weighting of our downside scenario due to credit concerns. However, the impact of this was offset by model and data adjustments. The remaining factors of volume growth, migration and updated macroeconomic inputs combined for the $9 million PCL. Turning to the next slide, the GIL ratio decreased 3 basis points to 53 basis points. On Slide 18, delinquency and loss rates of the Canadian residential mortgage portfolio remains stable. In summary, our well diversified credit portfolio continues to benefit from the good economic environment and I expect our PCL performance to remain strong in the coming year. I will now turn it over to the operator for the question-and-answer portion of today’s presentation.

Thank you. [Operator Instructions] The first question is from Steve Terrio with Eight Capital. Please go ahead.

Thanks very much. A couple for me, maybe starting with the U.S. business for Dave, there is a lot of moving parts with the margin and maybe a bit surprised to see that magnitude of the decline with the higher short rate, so maybe could you give us just a bit of an order of magnitude with respect to the moving parts and given what you know a bit of an near-term outlook for the margin [indiscernible] jumping off point?

Sure, right. So we were down nearly about 6 basis points for the quarter. I would note we were up 7 the quarter before, so kind of flat for the last two quarters and just indicates that it does move around a little bit, but the big issue and we talked about this before, the loans grew at 3% for the quarter and the deposits grew at 1%, so that does have a negative impact on NIM. If I unpacked a little bit more we had the interest recoveries in the second quarter, we did not in the third quarter, so that actually accounted for half of the diminution, but there were other things too. The rates helped us. Rates absolutely helped us, but that was an offset by larger loans and some diminution in spread, not significant, but some of that as well. So you pull it all together that hopefully unpacks it for you as it relates to going forward, I would expect a couple of basis points increase in the next quarter and that’s assuming that we do have an interest rate increase in September. Does that help unpack it for you?

That’s helpful. So a rate increase and kind of steady state competition in growth rates?

Yes.

Okay, thanks for that. And secondly turning to capital markets, definitely a better quarter, little bit of a bounce back quarter there overall, but we are not seeing that come from the U.S. business. The revenue looks a little bit better, expenses strong for the first time in a while, so mix making some headway there, but just wondering if you can talk a little bit about what it will take to turn that momentum around and get it back to the growth rates we were seeing I think the contribution was up to around CAD80 million a year ago and you talked about getting that back to those sorts of levels, but wondering if it’s – is it more need to go after the expenses a little bit more or is it just you need the revenue tailwinds to help from here?

Yes, thanks for the question. And the short answer is it’s definitely a revenue growth story that will get us to where the kind of levels you are talking about at $41 million of net income for the quarter that was definitely softer than we would want to see. And as you commented it was partly a revenue story. Revenue was modestly lower than the average of the past 6 quarters and that was really reflective of a fairly soft M&A environment for us. The overall market was reasonable, but our M&A experience was a little bit weaker this quarter, but it was offset by some pretty good performance in our trading products businesses, which we expect to continue. The other driver of the softer number this quarter was PCL. I am sure you noticed that we had $13 million of PCL in the quarter, which is above average relative to when you look at the past 6 or 8 quarters. And so that’s skewing a little bit of that comparison you are looking at. And then lastly as you pointed out, expenses are running a little bit higher than you would expect given the revenue line, but some of that is us continuing to invest in growth in that business. We are still seeing opportunities to acquire talent, particularly in our investment in corporate banking side of the business and that’s our long-term growth story and lots of potential there. And so we are going to continue to invest there. But in terms of where that – how that’s going to turnaround, we look at the pipeline, certainly for M&A and for ECM at least for us in Q4 and beyond has actually been quite strong and we would expect to see revenue growth could materially pickup from there. So in terms of getting back $80 million certainly was a high watermark for us in the recent past, but I think you should expect to see a range in the kind of 60 to 80 zone going forward for the next few quarters. And I would point out though that overall despite the fact that the U.S. investment and corporate banking business was a little bit weak, the Canadian side of the business was exceptionally strong. And so overall, we don’t expect all of the cylinders to be firing at any one given time and so that’s why we have a nice diversified business mix with some really great contribution from the Canadian side of that business driving what we thought was actually a pretty good quarter overall.

That’s very fair. Thanks for the color.

Thank you. The next question is from Robert Sedran with CIBC Capital Markets. Please go ahead.

Hi, good afternoon. Cam, you have spoken in the past about participation choices I guess as Tom noted in his prepared remarks as well that the deemphasizing the third-party channels. And I am wondering if you can give us a little more color about how you look at the earnings and volume growth against that backdrop relative to sort of expectations and more on the personal side. The commercial side is I guess less affected by that and also doing quite well at the moment. More on the personal side, how you are thinking about volume and how you are thinking about the way forward?

Sure. Thanks, Rob. So you will know it’s a commercial driven strategy and on the personal side strong emphasis on primary customer growth. And so sometimes when you put those two things together, commercial focus and primary customers we do end up making choices at the margin third-party, you reference indirect auto is another one where we sometimes pullback a touch. In terms of how we think about growth in the business, it’s a primary customer focus emphasis in three areas for us right now. Number one is on deposit growth, number two cards, number three, mortgages and RESL, more broadly. And I mean each of those categories to be sure the focus is on gaining market share. And I think you can see in the market share performance of the checking like on ROD, we have got some gains in market share more recently focused primarily driven by an increase in marketing and some new offers we have. On the card side again, there is modest market share gain again driven primarily due to again marketing digital yield enhancing products as well with our small business launch this quarter. And on the RESL side, if you put together the focus we have on branch originated which we do primarily because the margins are thinner on the third-party and because there isn’t a primary customer option for us there. We are actually in line with the market now and you put the amortizing HELOC in with that and that’s about 4% which is in line with market and I think guidance in 1% on the quarter which would have us probably a little closer to the front of the pack. So the focus is on share gains in those three areas that I had pointed to. I am optimistic the performance we are seeing this quarter in those areas has us in a good position. I think a couple more quarters like this and you will start to see the year-on-year improvement that we expect and will bring us more in line with what you are seeing on the commercial side in terms of relative performance. I hope that helps.

It does. I might have thought with that kind of focus that you might be seeing a bit more of a drift higher in the net interest margin over the last four quarters it’s been relatively stable which I guess when you are transitioning your business and maybe not a bad result, but am I wrong in thinking the margins should be following that same trend here going forward?

I think the margin will and we are up six on the year, one in the quarter only. But we have also been doing well in cards and commercial lending which is contributing to the 1%, just to the one basis point. But I would expect as you say if we keep it up with the deposits in particular on the checking that you will see 2 to 3 basis point gains next quarter and I expect that type of quarterly trend to continue into ‘19 as well.

Okay. Thank you.

Thank you. The next question is from Meny Grauman with Cormark Securities. Please go ahead.

Hi, good afternoon. Just a question on the legal provision this quarter in U.S. wealth hoping to get that a little bit more color on the nature of that provision?

If you normalize for this, results in the U.S. are very good. But this is kind of an ongoing matter and there is not much more to say other than the fact that it’s not material.

Okay. Thanks for that. And then just caught my eye on Slide 6, just the digital engagement numbers and I am wondering if you could just talk to where you are steering in terms of those three areas that you highlighted in terms of sales through digital channels, active digital users and growth in mobile users, is there particular number targets that you are steering towards?

Sure. It’s – I am Darryl speaking. I would say that with respect to digital sales you see that we moved from 18% to 25% last year to this year. We set a public aspiration of 30%. We thought it would take us a couple of more years to get there. I actually expect it will probably cross that threshold going into next year at some point and so we may well decide to go beyond 30%, but 30% is the goal that we set digital active users, we would like to see that number in the mid to high-60s in the relatively near-term and the growth in active users was actually linked to the point above and if we can continue to see high double-digit growth in usage of 90-day usage number, active user number, then I think all will be well. Underneath your question I think is what are you doing to affect that type of activity, for us digital strategy has been core to distribution in North American personal business banking for a while. We feel that we are in a very good position given the size in distribution with an urban leaning to our branches. We may have fewer, but they are well-positioned. And if we can do very well through digital account opening card sales through digital etcetera, we think that we can grow at or ahead of market and we are starting to see some of that come through

Thanks.

Thank you. The next question is from Gabriel Dechaine with National Bank Financial. Please go ahead.

Good afternoon. I just want to follow-up on the U.S. emerging topic and then I have a follow-up for Cam on the Canadian deposit commentary. First on the U.S., the loan growth outpacing deposit growth that you are setting that as the bigger issue, we have seen that for a while now. I am just wondering is there a strategy in place to accelerate commercial deposit growth or something kind of off the wall that you are exploring to address your funding out there and we are running at wholesale funding exposures growing quite steadily over time?

So, it’s Dave – you are right in this – we have had really good solid loan growth. And we have not – and we have actually had good deposit growth too. It has not kept up with the loan growth, but it just take you back and to remind you the way our business works, the retail business has been and continues to be a very significant source of our deposit growth and it continues to be. We have a very strong retail franchise in the United States. It’s growing, we grew deposit 8% this year, it will continue to grow. And as Darryl mentioned in his earlier comments, we have more coming down the road in terms of our digital capabilities in the United States on the retail side, which is run by my partner Ernie and you will hear about more about that in our Investor Day. But to your other question, on the deposit side for commercial, we absolutely do. We have probably over the past have not grown the commercial deposits as fast as the loans and we will definitely move to do more of that in the future. We have strategies in place in terms of different industries that are more deposit heavy than they are loan heavy. So, we will do that, but we have no concerns to kind of just around the south that we won’t be able to very adequately fund ourselves going forward and continue the momentum.

Is there a – I am just looking at the – I mean, we are at a $14 billion I guess wholesale funding figure here, is there sort of a max that you want to get through?

I am not sure what you are looking at, is that in the U.S.?

Yes, actually it’s probably little less than that. So I have got the managed mortgages, it’s…

Yes, a lot of those are – it’s probably about 7 in terms of our – in U.S. dollars, our deposits are around 70 or so and our loans are about 77, because I think you are looking at the mortgages that we service.

Okay. And then just on the commercial like you are not, the quarter-over-quarter decline on the commercial cost balance, it doesn’t sound like you are willingly let go, because we are hearing on a lot more about competitive pricing in that higher betas?

Yes. Well, on the commercial side, there has been more competitive. I think the deposit growth is expected to continue on both sides, but we should have better deposit growth in the commercial side in the next quarter and we continue to focus on that as well.

Okay, great. And then Canadian business for Cam, the deposit growth is your number one priority, I have heard that from pretty much all the banks. I was just wondering and I get that, but I am just wondering what kind of strategies do you find are working and which ones aren’t, because I get all the offers through this and we can get $100 instead of a checking account or whatever and then various forms of like that here or there whatever, where do you see yourselves playing?

Okay, thanks. I guess the first thing I would say is that the number, the number at 1.2 looks not as strong relatively that’s got term decline in it. And as you know the broker channel is a little thin and a little more competitive. I expect that would come up a little bit over the next little while, but the underlying checking account which is the one I think you are mainly focused on is performing I think well against market. It is a priority. And I am not at all surprised to hear you say that others are focusing on it as a priority. I’d probably go back to the comment I made with respect to the digital channels and we made a commitment a couple of years ago to make sure that beyond cards, everyday banking and savings accounts could be opened on the mobile phone in a matter of minutes. And that coupled with I would say a 50% increase in marketing spend in that area has been really helpful to us in achieving the double-digit primary customer growth we have had in the past year. But relative to other markets like the United States, I would say it’s maybe perhaps not as competitive and there is still room to grow here for the right offer and for the right branch network that’s prepared, but I think it’s fair to say that competition for these accounts and these funds will grow through time.

And that maybe competitive offering or promotional stuff that you might do is factored into that margin commentary you made earlier?

It is, yes.

Alright, thank you. Have a good day.

Thank you.

Thank you. The next question is from Sumit Malhotra with Scotia Capital. Please go ahead.

Thanks. Good afternoon. First, probably a couple of number ones for Tom, when you took the restructuring charge last quarter you had indicated that the expectation was about $185 million in expense savings over, I think it was over the coming year on a run-rate basis. Especially when I look at your corporate segment this quarter, it seems like you had a pretty quick decline in expenses. It was indicated that maybe all of that wasn’t run-rate, so just wanted to ask you, of that $185 million, how much do you think we haave seen so far and specifically is that the drop we are seeing in corporate?

Thanks for the question. We did guide to a number of around $185 million, which we will achieve in the middle of next year. In the current quarter on an annualized basis, the number would be more like $85 million to $90 million and it will build from that number up to the $185 million through Q2 Q3 of next year. In terms of corporate, the corporate results were better than average by around $30 million, a number of things contributed to that, none of them individually that significant on the expense side with some benefit from restructuring, but we also had real estate gain in the number that’s helped on the expense side. And on the revenue side, treasury was a little better than usual and we also had a higher level of security gains. So that combination produced the better overall corporate results.

But the expense drop is some of the benefit of the restructuring there?

It is and also the real estate.

Okay. And this one is as probably for you to, because it’s kind of esoteric and that’s usually the CFO’s job, Page 11 of your supplement the trading revenue by product, the column you call the mysterious other column is up $40 million sequentially and then you talk about runoff of structured credit and hedging exposures, I don’t think there is any structured credit runoff these days. So what exactly is this and then why was it such a decent size move in the quarter?

Yes, there isn’t any structured credit that is a legacy comment. We did have some larger mark-to-market items related to our treasury operation that I think are in that line. And that is what’s contributing to the stronger performance there. Some of that is offset because of the hedge. So the bump you are seeing there doesn’t flow to the bottom line for the most part, because there is an offset, but it’s treasury that’s really driving that in the quarter.

So that’s some of the corporate segment revenue?

That’s correct.

Okay. And I guess you can update Note 3 to take out the structured credit comment?

We will take a look at that. It could be that in the farther back comparable period it’s still relevant, but we will check it.

Okay. Last one for me and this is probably for Darryl it wasn’t that long ago that at least for a few years I was wondering whether that 15% ROE objective for BMO was going to have to be adjusted lower, I guess, it’s been a while since we have seen it. You got there this quarter. And the obvious question comes to the sustainability, but so far on this call we have heard your management team talk about higher NIM in Canada, higher NIM in the U.S. credit in check, expenses in check, U.S. capital markets earnings going higher. So really, I think the question that’s more in my mind is what do you see as the impediments to that 15% ROE objective that you hit this quarter not being achieved in the near-term, is there something in the way of investment spend or maybe just leave it to you is getting there this quarter the start of what you expect will be 15% plus for BMO as a run-rate level going forward?

Sumit, thanks for the question. We did set that 15% target sometime ago. I am not sure how to react to your confidence level and that’s achieving it at one point in time, but I would get past that and go straight to the forward part of your question. This is what we set out to do the businesses are operating well, they are operating against the agenda that we set with the 2.9% operating leverage that I talked about earlier and all four of our business groups contributing to that operating leverage with all of the details behind it that you are hearing from the management team in this call. The short answer to your question as we look forward to the future is if the markets remain constructive I don’t really see anything that will stand in the way of us delivering on that 15%. Of course, markets do change. If credit environments change dramatically, we will have the different conversation, but assuming the market that we are in right now, the execution that we are prosecuting right now against the pipelines that we have. I don’t see anything in particular, because if you consider the spend you have asked a good question on spend, if you consider the spend that is included in the 15%, I mentioned it in my remarks, but in case it was missed we have got a double-digit spend on the technology agenda growth year-over-year, but approximately 2% in constant currency of our all other expenses. So you would expect something like that give or take to continue into the future and assuming the markets are as constructive as they are right now, I don’t see why we would falter on our 15% over time there might be a quarterly variation around that, but as I look over the next little while I would see that to be a number that we are going to shoot for.

Thanks for your time.

Thanks Sumit.

Thank you. The next question is from Scott Chan with Canaccord Genuity. Please go ahead.

Good afternoon. I just want to go back to the Canadian margin or NIM, if I look at the past four quarters, it’s been pretty flattish and I don’t know if I kind of caught up, but is the outlook stable or is it increasing on the margin side in Canada?

It’s stable to increasing. It’s Cam speaking, I think it will be up a couple of points in quarter four and would continue in a similar trajectory through 2019.

Okay, great. And perhaps for Darryl, just with the excess capital, there is lot of talk about U.S. P&C, but what about wealth, is that in the area of interest considering your competitors have been pretty aggressive in that space recently?

Yes, those are both areas of interest. Scott, I mean we are looking at growing the bank and I won’t – you all do a good job of asking out this question from time-to-time and I might foray you with the response, but we don’t comment on any specific situation as you know. We are looking to grow the bank. Those are two areas in particular. We are looking to grow the bank. So with that, I will just remind you that we take a pretty disciplined approach to everything that we look at and will deploy capital as the opportunities meet the criteria.

Okay, good enough. Thank you.

Thank you. The next question is from Nigel D'Souza with Veritas. Please go ahead.

Thank you. Good afternoon. I had two questions for you. So first if I could refer you to Page 23 of your supplement and I have question on the commercial loan balances. So, sequentially your commercial loan book is about up about $6.5 billion relative to Q2 and when I look at the industry breakdown, it appears that the financial segment, particularly non-bank financial services is driving a fair bit of the increase nearly half with non-bank financial loan balances up about $4 billion sequentially. So, is there something particular that you are seeing, I assume this is out of the U.S., but is there something particular you are seeing in that sector that’s driving that growth and how sustainable you think that is going forward?

Yes, this is Surjit. I will answer your question. That financial segment sector that you see there has a number of sub-sectors. And one of the sectors that we had higher drawings in this last quarter, but by the way those drawings were in the investment grade and of a short-term nature, but this is not unusual that’s happened in the past, but generally there has been an offsetting reductions somewhere else, because there is so many sectors in so many moving parts. And this time it didn’t go that way, so you have seen a large increase, but there is nothing there that points to anything that would indicate that there is a particular sector that’s gone up all the change in strategy.

Okay. So we should expect more of I guess a run-rate that’s in line with your historical basis and not take this recent sequential increase as more of a trend going forward with that specific sector?

That is correct. From time-to-time there will be drawings that will cause the number to change, but as I have said it just happens that this time there was not much to offset the increase in one particular sub-sector.

Okay, great. Thank you. And my second question has to do with a comment made earlier, I wanted to make sure I heard it correctly, there was a comment on amortizing HELOCs and is it accurate to state that the comment was out including amortizing HELOCs in your growth rate, the rest mortgage book will be up 4% versus the current growth rate of roughly 1% is that right?

It’s Cam speaking. Yes, it would be about 4%, but that would be compared to the 3% if you don’t include the HELOCs, the 1% is where we are on a quarter basis if you take branch originated mortgages plus the amortizing HELOC. So it’s a 1 quarter-on-quarter and a 4 year-on-year with the two together and if you are just looking at the branch originated no HELOC it’s 3 and 0.7 quarter-on-quarter.

Okay, got it. And then just a quick follow-up to that, are you seeing any acceleration in the conversions for amortizing HELOCs or amortizing HELOCs among your retail customers or is that run-rate roughly the same as has been the last few quarters?

It’s stronger this quarter than last quarter but that’s what we expect in Q3 if you look at it over 4 or 8 quarters that’s in line.

Okay, great. Thank you.

Thank you. The next question is from Mario Mendonca with TD Securities. Please go ahead.

Good afternoon. Tom, could we go back to the restructuring charge taken last quarter, the $260 million did you provide a schedule outlining how that’s been used so far or how much has been used in the first quarter since the charge?

I can update you on that. So the charge was about $260 million or was $260 million, about 85% of that related to severance and we have left accrued of the $260 million about $190 million.

You have gone through I guess $70 million would be fair statement?

Yes, that’s right.

When do you expect to be through at all?

We will be through at all by Q2 of next year. So we are basically at full run-rate as we exit Q2. So the accrual should be gone by that point.

That makes sense. Another similar question probably for you Tom, I try not to look at this quarter-to-quarter, because I know it can bounce around. Referring to the fairly substantial growth in liquid assets, some referring to repos, cash resources, securities, ex-trading, that the increase there over the last three quarters, Q1 Q2 and Q3 has been material. And I am trying to understand what’s driving this, because it is having an effect on the all bank margin it’s coming in? And I get it, I understand why that will be the case, why that margin be coming in, we all calculate NIM on an all-bank basis differently, I don’t expect anyone’s call this is precisely the same way, but maybe Tom, you can talk about why we are seeing this and it’s been for three straight quarters?

Yes, it’s a fair question. We have had higher growth in liquid assets over the last three quarters and in the overall balance sheet and the growth is good in the overall balance sheet. That really has been the factor that’s moved the total bank NIM down quarter-over-quarter and that’s because the spreads are lower. I’d say three factors contributing to the growth. One is just client activity in our capital market business, providing liquidity to clients is our core service. We have seen good client flows and that drives a part of the increase. We have increased the amount of supplemental liquidity we are holding as a bank. That’s done through our treasury group and has been a contributor. And then last point is we will have closing in the fourth quarter, the U.S. capital market acquisition that we disclosed a little while ago and that’s our broker-dealer focused on particularly mortgage backs and asset-backed securities in the U.S. the name is KGS and kind of to glide into that acquisition we did increase some of our participation in the market in advance of that. So, you won’t see as much of a pop with the acquisition, but we front-end loaded some of the balance sheet associated with it.

Tom, what you are referring to in the second point, you said supplemental liquidity had increased?

That’s liquidity we hold for a rainy day. So just excess liquidity we keep from our risk management perspective.

Are you done doing so?

I wouldn’t expect that to grow at a higher rate than the overall balance sheet going forward.

Thank you.

Thank you. There are no further questions registered at this time. I would now like to turn the meeting over to Darryl White.

Thank you, operator and thank you all for your questions. I will close with a quick comment to reinforce the confidence that we have got in the momentum in all of our businesses. The bank is strong, diversified and growing. And as you have heard today, we are executing against the strategies that position us to grow in our target markets, which is leading to accelerated growth and improving efficiency. So we are on track to achieve the financial targets we set out at the beginning of the year and sustainable growth over the longer term. Thank you everyone for your time on the call today. We look forward to speaking to you again at our Investor Day in October.

Thank you. The conference has now ended. Please disconnect your lines at this time and we thank you for your participation.