Good morning, and welcome to the BMO Financial Group Q2 2022 Earnings Release and Conference Call for May 25, 2022. Your host for today is Christine Viau. Please go ahead.

Thank you, and good morning. We will begin today's call with remarks from Darryl White, BMO's CEO; followed by Tayfun Tuzun, our Chief Financial Officer; and Pat Cronin, our Chief Risk Officer. Also present to take questions are Ernie Johannson from Canadian P&C; Dave Casper from U.S. P&C; Dan Barkley from BMO Capital Markets; and Deland Kamanga from BMO Wealth Management. As noted on Slide 2, forward-looking statements may be made during this call, which involve assumptions that have inherent risks and uncertainties. Actual results could differ materially from these statements. I would also remind listeners that the bank uses non-GAAP financial measures to arrive at adjusted results. Management measures performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance. Darryl and Tayfun will be referring to adjusted results in their remarks unless otherwise noted as reported. And with that, I'll turn the call over to Darryl.

Thank you, Christine, and good morning, everyone. We continued to deliver good financial performance this quarter, driven by broad-based customer loan growth in our North American P&C and Wealth Businesses and solid results in our market-sensitive businesses. Second quarter adjusted earnings per share improved to $3.23, with continued positive operating leverage and strong pre-provision pretax earnings growth of 6%. Year-to-date, PPPT is up 12%, driven by strong revenue growth and continued expense management that includes targeted investments for future growth. With operating leverage of 3.3% and an efficiency ratio of 54.7% year-to-date, we are delivering on our commitment for positive operating leverage for the year. This morning, we also announced a dividend increase of $0.06 to $1.39 per share, an increase of 5% over last quarter and 31% over last year. We continued to strengthen our capital, including executing the planned equity issuance and are well positioned to support both client-driven balance sheet growth and the Bank of the West acquisition. ROE remains our key area of focus, guiding our strategic investment decisions as we manage the bank and our businesses for sustained profitable growth. Year-to-date, ROE was 17.2%, up from the same period last year as we continue to drive initiatives to improve the profitability of our businesses. These consistent results demonstrate the ongoing value of our advantaged business mix, including strong contribution from our U.S. segment and the dynamic execution of our purpose-driven strategy. Our strategy is designed to deliver sustained performance through the cycle, including disciplined capital allocation decisions. Our ongoing investments in talent and technology have delivered resilient performance through the pandemic and we believe will drive sustained performance in a rising rate environment. The current backdrop presents both risks and opportunities for our customers and for the bank. In the face of some economic uncertainty,…

Thank you, Darryl. Good morning, and thank you for joining us. My comments will start on Slide 10. Second quarter reported EPS was $7.13 and net income was $4.8 billion. Adjusting items this quarter are similar to last quarter and include revenue of $3.6 billion pretax from fair value management activities related to the acquisition of Bank of the West to mitigate the impact of higher interest rates on the expected goodwill and capital at closing. The details of adjusting items are shown on Slide 36. The remainder of my comments will focus on adjusted results. On an adjusted basis, EPS was $3.23 and net income was $2.2 billion, up from $2.1 billion last year, driven by strong pre-provision pretax earnings of $2.9 billion, up 6%, reflecting good year-over-year revenue growth across our diversified businesses and disciplined dynamic expense management. Efficiency improved to 55.6% and return on equity was 15.7%. Total PCL was $50 million, and Pat will speak to these in his remarks. Moving to the balance sheet on Slide 11. Average loans were up 9% year-over-year and 3% quarter-over-quarter. Business and government loans increased 10% year-over-year or 13% excluding the impact of declining balances in our non-Canadian Energy portfolio and deconsolidation of our customer securitization vehicle reflecting strong commercial loan growth in Canada and the U.S. Consumer balances were up 9% from the prior year, reflecting strong growth in our Canadian P&C and wealth businesses. Average customer deposits were up 7% year-over-year with growth across all operating groups. Looking ahead, we expect continued strong loan growth in our P&C businesses in the high single digits on a year-over-year basis reflecting strong diversified pipelines. Turning to Slide 12. Net interest income was up 9% from last year and up 12% on an ex-trading basis with growth across all operating…

Thank you, Tayfun, and good morning, everyone. We were very pleased with our risk performance again this quarter and saw continued improvement across many of our key portfolio metrics. This strong performance reflects the combination of disciplined risk origination from prior periods and strong risk management disciplines through time. Starting on Slide 27. The total provision for credit losses was $50 million or 4 basis points, up from a recovery of $99 million or negative 8 basis points last quarter. Impaired provisions for the quarter were $120 million or 10 basis points. And while this was up from very low impaired provisions of $86 million or 7 basis points in Q1, impaired provisions remain well below pre-COVID levels. Similar to last quarter, the strong impaired loan performance is due to low formations and low delinquency rates. We recorded a release on a provision for performing loans of $70 million this quarter. We did recognize the potential for economic headwinds by increasing the weighting of our adverse scenario as well as reducing parts of our economic outlook in our base case scenario. This was offset by positive credit migration again this quarter as well as a reduction in the judgment we have been applying specific to COVID-related uncertainty. Given the strong credit profile of our current portfolio and our forecast for impaired losses, we remain comfortable that our $2.29 billion of performing loan allowances provides adequate provisioning against loan losses in the coming year. Turning to the impaired loan credit performance in the operating groups, we saw low loss provisions across all business segments again this quarter. In Canadian Personal and Business Banking, impaired loan losses were $79 million, flat relative to Q1. The U.S. Personal and Business Banking business had impaired loan losses of $1 million, down from $4 million…

[Operator Instructions] The first question is from Ebrahim Poonawala from Bank of America.

I guess question, -- Tayfun. So one, you mentioned margin expansion in both P&C and consolidated bank, if you could quantify that a little bit for us? And then in particular, just talk to us a little about U.S. deposits in terms of -- is there any subset of the growth that you've seen in the last couple of years where you expect deposit outflows? And just how do you expect the behavior of deposits? I mean you mentioned about deposit betas, but given just the magnitude of rate hikes we're going to see in the U.S. in the second and the third quarters, just give us a trajectory of where you’d say how quickly do you think deposits begin to reprice? And how you are thinking about just the risk of deposit outflows on the back of that?

Thank you, for the question, Ebrahim. So I'll start with the latter part of your question, and I'll come back to the NIM question. In terms of deposits, outflows as well as deposit pricing, we are pretty much on target on model with our expectations. In this environment, we have been expecting, first, the deposit growth has slowed down. And then starting in the U.S., we were expecting to see outflows. As both rates are increasing, we're still seeing opportunities that our clients have to place the money elsewhere in their commercial businesses as well as in Personal Banking. So you can see the numbers on a quarter-over-quarter basis deposit growth either slowed down, flat or some declines in the U.S., very much in line with what we expected. I suspect that as the central banks continue to aggressively increase interest rates, deposit betas are going to move up. And it's difficult to necessarily move the dial all the way to the end and say whether they will end up higher than the last rate cycle, but it is likely that they will end up higher than the rate cycle based on what we see today. But in terms of our numbers, what guided us when we said we see NIM expansion into the second half of the year, and I will extend that also into 2023, all of it is in line with what we have modelled. I do expect NIM to meaningfully expand from here in Q3 and in Q4. We may see something close to what we have seen this quarter in our ex-trading NIM, which was 5 basis points in the next couple of quarters. And then based on the rate increases that we're expecting, I think we will continue to see the expansion into 2023, which when you put it all together with our guidance of high single-digit loan growth this year, potentially moving into even next year, that bodes very well for net interest income growth. We had 9% growth year-over-year this quarter. You should see that number to remain very strong for the rest of the year as well as 2023.

Got it. And just one follow-up, Tayfun. So I understand the hedging to mitigate the goodwill impact at deal close. Does a larger goodwill also imply that the purchase accounting earnings will be higher than you expected. As a result, the EPS accretion, if you add that, will be meaningfully higher than what we announced or am I missing something?

No, everything else equal. The higher rate mark will move more into the future quarters after we close the transaction.

And can you quantify how much higher would that be like things were at quarter end, of the day lows at quarter end?

Well, assuming that we have a $3.5 billion pick up this quarter on top of about $500 million last quarter, assuming that basically is the change in the rate market itself, all of that money would be accreting back to income -- the rate mark will be higher by that much.

Got it. So that will come through the life of those loans. Got it.

The next question is from Meny Grauman from Scotia Capital.

Just a question on Bank of the West. Bank mergers in the U.S. are facing more scrutiny. I think you have the hearing scheduled for July. I'm just wondering, is it reasonable to expect a delay here for the deal close, and why or why not?

Meny, it's Darryl. We don't expect delay, I would say to you everything that we thought might happen over the course of the year when we announced the transaction on the 20th of December is basically playing out according to expectations, including our capital raise, including the submission to various regulators, including the process as we see it, the meeting that you're referring to in July is a public meeting. It's not a hearing. It's normal course. That was expected as well. So as we sit here today, we don't really have any -- it's kind of boring for you. I know, but we really don't have any update relative to what we've said before, things are playing out as we expected to -- as we expected them to and our best guess remains exactly what we said when we announced the transaction, which is that we would close towards the end of the calendar year.

Got it, Darryl. Yes, boring is -- I guess, boring is good. all considered. But just a question on capital, partly as it relates to the deal. When you announced the deal, you talked about 11% or higher, given how the world has developed since then, should we be thinking about the higher part as being more operational now? How are you thinking about capital on deal close?

Meny, I'll give you my sense and Tayfun might want to complement here. We did say that. We said that we expected based on our models at the time that the first quarter post closing, we would be at 11% or higher. As we look at the developments over the 5 months that have followed and we look at our models going forward, we stand by that. In fact, if anything, we might be a little bit ahead of that by some of the capital actions, including the equity issuance, which was a little higher than we went out for. And when we look at where we are at closing and then post closing, that 11%, as I said, we stand by it. And in fact, it could be -- it could be a little better than that, it could be 11.5% in the first quarter or something like that. Tayfun, would you add to that?

Yes. I mean, but those are just going back to your question, they really don't relate to necessarily our world view of what the world will look like at the time. That's just where we see our capital ratios to be looking at the movements today. So we have not necessarily increased our capital target -- management target at this point.

So just to clarify, if you were at 11%, you would be comfortable with that. The regulator would be comfortable with that as far as you understand it?

Yes, that would be our expectation today, yes.

The next question is from Scott Chan from Canaccord Genuity.

Sticking to the Bank of the West theme or update. Tayfun, you talked about PTPP of $450 million to $550 million over the next 3 to 5 years with the split -- with commercial and personal. I assume that is all majority incremental revenue and is that cumulative as you already talked about the expected cost synergies within the transaction?

Yes. So this is -- Scott, it is net revenue synergies. So there is going to be some expenses associated with it, but this is a net number that we are projecting and we are projecting that to be a run rate increase after 3 to 5 years. So it's not necessarily over a 5-year period of time, a cumulative number. When we get to towards the end of that time period, we expect to add net revenues between $450 million to $500 million -- $550 million. And just 1 more comment. As you can appreciate, because of legal restrictions, we don't have full access to their clients' information and data. Our teams have done a lot of work around our products compared to their products, their markets, et cetera. So this is actually a very good perspective on the uptick in our performance as we expect. But I have to say that I am optimistic that once we actually get full access to their client base, this number has potentially more room on the upside.

Okay. And the 40% in Personal and Wealth, is that more weighted to the latter in terms of wealth management, do you think?

It's about even actually, to be honest with you it's between Personal Banking and Wealth Management.

The next question is from Gabriel Dechaine from National Bank Financial.

Yes, Darryl, I just want to follow up on your comment there. It sounds like you might be expecting an 11%, 11.5% post-close quarter 1 ratio. That's surprising, I guess, considering the backdrop. I mean it's a lot different than what we had in December, of course. Are you -- with all I got on your estimates for internal capital generation, are you anticipating to pull some strategies out of your back pocket like securitization activity or portfolio of sales or anything of that nature? Or you're still anticipating getting there or even better than the 11% in normal course?

Yes. So Gabe, I should course correct if I miscommunicated earlier, I think I heard you say that that's different from what we expected 3 months ago. I'll be clear, that's exactly what we expected 3 months ago and 5 months ago when we announced the transaction. So the message we're trying to give you today is that we are not -- we are unchanged in our perspective of the capital outcome post the transaction after the first quarter. And the only tweak I would make to that is, if anything, a little bit more capital based on where the models have come in and the outlook that we've got today. And as far as actions are concerned, the second part of your question, we're continuing along in the normal course. The balance sheets are being absorbed in the way that we expected them to and the customer behavior is what it is as you see the loan growth. We completed the equity issuance, the DRIP is in place, as you know, and it's coming in a little bit stronger than we had modeled. So all told, it round trips to basically what we had expected all along, if not a little bit better. That's the message we're trying to leave you with.

Yes. Maybe I misworded it, I meant the environment has gotten different, not necessarily your messaging. It's consistent despite that change. Okay. Now about expenses, and Tayfun, I believe I heard you recommitting to a lower expense growth rate in the second half? Because I've got the Q4, you were guiding to flat expense growth for the full year Q1, you bumped that up to 1.5%, and now you're not changing that. This quarter, we had, what, 2% expense growth a bit above that, a few variable comp, but nothing on the wage inflation side that might actually mention expense growth a bit higher than what we thought 3 months ago.

Yes. Thanks for the question, Gabe. So just to set up the environment, obviously, as I said, this was the eighth quarter in a row that we delivered positive operating leverage, and we are committing to that. So I mean it may not be every quarter, but that's our commitment over reasonable periods of time. We did have 2% quarter-over-quarter increase. My comment about the second half continuing a more moderate expense growth into the second half of this year relates to the fact that when we started ramping up our investments in technology and sales force, that happened more in the second half of last year. So therefore, we knew that the first half of this year was going to be a bit more challenging. And now going into the third and fourth quarters, you should see similar numbers that you saw from us this quarter, that 2% type of number, a relatively more modest expense growth. In that number, I should say that last week, we did announce a salary adjustment for our employees between level 2 and level 7 of 3%. We are seeing more inflation on the salary side, and we made that adjustment last week. My outlook does include the impact of that increase, which is an incremental amount to our discussion back in February. As you reminded us, we did guide to about 1.5% year-over-year expense increase, excluding performance-based compensation. With this increase, we're now going to take our expense outlook year-over-year, excluding the impact of performance-based comp to about 2.5% because that sort of is the incremental amount. We are seeing more movements in salaries, but at the same time we maintain our commitment to positive operating leverage. We’re spending a lot of time internally assessing the magnitude and the returns to our investment and we’ll ensure that as we watch the revenue environment we dynamically manage our expenses accordingly and still achieve that positive operating leverage.

Okay. About 1.5%, 2.5% now?

Correct.

The next question is from Doug Young from Desjardin Capital Markets.

Just in U.S. banking, it seems like there was a sequential slowdown in commercial loan growth, and I do get that it probably bounces around a bit. So maybe there's nothing in there. But I'm just -- I'm curious as to what you're seeing and then what the pipeline is telling you from a loan growth perspective over the coming year. And maybe you can kind of sprinkle just in terms of utilization rates, where they stand today and where you expect them to kind of migrate to.

Sure. This is Dave. Actually, in our commercial business in the U.S., we had almost 3% quarter-over-quarter loan growth on the commercial side. So very positive there and close to 14% if you exclude ex-PPPT year-over-year. So really strong, and it continues to be strong. And it's strong across both geographies and our sectors, particularly if there's been inventory build, which has increased our utilization and that's despite very, very low utilization in one of our businesses -- two of our businesses, our truck financing and our auto financing. Overall, though, utilization continues to go up as clients build their inventory and see a pretty positive near-term future for the back half of the year. So I would not characterize it as slowing down. I would say it's continuing to go up. And the last thing I'd say about this is really over the last 8 quarters, we've had 1 quarter where we've actually lower loan growth. And that does not -- that's including the PPP. So we've continued to build throughout this entire period, adding new customers, growing geographically, adding to our sectors. So I'd say it's really, really positive. But tell me if I didn't answer your question completely, if you've got any follow-up.

No. Well, given the macro backdrop, we get lots of questions on what is going to happen with commercial loan growth, and it just doesn't feel like in your discussions and your comments, and you're kind of talking to clients constantly that there's any real change in the outlook. Is that a fair characterization?

I'd say a couple of things. There's certainly more uncertainty given some of the continued issues that we all know about, supply chain inflation. But the demand for our clients' products still is outstripping supply. So they're still growing, they're trying to keep up, and the other part of it is there continues to be, both in Canada and the U.S., more movement to onshoring, less reliance on foreign sourcing, more capital expenditure to improve productivity through our manufacturing businesses and still a growth. And I think the North American market, U.S. and Canada, is going to continue to be pretty positive. I don't know, economically, if there's a downturn that's obviously going to impact us. But in the near term, we really don't hear that from our clients. They're still trying to grow and catch up in some cases in terms of still lower inventories.

And then while I have you, just the sequential decline in noninterest revenue in the U.S. Can you break that out a little bit? Like I think I'm assuming that's a result of lower investment gains? Or is -- can you talk a little bit more about that?

Sure, sure. It's not investment gains at all. There are no investment gains in our P&C business. There never are. Those -- that's mostly a Canadian issue. So the issue, though, is in our first quarter, and really, particularly in December, we had very, very strong syndication gains. And that's -- as you recall, at the end of the last year, a lot of transactions try to get done before calendar year-end. So that hit us in the first quarter. And we were up probably 15% or 20% in that business. And that's -- the syndication business is very strong for us. But that's really what the decline was. I think our more normalized NIR would be what we hit this quarter. There'll be some ups and downs. But we have a lot of other parts of that business, our M&A business, our treasury management business, those are all fee-related. And so I think it's still pretty positive, but that was the one issue. It's not securities gains, but it is syndication fees in our loan business.

The next question is from Paul Holden from CIBC.

So first question is regarding inflationary borrowing cost pressures on commercial clients. And we've seen a number of public companies come out with disappointing margin numbers. Just wondering if you're seeing any early indications of profit pressures on your customers, and then secondly, sort of how are you monitoring for that going forward?

It's Pat. I'll start and then maybe others can jump in. I would say the short answer to your question is no, we're not really seeing that yet. In fact, we're seeing – in fact the opposite. We're seeing this quarter, again, we saw a positive credit migration across the wholesale portfolio and broad-based in virtually every sector. And that's been a continuation of positive migration that we've seen over the course of the past 6 quarters in the wholesale business. So the early signs in credit migration, in terms of credit, in terms of impaired formation, you would have seen impaired formations extremely low again this quarter, and in fact, way below pre-COVID levels. And so that's another sign that would suggest that we're not seeing those kinds of things happening. Now with that said, obviously, we're guiding towards a normalization in rates. And I think some of the wage pressure, debt service cost pressure and energy cost pressure is one of the reasons why we think that normalization will occur. But there's always a lag to that, and that's why we're forecasting it to happen towards the end of this year and into next year is probably when you'll start to see some of those effects. But we don't see a material step function in terms of impact. We just see that as a catalyst to get us back to something that feels a bit more normal versus the really abnormally good conditions we're experiencing right now.

Okay. I understand. And then I want to go back to the discussion on CET1 and Bank of the West from a little bit of a different angle. I think there's a plausible scenario where the forward-looking indicators could change significantly between now and year-end, again, possible scenario, not fairly the absolute scenario, but possible scenario. What would that do for CET1? Just from the Bank of the West perspective, understand what it might do to BMO CET1. But with the credit reserves you've built into the acquisition, could that absorb higher credit density or you might have to raise more capital to offset that type of scenario?

So Paul, we only have a couple of quarters here ahead of us. So there's not a lot of time between now and closing. Yes, as you said, things may change, conditions may change. And depending upon the analysis at closing, those analyses are all performed at closing date, the way they look at closing date. We talked about the fact that we have pretty much neutralized the impact of interest rates. The credit mark could get bigger. We could have a higher second day reserve if conditions change meaningfully. But I don't expect that to necessarily have a significant impact on our capital ratio as we sit here today. We feel actually -- Darryl said earlier that our capital forecast is actually a little bit ahead of where we thought we were going to be when we announced the transaction back in December. So I feel comfortable that the numbers that we are looking at are quite adequate even if conditions change a little bit here between now and then.

The next question is from Mario Mendonca from TD Securities.

Tayfun, just maybe a quick detail question. Those syndication gains that were a little lower in the U.S. business this quarter, where is that reported in your fee income? Like is that just in the line referred to as other revenue?

Lending. It's in lending fees, Mario, yes.

Okay. I see it there. That's why it was down. Okay. Now a more broad question. Looking at the nature of loan growth, commercial real estate construction is still pretty good or, in fact, improving again and fairly strong growth to nonbank financial services companies. I would have thought with the environment changing in Q2, that growth in that area, so to financial sponsors and private equity would have started to slow somewhat. What are you seeing that's continued to drive growth in financial services lending nonbank? And the growth in commercial real estate, what's driving that? Why is that sort of coming back strong?

Dave, do you want to take that one?

Sure. Well, commercial real estate continues to be a very good business for us on both sides of the border. But as you know, we're still on both sides of border pretty significantly underweight in that business vis-a-vis our competitors. So it's gone -- it's been good growth, but it doesn't impact as much as it would with others as we grow there. It's still positive. We are still seeing good opportunities. I think it will probably slowdown in some cases. But on both sides of the border, we have really deep relationships with strong long-term real estate clients. And I think that will still continue, although there's certainly some slowdown in some businesses where we haven't been as active. So it won't impact us as much. As it relates to the financial side, I just want to make sure you're clear on that. The growth in -- and that's mostly in the U.S. is all in the investment-grade side of our business. So it's providing capital for financial sponsors that are backed by capital calls. It's not -- the growth that we've seen has been much more modest in what we were when financing individual portfolio companies. And that business will ebb and flow based on transaction activity. But I wouldn't want you to assume that, that business that's grown is not -- that's all -- the growth is almost all investment grade. Does that help?

Yes. And I wasn't assuming that, that was leveraged lending. I had a feeling that was still the high-quality stuff. But even that business, are there indications that activity with private sponsors or financial sponsors and private equity firms is starting to moderate?

It's a good question. There's still -- as my partner, Dan Barclay, reminds me all the time, there's still a couple of trillion dollars of unused capacity out there. It's probably slowed down a little bit since year-end. But we still see pretty good backlogs and the business in the commercial side is clearly more in the mid-market side. So not the mega deals. So in that area, that continues to be strong area. And I think actually, that will get probably more time with sponsors over time because the multiples in those businesses are a little bit smaller, a little bit lower. So I think it could certainly slow down as activity does. But I would not underestimate the ability of our financial sponsor group, our clients to continue to invest and do well. But it goes up and down, and it's at a good point right now. Is that helpful?

The next question is from Lemar Persaud from Cormark Securities.

I just want to circle back to the net revenue synergies on the back of the last year. So the $450 million to $550 million, is that Canadian dollars or U.S. dollars? And how is that expected to come in, more front-end loaded or back-end loaded?

It's in U.S. dollars. At this point, clearly, there's going to be a ramp-up towards the back end of that time period. But I think when you get to year 3, you are going to have a sizable portion of that coming in through the run rate of revenues. Again, as I said, if you can just give us a quarter or 2, we will give you a more specific perspective on both the time line as well as the dollars.

Okay. That's fair. And I guess then just to clarify, is that -- just because you mentioned it was a net number. So this should be this $450 million to $550 million, I don't want to beat it to death, but that should be in addition to the, I guess, $670 million expense synergy guidance that you guys offered at the time of the deal. Is that fair to suggest?

That is correct.

Next question from Mike Rizvanovic from Stifel GMP.

Maybe just a quick question for Pat. Just looking at the historical performance on the PCL ratio for Bank of the West longer term. Obviously, a very different experience than what BMO's reporting in the U.S. business. And I'm just wondering when you combine that business, I'm not sure if the book has been sort of changed or will be changed materially to sort of gravitate more toward your comfort level on credit risk, but what does that do to your PCL ratio in like a downward scenario if we do get a recession? And maybe on a run rate basis, is it incrementally positive, negative or somewhat neutral?

Yes. Thanks for the question, Mike. Actually, I don't actually agree that their credit history is significantly different from ours. When I look at their provisioning rate over the course of time, it's actually reasonably consistent with when we look at their credit profile as well, both in consumer and wholesale, we see it as very consistent with ours and a lot of overlap in terms of the sector exposures and even the weightings of sectors, we see pro forma, the weightings that we're going to have in sectors will be reasonably consistent with what we've got actually right now. And so we don't anticipate making material changes. The only place that they have a slightly different exposure to us is in the RV and marine segment. That segment performed differently during the financial crisis, so maybe that's what you're referring to. But we like that business as well. We think it's a nice complement to the consumer portfolio. And I think I have to reiterate, too, that in both the consumer and the wholesale segment, their starting position is the same as ours, which is a really, really strong credit profile, particularly in consumer. And so we're not concerned at this point in time with the merger of their risk profile and ours. We see it as very similar, quite complementary and don't anticipate making any material changes. And it certainly would not affect my guidance in terms of forward PCL.

Okay. It was actually the financial crisis period. So you're saying that, that business is something that you still like and I'm guessing that -- I guess the adjudication in that business has changed over time?

Yes. It's hard for me to answer that question. We don't -- I don't -- as Tayfun said, given some of the legal restrictions, we don't have deep detail on the history of that business. But we know a fair bit about it and we've done a lot of due diligence on the RV and marine portfolio. We like the business, and we like their expertise there. They've got some really, really well-developed analytics. And so we would anticipate continuing to remain there and would not anticipate it materially affecting our risk profile going forward.

That concludes today's question-and-answer session. I would like to turn back the meeting over to Mr. Darryl White.

Well, thank you, operator, and thank you all for your questions. I'll conclude very quickly with a few key themes. Number one, we continue to deliver good financial performance in the second quarter. Number two, we're strategically investing to deliver growth and efficiency over time. Number three, our superior risk management remains a differentiator and we believe it will continue to be. And number four, we have an advantaged business mix that's positioned to take advantage of the global trends that I talked about at the beginning of the conference call. So thank you all for participating in today's call, and we look forward to speaking to you again in August.

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