Good morning, everyone and welcome to Scotiabank’s Fourth Quarter Results Presentation. My name is Adam Borgatti, Vice President of Investor Relations. Presenting to you this morning is Brian Porter, Scotiabank’s President and Chief Executive Officer; Sean McGuckin, our Chief Financial Officer; and Daniel Moore, our Chief Risk Officer. Following our comments, we will be glad to take your questions. Also in the room with us to take questions are Scotiabank’s business line group heads, James O’Sullivan from Canadian Banking and Nacho Deschamps from International Banking and Dieter Jentsch from Global Banking and Markets. Before we start and on behalf of those speaking today, I will refer you to Slide 2 of our presentation, which contains Scotiabank’s caution regarding forward-looking statements. With that, I will now turn the call over to Brian Porter.

Thank you, Adam and good morning everyone. We are very pleased with the bank’s results in 2017. Our team of 89,000 Scotiabankers has performed well to deliver these results. Notwithstanding several catastrophic events that took place across our footprint, we are thankful that all our affected colleagues are safe and we are continuing to support our customers. Consistent with our strategic agenda, our 24 million customers remain our core focus. Throughout the year, we implemented a number of initiatives that put our customers at the center of everything we do, including a digital customer experience management system that provides us with rich feedback from our customers. We continue to make good progress on our digital transformation. A good example is our digital factory network which became fully operational in Canada in the Pacific Alliance in 2017. The network is integrated and we leverage our international scale and diversity of talent across our footprint. It is also a driver of internal innovation and our digital targets. Our increased attention to business mix has yielded good results on both sides of the balance sheet. Our focus on deposits in our retail, commercial and corporate segments has reduced our wholesale funding ratio by approximately 20%. This has improved our funding profile and further strengthened our financial position. In Q2 of last year, we announced our structural cost transformation program to significantly transform the bank’s cost structure. For fiscal 2017, the first full year of this SCT program, I am pleased to report the bank generated savings of $500 million well ahead of our target of $350 million for the year. Our SCT program helps to make the bank more productive and create capacity for new investments. Over the last few years, we have invested significantly in our leadership teams. We have strengthened the…

Thanks, Brian. I will begin on Slide 6, which shows our key financial performance metrics for fiscal 2017. The bank ended this year with diluted earnings per share of $6.49, up 8% in 2017. All three of our business lines delivered a strong performance for the year. Canadian banking was up 9% in 2017 reflecting a strong performance in retail and small business banking, commercial banking and automotive finance. The net benefit of higher real estate gains and lower net gains on the sale of businesses contributed 200 basis points of the growth this year. International banking delivered strong results, up 15%. Results, was driven mainly by the Pacific Alliance countries, with higher net interest income and fees from good loan growth and lower commercial provisions. Ongoing benefits and cost reduction initiatives also supported results. Global banking markets rose 16% from last year driven by results in equities business related primarily to higher client trading activity as well lower energy related provisions drove improvement in credit costs. As Brian mentioned, while operating leverage was flat at the all bank level in 2017, we saw good performances in Canadian banking, the adjusted positive operating leverage of 2.1% and international banking at 3.3%. Lower revenues in Global Banking and Markets and the other segment offset the previously mentioned strong results. The bank generated net additional savings of approximately $500 million in 2017 from a structural cost reduction program related to the restructuring charge taken in 2016. These savings are well ahead of the 2017 guidance of $350 million resulting in expenses growing only 3%, notwithstanding a 14% increase in technology-related costs. Generating positive operating leverage remains a priority for the bank and we are targeting positive operating leverage in 2018. Turning to the Q4 results, the bank reported diluted earnings per share…

Thank you, Sean. I will begin on Slide 15. We continue to remain comfortable with the fundamentals of the bank’s risk portfolios. Results in this quarter are within expectations and we saw the loan loss ratio improved to 42 basis points, down 3 basis points quarter-on-quarter and year-over-year. Looking back at our guidance of a cumulative energy loan loss ratio, over the period 2015 to 2017 of less than 3%, we have outperformed with a loss ratio of 2.1%. The energy portfolio had stable performance throughout the year. Overall, we are seeing improvements in the PCL ratios across our personal and commercial banking businesses in Canada and internationally. Specifically, in Canada, delinquency rates improved from prior periods across all of our regional product categories, including auto lending. By product, our loss rates in residential mortgages, remains minimal at 1 basis point. All lines of credit, personal loans and credit card all improved quarter-over-quarter. Our residential mortgage portfolio remains high quality and lower risk, 49% is insured portfolio and the uninsured portfolio has a loan to value of 51% on average providing substantial equity buffer. As well, new originations this quarter reflect an average LTV of 64%. Moving on to International Banking, we continue to see good credit quality trends. Retail performance was generally stable across the Caribbean and the Pacific Alliance countries. Last quarter, the exception was Colombia, but we saw the portfolio improve CCL ratio over 110 basis points quarter-over-quarter. The natural catastrophe did not have a significant impact on specific provisions recorded in international banking. As Sean mentioned earlier, the banks did a portion of its existing collective allowance against performing loans to the impacted portfolios, while reducing other exposures mostly energy in the collective allowances. Now, looking at our credit metrics, growth impaired loans were down 1% quarter-over-quarter reflecting improvement in Canadian Banking and Global Banking and Markets as well as commercial exposures in International Banking. Similarly, our net impaired loans as a percentage of our portfolio improved 1 basis point quarter-over-quarter and 6 basis points year-over-year. Turning to Slide 16, you can see the recent trend in Las Vegas for each of our businesses. We are reporting broad-based improvement with loan loss ratios improving year-over-year across all of our portfolios, including retail, commercial and wholesale exposures. Overall, we believe our credit portfolios continue to reflect broad diversification and notwithstanding the expected impact of adoption of IFRS9 standards as Sean discussed. Our underlying performance remains strong. I now turn the call back over to Brian.

Thank you, Daniel. I would like to provide some thoughts on our outlook for next year. As I mentioned earlier, we are very pleased with our performance in 2017 and the bank’s accomplishments. We are in a strong position as we head into 2018 and we expect to see good growth in each of our three business lines as economic conditions continue to improve. We have made good progress against our digital strategy and the targets we set out at the beginning of the year. Global growth is strengthening and for the first time since the global financial crisis, balanced global growth between industrialized and emerging market economies is expected. We expect the Canadian and U.S. economic backdrop to remain positive. In the Pacific Alliance, we expect to see improved GDP growth in the range of 2.5% to 4% lead by crew in Chile. With this context as a backdrop, I will now turn to the outlook for our businesses for next year. Canadian Banking is executing on its strategy of delivering an excellent customer experience and growing primary banking relationship. More specifically, James and his team are reducing structural costs to create investment capacity that will drive shareholder value, leveraging digital to improve our operations and enhance the client experience and drive digital sales and continuing to optimize business mix by growing higher margin assets building core deposits and earning higher fee income. We expect to see good volume growth in both lending and deposit products for our retail and business customers and margins also have the potential to improve during 2018. Operational improvements will continue to be a share of focus that will drive positive operating leverage leading to productivity gains. Overall, in 2018, we expect another strong financial performance from Canadian Banking building on the momentum that…

Thanks, Brian. That concludes our prepared remarks. We will now be pleased to take your questions. As usual, please limit yourself to one question and then rejoin the queue to allow everyone the opportunity to participate in the call. Operator, can we have the first question on the phone?

Our first question comes from Gabriel Dechaine, National Bank Financial.

Hi, good morning. Can you hear me?

Yes.

Okay. Just had a couple of quick ones on BBVA. Firstly, you have given some guidance on the core Tier 1 adjustment whether you buy 70% or 100% of the thing. I just want to confirm what’s underlying those assumptions. You are not intending to issue any equity to finance. This would be an excess capital finance transaction?

Yes, that is our intent to funds from existing capital.

Okay, great. And then broadly I guess how do these businesses compare, we see the loans and all that, the branch number. Just wondering how they fit strategically into one another? And then from a synergy standpoint, I see over the past few years your Chilean operations have quite a substantial improvement in mix ratio. Would this be in BBVA happens to have quite a few more employees and quite a few more branches. I am wondering if those business differences are something you can’t really change or if this is an adjustment that would lead to pretty material synergies on combination?

Gabriel, it’s Brian. We are going to have to wait and we will have another call in due course assuming we get this done and we can talk about the quality of the assets, accretion, synergies all those things that we want to talk about, you want – I think you want to hear about. But I would reiterate that this is a high-quality asset bank. It’s very well run. Risk appetite would be very similar to Scotia and we think it’s a good fit of assets. It will be a good of people and technology. We have done extensive work on this. We know the asset very well and we will have more for you to discuss in the future.

Alright. Well, if not the accretion numbers, I am not – where is the overlap in the businesses, are they strong in a market in which you are not that type of thing?

Yes, well both have a 7% a market share. So, the most important impact would be of course a very valuable we say greater scale. This would be 14% bank and we have a portfolio due to the Cencosud acquisition, which has a larger unsecured lending, but I would say, as Brian said is quite complementary and there is a very strong feet to our strategy.

Okay, thank you. Have a good day.

Next question on the line, please.

Our next question comes from Ebrahim Poonawala with BoA/ML. Please go ahead.

Hello.

Good morning. Hello, can you hear me?

Yes. Please go ahead.

Yes. I just wanted to follow-up Brian in terms of – if you can put some numbers around you mentioned the target to maintain strong capital levels if we adjust for BBVA transaction and the IFRS 9 impact get to about 10.35 CET1. If you could like what’s the timeline of how soon can that transaction close if the Said family doesn’t refuse the transaction? And secondly, given that there is a likelihood that the Global Banking regulators may reach some sort of an agreement in Basel IV maybe as early as next week. Can you help us sort of put some numbers around what a BIV impact would be to your CET1?

Sure. I will start and then I will turn it over to Sean who will walk you through the capital numbers. If everything goes according to plan here, we would expect to close the transaction sometime in the summer of 2018 and in terms of capital, Sean, do you want to walk through that?

Yes , so that would be further three quarters of capital appreciation anywhere between 30 and say 45 basis points on top of where we are at today. As you had mentioned or you mentioned the IFRS 9 is only 15 basis points, so that would comfortably put us around the 10.5 plus level. We also have expressed a dialogue – we started dialogue with OSFI in terms of looking at revisions possibly on the Basel I floor, OSFI has agreed to look into that, so there maybe some changes with respect to capital calculated in the near-term which could be a potential benefit, but we are not there yet. So, overall, we are comfortable that we will still be at 10.5 or higher. With respect to Basel IV, you are right it could be an announcement coming up next week. Our understanding of that would be effective for 2020 would have been a 5-year tense timeline to phase in a new floor expectation. So, there is still many years in front of us and again we have reached quite a pretty good level. So, we do not see Basel IV being a headwind in the near-term for us in terms of our capital management.

Understood. And just to clarify, the 30 to 45 basis points, is that the capital you expect to accrete over the next three quarters you said?

Yes.

And I guess that there will be enough of phase in to get in Basel IV, so clearly, there is no immediate shock. But I am just wondering I am sure you run through the math, I am just trying to get a sense of it, is it a 20 basis point impact, is it a 50 basis point impact when you apply sort of a 72.5% output floor. Any framework there will be very helpful?

Yes, we are still working through that, but again, we believe it’s going to be very manageable for Scotiabank to accretive to those newer levels under Basel IV.

Understood. Thanks for taking the question.

Thanks. Next question on the line please.

Next question is from John Aiken from Barclays.

Good morning. Sean, thank you very much for the disclosure in terms of the hurricane and other impacts in Mexico, I was wondering is there any ongoing lingering impact that you can talk to in terms of the operations and then specifically what’s been going on in Puerto Rico?

Okay. I will pass it over to Nacho to answer.

Yes, good morning. Well, as Sean mentioned really impact the direct impact was in Puerto Rico and some smaller countries, so it’s relatively small. It only represents 3% of International Banking. Going forward, of course, we expect that the tourism and economic activity will gradually recover. And in terms of Puerto Rico, it’s a very small portion. It represents only around 1% of our assets today. We have been de-risking our operations in Puerto Rico in the past year and only represents around 30% of what it was 5 years ago.

That’s great. Thank you very much.

Alright. Next question please.

Next question is from Steve Theriault of Eight Capital.

Thanks very much. I had a question for Dieter, but first just Sean on the BBVA deal, how long does the Said family have to make the elections regarding their optionality in right of first refusal?

We think this will get settled sometime within our Q1, so it won’t go beyond Q1.

Okay. And then so for Dieter, I think we all expected trading to be weak this quarter, but of $60 million of rate and credit trading, I think that’s the weakest we have seen since 2014 and I think there is a liquidity event in the quarter that we hit that. So, could we get a little, little more granular detail around how challenging the quarter was? Obviously, I mean, you guys had pretty good fixed income underwriting and volatility was down, but not that much quarter on quarter. So, just if you can get into that a little bit and if you can speak at all to the outlook and how November has been versus Q4? That will be helpful.

Yes, thank you Steve. You are absolutely right. The challenging area was in the rate side of the fixed income business. As we saw now continued low volatility in the major government bond markets in the UK and the U.S. and Canada. So although volatility was lack of movement in issuance notwithstanding a very benign environment resulted in trading revenues falling off considerably, that was of a very robust Q4 and Q1 last year you recall with Brexit in a situation – election situation in the U.S. was very constructive trading environment. So, that came off this quarter as you saw, we anticipate a much more proactive trading environment in the next quarter – next two quarters as the new Fed chairman takes over and some rate increases take place in the U.S. And so we also see a little more hawkish stone in the UK. So you combine that together, we anticipate a much more as I said constructive environment. And the good news is that our underlying platforms are operating efficiently and we are ready to take advantage of those good flows. And I also add to it that our debt origination you saw it in the underwriting fees is also quite robust this quarter.

So, thanks for that color. Are you seeing much of that in November or is that more if the fed hikes in December you expect to see activity is November feeling like Q4? Sorry.

November is feeling a mildly more positive than the end of October. We saw some volatility back in the markets and feedback. So, it isn’t at the same levels as we saw at the end of Q4, but much more constructive to begin the quarter.

Thanks for the color. Appreciate it.

Next question please.

Next question comes from Robert Sedran from CIBC Capital Markets.

Hi, good morning. Just first off a quick clarification. Sean, you mentioned on the back of IFRS 9, modestly higher provisions into next year, I presume that’s off the roughly 45 basis points for the full year and not the 42 for the quarter?

Yes, it would be off the whole year number.

Okay, thank you.

And again, as I mentioned that’s really off the volume growth now with IFRS 9 as you originate loans you have to for provisions of day 1. So, there is a bit more upfront provisioning that’s got to be done.

Got it. Thank you. And just a follow-up on the question about the international margin, you mentioned that it was mix and also some inflation related noise I guess. I am curious when you start talking about a flatter margin outlook, what of the mix do you see changing, are you expecting the commercial loan growth to slow a little bit or are you seeing a better pipeline on the retail side to balance off some of that growth or perhaps is the funding side that I am missing?

Yes, we are saying that the margin should be in and around this level, but it will be impacted going forward based on business mix. So, as you would expect, if retail grows fast and commercially you will see a higher margin, but we think at the current level if everything grew at the same pace, at the same rate, then the margin should be in and around what you are seeing today.

I see. So you weren’t signaling a change in the direction of that was from what you saw, it was more just…?

I’m not signaling.

I understand. Okay. Thank you.

Next question on the line please.

The next question comes from Meny Grauman from Cormark Securities.

Hi, good morning. Just a follow-up question on what drove trading this quarter specifically wondering about the precious metals business and the reported challenges there. I noticed that precious metals holdings are down quite significantly quarter-over-quarter and year-over-year. So I am wondering if you have any color on that to what extent that specific business is impacting the results in capital markets?

The main trading numbers as I mentioned to Steve’s comment, we are pretty focused around the rate side of the business, fixed income. Even though cash equities was softer as well we saw the market come off considerably in terms of new equity issuance and so between cash equities and the rate side that was the predominant side of the trading numbers in terms of the reduction, but you are absolutely right with gold being range bound for a good part of the quarter we saw the trading numbers come off in gold as well as that lending side of the gold business. So, the metals business was off this year and this quarter as well.

And I don’t know if you can answer, but in terms of your commitment to that precious metals trading business, is there anything you can add more publicly to those reports about potential sale?

We are always looking that making our businesses better and we continue to want to serve our customers the best way we can.

Thank you.

Okay. Next question on the line please.

The next question comes from Scott Chan from Canaccord Genuity.

Good morning. Just a quick clarification question, when you talked about the international NIM guidance, was that based on Q4 or the 2017 run-rate in terms of the way you are talking about earlier?

This can be – we are talking basically about some volatility around these levels of Q4. As Sean mentioned, I would put it this way, our margins in our core businesses, corporate, commercial and retail are stable and we expect them to continue going forward to be stable is really asset mix. The main impact that could have strong variation quarter over quarter as inflation also have as you see sometimes an impact, we see relative stability at these levels.

And is the retail margin higher than commercial and international?

Yes.

Yes, okay. Thank you.

Next question on the line please.

Your next question comes from Doug Young from Desjardins Capital Markets.

Good morning. Sean, just on expenses, $500 million of savings achieved in fiscal ‘17, can you talk a bit about bottom line impact from that? And then just off the same kind of being the mix ratio in GBM 52.3%, a lot higher versus last year. I don’t think it’s been the size since 2011. Just wanted to see what was flowing through there? It didn’t seem to be a revenue item from that ratio. It looked like obviously mix absolutely was higher. Just wanted to get little more detail there? Thanks.

Yes, on the cost savings, definitely you are seeing good benefit from that. As I mentioned, the whole year expense growth is up 3%, which is quite lower than what we were seeing up to Q3 year-to-date from the banking industry here in Canada. So, we are seeing savings from that. As I mentioned, we are still heavily investing in digital and technology to drive ongoing sustainable efficiency gains, but also a better customer experience. So again, we are very comfortable on the expense management side coming in at a very low 3% compared to what we are seeing in the rest of the marketplace. In terms of GBM, again slightly lower revenues than last year, the two sides of the equation when it comes to productivity and mix, so slightly lower revenues than last year on a TEB basis, but again as we mentioned that business continues to invest and earn through higher regulatory and compliance costs and also their own technology digital investments.

Yes, Sean is this new for GBM is this a new level that we should expect them going forward? And then just on the total expense saves, I mean, it sounds like most of the savings are being pumped back in the business and aren’t going through to the bottom line, is that a fair assessment?

Are you talking about the all-bank from the last call there?

Yes.

Yes, when you say it’s not getting to the bottom line, when you have got expense growth of only 3% on a whole year basis and our peers are running at 5.5%, it sounds to me like the expense savings are making their way to the bottom line in terms of reducing expenses. This year as we are saying that the revenues came in a bit lighter again on the trading side on a non-TEB basis, lower security gains for the year, so that revenue side was a bit lighter, but the expense performance I think was quite strong. And in terms of GBM again with bit of a softer quarter, the next is a bit elevated and we would expect to see that come off and back down into the kind of high 40s range that it was running before this quarter.

Okay, thank you.

Next question on the line please.

Nick Stogdill from Credit Suisse.

Hi, good morning. Just on the IFRS 9 the $600 million opening transitional adjustment, can you give us some context on the geographic mix what’s driving our business line, indeed by product just some high level thoughts on what’s driving those numbers?

Yes, I will kick off and if Daniel need to add he can add afterwards. So we are seeing higher provisions on the retail side with the commercial and non-retail actually a bit lower. It’s generally split on the retail kind of equally between Canada and the International Banking. That’s the general split between retail and non-retail and between the business lines.

Just to clarify so the $600 million is split equally between Canada and International and it’s mostly on the retail $500 million to $600 million or it’s slightly more?

The 600 million is the charge to retain the earnings, which is an after-tax number. So just think of retail provisions were a bit higher than that number and commercial provisions a bit lower than that number and for the higher retail provisions, half of that is in Canadian Banking and half is in International Banking.

Okay, thank you. If I could ask one more on BBVA Chile, just if you look at the loans to deposit ratio for Scotia, there is a bit of gap same with BBVA Chile. So, the scale matter on the deposit side in that market – I guess having more scale improve your deposit gathering capabilities?

Absolutely, they matter. And these will of course would have a positive impact in the cost of funds if you see in the largest banks in Chile, they have a larger mix of core deposits.

Thank you.

Next question on the line please.

Next question is from Mario Mendonca from TD Securities.

Good morning. If we could just revisit the expenses again, so $500 million structural cost transformation now presumably that wasn’t all generated in the year, that’s more of a run-rate look at it. Is that fair, Sean?

That would be the incremental in-year P&L savings, yes.

That all fell into the year, okay. Then the reason why that number just seemed large to me considering what you the incremental investment spending, the incremental – you said there was $3 billion in digital or IT spending with an increase of about 14%, that would imply then that your increase for the year was something like $350 million. So, without putting too fine a point, is it fair to say that as much as $115 million – sorry $150 million of cost savings fell into the year?

You can look at that, but there is more categories than just technology. We have got people costs and some other costs that we are also looking in some of the procurement, where we have savings on that, which shows up in different lines as well. So, I think it’s best to just to look at the overall expense growth of 3% in this environment when you are spending significant amounts in technology. I think the – go ahead.

And that’s kind of where I am going with this. So if next year as you suggest that you could keep the investment spend, the growth in the investment spending to less than 14%, then is it fair to say then that the bottom line contribution or the contribution, let’s call it, to lower expense growth could be greater next year than what we have seen in 2017?

Yes, I think that’s correct. We've signaled we expect ongoing expense benefits all the way to 2019 and beyond and we signaled we have further $200 million next year and if we do as well as it did this year we’ll exceed that $200 million. And as Brian mentioned technology digital comes off somewhat then you will see even more reduction to our expenses to even lower expense growth possibly next year.

Okay. And then to wrap it all up, then you made reference, I think it was Brian you made referenced to 200 basis point positive operating leverage on average over the next 2 years. Is there any reason why that might be back-end loaded like it’s in the second year say ‘19 rather than ‘18?

No, I will answer this. We see very good operating performance – operating leverage performance next year. So to get 52% which is 2% improvement productivity ratio that means on average we need 2% a year operating leverage in ‘18 and ‘19. And we think we will do even better than that in 2018, so we will have less reliance on 2019 to get to that 52% target.

And if I could just squeeze in a little more here, you entered the segments you talked about your medium growth outlook 6 to 9, 8 to 10 there were few numbers in there. Given the momentum we are seeing in the bank throughout 2017 in your positive outlook on the macro environment as it’s the sound constructive there. Is there any reason why the medium term growth outlooks, could they – was there any reason why they would not be appropriate for 2018?

No, Mario, it’s Brian. It’s – we think the bank is in a very good spot, I think that if you look at our international business in particular, I think the performance was – we are proud of everything that’s been done this year and particularly in the P&C businesses, but if you look at the international bank in particular, you look at the positive operating leverage at 330 basis points in an environment where revenue growth was hard to come by and that’s noted it in my opening comments, Peru had devastating floods, you know what happened in the Caribbean and Mexico obviously with the earthquake. So, we had to earn through that. We did it within our risk appetite. Obviously, economic outlook is going to be more positive throughout the Pacific Alliance from next year. So, we think international is going to have very good year. You have asked Sean the appropriate questions on the expense side and how we are going to get to our numbers. And we think we are going to have a very good year in the Canadian bank and we have got – we will certainly update you further on some initiatives and organic growth opportunities that present themselves in all our businesses on Investor Day in February 1, but we look forward to a very constructive year, next year.

Right. Thank you.

Next call on the line please.

Next question comes from Darko Mihelic from RBC Capital Markets.

Hi, thank you. Two really quick questions actually. First question is with respect to B20 guidelines, I think OSFI suggested that where possible you are expected to comply with the principles as of the date of that letter. So question is have you started to basically underwrite according to B20 and if so have you seen any impact? And then I have a second follow-up question for Sean on IFRS 9?

Yes. On B20, I believe will be live January 1. Let me make a broader comment if I may Darko on B20 and on mortgage growth generally. Look, on B20, we think there will be some impact and it will represent a bit of a headwind. But I would point out that some customers are going to find more equity. Others will extend the amortization. And some to be sure will purchase less home, but I think offsetting that higher retention and certainly possible. So, as we look at it we kind of think about a 5% headwind to originations maybe a reasonable guess, but I want to be clear on our overall assessment. Our overall assessment would be this. We have very strong leadership in this business and the person of John Webster and as an executive team we have discussed our outlook for 2018 more than once. And based on that, we would be aiming for growth in the mortgage book in 2018 of GDP plus. And I want to point out there is room here for mortgage growth to decelerate from current levels and yet still deliver at those levels of nominal GDP plus. Mortgage growth was 6% in Q4. So, one final thought or assessment of risk and return is dynamic, so if our assessment changes, our appetite will change, but overall, we are in pretty good position here in Canadian Banking. If we go back to Q1, the balance sheet was expanding at less than 3% annualized. If you go to Q4, the balance sheet is expanding at just north of 6% annualized. So, we have got very good momentum in the balance sheet which should feed into net interest income and into revenue as we head into ‘18.

Okay, thank you for that answer. It’s very good. Just a quick follow-up for Sean on the IFRS 9 impact, you mentioned that it sounded like the pre-tax number, I guess we will figure that out and sounded like retail was more than commercial and you mentioned retail was equally split between Canada and International. What about the commercial split? Is that also equal between Canada and International?

Yes. The commercial reduction we are seeing primarily in international and some in GBM and just a bit in Canadian banking, but again, we will be providing a lot more detail in our Q1 reporting. We are on the transition first also the impact on provisions in Q1 and so.

Fair enough. Thank you.

And we have time for one last question on the line please.

Our last question comes from Sohrab Movahedi, BMO Capital Markets.

Yes, thanks. Just a quickie for James, James that commercial loan growth in Canada was very strong as well. Can you just provide some color as to where by industry segment or otherwise where that’s coming from? James O’Sullivan: Yes, I think that we are – in commercial we had a strong quarter and a strong year. I think we see very clear evidence now of good momentum in that business. To your question, we are seeing good growth in certain focus areas, so geographically BC had a particularly strong year and secularly agriculture had a very strong year, so, 13% growth in assets, 18% growth in deposits. Spreads have been under a bit of pressure, but we are very, very pleased with this business and it continues to be a priority as we go into 2018.

I mean, so do you think double-digit growth is doable in an environment where resi mortgages are growing let’s say a GDP plus? James O’Sullivan: For commercial?

Yes, like I mean, if you took that same operating environment that you have in mind for mortgages and applied it to commercial in Canada, would you think that you could continue with this kind of growth rate? James O’Sullivan: Yes, very much so. So, our expectation would be for solid double-digit growth in commercial and solid double-digit growth in small business.

And across the same sort of industry sectors? James O’Sullivan: I think so I don’t see any particular shifts. I think there is still lots of room for us to acquire share in certain segments whether it’s geographically or sectorally. So I think 2018 should look a lot like 2017.

Thank you.

Very good. Well, thank you everyone for participating. And we look forward to speaking with you again in the New Year. Have a great day.