All participants please standby, your conference is ready to begin. Good morning, ladies and gentlemen. Welcome to the CIBC First Quarter Results Conference Call. Please be advised that this call is being recorded. To reduce the audio interference, please turn of your Blackberry for the duration of the meeting. I would now like to turn the meeting over to Geoff Weiss, Senior Vice President, Investor Relations. Please go ahead.

Good morning and thank you for joining us. This morning CIBC senior executives will review CIBC's Q1 2015 results that were released earlier today. The documents referenced on this call, including CIBC's Q1 news release, investor presentation and financial supplement, can all be found on our website at cibc.com. In addition, an archive of this audio webcast will be available on our website later today. This morning's agenda will include opening remarks from Victor Dodig, CIBC's President and Chief Executive Officer; Kevin Glass, our Chief Financial Officer will follow with the financial review; and Laura Dottori-Attanasio, our Chief Risk Officer, will close the formal remarks with the risk management update. After the presentations, there will be a question-and-answer period that will conclude by 9 a.m. Also with us for the question-and-answer period are CIBC's business leaders, including Geoff Belsher; Harry Culham; Steve Geist; and David Williamson, as well as other senior officers. Before we begin, let me remind you that any individual speaking on behalf of CIBC on today's call may make forward-looking statements that are subject to a variety of risks and uncertainties. These statements may include material factors or assumptions that could cause CIBC's actual results in future periods to differ materially. For more information, please refer to the note about forward-looking statements in today's press release. With that, let me now turn the meeting over to Victor.

Thanks, Geoff. And good morning, everyone. We're pleased to announce a strong start to the year. CIBC reported recorded adjusted earnings of $956 million or $2.36 per share, up 2% from the same period last year. We continue to generate industry leading returns with an adjusted return on equity of 20.6%. Our capital position remain strong with III Common Equity Tier 1 ratio of 10.3%. We also announced a $0.03 increase to our quarterly dividend. We are confident our client focused strategy and high quality asset base position us well to deliver consistent, sustainable returns and industry leading yield to our shareholders. During the first quarter we made progress on our priority to strengthen our CIBC franchise, by focusing on our culture, our clients and our shareholders. Our culture is evolving from the neighborhood [ph] focus which was acquired during a time of de-risking and stabilizing our bank to an out more orientation that’s focused on our clients. We remain committed to growing our shareholder value through prudent investments and strategic initiatives that support organic growth, which includes investing in our brand. We recently announced a strategic partnership that will see CIBC provide a number of services to enhance the travel experience for riders of the new express rail service between Union Station and Toronto Pearson International Airport,. The new express rail service is expected to be used by more than 2.5 million people annually and is viewed as an extension of our exclusive banking partnership with the greater Toronto Airports Authority. Under the agreement with Metrolinx, CIBC will have exclusivity in offering and marketing its financial services directly to travelers using the Union Pearson train link. These two partnerships, combined with our lead sponsorship of the Pan Am Games are providing us with a platform to elevate our brand…

Thanks, Victor. For my presentation, we’ll refer to the slide that are posted on our website, starting with slide five, which is a summary of results for the quarter. So we’re very pleased with our strong first quarter results which were driven solid contribution from all of our businesses. We delivered adjusted net income of $956million, or $2.36 on a per share basis. In our Retail and Business Banking segment, we continue to experience strong volume growth in core products, wealth management delivered 13% earning growth, driven by solid asset growth and we achieved record results in wholesale banking, executing on our client focus strategy. Credit performance continue to be favorable and we increased our quarterly dividend by $0.03 per share. We had a few items of note during the quarter, the more materials ones being that is part of our ongoing efforts to align our resources to better serve our clients and ensure that we are operating efficiently; we incurred a restructuring charge of $62 million after tax. Those had a gain from a counting adjustments on credit card related balance sheet amounts of $34 million after tax and a gain on sale of an investment in our merchant banking portfolio of $13 million after tax. In aggregate, the impact of these items of note on our earnings netted to a negative $0.08 per share. The balance of my presentation will be focused on adjusted results, which exclude these items of note. We have included slides with reported results in the appendix to this presentation. So let me now turn to the performance of our business segments, starting with the results for Retail and Business Banking on slide six. Revenue for the quarter was $2 billion, down 1% from last year, due to the impact of the Aeroplan credit…

Thanks, Kevin. And good morning. So I'll be referring to the risk section, which begins on slide 13. As Kevin mentioned this was a good quarter, loan losses came in at a $187 million or 28 basis points, so that’s down $7 million or 2 basis points from the prior quarter. This was mainly due to lower losses in retail and CIBC FirstCaribbean. Turning to slide 14, new formations were relatively flat quarter-over-quarter at $325 million. The decrease in our consumer portfolio reflects continued strong credit performance. The $12 million increase in our business and government portfolio relates to about handful of accounts in various industries that are not energy related. New formations continue to be at very low level. Growth impaired loans were up from last quarter and over 95% to the increase is due to the appreciation of the US dollar. So as consequence, growth impaired loans as a percentage of growth loans and acceptances came in at 0.56% which is up from 0.53% last quarter. In light of the decline in oil prices, we've added additional disclosure that you'll find on slide 15 and in our MD&A. So as it relates to our commercial corporate portfolio, we are just under $17 billion of direct exposure of which 58% is through exploration and production companies and only 4% is in the services space, about 80% of this is to investment grade name. To date, we haven’t seen any significant stress in this portfolio and there has not been any new additions to our watch list this quarter. As expected, we have seen an increase in our drawn exposures on both a year-over-year and quarter-over-quarter basis. A large portion of this increase is attributable to new names in our portfolio and to foreign exchange impacts. The balance comes from…

Thank you. And that concludes our prepared remarks. And we'll now move on to questions. Operator, can we please have the first question on the phone?

Thank you. The first question is from John Aiken from Barclays. Please go ahead.

Good morning, Victor. I think first off, the increase in the dividend was a bit of a surprise in the street or at least was from our stance, is this any change in stance or in terms of – is this a greater return to capital to shareholders? Does this mean that in the near-term, you're not necessarily seeing any acquisition targets or does it just simply reflect payout ratio you're comfortable with going forward?

Good morning, John. Thanks for your question. So, our stated payout ratio is in the 40% to 50% John, we're actually below the mid point today and we've been quite clear as a leadership team, that over the medium terms we'd like to be towards the high end of the payout range and really it’s a function of a couple of things. One is our business is performing well. The investments that we're making and our client franchise are continuing to deliver consistent sustainable earnings. So as long as we continue to have a constructive economic environment, and as long as our business continues to perform well, which we are very confident that it will, we will continue to work towards that higher end of the payout range over the medium term.

Thanks, Victor, and in terms of acquisitions, how patient or impatient are you and the board willing to be and have you actually targeted any specific regions that you're looking at?

So John, in terms of acquisitions, we've been active and we've disciplined. We've actually turned away things that don’t meet our valuation criteria. We've been quite clear in terms of our parameters around size, quite clear in terms of our parameters around valuation, quite clear that we are interested in the US market primarily, primarily in asset management and private banking. But our view is that the valuation has to make sense for our shareholders. If we're going to deploy capital then we have to have a reasonable expectation of accretive returns over the medium term and until we can't get that, we will be patient, because there is lot's room to grow in our Canadian franchise.

Great. Thank you very much.

Thank you. The following question is from Gabriel Dechaine from Canaccord Genuity. Please go ahead.

Good morning. I've just got a couple of number questions. The Atlantic Trust performance fee, how does that work over Q4 or calendar Q4 kind of thing. And is it a profit share with some of the sub advisors there, and is this year unusual? And then, just on the margins in Canada, down 4 basis points and you said stable from here, was it a quarter – in quarter decline caused by some, anything unusual that's going to pick up like promotional stuff?

Hi, there Gabriel. It’s Steve Geist. I'll start with the performance fee. That is driven by Atlantic Trust on its master limited partnership mandates and that is an area that it really have developed quite a specialty and have really grown the assets quite rapidly and delivered some very strong returns. It’s actually accrued at the end of the calendar year. So it’s a December 31 thing, so its something that we would see in Q1 each year and that is earned on asset they in fact manage and it finish the end of the year about US$2.3 billion and they've grown at quite rapidly over the last several years. They have – had these products in the market for the last eight years. They've earned a performance fee in seven of the eight, they've been quite consistent. The last five years it’s averaged a bout US$20 million and this year it came in at US$21 million.

Thanks for that.

Gabriel, its David Williamson. I'll pick up on the NIM question. So little bit of both, environmental and situational. From an environmental perspective, the recent move to lower rates definitely put pressure on NIMs. But I think the greater story is from a business perspective. Our total funds managed in personal banking exceeded the other banks that have reported so far this quarter on a quarter-over-quarter basis in CIBC and as Kevin and Victor pointed out, business banking seems strong, funds managed growth as well. So there is a couple of inherent impacts on NIMs, included in that funds managed growth. So one is mix, we've seen strong volume growth across retail and business banking. Our credit cards is moving slower than the other lower margin products, so that affects NIMs on a mix basis. So we are seeing credit card outstanding starting to accelerate now, so that we'll mitigate that factor. And the other is enhanced rates on deposits. So in Q1, in both personal and business banking, we are very effective in using promotional rates to attract additional deposits in excess of couple of billion dollars in deposits than we otherwise would have brought in. So we're now a leader in deposit gathering, that has cost attached to it. So now we're using analytics to drive targeted versus mass offers, which we've used successfully in past to significantly increase retention of those deposit of balances, but there was concerted effort in the first quarter. Going forward, and as you said Gabriel, we're looking for NIMs to stabilize.

So the deposits that you – were they new customers or was there a migration from checking accounts at CIBC to some high interest accounts, what was the story there?

Yes, the $2 billion was incremental funds in the door. I mean, actuals deposits grew by – quite a bit more than that, but we're seeing that of that outstand [ph] growth and deposits both $2 billion of it actually in excess of that was new funds in the door that wouldn’t have occurred with local’s promos.

Okay. Thank you for the responses.

Okay, Thanks, Gabriel.

Thank you. The following question is from Sohrab Movahedi from BMO Capital Markets. Please go ahead. Mr. Movahedi, your line is now open. You may proceed.

Thank you. Good morning, everyone. Just a quick question for just staying with David, David, the expenses, I mean, you have talked about the need to make some investments. You've talked about operating leverage for the full year being a tale of two halves. Were expenses a bit better than you had hoped or you had expected or you had guided us to this quarter, and can you give us a bit more color as to what, if there are any updates to the expense expectations and operating leverage, kind of thoughts for balance of the year?

Hi, Sohrab. Yes. Be happy to speak to that. Yes, they were a bit better than what we expected, but let me just give a bit of an overview. So as Kevin said, you take our revenue for retail and business banking, adjust for the impact of the sale of the Aeroplan assets and you're looking at 3% revenue growth, or more specifically, 2.5%. Expense growth came in at 3%, or more specifically 3.1%, so off leverage for the going forward business was slightly negative at 0.6%. So that was better than you may have expected and we've continued to guide to negative for the first half, but a bit better. I mean, we continue to look for expense efficiency opportunities and we did some of that in the most recent quarter. But, hopefully, there isn't any uncertainty that we continue to invest in our business, so better than expected. And consistent with what we indicated otherwise, again, for the first half. I think it's important that we recognize we continue to invest and we're getting benefits from those investments and if you'll allow me, I'll just review a couple of those investments that we are making. Because we are seeing an impact in our funds managed growth, I think as a result of some of these investments. So we continue to invest in COMPASS that was rolled out last year across all the branches in the third quarter, but there's more products put on to it. The early indications from COMPASS are its having a desired impact, both in the depth of relationships we're getting through the speed of onboarding new clients, but onboarding them not with products but with deeper relationships. We're investing in the mobile sales force, we continue to do that and it's resulting in mortgage…

Okay. So just to clarify David, as far as the full year was concerned you had said that you would be I think, I have heard you say that you in the past that you would be happy with flat operating leverage that would be a win and you're not changing that – those thoughts passed the first quarter results?

Thanks for asking, you're absolutely right. So same message before a bit, better this quarter, but the investments continuing. The overall comments we've made for fiscal 2015 remain the same.

Thank you very much.

Thanks, Sohrab.

Thank you. The following question is from Robert Sedran from CIBC. Please go ahead.

Hi. Good morning. David, just since you have the microphone a follow-up question. Is it fair to say FirstLine is now having a diminishing impact on the margin, or is it still a positive?

Hi, Rob. It is diminishing. So we still are getting a 50% retention on FirstLine and I haven't had a chance to report on that recently so that -- we're still very pleased with how we're retaining those balances. But you're absolutely right, as where before it was having a more marked impact as far as the lift on NIMs, that's still there but diminished.

Okay. And I just wanted to follow up on, I thought I had Laura say and talking about the energy loan book that part of the reason that drawn exposure went up, is that there are new names in the portfolio, but I kind of understand supporting existing clients and NIM drawing on their lines, but perhaps Geoff can talk about what the bank is doing to grow that exposure and where its doing it?

So Rob, what I would say is we're very selective, we're very focused in managing this situation in a prudent way. There are opportunities as some people may retrieve [ph] from certain accounts to selectively go in, but that is a highly selective thing on a few cases. So its not a large scale type of event. Basically our clients which is more a set of primarily investment grade are using this to short up their balance sheets and in some cases, you know, build some capability to do some acquisitions in what maybe a depressed commodity environment. So again I would say it’s highly selective, and it’s not widespread.

Is it more Canada or US Geoff?

We see it in both. We have books in both places, again, we're more in Canada than in the US, a little bit in the US, a little bit in Canada.

Thank you.

Thank you. The following question is from Stefan Nedialkov from Citigroup. Please go ahead.

Yes. Hi, it's Stefan from Citi. I have two questions. The first one is on the oil exposures. If I look at your previous quarter disclosure on un-drawn oil and gas facilities, that basically went down by around $400 million to around $8 billion this quarter. The drawn amounts went up by $1.7 billion, so I guess as a full of really, are we seeing drawn amounts being increased because of new clients or are you simply increasing the available un-drawn facilities to existing clients? So it's $400 million versus $1.7 billion? And my second question is on model updates. There was some talk in your press release again, and I guess that some of the numbers show that model updates, what is driving that, is that regulator driven? And what types of risks are you guys updating your models on? Thank you.

Hi, Stefan. It’s Laura. So I think I'll take both of those questions. So as it relates to draw downs in our oil portfolio, so a large portion as I mentioned as the, of what you're seeing the draw downs, we did bring in new clients. There has been foreign currency impacts relating to the US dollar and as we expected, we did see increase drawings and as Geoff pointed out, from some of our clients and that would have been primarily in the investment grade space. So it was expected but there is an increase and so we do actively monitor that and I can tell you that our team is in regular contact with our clients and from what we see they are adjusting, they are behaving in a very prudent manner given the circumstances and as a result we remain comfortable with the increase in the draw downs that we're witnessing. As it relates to model, I guess, in part I could refer to the piece that Gabriel Dechaine put out, so thank Gabriel for that. As you know, we can't comment on any specific regulatory review. That said, all of our material model parameter updates, they need to be reviewed and approved by regulators and that’s prior to implementation, so that would mean that old models would have been regulatory approved, then it also means that any new models we have would be regulatory approved and this is really just considered normal course of business for any Canadian bank.

All right. And so…

Does that answer your question?

Yes. And Well, there was a Wall Street Journal article talking about acquisition-related risk increases that the regulator is not very comfortable on, and obviously, you guys cannot really talk much about what's going on with the regulator, but in terms of acquisitions, within Canada or outside of Canada, are you completely comfortable with the risks you're taking on your books? And I guess, for those of us who do not subscribe to Gabriel's research, maybe you can you give us a summary of that as well?

So could I – I am going to hand that question over to Victor, but I can tell you that as Chief Risk Officer I am quite comfortable with the risks that we are taking and of course we would ensure we were comfortable as a team prior to making any acquisition and with that I'll hand it over to Victor.

Yes, Stefan. Thanks, for your question. So I don’t generally respond to articles like that, but I'll respond to your specific question, and that is around acquisition. So we are under no restrictions when it comes to acquisitions and growth. The only restrictions that were under are our own self enforce restrictions to be very disciplined. And as you would know any acquisition would have to meet, we have to get approval from regulators just as every bank would. So we are under no restrictions when it comes to growth.

Okay. Great.

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

Thanks, good morning. First for Victor, just tying in your comments on capital return and the lack of what sounds like an imminent acquisition from the bank. Since your appointment to the CEO role, the bank has not been active on share repurchase activity. Is it fair to think, given where your capital position is and that your comments on the acquisition outlook that it would be reasonable to expect CIBC to resume returning capital to shareholders in that form in the near-term?

Sumit, thanks for your question. So, the four area that always look out when it comes to our financials are, in terms of return and investment, it would be dividends, it would be organic investments and we have significant organic investments that we're making David sort of listed a number of them and they are important, because they are going to provide very good returns we believe to shareholders. There are the inorganic investments and there are the buybacks. First and foremost, I think our shareholders value and I think it’s a most important reflection of the strength of our business that we work our way towards the high end of the payout ratio. Secondly, investing in our core organic franchise is very important to us. We see returns in retail, business banking, wholesale and wealth that are a direct function of the technology investments that we're making to make it easier for our clients to do business with us. The other two areas of buybacks and M&A are simply a I think a pillar of additional flexibility that we would use when we see fit. It’s important to maintain that financial flexibility as we go forward. So I wouldn’t read anything into imminent or not imminent, what I'd look at is, the core underlying results are strong, the investments that we're making are delivering stronger results and the leadership at CIBC feels very confident that we can continue to do that over the short, medium and long-term and the best reflection of that is to work our way towards the high end of the payout ratio when it comes to our dividends.

All right. I hear you there and then I want to switch it over to Harry and Geoff. Record quarter, at least the way I've looked at the numbers here, for the Wholesale Bank. And Victor, in the last few months has talked a lot about I'll paraphrase here, essentially CIBC moving from defense to offense again after a number of years of de-risking. Can you talk specifically about some of the initiatives that you gentlemen have transferred over to the wholesale part of the business from a growth perspective? And what specifically underpinned what was very strong results, particularly in the trading part of the business?

Hi. It’s Harry. I'll take that off. As you probably know, Geoff and I've been responsible for this business for quite sometime now. So the strategy remains consistent. We are very, very focused on deepening our relationships with clients in Canada and abroad, as you probably would notice the earnings this quarter are well diversified across wholesale bank, that’s corporate bank, investment banking and capital markets with a specific emphasis on client activity and pre-volatile and reasonable look at markets. So we've seen good results in areas where we have invested, those initiatives you spoke about have been in place for quite a while. So we've invested a lot. As David is doing in retail and wholesale over the years and our trading platforms and our people. And that’s showing good results in working with our clients in difficult volatile markets. At the same time well diversified across all trading products.

Thank you. The following question is from Meny Grauman from Cormark Securities. Please go ahead. Mr. Grauman, your line is now open. You may proceed.

Hello. Can you hear me? Sorry. Hello?

Yes. We can Meny.

Hi, good morning. So just a broad question about the credit picture, definitely a good picture across the peer group. With no real warning signs, despite fears of the future. So I'm wondering, what you read into that. Is it -- does the credit picture in Q1 give you confidence that maybe the drop in oil prices is really going to be a non-issue from a credit perspective? Or is it just the case that it's just too early to tell and we don't have good information this quarter one way or the other?

Hi, Meny. I think its bit too early to tell, I mean, there is no loan losses, I mean, they are in part dependent upon our underwriting criteria on the state of the economy. We continue to have strong underwriting criteria, see good quality in the book, as I point to those from a watch list delinquency perspective to date we're comfortable. That said, the economy is facing headwinds, given low oil prices, so it’s really a question of how sustained these low oil prices will be.

And maybe it's sort of, looking out into the future, sort of, if we see the same kind of performance in Q2 or Q3, like, at what point do kind of start to look at these numbers and say I think this is actually giving us information that you know the situation maybe is looking better than maybe what some people expect.

Well, again, we watch oil prices closely and it will be a question of how sustained low oil prices are. That said, we do look at indicators in our portfolio, so early warning indicators, we watch things like draw downs and to what degree their increasing, revolving. We look at our watch list in the commercial corporate space to see if we're seeing signs of weakness there in our consumer books. We look at our delinquency rates. We also look at down grades, to upgrades in our portfolio and so where from your perspective I think you would start to see things as you look at your results, it would likely be more in that down grade scenario. So the first place we start to see some pressure as we have down grades, would be an increase in our risk-weighted assets.

Okay. Thank you very much.

Thank you. The following question is from Peter Routledge from National Bank Financial. Please go ahead.

Hi, this is for Laura's as well. On page 15 of the presentation, under indirect exposure, at Alberta HELOC and other exposures, have those – have households in Alberta been drawing on those lines at all in the last quarter?

No, we haven’t seen any changes in the last quarter.

If you start to see households draw on those lines, does it change your view of their credit worthiness and how do you respond?

So it doesn’t necessarily change our view in terms of credit worthiness. However, we do – we would look at that closely to see to what degree, if you will draw downs are increasing and are not revolving, because that would indicate if they haven’t moved and they are starting to move up and not come back down that there is some stress in the portfolio.

And do you start to revoke those lines for certain customers if you get worried like that? You certainly have the ability. Do you have plans to execute on that?

Well, we do like to support our clients and so we monitor the situation and it depends of course on the terms under which credits are granted and that normally there needs to be a breach in an agreement before you can sit down with a client to discuss whether or not you want to continue a relationship and under what terms and conditions.

But the household credit lines are generally revocable, right? Or do I have that wrong?

Well, again, if you have, if you are referring to HELOC, you would have to be in default of condition, so you would not be paying your interest for example, you'd be delinquent on that and that would be a moment where we could decide if we wanted to revoke credit or not. I think if we look more the question is perhaps more appropriate when we get into cards, where we do manage sort of our authorizations that we grant people and if we start to see things happening there, we do have the ability to adjust how much credit we're giving someone.

Okay. And then, just on your stress testing and this question will apply either to commercial or household portfolios. To what extent in your stress testing do you incorporate a deterioration in credit quality? So probability of default and or loss given defaults rising as things get worse?

So that is, if I call it a bit of a – what happens when we do the stress testing and that we look at multiple variables, and we look at it all kinds of different ways, but essentially when we go out and we look at what if for example unemployment rates rise, growth domestic product with retracts and what happens to asset valuations and from that we then look to see what happens to our clients, so as you would expect the probability of default would increase and depending upon what you are doing with your asset valuation your loss in the event of default would change.

So, in the context of that 60 basis point comment you made in your opening remarks, that includes a material deterioration in probability of default in loss given default across your portfolios?

That’s right.

All right. Thank you.

Thank you. The following question is from Doug Young from Desjardins Capital Markets. Please go ahead.

Most of my questions have been asked and answered but maybe, David, just on the -- and I think this was mentioned in Victor's prepared remarks in terms of, you notice an increase on average product per client. You've made a lot of investments; I think you've described them quite well in this call and past calls and in technology and product. Can you talk – give us a sense of what the outcome has been and, I guess, the best way to do that is if you could quantify it in terms of product by client or if there's other ways you can kind of quantified some of the success that you've seen? Thanks

Hi, Doug. Yes, let me speak to that, so back in 2011 when we said we had two objectives, enhancing client experience and accelerating profitable revenue growth, to make that happen we spoke about pivot from a product focus which by – pretty much by definition results in more single product relationships to a client focus and that’s really became a key element of the prioritization. So that was back in 2011 and you're right, we've been focused on that sense. So we talked about the progress since then, FirstLine a source of single product relationship, we try to get a deeper on FirstLine, couldn’t get there and then we made the decision to not roll that book any further. And in the adjustments to our new profile and travel cards, where we activated a focus on Aventura but retained Aeroplan as you know is part of that, we sold that part of our aero plan book that only had that product with us. So the single product relationships. So since then from a day-to-day operating perspective we've changed a lot, we've changed everything from incentives to the other end of the spectrum our investment I the COMPASS program and heck of a lot points in between those two extremes. And we have seen quite a change. So in 2011 we were actually heading there the other way, we were getting a thinner relationships, so our products use count, our depth measure of relationship depth was heading in the wrong direction and again that was because we focused on maybe a card sales or FirstLine sales, rather kind of product oriented focus. Since then we have changed the direction and over the last few years we've seen on the overall book about a 4% CAGRs as far as increase in…

Got it, its great. Thank you.

Thank you. The following question is from Darko Mihelic from RBC Capital Markets. Please go ahead.

Hi. Thank you. Good morning. Maybe I'll come back to my corporate and other after the call, because it's jus simple question I think we can hammer it out after the call, so just focusing back, Laura, I want to go back to the discussion on the stress test and the comment that you'd be below 60 basis points. And I guess what I'm really looking for, and I do appreciate the extra information you provided on slide 15 it's excellent, but I just want to make sure that we are talking about a stress test per se. Can you actually give us some meat as to what the assumptions are with respect to oil price, what the assumptions are with respect to unemployment and what the assumptions are with respect to real estate declines? That are baked into your stress test that results in a loss ratio that would be below 60 basis points?

Sure. So I'd like to start, I was actually hoping that comment would avoid a lot these questions, but that I did say that we would be well within that number. And so, yes, it does relate to the stress testing that we do and we have run a variety of stress test as it relates to our oil portfolio, including both direct and indirect exposures. We have looked at oil going down as low as $30. We have run unemployment in the Alberta area coming up to the Canadian national standard. We have dropped housing prices just under 20% and we also took I think about a half point off of our GDP. And so we've run, as I said a variety of stress test and those were probably the big headline items that we moved around to look at potential stress losses.

Okay. I appreciate it, I guess where I'm going with that is I'd always thought that when you say below 60 basis points, through the cycle, quote, meaning that at certain bad parts of the cycle, you could actually lose more than 60 basis points, as you did 70 basis points in 2009. So I would've thought that a true stress test could of actually pierced that 60 basis points. So maybe you can clarify my thinking on that, am I wrong in thinking of the 60 basis points through the cycle, meaning that at some point you can actually exceed that number?

So and we do talk about this being our medium term, so we talk about that, I guess, I would caution that they are stress test that we run, so they don’t, like there is a possibility they might not be correct and so we run a variety of them to a get a feel for how bad things can be and for the stress test that we run both are miles and severe stress test. We still come within those guidelines. Now that’s not to say we might not have called things right, all kinds of different things can happen in as well, but when we run our various stress test we fall within our risk appetite.

Okay. That's great. Thanks very much.

And the only thing I guess I would add to that of course, we're talking about when we run the stress a sustained decrease in oil price and that really affects Alberta primarily, so we're not talking about some other impact that could come into the Canadian market and affect other areas of the portfolio. So that would be just be the other important thing to point out.

Okay. Thanks very much.

Thank you. Due to time restrains, we have time for one more question. The last question is from Steve Theriault from Bank of America Merrill Lynch. Please go ahead.

Thanks very much. Thanks for squeezing me. If I could ask Laura, I'll burden you with one more stress test question. I'd be interested in knowing…

Hey, Steve. Can you speak a little louder.

Apologies.

That’s better.

So to Laura, just one more follow up on the stress case, I'm curious, how much RWA inflation do you get - we talked about PDs and LGDs moving higher. There is an obvious impact on earnings but I'd be interested, I don't know if you can put this in terms of basis points of CET 1, or just in terms of gross risk-weighted assets, but interested in knowing how that migration in a stress case affects the CET 1 ratio.

Yes, so when we look at – if you were to assume one notch down grade in our business portfolio, so commercial corporate loan, so imagine an overall one notch down greater than portfolio, that would equate to about $1.5 billion of increase in risk-weighted assets and so that would be about a 10 basis point corresponding decrease in the CET 1.

Could you map that on the consumer side as well, somehow?

Yes. So on the consumer side, we thought we probably be just under a $1 billion sort of if had an overall one notch down grade.

Okay…

And again, whether or not that would continue to increase would really depend upon sort of how sustained and low oil prices are and just low they actually remain.

So that's fairly modest. And then, lastly, for David, just to follow up on your commentary around the Double Double Card and the cross sell, or multiple product customers going from 4% previous example to 50%, how much of that would be sort of creditor type insurance versus savings accounts type branch products, sorry if I missed that in your discussion earlier, but I'm curious on that front?

No problem, Steve. No. That's actually the savings account affecting those numbers. Not the creditor insurance, so it's really getting to that deeper kind of transactional banking relationship that we're getting to and Petro Canada, at less than 4%, just really we are focused on the product and not the relationship around it. So it just speaks to just a mindset shift to the client and building that relationship relative to a product and having sales of the products.

Okay. And any sense of the timing of the new card that you mentioned is coming down the pipe?

Later – much later this year, it’s in development now.

Okay. Thanks so much.

Thank you.

Thank you. I would like to turn the meeting over to Mr. Geoff Weiss for closing remarks.

Thank you, operator. Well, that concludes our call. If anyone has any follow-up questions, please contact our Investor Relations department. And thank you for joining us this morning and we'll see you next quarter.

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