Guidance: L. Thomson: We expect to continue to improve the return on equity and close the gap with peers through a steady improvement in our business mix, fee income growth and ongoing productivity gains.
Demand and orders: L. Thomson: Credit card balances were up 3% quarter-over-quarter, and we continue to expect that to further improve by the end of the year, helped by growing purchase volumes, which are underscoring the improving quality of our book.
Margins: Rajagopal Viswanathan: Net interest margin expanded for the fifth consecutive quarter, up 2 basis points sequentially, driven by an increase in both loan and deposit margins.
Analyst Q&A
Analyst Gabriel Dechaine asked: Just sticking with international. On the -- you mentioned some conversion of portfolios from standardized to AIRB and that's going to reduce your core Tier 1 by 15 basis points. Just wondering why that is. Typically, it goes the other way. And is this a kind of a one and done? Management Rajagopal Viswanathan answered: So I expected to add a level of conservatism to the modeled outputs, and that's why it results in a 15 basis point increase in our capital requirements. Obviously, there will be some near-term impact to the ROE in the International Banking business because the denominator is going to increase next quarter, but it's pretty much done. And afterwards, we should see -- our portfolio is growing in line with our new risk appetite, the way Francisco is laying out this business for growth.
