The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst
: Yes, volatility obviously helped the trading numbers this quarter. Given the backdrop we're in currently, I'm just wondering if there's such a thing
as too much volatility and what that looks like. Is it mainly an issue of client activity pulling off or maybe positioning?
Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst
: The current quarter's quite early and of course, what happened yesterday is a bit of a twist, but are we still feeling good about the trading backdrop?
Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst
: We have a quarter. We're midway through Q2. And then yesterday happened. I'm wondering if you can make a commentary on what has been like
so far this quarter.
Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst
: Okay. Just switching gears to ABA, another business that's really humming along nicely. And I got to ask the sustainability question. And it's more
of a -- is there a point at which you grow your loan book to a certain size, and then that kind of spurs an investment requirement to scale up again?
Or have you built this thing because I know there was an investment phase a few years back. Have you built this thing for a very long runway of
growth?
Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst
: Okay. Well, very fitting that you answered that question, Ghislain. And congratulations and good luck in the new role.
Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst
: I just wanted to also pick away a little bit at the trading results this quarter, very strong. Maybe ultimately, is it possible that if you have $150 million,
$200 million swing in trading revenues to the upside, can we also see something like that from quarter-to-quarter to the downside? And would
you say that -- how is the positioning to, I guess, to defend the downside or provide some downside protection here?
Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst
: I mean, not to belabor the point, but you had an exceptionally strong quarter because of client activity. If next quarter, for whatever reason, we
have an exceptionally inactive client, could we be back down the $200 million or below from a trading revenue perspective?
Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst
: Okay. That's very helpful. And then, Bill, if I can just come to you, obviously, I think, in pretty good condition as far as reserves and what have you.
You mentioned that pre-pandemic for -- obviously, reasons unrelated to the pandemic, the bank had kind of started to throttle back a little bit
from a -- maybe your risk appetite didn't allow for some of the growth that was available and now your blood pressure is low and all that kind of
good stuff.
But the -- what sort of stuff are you looking for to decide when is the right time for the bank to throttle back again, if at all? Like what are some of
the leading indicators you as an experienced risk manager are paying attention to, aside from the fact that you're well reserved and you've got
good frontline originators and what have you? But what are some of the things you are paying attention to, to figure out when the blood pressure
should maybe start going up?
Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst
: I think it does. And maybe if I push my luck, so would you say in that points in the cycle comment, where would you say you think we are in the
cycle, early third, middle third or the final third?
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FEBRUARY 25, 2022 / 4:00PM, NA.TO - Q1 2022 National Bank of Canada Earnings Call
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