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: Jeff Fenwick - Cormark Securities Inc. - Analyst
: Hi, good morning, everyone. So, Dan, I want to start with wealth management. You highlighted the development costs being higher through the
quarter. I think that was a factor in Canada and the UK. Can you just remind us what all gets included in that bucket? I tend to think about it in terms
of business development and recruiting, but what sort of items get tucked in that expense line?
Question: Jeff Fenwick - Cormark Securities Inc. - Analyst
: Okay. I guess this is maybe in advance of some teams joining here. You called out this being a bit elevated and then it falls away. So this is then
tied to some new folks joining the platform?
Question: Jeff Fenwick - Cormark Securities Inc. - Analyst
: Thanks for that. And then with respect to recruiting, we haven't seen a lot of activity, I guess, in Canadian wealth management for a while. The
team count went down a little bit. I'm not sure if that's departures or maybe just some consolidation across the advisor base here. But, maybe you
can speak to the pipeline of opportunities there, and your level of focus on that versus the organic initiatives you mentioned?
Question: Jeff Fenwick - Cormark Securities Inc. - Analyst
: Okay. Thanks. And then within the UK, it looked like the compensation costs as a percent of revenue climbed up a little bit. Maybe that's partly the
factors you mentioned about bringing people in in advance of the assets joining --?
Question: Jeff Fenwick - Cormark Securities Inc. - Analyst
: Okay. thanks.
Question: Jeff Fenwick - Cormark Securities Inc. - Analyst
: And then maybe just one more here within the capital markets business. In the US, a question on your G&A. I'm just wondering, are there some
items that get front-end loaded through the fiscal year here that caused that to be elevated in the first quarter? When I look year over year, that
number was flat, a little over approaching $11 million, but that's more than double sequentially there. So I'm just trying to get a feel for that.
Question: Stephen Boland - Raymond James Ltd. (Canada) - Analyst
: Yes, good morning. Can you talk about --- I guess, I'm not sure if this is new disclosure. I apologize if this was presented last quarter. But you identified
that US trading provision that was set, I guess you identified that it's the US trading operation that you had to set the provision up and that it could
go -- the provision may have to go up. Can you just talk any kind of details around that?
Question: Stephen Boland - Raymond James Ltd. (Canada) - Analyst
: How much it would be, like, if you put another $5 million, $10 million, $15 million, $20 million in? Like, is it just a bit early to decide how much --
Question: Stephen Boland - Raymond James Ltd. (Canada) - Analyst
: Yes, maybe just going following up on Jeff's question on the US capital markets. I mean, the revenue sequentially up, but this division tends to
struggle over the last couple of years or at least over the last six, seven quarters. The revenue seems to go up, but the profitability [isn't] there.
Besides getting the revenue to maybe $100 million, which seems to be the threshold of profitability, is there anything that can be done to get that
division into profitability?
Question: Stephen Boland - Raymond James Ltd. (Canada) - Analyst
: Okay. I guess my last question, Dan, I always ask you this about optimism, your comments, seeming that, again, there may be a shift going into
mid-market away from large cap that benefits your business for sure. Is that your expectation for the latter half of this year? Is that over the next
18 months that continues to improve?
Question: Graham Ryding - TD Cowen - Analyst
: Good morning. Just a couple from me. On the Canadian wealth side, the AUA, I think, was flat quarter over quarter and year over year, maybe
growth has been muted. Were there any departures or anything in particular, client outflows, anything dragging the growth on the Canadian
wealth side?
Question: Graham Ryding - TD Cowen - Analyst
: Okay. And then my only other question would just be cash sweep income has been a bit of a headline issue in the US wealth space. Can you just
give us a bit of context or color on how material interest income from client cash is for your Canadian and UK wealth businesses? And are there
some other items in there perhaps that are also contributing to that revenue line?
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