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: Geoffrey Kwan - RBC Capital Markets, Research Division - Analyst
: I know you provided loan growth guidance for 2021. But just wondering from an origination perspective, like how would you describe your deal
pipeline and the level of housing activity relative to pre pandemic and then also, are you seeing the trajectory slow from the high levels of activity
that we were seeing in Q3 and Q4 of last year?
Question: Geoffrey Kwan - RBC Capital Markets, Research Division - Analyst
: Okay. And and if we go into this assumption that the economic and employment recovery continues to improve, but we continue to see what
we're seeing in the housing market in terms of strong activity and quite strong home price appreciation. What would need to happen for you to
feel like you need to maybe tighten some underwriting standards?
Question: Geoffrey Kwan - RBC Capital Markets, Research Division - Analyst
: Okay. And just my last question would be, you've talked about resuming your dividend growth strategy when OSFI lifts the ban on banks and
insurers around that. But I think even with the growth rate in the dividend that you've articulated, it's likely that you'll still grow your CET1 above
your 13% to 14% target. And then you'll get arguably a big or significant boost from AIRB. But I know it's a little bit too early to say, but can you
talk about how you think about that excess capital buildup and how to deploy it to kind of keep you within that 13% to 14% CET1 range?
Question: Etienne Ricard - BMO Capital Markets Equity Research - Analyst
: So in terms of the 2021 outlook, it's good to see growth in your alternative mortgage book expected to resume. I'm curious to hear how has the
competitive landscape with larger lenders involved over the past couple of quarters and notably in terms of renewals?
Question: Etienne Ricard - BMO Capital Markets Equity Research - Analyst
: Okay. Perfect. Good to hear. Switching towards EQ Bank. This now accounts for, I believe, 28% of your deposits that is trending favorably towards
your objective to, I believe, have about 1/3 of total deposits on EQ Bank. Given the momentum you've had so far, do you see this the potential to
go higher? And what would you expect the impact under cost of funding to be over the upcoming 2 years?
Question: Etienne Ricard - BMO Capital Markets Equity Research - Analyst
: Okay. Perfect. And last one for me. On covered bonds, could you provide an update on market appetite? And how -- I know you mentioned Q2 for
the first issuance. How sizable could that be? And longer term, how sizable could covered bonds become as part of your funding mix?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Excellent growth in the EQ Bank deposit channel and obviously, very rapid over the last couple of quarters, obviously picked up, too. So I'm just
curious, are there any metrics or customer characteristics that you're looking at that would give you confidence in the stickiness of these deposits
relative to, let's say, like 2019 acquired deposits?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Okay. Great. That sounds good. As we think about the evolution of EQ Bank, you mentioned payments as being one of the areas of growth potential.
Can you give us a little bit more color as to how you're thinking about payments and entering that space? And I specifically look at a recent
transaction with like Neo Financial and HBC. Is that a decent example to look at in terms of where you might take it? Or are there other avenues or
strategies that you might put in place on the payment side?
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