Dave Mun - Senior Vice President and Head of Investor Relations David McKay - President and Chief Executive Officer Janice Fukakusa - Chief Administrative Officer and Chief Financial Officer Mark Hughes - Group Chief Risk Officer Jennifer Tory - Group Head, Personal & Commercial Banking Doug Guzman - Group Head, Wealth Management & Insurance Doug McGregor - Group Head, Capital Markets and Investor & Treasury Services Zabeen Hirji - Chief Human Resources Officer Bruce Ross - Group Head, Technology & Operations

Robert Sedran - CIBC World Markets John Aiken - Barclays Capital Sumit Malhotra - Scotia Capital Gabriel Dechaine - Canaccord Genuity Sohrab Movahedi - BMO Capital Markets Peter Routledge - National Bank Financial Doug Young - Desjardins Securities Meny Grauman - Cormark Securities Ebrahim Poonawala - Bank of America Merrill Lynch

Good morning ladies and gentlemen, welcome to the RBC 2016 Third Quarter Results Conference Call. I would now like to turn your meeting `over to Mr. Dave Mun, SVP and Head of Investor Relations. Please go ahead, Mr. Mun.

Thank you. Good morning, everyone and thanks for joining us. Presenting this morning are Dave McKay, President and Chief Executive Officer; Janice Fukakusa, Chief Administrative Officer and Chief Financial Officer and Mark Hughes, Group Chief Risk Officer. Following their comments, we will open the call for questions. The call is one hour long and will end at 9:00 A.M. We will post management's remarks on our website shortly after the call. To give everyone a chance to participate, please limit your questions and reque. Joining us for your questions are Jennifer Tory, Group Head, Personal & Commercial Banking, Doug Guzman, Group Head, Wealth Management & Insurance; Doug McGregor, Group Head, Capital Markets and Investor & Treasury Services; Zabeen Hirji, Chief Human Resources Officer and Bruce Ross, Group Head, Technology & Operations. As noted on Slide two, our comments may contain forward-looking statements, which involve applying assumptions and have inherent risks and uncertainties. Actual results could differ materially from these statements. I'll now turn the call over to Dave.

Thank you, Dave and good morning everyone. RBC had a record third quarter with net income of over $2.8 billion up 17% from last year or 7% excluding the gain from the sale of our home and auto insurance business to Aviva. Compared to the second quarter, earnings were up 13% or 3% excluding the gain on sale. The sale of our home and auto business was part of our strategy to balance the needs of our clients, while investing on high return businesses with lower earnings volatility for optimizing capital for our shareholders. The sale included a distribution agreement with Aviva, which enables us to now provide an expanded offering of products and solutions to our clients. Proceeds from the sale will allow us to invest in other core businesses and initiatives including accelerating investments in a digital strategy to enhance the client experience and lower operating costs. The gain also contributed to a strong capital position as we finished the quarter with the CET-1 ratio of 10.5%. Returning capital to shareholders remains a top priority and I’m pleased that this morning we announced a $0.02 or 2% increase to quarterly dividend to $0.83 a share. In addition, this quarter, we repurchased over $290 million of common shares for about 2% of the buyback program, which we announced in late May. Our results this quarter reflect the strength and diversity of our leading client franchises and geographies that we operate in. We achieved these results particularly as the operating environment continues to present challenges for us and our clients. As you know, the wildfires at Fort McMurray were devastating for many families in the impacted communities and RBC remains committed to helping our clients. However, I would note the overall financial impact to our third quarter results, net of reinsurance was not significant. This past quarter, we also saw the UK’s decision to leave the EU adds further volatility to global markets. As equity markets rebounded from Brexit and credit spreads tightened, our market sensitive businesses benefited. In fact, investor and treasury services posted one of its strongest quarter yet, due in part to the derisking measures that we took across our funding and liquidity portfolios in advance of the vote. We also took the opportunity to have active dialogue with many of our asset management clients to discuss the possible impacts on their businesses. In the weeks following Brexit, we saw Central Banks globally adding more liquidity into the system, which in turn helps spur a rally in credit including high yield, corporate and investment grade. We were committed to helping our clients manage through the uncertainty and volatility, driving for example fixed income trading revenue in capital markets to its highest level in over five years. We achieved these results while remaining focused on optimizing the business, including shifting capital from lower risks return businesses. Well it’s too early to tell what the long-term implications will be, we have a continued commitment to the UK market and remain well positioned to support our clients and grow our business in the region. Turning to Wealth Management as the TSX and S&P indices were both up 5% sequentially, we saw our clients confidence improve. RBC global asset management had a record July in Canada with mutual fund net sales of $1 billion. This record month follows a strong calendar second quarter with RBC capturing approximately one-third of industry sales. Wealth Management also continued to benefit from strong results in City National, which contributed earnings of $201 million year-to-date or $338 million excluding the amortization of intangibles and integration costs. I’m very pleased with the progress so far, as you heard at our City National Investor Day in June, we are seeing the benefits of referrals and collaboration across our businesses. We have a clear path for long-term growth in the U.S. and I'm confident we will deliver value to our shareholders. Turning to Canadian banking, we saw solid results driven by good volume growth and expense control offset to a degree by pressure from low interest rates and higher year-over-year credit costs due to the challenges in the Alberta economy. As the operating environment continues to weigh on results, effective cost management remains a top priority. Our cost management capabilities form part of business as usual activities and year-to-date drove positive operating leverage of 1.7% and efficiency ratio of 43% an all time low. Our bank wide efficiency ratio has also improved as a result of our cost management initiative across the bank. What is more, we achieved these results while increasing our investment in technology and innovation, advancing our journey to digitize the bank and building long-lasting client relationships and our clients will hear from us on this front over the new few quarters. Importantly, our clients are recognizing all of this. In July, we ranked highest in customer satisfaction among Canadian five retail banks as part of the JD Power survey, and recently RBC was once against recognized by retail bank of international winning best payment innovation and best use of data analytics for 2016. RBC focused investment and emerging payment infrastructure and leading edge data analytics has allowed us to become an industry leader and set the standard for secure mobile payment solutions. These achievements demonstrate our success in serving clients where and when they want, enhancing their overall experience and building long-lasting relationships. Our results this quarter also highlight our disciplined risk management, which is central to driving sustainable earnings growth for RBC. Our credit quality improved quarter-over-quarter, mainly reflecting lower provisions in our oil and gas wholesale portfolio, which Mark will expand on later. In addition, this past quarter we acquired a higher amount of portfolio insurance as part of our prudent risk management practices. We recognized that the environment remains uncertain and could put upward pressure on PCL. On housing, we continue to closely monitor the greater Vancouver and Toronto areas. A short supply of single family homes in both cities, coupled with strong demand fueled by household formation including net immigration has driven strong price [appreciation] (Ph). We have prudent underwriting practices in place with the necessary technology to closely monitor these markets and quickly react as situations may materialize. Regulatory bodies are also responding to the combination of rising house prices and record levels of consumer leverage. We support the Canadian federal government’s recent action to form a working group to study the housing market and develop appropriate recommendations. To wrap up, I’m very pleased with our third quarter results, marking a record first none-months of the year, we finished the quarter with even stronger capital levels, while at the same time delivering industry leading returns. We had strong performance across most of our client businesses, driven in part by our commitment to discipline risk and efficiency management, while at the same time evolving our digital capabilities for our clients. Our size and scale enables us to invest in new capabilities and deliver an exceptional client experience and I’m confident that we will continue to deliver long-term value to our shareholders given the strength by diversified business model. And with that, I’ll turn the call over to Janice.

Thanks Dave and good morning everyone. We had record third quarter earnings of over $2.8 billion up $420 million or 17% from last year. As Dave mentioned, this quarter we completed sale of our home and auto insurance business, which resulted in an after-tax gain of $235 million. Excluding this gain, adjusted earnings were up 7% from last year reflecting strong earnings in wealth management and capital markets and higher earnings in personal and commercial banking. These results were partially offset by lower core results and in insurance and in investor and treasury services as the prior year included an additional month of earnings. Compared to last quarter, earnings were up 13% or 3% excluding the gain on sale reflecting higher results across most of our businesses and lower PCL. Our performance also reflects benefits from our continued focus on managing cost in this slower revenue growth environment to drive efficiencies and enable us to increase investment in key areas including digital initiative. Our Q3 results also benefitted from a lower tax rate mainly due to the earnings mix and the impact from the sale of our home and auto insurance business. Our tax rate for the first nine-months of the year was approximately 21% and we continue to anticipate that our 2016 tax rate at the enterprise level will be at the low end of our expected range of 22% to 24%. Turning to capital on Slide 7. Our common equity tier-1 ratio was 10.5% up 20 basis points from last quarter largely reflecting strong internal capital generation. The sale of our home and auto business also contributed seven basis points to this increase. These factors were partially offset by the impact of a lower discount rates increasing our pension obligation, share repurchases and funding organic business growth, which increased risk-weighted assets. Moving to the performance of our business segments on Slide 8. Personal and commercial banking reported earnings of over $1.3 billion up $41 million or 3% compared to last year. Canadian banking had earnings of over $1.2 billion up $45 million or 4% from last year. Results were driven by volume growth of 6% and non-interest income growth of 5% year-over-year largely reflecting fee based revenue growth across most businesses. This includes strong deposit growth of 7% and loan growth of 4%, which was driven by continued growth in residential mortgages, business loans and credit cards. Our net interest margin of 2.63% was down three basis points compared to last year reflecting the continued low interest rate environment and ongoing competitive pressures. Cost management continues to be a focus with expense growth of only 2% year-over-year and positive operating leverage of 1.4% this quarter, compared to the prior quarter Canadian banking earnings were up 3%. Seasonal factors including additional days in the quarter, higher fee based revenue and volume growth were partially offset by higher cost to support business growth and lower spreads. Our net interest margin was 2.63% down one basis point from last quarter and in line with our estimate of one to two basis points of compression per quarter in this low interest rate environment. Caribbean and U.S. banking had earnings of $38 million down $4 million from last year. Sequentially, earnings were down $18 million partly due to lower foreign exchange revenue. Turning to Slide 9. Wealth management had earnings of $388 million up 36% from last year and 1% from last quarter. City National continues to perform ahead of our expectations with earnings this quarter of $82 million driven by strong loan and deposit growth. Excluding the amortization of intangibles and integration costs, earnings were a $123 million up 14% from the prior quarter. Excluding City National, wealth management earnings were up 7% from last year reflecting the benefits from our efficiency management activities and a favorable change in the fair value of our U.S. share based compensation plan. Global asset management revenue was relatively flat from last year reflecting stable assets under management as capital appreciation was largely offset by net outflows primarily outside of Canada. Following a weak RRFP season, we saw strong long-term mutual fund sales in Canada largely offset by net redemption of funds in Europe, reflecting the ongoing market volatility in the region. Canadian wealth management revenue was up 4% from last year mainly due to higher average fee based client assets reflecting strong net sales and capital appreciation. In fact, assets under management were up 14% from last year. Moving to insurance on Slide 10. Net income was $364 million up a $191 million from a year ago. Excluding the gain on sale from our home and auto business, adjusted net income of a $129 million was down $44 million or 25% mainly due to lower UK annuity contract earnings. The sale of our home and auto business is expected to reduce earnings by $10 million to $15 million per quarter going forward, this estimate includes earnings from the distribution agreement we have with Aviva. Results also reflect higher claim costs mainly a $10 million impact related to the Fort McMurray wild fire. I would note that RBC Insurance will have very limited exposure to the Fort McMurray wild fire or flood claims going forward. Effective July 1, the portfolio has been fully assumed by Aviva Canada by way of sale. Sequentially, adjusted net income was down $48 million or 27% from the prior quarter reflecting lower investment related gains and higher claims costs, mainly related to the Fort McMurray wildfires. In addition, the prior quarter included a tax recovery. Turning to Slide 11, investor and treasury services had strong earnings of $157 million, down $10 million or 6% from last year as the prior year included an additional month of earnings in investor services of $28 million after-tax. Excluding the prior year’s additional month of earnings net income was up $18 million or 13%. During the quarter, higher funding and liquidity earnings were partially offset by increased investment in technology initiatives and lower earnings from foreign exchange market execution. Sequentially net income was up 13%, primarily due to higher funding and liquidity earnings. This was partially offset by higher regulatory costs. We have been in the process of derisking our funding and liquidity portfolio and our Q3 results benefited from tightening credit spreads that took place following Brexit. Turning to Slide 12, capital markets delivered strong results. Net income of $635 million was up $90 million or 17% from last year, driven by strong results in global market businesses, lower taxes and an increase due to foreign exchange translation. These factors were partially offset by lower results in our corporate and investment banking business mainly reflecting decreased client activity. Our capital market result reflects more favorable markets driving strong business performance for fixed income trading. Our fixed income business in Europe continues to perform well with both the business and Europe’s overall results to posting their strongest quarterly revenue in over five-years. Sequentially earnings were up $52 million or 9% driven by higher fixed income trading revenue, lower PCL and growth in debt and equity origination activity. These factors were partially offset by lower equity trading revenue largely in Canada, higher variable compensation on improved results and higher taxes. Overall, we had strong underlying results across most of our businesses despite the challenging market environment. And with that, I’ll turn it over to Mark.

Thank you, Janice, and good morning. Turning to Slide 14. Total provisions for credit losses of $318 million were down $142 million or 31% from last quarter. Our PCL ratio of 24 basis points decreased 12 basis points. If we exclude last quarter’s $50 million increase to the collective allowance, our PCL ratio on impaired loans decreased eight basis points. Our portfolios benefited from stable economic conditions, a modest decline in Canada’s unemployment rate and 28% increase in average oil prices since Q2 2016. Our year-to-date PCL ratio of 30 basis points is within our historical range of 30 to 35 basis points. Our gross impaired loan ratio of 70 basis points is down one basis point from the prior quarter. Let me discuss the credit performance of each segment on Slide 15. In personal and commercial banking, provisions of $271 million decreased by $8 million from the last quarter, reflecting lower provisions in our personal lending portfolios in Canadian banking. Caribbean and U.S. banking provisions were flat quarter-over-quarter. Wealth Management provisions of $14 million increased by $7 million from last quarter, mainly reflecting a modest increase in provisions at City National. Capital markets provisions of $33 million decreased by $90 million from last quarter, largely reflecting fewer provisions in the oil and gas sector. This segment also had a couple of recovery this quarter, one of which was in the oil and gas sector. As I have mentioned before, wholesale provisions can by lumpy from one quarter to the next. Turning to Slide 16. Gross impaired loans of $3.7 billion were relatively flat from last quarter. New formations, which were still at elevated levels compared to prior years, were mostly offset by repayments in write-offs. I would also note that these new formations were 39% lower than last quarter. Increased impairments in our capital markets oil and gas portfolio were mostly offset by lower impaired loans in Caribbean banking and lower acquired credit impaired loans related to City National. With respect to the increase in oil and gas impairments, our senior position in the debt stack and the value of our collateral give us comfort in our level of provisioning at this time. Let’s now turn to oil and gas on Slide 17. With the moderate increase in oil prices over the last quarter, now in the high 40s has provided some relief to our clients. It remains well below 2014 level and continues to challenge the profitability of the sector. A number of our clients took proactive measures to strengthen their financial position. This included selling assets, reducing expenses, accessing capital markets to raise additional funds and refreshing hedges at higher oil prices. In particular, we saw an increase in asset sales in the drilling and services sector. Our drawn exposure decreased by 12% from last quarter largely due to normal course business drivers partially offset by the impact of foreign exchange translation. Our undrawn exposures were down by 2% over the same period. Outside of our direct oil and gas portfolio, our wholesale portfolio remains stable. Let’s now turn to our retail exposure on Slide 18. The sustained low oil prices and higher unemployment rates continue to impact our retail portfolio in oil exposed provinces and we have seen an increase in provisions in delinquencies in these regions. However, it has been more than offset by improvements in economic conditions in other regions such as Ontario and BC as reflected by reduced delinquencies on a national basis, which demonstrates the benefit of our diversified portfolio. Overall, our Canadian retail portfolio performed well this quarter with PCL ratios down across most products. Let me now turn to our more portfolio on Slide 19. Our portfolio continues to perform well as the PCL ratio was unchanged from the previous quarter at one basis point. As Dave mentioned Greater Vancouver and Toronto markets are being closely monitored due to alleviated house prices. However, we consistently have the highest customer credit scores in these markets. We also continue to closely monitor our mortgage portfolios in oil exposed regions. Overall, we remain comfortable with our exposure to the Canadian housing market for the following reasons. We did not participate in the second lien market and do not originate sub-prime mortgages. We utilized proprietary channels for mortgage origination allowing for a centralized credit adjudicating process and enhanced monitoring. We are diligent in income verification, which is a key component of our mortgage approval process. Our client’s credit profiles are strong and have remained stable. In Alberta, customer credit scores remain in line with the national average and a higher proportion of the portfolio is insured. And finally, I would note 48% of our portfolio is insured which is up from 46% last quarter. This is due to the additional portfolio insurance that we purchased this quarter, which Dave highlighted in his remarks. Turning to market risk on Slide 20, VAR decreased by $8 million from last quarter due to inventory reductions and equity portfolios fixed income and securitized products. We had one day of trading loss this quarter, which totaled $4 million. The loss was driven by market volatility on our equity derivatives portfolio from hedge positions taken a week in advance of Brexit. In conclusion, this quarter’s strong credit performance shows the strength and resilience of our diversified portfolio. For the remainder of the year, we continue to believe our full year-to-date PCL will fall within the 30 to 35 basis point range in line with our historical average giving ongoing economic and market headwinds. With that, we will open the lines for Q&A and I would turn it back to the operator.

Thank you sir. We will now take questions from the telephone line [Operator Instructions]. Our first question is from Robert Sedran with CIBC. Please go ahead.

Hi, good morning. Mark I appreciate some of the conservative commentary around the outlook, but I’m just curious if that’s based on Chief Risk Officer conservatism or it’s based on things that you can see but we cannot. Like has the deterioration or has the performance of the portfolio stabilized or is it still trending the way it had been. I understand the formation number, but just curious the underlying trends?

I guess I still remain cautious, certainly the oil price has improved, which is very helpful, but we do have higher level of impaired loans from previous years, which you have mentioned so that add to my caution. I still do see some softness in Alberta. I would offset both of those with the positive trends we are seeing across the rest of the country as highlighted by your improved delinquency numbers. And if the oil price can continue in this range the markets are relatively helpful to our clients in raising further financing and helping themselves, which has helped. So I remain cautious, but if the market trends continue, I could certainly see us at the bottom of the 30 to 35 basis point range on a full-year basis.

With that comment about the markets being available to some of your borrowers, should we be more concerned about the Canadian banking segment or about the capital market segment when it comes to loan losses related to oil and gas?

I would say on the Canadian banking side, it's a matter of two halves a little bit, we have Alberta, which does see continued softness. The unemployment rate in Alberta is certainly higher, but in the rest of Canada particularly Ontario and BC, we continue to see very strong growth and that is performing well. The wholesale portfolio and capital markets, as I mentioned in my remarks can be lumpy. We still have sizeable impaired loans in that group, they are being resolved quite well through as we have mentioned before the security of our position and the seniority in our debt stack, but they can be lumpy.

Okay, thank you. I'll requeue.

Thank you. Our next question is from John Aiken with Barclays. Please go ahead.

Good morning, Janice. Thanks for the guidance on the insurance impact from the sale, but I’m assuming that you are not basing that off of the your adjusted number for this quarter, but more of a run rate that we have seen over the last few quarters.

Yes that's the run rate and it also is net of the fees that we will be getting from Aviva in marketing and we expect those fees to ramp up as we are carrying additional products and offering fuller service.

So if the sales do beat your expectations that $10 million to $15 million could actually be reduced a couple of quarters out or a couple of years out?

Yes that's what we are hoping.

Okay. And if I could do a follow-on the investor and treasury services. Obviously the tightening credit spreads as you mentioned were beneficial, but the actions taken ahead of the quarter, I’m assuming you were referring to the decline in deposits that you had. What can we expect to see the impact of that going forward in terms of earnings assuming that the market stabilizes where we are at present?

I will start with and Doug you may have some additional color at the detail business of it, but the actions that we are talking about were the fact that we had increased our liquidity portfolios in anticipation or reacting to what might happen in the U.S. market, and we also were taking risk down as a function of what could possibly happen with respect to Brexit. And so, you saw a lot of activity in INTS, but net on liquidity basis you saw where our liquidity coverage ratios is, we are down well within any buffer that we have for regulatory purposes, but we have lower liquidity portfolio.

Yes, I don't there was no strategy around of reducing deposits. The strategy that Janice was referring to in her remarks was really the liquidity portfolio, the $50 billion plus or minus, we just reduced term, reduced tenure in that book and reduced credit risk in that book going into Brexit. We had a mark immediately after Brexit that was negative, but it turned quite positive as credit gaped in when the Central Bank started buying credit.

Great. Thanks for the color, I appreciate it.

Thank you. Our next question is from Sumit Malhotra with Scotia Capital. Please go ahead.

Thanks, good morning. My questions are for Mark and comeback to your commentary on all banks provisioning. So the 30 to 35 basis points ratio that you have talked about for 2016 since start of the year. As you look at some of the moving parts and where you are in your provisioning cycling for energy. I guess part A would be, do you feel that’s still a reasonable range that investor should be thinking about for 2017 and perhaps relatively some of your counterparts have talked about a cumulative loss rate on the energy producer portfolio and by my math you are at about 4.2%. Are you in a position to help us think through what is a reasonable level for that number to end up that as the cycle plays out, given some of the positive you have talked about like the ability of your client’s access the equity markets?

Thank you for the question. 2017 is obviously hard to give too much guidance on, a lot as you certainly moving part, the oil price can certainly have a big impact on that. I think we still feel comfortable with the 30 to 35 basis points being the average normalized experience that we have had over the years. Whether the bottom of that range or the top of that range, I think will depend on how oil price is go economic conditions et cetera. With respect to the cumulative ratio, the 4.2 that you are quoting is around the numbers that we would calculate as well. I would note that that is over a seven-quarter period going back, I think to the beginning of 2015 to-date and so if you extrapolated that into next year assuming the oil price stay down then certainly the cumulative impact would continue to be higher. I would contrast that, I would say the 1986 period, when some commentators obviously have talked to around the 600 basis points level for the cumulative impact. But that was actually over a four-quarter period, because it was a much deeper, but very narrow type of crisis. This is now a more sustained crisis. So I think you do have to take into account how the period of time is changing with the various comparisons of crisis. Over the next year, we will certainly see a number of our clients benefit from the market continuing, they continue to be positive or assuming they continue to be positive. We still believe our security and collateral positions will help us, we may have impaired loans, we may take PCL, but we should see recoveries as the companies work their way through them. We have also sort of seen companies that went into bankruptcy earlier in the year and have come out with much stronger balance sheets and they have been able to continue to move forward. So there is a lot of moving parts as you mentioned, I think we remain cautious while the prices are where they are, but it has been a bit more of a sustained crises than the previous one.

You gave some very interesting tit bits there and that really caught my attention was you did 600 basis points in 1986 over four quarters. Right now, you have done about 400 over seven quarters. But if we are hovering in this $50-ish range certainly going through 2017, getting up and over that 600 level doesn’t sound like it’s out of the realm of possibility based on what you are seeing. Is that a fair assessment?

I think certainly the math could suggested on an average - once you start adding those numbers together, we could get up to that 600 level again, it will of course be dependent upon how the recoveries then start to net off against the PCL that we have taken in previous quarters.

Thank you for that. This is a very quick one for Janice on the numbers in the corporate support segment. We usually don’t talk about that one very much, but just wanted to ask you on net interest income. That line has consistently been 100 million and 150 million drag on NII, but it improved significantly this quarter. Was there anything in particular going on that caused that to drop and is it sustainable?

It’s always episodic depending on where the mark are on our hedges. So we with the little bit of the volatility that’s why we have a negative as appose to a positive, but I would say that treat it the way, you have treated it in the past. There is nothing that’s going to the systematically done differently today, it’s more mark-to-market on hedges.

Thanks for your time.

Okay.

Thank you. Our next question is from Gabriel Dechaine with Canaccord Genuity. Please go ahead.

Hi, good morning. Look I have got sort of part of the 20th short Canada Housing report in my career yesterday and [Global Mail] (Ph) has another story on Vancouver housing today. What do you view as the main risk from housing in Vancouver and some of the recent pricing trends, because I have become a little bit I guess desensitized over the past few years, but its still something that I think about, something I could ask about and I’m curious about your perspective. And Mark I think it was you or Dave who mentioned that if something happens you have got a contingency plan in place. So what are you thinking there?

It’s Mark here, I’ll start. Certainly from our view of Vancouver and/or Toronto is the same, obviously with the house price deprecation that we have seen over the previous quarters. We are monitoring it quite close, Vancouver has actually cooled off a little bit in recent weeks. But I think in our case, it’s just really about continuing to maintain our discipline and risk posture as to how we approve loans and the type of origination that we put on. We are quite pleased with the clients and the credit quality of the clients that we have there, we are quite pleased with our portfolio, but it is just because of external factors that are going on there, we do have to continue to monitor it quite closely.

Are you more concerned about like decreased economic activity if the housing market slows down or higher unemployment in BC potentially as apposed to the housing market itself is going to have something bad happen to it.

I would say that it’s just one of the factors that we include in our monitoring. At this point, I wouldn’t place any greater emphasis on that.

This is Dave here, the only thing I would add, according to the numbers that we can obtain externally, our growth rate in Vancouver would be under index to the market from what we can see.

Thank you. Our next question comes is from Sohrab Movahedi with BMO Capital Markets. Please go ahead.

Thanks. Just a couple of quickies here. Mark, the portfolio insurance was that for risk management purposes you would say you bought this quarter?

Yes, it was an opportunity, which we took advantage of.

Okay and then maybe for Doug and Mark. I mean trading revenue obviously very good. You talked about the fixed income, but the foreign currency also is kind of running at well above trend rates and VAR was down throughout the quarter. Just trying to get a feel for lower VAR - market risk VAR, what is the outlook for trading at these types of VAR levels versus let’s say last quarter’s VAR levels. Is it repeatable at these VAR levels or we have to add risk?

You know I think its repeatable, I think it’s really much more dependent on market circumstances. On the fixed trading numbers really those numbers improved the most in Europe and we are seeing just better market share after a long restructuring of our European operations, our [REITs] (Ph) business producing well. Our European credit business is doing extremely well actually in terms of especially very high market share in Sterling. So that business is just doing more customer business, it’s not about putting risk on and I think on the North American trading businesses, Canada fixed income fine, equity is a little slower in Canada and the U.S., because the new issue environment has been slower, but hopefully that will come back as markets have come back. So I think after the Labor Day we will see whether or not we get more activity. On the FX, there is a line in the stuff that has a very big number and that’s futures activity in investor and treasury services, a lot of customer were repositioning around Brexit, so we had a pretty good quarter in that space and we are just doing more FX in Canada and Europe.

Okay. So I guess what I’m trying to get a feel for here, maybe coming back now to Janice is you don’t think that you will have to add to the RWAs maybe through the market RWAs in the future to maintain this. So as such it becomes an tax on the CET-1 ratio.

That’s a good question Sohrab and the answer is no we don’t feel we have to add to the RWA to maintain this sort of trajectory on that line.

Okay, thank you.

Thank you. Our next question is from Peter Routledge with National Bank Financial. Please go ahead.

Hi. Just a question Dave on your remarks. I mean you made a point that things look pretty good right now in Vancouver and Toronto housing, but you also talked about reacting quickly to changes in those housing markets and I wonder if you could give us a little more color on how the bank might react?

I can start and may be Jennifer can add a few words. I think Mark covered it off well in his comments, so I don't want to reiterate what we have already said. But certainly we watch the markets very carefully, we have got strong adjudication processes. We watch how we are performing against other market players and from what we can tell, we are under indexed to the growth in that marketplace right now. So I think that's the best proof point that we are being careful in the deals that we select and the business that we do, which should be tangible evidence that we are reacting to potentially heated housing price market where as Mark pointed out higher unemployment rates would have harsher impact on potential portfolio. Jennifer do you want to add anything from what you are seeing?

The only thing I would add to that is as Mark covered off, the FICO scores of the clients that we are originating there are actually above the national average. The loan-to-value is below and the portfolio continues to perform very well. We also have very good ability to actually isolate our monitoring that we have described before by postal code and watch for any early signs that there is any kind of issues with our portfolio. So as Mark very well covered off, our proprietary sales force as well gives us the comfort that we have good controls over our lending practices and our adjudication practices.

Do you have the ability and would you revoke revocable unsecured household lending commitments in a particular region that you are worried about?

We obviously have the ability to do that but we have not had to deploy that in the current situation.

And you didn't do it in Alberta?

Well, as we have said about our Alberta portfolio is we are continuing to monitor it very closely and if there are signs of deterioration we can adjust and I think we have adjusted some of our origination practices and made adjustments to that in the last year.

Great, thanks for taking my questions.

Thank you. Our next question is from Doug Young with Desjardin Capital Markets. Please go ahead. Mr. Young your line is now open.

Question on set one, just wondering what was the impact from the portfolio insurance on the set one in the quarter? And then Janice the rules are coming I guess our new rules are coming or mortgages come November 1, and I am wondering if you have a kind of best guess of what that impact could be on your set one ratio? Thank you.

Thanks Doug. On the first question, in fact on the set one ratio from the mortgage insurance is pretty small, we did that insurance more as a risk management tool. With respect to the new rules, first of all we don't know precisely what the new rules are going to be, but we have looked at and spoke to the regulator about the extent of how we see rules will be implemented and with respect to the impact, we have had a discussion as has the industry around the fact that they will be prospective and the view would be that the banking system will be in a position to earn into the ratios. So while we have looked at them and modeled some of the worst case or reasonable case. We think that that whatever the rules are we will have the ability to manage our capital and optimize our capital to fully accommodate them within the rollout schedule envisaged by the regulators.

And do you have a sense of what period that would be at this point?

I think it could be out to 2020, 2021. The period is under discussion right now at Basel, because of the fact that this involves the whole world including Europe and the U.S.. And so they are having discussion around. For example, what is happening in Europe and potential impact on banks in Europe. So we are looking at the impact of that is having in pushing out some of the deadlines so we think.

Doug it’s Mark here. I mean, I think your question was specifically about the November 1, OSFI change. And then Janice started with her answer there and then broaden the answer to the Basel IV sort of capital implications. I would just add with respect to the specific November 1. The comment that Janice made about, it really applies to new originations, I think is really the key points, it’s not affecting the entire portfolio, it applies the new origination. Is that does include renewals, but our view of the impact for 2017 is still relatively minor.

Okay, great. Thank you.

Thank you. Our next question is from Meny Grauman with Cormark Securities. Please go ahead.

Hi, good morning. David, you have been pretty clear about the company’s philosophy in terms of managing expenses. But I’m wondering, more broadly, under what circumstances would you consider taking a broader restructuring charge. And just on a related note, what your peers do impact your thinking on this issue or would you say it’s not a factor at all and what you decide to do?

I would say, it’s not really the factor, we are pretty clear on our map forward. We have a real focus on costs, I think we are really happy to see where our costs control comes in with the 1% growth in NIE, net of City National. I think that’s without having taking any one-time charges to manage that. I think that seems to compare very favorably based on the work we see in the marketplace by others as a cost control number. So absolutely benchmark, we like to see where we are, but we are very focused on overall program. We are down in a number of our businesses in FTE, we plan that, trying to manage that with the minimal amount of customer impact, which is a big part of our journey. We have the best productivity ratio in the industry and we are very proud of that, but that doesn’t mean we are complacent. So benchmarking is a big part of it, but overall, we continue to look at for opportunity and we have very defined programs to take out costs, digitize our bank and to move forward creating shareholder value. So it’s a core part of our D&A and I think as we have mentioned on other calls that the cost of managing down our expense base is embedded in our run rates and therefore, it’s a continues activity that doesn’t necessarily require a one-time charge. It doesn’t mean that we won’t come to a junction where we have to make a more significant change to the organization, we are always open to that, so we would not prohibit us from doing it, but our current methodology seems to be performing very well.

Thanks for that. And then if I could just switch gears and ask about just the impact of Brexit on the capital markets business in Europe going forward. I’m wondering, if you have any visibility in terms of any changes that you would have to make for your existing structure related to that vote?

I’ll start and maybe I’ll hand it over to Doug. It’s obviously pre-mature to comment on what changes we would have to make. The current structure that we have gives us enormous flexibility, particularly with the bank in Luxembourg to adapt to any changes. But it would be pre-mature to say right now, there is a lots that has to happen obviously with invoking of the treaty and then the negotiation over two-year period and the past porting rule. So like all market participants we’re sitting back and we are watching, but we are committed to this market, it’s a large market in the UK, we have got a very strong business there and we are committed to that business. And we see an opportunity to serve clients in a bigger way going forward and our focus right now is to win one client at a time.

Thank you.

Thank you. Our next question is from Ebrahim Poonawala with Bank of America Merrill Lynch. Please go ahead.

Good morning. I guess a question for Janice in terms of - we talked about the risk-weighted assets. If we can talk on the other side, are there any additional actions that you can take to further optimize the asset base from CET-1 perspective?

We are constantly doing that in terms of - mostly it’s about RWA, it’s also about looking at how we can to some degree contain various like pension volatility and what we are doing around estimation there, but it is basically about us going forward, and always looking at supporting our clients and making sure that for our shareholders we are earning a good return on every piece of capital that we put against the businesses. So it’s an ongoing activity that’s a day-to-day activity.

Understood and I guess tied to capital - in terms of when we think about buybacks, the stocks had a good run. How should we think about in terms of you sort of going through the buyback authorization relative to the stock price or should we expect you to sort of complete the authorization over a set period of time?

I think that you have seen us do about $300 million of buybacks this past quarter, because we had some capacity and that was after funding all of our organic growth and also ensuring that we could support a dividend increase this quarter. And so as we have pretty solid earnings accretion level and our growth is pretty solid, also you should see us continuing on our program and as you know we renew it once a year and we just put it in place last quarter.

Understood. And a separate question if I can ask Mark, I think you mentioned about the prolonged crisis, what is the price of oil that we need where we are out of that crisis environment and where we actually see a rebound in sort of your borrow - activities in the energy sector.

Well, I guess if I could answer that I might not actually be sitting in this chair [indiscernible], but certainly from I think what we can see once you get to 50 or above, you will start to see I think some of the American production start to comeback, so that will have a bit of an impact on the marketplace. But really I think you would need to see it a little bit higher than that to start getting some the reinvestment that we would have been seeing two or three-years ago. The chances of getting back to a 100 in the foreseeable future I think would be fairly slim unless there is a change in some of the producers globally and in their attempts to maintain their production levels. So 40 to 60 level I would have thought would be the range we would expect to see if it goes below 40, it’s a tougher environment, if it goes above 60, it’s maybe a bit more of a positive environment.

Understood. Thank you very much.

Thank you. We have a question from Gabriel Dechaine with Canaccord Genuity. Please go ahead.

Didn’t expect the follow-up to come up. Just asking, similar to the last one actually, the decline in market risk out the ways have been pretty steep, you peaked out at around 46 billion market risk RWAs and now you are at 2014 now you are 26 billion. So a massive decrease, FX is playing a part in that and I assume but I just want to know what kind of revenue were you generating of the assets that you have shed from your balance sheet and how much of this reduction has been deliberate in advance of some inflation coming from the fundamental review of the trading book.

First of all, I guess the most dramatic reduction is in asset backed securities trading in the U.S. So, it’s just a business that has become really a liquid in the trading environment, because dealers just have to hold so much RWA against those assets, RMBS, CMBS in particular and so we have taken that book almost down to zero and the biggest reduction is there. I would say that the revenues were not particularly great in that business since that’s why you are not seeing a significant change. Just across all the other inventories, the next biggest change would probably be in credit and high yield inventories and given the credit markets we have had the last nine-months, we just haven’t had much on, we got very light last fall and that’s the other big reduction you would see. In terms of the fundamental review of the trading book, we obviously have our eye on that and to Janice's remarks, we are really just trying to get as efficient on RWA and those trading books and in the loan book as we can be and that's where you're seeing the reductions.

Okay. Thank you.

Thank you. There are no further questions registered at this time I would like to turn the meeting back over to Mr. McKay.

I would like to thank everybody for participating in our Q3 call and we will see you in three months. Thank you very much.

Thank you. The conference has now ended. Please disconnect your lines at this time and we thank you for your participation.