Good morning, and welcome to Scotiabank's 2023 Fourth Quarter Results Presentation. My name is John McCartney, and I am Head of Investor Relations here at Scotiabank. Presenting to you this morning are Scott Thomson, Scotiabank's President and Chief Executive Officer; Raj Viswanathan, our Chief Financial Officer; and Phil Thomas, our Chief Risk Officer. Following our comments, we will be glad to take your questions. Also present to take questions are the following Scotiabank Executives: Aris Bogdaneris from Canadian Banking; Glen Gowland from Global Wealth Management; Francisco Aristeguieta from International Banking; and Jake Lawrence from Global Banking and Markets. Before we start, and on behalf of those speaking today, I'll refer you to Slide 2 of our presentation, which contains Scotiabank's caution regarding forward-looking statements. With that, I will turn the call over to Scott.

Thank you, John, and good morning, everyone. This month marks the completion of my first year in this role as President. I'm pleased to have had the opportunity to spend the year listening to and learning from our shareholders, clients, and employees. I have seen personally the passion and commitment that Scotiabankers across the footprint have to making us a better bank. Our results for the year reflect a period of decelerating industry loan growth as well as our own deliberate actions to focus on balanced growth and a thoughtful approach to improving the profitability of our businesses and client relationships. We've made significant progress on key initiatives that are fundamental to strengthening our balance sheet and improving our business mix. Both will be important as we embark on our next phase of growth. The Bank reported adjusted earnings of $8.4 billion or $6.54 per share in fiscal 2023. Our return on equity was 11.7%. We believe our improved balance sheet strength and liquidity positions us to manage through potentially a more difficult economic scenario that could materialize. We took actions to strengthen our capital position to meet my January 2023 commitment to a CET1 ratio of greater than 12%, up from 11.5% at this time last year. Raj will explain in more detail the impact of the regulatory capital changes, which began in Q2 and will continue to impact us in the future. We also bolstered liquidity over the course of the year, meaningfully improving the liquidity coverage ratio to 136%, up from 119%, and the net stable funding ratio from 111% to 116%. Importantly, we made progress focusing the organization on deposits. Deposits across the Bank increased 9% year-over-year. The all bank loan-to-deposit ratio improved to 110% from 116%, resulting in the wholesale funding ratio dropping 100 basis points year-over-year to 20.6%. 2023 reflects early success in our enterprise-wide focus on thoughtfully growing both sides of the balance sheet. In keeping with our commitment to ensure the Bank is well positioned to manage through periods of slow growth and uncertain macroeconomic times, we have significantly increased the allowances for credit losses throughout the year across all portfolios by approximately $1.1 billion, mostly in performing allowances. As previously announced, in conjunction with our strategy review process, we made adjustments to our global workforce in the fourth quarter. This productivity effort reflects a continuation of the Bank's long-term commitment to achieving positive operating leverage, while ensuring the appropriate resource allocation in support of our future growth initiatives. Turning to our economic outlook, our base case assumption is that economic growth will continue to moderate in the near-term in North America. Higher interest rates are having central banks' desired economic impact which we are seeing through moderating inflation and our own clients' behavior. Recognizing that rates could remain elevated for the foreseeable future, we do expect some interest rate easing in North America later next year, which will be a tailwind to our profitability. Our international banking markets experienced more notable impacts of higher rates given an earlier and more rapid tightening response to the inflationary cycle. Chile and Peru are currently in the midst of modest economic contractions, and have seen central bank easing this past quarter. Economic growth is expected to rebound in the region later next year. Mexico has consistently seen GDP growth beyond expectations, currently forecast to deliver 3.5% growth this year and 3%-plus growth again next year, significantly outpacing the sub-1% growth expected for Canada and the U.S. We expect consumer spending to moderate as this higher rate environment persists, leading to very modest growth in our Canadian economic forecast. Our current balance sheet strength, structural interest rate positioning and deliberate approach to loan growth reflect our cautious near-term outlook. We look forward to sharing detailed business line strategic plans with you at our upcoming Investor Day, so I'll be brief today with a few updates on each business. In Canadian Banking, the performing ACL build materially impacted our profitability in Q4. However, I was encouraged by progress in certain key operating performance metrics. Deposits, up 10% year-over-year in Q4, outpaced loan growth in the Canadian bank for the fourth consecutive quarter, resulting in notable early progress on reducing our loan-to-deposit ratio, which moved from 138% to 125% over the course of the year. Solid net interest margin expansion of 21 basis points benefiting from higher deposit growth, loans repricing at higher rates, and business mix changes driven by more balanced loan growth across products. In retail, growth in the Scene+ loyalty program continues to outpace expectations, surpassing 14 million members this quarter. The program continues to accelerate as a strong customer growth engine responsible for over half our new to bank customers in the recent quarter. New day-to-day account acquisition is up 6% year-over-year, aligned with our commitment to grow everyday banking relationships. Tangerine delivered another year of strong earnings, a result of its strong deposit position and continues to widen its lead as the number one ranked bank in its class for retail banking client satisfaction for the 12th year in a row. Global Wealth results this quarter reflect the impact of more challenged market performance in recent months, and the resulting impact on investment industry fund flows, which have been negative throughout 2023. We continue to broaden what is already a very robust product offering with the announcement last month of a new alternative asset partnership with Sun Life to bring a more complete offering of private credit, real estate and infrastructure products to our high-net-worth clients. We have a differentiated wealth offering in Canada through our total wealth advice model and a unique international opportunity that our team is delivering on. Our international wealth management business delivered double-digit earnings growth again this year. Our Global Banking and Markets business has delivered resilient results in a challenging year for capital markets businesses while continuing to add product capabilities and sectorial advisory expertise. Loan growth has moderated considerably in recent quarters as our GBM team continues to take a more targeted approach to client selection with a focus on industries and geographies where we can deliver higher returns and more multi-product value-add to our clients. We continue to target deeper client relationships and leverage our footprint to grow our business. International Banking had a solid 2023. Results were negatively impacted by higher PCLs and moderating capital markets activity, offset somewhat by encouraging margin expansion and continued momentum in our deposit-strong Caribbean franchise. Deposit growth in Q4 continued, up 3% quarter-over-quarter and 9% year-over-year. This, combined with a more disciplined approach to loan growth, has seen our loan-to-deposit ratio improve from 140% to 129%. Despite inflationary pressures, International Banking held expense growth to a modest 3% on a constant dollar basis for the year, as a result of continuous efforts to rationalize our operations and further digitize the Bank. International Banking continued to deliver positive operating leverage. Our 2023 financial results reflect a year of transition; economic transition in the markets in which we operate and transition within the Bank as we prepare for our next phase of growth. We are seeing early signs of progress across the Bank on the strategic priorities previously outlined that will lead us to more consistent earnings growth over time, more specifically: client primacy, earning a greater share of the client wallet with a focus beyond the balance sheet; disciplined capital allocation, managing resources with a view to value over volume; and operational excellence, a continuous focus on productivity, process simplification and a relentless effort to build a culture that will give us competitive advantage better, faster, and at a lower cost. All underpinned by a strong balance sheet, ample liquidity and appropriate allowances for credit losses. I'm encouraged by the franchise strength across our businesses. We are recognized again this year by The Banker magazine with both the Bank of the Year in Canada Award and the Global Award for Banking in the Community, recognizing our ScotiaRISE Program and the positive impact it is having in our communities. The Bank is also a recognized leader for our commitment to fostering a more sustainable and inclusive future for our stakeholders. We were recognized by Global Finance with five awards for Leadership in Sustainable Finance, including Global Leadership in Sustainability Transparency and Best Bank for Sustainable Finance in Canada. And, we continue to build on our position as an employer of choice. This year, we were recognized as one of the best workplaces in Canada by Great Places to Work, and we are once again included in the Bloomberg Gender-Equality Index for a sixth consecutive year. Going forward, as we focus on executing our strategy and a cohesive enterprise-wide mindset to meeting the needs of our clients, we've also made important senior leadership additions to the Bank. I'm confident in the strengthened leadership team as we focus on the future and our plans to deliver sustainable, profitable growth for our shareholders. I would like to sincerely thank Glen Gowland for his contribution since joining the Bank over 20 years ago. I am delighted that we will continue to benefit from his expertise as he transitions to the role of Vice Chair, reporting directly to me. As previously announced, Jacqui Allard will assume the role of Group Head, Global Wealth Management on December 1st this year. I realize 2023 has been a difficult year financially, but the actions taken have been decisive, deliberate, and necessary. A strong balance sheet, a relentless focus on becoming more efficient and appropriate allowances will set the Bank up for success going forward. As I look to 2024, I'm confident earnings will increase, driven by benefits from the productivity initiatives and a more stable rate environment. We look forward to sharing our new strategy at our Investor Day on December 13. With that, I will turn the call over to Raj for a detailed financial review of our results.

Thank you, Scott, and good morning, everyone. This quarter's net income was affected by after-tax adjusting items amounting to $289 million or $0.24 per share, with an impact of about 6 basis points on the common equity Tier 1 ratio, all of which were captured in the Other segment. This included a $258 million restructuring charge related to workforce reductions, a $63 million charge for exiting certain real estate and service contracts, a $159 million impairment charge related to our investment in Bank of Xi'an, and a $114 million impairment on certain software. These were partially offset by a $319 million gain from selling our 20% equity interest in Canadian Tire Financial Services. The full-year results were also influenced by the $579 million Canada Recovery Dividend recorded in Q1 2023. All my subsequent comments will reference results after adjusting for these items and the usual acquisition-related costs on a year-over-year basis unless stated otherwise. Starting with our fiscal 2023 performance, the Bank finished the year with adjusted diluted earnings per share of $6.54 and a return on equity of 11.7%. Revenue increased by 1%, while expenses grew by 9%, leading to negative operating leverage of 8.3% for the year. Credit loss provisions were $3.4 billion in 2023, roughly $2 billion higher than the previous year, with more than $1 billion of that attributed to performing allowance build. Phil will elaborate on this later. Canadian Banking earnings totaled $4 billion, reflecting a decrease of $757 million or 16%, driven mainly by a higher $1.2 billion provision for credit losses, despite a 7% increase in revenues. International Banking earnings decreased by 4% on a constant dollar basis, totaling $2.5 billion. Even with a 7% rise in revenues, the provision for credit losses increased by $638 million. Global Wealth Management earnings fell to $1.5 billion, a decline of $126 million or 8%, due to the challenging market environment. Canadian wealth was down 12% because of lower fee income, while international wealth earnings grew by 19%. Global Banking and Markets reported earnings of $1.8 billion, down $143 million or 7%. Despite a slow capital markets backdrop, revenues increased by 7%, but expenses rose by 15% to support growth initiatives, leading to a higher provision for credit losses compared to the prior year. The Other segment incurred a net loss of $1.4 billion, compared to a loss of $229 million in 2022. Looking ahead to 2024, we anticipate our earnings will benefit from robust net interest income growth and modest non-interest revenue growth. Loan growth is expected to be moderate, but we believe repricing benefits will aid net interest margin expansion. Expense growth is anticipated to correspond with inflation, as strategic investments will mostly be balanced by efficiency gains. Positive operating leverage is expected in 2024, despite higher provisions for credit losses and a higher tax rate, particularly with the first half of the year showing better profitability than this quarter, and a stronger second half. For the fourth quarter results, the Bank recorded adjusted earnings of $1.7 billion with diluted earnings per share of $1.26, and a return on equity of 8.9%. Net interest income was $4.7 billion, marking a 1% increase year-over-year and a 2% increase quarter-over-quarter, supported by margin expansion stemming from higher lending margins and shifts in business mix. This quarter, deposit growth once again outpaced loan growth, leading to a loan-to-deposit ratio of 110%, down from 116% last year. Non-interest income was $3.3 billion, down 3% year-over-year mainly due to lower trading revenues and investment gains, counterbalanced by higher income from fees and commissions. Provisions for credit losses rose by $437 million or 53% from the last quarter, influenced by higher provisions on performing loans. Moving to Slide 7, the Bank’s common equity Tier 1 ratio was 13%, up about 30 basis points this quarter. Internal capital generation contributed 19 basis points, with the sale of our 20% interest in Canadian Tire Financial Services adding 16 basis points and our dividend reinvestment plan contributing 11 basis points. These gains were partly offset by a 10 basis point hit from restructuring and one-time items, along with an 8 basis point negative impact from the fair value effect of available-for-sale securities. Risk-weighted assets stood at $440 billion, remaining stable quarter-over-quarter, as a decline in book size was countered by foreign exchange effects. Looking at international banking, on an adjusted and constant dollar basis, the segment recorded net income of $570 million, down 12% quarter-over-quarter, mainly due to lower earnings from GBM LatAm. Year-over-year revenue increased by 3% due to improved net interest margins, but loan growth softened to 2%. Strong deposit growth continued at 9% year-over-year and 3% quarter-over-quarter, leading to a loan-to-deposit ratio that improved significantly to 129%. Regarding the Other segment, it reported an adjusted net loss of $487 million, marking an increase of $188 million from the prior quarter, with revenues down by $222 million. Higher interest from liquid assets was outweighed by increased funding costs and minimal investment gains. Looking ahead, we expect the Other segment's loss to remain elevated due to persistent funding costs and lower investment gains throughout most of the year, with potential improvements expected as rates decline in the latter half of 2024. I will now turn the call over to Phil for a discussion on risk.

Thank you, Raj. Good morning, everyone. We continue to strengthen our balance sheet by increasing our ACL ratio from 71 basis points to 85 basis points this year. With this, we have now increased our allowances for credit losses by $1.1 billion in 2023 with $780 million of this increase from performing allowances. Given the macroeconomic backdrop of higher unemployment levels, higher for longer interest rates, and upcoming renewals of fixed-rate mortgages in Canada, we have focused on strengthening the balance sheet, including: a further increase in performing allowances this quarter of $440 million leveraging expert credit judgment for Canadian banking and global banking and markets; higher quality originations with a focus on affluence in international, and higher credit quality in business banking; shifting business mix to a more secured across our footprint; and finally, a continued focus on building performance allowances in international, resulting in an approximate $200 million increase over the past six quarters. This improved ACL coverage provides us with a solid foundation to manage through periods of slow growth and an uncertain macroeconomic environment. It is important to note that while delinquencies are still within historical norms, consumer health in Canada continues to weaken, and we expect households may continue to experience financial pressure through 2024 with the build in ACL addressing this. In business banking, we are not seeing increased defaults due to the high quality of our portfolios. However, we are increasing our coverage ratio given the expectation of continued elevated interest rates and the potential impact on client performance. Moving to Slide 15. The quarter-over-quarter PCL increase was primarily driven by the performing allowance build which was 23 basis points. This compares to 4 basis points last quarter. The build was primarily in Canadian banking. As a result of the increased ACL, our total PCLs in Q4 were $1.26 billion, including $454 million of performing PCLs. Total PCLs were up $437 million quarter-over-quarter. This translates to a PCL ratio of 65 basis points. Impaired PCLs trended higher at 42 basis points compared to 38 basis points in Q3. Canadian banking total PCLs were 63 basis points. Quarter-over-quarter, total PCLs increased by $393 million, resulting in a total PCL of $700 million. $414 million or 37 basis points of the PCLs were related to the performing allowance build, of which $240 million was for Canadian retail and $174 million was for business banking. Retail customers in Canada continue to spend less on discretionary goods and more on essential items year-over-year. Overall, spending has continued to slow as total debit and credit card spend fell 3% quarter-over-quarter and remained flat year-over-year, despite inflation. Variable rate mortgage customers continue to spend less than their fixed-rate counterparts with total spend down 11% year-over-year, while spending for fixed-rate customers is only down 5%. Additionally, delinquencies continue to trend up across all products in Canada. 90-day delinquency levels were 3 basis points quarter-over-quarter to 25 basis points and were up 10 basis points year-over-year. Quarter-over-quarter, we saw a deterioration in HELOCs and auto, increasing 9 basis points and 6 basis points, respectively. In Canadian business banking, we are cognizant of uncertain macroeconomic conditions. Included in our ACL coverage is an additional build for our real estate portfolio, which includes impacts to collateral values. Our exposure to U.S. real estate is largely to investment-grade borrowers, and as disclosed in the investor presentation, our U.S. office exposure is immaterial. Global Banking and Markets provisions for credit losses were $39 million or 11 basis points this quarter and included a performing allowance build of $30 million. Total PCLs in International Banking were $512 million or 119 basis points, up 1 basis point from the prior quarter. Total retail PCLs decreased $17 million quarter-over-quarter to bring the PCL ratio to 211 basis points, driven by lower allowances and increases in Colombia and Chile. Performance in these markets have started to stabilize with an improving macroeconomic outlook. Central banks have paused interest rate hikes in Colombia and in Chile. They have started reducing rates. Mexico continues to perform within expectations, supported by resilient underlying economic fundamentals. Headwinds persist in Peru, with delinquencies remaining elevated and GDP contracted. Peru entered a recession and will likely be further impacted by the upcoming El Nino. Contingency plans and loss mitigation tools are ready, and have been deployed where needed. Looking to fiscal 2024, we expect a challenging environment will persist for consumers and businesses. Canadian GDP growth is expected to remain muted and inflationary pressures on households are expected to persist with the outlook for rate cuts uncertain. We expect PCLs in 2024 to be in the 45 basis point to 55 basis point range, assuming no significant changes to our expected economic scenarios. With that, I'll pass the call back to John.

Great. Thanks, Phil. Operator, could you open the lines for questions?

Thank you. Our first question is from Ebrahim Poonawala from Bank of America. Please go ahead.

Hey, good morning. So, I guess maybe, Raj, you went through a lot in terms of the outlook for next year. I just want to make sure we heard you right. It sounds like you're guiding for PTPP to be up either year-over-year and from fourth quarter levels given revenue growth should exceed expense growth and revenue growth driven by NIM expansion. So, if you don't mind, just quantify the level of margin expansion you expect at the all bank level if we don't see any action from the Bank of Canada from here on? And what is the expense growth that we should think about would be the right way for '24, either year-over-year or relative to fourth quarter expense run rate? Thank you.

Thanks, Ebrahim. I'll start. Margin expansion should continue for the whole bank in 2024, Ebrahim. A couple of reasons. One is repricing of our loans has already commenced, as you saw this quarter. Frankly, you saw it in the last couple of quarters across our portfolios, and that should continue in 2024. We know our deposit margin contribution to 2023 will be muted in '24, because there's been lots of deposit growth. And I said in my prepared remarks that deposit growth is expected to be lower than what we saw in 2023. The net of it is, you should see pretty decent margin expansion from where we finished Q4 2023, both in the business lines as well as across the Bank. Like you pointed out, with the Bank of Canada and the U.S. Fed expected to stop rate increases. Obviously, if they do increase, it'll be a headwind to this Bank. So, I think margins will be a good news story. That's where we expect net interest income to grow next quarter, in my prepared remarks what I talked about. Expenses is, Q4 tends to be seasonally higher. I think it's not unusual for us. Like Q1, next year will be higher because we have what we call eligible to retire costs that comes through our business lines, which gets recorded in Q1 across our employee base. But for the whole year, like I mentioned, we expect to generate positive operating leverage for the Bank, i.e., revenue growth exceeding expense growth by some margin. We know that the Canadian bank has to invest, so there we think our revenue growth will be strong and offset the expense growth that is expected as we look forward. International bank will continue to generate positive operating leverage, as it did this year. And the Wealth and GBM businesses, it depends a bit on the markets. But I think for the whole bank, we expect to generate positive operating leverage. Expense growth will be significantly lower than what you saw this year. Adjusted for FX, like I said, it was about 7% for the whole year. And next year, we're going to benefit from the productivity initiatives that we took as well, part of it is expected to come through in '24, and the full-year benefit should come through in '25. So, all that points to an expense growth, I would call, in the low-end of the mid-single-digit range is what we expect next year.

That was helpful. Thank you. On a separate question, Raj, you mentioned the 75 basis point impact to CET1 from the Basel FRTB-CVA changes and the floor factor in the first quarter. As we approach 12.25%, can you remind us of your target for CET1 as we consider the DRIP? Are there actions you can take to significantly optimize the balance sheet to mitigate that impact on the market risk side or the floor factor? Thanks.

Thank you, Ebrahim. Regarding our capital ratio, we aim to maintain it around 12.5% for the remainder of 2024, with the DRIP contributing to that goal. Many of the steps you've mentioned about moderating loan growth have already been implemented. We have been selective about deploying our capital and have reduced investments in areas not yielding adequate returns in this capital-constrained environment with rising costs. We anticipate maintaining 12.5%, but this will also depend on OSFI's actions and other regulatory changes expected after December 8. We intend to be cautious and will reassess any necessary actions as the regulatory landscape evolves throughout 2024. We will discuss appropriate capital levels at our Investor Day, but for 2024, this is the expectation.

Thank you.

Thanks.

Thank you. The following question is from Gabriel Dechaine from National Bank Financial. Please go ahead.

Hi. Good morning. I just want to put a fine-tune on the outlook commentary there, and I heard a few things from Scott and then in the MD&A, of course. You're suggesting that earnings growth will be marginal in 2024. That's off of the full year adjusted base from 2023, I assume. And if we're looking at it from an earnings per share standpoint, you got marginal earnings growth, then you've got the DRIP, which might be ongoing for the full year, we're probably going to see lower than marginal EPS growth. Is that a reasonable interpretation?

No, I think Gabe, I'll start and Scott might have a comment or two on that. I think on an EPS basis, you should see marginal growth from the $6.54 that we reported this year.

Right.

The DRIP definitely increases the share count as you point out, Gabe. That's inclusive of the comment that I made. If you just look at net income growth, it'll be greater than the EPS growth because the DRIP contribution, which tends to be between 8 million and 9 million shares a quarter this year, and I suspect it will continue through in 2024, will be an offset. But offsetting that we think we'll have marginal growth in the EPS.

Gabe, I want to share a few thoughts on that. Acknowledging that this has been a challenging year, we are at the one-year mark, and we aimed to act swiftly in tackling several issues related to capital, liquidity, and costs through our restructuring charge and allowances, which we've successfully done. This brings us to $6.54. The guidance we’re providing reflects strong confidence in our ability to grow earnings moving forward, and that’s an important takeaway.

Okay. And then, well, on the building allowances front, I mean, one way to look at it is you're being, "conservative", and I think the investors appreciate that. But the other way to look at it is that from a performing ACL ratio standpoint, if I look at it including mortgages or excluding mortgages, you're just at your pre-COVID level. So, it's a bit of a catch up in that regard. As the outlook, or if the outlook remains challenging, which undoubtedly will be, could we see additional uptick to your performing ACL like, beyond the run rate we had before Q4?

Thanks, Gabe. It's Phil here. Great to hear from you, and I appreciate the question. As I look ahead to 2024, we are guiding towards an increase of 45 basis points to 55 basis points.

Yeah.

The portfolio that we have today, we like, and we've done a great job over the last few years, really building a strong portfolio. There's still pockets where we need to focus on in the International bank, but we've really turned. A lot of the portfolio that we had pre-pandemic is not the portfolio that we have now, especially with the strong focus on affluent growth in the International Banking platform, and the change in mix shift from unsecured to secured. And so that is giving a different profile. We built these allowances because we were thoughtful about the macroeconomic outlook. We wanted to continue to strengthen the balance sheet, as both Scott and Raj said. And it's really a forward-looking perspective for us. But I'm not seeing a ton of weakness in our portfolios. We're going to be mindful of the macroeconomic shifts throughout the year, and if we need to build further performing allowances, we will, but the portfolio is strong.

Right. No, I'm not suggesting otherwise. Just from a management standpoint, where do you see the increase in your ratio next year? Is it more from the impaired or more from the performing?

It'd be more from the impaired with the usual run rate of our performing allowances.

Hi, thank you. Good morning. I have some credit quality questions, but before I go there, I just want to clarify one thing. You mentioned in your remarks that you're planning to operate around a 12.5% common equity Tier 1 ratio for 2024. What is your assumption there with respect to the regulatory environment, whether or not there's any pressure for higher capital?

Darko, it's Raj. I think we know the domestic stability buffer can be raised up to a maximum of 50 basis points. That's what's left in the framework. So that takes the minimum to 12% from a regulatory perspective, and that's why the 12.5%. I obviously have no insight into what will happen on December 8th or beyond in 2024, but it's a prudent way to manage it. More importantly for us, right, you'll hear more about it at the Investor Day, how we want to thoughtfully reallocate capital, which means we have to start the efforts well in advance of that so that the strategy can be implemented in the timelines that we want to do it.

So, just to be clear, Raj, then what you're suggesting is, even if the DSB were raised, 50 basis points is considered to be an adequate buffer, even with the uncertainty in the environment?

Yeah, from our perspective, we think it's reasonable. Obviously, if we see signs that we need to run a higher capital ratio, we will, Darko, but at this time, we think that's appropriate.

Thank you, Lemar. Whenever we consider Canada, particularly in light of uncertainty, it's essential to monitor unemployment. You've hit the nail on the head. We are closely tracking unemployment rates and the impact of rising interest rates. As I mentioned earlier in response to Darko's question, both our variable and fixed-rate mortgage portfolios are currently performing well. I'm carefully considering the trade-offs our customers are making, such as using one product to pay for their mortgage. Thus, we are focusing on payment flows both to and from us, analyzing how customers are managing their payments in this prolonged high-interest environment. In terms of regional performance, I believe investment banking has stabilized compared to last year. I'm optimistic about opportunities in Mexico, and we are paying close attention to developments in the Canadian market.

The only thing I'd add, Mario is, what you don't see is the internal work to focus on client profitability and both sides of the balance sheet. And that kind of focus around incentives, how we're allocating our time, how we're allocating our resources, how we're enabling the teams is significant. And so, this shift to deposits is not a one year thing, it's a ten-year journey. And you're starting to see the impact of that. I said in my opening comments, new day-to-day account acquisition up 6% year-over-year, seeing some massive engine for that. You're seeing the mortgage product. Mortgage profitability up in the quarter significantly as we actually bundle away from just a monoline mortgage opportunity, real focus on auto in terms of cross-selling. And so, this last year has been foundation-building in terms of getting that client for profitability focus across the organization, and that's going to pay dividends long term for us.

Thank you for the color.

Thanks, Mario.

Thank you. The following question is from Paul Holden from CIBC. Please go ahead.

Thank you. Good morning. So, I actually want to continue with that discussion point on deposit growth, because I hear the message that it remains important for the Bank and totally understand why and it should, but at the same time, you provided 2024 guidance that deposit growth will slow relative to 2023. So, I guess I just want to understand that message on slowing growth, is just because in '23 you had outsized growth and just simply won't repeat at the same pace, or is it related to pricing dynamics maybe in the deposit market? Just help us maybe understand that 2024 guidance again relative to the long-term importance of growing deposits?

Absolutely. I'll begin, Paul. It's Raj. You should expect our deposit growth to align with our loans, which is why we often discuss the loan-to-deposit growth in both our Canadian and International Banking sectors. This trend will continue. I mentioned that deposit growth might be subdued because last year we saw a 10% increase in deposits. I referred to the $32 billion growth in the retail bank in Canada. However, we are aware that savings levels in Canada have begun to decline, influenced by inflation and the overall cash availability for consumers. If we anticipate growth in the low single digits, as indicated in our profit plan for Canada next year, we consider that a strong outcome, especially given that loan growth is also expected to be modest. It's crucial to balance both aspects of the consumer balance sheet, and we are applying the same principles with our commercial clients. We need to manage capital and liquidity ratios to maintain stable deposits that support our loan growth moving forward. I wouldn't interpret this as a significant drop compared to 2023; rather, 2023 represented substantial, focused growth, and we aim to manage it strategically in alignment with our loan growth as we look ahead.

Hi, thank you. Good morning. I have some credit quality questions, but before I go there, I just want to clarify one thing. You mentioned in your remarks that you're planning to operate around 12.5% common equity Tier 1 ratio for 2024. What is your assumption there with respect to the regulatory environment, whether or not there's any pressure for higher capital?

Darko, it's Raj. I think we know the domestic stability buffer can be raised up to a maximum of 50 basis points. That's what's left in the framework. So that takes the minimum to 12% from a regulatory perspective, and that's why the 12.5%. I obviously have no insight into what will happen on December 8th or beyond in 2024, but it's a prudent way to manage it.

Phil here. Great to hear you, and thanks for the question. If I look forward to 2024, we are guiding towards 45 basis points to 55 basis points.

Thank you.

On behalf of the entire management team, I want to thank everyone for participating in our call today. We look forward to speaking again at our December 13th Investor Day. This concludes our fourth quarter results call. Have a great day.

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