Royal Bank of Canada (RY) Earnings Call Transcript & Summary

Thank you, and thanks for tuning in again, everyone. Before we begin our next session, I'd just like to remind you that Dave McKay's comments today may include forward-looking statements. Actual results could differ materially from forecasts, projections or conclusions in these statements. Listeners can find additional details in the public filings of the Royal Bank of Canada. With that, Dave McKay is with us, the CEO of RBC. Dave, welcome to the conference.

Good morning, Darko. Pleased to be here.

Good morning. So we just had Peter from the regulator up. We spoke a little bit about lot of things actually. It sounds like to me like we should be preparing ourselves for potentially higher capital requirements down the road, not imminent. Now in the case of Royal, think you ended the year with a record high capital ratio. It was at 13.6%. So you're coming from a position of strength. But I also seem to remember that in the distant past, I think I remember, correct me if I'm wrong, that you maybe thought about running the bank around an optimal level of around 11% common equity Tier 1 ratio. So in light of what we just heard, do you still think that, that's an appropriate level to run the bank at least in the shorter term? And I guess more to the point, can you even get there in the shorter term with that much capital that you have?

It's nice to have capital. That's for sure. It's an incredible strategic asset. So how do you get to 11%? Maybe that's the important way to start. And the 11% reflects basically an operational cushion above the regulatory construct. So the regulatory construct is well developed, well thought through 4.5 plus 2.5 plus DSIB and DSB buffers that gets you to a 10.5% regulatory minimum. And therefore, because it's all constructive, because we test against that, we stress test in different scenarios, severe scenarios, moderate scenarios, we're always looking against that. It is a well-developed construct and entity. Therefore, we think that's prudent capital for the system, and that's how the regulator said it. Therefore, maintaining an operational cushion above that is how we think about setting the overall capital targets for resiliency for the organization. Therefore, that's how in the current construct, we get to roughly 11%, a 50 basis point cushion above the 10.5% regulatory minimum. So I think from that perspective, I think that's how we think about it. That's how we think about excess capital. It doesn't mean we'll run the bank there permanently, but means as we think about deploying capital, what's excess, what is required. So that's how we think about it. If there is a change to the regulatory construct, as you heard this morning that there is additional buffers coming in, then we would maintain an operational cushion above that buffer. Now specifically to climate risk going forward and stressing against climate risk, as a superintended reference, this is journey. We're just learning how to measure climate and greenhouse gas emissions in our portfolio. We're just learning and trying to understand the inherent risks and volatility. This is an evolution. We don't even have a clear strategy in our country for how we're going to make the transition to net 0 and therefore, what we do know is we need a significant amount of capital in this country to make that transition. Therefore, as we think about prudential regulations, we think about policies in this country to enact this journey in the supply and demand side of energy and GHG emissions. We need to think about global competitiveness. And we'll -- are contracting upwards of $2 million -- sorry, $2 trillion of capital into this country. So we're on a journey. The journey has uncertainty. We're learning as a superintended reference. It's going to take some time to learn. We're going to apply those learnings to enhance risk management capabilities, enhanced measurement capabilities. How that produces a future buffer will be determined, and we'll maintain a regulatory or an operational cushion above that. But I do want to stress that maintaining competitive policies, competitive capital structures, competitive tax structures in this country is essential to maintaining a prosperous Canada and a competitive Canada into the future.

And just to think about how RBC might get their ratio lower. One, obviously, you've got a normal course issuer bid, and that's all fine. I don't think that takes a massive bite into your strong capital ratio. So what about -- can you just remind us about what you look for inorganically if -- and would you -- if an opportunity presented itself, would you draw it down aggressively to pursue some sort of an acquisition?

Yes. So as we think about where growth is going to come from and how we're going to use capital, we have a significant opportunity to grow organically. And we talked about that. We talked about it in the Q4 call. As we look at more capital-intensive businesses like commercial, like credit cards, corporate banking, growing organically. That is our primary growth mechanism. We also have a number of very successful ventures that I'm sure we'll talk about that requires scaling capital. We're going to invest in those. So there are a number of areas for us to deploy organic capital to grow. Having said that, in the last quarter, we generated over 40 basis points of organic capital to fund that. So we do have a significant amount of excess capital by any definition. We started returning that capital, as you've seen, to shareholders through our share buyback program, and we continue to do that. So as far as the strategies remain on course, and we're going to continue to do that, notwithstanding the discussions today, and we'll adjust to whatever changes commence. As far as inorganic capital deployment, we continue to look for opportunities that provide accretive growth to our shareholders. They're in a space of wealth distribution versus more manufacturing. Wealth distribution in the United States, we continue to look at wealth distribution in Europe to enhance our European and global wealth franchise, commercial in the United States. So all of those are areas that we would like to scale growth. We don't -- we're not missing any capabilities. This is about scaling into new geographies in the United States, both scaling capability. Therefore, we're very selective. The opportunities are significant to -- in those target areas. Therefore, our real focus in using inorganic capital to grow is really in industry verticals, whether it's healthcare vertical, whether it's the entertainment vertical, whether it's the technology vertical, acquiring technology companies like we've done in Canada, like we do in the United States, particularly in entertainment, FilmTrack and Exactuals were examples of accelerating client growth through platforms that come in to your organization and are able to provide ancillary services to your financial services that bring customer base and accelerate growth. For us, that is a really exciting way to grow, particularly in the healthcare vertical in Canada, in the United States, where you know as an example, Dr. Bill is a billing service for doctors. We have over 3,000 doctors on that platform right now. We expect to scale that to 8,000 doctors, and we're cross-selling them into to private banking customers as we go at a very strong rate. So I think from that perspective, that's how you should think about us deploying organic and inorganic capital. We don't need it to meet our growth targets and to set up -- meet our performance objectives. Therefore, we're very selective and the properties that we're after are high-quality properties and they are expensive right now. And therefore, the financials are challenging. So I keep reminding all our shareholders out there that there is no half-life to capital. You can only misspend it. You can't lose it. And therefore, you have to be very careful in deploying it there. I see a pathway through our organic capability through returning capital to shareholders through some very selective, or probably smaller acquisitions, to continue to meet our medium-term objectives and outperform on TSR in the marketplace.

You touched on in your discussion there on the wealth potentially being an inorganic sort of way to deploy capital. Now in 2021, you had very strong client asset growth in Canada and in the U.S. wealth management actually frankly. And maybe you can speak a bit more about what drove that growth? And can you touch on that the overall wealth segment and how the coreness to your strategy of wealth, please, because when we hear that you may want to add to it, well, we want to sort of -- we want to just to know a little more, I guess, on the wealth business. And how a CEO thinks about it, particularly from your point of view?

I mean, I think our wealth franchise in Canada and the U.S. as 1 of the crown jewels of RBC. It's a high ROE business that we've been able to grow at an accelerated rate and outperform in both marketplaces in Canada and the U.S. In Canada, it's a 50-plus percent ROE business when you combine distribution and our fantastic asset management business. Again in the U.S. because rates are low and deposits drive a bigger part of the income stream in the U.S., that ROEs were up 20% at cyclical lows, but they will certainly go back up when rates increase, but still 20% is well above our targeted medium-term range of 16-plus percent. So therefore, you look at a high ROE business with an attractive low volatile client, you have certainly market risk volatility in your earnings stream. But you've got low credit risk when you do cross-sell mortgage product, credit card product, operating lines to secured operating lines to your client base. So from that perspective, high ROE business, very attractive, low credit risk, low volatile customer with an ability particularly demonstrated in Canada to have accelerated above market growth. When you look at our Canadian asset management and Canadian broker-based business, fantastic volume performance. We've -- and when we look at retail flow, which is the higher margin flow compared to institutional flow, we've achieved anywhere upwards of 30% of the industry's retail flow among our competitors. So I think from that perspective, the deep distribution capability, combined with best-in-class manufacturing and Lipper award winning family of funds. I think 85-plus percent of our AUM beats this benchmark. We have outstanding manufacturing, combined with end-to-end leading distribution, the #1 broker capability under RBC DS. We've got a fantastic discretionary asset management capability with PH&N. You got the #1 branch-based commission sales force and branch-based financial planning sales force enabled by the #1 tool in the market in MyAdvisor. You look at the depth of distribution of the manufacturing that produces an incredible cross-sell and client experience, and that's where your 50% ROEs come from. In the United States, we're the #7 broker. And at #7, we have over CAD 700 million equivalent in AUA, that's greater than the #1 position in Canada. So you can see how large the U.S. market is the #7 position and growing significantly 14% compounded AUA growth over the last 5 years at the 20% cyclical low ROE increasing, generating close to $25 billion of sweep deposits for us, much of which goes on to C and B to fund the great organic credit growth there, acquiring new product capability and acquiring teams from our competitors. So you can see be why I'm so excited about our Canadian and U.S. wealth potential is to grow disproportionately to drive higher ROEs and to outperform in the marketplace. A very important part of our investment thesis.

I could spend more time on that, I wish I could. So very interesting statistics there. Thank you for that. Maybe moving on to some other parts of the fundamentals of the business, one of the things that we saw in the last quarter was a bit of margin compression in your net interest margin, all bank, and in the P&C business. Maybe you could touch a little bit on how you are going to manage the interest rate sensitivity here going forward. And really what I get from clients a lot, we get from investors a lot is we're not looking at a one-and-done kind of scenario. We are looking at one interest rate increase probably followed by an other and then maybe even another. How does -- how do you manage the -- how do you think about net interest margin or interest rate sensitivity? And how do you think on managing? And what should shareholders be expecting in an environment of rising rates throughout 2022?

I mean the core capability you need to really drive interest rate sensitivity is core operating deposit base, a low-cost deposit base. And you look at our Canadian business and very significant core operating base on both the consumer and business side, and you look at the United States, you look at City National where 50% of their deposit base is non-interest bearing. That is the foundation. We invest those deposits into interest-bearing consumer and business loans. So that -- those are 2 assets that focus over the last 2 decades in growing core operating accounts, the core operating customers when many of our competitors weren't is the asset. And therefore, that asset is undervalued today. So how does that asset react to a changing rate environment. So I'll give you a couple of scenarios under a flattening curve scenario where the short end of the curve moves 25 basis points. You have roughly, in Canada, $85 million of interest rate income of pretax. And in the U.S., roughly $75 million for each 25 basis points increase at the short term. And that's probably what you're going to see first. Over the coming year, we think there's at least 6 rate increases, both in Canada and United States, roughly 130 to 150 basis points. The market said 130 basis points, our forecast is 150 basis points. And therefore, that's -- if you think about it coming all to the short end and we flatten the curve there, that's how you should think of both the combined roughly $85 million plus $75 million of sensitivity. And that's U.S. dollars, USD 75 million plus CAD 85 million. A lot of banks choose to disclose what a parallel shift looks like. Therefore, you don't see parallel shifts that often, but if you do see a parallel shift across the curve of 100 basis points, then to quantify our interest rate sensitivity, that will be combined 10 basis points in the U.S., roughly $570 million in Canada with a 100 basis point shift across the curve and another $350 million in the U.S. You're looking at over $930 million, $940 million of interest rate sensitivity for RBC with 100 basis point parallel shift in 12 months. So that's a very significant interest rate sensitivity, driven by the core assets that we've invested in the structure of those operating businesses. So that is a real strong earnings driver for us. I think it's underappreciated in the market how interest rate sensitive our balance sheet is particularly in the United States and the U.S. wealth and City National.

Now one of things with interest rate increases in higher net interest income is, I think, you kind of alluded to this. When we think about you expense space. So you want to let this flow to the bottom line more or less, right? But we are also in an area of very high inflation. And you had guided to I think low single digit growth and expenses for 2022. Are you rethinking that? Or how should we think about expenses now in a rising rate environment with very high inflation? Are there -- are you suggesting you can keep it so low, because you've ripped out some costs somewhere? You've digitized or is initiative spending being drawn down. Can you give us some thoughts on expenses in 2022?

We've been on an expense management program internally, we call it zero-based budget. it's not something new, we're in our third year of really going from the bottom up and looking at all our expenses, and making sure that we are allocating. We've reinvested a number of the savings. And I think that's part of the success factor that's allowed us to outperform on the volume and customer experience side is to continue to invest those savings in new customer capabilities and making sure that our customer experience. We're #1 in J.D. Power in Canada, because we've invested in the customer experience. Having said that, we see our investments have accelerated past many of our competitors. We feel good about the value propositions we have. Our customer satisfaction numbers are really, really strong. And therefore, there is the ability to slow down some of the investment. There is an ability to continue to take out costs as we focus on that zero-based budget and reallocate them. So notwithstanding that we are in an inflation environment across all the markets that we operate in, we do feel strongly, given that we're continuing to take out cost. We've continued our investments. We can slow some investments. We really think it's important that we drive out performance on the bottom line over the coming year and years. And therefore, we feel very good about maintaining a lower single-digit NIE growth with strong operating leverage.

And I know it sort of dovetails into scale. I know you've been a big proponent of scale. And if there is one area of your business that you could point out where we should see the benefits of scale are continuing to flow through, would it be the Canada P&C? Am I safe in saying that? And shouldn't we see more and more of it as we go forward? So I'm thinking beyond 2022, the more you grow, I don't know if we're targeting certain efficiency ratios or what have you, but -- can you give us an idea of where and how much evidence of scale we'll see from RBC as the years progress?

First and foremost, I think you've seen a lot of benefit of scale. And while it hasn't translated to the bottom line, the benefit of scale to date has allowed us to build out #1 or #2 franchises in just about every business we compete in. So we're investing across the spectrum and capabilities that allow us to cross-sell and allow us to drive outperform on customer volumes, that allow us to maintain a premium customer experience, that will allow us to drive market share and have a number 1 or 2 franchise in that capability, which is really important to the overall investment thesis. We've been able to do that sequentially. We haven't had to make trade-off decisions. At the same time, we're the only bank in the Canadian set that's really invested in the next generation of the competitive set, which is a ventures capability, which is creating those ancillary services. Those deeper market experience, broadening the value chain, all that has not come at the expense of growth or customer experience. All that is additive. So I look at it almost -- the scale benefit is the free option you get on this very exciting ventures journey. You probably saw Mydoh on television over the weekend; OJO, which is our home search engine is already referring a significant number of mortgages; Ownr, our small business engines being scaled across the country. A reference, Dr. Bill earlier went up to 8,000 doctors in cross-selling their relationships. Our launch of Vantage and all the value that we're giving through and the rest of process value we're giving the customers through Vantage, all of that is the benefit of scale and, and, and, not or. And therefore, you're getting incredibly competitive models. We just talked about Wealth and Capital Markets and the retail bank today that's outperforming and you're getting this option, this very exciting option on Ventures that's starting to scale. We pulled ventures back for 2 years through the pandemic. Now we're starting to see the advertising budget kick in. Mydoh is a very exciting venture for those who have experimented with it. We have thousands and thousands of families now that are on the Mydoh app and we're only in our third and fourth month. So that's the benefit of scale. Incredibly competitive model in the current construct, model for the future that's evolving quickly. You get it all.

All right. Thank you very much. So would be remiss without -- if we didn't have a part of this conversation on credit quality. Look, credit quality has been very good for all Canadian banks, frankly. All banks actually in North America. One of the things is you didn't provide a PCL target for this past quarter, I mean, you didn't do that. Maybe you could talk a little bit about how you view credit going forward? And how do you view even the excess reserves that you have in the balance sheet?

Yes, there's certainly -- we're certainly in a benign credit environment right now. Surprisingly, it's benign. I don't think we thought that we'd be this long with such low credit losses, we were at 7 basis points of combined loss in -- I think, Stage 3 loss in Q4, and that's been a sequential decline. We're seeing some of the government programs start to roll off at the end of the day, but we continue to be in this benign credit period, and we struggled to forecast, I think, how long it's going to remain benign. We do feel, I think that's going to be kind of a slower walk back to a more normalized credit environment. It's hard to predict that path. And therefore, I think we've just been conservative in our view. That's all is how fast the walk back is going to be towards a more normalized credit environment. And we just don't know. But we're starting from incredibly benign and continuing benign place. So us not providing PCL forecast is just the uncertainty of trying to give you something. We feel that we have a lower risk franchise that we just talked about, given the wealth franchise, given the significant customer base that we have, how we manage the portfolio, where we take risk. We feel very good about the volatility we see in our Capital Markets business at the low end of the industry volatility levels. We are managing this franchise in the long term to have a lower volatility risk profile in a premium, more stable return through a cycle. And we know investors want that investment basis. And therefore that's how we manage the organization. So not giving a forecast is no signal that we're concerned at all. We just are having trouble forecasting. We released 53% of the reserves that -- Stage 1 and 2 reserves that we took in 2020. Just because of Omicron and the uncertainty of the impact on the economy, we don't think it's going to be a prolonged impact. I think it's going to reduce growth probably from 4.5% to 1.5% in Q1 in Canada, but their growth should start to return in Q2. Therefore, we still see a 4-plus GDP growth here in Canada. So this could be a slower walk back to a more normalized credit environment. We're just being conservative. And again, those -- there's no half-life to those reserves as well. And they don't disappear. So from that perspective, when we feel we're confident of the future, we will hopefully release those or put them to use in offsetting any stage view that comes at. So it is hard to predict. There's no science or insight beyond just uncertainty.

Fair enough. And maybe this is a good chance to dovetail into questions from the audience, because the very first question has been uploaded from the audience is on credit, and it is as follows: Where by sector or region, do you see the highest potential credit risk related to climate change? So I don't know if you've spent a lot of time on that, but credit risk as it relates to climate change.

We have to go on a journey here. And therefore, some of that risk is linked to the strategy Canada has to make the transition. How are we going to fund this transition? Where is capital going to come from? What policies and incentives do we have? For example, for the energy industry to invest in carbon capture to reposition their future. So as we think about where the large emissions come in the markets, we do, obviously, energy production is a significant emitter in the country, but also so is agriculture at the end of the day, so are our commercial buildings and commercial operations. So as we think about -- and we measure where our emissions come from, measuring risk business partly trying to understand where the policy, where the capital, where the technology is to make that evolution. So I think from that perspective, it's really hard, honestly, to say where the risk or where the emissions are. We're mentioning emissions. Now we're trying to understand how fast the policy is, where the technology is. But some of the higher emitters could have the best strategies to offset that and therefore, we're working with those industries and helping them understand the capital requirement, submitting that capital requirements. But I think we're just in a period of uncertainty right now. We're trying to measure. We got a lot of small businesses that can't measure that we're rolling out tools or rolling on capabilities. A lot of this journey depends on what demand side policies come into play. Like if we just expect the supply side to adjust GHG emissions, it's going to cost us $2-plus trillion to make the transition. But what does the government do to incent Canadians to change their behavior, could reduce that cost, could reduce the risks in certain sectors. So I think, honestly, Darko, all of that's up in the air until we figure out a path of this country and how to make the transition and that's the frustrating part. It's hard to answer that question until you understand some of those dimensions.

Okay. Great. Thank you. I'm going to sneak in one more from the audience, before I turn it over to you for some final messages. But a question from the audience has been uploaded here is, if you had to sum it up, what is RBC's capital market strategy for this year? And why would that be whatever your answer, why is that your focus?

Yes, we're very much focused on one kind of outperforming in the marketplace and kind of regaining our top 10 position. I think we're #11 or #12 finishing the year. Very strong momentum that we're seeing in our advisory businesses, in our origination businesses. So again, clients are very active, and we see that continuing through the end of the year. You'll see that, I'm sure, reflected in U.S. Bank results over the coming week. We're looking for better performance from our trading businesses, and I think we've seen that early on. And therefore, we feel very good about where we're coming at. We absorbed a lot of revenue impact in our secured lending business and the repo businesses. Margins are down by half given the excess liquidity in the market and lack of demand. We've absorbed also that into our run rate and therefore, we're seeing an evolution and a better performance out of our -- better margins out of our secured lending and repo businesses, we're looking to put more balance sheet to work, particularly in our corporate loan book. So we saw the big run-up in drawdowns in 2020, they paid down again that liquidity draw in 2021. And then we're back to kind of a mid-single-digit growth perspective, putting some more RWA work. Team's done a very good job over the past 5 years and re-purposed the capital. We didn't grow RWAs for 3 or 4 years after a strong growth [ spurt ] that you saw from kind of '16 -- 2015 through to 2018. We kind of held the capital levels, and we recycled capital into relationships that were providing cross-sell and deeper opportunities. The team did a fantastic job. Now I think we've got always performing of much higher ROE. So you look at the 16% ROE. I believe capital markets earned in Q4. Some of that comes from parameter changes that we talked about and worked there on the risk side, but also on just refining the portfolio and focusing on customers that were awarding us -- our balance sheet deployment with more cross-sell and more advisory-based business. We're bringing in new teams. We have a new team on the FIG side. We're building out our team on -- sorry, on the technology side, not the FIG side. We're building out our health care team. We are adding MDs. So all this is focused on putting more balance sheet out their cross-selling into advisory based businesses, looking for a rebound in our repo business. And therefore, we feel very good about the momentum exiting the year, and the investments we've made. And this is a really important franchise. You see the countercyclical benefits that we saw in 2020 to Capital Markets. But you see this franchise grow at an improving ROE with low volatility, and therefore, is a very important part of the investment thesis as well.

And how are you tracking so far against those expectations into 2022?

We ended the year with significant momentum. We saw a very strong pipeline of advisory origination business, and that continues into the new year. We're executing against that very well. I think the market share numbers, if you look at Dealogic in the last couple of months have us as high as ninth in the world in fees.

Okay. Great. So one of the things that I'm going to be doing today with everyone is I'm going to turn the floor over to you for some key messages that you would like to leave with investors today. So Dave, by all means, the floor is yours, what would you want shareholders to take away from today? And what is your key messages?

Just reinforcing some of the messages, Darko, that you were able to bring out through your questions. We've been investing in growth. We've been investing -- we didn't slow down that deployment of capital and the deployment of NIE into creating a very strong growth profile. We are investing in every single one of our businesses. We walk through the investments we've made in the wealth franchise. We continue to invest in our Canadian banking franchise by adding people. Commercial bankers, adding mortgage specialists, adding investment advisors, adding value through RBC Vantage, deploying tools like MyAdvisors. We're building out our channels, we're building out our employee capability. We're building up our value and our service for customers across the board. And therefore, you've seen the outperformance, and we continue to invest in further outperformance on the customer volume and customer activity side. So we're very excited about the investments made to continue this growth premium that you've seen. All the while maintaining a lower risk profile. I think you've seen the customer franchises, the markets we choose, how we choose to compete, is producing a lower risk. And in this benign world is very difficult to see that. But our strategy indicates and how we think about the customers and how we grow outside of Canada really indicates our appetite for a lower risk profile. And that's how we're executing on wealth management and Commercial Banking in those verticals. Those B2B, B2C verticals are so important. Very excited about the U.S. growth opportunities. You walk through our U.S. Wealth franchise, it's ability to generate deposits and those deposits flowing through sweeps into City National acquiring teams, we've just proved another growth profile and adding more Midwestern offices and those offices are largely full already. So as we continue to roll out, we're bringing teams in from our competitors. We're opening new offices to do that. So the growth profile is one of acquiring teams, new product, particularly secured lending product, new advisory capability and a very strong growth, a 14% compounded AUA growth coming in the last 5 years from our U.S. Wealth franchise. And the City National continues to be a premium growth franchise. It always was. I don't think you can buy a franchise that's not growing and just turn into a growth franchise. The Magic of City National was a strong growth franchise. We've accelerated that growth franchise. We tripled that institution over the last 6 years since we acquired it in 2016. And therefore, that continued growth that you're seeing both in deposits, commercial lending and now jumbo mortgage and consumer lending is a strong tailwind to it. We continue to invest in that long-term experience. Part of the NIE growth in City National should probably [indiscernible]. We didn't get that, is continue to build out a B2C platform. This was a bank through its history has been B2B than to C. That we have an entrepreneurial business relationship. And therefore -- and then we cross-sell the commercial customer in entertainment or technology or food and beverage and in medical healthcare. We crossed some them into a consumer personal relationship private bank after we acquired them as commercial. That's been a history of City National. Now we've added this B2C dimension that they've never had before, directly acquiring a customer on the consumer side. It's important for the long-term growth, long-term lower risk growth of City National and has been an expensive replatforming, building out a mortgage platform, building out a mobile and better online banking capability. Going from kind of 1 star in mobile banking in City National, now to 4 stars in the Apple store. That was really important to the overall long-term journey. We're replatforming the commercial franchise now, putting a new lending system and that will help us take out costs. So there's been a significant amount of lift to make sure that we have the right platform to continue to accelerate growth. And that's been expensive. And that's the NIE deployment. So I think from that perspective, very excited about our growth opportunities in capital markets in Canadian wealth, U.S. Wealth, City National, Canadian First on Commercial Banking, you can see the investments we're making under multiple horizons, short, medium and long term, to continue to reduce high ROE, lower-risk organic growth that's accretive to shareholders and drive our investment thesis of superior growth, high ROE and lower volatility through a cycle. I mean the entire strategy is built around delivering that investment thesis. Had a bit of a disappointment in Q4. We feel that we're back on track. We're feeling very good about 2022.

Okay. Thank you very much for that, Dave. Excellent wrap up. With that, we'll end this session. Thank you very much. And to the audience, we'll go back very shortly for our next session. Thank you.