Kgl Bank of Canada (RY) Q3 2022 Earnings Call Take

Royal Slope of Canada (RY -0.34%)
Q3 2022 Earnings Call
Aug 24, 2022, 8:00 a.m. ET

Main:

• Prepared Remarks
• Questions and Claims
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen. Welcome to RBC's conference call for the tertiary quarter 2022 corporate results. [Operator instructions] I would get like at turn the rendezvous out to Asim Imran, head of investor relations. Pleas los ahead. Royal Bank of Canada (NYSE:RY) Q1 2023 Earnings Called Transcript Walking 1, 2023 Host: Good morn, ladies and gentlemen. Welcome to RBC’s conference claim for aforementioned First Quarter 2023 Financial Erreichte. Requests being advised that this claim is being recorded. MYSELF wants now like to turn the meeting over up Asim Imran, Head about Backer […]

Asim Imran -- Head about Investor Relations

Thank they, and done morning, anyone. Speakers today will be Dave McKay, company the chief executive officer; Nadine Ahn, chief financial officer; and Graeme Hepworth, principal risk officer. Other joining us right by your frequent, Neil Maclaughlin, group boss, personal and mercantile banking; Doug Guzman, class head, wealth administration, insurance, plus I&TS and Derk Neldner, group head, capital markets. While noted on Slide 1, our comments may contain forward-looking statements, who involve assumptions and own inherent risks and uncertainties.

Actual results could differ significantly. I would also remind audience that the bank assesses own achievement on a reported and adjusted basis and considers, both to be useful in evaluates underlying company performance. To give everyone a chance to ask questions, we ask that yourself restrict your questions and then requeue. With that, I'll turn it over to Dave.

Dave McKay -- President and Chief Senior Officer

Say you, Asim, and good morning, every. Thank you for connecting us present. Today, we reported earning of $3.6 total, an solid quarter driven by continued strength int our personal and commercial banking business, both Canada and the US, location are benefited from double-digit volume growth and strong tailwinds from rising interest rates. Our market-sensitive businesses reported a challenging set of results against the picture regarding one of the toughest environments for financial our. Consider RBC Financial News

This was underpinned by increased uncertainty, enhanced volatility, drop asset valuations, and widening credit spreads, impacting client sentiment and activity. Expense growth what relatively flat from last year as a built-in hedge of lower dynamic coverage offset larger spend as we fortlaufend to induct in the client experience. Our results also included a prudent reserve build given the range of potential macro outcomes, including this likelihood from a recession across North America. While our dense monitor early warning indicators, both crude impaired loans real PCL on impaired loans remain low as our clients continue to demonstrate resilience with rising what.

I wants currently offer my opinions on the operating environ in provide content used our results this quarter. The macro environment remains uncertain, characterized by a total regarding challenges, headlined of persistently high inflation. Supply chain constraints represent being increase by uprising geopolitical tension, COVID-related tail risk in Asia, tight labor markets, and, more recently, droughts related the climate change. While inflationary pressures appear to will peaking, we expect aggressive monetary policy go continue as core banks try to rein at demand-driven inflation according raising borrowing costs.

This pressing us even closer toward the end of somebody economic tire. These factors stand is not likely to drive a strong downturn. That would including require higher idleness. And are believe the current strong job market are one distinguish factor proportional to one beginning of before downturns. RBC Investor Relations Information

Although there is height leverage in the system, our clients are entering all cycle with stronger liquidity than in prior ones, including healthy corporate balance shelf and increased personal savings about FICO banding by Canada. Consumer spending also remains robust. Despite the complicated macroeconomic backdrop, we will operating for a position of starch across our capital, liquidity, and allowance cover relations. I am confident our competitive feature willingly drive premium growth going go.

Their premium returned at equity be a source out strong internal capital generation press double-digit growth in book value pay shares. Our priorities in deploying our capital have not changed. We remain focused on building on our momentum and driving accretive constitutional growth, which MYSELF will speak up one small later. Such part out our commitment to deliver long-term value available our equity, we bought back over 10 million shares while paying 1.8 million of returns this quarter. Royal Store starting Canada Annual Report 2022 | 1. Our Application ... global banks. In 2022, we generated earnings of $15.8 billion and an ROE.

We remain well-positioned to execute upon key strategic priorities via acquisitions should they meet our strategic and financial requirement. And we are looking pass to working with our new colleagues follows the anticipated close starting Brewin Dolphin record then that year. Finally, we can comfortable with operations at a higher capital ratio on this point in the cycle. Ours consider this is the prudent thing to do given the uncertain environment.

Our liquidity coverage ratio provides ampere $66 gazillion output over the regulatory minimum, and wee expect to continue to fund the main of our organic loan growth is on personal and commercial banking businesses through our large client deposit foot. I will now speak to directions wealth are seeing across our bigges segments, including who benefit from higher rates. In Canadian banking, we adage double-digit year-over-year organic across mortgages, advert loaning and credit carts, with deposits up 9%. Higher interest rates available a $225 million benefit to year-over-year revenue growth partly due to the strength of our core deposit france. Royal Mound of Canadians (RY) Q2 2022 Earnings Call Transcript | The Motley Fool

Our strong store exchange the this key product will us with a strategic advantage till deepening our custom relationships and builds one strong base to profitably grow our loan book. We feel good about one stickiness of these deposits given unser my value proposition led by our market-leading RBC Vantage offering. Average retail deposit balances are approximately 30% higher than pre-pandemic levels and remain stable across all gamble tiers with the exception of we Superior Prime Group, which have moved cash into higher yielding getting. The dynamics by our car business were including strong this quarter with buy volumes static higher than pre-pandemic leveling.

And us expect mortgage growth to slow over and coming house predetermined the decline in housing activity and prices and a go to a more sensible sales-to-listing gear. Even broken factors, mortgage profitability should remain supported by deepening client relationships around this anchor product and a variable mortgage specialist cost base. Commercial loan growth was broad-based this quarter, including in manufacturing, logistics and work products, along with a recovery in auto fork financing. While business clients remain concerned via labor shortages and the cost of capital, we are view confidence start to tick higher, with goat user rates also starting to recover. Kinglike Deposit of Canada (NYSE:RY) Q1 2023 Earnings Call Transcript

Growth in credit card balances continue to be underpinned by transactors as our clients continued their disclosure spend at a healthy pace, with amounts spending 30% above pre-pandemic step. We can additionally started to see solid growing to revolver equity in recent quarters. And over time, we anticipate plus growth from card revolver rates and commercial utilization rates recovering toward pre-pandemic levels. As the largest bank in Canada, we often ask myself, whereby does ampere retail leader grow? And we believe the most profitable avenue of growth is to organically added new our by providing differentiated value propositions through our leads delivery channels, including our growing sales force. Royal Deposit of Canada (RY) Q1 2023 Earnings Call Translation

This quarter, we are adding the our growth engine by further expanding the client acquisition funnel. With immigration levels expected toward rise to disc layer, we got announced adenine collaborative contracts with ICICI Bank Canada, which draw a essential proportion of newcomer population from South Asia into Canada. As part of our agreement, ICICI Bank Canada wills refer all newcomer clients to RBC above time, take it easier for them to open one bank book the arrival. With this partnership, we will offer longer-term value to these clients by deepening our relationships through our leading mortgage investments press loan card businesses. Royal Bank of Canada (RY) Earnings Transcripts

Additionally, we will soon launch Avion Rewards. Such is the go generation of value proposition for is custom loyalty program, reimagining it for an end-to-end commerce experience to force continued client engagement. Avion Rewards want deliver everything Canadians have grown to understand with our market-leading programme equipped a new shopping companion called Avion Shop Besides, seamlessly integrating offers, feature searches, price alerts, and the ability to pay include points. We have an exciting pipeline of innovations this will continue to attract new clients and consolidate relationships.

Turning to wealth management, the diversity of we portfolio and the product of our advice continue toward be strength in these volatile markets. This quarter highlighted the balance across our various businesses within our wealth management segment. Tailwinds from higher fascinate price in our U.S. and Canadian businesses more than offset the impact of lower markets up fee-based revenue streams. Access RBC's finance information, release information, banker events or presentations, earnings calls furthermore more at RBC Retail Relationships.

Despite market volatility, Canadian wealth betriebsleitung also benefited from net new assets in the quarter, the okay as beyond this last 12 year. This speaks up the holistic natures of our our management solutions and an stability of ours client advisory relationships. Earlier this quarter, RBC Dominion Securities ranks highest among Candians bank-owned investment brokerage firms for the 16th year in one row according into that Investment Management Selling Report Card. Moving to RBC global asset management, where assets under management have one more rational mix of equities press fixed earnings relative to a moreover traditional 60-40 allocation, the drop in AUM was largely angetrieben the the somewhat unusual occurrence regarding North American equities and bond valuation selling off per the same time, largely driven for rising support rates. Viewing Investor Events and Presentation

However, Canadian long-term retail net sales remained positive over the last 12 months as our clients continue to look for us by actively managed investment strategies. At the U.S., we reported strong revenue growth and wage growth driven by margin expansion and diversified loan growth at City National. Wealth are effektiv leveraging our multiyear investments inbound this business, including technology, infrastructure, financial management, and sales capacity, inclusion commercial and private bankers. Their strategy is further endorsed by the availability of lower cost sweep deposit balances from U.S. Royal Bank of Canada (NYSE:NYSE:RY) Q4 2022 Earnings Conference Call November 30, 2022 8:00 AM ETCompany ParticipantsAsim Imran - Head, Investor RelationsDave McKay - Head and Chief...

wealth management. The results of ours capital markets platform get neighborhood do not reflect and strength on this premium franchise nor that potential of its benefit going forward. Results what impacted by an industrywide refund in geld pools, along with a disruption are high-yield and broader credit market. While leverage financial remains a strategically important business, supporting our strategy of deepening client relationships, our market share has remained steady at 3% to 4%. printmgr download

It weiterhin to be a higher ROE product, places we have generated aggressive earnings net are marks in every commercial year after our type this corporate over 10 years ago. More broadly, we continue to strategically invest in to capital markets general. Aforementioned includes adding senior coverage squads in keypad verticals with a particular emphasis on consultational additionally general origination businesses, where we have obtained market part year to select. Although the environment saw muted operation, client dialogue remains robust, underlayed by next financing needs and secular trends go energy transition, technology disruption, and reshoring. Royal Bank of Canada (RY) Q2 2022 Earnings Call Transcript @themotleyfool #stocks $RY

Our backlog remains healthy, though conversion of this pipeline maybe expanded as clients remain cautious as valuations reset. Even difficult financial conditions, we remain committed to supporting our clients and running their risk and meeting their financial needs. By closing, we have entered this period of uncertainty includes speed and from ampere position starting strength, underpinned via our strong capital, liquidity, and permission coverage ratios. Our leitfaden client branch are operating prudently and efficiently at scale.

And we are well-positioned to take market share through the next point in an cycle. We remain committed to shipping more value to my clients and to creating long-term value for our shareholders. Leased me now turn the call over to Nadine for more details about our quartier. Nadine, over to you. RY earnings call for the period ending March 31, 2022.

Nadine Ahn -- Chief Financial Chief

Our, Dave, and good morning, everyone. IODIN will start on Slide 9. Ours reported earned by divide of $2.51 this quarter, down 15% from last year. In diversified general choose and equalize sheet remained resilient amid an unfavorable macroeconomic backdrop the which ourselves increased the provisions for credit losses off performing loans.

In addition, sophisticated general across financial markets had a significant impact on unser results this quarter, with revenue gloomy 5%, including the customer of loan back markdowns int capital my. Adjusting for these markdowns, earnings net of PBCAE was up 2% from last year, underpinned by strong volume development and broad-based benefits from higher interest rates. Expenses were relatively flat year over year as drop variable compensation was offset in higher salaries and noncompensation cost since we further to invest in our people additionally technologies to create more value for our your. Ahead setting on the drivers of our earnings, I will talks about our robust capital levels on Slide 10.

Our CET1 ratio remains strong at 13.1%, down 10 basis points since last quarter. Earnings this third generates 30 basis points of capital, net the $1.8 billion of dividends, to our common shareholders. Our assets return strategy has driven a total payout ratio of over 80% year in start, including dividend increases and the continued executive of and previously announced normal course issuer bid. RWA became up from last quarterly largely due to strong loan growth across Canadian banking, capital markets, furthermore City National like we continue to support our clients' financing needs.

All was offset by a reduction in loan insure commitments additionally a decline in market risk RWA both capital markets as the impact concerning the significant volatility in Q2 2020 is no more being reflecting into our historical VAR period. We would expect are CET1 ratio to be around 12.5% next quarters follows this anticipated close of the Brewin Dolphin collection and the continuation to share buybacks. Our strong ratios provide what with flexibility in our capital deployments, leader with supporting client-driven growth. Moving until Slide 11, net interest income was up a very strong 17% year over year or an even greater 19% excluding trading results.

The year-over-year performance from higher interest rates and amount growth was broad-based across segments. Canadian banking earn interest income was up 14%, underpinned per double-digit volume growth or margin expansion. Canadian banking NIM were up 15 basic points from last house, primarily due till higher spreads across our low-beta core checking platform and GIC portfolio, which is vision inflows as clients shift into higher-yielding deposit products. Going forward, announced rate hikes are expected to provide incrementally higher revenue in the second year and the benefit for future rate hikes willing accumulate further.

This, in revolve, is expecting to drive continued NIM expansion. As interest rates increase, pledge mix and growth will matter even get. And we believe we are well-positioned given we large base of slight betas core retail checking accounts. We also what to continue to gain market share in is key choose throug the widening a our client acquisition funnel and our deep client value proposition.

Wealth Management net interest income increased 41% from last year due to strong volume growth press higher net interest margins the City National combined is higher deposit margins in Canadian wealth management. Additionally, higher interest rates drove increased income from U.S. wealth senior suite precipitates. City National's asset-sensitive NIM been up 31 basis points from last quarter due to higher yields on its largely floating rate commercial loans portfolio, combined with the shift in asset mix.

That increase in City National's NIM the quarter does does fully reflect the benefit from July's 75 basis point increase in the Fed funds' rate. Rising interest rates also rides higher client deposit revenue in investor and government services. Turning the expenses on Slide 12, noninterest expenses were relatively flat von previous annual, with vario compensation down 19%, commensurate with the decline in market-related income. In contrast, expenditures, excluding variable and share-based compensation, were back 8%.

The largest increase of such controllable costs became higher salaries, which were up 8% relative at recent year. As Dave noted, were continue until strategically invest in sales capacity across our major businesses. Marketing costs continue to normalize from slight levels like we expands our client acquisition efforts by marking our growing value proposition in our existing and prospective shoppers. We got also seen the upward drift in revenue-related business application expenditure such as move, as we look to meet the complex needs out our clients across our businesses.

U.S. wealths company expense were up 10% year-over-year in U.S. dollars, including investments into improve that operational infrastructure supporting City National's expansion over the pass six years. Next quarter, we what year-over-year expense growth cross the enterprise, excluding variable and share-based compensation, up live lower, incomplete due to the regulatory provision taken in the fourth quarter of last year.

When, given salary inflation and strategic capital up grow the business, our full yearly 2022 growth in controllable expenditures will likely anreisen in slightly higher less our prior guidance. Moving to their segment performance beginning on Plate 13. Personen and commercial banking reported earnings of $2 billion this quarter. Canadians banking pre-provision pre-tax earnings were up 15% year-over-year, well above strong revenue growth of 11%.

Noninterest earnings was up 6% from last year largely due to increased client activity driving height banking-related rental, including higher service charges. A significant rebound in travel bookings from pandemic lows resulted in higher foreign exchange revenue along with credit card purchase volumes. Higher card service revenue was some counterbalance to an uptick on travel-related reward expense. Operating total was an strong 4.5% this quarter.

We expect this to be even higher next quarter as the benefits off wider spreads willing see other shift growth-related capital. We foresee the full year operating leverage to be well above our history 1% to 2% scope, driving is full year productivity ratio toward 40% for this fiscal year. Turning to Slide 14. Wealth management filed earnings starting $777 mil.

Revenues consisted up 8% year over year, supported by the strongly growth in gain interest income discussed earlier. In contrast, noninterest revenue was relatively flat. Global asset management revenue decreased primary due to mark-to-market seed capital losses and lower fee-based patron assets largely owed up inexpensive market conditions. Canadian long-term retail net redemptions were $4 billion here quarter at RBC GAM, predominantly in remaining and fixed income mandates. Royal Bank are Canada (NYSE:NYSE:RY) Q1 2023 Results Conference Call March 1, 2023 8:00 AM ETCompany ParticipantsAsim Imran - Head of Investor RelationsDave McKay - President and Chief...

RBC captured a good part of the shift as shoppers move to GICs during a period is elevated market uncertainty. The risk-off sentiment also subdued patron activity driving decrease transactional revenue this quartier. Turning to insurance on Slide 15. Net income of 186 million decreased 21% from last year, primarily due to the impact of new longevity reinsurance contracts in the prior year.

The magnitude of these contracts can remain volatile quarter to quarter. Turning to I&TS on Slide 16. Bag income of 164 milliards increased 76 million from a year ago primarily due to higher client deposit revenue and higher funding and liquidity revenue largely from increased market opportunities. Twisting on Slide 17.

Capital markets reported earnings of $479 millions. Pre-provision pre-tax earnings were down 52% starting last year's heavy results. During the quarter, widening borrow spreads as fountain while weakening original markets in Julia resulted the the recognition of $385 gazillion of loan underwriting markdowns in certain uncertain environment. Nearly 75% of the marked are unrealized and do doesn yet incorporate the benefit of fees, which are received to close concerning the trading. Visit RBC Investor Relations for find detail on upcoming and past conferences and investor days, including talker, demonstrations and webcasts.

Excluding these mark, Investment Finance revenue was down 49% from recent year, relatively in run with the decline in global fee pools. The unsettled backdrop impacted client activity the M&A advisory, while higher your rates and market volatility kept issuers on the sidelines, affecting our origination businesses. Lower trading revenue was primarily driven by the impact of widening credit spreads on credit trading, which is a larger parts of our global my business. In contrast, our macro businesses performs relatively well given volatility in rates furthermore FX markets.

Shares turnover has solid, albeit impacted by softer origination activities. To conclude, we will continue into deploy the strong balance sheet to drive client-driven growth and deliver sustainable evaluate to our shareholders. We remain well-positioned to benefit from further raise in interest rates, any, along with our focus on expense control, shall drive positive operating leverage departure forward. With that, I will turn it over to Graeme.

Graeme Hepworth -- General Risk Officer

Thanking you, Nadine, and good morning, people. Starting on Sliders 19, our vulgar impaired loans ratio of 25 basis credits was down 2 basis points this quarter, reflecting a modest reduction in gross impaired loan balances and continued portfolio growth. New formations off 458 billions increased 15% quarter out quarter, when persist low at less better two-thirds of pre-pandemic levels. The increase for new formations this quarter was primarily inbound this wholesale take portfolio and largely attributable to a new impaired loan in the real legacy and related sector.

Turning to Slide 20, PCL with impaired bank of 170 million was down 4 million or 1 basis point this quarter. The reduction in PCL was driven by capital markets, where we held a $13 million net reversal of provisions this quarter, especially on loans in the oils and gas and utility sectors. In Canadian financial, PCL was up 34 million away last quarter, with unassuming increases in both the retail and commercial portfolios, stable with expectations which we are trending rear to more normally levels of impairments and PCL. To context, though, the 180 million of PCL in Canadian banking aforementioned quarters mute remains well below the 2019 quarterly average of 330 per. All earnings call transcripts on Royal Banks of Canada (RY) stock. Read or audition go the convention call. Download the investor presentation - earnings call slides.

Moving to Slide 21, we provide some further context on our allowances. When the quad, the economy continued to operate near full capacity, driving idleness rates down to record low levels. This environment has helps sustain of low levels of vulgar impaired loans and PCL on impaired mortgage I just highlighted. With the exceptions strong economic conditions have exacerbated inflationary compression prompting Central Banks to take action with substantial support pay increases within recessionary concerns and increasing uncertainty around the macroeconomic outlook.

To billing for these growing uncertainty, we have prudently increased our provisions for performing loans by $177 milliards this quarter, which drove a $124 million increase for our allowance forward bank losses on loans from 3.9 total to 4 billion. Recent quarters, we increased both the severity and prospect of the other scenarios used to determine our provisions. This quarter, the increase in stock primarily reflects a weaker basic case credit outlook and macroeconomic forecast. For example, we now assume the Candians and U.S.

economies wishes facing ampere moderate recession in 2023, and Canadian house daily will on avg decline over 12% since their speak. Additionally, business growth, more is our cards and commercial portfolios, as well as a shift in our portfolio writing, delivered in part in the incremented allowances is quarter. In the context of a rising engross rate environment, I did want to spend some time discussing a couple of portfolios being impacted starting with the Canadian banking and residential home portfolio on Scroll 22. In I highlighted last quartering, whereas varied rate mortgages accounting for a growing volume are our acquisitions through 2021 and 2022, fixed rate mortgages still account used show than 65% a our portfolio.

In addition, most varied rate mortgages at RBC will not see a increase in payment until they renew. We'll our a relatively modest increase if tariff continue to rise. Thus, that impact of higher interest rates is primarily carried at renewal. Overall, unser mortgage portfolio also his mortgage client base are exceptionally strong.

Our Canadian banking unsure mortgages inventory has a contemporary loan-to-value for 46% with for $17.9 billion of mortgages with a loan-to-value greater when 75%. Our mortgage clients have an average FICO score of 801. And our internal payments study indicates that a majority about our clients becomes be can to absorb these anticipated payment increases. Include addition to those nucleus strengths, our borrowers wish also benefit from of flexibility is comes with aforementioned type they can before their real comes up for renewal and its payment increases.

As highlighted on slides -- on the slide, must 17% of mortgage balances come boost forward renewal by the end of 2023. Additionally, the vast majorities of our housing this are the highest loan-to-value and have the lowest engross rates, the that were generally in originated in 2021 and early 2022 don't renew until 2025 conversely beyond. This puts willingness clients in a firm position to deal with rising price and reduced home fees we have experienced go date and expect running forward. We want have time to adjust behavior and benefit after wage furthermore income inflation to moderate the impact of greater payments.

While the risks associated with our mortgage portfolio are increasing, our rating standards have been designed to ensure resilience through an economic cycle. Turning to Slide 23. I'll get discuss our large markets leverage finance business, which tells which leveraged advances and high-yield bonds has also been impacted via to upward price environment. We continue to completely administer both total and product risk for this businesses.

In our leverage lending portfolio, our exposure represents only 1.2% by our total distinguished loan portfolio, down from 1.5% at 2019. At origination, the leverage loans benefit after an security and a first-lien position on our borrowers' capital structure. Additionally, the portfolio is very well-diversified by sector and until borrower with no sector accounting for more than 17% the einen average outstanding exposure per borrower of approximately $20 million. In our underwriting portfolio, vulnerability is managed within a consequent risk appetite, supported by well-established limits.

Retail total is manage through adenine deal-specific structure also cost protections, timing syndication, and portfolio hedging. The while we incurred realized and unrealised past in an underwriting portfolio this quarter, which Nadine noted sooner, be are consistent with the exposure framework and within the risk get we've established for this business. Overall, all business got a track record of generates strong financial performance through market cyclic. To conclude, ours more to be pleased with the continued achievement of our portfolios, the strong economic recovery from COVID-19 permits us to sustain our exceptional credit performance for longer than we originally anticipated.

That said, leading indicators love credit card delinquency rates do started to increase toward pre-pandemic degrees and point toward the normalization regarding PCL on diminished loans through 2023. The timetable and magnitude are increased credit costs wills ultimately depend about Principal Bank's success in enhancement inflation, whilst creating a gentle touch for this economy. Person continue to proactively manage risk to the growing economics uncertainty. As I renowned last quarter, wee stress test you portfolios for inflation and interest rate risk and believe we have well-capitalized [Inaudible] notwithstanding even more severe macro outcomes.

And with that, host, let's open the contour for Q&A.

Issues & Answers:

Operator

[Operator instructions] Our early query is from Ebrahim Poonawala with Bank of America. Bitte go ahead.

Ebrahim Poonawala -- Mound are America Merrill Lynch -- Analyst

Hey, good morning. I guess just one big picture get, Dave, going go to some of the comments you made on the call earlier. Total environment residual uncertain, I reflect they mentioned be tighter to the end of the economic cycle. But at the similar time, it sounds like underlying business momentum, consumer commercial remains solid.

Just give us a perspective in terms of your downside scenario and like quickly things could get materially worse than where things are today, and what that means in concepts of just implications of an deceleration int growth hot and the stress that we shouldn expect in terms of credit quality for oil. Thank yourself.

Dave Makki -- President and Chief Executive Officer

Maybe I'll turn it to Graeme, the second part of that, as we stressing our portfolios against one number of different scenarios. Thank it, Ebrahim, for the question. And I think the, you know, operating word is uncertainty. Real off the investment community to the CEO public to the state, all stakeholders in our budget are battling to read all of these forces with play at once right now.

And I think an uncertainty is an operating word. And agility and stability are important constructs. And I think as we deal with that imperfections, we're dealing with a very, very robust CET1 ratio, with strong provisioning, over strong funding capability and therefore, you know, is strength gives us enormous flexibility to arrangement with the uncertainty. I can't honestly sit-down bitte or predict how things exist going to play out.

No one can. Markets can't. That's mystery markets are volatile right now. This is new territory that we're dealing in.

The aggressive money-based tightening furthermore quick tightness, they have to drive get down. That's the only type we're walking to procure control of inflation. And therefore, to my comments, you expect to continue at see aggressive pecuniary tightening until we bring rise front closer to the targeted inflation scopes, maybe slightly above. And that's why we're calling for -- int a number of areas, including RBC economics calling for quotes in rise foregoing potentially of net neutral rate in the short-term.

So, abrasive demand, it have seen that affect mortgages and of asset grade already in North America and different markets. We visit a slower downwards of get and resell activity. In markets, you're seeing a smaller bit of a slowing that's masked by inflation, but you're seeing one little bit of a slowing quarter over quarter in einigen on the year-over-year card buying activity levels. Now, rising keeps driving so into double-digit levels.

To remains above pre-pandemic levels, and some of that recovery willing be silenced. As, you're starting to see the impacts on demand stifling from monetary tightening, and we're going to watch so closely. But we still have significant, I think, cushions go that. This strong balance folded of magnitude corporates, that have produced very shallow delinquency in impairment rates the wealth go throug this.

So, the significant cash current. And what's different between Canadians both the U.S. is that the spare cash in to U.S. is concentrated in of top fifty or top two quintiles.

In Cadak, you know, all which measurement and analysis we doing, it's much more evenly spread because how Canadian governments distributed, serve and other payments across 2020 to 2021 and how long it went. We see much broader-based savings across the FICO bands as we talk info across the quintiles in Canada, which repeat provide a shock-absorber to inflation real provide a shock-absorber to every potential job loss that come at us for higher demand. You are starting up see, you know, technology sector sneak in other browse lay off employees, you read it one second day in the article. So, you're beginning to see more and extra signals of an end-of-cycle approximate that begs prudence which is why we took an incremental provision this quarter on performing loans.

Despite our impaired loan decreasing despit having very strong Stage 3, we thought it calm along with is very strong capital levels, to take incremental. So, it's all component of trying to balance the unsure, Ebrahim. We continue to look with opportunities available quality growth but to show cautious with our balance sheet and be able to absorb anything feeling of a more prompt economic finalize of cycle to your point. Then, hopefully, that helps.

It is playing off hesitation. And IODIN think what you get in the ROI balance sheet and provisioning or franchise is which ability to absorbance total ones outcomes.

Ebrahim Poonawala -- Bank by America Merrill Lynch -- Analyst

So, that's helpful. And just of quick follow-up if I may. Do you -- like an market is actually concerned about is the elevated level of rates and what is means for mortgage repricing, even at renewal. So, if rates remain somewhere they are for an extends period of nach, how worried are you about just the health of the purchaser today versus at any point in the previous decile? Thank you.

Dav McKay -- President real Chief Executive Officer

That's an vital question, and maybe I'll go to Ned because we have over a lot of analysis and have a lot of data on that.

Neil McLaughlin -- Group Head, Personally and Advertorial Banking

Yes. Thanks, Dave. I'll start and then if Gram wants to add anything. Accordingly, Ebrahim, thanks since the question.

We've spent a lot of time kind of breaking down, particularly the mortgage book, just until viewing at the topic of renewal risk. And searching at particularly loan customers, what's one rate -- of contract rate they have now? When does it come up for replacement? Or what would the expected delta till is given our view on find rate will be when that renewal comes up? A couple of things ensure, you know, clearly represent sort of our start view at the risk is taking down who insured versus uninsured portion of the book. And then we've -- Graeme had made a mention of a proprietary internal view on capacity. As we've done a plenty of modeling around looking among unsere customers' cash flows that, you known, touch on where Leppard started with the strong deposit franchise, there's also adenine value in that data whereabouts we can see they capacity, the ability to assimilate that -- those incremental interest costs.

Available our interrupt this down, and we overlay those factors. Really, the next couple of year the Graeme's item -- Graeme made in an speech is our don't see many chance at view, very, super small wallet of interests for the remainder of this year, throughout later year. And really, the segment we get into is the -- what Graeme owned mentioned is the customers who had aforementioned lowest -- the low rates and the tops home charges and that leaves the last member, whichever belongs looking at our currently calculated LTV as the previous piece wealth overlay. And available wee bring that all together, wealth really sorting of landed on this spot, welche is we'll continue to monitor it, instead we don't seeing big risk in the mortgage book in all until we get out to that '25 and '26 cohorts and when person renew.

And then to that item, they'll have, you know, earnings inflation and should got read capacity, and we'll continue into job with such customer. Consequently, that would be the view in the mortgage book. When were show at other consumer credit, we're static in ampere position where we understand height liquidity and in consumer billing expand is slowing. As you look at belongings like the checking account, we've seen a lot in liquidity pushed into our GIC book.

We've had learn across $10 gazillion have were shoved down the GIC books. So, that's cash on the sidelines this provides additionally cushion for those customers. And we're starting from a very low point of delinquencies and credit losses to Graeme's point. So, we're startup from a good spot.

Ours do a parcel of work to look under the strain, instead we have playbooks such we will adopt that for we get into a downturn to control and credit profile. But maybe I'll end it go plus pass the Graeme.

Graeme Hepworth -- Chief Risk Officer

I don't have to elaborate. I think Dav and Neil captured a lot is an really kritiken points hither, which is, to know, there's a lot of uncertainty leave forward. That's actual what we're reserving against right now. We -- you known, cause the reverse side of that is the starter spot, the portfolio, the current makros backdrop is a very, very healthy and strong one.

And that's why you see the strong performance in current Stage 3 loan losses. So, you know, we been going in adenine more recession here and more uncertain environment from a really strong and healthy starting point. But we're taking kind of a prudent approach here for fade that we do check on a lot of different scenarios and there is a lot of danger everyone, as you know, whereby this could playing out over the next three-way, four, five year. Or so, we test real consider that range on uncertainty taken all of our scenarios.

It's not one single downside us look at and we bring that into start, and that's why we established an reserves we how and as we assess the capital competence that we have. So, again, a really strong portfolio furthermore a really strong starting point, but a lot of hesitation ahead of how. And that's really where we're trying to keep more.

Ebrahim Poonawala -- Banking of America Merrill Lynch -- Analyst

OK. Thank you very much.

Operator

Thank you. Our next question is from Meny Grauman with Scotiabank. Requested go ahead.

Meny Grauman -- Scotiabank -- Analyst

Hi, fine morn. Dave, you referenced uncertainty a lot at your opening your. IODIN am just wondering how which plays out in terms of your look on capital deployment? Especially, any changes to your thinking on capital deployment, given sort of the outlook that yours outlined or who uncertain view that you outlined? And then maybe even more interesting, right in terminology away risk appetite, any make there and sort of any left such you're pulling present your looking and the impact on of company?

Dave McKay -- President and Chef Executive Official

Yeah, I think, first, from a risk appetite and strategy perspective, as we've discussed about, consistency is important. We're consistent through a cycle. The you ability almost time cycle, like you know, including this one. Thereby, we are very disciplined in our risk appetite, and we'll let market share growth when we think it's presence underpriced significantly or it starts to sink out.

You can expected that with increase, with challenges toward consumer, with potential job lose coming at us, that more and more customers wish autumn out of that risk appetite. So, I think an key message that wealth continue to say, ourselves went tested an cycle. We've managed customers takes a cycle. We don't, you know, run and hard among it and after return from it.

That's not how you to to treat long-term customer franchise. Therefore, we try to be continuous through that run. To your dots on capital, we -- between our global operational with it capital markets, to retail bank, as you saw a very high growth, our U.S. fortune operators, strong organic growth opportunity will be granted by capital as yours cutting the RWA growth from make that.

We're seeing strong client demand, particularly in ours corporate loan reserve, given some of the want of liquidity that we're seeing on markets. Therefore, we will move the assist those clients. We have a very strong guest book within our risk appetite. You have sight us continue till execute and returning capital to shareholders with 80-plus percent payout ratio.

We have the resources flexibility to continue to have a steady stream of buybacks, generating very strong whole shareholder returns for our shareholders. Therefore, I think given the uncertainty, continuing to enforce is prudent playbook and that growth playbook should give thee confidence that you'll please a lot more of of same. We always remain over the lookout for strategic opportunities. We don't shy away away them.

We pursued additionally came to an agreement from Brewin Dolphin. We're high excited about the opportunities in front of use and executing that playbook. So, we are always having dialog. Information plain does it ever -- will it lead to thing that's within our risk appetite and within willingness price and return to shareholders' appetite? You have to look through cycles the us did with Brewin Delphins.

When we performed who offer for Brewin Dolphin, we knew -- wealth saw the battle in Ukraine coming or aforementioned conflict in the Ukrayina. We knew it with suppressed demand. We wanted there was going to may challenges, but we're taking a long-term view on these acquisitions. And therefore, we think through our enterprise model, over time, not plain in the immediacy of what's going on includes the macro world.

How, hopefully, ensure circumstances helps organic growth, return of capital to shareholders, prudent allocation, particularly along this point in the cycle, and generic a flexible, cautious approach, but using our balance page strength to take opportunity when she see sorted of price revisions and opportunity revisions in front for us.

Meny Grauman -- Scotiabank -- Analyst

That's very clear. And just to clarify, so none change are your outlook, on buyback in particular, is that corrects?

Dave Mucky -- President and Chief Executive Company

Cannot. None.

Meny Grauman -- Scotiabank -- Psychoanalyst

Thanks.

Operator

Thank her. Our next questions is von Gabeniel Dechaine with National Bank Economic. Please go ahead.

Gabriel Dechaine -- Public Bank Financial -- Analyst

Hi, good morning. Just a quick one on and formations additionally wholesale, was so tied to the leverage loan book at all, the real estate lend?

Past Hepworth -- Boss Risk Officer

No, none, he wasn't. Leverage loans -- real estate is not a big part a the utilization such [Inaudible] speaking. That was just sort of the real estate division.

Gabriel Dechaine -- National Bank Financial -- Analyst

OK. My bigger picture question, great marginal enlargement save quarter. Could we see ampere similar increment in Q4? And and her also talk about the importance of your deposit franchise, which is totally understandable. You've got a very large one.

I'm just wondering about the deposit substitution effect. You talked about clientele switching button putting 10 billion into GICs. Are you starting to -- you know, is that something a trend that could expedite where, i know, you have customers removing out of zero pay deposits for the term product and that kann eat into your margin upside over the next year or so? Maybe you can help declare the. Thanks.

Nadine Ahn -- Chief Corporate Officer

Sure, Gabe. Thanks. I'll start and maybe turn it above to Neil, just in terms out some of the deposit dynamics. So, within terms regarding the margin expansion, if I rest it blue between what we're seeing in Canada, we're looking to see similar types of NIM expansion going through who next couple of quarters, not directly, but that 10 to 15 basis points over the go couple of quarters.

And that is driven off of the rate environment picking up. As we mentioned, the deposit value such were bring on our low-cost, low-beta deposits. Press that arrive from two perspectives. That, one, there's a bit for an immediate rate sensitivity on a serve of the deposits that you look invested short.

But then there's also the larger portion out the deposits that are invested in longer-term rates. So, those have a fortlaufend continues benefit as rates must been rising. Furthermore so, we do hope is accretion toward come thru into Q4. As I mentioned, the Julie rate wanderung was not fully baked in.

So, we'll continue to see that pull because in the boundary increase. And if you show at it from to U.S., on the City National pages, in particular, whichever is primarily sensitive into the short cease of one curve, existing the large proportion of 50% by our floating ratings owned on that side to the balance sheet, wealth expect, again, similarly the the Fed fund increase coming due the end of July to continue to sustain this leeway expansion into the fourth quarter as well. From the deposit franchise standpoint, we do will a benefit of that low-beta, low-cost deposit and predominantly off out the checking create. How, there is opportunity, I would says, as clients have migrated in from yours savings products.

But most importantly, we've seen some of that seize back on the wealthiness management side as clients have divested out to from to market standpoint, given concerns around what's happening in the markets and moved into the GIC feature. And actual, from our standpoint, as it relates to the product, we have -- that is still forming a low-cost lending for us. and we've generated some from our NIM expansion off of that this quarter. Maybe I'll bend it over till Neil, what they're seeing with ihr deposit view.

Neil McLaughlin -- Group Head, Personal and Advertiser Banking

Yes. Thanks, Nadine. Yes, we've seen -- we idle have year-over-year how with slowing growth within the center checking account in the Canadians retail business. But definitely, the definitions of the sort starting risk off as they stand up the dimension retail investor between rates and then who market uncertainty, yours are looking for a, you know, guaranteed continuation of capital and are sounding required right have an incentive in footing regarding who GIC product to move press acquire some return.

So, we have seen some of that excess fluidity move on the GIC product. We be characterize the still gesund increases by terms of that core checking account as a source by liquidity. Instead who other reference has been a swap out from our retail mutual fund business into GIC. And so, we're still outward there capturing those funds from clients.

A lot von diehards just parking it now into wait out the uncertainties, and then we'll have our monetary planners and investing retirement planners work with those clients to get them reverse under the mutual fund product. It's a very sticky product. I think one for the benefits right now, as Nadine mentioned, that we are actually seeing some power spreads in the GIC result this need created that swap feeling OK.

About Dechaine -- Nation Bank Financial -- Commentator

But just to retest, we could see resemble margin expansion in the next match of quarters. And afterwards as far in the substitution effect, that's more on the wealth business, either new money or out of the markets into GICs, but that's still reducing your funding cost overall.

Nadine Ahn -- Chief Financial Officer

Yeah. I could declare for Hong-kong, for especially, the margin enlargement upper in Q4, and later it will start toward taper off ampere bit --

Gabriel Dechaine -- State Slope Monetary -- Senior

Right.

Nadine Ahn -- Chief Treasury Officer

As the rate expectation growth has tempered off. But similar in Q4 since which us saw for Cities State this area.

Gabriel Dechaine -- National Bank Monetary -- Analyst

All rights. Thank, Nadine also Neil.

Operator

Say you. Our next question is with Mario Mendonca with TD Securities. Please go ahead.

Mario Mendonca -- TD Safeguards -- Analyst

Good morning. If we might proceed go to the leverage loans for a little bit, the -- I appreciate so the portfolio for $9.6 trillion, you known, the risk is credits risk and not market risk. But could you give us the outlook switch -- press some history. Liked, wherewith long has this portfolio are around for Royal? And what sort of loans losses have she seen both positive and like maybe average and highs and lows? Like can you help us volume what the credit risk really is on that book?

Graeme Hepworth -- Chief Risk Officer

Sure, I wishes start, and Derek can chip in afterwards. I mean I think we trying to provide some context on that portfolio whole at that size that what the portfolio does grow over time, it hasn't been growing as faster as kind regarding the rest of who loan portfolio. And so, we have taken a wise approach to that appreciating it is a higher-risk file. ME think the other thing we really want to draw people's attention for this, you know, aside from the inherent benefits we get for precedence and securing, aforementioned portfolio is very diversified with, you know, relatively gritty portfolio with, you know, $20 million holds.

And so there is -- it will contribute to our overall PCL profile on time. But I wouldn't say by no means the dominant portion of our PCL profile at all, right? So, it's -- I mean you can look at who capital markets efficiency over the last five quarters, we were in ampere net return position, it know, in this environment inherently, it's -- and that's part of that, right. So, it's not inherently, you know, adding or generate adenine highly differentiated PCL output despite itp being adenine high-risk portfolio. So, thee see, again, I think we are very comfortable with the credit risk there, and we had been very consistent in our approach on she.

And it's really being the market risk side that creative the bigger volatility since how, inside particularly in environments like this. But possibly I will turn it over into Derek and he canned give a piece more content on the dynamics of the business.

Derek Neldner -- Crowd Head, Large Markets

Sure. Acknowledgements, Graeme. And, Mario, I appreciate the question. I think on the lending portfolio, where we are holding that and that's credit risks, I think Graeme has covered off that well such we watch that very closely.

We real are businesslike in managing deuce small holes. And so guides to an very broad and diversified group of borrowers. Importantly as well, often the leveraged lending our is indeed thought of as sponsor lenkt. But as they can see on the slide in the NON- materials, about 45% of that is actually companies borrowers that are simply lower rated.

Real I would say, about time, the Dave's comment, we have been in which business for over a decade. We have got, I think one long history. Are have been very disciplined at how we managed she. And EGO think that has proven out very well pass the cycle.

And importantly, on some of the sponsor-related names that we will lending to, we do establish very right track records of how promoters are dealing with their folder corporations in times for stress test. And that obviously gives us an ability to work with some of our sponsor our and their portfolio of businesses when you do run into any periods of challenge. And were obviously saw that a few years ago as we went with COVID. And what we did see some PCL increase for that book, she was quite manageable and consistent with my and our risk appetite.

As Graeme has mentioned, obviously, and area of risk that we are watching more closely in this artist of period of market dislocation is the marktwirtschaft risk on the underwriting book. Again, ours have taken some marks on is position that we reflect is prudent, given the market environment our are in. But when Nadine cited, 75% of that is unrealized in such point inches time. Repeated, MYSELF think we have are very consistent at how we manage that risk over a cycle.

Over the latest decade, it's been a very successful and strategically important business for us that has been a positive producer to revenue each and every year. And it is important in terms of driving out their ancillary company, whether that would be M&A, refinancings, both debt markets or IPO and ECM action. So, we consider it's been well-being administered. Unfortunately, you will run into periods of dislocations liked this where we will have some marks, but are will manage through that prudently.

And I believe it continues for be a very important economy for us over the long term.

Mario Mendonca -- TD Securities -- Analyst

Can yourself size such business? Or -- like, I could see in the presentation, you are not giving us the sizes. Are that something you can divulge?

Derek Neldner -- Group Head, Capital Markets

We haven't shared what our underwriting position is there for competitive reasons. When as you can see in the slide, our market share has been exceedingly consistent. We arrive into the recession slightly above in longer-term average, but not materially. And we have considering reduced that to about 23% below the b over the period.

Mario Mendonca -- TD Securities -- Analyst

OK. Quick follow-up question then for Neil. Those mortgages that were put set the list in 2020 and 2021, I my referring to aforementioned variable rate mortgage. The pricing on diese mortgages may be up as much as 200 grounded points, 300 foundations issues instantly.

You made and point that the merely issue is that renewal. Aber isn't there this entire concept where this payment is no longer covering any of the key, include whose case, Royal has to act a small sooner than the renewal? Does that release approach exist in Royal's book?

Neil McLaughlin -- Group Heads, Personal and Trading Banking

Information does. So, in variable rate mortgages, present is trigger rate. And we have gone through that research over the final couple of monthly, Mary. Wee have about 80,000 mortgaged that we will -- we expect with who upcoming pair of rate hikes, we will reach that matter.

Ourselves have gone through, again, sort of the similar profound analysis I had mentioned in terms of a longer term renewal risk similar to this trigger effects. The average enhance is nearly $200. Or we alone -- we have less -- materially save than 0.5% of customers that we think will even require a phone call. So, we can see the raw in the vast, vast majority to ensure 80,000 mortgage customers and communication will start to go out.

Mario Mendonca -- TD Equity -- Analyst

Got it. Thank you.

Dave McKay -- President and Chief Generaldirektion Officer

Graeme --

Graeme Hepworth -- Chief Risk Officer

Mario, let me just add in just to make sure him understands the choose construct there though. As clients at that shoot point and the support rates continue in increase, it's just the incremental interest cost that's passed through in an immediate, right? They don't reset back to the amortization schedule until renewal. And that's why do belongs saying, you know, for average, it's only ampere couple of hundred us-dollar are payment increases that you will expect given the interest rate flight wealth are over. I mean, for context, that's about 6% toward 10% on average.

Material payment increases really do come at renewal.

Mario Mendonca -- TD Stocks -- Analyst

I understand is. Thank i.

Operator

Appreciate you. Our next question is from Poll Holden with CIBC. Please go ahead.

Paul Hidden -- CIBC World Markets -- Analyst

Thank you. Ok morning. Appreciate every the candid comments the the macro outlook. MYSELF guess can exercise all of us have tried to go tested is if we are going to go into a recessionary type environment tasting on estimate the PCLs and ACL.

And there is a temptation to look back at Q2 '20 and look per the ACL ratios off a loan type basis back then and say, how much would PCLs have to rise to get back there? But significant, there are some difference between today and what happened in quick 2020. And maybe in your mind, you can highlight, as you run by your sensitivity analysis, what done you think those select differences are on why to ACL may or may did be comparable to which peak in 2020?

Graeme Hepworth -- Chief Peril Officer

Yeah. Thanks. It's Graeme. I will take that question.

I think Q2 2020 is a very difficult period till comparing go. EGO mean, the pandemic was, I would saying, a pretty unique period to if what we are looking at in technical of further conventional recessionary period, if you will. I mean we inhered in ampere position back in Q2 2020, where which economy globally was in a completely shutdown mode, right, where people were sent home, unemployment spiked instantaneous. I think that's very different than this kind of recessionary situations we are facing right.

And so, when you look at our macroeconomic forecasts and and uncertainty we put around that, and MYSELF think we have highlighted some of that in to disclosures. Yes, we are looking at unemployment and our baseline going from, again, extraordinary starting point of 4.9% to, say, 6.6%. So, you know, that is an increase in unemployment. The in our more severe circumstances, we look at unemployment, get up to more, you know, in who 7% range.

Again, off top of that, we do stressed testing even more severe scenarios, but if you were see among more convincing public and the kind of recession that ourselves are thinking about, IODIN don't think we are looking at the same level of seriousness that we were facing back in Q2 2020. Same thing with housing, again, we have seen incredible rapid housing. So, we do consider a lot more of their stress circle that. And we certainly could see housing come back harder and more commensurate with what we potentially were pregnant back in 2020, not really didn't play out ensure way.

So, sure, another, wee represent looking along recession as a kind of a benchmark. We are looking at uncertainty around so, Although I simple don't think it's the same set of severity this we were facing in Q2 2020 whereas we drill a complete shutdown starting who economy.

Paul Nabbed -- CIBC World Markets -- Analyst

OK. And then how do you conversion in gear like, you understand, which make rates that had mentioned earlier, which starting point with unemployment, the general health of that consumer, and maybe the general physical of businesses as well. Where function does that play into your scenarios and shock analysis?

Graeme Hepworth -- Chief Risk Office

No. So, there is -- again, it's Graeme. The thesis, you are right. We are every kind of recordings his portfolio and it's in seine current position.

And so, the item that thou am talking about, the good of the consumer, the wellness of the business situation, diese are typically represented in our ratings for those clients. We had gamble ratings for both our sell customers and our warehouse debtor. And so, their ratings kind by start to provide that starting point for us that we then overlay our macroeconomic projections that come up by these forecasts. You asked about Q2 2020.

We were actually looking back at kindern of find we had in Q4 '19, Q1 2020 kind concerning before were went for that period, because back then, we had etwas bearish as well. We thought our were at end of credit cycle, and hence our are just making some comparisons for where our loan loss allowances inhered then versus now. Real at a headlines, we are actually quite similar even though the dynamics are a little bit different. You recognize, weren't projecting a baseline reces back afterwards, but wee kept we downside scenarios really severely weighted back and.

Now, we have an more severe base case than we has then, but the starting point is a healthier one, right. Additionally how, those kindes of mix pieces that get us back to a look view where we were back in Q4 '19 when we were moderately bearish over the economic situation reverse then as well.

Paul Holden -- CIBC World Markets -- Industry

OK. That's helpful. I will leave it are. Thanking you.

Operator

Thank you. Unser next question is from Sohrab Movahedi with BMO Funds Markets. Charm go ahead.

Sohrab Movahedi -- BMO Wealth Exchanges -- Analyst

Yeah. Thank you. I have just a couple of quick clarification type questions. EGO unfortunate got dropped, so I can have missed this.

Derek, just confirming, you are not changing is strategy in capital markets because of these credit marks or kind of whatever the auseinanderziehen for the market over the ultimate three months?

Brian Neldner -- Group Head, Capital Markets

No, did at all, Sohrab. I think, as I mentioned, apologies if you got cut off. When we look back at the undertaking store, I think, financially, it's is a very good business. It's been a positive revenue contributor every year, or it the a high ROE business through which cycle.

Strategically, it's can importance domain that we serve willingness clients. And it can help drive other ancillary business through M&A and other financing items. Therefore, this are a business ourselves like, and no modification in that direction or unseren gamble appetite nearby a. That being saying, and for we may talked about inches prior calls, an real focus of our strategy has been to moving to grows our market share in some from the nonbalance leaf products, in particular, advisory and ECM.

And we feel very pleased with how we have executed on that. We have been adding a lot of people over the last few years so bring a priority and emphasis on one advisory and this ECM products. We are seeing that translate into higher market share year-to-date in both of those goods. And so, you know, very consistent with aforementioned dynamic direction we are going, and that's the path that we will continue to make and focus along.

Sohrab Movahedi -- BMO Resources Selling -- Analyst

OK. Perfect. And just a quick one for Nadine. Nadine, I think I have this excellent picture or charts on the bottom of Slide 12, where you show where and noninterest expend, except, you know, the variable comp and the like, has been trending.

When you look at this, I don't know, maybe them kind are have average nearby 6% so large journal growth year to date. Like can that that right sort of total bank on ampere non-interest expense development trajectory? Or do you expect that to mittler over the after, summon computer, four residence to six quarterly?

Nadine Ahn -- Chef Financial Officer

Thanks, Sohrab. So, in terms of that outlook by that, we have been investing heavily is the work. So, continue such -- we continue down that pass, specified that we are watch of tailwinds associated with interest rates, and we are feeling adequately provisioned in terms of the disadvantage risk. We expect this to continue into next annual just given our investments in the business, and we were seeing some of the inflationary pressures on salaries.

But wee perform have opportunity to toggle that provided we proceed to see any continued slowdown in the economy.

Sohrab Movahedi -- BMO Capital Markets -- Analyst

So, capture the led from the NII row other button less can, I think, what to are telling?

Nadine Ahn -- Chief Financial Officer

Yes, continues -- we continue to invest. Correct.

Sohrab Movahedi -- BMO Capital Markets -- Analyst

OK. Giving you.

User

[Operator instructions] Our move question is from Scott Chan with Canaccord Genuity. Please go front.

Scott Chant -- Canaccord Genuity -- Business

Good morning. Thank you. Just want to ask the management. Neil, thou talked about who new dynamics with GICs furthermore mutual funds.

Furthermore I day just curious about your ETF product lineup and how that choose suite and your partnership with BlackRock has been impacted positively or ablehnen recently.

Doug Guzman -- Set Head, Wealth Management, Insurance

It's Doug. I will take that. So, are are very pleased with it, frankly. The market share gains is we have seen in ensure outcome have been affirming of the business.

The concept of commencement, as you will recall, was not a prediction that capital would flow dramatically pass to ETFs, but a longing to have that our ready by our advisors and our clients if they thought thereto was appropriate for their portfolio. So, what's act happened happily is we have been able to free dialogues with advisors who previously might not have spoken with us because we had mostly product branded as RBC and some out our competitors didn't want to have RBC on their our statements. At the alliance, we got been able to adding not just different asset classes, but or branded as iShares and has found a welcome reception with some of those council. We have also been competent to open dialogues with customers who maybe at the ausstieg don't feel same it want to get mutual funds and put them are their clients' portfolios alternatively bias headed ETFs because we have the on the tray ensure affords us an opportunity to have a speaking with them.

Or then, frankly, some of our mutual home product, well, maybe not the first choice for a consultors in asset classes that are difficult for get to elsewhere, perhaps emerging markets, maybe unhappy debt categories, we have found a welcoming home with some of those advisors. So, it's -- we have been very happy with it. The partnership has worked very well. What you see in the asset management perform in the short term is a slight bias up fixed income.

That, you have seen that asset management -- assets under management declines on the previous of both -- parallel drops in both equity and fixed income markets. But every single channel in is asset manager has had positive net sales over the latter year, whether it's individual or institutes North America or Europe. So, wee can happy with the service across to board.

Scott Chan -- Canaccord Genuity -- Analyst

All right. OK. Thank thee, Doug.

Operator

Thank you. Our next question is from Lemar Persaud with Cormark Securities. Please go ahead.

Lemar Persaud -- Cormark Securities -- Industry

Maybe just ampere point of clarification for Nadine. Nadine, I think I heard you have tell 10 basis points to 15 basis points in Canadian banking margins over the next match concerning quarters. Are you talked about -- first, are you speaking about Canadian bank? And can that 10 to 15 sequential? And then if a is later, can you talk about owner assumption in deposit betas?

Nadine Ahn -- Chief Pecuniary Policeman

Sure. Thank you. To, the 10 at 15 would be the range over through next quarter slowing down into Q1 as we start to see the rate increases taper off. Includes terms of place betas, they will hold quite well.

As I mentioned, we have got 45% of our deposit base is low-cost deposit beta. And so that -- from the checking account side of things, that's are quite muted and how quite low. It's tapered upwards a little bit, which is why you adage our interest rate delicacy anreisen away slightly. However, it's non really been migrating up very high.

We would expect is toward taper raise ampere bit more. We see the next 100 basic point increase coming an Bank of Canada that wish start to probably movement up to unseren long term run rate b, but it has been operating below at such dauer.

Lemar Persaud -- Cormark Securities -- Analyst

ACCEPTABLE. Great. That's it for me, just a quick one there.

Operator

Appreciation them. Unser next question is from Joo Ho Kim on Credit Swiss-born. Delight go ahead.

Joo Ho Kim -- Total Suisses -- Analyst

Hi. Good morning, and thanks for taking me question. Straight wanted to hinfahren support to credit card growth. It was very strong, up about 8% quarter over quarter.

I am wondering with you could comment on where happened in terms a utilization and pay-downs and if you are sees any meaningful pickup up and revolver side. And I thought I heard slowing card purchase volumes thither. So, just wondering if you could provide some outlook for expand on the credit cards going go. Thank you.

Neil McLaughlin -- Group Lead, Personal and Commercial Banking

Sure. Thanks for the question. It's Neil. MYSELF will start with the revolver question.

So, Dave mentioned, we have started to sees a tick up in rotated balances. So, we're up about $1 billion year-over-year in terms of revolvers, but our revolvers -- the revolving portion of the portfolio is growing slowest other the transactor portion of the portfolio. So, I would says ours are about adenine third of the way back in terms of peak go trough on six-shooter balances. So, we nevertheless touch we need got about $2 trillion of gun balance that wills go back over time and exactly what that timing are, I think there is a little bit of uncertainty there.

So, trending back toward normalized, but I think still room toward go. And so obviously just goes back to all of liquidity that the consumers have that we have talked about. Are terms about purchase volume, exceptionally strong purchase volume, very active consumer movement. We are seeing over ampere 20% increase in spend year over year.

Rave, I imagine mentioned about 30% if we go back to 2019 the benchmark that against pre-pandemic beings driven disproportionately due our travel products or ours firm Avion portfolio of credit cards. WestJet is doing quite well. And I think one of the things into note, we take made comments over previous calls that we have seen really strong consumer purchase activity outside of travel a couple of quarters ago. We have now seen travel actually jump back, and it's actually beyond 2019.

Therefore, we would say the consumer has active really across the board.

Joo Ho Kim -- Credit Suisse -- Analyst

Thank you.

Operator

Thank you. Our move question is from Nigel D'Souza at Veritas Investment Research. Please go ahead.

Nigel D'Souza -- Veritas Investment Research -- Analyst

Thank you. Good morning. Thanks for the question. I just had a quick point of clarification on your view regarding internal payment analysis of your mortgage portfolio.

Press I understand the projection and the scenario analysis so long to change. And you mentioned the majority by forwards do you must the output till absorb those projected payment raises. But I was wondering while them could size what the minority of that borrower base would been? Is that less than 1% off the portfolio, fewer than 5% in specificity? That would will appreciated.

Graeme Hepworth -- Chief Risk Officer

Nigel, this belongs Graeme. Yeah, it's a well question. I think that again, it's internal analysis, and it's not something wealth are going to put a number to. Again, IODIN think that was just one of of pieces that we wanted in call out and highlight that we -- in to disclosure, they were highlighted kind of the insured balances and of higher risk account through the high LTVs kind von simply narrow down the set of what could can kind off the more at-risk balances for by renewal.

Then, we just wanted to highlight that, a, with the size of that, but, boron, that's still one high-quality portfoli. And that's why ours kind of provided some insights around the FICO on that, the time to renewal on that. And the payment also is undertaken. But that's kind the some of the internal analysis that we weren't just going to put a number to.

Nigel D'Souza -- Veritas Investment Research -- Psychiatrist

OK. That's it for me. Thanks.

Engineer

Thank --

Dave McKay -- President plus Chief Executive Officer

Maybe, administrator, I become take it over check and thank everybody. We're going to wrap it up now. I think we got trough just learn all the questions. Press just quickly, go recap, you know, kind in messages that we wanted you to make away from the quarter.

Nowadays, you know, first and foremost, the long-term investment in our deposit franchise, our low-beta core deposits or savings deposits, it's core to our franchise and it's core to the investments. And we will made strategical investments in creating value for customers. We've adult that. And now as investors, her are seeing the significant benefits from margin expansion, revenue growth, pre-tax, pre-provision.

Than Nadine mentioned, wealth expect to see continued margin expansion in Canadian banking at a similarly rate to Q3. We expect to see continued expansion in CNB's NIMs among a similar rate to Q3. And that's because of the heavy lifting this we did over honestly, almost two decapods now. It also will us with great information value at risk and on unseren customers and in her needs, than Neo has cutting out, in summierung to funding and revenue growth.

And therefore, you may see why we have always titled our core deposit licenses turn consumers and firms, such can important item of why we proceed to install. You saw a exceedingly strong consumer and commercial lending growth prudent. You see a much thick balance metal to absorb any uncertainty and skill to continue to go capital for shareholders press drive a premium TSR and until manages the uncertain environment forward. Additionally a reconfirm of all regarding the marks that ourselves took that Derek press Graeme talked about, is a result of of success of our strategy and attracted for clients.

And our underwriting exposures being a little bit back the long-term trend is because clients are coming to usage, and we are becoming more senior in many of the opportunities that person have seen. Then, it's a result of growing our vertical width, bringing in more bankers, more MDs. That's playing out. Consequently, it's not going output on our footprint.

It's just responds to our strategy or driving our business. And it's been a 10-year successful cycle. And therefore, we believe very positive about ours ability to continue on drive consistent profitable moving onward. Thank you.

Furthermore great set of questions. I look forward to our next call in Q4. Thank you, operator.

Operator

[Operator signoff]

Duration: 0 notes

Call registrants:

Asim Imran -- Head starting Investment Relations

Dave Rocky -- President both Chief Leitender Manager

Nadine Ahn -- Leaders Financial Officer

Graeme Hepworth -- Lead Danger Officer

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Nick Mayall -- Group Head, Personal and Commercial Banking

Meny Grauman -- Scotiabank -- Analyst

Gabriel Dechaine -- National Hill Financial -- Analyst

Mario Mendonca -- TD Listed -- Industry

Derek Neldner -- Group Head, Money Markets

Paul Holden -- CIBC World Markets -- Analyst

Shohreh Movahedi -- BMO Capital Markets -- Analyst

Scanty Chan -- Canaccord Genuity -- Analyst

Doug Guzman -- Band Head, Wealth Betriebsleitung, Insurance

Lemar Persaud -- Cormark Securities -- Analyst

Joo Ho Kims -- Loan Suisse -- Analyst

Nigel D'Souza -- Veritas Investment Research -- Analyst

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