Financial Data and Key Metrics Changes - Adjusted EPS for Q4 2025 was $3.28, up from $1.90 the previous year, with full-year EPS at $12.16, reflecting a 26% growth [4][17] - Record net income of $9.2 billion for the year, with a return on equity (ROE) increase of 150 basis points from 9.8% to 11.3%, and exiting Q4 at 11.8% [4][6] - Total provision for credit losses (PCL) decreased by $768 million year-over-year, with impaired provisions moderating to 44 basis points this quarter [5][30] Business Line Data and Key Metrics Changes - Wealth Management reported a 28% increase in net income, driven by strong revenue performance and growth in client assets [25] - Canadian Personal and Commercial Banking delivered record revenue with PPPT growth of 7%, while U.S. Banking net income rose to $627 million, up from $262 million [23][24] - Capital Markets net income increased to $532 million, reflecting strong PPPT performance and revenue growth of 14% [25][26] Market Data and Key Metrics Changes - Average loans grew 1% year-over-year, with higher residential mortgages and commercial loans in Canada, while customer deposits also increased by 1% [18] - Net interest income was up 10% from the prior year, supported by margin expansion and balance growth in Canadian P&C and wealth [19] - Non-interest revenue increased by 9%, driven by strong wealth management fees and underwriting fees in capital markets [19] Company Strategy and Development Direction - The company is focused on rebuilding ROE and achieving profitable earnings growth, with a clear strategy to optimize capital and enhance digital capabilities [4][6] - A digital-first, AI-powered strategy is being implemented to reshape operations and improve client service, with significant investments in technology and talent [6][7] - Plans to add 150 new branches over the next five years, particularly in California, to strengthen market presence [13] Management's Comments on Operating Environment and Future Outlook - The economic environment remains resilient, with modest GDP growth expected in the U.S. (1.8%) and Canada (1.4%) [14] - Challenges include a Canadian unemployment rate above 7% and trade uncertainties, but there are signs of optimism in client activity and pipelines [14][39] - The company anticipates continued market share gains and improving conditions in 2026, supported by fiscal initiatives and lower borrowing costs [27] Other Important Information - The CET1 ratio stands at 13.3%, above the target of 12.5%, with ongoing share buybacks and a recent dividend increase of 5% [6][22] - The company is committed to disciplined expense management, with a projected upfront charge of CAD 225 million for workforce optimization expected to yield annualized savings of CAD 250 million [20][21] Q&A Session Summary Question: Regarding ROE targets and timeline for achieving 15% - Management confirmed that the 15% target remains, with a medium-term outlook of three to five years for achieving it [34][35] Question: Comfort level with CET1 ratio and potential for dropping below 13% - Management expressed comfort with the 12.5% target, emphasizing a disciplined approach to capital management [36][37] Question: Outlook for commercial loan growth in the U.S. and Canada - Management noted general optimism among clients in the U.S. and highlighted strong pipelines, while in Canada, there is pent-up demand but low utilization rates [38][40] Question: Concerns about the Canadian credit card book and delinquency rates - Management acknowledged rising delinquency rates in the Canadian credit card segment but emphasized strong performance in the premium segment [41][42] Question: Potential for M&A and impact on ROE targets - Management stated that any M&A activity would not sacrifice ROE targets, focusing on strategic and financial alignment [45][46] Question: Clarification on corporate segment performance - Management indicated that there was no unique action taken in the corporate segment that led to better-than-expected performance [49]