EQB Inc.

Andrew Moor - President and CEO Tim Wilson - VP and CFO

Marco Giurleo - CIBC Capital Markets Geoff Kwan - RBC Capital Markets Stephen Boland - GMP Securities Graham Ryding - TD Securities Jamie Goyne - National Bank Financial

Thank you, Julie. Good morning everyone and welcome to our call.

I'm joined by Tim Wilson, Chief Financial Officer of the Bank. As a reminder, we posted our quarterly slide deck to eqbank.ca and I encourage you to review it as part of your analysis.

As we step back and look at the performance, I must admit I'm pretty pleased with how our team and the business performed so soon after the difficulties of April and early May. Diluted EPS was higher than a year ago, despite $0.42 of liquidity related costs, demonstrating the superior earnings power of the franchise.

EQ Bank continue to grow deposits and was named one of the world's best digital banks by Financial IT, our respected fintech industry magazine. This represents an important independent validation of the innovation and customer value embedded in our all digital platform.

The top two places in that ranking are held by Philips and Tencent and Alibaba China’s major Internet companies. So placing sixth globally is an excellent accomplishment for EQ Bank.

And on the credit front, our losses and delinquencies were really low. Given this performance, I think there are good reasons to have confidence in the future of our bank and now for some details.

After second quarter disruptions stability returned to the deposit market, in fact Canadians responded very well to our value proposition, posting another $500 million to bring total deposits to a record $10.5 billion for the good mix of GICs and on-demand deposits. The EQ Bank savings plus account led the way with sequential growth of 21%, another very encouraging signal that our old digital platform is building a strong community of supporters.

And I have to say that while increasing in phase rate GICs represented very economical source of funding when compared to other measures of interest rates. On the asset side, we increased lending activity relative to second quarter and originated almost $1.5 billion of core lending assets and almost $500 million of securitization business.

Competitive dynamics were demonstrably better with their entrenchment of another lender. We finished the quarter with a record $22.8 billion of mortgages under management, $2.9 billion higher than a year ago and $740 million more than June - at June 30th.

Reflecting effective capital allocation strategies quarterly ROE of 14.4% was slightly ahead of the performance of Canada's biggest banks. As a result, book value for common share continue to grow just as it has every quarter since we became a public company in 2004.

At this current level book value is 20% or $10.53 per share higher than a year ago and 4% above June 30th, demonstrating the fundamental valuation capabilities of our business model. With continued earnings growth, the Board announced another common share dividend increase third one this year.

As you know given the ability to own very attractive returns in our lending markets accrual gives priority to earnings retention and redeployment of having a high dividend payout ratio, but continues to prove that we are committed to consistently growing our dividend. The new rate is 14% above the dividend declared last November.

Moving to asset accumulation. Our [Indiscernible] single-family business set another all time record with $1 billion plus of quarterly originations.

And with strong productivity over the past four quarters, single-family mortgage principal reached a record $9.1 billion up 20% from last year. Our commercial lending portfolio grew by 7% to $2.9 billion in comparison to the second quarter.

We increased lending activity originating $380 million of commercial mortgages up 88% on a sequential basis and 4% year-over-year. Going forward we expect our strong capital position to allow us to pursue more opportunities for commercial lending in support of overall asset growth in future quarters.

Our expectation is that commercial assets will grow by $150 million to $200 million in Q4 and [Indiscernible] in the high-teens in percentage terms in 2018. Commercial is the Bank’s longest standing business and we have the capabilities in place to grow it safely.

Securitization financing, [Indiscernible] multi continues to provide a solid and reliable stream of activity for the originations of $359 million, broadly speaking matching our capacity to fund in Canada mortgage bond market. As I said at the outset, our credit book is in excellent shape, net impaired mortgage assets were down another $4.7 million from June 30 to $24.6 million with just 13 points mortgage assets.

This improvement largely reflected the repayment of a single delinquent commercial loan during the quarter, as well as the decrease in the single-family [arrears] [ph] with much of that coming from Alberta. We recorded provision for credit losses at $40,000 partly because we reversed $900,000 of specific provisions related to mortgages that result in the quarter.

Significant portion of this reversal related to a recovery from a title insurance claim. Our gross provisions were $900,000.

We remain very well protected by our allowance for credit losses of $33.5 million. The average Beacon score of our borrowers are 685 which mean it continues to be high and stable.

Average LTV in uninsured single family portfolio has decreased over the past year to 61% from 63% but moved up marginally in Q3 reflecting with softening in housing prices in the Toronto market. Clearly the general concerns about potential overheating in the housing market continue to concern us as well and I'll talk more about that in my closing comments.

Moving on we retained our position among banks with the highest capital ratios. Out period end CET1 ratio of 14.8% is more than double the BASEL III requirement.

The strong position does allow us to be more active on the commercial side of our business as I mentioned earlier. In late October, subsequent to quarter end we redeemed $65 million of outstanding Series 10 debentures.

This move reduces our interest expense by approximately $4 million per year beginning in 2018 and will result in about 90 basis point reduction in our total capital ratios from September 30th levels. Common equity Tier 1 and Tier 1 capital ratios will be unchanged.

This is a shift in line with our long standing capital plan that puts more emphasis on CET1 and Tier 1 capital ratios, the highest quality loss absorbing forms of capital with less need to consider total capital ratios. There have been challenges this year, but I am really pleased with the way our bankers responded to those challenges, delivered value to customers and shareholders protected the integrity of the institution and advanced our standing as Canada's challenger bank.

Now I'd like Tim to review our quarterly financial performance. Tim.

Thanks, Andrew, and good morning everyone. Third quarter performance was solid even though it bore the full impact of cost that we continue to incur as a result of protecting the bank from liquidity events in the second quarter.

Those costs which are reflected in net interest income amounted to $9.5 million or $0.42 per share of EPS in Q3 and included upfront and standby fees associated with the $2 billion backstop facility and $0.24 per share, amortized premiums for insuring $892 million of residential mortgages, net of the associated funding benefits of $0.18 per share. You will recall that the cost of those items plus in EQ Bank marketing program amounted to $0.38 per share in the second quarter.

The increase of $0.04 in Q3 reflected the fact that we incurred only a partial quarter of cost for the credit line in the second quarter. Offsetting those costs, we did not incur any EQ Bank marketing campaign expenses in Q3, because of successful deposit growth.

In terms of run rate, quarterly backstop facility and net insurance premium amortization cost should be about $7 million or $0.32 of EPS in Q4 and then drop down to just below $6 million or $0.26 of EPS by mid next year. The decrease really just reflects the fact that the insurance premiums will be almost fully amortized by the middle of next year.

As a partial offset to the extra expenses incurred in the quarter, we are in $0.12 per share of gains associated with the Maple assets, slightly above the outlook we expressed in our last call. Our expectation is that we will earn another $0.04 to $0.08 of income in Q4 and in each quarter of 2018.

We also had $1.5 million or $0.07 per share of gains and derivatives related to our securitization activities. Net interest income was 2% ahead of last year, as asset growth was largely offset by a 17 basis point decline in NIM.

Overall NIM was affected by core lending which was 43 basis points lower than last year reflecting mainly the cost of liquidity event actions which accounted for 30 basis points of the decline and also asset mix changes, specifically a shift to lower yielding but higher ROE single family assets, which accounted for 9 basis points of the decline. On the other hand, securitization financing NIM grew by 6 basis points, because of the higher mortgage prepayment income in the multi-unit residential portfolio.

In comparing Q3 to Q2, NIM was lower by 16 basis points again largely due to lower core NIM resulting from the liquidity event. Core NIM was also affected by lower prepayment income, a larger liquidity portfolio and growth of EQ Bank deposit balances, where we continue to offer rates above the long-term level that we would expect in order to attract more customers to the bank.

Looking to the final quarter of 2017, we expect year-over-year net interest growth to be in the 1% to 2% range. For 2018, we expect NII growth in the 8% to 10% range as assets continue to grow and as margins rebound from current levels.

We believe core lending NIM will increase by 10 to 15 basis points in Q4 relative to Q3. For 2018, we expect core NIM to be 15 to 20 basis points higher than in Q3 for a variety of reasons including mortgage pricing changes made in May, the fact that the net expense for mortgage insurance premiums will be immaterial next year and that we will see a slight shift in portfolio mix towards higher spread commercial assets.

On securitization financing, we expect that Q4 and 2018 NIM will be roughly consistent with Q3. Turning to costs, non-interest expenses were 9% higher year-over-year, but decline by 8% compared to Q2, when the EQ Bank advertising campaign elevated expenses by $2.5 million.

There were few other minor variances in the sequential and year-over-year comparisons, but the bottom-line is that we continue to carefully manage our costs while still investing in the bank's customer service capabilities, people and technologies. Looking forward, we expect total non-interest expenses to increase in Q4 and in 2018 at year-over-year rates consistent with the bank's growth.

As such our efficiency ratios should remain in the high 30% range through the end of next year. Now back to Andrew.

Thanks Tim. Now some final forward-looking comments that's respect to asset growth.

Since we last officially B20, the residential underwriting practices and procedures at old federal regulated residential lenders including Equitable will follow. Effective January 1, 2018 single-family borrowers must qualify on uninsured mortgage rate, the contract rate of the mortgage plus 2%.

This is the most severe qualification test, the origination that currently carried out by the bank or other lenders. This new rule will likely shrink the size of our alternative single-family market, I'm not sure by how much, a lot will depend on how our competitors simulate these rules, our borrowers react and how much of any incremental volume moves from large lenders into the alternative channel.

For our products, we are taking a cautious turns and having run several sensitivity tests believe that alternative single-family portfolio will continue to grow in 2018. B20 will temper growth competitive performance in recent years.

We've added a table to our MD&A; I hope you gauged the impact of lower levels of single-family originations using our trailing 12 month performance. As this table shows if single family originations had been 20% lower asset growth would still increase 10% because of renewals in fact our originations are higher relative to the size of our portfolio.

We believe that B20 may have an outsized impact on the entrepreneurial class of borrower and the new comers to Canada, who will find it more difficult to access mortgage financing under these new rules. With that said, as the amount of strategy we will continue to focus on alternative single-family business and look to maintain recent growth in market share by providing great service.

Growth in market share is one way to offset some of the impact to a shrinking market. I also believe the new rules under B20 will slowdown overall credit growth and reduce risk in the housing market.

So the bank will turn into mortgage business the impact of the changes maybe to trade off some growth along the term stability. As previously mentioned, we have the opportunity to deploy more capital into our commercial business.

On the funding side we are increasingly confident that our current sources of funding including broker term deposits in our EQ Bank platform will be adequate to fund our asset growth in 2018. At the same time we will continue to diversify and enhance a deposit taking capabilities and products as to strengthen our market position and further reduce our risk profile.

Our strategy as advancement of the EQ Bank digital platform and the means of increasing EQ Bank's customer base and attracting more deposits from our community of users, our plan is launch new savings products and services overtime. Key part of our roadmap is to add GICs to the EQ Bank platform.

Our GIC offering will be consistent general approach to building the digital bank with a simple intuitive customer experience is hard. EQ Bank's GIC offer great rate with easy access from our customers mobile devices.

We're also applying regulatory approval to incorporate new trust subsidiary to create more option value for the bank that allow us to offer broader range of products and services. A separate regulated entity would also further our ability to diversify by creating a new issuer of deposits to eligible for CDIC insurance.

These are the some of the ways; we planned to deliver our vision of Canada's challenger bank making our customers banking life better. In summary, we expect Equitable to close 2017 by delivering more value for shareholders or working hard to serve the needs of customers on both sides of the banks ledger.

Our asset quality is high, our funding markets is stabilized and our lending and risk management processes are well tuned to market realities. The 2018 will adapt to the updated B20 rules just as we did when the original B20 came into force, and use our positioning as a diversified challenger bank, now with a more sizable market share to make the most of our growth opportunities.

That concludes our prepared remarks and I would like to invite your questions. Julie, can you please open the lines to our analysts that have questions.

Hi good morning. My first question is for Tim regarding the pick-up in commercial loan growth targeted in 2019, I'm just curious about the long-term ROE implications for the firm.

Could you elaborate on the difference in commercial ROE versus the ROE you get on your single-family mortgages?

Happy to talk a bit about commercial. I think we're generally pretty optimistic about the opportunities in that commercial market right now, both from a volume and a pricing point of view.

So we believe that originations are going to pick up quite substantially from where they were in 2017. Reminding you that in 2017 we deliberately constrained our level of activity in the commercial market in light of the events in the funding market.

We don't talk specifically about the relative ROEs of each of businesses, just give you general direction the commercial is lower ROE, I mean naturally as we grow that business it would bring down the weighted average ROE of, I mean all other things being equal, would bring down the ROE of the overall company. But there are a lot of other factors to consider in there for example as we grow we gain scale, there is certain economies and efficiencies to gaining scale, which would counter-balance that and hopefully keep ROE roughly consistent with our longer term averages over time.

So there are a bunch of puts and takes that could help offset any of those impacts Marco.

I think Marco what we have been working very hard is increasing the ROE in that business over the last year or two. So we have seen spreads widened over the last six to nine months which has been helpful.

And also taking a much longer term view as we transition to AIRB, we think it's in part of that commercial business where you should see the highest pickups in capital weight. So, it's definitely something the shareholders may need a little patience to see the full win [Indiscernible] but we're pretty confident that's going to be great future value for our shareholders.

That was actually going to be my follow-up, so when you switch over to AIRB in 2020, do the ROEs on each business look similar or I imagine the spread between the two would shrink?

I think that's right, although we do have to think about how we might change the shape of the portfolio based on the risk rates you seen under AIRB, [Indiscernible] we can optimize the portfolio make up to reflect a good outcome under a standardized approach, under AIRB and expecting that we would do more higher quality assets with slightly lower spreads, but with commensurately significant lower risk ratings within net addition to ROE.

All right, understood. And just if you could switch over to originations have you seen an increase in single-family originations post quarter or post B20 just in the lead up to taking effect in January 2018?

I would say that generally no, I mean that date is always a bit murky, because there is always a few things going on, but I would, I was talking to just some people on the floor yesterday [Indiscernible], they didn't seem to be perceiving there was a sort of rush to get deals done before January 1st.

All right and finally my last questions are surrounding IFRS 9 in 2018, I was hoping you could provide us with what the initial capital impact might be in Q1 and maybe you could also talk a bit about the impact on provisions, do you anticipate provisions to be lower under IFRS 9 as we make the switchover?

I would say the following Macro, I would say consistent with the rest of the banking sector, we're going to disclose the impact to our end of year retained earnings and therefore our capital in our Q4 results. I think you are going to see that from the big banks within the next month when they release and then we will follow early in 2018.

I think what I would say generally is that we've been very conservative in our, in establishing our allowances historically. So our allowances are 18 basis points of our mortgage principal today, if you look at it relative to uninsured mortgage principal we're at 33 basis points.

So, I think and as we've consistently said, we're not expecting a really significant impact when we move to IFRS 9 relative to our current approach, but again we're still in the last stages of making that assessment. So it's too early to provide any details.

All right, and on provisions just directionally, I mean just given the fact that you do have a shorter duration portfolio than the big six, do you expect the credit losses or given the new accounting rules are on expected lifetime losses. Would you expect the loss rate to be lower under IFRS 9?

Certainly that is the way the math would work, with IFRS 9 modeling. But again we're in - we're still in the final stages of making those assessments and more to follow early in the New Year.

Okay, great. Thanks, thanks a lot guys, great quarter.

Thank you.

Hi good morning I know you talked about B20 and the potential impact in your business and it's kind of a fluid situation, because you don't know how competitors and consumers are going to react. But, in your guidance on mortgage loan growth for the non-prime business for 2018, like are you able to say kind of ballpark what the implied change in originations would be for 2018?

I think we’re being deliberate Geoff in communicating what the expectations for asset growth, which in the sort of low single digits, middle single digits. Within that there are assumptions about origination growth, renewal percentages and so on and prepayments.

And so we've had to make a number of assumptions to get that, we could be wrong on any of those one assumption but hopefully the sort of net of all of that is about right. So we do expect originations to be down clearly next year, but we do expect some other positive benefits on those other assumptions.

So, I think we’d rather kind of keep in focus that we are pretty confident that sort of single digit growth in the portfolio will be there and not try to unpeel too much about the assumptions we make underneath that.

Okay, okay. Just the other question I had and it's a multi-part question, but you made the disclosure in the MD&A about the one broker that you cut ties with I'm assuming in the quarter.

Can you provide some color on stuff like, the length of relationship you had with the broker, the duration of the issues that you had come to realize when you ultimately cut ties and what maybe just some color on the whole process as to what triggered you guys to take a closer look at the deals that this broker were sending?

Yes I can certainly do that, this is a broker that we've been dealing with for a couple of years and the good news is the, we found some challenges through our internal fraud process which gives me lot of confidence that our team is able to pick up on the issues, in the normal course we don't think it's particularly material, but fairly with the concern first raised about the growth in the assets, we wanted to kind of make sure that analysts were aware that roughly 1% of our origination was not going to be there from that basis and that sort of alter factors in that calculation around portfolio growth. We're very comfortable there is no credit risk or other issues that are going to emerge out of this.

So, congratulations to the team basically on picking up on this thing and dealing with it.

I'm sorry and how long was kind of that process that you were kind of monitoring the deals and ultimately cut out, and what were the issues, was it around income verification in terms of the quality of that like was getting forged or, I don't know if there was one thing in particular?

Yes, it relates, all relates to income verification which is frankly where the issue is lying in the industry at this point. So, there was a question of actually came to one of kind of new technologies we've engaged to pick up on potentially suspicious misrepresentation in that area.

And then our team [Indiscernible] work they would do to [track] [ph] back the quality of loans from that broker.

Okay and maybe if I can ask just as a follow-up on the same topic, is are you able to see whether or not that individual mortgage broker worked out what I would kind of consider one of the super brokers there are they still employed with that brokerage and has it been any sort of regulatory or other types of actions that have been taken?

This was not, this is an independent broker not associated with the larger franchise.

Okay. And anything on the regulatory and is it something that you can put into Equifax fit at all, sort of thing to help other players in the industry?

That's the great thing about -- said it also. The industry, this is an issue that goes right across the industry and the fit it all product that you refer to is an Equifax product where effectively we will be able to cooperate so to an extent that, we are finding things that done me the right color tone, but other banks are finding the same kind of issue.

We cooperate and the central database there we can help pick things up. So, I think the industry thing, this is a general issue and we are all cooperating pretty well and how do we make sure that we got integrity in our systems and I see a lot of enthusiasm for small industry players to make sure that industry is doing the right thing.

And then, any regulatory measures taken against that broker?

I'm not aware of that. As you know brokers are regulated by a separate set of entities and probably over Equitable, so I'm not familiar with what's going on there.

Okay. All right.

Thank you very much.

Thank you.

Morning, just in your commentary Andrew, you talked about the larger lenders which are also phasing the same rules. Maybe negatively impact of the aspects of the proposed changes.

And that may flow some business to you. What are you referring to there that that would be adjudicating different or what would cause them to decline mortgage and you do something?

I think the question comes to the 200 basis points. So -- of add-on to the space regs and those mortgages particularly for self-employed borrower for certain kind of income may or may not be accepted by the larger institutions.

So we are expecting this -- a number of lenders that won't accept loans that they currently accept. And they maybe represented to us as a different kind of transaction with more equity perhaps presented what makes it more palatable to us.

So, we do think there will be some -- a little bit of slowdown in that regard.

So, is it a case of them of -- just say its income verification that the big bank is not willing to do the extra work to really verify that income and therefore they are just saying, it's a basis point cost. We are not going to bother and you have the ability to do that with your expertise.

Is that sort of the way to look at it?

I think it's always been that way. Yes, with increasing standards thing that played right across the industry, we would see that the large institutions wouldn't continue to do that kind of business.

Okay. And just going back to your sensitivity which is really helpful.

Tim, on the attrition, I don't know if you have done this as well. But, if I look at your trailing 12 months, if you apply the B20 rule to the attrition.

Does that number obviously, how much is it grow, I guess. So, we can all try to look at originations.

So, it's how much business would be falling of your book as well, it's kind of everyone is trying to figure out.

I mean, we are expecting it will be less attrition right in the sense that grandfathered loans will not qualify to go elsewhere. So, if they were to qualify today and therefore -- and don't have to be requalified on these new rule.

So, I expect the attrition on the book to be lower. Next year, I think we want to give you heads up in the math, it's actually relatively higher renewal percentage coming up, so naturally we have got a higher level of maturities, it all factored into the math that I was indicating earlier, I think Marco has difficult to [indiscernible].

But, generally speaking we are expecting to have higher renewal rates and for loans to stick on the books for longer because of these new rules.

Okay. And just last question, Andrew, in your sort of guidance, I guess NIM, we are factoring that into EPS.

Your backstop facility that's a one year facility and you have option to renew. And I guess at some point, next year, you make that decision.

Is that the right way to look at that?

Two-year facility.

Sorry.

But, it's only in 2009, I guess it matures since May 2001.

June 2019.

June 2019. We are trying to think about -- given that it gives us a bit of luxury of time to think about what our long-term fundings structure needs to look like.

As you mentioned we are doing some other things around the truck companies subsidiary, see some disclosure there about we are tend to take longer term GIC is to turn that off composite book. And as I mentioned on the Equibank we are looking to raise deposits correctly through the Equibank platform.

So, over the next year or two, you will hear us I think more consistently update you on -- on what we are doing to make sure the funding structure it's actually solid. That may or may not include extending the facility either on different terms, different amount beyond 2019.

So, that we are very much keeping an open mind around that.

Okay. Thank you very much.

I hope the expectations, we won't need to renew it.

All right. Thanks guys.

Can I just start with the income issue with the broker, what was the timing of when you found the issue and sort of moved to resolve it and I guess just big picture, are you comfortable in this issue, if contained, it's not going to move into something bigger?

Yes. I think -- yes, it's over the summer that we cut this broker.

And we are pretty comfortable what it contained. That's certainly the advice, I'm getting stuck third lines that seems to be contained.

But, I think it's an area that we need to continue to be probably diligent about.

Okay. The competitive landscape, have you felt any impact on higher activity coming from home capital either on your volumes market share or even mortgage broker commission levels anything to that effect?

We haven't. Yes, I would say, we will be watching that situation really carefully and clearly they record I think next week, so it will be interested to see what's going on, we monitor rather otherwise [indiscernible] market.

So far we feel like we are in a pretty comfortable position where we continue to get good service, the brokers continue to be attracted to the Equitable offerings, so, we are feeling pretty good about that, but clearly when new management team that thinks that we need to be concerned to keep on touch on, what's going on in the market.

And then, with your guidance you provided next year, I totally appreciate that things are fluid but did you make any assumptions on market share either giving some back or maintaining market share?

As I mentioned that's one of the challenges, aside from sort of sitting in front of white board and doing the math for you, I think clearly will make new market share assumptions in that too.

Okay. The origination volumes we saw this quarter, did that reflect any of the summer slowdown that we saw in the GTA market or should we expect a lot of mortgages to be funding in Q4?

I think clearly -- usually Q3 would be a stronger quarter than Q4. So, I expect back that you Q4 originations wouldn't be quite as strong as Q3 sequentially.

I think what you are seeing in the Q3 results, it does reflect all that we were working through on and off the liquidity crisis right at the beginning in the quarter. But, clearly we finished from it.

Okay. That's it for me.

Thank you.

Great. Thanks Graham.

Yes. Hi.

Good morning.

Good morning, Jamie.

My first question is related to potential B20 offsets, you are baking in a number of various assumptions, I'm just curious from the product side, what is the appetite to extend amortization from typically 30 year product to potentially a 35 or 40 year product, can you comment on that?

I don't think our appetite is very high for that frankly. It doesn't really make sense to us but in the scheme of trying to derisk the housing market, mortgage extending the amortization, just we are in same page.

I see the reason why you are asking this question, if we extend the amortization, we can qualify mortgages that wouldn't qualify, had a shorter amortization under the rules. It doesn't seem to make much sense to me that we would say that the end of this mortgage doesn't qualify to 30-year mortgage, so we will offer you a 40-year.

So, I think we have to use common sense in lending as well as working to the letter of the law and I think we would see that it's gaining a system rather than working within the spirit of the legislation or the guidance which is really how we try to work on this guidance. They were principle based, regulator and Canada were lucky to have a principle based regulator.

And if we choose to interpret things aggressively like that I think that would be -- it's just not the way we should act because clearly the regulator would have to act in a different way and stop putting models in place which is bad for the industry and for the country frankly.

Okay, great. And maybe this is more a question for Tim, but in terms of the shift to commercial assets and still on the standardized approach, what kind of growth in risk weighted asset should we be thinking about for 2018.

And how does that impact let's say the end of 2018, is that one ratio in terms of against your target and where you want to be sitting.

I think that's something you have to derive with your own modeling. We've given you guidance on the growth in the different asset categories.

Clearly, we said asset should grow, call it 6% to 8% next year given the commercial is growing more quickly than single family risk weighted assets would grow at a rate somewhat above that. But, we are not giving specific guidance.

What I will say is for generating returns on equity in the mid-teens, and still retaining the vast majority of it. We are going to continue to build capital and with that look for opportunity -- look for other opportunities to deploy it.

But, capital growth should still be relatively significant through 2018.

Okay, great. Thanks.

And, in terms of deploying capital, there was a comment in the outlook about other business lines and you were always looking at various things. Can you maybe just provide a little bit of color as to what would something look like outside of the traditional mortgage lending market?

I think it's hard for us to really say much more into we really got kind of board approval in line to sort of pursue these things. We're having our strategic planning session in December.

But, our team is doing great work in exploring some things that are related to what we do, but not directly and [indiscernible]. We have been working on this for a number of years on the view that at some point, we might see slowing growth in our co-markets.

So, I certainly will be disappointed if sometime earlier next part of next year, we don't have some more meaningful things to share with you about that.

Okay. Thanks.

And one more and it's a little bit of a follow-up on when Graham was asking about the GTA market? Are you able to give us a little bit of color on the impact in GTA of -- what has been a slower sales and price deceleration in the -- let's say the more suburban areas.

Can you give us a little bit of color as to how mortgage growth has trended in those areas relative to other parts of the country let's say.

I think, in recent weeks it seems like things have picked up again based on the data we are seeing. So, generally speaking, I think it's playing out the way one would expect, you see more volatility in the suburban areas than in the core, new markets.

So, the [indiscernible] continues to be strong -- economy market continues to be strong. Those areas where you got to commute further into downturn, for the way the great jobs or single or more volatility and more days sales on market.

But, in general, it already seems a bit, almost too soon that the things from the [indiscernible] saying it seems to be good starting to pick on the street level. But, difficult call is run over yet, that for sure.

Okay. That's good for me.

Thanks.

Thanks Jamie.

Yes. If I could just follow-up, you mentioned technology was -- how you found us this broker that you choose to stop doing business.

Can you explain that to me like an income verification, I thought that that was very much and in personal exercise and trying to verify their borrowers income.

I think that's right for the -- we do have the database, we share databases but other vendors and mortgage providers. So that triggered some flags on the particular file and closed our team to dive back into the file and then they have pretty rigorous protocols around and checking other files right at the same broker.

It was the -- it was technology that gave us the original decision and then when we did further forensic work that's [Technical Difficulty].

Okay. Understood.

Thanks.

Yes. Just one quick follow up actually on the broker product identification, obviously there is quite a few reports in social media and then also in internal audits of -- certain individuals from home capital moving over to Equitable.

Can you say definitely one way or another whether certain of these individuals were related to this activity in way or another?

It's not a normal case to talk about any [indiscernible] but I can confirm one of the individuals that people I think wrongly suggest I think before growing things with current capital, we were involved?

None of them were.

None of them were. Absolutely none of them were.

Great. Thank you.

Great. Thanks Julie, and thanks to all of you for listening.

We look forward to reporting our fourth quarter results in February. And thanks for listening today.