Royal Bank Of Canada (NYSE:RY) recently reported its third quarter earnings and discussed the following topics in its earnings conference call.
Rob Sedran – CIBC: Janice, you mentioned the net interest margin and I guess on Slide 19 it shows it that excluding some of the noise in the quarter, the margins was up basically a basis point. Can you give us a sense for what earnings would have been in the segment without those items or is it more just a classification issue rather than actual revenue issue?
Janice R. Fukakusa – CAO and CFO: It is a revenue issue because our NIMs impacts are spread. But if you look at the actual sizing of the Ally purchase accounting adjustments it’s sized – I think it’s sized in our disclosure and I think it’s about the actual difference is about C$18 million of adjustment. And remember this that purchase accounting adjustment will continue as the loans pull back to par, so a portion of that is a quarter catch up and then a portion is going to be still there as an explanation for the NIM. The reversal of the prior quarter accounting volatility, I think, last quarter we sized it at about two basis points. So, the reversal of that today wouldn’t imply that the net quarter-over-quarter change is about 4 basis points.
Rob Sedran – CIBC: So a little larger than the C$18 million than on that item. Sorry, 4 basis points swing then will be about like C$22 million or C$23 million?
Janice R. Fukakusa – CAO and CFO: Yes, they are about the same, yeah because with the C$18 million.
Rob Sedran – CIBC: But I guess what you’re saying is that the fair value purchase accounting from Ally, that’s – I mean, it’s an explaining item, but it’s not really an adjusting item because it’s going to continue…
Janice R. Fukakusa – CAO and CFO: Portion of it will continue – remember, we did a catch up adjustments for one quarter. So if we have booked it in Q2, the adjustments would be less this last quarter. But, yes, it’s – the (indiscernible) purchase accounting adjustment.
David I. McKay – Group Head, Personal and Commercial Banking: Maybe I’ll make a comment about the Ally. Robert, the operating results you see at Ally up C$28 million is close to the run rate that we talked about when we made the acquisition of C$30 million. So, despite the one-time gains on the revenue side and the NIM impact, they were offset by (indiscernible) costs and expenses and integration pretty equally. So, when you get down to C$30 million, the revenue was offset by cost and you’re seeing a pretty close to true operating run rate there.
Rob Sedran – CIBC: So Dave, you’re saying as the integration expenses run off, you’re still comfortable with the C$30 odd million that you originally suggested?
David I. McKay – Group Head, Personal and Commercial Banking: That’s exactly my point.
John Reucassel – BMO Capital Markets: David, I just want to ask – or Janice there is some volatility in this NIM, but what is the outlook there and you talked about reducing the efficiency ratio here I guess, given that it’s a tougher revenue environment, is that mainly coming out of cost or Dave could you just update us on how that’s going to work.
David I. McKay – Group Head, Personal and Commercial Banking: Certainly. As we look at our efficiency ratio at 44.2%. We are battling a couple of headwinds to move it down, but we’re still committed to low 40s. We did envision the impact of the low rate environment one on revenues of our business obviously when we started this journey and two the increased cost and our pension from the lower discount rate. So they both put a drag on where we thought we’d be. Having said that we’re still pursuing a number of programs with the implementation of our retail credit transformation program later this year, looking at optimizing our network. We’re still on a journey where we are confident we’re going to get there albeit it’s a bit slower pace than we thought largely attributable to the low rate environment. So we’re on the right path and we see our way forward.
John Reucassel – BMO Capital Markets: So the pension expense, do you expect that continue to drag next year, and then just on the net interest margin, so could you – it looks like you’re comfortable with them being stable I guess looking through all the…
David I. McKay – Group Head, Personal and Commercial Banking: I guess the guidance that I’ve given over the last many quarters is slightly down 1 or 2 basis points quarter-over-quarter on the NIM side. I think the biggest pressure we’ve seen on NIM is the lower rate environment, particularly in our core checking business and our core deposit business, that’s starting to elevate year-over-year. Now the pressure that’s building obviously is on the pricing side, particularly in commercial markets, we will have pressure. So, it’s tough to predict exactly where NIMs are going to go obviously. But I would still expect slight reductions as we’ve talked about in the past despite the increase this quarter, holding it to slightly down is probably where we’ll be.
Gordon M. Nixon – President and CEO: The reversal will come though in the pension expense if interest rates go up because the discount rates will go up. So, there will be a positive adjustment if we ever get higher interest rates.
John Reucassel – BMO Capital Markets: But you’re still forecasting pension adjustments going forward, is that kind of what you see if rates stay where they are.
Janice R. Fukakusa – CAO and CFO: If long rates stay with where they are then there won’t be a major impact year-over-year. It will be slightly a higher expense. What we are seeing though is as you know long rates are moving slightly, so that will have an impact on pension. With respect to the pension expense, John, we actually sized it at the end of the fiscal year, for the year. So that’s the critical period to look at in terms of rates.