Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Jim Bantis – Credit Suisse
Jim Bantis – Credit Suisse
I’ve just got two questions for you, just looking at the NIMs again, on the retail side and I know that Russel gave detailed explanation on what some of the drivers were, but if we can talk about the sustainability of some of those management actions and to the extent that the NIMs can continue to expand in the upcoming quarters. And then secondly a question for Tom, surprised at the trading revenues had declined as much as they did because it seemed that coming out of the US banking first quarter that trading revenues were pretty robust in February, March, as well as in April, and I just wanted to see if there was anything that, was there a particular loss that may have taken down the equities trading business or maybe you can give us a little bit of color, maybe the pacing on the trading revenues wasn’t as smooth as I anticipated.
Bill Downe
With respect to the interest margin in detail, I think Frank can provide a little more comfort around sustainability but we do think that management action is paying off and showing up in a pretty consistent basis.
Frank Techar
I’ll just start by saying we’re very happy with the quarter. This is the third strong quarter in a row for P&C Canada and we really didn’t have many surprises this quarter which makes us feel good to Bill’s point around our management actions. The decisions that we’ve taken in support of our strategy and our brand promise are having an impact and I think we’ve seen that over the last couple of reporting periods.
Russel touched on the specifics around the margin that really was a big driver for our revenue growth this quarter at 7.8%. We are continuing to book high spread products to grow our high spread products. That’s having an impact on our margins. Securitization of our mortgage this quarter basically moving low spread products off the balance sheet and that mix change has had a big impact.
We have seen favorable prime to BA spreads that was a bit of a surprise. I think over the last couple of quarters and consistent with the competition we have taken pricing actions to offset the impact of the longer-term funding costs that we’re seeing. So we’re feeling really good about the margin to this point in time and looking forward our expectation is that the improvement in margins may moderate.
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