Thank you, Phil, and good morning, everyone. I’d like to start our presentation today by discussing our outlook for the year ahead. I will then turn the call over to Raj to review our Q4 and full year 2019 results.
Beginning with our macroeconomic outlook for the year ahead, we expect a modest improvement in global growth in 2020 despite the trade tensions between the U.S and China which have been weighing on business sentiment and activity.
We expect a modest slowing of growth in the U.S as the leaning impacts of the 2018 U.S. fiscal stimulus package and trade uncertainty weigh on the economy, despite resilient consumer confidence. In Canada, economic activity remained solid in light of strong population growth driven by immigration, robust employment and wage growth, accommodative monetary policy, a stronger housing market and good levels of business and consumer confidence.
We continue to believe that a recession is unlikely here in Canada or in the U.S in the near-term.
Our outlook for interest rates calls for additional cuts early in 2020 in Canada and the U.S. followed by stable interest rates for the balance of the year as central banks deal with global uncertainty. In our view, this policy stands as accommodative and supports our outlook for a continued economic growth.
In the Pacific Alliance, the outlook for 2020 is for an improvement in GDP growth in Mexico and Colombia, stable growth in Peru and a modest slowing of growth in Chile, due to local political developments.
We expect GDP growth above 2% on average for the region. The Pacific Alliance countries have proven resilient in the past, and we are confident, any issues will be resolved constructively.
We have over 30 years experience in the region and we remain committed to supporting our customers and are very confident in the long-term prospects for the region.
As we enter 2020, the Bank's repositioning efforts are substantially complete.
Over the past four years, we have simplified the Bank's footprint, improved earnings quality and provided a path to higher capital ratios.
Importantly, these steps have meaningfully reduced the Bank's risk profile by exiting higher risk and lower growth jurisdictions. This provides important long-term strategic benefits for the Bank, including a more focused footprint in the Americas, with considerable optionality and greater scale and strength in our core markets.
In addition, the divestitures closing in 2020 will collectively result in an after-tax gain of approximately $450 million to shareholders.
Turning to our earnings outlook for fiscal 2020.
We expect the Bank to deliver organic growth in the mid single-digits. From a business line perspective, Canadian Banking is expected to grow in the low to mid single-digit range, Global Banking and Markets in the mid single-digits and Global Wealth Management in the high single-digit range. International Banking will also grow in the high single-digit range, excluding the impact of divestitures.
We will continue to update the impact of our divestitures as they close.
Thanachart Bank in Thailand will have the most significant impact to 2020 earnings and will benefit capital ratios. It is a complex transaction that involves multiple counterparties and has different closing dates.
The first closing date is expected in early December, with another, later in 2020. The contribution of all announced divestitures to 2020 earnings will depend on when they close throughout the year.
We will be in a better position to provide an updated estimate at our Investor Day in January 2020.
We also expect to release a restated Q4 2019 supplementary package in January to reflect our four business lines pursuant to the establishment of Global Wealth Management as a standalone business line, and the impact of our closed divestitures in the first quarter.
We continue to have considerable optionality across our platform to grow earnings per share to offset any impact from divestitures, including superior growth in many of our core markets, continued acquisition synergies and capital deployment including share buybacks.
We will also retain a 6% interest in the merged Thanachart TMB Bank, which provides additional optionality during the course of the year.
The Bank has made significant progress on strategic initiatives that position us for an even better long-term sustainable growth and we remain committed to our medium term objectives for the Bank.
I will now discuss expected business line contributions to the Bank's 2020 earnings. The establishment of Global Wealth Management as a fourth business line effective November 1, 2019 and the closing of divestitures will result in changes to our business line earnings mix.
We expect Canadian Banking to contribute anywhere from 30% to 40% of all Bank earnings, International Banking between 25% and 30%, Global Banking and Markets between 15% and 20% and Global Wealth Management approximately 15%.
The Bank will remain focused on managing expense growth in line with revenue growth, while continuing to invest in technology, regulatory and business growth initiatives, while generating positive operating leverage in 2020.
We expect the major driver of historical expense growth, technology investment, to moderate slightly in 2020 to a steady-state growth rate in the high single-digits. Overall, credit quality for the Bank remains strong. The key credit metrics remain stable, including overall net write-offs, gross impaired loan formations and delinquency rate.
We expect any variation in our PCL ratios to be driven by changes in macroeconomic factors and mitigated by our diversified portfolio mix.
Our outlook is for stable to slightly increased -- or slightly higher PCL ratio in 2020.
Turning to the outlook for our business lines. Canadian Banking will be focused on driving higher revenue growth across its entire ROE businesses, including business banking and credit cards.
We expect continued growth from Tangerine as it further restricts its leadership in digital banking.
Continued productivity improvements will support positive operating leverage in 2020.
In International Banking, we have largely completed the repositioning of the business and we are well-positioned in our core markets. In 2019, Global Wealth Management acquired two strategic assets, MD Financial and Jarislowsky, Fraser; and has successfully integrated both businesses. The acquisitions, along with improved performance, have resulted in assets under management growing by approximately 50% since the end of 2017 to over $300 billion. Global Banking and Markets is focused on generating stable earnings growth by leveraging the Bank's unique Americas footprint.
Our goal for 2020 is to maintain a common equity Tier 1 capital ratio of approximately 11.5%. It is our belief that having strong capital levels provides both strategic and financial flexibility for the Bank.
Our common equity Tier 1 ratio this quarter is 11.55% on a pro forma basis, reflecting the benefits from divestitures, which have been announced but have not yet closed.
We will continue to be active in our share buyback program, while prudently managing RWAs growth to maintain our target level. The Bank has a strong record of consistent dividend increases over its history, which reflects both strong profitability and prudent capital deployment. To ensure consistent future growth in dividends, we believe dividend policy decisions should be made annually to provide more flexibility for capital deployment, and at the same time, to provide a substantial dividend to shareholders. Beginning in fiscal 2020, we will make dividend policy decisions once a year in the second quarter. This provides us with a better outlook to set our dividend and also aligns us with the approach of some of the largest most successful banks in North America. We understand the importance of our dividend to our shareholders and remain committed to our dividend payout ratio of between 40% and 50%.
I will now turn the call over to Raj, but I will return at the end to offer some further remarks.