On Deck Lending Grows Cold

Lending Club and On Deck have seen their shares plunge from their highs following closely watched initial public offerings.

Alternative online lending marketplaces Lending Club and On Deck Capital are taking a beating on Wall Street this summer, with both companies’ shares plummeting below the opening prices of their respective initial public offerings.

Lending Club LC -0.95% , which debuted on the New York Stock Exchange in December, has seen its stock fall 50% from a high of $29 per share shortly after thecompany went public. Lending Club’s stock, which is now trading at $14.56, is below its original price of $15 per share.

On Deck ONDK -2.42% has also been getting hit by investors after its December IPO. The company’s shares are now trading at $11.60, 42% lower than the company’s initial offering price of $20.

Lending Club was one of the pioneers in peer to peer lending by creating a marketplace that connect borrowers and lenders. Founded in 2006, the company took traditional banks out of the equation to connect investors directly with those in need of a loan like small business owners who may not have qualified for a loan from a traditional bank and individuals looking to consolidate their debt. After clearing a few hurdles with federal regulators, Lending Club started gaining traction while raising massive amounts of cash from investors like Google Capital and Kleiner Perkins.

While On Deck also challenges traditional banks, the company differs from Lending Club in that it lends its own money to small businesses. From 2007, On Deck has lent more than $2 billion to hair salons, pizza parlors, and convenience stores.

Michael Tarkan, an analyst at Compass Point Research & Trading, is not optimistic about the prospects for both companies. He’s set a $14 price target for Lending Club’s shares and a $12 target for On Deck, and believes the stocks may sink lower. Why?

“The stocks are too expensive relative to underlying risk,” he said in an interview.

Tarkan further explained that Wall Street has realized that the stock price was overvalued considering the competitive and regulatory risks in the alternative lending space. He cited an increased amount of fast-growing competitors including Marlette and Prosper. Other startups that have raised money in the lending space include CAN Capital, LendUp, and Bond Street.

Traditional banks are starting to see opportunity in online lending as well. Goldman Sachs will soon let consumers apply for and receive small loans online, according to theNew York Times.

Both Lending Club and On Deck have been lauded by Silicon Valley as disrupting traditional banks by opening up the floodgates for underserved customers to credit. Lending Club and On Deck make money primarily by taking a cut of interest rates from loans.

Renaud Laplanche, founder and CEO of Lending Club, acknowledged the declining value of his company’s stock, but maintained that some of gyrations are from a flood of shares into the market following end of an investor lock up period. The company also issued disappointing revenue guidance following earnings in the second quarter, which was later raised.

As for the increased competition, Laplanche points to the company’s second quarter revenue more than doubling to $81 million compared with the same period a year earlier. And with this growth, the cost the company was incurring to acquire customers has gone down over the past year, he added.

On Deck’s revenue has also grown year over year. The company doubled revenue to $56.46 million in the second quarter of 2015, but posted a net loss of $5 million for the quarter.

While there hasn’t been any renewed regulatory problems like Lending Club faced five years ago, Tarkan says that it’s still early days from a regulatory perspective.

LaPlanche says Lending Club has worked well with regulators thus far, and he’s optimistic that regulators will continue to see the marketplace as a positive financial platform.

OnDeck declined to comment on the company’s stock performance for this article.

The Banking Report Card : Stress-Test Results of Top Wall Street Banks



(Bloomberg) — Citigroup Inc.’s plans to return capital to shareholders got the cleanest approval from the Federal Reserve among top Wall Street banks, one year after the firm failed the regulator’s annual stress tests.
Bank of America Corp. got a conditional pass requiring it to shore up internal processes and resubmit its plan for managing capital, while Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley cleared only after revising proposals, the Fed said Wednesday in a statement.

U.S. units of Deutsche Bank AG and Banco Santander SA failed because of qualitative concerns about their processes. The Fed didn’t place any conditions in passing Citigroup or 24 other firms, including Wells Fargo & Co.
Michael Corbat, Citigroup’s chief executive officer, had staked his job on passing this year’s test after the Fed found the bank’s processes inadequate last year. He spent more than $180 million to improve the bank’s systems and asked Eugene McQuade, a veteran executive with close regulatory ties, to delay his retirement to oversee this year’s submission.
The tests are a cornerstone of the Fed’s strategy to prevent a repeat of the 2008 financial crisis and another government bailout of the largest U.S. banks. The results released Wednesday are the annual exam’s second and final round, determining whether lenders can withstand losses and still pay dividends, buy back stock or make acquisitions.
Analysts estimated before Wednesday’s results that publicly traded U.S. banks subject to the review were strong enough to boost quarterly shareholder payouts 53 percent on average, disbursing $109 billion over the next 15 months. The Fed didn’t specify how New York-based Goldman Sachs, JPMorgan and Morgan Stanley altered their proposals.
Citigroup’s Payout
Citigroup, which pays a token 1-cent dividend after last year’s failure, will lead increases with a 60-fold jump in quarterly disbursements through dividends and stock buybacks, according to seven analysts’ estimates compiled by Bloomberg. While payouts from Wells Fargo and JPMorgan will climb less than average, the rewards will remain the largest among the U.S. banks tested, the estimates show.
Banks can disclose details of their capital plans as early as Wednesday. If all of the banks that passed return the capital they asked for, they will pay out almost 60 percent of their projected income over five quarters, a senior Fed official said.
Failing the test can mean banks have to forgo increases to capital payouts, forcing executives to shore up balance sheets or internal systems while facing shareholders eager for more cash. The U.S. units of Santander, Royal Bank of Scotland Group Plc, HSBC Holdings Plc failed last year because of the Fed’s so-called qualitative look at risk management, corporate governance and internal controls.
BofA Faulted
Citigroup’s Tier 1 common ratio fell to a minimum of 7.1 percent under the worst-case economic scenario in the test after taking into account the firm’s planned capital actions. With the pass, Corbat, 54, ends a year of turmoil that included the Fed’s rejection of the New York-based bank’s plan last March because of what regulators described as deficiencies in the firm’s processes for projecting revenue and losses across its global operations.
Bank of America’s revenue and loss models and parts of its internal controls were lacking and need to be resubmitted by Sept. 30, the Fed said Wednesday. If the lender hasn’t fixed its capital planning by then, the Fed can restrict payouts.
Bank of America, led by CEO Brian T. Moynihan, disclosed Feb. 25 that regulators had demanded changes to models, including those for wholesale credit, which would probably decrease the Charlotte, North Carolina-based company’s capital ratios. The Fed didn’t say whether the requested changes in models were related to its critique of Bank of America’s stress-test process.
Deutsche Bank
Deutsche Bank Trust Corp. and Santander Holdings USA will be restricted from paying dividends to their foreign parent companies or to any other shareholders. That may not have a significant impact, because a Fed rule approved last year will require foreign banks to inject more capital into their U.S. units by July 2016.
That rule forces the largest foreign firms to consolidate U.S. operations into one subsidiary and abide by the same capital and liquidity minimums as domestic peers. It came after lenders including Deutsche Bank and Barclays Plc dropped the bank holding company status of their primary U.S. units.
Deutsche Bank Trust represents about 15 percent of the parent company’s assets in the U.S., a Fed official said last week. It’s a holding company for several units of the German lender, including a U.S.-based trust business that accepts deposits and groups that provide back-office services to the bank, and doesn’t include the firm’s broker-dealer unit, according to a regulatory filing last year.
Severe Scenario
Past Fed tests let banks make payouts in the four quarters that followed. This time, the test will determine payouts for five quarters.
Last week, the Fed said all 31 banks have sufficient capital to absorb losses during a sharp and prolonged economic downturn. That review didn’t factor in the companies’ capital plans. It was the first time since the central bank started stress tests in 2009 that no firm fell below any of the main capital thresholds.
Goldman Sachs got closest among the top six U.S. banks to breaching regulatory thresholds in the first phrase of the test, surpassing the 8 percent minimum for total risk-based capital by 0.1 percentage point. Morgan Stanley’s ratio in three capital measures fell to within 1 percentage point of the required minimum. Firms can modify their capital plans in the week before the second round results are released.
Goldman Sachs, which paid out the highest percentage of earnings among Wall Street firms in 2014, had to resubmit its capital plan to win Fed approval for a second straight year. The firm has pushed to give back capital to shareholders as it tries to boost return on equity, which has been 11 percent in each of the past three years.
Regulators don’t hold it against firms if their original capital plan is so aggressive that they are forced to resubmit, or if they do it in subsequent years, because it’s now a part of the process, a senior Fed official said.
The Fed subjects banks to two dire economic scenarios, with the most severe downturn marked by a 60 percent plunge in stock indexes, a 25 percent decline in housing prices and an unemployment rate that tops out at 10 percent.
Last week’s results showed that loan-loss estimates for the 31 banks totaled $490 billion under that worst-case scenario, down from $501 billion for the 30 banks tested last year. The losses include a $102.7 billion hit to trading, led by JPMorgan’s $23.6 billion. The heaviest damage was in consumer lending, with 39 percent of projected losses from such activity as mortgages and credit cards.

Banks still use accounting tricks to hide their true condition


Pacioli’s invention was the double-en


Pacioli’s invention was the double entry accounting

 system; in fact he’s known by bean counters today as the father of accounting.

This was a major and much needed innovation at the time.

In the 15th century, Italy was dominating global trade and commerce.

Yet unlike in the centuries before where merchants were primarily transporters and traders of exotic goods, 15th century merchants had essentially become proto-bankers whose primary business was extending and trading credit.

This was a major change in the way that business was done, and it absolutely demanded a new way to keep track of it all.

That’s exactly what Pacioli invented. And his system of accounting is still being used today, over 500 years later.

This was a seminal moment in business history—the near simultaneous birth and convergence of credit-based money, banking, and accounting that would eventually become the global financial system.

It revolutionized everything.

Back then, just as today, few people really understood it. And those who did were often clever enough to find loopholes in the system to hide their fraud. Especially banks.

There are some really stunning (and sometimes hilarious) examples of early banks who learned how to cook their books and misstate their capital using Pacioli’s system.

Curiously very little has changed. Banks still use accounting tricks to hide their true condition.

Bloomberg showcased one such technique last year, exposing the way that many US banks are rebooking their assets from “available for sale (AFS)” to HTM – Hold To Maturity


–  they’re called “available for sale,” because the bank has to sell these assets to pay their depositors back.

But here’s the problem—many of these investments have either lost money, or they soon will be. And banks don’t want to disclose those losses.

So instead, they simply redesignate assets as HTM.

It’s like saying “I don’t care that these bonds aren’t worth as much money as when I bought them because I intend to hold them forever.”

Thing is, this simply isn’t true. Banks don’t have the luxury of holding some government bond for the next 30-years.

This is money they might have to repay their customers tomorrow, which makes the entire charade intellectually dishonest.

That doesn’t stop them.

JP Morgan alone boosted its HTM mortgage bonds from less than $10 million to nearly $17 billion (1700x higher) in just one year. This is a huge shift.

Nearly every big bank is doing this, and is doing it deliberately. This is no accident. And there’s only one reason to do it—to use accounting minutia to conceal losses.

But the accounting tricks don’t stop there. And in many cases they’re fueled by the government.

One recent example is how federal regulators created a new ‘rule’ which allows banks to consciously reduce the risk-weighting it assigns its assets.

The Federal Financial Institution Examination Council recently told banks that, “if a particular asset . . . has features that could place it in more than one risk category, it is assigned to the category that has the lowest risk weight.”

This gives banks extraordinary latitude to underreport the risk levels of their investments.

Bankers can now arbitrarily decide that a risky asset ‘has features’ of a lower risk asset, and thus they can completely misrepresent their investments.

Bottom line, it’s becoming extremely difficult to have confidence in western banks’ financial health.

They employ every trick in the book to overstate their capital ratios and understate their risk levels.

This, backed by a central bank that is borderline insolvent and a federal government that is entirely insolvent.

It certainly begs the question—is it really worth keeping 100% of your savings in this system?

I would respectfully suggest finding a new home for at least a portion of your savings.

After all, it’s 2015. You no longer need to bank in the same place as you live and work.

It’s possible to establish an account offshore—at a safe, stable, well-capitalized bank overseas in a country with no debt.

You might even find that the bank will pay you a reasonable interest rate that actually exceeds inflation (shocking!).

And in many cases you may be able to do all of this without leaving your living room.

It’s hard to imagine anyone would be worse off.

The Bottom Line


Jack A. Bass, B.A., LL.B.an independent professional firm and with its affiliates provides a full range of offshore corporate services – registration and administration of IBCs and Special License Companies, Registered Agent and Registered Address services, directors` and company management, shareholding and custody of documents and bank account introduction.

When structured properly, history shows that a well-informed offshore strategy can have an immediate and  generational impact on your wealth.

Who Is Designing Your Offshore Strategy ? ( do you have a strategy?)

The most important thing that you MUST do is seek advice from a qualified advisor – Jack A. Bass, B.A. LL.B. (someone who understands international tax jurisdictions and tax law) . Your advisor must understand the benefits of particular offshore jurisdictions. It is your responsibility to take action.

In most jurisdictions you can set up your offshore company in as little as a few weeks. We most often start the process with registering a company name and sending in the right documentation and supporting documents for the incorporation and a bank account(s) or merchant account for you and your business.All of this can be conducted by internet on in rare cases we will attend in person – for you.

Contact Information:

To learn more about asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)

Email info@jackbassteam.com  OR

Telephone  Jack direct at 604-858-3202

Do You Have A Plan – or are you just planning to think about a plan ?



Guarantee from ANZ Bank 0 % Annually ! Hurry Now !

ANZ-zero-interest ( Compare to our Guaranteed  Minimum 12 %)

If you’re looking around right now for a new bank account that pays a reasonable rate of return, ANZ bank has a hell of a deal for you: 0%!

That’s right. ANZ is offering its depositors absolutely zero interest.

Now, a bank paying 0% isn’t exactly abnormal in today’s banking environment. But what’s really strange is that ANZ actually took out an ad in an Australian newspaper to advertise this.

Yesterday’s page 10 of the Australian Financial Review (AFR) had a quarter-page ad from ANZ boasting about 0% interest rates for accounts denominated in number of foreign currencies, including Hong Kong dollars, Japanese yen, British pounds, and more.

Curiously, in order to qualify for this bargain 0% rate, you have to meet a rather significant deposit minimum.

For the 0% Japanese yen account, for example, you have to deposit 23.5 million yen (currently about $223,000 US dollars).

So basically some manager at ANZ actually thought that paying 0% interest on substantial account minimums would be an attractive offer… so attractive, in fact, that they should brag about it in the newspaper.

This is so completely ridiculous. But it really crystalizes what’s wrong with the entire financial system.

We’re told to keep our money in banks… that banks are safe. But the objective data tells a completely different story.

Holding money in most banks guarantees that you will lose money.

Adjusting for taxes and inflation, you’re losing at least 2% per year, even if you believe the governments’ notoriously understated official inflation statistics.

This level of absurdity pushes people into riskier and riskier assets, simply in an effort to avoid LOSING money.

Case in point– the government of Spain recently issued 1 BILLION euros worth of bonds that yield a paltry 4%. And they’re due in 2064.

Bear in mind, Spain is completely broke. And just two years ago the government had to pay 7.5% on ten year notes.

Now people are lending money to the Spanish government for 50 freaking years at just 4%.

This is insane.

But couldn’t this insanity last forever? Couldn’t the grand wizards of the financial system continue to engineer one deranged bailout after another for decades to come?

Possibly. But unlikely.

Right now the US dollar is the world’s dominant reserve currency. This gives the United States nearly total control of the global financial system.

In order to clear cross-border trade transactions, foreign banks HAVE to use the US banking system (which is controlled by the US government).

Further, rest of the world must essentially mirror US Federal Reserve policy.

But this power… and insanity… only lasts as long as the US dollar is the dominant reserve currency. And this is starting to change rapidly.

China’s renminbi is becoming much more widely accepted around the world for trade settlement; a number of foreign governments are now holding renminbi reserves and doing deals to promote trade in renminbi.

Even in the United States, renminbi payment business increased 327% last year, and the US is now the fifth largest offshore renminbi settlement center.

It’s no secret here, this is happening right under our noses. The financial system IS changing.

People who ignore this trend do so at their own financial peril.

Yet those who understand what’s happening and align themselves accordingly stand to make fortunes.

The Weimar Republic’s episode with hyperinflation in the 1920s is a great example.

Despite all the warning signs, most people did nothing… and they got wiped out.

A handful of people, though, saw the writing on the wall. They took steps to safeguard what they had. And they allocated their investment capital to bet that the currency would collapse.

They were right. And vast fortunes were created in a matter of months.

Throughout history there’s always a handful of people ahead of the trend. And they’re rewarded for their foresight.

Right now we’re in the very early stages of a similar transition– arguably one of the most important economic transformations since the Industrial Revolution.

Because of this, opportunities already abound if you know where to look. It’s an incredibly exciting time to be alive.

If you agree with this premise but are just starting to wrap your mind around what’s happening, let me extend an invitation :


In the same way that I urge investors to use an adviser I too have a business coach. This week I complained that my performance of a 31% gain in 2013 was not gaining me the respect or new clients to which I thought I was entitled.

He challenged me :
a) I was not ” entitled ” to anything more than I earned by performance
b) My performance allowed me to guarantee an annual 12 % return or I will forfeit the 1 % annual fee and the 20 % performance fee.

The Challenge – a guarantee of a minimum of 12 % for your annual investment return 

Investors and pensions need efficient methods to screen, research, perform due diligence and monitor managers in their quest to deliver returns. They need to know the data they are using is accurate and fresh — and represents the best options available worldwide across every asset class. They must take into account their own assets and liabilities and the impact to portfolio risk while screening strategies and tracking exposures. They also need polished reports and presentations to provide evidence of a sound, inclusive selection processes for regulators and committees.

Placing these decisions in Jack A. Bass Managed Accounts removes the work from your hands to ours .

Meeting the Challenge

Jack A. Bass Managed Accounts offers a comprehensive suite of solutions for screening and monitoring, as well as risk assessment leveraging the data of the most important databases. In fact, 89% of surveyed clients agree that Jack A. Bass Managed Accounts helps them save their time during the due diligence process, while 75% of pension clients agreed .

The answer to When? – is always NOW ! – not tomorrow.
Contact Information

Information must proceed action and that is why we offer a no cost / no obligation inquiry service if you are not already a client.

Email info@jackbassteam.com

or Call Jack direct at 604-858-3202 – Pacific Time 10:00 – 5;00 Monday to Friday

Panama Bank Secrecy

Panama Bank Secrecy. the title  says it all

Here is what are clients can rely upon – our due diligence and guidance in selecting incorporation, trust and bank vehicles – plus the nation’s laws:

Article 111 of the Panamanian banking law states the following:

ARTICLE 111. BANKING CONFIDENTIALITY. Banks will only divulge information about its clients or their operations with their consent. Banks will not require consent from their clients in the following cases:
When the information is required from the authorities according the law.
When from their own initiative it must be provided in compliance with laws related to the prevention of money laundering, financing of terrorism, and related crimes.
Rating agencies for risk analysis purposes.
To data processing agencies or offices for operational or accounting purposes.

Our Panama Offshore and Financial Services

Panama tax haven is a leading offshore jurisdiction for companies and foundations.  Other offshore services are available to investors who are interested in operating or investing in Panama in one way or the other.  Panama is a true tax haven and levies zero tax on all offshore operations.  Panama tax haven offshore services can be summarized as follows:

  • Panama Corporation formation
  • Panama Foundation formation
  • Offshore banking
  • Vessel registration
  • Real estate brokerage
  • Capital/financing procurement
  • Trademark registration
  • Investment brokerage

We’ve Done All the Research
First, we’ve done all the research and conveniently gathered all U.S. and International regulations pertaining to Information Technology, Physical Security, Records Management, Privacy, and Third Party Invoicing into one place

We Help You Map the Overlap Between Regulations
Track compliance regulations, standards, and contractual agreements (Authority Documents),their changes, their individual originators and issuers, and their terms and acronyms

Developing a tax strategy is not the same as walking into the mall and opening a checking account.

Tax Haven Savings – Contact Information

Are you finally taking the step to tax freedom by incorporation and banking in a low tax jurisdiction? and if not why not ? Information must proceed action and that is why we offer a no cost / no obligation inquiry service.

Email info@ jackbassteam.com or
Call Jack direct at 604-858-3202 – Pacific Time 9:00 – 5;00 Monday to Friday

The main intention of our website is to provide objective and independent information that will help the potential investor to make his own decisions in an informed manner. To this effect we try to explain in a simple language the different processes and the most important figures involved in offshore business and to show the different alternatives that exist, evaluating their pros and cons.
On the other hand we intend – in terms of offshore finance, bringing these products to the average citizen.

Do something to help yourself – contact Jack A. Bass now !

Canadian Western Bank


TSX : C$36.99
BUY  Target: C$42.00

COMPANY DESCRIPTION: Canadian Western Bank is a Schedule I chartered bank that operates in Western Canada. The Bank specializes in mid-market commercial lending and offers a full complement of personal banking services. Through the Canadian Western Bank Group, the firm offers a diversified range of financial services across Canada. CWB operates 41 bank branches and has more than $19 billion in assets.
All amounts in C$ unless otherwise noted

Financials- Banks

Investment recommendation We are maintaining our BUY rating and slightly increasing our target price to C$42.00 (from C$41.00). We have increased CWB’s valuation target premium to 17% (from 14%), in-line with its historical average (see Fig. 11) to reflect relatively higher EPS growth expectations of 14%/16% vs. the Big-6 banks average at 5%/7% (based on consensus estimates). Our annual EPS estimates remain relatively the same (see Today’s Changes box). The partial replacement of high cost Series 3 Preferred with NVCC (4.4% yield) is offset by our lower NIM forecasts of 2.75% (from 2.87%) for F2015. CWB has a favourable positioning towards our key bank themes, specifically better operating leverage (+1%/1% in F14/15E) and large exposure to higher growth commercial loans (~75%), contributing to solid loan growth (+13% YoY).
Investment highlights  Q1/F14 results solid. CWB reported adjusted cash EPS of $0.67 (up 3.1% QoQ and 15.5% YoY), above our (and consensus) forecast of $0.65. While NII of $125.3 million (up 0.4% QoQ) was lower than expected due to NIM, non-NII of $28.5 million (up 9.0% QoQ) was higher than expected, PCLs were lower than expected, and NIE was in-line. CWB generated positive leverage of 1.7% in Q1/F14. Total loans grew 3.7% QoQ.
 Strong credit trends. The PCL ratio was flat QoQ at 19 bps and below our 21 bps forecast. The result was at the low end of management’s F2014 guidance for 18-23 bps. GILs declined 16.0% QoQ to $53.9 million (33 bps of total loans).
Valuation F2015E bank group P/E multiple of 11.5x that CG uses in valuing the Canadian banks.

Laurentian Bank of Canada


TSX : C$45.92 
BUY  Target: C$51.50

COMPANY DESCRIPTION: Laurentian Bank of Canada (LB : TSX) is a banking institution operating across Canada and offering its clients diversified financial services. The bank serves individual consumers, SME’s, and a wide network of independent financial intermediaries through B2B Trust, as well as full-service brokerage solutions through Laurentian Bank Securities. With $34 billion in assets, LB operates approximately 153 bank branches.
All amounts in C$ unless otherwise noted.


Investment recommendation

We are maintaining our BUY rating and slightly lowering our target price to C$51.50 (from C$52.00/share) following relatively in line Q1/F14 results. Our lower target price mainly reflects our lower NIM (to 1.71% by Q4/F15) forecast to reflect the challenging rate environment. Currently, LB trades at a modest 8.2x P/E (F2015E), and a 22% discount to the Big-6 banks average. CG maintains its group bank P/E multiple of 11.5x. Our EPS growth expectations of 7%/7% are in line with the Big-6 banks at 5%/7% based on consensus estimates. LB has a good positioning toward our key bank themes for 2014 and 2015, specifically positive operating leverage (2.7% in F2015E), capital allocation strategy in regards to MRS and AGF Trust, and focus on commercial loan growth (including new leasing solutions).
Investment highlights 

Q1/F14 results neutral. LB reported adj. cash EPS of $1.29 (excluding certain items including T&I costs), which was slightly below our $1.31 estimate (vs. consensus of $1.30) and down 0.8% YoY. While total revenue was below our expectations, PCLs and adj. NIE were lower than expected. Adj. operating leverage was a strong +4.9%. The average loan balance was down 0.3% QoQ to $26.6 billion (vs. our $27.0 billion forecast).   NIM and loan outlook. NIM was flat QoQ at 1.66%, in-line with our 1.66% estimate. We forecast loan growth of 1.5% in F2014, and 3.7% in F2015 based on growth in commercial (+17% YoY), equipment leasing (new), and a relaunch of Alt-A mortgages. Mostly as a result of the expected change in loan mix towards higher margin commercial loans, we expect an increase in F2015 NIM.  Credit trends mixed; management not concerned. For Q1/F14, PCLs of $10.5 million (16 bps) were below our $11.1 million forecast and up 5% QoQ (31% YoY). That said, GILs increased 15% QoQ (down 13% YoY) to $113.9 million due to higher GILs in personal loans and commercial mortgages. Management is not concerned with the credit trends and noted a reclassification on the personal loan side and is confident of resolutions on the two problem commercial mortgages loans (and noted low LTVs). Valuation Our C$51.50/share target price is based on a 9.2x P/E multiple applied to our F2015E EPS FD. We apply a 20% discount toward the F2015E bank group P/E multiple of 11.5x that CG uses in valuing the Canadian banks