An improvement in business confidence, combined with solid, but not spectacular gains in corporate profits, should lead to increased client demand for wholesale banking services in 2004. Improved financial conditions may lead to higher trading volumes. The rebound in equity markets from their October 2002 lows and a rising trend in bond yields are also supportive to new equity issuance. The advance in corporate profits should improve credit conditions and may cause additional merger and acquisition activity. One factor that will constrain the growth in corporate profits and significantly affect the relative performance of various Canadian industries next year will be the fall out from the rapid appreciation in the Canadian dollar in 2003. The unprecedented increase in the exchange rate will be a boon to importers, but a major hurdle for exporters. However, the U.S. economy is poised to deliver a strong performance in 2004. As a result, the impact of the stronger Canadian dollar on exporters may be offset to some extent by increased U.S. demand for Canadian goods and services. A further weakening in the U.S. dollar may occur in 2004, which could dampen demand for U.S. financial assets and provide an additional lift to trading volumes in Canadian dollar assets. See page 32 for discussion of factors that may affect future results.