Half Year 2020 Standard Chartered PLC Earnings Call
[music].
This is our customer I'll make a few comments about Andy will then go through a lot of the financial detail I'll come back in that trying to pick on pick up on some of the strategic things that we have been hitting consistently but also.
Reflect on the current goes on I give a little bit of such okay.
Since about.
So with that if you could move to page three in your and your slide deck.
Comment on our strategic.
Progress today and also on our performance.
I will be getting into a lot of detail on all these things as we go through the conversation.
First and foremost, it's very encouraging for us to have gotten some validation of the key strategic priorities that you've been.
Highlighting for the past several years.
These are things that have been critical for for what has been a pretty good first shot for us all things considered.
The we know that the economic health the operational backdrop is about as challenging as weak as expected.
But our focus on good strong network business with differentiated capabilities has allowed us to remain resilient in our corporate business due to spirit Likewise focus on affluent clients.
The buffeted by by some of the challenges that we're all experiencing Nevertheless, it's has proved fundamentally resilient and I would think we made actually some good progress in terms of our market position.
Looking at the four markets that we get called out for for optimizing no returns.
Hi, good progress across all four of those and we could include other very important.
Countries like China.
That makes so.
Drilling into that in some detail.
Had a consistent focus on productivity, it's what's allowed us to keep our expense base flat for several years now.
The shift has moved from just getting leaner and more focused and everything that we do to fundamentally transforming the bag. This of course goes into overdrive in this environment given the the income headwinds that we're experiencing in that we'll continue to two to present itself. So now we're talking about our focus on productivity durgan advances on the digital so.
And where we're getting closer to the point, where some of our key initiatives are hitting the market in full force. We're encouraged by the progress that we've made and very encouraged by the way that shifted the mindset in the back around a digital first to cloud first data driven business model, which we will be talking about and finally, you've heard us refer consistently to our focus on sustainability.
There is ever going to more important time as we think about the recovery phase from the pandemic.
Do you think about how would you that in a greenway sustainable way. So these strategic pillars for us have been as relevant as they have ever been.
Chris This is happening against the backdrop of.
Enormous economic and Hell challenges and also increasing geopolitical tensions so we're watching what's happening between the U.S. and China and all the implications are up very very carefully I think we're navigating that except that we so far but we will have more to say if as when things develop there.
Performance in the first part of the Irrs has been incurred so underlying.
Momentum has been very strong started to very strong in the beginning of the year with first half income now up 5%.
Excluding the constant currency basis and exiting the positive.
Figure.
Discipline over cost has continued to remain healthy that's that led to 17% increase in precondition operating profit something that I think reflects the underlying earnings capability of our business.
Credit impairments were of a material and the first half.
And $1.3 billion year over year.
Which which is is.
Discouraging, but but not surprising in this environment. Good news is that after a very difficult first quarter, we had a reduction in the.
Second quarter, leading to a first half.
Operating profit.
By 25% down to $2 billion.
No that we're facing significant residual uncertainty economic and otherwise.
Which makes us very comfortable running above our target capital range. So at 14.3% seat you want.
Very strong liquidity position as well.
Got it appropriate place for us to be in this environment and of course as essence normalized and we'll be talking about this as well today. It seems normalized we'll be looking at the right way to maintain our investments in our growth capabilities, but also to return capital to shareholders via by various means to the extent.
That does surplus exist so that I will hand over to Andy I'll come back later was and some comments on us another strategic themes. Thank you very much bill and good morning, good offerings for everybody. So if we can go onto slide five the overview all the financial support the period and I'll just pull out water.
Two things before we go in them in more detail afterwards, so if you recall in the first quarter. When it was primarily affecting the north and Pulpo region, we published the fixed affect gross income on a constant currency basis, excluding BTI.
Second quarter, I think actually has proven to be very resilient so quarter when the whole at the business was impacted but we still have printed a 4% increase in income so for the hawk here as a whole saying all.
An 8 billion dollar print on income with Nims low as we expected.
In terms all operating expenses votes were 5% lower so good cost control and the to those together have given those a pre provision operating profit, which is up 22% compared with the first half of last year.
On credit impairment site, we took a charge of 1 billion in the first quarter. We have increased 8.6 billion in the second quarter to give a halt total charge of 1.6 billion and when you put back altogether.
Underlying operating profit we are down 25%, but we have still printed a 2 billion dollar operating profit for the first call notwithstanding the significant provisioning.
The impact of that on surprised on the on the right see it that's been reduced so the thing for the first hall or the.
Let's see Walnut is strong 14.3%. So that's coming just above the top of the range that we have been working to and liquidity in the period was also very strong 149 cents, a little bit what Don to improve the the mix of liabilities during the period.
So if anything onto slide six this is showing the.
Split all the income growth by looking at the first off compared to first off last year and the second quarter compared with second quarter last year. The bolt some all numbers on here, we strip DTA out so that these all the rule numbers and you can see if any similar patent really on both the top and bottom very very strong.
Pull ins from financial markets, particularly in the second quarter and that has more than outweigh the interest rate effect, particularly in the transaction banking business, which as we expected has been impacted during the period.
In terms of margins and in terms of bully.
In the second quarter of the other factor in there little bit has been wealth management, which because of activity levels. In the period has held us back a little bit more recent trends on that.
Looking more encouraging so turning to slide seven and net interest income you can see on the left and so as the chart here $3.6 billion print for the half year, which is down 10% of last year.
We said at the end of the first quarter.
Interest rates would have an impact on the full year and that is what we're seeing here. Since then defendant thing because of flattened a little but.
We've seen the three about type okay to the lowest levels, it's been that but several years driven by significant capital inflows actually into Hong Kong and obviously.
It does have an impact upon the roll them as well. So if you look at the name 1.28% for the.
The most recent quarter.
The bottom of the chart you can see the average interest earning assets and liabilities both of which continues to move ahead about three or 4% and then we've also taken the opportunity to update sensitivity to interest rates last probably did that was at the end of last year before interest.
Right, Scott so sharply app as a consequence now being near zero interest rate sensitivity. Obviously on dice has increased so the cost 180 minus 335, maybe that is now the sensitivity to 50 basis point movements in interest rate so moving on to slide.
Eight which is the other income just days off of the income for the business overall and the color coding of lets them. So I took cost is feasible from pop trading so on the top half the fee income.
Leasing commissions was down 15%, that's roughly halt in the consumers fights particular wealth management and hall in the corporate sites ticket and transaction banking on the other half the net trading income is up very significantly so 41% increase 36% well and excludes the with.
Combination all strong ethics activity.
Yeah, Ben face some realizations in treasury markets et cetera. So overall very very strong holds in the trading side, but now we have said in the update state that would you expect overall that we'll see income likely down in the second half of the particularly because of interest rates and.
Particularly because financial markets, having had a great first saw it will because I think it would have similar on the second part, but the balance here in the markets, maybe not quite reflect replicable throughout the second hall or the here.
If somebody is then on to slide nine this is having a look past the business from a client segment points, if you're the first incidents and if I just maybe a focus upon the sort of income growth. So the biggest income great falls.
In the top corporate institutional banking up 13%.
That is up 9% eaten up on tape outs DTA.
So a big focus upon the place in comeback cost control, it's been great huge improvements in the jewels and also the coke because of pulled balance sheets and improving the mix secure reliability from.
The retail on private bank businesses were.
Frankly down on reported basis on income, albeit fairly similar on a constant currency basis. So I think warmest site that was a reasonably resilient performance given the external circumstances in that and then on the private bank Weve got a slight reduction in profit, but bear in mind.
There was quite a significant provision release that happened in the previous year.
Now, which we would have seen a slight increase in the profitability in the private bank.
If somebody's then on to Slide 10. This is then looking at the business from the regional perspective.
Say it slide 10.
So the fastest growing in the income is actually Europe at Americas, with 38% growth, which was particularly strong in the second half of the year now given that Youre going Americas is largely corporate business corporate side business as well. So that is broadly what one would expect if we can.
Moving to slide on by want the Afghan region than acid, 11% increase.
It was also very strong performer in the pair it and we had particularly with the growth in Indonesia, and India, which had roughly 40% increases in income in the period, so very very strong performance.
Im going to China, and North Asia at 2% increase I think that is again pretty resilient given the challenges in that region Jordan the whole appear it.
Hong Kong broadly was level its income.
We saw an increase in income in China, all about 10% and the credit business also had a great with about a 200 million dollar profit print for the halt yeah.
At the end the region was a little bit more challenged we had a minus 6% at long great, but really if you think about this we have been pet coke, but we have been pet oil prices had also foreign exchange went against us without the foreign exchange.
The the region would've been about two percentage points down so again I think in circumstances.
Not not not a bad.
For the period.
If we could then move on to slide 11, which is the central and offer so central and all but not not a lot factory to comment upon here on the left hand side you can see the current profitability.
Site similar at about 8.3 billion in both periods.
A little less profit recognition in both height be cult following the IPO, we're recognizing the profit on slightly delayed basis.
But offsetting that.
We had some benefits in the Treasury space and then all the central of the we've moved from small profit small loss, which is largely about the income in the treasury capital dismiss getting low interest strikes.
So moving then on to slide 12 on the costs. We have it is like I said earlier on that had I think it good half year on cost a continuation of what we have been doing pretty is slate.
Significant improvement in cost fuels and prudent all in costs, which was very very similar in both first and second quarter's we are continuing to invest in the business. We have continued to digitize business base of being big components of why we're keeping costs down these levels and we are reiterating.
Our intent that they cost for the full year this year.
I would be below the 10 billion bought and indeed, we are putting a lot of focus now into looking at other cost initiatives to endeavor to keep costs in Twentytwenty law also down below 10 billion Mark on the same currency basis. As we are experiencing site. So I think coal story is.
As a good story.
Then on to.
The credit side on slide 13.
We have got as I mentioned earlier 1.6 billion charge.
The first half of the year that it's obviously a lot as you can see.
Let Chuck compared with the same period last year and then you can see in the ball charts. The sequential these buttons and that individual that so we are down by 40% from the first quarter that reduction is primarily reduction in the CMBS space. So the retail.
Certainly some let's see I beat was down and in particular that was because we have no new significant names appearing in the CMBS space during the quarter.
So overall charges about 60% is stage three and about 20% on stage, it's warm into mobiles and on that stay tuned into managed overlay, which I'll come onto the minute.
So impairment charge about 20 cents all our overall income.
Hi, I announced a region about 35% and about 50% to me and the region, but only about 10% of income in our biggest region GCN I and the one which is moving out because it era.
So I think thats good progress that.
And on the bottom of the chart, we've shown again the make up all the stage.
So is sage stages and they categories here and you can see with had stage three go up a bit in the period about <unk> billion dollars CG 12 states them up and the early alerts has gone up again now in part that's because we have now going to sort of all sectors because all the second call.
And in fact, the earlier the numbers peaked in may have come up or fractionally. Since then.
So keeping a close on those.
Cover ratios on provisioning a fractional open than previously that is prime rate. Some of the older assets that were fully provided to being written out and southern Europe exposures the coming in goal.
Currency and credit insurance in them instead, so overall, we said if the economic environment remains a simpler worth of deteriorates too much further than we would anticipate that the second half impairment charges should be lower than the first half.
So if I didn't move on to slide 14.
Slide 14 is just taking one components of the credit impairment charges.
Stages, one and two you can see in the third books here for 50 million for the first quarter and that is pretty much cost in the second quarter to just over 200 million you could also see that roughly half that those type of charges was written by the multiples themselves and.
That half of it was from management for like so we have applied some discretion.
Thank you on the retail side just to reflect but we have got release measures on load more turret periods and on the corporate side to that we have got the exposures.
So we have taken some caution on base as those fronts, which in aggregate is about $300 billion full first of all the year in total.
If you then move onto slide 15. This again, it's just taking one of the cross comfortable about numbers. So this is the the retail exposures on the balance sheet. These are just say, 40% total balance sheet exposures.
Two or three points here. One is that we are very heavily secured so 86 cents total is actually secure.
Secondly, we have quite significantly towards more affluent clients to hopefully.
We'll be able to withstand the current period, a little bit better. So overall, we have got I think they book in a much better state getting into this period that was the case.
Period for.
Bill will talk a little bit about relief measures.
In a few minutes.
So with that then onto the next slide and the level.
Despite that sits on the cetone ratio so the risk weighted assets for the half year as a whole came down by one of the half billion now. It's many if you will recall, we have 9 billion benefit from the most disposal, which is the biggest component of that reduction.
But on the front, we have had somebody went up on asset quality. So the great.
On the asset side of it.
And then we have had somebody but all other from slide the quality of they also if you guys didn't VR dossiers, what should go on in the opposite direction. So overall.
I also want to hop in reduction in out of the rise in.
In terms of the Cetone ratio as I've said earlier that has come in 14.3%.
And again, a number of factors that play into that some of the best it's about the suspension of the dividend some of the bat is about Malta disposal and some of that baskets about credit migration.
Rule at 14.3% with strong liquidity say, we feel in a good position going into the remaining phases fault case, it and tends to get good to have strong capital position obviously.
As we go through the next few quarters, so with that let me hand back to Bill.
Great Andy.
Thank you very much.
If you can turn to page 18.
Deck.
Start with a with a little bit of review of the way that we're approaching our communities our colleagues and our clients.
It's never been a better time to be a purpose that organization I think we're seeing that quite clearly weve reached so that Victor purpose for our organization, we share that externally and I just give a couple of collosum through the thing that we've been doing maybe first and foremost in sustainability the.
Climate change challenges and the other sustainable development goals that we subtract you have not going away as a result of this dynamic if anything they become much more acute.
So weve maintained our focus in this area not just in terms were on activity, so $2.2 billion of infrastructure related.
Moving in the sustainability space.
Together with over this significant increase in the level of sustainable positive generated et cetera.
We've been advocating quite strongly in the global community to make sure that we're set up for a recovery that isn't just like through fiscal stimulus, but rather green fiscal stimulus key priority for us. Our second is we made it very very substantial investment in our people.
Of course, we're very proud of what our colleagues have been able to deliver through this this very challenging time.
We know that had the world is changing passing will change even faster as results of October 19 through the whole be showing agenda is critically important we've launched a whole new set of learning tools for our colleagues primarily on line of course, right now, but that being complemented by by in person draining what available but also through on Jeff development. The fact, we had.
Almost a third of our workforce that is that over a third of our workforce I spend a significant amount of time on our internal training sites.
Clears testimony, we could get to one the quality of what we're offering but to the importance.
Part of our colleagues and also.
Hi, guys answered that focus on community.
Of course, it starts with being there for our clients during difficult times, and as Andy mentioned and as I will mention.
We have stood by our clients during this during this challenging pack for them.
We've also found ways to help in in ways that are part from our core banking business.
Good thing raising $59 from from the back complemented by a significant donations from from employees.
To be used for.
Both immediate in front line relief, but also as we get into the recovery phase, making sure that use in particular in our markets are our employers and employees and the we've talked before about the billion dollars program that we set up to provide financing to companies who are fighting the fight against.
Yeah, as we sort of turn to slide 19, with who talk a little bit about the relief measures that we put in place for individual customers.
Probably we have.
Markets, where we have mandatory programs markets, where we have voluntary programs, but was strong encouragement from governments and markets, where we have.
No no programs, where we've taken a voluntary approach, which we think is consistent with the best of the of the mandatory programs.
Overall, we had about 4% of our retail clients seeking relief.
That has translated to talk about 8% of loans and advances.
About half of the people there sort release have sought uncertainty for voluntary programs and the vast majority of those R&D as in South Asia region, where the lock to answer than most of persistent and and permissions from or that the government programs have been thats. The most substantial the under the 8% alone that advances.
Point $9 billion.
79% of those have come from as result of mandatory programs and 89% our current meaning they were current when when they went into the program up and or they if they remained current throughout.
That 79% of the relief.
As is our secured as any indicated thats the bulk of our retail lending portfolio in any case.
About two thirds of those are mortgages, and we're with relatively low loan to value down at 37%, but apart from the release programs, where I think we've been we've been proactive and front footed we've had a number of taking remember steps to be sure that we're servicing our customers throughout and that's keeping our branches agendas call centers open refunds.
Proving over 90% of the British request that have come in and what we've seen in the markets that have come out of the the endemic Lockdowns earlier, so China and Hong Kong.
In Korea, most specifically, we've seen us essential return to normal so production and delinquency rates and reversal of some of those those for these trends.
Well I would think we've been responses, we think that they're responsible and we're encouraged by the degree to which the markets that have begun to rush I think would to page 20, we'll talk about the similar themes on the corporate side there is unparalleled for sure.
The.
Maybe first comment that the only about 3% of our of our corporate and commercial institutional back loans and advances.
Has been extended its about $5.6 billion.
That's a little over two thirds of that is a commercial banking clients clearly the segment of our high population is most affected by this larger clients have either had access to capital markets or cash reserves on which to drop about 20% of those exposures are in our vulnerable sectors, if you're talking about.
Issue on gas et cetera.
So we've had about 5000 clients looking for support.
There's huge to commercial banking clients by number and so.
It's interesting to note that the vast majority these are 99%.
Have been in the sort of the performing and and safe.
Integrates going into the process. So this is not an opportunity for clients that were struggling in any case to take advantage of this on your large scale way.
These programs that are on offer.
At about two thirds of the release granted is or short term exposure. So under 90 days, 3% of over 100 gig.
Overall. This is this is this is very manageable and we maintained a very good healthy dialogue with clients throughout.
A quick update on them billion dollars commitment that we made we've had great take up rate over 100 clients at substantially spoken for at this point and almost half funded.
A couple of examples on this page is just very it's encouraging that sometimes even heartwarming to see the uses that that our clients are finding.
We'll take it put our money.
At the if you turn to page 21.
Could run through on the network.
The clearly more challenging environment.
In the trade flows down so essentially interest rates impacting earnings essentially.
And with economic activity and cross border vesting also impacted despite a challenging period for major financial perspective that we have had good growth from our new and and other users next generation target clients up 14% year on year did everything comes down.
About 6%, which you think probably reflects and level of resilient, we look at our trade trade volumes.
Our trade assets are down about 11% year on year the market sound about 20%. So it gives us probably picked up share there as we did in the cash.
But the.
The overall challenges that network side our presence.
And when we look at that the return from from this financing that even in the subdued environment, they're still there's still quite good.
And the underlying trends that you are sites, including the ongoing opening of China, which we think we'll continue to the theme.
Very substantial inflows into the Chinese.
Markets and the bond markets.
Extremely well poised to capitalize on the changes in our network from which we've been physician so aggressively over the past several years.
Then we should pay patients tend to focus on our affluent clients.
Very very resilient performance again, some of the same macro challenges in terms of.
Inability to market face to face to the science, but despite that we've had an increase in the number of priority clients up another 2%.
Really the challenged in terms of being able to convert some of our high growth into.
The net new money not so basically flat year anyone is down with active marketers.
Income is basically flat continues to be very nice and high returning business.
Most importantly, weve been experimenting and now rolled out in full force the whole stream of digital offerings, which allowed us to maintain a very high level of engagement with these clients throughout refining that not only as has helped to protect the income growth. During this is the most directly affected dirt and also leaves us in a very good position to deal with these clients as they come back into.
The normal ways of working for them so.
So overall encouraged by the resilient results.
From inside.
We turn to page 23.
We're very happy with the progress that we're making in these four markets that we that we especially call last year and half ago.
Pat.
Strong income growth in all the markets with the exception of your E, which has any mentioned just as has been particularly hard hit not just bye bye bye bye all prices, but really phenomenal growth some of this international markets, but even stripping out the strong financial markets results. We've had very good income growth in India Korea and Indonesia.
Cost under control and improvement in all four of those markets. It clearly was was part of the focus on optimization.
It has led to $405 million profit before tax, which is a 7% increase year over year. Despite some of the credit challenges, we face and just a couple of various it to collect steady growth in our global subsidiaries business across the board so doing with subsidiaries of art.
Launch empty customers and key growth in the prior to segments. So again, both very focused on our strategic themes of network.
Network income streams, and our excellent client base.
We turn to page 24, we've as any comment steady improvement on the on the productivity side.
A lot of this productivity is coming from digital investments that we made in prior years and from underlying process automation and process improvement.
Surprise that added the measures of.
Digital sales have increased dramatically during the period.
The the productivity figures per ft, or meter income or or pre provision operating profit our are very encouraging.
As important as says doing more of the stuff that is more convenient for customers and more efficient for us.
Also finding ways to discourage clients from doing the things that are less efficient so.
During them away from the more manually intensive or paper based forms of engagement has been a key part of our productivity driving as you look too.
The confidence in any was able to express about not just this year's expenses that are but our targets for next year as well.
<unk> expenses at both at that 10 million dollar level. This has to do with fundamental business transformation more than just finding ways to get out some pieces of that we've been pretty good at finding that so far. So this is this will remain a key area of focus for us.
We move to page 25, just a quick comment on the digital side again, no big surprise mobile and digital adoption are way up both in the wholesale and retail side of our business.
Marks which is which is our Hong Kong virtual bank isn't and Thats testing right now.
Through the wholesale beta testing.
We expect to launch that very soon very encouraged by the results very encouraged to see the response to this to the brand and and offer and launch is that going to substantial accurate people, who are I had indicated their attention to sign up for the count once we are up and running good ongoing growth in Africa, and 330000, new accounts maintaining high balances.
Sales relative to our our previous offerings in in Africa.
We've got a number of joint ventures, which are really producing results now I will collaborate.
A personal loan partnership with and financial which is which has helped to drive the good strong income growth in China. This year with very very good risk experienced especially through this challenging time and this is a banking service platform that we are.
Initiated testing in Indonesia to the leading ecommerce Claire.
We'll deliver this thinking into service through multiple ecommerce channels and multiple markets.
But this is an opportunity for us to generate.
I knew account base with deposits and associated personal loans attached to the very high penetration that some of these ecommerce platform staff that we cannot replicate ourselves and Jimmy recognize externally.
Recognized by our clients most importantly.
The five various observers who are who at various points rate us best digital back in Asia Pacific lack in Hong Kong, It's something that we are proud of them take reflects as real progress that we're making.
So pretty much page 26 and.
[noise] Nixon concluding comments and then start at the bottom this page.
Where we set out the DNA evolution of our wealth and credit card spend.
And the Asa evolution as you can see we've had a good healthy upticks and see the Lockdowns had been relaxed in NGC, many John hung in China.
And Korea, which are early in an early out.
The of the anaemic related Lockdowns.
Trends are a little bit less discernible on the asset side, obviously, the the recovery began that later, it's been more muted a number of markets are still in London.
Or have had.
Maybe for a second where it's like Singapore.
But we are encouraged by the underlying dynamism of our clients the underlying dynamism core markets and that in our ability to stay relevant is clients.
Focusing on the on the outlook.
We did economic activity is likely to be model, it's going to be uneven across our footprint and we expect us to persist for some time that together with and driving.
Interest rates for a long period of time increasingly the case across our markets presents us with some real economic headwinds mill financial happens geopolitical risks are are very present, we're focused on them in hand to an extraordinary degree.
Had no material impact on our business so far as result of the geopolitical.
Syrups, but.
We recognize that there are elements escalation that could be impactful for us with her to those.
We are watching very very carefully to the extent that we can engines and we are levered realistically.
These are these are areas that we can watch prepared for and respond as appropriate.
The.
Then he said we are targeting expenses below $10 billion, both this year and next year.
We find it very challenging to forecast are are doing environments.
What we can say is that economic conditions deteriorate materially.
And if governments remain as effective as it had been in terms of of.
Putting do steps in place to where the worst of the that comes from this dynamic that we would anticipate let impairments in the second half of the or to be low the when impairment levels in the first half here.
But there are many many.
Certainly caveats and.
Also different scenarios in that regard.
So I will stop now turn over for questions and answers just a final comment from me.
We're very proud the organization its resilience, we're very proud of the response, we've gotten from clients during this challenging time.
The financial results show that that even more importantly, we think the.
The fact that we're getting from clients about the quality of the center triggered offering and the relevance of offering has never been more more important or or more encouraging in terms of the extra value of our franchise.
With that thank you for taking the time lessened, we'll turn it over Fourq you Nick.
Thank you ladies and gentlemen.
We will now begin.
The question answer session. If you wish to ask a question why are they would you. Please press star and one on your telephone keypad and fight for your name to be announced.
So you have a Chris please press the husky.
Turning to fleet. Please use the question books available.
Page to submit your question.
And the first question comes from the line off Jamie Cook. Some axon. Please go ahead. Your line is now open.
Okay.
Good morning.
Couple of questions.
I'd say.
And it to the impact piping.
Great. Thank you to wait.
Great.
Thanks, Bill, maybe a little bump when you're fighting.
Should we be thinking about missing.
Right.
Hi, downgrade.
Maybe.
Thanks.
Thank you all material.
That's right.
Second the key I think story.
I'm very simple annualization of.
Great. Thank you point to a number of much better than consensus right. Thanks.
What should we be expecting regarding thank you. Thank you.
The down about something here, yes.
Thanks, Good luck.
Pardon.
I think one cubic insisted that relate to crop cost Greg pointing out there right now like an inflation.
Before I.
Okay.
Okay.
Lets me.
Okay.
Thanks.
Okay.
Thanks, Mike extending out okay like.
Oh, Okay again, I kind of that you gave a Q1.
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Andy why don't you address questions.
Yes, Okay and say okay. So they have questions. So all told you I use as you've seen we had pretty much the benefit from outside offsetting the credits.
The voting and movement within the book et cetera.
Clearly going forwards tomorrow.
So if I didn't like I'm going to expect we would see some increase in the R.W. A's over the balance of the yet.
Two reasons, one we do hope there are opportunities out there to be lending more and secondly credit migration I think is likely to be help with rather than downwards realistic late.
Hopefully we've seen more the credit migration in the early months of yet and we will see in the last amongst the best decreases that will very much be hitting the efficacy of the lifting of lot downs in various countries and how that impacts upon our client base.
Some increasing out the various urges yet as a bounce the.
But nothing particularly noteworthy.
On the Colts the coal sprint has been good as you see and we have taken a thoughtful you hopefully interims all start cross bonuses et cetera, being accruing for the first quarter in the second quarter, which will continue to do through the balance of the yet.
I did it was the second half costs do tend to be a little bit higher than the first hall. So if you normalize the first half an ABL level that you do come to a number that is just sub 10 billion, which is what we all pretty much targeting.
Since going forwards and then obviously on the cost the issue is beyond 2020 feet. We won't make sure that we have go enduring change and enduring projects in the business. So because actually we can keep below the 10 billion number next year, but on the ownable structural basis.
You said question I think was on the net interest margins that.
We certainly have come down we guided at the end of Q Walnut that with the right changes we would see income comes down because of interest sprites I think it's probably fair to say, but right now because of flattened a little bit more than we have vinci shut that time it towards a little bit we're guessing guy.
If we you now what we knew then we might have talked about an eight under on the 600 numbers of the yeah something up afterwards, but obviously there are number of moving effects here right smoking is water volumes is an alpha but in that sort of awards. So bouts of yet clearly we'll have more impact on the interest line with you and I think that.
The offer income however in the first talk was not from interest was actually from fees from trading. So one part of the overall mix, but it is not now don't Paul.
Okay, and just make sure I had increased 800 million with your guess.
Mark to market today.
Right, Yes, yes, what we refer to 600 things more 800, if we work placing on state spots.
Thank you.
Thank you.
And the next question comes from the line of Tom Right now from Loomis. Please ask your question. Your line is now open.
Thank you then ask a good morning that will come on the handy.
Ask me on the question about the sustainability of revenue growth when looking beyond 2020.
If I take a guidance for the second half I think.
Kevin consensus of around $15 billion, but this year.
[laughter].
Mix of that looks like being a much lower netting technology and probably less.
The contribution from wealth management and transaction banking on a much bigger contribution from financial market.
Consensus has revenue.
Moving next year by about one side.
Taking up to 4% in place in 2022, which based on your cost guidance et cetera.
Q2.
We haven't tend to work with he is 7% bedding and nine you'll you'll have a sort of either lighting target. So I guess the question is.
Oh, you're still sort of comfortable with that sort of consensus view of lab revenue is going.
How dependent is that now on a recovery and then at some point do you need financial market to continue making that make a contribution then historically a lot of other drivers that means on et cetera that you think can pick up some slack I'm just trying to get it understand how comfortable you are there any with current market.
So consensus thank you.
Thanks, very much time, eliminating the first pass it does no R&D level have lots more to add.
First the analytics as we go as we come out of the that the acute and one of the case has been already or return growth in some key product lines like wealth management.
Up through and including the month of July we've had a strong.
In the markets, which have I wish it lighting during the condemning free for all the obvious reasons.
The interest headwinds by contrast favorable locks go away and that we've got reaffirmation from the from the fed yesterday that we will be local longest no reason to think that hybrids will be different either so.
The wafer should get back correct drug in country image first and foremost to make sure that our transaction volumes continue to pick up speed and we're comfortable given the momentum that we've had over the past couple of years from the moment. There was about 18 months now that we can make a material impact on income growth throughout through volume growth.
We are businesses.
The marginal as we've gone from year to year less dependent on.
On the measures of balance sheet and more to come on now cleansing.
Those are the opportunities for us as we think as a global economy reset as that trade flows re normalize and as well too we continue to press or network income.
We think that there's plenty of opportunity for CRE growth there.
Just on potential markets of course is it will be the global community banking community joint at very robust period, a trading markets.
Good headway.
And what we don't have relative to some of the big other capital markets players is a very large us capital markets business and clearly has been there.
About performance in a number of markets.
But that's the capital markets business itself and also the associated hedging activities.
Rather weaken in general.
For the most part in our emerging markets and.
That's a more and more sustainable gross and net income stream, so as Andy and I. Both indicated if you dig a little to replicate first half of 2020 FM results.
In the second question here or not here, but we do think if that's the secular growth.
And that the investments we've made in that area over the past couple of years are clearly paying off.
Entered Andy to to complete up on this one.
Yeah, I would probably just to go to add to build lets say this year. We've got essentially nine months. When we are likely going to be impacted I'm quite stated goal I tell you that hopefully as we are coming out of this year and things of settling more going into next year I think the volumes are only can.
Our some three next year this year should should offer some some upside.
Secondly, financial markets may not be as buoyant is recently, but next we all into March call. The territories I still think that there is going to be a lot of volatility there will still be a good amount of trading out to see around next year.
Thirdly, some areas, where we've been looked at week since wealth management's I think would be a good example, actually the trends my particularly in north and they show favorite supposed to reach and start coming out so that.
When not far off January levels now of income so generally the trends that all starting to pick out I'm pleased with several months to guide before we get into 2020 bought I think there are reasons to believe those should be some upside told the volume front as we go into next year. So you put all that together.
I think you know with that or thereabouts, and so what we should be going forward.
Okay.
Yeah.
Yes.
Correct.
Hi me Okay.
Hello.
Let me.
[music].
So sorry.
A quick follow up on the cost guidance, I mean $10 billion below 10 billion.
I mean, if he's asking where consensus I think today.
And with about 50 $50 million I guess when your target below 10.
Thinking something a bit more comfortable than.
$50 million is that fair assessment.
Are you thinking about your guidance.
Anyway.
[laughter], Yeah, I thought that might come to me and listen I think and we're talking 18 months now in total and and I think a below 10 print next year, we see looking at constant currency I think would be a sensible place to be positioning the business.
A minus 50, I get nice loans, its blake's invite long I'm happy with not only even happier if its 50 below ly.
But I think the key thing really is that we need to take the opportunity now to coach.
Also on things that mortgage loan.
I still see wants like one of the last few months.
We thought we didn't have you drew.
I think Eric.
Good to talk with reuse.
The thing that we all going to constantly look at things you can dig Tonight is more if we can and I think happening. It's all going out there that is memorable. They certainly certainly it's a good called songs and look forward looking we can see lot to gets to a two after what are the tempered in number for next year.
Okay. Thank you very much guide.
Thank you.
The next question comes on the line up little bit from Deutsche Bank. Please ask your question. Your line is now open.
Only all thanks for taking my questions.
Claims for us, but can you give us an idea of how Hong Kong's performing economically at the mine on the ground just to political tension, causing any concern among your clients a tool.
And just a clarification on the cost how much of this yet the cost savings to get to below 10 billion is coming from lower investments passes.
This is usually efficiency save some how much how does that change brings 2021.
Yes.
So thanks, Rob I guess I'll take a first pass.
Hung on obviously isn't isn't quite as severe economic slump began last year.
Actually its results of the of the civil protest and has continued this year through two covered and that general global economic might so the second quarter GDP fronts down close to 10% or obviously, obviously troublesome if my fear that does any of that relates through to the the U.S. China attention.
And.
Although the general backdrop in terms of economic malaise in the World is certainly.
Contributed to buy that that level of uncertainty.
But in terms of of our clients in Hong Kong changing the way that they would be age.
Apart from the fact that they were.
There were severely disrupted in the second half of last year. It is early part of this year.
To the protest and on the portion Lockdown in Hong Kong and the the much more substantial global economic contraction that was does have never go ahead.
That seems to be the primary drivers that gives us some continents that as some of those headwinds received at Hong Kong will come back to a same.
Dynamic healthy underlying growth.
Yes, just too quickly comment on cost so we might get back on our investments in our trying very hard to protect our investments as we go into next year.
The divestment program for the bank integration central for the past few years.
It's paying off we're seeing it in the productivity figures were seeing it in our ability to keep expenses.
Flat or down while it wasn't going to is growing.
We're seeing it in terms of some really cutting edge digital initiatives, but that will begin to produce revenue in the in the later part of this year and that will pick up speed over the next two or three years.
The question program is pretty central but of course, what we what we will look at them continue to look at his which of our investments do you really need your prioritized in this environment when when the different market really different world and I can certainly involve some some reporting.
We are some repositioning will from the investments, we make but we don't and we don't expect to materially reduce our investment profile.
Any.
Yeah, just on the second one we expand bouts of billion and a half cash all the investments in any yeah, we've always be goldentree, how to look at the more discretionary costs electrical close yet, but as Bill said, we're very very came to the things, but all structural lost strategic.
We absolutely indicate pressing along with those I think realistic as with most businesses the rate of spending may slightly more great because of the physical 50 courtesy of getting results, indicating the cotwo involvement. So it may take hundred million all platinum gold somebody going after the yeah. We expense halts is actually 50 billion.
If we wanted a pool Paul your question. It should this whole thing in keeping the costs down this year, it's something that 60 billion spacing in L. terms.
Right, Thanks very much.
Thank you.
And the next question comes from the line of Martin Leitgeb from Goldman Sachs. Please ask your question. Your line is now open.
Yes. Good morning, good morning, most of them Isight and thank you for them for their presentation I just wanted to put up firstly on the various comments you made on the outlook. It seems like Asia was first in print bucket by.
Mike endemic and from your comments that goes the data from what you see underground and particularly North North Asia, you can see that woven quicker out in terms of recoveries that something you'll see across your footprint in terms of client activity that activity levels.
Particularly in Asia picking up faster than elsewhere and should that give that if I read your come in dry dog.
Just a follow up on that that underlying I such growth loan growth from here with essentially accelerate.
And that's despite obviously that tensions in Hong Kong. The second question, just just briefly to put up on on your night Chrome and there was just wondering if you could help us.
How to think about they've been progression from I appreciate the come and go into higher rate sensitivity around close to one of them earlier question. I was just wondering in terms of the moving parts see a high bar being down in the quarter on trending.
Much lower at the end of the second quarter.
Should we expect mean here to continue to drop a little bit or the benefits from that legal entity restructuring, which could potentially lead to depend upon stabilization of mean from here and then finally just on topic, though I am just to confirm so on slide 16, I think you called out the 15 basis points impact.
Equally for these regulatory changes.
But that essentially implied that you're fully loaded common equity tier ones are fully loaded for high face nine concession though.
Essentially not that much different I sort of 41% to print that I'm not so yes, we looked at second quarter and how should we think.
About a scope for how to do that going from the out any material headwinds outside of the out of the emigrate reflect earlier, which we should be a well. Thank you.
Great. Thanks, very much more <unk> I'll take the first massively outlet comment to you then the complete that question and deal with the next two.
Yeah of course shaking you're correct that the China Hong Kong were refers into the continued drilled and first out.
I'm very encouraged by and return to something approaching normal, which which has involves both.
A reduction in credit delinquencies.
Also ever turn to.
Closer to normal, but management activities and that that is continuing to this day, obviously, we're watching what impact will be in Hong Kong of who stood waste that they're fighting right now which has resulted in.
Good luck on this as severe as as Lockdown Hong Kong as had so far.
You will see the the does it will clearly there's a containments capability, that's well understood now and we're optimistic that Hong Kong will it. This current asked Mike under control foot locker reminded.
By works and also by up what we saw earlier it months or last month in making a distribution going away will come back up from heavy time in there there could be ongoing economic disruptions.
When we look beyond obviously Korea, which Andy mentioned I mentioned as well as had a stellar performance in the first part of the year.
As you know have KRYTOSPHERE operate early in the.
I never went into complete Lockdown has had very effective continue.
Mechanisms and has.
And to a healthy very healthy level of business activity for us. So usually these are the role models as it were moved to to the.
Vision markets.
Obviously, I'm hopeful that seem portfolios, a similar that junkie and to China.
They are at Orlando, finding that they could bring an assay second wave with the pandemic as you know and.
We're also seeing some of the early sign so mentioned in my final slide.
Surely swap with encouraging trends there, there's about seems a little bit for them.
The containment efforts have been reasonably successful in places like Malaysia.
Vietnam, So we would hope you'll see similar sorts trends in those markets.
Let me go beyond the into if not I mean, India in Bangladesh, Russell I never get to persevere.
And Middle East is certainly certainly experiencing pressure not just let me provide promote questions.
Looking at is still.
Relatively early stage of the containment or the evolution endemic as well so.
We see you take sometime before those parts of our of our footprint to come back to anything close to full speed and it's likely that the economics will be somewhat during.
And then there's the U.S. in Europe.
Putting in the U.S. right now and we're all fearful of.
The the increase in infection activity in Europe.
People are moving Lockdowns procedure.
But as any pointed out.
You're right that universe from reaching for us in the first Amir substantially in the back end use markets would share which could be.
But also in terms of general like.
I think the.
The other western World continues to see needs as as an opportunity for growth is continuing to invest there.
And to engage in trading and other activity, which obviously plays well to spend a driver trends.
So with that I'll handover to Andy for.
Two questions.
Okay. Thanks, Bill I'm not answering your second question on NIM I guess is the right Tim Hot rolled through to book, it's logical to think that we'd see some further reduction in the NIM over the balance of the year olds, though I think the majority of it we've got three but there is some so that to go.
A lot and moving parts as you refer to the legal restructuring gives us some benefit I'm quite well coming down has an impactful day quite a lot about lending there is.
It's linked to the prime right.
But overall lets say slightly luck, but we've gone through the majority of the reduction.
Oh and capital, yes, the the printed number 14.3% if you take out the effects that all specific to regulatory relief related. They then you know 14.2 or something like that is still the number or is the number but it's still clearly above the range that.
We have big try to operate two in the business as usual era, and I think you put a cap rate since its interesting wall and clearly two courses in Chicago paid to actually has the bouchie in a position where we are both the range that we normally operate too is a good position to be it.
Where it moves from now will be dependent on two things one is going to be the growth opportunities. The raw out that suits related vote, and secondly is going to be about credit migration, which itself will be dependent on how successful countries all existing out of the lockout period, but I think either way we go.
Good flexibility that I'd say that we'd be I, certainly in the high rent or range for the full year as we as we sit at the moment.
Appreciate returns obviously at the moment is on pools, but generally speaking it remains as previously but whether opportunities to profitably grow the business that is where we will deploy capital to extend the surplus is having done that there are opportunities to return capital than vaccines, what we'll do.
Obviously subject to regulatory approval, but we already do that when we were recently called the the outlook is a bit more foreseeable maybe another couple of course is three cool song from now that that should certainly be the case, but bottom line I think coming midway through the because it era with capital ratios as high as they all up with liquidity as strong as the taste.
We actually feel that's quite a good spice and into next year or so then obviously, we'll see how the whole returns a position to both both for us and food sector as a whole.
Very clear. Thank you. Thank you very much.
Thank you.
The next question comes from the line models Castello from Autonomous. Please ask your question. Your line is now open.
Thank you good morning, everyone had a couple of please put if he could you just clarify.
Statement about expectations for 2021, and he said revenue would be that will better about.
Do you mean by that wouldn't do you think you grow revenue in 2021, but it's twentytwenty.
My second question is a follow up on NIM.
Which is tumbling precipitously towards almost being a double digit NIM.
Right.
I wanted to longer term does it change your thinking about the mix of the balance sheet. Do you think there is opportunity to deploy coming back five caps, then high and areas given how much you.
Control, Joe credit quality over the course of enough <unk>.
Three mix rather than just typing for rates to go up.
[noise] and you wanted to get et cetera that.
Well.
So to come back to something that's relatively stable on the current yeah. So does that was the cold pets that on on the name I think there's a variety of things that we all reflecting upon one is the proportion of all right to the cheese is those interest rates related and just like 'cause, particularly all the time.
<unk> business the focus upon wealth management, if I could absolutely <unk>. The mole, we can do a nice spice. It so evidently it's gonna be good we in the interests <unk> gonna continue to be very disciplined very cool.
<unk>, we will not pushing just places where we all uncomfortable the balance of risk an opportunity. It's inappropriate flopped again, we'd be keep that onto the review, but I think that is four oh evolution of mixed with assistance Rockland Revolution, the business. So rule it I mean.
The topic I'm ordering.
No.
Alright.
And the meal with a week with two slices of activity off without taking a little over Richard business. Then we will complete you can do that.
[noise] minutes, just a little bit of color for me.
Is there any pointed out and it was there.
S. A R retail consumer kind of smoking some smashed insecure most of the mortgage is cheeseburger, though London value. So you have a low risk consumer Unfortunately, not risk free as we speak in N Z as an apartment. So that was taken and any particular with the with the E T O.
But we can develop marketability is hard to canceled it over the past couple of years to take a data driven approach to consume a lemonade on an unsecured basis, and we'd rolled out and a number of discreet initiatives.
Where the other results are quite good.
Kinda.
No mechanism penetrating the the unsecured just sugar credit market is through a joint venture with a financial a partnership with with that.
Very good let's try to I'm trying to experience in the early places and it's it's contributed to are are trying to resolve I'm gonna be looked into programs like enough.
Which I mentioned earlier, sorry banking as a service model and Indonesia, and there'll be a substantial consumer then.
Component to that banking offering that will be done through any help with my form where.
The experience of the Patty and on the market is drink with that we can have much better credit, scoring and also a much better credit spelled the payments characteristics, where we have a cheeseburger spelled it to where we're what we're doing they're trying to work ourselves or just relying on bureau, so we're not we're not going crazy.
That's quite aware of of the the riskiness with me environment, especially right now, but this is a capability vanilla, but allow us to.
Go ahead, and you said that you just sent to your question I might be attracted which is to help me proportion of our grilled cheese, which I'm really high returns in a way that that is actually playing just <unk>.
Alright, Thank you very much.
Thank you.
Next question comes from.
<unk>.
After your question your line is now.
Hi, Thank you for taking the question most of been answered, but I did have one question on the mortgage nine it was quite a strong performance there, perhaps if I'm Lucky then a record figure I prefer the current mix of businesses that you have and I'm wondering what's driving the spread improvement there.
And you know how sustainable that might be over the country quarters, because whilst a small portion of your group revenues. It was actually in the first half of the year accounting for about 15% of the year on more growth and reported revenues. So if you could give me some.
Some steer on on the shape of that.
Line over the coming quarters that would be very helpful or at least what the dynamics where in the second quarter. Thanks.
And then you want to take a person that.
Yeah, Let me do that so the mortgage paid for us is particularly strong in Hong Kong, It's a large popcorn girl, we'll get Ya.
And we have seen pibal as we know.
Lower levels in Hong Kong recently.
Certainly help.
I think one of those little cat, she was supposed to pull grilled cheese as well as the mortgage and I'm, calling to get overall picture within the business because they're all clearly two components money in in money out to that so I think when you look at those two together you you get a better collective picture.
Thanks very much.
Thank you.
And the next question comes from the line of Nick lots of Morgan Stanley. Please ask your question. Your line is smell open.
Okay. Thank you very much and thank you for taking the question a couple of questions for me just in terms of the guidance on a a stolen credit quality and accept what you said about a lot of uncertainty them up for a second half could you just talkers through <unk> some of the stress points might be but would would lead got out come to be different sorry that but we ended up.
Having a second wave and GDP recovery ends up being checking much longer than you anticipate or is it but we ended up finding but the secondary effects of locked down something like.
More sectors when you're currently identified as troubled I'm just trying to to work out how are you thinking about the flags practice.
And my second question is much more details I was wondering nitrous you mentioned him a presentation, but the.
Revenues, we're benefiting from strong income in India, and Indonesia, I, just wonder if you could.
Little bit more on what exactly was driving though.
Sure things like I'll, just take a side of that one will have some color.
The.
During the first part of results, we called out to.
To tell us that incremental tell us beyond what we've got was entirely embedded into our burgers and learn to our ecl's.
And those were the possibility of an extended period of vanilla process.
Oh at that point, the the prices down around $20 a barrel.
And the second was.
The possibility that these.
Promised state support for the aviation sector I might not be 4000, that's N as as we actually go through a computer we seem to of course the price of oil.
More of a double.
It's still quite low, but not the Burger moved further away from that terrorists.
Doesn't mean that it's not there we all all right you guys have auto that can be.
A double double Burger away from scenario and second vacation sector.
The English yourself and pull under tremendous pressure.
The the state support that had been disputed or or discussed has been to some degree for stomach. So alright, a number of like hamburgers have either been recapitalize with it has to take care of some sort of helper or or other forums before.
So that because I've been.
Further away than the new world when we can help him out in the first order extra of this year.
When we look at the type of things here, it's it's the obviously.
The big unknown is how <unk>.
Operating under that payment hungry right now how they respond to listen.
[noise], we'd call about a member of things that are encouraging returned to more. So this is something much closer to normal delinquency levels and China in Hong Kong.
We also have the Burger doesn't countries, where the economic impact was also relatively modest giving me successful appointment efforts.
That's not the case and some of our <unk>.
So.
What will just have to see.
Did it comes in how our clients and you come back with that for me and.
Africa respond.
Payment holidays, and we shouldn't assume next that the encouraging there's grilled shrimp from China Muslim I'm gonna be replicated entirely most margaret's so that's one <unk>.
Dress and sensitivity uncertainty and clearly on the corporate side.
Scott large suedes of the adequate the universe, it or under under ketchup your sugar the captain welcome to in one of them. That's all most of our larger clients too.
[noise] top off their cash reserves to the extent of medium too at all.
Oh, that's the.
The extent of the economic noise is extended significantly we really shouldn't expect.
Let's see some troubles.
Sure, we think will definitely provided giving away from them all I needed done in the.
The ECL both the <unk> the reef three to five and of course, if things are send them a remodeled in terms of macroeconomic turtles, you'd expect to have some <unk>.
Maybe I'll so sorry.
Yeah, I need to New York.
Could could quickly caught up there.
Have a color on all the above.
Yeah.
Replacing story for us and obviously at any of the current environment.
It's it's it's quite negative.
But we've been reset and that business over the past two years very aggressively and we've had a good growth in our priority I find it come with any good growth and our global subsidiary, who come you Gotta screen first off with your Internet your muscles as well.
We used to always added continuing to I'm very.
Large cap corporate rules.
But have you done that wall Walton person does that trickled down expenses and reducing are returning R. W. As by iced over Sir because this is they did this this is just as good encouraging understanding you covered shortage in December Indiana is more.
Can I help you contributor to the group.
The what can I get no onions limited any I'm gonna as well was hope tomorrow.
We have refocused are are relatively small retail business on the absolutely client seconds.
And that sounds quite well on your part of the meal, Alright, and you have a very sure I'm supposed to French fries, one vanilla shake which performs well on the first part deer, and he got Internet Margaret Swirl shake.
N E.
I know it comes with a coke on the on the credit real send C as in Markus.
[noise] Yeah, I mean, you just briefly risk of reputation I think the success of Milltown things what state is gonna be hugely employed children's parents, both they put a comparable.
Cool Casco you towards a quick just the more businesses <unk> will survive a little extra parents will have more employment that we're at least like it goes without saying that the lifting up a little towns.
It's gonna be huge a significant that.
And get into the easier just just echoing won't be able to say I think give you some with many school Paul a lot it's gonna be could be enjoying your bike mark. It. So I grew up here at the time the strength in both of them was more on the kosher alright, the normal way or I'm, sorry, I'm sorry, it spans it across corporate finance can pull up to <unk> yeah <unk>.
<unk> generally transaction banking was that she's strong as well so equals for example, when you get if if you can <unk> <unk>, one cream, but like it will we will walk away coke or chocolate shake too late in the corporate sorry cause I used to <unk>.
Okay. Thank you very much.
Thank you.
And the next question comes from the line off.
<unk> from Barclays. Please ask you question your line, it's not open.
I want to Jen how can you can hear me, Okay. Just just a quick one and patterns.
I think.
This or a combination if the cute too.
I'm kind of what you're telling us about the.
The second half tea okay.
Provisions are going to come in leather then.
The Street is for 48 2020.
And.
I was kind of interested in you know what are you thinking about.
Extending of you into 2021.
That's a lot more positive stopped some provisions buses Y at the Street is currently I mean is that just announcer phasing and kind of.
What you might be there in terms of Frontloading buses.
Lost it but now it should come through or is it actually just.
Think.
But could I quoted in Hilbert because it's actually just better than the 11th Street and that's basically when you looked at the $5 billion.
Internment charged or the 20th 20th 2021 does that a number that you think.
Firmly disagree with an I guess, that's <unk> that could you help that something somebody assumptions, but you're making around.
[noise] targeted support for some of the sexes.
And you'll footprint I think he wanted you were talking about some of the national.
Hello, and carry those tennis, you've expanded that <unk> getting up that would be will not be very helpful. Thank you.
[noise]. Thanks, I'm on I'll, just take a good <unk> and and you'll never have color and and there's no sauce.
Who who've done.
And that'll work with root beer sure balance sheet over the past five years, so with a heavy lifting was dumb in the early on and that is generated some awesome.
Subsequently finding the portola, we've been reducing their concentrations proving that percentage. That's that's great. So we came into this this unexpected crisis.
And can I get Ya and not perfect shape, because we actually.
And the first quarter.
Oh come up.
But but we I feel very good about the quality of the book.
It can't can't come in on Monday intensive Sir.
Doesn't help they'll send your models, what what we can say is that.
Current economic conditions are sort of progressing along the lines with what we expect a N.
You'll get a level of effectiveness.
Is the government programs to support.
Let me see the pandemic things that can happen to your this will be below first off of there that's.
We can totally we can go but what that that would that's fundamentally reflect is the quality of our sparkle.
That's going to see if our underwriting processing for the past couple of years.
But also the musician.
Because it'll be problems, which is why we've taken the does that sounds rough tapping up are a little bit desserts with us at central management overnight.
Like with that I'll I'll hand over to anything.
Yeah, I'd I'd, just add I think food food costs thing with accuracy the credit impediment certainly going out the old. This yeah, it's quite tricky back to be honest with a previous question. If you can say how effective they locked down let's go with grilled they come and see if I come right then Oh.
One could predict lightning <unk>, what is going to have an apple or credit and haven't however.
It is supposed to say.
[noise] Kitty just baseball in the states supervision thing is although I first nine slightly more for the Coke diet Coke would.
Like more of those checks.
Is <unk> the last couple of school is.
What else can with variables oldest to constitute Rachel.
This year, let's hope that they go deteriorate as much as we'd go towards.
The stage three the visible exposures is just a little bit sort of up and down we had a high charge in the first cool to particularly because of a couple of situations and Nicole <unk>. The boat. We didn't have noon items in the second culture, which is good certain full of cool to again will depend upon.
Just how it come with it starts normalize over a period of time, so I I hate with like the number two years would prove to be you know a very full number in and ER no below isn't it but I think it'd be very difficult to this space to be cope with them in any predictions on that front.
[noise] perfect I mean, just on the assumption.
A certain sectors.
Changed interview.
Assumptions, though.
No I think I'm ready to.
Is done so sorry.
Very much a <unk> like to find places so where we hooked goats, you know, let's take aviation it's supposed to be like bags out then we will take that into account to look at that particular time. It's the hasn't theme then willow they should look at the <unk>. The the shakes instead of more vulnerable okay. How large the coupon we continue to be very <unk>.
Places to pull days, sometimes get as you would expect very very close attention on the day sybase's, but in terms of provisioning. They approach is very much fact place what we have to go fax. What we think there is cool <unk>, we will probation. If we don't have any facts for it but we think that could be something we have put some management overall I did.
Where would come through Oakmont situations, then we would leave 'em as they all the time thing.
Thanks.
Thank you.
Next question comes from the nine off I had to Kuvasz.
Please I need your question your line is now okay.
[noise] [noise] [noise] [noise], So I had kuma. Your line is not open. Please go ahead.
It looks like maybe on mute.
Alright, so it maybe maybe we move onto the next question and if so how does it.
<unk>, we can take that question later.
Thanks, a lot that most of the last order. Your question. Please continue.
No they're gonna do you have any questions on line.
[noise] yeah.
The question on the web.
From.
How do you think about capital V 10.
Should we think about one O scheme.
Uh-huh.
Thanks for the question run it.
First thing obviously is to get to the point, where we're we're we're willing and able to return capital at all and that is as he knows where we will follow discussion half with with a regular with alright, I forget what our own iron sensitive.
These are and then as we return capital the nature of sucked it M searches.
Other forms of return sharp I've extra or elsewhere in your neighborhood or before the depend on extra we were.
I had a reasonably.
Predictable dividend against earnings and and we had to talk about my programs Retriever, which room were now above that happened a R capital right. It's <unk>.
Comfortable place to be given the uncertainty of world but.
You indicated in our house sweet fully intend to.
10 to 14 per cent see if you wanted the branch when we returned from one normal environment.
Yeah, I'll stick to like why not.
So that.
We will be.
All around nature of capital return as you get some appointments actually returning capital.
I'll hand over to handy for.
Where did you use.
Yeah, let let's first get to the point, where we have got.
Calling for the sitting the outlook and more predictability, particularly on credit can patterns.
Then could they obviously regulators will have a view all that I didn't get along to the south lately with saying number one glad we can probably the business, we should invest money to do that number two with or his money to actually Richard.
First priority should be to have a sort of continue on all of a dividend float.
If they're all from clients time amount. So that's S capital away cause look a trip all I box is that in that instance, but let's see it's just <unk> three step thought process.
[noise] [noise] milk are there any any other questions on the right password I needed help you want one.
I'll take that as of now and thank you all for for [noise].
Oh thanks.
Thanks, everybody for for taking the time to understand the practice when I think there's any neighbors said, we're very proud of the the progress alright.
Remaining starting obviously about the environment because you were that is all three cheeseburgers.
It could be as we go into this I will give you pleasure. Thanks again and have a good rest of your.
Thank you.
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