Full Year 2022 Barclays PLC Earnings Call
Welcome to back these full year 2020 results analyst and Investor Conference call. The cool start with a recorded message from CX, then Kathy Krishnan, Chief Exec, keeping beforehand, David and across group Finance director.
Good morning.
I have recorded this message in anticipation of possibly not being able to join you on the date.
I am pleased to report that Barclays has delivered our target return on tangible equity of greater than 10% for.
For the year 2022.
We continue to see broad bit income momentum across the group.
We have invested in growth opportunities and realize returns from those investments across all three operating businesses.
In the corporate and investment bank.
Income year over year and delivered a double digit royalty.
I want to highlight our global markets business, which has managed risk.
Gary Adroitly through a volatile year.
And continues to gain not only market share with clients, but mind share with them as well.
Our consumer cards and payments business grew income.
Each of these components, which is payments, our private bank and U S cards.
In the U S card, our new partnership with gap.
Strong income and balance growth and scaling the business by doubling our total number of end customers.
In Barclays UK.
He has returned to pre pandemic levels.
Our sensitivity to interest rates is driven higher income.
<unk> and efficiency programs.
Table at significant cost control and positive jaws.
More broadly we have managed our costs in a very disciplined way across the group and we maintain a cautious approach to both the macroeconomic environment.
We position our balance sheet throughout the year and how we continue to do so.
Finally.
Organic capital generation from profits enabled continued distributions to our shareholders.
I want to use this opportunity to review our progress against our three strategic priorities, which we laid out one year ago.
Although much has changed in the world in the UK and the U S.
Last year.
Our priorities remain appropriate and fitting to the environment in which we operate today.
First one is to deliver next generation digital financial services.
The second.
Is to continue to deliver sustainable growth for our corporate and investment bank.
And the third is to.
We continue to capture opportunities as we transition to a low carbon economy globally.
Against the first priority, which is the delivery of digital financial services. We took several important steps in 2022 to broaden our capabilities and our product offering.
In the UK investments and Digitization is a core part of our Barclays UK.
Since formation strategy.
What's helping simplifying our products and driving improved efficiency.
The Barclay banking App has over $10 5 million users now and with the number of logins growing by about 8% during 2022.
This translates directly into product demand as 94% of our Nu.
5% really the active accounts opened online.
The ability to offer help online also benefits our customers.
With nearly half a million using our banking app to manage their mortgages for example.
From April when that functionality was added to the App over 8000 mortgage holders to switch their mortgage rates with us online within four days of a base rate change.
We are diversifying our product offerings further.
I expect to complete the acquisition of Kensington mortgage company, especially with mortgage lender in the first half of 2023.
In the U S. Our partnership with gap.
Broadened our product offering.
Opened up and meaningfully new addressable market for us and retail partnership card and provided us with scale and further growth opportunities.
Our second priority is to deliver sustainable growth for the corporate and investment Bank CIB.
We have invested in the CIB consistently over many years in our technology, our people our capabilities, our product offerings and our focus on our clients needs.
As a result, we have built a globally competitive business that is now delivering attractive and sustainable returns.
In 2022, we managed our risk not.
Not just in Q4, but throughout the year as we supported our clients during periods of high volatility.
And the diversification, which we have built within the CIB has proved valuable as we grew our broad overall income.
Even though the investment banking activity was subdued we have continued to invest appropriately in talent. So we are prepared for the future.
Our global markets business performed strongly relative to our peers and it has consolidated increases in market share and positioned us well for the future.
And I will talk more about how investments in the financing businesses, which are part of a global market.
To provide a more stable income stream, along with intermediation, even in periods of low volatility.
Our third priority is to capture opportunities as we transition to the low carbon economy.
We are steadily building, our capability and our reputation with clients in this area.
A recent example of our assistance to clients include as I mentioned in our Q3 earnings call acting as sole M&A advisor to Con Edison on the $6 $8 billion sale of their clean energy business.
More recently acting as lead left Bookrunner on Portland, General Electric's $500 million Green financing equity offering.
The construction of a wind energy facility and other renewable investments.
We continue to make good progress in two priority areas.
The first is facilitating sustainable finance and the second is investing in sustainable technology startups.
As we financed the transaction, we have announced a new target to facilitate one trillion.
Sustainable financing between 2023, and the end of 2013.
And we are on track to meet our targets to deliver 100 billion pounds and Green finance well ahead of the 2030 targeted.
Our commitment of sustainable impact capital has generated substantial demand and in December we announced we would increase our investment to 500 million pounds by 2027.
This investment.
We have an enhanced focus on decarbonization technologies, including carbon capture and hydrogen.
When we set out to build a diversified bank at Barclays as a management team in 2016.
None of US imagined this year rate and magnitude of change, which we would go through in the next seven years.
Our businesses I am happy to say are performing well individually and these fit well together.
While our performance in 2022 was very gratifying overall it was marred by the over issuance of securities in the U S.
As discussed previously.
I am determined that an incident like this should not happen again.
And we are committed and Barclays to operating at a very high level.
Reliably and consistently.
<unk> out.
Our focus will be on high quality client service on shedding complexity and achieving operational excellence.
In summary, we have achieved a great deal this year.
Reaching our financial targets for the group and supporting our customers and clients.
None of this would have happened without the skill and dedication of our colleagues across the firm.
I am grateful to every one of them for their hard work and commitment to our purpose.
Thank you for listening and I'll now hand, you over to Anna.
Good morning, everyone.
I'm going to talk first about full year than Q4.
I think you mentioned it was another year of delivery.
Right.
Return on tangible equity.
4%.
Income at 14%.
<unk>.
Thanks, Greg and operating costs.
Great.
And litigation and conduct.
Despite the increase of $1 2 billion and Allen.
Profit before impairment was up.
With our Scottrade cost income ratio of 67%.
It's allowed us to absorb a one 9 billion in impairment.
Charge began to normalize following releases in the prior year.
Okay.
Kevin and capital discipline is reflected in the year and CET one ratio.
39%.
Aps.
70.
Thanks, Ken and Dr.
Titled distributions in respect of 2020 dividend plus buyback will be equivalent to chip starting point for us.
We balance investing for growth with returning capital to shareholders.
All operating divisions.
Double digit rate for the second year running.
Our UK retail and business Bank Barclays UK in UK.
Again delivered strong double digit rate T 18.
Perfect.
Our international consumer business.
The cards and payments.
Hello, Greg.
Elevated legacy Alan feature market.
Right.
Our corporate and investment bank.
<unk>, 2% despite the effect.
Issuance of Securities.
I want to highlight the main drivers of income.
And the impairment.
I'm going to emphasize three key themes.
Okay.
Strengthening.
Jeff because of diversification because of.
Performance.
Our businesses have performed strongly.
The way, we expected them today.
On guidance, if I could a particular market.
Performed global competition in FY 'twenty.
Because we have invested.
I missed it.
Second our strategy to grow the business and drive efficiency.
And.
Our risk management across retail wholesale and interest rate, including the structural hedge and.
The liquidity pool.
All three businesses contributed to our income Greg 14%.
Thanks, Greg.
Just from margin expansion.
Client activity and selective Greg in the balance sheet.
Thank you Kay.
By 11% largely as a result of higher net interest margin.
Income in CCP increased 35%, including the effects of the stronger U S dollar.
Within the international card was up 39% from balance Greg.
U S card balances were up start.
31% or $7 billion.
Yes, Ron.
Organically.
$3 3 billion dollar GAAP book.
Payments income grew 25%.
Private bank restarts.
Again benefiting from increased rate, but all state from an increase in client assets and liabilities by 10%.
139 billion.
Hello, Nick.
Are they more on the development of that business in the future.
CIB income was 8% on top of a strong 2021.
Within the corporate was up 2% with growth in transaction banking offsetting the corporate lending income expense, which included knock some leverage lending.
Higher cost of our increased credit protection.
Investment banking fees were down 46% in U S dollars in line with the industry, reflecting the challenging environment for primary issuance and M&A.
Market by contrast was up 24%.
With a strong performance in FIC.
8%.
Clearly volatility provided a tailwind as we helped clients manage their risk.
It is managed.
Well.
Equity income was down 4% in dollars.
Well derivatives, we cut our equity financing income continued to glad.
And I want to thank you.
We have invested in a more sustainable income based on market.
Financing.
And then our trading businesses.
And how investing in capability more broadly across the market has increased.
Relative to our peers.
With our top clients.
In markets, we buy and sell securities and derivatives for Clyde.
And earn a spread on commissioning for this intermediation role.
We also following a failure.
The thing again trading position.
Preferably margin I've got conservative LTV.
A key part of our strategy has been to grow that's financing business.
As a result, whilst we have long been top correct.
And kind of a financing we are now also top sites in prime services.
With investment in Red box technology and risk management. This is good business.
Right.
Okay.
Correct.
<unk> aviation and cost guidance.
Volatility.
<unk> financing will also fluctuate to some extent with the leverage needs of our clients. It has a more stable base.
And then to mediation.
Second having a strong financing capability compliments client intermediation slide.
That trade with <unk> also tend to finance it.
Finally financing permanently margin on carefully structured is relatively at WAM session.
Therefore, it generates an attractive return on capital.
We have been investing in systems and talent in financing.
LTM period.
We're seeing the results.
We manage the business with an integrated approach across fixed income and equity financing.
So it's a multi strategy too.
To realize cost savings.
Consequently, an increasing amount of our markets income now comes from financing across FIC, and equities and let's touch Greg at 16%.
Over the last three years.
Financing is only part of our multiyear investment in technology and talent across market.
Expanding our product offering in line with our clients' needs and grabbing market share.
Our top 100 clients represent around 40% of the market.
We have grown share by serving them in an integrated and effective way and have increased the proportion of these client while we have a top five well that shot.
Two 7% in the first half of 'twenty two.
As a result, we have outperformed all but one of our top 10 global pit 2019.
With 114 basis points growth in revenue shot.
Market conditions have buried over this period. So this multiyear Shanghai illustrate strength across our asset classes.
We believe that with continued investment in human and technological capabilities.
Our risk management and strong offerings across trading and financing we can continue to gain sustainable share in the market.
Moving on to the market I want to remind you of our interest rate sensitivity, which underpins the income momentum from our consumer and corporate businesses.
As I highlighted before a lot took that comes from the role of the structural hedge as you can see on the left hand chart.
Although the long end of the curve have moderated from the Q4 average reinvestment rate on the hedge roll off still well above the average yield and the yields on maturing hedges.
Although the size of the hedge was marginally reduced in Q4, we have over 50 billion maturing in 2023 and expect to reinvest a large proportion of that.
Remember the portion we look Ken has a multiyear effect.
Looking now at our cost performance and strategy.
Got it.
For $16 7 billion.
This includes a $1 6 billion, an increase of $1 2 billion year on year.
Costs, excluding LLC with $15 1 billion an increase.
$9 billion.
With that Brian is 30% of our cost in U S. Dollars. This increase is due to the stronger dollar year on year and inflation.
Investment to drive the three strategic priorities with largely funded asset cost efficiency savings.
Our statutory cost income ratio was 67% flat on 2020 was significantly affected by the elevated level of Alan state.
Excluding the cost income ratio was 61% looking forward.
In the U S dollar will affect our sterling.
And 2023 costs will reflect further investments and Greg.
Continuing effect of inflation.
The dynamics of that will vary by business with growth opportunities at attractive return more concentrated in selected areas of the CRB.
Consumer cards and payments.
In the U K. The fact that this is more on transformation with efficiency savings to fund continued investments in digitalization and we are aiming for a significant further reduction in the cost income ratio in 2023.
We manage Tycho.
Including litigation and conduct charges with the aim of generating positive jaws on a statutory basis and are targeting a cost income ratio in the low sixty's. This yet as we progressed towards our longer term target of 60%.
Moving on to risk management.
The full call baseline macroeconomic variables that we have to use our full year model the talent artwork on our Q3.
So be it.
This increased muddled in patent by circa <unk> 3 billion in the quarter, but we utilize part of the post model adjustment for economic uncertainty as planned to offset that.
$3 billion.
C PMA.
The charge for the quarter was five.
And $1 2 billion for the full year, a loan loss rate of 30 basis points.
Franklin patent allowance at year end was $6 2 billion.
<unk> decreased in the quarter from $6 4 billion, but like strong coverage ratios across the portfolios.
Given the current economics, we would expect the life loss ratio for full year 'twenty three to be in the 50 to 60 basis point range closer to historical levels.
This will be affected by product mix, including plans growth in used car and by changes in the macroeconomic outlook.
We've updated here the metrics, we shared at Q3 to illustrate consumer credit quality.
In the U K Oh, great that's been in mortgages, well UK card has reduced by rising 40% 2019.
We continue to see high levels of repayments and U K Cup and arrears rates remained stable annualized.
Consumer behavior on the risk performance confirms the quality of the cards overall have increased and this is reflected in some reduction in coverage.
Ratio is still seven 6% in U K card with a 19, 2% coverage of stage two balances.
We gradually let's call it.
To maintain strong coverage level with eight 1% April just start to three 6% stage two coverage.
A few comments now on our wholesale risk management.
As we have grown share in CIB, we have managed risk carefully.
The odds of you raised in the CIB have Greg the increase year on year. It has been as a result of the stronger dollar.
Regulatory changes that was actually a slight decrease from other business related factors.
We also kept tight control of leverage with leverage exposure for the great down year on year. Despite FX.
<unk> installed on site.
Looking at the wholesale lending risk CIB loans to customers Bank amortized.
I'm a cost cost grew by 18 billion last year or 15 billion excluding FX.
Most of this increase is in the lower risk areas of corporate lending.
We've increased the first lot credit protection.
Commercial real estate lending as a sector is facing some headwinds in respect of valuation and liquidity.
Types of Cree lighting across the Creek are $16 6 billion.
Yeah on just 4% of our total loan book.
This is an area, where we have taken a cautious approach with UK excited it broadly static for a number of years.
Well collateralized.
Another topical area, it's leveraged lending commitment we have actively manage done hotline.
A couple of quarters, having authenticate commitments and have taken some marks on our remaining position in the corporate lending income line.
In summary, we feel confident in our risk management across our lending portfolio.
Trading businesses.
Some comments now on our Q4 results.
Profit before impairment of $1 8 billion was up 29% with income growth of 12%.
When you cough strike of 6%.
But the income or cost spread numbers are of course affected by the stronger U S dollar year on year.
Kind of a charge.
5 billion represented a 49 basis point loss rate close to our expectations for 2023.
A small net credit in the quarter and <unk> was eight 9% looking now at each business beginning with the U K.
Income grew 16% with call then by 8%, reducing the cost income ratio by 15 percentage points to 58%.
The NIM for the quarter was 310 basis points.
Nine basis points on Q3, as we saw further benefits from rate base.
She was moderated by product margin pressure, notably in mortgages and effect from Treasury activities, which are included in the other category on the bridge.
We would expect to see similar pressures in Q1.
Alright.
But 2023 as a whole we're guiding to a reported U K then over 320 basis points.
Tailwind from the building structural hedge benefits through the year outweigh these other dynamics.
Okay read tea was 18, 7% for the quarter.
Moving on to DCP.
Income increased 46%, reflecting growth across international cards payments on the private bank.
Costs were up 22% delivering strong positive jaws, despite our continued investment in growth.
The impairment charge of $287 million compared to 96 million last year.
This reflected the growth in U S cards balances back to pre pandemic levels, including the effect of the got folks out of that.
As balances grow.
Spectrum stage migration risk metrics remain below pre pandemic levels.
The Q4 rate was 13%.
Turning now to CRB.
Income was down 2% overall with another standout performance in FIC up 56% in dollars offset by lower investment banking fees.
I want to focus here on the Q4 corporate income, which was up 8% favorable.
Within this transaction banking without 78%, reflecting strong and I, all right and it's great to see.
Q3, corporate lending income expense reflected by fair value losses on leveraged finance lending.
Okay 85 million net mark to market gains.
And related hedges.
And the continuing high cost of hedging and credit protection.
The underlying corporate lending income remained stable.
Total cost increased by 13%, reflecting continued investments to support income growth initiatives plus the impact of inflation.
The impairment charge was 41 million.
<unk> for the quarter was five 4%, there's a slide in the appendix on the head office result.
Turning now to capital.
We ended the quarter with a CET one ratio.
13.9% towards the top end of our target range.
I'm going to speak with her on the movements in Q4, but this is a full year bridge in the appendix.
Our capital generation from profits with strong contributing 31 basis points.
As expected there was a headwind of close to 30 basis points from the acceleration of the capital effect of pension deficit contributions.
But we have now completed the triennial valuation, but that's something surplus.
Don't have deficit reduction payments in 2023.
We are very focused on managing the capital risk in their liquidity pool.
The effect of maintenance in the Sapphire reserve capital were immaterial in the quarter.
We've announced a further buyback of 500 million to supplement the earlier buyback and dividend totaling 7.25 10.
Making the return of capital in respect to 2022 equivalent to 13 four shacks.
Sure.
I do expect a moderation in the ratio this quarter for example, the 15 basis point impact the buyback.
Beckman and Kensington.
We also plan to lean into the seasonal opportunities in markets in Q1, as we usually do.
Looking further ahead, a quick update on Basel III one.
We previously estimated 5% to 10% odd W. A inflation.
Following the recent publication of the consultation paper.
Estimate would be towards the bottom end of that range for the January 2025 impact I'm not pre mitigation.
Our NDA is now 11, 3% and our target range remains 13% to 14%.
In conclusion, we remain confident in our organic capital generation to support further business growth in line with our three strategic priorities capital distributions.
A quick comment on the move in equity T. NAV increased 9% in the quarter to 295 pence per share.
Reflecting $6 five pence of earning a net positive movement in reserves.
Finally, we remain highly liquid and well funded with a liquidity coverage ratio of 165%.
The loan to deposit ratio of 73%.
So to recap and summarize the outlook.
We reported Doctor tree earnings of 38 tenths of a shot in 2022 and generated a 10, 4% our I T E delivering against our target of over 10%.
We are aiming to generate a double digit R. A T E again this year as well.
We pursue our three strategic priorities.
We have a diversified mix of businesses.
Budgeted investment in the businesses.
The way, we manage risk that allows them to perform and get this confidence and continued progress.
Income momentum comes from investments, we have made to underpin the sustainability of CRB and grow the balance sheet of CCP.
And then B U K, we are guiding to an increase men in excess of 320 basis points. This year.
We will balance this investment with cost efficiency given inflationary pressures.
And we wouldn't expect the elevated level of litigation on conduct experienced in 2022 to recur.
So we are aiming to deliver a statutory cost income ratio in the low 60 this year.
We progressed towards our target of the like 60%.
We are very focused on risk management and readiness for a potential deterioration in the macroeconomic environment.
As a credit risk mouse trap, we expect an increase in the impairment charge. This year I think around U S costs in particular and are guiding to a range of 50 to 60 basis points absent further macroeconomic deterioration.
We also expect some normalization of the group's effective tax rate.
Our capital ratio is strong and we are confident of being able to balance our investment for future growth with delivering attractive capital returns to shareholders.
Thank you we will now take your questions and as usual I would ask that you limit yourself to cheaper.
So we get a chance to get right to that pretty well.
If you wish to ask a question. Please press star followed by one on your kind of think keypad. If you change your mind Mr. Amit. Your question. Please press Star followed by Q1 does that answer your question. Please ensure that youll stay on as Amit had lately.
Can stand that stuff and if I wanted to ask a question.
Yeah.
Our first question today comes from Joseph Dickerson from Jefferies. Please go ahead Joseph Your line is now open.
Hi, Good morning, Thank you for taking my question.
Could you just discuss.
The balance between shareholder return on investment.
Given the 500 million buyback announcements.
Looks like Youre kind of distributing down on a pro forma basis.
Two above the midpoint of your <unk>.
Capital range.
Could you discuss what type of investments you see.
Are there U S card portfolios or anything like that later later in the year, because the $500 million.
15 bps of capital.
You guide to.
Well your ROE guide equates to about 150 basis points of capital generation per year. So I was just.
Confused a little bit on the quantum of the buyback.
Maybe what lays out there in terms of.
Investments and so forth, particularly in U S cards.
Thanks for your question Joe So we ended the year at 13, 9%.
That was a deliberate positioning.
Our capital and the reason that it's deliberate is because there are three things.
We now go to happen almost immediately in Q1. The first is the buyback that you've called out. We've also got the acquisition of Kensington.
Hubs, which we said today will complete in Q1 and then we've got the continued reduction in transitional relief. Those three things together are 40 basis points and take us.
39, right into the middle of our range.
So we've done that thoughtfully for two reasons really that first is Q1, we would always expect to be the low point of our capital simply because of the seasonal nature of our business.
You would expect us to lean into the market opportunity as I said in.
In the script.
I will do so and we would expect to accrete capital thereafter.
The other thing I would say Joe is.
The economic environment is certainly not benign so that should help you understand why we've taken the position that we have.
As relates to.
Specific investments and how we balance that.
With shareholder returns you can see that we are committed to shareholder returns, we got a 43% AP payout this year and actually if you look sort of on a free capital flight basis, you can see that there were some headwinds from from pensions and.
So if a payer that we might expect to dissipate over time. So we are very committed to it but we do balance that with two other things. The first is the opportunity to invest in the business and retaining that flexibility.
Given the returns that we think we can generate and the second is obviously.
Any regulatory changes.
So very committed to it.
As a deliberate positioning of our capital to end at 39.
So that we can essentially operate in the middle of the range and take opportunities as they come.
And then can I just follow up on that do you anticipate in terms of buybacks to look at this on a more frequent basis I E perhaps quarterly.
And that is a matter for the board.
Wouldn't change the guidance here you can see that we we have established a certain cadence does.
So.
I'd focus more on that.
Thanks.
Okay. Thank you Jay next question please.
Our next question comes from Omar <unk> from Credit Suisse. Please go ahead. Your line is now open.
Good morning, everybody. Thank you very much pool for taking the questions.
My first question. Please is on the Barclays UK NIM progression.
I just wanted to ask about the negative 33 basis point movement.
I would just note that the minus 33 basis points to.
About 11%.
Barclays UK annoying.
Hence with a substantial sequential.
Headwind.
Doing my own numbers, while the mortgage margin pressure with that.
It doesn't look to be more than 1% of NII per quarter.
Can you please elaborate on exactly.
What has driven.
It kind of looks like 10% headwind.
Mortgage margins I know you talked about treasury effects, but.
What exactly is this.
Okay, I'm really sherwin so.
Or what's the positioning.
It was also mentioned in the scripted comments. So this was expected to be an ongoing headwind.
Could you clarify whether that meant a further 33 basis point headwind.
<unk>.
Lack of unwind of that probably this will be a persistence.
<unk> rather than a one off.
And just related to that could you also talk about.
When you think about your guidance for 2023.
What assumptions you're making.
Movement of deposits into time deposits.
And my next question.
On Basel III one.
So you talked about the lower end of the 5% to 10%.
<unk> could you potentially talk about what the impact of the mitigation could be.
And whether you have a view on what the 2000 <unk> fully loaded.
<unk>.
I propose if any on pump.
Thank you.
Okay. Thank you.
Okay.
Let me start with BK men.
So.
Within that 33 basis points there are two things.
And they are broadly equal in the current quarter.
The first is product dynamics and I'll talk you through nice and the second is treasury.
Yes.
The product dynamics are predominantly relating to mortgage.
Margin compression.
It's not just the front book obsolete.
Actually the impact of churn and the nature of the market and how that is accelerating churn and I'm sure we'll come onto that in subsequent questions, but not as significant.
In addition to it we did expect that maybe slightly more intense than we anticipated.
The second thing within our risk well UK card balances have grown.
We are seeing prudent conservative behavior from our customers.
And we've actually seen a fall in interest earning lending.
Of course that somewhat offset an impairment.
So those two offset impart off fairly significantly.
What we have not yet seen.
It's a significant NIM effect from liability switching, but I think that's more important going forward.
The second impact is a treasury dynamics.
I would expect that.
To dissipate over time.
And the reason I say that is it relates to asset in the liquidity pool.
We have some fixed rate bonds in a rate rise extremely sharply in Q4.
I'm not essentially raised the cost of carry of the.
Investment.
Given more I see of the maturity program.
Im going disposal program I would expect to see that dissipate over time, we're busy here in Q1, but it is going to fade.
I would remind you that we report on all in NIM. So.
So we're not reporting a pancake and other than here. It's one number which is why that treasury dynamic is that.
I'm Gonna look forwards.
Here are the things I'm thinking about.
I have.
Pretty good line of sight.
To the structural hedge.
The momentum behind the hedge.
Yes.
I have pretty good line of sight actually into the treasury effects I've, just talked about and the fact I would expect those to fade over time.
What is more difficult to call.
Is the product dynamics.
We would expect.
Asset pressure will remain.
And actually in the guidance that we are giving today, we are expecting to see an intensification of switching within liabilities.
Therefore, I am thoughtfully, reflecting in the guidance that I'm, giving you.
So all of those factors are included in the greater than $3 two.
<unk> percent for the year.
What that looks like over time, if you would expect the more certain factors of treasury.
Structural hedge to actually build a tailwind through the year.
Product dynamics and the exact timing of those are a little more difficult to call.
So I hope that's helpful.
In relation to Basel three one.
Actually.
It's difficult to call out the impact of mitigation, it's a bit early.
The the full.
<unk> of rules are not yet clear.
It's clear that they're a bit more positive than we expected them to be and as we've had a chance to work through the detail.
We'll continue to update it.
Yeah.
Thanks.
A quick follow up question on the Bulks, if UK NIM guys and thank you for all but extremely helpful color.
It sounds like the key uncertainty within the moving parts that you talked about for 2023 is really the level of deposit migration.
In the context of the NIM guidance being the bank of England base rate of four to five.
Can I ask you.
Of deposit migration.
But you said you were thoughtful about it.
Turning to 2023 to ensure that floor of $3 20.
What sort of share of movements from some point of time deposits.
And that 320 still be met.
So I'm not going to.
Coli it very specific.
Assumptions.
Well I would tell you is that we feel we are being thoughtful and conservative and rice.
And not least we have a deliberate strategy.
Are encouraging our customers to perform good savings habit.
We think that's really important for the health of the franchise and ultimately the continued success of the U K.
Okay. That's very helpful. Thank you.
Okay. Thank you next question please.
Our next question comes from Alvira Serrano from Morgan Stanley . Please go ahead. Your line is now open.
Good morning couple.
Couple of questions from me one on CIB revenues another follow up on the UK.
Jim.
I mean, we've discussed several times over the past.
So the idea of you balance sort of CIB revenue says that.
When volatility comes down fees will pick up the slack and.
And you are confident about the outlook.
What do you see.
<unk> is coming down but fees clearly.
Picking up yet and does it got clearly in equities more but even in DCM, it's more investment grade that's coming through.
Could you maybe comment on where you see seeing how do you think.
You see things sort of give a bit more color on how you see things playing out this year.
In the current environment.
So steering is there.
Okay.
And on the NIM progression.
I take your points.
And some of the sort of the unit.
You don't have a crystal ball, but maybe on that NIM progression during the year.
Do you that over 320 is are we expecting a peak margin at some point during the during the year and then flatten in the second half.
Or should we expect a steady sort of quarter on quarter progression.
Just trying to get a bit of a feeling of how you see that deposit mix unfolding and is there a step up at some point that we should bear in mind.
Okay. Thank you Elvira.
Sure.
So if I just think about fees.
In the IP.
Clearly, it's been a difficult market for investment banking and we're broadly in line with our peers.
And we have a strong pipeline.
That pipeline to be monetized, what we need to see is a period of economic stability.
We haven't yet seen it although I wouldnt call when not exactly likely to happen. There is some small green shoots in Q1 from an investment grade.
That I would say, but it's certainly not meaningful.
Page.
That we would expect.
To be somewhat offsetting markets that we've seen over the last three years. This is a business that has delivered strong revenues strong results in three very very different macroeconomic environments.
This time last year, we were talking about.
Bobby with banking revenues, I'm actually fits being relatively cool in equities being brilliant.
Different macro environment and our objective has been to put together a business that can perform in all of those.
There's a couple of other things I would say the first is that forget the corporate bank within that transaction.
Talks a lot about NIM. So far this morning, the increase in transaction banking income is 800 million year on year. It is bigger than the increase in the whole of the U K.
So it's not a sustainable.
And then you would see like element of CIB revenue that we frequently look.
The second point is our financing business.
Clearly, it's not that it.
Yeah.
But it is completely stable. However, it is considerably more stable than the intermediation side of market.
And again, we've shown you some new disclosure today that will show you that that business has grown by 700 million year on year again, the same size as BK. So we have confidence in what we are building within the CRB.
If I go then on to your NIM progression question.
Greater than three two I would say I mean, if I go back and just reflect on the things I've said before.
Yeah.
Tell wins, if you like are going to fail.
That would suggest that you would see sequential progression.
Time.
It's a little bit more difficult to call out.
The product dynamics.
If you asked me for an opinion I would say I might expect them to be more intense in the short term and the longer term.
The reason I say that is it typically prompted by absolute movements in base rates.
But let's say things are uncertain.
Or more starting off well certainly build as the year progresses.
Thank you very much.
Thank you next question.
Our next question comes from Jonathan Pierce from Numis. Please go ahead, Jonathan Your line is now open.
Hello, Good morning.
I'm sorry, just back on the NIM in the fourth quarter of last year.
In the U K.
So.
Based on what we've heard you all saying that circa 16 17 basis points of this.
The negative is the mortgage refinancing headwinds the interest earning asset components of the comp book can.
Fairly modest deposit migration side, Paul which.
I think just totally understandable.
Can you just touch a bit more on what they say is because.
Some deploy <unk>.
<unk>.
Fixed rate assets in the liquidity pool that havent been swapped to floating rate so as base rates going up the cost of carry has gone up.
The NIM squeezed.
Is that right and if so why have you go.
Position I mean, obviously, if you've got more liquid assets that drags down on that.
On the NIM itself, but not the net interest income, but it sounds like the absolute net interest income has been hit by this dynamic.
Thanks.
Both of the structural hedge books.
So outside of that so what is this position in bulk as you can tell you that is causing 60.
16, 17 bps NIM. Please.
Fourth quarter.
The second question is a simpler one.
Related to the structural hedge maturity as they feel better and could this year.
And he said most of that I think would be reinvested.
Give us a sense as to how much I guess it was seen in the overall quantum of the hedge will drop a bit this year again because of deposit migration, but if you can give us a sense of how much. The 50, you expect to be reinvested that would be helpful.
Okay.
I'm.
So just taking the first one.
Yes.
You are correct in the way you characterized they're a relatively small proportion of the overall liquidity pool.
However, so.
We've got 80% plus of that.
Super will actually in there.
Central pharmacy, so I don't think so.
It's no uptake outright number.
In relation to the structural hedge.
The way we manage this Jonathan is we.
We clearly have built very carefully over time in doing so we tried to identify the proportion of our liabilities.
<unk>, which we expect to migrate in <unk>.
A rising rate environment.
That's clearly excluded from the hedge but as I said before we feel like we have prudently.
Prudently.
The patient dies level I'm not included not only in our NIM guidance, but also the way we think about our hedge.
The second thing I would say is we maintain buffers.
To the actual hedgeable.
Hedgeable amount of ex.
Hedge to that level I maintain a buffer.
So what you see us doing is conservatively managing those buffers.
So that we were able to preserve the role of the hedge.
So in part this goes back to the same point as we spoke about with men.
Deposit migration, we feel.
We have coal.
On the prudent side.
That's it.
Extensive that migration that we determine how much that we roll.
Okay. That's helpful on the hedge but sorry to labor this point why hip you'd gold's fixed.
Fixed rate liquid assets.
Within bulk is U K that have caused this NIM squeeze.
We can see from historic disclosure that movements in the yield curve have an impact on.
The ISS was.
<unk> not historically this is the first quarter I remember, where we've had a material impact on margin because of these fixed rate assets that are not swapped to floating rate.
That.
So.
The.
Then in then we include the overall Buffalo buffer return, it's important that we balance the investments within not investment within that liquidity buffer to have a range of asset. This is a small proportion of that range of assets.
Okay, alright, thanks very much.
Next question please.
Our next question comes from Larry <unk>.
<unk> margin from Bank of America. Please go ahead. Your line is now open.
Hi, good morning Ana.
Couple as well. Please the first one was just coming back so how you balance investing for growth.
And with capital distributions and particularly looking at February progression. So CRP all top anyways were down 15 billion in the fourth quarter on a smaller nominal balance sheet. So if I were to reverse in Q1 than the price of oil in the CET one ratio would fall from the first half that you thought your flags.
Hello <unk>.
That obviously be some capital generation to that and I was just trying to understand what gives you the confidence that you've got enough capital to support CIB market share and revenues handle sites generate council for distribution that.
That was the first question.
And then the second on the CIB just on the financing stuff. So firstly, thanks very much for the additional disclosure.
But as you know when you give us a bit we always also a bit more so I was wondering if you could give us some insights on the degree to which the growth in financing revenues has been driven by volumes.
Spread so all rights related thank you.
Okay. Thanks Rohit.
We're very focused on <unk> efficiency across the bank as a whole.
You can see that we are trying to.
And grow the CIB very thoughtfully in terms of where we place our risk.
And you can see in the fourth quarter. There is there is an FX impact in terms of they are Wi amazement.
And so I'll just be thoughtful about about that.
Obviously as we said we have.
<unk> managed our leverage finance.
Pipeline commitments.
Given the environment as well.
So there are there are things that that have specific like happened in the fourth quarter from here.
We're confident that we've got the right level of capital to support the growth in the CRB, we've done that pretty successfully over the last year that will be different quarter by quarter and it's one of the reasons that we settled ourselves at that midpoint, because we want to be able to lean in.
In in the way that you describe but the quantum of what you are describing.
Somewhat too high just because of some of the effects that I've just mentioned.
And.
So.
Hopefully that's helpful.
So you'd expect it to be a question yes.
So sorry, so just on that so you would expect it to be below the.
I expect Q1 to be done.
In the half, but not below 13.
It might not realized starting in the half, but we are fully expecting to remain.
Within our target range, we're very clear on that.
And even if it does it will be because of the business opportunity and we will accrete thereafter.
Okay. Thank you.
And then the second question was just on the financing revenues.
Thank you for that.
And I was wondering if we might get a little bit more for me just in terms of the driver and particularly the breakdown between.
Volumes and spreads so rates on the financing revenue growth.
Yeah. So we haven't disclosed we haven't disclosed that that split.
It's actually a little bit of space.
<unk>.
Clearly in a rising rate environment, you're going to see some expansion in margin in a volatile environment you would see the same.
Hum.
The other thing I would say as you can see that we are taking share that.
Not just from.
European peers, but more broadly across the street. So I think that is a combination of base volume.
Margin.
Okay. Thank you.
Keith.
Next question please.
The next question comes from Martin might get from Goldman Sachs. Please go ahead. Your line is now open.
Yes. Good morning. Thank you. Thank you for taking my question just two questions on the UK. Please the first.
First one just to follow up on.
The potential for deposit migration.
From here I was just wondering firstly would you able to.
Scott will detail in terms of how the deposit stock splits within Barclays UK.
It seems like from some downward with boardwalk indicated that there was a very small portion within Pi is on me I was just wondering what sales quick holdsclaw deposits just from current accounts and non interest bearing the president.
Just to give us guidance on potentially the scope with yoho migration.
And related to that.
I mean, we don't have really any <unk> store.
Or at least over the last 10 15 years in terms of deposit migration would you expect the bulk of this country.
Sandy you get them, so within 23 or could this be a long ago.
So prospect.
And secondly, I was just wondering in terms of UK consumer behavior, what you're seeing in terms of Oh business momentum do you see any change in terms of customer behavior, whether it be more on the conservative side for us.
Some of the savings deposits to pay down loan balances, both mortgages and costs or do you see continued appetite.
<unk> expenditure.
Thank you.
Okay. Thank you Martin.
So we don't disclose the split however, the level of time deposits is actually pretty small for us.
It's probably smaller than.
While certainly smaller than the market as a whole.
And we have never really well, we've never been a hot money buying.
Through all of through all of our history.
Our deposits are very strong.
Franchise loans.
We're looking at a potential deposit migration, we're actually looking largely migrate.
Migration from one type of franchise deposit to another I'm not sorry, much of our strategy as we said before.
In terms of ton deposit saw.
We have strong rates that bad, but they're very much in our control. So if we saw balances move.
These too high given the our loan to deposit ratio is as firm other tests, that's something that we can certainly manage.
And more broadly than that how do I expect it to be I mean, I've said before it's the absolute movement in rates that we typically see prompting changes.
There are some key differences from the past.
Firstly.
And all of the rest of our UK payers or most of the rest of our U K peers are in the different liquidity position and therefore, you might expect pricing to be different.
Having said that it's very very easy for customers to.
To move that money around of the people of <unk>.
Rainy days saved retired the majority the vast majority of those that are not online, which is clearly different which is why we're being thoughtful.
The impact of migration because it is so uncertain.
In terms of UK consumer behavior.
Really no change.
We are not seeing.
Changes in our rent levels are low and stable.
Stable. The same is true when we go actually into business banking and corporate.
And that probably should be less of a surprise given two things firstly our customers.
Have been and are being defensive in the way that behaving.
Skewing that.
Spending towards essential spend they are repaying strongly in the cards cards repayment rates are above kind of that level.
So the spending they are engaging with the car, but then the repaying.
So theyre behaving very defensively and then if you put on top of that the unemployment remains very alive.
It shouldn't surprise us, but actually we are not yet seeing anything untoward from a credit perspective.
So we see a lot were.
Well per pad should that occur and you can see our <unk>.
Coverage ratios are.
So pretty robust, but that's really why we're guiding to something thats very much in the historic norm of 50 to 60 basis points for next year for this year keeps a next year 'twenty three.
Thank you Okay. Thank you next question.
Yes.
Our next question comes from Jason Napier from UBS. Please go ahead, Jason Your line is now open.
Good morning, and thank you for taking my questions two if we could get.
Onto slide 11, please on gearing.
<unk>.
The numbers have changed but the.
The reality remains that defense still disclose is that right.
Hike of 25 basis points is worth $150 million more in year two than it was a new one.
Yes.
And so we've had 17 sets of 25 basis point hikes, which should mean, a tailwind of $1 7 billion or something in Barclays UK. So.
There are obviously a lot of moving parts, we've discussed I think to some extent all of those and various questions before how would you invite people to use the disclosures around year two versus year, one given that we should be looking at something like an 80 or 90 basis points year on year NIM expansion.
On this table.
If indeed that is useful in predicting the future.
And then secondly.
I think the corporate lending sort of mark to market in Q4 was probably better than some had feared.
And the disclosures that you provided around the hedges are all useful.
I, just wonder whether you wouldn't mind speaking a little bit more about.
The first loss cover to set on a sort of kicking from a from a P&L perspective, if you have a default on the 17 billion of covered exposures.
The mark to market hedges in place to the amount of protected the same in Q4 that risk management that you that you have.
<unk> two.
And really the kind of bottom line and this question is all of the costs of those hedges.
Unusually elevated.
There's something you could share in terms of quantum of protection costs.
What sort of go away as conditions normalize.
That level of protection, not all going to be required.
Okay. Thanks, Keith there was a lot there and I'll try and remember all of it so just starting with page 11.
I would say regardless of sensitivity disclosure not a forecast.
It relates to a 25 basis point upward.
We're a little shift in the curve.
Certainly not what we've seen.
So it's quite difficult to <unk>.
<unk> from from that chart.
Two.
Actually happening within the asset sensitivity.
And.
How it will help you though is the following.
Firstly remember two thirds of that broadly is in the U K.
One third is in.
The Barclays Bank plc, so on the var side, specifically within transaction.
King most meaningfully.
And the other thing I would say is that the basement from 65 to 200.
Is that too.
Really serve to remind you.
About the momentum in the hedge and that's really what we're illustrating with actuals.
Right hand side.
How I think about our tech.
And to your second question.
Within corporate lending there are a few things.
That's clearly the.
The marks that you call out against our leverage lending.
Book.
And there is the cost of loss coverage.
That for default.
If you look at page 15, you'll see that.
It's covering 32% of the 50.
$54 billion of corporate lending exposures.
And then finally on the Mark to market hedges that are specifically for that left fin exposure. They are typically tail hedges.
And it's really difficult given the sort of idiosyncratic nature of some of the names.
Or in any left fin book for us to be too specific.
That's how we that's how you should think of them, we've been very prudent I would say.
In extending the coverage of those of those hedges in the current environment you can imagine our appetite for stress loss is somewhat curtailed and therefore, we have put down more hedges.
Absolute cost of those hedges have gone up so you got two things going on more coverage greater cost, we don't disclose either of those things, but they're quite strong impacts within not numbers Jason.
Thank you I guess just coming back on on Slide 11, then.
Youre right the build and structural hedges is significant and I think quite well understood can I just ask.
And the whole does this also take into account things like deposit mix migration just bearing in mind the size of <unk>.
As you've seen to date.
As deposit feature built into this number.
No it doesn't it completely mechanistic.
That's a static balance sheet no.
Switching.
Thank you.
Okay.
Thank you next question.
Our next question comes from Chris <unk> from <unk>.
Thomas Please go ahead, Chris Your line is now open.
Good morning, Thanks for taking my questions.
One point of clarification on <unk> question.
Question on <unk>.
<unk> please within the 33 bps.
And your NIM bridge.
Count those two kind of two buckets.
Buckets the product dynamics.
Treasury impact could you just give us the split please 33 bps. So we can understand how much is expected to dissipate as we go through the SaaS portion of 'twenty three.
And then on <unk>. Please.
Neutrolin in the U S around.
Payment fees and so on.
Thanks for the Q2 charge those fees could you give us a sense of how expose CCT reconcile to those changes if they do come into force.
We look at sort of industry data might be something like 9%.
U S card players.
Income, obviously, you don't get that breakdown for Barclays, but if you could give us a sense on the potential headwinds to CCP revenues.
Thank you.
Okay. Thanks, Chris on the first one pretty straightforward answer there broadly half and half or so.
Hopefully that gives you what you need.
In relation to the late payment fees I mean, we'll see what happens as we see.
The final terms of that and this indeed actually moves into regulation, but given the.
We somewhat makeup detailed for us to be able to model it.
But from the initial calculations that we dumped Chris it looks like it's manageable within Grace.
Of that business, so we wouldn't call out a significant at this point.
In terms of thinking about quantifying.
Is there any reason to suppose that please do use card.
Protocol kind of fee split is.
Different toll markedly different to the industry average in the U S.
It's not really that I would think about I would think about.
The specific partner terms will that rate.
By partner.
Okay.
Yep Okay.
Thank you next question please.
Yes.
Our next question comes from Benjamin Toms from RBC. Please go ahead Benjamin Your line is now open.
Good morning, and thank you for taking my questions. The first one is on the mortgage market. If it was like housing and mortgages are starting to turn whats your expectations for net mortgage growth this year.
Then secondly, I saw on the slides that you were trying to valuation is now 2 billion funding status.
About funding ratio of 108% in other words the schemes now fully funded.
Back in the slides this means the capital drag from deficit reduction contributions eliminated.
Can you just confirm do you currently have a pitch may add on the pension risk on this primarily images risk, but now significantly reduced the scheme is officially in surplus.
On an actuarial technical provisions basis.
But one of your peers became pretty funded a few years ago. We saw the regulator produce that kind of two way Adam. Thank you.
Thanks Ben.
So what we see in the mortgage market is.
Hey.
It's quite a change really dominated by re mortgage.
Culminated by low loan to value re mortgage.
And the demand for high loan to value mortgages.
Hi.
Reduced significantly which is exactly what you might expect it to do in the face of uncertainty.
What that means is that the.
The blended margin.
For acquisition in the market is below where it would have been previously because you.
It's dominated by low margin low loan to value products.
In addition to that customers are re mortgaging extremely quickly.
We are seeing.
We are seeing considerable churn across the industry as a whole.
And because of that and I would say low demand overall, you've got low demand.
Supply and therefore, a very competitive environment.
So I would call out and that's why we are being really thoughtful and conservative in the way that we're playing forward. Our men that we think thats quite a change in that market given.
The impact of the third and fourth quarter last year.
In terms of what we're seeing in customer behavior again very defensive.
On the re mortgaging very quickly we're seeing no change in our records.
We're seeing some slightly elevated levels of overpayment, but not so much that it would move the overall balance.
So nothing of concern and actually I would say absolute margins are still healthy it's the mix in churn effect that we're thoughtful about.
On <unk>, we have seen not so we have seen a reduction in our pension risk within pellets Iia.
You might remember that during Covid there was a degree of relief from the PRA and the way that they calculate it.
Hello to a with reference to our Wi So they've gone from.
What was fixed or nominal approach back to a percentage of RW <unk>.
Those two effect broadly offset one another.
Thank you next question please.
Our next question comes from Guy stemming from Exane. Please go ahead. Your line is now open.
Hi, good morning. Thanks.
My questions, but one on cost and then one brief.
Fuller and deposit mix.
Costs on slide 12, I'm, just trying to understand the rationale behind the different arrows.
The U K, so it's actually Henry Sonangol <unk>.
We continue to invest and expect some some revenue mentioned, but I guess, it's CIB, which is much newer.
Oh hardest to cool I imagine.
And we enter 2033 with a tough investment banking backdrop and a high bar.
Year over year comps and more generally I'm also expecting no revenues this year the loss.
Yes, there is inflation there is investments perhaps less.
The CIB on things like Python, and other minor items I'm just trying to gauge.
If revenue is down a meaningful amount in 2003 is that something you expect should we still expect to grow.
So any thoughts around that would be very useful.
And then on the deposit mix.
You sound a lot more conservative than.
Then you have in the past.
Even though we're sort of nearing the end on policy rate hike will come to the right.
The competition hasn't intensifies at least in terms of term rates in the past months or so it seems like from your comments at this point so unlike as to how it works through into customer behavior.
With that in mind. This is late this year rates are flat or even falling.
We could still be seeing negative deposit mix worked through at that point. Thanks.
Thanks, Guy and so in terms of cost.
But you're right to point out that the dynamics of our business are really different.
So.
The U K, it's really a margin story. So what we're doing now is we're driving efficiency as fast and as far as we can in order to make sure that that drops through to the bottom line and Youll see that the UK costs are actually done in the current year, we're guiding to for this.
I would say modestly up if you look at that.
Direction of that alright.
CCP is different.
CRB is different they are.
Not only margin story.
<unk> for Greg.
Therefore, you should expect us to lean into them.
As we have done in the current year.
Now in CCP.
A bit more straightforward because it relates to onboard and got it also relates to restarting the sort of partner machine post Covid. That's very straightforward you can see the costs going in in Q2 of this year on the revenue.
Following thereafter.
Led to a high quality increase in income so 800 million up year on year as effect.
CIB, it's more difficult to call, but this is a business that we've invested in steadily over a number of years and we're seeing the benefit about now as I said before.
Phones across three very different yet in three very different environment.
One thing having diversification for those businesses to operate well you have to invest in them.
And actually our cost income ratio.
That sort of progression of our costs and income is not significantly different to those of our U S. Peers. If you were to align us up so expect us to continue to invest both in terms of markets.
And in terms of banking selectively where we see the opportunity to attract talent in sectors that we think are important for the future and.
We will also continue to invest in corporate.
<unk>.
People on technology by the way.
Okay.
I'd say.
Two more things the first is.
Forget the momentum that we've got in financing I forget the momentum that we've got in transaction banking within that business and of course. This is the area of the bank, where we probably have more complex because we are able to.
Speed up or slowdown our technology investments, we are able to.
Flex our comp.
So we will do that to the extent that we think it's appropriate and the income line is coming off.
And in terms of.
Deposit rate.
On deposit competition.
As I've said before.
It's broadly well, it's very much aligned with our strategy to drive good savings behavior with our customers that it looks like that's very much a market wide and the strategy as well and at least from what we see in pricing, but also comment that the TSA TFC rather.
So.
I think it's something that will remain I've said for a while actually.
The bigger effect here is not so much about Pos strength.
Policy rates may be coming to a peak.
But its customers' desire to migrate.
Hum.
That will be prompted by a number of things which may be competing.
And policy rates as I said before.
Behavior.
Equally in.
In the current environment customers are keen to manage.
Perhaps higher than normal sort of operational flight, if you like because of the because of the economic uncertainty. So there's some offsetting impact we have not been diagnosed path for many many years, which is why we're being cautious.
But we'll update you as we go.
Everything that I've said on all of those considerations also into our NIM guidance of greater than 320.
Okay.
Thank you guys I think we've got time for one more question. So we'll take the next one in the queue. Please.
Thank you. Our final question today comes from Bob <unk> from Deutsche Bank. Please go ahead well be your line is now open.
Good morning, Thanks for taking my question just on a couple of things on the hedge you see even with.
With the possible.
Declines in size in Q4, so just wondering.
Okay.
Scott.
The competition how.
How much of it.
Apologize.
Look forward on deposits.
No.
Right.
Patients.
Are you seeing.
Deposits decline.
Extinguishment.
That's continued.
Then secondly, just.
You mentioned revision, sorry churn rates speeding up.
Average time spent on the fashion right.
The interest rate models, let's say call it on the ground.
Good morning.
Okay.
Okay.
Thanks Ralph.
In terms of the hedge you're right we did.
The size of the hedge that was in corporate.
We did it.
Precaution right way.
And in order to preserve the size of the buffer.
And so it is not but we were going beyond the buffet, we've seen a bit more migration in corporate than we have in retail to date.
Kind of what you might expect.
And we're just being cautious.
Yes.
Making sure that that buffer remains.
It's obviously in the current environment the opportunity cost of holding that buffer is not as great. As it was I'm not sure why we made that trade off.
And a third of the benefit of the structural hedge goes to the corporate side and you're going to see.
<unk> side.
Youre going to see the peer predominantly and transactional banking and a little bit in our private bank.
In terms of absolute levels of deposits they remain pretty stable I would say on the wholesale side.
You know, there's some seasonality in that nothing to particularly concern us.
On the BK side, we've seen a slight reduction in business banking deposits that actually relates to what we can see customers either paying off pop airlines, but also deploying it in that business. So we see pretty healthy activity. So there's nothing really that concerns us.
This is exactly why we built it conservatively and exactly why we run portfolios and as you might imagine we're monitoring it daily.
Day by day.
And in terms of your question on churn.
You know, we don't disclose that level of detail what I would say is that.
Clearly.
There was a very low proportion of customers that remain on reversionary right.
Right right clearly that proportion of customers remaining on reversionary rights, you would expect to fall even further.
We are capturing that basin on NIM and NIM guidance.
We are conservative in the way we model our D R.
Okay.
Thank you Rob Thank you everyone.
For your questions today and for joining me.
Really looking forward to seeing you next week.
On to other folks on the call I'm sure we will see you in the upcoming investor meetings.
Until then take care.
Thank you.
That concludes today's conference call.
[music].