Q1 2024 Standard Chartered PLC Earnings Call

Unknown Executive: I'll take you briefly through the numbers, and then Bill and I will be happy to take questions. In my remarks, I will be comparing year-on-year on an underlying basis and speaking in constant currency unless stated otherwise. And as a reminder, the results of our segments and products are now presented to reflect the R&S we issued on the 2nd of April. We had a strong start to 2024. First quarter income was up 20%.

I think you briefly through the numbers and then bill and I will be happy to take questions. In my remarks, I will be comparing year on year on an underlying basis and speaking to constant currency unless stated otherwise and as a reminder, the results of our segments and products are now presented to reflect the rns that we should on the second topic.

We had a strong start to 2024.

First quarter income was up 20%.

Unknown Executive: This growth rate was flattered by two notable items totaling $234 million, but even excluding these, income was up 14%. Adjusted net interest income increased 5%, and the performance of our two engines of non-NII was strong, with wealth solutions up 23% and markets up 17%. We saw good momentum in banking, with income up by a similar amount at 17%. With mid-single-digit expense growth and modest loan impairments, pre-tax profit was up 27%.

This growth rate was flattered by two notable items totaling $234 million, but even excluding this income was up 14%.

Adjusted net interest income increased 5% and the performance of our two engines of known NII was strong with wealth solutions up 23% and markets up 17%.

We saw good momentum in banking with income up by a similar amount at 17%.

With mid single digit expense growth and modest loan impairments pretax profit was up 27%.

Unknown Executive: We remain highly liquid, our CT1 ratio remains robust, and the latest $1 billion share buyback is progressing well. We have also made good progress on our simplification agenda. We announced changes to our organizational structure, removed the regional matrix, and are mobilizing the group around fit for growth.

We remain highly liquid our CET, one ratio remains robust and the latest $1 billion share buyback is progressing well.

We've also made good progress on our simplification agenda, we announced changes to our organizational structure removed the regional matrix and are mobilizing the group around fit for growth.

Unknown Executive: Lastly, we are maintaining our 2024 guidance in line with what we presented at our full year 2023 results. So, all in all, a very good start to the year. Turning now to look at our performance in more detail, looking at the various components of income. NII was up 5%, benefiting for just one month from the roll-off of the remaining component of the short-term hedge at the end of February and a higher NIM.

Lastly, we are maintaining our 2024 guidance in line with what we presented at our full year 2023 results.

So all in all a very good start to the year.

Turning now to look at our performance in more detail.

You can get the largest components of income.

NII was up 5% benefiting for just one month from the roll off of the remaining component of the short term hedge at the end of February and the higher NIM.

Unknown Executive: Non-NII was up 37%, driven by strong performances in both wealth solutions and markets and positive momentum in banking. More on that later. Expenses were up. Credit impairment remains low and predominantly relates to the WRB portfolio, with the charge in line with recent... The $60M charge in other impairments was primarily related to the write-off of software assets with no impact on capital.

Non NII was up 37% driven by strong performances in both wealth solutions and markets and positive momentum in banking.

On that later.

Expenses were up 6%.

Credit impairment remains low and predominantly relates to the W. R B portfolio with the charger in line with recent quarters.

The $60 million charge and other impairment was primarily related to write off of software assets with no impact on capital.

Unknown Executive: The strong double-digit income growth, positive jobs, and low levels of impairment drove underlying profit before tax of $2.1 billion, up 27%. Other items include a $100 million provision for customers who incurred losses in Korea on their investment in equity-linked security. This reflects our participation in a compensation scheme in line with the recommendations of the Korean Financial Supervisory. Taxes in the quarter reflect an underlying effective tax rate of 26 percent, and we continue to expect the full year 2024 underlying effective tax rate to be broadly similar to last year.

Strong double digit income growth positive jaws, and low levels of impairment drove underlying profit before tax of $2 $1 billion up 27%.

Other items include a $100 million provision for customers, we incurred losses in Korea on their investment in equity linked securities.

This reflects our participation in the compensation scheme in line with the recommendations of the Korean financial Supervisory service.

Taxes in the quarter reflect an underlying effective tax rate of 26% and we continue to expect the full year 2024 underlying effective tax rate to be broadly similar to last year.

Unknown Executive: We saw some underlying asset growth in the quarter, despite the higher for longer rates environment, mainly in CIB. Tangible net asset value per share was down slightly quarter on quarter with profit accretion offset by the full $1 billion share buyback impact and reserve movements such as FX and own credit adjustment.

We saw some underlying asset growth in the quarter, despite the higher for longer rate environment, mainly in CIB.

Tangible net asset value per share was down slightly quarter on quarter with profit accretion offset by the full $1 billion share buyback impact and reserve movements, such as effects and own credit adjustment.

Unknown Executive: You will have seen that we now show a full TNAV walk in the appendices to the slide presentation. Adjusted Net Interest Income was up 1% quarter on quarter to just over $2.4 billion. There were a number of factors driving this increase. [inaudible] We also saw an improvement in the liability mix. These benefits were partially offset by a lower margin, which reduced net interest income by $52 million as the currency-weighted interest rate across our key footprint currencies in the quarter was slightly lower and deposit pass-through rates increased. Average interest earning assets of $554 billion were down 1%.

You will have seen that we now show a full clean up work in Japan. This is to the slide presentation.

Adjusted net interest income was up 1% quarter on quarter to just over $2 $4 billion.

There were a number of factors driving this increase.

Expiry of the lost $12 $5 billion of our short term hedges at the end of February reinvested at higher yields provided a 42 million dollar benefit for one month in March.

We also saw an improvement in the liabilities mix.

These benefits were partially offset by a lower margin, which reduced net interest income by $52 million is the currency weighted interest rate across our key footprint currencies in the quarter was slightly lower and deposit pass through rates increased.

Average interest, earning assets of $554 billion were down 1%, reducing NII by around $20 million.

Unknown Executive: Reducing NII by around $20 million. Looking forward to the remainder of the year, we continue to expect an NII of 10 to 10 and a quarter billion dollars in 2025. There are a number of factors at play here. Firstly, the currency weighted average forward curve we have provided in slide 15 of the appendices to our presentation points to reduced headwinds. In February, we showed our expected currency-weighted forward market rate reduction of 51 basis points. This is now reduced to just 12 basis points based upon the curves of April.

Looking forward to the remainder of the year, we continue to expect to NII of 10 210 in a quarter billion dollars in 2024.

There are a number of factors at play here Firstly the currency weighted average forward curve. We have provided in slide 15 of the appendices to our presentation points to reduced headwinds.

In February we showed our expected currency weighted forward market rate reduction of 51 basis points. This is now reduced to just 12 basis points based upon the curves of April 15th.

Unknown Executive: Secondly, we expect to see further positive impact on NII from the mechanical benefit of the short-term hedges rolling off. However, this positive impact on NII will be somewhat upset, as you would expect, by reduced client asset demand in a higher-for-longer rates environment. Now, turning to non-NII, which was up 37%. I will cover the product's performance in more detail later in the segment slides, but I will make a few comments on the non-NII performance of our core base. WellSolutions, one of the two engines of non-NII, was up 24% with broad-based growth across products.

Secondly, we expect to see further positive impact to NII from the mechanical benefit of the short term hedges rolling off.

These positive impacts for NII will be somewhat offset as you would expect it by reduced client as a demand in a higher for longer rate environment now.

Now turning to non NII, which was up 37% I.

I will cover the products performance in more detail later in the segment slides, but a few comments on the non NII performance of our core businesses.

Well solutions one of two engines of known NII was up 24% with broad based growth across products.

Unknown Executive: Markets, our other main engine of non-NII, was up 13%, and banking was up 48%. Excluding the two notable items of $234 million that we will address now, non-NII was up $25. The first of these notable items was a foreign exchange revaluation gain of $158 million in our Egyptian branch. This is booked in treasury products and arose as a result of the devaluation in the Egyptian currency. This has no impact on the group's capital position, as the income is upset by a loss in the currency translation result. The second item arose from Ghana being designated as a hyperinflationary economy for accounting purposes in accordance with IAS 29, which resulted in a gain of $76 million.

Markets. Our other main engine of non NII was up 13% and banking was up 48%.

Excluding the two notable items of $234 million that we will address now non NII was up 25%.

The first of these notable items was a foreign exchange revaluation gain of $158 million in our Egyptian branch.

This is booked in treasury products and arose as a result of the devaluation in the Egyptian pound.

This has no impact on the group's capital position as the income is offset by a loss in the currency translation reserve.

The second item arose from Ghana been designated as a hyperinflationary economy for accounting purposes in accordance with Ias 29, which resulted in a gain of $76 million.

Unknown Executive: Now turning to Expand. Expenses were up 6% driven by inflation and business growth initiatives, primarily to support our higher-returning businesses in CAB and our affluent proposition. The Feed4Growth program is in full mobilization phase, having launched the initiative publicly just 10 weeks ago.

Now turning to expenses.

Expenses were up 6% driven by inflation and business growth initiatives, primarily to support our higher returning businesses in CIB and our affluent proposition.

The fit for growth program is in full mobilization phase having launched initiative publicly just 10 weeks ago. We're seeing good early progress as our colleagues at all levels embraced the opportunity.

Unknown Executive: We're seeing good early progress as our colleagues at all levels embrace the opportunity. We have identified over 200 projects currently being scoped and put into execution, the majority of which impact multiple parts of the bank. This transversal approach will be a key characteristic of the program. And, as I said earlier... We have taken action to simplify our organizational structure with the right leadership team in place to further sharpen the focus on driving strong, sustainably higher returns through each. We have also removed the regional management construct, thereby reducing complexity and simplifying the mix.

We have identified over 200 projects currently being scoped and put into execution, the majority of which impact multiple parts of the bank.

These transversal approach will be a key characteristic of the program.

And as I said earlier.

We have taken action to simplify our organizational structure with the right leadership team in place to further sharpen the focus on driving strong sustainably higher returns to each business line.

We also removed the regional management construct thereby reducing complexity and simplifying the matrix.

Unknown Executive: This has led not just to a change in the way we report but a change in how we manage the organization, leading to improved speed of decision making, increased agility, and focus on satisfying client needs. Just a reminder that the second quarter is usually seasonally higher than the first quarter, with annual staff pay adjustments being effective from the 1st of April. We will manage costs tightly, and as guided in February, we are committed to keeping costs below $12 billion in 2026, implying a cost growth CAGR of 3% over the three years and targeting positive income to fund jobs every year.

This has led not just to a change in the way we report, but a change in how we manage the organization leading to improved speed of decision, making increased agility and focus on satisfying client needs.

Just a reminder, that the second quarter is usually seasonally higher than the first quarter with annual stuff pay adjustments being effective from the first of April.

We will manage costs tightly and as Guy then in February we are committed to keeping costs below $12 billion in 2026, implying a cost growth CAGR of 3% over the three years and targeting positive income to cost Joe's in every year.

Unknown Executive: Turning now to credit impairment. As a reminder, in the first quarter of last year, our credit impairment charge was just $26 million, mainly due to net relief. So while credit impairment in the first quarter of 2024 was up significantly over last year, with a charge of $176 million in the quarter, it remains relatively low. For CIB, the overall charge was net nil. China Commercial Real Estate Impairment was just $10 million net of a small overlay relief.

Turning now to credit impairment.

As a reminder, in the first quarter of last year, our credit impairment charge was just $26 million, mainly due to net releases.

So whilst credit impairment in the first quarter of 2024 was up significantly over last year with a charge of $176 million in the quarter. It remains relatively low.

In CIB the overall charge was mezzanine.

China commercial real estate impairment was just $10 million net of a small overlay release.

Unknown Executive: The cover level of our China commercial real estate non-performing portfolio is high, at 90%, and we retain a management overlay of $129 million against further downside risk, given that a sustainable recovery in price and sales is yet to be seen. As mentioned earlier, in WRB, the expected credit loss charge of $136 million is in line with the recent quarter. In ventures, we saw a $28 million charge, primarily from an increase in provisions in our digital bank, MOC.

The cover level of our China commercial real estate nonperforming portfolio is high at 90% and we retain a management overlay of $129 million against further downside risk given a sustainable recovery in price in sales is yet to occur.

As mentioned earlier in W or beat the expected credit loss charge of $136 million is in line with recent quarters in.

In ventures, we saw a $28 million charge, primarily from an increase in provisions in our digital bank marks.

Unknown Executive: This provision, which relates to the unsecured portfolio, encouragingly appears past the peak, with flow rates to default and delinquencies improving in both the legacy and the new. While we are clearly now in a period of higher-for-longer rates, we are not seeing any new problems emerging, other than for portfolios that were already under- High-risk assets were down $2 billion in the quarter. As I mentioned, the full year 2023 results. The temporary increase in credit grade 12 exposure reversed, as expected, in the first quarter.

This provision which relates to the unsecured portfolio Encouragingly appears passed the peak with flow rates to default and delinquency is improving in both the legacy and the new book.

What we are clearly now in a period of higher for longer rates, we're not seeing any new problems emerging other than for portfolios that were already under stress.

I'll discuss it went down $2 billion in the quarter.

As I mentioned at the full year 2023 results.

The temporary increase in credit grade 12 exposure reversed as expected in the first quarter.

Unknown Executive: We also saw a reduction of around $600 million in the early alerts portfolio from upgrades and repayments. Touching briefly now on the balance, on an underlying basis, customer loans and advances of $283 billion were up 2% or $4 billion in the quarter, despite the higher-for-longer rate environment. We continue to deliberately hold back on new mortgage origination in Hong Kong due to unfavorable pricing dynamics.

We also saw a reduction of around $600 million in the early alerts portfolio from upgrades and repayments.

Touching briefly now on the balance sheet.

On an underlying basis customer loans and advances of $283 billion were up 2% or $4 billion in the quarter, despite the higher for longer rate environment.

We continue to deliberately hold back on new mortgage origination in Hong Kong due to unfavorable pricing dynamics in Korea mortgage demand is weak.

Unknown Executive: And in Korea, mortgage demand is rising. But as we've said before, we expect to see mortgage growth only later in our three-year plan. While client demand for borrowing in a high interest rate environment remains muted, encouragingly, we saw some growth in CIB trade and working capital, markets, and banking, driven by client demand. We continue to expect asset growth to mostly come through later in 2024 with no change to our guidance of low single-digit percentage growth for the year. Customer deposits were down $6 billion in the quarter, excluding the impact of FX, to $459 billion.

As we've said before we expect to see mortgage growth only later in our three year plan period.

With client demand for borrowing in a high interest rate environment remains muted them encouragingly, we saw some growth in CIB trading working capital markets and banking driven by client activity.

We continue to expect asset growth to mostly come through later in 2024 with no change to our guidance of low single digit percentage growth for the year.

Customer deposits were down $6 million in the quarter, excluding the impact of FX to $459 billion, we continue to attract deposits in W or beat which increased by $3 billion.

Unknown Executive: We continue to attract deposits in WRB, which increased by $3 billion. However, this was more than offset by a reduction in CIB CASA from month-end client activity. Post-quarter end, we have seen these flows substantially return. The Liquidity Coverage Ratio was broadly stable at 146%.

This was more than offset by a reduction in CIB cars up from months and client activity.

At quarter end, we have seen these flows substantially return.

The liquidity coverage ratio was broadly stable at 146%.

Unknown Executive: Turning 2 Capital. Risk-weighted assets of $252 billion were up 3% or $8 billion at the end of 2020. Operational Risk RWA, which is mechanically calculated from the previous three years' income, contributed to $2 billion of the increase in the quarter.

Turning to capital.

Risk weighted assets of $252 billion were up 3% or $8 billion on the end of 2023.

Operational risk W. E, which is mechanically calculated from the previous three years income contributed to $2 billion of the increase in the quarter. This is a one off increase for the full year.

Unknown Executive: This is a one-off increase for the full year. Higher RWA from changes in asset mix was offset by an FX benefit from a strengthening USP. Lastly, market risk RWA grew by $4 billion as clients re-engaged post the seasonally quiet end to the calendar year.

Higher R. W. A from changes in asset mix. It was offset by an FX benefit from a strengthening U S dollar.

Lastly market risk RW eight grew by $4 billion.

<unk> re engaged pasta seasonally quiet end to the calendar year, although volatility was not widespread in the quarter, we saw pockets of opportunities to help clients, particularly in greater China and Africa and it generated an attractive return on risk weighted assets deployed.

Unknown Executive: Although volatility was not widespread in the quarter, we saw pockets of opportunities to help clients, particularly in Greater China and Africa, and it generated an attractive return on risk-weighted assets. Market Risk RWA from these client opportunities is expected to reduce in the second quarter, and we continue to guide to low single-digit percentage growth in overall RWA for full year 2020. The CT1 story is simple.

Market that he's got a W. A from this client opportunities is expected to reduce in the second quarter and we continue to guide to low single digit percentage growth in overall RW eight for full year 2024.

The C. P. One story is simple.

The reduction of the full $1 billion share buyback took the pro forma CET, one ratio down 40 basis points to 13, 6%.

After accounting for this.

Our first quarter CET, one ratio was broadly stable with equity generation from first quarter profits offset by the increase in <unk>.

Unknown Executive: The deduction of the full $1 billion share buyback took the pro-forma CT1 ratio down 40 basis points to 13.6%. After accounting for this, our first quarter CET1 ratio was broadly stable, with equity generation from first quarter profits offset by the increase in RWA. Let's look briefly at our large client segments, turning first to CIB. Markets income, up 17%, was led by strong double-digit growth in macro trading and credit trading. Flow Income was up 5%, and Episodic Income came back after a slow quarter last year, up 30%, as we helped clients to capture volatility in some of our key geographies.

Let's look briefly at our large client segments, turning first to CIB.

Markets income up 17% was led by strong double digit growth in macro trading in credit trading.

Flow income was up 5%.

It is all the income came back after a slow quarter last year up 30%.

As we help clients to capture volatility in some of our key geographies.

Unknown Executive: When we issued the RNS in April, we introduced a new product taxonomy, which included splitting financial markets into markets and banks to give you a better window into products with similar income and balance sheet attributes. Banking was up 17% as a result of higher client origination and execution of a good pipeline. We continue to increase the velocity of our balance sheet by originating to this. Trade continues to lag.

When we issued the rns in April we introduced a new product taxonomy, which included splitting financial markets into markets and banking to give you a better window into products with similar income and balance sheet attributes banker.

Banking was up 17% as a result of higher client origination and execution of our good pipeline. We continue to increase the velocity of our balance sheet by originating to distribute.

Unknown Executive: Global trade volumes are down, but we are maintaining overall market share across products and geographies. WRB also had a very strong, Wealth Solutions Income grew 23% with broad-based growth across products. Our less market-sensitive income grew at a healthy clip as we began to monetize the quarter of a million new-to-bank, high-quality affluent clients that we onboarded last year. The leading indicators continued to be robust, with sustained momentum in affluent new-to-bank clients, particularly in Hong Kong, Singapore, and China, of the Net New Money flows of $11 billion in the first quarter of the

Trade continues to lag global trade volumes are down, but we are maintaining the overall market share across products and geographies.

W. B also had a very strong quarter wealth solutions income grew 23% with broad based growth across products.

Our less market sensitive income grew at a healthy clip as we began to monetize the quarter of a million new to bank high quality affluent clients that we on boarded last year.

The leading indicators continued to be robust with sustained momentum in affluent and new to bank clients, particularly in Hong Kong, Singapore and China.

Of the net new money flows of $11 billion in the first quarter of the year $7 billion or around 70% were deployed into wealth products and the balance was from deposits.

Unknown Executive: 7 billion dollars, or around 70% were deployed into wealth products, and the balance was from the The mixed shift we have seen developing towards wealth products accelerated this quarter, even though interest rates generally remain elevated. We're continuing to invest in the Wealth Solutions franchise and are adding new relationship managers in key markets, including Hong Kong, Singapore, the UAE, and China. So, to summarize,

The mix shift we have seen developing towards wealth products accelerated this quarter, even though interest rates generally remain elevated.

We're continuing to invest in the wealth solutions franchise and are adding new relationship managers in key markets, including Hong Kong, Singapore and UAE in China.

So to summarize we had a strong start to the year net interest income increased wealth solutions in markets have started the year strongly and the positive momentum in our banking business is helping non NII.

Unknown Executive: We have had a strong start to the year. Net interest income increased, wealth solutions and markets started the year strongly, and the positive momentum in our banking business is helping non-NIRs. Our loan impairment charge remains low.

Our loan impairment charge remains low.

Unknown Executive: We have seen growth in RWA from client opportunities that arose in the first quarter, which in part helps drive the market's income. But we continue to expect low single-digit growth for the full year. Our capital position and expectations of RWA growth are entirely consistent with our goal of returning capital to our shareholders. April has seen a good start to the quarter, albeit not as strong as the first, consistent with normal seasonality as our first quarter always benefits from heightened client activity. More importantly, it is consistent with our group targets for full year 2021.

We have seen growth in our WMA from client opportunities that arose in the first quarter, which in part helped drive marketing them, but we continue to expect a low single digit growth for the full year.

Our capital position and expectations of the RW egg rolls are entirely consistent with our goal of returning capital to our shareholders.

April has seen a good start to the quarter, albeit not as strong as the first consistent with normal seasonality as our first quarter always benefit from heightened client activity more importantly, it is consistent with our group targets for full year 2024.

Unknown Executive: Finally, to bring it all together, as I mentioned earlier, we are maintaining all our forward guidance with the one clarification that our income guidance for this year to deliver growth around the top of the five to 7% range and positive jobs is excluding the impact of the two notable items in the first. With that, I'll hand back to the operator, and Bill and I will be happy to take questions. Thank you, dear participants.

Finally to bring it all together as I mentioned earlier, we are maintaining all our forward guidance with the one clarification that our income guidance for this year to deliver growth around the top of the 5% to 7% range and positive jaws is excluding the impact of the two notable items of the first quarter.

Speaker Change: With that I'll hand back to the operator, and bill and I will be happy to take questions.

Unknown Executive: As a reminder, if you wish to ask a question over the phone, please press star 11 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press star 11 again.

Speaker Change: Thank you I'll get participants as a reminder, if you wish to ask a question over the phone. Please press star one one on the telephone keypad and might find them to be announced.

Speaker Change: Your question. Please press star one again.

Speaker Change: Typically you can submit your questions via the webcast.

Operator: Alternatively, you can submit your questions via the webcast. Please stand by, we'll compile the Q&A roll studies. We'll take a few moments. And now we're going to take our first question. And it comes from the land of Joseph Dickinson from Jeffreys. The line is open.

Speaker Change: Please can I will compare the current narrow studies will take a few moments.

Speaker Change: Okay.

Speaker Change: And now we're going to take our first question.

And it comes from line of Joseph.

Speaker Change: Joseph to consent from Jefferies. Your line is open please ask your question.

Joseph Dickerson: Please ask your question. Hi, good morning. Congratulations on a very clean and straightforward quarter. I just had one question about costs. You showed a lot of financial discipline in the first quarter with eight points of operating leverage, you know, backing out some of the non-recurring revenue. Clearly, you had some pretty strong financial market activity, and you haven't seen the fit for growth yet really kick in. I'm just wondering, you know, how you think about that? If markets are strong, is there going to be a true uptick or an accrual later in the year? Or anything like that to kind of deflect the very strong start to the year?

Joseph: Hi, good morning, Congrats on a very clean and straightforward quarter I just had one question on on costs you showed a lot of financial discipline.

Joseph: In the first quarter was eight points.

Operating leverage backing out some of the nonrecurring.

Joseph: Revenue.

Joseph: Clearly you had some pretty strong financial markets activity.

Joseph: And you haven't seen the fit for growth yet really kick in.

Joseph: I'm just wondering how you think about that if markets are strong as they are going to be a true up or an accrual later in the year.

Joseph: Or anything like that to kind of deflect.

Joseph: The very strong start.

Diego De Giorgi: Any comment on costs over the year? And then also just on wealth, you commented on April, I think, for the group, but I can imagine that, you know, wealth must also be off to a pretty good start, given the about 10% move in the Hang Seng, so just any thoughts there would be helpful. Thanks. Thank you, Joseph. I'll start, and then I'll hand it to Bill for some comments at the end.

Joseph: Any comment on.

Joseph: Costs over the year.

Joseph: And then also just on on wealth.

Joseph: Commented on April I think for the for the group, but I can imagine that wealth must also similar.

Joseph: Really be.

Joseph: Off to a pretty good start given the about 10% move in the hang Seng. So just any any thoughts there would be helpful. Thanks.

Speaker Change: Thank you Joseph.

Speaker Change: I'll start and then.

Hand, it to bill for some comments towards the end.

Diego De Giorgi: First, on wealth management versus the group overall, it's broad-based. April has been a good month, completely consistent with the delivery of the targets in 2024. Bear in mind, of course, as a reinforcement of the sustainability of our wealth numbers, that the wealth results are the accumulation of the net new money and the new-to-bank that we have quarter over quarter, and the 62,000 new-to-bank and the 11 billion of net new money that we have recorded during Q1 bode well for the future. So that clearly is the story in wealth.

Firstly on the wealth management versus the group overall.

Speaker Change: The Bay. The April April has been a good month completely consistent with the delivery of the target in 2024.

Bill: In mind of course is a reinforcement of the sustainability of our world number that Wednesday is well results are the accumulation of the net new money in the near to bank that we have quarter over quarter and 62000, new to bank and the $11 billion of net new money that we have recorded during Q1 bode well for the future.

Bill: That clearly is the story in wealth.

Bill: On the cost discipline before I hand, it over to Bill a couple of things.

Diego De Giorgi: On cost discipline, before I hand it over to Bill, a couple of things. Longer term, the guidance remains very clear. It's the 12 billion cost cap, 3% CAGR over the course of the three years. We've said from the beginning that it would be more elevated this year, and that is the case, and it will continue to be the case. Remember, fit for growth doesn't show impact this year, nor, by the way, in terms of the saves, and relatively limited in terms of the cost to achieve.

Longer term the guidance remains very clear its the 12 billion cost topped 30% CAGR over the course of the three years that we've said from the beginning of that you would be more elevated this year and it is the case and it will continue to be the case remember fit for growth doesn't show impact for this year.

Bill: By the way neither in terms of the saves and relatively limited in terms of the cost to achieve.

Diego De Giorgi: And the last thing that I would say on cost is bear in mind that Q2 is usually seasonally higher quarter on quarter because it includes the impact of our full March annual pay and bonus round, but on the forward. I agree, discipline in the first quarter, but that's also coming off a strong year of financial discipline last year as well, including the pay route. So we've got a reasonably well-established track record here, and we intend to continue that.

Bill: And the last thing that I would say on the cost is do bear in mind that the Q2.

Bill: Is usually seasonally higher quarter on quarter, because it includes the impact of our full.

Bill: March annual pay and bonus round.

Bill: But on the forward.

Speaker Change: Thanks, Roger and thanks for pointing out the discipline, which I agree discipline in the first quarter, but that's also coming off a very strong year.

Speaker Change: This is the last year, as well, including including the payer out so.

Speaker Change: We've got a.

Speaker Change: Reasonably well established track record here and we intend to continue that so our primary focus is on maintaining and wherever we can extending our jos.

Diego De Giorgi: So our primary focus is on maintaining and, wherever we can, expanding our jobs. We've obviously done that very well in the first quarter, and we intend to protect that very important spread for the rest of the year as we have and as we'll continue to do. Then, obviously, if we continue to outperform, then we would expect to make some real ups, but always with a view to increasing returns and increasing jobs as we do that.

Speaker Change: We've obviously done that very well in the first quarter.

Speaker Change: To predict that.

Speaker Change: Very important spread for the rest of the year.

Speaker Change: As we have and it will continue to.

Speaker Change: Obviously, if we continue to outperform.

Speaker Change: When we would then we would expect to make some true ups, but always with a view to increasing returns and increasing doses, we do that.

Diego De Giorgi: And maybe on overall cost discipline, we have to remind ourselves that we are actually in the third year of our last three-year program, in addition to being in the first year of our next three-year program. So we have a number of programs that we've been investing in over the past couple of years that were more tactical in nature, less structural than Pit for Growth, which we're completing. So none of us are too surprised that we're coming into this quarter with ongoing good discipline.

Speaker Change: And maybe on the overall cost discipline and we have to remind ourselves we are actually in the third year of our last three year program. In addition to being in the first year of our next three year program. So.

Speaker Change: We added a number of programs that we've been investing in over the past couple of years that were more technical in nature less structural.

Speaker Change: Both.

Speaker Change: Which were completing.

Speaker Change: None of us are too surprised that we're coming into this this quarter with ongoing good discipline, but we're very excited about the opportunity for the next round of lift off coming from the much more transformational programs around to growth.

Diego De Giorgi: But we're very excited about the opportunity for the next round of liftoff coming from the much more transformational programs around Pit for Growth and that it is really very different in terms of the way that we're approaching it. So we expect to, as Diego has been very clear, expect to see some of the expenses kick in this year with some of the benefits kicking in next year and the following year, but but, always following on to the last three years of the program. Great. Thanks.

Speaker Change: And that is really very different in terms of the way that we're approaching it.

Speaker Change: So we would expect to have Diego has been very clear.

Speaker Change: To see some of the expenses kick in this year with some of the benefits kick in next year all year.

Speaker Change: Following on to the last three years with programs.

Speaker Change: Great. Thanks, Thanks, guys.

Bill: Thanks, guys. Thank you, Joe. Next question, operator. Yes, of course. Now we're going to take our next question, and the question comes from the line of Nick Lord from Morgan Stanley. Your line is open. Please ask your question. Thanks very much.

Speaker Change: Thank you Jeff next question operator, yes of course.

Nick Lord: And thanks very much for the presentation. A similar sort of question really to Joseph's on the CIB side. I just wonder if you could comment a little bit on both the flow and the episodic income and give a bit more detail on what actually drove that. I'd be interested to know if you're still seeing that activity come through, especially in terms of flow terms. And do you have a feel both of the pace at which market RWAs might return or might come off, and also any comments you have on the loan pipeline on the corporate side in the second quarter? Thank you, Nick.

Speaker Change: Okay.

Speaker Change: And now we will take our next question.

Speaker Change: And the question comes from the line of Nick <unk> from Morgan Stanley. Your line is open. Please ask your question.

Nick: Thanks, very much and thanks very much for your presentation.

Nick: Similar sort of question really to Joseph some CIB side I'm, just wondering if you could comment a little bit.

Nick: On both a flow I'll be happy so they can come and give a bit more detail on what actually.

Nick: Drove out.

Nick: Be interested to know if youre still saying by that.

Nick: Activity come through especially in terms of flow terms.

Nick: Do you have a feel both of the pace at which market at <unk> might return.

Nick: Might come off and also any comments you have a loan pipeline on the corporate side in the second quarter.

Diego De Giorgi: So, flow in Episodic, clearly good that we have seen a comeback of flow this quarter. But let's never lose sight of the fact that the vast majority of what we make in the market is flow, and therefore good to see the 30% increase in flow, but just as good, or more good that we've seen the 5% increase in flow. Where flow happens, because it's event-driven, of course, it's difficult to say

Nick: Sure.

Nick:

Speaker Change: So florent episodic.

Speaker Change: Clearly good that we have seen a comeback of the episodic this quarter.

But let's never lose sight of the fact that the vast majority of what we make and market is below.

Speaker Change: And therefore, good to see the 30% increase in episodic and <unk>.

Speaker Change: The or more mood that we have seen the 5% increase in flow.

Speaker Change: The the where were episodic happens because it's event driven of course, it's difficult to say this particular quarter G CNA Africa middle East to an extent.

Diego De Giorgi: This particular quarter, GCNA, Africa, and the Middle East, to an extent, in a relatively muted volatility picture for the market overall, i.e., not the easiest market to navigate. So, good there.

Speaker Change:

Speaker Change: Relatively muted volume.

The.

Speaker Change: Picture for the market overall I E not not the easiest.

Diego De Giorgi: Flow, by definition, we expect flow to continue. Episodic will see a little bit of what the future holds for us. RWAs, it's very clear to us. We reiterate very firmly our target of low single-digit growth of RWAs.

And there'll be this market to navigate.

Speaker Change: So good good there.

Speaker Change: <unk> floor by definition, we expect to.

Speaker Change: To continue episodic, we'd see a little bit.

Speaker Change: What the future holds for us.

Speaker Change: RW Asia.

Speaker Change: It's very clear to us.

Speaker Change: We reiterate very firmly our target of low single digit growth of RW laser we are nimble Youll know these houses for much from from ear. So we have shown our ability to be very aggressive on the <unk> front. We also flagged at the beginning of the year that we believe that the level of return on a risk.

Diego De Giorgi: We are nimble, you know this house. For years, we have shown our ability to be very aggressive on the RWA front. We also flagged at the beginning of the year that we believe that the levels of return on risk-weighted assets that we are achieving could be used to use RWAs. And I think this is a very good example. I mean, we did it.

Speaker Change: Weighted assets that we are achieving.

Speaker Change: We wanted to use <unk> and I think this is a very good example, I mean, we've done it.

Diego De Giorgi: They will come off; they've already started coming off in Q2. And, if anything, now dependent, of course, on the path of rates, but if anything, over the course of the year, one would expect to see a shift between market-risk-weighted assets and credit-risk-weighted assets. But, again, dependent on demand for credit. Loans, we pointed out, are a pipeline, in general, of activity. You will obviously have noticed after our RNS that we have separated our banking business out.

Speaker Change: They will come off and they've already started coming off in Q2.

Speaker Change: And if anything now dependent of course on the path of rates.

Speaker Change: But if anything over the course of the year, one would expect to see a shift between market risk weighted assets in credit risk weighted assets that if anything but again dependent on demand for credit.

Speaker Change: Loans, we pointed out the pipeline in general of activity you will Havent au you obviously have noticed after our rns that we have separated our banking business.

Diego De Giorgi: We think it's important. We think the drivers of the banking business, of course, are different from the drivers of the retail business, and we wanted to make sure that we gave you the ability to see into it. It's clear that between the financing solutions and the capital markets and advisory, they are driven by relatively similar things.

Speaker Change: We think it's important we think.

Speaker Change: The drivers of the banking business of course are different from the drivers.

Speaker Change: The market for business and we wanted to make sure that we gave you the ability to see into it.

Speaker Change: It's clear that between the financing solutions and the capital markets and advisory.

Diego De Giorgi: The pipeline is an important one. As we pointed out, we executed on a healthy pipeline. The pipeline remains healthy, and actually, if anything, healthier than the one that we executed in Q1. Of course, between a pipeline and a realization comes a market, so we'll see where that gets us. Bill?

Speaker Change: They are driven by a relatively similar things the pipeline is an important one we pointed out we executed on a healthy pipeline the pipeline remains.

Speaker Change: Healthy and actually if anything healthier than the one that we have executed in Q1.

Speaker Change: Of course between our pipeline and our realizations in the market. So we'll see.

Speaker Change: Yes Bill.

Speaker Change: Okay.

Bill: I completely, obviously, agree with everything Diego said. A little bit of color. I know we introduced this notion of flow versus episodic a few years ago, and it's an art, not a science, to be very precise about what goes into what or what drives each.

Speaker Change: Completely obviously agree with everything <unk> said, it a little bit of color.

I know we introduced this notion of flow versus episodic a few years back.

Bill: It's an art not science very precise of what goes into what are what drives each but.

Bill: But simplistically, we can say that flow income is coming from just the natural flows that come from our clients into our bank. So a lot of that is driven by their own cash management or trade financing needs. And we've done quite a good job of internalizing that while providing best execution for customers. That took some doing, amongst other things, meaning investing heavily in our electronic and digital connectivity, not just with corporate clients who are moving money around, but also with investors, including very sophisticated investors, which has also meant setting up very robust electronic trading capabilities.

Bill: So basically we can say that low income is coming from just the natural flows that come from our clients into our bank. So a lot of that is driven by by their own cash management or trade financing needs.

Bill: We've done quite a good job of internalizing that.

Bill: While providing best execution for customers.

Bill: That took some doing amongst other things have been investing heavily in our electronic and digital connectivity.

Not just with corporate clients, who are moving money around but also with investors.

Bill: Including very sophisticated investors, which is also meant establishment of very robust electronic trading capabilities.

Bill: So the underlying growth and flow, which has been really good and steady over a period of time, is absolutely influenced to a margin by market volatility. In particular, investors are more active in markets when things are moving around.

Bill: No.

Bill: The underlying growth in flow, which has been really good and steady through a period of time is absolutely influence on the margin by market volatility.

Bill: Particular investors of our active markets when things are moving around but the underlying close.

Bill: But the underlying flows are structurally a growth story. As we take market share as a top 10, and in many markets, a top three or top one financial markets dealer across FX and rates, the episodic, by its nature, is going to be fundamentally different.

Bill: Structurally the growth story as we take market share as a top 10.

Bill: And in many markets, a top three or top one financial markets dealer across FX and rates.

Bill: Prasad.

Bill: By its nature.

Bill: And the way we think about it is that it's highly correlated with either market shocks or with very unusual bursts of client activity or individual client deals. And now we could sit here and say in April or May of 2024 that there are going to be no more market shocks. But it really doesn't feel that way to me.

Bill: Is it is going to be fundamentally different than the way we think about it.

Bill: Really correlated with either market shocks.

Bill: Or with your very unusual burst some client activity or individual.

Bill: <unk>.

Bill: And.

Bill: Now, we could sit here and say.

Bill: April or may of 2024 that theyre going to be no more market shocks.

Speaker Change: Really doesn't feel that way to me.

Speaker Change: Markets feel extremely prone to sudden movements in various ways, either because of Augusta and shocks because regarding through some pretty key inflection points in central bank rate policy and associated currency movements. So.

Bill: Markets feel extremely prone to sudden movements in various ways, either because of exhaustion shocks or because we're going through some pretty key inflection points in central bank rate policy and associated currency movements. So we can't call an increase or decrease or anything else in episodic flows. I just think the environment is pretty conducive to this kind of market event that leads to opportunities for us. In terms of client-related deals, I mean, client volumes are just really, really strong.

Speaker Change: We kept coal.

Speaker Change: An increase or decrease or anything else in episodic flows I just think the environment is pretty conducive to this kind of market.

Speaker Change: Market events that lead to opportunities for us in terms of client related deals client volumes are just really really strong and it's a pick up on the point of your question Diego stored answer on loan pipeline.

Bill: And to pick up on the third point or your third question and Diego's third answer around loan pipelines. The, as we said over and over and over, we're focusing on returns over income growth. And the loan pipeline is very good. The loan pipeline was very good in the first quarter. We did not retain many of those loans. Most of those loans flowed straight through.

Speaker Change: The.

Speaker Change: As we said over and over and over we're focusing on returns over.

Speaker Change: Income growth.

Speaker Change: The loan pipeline is very good the loan pipeline was very good in the first quarter.

Speaker Change: Did not retain many of those loans most of those loans.

Bill: So we get a 17% increase in banking income without a big increase in the balance sheet. That's a good thing, not a bad thing. So yeah, the fact that our loan growth is a little bit lower than what we guided, and actually, customers' advances were in line, but the overall RBA growth is a little bit lower, is not a sign of concern. It's accompanied by a very strong return on tangible equity, which is what we continue to focus on optimizing.

Speaker Change: Straight through so we've got a 17% increase in banking income.

Speaker Change: We've got a big increase in the balance sheet.

Speaker Change: That's a good thing not a bad thing so.

Speaker Change: The fact that our loan growth is a little bit lower.

Speaker Change: Then what we guided and actually the customers and the vessels was in line, but overall, our real growth is a little bit lower.

Speaker Change: Is that a sign of concern.

Speaker Change: Accompanied by very strong return on tangible equity, which is what we continue to focus on optimizing.

Bill: So when we look at the pipeline, we see a good pipeline, which bodes well for continued growth in banking income. It may or may not lead to growth on the balance sheet, but that's okay. I don't want to find that we're solving for the wrong problem. Diego answered the RWA question perfectly. So take the next question.

Speaker Change: So when we look at the pipeline we feel good pipeline.

Speaker Change: Bodes well for continued growth in banking income it may or may not lead to growth in the balance sheet, but thats. Okay.

I don't want to fund that we're solving for their own problems.

Speaker Change: I think <unk> answered the.

Speaker Change: Question perfectly.

Speaker Change: The next question.

Operator: Now we're going to take our next question. And the question comes from the line of Andrew Coombs from Citi. Your line is open; please ask your question. Good morning, Andrew Coombs.

Speaker Change: Now we're going to take over next question.

Speaker Change: And the question comes from the line of Andrew Coombs from Citi. Your line is open. Please ask your question.

Andrew Coombs: Two questions, please. Firstly, on your reiteration of your net interest income guidance. Obviously, there's been a sharp move higher in the curve, but you're saying that should be broadly offset by lower volumes, hence why your guidance is unchanged. And if you take your 100 basis points, the Sensitivity, and 770 figure you gave previously, which is a parallel shift that And then my second question is on the extraordinary items or below-the-line items. There are two parts to this. Korea would be the first one.

Good morning, and thanks again.

Two questions. Please.

Andrew Coombs: Just on your reiteration of your net interest income guidance, obviously has been a sharp move higher than that.

Andrew Coombs: You're saying that should be broadly offset by lower volumes, hence why your guidance is unchanged.

Andrew Coombs: Take your 100 basis points.

Speaker Change: <unk> 770, <unk> again, you gave previously R&M.

Speaker Change: <unk>.

Speaker Change: To offset that impact and in fact quite a sizable decline in the volume out there.

Speaker Change: Just if you could comment on that.

Speaker Change: I don't know if there's anything else in the moving parts there.

Andrew Coombs: I think in the annual report, you talked about a potential charge of several hundred million for the XT-Link securities. But you've only taken 100 million today. Is that because the methodology from the regulator was better than you had feared at the time of the annual report? and also restructuring charges. You flagged this one and a half billion charge, but we haven't seen the material step up in Q1. When do you think we'll see that step up in restructuring charges coming through? Thank you. Very good. Thank you, Andrew. Okay, I'll take them.

Speaker Change: Guidance.

Speaker Change: And then my second question.

Is on the.

Speaker Change: Extra ordinary items below the line items.

Speaker Change: Two parts to that Korea would be the best one I think in the annual report.

Speaker Change: <unk>.

Speaker Change: A pension charge of 700 million securities you've only taken 100 million today.

Speaker Change: Is that because the methodology right.

Speaker Change: The bid at the time of the annual report.

Speaker Change: And also restructuring charges, you've got this one 5 billion charge, but we haven't seen material step up in Q1, when do you think might see that step up in restructuring charges, Greg. Thank you.

Diego De Giorgi: I'll take them from the top. First of all, on NII, let's quickly paint for a second the picture for 24. So 24 of the components that we have flagged in terms of the drivers of our NII, first of all, the rolling off of the short-term hedge, we clearly have seen only one month. In this quarter, we're going to see all of the rest of the unfolding of it.

Very good thank you Andrew Okay.

Greg: I'll take them, taking them from the top but first of all on <unk>.

Greg: NII, let's let's quickly let's quickly paint.

Let's quickly pain for a second the picture for 24 hours. So 24 of the components that we had flagged in terms of the drivers of our NII first of all the rolling off of the short term hedge we clearly have seen only one month in this quarter, we're going to see all of the rest of the unfolding, albeit on volumes.

Diego De Giorgi: On volumes, 2% growth in customer loans and advances, markets and banking positive, as Bill was saying before, of course, mortgages, a headwind in terms of volumes, but that ends also. Let's remember that loans and advances are a spot measure; AIEA is an average measure, that's to bear in mind. And so when you think about volumes, volumes here come more towards the end of the year. The liabilities mix improved during the course of the quarter. We rolled off quite some; we ran down quite some expensive CTVs and other sources of wholesale funding. And so from that point of view, these are really the components of 24.

Greg: Percent the growth in customer loans, and advances advances markets and banking positive as bill was saying before of course mortgages a headwind in terms of the volumes but that.

Greg: And also let's remember that loans and advances our asphalt measure AIA is an average measure.

Greg: Bear in mind, and so when you think about volume volume here.

Greg: More towards the end of the year the liabilities mix improved.

Greg: During the course of the quarter, we rolled off.

Greg: Some we ran down.

Greg: Some expensive CPB and other sources.

Greg: Self funding and so from that point of view. These are really the components for 'twenty four I would point out that we appoint an IRB I would recommend.

Diego De Giorgi: I would point out that to your point on IRDB, I would recommend, it behooves me to obviously recommend it, even if it's in our appendices, that we always try to use the currency forward, the currency weighted forward rates that we provide. We think they are a better guide for all the reasons that we went through in the full year results, but I'm not going to go through them again. But those are the kinds of shifts that I think help more predict how we think about the development of NII.

Speaker Change: Is it Behooves me, obviously recommended even.

Speaker Change: In our appendices.

Speaker Change: We always try to use the currency forward the kind of the weighted the forward rates that we provide we think they are a better guide for all the reasons that we went through at the full year results I'm not going to go through them again.

Speaker Change: But those are those are the kind of shift so that I think helped more predict a gig.

Speaker Change: See how we think about the development of NII at a very high level because the volatility of rates continues unabated, the I would say.

Diego De Giorgi: It's a very high level because the volatility of rates continues unabated, I would say. If you then extrapolate out to 2025, you have the headwinds that we were expecting for 2025 are now less headwinds. The hedge roll-off continues to be supportable, though at a lower level because it's going to be only $100 million next year. We continue to guide to low single-digit volume growth.

Speaker Change: If you then extrapolate that out to 2025.

Speaker Change: We'll have the headwinds.

Speaker Change: We were expecting for 2025 are now less headwind.

Speaker Change: The hedge roll off continues to be supportive although to a lower level, because it's going to be on the $100 million next year we.

Speaker Change: We continue to guide to low single digit.

Speaker Change: Volume growth and so if you do your math youll see that.

Diego De Giorgi: And so if you do your math, you see that anything that you then get in terms of the mixed effects of assets and liabilities is a little bit on top. That's the NII. On the ELS securities, the way that this works is that our board has approved a voluntary compensation plan for customers. We've taken a $100 million provision that reflects the implementation of the voluntary compensation plan based on applying the regulatory guidelines to all of the ELS that are outstanding with clients.

Speaker Change: Anything that you then get the in terms of mix effects of assets and liabilities is a little bit.

Speaker Change: On.

Speaker Change: On top of it.

Speaker Change: That the on the NII.

Speaker Change: On the E&S Securities.

Speaker Change: The the way the way that this works is that our board has approved a voluntary compensation plan for customers we have.

Speaker Change: Taken $100 million provision better reflects the implementation of the voluntary compensation plan based on applying the regulatory guidelines to all of the Elas that are outstanding with clients now can there'll be volatility to that number going forward, yes, because it is linked to an index.

Diego De Giorgi: Now, can there be volatility in that number going forward? Yes, because it is linked to an index, but it gives you a good picture of where we are. Bill, anything that you want to add? Only that this is our best estimate of the total cost of this problem. At this moment, yes.

Speaker Change: But it gives you a good picture of.

Where we are.

Bill: Bill anything you want to only that this is our best estimate of the total cost of this.

Bill: So on the ELS's own restructuring, you're right, we don't guide on restructuring, 10 weeks into Fit4Growth, lots of initiatives being prepared, we know what the shape more or less is, and we've said it. I mean, it's a limited cost to achieve this year, the bulk of the cost to achieve during the course of next year, and then a meaningful chunk in 2026. I think that remains the best guidance that we can give you. I would also be remiss if I did not add the $100 million from the previous program that Bill was referring to that we will flow through this year. Thank you, Andrew. Operator, next question.

Bill: Yep.

Bill: So <unk> is already fracturing, you're right. We don't guide on restructuring and we seem to fit for growth lots of initiatives being prepared we know what the shape more or less season. We've said I mean, it's limited limited cost to achieve this year the bulk of the cost to achieve that during the course of next year and then a meaningful.

Bill: In 2026, I think that the remains.

Bill: It remains the best guidance, we can give you I would also be remiss.

Did not.

Bill: $100 million.

Bill: From the previews the program that the bill was referring to that we will flow through this year.

Speaker Change: Thank you Andrew.

Operator: Yes, of course. Now we're going to take our next question. Just give us a moment.

Speaker Change: Operator next question, Yes of course now we're going to take over next question.

Speaker Change: Jackie This amendment.

Robin Down: And the next question comes to the line of Robin Down from HSBC. Your line is open, please ask your question. Good morning. I have a couple of questions. Can I start with the capital?

Speaker Change: And the next question comes from the line of Robin down from HSBC. Your line is open. Please ask your question.

Robin: Good morning, I have a couple of questions.

Robin: Start with the capital.

Robin Down: because you're obviously guiding for low single-digit RWA growth, which kind of suggests that from here, and we wait to see a great deal of RWA growth throughout the remainder of the year, and also you're going to be generating capital through the course of this year. That is, unless we see another buyback in, in August. Aren't we going to be hitting a CT1 that's above the kind of 14% top end of the target at year-end?

Robin: Position, because you're obviously guiding for.

Robin: And which are also very close which kind of suggests that from here.

We might see it quite typical at the rate of growth.

Robin: The remainder of the year, obviously going to be generating capital.

Robin: Through the course of this year.

Robin: Thus free ship another buyback.

Robin: In August.

Robin: We are going to be hitting your CET, one that's above the kind of 14% top end of the target.

Robin Down: I know you've got Basel 3.1 next year and you've got kind of... I'm just trying to think how you're thinking about this with capital, and obviously, circling back to the kind of five billion plus guidance you've given us through the course of the program, it just feels like there's upside risk there, and perhaps we should be looking for a buyer back in August. And the second question, just coming back to the kind of review guidance for this year, um, maybe my maths is wrong, but having had the kind of beat you had in the first quarter, assuming your kind of interest income guidance is right, I think to hit the kind of top end of your range, you just need fee income to be kind of broadly flat for the remainder of the year. And yet you've got kind of flat tailwinds year on year.

Robin: I know you've got Basel III next year, you've got kind of.

Robin: Obviously the.

Robin: Trunk of restructuring charges to come through but I'm, just trying to think how you're thinking about the capital position.

Robin: I don't see circling back to the kind of 5 billion plus guidance, you've given us through the course of the program. It just feels like there is upside risk there and perhaps we should be looking for buyback in August.

Robin: And the second question, just coming back to the kind of revenue guidance for this year.

Maybe my math is wrong, but having.

Robin: The kind of you have had in the first quarter.

Robin: Assuming you're kind of interest income guidance is right I think.

Robin: To hit the kind of top end of your range and you just kind of fee income to be broadly flat the remainder of the year.

Robin: You've got kind of a tailwind slight year on year.

Robin Down: But you've got tailwinds from wealth management coming through, and Q4 is a relatively easy comparator, so I'm just curious as to why you're not increasing the guidance for revenues for this year. Whether there's anything in particular that you're worried about, or whether it's just a degree of caution.

Robin: For wealth management coming through.

Q4 is a relatively easy comparison.

Speaker Change: I'm, just curious as to why Youre not.

Speaker Change: Increasing the guidance for revenues for this year.

Speaker Change: Whether there's anything in particular that you're worried about.

Speaker Change: Or whether it's just a degree of caution.

Bill: Thanks very much, Robin, for the question. The approach to capital, as Diego said, and as I think we've tried to indicate through time, we're very disciplined in terms of our commitment to capital and growth in underlying RWAs. And we demonstrated that we've got lots of levers that we can pull if and when we need to, number one. Number two, we are very, very comfortable operating within the full range of our guided CEC1, so between 13 and 14%. So 13-6, we're comfortably, especially given the earnings and capital generation momentum, we're comfortably in the top half of that range right now, and we're perfectly comfortable going to the lower part of that range.

Speaker Change: Thanks.

Speaker Change: Great. Thanks, very much Robin.

Speaker Change: For the question.

Speaker Change: Our approach to capital.

Speaker Change: As Hugo said as I think we've tried to indicate through time, we're very disciplined in terms of our commitment of capital and growth in underlying our view is and we've demonstrated that we've got lots of levers that we can pull it hasnt been we need to it number one.

Speaker Change: Number two we are very very comfortable operating within the full range of our guidance C. From one so between 13 and 14% 13, 6%.

Speaker Change: We're comfortably, especially given that the earnings and capital generation momentum, we're comfortably in the top half of that range right now.

Speaker Change: And we're perfectly comfortable going to the lower part of the range, we'll always consider at the time, what the internal uses of capital are and what the external environment is.

Bill: We'll always consider at the time what the internal uses of capital are and what the external environment is. But you know, in previous periods, we've been comfortable going down to the lower part of that range. Thirdly, we are fully aware of the attractiveness of buying back our shares, even at today's slightly higher price than the last time it was described as a version of fertilizer. And so, recognizing the value that shareholders attach to in terms of capital, we'll be very, very disciplined to manage our internal capital allocation and to return surplus capital to shareholders if, as, and when we're able to do that.

Speaker Change: But.

Speaker Change: In previous periods, we've been comfortable going down to the lower part of that range.

Speaker Change: Third is we are fully aware of the attractiveness of buying back our shares even at today's slightly higher price than the last time. It was described as.

Speaker Change: Our version of fertilizer.

Speaker Change: And.

Speaker Change: So recognizing the value of the shareholders attached to two turns of capital will be very very disciplined to manage our internal capital allocation and to to return surplus capital to shareholders.

Speaker Change: And when we're able to do that.

Bill: And I maybe just underscore that we've got plenty of levers to pull to make sure that we remain disciplined and consistent in terms of the way that we're generating RWAs. I hand over to Diego for the revenue point, and anything else you want to say on capital? I couldn't add anything to that.

Speaker Change: And maybe just underscores that we've got plenty of levers to pull to make sure that we remain disciplined and consistent in terms of the way that we're generating OWS.

Speaker Change: I'll hand over to Diego for the revenue.

Diego De Giorgi: On revenues, Robin, you've given yourself your answer. Yes, we are very pleased. We are very encouraged. It's a strong start.

Diego: I was wondering on capital.

Diego: I couldnt add anything to that.

Diego: On our own revenues.

Diego: Robin you've given yourself.

Speaker Change: Your answer.

Speaker Change: Yesterday, we are very pleased that we have been in quarter you had a strong start.

Diego De Giorgi: It further increases our confidence in the full year outcome, but this is the first quarter. And so, we'll see what the world holds in store for us. I concur with one of the things that you said, which is that the resilience of our two engines of non-NII is very visible. I continue to stress that the 5% increase in flow at a time when the market was not the perfect market clearly shows that to be able to trade in certain pockets with our clients, to assist them, to assist our multinational corporations at different times in different places is clearly a good thing.

Speaker Change: It further increases our confidence in the full year outcome, but it is the first quarter.

Speaker Change: And so we'll see we'll see what the world holds in store for us.

<unk>.

Speaker Change: I concur with one of the things that you said, which is it's true that the resilience of our two engines of the non NII is very visible.

Speaker Change: Continue to express how that 5% increasing floor at a time when the market was not perfect. The market clearly shows that to be able to trade certain pockets with our clients to assist them to assist our multinational corporations in the.

Diego De Giorgi: And in wealth management, the strength of the forward indicators, of the leading indicators, is also completely consistent with delivering a good year in wealth management. So yeah, no, there's nothing that we are worried about, but it's the first quarter. Thank you, everyone. Operator, next question.

Speaker Change: Times in different places is clearly easily leg with paying any wealth management and the strength.

Speaker Change: The strength.

Speaker Change: Of the.

Speaker Change: The forward indicators.

Indicators of the leading indicators.

It also completely consistent with delivering a good year in wealth management. So yeah, there's nothing that we're worried about whether it's the first quarter.

Speaker Change: Alright. Thank you thank you Robin.

Speaker Change: Operator next question.

Operator: Now we're going to take our next question, and the next question comes from Perlie Mong from KBW. Your line is open, please ask your question. Hello, I'm just picking up on some of the discussion that we just had. So I just wanted to ask about a higher for longer environment.

Speaker Change: Now we're going to take our next question.

Speaker Change: And the next question comes from the line of <unk> from <unk>. Your line is open. Please ask your question.

Perlie Mong: I mean, I guess part of the increase in episodic flows probably reflects lower rate expectations in Q1, because, I mean, you might disagree, but for me, there's, I guess, a big change between Q1 versus Q4 with the rate expectations, especially US rates, coming down. So first of all, do you agree with that? And secondly, well, given that expectations have now changed in recent weeks, does that change your outlook in any way? So that's the first question. And the second question is on market income.

Speaker Change: Just picking up on some of the discussion that <unk> had.

Speaker Change: I just wanted to ask about are higher for longer environment.

Speaker Change: And I guess part of that the increase in episodic probably reflects lower rate expectations in Q1.

Speaker Change: I mean, you might disagree, but I guess, the big change Q1 versus Q4 with the right expectation, especially your athletes coming down so.

Speaker Change: First of all do you agree with that and secondly, given that expectation has now changed.

Speaker Change: It's been weak.

Speaker Change: Does that change your outlook in any way. So that's the first question and the second question is on.

Speaker Change: Markets income.

Perlie Mong: So I think in one of your slides, you mentioned that episodic flows are 30% higher as you deploy more market RDAs to help clients take advantage of opportunities. But I guess you also mentioned that you expect market RDAs to come down. Does that mean episodic flows are expected to come down as well?

Speaker Change: So.

Speaker Change: Again, I think in one of the guys like you mentioned that episodic dosing studies.

Speaker Change: Did you get that higher as you deploy more market.

Speaker Change: To help clients take advantage of opportunities.

I guess you also mentioned that you expect market always to come down does that mean episodic close is expected to come down as well.

Diego De Giorgi: And then I guess just very quickly picking up on the comment you talked about credit risk migration, that from here, there is, if anything, going to be less market risk and more credit risk. And I guess just what do you mean by that? Because if I look at stage three or delinquencies, it looks pretty, pretty behind this quarter. Very good. I'll take it, and then Bill can add.

And I guess, just very quickly picking them up on a comment you talked about credit risk migration that.

Speaker Change: From here it if anything going to be in that market with a lot more credit risk and I guess, just what do you mean by that because if I look at the stage III or delinquency, it looks pretty pretty behind this quarter.

Diego De Giorgi: I'll actually start from the bottom. What I meant, and I'm sorry if I didn't communicate properly, I didn't mean that there was a change in credit. I meant that over the course of the year, if you believe that there are going to be demands for credit, the shape of our risk-weighted assets ought to move towards credit risk-weighted assets rather than just market risk-weighted assets. We don't see these credit risk-weighted assets today, but we ought to see more of them.

Speaker Change: Very good.

Speaker Change: Thank you and then and then Bill Bill can add.

Bill: I'll actually start from the from the bottom what I meant and I'm, sorry, if I didn't communicate properly I didn't mean that there was a change in credit.

Bill: And that the over the course of the year. If you believe that there's going to be demand for credit.

Bill: <unk> of our risk weighted assets or to move it towards create credit risk weighted assets, rather than just market risk weighted assets, we don't see that credit risk weighted assets today, but we hope to see more of them no no issue from the point of view of credit if anything.

Diego De Giorgi: No issue from the point of view of credit. If anything, I would flag that the impact of credit migration within our risk-weighted assets is very low, single digits, hundreds of millions of dollars in RWA. There is no credit migration effect on our risk-weighted assets.

Speaker Change: I would flag that.

Speaker Change: The impact of credit migration, we down within our risk weighted assets is like very low single digit.

Speaker Change: Hundreds of millions of dollars.

Speaker Change: So no credit migration effect in <unk>.

Diego De Giorgi: So that's on that part. On the other hand, I would zoom out for a second from simply looking at the impact of expectations on higher rates or on lower rates. Again, going, I don't want to repeat the same thing, but again, going to the point of flow and episodic.

Speaker Change: Our at risk with that so that on that but on the other I would.

Zoom out for a second from simply looking at the impact of the expectations on higher rates or lower rates.

Speaker Change: Again going I don't want to repeat the same thing, but again going to the point of floor and episodic. There is a lot of the slow that when things change in the world. It's why our clients rebalanced their liabilities. There are hedges there are supply chain dynamics in terms of accounts payable receivable et cetera, all of that flows.

Diego De Giorgi: There is a lot of flow that when things change in the world, it's why our clients rebalance their liabilities, their hedges, their supply chain dynamics in terms of accounts payable, receivable, etc. All of that flows through us. And therefore, I would caution not to try to tie neither flow nor episodic volatility to a simple specific indicator, whether it is rates, by the way, whether it is the volatility of rates, whether it is the volatility of currencies, whether it's dollar strength versus dollar weakness. On such a broad franchise like ours, a lot of these effects diversify themselves. Within them, there are spikes, and those spikes will change.

Speaker Change: Through us.

Speaker Change: And therefore, I would caution not to try to tie in neither flow nor episodic too simple specific indicators or whether it is right by the way whether it is the volatility of rates, where they're at in their currencies, where the dollar strength versus dollar weakness on such a broad the.

Speaker Change: Franchise like ours, a lot of these effects diversify themselves within them there are spikes at endo.

Diego De Giorgi: As we said, this quarter we plugged some; there might be others that are in the other. To the second part of your question on market risk-weighted assets, an important point, and thank you for raising it. We have increased market revenues over many previous quarters while substantially shrinking market risk-weighted assets. The link between market risk-weighted assets and market income is not univocal.

Speaker Change: And those bikes will change as we said that this quarter, we flagged some.

Speaker Change: There might be others that are in the other two the second part of your question on market risk weighted assets.

Speaker Change: Portal point and thank you. Thank you for raising it.

Speaker Change: We have increased market revenues over many previous quarters, while substantially shrinking market risk weighted assets the link between market risk weighted assets and.

Speaker Change: Markets income is not univocal.

Diego De Giorgi: At times it's helpful, at times there is a link, but it's difficult to drive a direct link, so much so that we are very comfortable with what we are doing, which is currently reducing the market risk-weighted assets. We don't think that that ought to be seen as a sign that we think that there are going to be less market revenues, but Bill, do you want to? I think that's perfect. Just to underscore what I think Diego was just very clear about, there's no correlation between the growth in episodic spending and anything really related to the inflection point in interest rates or expectations.

Speaker Change: It's helpful.

Speaker Change: There is a link but it's difficult to drive direct link because so much. So that we are very comfortable with what we are doing which is currently a reducing the market risk weighted assets.

Speaker Change: And we don't think that that's all.

Speaker Change: It's to be seen as a sign that we think that theres going to be less market revenues, but bill do.

Speaker Change: I think that's perfect.

Speaker Change: Just to underscore what I think <unk> was just very clear about.

Speaker Change: There is no correlation between the growth in episodic.

Speaker Change: Anything related to the inflection point in interest rates for expectations of Diego, hopefully extraordinarily transparently called out.

Diego De Giorgi: Diego helpfully and extraordinarily transparently called out Africa and China as two drivers of the increase in episodic. Of course, everything's related to interest rates somehow. Currencies are driven by interest rates, ultimately, and currencies clearly moved, but you know some of what's going on in the world, and these are not primarily interest rate-driven events.

Speaker Change: Africa and China.

Two drivers of the increase in episodic and of course everything is related to interest rates somehow I think currencies are driven by interest rates ultimately.

Speaker Change: Currency clearly moved but you know.

Speaker Change: Some of what's going on in the World and these are not primarily interest rate driven events, they're market driven right.

Bill: They're market-driven events where the fact that we've got a very, very strong local franchise across a large number of African markets and a very strong local franchise, not just in China but between China and all of China's major trading partners, puts us in an extraordinary position to take advantage of these market flows or dislocations as they come up. I won't say we're unique in every respect, but I will say that the nature of our market footprint is unique, and that puts us in a position where we have many opportunities to score goals, as it were, always by helping clients.

Speaker Change: The fact that we've got a very very strong local franchise across.

Speaker Change: A large number of African markets and a very strong local franchise not just in China, but between China and all China's major trading partners puts us in an extraordinary position to take advantage of these.

Speaker Change: These either market closer dislocations as they come up and I won't say, we're unique in every regard, but I will say that the nature of our market footprint is unique.

Speaker Change: And that puts us.

Speaker Change: In a position where we have many opportunities to score a goal as it were.

Speaker Change: We're always by helping clients and.

Bill: That's, I think, a key differentiator of our business. You'll note that from time to time it's a challenge as well, especially when countries in Africa restructure or in South Asia restructure, things like that, but we remember that episode from the last three years, and we remember that our bank did extraordinarily well through that period as well. So while there's always some downside risk with the upside opportunities, I'm going to give us pretty high marks for having managed the risk and capitalized on the opportunities. Thank you, Perli.

Speaker Change: A key differentiator of our business.

Speaker Change: You'll note that from time to time, it's a challenge as well, especially when countries in Africa restructure or in South Asia, restructure or things like that but we remember that episode from last three years, and we remember that our bank did extraordinarily well through that period as well.

Speaker Change: So while there is always some downside risk with the upside opportunities I'm going to.

Speaker Change: To give us pretty high marks for having managed the risk and capitalize on the opportunities.

Speaker Change: Thank you Bradley.

Speaker Change: Operator. Please next question, yes of course, thank you so much.

Operator: Operator, please, next question. Yes, of course. Thank you so much.

Operator: And now we're going to take our next question. And the next question comes from Lan, of Khunpeng Ma, from... Chinese Securities. Your line is open, please ask your question. Excuse me, Kunpeng. Your line is open.

Speaker Change: And now we'll take our next question.

Speaker Change: And the next question comes from the line of content from.

Speaker Change: Can you Securities. Your line is open please ask your question.

Speaker Change: Okay.

Content: Excuse me contend your line is open.

Operator: Okay, good morning. Thank you for taking my question. This is Kun Peng of China Securities.

Content: Okay.

Content: Thank you for taking my question. This is Quinn pump China Securities I've got two questions for you. The first is a follow up on the revenue guidance.

Kun Peng: I got two questions for you. The first is a follow-up on the revenue guidance. I'm wondering whether we can expect a better year next year because I noticed you even cut your expectation for the rate cuts for next year even more than this year. Sorry for sticking on with this question, but it is quite important, right?

Quinn: I'm wondering whether we can.

Quinn: Hello, Alexia because I noticed you didn't cut.

Quinn: Our expectation for the rate cuts for next year, even more than this year.

Kun Peng: The second is on the trading corridor business and transaction banking. Would you please provide us with more updates and outlook for the transaction banking business, like its volume pricing, etc. Thank you. Thank you, Kupang.

Speaker Change: The count with this question, but it is quite important.

Speaker Change: Yes.

Alexia: On the trading Colorado business transaction banking would you please provide us with more updates and outlook for the transaction banking business.

Alexia: It's volume and pricing.

Alexia: Okay.

Speaker Change: Thank you.

Diego De Giorgi: So revenue guidance for next year, we've given you our targets. We expect to continue to increase our return on tangible equity over the course of the years. And although we have not put out direct guidance on NII, we have said that we expect higher NII next year compared to this year. So all of that doesn't change. You are right.

Speaker Change: Okay.

Speaker Change: Thank you <unk> so revenue.

Speaker Change: Revenue guidance for next year, we've given you we've given you our target.

Speaker Change: We expect.

Speaker Change: We continue to increase.

Speaker Change: Our return on.

Speaker Change: Tangible equity over the course of the year.

Speaker Change: And although we have not put out.

Speaker Change: Direct guidance on NII.

Speaker Change: We had said that we expect higher NII next year compared to this year. So all of those all of those.

All of that doesn't change you are right.

Bill: All other things being equal, higher rates for now are either you can see, say, a tailwind or a reduction of a headwind. And next year, our currency forward rates imply a better position compared to what we saw at the beginning of this year. But again, it's early in the year, and we'll see what exactly materializes.

Speaker Change: All other things being equal higher rates for now.

Speaker Change: <unk>.

Speaker Change: Either you can see when the rate of reduction of a headwind.

Speaker Change: And next year, our currency forward rates imply a better position compared to what we saw at the beginning of this year, but again, it's early in time and we see what exactly materialize from that point of view I would refer you again to what we said last quarter about the different engines of growth at different times in the cycle.

Diego De Giorgi: From that point of view, I would refer you again to what we said last quarter about different engines of growth at different times in the cycle, in terms of having a strongly differentiated set of products. Just to add a little bit of color, the reason we're perfectly happy with this hire for longer scenario, but not over-exuberant, is that there's a downside to higher rates. And obviously, there's an NII upside, and we've called that out quite clearly.

Speaker Change: In terms of heading.

Speaker Change: In terms of heading stronger.

Speaker Change: Our strong and differentiated set of.

Speaker Change: Product.

Speaker Change: Just to add a little bit of color.

Speaker Change: There isn't.

Speaker Change: Perfectly happy with this higher for longer scenario, but not over exuberant is because there is a downside to higher rates, obviously theres an NII upside.

Diego De Giorgi: But we would expect there to be, on the margin, some credit stresses, which is part of the reason that we're guiding to a return to our average expected average credit loss through the cycle. We're still operating well below our average right now. We don't see any problems in the portfolio, just to be perfectly clear. It's not a forecast of issues or an early warning of problems.

Speaker Change: You called it out quicker.

Speaker Change: But we would expect there to be on the margin some credit stresses which is part of the reason that we're guiding to a return to our average expected average credit loss through the cycle, we're still operating well below our average right now we don't see any problems in the portfolio just to be perfectly clear, it's not a forecast of issues or early warning on problem.

Bill: If we have a hire for longer rate environment, you would expect at some point to see that flow through to credit losses. And at some point, you would expect to see that flow through to capital markets volumes. So while, net-net, it's pretty clear that it's a positive for us, and then you put it into the tailwind category, it's not without consideration for some of the downside risks, especially when you get out into 2025. Thank you, Bill.

Speaker Change: We have a higher for longer rate environment, you would expect at some point.

Speaker Change: Through to credit losses, and at some point you would expect to see that flow through the capital markets volumes.

Speaker Change: So net.

Speaker Change: Net net it's pretty clear that it's a positive for us and as we put it into the tailwind category.

Speaker Change: Not without consideration for some of the downside risks, especially when you get out into 2025.

Diego De Giorgi: So, and on trade and the trade corridors. So, a few things. In terms of trade corridors, some of the strength that we have seen in previous quarters continued. Trade corridors toward the ASEAN and toward the Middle East remain very, very strong, whether it's from Singapore, from Korea, from other sources. China outbound has remained healthy and particularly healthy going toward Europe.

Speaker Change: Yes.

Speaker Change: Thank you bill so and with that the on trade.

Speaker Change: Trade in the trade corridor.

Speaker Change: A few things.

Speaker Change: In terms of grade corridor.

Speaker Change: Some of the strengths that we have seen in previous quarters continue.

Speaker Change: Trade corridors.

Speaker Change: For the other.

In the end towards the Middle East remain very very strong whether it's from senior quarter from Korea from other sources.

Speaker Change: China outbound.

Speaker Change: Remained healthy and particularly healthy going towards Europe. So that is to give you some broad color about about the corridor.

Diego De Giorgi: So, that is to give you some broad color on the corridors. In terms of trade and transaction banking, look, income volumes were down last year. We have continued to work on our products, invest in our products, and invest in our relationship managers. We have data that confirm to us that we have maintained our market share.

Speaker Change: In terms of.

Speaker Change: Trade and transaction banking.

Speaker Change: Look.

Speaker Change: <unk> income.

Speaker Change: <unk>.

Volumes were down last year.

Speaker Change: We have continued to work on our products to invest in our products to invest in our relationship managers.

Speaker Change: We are.

Speaker Change: We have the.

Data.

Speaker Change: To us that we have maintained our market share and if you believe that forecast.

Diego De Giorgi: And if you believe the forecast that trade volumes are expected to grow in the low single digits this year from many different multinational sources, that ought to be good for someone who naturally sits astride the trade routes of the world. Thank you. Operator.

Speaker Change: Volumes are expected to grow in the low single digits. This year for many different multinational sources that ought to be good for someone who naturally.

Speaker Change: Prior to the trade the roots of the world.

Speaker Change: Thank you.

Operator, Thank you for your question. Thank.

Operator: Thank you. Now we're going to take our next question, and the next question comes from the line of Aman Rakkar from Buckley. Your line is open.

Speaker Change: Thank you now we are going to take our next question.

Speaker Change: Okay.

Speaker Change: And the next question comes from the line of Amanda <unk> from Barclays. Your line is open. Please ask your question.

Aman Rakkar: Please ask your question. Good morning, Bill. Good morning, Diego.

Amanda: Good morning, Bill good morning DAA.

Amanda: Yes, I just had a question on NII.

Aman Rakkar: Yeah, I just had a question on NII. Actually, more NIM, if I may. And I think, just based on current run rates and the benefit of the tactical hedging for the next quarter. [inaudible] I know rates are less of a drag this year, but my back of the envelope suggests that, you know, we do need a bit of volume growth this year to get to the target range.

Amanda: Actually more NIM.

Amanda: If I may.

Amanda: I think just based on kind of a run rate.

Amanda: The benefit of the tactical hedging for the next quarter.

Amanda: I know rates are less of a drag this year, but I think my back of the envelope suggests.

We do need a bit of volume growth this year to get to.

Aman Rakkar: And I do know at full year. And, you know, you broke out that volume and mix were a big component of actually getting to the 24NII. Obviously, the input for volumes looks like it's maybe more subdued than what we thought before.

Amanda: Target range and I do note full year.

Amanda: Yes.

Amanda: You breakout got through volume and mix was a big component of actually getting to.

Amanda: The 24 NII.

Amanda: But the volumes.

Amanda: It's maybe more subdued than what we thought before I'm just trying to think about.

Diego De Giorgi: I'm just trying to think about... and if loan growth or average interest earning asset growth doesn't meaningfully kick on from here, and if it's kind of flattish through your end, what is the, what's the kind of nim self-help that you have at your disposal? So can you kind of help us think about what you've left to do? on our set, and Liability Mix that, you know, can actually lift the NIM. Is it realistic to think you can? Okay, Aman.

Amanda: If loan growth.

Amanda: Average interest earning asset growth.

Amanda: Doesn't meaningfully kick on from here and if it's kind of flattish through year end.

Amanda: Is the what's the kind of NIM that you have that youll disposals. So can you kind of help us think about what you have left to do.

Amanda: On assets and.

Amanda: And liability mix, but.

Amanda: Can actually lift the NIM is it realistic to think you have.

Amanda: The NIM in the absence of loan growth is essentially what I'm asking thank you.

Diego De Giorgi: Absolutely. So, first of all, we don't guide on NIM anymore. And that's why we went to NII. We think it's simpler, but you're right.

Speaker Change: Okay and then.

Speaker Change: Absolutely.

Speaker Change:

Speaker Change: First of all we don't guide on MIM anymore.

Speaker Change: And that's why we went to NII, we think it's simpler, but but youre right. The way the way to think of it that we do bake into our NII walk.

Diego De Giorgi: The way to think of it is that we do bake into our NII walks the presence of volume growth. I would point out that, on an underlying basis, our volume grew by two percent or four billion in this quarter, which was not an easy quarter to grow volumes. So to give up, to throw away the sponge, we say on volume growth this early, is a bit early. We have many quarters to play for. So let's not discount the fact that volume, there are some green shoots for volume. Having said that, NIM is also very much a mixed story.

Speaker Change: The presence of <unk>.

Speaker Change: Volume growth.

Speaker Change: I would point out that on an underlying basis, our volume grew by.

Speaker Change: 2%.

Speaker Change: $1 billion in this quarter, which was not an easy quarter to grow volumes so to give up the profile of the sponge. If we say on the volume growth would be certainly is a bit early.

Speaker Change: We have many quarters to play for so let of discount for the fact that volume.

Speaker Change: There are some green shoots for volume.

Speaker Change: Having said that <unk> mean that is also very much a mix of solid I mean in this particular quarter. It is very clear that our NIM was very much helped by what we've done in treasury in terms of running off the expensive CBD. The other sources of more expensive wholesale funding and so if you wish on the cells.

Diego De Giorgi: I mean, in this particular quarter, it's very clear that our NIM was very much helped by what we did in Treasury in terms of running off expensive CTVs, other sources of more expensive wholesale funding. And so if you wish, on the self-help side, particularly in a bank that, by our nature of being in a large geographic footprint with very many different markets, et cetera, and therefore with a more active Treasury function, we have a number of levers that we can pull from that point of view.

Speaker Change: Beside the particularly in our bank debt by our nature of being.

Speaker Change: On a larger geographic footprint with different with very many defense markets et cetera, and therefore with a more active treasury function, we have a number of levers.

Diego De Giorgi: And of course, you pointed out to yourself, there is the mathematical and mechanical impact of the short-term hedge still coming to our help. We, I would say that that is the key, too early to give up on volumes. Bill, is there anything? Yeah, I love your request for guidance on self-help.

Speaker Change: And that we can that we can pull from that point of view and of course that you pointed out the U S. As there is the.

Speaker Change: Mathematical.

Speaker Change: Impact of the short term hedge steel.

Speaker Change: Still coming through our <unk>.

Speaker Change: We.

Speaker Change: I would say that the debt.

Speaker Change: That is the key.

Speaker Change: Too early too early to give up to give up on volumes Bill is there anything yes.

Bill: I mean, the best self-help for us is to grow our non-NII by 25%. That's not guidance, but that's what we did in the first quarter. And the momentum is really good.

I Love your request for guidance on self help and the <unk>.

Bill: Best self help for us is to grow our non NII by 25%.

Bill: Our guidance, but thats, what we did in the first quarter and the momentum is really good. So yeah of course, we should focus on NII.

Bill: So yeah, of course, we should focus on NII. It's at current run rates, a little bit over half of our income, but only a little over half of our income. And the other half is growing much faster and generating higher returns. So our self-help is very focused on generating the volume growth that we think is consistent with our business so that we can grow NII and create returns at the same time. But the real self-help is coming by driving that non-NII growth, leveraging the balance sheet that we're using that generates NII. So not to be too cheeky with the answer, but...

Bill: And at current run rates, a little bit over half of our incumbent but only a little over half of our income.

Bill: And the other half is growing much faster.

Bill: And to generate higher returns. So ourself health is very focused on generating the volume growth that we think is consistent with our business. So that we can grow NII.

Bill: <unk>.

Bill: And accrete returns at the same time.

Bill: But the real self help is coming by by driving NII growth.

Bill: <unk> the balance sheet that we're using the generator so as not to be too cheeky would answer of it.

Bill: I said sometimes I think it's important to focus on the real earnings drivers of the group, which are less NII and more NII, even though sometimes we focus more analytically on the NII. Thank you, Bill. Thank you. Thank you, man. Sorry, I'm on.

Bill: So sometimes I think it's important to focus on the real earnings drivers of the group, which are less NII and more NII, even though sometimes we focus more analytically.

Bill: Alright.

Speaker Change: Thank you Bill. Thank you. Thank you ma'am.

Speaker Change: Okay.

Operator: Go ahead. One more. My apologies. Please reconnect. I was too hasty.

Speaker Change: Sorry go ahead.

Speaker Change: Sure.

Speaker Change: My apologies.

Speaker Change: Please reconnect sorry.

Speaker Change: It's too hasty.

Aman Rakkar: Thank you very much, Bill and Diego. I appreciate it. Just one point of clarification. So say if you're sticking with the low single-digit loan growth expectation for this year, given your efforts on Treasury assets and also the fact that the loan growth might be a bit more back-end loaded this year, does that necessarily translate into low single-digit average interest earning asset growth this year? Or should we expect that to be lower?

Speaker Change: Okay.

Speaker Change: Thank you very much bill and Diego.

Speaker Change: I appreciate it.

Speaker Change: Just one point of clarification as I say, if you are sticking with the low single digit loan great expectation for this year.

Speaker Change: And given your efforts from Treasury assets and also on the line.

Speaker Change: Loan growth might be a bit more backend loaded this year.

Speaker Change: Does that necessarily translate into low single digit average interest, earning asset growth this year.

Or should we expect that to be low.

Diego De Giorgi: Um, a bit, a bit difficult, a bit difficult to say, in the sense that there are a few other moving pieces in that, but, but, over, over the course of the year, I would, I would, I would really focus on the underlying, on the underlying dynamics, because the noise that you introduce when you look at other things, I think, I think, it distracts you a little bit. So, I find it difficult to give you guidance that takes the average interest earning assets into consideration. Sorry, but there was a second part. No, no, no, that's it. That was just it.

Speaker Change:

Speaker Change: A bit difficult a bit difficult to say.

Speaker Change: In the sense that there are a few other moving pieces in that but.

Speaker Change: But over and over the course of the year.

Speaker Change: Really focus on the underlying on the underlying dynamics there.

Speaker Change: Because the noise that you introduced when you look at other things.

Speaker Change: I think I think distract too a little bit so.

Speaker Change: I find it difficult to give you a guidance that takes it takes the average interest earning assets into consideration.

Speaker Change: So there was a second part.

Speaker Change: No no no that's it thanks.

Speaker Change: Okay.

Diego De Giorgi: Okay. Thank you. Thank you, Aman.

Speaker Change: Thank you.

Speaker Change: Thank you Aman sorry, operator, so once more please I think it is time for one more question.

Operator: Sorry, operator, so once more, please. I think we have time for one more question. Yes.

Operator: Now we're going to take our last question for today. And it comes from the line of Gurpreet Sahi from Goldman Sachs. Your line is open. Please ask your question. Hello, can you guys hear me? Good Gurpreet, very well. Hey, good morning.

Speaker Change: We're going to take one last question for today.

Speaker Change: And it comes from the line of <unk> <unk> from Goldman Sachs. Your line is open. Please ask your question.

Goldman Sachs: Hello can you guys hear me.

Goldman Sachs: Good to have it very well.

Gurpreet Sahi: Yeah, thank you for taking my question and presenting a very strong set of numbers, Bill and Diego. I have two questions. First, on focusing on the strong aspect, which is banking. So trying to understand this a bit better, why this was so strong this quarter, up 17%. So what was there in the quarter that led to increased demand from our clients or other banks to get this distributed loan from our site where we originated and distributed it? So what changed in the environment so that we can in future model such things going forward?

Goldman Sachs: Hey, good morning, Yes. Thank you for taking my question and congrats on a really strong set of numbers.

Goldman Sachs: <unk> I have two questions first on focusing on the strong aspect, which is banking so trying to understand this a bit better why this was so strong this quarter up 17%. So what was there in the quarter that led to increased demand from our clients. So that the banks to get this distributed loan from <unk>.

Goldman Sachs: Site, where we originated and distributor to what changed in the environment. So that we can in future.

Goldman Sachs: Models, such things going forward, so that's on banking.

Gurpreet Sahi: So that's on banking. Second, on NII, can you help us think whether the deposit betas have peaked? And what we are seeing in terms of CASA, some back of the envelope calculations based on the slide that you disclosed on slide 18, seem to suggest that the CASA rate overall blended, and the CASA ratio just moved down in the quarter. So it seems like the migration has not yet peaked. So what are we seeing? Any color would be greatly appreciated.

Goldman Sachs: Second on NII.

Goldman Sachs: Can you help us think whether the deposit beta has peaked.

Goldman Sachs: And what we are seeing in terms of cost some.

Goldman Sachs: Back of the envelope.

Goldman Sachs: <unk> calculations based on slide.

Goldman Sachs: That you disclosed on slide 18 seem to suggest that.

Goldman Sachs: I said it overall blended.

Goldman Sachs: Godhead issue or just move down in the quarter. So it seems like the migration has not yet peaked so what are we seeing any color would be greatly appreciated. Thank you.

Bill: Well, why don't I take a stab at the banking question and hand it over to Diego on that? So the environment was supportive for us in banking; we had a good financing pipeline coming into the quarter, the market environment was conducive to execution, both in high grade and high yield across our market. Sustainable finance has, the pace of growth has slightly slowed. I would say it was a slightly difficult beginning of the year.

Speaker Change: But why don't I take a stab at the banking question.

Diego.

Speaker Change: Sure.

Diego: So the environment was supported for us in banking, we had we had a good financing pipeline coming into the quarter market environment was conducive to execution, both in high grade and high yield across our markets sustaining.

Diego: Sustainable finance has the pace of growth has slightly slowed.

Diego: It was.

Diego: Slightly difficult beginning of the year of sustainable finance has been one of our biggest drivers of growth, but still some central growth.

Diego De Giorgi: Sustainable finance has been one of our biggest drivers of growth, but still substantial growth in the first quarter, contributing to that, meaningfully to that 17% overall. And as I mentioned before, we've increased, and Diego has mentioned several times, we've increased the velocity of our balance sheet. So the proportion of the deal pipeline that we ended up retaining on our balance sheet was relatively low, and the proportion from which we were able to take some fees through a continued buildup of our distribution capabilities was very strong.

Diego: In the first quarter.

Diego: Tributes to that increased about 17% overall.

Diego: And.

Diego: As I mentioned before we've increased and Giga has mentioned several times, we've increased the velocity of our balance sheet. So.

Diego: The proportion of the of the deal pipeline that we ended up retaining on our balance sheet is relatively low and the proportion that we were able to exit fees.

Diego: We will continue to build up our distribution capabilities was very strong.

Bill: The pipeline remains strong, the environment remains supportive, but we know that's somewhat sentiment-driven. I should note as well that this banking line will be seasonal, as are many other things in our bank. People come out of the box, especially in a year where the economic environment is looking pretty good; they come out in the early part of the year, trying to get ahead of their financing plans. So we can't forecast 70% growth consistently, but we definitely have a good pipeline, we have a good pipeline, we executed well on it, and we did it in a very creative way.

Diego: The pipeline remains strong.

Diego: <unk> remains supportive.

Diego: But we know that thats somewhat sentiment driven I should note as well that.

Banking line will be seasonal as our.

Diego: Many other things.

Diego: And things people come out of the box, especially in a year, where the economic environments, we can pretty good they come.

Diego: Early part of the year, you are trying to get their getting it getting ahead of their financing plans. So we cant forecast, 70% growth consistently but but we definitely had a good pipeline we have a good pipeline, we executed well on it and we did it in a very returns accretive way.

Bill: On your second question, Gurpreet, I would say that Casa TD is broadly where we expected it to be. The reason, if anything, that you see a slightly lower Casa has to do with some of the dynamics in terms of net new money coming in in the wealth business. Because, as we pointed out to you, although the vast majority of the net new money in wealth now comes in as wealth products, a portion still comes in as deposits.

Diego: And on your second question, where fleet I would say that cover Tds broadly is broadly where we expected it to be the reason that if anything that youll see a slightly lower cost that has to do with some of the dynamics in terms of net new money coming in in the wealth business.

Diego: Because as we flagged out to you.

Diego: The vast majority of the net new money in wealth now comes in is what products.

Bill: At this time in the cycle, those deposits are fundamentally time deposits. So you see the impact is not so much the fact that our existing clients move Casa to time deposits at this time in the cycle, but it's more the fact that the money that comes in is very heavily skewed towards time deposits.

Diego: A portion of the <unk> still comes in as deposits at this time in the cycle. Those deposits are fundamentally and deposits. So you you will see the impact is not so much. The fact that our existing clients move assets with time deposits at this time in the cycle, but it's more of the fact that the money that comes in is very heavily skewed towards.

Diego: Deposits.

Bill: So with that, Bill, we want to... Good. Thanks very much, everybody, for taking the time. I know it's a very busy day in a busy week. I really appreciate the questions. And, of course, always available to get back on details if you want to get in touch with me, Diego, or IR directly. Thanks. Have a good rest of the week. Music Music Music Music Music Music Music Music Music Music Music Music Music, Music Music Music Music Music Music Music Music Music Music Music Music Music Music

Diego: So with that Great Bill do you want to.

Bill: Thanks, very much everybody for taking the time I know, it's a very busy day and a busy week really appreciate the questions and.

Bill: Of course always available to get it back.

Speaker Change: Those 200 countries <unk> giga or are directly thanks have a good rest of the week.

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