Half Year 2025 Oversea-Chinese Banking Corp Ltd Earnings Call
Non interest income rose, 8% to 257 billion.
Lifted by brought base fee income growth and higher trading income.
Expenses were well managed and controlled even S&P increased our strategic spending.
To invest for growth.
Cost to income ratio stay below 40% at 38, 9%.
We achieved solid year on year growth in loans and deposits up 7% and 10% respectively.
Asset growth remain resilient with NPL ratio at 0.9% without.
Calls at an annualize of 18 basis points.
Capital position remained strong.
<unk> common equity tier one.
Ratio was 17%.
And fully phased in ratio was 15, 3%.
In line with our target ordinary dividend payout ratio of 50% interim ordinary dividend of <unk> 41 cents was declared.
Moving onto second quarter performance.
Group and banking operations second quarter net profit was 7% below last year, mainly due to lower net interest income.
Against the previous quarter banking operations net profit was up 2% from higher operating profit and lower allowances.
At group level net profit moderated by 4% F. G. H second quarter performance was impacted by lower insurance income.
Our true key business pillars of banking wealth management and insurance provide diversified earnings base.
Banking business continue to see customer driven growth.
Flex it by rising loans and deposit volume.
Net interest income came off from prior year's peak level, but mostly compensated by.
Double digit growth in our noninterest income.
We are seeing results of our focused investment in wealth management business.
Our wealth management income was up 4%.
New high of 2.66 billion contributing 37% to our group total income.
Banking, a U M rose, 11% year on year to a record 310 billion driven by net new money inflows across all our wealth segment as well as positive market valuation.
Our first half 25, net new money inflows were <unk> 9 billion with $4 billion in second quarter alone.
For insurance first half profit contribution from <unk> grew 10% to 553 million.
G H.
<unk> contribution was driven by improved investment performance from his shareholders funds.
And our increased stake in G. H following our voluntary general offer last year.
G H real business and data value or Ambev was 16% higher and and best margin improved to 44, 7%. This reflected G H strategic shift towards higher margin products.
Moving onto net interest income in slide 10.
Second Q net interest income decreased 3% Q on Q2 228 billion.
Irish assets rose 2%.
But this was more than offset by 12 basis point decline in NIM.
We have included additional analysis on the site to provide more color on NIM.
The main factor was the drop in loan yields, which impacted group NIM by 17 basis points.
This was largely due to the sharp fall in sing dollar and Hong Kong dollar benchmark breach.
During second quarter reduction in loan use.
Outpace the drop in deposit costs, which reprice much slower than loans.
Close to half of our loan book, our denominator in sing dollar and Hong Kong dollar.
About 80% of our Cingal hurdles.
And.
About 80% of our sing dollar loans are floating rate and nearly all of our Hong Kong dollar loans are floating rate.
In the second quarter, one month, and three month compounded solera dropped more than 50 basis points.
And highbrow falloff, even shopper.
One month and three months LIBOR rates are down.
Around 300 basis points, and 220 basis points respectively.
So P J liquidity deployment into in kind of accretive high quality assets during our first quarter.
Oh, sorry.
To a small drag on NIM about two basis points.
Now our June exit NIM was one point.
8%.
We expect.
Inflection from the exit NIM SBC flow through from ongoing deposit rate cuts.
As of end June NIM sensitivity based on hundreds basis point drop.
Engaged across our four major currencies.
Singapore dollars Malaysian Ringgit, Hong Kong dollar and home and U S dollars was around 12 basis points on an annualized basis.
For the remainder of this year.
We maintain our assumption of three fed rate cuts.
But with the unexpected sharp drop in short run high bought that I mentioned earlier.
Now as trite as why 25 NIM to be in the range of $1, 9% to 195%.
Moving onto non interest income our first half noninterest income grew 8% year on year to 257 billion.
We set by strong growth in fee income trading income as well as higher realized gains from sale of fixed income securities.
This more than compensated for a 9% decline in insurance income.
The lower insurance income was largely due to two factors.
Mark to market impact of declining interest rates on valuation of insurance contract liabilities.
And revaluation of private equity holdings, you know insurance funds.
More details have already been checked in G. H result announcement earlier this week.
I will cover more.
Details on fee and trading income in the next two slides.
First half fee income grew 19% to 151 3 billion from broad based growth.
Underpinned by increased customer activities.
From the chart, we can see.
What trajectory in fee income over the past few quarters.
Supported by sustained growth momentum in our wealth management fees.
First half wealth management fees rose, 25% to 548 million the highest level in the past three years.
Our strong performance was driven by growth.
In private banking Bank assurance unit trust as well as structured deposits.
Compared to a year ago customer increased deployment of funds into investments now around 60% of our U N are placed in investments across all our segments.
Yeah.
First half 'twenty five trading income was up 6% to $771 million.
Customer flow Treasury income, which made up almost 80% of our trading income grew 10%.
A record $594 million.
The growth was contributed by both well and corporate segments. We also saw higher treasury sales across all our key markets.
On costs.
We continue to be disciplined in cost management.
First half operating expenses rose by a modest 3%.
Our cost to income ratio below 40%.
Second cube operating expenses was 2% lower Q on Q.
Our overall loan portfolio quality remained sound NPL ratio unchanged at 0.9%.
We continue to stay highly vigilant, including conducting ongoing reviews of the potential impact of tariffs on our loan book.
We have assessed that trip tariffs, having first order impact.
3% of our loan book and two third of our loan book and sectors with strong domestic focus.
We further stress tested our loan portfolio.
In a sense that our portfolio remain resilient.
Okay.
First half 75, total allowances were $326 million.
4% largely due to higher allowance for non impaired assets.
This include that preemptive allowances.
Set aside for trip Paris.
In macro uncertainties as.
As well as adjustments for macroeconomic variables updates.
Attributable to a weaker economic outlook.
Our first half total credit cost is that an annualized off 18 basis points.
Second cube allowances declined 46% Q on Q from Laura allowances for both non pet assets as well as in pet assets.
The decline allowances for non pet assets was mainly due to changes in credit risk profiles and exposures.
These are partly offset by additional preemptive overlays as well as download M E V adjustments in second Q.
NPL coverage ratio.
Stood at 156% and 2025.
Allowances for non impaired assets.
Sorry allowances for non and patent loans.
It will maintain at 0.9% of our total performing loans.
Our loan portfolio remains well diversified across geographies and industries.
On constant currency basis loans grew 9% year on year, and 3% Q on Q to 375 billion.
Our robust year on year growth was underpinned by increased Singapore housing loans.
We continued to build market share.
As well as higher.
Create higher non tree corporate loans, where we support our customers in sectors.
Zinc infrastructure data centers as well as transportation.
Our sustainable financing loans continue to see high growth.
Rising 19% year on year to 53 billion.
Now accounting for 16% of total loans.
Our group funding position remains strong.
And cut by stable customer deposit franchise, which made up 80% of our funding base.
Customer deposits grew 10% year on year, and 1% Q on Q2 407 billion.
In particular.
Casa deposits grew by 10, 6 billion or 14% year on year across both corporate and consumer segments, our Casa ratio rose to 49, 8%.
We maintain a strong capital position.
Transitional Reed CET, one ratio was 17% zero by six percentage points lower Q on Q, mainly.
Mainly due to payment of our FY 'twenty for final ordinary and special dividends.
Which offset.
Accretion.
On a fully phased in basis.
Tier one ratio would be 15, 3%.
After paying our first half 25 interim dividend pro forma CET, one ratio will be at 14, 6%.
Our board has declared an interim dividend of 41 cents.
This is in line with our target, 50% ordinary dividend payout ratio.
We remain committed to our previously announced $2 5 billion capital return via special dividends and share buybacks over two years.
This includes paying 10% of our FY 'twenty five group net profit to a special dividend.
Together, we are our target ratio of 50% dividend payout for ordinary dividend. This represents a total dividend payout ratio of 60% for FY 'twenty five.
With this I end my presentation. Thank you very much for your attention I will now hand, the floor over to Helen.
Thank you Sydney and.
Good morning, everyone again, it's always a pleasure to have you all in so that we can do a review together on our performance and also have some time to reflect and also look ahead I'm just would want to somehow apology you might hear that I'm coughing, you'll have a lingering calls.
But I'm just I'm, okay, generally, but if I do have some coughing so bear with me.
Allow me first you just delve a little bit deeper into our first half performance. So if we go to the first page.
Just want to say, we continue to deliver a resilient set of results dishes with wealth balanced earnings through even through a rather complicated economic cycle.
A few points here indeed, we benefit from diversified earnings has reset with a strong on our interest income a cushioning the impact from declining interest rates June Judy has express on how interest rates.
Have shape the movement of all of them, but if you all want to talk about this more maybe later on we can cover.
And indeed, I think are why we sit here and also reflect that so we have been successful in executing our strategic initiatives to drive revenue growth.
I think you all remember we talk about the three year plan of incremental revenue of $3 billion from the period 'twenty three.
225, and as at the first half of friend, who 25, we have achieved nearly close to 90% of that 3 billion. So it was probably a bit ahead of our structure.
A share by treating all net interest income is also in a way decline right from the peak to reflecting the significant decline $6 in Hong Kong dollars benchmark rates.
But we continue to see volume growth, while you can see it oh loan exposure along expansion drove the pays us indeed moderated in recent quarters.
Non I I'm has shown resilience backfile efforts in driving our strategic priorities, we talked so much about building the wealth business and building the cross border business linking up greater China with us in wherever we are well positioned to serve our customer so.
Wealth management in Guangzhou mentioned this is a important key business pillars.
Our plan and of course, we have been seeing realization of these strategic efforts in growing our wealth business have 70, and and Oh, Jason here today is again if you.
You are more interested in the wealth business I'm sure, they're very happy to share some of the things that we have done that enable us to continue to growth and keep the momentum of the growth in our wealth fees across all the product channels.
And and indeed, this led to a 25% increase in wealth management fees year on year.
Wealth management income assert that we continue to grow that in England has also increased 11% from a year ago with continued momentum in net new money I think that this is important we see that inflows across all wealth segments and I'll just give you some breakdown of first half we have.
Net new money of $9 billion and dishes, a 4 billion growth in the second quarter falling 5 billion growth in the first quarter.
We also saw an increase in demand for diversified investment options. So kind of interested in wealth planning advice and also alternatives investment as well. So this is a testament to how we have enhanced our capabilities and also expanded our M pool I remember when we talk about.
In particular for our private banking we are growing.
And offer you a plan. So this half half two enhance the wealth management business on the trading income improve naturally driven by customer flow. This is the good part.
And indeed, we have seen increased client liberties and all come together when you talk about incremental revenue of course, you have to have to initiate chips.
With our one group approach, but indeed it is true a few years of working on serving our customer better across all geography has a volume growing have more customers and more customer leading to demand for our mall and different products and as we improve our channels.
That's also helped.
Clients continue to also accurately hatched exposures, including long term ready to hatching for infrastructure and also a project finance transaction, so well Wow. This.
It's all the way for somebody adjacent business, but.
But a lot of our growth is also not just for loans, but anything that related to the loan exposure as I just mentioned.
So for.
G H, a awkward eastern insurance business right, a profit contribution 10% higher than a year ago on the business performance stay resilient.
And running are in today, if you want to catch up with them, but they did already amongst our results and talk about how they have performed and I have a bit of a forward looking or talking about strategy as well. So indeed, our investment income also improve right on stiffness outflows in the.
Ocean has also impart due to a higher share holdings a gain from the ratio. So about the offer for eastern does so quite a lot of comments in the media and and I, maybe I'll just take a chance to really reiterate OCB Association on great Eastern.
So if you ask me I am happy we are satisfied because we fulfilled our objective of gaining more economic interests in great Houston right, Some objective, which we sat.
I'd bring you back to one year I'll check just when we sat in a triangle Twentyfold Riggio announcement right was to increase our stake in great Houston with a real to the Miss we did say that we were successful in increasing our stake so rising from 88, 4% to 93, plus seven 2%.
So if the increase was.
Was substantial enough to result in a de listing we welcome it.
It did not but it is also acceptable to us.
Oh this year, but the listing resolution was proposed by great Eastern.
And could you sound plan and they have to we solve the 11 months trading suspension right. So ODBC supporter of the the lifting proposal with an extra Nova right. So we are consistent.
But if the listing is not achieved.
We already have the plan to support G to resolve the suspension by opting to.
If you take only class C shares I think you know the whole proposal very well I do need to bring.
Bring it so the cross shoppers without the voting rights right. So are we maintaining our economic interests, but help G.
Of course, we still need to see the result of this this is a plan to help G to resolve the.
The suspension right, so and also I'll schedule with Great Houston has not changed.
<unk> has always played an important role in OCB sea of becoming a leading wealth management player in the region and over the years, we have increased our stake will depend all integration and increasing synergies with great eastern.
And we will definitely have more to share as Greg continues to ramp very very closely with everyone of us and are considering and planning for a more synergies.
The collaboration working together, so and possibly over do you have built a more comprehensive and innovative suite of investment in insurance and a state planning solutions to our customers and our criticism likewise have benefited.
A very committed our retail and commercial customer pays off for them.
To deliver their products right and with the increase in our shareholding in <unk> to $93 seven 2% and we will come to you to our salary the synergistic work with GE as we grow as one integrated financial services group. So I just want to leave that on.
The on the comments on the G E.
Happen recently, so just wanted to wrap up this page of course cost to income ratio remain below 40% junior talk about tight management of costs.
But we still want to enhance our technology capabilities, especially in AI.
So remain maintain cost discipline and strong control on discretionary expenses, but for investment we need to put him we come to you to do so.
Asset quality of course remains a resilient and.
PL ratio maintained at four 9% for five quarters in a row and just as since June 24, I'm trying to get ready for them.
And are of course, a lot of people talk about uncertainties due to the trade tariffs and so we haven't seen the end of it yet.
But that has been impact, but so I think we have been always been be paths are when you look at tariffs. We don't respond to a terrorist changes we are preparing ourselves with paypal customers for that and I think the market was quite be Pat as you can see how market has rebounded since our liberation.
One thing but.
But having said all of that.
Because of the uncertainty and the volatility we did put aside additional UCL in both first and second quarter as the trade negotiations are progressing right on.
These are included overlays for our businesses impacted by terrorists or slowdown in global trade as well as adjustments are for our M. EV uptake so emotionally.
The change in our GDP forecast right and we will continue to view overlay approach.
So travel negotiations progress.
Currently do not see significant weakness in our portfolio, but do want to highlight that our Hong Kong CRE remains a sector that we are closely monitoring and working with our customers to support them in tightening over these are difficult times right.
So continue to focus on tight underwriting criteria are we do close monitoring proactively de risking our portfolio where appropriate.
Some spots that we grow our business, but I'll also take long to cover those are later on.
With we syndrome results and strong capital and keeping to our dividend policy of 50% payout ratio for the interim results.
Okay, So I'm turning to page.
We just say Ah.
I think we do have stronger than anticipated first half results and we expect second half to be more challenging, though right because alongside Blum with Simeon.
In the first half has benefited from the better than expected GDP growth across the region right. So regional markets were also supported with Frontloading activities ahead of the U S tariffs and government policy support.
And but of course, we look into the second quarter of terrorists and heightened geopolitical tensions have created uncertainty and challenges and that could be for the fragmentation of goodwill train that could be potential inflationary impact from Teva shocks. This confused to cloud the operating environment in.
Second half, although we have a.
A more com our first month of the second half we remain a long term positive on regional growth.
We still say is the place to be.
Investment in wealth flows across ASEAN in greater China region continue.
We still see as I sat pocket of growth opportunity in the region in all key markets.
I now invite take long to share more on these.
Good morning, everyone.
I will start by sharing some thoughts on that situation.
We used the words to describe the parachutes region actually triggers the first what is uncertainty so the impact we see in the eastern suburban Israeli customers Reevaluating investment decision. This is what you see but those are trading flows it continue on a btu basis.
The second of our youth are the second freeze all use described that Terry is chi reaction that chain reaction has been fully manifest itself. Yeah. So what we saw was that when the tariff charge on China production was very high triple digit do you find that the merchandise from.
A major manufacturer of countries, such as China find its way to other markets and because of the side than a influx of merchandise.
With us meeting in China.
Some other local businesses suffered from this intense competition so that was what happened.
However, this was sort of a silver lining.
Businesses, especially in Singapore.
In both of those.
But that's being bought the raw materials for activities conducted in domestically. So like for example, the construction industry and benefit from a lower cost of enrollment the U S. So that's the silver lining so depending on how this show that Terry N V will be there as a chain reaction, which currently.
It's still lumpy.
In personal loan growth.
You will have noticed that.
But I would say pretty healthy loan growth in the first half of the year and if you focus on the loan growth. Both duration did you continue to be healthy the one big contributor reason is that.
A lot of loan growth, which we have been focusing on the industrial sectors that you derived that demand domestically or regionally for example data Center project for example would reinstate in Singapore for example project financing so that work continue to NGO growth.
Look wise for the next half of the year, we are still optimistic that we can continue our pace of loan growth ending.
Ending the year about mid single digit <unk> guidance out yet.
Thank you.
I think it was it no.
I just wanted to reemphasize that ocb's is well positioned to capture growth opportunities as we identify and we will continue.
Continue to use a depressant in the region.
Supported with all our overseas our network of branches.
And Ah Indeed, we're able to capture the opportunities because we continue to run a strong balance sheet and also on capital strong capital position.
Over the years and continue to do so we have been focusing on enhancing our capabilities right deepening our presence in our key growth markets.
A lot of you have talked to us over the last few years, you've seen the changes you've seen.
The people you've seen how we've worked together as a group a leading to a few could use of good results and also the incremental revenues.
Revenues that we talked about so we hope out is also where things just got one group, we positioned ourselves to weather any challenges due to uncertainty and we want to remain and we will remain agile and navigating the challenges and be proactive and we'll put that I call it than me.
Let's just turn to my last page and provide an update.
One red dead, but indeed seen that happening to view, the operating environment and outlook.
Now explain our net interest income to come in slightly lower than the record levels achieved in trying to you 24 right.
And it.
It will be.
The NII would be down by a mid single digit percentage. So as mentioned by Jim you were guiding down there that are interesting and tell them to be in the range of $1, 90% to 1095% are in light of the current market conditions, a little use like me will come down further.
[laughter], but will be mitigated by lower funding costs.
So deposit cost savings expected to flow through from the first quarter falling from our interest rate risk.
Reductions on our friendship Mccann's in Singapore in particular dishes effective in May and we have announced another cut in the office as well on loan growth, we want to maintain a mid single digit cost to income ratio maintained at low forties as we continue to exercise strict cost.
Lynn.
But again again it would depend on the income right, but we will be very disciplined in maintaining our cost of.
Credit costs are we put it up between 20 to 25 basis points and but we will continue to exercise a proactive risk management and we will continue to focus on tightening underwriting criteria a selection of crying, a close monitoring and proactive de risking our portfolio where appropriate and.
We remain committed to deliver up to 60% dividend payout ratio coupled remember, we still have the share buyback plan over a two year payback.
After delivering a two 5 billion.
Return of capital to our shareholders.
Of course, barring unforeseen circumstances.
Sure.
Before we move on to Q&A.
And before you ask maybe I talk.
About this is the first chance I talk about my retirement.
Since the announcement about three weeks ago.
Sean just say people ask me why and all of that.
And it does only one simple reason is I need more time to be with my family in Hong Kong. This is one simple reason and a very important reason I actually advise the board just thinking early last year.
The last year.
And why is it why do you have just not so early because.
Because secession planning is a very serious thing you cannot just say I want to retire and I go to the next day milk I, usually I go in six months well even time you say you go in one year.
So everything we know normal.
When we plan on this and the.
The pop was supportive of course after quite some discussion right and we began the the succession process.
And of course with the real only to decide on the retirement date. After a successor is chosen and approvals have been obtained right. So you cannot say I want to retire in six months' time, and then we turn out with a with a CEO I believe a magic wand and.
That is not the case for seals assertion.
So and so it was a busy as I said, we take succession planning very seriously and 14 positions. We always have identified internal candidates and we have also rather sudden development plans for all candidates and indeed as you said when I took over as CEO. We also have some changes to the manager.
My team and quite a number of them are internally selected.
This is important because it said ensure continuity and ensure stability and also alignment with our long term strategic goals right.
SASSA fashion to single a we have to look outside as well right. Because this is only fab we find the best candidate and confirm the best candidate and that's why we did have a comprehensive global such and they're supposed to perform.
We identified potential external candidates as well and the port has finally, ultimately and so I want to say and and numerous needlessly.
Dangerously unanimously consider take long as the most suitable candidate amongst all the candidates we have a we have looked at.
And and that's why we come onto the.
Do you have proof goes and Oh, what can move directly to us and ultimately our Nam.
And I think it is also find and right to say that between announcement two of my retirement and will have six months.
And we have picked the wrong, who have already started to do more but they tend to have a a very smooth hanging over as well and take long as most of you have met with them and talked to him. He has been a key member to join us for more than three years by now and.
He was part of a very a significant member right into our whole corporate strategy and we talked about so much about our flows are linking up RCN and grit to China and building the team in the region and Tic loan has really been that anchoring on.
The success of our one group approach and I have been placing a great emphasize emphasis on since I took office back four and a half years ago.
Less than four and a half years ago.
That's more than four years ago, so take them home.
Expect we'll refine our strategy.
He is very deep in looking at what's happening to it.
The business to the well to a wherever I go in what we can continue to improve and I'm sure. He will share more details next year as you read from the analysis more miles stepped down from my role as the CEO I will continue to serve as the chairman of OCB see China and director of CPC.
Hong Kong that allows me to spend more time with my family in Hong Kong, but indeed on I want to to remain a link and connected with Otp, San Juan to be committed to support <unk> growth.
These capacities right.
So while I have more time with my family in Hong Kong.
I will come back quite often and if you don't see me on the street somehow.
Please say, hi, I would like to catch up and our and I I need to come back as well.
Because I am still a board member of Enterprise Singapore.
Ah I won't come back because I will have family in Singapore somehow.
But that's a very private but anyway I wanted to I wanted to sorry, I'm not that same area.
[laughter] no no I'm, not getting married and wholesale either [laughter] family members in Singapore, just what I'm trying to say.
So it might take long to I'll say a few words.
Yeah, all right.
Right.
Yeah.
[laughter] anyway.
I I I feel bad about my impending appointment to the OS V C.
The huge privilege for me to begin with this opportunity because it <unk> really very small REIT bank would be very very long history.
Hum.
I have joined with CVC for more than two years and even before that I go opportunity headland that'd be.
A lot of long and numerous conversations and I find that we see a lot of things are you know.
We share a lot commit perspective, and she's a indisputable.
Expert in China matters, and because of my stringent China. There were a lot of these retreat this cause and I dispute your change. So the end result, I joined <unk>.
So while we're in as soon as Manny discussed however, one thing which is not using wafer Helen.
And that is a very hot topic between the two of US she didn't pick spicy food very well so some of its consumer I choose restaurants without her.
Industrial about my thoughts about the OCB C franchise.
I think we have a great platform.
He is one of the best platform in Southeast Asia, and Greater China right.
Well, we're all concerned about a committed wins and you ended up Harry but structurally if you think about it this is the place to be.
One our GDP growth rate in this region instead of one of the fastest in the world.
When we talk about the China slowdown is slowdown at a.
5% growth.
5% of your Tri State a number roughly is about $9 billion.
You have a perspective every four or five years, where value added by China at 5%, So cost, but we'll grow it goes through the whole RCM group, which is at three eight trillion dollars to date. So I think it's a good place to be in ASEAN.
Growing in their slow year four 5%.
Europe, maybe six 7% so is through very good region to be in.
I really am a banker who started my career in syrup and Brian.
So I understand the RCI reach them very well.
So what's based in China.
Yes.
China franchise.
So it wasn't a very wonderful experience broadly speaking for myself I spend about one third of my career at risk group.
My career in the frontline so I think this environment I think.
Okay very good insight on how to speed member and tab there.
Right.
Relationship so with every economy hit mainly phase there will be opportunities for us and we need to stay with them.
Finally, I want to say one more thing, which is I think Peter you need a boost CBC group is a huge strength.
Do you actually integrate to a financial services group.
So there is less synergies, which can be read from working together in closer collaboration I think has put us on the right track.
One group strategy, which I'm empower their metro meeting and this was a strong foundation for us to attract the next chapter of growth alongside with the rest of the management team and those have you see.
Thank you.
Thank you, we'll take long please feel free to phone him questions.
But it will pass out the current recession and changing this.
Yeah.
First I will let John Nicols.
Okay.
Congratulations.
And I would like to ask about Easter are you still considering charging bancassurance fee on each day.
Just want to mention.
So.
I would like to ask me there Henry.
And pushed rates.
Great.
Pushed today in wholesale.
Thank you Anthony.
I used to.
Review.
And do you see.
Uh huh.
Operations.
Now you see.
Thank you.
Yeah.
Okay.
And second one I would like to hear.
Okay.
On Roes and how many rows of well.
C B C and he wish areas and regions.
Yeah.
Okay. Thank you Oh, great eastern charging.
Charging bancassurance fees only one of the one of the things you have to we keep.
Our options open discussing with our great eastern but the emphasis is definitely on how we work closer together and I realize some of the synergies that we can we can we can do together.
And I think I'll throw this one yeah.
And don't forget I had been a board member of <unk> for Awhile. So with also with Great Hinson happens as John I think John in terms of possible fossil is almost coming up to a year. Soon so that aside yes sure you. There's so much discussion and working together.
We remain very positive about how we can deliver better results in the future together.
On the tariffs I guess, you mentioned that there is still China coming up and last night, we see a few more a conclusion.
If we have you seen how do we look at cabinets. It's again, we looked at it all the time.
When we look at our portfolio, it's not like one stop to say that even as the tariff situation with China has been announced it doesn't mean that we've already stopped looking at the impact right. So it is an ongoing process. We mentioned our first half of the Euro D have some overlay.
Consider some more it depends it depends on the results on how we've seen the book and how we see market conditions. So nothing to share at the moment, but what we have done in the first half of the year, we're quite happy with.
So I'll pass on to take long to address the other question.
The other question is about Oh, how interest in inorganic growth.
I wouldn't say there'll be a range of obtaining growing organically.
Italy for organic growth is on the cardio and strength of our competitive position in the market to serve our customer better for you organic grow we are also looking at opportunities but.
Grocery is opportunistic for any organic growth my view is that you must.
Two main criteria one it must fit our strategy.
And two it must be a reserve the cost so we certainly don't want to overpay.
Kind of like give you some.
In fact at this juncture.
Do we take a question from the sell side, maybe a cashless.
Move on to you guys I'm sorry go ahead.
Great. Thank you so cash from UBS, thanks for the opportunity.
I wish you, a very happy to time and talent and congratulations and all the best the.
The first question is just on asset quality. So this quarter, but generally the NPL ratio was flat, but there was a bit of a pickup in npls in the consumer private banking space roughly 150 million. So if you could share some more color on that.
And then related to this the Hong Kong banks that have reported have.
It showed some renewed stress in the CRE space.
I just wanted to get your thoughts on why do you think this happen is there a chance that could happen to you in the coming quarters.
That's the first question and then I have a few follow up questions.
I think Jason will cover the first one I think commenting on the Hong Kong sale, Yeah, I'll stick around to do that.
Sure. So the increase in the Npls are relates to some of the loans which are.
<unk> done in the private bank.
To be fair, we actually and in line with our risk appetite, we've taken a prudent approach.
To these loans.
We are still working through them, we're actually making very good progress. So we hope at some point in time that we would be able to right back up but it is just a few loans that sits within our book, though we're being quite prudent in our approach and walking them through and we hope to be able to ride that out pretty quickly did you say ritch.
And is it a fixed margin loans or is it a large number of clients or maybe just few mines that actually spread across a few I'd rather not talk about the region just yet, but we are a we're pretty confident on being able to recover a lot of this so it's again to be regulators just us being prudent it's not.
It's not a lost calls for lack of a medicine.
On the Hong Kong CIC station, which is not new to US we have been tracking that market for quite a while I think if you recall in the past sessions I did talk a little bit more about Hong Kong. So it would be very prudent.
So Steve we have been proactive managing our exposure the overall CAGR, which has just kicked off for us in the mobile device segment second lead to the proactive management, we have been downgrading of cases, which means the outcome of which is that E. C O to O E. C O tweak it increased so it has been Ah.
Put into the system as we speak today.
So as far as the Hong Kong situation do not deteriorate industrial this year your valuation I think we are quite comfortable.
I'll give you another point based on our provisioning policy has been quite conservative and based on some of the recovery actually we had done in the past is more or less in that ballpark.
Sure. Thank you.
And the second question then is on the dividend so based on the.
[noise] payout policy that he was committed to 60% for this year.
Hum.
I think the debate earnings are trending it's a good chunk of the earnings would be down five 7% and 9% year on year. So there's a good chance of absolute EPS might be lower so last year. It was 101.
You know it might be 90, 596, I just wanted to get a sense are you, okay with absolute Dps screen down. Despite the fact that you still have a lot of excess capital.
But for it to be with you.
EBIT flat year on year.
I want to reiterate that we have a dividend policy and we want to be very transparent with our investors right.
In the past, we have considered opinion about our dividend policy and do not forget we do have a commitment of a share buyback plan as well.
Whether we would consider a different level of dividend.
Tell us a lot on how we see our balance sheet and capital position right and so I can tell you we pay more right, but its dividend policy is different policy.
So clear so if you have a percentage that news we are paying at least.
That amount out from a profit on that.
We pay more and enable it depends on how we look at our capital position.
So do you have anything to add.
It cannot be ruled out the possibility of a flat bps year on year.
You should not rule out I wouldn't I wouldn't say that but I would just say that in the past we have experienced are paying about it doesn't mean that we're necessary, we'll repeat that but.
At the time, we will consider all capital position before with design a final dividend.
Yeah, adding onto what Hmm has mentioned.
Since we announced our dividend policy in early then you can write for interim dividend is at least 50% and you said, that's the time that 50% dividend payout barring unforeseen circumstances, and we have delivered three yes.
For each end dividend now no question about that.
Uh huh.
I've mentioned, they have mentioned, 60% overall dividend payout ratio for FY 'twenty 'twenty five as part of our capital return plan and that makes up 10% that comprise 10% of our.
Give you don't be shy and special dividend for <unk>.
No.
At the end of the year when we looked at our final dividend that is then vivo.
Really take into account you via southern factors to decide that you want to go beyond you know like 50% Oh did you mean do you have you done and as you can see in the past two years FY2023 'twenty four we did go beyond that.
We paid 53% and this is an exercise that we will continue to do and what we look out for I really you know.
The position was kept it needs to support our business growth to support strategic initiatives. You know corporate strategy are there any market. He means that banks need to set aside more buffer to navigate the uncertainties and of course, there was a question to take long Island.
Any opportunities.
Also.
I'm also very aware that we should set aside some dry powder rifle GNU C O who maybe wants to go shopping.
Although I'm very flat he say that yeah valuation matters a lot. So [laughter]. Okay. So these are really a lot of factors that we take into consideration in our comprehensive set of.
Capital return plan as I mentioned before is spelled S going forward position on dividend payout. So just a question in the past.
There was a bit of a reduction in staff.
Quarter on quarter, it was a bit of a reduction in staff costs quarter on quarter.
So just want to understand is it part of some initiative or is it just accruing bonuses in different quarters of the year.
What drove that stock cost reduction going through taught me is because of economic activity right. Because if you you know some some staff off eliminate surplus.
Performance and so if you're all resolves numbers is slower so potentially that slower too.
And partly also we haven't really grown our headcount much yeah.
Okay.
She is a part of all our tight cost control and yeah you.
It can stay at that level right stuffed crust.
I hope so [laughter].
Just finally, what's the plan with T like if there.
<unk> does not happen I'll be back to square, one and trying to figure out what is the next what's.
What's the next step here.
So I always know are back to square one we increased our stake in G. As we had planned and as I said the discussion of GE continue it's not a discussion so simply put it is really working together I think I think I can testify to that we talked about so much.
More different opportunities and how we can actually pool, our resources to get our realized better synergies as well. So I do think we are going back to square one.
But we did say that.
We have a achieved what we wanted to set out to do I remember when guarantees that you can achieve to listing because it's just up to the knowledge you showed us.
So, but that's the whole point is we did increase so that means genius contribution to Osha PC group will be better going forward.
That fact.
So we'll.
We'll see I mean, why do we wait for the results of this pollution issue and doesn't really talk but we also said that test the listing all fall exit all phone as to.
To help Chi to support Chi I don't like the world as well as to support you need to we solve the suspension. So that is why if you look at the U T. M. The regulations are all out there.
Waiting for anything to say that is that the listings does not happen. Then we then come back and thinking about it because we wanted to have them to resolve this we felt the proposal of the publisher and across Asia is a very valid resolution to support Oh.
G to resolve the suspension right. So let's see how that is like a movie that we don't really have any imminent plans to launch and get an alpha.
Shareholders opting for class for you also.
It.
It's been a difficult minority shareholders also opt for the class C share.
If they do they offer the class V shares then you'll see the result for us.
I mean, what's the deadline for this could you remind us.
What is the deadline, but like when do we find though certain of this.
Okay several office.
Yeah.
Nation, that's something that just remember if they are not quick to crops. If they don't need to do anything that moves that will receive the felicia.
Okay. Thank you.
Be it a front Julian from Macquarie.
Okay.
Yeah.
Sure.
Congratulations on the appointment and Helen.
I believe four and a half years it satisfies so I'm wishing you all the best as well I'm sorry.
So I had a couple of questions just on.
The NIM in the deposit side I'm sorry.
So I think can you you said that we had an exit NIM of 188% and we are expecting some some good momentum from some of the deposit rate cuts can you help us to sort of quantify this and maybe also to think about what the quantum would be from the reductions in the 360 account because I think that was one of the important factors that you mentioned if you can.
To help us to decide to shop that'd be wonderful. Thanks.
Yeah, not so much green right into the quantum but what we are expecting is I also do you feel the rates assumption for the benchmark rate from one point it would be a spike it's about infection rates rather than they had at one point and the assumptions are really firstly on the deposit cuts that.
Head and as Ray mentioned and second easy aspect, So Ryan Hy Bon to stay steady at current in the books and I Miss you about two rate cuts right.
Increasingly possibly do more TV cause you know are now using the treatment cost assumption b.
It's huge historical small transmission rate to the tune key rates of high book as much. So a sofa high bar, 100% transmission from distribution cuts and for Sarah It is like 50%, 60% transmission so lesser degree no.
Based on D. B do you we.
Expect a second Q and for kidney to be above that.
So that's why you still give a you know a one nine to $1 95, it is not easy to come closer to the higher end.
Oh my assumptions come true.
Of course.
You know depending on YY to give a rain check it is oh, so barring a sharp drop again.
And then.
With that we also looked at volume growth to make up for some of the possible drop further.
Great.
And as a result of this this time round. We also give some guidance in terms of NII.
Right.
Mid single digit percentage Trump.
Yeah.
Just to put it into some perspective of what.
What sort of assumptions have you put through and then they didn't do it yourself.
Okay, but I think all of the factors that you just described directionally like negative for the NIM right, because if you're saying there's going to be more rate cuts. So then we sort of saying that there'll be some management. If the overall deposit portfolio like LDR has come down are we saying that we're going to let some expensive funding good.
Maybe if you could elaborate a bit more no she oh.
At least they'll come to policy in the sense that remember we've also declined liquidity right into the treasury markets assess right. This is that if you have more deposit we can let go of some of the wholesale funding that's about.
So and the policies to us is franchise yeah.
Okay. So it is all around managing funding costs as well as being able to still keep the volume to grow and I think that could be at the extent of the expense of mean right now our interest in the asset base will grow and so yeah. So it's a delicate balance of.
NII in smelting.
Okay. Thank you very much.
So julien.
Possibly.
Thanks, Ashwin JP Morgan. Thanks, a couple of questions one if I look at the guidance.
190, and 95 engine, you said, probably higher end of that range, but even at higher than it is flat NIM mathematically.
Mid.
Mid single digit loan growth kind of in line with where ITD, maybe slightly lower cost income ratio of low 40 means slightly higher than the first half very comforting for any favorite getting higher than the first half.
So it looks like half on half metrics are.
Worsening of reconvene on half on half basis is that a fair read or all of this guidance lines are very conservative.
Hence most likely.
I'm able to reconcile them.
But a bit of a pause.
Other live commentary overall, but if I look at the number seems like half and half would be deteriorating.
Thank you for that comment I thought in the very beginning with the first question is how does the tariff situation right.
Certainly there's still that.
Thank you yeah, I don't think.
We ended the year with wave.
No law people expect it even further escalation in the middle East situation right. So I want to say.
What are you, saying just as potent or what it just uncertain, we hope that it will be better.
But it is uncertain and will take long also said that.
There were some of the first half we also see that that's a little bit of pre selling right doing more export firstly, if autos haven't kind of thing.
So well now that some of the terrorists raised have been affirmed what exactly will happen unless exactly what will happen to the customer.
Yeah, we see the we do see our momentum because you you can look at your loan growth but.
If anything it would it be even tighter priced because our people to rush to the better quality loans right. Yeah. So that moves no matter, who could be tighter. So am I missing that dish was suddenly happened and I don't really have a crystal ball. This is really how we actually see the situation, we don't want to whenever Oh.
The aggressive annually in looking at our numbers I thought a and when we feel that we need to revise it.
Like the many situations, where you also don't want to over promise. So I'm just I hope that I mean that was most of the answer to your question because.
It is still uncertain.
And I said to you today, we don't know what the situation with China as yet.
No. Thanks for that and then the second question coming back to NIM, because some of the assumptions. If you think about high bar soda.
We had year to date.
I bought a movement have been significant right and there are other.
Driver for scholars friends, the game sort of movement downward.
200 basis point, almost a year on year.
The normal.
Our through from Fed rate school sing dollar rates is not exactly happened.
Next let's say three six months first what is your exit NIM in second quarter and the next three to six months if some of the similar trends continue.
And we have a meaningful.
Gap between fed rates, so far and a high bar and a sort of thing.
Can we get to the lower end of your margin range is that where that margin of safety you have built in your guidance.
Yeah, that's possible I mean, if you look on mathematically I'm sure all of you at that.
You know at 1.9, the remaining two quarters, you'll be below that right 182, or something like that right. So that that's sort of could.
Possibly happen if that.
My assumptions on stadia, solera, and high ball or need and historical transmission from the fact that cuts.
No.
And you can see how much are you yourself mentioned, how much sunrise and.
And how much high bonds.
In the first half so if they continue to fall and disarm range. One nine is a possibility and that is that how do we.
How are we able to bring in would you be able to at least bring you know stabilize and I Hi, Bill too.
NIM coming off extremely yeah.
Do you have to balance this and to us and ice.
Okay.
No I'm kidding.
Sorry exit NIM in second quarter, what was that.
Yeah, I mentioned, just now one point at.
One one.
And sorry, and the final question on this weakness in Florida. This is a departure from school for any broad towards why that is happening.
And any reason why that would change and go back to the historical assumptions relationships for high BARDA is clear right. There was a you know.
The Hong Kong government defending.
The pack as a result, which doesn't really flashed liquidity, forcing CR Cri is again really a lot of liquidity coming yeah.
Okay. Thanks National Pasta month, Nick in front of you.
Yeah.
Thanks, very much and again good luck on your retirement and congratulations take long.
Just coming back on this business points and I've got a question on wealth management can you maybe help us a little bit by giving us I mean, effectively your banking them I guess came down.
10 basis points or whatever and then you've got the two basis point impact from the.
Department to HQ L. A.
Or even just on a loan basis can you give us a breakdown.
Sensage wise between the importance of the move in high pool and the importance of the move in SURA.
Driving that shift down in an asset yields or banking them.
And then maybe you can help us just in terms of our sensitives him in as harsh points out obviously.
The relationship between Asian rates in U S rates is completely broken down in the last few months, yeah, that's likely to persist.
Is it possible for you to give us that sensitivity by currency so how much of it.
Precisely on basis points, but you know a third of its U S. Singapore dollar race that Hong Kong rates or whatever because I mean very important point here is that if high bar is a big driver of what's happened I mean, obviously, the futures expecting about hybrid tables.
And the next three months or six months, so it's very difficult for us to sort of work out what's happened to them unless we never currency sensitivity.
I have a second question.
Yeah, we did geese NIM sensitivity across the four major currencies right. Yeah, and then I also give a breakdown of our sort of like 50 about 50% of our loan book are in.
You know us you see.
Darla assessed Hong Kong dollar.
And also this repricing profile 80% of singular.
And B price Oh, sorry.
80% on 14 rates and then for a Hong Kong dollar almost the full answer.
And usually the repricing for Hong Kong dollars radically.
One man.
The majority of that and then some on two months.
And have you say that you know usually when you look at NIM sensitivity is over one year.
That also assume that the reprise after the policies.
Why you're seeing such a high impact on our NIM.
Due to the sharp drop right and saw Ryan Hi bought us in second quarter.
<unk> is a reflection of the lagging effect of some deposit pricing.
For fall a Hong Kong dollar deposits I actually also quite sensitive to rates.
But they reprice, a you know a longer.
Back to the repricing of the asset side.
So you know [laughter], so put it in a way of your 14 basis point decline Q on Q.
Yeah, two basis points was I think it was four she was at 12, sorry, 12 basis points two basis points was because of the yeah because in large base of the deployment into the high quality assets that I mentioned in the first quarter. It is still a lagging effect of that Oh.
Sort of what are you in fact, they come in in the second quarter. Yeah. Okay, and then 10 basis points was because of movement in the loan and deposit spreads.
Is it fair to say with two thirds about was hydro I mean bear in mind that highball came down 300 basis points from one single area.
I guess that guest because high ball in second Q of Lauder, if he got dropped like 20, and 300 basis point range. Okay. So that's a good rate and then just on your sensitivity on me I'm sorry.
Rate cuts.
You have everything remains linked sorry, if we saw three rate cuts in the U S. You would assume a high broken down 75 basis as well as how we should think about says yes.
Thank you.
Secondly, just on wealth.
Management.
Any can you give us any split between web and net new money came from between CFS and bank of Singapore.
So you've given us for 4 billion in the quarter, an indication 9 billion in behalf any indication as to.
Was it 50 50.
75.
We don't normally give that split, but I think I can say that both have registered good growth.
Okay. Thank you.
Tom from Citi.
Hi, Thanks for the opportunity so maybe just following up on the wealth management.
Just wanted to check if there's any change in the product offering, but changing customer behavior or even are you seeing how are you.
Lending and wealth driving leverage.
It should be because of these have come off.
Oh man coming from just wondering how sustainable. These we're all for it that east and whether you should do the run off on the treaty Osama structural shift behind the scene.
Hum Us Jayson and maybe he sent me to talk a bit about the trends and behavior of customers in wealth and then take long to cover the SME habit.
On that.
Sure.
And I'll start with the bank in Singapore, So for our client base.
Actually although we were relatively worried about liberation day as you can see from the the market. They continued to show strength and they continue to grow.
Day after day, so we've seen clients actually across the board do a lot of trading.
Structured products and continue to trade into the volatility of the market leverage has actually been relatively I would say muted, but it's not as big as we had anticipated because I think there is still that the fear.
Of drops in the market. So we haven't seen outsized leveraged.
In addition, we've also grown our at least in the back of suitable quite a lot about fee based business.
This year alone so we've grown quite significantly.
To create a more.
Resilient revenue within the private bank, but it's much more broad based and not not so one off as you may imagine.
Yeah for consumer side, we do see a pretty much Bruce Brook basically all the assets like treasuries your bonds and a structured product. We also do see a bummer shows growing quarter on quarter and of course, we do have some new products together G. At this.
Also helping us to grow our bank assurance bogey in T. W. P. A M best and also our revenue portion on the loan side leverage type C.
Pretty much good growth on the consumer side as well and you've been treacherous environment, Let me too low we do see that there probably could be a sustain oh the leverage portion as well.
Thank you.
Sorry, I didn't quite catch the partner S. M E.
You're asking about <unk> or <unk>.
<unk>, Okay alright. Thanks.
And maybe it was.
Pulling up on it.
Even the retail anymore.
Oh, okay.
Oh, Yeah, I think the last two years China's almost all payment can be explained.
China.
That's a repayment.
I presume, you're referring to the repayments from China companies, because they're cheaper RMB instead.
Is that the question more comparative highball.
Both of them, but they're the high ball onshore reads and because otherwise you're more comfortable to grow.
Yeah, we haven't seen customers moving full RMB financing to high ball because high boy is seen as short term.
Situation, so forth some categories. They may use Hong Kong dollars, but the major trade currency remains.
U S dollars and for Chinese companies to the extent that they are.
Home currencies ramp you do continue to be that's what we have seen let's not forget the very intense price competition among the Chinese bank within domestic China, which is our single largest source of RMB. So the tapping Hong Kong dollar I don't think there is a major I don't see that as a structure.
There were a change at the most is a temporary situation.
And final question, maybe something more short term.
The assumption was so wrong.
Three months, all I assume will be flat on the year.
If you look at women's horizon.
But at this point behind.
You did it was would be a reason for the NIM.
I find it.
You know under current market conditions predicting interest rate is getting to be something that people are not doing.
[laughter].
Yeah.
Okay.
Okay I pass to Felicia.
Did you see from the edge.
Hi, Felicia.
I have two questions. One is more of a whole a lot on first of all I know that the ECL I think you guys said, it's estimated to rise by two.
2.63 billion from $2, one six or 7 billion last year. This is all stage, one exposure and I agree.
What is the probability of such a scenario occurring and what indicators are you guys looking out for that might trigger such a migration and my second question is are they a customer loans and private banking has been downgraded from ECL one.
Okay.
You are talking about ECL on the jungle book and private banking yeah. The first one in general. This is I think page 10 on your financial statements and the second one is specifically on kind of thing.
You are asking whether we will do two more or what are you referring to I'm sorry, you guys said that the ECL estimates.
Right, but this is in the event if after each one exposures migrate to cities.
So we were just wondering about the possibility of such a scenario happening and why are you guys looking out for them I got that.
I don't think we can provide an answer on what how the migration is going to work because it's.
I'm.
I don't think I can have an answer to that.
Do you work trying to us because.
And we just noted that you guys are looking to your E sales estimated to rise.
So we were just wondering what are what is the probability or possibility of all of your stage one exposure.
Yes.
We don't Yeah, I don't think we can provide an answer on that yeah.
Yeah.
Well, let's let's pick this up I really want to understand what exactly you want but we can pick it up after this.
So the question on the because I think it is.
The consumer banking and private banking loans that your npls at $48 million. So and you said there was just a few accounts of this I say anymore, they've anymore that you're likely to see in that.
Okay.
I'll take it from the private bank side.
We are always constantly monitoring our loan book exposure right now we don't see anything in the pipeline that causes us any concern any worried that it would increase and as I said and as I mentioned before all the loans that we are currently classified as it's a part of our prudent approach they're well.
Well secured.
Well securitize, so we feel confident about.
About walk you through them and we don't have anything in the pipeline that causes us any concern.
So pass it to C kit from Channel News Asia.
Hi, I have a question on leadership position. So when it comes to ensuring a smooth transition can you give us some details on that.
That has been done so far for example, techno our immediate priorities key areas that you're already starting to focus on and you will be doing more so in the next months a few months ahead, Helen I know, we still have a few more months ago, but is it possible for you to do a brief look back on your ASP and a half years I see you and why do you think what's the biggest challenge you faced.
So we do that.
In January.
I think it's too early to say I am reflecting on what has happened right of course I'm very happy we have to go wrong.
I'm actually very proud of that I managed to convince him to join who see B C. Three years ago.
So I think the connection is something I would do later on in the year not now I still have a job to do we still have to deliver we still want to be able to make sure that our year end results is not at all.
This live up to expectations on our plan.
Yeah.
Pushes casino from two perspectives, one is I'm a tape out the senior team on the management Committee working with <unk> and the rest of my colleagues. So I do not just covered my own.
A department Division I actually covered a little bit broader where I can contribute contribute.
Having being someone who is actually very familiar with their customer base and having operator across many divisions.
I have been working very closely with Helen or many things so in that sense. It taper gopro for.
Secession of course, we didn't expect that the physician is a I mean, when I joined two years ago, We happy working together very closely now the second thing is that recently because the bank as forward looking we have been Oh, we have set up a unique causes a task force closer strategic resilience group.
This strategy is good too into account what's happening in the world, where you know, there's a little bit about geopolitical tensions in a in the north Asia and middle East any effects. So so for example, shifting out some of our customers etcetera etcetera, and we also took into account.
The evidence of AI.
It's a you know a fast moving fast developing space. So because for many reasons, we decided to set up the strategic visions group and I Chair that group. So on their group. There are some call members such as a CFO. This Yahoo head of global markets and.
And our technology.
It also includes all of our business he so.
So together, we have been charting and making recommendations on how we should put as you said the bank. So that's a much wider.
Then my GWB mandate and our report to Heaven.
And these are on the on this strategy with this group recommendations.
There is also another forward looking.
South hospitals are looking at certain businesses, which we should grow that is what we called bank of the future task forces. So if you look at especially area on how to improve well further how to get synergies from eastern the insurance and all well say twice that trial. So.
Actually our co chairman together your transformation.
Thank you Melissa from Goldman Sachs.
Thank you very much and happy retirement and congratulations.
I just had three questions just firstly back on the NIM in terms of opinion in terms of cash flow hedges do you still have that on your end.
It's it wasn't if you didn't have these hedges.
To understand like I said, you know what he seemed to fall you know in terms of the same.
Do we anticipate that NIM will continue to go down after that as the hedges rolled off.
Yeah, do you think of the cash flow hedges, which we intended.
And then do you think three and three and four are still there.
So it does help a bit.
Right.
We will see the Rona happening after the fact and then after the year end you will still see some pressure yeah. So so the effect of cash flow hedges.
And then yeah.
Then the broadcast will have just as like two to three years.
When the two to three years mature you know that's valuable.
Taper off okay.
Thank you Dan.
And then into the next question in terms of your <unk> target.
Yes.
Previously you mentioned early targets of 14% in the medium term I guess, given the environment it might be tough, but do you have any thoughts about why these are targets and just kind of an environment you find medium term.
Yeah. So I mean, if you look at our mix of our business right Oh.
Yes, we have been trying to raise you know the non interest income right and and this is where we do see increasing proportion of our total.
Shifting to non interest income and the integrated financial services group that take no mention is really a very key part of moving our you know composition of our revenue into more fee base.
Income right and this is that this is Chuck.
Suck up a long term plan to really shift to us higher I E.
S V and if you are still they're relying on you know loans.
Hi, and yesterday at W. E.
Creep up and usage of capital will go up as well you know this is maybe they'll have to maintain a larger proportion of E to being able to sustain those business, bringing in more and more fee income.
E com customers Treasury flow trading income so on and so forth I really part and parcel.
Long term sort of goals to bring our Agua Rica.
If you recall in the past you know that.
The interest rate was a little low Oh, he was like 11% or sometimes even less than 10% right, but now we you know now even for second Q.
NII was impacted due to the risks mentioned annualized basis is 6%. So this is that we do see a larger proportion of valves fees. The momentum that we mentioned start showing some results of that.
Insurance income, making up a bigger proportion of our earnings.
So.
So what do you see why we wouldn't be at 14, and we can be at 13.
Yes.
Yeah, that's certainly and handle that I would like to walk through it.
Our team at a time, you know watch them.
And I was still quite a bit.
But right now that we know NII is sustaining you know and that's how much we can go out E S.
Trading income to make up for that will determine how fast we can move you know what.
<unk> plus percent Oh, how many yes, yeah and also we still have on share buyback.
These 10 plan, which will also help me in terms of the idle ESL, Yeah, I suppose is obvious and UBS.
Looking at you know too to really be able to you know a.
Sustain a higher level of Arrow E and.
Low interest rate environment, let's say not in the summer he left in a sense anymore.
Okay. Thank you and I think lastly intensive.
And we didn't get the full prioritization, but does that change any of the plans that you have with them.
Could you have done differently. If you had full prioritization versus not in terms of you know the fall at Lucky synergies working together capital optimization what changes.
Aye.
I think that's that's clarify with another top tier about prioritization in L. A and of course, we use it I mean, obviously with the lifting you know GE is a very old company, probably will never have 100% of G in that sense right.
But I <unk>.
I was chosen as shown on this whole we show last year on GE.
The first one is definitely.
The use of our capital.
We want to buy into entities that we know rollout.
I mean, you're always going to ask me, how long in Russia, Russia, M&A plan and to an extent buying into GE is as you can see it is a it is more like a M&A because I am increasing stake in investment, but we chose a G. Because we know them and instead of having.
To assess whether whether to go outside and buy something that we do not know we felt that was a very good move and we like GE all the way and so when you did that so the listing all should help a bit more because of.
Of course.
Yeah.
The company does.
Mr. Luiz to adhere to and May impact some of the related transaction, right and and all that but it doesn't mean that.
We cannot work on a lot of the things that we want to work together, but I thought test show off our wish to increase in the AR in our economic stake in <unk> is also a very long songs that are very keen on us that.
Together, we can actually work better because having high economic states. When you start you will turn more to make sure that they also generate more profit right otherwise you are.
More economic state of West company, that's slipped away. So that's why I do I would say that it is also a very strong.
Shifting now to say that we are intensifying the efforts that we have been doing and identify new areas that we can work together, so to listen or not does not impact that.
But of course, the Danish thing is a signal that we truly intensifying the way we work together.
Okay, then maybe just one of them in the 900 million is satisfying.
The listing will happen on the second piece now that that's no longer there what are you considering for ethical back into the pot or inorganic inorganic.
Well Debbie consideration.
Hopefully raising dividend it goes back into the part of the capital.
And we can see that rapidly would have anything they want to do it depends on how you evaluate the whole capital situation yeah.
Cause already passing and then a quick question.
The last one.
I have lots of questions, but I'll just ask two and then ticked down and I'm just wondering.
Continue Joe one group strategy and.
So you know one of the reasons that I think has been very appreciated by shareholders. She changed the dividend strategy to raise a path to 50% now I just wanted to know what your philosophy is on capital management and dividend payout.
And she preferred dividends to be pretty.
Despite these analysts to do the share buybacks and what's your what's your philosophy on that.
That's it.
Oh lung good strategy I have indicated that for US we are in the greater patient services group. So certainly seen it used to be with all of that and therefore, certainly we'll continue with elements of that.
The second question is not so much philosophy is professionally at goldfield pressurized.
Hi. This question of like why is the capital what's the optimal capital you'd need to hedge. These uncertain times is a question of.
How do we look at value, adding to their shares. So there are multiple consideration what I'm really focused on right. Now is the strategy of how to grow our franchise I think that's the most imperative Pos for me.
Okay.
Okay.
[laughter].
Okay Alright.
Thank you. Thank you good luck for the last question I think it would take not finding that very well.
You'll hear from taking on more on next year, but with that I. Thank you very much everyone for joining us this morning and have a good day. Thank you.
Okay.
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Yes.
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