Earnings Call: Q4 2015

Feb 4, 2016

Good morning. This is Cecilia welcoming you to ING's 4Q 2015 Conference Call. Before handing this conference over to Ralph Hammers, Chief Executive Officer of ING Group, Let me first say that today's comments may include forward looking statements. Such statements regarding future developments in our business, expectations for our future financial performance and any statements not involving a historical fact. Actual results may differ materially from those projected in any forward looking statement. A discussion of factors that may cause actual results to differ from those in any forward looking statements is contained in our public filings, including our most recent Annual Report on Form 20 F filed with the United States Securities and Exchange Commission and our earnings press release as posted on our website today. Furthermore, nothing in today's comments constitutes an offer to sell or a solicitation of an offer to buy any securities. Good morning, Ralf. Over to you. Good morning. Welcome, everyone, to ING's full year 2015 results. I will take you through today's presentation as an introduction and then for questions. So we have Patrick Flynn, our CFO Wilfred Nagel, our CRO here with me from the Executive Board. Turning to Page 2. I'm very pleased with our achievements in 2015 as we have delivered results against our Think Forward strategy. We really work hard and we concentrate on it every day to improve our customer experience, So it is very rewarding to report that we added another 1,400,000 new customers in 2015. And we have also been able to grow our customer lending by over $21,000,000,000 during the year. This has clearly contributed to our strong financial results for the year. The underlying net result banking increased by 23.2% from 2014 to €4,200,000,000 and the return on equity was up for up to 10.8% for the year. Our capital position continued to strengthen as well. And on a fully loaded core equity ratio of ING Group and bank were respectively 12.7% and 11.6% at year end. And given the good results and given the strong capital position, we are very pleased to propose a full year dividend of $2,500,000,000 or $0.65 per share. We're committed to maintaining a healthy group core equity Tier 1 ratio in excess of the prevailing fully loaded requirements, which currently stand at 12.5% and also to returning capital to our shareholders. As such, we aim to pay a progressive dividend over time. If we turn to Slide 3, basically, you see that when we launched our strategy 2 years ago, we had one clear purpose, empowering people to stay a step ahead in life and in business. In order to empower people, innovation and constant improvements of service concepts are And in the Q3 or in Q4, in Poland, we launched Moye ING, which is a new omnichannel banking platform, which gives customers insights in their personal finances in an easy and intuitive way, so they can do their banking more and more themselves. Now in Spain and the Netherlands, we launched a new product as well. It's called TWIP. It's an acronym for the way you pay, and it's a peer to peer payments app, which allows consumers to pay small amounts to contacts on their mobile devices using their mobile phone numbers only, and you can do it in a few seconds. After 7 weeks, we already have more than 200,000 users on this app. And clearly, we're also looking at FinTech innovations outside of ING that can help us strengthen our capabilities. And specifically on the lending capabilities, we are looking at FinTechs in the area of consumer lending and SME lending. We recently announced an investment in a Fintech called WeLab, which provides consumer loans China and Hong Kong in a fully automated process. And it only takes minutes from application to approval. So I'm happy to say, if we turn to the next slide, that we welcome another 1,400,000 new customers. And more importantly, as part of our strategy, we established 550,000 new primary banking relationships, with particularly strong growth in the Challenger and Growth countries, as it is in line with our strategy. If we continue to make progress on our strategic initiatives, and I'm sure we will, I'm confident we will reach our goal of at least 10,000,000 primary customers by 2017. And all of this clearly leads to growth in the commercial sense. So on slide 5, you see that our deposits are growing by 4% to $509,000,000,000 and our customer lending has increased to $533,000,000,000 despite further reductions in our runoff portfolios. If we zoom in on the core lending franchises on Slide 6, you can see that they grew by €21,700,000,000 or 4.2 percent during 2015. Wholesale Banking increased by $1,000,000,000 driven by growth in industry lending and general lending and transaction services and retail banking increased by 9,000,000,000 dollars mainly in retail Belgium, Germany and the other challenges in growth markets. And all of that, the focus on clients, increasing number of clients, increasing your clients' business, both on the deposit side as well as the lending side, in the end leads to better results, which is on Page 7. Moving to the P and L. We posted strong results in 2015. The underlying net result of bank increased 23% from 2014 and a return on equity increased to 10.8%. If we were to exclude CVA and DVA, which was positive in 2015, the underlying result increased by 11.9%, still a strong growth. And that was explained by a couple of factors, which are on Page 8. So the strong results were supported by healthy income growth and lower risk costs. And the net interest income, excluding financial markets, was increased 4.5% from 20 supported by the strong volume growth that we have shown. Our risk cost of $1,300,000,000 or 44 basis points of risk weighted assets are now in line with our long term average of 40 to 45 basis points of risk weighted assets through the cycle. If we then look at the underlying businesses on Page 9, we see that the improved results are both in Retail Banking and Wholesale Banking this year. We see the relatively strong growth in Retail Banking driven by Retail Netherlands, whereas where the risk costs have come down sharply and Retail Germany. I think it's worth highlighting the performance in Germany in a bit more detail if we turn to Slide 10. Now if you as you can see in Slide 10, ING Germany continued its strong performance in 20 15, reaching a pretax profit of 1,152,000,000 €1,100,000,000 And for the first time, they are above the €1,000,000,000 mark, which is an enormous accomplishment. The strong performance in Germany is mainly due to the customer centric focus, resulting in achieving the award of preferred consumer bank for the 9th consecutive year, focusing on customer services, improving customer services every day, making things easy, simple and empower your customers does work. Our customer base and number of primary customers continue to increase, while we are also diversifying our product offering to customers in order to increase the cross buy. As customers see us increasingly as their primary bank, they don't only want to do savings and mortgages with us, they want to do the whole product spectrum in a direct Internet driven and digital way. Consumer loans in Germany increased by 20% to $5,700,000,000 in 2015, but we're also seeing an increase in the purchase of investment products as said by our clients. Also, the Wholesale Banking operations in Germany are growing fast. Wholesale Banking also have increased further to $13,500,000,000 at year end as we continue to grow the franchise and optimize the balance sheet. I think one of the specific parts that shows how we work and how we work in managing cost income is also shown here. Here, we have a franchise in which it is okay to have cost increase, given the fact that it's growing so fast and the efficiency is only growing with the growth that the cost income ratio is rapidly coming down, whereas the cost line is increasing. Now those strong results across the group have further strengthened our capital position. The Bancorp equity capital increased to 11.6 percent due to the positive net profit, 26 basis points in the 4th quarter and an increase in revaluation results, which was partly offset by an increase in weighted assets. The Group Core Equity Tier 1 capital increased to 12.7 percent, and that's largely mirroring the developments of the bank, but also including a $600,000,000 release from interim profits that had not been included in capital in the 1st 9 months of 2015. Now in January 2016, we further reduced our stake in NN Group to 14.1%, and that resulted in an uplift of 30 basis points in the group core equity Tier 1 ratio, pro form a to 13%. And if we would allow for the full divestment of NN Group, the pro form a group core equity Tier 1 ratio would be at 13.4%. As far as the capital levels are concerned, for 2016, the group has a minimum core equity Tier 1 capital level of 10.25 percent, which is composed of the 9.5 percent core equity Tier 1 SREP requirement and a 75 basis points phase in of the Dutch systemic risk buffer. The systemic risk buffer is scheduled to phase in by 75 percentage points by 75 points 0.75 percentage points, sorry, per annum to 3% from January 1, 2019. So our fully loaded requirement is currently 12.5 percent. Now as these capital levels are requirements for the group rather than for the bank, we've introduced a new target for the group core equity Tier 1 ratio. Firstly, we want to remain above the fully loaded core equity Tier 1 requirements, currently 12.5%. And secondly, we intend to grow over time into a management buffer over the fully loaded core equity Tier 1 requirements. Now taking into account these new capital requirements, including the 3% CPE buffer on top of the SREP, we have decided to propose at the AGM to pay a dividend of $2,515,000,000 or $0.65 per share. And going forward, we aim to pay a progressive dividend over time. Now on Slide 13, you basically see an additional table, which is the core equity Tier 1 requirement on group level versus the bank. And that's a change from the past. So you see an ambition 2017 now on the group level, and you see the other ambitions on the bank level still being the same. Coming to those ambitions, Actually, in 2015, we already reached most of our ambitious 2017 targets, and I'm pleased with the progress we're making on each and every of these metrics. Now turning to the 4th quarter results. I'm now turning to Slide 15. In the seasonally weak 4th quarter, ING's underlying pretax result was solid at $1,202,000,000 despite significantly higher regulatory costs. Net interest income excluding financial markets has remained steady in the past year, supported by an ongoing volume growth. Turning to the NIM. The net interest margin was up from the 3rd quarter by 1 basis points and that's due to net interest results in financial markets that are a bit higher versus the Q3. The commercial interest margins have been rather stable over the past year, and a large part of the 6 basis points reduction from a year ago is as a result of the lower interest result in the financial markets. We've touched upon this previously where you see the composition of the income in Financial Markets changing from noninterest income to interest income and also changing it back. And you see also in this table how it moves, whereas the Financial Markets division is actually performing very well in a stable manner. It's just that the composition of income changes. So now and then, that does affect our NIM. That's why we keep explaining it. Looking at the NIM, the we see lower margin in current accounts, and they have been offset by higher margins on savings as a result of lower client savings rates. In line with market developments, we have further reduced these rates in several countries in December 2015 January 2016. Focusing on the lending growth in the Q4 then. You can see on Slide 17, I guess we are, In our core lending businesses, they all increased or most of them increased from the Q3 2015, with most growth actually in the Wholesale Bank. And as shown at the beginning of the presentation, our core lending fractions grew by 4 point 2% in 2015, and that's fully in line with our guidance. So for 2016, we expect this positive to continue. Moving to expenses. Our expense base is more and more impacted by regulatory costs. And you can see that in these tables as well. There seems to be no limit here in terms of what some of the countries are thinking about. We are confronted with a new bank tax in Poland, as you know. Now you see the increase here for 2015. Here, we were trying to manage that, and we are managing in it also in terms of further improvement of efficiency. But this is the picture. So if you look at your expense base, you see it's more and more impacted by the regulatory cost. We also took a number of smaller redundancy provisions in retail Benelux and also banking this quarter in an aggregate amount of 120,000,000 dollars And these are expected to deliver annual savings of $65,000,000 by 2017. Adjusted for the redundancy cost and regulatory costs, expenses increased by 6.2% from Q4 of 2014 and were flat from the Q3 in 2015. Now the risk costs. We have seen a small increase from the 3rd quarter, but the trend remains positive year on year for sure, 2014, 2015. Total risk costs were 38 basis points of average risk weighted assets this quarter, below our through the cycle average. The NPL ratio also decreased to 2.5%, and that's an improvement for the 3rd consecutive quarter, both in Retail Banking and Wholesale Banking. Then zooming in on Wholesale Banking risk cost on Slide 20. Risk cost in Wholesale Banking continued their downward trends. They amount 33 basis points in 20 15 as a whole, 26 basis points in the 4th quarter, and that's clearly below the long term average. However, there are some uncertainties out there, the most obvious ones being the very low oil prices. The NPL ratio on our lending to the broader oil and gas industry is still low. It's at 1.8% and hasn't deteriorated in the 4th quarter. And that's despite the further weakening of oil prices to around $30 a barrel. But we cannot rule out that we will have that we will be hit in the future by instance affecting our Wholesale Banking loan book. For that, I go to the next slide. This slide gives you the overview on oil and gas exposure. It's a slide that is familiar to you. We have it included we started to include it last year in most of our presentations. The slide shows that 85% of our lending to oil and gas is not directly exposed to oil price risk, and that hasn't changed. The remaining 15% is exposed to oil price risk to some degree, although it is important to note that there are many different mitigants in place. Nevertheless, given the further decline of oil prices in the Q4, the oil price risk in certain segments of our oil sector has increased. Overall, we expect risk costs for 2016 to be at or slightly above the level of 2015. But if oil prices were to stay at around $30 or below and remain there for an extended period of time, 2016 risk costs may increase. In such a scenario, we estimate overall risk costs for the total bank could end up somewhere between the 2014 and 2015 levels, I. E, potentially between the $1,400,000,000 and $1,600,000,000 That's overall risk cost overall on a total portfolio. Now to wrap up, if you take one step back and you look at the results for this year, we actually have been able to deliver on 3 counts: growth in customer numbers growth in lending and growth in savings results strong results and the third one being strong capital and an attractive handsome dividend that we start to pay. I'm confident that our story is on track. I'm confident that we can continue our strategy across our network, benefiting the shareholders as well as the customers. I would like to open the call We will now take our first question from Anton Kajuk from UBS. Please go ahead. Good morning and thank you very much for taking my questions. Just two questions, please. Firstly, on the capital target for the group, now that you have a clear capitalization level in mind for the overall group, would you be able to guide us on the target return on equity that you would like to achieve in the group? We have a target for the bank, but given that the focus is now shifting more towards the group, it would be helpful to know your ambition on ROE for the ING Group rather than just ING Bank. And the second question, please, what proportion of your oil book is exposed to clients in the U. S? And have you seen an increased provisioning on your U. S. Energy book? Thank you. Thank you, Anton. The first question will go to Patrick. And the second question, I will give to Wilfred to answer. Patrick, go ahead. Yes. So as a consequence of the SREP and having the DCF come on top, we have to update the our targets with respect to capital ratios. We have not done a full review of all our ambition levels and that will come on the next Investor Day we will have, which hopefully will be sometime towards the end of this year, maybe early next. So the in terms of ROE, we're still staying with the underlying results over the capital in the bank as the target. And maybe we'll have to factor in thoughts around the group in due course. I mean, the bank, as you know, is above the 10%, nearly 11%. I think the group average for 2015 was just around 9%. But in terms of targets, that's something for ROE for the group is something we'll update with our next full Thank you. U. S. Oil exposure, the main component of that is what sits in our reserve based lending business in the U. S, which is about $1,800,000,000 There is beyond that a bit of exposure to some of the U. S. Global oil majors, but I wouldn't really call that U. S. Exposure in the terms you mean. Thank you. So it's €1,800,000,000 That's correct. Perfect. Thank you so much. We will now take our next question from David Lock from Deutsche Bank. Your line is open. Please go ahead. Good morning, everyone. Thanks very much for the presentation. Just a couple for me. The first one, just to ask a little bit more on the management buffer that you point to in the presentation, growing into a comfortable management buffer over time. I mean, when we wind back to the Investor Day, you gave a 10% target for the bank, but with an 11% in mind including that buffer. Should we be thinking about a similar 100 basis point buffer for the group, obviously, building into that over time? And then the second question I had was really around oil, but also thinking more on the impact potentially for your loan growth. Are you still confident you can hit 4% loan growth going forward given where oil is? And are there any other kind of additional sensitivities you can give us around that? I appreciate the sensitivities on the risk costs, but just on the growth aspect, that'd be really helpful. Thank you. Yes, Patrick? Yes. I mean, I think the first thing to say is where we currently are at the phase in, as Ralph pointed, it was 10.25%, pro form a was 13.4%. So it's more than comfortable over 300 basis points today. That phase in will happen over the next 4 years. So that if nothing else happens just mechanically that buffer would diminish a bit as the phase in continues. That said, there's a number of moving regulatory parts here that we have to just see how they play out. I mean, I think there's a growing recognition that the way the SREP process and the DCP buffers has played out in terms of how that translates into NVA perhaps not the intended result. There may well be a revision to MDA levels. We're hearing talk of that. So that may take some time, but I would expect that to be come to fruition in the course of that period. And also, in terms of domestic buffers and harmonization thereof, the EC is repeatedly saying it wants to level playing field in capital, And we are hopeful that will happen. And again, over that 3 year period, there's ample time to see that fall through. So sorry, it's a bit of a long winded answer, but there are a couple of important regulatory moving parts that will determine what we might need in terms of the buffer. Okay. David, yes, on loan growth, there's 2 ways to go about your question as to what will it mean for growth. Honestly, in 2015, the growth in our book did not necessarily come from the oil and gas sector, given the lower oil price. Actually, certainly on the short term side, it actually decreased. So there was not that was not leading the growth in our book. And then on the contrary, I actually think that we should all look at the positives of a low oil and gas price, leading to further domestic demand, disposable income in most of the economies in which we're active. As a consequence of which a larger part of our loan book and a larger part of our clients will actually benefit from it. And therefore, it does not necessarily alter our confidence in being able to grow our loan book the way we have guided up to now. Thanks a lot. Thank you. We will now take our next question from Ashok Kummersadi from JPMorgan. Your line is open. Please go ahead. Yes. Hi. Good morning, everyone. So first of all, can I get a bit more color on risk cost? I think you've clearly mentioned that this year's risk cost, if oil remains here would be a bit higher give or take around 45 basis points to 55 basis points. But let's say if oil demand here for next 3, 4 years, I mean, how should we think about your risk cost? I will you be kind of taking a one off hit from oil in 2017, 2018 or will it be staggered in the risk cost? How does accounting works on that would be great to hear? Secondly is on your NIM outlook. I mean clearly your guidance is 1 and 52 basis points, 155 basis points. Are you still sticking with that guidance given that you're still way away from that guidance at the moment? It's still about 146 at the moment. So are you still comfortable with that guidance? Thank you. I'll risk off, I'll give the word to Wilfred. Yes. Ashik, I think what you're going to see if indeed oil prices were to stay low for a longer period is a gradual development of the risk costs for a couple of reasons. One is different parts of the portfolio will have different timing in when they will be hit. If you take a large part of our reserve based lending, that is likely to come somewhat early. This is a high OpEx, low CapEx business where the marginal profitability is very sensitive to oil prices. And these are the wells that are going to be shut down first as we are already seeing at this point. And a large part of our book, however, is more exposed to the conventional development and exploitation, which means that this is a much longer cycle where even development projects that have already been started before the oil price drop hit are still continuing and these fields will come on stream, will require servicing, will require rigs. If you look at our book, typically what we do is collateralized and cash flow based, I. E, in that segment of the business, what we look at in terms of thinking about provisioning in the end is going to be the NPV of the cash flows from the contracts that we have these rigs on versus the outstandings. And in many of these cases, you're talking about modern new rigs with contracts of 5 to 7 years, where by definition, the problems, if they arise, will start showing up quite a bit later than, for example, in the reserve based lending. So you would expect a gradual increase of provisions there over a prolonged period. We're certainly not, at this point, seeing a big shock coming. Okay. That's very clear. Okay. Ashik, Droralff, on your question as to the NIM guidance. The $150,000,000 $155,000,000 kind of guidance that we gave was for 2017. We're touching it, honestly. I think it's 147,000,000. It's not that far away from the lower end of the range of 150,000,000. We're 98% there, to be honest. We have explained to you as to how the Financial Markets results influenced this a little bit as well. We've been into the range. We're just out of the range. And then one more remark to be made. Yes, we do feel comfortable we can get there. We feel we can manage the NIM in the current circumstances because in the end, when we guided the NIM range to go up to $1.50 to $1.55 by 2017, We also indicated that, that was dependent on the change in asset composition, where we would grow more in higher margin assets in industry lending, in some of the commercial banking activities, in SME lending and consumer lending away from a concentration on mortgages. So basically, we are showing that every quarter that the asset composition is changing. And that will also help us to move towards and maybe close into the range that we guided 2017. So is it fair to say that your high margin shift, high margin asset shift as well as some more deposit rate cuts is still will still be able to absorb the risk you're seeing on the asset side? Because clearly, I mean, after the Bank of Japan start basically the market is really worried about negative rates here as well. So you're still comfortable? Thank you. Yes. So for 2016, we feel comfortable. Okay, great. Thank you. We will now take our next question from Bruce Hamilton from Morgan Stanley. Your line is open. Please go ahead. Morning, guys, and thanks for the presentation. Very useful. Just going back again to the sort of energy and metal mining exposure, could you give us what your sort of undrawn committed line exposure would be? So obviously, certainly in the metal and mining space, there's a risk, I guess, that those lines could be drawn down. And then secondly, in terms of the Dutch market, obviously, you've got further scope to take deposit costs down or savings deposits down. But I mean, where do you think the limit is on that? And are you still seeing any benefit in terms of mortgage front book pricing? Or is that all now played out just in terms of the NIM for the Netherlands specifically? Okay. Wilfred? Yes. Bruce, on undrawn commitments, the vast majority of that really sits in our trade and commodity finance environment in the segments that you're talking about. On the actual project and pre export finance deals, it is very limited. There's not a big percentage of the total book undrawn committed there. Then Bruce, specifically on the Dutch market. We see the current mortgage market and the price in there is higher than the average of the back book. So that should improve the picture slightly. That's one. On the other side, you also know that our total exposure on mortgages and analysts is decreasing with the transfer of the Western Utrecht book to NN. So from an NII basis, the development may be different than from a margin basis. Now in terms of managing on savings rates versus managing on the asset side, the 2 different sides here. It's about how the market develops, how the customer relationships develop as to how we can go about pricing. I can't really comment on how we will move there. But there is scope. If you compare it to other markets outside of the Netherlands, you see that savings rates are much lower already. So yes, but it depends on how the market develops as well. Thank you. We will now take our next question from Mr. Murray for Alta Your line is open. Please go ahead. Good morning, gentlemen. Just two questions, if I may. Firstly, with regard to the €0.65 full year dividend, should we just regard that as a base dividend on a going concern basis? Or is there any kind of excess capital distribution component within that? And over what kind of time frame might ING be able to address any potential excess capital that it sees? I mean, are we really looking at kind of 3 year timeframe to try and settle down regulation from here? And then finally, just on a point of detail, what approach will ING take to the dividend accrual against capital for full year 2016? Obviously, last year, you stopped accruing profit to capital in the Q2. I just wondered what approach you'll take this year. Thanks. Hey, thank you. In terms of how we thought about setting this, in the past, we just a bit of a retort about what we said we would do. We said we'd pay a minimum capital minimum dividend 40%. We've done that and we've topped it up, come up with $0.65 per share and we're aiming for that to be a progressive dividend 2x. Now in terms of surplus capital, did that play a role? Yes, it did, albeit given the SREP requirements, that quantum is a lot lower now. Mechanically, you can see it's just under €3,000,000,000 But in terms of setting the base dividend for go forward, that's part of that was part of how we were able to set it at this level. Prospectively, the aim is to have a progressive dividend policy through time. So ideally, we can try to grow this through time. And that would absorb capital generation of the bank and the reduced surplus of the group as well. In terms of accounting, yes, mechanics has to stay the same. To pay a dividend, profits will have to be earmarked for dividend rather than for capital. At Mechanics, it's the same. We count them twice as it were. Precisely what we do every quarter in terms of how much we put into each of the 2 buckets, the capital or the dividend bucket is something to work out in Q1. Okay. Thanks. We will take our next question, Robin Vandenbroek from Mediobanca. I was wondering if you could share your thoughts on the discussion with the Dutch Central Bank regarding the lack of level playing field on capital. Do you feel that if there's more clarity on Basel IV, for example, that the Dutch Central Bank might be more lenient to reduce these requirements? That's question 1. And secondly, I thought in your slide pack, you also give some disclosure on your oil book about the maturity of the loan exposure. Could you maybe share some comments on your willingness to reduce exposure, especially the less than 1 year maturity part of the book and what potential margin impact that could have? Thank you. Okay. Thank you, Robin. I will take the first question and Wilfred will take the second one. Yes, so clearly, I think the Dutch Central Bank knows that they have created an unlevel playing field with this high buffer that they put on the Dutch banks. And I also know that there is some more regulatory change coming and that may be impactful for many banks as well. And we are in constant discussion with the ECB, with the DNB on each and every measure that we can see coming, whether it's from Basel, whether it is from the FSB, whether it is from different approaches that the central banks themselves take in terms of modeling and all of that in order to show what the effects are. And the only thing I can say is that this is a very open and constructive discussion. But yes, we are dealing with an unlevel playing field here. Okay. Okay. On the exposure oil and gas shorter maturities and the development of the exposure, The short maturities that we have in the book consist of 2 things. 1 is, of course, the trade and commodity finance business, which by definition most of that is shorter than 1 year. And then there is the maturities on the longer facilities. Now the underlying dynamic here is that the music in terms of new development basically stopped 18 months ago. So what we still have coming and that also goes back to the earlier question about undrawn commitments is really mainly those facilities that we committed to before the CapEx largely stopped and that are being gradually drawn down. And obviously, being that now almost 2 years behind us, a lot of that has been drawn. On the other hand, a lot of these facilities, particularly the ones that are, for example, on the drilling side with rigs on contracts are paying back. And there is not a lot of new business coming. So our view is that net net the exposure will gradually come down. But we may well, and there's no intention to stop that at this point at all, simply continue with the shorter term trade and commodity finance business. So I think what you're going to see is gradual translation of longer exposures into shorter and then maturing ones and a continuation of the short revolving type facilities. And your impact on margins, can you comment on that? Well, given the fact that there's not a lot of new business, what you're going to see is project finance type margins continuing as the majority of the book for a while. And on the TCF side, it is more a volume than a margin change that we're going to see. So I wouldn't expect a massive impact on margins from this development net net. Okay. Thank you very much. We will now take our next question from Martis Uva from Orbis. Your line is open. Please go ahead. Are you on mute? We will now take our next question from Guillaume Teebergen from Exane. Your line is open. Please go ahead. Yes, good morning. It's a follow-up question on the net interest margin. Could you maybe help us quantify how negative the impact might be if the ECB announces new measure to put rates into more negative territory before any mitigation that you might be able to implement? Maybe the way to think about this is we have stable core deposit base that is not getting too technical. It's replicated over a reasonably long time frame. So our results are some degree resilient to the immediate impacts. We're not a trading shop, so there isn't a mark to market daily mark to market in our banking book. So it's more a question of prolonged low rates will have a negative impact through time. The quantitative easing impact tomorrow will not show any immediate impact in results. Longer term, of course, the lower the rates are, the lot for longer, it clearly is a negative. But as Ralf said, for 20 16, we think the outlook is broadly similar to where we currently are, stable ish. And the 3 levers apply. We look very carefully at the pricing of all the products, including deposits. We are very much focused on trying to grow lending and improve the composition of our balance sheet. So balance sheet optimization and loan growth play a major part too. We have been able to deliver that, are delivering that and hope to continue to deliver that. So hopefully, stable ish margins, which is what we achieved in 2015. If you exclude FM, same thing hopefully for the coming quarters 2016. Thank you. Very small follow-up. Did you highlight whether you would think you're able to still grow volumes at around 3% or 4% this year and next? Well, we did indicate so that given the fact that the oil and gas price also has a positive effect on an even larger part of our portfolio that in the end that will support domestic demand and therefore GDP and therefore a large part of our portfolio will benefit from it. And certainly it should also lead to growth on that side. So where we saw this year with some uncertainties surrounding the global markets and specific markets, I'm sure well, this year 2015, I'm sure there will be uncertainties surrounding specific markets in 2016 as well. But we have a good core franchise in Europe and we have a very good global franchise from a commercial Wholesale Banking perspective that gives us ample opportunity to grow. We will now take our next question from Alex Cogan from Natistics. Please go ahead. Yes. Hi, everybody. Just two follow-up questions from my side. The first one is on the capital. I was just wondering whether you can share the potential impact of the IFRS 9 on your capital? And secondly, it's more on the cost side. I was wondering whether we can expect any new initiative to compensate the potential impact of the regulatory cost? Thank you. On IFRS 9, it's a bit too early really to be definitive on the impact. A couple of we'll be working out very much focused on this now this year. Big picture is that I think the broad view is that this will increase the quantum of provisions. If that happens, they would be taken through equity on transition as this IFRS requires. But also we've got this expected loss deduction in capital today that should be released. So the net impact on capital is difficult to judge whether it will be a net increase or not. But we're working on trying to develop the models to compute this and that will be something we're doing this year. And your second question was? Was on post initiative, we should expect a new cost protection program to compensate the impact of the regulatory costs? Yes. I mean, we this is something we're working on, and we've done it in big numbers in 2014. We've done another one in the course of have been smaller ones in the course of 2015 and also the 120 we've announced this quarter. And I mean cost discipline, cost focus, cost savings is just a constant theme. And it's something we're going to be doing a working very hard on, something we want to improve on. So watch this space, but there's a lot more work we have to do here and will do. Okay. Thank you. We will now take our next question from Keirav Fajjad from Barclays. Yes. Good morning, guys. Yes, I've got a couple of questions on your RWA development. Could you give us more color on the model adjustments you flagged at the back, specifically what are the kind of methodology changes, what's driving that? And are there more changes we've got to factor into our models for 2016? And then separately, on the more positive side, you've had some positive ratings migration as well. So which books are showing the improvement? And again, what's your outlook for ratings migration into 2016, please? Yes. I think generally speaking, we're still seeing improvement in most of the books around the globe. Certainly, the ones that were giving us some heartburn over the past few years are all improving. NPLs are generally coming down. We see certainly on the mortgage book, for example, here in the Netherlands also the improvement in property prices having a positive impact on cure rates and on LGDs. So generally speaking, that migration, we think maybe at a slightly less rapid pace will continue into 2016. We talked already about the oil and gas exposure. So obviously, that is going to show a slightly different development. And then looking at the models, look, there is a constant review of models going on. We're upgrading. We are also complying with new guidelines around these models. And it won't be a surprise that models that present an increasing risk weighted assets tend to go through the whole approval system a little bit faster also with the regulators than the ones that reduce RWAs. Okay. Thank you. We will now take our next question from Tarek Emjad from Bank of America. Just a couple of questions. First, follow-up on these discussions of SREP plus DSIB. I mean, thanks, Ralph, for your input on that. But can you specify what's the speed of this discussion? So do we would you hear more from the Dutch Central Bank around this year or when you'll be discussing the dividend next year again or what's the timeframe on that? And secondly, I mean, what's your thoughts on the AQR or even the strip for the next year because we understand this 9.5% can be moving up or down? Do you think they might include part of the stress on the commodities book this year? Or is it not really on the table? Thank you very much. Okay. Thanks, Tarek. Well, on the discussions with the regulators, well, first, the D SIP is phased in, right? And so that's not it's a phased in over the next 4 years. We do fulfill the fully loaded already. So we fulfill that requirement already. This is phased in. So that in itself already shows the DNB taking into account that these things may take time. That's one thing. On the other side, the Basel discussions, we hear many different things coming back out of Basel. On one side, we have seen a consultancy, a consultation around not leading to many changes. On the other side, we hear that there is quite some opposition to floors, not only from the industry, but specifically also from regulators. And honestly, we don't know where this is going to end up and when it's going to end up somewhere because time lines are being shifted as well. So I think we have to deal with what we have. This is what we know right now, which is this 3% phased in until 2019. We feel comfortable at these levels. We work with these levels. And based on that, we've also set our dividend. So and it shows as well as to how we feel about it. In terms of next year's SREP, I'm looking at my colleagues, TCF volatility, not sure that leads to a lot of risk costs in itself because that's all collateralized and it goes up and down in our book as a volume from a volume perspective, but it doesn't show any kind of difference in risk experience. So I'm looking at Wilfred? No, that is right. I mean, certainly, the commodities the TCF side of the commodities business is not showing any particular stress at this point. To the extent that the overall environment deteriorates, it will translate into higher risk weights through our models and as such find our way into the capital. I don't think there's going to be any particular reason for that to become a shrapnel pick in itself. Okay. Thank you. Just a quick follow-up please on your previous comments on the MDA. You mentioned that MDA levels could set some endurable consequences. Do you think the MDA level could change in here? I mean, EBA is requesting to be pillar 1 and 2. Some Nordics have only Pillar 1. So what's your thinking in that? Well, I mean, as I said, what we saw was, as of last year, when the SREP first came out, there was quite a lot of confusion about how to interpret NDA in terms of SREP. Should it be based on there was an 8% number talked about, should it be based on the SREP number, including buffers? So there's quite a bit of confusion on that. And then there was clarification given earlier that it would be set based on the total including FREP. I'm also hearing a number of regulators indicating that was not necessarily an intended outcome. And that I mean that could be it's not where they necessarily wanted this to be. So I think there's scope for this to be reviewed. Revisions that change lower capital requirements in whatever form are not easy to get through, but there is discussion that the outcome of having MDA based on the fully loaded requirements is perhaps not what was intended at the beginning. So again, this may take time, but that is something that I do hear on regulatory change agenda. Okay. Thank you. We will now take our next question from Robin Down from HSBC. Your line is open. Please go ahead. Good morning. Apologies about coming back to the energy book again, but obviously this is a big issue for the market. What I find kind of interesting is that we've seen growth in a number of your subcomponents in that energy book. And I appreciate with the trade and finance that's probably some element of drawdown of previous facilities. If I look at the reserve based lending that also seems to have grown by quite a high percentage in the Q4. And obviously you guys are the experts and we're not. So I'm just wondering what is it that gives you confidence given everything you're saying about high credit losses there to go out and grow that book? And are there any sort of metrics you could share with us in terms of maybe a sort of loan to value type equivalent with a $30 sort of oil barrel. I mean, can you tell us roughly what's the percentage of the reserves you're actually lending against? Thank you. Okay. And on the actual movements, there is a couple of things going on here. 1 is a currency effect. 2 is there's always a little bit of undrawn commitment that gets drawn. What is important to keep in mind also is that the reserve based lending is not just oil. There's a pretty big component. It's about fifty-fifty is gas. And whilst that is not totally uncorrelated, the market dynamic is different. And we have seen one particular transaction in that area. I think your question was typically what kind of loan to value should you be thinking of in terms of reserve based lending. Obviously, they vary a bit, but typically this is around 55%, 60% or so. And it's important to keep in mind that the power business in this particular area is purely senior and almost always secured. I know there's a lot of talk in the market about high yield exposure to the energy sector. I don't completely recognize the concern around that because as I say, whatever we do, certainly in the non investment grade domain is secured lending against cash flows and assets. But if you're putting on a new facility today with oil at well, I guess, we're just over $30 I mean, are we effectively saying that you almost need to see that dropping down into sort of mid teens levels before you think that you might be at risk? If you're looking at a 60% loan to value, then you can see that there is a 40% cushion. Are we doing are we actively pursuing new deals at this point? The answer is no. Okay. And if there is a particularly compelling situation with a very strong capital structure and a good loan to value, we might still do something, But it's we're not actively hunting for dealers at the moment. Okay, great. Thank you. We will now take our next question from JP Lambert from KBW. Your line is open. Please go ahead. Yes. Good morning. I would like to come back to the FinTech involvement in CABG and WebLab. And the question is how you see the implementation within your own operations in terms of timing, pilots? What kind of results you can share with us? The second question is, again, on oil and gas. More specifically on timing, you indicated you expect a gradual increase. And the question is, can we expect a gradual increase in that scenario also on a quarterly basis next year I mean, this year, 2016? Jean Pierre, thanks. It's Raf. On the fintech question, first, I want to go back to innovation as a whole. Clearly, we innovate a lot ourselves as we have launched many different products ourselves in the payments area, in the customer loyalty area and all of that. And that's a promise we need that we made when we said, okay, we will want to deliver differentiating experience for our customers and it fits with what we're strong at and why we're also successful. Because if you go back 10 years ago, we were probably seen as the fintech in the world, although it was not referred to as a fintech. And you see also with the successes that we have in countries like Spain and Germany and Australia that you can build a completely different model. Now what we have also indicated in our strategy is that we are in need of developing new lending capabilities and particularly in the area of SME financing and consumer financing. And when we launched the strategy 2 years ago, we also indicated that we didn't want to go about, for example, SME lending by building a branch next to every church in every village because that's a very expensive way to build a platform to do SME lending. So we had to look at alternative ways to do so. Now clearly, if we can't develop those ourselves or if we see a good practice out there and we've seen one called CABG in the U. S, then we want to engage with this practice. And that's what we did with Kabbage. So we took an equity investment as a more strategic player, not as a venture capital front because that's not how we play. It has to fit our strategy. And then we look at how do these algorithms work, can it fit our client proposition, etcetera. So with Kabbage, we have a joint venture in Spain as we speak. We started to do SME lending about 5, 6 weeks ago. It's too early now to indicate to the market as to how we go about it, how the book is developing, how fast we're growing and all of that. So we'll have to see how it develops, but we are looking at it. With Wheelab, that's on the other side. So that's in Hong Kong, China based consumer finance, FinTech, also instant lending. And we think their algorithms and their time to market to service their clients is one that fits our promise to our clients a lot as well. And therefore, we took a participation there. We're looking at it. We are working with them and taking a close look as to whether we can use some of their experience and their algorithms back into the franchise that we already have. So this is not for opening new markets. This is really to look at how can we build the franchises that are already so successful in a broader client franchise. And then I'll refer to Wilfred for the second question. Yes. That was on timing on a quarterly basis of our provisions, which is quite an ambitious question, frankly. Let me give it a try though. If you peel the onion of the exposures that are sensitive to oil price, If I think about our services and drilling activities, most of these clients have contracts that will last them into 20 17. There will be a bit of expiry in 2016. Frankly, we're not expecting very big issues there. So the part that could still have a bit of impact on the 2016 provisions is largely going to be the reserve based lending. There we'll see the semiannual reset in Q2. So this is when we will start seeing if there is going to be more stress, we'll probably start seeing that show up than in the Q3 provisioning discussion. So I can't tell you whether at this point we believe there are going to be problems. If we did, we would be taking provisions, but we'll see what happens after the Q2. So that's, I guess, the best I can say about what the timing of these things might be. Thank you very much. We will now take our next question from Andrew Combs from Citi. Your line is open. Please go ahead. Good morning. I think all the questions on capital and energy have been exhausted, so perhaps I could have one on costs and one on loan growth. Firstly, on costs, if I look at the regulatory costs, you've actually come in slightly lower than expectation for the full year 2015, 620 versus the 650 guidance. And yet you're increasing your guidance for next year from 800 to 850. So just trying to tie those two things together, what's led to the increase in expected regulatory costs for 2016? And the second question would be on the core loan growth and two aspects of that. The first is when I look at the Dutch retail lending, you've seen a €1,600,000,000 contraction. That's accelerated Q on Q and I think you identified lower business lending as the reason. And that seems slightly surprising when you look at the DNB statistic, which shows the SME loan demand is increasing. So perhaps you could elaborate there. And then on the flip side, industry lending, very strong loan growth this quarter, quite a big increase from Q3. What drove that, please? Thank you. On costs at least, so what happened was that there was a legislative hiccup in the Netherlands and the DGS, which we expected to be implemented. Actually, we thought it was coming in, in the mid year, then it got delayed to Q4. And then it turned out there was a flaw in the legislation that got pushed back. So that was a deferral. It's about $40,000,000 a quarter. I mean, that's all it is, is a deferral. So it all comes in, it's $133,000,000 comes in, in 2016, it's the full year impact. And then the other thing that came in new was the Poles gave us a nice surprise of $70 odd 1,000,000 on top, which has increased the 2016 estimate to 8.40 percent. And then on lending growth, the growth for the quarter, actually, we're looking at the specifics. So there's a couple of people now going through some of the pieces of material that we have in front of us, if you want to know it exactly. So on real estate, there was certainly some growth in the structured finance area as well. It's actually spread across the different sectors that we have. So there's not kind of one sector that kind of comes out here. And we see that growth continuing. We have 2 teams in place. We actually see some of our competitors withdrawing from some of these markets. So it's a combination of growth or growing our teams and seeing that competitor withdrawing. So we have real momentum there across the different activities that we have. Thanks. And on the Dutch retail side? So the Dutch retail, yes. So whatever the DNB statistics, we don't see the demand increasing. So there is demand in the SME sector. It is stable. We haven't seen an increase over the Q4, whereas we had expected so. So it hasn't come in as an increase. Approval rates are stable or improving even. So that should show some pickup. But in the end, the book runs off more quickly than the new production kind of comes in. And that's it's a combination of the 2 that makes that the book has shrunk by €400,000,000 in the 4th quarter. Okay. Thank you. We will now take our next question from Pavel Dussek from Goldman Sachs. Your line is open. Please go ahead. Hi, and thank you for the presentation. I have 2 follow-up questions on growth and regulatory costs as well. On your volume growth, you increased your core lending by €22,000,000,000 in 2015, which corresponds to around 4% growth rate. But if we look at this on a quarterly basis or it's nearly 70% of that came in the first half of the year. So is it fair to assume that although maybe the growth rates remain solid overall, the growth rate going forward will be somewhere below that 4%? And on regulatory costs, a follow-up question as well. So you increased your cost to €850,000,000 but can you give us a little bit better idea what are the sensitivities around this number? So for instance, in Poland, there are further talks about Swiss franc scheme that could push regulatory costs higher. And also, I was hoping if you can comment on any talks about potential elimination of overlap between the fees you pay on Dutch bank levy and Resolution Fund in Europe? Thank you. Okay. So on the growth, honestly, you can't I would not kind of look at a quarter by quarter picture nor even a half year by half year picture here. It really varies. Certainly in the commercial banking book, these are sometimes larger deals and therefore in one quarter we have a higher growth than others. Even on the mortgage side in some of the countries, depending on where the customer demand is and also the tenors, we grow a little bit faster and sometimes a little bit slower. So the guidance, not specifically as a target, but the guidance that we have given when we launched a strategy of a growth of 3% to 4%, we still feel comfortable there across the different franchises that we have. Now on the regulatory cost outlook, Patrick is going to give you some more information there. I hesitate to predict what this would be. What we can be clear about is we can compute what business growth will give us in terms of insurance schemes and deposits. But what we're not able to predict is necessarily is which countries decide to introduce a much bigger amount. As I said, I think the Polish piece that was a surprise out on the 70,000,000 euros Right now, that's all we know and hence, we think the total is around the 8.40, which is the increase due to, as I said, the Dutch CGS, which is implemented in full in 2016 rather than partially in 2015. So that's 133 and the Polish bank tax of €70,000,000 is the bulk of it and the remaining small increase is just due to business growth. So business growth is small. What would cause it to go up significantly is another element another new tax. In terms of foreign currency mortgages, I don't think that's in a bank tax sphere that and by the way, we're very we've a very, very small exposure there. Our Polish businesses, I think, is about €300,000,000 or €400,000,000 tiny. So that's not a big issue for us. I think that's been translated more into minimum capital requirements for dividends for the entities in Poland rather than bank tax. And there, given again, we have a very small requirement, it's something we can manage around. Ralf Frank? Yes. Just briefly coming back to the question on loan growth in Commercial Banking. As Ralf said, it's spread pretty much across the board. The segments that stand out a bit as growing faster are Transportation Infrastructure, Working Capital Solutions, Export Finance and Real Estate. We will now take our next question from Anke Ring from Royal Bank of Canada. Your line is open. Please go ahead. Yes. Thank you very much. Firstly, on your risk cost guidance of flat 2016 versus 2015. I was just wondering if you can give us a bit more of an indication of where of the different sub segments looking at second half. So basically you're saying retail Netherlands, Belgium more like flat and the growth increases coming then from the wholesale banking area. If you just could give us a bit of indication of the sub segment? And then secondly, on the dividend, obviously, in the past, you talked about the payout ratio of at least 40% of net profit. Just going forward, should we be thinking about, I mean, is it like 60% of net profit in 2015? Is that sort of like a formula we could apply going forward? Or should we just basically just look at the just at the absolute level? Thank you very much. Alfred? Yes. Like we said on risk cost, generally in most businesses, we see improvement certainly on the retail side continuing maybe, as I said, not as quickly as it did over the past 2 years, but certainly will continue a positive trend. And then what would be adding to provisions potentially is, as we discussed, the energy sector. And generally speaking, of course, wholesale banking tends to be lumpy and could cause here and there through some bigger files also an uptick. In terms of sub segments, I think you've seen the development on business lending in the Netherlands. I think it's fair to assume that that will continue for a while. The mortgage book in the Netherlands will certainly also continue to improve as far as we can see. I think rest of the world generally is at healthy levels, might improve a bit. I'm not expecting a massive change there. And then Anke on your question on dividends. Yes, we are moving away from a payout ratio. That's the way we've guided over the last 2 years as to what we at that moment thought it was the best way to kind of communicate it. I think there's a lot there's more clarity now around capital levels, more clarity about the underlying performance for us as well. And therefore, we have changed this to an absolute level of dividends. And the statement is that we aim to strive that we aim to grow the dividend over time. Okay. Thank you. We'll now take the next question from Matthew Clark from Nomura. Your line is open. Please go ahead. Good morning. Another question on costs, please. Just wondering what you think your gross cost inflation is underlying. So if you strip out the regulatory costs, the redundancy costs and the benefits from your legacy cost saving programs, I mean, it looks like you were very high in 2015, sort of 4% or 5%. Is that a figure that you recognize? Why was it that high? And what do you see it being going forward? Thanks. If you look at you try to strip it down to the essence and look at what we see things like inflation and labor schemes, which mandate pay increases. It's much lower than the 4. It's maybe 1, 1.5 is maybe where you might see a push factor on costs that come against us from those regulatory requirements to index labor costs. Okay. And so why was it that much higher in 2015 then? I don't think the inflation on the underlying salary costs have increased. It's just that as we have announced just over a year ago, we decided to invest in the Dutch franchise, which is 100,000,000 dollars We have indicated that we were investing in the industry lending franchise, that we don't mind Challenger and Growth Markets if it is improving the costincome ratios that we have shown you with the German picture where costs are certainly increasing, but the costincome is rapidly coming down. So the cost going up is not necessarily a bad thing. And those are the 3 areas that we specifically have decided to allow some cost growth. There's many areas where we don't allow it at all and where we're actually decreasing cost. But so the underlying cost growth in terms of inflation and all of that salaries, We more or less take into account that for 1% to 1.5% at least last year. But then you have, as I said, euros 100,000,000 in the Netherlands, euros 50,000,000 in Germany, euros 50,000,000 in industry lending, euros 50,000,000 in foreign exchange on the cost. So it's a dollar cost and in euro cost has increased. So it's a combination of many factors there. And so do you expect about same level of cost increase driven by rising investments 2016 versus 2015 as you saw 2015 versus 2014? Or should the clinical growth cost increase just reflects more the inflation? You talked about the 1.5% or so. So the cost that we don't want to necessarily grow, it's the inflation it's the ones with inflation and that's where basically indicated Patrick indicated we would allow for 1%, 1.5%. However, we really manage cost income. We really manage efficiency. We see much more volume coming through and it's the efficiency that we manage. And again, in certain areas, we don't mind costs growing if in the end we feel that it is positive from a cost income perspective and hence positive also from a return on perspective. And that's the way we look at cost at this moment in time. We will now take our next question from Bart Joorth from Petercam. Your line is open. Please go ahead. Yes. Hello. Thank you for taking my question. Just one small follow-up question. Do you have any exposure towards the troubled Italian banking? We don't have any exposures to Italian bank that we worry about. We concentrate very much on the top end there. And most of it is short term interbank placements, but we don't really do a lot in the Italian market. That's clear. Thank you. We will now take our next question from Robin van den Broek from Mediobanca. Please go ahead. Yes. Thanks for putting me on again. One follow-up question on your dividend versus capital framework. I was just wondering if you look at your return on equity and your loan growth, you could calculate that you need to retain 30% to 35 percent of your capital generation to support your capital targets. If you look at consensus expectations for 'sixteen, yes, your payout ratio to be progressive is around 60%. So I was wondering what implications that may have for potential M and A and Fintech Investments. If you see sizable opportunities, how will you deal with that? Could that go at expense of dividends? Or how should we look at that? And secondly, a more detailed question on the Netherlands. I believe that people that will refinance their mortgages and that are still on an interest only framework, they cannot switch providers. Is that correct? So how do you look at that from a pricing perspective? It seems that you have flexibility to lift up the prices, but again, that could also lead to some political pressure on that behavior? Okay. Robin, so on the first one, yes, this is the balancing act that we have. At the end of each year, we have a capital generation. And out of that capital and whatever capital requirements you at that moment have, you can make a decision between how do you firm up your capital even further, what do you want to reserve for further growth in your business, what is there for dividend. Now on the dividend side, I think we have indicated where we are going. So we aim to pay a progressive dividend over time. So that should give you an indication as to the dividend component of it. Now if it comes to M and A, I've indicated previously as well that core of our strategy is an organic strategy. And where we are looking at fintechs, these are very small amounts. So I mean, they are not kind of huge acquisitions that use a lot of capital. These are small tactical amounts in order to get new abilities in through which we can grow organically ourselves. It may be teams and some asset portfolios, which come with specific skills as well, but there's not so we're not earmarking a lot of capital from that perspective. The in the Netherlands, on your mortgage situation, it is the case that if you stay with the same provider and you refinance on interest only, then you do that within the same contract as a consequence of which you don't have to. You're not kind of ruled by the new law in which you have to adhere to annuity under your mortgage from a tax deductibility perspective. Now if you switch providers, clearly, you have to enter into a new contract because it's a different legal contract because you're taking it out with a different bank. At that moment, a new law applies, and that law prescribes that you have to repay your mortgages at least on an annuity basis, at least from a tax So it's what the law prescribes. And then can you put a margin incremental on that? I guess so because the annual for the monthly payments for your clients will be lower if they stay interest only. So No, I no, we don't. Okay. That was our final question. Thank you. Okay. Thanks for attending this call and for preparing these questions. It's always good to have these discussions around our set of numbers. I want to wrap it up very quickly. I think 2015 has been a particularly successful year for ING. We've really made progress on our Think Forward strategy and we're hitting the 3 basis that you need to hit. The first one is growth, growth in customer numbers, growth in lending, growth in savings. The second one is profitability. We're showing good profitability with good return on equity. And the third one is capital levels and dividend policy. And we're very happy that in 2015, we performed well on all three. Thanks for your questions and talk to you soon. Thank you. Bye.