Earnings Call: H1 2021

May 5, 2021

Good morning, everyone, and of course, good evening to those of you who are in Australia. Welcome to our half one results presentation, and thank you for taking the time to join us. Before we begin, I'd like to welcome Clifford, our new group CFO, who joined me today to deliver his first set of Virgin Money results. Our presentation today will take approximately 30 minutes and will be followed as usual by a live Q and A session. Let me begin our presentation with a summary of our performance, you can find on Slide 4. Our financial performance for the first half of twenty twenty one improved across the franchise, and we delivered a statutory profit of GBP 72,000,000 and our underlying profit more than doubled to GBP 245,000,000 due to lower than anticipated impairment charges, which which is similar to the industry. Our NIM improved in the early part of the year from 152 basis points in Q4 to 160 basis points in the 2nd quarter, and that translates into a 156 basis points for the first half. And this improvement reflects our continued success in reducing the cost of term deposits and also improving our mix, and we have benefited from some improved lending spreads. I think we are pleased to announce that given this performance, we are upgrading our full year 2021 NIM guidance and now expect NIM to be around 160 basis points for the full year. Our deposits have also grown up 1.5% in the first half of the year. And particularly important, we have seen our relationship deposits rise 12% as consumers and businesses continue to maintain higher balances during the lockdown. As you also know, we have managed our loan book cautiously through the early part of the year, and this has been particularly true in mortgages where we prioritize price over volume. Our business lending has remained stable and frankly our personal lending has performed solidly despite a reduced demand for unsecured lending. Our half one cost of £460,000,000 were down 1% year on year. However, during the lockdown, we have had to reface some of our activity and we now expect to deliver slightly below GBP 890,000,000 for the full year. We will deliver these re phase cost reductions in the first half of twenty twenty two as well as other opportunities that have arisen as a result of the pandemic and I will come back to those shortly. Our asset quality has remained very resilient across the book, and we have not incurred any material specific provisions or experienced a deterioration of asset quality across any of our portfolios today. Our half one charge for the cost of risk was there for 11 basis points and we expect that the cost of risk will remain subdued for the rest of this year, it is likely to trend higher next year for obvious reasons. Although we have refreshed our economic scenarios to reflect this more positive economic outlook, we have not yet actually experienced the pandemic without government support. And so we have decided to maintain our prudent provision levels of CHF 721,000,000 with coverage remaining broadly stable at 100 basis points. And finally, CET1 strengthened in the first half to 14.4%, which is 13.9% if you exclude the software adjustment. And this leaves us with a management buffer of circa 1,300,000,000 above our minimum regulatory requirements. So let's turn to the future. I have set out here the latest economic outlook from Oxford Economics. And you will see that the economic backdrop has improved markedly from the time we announced our full year results that's been driven by quite a few factors. The biggest driver of all is that the vaccination program rollout has exceeded expectations. But also the government has continued to extend support well beyond the original plans, which has had a big impact. And finally, we have seen material injections of stimulus the major economies of the world. The Australian economics outlook for GDP has therefore improved and their base case now suggests that the economy will recover back to pre pandemic levels within 12 months. We also see that consumer spending levels are recovering and it is likely that, that spending will continue to increase as the restrictions are eased further. In April, credit card spending started to exceed the same period last year, rising to finish nearly 90% higher in recent weeks. Equally, it's very important to understand the expectation for peak employment levels. And these have reduced in the latest forecasts, but we believe that there will still be an economic impact from the forecast of employment levels when government support ends. Another key indicator to watch closely will be how consumer behaviors will evolve around spending the large pools of savings that have been built up during the lockdown. Whilst this improving backdrop does provide some scope for greater optimism, the recovery is still in its initial stages, and we think it's right to remain cautious until the full effect the removal of government support is understood. We're also a little bit conscious that we will be living with variants of the current pandemic for a period of time. And whilst we hope that the vaccination will prevent further lockdowns, I don't think at this stage that that can be guaranteed. However, given this more optimistic economic backdrop and the strength of our capital, our funding and our provision profile, our top priorities going forward will be to reduce the operating cost of the business to accelerate our digital transformation and finally to build our customer franchise and experience. Let me now turn to the implications of COVID on the operating costs of our business. As you will recall, at Capital Markets Day in June 2019, we outlined our intent to become a purpose led digital bank. The lessons we have learned during COVID have led us to conclude that we need to accelerate our ambitions around digital. And in addition to improving digital service delivery, we see an opportunity to further reduce our costs using cloud based technologies and faster and more effective tools. And we see the opportunity arising in a number of ways. Firstly, our customers have changed their behaviors materially. They have learned how to be more productive using obviously new technologies and to optimize their time using video techniques. And this is especially true for small business owners who are often time poor. And COVID has provided these customers with a significant opportunity to become more efficient and better connected. And as a result of that trend, we are expanding our fintech ecosystems and adding a wide range of services and in app products to support those customers. Secondly, following employee feedback, we will implement a predominantly remote working model. This life more urgent model, as we call it, we'll offer our employees substantial flexibility and an ability to live their best lives both at work and at home. This approach will impact on the use of our head offices and our branch network, and we expect that, that will naturally lead to a reduction in the operating costs of the bank. Thirdly, the delivery of technology solutions has been transformed by the pandemic, as you know. And like many others, we've been able to deliver solutions in days weeks rather than months years. But based on what we have learned, there's a real opportunity to go further and faster and the key areas of focus will be the digitization of our customer journeys and the automation of key internal processes. I believe that if we look at the combination of customers migrating to digital, to the emergence of a more efficient bank operating model and the availability of these technologies and new ways of working. This will allow us to deliver a far more efficient cost outcome over the medium term. So what does it all mean? Well, as a result of COVID, we have had to reface some of our delivery on cost this year. While we will deliver this saving again in the first half of twenty twenty two and equally we have identified the potential for additional cost savings in excess of our guidance, and we are confident that we'll be able to deliver these savings in 2022 and beyond. We have some work to do, and we will complete that analysis of those costs in the coming months and we'll provide more detail on the impact of our cost guidance at the year end. So let me now turn to progress in the different areas of our business. As we focus on growth, it has been helpful that many large scale projects like rebranding and integration of PPI are nearing completion and allows us to focus management resources towards the growth agenda. As we return to this growth model, digital sales capabilities will be critical to our success. And I'm pleased to say that we're making good progress in this area and the vast majority of our sales are now digital. And we are well on the way to achieving our ambition, which is to be at close to 100% digital sales in all products over time. In addition, most of these sales are now virgin branded and incorporate virgin lifestyle propositions. We first launched our Brighter Money bundles to retail customers, and we have seen a 90% increase in like for like growth in card accounts. And this is a very encouraging sign in what the product and brand combination can achieve. And we will be developing similar propositions across our entire public suite during this year. Partnerships are also a key driver of our growth momentum and we're making good progress in developing our technology partner ecosystem. We already work with a number of fintechs, as you know, in the retail area. And in our business bank, we have now signed up 7 fintechs and have a target of building into 20 partners by the full year 2022. And lastly, we have launched our mortgage coach FinTech app with 22,000 downloads to date. Early signs indicate that there's quite a lot of potential to generate significant additional lending via this tool. As we emerge from this phase of the pandemic, I'm confident that the combination of our technology, brand and unique propositions will allow us to build real growth momentum as we come out of the pandemic. And that being said, we will be prudent in our origination in the short term until we understand how the pandemic will play out without government support, we are optimistic about growing the balance sheet in the medium term. Our loyalty and rewards program is key to this growth strategy, and we are working closely with Virgin Red and the Virgin Group loyalty program has now been launched and is expanding quickly. Customers who sign up now have the ability to earn and spend points across an ever increasing range of companies and services. And encouragingly, more than 100,000 customers have signed up within the 1st 2 months with plans by Virgin Red to grow to over 1,000,000 customers within a year of launching on this program. At the same time, we are working on our Virgin Wine charity bundles. And I have already mentioned that these propositions have delivered impressive growth in our current accounts. Virgin Red is also offering point incentives to the Virgin Group customer base to open emerging money current account. And the early signs have been very positive. And we'll continue to explore that type of cross selling opportunity with others and target the 17,000,000 Virgin customer relationships with a strong affinity for the brand. In addition to these bundles, we are also constantly adding new functionality to our product. And our recent credit card cash back launch has seen more than 100,000 customers register already. The credit card has averaged a 10% cash back on purchases over the past few months and that's industry leading. And we're now expanding cash back to our personal and business debit cards later in the year. And we believe that the combination of the Virgin Red loyalty program and our loyalty strategy we'll provide very strong support for our growth ambitions. Following the launch of our refreshed ESG strategy in November. The Board and I remain firmly focused on laying the foundations this year to become a leader in this area. It's probably worth highlighting a couple of recent deliverables. Earlier in the year, we launched our Property Premium strategy and introduced Macmillan Guides to support customers with cancer. These types of initiatives will enable us to support our customers when they are most vulnerable. From an energy perspective, we recently switched to biogas. This means that all of our energy is now 100 percent sourced from renewable sources. And this gives us a strong platform to continue building momentum towards a greener future with our colleagues and our customers. As we look forward to the second half of the year, we're delivering some innovative new products. For instance, we will be the 1st bank in Europe to develop a framework to offer sustainability linked loans in commercial banking to all companies regardless of size. And we're also on track to pilot a new green mortgage product in the coming months. Diversity also remains a key priority for me, and I'm absolutely committed to delivering gender and ethnicity quality, and I will provide some revised targets at the year end. I think overall, I'm very encouraged that we've been able to build momentum across a wide range of ESG initiatives. And as we build more momentum in this area, I expect to provide more detailed commentary in future presentations. That concludes my overview of the business. So let me now hand you over to Clifford to take you through the results in detail. Thanks, David. I joined as CFO in March and I'm delighted to be here. I bring to Virgin Money considerable experience of UK Retail Financial Services and more recently at Banking in the Netherlands, which in many ways is ahead of the UK in digital adoption. It's great to be back. What attracted me to Virgin Money is the strength of our brand and its unique position to disrupt UK Banking. The bank has strong fundamentals and real momentum in our strategic delivery. We have a clear path to delivering double digit returns and profitable growth. Turning to Slide 11. As you know, we've followed a consistent strategy since our Capital Markets Day in 2019. Despite the distractions of COVID, we've made good progress on our core pillars. And as David described, we're now accelerating further our ambitions around digital. I'm convinced our strategic execution will deliver value to investors over time in 3 phases set out here. Short term, we maintain our resilience through the tail end of COVID and you see that in our first half results. We continue to manage the balance sheet prudently with our defensive portfolio, stable provision coverage and a healthy CET1 ratio. We're now moderating our growth in lending until COVID is fully behind us. Through next You'll see improved returns as our digital transformation lowers costs further and growth in our relationship deposit propositions supports NIM. As market conditions normalize in the medium term, we will tap into lending growth opportunities and deploy capital profitably. I'm confident we'll achieve lending growth medium term by utilizing the Powerball brand and our improving digital customer propositions as David described earlier. So in summary, our strategy will deliver value over time through a phased approach that will first see continued resilience followed by further cost reduction. We have a clear roadmap to double digit returns with the key elements of that improvement within our control and the necessary foundations for a profitable growth led future. Now turning to our results for the half year as set out from page 12. I'll comment on profitability first. David has given you the highlights, and I'm pleased to report a strong performance with underlying profits more than doubling year on year. That performance reflects improved NII as NIM increased relative to the second half of last year by 7 basis points. Clearly, impairments are significantly reduced from this time last year when we first booked COVID related charges and with limited loss emergence in this portfolio this year to date. Other income at £66,000,000 reflects ongoing reduced activity levels and costs are relatively flat. So taken together, this delivered a solid improvement in underlying return on tangible equity 10%. Moving now to statutory profit on slide 13. It's good to see a return to statutory profit for the group in the first half of this Q3. You'll recall we took a GBP 49,000,000 charge related to PPI in the first quarter. There was an additional £10,000,000 charge in the 2nd quarter and pleasingly that program is now drawing to a close with no further charges expected. There was an £8,000,000 tax credit, which reflects a deferred tax credit for historical losses that were recognized in the period, which more than offset the tax charge on profits. I'll now talk you through the details of our balance sheet, income, cost provisions and capital. Andrew. Turning to funding on Slide 14. We saw customer balances continue to grow during the first half as customers save more and businesses carry additional liquidity. As David mentioned, a large proportion of that growth was in current accounts and as a result, relationship deposits increased 12% across the Q4. We improved our funding mix, reducing more expensive term funding during the period, which alongside repricing drove the overall reduction and cost of funds in our NIM expansion. We also reduced our wholesale funding given the growth in customer deposits as maturing secured funding as not needed to be replaced. Taken together, we expect to see a continued reduction in the overall cost of funds during the second half of the year. Moving now to lending on Slide 15. You'll see here that we're managing volumes prudently through this year as we navigate the pandemic. In our mortgage business, we entered the year more cautious on HPI and chose to prioritize margin amidst strong market conditions with balances broadly flat during the half year. Business lending balances were also stable during the period as growth in government guaranteed lending offset lower BAU lending, where we remain focused on managing margin over volume. Personal lending continues to be impacted by tougher market conditions and declined by 3% over the half year. This was a resilient performance given the market context as we continue to benefit from a high proportion of balance transfer card balances, which are typically more stable and revolving credit facilities that rely on consumer spending. As restrictions have started to ease in recent weeks, we have seen some encouraging signs in customer spending patterns, which we expect will support card balances in the second half of the year. As we navigate the tail end of COVID and for remainder of the year, we'll continue to be focused on maintaining pricing discipline and underwriting criteria what continues to be an uncertain environment. Looking ahead, we expect customer lending to remain stable during the second half of the year and to grow after that. Moving now to net interest margin performance on slide 16. I'm pleased with our net interest margin performance of 150 the first half. This reflects a strong improvement compared with the Q4 2020 exit rate of 152 basis points and with the Q2 of this year rising to 160 basis points, we're clearly showing good momentum. Deposits continue to be a big driver in that margin improvement as the impact of deposit repricing actions play through and we continue to improve our mix. This resulted in the overall cost of deposits declining 20 basis points to 61 basis points. From a customer lending perspective, the lower interest rate environment has contributed to a reduced growth contribution with asset yield declining in the half. That is primarily influenced by reductions in headline mortgage pricing, lower yielding government backed lending and competitive personal loan pricing. As David mentioned, we're upgrading our guidance for this year and expect NIM of around 160 basis points for the full year. That improvement also includes a modest benefit from our structural hedging program, which we restarted in Q2 and I'll now talk more about this on Slide 17. You'll recall in Q3 last year, the bank unwound the structural heading position we've now restarted. I'll explain why we changed and the positive financial impact. We unwound ahead last year for two reasons. The yield curve was flat and so there was no benefit of extending maturity. At the same time, the Bank of England hadn't started consulting on negative rates and our view was, therefore, that the lower bound floor had been reached. So we saw neither a pickup nor a need to extend duration last year. This year, things changed and so we reintroduced the hedge that is the yield curve has steepened and the MPC have made it clear that negative rates are in the policy toolkit. Lindsay. So by re hedging, we benefit from extended duration and mitigate the downside risk of negative rates. Now turning to the financial impact. Our decision to unwind the hedge last year locks in NII contributions as the previously hedged position unwinds. To remind you, our previous hedge was around £24,000,000,000 of notional and has been locked in at around 80 basis points since Q3 2020. 1 60th of this rolls off each month. The 2020 contribution was around £210,000,000 and that is gradually reducing out to full year 2025. That existing contribution is unaffected by a decision to restart the structural hedging program. The group's hedging capacity is now around £26,000,000,000 higher than last year, reflecting the growth in current account balances. We have very largely fully re hedged using swaps with an average duration of 2.5 years at an average yield of around 30 basis points. We expect that at current rates, there will be a benefit of around £60,000,000 in full year 2022 with a more modest contribution this year. I'll now move on to non interest income, Slide 18. Our non interest income during the first half remains subdued. Relative to H1 2020, non interest income declined by £49,000,000 although that includes £60,000,000 for 1 half gilt sales last year. When compared with the second half of last year, performance has been much more stable. In our personal division, our performance relative to last year has been impacted by lower credit card transaction fees as spending reduced significantly under lockdown. The removal of some overdraft fees following the high cost of credit review also had an impact. Linda. Business was a bit more resilient, but still lower than last year, reflecting reduced activity levels. Mortgage income has been broadly stable and improved relative to the second half of last year with increased mortgage activity. In the near term, we expect non interest income will remain secured until lockdown restrictions are fully eased and recover after that towards the end of the current financial year. We're working hard to develop further non interest income opportunities over the medium term, including progress from our joint venture with Aberdeen. We're also working hard on building out of Business Banking for Yearning Services. Turning now to costs on Slide 19. At full year 2020, we reported underlying costs of GBP 970,000,000 and targeted less than GBP875,000,000 for full year 2021. You can see for the half year, we've reported £460,000,000 of underlying costs in line with last year. And relative to the second half of last year, our first half performance was broadly stable. We saw a continued good delivery on our cost saving programs. However, we also had some one off costs in the first half and increased our investment in cost saving programs, which will support our cost reduction through the remainder of the year and beyond. So as we move into the second half of the year, we expect reducing costs, reflecting a good exit rate from the first half, together with additional cost savings as our transformation program continues to deliver, including the benefit of that additional investment in H1. We'll also see reduced investment spend and D and A relative to H1 and no expected one offs. Given the COVID restrictions, we've seen delays in the delivery of some of our planned cost reductions. And so whilst we remain confident of our trajectory, we are now targeting less than £430,000,000 for the second half, which will result in less than GBP 890,000,000 for the full year, but with a strong exit trajectory into next year. Looking ahead, we're accelerating our digital transformation activity to take further costs out of the business. We're of course striking an appropriate balance between cost reduction, the cost to deliver this and investment back into the business. Consequently, we're raising our guidance in integration and transformation costs this year to around £100,000,000 we'll talk more about the longer term cost outlook at our full year results later this year. Now moving to asset quality on slide 20. As David mentioned, credit qualities remained stable in the quarter and the proportion of Stage 3 loans remained at 1%. Arrears and default levels remain lower for all portfolios and forbearance levels remain stable. We continue to support customers with payment holidays where appropriate, although we're only seeing around 1% of portfolio balances on a payment holiday with the vast majority of those that have expired returning to making payments. We've maintained prudent credit provisions of GBP 721,000,000 and broadly maintained coverage ratios across portfolios with our total coverage ratio at 100 basis points. This produces a £38,000,000 income statement impairment charge equivalent to a cost of risk of 11 basis points. During the Q2, we updated our economic scenarios in order to reflect great optimism and also refreshed scenario weights to include a higher upside rating. As a result, our Stage 2 balances reduced in the 2nd quarter. Linda. Nonetheless, we remain prudent facing into an uncertain outlook, particularly as support measures have withdrawn. And as a result, reductions in model ECL improved staging have been offset by increases in post model adjustments reflecting economic uncertainty. We expect the group's near term cost of risk for full year 2021 to remain subdued, likely increasing into full year 2020 Q2 as government COBRA related support measures are removed. I'll now turn to capital on slide 21. I'm pleased with our capital position of 14.4% at half year. This includes the benefit of software intangibles of 46 basis points and IFRS nine transition relief of around 120 basis points. We saw strong capital generation during the period, reflecting 100 basis points of underlying profits and 22 basis points from low RWAs offset by 12 basis points of 81 distributions and 55 basis points of exceptional items. Looking into the remainder of the year, we're confident we will be in excess of our previous guidance of around 13%, excluding software. We expect credit risk on LOA inflation to be pushed out. As it emerges, we expect it to be modestly dampening CET1 progression. Our full year RWA expectations does not now include benefits from including the move to IRB through our credit card portfolio and the adoption of hybrid mortgage models. Both of these are dependent on regulatory approval and if delivered this financial year, it would be incrementally beneficial. Finally, I want to finish on our full year guidance and medium term outlook on slide 22. We're making good progress on driving the key pillars of our strategy, as David spoke to earlier, which forms the foundation of delivering double digit statutory turns and then profitable growth in the medium term. We have given guidance on KPIs throughout our presentation and set this out on the right hand side, which in general reflect upgrades. I will now hand back to David for his concluding remarks. Thank you very much, Clifford. Let me just make a few comments now before we turn to questions to fill things out. I think you'd agree it's been a very difficult year for all of us, both professionally and personally. And I hope that like some of us, you're beginning to see light at the end of the tunnel and perhaps seeing family and friends and enjoying a bit more on an involvement in your community. I believe that as a bank, we've responded well to the pandemic. And in particular, I think we have really delivered for our customers. I'm also very proud of the results that the team and our staff have delivered for this half year given the circumstances. From my own perspective, I think that the bank is in a good place. We are well capitalized and funded, and we have good quality assets and are well positioned for the next phase of the pandemic. We also have a clear line of sight to a medium term growth strategy, which I think is very important. The other key factor in my view is that we are leaving legacy issues behind us now and we are close to completing our rebranding and integration activities. And also, we have built unique products and propositions, as I mentioned earlier. And these plans are all supported by a strong digital capability and a powerful loyalty strategy. As I have said, it has been a difficult journey, but at least, Tio and I are looking forward and focusing on growth in the future as a purpose led digital bank. We're confident that Virgin Money is probably at an inflection point and we're looking forward to delivering for our shareholders and other key stakeholders over the next few years. So let me just bring this to close. Thank you all for your time. For those of you that have been following on the webcast, the live Q and A conference call will begin shortly. Thank you. And we will look to deliver beyond or below set of an 80 Lynk. We'll give you details of what we're going through right now in analyzing. So we will have improved on that guidance and we'll also deliver what is a phase delay in some of the savings for this year. So think of it as our 7.80 still stands. We have a slide today. We're going to deliver that in the first half of twenty twenty two, and we're going to deliver further improvements in our guidance once we have the details worked out this year, if that makes sense. Yes, that does. And then the second question just on NIM. Now in the The structural hedge is now pretty much implemented and that will be a strong headwind and in We're sitting together with many other banks on quite a bit of deposits. And as the consumer comes out of lockdown, it's possible that the deposit market It becomes a little bit more competitive. So that's the balanced picture, but we're sufficiently confident to give you that guidance of around 160 basis points, which will obviously be a stronger exit rate at the second half of the year. And then I know FY 'twenty two is a long way away, but you've got An increased benefit from the hedge in 2022. And then it's about the question is more around can you see more on the deposit side or a little bit unsure at this point in FY 2020. Yes, it's too far off. That's too far off. I think there'll be a whole balance of things. I mean, as David talked about, we're very confident Link. In our relationship deposit, our current account propositions really coming through, getting real commercial momentum. You see the structural hedge, and we've guided to €60,000,000 full year benefit that will come through that year. That's 5 basis points. And on the lending side, I think we're looking forward to growing into full year 'twenty two. And clearly, that will have a Link. We'll be opening the jewels at that point, and we'll look forward to that. But this year, we've got a bit of work to do, as you know, based on the things we've discussed earlier today. Okay. Thanks. I'll leave it there. Thank you. Our next question comes from Grace Dagen of Barclays. Grace, your line is now open. Hi, good morning. Thank you for taking my questions. So just a couple from me. I think firstly, on the cost, How do you see costs evolving into 2022, particularly bearing in mind sort of the guidance from today? Lynne. And what items do you think will be driving a delta in cost base from 'twenty one to 'twenty two? And then secondly, Just picking up on the NIM. I guess, just very quickly, what mortgage spreads are you and in that NIM guidance. And maybe if you could add any color on what spreads you're currently seeing on your mortgages? Thank you. Andrew. Yes. So I'll pick up starting with the second and talk about costs. I think on NIM, look, we don't guide to our NIM Spreads on mortgages, I know other banks do, but we've not done that. I don't propose to start. What I can say is that Lyn. NIM spreads have come down somewhat sort of Q1 into Q2 as we've seen the market become a little bit more competitive. Lynk. That may well continue and give rise to some modest dilution in NIM, but we are sufficiently confident in the round to confirm the guidance of around 160 basis points. I think on costs, You've seen Page 19 in our deck. So we're expecting quite a step down from H1 to H2. Link. Yes. As David indicated, I started as CFO towards the tail end of the second half of the year. You can imagine I spent quite a bit of time looking at costs and our cost plan Lynk. I am sufficiently confident to confirm the guidance you've heard today, the less than €430,000,000 for the second half of the year. Link. We've got good momentum. David talked about phasing issues, and that means you'll expect to see cost savings really coming through The second half of the year, which means we'll have a good exit rate from full year 2021 to 2022. And we'll update on the three drivers cost savings that David indicated really around digital and the post COVID world that gives us confidence to indicate the long term guidance that David gave earlier of less than $780,000,000 We'll update you on the time frame for that, the specific plans and any costs associated with delivering it. Okay. Thank you. Lindsay. Our next question comes from Rob Noble of Deutsche Bank. Rob, your line is now open. Anthony. Can I ask a couple of questions? 1 on the structural hedge. So why do you not go further down the yield The weighted average life is pretty low. How are you going to manage it going forward? Is it be back to purely mechanical? Or can we expect Link. You're flipping it around again if the yield curve changes sufficiently. Andrew. And then, Clifford, just as you've just started, is there anything you would like to see done differently at Virgin going forward, having been there for not so long now? Thanks. Yes. I'll answer those two questions, especially the second one. I think in terms of the structural hedge, We made a strategic decision driven by the 2 things I mentioned on my little presentation. 1 is We've now got an upward sloping yield curve. And secondly, the possibility of negative rates in the policy toolkit. Link. That was a I call it a strategic decision, albeit one different from last year. When conditions change, we change our strategy. I don't foresee us changing our strategy again. It's not a trading position. So our duration is set by Link. Good on behavioral duration of the relationship deposits, so you can model that out. We think that duration is 2 to 3 years. Link. So and I don't expect that to change materially, and we won't change it. In terms of and I expect Lynne. That we will continue to mechanically roll that as we've done in the past. That means we'll lock in the 5 year rate. As each month goes by, we'll roll onesixty of that position. So I think coming in new, Link. I mean, I used to work in a bigger bank. What attracted me to Virgin Money was we've got scale. Link. We're a full service digital bank across products, both assets and liabilities, but we're small enough to be agile. Link. And you really see that coming through in our results, really quite resilient during the tough year or so that the whole sector has had. Link. And we've also got the ability to drive double digit returns through further cost reduction, which we talked about earlier, and importantly profitable growth, right? So as a medium sized bank, we can continue to grow profitably in this market. So that was the attraction. We're doing a lot of good things. I think you've seen that in the results today. We have ambitious plans. Link. I think cost is clearly something that will be a big focus for me. Link. We continue to make progress, but also all the possibilities that David talked about earlier, particularly for a bank of our scale to really deliver. We're a national bank that can deliver digitally, cost efficiently, and we'll talk some more about that at the full year. Link. I think capital gets a lot of focus for any CFO. I'm pleased coming in with the strength of the capital position. We've got our 1st solvency stress test this year with the PRA. So that's clearly a lot of focus. But what I'm excited about is Lynk. The prospect for the franchise, we're now very largely digital. We've very largely rebranded. Link. I think we've only just started in terms of the commercial momentum behind our new products. So there's exciting times to come. Link. Great. Thanks a lot. Our next question comes from John Cronin of Goodbody. John, your line is now open. Good morning and thanks for taking my questions. The first one is a point of detail on the acquisition accounting unwind charges. I know you'd said previously that we should expect circa €150,000,000 of unwind charges over the next 5 years. I think you said that the full year results page. €57,000,000 in H1. So just wondering if the guidance still intact there? And if not, why not? And second question, just on loan growth. And look, I hear your point in terms of prioritization of margin over volume. And I guess this is the 2nd time we'll probably see consensus downgrade to loan growth following an update. And we're hearing some very bullish commentary from your peers in terms of volumes. Look, I appreciate the desire to keep NIM up, but from a risk adjusted return perspective, Could there be an argument that you could go faster on loan growth in the current environment, in mortgages particularly? And then thirdly, on capital guidance. Look, I know that your guidance is for in excess of 13%, which I suppose leaves it open to one interpretation. But that 13% number does tend to anchor people towards that level. Just working through the numbers and in light of your comments, particularly Clifford on subdued cost of risk for the remainder of FY 2021, albeit rising thereafter potentially. It strikes me that look about 14% would see more appropriate guidance given where capital is purchased at H1 and the various moving parts through H2. Is there something I'm missing there Is my assessment broadly correct in your view? Thank you. Maybe, John, I'll pick up just on the growth point that you make and Clifford will pick up on the other 2. I think Look, we were as you say, we were cautious coming in. The outlook has improved. And so we are Lynne. Very thoughtful about that. You can take it as Ren said, we're still a little bit conservative in the short term, but absolutely confident about growth the balance sheet in the medium term. That's our overlay. Underneath that, you will see us probably stable overall with the balance sheet for this year, but building momentum in growth. So you'll see in the mortgages, which you mentioned specifically, Lenny. Our March lending was up circa 50% from previous levels. And that's moving along to the stock levels, which we have indicated we would like to hold around 4%. So I see that progressing stronger as well for the full year. We have in the business bank, it's really a function of the government lending, but we've also gone national on the digital bank now and as over the last few weeks and that will build a BCA driven growth model of customers. You've seen that in the personal level, we're 90% up in our personal accounts. So what I would say is we're looking at a still an element of conservatism. And I know people want us to just charge out there In an environment where, frankly, mortgages, as we predicted, are coming down in margins quite significantly. So we protected the margin. We'll still defend that. And that's why we have them and we have. But we are starting to grow now, but we're laying the foundations across every single tight area, including with the propositions and the loyalty programs. And we're expecting to come through the pandemic next year and deliver in 2022 above market growth. So that's the sort of trajectory that you should be thinking about when looking at growth, John. But let me hand over to Clifford just on the other two items you raised. Anthony. Yes. Thanks, John. You talked about the 2 questions. 1 was accounting acquisition accounting on why and the other was CET1 ratio guidance. I think on the acquisition accounting, we said at the full year 2020 that we would have roughly EUR 150,000,000 of acquisition accounting unwind over the next 5 years with the bulk of that in the next 2 years. We've seen EUR 47,000,000 Link. In the first half of this year, there was, I would say, a little bit more than we expected, reflecting the slight shrinkage in the card book. I call that technical phenomenon. Link. And we expect the bulk of the remainder of around EUR 100,000,000 in the second half of this year and next year. So I don't think anything has materially changed, but just an update and a reminder of the dynamics there. I think around the 13%, I take your point around anchors. We wanted to refer back to our previous guidance of 13%. So we're feeling good. I'm not capping it, capping our ambition at any level. I think just to remind you that, that guidance excludes the benefit of software intangibles, Which we expect to reverse. We also not included in that guidance the benefit of the hybrid model, mortgage model, Which we think is unlikely this financial year, our year ends in September. Link. And then finally, on RWA inflation, whilst we've seen little of that today, we just remain cautious. It's possible we get some RWA inflation, Although we think in all likelihood that will be into next year. So that's the background on our caution, but in terms of our guidance. Overall, we're feeling good about our capital position, and that puts us in a position to take advantage of moderate profitable growth opportunities for lending as the economy clearly recovers from the lockdown. Thank you. Our next question comes from Rohit Chandra Rajan of Bank of America. Your line is now open. Hi, thank you very much. Good morning. I wondered if I could ask a return to costs, Please, a few questions. The first one is really just to understand what changed in terms of your 2021 cost expectations between Q1 and now. And then sort of following on from that, I know that you'll be giving us a fuller update on 2022 and beyond the full year results. But could you sort of help us just scale, I guess, the relationship between Underlying costs, which you said less than €780,000,000 but you're also indicating an increase in sort of investment spend. So if we take Link. The underlying plus transformation and investment spend together, how should we be thinking about the 2022 costs overall? Link. And then on that sort of digital acceleration program, what sort of timescale do you envisage that being over? So I appreciate on costs, you'll give us more update, but if you could give us some sense of how that you think that will play out now, that would be very helpful. Thank you. Yes. So in terms of costs, I think the actually, that guidance predated me personally. Link. But I think in terms of our cost plans, it was always clear we were looking for a step down in costs in the second half of the year of this year. And we've been in lockdown consistently. I'm calling from my kitchen. Actually, I'm sure you are too. So I think that's meant some phasing in our cost saving plans, but those plans remain very much in progress. Link. So I'm expecting to deliver on the guidance we announced this morning, which gives us a good entryway into next year. Link. I think in terms of overall ambition, timeframe and costs, let me have got a lot to add, maybe David can. We have signaled higher integration and transformation costs this year from our previous guidance of 74 to around 100. Link. And that's a, if you like, some guidance ahead of what to expect at our full year results when we'll be more specific about our plans, phasing and unnecessary costs. Yes, thanks. And Rohit, maybe just to provide some context. The digital side of this is really to continue the transformation that we've been doing where we see the potential to accelerate. Now that can come In terms of the way we have an operating model on a remote basis, which we think is a significant opportunity, it comes in terms of transformation of some of the space that we have in the terms of total real estate footprint. But it also comes in the sweet spot of providing services to customers online. So as you saw, we have in the presentation, a very strong level of progress in terms of digital sales, and that's key. And behind that, we want to make sure that the customer experience that we're delivering is at the same level of digital functionality. And so we're joining up the 2 to create an end state, which is almost seamless and straight through. An example just being by the end of the year being able to deliver straight through mortgages in 2021. And then it is in a similar way looking at the process behind every digital delivery and service in 2022 to make sure it's at the same level. And in effect, offering a fintech equivalent model in terms of how they provide services to our customer and the level of experience they should expect. So that's the framework. And what we're doing right now, Rohit, which I know is a little unclear right now, but what we're doing is doing the detailed work on all the different elements of the remote model, the service provision of real estate, so that we can provide you with what you would expect between reasonably detailed science to underpin our medium term cost output, but also the level of digital capability that will underpin our growth agenda, which is what we're very focused on in that medium term. Link. So I'm very confident that we'll deliver that cost agenda, but I'm also very ambitious about delivering the digital agenda to ensure that it underpins our growth strategy. Thank you. Could I just come back on the 2022 costs? So if I take the GBP 780,000,000 existing guidance. And then consensus has about $40,000,000 in, I think, for restructuring or transformation costs. So it's $820,000,000 in total. Is your and I appreciate the plans aren't fully formed, but should we be thinking about something higher or lower than that? I don't know if you're able to comment. Yes. I mean, that's SEK 780,000,000 we backed off that guidance for full year 2022 at the start of the pandemic. If you recall, so just to remind you. And but I'm not in a position To give specific I note consensus for costs for full year 2022, which is materially in excess of 780,000,000. So I would cross check that. Link. And on exceptionals, again, I've guided to full year 2021. This year, That will be investments to, amongst other things, take out costs for the next few years. But we're I'm afraid you'll have to wait till November for further specific guidance on numbers on full year 2022. Understood. Thank you. Our next question comes from Benjamin Thomas of RBC. Benjamin, your line is now open. Please go ahead. Thank you. Welcome, Gifford, and thank you for taking my questions. Just in relation to the reintroduction of the hedge, How close structural hedge comes to speculation versus risk management? A speculation versus risk management is obviously kind of a spectrum, but I imagine that one could argue that new I think we lost you there. We lost you there, Ben, that last bit. Can you hear me now? Yes. I think you talked about is the structural hedge speculation or risk management Link. And then you want to I guess something else. The crux of my question is, should we expect something in in terms of your CET1 regulatory target, an add on of some kind because you're switching on and off the hedge. I guess that's the crux of my first question. Ian. And then on noninterest income, I think you've given guidance before for full year 2021 of EUR 150,000,000. It's obviously fair to say now probably that you're coming well below that guidance, but is the EUR 150,000,000 now a more achievable number for full year 2022? Thank you. Andy. I'll tackle that. I think so the got so that $150,000,000 is guidance for OOI. Is that what you mean then? Yes. I think the We've been pretty vague about our current guidance for ROI. And I think today and any previous guidance, I think, It isn't relevant when you go through a pretty tough lockdown and now we're emerging from it. So I would say as of today Link. That GBP 66,000,000 has reached a sort of a stable low reflecting Low activity levels, England was in lockdown right the way through that period. So I'm hopeful that we'll see growth from here. It may take some time to come through, but we'll see that particularly on our credit card business activity levels on current accounts and and business accounts. We also have launched some fee earning products that you've seen that David talked about, which gives us medium term confidence in fees. But I'm not going to give specific guidance for next year. I think in terms of the hedge, Link. Look, I think it's sensible risk management in the light of the current environment. So as I indicated further, this was a strategic step. I think we are in unprecedented times. So the extremely flat yield curve That we saw last year together with negative rates not being not really being a possible loss. It was very unusual. And in those unusual circumstances, the bank unwound the hedge. We've made the strategic decision To put it back on in quite a mechanical way, so you should not expect us to be trading that. I think both measures were, call it, sensible risk management. I think I'm very comfortable with our approach now because it gives stability to our earnings outlook and really allows the commercial momentum of the bank to deliver earnings going forward rather than movements in the curve, at least Over time. And as you know, the hedge is more a smoothing mechanism than a hedge per se, right? I think that's Yes. I think on the capital side of things, I don't really want to speculate on that and how the PRA may or may We're obviously in close dialogue with the PRA. We're going through our first solvency stress testing. I think that's the Link. That will be an important driver of our capital framework, which we've indicated we will update on once those once the results of that testing are clear. Thank you. Our next question comes from Guy Stebbings of BNP Paribas. Your line is now open. Good morning, David and Clifford. Just A couple of follow ups from me. Firstly, on margin, just on the deposit side of things, I'm just trying to gauge sort of how much more of a tailwind this can be. It's still priced quite competitively in some areas. So I guess you could adjust down on those. But then equally, you've hinted at competition potentially coming back. So I'm just trying to sense How much more we could see there? Is it more now just about kind of mix effects and moving more towards current account and away from terms still? Or is that sort of actual repricing within individual products still to come as well. And then secondly, on macro assumptions, just to understand sort of the timing of how these get made and flow through into the models because there's still quite a lot more conservative than some of your peers. And certainly the forecast you set out on Slide 5, just trying to gauge Link. The sort of conservative, is that a sense of your sort of conservative perception of risk and driving some of your actions on mortgage risk appetite, for instance? Was it more about timing of when things get signed off because it looks like there could be some sort of sizable revisions still to come? Thank you. Link. Yes. Thanks, Guy. I'll take those 2. I think on deposits, I won't talk about future pricing. Link. What I would note is you've seen the decline in the cost of deposits half year to half year to 61 basis points. Clearly, the Q2 cost of deposits was lower than 61 basis points. So in the mid-50s, that was the exit rate. We are really benefiting from the growth in relationship deposits. Some of that is the effect of the lockdown, people being at home. Some of it's our proposition. So I think what will drive the cost of deposits Going forward, how quickly people spend those deposits as they come out of lockdown, Not just the money they hold with us, but obviously the money they hold across the sector, which will drive how competitive market is for deposits, including NS and I that's been a big has been a big player in this market in the past. So I think there's some benefit of, let's call it the exit rate earnings through into the second half of the year, but clearly some uncertainties there underpinned by some strong propositions in the medium term. In terms of macro assumptions, yes, it does take time. IFRS 9 takes time to crank the handle on models. So the macroeconomic forecast that underpin IFRS nine were set in the early part of Q2, before March. I mean, we're comfortable that they reflect A realistic view of the balance sheet day because we published our accounts. But clearly, they're a little bit dated versus what you're seeing today in terms of economic outlook, whether that's our own provider, Oxford Economics or the market generally. So we'll clearly keep that under review. What you've seen in terms of our provisioning at the half year is while we have Reflected the more positive economic outlook that's in our economic forecast, we've also strengthened the post model adjustments because we are Uncertain as to how bottles will behave when the support mechanisms wind down. Link. And that wind down is expected to take place, I would say, around maybe a little bit after our full year balance sheet date because we had the September balance sheet period, if you know. So that maybe gives you a bit of a feel for how we're thinking about economic forecasts and how it might affect provision level. Question comes from Chris Can't of Autonomous Research. If I could just come back on costs, I'm afraid. I just wanted to come back on what you were saying about your momentum through the second half of this year. So 430% run rate for the second half, but then with a strong exit, so presumably below 430 as the sort of December exit level. Consensus for 2022, if I look at the operating costs number, is at 'eight 20. Do you think you're kind of at that run rate at the end of this year there or thereabouts before you take additional cost actions looking into next year. And I'm cognizant that you don't want to talk about the quantum of those additional actions. But just in terms of Where you think you get to by the end of this year versus 2022 would be helpful. And then just to come back on capital as well, I'm afraid. So I'm also a bit confused by your greater than 13. You're at 39x software, Pareen is expected to be low. You're not expecting to grow the balance sheet much. You're not expecting procyclicality or anything significant on procyclicality. You guided us on the transformation costs, which is within line with the first half. Am I missing something there? I mean, is there sort of a big upside risk To that transformation charge number when you give us the new cost plan, is that what you're trying to communicate there? Because like others, I'm also struggling a and then looking into 2022, could you give us an update please on the quantum The RWA benefits you expect to come from the card IRB and the hybrid mortgage models. Link. I think in the past, you've guided that to be 5% to 10% of RWAs. I guess that may be a little bit stale now given that we haven't had Yes. Maybe I'll take those. I think on we're kind of drilling into some of the detail and you'll forgive me if I hold back a little bit. I think the 430, Link. We are confident in at or less than that figure and that will be a lower exit rate. I'm not going to quantify it you. I think around the 13%, I think what you might be missing is our caution in a very uncertain environment. So I think we've guided to, for example, transformation costs this year already. We'll refine our plans and announce those. But I think the I think we're still a bit cautious around the environment around the timing of RWA inflation, and we don't want to give capital guidance to 1 decimal point. I think in terms of the RWA initiatives, I think the I don't want to give a very specific figure, but I think the effect is likely to be a little bit more muted than perhaps we thought a little while ago. I think HPI has been strong since then in particular. Link. So and the guidance we've given of above 13% actually excludes these benefits. So we do see it as incrementally beneficial, Link. But we'll just see how it plays out and in particular in our dialogue with the PRA around the hybrid model in common with the rest of the sector. Link. I think that deals with your 3 questions, Chris. Okay. Thanks. Our next question comes from Victor German of Macquarie. Your line is now open. Link. Good morning. Thank you. I was hoping just to follow-up actually on the hedges again. It looks like A material upside or a material change to guidance for margins is actually coming from that Link. A new hedge that's in place. I'd just be interested if that's if my interpretation is correct. And also, as we look into second half rather than full years, but From a second half perspective going into 2022, if you can just perhaps from a total hedging perspective, Would it be fair to assume that margins are kind of broadly flat kind of second half going into first half twenty twenty two? I think Victor, it's Clifford. I think the structural hedge Link. We'll deliver around 5 basis points next year, right, when we get a full year's benefit, assuming the yield curve remains in place. That translates to roughly 2 basis points. So it's helpful, but it's not the only driver of our upgrade on NIM this year. I think the other primary driver was our cost of deposits where we performed Link. Very well. I think in terms of full year 2022, I'm not going to provide any further guidance other than to say that Link. Our exit NIM, so for Q4, if you like, we expect to be above the around 160 Link. Given that guidance we've provided for the full year, and that was clearly low at the start of the year. So we've got good momentum going into next year. And next year's NIM dynamics will play out driven by the factors I mentioned earlier. Yes. No, I appreciate that. Maybe I didn't come I get all what you're saying. I mean, based on your current guidance, it sounds like your margin in the second half should be sort of 163 or so. Link. And that five basis points makes sense. And just I guess, would I be right to interpret that, that five basis points would largely come through in the second half? And so If I look at second half kind of margins going into 'twenty two margins, structural hedge should broadly in neutral. Is that the right way to look at it? Yes, that's right. That's the right way because it's fully on now, and it will be in the second half, right? Yes. So and we gave the we indicated €25,000,000 for this year And it came on at the beginning of the second half. So it's now earning at a steady run rate through to full year 2022. We're basically over 95% done. So I think the short answer to your question is yes. Okay. Understood. And simplistically speaking, kind of similar to the past, sort of every sort of the hedge will basically roll off So every month, 1 60th rolls off. That's right. So we've slightly upsized it, reflecting the strength of the deposit book, And it will be 1.60th and you should model it at the 5 year. So the average duration is 2.5%, but the marginal is 5 years. Link. And because you've got an upward sloping yield curve, so you should expect the benefit of the structural hedge to creep up over time assuming the yield curve is fixed. Link. Understood. And then just to confirm something on noninterest income. I mean, it looks like the big delta in the half at least It came through fair value line. Appreciate it's very difficult line to guide on. But I mean, would you say the most kind of The easiest way to think about it is just assume 0 and then kind of see where it lands? Or is there any kind of indication you can see that? Yes. I think that's more than right. Link. I mean, it's pretty you look at it over time, we've got a consistent hedging strategy. You get some noise Through there, it's been modest negative, modest positive and the swing we've had this half year has been unfortunate. So I mean, we disclose it so that you can really look through to the underlying fees, which have been pretty stable half year to half year. So I think we should have reason to feel optimistic On that line coming out of lockdown and as our propositions develop, I think the challenge is what's the timing. Thank you. Our final question comes from Jason Mapier of UBS. Jason, your line is open. Please go ahead. Good morning. Thank you for taking my questions. I had 3 Quite simple ones actually, if that was okay. First one, David and Clifford, just to check, David, you said that the expectation ought to be for stable loans at the full year period. I think you said I just wanted to confirm that that was okay. Yes, Sue. Thank you. That's handy and it leads on to the second one, which is the strategy as previously shared is one in which and The business is looking to maximize spreads and shift mix to sort of a greater share of SME and higher spread business. And I just wonder, in the light of the fact that despite very strong HPI, and consistently upgraded macro, better government assistance and so on. The bank is not growing Link. It's mortgage book where the best we would think the best return on our square foot assets are. I'm just wondering, sort of going forward, even if the economy rebounds strongly, Link. Given how cautious you've been in the crisis, does it make sense for us still to be expecting you to pivot towards other things. And then lastly, tomorrow at the Holyrood elections in Scotland, I just wondered whether you could talk to the exposure of the loan book to Scotland and sort of strategic thoughts around what a potential drive for independence would mean for the bank. Thank you. Sure. Maybe I'll take on some growth and Trevor can come back on Scotland. I think the position we have is, we were overweight versus our peers in mortgages as a business. So we were looking at not short term, but long term rebalancing of that. That's not a 1 quarter or 1 year type mix issue at all. It's multi years, clearly. We at the same time, we're reacting to and can react to what we see in the market. And so as I mentioned earlier, we are Stepping up in mortgages now at a 50% increase on last month in terms of volumes, but still keeping careful eye on and the mortgage again. Well, we are able to build that mortgage capability. And the same with personal, we've seen the credit cards Returned to probably 94% in April of pre pandemic levels. And then on the personal side, that will be a function of activity. And on the business side, We have launched the digital bank. So we're waiting to see what the economy gives us an opportunity. But what we're doing is accelerating in all areas our plan with an element of caution as we said, but I don't overdo that. We've built all the propositions around the product, the digital capabilities. And we're now leaving behind a kind of legacy period and stepping into a growth period. It's the pace of growth, which we're trying to gauge for the short term correctly. But to make myself very clear, the medium term is Stronger. So that's the way to think about it, if that makes sense. When you look at 5 months left in the year, that's why we talk about stable to this year Because our step ups will bring it to the mobile insurance and full stop. So I think this year is stable. We don't manage the business by quarter, Lynne. But this year, we'll be stable and then there's an acceleration of our growth and coming out with stronger and stronger momentum as the pandemic becomes more clear. But maybe it's a 30% on the fiscal year. Yes. And just to build on that, Jason, I joined the bank Because it was a growth bank or is a growth bank in terms of the overall business, but also and to broaden the product range. So I'm convinced the opportunity is there. It's Just on the timescale that Dave referred to, clearly, we're cautious in this very uncertain environment coming out of the pandemic, Cautiously optimistic, but we are let there be no doubt, we are a growth bank, right, and we can open the doors, which we'll do over time. I think in terms of Holyrood elections, I mean, I'll be following the polls and the newspapers as we will have. I think the in terms of our loan portfolio, since the acquisition of Virgin Money, we're very much a national business. So mortgages, cards is around 10% of our portfolio in Scotland. Business and personal current accounts are a bit more than that reflecting the heritage of former Clydesdale. So I think we clearly like other banks, we have a Scottish exposure, but perhaps it's a little bit more modest than people might think Given our history, we have around 4,000 staff working in Scotland, so around half the team based in Scotland, which we think is actually a great location for a U. K. Bank. So we're clearly monitoring the situation closely Link. And we'll follow the implications such as they may be in due course. I'll now hand back to the management team for closing remarks. Okay. Thanks, and thank you, everybody, and thank you for the time today. Just to wrap up maybe, I think from our perspective, as I said in the presentation, I think we're in a strong position from capital and funding perspectives. We really feel good about that and see upside there. We do have real confidence, and I know you've read your questions like cost, but We see this as a temporary phasing of costs and then a double down on cost drives, which will lead it to getting below the target. We're very confident about that, We just need a bit of time to get the details together so that we can present that to everyone. We have a tremendous amount of progress being made on the rebrand and the integration allowing us putting to put our products and our propositions out there with the Virgin Red loyalty scheme and we launched the business Digital Bank. So we see ourselves making a lot of progress in terms of our capability and emerging signs of growth in that from the personal accounts that Mike said. And so we have a powerful digital agenda at work with all of those propositions and all of those products capabilities. And we are therefore really quite optimistic about the medium term and growing our balance sheet. So I believe it's kind of the next evolution phase for this bank, but we're very confident about that future. So we will close there. Link. Obviously, you don't have to reach us and the IR team if you need any further information. But thank you all for your time today, and we will close our call now. Thank you.