Good morning, and welcome to CaixaBank's financial results presentation for the second quarter of 2021. I hope you and your families are well. For today's presentation, we are joined by our CEO, Gonzalo Gortázar, and the CFO, Javier Pano. Please note, for reporting purposes, that this is the first quarter in which Bankia is integrated and thus is included in the P&L. We have provided, for comparison purposes, historic P&L figures, which include Bankia restated to CaixaBank presentation standards. Moving on, just a reminder that we plan to spend roughly around 30 minutes presenting, with 45-60 minutes after that for Q&A session, for which you should have received instructions via email. Without further ado, let me hand it over to the CEO, Mr. Gortázar.
Thank you, Eddie. Good morning, everybody. Thanks for attending. If I may anticipate, you'll be taking some time off over the next few days, and hope you enjoy that time off. Let me go directly into key points of the quarter, the highlights. You know them well at this stage. The redundancy plan has been agreed. The cost and savings associated with it have allowed us to increase the target for cost synergies from EUR 770 to EUR 940 million. That equates to 54% of Bankia's cost base. I think a fairly ambitious objective, but one which we think is clearly achievable, and that's why we're revising our figures to that number, which we expect to achieve in full in 2023. Core revenues have gone well. You have the figures there, both year-on-year and quarter-on-quarter.
We are obviously going through the first quarter of integration of both entities into single revenues. The level of activity, as you will see later, stand at good levels, is particularly satisfactory. Credit quality, again, NPLs are flat. Clearly, cost of risk coming well below our estimates, we are updating and improving our guidance to be below 4% by year-end on NPLs and below 40 basis points on cost of risk by year-end. Capital 12.5% on a fully loaded and excluding IFRS transitional adjustment. Well above our initial estimates and our targets, 12.5. Obviously, that gives us plenty of confidence, among other things, to restore very quickly a normal sort of payout policy, which we're bringing back down to 50%. In terms of how integration is going, we are fairly pleased.
As you know, integration of two large institutions in the same market is a lot of work and a lot of complexity. On the corporate side, we have made progress in terms of merging the asset managers, which was completed early July, agreeing with Global Payments how to value our merchant acquiring business that will go into a joint venture with them. We are also moving ahead on other specialized businesses where we have specialized companies like payments and consumer or VidaCaixa and Bankia, the pension business of Bankia. On the commercial side, all the retail network has been rebranded now. All the retail network has joint terminals so that we can do CaixaBank transactions in Bankia's branches. Obviously, everything has been unified in terms of management since day one. We have fully integrated already some business units, CIB, business banking, private banking.
Because of the nature of the business, has been integrated, well, basically from day one. We already have the former Bankia network. Even though they are running different platforms, we have already been able to put some of our products from CaixaBank on that platform, and hence, the MyBox, for instance, senior protection has already been sold through Bankia. Really, it's their fair share. It's fairly pleasing to see that this is happening soon. On an operational basis and headquarters, we have unified everything in appropriate joint or unified governance processes, integrated teams. The IT work is on plan. We have made very good progress. We obviously still have to do some work until the end of the year when we will integrate IT, but everything is on track. Some more details on the redundancy plan. You know them well.
I'm not going to repeat them by reading what's on the page. I think it's worth highlighting, in terms of the total cost by measure through its impact on Core Equity Tier 1, it's gone from 2.2-2.4, so slightly below a 10% increase, but the cost savings have been increased by 22%. It's clearly, I would say, a very good trade-off for a 10% additional cost, a 22% increase in the run rate of synergies. Again, you have the details there of what's personnel and what's the general expenses. When you look at the payback, which is obviously a very crude, simple measure, but something that is also very tangible, the payback from the cost versus savings comes down from 2.9-2.5.
I would like to remind you at this stage that we keep committed also to the revenue synergies that we announced at the transaction presentation, even though all this is mostly related to the insurance business. It is pending in terms of its contribution to the P&L. It's pending until we get an agreement and conclude the discussions we have with our insurance partners or Bankia's insurance partners, namely Mapfre. Some details on production levels. You see a long-term savings business is really booming, with that EUR 5.8 billion of net inflows in the first six months of the year, four times what it was last year, which obviously was affected by the pandemic. Even though, and compared to the second half, also very satisfactory level. On the protection business, both life risk and non-life, MyBox is gaining predominance very quickly. It's really a boomer, and doing very well.
Hence, we're quite happy with that part of the business. On the mortgage side, we have an increase in new lending, 16%. The market is healthy there. We continue to be pretty strict in terms of pricing and the discipline we have on that business. Consumer, I think achieving this 3% growth is a good thing. Obviously, we have seen that consumer lending is taking its time before it takes off. Activity levels are improving clearly, and hence our expectation. My conviction is that we're going to have pretty good activity in the second half of the year. We are extremely well positioned with what we've been doing so far. On business lending, it's been in line with the second half of 2020.
Obviously, well below what it was the first half of the year of last year because of the pandemic, where we had a big jump in ICO loans and non-ICO loans as well, I have to say, on precautionary funding. Less activity on that front, but some stability in new lending. Some macro data. You know we follow very closely the domestic card spending in Spain with our 25% market share. It's actually very good and instant information on what's happening. In the month of July, up until this week, actual spending is up 18% on the same period of 2019, obviously before the pandemic. You can see how that has evolved in the last couple of years. It's a big jump. I have to say, this is only domestic.
Checking the numbers also on the international side, even though it's still well below the levels of 2019, it's almost double from it was just a couple of months ago. That's also important for our activity. The international spending is recovering, even though still has a long way to go given the trends in international tourism being different. PMIs, record highs. Employment, we're basically at the same level of employment in Spain as pre-pandemic, which is quite relevant. We have an increase in active population looking for work. What was expected. I think going on, we have clearly a recovery path for the economy in Spain, as you know. In terms of our balance sheet, the customer funds, very significant growth. Obviously, we have a lot of numbers here because of the complexity of the comparison with the period pre-merger.
I'm going to just comment more on the last column, the organic, which is, I guess, more indicative of trends with that 6% of growth year to date. Most notably, on assets under management, look at that 10.3% increase. Obviously very high levels. If you add all this and insurance, we're clearly gaining market share on this part of the business during the year, which is, I think, particularly something to be highlighted during this first stage of the merger, the labor union negotiations, et cetera. We've been able to actually grow on the high value added part of these customer funds faster than the market. The total, you see EUR 13.7 billion in the middle of the page in the chart between market impact and net inflows. Obviously on the on-balance sheet fund side, there's also growth.
In June, it tends to be particularly higher because of some seasonality. Worth highlighting again, the assets under management at the end of the period are higher than those average for the quarter and certainly for the year. That is going to help fees in the coming quarters. As you know from the market, actually July is also behaving very well. Again, very strong support and tailwind here for our fee business. Long-term savings. I just wanted to highlight a couple of things. On this part of the business, where we have basically EUR 210 billion now between insurance, pensions, and mutual funds. A very large part of our customer funds. We have made great progress in terms of our sustainability agenda.
During the quarter, we've launched, with the help and assistance of BlackRock, an impact initiative on which we have already EUR 3.5 billion in AUMs, which are considered as Article 9 of the new disclosure regime. Again, I think we're pioneering here something that is quite promising for the future. Why not highlighting we joined the Net-Zero Banking Alliance, and we're actually, as you know, making extremely good progress on this front. I believe it is very well-suited to our DNA, the trend towards sustainability, and we're definitely committed to make the best out of the position in which we are and out of all the initiatives that are underway, and some more that will be coming in due course. On the lending side, obviously, demand is soft on the corporate side. You know that well.
If you look at the middle of the page, you see mortgages coming down in line with historical trends, and again, in line with strict pricing discipline that we have on this front. Consumer is broadly stable when you take out some of the noise from the integration. Here, I believe there is good upside, given the economy and initiatives we've been taking. You see there is a significant impact on the loan book, on the business loan book in this quarter, which is obvious. I have to say, the month of June has been quite positive. I think at least we have a trend that is not necessarily going to continue of that book deleveraging, but it's also going to depend on how the demand evolves in the next six months.
I would be quite bullish with respect to 2022, 2023, in terms of the impact of the E.U. funds on that front. We'll have to see how soon this impact is perceived. Comparing the net income adjusted for this year with the net income of last year, you see, obviously, the big green bar is the reduction in loan loss provisions. Remember, we did quite a bit in anticipatory loan provisions associated to COVID-19 in the first half of last year. Actually, in the first half of this year, we're having every other month good news on credit quality, which is very good, obviously. The core revenues are up, but you have that tale of two cities between NII coming down, but fees and insurance almost doubly on the positive sense, double. Obviously more than offsetting that negative NII. Then some other impacts.
The final comments on where we are, I think very good that closed the merger late March. In June, I think we have a real integrated franchise, a good and reinforced balance sheet, both in terms of capital, in terms of liquidity with numbers that speak by themselves. The asset quality, both current ratios and the outlook improving. All that gives us, obviously, confidence to reinstate our more traditional payout policy, which we're fixing at 50% for this year. Obviously, we're deducting corresponding amount of profits from our 12.5% capital ratio that already incorporates that 50%. Anyhow, we have, I think, a formidable platform with the market share we have, the clients we have, and the efficiency we're going to build in when we achieve these synergies, which we have recently increased.
Anyhow, we're looking to be, hopefully soon, on business as usual, but we still obviously have to go through the rest of the year, integrate IT systems, and then the overlapping branch. That's what I would say at this stage, and hand over to Javier.
Okay. Thank you, Gonzalo, and good morning. Well, some more details from my side. As always, starting with comments on the consolidated income statement for this second quarter. A quarter with clearly lower loan loss charges, stable core revenues that have led to strong growth in the adjusted net income. Well, on core revenues, clearly NII impacted by the lower yield environment, I would say. Fees that continue to grow nicely, supported by our long-term savings business. On insurance, we keep recovering and track to our targets, although this quarter affected by some non-recurrent items. The year-end outlook is unchanged, and we are quite positive on the evolution of this business as in the past. On non-core revenues, I could remark here mainly the dividends from BFA, the Angolan stake of BPI.
You know we have had an ordinary but also an extraordinary dividend of slightly over EUR 90 million this quarter. Then finally, I would remark the resolution fund charge this second quarter. On costs, no major news. We are on track to reach our guidance for this year. As you know well, we have this extraordinary cost that mainly it's the personnel restructuring. It's approximately EUR 1.9 billion this quarter. Then below the line, clearly lower loan loss charges with, well, situation after the prudent buildup of COVID-19 reserves. That allows us to clearly reduce the impact on that front. Other provisions also with some noise from M&A charges. This, well, taking into account the M&A impacts, that post-tax are EUR 1.4 billion results into a net income adjusted x M&A impact for the quarter of EUR 764 million, well above the levels of last year.
A few comments on Portugal. Well, the business is doing really well. You may see core revenues really doing positively on a quarterly basis and also year on year. Good performance of NII there. You may see the positive evolution of the loan book with growth across, I would say, all segments, also the new production doing well. Together with good cost control, this results into higher operating leverage with the core operating income up by 21%, I would say, year on year. Really positive evolution. Also lower provisions, ending the second quarter with net attributable profit of EUR 36 million. You know that we have also a loan moratorium in Portugal that is ending a little bit later than in Spain, as you know well. Well, the performance is sound. Well, you have here the NPL ratio in Portugal only at 2.1%.
Before entering into details of the P&L, let me also give you a picture of our ALCO portfolio that is trending down this second quarter at EUR 60.3 billion on the lack of reinvestment opportunities. I'm sure we can discuss this later on the Q&A session. The yield stable and the rest of the metrics, you may see the maturity profile. Obviously, we are facing some important maturities also this year, approximately evenly split between the third and the fourth quarter. The breakdown by different exposures that remains, I would say, broadly unchanged. On the right-hand side, wholesale funding costs that are fairly stable at much lower levels than before the closing of the transaction, remember, after the fair value adjustments. Now on NII, stable, I would say quarter on quarter, obviously down year to date.
Well, the yield environment is pressuring, and we are expecting to keep having pressure during the second half of the year. In this quarter, you may see the impacts. It's client NII mainly impacted by lower loan yields and arrival repricings, and the ALCO broadly offsetting this, mainly thanks to the top-up on the TLTRO III. On the right-hand side chart, you may see the evolution of margins. The buybook yield impacted down by 4 basis points to 167. Arrival repricing mainly. On the contrary, a positive message here is that the front book is gaining traction with a higher weight of consumer lending and also wider spreads on, let's say, CIB. We are up to 211 basis points, up by 16 basis points this second quarter. On fees, clearly a much more positive environment.
We are doing really well quarter-on-quarter, year-on-year, whichever the metric. We are up by 5.5% on a like-for-like basis year to date. You will see the breakdown across the different segments. It's not only asset management that is performing really well, up by 14% year to date, but also recurring fees. You have details, monthly evolution on the right-hand side chart. This includes obviously payment fees, but all the, I would say, maintenance fees, et cetera, all the transactional fees, you may see that we are having a clear recovery. This bode well for future evolution. On insurance distribution, you may see a negative quarter-on-quarter evolution, but this is not important. It's a one-off. There are some accounting effects, but also the gradual rollout of the CaixaBank commercial offering in the Bankia network.
As you know, we are quite upbeat on the future evolution of this part of the business. On wholesale banking, always more volatility, and we have had a good quarter. Well, as you know, it's a slightly softer year as this 2021 compared to last year with extraordinaries during the pandemic. On other insurance revenues, I would rather focus on the central chart, which probably gives us the broader picture. We have a positive evolution year-on-year. On life risk revenues, we are up year-on-year for the first half of the year. This quarter with also some non-reoccurring items related to commercial incentives and others. The business remains stable. As you know, we are quite positive, as I said before. Well, on the right-hand side chart, you see the evolution of core revenues.
As Gonzalo commented, fees and insurance compensating so far NII. Well, the low yield environment is putting pressure on NII, as you know. Now we have some chance of a slight undershooting on our core revenue guidance for this year. That should not be more than by 1%. On costs, I would not remark much things. I would say that we are on track to meet our targets. We are on costs with negative growth year to date. Well, you know that last year we had extraordinary cost savings in the last part of the year. We are on track for our cost guidance for 1% for this year. On the right-hand side chart, you have the phasing of the cost synergies that will reach EUR 940 million by 2023. Finally, on the P&L loan loss charges. This second quarter, really low, EUR 155 million.
Now cost of risk standing at 41 basis points on a pro forma basis. You see the evolution of our different stages of the loan book. I would say that pretty stable, although on stage 2, there are always inflows and outflows, we can comment later. At the end of the day, we are in the same place. We have had this 2nd quarter, the partial assignment of COVID-19 reserve to specific provisions in the, let's say, the periodic model update. This has been EUR 400 million. Now the unused COVID reserves stand at EUR 1.4 billion. You know that this is, in general terms, doing better than initially expected. Also, moratoria performing clearly well, better than our initial expectations. Thus, we are upgrading our cost of risk guidance for the year to less than 40 basis points from less than 50 basis points.
Let's move to the balance sheet. Some comments on NPLs. You know that, as I commented in the previous slide, good performance. We are not having new NPL formation materially. Actually, the balances have come down by EUR 100 million, as you may see, and the ratio remains stable at 3.6%. The breakdown by segments is pretty stable, nothing material, and the coverage ratio at a sound level of 64%. With this, now we have the expectation that the NPL ratio is not going to be over 4%. Clearly, we expect that it's going to be below by before the end of this year and probably growing a little bit more into 2022. The bulk of the moratoria has already expired. You have the details on the right-hand side, and it's now EUR 6.8 billion outstanding, the major part in Portugal with a more extended calendar.
This is expected to end as of September. As I said before, performance is good. Non-performing moratoria, considering active and expired, is 0.5% of the loan book or 0.2% when excluding those with payment difficulties already before COVID. The REOs exposure unchanged at EUR 2.3 billion. On liquidity and MREL, well, the numbers speak by themselves. Liquidity over EUR 160 billion. Liquidity metrics extremely comfortable. The TLTRO III outstanding probably unchanged at EUR 81 billion. You have all the MREL stack. I would remark here our subordinated MREL position above 22% and total MREL at 25%, well above requirements. We have been having successful market access this first half of the year, diversifying the investor base with issuances in British pounds and Swiss francs also, and also with a very active presence in the ESG world with three green and one social bond.
Any further issuance this year will be targeting 2022 refinancing needs. Finally, capital. Strong capital position at 12.5%. With this, we are back, I would say, to normal in terms of dividends with a cash payout target at 50%. This quarter we have negative impact of 86 basis points from restructuring, as have been already been flagged before. Also regulatory impacts of 69 basis points. This includes TRIM impacts that we have been also commenting in the past. This leads to 155 negative impacts from, let's say, regulatory and M&A related. With this, our view is that now net capital drawdowns are already finalized. We have organic capital generation, 33 basis points. Take into account that this second quarter we have the catch-up of the payout dividend. The dividend accrual that was accruing at 30% and now is 50%.
Some other impacts that result into this sound CET1 ratio, 12.5%. On top of this, we have IFRS 9 transitional that results into an ample MDA buffer at 468 basis points. You have also on the right-hand side, the evolution of the tangible value per share with positive evolution despite M&A impacts that have been fairly neutralized each other. With this, I end with a summary, which is what we have been commenting. A really strong balance sheet post-merger, a strong solvency position. I would say that also an evolution in terms of credit quality, much better than our initial expectations. Thus, we are improving our guidance in terms of cost of risk. Also, after the redundancy plan agreed, we upgrade our synergy targets for the next two years clearly. Now the integration is proceeding at full speed.
Thus, we are shifting the focus to sustainable profitability and capital returns. Thank you very much. With this, we may be ready for questions.
Okay. Thanks, Gonzalo. Thanks, Javier. Let's move on to questions next. Operator, can you please proceed with the first one, including the name and company of the caller? Operator, are you there? Hello?
Hello?
Can you hear me?
Is my line open?
We can hear you. I'm not sure if you're the operator.
No, it's Alvaro. Hey. Hi, I think they've opened my line. Is it me you're listening to?
Yes.
Okay, great.
Could you please transfer us to the operator?
I think my line's open. Yes, I can hear my voice. Two questions from me. It's Alvaro from Morgan Stanley. Good morning. One on your core revenues, you mentioned, I think Javier mentioned that it could be -1% versus the original flat expectations. Presumably, it's the NII that's disappointed, so I'll concentrate my questions there. When would you expect the NII to bottom over the next few quarters? If I think about, can you maybe walk us through what are the headwinds remaining? Obviously, EURIBOR, how much EURIBOR sort of impact is left, and maybe any other margin pressures that you want to point out. The second question obviously relates to that, is on corporate lending. If you can maybe share your thoughts about the outlook there. Obviously, it's down, and I heard you, Gonzalo, talk about that you expect a significant improvement.
I don't know if you've done any analysis on sort of liquidity positions of your clients, and how much of potential increased CapEx or increased working capital requirements they're going to dip into existing liquidity before actually loan growth picks up. Any thoughts there, and if you can help us with your crystal ball quantify potentially the opportunity with the NextGen funds, that would be great. Thank you very much.
Hi, Alvaro. Good morning. Yes, I commented that we have now a slight chance of approximately a 1% undershooting on our core revenue guidance. As you say, it is for pressure on NII. I would say that here we have different angles as always. One is, and you pointed out, the part of loan growth. On that front, we are observing that corporates in general and SMEs actually accumulated quite a decent amount of liquidity. Remember that we were quite active on ICO lending, which we think was the right thing to do. Now those clients are, let's say, having a little bit less appetite for new lending. We are having this situation. At the same time, there is this kind of delay or at least a little bit about NextGenerationEU funds, that everyone is waiting for.
At the end of the day, money is still not there. The plan and also companies, SMEs, and even corporates are always looking for more details before deciding. This is affecting. We think that we will have a great opportunity on that front. Obviously, we are working internally to take advantage of this opportunity. Unfortunately, it's not there yet. It's going to be there probably more in the fourth quarter or even into next year. Thus, we face now a third quarter without probably that help in terms of loan growth that probably initially in the year we thought would be there. On the contrary, in other areas like consumer lending, I remember commenting last quarter that we had launched a really large campaign in terms of consumer lending, is doing well.
We have been gaining traction as the quarter progressed, and July figures are good ones. I think that on that front, we can do well, but it's unfortunately a little bit uncertain to what extent, as we are in this, let's say, post-pandemic or in the midst of the pandemic still, to really assess the timing of things. This is why we now have slightly this more conservative view on that front. Finally, it's the ALCO portfolio. Here, if I may, I would be clear on that front. We face maturities. You have all the details on the presentation. We have the potential to increase the size of our portfolio. Clearly, our assessment of the situation is that at current levels, yields do not offer long-term value. It's our view.
Nominal yields are clearly negative compared to inflation expectations. We think that it's not time to build a long-term portfolio at current levels. Thus, unfortunately, we are refraining to roll over maturities or even to expand the portfolio. Credit spreads are at the tightest of recent years. Unfortunately, we're feeling the pain in the short term on that front. This is why also this is putting pressure. You asked also about the ALCO. I remember saying that this year we were facing a mark down of 12 months ALCO of approximately 20 basis points. This is not linear. This is not 20 basis points every quarter. In the third quarter, it's a little bit more intense. It's because the year-on-year comparison is less favorable.
We have a situation where in the third quarter we face repricings of approximately -30 basis points, and this is also having an impact. All in all, we have a situation where we are now estimating NII to be negative by approximately -4% or -5%. And depending on the evolution of fees and the rest of the business, this is why I flagged that we have this chance of slight undershooting on core revenues. Thank you, Alvaro.
If I may add, Javier, obviously, you made that comment on pressure on NII. I think it's obvious. There was that comment, Alvaro Serrano, on the NextGenerationEU funds. I think this is going to be an important tailwind, as Javier said. It's EUR 70 billion coming down to Spain, which is probably going to mean investments of approximately 2x that amount. This is our sort of macro analysis, where we think there's going to be bank credit, bank lending of EUR 35 billion-40 billion. That is the impact, and obviously, we're aiming to get our fair share of that, which is not necessarily 25%, but more. We'll have to see. This is our estimate for the next two years, and as Javier said, mostly associated to 2022 and 2023. I have to say, it's difficult, and Javier's been quite clear. We do have pressure on NII.
This is going to come to an end. You ask about bottoming of NII, and I think Javier, it's likely to be next quarter. Let's make sure we look at the overall picture, because it's been a very positive quarter, and certainly, what we're doing on fees is quite remarkable. I'm sure we'll get into the insurance business, where there's some one-offs that make it not shine as much as it usually does, but there's absolutely no change in the trend on this business. We're quite comfortable with the way the business is going and the capacity we have over time to more than offset the pressure on NII with the rest of the income statement.
Okay. Thanks, Alvaro. May we move on to the next question, operator?
Yes, hello.
The next question comes from the line of Ignacio Ulargui from Exane. Please ask your question.
Hi. Good afternoon. Thanks for taking my questions. I just have two questions. One is, if you could elaborate a bit more on where the EUR 940 million or the delta of EUR 170 million of cost savings are coming from. If there is going to be sort of it's more linked to headcount, or it's more to processes and sort of internal savings on the admin side. The other question, it was just a bit to get your thoughts on how the competitive environment is. You have been talking about delays on NextGenerationEU being deployed. How do you think that is going to impact the TLTRO III, and whether you see or you start to see competitors being more aggressive in corporate lending. Thank you.
Thank you, Ignacio. I would say the increase in cost savings is the result of detailed analysis done, it includes both a review of headquarters, general expenses, and personal expenses, and obviously with a higher degree of certainty after three months or after having agreed the headcount. We did not provide a detailed breakdown of cost savings when we announced the transaction. Hence, I'll go back on that, which we think is not the right thing to do now. It's difficult to compare, I can tell you, the caller, that really we have looked at everything now, and we feel quite confident on that front. On the other part of the question, maybe Javier
Yes. Well, sorry, what's the question?
Competitive environment.
Competitive environment. Yes. TLTRO. Well, it's competitive as always. I would not say that it's much more than in the past. Actually, we are recovering the front-book yield as you saw before. Precisely, it has been a quarter with slightly wider corporate lending yields. In terms of SMEs, also after the ICO lending, that obviously led to tighter yields or spreads, we have been gradually recovering. It's competitive as always, but I would not say that on the segments that count for TLTRO III purposes, there is right now a difference compared to previous quarters. I think that in general terms, all the industry and ourselves also, and I can confirm this now, we are on track to reach the benchmark for TLTRO III benefits.
I think that as everyone is more or less on track, we should not expect much more intensity than the usual one we have always. I think that probably is the summary of the situation.
Okay. Thanks, Ignacio. Could we move on to the next one, please?
The next question comes from the line of Francisco Riquel from Alantra. Please ask your question.
Yes. First question, a technical question on the NII. If you can please quantify the impact of the fair value adjustments on NII on a full year basis, you were previously guiding for a neutral impact. It seems that is now going to have a positive contribution. Whether this impact is sustainable in the coming years or if there is any fading impact from the accounting of the fair value adjustment on NII. The second question is about the insurance revenues, the life risk insurance fell quarter-on-quarter. You mentioned a one-off impact, if you can please explain and quantify this impact. In any case, the underlying trends in life risk insurance are stable quarter-on-quarter, and then the fees from the sale of insurance products also fell quarter-on-quarter.
If you can update on the trends here for this quarter and the second half of the year. Thank you.
Okay. Hi, Paco. Well, on fair value adjustments, what I remember saying is that could were slightly positive at the beginning and then fading a little bit. becoming positive again later. It's not linear. Now it has been positive. It has been close to EUR 15 million this quarter, 15. Don't take this number as a constant one for the rest of the quarters, because as you have different maturities on assets and liabilities, it's going to change. It's positive, a little bit less than this figure in coming quarters for, I would say 1.5 years, then becoming neutral, and then becoming slightly positive again, but well past, I would say 2025 or beyond. On insurance, well, I mentioned, we had an adjustment of commercial incentives, but the underlying business is doing as before.
You know that I have been giving guidance for this business line on life risk of approximately growing to around double digits, let's say around 10%. We think that we are clearly on track to reach this target. You should not read much into this noise quarter-on-quarter. In non-life, it's a little bit of the same. We have also some noise in terms of accounting, but also in this case, as I mentioned before, the rollout, because for non-life, the former Bankia network is already distributing those products. We have had during this second quarter the rollout process, and obviously, we have had here some impact from that effect. Those, both life risk and non-life, were targeted as one of the key drivers of our revenue synergies. This continues to be the case. We reaffirm that those revenue synergies are there.
Obviously, this is a business can only do better in coming quarters. This is clearly our view.
Okay. Thanks, Pano. Could we move on to the next one, please?
The next question comes from the line of Sophie Peterzens from JPMorgan. Please ask your question.
Hi, here is Sophie from JPMorgan. Thank you very much for taking my question. I would have a question on the revenue synergies. You guide for EUR 290 million of revenue synergies, and you say most of it will come from insurance. If I look at your NII guidance, you now guide for NII to be down 4%-5% year-on-year, which means roughly net interest income will be down EUR 300 million, which is roughly EUR 200 million more than what you previously guided for. Is this EUR 290 million of revenue synergies just coming from insurance, and you don't take into account NII weakness, potential fee weakness? How should we think about the revenue synergies? What's the starting point? That would be my first question. The second question is on your thoughts between dividends versus share buybacks. How do you view share buybacks?
Would you consider doing a directed share buyback from the FROB, and is that even possible? Those would be my two questions. Thank you.
Thank you, Sophie. Let me try to answer your questions. First of all, on revenues, I think we need to separate the objectives we have on revenue synergies from the current performance of core revenues. These are two different things. Our revenue synergies are not expected to come in in any material way this year. They are mostly, or in fact, associated to our insurance business and our long-term savings. On this front, we really need to unwind the existing JVs to really make them happen. That's why we did not incorporate that into the short-term guidance. Given what we're seeing, we are fairly confident that this will be coming.
Obviously, there is part of that that is just buying back up to 100% of the JVs on the insurance front, which is rather than a synergy, is just a consequence of just an acquisition of the 100% control of the business, which we quantified at EUR 75 million of this EUR 290. Obviously, that has not been reflected and will not be reflected until the transaction is completed. The rest, we do need for all what has to do with life business, which is obviously a very large part of that number. We need to have integrated IT systems and bought back the JVs. Hence, this is more a 2022 onwards synergy. Obviously, when you look at the business, and we are now an integrated one sole bank for a bit over, well, including July now, four months.
We've been looking at all the assumptions we've made, and we actually feel quite comfortable given what is happening. At this stage, we thought that the right thing to do was to focus today's change of guidance in the cost savings and increase the target. We all know that revenue synergy is a bit softer and longer term. The way we feel now about revenue synergies is stronger than it was four months ago. That's the reality. Because this is all into 2022, then we can look at the performance in the quarter, which Javier has explained. Here we have very strong show on fee business. Some one-offs on the insurance business, which may generate a question mark, but believe me, we are always pretty honest. We are as bullish on this business as we were three or six or nine months ago.
This is going to get where we want on both protection, both on life risk and non-life. Synergies, revenue synergies, which will be on top of that, are likely to come certainly after the integration of IT and after buying back the business in particular from Mapfre, because it's the largest part of the business. It puts us into next year. The second part of the question is capital. We're obviously outperforming vis-à-vis our expectations on capital generation, and it's great to be here. With 12.5% of ex IFRS 9, we are very comfortable. That has allowed us to restore a more normal payout policy. We have a fundamental decision to be made ahead of us, which is what do we do with the capital we are going to generate both this year and going forward.
We want that capital to be available and distributed to shareholders. That's clear. We have a number of means. Obviously, payout is part of the equation in any case. The question is, what is the right sort of sustainable levels on payout, and what is what we can do on top of that with the capital we generate? Share buybacks is obviously one tool which we will be analyzing. This has to be obviously part of sort of a longer-term vision, which we are going to undertake and present to the market sometime in the second quarter of next year. Certainly, this is part of what we will be discussing at the time. I am, and I think we are all completely open to use various tools that we have to remunerate shareholders.
Certainly, considering a share buyback is in the toolkit.
Okay, thanks, Sophie. Let's move on to the next one, operator.
The next question comes from the line of Maksym Mishyn from JB Capital. Please go ahead.
Good morning. Thank you for the presentation and taking my questions. The first one is on the loan book in Spain. Mortgage loan market is probably the best performing in Spain this year, and CaixaBank has been deleveraging in mortgages in the past years. I was wondering if you plan to change the strategy a bit now with Bankia inside and be more aggressive in mortgages, and if not, why not? Considering the perfect loan book of CaixaBank, how do you see the mix in the medium to long term? The second question is on BPI. You have quite a high common equity tier 1 ratio at your Portuguese franchise. If I'm not mistaken, it stands above 14%. Could you explain what is the rationale for operating with excess capital in Portugal? Thank you.
Thank you very much. Let me address the mortgage market. You're right, we have been very, I would say, disciplined in terms of pricing appropriately our mortgages. Also quite, I think, pushy in making sure that we actually offer a fixed rate mortgage, which is, in most cases, better for clients and better for ourselves. That had changed completely our mix of new production and has also changed the mix of new production towards fixed rate mortgages in the overall market because of the weight that we have there, and the market has followed us broadly. We are looking at mortgages not as a way to capture new clients. It is an expensive way to capture new clients by underpricing mortgages. We have plenty of ways to capture and retain clients because of our size, our presence, our product offering, which is quite diverse.
Everybody, obviously, is not of the same view, and there are some people that are being more aggressive. I have to remind you, when you look at numbers of mortgages, that banks, originating banks, have to pay for the stamp duty or the Actos Jurídicos Documentados, which means that the cost on a running basis is close to 40 basis points. When you compare spreads and you look at other markets where you don't have that tax, you really need to deduct that from spreads. Then you start looking at, well, the profitability of the product is what it is. Honestly, we're not here to grow our balance sheet for the sake of growing it. We're in the business of being profitable and selective. That's where we are. Can we be more aggressive? Yes.
We obviously will have to be tactical because we want to do the right share of value enhancing mortgages. That is day-to-day tactical management of the business. I do not think we're going to change our fundamental view. That is likely to result in some continued loss of market share in terms of the stock of mortgages, which we are prepared to have. We have had in the past. We still have a 27% market share in mortgages. I think we are not going to be driven by one number. We're going to be driven by doing the right thing economically. That leads me to the mix of the loan book. If you look at the trends, mortgages is likely to come down.
Not new production, but the stock of the loan book, while obviously we're going to keep growing the consumer book, where we see an opportunity. We will see also growing the business and the CIB book in the coming quarters. If you look at most predictions from June 2021, so basically now to the end of next year, we're going to see 10% GDP growth, more or less. If you look at most predictions combining what is going to happen in the second half of this year and next year in full, it's like 10%. We're going to see an increase in working capital. This is back also to the previous question we had on expectations from Alvaro, on working capital. Obviously, with the GDP growing 10%, there is going to be an impact on working capital, the Next Generation funds.
There's going to be growth on that front as well. I would say in terms of the mix of loan book, we're going to see as a % and a higher weight of consumer and business and a reduced weight of mortgages. That wouldn't come as a surprise to you. I will not be able to quantify exactly because we're very happy to do businesses on the three areas. It's going to depend on the market. Hopefully, we're going to keep growing market share in consumer and businesses like we've done in the last years, and likely to have some reduction of market share in mortgages. With respect to BPI, there is no rationale for the high Core Equity Tier 1 other than a result of history.
Because of the pandemic, BPI has followed, even if it wasn't technically within the recommendation of the ECB, we decided that it was appropriate given the size of BPI in Portugal to also restrain the flow of dividends, which has no impact, obviously, on a consolidated basis. Hence, most of the profits generated in 2019, 2020 have been retained. To that, we also have to add the results that are coming from Angola. It's a result of history, and I think in due course it is likely that the levels of capital will be equalized to those of the group. That is a decision that is not a decision for today. It will come obviously when we have to decide on payout going forward at the end of the year.
As capital is freely transmissible, whether we have it in Madrid, Barcelona, Valencia or Lisbon, is not something that is particularly relevant for the management of the group. There's no penalty for us having more capital in Portugal versus other places. It would be different if it would be in a different currency or subject to limitations or whatever. It makes a difference for us whether capital is retained at BFA in Angola or upstream to the Eurozone. Between Portugal and Spain, fortunately, there is no real impact. Thank you.
Thanks. Thanks for your question, Maksym. Can we move on to the next one, please?
Our next question comes on the line of Marta Sanchez Romero from Bank of America. Please ask your question.
Good afternoon. Thank you very much for taking my questions. The first one is a follow-up on the market share on mortgages. I was wondering how much of a consideration, in defining your risk appetite, is the fact that you still have a high legacy from the previous crisis between mortgage NPLs and repossessed collateral. Is that a consideration in your strategy or you're not too worried about it? Another question on the NII is, the spread on your annuities business is approximately 6% of that line. We have no visibility on how that contribution is going to taper off given where interest rates are. We've seen that it so far is 5%. Could you provide some outlook? It's down 5% this year. Can you provide some outlook?
Just quickly on IRB model approvals, can you provide an update on timing for BMN and potentially for BPI? On the latter, what would you expect the rollout of IRB models to add to your capital?
Thank you. Thank you, Marta. Let me start, and then I'll hand it over to Javier. On mortgages and legacies, obviously our numbers are public, and you know them well, and it's up for you and the market to judge whether there is a legacy. I see our NPL ratio in Spain, and it's below the NPL ratio in Spain of the top or the next three banks. I don't think we have a negative legacy. We have been reducing our NPLs. We'll continue to do so. This year, they have increased slightly because of the merger with Bankia. On that level, again, we are managing those, and this aspect, again, outperforming our own expectations, obviously. I don't know what the expectations of the market may have been, but certainly we're quite happy there, and we are not having any issue affecting new production because of legacy.
I think if that was the case, it would be certainly others thinking about this. Not all others, because there are other banks that obviously have a differential position depending on their history and their specialization. Certainly, most of our peers have higher legacies than we do. We are quite happy with the way we're dealing with that legacy. We have taken very prudent decisions, to move into stage 3 mortgages that are still paying, because of the current situation. Hopefully, we will also have good news as the economy recovers, and we see some of these more unlikely to pay, that we have classified as stage 3 are coming back into performance. No impact whatsoever on that front. On the annuity business, I'll let Javier expand. This is a growing business for us, and the product is not a simple product.
It has implications in terms of fiscal consequences, and I think at this stage, certainly, we have not seen that as a threat to our future business or NII, quite more as an opportunity. I have to say, because we continue to see very strong growth there. Maybe, Javier, you want to elaborate and also update on timing for the rollout of IRB models.
Okay. Hi, Marta. Well, on the annuities business, I agree with the comments made by Gonzalo. It's not a business that is tapering off. Actually, there is quite a very good amount of new production. Obviously, in this yield environment, it's more challenging. You know that we have precisely structured our commercial offer in a way where you have a mix between Unit-Linked and annuities. Obviously, the Unit-Linked is at the risk of the investor. Well, it's a product that is doing really well. You may see on our fee line there only the part of Unit-Linked, but usually this product has attached an annuity that has the impact on NII. There is new production, it's not like a legacy portfolio in run-off. I would like to make this clear.
The average life of the current portfolio is approximately 10 years. Also just to have this in mind. On IRB models, on BMN, our expectation is that this may come next quarter, so third quarter, I mean in the third quarter. BPI, it's almost sure something for 2022. This is our expectation. Remember that for BMN models, we were estimating a positive impact of approximately 10 basis points. On BPI, still pending to be defined, but the amount may be approximately at the same levels, depending on the final portfolios that are included and are authorized, et cetera. As I comment this, I make on the slide, commenting on capital, I made clear that the net drawdowns from regulatory and M&A impacts have already ended. Obviously, this is a net, so compensate each other.
Remember that we have here disclosed three impacts, which is these IRB models for BMN, which is a positive one. We have 300 million of CET1 pending in terms of restructuring costs, the major part into this 2021. Then we have the transfer to our JV with Global Payments of the merchant acquiring business. That results into a positive impact of approximately 10 basis points also. Obviously, there are other unknowns, mainly the final agreements with the rest of the JVs. Our estimate is that considering everything, we are already done. Thank you.
Okay. Thanks, Marta. Operator, can we have the next one, please?
The next question comes from the line of Jernej Omahen from Goldman Sachs. Please go ahead.
Yeah. Good morning from my side as well. Can I just start with a follow-up question? Javier, when you were going through your ALCO book, if I understood you correctly, you said that as positions roll off, you just don't reinvest them. Did I get that right? What happens there? It just sits in cash, you deposit it back to the ECB or what happens?
Okay. Yes. The answer is yes.
The threshold for you to change that approach. Which duration of the curve are you looking at, and how high does it need to go for you to start deploying?
Well, you know that up to May, we were on a steepening process of the yield curve. That looked that it would have, I would say, more legs. Well, since then, the market has reversed. I think that, and I mentioned this in a previous question. Our view, and we may be wrong or not, but we share our views with you, is that the current market levels are not attractive enough in order to be rolling over the portfolio. We are, I would say, waiting a little bit. This is having some short-term pain, as you say. We are accumulating cash at a cost. It's our view. I think that also in the interest of shareholders, to know our strategy there.
Obviously, if the situation changes and goes in the direction we had in the first part of the year, obviously we'll start moving.
Okay. Secondly, I wanted to ask you a conceptual question. The market shares that you have in Spain are obviously market leading, but I think they also put Caixa in a position where it's very difficult to outgrow the market. Okay, investment products aside, but basically, I think when you reach that size, that scale, you share the dynamics of the market pretty much. Now, you've gone through or you're going through a merger. It's going well. You've just increased your cost targets. You've mentioned before that you feel you could move capital without much friction around the Eurozone. I was just wondering, are you ever tempted to consider redefining the geographic presence of Caixa to add a country within the Eurozone to the mix?
Well, Jernej, obviously, a very fundamental question. Before I answer, let me say that our experience in Spain is one of growth despite
Growth on market share despite a very high market share. We are not a normal bank in terms of how our market share is distributed throughout Spain. It is more balanced now after the combination with Bankia. Before that, we had very large market shares in certain regions of Spain. Actually, we've seen growth, where we had market shares that are higher than what we have today throughout Spain. Even though it's difficult, we certainly don't give up on the idea of gaining market share. Obviously, the next six to 12 months are going to be marked by integration, so it makes it even more difficult to gain market share. We will try. As you mentioned, for instance, on the asset management side, overall is going very well despite the current period.
I think that we still have a possibility of not just following the market, but doing better on the market. I know that's difficult on the law of big numbers is the one that you say, but I don't want to give up on that challenge. Certainly, I'm pushing the organization to be ambitious, to say 25% is not good enough for us. Having said that, what you say is obviously a very fundamental question that is not on the table now because we're going to be so busy. We are so busy, but we're going to be very busy next year as well, making sure we actually implement this merger to its full potential. In due course, I think that is a legitimate question that I'm sure the board will ask itself.
I think at this stage, quite, I would say, agnostic in terms of when we're done. We will obviously look and consider whether there is a new phase that takes the business beyond the current perimeter. I think it is actually very likely, and that's one scenario I wouldn't discard at all, that we say, actually, the current focus on Portugal and Spain is the right one. Plus one sort of increasing focus that we have for our CIB business in the Eurozone.
Over the last years, we've opened and then operated branches in London, Frankfurt, and Paris as three areas where obviously the CIB business, there's very simple growth for us with plenty of business referred between companies that operate in Spain but have headquarters in Germany or France or the U.K. or international companies that have their European headquarters there, and where there's a clear business for us to do at a marginal additional cost. I think that is certainly part of the strategy. It's been over the last few years. It's probably not been visible enough for some people, but it is increasingly being more relevant and will continue to grow. We have a great source of deposits in euros. Unfortunately, they make Javier's life difficult with having billions and billions of money at the ECB, as you said.
We also have great corporates that are operating in Spain for decades, and where we can obviously compete effectively, not only in funding them when it's appropriate, but also in doing transactional banking, project finance, et cetera. Other ancillary business that makes the overall relationship attractive enough. That train has left the station. In fact, it did leave the station three, four years ago, and it's going to become more relevant over the next five years. Piano, piano, as they say. We're doing this, being in investment banking for 20 years, and wholesale markets, et cetera, we know what the cost is of going too fast. We're going very gradually. That's why it is not that easy to notice. Year after year, building a reasonable CIB presence in the Eurozone, which is the logical ambition for us.
That was what I could say at this point, but obviously, we'll see how things develop in the mid, long term in terms of the more strategic question that you asked.
Okay. That's very insightful. Thank you very much.
Thank you.
Thanks, Jernej. Next question, please.
Our next question comes from the line of Mario Ropero for Bestinver Securities. Please ask your question.
Hi, good afternoon. Just a follow-up question on some of the comments made on provisions. Could you please tell us a little bit about the timing you foresee in order to consume or release the EUR 1.4 billion pending COVID-19 provisions? Is it 2022 mostly, or you think that it will go well beyond this date due to perhaps pending uncertainties around ICO or whatever? Thank you.
Well, we have to see. Obviously, we built this very large provision, and things have gotten much, much better afterwards. We're going to be prudent, and I think we clearly need to get well into 2022 to know what the extent of the damage is, but I don't see that it will go beyond that year. Certainly, there is upside on this front. I think month after month, when I look at these provisions, I see actually there are obviously, many scenarios in which these provisions are not necessary, certainly not in their full amount. I will be careful, and I think that is a question that will be clearer during 2022 progressively. I'm not able to tell you whether it's June next year or October or September or December, but it should be during 2022 when we have clarity on these fronts.
Okay. Thank you, Mario. Next question, please.
Our next question comes from the line of Carlos Peixoto from Societe Generale. Please ask your question.
Hi. Hello, everybody. Thank you for the presentation, and for taking the calls. Two questions from me. One is about the negotiations with Mapfre to break up the JV. You were initially allocating some potential costs to break that deal. I was wondering if you could update on that, how you are planning to offset that cost with other sales from your insurance partners. It'd be helpful to see what's your final assessment on that. On capital, it's a more general thought. You've accumulated more than 100 basis point higher CET1 ratio than when the merger was announced. Even at that time, you wouldn't count on a lower payout ratio than the 50%, which is consistent with track record. Even if Caixa delivers and over-delivers on capital, we never really have a more generous payout policy.
Should we understand that the 50% is for 2021 only, and that the underlying payout could grow future years? You've already said that you're considering share buybacks. Are those the only options? When you said you are thinking of possibilities, could you specify a little bit more if bolt-on acquisitions are a possibility? In that sense, which sectors you would be looking at? Would be fee income business, like insurance or asset management? Is that a possibility where we could see deals as some other Spanish banks are doing? Thank you.
Thanks very much. Let me be very direct on Mapfre. Two things. I don't want to comment on where we are now. There's an ongoing negotiation. We will obviously get to an agreement in due course, but we need to be patient. We have not included in our core revenue numbers what is going to be the contribution from the business that we acquire. We will see at what point in time it happens. Technically, the results of Bankia Mapfre Vida are, for us, since the end of the agreement, or the agreement was terminated or was communicated as terminated by Mapfre. There's some upside there, but clearly, we need to wait. The impact of all this, as I think Javier has said, is going to be neutral.
We don't want to start detailing on what is the impact of each of the negotiations, because obviously that will not be useful for negotiation purposes. Overall, what we see coming from the remaining of the M&A discussions that we have associated to unwinding agreements and the various partnerships we have with Bankia, plus the last leg of some of the regulatory implications, the total will be neutral. That's our best estimate. When you talk about capital and payout, clearly the 50% is a decision for 2021 only. We will need to have a discussion on what we do for '22 onwards. Clearly, my implication is that our distribution policy will be generous, is that there is upside from that level.
once you look at the upside, you have to decide what becomes the ordinary payout, what may become a special dividend, what may become a share buyback. There is no decision that has been taken on that front at this stage. We have plenty of things on our plate. Obviously, the integration is by itself very time-consuming. any projection that we do over the midterm results in the generation of very high levels of excess capital. We have no intention of retaining those for M&A, zero intention, and hence all that excess capital is going to be made available to shareholders. The only discussion is when and how. I don't foresee any M&A activity, and we certainly will not want to retain capital for the sake of retaining it. It creates more problems than benefits, so it will be made available to shareholders.
obviously, increasing the payout is one option, a special dividend is another, and a share buyback is another. A combination of those is obviously also possible.
Okay, Carlos, thanks for that. Can we move on to the next one, please?
Our next question comes from the line of Fernando Gil from Barclays. Please ask your question.
Hi. Hello. Thank you for taking my questions. Just a follow-up question. You have described the cost synergies, and revisited the story. On revenue synergies. You stay the same. Is this basically because you haven't reached yet the agreement with Mapfre and you will review afterwards? Can we see a revision on that? A further question related to that is on the restructuring cost pending, you mentioned this EUR 200-300 million additional. I didn't get it, but is this coming into 2021 or is it going forward in 2022? Thank you very much.
Thank you, Fernando. Let me answer the first question, and Javier can do the second one. On revenue synergies, we want, I think, before we communicate further, two things to happen. One is effectively closing the agreement with Mapfre, because this is obviously very relevant. It's going to happen, but it is very relevant, and I think otherwise we're explaining things too ahead of its time. Then I'd like to see some delivery on this front. Market is well known for its skepticism on revenue synergies. We've already said what we thought it was at the time of the announcement. It will come back with a detailed analysis. We want it to be very detailed and hopefully also to be based on things that are already happening.
We want to give us a bit more time on that front, both to close the agreement and also to make sure that we build a case that is not just intellectually appealing, which I know some of you agree with us that intellectually is very appealing, but also that it has some further legs in terms of something is really happening and people can see, well, this is actually not just smoke of good things that may happen, but some real progress, which suggests that we should take some time before we provide further detail. Let me tell you, the feeling we have is very positive. Obviously, we're looking not just at the areas that we had identified in the past, but also to other areas.
Actually we have very big businesses, when we put them together, we discover that there are opportunities that are obviously in quite a few areas. Time will tell. Resettlement cost, Javier, you can help me there.
Yes, absolutely. Hi, Fernando. It's EUR 300 million in terms of capital. It has to do, to a large extent, with headquarters and branch network optimization or restructuring. Also, there are some charges related to IT, et cetera. Approximately you can assume that 50% may be this year, and 50% into the very beginning of 2022, depending on this, let's say, optimization of the branch network, how it goes. It's approximate. Let us please have some leeway on that front. Thank you.
Okay. Thank you, Fernando. I believe we have one last question, so please, operator, could you let that through?
Last question comes on the line of Benjie Creelan-Sandford from Jefferies. Please ask your question.
Hi. Yeah, good afternoon, everyone. All of my questions have basically been answered. Maybe just two quick clarifications. First of all, you've been clear that the M&A related net capital drawdown is finalized. Just wondering, beyond the deal on the card business, which you've announced, and the ongoing negotiations with Mapfre, is there any amount from the transactions that's feeding into that net equation that we should be thinking about? The second question, just given that there was a EUR 98 million contribution from BFA this quarter, is there any update on potentially exiting that stake or any update on how you see that business going forward? Thank you.
Thank you, Benjie. I would say on the M&A, if I heard you well, I think you didn't mention, we also want to have a discussion on the insurance business we have in the Balearic Islands. There's a different partner there, Caser. That's something that is also pending in terms of where we end up. It's obviously much smaller. Then there is also the extension of the non-life agreement that we have with SegurCaixa Adeslas that will imply, in this case, a payment to us for the increased size of the business. Unless there's something else that Javier can add, but at least those two things. With respect to BFA, I think there is no change in our position. The change financially is obviously an attractive one in terms of having both agreed to a good payout for these 2020 results that are being paid in 2021.
Also this capital reduction, which is obviously logical because BFA has a very high equity solvency ratio. Our position is the same. This is not our core business. This is a business in which we would like to reduce our position in due course. It is becoming less and less financially relevant in terms of the size of the group and the book value that is going to come down, obviously, with this capital reduction. It's not part of our strategy to be there. At the same time, it's a great bank. It's doing well. It's providing us good returns, so we have to be patient in finding when is the right time, both in terms of an attractive valuation and also a solution. It's a very important bank for Angola, and we will be patient until that time comes.
It's patience that is being rewarded by very good financial performance, so not really any longer into the problem category.
Okay, Benjie, thank you for that. I think we have no more questions. With that, let me just say it's been a pleasure to host you one more quarter. If you do have some time off after results season, let me wish you all the best. See you next quarter. Bye-bye.