Earnings Call: H2 2020

Feb 24, 2021

Ladies and gentlemen, thank you for standing by. I'm Mirjo, your Chorus Call operator. Welcome and thank you for joining the Bank of Cyprus Conference Call to present and discuss the Preliminary Group Financial Results for the year ended 31st December 2020. All participants will be in a listen only mode and the conference is being At this time, I would like to turn the conference over to Mr. Panikos Nicolaou, Chief Executive Officer Mr. Lizani Padiotu, Executive Director, Finance Mr. Dimitris Dimitriou, Chief Risk Officer. Mr. Nicolas Nicolao, you may now proceed. Thank you, Mr. Good morning, everyone. Thank you for joining our call. I'll start by highlighting some of the key achievements of the year on Slide 4. We all know that 2020 was not a normal year. The pandemic had caused fear and dislocation in societies around the world. Ballot Cyprus, in our view, successfully navigated through the crisis. We entered 2021 remaining vigilant but more optimistic about the ability of society and economy to recover. During 2020, we have clear priorities. We played our role supporting our clients and the broader economy. We achieved significant progress with Fusion and P while maintaining strong capital ratios, and we share our view of the future balance cycles with the launch of a new strategic plan. Firstly, we granted €1,400,000,000 of new loans during 2020, supporting the Ethiopian economy. We have supported our customers by granting Pennant Holidays to over 25,000 clients, representing loans of around €5,900,000,000 all of which have expired on 31st December 2020. Secondly, despite the challenging environment, we achieved further significant progress on balance sheet de risking. During 2020, pro form a for the NPE sales will reduce NPEs by €2,100,000,000 from €3,900,000,000 to €1,800,000,000 and the NPE ratio from 30% to 60%, which our coverage ratio was increased to 59%. At the same time, we have strengthened our CET1 ratio by 40 basis points to 15.2%. Firstly, we've clearly monitored the loss under payment deferrals. We were and continue to be in close contact with our customers in order to provide support to alleviate short term cash flow investments. 4th, we will focus on cost management. In 2020, we achieved a 12% reduction in total operating expenses and maintained our cost free conversion broadly flat at 60% despite revenue pressure. Finally, we launched our new trading plan and medium term target last November. We committed to reduce NPL ratio to single digits by end of 'thirty two and to 5% in the medium term. We set a clear path to sustainable profitability and delivery of shareholder returns, committing to generating an income on tangible equity of around 7% over the medium term. Slide 5 summarizes the key highlights of the quarter. I will briefly go over these. During the quarter, we extended a further $374,000,000 in new loans, up by 30% compared to the previous quarter as new demand increased for the first half twenty twenty lockdown. We generated total income of $142,000,000 up 3% quarter on quarter and a positive Opel EMEA result of €45,000,000 broadly flat quarter on quarter. Cost of risk was essentially unchanged from Q3 at 99 basis points for the quarter. Total operating expenses for the quarter amounted to €91,000,000 up 7% quarter of cost, resulting to a cost to income ratio of 54%. The underlying result of the quarter was a profit tax from organic operations of €2,000,000 with the result of the quarter was a loss after tax of EUR 49,000,000 including the provisions, net loss on NPTEL of EUR 42,000,000. Overall, the loss after tax for the year amounted to BRL 171,000,000. The bank's capital position remains good and comfortably in excess of our regulatory requirements. As of December 1, 2020, our capital ratios on a transitional basis were 18.7% for the 12th calendar ratio and 15.2% for CET1 ratio, both pro form a for Q2. Deposits remained broadly flat in the quarter at €16,500,000,000 and we continue to operate with significant liquidity surplus of €4,200,000,000 dollars As I mentioned earlier, despite the challenging environment, we have sustained our focus on further strengthening our balance sheet and improving our asset quality where we have made material progress. In January 2021, we reached an agreement for the sale of Ciska $500,000,000 of NPE portfolio, known as Hilli's 2 portfolio B. Together with various NPE sales, we have reduced MT by up to €5,000,000,000 since December 2019, combined with organic reductions of €600,000,000 overall, we have now excluded stock of delinquent loans by €2,100,000,000 €1,800,000,000 and our NPE ratio to 60% and to 7% on a net basis, both on a pro form a basis. NPE coverage was maintained at 59%, reducing the residual risk on our balance sheet to just €700,000,000 Slide 6 provides an overview of the journey that bank has been these past few years and where it was to be in the medium term. We have been through a period of considerable change. We have now laid the foundations for delivering great share of the value. Our NPE our NPE objectives include the completion of our balance sheet de risking through organic fee reduction and potential disposal as has been the case over the past few years as well as ensuring our cost base remains appropriate with further investing in our digital capabilities. Over the medium term, our priority will evolve. We will be increasingly focused on capitalizing on our strong market position across both banking and financial service products to enhance our revenue. At the same time, we are very focused on improving our operating efficiency and driving down costs. And combined with the expected normalization of the cost of risk, we have a clear path to generating sustainable profitability. Slide 7 provides a summary of the actions we have been taking for the support of our customers and our society. Slide 8 provides a summary of the measures taken by the government for mitigating the COVID-nineteen impact. We are pleased to see the government sustained efforts to address the pandemic through comprehensive, a far reaching measure in 2020 have accounted for over 4% of GDP. In January 2021, as a new package of up to €400,000,000 was introduced to help support business and customers impacted by the January 2021 lockdown. The main feature of which are: firstly, subsidized plans for business and those that employed impacted by the lockdown, which includes coverage of rent and other operating expenses. A second loan moratorium specifically for business is family individuals impacted by the lockdown by the 2nd lockdown. This will last until 30 June 2021. And importantly, eligible borrowers will be entitled to a total moratorium of up to 9 months, which includes any time based on the moratorium during 2020. Finally, an inspection of plans for the capitalization of fixed rate of new housing and business loans until December 2021. The subsidy on the interest rate is up to 4 years. Focusing now on macroeconomic condition on Slide 9. 52 GBP contracted by 5.1% in full year 2020, as volume declined on the near 7% contraction across the euro area, demonstrating intangibility as an often more inflexible economy to quickly recover from economic crisis. However, the reproduction and tightening of containment measures in Q4 2020 for the second wave is likely to cause some growth momentum in economic recovery in early 2021. Based on revised projections, GBP growth in 2021 is similar to a decrease between 3.2% 4.5%. And government has successfully managed to pandemic today. 5th group runs 1st among EU countries in terms of coronavirus testing and 5th globally for the management of the pandemic. The development of effective vaccines is encouraging and successfully vaccination programs both in Cyprus and abroad to last as both catalysts for both global and local economy recovery. That is expected to have vaccines for 70% of the population over the age of 18. By We expect a recovery in the second half of the year, helped by the fact that 2 countries will be able to progress vaccination plan, U. K. Will account for over 40% of our tourism arrivals. Slide 10, new lending. New lending continued to grow in the 4th quarter and amounted to $374,000,000 up 30% quarter on quarter, driven mainly by corporate and supported by retail housing as economic activity continues to improve. For 2021, demand for new lending is expected to increase in line with the economic recovery, especially for housing loans in the context of the government interest subsidy scheme. As of 15 February, the investment pipeline for new housing loans amounted to €150,000,000 Overall, the new lending in 2020 totaled €1,400,000,000 compared to €2,000,000,000 for 2019, reflecting the impact of the pandemic. New lending continues to be carefully considered against robust ascending Iberia, and 99% of new exposure in Cyprus since the beginning of 2016 were performing under the start of the moratorium. Turning now to Slide 11, where we provide an update on the performance of the loans as we are under moratorium. We are experiencing a challenging trend following then on the moratorium through our cautiously optimistic based on customer behavior so far. Specifically, as I mentioned earlier, around €5,900,000,000 of loans were under payment deferrals that expire on the 31st December 2020. As shown on the slide, €3,600,000,000 had an installment due by mid February with 90 5% of those reviewing payments. An additional amount of around €700,000,000 are due to have an installment view by the end of March 2021. We will continue to closely monitor the performance of this loan and in close contact with our customers in order to detect provincial areas early and offer solutions as necessary. A cellular moratorium was launched by the government in January 2021 for those customers impacted by the federal lockdown, with payment deferrals until the end of June 2021. In this 2nd moratorium, the total March under your moratorium cannot exceed a total of anized mass, including any period anti molar volume in 2020. Given the strict eligibility criteria, the participation of this merger is very small. The application period has expired. And during this period, we have received applications for just €27,000,000 Up to today, we have approved €70,000,000 €17,000,000, sorry. The bottom left graph of the slide shows the resiliency of the delinquency buckets for the total loan book. The percentage of arrears as a percentage of the portfolio remains broadly unchanged, indicating that the quality of the portfolio is resilient. Let's now go to Slide 12 that provides an overview of the non legacy loans of private individuals. As I said, December 2017, non legacy loans to private individuals amounting to €4,100,000,000 of which €2,100,000,000 were under payment deferral was expired at the year end. 82% of those loans had a payment due by mid February, of which 93% resumed payments, providing careful that the general monetary has no negatively impacted the payment culture. Overall, over 80% of the private individual loan portfolio is housing loans. This segment is well collateralized with almost twothree of customers having a loan to value ratio below 60%, the net percent of the portfolio of 100 TB of more than 100%. Other loans to private individuals amounted to €690,000,000 as on December 2020, 62% of these portfolios secured, of which 50% by property and the remaining 40% by other type of collateral. Moving now to the non legacy business loans on Slide 15. The non legacy business loan book as of December amounted to €5,100,000,000 and is well diversified with high quality collateral. The business loans that were under moratorium amounted to €3,800,000,000 over 50% had an installment due by mid February, of which 97% resumed paying. Overall, 90% of the non legacy business portfolio is a cutoff, of which 80% by product. The portfolio has a loan to value ratio with almost 3 quarters of the portfolio of less than 80%. Following the last crisis, we now have higher quality origination by a prudent underwriting standard. We make strong assessment on the impairment capability of our customers. Slide 14 provides an update of our exposure to the sectors that we are mostly impacted by COVID-nineteen, Turing and Trade. As of 31rd December, past oil exposure to Turing and Trade amounted to €1,100,000,000 and €900,000,000 respectively. The utilized liquidity of the tourism sector remained broadly unchanged from September and amounted to €0.32,000,000 as of the end of the year. Around €1,000,000,000 or 91 of 2 integrated loans were under the expired deferral scheme. Around onethree had an installment due by mid February 2021, of which 98% resumed pay. Cumulatively, around half of the loans under the expired payment deferrals will have an installment due by the end of March 2021. Our exposure to trade as of the end of the year amounted to €890,000,000 of which around €500,000,000 were under payment reserves. Other 2 thirds of which had an installment due by mid February 2021 with 97% returned to regular pay. I will now hand over to Elisa to take you through our performance in Q4. Thank you, Danica, and good morning from me too. So I'll start with Slide 17 on the income statement. Net interest income amounted EUR 20,000,000 for the quarter, broadly flat Q on Q, and the net interest margin decreased to 1.75 percent as the pressure on lending yields continues. Non interest income increased to EUR 62,000,000 in the quarter, up 11% Q on Q, positively impacted by higher fee and commission income as transactional volumes gradually recover following the first lockdown during the first half of twenty twenty and also IRM news evaluation gains. Overall, non interest income was at €237,000,000 for the year, driven by lower net gains on disposal of stock of properties, lower evaluation gains on financial instruments and lower other income negatively impacted by the COVID-nineteen crisis. Total operating expenses amounted to €91,000,000 for the quarter, up 7% Q on Q, mainly due to seasonally higher operating expenses. Total operating expenses for the year amounted to €340,000,000 down 12% year on year, following the successful completion of our voluntary staff exit plan in the Q4 and lower operating expenses resulting from forecast of management to contain cost and savings from the first half twenty twenty lockdown. Total loan credit losses, provisions and impairments amounted to €40,000,000 in the 4th quarter compared to €38,000,000 in Q3, driven mainly by higher provision for litigation and other financial instruments. Loan credit losses for Q4 remained broadly flat at €31,000,000 reflecting a cost of risk of 99 basis points. Exceptional items for the 4th quarter amounted €51,000,000 and consists of provisions or net losses on NPE sales, including restructuring expenses of €42,000,000 the cost of a targeted voluntary exit scheme of EUR 6,000,000 and the deferred tax credit levy of EUR 3,000,000 The overall result was a net loss after tax of €49,000,000 for the quarter or €171,000,000 for the full year 2020. Moving now to the drivers of NIM on Slide 18, I will briefly go over the chart on this slide. So our meaning in the 4th quarter decreased to 175 basis points after significant surplus liquidity and low interest rates continued to put pressure on asset yields. Our margin dynamics are complicated and there are several important underlying components that I would like to analyze. First, performing book yields remain under pressure due to the sustained low interest rate environment and competition. But reference rate repricing is reaching its end and we are aiming for higher credit spreads in the post COVID environment. 2nd, higher yielding, higher risk legacy loans are reducing as we successfully exit NPEs. And third, the cost of funding continues to decrease as we price down the cost of deposits. In the 4th quarter, the deposit cost was reduced to 5 basis points. Moving to Slide 19 now on non interest income. During full year 2020, non interest income was materially impacted by the slower economic activity, mainly in the first half of the year as a result of the pandemic. Overall, non interest income for the year amounted to EUR 237,000,000 compared to EUR607,000,000 in 2019, driven mainly by lower revenue gains, revaluation gains on financial instruments and other income. In the 4th Q, our non interest income increased to EUR 62,000,000 compared to EUR 55,000,000 in Q3, reflecting early recovery from the first half twenty twenty lockdown. Net fee and commission income increased to $38,000,000 in the quarter, accounting for 27% of total income due to seasonality, higher non transactional fees and increased economic activity following the 1st lockdown. Net insurance income remained pretty flat Q on Q €14,000,000 and I will provide more information about insurance businesses in a couple of slides. Revenue net gains increased to €5,000,000 mainly due to higher net revaluation gains relating to specific progresses in Greece. Revenue sales remain volatile. Net FX gains, net gains on financial instruments and other income amounted to €5,000,000 in the quarter and are broadly flat Q on Q. Now turning to Slide 20, the accelerated risking of the balance sheet is expected to continue to put pressure on revenues in the near term. Specifically, Helix II reduces NII by €7,000,000 per quarter. Although as a reminder, interest on net NPEs is not received in cash or interest on net and fees, which is not received in cash, is fully provided. And hence, we should see a similar reduction in loan credit losses. As we presented in our medium term strategic plan, we have multiple initiatives underway to increase net interest income and less capital intensive non interest income with a focus on fees, insurance and the non banking business. I will start with the NII initiatives. Firstly, over the medium term, the performing book is expected to grow by around 10% and broadly offset the foreign interest income from the declining legacy book as we successfully exited TEEs. We will address challenges from low rates and surplus liquidity. We will intensify our efforts to price away or price correctly deposits through liquidity fees and improved credit spreads. Now moving to non interest income initiatives. As of February, we have extended our liquidity fees to a wider group of customers and introduced a new price list. These actions are expected to have a positive impact of around €13,000,000 per annum on our fees. We will aim to increase the average product holdings through cross selling to the underpenetrated customer base. More widely, we're working to generate new revenue sources through the introduction of a digital economy platform, leveraging the bank's market position, knowledge and digital infrastructure. These initiatives are expected to improve our fee income income from around 0.7% of total assets to near 1% of total assets in the medium term. And revenues per risk weighted assets are expected to increase to around 6% from the current level of 5% as many of the initiatives improve revenues in a more capital efficient way. Overall, we expect revenues over total assets to improve from around 2 60 basis points to 2 80 basis points over the medium term. Now moving to insurance on Slides 21 20 2. In the past, we haven't spoken about them in much detail. But over the last few years, our life and the non life insurance subsidiaries have delivered sustainable healthy profitability and going forward, insurance arm will be one of the important sources of increased revenues. Slide 21 starts with our life insurance business. Net insurance income for Eurolife amounted to €33,000,000 for the year and compared to EUR 35,000,000 for 2019. Despite the challenging environment, Eurolife increased its gross written premiums by 6%, driven mainly by the 17% growth in its agency force. During the year, Eurolife increased its market share across major products. However, we believe it can deliver more. We are aiming to grow total revenue income by over 35% in the medium term by expanding its product and customer base and further leveraging on the bank's strong franchise. Moving to Slide 22, net insurance income for our general insurance business increased by 2% year on year to €23,000,000 driven mainly by the reduction of net claims positively impacted by better claims management and COVID-nineteen and the lockdowns. We're making some important improvements, aiming to further growth rates and premiums by capturing fair share based on the bank's customer base. We are revamping our bank insurance channels, and we are expecting more synergies with our life insurance sales network as we are expecting to enhance digital sales. Overall, we expect our market share in general insurance to rise considerably over the next few years and our gross written premium to grow by more than 50% in the medium term. Now moving on to cost on Slide 23. Overall, total operating expenses for the year were down 12%, reflecting our forecast to contain costs. The staff cost reduction of 11% reflected the impact of the voluntary staff exit plan in the Q4 of 2019. Other operating expenses for 2020 were down 12%, resulting from various initiatives undertaken to reduce operating expenses and savings from the first half lockdown. Despite the significant reduction in expenses in the year, our cost to income ratio remained broadly flat at 60% as revenues continue to be under pressure. Total operating expenses for the quarter were up 7% q on q, driven by higher operating expenses, mainly due to seasonality. Specifically, staff costs amounted to €50,000,000 for the quarter and are flat Q on Q and operating expenses were at €41,000,000, 16% up marketing, property and professional fees. In Q4, we ran a small targeted voluntary star exit plan at a total cost of €6,000,000 with an annual gross savings of €2,000,000 or 1% of the payroll costs. On Slide 24, we discuss the medium term cost outlook. We remain focused on further improvement of our through specific initiatives, including exit solutions to release full time employees and further branch footprint rationalization. These initiatives are expected to deliver total operating expenses of under €350,000,000 in the medium term, a reduction of over 10% from the 2019 base after continued significant IT investment over the coming years. In addition, restructuring expenses are expected to reduce to single digits following the successful completion of our balance sheet divestment. Our cost to income ratio is expected to rise in the near term as revenues remain under near term pressure and operating expenses increased due to higher IT and digitization investment costs. However, we then expect our cost to income ratio to decline and over the medium term, this is expected to reduce to the mid-50s level. Now turning to Slide 27 on capital. Our CET1 ratio as of 31st December increased to 15.2% on a pro form a basis for the Helix trade. It's important to emphasize that during a very challenging year, we managed to reduce our NPE ratio from 30% to 16%, maintain our coverage at around 60%, both pro form a for the NPE sales and increase our capital ratio by 40 basis points. Specifically, during the Q4, we have generated 40 basis points of organic capital for operating profit and 20 basis points of capital from the decrease of risk weighted assets. The recent amendments and capital regulations resulted in a benefit of around 20 basis points for the bank in Q4, arising from prudential treatment of software assets and the IFRS nine dynamic component. These were offset by 20 bps on the accounting loss of the Helix II portfolio NPE sale. As previously mentioned, the on-site inspection and review by the SSM on the stock of Remi property was completed. The finding related possible prudential charge of up to 46 basis points, the majority of which is expected to be taken at 13 June 2021, depending on the bank's progress in disposing the properties impacted by this prudential charge. The group is currently evaluating its potential Tier 2 issuance in the context of the outstanding €250,000,000 Tier 2 issue, which is callable in January 2022, subject to market conditions and applicable regulatory authorization. Separately, the group will also consider initiating its MREL issuance as part of its overall capital and funding strategy. Now I'll take you quickly through the asset quality section as well. So starting on Page 31, where we present a short summary of Helix II. Despite the challenging economic conditions, in January 2021, the group announced the sale of additional €529,000,000 of NPEs, a project known as Helix II Portfolio B. The cost consideration amounts to 44% of the gross book value and 31% of the contractual balance payable in cash, of which 50% is payable at completion and the remaining 50% is deferred after December 25 without any conditions attached. The accounting loss on Portfolio B recorded in the 4th quarter amounted to €27,000,000 Combined with the sale of NPEs of €886,000,000 signed in August 2020, we have reduced NPEs by 1,400,000,000 euros representing another milestone in the delivery of 1 of the group's core strategic objectives of improving asset quality. Overall, Helix II resulted in a capital impact of minus 76 basis points on group CET1 ratio for 2020. At completion, Helix II is expected to have an impact of minus 42 basis points on CET1 and will eventually turn to a positive impact of plus 24 basis points upon the full payment of the deferred consideration. Now moving to Slide 32. During the Q4, gross NPEs were reduced to €3,100,000,000 and €1,200,000,000 on a net basis. Pro form a for CX2 gross NPEs decreased to €1,800,000,000 and EUR 700,000,000 on a net of provisions basis. The gross NPE ratio is reduced to 16% pro form a pro form a pro fix and 7% The bank's NPE coverage ratio remained broadly flat to 59% on a year end pro form a for Helix II. When taking into account tangible collateral at fair value, NPEs are fully covered. Coverage of re performing NPEs is relatively low at 20%, reflecting the lower risk associated with this stock of NPEs, where coverage of core NPEs increased to 65%. Also shown on Slide 34, we have a clear path to reduce our NPE ratio to single digits by 2022 and to 5% over the medium term. Our track record here has been excellent, achieving an 88% reduction over the past 6 years, the vast majority of currency. We have a highly experienced and highly effective team in place, and we expect NPE reductions to continue in 2021 through both our tranche and the north tranche. We expect to have a high coverage of over 50% in the medium term, excluding any collateral. Our cost of risk is expected to be reduced to around 70 to 80 basis points in the medium term. Now turning to Slide 36 on cost of risk. The annualized cost of risk for the quarter was broadly flat from Q at 99 basis points of gross loans, of which 37 basis points reflect the impact of IFRS 9 forward looking information, driven by the deterioration of macro outlook. Cost of risk for the year accounted for 118 basis points, which is in line with our expectations. Out of these 118 bps, a 43 basis points of €54,000,000 reflect COVID related charges. We have updated the macro assumptions underlying the IFRS nine calculation of loan credit losses, taking into consideration the prevailing market conditions and the reintroduction of restrictive measures to contain the 2nd wave of the pandemic in Cyprus. Our IFRS 9 macroeconomic projections P in Q4 represented 43 basis points out of the 99 basis points cost of risk. With that, I'll hand back to Thanks, Alisa. Let's go now to Slide 41. As we previously communicated. Our strategic priorities are clear, complete the restructuring and the derisking of the bank as soon as possible and set the bank on the path for and of course, delivering on shareholder value. Today, our near term priorities include the completion of our balance sheet delivery as before through our chemical reduction and production disposal as well as ensuring our cost base remain appropriate, which is further invested in our digital capabilities. Over the medium term, our priority will evolve. We will be increasingly focused on capitalizing on our strong market position across both banking and financial service products and to enhance our revenues. At the same time, we are very focused on improving our operating efficiency and driving down costs. And combined with the expected normalization of the cost of risk, we have a clear path to generate sustainable profitability. Turning now to Slide 42. Bringing all of this together, we remain committed to our mid term financial targets that we shared with you in November. We are in a strong position to take advantage of our many strengths over the next few years. We are committed to generating an internal tangible equity of around 7% over the immediate term. The building blocks behind that included commitment to reduce total operating expenses to below €350,000,000 and to complete the risk of the business, demonstrated with an increase in total digits by the end of 2022 to around 5% over the medium term. We expect our normalized cost of risk will be between 70 to 20 basis points, appropriate for our foreign bank with our mix of businesses. Maintaining a strong capital base has been a key tenor of the past few years, and that remains a difficult for the bank going forward. Our business plan is based on maintaining a situation ratio of at least 13% over the prior period of our plan. This concludes our presentation. I will now open the floor for your questions. Thank you. The first question comes from the line of Quinn Dara with KBW. Please go ahead. Hi, good morning. One question on the organic NPE reduction plans that you have for 2021, just if you could update on that target and how it will interact with the payment that we may look on debt highway. And my second question is, could you remind us just of your strategy regarding TLTRO and back funds, kind of performing loan growth at year end? And then a final question, if I may, on capital. If you could just maybe remind us of particularly using the parts of the CET1 ratio with respect for 2021 in terms of the E and P sale and the sales charges, etcetera, just to be able to connect you accordingly, think the net impact of those coming to? Thank you very much. Thank you, Patrick. The first question is about the organic and pre reduction for 2021. So I would just say that because we have previously guided the market that both organic and nonorganic transaction, meaning trade, Luxe has delivered a reduction in oil and cremations for 2021 as well, including any new inflows because of the mobile product, which of our hand has been showing very encouraging signs. Organic deduction, you know that we have an action. As the NP stock is refusing and trade accelerate, we should expect a smaller cost of capital reductions under €200,000,000 that we used to deliver on the past. But we continue to kind of deliver and combined with any sales we'll move towards a sales LNP ratio reduction in 2021 as well. I will pass over to Elisa for the LTRO and CTO Ancara questions. So Elisa? Okay. So on TLTRO, as you know, we currently have €1,000,000,000 of these, and we are hopeful well, we are encouraged by the trend we see that we will be able to we expect to be able to get the €5,000,000 interest benefit arising from it. There is also a new TLTRO program that's been announced and which we will consider in applying there are possible days to apply starting from March and every quarter thereafter. The downside cost of that is not there. It's a new type of TLTRO product. So as it is something that's under consideration, but it's a net it's an easier decision, let's say, to make. And we have room for around EUR 1,500,000,000 incremental, I mean. On CET1, the moving parts for 2022, let me try and summarize. So first of all, there's the IFRS nine phasing in, so you just should start from 1st January 2021 as a starting point. The other moving parts are obviously organic evolution of the balance sheet. The completion of Helix 2, and there was a slide on that in the deck. Any impact from Helix 3 depending on whether it's signed or completed or and the revenue prudential charge, which is disclosed on the capital slide. If I may, Angelica, I mean, the question is about the NP trade. And so far, as you have seen, we have been able to deliver trade at around capital neutral. So it's also important to remind you all that from Q2, A and B, there is a capture of while the BPP is starting to get to repay, then the GBP 60 point will be gradually delivered in terms of capital generation. The next question comes from the line of Floriani Jonas with Axia Ventures. Please go ahead. Good morning. Good morning, team. Congratulations for the progress in the year and thanks for the presentation. So my first question is a follow-up on my colleague's question. So remember, we discussed that we expected reduction. Organic return of NPE that you just mentioned should be around $200,000,000 per quarter or so going forward. I also remember that you mentioned that at that point in time, last year, the expectation of loans on the meritORIA turning into NPEs could be around $1,000,000,000 So pretty much saying that the organic measures would be able to pretty much offset the new flows. Have these expectations now changed given the good start in the resumption of payments? So just wondering what do we have now and the budget for new flows that you'll be able to offset with your debt leverage reduction? My second Zolm lending for 2021. I see on Slide 10 that you have the January figure there. Just wondering if it's fair enough to take this as a run rate for the coming months and then project the 2021 new investments to be somewhere between 2019 and 20, I don't know, dollars 1,700,000,000 or dollars 1,800,000,000 And then finally, it's a question on capital on your Tier 2 comments. So I'm wondering what is the level of Tier 2 over capital you're expecting to have after this market transaction is done? Because now you're at 160. Is the idea to have this number a bit higher, maybe 200 or 250 basis points of another view raise going forward? Thank you. Thank you, Jonas. I will start with the NPE question. I will firstly say that we have never guided the market, that there will be EUR 1,000,000,000 of new MT because of the moratorium. So I just we are experiencing very encouraging signs at the first one point 5 months of the moratorium. As you already seen, we have 95% of those that have to take advantage of it without even moving to provide any restructuring solution. So this is very encouraging. Carnegie, we remain cautiously optimistic. And all these results are the experience of the monitor provide us a comfort and we confirm our guidance to you, but we expect a further reduction in our NPE ratios during 2021 as well. With respect to organic reduction, I would like to remind that all that as we accelerate the trade and not the end period used in this period where it's not initially anticipated, And it's expected to have, let's say, lower amount of accounting reduction of credit here. I mean, you see that the top of our business is roughly EUR 7,800,000,000 on just the remaining input. So yes, there will be a kind of reduction. It's we have delivered around EUR 140,000,000 to EUR 150,000,000 Q on Q in 2020. As the book reduced, obviously, you should expect lower amounts of organic reduction. But I would also like to emphasize that there are currently reduction, there are future NPE trades and any new NPE inflows. That's how previously mentioned. We are very encouraged from what we experienced in after the exploration of the moratorium. We're literally that's in our exploration in 2021 and of course, the single digit inflation in 2022. As regards lending, yes, January was very encouraging. It was very positive. And for those of us living with Typhoon, January was a full and strict lockdown month. We have reopened gradually starting for February. So yes, we expect a better performance in new entry in new lending and investments in 2021. And as we guide, we will be expect 20% to 25% higher than 2021 than 2020. So it will be reasonable to assume a new rent figure between something between 2019 2020. In respect to capital and Tier 2, I will hand over to Elisa to comment on this. Okay. So on Tier 2, the regulatory room not room, but the regulatory Tier 2 capacity we have is at 2.75 percent of reported assets. So we do have some room to call it a bit higher as and when we get there to refinance the existing bond. But they all depend on market conditions and our market and no decisions have been made to that effect. Okay. It's clear. Thanks. The next question comes from the line of Bulu Ulsan Exanebras with UBUKO and Co. Please go ahead. Good morning. Thank you for the presentation. Just a clarification on the moratoriums and the expiration that you mentioned until 15 February, all these repayments. Is there in Cyprus? Or do you offer to your clients any step up installments to avoid this click effect? Or all these moratoriums went to the full payment as the pre COVID installment basically in by 15 February that you mentioned? That is my first question. My second question is regarding the liquidity fees you mentioned on Page 20, which you mentioned a positive addition a positive impact of €13,000,000 per annum. Is this €13,000,000 from starting from 2021? Or is it the later stage? 3rd question is regarding the capital impact on the revenue portfolio from the SSN, the 46 bps? That's just part from the P and L. That's a technical question. And I think that's all. Thank you. Okay. Thank you, Alexander. No, I mean, we don't have the Greek, let's say, step up approach. I mean, all the clients, they came back to their original repayment schedules as they were before the moratorium. So this is the answer to your first question. In relation to liquidity fees and capital, I will pass over to Elisa for the comments. So the liquidity is together with the new price list, Alex, is what accounts for a 13% annual benefit to P and L. I'm not sure I heard you say this correctly, so that's why I'm repeating it. And on the revenue portfolio, no revenue impact, no, it's not a P and L, it's a Prudential. So it's a deduction from CET1 like we had in the past similar on 20%. Okay. So on the fees, EUR 13,000,000 all the impacts together have EUR 13,000,000? Yes, it's around EUR 7,000,000 for yes, yes, it's around EUR 7,000,000 for the liquidity fee and EUR 6,000,000 for the new price list. Price list. For the other fees, yes? Thanks. Yes, understood. Thank you. The next question comes from the line of Hadrien Loysia Cristi with Barclays. Please go ahead. Good morning, everyone. Thank you very much for the presentation and for taking my question. I have 2, please. First of all, on cost of risk, thank you for the guidance, the medium term guidance of 70 to 80 basis points. But could you give us any color of the expectations for 2021? And then my second question is just coming back on your issuance plans. And if you could share any early thoughts you might have on the timing for the issuance of potential Tier 2? And also, you referred to sort of market conditions. What sort of market conditions are you looking for? What other factors will you be looking for in order to make your decision on whether and when to issue? Also, the same question applies to the potential MREL issuance as well, please. Okay. Thank you, Christy. On the cost of risk outlook, yes, we are guiding the market for a 70 basis points to 20 basis points on the medium term. As we expect as we expanded the exciting country rebound and as we continue in the history, it's and based on what we know today, we expect cost of risk to be lower in 2021 and gradually convert to our diluted guidance. Regarding the timing Tier 2 and MREL, it's something that we constantly monitor. And so as I think today, we have not decided yet to a specific time of the issuance of both. It's something that is currently under consideration, and we'll soon return this issue. Donna, Lisa, you want to add anything? No, no. It's valid, and we are encouraged by the current market conditions being favorable. So we'll continue monitoring the market and decide accordingly. We are platform. Okay. Excuse me, have you are you done with your questions? Yes, yes. I'm done, Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Nicolas for any closing comments. Thank you. Thank you for your participation. As a final comment from my side is that we consider 2020 as a year of major achievements in the group. Despite the pandemic, we have successfully managed to significantly reduce our NPV ratio, increase our current leverage on capital, maintain strong liquidity and, of course, providing significant new lending to the secret economy with the current size of new lending in 2021. What is also important is that this has certain withdrawals around the Cyprus economy and the environment in particular because of the large extent of the moratorium. As we previously said, this was not a sign of distress. It was rather a benefit. And so far, we have a current size and a current incentive payment, which, of course, we will continue to monitor and update the market in our, let's say, next results. So overall, thank you all. Myself and the team will be available to take any offline questions and, of course, arrange 1 to 1 calls for further discussion of the results and more details. Thank you very much. Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling.