Earnings Call: H1 2019

Aug 27, 2019

Ladies and gentlemen, thank you for standing by. I'm Konstantinos, your Chorus Call operator. Welcome and thank you for joining the Banco's Cypress conference call to present and discuss the Group Financial Results for 6 months ended 30 3, 2019. All participants will be in a listen only mode and the conference is being recorded. The presentation will be followed by a question and answer At this time, I would like to turn the conference over to John Patrick Hurican, outgoing Group CEO Mr. Panikos Nicolaou, Group CEO Designate Mr. Elisa Livallotto, Group Finance Director Mr. Michalis Asanasiou, Group Chief Risk Officer Ms. Anna Saffronayou, Director, Real Estate Management Unit Mr. Nick Smith, Director, Restructuring and Recoveries and Ms. Anita Pablo, Manager, Investor Relations. Mr. Hurricane, you may now proceed. Thank you very much, Constantino. Good morning, everyone. Thank you Thank you and welcome to the 2019 Microservice Interim Results Call. We recognize that you haven't had a lot of time with these numbers. And of course, Anita and her team are available to answer any questions you will no doubt have when you go through the detail. As an overarching statement, I'd like to say that the results for this quarter reflect our continuing progress against our core objective of balance sheet repair. Before I turn to my colleagues on the interim results, I'd like to mention that today, in fact, is my last official day at the Bank of Cyprus. I spent 36 years now in Cyprus, and I'm proud of the progress that the bank has made since late 2013 when I joined the executive team on this journey. The bank is returning to strength through a disciplined approach to balance sheet repair and the deliberate disposal of non core businesses. And it is now, I believe, well placed to support the strengthening separate economy and indeed to build value for shareholders. It has been an interesting 6 years and certainly a busy one. And I would like to thank you all for your continued support, your trust and most importantly, your continued patience throughout this journey. I am certain that Panikos will confidently lead the bank in its next chapter and that the management will remain focused on continuing to make the bank stronger, safer and future focused. I'll now hand over to Panikos to take you through the key highlights of the Q2. Panikos? Thank you, John, and good morning, everyone. I will start by saying that we are very grateful to John for his commitment and significant contribution to the transformation of the bank. It has been a true privilege to work with such credible leaders over the past 6 years. We will continue the hard work aiming to finish the de risking of the bank. At the same time, in the complex and challenging environment in which the bank operates, we need to improve our business model, improve our efficiency and identify ways to strengthen our long term profitability. A lot of wealth is underway. The group's organization we announced this morning put in place the structure to achieve these objectives: reduce legacy assets, deliver on costs, strengthen the customer engagement and enhance the regulatory dialogue. We have identified ways to reduce cost of running the bank. We will update you on the future straight early next year with the publication of the full year accounts. Now let's take a look at the highlights of the Q1 before Elisa and Michalis take you through the figures in detail. The Embanker's merger remains good. Partial capital and CET1 stood at 80.5% and 50.2%, respectively, pro form a for CMP well above the minimum requirement. In June, we completed the sale of NPL2.7 billion in Project Helix, which added another 140 points to CapEx. When derisking of our balance sheet continues, in Q2, our organic rent reduction amounted to €300,000,000 bringing total organic reduction in the first half to €457,000,000 dollars That is in line with our target of $800,000,000 for the whole year. Since the peak in 2014, our gross NPE declined by 71 percent to €4,300,000,000 Our NPE ratio was reduced to 36%, and exposures are 50% covered by loan credit losses. Overall, since 2014, we have managed a reduction in gross and fees of €10,700,000,000 of which €8,000,000,000 has been through organic actions. The organic revenue sales for the quarter amounted to $73,000,000 bringing the organic revenue sales for the first half to 100 and £10,000,000 In Q2, we have also completed the sale of Syre's delivery of $160,000,000 of sales in the first half. We have a clear strategy of continuing the improvement in the asset quality position of the bank, and we continue to actively explore options to further accelerate the delisting, including further portfolio sales. During the quarter, our debt losses remained broadly flat at €16,400,000,000 Themban continues to operate with significant structural liquidity, but at the end of the quarter amounted to €3,800,000,000 boosted by the €1,200,000,000 increase following the completion of Hillis. The management continues to actively pay down deposits It is positive continued pressure from low interest rate. The cost of our deposits reduced by 8 basis points in Q2 and by 52 basis points since January 2018. Our loan to deposit ratio stood by 67%. During the Q2, our total income was 177,000,000 positively impacted by some one off insurance income streams, revaluation gains from financial instruments and increased gains from the disposal of revenue products. Our operating profit was €72,000,000 and the underlying profit after tax, excluding Helix and CMP, amounted to €21,000,000 The cost of risk stood at 1.33%, reflecting continued derisking and IFRS motor volatility. The disposal of our investment in CRT Cyprus in June 20 19 resulted in net loss of €23,000,000 in the quarter, but is expected to have 13 basis points to capital completion. This result is a profit after a touch of $2,000,000 for the quarter and $97,000,000 from the first half. And with that, I will hand over to Elisa to take you through the capital slide. Thank you. Good morning from me too. So turning to capital on Slide 3, the bank's capital position was strengthened following the completion of Project Helix, which added 140 basis points to capital. During the Q2, we generated 50 basis points of organic capital in operating profit. These were partly offset by loan credit losses, impairments and other adjustments totaling around 30 basis points. And as Anikos mentioned earlier, the sale of our investment in CMP Cyprus is expected to add another 30 basis points to capital on completion is anticipated in the second half of the year. We finished the quarter with a CET1 ratio of 15.2% and total capital ratio of 18.1%, both pro form a for CMP. Our average risk weighted asset intensity has remained relatively stable during the quarter at 64%. Now Michalis will take you through the asset quality slides and we'll then continue with the P and L. Thanks, Charissa. Good morning for myself as well. I will start by focusing on Slide 4. In the Q2 of the year, as you can see, the bank continued to deliver organic NPE reduction with NPEs reducing by €300,000,000 or circa 6%. Since 2014, NPEs reduced by €7,700,000,000 as Panik mentioned earlier, of which €8,000,000,000 has been through organic actions. The NPE ratio reduced by 2 percentage points and now stands at 33%. Write offs continued to €260,000,000 in the first half 2019, representing 39 percent of organic growth NPE reduction. As we have previously explained, we continue to expect that the promotion of Rydox in a given quarter will be volatile. If you now turn to Slide 5, the picture shows NPL flows of 3 $34,000,000 an improvement on previous quarter. This quarter also had lower NPE inflows of 63,000,000 dollars Overall, for 2Q 2019, the net organic NPE reduction was 300,000,000 bringing total organic reduction in the first half of twenty nineteen to €457,000,000 in line with our organic substrate of €800,000,000 for 20 19. As for Acuity cost of corporate system expected, we remain committed to our annual target. We now turn to slide 6, where we present the bank's view on what we describe as core and non core NPEs, giving a consistent approach in line with previous results presentations. Non core NPEs totaled €660,000,000 as of the 30th June, representing 6% to 5% of gross loans, a 3.15% of total MT stock. Coverage on this loan remains relatively modest at 18%, reflecting the lower risk associated with risk stock for employees. Around 40% of these are available for MP exits by the end of 2019, after continuing to meet, of course, all relevant exit criteria. Core MP totaled €3,500,000,000 as of the 30th June, representing 28% of gross loans with 55 percent coverage. The contractual balance of core NPE amounted to €5,480,000,000 and they are 70% covered by credit losses. On Slide 7, we show that a clear strategy for further NPAs action by continuing to tackle the bank's loan portfolio, which is of utmost importance for the group and our stakeholders. We have been successful in developing restructuring solutions across the book and we expect this to continue in the coming quarters at a period of $200,000,000 per quarter. Today, the bank's €3,650,000,000 of core M and A is forced into 3 principal buckets. Thirdly is the SPIA, as announced by the government, the scheme will be launched in September. Following ongoing detailed assessment, this year is expected to positively impact up to €0.84,000,000 of key tier retail core NPEs such as of course, reliability criteria and participation rates. SCLC remains indirectly important to other NPEs as it provides a clear definition of socially protected borrowers, discouraging strategic reports. Secondly, retail, non GA eligible loan of CNY1.76 billion. This will continue to reflect clear focus on management going forward. Thirdly, SMEs and Corporate loans of CIFTA 1,250,000,000 euros above plan, prioritize realizing collateral, using write offs to incentivize ticket cash or bigger solutions or via foreclosures or other enforcement routes where borrowers are not willing to cooperate. This will continue to be facilitated by ongoing earnings premium at conservative circa 25% to 30% discount to upper market rights. Overall, excluding Astea, core NPEs amounted to €2,800,000,000 and will be the focus of the options we continue to explore to accelerate MP Resolution through Structural Solutions. We go now to Slide 8, Samuel and Espia. As I mentioned on the previous slide, the scheme will commence in September. A specific time line has been announced by the government, and this is shown on the slide. In summary, the memorandum of understanding between the government and the banks participating in this scheme was signed at the end of July The admission of applications will start in September and will last until is expected to last until mid November. The government process and the payment of the 1st installment to the bank is expected to be completed by April 2020. We have undertaken such financial in order to assess eligibility and keep the book prior to the launch of the scheme. As of July 2019, we have 763 activations of around 211,000,000 of the well a well proper stage for submission to the scheme in the Q3 of this year. The meetings with interest borrowers are ongoing, and we expect to have good participation in the scheme given that there is a positive response to the team from the market at large. Indeed, 96% of potentially eligible borrowers' contactors have expressed interest to participate. As we have stated before and to remind everyone, while the scheme will help resolve a speech and a telecentric component, it will not produce immediate results as a restructured credit, which is subject to usual NPE curing rules and timetables. The NPE benefit for the restructuring that we would perform in 2019 for eligible borrowers will not materially be visible until late 2020 or early 2021. Moving to Slide 9 of foreclosures. Foreclosures are becoming an important tool in NPE's resolution and therefore having a robust legal framework around foreclosures is very important. The foreclosure law amendment was approved in July 2018 and expedited the deployment limited options to separate execution. Additionally, the Florence has loaded through certain changes to that law, It's in the most part, it's to provide additional checks and balances where banks are seeking to foreclose small loans. In small loans, we mean less than $350,000 secured by private by principal private resident and extend the foreclosure timetable by extending certain mortgage periods. Those amendments have not yet passed into law. As the Peruvian Republic has deferred this to a Supreme Court based on legal advice from the Attorney General that elements thereof are unconstitutional. Discussions are ongoing, including intradalia with the Ministry of Finance, the CVC and the Financial Ombudsman, aiming to introduce amendments to the closure and loan restructuring framework that are acceptable to all stakeholders. Given these amendments are tightly targeted and those exclusions are included, it is not expected that it will have a material adverse impact on the positive experience reported in July 2018 should it pass into law. During the second quarter, foreclosure was initiated on 5 27 assets. Overall, around half of the borrowers for which we have initiated the foreclosure process are engaged in active negotiations with the bank. 245 auctions were achieved in the first half of twenty nineteen, but around 750 are already set for auction during the remainder of 2019. Around 300 productive are today awaiting repossession having failed sale adoption. We expect further improvement in the period of foreclosure during the second half of twenty nineteen. We now go to Slide 10 on revenue, where we show and last slide represents the performance of the division. Overall, over 1,000,000,000 sales covering 1284 product leads were achieved since the revenue settlement in January 2016, demonstrating the brand new strategy that will both value and volume of assets. €110,000,000 of property sales covering 215 properties were achieved in the first half of twenty nineteen at a profit of €60,000,000 testament to our conservative policy for onboarding assets at a 25% to back discount to optimize. The disposal of Cybe, which included 21 assets, was also completed in the strong quarter of 2019, still delivering a further €160,000,000 of sales. The near term sales pipeline remains strong. As of December 2019, SPAs relating to €89,000,000 of property sales were signed and awaiting execution. At the same date, €51,000,000 of SPAs were under preparation, coming under commercial terms with buyers. And in previous quarters, Land Street continued to be the largest component by volume, representing 53% of the first half 2019 sales. Market statistics remain encouraging. Residential total reprices rose by 1.5% year on year and sales contracts deposited at the land registry excluding those that related to bank foreclosure activity increased by 24% year on year to year. Slide 11 on coverage. The bank's coverage ratio increased to 50% at quarter end. In light of our previously disclosed expectations, Gaspar today above the European average coverage ratio of 44%. And total coverage including tangible collateral stood at 119%. Excluding Helix, the cost of risk for the Q2 was up 23% that was affected by the revised 509 model volatility driven by the constant evolution of the economic outlook and the impact of UTP criteria on MQE defaults. Around half of the quarterly cost of risk related to 509 volatility. And with that, I will hand back to Elizabeth. Thank you. So before I start, let me remind you that the income statement analysis as presented in the following slides excludes the impact of Helix, so that it's more forward looking and relevant to investors. The impact of Hillix has been collapsed to a single line low operating performance. So on slide 12, starting with total income on the team bill. Total income stood at €177,000,000 for the 2nd quarter, 13% higher than the previous quarter. Net interest income remained at similar levels with the previous quarter €85,000,000 as the lower interest income on loans was offset by lower funding costs. As previously mentioned, Helix contributed around €17,000,000 in the NII line. Our non interest income increased to €92,000,000 compared to €71,000,000 in the Q1, mainly due to one off insurance income items, one off realization gains on financial instruments and increased gains from the disposal of revenue properties. Now moving to the drivers of revenue in more detail, starting with volume trends on slide 13. New lending amounted to €548,000,000 in the second quarter. Overall, the first half of twenty nineteen in the first half of 2019 will lend €1,100,000,000 to customers in Cyprus exceeding the level the same level of the first half of twenty eighteen. Corporate continued to be a strong component of new lending representing 55% of overall loan originations in the quarter. The yield on our performing books fell in the quarter as a result of the lower reference rates and continued interest rate environment and competitive factors. New lending continues to be carefully considered against robust assessment criteria and 97% of new exposures in Cyprus since the beginning of 2016 continue to be performing. The bank is the single largest credit provider in Cyprus with a market share of 41% at 30th June 2019 compared to 47% in March with the reduction resulting exclusively from the sale of the Hill's portfolio. Now moving to Slide 14 on balance sheet de risking. As explained previously, the continuing balance sheet de risking is resulting in a smaller but lower risk loan book. Overall, net loans have reduced by 36% since 2016, driven by the legacy book deleveraging and the sale of the UK Bank last year. Today, the performing book represents 81% of net loans compared to 58% in 2015. Q on Q, the performing book was totally flat and amounted to €8,900,000,000 Excluding Helix, interest income on loans fell from €104,000,000 to €101,000,000 in the quarter. And within the performing book, interest income fell by €7,000,000 as a result of the lower yields I noted earlier due to the continued low interest rate environment, lower base rates and the sustained competitive pressures. Interest income in the legacy portfolio was unchanged in the quarter. And going forward, the continued derisking of the legacy book will result in further pressure on interest income, but this should have little impact to the bottom line as all of this interest income is provided for. Moving to slide 15 now, this should be a familiar slide from previous quarters. So starting with legacy, the legacy column, you can see that the interest recognized on this book is negative to the bottom line this quarter due to higher loan credit losses. This risk adjusted yield of the book was actually negative compared to 3.4% of the performing book. Now turning to funding and liquidity on Slide 16. The company's profits remain broadly flat Q on Q. Of the deposits in Cyprus, around 2 thirds represent deposits who have made beneficial owners of CPO, while only 4% are Russian. As you can see, the cost of deposits fell by a further 8 basis points in this quarter. Overall, our cost of deposits have fallen by 52 basis points since January 2018, as the bank is actively pricing down deposits to respond to the intensifying pressure from lower interest rates and forward curve. The bank continues to operate with significant capital liquidity that asset re quarter end amounted to €58,000,000,000 enhanced by the €1,200,000,000 cash received following the completion of Helix. These levels of liquidity continue to put pressure on NIM as excess liquidity is placed with ECB at negative rates, which are expected to continue and possibly deepen in the near future. Now moving to the drivers of NIM on slide 17. To bring assets and liability trends together, I'd like to discuss margins now. So as explained on previous results calls, NIM has come under pressure as a result of a number of actions we have taken, which had a positive impact on capital and liquidity. The recognition of Helix has impacted NIM by around 40 basis points as Helix portfolio included higher yielding, higher risk loans. Excluding Helix, our NIM in the 2nd quarter was broadly flat at 189 basis points as the lower interest income on loans was offset by lower funding costs. Our margin dynamics are more complicated and there are several important underlying components that I'd like to discuss. First, the liquidity breakup in a very challenging interest rate environment. Liquid assets increased to 7 point €4,000,000,000 up 25% in the quarter, reflecting the €1,200,000,000 cash inflow from Helix I mentioned before. Liquid assets now account for around 40% of interest bearing assets. And going forward, we expect that the pressure on the effective yield of liquid assets will continue as the interest rate environment remains and probably deepens into the tariff territory. Secondly, the use on the performing book, we dropped from 3.55% in the 1st quarter to 3.35% in the Q2 due to continued lower interest rates, reference rates and competitive pressure. Thirdly, the higher yielding, higher risk legacy loans are reducing as we successfully exit NPEs. As I mentioned earlier, this is neutral or even positive to the P and L. And finally, the cost of funding continues to decrease and the impact is increasingly visible. We continue to effectively reprice our deposit book down. The cost of our deposits in Cyprus declined a fair rate this quarter and 52 basis points since January 2018. Our overall blended outstanding cost came down by 7 basis points in the quarter. Now moving to Slide 18, excluding Helix, non interest income for the 2nd quarter increased to €92,000,000 compared to €71,000,000 in the previous quarter. Recurring income was at €56,000,000 in the quarter, up 14% Q on Q, mainly due to higher insurance income attributable to increased income, positive investment return, the reduction of the interest of the discount rate and the improvement in the yield of assets. We also have certain revaluation gains and lower insurance claims during the quarter. Net fee and commission income of around €40,000,000 for the 3rd quarter was reduced to €37,000,000 in the second quarter as commission income of €3,000,000 relating to Helix transitional servicing fees is now included in the Helix line. Entry and commission income accounts for 22% of total income compared to 23% in the previous quarter. Net gains on financial instruments amounted to €24,000,000 in the quarter compared to €18,000,000 in the previous quarter, positively affected by one off evaluation gains on financial instruments. Net gains increased to €12,000,000 for the 2nd quarter compared to €4,000,000 in the Q1, mainly due to increased revenue profit from the disposal of high value properties. Revenue profit does, however, remain volatile. Now moving to costs on Slide 19. Our cost to income ratio, excluding Helix and Delevis stood at 59% for the first half compared to 62% in the Q1 on a same basis. Our operating expenses are a clear focus area for the bank. During the Q2 of this year, excluding Helix, other operating expenses amounted to €43,000,000 compared to €41,000,000 in the Q1. And staff costs for the quarter were at $56,000,000 flat on a Q on Q basis. Going forward, the digital transformation program is beginning to clearly deliver an improved customer experience. We are the 1st bank in Cyprus to launch PSD 2 APIs to follow customers to allow customers to view account balances from all banks in one interface for our 1 bank product or tool. We have also launched various new features on our mobile application to allow customers to apply for e products, make faster payment and log in using biometrics. And finally, we've introduced very recently Apple Pay and POC Wallet to facilitate secure and safe payment by via mobile devices for POC card holders. The digital transformation program, the above was some examples of that is a priority for the bank and is a key lever for enabling us to achieve operating efficiency, cost reduction and revenue regeneration. So now turning to the complete income statement on slide 20. Net interest income remained broadly flat at €85,000,000 this quarter. Total income increased to €177,000,000 while product expenses were $105,000,000 compared to $103,000,000 in Q1. Loan credit losses amounted to $14,000,000 and cost of risk was at 1 point 23%. Impairments of other financial impairments amounted to €9,000,000 and they mainly relate to legacy revenue properties. Profit after tax from organic operations for the quarter was €21,000,000 Then following that there was a net loss of €23,000,000 relating or resulting from the agreement to sell CMP which was achieved in June And this leaves an overall profit after tax of €2,000,000 in the 2nd quarter. So in summary and as Panikol mentioned at the beginning, what we'd like to emphasize is that we continue to focus on revenue generation, on cost reduction and of course on the continuing delisting of the balance sheet. And with these 3 pillars, these 3 pillars will allow us to now redesign and refine the strategy for the next 3 years. We are aware of your requests and calls requesting forward guidance and we do intend to give that out on the back of full year numbers. So you will have to bear with us until then. So with that, we conclude the presentation and we'll now open the The first question comes from the line of Boriano Jonas with Axia Ventures. Please go ahead. Good morning, guys. Thanks for the presentation. I'll start with a few questions and then I can join rejoin the queue if necessary. So on your Slide 5, it looks like your numbers reported for inflows and outflows of NPEs were quite good compared to previous quarters. So I know that you have that guidance of around €200,000,000 of organic reduction per quarter on the NPEs. But do you see any of these trend seen in Q2 as sustainable or maybe a possible change from the €200,000,000 to something bigger in terms of reduction going forward? So my second question then is on real estate assets. I'm just wondering if there's anything you can share in terms of age of the average age of the assets that you are able to sell on a quarterly basis compared to the inflows. I was just wondering once you have like foreclosed assets coming in, how long it normally takes for the same asset to leave your portfolio? And then finally, I am aware of what you just said in terms of guidance going forward, but just wondering if there's anything for the full year 'nineteen, not 20 21, but in terms of the carrying lines, the €85,000,000 in terms of NII or maybe cost of risk that you've already mentioned something around 100 basis points. So if you can at least confirm those 2, that would be helpful. Thank you. Okay. Jonas, thank you. I'll take the first two and then I will Louisa take the last one. It's true that in the first half of twenty nineteen, you guys have seen that there were the yields versus outflows, let's say, balance are shifted towards the better picture for the bank. Is this trend sustainable? Well, some financials seem to support the trend to continue. But obviously, we need to remain focused and deliver specific actions so that we maintain this 10.4. But Not forget that there is a lot of focus by management behind all this. And actually, this is what was reflected in the 2 quarters of 2019 and we intend to continue that. Now on the real estate and on the age of assets, our legacy book, the one that we had in our revenues before the sale of the revenue is actually very small and we have managed to create some good inroads into selling a lot of those legacy assets. Now on obviously, once the revenue was set up, then there is a lot of focus in assets from 2016, 2017. They are continuously being sold and impacted per se. But of course, Anita, you want more details on the age and the distribution of those assets. Yes. We just wanted to add, it's Elisa. The legacy book is now just below legacy is before January 2016, by the way. It's just below €100,000,000 in terms of book value. So it's €1,500,000,000 book. So in mix effect, it's very small. And just also on your question of 2019, we are not specifically guiding at this stage on cost of risk. However, as Michalis mentioned, we expect this quarter a bit tougher from this IFRS nine model volatility like a number of other banks have. We're still obtaining the IFRS nine model. But we do expect Q3 and Q4 charge to be below 100 basis points. Interest income does have some pressure going forward because of A, the liquid assets that we got, the cash we got from Helix, which will be at tightly placed at negative rates until we decide how to what to do with it and also the general rate environment, which is negative. Don't forget that we are also focused on follow on 1 or more follow-up trades of different sizes. This will impact the P and L or at least the lines of the P and L. As I mentioned, this quarter, our legacy book was actually net bottom line loss making or neutral. So it shouldn't be impact bottom line on a DAU basis, but it will impact individual lines, the shape of the P and L NII specifically. And we are also planning to start implementing the cost reduction program. We will give you full details with full year numbers, but we do intend to share with you elements of that program with the Q3 results, especially the tough cost side of it. Okay. I can understand that's clear. So yes, thanks a lot. And me also take the Brazilian to finish John, consulting his new challenge. Okay. Thanks, guys. The next question comes from the line of Sherwood Roberts with Tuscafan. Please go ahead. Hi, morning all. Thanks for taking the questions. Just two quick ones. Firstly, on the CMP Insurance sales, just wondering quickly got kind of on an ongoing basis what the pre provision profit kind of impact could be of that, any loss in revenue from that? And the second one, just again, I appreciate you kind of talked about it in the presentation, but on the derecognition of the AMPEs related to Astia. Am I right in thinking that that's kind of the typical 12 month period performance? So assuming the subsidies being paid, etcetera, you could think about that. You spoke about early 2021 when some of those could start to roll off. Just wanted to clarify if that was what you were implying. Thanks. Thank you, Rob. So CMT was contributing around $8,000,000 to bottom line profit per annum. This is reported in the share of profit of associates. It was a decision we took on the back of the fact that we were essentially a minority shareholder. We hold the company, the majority shareholder CMP France. It was probably the last material legacy asset we have from the 2013 merger with LYG. So it didn't make strategic sense. This is why the decision was made. It's also capital accretive as I've mentioned before. On Astea, Michalis, you want to Yes. As I've mentioned earlier, guys, I mean, on Astea, would you expect the benefit on the MP side to start materializing towards the end of 2020 early 2021 subject to of course the borrowers meeting their requirement, the contractual requirement under the scheme of course in satisfying our MPX criteria which we can understand there are certain efforts that they need to meet before they exit. So these are the times that we are seeing will start in the dive. We will also as soon as it actually becomes real, we'll start reporting separately of the analysis. You should expect that C alone will migrate from core NPs to non core NPs and then eventually exit and will be transparent in reporting this portfolio of equity. Perfect. Thank you. The next question comes from the line of Sandeep Cia Mardeeo with Axure Capital. Please go ahead. Hello. Good morning. Thank you very much. I would like to ask you, if possible, just to understand which is the yields on the new lending compared to the SEK yield of €235,000,000 on the old book that you have? Thank you very much. We don't separately disclose it. It is lower than the back book. The back book was given at different macro conditions and different interest rates. Environment, there is a mix effect. However, there is also a mix effect between products with retail lending generally in lower price than corporate and SME lending. Okay. Thank you. Maybe what I should add is that, as I mentioned in the presentation around 2 thirds of the new lending is corporate lending. That's at the 3% mark or about 2%, so on a blended average. Okay, perfect. Thank you very much. Axia Ventures. Just two follow ups. So one, back to your, let's say, NII sort of things. I mean, looking at what is happening to your cost of deposits and still have the room to maneuver and to offset the top line pressure, so given the low rates. But I mean, we're approaching the zero level. I mean, what's going to be the next phase you guys in terms of not only the repricing, but what will be the strategy of the asset side of things as well in order to offset the low interest rate environment? And then the second question, if you have any comments in regards to timing of a partial NPE transaction in the next months or any comments you have around that, it would be helpful as well. Thanks. So on cost of deposits or funding cost generally, first of all, yes, there is room to go further. I know the absolute basis points level is low now, but some competitors in the market have market being negative. And this is definitely something we're actively considering at the moment, whether it's through NII or this is something we will reach a decision in the next few days on. So there is room to go further. I think our track record of reducing the cost of deposits in the last 5, 6 years in fact is proof of that. Of course, we need to be careful not to lose the franchise, not lose customer fees, etcetera. But I think there is room there. There's also 2 other levers we can use to improve NIM. 1 is volume of deposits, therefore at the margin when it's loss making and therefore reduce liquidity. And the other is the investment opportunities of the liquid of the increased levels of liquid assets to the extent we can without losing sight of the fact that investments in banking institutions to put capital at risk. So we do need to balance the risk return and be careful not to create and de risk if market conditions change. There is also the annual review. Also, if you're following the stop in the last few years, every summer we review the fee level. We are in the process of doing that and with 2 fee numbers hopefully we'll be able to give you numbers of where those discussions will end up being for that run rate level. Next question comes from the line of Kia Olu Yazzan with HSBC. Please go ahead. Mr. Kevardoglou has withdrawn his question. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Hurricane for any closing remarks. Thank you. I'll hand the honors to Carrickos to continue the call. Thank you all for participating in this call. I'm sure we're going to have the chance to speak either face to face or, let's say, in the near future. And I'm looking forward to work with you and going forward. Thank you very much. Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling and have a pleasant evening.