Earnings Call: H1 2018

Aug 28, 2018

Ladies and gentlemen, thank you for standing by. I am Gail, your Chorus Call operator. Welcome and thank you for joining the Bank of Cyprus Conference Call to present and discuss the Group's Financial Results for the 6 Months Ended 30th June 2018. All participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a question and answer session. At this time, I would like to turn the conference over to Mr. John Patrick Hourigen, Group Chief Executive Officer Ms. Elisa Livadioto, Group Finance Director Mr. Nick Smith, Director, Restructuring and Recoveries Mr. Michalis Afanacio, Group Chief Risk Officer and Ms. Anita Pavlou, Manager, Investor Relations. Mr. Huracan, you may now proceed. Thank you very much and good morning everyone. I will start just by one minor correction, which is Nick Smith is not with us on the call today. He has been otherwise doing the closure of Project Higgs, which I'll come on to later in my remarks. So maybe I'll just start with we've got a busy day today with an AGM underway and we will try and be reasonably pithy on this call to try and get through the key messages. So our results this quarter reflect continuing delivery against our core objectives of balance sheet repair. Today, we also announced the sale of €2,800,000,000 of loans to a highly reputable international buyer Apollo Global Management. This loan portfolio sale significantly accelerates the repair of the bank's balance sheet and further underpins the risk reduction strategy that we have pursued since the crisis of 2013. Slide 2 summarizes the key highlights of the corporate actions post quarter end, and I'll briefly go through these. As I mentioned earlier this morning, we announced the sale of $2,800,000,000 of gross loans, of which $2,700,000,000 are NPEs for a consideration of €1,400,000,000 This translates to approximately €0.24 on contractual balances and €0.48 on gross book value. The loans were carried in our books at a little under €1,500,000,000 The sale also known as Project Helix reduces the NPE ratio by 10 percentage points and combined with organic reductions result in the net NPEs being reduced to €2,700,000,000 down 72% net since the peak. The net NPE balance is now substantially covered by capital. The transaction is capital accretive by 60 basis points in CET1 and total capital ratio. The accounting loss from the transaction recorded in the 6 months resulted was €135,000,000 which declined by €105,000,000 by the year end as a result of the time value of money of €30,000,000 which unwinds over the 3rd and 4th quarters of 2,008. Slightly more than half this accounting loss in the full year related to the cost of executing the trade and sensible levels of provisioning against deal warranties, etcetera. The bank also will underwrite an initial portion of the senior funding tranche of €450,000,000 of course subject to regulatory approval. As previously announced in July, the bank signed a binding agreement for the sale of our U. K. Subsidiary for €117,000,000 This sale will result in a profit of €3,000,000 on completion and is expected to add 75 basis points to CET1 and 70 basis points to total capital based on our June results. This is in line with our strategy of delivering value to shareholders and focusing on supporting the growth of the Cypriot economy. We previously announced that we were exploring opportunities to raise AT1 additional Tier 1 capital to further strengthen the bank's capital base. Today, we are in the process of finalizing the terms with and seeking binding commitments from third party investors in respect of a privately placed AT1 transaction of an anticipated size of circa €200,000,000 again subject to market conditions. Our capital levels will be significantly enhanced following the corporate actions described above. Pro form a for Helix and the U. K. Bank sale, we estimate that CET1 will be circa 14% and pro form a total capital ratios will be about 15.5 percent. Total capital ratios will be further strengthened if we are successful in placing the AT1 bond late in the week. The corporate actions we undertook results in a stronger, safer and more focused bank serving the secret economy and maintaining its position as the number one bank in the country. Just turning to Slide 3. Our pro form a balance sheet is €9,000,000,000 smaller now than it was in 2013. We have deleveraged through selling off non core operations in Russia, the Ukraine, Romania and elsewhere, and most importantly through reducing the stock of nonperforming loans. Post the delivery of Helix and the U. K. Sale, NPEs are expected to have reduced by 65% or circa SEK10 1,000,000,000 since their peak in 2014. To put this in context, this amounts to 55% of the country's GDP. Provisional coverage on the residual nonperforming portfolio remains adequate at 49%, and all of this will have been achieved without state aid. The NPE ratio pro form a for Helix and the UK sale is reduced by 25 percentage points since the peak in 2014 to 38%. The 10 percentage point improvement from Helix is partly offset by the 5 percentage point deterioration from the U. K. Sale since the U. K. Bank carries predominantly performing loans. Our capital levels remain adequate and above regulatory requirements. As at the half year, the CET1 ratio stood at 11.9%, including the accounting results from Helix that was recorded in the period. Pro form a for the entire impact of Helix and the U. K. Sale, CET1 expected to be, as I said, at 14% in total at 15.4 percent. This will be further strengthened by any issuance of AT1. Moving on to Slide 4 and 5 that provide further information on Helix. Helix is a transformational trade for the bank and is also the first meaningful corporate and SME trade in Cyprus. It accounts for 15% of Cyprus GDP. The trade achieved accelerated derisking, equivalent to 6 quarters of organic NPE reduction and it is capital accretive by improving the CET1 and total capital ratios on completion by 60 basis points. Helix complements the organic NPE reduction achieved in the quarter, which was €435,000,000 The transaction is subject to a number of conditions precedent, mainly regulatory and other approvals, including the ECB agreeing to a significant risk transfer benefit for the transaction. The Helix portfolio consists of, as at the 30th June 2018, gross loans of €2,800,000,000 of which €2,700,000,000 as I said are NPD. The contractual balances as at the reference date of the 31st March, 2018 amount to €5,700,000,000 Slide 5 presents the accounting treatment of Helix. Elisa can come back to this if anyone needs further explanation on it, but I don't intend to go through the detail of it, something Elisa likes to do. Slide 6 summarizes the key highlights for the 6 months ended the 30th June 2018, and I'll briefly go through these. We have continued to make good progress on balance sheet repair. This was the 13th consecutive quarter of material organic NPE reduction. We reduced the stock of NPEs organically by $435,000,000 to $7,900,000,000 in the Q2 of 2018. The subsequent sale of $2,700,000,000 of nonperforming loans accelerates this reduction to €5,200,000,000 pro form a and provision coverage on the residual nonperforming loan book remains adequate at 49%. Our capital levels, as I said, remain adequate at quarter end, above the minimum requirements and are expected to be strengthened further once both the post quarter end transactions are completed. CET1 ratio, as I've said, stood at 11.9% and total capital at 13.4 percent and pro form a for both Helix and the U. K. Sale, the capital ratios are 14% and 15.4%, respectively. The pro form a total capital ratio excludes the impact of any issuance of AT1. We are in the process of finalizing the terms, as I said, with and seeking binding commitments from investors in respect of a privately placed AT1 transaction, and that size, as I said, is about $200,000,000 in size, subject again always to market conditions. During the Q2, deposits increased by 2.4 percent to $18,400,000,000 We remain fully in compliance with all liquidity ratios both local and European. Following the relaxation of the local liquidity requirements as at the 1st July, the bank had surplus liquidity to ratio compliance of about $1,400,000,000 Our loan to deposit ratio stood at 77% at the quarter end and 68% pro form a for both transactions. The bank is now focused on reducing the cost of deposits and ensuring its deposit base has the appropriate shape to maintain compliance with liquidity ratios. Our organic performance was in line with guidance of $0.10 per quarter or $44,000,000 in Q2. We recorded total income of $201,000,000 and operating profits of $89,000,000 and net profit from organic operations of $44,000,000 in the quarter. The reported results for the first half reflect the accounting impact of the bank decision to proceed with Helix, which I have already described. With that, I'm going to hand to Elisa to go through capital and funding. Thank you, John. Good morning from me too. So turning to Slide 8, our capital levels, as John just mentioned, remain adequate and above regulatory requirements. As of 30th June, the CET1 ratio before Helix in the U. K. Sales stood at 12 0.6%. And during the Q2 of 2018, we generated 50 basis points of capital in operating profits, partly offset by 20 basis points of provisions and other impairments. Pro form a for silix in the UK sales, the CET1 ratio is expected to be at around 14% and total capital ratio at 15.4%, excluding any AT1 issuance impact. These figures assume SRT approval by the ECB, which is required in order to realize the Helix capital benefit. Our average risk weighted asset intensity decreased from 77% to 73% during the 2nd quarter and to 69% on a pro form a basis. Now moving to funding and liquidity on Page 9. Deposits grew by around EUR 600,000,000 in the first half of twenty eighteen. Within the CPLR business, local deposits increased by 3% on a quarterly basis and 6% year to date. There was a 4% reduction in international deposits during the year. On liquidity ratio compliance, as you are aware, the previous local liquidity requirements were replaced by an add on requirement on the LCR effective as from 1st January 2018 with which we are compliant. As from 1st July 2018, there was a 50% relaxation of the CELSIAR add on rules, increasing the fair flow of liquidity of the bank to EUR 1,400,000,000. The elevated deposit and the increasing liquidity, however, will continue to pressure on to put pressure on NIM as excess liquidity is placed with ECB at negative rates. The bank is actively taking measures to reduce the cost of deposits and to optimize deposit mix to achieve efficient liquidity ratio compliance. I'll hand over now to Michalis to take you through asset quality. Good morning all. Thank you, Elisa. I'll be covering this section that is normally covered by Nick, who is in London concluding the Helix project, as John said, and probably need some rest. So turning to Slide 11, the first half of twenty eighteen has seen the bank continue to deliver strong organic NPE reduction with NPEs reducing by CAD 890,000,000 or about 10% broadly in line with guidance. Since 2014, the organic NPE reduction was €7,100,000,000 or 47%. Pro form a for Helix and UK sale, the NPEs reduced further by CAD2.7 billion leading to a total reduction of circa CAD10 billion or 65% since 2014. The NPE ratio improves further to 38%. As mentioned earlier, Helix reduced NPE ratio by 10 percentage points, whereas U. K. Sale increases it by 5 percentage points due to the reduction of performing loans. Rydals were a most substantial component of the first half of twenty eighteen NPE declines, representing 52% of NPE outflows achieved in the first half of twenty eighteen. We continue to guide that the proportion of write offs in a given quarter will be volatile driven by, firstly, the volume of heavily delinquent recovery cases resolved in the quarter and secondly, the level of natural NP curing achieved. Turning quickly to Slide 12, the pace of NP outflows typically in the top chart remains reasonable and in line with our guidance levels. Defaults and redeforts, as shown in the bottom chart, have increased in the Q2 of 2018 due to reclassification of a corporate performing customer group of around €150,000,000 Turning to Slide 13. Here, we present the bank's view on its core and non core NPEs using a consistent approach to that described in our last results presentations. As a brief recap, non core NPEs relate to restructured cases that have no arrears and based on them continuing to meet all relevant exit criteria should exit from NPE status over time. Core NPEs relate to delinquent borrowers that await consensual or nonconsensual solutions to deliver NPE exit. These two pools have materially different characteristics in terms of cash generation and risk, and therefore, we continue to believe it is worth considering them separately. Noncore NPEs totaled €1,400,000,000 at 30th June, representing 8% of gross loans and 18% of total NPE stock. Coverage on these loans is relatively modest at 18%, reflecting the lower risk associated with this stock of NPEs. Pro form a following the sale of Helix and U. K, noncore NPEs totaled €1,100,000,000 Around 23% of these are available for NPE exit in 2018, subject to continue to meet all relevant exit criteria. Core NPEs totaled €6,500,000,000 at the start of June, representing 36% of gross loans and with 58% coverage. Coverage of these loans has improved substantially from 36% in December 2015 to 58% in June 2018. Capturing sale of Helix and U. K. Impact, core NPs will reduce further to €4,100,000,000 with a coverage of 57%. Foreign sale of Helix and the core NPEs mix changes to mainly retail 51% from 35% and corporate NPEs reduced from 38% to 22%. Turning to Slide 14. The bank's NP coverage ratio starts at 52% at the quarter end, in line with our previously disclosed expectations and 49% based on pro form a results for Helix and UK sale. The vast start today above the European average coverage ratio of 46% and total coverage including tangible collateral remains at 118% on pro form a results. Our cost of risk for the 2nd quarter stands at 0.9%. Turning to Slide 15, tackling the bank's loan portfolio is of course of utmost importance for the group. The group has been successful in engineering restructuring solutions across the spectrum of its loan portfolio and expect this to continue in the coming quarters at a revised pace of around €200,000,000 per quarter as portfolio size and business land mix change radically after Helix. In parallel, the bank continues to examine other structural solutions to accelerate balance sheet derisking. The STS scheme proposed by the government in July is designed to address NPEs collateralized by lower value primary residences. The scheme is expected to address up to €900,000,000 of sticky retail core NPEs, subject to eligibility criteria and participation rate. Eligibility criteria led primarily to the open market value of the residents, total income and net wealth of household. These we lack as a clear definition of socially protected borrowers. Also a clear segmentation between retail and corporate SMEs in the core NPE universe. We intend to increase our focus on retail, non ST eligible exposures in addition to maintaining the existing strong pace in SMecorporate space. The bank will also strengthen the foreclosure team to more actively use this channel going forward. And now turning to Slide 16. There have been important positive changes in the legislative front, and the amendments are summarized in the slide, and I will very briefly go through them. Firstly, on the foreclosure law, the approved amendment aimed to strengthen the foreclosure framework and mainly reducing the waiting reposition period from 12 to 6 months from date of 1st unsuccessful option. On the sales of loans law, the changes aims to improve the law and close current gaps that hinder the use of the law by improving the framework around transfer of rights and obligations to the buyer. We now have a securitization law that this new law came into effect on 15 July 2018 and facilitates the banks to securitize NPL and is regulated by the Central Bank of Cyprus. On the tax legislation front, the amendments give incentives to customers to agreeing processional solutions, including exception of capital gains tax and transfer fees in sale of property banks and additional exemption for sale of property directly to third party. With respect to the insolvency framework, the change is aimed to close gaps and enhance the participation and applicability of personal repayment schemes for physical persons. Turning now to Slide 17 on the revenue sales front. Revenue had a strong half year and is building a consistent record of quarter on quarter delivery against expectations. Sales volumes were high. Revenue sold or signed as in relation to 395 properties during the first half of twenty eighteen. This actually represents 30% of the total volume of properties shelled by the bank today. Sales values continue to be strong with €207,000,000 of sales made or SPA signed in the year to date period resulted to $21,000,000 of revenue profit in the first half of twenty eighteen. In addition, market statistics remain encouraging. Residential property prices rose by 1.8% year on year and sales contracts deposited at the land registry excluding those that relate to bank foreclosures activity, increased by 23% year on year by volume. Turning now to Slide 18, which deals with new lending. New lending reached up €300,000,000 in the 1st 6 months of the year. CPL lending was 42% up year on year. Corporate continues to be a strong component of our activity in new lending, representing 66% of total loan originations, with SME 10% and retail 24% in the Q2 of 2018. And with that, I'll hand over to Elisa to take you through the rest of the presentation. Okay. So moving to Page 20. As explained in previous quarters, the continuing balance sheet derisking is resulting in a smaller but lower risk loan book. Overall, net loans have reduced by 16% since the end of 2015, driven by a 47% reduction of the legacy book, mainly due to increased provisions, curing and therefore asset swaps. On a pro form a basis, following Helix and the U. K. Sale, net loans will have been reduced by 35% since the end of 2015, driven by a 65% reduction of the legacy book. The performing book continues to grow, and this is on the back of increased new lending, as Michalis mentioned earlier, in Cyprus, and we expect this trend to continue in the coming quarters. The legacy book interest income increased by €2,000,000 in the quarter, mainly due to increased collections. The accelerated derisking of the legacy book will result in further pressure on interest income, and this will be somewhat offset by lower provisions. This secular accounting is something we have explained previously on our results calls. The performing book interest income continues to be under modest competitive pressure as a result of the sustained low interest rate environment. So I'm moving now to Slide 21. This is a familiar slide again from previous quarter. The key dynamic on this slide is that as the performing book increases as a percentage of the total loan book, the overall net interest income and margin will be negatively impacted despite this being an entirely positive development and one which confirms the health of our customer franchise. Our impairment charge, however, is expected to be positively impacted, and our risk intensity is expected to decline as the delinquent book shrinks. We have broken out Helix and the U. K. Bank on this slide in separate columns so that you can use it for your own modeling purposes. Now moving to Slide 22. As explained on previous results calls, net interest income is under pressure and as a result of a number of actions we have taken, which had a positive impact on capital and liquidity. However, we remain confident given the strength of the underlying customer franchise, but this is not reflected in margin as the accounting NIM is volatile for a banking recovery. The NIM was stable in the Q2, whilst the year on year drop in NIM reached 87 basis points, a phenomenon we have discussed at length previously. Now continuing on Slide 23. Noninterest income for the 2nd quarter was at EUR76 1,000,000. I remind you that the Q1 noninterest income included nonrecurring treasury gains from bond disposals of EUR19 1,000,000 and a further €19,000,000 of revenue gains. Revenue gains in the 2nd quarter were at a net €2,000,000 Recurring fee and commission income was 6% up on a quarterly basis in the 2nd quarter and now represents 21 percent of total income for the quarter. Moving to Slide 24. You can see that total income is much more stable than net interest margin. As we have said before, for a banking recovery, profits are reported on different lines of the P and L other than net interest income. And examples of these are the revenue gains and net all recurring treasury gains. The total income drop in the second quarter was mainly due to the one off interest income items sorry, the one off non interest income items I just mentioned on the previous slide. Now moving to expenses. Our cost to income ratio, excluding regulatory levies, stood at 48% for the 2nd quarter compared to 43% in the previous quarter and 44% last year and this is within market guidance. The reason for this increase is lower total income, as mentioned above, and higher operating expenses. OpEx was €8,000,000 higher on a Q on Q basis and €6,000,000 higher on a year to date basis, mainly due to the timing of certain project related costs. Our operating expenses are monitored closely, and we are in early stage implementation of a multiyear digital transformation program aimed at re platforming our product distribution channel and reducing over time our operating costs. As regards staff costs, these were stable at €58,000,000 in the second quarter. And we remind you that the renewal of the collective agreement for 20 18 remains under discussion with the union. Now turning to Slide 26 on the profit and loss account. What I would highlight on this page is that profit after tax from organic operations was at €44,000,000 and corresponds to a quarterly earnings per share of €0.10 in line with previous guidance. Now moving to 28, Slide 28 on guidance. The bank is currently generating around $0.10 per quarter in organic profit after tax on its current balance sheet and risk profile. The impact of the U. K. Sale and Helix are uncertain from a timing perspective And in the interest of ensuring you have an appropriate level of disclosure to model future returns, we have separately filled out the U. K. And Helix impact on these results in Pages 2930. And with this, I'll hand back to John and the operator for questions. So in the interest of making sure we are efficient on the call, I'll open this to questions now, operator. The first question is from the line of Cunningham Corrine with Autonomous Research. Please go ahead. Good morning. Two questions, please. The first one is, can you give us a bit more detail on the funding that you're providing as part of the NPL sale? And the second one, can you clarify when you talk about the ECB, you're waiting for approval there to get the pro form a CET1 that you're talking about of 14%. Can you give some details on what exactly you're expecting there and what the CET1 ratio would be if you don't get that ECB waiver? Thank you. Okay. On the funding, the plan and the agreement is that we will underwrite or acquire 450,000,000 worth of the senior tranche. There is only an equity and a senior tranche, so we will be buying the senior tranche. We cannot disclose the details in terms of that because we're bound by confidentiality agreement. On SRT, Michalis, The approval that we are expecting from the ECB evolve around our participation in the senior tranche of the transaction and approval with respect to a significant risk transfer of the entire transaction will enable us to get the benefit of our of the RWA action and the capital impact that was described by Visa during the presentation. So Colin, it wouldn't surprise you to know that we would sensibly and correctly caveat a transaction that just comes straight off the press to ensure that we meet any regulatory sort of requirements around the perimeter. It is a unit tranche deal from a senior perspective, so we expect it to be easily understood. And there's a very significant amount of both equity and indeed other people's participation in the senior tranche coming in as well. So we are hopeful that this transaction presents a reasonably straightforward discussion around SRT. But of course, we can guarantee that. But so therefore, we are required to sense that they are caveat in the transaction around regulatory approvals. Thank you. I didn't hear you properly. Was that the whole of the 450 is senior tranche? Yes. No, there is no mezzanine tranche in this transaction. It is a unit tranche senior piece and then there's the other piece being handled by the acquirers, the equity. So we are taking a component of the senior tranche. We will be alongside other lenders in that space. Okay. Thank you. The next The next question comes from the line of Buruguri Faijaksembros with Wood and Co. Please go ahead. Yes, hello, good morning. My first question is regarding the guidance for 2018, the $0.40 that you had previously guided. Is this still you keep this guidance or post these transactions you will revise in 2019? This is my first question. My second is on cost and efficiency. You mentioned that you want to take extra measures given that the NII from the Helix is about 18%, 20% of the NII, if I understand correctly, of interest income. That could be quite significant in terms of cost to income, the increase to cost to income. So would you should we expect some measures in terms of costs of ERS by year end to offset that? And one third question, if I may, regarding Apollo and who will manage this NPE book, the €2,700,000,000 ounces of your book? Do you have an agreement in place in the short term until they set up a platform? Or is there any news of that? Or it's too early? Thanks. Okay, Alex. Now on guidance for 2018, as I said on the existing balance sheet and existing risks, we think we could achieve the €0.40 or the €0.10 per quarter guidance. However, given the uncertain derecognition timing of the U. K. Variant Helix, We are not guiding as to earnings for the 3rd and the 4th quarter at this stage. We will come back to guide on 2019 and medium term closer to year end or actually with the full year 'eighteen results. We've given you the information that you can form a view on when these things might occur, and that view is not a certain view depending on regulatory approvals, etcetera. So we have the information in the disclosure we've given you this morning to be able to model out the impact of a Q3, Q4 or Q1 next year impact of the execution of one of those trades. So the balance sheet and risk on our bank today is capable of generating $0.10 per quarter. We have work to do to replace risk that comes off with income that we will have to find elsewhere to create future earnings. On costs, we will be examining now or reexamining our business model. We are intending to revisit the cost base of the bank. At the moment, given that Helix has only just crystallized in the early hours of this morning, We are not ready to provide guidance on the timing or the significance or the degree of this cost reduction, but this is something that's definitely on our radar screen. And on digital Let me add to that. So let's see. We are, of course, reengineering our operating platforms in the bank have embarked over a year ago on the beginnings of a digital transformation program for the bank. That program is designed to make the bank future focused and capable of aligning itself to a shifting paradigm in the banking world. That is a multiyear program with naturally the cost out of that program to be achieved in the later years. We will of course, we would have had an eye to the balance sheet repair agenda in the creation of the renewal agenda. And I think that will be a conversation in detail as we head into 2019, but we're not in a position at this stage to be putting out detailed information on those programs. You would expect us to want to consult and engage internally well before doing that. But we are you can rest assured we are examining and under construction in preparing a bank that is capable of being more efficient in a smaller balance sheet context into the future, but this takes time to replatform under a digital transformation program. And then with Apollo? And then on servicing with Apollo, I'll refer you to the Helix announcement, which has a reference to this. But effectively, we have a transitional servicing arrangement or agreement in place while we will continue through a ring fence team to service these loans on behalf of Apollo for a period of time. And at the end of this and during this period, agreements detailed agreements will be put in place as to how and in what exact form the servicer will be separated from the bank. This is not yet finalized because the buyer wanted to keep some flexibility and test the waters. And indeed, it's a question that is no longer a bilateral question to us. It's one which involves Apollo and we wouldn't presuppose to determine how they wish to manage their portfolio going forward. Okay, clear. Thank you and congratulations on concluding the deal. Thank you. The next question comes from the line of Noam Vacek Andres with HSBC. Please go ahead. Thank you. I understand the timing of both the U. K. Sale and Helix is uncertain. But at least with regards to the U. K. Sale, it's been a while since you made the announcement. Has there been any progress? And on the UK sale, it is a binding agreement. But are there any circumstances under which the buyer can walk away? Thank you. Andres, on the I mean, progress has been made with the regulators, but we don't yet have visibility of their decision. We are working or our working assumption is that the UK sale will conclude in early Q4. That's our working assumption based on the day count of the regulatory approval calendar. To your question on whether there are walkaway clauses, there is a minor walkaway clause in the contract, which is extremely remote and it relates actually the loss of the license of the UK bank. So no It's effectively subject to regulatory approval and if regulatory approval is granted by the U. K. Authorities for the acquirers to acquire the bank, then the transaction will go through subject to the ECB allowing us to sell it, which we expect to be to occur. The next question is from Stoker Marshall with Eaton Vance. Please go ahead. Hi, good morning. Marshall, Stoker. Two questions. One is, and I may have missed this in the call, there was a lot of details I couldn't keep up with. Can you kind of characterize the NPLs that were sold? I remember in the early plans, there was talks of maybe 3 different tranches. Can you characterize these are the are these the large ones, the small ones and so forth? And then secondly, do you have any guidance as to the timing of when the nomination committee will finish their efforts to find a new Chairman? Thank you. I'll hand this first one to Michalis and I'll endeavor to give you something on the same. The initial understanding on Helix was that it would have been broken down to 3 main portfolios. 1 would have been more retail orientated, second on the SME space and the third one on the larger corporate. Eventually and finally, we only proceeded with the last two. So the Helix portfolio that has been disposed is mostly focused on the corporate side and the semi space and associated exposures along those portfolios. There have been no retail exposures exposed in the Helix portfolio. Yes. There was never really any retail exposure. The smaller portfolio was more smaller SMEs. And that portfolio was just too voluminous to try and tackle from a diligence perspective in the timing we wanted to execute the trade. So but as you can see there are 12,000 or 13,000 individual loans and 9,000 pieces of collateral in this trade. So it is a monster in its own size. So yes, it was the large and medium portfolios, not the small portfolio, but then what it was the majority of the perimeter that we had decided to examine from a HELIX perspective. And on the guidance for the non GOESL, Doctor. Ackerman just wishes to in the context of good governance announce in good time to the shareholders that he expects to be around between this AGM and the next AGM. We have Ekans Ender already engaged to examine the universe of potentials for a Chairman. But of course, it could come from internal or external. This is a matter of the nominations committee over time. And I would expect their deliberations to go through the year end. But frankly, I don't have visibility. I'm not a member of the nominations committee. And I'm sure that Joe will be happy to take a question from you, Marc, if he wants to call. Okay. Thank you. The next question is from Sherwood Raab with TSCA Found Asset Management L. O. Please go ahead. Hi, good morning, everybody. Thanks for the update. Just two quick ones. Firstly, just on sort of further NPE reduction, obviously, being a little bit greedy here. You've done a great job. But looking at the other items on kind of the agenda, the Astea, I mean, how likely is all that to happen? And then given the sort of scale of the transaction, presumably, it's a bit early to be talking about other things that are going on. But is there actually is there sort of scope within the balance of NPEs to kind of do more sales of not obviously as a similar size, but other transactions? And then the second question, obviously, it sounds like the cost side, you are going to maybe give us a few more updates later on in the year. But thinking about the kind of costs related to the portfolio, I don't know if you can give us any more kind of color on the sort of related costs of that, that might be able to come out? Thanks. Look, I'll just take the first one and allow Lisa to remark on the second one. So there's not the I think accelerating by 6 quarters, as you suggest, should be satisfied your greed for a little while, Rob. But look, we're there is effectively SEK 4,000,000,000 of core real NPEs existing in the residual five. 1,000,000,000 of that is SPEAKER related. So we need to create some performance characteristics around that 1,000,000,000 portfolio before we can understand what the options are around funding it or doing anything with it. So I think the work for us will be to create performance and cash dynamic in that $1,000,000,000 of the residual core 4. Then if you split the rest into they're not actually equal, but they're not far off equal, dollars 1,000,000,000 in each of corporate, retail and SME. We have a machine that's working hard on the SME and corporate space. We will look at and explore these ideas, but I don't think we should be saying that we're going to sell any of them. But it will really depend on what we see as value and what we see as opportunities in front of us. And on the retail non SDA piece, we've made less progress in that over recent years. The changes in the foreclosure law and the definition of who is vulnerable in the context of Cypress Society is a very important data point for us because this allows us with less impunity to actually go after the now defined nonvulnerable. So you'll see an accelerated focus for us on basically seeking collateral recovery in the retail space as a direct machine from the bank ticket itself. And then we will continue to prosecute the SME and corporate agenda as we have been doing with an eye to exploring whether there are opportunities on the way for us to see if there's a structural solution or 2. But so we're going to be open to everything. But at this moment in time, we don't have an explicit on the books. And then just handing to Alisa on cost out. On cost, so there is a modest cost reduction coming with Hillix directly through the servicing team. We haven't guided specifically to that. It's a single digit euro annual savings. But it falls in the context of what I said earlier to Alex's question, that we will look in a more holistic view on the cost base process of transactions and the business model and decide on the next move. Yes. So there I mean, we don't want to be announcing on a call what's happening in terms of whether or not some of our people may or may not go to health services portfolio. But it wouldn't surprise you to know that there's a conversation with our own employees, but also with Apollo on whether or not the competent people who have been delivering the success so far in that transaction and may have an opportunity to work with them and that would be a direct reduction for us in our cost base. And as Leza says, it's in the single millions, not in the multiple tens of millions numbers. But we will be exploring that and we now have an objective to try and really focus on the efficiency of the cost of the bank. And that as you know, to take cost out costs money, but also it takes time. We will be focused very heavily on that on the renewal agenda as we move from pure repair as being our focus. Perfect. Thank you. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Horrigan for any closing comments. Thank you. Ladies and gentlemen, thank you for this early sort of post bank holiday weekend in the U. K. Joining the call and for any of those who are in different time zones again, thank you for joining. We have bombarded you with a lot of actual activity this morning between announcing the Helix announcing succession issues, announcing the results indicating that we're exploring AT1. We hope that all these messages are broadly positive for you. And we hope that you regard them as us delivering on the promises that we've made over the course of the last few quarters. We will leave you to digest the information. There's a lot of it. And Anita, Lisa, myself and the team are all happy to take inbound queries as and when you digest the information. Thank you very much and I'll allow you back to work. Ladies and gentlemen, the conference is now concluded and you may disconnect