Earnings Call: H1 2021

Jul 28, 2021

Good morning, and welcome to our 2021 interim results presentation. I'm going to give you a short presentation on the progress the bank has made in 2021. Our Interim CFO, Paul McCann, will provide a more detailed review of our financial performance. At the end, I will provide some detail on our transaction with Ulster Bank, our medium-term outlook. Paul and I will be happy to take your questions after that. If we just turn to slide 4, the performance for the first half of 2021 has seen the bank competing very strongly, bringing real innovation to the market, introducing new customer offerings, and attracting new customers to the bank. We saw a strong rebound in activity in the second half of 2020, have built further on this momentum in the first half of 2021, with total new lending of just under EUR 900 million, which is up 43% year-on-year, and up 20% on the same period in 2019. New mortgage lending of just under EUR 800 million grew by 45% year-on-year and 25% versus the first half of 2019. That outperformed the mortgage market, which grew by 26%. This led to a mortgage market share gain from 15.3% for 2020 to 17.5% for the first six months of 2021. We've had some significant achievements across many pillars of our strategy, including digital transformation, customer experience, culture, responsible and sustainable business, and we'll talk about all of these later and through the presentation. In April of this year, we announced a further EUR 50 million investment in our technology infrastructure and digital capability. This investment will allow the bank prepare for a significant expansion of customers and services over the coming years, bring an enhanced digital experience for our customers. In May, we announced the introduction of new hybrid working arrangements for employees with over 1,200 bank colleagues, which represent about 50% of our total workforce, having applied for permanent flexible working arrangements. The bank will be putting this in place following the relaxation of the COVID-19 pandemic restrictions. To support delivery of our strategy, we also recently announced the recruitment of 180 new positions across both senior and graduate levels in key growth areas for the bank. On profitability, the bank reported a loss before tax of EUR 9 million for the first half of 2021. This is trending positively from a loss before tax of EUR 57 million in the first half of 2020, when we were at the beginning stages of the COVID-19 pandemic. Overall operating income has reduced by 10% from the prior period as a result of reduced income, primarily from the loan sale transaction, which was Glenbeigh II, which was in quarter four of 2020, together with lower treasury income and negative rates on excess cash as a result of a low interest rate environment. The bank's net interest margin has reduced to 150 basis points, and that's a decrease of 25 basis points from the prior reporting period. However, when we exclude the cost of holding additional excess liquidity, the underlying NIM is 172 basis points for the first half of the year. Total costs have increased by 4% year-on-year. The bank continues to maintain tight control over administrative costs. However, we are accelerating additional investment in the bank's technology infrastructure and digital capability, which is contributing to a higher cost base in the first half of 2021. Non-performing loans reduced by around EUR 85 million to just over EUR 1 billion in 2021, as organic cures exceeded the level of new defaults in the period, reducing the NPL ratio by 60 basis points to 7%. All COVID-19 payment breaks have expired, and the bank continues to support customers who've been impacted by the COVID-19 pandemic, and the level of customers is around 1,000 that we are working with closely by way of supporting those customers. All capital ratios remain above both management and regulatory minimum, with the Common Equity Tier 1 ratio increasing by 20 basis points to 15.3% on a fully loaded basis. Lastly, the bank successfully issued €250 million of Tier 2 capital in May 2021, and this added an additional 3% to our total capital stack. Overall, our capital stack's in a very good position, and it's growing versus last year. If we just turn to slide 5, just we talk about the mortgage market. The mortgage market, having reduced to EUR 9.6 billion in 2019 and entered EUR 8.4 billion in is expected to grow by 19% this year to a market size of around EUR 10 billion. Mortgage approvals and drawdowns recovered well in the second half of 2020, with continued momentum into the first half of 2021, and application volumes were very strong with H1 volumes averaging around EUR 6.8 billion per quarter. Housing supply remains insufficient to meet increased demand due to the availability of buyers with approved funding and changes stemming from public health restrictions. On average, the residential property prices have increased by 5% in the first half of 2021, and we could see them continuing to increase over the medium term. The Banking & Payments Federation Ireland, or the BPFI, is projecting total housing completion numbers to be at least similar to the observed levels in 2020, which is around 21,000 units. However, the ESRI notes that the structural demand for housing in the Irish economy is approximately 35,000 units per annum. There continues to be an undersupply in that respect. If we just turn to the macroeconomic situation, uncertainty remains around the true state of the labor market due to the ongoing high levels of government support. However, most recent data shows that the number of jobs openings is rising above pre-pandemic levels. Significant fiscal support throughout the pandemic has led to a record increase in household savings, rising by 24% in 2020. That's one of the highest levels of increase across Europe. We also see card spending has increased each month this year from a low point of the third lockdown at the start of the year. The combination of elevated deposit levels and the easing of restrictions, together, these three things, we believe, will lead to a higher level of consumption through the summer and into the autumn and for the rest of the year. If we just turn to slide seven, we'll talk about our strong business performance for the first half. On the top left, you'll see that our mortgage drawdowns and market share has increased. In 2019, it was 14.7%. Last year, even though the first half of the year there was lower drawdowns, we achieved 15.2%, and this year it's increased to 17.5%. That's a 45% increase in mortgage drawdowns versus last year, and as mentioned earlier, it's 25% up on 2019. If we move to applications, you can see the significant increase in applications. In 2019, we had 14.8%. That dropped in the first half of last year to 12.4%, but has recovered strongly to 15.8%. If you compare the top left and the top right of the slide, you'll see that we convert a higher level of drawdowns. Once we get an application in the door, we're able to convert that to a drawdown at a much higher level, and that is seen on a consistent basis over time, and it's part of our promise to customers to work closely with them in order to achieve a drawdown of their mortgage when they're ready. On the bottom left, you'll see our personal term lending, which was EUR 47 million for the first half. There's no doubt that the wider consumer market and the consumer lending market across overdraft, card, and indeed personal lending, has been lower due to the pandemic restrictions. We are starting to see signs of recovery through the summer, and we expect, in the second half, to have a stronger personal term lending level. On the right-hand side, you'll see our SME lending. We lent EUR 42 million for the first six months. That's a 68% growth on last year, which is significant. Indeed, last year had the pandemic for half of the six months. If you compare to the previous year, you'll see also a significant increase of nearly 35%. We have momentum in our SME lending, and what you can see in this slide is the pipeline, which is very, very strong and increasing on a monthly basis. We should see that pipeline converting to drawn funds for the rest of the year. Indeed, as we develop our SME proposition, you'll see that growing year-on-year going forward. If we just turn to the next slide. This is a slide which is important to me as CEO, which sets out our ambition and purpose and how we measure it by way of our priorities. We've seen significant change within the retail banking landscape. Throughout this period, PTSB has remained focused on delivering for our customers and communities, and we are committed to doing so in future months and years ahead. Personally, I've huge ambition for Permanent TSB, and I believe as an organization, we've a great opportunity to grow in the market over the coming years, and indeed, we're demonstrating that in this half year results today. Our purpose is to work hard every day to build trust with our customers and to ensure that we live up to our promise of being a community of people that serves the communities in which we operate, not only the physical communities where we have 76 branches, but also the growing digital community that we serve. We will do this by building a sustainable organization that's transparent and fair with customers. Our ambition is quite clear. It's to be Ireland's best personal and small business bank. For us, best doesn't mean the biggest. It doesn't mean being number one in the market. There are other players that already hold that position. What it does mean is being the best at what we do for both our personal and business customers. How that's demonstrated is those customers telling other future customers to come and talk to PTSB if you want a business loan, if you want to take out a mortgage, if you want a personal loan, if you want to open a current account. That's what it's all about. As we think about this ambition, we're focused on the priorities on the bottom of the page, which is around increasing trust, advocacy, and loyalty of our customers. Enhancing our digital capabilities across a number of different product lines. Embedding a culture that's open, inclusive, risk-aware, and is a growing culture. Simplifying how we do our business, and continually to simplify our business. By focusing on those 4 priorities and doing the right things in those areas, we believe we will build a successful and profitable bank that we can all be proud of. If I just turn to the next page around customers. Personal service will remain at the heart of everything we do. However, both customers and colleague experience have changed so profoundly in the last 18 months, and therefore, digital is playing an ever-increasing role in our service offering and in our future ways of working. As I mentioned in the cost, our cost increase for the first 6 months is in this area. It's about investing in our digital capability. It's about investing in ensuring that we're keeping pace and indeed exceeding expectations of customers. Indeed, we are competing very strongly. We're bringing real innovation to the market. We're introducing great new customer offerings, and we're winning new customers. You'll see on the slide here in the top left that 42% of our mortgage business in 2021 were new customers to the bank. We're also attracting new customers to our current account offering, and we're also attracting new customers to our business banking offering, which we're up and running on, as I mentioned earlier on. Our customer focus is a key priority for us, and our aim is to enhance customer journeys, to make them simpler, make them easier, and make that interaction customer-driven and customer-led. It's about leveraging our digital capability in this respect. Balancing our existing branches with our digital capability, balancing our service provision and what we can do by way of digital channels versus what we're doing in our branches. Also, it's about how we reposition our brand to ensure that customers are enabled to bank at a time and place of their choosing with a product and service that they need. Really, really important and a key focus for us. If you look here, again, on the top left, you'll see that the bank has made significant gains in our relationship NPS, with a most recent score of +19 at the end of June. This compares to a score of +12 at the end of 2020. A 6-point increase. The main drivers here have been around customer service and experience, and we are proud of this. It's something we will continue to focus on, it's something we will continue to interact with customers on, and it's something that, as I say, we pride ourselves on and ensure that we are doing as best we can in that respect. If we look at the action we've taken on mortgage pricing and service, and since my appointment as CEO, I've been focused on putting our purpose into action for our customers and really demonstrating that by way of real actions and deliveries. As part of this, we continue to evolve our mortgage pricing strategy. We launched a new 4-year fixed rate mortgage product, which was for personal customers at a rate as low as 2.25%. This new product broadens our choice for customers by offering an alternative to the cashback option. The bank will also continue to offer that cashback offer as a part of our mortgage drawdown. Non-cashback has been welcomed, and it is beginning to grow by way of a product offering. If we think about our customer journeys in a digital world, customers now want the availability to interact with us at a time and place that works for them and through an optimal channel. To date, what we've seen is 50 million logins in our digital channels. That's a 20% increase year-on-year. We have now 550,000 digital customers, and that's an increase of 10% year-on-year. We can see a lot of momentum in this area, a lot of interaction, and there's more to come. The investment we're making here will make that digital interaction even better. It'll make it more favorable for the customer and help us do more business online. Should also mention here that 45 million contactless payments were made by PTSB customers during the first half, and this is an increase of 22% year-on-year. Partnerships is an area which is growing for us. Given the size of our bank and given what we can offer by way of our breadth of product, we want to give customers more choice. We've continued to match our words with actions during the first half of the year with the introduction of new products and services for both personal and SME customers, along with a commitment to maintaining our existing branch network. There's no doubt that the branch network will need to continue to evolve to adapt to the changing needs of customers. We are committed to that nationwide network. Indeed, we're building a larger network with the Ulster Bank acquisition, and I'll talk about that later on. We believe that that network supports customers in their local community to make the big financial decisions that they need to make. We continue to have a well-established relationship with mortgage intermediary partners, and our broker mortgage market share increased by 2% to 27% in 2021. We also recently announced a partnership with an Irish fintech, which is CreditLogic, which will see PTSB provide a new digital application platform for mortgage applicants. This will allow customers to complete their entire mortgage application process online through a special app designed for exceptional ease of use and security. This will support a new online-based mortgage application service, which we'll be launching this year. Earlier this week, we announced a further expansion of our SME payments offer with our connection and partnership with Worldpay, and this is connecting the business banking customers with safe and easy-to-use merchant solutions. We also have an existing relationship with Bibby around invoice discounting. We've a new relationship with Castlight, which is supporting us internally by way of how we approve credit and how we manage our credit application process. We also have an existing and expanding relationship with the Strategic Banking Corporation of Ireland. The first offer we made was the Future Growth Loan Scheme, which was a EUR 50 million scheme. That's now fully allocated, and we're working through the drawdowns with regard to customers there. We've also recently agreed a second Strategic Banking Corporation of Ireland fund, which we'll be launching in the second half of this year. You'll see on that slide an ecosystem of partners that we're building up, both in the fintech world and in the physical world, which we will use to help our customers and provide a deeper product set. That list will only increase in the next six months and beyond. If we move to slide 10, it's about how we're transforming the business. Living through the pandemic has accelerated the move towards digital channels, as I mentioned, and it is evolving the way we work and the way we bank. We've invested EUR 100 million already in technology and digital capability, and that's over the recent years. As mentioned earlier, we recently announced an additional EUR 50 million investment, which complements our commitment to maintaining our branch network and supporting communities. That enables us to offer customers a seamless digital, and will enable us, indeed, as you'll see the improvements, to offer a seamless digital experience online, as well as personal support and advice in branch and via our Open24 contact centers. The investment to date has delivered an upgrade to the bank's core platforms and has increased security for customers through the introduction of secured customer authentication, the integration of a new API platform to enable open banking, and significant improvements to digital services via the PTSB mobile app and web portal. To support delivery of our strategy, we've also recently announced the recruitment of 180 new positions across both senior and graduate level in key growth areas. These include technology, business banking, risk management, and data analytics. These new positions will support the rollout of the next phase of the bank's digital and SME growth strategy as we prepare for a significant expansion in personal business customers and services over the coming years. As mentioned, partnerships are a key feature of the bank, but they're also a key feature of the digital transformation program. This includes our partnership with Ernst & Young and global service integration providers, Infosys, a market-leading provider across the world, and Finacle, which is a market-leading banking platform provider. This has accelerated the development of our best-in-class digital services for customers. That includes the first of our product offering, which is a digital current account opening, which is via our app. We launched this in May. We're also making significant progress on other areas of our digital banking journey. We look forward to building that momentum in the next 12 to 18 months. This will include Google Pay, which we'll launch in the coming months, further enhancements to the digital mortgage journey with a mortgage application portal and tracker for personal customers, which is due to launch in the second half of this year, building new digital capabilities for our SME customers, which reflects the importance of this sector to our growth plans and the rollout of additional mobile payment capability, and building, most importantly, a scalable and resilient digital self-servicing platform, bringing essential servicing journeys to both desktop and mobile channels for customers' everyday banking needs. We've now completed a bank-wide enterprise transformation program. This has allowed us to conduct a full review of the organizational structure. As part of this, 200 of our colleagues have availed of voluntary severance, have already availed of the voluntary severance program and have left the bank, with an additional 100 colleagues due to leave under the program in the second half of the year and into the first quarter of next year. In May, we announced the introduction of new hybrid working arrangements for employees. As mentioned, this affects over 1,200 PTSB colleagues, representing about 50% of the workforce. They have applied for permanent flexible working arrangements for the bank, which we'll be putting in place following the COVID-19 pandemic. These new arrangements have been designed following extensive consultation with employees and union partners and are based on new work practices that have evolved successfully since the onset of the pandemic. We're delighted to offer our customers this flexibility in their working arrangements, which has been made possible by our significant ongoing investment in technology. It's clear that this flexibility is needed, and we are confident that it will result in an even better service for our customers and an enhanced work-life balance for our colleagues, who provide so much additional support for the bank and make such a difference to how we offer our service. Operational excellence, information security, and operational resilience remain core to the bank and are key priorities as we move forward. We will continue to invest in these areas to ensure that we're meeting not only the requirements of the wider market, but to exceed that, which particularly as we look at operational resilience and information security. A main focus for us through the pandemic has been that our critical IT systems are monitored, protected, and proactively managed to ensure that the mission-critical processes of the bank continue to operate without any issues, building operational resilience into everyday banking. I'm delighted to say that we had no issues during the pandemic around how we moved our staff offline and indeed supported our customers. If we just turn to the next slide. Being responsible and sustainable is at the core of what Permanent TSB is. We are around over 200 years as an organization. We intend to be around for a long time to come. This is at our core, it's part of our DNA. If we look at the things we're doing, we've conducted the bank's first materiality assessment to inform us, both the executive and the board, on the next stage of our sustainability strategy. As part of this, we signed the Business in the Community Ireland Low Carbon Pledge, which joined 61 other of Ireland's leading businesses in committing to set new climate action goals. Through this pledge, we've committed to setting science-based carbon emission reduction targets by 2024, and this includes measuring and reducing our entire carbon footprint across scope 1, 2, and 3, in line with the Paris Agreement. Our focus on improving culture, and in turn, the reputation of the bank, also continues to deliver positive outcomes, evident by the significant improvement in the bank's reputational score in Ireland's RepTrak 2021 survey. We remain steadfast in our commitment to further evolving the culture of the bank to ensure that we are delivering on our purpose of working hard every day to build trust with our customers. We continue to support valuable societal and citizenship projects through the partnership with Ó Cualann, which is an Approved Housing Body that develops fully integrated cooperative and affordable housing schemes for communities across Ireland. In total, we've contributed over half a million EUR in financial contributions to Irish community organizations in the first half of the year, and we've announced through a survey from our customers, and the demand and the input from our customers was amazing. We received over 120,000 votes from customers to select six new community fund partners across the country. That customer involvement has increased by a multiple, showing the interest and the support we're getting from our customers around our initiative to support local community fund partners. In June of this year, the bank was awarded the Guaranteed Irish symbol for its contribution to local communities across the country and its commitment to Irish provenance and local employment. That's something you will see us develop over the coming years. We're very proud of that award, and we will develop it across our local communities. Evolving our culture for the better of our customers and communities continues to be a key focus. Embedding an open, inclusive, risk-aware, and growth culture is one of the 5 strategic priorities for the bank. That was set out last year, and we'll continue to evolve this as part of our responsible and sustainable business strategy. We also play an active role in the Irish Banking Culture Board, which was established in 2018 by the five Irish retail banks, alongside other stakeholders. The aim of that is to rebuild confidence in the Irish banking sector. Through the recent survey that was carried out, we performed quite well and showed significant progress in our cultural development. There's more to do, but we're absolutely heading in the right direction by way of how we think about the culture, how we interact with customers, and how we as an organization operate and act internally with regard to that. The bank recognizes our environmental impact and is mindful that making a positive contribution to the economy through the consideration of environmental issues is fundamental to running our business in a responsible and sustainable way. In the second half of this year, you will see some initiatives from us around green product that we will launch. Also, we'll be undertaking, in the early part of next year, an ESG risk rating, where we're engaging a rating agency to produce an ESG risk rating for the bank. From that rating, then it will set a benchmark against other organizations which we will develop and work from in order to ensure that we are playing our part by way of being both responsible and being a sustainable business. With that, I will hand over now to Paul McCann, our interim CFO, who'll go through the financial performance of the bank, and I'll return at the end to talk about the Ulster Bank transaction. Thank you. Thanks, Eamonn. Good morning, everyone. I will now present the interim financial results for the 30th of June 2021. Just now turning to the P&L for the period in question. The loss before tax is EUR 9 million, and that is from an operating loss of EUR 1 million. Just to touch on some of the component parts of the P&L. The net interest income is EUR 152 million, which is down EUR 19 million from the same period last year, and I will touch on that in a little bit of detail in the next slide. Fees and commissions are EUR 15 million. That compares with EUR 16 million fees and commissions for the same period last year, which I would suggest is a good result given the fact that this year has effectively been in lockdown for the 6 months, whereas the previous period, it was for roughly half of that. Transactional income has held up, and we look forward, I think, to increased activity in the second half of this year. Net other income is zero, from a EUR 2 million negative figure in H1 2020, resulting in operating income of EUR 167 million versus EUR 185 million from the previous period. There's been an increase in operating expenses, which again, I will go into in a little bit of detail to explain that, resulting in our operating loss of EUR 1 million. There's an impairment charge of EUR 3 million, which is obviously a significant difference, a delta of EUR 72 million from the same period last year. There are exceptional items of EUR 5 million, which mainly relate to costs relating to the potential transaction, which Eamonn will talk about in a few moments. Just to talk about net lending income, and I think it's worthwhile just spending a little bit of time on the delta between the two periods. A significant reason for the delta is in Q4 of last year, we sold Glenbeigh II, which is a performing loan book. That sale gave us some really good capital generation, which is going to stand us in good stead for the future. Obviously, one of the side effects, obviously, of improving our capital is you lose the income. The part of the bridge is the EUR 8 million delta arising from that. We're in a competitive environment, and the bank is committed to being competitive in this environment, and we have had price reductions on the bank's fixed rate products during that period, and that accounts for another EUR 8 million of the delta. That's offset by continued active management of the cost of deposits, which offsets part of the reduction in the performing loan income. As you can see, the net interest income, it really is a momentary shot in time of where we're at. I think given the strong business performance and the potential for transactions in the future, I think you'll see that move over the coming periods. Our other interest income has gone from EUR 5 million in H1 2020 to zero in H1 2021. Really the main reason for that delta is treasury income is reduced by EUR 6 million due to the low interest rate environment and the cost of excess liquidity. Our net interest margin has gone from 1.77% to 1.50%. Our NIM, obviously a key reason for the delta there is the cost of holding excess liquidity has reduced our NIM percentage by 22 basis points in H1 2021, but the underlying NIM remains at 1.72%, as our lending asset yields remain good at 2.4%. There's been good management in terms of the cost of funds, that's been reduced by 8 basis points year-on-year, as we continue to manage the cost of our deposits. In terms of the performing residential loan book, our home loan mortgage book has grown 2% year-on-year. In terms of the home loan book by product, we see the continuing trend as tracker as a percentage of the book moves downwards, and as our fixed part of the book increases to 43% of the book in H1 2021. It's a really strong new business performance. New lending is 45% higher year-on-year. You can see 97% of the inflows goes to fixed interest products. Our new business exceeded outflows by 17%, with 35% of the outflows from tracker products, with an average yield of 1.4%. Our average new business yield is 2.71%, which is a reduction of 15 basis points. It reflects the competitive nature of what we're in terms of the marketplace. The bank has introduced competitive 3 and 5-year rates for high-value new business. We also launched a 4-year fixed rate only product with rates from 2.25%. The buy-to-let loan book is a reducing story. Obviously, we had a 1.6 reduction in the buy-to-let loan book from June 2020 to June 2021, and it also reflects the EUR 1.4 billion performing loan sale transaction, Glenbeigh II, in the last quarter of last year. I think it's good to note the average yield on the performing buy-to-let book at June 2021 was 1.67%, which is 25% basis points higher year-on-year, as the average yield on the performing loan sale at Glenbeigh II was only 1.08%. As Eamonn outlined, we're happy with the performance of our SME loan book. Our new lending is driving 16% growth year-on-year. With new lending of EUR 42 million, with a blended rate of 4.2%, and I think that's a positive. If you can see the trend in terms of our SME yield going from 3.91% up to 4.16%, showing that we can bring in products which have a greater yield. I think it's also interesting to note the makeup of the new SME lending, going in H1 2021 with more of a focus on term loans as well, which is good to grow and help grow our business customers. A good performance from an SME perspective. Again, it's a good dynamic marketplace with the opportunity to acquire new business customers.In terms of operating expenses, obviously we've been very happy with our cost discipline over the last number of years, and we continue to maintain cost management discipline as a key focus. The total costs are EUR 168 million versus EUR 162 for the same period last year, which is a 4% increase. In terms of operating expenses, it's EUR 147 million versus EUR 142 million for the same period last year. Our cost income ratio has gone up to 88%, largely that's a result of the income part of that ratio. As we discussed earlier, we have continued to look at efficiency and give optionality to our people, our closing staff number is reduced by 210 full-time equivalents, which is a 9% decrease from 2,465 to 2,255. 200 of them have gone in the first half, and another 100 are set to leave in the second half of next year. I think there's a good bridge on the right-hand side of the slide. We've indicated in previous briefings our intention to pay for the depreciation charge of our CapEx spend in terms of digital banking and our technology investment. We intended to pay for that depreciation out of savings on efficiency, and you can see there the depreciation charge is largely offset by the payroll savings and the non-payroll savings fulfilling on that promise. Equally, we are in a changing and dynamic marketplace. The bank market has gone from five to three banks. There is a significant opportunity for the bank to acquire customers in the future, and therefore, we've naturally and understandably accelerated our investment program in the first half of this year in anticipation of what's to come over the coming 12 and 24 months. In terms of our financial year 2021, our total costs are expected to be circa 3% higher as a result of what I've just described, and the bank continues to invest in technology and to support lending growth. All of our spend, if you like, is for the future, to future-proof the bank and to make the experience good for customers. Equally, we continue to have a huge cost discipline and an efficiency focus on the other parts of the bank. In terms of asset quality, it's a positive story for the first half of the year. Our NPL ratio is 7%, and our provision coverage is in line with FY 2020. Gross performing loans have increased by 1% in 2021 to EUR 13.8 billion. Non-performing loan book Stage 3 decreased by EUR 85 million or 8% to EUR 1 billion, and we're very happy given that a lot of that was driven by organic cures and lower defaults. As Eamonn described, the COVID-19 mortgage payment breaks have expired, and there are no EBA-compliant payment breaks as of the 30th of June 2021. Obviously, the bank maintains and continues to support customers during the pandemic on an individual basis. We remain committed to mid-single-digit NPL ratios, and 30% of NPLs are on a path to cure over the next 12-18 months. Management will be looking at the balance and will be assessing all alternative options while ensuring that we protect capital. In terms of our asset quality and coverage, it remains stable at the half year vis-à-vis at the end of last year. Our fully loaded leverage ratio remains strong at 7%. In terms of our balance sheet, we have strong funding and liquidity position. Our ratios are significantly better than our European peers. Our current account balances have increased by EUR 0.7 billion or 12% in H1 2021, reflecting the situation in the wider economy and with other banks as people have struggled in an inability to spend money. Our retail deposits have remained broadly in line while we've had active management of the total deposit base, which has resulted in a EUR 0.2 billion reduction or 12% reduction in corporate deposits. As I mentioned earlier, the sale of the performing loan book in Q4 of last year, together with the additional current account balances, does mean that we have an average volume of excess liquidity held with the CBI, which attracted a rate of -50 basis points, and that figure was circa EUR 2 billion. The bank's current MREL target is circa 23% of our RWAs, and that becomes binding on the 1st of January 2022, and the bank is currently compliant with this target. Our revised MREL target is expected to be communicated in Q4 of 2021. There's a good bridge on the right-hand side of the page discussing the change in the retail and corporate deposits. You can see current account results in a big part of the increase that's offset by actions taken by the bank in terms of the non-personal deposits. Our LCR is 318%, which again, obviously, is significantly elevated to our European peers. In terms of our capital, our CET1 ratio has increased from 15.1% to 15.3%. Our total capital transitional ratio has increased by 130 basis points year-to-date versus December 2020. We had a Tier 2 issuance in May of 2021 of EUR 250 million, which added 300 basis points. We've had an increased add-back for software assets of 30 basis points, and that's been partially offset by a derecognition of the 2015 AT1 note in February of this year for EUR 125 million, some prudential filter deductions, and also our year-to-date P&L, our small loss on our AT1 distribution in the six-month period. Again, that is shown in terms of a bridge on the right-hand side of the slide. Just to look at 2021, and in a very dynamic year for the bank and for the economy, our new mortgage lending is circa 30% increase on 2020 volumes. We see a mortgage market share of circa 18%, which is a 3% increase year-on-year. We see SME lending heading for over EUR 100 million during the financial year. We also see consumer term lending over EUR 100 million. We're guiding our NIM at circa 1.5%, 150 basis points, and our non-interest income over 9% of total income. In terms of efficiency, we are accelerating our investment in the digital infrastructure, but that is in order to support growth in our customers and our anticipated increase in customers over the period. Therefore, we are increasing our operating expenses circa 3% year-on-year. The bank is committed to making underlying cost savings to partly offset this increase, and there's a huge amount of effort and initiatives in relation to that. We intend to reduce our NPLs further while protecting capital. We're guiding a net impairment charge of less than 25 basis points. In terms of returns, as we've outlined, our lower net interest income is impacting on profitability in 2021, which is probably a base year in terms of a platform for the future, returning to profitability from the financial year 2022 onwards. Our leverage ratio remains strong at 7%. I'll now hand you back to Eamonn, who'll talk more about the medium-term for the bank. Thank you. Thanks, Paul. Thanks for that. Naturally, our medium-term outlook is we have to take into account the transaction and the memorandum of understanding that we entered into with NatWest and Ulster Bank, and we announced that last Friday, which was on the 23rd of July. This is around us acquiring certain elements of the Ulster Bank retail and SME business. It envisages us acquiring EUR 7.6 billion of retail and SME loans, 25 branches, which geographically complement our existing 76 branches that we have. Of that 76 branches, we see 2 overlaps, so we see 2 branches closing. It also involves us transferring 400 to 500 Ulster Bank staff, with a significant part of those staff being front-facing, customer-facing staff, but that is subject to the TUPE legislation, so it's part of the further negotiation. As part of the consideration for the transaction, NatWest will become a shareholder with up to 20% of the enlarged share capital of Permanent TSB, together with an additional cash consideration, which is payable by Permanent TSB as part of the transaction. We expect, and I'll talk about the medium-term outlook, but we expect it to be accretive from a return on tangible equity point of view, and we expect also to hold a pro forma management level of core equity Tier 1, fully loaded, of 14%-plus. We also envisage that the transaction that we will move to try and complete by the end of the year, subject to further legal negotiations, is self-financing. We believe it'll finance itself. We don't envisage that we'll require support of existing shareholders as part of this transaction. At this stage, it is subject to regulatory engagement, and as I mentioned, we don't envisage any new capital. Let me talk about why we're doing it. I think in some cases you'd argue it's reasonably obvious, but it's important that we put forward a strategic rationale for this transaction across what we have as the strategic priorities of the bank, which cover customer, digital, cultural aspects and staff, simplification of our business, and indeed then profitability. At a customer level, this accelerates the growth of our customer base. It has been accelerating in recent years anyway. We have over 1.1 million customers, and we've been growing customers in our current account base over recent years. This will really turbocharge it by way of additional customers, which will be attracted to our brand. It also increased our market share in complementary products that we already offer on the retail side. On the micro SME and business banking side, we will take on an asset finance business, and we'll also take on thousands of business customers who we will be able to support with regard to their own business desires and growth desires over the coming years. It does bring us into an area which we were planning to go into anyway, but it speeds up that customer acquisition. It speeds up that growth in that business area, and on the mortgage side, brings us to over 20% of the mortgage market. Lastly, I'd just mention, it's a performing book that we're buying, so it doesn't contain any non-performing loans in that respect. By way of our digital capability, you can see that we've increased our investment in digital over the last 18 months. You can see in our numbers for the first 6 months that we have an increase in investment. What this deal brings us is increased income to support further investment in IT infrastructure and further accelerating our digital enhancement and our digital offer. This is an important part. Within the asset finance business, there's also a digital asset finance solution for Permanent TSB, which we will acquire as part of the acquisition. When we think about the cultural fit and colleagues joining the bank, as I mentioned, Ulster Bank customer-facing staff are within the perimeter and have the opportunity to move to us. Obviously, that's subject to TUPE. Through that, we will be able to provide new growth opportunities for both staff existing in Permanent TSB, when we think about our development of not only the branch network, but also as we think about our development of our business banking activity. There'll be new opportunities for both our own staff and indeed the new staff who will join us, and we welcome those staff as and when they arrive, and we close this transaction. On the simplification front, and as we think about transforming the business, this in itself allows us the opportunity to continue to rethink business processes, to champion simplification, to create additional cost synergy opportunities by eliminating what are at times, sometimes complex processes that we have within the organization. The productivity enhancement of putting two networks together with putting these business aspects together cannot be underestimated as well. For instance, as we open new current accounts, we will have the ability to offer an overdraft, we'll have the ability to offer a credit card, we'll have the ability to offer a term loan to those customers, as well as accessing new mortgage business through those customer links as well. Lastly, and probably the most obvious, the increased scale will actually create a more robust balance sheet with increased income, a stable funding profile, and a strong improving capital base. This acquisition is clearly within the area that we're comfortable with. It clearly enhances what we do already. It clearly shows us as being a competitor, particularly in the business banking area, to the two larger banks who dominate this area. We believe providing customer choice is really, really important here. We can gain new customers, new business. By having increased scale, increased profitability, will allow us to continue to invest to ensure that we're meeting the demands of customers. These are all the strategic reasons why we're doing it. The fact that we can do it on a self-financing basis, also attract NatWest to the organization as a shareholder, as a partner, as someone who will have an interest in how we're progressing and developing over the future years. We see that as a real vote of confidence in what we've been doing over recent years, and indeed what we plan to do as part of that. Let me just talk about how this turns out by way of what does it mean for customers, what does it mean by transformation. I talked about our purpose and ambition. This action fits right into the center of our ambition around being the best personal and small business bank. It fits right in the center of what our purpose is around building trust for customers. Through that building of trust, we can then have increased business and an increased 2-way conversation and access to those customers. On the right-hand side, on the top of the slide, you'll see about us having the nationwide physical footprint. We will now be operating in locations we haven't operated before. We'll be visible on the high street, and there's a lot of importance to that from not only a brand point of view, but really that connectivity to customers in those areas. That is important for us. Digitally led around what our plans are, and we'll see through 2022, the delivery we will make by way of changes to our digital capability, improving the interaction we have with customers through our new app and through our new digital front end, improving the way customers can apply for mortgages and do it in a much easier and less paper-based way, and also improving how SME customers can apply online for loans and indeed link with us and link with our branches around their needs. On the top right, it's about having the right products, the right price, and with strong and growing market shares in our target segments. Indeed, that's what we're showing by way of the results today. We are growing in the target segments that we operate in. You'll see we have activities in the branch today that are somewhat routine or mundane. We believe that if we move those more online, that customers can self-service. It will allow those branches to act more as sales centers, support centers, and advice centers as we move forward. We as a bank, given our history and our location in those communities, are perfectly positioned to be a trusted advisor and a trusted partner of customers across the country. Lastly, I'd have to say that it's more of a result of the pandemic in this area, but we can see the vibrancy of local communities increasing through the pandemic. We can see that people, citizens across Ireland, are acquiring properties, acquiring homes outside urban locations, and towns are growing in that respect, and the vibrancy of towns are growing. We want to be part of that vibrancy. We want to be part of that growth through our footprint. If I go down to the bottom of the page, if we think of customers, I talked about partnerships and innovation. Given our size and scale, we can't deliver everything, so we're going to be a bank that develops an ecosystem of partners that will assist us in areas that, for instance, customers can't see, such as the partnership with Castlight, such as CreditLogic to some extent, although customers will see that by way of the usage of the online mortgage application, through Bibby, through Worldpay, through SBCI, and as I mentioned, others will come through that partnership and that ecosystem of suppliers and partners that will help our customers and help us support customers. I believe we'll be able to offer a distinctive offer to business customers, given our heritage, given the way in which we operate well with customers, and the way that there's a significant and strong connectivity between our staff and the customers that we serve. That can be seen through our NPS scores, the way they're increasing, and the way they have been moving in recent years as well. By way of transformation, I mentioned about simplifying our business, improving that customer experience, increasing efficiencies, and reducing costs. That cost reduction is about ensuring that we can invest to simplify, to enhance, to improve, to match the needs and requirements for customers. That's what it's all about. That two-way flow of creating efficiency to continue to invest. I would suggest in that respect, while it might sound a cliche, successfully combining bricks and clicks, how we combine the branch network that we have across the country with the digital experience that the digital community, which is growing, requires as well. If we just move to the medium-term outlook, and this is the medium-term outlook, which includes the Ulster Bank acquisition. In that respect, I just want to say that Permanent TSB over the medium-term, and the medium-term we're talking about here is out to 2025 and 2026, by way of how we think about our forecasts, et cetera. Permanent TSB is the engine for growth. It will continue to grow. We can see that in our numbers, the Ulster Bank business will complement that, and indeed, as I mentioned in the business banking area, will turbocharge it by way of our product offering and the customer links that we have. We believe there's plenty of opportunity for us, particularly in that business banking area, where we're starting at a relatively low base. Every EUR we lend, every customer you acquire, every piece of business we do, will add materially to that growth for us. It's not as if we're losing business in that area to try and win it back. We're actually out there trying to attract those customers to us and support them and trying to provide them with something different. We're talking about a material growth in our loan book, which includes the Ulster Bank acquisition. We're talking about a net interest margin of 190 basis points plus. That doesn't include any interest rate increase that could come over that period of time. It's effectively flat interest rates, but it does assume that the impact of excess liquidity and negative rates dissipates as we utilize that funding to fund the Ulster Bank acquisition. It does involve increasing our fee income. Why? Because we believe we'll have more customers, we believe we'll have more product offering, we believe we'll generate more fees. Therefore, fee income as a percentage of total income will increase from the current level Paul presented. It was about 9%. We've ambitions to bring that into the double-digit area over a period of the next number of years. Our cost-income ratio, which is somewhat accentuated in the first 6 months of this year. Why? Paul already mentioned, we've got the impact of excess liquidity predominantly on our cost base, and we're investing for the future. We are pre-spending today in order to be ready to compete in a market that has changed significantly, and we are now a real alternative for customers to come and talk to and deal with. In that respect, we estimate and forecast our cost-income ratio will move below 60%. As mentioned already, we're projecting being a larger bank, being a larger player in the market, that we'll maintain our core equity Tier 1 ratio at a 14%-plus level. The combination of these, we believe, will bring us to a return on equity of around 9% through higher income, through management of our cost base, through the attraction of more customers, through the attraction of more fee income, through ensuring that we manage our risk profile in a proper way, naturally by the continuing reduction of our NPLs, both by way of improving performance, which we've seen this year, where it's reduced by EUR 85 million, but also the fact that 30%, we believe, will come back to performing. Also the wider economy by way of how it'll perform. Within that, we believe we're very well provisioned, and that's proven over many years. We've been well covered with regard to our provision charge and having a conservative approach to how we provision. All of those together, we believe over the next couple of years with the Ulster Bank retail and SME business that's outlined as part of our bank, as I say, we believe will drive us towards around a 9% return on equity. Given where we've come from as an organization, I think that in itself is absolutely transformational, and it's something that the management team, wider colleagues and the new colleagues that will join us from Ulster Bank, and obviously the new customers that will join us, whether they're from Ulster Bank or elsewhere, I think that's an exciting prospect for us, and it's really something for us to fight for and grow and develop. Thank you very much. We're happy now to take some questions on the presentation. The first question is from the line of Diarmaid Sheridan from Davy. Diarmaid, you are unmuted. Good morning. Paul, I hope you're both well, and thank you for taking my question. On the non-performing loan front, very strong organic performance in the first half of the year. I wonder if you could just provide details on the gross organic reduction, is it representative run rate that we should think about going forward? Secondly, I appreciate you referred to this, how should we think about inorganic going forward? Should we look at the kind of the bad element that isn't in kind of trending cure and think about that as being something that you will look to dispose of over time? Finally, on non-performing loans, in the context of your lending 5 basis points impairment guide, I just wonder what that's doing in terms of reassessment of the stock of provision that was taken in 2020. Just secondly, on operating costs and investment spend, if I may, should we think about the higher spend simply as an acceleration of the EUR 50 million investment program that you announced recently? Is there understandable investment just given the very significant growth that is ahead? Thank you. Thanks for your question. I think in terms of the NPL, for years, I think cures have exceeded defaults, during the period. We believe the run rate will continue. In terms of, I think where you were heading there was the inorganic cures or potential loan sales. It's too early to say at this moment in time in relation to that. Management will assess that as the year goes on, and look at market conditions as the year goes on. We'll give further indications in relation to that at a later date. Then again, in terms of the impairment guidance, I think, again, Diarmaid, where you're heading for was any potential for releases in the future. I think we're still only 15 months since the start of the pandemic. We've got income supports, which is a live issue at the moment. We have the opening up of the economy. I think, there's a lot of variables still in play. We as a bank have a prudent approach to impairment and a conservative approach to impairment. That does not mean, in the future, if the releases are appropriate, of course, we would look at them. At this moment in time, we're comfortable with our prudent position in relation to that. In terms of costs, I think it's really worth emphasizing, this moment is just the acceleration of the spend that we had anticipated. It is about making sure that we're ready for the coming 24 months. It's about making sure that we have the capability to cater for new customers and to cater for their needs. I really would like to emphasize that, and I said this before, there's nothing casual about our approach to cost discipline here, and that is very much still to the fore in the first half of the 6 months and will continue to be our commitment to cost discipline and efficiency over the coming period. Thanks for your question. Great. Thank you. Thank you so much for your question. The next question is from the line of Eamonn Hughes from Goodbody. Eamonn, you are unmuted. Now go ahead. Okay. Thank you. Hi, Eamonn. Hi, Paul. Am I allowed to ask some questions, maybe more clarification around Ulster Bank? I suppose firstly, the EUR 7.6 billion of assets that you're taking on board, I suppose that's kind of position now. Should we expect that no new formation in terms of new business effectively from that franchise potentially over the short to medium term, that number may decline by the time they're onboarded? As to how we think about the shape of the business kind of further out in relation to medium-term plans. Just in terms of funding those assets, you've got about EUR four and a quarter billion of excess deposits, presumably, you'll capture some share of the current accounts. That will be presumably as that business which will close some of the gap, but would there be any sort of sense around issuance plans to fully close it? Finally, just for clarification around the revenue target. Is that a return on tangible equity or is it a return on CET1? There's just kind of a slight difference in terms of the base. If you can provide a bit of color on that for me, and then I might have a follow-up just in relation to business income. Okay, Eamonn. Good morning. The EUR 1.6 billion is the number at the end of March, that Ulster Bank had quoted with regard to this perimeter. I can't comment on how Ulster Bank are operating with regard to new origination, because I don't have visibility in that. It is fair to say that amount may narrow or reduce over the period until it gets closed, as some repayments outstrip new origination. To what level, we don't know. It's a substantial book. It's important that we provide not kind of a number that could be in the future, that we provided something that is a reference point. As I mentioned, that's the end of March. I think even within that number, some of the business lines increased, not reduced. That was just a minor point. Overall, you could expect some contraction on that number. On deposits, naturally, we've two significant actions happening in the market by way of KBC's decision and also Ulster Bank's decision. Both banks have deposits. If we just focus on the Ulster Bank deposit base, we would expect to attract a significant level of those deposits in time, whether it's non-current account deposits or the current account deposits. We would see that as part of our funding situation. We also have a significant access to funding ourselves, structures, some of which we've renewed in recent times, by way of funding access. There's a number of different levers we can pull by way of funding the transaction as and when it closes. Deposits will form a core part, a significant part of that funding for that transaction. By way of return on tangible assets, it's a return on the CET1 level at 14%. It's clear by way of this transaction, well, if it's not clear, I'll make it clear now. We're sitting on excess capital today. We have been growing our capital position over recent years. As mentioned, it's up 20 basis points in the last six months. We increased it last year. I think we were the only bank to increase our core CET1 last year, by undertaking capital actions in that respect. We have a history of managing capital quite well. We will be looking to manage our capital position around that 14%, 14%+ position as part of this transaction. Indeed, we see the utilization of capital to our book as well. We're talking about material loan book, not just the Ulster Bank story, but growing across the core products we have on the lending side. That will require us to maintain our capital correctly. Thank you, Eamonn. That's great, Eamonn. Maybe just two quick follow-ups, one on NII and one on business income. Just in relation to the NII, Paul, you helpfully gave bridge just in relation to how you've driven from positive impact for yourselves, obviously. Any sort of context and potential implications kind of on a full-year basis? Is there as much to do again year on year, or is it kind of? Secondly on business income, I think Paul actually, again, sorry, you might have referred to look as the economy reopens into H2. When do you think we could be getting back to sort of the prior run rates on business? How quickly could that be the case? Would it be still a 2022 outcome or already? Yeah, I think we mentioned the pipeline is very good in terms of the biggest business income side. I think we saw in the first half of the year from the business income side is, it's generating business customers. It is the type of interaction that is done face-to-face or better done face-to-face, and things do slow in a pandemic. It's not a quick transaction. Businesses like to know who their bankers are, and things definitely slowed in terms of the inability to press the flesh and to meet and to connect, and to close the business lending. We would be optimistic. I think your question is, do we see it improving in the second half? I think it will. How much, Eamonn, is another story. We're very happy with where we're at in terms of our SME book, where we're going, the pipeline. It'll improve in the second half of the year, and it will improve again into 2022. It's just a function, I think, of where we're at vis-à-vis the pandemic. In terms of the NII, I think what we've said in terms of that is it's really just a snapshot at a point in time of where we're at. You can see by all of the discussion this morning the potential for improving it, both as organic, both in terms of what we're doing as a bank aside from anything else, both in terms of changes in the marketplace, and then the significant opportunity vis-à-vis a possible transaction. So all of those will have a positive impact in terms of the NII, but I suppose it'll take time, and so when that comes through will take time, but I would suggest this is the year where it'll be at its lowest, and there would be increases then subsequently. Thank you. Thanks, Eamonn. Thank you for your question. As a reminder, if you'd like to ask a question on today's call, it is star one on your telephone keypad. Okay, we do have a follow-up question coming from the line of Diarmaid from Davy. Diarmaid, you are unmuted. I mean, now go ahead. Just a question maybe on the mortgage market, and obviously, it's still early days in terms of the two banks that are announcing, they've announced their exit. I just wonder, Eamonn Crowley, where do you think your appetite will fall when all of this plays out, and what type of market share should we think about for yourself, looking forward into the future in the mortgage market? Thank you. Thank you, Diarmuid, for the question. Obviously, mortgages are a core part of our product offering. They're a core part of how we operate. They will continue to be, even through the medium term, as we grow our business lending and grow our consumer lending and term lending. Mortgages will become a core part of what we are. It's a very important market to us. We've been growing our market share materially, actually, over the last five years. I think if you went back five years ago, we were at about a 9% market share. I appreciate it was a smaller market, but we've been consistently growing that share over the medium term. We protect it like a baby, if you want to think of it that way. We compete with other banks in that respect, and we have ambitions to grow. How we grow will really depend on how the market evolves. We can see the non-bank lenders have been growing their share of the market, but we're coming from a different position, and we're coming from a position of growth. In that respect, I think it's reasonable to think of our bank over the coming few years to have a 20%+ level of market share in mortgages. That's in a mortgage market that we believe will grow in itself, and there are rumors of a government announcement around housing supports and a housing initiative to increase the level of supply. We are leaders in the first-time buyer market. That's a traditional space for us that we've operated in for over many years and decades, and therefore, we will continue, and we expect to continue in that area. I would suggest 20%+ is reasonable, and then the question is, as you look at us, by the end of the year or the next year, as we get into true 2022, to see if that trajectory is starting to pick up some pace. That's a reasonable level for us at this moment, Diarmaid. That's great. Thank you. Thank you very much. Thank you for your question. We do have another follow-up question coming from the line of Eamonn Hughes from Goodbody. Eamonn, you're unmuted, and now go ahead. Sorry to come back again, actually. No, okay. I was going to pick up actually a little bit on Diarmuid's question there, just maybe further on the mortgage market. Your experience to date with the non-cashback product, I suppose, has it been encouraging, and does it make you think maybe a little bit more differently about your wider offering? I suppose maybe also thinking about you said there, Eamonn, you're very active, clearly, in the first-time buyer space, which maybe prefers cashback. How should we think about maybe the mix of the business between cash and non-cashback? Maybe just a quick second question. You mentioned an ESG rating agency. You've engaged somebody. Are you able to say who it is, or that's just a work in progress, we'll just wait to see whenever it gets published? Yes, to answer your second question first, no, we'll wait and see, Eamonn. Okay. Not that it's an enormous secret or anything of that nature, we're talking about undertaking this work over the next six months and indeed issuing something in the first quarter of next year. There's some time yet to discuss that and to show our credentials in this area. There are already a few market leaders. Yeah With regard to your earlier question, yes. We can see actually an increase in the mover market as well. There's an increase in movers, and also there's an increase in switchers as well in the market. Some of this is driven by COVID and the fact that you could see, and this impact occurs across many different sectors, not just the banking sector, that customers have more time and maybe a deeper thought process around how they think about mortgage pricing and how they think about their interaction with mortgages or with their banks. That creates an opportunity for us because we are attracting switchers. We're also attracting movers in that respect. I think that while we talk about the first-time buyer market being restricted by supply, it's fair to say that the mover market or the second-time buyer market is also restricted by turnover levels, which are very low due to not only the pandemic, but even pre-pandemic, the Irish market for movers was actually quite low. Could we see releases of that over a couple of years? I'm not sure. If it does, it creates more turnover, more activity for us, which we can benefit from. We want to compete in those areas. We want to be a real force. We review our pricing on an ongoing basis to reflect that. The product we brought to the market, the 4-year product, which is the non-cashback product, brought us into an area of the market where some customers or a portion of the market do not want cashback. They want a different price, a cleaner price, let's call it. In that respect, we're seeing a lot of interest in that. We're seeing a strong pipeline in that product, and it does encourage us then to consider how we develop our wider suite of products as we move forward and develop a wider suite of non-cashback products, which is something we will continue to consider. I don't believe that we will be removing that product. If anything, we'll be widening it and developing it over time. Do you think, Eamonn, maybe picking up on your earlier comments there about customers having more time to think around through the pandemic and people working from I presume, we've also seen a structural increase in the broker channel partially because of that. People can go to them, they can't go out and visit the bank, and they're more interested in maybe the broker doing the work on their behalf. I would expect, or do you expect that to remain structural, actually? You guys have been reasonably dependent on the broker channel as well, historically. Well, we typically don't go into the detail, but our branch and brokers has increased as well, and it's increased consistently in the last three years. We're seeing increased volumes in branches in some non-urban locations by 30%-40% by way of application volume. Some of the branches are falling away. They're getting their fair share. There's no doubt that the overall share of broker market in the mortgage area has increased to between 35%-40%. Brokers have always been strong partners of PTSB, and we've been strong partners with them by way of the delivery of their product, and our share of that market has increased as well. I don't see it as a dependency. I just see it as being a core part of what we offer. Indeed, it's fair to say we can see other players trying to get into that area because they recognize that it's a societal change in dealing with a broker. If I just go back to my core point, our share of mortgages through the mortgage channel has increased for the last 3 years in a row, and we generally want to progress and promote that increase in market share. Through the partnership with CreditLogic, we'll be providing that ease of application through the branch for customers as well. Sorry, lastly, I'll just say that we've set up a direct channel as well for mortgage customers, and we've seen growth in that channel from a standing start of 0 over the recent months. That's quite encouraging. This is about providing customer choice through lots of different channels, progressing with the strong connections we have with brokers in the wider community, and supporting them in what they do and ensuring that our branches are also increasing their market share, which they are. Okay. Thanks very much. Thanks, Eamonn. Thank you, Eamonn, for your question. For final reminder, if you would like to ask a question, it is star 1 on your telephone keypad. Okay, there are no further questions coming through in the queue. At this time, I would like to turn it over to your host to conclude today's call. Thanks very much, everybody. Take care. Thank you. Thank you.