Welcome to the Barclays Full Year 2021 Results Sixth Interim Conference Call. I will now hand you over to Tushar Morzaria, Group Finance Director.
Good afternoon, everyone, and welcome to the Sixth Interim Investor Call for our Full Year 2021 Results. I'm joined today by Dan Fairclough, our Interim Group Treasurer. Let me start with slide 3 and make some introductory comments on our full year performance and outlook before handing over to Dan. Through the year, the strength of the CIB has continued to offset the effects of the pandemic on our consumer businesses, where we are now seeing initial signs of recovery. Overall income was up 1% year-on-year, despite an 8% weakening in the average year-end dollar exchange rate. Costs increased by GBP 0.6 billion to GBP 14.4 billion as a result of an increase of GBP 0.3 billion in structural cost actions and GBP 0.2 billion in performance costs.
Our base costs, excluding these items, were flat at GBP 12 billion in line with our guidance. Following an impairment charge of GBP 4.8 billion in 2020, we had a net release of GBP 0.7 billion for the year while maintaining strong coverage ratios in line with or better than pre-pandemic levels. This resulted in a PBT of GBP 8.4 billion, a significant increase on the 2020 profit of GBP 3.1 billion and the EPS of 37.5 pence. Overall, we generated a cash-free ROE of 13.4% for the year. The capital generation has put us in a position to pay a total dividend of six pence for the year and launch a further share buyback of up to GBP 1 billion, following on from the GBP 500 million buyback executed in the H2 of 2021.
We ended the year at 15.1% CET1 ratio or 14.8% adjusted for the proposed buyback, above our target range of 13%-14%. Dan will talk about our capital position in more detail shortly. We have achieved a 13.4% ROE in 2021. Going forward, we're focused on delivering our target of double-digit ROE on a sustainable basis. We are seeing some recovery in lead indicators for consumer income and the CIB franchise continues to be well-positioned. I believe our diversified income streams position us well to benefit from economic recovery and rising interest rates. Despite the impairment release, we have maintained strong coverage ratios, and we expect the impairment charge run rate to be below pre-pandemic levels in the coming quarters.
All our base costs in 2020 are expected to be modestly higher than in 2021 as a result of inflationary pressure. Costs remain a critical focus, and we will be disciplining our performance costs and the extent of further structural cost actions. Overall, we are well positioned to deliver sustainable double-digit returns on tangible equity and making appropriate capital returns to shareholders while maintaining a strong capital ratio. With that, I'll hand over to Dan for the balance sheet highlights.
Thanks, Tushar. We ended the year with a robust position across all aspects of our balance sheet, as evidenced on the slide. Our CET1 ratio was 15.1%. The statutory UK leverage ratio ended at 5.3%, and MREL was 34.4% of RWAs, ahead of our end-state requirements that came into effect at the beginning of the year. Liquidity continues to be strong with an LCR ratio of 168%. I'll start with some comments on capital on slide seven. Our earnings in 2021 underscores the strong organic capital generation of the group that is slightly more elevated than a typical year. RWAs grew by GBP 8 billion over the year, driven by market risk model updates in Q4 and business growth in the CIB.
We absorbed previously flagged headwinds, such as the reduction in IFRS9 transitional relief and pension contributions. Our strong capital position enabled us to distribute 72 basis points of capital to shareholders over the year in a combination of dividends and buybacks, including the buyback announced today of up to GBP 1 billion or the equivalent of 30 basis points. On slide eight, we thought it would be helpful to show the effects on the CET1 ratio of the share buyback and the regulatory changes, which took effect from January 1 this year. The effect of regulatory changes is circa 80 basis points, similar to guidance we provided in Q3 results last year. The combined impact of both of these items would take the CET1 ratio to circa 14%, the top end of our target range of 13%-14%.
We do not expect any further significant regulatory headwinds for the next couple of years. Looking further out, we provided an estimate of the initial quantitative impact from Basel 3.1, which is a 5%-10% increase in group RWAs from our end 2021 position. As you'll be aware, there is material uncertainty in the quantum and timing of the Basel 3.1 impact, particularly in the U.K., and it will be some time before the impacts can be assessed with accuracy. Alongside the rest of the U.K. sector, we are awaiting the consultation paper from the PRA on rule finalization and timing of implementation, which is now expected in the H2 of this year.
We note that for the rest of Europe, implementation was further delayed to 2025, and we await to see if this will be followed in the U.K. On slide nine, we've attempted to lay out at a high level our philosophy towards capital management and how we intend to allocate capital going forward. As 2021 has proven, the group is able to generate meaningful organic capital from earnings. Achieving our greater than 10% return on tangible equity consistently would translate to 150 basis points of annual capital ratio accretion. This capital can then be used in three ways. Firstly, and most importantly, to maintain a strong capital position, which is the foundation of our 13%-14% CET1 ratio target. Secondly, to selectively invest for growth in demand-led and capital light organic and inorganic opportunities.
Finally, to distribute an appropriate proportion to shareholders. Holding an appropriate headroom above our MDA hurdle is a critical part of our capital management framework. Looking ahead, we are comfortable that the 13%-14% target range accommodates for the regulatory measures that we see on the horizon. At the end of the year, our buffer to the MDA hurdle of 11.1% was 400 basis points or circa GBP 13 billion of capital. With the Bank of England reintroducing the UK countercyclical buffer, or CCYB, from December 2022, the MDA hurdle will increase over time, as illustrated on the slide. The UK CCYB translates to circa 50% for the group given our geographical exposure.
Therefore, the 1% CCYB application in December 2022 becomes a circa 50 basis points capital buffer, which would increase our MDA hurdle to 11.6%. If the CCYB was to be increased further to 2% in Q2 2023, as the Bank of England has indicated it may, then this would result in a circa 100 basis points total additional buffer for us, bringing the MDA hurdle to 12.1%. However, as we experienced in both 2016 and 2020, the PRA has moved swiftly to remove the CCYB in the event of a real or potential macroeconomic stress. We do view this element of our capital requirement as a stress buffer.
The PRA have also said that they intend to review their Pillar 2A methodologies in more detail by 2024, in light of changes in buffers and improvements in the way RWAs are measured following the finalization of Basel 3.1. As such, we may well see some offset in our Pillar 2A requirements. This would be consistent with prior official sector comments on the adequate levels of capital in the U.K. banking system. All in all, we believe that the 13%-14% target is calibrated to provide an appropriate headroom to the MDA hurdle, reflecting this evolving regulatory environment. Turning to the next slide, which illustrates the structure of our total capital stack. We continue to run a robust AT1 level and maintain a conservative headroom over the regulatory minimum. Our thoughts in this area are unchanged.
The headroom primarily serves to manage any RWA and FX fluctuations. In addition, as we've noted before, running at this AT1 level also supports leverage, and we continue to see attractive opportunities in parts of our markets business, where returns on leverage balance sheet are in excess of the cost of AT1. Finally, I would note that we do have a regular core profile of AT1. For example, the recently announced call of our $1.5 billion, 7.875% Tier 1 bond two weeks ago. So we have the ability to manage this ratio dynamically if we choose. Of course, this is subject to market conditions and regulatory permission at the relevant time. In Tier 2 capital, we aim to hold appropriate levels of Tier 2 to meet our total capital requirement.
On legacy capital, we remain comfortable with our position, giving it a very small part of our capital stack and is not counted within our MREL position. We have around GBP 1.7 billion worth of legacy instruments which could exist beyond 2022. The vast majority of these instruments continue to qualify as own funds until 2025 or beyond. Our approach remains unchanged, and the own funds eligibility aspect that I just mentioned is a component that informs our decision making on resolvability when assessing each instrument. This reflects the understanding that qualifying own fund securities remain in scope for regulatory stabilization powers. We continue to assess our position and will consider each security on a case-by-case basis. In addition, we have no legacy capital securities issued from our group resolution entities, Barclays PLC.
This is something we've mentioned previously and is important to us as legacy capital will not impact the single point of entry resolution model. We continue to be engaged with our regulators on legacy capital, which forms a part of our overall Resolvability Assessment Framework, a summary of which is due for publication later this year alongside our peers. 2021 was a milestone year for MREL. As the transitional requirements have come to an end, we are pleased to have been compliant with our end state MREL requirements for some time, the culmination of a near decade-long journey from when we started in 2013 with our first CoCo issuance. As you can see on slide 12, we have a proven MREL position and are in excess of regulatory minimums.
For 2022, our MREL issuance requirements are expected to be around GBP 9 billion, lower than the circa GBP 12 billion of total redemptions of holding company and operating company term securities. Within this GBP 9 billion issuance plan, we expect to be active across all MREL debt classes as usual, in senior, in Tier 2, and AT1 formats. We are pleased to have already kick-started our plan with a EUR 1.25 billion senior transaction at the start of January, leaving us with around GBP 8 billion of MREL issuance still to do for this year.
One of the three strategic priorities for the group that Ben laid out this morning was to support the transition to a low carbon economy. This transition will involve a fundamental reorganization of the global economy, and Treasury is playing a critical role in supporting Barclays initiatives in this space. We are facilitating investment, including our own capital, into new green technologies and infrastructure projects that will build up low carbon capacity and capability. Within Treasury, our Sustainable Impact Capital program has a mandate to invest up to GBP 175 million of equity capital in sustainably focused startups by 2025, helping to accelerate our clients' transition towards a low carbon economy. The program is seeking out and supporting clear, scalable propositions that deliver both environmental benefits and economic returns.
GBP 54 million of our target has already been deployed with GBP 30 million invested in the last year. In terms of future fundraising, we have ambitions to continue to expand our environmental and social issuance. These include the continued building out of our green liability programs and issuance on existing programs such as our Green Structured Notes program. We continue to develop a product offering such as our Green Commercial Paper program launched this month. We are also active as an investor with GBP 3.4 billion of green bond assets held in our liquidity portfolio. On that note, let me now turn to slide 14 to talk about our liquidity position in more detail.
The liquidity pool of GBP 291 billion and our Pillar 1 LCR ratio of 168% represent a GBP 160 billion surplus above the minimum regulatory requirements. You'll see that the LCR position has been stable throughout the year, maintaining a prudent balance between holding a healthy excess and deploying the liquidity to our businesses, enabling them to capitalize on the prevailing market opportunities. Maintaining this prudent liquidity position comes at low cost to the group in the current environment. Let me now turn briefly to our funding profile on the next slide. We continue to see the group loan to deposit ratio trends lower. In 2019 it stood at 82%, and at year-end it was 70%, with deposits across the group of GBP 519 billion, up 25% over the past two years.
The deposit growth has been observed across the market, largely due to global monetary policy actions. Looking forward, we believe that deposit trends will depend largely on the wider macroeconomic environment and in the UK, determined by how rapidly the Bank of England unwinds QE. The deposit book currently remains stable, but as you would expect, we continue to monitor it closely. In our structured hedge program, we identified further deposit balances suitable for hedging and grew the program by GBP 40 billion last year. However, retaining a significant buffer of unhedged balances that we keep under review. Before I conclude, let me spend a moment on credit ratings. Improving our credit ratings profile continues to be a strategic priority for the group. We ended the year with positive outlooks for Barclays PLC with S&P and Moody's. To S&P, we went.
We underwent a double revision in the space of four months from negative to stable in February last year, followed by stable to positive in June. With Moody's, the outlook was revised from stable to positive last November. These were actions in recognition of strengths specific to our credit fundamentals, most notably in how we've demonstrated an improved and sustainable profitability level throughout the pandemic. We will continue to seek active dialogue with the agencies to move forward with the positive momentum that we have.
To wrap up, we continue to manage the group with a strong balance sheet, a prudently managed CET1 ratio and robust liquidity metrics. Our diversified business model continues to deliver meaningful capital generation, giving us comfort in our 13%-14% CET1 ratio target. We continue to approach our capital market issuance in a responsible and measured way. We look forward to engaging with all of you and the rest of our fixed income stakeholders over the coming months. With that, I'll hand back to Tushar.
Thank you, Dan. We'd now like to open up the call to questions, and I hope you have found this call helpful. Operator, please go ahead.
If you wish to ask for question, please press star followed by one on your telephone keypad. If you change your mind and wish to remove your question, please press star followed by two. If you want to ask the questions, please ensure that your phone is unmuted locally. To confirm press star followed by one to ask the question. Our first telephone question today from Paul Turner from Société Générale. Your line is now open. Please go ahead.
Oh, hi team. Hi Dan Stace-Jones, hi Tushar Morzaria. Tushar Morzaria, congratulations and all the best for the future. I guess I got three questions. The first is on the plans for funding. So you're saying GBP 9 billion. Would it be fair to assume across the spectrum this is gonna be something like GBP 5 billion whole-co senior, GBP 2 billion Tier 2, GBP 2 billion AT1? Just a little bit of guide around the quantum at each level would be very helpful. The second question is just looking at your asset quality figures. I know the outlook gives all pretty benign, but the stage 2 at what I think is around, still around 10% or so is still historically quite high. Where should that end up being or are we kind of at a naturally sort of higher?
Thanks to stage two. The third question is around, you know, the thorny question around sanctions, you know, in against, you know, Russian institutions and potentially an escalation of the size of the banks over there. How should we think about the impact on, you know, someone like Barclays with these sanctions? What does this do for you, and where does this hurt? In particular, I guess, what is the nervousness around cutting off SWIFT, and why is that the place where no one wants the government switching off SWIFT off the Russians, and what would that impact be? Thank you.
Thanks, Paul, and I appreciate your comments at the beginning of your question. I'm gonna ask Dan to cover the funding plan and sanctions and the impact it may have on us. Why don't I quickly cover your question on asset quality, and sort of impairment staging? I'm not sure I'll be able to give you a sort of a straightforward answer on what you'd expect stage two balances to be. The only thing I would say is that, it's a little bit complicated where we are at the moment, because the way our models were written under IFRS nine, you know, we didn't really have the pandemic in mind in terms of modeling sort of credit behavior, particularly on the consumer side.
Therefore, we've had to use a series of management overlays to really adapt the models to take into account some of the unusual features of the pandemic. It's really the speed of building into a recession and then recovering from it. Then, you know, once in a while, you get sort of a temporary lockdown, which the models find really difficult to calibrate to. Having said that, when you take a step back and I look at sort of general asset quality and the credit environment, I'd make a couple of points. One is that the environment itself on all our leading indicators looks incredibly benign at the moment.
Some delinquencies, we look at spending patterns, we look at customer indebtedness with affordability levels, all the sort of leading indicators you'd expect us to be monitoring, both from the consumer side, but even on the wholesale side, look as benign as we've seen. Our watch list when we look on the corporate side is very low at the moment, and again, probably towards the lower end of as I've seen it. Now, we've of course got a few political events. We'll come onto that in a bit. We've got, you know, the issues around potentially the cost of living, the rate cycle and, you know, whether it's energy bills or other forms of inflation that are coming through.
I think we'll pay a lot of attention just to monitoring very closely these affordability levels and the transmission's effects on this. At the moment, it does feel there's quite a decent level of resiliency, at least as we see in our assets, to any shocks. The final thing I'd say, Paul, on the asset quality is, we do look at coverage ratios in a lot of detail. One of the areas that we wanna be conservative in the speed at which we were building our provisions and also, you know, cautious in the pace at which we released them. One measure of that would be the coverage ratios we have. You look at our unsecured books on the consumer side, they're still quite a bit above where they were pre-pandemic levels.
Even on stage two balances on the consumer side, I think we're running in the cost between something around 30%, and most of these balances aren't even past due. So some of that is a feature of deliberate, sort of, caution on our part, in terms of, you know, Omicron was still an ongoing item when we were closing the books at the year end. It was appropriate for us to be cautious. You get a sense that we feel very well provided at the moment, against a relatively benign, sort of credit backdrop, consumer credit and wholesale credit backdrop. Dan, do you want to talk about some of the other questions?
Yeah. Hey, Paul. So just on the funding plan, I mean, as I said, we'll be active across all tiers of capital. Actually, I won't comment on, you know, the individual makeup, but it won't be dissimilar to prior years. The largest portion of it would certainly be in senior unsecured. Just on the sanctions question, I mean, there's obviously a couple of different avenues that we could be impacted by that we focus on. Firstly is obviously the direct credit exposure that could arise either in direct exposures or in securities form. The second, which I think probably gets to your point about SWIFT, is where we might have Nostro or Vostro exposures, so monies due or from to Russian banks.
Obviously, that could either be direct with them or where we are using them as a clearing counterparty. I mean, fortunately, from our perspective, we've got very limited exposure to the Russian banking sector or indeed Russia as a geography full stop. We're clearly keeping it under close review. Hopefully that's helpful.
Yeah, on the Russian business, I just wanna kind of add to what Dan said. We, if you've been covering us for some time, Paul, you probably recall when we opened our non-core unit way back when, one of the areas or geographies that we exited was Russia at that time. This is just part of our geographical shape now. As Dan mentioned, we don't really have any direct exposure and therefore, even direct exposure is fairly limited.
Thank you.
Thanks, Paul. Could we have the next question please, operator?
Our next question is from Lee Street from Citi. Your line is now open. Please proceed with your question.
Thank you. Hello. Good afternoon, all. I have three questions for you today, please. Firstly, you flagged no regulatory headwinds for capital after the start of this year, and you're somewhere around 14%. I guess my question is, after accounting for growth in risk-weighted assets, are you sort of effectively saying you're gonna be distributing 100% of your earnings as you kind of manage to that 13%-14% range? That's the first one. Second one, and this might be an impossible question, but in those years that you talked about, what is the level of interest rates that you think is quite important, where the benefit of the higher rates to those set of revenues starts to become more than offset by higher and rising loan losses?
Or to put it another way, at what level do you think interest rates would effectively become a hindrance constructive to the business model? Finally, a technical one on the Resolvability Assessment Framework. What level of detail do you actually expect to publish on those? Is this like a one-page summary of, you know, five pages, 10 pages, 100 pages? Or is it up to you or will the Bank of England effectively dictate to you what you can actually publish? They would be my three questions. Thank you.
Yeah, thanks, Lee. Why don't I take the first one on distributions, and I'll ask Dan to comment on the other two. Yeah, we don't see, outside of the direct changes that we'll be putting through in the Q1 , we don't see too much on the horizon over, let's say, the next two-year timeframe. You've also called out, Basel 3.1 remains to be seen exactly what that is. I think they will publish the, I guess it's a consultation on that sometime before the end of this year. We don't know exactly when that will be, it feels like it'll be towards the sort of latter half of the year or the earlier part of the year.
That feels like, if Europe's anybody, it's 2025 or, you know, perhaps even a bit beyond in terms of implementation. Therefore, given that there's no headwinds, I think, look, I don't want to sort of say we'll be distributing literally down to the very last basis point because, you know, we're prudent and we're banks, so we will sort of always be cautious in terms of ensuring that, you know, if there are changes in market environments or business cycles or whatever, that we're appropriately capitalized. Distributing excess capital when we clear.
When we don't think there's a need to retain it as a potential matter, or indeed as a productive matter in terms of putting that capital to work is something we would look to get back into shareholders' hands. I think you've seen hopefully in the past us operating fairly prudently, well above any sort of minimum level as we would define it, and that's obviously well above any regulatory minimum. You know, I guess the message I'd give is we will be a distributor of capital back to investors, but always ensuring that our stock remains prudent and appropriately prudent depending on where we are in the business cycle. Dan, do you want to cover the other two?
Yeah. Just on the interest rate point. I mean, obviously we've disclosed the potential impact of a 25 basis point rate move, so clearly we've got good positive gearing to higher interest rates. I mean, in terms of, you know, when would we begin to see impact in credit, and obviously that would need to be a sort of impact on credit beyond what we're already provisioning for. I think the point that I'd probably make is just that we do stress test for materially higher interest rates at origination. We do that in particular on mortgages where, you know, we'll be stressing up to interest rates of 6%. Obviously there's the benefit of the LTV protection there.
Hard to give a specific answer, but I do think we're pretty well protected and we stress for that pretty thoroughly at the point of origination. In terms of the legacy capital publication, I mean, we're in close discussions with the Bank of England on that now. Obviously, we'll be guided by them a little bit as to how much disclosure we put in that. You know, obviously when we can say more on it, we will.
All right. Thank you very much. Guess I'll be next roll. Thanks.
Yes, thanks, Lee. Could we have the next question please, operator?
Our next question comes from Corinne Cunningham from Autonomous. Your line is now open. Please go ahead.
Thank you very much. Some of them was actually also on the RAF. I think most of it you've just answered. Have you already had your discussions in terms of what counts, what doesn't count? Is it just literally kind of what published part that you're discussing or are there still literally meaningful and material conversations about exactly how your resolution framework should work? Are these still ongoing? A U.K. bank call wouldn't be complete without a legacy question. We don't have a lot of questions for your book, but just looking back, I wondered if the reason for calling the Sterling disco, what's the rationale for that private label system? Thank you.
You want to take that one, Dan?
Yeah, sure. I mean, the resolvability dialogue with the Bank of England is quite a broad topic. It's not just related to securities. It covers, you know, capabilities in funding and resolution, capabilities in value and resolution, amongst other things. It's a pretty broad ranging topic. We've submitted a self-assessment to them, and we've had sort of very detailed interviews with them. I don't think there's too much more engagement for us to have. However, really, it's now just about finalizing the publications for June. In terms of the Sterling call, I mean, that was an instrument that lost own funds capital eligibility, and it was economic for us to call. They were the two main drivers for that security. Obviously, as we've said before, we'll look at all securities on a case-by-case basis.
That, does that answer your questions, Corinne?
Yes. It does. Thank you very much.
Thanks, Corin. Can we have the next question please, operator?
Our next question comes from Robert Smalley from MacKay Shields. Your line is now open. Please go ahead.
Hi. Thanks for taking my question, and, Tushar, congratulations and, thanks for all your help, especially on these calls over the past couple of years. Couple of questions on credit cards and then one on liquidity. Could you talk about payment rates? Are we starting to see that turning into revolving balances, differences in the U.K. versus the U.S.? On the earlier call, there was discussion on in the U.S. about the acquisition of Gap portfolio. Is there really there gonna be more divergence in strategy U.S., U.K.? U.S. more targeted at buying portfolios, U.K. more broad-based.
Where do you see credit normalizing in the card space? On liquidity, obviously you're carrying a lot of excess liquidity. You've also got still COVID reserves. Are you looking to deploy that excess liquidity as rates are going up? Do you think that's reflected in perception of where your net interest margin is going for 2022?
Thanks, Robert, and appreciate your comments at the beginning of your question. Why don't I cover the point on the card questions and Daniel, I'll hand over to Daniel on liquidity. On credit cards, in terms of payment rates, we were certainly more elevated than we'd hoped for, although not wholly surprising to us over the course of last year. It's probably a little bit too early to tell, because of the seasonal effects we sort of currently have going on at the moment. Obviously, we're off the back of the holiday spending period over Christmas and New Year, and we're sort of not even two months into this year, so it's a little bit hard to tell. Generally speaking, I think the ingredients are there for balances to...
Revolving balances to grow, particularly in the U.S. I mean, we've seen very good card-opening metrics for our cards in the U.S. We've seen very good utilization metrics. We certainly haven't seen payment rates increase in all those cards. That's a sort of caveat that with the fact they're unseasonably. We'll have to get through another month or two to know for sure. We are reasonably optimistic looking ahead into revolving balances. I think both certainly in the U.S. and in the U.K. as well. In terms of the strategy, though, yes, there is a divergence in the sense that in the U.S. we are very, very focused on partnerships. The purpose of the Gap portfolio is really to diversify into...
You know, we were very heavy on the travel and hospitality, leisure sort of sector in the United States with the respective partners. This takes us into retail. If you look at it in real simple terms, half the market in the U.S. is in the hospitality, leisure, travel space, and the other half is in retail. You know, our first foray into retail is almost a brand-new market for us. It also takes us into white label or store cards, private label cards, which is a very different product, a different sort of credit proposition, different sort of socioeconomic demographics that we're getting. We think of that as literally almost a business line in itself. They are quite divergent.
In the U.K., you know, because of the lack of interchange, you don't really get an opportunity to run a sort of partnership business in the same way that you can in the U.S. We see that more as a sort of Barclays branded product rather than issuing cards on behalf of partners. In terms of impairment normalization, in pre-COVID, I think both businesses coincidentally were running at about 3% loan loss reserves. I would think early on in the credit cycle and probably credit still benign, notwithstanding the sort of questions from earlier with potential inflation shocks and rate rise and stuff like that.
Even then, you know, I'd expect it to trend below 3% for some time, actually. At some point, you know, as the cycle matures and, you know, in season as well, then that may sort of build back up to 3%. I think it'll be some time before you get to 3% loan loss rates, this time around. Dan, do you wanna cover the funding or, sorry, liquidity for,
Yeah. Yeah. I mean, obviously, you completely agree we've got very high levels of liquidity right now. I would point out that it's very low-cost liquidity, both in terms of the franchise that we've got, and obviously the TFS and the draws that we've made in the year. It's certainly available and ready to be deployed into the business. That's something we would like to do, subject to the client demand. Obviously, that's gonna be most impactful in the BUK sector in terms of actual impact on NIM. I think as Tushar alluded to this morning, there is some expectation of growth in those NIM forecasts, particularly in the secured space, given the likely activity that we'll see in the remortgage market and some expected normalization of the unsecured card balances. Yeah, certainly that liquidity remains available to be deployed.
Thanks very much. Appreciate it.
Thank you very much, Robert. Can we have the next question please, operator?
As a reminder, if you wish to ask a question, please press star followed by one on your telephone keypad. Our next question comes from Alvaro Ruiz from Morgan Stanley. Please go ahead. Your line is now open.
Thank you very much for taking my questions, and best of luck with the new role. I have two questions. The first one I think is quite difficult to answer, but I'll try my best. About the Resolvability Assessment Framework. Given the deadline is in June, and you already had all the most relevant conversation with the regulator, do we expect any kind of surprise in terms of not only about legacy instruments, but as well about the structure of the bank? Basically, I just want to see if we can receive any feeling about any big changes once this thing is published. The second one is about legacy, and if you can give us an update or regarding the remaining disco securities. That's all. Thank you very much.
Thanks, Alvaro. Just a few comments at the beginning of the question. Why don't I talk about the resolvability assessment framework, and I'll ask Dan Stace-Jones to talk about the legacy instruments, including the discos. You're right. It's a tricky question to answer. We are in close dialogue with the PRA. We've been in close dialogue for some time, and they've obviously looked at our resolvability assessment framework. They looked at the work we've done, the assurances that we've taken, the governance that we've had, the substantive nature of the work that's completed, whether that's funding in resolution, evaluation in resolution, operational continuity, you know, contract continuity in place and what have you. All of the eight objectives or impediments that they see to resolvability.
Where we are at the moment is we are sharing with them our final work, which they've given us feedback on our draft work, so we've received feedback from them. No surprises there. We've taken on that feedback and addressed it, and we're sharing that work with them. The next stage will be to share our own disclosures with them, and they will probably give us feedback on that. We expect to receive feedback on that. I don't think the Bank of England are interested in sort of creating any surprises here, either at the point of disclosure or in terms of what to expect between our bank's own assessment of their own resolvability and their own assessment.
You know, this is something that we'll know when we get there. At the moment I would say it all feels like it's going to plan, and there's a very healthy two-way dialogue, you know, to be transparent in our communication between each other in terms of expectations. There's probably not much more than that I can say at this stage, Alvaro. Dan, do you want to cover legacy?
I mean, at the risk of repeating myself a little bit, I mean, we're very comfortable with our legacy capital position. It's obviously a small number of securities outstanding. We've got no legacy securities outstanding at the PLC holding company, so we do feel pretty comfortable. In terms of the discos specifically, obviously as we've disclosed in the Q3 report, these are own funds until 2025 in our view. So, we don't need to do anything specifically on them. Obviously, we won't comment on future calls, but we'll look at the security portfolio kind of on a case-by-case basis as we go.
Okay.
Thank you very much.
Thank you very much. Operator, are there any other questions?
We have no further questions, so I'll hand it back for closing remarks.
Okay. Well, thank you very much. We all hope you found the call helpful. I'm sure, Dan and the team and even myself will maybe see you on the road. With that, I'll close the call and thank you very much for joining us.
This presentation has now ended.