Earnings Call: Q2 2021

Jul 30, 2021

Slides

Welcome, everyone. Today's presentation will be hosted by Katie Murray, CFO and Donald Quaid, Group Treasurer. After the presentation, we will open up for questions. Good afternoon, everyone, and thank you for joining us for our H1 twenty twenty one fixed income results presentation. I'm joined today by Donald Quaid, our Treasurer and Paul Pibras, Head of Debt IR. I will take you through the headlines for the first half, give an update on our strategic priorities and then move on to some of the details. Donal will then take you through the balance sheet to capital and liquidity and then we'll open it up for questions. So starting with headlines on Slide three. We're reporting an operating profit of billion compared to a loss of billion in the first half last year. This includes an impairment release of million dollars as a result of improvement in economics and underlying credit metrics. I will come on to this in more detail later. Most of this release was made in the second quarter when we updated our economic assumptions in light of a more favorable economic outlook. This resulted in an attributable profit of billion. We continue to make good progress against our targets. Net lending grew 2.8% on an annualized basis, driven by growth in mortgage lending. We reduced costs by 5.9% year on year. Our progress here will not be linear and we continue to target a reduction rate of about 4% per annum over the next three years. This is a capital generative business and we're reporting a CET1 ratio of 18.2%. This capital strength has enabled us to announce an interim dividend of 3p today and to increase the minimum annual distribution over the next three years from £800,000,000 to £1,000,000,000 We are also announcing an initial on market share buyback of up to £750,000,000 in addition to the 1,100,000,000.0 directed buyback of almost 5% of our share capital from the government earlier this year. This brings total distributions for 2021 to about £2,900,000,000 You may have seen the announcement last week that the government intends to sell part of their shareholding over the twelve months from August onwards. So these are the headlines. I'll move on now to our strategic priorities on slide four. Against the background of ongoing pandemic and placing purpose at the heart of our business with our commitments to helping people, families and businesses to thrive remains of paramount importance. We continue to execute on our strategic priorities, invest for growth and accelerate our digital transformation in order to drive shareholder returns and deliver on our targets over the next three years. Lending above the market rate, reducing costs by about 4% per annum and operating with a CET1 ratio of 13% to 14% in order to achieve a return on tangible equity of 9% to 10% by 2023. Let me tell you how we've been putting our purpose into practice in the first half of slide five. I'll start with our three focus areas, moving barriers to enterprise, building financial capability and leading on climate change. On enterprise, during the first half, we published a report into the help small and medium sized businesses need to build back from the pandemic and contribute to economic recovery. This research found the largest drivers of future economic growth include supporting more scale ups, boosting female entrepreneurship and achieving representative workforce participation. We have relaunched our enterprise program to reflect these priorities and committed 6,000,000,000 to supporting SMEs to scale up and grow, with two thirds of this allocated outside London. Our enterprise program aims to support 35,000 entrepreneurs this year, including more than 700 individuals on our current accelerator program, of which about 42% are female. On financial capability, we continue to help customers strengthen their economic resilience with measures such as free financial health checks, financial education programs and help in starting to save for the first time. And on climate change, the need to act is now well recognized by investors. Our focus remains on financing and supporting our customers' transition to a low carbon economy. During the year, we helped business customers raise billion of new sustainable funding and financing, which means we have now exceeded our billion target. Turning now to slide six, I'd like to talk about the worsening of our customers as the economy starts to recover. Across retail and commercial banking, net lending by 4,100,000,000.0 during the first half, excluding government lending schemes. With the gradual lifting of restrictions over the past three months, both debit and credit card spending have returned to pre COVID-nineteen levels. And while credit card balances have declined slightly, that trend has started to reverse in the second quarter. Gross new mortgage lending in the retail bank grew to billion with net lending growth of billion. We are seeing some reductions in margins in a competitive marketplace. In commercial banking demand for new lending from businesses has been muted given high levels of liquidity and significant government support. Revolving credit facility utilization is now around 20% compared to a peak of 40% in April. Looking at government lending schemes, we approved lending of some SEK 14,000,000,000 in 2020, of which around 60% was bounced back loans to small businesses and 30% was CBILS for medium sized business and the balance was to large corporates. Since the first anniversary of the scheme when repayment started, 5% of all our bounce back loans have been repaid in full. And of customers due to start repayments, 92% are now repaying on or ahead of schedule. The government introduced Pay As You Grow in April, which enables businesses with these loans to request an extension or take a payment holiday. Just 5% of our bounce back loan customers have asked for a payment holiday through this scheme. I'll turn now to capital management on slide seven. As you know, we have made strategic choices in relation to both Ulster Bank and NatWest Markets. We have made good progress on Ulster Bank and have now signed a binding memorandum with Allied Irish Bank to transfer CHF 4,200,000,000.0 of performing commercial loans along with the colleagues supporting these loans. We also announced last week a non binding memorandum of understanding with the permanent TSB for the sale of billion of performing retail and SME loans and the transfer of associated employees and branches. Taking these together would account for about 60% of the Ulster Bank loan book and we expect this to be capital accretive over the multi year withdrawal process. In NatWest Markets, RWAs now stand at 24,400,000,000.0 on a pro form a basis as we updated our model due to the end of LIBOR and we remain on track to achieve the majority of our targeted RWA reduction to about billion by the end of the year. As you'd expect, we're also managing our portfolio to reduce capital consumption and manage risk. In commercial banking, this contributed to an million reduction in RWAs. Turning to impairments now on slide eight. We're reporting a second quarter net impairment release of million or 66 basis points of customer loans, bringing the overall release to seven zero seven million for the first half. The Q2 release was driven by an update in our economic assumptions, improved underlying risk metrics in our performing book and a continued low level of defaults. Our updated assumptions reflect a more favorable economic outlook. Our base case now assumes UK GDP growth of 7.3% in 2021, up from 4.5% previously and for UK unemployment to peak at 5.5%, down from 7%. We've adjusted the probability weighting of our four scenarios and reduced our weighting for the two downside scenarios. Nevertheless, the outlook remains uncertain and we are mindful of the significant government support that our customers still receive. Given the net release of $7.00 £7,000,000 in the first half, we now expect a net release for the full year. There are three key variables affecting the full year outcome. First, economic performance versus the weighted economic outlook we use in our scenarios. As you know, we update these each half. So the consensus economic outlook as we get towards the end of the year will be critical. Secondly, credit performance. While we see a low level of defaults and no tall trees at the moment, we will monitor credit conditions carefully as COVID support continues to roll off. And third, our post model adjustments, which I'll come on to. Turning now to our expected credit loss and coverage on slide nine. Our ECL provision at the end of Q2 was $4,900,000,000 down from $5,800,000,000 at Q1. This reduction was driven mainly by an improvement in both our economic scenarios and the risk metrics in our performing book, which together accounted for a release of £648,000,000 Comparing the first quarter column on the left of the bridge with the second quarter column on the right, you can see we have reduced post model adjustments for economic uncertainty by million to million. The ECL release has reduced our ECL coverage from 1.56% at Q1 to 1.31% at Q2, and we are comfortable with this level of coverage. I'm not going to walk through all the moving parts, but I would like to highlight that our P and A for economic uncertainty is now a larger proportion of our overall ECL coverage accounting for 22 basis points and the remaining coverage of 109 basis points is broadly in line with twenty nineteen levels, which feels reasonable. We do not see any particular issues in the book at this time and are comfortable with how it's performing. As we look to potentially unwind these post model adjustments, the major factor will be how the economy and our customers react to the ending of government support. But as long as economic and credit conditions continue to trend favorably, there could be some upside later this year and into 2022. And with that, I'll hand over to Donald. Thanks, Katie. Good afternoon and thank you for joining today's call. Let me start off by thanking you for your continued engagement with NatWest Group during the first half of the year. It has been a busy year to date with capital issuance, liability management exercises and calls on a number of our securities. I will share some of the highlights from H1 before moving into more detail on capital and liquidity and progress on our funding plans for 2021. Starting with Slide 11, We ended the first half with a strong set of balance sheet metrics against our capital funding and liquidity requirements with a CET1 ratio of 18.2% and liquidity coverage ratio of 164. With a far more positive economic backdrop than was anticipated a year ago, market conditions have been favorable for issuers and I'm pleased that we were able to successfully execute a number of milestone transactions across the capital stack, making significant progress against our 2021 funding plans and further progress on capital optimization. We continue to proactively take opportunities to optimize our capital stack in H1, repurchasing around 1,600,000,000.0 sterling in open market tenders that targeted legacy Tier one and bullet Tier two secondurities, reducing inefficient capital and generating ongoing reductions in our interest expense. We also took the opportunity to call or announce our intention to call 800,000,000 sterling of Tier two secondurities in line with our strategy to reduce legacy securities that do not provide capital benefit beyond the end of this year. And we announced our intention to call our $2,650,000,000 additional Tier one in August, following successful sterling and dollar additional Tier one issuance during the first half year. On ratings, Moody's upgraded NatWest Group and subsidiaries this month and both Fitch and S and P revised their outlooks on the long term issuer ratings for all entities in NatWest Group from negative to stable. And we've also seen further progress on our ESG ratings with Sustainalytics reducing our risk score to low risk. Turning to our capital and leverage position on slide 12. Our CET1 ratio at the half year was 18.2%. That includes the benefit of IFRS nine transitional relief of 1,200,000,000 or 70 basis points. Our total capital ratio was 24.9% with a total loss absorbing capacity ratio including senior MREL of 38.9%. That leaves us comfortably above our minimum registry requirements on all of our capital metrics. Our CET1 ratio is now between four twenty and five twenty basis points above our 13% to 14% target range and more than double our maximum distributable amount. The UK leverage ratio was 6.2, leaving two ninety five basis points aheadroom above The UK's minimum requirements of 3.25%. Moving to Slide 13 and our quarterly movements in CET1 and risk weighted assets. Our CET1 ratio on a transitional basis under IFRS nine was unchanged when compared with Q1. The ratio fully reflects the updated dividend accrual of £500,000,000 and other foreseeable charges of £924,000,000 made up of the £750,000,000 buyback permission and linked pension contributions of £174,000,000 post tax, which together reduced the ratio by 75 basis points. This reduction was offset by 41 basis points increase from attributable profit and a 19 basis point benefit due to lower risk weighted assets. RWAs decreased 1,700,000,000.0 in the quarter to 163,000,000,000. Within this, a reduction for credit risk of 2,600,000,000.0, driven by lower commercial and unsecured retail balances, partially offset by million reduction from pro cyclicality largely arising in the retail bank. Market risk increased million reflecting a temporary impact of billion in NatWest Markets related to the transition from LIBOR to SONIA. A model update permission received in July reverses this uplift to give group pro form a RWAs of SEK160.5 billion. Moving on to the future drivers of our CET1 outlook on Slide 14. These impacts are all indicative based on our capital position at Q2. Starting with regulation, based on what we know today, we expect this to consume around three fifty basis points. This includes the unwind of COVID related measures such as IFRS nine transitional relief as well as RWA inflation including BAW3. We expect PR changes to increase our mortgage risk weights to around 15% on 01/01/2022. Based on book growth and current risk density, we expect this to increase our mortgage risk weighted assets by around SEK 15,000,000,000. Taking into account these factors and the improved economic outlook, we now expect RWAs to be at or below the lower end of the previously guided SEK 185,000,000,000 to SEK 195,000,000,000 range at the end of twenty twenty one, including all regulatory impacts effective on 01/01/2022. Additionally, we expect to lose the benefit from software intangibles of 27 basis points at the end of the year. We expect to generate capital to 2023, both through earnings and through our reshaping of NatWest Markets and our phased withdrawal from The Republic Of Ireland. We will also consume capital via loan growth. We do intend to grow above market rate, excluding government schemes and through pro cyclicality, which is remains uncertain. Finally, on distributions, we have announced that we intend to distribute a minimum of SEK1 billion per annum through ordinary and special dividends, which would consume around 155 basis points of additional capital through to 2023. The share buyback we announced today is fully included in our 18.2% ratio. Where we had to have the opportunity to do further direct buybacks in 2022 and 2023, in line with the one we completed in March, this would consume around 140 basis points of capital. And we will also have flexibility to do further on market buybacks. Moving on to liquidity and funding on Slide 15. Our LCR ratio decreased slightly from 165% to 164% during the first half and reflects over $75,000,000,000 of surplus primary liquidity above minimum requirements. The increase in primary liquidity was mainly driven by customer deposits and cash proceeds from new issuance, offset by the $5,000,000,000 TFSME repayment in February, the directed buyback, pension fund contributions, liability management exercises and the purchase of the Metro mortgage portfolio. Our wholesale funding is $66,000,000,000 or about 12% of our total funding and around two thirds of our wholesale funding is to meet our senior MREL and non equity capital requirements. On Slide 16, you can see that retail banking deposits grew by 7% or AUD 12,000,000,000 to £184,000,000,000 as a result of increased savings and lower consumer spending in the face of lockdown. Commercial banking deposits grew 5% or £8,000,000,000 to 176,000,000,000 as customers built up liquidity during the pandemic and retained a percentage of government lending scheme drawdowns on deposits. Since full year 2019, our total deposits have increased 86,000,000,000 with 34,000,000,000 of growth in retail and 41,000,000,000 of growth in the commercial business. Our deposit base is well balanced across our commercial and retail franchises and our wholesale funding mix reflects a range of different sources and maturities. Our loan to deposit ratio is 78% underpinning our strong liquidity and funding position as well as our strong ability to lend. We will continue to look at options available to us to assess the optimal blend and most cost effective means of funding, including consideration to draw TFSME before the window closes on the October 31 this year. Looking back at our issuance in H1 on Slide 17. I'm very pleased with the transactions we've executed during the quarter and again thank you for your continued participation. On MREL, we've made excellent progress towards our end state requirements. In February, we issued a billion senior MREL social bond under our green social and sustainability bond framework backed by lending to the affordable and social housing sectors. This was our third transaction in GSS format and is an increasing area of focus as we aim to build out from the billion issued to date. In addition to our GSS issuance, we were also active in the dollar market with a $1,500,000,000 6 year non call $5,000,000 MREL transaction last month. On capital, in March, we returned to the sterling market with our second sterling AT1, a £400,000,000 perpetual Non Call 75000000 And recently, we took advantage of favorable market conditions to issue a $750,000,000 perpetual non call 10, meaning that we have now met the 1,000,000,000 we guided to at the start of the year. We also issued 1,000,000,000 sterling 11 year non call six Tier two against our guidance of up to SEK2 billion Tier two for the year. We continue to proactively take opportunities to optimize our capital stack, including the completion of circa SEK1.6 billion liability management exercise that targeted legacy Tier one and bullet Tier two secondurities with less than five years to maturity, reducing inefficient capital and generating ongoing reductions in our interest expense. These LMEs follow our previous exercise in Q3 last year when we repurchased around $1,600,000,000 of securities. So we have now retired approximately $4,000,000,000 of Tier one and Tier two capital since September. In H1, we called or issued notice of our intention to call six Tier two secondurities for NatWest Group and NatWest Bank, including the four outstanding discounted perpetual Tier 2s. These actions are in line with our strategy to reduce legacy securities that do not provide regulatory capital benefit beyond the end of this year. And earlier this month, we announced our intention to call the NatWest Group two point six five billion dollars eighty one in August. Finally, from NatWest Markets OpCo, we issued a €1,250,000,000 and a $1,250,000,000 taking advantage of spreads. Finally, turning to ratings on slides eighteen and nineteen. I'm very pleased with this month's ratings upgrades by Moody's. For NatWest Group, the senior unsecured debt rating moves from Baa1 from Baa2, while retaining a positive outlook. For NatWest Bank PLC and the Royal Bank of Scotland PLC, the issuer ratings move to A1 from A2 with a stable outlook. For NatWest Markets and NatWest Markets MV, the senior unsecured debt ratings moved to A2 from A3 retaining the positive outlook. And the short term ratings moved to P1 from P2. Fitch and S and P changed their outlook to stable from negative for all group related legal entities in July, reflecting a stronger than expected UK economic recovery and NatWest Group's strong financial profile. We also continue to progress on our ESG ratings, reflecting the increased focus and engagement efforts we have had with ESG agencies on our purpose led strategy. This month, Sustainalytics announced an improvement in our risk rating score to 17, which now places NatWest Group as low risk. So NatWest Group now ranks in the tenth percentile among banks and the fifth among diversified banks. Our ESG ratings leave us very well placed from an industry and peer perspective. I'm personally delighted with the significant progress we have made on our ESG ratings given our aspirations to issue a higher percentage of our MREL in ESG format. With that, I'll hand back to Katie. Thank you, Donal. And so on to my final slide to summarize. We have delivered an operating profit of billion, which includes an impairment release of $7.00 7,000,000, as we revised our assumptions in light of a more favorable economic outlook. Though we maintain a conservative approach as government support schemes wind down and the economy recovers. We have made good headway on our phased withdrawal from Ulster Bank and expect to largely complete the restructuring of NatWest Markets this year. We are also making good progress on our three year targets and continue to work towards CET1 ratio of 13% to 14% and return on tangible equity of 9% to 10% by 2023. Finally, we are increasing our annual distribution to a minimum of billion a year in 2021, '20 '20 '2 and 2023 and have announced today an interim dividend of 3p as well as an initial share buyback of up to £750,000,000 Thank you very much and we are happy to open it up for questions. Thank you. And we will now go to our first web question. Thank you, Nicole. The first question from the web asks, could you provide some color on how you build up the 13% to 14% CET1 target? Does that range imply a stress buffer of 400 to 500 basis points above MDA? Yes, sure. I'll take that one. So the quick answer is no. So the first thing to remember is that MDA is not static. So we expect it to increase from the 9% today. So the buffer will move as MDA moves, but also as I see, it reduces from the distributions growth and regular inflation that we just talked about. Also important to remember, countercyclical buffer is currently set at zero and we'd expect that to increase as the economy recovers. You recall it's not long ago back in November 2020 when the expectation was for countercyclical goal to move to 2%. And in addition to that, then we'd expect changes in Pillar 2A and also potential changes in the OS outside buffer as well too. So I think the thing to remember is we'll always consider those future regulatory impacts to our capital framework when assessing our capital targets. I'm looking at both our supervisory capital requirements from a BAU and stress perspective. So, building all them up, we get comfortable with the 13% to 14% range, but we wouldn't view it as a 400 or 500 basis stress buffer to MGA. Thank you. Thank you. And your next question comes from the line of Robert Smalley at UBS. Please go ahead. Your line is open. Hi, Robert. Hi. I hope you're doing well. A couple of questions. On PMA, you said 22 basis points above twenty nineteen levels. And I'm sure there's a lot of puts and takes in that 22 basis points. But is it fair to say that that's very discretionary and that you could easily go below that? Would you contemplate going far below twenty nineteen levels is my first question. Secondly, on liquidity, obviously, big inflow deposits, lots of liquidity. How are you looking to invest that now? Are you doing anything differently? And the recent exercise on negative interest rates, does that inform any of your decision making around that? Thank you. So you want to take the liquid one and then I'll do the PMA at the end. Yes. So you're right, Rob. We continued inflow of deposits. You said 14,000,000,000 in Q2. So, we continue to manage we've been managing excess liquidity as I suppose BAU now for a number of years. So, we continue to do that through the liquid asset buffer and just trying to optimize it where we can. Outside of that, obviously, we have significant capacity to grow our lending to our core lending franchises, both in retail and commercial. So hopefully, if we do see a pickup in the macroeconomic environment, we're very, very well placed to deploy that liquidity and through those franchises. From a negative interest rate perspective, I suppose again it's only probably twelve months when it was a live conversation from UK perspective. So we would take that into consideration in terms of how we deploy that liquidity as well. Katie? Perfect. Thanks very much. So if I look at the PMA and you can see in the accounts, if you want to have a bit of a look that the SEK 1,100,000,000.0, it's made up of three different sections. One is the deferred model calibrations and that's really when we're making adjustments to the model because we know that it's not behaving quite as it should, which if you can understand how unusual PDs have been for the last twelve years, that's kind of not unexpected and that's like 150. And then the main part of it is this $834,000,000 which is there for relation for economic uncertainty. And that's the piece I would say it's more discretionary. So you do try to base it in some in the data that you've got within your system. It's not just our kind of thumb stock in terms of what the number would be. And that's the one that you would expect to unwind as we see the stabilization in the economy once the government support kind of starts to come off. But I would say, if I look back to that picture you're referring to on Slide 20 of our slides where we had full year 2019, we had 0.06 bps in relation to that six bps sorry, that that was you may recall that was some economic uncertainty we held because basically the transition to Brexit. So they are case specific. So you would expect that 22 basis points to unwind over the next maybe a little bit this year and then into 2022 as the kind of economy sort of stabilizes through. Thank you. It makes a lot of sense. It's very helpful. Thanks again. You're welcome. Thanks so much. Thank you. And your next question comes from the line of Tom Jenkins at Jefferies. Please go ahead. Your line is open. Hi, Tom. Thank you very much. Hey, Katie. Hey, Daniel. Just a quick one. Not that I was falling asleep. Honestly, I wasn't. Or watching Olympics. Promise I wasn't. But did you say that there was a $1,600,000,000 Tier two buyback you've done this year. But was I'm feeling you're going to get a little bit technical, but was that the $2.23 bond, 6% to 6.1 percent? Or have I missed something you've done in markets from public tender? No, you're partially right there. So the $1,600,000,000 of buybacks is to the two LMEs that we've done in H1s, that was legacy Tier one and some of our bullet Tier two secondurities that you referred to there as well. So it's a combination of those two. It's a public stuff. Okay, fine. There's nothing you've done sort of in market? No, no. All through the public LMEs. Keeping it sneaky from us. Okay, that's fine. And then the second one is, obviously, with the reduction in RWA at NatWest Markets, which has obviously been sort of notable, should we consider a reduction in the debt stack there, especially the long dated expensive stuff? So what I would say from an Atlas Markets perspective, the strategy has been around the reduction to in or around the $20,000,000,000 of ordinary weight. So that's already built into their longer term funding plans. They have been active there with two issues this year, but that's more around refinancing some of the more expensive that that will roll off over the next kind of twelve to eighteen months. Okay. I'm dancing around the topic board about the 90 three's? I won't comment on any specific securities, but we will we always take those back into consideration. Okay. Fair enough. But no great desire to see them on the balance sheet or just any comments at all? No, nothing to add on specific securities. All right. Thanks, mate. Cheers. Thanks, John. Enjoy the Olympics. Thank you. And your next question comes from the line of Daniel David at Autonomous. Please go ahead. Your line is open. Hi, Daniel. Hi, Daniel. Hi, Daniel. Thanks for the call. Hi. Thanks for calling taking my questions. I'm noting your comments on CET1 and DIA. I just want to focus on MREL and kind of a similar topic. So you've got a lot of MREL and then a big buffer to excess buffer to requirement. Just thinking about what you're targeting in terms of a buffer for MRAL, is it right to kind of think of the CET1 buffer kind of a similar and how it would be on the MRAL stack or would it potentially be a bit smaller, noting kind of the MVA MRAL process? And then secondly, just a quick one on ESG, noting your progress issuing ESG bonds. Would you consider an SLB, sort of a sustainability linked bond? And does your current framework allow you to issue in that format? Thanks. Let me start with the second one first. So I think, yes, as you mentioned, we've made good progress on our MREL and ESG format. Our focus has been around the use of proceeds, as you will have seen, as opposed to kind of sustainability linked issuance. So kind of building out our green social and sustainable bond framework under we've issued three transactions totaling billion across social and green, but really with a focus on use of proceeds. We haven't our current framework hasn't kind of focused in on sustainability linked issuance. It hasn't been a real focus for us. Currently, the feedback we've had well, probably if I'd say we haven't seen a huge demand from investors around the demand for sustainability linked issuance. They seem to be quite comfortable to use proceeds. I know a couple have been quite vocal around actually the dislike of sustainability linked issuance just in terms of the no restrictions and also for some of the variable coupon can be a bit of an issue. So for now, we're just going to focus on use of proceeds. And you'll see we've also published our impact reports on the Green and Social as well. So a lot of transparency we feel going down that route. On the MREL buffer question, really we look at it in terms of the evolution of CET1 and kind of buffers, how we would look at it kind of over a longer term as well. We're obviously running, as you say, significant headroom is present as the CET1 reduces down over time, which we discussed earlier on in the speech and Alison and Katie touched on today. Then we'll kind of give more consideration to what we feel is an appropriate buffer to run over time. Some of that will actually probably be dictated by the fact that a lot of our RWAs now are sterling denominated. So we do have less volatility as well in terms of issuance in different currencies and volatility around that. But one we will consider over time when we return to a more steady state. Thanks. I appreciate the color. Thanks, Daniel. Thank you. And we will now take a further web question. Thank you. This is a question on LIBOR. I think you're well positioned on the liability side, but can you update us on the asset side? Any bits of the book that are concerning? Yes, I will take that one. Yes, so as you said, we're in a very good position from a liability perspective. So we only have a small number of securities outstanding and they are really linked to dollar LIBOR. And I've talked about them before they're issued under New York law. And so as such we would consider them tough legacy as consent to amended terms and conditions would need to be unanimous, so very unlikely to be successful. One of these instruments actually is the $1.81 which we've just announced our intention to call, so that kind of reduces the numbers outstanding, but they will be addressed through the legislative solution under New York law securities. On the asset side, we continue to make good progress. So we've adhered to like all of the banks to the targets of ceasing LIBOR cash products and LIBOR linear derivatives in Q1. Majority of our focus now is transitioning that asset side and working with our customers for a smooth transition between now and year end. That's through a number of different routes including notice of variation, write and advise and also bilateral negotiation. So really on the bilateral negotiation side, that's where we are seeing momentum building, but still many customers are looking to transition probably later in Q3 and Q4. So I do expect significant activity right up to year end. But saying that I'm very comfortable with the progress to date and confident of a successful transition. Thank you. And there are no more questions at this time. I would now like to hand the call back to Katie for any closing comments. Thanks very much, Nicole, and thank you to those who for joining the call and for your ongoing support in terms of our issuance and securities. Thanks very much and have a good weekend. Take care, everybody. Bye bye. Thank you.