Good morning and good afternoon, those of
you outside the room
who are in further east. Thanks for joining us first thing on a rainy morning here in London to talk about our 2019 full year results. Sort of the usual format for me and Andy, I'll say a few things upfront. Andy will go through a lot of the details, and I'll come back and touch on some of the progress that we made against the strategic objectives that we refreshed a year ago. But just quickly upfront, We feel very good about the progress that we've made against each of the strategic priorities that we set out last year, really everyone, and in every region and in every line of So it's we're very happy with the progress that we're making.
The network and affluent activities, we'll dig in a bit more detail on these later. But good growth on all fronts, continued to be strong returns, really evidencing the logic that we set out in the first place, which is that we think we've got The right focus in terms of our client segments, these areas where we can differentiate ourselves, and we've continued to do that. Push in digitization is going at full speed. We've completed the rollout of our digital banks across Africa. We're beginning to roll those out in that model elsewhere, building our business in Hong Kong and many other markets.
We'll talk about that in a little bit of detail. The Four markets that we focused on improving performance. Also good progress in each one for different reasons. We'll dig in. Productivity has been really good strong improvement with basically flat expenses year on year against the income growth that we've experienced.
This is reflecting both our management of expenses but also the focus on real underlying productivity. And we completed our the buyback that we announced a year ago. As you will have seen, we have announced a second tranche to commence immediately, so indicating that our determination to continue to manage our capital base as aggressively as we can and as is appropriate. And we'll talk a little bit about sustainability. You just saw this video, but this has been a tremendous area of focus for us, both because it's the right thing to do, but also because it's an enormous profit opportunity, for Standard Chartered Bank for us to help our clients transition into a low carbon economy.
I don't think there's a bank in the world that's better placed to provide that assistance than we are. So the financial numbers, we'll get into in a lot of detail. Obviously, improvement in ROE and A little bit of a comment on the beginning part of 2020. We were quite encouraged by the progress in the early part of the year, really up through to and including today. But we know that the most substantial portion of the impact from the virus has not yet settled upon us.
So While we are we continue to see the evidence of the strategy that's playing out, we know that it's going to be more challenging for us to hit our RoTE target in 2021, we originally set out. And we expect that income growth in 2020 will be a little bit slow. But we'll give some context for that as well. The couple of things I don't always talk about in the beginning of our annual results presentation, but which is to me and to the rest of our management team and Board, it's just critically important. It's a big chunk of my time spent focusing on the reskilling and development of our workforce.
The thing that's going to allow us to generate the kind of growth that's going to get us consistently above cost of capital is going to be the investments that we're making in our people and the rescaling and retooling of our workforce relative to what we needed in prior periods. So this is a tremendous area of focus for us and one I think we're taking a leading position in a number of regards. And I feel very, very good about the progress that we're making here, both the people we can attract, but importantly also what we can do with our colleagues in house. And second on Page 4 again is the focus On climate, we came out with a very important document a couple of months ago outlining the private sector financing requirement to meet the sustainable development goals over the next 5 to 10 years. Talking $35,000,000,000,000 is what's going to be needed, something like $2,500,000,000,000 per year financing to hit climate change targets.
We know that our markets are likely to be most affected by increasing global temperatures should that happen. We also know that our clients in those markets have the most need to transition their own activities to a lower carbon future and a lower carbon footprint. Standard Chartered, as it happens, is one of the leading banks in the world in infrastructure financing and renewable financing in particular. We intend to push this very, very hard. We see this as one of the growth opportunities that is really unique to our time and particularly relevant for Center Chartered.
In addition, it's the right thing to do. So with that, I will hand over to Andy, go through all the numbers. I'll just make a couple of comments later on some detail on our strategic
Thank you very much, Phil. Good morning, good afternoon. So let me just start With the normal overview slide on the numbers and then can drill into things in a little bit more detail. I think the Headline, we regard last year as actually having been pretty resilient to the business, particularly in the context of some of the challenges in our regions with the U. S.-China tensions, the unrest in Hong Kong, etcetera.
So just going through the key numbers. The operating income up by 2% on a reported basis. That is 4% on a constant currency basis. And we had a bigger than usual, which I'll come on to it, DVA charge in the period. If we had not had that, We would have been at the 5% level, so just slightly at or below the guided medium term income range.
The Q4 number, particularly, which we'll come on to published number, is 1%. Again, if one adjusts for the DVA and currency, that was actually 4%, so not Similar to the momentum in the prior quarters. Operating expenses were well controlled. Those were essentially flat Period on period. Credit impairment was a little bit higher but off a very low base in the previous year.
Put all of that together and the underlying operating profit at £4,200,000,000 It's an increase of 8% reported or 10% on a constant currency basis. Further down, risk weighted assets were up 2%, so that was very much in line with the rate of income growth. The underlying earnings per share, up 23%, a combination of the increased profit, A slightly lower tax charge and reduced number of shares in issue following the share buyback of last year and the proposed Dividend per share at GBP 0.27 being a 29% increase year on year. That is on a consistent trend with our endeavor to double the dividend by 2021. CET1 ratio at 13.8% at the higher end of our 13% to 14% guidance range and hence the announcement today, as you will have seen, as Bill has mentioned, of Another €500,000,000 share buyback, which with the share price where it is, we can't wait to get on with.
The royalty up To 6.4%, so 1.3 percentage points of gain on the ROTE during the year. Let me just go through a number of those just in a little bit more detail. So first of all, the ROTE. 2018, 5.1 percent 2019, 6.4%. So the 1.3 percentage point improvement.
Major components there, slightly lower on net interest income with volume growth not quite offsetting margin decline. Fees, on the other hand, very strong. Financial Markets, in particular, had a very, very strong year, up 12% on income on a reported basis. Wealth Management, also a good year. Expenses impairment, not a huge impact.
And then the tax And U. K. Bank levy, probably more tax. So we were just below the 30% level on the tax rate, whereas last year or the year before, we were slightly above 30%. That's due to a mix of country profits, allowability of expenses and prior year settlements.
We'd expect going forward the tax rate to be give or take the 30% level. And then finally, equity appearing for the Time on a full year chart with the reduction in the share count from the buyback has also contributed to getting to the 6.4% number. And to put this in context, We were 0.5% negative on ROCE in 2015. So we have actually moved 7 percentage points up over the last 4 years, more clearly to do, but we have moved pretty significantly up that range. So Let's move on to income.
Two slides here. First one, full year and the one that follows on the Q4. So we've taken the 2018 published and adjusted it to the FX rates that we experienced in 2019 and also for the DVA that we experienced in 2019. So you can see that DVA has had an impact, 1 177,000,000 in the year. So exiting out DVA, 14.5 percent a year ago and 15.3 percent in 2019.
That, as you can see from the circle at the top, is a 5% increase. The little green percentages there on the chart below Show the ex DVA constant currency growth rates in those major areas within our business. So you can see that Financial Markets, particularly Power is ahead, so 22% growth on VAT basis. And then pretty even performance across many other areas of the business, transaction banking, retail products, wealth management, etcetera, all grew 5%, 6% during the period. And the one that held us back was on Treasury with the higher interest rates that were paid the businesses for their liabilities.
So £15,300,000,000 5% up constant currency ex DVA. This chart is then the equivalent for the Q4. So it published at 3.6 a year ago. I think what is noteworthy here is actually of our full year DBA of 177, a lot of it was in the 4th quarter. So $118,000,000 of it was in the 4th quarter alone and hence depressed the reported income growth for the quarter.
If you x that out, then the underlying was €3,450,000,000 a year ago and that increased to €3,600,000,000 or thereabouts 2019, again, a similar pattern there. I won't go through all the detail, but you can see, in fact, if anything, Financial Markets even stronger at 33% growth, but Wealth Management also very strong during the Q4. Now let's change tack a little bit more detail on Slide 10 on the client segments. I think the key point to make that spans this chart is we had income improvement, profit improvement and ROTE improvement in all 4 client segments during the year. So just going through and pulling out 1 or 2 things from this Corporate and Institutional Bank, which is obviously the biggest single client segment by some way in the business, very strong year, 5% reported income growth, 7% on a constant currency, actually 9% on constant currency pre DVA.
That was all delivered with reduced expenses. The jaws opened up considerably. And the consequence of that is Arotea at 8.5%, which is about a percentage point higher than a year ago. Retail Banking also strong performance. So it is our highest roti business.
It remains that at 12.6%, which is also about a percentage point of improvement, 3% up on income reported 5% on a constant currency basis. In some senses, Commercial Bank probably is the star of the show here with a doubling of operating profit in the period. And I think if you recall the business back 3 or 4 years ago, this has improved the most noticeably. The ROTE now at 7.3% starting to get fairly close to the corporate and institutional bank ROTEI. So a really good performance there, doubling the ROTEI during the period.
And then Private Banks, more in the overall scheme of things, but again, I think very positive progress here, 12% increase in income for the Consecutive year that we've seen the growth in income, a good profit printed for the period, assets under management Growing by 14% net new money, up by over $2,500,000,000 So again, good performance in that part of The business. Slide 11 is then addressing the same topic, but now looking at this from a geographic Lens. So Greater China and North Asia, our biggest region, as most of us will be aware. This has a more difficult period. It's a majority of the macro challenges that we have seen across the group.
But nonetheless, We have had a flat top line slightly up when you view it on a constant currency basis. We have tightly controlled expenses and therefore seen the profits growing by 3% in a difficult period. And overall, I think the performance there has been extremely strong. Hong Kong has been robust. China has been strong.
And overall, we've come into this year, I think, in pretty good shape in the overall circumstances. The ASEAN and Southern Asia region has also had a very strong period. So this is now contributing so has opened up jaws by 7 percentage points. Africa and Middle East numbers there a little bit impacted by currency, So 2% down on a reported basis on income, actually 4% up if one puts it on a constant currency basis. And particular focus upon credit impairment has resulted 29% increase in overall profitability for that region.
And then Europe and Americas, whilst the income Print is 3%. This is the region that's taken the majority of the DVA hit. If it had not been for that, it would have been printing a 10% increase in income. So I think good performance in our sort of central hub there. Central and other then these are the items that are not included in any of the numbers that you've seen before, they're largely the management of the balance sheet and the center.
I think sort of 2 takeaways. On the bottom left, You can see the cut by client segment where we have got the level of income and profit down about £300,000,000 That is the impact of higher interest rates being paid to the businesses for the liabilities that are managed in the center. That will unwind a bit over time as interest rates come off. On the right hand side on the region, you can see the numbers actually have stayed fairly Similar. So a small loss and slightly reduced on the previous year with the impact of higher debt costs being more than covered by hedge ineffectiveness reversals and internal capital charges.
So moving on to expenses. As I said earlier, these are, I think, under very good control now. So €10,100,000,000 constant on the previous year at £10,100,000,000 That is an opening up on the jaws. It is, I think evidence of several years now of spend on IT and process improvement. The productivity, if one measures this in terms of income Full time employee is actually up 5 percentage points on a year ago, which is one of the biggest improvements we've had in a single year.
Clearly, this is going to be a very big area of focus, particularly in a softer income period. But I think the track record on the costs is now well established. On the bottom left, you can see the cash investments we're making. We are continuing to absolutely focus on investing in The future of the business, so $1,600,000,000 of spend there, similar to the previous year. The highlight in green showing the proportion That we're spending on strategic projects is slightly increasing.
So this is things like the virtual bank in Hong Kong, which hopefully we will be launching before too long. A lot of investment in breakthrough processing in our corporate businesses, Real time onboarding in several of the Asian markets, etcetera. So we are doing whatever we can to be able to carve enough out of the core cost to be able to keep and in some respect increase the momentum on the spend for the future. This is maybe on Slide 14, a slightly different way to visualize this. So this is the cost income ratio over the last 3 years.
As Many of us will know we have got pretty stuck at around the 70% point over the last several years. That has now started to improve. So the 2017 year, it was basically flat. We then improved things by 2 percentage points and then by 3 percentage points over the last year in total. So that, I think, evidence that we have got a good focused upon the costs.
So moving then on a different topic of credit and credit quality. As I said earlier on, The top chart here has got the charge to the income statement at just over $900,000,000 So whilst it is up Slightly on a year ago, that is a low point of comparison. 2019 was still a 27 basis Point of gross book charge. I think within those numbers probably the thing that is interesting is the charge for the Stage 3 loans. So the non performing reduced quite a lot during the period.
And what we saw was an increase in the Stage 1 and 2 charges, About $275,000,000 Half of that was to do with deteriorating macroeconomic variables and about half was specific to Hong Kong. On the bottom left, you can see the overall level of credit on things that we are focused So the Stage 3, the nonperforming, the Category 12s, etcetera. And I think the take there is that this is We're remaining at a pretty constant level. In fact, in the €9,300,000,000 for 2019, there's about €300,000,000 which is Sovereign downgrades in 1 or 2 smaller countries. So actually, ex FAD, we would have actually seen the overall numbers there slightly improving.
So clearly, we're very much alert to things relating to the coronavirus now. But certainly, as we exited last year, we had the overall Turning then to the assets, liabilities and the NIM. Top left chart is the overall assets. So I'll call dotted there 5% is the increase in customer spending. So that is continuing with a good momentum.
On the bottom left is the average liabilities. So in the middle is the liabilities on which we're not paying interest. Those are up £7,000,000,000 in the year. And on the very bottom in the darker color is the liabilities that are interest bearing. So those were 3% up in the period.
What you can see on the top right then is what has happened with yields. So on the assets, we are getting a 16 basis point improvement in deals compared with a year ago. On the liabilities, we are paying 27 basis points more than we were a year ago on the average. And hence, the overall margin is 7 basis points down, I think quite similar to what some of our competitors have been experiencing. So we exited the year Q4 at 154.
And clearly, as we go into this year, a huge amount of focus upon this specifically. We would certainly hope in this year that we We can improve slightly on that Q4 exit rate. A number of reasons for being reasonably comfortable with that is The focus we have had recently on increasing the current accounts and savings accounts, reducing time deposits within the business, which in the second half It was quite a strong progression. We have done quite a lot to derisk the book in terms of interest rate sensitivity, And we are focusing a lot on the new hubs, particularly in Hong Kong and Singapore. So CET1 ratio, 14.2 percent a year ago, 13.8% at the end of 2019.
Remember that the buyback took about 40 basis points out of that number. Also the €500,000,000 that we've announced It does not get reflected in these numbers, but when we come to the Q1, the €500,000,000 will be about a 20 basis point reduction from the 1st quarter CET1 numbers. And also, let's bear in mind that with the PAMATA sale still hopefully not too far away, that actually that should have the potential to further look at returns. Risk weighted assets then on the bottom left. As I mentioned earlier, those are moving up roughly in line with income, so 2% up $6,000,000,000 3 main moving parts: 1, Asset growth, business growth, good.
2nd, credit migration, a small part of it. And thirdly, efficiencies that we have said that we will and continue to focus So put all of those together and the closing RWAs at GBP 264,000,000,000 So just pulling this together before I hand back to Bill. Left hand summary targets we talked about last year. I think on most of these fronts, we have done pretty well in 2019. Certainly, 1.3 percentage points of gain ROTE is good, Income fraction below guidance range, but only a fraction below the expenses slightly controlled within the capital at the top of the range.
As Bill said, the start of 2020 January and what we're seeing so far in February has actually been encouraging. Underlying momentum similar to what we had in the Q4, albeit clearly well aware that the coronavirus impact will be more March and onwards. So just a word of caution on that. For that reason, we have said This year, growth rate and income likely to be slightly lower than the 5% to 7% medium term guidance range. And secondly, on the ROTE, given that certainly compared with a year ago, we have lower interest rates, we have a macro that is not is promising.
And we have the coronavirus has said it is likely that the 10% will take longer. We absolutely believe in getting to the 10%, But it is likely that it will take longer. So with that, I will hand back to Phil.
Thanks, Andy. I'm just going to run through the a little bit of a mark to market on the strategic objectives that we set out a year ago and progress that we've made. First on Page 20, Slide 20, is the quick review of our Network business. It continues to be very, very strong. We've had good growth in client income for those clients we've specifically targeted to grow our network income.
So Our next 100 clients and new clients, which are now extending to 100 of clients, overall income is up 6%. The percentage is flat. The ROE RoTE remains very strong. In fact, it's getting stronger for that network business. We see the overall Corporate and Institutional Banking business at an 8% RoTE is getting towards that cost of capital plus return that we continue to think is absolutely achievable.
As we continue to both work the investments that we've been making in this area over the past couple of years, increasingly digitizing, increasingly focusing on new tools on our own and in partnership to deliver some differentiated supply chain solutions and of course, with continued strength the Financial Markets business, which has got its legs and is beginning to move quite nicely now. Of course, it will be volatile from period to period as is normal with the client flows in that business. But we think our underlying capacity to generate good, strong growth in Financial Markets, like the rest of our CIB business, is very strong. Looking at the affluent client business, again, the story is a very good one in terms of progress. A little bit more difficult environment, certainly in Hong Kong in the second half of last year.
Hong Kong, no need to remind, our most important single market broadly but also for the affluent client business. Despite that, we had good growth in clients, good growth in net new money and private banking and in the affluent composition. A continued improvement in the mix in favor of that affluent client segment And ongoing very strong returns from that segment in terms of return on tangible equity. And throwing in the private bank as well. So good returns in that business overall, so one that we will continue to invest in quite heavily.
We've launched a series of differentiated offerings at different asset levels or just different wealth levels. So we've introduced a premium client segment in several of our key markets over the past year. It's clients have responded extremely well to that. So these are clients that were would otherwise have been in our personal mass market offering that are getting a differentiated level of service. They feel a bit more special in terms of the customer service that they're getting, and they're responding very well.
Likewise, we've got a segment at the top of the stack called the priority private, which are clients that are underway to being getting the full service white glove treatment from a private bank. Getting it from Standard Chartered. We're obviously we're combining that with that local operation. That really is differentiated visavis many of the other private banks that are competing for some of that money. So overall, we're feeling very strong about the affluent client segment.
Looking at the 4 markets that we have really focused on for turnaround, the number of the key numbers I'll call out is right on the lower left, which is that the aggregate Pre provision operating profit is up 15%, and it's up in each of the individual markets. Now obviously, when we step to the next number up on the lower left, so the aggregate profit is only up 10%. The difference is single name credit losses that we had in India and Indonesia. Question always, especially in this uncertain time is, is this the beginning of a trend? Or is this something that indicates that there's been any loosening in credit standards?
The short answer is no. I think these are very small number of cases that are genuinely idiosyncratic. And of course, the overall credit cost, as Andy mentioned, is still around 27 basis points for the year. So a bit up on last year but still lower then we would expect for sort of a through the cycle level of credit impairments. So we feel good about the progress in each market.
Each market is quite India, the story is income costs and active management of capital. Korea, it's substantially about the management of capital with ongoing cost constraints and cost focus. In the EOEs, it's largely about the improvement in loan impairments, although there's been a real focus on managing the expense space there as well. And Indonesia, again, it's income, expenses and management of capital. So we remain let them see focus on this.
We think we're on the right track. And this part of our strategic thrust should do its part to deliver our 10% RoTE plus as soon as we can possibly get there. Quick focus on productivity. Andy mentioned the Aggregate numbers and gave a couple of examples. We're looking at pulling many, many different levers on the productivity side.
Clearly, digital sales is one thing that we're watching actively. We've had a steady increase in digital sales, a steady decrease in the cumbersomeness of our process. So Turnaround time for onboarding clients, the decision making time for financial crime compliance reviews are all steadily improving. And that's driving the improving income or risk adjusted income per full time equivalent. And as Andy mentioned, the costincome ratio is continuing to improve.
We've got a series of key initiatives around understanding and delivering client journeys, which is in the process of transforming our bank. This will drive productivity in the certainly in the medium to long term, but we're not shying away from the actions that we need to the short term as well, that are strategic where they need to be, tactical where they need to be, but in any case, driving this productivity figure. Quick touch into digital. Of course, every bank is investing substantially in digital, so are we. The bulk of our discretionary investments are going into various digital applications.
It's paying off. Our mobile and digital adoption rates in the retail business are approaching the, I would say, the benchmark in our key markets, Hong Kong, Singapore, Taiwan, India, we are at industry standard levels. Some of our smaller markets are further behind in terms of digital adoption, but we will continue to push that. And With the rollout of our digital banking platforms around the world, we see both enormous productivity gains but also fundamental improvement in the quality and efficiency of service. Likewise, in the CIB business, we've had a steady increase in straight through digital processing in Financial Markets, but that applies to our cash payments to our custody business, security services, etcetera.
And in Commercial Banking, we're looking at a number of clients. And in some of these cases, they're quite small, used to doing things an old fashioned way, are increasingly adopting our latest digital tools. And this all comes through into some recognition externally. So When I travel through our markets in Singapore, etcetera, I do have accounts at a number of our markets, Frequently hear from our own colleagues, who sometimes acknowledge to me that they have banking accounts at other banks as well, that our mobile banking apps are really the best. And in Singapore.
We have the best mobile banking applications. We have had for some time. We're recognized as having the best mobile banking applications for several years now. Global Finance gave us not only the Singapore award, but the Global award this year. Do the awards mean much?
No. Are my colleagues in Standard Chartered Banks purely objective? No. But I can tell you that they tend to be very, very, very critical and that it's a big test market. But the fact is we're delivering stuff to our clients that's differentiated.
And through time, As we look at the improvement in our retail business in Singapore and Hong Kong and India, it's coming down to the nuts and bolts things like Better quality, better service and higher efficiency, lower error rates. And you can expect to continue to grow us on that and see the progress that we're making. Page 25, the just a quick run through on some of the commitments we've made, the actions that we're taking apart from the narrowest measure of financial contribution. We understand our responsibilities as a bank. We understand that we're in the front line in the fight against financial crime.
We're delighted to have been able to put the U. S. Litigation actions behind us over the course of 2019. But we haven't let down our guard at all in terms of the focus on the role that we play in this area, and we will continue to focus on this. The investments continue to be material as well as much to improve the efficiency and the quality of what we're doing as to make sure that we're productive as we could possibly be going forward.
But we have other responsibilities as well. I think as a corporation, we stakeholders are very keen for us to focus on the contributions we can make to halting increasing global temperatures. This is also very important to our colleagues. And I'm really proud of the work that we've done at Center Charters in terms of identifying the best ways to measure the impact of our business and our clients' business on the environment, taking concrete steps to address that, setting very specific targets in terms of the things that we won't do, but even more importantly, the things that we will do, the $75,000,000,000 of financing that we've committed to support the achievement of the sustainable development goals, The $35,000,000,000 that we've committed to climate change related investments in particular, but of course, this is a drop in the bucket. And the flip side of all of those commitments that we're making or the things that we won't do is that this is also one of the great opportunities of our lifetime.
There's going to be something about $2,500,000,000,000 of financing that the market that the world is going to require per year to achieve the climate change targets that we've identified. The bulk of the impacted markets are ours. The bulk of the transition expense or investment is going to be in our markets. And we're very good at this. So this is an area that we will focus on.
We hope to have meaningful income stream. We do already. We hope that, that can grow steadily. So we can both certainly do our bit for the world and do that in a way that's actually very good for our shareholders as well. We talked a little bit upfront about the incident people.
This is something that we'd like to come back to with more metrics and measures of the kind of progress making. It's a tremendous commitment that we've made and that's resonating very well with our colleagues. And the focus that Standard Chartered has always on the contributing value to our community remains very strong. We launched Future Makers, which is A sort of a superset of activities to focus on our markets, in particular helping people to learn, to live and to grow, Particular focus on young women in a number of those markets, but certainly not limited to that. And subsumes into The very long term effort we've had on treating and dealing with preventable blindness, 3 Singers believing.
So this is a large part what makes Standard Chartered special. And it's when we get these things right, I know Andy and I and Jose and the rest of the Board and the management team find it much easier to hit the financial targets when you've got a workforce that's motivated to deliver some of these objectives as well. A little bit building on the comments that Andy has made and I made at beginning about the outlook for 2020. So we're on to Page 26, Slide 26. We all know that the evolution of interest rates since we gave our refreshed guidance a year ago, has been substantially down, with over 100 basis points of reduction in forward rates to that period out to 2021.
We all know that the outlook for global economic growth has reduced. As we sit here today, it's decreasing sort of by the day as the impact of the virus is fully digested. Of course, we'll see how that plays out. But as we sit here today, The global economic outlook is less positive than it was a year ago, and the Hong Kong outlook is substantially less positive it was a year ago with the combination of the global effect and, of course, the disruption in the second half of last year through civil unrest. So onto Page 27, the box on the lower right.
You'll all be curious to know what the impact on Standard Chartered Drilling. This will be month by month and year by year from the coronavirus since the fact is we don't know. We know that we had a Good start to 2020. We know that we see that our operations are being disrupted in terms of our ability to connect directly with clients or for clients to connect directly to themselves. And we know that by the same token, people are getting back to work.
So our China colleagues are increasingly back in the office. I think by next Monday, they'll be substantially back in the office and probably in a week or 2, With the exception of Huya Province, they'll be we'll be largely up and running. Along the way, they've managed to keep our operation completely functional. We're opening branches. Kept branches open throughout.
Our core operational centers in Tianjin and Shenzhen were never shut down, so never did not miss one beat. In Hong Kong, we're in about 70% of the branches are open. Of course, the footfall is dramatically reduced, but that will begin to normalize as people in Hong Kong stop working at home, start going into their offices. So we're optimistic that we can get back in our core markets, that we can get back to something closer to normal in the next few months. But of course, we don't know how this is going to develop.
And what we also don't know is how the virus spreading around the world will impact global economic activity and global growth. But we do expect that it'll be harder for us to hit the 10% RoTE target in 2021. And as Andy said and as I said, we are not backing away from that objective at all. We continue to think that's the right return on equity for this bank to be able to achieve for the RoTE that but for the features on or the events on the previous slide, interest rates, global economic activity and virus, We wouldn't be talking about delaying our achievement of that target at all. But do you think that's happened?
And I think we are realistically saying Every decision we take continues to be focused on hitting that target. Every incremental capital station. Every lever that we can pull is focused on maintaining that target. We're not backing away from the target. We're just questioning the timing.
The Just to sum up really quickly before we go to Q and A, we continue to think and believe based on the evidence of what we delivered in 2019 that we're operating in the right that we've got the right strategy. We're making good progress on every single element of that strategy, that we've got the right people. We've got the right clients. The clients are recognizing the value that we're adding through their activity with us and then through the objective surveys that we can subscribe to. So we're going to continue to stay the course.
We're continuing to invest substantially, and we are continuing to maintain the level of discipline that we've demonstrated over the past 3 or 4 years, both in terms of our approach to risk but also our approach to expenses. To the extent that The environment remains more difficult. We've demonstrated that we're not reluctant to pull the various levers that we can to improve profitability, and that will continue to be the But at the same time, we recognize that many of these things that have buffeted us and the market are likely to be transitory. And we're building this bank for the medium to long term, and we'll continue to focus on those investments that can help us deliver that kind of value. So with that, I think we will head into Q and A.
And Andy will join me, and we'll take your questions.
Yes, good morning. Martin Leitze from Goldman Sachs. If I may, I have 3, please. And the first one, Specifically on the disruption caused by the virus outbreak. Would you be able to share a little bit how you were thinking about ECL.
And then tied to that in terms of your revenue guidance for 2020, it seems that your revenue guidance is a little bit more constructive And I was just wondering what is driving that. Is this embedded in that still some benefit from the
East.
And finally, in terms of capital return, your very clear commitment to stay well within the 13% to 14% range rather than wedge Towards 1 of the year. And if we just look at your profitability trends last year and also in terms of what your guidance implies,
Let me just give a high level answer on the corona impact. We don't know. I mean, I appreciate you giving a little bit of color on what the expected scenario is. And I hope you're right that, that's the expected scenario. And we can be guided by a couple of things.
We know that there was an impact on our growth in Hong Kong as a result of the civil unrest in the second half of last year. We managed still to turn out a good performance in Hong Kong. But obviously, the virus is not just Hong Kong. It's the whole world potentially. The and we know that we had a good couple of months of 2020, which was impacted by the virus, although the bulk of the impact is almost certainly to come in terms of global impact.
So we're not going to put a number on it because it's we can't. We can't estimate the impact specifically because the expected case It's actually a very, very, very broad range of possible outcomes, and we're seeing that change every day. What we are saying is that East. It's particularly important for us to remain very strong to do this. So we're very happy that we're coming into this period of turmoil and uncertainty with a strong capital position, with a strong liquidity position, with good underlying earnings and good underlying earnings momentum.
So we've got some buffers. And Our intention is to weather this particular storm and then come out and resume growth at ideally a higher level based on the fact that we should be a little bit less disrupted than perhaps others who are less prepared for this.
Can I just maybe pick up on the capital levels?
So the
13% to 14 percent range, we're still very comfortable with. The frequency of review of that, the board looks at it obviously from time to time. When we have ended up in the higher end of the range as witnessed last year, we acted with the buyback last year. We've got towards the higher end now. We have again acted on that.
So we'll be thoughtful. We'll look at trends going forwards. PAMATA, I guess, has the potential for further. We'll see when we get to that point in time, whether there is Further potential on that front. And it's something that we're pretty comfortable with where we are in the ranges now.
I think it's difficult to comment relative to others' commentary. What we've said is the 5% to 7% this year is probably going to be tough to achieve. I think the underlying momentum of the business, if you recall some numbers for the quarter, the financial markets growth was very strong. The Wealth Management growth was very strong. The benefits the legal entity restructuring you referred to, those progressively build up.
So that is something which we have got, which is maybe a little bit unique to us. But how long and how deep the coronavirus impact is, as Bill has just said, is really difficult to tell.
Thanks. It's Guy Stebbings from Exane BNP Paribas. Two questions. The first was just on asset quality. And specifically in the Q4, CT-twelve accounts grew, but it sounds like that was entirely driven by the Saudi outgrades.
But the early results were up, I think, 20% from 10% up into Q3. I appreciate the numbers are still pretty small, but can you give any color around what's going on there? And the second question was on RWAs, which fell, I think, about £5,000,000,000 in the Q4. It looks like that might have been RWA efficiencies driving parts of it, but Perhaps there was some seasonality as well. So if you could give us a bit of a breakdown as to what drove the movement in the 4th quarter and what might reverse in Q1?
Thanks.
Yes. So let me take credit quality. A difficult one, I think, to monitor strictly quarter by quarter. Over periods of time, it sort of ebbs and flows. And I think what hopefully the chart showed was that over a period of time in the aggregate, it's remained relatively constant.
You're right, the CG-twelve movement was more about the sovereign downgrades. The early alerts were a little bit higher. But remember, the early alerts, the majority of those do not end up being a problem. The minority do, but the majority do not. So they're just ones where people are paying on time, but there's some other indicators that maybe we just need to be a little bit careful about So not concerned by that.
Clearly, at this point in time, with the coronavirus, monitoring very carefully, particularly in Hong Kong and China, just where we are on sort of payments from customers and so on. And we'd expect a little bit of softness of that for a period of time. But I think that is in the overall scheme of things for the group. It's not a huge issue. RWAs So this time last year, we said sort of 2 things.
The growth In the underlying RWA, it's probably trending sort of with income as we grow the business. But offsetting that, two things: 1, a continued focus on efficiency opportunities. And secondly, when PAMATA completes, that will take I think we've got $9,500,000,000 on the balance sheet at the moment, RWAs. So the fact we've come in this year at 2% is very consistent with that. It's not the year it's obviously benefited from BARTA that hopefully will come this year.
And we will continue to grind away asset efficiencies over a period of time. And as you've seen in the numbers for last year, that has provided some relief from the gross increase.
Thanks, Manus. Costello from Autonomous. Am I right in thinking that despite the more difficult macro environment, the threshold relative, your LTV increased for the period going forward. Do you think that's fair? And does it change your enthusiasm for wanting to Great question, Manus.
I'm happy to report and I can do this on behalf of Andy and me. We're checked in. We're enthusiastic And we're completely focused on delivering this package, right? I mean, fair is a really interesting question in the context of aggregate levels of play relative to almost any other measures. So yes, of course, it's fair.
Is it whatever. Yes, it's fine. The and it's not going to change at all the way that we approach the business. So the fact is that, that 10% target, 10% plus, it's the right target for our business. There's always going to be questions about timing.
We know that there'll be Peries when it's easier and Peries when it's harder. Right now, we're saying it's going to be harder. You can imagine scenarios where it gets easier. And if we you believe the Fed dot plot and if you believe what I mean fewer people are now saying this is going to be a sharp B in terms of the coronavirus Although even a week ago, when we had the first draft of this deck, people were thinking that a view was entirely possible. Things could get better, and we could end up surprising Right now, we're sitting here, and we're indicating caution.
And so how management then of course, it's not just me and Andy. It's our whole team. How we get rewarded is by creating a great company that we can all be here enjoying years from now.
We'll just take a question from the web.
The question is from Rohit Ghosh from Citigroup. TAM has a large and liquid balance sheet. So why the push in the second half of twenty nineteen to add corporate operating accounts that appear to have hurt your NIM? And are you more concerned about core liquidity than a year ago? Will this OpEx corporate accounts push continue or now slowdown In May 2020.
So let me pick that one up. Overall, liquidity levels in the business, we're liquidity levels in the business we're very comfortable with. We will continue to focus upon the balance between the more expenses and the less expensive sources of liquidity. We have pushed more on the operating accounts. Those tend To be fairly sticky balances, the rates on those below those that we'll pay on time deposits.
We have done some rebalancing within the 2nd half of the year, which as I said earlier, should see some benefits as we come into this year with the high levels of the OPEC and the lower levels of time deposit. So It's all part of managing the overall progression on margins.
Hi. It's Claire Kane from Credit Suisse. Two questions, please. Just one clarity on the revenue outlook. You mentioned you hope to improve NIM from the exit rate in Q4.
So do you think overall NII can be a contributor So revenue growth year on year in 2020 is my first question. And then a follow-up on BCL sensitivities. I haven't read it in detail, but you do have disclosure in the annual report around a moderate downside scenario, A global one where you say there's an extra $400,000,000 impairments there. And I think in your extreme downside, it's $2,400,000,000 Impairment. But how should we think about that €400,000,000 in the context of, say, coronavirus extending throughout the rest of 2020?
Okay. So let me take the NIM. So we ended up last year at 1.5 4% in the Q4, we're 162% for the year average. It's clearly an area that is quite difficult to forecast accurately. We're doing this across 60 markets.
We've got coronavirus. We've got everything that's going on. What I'd hope is that we would see in 2020 us being somewhere above the Q4 level, But it would probably be optimistic to think we'd be actually at the 2019 overall level. So I'd hope that, therefore, it will be in that sort of range. Difficult to predict with precision.
On the ECR and sensitivities, look, you can run 1,000,001 Different scenarios for a bank, and we obviously published a particular scenario with a particular set of sensitivities. What we have not done, And I know others have, is sort of put a number on the ECL impact of the coronavirus. We think at the moment, it is really We've had a fairly good January, February. March will be affected by the virus. When we get to reporting out on the Q1, we will have a few more weeks of knowledge.
And at that point in time, I think we will have a slightly better basis for putting some numbers on it. And obviously, we'll have to put numbers on it for our reporting. But just as of now, I just think it's a very difficult area to give you any precision on.
Just on the NIM, I appreciate we may not get back to the average For year 2019. But do you think with volume growth, you can get the top line higher year on year?
Well, we certainly are hoping that we can have positive growth on income during 2020. As you saw, the fees side of it, which is Reason we're going to get to heart, actually with what happened in financial markets with Wealth Management, that grew comfortably last year. I think the net interest one, we'd hope that we can be sort of there or thereabouts on last year's numbers. But again, it's quite a difficult one to predict, particularly in the current environment. Hi.
Ian Gordon, Investec. Firstly, can I just ask you to comment on your Views on helicopter money? And firstly, in terms of what views you might express with monetary authorities. And secondly, your view on what the potential impact might be on your business? And then secondly, on TAC, Andy, I think you've guided us to the second 30% going forward.
Would it be reasonable to assume some geographic mix benefit as well as the U. K. Bank levy in 2021 and beyond?
So the helicopter money obviously has gone from hypothesis to reality in Hong Kong. So we'll see what it does in terms of bringing the Hong Kong citizen out to start spending again. Obviously, the Hong Kong has been buffeted by 2 ways that have kept people out of the shops. And although it hasn't kept them from shopping, There's been a substantial shift to online. But it's obviously an extension of a quantitative easing type approach to monetary policy.
It's definitely going to increase consumer spending. The question is whether it kick starts an economy and generate some growth that's sustainable. It's an interesting experiment. Thankfully, Hong Kong can afford it many, many times over. So We'll see if they can get a real kick start.
Timing is probably about right because people are, certainly from our colleagues, they're ready to get back out again. They're feeling safer about the environment. The health measures that the authorities have taken in Hong Kong have been very substantial, and it would appear effective. Say the same thing about China. Certainly, outside of Hubei province, where obviously, the response was later than anybody would have hoped.
But the response has been very, very, very aggressive. I'm going to include Singapore in that as well, although Singapore came a little bit later just because of the geography. Are we encouraged that each of these markets can get back to normal in relatively short of a year? Yes, we are encouraged. A little bit of helicopter money will help lubricate things in Hong Kong.
Can I I'll take the second part? I thought Bill was going to pick up the tax The so 2 parts. The effective tax rate, we have been in the low 30s for a period of time. We are just a shade under 30% for 2019. And what we've said is sort of somewhere around 30%, I think over the next 2 3 years is probably where we should be heading, possibly a fraction above that in 2020, but there or thereabouts.
The The fact it's a bit lower is in part due to geographic mix as some of the businesses are becoming more profitable. It depends on what the tax rates are in those countries. And when you put it into the mix, that's sort of the Separate that out from the bank levy, which is not in the effective tax rate. The bank levy is separate. As I think you're aware, the bank levy at the moment is charged on the global balance sheet, whereas in 2 years' time, we will have that based upon the U.
K. Balance sheet. What is therefore sort of 3.40 ish cost should be sort of 100 or so cost. So an important contributor as we take the ROCE upwards going forwards from every line on the P and L and that Hopefully, we'll be all of
them. Thanks so much. It's Ed Firth from KBW. I'm just trying to understand a little bit more your caution on revenue, because you highlighted that year To date or 1st few weeks, I think you said of this year, you're running at 4%. That's pretty much in line with what you did last year.
And you said that your hope well, your point of language is that you're expecting the impact to be reasonably transitory, I think is the word you used. And you're only 1% light on your target anyway. So is this just like a sort of general join the crowd, everybody's cautious, we should be cautious, type Step back from those targets. Or is there something really tangible that you can highlight to us that gives you this caution and this Expectation that actually we're going to see a big slowdown. So I guess that was my should I get my second question or do you want to wait for that one?
I suppose.
I guess the second question was then just on the margin. Could you just in terms of your the comments you've just made on the in answer to the previous question on the margin, What are your expectations? Are you factoring in things like interest rate cuts in the U. S. And the high ball following, etcetera, just as a small?
The question on income is interest rates are lower. We've had another 20 basis point move in 10 year rates, which
is going it's gone through
the curve. So that impacts us. Now our sensitivity is less, as we've indicated in the material that we sent out. It's less than it was a year ago, but it's We have we are sensitive to lower interest rates. Trade flows are down, and trading activity is down substantially, as we've seen.
The propensity to invest in capital projects is at least being delayed. I think this will all get caught up, it may not get caught up until we may pick up in the second half of the year or whenever this thing passes. Activity that we miss in the first half of the year, that's going to impact growth in 2020. The consumer sentiment is down, so the propensity to spend is down. We're seeing that in terms of economic impact in certainly the affected markets.
As I say, there has been a big shift from physical to online purchases, of course, is part of a much longer and larger trend. So it's the empty shopping malls that you see pictures of in Hong Kong, Singapore and China are not the whole story, but nevertheless, it's down. And I can probably go on with other things that happen when people get nervous in terms of activity. That, for us, has been a little bit offset so far by people focusing on risk management. So our Financial Markets business has done very well through this period because people are more concerned about risks than they have been.
There's plenty of indicators of that. And yes, it's not to say that we would expect that Financial Markets activity to fall off as soon as people get comfortable that the plan is going to survive. Well, yes, there's every possibility that we have things that are a bit out of sync. So maybe we're being too cautious. I really hope we're being too cautious, but I think there's good reasons to expect that there's some real headwinds this year.
On the NIM, as I said, there's a lot of moving parts. It's not an easy one to accurately Forecast, as we all know, if you look at forward curves, there's a little bit more downward pressure on interest rates, but actually the majority of that They have happened during the last few months. The things that we're doing on the rebalancing of the liabilities, on the repricing, The legal entity restructuring, we think those will be offsets. And our hope is that we can come out this year a bit better than we In Q4 of last year, but time will tell.
Thank you. It's Tom Rayner from Numis. I was going to ask a similar question to Ed, although I was going to ask why You're not more cautious perhaps on revenue. But it looks fairly obvious why with the interest Great pressure, etcetera, that you're going to do well to show any growth in net interest income this year. I think that would be A fairly good outcome.
And that seems consistent with what you've said. And Bill has now just given a few Points around why the non interest income may also be more difficult certainly for the next year. One thing you didn't mention and I may have missed this because a little bit late, apologies, but At the start of the meeting is the sustainability of some of the financial markets revenue, in particular in Q4, It looked like a fairly large number in corporate and institutional sort of $243,000,000 which I wasn't sure what that was. I just wondered if you could talk a little bit about The sustainability of the Financial Markets revenues going forward as well, please. I'll give you a
bit of color, Andy can comment as well. The a number of things have changed in our Financial Market business. So for starters, we've shifted the orientation of the bank to a much more active credit flow through business, underwriting and distributing rather than buying and holding. So our credit structuring distribution group has added materially to profits. That should continue to grow.
That is one of those things that the deal activity will drop during periods of concern, obviously. Bond market issuance is going to be down. Syndicated loans will be down in the short term. The underlying applications or the underlying need for financing hasn't gone away. Those will come back as a question of timing.
But that's there's been a structural increase, and there will continue to be structural increases in our ability to make money originating, distributing and trading credit. At the other end of the spectrum, I would say We've done we had good results in our rates trading and in our currency trading business. That's very dependent on underlying market volatility and concerns. We're at a relative high in the cycle by most measures in those two areas. But despite the underlying Logical volatility of those businesses.
We have been steadily improving our capabilities. We're now regularly regarded as always the top 10, sometimes the top 5 FX player in G3 currencies. And in our local markets, we're regularly number 1 or number 2 and have been for some time. And those markets are growing. Flows are erratic, but they're growing.
And then someplace in between, I would say, is the ongoing focus that we've had on providing more customized solutions to our customers. Standard Chartered has tended to be call it a plain vanilla house in years gone by, and we still are predominantly. And we're definitely not going back to the go go days of 10 years ago. But Standard Chartered is becoming a much more creative and innovative place. And to the degree that we can solve our clients' problems in more creative ways, always focus on getting the right results for the client.
That's a secular and structural area of growth as well. So is it sustainable? Yes. Will it be volatile? It hasn't been survival, but will it be perspective?
Yes, you have to say yes because we know that the environment will But the fact that this is a business line that's got its legs and can continue to grow is a fact that we would put out as well,
as a fact.
It's Raul Sinha from JPMorgan. Can I have 2, please? Last time around, you had a slowdown. There was obviously quite a lot of cost pressures on the business because you had to invest. This time around, I think you're quite confident about hitting Jaws, but I was interested in what are the areas you can potentially squeeze to hit that positive jaws guidance?
And does that actually make sense given the amount of investments you continuously need to make within the business. So the question really is Where are you stepping away from, from an investment perspective? And what
are you
prioritizing? And then the second one is on virtual bank in Hong Kong. Obviously, we've seen only one example of that and looks like quite a high cost deposit model. What are your thoughts about the likely shape of your offering? And are you going to change based on what you're seeing in terms of customer behavior?
Thanks.
In terms of investment, the of course, we have A bedrock of things, which Andy has regularly called out, which we're going to do in any case, either they're required for regulation or meeting accounting standards or whatever. There's a little flexibility there, maybe a bit of flexibility in timing. There's, thankfully now, a large block of our investment are things that are discretionary tended to generate either fundamental improvements in our process or income or both. And we have a number of levers that we can pull there. I won't be we can delay the timing on things.
If we look at the environment and say it's just not as attractive for a particular area of investment because economy is going to be slower or because markets have receded or because the client segment is under pressure or whatever, then obviously, we can target those investments. We're very reluctant to pull back on the investments that we're making because this is clearly how we get the growth engine fully up and running. The other lever that we have and we have many levers to pull, I would say, But another interesting lever is that we've become quite good at deciding whether we want our investments to be off our own And to the extent that of course, when you enter into a partnership, you do it because you think that the partner is going to bring some value. It's also a way to defray the cost up front or to spread your risk or put your euphemism around it. The to the extent that we have some really exciting opportunities that we don't want to cut back, but we don't feel that we can afford it.
We can either push into more partnership models or we can shift the economics of the partnership so that we're putting less cash in and perhaps adding value elsewhere or just taking a lower resulting stake in the profit. So I think we've got plenty of levers to pull without deviating from the core strategic thrust. And that's what are these things? Very focused on penetrating the mass market in markets where we have a presence but where we're subscale. And I think the easiest way to do that is through partnerships with various new economy players.
We should be in a position relatively shortly. In fact, we've signed our first commercial contracts on our partnership in Indonesia. We'll be in a position to announce that in the next few weeks, I guess, that will get us access to tens of millions of customers for a full range of banking services in a new technology platform that we built that we're rolling out with one platform first, and we'll roll out through others. As you negotiate these transactions, there's always a negotiation of who's picking up the development costs, who's picking up the marketing spend and who gets the income that comes off the back of the initiative. We can move those things around depending on what our appetite is at a point in time.
We've got you asked about the Hong Kong Virtual Bank. I mean, the one guy that's in I would call it sort of advanced alpha testing right now, has offered a 6% interest rate or 6.5% or something like that for a very short period of time to a very small number of clients. So obviously, they accomplished what they wanted to accomplish, which was to get a headline, and that's great. What we intend to deliver, and we should be in a position to deliver that relatively quickly, is a differentiated customer proposition. That's our we're not going in to compete on price.
Of course, our price will be competitive. I mean, that's Hong Kong consumers are as rate sensitive as anybody. But what we're really competing on is a differentiated proposition. And what we're building, we're quite excited about.
So Scott, one question online and then we'll do 5, and then that maybe will also share the slides.
The Next question is from Aman Raka from Barclays. Firstly, regarding your 13% to 14% target CET1 ratio, Why operate so high above your MDA? Is there scope to bring this down? Or is there trapped capital in the footprint, elevated stress, drawdowns, etcetera? Secondly, shall we expect a step up in 2022 RWAs?
As part of that, do you still expect 5% to 10% RWA inflation from Basel Piers indicate a watering down in drool.
You want to comment on our token buyback? Only €500,000,000
Let me take this through to so CET1, 13% to Obviously, there's a number of factors that indicate that. 1 is regulatory minimum. 1 is peak to trough on stress tests. One is capital requirements within the system operating across 70 countries. If you put all of that together, 13% to 14% for us seems a sensible space to be and we are comfortable with that.
We're operating within it.
And sorry, so we're aware, Regis is
happy and we're happy with So that is a range we're comfortable with. On RWAs, it's really a repeat of what we said last year that We do we can keep the growth in the RWAs below the rate of inflation or rate of increase in income. Let's put it that way. Panmata, when that goes, we'll take quite a big chunk out of the group's RWAs. And on Basel III or IV or whatever it is, somewhere in the 5% to 10% range is the best estimate.
It is still an estimate because there is still quite a lot of detail that needs to be clarified. And the U. K. Obviously needs to form its own view irrespective of Europe on the exact application of some of it and like most banks eagerly await more definition and more clarity. Last question, I think.
It's Fahad from Redburn. So a couple of questions. Just on the margin, just a point of clarity. How much of the €200,000,000 to €300,000,000 came through In Q4's audit, there's all of it coming through in 2020. Have we had any benefit from that at all into the funding synergies?
And on RWA, to follow on from the earlier question, you had €3,500,000,000 of credit migration in FY 'nineteen. I'm assuming all of that was Hong Kong related, please correct me if I'm wrong. Have you assumed any credit migration? Or how should we think about credit migration, considering what's happening on the ground 2020. And your RWAs less than income guidance, is that ex Primarta or is that with Primarta, so I.
E, if we take Primarta away And assuming credit migration, is it realistic that RWA is will be growing less than income? Thank you.
It's like a 2 part question? 3 or 4. Okay. So in terms of the benefit to our NIM of the legal entity restructuring, which I think was your first question, We said that will progressively build over a 2 to 3 year period. So as we retire existing exposures, replace them with Better funding sources or location of sources that will come through.
So there is a little bit of impact of that in 2019, but there will be more in this year and then more in the year after. The GBP 3,500,000,000 of credit, there is migration. There is Some clearly this is in Hong Kong absolutely for sure. And then the rest is sort of spread around the place. The keeping the overall RWA growth below the rate of income was a sort of aggregate comment, which did incorporate the assumptions that PAMATA would be going at some point during that time period.
And just credit migration in
general, I mean, can you expect more
positive credit migration over the course of the year?
Well, it's probably tied quite a lot back into the coronavirus sort of issue. We'll see just how that Hands out not just in terms of direct but indirect consequences. We are well aware and we are keeping a close eye on that at the moment. There are 1 or 2 sort of smaller stresses, but nothing significant in the group context. But clearly, as we all know, it will depend on how long it lasts for and how many countries it impacts.
Okay. Thank you very much. As it starts to snow outside, The cautionary tale is starting to win. Thank you very much for coming, and thank you, Anibal. Thanks.
Thank you.