Good afternoon, ladies and gentlemen. Welcome to BPI's Second Quarter and First Half 2023 Earnings Call. This is Chinqui Lukban, your moderator for this session. I am pleased to introduce our speakers and panelists this afternoon. First off, TG Limcaoco, our President and CEO. Eric Luchangco, our CFO and Chief Sustainability Officer. Ginbee Go, Head of Consumer Banking. Derrick Tan, Head of Wealth Management. Jojo Ocampo, Head of Mass Retail Products, and John-C Syquia, Head of Institutional Banking. We also acknowledge the presence of the rest of the BPI leadership team joining this call. This afternoon's agenda will begin with opening remarks from our president, TG Limcaoco, followed by our CFO, Eric Luchangco, who will walk through this quarter's performance highlights and strategic updates. The floor will then be open to questions from the audience. Just some housekeeping reminders before we proceed.
Identify yourself by your name and company so we can address you accordingly. Keep your lines on mute to minimize background noise. Finally, this call is being recorded and legal disclaimers apply. Now let me turn you over to TG for his opening remarks. TG, go ahead.
Thank you very much, Chinqui, and good afternoon to everyone joining on this call. Today we're very pleased to explain our second quarter and first half results. The team of Eric Luchangco and his entire team have put together what I think is a very comprehensive presentation to provide even more transparency t o our numbers and to the actions that we're taking to achieve our five-year goals. I think the results of the first half show very much that we are making good progress towards our five-year goals in that our success and our aggressive actions towards acquiring market share in the loan space, both in the institutional banking and the consumer space are paying off, as well as our actions on the digital front, are beginning to bear fruit.
We will also have a small section at the end where we will talk about our actions on the agency banking initiatives that we have taken that will move us further into our goal of 50 million customers by 2026. So as usual, Eric will run through the numbers as well as some of our actions, and we will open for Q&A at the end. At that point, I think let's have a great discussion of where the bank is moving towards to. Without further ado, Eric, I'll turn it over to you.
Thank you, TG. Good afternoon to everyone joining us here today. We're pleased to report that the bank delivered a record PHP 25.15 billion in after-tax earnings for the first six months of the year. This was driven by strong net interest income and lower provisions. Excluding the impact of the sale of a property last year, which generated PHP 5 billion in gain, net income would have been up 51% year-on-year. Profitability further improved with an annualized ROE of 15.5% and an ROA of 1.92%, the highest level since 2016. Funding and liquidity ratios remain well above regulatory requirements with an indicative LCR of 204% and NSFR at 153%.
The capital position slightly moderated, reflecting strong pace of loan growth and capital distribution. Indicative CET1 was at 15.55%, and CAR was at 16.43%, well above both internal and regulatory thresholds. Asset quality. On asset quality, it remains sound with a small uptick in the NPL ratio to 1.88%. We continue to book provisions, although at a slower pace than last year, bringing our credit cost to 23 basis points and NPL cover to 167%. As usual, our asset quality remains more favorable than industry averages. Lastly, our strong income generation is sustaining shareholder returns.
For the first half, the bank paid cash dividends at PHP 1.68 per share and distributed common shares as property dividends at an entitlement ratio of approximately 0.089 shares for every share held. Looking at the second quarter performance, we delivered a record net income at PHP 13.02 billion, notwithstanding an increase in operating expense. Compared to the same period last year, net income was at 4.5%. The impact of lower fee income and higher expenses were more than offset by the strong growth in net interest income, up 27.5%, trading income up 43%, and lower provisions down 60%. Excluding the gain from the asset sale last year, fee income would have been up 11% and revenue up 24%, outpacing the growth in expenses.
Net income would have been up 49%. Looking at our first semester performance, we delivered a net income of PHP 25.15 billion, up 23% year-on-year, driven by stronger revenues and lower provisions, which offset the increase in operating expenses. Sustained expansion of loans and NIM offset the decline in fee income from an elevated base last year, due to the gains from the asset sale. Also reflected in our results are the following: Net interest income at PHP 50.11 billion is up 27.4% year-on-year, attributed to strong loan growth and higher NIM. Trading income at PHP 2.29 billion, up 41.5% year-on-year on favorable market conditions. Fee income at PHP 13.19 billion, down 20.9% year-on-year from an elevated base last year.
Total revenues came in at PHP 65.6 billion, up 13.8% year-on-year. While operating expenses at PHP 31.39 billion were up 24.4%, driven by a growth in volume, technology, manpower, and marketing expenses. Provisions at PHP 2 billion were 60% lower compared to the previous year, which brought net income to PHP 25.15 billion, up 23%. Excluding the asset sale, fee income would have been up 13%, revenue up 24.6%, outpacing the growth in operating expenses, and net income would have been up 50.6%. Strong earnings last year allowed for a sharp increase in capital distribution following the bank shift from a fixed dividend amount per share to a variable dividend amount based on a 35%-50% payout ratio on previous year's income.
The bank declared for the first half of this year a PHP 1.68 dividend per share, up 58% from last year and 87% from the previous years. This is equivalent to payout of 19% for the first semester. Also in June, the bank distributed common shares as property dividends at an entitlement ratio of 0.089634 shares for every common share held. We further improved profitability in the past quarter, resulting in an ROE of 15.53% and an ROA of 1.92%, that's the highest level since 2016.
Earnings per share for the first semester was at PHP 5.09 per share, which is 58% of full year EPS last year, despite the additional outstanding shares from the distribution of common shares through the property dividend in June. Looking at the revenue more overall, increases in assets and interest rates drove revenue growth. The bank reached a new high in quarterly revenue at PHP 33.9 billion, up 6.8% on the sequential quarter and 4.9% from last year, despite lacking the one-off gain that we had last year. Net interest income is up 27.5% from last year on strong volume growth and continued NIM expansion from increases in interest rates. Trading income is up 43.4% on a more favorable trading environment.
Fee income is down 38.5% from last year, but would have been up 11% net of the one-off gain. We continue to see positive trends with loans which stood at PHP 1.78 trillion, up 10.2% year-on-year, despite the high base last year from the booking of the tower loans in June. The loan book is up 3.5% quarter-on-quarter after a contraction in the previous quarter due to seasonality. NIM also improved following the trend of previous quarters. Second quarter NIM reached 4.11%, up 17 basis points from the previous quarter and 60 basis points from last year, driven by a recovery in asset yields.
Total loans stood at PHP 1.78 trillion, up 3.5% quarter-on-quarter and 10.2% year-on-year, benefiting from the use of alternative channels, improved online applications, innovative credit score models, and increased marketing efforts. Growth was broadest with consistently strong growth in personal loans, credit cards, and microfinance. Personal loans are up 16% quarter-on-quarter and 108% year-on-year. Monthly loan releases reached PHP 1 billion and new bookings were exceeding runoffs by 22 x. Credit cards are up 11% quarter-on-quarter and 43% year-on-year on a 39% increase in installment loans and a 61% increase in revolving balances. As of May this year, 25% of all clients were revolvers versus 30% in May last.
25% of all clients were revolvers for May 2022 versus 30% for May of this year. Delinquency among new clients remains low at about 2%. Microfinance loans are up 6% quarter-on-quarter and 26% year-on-year on a 31% increase in loan releases driven by higher loan releases per branch, which were up 21% compared to last year, aided by the additional 10 branches we opened this year under BanKo. Mortgage loans had its best quarter since the pandemic began following multiple quarters of middling growth, this time posting a 2.7% quarter-on-quarter growth driven by bookings in CTS loans in June. On an absolute basis, corporates grew the most up PHP 100 billion or 7.8% year-on-year.
All told, combined consumer loans increased 19% year-on-year, consistent with our direction to increase our presence in this area, resulting in an improvement in the loan mix, with consumer cornering 21.3% of the total loan book, up from 19.7% last year. Fee income at PHP 6.89 billion was up 11% year-on-year, excluding one-off gain last year, with our biggest businesses posting fee income growth. Card fees, which account for 29% of total fee income, were up 42%, largely on increased customer base and client engagement. Wealth management fees are up 1% year-on-year on an 8% increase in AUM driven by flows and market performance. Branch service charges are up 9% on higher transaction count, including loan releases.
ATM and digital channels were up 21% attributable to the onboarding of additional partners this year, which contributed to the 53% increase in partner transactions and 22% increase in fund transfer usage. Above increases were partly offset by lower fees from securities and investment banking, which were down 14% on fewer notable transactions so far this year, although the pipeline remains robust. Insurance was down 2% due to lower equity income from investments in BPI MS and AIA, while asset sales and rental income were both down year-on-year due to the high base last year from the property sale and the loss of rental income as the property was being leased out prior to the sale.
Just looking into our card business in a little more detail, we can see the exceptionally strong performance of our card business, which demonstrates how embracing change and digital transformation has driven growth. Over the course of a year, we expanded and diversified our channels to include digital partnership to GCash and agency banking, including third-party aggregators. The partnership with agency banking brought with it indirect access to under-penetrated customer markets through six merchants and their over 1,000 physical stores, where clients can access applications for credit card for card products. I'll talk a little more in a little more detail on the agency banking later.
We adopted alternative credit scoring models developed by our data analytics team using data across different products to expand the pre-qualified client base and improve approval rates, while also streamlining the application process and reducing application requirements. We transformed our marketing campaigns through hyper-personalization, leveraging on the use of data to ensure that clients receive the right offers that address their needs. This is apparent in both targeting BPI depositors and the market at large as we intensify acquisition via the internet channel. This approach helped the bank achieve better results while saving on marketing costs. Finally, we implemented a Fall Off Your Seat campaign, which is an aggressive card switch campaign employing discounts, rebates, and points in the BPI Rewards program. Awarded points can be viewed and redeemed via the VYBE app.
These resulted in a 29% increase in card base and a 55% increase in billings year-on-year versus industry growth of 14% and 40% respectively. Card banking demonstrated how fresh ideas supported by technology and a highly engaged team can transform the experience of the client and the employee. We're excited to roll out these initiatives in other products like personal, auto, mortgage, and mortgage loans, and even investments. Anticipating that they will yield similar results and accelerated growth in customer acquisition and customer engagement. On the expenses side, operating expenses for Q2 stood at PHP 16.3 billion, up 23% year-on-year on tech, marketing and manpower expenses, as well as the low base effect as OpEx i n the first half of..
In the first half of 2022 was up only 5% over the same period of the prior year, due mainly to payment schedules for IT projects. Manpower expenses are up 17% year-on-year due to structural salary increases and a slightly higher headcount, although headcount remains lower than its peak in 2019 and even the level in 2021. The manpower efficiency has continued to climb, showing consistent annual growth in customer count per employee headcount. Technology costs at PHP 3.1 billion are up 26% on continued investments in digitalization, noting that some of this year's spend is still spend from last year. We are seeing that spend result in new offerings to customers, and we'll also give more details on that in the following slide.
Other expenses are up 37%, driven mainly by increases in marketing expenses and card transaction charges. The higher operating costs were partially offset by the impact of efficiency initiatives. We served more clients, now at 9.65 million, with a reduced number of branches and branch employees. Digital clients, which generate more revenue and cost less to serve than non-digital clients, are now nearly a third of total client count from 6% in 2019. Cost income ratio was at 47.9%, lower than the full year 2022. We recognize that there have been questions on our rising tech costs. Here we show a breakdown of the fixed versus variable costs on the tech side, and you will see that taking half of the tech costs from last year, basically semi-annualizing, our tech costs from last year.
You will see that the fixed costs remain fairly fixed, but the variable component, which rises in relation to business volumes, such as transactions or number of customer accounts, has grown with the increase in business volumes. That component currently accounts for approximately 12% of total tech costs. We're constantly reviewing our tech architecture to determine that this remains the best way for us to manage our growth moving forward, and we will adjust as we see fit moving forward. Our balance sheet expanded with both loans and deposits increasing by 10.2% and 7% growth respectively. Our liquidity remained healthy, supported by a stable and reliable franchise. CASA ratio remained stable at 70%. Our asset quality remained resilient.
There was a slight uptick in the NPL ratio to 1.88%. Which was due to new NPL formation from credit cards and personal loans, which were within expectations, and we kept provisioning at PHP 1 billion for the quarter. Consistent with the guidance in previous meetings and to address concerns of our auditors in over-provisioning, we are on track to gradually lowering the NPL cover, which reached as high as 180% in December 2022 from 88% in December 2018. During this period, we accumulated huge provisions by keeping credit costs elevated to as much as 2% in 2020. We continued to book provisions this year, though at a lower rate of 22 basis points to partly cover new NPL formation while allowing the total cover to gradually decline.
For now, we do not see the need to book higher provisions than planned, as new NPL formation has remained muted and asset quality outlook has become favorable in line with our view on GDP, employment, and inflation. In addition, our stage one and stage two ECL are lower compared to the start of the year, though total ECL increased slightly, driven by new loan bookings. Currently, the provision is more than sufficient to cover our base case scenario. We are comfortable with the range of 150%-160% NPL cover, and it's worth noting that although the cover is declining, we are confident that the co-provisioning is more than adequate, especially since we have very strong collateral cover on these accounts.
Looking at the collateral cover for the NPL and restructured loans independent of the rest of the loan book, we note that the coverage for these accounts via hard collateral, such as real estate mortgages or deposits, government securities, et cetera, is at 220%. Beyond that, we also hold additional enforceable collateral, such as title mortgage or similar, on these accounts. Lastly, on capital. Our capital position has remained robust while supporting strong growth for the semester. CET1 capital stood at PHP 303 billion, up PHP 3 billion for the quarter on net income accretion, additional paid-in capital from distribution of common shares as property dividends, and other comprehensive income gains, partially offset by the cash dividend distribution.
CET1 ratio was at 15.5% and CAR at 16.4%, both lower by 20 basis points from last quarter, reflecting growth in risk-weighted assets, slightly outpacing the capital accretion. Now I would like to show you some updates on what we've been doing with the bank. To show that, we continue to execute on three key aspects of our strategic focus, financial inclusion, digitalization, and sustainability, all underpinned by our nice core values. By 2026, we target to bank 50 million Filipinos from the 9.5 million customers that we have today. Actually, just over that, at 9.65 million. This afternoon we will talk about our agency banking and BanKo, and the progress we have made on financial inclusion.
Our digital transformation also largely plays into our customer acquisition and customer engagement strategy. We will give you an overview of the latest drops in our client engagement platforms. Finally, we'll also have an update on our sustainability initiatives, which is core to how we do business. Agency banking will change the way BPI engages with Filipinos by integrating banking with their daily lives through new channels that will extend our capability to reach, acquire, and serve more customers in more communities. With customer convenience at the forefront, our ongoing marketing caravans create awareness about the presence of BPI in partner agency stores to drive customers to the stores already in their community. From a come to us attitude, BPI will now go to you. We match the right technology enablers such as APIs, digital linkages, and our own agency banking platform to our partners' business requirements.
At the bottom of the screen, we show a sample BPI tent card that our agency partners will display with the unique QR codes of available BPI products. A customer only need to scan that QR code to apply for the product, and he will then be directed to a BPI product landing page, where he will complete his application. The entire application process will be done in the BPI environment. By becoming another channel for simple banking transactions, our agency banking partner outlets can help BPI branches operate more efficiently by reducing the transactional processing load at the branches, dovetailing nicely with our branch optimization strategy.
Agency banking instantly expands the BPI network, as shown in the map on the right as of June 30, our physical presence has expanded from 752 branches, from the red dots that you see on the left, to a total of 2,200 with an additional 1,480 new partner outlets, which you see on the map to the right with the green dots. Many of these new outlets are located in municipalities and towns where BPI does not have a presence, and many of them are open on weekends and holidays, 24/7. Clients may avail of deposit, loan, and insurance products with any of these partner outlets.
By the end of the year, we expect to onboard 8 more partners to bring our network of physical stores to almost 6,000, including branches. By then, clients may also be able to do bills payment to merchants and government agencies and cash in cash out transaction, making these outlets operate more like a branch. The strategy is to be the most anywhere, anytime banking May BPI Dito. In June, we launched the e'Nay app, linking sari-sari stores to a major FMCG distributor client of ours. The app is a marketplace that enables sari-sari owners to order directly from the distributor and get the delivery same day at their locations, greatly improving the logistics of replenishing their inventory.
We expect to increase both the number of sari-sari stores using the app as well as the number of distributors offering product via the app. Recognizing the contribution this makes to financial inclusion, BSP Governor Medalla himself joined us during the app launch. From BPI's perspective, this increases the BPI ecosystem, increasing the propensity of customers to keep their money within the BPI ecosystem, making BPI their operating bank of choice. Our continuous deployment of the seven client engagement platforms is full steam ahead. Up top, we have highlighted the available new and coming soon functionalities for each of them, and we're excited for each new drop which enhances the UI/UX experience of our customers. The images in the middle show how each of our apps currently look on mobile devices. We encourage you to download, navigate, and explore the platform best suited to your financial journey.
Please feel free to reach out to the IR team if you need help with the links to the most updated apps. At the bottom, we provide some key metrics which we use to constantly monitor our performance to ensure that we are on target to meet our platform milestones. In the second quarter of 2023, BPI continued to be an inclusive, innovative, and trusted pioneer in responsible banking. We continued enhancing our digital platforms in the spirit of financial inclusion to cater to the underserved and the underbanked, and to drastically reduce the carbon footprint of banking. We launched an enhanced BPI app with AI power and insights available to our 6.2 million enrolled customers, with 68% of which are active users.
We continued expanding our touch point inter-infrastructures with BPI agency banking, making our suite of financial products available to six brick-and-mortar partners with a total of 1,480 stores, plus an additional three digital partners. We held the 2023 Sustainability Awareness Month with the theme of Green and Beyond, attended by over 14,000 people through 17 events. We continued using energy-efficient technologies with 100% of the BPI branches using LED lights and 90% of BPI branches using inverter air conditioning units, with the rest to follow over time. As a result of our various initiatives, by July 2023, we have garnered a total of 8 recognitions in the ESG space from reputable award-winning bodies such as FinanceAsia and Global Finance, among others.
We're looking to surpass the 10 sustainability-related awards that we received last year, which by itself is already more than the number of sustainability-related awards received by most of our peers in the region. Lastly, we'd also like to share with you some of the notable awards and recognitions received by the bank this year, including Best Bank in the Philippines and Asia's Best Bank for Corporate Responsibility from the prestigious Euromoney Award for Excellence, as well as multiple awards from the Institutional Investor survey. These awards mark our achievements, and they motivate us to do more and serve our customer better, reinforcing the vision of BPI to build a better Philippines, one family, one community at a time. As I close, let me summarize some key takeaways. Overall, the bank delivered a solid quarter performance on profitability.
We further improved profitability and shareholder returns. Our balance sheet remained robust with healthy liquidity and capital position. Asset quality remained resilient with ample allowance for losses. Lastly, we further strengthen our leadership in digitalization and sustainability. Thank you, and I now open the floor for questions.
Thank you, Eric. Ladies and gentlemen, the floor is now open to your questions. There are two functions at the bottom of the Zoom webinar screen you may use Q. One is the raise hand function. I will then prompt you and unmute your line for you to speak. Alternatively, you may type your questions in the Q&A box, and we will read out your question on your behalf. We have a question in the chat box from Samin Reza of Maple-Brown Abbott. He asks: How sustainable do you think ROE is in terms of how much is being driven by NIM versus fee income growth? And additionally, any sort of concerns with NPL ratio rising in the last two quarters?
Maybe I can start off and then TG you can add if you have any additional comments on those two questions. First, sustainability of ROE. We believe that this level of ROE is really quite sustainable for us. We do realize that much of it was driven by NIM growth. Moving forward, we expect that our digitalization initiatives will continue to help drive profitability for the bank. Some of it may come via additional fee income, but the reality is some of what we're doing on the digitalization side will also help to increase our cost of deposits, we believe, which will also augment our NIMs.
Therefore, that will also contribute to, I guess, continuing NIM growth. Additionally, there was also the question on NPL. We don't really see any real concerns for us, based on what we've seen on the NPL movement over the last couple of quarters. We have been seeing some upward movement in the NPL over the last couple of quarters. In our minds, this was really to be expected given the rate at which we saw interest rate rises over the course, especially over the course of this second half of last year. There's always some kind of lag effect for that to filter into, I guess, our borrowers.
That being said, we don't believe that NPLs are gonna come out of hand. In any event, we are very well positioned from an NPL cover standpoint, and as I mentioned earlier, from a collateral coverage standpoint as well.
Let me add to that, Eric. Thanks for your question, Samin. You know, that's one of the things that the management team keeps first and foremost in our minds because our objective has always been to deliver the first goal of 15% ROE. The sustainability of that number is something that we work at. I grant you that much of it was driven in the past couple of quarters by the expansion of the NIM. We do realize that eventually this cycle may turn, although we do not expect it to turn in the very near future as the central bank governor and now the Secretary of Finance have both messaged that they do not believe that rate cuts will be imminent in the near future.
To mitigate the potential turn sometime in the future, we are being very aggressive with the growth of our loan book. You see that, our projections for our own loan growth, is that we will take more market share. We are growing our consumer book quite aggressively. You've seen the number from cards. If we drill down into our mortgage and our auto loan business, you will see that those two are also growing very well. We are also making progress on our fee income. For example, when you look at the results that Eric pointed out, digital fees are growing close to 25% per annum. We expect that to continue. We see transaction banking growing as we improve our platforms for corporates.
Finally, related to your question about NPL, when you really look at what drove the NPL growth in the first quarter and the second quarter, the first quarter was driven really by the fall in the loan book due to seasonality. The slight pickup in the second quarter was driven much by higher NPL on both the cards business and the personal loans business, which is something that doesn't really concern me because it's something that I do want to push. I've told Jojo Ocampo and Ginbee Go, who both run, you know, Jojo runs our unsecured lending business, our mass market, and Ginbee runs the consumer business, that NPL ratios which they have today are too low for the kinds of margins we are getting.
We would like to gain more market share there in those two segments, even at the expense of having a slightly higher NPL ratio for those businesses, which of course, because they are higher than the 1.8% that we have today for the overall book, will cause the overall book NPL to rise. In the end, it will still be accretive to the back end, and that's the strategy we're moving going forward. As Eric said, coverage is quite good, particularly on the consumer book, where everything is either secured by a chattel mortgage or a real estate mortgage.
Thanks, TG. Our next question comes from Nat of APG. How much do we attribute strong growth in retail portfolio from digital channels?
I would say I think most of it really still is coming from our traditional channels, except for cards. I think, Jo, maybe you can talk a little about how digital channels has increased our acquisition. Then maybe Ginbee can say something a little about what we're doing on the digital space for the consumer loans. Jo?
Yes. On credit cards, digital channels now account for 40% of our credit card acquisition. This is driven primarily via improved applications coming from market at large, as well as partnerships of agency banking in Lazada and foodpanda, as well as with GCash. This 40% growth in credit card acquisitions from digital channels has come from about 13% last year. It's a significant increase for 2023.
On the consumer side, the acquisition is really where we're seeing a big jump in terms of contribution by the digital channels. Right now, as of this year, we are already 50% contributing. The digital channels is already contributing 50% of new to bank client acquisition. Out of the 1 million that we have acquired, 50% of that is already digital.
While branch channel continues to contribute 50% as well, their growth in new to bank acquisition continues. That's why you see a significant growth in client base acquisition.
I think just to be clear, when Ginbee talks about that, she's talking about a deposit acquisition. Right, Ginbee?
That's right, TG. That's our main product for acquisition of new to bank at the digital channel.
Thank you, Jo and Ginbee, TG. Our next question comes from Haesu Lee of Robeco. Can you please talk about earnings outlook for the second half, second semester of 2023?
Go ahead, Eric.
Yeah. I mean, we don't provide specific outlook numbers. I can say that we generally expect our performance in the first half of this year to continue moving forward. I would say it's fairly representative of what we expect to see moving forward for the rest of the year.
Okay. Thanks, Eric. Our next set of questions come from Joanna Soriano of Bank of America. When do you expect credit card growth to slow? Is there a target in terms of percentage share of total consumer book? May we get NPL ratio and coverage for consumer, particularly for cards, also for corporates?
Okay. With regard to credit cards, credit card loan growth of 43%, this is driven not only by the activities that we've had to gain share from the market but also the opening up of the economy, particularly travel and entertainment as a result of the end of the pandemic. We expect to continue that growth, but end the year at 35% growth year-on-year. The 43% could slow down to 35% but nonetheless, we expect this to be still faster than the growth of the market. With regard to NPL covers, while it has gone up, there was a slight uptick, as TG earlier mentioned.
This actually is still far from pre-pandemic levels and far from the target, given the news that we are getting from this business, which has actually improved with the lifting of the interest rate cap. Our NPL cover on cards is currently at 1.6, and for personal loans at 1.2. We have sufficient cover.
Thanks, Jo. Our next question is from-
I think Ginbee will. Ginbee, do you wanna say something about your NPL ratios on the auto and mortgage book?
Yes, TG. Our NPL ratios on auto is at 4.53%. This is significantly lower than the industry by around 200 basis points. Our NPL ratio on housing is likewise significantly lower than industry, currently at 4.46%.
Thanks.
Thank you.
Thanks, Jo and Ginbee. Our next question comes from Gilbert Lopez at Macquarie. Can you give us your latest loan growth outlook for 2023? Monthly loan data from the BSP suggests slowdown in the sector. Will that apply to BPI as well?
Eric?
Generally, our loan growth that we've seen through the course of the first half of the year, I think that generally is again representative of how we think things are gonna play out through the course of the rest of the year. We expect somewhere in the range of kind of low double digits as our loan growth target.
Thanks, Eric. We'll take a question from DA, who has his hand raised. DA from JP Morgan. DA, go ahead.
Yeah. Hi, everyone. Thanks for the briefing. Just a few questions from me. First, on the underwriting side, 'cause you guys have been growing the consumer book quite fast. Just want to understand anything different we're doing on the underwriting to make sure we don't run into issues down the line, especially we have lots of new to bank customers coming in.
Maybe I'll ask Ginbee to go ahead first, because they've developed several models on the consumer book. Jo also has a lot of programs on the cards also.
Yes. TG, thank you. DA, thank you for the question. Yes, we have been continuously enhancing our ability to underwrite for better asset quality. Our credit programs continue to move most of the needle for us in terms of loan releases. These are pre-qualified programs, and recently we have credit programs that we have finally been able to roll out not just on a test basis, but also on a normal BAU basis. We've been really underwriting our depositors, winning them over with faster turnaround time because of these credit programs. We've also enhanced our credit models. We have recalibrated our auto loans model and housing loans model coming out of the pandemic, having learned some of the nuances as a result of the COVID pandemic. We continue to do that.
Quarterly, we look at our models to be able to make sure that we are underwriting quality, and at the same time, able to speed up our approval processes. That's continuing. We are also on the system side enhancing our capability to process transactions faster, because really, winning over our customers also require faster turnaround times. On system side, we now have improved our ability to do straight-through processing because of the integration of our credit models into our loan origination system.
Thank you.
Yeah. On the credit cards and personal loan side, we're also doing the same. Our focus, though, is primarily on our depositor base, so that gives us the confidence to actually be a little bit more aggressive because they are our depositors in the first place. For our non-depositor base, we've also been testing the use of alternative scorecards like telco scores as well as the GScore from GCash. However, we do have risk mitigants and gates, because before rolling this out, we have a test size or a test limit that we do the test on. Only upon the positive performance of the portfolio against which this test is placed, only then do we roll these out.
Thank you.
Yeah.
Yeah. On an overall basis, should we then expect credit costs, like normalized previously was like 30-40 basis points, should we expect that to remain in that range, or do you see this moving up as consumer continues to grow?
I think, DA, just because of the expansion in the denominator base, we should expect our credit cost to remain, if not further improve. TG's mandate to Jojo and myself is very clear, to really aggressively grow our loan book just because, from a risk standpoint, we're able to better spread our risks on the consumer side, and the risks are actually smaller, on a per loan account basis. So at any point in time, when we see that we're no longer comfortable with the risks that we are taking, it's also quite easy for us to just step on the brakes a bit. That's actually what we've done during the pandemic. When we see that the NPLs are going to rise.
We've stepped on the brake a bit and improved and enhanced our ability to underwrite to manage our risks.
Yeah. The other side of it also is the digitalization on the collection side. We have also employed better collection scorecards to help us mitigate the risk with it, in line with our universe expansion initiatives.
All right. I guess just putting it together on an overall basis, are you saying you don't expect credit costs to move above your former normalized range? Is that a fair statement?
Yes, that's a fair statement.
That's correct. That's a fair statement.
All right. Just last question from me on the NIM outlook. It has been increasing rate cut or rate hikes or towards the end. Do you expect further expansion second half of this year? Are there parts of the book that has not been priced and so on? Thank you.
I think every time the BSP raises rates, you'll see that there'll be a lag effect on a significant part of our book, only because 80% of our book is institutional, and maybe of that 80%, maybe 75% is floating rate that reprices anywhere between 30 days to a year. That said, we expect the BSP to probably be very reluctant to raise rates going forward. But what I see now is that there's been a challenge on the deposit side. The funding has been very competitive. I think most banks have seen a slowdown in the expansion of the NIM only because funding costs have risen.
I believe funding costs will begin to normalize, and you'll see the competition for TD rates slack off, and that should allow us to continue to increase our NIMs going forward.
Okay. There's still part of the book that has not yet fully repriced.
Yes.
On the asset type?
Yes.
Okay. Thank you.
Thanks, DA. We have a question in the chat box from Shane Matthews. Hello. If we look at loan mix today versus five years ago, retail segment was broadly constituting 20% of the overall book. However, ROEs were never close to 15%. What is different this time?
Well, obviously, I think, what's happened, one is the NIMs have expanded. I remember maybe 5 years ago, there was very extreme competition to grow the loan books and many of the major commercial banks were slashing their margins. Maybe John-C can talk about that going forward. Also, I think, don't forget that, I think the bank has become extremely efficient in the last four years, the last three years. When you look at our headcount, we're now down to 18,000. At one point, we were 22,000. At one point, we were over 800 branches. We're now down to 700 and change, going to 600. Our cost-to-income ratio has also fallen significantly as a result of efficiencies we've put in.
I think that's what's really, you know, one of the things that we're very focused on, is to make sure that these investments we're making in digitalization and technology not only allows us to acquire more customers, but makes us more efficient on the expense side. People might be concerned about the growth in technology costs, but you need to look at that and see what kind of growth we are having or what kind of shrinkage we're having in the other costs, in manpower costs and premises costs and other support costs that are not necessarily technology. For me, for as long as we're bringing our cost-to-income ratio down, we're headed in the right direction. That's that's a major portion of the the ability for the bank to get this ROE of 15% today.
Thanks, TG. Our next question is from Rachelleen Rodriguez of Maybank. Her question is, can you share the reason for the slowdown in growth of corporate loans aside from the power deals? John-C?
Hey. Yeah. Good afternoon. Thank you for the question, Rachelleen. Yeah, the power deals is, I think, as Eric touched upon earlier, it's really just the base, you know? They started these large deals or monster deals started growing around June last year, and therefore the base of last year was up. I think, in the last call, I also mentioned that, you know, having some reserve liquidity was something that many of the corporates had undertaken during the more uncertain months during the pandemic. That's off now. The cost of borrowing is obviously higher now, so therefore there's more discipline as far as the corporates are concerned.
Having said that, I think on a year-on-year basis, if we look at working cap, the source supply to the markets that Jojo and Ginbee served, the consumer spend is still high. We still see a lot of use of the working cap lines. In fact, we see a positive slope versus last year as far as growth is concerned. While there has been, it's right to point out that, there's probably been a slowdown in the recent months. We're now pushing to the period where they'll need to replenish. They could potentially need to replenish stock towards the year-end season, Christmas, et cetera. I think from a working cap standpoint, we expect that to go up.
Of course, what hasn't happened are the mega projects that should have been the infrastructure that we expected to come sooner rather than later. Those will come. Power, the airport, for instance, those big transactions are expected to come, maybe late this year, early next year.
Okay. Thanks, John-C . Our next question comes from Eric Chan of Buena Vista Fund. To achieve our 2026 customer and IT target, how should we think about OpEx trend and cost-to-income ratio from now to then?
Sorry about that, Chinqui. Can you go to the first part? To achieve our?
To achieve our 2026 customer and IT targets, how should we think about OpEx trend and cost to income ratio from now to then?
Well, I think what we've done is we're putting the base in place to make the acquisition to allow us to grow to these 50 million customers. Key to that are partnerships such as the e'Nay app, the VYBE app, which is an app that we've developed for BPI to serve as our payment platform. That should deliver close to half of the new 50 million customers. I think when you look at the OpEx trend going forward, you just have to be as mindful of the cost to income ratio and the mission that Eric and myself and the rest of the team have is to keep that cost to income ratio falling. In fact, we have messaged that we expect this to be below 45% by 2026.
Thanks, TG. Our next question is from [Terry Ang from Schroders]. Congrats on a great set of results. Just wondering how has BPI been leveraging on recent trends in AI and data science? How much of tech expense is allocated to this? And have we seen any impact already in current operations? And what kind of benefits are you expecting from this area in the medium term, if any? Thank you.
I think it's a bit too early still to talk about a big tech spend in AI. We are looking at it. In fact, we have a couple of projects ongoing that we're testing internally. All of our tech spend today is still under business as usual. Maybe I'll have Ginbee talk a little about what we're doing on the customer service front and how we're using AI for that. More importantly, we're putting a new technology. We're rolling out Salesforce across all our frontliners to ensure that all frontliners have a 360-degree view of all our customers, that our customers' issues are put so that everyone can access them, and these issues can be addressed by the appropriate people.
We are also using Salesforce as a way to market, and to generate leads, and to track performance of our frontliners in terms of sales. Maybe Ginbee, you probably know more about this than me.
Thank you, TG. We're of course cognizant of the fact that AI and data science will contribute in enhancing our ability to service our customers and improve the customer experience and customer journey. TG has talked about Salesforce as a means of delivering that. On the AI side, we are actually piloting for our internal employees, particularly the branch employees, their ability to service clients by having right on-hand access to information, whether that's policies, process, guidelines, that they can immediately address customers who are in the branch for any queries or concerns that they may have. That's how we are currently using it. Well, it's still in pilot mode, and we hope to be able to make that available to our frontliners by the end of this year.
We're also using AI-inspired intelligence soon through our personal financial management tool that will be available in our mobile app in the next two weeks. Watch out for that. Thank you.
Thanks, Ginbee. Our next question comes from Manik of Freemont. Thanks for providing us an update on digital initiatives. Along with financial inclusion as a key goal, how do you think about the ROIs for the digital investments? A follow-up would be, how differentiated is the strategy versus your close peers?
Sorry, Chinqui. Can you say that again, the first part?
Along with financial inclusion as a key goal, how do you think about the ROIs for the digital investments, and how differentiated is your strategy versus your close peers?
Well, I think, Eric, in many of our briefings before, we've talked about how we believe one key measurement is looking at how many of our customers are digital customers. Our definition of digital customers are customers who do more than half of their transactions on our digital platforms. Our studies have shown that this is a growing number internally for us, and it's significant for us because digital customers generate twice as much revenue as a non-digital customer, with the same per capita cost. Therefore, that's really the return on the investment of our digital initiatives. We need to get as many people onto our platforms. We need to get them using our platforms and transacting on these platforms. It builds stickiness. It builds loyalty to us. Many Filipinos will only bank with one bank.
Today, maybe only 30% of Filipinos are banked by a formal bank. We believe that there's much to be gained by getting them on our platform, gaining their loyalty, and having them stay with us through their whole lifetime. It's both great for financial inclusion, but it's also great for the bank going forward. The amount of data we can get from these customers, the amount of transactions that they do, where they do not necessarily are the people making the payments to us as revenues, but where, let's say, the biller is paying us for the transaction that this customer does.
One of the things that we're very proud of is our 2.5 million retail customers who are payroll clients, who may not keep significant balances with us, but certainly do 2 or 3 bill payments a month. They generate enough revenues to justify their existence on our platform. I think that's the kind of thinking that drives us to make these further investments in our digital platforms.
Thanks, TG. I will now take some questions live. Rafa Garchitorena from Regis Partners. Raffy, go ahead.
Hi. Thanks guys, and congrats on your 2Q. Just a quick question. What are you guys seeing from the competitive environment side, both on the lending and deposit taking side? We're again hearing some anecdotes of banks who shall remain nameless, pricing loans at or close to policy rate for top tier corporates. I don't know if John-C can address that as well. Yeah, that's a quick question.
John-C can answer and also name them. No, don't name them.
No, sir. That's true. It's been very competitive from the standpoint of lending. It's across the board. Particularly for the quality names, it's been the same as in the past. A bit up, more upward now because the policy rate is the real rate, with you know in which banks can really place all of the excess. I think there'll be a period of adjustment there as you know others may behave more rationally or logically than others. There'll be a period of adjustment. I think this may be, TG, only a first phase in how the BSP wants to use monetary policy.
Yeah.
I think the volumes from the first week, which is two Fridays ago, to last week and more recently, have already increased substantially, TG.
Yeah. I'm not sure Rafa and the industry know what the change in-
Yeah.
In what the BSP has done, right?
In the past, if you remind me, in the past, there was a cap of PHP 300 billion, was it? of the BSP.
No. In the past, their RRP rate, which is the rate at which they would take funds from the banks, that would be the policy rate that they advertise as the policy rate. You could not. The banks could not give everything. There was a sort of a cap on how much they would take, right? Therefore, if you could not lend it at the policy rate, you could give it to them at a much lower rate. Therefore, some banks would then just instead lend it out to clients slightly lower than the policy rate 'cause it would be better there. Since Governor Remolona has taken over, he believes that you need a clear and transparent mechanism to transmit monetary policy, and the overnight rate is one of them.
Therefore, for him, you either have no cap or you turn it into an auction. Today, it's no cap, so the policy rate that they have today, banks can throw all their excess liquidity to the BSP at that rate. It doesn't make sense to lend it lower than that rate because the BSP will take all excess funds at that rate.
As an aside, does this mean that your excess cash can now get a little bit higher yield than could help your minions even just marginally?
It's very marginal, Rafa.
Okay. On the deposit side, is competition easing, getting worse, getting better?
Well, let Ginbee talk about that. Ginbee, please.
Rafa, again, just like in the lending side, there are some irrational pricing happening in the market. You know, we see this, as TG mentioned earlier, we see this eventually coming down simply because it's not sustainable. We've seen some of our digital deposit competitors, the fintechs also doing that in a significant way and no longer renewing high rate deposits. It's only a matter of time when, you know, the traditional banks will no longer fight for deposits at the rates that they are currently at. Again, similar to lending, we'll see this flattening in the next months. Not sustainable.
Thanks, guys.
Thank you.
Thanks, Rafa. We have a follow-up from Nat. Can you please expand on extending digital transformation beyond cards into other types of retail loans? Do we have enough data and infrastructure to do so, especially for asset-based auto and mortgage lending? Ginbee, I think this is yours.
Yes. On the digital side, we continue to invest on the digital build-up for all products, not just deposits, but also auto and mortgage. In fact, we're preparing for a major initiative where we will open a new channel for auto and mortgage on the digital side. You just have to watch out for that. It's currently on pilot as well. Again, on the data science side, that's part of our success and our ability to manage asset quality and at the same time grow our loan releases because we have been focused on really delivering credit programs that are driven by data science.
Thanks, Ginbee. Our next question is from Yong Hong Tan of Citibank Singapore. Could I check what's the NIM upside from the RRR cut after taking into account the SME loans impact? Any expectations for further RRR cut?
I think the effect that we got from the RRR cut from 12 to 9.5% was marginal. Because if you look at it closely, what that did was to really replace the, I guess the ability to use SME loans as reserve eligible during the pandemic. That was about that expired June 30. The industry had about 2% of their loan book in SME loans. The cut of 2.5% on the same day that 2% of the loans became ineligible for reserves was basically neutral on the banks. For us, our loan book, our percent of our loan book that was in SME eligible for reserves was slightly over 2%.
The 2.5% cut just bought us just maybe under 50 basis points of reserve cut. I think going forward, the governor has messaged that they are looking to do more RRR cuts. As to timing, it's unclear.
Thanks, TG. Our next question is from Angelo Mabanta of Metrobank. Do you have internal forecasts for when you expect NIMs to contract, either on an absolute basis or relative to when you expect the BSP to cut policy rates?
I do not know when the BSP will begin cutting policy rates. I assume when the BSP begins cutting policy rates, then you may begin to see the contraction of NIMs.
Thanks, TG. Our next question is from Daniel Lau of Eastspring Investments. How has the partnership with GCash improved your credit scoring models? Has this helped you in your push into the consumer segment?
Maybe I'll let Jo to talk a little about what we're doing with GCash.
Yeah. Okay. Yes. Hi, Daniel. Yes, the applications from GCash now account for about 2.5% of our total applications or approved applications. To the extent by which we use their credit score as a guardrail or we set a certain credit score, a GScore, against which we acquire customers from. Meaning we give them, we backtest their credit scores, and then we use this to pre-qualify some of their GCash customers. Yes, to that extent. Although the fact that it has only contributed 2.5% total applications, we are still in the process of refining their scores and seeing how it can help our own credit score.
Thanks, Jo. Our next question we'll take from Karthik. Karthik from Indus Capital Partners. Please unmute yourself. Go ahead with your question. Karthik, are you there? Okay. Maybe we'll get back to Karthik. Let's go to Rachelleen Rodriguez of Maybank. Follow-up question. Can you share the mix between short-term and long-term corporate loans? John-C?
Sure. Rachelleen, may I clarify if you're on yourself. You're asking that in the context of TG mentioning the pricing of the book, right? Is that why?
Yeah, I think so, John-C.
Yeah, I think maybe.
Sorry.
I'm sorry.
Sorry. Yeah. Hi, my question is regarding the mix between working capital loans and those used for CapEx. It's more of how much of the loan, of the corporate loans are now long term.
That because there are two ways. I think right now the working cap more or less is maybe about 40+% of the book. But we have what TG alluded to earlier in terms of pricing. We have term loans that actually are priced on a short-term basis, the floaters. That's more or less where we are in the corporate side.
All right. Just actually wanted to get a sense on whether the corporates now are have the appetite to borrow more on the CapEx side.
Yeah, they do. They actually do, but it's still very selective. What we're observing is for projects where you don't need to do one time big time approach, they face development. If the best analogy is still real estate, you face your construction. Even for capacity expansion, that's what we're observing.
All right. Thank you very much.
Thanks, Rachelleen. We've got a question from Roger Dylan. Can you share with us metrics on customer acquisition or loans through agency banking?
I think it's fairly early in the game. We really began rolling out agency banking with all the physical doors in June and July. Although we've been doing agency banking on Lazada since, I think for six months now. At one point in a heavy month, the acquisition of new cards through Lazada was equivalent to about 20% of our branch production. Today, I think, I don't know if Rally is on and if Rally can give some color on what we're doing. Rally, some metrics, early numbers for our agency banking, recognizing that the physical presence has only started really in the last couple of weeks. Rally?
Yeah. Good afternoon. Good afternoon, TG. Good afternoon, everyone. So far, we have some victories. I think we have about 60,000 clients onboarded as we activate communities using the agency channel. TG, sorry, we just started our PickMart partnerships, and it looks promising as of the moment.
Thanks, Rally.
Maybe we go back to Karthik. Karthik, are you there?
Yeah. Hi. Am I audible?
Yes.
Yes. We can hear you.
Okay, finally. Okay, great. Yeah, thanks a lot. Congrats on the quarter. I have three quick questions. The first one is, are you seeing some level of disintermediation when you look at loan demand, where some corporates do access the bond market because the spreads are better there? And if yes, what is the difference in the spreads, basically between your lending yield and what they're able to get in the bond market?
Okay. Do you wanna do the other two questions so that we can-
Okay, great. The second question is basically if I were to refer to slide 13, where you have a customer count per headcount, which is now standing at about 517. From a practical standpoint, what is the optimal ratio for this, if you were to maintain, you know, your efficiency of services, et cetera? I'm just curious to see where this can kind of like peak out. My third question is, as far as credit cards are concerned, what would be the card limit utilization today on an average?
Okay. While Eric thinks about question number two, because I don't think we've really thought about that, Karthik.
Okay.
I'll let John-C answer question number one, which is about disintermediation by corporates where you're going to the capital markets and the kind of cost difference and why they would go to the capital markets and why they would come to the bank. I mean, obviously, Karthik, we see our top clients go to both, right? I'll let John-C do that. Then Jojo will talk about credit cards and the kind of limit utilization. John-C?
Yeah. Hi, Karthik. Yes, the answer is, while the markets are open, we definitely see clients who can go to approach the capital markets go there. This year the bond markets have been good. In fact, we've recently seen preferred share issue or preferred share issuance, which means it's really fixed income that is in the form of equity is preferred. That means the market's more open than previously. The rates are less of a consideration or the margins are less of a consideration, but the fact that loans typically can be floaters, and when you go to the capital markets, it's typically fixed rate.
The main consideration is less the spread and the fact that the yield curve is quite flat at the moment. We're seeing the issuers take advantage of that. Banks have gone shorter than corporates, and corporates typically are in the sweet spot of maybe about 5 years. We've seen corporates go even 10 for the bonds. The way we play that obviously is we have our investment banking unit, which is very active in that space as well. I hope that answers your question, Karthik.
Oh, yes, it does. Thank you.
Jo.
Okay. Yeah. On the third question, the card limit utilization today is at about 32%, and that's also because we have, in the last couple of years, steadily increased our maximum unsecured exposure as the ratio of customers' either income or deposit with us. The answer is 32%.
Okay, great. Any thoughts on question two, or shall we wait for the next quarter for that?
I can actually answer that. I can answer that now. The answer to that is that as TG said, it's not something that we had really thought about in the past. To be honest, I think part of the reason for that is that right now we aren't thinking of a specific target for that. That is, I guess, more an indicator that's a result of what we're doing. You know, we're currently at over 500. If I was to tell you that could go over 1,000, then I don't know what you'd think about that. In our minds, at least for me, as I think about it, our goal is to grow to 50 million customers, right?
If I think of an interim target for that, and let's say we grow to 30 million customers, in order for us to be at 1,000 customers per head count, that would mean that our employee head count would have to go to 30,000, right? I don't think we're gonna get to 30,000. I think where that number is for us, it's gonna be over 1,000 as to where we can get. There's just so much development that will help us take advantage of this.
I mean, the digitalization initiatives, AI, some of the data science initiatives that we're doing are gonna allow us to penetrate a much deeper client base, without really adding that much cost.
To put it another way, you can basically double your customer count with the same head count.
Yes. Yeah.
Right? Okay. Because that's going to have some implication on your cost-to-income ratio as well.
Absolutely.
Absolutely.
Okay.
You see, because Karthik, the reason I don't wanna give a number is 'cause if I give a number, and once we are better than that, these guys are gonna ask me for more head count.
Yeah, that's a good strategy.
Yeah. We really ideally, you know, if you use technology or use the agency banking channel, I think you can really up your customer count without really significantly raising your head count. Today we have about 2,000 vacancies with a request for the bank. That just kind of fits really well with the Robinsons Bank acquisition, 'cause their head count is about 2,000 people.
Got it. This is very useful. Thank you very much, team. Wish you all the very best for the rest of the year.
Thank you.
Thank you, Karthik. Our next question comes from Mary Angeline Jacolo of Metrobank. Acknowledging that the bank's NPL cover has remained well above ideal levels, can we know what is the reason for the 12.7 percentage points decline versus 2022 amidst the continuous increase in the NPL ratio?
Eric, you wanna talk about why we're bringing our NPL cover down?
Yeah. Sorry. Yeah, I think that's a conscious effort that we've telegraphed to the market. You know, when we were at 180%, and actually even before we hit that level, you know, when, as we were exceeding the 160% level, kind of in the 170%-180% level, the auditors were already signaling to us that they believed that our provisioning level was too high. In reality, we also believe that it was a conservative level, but we wanted to position that way because we wanted to see how the higher interest rates were going to affect our clients, and we didn't want them to be under provision.
That's what we want to make sure we weren't going to be. I think having seen what we've seen so far, we again to kind of reiterate what I mentioned earlier, we feel very comfortable with the position, with the quality of our book, and we feel that we are well positioned to bring this down gradually over time. We're bringing it down gradually because, you know, we want to continue to be able to evolve with the situation. Again, as I mentioned, at 160% with over 200% collateral cover and even further once you go into kind of not hard collateral, we feel that even below the 160% level is something that is still a comfortable level for us.
I think to add to Eric's, the reason you keep it high, if ever, is because you expect NPLs to continue to grow. I think we're in a situation where we don't believe NPLs will grow significantly going forward. Therefore, when you combine the fact that our collateral cover on NPL loans is over 200%, NPL cover as a result from reserves at 170%, we think it's just very high, and therefore there is room to take it down. In fact, as Eric said, that's what the auditors are arguing with us.
Thanks, TG. We have one last question in the Q&A box from DA. Can you discuss cost outlook for 2023? Are you revising up your initial guidance given the growth in the first half?
Eric?
On that, we are not revising our cost outlook for 2023. We believe that we'll be able to continue to perform and manage the cost within original expectations.
Thanks, Eric. Thank you, ladies and gentlemen, for your questions. That was the last of it. They provide valuable insights for us as a management team. Before we end the call, maybe we have some final thoughts from TG. TG, any words?
Again, thank you to my management team and to everyone who's joined this call. We had over 200 people in the call today, I think reflecting the kind of interest and following that we have as an institution. As Eric and my colleagues have pointed out, I think the bank is in a good place. I think we continue to be very optimistic going forward. Our plans on the digitalization, our aggressive stance to grow market share across all our businesses, I think will prove well going into the future. I think that's it for now. Of course, as usual, Chinqui and her IR team are ready to answer any other questions that you might wanna push on the side. The management team here will be happy to answer those questions individually as well. Thanks so much for joining us. Chinqui?
Thank you, TG and Eric. Ladies and gentlemen, this concludes today's earnings call. Should you have additional questions, you can direct them to our investor relations mailbox at IR.