Good day. Welcome to The Commercial Bank Q1 2020 Investor Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Joseph Abraham. Please go ahead.
Thank you. Good afternoon, everyone. Thank you for joining us today. Firstly, I do hope all of you and your families are safe and well. My best wishes for coming out safe and healthy when this situation eventually ends. We hope that is sooner rather than later. Turning to our results. As you can see, for the first quarter of 2020, we've achieved a profit of QAR 402 million as against QAR 440 million for the same time last year, a reduction of 8.5%. I would say that this is actually quite a solid performance which has been impacted by two factors. The first factor, of course, is as we know there's been unprecedented volatility in the international markets. There have been some impacts flowing through on a mark-to-mark basis for our bond book.
That is an uncrystallized impact which we have already seen quite a significant portion of it coming back in the first few weeks of April. We remain confident that over time, as the market stabilizes, we'll see that coming back. The second factor is the performance of associates. Rehan will speak to that in greater detail. We are limited to what we can say because both our associates are listed entities. We've used management accounts to produce the current results, so they're subject to that change. I'm sure all of you are wondering about the effects of the COVID-19 situation on The Commercial Bank and in the wider macroeconomic environment. Firstly, I would say that the government of Qatar and the Qatar Central Bank have been very proactive in supporting the affected sectors.
We have seen the national response guarantee program initiated by the Ministry of Finance and the Qatar Development Bank to support affected sectors with salary and rental payment loans, which will be interest-free for the first, or will be borne by the Qatar Development Bank for the first six months. Similarly, we're seeing quite a good uptake on that program. Similarly, there's also been interest and principal deferment for six months for affected sectors. Also we've been paid for banks to provide additional interest rates for affected sectors at 1.5% against a 0% repo window from the central bank. There are many supporting measures taken to help the affected sectors.
Secondly, of course, the Qatar government continues to spend on the necessary infrastructure for 2022, and it's supported by its own strong fiscal and other buffers and its credit rating, as we've seen by the recent bond issuance. Overall, I'd say that the macro support factors have been well announced and implemented, and that provides some comfort at the overall level. With regard to ourselves, The Commercial Bank, I would say that we have had a solid performance, and you can see that if you look at the overall Net Interest Income and factors like the Net Interest Margins has improved. Even cost to risk, whilst it's, again, some factors which have added from COVID-19 at a macro level, it still remains within acceptable parameters.
I would say that we are well positioned for this situation for a number of reasons, but primarily this is due to the five-year strategy that we implemented three and a half years ago, which we are still implementing. If you look at it from a risk perspective, we tightened our underwriting standards right across our book, whether it's in personal loans, whether it's in SME, whether it's in corporate, including reducing our exposure to real estate and other sectors and contracting. You can see real estate has come down to 21% of our book, whereas it used to be as high as almost 30% when we started this journey. Similarly, we tightened our SME and our other underwriting standards.
All this has led me to believe that the impacts of COVID-19 will be within acceptable parameters for our risk book, given the quality of our current loan book and the subsequent origination. It would be foolish of me to say that there'll be no impact, but I believe that the impact will be within acceptable margins, and that's a result of the strategy that we implemented on the risk side, which is at the end of it, the underpinning of banking. The second piece where I think we've been, again, our strategy has benefited us is that we said that we are going to be very strong in technology and digital leadership. We have launched a number of products, whether it's contactless cards, whether it's our 60-second remittance proposition, and our recent mobile wallet.
It's our ability to launch and use technology which we have now brought in-house. It used to be outsourced. It's brought in-house, which is actually a great advantage for us because it has enabled us to respond to the crisis. As an example, there was a need for a remittance product for domestic workers which we were able to launch within 10 days. I'm just saying that's an example of the nimbleness that we have around technology and our ability. We have many of our processes are now automated on an end-to-end basis. I believe that the corona crisis will lead to fundamental change in consumer behavior, especially as far as banking is concerned, because that's very amenable to digital banking and self-service, and we are well positioned to take advantage of that.
As an example, our remittance volume showed a spike of over 30% and be able to handle that seamlessly because of the technology that was deployed at the customer end, where the experience is very easy, and in our operations, where the process is end-to-end and automated. That's an example how we're going to benefit currently and in the future as customer behavior changes. I would say that overall, the cost income ratio continues to go down, and that to me is a result of all the technology and other factors that we are implementing. We continue to focus on that area.
Overall, I would say that the bank remains well-positioned in this difficult and challenging time, our continued implementation and strong execution of our strategy will enable us to continue to progress and perform despite the current challenges, because we have an enhanced resilience, we probably will come out at the other end in a stronger shape because of the capabilities that we have in place and the execution that we've done over the last two and a half years. We take some questions at the end of it, I'll hand over to Rehan right now, who'll talk you through our financials in more detail, and we're happy to take questions after that. Rehan?
Thank you, Joseph, and good afternoon, everyone. I'll go through an overview of the results. As Joseph said, then we can move to the Q&A session. If you look at slide five, this shows the quarterly analysis. For both the fourth quarter of last year and the first quarter of this year, we have included normalized numbers on the far right of the slide. In this quarter, we've stripped out the impact of IFRS 2, which results from the movement in the share price to the stock performance scheme that we discussed in the last quarter. This is QAR 95 million. We've added that back both to income and to expenses in the far right column. All other numbers are the same as in the reported column. On that basis, when we look at total operating income, this has improved by 11% year-on-year.
Within this, NII has grown by 39%. Our NIMs have improved from 2% to 2.5%. Although asset yields have reduced, the increase in margins is mainly due to proactive management of the cost of funding both in Qatar as well as in Turkey. There are no one-offs, we have seen a full quarter benefit of the Tier 2 maturity that took place in middle of November last year, healthy levels of low-cost deposits, and the overall success of bringing down the cost of funds. At the same time, non-funded income has decreased by 69% year-on-year on a reported basis. When adjusted on a normalized basis, it is still down by 39%.
As mentioned earlier, this is primarily due to the adverse unrealized mark-to-market movement of about QAR 200 million, both in our investment book and in our trading book, as a result of the volatility in the global markets. This was primarily in March, and as Joseph said, we've begun to see a reversal and a recovery of that in the first three weeks of April. Costs, you can see on a normalized basis, are fairly consistent with previous quarters. Our cost income ratio, although on a reported basis is 19.5%, on a normalized basis, this is 27.1% and shows the downward trend that we've got quarter-on-quarter. The net provisions have decreased year-on-year. We have included additional ECL by updating our models based on the most updated current macroeconomic data that was available.
Due to the current situation, you can see that there have been delays in realizing our planned bad debt recoveries, but we still expect to complete the majority of these in the current financial year. NPL ratio is down from 5.6% last year to 5% this year, and the cost of risk is increased basis points on a net basis. Total capital adequacy now stands at 16.6%, and CET1 is at 11.1%. This is broadly in line with our year-end numbers. Coming from a balance sheet perspective, we've seen loans increase by 3.2% as compared to March of last year. We've grown our share of government and public sector. We have continued to de-risk and also reduced our real estate and contracting exposure. During the quarter, loans have increased by 0.9%, and this is in line with our expectations.
Deposits are down by 0.7% compared to last year, but up 1.5% compared to the year end. Importantly, low-cost deposits continue to grow, and as you've seen, this is one of our focus areas. We've been very active in the transaction banking through our payments and cash management, as well as our leading remittance products, and this has resulted in higher average low-cost balances. Moving on to our P&L, Alternatif Bank has delivered a year-to-date net profit of TRY 40 million compared to TRY 32.5 million this time last year. That's an improvement of 24%, and the bank is showing positive jaws compared to Q4 of last year. The impact in our reporting currency is 12% increase year-on-year due to the depreciation in Turkish lira. Let's turn to our associates.
As you're aware, the countries in which we operate have different Q1 reporting, and hence, the numbers we've included for our associates are based on their management accounts. In addition, we have taken a management overlay, and that is to ensure that we are prudent considering the current situation, as they still need to finalize their Q1 numbers, which will then be reviewed by their auditors. As these entities are listed, we have not separately disclosed the individual entity numbers but have shown these in aggregate. Out of respect, we will wait for the Q1 numbers to be finalized. I think this is an area we can talk about more in our Q2 numbers once these are all published. Let me hand you back for the Q&A session, and we're happy to take any questions that you may have.
Thank you. Ladies and gentlemen, if you would like to ask a question at this time, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our assistant. Once again, that is star one to pose a question today. We will pause for just one moment. Our first question today comes from Vikram Viswanathan from NBK Capital. Please go ahead. Your line is now open.
Sure. Thank you, Rehan, thank you, Joseph, for the wonderful update. Really appreciate it. Just coming back to the guidance that you gave during the Investor Day, is it fair to assume that given the exceptional circumstances, the guidance stands confirmed for now?
I would say, Vikram, that, like I said, I believe the guidance will more or less remain where we want it to be, where we said it was. I think on the cost of, let's say, the Net Interest Margin, we'll try very much to keep it where we're still targeting for that. I would say on probably the loan growth, we did guide 4%-6%. I think it'll still be somewhere in that range, maybe more towards the lower end of it, whereas earlier we might have been at the higher end of it. In terms of the cost of risk, I think we guided at 60 basis points. I think that's the one area that perhaps we might be a little outside of that parameter. We are still going to try for it.
Given COVID-19 and who knows what can happen on that, I think conservatively, we'd say that's probably the area that I might say we might not be able to quite achieve that level of 60 basis points. Whether it's at the current level of 83, I would hope it will be better than that because of the COVID crash, a lot of the courts and other recoveries that we were aiming for have not flowed through. We expect them to come through still later on in the year. If that gets delayed, that might have some effect. I would say that overall, we don't see a huge change in the guidance except perhaps in the cost of risk, given that some of these factors are not in our control. That would be where we'd keep it at right now.
Sure. Another question on the associates. We've seen some of the UAE banks delay their numbers, given that the regulator has given direction to delay the numbers. We are under the impression that most of the banks are reporting numbers in Oman. We've seen numbers coming from Bank Muscat and other competitors. We do not see numbers coming from National Bank of Oman. That's the only bank which is not reported so far. Are they not going to report their Q1 numbers? Is it now delayed? Is it the only bank in Oman which is not going to be reporting?
No, let me take that. Vikram, actually, NBO were required to change their auditors in 2020 as they had reached the maximum number with EY at the end of last year. AGM could not take place last month as scheduled, and therefore, there was a delay in appointing the new auditors. They have now been given special permission to appoint those auditors. Now that work is going on to get the accounts reviewed, and then they will publish the accounts. There's a slight delay because of that issue on the AGM. We expect essentially in the end of next month, those numbers will be published, probably around mid to May, I would expect.
Okay. A question on the fee and commission. We noticed that there was a decline in fee and commission relative to the normal run rate. Is it somehow linked to the one-off cost gain that you took? There was a mark-to-market impact on the costs. Do you think it's also impacting the fee income in some way?
That's correct. When we normalize that, it's about QAR 95 million that gets added back. Although that's just the volatility that we've seen both in fee income and in the staff expenses based on the share price movements. That is the main reason.
Sure. A question on United Arab Bank. As we know, you booked impairments on this item last year. Given the situation, and given that it's a small bank in the UAE, do you think you would have to accelerate some more impairments this year?
Yeah, look, I think certainly, there will be impairments during 2020 as well. That's something that we will work out once the full impact of COVID-19 is assessed. Yes, I think it's fair to say that there will be some further impairment that we will take during this year.
All right, excellent. Thank you, [Inaudible]. Thank you very much.
Thank you. Now we take our next question from Aybek Islamov from HSBC. Please go ahead.
Thank you. A couple questions from me, please. I was wondering how your asset yields will hold up in 2020, in particular, I'm interested in the yield on Qatar government securities. Obviously, these are very good yields. Looking at 2019, you earned 4.6% there. Are these peak trades or are you expecting to come down in 2020? Secondly, how do you think your loan book will hold up in 2020? If you think about repayments versus new origination, what do you think will happen with your loan portfolio? My third question is, on your provision charges on loans, in the first quarter, how much of it is due to this preemptive provision for COVID-19 and how much is the sort of normal run rate? If you can comment on this in Qatar and in Turkey, if possible.
Look, firstly, in terms of asset yields and NIMs, generally, the guidance we gave for NIMs this year was 2.4%, and the Q1 number shows 2.5%, so we've done slightly better in Q1. We do expect asset yields to come down. The cost of funding is also coming down. That's why at this stage, we would say that 2.4 is still achievable, and that's what we are striving for. That guidance remains in place. In terms of your second question on loans, we believe that this will still be a government and public sector-led loan group. As we said, we've given a guidance of 4%-6%, maybe it will be at the lower end of that guidance. We believe that will still happen. Private sector is more likely to emerge in the second half of this year.
We think that the government sector will still lead the growth in the lending book. The third question I think you had was regarding provisioning. Actually, the underlying provisioning has been decreasing both here and in Turkey, and that's really the result of the very large provisioning that we've taken in previous years. COVID-19 modeling has been updated, as we said earlier, for the macroeconomic factors, and that has been included in the provision number. What we expect to happen is with more data for that modeling to be updated again in Q2 of this year and a fuller assessment done then.
I think if I may just add on the quality of the loan book and how it would stand up. I think, as I said earlier, the measures we've taken to proactively de-risk from our portfolio, de-emphasize real estate, tighten our underwriting standards right across the board. All this has led to, I would say, one is identifying a lot of the problematic accounts and taking proactive action, and two is the quality of our subsequent origination over the last three years has been, I would say, good. The resilience and ability to handle the COVID is better. I would just say that I think as an example of that, we all know there's a very significant exposure which is currently impacting many banks in the UAE. We had a significant exposure to that name in our books, which we exited in 2018, June.
I'm just giving that as an example of the risk culture that has been now embedded in the bank. I'm not saying that we will never get it wrong. Of course, in banking, we will get risk writing off. That's an example of the sort of risk approach that we're taking to make sure that the quality of our book improves and is improving over time.
Okay. Where do you expect more pressure on your cost of risk in 2020? Do you think it's going to be Qatar, or do you think it's going to be Turkey?
Look, I think even Turkey, if you think last year, we took some significant provisions which were also mandated from the government side. I don't see any particular area. Turkey, I think more impact will come from the currency depreciation in their book and some of those impacts. A lot of the risks have been recognized at the end of last year. Some more will come through, but I think in terms of the overall size of the risk, I think we should be more or less on target. I don't see, as I said earlier, too many large variations in our book coming through either in Qatar or in Turkey. Maybe I'm being a bit optimistic here. I expect the quality and the work that we've done already to actually stand us in good stead, even in this situation.
Okay. Thank you. That's all.
Thank you.
Thank you. We now move on to a question from Chiro Ghosh from SICO. Please go ahead. Your line is open.
Hi, this is Chiro from Bahrain, thanks for hosting the call. I have two questions. My first one is regarding the loan deferment. What's the loan deferment you're offering in Qatar, and what is the loan deferment policy you're offering in Turkey? That's one. Second thing is more of a understanding. Let's assume if you have restructured a loan and the usual convention is to take back the performing loan after it complies with the payment schedule for one year. Now, if the company is not paying for three months or six months, what exactly, how does the deferment policy changes? This is my question.
I think in Turkey, overall the process in Qatar is six months deferment of principal and interest is being permitted. There's also discussions on that this should not automatically lead to a downgrade of the account or anything like that because of the deferment. That's the approach. If they're after the deferment, it'll get either added to the principal and either as an increase in the bullet payment or to their current installment. As long as they're meeting those, they would not necessarily be downgraded at all. If they default in meeting their payments, of course, then that would lead to downgrade. We don't see the deferment per se creating new movements or new downgrades. Have I understood you correctly in that?
I just wanted to know, say if some loan is non-performing or it's in a restructuring stage, how does the whole schedule work? I kind of got an understanding of that.
Yeah.
Okay.
Just to add to what Joseph said, actually, there's a very specific requirement from the Qatar Central Bank, which the auditors have agreed with, that any deferment should not change the category of the customer. Under these exceptional circumstances, this is the policy that is being adopted by all banks.
What is the deferment policy which you're following in Turkey and in Qatar?
I think I'll need to get the details on that. In Qatar, it's six months for principal and interest.
You will accrete the interest. You will keep accreting the interest on the principal.
Yes, we will accrete the interest. Correct. That will continue to be accrued, and they will have to pay that over time. It'll either be added to the bullet or be added to the amortization schedule.
In Turkey, one thing the regulator has said is that a loan will become non-performing after 180 days rather than 90 days. In our consolidated results, we have kept the policy of 90 days to be consistent across the group. We've not adopted that. We've asked Turkey, and they have submitted their numbers based on 90 days rather than 180 days, which they will employ for their local delay.
Okay. Turkey might be a lot more conservative than its peers, right? That is something kept in non-performing loans.
The numbers submitted to us, yes.
Okay. That's all from my side.
Thank you. We now move on to a further question from Waruna Kumarage from SICO Bank. Please go ahead. Your line is open.
Hi. Thank you very much for the call. I have two questions. The first one regarding fee and commission income. Once the adjustment is made, I think there's no material decline year-over-year in terms of fee and commission income compared to last year. Do you expect this to continue? Because we haven't seen the full impact of COVID-19 in the first quarter. Do you expect it to decline in this quarter and quarter after?
Rehan, do you want to take that?
Yes. I'll take that. Look, I think obviously the impact of COVID-19 is not high for the first quarter. I think the areas where fees and commission will be impacted is, for example, on the international card spend, which will clearly decline for ourselves in terms of income, and also depends on how long the current status remains. I think those are the kind of areas where we may see some decline in income. Having said that, I think areas like FX are very strong in terms of remittances, and the areas we expect, which is like transaction banking, they remain very strong. There will be some compensating areas. I think overall, yes, we still to see the overall impact of COVID-19 in our fees and commissions, but I think there will be some areas where we will see lower than in previous year.
We will try as Rehan said correctly, I think credit cards and international spend will be the area which is most impacted and for obvious reasons. Until that happens, I think that's what we will be keeping a watch out for. International remittances, as one of the measures to help out people during the COVID-19 crisis there has been a waiver of the fee that we charge on international remittances. Obviously, that will be impacting a little bit. At the same time, our volumes are going up, so we might make that up on the foreign exchange and currency conversion side. Overall, I'd say that things been round about on that front. The credit cards is the main area. We continue to win new mandates for cash management, et cetera, which should help boost the subject revenue.
Okay, that's clear. Thank you very much. Secondly, I want to move on to this forbearance of loans, the deferment of installments. You mentioned it is allowable to dispense deferment to affected sectors, but it depends on the request that you're getting, right? It's not like you automatically do everything. How is the take-up up country now? Can you give some kind of sense?
We proactively deferred it for our SME portfolio, for the entire SME portfolio, I mean, enterprise portfolio. That was a measure that we took. That's a relatively small part of our overall loan book. For the major part of our loan book, we are doing it on request, and we have received a few requests. I would say that we have received less requests than I was expecting because I thought many people would take advantage of it. Maybe that will come through later on as people find their cash flow may be affected, et cetera. Right as of now, it's less than I was originally expecting. I'd say right now maybe 10%-15% of our portfolio has requested it. 10%.
10%-15%?
Yes.
Yeah. In terms of impact on I know that this is cash flow wise one. As long as it gets paid, doesn't really matter in terms of, only thing if someone is to get pushed back. In terms of income recognition, is there an impact on the net interest income the way you are recognizing, accruing it in the P&L?
In theory no, because it is purely a deferment. However, we are going to be conservative on income recognition. We will look at that very carefully in this quarter and next quarter in terms of how much take-up there is and how much is actually deferred, and then what that means in terms of the loans, in terms of bullet payment, et cetera. That's still something being worked out, and that's partly why we've said that net interest margin is like 2.4% for the year rather than 2.5% that we've achieved in Q1.
Isn't there a uniform agreement between the Qatari banking sector regarding this recognition? Because I got this feeling from some financial banks when during the conference call they mentioned that they are not accruing the interest income. Is there inconsistency? Is it up to the bank to decide how to recognize the income on this?
No. What we will do actually is we will work with the Big Four audit firms on working on this to have a consistent view for the banks, and that is the one we will adopt overall. That is not finalized yet.
Okay. Got it. Thank you. If I may move on to the associate income, as you mentioned, this is based on management accounts of companies, et cetera, that we've got it. Can you give us guidance, is it fair to assume that this is mostly coming from UAB, the loss?
Yes, Waruna, I think that's correct for you to assume. As Joseph alluded, there is one exposure which is in the market, and UAB does have exposure to that customer as well. Therefore, that's why we've partly done that management overlay to the overall numbers.
Lastly on, I think another participant asked the same question, but can you quantify the COVID-19 overlay that you applied on the provisions? Is it quantifiable, or what percentage of it is COVID-19 related?
Yeah, I can tell that. It is QAR 30 million for Q1 based on updated macroeconomic factors.
Okay. Thanks, that is really helpful.
Thank you. As a reminder, ladies and gentlemen, to ask a question today, please press star one. We now move on to a question from Mohamed Adel from Al Faisal Investments. Please go ahead. Your line is open.
Hello. Thanks for taking my call. I have only one question because the other questions have already been answered. My question is on the deferment of loans. I've heard on other calls that the government initiative is only for SMEs and for three months, and now the other banks saying six months and can be extended to other affected sectors. Can you just clear this up for me? Thank you. Just the government initiative. Thank you.
Let me take that one. I think there may be some, just to clarify, one government initiative was to provide loans to companies for the payment of their workers and rental payments in case because many places have been closed down, whether it's a restaurant, et cetera, but you still have workers, you still have rental payments. To support them on this, for a period of three months of salary or rental, the Qatar Development Bank is providing a loan scheme to provide for three months of your salaries or rental costs to these affected companies. That's one scheme. The second scheme, which was promulgated through the Qatar Central Bank, et cetera, is that banks can give a deferment of loan and interest for a period of up to six months. That's the second scheme.
That applies to any company, not just for payment of salaries or rentals, which is restricted to three months and is a separate loan scheme. This is for giving fresh loans to companies who have been affected by this. That's only for three months of wages or rental costs. The other deferment for six months applies to existing loans, to existing companies. That's just the difference between the two.
Okay. Another question. You said that the deferment, the period that falls under deferment can only be around 10%. Does it include the entities that you are ready to actively distribute or is it just the other companies that ask for deferment?
It includes everyone that we are looking at to deferment as of now.
Oh, okay. Thank you. Thank you very much.
Thank you. We now move on to a question from Bijoy Joy from QIC. Please go ahead. Your line is open.
Hi, gentlemen. Thank you for the call. I have two questions. The first one is on the net interest income. Going forward, how do you plan to maintain the NIM? Is it through focusing on better margin loans or a mix of both, or is it the majority of it is going to come from interest, reduction in cost of deposits?
I think as Rehan said earlier, our primary focus now is on the cost of funds. This is going to be a combination of, as we said earlier, we had an expensive Tier 2 issuance last year. The benefits, which we only mentioned at the end of last year. The three-year benefit of that will come through. Second, we also had some other issuances in the Tier 1 space, which have been repriced now. That's also going to benefit us this year. We're going to continue to reprice our whole liability book right across all our customer deposits. We have a weekly meeting where we look at everything and make sure that we are repricing. We have some strong disciplines around that. That's going to be the primary focus. Loan prices, obviously, with the drop in interest rates are going to drop.
We manage that on a case-by-case basis to see how we lag it perhaps a little bit or manage it so that the effects flow through on a more deferred or delayed basis. Fundamentally, I don't think we have much scope. We're not chasing high-yielding loans because that might push you down the wrong end of the risk curve, which is not what we want to do. It's definitely not chasing high-yielding loans at the cost of risk. That won't be the emphasis. Much more on the cost of our funding base and how we manage it proactively.
Understood. My second question is on the fee income. I saw that for the Turkish bank, it has come down from TRY 65 million last year to TRY 40 million or so. What exactly is happening? I can understand part of it would be because of the depreciation, but if you can provide some color on that.
I think last year there was quite a significant because of the way the currency was moving. I think there was a lot of opportunities in the hedging space from both interest rate and currency. I think that was contributing to quite significant treasury fee income. That has obviously come down a bit this year as a lot of people have already done what they needed to do. That's probably the main reason why you have that difference.
Yeah, that's correct. A lot of that was trading income related, which was the opportunities in the market at that time.
Understood. Thank you so much.
Thank you. Once again, that is star one for any questions. We will pause for just one moment. There appears to be no further questions at this time.
Okay. Well, if there are no further questions, I will let you all get back to what you're doing and writing up your reports. I think we have one question we have to come back to, which is about the loan deferment and the interest deferment in Turkey. Rehan will come back to the concerned analysts on that point. Once again, thank you very much for joining us today and please keep safe and healthy and we look forward to talking to all of you again at the end of Q2. Thank you very much.
Thank you. This concludes today's call. Thank you for your participation, ladies and gentlemen. You may now disconnect.