Earnings Call: H1 2020

Aug 20, 2020

Ladies and gentlemen, welcome to the BCV Half Year twenty twenty Results Conference Call and Live Webcast. I am Alessandro, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. The conference must not be recorded for publication or broadcast. For the call today, the speakers will refer to the slides, which are available for viewing on the IR section of the BCV website since this morning. At this time, it's my pleasure to hand over to Mr. Pascal Kiena, CEO of BCV. Please go ahead, sir. Thank you very much. Good afternoon, everybody. Let me jump directly to Page 4 with a couple of key messages. Obviously, we've been impacted as well as our environment by the COVID-nineteen crisis. We will go in much more details later on to explain exactly what's happened in the last 6 months. So basically, our revenues are down 5%. There is a mix of, let's say, real revenue, commercial revenue as well as increase in provision in those numbers. And some provision increase as well in the provision line of the P and L. Basically, if I sum up, less business activities with customers, Thomas will explain that in more detail and an increase of EUR 20,000,000 dollars of provisioning needs in trade finance as well as SME. So those are the 2, let's say, main elements of H1 2020 and the main differences with last year, which was a record year. So that translates into a operating profit and net profit down to 30% to 13%. Now having said that, we believe it's a fact we still have the highest return on equity among comparable banks, especially Continental Banks and a very solid bank with a capital ratio of 17.9%. So if I look back and think that we're talking about the biggest crisis since World War II. At least this is what we can read from several economists. And I think those numbers are very solid. Nevertheless, we have some provision to take due to some clients, some SME and trade finance clients, which face difficulty. But this is a couple of clients, probably less than 10. So basically, the rest of the book of the loan book is still very solid and very resilient. So I'm not worried at all about the situation. Key figures, I'm not going on Page 5 to comment that. Business trends, so nothing really here spectacular to comment. Mortgage loans slightly increasing. Deposits increasing, but you have combine the site deposit with the other client deposits since we have a reclassification of the account for payments. And if you combine the 2, you get a 2% increase. I will and also Thomas will go into more details later on. Some highlights very quickly. Basically, the 2 rating agency confirmed their rating, which is a good rating, as you know, with stable outlook. The dividend was paid. And I don't think I need to comment much more on that. I mean, the split of the share, of course, but I can go directly to retail banking. I'll try to be quick, so you have enough time for your questions later on. So Retail Banking, basically nothing tremendous to report. Mortgage loan increasing slightly. This is our strategy to focus on quality and to not to target volume per se. Probably the main two main elements. 1st of all, customer deposits are up. This is basically less consumer spending due to the lockdown in Switzerland. And the second point I want to make is basically the revenues are down, which is also linked to COVID-nineteen. Basically, this is less cash transaction, less credit card transaction, people bought less, people travel less, etcetera. And this has an impact clearly on revenue of the Retail Banking division, around $2,000,000 as you can see. Corporate Banking, here this is probably a bit more interesting. Three businesses, SABL, Corporate, Trade Finance. So you see basically let me start with the provision needs maybe because this is across the board. So EUR 20,000,000, it's a lot, but on the other hand, it's a crisis, which was quite and which is still quite acute. And but the good news in a way, we're talking about a couple of customers, couple of clients, which are in default or close they are in default basically. We don't exactly how much we will recover. This is why we had the best possible estimation of $20,000,000 Provisioning is not a perfect science. And the good news, as I said, is that we are talking about a limited number, which means that the rest of the portfolio, so 95%, 99%, 90 9.5% of the portfolio is solid and quite resilient. So SME, you see numbers are up in terms of deposit credit. Basically, this is mostly the bridge loan program from the federal government. So we had in our plan base, we extended more than 6,000 such loans for roughly $700,000,000 And those numbers, when you compare between banks, they are quite similar. So it's always a part of their portfolio of their customer who requested those loans. Large corporates, use of cash, this is quite clear, quite expected in this situation. Trade Finance. Basically, Trade Finance is an inventory testing business, but as you know, quite volatile from a revenue point of view as well from a, let's say, credit risk point of view. If you look at trade finance, first of all, dollar went down and all those transactions are in dollars. So when you convert to Swiss francs, it's clear that we have less revenues. The commodity price went down. And we are the general activity also went down the number of transactions because of the economic crisis in different countries in the world. And also we decided as of February to decrease our activity. We started 1st to decrease activities of transaction towards China because at that time, we didn't know exactly what was going in China and how things would develop. But overall, we have decreased our activities in some countries or some kind of transaction to try to minimize credit risk. So on one side, there is less revenue in trade finance due to those factors, which I just mentioned. And on the other side, there is some need for higher level of provision in trade finance due to some incidents. I think you could read probably also in the papers. I don't think that we are the only bank which needs to take a provision for this business this year. I think that's all I wanted to comment on total banking. Wealth management, nothing really spectacular to comment. Interesting increase of net new assets from traditional especially in the German parts. Otherwise, Thomas will comment, let's say, the numbers, especially the decrease in AUM later on. So I don't want to spend more time on that. But here, there is nothing really spectacular going on with the continuity. On the good side, on the positive side, in trading activities, I'm talking about client driven activities, as you know. So basically, the volatility has increased in the volatility in the ForEx Life market in March, April had a good positive impact on our revenues. And see that here the revenues are going up. So I think this is nevertheless a good sign of the let's say, our revenues mix. Something went down, other went up. Overall, it went down, which is not good, of course. But nevertheless, the fact that we are quite diversified here is a good sign and we can prove that here. Okay. I will hand over to Thomas for the detail of the financial results. Hello, everybody. I'm on Page 13. Well, very briefly on the income statement, you'll find the key numbers. And it's actually interesting to understand the developing of our operating profit. You know that due to the specialties of accounting rules, the decrease of total income is already affected by buildup of provisions. But you also have on the line other provisional loans, an increase of €6,000,000 which is the other part of the buildup of provisions for loans at risk. So I will comment how this really works in terms of income development and risk cost to understand this minus €30,000,000 And for this, we prepared a special chart on chart number 14, really understanding these drivers and leaving a little bit the key numbers as they are published. Again here, operating profit goes from €209,000,000 to €179,000,000 down minus 14% or down minus 30 And as mentioned in the press release, there is minus 11% due to income development without before a buildup of provisions. And then there's really this element of minus 20 of impairment charges, which are as mentioned as well on the top line as well as on other provisions as Pascal commented those already. So with regard to the pure income dynamics, there are 2 really different elements because to understand this minus 11. On one hand side, it's this increase in trading income of +13. And then there is this minus 24 decrease in income. And basically, it's all more or less linked to COVID in the sense that the negative interest environment even worsened given to this pandemic, Given that our there was a slowdown in activity of our private clients who, as Nigel mentioned, with less payments, less credit card, less ATM, less FX. And then there is this trade finance element, as mentioned, that we reduced exposure by 30% pretty early when we saw the crisis starting in China. But you add to this that there was a decrease in dollar and commodity prices. To understand the already voluntary almost voluntary effect on the income. And last but not least, I mean, definitely there was a nice element of an extraordinary dividend in 2019 coming from a holding. I remind you here that the BCB assets balance sheet is clean. The holding here is basically by what I call to a system, finance market infrastructure. And as a matter of fact, in 2020, there was not such an extraordinary dividend. To some extent, this is also linked to the fact that also those type of companies were holding back equity given the environment. So I think it's really important to see that to COVID, we can link minus 24 and minus 20, minus 44 on our operating profit. So in more usual accounting terms, you will find this back on Page 15. I think these numbers have been commented. I don't want to develop this more as I believe. As mentioned, operating expenses are stable. Again, here some interesting COVID effects given that personal costs increased slightly to the fact that people didn't take their vacations. On the operating expenses to the island side, we did less marketing events obviously. On the other hand side, there was a real strategic result of us working our IT running costs. Slight increase in depreciation and amortization giving a little bit higher investments in digital banking over these last years. But I mean this is a small number plus €1,000,000 Total assets, I mean, here's another interesting element. Liquidity, cash and equivalents. So obviously, I mean, again, here, we see a cobalt effect. Given that the Swiss National Bank increased in 2 steps, the exemption threshold for the money with the current account of banks with the Swiss National Bank, which they can hold at 0. And it's a significant step up. Not all this is below the extension of what you see as cash equivalents, but it's almost that number. So this is also the reason why we break the €50,000,000,000 limit, but obviously, I mean, we would have preferred to re count there by our core business, not that way. But you get to loans and advances, I mean, you see that loans and advance to customers, they have a slight increase given to these bridge loans, which have been set up between banks and the government. And on the other hand, we have the decrease of our trade finance. Ongoing development as mortgages as Pascal mentioned already. On the liability side, Page 18, nothing special to mention. Deposits continue to inflow. The COVID loans were used as HQLA collateral at the Swiss National Bank. With regard to assets under management, here the dynamics, the key dynamics are several. As mentioned, there is the kind of almost end of the handover of deposit banking activities for Swisscanto as said, we bought up Swisscanto some years ago. And before that, BCU was one of the key deposit banks for Swisscanto. This was expected. Secondly, there is this net new money, net new money of €1,900,000,000 with a very positive development in institutions and also in private and SMEs. And the usual variations of large corporates over the Q1, in particular one, very known one, which is typically event given you see the statistics of the first half of the year. So but so the large corporate net new money is not really interesting number, but the business number on Personal Banking and Institutions and SMEs is in good and positive development. Headcount, slight decrease, also kind of linked to COVID because on one hand, we had normal departures. On the other hand, given the lockdown, it was more difficult to recruit. So don't take this as a structural change, but we have very small numbers here. You already know that. Capital ratios, here is something interesting and maybe also already anticipating some of your questions. So we had a step up in our capital ratio basically for two reasons, right? Obviously, Trade Finance is very risk rate intensive business, slowing down by the order of size I mentioned and given the magnitude of its total exposure, expands basically 2 thirds of the decrease of the capital ratio. And then adding to that, we had a kind of nice surprise from our as always you can talk, the banks talk about this, about their supervisor. But our supervisor basically decreased slightly as written on Page 32, our IV multiplier, given our very strict discipline of applying this, I remember the IRB multiplier was set up to kind of floor the IRB effect on residential mortgages on the capital ratio. While average ratio, I don't have to explain to you, longer balance sheet with a slight effect on the leverage ratio. LCR, well pretty stable in the pretty high level above target level. Well, this is all I want to explain to you so far. Pascal? Okay. So going forward, I think it's quite fair to say that really in a very uncertain world, I think you have to do in your job also some forecast. So it's quite difficult. I mean, first of all, we don't know exactly how this COVID-nineteen problematic will develop. For the time being, it seems to be under control, but we don't really know. That's the first part, which is difficult. 2nd part, we don't know exactly what will be the reaction of authorities, of government, depending on the evolution of the pandemic, then the government might react differently. So those are 2 key drivers of, let's say, of the economic environment, which are not really in our control. So what I'm going to say is the current level of our estimation, But obviously, depending on those two factors, which I just mentioned, everything could be wrong in a couple of weeks. So basically, for the time being, we estimate that the economy will recover. And we see that already, but it could change in a couple of weeks or months from now. But let's assume that the crisis will not explode, but continue to be under control as of today, Even if there would be more cases, nevertheless, under control, then we believe that the recovery of our environment, of the economy should carry on at a moderate pace. We will probably not recover everything in the next two half, but probably part of it in probably 2021 and the rest 2022. That's basically our best guess as of today. Obviously, that will have a positive impact on our corporate clients, etcetera. For the real estate market, which is quite important for us, as you know, despite the pandemic, we have seen an increase in prices. This is mostly due to basically low interest rate environment and the lack of attractive investment opportunities for a couple of for private investor as well as for institutional. So that should carry on, I think. And this is why we are quite careful in this market. We see the vacancy rate going up. We don't want to change our policy of saying that we focus on quality loans. We don't target volume. We could grow faster than we grow, but we don't want to do that. And we are really targeting the areas where there is lower vacancy rate. Because in Cantonvo, yes, you can see 2 photovine now that are quite different. The area along the lake or Lausanne, I think we have a vacancy rate of something like 0.45. So there is still room for business here. And if we take some, let's say, more remote areas, backcountry, I would say, if I may say so, we are approaching 2%. So in those areas where the vacancy rate is higher, we want to grow at a slower pace, which is quite, I think, basic common sense. But roughly, our strategy here will not change. So the outlook, I mean, given the equalities I just mentioned with a high level of uncertainty, we will still be under pressure in terms of revenue, but probably we should see revenue slightly grow. We would still be very careful in trade finance, but I don't expect growing the revenue of trade finance because we don't want to increase volume right now. I think it's too early. But we might not see the decrease we saw due to less activities of our clients, being traveling, being buying stuff in this alone or abroad because now things are going better. On the other hand, we might not have the same volatility in the ForEx market. So probably trading revenue will not be as attractive as in the first half. We carry on being very cautious with our operating expense. So basically, we expect a similar trend in 2,000 in second half of twenty twenty. I mean, the main uncertainty, as you have already thought, is the level of provision. We don't know exactly what's going to happen in the economy. We are rather, let's say, positive, but it will really depend on how this pandemic will develop. So very difficult here to be more precise than that. But our let's say, our budget, our forecast is to have similar trends in the second half as in the first. Okay, I'm done. So we are done. So now we are ready to answer your question. The first question comes from Andreas Venditti from Vontobel. Please go ahead. Yes. Hi from my side. Thank you for taking my questions. I have a couple of those mainly on trade finance. Maybe it would really help us if you could maybe quantify slightly what's the negative impact on revenues was for this period. Then the second question is in terms of activity. And I think I guess I understood you right that you would not basically reallocate more resources in this business, even though as we have were able to read recently, some large players are exiting or reducing their activity. So this might result in opportunities. But if I got you right, you're not willing at the moment to take these opportunities. And then if I look at the Pillar 3 report, is it correct my reading that a big part actually of the provisions taken were actually from trade finance and probably a smaller one from the SME business? And maybe on this multiplier on the risk weighted assets, is this temporary? Or is this permanent? Thank you. Okay. I will take the second one and Thomas will take the first one and the third and fourth questions. So you're right. We're not going to, for the moment, to increase our volume, our activities or deploy more resources in this business. I mean, this business has always been in a way under constraint at BCB. For us, the sky is the limit. We are a very small player, and we could have a business which is twice as big or 3x as big, but that would not fit really in our portfolio, in our strategic intent. Now it's unclear what's going exactly to happen to those players. I mean, I read as you did probably the different papers and reports that some players are withdrawing, but we don't know exactly what it means. Are they talking about specific countries? Are they talking about specific, let's say, location where they don't want to do some business? For me, it's unclear for the time being. But it could be that if big player we need to understand that better because the communication was around that clear. Probably that will be good for the business because if there is less competition, there might be a way to increase margins. I would rather try to increase prices and to have better condition on them than just increasing volume. But let's say for the next 6 months, I don't think that we will change anything in our strategy because this business is limited within BCV for strategic reason anyway. And now we are a bit far from this limit since we are reduced by roughly 30%. But I mean given the current uncertainty environment in the world, it would be probably not wise to increase volume. On the other hand, you see, it's always easier to be clever afterwards after the fact. I mean, probably if we had if we didn't have if we didn't decrease or hadn't decreased our volume, Probably, you might we might have had the same provision level, and we might have had maybe $5,000,000 to $6,000,000 more revenues. So it's quite difficult. I mean, the point strategically is that this business has been profitable for the last 15 years at BCV, the last 17 years at BCV. This year, despite the provisioning need, it is still profitable. And I'm always surprised by some large player saying that we withdraw. Then when the economy is recovering, transaction are here, then they come back. So we don't plan to play this game in and out. I'm not sure this is the right way to do this business. But to go to the point, to make long story short, you're right, we are not going to deploy or to increase our resources and our commitment to this business for the next 6 months certainly. Right. So just to give you orders of size, as we got to revenues impact, right, Pascal already mentioned the order of size, right? So it's probably on revenues something between €5,000,000 to €8,000,000 minus for this first half. You can see from the numbers also in Pillar 3 that the exposure on absolute volumes has decreased by something like 25% in volumes. Now and still I insist on the point that over the first half of the year, the Trade Clements business was profitable in, obviously, in in revenues after cost for provisions. Now obviously, you are a very good lecturer of our piece, Survery Broad, in particular, it's Page 22. It's good news and frightening at the same time because it's obviously very strong transparency. So it's a matter of fact. Now you must always be aware that the it's a net increase which you see on end of 2019 to 2020. The gross provision moves are larger in terms of creating and in the sense of recovering. But still as a matter of fact in terms of the net increase, it is definitely as you can easily read strong majority from trade finance. But refer to the gross numbers there is also in enterprises. And sometimes there is always recovery given our prudent approach. Now with your last question with regard to the player, it is structural. There was a step up over, I don't know how many years of this multi player, 10 years it was actually, 0.0 to 2 in the base of 0.2, increased by year, if I'm not mistaken. And also as written in the Pillar 3 report on Page 32, it has now been reduced specifically for BCV by 0.1 with positive effect on the CET1 ratio. So basically, it is permanent? Yes, it's structured. Have we answered your questions? Yes. Thank you. Sorry, I was on mute. Thanks a lot. No problem. Thank you. The next question comes from Stefan Stalmann from Autonomous Research. Please go ahead. Yes. Good afternoon, gentlemen. Thanks for taking my questions. I have 3, please, all on the topic of, I guess, credit quality. The first one pretty broadly, we have had a change in accounting for credit risk under Swiss Banking GAAP. And I was wondering if you could talk a little bit about whether this has influenced your provisioning in the first half at all, whether anything has changed or whether you would expect any changes from this accounting methodology to come in the second half of the year? The second question, a bit more specifically to the provisions in the first half. We already talked about the Pillar 3 disclosures. It looks like you had a provision cover on impaired trade finance loans of 100% at the end of 2019. And on the incremental impaired trade finance exposures in the first half, you only provisioned a bit less than 30%. And you also hinted that some of the cases behind these impairments could be could have been in the public domain. And the ones that I'm aware of have often involved fraud, where the loss given default seems to be quite a bit higher than 30%. So I was wondering how confident you really are in the additional provisions that you have taken on these impaired trade finance exposures in the first half? And the third question on payment deferrals. You mentioned that you actually deferred about €40,000,000 of payments during the first half of the year on corporate loans. Could you disclose what the total notional amount is of loans that benefited from these kind of payment deferrals? Thank you very much. Okay. Stefan, it's Thomas. I will start with your accounting question. As a matter of fact, the sales change in domestic standard with regard to provisioning of expected loss on the loan book in Switzerland. As a matter of fact, we have not yet applied it. And it's a strong intention, and we actually is prepared to do it by the end of the year. Without betraying anything, I can just explain you already that be aware that our CET1 ratio as we published it today has already takes only into account equity after deduction of the Basel Committee calculation of expected losses, which already takes into account the expected loss on healthy credits. I'm saying our CTE ratio, as a matter of fact, already is equity after corrected by reduced by provisions for healthy credits. So this I think is a key element to understand where you should expect us. Pascal? Yes. So your question is a good question on trade finance. You're right. We haven't taken 100 percent of the exposure to the provision. I think maybe one point is important. In trade finance, you have 2 ways I mean, in a way, 2 ways of doing the business. Either you can finance the balance sheet of a trader. So you're exactly like if you would, let's say, finance a corporate or you finance transactions, specific transactions. And we do, let's say, 90% of our business, maybe even a bit more probably transaction financing. So that means there is always good, there is always in a way a kind of a pledge, which is not the case if you finance the balance sheet of a trader. So then depending on the kind of, let's say, of transaction that you are financing, depending on the countries, so basically, we did an assessment of the different situation and we came to the conclusion that for the time being with scenarios, we believe we have the right number. But I cannot exclude that this number will go up. The number could also go down. I mean, so this is not a precise science. But maybe comparing maybe to other banks, if you should do that, think about, let's say, the different ways of financing those traders. It's clear that if you finance the balance sheet and there is a huge road, then you are maybe not in as good in a position which as good as if you finance a specific transaction where there is good behind. Now it doesn't mean that this is always 100% safe when you finance a transaction because you are also fraud in financing a transaction. But overall, probably it's a bit less risky, if I may say so, and less prone to fraud if you have specific transaction. So this is why we believe we will recover some of our exposure, and there is a part when we'll probably not recover. And for the time being, this is what we have some provision. But I cannot exclude that those provisions will go slightly up. And if you read also very carefully our statement of going forward, we believe that second half will be similar to the first half. So that means we believe that provision might increase in the same kind of proportion. But for the time being, let's be clear, we don't know exactly what's going on. So okay, that was the second question. There was another question. SMEs. I see SMEs. Okay, the numbers, we don't have the number. I don't have here, but we can provide you the numbers if you want. Off size. Afterwards, and order of size. Okay. So if the order of back half, I mean, we're basically talking here of a base of €8,000,000,000 with regard to the particular mortgages to the SME sector, which has a scheduled amortization and which we are basically then the bank decided to create this liquidity injection for these companies by another $40,000,000 So it's not a tremendous number, but it's a nice thing to do. Does that mean Thomas that you've basically not accepted any payments during the first half from We decided on maturity, the 2 maturity end March June, to not take the principal amortization, but to suspend principal amortization. Now just to come back maybe to the numbers in provision. I mean, you can read, you can get if you return the Pillar 3, you see the expected loss at PCB. So now we are in a huge crisis. So in a way, expected loss is through the cycle. So I would not be surprised that in a huge crisis that we would shoot a bit more than expected. And that might not be the case, Tomaco. How do you expect the figures? Depreciation and amortization of I know. I'm going back to the For the models, from the models, the expected loss is €30,000,000 to €35,000,000 to €35,000,000 So we are at 20. So you see, this is still okay. I think this is something maybe what people tend to forget because in the last 10 years, I mean, the economic cycle was always good, and we are always less than the expected loss in terms of more or less always. So if at the end of the day let's imagine that at the end of this year, we go to, I don't know, 30%, 35%, that will be a perfect number in terms of matching the expected loss and the real losses. So I don't know. But you see, I mean, I think we have to be clear, this is a crisis which is quite acute. And I would not be surprised if we should, let's say, above the expected loss. It seems to be the case for the time being, but we don't know really what's going to happen in the next 6 months, whether the conditions will increase or will decrease. I think here, we have to be quite humble. It's very difficult to be precise, I mean. Yes. Could I maybe follow-up on what you, Thomas, said earlier on the accounting point, where you basically reminded me that there's, I think, about €58,000,000 of expected losses already deducted from your CET1 capital. Is it therefore possible that as the new accounting comes on board that we see, let's call it, half of that going through the P and L, but then it's going to be offset by less deductions. So your CET1 is protected, but your P and L would suffer. And if that is the case, and this is all very hypothetical, would that have any impact on your dividend? If that means that you had to be I cannot explain it to you, but I can tell you that CET1 ratio will be unchanged. And well, as we have broken out, we don't expect impact on P and L. Neither on dividend. I mean, that change will not affect dividend at all. No. I think it's really the thing I was hinting on is that basically the cost of this approach we already paid today we introduced IRB. Yes. It's just that if I look at other banks that are using IFRS, the typical outcome has been that some of these It's nothing to do with it. Losses have gone through the P and L. Yes, yes, yes. It's a very yes, I understand. It's technical. It's not IFRS. It's not IFRS, okay? Okay. It's domestic standard and our ambition is that we want to make to take the opportunity to make our IRB Basel III and CET1 ratio and the accounting numbers more consistent, that will be more consistent by the end of this year. Is it clear for you? Yes. Thank you very much. Okay. The next question comes from Andreas Brunn from Credit Suisse. Please go ahead. Hello. Thanks for taking my questions. Can you actually split the trade finance revenue loss to fee and income, fee and commission income as well as to interest income? Or more generally, is it like evenly split between these two revenue lines? Yes. Yes. Yes. Okay. Sorry. Yes. You can go ahead with 50%, fifty-fifty percent. Okay. Thanks. On G and A expenses, which came down nicely in the first half year, is this actually a step down to a new normal? Or in a normalized environment, will it go up again due to higher marketing expenses, etcetera? It's a mix. It will go high. It will go up again, but we also have IT decreased. But I don't have any specific figures, but it's clear that also in the second half, I mean, most of marketing events, if you know that we have BCV as a birthday this year, 175 years, and we had put something aside for that. And we had to cancel most of the events. So there will be also in the second half certainly some reduction due to those events being concerned. But don't expect this is the new baseline for 2021. That would not be correct. On the other hand, if you take personal cost, it's clear that we people could not take their vacation, and we could have forced the people, but this is not our philosophy. So there is an increase in personnel costs due to vacation not taken by our employees, it's clear that we will if there is not a new lockdown or stuff like that, during the course of 2021, we will ask the people to take their vacation. So we might see during 2021 a slight decrease in personnel cost only due to that effect. Okay. Thank you. That's very clear. Lastly, on gross interest income, which was down 10% year on year, Do you think that this net interest margin compression will continue going forward? Well, 1st of all, so gross interest income was down 4%. There was the first moment an error in the AWP communication, which they corrected later. And then the net income is down 10%, given taking into account the risk costs. Now going ahead, here's something particular to dynamics of gross income, is very much linked to the negative interest environment. There are some elements which we should take into account here. Obviously, there will be the ongoing effect still of mortgages repricing on the asset side at lower interest rates. And on the other hand side, on the liability, nothing special going on, as you know. Secondly, there will be positive effect from the increasing increased and increasing exemption at Swiss National Bank to put liquidity there at 0. Thirdly, it's actually difficult to read the real economic development of interest income in the P and L, because it is partly in the line which we are just talking about. And given that the treasury is working on this to explore that completely, It's partly captured in over derivatives, over swaps in trading income. So the number you see in terms of development of interest income is not fully reflecting the dynamics. Now all together, taking together by coming and taking to the bottom line, interest income from an economic perspective will be under pressure. But if we take the strong hypothesis that the current interest rates stay as they are, we are rather on a flattish development. Okay. Okay. Thank you. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to BCD for any closing remarks. Okay. I mean, I will be very quick. Thank you very much to all of you, and we talk to each other either in roadshows or discussion or next year for the 2020 results. Bye bye. Bye bye. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.