Earnings Call: H1 2020

Jul 23, 2020

Ladies and gentlemen, welcome to the Leontec Half Year 2020 Results Conference Call. I am Sabrina, the Chorus Call operator. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Dominic Rubly, Head of Investor Relations, Communications and Marketing of Laemtec. Please go ahead, sir. Good morning, everyone, and welcome to the press conference call of Laemtec's half year twenty twenty results. All presentation materials as well as the half year report can be found in the Investor Relations section of our website. Here with me today are Chief Executive Officer, Lukas Rufring and Deputy CEO and Chief Financial Officer, Marco Amato. We will start the presentation with an overview of the highlights of the first half of twenty twenty. We will then discuss the financial performance of H1 2020, continued by a business update and a look at our strategic priorities before we close the presentation with a summary and an outlook. The presentation will last about 45 minutes, after which we are happy to take your questions. We intend to close the conference call at 11 a. M. It is now my pleasure to hand over to our CEO, Lucas Rolfi. Thank you very much, Dominik. Good morning, ladies and gentlemen, your shareholders, analysts and media representatives. Before we start today's presentation, I would likely quickly look back 2 years. If you recall, in mid-twenty 18, we shared with you our plans regarding the journey we were embarking on as a company, a journey to overcome certain limitations we faced and to grow and transform our business. At today's press conference, we will highlight to you the progress we have made through a clear and focused execution of our strategic priorities, which is visible with the strategic progress we made in the first half twenty twenty. Let me then start on Page 4 of the presentation by outlining some of the key takeaways from the first half twenty twenty. The year started out well, and we were on track to deliver our half year results according to plan. Then beginning from March 2020, however, the coronavirus became a global pandemic, resulting in turmoil in global capital markets affecting all asset classes underlying structure products. As you will recall, we were early on with updating you in early April 2020 about how our business was impacted amidst the coronavirus situation. We also announced back then that we expected our results to come in around breakeven level. In line with this guidance, our net profit for the first half year of 2020 was CHF 5,500,000. Our net fee income reached a record of CHF 213,000,000 which is a 76% increase compared to the first half twenty nineteen. On the trading side, we reported a net trading result of minus €107,000,000 We will come back to that shortly. This was driven by hedging related losses, driven by the oil price shock and unexpected cancellation of dividend payments. In addition, we recorded an overall increase in hedging related costs, which were only partially offset by our structural long volatility position. On the cost side, our total operating expenses were up 5% to CHF 98,700,000. This increase is driven by investments in hiring and our key strategic initiatives. On the business and strategy side, we are encouraged by the further strengthening of our client franchise, the significant progress we have made during the first half of twenty twenty by diligently executing the strategic priorities we defined 2 years ago. Ago. In the first half of twenty twenty, and in particular in March April, we delivered full client service at all times under unprecedented market conditions. In this environment, we recorded an increase of 58% to about 115,000 client transactions in the first half of twenty twenty. Our turnover in structured products traded on our platform increased to CHF 15,400,000,000 which is up 3%. Furthermore, we significantly expanded our issuer network with new partnership agreements with RENZ Merchants Bank, Basler Cantonalbank and Post Finance. Then today, we announced that Barclays will join as the 1st third party issue on our digital marketplace. We also enhanced our technology platform and fund derivative offerings through our collaborations with Google Cloud and BlackRock. Furthermore, and as envisaged and communicated 2 years ago, Ship is now being up and running with 7 hedging counterparties in addition to Leontag connected. The ship milestone is a major milestone in our company's development, and I'm pleased that we delivered it on plan. Last but not least, we have further invested in our digital marketplace, Linx, which offers new features and modules and is now also available to our clients as a mobile app. While the bottom line result is at this point, and we shouldn't even start debating about that fact. The first half year of twenty twenty proves that Leon Tate can weather the storm in real periods of market stress. And I'm not entirely sure that everyone understands to what extent March April were when it came to the underlying asset classes, underlying structure product, a real stress test. We were all among the management team up and running during the financial crisis 2,008 and 'nine. And compared to that, the events we saw in March April were by a magnitude larger when it came of speed to speediness of events happening and also speediness of liquidity in what's previously the liquid markets disappearing. Clearly, central bank actions and government interventions helped a great deal, but at the same time, created new unexpected political risks, which affected negatively our results. We'll show that shortly. If we now go on to Page 5, please. What clearly became evident at the beginning of the onset of the events was that the market turbulences were not only affecting Leontec's position as a market participant and also providing hedges, but clearly also as Leon Tech's position when it came to service our clients. And we very consciously from the very beginning said, the client franchise is the goal of this firm, and we will do whatever it takes to be here for our clients, providing liquidity whenever needed. And I'm very happy to say that not only did we do this, but we feel strongly the clients appreciate that. And on the back of it, I feel strongly that we have a better year a better firm than half a year ago. Now going through the slides. Throughout the period of market stress, neon tech demonstrated its ability to navigate unprecedented market environments, underscoring the strength of our client business, our solid technical position, the robust infrastructure and our effective business continuity management. Diontech's technology platform was fully operational throughout that period, allowing us to deliver high quality service to our clients without any material interruptions. Our technology platform experienced significant traffic due to the market volatility and processed more than 95,000 secondary market trades and more than 55,000 lifecycle event. I'd like to note here that it is an exceptional achievement to transfer our platform within a few days to accommodate full work from home for our employees and continue to support our full business needs. All home office capabilities across the company were established in preparation for the lockdown, including high demanding trading and ID development setups. Our business then remained fully operational throughout the period, while more than 95% of our staff worked remotely from home, including traders who are supposed to manage market risks and also key IT functions. We were also pleased to see that the day to day business was not affected. That's clearly visible in the net fee commission line. And teams continue to hold regular meetings through WebEx, and staff remained engaged and attended virtual group town hall meetings. Continued to provide full client service at all times, as I've just mentioned, for which we have received excellent feedback from our clients and partners. All of these examples are clear testimony of the solidity of our infrastructure, which underpins our technology platform as well as the dedication and professionalism of the entire Leontec team. In this context, please note that Leontec is not just serving clients in Switzerland, but throughout the globe. Our service on a given day starts early in the morning with servicing Japanese clients and ends late in the evening with clients doing transactions on U. S. Underlines, for example. So we already maintained not just an active and functioning platform, but 24 hour period necessary to serve clients on a global basis. In this context, I would like to thank all of our partners and clients for the trust they showed in Leontec and also thank all our staff for their exceptional and good work they delivered in this difficult period. I've been telling our internal staff from the beginning of this crisis, and I maintain this view that I feel very confident that Gliontech will emerge post COVID in a position of strength and ready to take on the new opportunities the new environment brings. The limited visibility we have today as a management team, it's obviously only a few weeks since things seem to be coming down a little bit, is that this view is clearly proven. I see as the CEO of Leontag more opportunities ahead of us than I possibly see never in Leontag's 13 year history. Obviously, all of this will come down to good execution on the part of us. And obviously, all of this is also conditional on what the next effects of potential COVID related or other related crises will bring. We are, as Leon Tate, prepared for any scenario which might come. But we see a lot of sunshine behind the clouds that were above all of us in the months of March April. With this, I would like to invite our Deputy CEO and CFO, Marco Marto, to present the half year results of Leon Text focusing a bit more on the numeric side of things. Thank you, Lucas. Good morning and warm welcome to all participants from my side. I'd like to talk about our financial performance, first looking at our P and L. We'll then elaborate on the main drivers, which impacted our business, especially during the months of March April. And we'll conclude talking about cost, balance sheet as well as our capital basis. If we start on Page 7. On 9th April 2020, in light of the COVID-nineteen situation, we provided you with a business update and announced that we expect our profit to come in around breakeven level. Today, we report that in line with this guidance, our group net profit was CHF 5,500,000 compared to CHF 32,500,000 in the prior year period. We also stated that we recorded a significant increase in fee income, while being negatively affected on the trading income side by hedging related losses driven by the oil price shock and the unexpected cancellation of dividend payments as well as an overall increase in hedging related costs. Today, we provide you further transparency about these drivers of the first half year result. Our net fee income increased by 76 percent to CHF 213,000,000 in the first half of twenty twenty. This was driven by 3% growth in turnover to CHF 15,400,000,000 and a significant increase in margins to 129 basis points compared to 71 basis points in the prior year period. Our net trading result comprises contribution from hedging activities, which amounted to €99,000,000 negative and a treasury carry, which was €8,000,000 negative. Let's look into the trading results in more detail on the next page 8. On Page 8, we have illustrated for full transparency the development of our weaker economic revenues for the 1st 6 months of the year. As you can see, Leontec achieved a strong start to the 2020 financial year with high levels of client activity and a positive trading result on the back of increased volatility towards the end of February. In March April, we had 3 major items, which negatively affected our results. The first oil price shock in the beginning of March alone had a €20,000,000 negative impact on our trading result. Then towards the end of March beginning of April, we saw a widespread and unexpected cancellation of previously announced dividend payments. As Lemtek holds a significant amount of equities for hedging purposes, these missing cash flows as well as the resulting changes in the implied dividend yields observed in the capital markets has negative impact of approximately CHF 38,000,000. And then throughout those turbulent weeks, Leltek recorded a significant increase in hedging related costs as market risk exposures changed rapidly in an increasingly illiquid hedging market. These additional hedging costs were only partially offset by our structural long volatility position. In May June, the capital markets recovered technically, which we've normalized in volatility levels. What the chart in front of you shows is that our business also normalized in terms of weekly revenue production towards the end of the first half of twenty twenty. Let me now discuss our cost line on Page 9. Total operating expenses were up 5% to €98,700,000 compared to the first half year twenty nineteen. This was primarily driven by investments in hiring and key initiatives in the first half of twenty 20. Given the strong strategic progress we saw in the first half of twenty twenty and in particular in the Q2 of 2020, management consciously decided to selectively invest in new growth areas. Concretely, the onboarding of new white labeling partners will require new resources. Also, we have increased our investments for the implementation of additional features and modules of our digital marketplace links. And we are continuing with our efforts to increase our regional footprint in Europe and the Middle East through the opening of new offices in Milan and Dubai, which are planned to be opened during the second half of twenty twenty. It is important to note that we are monitoring the situation constantly with the clear aim to protect our profitability going forward. For example, in case there will be a substantial drop in client demand in the second half of twenty 20, we have the ability to implement meaningful cost measures if necessary. Currently, we do not envisage such measures and plan to further invest. Therefore, the total operating expenses are expected to amount to approximately $200,000,000 for the full year 2020. As announced with our full year 2019 results, we considered a number of nearshoring options, and I'm moving now to the second part of the slide. We did this in the context of our continued need for investments, which we want to balance with our profitability targets. After an extensive evaluation process, Lemtek has selected Lisbon, Portugal as the location of choice due to several factors. These included the talent and sourcing opportunities, the political stability of Portugal as well as time zone and cost considerations. Phase 1 of the nearshoreing operations will consist of establishing a serviced office setup. This is expected to be completed by the end of 2020. A small number of external IT development specialists as well as other personnel in shared service functions will be employed during this process. In Phase 2, starting in the Q1 of 2021, we will we plan to establish a known office with up to 100 designated roles along the entire value chain. It is standard, Phase 2 will be fully operational by the end of 2022. Let's now turn to Page 10. On Page 10, you will see our regional results. We reported double digit growth in all our regional operations. In our home market of Switzerland, the net fee income increased by 56% to CHF 82,000,000 in the first half of twenty twenty. Our business in Europe grew by 105%, meaning doubling the net fee income compared to the first half year twenty nineteen to CHF113,200,000. And the Asia region saw a 34% increase in net fee income year on year to CHF 17,800,000. As communicated with our full year 2019 results, we will open new offices in Milan and Dubai in response to increased client demand in these regions. We expect to receive the necessary regulatory approval shortly and to open respective offices during the second half of twenty twenty. Moving on to Page 11. The good fee income performance in each of our regions this first half year of twenty twenty was primarily driven by our Investment Solutions business line. Here, we met the strong client demand and provided full service at all times under the unprecedented market conditions. On Page 11, you can see the change in our turnover, fee income margin in the middle of the page and the net fee income year on year. Leotech's turnover increased to CHF 15,400,000,000 in the first half of twenty twenty compared to CHF 15,000,000,000 in the prior year period, which was mainly driven by a higher amount of secondary market transactions, particularly during the COVID-nineteen situation in March April. Our fee income margin increased exceptionally to 129 basis points compared to 71 basis points in the first half of twenty nineteen on the back of the market turmoil and increased market volatility. In the first half of twenty twenty, the Investment Solutions net fee income increased by 86% to CHF 198,700,000 compared to CHF 107,000,000 in the first half of twenty nineteen. Let's take a look now also at our insurance and Wealth Planning business line on Page 12. We continue to grow in the area of unit linked insurance policies despite the headwinds created by the significant reduction in long term interest rates since 2018. As of June as of end of June 2020, we have almost 50,000 insurance policies outstanding on our platform. This is a 5 percent increase since the end of 2019. On the fee income side, the IWPS units recorded an increase of 3% to $14,300,000 in the first half of twenty twenty compared to the first half of twenty nineteen by 3%, also reflecting the challenging interest rate environment. I would like to turn now to discuss Lemtek's balance sheet on the next page. On Page 13, you will see the composition of our balance sheet. Our balance sheet is driven by 2 factors. 1st, we issue Lelantec owned structured products, which are recognized on the liability side. To hedge these liabilities, we invest approximately half of the proceeds from own issuance into a conservative investment portfolio and the other half into hedging derivatives positions such as equities or indices. Likewise, as a result of the issuance partner business, we mostly hedge for our partners their structured products exposure by purchasing either the underlying securities of the products or options. At the end of June 2020, volatility levels were higher than they have been in years. Due to this, our positive and negative replacement values of derivatives instruments increased by 109% to CHF 6,200,000,000 and by 75 percent to CHF 5,100,000,000 respectively. At the same time, cash collateral paid and settlement receivables as well as collateral received and settlement liabilities grew significantly. Our own issued products remained stable around CHF 4,100,000,000 whilst our high grade investment portfolio increased slightly from CHF 2,400,000,000 in December 2019 to CHF 2,500,000,000 at the end of June 2020. These factors combined resulted in total assets on our balance sheet to increase by 48 percent to CHF 13,400,000,000 Similarly, our total liabilities increased by 52% to CHF 12,800,000,000. Let's now move to Page 14 to look at our shareholders' equity in more detail. Over the past years, Lemtek has built up a strong shareholders' equity. Looking at the top chart, you can see that shareholders' equity decreased slightly from €662,000,000 to €659,000,000 This compares to a capital base of approximately EUR 400,000,000 from 2 years ago. Since the beginning of the year, Lamtech is operating under a new regulatory framework for securities firm. The new capital requirement of SEK 20,000,000 was significantly exceeded as of the end of June 2020. Then looking at the bottom chart, you see that we report a EUR 26,000,000 decrease in our deferred fee income to EUR 81,000,000 as of the end of June 20 20. €5,000,000 was due to the retrospective application of changes in revenue recognition as of the 1st January 2020. This change was driven by a review that we did at the beginning of the year on the back of an increasingly competitive environment in recent years. Higher competition we saw in our Investment Solutions business line was also reflected with our fee income margin declining in the area of 100 to 120 basis points in 2016 and earlier to the area of 70 to 80 basis points last year. With that, I conclude my remarks on the financial performance and would hand over back to you, Lukas. Thank you, Marco. I will now continue on with an update on Leontec's key initiatives on which we have made good progress in the first half of twenty twenty. For the last two years, some of you have asked us at our half year and full year press conferences, whether and when LEO Antec is going to announce new platform partners. You will remember that we have consistently told you, yes, we will announce new partners, but we asked you at the same time for some patients as we were less interested in the announcement themselves, but much more in adding partners to the platform, which would contribute to our vision of becoming the leading marketplace for structured investment products. In this context, we are pleased to be able to report on the following 4 new partners, which I would like to discuss in a bit more detail on Page First, we entered into a broad cooperation agreement with Basler Cantonalbank. As part of this cooperation, Basel Cantonalbank is issuing structured products and Leontec providing services along the entire value chain. We both distribute these products to our respective clients. Leontec also launched a collaboration with Rand Merchants Bank, a division of First Rent Bank, for the manufacturing and distribution of structured investment products, broadening our offer to clients into a new region. Furthermore, we also won a tender for additions and distribution of investment solutions by Post Finance and have signed an agreement to cooperate with the company in the field of structured investment products. We are very pleased to expand our cooperation with post finance that began in 2017 as a pilot project, and we will be providing all services along the entire value chain. And today, we have announced that we have built connectivity between our digital marketplace and the Barclays electronic platform, making Barclays the 1st 3rd part issuer to join our multiissure platform on an automated setup and spaces. Furthermore, and moving on to Page 17, we have also entered into new partnerships and collaborations with 2 highly reputed companies. The background to this is that we need to ask ourselves the question how we are positioning for further growth, which we expect on the back of various investments we are making in new key offerings on our side, such as the Lynx platform, the AMC gateway and the Ship platform, we need to think ahead of this assumed future growth. In this context, we have started the collaboration with Google Cloud to support our platform scalability by extending our infrastructure from our 2 on-site data centers into the cloud. Important to note here is that the cloud is an additional backup facility we are having. The office is still maintaining fully our 2 on-site data centers. By leveraging Google's cloud offering, we are able to benefit from additional flexibility and performance at scale for our core grid computation processes. This will also be beneficial, and that's very important to understand, For our platform partners in the future, with regards to their reliance on the OnTeq's technology platform through enhanced business continuity management, faster platform rollouts and improves regulatory and risk management. So just to give you a very specific example, one of the leading banks in Africa, such as FirstRand Bank, is obviously asking itself the question, what if there is a major downside on our to on-site data centers with regard to their service offering by essentially having the Google Cloud next to our on-site data centers, we can credibly demonstrate to these and other partners that they are not simply relying on hardware reliance and technology of Leontec, but really also are being supported by what is probably the leading technology provider when it comes to data centers, etcetera. That's really why we have been working very extensively the last 18 months as a management team to onboard with regard to this cooperation. Then our strategic partnership with BlackRock, which we announced recently, is expected to further diversify our revenue base. As part of this partnership, Leontec develops and market structure products with BlackRock's Luxembourg Mutual Funds range and iShares ETFs as an underlying asset class. We are very pleased to be working closely with these 2 leaders in their respective industries and have already benefited from the extensive exchange we had with these parties in the period ahead of this announcement. Of course, such partnerships take time to develop. And I'm definitely convinced that these additional services and partnerships we are providing are not only helping our end clients, but also our white label partners. Now if we move on to Page 18, please. I'd like to briefly discuss our hedging activities and the progress we made on our balance sheet light piece. Clearly, as we have seen now in this first half year results, Leontec hedging outstanding structure product itself comes always at the risk of unexpected market developments. So simply put, the less we are hedging as Leon take, probably the more stable our bottom line will be. That's really the background to ship, which we communicated to you as a project 2 years ago. And in parallel, we have obviously used the last 24 months to develop some further ship alike approaches, which all have the same underlying rationale. We'd like to reduce the reliance on the on the on the own balance sheet when it comes to hedging transactions of structural products issued. Back quickly to ship. As said before, it's now fully operational, and it is an important step in transforming LEO Antec's position from a balance sheet business to a platform business. Ship, as of today, has 7 leading investment banks connected to it so that the technology connection is fully up and running, tested and has been verified. A total of 8 counterparties, including Leontec, are actively contributing growth to the platform. And out of these 8, 6, including Leontec, are currently able to execute trades. With the other 2, we are in literally the last thrust of getting their execution capability fully up and running. So very shortly, we'll have the 8 up and running. Also, we not only connected the hedging companies but also the issuers. So we have today, from the white label issuer side 4 issuers up and running. So Leontec, of course, but also HiFi and EFG and Standard Chartered, and we are talking to all our other white label partners about connecting them as well to the Ship platform. As mentioned in parallel, we have built out other offerings with the same purpose and have today 15 third party issuers connected. Those we service on a customized basis, which means we have a lot of manual intervention. And that's obviously not ideal with regard to our end goal of having a fully automated platform available. So I'm very pleased to be able to report our cooperation with Barclays. The key difference to the past year is that the client using our platform can directly buy a Barclays product whereby the entire execution, settlement and processing happens on an electronic basis. It's obviously a massive improvement to a manual setup. As you can imagine, we'll also be working on automating some other softer third party issuers. And on top of that, we extended our capabilities for back to back hedging transactions of complex structures with additional hedging counterparties. So the combination of ship, which is only up and running now fully as of now and our 3rd party issuers and B2B hedges, this is the back to back hedging approach we are taking, has enabled us to increase our balance sheet light business to some extent. While the 6% of total turnover, which that represented in the first half twenty twenty is still a low number, It is not surprisingly at that level because, a, ship wasn't yet fully up and running and, b, a lot of the developments which will further increase that number were obviously only delivered during the last few months. Nevertheless, I am pleased to say that 6% is an asset improvement to the 1% we had in the comparing period 'nineteen, And this clearly shows you the direction we are taking as a firm. It's obviously also a number we will report going forward. So you will be able to monitor the progress management is making yourself as we report on a half year basis that number also going forward. Moving on to Page 19. I want to share with you how Leontact's marketplace for structured investment solution is taking further shape. We are not at all at the end of this taking shape process. You can and should assume that we will have more parties joining the platform. And simply put, on the right hand side, what you see is our clients. We are B business, so our clients are typically regulated entities, private banks, retail banks, asset managers, etcetera. On the left hand side, we have the entire spectrum of issues or structured products available. A good number of them we are enabling through our white label setup and a good number of them now also in an electronic format. The first time with Barclays, we are offering to our clients through sell side service whereby they can buy through our platform the 3rd party issuers. We are augmenting that reality on the top part of the chart with Ship, which ensures for end clients on the right hand side that the best execution is not only happening at the level of the issuance of the 0 bond, but also at the level of the derivative, which we source through the ship market and which brings the ONTAC that whenever a derivative is not purchased from ONTAC, ONTAC is obviously now providing the hedge, which essentially reduces the reliance on Leontec's balance sheet. As this marketplace is becoming more and more relevant, We see a good potential of adding content and technology enhancers. BlackRock and Google are two names. We have some ideas of additional content and technology enhancements we could add. We'll obviously, nevertheless, keep that number limited because again, here, it's not about the names or the number of announcements, but any of these additions need to make a real difference to the platform we are building. With that, I'd like to come to the summary part of our presentation before we will gladly take on your questions. So Page 21. Neon Tech's half year twenty twenty results are evidence that we can weather the storm in real periods of market stress and safeguard our profitability. Marco Amato has shown you on a weekly basis economic revenues. I can't think of a way of being able to be more transparent to you about our developments. You clearly see in the numbers that neon tech did not manage for political risks, which came as a result of these events we saw in March. I'm not sure that it's a very good approach for the firm into the future to hedge for political risks. We are able to do subsequent oil price shocks. I would define an oil price shock as a 30% movement in the oil price overnight. Was obviously a very big oil price shock when oil went negative. And without exception, all subsequent 7 oil price shocks did not bring us a single dollar of loss. That shows you that Cleantech is absolutely capable of hedging political risk. And in this case, we did it. The drawback to that strategy is, obviously, it comes at the cost. You cannot buy insurance for free. And as we will come to the Q and A, I assume some of you will be asking for details of the trading breakdown and the trading losses. And increased hedging activities means essentially a conscious decision by management that, a, we do hedge, and we will continue hedge no matter what the market brings because that's really the approach to take if you want to safeguard the company for worst possible outcomes. But it also means that you are paying for a lot of insurance premiums. Some of them, you are with hindsight benefit happy to have had. Clearly, the oil price development showed that the strategy worked well with regard to debt. But in some other cases, the approach led to essentially us paying insurance premium without any tangible results. I think we did the right thing in view of the developments we saw in March. But at the same time, it's a very expensive strategy. And one has to balance a bit the downside risk of not protecting for every potential outcome also is the benefit of essentially keeping some tail risks open. And as we have seen in March, the tail risks when they come are in every regard, unpleasant in terms of their effect on our P and L, but they are not of such a magnitude that it would fundamentally question the solidity of the firm. And of course, we have some inherent hedges with regards to our positioning. 1 is the long structural volatility position we run, and the other one is that we know based on experience that typically clients would transact more when markets become very volatile, which was evidenced here and which then obviously has an effect on our fee income. The key takeaway for me, nevertheless, aside of the fact that obviously, first half is a disappointing outcome on the net profit side is that LEOONTEK has invested in its Clarion franchise. I believe we have a better firm now than we had 6 months ago when it comes to client trust and client confidence in us. We have really stress tested the robustness of our technology platform. We have never had better strategic progress when it came to new partners. I'm very pleased to see that the involvement of our vision into a marketplace is taking shape. And it's not just something I'm telling you because I believe it. It's also something that independent, highly rated, in any cases, too large to fail institutions has really defied by entering into the strategic corporations with us. And finally, understanding that some of these new corporations will bring new costs. We obviously have thought long and hard as a management team how we can contain some further cost developments. And therefore, the establishment of an near shoring office in Lisbon will be very critical. Now what can we expect moving forward? You will not be surprised to hear from me that there is considerable uncertainty about the duration and global economic impact of COVID-nineteen pandemic. We are unable to predict what the next developments are. We obviously know that there are also some geopolitical risks standing out there, be it U. S, China in terms of trade tensions and talks, be it U. S. Elections in terms of what policy and decisions out of that election process might come. What we can objectively observe today is that the interest rate environment now in really all main currencies is at a historic low. In many instances, interest rates are negative levels. And we know and we can prove that based on hard facts that in this environment, structured investment products offer attractive yield alternatives. Given the strategic momentum, neontech will continue to invest in key initiatives, and our total operating expenses are expected to reach approximately CHF 200,000,000 for the full year 2020. We will continue executing on our strategy to transform into a platform business, and we obviously see our sales well positioned for further growth. Otherwise, we wouldn't have made the conscious decision to report to you today that we will continue to invest into future growth. It would be very simple for management as we would know exactly what to do to tell you that we have decided on a certain cost block reduction. We know in our setup exactly how to do that. The biggest cost block we have comes from our people. So we could obviously have decided a cost reduction on the back of a diminution of our staff force. We are consciously not doing that because we think now is the time to invest into the opportunities we see. We don't think now is the time to retreat on the cost side. But we understand and appreciate it that this is a strategy which needs to be balanced against the revenue side, and that's why Marco stressed that in case the revenue side would not materialize, we would know exactly what to do, and we would obviously also not hesitate to act should we need to do so. With that, I would like to thank you very much for your attention. So we are at the end of the presentation and are now happy to start the Q and A session and we'll take the first question. The first question is from Martin Enes of UBS. Please go ahead. Good morning. Can you hear me? Yes, Martin. Good morning to you. Good morning. Thank you for the presentation and the details of the various revenue lines. I have a couple of questions on both fee income and also the trading income component. Firstly, on fee income, clearly, the increase in the fee margin drove perhaps the significant increase in net fee income as well, while it seems to me that in Investment Solutions, the product turnover remained broadly flat. I'm wondering if you could give us some color on your expectation in regards to the margins. Should we expect basically a reversion back to more normal levels as perhaps Q1, Q2 was an exceptional environment and very high volatility? Or you would expect still margins to remain structurally higher as the VIX and volatility levels remain also quite elevated? Secondly, on trading income, appreciate the color on the components and what has driven it. I'm just wondering if you're planning or conducting any review of your own issuance hedging strategy in order actually to prevent something like this happening again? Or this is essentially an inherent risk in the business. And as you mentioned, some risks are perhaps inevitable and then not worth fully hedging. So these are the first two questions. And then the third question on ship. Can you give us any color on where the 6% total turnover on balance sheet light turnover could go in the next year, 2 years, 3 years? And then maybe a quick clarification just to make sure we are on the same page. When you say back to back hedges on ship, this essentially means you have no hedging exposure there. Is that correct? Thank you. Thank you very much, Mads. I will take the last two questions, and Marco will address the fee income question. Look, what is very important to understand on the trading income, I mean, the number, as it says, is obviously a large negative. But the first comment I'd like to make is this is not a trading loss based on any proprietary views that the OnDeck took. This is really hedging related losses. The 2 political risks we cheat us. So oil price shock, the magnitude of it, I guess, was a bit driven by 2 very large oil dominating countries having some discussions between themselves. I would say there was a political risk. We didn't prepare for that. We didn't see it coming this way. And we suffered, and the number is disclosed. The second that event happened, we said, okay, this can obviously continue to happen. We didn't take any view whether it was going back to 80 from 40 or whether it was going to 0 or even negative, but it was obvious to us that it could come again, and we hedged for that. And then we had 7 events like this, and none of that cost any money. The second, I would say, and that's probably something which happens from time to time. In that magnitude, on oil, we saw it 40 years ago. But then we saw another 7 events after the first event. And I'm certainly not in a position to tell you that it could not happen again. But I would say, if it had just been that one off effect, our number would not be pleasant per se, but obviously, it would already be quite different to what we are reporting today. Then came the dividend cancellation. That was very unexpected. And just to illustrate to what extent it was unexpected, we had leading banks take HSBC, who were trading ex dividend. And then the day before the payment of the quarterly dividends, they don't pay because the U. K. Regulator told them they should not pay. That is difficult for Leon tax to hedge because if you say you guys could just have bought some dividend futures, I will tell you no, there is no market for dividend futures trading on dividends, which are trading between the ex dividend day, I. E. Shares having affected in terms of market adjustment and the effective settlement of a dividend. You could obviously also hedge for that scenario, but the hedge there is you need to go short the underlying share. And that's then really not a hedge. I would call that more as a market view. So we are not by setup of our business approach taking such market views. And in this particular case, it's difficult for me to tell you how we could change our hedging approach because effectively, the change would really be taking market views, which we are not willing to take as a firm. Now that then explains you $58,000,000 of the difference, and you are still left with the remaining number. And there, I don't think we can say today that we are changing a hedging view because management made, together with our trading team, a very conscious decision, which resulted in that sort of outcome, which is in the number. The decision was twofold. 1st, we said we are here for our clients more than ever, and we have to be here because what's the point of selling structured products to clients when markets are benign and everything looks good and not being here for clients when they really need you. And that meant in some instances, we were providing liquidity to clients where we knew that the ultimate underlying to sell off was highly volatile and would probably be less liquid than the liquidity we provided. We safeguarded a little bit by having a bit of a higher commission income, I. E. Having a bit or bit ask spread. But then, of course, if you unwind the underlying position at the loss, you would see the loss in the trading side, whereas your fee income would still be showing the fee you made by the unwind. The second conscious decision we made was we said we are going to safeguard the company for the worst possible outcome. And what I can maybe just say as an illustration to what that means. The trading income was by a magnitude larger in terms of negative impact when the markets kept up and went back to higher levels than when the markets came down. So essentially, throughout the period mid March to end of April, we positioned the books in a way that if there would have been a second way, say, we would have known that we would have everything under control. But they can't set the hedging cost. Could we have taken another approach? Of course, we could have. We could have said we just hedge for the minimum, and we think there will not be any market developments on the legacy side. But essentially, sometimes you need to take a view are you rather coming out at the end of the half year with a number which will be, say, plusminus breakeven? Or are you actually taking a view and not necessarily building up extra hedges for all possible worst case scenarios. And a good example is the extra hedges we took on the oil side. We didn't have clients unwinding the position. So we went into the subsequent 7 oil price related jobs with the same client positions as at the beginning, but we didn't lose money. But that means we bought additional safeguarding protection mechanisms, which obviously cost money. So whereas the numbers speak and whereas it seems that maybe it necessitates a review of our hedging approaches. It's really not that as far as I'm concerned. Half of it is explained by political risk for which we didn't hedge. We can hedge for it for part of it. The other half, I still don't know quite how to do it. And the other half is really a reflection of both above average, I would say, client service, I. E. Providing liquidity when maybe you don't have the liquidity yourself in the market, and also a very prudent risk management approaches decided by management. But it comes at the cost. And of course, when the market then recover, which by the way, I'm very happy about because it also means a lot of our clients are again sitting on decently performing products. But it obviously infection outcome means that you need to do a lot of explanation, which we are happy to do. If the outcome would have been different, I. E, another wave, then we would have had a situation where probably our relative trading performance would have looked quite solid in the relative context of what maybe the market and competition would have done. But in summary, to answer that part of your question, Matt, Beyond Tech wants to be a platform business. We want to be a marketplace, and we will continue investing in that vision. We do not want to continue to use our balance sheet to the extent we are using it now in terms of percentage flow enabled by our balance sheet. And we definitely never want to take use because we know with our backgrounds that we can be right if we are very good market view takers, maybe 51% out of 100, and that's just not a good enough ratio for us. So it's better not to take a view, protect the firm under all scenarios and accept that in a market like this, which I think is very unique and historic in terms of the last 100 years, We do not produce the result that shareholders correctly expect, and it is what it is. Now with regard to the marketplace and chip, look, the 6% number will definitely go to a double digit number. But it would now be a little bit premature to tell you what that number is or where we are seeing it because ship is now finally up and running. But we'd obviously now to see like to see a few weeks and months of development before maybe we eventually start guiding on that percentage. On the back to back question, absolutely. So SHIP obviously takes the risk and balance sheet of LIONTEK out of the picture. SHIP has the advantage that it's automated and electronic, but it has the disadvantage that simply due to time, we were not able to automate every single payoff and every single structure there is in terms of client products we are selling. And the back to back approach allows us on a manualized customized basis to essentially replicate what shift does but in a non automated way. But the outcome is the same. With that, I will pass on to Marco for the fee income question. Thanks, Malte, for the question. As you know, there are multiple factors impacting the margins. And among others, we also mentioned volatility, the market turmoil, the funding levels, demand of large tickets that we have and as well the secondary market transactions that we execute especially in the first half year twenty twenty. We explicitly also mentioned that the increase is exceptional. So yes, definitely you can expect margins or we expect margins to come down again. We always guided the margins to be roughly 60 to 70 basis points for partner products and slightly higher for LEMTECH products. So I would expect them to come down. Currently, we still see volatility levels higher than what they have been in 2019. So assuming those levels, I would expect margins not to drop immediately down to the 2019 levels, but still be slightly higher than that. But nevertheless, please don't assume that the levels of margins will stay as they were in the first half year twenty twenty. Okay. Very clear. Thank you very much for the detailed answers. The next question is from Andreas Brun of Credit Suisse. Please go ahead. Hi. As Matt has said, turnover remained flat in H1. Can you give us your view, your outlook with regard to further growth going forward? And maybe you can even give us, Blake, how much you expect from the new clients, their contribution or from the underlying business, even if it's only in a qualitative way? Thank you very much, Andreas, and good morning to you. Look, the turnover remains flat. But to answer that question, you probably it's half is for you to look at your own trading pattern during the crisis. When markets are all over the place like they were in a few during a few weeks of March and maybe April onwards, naturally, human beings start being a little bit less active with regards to new engagements. What typically people do is they very proactively manage existing engagements, and that's really what you see also happening on our platform. So the €15,400,000,000 turnover number, whilst it looks flattish year on year, I think, is a good number because it really shows that there was a lot of activity on existing positions. We didn't see that much of new engagements by clients during these 2 months in particular. Going forward, I would expect, again, clients to be a little bit more active. You obviously also wouldn't have in such markets trigger events like autocorlopers when products would automatically be repaid. That now looks also a little bit more promising with some markets being at all time highs. So I would expect turnover to grow from that number. But you are so good in forecast that it would be wrong for me to do the work for you. Thank you. The next question is from Retho Groveler of ENPA. Please go ahead. Yes. Hi. I've got a question on deferred revenues. Can you update on the deferred revenue line? I think you have given some indication end of last year in terms of equity plus deferred revenue, but where do we stand here midyear? And the second question is on the cost side. In Investment Solutions, you had about €5,000,000 higher cost in H1 this year than in H1 last year on the personal expenses. So can you confirm that the personal expenses is largely related to or not or the big part is related to fee income in terms of sales getting the clients to be active on your platform rather than trading book related stuff where some revenue contributors or volume contributors cannot really influence that line. So just to get a feel for how you incur for income for bonuses in H1 and what to expect maybe on that line for H2? Well, look, on the deferred income slide, there is obviously on Slide 14, which gives you the detailed breakdown. For us, the deferred income is obviously money we have generated, but not yet fully through our accounts. And we are therefore, for the purpose of our capital solidity, showing growth numbers. So the €740,000,000 is the number management further increase to a more round figure, we would gradually then also anticipate to change our dividend policy from a more conservative policy to a more progressive. But other than that, maybe you precise your question. I'm not sure what I should answer because I believe the correct the answer to your question is on that slide. That is fine. That's why I missed that part of the presentation. I think it was offline for a short period of time. But yes, no, that's fine. I can do some math out of that. Okay. Thank you. Now on the cost side, I beg Marco maybe answer specifically. But I think what's very important for you to understand the production on the fee commission side with clients activity and obviously our sales desk contributing to that number, it was in every regard outstanding compared to the past. And it would be wrong for us as a firm thinking about the mid- and long term future to not also wanting to compensate our staff, including obviously the sales for the extra efforts they produce during this period. We obviously have also more personnel on the payroll, so that's also having some effect. And again, I would say, probably the number reflects a conscious decision by management and obviously also the Board that we do not wish the COVID-nineteen crisis to fundamentally impact the firm with regard to our future potential. And a lot of the future potential lies with our staff, which means we'd like to be able to still pay them recently. It goes without saying that, of course, that first half year result will also have an absolute effect on everyone's compensation. So it's not the message that only the shareholders have to take a negative impact. But it would have been in every regard strong, we believe, to essentially say, well, the number is such that we do not afford anyone getting a bonus. Marco? I think, Reitel, you're also right. It obviously relates to the strong performance of the fee income. Obviously, for the first half year, we do always estimate also on the variable compensation. These are not final numbers. As always, we try to come up with a best guess estimate. And this has obviously to do with the increased number of personnel as well as the strong fee income performance in H1. The next question is from Daniel Regli of Octavian. Please go ahead. Good morning and thank you for taking my questions. I have, let's say, 4 clusters of questions or 4 subjects. I would like to ask a couple of questions on I would propose to ask them subject by subject. So I'll first ask a couple of questions on the fee income, and I would then add the other subject or ask the other questions later. So first, can you give me some kind of a split between primary market fee income versus secondary market fee income historically and for H1? And maybe also similarly for the turnover number and what yes, what drives the turnover number or how you account for turnover, particularly for the secondary business? And then also maybe on the turnover, can you give us maybe the split or the year on year increases by quarter in the turnoffs? I would expect that the turnover has been much stronger in Q1 and then declined in Q2. But yes, this would be the question. And then 3rd, maybe also this split between primary and secondary fee market is potentially also driving the decline in deferred income, I assume. Can you confirm this? Does the decline in confirmed income, this €20,900,000 you show on the Page 14 is driven by having more secondary market business and less primary markets business compared to the last period. Okay. Thanks for the questions. On the first one, unfortunately, also the split between primary and secondary, we highlight to you that as part of the COVID crisis, we saw a significant number of secondary market transaction happening. We don't provide details on the amount on anticipate between primary and secondary and hope you appreciate that. Same is unfortunately too also for the turnover. We have guided you with the business update on the 9th April that turnover has significantly increased. So you can assume looking at turnover being more or less stable, so up 3% year over year that it has been higher in the Q1 than in the Q2, given that we have given this update on the 9th April. And with regards to the deferred fee income, it's not correct because we basically the revenue recognition treatment that we do for primary and secondary transactions is the same. So it doesn't matter if we issue a primary or secondary transaction on deferred fee income. But nevertheless, I refer you to also to the Note 8 of our half year report where we also state that we did some revenue recognition model adjustments in terms of periods that's due to also increased competition that we see in the market. So we started deferring. In the past, we referred over 12 months period our fee income. Now we only defer it over 9 months. That's an adjustment we did on we do on a regular basis. We started the review in beginning of the year. And obviously, deferring over 9 months period means also you get less deferral. We still want to highlight that with the €80,000,000 deferred fee income, we have a substantial amount of deferred fee income, which is also much higher than what we had in the previous years. Perfect. And I assume that the change in revenue recognition is this what you show as 5 point €1,000,000 but the €20,900,000 or the €21,000,000 I assume is because of a different mix between primary and secondary market. I assume that in the primary markets business, you defer the income and on the secondary markets, not do you defer both the income? No, no. We defer also for secondary markets transactions. Basically what we what you see at 5.1 is the effect from previous year, so the retrospective effect that we had on our numbers. And then the €20,000,000 part of it is obviously the prospective effect of changing the revenue recognition going forward starting 1st January. Okay. Okay. And then maybe the second couple of questions is on the cost. I saw you had a release in the provision line of about EUR 4,000,000. Can you maybe explain to me what this was and why did this happen now? And secondly, is this included in your full year guidance already? Or can I deduct this from the full year guidance? And then secondly, the Portugal office there, is this really an add on so you hire more people in Portugal? Or is this also partly a replacement of people we have in Switzerland or operations we have in Switzerland or elsewhere? Okay. Probably on the release of the provision, also there you have the full details in Note 12 of the half year report. It's related to basically a decision regarding VAT. That was a decision taken in December, which was then fully effective in March. So the release happened in March. You can assume that the €200,000,000 that we guide as cost base includes total cost including provisions. So it's EUR 200,000,000 including the EUR 5,100,000 release of the VAT provision. And then on Portugal, it's the idea is not to add further headcounts to the Portugal. Definitely in the beginning, we'll have to have headcounts basically over there, which are not being basically are not replacements of headcounts, which are here in Switzerland. But going forward, the idea is to basically have through the natural fluctuation move more and more people from Zurich to Portugal in Lisbon. So basically, the idea is someone resigns here, we assess if there is any possibility to hire that headcount going forward in Lisbon. It's also very clearly communicated that we do not plan to let go anyone here in Zurich just to move that account over to Lisbon. We have natural fluctuation. And through that natural fluctuation, we plan to just move over headcounts from Zurich to Lisbon. And definitely, yes, we plan still to grow. So the overall headcount, you can assume they will be flat or slightly increasing over time. But that's part of the move also to from Zurich to Lisbon. Okay. Thanks a lot. And maybe quickly on a couple of strategic topics. The first is ship. Obviously, you have already elaborated a bit. You want to have this 6% going up to a double digit number. Just try to ask you where, however, you can be a little bit more concrete. And to me, to be honest, this 6% was a bit of a disappointment. I hope this volume would increase more significantly on ship. Can you maybe elaborate a bit what were key challenges why this number is not yet higher? And what do you plan to do to grow this number more into the area where you target? Thank you for the question, Tayo. Look, unfortunately, I can't give you more guidance because, as I said, we want to see a little bit more now developments given that it's ship up and running. And in this context, I'm a bit surprised about your comment that you are disappointed because in February, I told you it will be in summer that we are up and running. So actually, you should see that number as more or less 0% or 1% as in the first half 'nineteen or maybe you say at 3% as in the first half second half 'nineteen. But whatever the number is, 6% is not the number for the future, and we want it to be higher. But there is really not a big point in now guiding you to a number before we don't see a bit more effective results ourselves. Can you maybe elaborate on the key challenges, which is, let's say, standing in the way of getting this number higher? What needs to be done that this number increases going forward? What needed to be done was for ships to be up and running, which is the case now. So I feel confident that we'll reach double digit, but there's obviously double digit starts at 10% and then at 99%. So give us a bit time, please, to make them be able to guide you. Okay. And then sorry to come back to this topic, and I know you have already elaborated on the trading income quite a bit on matters and other analysts' questions. But when I look at this chart of the weekly revenues, yes, the bar is more like €30,000,000 can you maybe explain what was the additional €10,000,000 lost in this week? And then, yes, if you just could be a bit more concrete on your strategy. So from your explanations, I assume you have locked in the losses after we have seen these drops, whereas others in the market potentially have let the positions run more openly and then were able to benefit from the recovery in stock markets and the oil price? Or am I wrong in this assumption? Or can you maybe just explain to me a bit what you're in your opinion, have you been doing differently than others, which obviously didn't face also they saw interruptions, but not in a similar extent as you have? Okay. You're asking a lot of question in one. And it's always difficult for a CEO of a firm to comment on anyone else's production or numbers because I don't know those companies and their numbers at all. But I will just refer you to 2 of the market leaders being BNP and Societe Generale. They had announcements on the first quarter and will soon have announcements on the Q2. And I would be surprised if the direction was materially different to ours. Some other competitors have a lot of other businesses mixed into that business line, so it's difficult to conclude. What I can tell you when it comes to transparency, I've looked long and hard to anyone I could possibly think selling structured product. And I've not found on a global basis anyone giving the sort of visibility and details we are. I've actually not found a single financial institution giving weekly numbers. And it is inappropriate for us to comment further on this because then we are all of a sudden debating with people about an event on a given date might have been. What the only answer I can give you to your question on the week, which you referred to, which was the week starting March 9, was that was both the culmination of COVID-nineteen related, first shockwave hitting investors really hard and then obviously the oil price shock on top. And in such markets, you have these locations all across the place, and you obviously have also some positive effects. And the number is what it is, but it's really not appropriate for me to comment. And what I can tell you also is the numbers we show here with a €20,000,000 number and €38,000,000 is not suggested per se to explain that 1 week development. It's just trying to indicate what was the biggest driver. Now on the second part of your question, I don't think I can agree to what you say because your question assumes that Gliontech takes market views when it does hedging transactions. And I certainly cannot comment what other people might do. But not taking market views means the oil price shock by definition, you take the loss and it's there. There's really nothing you can do about that. The dividend, you take the loss and it's there. And the one comment I made is we had in relative trading impact higher impact due to the market going up than due to the market going down. But it wasn't driven by the delta moves on the underlying stock price. So it's not because markets went up, we lost equity onshore positions for lost money onshore positions because we don't run such positions. Indeed, we do a lot of different hedging transactions. And those hedging transactions, when they don't meet materialize, cost your premium, so you buy an insurance premium and then it doesn't pay. But it was really not the view anyone at Gliontech would have taken, and it's not something we'll do in the future. Okay. Thank you. I hope we can continue with we have another analyst also in the queue to pose his final questions. Is that okay if we continue to speak to whoever? Could I just maybe use the occasion, Daniel, just to say one thing. Intention to take market views, our risk management limits do not let us do the sort of things you referred to where you said, okay, maybe you had a loss, but then you locked in the loss and that was kept the position open and made the loss back. That's just not the way we run this business. We run this business by hedging client related flow. And of course, when hedges become much more expensive as they did on the back of these events, we pay much bigger bid ask spreads to enter and exit these hedges. And that's really the biggest driver of these effects, which we highlight here with increased hedging costs. Okay. Thanks a lot for the explanations. And yes, looking forward to meeting you. The next question is from Retho Huber of Research Partners. Please go ahead. Hello, everyone. Thanks for taking my last question. Stacy, all of them have been answered. But nevertheless, there is one that remains. You also discussed it partly, but I still don't really understand. You said you continue to hedge you continue your hedging program. But I still wonder since platform trading in the secondary market and the level of the net fee income margin increases in extremely volatile times like the ones we just saw. Why do you still need your hedging program? It's a good question. It has a lot to do with the fundamental philosophy we run here in this firm, both management and support. The philosophy is no matter what happens, we always need to safeguard the interests of our clients. I mean, that's by far the highest good this firm has to protect. And in order to do so, you obviously need to also safeguard the position of our capital and solidity of our financial situation. Now I give you a concrete example. You have a reverse convertible on a stock, which gives you some Greek exposure, say you have a Vega exposure. On a stock which is a 2022 exposure. And that Vega exposure has gone from 20 to 50 on the back of just abnormal markets. And the client now says, I want to sell. And you basically buy at the fair value of that Vega. We have other Greeks influencing the price, but I take that as a parameter because it illustrates the example. You buy that product back with an implicit Vega assumption of 50. Now you go to your hedging markets, and you find that all market participants simply do not want to take position. So you find a bid ask spread of 30 to 70. You can obviously say, you know what, we are the on tech. We understand that volatility will also come back again. That's just a silly price. And we are now not going to sell at $70 because aside of the fact that we are locking in a loss compared to what we paid to the client, It's just an absurd price. And even if Vega stays at 70 for a few days, it will come back because it always does. Look at any historic volatility job, it can spike, but it will come back. That's a fundamental approach a firm can take, and I would take that say that's a firm which takes market views and nostril position. The problem, obviously, if you take that approach is it can obviously come back. But before it comes back, it can go from 50 to 200 or 300. And we saw this happening during the financial crisis when all of a sudden volatility on UBS went from 20 to 200, UBS as an under buying share for a very short period of time, but it was there. And obviously, as any other regulated entity, we would mark to market all our positions. So you can now take the view, which is at 50 with that sort of bid ask price 30 to 70 in the market not to hedge. Now Leon Tate will never take this view. We will go and hedge it at 70. And if it means that we have to lock in $500,000 of a loss, we will take that loss because we have enough substance within this firm to take that loss. You cannot do something else. You can say, you know what, because obviously, we see the market before the client transacts. We see the market is at 30 to 70. We ask the client 90, an approach firms can take, but that's not an approach we will take because these clients have been good clients for the last 13 years, and hopefully, they will remain good clients for the next 13 years. And sometimes, a firm needs to be prepared to take a loss to enable a client a better outcome and a better service. And what makes it even a bit more difficult is that none of what I've just said is static. So it can well be that by the time you have the client executing and you go back to the market, you don't have a 30, 70 spread, but maybe a 20, 50, and then you're fine. But worst case, it's a fifty-eighty, and then you're less fine. The point is, neon tech has, and within the future, make sure that our residual market risk is within our risk appetite, which is limited. And it's limited because in a worst case scenario, you could face further losses. And we just don't want to end up in that scenario. It's not in the interest of anyone. Okay. Thank you very much. And also congrats on your very precise lending and your strategic progress you made during the first half year. Thank you very much for your kind words. Sometimes you need to be lucky. And obviously, with regard to the precision of the lending, we were reliant when we made the assumption that clients would actually repay us for the service and quality of platform approach we showed in the crisis. And I'm pleased to say that this materialized subsequently on. Very good. So with that, we thank everybody on this call for joining today and for their attention and wish you all a good day. Thank you.