Earnings Call: H1 2019

Jul 25, 2019

Well, ladies and gentlemen, good morning. A warm welcome for the 1,000,000 Half Year's Presentation 2019. Welcome on behalf of Von Toppel and together with Martin Sieg, our Chief Financial Officer to everybody here in the room as well as to everybody who has joined us over the telephone conference. We have published our set of numbers this morning. As usually, I will start with the highlights and a few remarks from my side. Then Martin Teague, our CFO, will lead us through the details of the results. And then I will be back with an update on strategy as well as outlook for H2. We think the set of numbers that we published this morning are respectable set of results. I would like to put them into context before we go into the details of the numbers. And in order to put them properly into context, let's quickly start with how this context actually looks like. And what we sense and what I sense is that we have a discussion in our industry that concentrates a lot on size. Size for the sake of being big is apparently a key success factor. We have increasing consensus building that not only the prices of commoditized financial service products go ever lower, but that any financial service should be apparently under price pressure. And thirdly, the historic hallmarks of any sensible strategy being quality and conviction are now replaced by a focus on ever lower costs and benchmark hagging. Against this backdrop of context, we think we have published numbers that give pretty strong evidence that our client centric, focused, bespoke strategy that rests on very specialized capability is paying off and is delivering the results we are expecting from it. Evidence to that are our margins, both in Asset Management as well as in Wealth Management that are not only stable, but that are on the wealth management side increasingly driven by commission driven income and not only by commission driven income in general, but by recurring commission driven income. Pretty hard evidence to that assessment is also the flow, the organic growth that we are able to generate at the firm level at slightly more than 6% on an annualized growth rate within asset management at the very, very strong 9.6 percent annualized growth rate. Another sign of evidence to that is also that we bring through the scaling effects of the acquisition we did last year as profits in combined wealth management are up by almost 30%. What the numbers show as well is that we too are living through an environment with tremendously low trading activity. We see the impact in our transactional businesses. We suffer from it, but we have the diversity, we have the strength, we have the bandwidth in order to see through these cyclical patterns. 2nd, we also see that the integration efforts have left some patterns in the net new money flows in combined wealth management, but we are as convinced as ever that the broader platform will lead to strong growth going forward and we commit ourselves to the 4% to 6% annualized growth target in net new money in combined wealth management. Let's look into the numbers in some more precision. Our client assets have reached 200 and 72,200,000,000 This includes €212,900,000,000 of advised client assets And for us, as the Wealth and Asset Managers, obviously, advised client assets are the key driver for revenues going forward. Our net new money stood at €5,300,000,000 in the first half year. This translates into 6.2% growth rate of an annualized growth rate. Operating income is up 7% at €625,600,000 Our group net profit, both under IFRS as well as on an adjusted basis, is more or less in line with last year and we all remember the first half year of twenty eighteen has been an extraordinarily strong year in our industry. So we are down by minus 1%, so eye to eye with the year before. That translates into earnings per share of $2.23 per share. Our return on equity is within our target range. It stands at 14.3%, therefore decisively creating value after capital costs and all of this at a solid strong capital situation with a Tier 1 at 18.2%. What are the key points behind these aggregated numbers? Our clients continue to endorse our products and services, which translates into higher revenues and which also translates into higher assets under management of CHF186 1,000,000,000. We are very proud about the endorsement by our clients and the trust they have given to us by this strong net new money growth, especially on the asset management side. The asset related businesses, asset management and combined wealth management are now accountable for 85% of pre tax profit of the business lines. The return on assets are stable, are solid, and we think they are robust and repeatable going forward, this despite the still high liquidity levels that also our clients are holding in Wealth Management. We are constructive about the growth momentum and the development of margins in our asset related businesses going forward. Financial Products as any transactional business in this environment suffers from very low trading activities. We have seen that in the number. We will stick to our strategy and continue the business with the current risk appetite. Our integration activities are very close to completion. The integration of the U. S. Client book from Lombard ODA is fully completed and the Nordenstein Laroche integration will complete in H2, therefore paving the way to use the broader base, the stronger base, the existing client base to deepen our relationships with the clients and to gain and attract new clients in our home market, Switzerland. These were the highlights from my side In a quick overview, I gladly hand over now to Martin Sieg, who will lead us through the details of the numbers. Thank you very much, Tenno. Good morning, ladies and gentlemen, from my side. Let me start my presentation with the overview of the development of our client assets on Slide 7. For Von Taubel, as a Wealth and Asset Manager, client assets from the basis for the continuous generation of fee income. Consequently, the volume and composition of those assets are important success factors for us. As you can see on the left hand side of this slide, over the last 3 years, we were able to grow our adviser client base assets by 15% annually. In the 1st 6 months of 2019, total advised client assets increased by 11% to €213,000,000,000 thanks to broad based net inflows in Asset Management and good performance in Asset Management and Combined Wealth Management. In recent years, we invested systematically across all divisions in the expansion of our business in our home market of Switzerland and in our defined focus markets. This investment is now reflected by our well balanced global base of private and institutional clients as you can see from the right hand side. Today, 43% of our assets stem from Swiss clients. The percentage amount increased last year due to the majority Swiss asset base of Nordmerstein Laroche. A year ago, Switzerland stood at 40%. The rest of our advised client assets is broadly figures for the first half of twenty nineteen on slide 8. Bondtobel's operating income rose by 7% as a result of the increased asset base, which is also reflected in the 8% higher recurring fee and commission income. This reflects now 66% of operating income. Operating expense grew at 13%. This increase was an organic growth, investments in talent, technology and markets, as well as the integration of Nordenstein Laroche and our latest acquisition of the U. S.-based portfolio of Lombard ODI. ODI. As a result, our IFRS Group net profit decreased by 1% to $131,100,000 compared to the previous year. The result was positively impacted by lower taxes. The tax rate of 12.3% reflect the U. S. Tax refund and the benefit of a deferred tax asset in Germany. Without these two effects, the tax rate would have been around 17%. Going forward, we expect the long term tax rate in the range of 17% to 19%. The tax rate for the second half of twenty nineteen, however, depends on the outcome of the vote in the Canton of Zurich regarding the tax reform 2019. On an adjusted basis, group net profit was €131,900,000 in the first half of twenty nineteen, as the integration costs mentioned before were close to fully offset by a special dividend from SIX Group, where we are holding a participation. Group net profit, excluding minority interest, was at $124,700,000 down 2% compared to the same period last year, resulting in basic EPS of CHF2.23. The return on equity was 14.3%, once again significantly exceeding the weighted average cost of capital of around 8%. This is in line with our increased medium term target of 14%. The CET1 ratio was 12.3% unchanged compared to the end of 2018. The comparison with the previous year is difficult as the mid-twenty 18 numbers do not yet include the acquisition of Nordenstein Laroche. Our Tier 1 capital ratio remained very solid at 18.2%. I will give you further details, this is the end of my presentation on this. Our balance sheet should be viewed as highly liquid since the liquidity coverage ratio averaged 193% and that also significantly exceeded the minimum requirement of 100 percent defined by FINMA for 2019 and onwards. And our solid capital position is also reflected in the leverage ratio 3 of 4.9%. Let's have a closer look at our profits development on Slide 9. As you can see on the left hand side of the chart, Vontobel posted a group net profit of CHF 132,700,000 in the first half of twenty eighteen. There were no one offs recorded in the 1st 6 months of twenty eighteen. In the first half of twenty nineteen, we achieved an IFRS profit of $131,100,000 Adjusting for the integration costs of Nordstein and Laroche of $6,500,000 after tax and the integration costs of the North America portfolio of loan borrower the year as well as the positive impact of the special dividend paid by SIX Group, our adjusted net profit reached CAD 131,900,000 both on a reported as well as on an adjusted basis, net profit was down 1%. Our income ratio on an adjusted basis increased to 75.4% due to ongoing investments in international markets and innovative platforms. Low transactional activity impacted the results in Financial Products. As expected, Asset Management proved immune to the cyclical levels of transactional activities. Wealth Management shifted the revenue mix toward asset based revenues over the last years and therefore performed well. Despite the difficult market environment, we are further investing into all our businesses, but we obviously continue to apply an entrepreneurial approach to cost management. Let's turn to combined Wealth Management on Slide 10. These activities encompass our wealth management as well as our business with external asset managers. Building on its existing activities, combined wealth management acquired $300,000,000 of net new money in the first half year of twenty nineteen. This corresponds to a 0.9% growth rate in net new money, clearly below our target for 2020. On top of generally slow growth in the industry in the first half year of twenty nineteen, we witnessed outflows in our Basel branch, but other locations more than compensated them. We remain convinced that our underlying structural growth path is intact, and we are committed to our 4% to 6% net new money target. Assets under management in combined wealth management grew to a new record of $72,200,000,000 in the first half twenty nineteen, driven by strong investment performance of 8.4%. Additionally, the acquisition of the U. S.-based private client portfolio of Lombardier added $700,000,000 or 1.1%. Advise client assets ended up at $73,600,000,000 at the end of the first half of twenty nineteen, an increase of 10%. The systematic client focus and ongoing enhancement of the advisory process in combined wealth management are not only as well as the strong operational efficiency and profitability as you can see on Slide 11. Despite the risk aversion of many investors, reflected by the high liquidity held in the portfolios of Private Clients, gross margin stabilized at 68 basis points. As a result of the record client assets, we succeeded in increasing our operating income by 30%. Operating expenses grew at a similar rate of 31%. While we are on a good path to reach the cost synergies with our acquisition of Nordenstein Laroche, investments in our digital platforms, for example, Vault and our focused markets have led to additional costs in the first half of twenty nineteen. Consequently, combined wealth management delivered a significant increase of 27% in pretax profit to $71,400,000 in the first half twenty nineteen. This progress is also reflected in the good cost income ratio of 70%, in line with our ambitious 2020 targets. Asset Management, this is on slide 12, generated strong net new money of $4,900,000,000 corresponding to a net new money growth of 9.6%. With this growth rate in our core activities, we are well above our target range of 4% to 6% and clearly above the market average. This figure has to be seen in the light of an AM industry that witnessed again very weak flows year to date in 2019. Inflows in Vontobel were broadly diversified across fixed income, multi asset and sustainable and thematic investing boutiques. A proportion of inflows again originated from our investment business with Raiffeisen. The good quality of our products and our strong distribution platform were the key drivers for the net new money growth. Our range of sustainable investment products is one area of focus of our growth strategy. These strategies totaled €28,000,000,000 and attracted very good net new money. Assets under management at the end of June 2019 were at $112,200,000,000 8% higher compared to the end of 2018, despite a reclassification of $4,100,000,000 of assets from AUM into other advised client assets. We decided on this reclassification of solution related assets as the whole asset management industry is going into this direction. Going forward, we will bundle our private label fund business, our advisory business with ANZ and a number of overlay mandates in the category other advised client assets. The increase in assets under management was also strongly helped by the good performance of 8%. Advise client assets increased 9% to 100 and $28,300,000,000 Let's turn to slide 13. The gross margin in asset management of now 44 basis points reflects the broad diversification of our products across equities, fixed income and multi asset class and quantitative strategies for institutional and fund clients. The increase in the margin in the first half of twenty nineteen is the result of a slight shift to higher margin product and the effect of the reclassification of assets into other advised client assets. This accounted for 1.4 basis points of the increase. As a result of the systematic execution of our growth strategy, we delivered a 2% increase in operating income in the first half year of twenty nineteen compared to the previous year. With the ongoing investments and the 9% higher FTE base, operating expense grew 8%. This resulted in a cost to income ratio of 64%, which is in our 2020 target range and the pre tax profit of 86,000,000 dollars With a substantial profit contribution, asset management was once again the main earnings driver at Pontobel. Slide 14 demonstrates the strong market presence of Fonthobal Financial Products. Von Tobol is one of the world's leading provider of structural investment products and leverage products with a market share of 11.5 percent in Europe overall, up from 10.8% in the first half of twenty eighteen. The largest share we do have is in our Swiss home market with 29%, measured in terms of the exchange rate volume in the target segments. In Hong Kong, our turnover was $5,300,000,000 resulting in a market share of 1.3% in the first half of twenty nineteen. The international expansion of our Financial Products business is well advanced. In addition to the existing markets, we started market making in the Danish market segment of the North Growth Market in Stockholm in January 2019. Our turnover in Europe decreased to CHF 10,200,000,000 down 20% year over year, in line with aggregated market turnover. The €5,300,000,000 trading volume in Asia reflects a more than 50% decrease. This is partially an effect of the whole market development with 15% lower volumes, but also due to our increased focus on margins after we have established our presence as a market player in Hong Kong last year. Our digital platforms attracted $4,100,000,000 turnover, up 28% year over year. By now serving more than 75 banks and more than 550 external asset managers, the platform again attracted more volumes than the fixed exchange segment for yield enhancement products. Let us turn to Slide 15. In the first half 2019, operating income in our Financial Products division was $132,000,000 This corresponds to a decline of 17% compared to the very strong first half of twenty eighteen. The decrease was driven by lower volumes traded, but also reflects a decline in brokerage and corporate finance revenues. The cost base is not following operating income immediately. It was down 3% and will adjust over time due to our entrepreneurial approach to cost management. As a result, pre tax profit fell by 45% year over year to $28,500,000 relative to the very weak second half of twenty eighteen, however, profit in Financial Products more than doubled. Slide 16 gives an overview of the pre tax profit development of our 3 business activities. Once again, Asset Management remained the main driver of profits. Combined Wealth Management delivered a substantially enhanced profit. The operating strength in Combined Wealth Management and the acquisition of Nordenstein Laroche resulted in a strong improvement of pretax profit by 27% to $71,400,000 dollars The positioning of asset management as a high conviction manager and the diversification strategy introduced some time ago are continuing to prove successful. Further investments are holding back pretax profit growth such as the result such that the result was down by 7% to 86,000,000 dollars As explained before, weak market demand and continued investments in our business led to a pre tax profit of $28,500,000 in Financial Products. In relation to the average regulatory capital allocated to Financial Products of $222,000,000 the pretax return on allocated capital was 26%. Combined Wealth Management and Asset Management accounted for 85% of the pre tax profit generated by the divisions. This large proportion reflects Fontholgo's successful positioning as a wealth and asset manager. Financial products contributed 15% of growth pre tax profit excluding the corporate center. Let us finally turn to Page 17. The CET1 ratio at the end of June 2019 was 12 0.3%, the same as at the end of last year, and the total capital ratio was 18.2%, slightly down from 18.9%. However, the numbers are not fully comparable. At the beginning of 2019, Montalvo adopted the new IFRS Standard 16 on leases. For all leases, the lessee has to recognize the leasing liability for its obligation to make future lease payments and at the same time has to capitalize the right to use the underlying asset. The impact of this is an increase in the balance sheet as all our office leases newly have to be activated over the lease term. At the same time, this also increases our risk weighted assets. At the end of June 2019, this led to $186,000,000 additional risk weighted assets. Excluding this, CET1 ratio would have been 12.6% and the total capital ratio 18.7%. In any case, both ratios significantly exceeded the minimum requirements defined by FINMA of a total capital ratio of 12% and a CET1 ratio for Category 3 banks, including Vontobel of 7.8%. Vontobel will continue to have a solid capital position that significantly exceeds the regulatory minimum requirements. In the first half of twenty nineteen, operating income grew by 9% compared to the second half of twenty eighteen, as corresponding risk weighted assets grew by 8% since the end of 2018, excluding the effects of IFRS 16. That brings me to the end of my remarks. Thank you very much for your attention. I will hand back to Ben Osterberg, our CEO. Thank you. Thank you, Martin. Let's go into strategy update. We continue to execute our strategy along our by now probably well known 5 strategic priorities. It all starts with the client to whom we want to deliver that unique front total experience, which is the combination of our competencies, our capabilities, our products, our services, but of each and every physical or digital touchpoint. We know and are aware of the fact that we can only make the difference by that experience if we can deliver that by the best workforce in the industry. We want to have a workforce that feels empowered, a workforce of people, of colleagues, of team members that execute their work with passion, with conviction, and we are very proud about the level of talent we have and the level of talent we attract. We are aware that we compete in a world that suffers from attention scarcity and therefore our brand is a key point in order to make the difference going forward. Therefore, we continue to invest in our brand and strive to create brand excitement among our clients. All of this has to translate into growth, into market share and in combination with an entrepreneurial approach to cost management into efficiency and profitability. One of the examples at least from our perspective on how the execution of these five priorities feeds into results through time is our wealth management and our combined wealth management activity. Based on a clearly investment led value proposition anchored on the basis of strong investment capabilities and delivered to the client in a holistic advisory process through distinct and bespoke customer journeys and combined with a service approach that is state of the art and that supports the relationship manager with investment and wealth planning specialists, we got through time the recognition in the market that we aim for. And this translates also in a price for value point in terms of return on assets, which we think reflect fairly the quality of our offering. We have deliberately shifted the earnings mix towards recurring commission income, which has gone up over 3 years now from 37 basis points to 42 basis points as we think recurring fee models are better for long term results for clients and for us, they are better in terms of interest alignment and they make a lot of sense also to build a stable recurring business model. Therefore, transaction based commission income has come down in relative importance. This is a deliberate process. We think that goes into the right direction because at the end of the day wealth management is neither product push nor event management, wealth management is running money for private people. Our interest income is more or less stable at 11 basis points. This reflects our risk appetite in terms of lending and in terms of penetration with our lending products. So we are not only able to deliver solid profitability and stable margins in an environment that is defined by margin pressure. We are also confident about the growth drivers in this business. We will use the strong level of presence and brand power that we have in Switzerland in order to deepen the relationships and win share of wallet with existing clients as well as attract new clients in our home market. We also see a very strong pipeline and a very strong flow of talents that are willing and interested in joining Foamtobel and this will be an additional growth driver across all focus markets. We products. We have launched a number of synthetic investment products that are very strong in terms of long term outperformance potential as well as of a strong endorsement by our clients. On the external asset manager side, we deploy distinguished advisory service and we will continue to build out the EAM business in Asia. In addition to the classic business models, we have developed a number of digital growth avenues. We have launched Vault, a fully automated discretionary investment solution, which we will bring to the market in H2 with a little bit of more emphasis. We have built capabilities and are building capabilities to increasingly support organic growth through digital distribution channels. And we are offering the Vault technology also to distribution partners and the example of Raiffeisen is public in terms of our digital investment solution platform. Let's turn to our biggest business line, Asset Management. At the core of a high conviction active asset manager stands its ability to deliver high quality performance. The long term success factor is the ability to attract and build investment teams that have a distinct investment philosophy that is able with robust repeatable processes to beat the market consensus. And we are very proud about the investment quality that our multi boutique structure and the teams and the experts in these multi boutique structures have delivered. So we give you here the percentage number of asset weighted assets in equity, fixed income and multi asset class that are ranked against the global competition in the 1st and second quartile. So you see strong numbers across all time horizons and outstanding numbers across the long term 5 year horizon with, for example, 98% of all our equity products in the first quarter. This translates into a number of endorsements and KPIs that I think are worth mentioning as they are the bedrock of the future revenue potential of that business. 56% of our funds have a 4 or 5 star Morningstar ranking. This compares against an average of 35 of our competition. In terms of asset base, 88% of the assets are linked to 4 of our star rated products. Von Total has established a global equity equity product, with our ESG driven addition that we developed over the last 5 years, and now also with the debt franchise, which delivers hard and local and blend currency here out of Zurich. 24 Asset Management, our fixed income boutique in London has been awarded for the 2nd time in a row as Specialist Group of the Year. We're very proud about that as we always repeat and keep repeating to ourselves, everything is about specialization and therefore to be rewarded by clients and the public as the specialist group of the year obviously gives us a lot of confidence. Within quality growth, we have passed through this 3 year performance period after the handover to Matt Bankendorf and his team. We're very happy with the results after these 3 years. The team is completely unchanged. We have added new young analysts in order to grow them internally. We have appointed lead and co PMs on each and every product, and we have a completely unchanged investment philosophy that has delivered strong investment results over these 3 years. This translates in combination with our distribution set up in strong flows. As I know that with many of you, I am perceived as being a little bit of a technical guy. I always try to bring one slide with me that confirms that perception. So in this year's presentation, Slide 23 is the technical slide. So let's quickly look at the left hand side. So what you see here are the accumulated flows of all European competitors in Active Fund mentioned. So we talk about 1458 companies and these are the aggregated flows. So in 2017, the whole industry was growing. You see to the right hand side, we did the same in 2017, we grew with the industry. In 2018, the industry started sensibly well, but then went into outflows until year end. We continued to grow in 2018. 2019, the whole industry year to date is in outflow. We continue to grow at the same pace that we grew in 2018 or 2019. Why do we do that? It's a number of success factors. Obviously, again, the base of everything is consistent performance, especially in our emerging market product ranges. We think we have a sensible level of innovation that triggers interesting new sources very diversified across regions and channels. We will continue to invest in these success factors by expanding our client coverage in the U. S, in Latin America, we will go onshore in Japan and we will enhance the coverage of the global banks, which is to the whole industry a $1,000,000,000,000 opportunity. Financial Products has suffered like all the transactional driven business models by the low trading low activity trading environment. We continue to see relative market potential in our business, obviously limited in Switzerland as we have such a strong market share, we expect in Switzerland to go up and down with the market. But we see additional market share potential in Europe, in all European markets and obviously strong additional market share potential in Asia. We will not adopt or change our business model. We stick and remain committed to the markets, to the type of clients we serve and to the risk appetite we apply. We are happy with how our platforms develop. So Dairy Trade has clearly established itself in Switzerland as the leading multi issuer platform and we see additional growth potential. We are happy with how our business in actively managed and synthetic certificates develops. We have now issued levels of more than €2,000,000,000 And we're also happy with how our financing platform, CosmoFunding, gains traction. The platform has now already matched investors and creditors at the level of more than SEK1 1,000,000,000 since the launch. So that was it with an update on strategy. How does that translate into matching our targets? These are our 2020 targets. You see that we are in line in terms of growth, both revenue, top line growth as well as net new money growth. We are in line with capital and payouts. We are also in line with the return on equity, which at the end of the day is the key value driver for our shareholders. We are not in line with our cost income ratio for 2020 targets. We commit ourselves to the 2020 targets. We will continue to work in regards to the cost income ratio on both revenue build as well as cost consciousness. However, Fronthopel will never sacrifice long term growth potential for short term profitability. Let's turn to the outlook. As we have by coincidence the privilege this week of being the last reporting financial services firm. We obviously looked at the questions and the concerns that you as the public and the investor community had, And we recognize that one of the big questions and concerns has always been around net interest income and what will ever lower interest rates do to that. So I'm happy to reflect a few viewpoints on that. So first of all, we share the view that it's not lower for longer, but perhaps lower forever. Well, nothing is forever in this world, but lower for a very long time. What does that mean for us? Obviously, as you know, we are an asset manager with a banking license. Therefore, we also have a balance sheet business, which is impacted by that. However, in our revenue mix, this is 7%. So that's an issue, but it's a very limited issue. We see on the other hand 2 impacts of lower for longer that are actually structural growth drivers for many activities we do. Obviously, many savers and investors across the world move out of balance sheet products as balance sheet products do not yield anything anymore. Therefore, they are looking for more diversified, broader managed investment products with a professional risk management approach. That's one of the growth drivers for strategic income funds, for credit driven investment fund strategies. And one of the products I would like to mention is our strategic income fund run by 24 asset mentioned in London, which is exactly one of these investment alternatives for savers who are looking to build their long term savings with a sensible return. And this product has grown over the last 4 years with 150 percent annual growth rate. That's the level of demand that gets created for more modern asset management products, but this investment environment. And second, we expect that ever lower interest rates will put significant additional pressure on bank balance sheets as the ideal matching place for savings and creditors. Therefore, we expect that the financial architecture will partly change and that financing platforms will be the matching place for supply and demand and we are happy to compete in this at the end of the day more client centric and more efficient model with our platform, CosmoFunding. How did we start into H2? Exactly as we have done in H1. So we continue to see strength where we have seen strength. So we're constructive on margins in Wealth and Asset Management. We are constructive in the robustness of our flows in asset related businesses and we continue to see challenges where we have seen challenges in the first half year, meaning trading activity has not come back. What are our targets in H2? Obviously, to complete the very advanced integration process and then to move boldly forward with that broader and stronger shared platform. We want to harness the momentum we have in many focus markets, and we keep investing onshore in onshore in Japan and we invest in a number of our selected markets. We are very conscious about the huge responsibility we have and the challenge we have in steering our client assets through a very challenging investment environment. So far, our investment returns year to date and over the long term, as I have shared numbers with you, are very strong. This will remain a key priority of ours to prove our merit as high conviction active asset managers. We invest a lot of effort and also technology, skills and people into how to improve our client experience through digital channels and digital offerings. We think that the disruption process is only at the end of the beginning. We are convinced that platforms and ecosystems will only become more important going forward, and we think we are very well positioned to compete in this arena. We remain, therefore, open to the future and committed to build from what we see as a solid base to transform this change around us into opportunity for our clients and for us as a firm and therefore for you as our shareholders. Thank you for your attention. Martin and I are now happy to have your questions. As always, there are questions from the phone and from the room here. So the people in the room, I have to ask you first to wait then for the microphone because otherwise the people on the phone have no chance in understanding. So let's start with right in the middle here in the room. Good morning. This is Martin Ameche from UBS. Thank you for the presentation. I have a couple of questions, mostly on combined wealth management. Perhaps first on flows, you mentioned that you saw some outflows from the Basel based Brancher business. Could you perhaps quantify these outflows? And also perhaps the gross number for the rest of the business or the underlying number and whether you could confirm that the 4% to 6% target is still relevant for the full year? Then on margins, the second question, you had 68.1 basis points in the first half of this year, you're targeting above 68. Now clearly, deposits and cash allocations are very high. This is impacting the business. And I was just wondering if actually trading activity remains at currently low level, are you still confident you can meet this 60 basis point plus approach? Also, if you could talk a little bit about what levers you can pull to reduce perhaps the drag coming from the liquidity side and whether you have any avenues to start charging clients on deposits? And third question on hiring, I noticed that the number of relationship managers decreased by 4. If you could just talk a little bit about hiring patterns, is this coming from the former Nordensteen business and what should we expect in the second half of the year? Thank you. Good. I try to jot everything down. If I missed something, yes, okay, good. So let's get into these questions. Let's start with flows. So we do not disclose separate flows anymore from Nordstein or Vontobel. We think it is very important also internally culture. While this is now an integrated business, this is one firm, one company, and therefore, we look at the aggregated flows. However, I can give you some color about the flow pattern. We have seen a sensible inflow, so also like a bit in line with what many examples we have seen. In general, it has not been the fastest growing semester, also not at Fron Topol. And we had on top of that specific situation in Basel and I think it's important, it's very concentrated to a very small number of people and it's not the general thing for the integration. And we as you may have noticed also, we have not given up on Basel. The contrary of it, we keep investing, we keep moving forward and the Fontholpe will be one of the leading wealth management providers in Basel in the future. So that's it from the flow side. We would not be as aggressively ambitious that we can catch up in H2 for the full year. But going forward, we aim to get back to this 4% to 6% and we think we have the attractiveness and the levers and the measures in place in order to get back to that. And I think also in comparison after the digestion of a large integration of 12 months, we are in a fair spot given what one could have seen in other places in the industry. Margin levels, good news. Just to start with them, yes, we are confident and confirm the 68 target also at current trading levels and at current cash levels and at current negative interest rate levels. We are confident that we can protect and deliver levels of margin in this range. When we look at trading level, we do not see any source of change in that or any drivers for that. You have also seen that we have reduced our dependency on this as we think this is very much in line with the true long term goals of Wealth Management clients and makes a lot of sense to everybody. Cash levels at current interest rate levels to give you a guidance is a drag of 3 basis points. So just if interest negative interest rate levels would go away, 3 additional basis points would more or less fall from heaven into our P and L. We do not expect this to happen. How do we manage that? 1st and foremost, we try to be the investment partner of our clients and not predominantly their cash deposit bank. So we always look at cash in the context of our overall relationship. If cash becomes too dominating, we initiate a dialogue with our clients and say, listen, we are probably not the best place in the world to store cash. We are obviously one of the safest, but probably not the cheapest. And that resonates with clients. They understand that. They pay our premium fees for advice, for quality, for investment capability and we are also happy to accept outflows when it's only non yielding cash. And we continue to do that and we will continue to do that. On this whole negative interest rate question, perhaps as I have outlined, bear in mind that 7% of our revenues. I mean, it is a topic, but it's not a make or break question for us. What do we do in order to protect that margin and to deliver to clients the service we need? We obviously work on mandates. We have now discretionary mandate penetration of around 25% and we have an advisory mandate penetration of 50%, which I think reflects very well our ability to convey our capabilities as an investment advice. In terms of hiring, we have had reduced hiring activities over the last 12 months. That's fair to say as we had to digest the integration and it's obviously also fair to start with the basis of these 100 people who have joined us and to do whatever we can to build a successful common future. We have increased our hiring activities again. We are positive. We are confident going forward that we can attract the right people. However, I would like to mention we insist in 2 levels of organic growth. We are not only hiring people who know people who have money and we do not think that this is the only available source of organic growth in Wealth Management. We also are confident that our brand, our capabilities, our services are in it and traction in and by themselves. And you have seen that historically can correlate net new money growth to FTE changes in RMs and the correlation is very low. And that's a very clear target from us. We want to build a platform that has true organic growth inside out and we're not only a hiring platform. But yes, and some of the announcements we have made public, I think if you talk to the industry, we attract the right level of people. Good. Then we have another question here in the room. This is Daniel Regli from Octavian. Thank you for taking my question. The first question is a follow-up on Marte's question on net new money. So could you maybe confirm the 4% to 6% target for the second half of the year? I can see that it's difficult to achieve this for the full year now, but is it achievable for second half of the or are there reasons which could you or make you cautious about the net new money flows in the second half? And maybe also a bit on net new money flows in the first half. Obviously, it was a difficult half year for all the banks. But nonetheless, I think, Fonto Plevano performed a bit even its peers. What were reasons? Were there specific regions where outflows were more pronounced? Or was it deleveraging, I think, was something we heard from other banks? Or maybe if you could just give us some more color on this one? And the second question is on costs. Do you expect to close the integration of Knottenstein Lagos in the second half this year. Should can we expect costs to come down afterwards in combined Wealth Management? You're currently at your target of 70% costincome ratio. Shall we expect these costs to grow in line with operating income? And maybe a similar question to asset management where costs have increased quite a bit in H1 due to this business expansion. If you just can could give us some kind of color on what kind of business expansion we're talking about and whether this should be now be more stable over in H2? The third question is on tax. Can we now expect the tax rate to be at 17% for the full year can you give us some kind of guidance there? Yes, I'll leave it with that. Okay. Thank you. I start with net new money and cost development in the divisions and then I will ask Martin to take over the tax question. So as you know, we are stubborn in several aspects. We're also stubborn in not giving guidance for the rest of the year. But what I tell you is that we stick and accept that you will measure us by the end of the year for the second half year against the 4% to 6%. And we understand that this is a target to which we commit. Then in terms of additional color or flow pattern, well, we just we're not at the size level where flows are completely evenly distributed across quarters. We just have ups and downs. We have seen that over the last years as well where not every quarter has been equally distributed in terms of net new money flow. And we had a combination in the first half year that we were not on target in each and every market area, but we have not seen distinct effects. So I can clearly deny that there is anything linked to deleveraging because also when you look at the lending penetration at Van Toplen, it's limited. And we are also not into some of the more aggressive industry forms of leveraging. So it's only Lombard lending and Lombard loans are public, you can check-in the balance sheet, they're more or less flat. So it's just not seasonal, it's just pattern in terms of net mnemonic success where we were not in line with targets in this half year, but where we do not see any structural change or any doubt that the platform and the people and the processes in and by themselves will deliver according to target level. And then second, we have to be realistic. I mean, we had to digest within the U. S. Business, the integration of Lombardia and within the rest of the organization, Odenstein Large. And that obviously was a drag on management's attention and focus. And we have also been transparent obviously within Nordenstern, the Basel situation was not helpful for our net new money figures, that's true. But we have been able to digest it and we commit going forward to this target to 4% to 6 percent. And in terms of completion, yes, it will be completed in H2. You will see a low very low single digit numbers of additional integration costs in H2, but we are very, very close to completion. And we have done everything to build a common platform moving forward and going forward. Will that change the cost structure in Wealth Management? No. We are in line with our target of 70% cost to income ratio. We are happy to navigate around these 70% As long as growth and healthy margins come through, we are happy to invest the cash we generate in investing into the future, in hiring people, in building future growth. We do not see again always as long as growth comes through an urgent need to move to an even lower target in the cost income ratio side. On the asset management side, yes, like a number of things that drove the cost uptick, which you can see as more or less as a significant part, it's probably a one off shift. You should not see a similar correlation going forward for revenue growth. But when you have substantial growth, we needed to add staff in our fastest growing boutiques, which I think makes a lot of sense in order to keep up the service level quality. We invest in distribution. So we have more people in the U. S, we prepare the market entry in Japan. We have more people in some European markets. This does not come for free. But that's we probably can show if a business grows with 9.6%, it probably makes sense to invest in it. And the third is and that was surely more of a one off component also asset management asks now for more technology, more process is more compliance, more platform costs and we had to do a certain investment adjustment on this side. But we also there commit to our cost income ratio target that we have in the target. We will be able to match that. May I ask you to comment on tax? Yes. On your question about the tax rate, what to expect for the full year 2019, the first half year was 12.3% and this is in the book, obviously. So 50% of the figure to put into your spreadsheet. For the second half, it's just fair to assume 17% to 19%. And then on top of that assumption, it all depends on the vote of the tax reform in the Canton of Zurich. If that goes through, then every IFRS company has to look at all the deferred tax assets and at all the deferred tax liabilities and has to analyze them and see if there's a need for a revaluation of DTAs and DTLs. At current expectation, that might lead to a slight help for us. We would give that as a transparent figure in the full year results. Good. Then I would for fairness, we would switch for once to the telco, where we have a question from Nicholas from Citi. Please go ahead. Yes. Good morning, gentlemen. Can you hear me? Yes. Cool. So just three questions, please. 1 on each of your core operating divisions. So in Wealth Management, you've seen a bit of pressure on your recurring fee margin there. Presumably that's risk off, but I'm also a little bit confused because equally I note that the allocation in equities went up, while equally the allocation to liquidity came down versus the end of last year. So what was driving that pressure in recurring fee margin in Wealth Management? In Asset Management, can you talk a little bit about the offering? I thought it's an interesting move by yourselves to move away from solutions. Equally, you also seem a little under indexed in private markets and private equity. And I think you also recently sold a fund in real estate. So, I mean, these are all quite strong growth areas. So what is the rationale for all of this? Just second question, asset management as well, if I could. Good to see that your equities performance has been very strong, so well done there. But conversely, is there a risk that we see lower flows in fixed income in future given recent declining performance? And then finally, in Financial Products, I'd be interested if you could just dig into a little bit more for us please the comments about stronger competition there. And particularly if you could talk about the competitive dynamics in Asia and structured products given that you felt the need to increase margins? Thank you. So let's start with the margin question on Wealth Management. Actually, we would not see margin pressure. Actually we have the impression that we were able to defend margin levels in Wealth Management both at combined as well as the standalone Wealth Management business. But Martin, do you have additional color on this question? No, I think there's a slight split between the part that is recurring and the part that does to some extent depend on trading. But this is really in the random part of fluctuations that we always witnessed. So there's no special comment on that. Okay, thanks. And as I've said also at current trading activities at that current cash and interest rate levels, we commit to the target of 68. Then in Asset Management, I apologize apparently our communication was not clear enough. We do not move away from solutions. We just disclose them separately or part of our solution business. As given our Westcor activities, they with quant driven approaches, they do quite a lot of overlay business, which obviously is a completely different business to bottom up high conviction active asset management. So therefore, we just wanted to give you more transparency on that. But we are very confident with the overlay business and the solution business that we have, and we expect additional growth of that business going forward. Your assessment that we are underrepresented in private market is completely right. We are by 1 not represented at all. It's part of our focus strategy. We have clearly decided and stick to that assessment for the time being that we focus on liquid asset classes. We think we can't be everything to everybody. We want to focus on what we know best and what we master and we think we bring a lot to the table to our clients when it comes to liquid asset classes and we will stick in that zone and execute within that strategy. Then in terms of performance patterns, we're actually happy with the performance pattern also on the fixed income side. We see strong pipelines, strong demand and we do not see we will now have to get into very technical details at product levels, but the top line is strong outlook, strong pipeline, no worries for future growth driven by performance quality. And on Financial Products, perhaps why we changed a little bit our margin approach in Asia? Martin, you may comment. Yes. In Asia, we had a turnover of SEK 5,300,000,000 in the first half of twenty nineteen. This is down 50% from 20 eighteen's first half. Now generally, market volumes in Hong Kong were down 15%, but we were down much more. So why is this? There's strong trade offs between volumes and profitability in Asia. If you go to market making with low margins, you attract a lot of volumes. If you increase your margins, profitability increases on the trades that you still have. You have then less volume, but higher profitability per trade. Now in the 1st year of presence, we opted for more volume in this trade off because we wanted to get our name promoted in the Asian market, volumes follow volumes in this warrant market. So in the 1st year, we opted for higher margins. And for lower margins, in the 2nd year 2019 that we are present in this market, we increased our margins slightly for better profitability and lower volumes. And perhaps one word on competitive position. I mean, this is a global business. It's European and it is Asian and we are globally in the top 10. So we are confident that we will defend a very sensible and reliable competitive position in that business going forward. Right. Okay. Thank you. We have here. Yes, sorry, please go ahead. I mean, as I said, just to follow-up quickly on the competition point. You did specifically call out fierce competition. So is this something that could drive margin further margin pressure? Or is this something that we should be aware of? Yes. Thank you. Yes. No much additional color from our side on this point. No. Okay, we move back to the room here. You mentioned some trends like outflows in active managed funds and low level of net new money, the low trading volumes, all these things. I mean, can you say which of these trends are more structural developments and which is more maybe short term, near term trends? And second question, I mean, you have a margin, gross margin 68% on your asset under management. And if there is a general pressure on margin in the industry, I mean, if you can keep your margin, then on the other hand, the clients lose performance logically. So I mean, what do you think maybe clients maybe near term are not happy anymore because they think their bank earns can keep the margin and what about me? Good. So the first question, the structural cyclical and then margins. But perhaps to kick off with the question, do you think I lose after I have paid you the CHF700 that you take for your newspaper yearly basis? No, you don't think so, because you think that I actually made a net profit because I get access to your content. And our industry is one of the only industries where there's almost never made a link between price and value. And we just insist that also in our industry, there is a link between price and value. And over time, these two things obviously have to remain in sync. But if performance, service quality, client experience comes through, we think also the financial service industry has the right to charge a value price point that makes sense long term for the client and for us. But I'm happy to comment in detail. I just wanted to check if you think I'm a loser as a reader of your newspaper. Good. So let's talk about these trends, active versus passive. This is a long discussion and somebody has decided or the public opinion has decided based on academic work out of the 50s 60s of the last century that it is proven that only passive makes sense. We think that actually the remaining part of the academia discussion that happened in the 70s 80s 90s that went on and actually proved that no, this is not true. And for example, Grossman Stiglin, 1976 about the impossibility of fully efficient markets got a little bit lost on the public discussion. So we think that this is not a given truth that only passive makes sense. However, this is not the key point here. The key point here is we are a boutique. We are a niche player. We are a specialist. We don't have to do what the average big large market player has to do. May the passive pool grow further, we actually do not care. We will not go there. We will remain focused on the active pool because even within a shrinking active pool, our market share is ridiculously low and we will always be able to deliver growth because we have a higher performance quality, a higher service level, a strong long term commitment to this business, great people. That has to be our strategy and it will remain our strategy. So the top line growth changes of the pools are not relevant for us given our smallness, our focus and our boutique approach. Secondly, we would also challenge that after having seen the biggest PE expansion of the last years, after having seen interest rates coming from 15 to 0 or minus 1, why then a capital weighted investment approach is the most sensible thing to do for investors. But that again is the decision and the choice of the investor who believes and commits to active asset management. So we think that is a structural change. We will see further growth of passive until perhaps then we see some of these asset bubbles coming under pressure and then there may be a day of reckoning, but that's a mid to long term opinion. We are convinced that we do the best for our clients if we continue to offer him advice and investment products based on active approaches. And second, given our boutique strategy, we will be able to continue to grow. We do also not expect that price levels for active products to come down ever more and more and more and more. We may see competition. We may see some price pressure. When I look into our internal data at boutique per boutique level over the last 3 to 4 years, we don't see a lot of price pressure in the most bespoke distinguished high conviction active products. In a world that is so scarce for return, products that are able to deliver alpha get recognized by the market and have a sensible market price. We expect that to continue. In terms of interest rate levels, we think that this structural theme will remain with us. We have to live with a world with very low or negative interest rates for the time being. We quickly gave some color on it. It's only 7% of our revenue in the Classic business and in other parts of the business it's more of a growth opportunity. Trading activity, this is the $100 question for all the people with transactional businesses. We also have a transactional business. It's 15 percent of our revenue. To be very frank, I don't know. We, Martin, even for longer, Martin and I, you for more than 20 years, I for 20 years, we walked over these businesses. It's the first time that everybody in the industry sees record high levels and record low trading. Do we have the final answer? No, we don't. Martin, who is the better economist than me, his theory is that the last time when we saw record high levels in 'ninety nine in 2006, people were convinced that in 'ninety nine technology and in 206 globalization would drive earnings further and further and therefore nobody wanted to miss out and everybody was trading. Today partly one of the reasons why market levels are where they are is because where is the alternative? It's driven by interest rate levels. And people are afraid of this coming to an end and that may be an explanation of low trading activities, but frankly we don't know for ourselves, But we do not think that trading has ceased and gone away forever. We expect it to be cyclical, but it's a long cycle, I have to admit. Patrick Winters from Bloomberg. Two questions. First one on flows. It's a more general question. Do you think Switzerland as a booking center is benefiting from some of the political risk in the UK and kind of Brexit uncertainty, the fact that we're not really sure what kind of government will be then and how long it will stay Are you seeing any flows basically from the UK coming to Switzerland as a result of that? And second question is regarding Nordenstein, which gave you definitely a step up in terms of wealth management in terms of your size, but now you've seen some outflows. Are you happy with the way that turned out? Are you happy with the price you paid for it? Would you do it again basically? Yes. Good. So first of all, I think it does not make sense neither for a country nor a company to base one's strategy on the weaknesses of others. That's not a sensible thing to do. And we try to avoid that. And I think also our industry has been for many years much too over relying simply on the framework and the stability and some other aspects of the legal framework that are available in this country. So we as a company have very clearly shifted away and said you should first and foremost that the private client works with us because of our capabilities, our service, our know how, our access to investment products. And then yes, if you book with us, we book in Switzerland and with Switzerland does come stability, reliability, rule of law and all of that. What we see in our numbers is that there is a continuous interest in the Swiss Booking Center that people appreciate the level of stability that this country is still able to produce, but it's not the primary driving force in the client or advisory or sales process. And the current events or also the events of the last 2 to 3 years around the U. K. Have not been a game changer in that. But that's fine with us. Nordenstein, very clear confirmation. Yes, if we would know if we would have known everything we know today, we would have done it again. We can also confirm that the business case that we currently assess is fully in line with the business case that we have under pinned to our decision. Overall, we are happy with the integration went. I think it was very fast, very smooth from a technical perspective. We have very fast reached a commonality in terms of processes and approach and doing business with the new people that have joined us. Obviously, there was a setback in Basel. Yes, that can happen. I think it is very important in these transactions that despite setbacks, you stick to your path and there is only one path. At the end, it is 1 fundable, 1 company, 1 firm and one way of doing business. And this dominates everything else. And therefore already at the numbers level, we are fine and at the strategic level we are fine anyway because for us this was not a unique but surely a very rare opportunity to build with 1 transaction nationwide. Now this sounds crazy to a UK person, if a Swiss people talks about nationwide, but this is a strange country, very heterogeneous, a nationwide private wealth platform. And I think we are there now and we will build from that. I'm sure Mr. Hasty had questions on this assessment. Actually, I like it. But I was wondering whether Fronthorpe will change a little bit its image in the private bank in a way that you open up for more affluent people? Is the repositioning going on? I mean, you changed your closings a little bit with the colorful logo and everything. Would that bank be an option for people that don't swim in money within Switzerland? First question. 2nd one, I was wondering whether you will have to cut shops. You have now 2,000 people on the payroll. The third one is, will there be no more deal possible because of your CET1, which seems to be a little bit low? Thank you very much. Thank you for this question. So perhaps let's start with the closing or the colors. And to us, this was a very important process and it didn't start with we want new colors. So we have worked for over 1 year internally with our people globally, with our Board, with our shareholders on the shaping on who and what we want to be. And not because we thought we had lost ground or we didn't know it anymore, but because we had grown so much, we have now then people from very different backgrounds. And I think one of the biggest risk to any company is a world of tribal cultures. If the fixed income team comes from Barclays and doesn't talk to the equity team from Goldman Sachs and said neither understands the risk control that comes from Deutsche, The world becomes very complex. So if you have grown, if you have done acquisitions, we thought it was worth the effort to strengthen, to sharpen, to shape the fundamental core of what we are, why we are Fonthobal and what we want to be to the marketplace. And we have spent 1 year in this process and actually communicated and endorsed and onboarded the whole company on all of this content and then said, and now we want to express this to the marketplace also with a new clothing. And I remember fondly your article on the day of when we unveiled the colors and obviously I did not agree on the words, but I shared parts of your viewpoint. We wanted to make a very clear sign. Von Tobel is not about being 100 years old. Vontobel is about mastering the future. This whole cloth thing expresses that our only raison d'etre is to help our investors, our clients to build together a successful future by having foresight, by navigating the markets and by building common success for the clients and for us. And yes, we also wanted to choose colors and the clothing that works well in the digital space because also it's wrong we think to still think digital is for younger people or for people who do not swim in money. Digital has become a relevant touch point for everybody and it goes across age groups, across nationalities, across wealth bands. And therefore, we wanted to find tools and methods where we can come across and where we also can make a difference and people notice that Phone Total is different. And do we want to open up with that to new channels? I mean, Fontabel has never been an early early test organization that has said, well, below €5,000,000 you should not talk to us. We are transparent in the way that we say we have price points and price levels that do only make sense if you have a certain level of intensity in your investment approach and a certain level of wealth, but it's free to choose for everybody at which level that makes sense. And we do again not segment our clients in wealth bands, but we segment them in needs, in desires. And there are people who prefer to interact with us digitally, and we offer that to them. And if that attracts also people who may, as you say, not swim in money, that's fine with us. But this is not a change in positioning. Fonthobel has always positioned itself as a professional provider of service advice and of investment products and whoever feels attracted by that and that is in line with our values, we are fine. In terms of jobs, you know us, we try to avoid stop and go cost policies by almost everything we can because we think it's not good for the long term value creation of the company. That does not mean that we do not adopt resource allocation. We do that. We also see shifts in the skills we hire. I mean, we hire today more tech people and more quant people than we have hired 2 or 3 years ago. That's all of that is true and I think it's only part of serious business management and that will continue, but we do not intend to have anything that is cut across all activities cost program and I think the numbers also show that we're not forced to do that. And in terms of deals, we never told anybody that you should be a shareholder of Fonthorpe because we are the best serial acquirer. We always said you should hold Fronthable because we have an outstanding capability and work very hard towards that to deliver above average organic growth. And we are willing to underpin that path with acquisitions. We have done acquisitions that diversified our business, 24 Westcor, we have done acquisitions that gave us market access, Lombardier, Finto and we have done an acquisition that gave us scale and efficiency and presence in Openstine. Our need has obviously now come down. We have become even more selective. I mean some of you have written for years that we are always selective. I can assure you we have become even more selective than what we have been in the past as we have now a level of diversification and breadth in our business model, which allows us to be selective. And therefore, we are not limited by our capital position. If needed, we could do a deal, but we feel absolutely no pressure to do it. We have another question on the phone from Marco Di Matteo from Goldman Sachs. Please go ahead. Good morning and thank you for taking my question. I just wanted to ask again about the interest rate environment and on your lending policy. So you have traditionally been have had a fairly conservative approach to lending and your loan penetration and loan to deposit ratios are well below industry averages. And if the environment with low interest rates remains as it is and in the eventuality that rates get cut further, would you consider growing the lending benefit ratio and try to offset the lower deposit margin with higher loan volumes? I mean, we have no intention to change our lending criteria. We have we will stick to the quality and the lending requirements we have. We would rather accept if we would not exclude that there is a competition on price in lending now as obviously the absolute margins will come down and there is always an inclination in our industry that people become more procyclical in their risk appetite, we will avoid this fate. And I think we are in a solid position to do it. It's again only 7% of our revenue. I'd rather have a 10% drop in the 7% than a change in our risk approach. Anything to add from your side, Martin, on this? Nothing to add. Any more questions? Yes, we have one more here in the room. Thomas Paul, AWP. Can you just remind me what is your policy for negative interest rate with clients? Do you apply negative interest rates in how far? And I think a competitor said a few days ago that he feels pressured by Canton Allbanken in Switzerland because they are more generous in this regard? Do you feel that as well? Well, perhaps one general remark, but that is more not purely linked to that. We all know that the framework that the Swiss National Bank has created for the what's the term, the rebate that they give to banks, the Freibetag is obviously in favor of large commercial banks and in this favor of wealth management managers with a banking license such as ours. So we are net payers, but that's how it is. We accept it. Our policy is very clear. We only charge directly to banking counterparties, pure institutional counterparties that have a transactional relationship with us. There is a market practice and it's accepted to everybody, but that's not an important part of our business. In our core business, as soon as we talk about the wealth or asset management relationship, we look at the cash position in relation to our overall relationship. We understand that if a client has a large wealth management relationship with us and he has cash as part of his overall asset allocation, we think we should not charge it. But if this becomes a predominant or a dominating part of his positions with us, we remind him that we are not the best place in terms of price to store cash. And then either we develop together a roadmap for investing or he agrees on pricing or he moves the cash away to people who apparently need it. That's fine with us. Yes, I would say it's a client specific dialogue in which we look at the overall relationship. If you would have wealth management mandate with us and 5% cash and pay 68 basis points and the first thing I would talk to you is about negative interest rates, you would not think it's a fair dialogue. If you would become our new client tomorrow morning and deliver 100% cash and say, I will never invest, you would understand that we would initiate a dialogue. Good. In respect of your time as lunch break approaches, we propose that we call this almost a day. Before we call this a day, 1st of all, I would like to thank you as ever for your attention and your interest. And then I would also like in this forum quick to say goodbye to Susanne Boron, who has been with many of you and also with me for the last 20 years in each and every closing. And unfortunately, she has insisted to go into retirement, which we regret, but it's a right to do it. So thank you, Susan, for many years of service. And to everybody of you, have a great day. 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.