Ladies and gentlemen, thank you for standing by. Welcome to Leumi's Fourth Quarter 2024 Results Conference Call. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded March 4th, 2025. I'd like to remind everyone that forward-looking statements for the respective company's business, financial condition, and results of its operations are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated.
Such forward-looking statements include, but are not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development, and the effect of the company's accounting policies, as well as certain other risk factors, which are detailed from time to time in the company's filings with the various securities authorities. I would now like to turn over the call to Mr. Michael Klahr, Head of Investor Relations. Mr. Klahr, please go ahead.
Thank you, Operator. Ladies and gentlemen, we thank you for taking the time to join us for Bank Leumi's Fourth Quarter and Full Year 2024 Results Conference Call. Joining me today is Mr. Hanan Friedman, President and CEO, Mr. Omer Ziv, Deputy CEO and Head of the Capital Markets Division, and Ms. Hagit Argov, CFO and Head of the Finance Division. A presentation will be presented during the call for those joining by webcast. The presentation is also available on the IR section of the bank's website for those dialing in. I would now like to turn the call over to Hanan.
Good afternoon to everyone. Earlier today, we published our financial results for 2024. We also published, for the first time, key financial targets for 2025 and 2026 based on our strategic plan. Although 2024 has been a challenging year for Israel, I am very pleased to say that we have demonstrated another strong year with record results and profitability, the highest ever, in line with our targeted growth strategy. Before presenting the highlights of Bank Leumi's 2024 results, I wish to share some points about the Israeli economy, which have a great impact on our business. At the beginning of 2024, early forecasts predicted negative performance of the Israeli economy. However, during the year, the economy showed its resilience with GDP growth of 1% in real terms.
This performance not only defied early expectations but also highlighted the strength of the Israeli economic fundamentals and the unique resilience of the Israeli population. This reinforces our confidence in Israel's long-term growth prospects. Based on our technology capabilities, data, and AI-based models, we reaffirmed the execution of our strategy, doing more and better with fewer resources. We increased revenue by 10% while keeping expenses flat. We once again did so while attaining the best results in quality of our credit portfolio. We have one of the lowest NPLs in the market. And I remind you, NPL is the sole objective parameter for the quality of the credit portfolio. We also did better in our Service Revolution as part of our vision to be the bank that offers the best and the most convenient service.
The Service Revolution was a major catalyst for our rapid growth in the raising of retail deposits much more than our competitors. We attained a net income of ILS 9.1 billion, up approximately 40% in 2023. ROE was 16.9%. This was achieved against the backdrop of an ongoing war and a challenging macroeconomic environment. Notably, in 2024 and in previous years, we managed to responsibly grow our credit portfolio with improving credit quality metrics. Our NPL and troubled debts, as a share of gross loans, have both declined and remained much lower than the industry average. Our expenses have remained stable despite continuing high inflation in recent years. We achieved this through the bank's ongoing investments in technology. This led to improved customer experience and service, improved operational processes, and reduced operational risks.
Our cost-to-income ratio, which further declined to 29.9%, is the best not only in the Israeli banking system, but also, I am proud to say, one of the lowest globally. We aim to maintain this strategy and keep it that way. Our strong report is a further demonstration of Bank Leumi's excellent execution capabilities and our ability to deliver. Our Core Tier 1 capital ratio of 12.17% at year-end is comfortably the highest in the sector and about 2%, approximately 10 billion ILS, above our minimum regulatory requirements, supporting asset growth and significant capital return. Today, we announced that we will distribute a payout of 40% of the earnings of Q4, totaling 1 billion ILS. With the war winding down, we are optimistic that the regulator will permit us to distribute more of our excess capital to our shareholders in the near future. Our leadership in technology continues.
We continue to successfully execute our growth strategy in the mortgage sector, supported by our Zoom mortgage product. This has significantly increased our share of new mortgages to close to 30% market share. Leumi's mortgages book has grown by more than 30% in the last three years, outpacing the market. We did this without compromising on price or risk management, maintaining the lowest rate of high-risk mortgages and the lower mortgage NPLs than the market. In addition, we are in the process of launching a new platform for deposits that will allow us to expand our offering to customers and increase deposits. In 2024, core deposits in our Retail Division increased by 5.1%, greater than the competition.
Customer service offerings, defined by the bank as a strategic goal, are being transformed by upgrading the application and the website by expanding products and services, and by responding rapidly to customers within minutes and improving SLA. For example, Leumi customers today can message their branch manager directly or message my personal team if an issue is unresolved within one business day. Another feature is that English-speaking customers can use our English-language app, the first one on the local market. These efforts and many more are highly appreciated by our customers, who are making Bank Leumi their first choice. In the most recent Bank of Israel Customer Satisfaction Survey published last month, Leumi ranked first among the five large banks for service in five categories out of nine, and in addition, ranked second in another category. We are ranked number one in telephone banking, the mobile application, and our website.
Aside from the clear revenue benefits, more satisfied customers also reduce customer friction and improve efficiency. At Pepper, our digital bank, we are launching a new strategy following the migration to Leumi's core systems. Pepper is already a leading digital option for our younger customers, but these changes allow us to improve the customer interface and add many new products, further improving our offering. From now on, Pepper will play a material role in implementing our strategy for the retail sector, including in raising core deposits. Looking forward, following the recent ceasefire in Gaza and in the North, there has been a decrease in macro risks, credit risks, and risks related to global market attitude towards Israel. We expect GDP growth of 4% in 2025 as the economy rebounds after the challenging 17 months.
In the fourth quarter of 2024, we already saw a peak in domestic consumption and higher fixed investment. We expect this trend to continue at a greater pace. Our customer-focused model, together with our high operating leverage, advanced capabilities in rapid production of tailor-made solutions for our customers' needs, and our healthy balance sheet mean that we are best positioned to take advantage of this growth. These capabilities, the excellent execution of our recent strategy, and our well-proven performance give us the confidence to publish key financial targets for 2025 and 2026 based on our strategic plan. This strategy will accelerate our journey in the segments that we have already selected as part of the previous strategy. In addition, the new strategy includes other segments that will grow rapidly and many other new initiatives.
The key financial targets for 2025 and 2026 are ROE of 15%-16%, annual net profit of nine-11 billion ILS, credit growth of 8%-10% annually, and capital return of minimum 50%. In addition to publishing these key targets, we'll also present our new strategy for the coming years at the Local Investors' Conference on March 20, followed by presentations to our foreign investors. I invite you to join us. On a personal note, the last 17 months have been a very challenging time for the whole country. Everyone is affected. I would like to share with you how proud I am with our employees and the organization for overcoming this difficult period. I would like to take this opportunity of thanking our stakeholders, our employees, our customers, and you, our investors, for your continued support and trust.
With that, I will hand over to Hagit, who will walk you through the financial results.
Thank you, Hanan. Good day, everybody. I'm very happy to be here with you today and to present our excellent results for the fourth quarter and the full year 2024. Hanan just gave you the big picture for our really great year. Now, I will drill down to some of the details. Before we discuss the bank's position in detail, a few words on the macro situation and some key messages. Slide 8 shows some key economic indicators. The recovery began in the third quarter and continued into the fourth quarter with real GDP up 2.5% on an annualized basis. Credit card purchases and apartment sales both accelerated in the fourth quarter ahead of increases in VAT and other taxes at the start of this year.
In February, the State of Israel raised $5 billion from international investors in a well-received and many times covered placement, demonstrating Israel's improved risk profile. Bank Leumi estimates that real GDP will grow by 4% this year with an emphasis on domestic demand and fixed investments. Slide 9 shows a snapshot of the year and the quarter. Net income for 2024 was ILS 9.8 billion. ROE was 16.9%. Cost-to-income ratio declined to 29.9% from 32.6% in 2023. Credit loss expenses declined to 0.16% from 0.58% in 2023. At the start of the war, the bank took a cautious stance and increased its collective provision significantly. While the consequences of the war have been less severe than initially expected, we have not released any of these provisions yet. Credit growth was 8.6% in 2024, similar to 2023. Book value per share increased by 14.6%.
Core Tier 1 ratio increased by 50 basis points in 2024 to 12.2%. In the fourth quarter, net income was ILS 2.45 billion. ROE was 16.2%. There were no one-time items in the quarter, and the cost-to-income ratio was 30.9%. Slide 10 shows a snapshot of income and expenses in Q4. Financing income and fees both rose strongly, up 8% and 6% year-on-year, respectively. Operating expenses were down mainly due to higher severance pay in Q4 2023. Pre-provision net revenue was up by 17% to ILS 3.8 billion. Slide 11 shows the breakdown of income and expenses for the full year. Pre-provision net revenue, bottom right-hand side, increased 13% year-on-year to ILS 16.2 billion, supported by higher financing income and higher fees. Operating expenses were flat year-on-year. In Slide 12, we can see the quarterly development of net interest income and margin.
Net interest income and NIM were both lower in the fourth quarter, mainly due to the lower CPI and also due to the fall in the U.S. rates and the shekel exchange. Year-on-year, the NIM was down slightly due to the lower average interest rate and the shift from non-interest-bearing to interest-bearing deposits. Slide 13 shows the year-on-year increase and breakdown of fee and commission income. Fees were up 2.3% for the full year in 2024 and 6.2% in the fourth quarter, compared with the corresponding quarter last year, mainly due to the higher securities transactions and higher credit card activity. Fees were weaker in the fourth quarter of 2023 following the outbreak of the war. On Slide 14, you can see the continuing improvement in the bank's cost-to-income ratio, which improved further in 2024 to 29.9% from 32.6% in 2023.
As Hanan mentioned earlier, we have successfully leveraged our technological advantage to accomplish more with fewer resources, which enhanced our efficiency ratio. Slide 15 shows the development of loan loss expenses, which remained low through 2024, with ILS 1 billion of total collective provision, partially offset by ILS 320 million of specific provision income. On a net basis, 2024 loan loss expenses were 0.16% versus 0.58% in 2023. Q4 credit expenses were at similar levels to the full year. As mentioned, the bank took a conservative stance due to the continuing uncertainty in Israel. With that in mind and turning to Slide 16, we can see that despite the war, a tough macroeconomic backdrop and the high interest rates, NPLs of 0.5% and troubled debts of 1.45% remain at historically low levels and are among the lowest in the Israeli banking system.
At the same time, the bank's provision for bad debts stood at ILS 6.9 billion, covering NPLs by three times. This data illustrates the continuing high quality of our credit portfolio. I'm moving ahead now to Slide 17 to our loan book. Our loan book increased to ILS 455.5 billion in 2024, up 8.6% and following a 9% increase in 2023. We continue to grow in our target segments of mortgages, middle market, and corporate. Slide 18 shows deposit trends. Total deposits increased by 9% in 2024 to ILS 618.3 billion. Leumi's retail deposits increased by more than 5% after 5% growth in 2023. It is also important to note that our deposit base on the right is well-diversified and our liquidity ratios remain strong. I'm moving ahead now to Slide 19, which shows our very healthy capital ratios.
The Core Tier 1 ratio increased by 50 basis points in 2024 to 12.2%. The bank's capital buffer, the difference between the Tier 1 ratio and the minimum regulatory requirement, now stands at almost ILS 10 billion. Total capital at the end of the year was 14.8%. Turning to Slide 20, Payouts. Today, we announced that we would distribute a cash dividend for the fourth quarter of ILS 0.7 billion, which, in addition to the last range of the existing share buyback plan, will bring the total payout to ILS 1 billion, or 40% for the quarter. Together, this brings the total capital return for 2024 to ILS 3.9 billion and significantly more than ILS 2.3 billion of capital return for the whole of 2023. The fourth quarter return is equal to an annualized return at yesterday's close of around 5.3%. In conclusion, Slide 21, let me summarize.
The bank continues to present consistent and strong financial performance with high ROE despite the challenging economic backdrop. Long-term asset growth is driving higher revenues and profitability, supported by best-in-class cost-to-income ratio and strong credit quality indicators. The bank's strong profitability and healthy capital buffer enable us to continue growing in our target segments while also allowing us to share higher returns with shareholders through dividends and buybacks. With that, I will now open the call for questions. Operator?
Thank you. Ladies and gentlemen, at this time, we'll begin the question-and-answer session. If you're calling in, please press star one. If you are on the Zoom, use the chat button or the raise hand at the bottom of the screen. Please stand by while we poll for your questions. The first question is from Chris Reimer of Barclays. Please go ahead.
Yeah, hi. Thanks for taking my questions and c ongratulations on the solid quarter. I was wondering if you could discuss the assumptions behind your targets and give any color on really what you think is driving the confidence in reaching those numbers?
So maybe I will start by saying that we will elaborate regarding that and present a dedicated presentation for that before the Conference of March 20 and following that meetings with our international investors. We have many initiatives, detailed initiatives that are part of this strategic plan for the coming three years, and we published the figures for 2025 and 2026. As we said, it's based on the capabilities that we built in the last years. We want to take advantage of these capabilities and take the next leap in leveraging those capabilities for the segments that we have already focused on and we performed rapid growth with very impressive quality of the credit portfolio together with continuing and making additional leaps in the raising of deposits, which will contribute a lot to our ROE.
Together with other segments that, as I said, we prepared ourselves with the right products, the right processes, the right capabilities, and most importantly, with the right underwriting and risk management capabilities. This is in a nutshell. More details will be presented later this month. I build up the interest in that, but Omer, please elaborate if you wish.
Maybe I will add a few comments about the financial assumption behind the numbers. First of all, as Hanan mentioned, we expect a credit-based growth of 8-10% a year. That's first. Secondly, we base this stability, the ROE of 15-16%, on interest rate, which will be in 2026, on average, 3.75%, and on inflation rate, which should be between 2.5%-3%. So the bottom line is that as we present in the last two years, very strong ROE of above 15% in all of the last four years, we believe that even if the interest rate will decrease by almost 1% on average, and even if we see a lower inflation rate, we still have the capabilities to maintain our strong ROE of 15-16%. This is the most important financial number in our expectation. Even if the interest rate goes down, we'll be able to maintain our strong capability above 15%.
Thanks for that. That's really great color. One more. If you could just maybe comment any of your thoughts on last week's Bank of Israel announcement, which suggests a framework to provide additional relief to customers, and how might that compare with programs you already have in place?
So again, thank you for this question as well. First of all, it's quite new. We are still in the process of calculating the final outcome of it, but at the end of the day, since it's totally ILS 1.5 billion for the industry for a year, and our market share in retail, as you probably remember, is lower than our total market share. So our first reaction and our first assumption is that it will not be material. It will have some impact, but first of all, we are still calculating it, but we believe and we are working to make the right steps to compensate these expenses by increasing other revenues. So in total, we believe that we believe, and it's modest belief, that we will be able to execute the figures that we published, taking into consideration the last regulatory expectation that Bank of Israel published.
Great. Okay. Thanks for that. That's it for me.
Thank you.
The next question is from Anand Dembo of Citigroup. Please go ahead.
Hi. Thank you for taking my questions. First question is, which segments do you see the most opportunity for credit growth in 2025-2026?
Okay. So in the last two years, Hanan pointed out, we were focused in our strategic sectors, I mean mortgages, middle market, corporate, including real estate. As a matter of fact, we didn't increase at all or almost at all our credit portfolio in unsecured retail and in SMEs. As Hanan mentioned, we will elaborate on it more in our conference on March 20, but we are in a position in which we are looking also at the other segment that I mentioned, and we are looking and re-examining what would be the best point in time to start increasing our market shares also in these areas.
Okay. Thank you for that. I have one more question. As you have already taken significant collective provisions over the last six quarters, what is the reasonable allowance level going forward?
So first of all, I would like to mention again that the specific provision in the last few quarters was negative. Also on annual basis, it was negative. So on the one end, we cannot maintain the specific provision at a negative level forever. So I expect that somewhere along the way, we will start to see some increase in the specific provision, so it will be a positive number. On the other end, the collective provision that we built a very conservative buffer in our collective provision with the outbreak of October war in 2023. We didn't release it yet because we are cautious. So on the other end, we expect that the collective provision will remain low. So the bottom line is that we expect the credit loss expense ratio to remain low in the next three.
If I may, I will add an additional sentence. In Israel, there is a direct and strong connection between the rate of unemployment and the specific provisions. The expectation, the focus for the coming years is that the labor industry will be very sticky, so the expectation is for almost zero unemployment rates, which means lower risks in this respect.
Thank you. If I may, one final one. As all banks are now mostly sitting on excess capital, are you seeing any margin pressure anywhere?
There is competition all over, but as you see, we are the result. We have our way to deal with that because at the end, the choice of the customer is not based only on the price. It's based on the service. It's based on your appetite for business. It's based on technology, on our different AI vehicles. At the end, the competition is there already. If you look at the margins, excluding the CPI effect, you will find that you can see that in the last few quarters, the NIM is quite stable. Of course, if the interest rate goes down or the CPI goes down, it will have a negative effect on the NIM. On the other end, the NIM is also affected by the mix of the credit portfolio.
As I mentioned earlier, we were very cautious in the segment that paid higher yields but higher credit loss expenses. Also, in the last two years, there was a significant movement from current accounts to time deposits. If the interest rate goes down, I assume that we will see maybe some turnaround in this trend. The bottom line is that the NIM is, of course, a composition of the margin on loans and the interest rate on our deposits. The bottom line is that we were able to keep the NIM quite stable in the last few quarters, and we believe that also when we look forward to 2025, we have the capabilities to keep it quite stable.
Thank you. That is it for me.
Thank you.
The next question is from David Kaplan of Psagot. Please go ahead.
Hi everyone. I have two, I think, probably quick questions. On your guidance for capital return of a minimum of 50%, that's up from the current 40%. The additional 10%, are you also planning to split between cash and buyback, or are you planning on leaning more towards one of them?
So, first of all, till now, for years, we combined the dividend by buyback and dividend in cash. So, when we increase the ratio, the minimum of 40%, of course, subject to the limitation of the Bank of Israel, our preference is to mix it and to split it between buyback and cash.
We believe there's also the preference of most of our investors, and then we hear them. We are not able to reach a consensus among them. So we believe that we make the right balance, and we will continue similar balance going forward.
Okay. Great. Thank you and on the second question, how do you see the sustainability of your cost-to-income ratio? What you produced in 2024 was quite impressive, seemingly mostly driven by top-line expenses stayed kind of flat over the course of 2024 versus 2023. So going forward, do you think that's a sustainable cost-to-income ratio, or do you expect if there's contraction of either interest rates or of inflation that you expect a cost-to-income ratio to range back towards the mid-30s?
Okay. So first of all, as Hanan pointed out, this year, again, as we did consistently in the last few years, we were able to increase our income significantly by around 10% while maintaining our expenses at the same level. That's what we did in 2024. That's what we did in 2023. That's what we did in the last few years. We believe we have the capability to continue increasing our income and maintaining our cost more or less at the same level. As you mentioned, of course, if the interest goes down, it has a negative effect on income. But we have other ways to increase the income by increasing our business. So we believe we have the capabilities to maintain our cost-to-income ratio around the current ratio and maybe even to improve it with efficiencies.
Yeah. On the expenses side, we have many more initiatives in the pipeline, and we strongly believe that it's not just a matter of efficiency and cost reduction. It's also a matter of risk management, operational risk management, and on top of it, it's a matter of making the customer experience and the bankers' experience much better, which has a material impact on our ability to make our business much healthier and much stronger.
Okay. Great. Thank you very much.
The next question is from Valentina Stoykova of Barclays. Please go ahead.
Thank you very much for the presentation, and congratulations on the good results. My first question is titled, "The Implications for Capital." So you're targeting faster loan growth in 2024 and higher distribution from profits. So I was wondering what this means for your Tier 1 buffers, and is there any minimum target level that you can share with us? And then my next question is on your Tier 2s. It will be great if you can share your thoughts on the Tier 2 call option and also any bond issuance plans that you have budgeted for this year.
Okay, so hi, Valentina. Thank you for your question. First of all, regarding our equity capital ratio, so as Hagit and Hanan pointed out before, currently we are at a level of 12.2%, much, much higher than our regulatory requirement, which are 10.2%, so it reflects around ILS 10 billion buffers. Now, we have different buffer and limitations above the 10.2%. First of all, we have internal buffer of at least 10.6% in our CT1. On top of it, we have in our buyback plan a threshold in which if the CT1 goes below 10.8%, so we stop the buyback plan. We have different thresholds regarding dividends, so it's not one answer. We have different thresholds which have the capability to respond to any eventuality, but currently, our CT1 is significantly higher above these buffers.
Now, as for our Tier 2 series, our preference, of course, is to call it on time. We had a few local series till now that we called them on time. But of course, the final decision will be taken in the second half of the year.
Thanks. Thanks a lot for that.
The next question is from Liran Lublin. Liran, please go ahead. Open your mute.
Hi. Thanks for taking my question. Congratulations on very impressive results. We're seeing price pressure building up in the housing sector in Israel, and your exposure to real estate is obviously material. How do you see that risk profile developing in the coming years?
So maybe I will start, and then we'll elaborate. At the end of the day, we are focusing on housing. And in Israel, we still have a greater and greater buffer between demand and supply, shortage between demand and supply. And the war makes it even worse because the time frame between starting a project and completing a project became longer and longer. Part of it is lack of employees, and there are other issues. And the Israeli population is increasing by almost 2% year after year. So the expectation for at least for the coming decade is that the shortage will not be closed and will keep at least on the level that we have today. Now, it's true that the price of apartments cannot increase every year by 8% like it happened in the war year of 2024.
But still, the demand creates the pressure and creates psychological pressure on young couples to buy apartments as soon as possible. Otherwise, they will pay much more. Now, regarding our portfolio, so we don't have any project with affordability percentage of less than 25%. And over 82% of our portfolio, the absorption rate is greater than 50%. So even if wars come to war and prices decrease by 20%, we will still are not expected to suffer any losses. And as I mentioned, for 82% of the book, even 40% and 45% will not harm us. And you see it also not just from these figures. You see it from the impressive NPLs that we have for a long period of time since we underwrite each and every project carefully, and we are supervising each and every project carefully.
We prove year after year the quality of our loan portfolio, mainly in the real estate segment. And I believe that you will not find banks with so strong affordability ratio that, again, I repeat the figure, we don't have even one project with less than 25%. And so maybe I have a few more comments I want Hanan to mention. First of all, when you look at the NPL, the NPL in real estate is 0.4%, lower than our average NPL. When you look at the problematic debt ratio, it's 1%, lower than the average, which is 1.45%. And as far as I remember, the best in the market, despite the fact that we have the biggest market share and the biggest rate of growth in real estate.
Now, when you talk about real estate, so the vast majority of our exposure is, as you mentioned, to residential construction real estate. And we have lots of mitigation around that. Hanan mentioned a few of them, the absorption rate, which is very strong. And in this area, there is even one project with the absorption rate below 25%. It's very well diversified. It's very well geographically diversified. Almost very little exposure to high-end and luxury apartments. We have very strong guarantees in lots of cases, even personal guarantees, very strong collateral, very strong collateral. And also the way it works in Israel is very different from the way it works outside of Israel because in Israel, when you sell an apartment, it's final and binding, and the customer pays payment over the period of the project. So the risk involved in construction real estate are relatively low.
You see it here at the number. The numbers are very clear. The NPL is low for a long period, and the property debts are low also for a long period.
Thank you very much. That's very helpful.
Thank you, Liran.
The next question from the chat from Vinod Surendran. Can you please comment on your funding plans? Any plans to approach Eurobond market to issue USD senior unsecured notes or capital instruments, including AT1s and T2s? Second question, update on asset quality. Which sectors are expected to see deterioration in 2025 and ahead?
Okay. So for the first question, in Israel, you are not allowed to hold the AT1. None of the banks issue AT1. As for senior or T2, first of all, every year, we do a few issuance of senior. And also, almost every year, we take the T2 series. And every time we look at it, we look where it's better or more efficient to do it, either in Israel or outside of Israel. It's part of our regular way of business. And this year, we already issued a few series here in Israel, and we intend to issue more senior and maybe two T2 in the next following quarters. And we will decide, based on the circumstances and the numbers and the figures, whether to do it locally or internationally.
Of course, we have interest to do it both to meet it because we want to build our curve also outside of Israel. Now, as for the asset quality, I think the numbers speak for themselves. As we mentioned, the NPL is the lowest in the market, 0.5%. The property debt ratio is the lowest in the market. Now, of course, the sectors that are most exposed to any deterioration in the economy are the unsecured retail and the SMEs. And I would like to mention that these two sectors are only 13%, one-third, of our total credit portfolio. In the last few years, we were very cautious regarding this segment because of the risk involved in this segment.
Despite the fact that these sectors have higher margins, so these sectors which pay the highest margin, of course, are the most exposed to any deterioration in the economy, and they are only 13% of our total credit.