Good day, and thank you for standing by. Welcome to the BAWAG Group Q1 2022 results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded and a transcript thereof will be published on the company's website. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, CEO Anas Abuzaakouk. Please go ahead.
Thank you, operator. Good morning, everyone. I hope everyone's doing well. I'm joined this morning by Enver, our CFO. Let's start with a summary of the first quarter results on slide two. We delivered net profit of EUR 111 million, earnings per share of EUR 1.24, and a return on tangible common equity of 14.2% during the first quarter. The underlying return on tangible common equity was 19.5%. That's after prorating regulatory charges and deducting EUR 425 million of capital earmarked for buybacks this year. The operating performance of our business was very strong, with pre-provision profits of EUR 205 million and a cost income ratio of 37%. Total risk costs were EUR 20 million, translating into a risk cost ratio of 19 basis points.
We decided not to release any credit reserves with an ECL management overlay of EUR 64 million that was built up during the pandemic and equal to almost a year of reserves, despite a record low NPL ratio and robust credit performance. Regulatory charges for the quarter were EUR 38 million, equal to approximately 80% of full-year charges. In terms of our balance sheet and capital, average customer loans were flat quarter-over-quarter and up 8% year-over-year. We generated approximately 60 basis points of gross capital during the quarter. Our CET1 ratio was 14.7%, down approximately 30 basis points from year-end 2021 after considering our dividend accrual, RWA increases, and impacts to OCI.
As of first quarter and after deducting current dividend commitments totaling EUR 61 million, we have additional excess capital of EUR 505 million versus our target CET1 ratio of 12.25%. As it relates to the geopolitical environment, we have no direct exposure to Russia or Ukraine and de minimis exposure to Eastern Europe, reflecting our strategic focus towards the DACH/NL region, Western Europe, and the United States over the past decade. We have no trade finance, commodity trading, derivatives, or agricultural supply chain exposure. We have de minimis exposure to corporates with a reliance on the Russian market through sale, production, or supply and/or to sectors with supply chain issues tied to the Ukraine. Our total exposure to energy-intensive industries such as cement, building materials, and chemicals is under 1%.
However, given the geopolitical uncertainty, surging inflation, and potential longer-term structural impacts to growth and the overall uncertain macroeconomic outlook, we will continue to maintain our ECL management overlay in the coming quarters as we take a cautious and prudent approach to risk management, which under the most severe updated GDP scenario would be sufficiently covered. Given the surging inflation and rising interest rate hike expectations, the bank is positively positioned for a rising rate environment. Specifically, a 100 basis points increase in three-month EURIBOR translates into approximately EUR 100 million of incremental NII per year on a proportional basis. In terms of capital distribution, we committed to a share buyback of EUR 425 million during our year-end 2021 results.
Given the current geopolitical environment, volatility, and potential for dislocations, we wanna make sure we are prudent in our buyback approach, always maintain a fortress balance sheet, and prepare for potential opportunities arising from market dislocations, which will provide us with dry powder to address potential organic and inorganic growth opportunities in the coming quarters. Therefore, we decided to break up the buyback into two tranches. The first tranche equaling EUR 325 million, which we filed, and the second tranche of EUR 100 million, which we would file in the second half of the year. Our goal is to hopefully complete the EUR 425 million share buyback through the course of 2022, subject to all regulatory approvals. With our strong operating performance during the first quarter, we are reaffirming our full-year targets for 2022.
Profit before tax of greater than EUR 675 million, a return on tangible common equity greater than 17%, and a cost income ratio under 38%. This does not factor in any potential upside from rate increases that may take place this year. We believe the current geopolitical situation, significant inflationary headwinds, and shifting global supply chains will cause real disruptions in the short and long term. Therefore, we want to ensure we remain vigilant in managing these risks and conservative in how we run the business, requiring us to be patient and always focused on risk-adjusted returns. We have a resilient business across all cycles with consistent earnings and capital generation that should serve us well in the quarters ahead. Moving to slide three. We delivered net profit of EUR 111 million, up 50% versus prior year.
Overall, strong operating performance with operating income of EUR 325 million and total expenses of EUR 120 million, up 8% and down 1% respectively versus prior year. Total pre-provision profits were EUR 205 million, up 14% versus prior year. Risk costs were EUR 20 million, down 30% versus prior year. The regulatory charges were EUR 38 million, down 29% versus prior year. Tangible book value per share was EUR 35.20, up 8% versus prior year and 1% versus prior quarter. This assumes the deduction of our first quarter 2021 dividend accrual. Moving on to slide four.
At the end of the first quarter, our CET1 ratio was 14.7% after deducting the first quarter 2022 dividend of EUR 61 million, which reflects the increased payout ratio from 50%-55% of net profits in 2022. For the quarter, we generated approximately 60 basis points of gross capital, which was offset by an increase in RWAs of 30 basis points from implementation of regulatory guidelines and FX impacts, as well as negative OCI movements of 30 basis points, primarily from widening credit spreads and overall market volatility. Net of our targeted EUR 425 million buyback, our CET1 ratio would be 12.6%, approximately 30 basis points above our stated target of 12.25% and 350 basis points above our SREP capital requirement of 9.14%.
Following our capital distribution framework, our primary focus is to deploy our capital into organic growth and value-enhancing M&A. We currently see several potential organic and inorganic opportunities that we are assessing and hope to be able to execute on in the coming quarters. On slide five, our retail and SME business delivered net profit of EUR 99 million, up 48% versus the prior year, and generating a very strong return on tangible common equity of 28% and a cost-income ratio of 35%. Average assets for the quarter were EUR 21.3 billion, up 8% versus prior year and 1% versus prior quarter, driven by growth in housing and consumer loans. Average customer deposits were EUR 28.2 billion, up 10% versus prior year and 1% versus prior quarter.
RWAs in the segment were up 8% versus prior quarter, resulting from the implementation of regulatory guidelines, FX impacts, and loan growth. Pre-provision profits were EUR 160 million, up 18% compared to the prior year, with operating income up 10% and operating expenses down 3%, resulting from prior year operational initiatives with a continued focus on driving synergies across our various channels and products. Risk costs were EUR 15 million, reflecting a gradual normalization of risk costs without any credit reserve releases. The trend in asset quality continues to improve across our customer base with our record low NPL ratio of 1.9% and a risk cost ratio normalizing at 28 basis points. We've continued to execute on our various operational and strategic initiatives during the quarter.
We expect continued earnings growth across the retail and SME franchise in 2022, driven by strong operating performance across the business. On to slide six. Our corporate real estate and public sector business delivered net profit of EUR 38 million, up 50% versus the prior year and generating a solid return on tangible common equity of 15% and a cost income ratio of 22%. Average assets for the quarter were EUR 14.7 billion, up 6% versus prior year. Pre-provision profits were EUR 62 million, up 12% compared to the prior year. Risk costs were EUR 3 million, with no reserve releases taken. The trend in asset quality continues to be solid with our NPL ratio at 90 basis points.
We continue to see solid and diversified lending opportunities with a strong pipeline and commitments during the first quarter that we expect to fund over the course of the year. We will of course always continue to maintain our disciplined underwriting, focus on risk-adjusted returns, and avoid blindly chasing volume growth. With that, I'll hand over to Enver.
Thank you, Anas. I will continue on slide eight. Very strong operating performance during the first quarter, with core revenues up 2% versus fourth quarter, with a strong net interest income despite lower day count and net commission income up 12% driven by strong advisor business and full impact from Hello bank!. Compared to prior year's first quarter, core revenues were up 9%. On the back of strong core revenues and low operating expenses, our cost income ratio further came down and stands at 37% for the quarter. Risk costs of EUR 20 million show a more normalized picture with a risk cost ratio of 19 basis points, which is in line with our long-term trend while we maintain the management overlay of EUR 64 million. Regulatory charges for the quarter were EUR 38 million, equal to approximately 80% of full-year charges.
Slide nine shows key developments of our balance sheet in terms of assets and capital. Customer loans were flat quarter-over-quarter and up 6% year-over-year, while we divested some of our securities and bond portfolio position, leading to slightly lower average interest-bearing assets in the quarter. Our CET1 ratio was 14.7%, down almost 30 basis points in the quarter after considering 60 basis points of gross capital generation offset by dividend accrual, RWA increases, and impacts to OCI. On the funding side, we continued improving our long-term funding profile through issuing EUR 500 million in the first quarter and another EUR 750 million of mortgage-covered bonds in early April. On Slide 10, core revenues.
Strong net interest income down 1% versus Q4, but that is really because of the lower day count and a better net interest margin of 233 basis points for the quarter, which is probably more around 230 basis points on a normalized basis. In terms of net commission income, very strong performance in our advisor business and the full impact of the Hello bank! acquisition driving NCI up 12%, whereas it's an already strong fourth quarter. For 2022, we expect core revenues to grow by more than 4%, not considering any rate hikes in 2022 and no M&A or portfolio transactions. With that, moving on to slide 11. We managed to reduce operating expenses despite significant inflationary pressures.
This was only possible because we launched several initiatives over the past two years that have allowed us to counter these significant inflationary pressures we are confronted with today. Cost income ratio continued to improve and stands at 37% for the quarter, which is well on track to meet our 2022 target of below 38%. We'll also continue to focus on an absolute cost out target, and we think we can achieve a net cost out of around 2% in 2022. Slide 12, risk costs. Overall, unchanged, conservative and prudent approach and provisioning with stable underlying trends and a strong asset quality performance. Our focus continues to be on developed and mature countries with 73% of our exposure in the DACH/NL region and 27% in Western Europe and the United States.
We have no relevant exposure in the East and do not have any direct exposure to Russia and Ukraine. We continue to be very careful with releasing credit reserves, and the ECL mentioned earlier now stands at EUR 64 million, whereas it's EUR 61 million as of year-end, which represents almost a year of reserves. In Q1, we booked EUR 20 million of risk costs, translating into a risk cost ratio of 19 basis points, in line with our full year target to be around 20 basis points. On slide 13, I wanted to reiterate and reaffirm our 2022 targets of a return on tangible common equity of greater than 17% and a cost income ratio of under 38%. We expect core revenues to grow by more than 4% and operating expenses to decline by around 2%.
Regulatory charges should fall below EUR 50 million, and our risk cost ratio is expected to be at around 20 basis points. This would lead to a profit before tax of greater than EUR 675 million for 2022. Again, this does not assume any rate hikes in 2022 or any M&A or portfolio transactions. With that, operator, let's open up the call for questions. Thank you.
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound hash key. Once again, star one if you would like to ask a question. Your first question today comes from the line of Izabel Dobreva from Morgan Stanley. Please go ahead. Your line is open.
Hello, good morning. Thank you very much for taking my questions. I have a few. Firstly, I wanted to start with a question on the buyback. It's my understanding that from the day when you file for the approval, the ECB has 90 days to respond. From what I remember, you were going to file the original mid-Feb. My question is, does the tranching now reset that deadline, or should we still expect the approval to come through by the latest of mid to kind of late May? That's the first question. Just what is the remaining wait period on the approval of the buyback? My second question is on M&A. Could you give a little bit of color here, around the background behind this increase in M&A pipeline opportunities?
What is really the driver, considering that CD is not really a target market? What is the link between the current situation and why you are seeing this increased pipeline of opportunities? My final question is on NII. Thank you for the sensitivity to ER IBOR. Could you also clarify what would be the upside for parallel shift or an increase in the long end, in swap rates or bond yields, to your NII? Could you confirm whether you are actually re-risking the balance sheet yet? Are you deploying in higher yielding assets at this stage?
Hi, Izabel, it's Anas. All very good questions. Let me start with the timing with regards to the buyback. Obviously, we're restricted in what we can say in terms of the overall process, but I think I was clear on the presentation. Our goal is to effectively complete EUR 425 million during the course of 2022. The first tranche of EUR 325 million, hopefully sooner versus later. Then we will file for the second tranche of EUR 100 million. That'll probably be late third quarter, fourth quarter if everything goes as planned. We can't comment on the specifics of timing of application and when things will get approved. We're confident hopefully the full EUR 425 million will be completed over the course of 2022. That's on the buyback.
The second one, good question on buying opportunities as far as the market. These are more idiosyncratic. This is not generic securities portfolio purchases. These are more idiosyncratic opportunities that we're seeing. If successful, hopefully we'll be able to deploy capital in the coming quarters into these opportunities, which generate really good risk-adjusted returns. Being mindful, as I'd mentioned in the presentation, that there's a lot more volatility, and you have to price that in, and we'll focus on risk-adjusted returns on any potential purchase. That's something that I think has been a hallmark of how we've operated the bank.
Over the past decade. I will pass it to Enver for the NII sensitivity.
Yep. Thanks, Anas. Thanks, Isabelle, for the questions. On the sensitivities, three months here, Robert, we captured that 100 bps, EUR 100 million uplift in NII. I think if I got your question right, you asked about what the impact would be if a parallel shift or probably furthest deepening of the curve from the long end. That's probably a more nuanced answer. Why? Because that's on a longer, you know, time curve. Both we benefit from, so we are geared to, you know, higher long-term rates as well. That's more coming from the structural hedge on the deposits, and we are almost equally sensitive as on the three months here. There is one obvious element to be considered that takes a longer period of time to be reflected in NII. That's why we explicitly focus on three months survival.
That should be really almost real time impact on the NII for the relevant year.
Thanks, Izabel.
Thank you very much. Just to clarify, a 100 basis point parallel shift fully replaces actually EUR 200 million NII.
It's a bit lower. Again, if in a long term of probably, but then we are talking up to 10 years, we would benefit almost equally from a rising longer-term rate.
Thank you. Thank you very much.
Thanks.
Thank you. Your next question comes from the line of Gabor Kemeny from Autonomous Research. Please go ahead. Your line is open.
Oh, hi. A couple of questions from me. First, in the consumer lending business, it seems to be seeing strong momentum. I think you are annualizing a 10% growth rate in consumer loans as of Q1. Could you talk a bit about the outlook and the drivers of you presumably gaining further market shares here? The other question was what drove the decision to keep reducing your investment portfolio and whether this had any impact on your NII? And just finally a verification on the acquisitions.
I mean, are you seeing a kind of constellation here under which you would choose to undertake M&A opportunities, acquisitions and not do the second tranche, or is this really just a timing issue pushing out towards the end of the year? Thank you.
You want to go ahead and take the first two, and then I'll.
On the consumer loan growth, you're right, Gabor, we had a very good quarter in consumer loans. That was already, you know, in the last couple of quarters we have seen a rebound. Just given the overall situation, we would expect a bit of a slowdown for the rest of the year. I think it would be too aggressive to assume kind of, you know, pro rata development for 2022. On the second one, why we reduce investment portfolio, that's something that we have been doing in the past as well. We see this for two elements. We are creating dry powder for, you know, reinvesting it for the rest of the year. One part of that would be, you know, potential M&A or portfolio transactions, but also organic growth.
The second one is also to reduce the overall OCI sensitivity that we have seen an uptick in the first quarters. The third question, I'm not sure if I got it right, I think.
I would just say, Gabor, on the third one, again, I said on Izabel's question, these are idiosyncratic opportunities. I think your question was about the splitting of the tranches, the 325-100. We did that to be able to give us enough dry powder and to also be prudent in our approach on organic and inorganic opportunities. The idea is to do it through the course of the year, and any potential opportunities would also fall within that timeframe. If I understood the question correctly.
Okay. No, no, that's helpful clarification. Thank you.
Thanks, Gabor.
Thank you. Your next question comes from the line of Mate Nemes from UBS. Please go ahead. Your line is open.
Yes, good morning again. Thank you for your presentation. I have a couple of questions, please. Firstly, on the strong results in fees and commissions, could you just remind us what the contribution was from Hello bank! and also what this meant on the cost side? Secondly, on asset quality or asset quality outlook, I'm wondering if you could give us a sense of any sensitivities to a potential energy embargo or a scenario under which Austria or Germany, you know, cannot import natural gas from Russia. Have you made any assessments as to how this would impact your portfolio and asset quality? The last question is on credit or corporate lending outlook.
I think in the past, you've been quite consistent and quite disciplined in terms of pursuing opportunities, flagging an unfavorable risk reward in that market. Could you comment what you're seeing currently, the credit spreads now higher? Could there be opportunities to perhaps deploy more capital into that business? I would be interested in your thoughts. Thank you.
Thanks, Mate. You want to get this?
On the NCI and I think OpEx, yes, the contribution from Hello bank!. We don't disclose the specifics, but directionally what I can tell you is on the net commission income, roughly 10% is from Hello bank!, if you look at the quarter. OpEx has fully reflected the total cost of Hello bank!. When we saved EUR 120 million for the quarter, that included. I would say, what is it? EUR 45 million, I think, from Hello bank! in the quarter already reflected in this number.
Mate, as far as asset quality, what we do is, you know, we try to break down the specific risks, the direct exposures, the secondary exposures, exposure to energy-intensive industries. What we also do is we model out shocks to GDP. If I think more broadly addresses your question in terms of energy, potential energy embargo. We've kind of gone through those scenarios. What gives us comfort is we have EUR 64 million of a management overlay, pretty much what we've kept over from the pandemic. We always said we're gonna be kind of prudent and cautious in how we address that. We have a lot of uncertainty today. That will sufficiently cover any potential stress, if effectively those scenarios play out.
As it relates to overall credit spreads, I mean, when you look at bank spreads, investment grade credit or corporate spreads, it's about 25-30 basis points wider than on a year-to-date basis. We still think there's room to go. We've said before that we're gonna be disciplined. We'll focus on risk-adjusted returns. We still think there's quite a bit of repricing of risk to come, and that for us will potentially provide opportunities in terms of deploying our capital and growing organically in a much more disciplined and profitable way. Thanks, Mate.
Thank you.
Thank you. Your next question comes from the line of Johannes Thormann from HSBC. Please go ahead. Your line is open.
Hi, guys. Thanks for taking my question. Two follow-up questions. First of all, on your risk provisioning policy, can you provide some more details where you expect some defaults to happen as you describe where you're not exposed, but what are in your portfolio which do concern you most? As you talked about the severe economic scenario, I think you explicitly don't wanna call it the worst case, but some more details what a severe economic scenario is for you guys. In terms of M&A, are there any limits in terms of size for where you would say we are just looking at small bolt-ons, or we're not even afraid to take on a bank which is roughly the same size as you guys are?
Would there be a limit from your management style as you normally sit in most of the project yourselves to really steer the cost reductions? Is there any limit effective? Thank you.
Hi, Johannes. Let me start with the M&A first. What we're looking at is more reflective of kind of bolt-on opportunities, both portfolios, platforms. It's not the variety that you'd mentioned in terms of a large deal. We've always said, by the way, we're agnostic in terms of the size of the deal. It's really a reflection of the price point and the value creation opportunity, and we just haven't had a chance. I mean, you have to have a willing buyer and a willing seller, and that hasn't lined up at the moment. When we talk about in the coming quarters, potentially executing, we're talking more bolt-on portfolios, platform type opportunities. What was the first question?
Risk provision policy.
Oh, the risk provision. Yes. Sorry. Johannes, in the, I would say, look, we've always stated this, and we said this during the pandemic, the one area that we'll always be vulnerable on, if you wanna talk about a severe downturn, is on consumer unsecured. If you look at our consumer unsecured, those are P loans, those are overdrafts, primarily Austria, Germany. We also like the positioning of these geographies and the kind of support at a state level, plus the social safety net programs. That's all factored into our overall underwriting. If you had to say, what's the area that's most vulnerable in a severe downturn, it'll be consumer unsecured. No different than it was in the past. This is just another type of a crisis that we're living through.
Seems to be more consistent, obviously, over the past two years. I would say that's the one area that we're the most vulnerable. In my commentary around the severe GDP scenarios and being sufficiently covered, that's what I was referring to within our overlay.
Okay. Okay, thank you.
Thanks, Johannes.
Thank you. Your next question comes from the line of Hugo Cruz from KBW. Please go ahead. Your line is open.
Hi. Thank you. I have three questions, if I may. First of all, on your revenue guidance for growth above 4% for core revenues, can you split that between NII and fees, you know, the growth? Second, on the capital, you know, could you perhaps give a bit of guidance on the moving parts, especially for Q4, Q2, especially OCI? Do you have any guidance there for a sensitivity to bond spreads? On RWA, do you expect to see again some regulatory headwinds in there? Final question, you know, you got a lot of questions on the M&A opportunities, and I can understand you cannot give a lot of color there, but I'm more interested in your comment around organic opportunities.
Can you give us some indication of what type of opportunities and the size that you might deliver in the next quarters? Thank you.
Sure. Thanks, Hugo. I'll address the question on the opportunities as well as what was the second question? The OCI.
OCI. Got it.
You'll get the
Yeah
The core revenues. The opportunities, organically, I'd say those are twofold. The retail is more of a flow business, and you can kind of see, you know, make assumptions as to what you see as the growth, or net asset growth there. On the corporates, real estate, public sector, we have a pretty good pipeline. That is, it's less kind of a flow in the sense that it's not a consistent buildup. That can be lumpy at times. I think you saw that last year. We have a good pipeline. We have good commitments. We'll see how that materializes over the course of the year.
I can tell you, over the course of the year, we feel pretty confident that we'll see net asset growth in terms of those core asset classes. As it relates to the securities, once credit spreads widen, and we think there's good risk-adjusted returns. I mentioned this earlier, we still think there's room in terms of repricing of risk given the volatility in the market. I think that's gonna open up an opportunity for our securities portfolio, which we've been under-invested over the past few years, if you compare our securities portfolio versus our interest-bearing assets, and we think there's an opportunity. That, I think on the organic side, touches on that. Then on the OCI, we don't give specifics in terms of forecast, in terms of movements.
Look, I think there's gonna be more upside than downside opportunities if you see spreads widen. I just mentioned some of the organic deployment versus any potential capital impacts from an OCI standpoint. You wanna get the core revenue?
Yeah, you go. Yeah, it's gonna be core revenue. What do we expect from NII and from NCI contribution. I mean, we actually don't provide that detail, but I would think about it in the context of the absolute contribution or increase year-over-year would be very similar for both. Which means in relative terms, NCI will outpace the NII. Also what we have seen in Q1, just given, you know, higher contribution from Hello bank!, a better advisory business. Again, the overall context, I think it would be very kinda evenly distributed from an absolute perspective.
Thanks, Hugo.
Right. Thank you.
Thank you. Your next question comes from the line of Tobias Lukesch from Kepler Cheuvreux. Please go ahead. Your line is open.
Yes. Good morning. Thanks for taking my questions. Two questions from my side, please. One on the NIM, one on costs. On the NIM, it's nicely up to 2.33%. You mentioned interest-bearing assets a bit down, so I think low margin. You also mentioned a high consumer product. Could you in any way walk us maybe through the various products, what you've seen this quarter, what you're expecting for the next quarters? I think you were talking about a 2.30 underlying NIM. On the other hand, we know mid-term you were guiding more towards the 2%, so that would be quite interesting, you know, how you see that development.
On the cost side, I mean, you have this firm commitment of this 2% net cost reduction in 2022. Q1, very smooth. What is the outlook for the coming quarters? Is there anything, you know, which could create a hiccup? Is there anything where you say that might be burdening one quarter more than the other, or is that something that runs smoothly to 2022? Thank you.
Thanks, Tobias. I think on the NIM, why we said normalized is, as you said, we have reduced a bit the average interest-bearing assets in the quarter, mainly by divesting some of the kind of lower-yielding assets. That's why, you know, on average, the NIM went up. We said, you know, if you bake that out or normalize, it should be quite stable around 230 basis points. That is largely driven by, you know, stable asset mix, a bit more shift towards consumer loans. That's the underlying assumption.
The other, you know, effect comparing to what we said at the investor day, and, you know, I don't wanna kinda comment on the long-term plan right now, but I think what is quite obvious, the spread situation and the interest rate environment has changed significantly in the last six to nine months. That is obviously supporting the overall NIM trajectory. If you ask me today, probably the 2% NIM is overly conservative in the longer term. You know, we might revise that obviously in the next couple of quarters. In terms of cost, the 2% cost, I think, as you said, very good start into the year.
We would expect a very smooth development for the rest of the year because most of the measures we have taken have been taken, you know, over the last two years. You see that now reflected in the run rate. I would not expect any, you know, swings in the quarters for the rest of the year.
On the cost side, Tobias, right, the one thing that like I mentioned, the lead time people sometimes forget, it takes 12-24 months, whether you're taking a hedging cost, whether you're taking out cost in terms of restructuring, all of this stuff is, I'd say, a fairly healthy lead time. It gives you a sense of how things will develop in the coming quarters. We just, obviously need to continue to be disciplined in how we manage the cost. That's one of the few things that we can actually control. Thanks.
Thank you. Thank you.
Thank you. We will now take our last question, and the question comes from the line of Mehmet Sevim from J.P. Morgan. Please go ahead. Your line is open.
Good morning. Thanks very much for the presentation. Just one follow-up question on the OCI moves. Could you please provide some color on how much of the moves come from government bonds and how much from corporate spreads in the quarter? Is there any detail that you can provide? Maybe just on the buyback on the second tranche, how does the technical process look? So let's say you've completed the first buyback at some point this year. Will you be auditing your half year results, let's say? Do you see any other technical differences? Yeah, any color on that will be very helpful. Thanks very much.
Hi, Mehmet. The question on the OCI, we don't break out the specifics between government, corporate bonds, bank bonds. I would just say the overall securities portfolio because that's kind of shifting. That's something that we'll be able to manage. If spreads widen further, like I said before, it's gonna be more of an opportunity in terms of deployment and less of the impact on capital, even if that comes through. I think the question-
I'm honestly not sure on the second question. I think you're asking if we're about to audit the half year results.
I think so.
Mehmet?
Yeah. Yeah. Correct.
You know, very likely not. We'll just probably review the half year results but not audit.
Yeah. Okay, great. Just maybe one last question, Enver, that will be for you. Is it fair to assume that the high RWA inflation, the one-offs is now behind us? Or would you expect any other moves, you know, regulatory guidelines or obviously FX impact, you can't know. Any other color on that?
Yes. I think, you know, we have taken the biggest part of it, and now the development should be in line with the business development.
Right. Great. Thanks very much.
Thanks, Mehmet.
Thank you. I will now hand the call back over to the CEO for closing remarks.
Thank you, operator. Thanks, everybody. Hopefully everybody keeps well during the next few months, and we'll look forward to catching up in the second quarter results. Take care. Bye.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.