Raiffeisen Bank International AG

VSE:RBI

Earnings Call Transcript 2021-Q2

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the conference call of Raiffeisen Bank International. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Johann Strobl, Chief Executive Officer. Please go ahead, sir.

[Johann Strobl, executive]

Good afternoon, ladies and gentlemen, and thank you for taking the time to join the call. I'm pleased to be reporting on a strong second quarter today, which, to some extent, reflects an improved economic backdrop as well as a more favorable rate environment. Consolidated profit posted a 66% year-on-year increase, driven primarily by lower risk costs. Net interest income for the first half was down 8% compared to 2020. However, it is important to note that it increased by 5% in the second quarter on the back of higher volumes and rate hikes.

The second quarter was one of the strongest we have had for fee and commission income. We generated close to EUR 500 million, which I will come to in a few minutes in more detail. Loans continue to grow steadily. We have now firmed up our outlook for 2021, and we're guiding for a loan growth in the mid- to high single-digit range. This guidance does not yet reflect the pending consolidation of Equa Bank. We have also revised our outlook for 2021 risk costs down to approximately 50 basis points, assuming that there are no renewed lockdowns. The integration process in Czechia is making very good progress, which I'll also address in more detail later on.

We have been busy on the green bond side as well this quarter. Issuance activities included our first Tier 2 green bond as well as green MREL issuances by our subsidiaries in Czechia, Slovakia and Romania.

And with this, I'll turn to the next page, where we see the more detailed quarter-on-quarter comparison. I mentioned already the net interest income. I mentioned a very exciting development on the fee and commission income. We saw a slight increase in staff expenses by 3%. We saw a substantial more increase in other administrative expenses. This includes, one might say, regulatory costs, costs for the bank supervisor, which had been due in this quarter to a lower -- a couple of small additional amounts on advertising.

In the staff expenses, we also had some rising incentive compensation components. As you have seen, we enjoyed a good growth. And we're also continuing our investments in IT, cloud services, all these exciting stuff, but also in a couple of innovation ideas. And the other results, I will also comment a little bit later.

When talking about the core revenue trend, I'm happy that we now see what we have been talking quite a while that is around EUR 770 million net interest income should be the bottom, and we should now see the increase. In the EUR 804 million, we have to make you aware that we also recognized EUR 9 million of TLTRO bonus, which we did in the second quarter. As always, given this high liquidity and what we tried to achieve also with the takeover of the ING clients in Czechia, the net interest income -- sorry, the net interest margin is inflated substantially. And I think for a while, this is not a strong key performing ratio. I talked about the net fee and commission income. And if you look at the lower box, the table on the right-hand side, you see that actually, the improvements had been almost everywhere in the second quarter.

If we turn to the next page, we have a few more details on Raiffeisen Czechia. So as I said before, we closed the Equa transaction on 1st of July. We are now in preparation of the legal merger, which will happen in the first quarter next year. And we are also working in very detail now on the operational merger. We want to have one brand and a consolidated system. It's about 480,000 customer relationships. It's about 2 billion customer loans.

Where we're especially proud of with this acquisition is that Equa has built a strong consumer lending engine. They have some distributional skills, what we did not develop in Raiffeisen Czechia, and we are happy to add and use it in the then merged entity. And of course, to build something like this, you need quite a lot of talented people and we are happy that they joined us.

We have ING. Here again, we are more than happy. We have this agreement with ING that we recontract the customers. They would recommend us as the preferred bank. And with having acquired now more than 150,000 customers with deposits of about EUR 2 billion, we are very happy with this more -- much more achieved than we had hoped for. And of course, in a rate environment where I see rising rates, this, per se, sounds very favorable. But I think our offer what we have prepared for these customers is also a very interesting one. We are proud of our cross-selling skills of our people there. And I think they will -- by exploring the needs of the customers, they will find the right products, which makes the customer exciting.

Bausparkasse, this is something which is important for the Czech Republic. This was an intergroup transaction so it doesn't make a big change in the overall numbers, be it customers or deposits or loans outstanding. But again here, the colleagues found ways for cost synergies. Here, I can report that about 2/3 of this integration is already done and we will soon see some additional benefits. But again, here, also interesting, we hope for and plan for some cross-selling activities. Again, this is an interesting channel because Bausparkasse is a building society; products are, to a large extent, driven by brokers. And if you get it right with them, you can achieve much more. So happy about that.

I will now turn to the next page. And so we have prepared 2 pages, which somehow are perceived as a burden, which keep quite a lot of management attention and attention of our people. I'll start with Belarus. You're aware of all these sanctions and the negative reports what we received from the country. Just for those who are not so close to us, we have acquired the Priorbank's stake from EBRD already in 2003. This was the time when we all believed that the market will enter in a broad liberalization phase. Here, we had, for sure, too high hopes and it did not materialize in the way we want it.

On the other hand, I'm still proud that I think whatever the improvements happened in this economy, little changes what we have seen, I think our bank could contribute to some extent to that. Overall, the impact of our bank is not so big, so we have a market share of about 6%. In total, this means 1.1 billion loans to customers, which is a little bit more than 1% of our group planned in the equity. What we employ in the country is about EUR 300 million, which is a little bit more than 2.5% of the group equity.

If you want to look at the exposure what we have, so this is now not only loans but everything what you define as exposures, so guarantees, committed lines and, and, and. What you see here, it's an exposure of a little bit more than EUR 2 billion. You all are aware of sanctions against the state-owned companies. We have given here a little breakdown.

So if you look at the structure, 14% of these exposures are to corporate state-owned entities. We have 5%, so around EUR 100 million to government; and we have about 10%, EUR 180 million, EUR 200 million to the National Bank. And you're being close to banks, for you, it's clear that this is an area where banks have to pay for their liquidity management. Yes. And we have -- from the targeted sanctions, we have to report that around EUR 111 million of exposure is related to oil and gas, fertilizer, potash and potato producing companies. The rest of the portfolio, so the bigger part is with private sector corporates but also households and SMEs and, of course, some foreign companies.

Then turning the page, then the second big topic. What we have also, I have to say, not much developments in the recent few weeks is our Swiss franc mortgage portfolio in Poland. It's about EUR 1.0 billion in euro terms outstanding. It's close to 29,000 loans. We have an amortization of about EUR 100 million per year, so you see it's still a long-term maturity portfolio. You're aware that the risk weight is different to what you usually have with the mortgage business with 118% risk weight.

And of course, what's the biggest issue is this litigation situation, which is increasing. The inflow is high, about 300 cases per month. In total, we have now about 5,500 cases. We have shared with you the model which we use for litigation provisions. And of course, we had to adjust the parameter. So maybe to remind you what we use is the inflow, the numbers at court and what we observed, the decisions, which first instance is mainly and, to a small extent, or the second instance is doing the ruling.

These rulings had in the recent past been very much in favor of the consumers. The good thing, what -- I mean, the good thing, we will see what the Supreme Court will rule on. But the good thing is that the Supreme Court has invited 5 Polish authorities to give their opinion on this specific problem. You know that the Supreme Court, with all the members, will decide, will give a ruling on 6 questions, which had been formulated by the president of the Supreme Court. Very important questions for the further developments, probably not all of them touch but we will see what maybe that they would even go further to touch all the problems, which are part of these rulings with the various potential outcomes.

What I found somehow confirming our view and what we talked about the last many years, it was a statement by KNF and the National Bank of Poland. The way I read it and I give you now my short brief summary is that overall, the KNF came to the conclusion that at the time the loans were granted, the conditions under which the bank did it is deemed to be fair and not unfair. So this -- using this effects clause, the way it was communicated, the way the customers were informed were absolutely according to the standards of that period of time.

I think the second, which is not important for us but maybe important for the public is that finally an authority, a neutral authority stated that some claims in the public that this is a zero-sum game and that whatever the customers are losing, it's to the benefit of the bank. This was clearly a proof that this is a totally wrong perception. So we'll see if this makes any impact on the public perception of this issue. Yes. So 2nd of September, it was announced that the full Civil Chamber of the Polish Supreme Court will meet again and will discuss the 6 questions.

Okay. So maybe to the provisions. EUR 195 million; to repeat that, we added EUR 77 million, mainly based on the inflows and the decisions to make that clear. We are now at a little bit above 10%, which I think is what I sense from the market is in line. Of course, there are 2 banks who are rather urging for a voluntary settlement with different approach.

Looking at Slide #10, I already mentioned that we have seen customer loans growing about 2% quarter-on-quarter. The good thing here is that we now see also an increasing demand from the retail customers, especially in the unsecured part. You are aware that the mortgage business was doing quite nicely also the last couple of quarters, but now we see it also in the unsecured part. The areas where we still, before pre-pandemic, had a little bit better outstanding development is in the credit card and in the overdraft of the accounts by the private individuals. Here, given the high liquidity, this might take a little bit longer that these sources will be used also.

If we then move to the next slide. So here, we see the 13.3% CET1 ratio and the other 2. So I think it's a nice development what we have here and nicely covering the buffers.

If we turn to the next page, here you see some explanation how it's developed. We have driven, mainly by -- from the loan growth, some 34 basis points CET1 requirements in addition and we had a change in the rating model for sovereigns, which is more granular now and which required additional 10 basis points. Retained earnings are up by 39 basis points.

I am now at Slide 13. I think in this time of over-liquidity, there is little value in discussing liquidity ratios here. I just want to again sum up what I did at my introduction. We had a EUR 500 million Tier 2 subordinated green bond on the first subordinated green bond. And we are also happy with the developments in the MREL area. Slovakia came with a EUR 300 million green bond, Czech Republic with EUR 350 million green bond. And also in Romania, we had a green bond issue. This supports our MREL requirements. I think the countries where we didn't approach the markets, they're rather with small needs like Hungary, Croatia and Bulgaria.

With this, I come to Slide 14, which is our outlook. And what we see here is that given this progress in vaccination, and I want to say the very skilled approach now in how to deal with increasing and reducing infection rates, I think, overall brought very good fundamental for, on the one hand, for the governments dealing with infection rates; on the other hand, keeping the economies of the countries in good shape, and we see this in the GDP developments for '21 and '22. If you compare it with earlier forecasts from Raiffeisen research, then you see many improvements there.

And a couple of countries in our environment might already be at the level where we had been in 2019 with the GDP output. And those who do not fully reach, it will be there in 2020. One might even say that in some countries, the positive trend could soon be reached. And so maybe after a few years, we will tell that we didn't lose too much on growth over the longer period.

These positive developments and everything said under the assumption that because of the Delta version of the virus and other developments, we don't see another sharp lockdown, leads to a slightly revised outlook. We adjusted the loan growth where we say new lending accelerated in the second quarter, and we now expect mid- to high single-digit percentage loan growth for 2021. And here, Equa is not included in that number.

Risk costs, Hannes will talk about it is now expected to be around 50 basis points. Cost-income ratio is confirmed to be 55 basis points. Here, we are eager for 2022, but yes, yes, there are some uncertainty still there.

Profitability, we stick to our midterm 11% target, CET1 ratio midterm 11%. And as some basic topics in our environment have not changed, we still have this broad range of payout ratio of 20% to 50%.

A final remark before I hand over to Hannes. When talking about the 13.3% CET1 ratio, I did not mention that the EUR 1 dividend, what we wanted to pay out in 2020 for 2019, this is still as a profit carried forward. And as soon as the ECP has dropped its strong recommendation not to pay out dividend, we approached them with our idea that we're going to pay a dividend again, hopefully, in the fourth quarter of this year. Discussions with them as they -- and why discussions at all, you might ask yourself. So when reading their recommendation, they made this reference to capital planning, which is nothing more than an invitation to first talk about capital plans and then about dividends, and this is what we plan to do. Our request for talks had been sent, as I've said on the day when they lifted the pen.

And with this, I hand over to Hannes.

[Hannes Mosenbacher, executive]

Thank you, Johann. Well, all -- I'm very happy talking to you and either you already enjoyed your holidays or, hopefully, holidays are just ahead of you. Well, from my point of view, when talking about the way of the CEO main message is, I think it's -- we are observing and enjoying a very strong economic rebound with a strong GDP momentum. And this leads also, of course, to a strong increase in financial demand, meaning our credit exposure is increasing.

If I look at the second quarter, to sum up is easy. We have risk costs of EUR 31 million. We have an NPE ratio of 1.7%. We have a very good coverage ratio, still best-in-class of 60.3%. And having said all this and given this very strong economic environment we are enjoying, it was obvious that we had to adjust our risk cost guidance to around 50 basis points.

Let me now go into the details on Page 17. If I look at the total exposure, which increased on a total sum by 1.5%, but please go with me into the details. So we have seen, as said by Johann Strobl, very good demand on the corporate and on the retail side, giving us an uplift of EUR 4.4 billion. Given the strong still liquidity inflow and also merger with Equa Bank, we see -- and ING taking over the clients, a strong increase on the sovereign exposure of EUR 4 billion, and it was partly offset by the financial institution exposure. Here, we have changed our approach in all days we have shown on the derivative part, the mark-to-market plus the add-on. Now it's the mark-to-market plus the potential future exposure on a net basis.

Well, and if I lost you, I'm sure you will raise the questions. So I move on to the next page on Page 18. When talking about the provisioning, what you can see and I would like to start the chart from the right-hand side. Q2 was showing, we had EUR 31 million of provisioning needs in total, EUR 23 million coming out of Stage 3. And we also have allocated another EUR 30 million for the Belarus sanction for the Stage 2. So having said this, the second quarter would be even a 0 risk cost if we would have not again used the IFRS environment to pre-provision, so to say, part of the Belarus sanction.

If you look at the first half year of the EUR 110 million, you could also split up the EUR 110 million into EUR 30 million for sanction risk in Belarus, EUR 21 million in post-model adjustment and only EUR 68 million are comprising real new defaults, a little bit more pronounced on the retail side, less so on the nonretail side. On the nonretail side, we even enjoy repayments also from default clients. Not to lose on the minus EUR 9 million on Stage 1 and Stage 2, this comes because of we see uplift in ratings and we also see early repayments.

While I move on to the Page 19, talking about forborne exposure and our moratoria exposure. What we thought in this quarter we would like to emphasize a little bit on the forborne exposure. Because in the first part of the crisis, of course, we have provided liquidity where needed. We gave our industry assessment. And what we now see for the industries where I would introduce a new letter of the alphabet, so not anymore V, L and U. It is K-shaped. There are some clients who now need forbearance measures, which we're happy to provide because usually in the hotel sector, you have a very good collateral. What are the typical things? What is being requested? Is it either an extension or a covenant holiday? These are the things that are being asked for. And the other bigger part is still that demand when it comes to airports is not yet back on 2019 level.

On the lower part of the chart, you can see still how declines, who made use of the moratoria, how they are performing. On the retail side, 93.3%, completely resumed repayment there in the repayments scheduled, some 1.9% have asked for further restructuring a 4.8% defaulted on the corporate side. From the change from the last quarter, we see now that 94% being back on the regular schedule, 4.2% and this is consistent with the increase in the forborne exposure; 4.2% have asked for further restructurings and 1.3% out of those who have made use of the forbearance -- of the moratoria defaulted.

Let me move on to our RWA developments. Consistently, if you see good credit demand and increase in credit demand, of course, also RWAs are increasing. We have a slight effect also because of the migration effects, so EUR 0.6 billion are being caused because of some lower ratings. And the other thing, what I would like to make you aware of if you look at the bullet 3 is the market risk by another EUR 0.5 billion. And this is given the environment also with the sanction language. And in Belarus, we have slightly increased our ruble hedges, leading to RWAs by the end of Q2 of EUR 84.9 billion.

This brings me already to the well-known and last page of my swift presentation. To sum up, NPE ratio of 1.7%, NPE coverage 60.3%. Please be aware of that we have a very good coverage if we would also include Stage 1 and Stage 2 of 89%, and this figure does not include any guarantees or collaterals.

Well, having said all this, we are now more than happy to take your questions.

[Operator]

[Operator Instructions] Our first question comes from Jernej Omahen at Goldman Sachs.

[Jernej Omahen, analyst]

I have 2 questions actually. So the first one is on -- thanks for the presentation, obviously. The first one is on Page 8. So when you talk about the Belarus exposure, I was just wondering when it comes to the exposure of Raiffeisen, i.e., the parent to the Belarus subsidiary, is the exposure limited to the EUR 0.3 billion of equity you have there? Or are there also intergroup loans from Vienna into your Belarus entity? So that's kind of question number one.

Question number two. So I've now listened to more bank conference calls over the course of this week than I can keep count of. And we are 3.5 hours away from the European Bank's Authority stress test results being announced. Not one bank has mentioned the stress test as being relevant to them or was it a discussion point. And I was just wondering from your perspective, 2 questions, I guess. Number one, is the stress test result a relevant factor for you when you think about your capital planning? And number two, you mentioned before that you already requested to start discussions with the SSM on the capital return policy. Do you expect it to feature in that discussion?

[Johann Strobl, executive]

Yes, I think you have, in 2 questions, put a very broad content when talking about the stress test. I think the reason why banks do not mention the stress test results is -- at all is a simple one and this is related to the methodology. So the methodology says that you deliver in a couple of rounds, according to their scenarios, the results, which come from their model. But then they come with adjustments, which are not compliant to your model at all and you have to run it. So if you ask yourself, is there additional insights coming from the final outcome on your policy? Then I say no. There is no because it's a sort of black box.

We haven't heard any concerns with our results from the authorities still now, so there was no heads up, no, nothing. So 3.5 hours ahead of this, I assume it's also not a big thing. On the other hand, I think the way it was designed that knowing when most of the banks will publish their results, knowing what to communicate before and after they drop, so there is some impact. Maybe, we don't know. I don't expect, I don't expect. So I personally still think that the 13%, what we have as CET1 ratio, is good.

I think that, of course, the stress scenarios this time are even more severe if you look at the overall development, what we had over the last years -- 2 years now. So it's very severe. I think the outcome, we are not allowed to talk about the outcome. I understood before the evening, but the outcome is in the range everyone expected. So yes. And I don't know if they will make, when we talk about the dividend, the reference to the stress test results. We'll see. I've -- it's just the sequence of events why we are a little bit more careful. I mean any details would then be given by Hannes. I don't know if he's allowed to say something today already or you can call him after midnight, I don't know.

[Hannes Mosenbacher, executive]

Well, you have stated or you have posted 2 questions when talking about the stress test. And I think some of you anyway run their own models based on our numbers. We are very transparent. You know now RBI very well. So we see 3 years extended period of a recessionary environment, interest rates in this style of scenario even have been slumped down further. And what is very special is you note that you're -- in a 3 years' wait-and-see motors, you just see the crisis making his way over your balance sheet and you're observing standstill motors.

The second part you're asking about capital planning. Yes, indeed, we also use in our budgeting process in our way of conducting our regular business. We use scenarios which we deem sufficiently severe, but also giving them at least a likelihood of some 5% or 10%. And it would look differently our internal stress test compared to the one which was designed by the EBRD. But of course, we don't have to design stress test scenarios, style of scenarios for 100-plus banks. So I think at this point in time, if I would be tempted, I would not like to give more details on the stress test. Let's wait for 6 p.m. and that's into the output.

On the Belarus intergroup loans, this is very, very minor. We have another EUR 33 million of intergroup loan provided to Belarus. Hopefully, this answers your question.

[Jernej Omahen, analyst]

Yes.

[Operator]

Our next question is by Mehmet Sevim at JPMorgan.

[Mehmet Sevim, analyst]

I'll have just one question on the CHF mortgages and the provisions that you're taking there. I totally understand the approach you're following, but at the same time, it's very visible that the trend is worsening there, given the cases are going up. And I guess this is in line with the expectations, of course. But there are also concerns that the date of 2nd September would potentially not bring much clarity and that the issue would carry on for the foreseeable future.

So can I ask here, are you concerned that this drift-feeding of provisions could potentially impact, let's say, your dividend payments in a given year? Or would you see any other resolution to the solution to this problem? I mean, let's say, for example, it reaches EUR 100 million in the quarter, it's going to be EUR 400 million of P&L taken out. What is your view here? And is there an alternative solution that you may consider?

And maybe just one more question on NII. Here, can I ask what your expectation is in the second half of the year? And how would you see the lending environment, given that now we're in a hiking cycle in many of the countries? Do you think that this may affect consumer demand for mortgages or personal loans negatively?

[Johann Strobl, executive]

We are talking about the development in the Swiss franc. As of today, I still would think that we keep our methodology, which is depending on the inflow of cases. And this is -- there's also a forward-looking component in it. But the number of cases which coming in is important. Here, this is clear. I think for me, the most important question would be, and let's look now what is the -- given the inflow at the speed what we have, I won't say that we see any or we face any negative impact on the dividend payment capability. So we have built in, in our midterm planning, an increasing number of cases. We assume that the speed of the inflow is similar to what we have. So it's digestible. So this is the first part of the question.

I think the most important question for me is, in addition to what the 6 questions, which I addressed to the court, which is if there is an annulment, what is the impact on that? Because what we already have, I think, more important, more important decision by the Supreme Court with 7 judges, which is binding to my understanding is that they said the time of limitation. So they questioned, if there is an annulment? They said there is the 2 conviction theories. So the 2 then parts of the loan are separated and everyone has to go on its own for it, and there is no automatic compensation on each other.

So -- but then what is the -- as bankers, we would say what is the cost of funds which you can then judge both sides. But what I understand, the terminology shall not be used because here, it's not about cost of funds but on something else. This is something else there, to my knowledge, was not decided by judges and for sure, not by the Supreme Court. You might be aware that following the advice of our lawyers, we -- in one case, which got famous anyhow as it was at the European Court of Justice, we followed what we think are the requirements on the Polish law. And yes, we need a judgment on that.

So I don't -- but if all what I see, I don't think that it would go much faster also from the customer perspective. So you -- I mean, the only negative thing what I have realized so far is that there are now judges who rule that as long as it's not decided at the court, customers do not have to make any repayments. So this is a new incentive to customers to act faster with their -- in all the other cases, I think it -- if you would have asked me, I would rather advise the customer to wait because currently, the perception is that they have an option. And why would you really use your option? So I think this is the question for the customers.

And yes, in our forecast, we have a couple of more court cases already built in. So we'll see how big the acceleration will be, but there should be enough room, I would say, and no risk for the dividends. Would we go for a voluntary settlement as it is proposed by PKO and ING? I haven't found any reason why to do so. It does not solve the problems. And it seems that also not so many customers from these banks are running after that.

When talking about the NII for the second half of the year, I think it's reasonable to assume that maybe EUR 1.6 billion or so could be possible. And yes, the loan growth we assume, maybe half between 5% and 10%, something like this.

[Mehmet Sevim, analyst]

Okay, great. Just maybe one follow-up on the first question. So if you were to offer a voluntary settlement scheme and you would convert a CHF loan into a PLN loan, would there be a change in the risk weighting of that loan, just technically? Or would it still be at 118% on average because it's still a foreign currency loan from a group perspective?

[Johann Strobl, executive]

No. If you convert it into Polish zloty, then it's domestic currency and then it should be maximum 35% risk weight or so. And I understand that you say this is -- this might be one additional buffer what you could use when thinking about the overall cost. And yes, yes, we do. And in another occasion, I said yes, there have been countries which came with a solution, which I think is not possible in Poland because of EU law, but with some conversion, I don't know. But it must be something strong. So if we solve it and change from Swiss franc to zloty, then we really need certainty. And we -- then we want to close this chapter. Yes. But it would be reduced, the RWA, our assumption is 35% risk weight.

[Operator]

We'll now take our next question from Izabel Dobreva at Morgan Stanley.

[Izabel Dobreva, analyst]

I had 3 questions. The first one is on the dividend, on the one you were -- which is the crucial capital at the moment. A few of your peers have been giving a quite upbeat message in dividend. They've been saying that if the dividend is already accrued through capital, then the discussion would be CDs, more or less to promote you. And if I'm listening to you, it seems like the discussion here might be a little bit more nuanced. Is that a fair understanding of your message? Or are you fairly confident that the dividend will be paid this year? And how does the stress test link into that?

And then my other 2 questions are more straightforward. So one is on NII. Could you just remind us of the sensitivity to rate hikes in Russia? And how much of a benefit you expect to see already this year from the rate hikes we have seen so far?

And then my third question is on the new cost of risk guidance. Could you share with us what are your assumptions within that regarding the macro overlay and also the migration of Stage 2 loans?

[Johann Strobl, executive]

Yes, coming back to your first question. I think we -- over the years, we sent a clear message to our shareholders but also to the ECP and to all the others when we said we -- this EUR 1 per share, what we promised in -- at the beginning of 2020 for the year 2019, we never added to the CET1, so you can see that what our intention is. And the reason why we are not stronger than what we had been in the past is that I want to see, we want to see how is the language of the ECP tonight around the stress testing. And then after that, we can talk about it.

When talking about sensitivity of the rate hikes, what we have seen overall in 2021, for Russia, I would assume that till year-end, this should bring additional EUR 30 million, around EUR 30 million, half from the rate hikes what we have seen earlier, a little bit more came earlier, so in March and in June, and a little bit less than half from what we have seen now in July. So about EUR 30 million compared to the 2020 number.

And the sensitivity, with the numbers I shared with you already, it's Russia. You said the -- sorry, I have to get your full question. The sensitivity was 100 basis points is about EUR 10 million to EUR 15 million. So we're a little bit more sensitive now to rate reductions than to increases, so 100 basis point up might be another EUR 10 million. And as I said, let me confirm all the rate hikes, what we have seen until now would add EUR 30 million on the Russian NII. And then there was one more question, I understood. Cost of risk guidance. Hannes?

[Hannes Mosenbacher, executive]

Well, thank you very much for this question. So our through-the-cycle risk costs are somewhere around these 55, 60 basis points, which we have shared with the market. In states -- dual provisions, I would deem very stable over the next months to come. The only car feeder, but this is just -- you could say the disclaimer, let's see if there are any further lockdown need is. But what -- the way how we look and what is our base case scenario, the vaccination speed keeps the pace. And yes, we could see a higher rate of infection but no further lockdowns.

Having said this, we believe that Stage 2 provision should be fairly stable because where would the Stage 2 come from? From further migration? Well, I'm not scared about too much about further migration on the rating scale because we have rerated all our clients more or less already 2 times. So here, we should be clear, not pretending that they could not be the one or other client, but in looking at the total portfolio. So this would be one potential inflow.

Another sanction topic, well, this -- any way we would flag explicitly. And the other one is further post-model adjustments. I would not deem it necessary, given that we have done a very robust and decent job when it comes to this post-model adjustment. Hopefully, this guidance helps, Izabel.

[Operator]

Our next question is from Gabor Kemeny of Autonomous Research.

[Gabor Kemeny, analyst]

A few short questions for me. Would you flag any one-offs nonrecurring items in your fee income in the second quarter? And perhaps a quick comment on the second half would be useful. The second one, did you accrue any dividend with the H1 capital ratio and what you're thinking around the dividend payment from 2021 results?

And just finally, if you can give us a sense about this, how you came to this EUR 30 million Belarus sanction provision? I understand you had about EUR 130 million exposure to the sanctioned entities and maybe EUR 600 million overall to the sovereigns. So would you be able to give us a sense of what's the likelihood of recurrence of these provisions in the next few quarters?

[Johann Strobl, executive]

Yes. Talking about the fee and commission income, Gabor, so there are no one-offs in this quarter. We made, if you compare it to the last year's, 2 small changes in the way we present and accrue. The one was that in the past, we had, in terms of credit card payments and so on, a rather big booking in the Q4. We adjusted this a little bit. And just for the, let's say, pontification or whatever, we would show in the fourth quarter. So it's more like an accrual base. So if you think about modeling the fourth quarter, there is less seasonality than what was in the past.

And also not a onetime, but let's say, a switch between the lines was that in the bank notes business, which in the old before, up to last year, everything was reported in the trading. Now there is one element, which is really rather a fee income is reported here. But you've seen this already in the first and in the second quarter and it will remain like that. So there is no onetime something.

Then you asked for the dividend, which had been accrued for the half year CET1. We -- what we do in our capital planning, which is relevant for what we report, we use the lower end of the range, which means EUR 119 million, which is the 20% payout, which was required. And I mean, the fine -- this is more for planning and reporting, and the final number will then be decided for the fourth quarter in the January, February meeting by the Board and the Supervisory Board. And the Belarus question goes to Hannes.

[Hannes Mosenbacher, executive]

Gabor, it's at the end of the day, it's not super rocket science, but at the same time, also, of course, I think it's robust to open the mind and to think how could you approach this topic. So the method we deployed is we have looked at those companies who are being subject to the sanction and sanction risk. We went into the single transactions. And this gives you a total sum, which is slightly below the 14% out of the EUR 2.079 billion. And then we have deployed an assumed loss given default of somewhere around 40%, 50%.

So meaning, if I look at these foreign affected names and if I look at the loss potential burning with the method described, then it gives me a number somewhere between EUR 25 million to EUR 30 million. That was the reason why we came up with the EUR 30 million at this point in time. Whenever there comes further insight, further development, new sanction to be announced, blah, blah, blah, we would have to adjust anyway, but this is the basic approach what we have done.

So looking at those who are being subject to the sanction, we looked one step deeper, one to the single transaction coming to the average employing a loss given default of 40%. This leads us to the EUR 25 million to EUR 30 million. That's the way how we have done it. Hopefully it helps, Gabor.

[Gabor Kemeny, analyst]

Yes. This is very helpful.

[Operator]

Our next question is by Johannes Thormann of HSBC.

[Johannes Thormann, analyst]

Johannes Thormann, HSBC. Two questions, please. First of all, on your LLP guidance of around 50 bps, which is probably double the level we've seen in H1, so it would imply that we see more than double the level in H2. What needs to happen to get there in terms of changes to default and so on? And probably also to get a sensitivity or understanding, what would be needed to maintain the current levels of 12, 13 bps risk costs in the second half of the year? And secondly, could you elaborate a bit if the new Austrian Raiffeisen Bank IPS has any impact on your regulatory costs?

[Hannes Mosenbacher, executive]

Well, Johannes, if this is fine for you, I would start with the 50 basis point cost of risk guidance. And it would be fairly split equally between retail and nonretail. And retail is maybe even a little bit easier to do an appropriate forecast because here, you have a certain run rate. So you could take the 50 basis points and maybe a little below the 25 -- 20, 25 could come by retail because here, you have a certain run rate what we know from our historical model could be on the lower end, but this is the way how we have thought about. So 20, 25 coming from retail.

And the other one, we kept another 25 for the nonretail for the second half of the year. Well, a couple of thoughts on this one. Also, of course, if you use the typical methods with this PD, LGD and then we have done a bottom-up and drop-down, so it was done very thoroughly. And what I also included is you could have 1 or 2 midsized companies, which would just come as a surprise because we have seen in the history that some of the companies had a decent good rating and suddenly, you have seen them on the screen announcing that they have financial trouble. So this is what we have comprised in the second 25 basis points for the nonretail but having said this for the corporate, but that's our way of thinking. Well, does it resonate to you or you would even...

[Johannes Thormann, analyst]

Yes. And what would be needed if it's like -- if everything goes well, could you also...

[Hannes Mosenbacher, executive]

Well, if everything goes well, we don't see these 2, 3 defaults, what I have announced, which could come as a surprise. And I think the reason why we have included them is such strong economic impact usually also may cause some companies that suddenly you see them, as I said, on the screen. So if they will not come, then we are even lower. And if retail clients are performing even better, given loan increases, high employment rates and then also the retail run rate may come in a little bit lower. This is my way of thinking when talking about the risk cost guidance.

[Johann Strobl, executive]

When answering your question on the IPS, maybe for those who are not so close, we always had an IPS, so an institutional protection scheme with our core shareholder, the Landesbank. It happened that Raiffeisen has decided not so long ago when the deposit guarantee scheme was changed that Raiffeisen moves to the general one. After reconsidering with some negative experience by a bigger fraud default, Raiffeisen now went back and made use from the possibility to have its own Raiffeisen deposit guarantee scheme.

And as a consequence of this, there is now when -- a little bit broader protection institutional protection scheme, where also the other members of the Raiffeisen deposit guarantee scheme are involved. Therefore, the volume increases, therefore, also the funds for the IPS increases, but this does not change the contribution of RBI. So the additional funds come from the others, one might say, the new members. The costs are depending on the, or let's say, the floor for such costs are given by the regulator, which currently is 0.5% of the RWAs of the consolidated IPS. So for us in a nutshell, no change.

[Operator]

Our next question is from Riccardo Rovere of Mediobanca.

[Riccardo Rovere, analyst]

If I may, I wanted to get back 1 second to one of the previous question from a colleague of mine with regard to the 50 basis point risk cost guidance. It's still not clear, not 100% clear to me whether in these 50 basis points, you assume to release -- to use some of the post-model adjustments that you charged in 2020. Sorry for that, but if you can clarify? And if that is the case, is -- if I remember, well, the post-model adjustments in 2020 amounted to, roughly speaking, EUR 300 million. And if that is the number we could eventually use to think about that?

The second question I have is on the risk-weighted assets. How do you see the progression of risk assets over the course of 2021? Do you think you have already included most of the headwinds like TRIM, EBA guidelines, rate -- I would imagine rating migration at this point? Or is there any other ambush maybe from regulators that we should take into consideration?

[Hannes Mosenbacher, executive]

Riccardo, I appreciate very much the question. It gives me the opportunity to be even more clear. Well, as I said, the 50 basis points, let's split the 50 basis points equal into retail and nonretail 25-25 each. Well, on the 25 retail, like it was again via their run rate. The second thing, what you mentioned is the BMA and the booking in 2020. At this time, you can recall our V-shaped U-shaped, L-shaped way of thinking. And if I would be forced to introduce a new letter from the alphabet, I would introduce this K-shaped because within the industry, we see now the differentiation that some of the clients within the specific industry are performing very nicely. That's the upward part of the K. But also at the same time, we still see some who are suffering.

So who is still in the recovery phase, so to say? It is the hotel portfolio because we mainly have financed hotels, are being exposed to the prime locations within a city center. What we know, Riccardo, from -- and we took guidance from the 2002-2003 SaaS environment that the full recovery on the hotel sector in the city hotels may take up to 2, 3, maybe even 4 years. Having said this, and you know that a big part of our BMA was mainly allocated to 2 things or 3 industries. The one was everything what comes in with airports, airlines and so on and so forth. The second one was to the LBO portfolio and the third one was this accommodation hotel portfolio.

Since -- and when going back to the first quarter, we have not believed that the lockdown will be so much extended. And that's the reason why, if possible, I would like to carry over part of this BMA, and you have been right with around EUR 300 million, I would be eager to carry over at least part of it to 2022. Why so? Because as you have seen in our forborne exposure, so things fit together very nicely, we have seen an increase of our forborne exposure in the quarter 2 of EUR 184 million.

And then let's see if the forborne measures, what we have conducted are sufficient. And if they are not sufficient, of course, I have to provision them. And then I would have already the BMA available to allocate the BMA, which is currently abstract to a dedicated case. So that's the way of thinking. So for the guidance I gave on the 50 basis points, besides we would see default, especially in this area I have announced, I would try at least -- or we, as an RBI Group, would try to carry over a substantial part into 2020 -- 2022 because as said, this industry may still be challenged.

RWA progression in 2021 is that the most headwinds included, as I said, we have done a 2x rerating cycle. Of course, you always could say, well, these are another big thing to come or is it -- is this the full story? Yes, slightly, there might be the one or other small nonorganic impact what you could expect, but the biggest part, hopefully, comes because of strong business growth.

[Riccardo Rovere, analyst]

Okay. Just to be clear, to get back on the first question, my understanding from your wording is that you expect to keep carrying the EUR 300 million or most of it in 2022. And so -- and then eventually a decision to be taken in 2022, right?

[Hannes Mosenbacher, executive]

Yes, sir. Yes. Yes, Riccardo, that's our way of thinking. Part of it, I have to release, and that's the reason the way how we have built it out of the retail, so I cannot carry over the full EUR 300 million, so it would be reduced by about EUR 100 million. But part of it of this EUR 200 million, we intend, given my arguments on the affected industry, airline, airports and hotels, we deem justified to carry them over. If the forborne exposure is then turning into a defaulted exposure because then the BMA is exactly serving the purpose that we have done this post-model adjustment for future potential defaults.

[Operator]

Our next question is by Krishnendra Dubey at Barclays.

[Krishnendra Dubey, analyst]

This is Krishnendra from Barclays. I have 3 quick questions, actually. The first one is regarding the recent Czech Republic transaction. How much do you expect to benefit from those in terms of your NIM profile in the country? How would that help you to change it? Secondly, just to align with that, what is the incremental NII and PBT impact? And also, is there any upfront restructuring cost that could be allocated to this? And just to add on to this, I think any synergies that you expect from this deal?

And second question is, given your strong Q2 results, what's your expectation for the ROTE for 2021? And third one, which is a broad and a strategy kind of a question, I think it's just regarding what's your thinking about the -- what's your thinking in terms of growth between inorganic and organic growth in the businesses? And in terms of capital return, what's your view -- given that where the stock trades, what's your view on the buyback program?

[Johann Strobl, executive]

Yes. I'm here with you, sorry. So the Equa Bank is not a big one, as you said, with EUR 2 billion loan portfolio. I think we expect some EUR 40 million or so gross income for the second half of the year. And yes, let's say, the EUR 40 million on the NII cost there is as almost only NII. And I mean, the rest of the acquisitions, what we have done will not have any significant impact when we talk about net interest margin. As I said, these are mainly liabilities what were added from the ING transaction. So here, you shouldn't expect too much. When talking about the NII, I was not sure, is it -- this was referring to the Equa transaction. Is this correct?

[Krishnendra Dubey, analyst]

Yes, this is regarding the Equa transaction, the incremental...

[Johann Strobl, executive]

Yes. So this is the -- as I mentioned, as there is little fee income, it's almost everything of the EUR 40 million. For the second half goes into the net interest income. Then the OpEx is -- I mean, the OpEx is maybe about EUR 26 million, which might be added to the OpEx from that perspective. And then, of course, if we talk at the overall then for the next 18 months, there will be some additional integration costs on the -- then on the combined entity, mainly on the Czech on the -- yes, in the second half or first half of next year. I did not fully get your second question. I think it was somehow about ROE or so, but would you be so kind and repeat your question, please?

[Krishnendra Dubey, analyst]

Sure, sure. No worries. I was just saying, given the strong Q2 and the fee that you guys are suggesting, what is your ROTE expectation for 2021?

[Johann Strobl, executive]

The ROE expectation for 2021? Yes. You have seen the first half of the year. There is some seasonality in the first quarter. On the other hand, there is some seasonality from the cost perspective. You know that the seasonality in the first quarter usually is that the bigger part of the regulatory costs come in the first quarter. And in the second quarter, we have a little usually more OpEx and maybe also more risk costs. So you probably won't double it, you won't double it, that's what you usually not do.

[Krishnendra Dubey, analyst]

Sure. I was just maybe -- because I was looking at 6.5% to 7.5% in ROTE...

[Johann Strobl, executive]

Yes. See, I mean, to be less precise, I would say, it should be better than last year. This is clear. Is it already double digit? Let's talk a little bit later, not yet. No, not yet. Then your question was organic growth. Yes, it's -- I mentioned already that what we add is that the Equa from inorganic, which is the EUR 2 billion of loan portfolio. I think you are aware that the one or the other smaller consolidation targets are in the market. All of them, what we are looking at currently, not that huge. But something inorganic might come as well.

And then I understood you also. I have a question on the buyback program. Of course, from time to time, we look at this as well. We understand that the broader part of the shareholders are rather in favor of a cash dividend then of a buyback. But I mean, if we -- if you ask me, would you have a program in the drawer in case it's exceptional times? Then I'd say, we have brilliant finance people. They have something in the drawer, but I wouldn't expect that we use it this year.

[Operator]

Our next question is by Alan Webborn at Societe Generale.

[Alan Webborn, analyst]

I just wondered in terms of the improvement in your loan growth guidance for the year. Clearly, you've had 1 or 2 geographies that have shown quite strong performance in the second quarter, maybe helped a little bit by currency, I'm not sure. But what is -- what for you was the main driver for that improvement in growth? I mean is it particular geographies you're really a lot more confident of? Is it that you feel that you can put a little bit more capital to work because there's always demand in a number of these countries? Could you just give me a flavor of how you feel and why you are confident to push the loan growth target? That was the first question.

And the second question, again, sorry, sorry to ask it again. But your provisioning on the Swiss franc mortgages in Poland is clearly lower than a number of the domestic banks. And as you rightly said earlier, a number of them seem to be a lot more keen to go for a voluntary settlement. But that voluntary settlement seems to be demand that the majority of operators in Poland accept it and go for it. Do you feel that you will be able to, if the majority go for a settlement, for example, if it's done on the KNF terms, can you still ignore it and go through the courts yourself? Because clearly, if your clients are getting a less good deal than the others, isn't that going to be rather difficult? So at the end of the day, will you not really just be forced to follow what the majority go for? Or do you think you cannot do that and go through the pain of another 3 years or so of court cases? I just wondered what you feel about doing something different, as I guess, you've tried to do earlier. So that was the second question.

[Hannes Mosenbacher, executive]

Well, Alan, if I can start with the second question when it comes to the Swiss franc provisioning. As our CEO clearly said, PKO was using a different path when it comes to their provision. We also know their shareholder structure and their good intention to find a settlement. At the same time, there was a little -- there was only a little day curve. And if I look at the other banks who already have announced their quarterly results, we feel very well with our coverage of above 10%. If we look to Commerzbank with some 11%. If I look to Santander with 14%, we have get in for obvious reasons with 3% only. BNB also being on 10%; BPH, 10.46%. So we feel very well hosted in the environment, what we have created.

And of course, each and every bank has a different loan dynamic and dynamic when it comes to the court ruling. So that's the reason why we have thought that the current coverage of this around 10.2% is very well done.

The other one is when you were talking about the judgment, when the ruling comes from the Supreme Court, it is a very strong guidance not to say even binding to the local regional courts. But needless to say, different if there would be a new law introduced, each and every individual client would have to go and to sue the bank to get here a legally confirmed agreement with the bank. That is the reason why we take this approach.

And we must also not forget and that's another thought, currently, there is one industry in Poland which makes a very good earning out of the whole situation. These are the lawyers and the different core lawyer communities because if you go the road towards the court, it costs you some EUR 10,000-plus. So that is the reason why we believe that there will not be a once-or-so-time announcement, but rather if this ruling by the Senate of 7 or the clear guidance and answering clearly, the 6 questions that we could see either as slowdown of new cases coming in. And as I said, our current provisioning is already assuming a further increase of new cases coming in. That's our thinking on the second part of your question when it comes to the provisioning into the coverage on the Swiss franc provisioning.

Well, the loan growth goes across all the regions. I think we already have confirmed this loan growth in the first quarter. You can recall that, Johann Strobl, our CEO, was already very constructive and positive in the first half year. Well, if you go across the different regions, well, I think we see very good growth in Central and Eastern Europe. Is it Hungary where it could be double digit? Also Czechia is constructive, maybe not this pronounced as Hungary. Slovakia is somewhere in between Hungary and Czechia. This is the way I see it when it comes to the CE region.

When looking at the SE region, is there one country to take out where we can see very pronounced growth? Maybe in Serbia to take out one of them, current research has it that we believe that we could see even a double-digit growth in Serbia, but also Albania, in Bulgaria showing a very nice growth dynamic. Very favorable. Also still when it comes to the Eastern European market, we have seen that in Ukraine, we have been capable to catch some of the market share as well. Here, we would be slightly below double digit in Ukraine. But if we look, for instance, in Russia, at least market capacity would show a clear market growth beyond double digit. Well, and last but not least, just to finish our regional footprint, I think Belarus is not the market currently to heavily expand our footprint when it comes to financing.

[Operator]

Our next question is by Robert Brzoza at PKO BP Securities.

[Robert Brzoza, analyst]

I have 2 quick questions. First, a follow-up on the cost of risk. I've noted that in Bulgaria and Romania, the annualized cost of risk currently at around 80 bps is actually higher than in Russia, where it's below 60 bps annualized. So my question is, are there any country-specific drivers in Bulgaria and particularly in Romania that are sustainably driving the provisioning charges upward? And on the other hand, do you consider this level of cost of risk in Russia to be sustainable in the -- over the midterm? So that's my first question.

And second question is on the fee and commission income in Romania. It registered a 20% quarterly increase. So my question is I can't imagine it was purely due to reopening of the economy because it has been fairly robust even during the pandemic. What has been behind this increase? Was it a one-off or did you change your fee schedule? Or simply, it was related to the customer activity?

[Hannes Mosenbacher, executive]

Well, thank you for walking through the presentation so deeply. I appreciate very much. On Romania, of course, this is not the run rate, I have to clearly admit. But I don't know if you followed the latest constitutional court ruling in Romania when it also comes to the mortgages and one could say we once have discussed in this esteemed room of participants when it comes to handling in the keys.

And we thought that, especially on our stream strength portfolio in Romania, we also deemed it necessary to do another post-model adjustment when it comes to Romania, which is summing up in total to EUR 8.5 million for the -- for this specific subject matter. So this would be my answer for Romania. You're right, it's elevated but it's a quarterly number. So please do not scale it to the full year.

The second one is Russia. I can recall this question, I think multiple of quarters. The 60 basis point, what we guide for, for Russia is derived from the -- from our models, you could say, based on ratings based on LGD experience. At the same time, what we have enjoyed very much is that the local national champions have been capable either to adjust the business model if they have been challenged or they have been just rock solid. Yes, you're right, it's very, very low. If we really can sustain this for the next endless quarters, I don't know, but Russia was always able to surprise us positively when it comes to the risk costs. Model would indicate slightly higher than what we can see currently. But colleagues continuously demonstrated. And what we also see that's very positive debt on the -- also on the retail side. The forward-looking indicators is it 3 months at 30-days plus or the 90-days plus and 3 over 3 months, all of them look quite favorable.

[Johann Strobl, executive]

Referring to your other question, which is the fee income in Romania quarter-on-quarter, I mean, it's a combination. So there are no specific one-offs what we have seen is or what I would say is I wouldn't expect if -- and I tried to be cautious, I wouldn't expect that it's so easy to repeat the EUR 500 million quarter-on-quarter, which also means Romania. But if you look at the fee income in Romania, it was also last year around a little bit above the EUR 40 million. So the EUR 45 million is, I would say, exceptionally, given also the new loans business in the unsecured lending, which is a very good one and some other activities as well. So no one-offs to mention in Romania. Very good quarter.

And currently, we are very positive to say, I mean, there is some seasonality maybe from the Visa and MasterCard. So if you take off EUR 2 million to EUR 3 million from this special seasonality, then you are anyhow back at EUR 41 million, EUR 42 million, what we had in the last years as well. So I think it's a very good development, but not such a big surprise.

[Operator]

Our next question is by Riccardo Rovere at Mediobanca.

[Riccardo Rovere, analyst]

Yes. Just on TLTRO, I noticed that you got EUR 9 million bonus in the quarter. Can you remind us where you stand in terms of accounting of the benefit of TLTRO? It's getting a bit complicated to track all the differences among the various banks.

[Johann Strobl, executive]

So yes, I fully agree with you that the accounting is very difficult. And it took my colleagues quite a while until they got the impression that I have understood it what we -- the way how we did it. So what we did is, first, we said, let's wait until we have the confirmation. Don't book anything earlier. So we waited until we had the final confirmation, and then we booked everything what was accrued for the first half. We are in a sort of accrual mode, if I may start with this. And what comes on top of this accrual mode is that we didn't book anything for last year. So this came on top.

Our volume is not so big, but we would now accrue quarter -- or every month, we would accrue monthly. And of course, it's for the rest of the drawing and it might be around, what is it then, in the half year, maybe EUR 5 million to EUR 7 million, something like this cost. The EUR 9 million, this is already with what we also allocated from last year. But we accrue it over the life of the drawing on a monthly basis.

[Riccardo Rovere, analyst]

So this is -- just to be sure, the EUR 9 million we have seen in this quarter will more or less to stay every single quarter or in the foreseeable future?

[Johann Strobl, executive]

No, no, no. Sorry, sorry. Sorry. This would be misleading. So what we have is we had -- in May, we booked for the first time. And in May, we then had to book everything what was in accrual terms since this period started where part of it goes back also already in '20. And now it's a little bit difficult to do it because this is a group report what we do. And so you might say that we will have -- let me think, we will have -- for the first half year, we had a little bit less than EUR 4 million what we take in RBI AT and another EUR 4 million will come in the second quarter, something like this, almost EUR 4 million.

And we had a catch-up of last year as well and we have a smaller amount from Tatra Bank. So I don't know if I was not precise enough. I'm looking around also in the round here. People say I'm rather too optimistic, maybe I should say, just EUR 5 million in the second half from the TLTRO and EUR 4 million was a catch-up. So if you take the EUR 9 million, EUR 4 million catch-up of last year, EUR 5 million for the first half of the year and another EUR 5 million in the second half of the year. You see also for me, it's rather difficult.

[Operator]

Thank you for all your questions. [Operator Instructions] Okay. As there are no further questions at this time, we will now conclude today's conference call. Thank you for your participation.

[Johann Strobl, executive]

Thank you very much for your participation. If I may join the thanks, I want to wish you all the best not only for the weekend ahead. Also probably, it might be a late start, given the ECP with the announcement of the details of the stress test. But nevertheless, all of whom who had not enjoyed the nice summer, I wish you all the best, enjoy it. The banks what you cover, I have seen all report good numbers will be a good holiday for you and I think also for us. Thank you. Bye-bye.

[Hannes Mosenbacher, executive]

Thank you.

[Operator]

You may now disconnect.