Raiffeisen Bank International AG

VSE:RBI

Earnings Call Transcript 2020-Q3

[Operator]

Good afternoon, ladies and gentlemen. 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.

[Johann Strobl, executive]

Thank you very much for this kind introduction. Good afternoon, ladies and gentlemen, or good morning, when you are in another time zone. We're happy to talk to you again. I hope you're all healthy, sound, safe in these days. I think that's important.

Now let's talk about Q3, and you have received this morning the numbers. And I think what you see is the impact of COVID so far. And one might say, to a large extent, the way it was expected. In the consolidated year-to-date profit, you see -- and if you compare it with last year, you see the increased provisioning and impairment charges. You see lower costs, which partly also had been caused by currency weaknesses in CEE and the lower cost absorbed some of the negative impacts. We confirm our guidance for the full year 2020 and continue to expect the full year consolidated ROE to be in the mid-single-digit area. Loan growth was affected by currency movements. In local currency terms, we saw year-to-date growth in a number of markets like the Czech Republic, Hungary, Slovakia, Romania, Serbia and Russia. We did, however, see some signs of slowdown in the demand for credit in the third quarter.

And important to mention net interest income has been impacted by rate cuts and by currency movements, and I will come to this shortly -- in detail shortly. Fee income in the first 9 months, probably as expected, was also down year-on-year. But the good thing is that we saw some recovery in Q3. You see the numbers close to EUR 600 million consolidated profit year-on-year dropped by 32%. We see a CET1 ratio of 13.1%. One of the customers close to EUR 92 billion, a small increase since year-end. Core revenues, net interest income, as I mentioned before, down 2% year-on-year. And as I mentioned before, the fee and commission income is close to EUR 1.3 billion, down 3% year-on-year. Provisioning ratio is in the range -- Hannes Mosenbacher, and he will talk in detail about that soon. It is in the range of 40, what we expected is 72 basis points. And the coverage ratio of stage 3 net nonperforming exposure is good with 63.8%.

And with that, I would like to move over to the next slide, where we see the quarter results -- quarterly results and let me start with the net interest income. As I said before, there was a drop of EUR 55 million compared to the second quarter. This was triggered by the big countries: Russia and Czechia, but also by Ukraine, where we see not only decrease in Central Bank rates, but also the FX development was Russia and Ukraine, Belarus, which is a smaller country, was negative for our business. I already mentioned that the -- after the lockdown, the broader activities in overall, in many areas of the economy brought an increase quarter-on-quarter by 10% of the net fee and commission income and trading income and fair value results was also contributing positively. So that overall, the drop in the operating income is 1% quarter-on-quarter or 4% year-over-year. This was compensated, as I said before, by general administrative expenses.

Here one has to be aware when talking about staff expenses down by 9%, that there is always a seasonality effect in Q3 as well, which is because of the holiday season. And I have to remember you that we had a special provision in the second quarter, which was a onetime event.

When talking about other elements in the other results, we had one more adjustment in the valuation of participations, and impairment losses on financial assets, as explained. Yes, and with that, we end with a consolidated profit of EUR 230 million, which was a good improvement compared to the second quarter.

I think on slide -- on the next slide, Slide 6, there is 2 more details. The one I have mentioned already, the NII, if we now talk on the -- and the areas where it came from, when I'm not talking about the implications for the net interest margin, what you see is that the drop of 21 basis points, the biggest extent came from the drop in the NII, to a smaller extent from the increase in balance sheet. You will see it on later slides that inflow of deposits was still strong. We have high liquidity, so this drove the balance sheet, but this is not contributing really to the earnings. So we end with a 2% net interest margin in Q3. And in the lower right-hand box, I would like to draw your attention to some more details on the development of the fee income. Here you can see where the business activities improved.

And with that, I would like to move to Slide #7. I think here, again, it's more the quarterly details of the development. And I think what you see is the drop in staff expenses and other administrative expenses. Depreciation is rather flattish. This is simply the outcome that in the past and also now to invest in mainly digital developments. And as soon as this produced software goes into use than depreciation starts. When asked where does this reduction in costs come from? So I already mentioned that FX was one contributor. But what we also see is that you might remember some time ago, we introduced a review of our operating model at RBI head office. And we saw a EUR 40 million impact here already. And a little bit more and another EUR 10 million from the Austrian subsidiaries. You are aware that around EUR 1 billion of the EUR 3.1 billion of administrative expenses are allocated to Austria to the RBI head office and to subsidiaries.

We also saw some gains in the operational efficiency in the network banks as well. And there is more to come, automation has still room, and this will bring down the costs also in the future. And you are aware that we have made some adjustments in the branch network last year already, which starts to pay off this year. And with the positive experience, which we made from the lockdown and the improved use of digital channels, there is also more potential in the future.

Then moving to the next slide, you see here the -- I think the regional segment where how was the core revenue development, I think this is the one issue. The other is -- and here you see that the various activities in the quarters lockdown versus non-lockdown. So I think this is the big differentiator in the fee income between the various countries, how deep the lockdown has been, if you have this quarterly comparison. And the loan development to customers. I think you see here the development which, of course, as these Euro terms, as I reported before already, this has to be considered. And here, you mainly see in the eastern part that this drop in effect is also probably big downwards adjustment in the loan portfolio.

The rate cuts are visible in the net interest margin in all the countries. Yes, we had this strong reduction in Central Bank rates in Russia and Ukraine. And given that, I think the drop in the net interest margin is not that bad so far. I think in the CE segment, you see the huge impact of this big drop from the Czech Republic.

Then moving to Slide 9. I think it includes here some valuation, some information sorry, on specific positions in the balance sheet. I would like to draw your attention to the lower left box, which shows the customer demand for long-term loans. And I think what you see here is what we reported throughout the year. The different patterns between corporate and retail. And you see the improvement in demand in September, and in both, I would say, in September, close to normal in the retail area. And after a weak development since May, also improvements in corporate.

Then moving to the next Slide 10 now. We are on the report about regulatory capital requirements and ratios. Here, we are at 13.1%. The requirement is 10.42% for the CET1 ratio. And you are aware that since the third quarter, we optimized our capital structure so that we can make use of these improvements in the Pillar 2 requirements, where now the requirement with CET1 is 1.27 and the rest is met by 81 and 32.

And with that, I think I should move to Slide 11. Slide 11 shows the development in the CET1 ratio from Q2 to Q3. We had development, one might say, as expected, in the credit risk area where rating migration, yes. We have been expecting this. And the re-rating of the portfolio, to a large extent, is now done. Broader RWA increase of EUR 1.3 billion, which leads to 23 basis points. There has also been some new business and colleagues have been successful with remodeling some operational risks, which brought some improvements. I mentioned several times the negative FX development, which is shown here with reporting EUR 0.4 billion. So we do hedge part of the ruble participation in Russia. It's not fully hedged. So there was some negative impact from this as well, but more important, one has to say that also other currencies, which are not easily being hedged, contribute negatively like the -- yes, a few other currencies where we have this drop.

If I move then to Slide 12. I come here to the funding development, the liquidity situation. And yes, what you can see here is this huge inflow of on the one hand, deposits from customers. On the other hand, you are aware that we also participated in the TLTRO 3, which also improved substantially to short term liquidity. And we are now at the level of 170% here. Of course, it's our intention to bring this down.

And with that, I think I should move to a few business updates, so that you not only hear COVID numbers and the impact or also, I have to say, partly, we see this year in these numbers as well. So I think what every company in these days can confirm is that we roll the negative element of the COVID. There are some positives and one is that the digital transformation is strongly supported. When talking about our main targets for retail in this retail transformation, it's customer growth. And here, we are happy to report that although with these reduced activities in all the countries, we were able to grow our active customer numbers in Q3. And we are confident that if this development continues, we can reach our ambition for '21 with 12.5 million active customers.

Mobile banking penetration improved, and this gets to 40%, and this gives us, again, confidence that the 55% are in reach in '21. Digital sales. Here, we have to say that the lower sales in the -- in the physical channels, supported this relative number of 34% digital sales. When the situation normalizes and physical sales will increase, then probably this number will not be so high as it is now. But it clearly confirms, again, this ambition that 35% of all our sales should be done digitally. So when thinking about what could be the benefit of this further digital transformation, then I think the focus is on these 5 products, which we show here. In retail, 3 for classic retail PI and 2 for SME customers. These are the areas where we will put our focus. And of course, they cover a big parts of the operational and overhead costs, and we believe that this should show the potential where we can save and by the end of 2025, this is at least the potential of EUR 114 million per annum. And yes, I think if we get it right, we -- it will not only contribute to a reduced cost base, but also to an improved revenue. And here, estimates are that at least EUR 110 million should come from these improvements.

Moving to Slide 14. Of course, I think the follow-up question then is, what does this mean for branches? And I think there are, and I have stated here this as well, it will show in 2 developments: The one is, of course, more digital sales gives room for optimization of the branch footprint. Probably here in our regions, we might take out 300 branches. And this is enabled by this improved remote sales and also by the digital development of our customers. And this comes from the way we will improve our branches. And the idea is that those people, the number of people, who really are in a sales role in branches, so converted from service function to a sales function, we should reach 70%. And this gives room for also cost reduction, of course. And it should also reduce the complexity. And these people will support also the transformation of the customers.

We have been quite often asked what is your approach -- what is our approach on the digital development? Do we believe in one solution over all countries? We always said that for us, with what we know now, changing the total IT network in our branches seems, for us, expensive and maybe also risky, so the core banking systems, as of today, we do not intend to touch. We rather move in a direction, which is based on APIs and micro services. So decoupling, and I think I have -- was speaking about this several times in the past. And I think we made further progress on that. So by introducing to a large extent, APIs and micro services, so that front-end solutions, customer-facing solutions can more efficiently, I would say, more real time -- in a more real-time way, communicate with the core banking systems. This is the way we are going to explore. We are already exploring and this would lead to further IT cost savings. Here, the estimates are from EUR 17 million per annum for these products. And of course, if not, all the network banks have to invest in similar solutions, this should also reduce the CapEx, the investments. And if the reuse is successful, development time should also be reduced.

Coming to Slide 15. Talking about the corporate banking area. I think here, it's mainly about customer service and efficiency. So customers struggle with these huge requirements in KYC, account opening and so on. So we believe that for the simple the standardized product lending can be digital, account opening can be easy. And then if you see it here, and we made some progress also in the trade finance area where digital solutions are now available. And these functions will be rolled out over the coming quarters to the whole network bank. And this might also will give some room in reducing the efforts in the process.

Coming to the outlook. Let me start with macro outlook. We just [ arrived ] based on research just recently adjusted. The last one, which was from August and to make it easier for you to compare and to read, to where the adjustments happened, what you can see is that in most of the countries, the development in the third quarter was better-than-expected with 2 exemptions, Czech Republic and Hungary, and to some extent, Croatia. So what you see is a few negative adjustments, and you see the percentage points of the adjustment in the rows after the absolute numbers. And you see also the impact what our research people assume for '21 and '21 is rather unchanged, improved again with small exemptions and I think the biggest impact came for the Czech Republic. We all have been surprised about the high number of infections and the required lockdown. Personally, I still hope that '21 is slightly better than what we see here, but the experts know anyhow better. But then there had been also a couple of countries where the negative impact of the COVID in '20 was less than one have expected till -- even till August. So I think this is overall a rather positive statement.

And with that, before I hand over to Hannes, I just confirm the outlook, which is modest loan growth in 2020. Provisioning ratio to be around 75 basis points. Cost-income ratio, we keep the midterm target of 55%. It's still good till now. But this -- by the end of the year, next year, we have some seasonality in the cost. We will be above this 55%, and we will reassess this. And with the Q4 numbers, we will maybe adjust or for sure, adjust also this guidance. Profitability for this year, mid-single digit. And in the long run, I think the potential is there for this 11%. CET1 ratio, I confirm to 13%. Payout ratio between 20% and 50%. You're aware that we had the annual shareholder meeting. We have to adjust our dividend proposal as there is still this very strong recommendation by the ECB not to pay dividend this year. The approach we took is, let's postpone this decision. If the dividend ban is lifted by the end of this year or early next year, let's call for an extraordinary shareholder meeting and let's decide then. So there is the assumption that this gives -- this approach gives us the most flexibility. And with this, I hand over to Hannes.

[Hannes Mosenbacher, executive]

Johann, thank you. Dear all, great talking to you, and good afternoon from my side. Well, if I would reflect on the first 9 months of this challenging 2020, we can report that our NPE ratio is at 1.9%. We show a very strong coverage ratio. This is coverage ratio of 163.8%. If you look on our impairment losses of EUR 497 million. The biggest part goes to the Stage 1, Stage 2 and post-model adjustment, summing up to a risk cost of 72 basis points. We still see a low inflow in the stage 3 bucket on the corporate side for obvious reasons. We see the moratorious, with also tax deferrals. And having said all this, by this, we are confirming it was just also repeated now. We are confirming our risk cost outlook somewhere around 75 basis points. Last time, we realized that you appreciated the deep insight we were providing on the nonretail side when it comes to our thinking on the industrial side. This time, we have thought we'd give you a little bit more insight on the retail dynamics.

I'm now on Page 19. I think that's a very well-known page to you. As I outlined, of course, the FX dynamics have been heavily impacting the exposure. But if you look year-to-date, we see an increase on total exposure for the many markets in the Eastern European part of our RBI group. We see that the development on stable FX rates would have been very strong. We could have demonstrated a growth of EUR 2.8 billion. At the same time because of the strong deterioration on ruble, on a net basis, we see a decrease of EUR 1.1 billion. And you also see on the right-hand side, what is the split on retail, non-retail and within retail. You see that we have, in total, some EUR 41 billion of exposure at default, comprising EUR 24 billion on the mortgage base and EUR 17 billion on the consumer lending.

The RWA developments have been deeply explained, also not a big change. You see that we have finished year-end, half year, with EUR 80.5 billion. Now we are at EUR 80.1 billion. We have the FX impact. We see a little bit of growth. We see also the rating migration, and we were also talking about the op risk.

Page 21 is just an update, and I realize that you have reflected on this also in your research notes. That we have seen now a drop of moratorium exposure outstanding from EUR 7.2 billion to EUR 6.2 billion. We see a stronger drop on the retail part. And then I'm happy later on to give you some very first insights on the client behavior for those who are being now back on the repayment. Do not expect too much on this one because we have just a historic experience now of 1 or 2, 3 months of clients now being back in the amortization schedule.

Bringing me to Page 22. Well, we have shown our retail exposure, and we tried to explain it to you in more detail. What are the big messages of this slide? You see in the middle block, the EUR 38 billion for the PI clients and EUR 3 billion coming with the SME clients. And you very well know our way of thinking when it comes to the industrial split, and we were also employing this industrial split to our PI clients, so where they are employed? And what you can see here that only 6% of all our PI clients are acting and working in the industries, which we leveled as well being challenged as L-shaped industries. Some 23% are working in the industries which we call U-shaped, where we believe on a U-shaped recovery on the specific industry.

And a big bunch of this, over 70%, is working in the area, which we leveled green, meaning that they have a big impact, but also seeing a nice recovery. So that's the one-way of looking at our PI portfolio. But even more importantly, if you look on the left-hand side, you can see that we have a very, very strong going in position when it comes to the credit quality of our retail exposure. You see that we have 70% of declines in the very, very good rating rates, some 23%, which we level here as good, sound and acceptable and so forth. So I don't have to do guided reading for you. But this is my 2 most important conclusions on this upper part here. So the industry split is also working on the PI client and the client which we are banking with, only 6 of them working in the red level industries. Out of this 6%, comprising EUR 2.2 billion, some EUR 0.3 billion have asked for moratoria.

On the SME side, you can see that in total, the portfolio, and that's very important to memorize. The total portfolio currently is just summing up to EUR 3 billion. So we have been rather restrictive in the history on the SME portfolio. And you can see here also the industry split. So hopefully, it's insightful for you, and it helps you to make your assessment when it comes to the economic development of our group. Well, I would now move on to the next page, where we have shown, and this is a very well-known slide to you when it comes to the recovery assumption per industry. That's very important. It's the recovery assumption per industry. We are not talking about macro, what different letter in the alphabet you would like to use now. Someone say, hearing it, looks more like the trademark of a sports company, the current shape of the recovery. So what I'm talking about here is really focusing on the recovery shape per industry. This is just for updating you what happens on the Q3. So I would not like to talk in details. I have introduced this slide already in Q2. So for me, no need to go into the details here. Just to clarify that these are the recovery assumptions per industry.

Let me move on to Page 25. And this is just again to see because you always have 2 effects: The one is how is the industry moving? And also, what is the financial strength of the individual counterpart? And here, I can report that the numbers are more or less stable. So we have done our re-ratings. We have seen that some clients even have early repaid. So this is also just for your reference and for your records, to give you an update that this bucket on the yellow and on the red industry for those clients, which we call rather substandard and below when it comes to the customer rating. Last time, I was talking about a net rating of somewhere around single B, BB, but here, the portfolio is more or less stable.

So I'm already now on Page 26. In Q3, we have seen a total sum of risk costs of EUR 185 million. We have shown here the different segments. And we have also shown here to the left-hand side, were the EUR 185 million, summing up. So you'll see some EUR 55 million coming from Stage 1 and stage 2. That's obvious we have to do, and we are doing this, of course, constantly. We are doing this re-rating exercises. So you see that here, there comes an updrift on the expected losses and on the shift on the stages. The second pillar we are showing here was EUR 42 million. What did we have in mind when doing another post-model adjustment. Last time, we were talking quite intensively about our hotel portfolio. As I told you, on a net EAD basis, we're talking about some EUR 1 billion exposure at default after collateral. And we deem that given the still very subdued demand on offers from the hotels acting within the cities, we deemed it justified to allocate here some post-model adjustment.

Page 26, you see it on our coverage ratio that we have slightly increased our coverage ratio and of course, goes without saying, we are being part of the economic cycle, and we see already some first defaults here and there.

Let me come to my final slide, and this is also just updating. Anyway, just repeating in a nice form what I was stating in [ Medicur ]. We have an NPE ratio of 1.9%. We have a coverage ratio of 63.8%. We see that the third quarter is maybe very interesting for you. If I would also add the coverage we have created in stage 1 and stage 2 and with all the post-model adjustment, we would now come to a coverage ratio of 95%. And everything is good for reading and where you can see what all have been the dynamics in the different buckets.

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

[Operator]

[Operator Instructions] Our first question comes from Anna Marshall of Goldman Sachs.

[Anna Marshall, analyst]

Two questions, for me, please. Firstly, on asset quality. You've mentioned your outlook for this year unchanged. But how about the outlook for the following 2 years especially in light of your updated macro parameters? And also, would indeed like to take you up on your offer to comment on the moratoria exposures, which have exited, how the early performance looks like? And my second topic is capital. Could you please indicate how you see the trajectory into the remainder of the year? I see in your presentation, you expect some positive regulatory impact, but what else could be a moving part there?

[Hannes Mosenbacher, executive]

Well, Anna, thank you. If I may start with your question. If you look at the post-model adjustments and the way how we have thought about the different industries. So my way of looking at the current dynamics is and you can maybe recall that for those which we have leveled in this V-shaped bucket, we were doing a stress simulated rating, assuming that there is a fallout of a monthly turnover. But those industries, which we have leveled U-shape, we were assuming a fallout of 3 months and the 1 with L-shape, we were assuming a fallout of monthly turnover of 6 monthly turnovers. On the V-shape, I think, we have been a little bit too conservative, talking to the entrepreneurs, talking to the different companies. Many of them report numbers comparable to 2019, not of course, all of them, but the V-shape.

There are some industries to think about retail grocery and many others, where they do not feel such a huge slump. So this is my -- on the V-shape. The U-shaped was just lately reading a research from 2 very prominent rating agencies saying, well, in the most prominent industries, e.g. car industry, they assume a drop in annual sales of 25%. And we were doing this industry clustering beginning of March, April. So seemingly, we have here really hit the nail. And then it comes to the red level, the industries. And here, I think we have been a little bit surprised by the deepness of impact. Now we've seen some of the hotels that turnovers and revenues per room are going down by some 80% or 90%.

So having said all this, the adjustment on the macro side -- so this is the one-way of thinking. The second way of thinking is that we have -- and you can see it in this stage 2 post model adjustment, which we call macro overlay. We were already considering in our models when we build models, we like models, which are reacting quite fast and precise. At the same time, with the initial very strong recovery assumption by the researchers, our models would have forced us that we have already started releasing some of these stage 2 provisions, which, of course, we deemed extremely difficult to understand and to integrate. So meaning that we have added a lagging factor that part of this release would start to be seen in 2021. So that's the reason why -- now if we now see a drop in adjustment in Czechia and some other countries, we would not immediately see the need to adjust. And as I always said, we're talking about 75 basis -- around 75 basis points. So please do not nail me down on it in the end of the year if we are on 71 or on 76 or 78 basis points. So this is around 75 basis points.

The other questions you raised on the first insight. When we were talking about the retail portfolio in the moratorium and in the peak, it was somewhere around EUR 4 billion. In our internal assessment, talking to the clients, asking them what will be your repayment behavior, do you need a second restructuring. In the initial questions, many of them were saying, well, also some 20% of our clients when being asked via SMS or via calls have assumed that they would need a small restructuring. What we then have seen that only about 10% really make use of this restructuring need. And this first very cautious glimpse, I would now like to share with you is really very cautious because we see now some 2, 3 months of first repayments in neighboring countries -- neighboring country of ours.

On the retail side, what we can see here that on the secured -- so those who are in the secured lending, i.e. mortgages that here, the one coming into area is below 1%, currently on the secured basis. On the unsecured basis, we see that it's somewhere around between 2% and 3%. Asking or coming into an area, meaning 30-plus, which means that we did not yet fully utilize also our collection and our restructuring, but these are the first numbers. On the corporate side, it would be too early to share with you any insight when it comes to the dynamics of those, who are being back in the regular schedule.

One more point before taking the second question by Johann, if being taken by Johann, I think what for me is very important to underline and to emphasize, but it was already good to get our clients being back in normal schedules. So there was done a lot of effort that people are -- our clients are not being back in the usual and normal amortization.

[Johann Strobl, executive]

Thank you, Hannes . Talking about the RWA development till year-end, I think most important is that there is probably an organic growth of a little bit more than EUR 1 billion, what one might expect, maybe some further EUR 400 million in rating migration, as I said, big part of the re-ratings had happened already. And then there are a couple of other elements which might neutralize each other. And in terms of regulatory, what the Regulatory called quick fixes, though the software assets and the sovereign exposure that's not big for us, given what it's discussed now. But yes, it could be around 15 to 20 basis points, which would be supportive in addition.

[Operator]

Our next question is from Andrea Vercellone of Exane.

[Andrea Vercellone, analyst]

Quite a few questions. The first one is on the TLTRO. I was just wondering at what rate you have accrued it? The second question is on pro cyclicality. If I'm not mistaken, as accounted for about 50 basis points of capital year-to-date. You just stated, there's a little bit more to come in Q4. So the question is, how reactive will your models be, i.e. how often will some of this come back in future years?

Then 2 questions on the Corporate division. The first one is on provisions. If you can split out the EUR 81 million in the quarter between Stage 3 and other aspects? And the second, if you can make some commentary on the trends in NII for Q4, given the big drop that we have seen in Q3? And the final question is on macro in the Czech Republic, what is driving such cautious stance from your economics department for next year?

[Johann Strobl, executive]

Thank you for your questions. I'm not sure if I got all of them, but if not, I'll kindly invite you to repeat one or the other. So TLTRO, we do not accrue anything from the benefit, which we might get, we will do it on a later stage when we come closer to harvesting. The other -- the model, probably, this was -- I didn't fully get the question. So what I understood is, but please correct me if your question was heading in a different direction, you were referring to the point that how often we are re-rating our customers and what the impact that this would be? I don't know if this was the question or was it rather related to the modeling of provisions from the IFRS 9. If it was the first...

[Andrea Vercellone, analyst]

No, it's the first question i.e., up until now, you really haven't seen any material movement into stage 3, yet already starting from Q1, RWAs have gone up and then more in Q2 and then more in Q3, just because of rating migrations, i.e., adjustments you have made in your models, which are kind of managerially adjusted, I think, because you wouldn't have seen anything back then. So I'm just wondering whether you've now made the adjustment. So that's it. We shouldn't expect any material more into the future. And then once the crisis is gone, how fast the adjustment, some of them revert back?

[Hannes Mosenbacher, executive]

Andrea, if I may try to give it a trial to explain what we are doing and what we have done. You're right that currently, year-to-date, we see about an inflow to the Stage 3, which is some 30%, 40% below a 3 years or 5 years average. But what are our credit analysts and our underwriters have to do? I cannot proceed in believing that there is no crisis out here. So what all my fellow colleagues have done in my area of competence, we were looking at the financials, we were looking at the interim reports, and we have adjusted and our rating consists basically of 2 or 3 components. The one, of course, is the hard fact, you're right. Here, we have to wait for the annual reports and results, but we are using interim results. So therefore, you're already on the hard fact side, you could see some impact. And still in the internal rating hard facts accounting for some 2/3 and soft facts for another 1/3 when doing an -- when exercising the rating.

So the rating analysts also have looked, of course, and here they can include very much the forward-looking dynamics, and they have also done so. So that's the reason why you see this re-rating and we deem it necessary for us internally, but also in our external communication that we show the fair reflection on the probability of default when it comes to our credit portfolio. So this is a usual job what you anyway, in a growing concern, would do. But even more so and even more important, when you're acting in such a strong crisis as we have -- what we are now facing. But this is the usual process, what we are doing. And normally, we have at least once a year to re-rate the customer. Given the dynamics, what we are seeing, we are also not shying back to have a second and third look on the credit profile of a specific client. So that's the reason why you see the strong RWA dynamics and yes, you're right, we are moving here quite swiftly, but this is what I also would have expected that we see some RWA impact on the credit risk side.

[Johann Strobl, executive]

When talking about your question on the NII expectations till year-end. So yes, you're aware. It 3 elements, which drive this. First, all these 3 elements are based on my expectation that there is no further drop on the -- or not a remarkable one compared to what we had in the first quarter. So then the drivers are mainly the 3, which I am mentioning now. The one is -- which had element in the negative development of the NII. This are maturing hedges and runoffs in model books. This might add another EUR 15 million for Q4 in a drop. And then the question is, to what extent can this be compensated by some loan growth as expected. And probably important is the question at which margin this -- the cost of funds, this new loans can be acquired. I mean we have been -- have seen some positive developments when -- in the pickup of the loan demand in September.

This is what you also have seen in our numbers. And the broad question is to what extent is higher loan volume -- higher-margin loans, like unsecured lending can be acquired. So this is the -- I think the structure of the loan demand is the bigger driver. We saw a slight improvement in the overall margin in loans in the third quarter compared to the second. So some repricing adjustments. But on the other hand, I have to report also that in -- that all the banks are highly liquid. For some customer segments, there's also a fierce competition. But overall, I think it's this development. And of course, what is very difficult to forecast is the impact of FX. As you have seen, we had maybe in quarter-on-quarter, about EUR 20 million of drop driven simply by the effects in some countries. And here, again, I would assume stabilization or slight improvement in some of the currencies.

[Hannes Mosenbacher, executive]

Well, I will take then the next question, Andrea. Hopefully, we got you right on the risk costs that you would like to have a little bit more of an insight to what is going on to Stage 3. Because I reported in the intro that the inflow on the Stage 3 currently still is rather low. So in total, you see a Stage 3 booking in Q3 of EUR 87 million, you can allocate about -- sorry, go ahead.

[Andrea Vercellone, analyst]

I'm sorry. Can I stop you for second? I'm only talking about the Austrian corporate division.

[Hannes Mosenbacher, executive]

That's easy. That's the 2 things what I was mentioning, the post-model adjustments. The post model adjustments on the hotel portfolio and the leveraged loan portfolio. So there, we have done 2 post-model adjustments. That's everything, and increasing here and there, our coverage.

[Andrea Vercellone, analyst]

So most of them are provisions booked in Q3 are not Stage 3?

[Hannes Mosenbacher, executive]

Yes, sir.

[Johann Strobl, executive]

When commenting on your question, what is negative on the Czech macro? So I mean, negative. It's not as good as I had hoped for, what we have seen in August. So this drop in 2021, which is a year-on-year number. So the increase of just 1% compared to the 4.1%, what we had a few weeks ago. And I think the explanation is that the lockdown is in the service sector and in some areas rather big. And probably because of the high numbers, the expectation is that it takes a little bit longer to recover from that. I mean, some industries, my understanding in the Czech Republic is that they are still doing well. So -- and some support is also quite good from the state. So that's -- as I said, a mixed picture. To a large extent, these are assumptions now, how long and deep this lockdown will last.

[Operator]

We'll take our next question from Alan Webborn from Societe Generale.

[Alan Webborn, analyst]

Could you talk a little bit about the operating performance in the Group Corporates & Markets division in Q3. It seems to be sort of perhaps seasonal weakness. But could you just run us through the trends in NII and fees and the other operating lines for the corporates and markets? That would be the first question.

I know you said that, secondly, on the margin that EUR 20 million comes from the FX level. But I do remember you, correct me if I'm wrong, but at the second quarter stage, you felt that the margin could be flat going forward. And clearly, it isn't. And I wonder outside of the FX, what are the elements that you're seeing that are more difficult perhaps than you saw the second quarter level. Is it the mix? Is it the level of competition? Is it the liquidity? If you can give us a little bit more idea of that, that would be helpful. And obviously, do you think the margin overall is going to fall further in the Q3 stage? Or do you think from where we are, there's an opportunity to keep it a little bit more stable? That was the second question. And I think sort of, finally, in terms of the Eastern European side, I mean, what's your view about the growth and the recovery coming through in Russia that we're seeing from some of the peers there. How do you feel about the growth opportunity there this side of lockdown?

[Johann Strobl, executive]

Yes. When talking about the GCM segment. I think -- sorry, I think one has to be aware that here as this is mainly a euro, and to some extent, U.S. dollar-based business, if I compare Q1 with Q4, for example, in the corporate area, it was more or less flat performance. So we had EUR 81 million compared to EUR 84 million. The second quarter was better and here it, there are some -- I mean, this is also driven by some larger long term loans, which might be repaid early from time to time if customers feel strong or that there is a new request what we had by the end of Q3, which you can see in these numbers. But in general, I would say this is within the normal range of fluctuation, what we have seen so far. But we have to say that the demand for long-term loans, this was -- yes, one might say expected, but this was lower than what we had throughout the years.

The second is the institutional clients. I think here in this business, there had been quite a lot of repo business, which given the difficult situation had nice margins. And here, this business was rather back to normal and in capital markets, we had -- there is always this switch, how much some of the positions are hedged, and you see the result in the NII? Or is it in the trading income? So here, partly, this is a change also between the lines. So if I add up this EUR 19 million drop in NII in this segment in Q3, then EUR 5 million to Corporates as explained, EUR 5 million to institutional clients, mainly, as I said, from repo and the EUR 8 million in capital markets trading activities.

When talking about the margin expectations, and Russia was your broader question then as well. Yes, in the guidance, I have to say, which I gave, the drop in this -- the FX impact on this margin drop, of course, I did not consider, I have to say. And to some extent also, this increase in balance sheet when going through the presentations that this had a 5 basis point impact on the NIM. This I also -- well, did not consider when talking about the NIM development. That these 2 have to be considered in addition. When talking about the other drivers, then, of course, the sluggish demand in unsecured loans, I think there compared to a normal year. We lost about a EUR 1 billion of new business because of this COVID. And this, of course, has a negative impact because then the margin there is, of course, much better than what we have in the secured part.

And yes, as I said before, this 5 basis points comes from the over-liquidity. This in the future might be reduced a little bit because, yes, of course, some of this over-liquidity will be returned to the customers or what we would prefer, bring them to other products, which brings it off the balance sheet, but could create also some -- generate some fee business. I have to look if I have forgotten anything. Yes, Russia. I mean Russia did quite well despite the high number of COVID infections. And I think there, the -- in local currency terms, the numbers that the loan business is not that bad, one might say, and the potential is also there. So this might be 1 answer, if there is some switch between foreign currency and local currency that there is also some room for improvement. So I also want to make you aware that some of the hedges for the falling rate, which has been entered in recent years will also mature some of them in the course of next year.

[Alan Webborn, analyst]

So super. I just have a quick follow-up in terms of what was your appetite like for unsecured lending? Because, I mean, clearly, there are some markets in your region where unsecured lending has been growing actually quite fast in the third quarter. I mean, would you describe yourselves as quite prudent as far as that goes? Or do you feel that it was just demand that wasn't there to give us an idea of -- there was a significant recovery in economic activity in the third quarter, and you don't see that much of it in your numbers?

[Johann Strobl, executive]

Yes. I think, as I said before, in retail, we came back to -- and we compare it to the new volume in February, which was the full last month before the lockdown came mid of or before we felt it. And in Russia, of course, it came later. Overall, I can say that we had this drop in the unsecured lending, which was 70% less in April than what we have had in February. And there is only a slight improvement in May since then. And as I said, it recovered up to 90%. I think maybe it was the case that in the first 2 months, we -- maybe we were more differentiated. And you said the nice word, prudent, with our risk policies. And when having seen the development, we start to ease it substantially, not at the level what we had before COVID, but many obstacles have been removed. We also returned back to some of the sales activities, preapproved limits and all this stuff, which supports lending. So to a large extent, we are back to the behavior we had, but not fully.

[Operator]

We'll now take our next question from Olga Veselova from Bank of America.

[Olga Veselova, analyst]

Can I ask, if I understood correctly, that there was zero impact on the net interest margin from TLTRO 3 in the third quarter? So this is my first question. My second question is, what would be your cost growth outlook for the group for 2021, if that is possible to guide at this point? My third question is on Poland. I think Polish banks are saying that they very much expect the decision, the ruling of local Supreme Court. Do you think that for your business, this is just an upside or downside this to the pace of provisioning you have in Poland right now? And my last question is the sensitivity of your financials to the exchange rates in countries where you operate. It may be difficult to generalize really, but maybe you could generalize for us what would every, let's say, 10% of depreciation of the basket of currencies in your countries versus the Euro mean for your net interest margin and for your CET1 ratio?

[Johann Strobl, executive]

So I'm not sure if I fully got the first question. So was it that the question was, what is the impact of that TLTRO on the net interest margin?

[Olga Veselova, analyst]

On margin, yes? Was it zero?

[Johann Strobl, executive]

On margin? Yes. It was -- we did not accrue any of the potential goodness of this, so there is no positive on that. And yes, the total volume is around EUR 4 billion what we have under TLTRO. So it's -- sorry, I'm not anymore as good as I was in my younger days to figure it out in my head immediately what the impact is on that. But it's EUR 4 billion in addition with no additional income. This is the way I would phrase it. And in Poland, your question was the rulings, what we expect? I mean in -- sorry, again, in the -- for me, it's very difficult to say where we really end. But maybe Hannes would add to that.

[Hannes Mosenbacher, executive]

Well, I think what we have seen is that in the due course of the lockdown, the number of legal claims was reduced as an inflow. There were still some questions outstanding to the European Court of Justice from 1 regional court. We see now more and more of the second instances coming. And I know also from some other market participants, but you're anyway closing extremely -- you're anyway following extremely closely that the one or other also has tried to find a settlement with their clients. I think there is -- some of them, they are still waiting what is the feedback from the second request from the [ Danst ] region to the ESG, how this should be interpreted.

Was there a third question?

[Olga Veselova, analyst]

Yes. Yes. So there was a question on cost. Do you have any early -- possibly early outlook for 2021 on cost growth?

[Johann Strobl, executive]

Yes. 2021 should be on the level of '20. There shouldn't be that much wage inflation and the investments, what we take should be on the same level. And there, where we have to increase, it should be compensated out of the running cost. So I would assume on the same level. Of course, it also depends on some of the regulatory developments. There are few uncertainties. When was that -- and this is now more in the regulatory area that the contributions of our banks to the various funds being it resolution funds or being a deposit insurance in many countries is rather high. Russia benefited this year from a reduction. This might be changed next year. We had the good development in Slovakia that after the substantial increase, it was stopped for the second half. And what I understand, there are good signs that it will not be continued next year. So it's -- I would say, on operational costs, we should be where we had been this year. And of course, there is, again, a fixed component, which could work in both directions. And then there is -- yes, this other element, but my assumption is flat.

[Olga Veselova, analyst]

My last question was about the sensitivity of your net interest margins and CET1 ratio to weaker currencies if that's possible to classify?

[Johann Strobl, executive]

Yes. Here, I would have to look up in my material or maybe the quicker way for all of you is that I ask John Carlson and his colleagues to have a nice table for you on these sensitivities. If this would be also fine, you will get it rather soon.

[Operator]

Our next question comes from Riccardo Rovere of Mediobanca.

[Riccardo Rovere, analyst]

2 or 3, if I may. The first one is on the funding mix. Deposits are going up quite nicely. This is fairly common in Europe. But I also noticed that your medium to long-term funding has been expanding over the course of the first 9 months, which is a bit more surprising. I was wondering whether you have the opportunity for some pre-funding, maybe? And with regard to deposits, do you see any possibility to redeploy this amount of money somewhere else to which -- with a little bit better remuneration?

The second question I have is, again, sorry, on TLTRO, what has prevented you to book the gain? The loan book is growing, the benchmark is not exactly challenging to beat. So I was wondering why you decided not to book anything. And eventually, when you should book the benefit on the EUR 4 billion, which could have at least, let's say, smoother to the difference between the NII that you have reported and what consensus is going for? The third question I have is again on NII. Taking out FX, taking out the TLTRO contribution, do you see the EUR 770 million that you have reported this quarter, more or less as the run rate going forward? And then I have another question on RWA. You have already clearly specified, clarified, that a lot of the rating migration should have already been somehow captured in your risk-weighted assets. I was wondering about if there is -- if there could be any impact from the definition of default, if that has already been taken, EBA guidelines, these kind of things going forward?

And last question I have, sorry for that, is, if I remember correctly, in the past, you mentioned the possibility of bolt-on acquisitions in some of your core markets. I was wondering whether this statement still remains, if you have changed your mind, if you can share your most recent thoughts on the topic?

[Johann Strobl, executive]

Okay. Thank you for your questions. So I mean, when talking about the long-term funding, there has been various occasions throughout the year. And you know that part of the long-term funding also came from the optimization of our capital structure. So this EUR 81 million and the subordinated, so this was a driver. And the other has been in the early days, sometimes when we also tested the market there. So I think this is -- yes, it -- I think the next year will rather be driven by the MREL requirements than by other funding needs. And yes -- and maybe a little bit later then there is another need to keep the efficient capital structure by some Tier 2 elements, which lose the full recognition of the supervisors. So this would be my first answer to the general question.

The second part of it is to the TLTRO. Yes, I don't know. Yes, I recognize that some other banks consumes this already. We have decided that we would rather do it at the end of this exercise. So maybe we are a little bit cautious in this element. When talking about NII, the EUR 770 million as a run rate. Of course, we hope that we still can improve it. It's not that easy that we are all aware of. As I said, there are some hedges or model books running off. On the other hand, if we assume a loan growth of, I don't know, 3%, 4%, maybe even more after the positive news with vaccination, then -- and if this is a nice product split between unsecured and others, then I -- where I said it should be on the level what we expect for this year. And it should be a little bit higher than EUR 770 million x4, so I hope for a little bit more, of course.

[Hannes Mosenbacher, executive]

Well, if I may take the question on the impact when it comes to the ever new definition of default. I think you can recall that already in 2019, we have introduced the new default -- definition of default and have also reflected what is the impact when it comes to the risk costs in quarter 4 of 2019. Now it depends on how you read the guideline. The one is on the non-retail side, we, anyway, use through the cycle PD. So we would not assume, as of today, any impact out of this new default definition on the non-retail side. And on the retail side, it still needs to be seen if we would employ through the cycle, we would have experienced a slight updrift on the retail RWAs.

[Johann Strobl, executive]

And on your -- I think it was the last question that you raised, the M&A. Yes, here I think every rationale, what we used to explain is still valid. So these days of very low rate or negative rate environment is an invitation for consolidation and the market, which we mentioned, Czech Republic, maybe Slovakia, maybe not so pronounced, then Romania, Serbia, this holds still.

[Operator]

Our next question comes from Robert Brzoza of PKO BP Securities.

[Robert Brzoza, analyst]

I have one more question on the NII development in the Group Corporate segment. Has there been also any negative impact of lower average loan rate for the multinational lending, because we've seen that there is a downward pressure on the corporate lending prices across the region. Second, in Belarus, there was quite weak NII result also taking aside the question of the currency. Should we expect more or less this level of the NII going forward? What was the major driver? Was it also hedging related? Because the drop was quite sudden. And finally, could you comment on the stage 2 development? One, in mortgages, there was an increase of EUR 1.1 billion over the quarter, quarter-to-quarter. And in the Corporate segment, there was a decrease of EUR 1.3 billion third to second quarter 2020. Could you comment what was the reason for these changes and which sectors in the Corporate Stage 2 book were most positively affected?

[Johann Strobl, executive]

Yes. When talking about the net interest income and in this segment with large and multinational customers, so what we can say is 2 elements, which somehow are contradicting. So as I explained, we had a situation that we even had -- if we compare Q2 with Q3, those which we booked, we even had a marginal improvement on the new volumes. But one has to say that for a while, we also have been rather selective. And so we observe, and this is the second part of the question, we observe and confirm that there is large customers, and in some countries, even more so for quasi-sovereign. So corporates, which are held and which are close to the sovereign, local sovereign, which by some banks are properly treated like the sovereign itself. And therefore, there is -- there is some additional pressure on that. And in our case, it was also the structure. There had been -- in the third quarter, there was a reduction in long-term loans by, one might say, repayments by some customers on the one hand and less new generation, as I explained before and what you have seen also in the chart.

When talking about Belarus, there are several impacts. The one is that the Central Bank is defending to some extent the currency as well. So this means that liquidity is limited. The Central Bank is very careful in managing the liquidity in the system, which creates pressure on lending in local currency to private individuals. So this is very difficult now. And the FX impact I also mentioned, so it's 2 or 3 impacts. And I would say, it's -- as they only have 1.1% of assets in the total group, that the impact is on group level, not so huge overall, but yes, when looking at the NII, also we had a negative contribution from the country. And I think that it might be complex for the next couple of months in the country. Given this uncertainty is what we have mainly in the political area.

[Hannes Mosenbacher, executive]

Well, thanks for your question on the Stage 2 dynamics. I go back again a little bit in history. Already in Q2, we were using the way on how we have looked at the whole story that we have employed on an industry level, the shift of the full industry into the Stage 2. But of course, this -- you cannot run through towards the end of the year. And going also back to a question of Andrea, we have then looked into the details of the individual customers within this industry bucket and whenever we have performed the re-rating, it was taking out of this comprehensive way of leveling the full industry into the Stage 2. So that's the reason why you see broadly now a reducing dynamics when it comes to the Stage 2.

Secondly, what we also have seen and my colleagues have just provided me with the single counterparty names, some of them just repaid. They have been Stage 1. Because of this leveling, it was Stage 2. But also, of course, as we have discussed beforehand, we have seen also some repayment of these clients. On the retail side, it goes back to some mortgages where we have based on the currency and/or on the moratorium, we have shifted them to the Stage 2. So that's the basic and the background of the dynamics on the Stage 2 bookings.

[Operator]

We'll take our next question from Simon Nellis of Citibank.

[Simon Nellis, analyst]

Just curious how you're thinking about risk costs for next year. I know it's a difficult question. But just given what you know now, you've improved your macro outlook a little bit in some markets. And you're feeling on risk cost for next year would be helpful. And then just 2 quick technical questions. Can you just remind me how much of a dividend was deducted as accrued for this year? Sorry, if I missed that. And also I see in your reported results that the fully loaded core Tier 1 was 12.5%, excluding earnings. And you're saying it's 13.1% with earnings, but earnings were just 30 basis points of risk-weighted assets. So I'm just wondering where the other 30 basis points came from?

[Hannes Mosenbacher, executive]

Well, the first question goes to me, and since our CEO was quite heavily challenged today with many questions with 2021. Simon, I think it is really very demanding and to the best of our knowledge, you have many effects. You have the movements from the Stage 1, Stage 2, Stage 3. You have the rating migrations. You have then the inflow on the Stage 3, which, of course, next year shall be more pronounced if you do not have these tax holidays and the moratoria. So having said all this, I could also make it less dramatic. But I think we would be around the same level as we have seen today, of course, with a bigger margin of error, so to say. So again, this is around 75. And of course, we will reach out to you if we need to adjust, but this is to the best of our knowledge. And I give you a glimpse where the different dynamics are coming from?

I know that some other market participants have been even more constructive when it comes to the risk cost but I think we have 2 effects, what we must not forget, which partly compensate, the one is on the macro models. [indiscernible] was given this outlook, you should get sort of a relief; on the other hand side, you will still see the one other migration because, as I have said also beforehand, then you get the hard numbers, then you get the balance sheet figures. And you could expect the one other rating downgrades still to come. So that's the thinking. That's the number on how we come to this around 75.

[Johann Strobl, executive]

And to the dividend question, we had proposed this EUR 1 per share, which is close to EUR 329 million or 41 basis points. And then during the year, we take the lower end of the range. So the 20% of the profit, which in that case, is EUR 128 million or 16 basis points. So -- and these 2 would add up to 57 basis points, which we do not recognize as of today in the CET1 ratio. And the explanation why the 12.5% and the 13.1%, the gap is so big is this is, to my understanding, if you do not -- if you do not have a full audited report, you do not only -- you are not allowed to recognize the profit. But in addition to that, you have to reduce some of the provisions. And if you add these 2 elements, then this explains the -- so not only that you don't show the profit, but it's -- like as you were negative in that quarter because of the provision. So this is the way we understand the regulations, and that's why the difference is so big. And that's what it is.

[Operator]

And we'll take our next question from Johannes Thormann of HSBC.

[Johannes Thormann, analyst]

Johannes from HSBC. Two questions from my side. First of all, it's fair to say that you have 1% of your exposure in hotels. Would you still consider this the biggest risk industry or the biggest industry risk in your portfolio? And if you could provide more details, like if it's in Austria, Croatia, the usual tourism, city or rural hotels or holiday resorts, what's behind this? And secondly, just more general question. You're talking to regulators as well. What are you hearing regarding dividends? You hear them saying about a differentiated approach or do you want -- will they go again for a more blanket approach one-sided or for all banks and then although, Mr. [indiscernible] is just German bucket head, but he hit the tapes today saying he wants a conservative approach, what are you hearing from your Austrian regulators?

[Hannes Mosenbacher, executive]

Well, thank you very much for the question on the hotels. I tried to explain already our way of thinking in the last quarter. There are a couple of things. And if you look at our portfolio, and this is the thing what I would like to focus on. We have financed the 1 other hotel within the centers. So all the hotels what are used for traveling, what are used for any conferences, with a very good -- being very well reflected within the city. This is what you would find in our portfolio. So no sleep over anywhere on the outskirts, so like 2 or 3 stars. So we are talking about a different category. This is the one thing what I can tell you regarding the hotel portfolio. So you would also not find just pure leisure hotels in our portfolio. Is it in Croatia or is it somewhere else? Yes, there could be some EUR 5 million or EUR 10 million here and there, but the EUR 1 billion is comprising mostly of the one what I was saying, hotels in very good locations within the cities, focused on city tourism and some conferences. This is the way we are looking at the story.

Big part is coming from within Austria, with very good locations; a little bit of Czech Republic. With new, you would also find the one other and this is almost decent. The Croatian portfolio is already much, much, much smaller. So what is our thinking on the hotels. The one is, we are in regular contact with all these hotels to see how did they cover on the rates and also on the utilization? What we can see? And we also look at the same time always at China. Because in China, you can see now in some of the city hotels that the occupation is already being back to between 50% to 70% from the peak, what we have seen in 2019. Why is this important for us because it could be of a front-running indicator to us. The hotels we are financing. We are currently on a utilization of some, let's say, 15% to 25%. At the same -- so that's the one how it's being utilized. The other one is how it's being structured when it comes to the underwriting. And I already made a very important point, they have really best locations. They have the best locations and usually, you finance it that there is a reserve cash account. And suddenly, you have then your regular amortization and then you have a sort of a balloon payment. But this balloon payment is very nicely covered multiple times by the value of the entire hotel you are financing. So this is what I could talk about. Yes, you're right. And this is also the reason why we have allocated some of the post-model adjustment to this distinct portfolio, because I think this will be a very small fraction of our total portfolio, which keeps us also quite busy in the [ work-hard ] units and restructuring units in the coming quarters to come.

[Johann Strobl, executive]

When talking about the regulators, the Austrians always follow very, very fast ECB EPA recommendations. So they do not develop their own view when talking about dividends in the public we immediately get the call where they question us again why we are so positive on the dividends. But this is the current policy, I would say. I hope that there is a change in their policy. But the signals what we hear from the ECB and the EPA, I would say, a rather mix standard. It comes like, I don't know, cold-warm, hot-sour something like this. When one person is a little bit more positive and another one steps in and is less positive, and there are so many of them. So that's difficult to understand it.

[Operator]

[Operator Instructions] 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 all your questions, for your participation, for your time. Stay healthy. I hope we hear each other soon. I think it's looking to Jan latest and if we don't have any other meetings early February with the preliminary results. Thank you. Stay healthy. Bye-bye.

[Operator]

Thank you. You may now disconnect.