Deutsche Bank AG (DB) 2004 Q1 法說會逐字稿

Good morning ladies and gentlemen and welcome to the Deutsche Bank Investor Relations Conference Call.

At this time, all participants are in a listen only mode.

Later we will conduct a question and answer session and instructions will follow at that time. [operator instructions] Just to remind you all this conference call is being recorded.

I would now like to hand over to the chairperson, Dr. Wolfram Schmitt.

Please begin your meeting and I will be standing by.

Yes, good morning and welcome to Deutsche Bank's first quarter conference call.

We have published our earnings release this morning.

Also you will find as usual on our website the full financial data supplement, as well as a set of PowerPoint slides which will be referred to in the course of this call.

On this I would like to hand over to our CFO, Clemens Borsig, who will present our financials to you.

Clemens.

Thank you, Wolfram.

Good morning to all of you also from my side.

The first quarter 2004 was very successful for Deutsche Bank.

We achieved a record performance.

The key takeaways are a substantial increase profitability, all profitability figures and ratios are up substantially.

We have seen continuous strength, especially in Sales & Trading and Origination, and we made a substantial progress in North America and in Asia Pacific.

Something which is very pleasing to us is also the successful turnaround of our PCAM, particularly PBC.

We achieved a further strengthening of our CIB franchise.

The asset quality has further improved.

In summary, we are well on track to deliver on our challenging targets.

The next slide gives you an overview of our income statement.

I am going to explain the numbers in more detail on the next slide but just one observation here.

This is increases in revenue, quarter-on-quarter and year-on-year of roughly €1b, fed straight through to the bottom line, both on a reported as well as on an underlying basis.

On the following slide you have the key financials, and in all those key figures you see very strong progress.

Page seven substantial in terms of profitability, substantial growth and convergence.

Our underlying pre-tax profit increased by 45%.

What’s also very important here is to mention is, we haven’t had any unknown underlying charges in the first quarter 2004.

So, our reported numbers and our underlying numbers, as I mentioned in prior calls and meetings, really have converged which is very good.

We talk about underlying profits here, I guess, only for the comparison with the last year.

Page eight shows you our quarterly development of our underlying pre-tax profit.

I mentioned the increase of 45% year-on-year, quarter-on-year, it is an increase of over 100%.

We have seen very strong revenue momentum, primarily driven by investment banking revenues.

And in a few moments I will give you more details of the driver of that revenue growth.

On a FOREX and deconsolidated adjusted basis, our underlying revenue increased by 13% year-on-year, in investment banking by 22%.

Quarter-on-quarter the increase was 14%, in investment banking 24%.

Our operating cost base, that is the next slide, driven by higher incentive compensation.

In line with our very strong performance in investment banking, our accrual for the incentive compensation has increased, while our fixed compensation has come down.

Both on a quarter-on-quarter, as well as on a year-on-year basis.

Our comp ratio has stayed flat, as we will see in a moment.

As far as non-compensation expenses are concerned, they have further come down and this is by higher business volume.

So, all our key operating ratios - the following two slides - have improved.

Our underlying return on equity pre-tax has increased to 22%.

This compares very, very favorably with 13% a year ago and 11% in the first quarter of last year.

I would also like to mention, and we will see that in a moment, that the return on equity in CIB was 36% - it is a very good number.

PCAM achieved a 25% return on equity.

Underlined here is the profit margin increased to 23% and equity turnover to almost 100%.

The next slide gives you the cost ratio.

The underlying cost ratio has come down to 74%, compared to 77% a year ago and 84% in the fourth quarter.

As I mentioned before, while our compensation ratio has stayed flat, our underlying non-comp ratio has come down significantly.

On the back of our restructuring program and due to our ongoing cost disciplines, we are managing our cost income ratio for greater consistency.

If you look at the numbers last year, you see a little bit of volatility and we want to reduce this kind of volatility.

So for the Group results, now discussing the segment results.

Page 14 gives you again an overview of our reported segment results.

Let me now discuss the performance in the various sectors in more detail.

Turning first to CIB - CIB achieved, as I said before, a very, very strong performance.

Underlying profit, year-on-year, is up by 22%, and quarter-on-quarter is up by 161%, to more than €1.1b.

Revenues came in very strong as I mentioned before, and I will discuss the details in a moment.

On a FOREX adjusted basis, revenues were up by 17%. [Progress] on provisions, the increase in the operating cost base is entirely due to a higher incentive based compensation, and pre-tax profit is up.

The cost income ratio came in at 69%, a significant decline compared to the average number of last year, which was 73%.

Return on equity increased substantially to 36%.

I am now discussing in a little bit more detail the revenue performance in CIBs.

First on fixed income - as you can see here, very strong - continued very strong performance in fixed income, currency adjusted year-on-year.

An increase of 15% to almost €1.9b, and the increase quarter-on-quarter was 57%.

Let me highlight four factors which have driven sustained growth in our fixed income business.

First, we have continued to leverage on our leadership in high value, high margin, fast growing market segments such as credit and interest rate derivatives, emerging markets, and asset and mortgage-backed securities.

Secondly, we have grown in flow products due to market share gains among corporate and end-user clients.

Thirdly we have been successful with gains in proprietary trading.

Nevertheless, customers flow business continues to predominate.

Something which also very pleasing, our cross-selling fixed income product to PCAM private and high net worth clients, particularly with private and business clients, has made substantial progress.

Turning to equity, very strong gains year-on-year.

Revenues were up year-on-year by -- FOREX adjusted by 40% to almost €800m.

The decline quarter-on-quarter is due to the fact that the fourth quarter for us was a very, very successful quarter.

So, it is a bit of a base effect.

Let me now highlight the key drivers of this strong performance.

At first we had positive impact in cash equity commissions in Europe and the US.

Derivative revenues increased due to trading and strong customer business.

Proprietary trading benefited from strategic diversification into Asia.

We had very good trading results in Asia, in America and in Europe.

Convertibles however, were adversely impacted by market conditions but these are starting to normalize.

We were confronted with challenging trading conditions in Pan-European markets following continued uncertainties arising from terrorist activities.

Turning to origination and advisory - a strong increase of 22%, FOREX adjusted year-on-year, quarter-on-quarter, we have seen a slight decline.

Let me highlight the main factors which have driven our performance here.

In origination equity, we had the best ever quarter in Asia Pacific, and the best quarter in the US for the last seven quarters.

We have retained a leading market share in Eastern Europe and Africa.

In origination debt, we had strong growth in real estate debt business.

We had buoyant market conditions in European high yield.

We are here the number one issuer with dominant market share, and we are number one in the EMEA investment grades debt underwriting.

Advisory announced market volumes stronger across the board but based on a few large deals.

Number one in first quarter advisory fees generated in Europe, and we consolidated our leading position in Germany.

Unfortunately M&A activities in Germany haven’t lived up yet to expectations.

I mentioned as one of the key takeaways the turnaround in PCAM.

This is something we are very, very pleased with.

As you can see, the underlying profit has substantially increased 79% year-on-year, and 45% quarter-on-quarter, to €410m.

The pre-tax return on equity, as I mentioned before, has increased to 25%.

Revenues have grown, provisions came down.

Operating costs, after our restructuring efforts, has come down, and all this -- then the look of this strong pre-tax profit development.

On the next slide you have the highlights for PBC and this is exactly what we are very pleased about.

They substantially increased their profitability to €255m, which is consistent with our target of annual profits of €1b.

Their return on equity more than doubled to 65%.

Actually, it is absolutely clear that our restructuring efforts now are bearing fruit here.

This is, I think, a substantial achievement of my colleagues in that business, this turnaround.

In asset and wealth management we have seen an increase in profitability of 53%, or €155m, in the first quarter - compared on a quarter-to-quarter basis profit has come down.

I want to mention here three factors, and first, the business is seasonal here.

Secondly in the third and fourth quarter we had gains in the real estate.

Last year we had gains in the real estate area.

We had the successful placement of our global opportunity funds.

Thirdly, performance fees are always back-loaded.

Within asset and wealth management, wealth management had a very successful first quarter with net new money inflow of about €3b, and further progress both in terms of revenues, as well as on cost.

So the underlying profitability has further improved markedly.

Turning to corporate investments, our strategy to reduce our investment in alternative asset has substantially de-risked the Bank, with a very positive effect on the bottom line, as you can see here.

A year ago we had one-off charges in this area, and they have now entirely disappeared, as I mentioned a moment ago.

Let me now turn to risk and capital management.

Again, this continues to be a very good story.

Our loan book now stable at €149b and, as a matter of fact, our corporate loan book has slightly further come down.

As to credit losses, we have seen the second consecutive quarter of declining risk provisions.

While the credit environment in Germany still remains challenging, we have seen an improvement on the retail fund, and we have seen particularly an improvement internationally.

Our declining risk provisions also reflect the success of our work [Groups] within credit risk management, and also our tight discipline which we have in our credit risk management.

I can also say that the quality of our loan book, in terms of rating, has further improved, and the declining risk provisions clearly reflect this.

On the back of this we have seen continued reduction of our problem loans, now at €6.3b.

Going forward, we expect problem loans to come further down, and the cover risk ratio to go up to something like 50% by year end.

Tier 1 ratio - consistently strong - has now increased to 10.1%.

This is the result of our capability and of our profits.

I have said it because the increase in the Tier 1 ratio was achieved despite continued share buy-backs.

In the first quarter of this year we repurchased about €12m shares for a total consideration of around €800m.

It is absolutely clear that the capital strength which we are having allows us to further continue with our share buy-back program.

So, let me finish my discussion just with a summary.

I started the key takeaways are, substantial improvement in profitability; very successful turnaround in PCAM, particularly in PCB; and a further strengthening of our CIB franchise.

Against this backdrop we feel we are very well positioned to deliver on our challenging targets.

Thank you very much for your attention and I am now pleased to answer any questions you may have.

Thank you. [Operator instructions] Our first question comes from Jeremy Sigee.

Please go ahead with your question, announcing your company name

Thank you, Jeremy Sigee from Citigroup.

Could I ask three questions, please?

Some of them you touched on but I just want to get into more detail.

Firstly, equities looks less good than some of the competitor trends we have seen.

You mentioned challenging trading.

The volumes have remained good in the market, so I wonder whether that implies proprietary losses in your case?

Second question, asset and wealth management.

You talked about some of the gains not recurring and some of the seasonality.

But I am still surprised - even if we just look at the portfolio and the fund management fees - those seem weak, weaker than any quarter last year, despite better market levels.

I just wondered if you could comment a bit more on just the core fund management fee levels?

Final question, I just wondered if you could give us an update on the Daimler Chrysler stake?

What your break-even point is for disposing of that and whether we are closer to that at this stage?

Yes, the first question in proprietary trading equities, the answer is no, on the contrary.

But what I have said is that throughout the fourth quarter, which usually is a low quarter in equities, was very, very successful.

We were also successful in proprietary trading here.

On Daimler I guess we disclosed that number, the break-even number as €38.5 per share.

On asset and wealth management, again I have to re-iterate here that this business is back-loaded.

In terms of fees [out], our commission income and you know we usually book them at the end of this year.

Commission income -- I have the only -- we discuss only the PCAM number here, is up by 4%.

However, we have a substantial piece of that business in the US, so that has impacted by the shift in exchange rates.

The 4% is the nominal number.

Thanks.

Our next question comes from Fiona Swaffield.

Please go ahead with your question, announcing your company name.

Fiona Swaffield from Execution.

Can we go in to -- I think you mentioned that the proprietary gains were a bit greater than the long-term average on fixed income.

I mean I remember, I think, it being said that 80-20 was the rule.

Could you give us a bit more of a feel?

Was Q1 2004 bigger than, you know, greater proprietary trading in Q1 2003?

The second area is, when you look at the investment bank you had a very good non-staff cost to revenue level.

Do you think - you know, what is going on in your investments on IT?

Have you now started to invest more or do you think that level is sustainable?

Thanks.

Yes, on proprietary trading, it was slightly up in the first quarter this year.

We felt we should take advantage of market opportunity.

This also should be seen in the light of the fact that we have so massively de-risked the Bank by substantially reducing our exposure to alternative assets.

But, as I said before, the business though is absolutely dominated by businesses that are [indiscernible] and not by proprietary trading.

As far as investments and the investment bank are concerned - no, we have not reduced our spend.

We called this spend on change the Bank, and our target is to spend this year the same amount of money which we spent last year.

So the improvement in the non-comp ratio is a reflection of the higher efficiency which we have achieved as a result of our cost reduction efforts.

Thanks.

Our next question comes from Kian Obihusian.

Please go ahead with your question, announcing your company name.

Yes, hi, it is Kian from JP Morgan.

Calling regarding three questions.

First of all, PCAM.

If I take the pre-tax number and I take out the severance cost, I get to a level of about €1.7b.

I remember Mr. Ackermann saying that in January you are already running at your target of €1.8b to €2b.

So has there been a slowdown in February and March and how should we see that this is developing?

Second question is to CBNS, fixed income volatility has been trending down this quarter.

Can you talk a little bit about outlook?

Also, expense ratio looks relatively high.

Are you over accruing for the year using the very good revenue environment?

The last question is on page 33, SFAS 150 shares have increased.

Can you give me a bit of flavor of -- is this just related to -- I really do not understand why they are increasing?

Also if you could tell me roughly the maturity of the shares?

Yes, on PCAM, the first question was slowdown - the answer is no, what shows that in that conference, if I recall it correctly.

I sat next to him so I know exactly what he said.

He said you can take January but you cannot multiply January by itself.

There are two factors -- I mean if we now analyze -- you know it is a dangerous thing to analyze forwards but if we analyze months it is even more dangerous.

January has more working days and also declined a little bit more active in January.

February has less working days.

But we cannot, as we look at the trends, and so we cannot say that we have seen a slowdown in revenues.

As a message, what is important is that the achievement in the first quarter is consistent with the target which we set ourselves.

Well, on CBNS, and here particularly in fixed income, every conference call, so every quarter we discuss rate.

The very good performance of us in fixed income, and the issue of is there a negative outlook for the following quarter?

I do not want to go now into forward looking statements.

But if you take the reasons which I have given for the strong performance in the first quarter, I guess you yourself can come to the conclusion what this means for the second quarter.

But we have always highlighted that the fixed income business is a seasonal business, and for them the first quarter is their strongest quarter.

I just want to reiterate the seasonal characteristic of the business but this has nothing to do with the annual trend.

You mentioned our expense ratio and the issue of over-accruing.

I mean what kind of answer do you expect?

As a CFO I can only say that we did on the accrual front the absolute right thing, and we have chosen again, we are pursuing a prudent approach to accruing.

As far as the SFAS 150 effect is concerned, you know that we had equity [clients] in February and they are reflected in those numbers.

Okay, but the number of shares are increasing significantly, that is what I understand SFAS 150 but I do not understand why there is a such a significant increase.

I mean, we have given you the number of shares which we have graded, and that numbers of shares have been hedged, and the increase is just the additional hedge.

I think this -- I am a little bit surprised that you are surprised by this chart because that is exactly what I said in the last conference.

I talked about it, it will end up around €20m, and we have in fact hedged the entire amount.

Okay, thank you.

Our next question comes from Adrian Fields.

Please go ahead with question, announcing your company name.

Yes, hi, it is Adrian Fields, MainFirst.

Two questions please.

One actually more to PCAM in the retail banking side, seems to be quite good numbers and performance.

I am just trying to understand your stronger pre-tax performance.

Can you give us a highlight or indication how much of that performance came from underlying improvement in credit margins, net interest income margins?

How much came from simple brokerage fees by just your customers going back into the equity markets, doing some trades, and giving you fees for that?

So, you can give us a sort of a split or some sort of indication within retail banking, which side of the fence has improved please?

Second question on the assets under management, net new money inflows and maybe a comment on the US operation.

The way that I interpret most of your net new money, it is sort of stabilizing.

There are some outflows whether because of deconsolidation or something like that.

Could you comment a bit more on the US side, especially the [Forma Scudder] franchise, how that has been operating?

Is that profitable now again in Q1?

Could you comment a bit on that, please?

On this new money, again, we have, as I mentioned before, strong inflows in wealth management.

Also in PBC on the security side we had positive inflow but we had outflows on the institutional side, and this is predominantly in the US.

It is exactly the same reasons which I gave the last quarter.

Part of it has to do that -- to reduce concentration of the company, we brought those cover from -- has reduced assets and also resulting from our restructuring which reduced the assets under management.

It is nothing, again, which would worry us too much.

As you know, institutional fund management business is not a particularly profitable business anyway.

So, if you will, the quality of our assets under management by and large have improved.

As far as the profitability of [Scudder] is concerned, or our US operation is concerned, I mentioned the last time that the operation was break-even last year and has stayed on that path.

The progress this year in the US depends upon their performance then in the second half, as their revenues are somewhat back-loaded.

But we feel that we are making further progress in improving our business in the US.

On PCAM that really comes from -- I can only tell you it is a combination in a way, in a combination of all factors.

You mentioned margin improvements, we have also observed the margin improvement in our loan book.

For more details I would suggest you go back to investor relations and they will provide you with the answer.

Thank you very much.

Our next question comes from Satish Pulla.

Please go ahead with your question, announcing your company name.

Hi, this is Satish Pulla from Schroder Investment Management.

Just a couple of quick questions on the sales and trading revenues in both fixed income and equities.

Could you give us a quick feel on the value at risk estimates for, you know, first quarter 2003 versus first quarter 2004 in fixed income and equities?

I am just looking for the respective --

I guess I am looking at slide 16 and 17.

We have [Tony Di Rolli], the Head of Controlling who is giving you the details, okay?

Tony.

Compared to the prior year, we break down interest rate equity, effects and commodities, VARs.

Well, VAR is up in the interest rate area by approximately 50% of the prior period, to just over €60m.

Equity VAR is up approximately the same percentage to approximately €30m.

FX and commodities risk is flat for the prior year, a combination of the two of just under €14m.

Let me say, you know the VAR is only one measure of risk.

At least equally important is economic capital because that tells you more about the risk under stress than revenue.

As I said, on prior occasions our economic capital in this area has not increased as much as the VAR.

So in a way we are not taking, if you will, really a lot of additional risk.

We feel comfortable with the risk which we have been taking.

Our positions are very, very liquid and if need be we can reduce our VAR substantially within hours.

So, again, what I am trying to say, survival would be one indication of risk.

Perhaps -- it is the most universally used but perhaps it is not the best measure of risk.

For us economic capital consumption is more, and as I said, in this regard we haven’t increased our risk in line with a VAR increase.

Again, the numbers you were looking for you will find on page 23 of the interim report.

Thank you.

Our next question comes from Stewart Graham.

Please go ahead with your question, announcing your company name.

Hi, it is Stewart from Merrills here.

I have two questions please.

Just on the bonus accrual again, just to be clear.

Have you changed your policy because I think earlier in the presentation you said that you were looking to reduce the volatility in the staff cost revenue ratio?

Could you just say if you have changed your bonus accrual policy from last year or not?

The second question is on loan products in the investment banking division, that looked quite strong to me.

Could you just comment if there is any impact on the credit default swaps in there?

I think you talked about syndication fees in the statement.

So is that [investors] lumpy revenue?

Could you just comment upon the 463 loan products in investment banking please?

Thanks.

Yes, Stewart, on bonus accrual, no, we have not changed our accrual methodology.

All we have said, it is a model driven by what we have done we have refined it.

As far as the loan hedging is concerned, we have further increased our loan hedging program.

However, as mark-to-market -- excuse me, as credit spread has widened a little bit, we had some positive on the mark-to-market which offset partially the expenses for the premium.

To give you a number of what we have hedged, we are now at - after the first quarter we were at €17b -- €17b of the loan book has been hedged compared to €13.9b as of December 31.

Sorry, can I just come back on the bonus accrual thing again.

When you say refined it, is that making you more like your US peers who tend to sort of have very high staff cost revenue ratios at the beginning of the year, and it drops dramatically?

Whereas you tend to be more of a sort of flat line in terms of staff costs, revenues?

Is it a material refinement I guess is my question?

I guess this is a question, the kind of question, you know, where I am a little reluctant to answer.

It is a little bit in this direction.

Okay, all right, thanks.

The next question comes from Mark Rubenstein.

Please go ahead with your question, announcing your company name.

Yes, good morning.

It is Mark Rubenstein from Credit Suisse First Boston.

A couple of questions.

Firstly, on provisions.

You -- thinking back to 2002 you correctly called the turn in the provisioning cycle in the third quarter.

What is your view now, given the low level in provisions, particularly given that charge-offs still seem to be quite high and still represent a multiple to the rate of new provisions being added?

Secondly, can you explain what went wrong in the convertibles business, please?

On the provisions side, I think we have now a pretty low level.

If you recall, this current level is around the expected loss of the portfolio.

It is an open question whether we can go further down.

We have seen in the first quarter some successful work outs with recoveries coming in a little bit higher than expected, and that has been contributed to this €141m.

So we do feel, I mean -- we do feel at around this level, €150m plus or minus, this [kind of objective] is a new level for our risk provision.

On the charge of fund, it is right.

We had a charge of this quarter again.

As I said before, we are still a little bit in a catch-up mode to get fully aligned to the US GAAP practice where you charge off problem loans much [faster].

Also, some work out with a result of a net reduction in problem loans slipped into from the first quarter most probably into the second or the third quarter.

That the basis why I said by year end we expect our coverage ratio being back to the 50%.

Thanks, and on the convertibles?

Just a second Mark, just get the message.

I mean in a nutshell on convertibles, you know convertibles had a very successful year 2003.

It was one of the hottest products, if you will, in the equity estate, that is not Deutsche specific that is in general.

By the end of this year some investors were a bit concerned about valuations hadn’t gone too high in the convertible field.

But in the first quarter we have seen some sell-off in convertible, making the environment less benign than what it was before the year before.

But as I said, during the course of the quarter we saw a stabilization of this trend.

Okay Mark?

Thanks.

Our next question comes from David Williams.

Please go ahead with your question, announcing your company name.

Morgan Stanley here.

I just have a question on your full year targets.

At the Q4 stage, you targeted €6.5b of pre-tax profits for the year, and I think that is a target you re-iterated a number of times during the quarter.

Looking at your underlying pre-tax in Q1 €1.4b, if you analyze that, clearly you get to €5.6b.

And as you suggested already, there is a seasonality to the business, whereby Q1 tends to be the best quarter of the year for Deutsche Bank.

So could you please give us an update on where you stand in relation to the full year targets now, please?

Thank you.

I expected this question.

At first, when we presented slide number - I guess it was page 14 on first presentation - we did not say this was the forecast for 2004.

We said this is the model, how we reconcile our performance last year to what is necessary, given the conditions by the end of last year to achieve the 25%.

To demonstrate that the 25% return an equity target, clearly is in reach.

If I now reconcile our performance in the first quarter with this target, again I don’t make forward looking statements, I just reconcile.

Then we have to keep in mind a few factors.

I guess on the revenue side we are in line with what we said with the model.

What we do have is we have some seasonality here, for example, in corporate investments.

The underlying loss which we have shown of €100m in the first quarter reflects the seasonality of this business.

Secondly, we have seasonality, for example, as far as the severance and other consolidated expenses are concerned because, clearly, those effects are front loaded.

You know, the [EMEA] people prefer [indiscernible] at the beginning of the year and not so much at the end of the year.

So that there is a bit of -- a few seasonalities.

Then we have volatility - volatility relate particularly to corporate consolidations and adjustments.

Our number here in the first quarter is higher than what we have in the model, and it is higher with the monthly average.

There are a few more volatility numbers.

We had a one-off charge which we have, in fact, in our model and this is a vacant space charge of €43m.

If I take all those factors into consideration, our performance in the first quarter is in line with our 25% target.

That does not mean that I made a forecast that we will achieve this because this depends very much upon market development.

Thank you.

Our next question comes from Roland Gosche.

Please go ahead with your question, announcing your company name.

Yes, thank you.

It is Roland Gosche from Citigroup.

I just wanted to go back to the question on loan products and also on asset management.

On loan products, there seems to be a quarter-on-quarter €240m difference in terms of the results.

I can see that you’ve got about €100m variance on the hedging gains.

To what extent should we just assume that the remainder is simply a few large, you know – you close a few large transactions?

Or is there any kind of other improvement here because the hedging gains only seem to account for about half of the change, quarter-on-quarter?

Then on asset management on the institutional business, the outsource rate has slowed.

In previous quarters you talked about that being very focused on money market products.

I wonder if you could give us any kind of product comments in terms of equity versus money market versus fixed income?

Thank you.

Okay, the first on loan products.

Out of the revenue loan products in the fourth quarter last year, they are very low and, that was primarily due to two factors.

One was the losses on hedges or the expenses mark-to-market losses for hedges, a factor which you mentioned.

The other one was, and I explained this, that we had a catch-up on an [ABS] security.

It was modification in accounting which was found in the catch-up, and then catch-up then was a charge to revenues.

We are now absolutely at the same level as last year.

You can conclude from that the loan book is a bit lower, particularly the loan book in the corporate role.

As I said before, some margins have improved a little bit.

I guess what I am trying to say is that the fourth quarter last year, you know, was an operation from normal, and we are now back to normal.

On the contrary, we have improved a little bit also year-on-year.

As far as asset management is concerned, I mentioned the last time [all was said], it is particularly cash product.

As far as the portfolio is concerned, which I mentioned before from the firm we bought, we acquired those covers from.

This was not only business, not only cash but it is also predominantly fixed income.

Thank you.

I think we prefer to take one concluding question.

Okay, the last question comes from Richard Ramsden.

Please go ahead with your question, announcing your company name.

I am sorry he has actually withdrawn the question.

Okay, so then I think we are done.

Thank you very much for all your questions today and joining us on this call, and looking forward to your comments.

Thanks.

Ladies and gentlemen, thank you for your participation in today's conference call.

This concludes the call, you may now disconnect your lines.

Thank you.