Deutsche Bank AG (DB) 2023 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the Deutsche Bank Q3 2023 Fixed Income Conference Call. (Operator Instructions)

I would now like to turn the conference over to Philip Teuchner. Please go ahead, sir.

Good afternoon or good morning, and thank you all for joining us today. On the call, our Group Treasurer, Richard Stewart, will take us through some fixed income-specific topics. For the subsequent Q&A session, we also have our CFO, James von Moltke, with us to answer your questions. The slides that accompany the topics are available for download from our website at db.com. After the presentation, we will be happy to take your questions.

Before we get started, I just want to remind you that the presentation may contain forward-looking statements, which may not develop as we currently expect. Therefore, please take note of the precautionary warning at the end of our materials.

With that, let me hand over to Richard.

Thank you, Philip, and welcome from me. It's a pleasure to be discussing our results with you today. We show continued progress on the path to our targets in several respects. Let me start with the key highlights of our resilient performance over the first 9 months on Slide 1.

We delivered operating leverage of 4% on an adjusted basis with revenues up 6% and adjusted costs up 2%. As a result, our pre-provision profit for the first 9 months was up 5% year-on-year to EUR 6 billion. Our post-tax return on tangible equity was 7% and would have been nearly 9%, excluding nonoperating costs and with bank levies apportioned equally across the year. This reflects progress on our path to meet our 2025 target of above 10%.

In addition, we continue to reap the benefits of disciplined risk management and a high-quality loan book. Provision for credit losses for the first 9 months remained in line with our full year guidance at 28 basis points of average loans.

Let me now discuss the growth and balance across our business on Slide 2. The Corporate Bank delivered a post-tax return on tangible equity of 17% over the past 9 months. Strong revenue growth, combined with flat adjusted costs, driven by tight expense discipline, produced operating leverage of 24%. Our momentum with key clients is encouraging. We saw an increase of around 40% in incremental deals won with multinational corporate clients, which will drive future revenues.

In the Investment Bank, we have a well-diversified business portfolio supported by our leading financing business, which contributed EUR 2.2 billion or approximately 35% of FIC revenues year-to-date.

Turning to the Private Bank. The business grew revenues, attracted inflows of EUR 22 billion supported by new money campaigns and made further progress in streamlining our distribution channels.

Finally, we also grew volumes in Asset Management. Assets under management grew by EUR 38 billion, including EUR 17 billion of net inflows in the first 9 months of 2023, driven by strong inflows into Passive, including Xtrackers.

To sum up, we delivered revenues of EUR 28.5 billion in the last 12 months, up over 6% versus the equivalent prior period. We also see forward momentum from net inflows, investments and business wins with key clients. Our businesses are strongly complementary and well balanced. All of this supports our view that we will continue to grow our franchise and exceed our revenue growth targets.

Now let me turn to the progress we're making to accelerate the execution of our Global Hausbank strategy on Slide 3. With a compound annual revenue growth rate of 6.9% over 2021, we are well on track to outperform on our revenue growth target of 3.5% to 4.5%. And we will continue to benefit from the high rate environment, which drive sustainable performance in the Private Bank and Corporate Bank.

We continue to make progress with further initiatives that are expected to drive fee income. We are confident that the new entity, Deutsche Numis, will enable us to take added advantage of an expected pickup in Corporate Finance activity. With EUR 38 billion of net asset inflows in the first 9 months, we expect the growth of our assets under management to drive fee income in future quarters.

On operational efficiencies, our existing savings measures are largely proceeding in line with or ahead of plan. This includes streamlining of front-to-back processes and headcount management. We are also optimizing our distribution network and have reduced branches by more than 90 over the first 9 months of 2023. This enabled us to keep our adjusted costs essentially flat compared to the prior year quarter despite absorbing inflationary pressures and investments in growth and controls, and we continue to work on further measures.

Slide 4 provides further details on the development in our loan and deposit books over the quarter. All figures in the commentary are adjusted for FX effects. Loans have been essentially flat across businesses during the third quarter as well as on a year-on-year basis. Underlying this yearly trend, loans have declined due to lower client demand in interest rate-sensitive segments as well as due to more targeted and selective balance sheet deployments, offset by focused growth in FIC.

On deposits, we have seen significant inflows of EUR 14 billion or 2% in the quarter. This was driven by a strong client reengagement in institutional segments following the market events in the first quarter, resulting in a stable year-on-year trend. This trend has been particularly pronounced in the Corporate Bank, where we saw growth primarily in term deposits.

In the Private Bank, deposits remained essentially flat as inflows in the International Private Bank were partially offset by outflows in the German retail business due to continued macroeconomic headwinds.

For the remainder of the year, we expect a stabilization in our deposit book around current levels and materially above the previously communicated EUR 600 billion guidance, as recent growth in term deposits exceeded our previous forecast.

Moving to the net interest margin development on Slide 5. Average interest-earning assets were up EUR 6 billion, driven by the recovery in deposit balances in the third quarter. At the group level, NIM is down 12 basis points, of which approximately 5 basis points relates to accounting effects held in the corporate center, which were offset in noninterest revenues and have no impact on total revenue. This is the same effect we discussed with you in the first quarter.

Net interest margin in the Corporate Bank declined by approximately 25 basis points due to lower lending income and a higher cost of liquidity reserves. However, net interest income on the corporate deposit books remained strong in the quarter.

Net interest margin in the Private Bank remained broadly stable in the third quarter with increased mortgage hedging costs, offsetting the ongoing strong margins in the deposit books. Overall, our deposit betas continue to outperform our models, and we expect NII to remain broadly stable in the fourth quarter.

Moving to Slide 6, highlighting the development of our key liquidity metrics. The liquidity coverage ratio at quarter end was at 132%, due to proactive steering towards our target level and in line with our previously communicated guidance. The daily average LCR over the last 3 months has even slightly increased to 136%, demonstrating our sound liquidity profile.

The stock of EUR 210 billion of HQLA, which is mainly held in cash and Level 1 securities, has increased by EUR 6 billion, reflecting a strong deposit growth in the third quarter. The surplus above the regulatory minimum slightly decreased by about EUR 4 billion to EUR 51 billion quarter-on-quarter, mainly driven by almost EUR 7 billion of TLTRO repayment, including the early prepayment of EUR 3 billion maturing in December 2023. For the fourth quarter, we remain committed to support growth in the business while aiming to maintain the LCR around the 130% target level.

The net stable funding ratio was slightly up quarter-on-quarter to 121%, again mainly reflecting the strong momentum in our deposit book. This represents a surplus of about EUR 105 billion above the regulatory requirement. The available longer-term stable funding sources for the bank remain well diversified and are supported by a robust deposit franchise, which continues contributing about 2/3 to the group's stable funding sources.

Targeted deposit campaigns in the Private Bank as well as strong deposit momentum in the Corporate Bank also supported our NSFR. We aim to maintain our funding mix in 2024 with the remaining TLTRO of EUR 15 billion being gradually replaced, and we note that we do not have further material TLTRO repayments this year.

Turning to capital on Slide 7. Our third quarter common equity Tier 1 ratio came in at 13.9%, a 19 basis points increase compared to the previous quarter. Regulatory changes, principally from the go-live of newly approved wholesale and retail models, resulted in a decline of 38 basis points, slightly below the low end of our previous guidance. Optimization initiatives generated 27 basis points from lower credit risk RWA, principally reflecting improvements in our data and certain process changes.

A further 19 basis points of ratio support came from diligent risk management in our businesses and an 11 basis points increase came from strong organic capital generation. That is net income, offset by deductions for the share buyback, dividends and AT1 coupons.

As mentioned, regulatory changes led to a reduction of 38 basis points in our common equity Tier 1 ratio. With the go-live of the newly approved wholesale retail models, the ECB has completed a review of approximately 85% of the relevant portfolio, and we expect only limited ratio impact from the remainder.

In the first quarter of this year, we announced a targeted EUR 15 billion to EUR 20 billion RWA reduction by the end of 2025 through several capital optimization initiatives. We accelerated some of the data and process optimization initiatives into the third quarter, which brings the cumulative RWA reductions to date to EUR 10 billion. The work we have done over the past several months gives us confidence to increase the original target by EUR 10 billion to EUR 25 billion to EUR 30 billion.

Lastly, let me touch on our Basel III estimates. The latest review of our impact assessments indicates an RWA increase of only around EUR 15 billion versus EUR 25 billion to EUR 30 billion we had previously guided. The majority of the improvement comes from lower market and credit valuation risk charges, delivered out of the FRTB transformation program. Credit risk estimates are still under review and remain dependent on the final CRR3 legislative text.

Overall, let me highlight that estimates are based on our interpretation of current draft regulation and therefore, remains subject to change. Our capital ratios remain well above regulatory requirements, as shown on Slide 9. The CET1 MDA buffer now stands at 278 basis points or EUR 10 billion of CET1 capital. The quarter-on-quarter increase of 16 basis points reflects a 19 basis points higher CET1 capital ratio and a 3 basis point reduction from a higher countercyclical capital buffer in the United Kingdom. Our total capital MDA buffer further increased due to lower RWA, reducing our AT1 and Tier 2 capital requirements. It now stands at 300 basis points.

Moving to Slide 10. At the end of the third quarter, our leverage ratio stood at a comfortable 4.7%, flat to the previous quarter. A 2 basis point decline was due to lower Tier 1 capital, in line with CET1 capital movement. A 6 basis points increase of the leverage ratio resulted from lower leverage exposure, driven primarily by a regulatory clarification on the treatment of specific cash pooling structures. FX effects contributed a 3 basis points decline. We continue to operate with a significant loss-absorbing capacity well above all our requirements, as shown on Slide 11.

The MREL surplus, our most binding constraint, increased by EUR 5 billion to EUR 17 billion over the quarter. This includes an increase of EUR 3 billion from higher eligible liabilities and own funds, an increase of EUR 1 billion from lower RWA, net of the increase in the countercyclical capital buffer requirement in the United Kingdom.

Our loss-absorbing capacity buffer stands at a comfortable level and continues to provide us with the flexibility to pause issuing new eligible liabilities instruments for approximately 1 year.

Moving now to our issuance plan on Slide 12. With year-to-date issuance of EUR 13 billion, we have largely completed our issuance plan for 2023. We expect our full year issuance volume to land in the EUR 14 billion to EUR 16 billion range. Issuance this quarter will be in senior preferred and covered bond format, both relatively inexpensive sources of funding for the bank. It is too early to provide concrete guidance regarding our 2024 issuance plan. But depending on market conditions, we may consider some prefunding of 2024 requirements during the fourth quarter.

You may have seen our announcement on the 11th of October of a consent solicitation for our 4.789% coupon dollar AT1 security. This transaction endeavors to transition the coupon reset mechanism from eyeball swaps to safer swaps. To encourage investor participation, we are paying a fee of EUR 0.50. In the event the transaction fails, we expect the securities fallback language to result in the usage of the last available fixing of 4.201%. We note that this fixing is below current and forward rates for the next reset date in April 2025. The registration and instruction deadline is on the 31st of October, followed by the voting period from the 1st to 3rd November. On the 6th November, we will either announce the results or convene an adjourned meeting.

Before going to your questions, let me conclude with a summary on Slide 13. We remain focused on delivering positive operating leverage, as we drive our revenue growth initiatives and execute our cost reduction measures. We now expect full year 2023 revenues to be around EUR 29 billion. Provision for credit losses is expected at the upper end of the 25 to 30 basis point range of average loans for the full year. Our balance sheet proved its resilience with a deposit increase to well above EUR 600 billion. And finally, our capital position and outlook has substantially improved through RWA measures we have implemented.

With that, let's just turn to your questions.

(Operator Instructions) The first question comes from Kumar Brajesh from Societe Generale.

I got 3 questions, if I may. First one on net interest income. Can you just explain why the group NII has not moved much over the whole year in fact? And also, how should we think about the NII trajectory going forward?

Second on issuance, Richard, I know you talked about increased senior issuance plan now. But why we are increasing senior specifically? And talking about prefunding for FY '24, any particular capital structuring plan you have? And finally, given your improved capital outlook, can you give us some update around your capital distribution plans? That's it for me.

Thanks very much for the question, and thank you for joining on a Friday, almost a weekend. So I guess the NII question, first of all. So at the group level, our reported NII is heavily impacted by our use of derivatives to hedge our cross-currency and basis risk and by our trading books, particularly rates derivatives. These positions can create a symmetry between accounting, net interest income and noninterest revenues, which are flat at total revenue level, and the size of the offsets varies depending on market conditions. This offset between accounting classification for our hedging is kept in our corporate center to allow a clean economic view of the NII in our Private Bank and Corporate Bank segments.

As you can see, the NII in these 2 businesses is up about EUR 2 billion in the 9 months year-to-date when compared to the equivalent period last year. We expect to see NII relatively flat in both businesses in the fourth quarter as the underlying deposit NII in both segments remained strong in this year and also in Q3. And betas continue to outperform our models. We do expect betas to converge over the course of 2024, resulting in a modest decline in net interest income, but a much smaller magnitude than the increase we've seen over the last 2 years. So a bit of an accounting sort of conversation there, but hopefully, the overlying trend is clear to you.

On the issuance side of things, so if I understood correctly, so why senior? The -- I think it's a combination of both senior and covered bonds, but just -- it's just to complete our issuance plan for this year. That's kind of the sort of spot which we think is the sweetest from a funding perspective.

And then in terms of guidance, I think we just want to make sure, while no decision is being made around what we might do for any prefunding, we obviously are always opportunistic as markets allow. But as we kind of go through our planning process for 2024, we kind of see what the shape of the balance sheet looks like. We may take an opportunity in Q4. We just didn't want you guys to be surprised by that.

And my comment -- what's the last question on that? I guess outlook for next year I think was your question. So there, again, as we just go through that planning process, we haven't really formulated a view as to what our needs will be for next year. But I guess the guide will be kind of what you see in the last few years, which is somewhere between EUR 15 billion to EUR 20 billion if you have to put a gun to my head today. But again, we will refine that as we kind of go through our planning process. So that's what we're thinking to ourselves. And I'd note also that as you're all familiar, we don't have any Tier 1 or Tier 2 calls next year either. So just to reiterate that point.

And I guess on the capital distribution plans as your last question, so as we had mentioned in our analyst call on Wednesday, we see outlook improvements regarding capital efficiency, which we expect to free up an additional EUR 3 billion of capital from now through 2025. The RWA optimization efforts came out better than expected, along with that improved outlook. We continue to be in discussions with the regulator regarding a revised capital plan. And subject to that dialogue, we would expect a good proportion of the incremental capital to be distributed.

At the same time, we continue our strategy to invest in growth and fee-related revenue businesses across divisions. Our technology investments are already paying off, and we do believe that we have a market-leading position in many areas such as payments. So hope that gives you a bit of a visibility as to what we're thinking.

The next question comes from Daniel David from Autonomous.

Congratulations on the results. I've got 3. The first one is just on U.S. office CRE. I know that we stated at about EUR 5 billion in Q1, and that's gone up to EUR 8 billion. Could you comment on what's driven the increase?

The second one is just on CET1. I know that the expected loss deduction in CET1 jumped from EUR 0.5 billion in Q2 to EUR 2 billion in Q3, but that looks like it's being compensated by the legacy NPE deduction, which has dropped from EUR 1.1 billion to EUR 0.3 billion. Could you just comment on what's driving that? And is that CRE related as well?

And then finally, just to round off on CRE, you've got EUR 5.7 billion of modified U.S. CRE loans. Would these be Stage 2? And is the modified kind of classification similar to criticized as the U.S. banks report?

So Daniel, thank you for your questions. It's James here. So on the U.S. office, first of all, we went through what I'd call a sort of redefinition of the disclosure we were providing at the middle of the year to try to give you a clearer view of what is nonrecourse, how does it compare to the NACE disclosure? And then what within that is CRE and within CRE U.S. and U.S. office? And in that redefinition, we, among other things, redefined what we call -- used to call a focused portfolio, now we're referring to as our stress test portfolio.

The increases were, among other things, sort of just a wider perimeter lens, if you like, that we were looking at. We were particularly focused on IB before and we expanded that perimeter lens, if you like, to include Corporate Bank, but also other corporate portfolios. And so that redefinition gives you just a higher level of U.S. office exposure. It's not connected to the expected loss number, the shortfall that you're referring to. So it's not a CRE issue. It's actually really just -- I refer to it as a recognition of some double count between the models that have now been updated to reflect the approved models.

So the retail, wholesale models finding some double count between what those models are now capturing and the EL numbers previously, including for nonperforming exposures. And then on the EUR 5.7 billion, it's a mixture of Stage 2 and Stage 3. So it's not all in Stage 3 because some of those loans are performing when they're modified or extended. So it doesn't -- the definition of a portfolio that is in that EUR 5.7 billion doesn't neatly fit into the IFRS staging.

The next question comes from Robert Smalley from UBS Fixed Income.

I have 3 today. First, on asset quality. It seems that changes in provisioning, the swing factor is more model driven than anything else. So from that, can we imply that your bottom-up type of analysis still isn't focusing on any particular set of credits or credits that are an issue and it is just model driven that's causing changes in the provision? And if you can take out the microscope, are there any kind of micro trends in there that you're starting to see provision-wise?

Secondly, on Tier 2. You mentioned that there's no Tier 2 maturities next year. Your Tier 2 spreads are considerably wider than your peers. Is -- can you say that you won't do any Tier 2 issuance next year and maybe that could be helpful in tightening that up?

And then third, looking out a little bit further, on the MRR, the mandatory reserve requirements that the ECB is talking about raising that, there's no remuneration for that. Now they changed that to 0. Could you talk about the impact on net interest income there and on liquidity given you can't use that in the LCR calculation? And I realize it's early days, and we don't have numbers, but just wanted to get a feel on what you were thinking and if this is a negotiation with the ECB? Or are they still kind of thinking it over there?

Thanks, Robert. Thank you for joining us this afternoon as well. So yes, the answer is it was all model driven, the release in Stage 2. By the way, the EUR 100 million was sort of the -- was both the net and the gross, I would tell you. There was about -- there was some additional Stage 2 improvement from forward-looking indicators, offset by portfolio parameters in the quarter and -- but the net was the same as the model-driven release.

In the -- and by the way, also highlight that the allowance remains EUR 5.7 billion. So it didn't actually change a great deal, what our allowance looks like. In terms of bottoms up, there wasn't any sort of noteworthy changes in the portfolio in the quarter. So if I think about, for example, kind of the upgrade/downgrade activity forward-looking metrics in the portfolio, there really wasn't anything to note. So I would characterize it as a quarter in which the micro trends, as you say, were essentially stable to maybe slightly improving over the quarter, which is encouraging given where we are in the credit cycle.

I'll leave Richard with the other 2 questions you asked.

Yes. Sure. So I think the first question was around Tier 2, and I'll take the MRR question. So Tier 2, again, we're still working through that funding plan, as I kind of mentioned, but -- so I wouldn't rule it out. I think in previous years, it was kind of down EUR 1 billion to EUR 1.5 billion in prior years. I think the -- no decision is being made as we just kind of work out what the shape of the balance sheet looks like for next year.

The -- what I would say is, I mean, interesting, I guess, around your idea about sort of tightening the spreads just given where things are, obviously, that's something which we're cognizant of. I think interestingly enough, when we issued our Tier 2 bond back in February actually kind of tightened the Tier 2 market rate. So I think that's something else that we have to think through.

On the MRR side of things, the -- which I guess take it a few different ways. So anyway, we kind of mentioned at the last FI call the sort of the move from -- that was announced kind of 0% to 1% move, I guess, impacted us by around EUR 50 million in revenue per quarter.

Yes, I think actually, it's a dialogue or a conversation. I think it's more the authorities will kind of come to their own decision. But I think we, along with our peers, are pointing out that the impact of what these decisions actually mean from a both a liquidity perspective but also an interest rate risk management perspective.

And as you can imagine, we're kind of pretty vocal around whether this is an appropriate form of monetary policy. But yes, I think the impact, I think, is on liquidity, of course, is the fact that we have to withdraw these liquidity -- the reserve requirements go against our liquidity, so we'd have to replace that liquidity for every 1% change. So let's put things in perspective.

So if the MRR was kind of moved by 1% or something, that was -- have a commensurate impact on our HQLA holdings, which will need to be replaced.

The next question comes from Lee Street from Citi.

I have 2. Firstly on Slide 11. Just you envisage shifting around the mix of preferred senior and nonpreferred senior use of MREL and TLAC compliance. Or do you think that will stay in line with where we are currently?

And secondly, I think you're quite clear saying that you expect most of your additional connected Tier 1 to be used for capital return. But for amounts that aren't used for that, in which divisions would you be looking to deploy that? Or to put the question another way, divisionally, where do you see the best return on your marginal unit of capital to the extent you're going to extend more capital across your divisions at the current time? That would be my 2 questions.

So yes, I think in terms of issuance shift, I mean, I think it's relatively simple. I think for things -- so (inaudible) we see as a similar mix to next year as previous years. I think the sort of the uplift we get from loss from the LGF methodology for Moody's, for example, means that -- and kind of where we are with kind of capital means that we probably need less S&P at the margin and senior preferred we still see as an attractive source of funding. But we're not seeing a substantial change in our mix going forward.

And Lee, in terms of where to put the capital to work, we look at it both by sort of externally reported segments, and -- but within those segments at a more granular portfolio level. What I would say is in terms of the mix of business, our capital allocation is sort of trying to move capital to the Corporate Bank and the Private Bank in particular, but they're, in essence, constrained by the market opportunity. So the ability to lend within our risk appetite and thereby grow risk at risk-weighted assets really is the thing that drives their capital usage and there, we want them to grow within that risk appetite.

We're also supporting the Asset Management business with additional capital, for example, seed funding for new investment strategies and products. So there's some amount that goes to Asset Management. Where we sort of attempt to manage and, if you like, constrained capital is from an allocation perspective is the Investment Bank. That's sort of a business mix call but also, I think, a disciplined call because it's a business in which you can, in a sense, put unlimited capital to work and you need to preserve that discipline.

What's really gratifying is the business embraces that under Fabrizio, Ram and Mark's leadership, they absolutely -- and their teams embrace the ideas around efficiency of deployment. And as I say, at a more granular portfolio level is also where we look at it. So within the businesses, there can be sort of capital allocation and efficiency measures below the reported segment.

The one other thing I would just add, I think you started your question with a reference to AT1. We look at the use or the deployment of the leverage balance sheet as well as the risk-weighted asset balance sheet. So we look at that comprehensively. And obviously, the greatest degree of flexibility in terms of committing leverage resources within the envelope that we're comfortable with is typically in the Investment Bank. So hopefully, that captures your question totally.

(Operator Instructions) The next question comes from Adam Terelak from Mediobanca.

I thought I'd take some time outside of the equity quarter, ask on a different topic, and that's the digital euro. We've been asking all the banks in Europe around what they see as the risks, the opportunities from the implementation of digital euro. So we just wanted to get both of your thoughts on that as well as what's kind of baked into your forward planning at this stage or whether it's a bit too early to say.

So Adam, thanks for the question. And it's, by the way, a topic that interests -- it's James again, interest me as well intensely. In short version -- or short answer to your last part of the question is really nothing built into the forward plan. It's too early to think about timing and specific impact implications of a digital euro.

But if I take the question in a few parts, first of all, there is a pretty high degree of engagement certainly that we have -- that we at Deutsche Bank engage in both directly and through industry fora on this topic. One is, by the way, at the CFO level, I and a group of my peers have been quite engaged, but also Christian and his peers at an association level, quite engaged with the authorities on this topic.

We recognize that it's both an opportunity for the financial sector for Europe, for the sovereignty of the euro and the risk to the sector. And as you can imagine, we're very vocal in pointing out where we see the risks, including to liquidity in stress, to the business model of banking and payments to the extent that, in essence, private market solutions are displaced by official sector solutions, and conceivably to sort of credit formation. If you basically take the banks out of the business of money creation and credit formation, you're potentially unleashing some forces on the economy that are hard to predict.

So there are a number of, as I say, opportunities and risks that we see associated with the digital euro, and we're very engaged in that dialogue. And by the way, that's true looking both at the digital euro from a retail perspective and from a wholesale perspective. And in fairness, we see a lot of use cases in wholesale in particular which we would embrace.

In retail, it's sort of interesting exactly what the use cases are that improve on the world as it is today. In either case, I just want to be clear, we are supportive of the -- as certainly as a firm and we think as an industry of the initiative, but we think the initiative needs to be very carefully crafted and constrained in order to avoid some of the unintended consequences around liquidity, credit formation and what have you. So I hope, Adam, that sort of captures the essence of the question you have.

Just one follow-up would be on kind of the cost of implementation.

I wouldn't -- again, too early to say. In fairness, we're investing a ton in our payments platform as things stand. So I would think of it as really just a diversion of or channeling of money that we spend anyway on our payment systems rather than an increment. We are also investing in the European payments initiative as a shareholder, and some of that investment would go through sort of industry platforms rather than directly through us. But again, today, it's -- it wouldn't be a feature in our planning so much as in the future when it's more clear exactly what the system would look like.

I will say the payment space is changing all the time. As you know, this year was the implementation of ISO 20022. So a pretty big payment system initiative went through the industry already this year. Just to give you an example of -- in any given period, there's a fair amount of work going on in the technology side by the banking industry to support the evolution of the payments infrastructure in the world. And that's something we are very committed to, given it's a very core part of our -- of the service we provide to the economy and our clients.

There are no further questions at this time. I hand back to Philip Teuchner for closing comments.

Thank you, operator. And just to finish up, thank you all for joining us today. You know where the IR team is if you have any further questions, and we look forward to talking to you soon again. Goodbye.

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.