ING Groep NV (ING) 2004 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the ING first quarter results conference call on Friday, the 14th of May 2004. [OPERATOR INSTRUCTIONS] I'd now like to turn the conference over to Mr. Bill Holding. Please go ahead sir.

Good morning, this is Bill Holding for ING, welcoming you to ING's conference call on the results for the first three months of 2004. Hosting the call will be Cees Maas, Vice Chairman of the Executive Board of ING Group and Chief Financial Officer, he will be joined by Tom McInerney, Chief Executive Officer of ING US Financial Services. Before starting roll out, we quickly say that any forward-looking statements in today's comments are subject to a number of variables including interest rate, foreign exchange rate, inflation rate, movements in securities market, including equity markets and underlying economic health and changes, the realization of forward-looking statements could be materially altered by unexpected movements in any or all of these and other variables. That's it good morning Cees.

Good morning Bill and thank you for your introduction, ladies and gentlemen good morning, good afternoon, wherever you are in the world. Let me before - give you a very brief introduction of a couple of minutes and before we start with the question-and-answer session. I tell you that present in this meeting is also the new Chief Executive Officer, Michel Tilmant. So, we have been very happy that he is with us and that he is here. So, by way of introduction, let me say and may you have seen of course, our results, ING Groupe, we had strong growth in our operating net profit in the first quarter, profit went up by 32%. As you have seen, return on equity remained high at 21.8%. Our capital base strengthened further, capital of our insurance company was 184% of year regulatory required. The Q1 ratio of the bank was 7.52 that debt-equity ratio for our group, you know one of the drivers has improved further from 14.2 at the end of 2003 to 13.3%. As you have seen also that our operating net profit from the bank reached all times high in the first quarter at 65% compared to the first quarter of last year and this strong growth was driven by strong revenue growth especially from ING Direct and from interest rate and financial markets activities. Profit increases from the insurance, was partially offset by Ohio, Texas with the pre-tax profits been rose by 29% so, a strong increase also and this was mainly led by strong growth in profit before tax of the United States and of Asian.

Operating profit before tax in United States went up by 46%; thanks to lower credit losses and focus on profitable sales of core products and necessary Tom McInerney will of course go deeper into that. The various three divisions in America was up 78% up to 40 million euro and internal rate of return of our US business rose to 10.4% and that's an improvement from 9.9% in US dollar terms.

Our life insurance business in Asia continues to show impressive growth. Operating profit before tax went up by 52% and premium income by 27% in local currencies. So top line growth and bottom line growth in our Asian region and the various new business was up 15% to 70 million, which represents 45% of the Group's total value of new business of the first quarter.

The Netherlands an important focal point also, profitability of our new license business in the Netherlands showed strong improvement. The profit from eventual Swedish business is in the pressure due to a higher cost, in order to improved the services at our best, insurance company mentioned on the mid number as you all know the desire to new business in the Netherlands increased sharply from 217.4 million and it was 2.6 in the previous - and of course coming quarter of last year. The internal rate of return improved also strongly from 8% to 12.4%, which is about the hurdle.

Finally, the very last as the banking business improved our sales and strongly for both retail and wholesale. The retail business was to 33% but probably the more important the wholesale rate that improves sharply to 22.3% and that means that our wholesale re look is above the hurdle required for ING business as a whole, as you know which is an 80.5% and this is a pre tax number. Finally, the outlook, ING will not give an outlook for the full years profits that is, there is still high uncertainties in our major stock markets and volatility in those markets has increased further.

We should say the improvement in the major requirement in which we operate. However, the European growth is still lagging behind other major markets and still relatively slowly. Although this cost and credit losses are going down they were exceptionally low in the first quarter and the low interest rate environment continues to effect some of our businesses and have shortly pleased as you can imagine, which also create this time is on challenges. Having said this by various introductions I'd like to open the floor for questions and we'll try to answer them, as usual as good as we can. Thank you.

Thank you. [OPERATOR INSTRUCTIONS] The first question comes from Mr. Keemon Calamboosas. Please say your full name and company name followed by your question.

Hi, this is Keemon Calamboosas from HSBC. Two questions if I may, first on the ING Direct US asset duration you mentioned in the past that assets were invested suppose 50% above one year. How does the recent increase in interest rates affect your business in terms of asset duration and profitability please? And the second question is that. You changed the way you account for kicks in the US? Which I think is even stepping in the right direction and it's in line with our ex recommendations. What don't apply this to the wide line now takes place? Thanks.

Thank you. The asset division of in ING Direct US is 1.6 that's the first answer. The second question that's a good question. In fact basically we decided to change the definition only to the kicks because when we write that we could have applied it also to the variable immunities in line with IRS at the moment that we have that considered this it was not clear how IRS would work in this respect now it's a little bit clear and no about that from the first of January 2005 onwards we will bring this fully in line with IRS.

Yeah just a follow up if I may. How did the asset duration change in the US in this quarter? Currency too please.

Well, already full year buyback in full of course, when we disclose our Q4 figures that generally speaking that claim is that the duration will be shortened.

Thank you.

The next question comes from Mr. Nick Byrne. Please tell your full name and company name followed by your question.

Good afternoon it's Nick Byrne from J.P Morgan. Two short question, firstly on the loan loss division in the bank. Can you give us a feel for what the right backs where are the release of provisions relating to sort of a whole sale banking business? And therefore could you give us an understanding of what the perhaps the normalized level of loan loss operations well high than the 22 basis points you reported? And then secondly on the fixed annuity business there was a decline in the crediting rate, which is line with obviously re-pricing. But could you give us some fell for this space with which stock can continue to go down over the next couple of quarters? Please.

Well let me first answer - let me answer the first question and then Tom McInerney will answer the second one. The newest provisions in the world of ride backs let me first of all say that ride backs they are always ride backs, they are always releases from the provisions because if you would not have them that would be a sign that you haven't provisioned clearly enough or conservative enough so to speak, respectively that your work out division is not effectively enough in taking back of course the provisions that you take in the normal proving rate. So first of all there are always ride backs second the ride backs this time were about 40% a little bit over 40% of the, what shall I say, the growth loan losses, which is only which is a little bit higher than normal but only a little bit. So, this is not exceptionally higher than normal but not averages. Having said that yes the loans loss position are low in this quarter, our normal expected loan losses in the Reva projects (ph) circulations today are around 35 basis points. The trend is that we see that the loan losses underlying are going down and you know last year, full year as a whole there were 44 basis points I expect and I hope that there will be that we will end at 35 or little bit lower for the year as a whole.

Let me add one other thing to that I mean the volatility or the difference to share, it becomes more difficult to guesstimate if you have only one quarter. The numbers position if they are low than they are high, very simple if you have normal position say of 60 basis points then can be 60 or 70, may be of 20 then if you go to 30 that's the same amount so if there is one, if you get one big hit because of one company going down the drain then of course that might increase your normal provisions sharper in relative to Northern (inaudible) than before. So, the prediction in terms of basis points is more difficult. Please Tom.

Yes, next on the crediting rate keep in mind you got to look at what's in there at 25% of what's so much of positive, more five year guarantee, so we can't take those down above 50% actually 47% are the fine contribution of retirement services and there the bulk those are adjusted at 1-1-04. So, you did see that and obviously in the first quarter. That was a big driver of the reduction in crediting rates in the first quarter. Then above 20%, 25% is the annual reset annuities of those we adjust the crediting rate when they new on their anniversary date. So, you will still be able and you will see that over the course of the balance of the year those crediting rates on annual reset being adjusted as they come do so, we will be able to make crediting actions on about 20% to 25% of port folio as we go through the balance of the year depending on where interest rates go.

That's very helpful thank you very much.

The next question comes from Mr. Nick Holmes. Please state you full name and company name followed by your question.

Hey, it is Nick Holmes from Lehman. I had questions on Dutch life, U.S. life. Please, on firstly with the Dutch life. I wondered if you could explain little bit more what reasons are for the very significant improvement in margins as new business stars on AP and IRR basis. And on looking at the operating results or the structural results from Dutch life. Wondered if you could tell us whether you expect more expenses relating to the service backlogs work and also what exactly is the higher pension cost that referred to? And moving on to US life wanted to ask two questions. One is what sort of spread or concept margin do you think you could achieve by the end of this year would it be sort of a 180 basis points that you might be targeting something like that? And are you going to raise your target over 10% overall for US new business life, new business since you nearly achieved that already and the looks inside -- might be scope for further improvement. Thank you....

OK first of all on the Dutch life business. A few set questions on the higher pension expenses these are by the way higher IAS banking expenses. There is an underestimation of the core factors described in the first quarter of 2003. So after, which additional expense was booked in central level also a lot of technical, just a technical adjustment by the course by 2003 and there was some harmonization of the IAS pension charges between the bank and the insurance company, which led to a little bit higher charge on the insurance side these, are mainly the most important reasons.

Then on the cost side, can we expect on going cost on the restructuring? The answer is yes, at least for 2004, and then we hope that we had (inaudible) done. Then the absolute priority is to solve this and that is indeed that the expense is a little bit lower profit in national on that, a sort of longer terms exceptions is necessary in order to regain the confidence of the client. And therefore indeed you can except that roughly we will continue with this level of cost for 2004.

On the value of the new business. For the first -- I have -- on the individual life traditional internal rate return improved strongly from 6.8% in 2003 to a 11.8 individual unit linked on 20.6 to 16, group traditional went down a little bit from 9.8 to 8.5 and group unit linked from 5.6 to 4.7 on the new production, traditional has very high numbers around 20% and at a stable. If that was roughly your question.

Yes that's very, very useful thank you.

Next on the questions on the U.S. side. First I describe, I am not going to give a you forecast I would say that we continued to on the crediting rate side do what we can bouncing all the factors. And we did make some progress in the first quarter obviously we have got a balance crediting rate, internal rates with what going on in the market place, where competitors are and what's happening to interest rates and all those factors will play in going forward. We obviously look to try to make progress overtime on this side. In terms of the IRR I think the way I look at the 10% target is that is a minimum that we are looking to shoot obviously we will attempt to improve on that going forward as market conditions want.

Can I just ask a follow up on the spread? Let me rephrase the question. What would be the maximum spread that you think you might be able to achieve for the mix of business cause you have got a lot of different types of product's in your book. What would it be? I mean for example fixed in USA, retail fix in USA a lot of people would be targeting 250 basis points maximum spread that they could achieve in the best possible environment. What would be do you think the best spread you could get to your mix business?

I think that I guess the best way I'd answer that if you look at -- if you go back to the statistical supplement we gave last quarter was covered 2002, 2003. So, we have those eight quarters in the first quarter of '04, you can see because we have a 18%, 20% in CMO and that has a level of complexes. I think over those nine quarters what did you see that it is, it has very significantly and we got up and down given how our interest rates are, the shape of the yield curve, how that impacted the mortgage past result. So certainly I don't want to predict what's the math but clearly that margin has moved based on the mix of business that we -- the assets we have particularly given the percentage of CMO that we have.

OK, thanks you very much.

The next question comes from Mr. Andrew Richie (ph). Please state your firm name and company name followed by your question.

Good afternoon, this Andrew Richie from form Citigroup. Three areas of questions. First of all net interest margin in Netherlands benefited from what you described as improved product margins and I wonder if you could just go a bit behind that. Is it Cooper lending mortgages and what can you expect for that going forward. And secondly in US, I want to clarify is the SNP 500 didn't end up 2% in the quarter. Was there a negative (inaudible) and if so what was sort of -- the quantify sensitivity there. And also in the US could you give us sense number of competitors are talking about the strong pipeline, retirement services for (inaudible) business. So you're seeing that as well. And finally, you mentioned this morning's call, in case that there would be restatement in the second quarter along with your management reporting lines. Could you just clarify that a little bit further? Thanks.

OK, Thank you. On the last question first. On the last question first what we are going to do from the second quarter onwards from next time is that we are going to report along the new business lines, simple. So ING America's Insurance Europe, Insurance Asia also banking retail banking and (Inaudible) direct and that would be done and restated not only back to the first quarter, but back into 2003 as well. Of course we -- those figures are really re-stated because we have managed the business on that lines but we have those figures because we fully already for a long time to manage the accounting our MAS systems, those lines of business and of course the change in the structure doesn't come out of the blue. So we were more or less pretend for that and we are restating and we caught among the business lines, that's what we are going to do. Then your question on the interest margins, the interest margins that was the question. In the Netherlands improved in the first quarter of 2004 by seven basis points compared to the last quarter 2003 and that one basis point compared to the quarter before and the corresponding quarter, the main drivers here were an improved margin in retail lending and corporate lending. So in lending the overall margin improved by 20 basis point in the Netherlands at least in IBM, so in ING bank Netherlands and the savings and payments margins decreased slightly by around 7 basis points something like that on the basement side there were only small changes payments up 2 basis points is only small. The only real change is in the lending in the twelfth rank gradually improved by 70 basis points. And then we have a quite smaller units like Angeles 10 basis points up see any bank 10 basis points up and little bit hollow about 3 basis points up so more relatively small changes little bit up and little bit down in the different lines in general. Tom.

Andrew, on your first question, your IP has increased by 100 did go up last and the ones in assumption but our actual turn around portfolios you know, price actually did better than that. But there was an immaterial amount of backlog in the first quarter so from that perspective I think the numbers are pretty clean. In terms of your question the 41K business, if we look at the statistical supplement on retirement services, if you look at the accumulation and pay off product line, which is where the 41K business is reported. That has shown over the last several quarters improvement and our focus is, and the small end of the 41K market and we do see a good momentum and good opportunity there. So, I would say that would be consistent with what you are hearing from others.

Is it possible just to clarify the sensitivity of that or not, say for a quarter where you assets are up are flat?

Well if we obviously if you lake long-term assumption, which is on the separate account growth to grow at 8.5%. We quaternize that and its last based on the asset we would unlock if it's flat it would be probably 10 to 15 million range.

OK, That's sounds great, Thanks.

Our next question comes from Mr. Paul Goodwin. Please state your full name and company name followed by your question.

Yes, hi, it's Paul Goodwin from Bear Stearns. Could I direct three questions at Mr. Tilmant if possible? The first of the key return is on the straight disclosure at ING, which service would highlight this is where you looking about giving us more information 100 or more pages presentation. But obviously we also like more. The second is on strategy and in the past ING said it is activating about 60 countries of which only 20 are in the core most of you another 40 was that the prices in times scale which base 40 would be reveled. And lastly a kind of open ended question if you were the highlight the pre-amortization over a state assume initiative, we could have the most notorious impact on ING's profitability which ever could that be?

OK. First of all if I understand your question about display rate, I guess my approach is at, I'm quite disclosed in the elegant numbers. OK and I'm also in survey of I think a simple way to look at the numbers and I think that the new structure by business lines, will help tremendously providing with this relevant information. OK, and as Mr. Maas said, we are going to provide numbers by those six business lines that in my view it'll give you - that will help get the key drivers of those business lines. And in terms it will help understand the business better, and I guess feet your programs better.

As far as second point is concerned, I think that I have made clear in my presentation yesterday and today that one of my priority is portfolio managements, and that means that we are going to look at the portfolio of this company in like of this six business lines. In relation to the six business lines, and beside where we have to put our capital going forward in those business lines. Now the country issue for me its frankly an irrelevant issue because the real issue is given the business lines you want to be in, what are the countries where you want to be and not the reverse. OK, so we are going to look at it that way for example if you take also banking the question is, in which country do you want to be to support you also banking strategy. And you know that my answer has been already in the last two years is to reduce basically those numbers. If you want to be in the retail business, the question is in which country do you think, you can spread yourself and at the same time get scale where you are. And therefore it's a question of also capital location, ING directories are same so and I could be on and on like this also for insurance in Asia, insurance in Europe and in America. So, that is going to be a part of my priorities to look at within this six business lines or willing to get our portfolio alike and where we're going to put our capital.

The third question I would say, I already mentioned also that there are three priorities you know what I did, where I'm going to spend my time. I said number one is building the new management capital. Number two is working on the portfolio management of the group. Number three is making sure that we execute properly everywhere. And that last but certainly the most important is search in where we should put our capital to capture the maximum growth and return to creat value.

Thank you.

The next question comes from Mr. Chris Watson, please state your full name and company name followed by your question.

Hi, Chris Watson at Fox Pit Kelton. I just wonder, if you could perhaps tell us a little bit about the product characteristics variable annuity that you are currently showing in -- reasonably satisfactory volumes at the moment in terms of the -- of the guaranties, the charges for the guaranties and the commission rates that you are making on that product fees?

OK if you look at the overall, obviously we are pleased with phase of growth at variable annuity line, but 60, 65% of the variable annuities immunities has income benefits. In terms of the GMBB have about 40% of the normal entered GMBB and the balance would be other categories and our fees are based on they were underwriting overall the -- and then we feel that typically in the 125, 140 basis point range and then we charged additional fees based on the cost of those guarantees, which are as you know Bob increased out fully or fully hatched. So those were really based on the specific rider that we are riding.

OK, all right thank you very much.

The next question comes from Mr. Robin Mitra (ph). Please tell your firm name and company name followed by your questions.

Hi, this is Robin Mitra from CSFB. I have got four questions. The first one is on ING Direct. Could you give us the P&L for that? The second one is ING the wholesale bank. You got the - (inaudible) up to 22% and above. Could you tell us how that the components of that improvement, it was only a kind of 12% at the end of last year. And then perhaps start some misreading the statement that my - already in the statements seems to say there is a much more, much greater focus on the bank and that is insurance. With that some thing that I should rereading it is just a mistake on my part and the final question is on the forecast. You had not given a forecast for this year, you said it's because of the uncertainty in financial markets or is that something more, is that something more detailed you just don't want to give forecast anymore? Thank you.

Thank you Radon. First and the risk, can you give if is it P&L. Yes, has been guidance to you 77 million in the first quarter as compared with 7 million in - the possibility is more.

I meant interest income risk cost in expenses, please?

Well, we have - we pick it from the past the income was 364 in the first quarter compared to 191 last year. Operating expenses still 57 compared with 172 last year. So result before risk cost 97 compared to 19 last year. Risk cost 20, compared to 12 last year.

Thank you.

Over. Also that was also we'll look for the year 2004. Let me see the Netherlands is at a level of 130, which was the same services, particular improvement in South West Europe and as mainly financial markets up from 20 up to around 38. Germany of course improved spectacularly and ING BHF-Bank was negative, -4.6 and is now closer to 6.9 and also in BHF. So that's great, Central and Eastern Europe from 11 up to 19 roughly speaking. United Kingdom a strong improvement also from around zero last year to 11 in the first quarter of 2004 and Americas, which are very from 16 last year to 42 this year and Asia is very small, is slightly negative around -4%. So, that is roughly the break down and the reason why we have improved results spectacularly.

Great.

The third question I understood Robin is banking taking over the interest. Is that your question right?

Yes, I misread your statement.

Yes I think you misread my statement.

OK, Thank you.

I think we just have a full year for your business.

Sure. And the forecast?

(inaudible).

Yes I understand.

Well, it is been the practice of this company never to give a forecast in the first quarter, Robert.

Sure, but is that something you are continue on to the second, third and third quarter too.

The second quarter bringing down the decision.

OK, thank you.

The next question comes fro Mr. Ibo Derek (ph). Please state your full name and company name followed by your question.

Good afternoon, it's Ibo Derek from (inaudible) asset management. Two small questions on the portfolio changes. On the sale of the Australian division, am I right if profitable before tax structure of 75 million for the complete growth say 37 cents and year only and will there will be a profit in the P&L due to the sale and then in the last picture is of Philadelphia area around the same amount. Can you give some kind of hope from the rational of those of this dealing or yet to come in the P&L and if there would be goodwill? Please.

Thank you Ibo. As far as the Australian business is concerned actually our report was about 30 million in 2004, that's one and as far as Bank of Asia is concerned I must say that I had--

I think I like to-the logic of the (inaudible), that's was your first question and the logic of the Rhythm co (ph) was to build on the intense balance sheet, a long time asset base to match the long-term liability base. And as you know both market since the very few financial market instruments to find the Asian this is one of the best way to do it. And this is actually the logic of this purchase.

Thank you.

[Operator Instructions]. The next question comes from Mr. Sebeanito (ph). Please state your firm name and company name followed by your question.

Hi it's Sebeanito at Execution Limited. Just a few questions on the entire earnings that we saw improving in the retirement source of segment. We saw that up $10 million sequentially on the quarter. I would like to understand how much of that came from the replacing of the 20 billion or so of fix annuities inside the retirement services business versus just is a sort of a like effect of the assets under management growing in the non six media. Just to get us therefore going forward, what about earnings change continue to get more benefit of spread expansion or is it simply going to benefit from here on out on the average assets under management growing?

I would say the big driver has done the over all expansion and asset got the management clearly; the business did that asset from that is better spreads and as I mentioned that business, we typically, a lot of the business for news on 11 and so we did take credit rates down on 11. There is another significant amount where we can adjust 41 and we did also adjust rates downward as of 41. We have the benefit of those reductions for the balance of the year. We won't really be reducing the crediting rates on the retirement services until, again we look at where we are as we get to the end of the year in the 1\1\05 renewal. So a big part of the first quarter, the sequential improvement was just overall assets under management fees on that. And I think going forward we should see some benefit from that as well.

Thank you. And then just a follow up on the long last provisioning. In case am I to understand then that you are sticking with the view that for the full year 35 basis point at provisioning is kind of the way to go because when we look inside the numbers that you gave, it looked as though Netherlands below the 20 of the basis points was pretty low? But then things like Germany are still coming in fairly high.

Well, that's correct. We have a few months we are very low, as you have said yourself and a few months we are still high. As you know in Germany, we have this restructuring portfolio where we still have to take provision for that is going down also. But it is not over yet for 2004 as a whole. So, and then we have a few others, which are relatively speaking high like in Central and Eastern Europe. (inaudible) is still on the high-end sales that the problem of the position is a rather mixed picture. And we have a few that are very low and we have some releases and we have few structurally high of welcoming down. So what I said was I expected to end up at 35% all lower. That's what I said.

OK. And then just following up on what you mentioned about portfolio management, if you look at the sale of the Australian business, and just the questions on the dividend policy. Is it possible then that in the next few months, we could see a few more pieces getting sold out of the portfolio that would help accelerate the sort of trajectory on getting back to a cash dividend?

Well, it is certainly true that the proceeds of this Australian deal will help in reducing the equity ratio. It is not enough to get down to 10. That certainly is there are possibilities to accelerate our portfolio management in the light of getting, changing our dividend policy but certainly not to do so. Be assured.

Thank you.

The next question comes from Mr. Matt Pickering. Please state your full name and company name followed by your question.

Hi, it's Matt Pickering from Institutional Capital. I just had a quick question McInerney. Wondered if you might be able to help me understand how you had withdrawal benefits because I just not being in the business don't think I understand that very well. Thank you.

First I would say that Matt, we don't have a significant amount of product today that has the withdrawal benefit. So at this point while we do have an offering and we look to grow that over time, it isn't a big part of our existing portfolio. We have had to program that in place since 2000 and I don't think that we gained a lot of experience on that and obviously been able to manage that through the bear market of certainly 01' and 02' And across the board on those hedging, assumptions that we make, we use conservative assumptions that clearly when we look at what clients might do almost for all, what they might do in terms of some of the income benefits We take conservative assumptions, we build that into the pricing of the product and manage it that way So, I think certainly our experience over the last 4 years overall has been pretty positive with the hedging program. We have conservative assumptions on the withdrawal benefits and as I say it is not a big part of our current book of business.

Just two quick follow ups, Tommy, One would be would I be incorrect in my belief for today that while withdrawal benefits are not particularly large as a portion of the global annuities book I thought the reasonable amount of the slow that you are seeing given back competitiveness of the US market Yes, my second question is just also from a practical standpoint Some of our hedging perspective for our withdrawal benefits is that something that you can hedge in the capital market? So do you have to go to more of a proprietary hedge relationship with either (inaudible) or bank?

We had used the capital markets to do the hedging and gained back to the amount in the first quarter, there are less than 10 million of annuities we are still with the withdrawal benefit.

OK Thank you very much, Tom.

The next question comes Mr. Evo Gasen. Please state your surname and company name followed by your question.

Yes, hello it's Evo Gasen (inaudible). One question on the gross base of the invent I may please. I am absorbing few things First when I strip of the one option, the opening expense and then get a pretty nice efficiency ratio from 62% and at the same time comparing to the strip out through three figures still some 70 million higher And maybe can you get us some feeling on the run rate that we could expect for the rest of the year? Thank you.

As far as the expenses of the bank is concerned, still the operating expenses came down by 3% if I can compare Q1 to 04' to Q4 of 03', as we have said before, we accelerated the depreciation of the capitalized software in Q4. So, yes, you are right. There was an underlying trend of decline in the expenses of the bank if that was your question.

Not exactly I am looking because of the sort of distorted Q4 figure I am looking at the third quarter as a report on either restructuring sort of 37 million, just in (inaudible) from through the earning cost. Adjusting for the one off in Q1 this year, you saw some 70 million higher Yet when looking at the finished ratio for example it looks quite nice in the first quarter But still now it is just trying to get the feeling for what we could expect in the next three quarters or something.

This is Mr. McInerney. If you ask me what is the base of the expense - the operating expense of the bank for this year, I think, we have to take this quarter and discount the one off and then basically at the base of the expense for this year.

OK, thank you.

[OPERATOR INSTRUCTIONS]. Excuse me gentlemen there are no further questions at this point. Please continue with any another issues you would like to raise.

OK, well then its many questions more than I believed I at least want to on the European side of our audience wish you a very happy weekend and lets close on the American side. They have still a full day ahead of them before the start of the year. Thank you very much for your questions and for your patience and hope to see you next time. Thank you.