Jul 27, 2017
Executives
John Andrews - Head of IR John Cryan - Chairman and CEO James von Moltke - CFO
Analysts
Kian Abouhossein - JPMorgan Jernej Omahen - Goldman Sachs Jon Peace - Credit Suisse Stuart Graham - Autonomous Research Jeremy Sigee - Exane BNP Paribas Andy Stimpson - Bank of America Merrill Lynch Andrew Coombs - Citi Alevizos Alevizakos - HSBC Andrew Lim - Societe Generale
Operator
Ladies and gentlemen, thank you for standing by. I am hereby our Chorus call operator.
Welcome and thank you for joining the Second Quarter 2017 Analyst Conference Call of Deutsche Bank. Throughout today's recorded presentation, all participants will be in a listen-only mode.
The presentation will be followed by a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to John Andrews, Head of Investor Relations.
Please go ahead.
John Andrews
Operator thank you very much and good afternoon from Frankfurt. I'd like to welcome everyone to our second quarter 2017 earnings call.
I'm joined today by John Cryan our CEO, and James Von Moltke our newly minted Chief Financial Officer, who's bravely undertaking this call three and half weeks into the role. John will start today with some opening remarks and then James will take you all through the bulk of the analyst presentation, which is been available since this morning on our website www.db.com.
As always, I would ask for the sake of efficiency and fairness to questioners please limit themselves to their two most important questions so that we can get as many analysts chance to participate in the Q&A session. Let me also provide the normal health warnings to pay particular attention to the cautionary statements regarding forward-looking comments that you will find at the end of the investor presentation.
With those formalities out of the way, let me hand it over to John.
John Cryan
Thank you, John and hello everyone. Let me add my welcome to you to our second quarter earnings call.
We've continued to make steady progress on the implementation of our strategic turnaround plan and the many changes we've made so far starting to bear fruit. The bank feels very different today from how it was just two years ago, but for all the change we've made there is still much to be done.
The results for the first half of 2017 show relatively little impact from charges relating to our legacy, compared with what we experienced in 2015 and 2016. Nor are they yet impacted by the financial effects of the post bank merger details of which we still expect to announce towards the back end of this year.
In the second quarter, we were operating against a macro economic back drop that was actually quite constructive for us. Growth expectations for Europe were improving and have now overtaken those for the USA for 2017.
Geopolitical risk may have increased, but it's contained to certain hotspots, North Korea, Qatar, Brazil to name a handful. The revenue environment for us on the other hand was more challenging.
Client activity across many of our business remained muted. Extremely low levels of price volatility, notwithstanding the geopolitical backdrop drove low volumes of trading.
Even exceptionally low price of volatility and many asset classes failed to entice corporations and investors to trade. Persistently low interest rates in the euro area and the C change in inflation expectations in the USA both acted as brakes on our revenue in the quarter.
Overall, operating revenues fell short of our own expectations, although the bank is now well positioned to benefit for an uptick in interest rates, in volatility and in client activity. In the quarter, we saw solid performances in our retail banking operations and in our investment manager.
The stronger performance in retail banking reflect our ability to respond to negative margins on our deposit books with accounts and other fees and through the substitution of deposit products by investment products offering the prospect of higher returns for clients. We've also substantially completed our branch closure program and the attendant headcount reduction is well underway.
With just 11 branches that are remained to be closed over the summer and the consequent expense reduction is starting to be seen. Our Asset Management businesses continue to exhibit good investment performance across many asset classes and investment styles and our passive funds remain a vital part of our product offering.
We continue on track to list our Asset Management Group. Precise timing will be influenced by market considerations and by the need to obtain final regulatory sign off.
And as I said earlier today, it's therefore unlikely that we'll proceed with an IPO in this year 2017. In our Corporate & Investment Bank, the second quarter was overall quite challenging.
So our credit trading teams once again produce strong results. Equities and U.S.
rates trading results were disappointing. The Equities business continues to need more investment in infrastructure and people, which we plan to make.
We'll continue to invest in CIB to build market share and to strengthen our position in our core markets. On management of the cost base, we saw the quarterly ticket [ph] down 15% on the corresponding period last year.
But this of course is also reflective of the absence this year of material net litigation cost or restructuring charges. We're investing approximately €2 billion a year on projects to change the bank especially its IT infrastructure and I'd expect to have to invest roughly this level for the foreseeable future.
This figure excludes the estimate of the cost of the Postbank manager, which we announced back in March and on which we have no further update. On litigation and regulatory investigations, we've made significant progress in the quarter concluding numerous settlements.
This is reflected in the net reduction in provisions in the quarter by around €700 million. The balance of remaining provisions that is around €2.5 billion at quarter end, unfortunately we can provide no useful guidance as to the timing or impact of the resolution of our outstanding regulatory investigation litigation items over the rest of 2017.
And now for the detail of the quarter, I'll hand over to James, who can walk you through these.
James von Moltke
Thank you, John. I'm very pleased to be hosting my first investor call as Chief Financial Officer of Deutsche Bank.
Let me start with the financial highlights on the page three. For the second quarter, the group reported income before income taxes or IBIT of €822 million and net income of €466 million, both up materially from last year's second quarter.
While the revenue environment was challenging in the second quarter as John noted. Lower noninterest expenses drove the increase in profitability.
Quarterly net revenues of €6.6 billion were 10% below last year. This decline was driven by a number of factors notably the market environment and the strategic and business decisions we have made.
In general we will speak to our reported results. Nonetheless it is important to understand the underlying operating performance in the quarter, because we incurred a number of non-operating items.
For example, we recorded over €340 million of charges in the second quarter from the impact of our credit spreads tightening and for a loss and cumulative currency translation impact related to a business disposition. The comparison to 2016 was also affected by the absence of some one-off gains in last year's second quarter, the largest of which was the €192 million gain from the sale of our interest in Visa Europe.
Even giving the effect of these non-operating items the challenging environment contributed to a significant revenue decline especially in our Corporate & Investment Bank segments. The group's noninterest expenses in the quarter were significantly improved over the prior year, by approximately €900 million, reflecting both our cost control efforts and the absence of an impairment recorded in the prior year, a small net release of litigation reserves compared to a build last year and much lower restructuring and severance charges.
We are making progress on our controllable costs with adjusted cost down 6% year-over-year. Our fully loaded pro-forma CET1 ratio was 14.1 at quarter end, with the increase predominantly from proceeds of the capital raise and related items.
The leverage ratio at 3.8% was also higher than last quarter, reflecting the capital raise, a decline from the first quarter on a pro-forma basis due to an increase in cash balances as well as updated guidance from ECB on pending settlements that I'll discuss shortly. The capital increase and our actions to build liquidity over the past several quarters have positioned Deutsche Bank with a CET1 ratio among the highest in our peer group and a strong and highly liquid balance sheet.
Turning now to page four, before I speak to the second quarter in detail, I want briefly to look at first half results, in order to highlight some important items that affected our net income relative to last year, to better understand our operating performance. Total net revenues declined by just over €1.5 billion in the first half of the year, this was more than offset by cost reductions.
Revenues in our business segments were down by over €550 million, slightly over one third of the first half decline, driven primarily by the weak environment and the absence of the prior year gain from the sale of our Visa Europe stake. Nearly €1 billion of the total revenue decline in the first half of 2017 was driven by net impact of a number of non-operating items, notably a year-over-year negative swing of approximately €850 million in DVA and consolidations and adjustments or C&A.
specifically related to the tightening of our own credit spreads. The number of additional charges in C&A of which the largest were related to the sale of our operations in Argentina and Uruguay this past quarter.
And the small revenue loss from prior disposals. These various charges more than offset the non-recurrence of prior year losses from the NCOU, which was wound down at the end of the 2016.
The revenue decline was offset by lower adjusted costs, lower litigation and restructuring and severance costs and the absence of a goodwill impairment recorded in the second quarter of 2016. In addition, loan loss provision in the first half of 2017 have been low reflecting the benign credit environment and recoveries.
Let me briefly discuss non-interest expenses on page five. Non-interest expenses of €5.7 billion were 14% lower versus the prior year.
The three primary drivers of this were lower adjusted costs in the quarter, the absence of a prior year impairment of goodwill and intangible, virtually no litigation expense and relatively low restructuring expenses. I'll address all of these in more detail in coming pages.
Turning to adjusted costs on page six, we continue to make progress with adjusted costs down 5% year-over-year on an FX neutral basis, and 11% versus the first quarter of 2017 on a reported basis. The decline in quarterly adjusted costs was largely driven by the wind down of the NCOU, business disposals and lower professional services fees.
And although the bank levy revenue went up year-over-year that reflected the absence of a refund received in last year's quarter. One key underlying driver that the bank continues to make progress on is FTE reduction with the decline of nearly 4,700 over the last 12 months.
Turning to capital and RWA on page seven, one technical point I would make, which some of you may have noticed is that we are referring to our CET1 capital and associated ratios as pro-forma for the second quarter. This simply reflects the fact that the new capital had to be approved by the ECB for regulatory purposes, which has occurred but only after the quarter ended.
Pro forma CET1 capital at quarter end was €50 billion with the increase mostly reflecting the proceeds of the capital raise and the additional benefit from lower deductions under the 10% threshold for items like DTA. The net income we generated is offset for capital ratio purposes by the 100% payout ratio we must assume as per standard ECB guidance.
Risk-weighted assets stood at €355 billion at quarter end, a €3 billion decline from the first quarter 2017. The decline was driven by the effect of foreign exchange offsetting €4 billion of RWA growth in the businesses.
Turning to leverage on page eight, the fully loaded leverage ratio was 3.8% at quarter end, with the 40 basis points increase versus the first quarter from the capital raise, partially offset by increases in leverage exposure. Leverage exposure rose €73 billion on a reported basis and €119 billion on an FX adjusted basis principally reflecting two items.
A €52 billion increase from cash and cash from deposit growth and the proceeds of the capital raise and a €64 billion increase from a change in the treatment of pending settlements in the leverage exposure calculation per new ECB guidance. Essentially we must now include pending settlements in our leverage exposure on a gross basis in line with our IFRS balance sheet rather than net at against payables.
We did not expect the inclusion of gross pending settlements to be a permanent change as the application of draft CRR2 rules would allow us to revert to using net settlements, which we expect to occur in late-2020. Let me turn to the segments starting with the new Corporate & Investment Bank or CIB on page 10.
This page highlights how the business segments in the new CIB have changed. And in particular it highlights the new financing segment.
Financing holds business previously reported in either loans and other products or the old debt sales and trading that is related to financing transactions and generally held on our books. The majority of the transactions in the new financing segment came from Debt Sales & Trading.
So financing is more of a banking book business than trading book and should produce relatively more stable results overtime, while the new FIC Sales & Trading will largely house trading activities. It's also worth noting that the new CIB segment generates the majority of its revenues from relatively more stable businesses.
Let me now discuss the results of CIB on page 11. CIB reported EBIT of €543 million in the second quarter, 18% above last year's second quarter on a reported basis.
This was despite quarterly revenues declining 16% to €3.6 billion. But the revenue decline was offset by a 19% reduction in noninterest expenses and €100 million decline in credit loss provisions.
While revenues were affected by some non-operating items, the largest driver was the challenging operating environment. Noninterest expenses fell 19% to €3 billion, mostly from the absence of the €285 million impairment last year, a €219 million decrease in litigation as there was a small release in the second quarter, and a €177 million decline in adjusted costs largely, driven by reductions in non-compensation costs.
RWA of €242 billion declined 5% from the prior year, reflecting derisking and favorable FX, which offset RWA increases from the residual NCOU assets being transferred into CIB at the start of 2017 and operational risk. Let me now turn to the individual businesses in CIB starting on page 12.
Global transaction banking revenues of €975 million declined 12% from the prior year, which seems like a large decline at first glance, but there are number of factors at play. First almost half of the year-on-year revenue decline was from increased funding costs incurred by GTB the majority of which was related to changing our internal method for allocating liquidity related funding costs.
Second, about a quarter of the revenue decline was from strategic parameter and client reductions that most affected the cash management and trust agency and security services businesses. The remaining revenue decline was from the impact of margin pressure, which particularly affected trade.
In origination and advisory, revenues fell 7% to €563 million. But it's worth noting the first half increase of 9% relative to 2016.
The major driver of the decline was debt origination revenues, which fell 24% in the quarter to €311 million. This reflected declines both in market issuance volumes, as well as in the U.S.
leverage finance market where we changed our risk appetite. Equity origination revenues fell 7% to €115 million as industry issuance volumes declined following a robust first quarter.
Advisory revenues increased 91% to €137 million reflecting a weak prior year quarter, as well as the closing of a number of large transactions. In financing, revenues were down 5% with the good performance in asset based lending and CRE being offset by lower revenues in investment grade lending.
Let me now turn to the trading units on page 13. In fixed income currencies, sales and trading second quarter revenues declined 12% to €1.1 billion.
The second quarter was challenging for fixed income with subdue prime activity and low volatility in many areas. Nonetheless, credit revenues in the quarter were significantly higher, particularly in the Asia distress business.
However all other businesses in fixed sales and trading recorded lower revenues in the quarter. Revenues in rates were down slightly as stronger performance in European rates was offset by a challenging quarter for market making in U.S.
rates. Foreign exchange revenues declined as client flow and volatility were low, particularly compared to last year, which saw heightened activity around the Brexit vote.
Emerging markets' revenues fell as market conditions were challenging and client flow subdued. FIC Asia-Pacific was also down due to lower levels of client activity.
Equity Sales & Trading revenues declined 28% to €537 million, declines in prime finance revenues accounted for the majority of the total revenue drop in Equity Sales & Trading. As we've noted before, since the first quarter, we've had a significant recovery of client balances that we lost in latter part of 2016.
And our balance is now back to September 2016 levels that were still lower than they were on average in last year's second quarter. And average margins while recovering were also below last year's level.
Additionally, the benefit from recent balances was not fully reflected in our quarterly results as there is a time lag between balances returning and the associated revenues flowing through. Cash equities declined largely from sluggish client volumes particularly in the U.S.
Equity derivative revenues were down slightly as low volatility and reduced client flow in the U.S. offset our strong performance in Europe.
Nonetheless despite the weaker revenue trends in the quarter, we continue to regain business that we lost last year and are encouraged by the pace of client reengagement. We clearly have more work to do to improve our efficiency, grow our top-line and improve returns in CIB and those issues remain a core focus for us.
Let's now turn to the Private & Commercial Bank, our new PCB segment on page 14, which combines the former PWCC segment and Postbank. Second quarter PCB revenues of €2.6 billion declined 7% from the prior year period.
That decline was entirely due to the absence of the €192 million gain from the sale of the bank's interest in VISA Europe last year plus the absence this quarter of the revenues from the PCS unit in the U.S. that was sold last September.
Excluding these two items, PCB revenues were essentially flat as loan growth and higher fee income from current accounts and investment products, offset ongoing impact of the low interest rate environment. There was also a gain from a distressed loan book restructuring and wealth management that more than offset a loss from the redemption of a legacy trust preferred security in Postbank.
Both of which you can see in the business segments on the next page. PCB noninterest expenses declined 3% largely from lower restructuring charges, while adjusted costs were flat as lower compensation costs were offset by higher investment and technology spend.
Looking at the individual business units in PCB on page 15, revenues in Private & Commercial Clients or PCC declined 4% from the prior year to €1.3 billion. This declined was entirely driven by the absence of the €88 million VISA Europe gain in last year's second quarter.
The ongoing pressure from low interest rates on the positive revenues was largely medicated by growth in fee income from investment products, which has been a focus for PCC. Revenues in Postbank decreased 20% from the prior year to €726 million.
This was driven by the absence of Postbank's €104 million gain from VISA Europe last year and €118 million last from the termination of a legacy trust preferred security incurred in the second quarter. Absent these two non-recurring items, Postbank's revenues increased versus last year driven by loan growth and higher fee income.
Wealth management revenues increased 7% from the prior year to €526 million. Revenues benefited by a total of €135 million from successful workout activities relating to our book of distressed loan, which more than offset the loss of revenues from the sale of the U.S.
PCS business last September. Excluding these two items, wealth management revenues declined from lower net interest revenues as a result of selected loan sale.
On page 16, we show the results of Deutsche Asset Management excluding the impact of the Abbey Life gross-up from net revenues and noninterest expenses as Abbey has been sold. Asset Management revenues in the quarter increased 7% to €676 million from higher performance fees and alternatives and improve management fees, reflecting favorable market conditions.
Gross margin was also up in the quarter. Noninterest expenses excluding the Abbey gross-up of €442 million fell 4% largely from the absence of restricting expense in the quarter, which was partially offset by a 3% increase in adjusted cost from higher compensation expense.
Net new asset inflows were €5.7 billion in the quarter. C&A was negative €265 million the largest driver of which was the sale of our businesses in Argentina and Uruguay, which created both a loss on sale and a realized DTA loss.
Additionally, the increase in remaining items in C&A was largely from the absence of a €73 million insurance recovery recorded in last year's second quarter. Let me now turn to outlook.
As we've already noted the operating environment in the second quarter was challenging with subdued client activity, lower volatility and the persistent challenge of low interest rates. So far those trends have remained in placed in the quarter to-date.
But despite that near-term commentary, we remained probably optimistic on the outlook with improving economic growth particularly in Continental Europe. The growing likelihood of normalizing interest rates in the Eurozone which would drive significant additional revenues given our interest rates sensitivity.
Credit loss provisions were unusually low in the first half of 2017 and while we expect benign environment for our portfolio to continue provisions will likely be modestly higher in the second half of 2017. We remain on track to achieve our €22 billion adjusted cost target by 2018 and expect to produce lower adjusted cost in the coming quarters.
Litigation remains difficult to forecast and as a technical matter any material litigation that settles as late as mid-March 2018 may impact our 2017 financials as a subsequent event. But we obviously anticipate that litigation expense will be higher in the second half than year-to-date, but below prior year's levels.
Restructuring expenses are also lumpy and you should expect higher restructuring charges in the second half of 2017 likely in the fourth quarter. Our guidance that 70% of the planned €2 billion of restructuring expenses announced in March would occur in 2017 and 2018 has not changed.
In the meantime, we remain focused repositioning the bank, which we do from a renewed position of financial strength with record liquidity, CET1 ratios that are among the highest of our peer group and a client franchise that has again demonstrated its resiliency. As John has noted, we're on a multiyear journey, but we are making demonstrable progress.
John and I would now be happy to answer your questions.
John Andrews
Operator if we can start the Q&A, and if I could remind everybody two questions please.
Operator
Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator instructions].
And the first question is from the line of Kian Abouhossein with JPMorgan. Please go ahead.
Kian Abouhossein
Yes, thank you for taking my two questions. The first question is relating to your page 24 guidance that you have given, outlook statements on CIB.
You indicate that revenues will be slightly lower in CIB, if I look at first half year-on-year you were down about 10% if I look at the third quarter last year relative to the second quarter run rate this year, so already €900 million better. So I am just wondering what is the driver in the second half that you're seeing which has to result in a material pickup in revenues in order to be slightly down year-on-year.
Than the second question is if you can dig slightly more detail into the Equity Sales & Trading numbers, and in that context if you can explain a little bit the prime brokerage improvement that you're seeing is this new accounts, is this cash, whether is derivative if you explain it a bit more? And in addition to that if you can also explain why you have not participated so well in corporate derivatives which you haven't mentioned, which has been a big revenue driver for some of the U.S.
peers considering your strategy is more to go towards more of a corporate driven franchise.
James von Moltke
So, it's James, I'll take the first part of the question and perhaps part of the second and then pass it on to John. Firstly on an outlook basis, I have cautioned you that outlook is hard especially about the future but as we look at our numbers on a forward looking basis, it's important to bear in mind that there is also the year-on-year comparisons that you will see in the third and fourth quarters of the year.
And especially obviously the fourth quarter where Deutsche suffered declines in revenues given idiosyncratic issues around the company. In the - just to answer your equity question and particularly Prime Finance we are looking at balances that have recovered round numbers 15% since the end of the year and the end of the year represented more or less the low point, was a little bit up from the low point in the fourth quarter, but more or less the low point.
As I mentioned in the prepared comments there is a lag from regaining the balances to seeing the full impact of the revenues from a covering clients. And lastly generally on clients, it is largely or mostly clients coming back to Deutsche Bank and that's obviously encouraging in terms of the signal about the client franchise.
John Cryan
Yes I think Kian on the outlook for the full year, we have to write something and it is quite difficult to what to write sometimes because the drivers of our revenues particularly in sales and trading area are largely driven by client volume and that's notoriously hard to predict. We are not reading too much into July to-date, but there hasn't been much of a change in the environment from what we saw at the end of the second quarter.
So volatility is still very low I mean the risk was pluming new debt in the past few days and client activity levels tend to be driven a little bit by volatility. You raised the question on corporate derivatives, I agree that they seem to have picked up in U.S.
we did okay in Europe in corporate derivatives, but we were sluggish in U.S. comparatively.
But I think on the outlook it's really just a question of activity levels and we just don't feel confident that we see them coming back with any particular timeframe attaching to them. But longer term we do think they will come back.
Kian Abouhossein
And if I may just one more follow-up very quickly John, you mentioned at the time taking over Deutsche that you wanted to reinvigorate so to say the sales trading franchise at Deutsche equities. Is that something you had that is happening, is that something you have to shelf considering market conditions or also things have happened in the meantime which impacted your business, how should we think about that that equity franchise?
John Cryan
Yes, it's a good question. Obviously in the second half of last year, we did point out that Prime Finance had been a driver of the reduction in performance in that division and that's because there were questions about our credit worthy so forth you know the story.
As James said, a large proportion of that has come back, but it's comeback during the first half and it's not as active as it was this time last for us yet. Where I think there is a gap to the market, and I said this I think a couple of quarters ago is in the area of electronic trading.
And so there we do need to invest to catch up a little bit in the technology that supports sales and trading in equities. And then we are investing in people.
And we've had to reconfigure that business quite a bit as its commoditized and as it's become much more machine based we proportionately need fewer traders doing voice trading and more in a way of specialist sales and distribution. So we've been slightly changing the focus of the Equities business and we were a bit hamstrung by the overall impact the company went through last year.
But we determine to get back there, because that's clearly core to even the corporate led investment banking idea.
Kian Abouhossein
Thank you. Operator Next question is from the line of Jernej Omahen with Goldman Sachs.
Please go ahead.
Jernej Omahen
Yes, hi. Good afternoon from my side as well.
I have two questions please. So the first one relates to the exemption from the German Bank Separation Act.
In regards to the integration of Deutsche Postbank I think that at the time of the rights issue, John you expressed an expectation that this would be obtained I think the wording was quickly. And then I think the previous year those stated on the last conference call that the expectation is for this to happen over the course of the second quarter.
And I was just wondering if you can give us an update on that front. And then secondly on Basel IV, obviously lots of moving parts and lots of meetings that didn't produce an outcome that was expected a completion of Basel IV over the course of the second quarter.
What is the expectation of Deutsche Bank on this front? Should we treat you previous guidance as a worst case outcome or as a base case outcome, where do you think Basel IV ends up for Deutsche Bank?
John Cryan
Let me take the - what you call the German Bank Separation Act. Yes, can I ask you a question because on that there were two aspects of the German Bank Separation Act; one was related to Prime Finance and the other I suppose has a tangential application to the merger with Postbank.
I mean, I answer the merge with Postbank but whether you were referring to the other issue as well, which was the question of whether Prime Finance in the investment bank was going to be an issue? Was it both or…
Jernej Omahen
No. I think so.
I think I'm asking the same question for three quarters. So for the third time now it seems the rights issue was announced.
The question relates to…
John Cryan
The weighs are on large exposures.
Jernej Omahen
Yes. So the question relates to whether Deutsche Bank will be able to use the liquidity of Deutsche Postbank for the purposes of the group treasury before the merger is legally completed before the legal entity is extinguished.
John Cryan
Okay. Well on that one, we've rather moved away from applying for the waiver, because the waiver will be all rolled into an approval for the merger.
So we'd like to grant rather effectively the Deutsche Bank subsidiaries ability to have its excess liquidity counted towards group ratios.
Jernej Omahen
Right.
John Cryan
Because it didn't seem to make much sense we go through a process of doing something for Postbank when; A, we didn't need the liquidity and we don't need to show stronger ratios because there are already very, very high. So we would leave it just until we get the approval for the merger.
Jernej Omahen
May I just ask? So do you - so we should expect this to happen…
John Cryan
Yes…
Jernej Omahen
By the end of this year.
John Cryan
Yes. No one is losing any sleep over that.
Well, yes we wouldn't announce the merger and if we didn't have approval for it. So I guess we seem to be on track to do it this year.
Although I shouldn't deprive regulators have their own jurisdiction to decide when make us think like that but I would expect it this year. On Basel IV, I think there's still a whole variety of topics within Basel IV which are open.
The first I guess is FRTB and I think the draft year legislation has been issued although we then read the U.S. treasury paper and we're not sure the U.S.
is actually that in amative FRTB anymore. So we need to see how quickly Europe actually implemented.
From our perspective we had a project running for quite a long time to make sure that we're ready for it, but that's the best I can offer you there. Likewise a little bit of uncertainty on operational risk, as you know we're one of the few banks left using the advance measurement approach and the new Basel replacement proposal the standardized SMA it's called I think is not yet agreed by Basel.
So again we're not really sure where we're heading on that one. But we do assume that the AMA model at some stage is replaced by more a standardized approach.
On credit risk again we're aware of these discussions in relation in particular I guess to the output flow and as we said would impact us in two ways one, it would have an impact we assume on low credit risk assets predominantly German mortgages. And then it would have an impact on the counterparty credit risk that's embedded in our derivative contract.
And on that one there still seems to be some sort of bid offer between an output flow of about 70% of standardized versus 75% or so. And I'm not aware of any concrete progress that's been made.
And so I don't think our guidance has changed very much on that one. Other than I think it would be fair to say we didn't really re-run the numbers, but as time goes on obviously the impact of uncollateralized and non-daily margin derivative will diminish somewhat overtime they're quite long dated.
But our older book which is less compliant with the new rules would tend to run-off and then can't be replaced by derivatives that are a little bit more compliant. But I think the story there is as we said at the time of the writes issue every indication we had at that time was that the implementation date would actually fall off at the end of our normal planning period i.e.
2021 and later. And I've not heard that anything is proposed to bring it any further forward.
So I think it's still off the end of our planning horizon although I guess for the fifth year in 2018 we might need to think about how it's introduced. We said it was about €100 billion I guess you could shave a little bit off given that the books matured and moved on, but we haven't re-run the numbers.
Jernej Omahen
It was €100 billion without Deutsche Postbank right?
John Cryan
Yes I think it was, that's right although at the times of the writes issue, we didn't refine that number. So I guess the impacts on Deutsche Postbank would impact the mortgage book there.
But we did stress the derivative book although the legacy book does take a while to run-off, it does run-off overtime. And don't forget there's a number that we did was run-on a QIS from a book that's now probably it doesn't look much like the current book.
I mean a lot of the contracts would have run-off and we're actually in the context of running off the NCOU would have got rid of some of the more offending contracts.
Jernej Omahen
Thank you.
Operator
Next question is from the line of Jon Peace with Credit Suisse. Please go ahead.
Jon Peace
Thank you. So my first question is about fixed income trading and I wonder whether you could just comment were there any sort of lumpy negative trading revenues in the quarter that might have made your sort of underline run rate a little bit stronger than what was reported?
And then second question is on the outlook for leverage assets and how quick - first of all how do you think those should develop going forward is there some things that you can do to bring your leverage assets down? And how quick do you want to get to your 4.5% target knowing that there might be some relief beyond 2020 are you giving yourself more time to get there?
Thank you.
James von Moltke
Thank you it's James, I'll take both of those questions. On FIC, I would say there are lumpy revenues in FIC in both directions, which is obviously not a typical and I think as we called out we had a very strong quarter in credit products.
And so positive results in net book offset some lumpy items in the other direction. But to your question I think therefore our performance in the quarter relatively well reflects what you call the underlying performance to your question or the way it was phrased.
Our leverage exposures I think yes, you answer the question we do give ourselves time to work towards the 4.5% target that we've set for a number of reasons, but I'll fight a couple first I noted the pending settlements treatment. So, some of the sort of backward motion in the second quarter, we do expect to recoup overtime.
There is also a lot of optimization that we think we can still do in respect of leverage exposure and the sort of prudent management of the balance sheet again overtime. And so we do think there is opportunity there in the years to come.
You asked I think a near-term outlook question that's something we sort of work on every day. We're hoping and expecting markets to normalized over the back half of the year and if that happens you would see RWA and likely leverage exposure growth into the year.
And because we're not accumulating capital based on the 100 dividend payout ratio assumption I mentioned in my prepared remarks. You would consequently see both the CET1 and likely the leverage exposure or leverage ratio decline into the year-end.
But those are predictable events largely driven by market growth.
Jon Peace
Right, thank you.
Operator
Next question is from the line with Stuart Graham with Autonomous Research. Please go ahead.
Stuart Graham
Hello, thank you for taking my question. I had two questions.
The first one is on the Q4 call you mentioned €750 million to €1 billion revenues that left the bank last year and should be returning. I think on the Q1 call, you said €100 million is returned I think mainly in prime broking.
So can you give an update for how much more returned in Q2 in CIB, please? And then the second question is on the €64 billion leverage ratio reclassification, I'm bit confused because I thought the whole point of the Basel leverage rules because they were identical irrespective of which gap you're on.
So didn't matter whether you are U.S. GAAP or IFRS.
I mean that number feed straight into the FSBs, GSIP math [ph]. So it should be consistent across all banks.
So, just wondered why you were reporting on a different basis. Thanks.
John Cryan
I think James is offered to take the second one first on the leverage ratio but we're competing over it, so I'll let him do it. It's his first call for us.
James von Moltke
We're completing talk about leverage ratio, on the pending settlements, there are different practices in the marketplace in terms of how it's treated and that's in line with the relevant reporting standard. So, some banks report on a gross basis, some banks report on a net basis.
And in respect of that calculation it is inconsistent globally reflecting how each jurisdiction treats it. I point out the U.S.
broker dealers treat this on a net basis given the view that there is relatively little risk in the positions in regular way settlements. So, that's on leverage exposure.
Stuart Graham
I am sorry, when you say broker dealers, you mean the money centers?
James von Moltke
Yes, exactly. That in the money center accounting within the broker dealer balance sheets.
Yes, it's treated on that basis and again each firm is managing it consistent with their accounting practices.
John Cryan
Just generally we need to disabuse you of any notion that leverage ratio is a comparable across institution I mean just two areas past, we still have a big add on for our rates business. And the second is another idiosyncrasy about which is that no matter how much net income we pay this year, it doesn't get credited to our CET1 because of the ECB rule that says that given our situation last year of having paid that national dividend, the minimum dividend against the loss that leads to us having to assume that all of our net income this year is paid out as dividend, which is not the intention, but it doesn't get added to CET1.
So, unfortunately other the intention was to create something simple and comparable across jurisdictions and across institutions from our perspective at least there is nothing of the sort. On the revenue lost and regained I am not sure that there was much of an uptick in the Prime Financing revenues attributable to the balance able to come back Q2 versus Q1.
But let me give you one of my favorite examples of demonstrating how and when balances come back don't necessarily have much of an impact initially on P&L account. In our Transaction Bank our liability balances year-on-year are up 25%, unfortunately I think they are mostly in euros because they are not having any impact at all in a positive sense that's for sure on the revenues there.
So where we're seeing these balances come back they haven't come back with commensurate activity or net interest margin pickup yet although it's clearly much better that they are back than not back.
Stuart Graham
So you still feel confident that €750 million to €1 billion will come back at some point in time because it feels quite a long time ago now.
John Cryan
Yes it does, well there comes a point where there is no point in worrying about what we had and what we have got now because we should just be out there trying to win new business rather than win back business from people we used to do business with. So it's hard to say, but I wouldn't be anywhere near as bold as to say that we have got a high proportion of that lost €750 million to €1 billion of revenues.
Stuart Graham
Okay, thank you.
Operator
Next question is from the line of Jeremy Sigee with Exane BNP Paribas. Please go ahead.
Jeremy Sigee
Hello, thank you. Two questions please, so one is just coming back to a point you touched on which is the GTB revenues rebating down, and I just wanted to be clear that what we're seeing for that 2Q number the 975 that's the new base level it's not burdened by a full half years' worth of adjustment so that's the base level.
And if it is the case is there any claw back on that accounting treatment or is this just what it is going forward, that's my first question. My second question was a bit more sort of conception in a sense which is how do you evaluate your cost progress against the backdrop of lower revenue outcomes.
Because obviously those low revenues helped your costs to pick under some of lower revenue related and weaker revenues more than offset the benefit of the lower costs. And your cost income ratio on an adjusted basis is unchanged versus 2Q last year at 83%.
So how do you evaluate your progress and I guess leading on from that do you at some point consider restating your target if the revenues remain weak in the way that you are describing?
James von Moltke
So it's James, I'll take certainly the first and probably a part of the second. On GTB revenues as I said in the prepared remarks there were a number of different factors around funding costs and parameter especially and also to a certain extent also risk appetite in that business.
I would say short answer to your question the second quarter represents reasonably good base for comparison some of those funding costs that we referred to were held in the C&A segment in the first quarter. And so effort was undertaken to push those out to the businesses GTB received a significantly amount for a number of reasons methodology related, but now that that's in there that's a good basis.
I will say part of those liquidity - part of those funding costs reflected much higher liquidity we're carrying. And so overtime as we optimize and manage that liquidity there could be some improvement, but the goal of funds transfer pricing obviously is to recognize in the segment the funding costs and liquidity charges that are inherent in the business.
So some but modest benefit likely to come to GTB overtime. Your second question about expenses, I think it's very early for me to make any new statements about our costs especially accelerating beyond the €22 billion commitment for 2018.
This is a commitment I understand I am inheriting and one that's shared by the whole management team, I certainly signed up for it. To your question though about the variability of costs relative to revenues, I think we are all acutely aware of the need to make the costs basis flexible as possible.
But that is a significant challenge especially in areas outside the sort of transaction related costs and to some degree compensation. So we are aware of it, but it'd be too early for me to make any new statements about that.
John Cryan
Jeremy, I know you guys like me to be appropriately note you every now and again but on the costs if I could just give you some stats on where we are for example on technology because we set some targets for you, which were non-financial, but were related to the complexity of our systems. You recall when I started back in mid-2015 we had 45 different operating systems.
And we set a target getting that just down to just 4 in 2020, and we're currently at 33. So it's down I think that's 27% or something.
So there is a plenty of room to go there. So that's operating systems, but they host application systems.
And at the time I started we had over 1,000 reconciliations a day between operating systems. We've got that down by about a third and our target is to get it down to about 300 or so by 2020.
So plenty of scope for simplification there and cost reduction. On private clouded option, our plan is still to reach at least 80% by 2020, and we're not even halfway there yet.
So there is room for improvement there. And on our vendors, you remember we had more than 56,000 vendors which was some feed for 100,000 people in the company.
And we've got that down by almost 30% or so. But there is still a lot of progress that we want to make in reducing complexity.
And I'm still of view that there is a recently good correlation between complexity reduction and real cost and wastage reduction. So I'm not changing the guidance for what we're targeting and just remember the extra €1 billion after 2018 that we're looking for but we do see there is scope to bring down the cost from the run rate that we're currently seeing.
Jeremy Sigee
Thank you. I think it's interesting to hear those other stats, because it's sticky just to interpret the P&L cost line given the revenue length.
So thank you.
John Cryan
It is. And don't forget that and again not to exaggerate the point so we wouldn't want you going away thinking we're going to half our cost.
But we've made redundancies in Germany through the horizon program, the cost branch reduction program. That's been taking place through the first half it's as I said in my remarks it's almost done 11 branches or something still to do.
And the full weight of that won't come through until the quarter or two or even three. Having said that, I also said we need to spend at least €2 billion a year to fund this modernization program, otherwise we'll slip in market share again.
Jeremy Sigee
And sorry, just on that point, because you flagged the need to investment I don't know if you're referring that the equity things I noticed you're referring to that. I mean, is that additional to - is that included in your plans and budgets or is that an incremental thing that you're going to have to find savings to fund?
John Cryan
I think the truth is it's probably a little bit of both will accommodate some of the cost of doing that within the general change the bank budgets, which we sort of refresh every year. We've been prioritizing, triaging we've obviously focused on not just efficiency gains but we've really focused in the past two years on controlling improvements as well as efficiency gains.
And we need to start investing more in sources of competitive advantage for the bank. I think in the retail banking well we've done a good job with the digitalization we've got mobile payments up and running in Germany which is new.
We've even got voice banking if you use Siri. So we're stepping ahead in Germany.
I think we need to invest a little bit more in CIB outside of just GTB, which is always been a business that is driven by competitive advantage from technology. We've got to apply a little bit more investment to our sales and trading area to help leverage the people there.
Jeremy Sigee
Thank you.
Operator
Next question is from the line of Andy Stimpson with Bank of America Merrill Lynch. Please go ahead.
Andrew Stimpson
Good morning, everyone. So first question is on net interest income, the idea that net interest income would go up if rates do ever go up and Europe has been powerful concept for the whole sector.
When I look at your net interest income so far this year, so first half '17 on first half '16, and it's down by €1.4 billion already. And how should we be thinking about that line going forward in the near-term.
I know we tend to talk about revenues in terms of product lines, but clearly, this year that's definitely been a focus on net interest income. So maybe you could talk through how if rates don't up for the next year in Europe how that works out?
And then secondly, I thought the stats you just gave on technology were extremely helpful. You've made some progress so as you said so far and there is plenty to go.
Is there a delay between making the progress say on the move towards cloud adoption and the costs actually coming through. Because clearly there is sometimes different between making the progress on the IT and then retiring the old systems, which is where you really get the cost saves.
Thank you.
James von Moltke
Sure it's James on the NII question there are a lot of moving parts in our NII line items. Two that I would highlight are the RMBS exit and also Abbey that are in our historical numbers, but not in the current quarter or forward-looking numbers.
So that's a feature that makes the comparability tough. I'd say the other thing is again I mentioned higher liquidity costs as we have built liquidity and there are also liabilities that we've been carrying and put on during the period of stress last year.
They've resulted in slightly higher funding cost and we'd expect those to roll off overtime. If I look forward a few things without wanting to give specific guidance at all, but you mentioned the interest rate sensitivity that we've published and provide again on page 24 of the investor deck.
We would expect overtime some of that to flow into our income statement, but of course it's anybody guess when the market rate environment and Central Bank actions especially in Europe really would lead to that outcome. In the meantime a number of our businesses the liability businesses of course are suffering continued margin compression and interest income declined from longer hedges that roll off.
And that's a process that's not yet complete. So on a total revenue basis the businesses work hard to offset that pressure from interest income, but in the interest income line it's still a headwind for the at least the near-term.
Andrew Stimpson
Okay thank you.
John Cryan
On the question of costs, I think there's not a great deal that I could add. I think most of the opportunities actually probably beyond 2020, because if we reach our target operating infrastructure by 2020, which we're reasonably on track to do, we need to take stock again then of what the competitive landscape looks like.
Because technological improvements are being introduced at a rate of knots and it's very difficult I think to predict anything three or four years out. What I would suggest though is that to the extent we reduced the cost of running the bank, we probably have to ship some of that cost into the change budget so where I can say we keep the €2 billion at least for the period up till probably 2020.
After that it maybe that the banking world just have to continue to invest in technology to keep pace, very difficult to say, but the competitive environment will come from outside the banking sector, I think particularly in retail banking.
Andrew Stimpson
Yes agree. Thank you very much.
Operator
Next question is from the line of Julia [indiscernible] with Morgan Stanley. Please go ahead.
Unidentified Analyst
Hi and good afternoon and thank you for your presentation. Two question from my side one on the revenues and one on dividend.
So on the revenue side, I just wonder how is the competitive market evolving in Germany? And your strategy of rationalizing the branch network is that affecting your pricing power, are you losing customers obviously we hear competitors of yours that is quite keen on gaining new customers.
So if you can give us an update on that? And then on dividend so I know that obviously you're accruing more than you plan to pay, but I was wondering if you can provide an update on how you're thinking in terms of a normalized payout from 2018 and beyond?
Thank you.
John Cryan
Yes well let me take responsibility for the margins and revenues in the German market. At the time we announced the rights issue we had seen an improvement over the mid of last year.
As soon as we mentioned that there hasn't been any further improvement. So the situation I think is pretty stable.
And you're right there is always competition for customers, which has always been as intense in Germany as it has been in other markets. So we've 20 million clients across our two banks and that's again an addressable market of something like 60 million.
So if we can't make money from that competitive position then something really wrong. So I think we are well positioned, we need technology to produce better net margins, because I don't think Germany will ever be a market that's classified by very high gross margins and that's partly because as you have seen from our credit numbers, credit losses are not really a hallmark of the market.
On losing customers I guess in retail banking we do that all the time, but where our customer numbers are reasonably stable, we have as you know from some of our marketing we have been trying to appeal to the younger customer with some of our more modern technology interfaces and that's remains the focus. The only other thing I would say on retail banking is that we continue to review the brand and we continue to review the pros and cons of advertising.
And I guess in 2018 that's something we need to turn our attention to. On the dividend, there is actually some news on the dividend, which is not from us, I think it's an environmental change, which is that I believe that in the last day or so a new interpretation of when a minimum dividend is required from a German Corporation has been passed.
And to the best of my knowledge and we will correct this or let you know with some detail. We think that if you are a regulated bank the minimum dividend requirement, which you remember we were taking to court and then up to the court first court ruled we decided just to accept the ruling.
We believe that that's now been annulled by a statute or some act equivalent in Germany and that we now that taken out of the law in relation to banks. So I think we are back to a position where we would be able to zero the dividend, we haven't really made a decision on what we will do we had prior to this obviously been working on the basis that the minimum dividend rule applied.
And that was going to be the basis of thing for the recommendation for 2017's year paid in 2018. But we will wait until the outcome for the whole year was clearer before we made any sort of recommendation to the supervisory board who in turn make a recommendation to shareholders.
And we saw we have seen that shareholders actually have had a say in the dividend level in Germany, which is I think possibly unique in the country, but it seems to be the case that for banks that's now no longer the case.
Unidentified Analyst
Okay, thank you. So you would consider zeroing the dividend for fiscal year '17 to be paid in '18 if this goes ahead?
John Cryan
I think the better phraseology is it is now again an option for us, but we will see how the year looks. Our capital ratio is obviously quite strong.
Unidentified Analyst
Yes I would assume.
John Cryan
Yes okay.
Unidentified Analyst
It is for zeroing in fact I was asking if you were planning to start doing higher dividend but it doesn't seem the case.
John Cryan
Well we came with this deliberately unclear statement as a competitive dividend payout ratio for the financial year '18 paid in '19 at the AGM then so I think we stick to that.
Unidentified Analyst
Okay, thank you.
Operator
Next question is from the line of Andrew Coombs with Citi. Please go ahead.
Andrew Coombs
Yes good afternoon, two follow-up questions please, one on IT and then one on the leverage ratio. On the IT thank you for the data that you provided.
What I wanted to ask was could you provide any indication of the size of your overall IT budget as a function of your cost base. And secondly you made the point about moving away from run the bank cost to migrating more to change the bank costs overtime, is there already some evident of that coming through and a lot of the maintenance spend you have indicated you may be able to reduce, but the €2 billion investment it looks like your capitalized balances have been going up somewhat.
So does that mean that we are just going to see that flowing back through the P&L as a higher amortization charge in Q4? Second question on the leverage ratio, if you take your numbers now even if you give back the 20 basis points of benefit it looks to be the lowest of any of the large global CIB peers.
With that in mind how much of a competitive issue is that? And more broadly the 4.5% number that you target previously that was a 2018 target, is it now fair to assume that is now a longer dated target.
Thank you.
James von Moltke
I might take the second question first if I may. And then ask John to respond on the IT front.
We did not set a specific date for the 4.5% target. So I want to correct that impression.
You're correct that on a relative basis compared to the peer group, we would show up at the low end. As I mentioned earlier, in response to another question, I do think there are sort of optimization improvement sort of opportunities ahead of us.
We have as an institution focused more on optimizing the risk weighted asset sort of load on the balance sheet. And as we look forward in time, I think we will devote more or perhaps equal attention to leverage exposures.
I mentioned also that we are carrying some excess liquidity. If you put just the liquidity and corporate bond portfolio against our leverage ratio it represents a reasonable sizable component of that ratio.
Again it's relatively not risky, but as we optimize around a number of items including the corporate liquidity portfolio, we do see some upside there.
John Cryan
On the IT costs, I direct you - I don't know if you've got in front of you page six, which is the adjusted cost schedule. You'll see that the IT cost run just below €1 billion per quarter.
So that's pure IT cost, and there will be an IT element within professional service fees for examples and then obviously within comp and ben. That would be to run the bank budget plus to change the bank budget.
But in non-comp and ben expense, IT would be a large proportion of our costs. Because real estate is I guess the other one.
So that's sort of indicative of pure IT costs, I think some quarters last year it was €1 billion it runs between that sort of €900 million to €1 billion per quarter. But there would be professional service fees, there would be a bit of occupancy maybe for some datacenters and so forth with a bit of comp and ben.
They're probably running €5 billion a year I guess.
Andrew Coombs
And I guess my question is if you take the OpEx I mean the €97.16 [ph] you add a bit on to the professional services fees some of the compensation, you could be getting up to 25% but that's prior to capitalization number. I guess my question is even if you bring the OpEx number down is the capitalization number going to creep up.
John Cryan
Yes. The cost on the software amortization number you get to a run-rate at some stage.
I mean it does plateau out. But you're right, I mean, IT should be one of our major costs.
We are an applied technology company, and that's the way you need to see ourselves going forward.
Operator
Next question is from the line of Alevizos Alevizakos with HSBC. Please go ahead.
Alevizos Alevizakos
Hi, thank you very much for taking my two questions. So question number one, going back to prime brokers.
I was wondering we were focusing a lot on the revenues that were lost on prime brokerage. But could you give me an indication on the revenue multiples that prime brokerage has go to the remaining equity businesses, i.e.
what are the revenues that there were lost in the cash business and derivatives business because of the prime brokerage AUM reductions since the last quarter of 2016? And then on the second question, we focused a lot on the cost, but I would like to focus a bit on the revenue.
If you were to select the three businesses, which will offer the largest revenue CAGR through 2020, what those three would be? Because we have seen competitors highlighting importance of business like GDP and wealth management, but to be fair you've underperformed in those two businesses.
So I just really want to hear like your thoughts about the top three areas. Thanks very much.
John Cryan
Sure. On prime brokerage, I think we'll take that as a follow-up.
I couldn't to hand really create a link for you between the cash and derivatives, revenue declines and the specific balance items in Prime Finance. What is market, what is idiosyncratic and what has to do with sort of the customer engagement around the Prime Finance business and hedging if you like in other activities.
On the revenue side, one thing I'd point out, so one business that I think performed very well in the quarter is asset management. And so there we are participating along with peers in a strong market.
In wealth management, that business is undergoing a significant repositioning and as you say the revenues are down adjusting for the recovery, the large recovery in the quarter. And I would say that over time, it will take us time to fully invigorate that business.
And so we would see the trend to be negative for a number of quarters while we rebuild and invested in that business to drive future profitability. And lastly GTB, as you point out there are number of business that the bank see as strategic in the new regulatory world we would look at GTB no less so.
As an attractive strategic business and one which Deutsche Bank is well positioned. There as I said and answer to an earlier question, I actually do think the question was well put in terms of the quarter representing a basis against which to compare future performance.
As John cited it's a business that we will what we need to continue to invest in to preserve and grow market share, but there I would looking forward think about revenue development with some optimism in GTB given our competitive position and market offering client based.
Alevizos Alevizakos
Thank you.
Operator
Our last question is from Andrew Lim with Societe Générale. Please go ahead.
Andrew Lim
Hi, there. Thanks for taking my questions.
You talked about accounting changes in GTB, which drove funding costs more to that business. Could you explain a bit more about why that happened why you made that change how much they amounted to?
And what other businesses they came from? And then secondly, on the CET1 capital if I look quarter-on-quarter it seems like it actually went down a little bit even though you had positive earnings, is that the correct observation there?
And could you explain exactly what happened?
John Cryan
Sure again on the last question of the CET1, as we've noted we are based on the ECB guidance showing our ratios and CET1 capital on the basis of an assumption of 100% dividend payout ratio. And that's because there are three tests, which you apply one of which is the prior year's dividend and given we were lost making in 2016, but paid a dividend in respect of '16 that assumption is 100%.
And so that underlies John's earlier comment that we really do not accrue capital for CET1 or regulatory purposes during the year until in 2018 our actual dividend sort of declaration is made. On the funding charges in GTB, there were a lot of different items that went into it so I don't want to talk to individual sort of by amount and driver, but first of all it's not an accounting change.
It's really an internal methodology change for how the businesses are rewarded and charged for their balance sheet usage. And GTB in the sort of the reallocation of firm wide funding charges had a net drag.
One of the contributors was a change in our methodology for thinking about inter day liquidity usage in the businesses and there GTB had a higher charge that was partially offset by on the other side of the balance sheet liability benefits as we recognize the value of liability providers in the bank. So there is really a net item flowing through there as I say I'd correct you in terms of an internal methodology verses an accounting change.
Andrew Lim
That's great. Thank you very much for that.
Operator
So we have no further questions. I hand back to Andrew.
John Andrews
Great. Thank you very much everybody for listening in call today.
We obviously standby and the IR team to answer any follow-up queries you may have. And we wish you a good rest of the day and rest of the earnings season.
Thank you.
Operator
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day.
Good bye.