Business

Edited Transcript of CABK.MC profits convention name or presentation 31-Oct-19 10:30am GMT

Barcelona Nov 4, 2019 (Thomson StreetEvents) — Edited Transcript of Caixabank SA profits convention name or presentation Thursday, October 31, 2019 at 10:30:00am GMT

CaixaBank, S.A. – Director of IR

CaixaBank, S.A. – CEO & Government Director

CaixaBank, S.A. – CFO

Mediobanca – Banca di credito finanziario S.p.A., Analysis Department – Analysis Analyst

UBS Funding Financial institution, Analysis Department – Government Director & Fairness Analysis Analyst

Edward O’Loghlen, CaixaBank, S.A. – Director of IR [1]

Excellent morning, and welcome to CaixaBank’s effects presentation for the 3rd quarter of 2019. With us lately is our CEO, Mr. Gonzalo Gortázar; and our CFO, Javier Pano.

We plan to spend round 30 mins for the presentation and 45 mins for are living Q&A, and you’ll have directions to your display screen to take part. Let me reiterate that my group and I are to be had for any questions that don’t seem to be spoke back all the way through the Q&A.

And with that, let me hand it over to the CEO.

Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [2]

Thanks, Eddie. Excellent morning, everyone. I am going to check out and beat Eddie’s forecast for the presentation to be shorter no less than on my aspect as a result of I believe it is a reasonably blank quarter with more than likely much less explanations required.

You have got a abstract of this quarter. On a quarterly foundation, now we have a powerful enlargement on core revenues, and now we have some value financial savings coming from the restructuring plan. So quarter-on-quarter, beautiful just right figures, returning to — simply on a quarterly foundation to these sure [jaws.]

The long-term financial savings and the insurance coverage had been beautiful just right on this quarter. And it is a seasonal quarter, and it is usually 1 / 4 by which now we have had, for the reason that 1st of August, 2,000 folks much less. So I believe excellent concerning the achievements within the quarter. Taking that issue under consideration, relating to charges and lifestyles threat insurance coverage revenues, they [resume] the expansion that we’ve got structurally had and the place now we have had obviously a slower starting of the 12 months.

At the lending aspect, it is trade lending and client lending that keep growing the trade. Lengthy-term financial savings, AUMs are up within the quarter and up considerably with that 7.6% year-to-date. And in the end, on solvency aspect, we constructed capital to 11.7%, and now we have persisted to construct that ratio to a degree this is simply now very as regards to what now we have been requested to have by way of the top of subsequent 12 months.

So all in all, beautiful just right developments. Go back on tangible fairness will exclude the unusual price of 10% — 10.1%, additionally indicating what we really feel is that our trade type can in truth ship and prosper in spite of the very adverse rate of interest surroundings.

Commercially, you will have noticed this slide prior to. It is year-after-year, we proceed to achieve marketplace percentage in the ones spaces which can be extra strategic for us. This 12 months is not any exception, in particular clearly lifestyles and pension trade lending, you’ll see relating to marketplace stocks, additionally robust acquire in payrolls within the ultimate 12 months. And the choice of shoppers that we name relational or (overseas language) in Spanish is now above EUR Eight million, an important building up year-after-year. Clearly, our technique is to develop purchasers, however in particular develop relational, particular person purchasers, and that’s running well for us.

Stability sheet-wise, relating to buyer price range, you notice the robust building up of the 12 months, EUR 22 billion. Clearly, 2 large members. Call for deposits, expensive, however signs of the luck we’re having within the trade, and market-related. However I’d additionally spotlight that at the long-term financial savings and mutual price range, now we have noticed higher developments relating to internet inflows, in particular within the month of September specifically after the August vacation.

The 12 months as much as September, as you’ll see at the right-hand aspect, is report relating to the rise in buyer price range. And clearly, it displays, sure, partially a just right evolution of markets, however most often, business energy, the truth that the type is operating and that the system remains to be rolling ahead.

At the long-term financial savings and [protection] , I mentioned, it is been a horny just right quarter. As we had just right ranges of process however perhaps no longer complete mirrored image of the ones within the P&L within the first 2 quarters. You’ll see marketplace percentage in long-term financial savings, up 22% — up, sorry, 33 foundation issues, so 22%. And inflows, you’ll see within the 3rd quarter, at EUR 600 million, it is a just right degree in comparison to what we had noticed within the earlier quarters. MyBox has been obviously a luck. It is permitting us to extend the penetration of insurance coverage merchandise in our consumer base. You’ll see that for lifestyles threat and family, well being, auto, most of these signs are up. And I believe it displays that it used to be the correct option to ship this new business providing, which had a transition era within the first a part of the 12 months, however it is now, I believe, running at an excessively suitable and just right velocity.

The lending aspect, it is once more a tale of enlargement in client, enlargement in trade and loan deleveraging. [Those are] the developments that we’ve got noticed. Public sector’s a little bit extra risky. This 12 months is contributing, however it’s — it has a tendency to be extra tactical and clearly extra risky quarter-on-quarter, however it is usually contributing to lending enlargement, is two% enlargement on appearing loans year-to-date, obviously above what the marketplace is doing and appearing the similar, I’d say, a hit developments, in particular related in client with that 11% enlargement year-to-date. But additionally at the trade aspect, it is beautiful just right developments.

New manufacturing is up on trade and client lending. As you’ll see, we proceed to push quite a lot of projects which can be making us extra a hit in each side. Specialization of our department community is a key one. We now have as regards to 200 facilities now supporting companies all the way through Spain.

We now have moved from the (overseas language), the bigger companies to smaller branches, what we name the trade financial institution, which might be having an excellent, I’d say, excellent efficiency within the early days throughout Spain.

Shopper lending continues to develop. We’re, as , innovating each relating to supply channels, generation, AI relating to credit score scoring and preapprovals, additionally relating to what we are doing in client lending, the place now we have now allotted, as you’ll see, over 240,000 TVs, cellphones and similar promoting vehicles in — via, what we name in Spanish, (overseas language) and safety alarms, numerous issues which can be serving to the normal client lending process, which is doing [fairly] smartly.

Loan aspect. You obviously see a fall in new manufacturing. And it is a bit early days, however I believe there are 2 elements. One, obviously, is the brand new loan legislation, which has a slowdown. I believe the — all the way through the summer season era has bogged down manufacturing and that are meant to be clearly brief. However I additionally really feel there is some stabilization, I’d say, out there. Probably the most numbers that we’ve got noticed lately point out that stabilization, which means that the loan e-book is not going to develop going ahead in the end for us. As , that used to be what we have been predicting once we introduced our strategic plan.

And speaking concerning the strategic plan, I believe it is a just right time to only point out that in truth the quite a lot of drivers for revenues that we mentioned have been going to be crucial for our luck in those Three years and long run, in truth, are running beautiful smartly. Clearly, the surroundings is tougher with adverse charges and the slowdown in financial system. However if you happen to have a look at what we mentioned is enlargement in — at the lending aspect in trade and client, that is doing very well. Expansion in bills with a 10% year-on-year is in truth doing well smartly.

BPI rising, and we’re going to see the numbers at the P&L as smartly, at just right tempo in spite of the surroundings. The long-term financial savings, in particular, just right quarter and year-to-date, obviously remains to be a very powerful motive force as it’s the coverage, each the nonlife and the lifestyles threat part of our providing. Mortgages, obviously, each relating to pricing and volumes, are susceptible. We have been predicting it to be susceptible. And more than likely it is sadly even weaker. After which now we have at the adverse aspect, the surplus money steadiness round EUR 17 billion, which now we have on the ECB, which is clearly a drag on effects. But when we have a look at what we in truth mentioned lets develop and make allowance us to proceed making development and succeed in good enough profitability, most of these drivers are there. We now have a little bit extra headwind on account of charges. However obviously, it does not imply that the type isn’t in truth doing great.

When it comes to effects. P&L., I believe it is marked by way of restoration of core revenues. And whilst you have a look at the restoration in core revenues quarter-on-quarter, clearly there is a important distinction between the solid NII after which 3% enlargement in charges and as regards to 7% enlargement in insurance coverage. I believe this displays smartly the developments by which we’re and developments that we predict relating to additional force on NII, however talent to proceed rising internet charges and insurance coverage source of revenue going ahead. That is obviously what we predict to do on this quarter. I believe we now have proven it will possibly paintings. Instead of that, now we have decrease noncore revenues related to the truth that we not have Repsol on year-on-year. And clearly, the Telefónica dividend which we recorded in the second one quarter, however not anything surprising on that entrance.

Bills are coming down as advantages of the restructuring program began to fill in since August. And that’s clearly serving to to decelerate the numerous enlargement in bills that we had proven as of — on the finish of June. At the asset high quality aspect, Javier will speak about, however we see solid developments relating to value of threat, just right development in NPL aid and, as I say clearly a go back on tangible fairness this is simplest 6.8% relating to reported. However given this singularity of the restructuring price, I believe it is suitable to regulate for that to estimate what’s the cruising velocity of the financial institution. And at this degree, we’re at this 10% threshold.

BPI been obviously a luck tale for us. I believe what I’d spotlight is core revenues enlargement. NII charges with — as a result of we had this switch of companies from BPI to CaixaBank, the reported determine isn’t related. Once we modify, we see important enlargement in charges. We are making an investment at the value aspect, obviously, even though now we have a quarter-on-quarter aid, year-on-year, now we have an building up. And the nice factor is that we’re seeing the revenues come related to those investments. Credit score high quality, excellent. We’re going to proceed to look write-backs and, therefore, a just right contribution to our P&L. Clearly, in comparison to ultimate 12 months, there are some variations as a result of there have been numerous one-offs ultimate 12 months however, obviously, relatively just right.

And in addition relating to process, client lending, trade, buyer price range and financial savings, BPI is relatively aligned relating to its efficiency with the type of issues we are doing in Spain which can be running, and Portugal is following an identical developments.

With that, I believe, Javier, chances are you’ll wish to pass into the element of the P&L?

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Javier Pano Riera, CaixaBank, S.A. – CFO [3]

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K. Thanks, and just right morning. From my aspect, some extra main points. On NII, as you might even see, we’re up by way of 0.1% quarter-on-quarter and nil.3% year-on-year. At the sure aspect right here, obviously, upper moderate mortgage balances serving to after a powerful mortgage enlargement all the way through the second one quarter. Additionally now we have the assistance of upper price rely this 3rd quarter. And at the adverse aspect, as already commented by way of Gonzalo, it is the ALCO, and clearly decreased dimension and likewise the surplus money this is having a adverse affect. Going ahead, I’d say that within the fourth quarter, we additionally — sorry, we can have already got the sure affect from [tiering] and into subsequent 12 months, TLTRO provides us optionality to partly offset the decrease affect of decrease charges.

With this, let me now focal point into the client actions in our property and liabilities. First, on deposits. You spot us in fresh quarters, there aren’t any adjustments. We’re repricing our euro deposits at 0. The e-book yield stays at very low ranges. At the asset aspect, you might even see that the entrance e-book yield comes down by way of 23 foundation issues this quarter and to 257 foundation issues. This additionally has to do with the truth that all the way through this 3rd quarter, on moderate, now we have had decrease marketplace yields. The LIBOR, relying at the tenure, is under — between 15, 20 bps in comparison to the second one quarter and likewise long-term yields had been decrease. Having mentioned this, I’d say that segment-by-segment, now we have no longer noticed a tightening of spreads of the brand new manufacturing.

To the contrary on mortgages, as we will more than likely remark later, now we have noticed a favorable construction in this entrance. At the again e-book yield, it comes down by way of 2 foundation issues, on this case suffering from nowadays rely impact additionally that this technical explanation why on account of the other foundation of our mortgage e-book that when now we have an extended day rely 1 / 4 impacts downwards our again e-book yield and it stands now at 223 foundation issues. With this, our buyer unfold comes down additionally by way of 2 foundation issues, and our internet hobby margin by way of 1 foundation level to 121.

Now into the ALCO actions. From now, now we have determined for disclosure to merge the previous structural and liquidity portfolio. The latter not having the aim it used to be designed for, has little bit — has misplaced just a little bit its objective as we have now TLTRO3 to be had for TLTRO2 redemption. And — smartly, you might even see that the scale of the portfolio — the blended portfolio has remained at a solid EUR 34 billion, with a solid yield this quarter at 0.9%. We disclosed additionally for the primary time, the adulthood profile.

As you might even see, the ones maturities from 2020 and 2022 are unfold throughout. And in addition you might even see that the common lifestyles and length of the portfolio all the way through this 3rd quarter has remained solid. At the legal responsibility aspect, in spite of the brand new issuance, it stays — our wholesale investment value stays quite solid at 124 foundation issues over 6 months of LIBOR. And the common of the issuance of this 12 months has been a LIBOR plus 134. In order you might even see, beautiful in step with the common of the inventory.

With this, let me flip to charges, the place now we have had a just right quarter. We expect, in spite of the seasonality that generally impacts the 3rd quarter. We’re up quarter-on-quarter on charges by way of 3.2% and by way of 1.7% year-on-year. We now have just right efficiency around the other classes. On ordinary banking charges, we’re up by way of 2%, each quarter-on-quarter and year-on-year, round 2%. In — on asset control, we’re strongly up, each quarter-on-quarter and year-on-year additionally. Right here, you might even see to your right-hand aspect chart that we’ve got the common AUM balances that this 3rd quarter had been progressing, no longer simplest on account of just right marketplace prerequisites, but in addition as a result of now we have began to have some inflows. And you might even see that the end-of-period balances are already upper than the common which — bodes smartly for the efficiency of the fourth quarter, markets allowing.

In insurance coverage distribution, even though a adverse enlargement in comparison to ultimate quarter and likewise to the 3rd quarter ultimate 12 months. Right here, now we have a extra sure development, and we predict and we can glance this into the element within the coming slide. We’re convalescing after a susceptible first part of the 12 months. And wholesale banking this quarter, in spite of being extra risky, have completed actually smartly all the way through the 3rd quarter in spite of seasonality. With NII and costs in thoughts, a glance — a extra detailed glance into core revenues. As you might even see, we succeed in on a quarterly foundation an all-time top, each in team phrases or in simplest taking into account CaixaBank. As has been commented, the core revenues are up 1.2% year-on-year, 2.9% quarter-on-quarter.

Taking a look into the element of our key companies, you might even see that we’re doing smartly year-on-year on long-term financial savings, up by way of 4.1%. In coverage, 3.8%. In bills right here, obviously, because of digital bills which can be serving to so much, up by way of 3.6%. The ones companies already constitute long-term financial savings, coverage and bills 41% of our core revenues, up by way of 1 proportion level year-on-year and quarter-on-quarter. As I mentioned, focusing extra into our coverage revenues, you might even see that around the other segments of this trade, we’re bettering our efficiency.

Lifestyles threat is consolidating. Obviously, a restoration, and we predict this development to proceed. We even have this 3rd quarter, robust enlargement in fairness accounted from a number of (overseas language). There’s all the time right here some seasonality. However even in comparison to ultimate 12 months, doing higher. And in insurance coverage distribution charges, nonetheless, as I mentioned prior to, moderately adverse in comparison to ultimate 12 months. However obviously, on a steepening development and right here in this entrance with MyBox, the MyBox providing, we predict that that is set to make stronger additionally.

Now I flip to prices. Right here, obviously, now we have the affect of the restructuring program that begins to fill in. Prices are down quarter-on-quarter by way of 1.3%. You might even see that it is group of workers prices what’s riding our value base down. And that is greater than compensating an building up on the whole bills and amortizations. That is principally because of the funding that we’re doing. In lots of instances, in IT and likewise within the reshape of our community.

On account of 2,000 folks leaving the corporate, in August, now the productiveness in step with worker has actually greater. Our core revenues in step with worker grew by way of 7.4% in comparison to the 3rd quarter ultimate 12 months and by way of 24% in comparison with the start line of the former strategic plan overdue in 2014.

In the end, at the P&L, a couple of feedback. Our — sorry, on our mortgage loss provisions, a couple of feedback to finish the P&L. Our provisioning ranges are reducing. On a 12-month buying and selling foundation, you might even see that down in comparison to the location ultimate 12 months by way of 28%. The price of threat stays at 14 foundation issues this quarter and already down by way of 6 foundation issues in comparison to the 3rd quarter of ultimate 12 months and smartly under steerage, take into accout, for value of threat to be under 20 foundation issues.

And with this, we flip to the steadiness sheet. A couple of feedback on our nonperforming exposures. You might even see that our nonperforming loans come down by way of EUR 400 million spherical numbers. This permits the nonperforming mortgage ratio to return right down to 4.1% not off course to be under 4% by way of year-end. We expect that that is transparent achievable goal now. Our OREO publicity remains to be nonmaterial, EUR 0.Nine billion. And in addition we proceed decreasing our rented actual property portfolio. Now we’re status at EUR 2.2 billion. And as you might even see, the tempo of inflows continues to decelerate. And if you happen to have a look at additionally the primary Nine months of this 12 months in comparison to the primary Nine months of ultimate 12 months, down by way of 15%. And on the similar time, in spite of decreasing our nonperforming mortgage exposures, you might even see that the protection ratios stay sound and solid with our — I’d commentary right here, our uncollateralized protection ratio status at 83%.

On liquidity, no information. We proceed to have a actually robust liquidity place with all metrics in very relaxed ranges. Liquidity quilt ratio at 190%. And internet solid investment ratio is 124%, in spite of that TLTRO is now already no longer being thought to be as long-term investment. And you might even see additionally that we’ve got had persisted and a hit marketplace get entry to, EUR 5.Four billion issued all the way through the 12 months. All the way through the 3rd quarter, EUR 1 billion, Five years senior nonpreferred inaugural social bond with nice luck. And as commented prior to, the brand new TLTRO3 prerequisites that obviously had been progressed for the reason that previous model supply [the ability,] control optionality, each relating to company deposits and likewise relating to wholesale investment.

And in the end, on solvency. It is a quarter the place we progressed our solvency metrics around the board. Our CET1 ratio up by way of 11 foundation issues to 11.7% with contribution from natural capital technology and likewise marketplace and [others] serving to. I will be able to commentary additionally that our tangible e-book price in step with percentage is going up by way of EUR 0.13 of the euro quarter-on-quarter and it now stands at EUR 3.42 in step with percentage. And as commented, our MREL ratio right here on our solvency metrics at now we are status at 21.4%, actually as regards to the objective [or the] requirement at 22.5%, anything that we will set up simply all the way through subsequent 12 months.

And from my aspect, some ultimate remarks to wrap up. It is a quarter the place core revenues have obviously grown, supported by way of a powerful restoration in long-term financial savings and insurance coverage revenues. On the similar time, it is a quarter the place now we have the affect of — from cheaper price financial savings, and this has resulted right into a spice up of our quarterly internet source of revenue. When it comes to volumes, we proceed to do smartly in companies and client lending, this supporting the mortgage e-book and likewise it is a quarter the place long-term financial savings have began to do smartly, keeping up what we predict perhaps structural enlargement going ahead. And on the similar time, additional reinforcing our solvency metrics.

Thanks very a lot. And with this, I believe that we is also in a position for questions.

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Edward O’Loghlen, CaixaBank, S.A. – Director of IR [4]

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K. Thanks, Javier. Earlier than we continue to Q&A., simply let me remind everybody to thrill stay your questions transient for the advantage of everybody at the name. I imagine now we have over 12 callers at the line.

So operator, let’s get started then with everyone’s title and corporate they paintings for, please.

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Questions and Solutions

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Operator [1]

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(Operator Directions) You first query comes from the road of Sofie Peterzens from JPMorgan.

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Sofie Caroline Elisabet Peterzens, JP Morgan Chase & Co, Analysis Department – Analyst [2]

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Right here it is Sofie from JPMorgan. So I had 2 questions. So my first query can be on capital. What regulatory headwinds or pressure headwinds and Basel IV headwinds must we predict going forward to your capital? After which my 2d query can be on NII. How must we take into consideration internet hobby source of revenue going ahead? At Investor Day ultimate 12 months, you guided for round 1% NII enlargement in a flat price surroundings. Is that this nonetheless honest to suppose within the present surroundings and the way must we take into consideration the TLTRO3 [tiering] and different doable assist on your internet hobby source of revenue subsequent 12 months?

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Javier Pano Riera, CaixaBank, S.A. – CFO [3]

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K. Thanks, Sofie. Smartly, on capital, we’re in the similar position ultimate quarter. So we are finishing the method for the [loan default] portfolio in TRIM — on TRIM. And — smartly, we predict that the general information in this will come early subsequent 12 months. That is our expectation. That is more than likely within the subsequent name in January, we will replace you on additionally. I believe that that is the phase this is spending on TRIM, as , it is the ultimate a part of our TRIM procedure. When it comes to different affects, it is smartly Basel IV.

We now have flagged this since 1 12 months in the past once we exactly — we determined to position this type of further buffer on our capital making plans of one proportion level. That used to be exactly designed to soak up Basel IV principally, and the possible pending affects from TRIM, which simplest pending one, if any. It is this one for the entire portfolio. So from our aspect, rather then this, no different important problems at the capital entrance. On internet hobby source of revenue going ahead, smartly, right here there are many transferring portions. I am not going to come up with lately steerage for subsequent 12 months. We are running now on our funds for subsequent 12 months.

And on NII, there are a couple of positives in comparison to the location we had in August. When you have a look at the displays, that you must assume that it will be the [exact reverse] scenario, however now the marketplace obviously is discounting no longer so decrease charges. So if you happen to have a look at the forwards for 12 months, then again, are roughly round minus 30 bps, which is the extent that at the moment are. On most sensible of this, now we have [tiering]. In our case, we predict to benefit from tiering in complete. We already cling at team degree, EUR 17 billion at ECB by way of the shut of the quarter.

Our — the tiering — to ensure that us to take pleasure in tiering , the utmost quantity is 13, 1 3, and we predict to take care of the ones EUR 13 billion at 0% at ECB at any time. This effects into a favorable affect on our internet hobby source of revenue of EUR 65 million in step with 12 months. Round EUR 60 million in CaixaBank and EUR Five million in BPI. That is EUR 13 billion are roughly EUR 12 billion in CaixaBank, Spain, and EUR 1 billion in BPI or moderately greater than EUR 1 billion in BPI. So that is the plan. So from right here, we’re running on, as I say, on our funds, on volumes.

When it comes to mortgage enlargement, relating to segments, relating to pricing, and clearly, TLTRO3 provides us some optionality, as I mentioned prior to relating to investment, in phrases you must — nonetheless wish to take a last determination clearly on what to do with TLTRO3. We are facing redemptions of TLTRO2 subsequent 12 months. We wish to make a decision if we’d like this liquidity or no longer. And if we roll over the TLTRO2 into TLTRO3, and to what extent, et cetera. Understand that there are lots of home windows for this. So it isn’t just one shot. So the following window in December, the next in March and so forth. And so we’re going to make a decision as a result of we’re doing the numbers. So all in all, clearly it is a income line that will probably be underneath force, obviously, as a result of charges are decrease, however no longer that low as no less than in August which may be anticipated. I have no idea Sofie if with this, I spoke back your query.

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Operator [4]

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Subsequent query comes from the road of Carlos Cobo from Societe Generale.

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Carlos Cobo Catena, Societe Generale Move Asset Analysis – Fairness Analyst [5]

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A few questions. One on capital and the opposite one, I believe, [it’s a must] on IRPH. I am not certain how a lot you’ll provide an explanation for, however I assume you’re underneath a greater place to grasp doable state of affairs there, that’s the fundamental query. If the overall recommend advice is reaffirmed, may just we be speaking about no affect in any respect? Or that may nonetheless have some affect relating to litigation prices. What can be your measures to compensate them? It will be simplest P&L readily over the years or you might nonetheless wish to take some in advance fees?

And 2d on capital piece, first is at the 100 foundation level buffer that you just discussed for TRIM and Basel IV, we now have already — I sought after to know how we must learn that buffer? Is that this a dynamic buffer as a result of you will have already absorbed a part of the TRIM affect? So now it must be less than 100 foundation issues? Or how must we learn that? You’re going to take care of it at 100 foundation issues till Basel IV is clarified.

And finally, additionally on capital, if that you must elaborate at the Five foundation issues capital technology organically, in Slide 10, I believe, of the pack. It appears low whilst you have a look at the retained profits within the quarter and the truth that the mortgage e-book has fallen just a little bit. I [could] justify greater than 10 foundation issues or much more of capital technology organically this quarter. So I sought after to grasp what had been the negatives or the rise in risk-weighted property that compensate that.

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [6]

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Thanks, Carlo. Let me perhaps get started with the IRPH. Our base case, up to now, has been and remains to be that we can no longer have a subject material affect from IRPH. And definitely, whilst you say is it no affect in any respect conceivable? Clearly, sure, it’s, no subject material affect. We expect that in line with what the overall recommend has mentioned relating to the index or the clause no longer being void [nor abusive] that it must be the native Spanish courts which can be those that experience to investigate transparency case-by-case. And in line with this actual scenario, in truth from any other financial institution and being based on the transparency necessities and the apply that we’ve got adopted, we are constructive that this may increasingly sooner or later be the case. Having mentioned that, clearly we wish to wait and spot what the general courtroom determination is.

With appreciate to the buffer, now we have created 100 foundation issues, come with TRIM and Basel IV. As Javier mentioned, TRIM isn’t but finalized for us. So no default portfolio pending this is more likely to be subsequent 12 months, we’re going to have to look if and what’s the ultimate affect from that. There is additionally a couple of issues about Basel IV that also wish to be outlined about operational threat, which might be related for us. And definitely, additionally what’s then the timing as a result of it is increasingly that there could be a extend. However in the end, now we have — a 12 months in the past, we supplied an estimate of transferring portions which used to be 100 foundation issues. And I believe that estimate is — lately continues to be legitimate. We can have some permutations over that 100 foundation issues, however it remains to be a just right buffer to offset those 2 issues and anything that we’re nonetheless in a position to construct organically within the 2 years and now one quarter that we’ve got between now and the top of 2021.

But even so that, I believe there may well be extend on it, no longer simply on [the output floor,] which does not have an actual affect for us, however the remainder of the Basel IV package deal, which do have affects for us would possibly in truth even be behind schedule. However our technique, at this level, is to construct this buffer by way of the top of 2021, so we will function in a 12% put up Basel IV absolutely carried out. After that date, we can’t be 100% positive, as , as a result of there are some transferring items. However I believe it is a just right relaxed estimate that we’ve got, and that we in truth — already disclosed virtually a 12 months in the past as a result of we noticed this coming and we all the time wish to be relatively honest to the marketplace and likewise for our personal making plans functions. Simply recognize that whether or not we love it or no longer, Basel IV is there and it has a small affect on us relative to others, however it is nonetheless an important affect. And Javier, you’ll elaborate on that and the quarterly buildup?

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Javier Pano Riera, CaixaBank, S.A. – CFO [7]

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Sure, Carlos, at the quarterly buildup is what you are saying, there is extra — more than likely extra intense risk-weighted asset enlargement organically this quarter and that is for a couple of causes. Smartly first, now we have had a powerful enlargement in Portugal, take into accout, nonetheless no longer [under advanced] fashions. 2d, there’s enlargement in contingent liabilities — or steadiness sheet contingent liabilities. Most likely you do not — you have a look at this then now we have had enlargement this 3rd quarter. After which there’s a combine impact nor for the reason that mortgage e-book has come down, we proceed to have enlargement in corporates, SMEs, plus client. So there’s a little bit a combination impact in this. In order that’s it. That is more than likely the rationale.

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Operator [8]

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Subsequent query comes from the road of José Abad from Goldman Sachs.

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José Maria Abad Hernandez, Goldman Sachs Team Inc., Analysis Department – Government Director [9]

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I’ve 2 questions. The primary query is at the different source of revenue and losses line. You may have booked EUR 44 million this quarter, which is above expectancies, no less than my expectancies and likewise of your personal steerage for [seasonal] internet actual estate-related impairments. So I wish to know — I imply if that you must in truth please elaborate a little bit to your expectation for this line going ahead. The second one query is on world macro developments in truth, in Spain, specifically, we are seeing in truth a slowdown — slow slowdown in truth within the financial system pushed by way of weaker, in truth, family intake.

So this leads me to two subquestions, if I would possibly. The primary one is whether or not you continue to be expecting — you could have a steerage of under 20 bps value of threat this 12 months and under 30 bps subsequent 12 months. So do you continue to be expecting a pickup in the price of threat for subsequent 12 months? And would subsequent 12 months, in truth, value of threat be above your steerage, for the reason that the macro outlook is weaker than on the time that you just introduced your steerage? And the second one query here’s how do you are expecting your client lending originations to adapt? Do you are expecting them to proceed at double-digit enlargement? And if no longer, would you be prepared in truth to sacrifice costs?

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [10]

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Thanks, Jose. Possibly I will get started with the second one query and [Javier perhaps] you’ll construct on that and solution the primary one. When it comes to the slowdown, sure, there is a slowdown. Obviously, once we have a look at the newest employment figures in Spain, there’s nonetheless enlargement, however at a far slower tempo than what we had noticed prior to, which has the message this can be a slowdown, however we are nonetheless in sure territory. And that’s what we are anticipating. And in truth, and I believe relying on, I believe, the greater self assurance that are meant to come related to the advent of recent executive, which my expectation is that it’ll happen after the election and clearly topic to ultimate settlement on industry problems between the U.S. and China, even though lately, there used to be adverse information on that entrance it is nonetheless our best possible case that we can have some roughly settlement. And therefore, that first level is, sure, we are in a slowdown house however no longer in anything worse than that. We’re going to have to look.

On this state of affairs, we are assured to stick throughout the limits of value of threat that we mentioned, each for this 12 months and subsequent 12 months. We in truth have had a horny just right 12 months relating to value of threat. And definitely, the adverse charges may be an ideal surroundings for us to proceed decreasing NPLs. Previously, we now have been requested whether or not we’d see value of threat going into adverse territory or very low, and we now have all the time mentioned clearly can not are expecting the longer term however we are going to nonetheless paintings on decreasing our NPL e-book. And that can have prices implicit on that. And therefore, as of lately, we nonetheless really feel that we can proceed to scale back NPLs strongly no longer simply by the top of the 12 months, as Javier mentioned, under 4%, but in addition into 2020. And that’s in line with the price of threat objectives that we’ve got introduced.

When it comes to the shopper lending, now we have been shocked to a point of the energy of the expansion of our e-book. On this case, what we are doing is in truth yielding higher effects than what we anticipated initially of the 12 months, as we weren’t anticipating double digit, even though we have been anticipating top single-digit enlargement. I believe it is logical to assume that this may increasingly decelerate. It is in our forecasts, in our expectancies. And that we might have enlargement going ahead in 2020. However under that degree, and that will probably be in line with the present pricing coverage that we’ve got. I do not believe we will outgrow the marketplace such a lot, and faux to stay or intend to stay double-digit enlargement if the marketplace shouldn’t be rising at that degree.

We now have had a just right price efficiency this 12 months, however I believe it is prudent to assume that we’re going to keep growing sooner than the marketplace and at just right ranges into subsequent 12 months, however at decrease ranges than what now we have lately. This is, in truth, what we mentioned once we introduced a strategic plan. On this case, 2019 has shocked us at the upside, which, now and again, isn’t dangerous. We are preserving an excessively shut eye on asset high quality, in particular in this e-book. So we now have commented prior to now, we now have mentioned how we’re going to monitor quite a lot of vintages. And in truth, we are having beautiful just right efficiency relating to development of asset high quality statistics of every quarterly vintages over the past couple of years. So we be ok with the trade. However clearly, we believe you, it is tough to stay the double-digit enlargement price into the longer term.

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Javier Pano Riera, CaixaBank, S.A. – CFO [11]

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K. From my aspect, to your query on our beneficial properties and losses. Right here, now we have a couple of impairments at the new inflows into OREO. So that you discussed that steerage for Zero internet actual property impairment, however this used to be prior to the disposal to Lone Superstar. Now there are small inflows into the OREO portfolio, now we are status at EUR 0.Nine billion and smartly, now and again, we wish to [provide] just a little bit in this. Instead of this, I’d say that we’re accelerating the tempo of — the restructuring of our community. So now we have impairments associated with branches, as we’re ultimate branches, outdated branches [into] new ones. So we — there are some impairments associated with this. So we can have had an uptick on the ones bills because of this, however I’d no longer be expecting that that is atmosphere a development for the longer term. So now we have had this quarter, more than likely with a moderately higher affect, however it isn’t a development in any respect.

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Operator [12]

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Subsequent query from the road of Alvaro Serrano from Morgan Stanley.

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Alvaro Serrano Saenz de Tejada, Morgan Stanley, Analysis Department – Lead Analyst [13]

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Two questions. To start with, this 12 months has been a horny tough trip for you. I imply the primary 2 quarters income you ignored relatively so much. You introduced a large restructuring plan. The query is, what a part of that first part misses, and taking a look again, do you assume used to be market-related and what — I believe what used to be perhaps kind of you restructuring a few of your inner processes? Or as an example, in insurance coverage, redesigning the insurance coverage providing. And since if I have a look at the Q3 efficiency, that is a lot more what we are used to from CaixaBank with charges up 2, insurance coverage up 4. Is that this disruption over? And is the two% and four% roughly enlargement that we must be taking a look ahead to going ahead is actually the query.

And the second one query is ready prices. Discovered 2020 — you have not given steerage for 2020, however given the revel in this 12 months, how dedicated are you to have [positive growth] in 2020? And what sort of flexibility do you could have so that you could decide to that?

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [14]

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I’d say we believe you, the 3rd quarter displays the energy of the franchise. And primary and 2d quarter, it [wasn’t] that glaring, [if] we are taking a look on the P&L. I insisted so much that the process used to be doing smartly, that we’ve got been clearly affected relating to internet inflows, which I believe have some like [slow] era and feature been slower initially of the 12 months. They are selecting up into 3rd quarter, and I be expecting them to proceed to be sure.

Even if clearly we’re going to have to look, however now we have a just right development there. After which it used to be related to the trade in our, in particular insurance coverage providing with a MyBox product, which took some time to interchange one former providing with the present providing. And the goods are other. We attempt to insist that, in truth, the system used to be running and that relating to process, choice of insurance policies, et cetera, that this used to be extra a brief accounting linked blip than the rest. And by chance, the 3rd quarter is suggesting that, that used to be the case.

Clearly, we are running now in, I believe, in just right form to proceed in this trail, and we take into account that you will have to see how that continues to consolidate quarter-after-quarter to substantiate that this used to be extra a brief factor. I don’t assume it used to be distraction internally. The settlement clearly that we needed to get a head rely aid used to be tough, however I shouldn’t have the sensation that the folk had been actually apprehensive or distracted. Actually, when now we have had the largest problem has been in August and in particular in September.

In August, we had 2,000 folks much less, however folks on vacation. So the purchasers have a tendency to be on vacation, so it is much less of a subject matter. September when folks come again, it is relatively tricky. As a result of, clearly we are running with 2,000 folks much less and those workers have been doing issues. They weren’t kind of idle, and we wish to reengineer issues. And now we have been running on that.

However the first couple of months, they are all the time a problem. And what now we have noticed is that, in truth, the group has delivered very well in having the most efficient quarter relating to revenues and an excessively robust September as a result of clearly this quarter isn’t generally completed in August when — for seasonal causes. Trade is gradual. So I take a part of your remark very sure is — the group is in nice form and has been in a position to ship an ideal quarter and September, in spite of most of these adjustments.

And with this inertia, I am assured for what’s forward this quarter, subsequent quarter, does not imply that it isn’t a troublesome surroundings, it is a particularly difficult surroundings. You recognize that smartly. However I believe we are going to be as much as the problem. And definitely, the 3rd quarter is helping us and with a bit of luck additionally will give you monetary group, some information to make stronger that, in truth, now we have a type that may do smartly on this surroundings.

So sure, we predict 3rd quarter to be extra consultant of the longer term relating to process. What it’s true is now we have adverse charges, and now we have a adverse repricing on Euribor at the loan at the ALCO, et cetera. So the ones headwinds are there, and they are going to be felt steadily all the way through the following quarter. Additionally we are going to wish to paintings more difficult and more difficult to offset that. At this level, with appreciate to 2020, we can not — I really like to mention anything to each assist your research and likewise clearly, to mention anything that we will ship on. It is too early.

We’re running, as Javier mentioned, on the main points of the funds for subsequent 12 months. We definitely are running. And I have mentioned, it isn’t a herbal state of items to have adverse [growth], like we are having — in truth, this 12 months for the primary time in 10 years, and we are running to go back to sure [views]once conceivable. When is that, at this level, isn’t anything I am relaxed in creating a touch upon most often as a result of we wish to supply steerage on 2020 on the finish of the 12 months and be extra complete and likewise ensure that no matter we are saying, we really feel we will in truth ship and we can not simply in truth ship, but in addition provide an explanation for to you why that is going to be [that way] . And on that entrance, we aren’t but completed. We, with a bit of luck, will probably be quickly and definitely be expecting that every one issues being equivalent, we will have this dialogue subsequent effects presentation.

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Operator [15]

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Your subsequent query comes from the road Andrea Unzueta from Credit score Suisse.

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Andrea Unzueta, Crédit Suisse AG, Analysis Department – VP [16]

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The primary one is a little more particular on insurance coverage revenues and particularly on coverage. The numbers have progressed considerably within the quarter. However on combination, the income from coverage insurance coverage continues to be declining year-on-year by way of kind of 1.5%. Is it honest to suppose that you just completed the 12 months with slight enlargement? Or how large is the seasonality of This autumn on manufacturing? After which my 2d query is on Portugal, and particularly, on NII, which used to be up 7% Q-on-Q. I believe it comes from a cheaper price of investment most commonly. May just you give us a little bit of colour at the developments in Portugal. And in addition — sorry, the ultimate one, if I understood appropriately, are you making plans to transport the risk-weighted property of Portugal to the IRB? And if that is so when and what will be the affect?

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [17]

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Smartly on insurance coverage revenues, obviously, we are on an upward development. It is anything that — on this case, I am again to the query from Alvaro, no? Sure, we have been running on reshaping our business be offering in this with MyBox. That is doing higher than, I’d say, that — even than anticipated to begin with. So our view is that, sure, we will ship extra sure efficiency quarter-by-quarter. To what extent — on your query, very particular, if we would possibly see a slight enlargement this 12 months, let’s examine what occurs all the way through the fourth quarter. However let me say that the rage is there and development this is anticipated to proceed to be higher.

On Portugal, you could have a selected query on NII. Portugal has completed really well. And I’d say that right here it is roughly 50-50, two primary causes, which is, first, just right efficiency from a business perspective. And right here you could have mortgage enlargement. You have got a just right efficiency relating to spreads, as you mentioned, at the legal responsibility aspect. However rather then this, there is additionally a standardization of asset and legal responsibility control practices at team degree. And in addition this have led to higher efficiency, shall we embrace, at ALCO degree from BPI. And on IRB, sure, in the future, we can roll out, however we nonetheless shouldn’t have an affect in this, no? It is anything that more than likely into subsequent 12 months, we will be extra particular. However as a gaggle, we must be inside the similar parameters and the similar fashions and follow IRB to BPI additionally.

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Operator [18]

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Your subsequent query comes from the road of Stefan Nedialkov from Citi.

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Stefan Rosenov Nedialkov, Citigroup Inc, Analysis Department – Director [19]

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It is Stefan from Citi. So 2 questions about my aspect. At the beginning, to return again to IRPH and to grasp just a little bit higher relating to the way you guys are managing that publicity. Are you able to percentage with us, out of 100 IRPH mortgages, as an example, what’s the % that you just way the client and it finally ends up being transformed into a normal Euribor loan or a set price loan? And of the remainder percentage, how a lot is going to courtroom? And what sort of you find yourself successful as opposed to dropping? Any colour, clearly, numbers can be superb. But when you do not need to offer particular numbers, simply give us some colour relating to how you are drawing near the problem total?

After which secondly, a little bit extra of a kind of technique query on insurance coverage. Once I have a look at your marketplace stocks and long-term financial savings, lifestyles insurance coverage, pension plans, payrolls, the ones had been doing amazingly smartly for the previous 4, Five years. It seems like you could be plateauing relating to this type of 2d spinoff, so as to say, of the rise. Do you notice achieving a herbal ceiling in the future within the subsequent x years on insurance coverage and on long-term financial savings extra most often in addition to pension plans? Any colour round that may be very attention-grabbing.

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [20]

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K, Stefan, let me come up with some colour. As you mentioned, I shouldn’t have the figures, and I am not certain [listing it] can be proactive to get into an excessive amount of element in this entrance when now we have a couple of months prior to now we have ultimate end result on those. However most often, now we have no longer renegotiated IRPH. So our publicity is what we had, and it is decreased by way of maturities. And clearly, if a shopper involves us and says they wish to trade the loan in a method or any other, whether or not it is IRPH or anything else, we all the time concentrate. And we strive and in finding an lodging, if it is sensible for each the buyer and ourselves, however now we have no longer engaged into an lively restructuring of negotiating with purchasers on that e-book.

We’ve got mentioned that we are successful the majority of instances in Spanish courtroom up to now on IRPH, which means the overwhelming majority, so an excessively top quantity. And because of this and for the content material of what the AG has mentioned, I believe, [to maintain] our base case is what is cheap, however there is not anything new from what now we have mentioned prior to now in this entrance. When it comes to marketplace percentage construction. Clearly, marketplace stocks evolve over the years. I shouldn’t have the sensation that we are plateauing, however clearly, relying on which kind of numbers or a sequence of numbers you glance, chances are you’ll in the future say that long-term financial savings, specifically, is now dealing with a large problem, which is that — clearly, in Spain now we have adverse charges for a couple of years, however we had a steeper yield curve than all over else.

We now have some kind of yields at the 10-year bond and the longer-term maturities that now has long gone as regards to 0. So a regular long-term saving product in line with simply fastened source of revenue may be very tough to construe lately and be offering some sure returns. It implies that we need to expand a brand new technology of goods this is combining different exposures clearly to equities and different underlyings that don’t seem to be simply kind of long-term executive bonds or fine quality corporates. To ensure that this to paintings, we wish to additionally supply to purchasers some sure bet there. [They are not] going to endure losses within the brief time period, blended with specific folks which can be retiring or that experience the online value and they don’t wish to settle for marketplace volatility. In the event that they really feel that in truth 75 what if anything occurs in subsequent 12 months and I move over, and on the similar time, markets are down, and I’ve a large loss.

So we’re running in construction a sequence of goods that mix biometrics coverage with long-term accumulation. Those are extra advanced merchandise. However on account of our marketplace percentage and experience, we have now a complete vary of possible choices. We are seeing the ones paintings well. Within the month of September, and in truth, now in October. And I believe there is upper value-add in our providing, no longer simply within the product, but in addition within the suitability of a product for a given consumer as our over 16,000 folks with monetary advisory levels, which nobody has to that extent, are crucial. And this building of value-add advisory and value-add merchandise is relatively distinctive, I believe, now in Spain. And therefore, my feeling is that we in truth will have the next stage of differentiation relating to marketplace percentage will increase than prior to now.

It is definitely a problem. However I will be able to under no circumstances surrender on the concept we will proceed gaining marketplace percentage, in particular, long-term financial savings. Clearly, there will be quarters up and down and perhaps one competitor comes with an excessively particular kind of push be offering or anything underneath a marketing campaign, you can have 1 / 4 the place issues trade. However over the years, I believe on this surroundings, the place kind of easy merchandise don’t paintings, it will play to our benefit. And it isn’t only a thesis of the longer term, it is a truth lately as a result of now we have an providing this is completely differential. And whether or not in spite of everything, given product is bought to a shopper as it suits or no longer, in the end, now we have a unique discussion with the purchasers the place we will actually be offering a complete vary of answers for long-term financial savings even though charges don’t seem to be above Zero in the longer term. So we really feel just right.

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Stefan Rosenov Nedialkov, Citigroup Inc, Analysis Department – Director [21]

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K. Thanks, Gonzalo. That is very attention-grabbing context. So from what I perceive, you mainly are beginning to be offering extra capital safe merchandise with extra sophistication and customization round it, which is actually the secret in asset control going ahead and that carries over on your insurance coverage providing.

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [22]

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Positive.

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Operator [23]

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Subsequent query comes from the road of Andrea Filtri from Mediobanca.

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Andrea Filtri, Mediobanca – Banca di credito finanziario S.p.A., Analysis Department – Analysis Analyst [24]

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One query on capital and legislation and the opposite on different provisions. We now have heard from certainly one of your competition that EBA pointers must be incorporated throughout the TRIM procedure. Do you’re feeling the similar about it? And what would you are expecting from the brand new definition of default in years yet to come? And if this have been the case, would you no longer then must steadily cut back and replace the marketplace to your 1 proportion level CET1 buffer as those hurdles in truth hit your capital ratio? Secondly, at the different provisions. They regarded sudden top this quarter. I have heard your solution to the former colleagues, however may just you elaborate just a little bit on those developments and the way we must type them going ahead? And simply in the end, have you ever completed any repricing on banking charges?

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [25]

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The ultimate one, the repricing on banking charges?

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Unidentified Corporate Consultant, [26]

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On banking charges.

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Andrea Filtri, Mediobanca – Banca di credito finanziario S.p.A., Analysis Department – Analysis Analyst [27]

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Sure.

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [28]

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The solution to the latter isn’t in a significant method, no. The — at the first level, I will identical to to mention the brand new definition of default isn’t going to have a subject material affect for us. And with appreciate to updating the marketplace as we pass during the TRIM, Basel IV, et cetera, Javier?

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Javier Pano Riera, CaixaBank, S.A. – CFO [29]

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Smartly, we — once now we have — or so long as now we have information at the construction that — [or whatever] traits that can affect our capital base, and that is for what now we have constructed this buffer of one proportion level. We might be able to replace at the place. However understand that once we positioned this buffer 1 12 months in the past used to be for Basel IV. TRIM-plus EBA pointers in time relating to the trade of parameters that may occur on account of this. And I will be able to [talk] in our view. This 1 proportion level buffer is what’s had to face all the ones regulatory headwinds. When it comes to different provisions, smartly, understand that we gave a comfortable steerage of the — the ones different provisions to be round EUR 50 million in step with quarter, no? And we are in an atmosphere the place we must assume that that is — this may increasingly proceed to be the case. And a few quarters is also moderately down and a few quarters moderately up. This has been the case, however we do not see that as a result of this 3rd quarter has been moderately upper quantity, this can be a development upwards, no? So I believe that that is the anticipated evolution.

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Andrea Filtri, Mediobanca – Banca di credito finanziario S.p.A., Analysis Department – Analysis Analyst [30]

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Only one explanation then. In the case of the buffer, are we then allowed to deduct from the 1% the root issues that you are taking from TRIM quarter-after-quarter and feature — do you could have the sensation that EBA pointers are incorporated within the TRIM workout?

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Javier Pano Riera, CaixaBank, S.A. – CFO [31]

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If now we have additional details about the general TRIM workout, which is concerning the mortgage default portfolio, if there’s an affect, this may increasingly decrease within the 100 foundation issues. So at that time limit, we will replace you at the closing buffer. So sure.

And the tips are incorporated on this workout.

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Unidentified Corporate Consultant, [32]

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And I might like to mention, there is not any further affect from that. It is all in combination.

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Operator [33]

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Subsequent query comes from the road of Ignacio Cerezo from UBS.

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Ignacio Cerezo Olmos, UBS Funding Financial institution, Analysis Department – Government Director & Fairness Analysis Analyst [34]

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Couple of fast ones on value of threat from me and one on prices. When it [comes] to threat, if you’ll replace us at the provisions you are these days charging at the client lending? And the second is how lengthy do you assume BPI can opt for prior to you in truth get started offering most often within the P&L? And at the prices, you roughly hinted in Q2 that you just have been taking a look at new value projects to scale back the associated fee enlargement, you are nonetheless forecasting for ’20 and ’21. I shouldn’t have noticed — have not noticed the rest in truth within the presentation. I do not believe you could have discussed the rest on this route within the name. So if you’ll replace us on that as smartly.

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Javier Pano Riera, CaixaBank, S.A. – CFO [35]

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If I would possibly get started with BPI and depart the remainder — I believe we, once a year, are relatively conservative in assuming that BPI wishes to visit normalized value of threat. BPI has had unusual cheap of threat relative to the cycle. Previously, I will be able to proceed to be shocked at the sure, no? We even have clearly provisions on the consolidated degree. So now we have an excellent place in this side of BPI, however I am able to say how lengthy, and I simply see that we’ve got noticed relatively a large number of upside past what we have been considering and we even have this extra money at CaixaBank degree.

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [36]

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And you then had — smartly, simply to counterpoint in this, the PPA associated with BPI stands to EUR 298 million at the moment. So simply to counterpoint the guidelines with this. You requested about value of threat of client lending…

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Ignacio Cerezo Olmos, UBS Funding Financial institution, Analysis Department – Government Director & Fairness Analysis Analyst [37]

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At the client income?

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [38]

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Sure, on client income. Of our provisioning ranges, at the moment, tough numbers, however more than likely between third and 50% is strictly because of the shopper mortgage portfolio. And as commented prior to, no, however we really feel actually happy with this place with this portfolio. We are tracking it very intently. When it comes to vintages, each quarter, I’d say, that the efficiency of new vintages are doing smartly, even higher than earlier ones. So we aren’t seeing deterioration in any respect from fresh traits relating to macro.

I’d upload to this that the brand new manufacturing, that we’ve got part of the brand new manufacturing this is coming from the ones agreements now we have with main distributors like IKEA, Fnac, et cetera. And so the ones [digital] manufacturing would possibly much more intently tracking, and we are extraordinarily satisfied to look which can be doing actually smartly and in line, if no longer even higher than the brand new manufacturing of loans from, shall we embrace, the CaixaBank or BPI purchasers, no? So it is a portfolio this is successful, great returns. Provisioning ranges that as the remainder of the mortgage e-book does no longer require at the moment top provisioning ranges makes round third of the provisioning at the moment. However on an excessively sound development and no main worries or no worries in any respect from our aspect. Even if, clearly tracking it intently. I believe that this solutions your 3rd query. And what is the 2d query about prices that I ignored? I have no idea.

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Ignacio Cerezo Olmos, UBS Funding Financial institution, Analysis Department – Government Director & Fairness Analysis Analyst [39]

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Sure, at the value — at the running value. I believe you hinted in the second one quarter that you just have been taking a look at new projects to scale back the associated fee enlargement in ’20 and ’21. If you’ll give us an replace in this.

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Javier Pano Riera, CaixaBank, S.A. – CFO [40]

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It is — this what we are running on at the moment, no? As we are running at the budgeting procedure for subsequent 12 months. It is about reviewing normal bills in — widely, no? There are key spaces of focal point in advertising, relating to sponsorships, relating to many spaces, the place you’ll reconsider over and over again about what actually is sensible for us. And on most sensible of this, clearly reviewing all funding projects relating to IT funding. Clearly, by no means — making an attempt no less than to not put into any problem, the projects for, shall we embrace, evolving the purchasing or converting the [bank] in comparison to the projects for operating the financial institution. However relating to prices and with a big value base, you’ll all the time do issues and this time, once more, in spite of having completed time and again, we evaluation the entirety once more. And as I say, running on it, no? So that is the primary — this would be the primary contributor to any effort — further effort for subsequent 12 months. One thing that we predict, on the finish of the day, we will ship.

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Operator [41]

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Your subsequent query comes from the road of Fernando Gil from Barclays.

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Fernando Gil de Santivañes d´Ornellas, Barclays Financial institution PLC, Analysis Department – Analysis Analyst [42]

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Only a query on loan marketplace. Are you able to pay attention me smartly? K. So loan, have you ever noticed any trade in combine from fastened mortgages manufacturing in quarter Three from quarter 2? And if you’ll replace what’s the combine of recent manufacturing from fastened to variable mortgages.

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Javier Pano Riera, CaixaBank, S.A. – CFO [43]

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No, the quick solution is not any. We are making round 60% — 60-something % at fastened of the brand new manufacturing of mortgages to people. And we are between 60%, 65%, I’d say, that may be a quantity that we are having each quarter and this isn’t converting. What we see is that, additionally there’s a extra broad-based development against fastened mortgages around the {industry}. And if I take into accout smartly industry-wise, the burden of recent — of the brand new manufacturing, no longer fastened is getting nearer to 40%. So we aren’t on my own in this. We have been the primary ones, however we are not on my own. So this may be in our view, a favorable construction.

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Operator [44]

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Your subsequent query comes from the road of Benjie Creelan from Jefferies.

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Benjie Creelan-Sandford, Jefferies LLC, Analysis Department – Fairness Analyst [45]

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I simply had a query on charges. Do you continue to be expecting to get again to sure year-on-year enlargement for complete 12 months ’19 at the commission line and possibly extra particularly at the CIB charges. I imply you discussed previous the home political scenario. Do you assume that is having any subject material affect relating to retaining again CIBC enlargement? Or how do you notice the outlook there? And the second one query, only a fast one on Angola and BFA. Are there any are living discussions ongoing? Or is there any replace across the doable to go out that retaining?

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [46]

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Sure, get started with the second. And the solution is discreet, no. No replace. Not anything occurring. And clearly, there’s a dialogue across the possession construction of our spouse [retailer] and [potential] for one birthday party to promote there, which is the one information. However we aren’t a part of that, so we will simplest observe the scoop of the obvious hobby of the telecom Brazilian [Oi] to promote their stake, no? However not anything on that entrance. On charges, you need to remark.

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Javier Pano Riera, CaixaBank, S.A. – CFO [47]

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Sure, on commission efficiency into year-end. Smartly, we’re going to see. So I will be able to no longer [commit] right here. It is what you are saying, no, CIB is extra risky for charges to do actually smartly into fourth quarter. We would wish the contribution from CIB, we’re going to see. At the different entrance, on commission revenues, now we have a extra large view on the entirety associated with AUMs as inflows into AUMs have resumed. At all times we wish to see markets allowing, no? However up to now, it appears that can be the case in this entrance. And relating to all of the companies that affect on charges, like bills and all are normal extra large fee-based. I’d say that efficiency is as anticipated, no? So I’d say that against extra sure development. We think that we will do smartly into fourth quarter. However as as to whether I decide to what on your query, no longer in a position to turn at this level.

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Operator [48]

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Our subsequent query comes from the road of Gonzalo Lopez from Redburn.

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Gonzalo Lopez Eguiguren, Redburn (Europe) Restricted, Analysis Department – Analyst [49]

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A handy guide a rough query on Portugal’s tax price. You reported a favorable tax price this quarter, and subsequently, enlargement price is someplace as regards to 18%. I used to be questioning if that you must please elaborate what came about this quarter in Portugal? And in addition if there is something that we will extrapolate going ahead?

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Javier Pano Riera, CaixaBank, S.A. – CFO [50]

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K. Smartly, now we have had the reversion of provisions prior to now put aside to hide tax legal responsibility for an oversea funding. And that is not anticipated to be required, so that is why of this. And — however this can be a one-off, so as to make it transparent.

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Operator [51]

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Your subsequent query comes from the road of Britta Schmidt from Independent.

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Britta Schmidt, Independent Analysis LLP – Non-Designated Member [52]

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I’ve 2 fast questions for me, please. You already mentioned the CIB volatility in charges. However in regards to the structural charges at the insurance coverage aspect, we see the insurance coverage effects lifestyles threat doing higher, unit-linked doing smartly, the (inaudible) smartly, however we do not see an building up actually in insurance coverage distribution charges. Possibly that you must simply provide an explanation for as to what’s going to be riding that? Are there — is there any pricing force? Are you providing decrease costs to shoppers? After which the second one query can be, the place are we at the debate referring to adverse charges on deposits, together with deposits for top internet value retail shoppers? Possibly you’ll give us an concept as to the place you notice the outlook for that?

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [53]

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Thanks, Britta. On adverse charges, we proceed to imagine on no longer having any adverse charges handed directly to retail shoppers, however do it progressively onto our company consumer base and we’re in that procedure, appropriate, is a procedure this is clearly necessary. On the similar time, it is subtle. And we wish to pass case-by-case and ensure that what we are doing, we are measuring correctly the entire profitability of the connection and ensuring that we will get the ones prices reimbursed, both via a selected commission or value or via an building up within the total courting. In essence, once we have a look at our retail purchasers we [look at it] a little bit the similar.

Whether or not we love it or no longer, lately to offer fundamental banking products and services has a value and purchasers don’t love to pay for that value. The best way we are getting paid is by way of having an excessively huge courting with a shopper that brings us relatively a large number of trade. In order that total, we will be offering the day by day banking products and services, the branches, the folk, the methods and get the profitability as a result of they carry many merchandise. And all in all, it really works. So — and clearly, with corporates, we now have been doing that on the very most sensible prior to now with adverse charges. So we wish to do it in a extra generalized foundation. We are running on that. Clearly, it is very related for you.

So what’s the affect on that? And sadly, this level, we aren’t able as a result of it is too early to come up with a determine or a sign. And definitely, we’re going to incorporate it into our steerage for subsequent 12 months. With appreciate to the opposite, I might like to mention something, and Javier will, I am certain, elaborate. However keep in mind that the 3rd quarter is relatively seasonal and it isn’t the most efficient quarter to promote new merchandise, appropriate? And therefore, we usually have — clearly, for the distribution charges and insurance coverage, it must be a worse quarter on that entrance. We now have the summer time. The summer time is helping us at the fairness accounted effects from Adeslas as a result of they are seasonal and the claims come down tremendously in August as folks have a tendency to not pass to hospitals or to the physician until they have got an actual factor in August and they are attempting and chill out and do anything else. That is a conduct.

However in an effort to promote new merchandise, it isn’t simple. At the lifestyles threat, now we have been relatively additionally transparent that it’ll have a just right standard kind of periodic top rate accumulation and the luck of what we now have completed prior to now, transferring from unmarried to kind of per month premiums, used to be going to have some kind of affect — slow affect, sure roll on build up progressively. And we are obviously seeing a few of that. And clearly, that is excellent news. That is coming as a result of as soon as we now have bought any such new merchandise, we are going to see increasingly sure effects sooner or later as we construct on what we now have all bought plus the brand new manufacturing. So I’d say it isn’t that sudden what we mentioned. Javier, perhaps you need so as to add anything extra particular at the numbers or…

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Javier Pano Riera, CaixaBank, S.A. – CFO [54]

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Sure. Smartly, simplest that if you happen to have a look at one of the most charts I defined, no, chances are you’ll monitor right here the efficiency in fresh quarters this 12 months, no. You might even see that — exactly the ones insurance coverage or charges associated with nonlife insurance coverage, no. Even if all the way through this 3rd quarter, nonetheless moderately down in comparison to the 3rd quarter of ultimate 12 months. We are a lot much less down than within the earlier quarter. So progressing so long as all the ones merchandise are being integrated into the MyBox business be offering. We think that we can get traction progressively. So we predict that that is going to make stronger in coming quarters.

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Unidentified Corporate Consultant, [55]

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I believe now we have time for yet one more and I imagine there is just one extra at the line. So what a contented twist of fate. Let’s have the ultimate one then.

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Operator [56]

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Positive. Your ultimate query comes from the road of Marta Sanchez Romero from Financial institution of The usa Merrill Lynch.

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Marta Sánchez Romero, BofA Merrill Lynch, Analysis Department – Director and Analyst [57]

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The primary query is on NII. Does it make sense to take your complete allotment of TLTRO III, so including kind of EUR 15 billion to what you could have lately and make investments it in Three 12 months Ecu sovereign debt? Otherwise you assume you do not wish to prop up your NII with low high quality, momentary fixes? How complicated are you in passing via adverse charges on your nonoperational company deposit base? And are you able to remind us about volumes there? We have not noticed any deposit value financial savings this quarter and the price of time deposits is in truth up in Spain. The second one query is to your EUR 2.2 billion condominium portfolio. When you have been to promote all of it lately in wholesale transaction, do you assume it might be breakeven? Or do you assume you wish to have to convey the online e-book price of that portfolio right down to be nearer to marketplace costs?

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [58]

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Smartly, on the second, Marta, I have no idea. We are not looking to [sell out]just one function. We are progressively bettering the standard of this portfolio. It is coming down. Yield is expanding. And we in truth wish to set up it for price. I believe now we have it conservatively in our books. However definitely, I can’t elaborate on what’s going to occur if we attempt to promote altogether as a result of that isn’t what we are pursuing, no?

Possibly Javier you’ll take at the…

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Javier Pano Riera, CaixaBank, S.A. – CFO [59]

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At the query on TLTRO III, smartly, I do not — I mentioned prior to that we’ve got no longer made a last determination in this now. However I do not really feel that we can take complete TLTRO to take a position into momentary bonds as a result of principally for the reason that unfold isn’t that prime. When you make investments into Spanish executive bond, as an example, you could have a couple of foundation issues simplest. And I do not believe this will probably be our plan. Even if, as I mentioned, we are running on our funds, money balances, so there are lots of transferring portions right here and it is a part of the method, no?

You had a query on nonoperational deposits. So I believe that the quantity has been disclosed every so often. It is — the ones are — very first thing is, the ones are extra nonoperational deposits — wholesale deposits from a regulatory perspective relating to the calculation of the liquidity ratios, no? And this determine stands round 35 — if I take into accout, 35 used to be moderately upper than EUR 35 million. However this doesn’t imply that, as Gonzalo used to be explaining, that we are making plans to price unilaterally to these deposits. As a result of on the finish of the day, something is the regulatory remedy and the opposite factor is the economic courting you could have with the ones purchasers, which — what sort of trade and what kind of trade you could have with them, no? And that is going to be a procedure that may deal with and [be available] in a case-by-case foundation and what we’re running. And needless to say, we can replace you on our perspectives in this within the subsequent name.

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Gonzalo Gortázar Rotaeche, CaixaBank, S.A. – CEO & Government Director [60]

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Thanks, everybody. And we can reconvene in Three months’ time.


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