Banco Comercial Português, S.A. (BCP) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Millennium BCP 9 Months 2020 Earnings Conference Call. [Operator Instructions] I must advise you, the call is being recorded today, on Friday, the 30th of October 2020. And your speaker for today is Mr. Miguel Maya. Please go ahead.

Good afternoon. This is Miguel Maya speaking. Welcome to the third quarter earnings conference call. Let me start by recalling that in March, when we faced this scenario of a significant risk deterioration for an extended period, we immediately defined 5 overarching priorities to guide our actions through the pandemic. We switched from a growth driven mode to a more defensive mode by strengthening the focus in the protection of the balance sheet while safeguarding the employees and ensuring business continuity. In the second quarter, we swiftly managed throughout the most critical period so far, dealing with the challenges of a severe and sudden lockdown in which our operational continuity was tested and the overall economic activity was stressed with relevant economic sectors almost stalled. In this adverse context, BCP stands out as an agile organization that is capable of quickly adapt to unexpected circumstances. Once again, we proved the strong resilience of our business model. After the lockdown, the economic activity recovered slightly, and the society progressed in the learning curve to deal with the pandemic being now more adjusted to [indiscernible] wide restrictions that characterize this process. These 2 evidences are positive signs that support an increasing confidence that further extreme restrictions that seem increasingly probable would not have the same impact in the economic activity as in the beginning of this crisis. But the high uncertainty levels did not vanish. And the exit from the pandemic and its full extent are not yet foreseeable, as shown by the current global operating in the spread of the infection. This is the new reality in which we are operating and BCP has adjusted accordingly. We reinforced structures and adopted procedures to face these challenges of the new context and to properly manage the risks ahead, mainly the risks associated with the moratoria regime. In total, the proportion of loans under moratoria is higher than in other European countries due to the configuration option under [indiscernible] Portuguese government in addressing the public support to the economy in which to launch schemes for all non reasons assume a less relevant proportion than in other countries. If public measures to support the economy are not prematurely withdrawn, moratoria loans should not compromise the bank's loans book. Quality behind the currently is the outcome of our updated impairment model. Economic viable companies from sectors that were -- are -- and still are deeply affected by the pandemic, will need time to recover their income levels and be able to fully resume its obligations. And only withdrawn of the moratoria could jeopardize the effort made so far to safeguard the existing economic capacity for those viable companies, which otherwise will be destroyed. Nevertheless, let me be bold in assuring that we are uncomplacent with the risks. We are actively monitoring the loan book subject to moratoria, undergoing assessments with high level of granularity of the risk profile of debtors influenced by the current circumstances and adjusting impairments accordingly. This is an ongoing process and its outcome is already reflected in the increase of NPE coverage. Moving into the highlights for the first 9 months, I start underlining the consolidated net profit that reached EUR 146 million, showing a year-on-year decrease of 46% that was markedly influenced by the pandemic context and the challenge in Poland. Even though the significant interest rate cuts in Poland and the Mozambique and the legal restrictions in Portugal are about commissioning, we prove that we have a resilient business model, both in terms of NII and commissions that produced a stable core income above EUR 860 million in the first 9 months. And our adaptation capability is well reflected on the cost-to-income of 48%, obtained with the operating costs under control, including the additional costs incurred due to COVID-19 measures. Therefore, BCP remains an efficient benchmark among European banks. As a result of our present risk assessment, namely the impact of the pandemic in the economic activity and the litigation risk in Poland, the impairment rose 46% year-on-year for the first 9 months, revenue increased by almost EUR 174 million. Our capital position remains above regulatory requirements and we reached a total capital ratio of 15.7% and a common equity Tier 1 ratio of 12.4% after organically generating 22 basis points of capital on the third quarter. Liquidity levels are high and well above regulatory requirements, having more than EUR 22 billion of eligible assets for ECB funding and our loan to deposits remains low at 86%. Although operating in adverse context, our commercial intensity was responsible for a remarkable increase in business volumes. The performing loans grew 4.9% year-on-year, of which EUR 2 billion in the first 9 months of 2020, driven by the leadership in the COVID-19 loan schemes in which we have reached a market share of 32%. The customer funds grew 3.9% since September '19. And this intensity has been also essential to keep improving the quality of the balance sheet, having managed to decrease the NPEs in Portugal by EUR 545 million this year, of which EUR 207 million in the last quarter. As I mentioned before, we adjusted the impairment to reflect the economic context and the main risks affecting the loan book, driving the cost of risks to 89 basis points and the NPE coverage by impairments increasing 7 percentage points to 62%. Our investments strategy on mobile is recognized and valued by the customers, with BCP standing as a leading bank in customer satisfaction in all assessed dimensions of digital channels in Portugal. The pandemic has been capitalizing digital adoption by the customers, and our app is their choice for its visibility, versatility and product quality, reflected by the growing number of mobile customers, which grew 35% at group level and 31% in Portugal since September 2019. Besides the growing number of mobile customers, the app is driving the increase in the mobile interactions of the customers with the bank. 45% of our digital customers use exclusively the app, which represents an increase of 13 percentage points since September '19, and in the last quarter, there was a strong growth in mobile business compared to the last year's third quarter, with 68% in sales, more 73% payments and more 90% transfers made through the app. Besides receiving Best Digital Bank award in Portugal, our app is also receiving top customer recommendations at Google Play Store, which is a leading indicator of customer satisfaction. In 2020, we intensified our priority in putting our innovation capabilities at the service of the customers, providing them 15 new releases of the app that have continuously improved its usability and convenience for customers of all ages, facilitating their day-to-day interactions. The app provides customized experience to the customers and enhanced features. We have been leaders in promoting open banking in Portugal by enabling the aggregation and initiation of payments from accounts in other Portuguese banks, but also from several French banks, country. We have the number of Portuguese cities and is relevant. The current context, particularly after the lockdown restrictions has boosted the digital transition. And we are confirming that not only the younger generations are quickly adopters of digital tools. among the senior customers, we are also witnessing a steep climb in mobile adoptions. Since March, we have registered a growth of 25% in the number of mobile customers above 65 years, confirming that our app is user-friendly, and it is an efficient platform to serve the customers and meet their expectations. On average, each customer is making more than 30 interactions with the bank every month. Before giving the floor to my colleague, Miguel Braganca, I want to reiterate that our strategy remains valid, although the time to reach some objectives should be redefined as soon as we may foresee this transition from the current new reality towards a new normality. I also wish to underline that the resilience of BCP business model were reflected in our capability to maintain the core income stable under a very adverse context, while keeping the cost-to-income below 50% and being able to organically generate capital of 22 basis points on the last quarter. Once again, we proved our agility in adapting to new realities, which is reflected in the capacity shown by BCP employees to ensure that our high-quality service levels are provided to customers without interruptions, no degradation. And it's also visible in the relevant progress we made on mobile on the operational adjustments that followed the investments we have been making in automation. There are many challenges ahead, but we are convinced that BCP will come out of this crisis with a reinforced competitive position. Miguel, the floor is yours.

Thank you very much. Thank you, ladies and gentlemen. Going now to Page 12, we can see here the income statement. And as our CEO, Miguel Maya, was commenting, in spite of this huge crisis, we have shown a very resilient core income with net interest income and commissions, basically flattish vis-à-vis next year. And as I have commented here several times, our view for the full year is a small single-digit growth vis-à-vis last year as I had anticipated before. The recurring operating costs are also flattish so that the core earnings really show a very robust performance in spite of this huge crisis vis-à-vis next year. All the unusual costs like restructuring costs, integration costs and so on, slightly better than next year. And the other income, in which I would highlight the capital gains on foreclosed real estate and so on with some decrease vis-à-vis last year. And this is exactly what explains our slight pre-provisioning profit, a decrease of 4.5% vis-à-vis last year. With the situation that we are living right now of the COVID, of course, as we would expect, the impairment charges and the cost of risk are higher than last year, growing around 46%. And this is basically, this impairment and provision for Swiss franc mortgage risk that explain then the sharper decrease vis-à-vis last year. In terms of the net interest income, what we see is a margin -- net interest margin compression that somehow compensated the volume performance. So that at the end of the day, the total net interest margin is broadly constant, both in -- when we sum the international operations with the Portuguese operations. I will highlight here in the Portuguese operations, as I had commented before, a net impact of this quarter vis-à-vis the previous quarters of around EUR 10 million explained by the TLTRO and a negative impact, vis-à-vis the full year of last year, if you want, of [Audio Gap] linked to the excess cash that we have in the [Audio Gap] In international operations, there was some compression in terms of margin, to a large extent, explained by the very sharp decrease in reference rates in Poland that had an immediate impact on the interest rates received from the assets. Fees and commissions also flat with a very slight decrease in Portugal of 1% and an increase of 2%. And in other income, we see the net trading income with a slight decrease vis-à-vis last year. But mainly, the most important impact was the increase in mandatory contributions in -- mainly in Poland. And a capital gain that we had last year in foreclosed assets of around EUR 22 million that we did not have this year. Operating costs. The recurrent operating costs, in spite of the change of perimeter in Poland in consolidated terms, flat at 0%, with a decrease of around 2% of operating costs on a recurring basis in Portugal and an increase of 2.3% in the international operations. I would here -- would like to highlight that the integration of Euro Bank in Poland went very well. We have reduced the headcount year-on-year by more than 700 people. And there is still, I would say, linked to digitalization and so on, some room to go in this regard. This explains this good cost evolutions, explains our persistent cost advantage in terms of cost to income. As you see here, we compare very favorably with both our competitors and the average banks in Europe, mainly when we consider cost to core income, i.e., excluding trading gains. Impairment and provision charges, this is a tale of two sides. What we see here is, mainly in Portugal, we see an important growth of the cost of risk as anticipated to around 90 basis points on the first 9 months of the year. In Poland, the main impact was this provision that we are charging now already for the third quarter in a row for the Swiss franc mortgage risk. Credit quality. It has been a long marathon, but with strong success. As you see here, our nonperforming exposure ratio based on the loans already at 6.5%. If you look at the EBA ratio with all the securities of balance sheet exposures, commercial paper, et cetera, it's already at 4.5%, which is a very sharp improvement from the last years. And we were able, in spite of the crisis, to continue the reduction of NPEs even in this quarter where we have reduced EUR 200 million in Portugal and EUR 550 million since the beginning of the year. Customer funds are growing in a very sustainable way with a 3.2% growth in Portugal. And here, I would like to highlight the fact that we have been able to grow also in off-balance sheet in these last quarters, which is clearly a much more profitable way of growing this type of business. Loans to customers. You see here a very sharp growth in performing loans to customers, mainly, this has been explained to a large extent by the corporate book and also by the government-guaranteed schemes which we thought had represented a well-balanced risk return profile. So that this time, we have had here a EUR 2.3 billion growth of performing loans in Portugal, which compares with around EUR 1 billion decrease of the nonperforming portfolio. Finally, increasing 3.6% even in net terms in Portugal. The international book, quite stable. In terms of capital, as you see here, our fully -- our total capital ratio on a fully implemented basis, vis-à-vis the requirement, shows, I would say, a decent 2.4 percentage points buffer. And if we look at the CET1 ratio, we see here a 3.6 percentage points buffer between the 12.4 and the 8.83 of minimum required level. The MDA buffer is above EUR 1 billion, given the fact that we have not filled totally our AT1 and our subdebt package. The leverage ratio, clearly, very, very comfortable, compares very favorably with the leverage ratios in other countries, as you see here, 6.7%. And this is explained by the fact that we have a very high added density, which is explained by, to some extent, by our models and by the type of balance sheet that we have and by the recent history of the Portuguese economy. Net loans to deposits, I would say, very comfortable, almost too comfortable, with EUR 22.5 billion eligible assets. As you see here, we have used our TLTRO, which is slightly above EUR 7.5 billion, as you see here. And of course, we are recognizing in our P&L, the 1% of the EUR 7.5 billion. In relative terms, this is always a question that the marginal impact of this, given that in marginal terms, we have investments at minus 0.5 times EUR 7.5 billion. This is the marginal impact of the TLTRO in our P&L. I'll pass now the floor to Bernardo to explain in deeper detail the Portuguese and the international operations.

Okay. Good afternoon, ladies and gentlemen. On Page 28, starting with the Portuguese operation, net income decreased 26.7% and stood at EUR 92 million in the first 9 months of 2020 compared with EUR 125 million in the first 9 months of 2019. This performance was influenced by an increase on provisioning due to the COVID-19 environment. Net earnings were only 3% down from previous year, explained by a slight decrease in NII, lower level of banking commissions and significant lower income from sales of real estate assets compared with the 9 months of 2019, and as I mentioned before, higher impairment charges. With regards to costs, there was a reduction of 3.4% to EUR 475 million, explained by some decrease in staff costs and a more significant decrease on other admin costs due to the pandemic. Okay. Due to the pandemic. Nonrecurring costs decreased 35% due to the lower compensation -- salary compensation paid for temporary salary cuts that amounts for EUR 5.8 million in 2020 versus more than EUR 12 million in 2019 and by lower restructuring costs. On Page 29, looking to NII in Portugal, it stood at EUR 591 million at the end of the first month -- 9 months of 2020. And only 1.5% below the same period of 2019. Favorable impact as the expansion of the credit portfolio supported by the COVID credit lines as well as the TLTRO were the main positive contributors. Other positive factors, such as the lower wholesale costs and the repricing of the deposits that at this stage, it's mainly coming from the repricing on U.S. dollar deposits, were almost enough to compensate the negative impact of EUR 64 million registered on this period related with lower price on credit, lower yields on security portfolio and impacts from NPEs reduction, and as mentioned before, the excess of liquidity. Let me also highlight that the turnaround on NII in Portugal, when we look at the previous quarter, in fact, NII increased 10% quarter-on-quarter. NIM went down to 155 basis points, mainly explained by the lower spreads related with COVID credit lines and lower weight of personal loans in total loan portfolio. Quarter-on-quarter, NIM went up 6 basis points. On Page 30, regarding spreads on term deposits, back book spreads stood at minus 51 basis points compared with minus 55 basis points on the first 9 months of 2019. Front book priced at an average of minus 41 basis points in the first 9 months of 2020 and still below the current level of the back book. Spreads on loan book were compressed and stood at 269 basis points from 272 basis points due to the lower spreads on the credit lines with a guarantee of the state. Moving to Page 31, that presents the evolution of commissions and other income, you can see that banking commissions decreased 4.1% in the year due to the COVID-19 with higher impacts coming from cards and transfers with a reduction of slightly less than 10%. That was not compensated by the increase of customer account related fees, explained by strong performance on customer acquisition. Market-related fees increased 20% as a result of better performance in securities and asset management and combined fees and commissions decreased year-on-year, only 1.2%. Looking to other income decrease, as mentioned before, was mainly explained by the lower gains in real estate sales, higher mandatory contributions due to the additional solidarity contribution on the banking sector that was approved last June. And in the case of BCP, it amounts to EUR 5.9 million. On the opposite side, there was a positive impact on equity accounting earnings related with the reversal of liability adequacy test from the insurance company that was booked on Q2, with an amount of EUR 17.8 million. On -- going on -- going to Page 32, looking at costs, there was a reduction of 3.4%, mainly driven by lower staff costs, minus 4%, and the slowdown on other admin costs, minus 8% due to the COVID-19. All in all, recurring costs went almost down 2%. And on a quarterly basis, costs were reduced by 4%. In terms of employees, there was a reduction of more than 100 employees and to what -- regards to branches there was a reduction of 37 branches, bringing the total number of branches in Portugal below 490 branches. Moving on to Page 33, which refers to asset quality. Even on this challenging environment, NPE reduction was strong. There was a reduction of almost EUR 1 billion year-on-year, of almost EUR 550 million year-to-date and more than EUR 200 million on the last quarter. Reduction of NPEs were predominantly from sales. Cost of risk increased to 90 basis points, reflecting the increase on provisions due to the more challenging environment and is within the range that we estimate on the first quarter earnings, where we present 90 to 120 basis points, the cost of risk in average for 2020 and 2021. Let's move to Page 34, which looks at the NPE coverage breakdown. You can see that total coverage stood at 118%, 3 percentage points higher than previous quarter and 8 percentage points higher than September '19. Coverage for individuals with high levels of real estate collaterals stood around 100% and for companies at 124%, that compares with 113% in September '19. As you can also see on this slide, coverage by loan loss reserves stood at 61% for total NPEs and above 70% for companies. On Page 35, that shows the evolution of foreclosed assets and restructuring funds. There was a decrease year-on-year of EUR 190 million and EUR 119 million, respectively, compared with the first 9 months of 2019. And to what regards to restructuring funds, decrease was mainly impacted on Q2 by the reduction of the net asset value of the units. In terms of property sales, there was a strong slowdown in the first 9 months of 2020 compared with 2019, were, once again, influenced by the COVID-19 outbreak. The reduction of the number of properties sold were almost less 300 -- 3,000 compared with the previous period and sales represents less than EUR 300 million. As you also can see, even with a small number of sales in 2020, we have been able to do in above the book value. Now moving to Page 36. Total customer funds amounted to almost EUR 59 billion, stood in 4.7% above 2019. The growth of more than EUR 2.6 billion was determined by the performance of demand deposits on individuals. In terms of balance sheet customer funds, it shows a slightly decrease from the amounts reached on September '19, although it is important to mention that on a quarterly basis, off-balance sheet funds increased 3%, mainly explained by the higher level of subscriptions in mutual funds. In terms of gross loans, there was an increase of 3.6%, mainly related with loans to companies that went up 7%, supportive on the credit guarantee lines related with COVID-19. In this period, performing loans increased EUR 2.3 billion, meaning more than 7%, and the NPE reduction, as mentioned before, was 1% down, meaning a 26 -- 27% decrease. Going to Page 37, it is possible to see our strong support to companies on this challenging environment, where the performing credit to companies was responsible for 89% of the total performing loan growth. Performing credit to companies increased 14% year-on-year, and the total performing credit portfolio grew 7%, representing an increase of EUR 2.3 billion in terms of amount. On Page 38, you have a picture of our support to companies and households since the beginning of the outbreak. And since the first phase of the pandemic situation, BCP was able to be close to their customers, supporting their needs and helping them to take the most adequate decisions. In terms of credit loans to companies, there was the first wave of granted loan lines provided by the government of EUR 6.6 billion and BCP was able to disburse EUR 2.3 billion out of the EUR 2.6 billion approved by the SGMs, representing a market share on this first wave of 38%. On the second stage, there was -- there become available additional lines with an amount slightly less than EUR 1.6 billion. But at this second wave, banks have to be -- are able to use the lines according to their market share. In what regards to moratoriums, it was possible to households and to companies to request them until the end of September this year, but as you can see, the amounts are not significantly different from the ones we presented in June. BCP supported more than 100,000 operations to households, with a total amount of EUR 4.2 billion. That is 91% concentrated in mortgage loans. Regarding 2 companies, there was almost 24,000 operations and the total amount at the end of September stood at EUR 4.7 billion. On Page 39, looking deeper to moratoriums in terms of households, 20% of the loan portfolio is under moratoria. Out of which, 91% is related with mortgages and 71% of this portfolio has LTVs below 80%. Regarding households, let me also remind that on the Great Financial Crisis, unemployment rate reached 16% and the cost of risk of individuals was around 50 basis points. In this crisis that is significantly different from the previous one and employment estimations are not -- are below 10%. In terms of moratoria to companies, 1/3 is related with sectors that we can see they're more vulnerable as autos, real estate and activities related with tourism, among others. On this segment, 2/3 of the portfolio have LTVs below 80%, once the largest exposures are in hotels and real estate typically sectors with high levels of collateral. With what regards to results of international operations, we can see on Page 41 that there was a significant reduction of the contribution from international operations to net income. These results was mostly impacted by the lower contribution from Poland due to the sharp decrease on interest rates by the Central Bank of Poland by 140 basis points and higher provisions for potential CHF litigation risks. Combined contributions from international operations stood at EUR 54 million compared with EUR 131 million in the same period of 2019. Poland was -- Poland decreased 76% and Mozambique, almost 18%. Moving to Page 42, net income in Poland was impacted by several specific items that amounts more than EUR 100 million in the first 9 months of 2020. These amounts reflects the impact of the Euro Bank acquisition, the reinforcement of the provisioning for legal lease related with mortgage loans in CHF, by additional impairments for credit risk arising from COVID-19 and higher mandatory contributions. Net operating revenues increased 6%, which includes the accretion value from Euro Bank as well as the strong franchise of Bank Millennium. Operating costs increased year-on-year, 8%, mainly driven by Euro Bank acquisition. CET1 ratio stood at 17% and total capital ratio stood at 20%, both ratios well above the regulatory requirements. On Page 43, we show the impacts from Euro Bank integration, and it is relevant to highlight that synergies in 2020 of EUR 25 million more than compensate the integration costs of slightly less than EUR 12 million. Integration costs and CapEx incurred up to September account for 83% of the overall plan. On Page 44, some detailed information about Bank Millennium, NII at 9%, even considering the strong interest rate cut of 140 basis points that affect the loan book and it will take a longer period to be priced in the deposits. NIMs stood at 2.63%, meaning minus 16 basis points compared with the last year. Fees and commissions increased 7.1%. And on the opposite side, other income was lower due to higher mandatory contributions, more 21% as well as lower trading gains. Operating costs were higher than first 9 months of 2019 due to the impact of Euro Bank acquisition. Moving to Page 45, related with asset quality in Poland. NPL ratio slightly higher than in September 2019, explained by the higher rate of consumer loans in total portfolio but stood below 2.9% registered in June 2020. Cost of risk increased to 92 basis points as the result of the COVID-19 environment. Coverage ratio by loan loss reserves at 116%, meaning an increase of coverage by 8 percentage points compared with June 2020. On Page 46, looking to volumes. Customer funds increased 5.6%, with highest -- with the highest impact coming from the increase of 7% in deposits. Regarding off-balance sheet products, there was a decrease of 6% year-on-year, but it's particularly important to mention the increase of 13% quarter-on-quarter. In terms of loans to customers, gross books stood at EUR 16.5 billion, more 5% and it is important to mention that the new production of mortgage loans reached a new record in terms of quarterly origination in Q3, translating into a market share of 12% on the third quarter of 2020. With regards to Mozambique, turning to Page 47, net income was lower than the same period of '19, driven by lower net operating income associated with lower NII resulting from a lower interest rate environment as well as lower gains on securities compared with 2019. Costs increased 4%, mostly explained by some increase in staff costs. And capital stood well above 40%. Moving to Page 48, NII and NIM in Mozambique decreased due to the continuing downtrend of interest rates. And commissions were slightly down than in 2019 due to the pandemic situation. And other income was much lower because in 2019, as mentioned before, there were some gains related with security sales that amounted almost EUR 5 million. Moving to Page 49. NPL ratio stood at 20%, cost of risk at 197 basis points and coverage by loan loss reserves stood at 71%. That compares with 67% in June 2020. Regarding volumes in Mozambique, you can see on Page 50, customer funds grew 15% and loans increased by 9% year-on-year, reflecting, for both cases, the power of the franchise in Mozambique. So thank you very much for your attention. And before we move to Q&A, we'll leave the -- I will return to Miguel Braganca for some final remarks.

Thank you very much, ladies and gentlemen. As we see here in Page 52 and as we keep presenting to you, when we have presented our strategic plan, we had presented several levers now. We have presented clearly a lever of franchise and business model that was related to the growth in number of customers and to the progressive digitalization and converting the customers in mobile customer. And here, we are clearly above the track with a very strong progress in terms of the number of customers and in terms of the service model/business model with which we serve these clients. Another very important lever was asset quality. As we all know, BCP was a little bit of an outlier in terms of the healthy banks in Europe in terms of asset quality. A key focus for us was in terms of normalization of our balance sheet, and we are clearly progressing in this regard with the target of getting to around EUR 3 billion of NPEs by 2021. I would say that in this target, we were clearly on track and we still think it is achievable to get to this number, albeit after the consequences and the digestion of the consequences of the present crisis. This was linked also to a progressive normalization of the cost of risk. As we have explained several times, our cost of risk is being unduly penalized by the speed at which we reduce our NPE stock because if we do an analysis of the healthy loans at the beginning of each year, our origination, our healthy loans typically have a cost of risk across the cycle of 40 to 50 basis points. In terms of financials, we do think that with our client loyalty, with our service model, with our customer preference, we should -- and with our efficiency with which we serve these clients, we should get to an ROE that is in line or slightly above our cost of equity of 10%. And this, of course, was also linked to a cost-to-income of 40%. This is the consequence, over 40% cost to income, together with the cost of risk of 50 basis points, which we thought and still think it's totally achievable for a bank such as ours in a run rate scenario. Unfortunately, with the present situation, what we see is that this stabilization and is getting to a steady state, we will take somewhat longer than what we were expecting so that we clearly maintain this vision of what the bank should be. But we index, so to say, the steady state to the steady state of the economy. In any case, in terms of the infrastructure elements that are behind this objective, we clearly think that we are progressing. Thank you very much. I open now the floor to Q&A.

[Operator Instructions] Our first question is from Maksym Mishyn from JB Capital Markets.

I have three, if I may. The first one is on NII. It recovered nicely in the third quarter in Portugal. And I was wondering if you expect a similar trend in the fourth quarter. Or should it remain kind of flattish? And what's your view for 2021? Could you also please update us on the sensitivity of your NII to move in your LIBOR? Then the second one is on costs. You had previously indicated you will delay some restructuring costs in Portugal into 2021. I was wondering if you could provide more color on the matter, how much of a restructuring cost should we expect for the next year? And finally, a more theoretical question. What's your view on M&A in Portugal? There is an increasing debate in the Portuguese press on whether Portugal needs more consolidation within the banking sector. And we just wanted to hear your thoughts on this, please.

Maksym, first, in terms of NII, as I had commented in the previous result presentation, the result presentation of last quarter, we were expecting an NII of single-digit growth vis-à-vis last year for the end of this year. And that's what we should expect. This means that we have now this jump vis-à-vis the second quarter, but the end result should be closer to a single-digit growth for the end of this year. And what I would also expect for next year is also a low single-digit growth in terms of NII with some margin compression because we will focus on lower risk segments than government-guaranteed schemes and collateralized loans compensating, so to say, some volume growth. So we maintained our view that we'll have a resilient NII, but not a high-growth NII, okay? The sensitivity of our NII is broadly constant of around slightly above -- slightly around EUR 100 million for each 100 basis points of variation in the reference rate for the Portuguese operation, okay? In terms of restructuring costs, it is true that we have commented that in the midst of the pandemic, we will not be doing a major restructuring. And we maintain this. So this year, we are not doing a major restructuring. We are analyzing exactly what will be next year and what will be the dynamics and the economic dynamics of next year. And for instance, a very important part of the restructuring is the recovery areas and the areas that are more linked to create monitoring and so on. So we have to calibrate, so to say, our headcount to the type of services that we will need. In any case, what we can say is that in principle for the results presentation, either for December or for Q1, we will present our view in terms of what will be the possible restructuring plan in Portugal. But not now because we are still looking forward to trying to see exactly what are the competencies that we need and what is the headcount and any charges that we will need for this new reality. In any case, what I can tell you is that typically, when we do a restructuring in Portugal, we are able to get to a level of 2.5 to 3x payback. So typically, the cost that we have in the restructuring is paid back after 2.5 to 3 years of -- or if you want, the yearly savings multiplied by 2.5 to 3 is the amount of the restructuring investment. In terms of M&A, what we can tell you and we have reiterated several times, is that we do not need an M&A. I mean there are some institutions who may need an M&A. We do not need an M&A. We have enough client loyalty, enough client preference, enough cost advantage to have the right size in the geographies in which we are. We do not need it. An M&A for us would have a high opportunity cost in terms of distraction. But if an asset comes to the market, of course, we have to look at it. But please be comforted by the fact that we do not need it. So if we take any type of decision in this regard, it's only if it is very clearly in the interest of the bank and its shareholders, but it is not the base of our plan, it's not the base of our strategy, okay?

Our next question for today is from the line of Noemi Peruch from Mediobanca.

I have four questions from my side. The first one is on cost of risk. We are approaching the end of the year. So can you give us more color on the annual cost of risk you expect in Portugal in 2020 and maybe in 2021 as well? The second one is on capital. Do you expect to land above 12% at year-end after the update of the discount rate? The third one is a follow-up on M&A. Could you please share with us the criteria you will consider when assessing a potential M&A deal? And the very final one is on funding. Are you planning to issue Tier 2 bonds in the next month to use the flexibility granted by Article 104a?

Okay. And first, I mean, starting with the last one, we typically, we do not preannounce short-term funding decisions. So it's not something that we typically preannounce. What we can tell you is that we do think that there will be a moment in which we will issue Tier 2, but we don't need it immediately. We don't need it even for MREL purposes. So to be clear, so we are clearly meeting our subordinated slot even for MREL purposes. And we will only do it when we think that it's clearly the interest of our shareholders to do so. Because as we do not need it, we do think that the present spread does not adequately reflect the risk that we have. In terms of the criteria for an M&A. So we do not need an M&A. So at the end of the day, the main criteria is whether a possible deal as in that type of situation, genuinely adds value to our shareholders, to our franchise, whether -- or in our assessment, whether an M&A would be accretive in terms of value considering its opportunity cost because we do realize that any integration has opportunity costs in terms of focus, in terms of development and so on for our bank and consequently, for its shareholders. So it has to be very, very compelling in terms of value creation. At the end of the day, in terms of the impact, the short and medium-term impact on our share price on the bank and on the risk profile of the bank. In terms of the CET1, we are presently at, as you see, at EUR 12.4 million. There are -- we are not envisaging, so to say, an organic capital deterioration between now and the end of the year. As you know, there are some movements that flow directly to equity in terms of capital ratios, such as the development of the ALM portfolio, which is positive and the net impact of the pension fund, which is the result of two variables, that is the performance of the assets of the pension fund and the update of the interest -- of the discount rate. Typically, these impacts that flow directly to the balance sheet, to the equity in the balance sheet, tend to move in opposite direction. So there is some natural hedge between the impact of the ALM portfolio that typically has a positive impact when the interest rates go down of the books of the pension fund and of the discount rate. So we are not expecting something that would move our CET1 below 12%. So this is clearly not in our forecast. But I mean, anything will happen, but it's clearly not within our -- what we would expect, okay? In terms of the annual cost of risk, when this pandemic came in the beginning of the year, we did our models, we did our simulations. And of course, we try to come up with a top round view of what it could be. And I shared here with you that based on our models and based on several simulations that we did, we would expect between this year and the next to have a cost of risk for Portugal between 90 and 120 basis points. This was a top line approach based on the previous crisis and based on the -- I mean our model and the impact on our PDs of different macroeconomic scenarios. Right now, we are closer to the 90 basis points, as you see. And I would tell you that if we were clearly with the perspective, of end of September, if we want, then the cost of risk would be much closer to the 90 basis points than to the 120. So as of September, I would say we would be much closer to the 90 than to the 120. And of course, in the last 2 weeks, there are strong developments in terms of the pandemics in Europe that we expect to be reversed in the beginning of the year with the vaccine. But here, I would say my expectation or my view is not better than yours. So you have as good information as I have, for sure, in terms of the vaccine, in terms of what will happen and so on. I would say if things normalize quickly. We would expect this cost of risk to be closer to the 90 basis points in these 2 years. If for whatever reason, the vaccine takes too much time or there is a very serious lockdown for a very long time, contrary to what we are expecting in Europe, it will be closer to the 120 basis points. But the choice of the scenario, I mean, is -- maybe done by you because you have as much information as I have in this regard.

Our next question for today is from Ignacio Ulargui from Exane.

I just have three quick questions. One is on NII. Just coming back a bit to the outlook. Miguel, you were mentioning that you expect growth in '21. How does funding cost play there? Is there a scope to the war you have already done a lot on deposits? I mean, I was wondering whether there should be any benefit from wholesale that maturing and subordinated debts in 2021. The second question also in NII, it's a bit of -- how do you see the Polish NII or the international operations NII? You have been betting a lot on growth in Poland, thanks to volume. This year has been tough due to COVID crisis. What is the sort of like expectations that you have for the international NII? Regarding -- third question is regarding the evolution of costs in Portugal, which has been very good, and this is without a major restructuring, as you were mentioning before, are there other things that we should expect? How do we see costs in 2021 with restructuring? And the final question on capital. I mean, have you taken any decision on the dividend? Or would you consider paying any dividend if the ban is removed? That's it.

Okay. So starting with your last question. We, think it's too early to take a decision in this regard because with so much uncertainty, I think we benefit from seeing what is going on, how we will be once we present our annual reports to be approved. And for sure, the information that we may have in the first quarter or second quarter of next year that we will be the decision on these matters is much richer and much more relevant than the one that we are now. So we are not discussing this issue, because we think we may profit from more information for the moment that we will take these type of decisions. In terms of the NII, effectively, as you were saying, there is a positive impact. There are a lot of impact, so to say. We will have still some impact of the TLTRO next year. We will have some margin compression on the asset side next year in Portugal. But we expect still to have here some slight volume growth in low risk business. So that this means that for next year, we would be expecting a low single-digit growth for the Portuguese operations. There is also some benefit, as you rightly pointed out, from some very expensive sub-debt that will mature next year, as you know. But this benefit will then occur also in 2022 because they mature in the end of next year, so to say. But the resulting impact of all of this will be some growth, but not -- we expect some growth but not a major growth, so low single digit, as I was commenting. In terms of, of course, effectively, as you say, there are some opportunities in terms of cost in Portugal. And we will come back to this issue in Q1 of next year. We do think that all these efforts that we are doing in terms of digitalization, in terms of mobile, in terms of robots and so on. There is some, in the first moment, some overlap between one and the -- between the traditional servicing model and the new servicing model. But once the customers get accustomed to the new servicing model, of course, we can then reduce costs at a much sharper pace. This is something that we want to do, but we have to calibrate this well. And we will -- in principle in Q1 of next year, we will present our views on this matter to the market. And I think this was additional?

There was. 1.7...

I'm sorry, the NII in international, by the way, I'm sorry, the NII in Poland, I'm sorry. We have here a strong impact from the very sharp reduction of the reference rate in Poland, which has an immediate impact in terms of the user rate of the cash loans and of credit cards in Poland with a multiple. So we do think that Q2 and Q3 of this year were the lowest levels of NII. We expect the NII to start growing. So that, I would say, in next year, we will have an NII already above the NII of this year that was positively influenced by the Q1 of this year that was very positive. So we really think that now the NII will start growing to a level that will end 2021 above 2020, which is a very important achievement given the fact that it reduced a lot from Q1 to Q2 and Q3.

[Operator Instructions] Our next is from Carlos Peixoto from CaixaBank BPI.

A couple of questions here as well. The first one would actually be on the common equity Tier 1. So basically, whether you could give us some color or some more details on the evolution during that quarter, on the 20 basis points evolution during the quarter. And also, whether -- should we expect some kind of impact from IT reductions as we're seeing in other banks, from IT reductions in the fourth Q. And then a second question would be on the effective tax rate in the quarter, which was quite high. What were the reasons behind it? And also, how should we think about that moving forward?

Okay. In terms of the IT reduction, in our case, it is a minor effect, as I believe also commented here in our last call. In terms of the evolution of our CET1 this year, it was basically explained by organic capital generation. So the nonorganic capital generation, both the evolution of the fair value reserves in our portfolio, I mean -- and the types of impacts that flow directly to equity were in total, relatively irrelevant. So this impact was basically the impact of the -- I'm sorry, of the net income generation plus adjusted for taxes. In terms of the taxes, effectively, as you rightly pointed out, in this quarter, the marginal accounting tax rate was quite high in spite of the fact that it is not -- this, in principle, does not have an important impact on capital. And this is because we are in a tax loss carryforward situation. And when we do this effort of selling NPEs, of selling credits, very often what happens is that a provision that was considered to be deducted at a marginal tax rate of 31%. Effectively, because we are in a tax loss carryforward situation, then the -- by provoking the loss immediate, the loss is only deducted at the 22% tax rate. So effectively, what happens is that the tax loss carry -- the DTA, so to say, that was calculated under the assumption that the loan was not going to be sold necessarily in a tax loss carryforward situation. It has to be corrected at the end of the day because we only deducted at a 22% situation. So this is the main impact. We had important credit sales during the year that were linked to our strong NPE reduction. And as we are in a tax loss carryforward situation, these have this small effects. Going forward, we do not expect -- this may be important in one single quarter when we have a special size, mainly when we are in such type of situation. But this is not necessarily something we carry more important. This typically does not influence our CET1 because typically, this is a correction, if you want, to a DTI that was not typically on the capital. It's a reaction to a nonguaranteed DTI. So this has not an impact on capital at the end of the day. This has an impact in terms of what is the size of the tax loss carryforwards that you move forward, okay? Then there were some additional costs that were not tax deductible. As you may know, in the Portuguese -- there was a new law in Portugal, we had an additional tax of EUR 5 million, the [Foreign Language] solidarity tax for the pandemics of EUR 5 million that was not deductible. So this also has this impact.

Our next question is from the line of Sofie Peterzens from JPMorgan.

Here is Sofie from JPMorgan. I had a question -- or my first question would be on your macro assumptions. Have you changed those things the second quarter? Or do you still have the same macro assumptions for the third quarter? And my second question would be on kind of Portugal, China relationships. There were some articles a few weeks ago that the relationship between Portugal and China has deteriorated, given the U.S.-China trade war. Clearly, we have the U.S. elections next week, but what kind of discussions have you had on with Fosun? And do you think if there is an escalation of the relationships between Portugal and China, could it have any impact on Fosun's holding in BCP? And then my last question would be on the Swiss franc mortgages in Poland. Could you just give an update on how do you think about any future litigation going from here?

Sofie, thank you very much for your questions. In terms of the macro, our macro view is that based on the latest reported numbers, from -- for the bank -- from the Bank of Portugal and so on, they are slightly better than the ones that we had incorporated previously in our models. But after that, I mean, we are seeing what's happening in Europe. So I would be somewhat cautious on this issue. So we are not reflecting any improvement, so to say, in macroeconomic conditions vis-à-vis our previous numbers in our estimations of impairments and provisions yet. Let's see. I have -- the main impact of this is on the cost of risk. And I believe I have already commented what is the interval in cost of risks that we may have. In terms of the geopolitical tensions, if you want. Of course, we have always to be aware of the geopolitical tensions and what may go well, what may go wrong and so on. But I would say that between Portugal and China, Portugal and China have a relationship that goes back for centuries. Just on the side, I don't know, but at a certain point in time, it were Portuguese navigators that were the most important trade people between Japan and China. So most of the commerce between Japan and China was done by Portuguese between Nagasaki and China. So which goes back to many, many centuries. The handover of Macau was done in a very peaceful way. And tensions come and go, and there is not any type of, I would say, friction on the contrary between Portugal and China. And my personal view is that with some -- in the period after the elections in the U.S. probably this tension will be reduced somewhat because before election, it's normal to have more and more tension, more and more aggressiveness because it's part of the democratic game to have a little bit of tension in election times. So in any case, Fosun is a private company. It's not a publicly owned company. It's a very entrepreneurial company. And we do not see that relationships at the government level would have an immediate impact on relationships between 2 private companies. So Fosun invests in BCP because it sees BCP as a good part of its portfolio. It has an analysis of BCP as any other investor would have done. And we try to add value to our share price for Fosun and for our other shareholders in the same way. In terms of the CHF portfolio. And the way we see it is the following: during 9 years, there was a series of decisions in courts that typically were for the banks in courts. And I would say that probably something that framed somewhat the decisions of the judges in Poland was the fact that they felt compelled that the issues arise to European law, to European regulation that this should be fair in this type of situations. After this due back decision of the European Court of Justice in last year, October last year, most of the decisions in the courts have been against the banks. But we see this as a pendulum. So we have, during 9 years, a lot of decisions for the banks. Now we are leaving the period of some decisions against the banks. In our case, there is not any decision that has yet been gone to the Supreme Court and has not been final. So we had since October, we had basically 4 decisions against us on the second instance, which is the relevant one. And these 4 decisions against, since we have appealed to the Supreme Court and as we are waiting for decisions. So up until now, there is not one single decision taken by the courts that has been gone up until the final verdict that is against us. What we had since October, by the way, is 4 against us. And by the way, 2, for us, 2 very clearly, for us. And how do we see it? We see that we are comfortable with what the bank did in the past. It was a long time ago. But from a process standpoint, we do think that everything was done right. There was in 2008, 2009, a lot of pressure for the banks to originate loans in Swiss francs, inclusive by the government. There were a lot of regulations framing in what way this could and should be done. There was -- there were clearly direct decisions by the political authorities saying that banks should present offers in foreign currency to the Polish customers because Polish customers should have the right to funding at low cost. My personal view, of course with hindsight is that banks should not have gotten into this business, but now it's not totally irrelevant, but it was done in a correct way, in a legal way. And what we see right now is that there is a systemic risk in Poland with several banks having portfolios in this regard. And a lot of decisions in courts being taken against the banks. And I mean a minority of the decision is being taken for the banks. And I think that what will happen is that sooner or later, there will have to be some type of systemic decision in this regard that I hope is balanced for the protection of the whole system. The type of provisions that we are doing are based on the methodology, that basically puts us more or less at the same level as the other banks that have Swiss franc mortgage portfolios, are doing in Poland. So basically, we look at each other and see more or less because in this -- with so much uncertainty, more or less what would be an adequate level for the type of risk. But at the end of the day, my personal view is that this most probably will have some type of systemic decisions because this effects, not particularly only BCP, but a large part of the Polish banking system. In any case, there was a recent decision or interview to key judges of the Supreme Court where they were asked what was their opinion on the subject. And they very clearly stated that it is very difficult to have a one size fits all decision. It's very difficult to have a precedent because -- and this is very important, each case is different. Everything has to be seen on a case-by-case basis. The contracts are different. The cases are different. And this is clearly something that we think protects us a lot because in our case, for instance, customers were -- had the possibility to pay directly in Swiss francs and this for the type of decisions that are being taken makes a lot of difference. So how do I see this going forward? I see that it will be a kind of a bumpy road with some -- a lot of news in the past regarding this issue. I think in the next quarters, most probably there will be some pressure for the banks to keep on doing some type of provisions in this type of dimension that we are seeing in the last quarters. We do think that this is the most likely scenario. But we do think that in some quarters, there will have to be some type of systemic decision that protects the Polish banking system.

Our next question is from Gabor Kemeny from Autonomous Research.

A couple of issues on asset quality, please. First one is on the debt moratoria. Can you give us an indication how much provisions do you have set aside for these exposures? And how do you think about building up coverage here? And more broadly, on the debt under moratoria, how do you think about the exits? What's your strategy about recovering these exposures and becoming them paying again? So do you have any tools available to incentivize these clients to start paying the debt again? As I understand that the statutory payment holiday is on the next September. And then another question on your participation in the restructuring funds in real estate and tourism. I saw the roughly EUR 700 million of these left. How do you think about the quality of these exposures, potentially having to impair them? And what could be the magnitude of potential impairments in the next few quarters?

Okay. Starting with the last question. The restructuring funds, as I have already commented here several times, are not managed by us. So these are funds that are supervised by the Portuguese SEC, by the CMVM. The -- actually, one of the reasons for the existence of the restructuring funds, is to have a new management for the companies and banks are not particularly akin of being good turnaround managers in industrial companies. So I think this is the first point. So these are assets that are being made separately with funds that are under the supervision of competent authorities. And every time it is necessary, and I think it is done on a quarterly basis, there is an evaluation of these assets by the management and by auditors under the supervision of who has it. So I think this is very important. In terms of the assets themselves. The assets themselves, the ones that have remained, have a high concentration of tourism. But they are good assets. So for the ones of you that come to the [indiscernible], and this is public, I mean you have one hotel that used to be a Sofitel Hotel. You have very good hotels, front line hotels, new hotels on the front line of the beach, of good quality, 4 to 5 stars, I mean, it's good quality in terms of tourism and they are performing quite well. In relative -- or they were performing quite well in relative terms. What happens? Of course, this crisis is -- reflects itself on to tourism. So we have to see exactly what will be the impact of this crisis on the cash flows of these hotels. As I have commented last time when -- in June, when we had presented the valuation of the restructuring funds, when I was asked what I was expecting to the future, I said that the valuations were then under the assumption of a progressive normalization of tourism towards the summer of 2021. So -- and I believe that the valuation that was done was under this assumption. If for whatever reason, there is not a vaccine, if next summer is also loss for tourism and so on, I think, but this is not done by the bank, this is done by external independent auditors, but I think just based on common sense, that the hotels will have less cash flow next year and at least this impact of lower cash flow next year may have an impact in regulation, of course. On the other hand, if next year is totally normal, and people gets -- are so aching to go out because they are so -- I mean, in need of holiday. So in need of sun that suddenly, I mean, there is a massive uprising in tourism next year. Probably the valuations of these hotels will go up because this is not the base case scenario. So let's see. I think it's too early to say exactly what the impact will be. What I can tell you is that the touristic assets are reasonably good assets that will outperform other touristic assets in Portugal. In terms of the debt moratoria, we do the provisions on a case-by-case basis. And of course, some of these customers that are in moratoria have stage 1 or stage 2 provisions. Some of them even have stage 3 provisions. They were not in default, but they were in stage 3. So I won't -- we do not segregate, so to say, our provisions with -- the provisions for customers and moratoria and provisions for customers without the moratoria. But we have a rating, we have an evaluation of customers. Of course, we could not get all the ones that I -- that I'm required of, but we don't think it's necessarily reasonable. What I can tell you is that we treat these customers and the provisioning model for these customers in the same way as our customers, of course, considering the level of risk. I would also like to say that the stigma associated to the moratoria and the conditions of access to the moratoria are very different on a country-by-country basis. So it is not necessarily a good exercise to compare the ratio of debt in moratoria among different countries and take the exact same conclusions because a moratoria without a stigma, that is easy to access and the way you have no downside, is totally different for moratoria where one of the reasons to access was a very, very big problem, either in terms of business model. So we do not think that is necessarily the best exercise.

[indiscernible]

These are for companies. For individuals, I think it's very important to say that in the case of mortgages, the way the moratoria was developed is that if you have a 30-year mortgage, and if you ask for a moratoria, basically, yes, 30-year, 30-year mortgages gets extended some additional months for the months of the moratoria. So this is on long-term loans, on all long-term loans. What happens is that the loan gets extended for the period of the moratoria. So this makes it much softer and much easier for the cash flows of the individuals or of the companies to cope with the moratoria. It's not like a cliff event, like when the moratoria ends, you have to pay everything. On long-term loans, the loans get extended for the period of the moratoria. And instead of the 5-year loan, you have 5 years and 6 months, let's say, or 9 months, whatever.

That's all very helpful. Just to quickly follow-up on the restructuring funds. So based on what you say, it's kind of unlikely that you may do a revaluation in the fourth quarter, but more likely to revisit how the exposures and the cash flows developed in 2021. Is this fair to say?

I think it's fair to say that we will not do a revaluation of the restructuring funds. We are in the fourth quarter now, in the first quarter because we'd never do revaluations of restructuring funds. So we receive the math of the restructuring funds based on the managers of these funds and the supervision of the competent authorities. So...

Remember we've made the [indiscernible]

Yes. We challenge it. Of course, as with any other asset, we challenge it. But so the valuations are not done by us. What I can tell you is that these valuations were done based on an assumption that I have just commented. And if the reality confirms the assumption, we would not expect the people that have done the revaluations to change their valuations. If the reality change, the valuation change either upwards or downwards.

Our next question for today is from the line of Shimi Adequia (sic) [ Samir Adatia ] from Citi.

This is Samir Adatia from Citibank in London. I've got two questions, please. Firstly, the press were alluding to you exploring large NPL disposals, could you give us more context on this? As my understanding is previously, your focus was on small tickets and workouts? And then my last question is on the moratoria. With the EBA last month confirming the September deadline around forbearance under IFRS 9 remaining, what happens when you have a customer who hasn't previously utilized the moratoria scheme and asked to utilize it? Do they automatically get categorized as stage 2? Or do you have flex to put them under stage 1?

Okay. So just to be clear. So right now, there is not any moratoria, any public moratoria anymore. So right now, the customers cannot have demand access to these moratarias. So these moratarias that we have -- I mean, have ended, so -- for these type of moratorias. Of course, a restructuring of a loan of a client is something that sometimes clients ask and if we have to engage with them in a restructuring, this typically is a trigger for revaluation of the risk. And typically, I mean, this is a signal of degradation of the credit risk of the customer, and very often makes it a stage 2. And if there are 2 restructurings in a row, it is even a stage 3. But everything has to be done on a case-by-case basis. What has been done with this public moratoria was basically that these automatic triggers were subject to a special analysis. So there wasn't an automatic trigger because the assumption was that, as this pandemic is so much across the board, that it's not because somebody asks for a moratoria, that this necessarily means that the person is a worse risk.

[indiscernible]

Okay. Just to make sure. So we are not -- I mean, we -- our transactions compared with other transactions are always more targeted transactions. So we are not doing very large transactions. Sometimes the volume seems large because we have some written off credits and so on to it. But in comparative terms, what we try to do is a targeted transaction in which very often what happens is that either we sell a big loan to a natural buyer of this loan, let's say, you have a loan to a, for the sake of an example, for a hotel, let's say, if somebody wants to buy a hotel, probably the way to step in is to sell this loan to the new owner of this hotel or we may have portfolios of small loans, but these portfolios are very -- also very targeted portfolios. And that's what we have done and what we will continue to do if there is a market for it. What we typically do not do is to have very large heterogeneous portfolios because this leaves money on the table, basically. So if we segment the market better, we think we have a better deal for our shareholders. And we have that. And of course, in some quarters, because there are these type of deals, we have larger sales and/or more -- some of these natural [ owner sales ] in other quarters, not. So that's why there is some oscillation, some variation in the sales of portfolios.

There are no further questions at this time. I'll hand back to the speakers for closing comments. Thank you.

So ladies and gentlemen, thank you very much for your interest in our equity story. We really want to stress that we are deeply committed on performing in the bank and on delivering value to our shareholders, and we really appreciate your effort on following us, analyzing us and channeling all this communication to the market.

Thank you very much, sir. Ladies and gentlemen, that does conclude the call. Thank you, everyone, for joining. You may now disconnect.