Bank Hapoalim B.M. (POLI) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Bank Hapoalim Fourth Quarter and Full Year 2023 Results Conference Call. For your convenience, this call will be accompanied by a PowerPoint presentation. May we suggest, if you have not yet done so, that you access the presentation on the bank's website, www.bankhapoalim.com by clicking on Financial Information on the homepage and then click on the annual report presentation. [Operator Instructions] As a reminder, this conference is being recorded, March 7, 2023 (sic) [ 2024. ] With us on the line today are Mr. Dov Kotler, CEO of Bank Hapoalim; Mr. Ram Gev, Chief Financial Officer; Mr. Victor Bahar, Chief Economist; and Ms. Tamar Koblenz, Head of Investor Relations. I would like to remind everyone that forward-looking statements for the respected company's business financial condition and results of its operations are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. Such forward-looking statements include, but are not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development and the effect of the company's accounting policies, as well as certain other risk factors, which are detailed from time to time in the company's filings with the various securities authorities. Mr. Kotler, would you like to begin?

Thank you, operator. Thank you, everyone, on the call for joining us today. Today, we are reporting outstanding results for the fourth quarter and the full year of 2023. The full year of return on equity of 15%, with an increase of almost 13% in net profit to ILS 7.4 billion, ILS 7.4 billion. The results were achieved in unusual time in Israel. And I think that the bank has demonstrated outstanding resilience during this period. I will talk about it later on. Our strong results reflect the significant operational lever we created. Again, this year, almost 20% growth this year alone in total income versus only 3% this past year in expenses. This led to substantial positive jaws and efficiency ratio of less than 39%, 38.5%. In fact, we were able to maintain last year's higher return on equity, even slightly in positive, despite a substantial increase of the collective allowance this year and provision for the 5-year wages agreement signed during 2023. I am moving on to Slide #5. We are currently in a period of high uncertainty and some of the consequences of the war are not fully apparent yet. However, until now, this situation has demonstrated once again, that the Israeli economy has the power and the capacity to withstand crisis in any impressive way. I don't know if many countries, including wealthy one, could get on course so quickly towards recovery. Household consumption tend to recover as shown in the graph. Although this data still is not representative of the entire economy or all of region of Israel, unemployment is also returning to previous levels. Still, there are several challenges ahead. First, around 100,000 people, 1% of the population, are still displaced from their homes. The construction industry is still suffering from a labor shortage that brought work to halt on many projects across the country during the fourth quarter. In tourism, very few tourists are entering Israel. Now we will move to Slide #6. In an environment of such high uncertainty, Bank Hapoalim is the best prepared in the industry for potential negative macroeconomic developments. This readiness is evident in 2 main parameters: credit growth. Back in 2022, we recognized the global and local rising risk and adjusted our growth, becoming more selective. As we adjusted the pace of our growth, we also increased our allowance buffer every quarter to our current level of ILS 8 billion, almost 2% of our total credit portfolio. Moving on now to Slide #7. Our readiness also reflected in capital liquidity, which enabled the bank to take advantage of growth opportunities as they arise. In capital, we grow our capital buffer, while continuing to pay out dividends to our shareholders. Looking ahead, we are well prepared for a scenario of rising demand for credit. By the fourth quarter, we have reached a Tier-1 capital ratio of 12.02%. This was partly due to the restriction placed by the Bank of Israel on dividend distribution in the preceding quarter. As the war continued, Bank of Israel extended its instruction and limited the distribution for another quarter, the fourth one, although we are clearly able to pay out dividend in line with our policy and even more. Obviously, our view is that the remaining capital surplus should be distributed to our shareholders, and we are working on that with Bank of Israel. Our liquidity has always been strong, supported by our stable retail deposit base, which accounts to 58% of total deposits, enabling us to present high solid liquidity ratio over the long term, with an LCR of 129%. Slide #8. Our real estate exposure figures speak for themselves, demonstrating that we are primarily focused on residential properties with less exposure to riskier segments. In every category detailed in the slide, you can see that we are focused on projects with high LTV and strong absorption capacity. We show a strong underwriting and mortgages too, with an average LTV ratio of 46% only for the portfolio, taking into account the current balances and the rise in housing prices, the effective LTV is clearly lower. Moving on to Slide #9. The power of Bank Hapoalim lies not only in the strong figures we have presented, but also in our activities since the outbreak of the war. Anything this country experienced Bank Hapoalim experienced too. As a large leading organization, we were instantly aware of our moral responsibility and took action to provide meaningful support to our customers, and actually to any Israeli citizen in need right away. This issue is close to my heart, and I am involved in it personally. I'll mention a few examples of the main measures. The Poalim Rebuild Fund, ILS 100 million allocated by the bank for the restoration of the expected border communities in the South of Israel. It's the largest amount in Israel. We sent the emergency aid in the form of donation to medical and rescue organization into the group's aiding display families in the amount of ILS 10 million. Through it, we raised another ILS 14 million for the similar causes. Benefits for customers, we expanded on the outline provided by the Bank of Israel to include payments, exemption and suspension for directly affected customers and other benefits for the general population. In total, the cost of benefits is about ILS 159 million recorded this quarter and another ILS 59 million to date for the coming quarter. We built the banking support system for the families of our customer, casualties of the war or hostages, to deliver immediate solution as needed. We also set up a contact center for people injured or harmed by the attack on Israel opened just a few weeks ago, where we will provide the individual care and make sure that at least when it comes to banking, they can have a peace of mind. I would like also to mention our employees who participated in a wide range of volunteering efforts in addition to being excellent professionals. They have shown their strong moral side. Finally, I'm moving to Slide 10. I want to stress that despite the challenging conditions, we have continued implementation of our strategy. 2 years ago, we worked with McKinsey to build over 4 years strategic plan under the name of Poalim 2026, which primarily focused on the retail banking division this year. We've designed the plan to help us adapt our retail banking to what customers want today. In essence, they want digital sales and more remote banking, but also to hold on to their option to come into the branch in certain situations. Before we move on to review of the financial results by our CFO, Ram Gev, let me just sum up my comments. The bank is demonstrating strong performance for the quarter as well as for the full year. The interest rate in CPI supported this year results, but our performance also achieved, thanks to a long-term perspective and decision made by the management in the best interest of the bank, its customer and of course, its shareholders. I'm very proud of this organization, of our results, yes, but also of how we reacted in a moment of truth, both to the employees as well as for the customer. Thank you very much for listening. Ram, please go ahead.

Thank you, Dov, and good afternoon to you all. I will briefly review the financial results. Bank Hapoalim delivered yet another strong quarter, while coping with the consequences of the war. And as Dov mentioned earlier, our preparedness and strong position are the key factors for the good financial performance and our ability to support our customers, our employees and the Israeli society. Moving on now to discuss the financial results of the quarter and the full year. I will start with Slide 12. Impressive results, I may say, 14% return on equity for the quarter, 15% for the full year, driven by the positive jaws we are showing. Total income grew 19.3% this year due to rate hikes and the growth in activity. However, the macroeconomic trend changed during the year and more so in the fourth quarter. Coupled with the cost of benefits and relief, this resulted in a decrease in fourth quarter income. And speaking of the operating leverage, alongside the trend in income, discipline in expenses has been maintained this year, bringing the cost income ratio to a very low level. On growth, we continue to lead responsible credit growth, as the pace was preadjusted to the changing environment, allowing us to be even more selective and focused on credit quality and pricing. This approach is well reflected in all credit quality metrics. The NPL ratio is low, below 1%, and we increased the balance of the allowance, which covers 174% of the NPLs. And lastly, we continue to also solidify our capital and liquidity position, while creating substantial shareholder value. This quarter, we declared a 20% payout ratio, continuing our consistent dividend distribution. The bank distributed ILS 2.3 billion in respect of 2023 net income, the highest in the industry. The significant capital surplus reflects a potential for a higher distribution. However, the bank adjusted the payout ratio this quarter as it did in the third quarter, in order to meet Bank of Israel guidelines to the banking sector. This guideline from last November, which also applies to the fourth quarter, requires all banks across the sector to reexamine dividend distribution policies in view of the war and the increase in uncertainty. Moving to Slide 13. Let's focus on the message of this slide. Each quarter, we are demonstrating strong profitability of mid-double-digit return on equity. This is due to the successful implementation of our strategy and a set of responsible long-term decisions that were made by the leadership of the bank. On Slide 14, we present our core income on an annual basis, the key driver of our robust profitability. Income from regular financing activity grew by almost 19% and the financial margin increased by 32 basis points. On fees, the financing activity also supported the growth in various fees, driving 5% growth year-on-year in total. On Slide 15, we take a look on income on a quarterly basis. The factors affecting income have changed since the third quarter. This includes the pausing Bank of Israel rate hikes, the continued migration of noninterest-bearing deposits to current accounts, albeit stabilized at the end of the year, the reduction in the CPI and the impact of the support we have provided to our customers since the outbreak of the war. The latter, amounts to ILS 129 million, which was booked in the nonregular financing activity line. Looking at margins, these were affected by the lower CPI as well as the increase in deposits in the fourth quarter. Fees were also affected by customer benefits of ILS 30 million in the quarter as well as the temporary decline in economic activity right after the outbreak of the war. Let's move to Slide 16 and 17. We grew our credit book by 0.7% this quarter and by 4.8% in 2023 to ILS 407 billion. As Dov mentioned before, we had already aligned our credit growth base in 2022 and more so in 2023, when we identified the changes in the global economy. The pace of the growth also reflects the impact of macro dynamics on the demand for credit in each segment. Our deposit base, on Slide 18, continue to grow, with 58% of total deposits attributed to the retail segment. Accordingly, the LCR and NSFR are both substantially above regulatory requirements. On costs, on Slide 19, total expenses increased year-on-year, mainly due to a onetime expense of approximately ILS 200 million in respect of the wage agreement signed in 2023, and an increase in software depreciation and impairment expenses. Total expenses this quarter decreased 7.9% due to a decline in salary expenses. The lower salary and related expenses are attributed to year-end adjustments of performance-based compensation. The cost/income ratio, both annually and quarterly remains very low at roughly 38%. And as you can see on Slide 20, productivity ratios are improving as well. On Slide 21, we present another lever that will have an impact on our costs going forward, but will also bear onetime capital gains and have a positive impact on organizational culture. As you know, we are in the process of building a new headquarters building, Poalim Center. The center is going to be best in class in terms of operational efficiency and of employee experience, and is well located on a primary transportation hub in Tel Aviv. In view of the exciting move to Poalim Center, we will gradually sell our own properties, some of which are currently undergoing a betterment plan and, therefore, incorporate future value. Now moving to Slide 22. As I mentioned before, following the last few quarters in which we materially increased the collective allowance, we continue doing so in the fourth quarter as well. This was due to the expected economic effect of the war, where the third quarter impact on collective allowance was more material, as it reflected the effect of the outbreak of the war. The fourth quarter provision was also affected by an increase in automatic charge-offs. The individual provision, however, remained very low, below long-term representative levels. In total, credit losses amounted to ILS 453 million or 0.44% of total credit in the quarter and 0.46% in 12-month period, equivalent to the ILS 1.9 billion provision we booked in 2023. The next slide shows our resilient asset quality as well as the buffer covering problematic debt. Total problematic debt increased this year, mainly as a result of an increase in special mentioned debt balances. There has been also an increase in nonaccruing debt, but the NPL ratio remained low at 0.97% of total credit. On the right-hand side, you can see the high reserve amounted to ILS 8 billion, of which ILS 7.1 billion is the collective allowance. The balance sheet reserve covers 174% of the NPLs. The next slide is on capital. The CET-1 ratio increased to 12.02%, well above both internal and regulatory minimum requirements. Our solid position derived from strong organic capital generation capabilities reflected in a 12.7% growth in shareholders' equity this year. In addition to the solid CET-1 ratio, both the total capital ratio and the leverage ratio are comfortably above minimum requirements. On dividend, as mentioned before, the bank distributed ILS 2.3 billion in respect of 2023 net income. In the first 2 quarters, we distributed 40% of net income, according to our policy. Since the outbreak of the war, dividend payout was adjusted to 20% due to Bank of Israel guidelines, despite the bank's significant capital surplus. Before we conclude, I'm moving to shortly discuss the macroeconomic environment in Slides 25 and 26. The resiliency of the Israel economy is being reflected by several parameters in recent weeks. As Dov mentioned, domestic private consumption is recovering. The formal unemployment rate is stable and the number of workers who were absent from work has declined. And that's for the GDP after falling by an annualized rate of 19.4% in the fourth quarter of 2023, we expect a rebound in the first quarter. However, some sectors of the economy are still suffering from the circumstances like construction and tourism. This also means that overall activity is still below the potential. It should be noted that the government is compensating evacuees in businesses affected by the war. And of course, all reserves. It means that in most cases, their income has remained stable. On Slide 26, we present additional indicators showing that although the cost of war is high and the budget deficit has increased substantially, Israel entered the war from a very strong position. Low public debt, a high private saving rate and high credibility in global markets. However, while risk premiums in global markets have increased, the shekel actually gained strength and the local 10-year yield is following the U.S. treasury. Inflation went down faster than expected, probably with a tailwind from the war. For example, the increase in housing rental prices has slowed. However, we still think inflationary pressures exist, and do not foresee a further fall. Seems like in the U.S. and Europe, uncertainties remain high. The labor market is tight and wage pressure still exists. As for the Bank of Israel interest rate, the decrease in inflation to the target zone enabled the Bank of Israel to reduce the interest rate in the beginning of 2024 to a level of 4.5%. The market now implies about 3 rate cuts till year-end, to a level of 3.75%. Before we open the call for your questions, I will summarize the key takeaways on Slide 27. Following the initial shock from the war, economic activity is impressively recovering, but there are still several economic challenges ahead. As you all know, there is significant importance to the position in which organizations enter this period. Bank Hapoalim arrives with best-in-sector preparedness, thanks to a good combination of responsible credit growth, capital buffers, ample liquidity, a strong allowance buffer, high underwriting standards and excellent leadership. The fourth quarter and full year results reflect continued robust performance, with return on equity of 14% and 15%, respectively. This was mainly derived from the almost 20% jump in total income, while costs grew by 3.2%. This created substantial positive jaws, leading to a low cost/income ratio of 38.5%. We continue to increase the collective allowance, mainly due to expected consequences of the war. The total allowance constitutes 1.92% of credit. Our capital is robust, allowing us to pay dividends while growing the book and strengthening capital ratio. With that, let's open the call for your questions now.

[Operator Instructions] The first question is from Chris Reimer of Barclays.

Congratulations on the strong results. First off, just looking ahead a bit, assuming the status quo remains the same for the next few quarters, how should we be looking at loan growth going forward? Any dynamics you could talk about?

Good afternoon. This is Dov speaking. Look, we have experienced 2 intensive years after the coronavirus. I believe that 2024 will reflect a lower growth rate. Let's not forget that the fourth quarter, we -- the economy in Israel went down by almost 20%. I assume that this will impact the demand going forward. Our Chief Economist, Victor's assumption is that the growth rate of the economy will be around plus 50%. And of course, everything is subject to any future or current development in the north. So to sum up, it will be less than previously, and we expect that the economy will recover subject to the north. One more item that I should emphasize, if there will be a faster rebound based on our equity position, Tier-1, 12% and total equity of 15% more than that, we are ready for a larger rebound so we are ready for any optimistic scenario. But on the contrary, we also already -- we are also ready for any pessimistic scenario, because the allowance reached the level of ILS 8 billion. So it was a long answer for a short question.

Got it. Yes. That's helpful. Also, if I could ask, you mentioned in the press and also Ministry of Finance about special tax on the banks, your report mentioned a special payment. How do you view this playing out? Any color you can give?

Excellent question, Chris. It's in the process of the legislation [indiscernible]. At the beginning, the tax should have been in the level which is higher to my expectation, there was certain negotiation between us, the banks and the Ministry of Finance, and the understanding, which will be presented to the [indiscernible] next week is that we will pay on a quarterly basis around 6%. This is a better result than what we've expected. And I believe that we should be smart and not wise, so better have a compromise where we know the limit, then hoping for either failure or success. The effect and the results going forward, the numbers in the bill speaks about ILS 1.2 billion in 2024 and ILS 1.3 billion in 2025. If you take our market share or our share in this amount, it should be, I would say, in the range of ILS 300 million to ILS 400 million a year. It's, by the way, just to be accurate, there is a description in Page 212. How many pages you do have in the report? Right, make it short.

The next question is from Micha Goldberg of Psagot.

Congratulations on a strong quarter and excellent year despite challenging times. A couple of questions, if I may. First of all, regarding dividends, you mentioned Bank of Israel guided you to pay out maximum 20%, and I'm just wondering, to the best of your knowledge, does the Bank Hapoalim have like a minimum capital buffer in mind? Or is this purely, I don't know, a qualitative work, I don't know, popular kind of guidance?

Micha, let me respond to the first question and then with your permission, will move to the second one. Bank of Israel instructed any bank to a minimum equity position, it's published in the report. Our's is around 10.5%, if I am not wrong. It is published in the report, if you want. I will find the exact page. But each bank has specific -- of course, there is a differentiation between the large bank and the small banks. Above that, it's internal decision of each Board Director, an additional buffer by each management of each bank. So this is the system and the decision of the 20% is regardless of that buffer or numbers that I've just mentioned. Because as you know, we are able to give dividend to a much higher number. Our dividend policy is around 40%. And our position is that we are able to do so. Of course, we are doing exactly -- following the instruction of Bank of Israel, which limited us to only to 20%.

I actually was referring just to that guidance, the Bank of Israel put forward, not to your internal ratio and minimum that the Bank of Israel clearly stated in your financials. I was just wondering, the fact that the Bank of Israel is guiding the banks to put at no more than 20% -- at more than 20%. Is that based on some buffer they're sharing with you, they want you to reach at least x amount of capital? Or it's just a blanket kind of guidance, don't pay out more than 20% because of it doesn't look good in the press. That's what I'm trying to understand.

But what I've explained before, will be the same answer. There is no specific guidelines as of this day, okay? The only guidance is the requirement that are presented in the balance sheet on the report. Above that, Ram, you want to add something?

Yes. Micha, if I can add to what Dov said, there is no specific guidance of any buffers that should -- one bank should hold. And the example is very simple, you see that Bank Hapoalim holds actually the highest level of Tier-1 capital ratio and still the guidelines also relates to Bank Hapoalim. And the reason is very simple. The essence of the guidance is the level of uncertainty that Bank of Israel see today during the war in Israel to the banks, be more cautious. Obviously, you have buffers and Bank Hapoalim have very large buffer and potential dividend distribution, higher than that in the future. But it says to the banks, take into account the uncertainties and lower your dividend payout ratio as for this period. So no -- let's say, they didn't define any, let's say, buffers that they see.

Okay. clearly. Another question, your current excess capital is hurting your return equity by, I don't know, close to 1%. And I was just wondering, under these guidelines by the Bank of Israel, assuming they won't be lifted in near future. Are there any other ways that you can reduce the excess capital or otherwise without paying dividends and increased return on equity?

Micha, thank you. Obviously, the banks and you mentioned have very high buffers above regulatory requirements and internal targets as well. The bank is targeting to be effective in capital. So obviously, we want to be back to implementing our policy, which is up to 40%. And considering, in the future, obviously, other tools, for example, are updating our policy or considering buyback plans, but we didn't decide any of that at the moment, because of Bank of Israel guideline. But obviously, everything is off the table, our ability and the potential is for higher distributions.

I am sure Micha that Bank of Israel is listening carefully to any note registered by economies or analysts today.

Okay. Two more questions. You mentioned Hapoalim 2026 strategic plan. And I'm just wondering if there is any guidance in that plan for cost income ratio? You have successfully reduced your cost income ratio significantly and then the efficiency ratio has improved as well. I was wondering is there a target that you think you can achieve? Is there something you can share with us on that?

Micha, it's a constant question and the same repeated answer. Of course, we have a guideline. Of course, we have ambition. Of course, we are not giving up and we want to win, but it's not published. And the same picture, probably in 2026, which was built by the management of the bank with McKinsey, a markdown and 11 large projects which are being monitored by the Chief Transformation Officer, which is supervised directly by me. One of them, for example, is RWA. The other one is the future branch plan to be implemented in 2026. So there is a list of huge, large projects, and the goal of all of them is to lead the right return on equity that we believe will satisfy the investors in general and specifically, you. But again, you will try and I will try to prevent, to promise the specific numbers.

Very clear. My last question is regarding the implementation of [indiscernible]. I think you've mentioned in the past that it will be completed by year-end. I'm just wondering, will this have any impact on the credit card business and your credit card revenues? Will this allow you to improve profitability, not just a bit, but also in other areas?

Look, it's an important milestone. It depends how it will be implemented. And the second factor is the user interface, how will they materialize or exercise disability. If there will be large scale of implementation, certainly there will be effect on both sides. So it's a question of usage, on the user interface. I would say it's too early because I don't -- we did not see the end product that is being developed these days and we'll have to wait to year-end to see how good is it.

The next question is from Erik Bar of Excellence.

And again, congratulation for the outstanding results, it is really excellent. Just 1 question about the salary expenses costs. So I see that in the last quarter, it was abnormally low, so by ILS 100 million, if I compare that to Q3 and Q2. It is the new level? Or it's just adjustment -- onetime adjustment because you took maybe a larger month in the Q4 -- sorry, the one, the first quarter.

On the optimistic side, I hope that you [indiscernible] right answer. What we have done over the year, we have the allowance for paying a bonus based on certain expectations. The results of the war certainly effect -- there is an effect. So the decrease by ILS 100 million in the fourth quarter is a result of adjustment of the bonus, and it's only for this year and it's only for this quarter, not for next year. Hopefully, we will succeed, but this is not the answer.

So for next year -- so this year, we expect to have ILS 1.1 billion, something like this?

I don't remember the exact numbers, but let's not forget -- no, it's $1.1 billion you are saying or shekel? No, no. Shekel. You're mistaken. No, no, no.

This quarter, sorry, [indiscernible].

Okay. So that's the reason I changed to dollars. Yes, the number -- I will say, look, we have signed an agreement with the employees at the beginning of 2023. And I believe that we have reported that the effect and the expenses is an increase of about 3%. I'm not sure if we -- it was 25% on average. So I believe this pace will continue going forward. And this is the assumption that I would take going forward, unless...

3% over 2022?

Average, it's not the fourth quarter specifically. The total of 2023. In one condition, on one correction, we have plans to be more efficient, which we did not expose, and this will cut part of the increase.

The next question is from Valentina Stoykova of Barclays Capital.

Congratulations on the good results. Perhaps I am the fourth person that's congratulating year-to-date, but really strong results. My question is on the sensitivities of your capital ratios, how do you see the sensitivities, especially in the context of potential deterioration in asset quality of your deferred loans? And how much of your excess capital do you see at risk here? And also, what's the sensitivity to contest the potential further downgrade of the sovereign [indiscernible]. And lastly, we've seen the sovereign coming out with bond issuance. So it will be very helpful if you give us an update on your bond issuance plan.

Valentina, these are 2 separate complex questions. Let me address the second one, which is the easiest one. We are not rated by Moody's, so we are not affected. We are rated -- we are following the ratings of S&P. So far, they did not downgrade the rating. If they will do so, it's published in the report that the effect on the equity ratio is 0.24%. So this is going to your second question, okay? The first question, look, we are trying to manage the credit portfolio on a conservative basis. And I believe that the quality is strong or solid enough, on 1 hand. And on the other hand, the reserve allowance are up to ILS 8 billion, 1.92% of our loan portfolio, which is a record high. So I don't think that we'll see a substantial increase going forward, because I do believe that we have sufficient allowance that will not reduce the capital that we've presented so far. I hope I answered your first question because I'm not sure that I followed it properly.

Valentina, if I can add to what Dov said. Clearly, first, our position is very good in our loan book and the loan book has very positive elements. Nevertheless, we provided very conservative and the allowance is reaching ILS 8 billion, like Dov mentioned. The majority, about 90% of it are collective allowance. The collective allowance is calculated or based on the CECL methodology, which is relatively conservative. While during the CECL calculation, we are taking different scenarios. We are taking into account even a more pessimistic scenario or a combination of scenarios. So in case of a very pessimistic scenario that you can see that in table 3-3, we disclosed that if we would have to take only the pessimistic scenario, then the additional provisions would have been ILS 0.74 billion. So it implies that our current provision is very conservative, mainly compared to a very high underwriting standards and the quality of the loan book.

That's very clear. And on my last question regarding commission plans?

Valentina, could you elaborate on the question? I did not understand the question, please.

Just bond issuance plan. [indiscernible].

If you look at our figures, you can see that our liquidity, both LCR and NSFR are in very good numbers, about 129%. Another element, our broad-based retail deposit base enable us to be very flexible in liquidity. So we are now in a very good liquidity that enable us to cope with different scenarios, execute our growth plan and maintain all the regulatory requirements. So as for the moment, our liquidity base is sufficient for our needs this year. Obviously, if we will face a very optimistic or good scenario of a rebound, we have enough liquidity to serve that. But obviously, in a very good scenario, let's say, or sharp rebound, we have the ability to address capital markets, but it's not the current situation.

[Operator Instructions] There are no further questions at this time. This concludes the Bank Hapoalim Fourth Quarter 2023 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.