Barclays PLC (BARC) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to day 2 of our conference. Again, thank you very much for attending. I have to say yesterday's discussions, including reception, but individual meetings, but also in the big conference room were very insightful for me, for all the participants I've spoken to. When you have special feedback, obviously, please return that to us. We always want to get better. Now in terms of getting better every day, I'm really appreciating and highly welcome Venkat, CEO from Barclays. Why do I say that, Venkat, because if I look at Deutsche Bank and how we can get better and how we can develop, I know my people are already getting bored of saying, look what Barclays is doing. You had a record quarter 1. You have shown, I think, a wonderful transformation and development. And obviously, if I look at Barclays, if I look at Deutsche Bank, there are quite some similarities. I think we are one of the very few, if not the only 2 really left, European investment banks who also play at least in certain fields eye to eye with the U.S. banks. And in this regard, Venkat and I are sometimes facing the same challenges, the same risks, but also have the same opportunities. And then I think I can say that, too, I think Venkat and I have a pretty good personal relationship. And -- also that, to be honest, you don't always have that in banking that you have a close relationship with CEOs of other banks. And therefore, Venkat, also personally, I would like to thank you for the relationship, the loyalty, the commitment. I know that Deutsche Bank went through some difficult times years ago, and you were always somebody who were supporting us and who also was always there with an ear for me and gave me also the one or the other hint. And in this regard, it's a special appreciation and a big honor for us that you speak here today in New York. That is, I think something which the European banks need to do better, in particular, the investment banks in Europe that we use the U.S. platform also for conference is much better. And hence, Venkat, you start with us today. And I know that we come to your conference in September. And next year, I promise I will be on your conference. Thanks again and, again, great to have you here. Thank you.

Thank you, Christian.

Thank you. Rob, over to you.

Look Christian, thank you very, very much. It's a great honor to be here. And as Christian said, our institutions are very similar in many ways. We look up to each other. The day doesn't go by the senior traders don't talk to me about how well Deutsche is doing in fixed income. And I know I was a client of Deutsche, I was in fixed income. I've been over 2 decades ago. But it's a great honor to be here and thank you very much for asking us.

Great. Well, thank you very much, Venkat, echoing Christian's words. For those who don't know me, I'm Rob Noble. I cover the U.K. banks -- U.K. and Irish banks at Deutsche. And we'll jump right into it.

It seems every year in the banking sector, there's a once-in-a-lifetime event. I think given what's happened here in particular in the U.S. regional banks, then read across the Crédit Suisse, how have you gone about managing liquidity risk and how has that changed? How do you think the regulator looks at it going forward?

So I think for many of us, liquidity risk has been one of the important things, part of asset liability management that we've all been focused on. And I think if we were to be honest about what's happened in the U.S., a number of banks were not paying perhaps as much close attention to their asset liability and to the duration -- risk and to the duration of their assets as they should have been. In the European context, I think it's true for you, it's true for us, some of the regulations require us, but we would probably have done it ourselves, to understand the impact on our portfolio of a certain rise in interest rates. And therefore, most of us had much smaller books in what is called held to maturity, which is non-mark-to-market. So for us, it's been a couple of things. On the asset side and the asset liability side, really nothing has changed. We continue to look at the interest rate sensitivity of our books. Our book of investment portfolio is around GBP 333 billion. I didn't manufacture that number. It's coincidentally that. But over 82% of it is in cash. The rest of it is in securities, high-quality bonds, but with a very well-managed interest rate profile. On the liability side, look, the bank is very old, the bank has a very broad profile of customers: retail, small business, midsized corporates, large corporates, funding in the wholesale markets. And that composition, that liquidity, that tenor, the currency mix is something that we have developed over many, many years. We -- one of the advantages of both the European banking system, the U.K. banking system and its concentration and, frankly, the ring-fence, which for those of you who don't know, is it was a way of taking domestic banking, separate it from the international side of the bank and protecting U.K. depositors. That made it easier and there are only a handful of banks inside the ring-fence. It makes it easier to run a well-oiled deposit strategy because you're not actually fighting a bunch of people for it. So we've got a broad-based client base for our deposits. And curiously enough, as the stuff happened in the U.S. with Silicon Valley Bank, we actually had an inflow in the large corporate deposits, around GBP 10 billion, of people coming in who are, I think, basically moving away from U.S. banks. They were known U.S. clients moving away from U.S. banks. So it's a broad deposit strategy, which we continue to keep an eye on. What's happening with the rise in interest rates in the U.K. is that we are seeing a shift from -- obviously from keeping it in overnight accounts, savings accounts, into term deposits. It's staying with us, but it obviously it affects the NIM. The guidance which we have given over the year is about -- is greater than 3.2% NIM, 320 basis points. And we've factored into that this level of migration, which I think is notable. And I think as we go through the interest rate cycle -- remember, this is the first interest rate cycle we've all seen in the developed markets for about 20 years -- you will see aspects of behavior which models of 20 years ago did not capture. So you've got to be a little conservative in how you view it, we certainly are. But it -- all in all, net-net-net, it figures into our guidance of 3.2%.

Just on the deposits, we've seen a decline even at sector level in the U.S. and the same in the U.K. and you say you're taking on some deposits, but I think overall deposits starting to go down. It feels like a lot of the deposit flows and liquidity issues because all the central banks are retrenching, right? And then you're seeing this change in mix because interest rates are higher. How do you manage the interest rate risk and the liability mix shift, thinking sort of 1, 2 years ahead, what's the level of deposits going to be and the mix? And then how do I plan forward with hedges and alike?

So [ it's a sense and it's not ]. The basic thing is if you assume you knew what the deposit profile was and you assumed you knew what the mix was in terms of short term to long term and other client compositions, then it's sort of easy to hedge it. But as I said, you're going through an interest rate cycle, so you don't know, as liquidity is being withdrawn from the system, how much ultimately deposits are down. And you also are trying to be conservative as to the mix from short term to long term. So we try to apply conservatism to both, model it. And as I think people know, one of the things we have had as a programmatic approach for decades -- maybe decades is what we call a structural hedge. So we basically had a ladder of swaps, which goes out in time and which earns a higher fixed rate. So what we try to do is, as the yield curve peaks, this thing which you put in place a couple of years ago will continue to give you greater interest income. And then it adds as a stabilizing force on the other side when interest rates start dropping as well. So that's the approach we've taken. And the quantum of that hedge is subject to understanding the size of your deposit base and to understanding the composition in terms of tenor. But this is one thing which is changing in the market, and you've just got to model it and watch it closely.

One thing Barclays has done very well is you've managed to smooth your RoTE quite well through the -- we've been through a recession now, right, 3 years and you've done well at maintaining your RoTE. In the last 2 years, you've posted RoTE greater than 10% your target. Q1 off to a great start. Why do you choose to work with such a conservative floor target? And is there a challenge in meeting 10% if rates revert back to sort of normal levels [indiscernible] market?

Yes. There's an aspect of it which is conservatism and there's an aspect to it which is communication. So when we say greater than 10%, I'm thinking greater, everybody thinks 10%. But look, we set our targets late last year. And as we set our targets, we had a fairly cautious view about the economy. We also had a cautious view about what would happen to the economy and business models as interest rate grows. Now did I think in Q4 that we would see something happening in the U.S. regional bank sector? Absolutely not, right? I have no idea it was going to happen. But we were worried about business models resetting. And I still think you see that. So the businesses underlying are performing reasonably well. Our trading businesses, and I'll sort of come to this quarter in a minute, have benefited over the years from strong volatility. The investment bank did well, softened again in '22 as deal volume declined. So we look at the picture in a whole. I think as the year goes on, we will take a look at those targets, and we'll see if it makes sense to change them. But for now, we say greater than 10%. I will say greater than, I hope you hear that number. You hear that, but some people hear 10%.

So you put a lot work into the investment into the CIB, right, gained a lot of market share to make it more stable contributor to that group RoTE target. So how much more is there to be done in that area? How stable do you see that revenue and returns sourced now? And what can you do to make the market and analysts [ to sign a greater ] balance those earnings? And we've got the same issue at Deutsche as well.

Yes. I think I'll take the investment bank into 3 parts. I'll take markets, I'll take banking. And within markets, I will talk about -- and banking, I'll talk about what aspect of it is a function of market volatility and market cycles and what is less related to that, which is our financing business. So let me begin there. So as an investment proposition, we've been investing in technology in our markets and our trading businesses. And we invest in our financing businesses in prime and in fixed income financing. We've been talking about the growth in those numbers. And fixed income financing and equities financing is around 28% of our total market's revenue. And it's relatively stable. In 2020 and 2021, where the equity markets were volatile, prime was good. And as rates have risen and spreads have widened, fixed income financing has done well. Both of these require huge investment in technology and people. We've been doing that. We'll have to continue to do that. So market is about that, technology and people and filling in spots. We -- our rank in securitized products has been a little lower than ranked elsewhere. So we've been investing in securitized products. Banking, investment banking, I think, is going to see a lot more investment for a few reasons. Number one, there are -- we've traditionally had a great strength in debt capital markets. And as we look to be more PE oriented and capital and balance sheet light in the investment bank, we are investing more in M&A. And that kind of advisory skill requires you to invest in bankers who have the connectivity with companies, and so that's one big area. The second area within the investment bank is, when we think about the generational change that's happening in sectors, much more on climate and ESG-friendly sectors, we have to develop and build the skills there. We have traditionally been very U.S.-heavy. So we've been investing a lot in Europe. And we have pockets of investment in Asia where we continue to want to strengthen it. India is one case where we've had a long history, and we want to continue to strengthen that part of our franchise. So in the investment bank and in banking, especially in this downturn, what we hope is we can both continue to build our internal talent, invest in external talent, finding the specific areas where we want to work -- to do more and to try to reorient it -- I mean retain, hopefully, our strength in debt capital markets but build complementary strength in equities and in M&A.

If I look at the other areas of your business, you've been investing in those as well. And if we pick out a couple of small inorganic ones, the Kensington Mortgage is within the U.K., the Gap portfolio in the U.S., and they offer slightly different products than you have in the existing portfolio. So what growth and opportunities you see in the retail and consumer side from a product perspective as well?

So I think I've said this in the past, at the very highest level when you look at our bank, there were 2 questions about Barclays 5 years ago. Should you have an investment bank? Should you be in investment banking? And if you were in investment banking, would you be any good at it? I think as Christian said it, Deutsche and we are the 2 strong European investment banks left. And I think it has provided a very good diversification to the earnings of the bank over a number of years. So my answer to those 2 questions is, yes, we should be in investment banking and we think we're reasonably good at it. That was the question of the last 5 years. As we look forward, in a way that we have been too successful in that question because the investment bank is about 60% to 65% of us, give or take, in a year of our revenues, of our capital allocation, of our profitability. And what we would like to do is to grow the other side of it, which is much more consumer oriented. Sometimes, it has balance sheet, sometimes it doesn't, but more fee-oriented businesses. The U.K. is a very densely banked market. And there, we are looking to broaden our product capabilities. This portfolio of Kensington Mortgage, as you refer to, we've always been a very sort of traditional mortgage lender, conservative. You have to show as your source of income. We give you x percentage LTV. We issue the mortgage, et cetera. Kensington has made a specialism of lending money to people with nontraditional sources of income, multiple sources of income, which, as you can see, the economy is shifting to, right? People who have multiple jobs, so called gig economy. So we wanted to buy that capability and to grow our mortgage portfolio. It's hard in the context of a GBP 120 billion mortgage portfolio to find where the spots are, but this is one spot. The U.S. credit card business, we operate a partnership card business, virtually entirely partnership, which means we -- it's a B2B2C business. We work with corporate clients, some of the big airline companies, JetBlue, American Airlines and so on. And for their rewards cards, we are the issuer. Our client is the airline company and underlying that, you've got their customers. And because we don't have a retail offering in the U.S., we don't compete for that customer, right? Our customer is the corporate client and helping them service and build loyalty with their end customer. They've got about 20 million underlying people who use our cards. And that's actually a fairly big number. What we did with Gap was we tried to do 2 things -- kill two birds with one stone. One is we've always had a higher-end portfolio in travel and hospitality. With Gap, you sort of go broader in the credit spectrum and smaller ticket sizes, people buying jeans and backpacks. And we also scaled because we doubled our underlying customer base from 10 million to 20 million. So what I'm hoping to do there is to continue to grow that business and scale it because I think the consumer market in the U.S. is very important, and it's a growing market. And unlike the U.K., there's a lot of opportunity and headroom for us. So -- and I think it fits in with a larger strategy of increasing the percentage of our revenues that are not tied to market volatility in the investment bank.

How do you balance the desire to invest and shape this business and sort of dilute the investment bank, if that's the -- you agree with those words against returning capital to shareholders given the valuation in the market at the moment? It must be a high hurdle rate to actually spend money on investment versus buying back your stock at such a low level?

Yes. You have to eat well and exercise well, right? And sometimes people view those as contradictory terms, but they're not actually. So we understand with our price trading -- stock price at half a book, mathematically that there's an implied cost of capital of 20% and that the best thing you can do is buy back shares for the shareholder and for us. For the shareholder, it's "certainty" of return of capital. On the other hand, we are not in this business to run it -- to sort of run it in some stable way without investing. So we have 3 things we look at. Number one is we value return to shareholder and we want to do not just because our shareholders want us to do this because we understand that it is, at some level, the highest and best use of capital. Two, we are though in businesses, as I said, whether it's investment banking or otherwise, where there is opportunity in the long run where there are synergies. And frankly, you have to invest to stay [indiscernible]. Barclays in trading went through a period from 2010 to 2015-'16, where it did not invest enough in its systems and lost market share as a result of that. And what you've got in our markets business and in banking is an increasingly smaller number of players who if you invest and keep it and keep yourself current and leading edge, then you can share in that profit in that people and in a way that others really cannot. So it's a protective aspect of it, too. So we have to do that investment. The third thing, coming back a sense to your first question is, we also have to realize that with the way the world is changing and with regulation, you've got to be cautious about what regulatory changes there might be that require capital from you, right? And you've got to -- in some years, there might be more; in some years, there might be less. But you've got to keep some aside for that, meaning you keep a healthy capitalization growth. You're balancing those 3 things, right? And what I would urge you to think about it is you've got to eat well and exercise well, you've got to do both. We've got to invest, we've got to be well capitalized, and we have to return to shareholders. And we try to balance that. Not everybody will be always happy with the way we balance it, but we are trying to balance it well.

Let's move on to asset quality. You mentioned you move high risk profile in the U.S. I think in general, the trends that we're seeing, from an asset quality perspective, are better than we all expected maybe a year ago at this stage, but there's some small signs of weakness. Can you talk us through the trends you're seeing in the U.K. versus U.S. credit cards, for example, small versus large corporates, U.S. leverage lending and anything that you -- are still on the horizon that might potentially concern you?

So let's just begin with the U.K. and U.K. retail. So one of the aspects, coming back to your earlier question about liquidity, is one of the reasons why liquidity is leaving the system besides what the central banks do is people are spending their cash cushions because -- and they have to because of higher inflation. What that means is we've not seen credit stress, but what we are seeing is people managing their spending. So if you look at our own credit card spending data and debit card spending data, I think for the month ending in May, sometime in mid-May or late May, the percentage growth in spending annually has been about 4.5% and inflation has run around 9%. So they are spending less than inflation. What they're doing is -- inflation is item per item. What they're doing is they're economizing on the items, either buying less or moving to cheaper brands or moving to a different level of quality, organic milk to nonorganic milk, and we've seen that consistently. We've also seen what you might call downsizing. People not eating as much in restaurants and eating more in some of the fast food chains. So travel has picked up off a very little bit. That's the one thing which is discretionary expense that's picked up. But what you're seeing broadly across the economy is people being very careful. It has not led to, other than the very extreme amount, signs of increased credit stress [indiscernible]. The other measure which I use in the U.K. is the mortgage market. And in the mortgage market, the U.S. is a 15-, 30-year fixed rate market. The U.K. is a 2-, 3-year fixed rate market. So this rate rise, let's just say, began 1.5 years ago. In 1.5 years, everybody would have refinanced to a much higher rate, right? The rough calculation is a 2-income family -- median 2-income family with median incomes in the median house up to 2020 were spending 20% of their income on mortgages. Now when this is done, they'll be spending around 28%, call it, close to 30% of their income on mortgages. So which means that is in addition to pure food and energy inflation, that's another thing that's going to affect spending. So -- and so I think ultimately that all puts a pressure on credit. Now what's helping the U.K., it's helping the U.S., is that unemployment is still very low. The employment side, people have jobs. And that, I think, in the U.K., it is stifling growth because how do you generate higher growth in a full employment economy? It's stifling growth. But as far as credit goes, so far, so good. Similar trends in mid-corporate and larger corporates. Of course, there are sector imbalances in mid-corporates. Some consumer-related companies are having a tougher time. Leverage finance at the very higher end, that market was properly in, I won't say freeze, but deep freeze. It was shut for a while late last year. We've managed to clear a good bit of our pipeline from last year, and it's all been materially within the marks at which we held them. We started seeing a few trades coming in. The way I simplistically think about it is 3 things have to happen for those deals to work. Number one is companies that want to invest, which are primarily the financial sponsors, the private equity firms, need to have cash. They have cash. Second, people have to believe that asset values have found the floor, which people thought at the start of this year with the stock market, I think now people are not sure anymore. And then the third thing is, the cost of bank financing has to have reached a level, right? And the terms have to be stabilized. And I think we're slowly getting there. We've not gotten there. What's happened outside is private credit funds have formed, which may intermediate the banks and provide "stable financing." That's it.

I guess, maybe we'll tag on commercial real estate and any thoughts you have there as well given what seems to be the topic of -- one of the topics of the year?

Yes. So our own portfolio has been fairly conservative. We've got about GBP 16 billion exposure, fairly conservative LTVs. It's a sector that bank got burnt in 30 years ago. And I'm glad institutional memory remained. So -- and what we do is mostly warehouse financing to the large firms. I think on commercial restate, clearly, you're seeing problems on the office sector. And you're seeing problems in lower quality office buildings. So the joke in New York is you can't find an apartment, but if you want to live in an office building, you can. And I think what's happening with the regional banks will continue to put pressure on the commercial sector around the U.S., especially because they are involved in that kind of lending and they're going to have to be more cautious about their lending because they have other asset problems on the bench.

Well, we'll open it up to questions, if anyone has any questions here for Venkat. Yes, lady here.

The central banks will be withdrawing money from the system, not with sort of the current TLTRO and all those. But generally, in the next 5 years, we're going to be seeing liquidity being withdrawn from all of the markets. And in most of the models, we actually do not see analysts forecasting smaller balance sheets for [ betting ]. We think it's going to be business as usual. However, it will have a huge impact on your asset liability decisions. Could you give us a little bit more color on how you see, not the way near term, but maybe the medium term on that front?

So I think a couple of things to remember. First of all, for many of the large banks, the loan-to-deposit ratio was well under 100% during the rise in deposits, right? That just reflected the number of deposits. The second thing is, when you look at the banks that had very high deposit inflow, including say Silicon Valley Bank, there is actually good news, which it's hard to see, but it's there, which is they invested it in government bonds. Now maybe the wrong duration of government bonds, maybe it should have been better at a shorter duration, but they bought government bonds. What they didn't do was they didn't lend. And part of it is lending demand has -- in -- across the developed world, more in the U.S., less in the Europe, but generally speaking, some of it is coming from the capital markets and the buy side, people like you. The rest of it is bank credit processes, bank credit committees, bank client relationships don't operate at that level of speed where they can actually go out and lend the money in any reasonable way. So it's actually a good thing. I think Silicon Valley Bank would have lost more money had they gone and lent it all out than what they did with government bonds. There they just took a mark-to-market risk. They didn't take a credit risk. So that's why the banking system has had lower loan-to-deposits. And that's why I think bank balance sheets in the asset side or the lending side will not shrink at the same proportion that deposits will come down, the loan-to-deposit ratio will rise.

Yes, sir.

Yes. Could you just spend a moment on the credit card business, dig in a little bit deeper? You said you plan to grow, be a little more aggressive. It's obviously an awesome business, but it has a lot of very strong competitors in the U.S. You've got some great partners, American Airlines and some other travel partners. Can you just talk about how do you grow? How do you beat some of the incumbents?

So you don't grow this business by marketing campaigns or just going out and finding customers, right? It's a lumpy business. There are contracts which companies give to banks like us, 7- to 10-year contracts. They come up for maturity every now and then. And you've got to decide which industries you're good at and what ability you have to work with the customer to increase their loyalty, right, and that engagement. This is a very different form of engagement, I think all of us know it, with the reward card that we have in our pocket versus some other non-reward card. And that reward engagement is important. So what we try to do is look forward, which contracts are coming up, which ones do we think we'll be good at, where do we think we can sort of take on to the system. What we've done is made the investment in the technology so that the business can have many, many more customers. And then in a sort of cautious way, we'll go about finding the right corporate partners. And we'll announce them as we do them. And ideally, what you want is -- we've got about $30 billion in assets in that. Ideally, what you want is a number of them, slightly different industries, maturing at different times and not any one of them that entirely dominates your portfolio.

So you mentioned growing on the advisory side as one of the sort of initiatives that you have. I mean we've seen a few international banks do some inorganic acquisitions. I don't know if you could comment on that and any plans on those?

So I think all of us are and should always be looking at opportunities. The inorganic -- when you do something inorganically, especially in banking, you've got to look not just at the business aspects of it, but the cultural fit. And that's very, very, very important because if there's ever repeat this business, it's that. So there's been one more recently done in the U.S. And I think we look at them. And if we find something that makes that fit, wonderful. But it's -- they're rare.

Can you give any updates in terms of the current environment for markets, investment banking and maybe what impact you've seen from the Deutsche negotiations. JPMorgan the other week talked about it being a drag for fixed income. And I guess I step back and wonder now that seems like it's going to be resolved. Does that kind of need to increase activity? Or is that maybe just some permanent loss of business?

So as far as this quarter goes, the forces that are affecting us are the forces that are affecting everybody else. So on the trading side, market volatility in this quarter in Q2. I mean I even said in my earnings call a month ago. Market volatility in Q2 is much less than what it was in Q1. And it was much -- certainly much less than it was in Q2 last year, which was just after the Russia-Ukraine envision. And so you've got to factor that in thinking about trading results for this quarter. On the investment banking side, similarly, deal volumes, I think Dealogic has it down 30% year-over-year. So that also has to be factored in. Now net-net, we have some other things going against it, which is transaction banking revenues went up in the first quarter, and they're a function of higher interest rates and so on. But when you talk about raw market-based activity, whether it's in trading or in banking, think of us as being affected by the same forces that affect everybody else and volumes being off for the reasons I said.

Yes, sir. What are Barclays' activities in AI? And what are the associated risks and benefits of those activities?

We are still in what I would call the serious study stage of this, which is trying to find important use cases which will have a material impact on the firm and can be done in a properly regulated way. So on the face of it, if you look at some of our customer service areas, it would be wonderful when you're chatting with the customer and you're trying to understand their entire profile of credit card, mortgages, personal loans and other spending for some AI algorithm to look across everything and sort of give the customer service agent a view, right? We've got to make sure that that's all properly -- the compliance is good with privacy rules, data protection rules and that you can then have the conversation that comes out of it. So where we are is in a very serious stage of picking 2 or 3 areas where we can study it and apply the new level of AI technology. At the same time, I think there is an important part of it at senior management levels for us to understand what this brings, right? It's one thing to read it in the newspaper. It's another thing to actually try to start using it yourself at the management team level. So I'm trying to encourage that a bit as well and that hopefully will give us a good sense of what the areas are where we can actually put it to work, right? I mean it's one thing for it to say that goes through my e-mails and says I spent too many times and meetings on X, but it's something else to do it in a much more serious way.

How long a process do you think that is, right? This has been a common theme across all the meetings I have attended as well because -- I mean you're just starting to look at it, identify the areas, implementation. Presumably, it's a material benefit to cost. [indiscernible] pilot stage, you haven't identified how much the cost base could benefit. But how long until there's an actual material impact on the bank?

Well, 6 to 9 months or maybe 6 months to a year to figure out where you're going to do it. Then I'm sure that once you implement it, you can't just take it out of the box and implement it. You're going to have to adjust it and, frankly, work with the big tech providers to help you adjust it. So it will probably be multiple years before you see the benefit.

Any other questions? I think the -- well, I guess, the last question for me would be, you've been through a full rate cycle now [indiscernible] there's been a recession in the last 3 years. Barclays has generated -- has kind of proven it's -- the reason why I found that shareholders or potential shareholders didn't want to buy the shares was the lack of stability in the ROE. And you're showing much more stability in the ROE than anybody else. But the valuation hasn't reflected it at any point. It hasn't really given you the benefit. So what can you, as a company's CEO, do to sort of help the story, help unleash the real value of the bank and the share price?

I think there are 2 things. I think number one is that we have to continue to improve the business mix or change the business mix so that people understand there's a large amount of the total revenues and the profits, the investment that come from key activities, which are less capital-heavy and less balance sheet-heavy. This is not an investment bank, non-investment bank thing, because even within the investment bank, there are relative capital-light activities. It's just across the bank, where is it that you're earning fees and where is it that you are putting in balance sheet? What part is subject to market volatility or deal volatility, what part is not? What different economic cycles do they operate in and inhibit? And how do you diversify yourself? Stress tests are one way of looking at it, but the real way is to try to explain that to people. And we have to change the mix to make it a little less market volatile sensitive and explain it better. That's one. The second thing, from my point of view, is if we look at the history of Barclays, there is a bit of skepticism sometimes about problems we have created for our own selves in the past, flipping on our own banana skins, which we just absolutely have to avoid. And what that means is a very focused approach to very good controls, understanding end-to-end what your operations are and running them really, really well. So the other side is we should not -- we've managed the external risk environment fairly well, whether it was Russia-Ukraine or the volatility in gilts or even what happened this year. We've managed that very well. We've had issues in the past, which people look at and say, well, you lost money in U.K. mortgage PPI or you lost money last year in the U.S. securities issuance. We've got to avoid those things. So we can't create negative surprises on our own. I think our shareholders understand if results go up and down with the markets. And so 2 things basically then, right, improve the business mix and that will be a slow process. Second is to avoid problems of our own making. And if you do the 2 and quarter after quarter you produce decent numbers, I think you'll get rewarded. And of course, as we said, find the right balance between shareholder return, investment and being appropriate capitalized. I make it sound very easy.

All right. Thank you very much. But I think we're out of time now. Very interesting.

Thank you.