BAWAG Group AG (BG) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing-by, and welcome to the BAWAG Group Preliminary Full Year 2020 Results Call. [Operator Instructions] I must advise you that this conference is being recorded today. A transcript of this conference will also be published on BAWAG Group's website. And now I would like to hand the conference over to your speaker today, Mr. Anas Abuzaakouk, CEO. Please go ahead.

Good morning, everyone. I hope everyone's keeping well. I'm joined this morning by Enver, our CFO. It goes without saying that 2020 was a year like no other. But our performance this past year was a true testament to the quality of our people, the franchise and our strategic focus over the years. So let's start with the full year 2020 highlights on Slide 3. We delivered annual net profit of EUR 284 million, earnings per share of EUR 3.19 and a return on tangible common equity of 10.2% in 2020. The underlying operating performance of our business remain solid, with pre-provision profits of EUR 653 million and a cost/income ratio of 44%. Total risk costs were EUR 225 million, of which approximately EUR 100 million were tied to management overlays and the increase in ECL reserves. The management overlay, which equals EUR 38 million of the EUR 100 million that I just mentioned, are general reserves in excess of modeled reserves resulting from our decision to apply the ECB Euro area's most adverse economic scenario of minus 12.6% GDP decline in 2020, which was published last June. This assumption turned out to be overly pessimistic as the actual GDP decline for 2020 was minus 7%. We decided not to release any credit reserves although we see both an improved overall macroeconomic environment and continued positive developments across our customer base, in particular, seeing payment holidays falling under 50 basis points across our total customer business. In addition to delivering solid operating results, we continue to grow our business despite COVID-19 related headwinds. We grew total customer loans by 5% and interest-bearing assets by 10%. Even with the balance sheet growth we experienced, we continue to accrete CET1 capital, generating 180 basis points of gross capital through earnings, allowing us to fortify our balance sheet through conservative provisioning and capital prudential filters while at the same time continuing to deduct our earmarked dividends. Our year-end CET1 ratio was 14%, up 70 basis points from year-end 2019 after deducting earmarked dividends of EUR 460 million, covering 2019 to 2020 or a total dividend per share of EUR 5.17. We have a very strong capital position with a buffer of 180 basis points or EUR 360 million of excess capital versus our CET1 target of 12.25% and a total of approximately 500 basis points or almost EUR 1 billion of excess capital versus our SREP of 9.13%. Based on BAWAG Group's dividend policy to pay out 50% of net profits, we earmarked dividends of EUR 372 million for the financial years 2019 and 2020. Additionally, the Managing Board plans to recommend to the Ordinary Annual General Meeting a special dividend of EUR 88 million for 2020 so as to keep the absolute annual dividend payment of EUR 230 million, consistent between 2019 and 2020. Given the most recent ECB recommendation from December, a down payment of EUR 40 million on the total EUR 460 million earmarked dividend will be proposed to the Extraordinary General Meeting in March, which represents the maximum allowed at the moment, with the remaining EUR 420 million dividend to be paid in the fourth quarter later this year, of course, subject to shareholder and regulatory approvals. In terms of targets, we see 2021 as a stepping stone to our medium-term targets in a normalized environment. We are targeting a return on tangible common equity greater than 13% in 2021 and greater than 15% in a normalized environment, which, from today's perspective, could be as early as 2022. Our focus will be on driving profitable growth and continued efficiency with a target cost/income ratio under 41% in 2021 and under 40% in the normalized environment. Moving on to Slide 4. We delivered net profit of EUR 284 million and an EPS of EUR 3.19 per share, and this was down 32% versus prior year. Operating income was down 5% offset by a net reduction of 2% in operating expenses. Our cost/income ratio was 44% or 43% after excluding the one-off restructuring charge of EUR 22 million booked in the fourth quarter. Tangible book value per share was EUR 32.65 per share, up 5% versus prior year. This assumes the deduction of the EUR 460 million of earmarked dividends. Okay. Moving on to Slide 5. Prior to the deduction of any dividends, we ended the year with a CET1 ratio of 16.3% and 14% after deducting the earmarked dividends of EUR 460 million. We generated 190 basis points of gross capital, of which 180 basis points were through earnings, reflecting our highly capital-accretive business. During 2020, the CET1 ratio target was reduced from 13% to 12.25%, reflecting changes in our P2R composition after having issued a combined EUR 375 million of Tier 1 and Tier 2 capital during the third quarter. We issued greater amounts of Tier 1 and Tier 2 capital than was required, continuing to fortify our balance sheet in creating an additional EUR 4 billion of RWA capacity for growth to meet any future P2R needs of the business. Given our overall capital strength, we decided to fully provision the City of Linz from a capital standpoint even though we continue to feel strongly about the merits of our legal case. The receivable on the balance sheet stands at EUR 254 million, which is marked at 60% of the original amount owed to the bank dating back to 2011. The provisioning of the receivable was through the use of CET1 capital prudential filters and resulted in a net impact of minus 60 basis points in 2020. We decided upon this action to ensure that the City of Linz legal case, which we expect will ultimately be referred to the Austrian Supreme Court in the absence of any reasonable compromise, does not become a lingering distraction, and we can capitalize on the multiple organic and inorganic growth opportunities ahead of us. On to Slide 6. We wanted to summarize our approach to capital distribution. Our aim has and will always be to be good stewards of shareholders' capital and focusing on shareholder value, an approach that remains unchanged since our IPO dating back to 2017. Our primary objective is to deploy our excess capital into profitable organic growth, at times supplemented with M&A defined by disciplined underwriting and generating returns consistent with our RoTCE targets of at least 15%. We are committed to a dividend payout ratio of at least 50% of net profit, which we have committed to since our IPO. To the extent that we are unable to deploy our capital in organic growth or M&A, we will return our excess capital to shareholders through share buybacks and/or special dividends. In terms of capital distribution, we look to distribute excess capital above our target 12.25% CET1 ratio on an annual basis in a normalized environment. We ended the year with a CET1 ratio of 14%. This is after deducting EUR 460 million of earmarked dividends tied to 2019 and 2020 earnings which we have had to postpone distribution due to the continued ECB recommended dividend band. Based on our dividend policy to generally pay out 50% of net profits, we earmarked dividends of EUR 372 million for the financial years 2019 and 2020. Additionally, we plan to recommend the Ordinary General Meeting a special dividend of EUR 88 million for 2020 so as to keep the absolute annual dividend payment of EUR 230 million, consistent between 2019 and 2020. The Management Board proposed a special dividend as a show of appreciation and gratitude for the patience of our investors and for the patience of our shareholders during these extraordinary times, many of whom are comprised of pension funds, retail investors and institutions that have come to rely on our dividend payment. Given the most recent ECB recommendation, we plan to make a down payment of EUR 40 million on a total EUR 460 million earmarked dividend during the first quarter of 2021, with the remaining EUR 420 million dividend to be paid in the fourth quarter of 2021, subject to shareholder and regulatory approvals. We fully understand the regulator's position on capital distributions this past year in light of the COVID-19 health crisis in dealing with these extraordinary and unprecedented times. We will remain patient as we hope our investors will, too. We are fully committed to distributing our earmarked dividends as we look to honor commitments to shareholders and believe the bank's resilience this past year and the overall strong capital levels position us well to ultimately catch up on past dividend commitments and resume ordinary capital distributions. Our year-end CET1 ratio of 14% represents an additional EUR 360 million of excess capital versus our target CET1 ratio of 12.25%. Our CET1 target of 12.25% represents an MDA buffer of 312 basis points or approximately EUR 620 million,versus our SREP of 9.13%, which represents our minimum CET1 capital requirements. In total, this represents 490 basis points or approximately EUR 980 million of CET1 capital between our 14% CET1 ratio post dividends and our 9.13% SREP. We've maintained a very strong capital position, continue to fortify our balance sheet through conservative provisioning and capital prudential filters and consistently generated average annual CET1 capital generation through earnings of over 220 basis points per year since 2017. On Slide 7. Our Retail & SME business delivered net profit of EUR 281 million, down 5% versus 2019 but still generating a very strong return on tangible common equity of 22% and net asset growth of 6% driven by growth in housing loans across our core markets. The decrease in profits relates to booking risk costs of EUR 126 million, up 66% after applying prudent and conservative provisioning. Pre-provision profits increased to EUR 532 million, up 7% compared to the prior year, with an increase in net interest income of 6%, more than compensating for COVID-19 related lower fee and commission income, which was down 10%, impacting primarily our advisory and transactions business. Overall operating expenses were down 3%, resulting from prior year operational initiatives. While responding in real time to our customer needs during the crisis, we continue to execute on our strategic initiatives. We completed an important step in the simplification of the group by consolidating our domestic and international Retail & SME businesses, focusing on building out a multichannel and multi-brand Retail & SME customer franchise, providing simple, straightforward and reliable financial products and services. We also continue to execute on a number of operational initiatives to drive greater growth and efficiency across the business, building a strong front-end sales organization across key products and channels, leveraging central functions in order to provide customers with a seamless experience and continuing to drive synergies across the group. Overall, we saw customers acting out of an abundance of caution and retail customer activity impacted by the various lockdowns put in place. This has impacted consumer loan demand and depressed consumer spending levels. However, we are hopeful that we will see a gradual resumption of activity in 2021 and expect to see more normalized levels during the second half of the year. On Slide 8, we provide a portfolio overview of the EUR 19.2 billion of customer loans and leases across the Retail & SME business. The page captures the overall credit profile of the business, highlighting the split of housing loans versus consumer and SME assets, total reserve ratio development since year-end and development of customer payment deferrals. The customer payment deferrals have been updated as of February 5 to provide everyone with a real-time update. The key highlights are the following. Our Retail & SME business is highly collateralized with approximately 85% of the lending done on a secured basis, which is comprised primarily of housing loans. Approximately 80% of personal loan customers are primarily our primary banking customers with a direct debit salary current account, providing us with insights into the financial health of our customers. As of February 5, we observed overall payment deferrals decreasing to 60 basis points across the Retail & SME business from a high of 6.8% at the end of June, representing a decrease of over 90% since the summer peak. More importantly, we now observe a paying ratio of 91% for customers with expired deferrals with an average paying period of over 6 months. In Austria, the public moratorium expired January 31, 2021, and we do not expect any further moratoriums, be it public or private, to be put in place. It's important to note that the benefit from an ingrained -- that we benefit from an ingrained payment culture in our DACH markets and our strong creditor friendly legal systems. This has always been a key factor in our strategy to focus on the DACH region and core Continental Europe given the overall stability and solid macroeconomic fundamentals. We have taken a cautious and prudent approach to provisions given the overall economic uncertainty. Although we see significantly improving development in customer behavior, in particular, a low payment deferral percentage of 60 basis points and a high-paying ratio of 91%, we continue to build up reserves. We've increased reserves by EUR 105 million, up 60% to EUR 281 million as total reserves as of year-end in the Retail & SME business. This is driven by ECL, management overlay and general reserves. On Slide 9. The Corporates & Public business, this contributed a net profit of EUR 80 million for the full year, down 44% versus the prior year, with a return on tangible common equity of 9% and a cost/income ratio of 29%. Pre-provision profits were EUR 197 million, up 2% versus prior year. Risk costs were EUR 80 million, of which EUR 49 million were tied to specific reserves primarily related to residual oil and gas exposures that have been written off. Net assets were up 6% versus prior year driven by growth in public sector and asset backed lending. We continue to see solid and diversified lending opportunities. However, we will continue to maintain our disciplined underwriting, focus on risk-adjusted returns and avoid blindly chasing volume growth. This approach has served us well pre COVID-19 and will continue to serve as the fundamental lending principles of our business. On Slide 10, we provide an overview of the EUR 13.9 billion of customer loans across the Corporates & Public business as well as a breakout of the corporate and asset-backed lending assets. The page captures the overall credit profile of the business, total reserve development since year-end and development of customer payment deferrals. The customer payment deferrals have been updated as well as of February 5 to provide a real-time update. The key highlights are the following. As of February 5, the total payment deferrals for the EUR 9 billion of corporate and asset-backed lending assets were 20 basis points or EUR 14 million loan volume, down over 85% from a high of 1.3% at the end of June. More importantly, we now observe a paying ratio of 100% for customers with expired deferrals. We have taken a cautious and prudent approach to provisions given the overall economic uncertainty. We continue to conservatively build up general and specific reserves. We've increased reserves by EUR 38 million, up 50% to EUR 115 million of total reserves at year-end in the Corporates & Public business driven by ECL management overlay and specific reserves. In terms of corporate lending, we've been conservative over the years focusing on senior secured lending, free cash flow generating companies with defensive business profiles and solid capital structures. We have not been as active over the years in corporate lending as we found the space challenging from a risk-adjusted return standpoint. We will continue to remain disciplined and focus on risk-adjusted returns. Of the EUR 4 billion of corporate assets, our net exposure to higher-risk cyclical sectors, which is comprised of oil and gas, shipping, hotels, nongrocery retailers and airlines, was collectively EUR 22 million as of the end of January. This is down 81% since year-end 2019, representing approximately 50 basis points of total corporate assets. Just as important, none of these exposures are nonperforming loans. During the course of 2020, we proactively managed down our higher risk cyclical exposures, writing off EUR 25 million of residual oil and gas exposures and taking a conservative approach to provisioning. In asset backed lending, we've taken an equally conservative approach. Our focus has been senior secured real estate lending. On average, we underwrite to an average loan-to-cost or LTC of under 65% and interest coverage ratio of greater than 2x. We continue to observe solid performance across the portfolio with positive customer responses and actions taken. Given the acute stress on retailers and hotels, we are actively monitoring real estate loans with stand-alone exposures to these types of businesses, which amounts to approximately 8% of the total asset-backed lending portfolio. Of this subset of loans, 16% is in Stage 3 and conservatively provisioned. The majority of the loans have either an interest reserve or free cash flow of approximately 6 months. Additionally, 39% of the original principal has been repaid as the vintages date back to 2017 and 2018. In summary, while some of our clients have experienced increased financial pressure during this crisis and have been impacted by multiple lockdowns, on the whole, we have been pleasantly surprised at how they have responded to date. We will remain vigilant in monitoring our portfolio to ensure performance continues and are cautiously optimistic that any stress in our portfolio will be minimal. With that, I'll hand over to Enver.

Thank you, Anas. I will continue on Slide 11. Our cash position, including money held with the central banks, went from EUR 7.1 billion in 2019 to EUR 10.9 billion in 2020. And the main increase came from the drawdown of the TLTRO III program in June of last year. At the same time, in addition to our customer loan growth, we partly deployed our excess cash into high-quality securities. Our investment book stands now at EUR 6.5 billion and remained broadly unchanged in terms of quality with no nonperforming assets. 96% of the book is investment grade, has a balanced maturity profile of more than 4 years and healthy diversification. With that, moving on to Slide 13. We saw stable development of core revenues in the fourth quarter. Compared to prior year, core revenues were up 1% with strong NOI growth of 4% and the very challenging situation, net commission income in 2020, which was mainly impacted by the various lockdown measures. Our net income was slightly positive in Q4 and overall flat for 2020. Underlying operating expenses were stable and on track. And as mentioned in Q3, we booked additional restructuring cost of approximately EUR 22 million in Q4 to further accelerate our future efficiency measures. Risk costs further came down quarter-over-quarter, while we continue to apply a prudent and conservative provisioning approach. Profit before tax of EUR 107 million and net profit of EUR 83 million both improved by 6% and 5%, respectively, versus Q3, which is also reflected in a solid quarterly RoTCE of 11.5%. On Slide 14, we provide an overview of our balance sheet, which was growing in 2020 through increased customer loans and interest-bearing assets. Overall, total assets were up 16% versus year-end and up 4% compared to Q3. On the funding side, we have seen a continued increase of our customer deposits and improved our long-term funding mainly through issuing covered bonds in 2020. Additionally, in Q3, we also raised EUR 175 million of additional Tier 1 capital and EUR 200 million of Tier 2 capital, further improving our total capital stack. On Slide 15, core revenues. So a solid quarter of net interest income, largely stable versus Q3, with a net interest margin of 228 basis points, are in line with the full year performance. We see an overall positive trend resulting from high interest-bearing assets. And over time, we would also expect the change in our asset mix more secured and no effect on lending. In terms of net commission income, we saw a very challenging situation in 2020 especially in the second quarter, which was really a trough of activity, mainly impacted by the lockdown measures and travel restrictions which have been put in place. In the second half of the year, we observed a gradual recovery with NCI improvement in Q3 and Q4. We stand now at above 90% of pre COVID levels. And assuming a more normalized environment in the second half of 2021 after continued subdued activity in the first half, we expect core revenues to grow by approximately 2% in 2021. With that, moving on to Slide 16. Underlying operating expenses excluding restructuring costs came down 6% year-over-year and showed a positive trend in Q4 as well. Underlying cost/income ratio was at 43% for the year and at 41% for the last quarter. Absolute costs came in at EUR 145 million for the quarter, including approximately EUR 22 million of restructuring costs that we took in Q4 to further accelerate our future efficiency measures. And as indicated in our last earnings calls, we have already started working on different measures to redefine our operating infrastructure, which will result in more digital engagement and will also put a lot of focus on driving a higher simplification and standardization across the bank. What it means in terms of cost out is a further reduction of our operating expenses to below EUR 485 million in 2021 with a target cost/income ratio of below 41%. And having said that, we also confirm our midterm target of going below 40%. Slide 17, risk costs. In general, we continued with our conservative prudent approach of provisioning. In Q4, we booked EUR 45 million of risk cost. It took EUR 19 million specific reserves in our corporate lending business mainly to address cyclical exposures. And we had a normal run rate in Retail & SME of approximately EUR 16 million of risk costs. Underlying gross cost ratio further improved and was below 30 basis points in Q4, while total risk cost ratio came down from 49 basis points in Q3 to 44 in Q4. Full year risk costs were EUR 225 million, of which approximately EUR 100 million were tied to management overlays and increasing ECL reserves. It didn't adjust our macro assumptions and the stand built management overlay of EUR 38 million, which are general reserves in excess of model reserves. We also decided not to release any credit reserves, although we see an overall improved macro environment and continued positive developments in payment deferrals now being under 1% in total across our customer business. Because of our conservative approach in 2020 and the improving overall environment, we anticipate risk costs for 2021 could be more than 40% lower than in 2020. On Slide 18, we provide more details on reserves. Consistent with the prior page, we see a continuous build up of reserves in 2020 and reserves increased by EUR 140 million or 54%, of which ECLs were up EUR 73 million and Stage 3 reserves were up EUR 67 million. We booked approximately EUR 100 million of reserves tied to management overlays and ECLs. Additional Stage 3 reserves in Q4 also resulted in an improved NPL cash coverage ratio excluding the City of Linz case of 46% versus 37% in 2019. We also decided to fully provision the City of Linz worst case from a capital standpoint, which is best reflecting a significantly improved NPL cash coverage of 62% versus 32% in 2019. And as mentioned before, we have not released any prior ECL reserves and will continue to be prudent in our provisioning approach. With that, moving on to Slide 19, capital. I just mentioned that we decided to fully provision the City of Linz case from a capital standpoint through a CET1 prudential filter that resulted in a net impact of 60 basis points in 2020. This means that even in a very unlikely worst-case scenario, we will not see any impact on our CET1 capital. This again was largely offset by the positive impact resulting from new capital rules on board reductions from software intangibles and the so-called SME factor. We ended the year with a CET1 ratio of 16.3% prior to the deduction of any dividends and 14% after deducting the earmarked dividends of EUR 460 million. Despite the overall challenging environment, we generated 190 basis points of gross capital, again, reflecting our highly capital-accretive business model. After having issued combined EUR 375 million of Tier 1 and Tier 2 capital in Q3, the CET1 ratio target was reduced from 13% to 12.25%, reflecting changes in our P2R composition. This also led to an improved total capital ratio of 19.6% post dividends in 2020, up 260 bps versus 2019. That gives us now an implicit buffer of more than 310 bps between our target ratio and regulatory requirements or almost 500 basis points if you compare it to our actual CET1 ratio of 14% post dividends. With that, moving on to Slide 20. We wanted to provide you with our 2021 outlook. In terms of revenues, we expect subdued activity during first half of the year given continued lockdowns, albeit a more normalized environment in the second half of the year. Core revenues, we would assume to grow by approximately 2%, while we expect other income to be 0 for 2021. Our focus on efficiency is unchanged and approximately EUR 22 million of restructuring costs that we have booked in Q4 will further accelerate our ongoing efficiency measures and translate into a reduction of greater than 3% of core operating expenses, ultimately resulting in operating expenses for 2021 to fall below EUR 485 million. With the increased annual deposit insurance payments of EUR 12 million per year following the commercial bank fraud in 2020, we would expect total regulatory charges to be around EUR 60 million for '21, assuming no recoveries. During the course of 2020, we have taken a cautious and prudent approach of provisions. We proactively managed on our higher risk cyclical exposures, apply the most conservative macroeconomic scenario models and booked approximately EUR 100 million of reserves tied to management overlay and ECLs. Now we see a significantly improving development in customer behavior, in particular, a very low level of payment deferrals and the high-paying ratio. And because of these actions and the overall improved economic environment, we now anticipate risk costs for 2021 to be more than 40% lower than in 2020. And with that, I would hand over to Anas for final remarks. Thank you.

Thanks, Enver. To wrap up on Slide 21, I wanted to reiterate our 2021 targets. We are targeting a return on tangible common equity of greater than 13% and a cost/income ratio of under 41% this year. We feel confident in our ability to achieve these targets and that 2021 will be a stepping stone to our normalized medium-term targets, consisting of generating a return on tangible common equity of greater than 15% and a cost-to-income ratio under 40%. We are planning an Extraordinary General Meeting for March 3 to approve the EUR 0.45 per share dividend or EUR 40 million down payment on our total earmarked dividends of EUR 460 million. The ordinary Annual General Meeting, in which the remaining EUR 420 million will be resolved upon, will be scheduled for the second half of the year. We are also planning to update investors in our inaugural Capital Markets Day, which is currently scheduled for September in London. Our strategy has been consistent throughout the years, one defined by consistent operational execution, focusing on the things that we can control, driving profitable growth, being good stewards of capital and doing our best to deliver shareholder value. I'm extremely proud of how the business performed this past year and the contributions of all of our team members across the group. With that, operator, let's open the call for questions. Thank you.

[Operator Instructions] And your first question comes from the line of Izabel Dobreva from Morgan Stanley.

I have 2 questions, please. My first question is on your dividend proposal, which you have outlined very clearly. But my question is more regarding the timing and if you could give us a sense of your conversations with the regulator and any color on how those have evolved. Specifically, I would like to know whether the proposed amount, including the specials beyond the tap, have been discussed with ECB. And then regarding the timing, how confident do you feel or how likely is it that the payment can be made already in Q4? So is it a matter of just the ECB cap being lifted? Or is there anything else we need to think about regarding BAWAG's specific variables, for example? So that's the first question. And my second question is on the core revenue guidance. The 2% year-on-year growth, how should we think about the mix between NII and fee growth within that? And more specifically, you mentioned you expect to slow first half. So what would be your total loan growth outlook for 2021 considering the kind of slowdown we're seeing in consumer?

I'll take the first question on the dividends. And then, Enver, if you can take the core revenues, that would be great. So on the dividends, Izabel, the EUR 40 million, that's obviously the maximum allowable per the ECB communication in December. We hope to hold the Extraordinary General meeting on March 3, and that will be EUR 0.45 per share. I think the bigger question that you were asking about is the residual EUR 420 million. As we've said before and as our time as a public company, all the discussions we have with the regulators are confidential. Rest assured, obviously, we share the information that we share with you and the public with our regulators beforehand. But I think this is going to be dependent upon the actions taken vis-à-vis the dividend ban. We believe as the ECB has stated, these are extraordinary and unprecedented times. And hopefully, the dividend ban is lifted. But from a capital standpoint, we've deducted the earmark dividends of the total EUR 460 million from our CET1 capital. And we'll look to make those distributions when the time comes. And hopefully, that's the fourth quarter. So I can't give you any more than that. So thank you. Enver?

Izabel, so on the core revenue split, we don't provide actually the details. But direction how to think about it is it's probably a bit skewed to the NCI, so would expect better recovery on the NCI front. On the loan growth, also here, we don't provide any details on that. But what we would assume is at least that the growth momentum that we have seen on the secured lending side also continue for '21. I hope that's helpful.

And the next question comes from the line of Thomas Dewasmes from Goldman Sachs.

I had just one, actually. You've reclassified your assets breakdown by geography and type of assets to now put Netherlands in the core region, it seems. Is it a region where you expect to grow even faster organically or inorganically?

Thomas, look, the reason we have the DACH now, which is Germany, Austria, Switzerland and Netherlands, because they share similar characteristics from a macroeconomic standpoint, we see that as kind of core Europe. We like the underlying macro fundamentals. And then when we look at the whole retail market, we look at it as one market. We don't look at it as kind of a vulcanized Austria, Germany, the Netherlands, we look at it as one single market. And we see interesting opportunities across the retail product. So that's the reason that we've kind of expanded the scope, and we see a number of organic opportunities and, hopefully, inorganic opportunities as well. I hope that helps.

And your next question comes from the line of Gabor Kemeny from Autonomous Research.

A few questions from me. First 1 is e the hotel retail exposure, where you now disclose a 16% NPL ratio. What share of this do you classify as Stage 2? And if you could give us some color on how much additional provisions do you assume here this year when you guide for an at least 40% decline in the group's provisioning charges. Second on also on provisions. I seem to recall that you set aside provisions for the debt under moratoria, in particularly, the consumer unsecured debt. Can you remind us how much provisions do you have set aside for these exposures now given that these -- most of these loans have been coming out of the moratoria and performing? And then my final question is on the long-term incentive plan for management. I think up to 1 million shares are to be vested this year, and the vesting was linked to pretax profits in the last 3 years, I think, to remember. Can you give us an update about the expected vesting?