Deutsche Bank Aktiengesellschaft (DBK) Earnings Call Transcript & Summary

Hello. I'm delighted to be joined today for the fireside chat by Fabrizio Campelli, the Member of the Management Board of Deutsche Bank and its Chief Transformation Officer, a role Fabrizio took in November last year. In his 16-year career at Deutsche Bank, Fabrizio spent the last 4 years as the Global Head of Deutsche Bank Wealth Management and previously, as a Head of Strategy and Deputy COO for the group. Fabrizio, thank you very much for being here with us today.

Thank you for having me.

Let's divide the conversation into 3 parts: reaction to current conditions, of course; your role and the key transformation targets for Deutsche Bank; and kind of, finally, more far-reaching fundamentals. So let's start with the COVID-19 impact on Deutsche, both from the business, but also operational perspective.

Sure. Obviously, this is a time when the financial industry is facing what is effectively a very, very serious crisis. We are, as an industry, much better prepared and much more resilient, thanks to all the investments that have gone into resilience and the contingency management in the last decade or more. And in essence, Deutsche Bank is no different. I think in -- when you look at crisis like this, your positioning at the beginning of the crisis is the most important thing. You arrive into one of these crisis with the positioning you have. And in that sense, I would say, DB is very well positioned. There are a number of reasons. And the first one is our strategy realignment, which we announced in July of last year, was one that obviously is helping us a lot right now. It's paying off in terms of having shifted our focus towards more stable businesses, reducing exposure to highly capital consumptive and more volatile end of the investment banking businesses, relying on recurrent revenue streams and really on businesses in which we have scale and strong competitive positioning. Very helpful at times like this when you do want to continue to stay very relevant to fewer, more focused businesses. The second area on our plan was quite conservatively planned, particularly when it comes to capital. We have the stated target of staying above the 12.5% core Tier 1 ratio for the duration of our strategic plan. We came into 2020 with a 13.6% ratio which is a very strong ratio. And even accounting for some of the RWA inflationary impacts of, for example, the new securitization framework, which kicked in at the beginning of the year, we still have a very robust buffer to operate with for the year. We also have a very strong liquidity position. Coming into this, DB was already enjoying a very strong liquidity base. And even at times like this, where there is a quite fair amount of stress in the system, you do see that clients turn to you for drawdowns. There has been, across the industry, an increase in the request for drawdowns on committed facilities. DB has been no different. But the drawdowns we've seen have remained very much within the, in fact, way, way below the stress modeled levels that we model. And in fact, our liquidity levels remain, as of this morning, comfortably above the EUR 200 billion. So overall, I would also say on the credit effect so far, obviously, we haven't seen any major credit event. This is not to say that CLP, given how CLPs get modeled on IFRS 9, also on the basis of forward-looking indicators like the deterioration of macroeconomic environment. Obviously, we will see some of those effects, but these are modeled effects rather than actual losses. So overall, strong positioning. And financially, we're running into this crisis with a lot more comfort than we would have had absent the strategic realignment we carried out last year. Operationally, big events. Obviously, we had to invoke, like everybody else, a number of our business continuity protocols. We have moved to split operations pretty much across the globe, but we have the continuity measures in place to ensure continuity of operations. As you can imagine, at times like this, our top priority remains, among all the things I just mentioned, the safety of our employees and of course, the customers that they come in touch with and continue to progression to customers. And in that sense, all the continuity measures we put in place are delivering just that.

Perfect. And then given the volatility in the markets and, of course, the policy shifts we have seen over the last couple of weeks, how do you see these impacting your FIC revenues, in particular, year-to-date? And how do you risk manage these?

Sure. So the FIC business, and maybe just to kind of put it in context in the map, we -- after the realignment of the strategy last year, Investment banking has become about 30% of revenue base of the bank and 70% in the more stable businesses of the Private Bank, Corporate Bank, Asset Management. And within the Investment Bank, FIC, obviously has been a very important engine. That's the one business, the one which we refocused. And the recalibration of that model last year has resulted in us not just recalibrating more towards fixed income, but also recalibrating within fixed income. The result is that we now have about 80% of all of our businesses in investment banking, a business in which Deutsche Bank has a leading position, which positions us really well with clients by being one of the top [ calls ], by being one of the key bankers and key relationships that they lean on, which gives us also much better insight on flows and risks than we would have had we remain in businesses in which we were subscale. You're right. Fixed income is a key business we look at in that context, but maybe I'll also refer to the other 70% of the bank, of the investment banking. But the fixed income part is working quite strongly. We have shown how the momentum in the fourth quarter of last year, where we had actually the first quarter of revenue growth in investment banking after 11 quarters of decline, 7% increase for the second half and 22% for the fourth quarter, and fixed income within that was 30% year-on-year growth. So strong momentum, which are the result, as I said, of refocusing the business, but also the fact that some of the negative halo effects we expected from business exits on the equity side, whereby we feared customers kind of interpreting that as less commitment to the fixed income complex as well. Clients understood that that's not the case. And in fact, that negative halo effect was probably overassumed in our models, and the result is that we're seeing that momentum quite strongly reflected in those numbers. That momentum has continued into the first month of the first quarter. Of course, the last few weeks have presented us with levels of volatility, which were obviously unexpected and the turbulence has been quite high. Generally speaking, how do we risk manage it? First of all, we have, like I said, a strong positioning in a fairly conservative approach. We have a relatively low VAR. It's our kind of [ 1-day 95% ] VAR at around EUR 25 million. We have also reduced exposure to some of the asset classes that have experienced the highest level of volatility right now. And in fact, we're now exposed to parts of the business, which tend to be quite volatility-friendly. So overall, I think we are managing these days relatively stably, and it's encouraging to see this resilience in the fixed income complex. I would say in the other parts of the bank as well, the Private Bank has had revenue resilience throughout these last 2 months. And when we look at the asset gathering part of the businesses, again, we enjoyed strong growth in the fourth quarter. DWS, our asset management arm, was up 12% in the quarter. The core business of the Wealth Management business, which is obviously, as you mentioned, I know quite well, is up -- was up 11% in the [ fourth ] quarter, and that momentum that has been carried out again into Q1. And so for the time being, I think the businesses are showing the resilience we need. And of course, the effects of much of what's going on right now will probably be seen later in the year rather than in the first quarter.

Yes. Or kind of immediately, that's true. Offsetting interest rate headwinds is obviously a big part of your kind of revenue focus. How are you going to do this? And how far through the deposit repricing, and that's particularly to your kind of euro business, are you? And what is your -- what is the sensitivity of your NII to the kind of movements in the euro rates? Should we get them as additional policy response? But how does it look on the U.S. dollar side, too?

So you're right that we've made it also quite a prominent feature of our Investor Deep Dive in December, the fact that we have been moving quite steadily towards a policy of looking for resilience on the interest rate and net interest income across our business model. We pursue the 3 avenues on how we did that. And of course, there are other effects that have helped. The first one is definitely the strategic realignment I referred to. The shift in business perimeter in 2019 meant that we reduce business exposure to some of the more interest income-exposed businesses, and we invested in those areas that actually built out more of a fee income profile. And we mentioned explicitly some parts of the Corporate Bank, Asset Management, Wealth Management. And between Wealth Management, Asset Management and the Private Bank on the retail and affluent side alone, we have EUR 1 trillion of assets under management, which obviously supports us at times of fee gathering. There's a second aspect which got a lot of attention around the repricing of deposits, particularly negative interest rate environment deposits. We started in 2019 already, and that process has continued to move forward. Obviously, this is being carried out with clients who have either corporate clients or the most professional clients within the private space, and that is a process that has continued steadily and supported across the businesses in a very consistent manner. And also, I would say, in ways that clients obviously understand, given the [ interest rate ] environment and are more accepting off across the street. That process is going well. We've also continued to identify pockets of our deposit base that can be repriced more systematically across the platform. And of course, initiatives like the ACB on the tiering of deposits, obviously, has supported us further in that effort. Your question on sensitivity. On euro, I think you have seen that there has been a lot of volatility in euro rates, that the recent weeks has kind of somewhat brought the numbers back up and very close to our modeled levels. On dollar sensitivity, I think we did disclose this already in the past that given the euro-denominated nature of our institution, we're less exposed to euro rates volatility -- sorry, dollar rate volatility. And accordingly, you can quantify it in EUR 1 million revenues per basis point of shift. So in the last fortnight, 200 basis point shift in the dollar rates have resulted in an annualized modeled impact of about EUR 200 million revenues, which obviously, is a big number. But in the grand scheme of things, bodes well within the tolerance of our revenue plans.

Yes, yes, absolutely. How do you think about the credit exposures kind of evolving at the moment? Of course, and the market is focused on certain sectors, be it in energy sector, be it hospitality, be it, of course, airlines. How do you think about, well, your exposures, your positioning? And how are you kind of monitoring and managing that risk now?

Sure. Well, DB has historically been a very kind of focused, very strong bank when it came to credit risk management and some underwriting policies, and that has served us well throughout the last crisis, throughout the cycle. And certainly, at this point in time, it will serve us well no matter, I think, what the outcome and partly because there has been -- it's like I said earlier, you really come into this crisis very much defined by the positioning you have. Our Chief Risk Officer, Stuart Lewis at our Investor Deep Dive in December pointed out that we feel very well protected from a risk perspective, and partly because the underwriting policies have been very strong. But also, if you look at our book in more detail, you'll see why it feels quite safe. Firstly, if you look at our kind of funded balance sheet, about 1/4 of it is cash and government bonds. That includes the liquidity I referred to a little while ago. Another -- just under 50% of that funded balance sheet is the high-quality loan portfolio that we enjoy, of which 50% or so is within the Private Bank. And you can boil it down to German mortgages, the Wealth Management loan book, which again I know really well, and it's a book that has historically sort of under 5 basis points of losses. It's collateralized and fully collateralized and typically always have guarantees attached to those loans. And the international retail business, again, affluent lending predominantly in the real estate space. 25% of that book is corporate banking, which typically is short-term trade finance, asset finance. And when we do have some of the more structured loans, those often have government guarantees attached to them. The 25% of this loan book that I'm referring to is the investment banking related and typically, that is always investment-grade secured business with high collateral profile. So we are, generally speaking, talking about the book, which is quite strong in terms of the composition. So a lot less exposure, for example, to consumer finance products and to credit cards and the more unsecured consumer finance part of the business compared to many of our peers. When it comes to sector, on sectors, again, we've been quite conservative on our position towards those sectors. After the 2015 oil price hiccup, we had quite heavily derisked our oil and gas exposure. So right now, our limits are materially reduced from back then, even materially reduced from last year. And we're operating predominantly with oil majors and major national oil producers, the vast majority, 80%-or-so investment grade. You mentioned the aviation. Again, relatively small portfolio for us, mainly national flag carriers and some aviation, financing aviation leasing companies. And on the hospitality side, I think, I would say the broader leisure sector for us has been one in which we focus quite closely on, and that reduce exposure to -- it's relatively limited right now, predominantly in hospitality. And the vast majority of it, again, investment grade. And where it's not investment grade typically is firstly in secured positions. And our exposure specifically to tour operator, cruise operator is very, very small. I would also say, we have funded our book always very conservatively. So on the other side of it, we have 80% of our entire loan book is funded really rather conservative with most stable funding sources. We have 76% loan-to-deposit ratio, which makes us probably one of the most conservative banks on that ratio, which also means that times like this, we're also in a position to be there to help some of the clients that need us at this point in time. Also, in conjunction, for example, with the program that the German government has announced last week through KfW to support loans to corporates who may need it across size and spectrum for working capital and OpEx purposes.

Yes, yes. Since we kind of got on that point, we kind of thought you were the -- how do you see the kind of -- the most kind of recent support coming out of the government from the perspective of the kind of SME commercial corporate sector? Because, of course, we've got the KfW program in other countries. We've got the SME kind of guarantee programs as well, some running at a kind of very high numbers. Of course, we don't have the details yet, kind of the operational details, how exactly these things are going to look like. But of course, if we kind of add the -- we've done the calculations earlier this morning at the kind of German-French, kind of Spanish and Italian kind of guarantee programs, as announced. Now they effectively are almost at the 1/3 of the stock of corporate loans. So kind of big in numbers. How do you expect these to pan out? Do you kind of find them very useful from the perspective of your own kind of behavior when it comes to giving out loans, to dealing with the credit lines and to kind of managing risk going forward?

Well, these [ programs ] are undeniably extremely helpful at times in which, clearly, the uncertainty that is building out is one of how long will the situation last for? How long will the economy would have to be put on hold? And how much resilience can be built in the more vulnerable cash-dependent immediate solvency-dependent parts of the businesses of the economies, which are currently being affected. So those are very, very good measures. And obviously, they play hand-in-hand with the role that banks need to play in ensuring that, that liquidity then find its way to the individual companies that need it and to, in some cases, individual consumers who need it. I would say one important aspect here is how accessible will these programs be? How well operationalized will these programs be? Because many of these programs exist already in the economies you mentioned. But they're designed, typically, on a business-as-usual basis to really support very specific types of businesses in very specific circumstances, and the use is actually quite limited generally. And if you deploy similar mechanisms to access some of these more emergency nature type of programs, then we may create too much of a drag. And so finding the right mechanisms to access these will be a critical feature of making this truly effective at this time of disruption.

Yes, perfect. Let's move kind of -- let's talk about more strategically about your role and about kind of how it fits into the group's strategy overall. Chief Transformation Officer, how would you describe the role, its kind of parameter? And how does it fit into the broader bank and the strategic effort?

Sure. So the bank has announced a new strategy. And the strategy implies a number of execution priorities now needing to be met. We've made it a very important part of the strategic announcement, the very public disclosure of a number of targets that need to be met. And we have met or exceeded all of the targets that we've announced for in 2019, and the intention is to continue to deliver against those. The program is obviously a comprehensive strategic overhaul of the bank, the largest in 20 years at least and accordingly, needs a very high focus on executing on all of the priorities, being very focused on what needs to be executed, and maybe having the discipline of not letting new ideas and new features that don't play to the heart of this transformation creep in over time. So my role is actually aimed at supporting and enabling the clarity of this transformation road map, defining what it is, making sure that we know what the deliverables are and identifying what needs to be delivered from an activity level, a management level across the bank in a coordinated and aligned fashion, tracking whether these activities are then happening. And to the extent that they're starting to slow down or get derailed, then intervene quickly in supporting, challenging, escalating what need be. Hence, my position on the Management Board that allows for an unfiltered escalation straight in the decision-making body of the bank. And then to a certain extent, I'm also on the hook for delivery of some of these initiatives. As you may have seen, we have broken down this road map, this transformation onto 5 key themes and 20 key initiatives. Of those 20 initiatives, I own directly 3 of them that I'm responsible for and 2 more with the HR function, which is also under my responsibility. And this range from cross-divisional collaboration enhancements to cost catalyst, which is a program that has existed in the bank, which I'm taking over and operating with in close partnership with the finance department to workforce and compensation model redesign, to end-to-end process reengineering initiatives. And those are initiatives that sit under my responsibility to execute in support of the transformation. To be clear, my role is, one, to enable the bank in the next 2 to 3 years in the peak of this transformation road map to execute on the stated strategy; and to drive, as much as possible, the bank forward. And to the extent that we will need to make changes to the strategy that we do those, the changes to the execution priority that we do though, we do that in the context of the strategy we have announced. And if we don't start to, again, get distracted, but maintain the focus that the choices made last year have given us.

Okay. That's right. The group strategy, of course, involves growing revenues while kind of cutting costs. And kind of how do you think about kind of achieving that? And particularly, kind of taking into account maybe the short-term situation, but also the medium term that you're kind of aiming for?

Sure. Growing revenues is maybe the way to think about first, that we -- the strategy we've announced was one that was aimed at protecting as much as possible, preserving our ability to stay in front of the clients we have chosen and selected as part of our strategy as the core segments, the core businesses. In that sense, those core businesses have had the number of client-facing staff either stay stable or increase. So the revenue focus was obviously one that we did not want to compromise on. The cost improvement that we are targeting and are much more linked to either disposal of businesses including, for example, through the capital release unit where we are actually exiting business. And with it, we will reduce the cost associated to those businesses front to back, all the way to the infrastructure and central function supporting those businesses. Cost reductions aimed at creating better efficiencies through technology, which obviously does not impact, in fact, it may enhance our revenue productivity. And this is by digitizing some of our activities, automating some of the central and infrastructure functions activities, including those most close to clients. Thirdly, by creating a much more modern digital platform in the retail bank, again, a very big source of savings for us. If you remember, in Investor Day, one of the key priorities we outlined was the integration of the -- our retail platforms in Germany, which account for about EUR 400 million of IT cost savings, IT and operational cost savings alone of the EUR 1 billion we are targeting to save in that segment by 2022. And lastly, a lot of work was done in 2019 already. We had, on the one side, big remediation programs, which have come to an end. They've remediated, but those costs have not run off. But we also had a number of cost reductions initiatives in 2020 -- in 2019, especially in the second half, that when you run rate them into 2020, they are actually giving us benefits that are already baked into our operating performance. So coming back to the last part of your question, what does this mean short term? Short term, and specifically for 2020, we have a very limited set of publicly stated targets. They relate to capital around which, like I said earlier, we operate with comfortable buffers. So 12.5% core Tier 1 ratio and 4.5% leverage ratio and to costs, EUR 19.5 billion of adjusted costs. Adjusted because it excludes the effects of the sale of our electronic trading and prime brokerage businesses to BNP from the capital release units, where we are bearing some costs that will be refunded by BNP upon the consummation of the transaction. So if you adjust for that, of the savings implied between 2019 and 2020, a bit under half, around half of those savings are already run rated from the activity that we've carried out in 2019, and a lot of the rest is coming through initiatives we've made, including some investment in technology to take those costs down through digital efficiency. So at this point in time, just like I guided you on the capital ratio targets, we do not see, notwithstanding the fact that there's still a lot of uncertainty out there, we, at this point, don't see the need to change our short-term guidance on our cost targets for 2020 either.

Perfect. Very clear. Part of the revenue growth, though, I'm kind of -- I'm revolved around kind of ongoing loan and asset growth, when we kind of talked about it in December and since. But you're, of course, also kind of focused on the kind of preserving capital within the parameters we've kind of -- we've discussed because, of course, we're still in the kind of mega restructuring kind of mode. How do you manage the balance?

Well, the balance is obviously a fund balance manage. The premise is always we manage our capital very conservatively. We have a conservative modeling assumption. We build buffers to take into account the fact that we will see a number of regulatory inflationary measures coming through that are already planned for this year. And at the same time, we are experiencing volatility, which obviously puts more uncertainty on the outlook. A crisis like the one we're observing in that sense is -- obviously has 2 effects, 2 opposing effects. On the one side, it may imply lower capital accretion or even capital erosion if we end up in a situation where loan losses were to kick in, which we don't see right now, but we need to see how things evolve. But equally, if that scenario were to play out for a long period of time, some of the growth that we have baked to the RWA growth for new business we have baked into our models would be offsetting that. And therefore, the capital ratios would maintain the resilience that we aim to have. Let me also remind you, maybe it's a good time to say, we look at it more broadly, right? We have spent a lot of time working with regulators over the last decade, building the buffers that were needed precisely at times like these. And now it's encouraging to see on the one side that regulators are taking measures to support banks at times like these, like the ability to operate within Pillar 2 requirements, where the countercyclical buffers being reduced or other activities being postponed, like EBA stress test and so on. But it's also encouraging to see that regulators still have a pretty robust tool kit in their arsenal of measures they can roll forward in support of these capital measures because there is still a lot of discretion for measures that can and cannot be rolled out this year or in future years. And that is also what helps the industry to operate within a certain balance and banks who are assuming that still, all the measures that were expected this year come through. We still have enough buffers in there to know that we can still play, we can still have enough flexibility in the way we look at our capital outlook until we have more clarity around this crisis resolution.

We actually hosted [ Elizabeth McCall ] yesterday at the conference, and that was precisely her message, that the supervisory flexibility on the operational front and on the buffer front and pretty much also individualized per bank, are effectively what's currently being done. So it was also quite a reassuring message to have. A slightly different kind of question, but within the kind of restructuring realm. How's the market dislocation? Because that's what we effectively kind of are seeing affect the speed and P&L impact of the CRU rundown as you see it now. I know very kind of tough to tell, but how would you see it?

Well, the market is clearly, is dislocated. And we are seeing, obviously, that some of the asset classes are operating, obviously, with very different level of liquidity compared to what we were obviously envisaging at this stage. I would say when you look at the CRU, we had gone in with quite conservative assumption for 2019, which we exceeded and we managed to kind of create a buffer there, again, by having derisked that unit quite a bit faster than we had envisaged, which obviously helped us. The second thing I would say is, yes, Q1 is derisking at a lower pace than Q4. To a certain extent, that was expected. In fact, if you -- we've given disclosure about the capital release unit at Investor Deep Dive in December. And Louise Kitchen, who runs that unit for us, made it very clear, this is not one of -- a unit that trickles down quarter-by-quarter the exposure on a steady flow, but rather goes through phases. And Q1 was envisaged already since the last year to be more of a preparatory phase for further disposal. So in a way, the fact that this is happening right now, it's happening in a quarter which already we were not envisaging going at a particularly strong pace. We had already a bit of a buffer. So all of that is something we're watching very closely, and we cannot be complacent on anything we're discussing these days. But again, we feel that the pace of CRU derisking is not at risk relative to the targets we laid out in the outer years. I would also add, as a reminder, that of the EUR 127 billion, EUR 126 billion or so of exposure we still have in the CRU, about 1/4 related to the disposal of those prime brokerage and electronic trading businesses to BNP, and that transaction is going ahead. So let's say there is still a very big focus we have on continuing to generate capital release through that unit. And at this point in time, notwithstanding the significant dislocation, we feel comfortable with what's happening.

Perfect. I've got a couple of very quick questions from the web. Are you kind of comfortable to give us an update on the kind of markets trading revenues year-to-date?

I think I mentioned that the momentum of Q4 was observable also at -- in the first quarter, at least in the first couple of months in the quarter. And I mentioned that for the last 3 weeks, it's too early to tell and so any guidance in that sense would be a bit displaced. But what we are observing is resilience at this stage.

Okay. And the other question is where we're still about the kind of the credit line facilities kind of getting drawn. But you did mention right in the beginning that you are kind of -- you are seeing some of it, but to a degree less than modeled. Is that right?

Or less than modeled. We have some drawdowns that are happening as expected in situations like this. And like I said, relative to the models that we all have, we're talking about a fraction of those, given the time and the crisis we're at right now. And still, there is also another effect to think about as the market moves to risk off. You do see actually the opposite effect as well. And so we're actually seeing inflows as people move some of various investors move some of their investment position to cash. We also are seeing -- it's not a one-way liquidity draw, it's also some liquidity coming back in, which is why, like I said, we stay comfortably above EUR 200 billion on liquidity, which is again way above any modeled severe stress scenario like the one that we're observing.

And the last kind of very, very quick question. How -- what's your assessment of the U.S. dollar and euro liquidity in the market?

So far, we see quite stable situation in the market. I think there has been a very abundant and decisive intervention by Central Bank, which has provided sufficient reassurance on liquidity. And so for the time being, we're not seeing severe dislocations there.

Perfect. And then so let's maybe come back to the regulatory supervisory side. You've mentioned -- we've mentioned your reaction in a couple of places, how useful, of course, the guarantee funds kind of are or would be should they be properly operationally kind of managed. When you kind of think about the entirety of the -- both kind of fiscal and supervisory kind of help that seem to be kind of trickling through in pretty much every country in the European Union. How comfortable does it kind of make you feel that the actual response is adequate to what we are seeing?

Well, I would say the response is to be applauded that there has been a combination of monetary intervention precisely to avoid that seizing up of liquidity, which is not happening. And in fact, those messages have been quite consistent by Central Banks pretty much across the globe. And on the fiscal side and the availability of liquidity to company's liquidity and solvency maintenance measures, all of that is very positive. I think clearly a crisis like this, which will potentially have a more fundamental impact on consumers and on companies, requires a very high intervention at the fiscal level, and specifically, in a well-coordinated way across countries. I have to say, in this sense, the German government's example is one that is to be applauded. Intervention was very precise, very prescriptive, aimed at really supporting the heart of the economy, which as I mentioned, through that KfW intervention. I mentioned it basically will amount to EUR 460 billion of support to mid-caps in Germany. And this is done in a way and at a time where it can reassure those who will be suffering the most from the possible lockdown of the economy for the next weeks, that actually will be support and solvency being guaranteed to them through this mechanism. So we obviously welcome this very much. I come back to the caution I made earlier. It's really important to make sure that these policies then have an adequate operationalization, so that we have clarity on how to access this instrument, how to make it easy for people to use them, particularly those who really need them because that's what will make the difference. I believe through these measures really finding the full impact as opposed to finding more time towards the objectives that were designed to achieve.

Of course. So let's summarize for our audience. You're kind of very comfortable coming into this year from the perspective of the balance sheet, from the perspective of liquidity, from the perspective of capital, and of course, the kind of the results of the actions that were kind of broadly taken last year. And of course -- and from a perspective of the target, you can still see the -- particularly, the cost target for 2020, very much kind of accomplished, ready to be accomplished. So it's -- is that the fair summary?

Well, yes. I would maybe -- in my own words, I would say, the -- we feel that it's a very dynamic situation and things will continue to move. And it's very early to come to conclusions on what will ultimately happen. But at this point in time, we definitely see that for the short-term targets we've given, which were really specific to capital and the cost, and we don't see the need to change that guidance at this point in time. We obviously also feel that the reason for this has a lot to do with the heavy lifting that has happened already in 2019, which positions us well, as I mentioned earlier, to go into 2020. A lot of work remains to be done though, so it's not accomplished yet, but we're working towards it.

Brilliant. Fabrizio, thank you very much.

Magdalena, thank you for having me.

Brilliant. And thank you, everyone, for watching us.