Erste Group Bank AG (EBS) Earnings Call Transcript & Summary

Wonderful. Good morning, ladies and gentlemen. I would like to welcome you for the presentation of the half year results of the Erste Group. If you're following the live stream today, I'd like to ask you to ask your questions even during the press conference in our online tool. After the press conference during the Q&A session, I'm going to read out your questions. For all those in the room who have questions after the presentations, please wait for the roving microphone so that the colleagues in the live stream can hear your questions as well as the answers. Thank you very much. And I'd like to hand over to the CEO of the Erste Group, Willi Cernko. Thank you.

Allow me to start with a quick look back to the year 2022. Without any doubt, you can see that we had excellent growth rates in the region. Please don't forget that. This also reflects some catch-up effects from the COVID pandemic. Now let's take a look at the current year. You can see that we have a quite differentiated picture. You see moderate growth. But we must not forget that it's not too long ago that there have been quite a few people who would have bet that we would have a major recession, but this didn't happen. This isn't the case. You see somewhere between 0% and 2% growth. And of course, we should not forget the fact that this economic area is also largely dependent on the developments in Germany and the economic development in Germany where in the past 2 quarters has experienced a technical recession, and now we are seeing 0 growth more or less. Looking forward, you can see clearly some positive results. We are convinced that these positive signals will also materialize. And it's important to show that this region where we are invested in the long term, we'll continue to show better growth than the rest of the Eurozone countries. Now why is that? At first because the transformation of the economy to a sustainable economy will happen on a major scale. There's a lot of finances available for '23 all the way until '27. So in this region, we are talking about funds worth EUR 150 billion. So you can see that there are opportunities to grow. We are convinced that these opportunities will be made good use of. Now let's take a look at the budget deficits. So what we are seeing is that there are some downward trends that we are clearly seeing here and there are also numerous one-off support measures in the various countries that are expiring. And there's also a common approach that any further support measures will be much more targeted than has been the case in the past. Now let's take a look at state debt, public debt levels, but the mass criteria, that is something that has been reduced in terms of no longer being at the top of the agenda, but there are some positive trends on the one hand. And on the other hand, there's also some leeway for future challenges. And of course, we should also consider the EU funding that's available for the transformation of the economy. And I think that we can be quite optimistic. And as far as inflation dynamics are concerned, it's also showing a downward trend. But we have to say quite clearly that we were surprised because originally, the expectation was that we would see completely different rates of inflation in 2023. This didn't happen. So we did see that inflation is still sticking around in a stubborn way. And of course, this also means that maybe we reacted too late. Of course, let's not talk about probably gone things. We believe that in 2024, we will see a strong downward trend. As far as the 2% goal is concerned, well, I think it will take until 2025 or 2026 until we see 2% interest rates. And if we take a look at the interest rate developments, the expectation that interest rates will move south very quickly. Well, this is something that we cannot confirm. What we are seeing is that the interest rates have leveled off. We're no longer talking about we have seen the peak. But what we are seeing is that probably the interest rates will remain at this level for a longer period of time. Now let's look at the Czech Republic. This is also a historical look back at the past. And in the first quarter of 2023, there was expected to be a reduction of interest rates. That hasn't been the case. And now the Czech Central Bank has recently stated that the level of 7% will be continued throughout the year. But of course, we are still optimistic that in 2024, we will see some first rate cuts and maybe in a more moderate direction. I'm not talking about the crisis, but this is a challenge. And we are seeing a very robust employment market. Of course, there's also the other side of this medal. The employment market is very robust. The labor market is showing strong signals, and there's also a shortage of skilled workers. But not only that, there's also a shortage of workers of various levels of qualification, also auxiliaries. And what is an issue here is that we have not really devoted full attention to the problem of what we need to do in Europe, what we need to do in Austria in order to make sure that we facilitate the immigration of qualified workers of skilled labor. I think we need to look at people who are coming here to fulfill their dreams, people who are university graduates, 2/3 of the people with the university diploma go to Australia, the U.S. or Canada. Well, why are they going there? This brings us to the capital markets. They can realize their dreams there. They can fulfill their expectations. They don't come here to have a 32-hour working week. No. They want to go where they can best fulfill their dreams and their ideas. And they believe that the labor market and the opportunities that arise out of the situation of the labor market should be focused on. So we should make sure that qualified individuals, people who want to make a contribution to this urgently-needed transformation, these people find a safe haven here. And we also need to provide them with the right setting to make sure that this becomes an opportunity for them, and funding and bank loans alone will not be enough for that. Let me hand over to Alexandra.

Thank you very much. Willi, the unemployment rate is a good password as the labor market is a very strong pillar when it comes to the risk profile. You can see that in spite of an unchanged, very demanding environment, we see a stable situation in the risk situation on a very high level. What does it mean by way of figures? And to remind you because this is not self-explanatory, we show our risk costs in basis points of the credit volume. If we take 2022, 15 basis points means 0.15% of our loan volume. When you see a minus before the figures, which was the case in 2018 and in the first half year of 2023, this is a net release. We did not form as many risk costs as we then released. What does it mean for the first half year of 2023? We have 3 basis points. This is about EUR 800 million less in provisions than released. What is the reason for this? It does not have to do with the fact that our crisis-related risk provisions would have been released, you see it on the right-hand side. In the first half year of 2023, we have roughly EUR 900 million of risk-related loan provisions, which have been on our accounts and they remain available also in the future and the macroeconomic environment -- should the macroeconomic environment and the portfolio worsened, we have hardly any losses. This was the case in the first. And in the second quarter, there is one or the other individual loss, but there is no structural worsening in the portfolio in any part of a portfolio or a segment. Throughout our whole region, we see the same very positive picture. And this then brings me to the next page, our nonperforming loan ratio. You do not see it on this transparency because it is rounded to 2%. It's 1.97% to be exact. And for the first time in our history, we are at an NPL ratio of below 2%. The NPL coverage, that is the extent to which the nonperforming loans are covered through provisions, not through collaterals, they would come on top, but only merely through balance sheet provisions, and this is nearly 100%. For the overall year of 2023, we do assume from what we've seen in the first half year and in July that the NPL ratio will not change massively. It will stay at about 2%, maybe a bit slightly higher, but only to a minimum expense. So the NPL coverage ratio will slightly go back, but also on a very high and comfortable level. So why is the situation so good? Why do we have positive risk cost in the field of net releases such a low NPL ratio and such a high coverage. I may be repeating myself, but it's important to stress that this is the result of a very disciplined and responsible loan granting over many years. This didn't happen recently. We are speaking of at least 10 years of very responsible changed standard for the granting of loans that lead to such quality in the portfolio. Of course, we have a very strong labor market, which is also a very important driver for the retail portfolio. Here, we see no worsening in the ability of our customers to pay their loans back and no higher losses, either. And we see a very, very strong and resilient business environment, which reacted very flexibly to the many challenges of the recent past. And as I said before, there has been adequate -- have been adequate state support during corona. So you see me, you see us here in a very confident mood where our starting position is an excellent one. And our customers, when it comes to financing technological transformation, our customers will be accompanied very reliably. And I would like to pass on to my colleague, Stefan Dorfler. Thank you very much.

Income is rising significantly. Why is that? But in our core business, we built up our business over many years, and we have a loan portfolio that has a very high quality, as Alexandra has just said. Of course, rising interest rates are helping us in the short term. But the net interest income is carried by the strong loan portfolio that has an optimum quality. And for liquidity purposes, we also hold an investment portfolio. And we have to, of course, have that portfolio, that's also benefiting and receiving some tailwind from the higher interest rates. Now it's important to point to the net fee and commission income, that is of strategic importance for us that it is profitable. This net fee and commission income is supporting us for further investments, and we've seen a continuous improvement. We have EUR 1.275 billion that we generated in the first half of the year. Now let me briefly talk about the net trading and fair value result. Gains and losses from financial instruments at [indiscernible] due to the turbulences in the market and due to the short-term rising interest rates, it came under pressure. This year, it's normalizing against on a year-on-year comparison. We have a positive contribution from the net trading result. It is not our main goal to increase the net trading result. It's back to normal, I would say. Now let's take a look at the operating expenses. It is hardly surprising that enormous inflationary pressure has also had a significant impact on our costs. For the full year of 2023, we expect our operating expenses to rise by 9%, maybe even a bit more, and the personnel expenses have gone up by 12% to 13%. Now the background of this is, first of all, the strong inflationary pressures across all the countries where we are present, we have also guest from CEE present here physically in the room and also joining us online. So in most of the countries of Central and Eastern Europe, inflation rate is higher than the already very high inflation rates here in Austria. That's one driver. And another driver, and we quite consciously decided that in countries such as the Czech Republic or Romania, we would use the good income situation in order to invest into our digital future. You can see the headcount in those countries, and it's also been the case in Austria recently. We are pursuing very ambitious goals. Willi Cernko reported on this repeatedly. And that, of course, has an impact on our cost base. We do expect that there will be a reduction of rates starting in '24, which will have the effect of reducing our costs and the top line will be supported by the investments we're making today. Now I will be very brief and talk about the loan demand, where Ingo Bleier as well as Willi Cernko are going to discuss this business development in corporate and retail in more detail. The loan-to-deposit ratio in all countries, those are the aggregated numbers that you're seeing here. So the loan deposit ratio is very healthy in all countries, which is quite important in a year where liquidity has created some stress in the market. We are extremely well positioned, and our loan deposit ratio level is very good. This brings me to the last 2 slides that I would like to share with you. And here, I would like to emphasize on the one hand that in 2023 so far, at the half year date, we had a total net result of a bit less than EUR 1.5 billion. And I already discuss the operating income, the operating expenses, and Alexandra Habeler-Drabek talked about our risk costs. But we must not forget taxes and other results. Normally, we don't talk about this very much because it's just a normal item on our balance sheet. But I would like to briefly emphasize this for a few reasons. On the one hand, what's behind this is a very good result of Austrian Sparkassengruppe. You know that the savings bank group, that Sparkassengruppe is consolidated and where we are not [indiscernible] is, of course, something that we can introduce from the net result. I would like to congratulate our colleagues for this excellent results so far. And a higher pretax result also leads to higher tax payments, which is only normal. And that is an item which has gone up in a year-on-year comparison, and that's only normal. And last but not least, and other operating results, you can see also the contributions to the deposit insurance fund that already happened in the first quarter. But of course, we also need to see it in the full year perspective. On the whole, and this is very important, as many of you know, we are continuing to strengthen our capitalization based on our good income situation. And this is important for 3 reasons. On the one hand, this enables us to continue to have a forward-looking approach, very open and aggressive approach. We've made some small acquisitions. And wherever there are interesting portfolios, well, we tried our luck. Sometimes we win, sometimes we don't. But on the whole, the result is very satisfactory. We already communicated this morning that the call for 2023 is EUR 2.7 per share. So we want to offer our shareholders an attractive dividend. That's part of our overall business model. And we have also expressed this in today's announcement. The third thing, and that is actually the most important point, is the financing of our customer business. And I think this has been done in a very sustainable and a very consistent way in the past. And for that, we need a strong capitalization, and I believe this is the right point for Ingo Bleier to take over from the customer business in the corporate side.

Thank you, Stefan. Ladies and gentlemen, what are we doing for our customers in the area for the corporate and market segment? If you take a look at the left graph, you're going to see that the loan growth has slowed down. So the demand for new loans is weaker than last year, where we saw a very dynamic growth of corporate customer loans. We are still seeing a growth of 3.5% since the beginning of the year. But in the second half of 2022, it was actually 7.5%. And that's not the case because as it is often reported, that we have a more stringent underwriting criteria. We're pulling the reins tight now. We are seeing a weaker demand situation in most segments that we are in charge of. What we're very pleased about is that within this loan growth, we also have granted EUR 1 billion worth of green financing. That's financing for renewables, for sustainable and energy-efficient buildings and similar projects. Let me provide you with an outlook. Of course, Willi Cernko will also provide you with another outlook, but it will be about 5% until -- for the full year. We have seen a very dynamic development of the issuances. In the center of the slide, you can see a diagram that shows you the volume that we are supporting on the capital market, that's IPOs and debentures, loans and either Electrica or Romania. It's a hydropower plant operator listed at the Bucharest Stock Exchange. You're going to see these results in the second half of the year. But even though some markets were closed, we had a very high level of issuances and we're gaining market shares also from other regional banks. And we're also continuing to grow in the area of assets under management as a total volume of funds that we are managing in the Erste Asset Management Group. We had a very difficult year 2022. And this year, we have significantly better growth. We are selling in retail and also for institutional investors. And we are also seeing nice growth in area of sustainable funds. That's Article 8 and Article 9 funds for the experts among you under the disclosure regulations of the European Union. So we are seeing different growth rates. But of course, we continue to see growth on the customer side. This brings me to digitalization. Something we're also doing for our corporate customers is we continue to expand George. In Austria, you will have noticed the George Business campaign. You will have seen many of us with pixelated faces and various Internet presentations in the first half of this year. Meanwhile, we standard more than 9,000 corporate customers who are using George Business, and our plan is to continue to roll this out in Central and Eastern Europe. In the medium term, in the entire region where we have a presence, we want to provide our corporate customers with a unified platform where we can offer online services. We will mainly offer our own services. But of course, the more customers are on this platform, the more this will be interesting for third parties, and we have started some corporations with providers that are also going to use the George Business platform to offer their services. We started in Austria. In Romania, they already started the friends and family phase, as we call it. And at the end of the year, we're going to launch also in the Czech Republic. And in Austria, we're now more than 9,000. At the end of the year, we'll probably have 15,000 users of George Business. I'd now like to hand over to Willi Cernko for the Retail segment.

Thank you very much. To tie over here, when it comes to retail business and George with more than 9 million or 10 million active throughout all the countries with an exception that is Serbia, why not? This has to do with the fact that the current banking system -- the core banking system was rolled out anew and thus, deep prerequisites were created also for Serbia then to make available George by 2025. One more comment on digitalization. When looking into the future, we usually assume and here, I'm speaking of the coming 3 to 5 years, we do assume that all those who want to be successful in banking and withstand, the prerequisite will be to have a platform-based digital interactive solution that is made available. So it will become self-evident for people and companies to do their daily business from home or from wherever they may be. This will not be such a big difference that we can make here. In the future, the human factor will be decisive. Given all the digital offer we have or the solutions we are developing, when it comes to decisions that are important for life, this may be the purchase of an apartment, the construction of a house or some old age provision or be it the education of someone's children or grandchildren, this is very subjective and individual. But here, the human factor comes into play. And our employees, this human factor needs to be supported also with the help of artificial intelligence in such decisive moments to generate added value. Let me come back to the Retail segment. I'd like to address 2 topics here. On the one hand, we see interest rate hikes and we are asked again and again without preempting your questions, why the deposit interest rates are not adjusted at the same speed as the loan interest rates? What we're experiencing for the first time in 7 years, we have 0% interest rate and decreasing the tendency borne in mind. This is a period of 12 years where we haven't seen any interest rate hikes in our subsidiary support of our employees for the first time in their professional life have been confronted with an interest rate hike, to put it into the right context. So what we are observing today, we see a very massive tendency towards interest -- fixed interest rates, but also a tendency towards securities business. The Securities segment, which we set up some years ago, we will see a clear increase together with our customers. We try to make use of the liquidity that is available in the medium and long term to invest it into forms of investment that may provide for a value increase. And on the other hand, when it comes to those liquidity positions of our customers, which relate to the coming 6 to 18, 24 months, which they will not touch them, we would like to provide an attractive interest rate offer. We have adjusted the interest rate levels also after the interest rate hikes by the European Central Bank for 24 months, we have 2.75% and for 12 months 2.5% and for less 2%. So these are certain tendencies. There is some movement in this, and this requires a day-to-day liquidity as well. And this is something that is not something we can make use of to our full avail, as is the case with our customers. So we do see some movement towards forms of investment that also rent up by far better and more intense results with regard to this interest rate development. And as for the second part, the graph in the middle and on the right-hand side covers the funding of the housing loans. And you may have asked yourself, given this modest part of new business, how can it be the case? Does the stock volumes more or less do not decrease, but increase on the contrary? This has to do with the fact that the major part of our customers over the last years, that is 90% of all customers who asked for a housing loan agreed fixed interest rates. And at the moment, I do not -- they do not care what's happening on the interest rate side. So luckily, many customers follow their recommendation and the advice to invest 1.8% to have regulatory security and security of planning, and they now have disadvantage. Many of our customers are not concerned by this interest rate hike, which we find at the time being. So there are hardly any paybacks because the customers find themselves in a reasonable financial situation. The portfolio will not be revolving that much. And concerning the volume of new business. Here, you see a very harsh correction of about 60%. But on the very right bar, you see that there is some hope on the horizon that the soil formation, as we call it, has already happened, that we see some increases. And we attach great efforts, and I make great efforts to also fulfill the regulatory framework and to reevaluate it in autumn, we will do so. And I'm convinced that the reasons that are no longer given for it, and we should not overlook the fact, and I'm coming back to what Alexandra said, that we have a very highly regulated transparent business that is closely accompanied by the supervisory authorities. And we do not need any regulations on top. And when it comes to the rules of play, we do not have to exaggerate. We do not want to foster speculation. We want to give an opportunity to young people to have their own dream of ownership, of house ownership materialize. And I'm very optimistic that in autumn, we will arrive at a very reasonable discussion. And I do assume that as in other places, as in the Czech Republic where they have done a very smart move, that we will follow suit and take a similar step. And then this brings me to the outlook. Some things have already been mentioned. Let me summarize. Nevertheless, we assume that there will be a lending growth of around 5% the first half year. Here, we are still lagging behind, but we are very optimistic that in the second half of the year, there will be some supportive moments that will help us achieve this. We find a very favorable risk environment, which will continue to be favorable for quite some time. The dividend of EUR 2.70 has been mentioned. And I also find it extremely important when it comes to the location of Australia, Europe, Eastern and Central Europe, I think what is really important is the European funds to provide for financing the green transition. So if I may conclude mentioning these 3 topics, yes, we have a very good, strong operative result, but we are also convinced that this transformation can only happen when we have a well-positioned liquid banks. Why is that so important? For Europe, the capital market this is a wish that this be developed, but the economic situation of businesses, the small businesses in Europe to a very high extent, depend on the competencies of the banks when it comes to providing the right loans and advances to them. Subsidies will also play a role and the capital market needs to be developed if we want to arrive at the situation where not only will talented and give people move to Europe and materialize their dreams, and if we want this transformation of business and economy to be implemented in practice, there will be no other way to embark on. There's one common denominator. If we want to pursue the goals of transforming the economy into a sustainable economy and business, then we altogether are speaking of 3-digit billion figures that have to be contributed by private parties, let me give you one reference. In Europe, the private households are more than 10,000 billions of euros in deposits and cash. And by 2030, we were -- by the capital market, we will require EUR 500 billion. So this is a large part of those 10,000. But we require the right structures. We require rules and regulations that invite private investors to come on board. Otherwise, this will not be possible. We will render our contribution for sure. Thank you very much.

[Foreign Language] Thank you very much, and we'll continue with the round of questions and answers. The Czech Republic, please.

[indiscernible] the Czech Republic. You -- this is the question for Willi Cernko. You emphasized that the developing of the capital markets, this is the problem not just for Austria, but the whole of Europe, of course. Can you elaborate a bit on this? What steps do you believe to be -- have to be taken to achieve this? I think the -- one of the first steps will be the evolution of the capital tax, as you discussed in Austria. What else? And the green transition hugely depends on this, I guess?

Should I answer in English or in German?

In English, please.

You would hear it in English.

Yes, the translation is a little bit shaky. Not shaky, but not good quality.

Then let's do it in English.

Capital Markets Union is not an idea that is developed by ourselves. It's a European initiative. And what we can see is we are lagging behind in all aspects. And what we did, I was in Brussels a couple of months ago. I was forwarding a document with 13 proposals the way we would, let's say, bring it alive this Capital Market Union. And there are many, many elements in, if you wish, if you're interested in, we want to forward to you this document, it's a tiny little vapor. It's easier than to run through all the proposals we have, but just to pick one out of it, it is -- what is the incentive for a private investor to invest via capital market instrument when he is not able to get access to tax benefits? So in Austria, we're talking a lot about how long do we have to keep your investment? Until you benefit from a certain tax benefit. So it's an ongoing debate. But we are pretty sure the more we come up with concrete proposals, and the more we stress this as a relevant topic to get the business transformation towards a more sustainable business up and running and really happened at the end of the day without any capital market, it's not going to work. So I'm going to forward to you the document whoever is interested and we are doing the same.

[indiscernible]

Could you say something about the funding that is made available from Brussels for this transformation? You also talked about the shortage of skilled labor. So what does this mean?

If we don't have the skilled labor, then we can't invest the money. Nobody in the West will migrate to the East, right? No qualified people will go from West to East. This simply doesn't happen. And then in those countries, people don't want any migration in the first place. So there's a lot of funding that's made available, but there's a shortage of skilled labor. Well, I don't want to have a political discussion about this, but I believe that there are several elements that we need to openly discuss. I know that when we talk about migration, well, it may sound as if this is a problem. But if we take a look at where highly qualified people go to, which countries they go to and why they choose those countries, well, we see the same pattern time and again. So it's about where we can implement and realize our dreams and ideas. And those are countries such as the U.S., Canada, Australia and the U.K. So of course, we can continue to work with [indiscernible] there, equivalent to the green card. But we know at the end of the day, why certain highly talented people take their ideas to other countries. We have highly qualified people. So if there is a possibility to realize your own business ideas in those markets because there is an existing capital market and I know we are starting at a very low level. But at some point, you need to start. And I believe that it's about having the courage to take those first steps. And you will see the document that we drafted, this is not rocket science. These are small practicalities that we believe will help develop the capital markets step by step. That's it. People want to stay in their own country and realize their ideas there. Why do they leave? Because they don't have the right setting and prerequisites there.

Well, I would like to ask a question. We talked about the capital markets, and this is a difficult issue here. I know you don't want to start a political debate on this. But how likely is it? And I assume that you also talk to the government or the Ministry of Finance, how likely is that anything will happen in the coming 5 to 10 years in terms of that? And then I have another question. You said that we will have a reasonable debate on the KIM ordinance or the KIM regulations. So I guess you will discuss this with the capital markets. It's about the funding of real estate transactions. Mr. Bleier, you said that there's a reduced dynamics in loans. Can you give us the reason for that?

Well, let me try to answer the first 2 questions. Well, of course, I'm continuously talking also to the Ministry of Finance, but the political reality is what it is. You can subsume it. And well, they're trying to deal with the difficult jobs. Of course, this is part of my job also to try to solve these hard cases. So if we want the transformation of the economy to really happen, what we should do is we should give those private households a chance to participate in these green investment opportunities and to also have some tax benefits due to this increasing value in this segment. If you invest in a capital market product, people are still demonizing this at the ideological level. This is almost like going to a casino. That's how it is perceived. And we want to make sure that people invest in initiatives that are good for this planet so that we can also benefit from the added value. We want that. This is a tool to control the system. So if people are invested for a couple of years, they should be able to get this without paying taxes on the capital gains. So these are simple instruments that allow you to still the money to those channels where you want the money to go. So if you say, hey, you will -- if you invest here, you will get the capital gains, 100% without paying any taxes. So it's about creating incentives for people to invest. And I'm not going to give this up because I believe that at some point, we are going to have to come to the conclusion that if we're really going to be serious about this, we need to start now and it's better to start yesterday, actually. And as far as the investment in real estate is concerned, well, there is a body that has members of the financial market authorities and the Central Bank. And those are the people we are talking about. There's another question. What I meant is that this year, we are seeing a weaker demand than last year. And this is certainly to do with weaker growth rates. And Willi Cernko said that we have seen a technical recession in Germany. So the investment volume has gone down. This is why the loan demand has also been reduced. If we have a stronger economic growth next year, the loan demand will be picked up. And now let me talk about the capital markets, if I may. I was talking about Austrians not like -- not wanting to invest in equities or securities, this readiness has gone up. In 2016, 50% of our retail customers had securities. Now after corona, this rate has gone up to 25%. So we are seeing a strong growth and people are more open towards investing in securities. You've also seen in our securities savings plans that these rates have gone up. So people are buying individual shares and also securities plans. So I think that the rotations, we don't see this yet, but the people are already picking up. And what's going to happen in Eastern Europe if all this funding meets a labor market that is quite restricted? Well, there's been [indiscernible] from Southeastern Europe living abroad in the West and the more perspectives opportunities are and the more financial prosperity is created, well, the more people may come back to those countries. So people are interested in going back and to strengthen the local labor market if the conditions are right. These are the more important perspectives. Thank you. That's what I wanted to add.

Okay. Let's move to Mr. [indiscernible] Irish Newspaper. He sent us a question. Are you expecting any major problems due to the rising number of insolvencies, especially in the construction industry in retail? And in light of the good banking results, do you think that there might be a windfall profit tax levered by politicians? And if so, what do you think about this?

I'll address the first question. For the coming quarters going forward, we are not seeing any problems due to a higher number of corporate insolvencies. Well, we are seeing that a number of insolvencies is going up. But what we shouldn't forget is that even with these rising figures, we are at a level of 2019, and the level of 2019 was extremely low. What happened after that was actually a 0 insolvency ratio. So this rise does not worry us. And in concrete terms, if you ask about the construction industry, well, we are, of course, looking at all portfolios on a regular basis. And we are not worried about our portfolio. Well, as to the first question. Looking at the comments and the position taken by the regulators, there is no leeway for such ideas. So the regulators are quite clear about this. And this also coincides with our approach that if we want the banks to be able to provides support for people in light of these new challenges, then we need to have strong banks. And especially during the times of corona, we have seen what it means to be available overnight. And we have demonstrated that we can be available. And it's not about gratitude, but that has shown that the system is working and we should not question that. Thank you.

And from Frankfurt [indiscernible]. I would like to come back to Eastern Europe, Mr. Cernko.