HSBC Holdings plc (HSBA) Earnings Call Transcript & Summary

[Audio Gap] So can we start off with, I'm sure the question that you've been asked many times already today. In terms of Russia and Ukraine, have you been able to quantify sort of firstly, your direct exposure and then to think a little bit about the second order impacts and then how HSBC might be affected?

Yes. I mean look, firstly, the situation going on in the Ukraine at the moment is dreadful. So organizationally, we're very focused on what we can be doing from a humanitarian perspective, very focused on the impact on various members of our staff and then around the region. And also, yes, a lot of our customers are quite materially impacted as well. For us, we have a very small business in Russia, less than $100 million of equity, about $1 billion of direct exposure, 220 employees. On top of that, we have about another $1 billion of, I would call, Russian-related exposure, mainly elsewhere in Europe and here in the U.K. The -- yes, I do think relative to the comments I made at full year results just over 3 weeks ago, it feels like a very long time ago, that you should expect that ECL charges -- we think ECL charges will be higher this quarter than what we had anticipated 3 weeks ago. I think that's a combination of some direct Russian write-downs together with an adverse movement in forward economic guidance, which isn't all Russia, Ukraine-related. It's also partly related to the situation in Hong Kong as well. Yes, in terms of second, third order consequences, we're obviously paying attention to some countries that are going to be, I think, impacted Turkey, Egypt, Polish zlotys down materially, et cetera. I don't think any of that at the moment is causing us particular concern. Nothing on the commodity side. I think on the market side, the markets business is actually trading quite well. There's decent volatility. Year-to-date, the markets business is actually ahead of where it was last year. Yes. So overall, I mean, if you sort of look at the total consequences of what's going on, it's not immaterial, but it's not material in the context of the group.

Okay. Okay. And then maybe if we turn on to what's probably the next burning issue, which is rates. I mean, you've clearly set out your sensitivities in your results, we're sort of 3 months into the U.K. rate hiking cycle. Now I think you raised deposits modestly last week. So how is your U.K. margin experience playing out relative to expectations? And what's -- are your rate expectations changing as a result of what's happening in the sort of wider sort of global economy at the moment?

Yes. Again, if you go back to where we were at full year results, I think U.S. dollar and U.K. rate, the expectations are actually ahead of where they were 3 weeks ago. So what's happening in Russia and Ukraine at the moment with the impact on energy prices is going to be inflationary. So we're not anticipating at this point any significant disruption to U.K. and U.S. dollar rate rises. We are having more of a debate about HIBOR in Hong Kong and given the inevitable economic slowdown that's going to occur because of the COVID restrictions in Hong Kong at the moment. Will there be some period of delinkage between HIBOR and U.S. dollar rate rises? So there could be a longer period of break, call it, 3 to 6 months than we normally observe. So I think the only real debate we're having at the moment around HIBOR. Yes. In terms of the U.K., we did push through some deposit increases; it was a matter of public record a couple of weeks ago, the implied deposit beta on that is comfortably under 50%. We said few weeks ago that we expected through the cycle. And the unusual part of the cycle is much of it could happen this year that we would expect that deposit beta to be 50% through the cycle. The only thing I'd say in the U.K. is there's obviously quite intense pressure on the mortgage side at the moment. So it may well be that the deposit beta is less than that if we choose to offset some of the pressure, we're seeing on the mortgage side with capturing more of a margin on the deposit side. But again, you've probably sat and listened to the other U.K. banks, it will depend very much on competitive pressure here in the U.K.

Okay. Okay. And in terms of sort of Hong Kong and maybe just coming back to that HIBOR point. I mean, obviously, we've got a slowdown. We've got COVID lockdowns. So maybe if you could talk a little bit about how easy you think it will be to reprice assets in Hong Kong because I assume demand is not going to be huge this year. And then maybe we can talk a little bit about the wealth business as well because obviously, I think you said it results that half of your branch network in Hong Kong is currently closed. So there must be some impact to that?

Yes. I mean the -- look, I mean, I think Hong Kong is just going through what we went through here in the U.K. a couple of months ago, which is they're going through their wave of Omicron. We know in every economy that we've seen it pass through, it's a 3-month phenomena. They're probably about halfway through at the moment. We think COVID probably already peaking in Hong Kong. So call it, February through April, you will see a significant degree of lockdown activity in Hong Kong. And then you'll start to see -- we would anticipate you'll start to see easing from sort of May onwards. In terms of practically, what it means for us at the moment, we are sort of shutting branches on an alternative days. So approximately 50% of our branch capacity is off on any given day in Hong Kong at the moment. This is the biggest quarter for us every year for wealth sales. So anything -- any complex product sale at the moment is more difficult and will be impacted over the next few months. So that ranges from mortgage sales, insurance sales, mutual fund sales and the like. Secondly, equity market has been pretty weak in Hong Kong year-to-date. Equity brokerage volumes are down about 50% on where they were a year ago. So the equity brokerage line, I think, will be impacted. And we also have a very large insurance franchise where we take something called Market Conditions Update, MCU, the mark-to-market on the asset side of the insurance business through revenues, yes, as of yesterday. And again, this is not all Hong Kong-related, it's global markets-related. As of yesterday, the mark-to-market there was a negative $0.5 billion. Obviously, today, the Asian Hong Kong markets have bounced quite a bit, and that number has been bouncing around. So when you add all that up, the Asian wealth revenues will definitely be weaker this quarter than they were a year ago.

Okay. So that brings us on to the results of our polling question. I think not surprisingly, 50% think that interest rate outlook is the most important thing. We have 17% on share buybacks and dividend. Interestingly, though, 1/3 of people think that, that Hong Kong border reopening could be quite crucial for you.

Look, in terms of my reaction to that, I would have put close to 100% on rates. The -- yes, in relation to the comment on Hong Kong, the -- as I said, look, Omicron will pass through the economy pretty quickly. There's no economy in the world where it hasn't passed through very quickly. So it will impact new business sales. But the biggest single driver of the profitability in our Hong Kong business is where does HIBOR end at the end of this year, which is rates. If you looked at what happened last year, the biggest single driver of the downturn in Hong Kong profitability was rates. The Hong Kong, Mainland China border reopening is probably worth a few hundred million a year to us in terms of additional revenue, principally in our insurance business, pre -- if you go back to 2019, about 40% of the new business sales were done cross-border. They've gone to close to 0. We have been able to replace some of them with online channels, but not a lot. But by far, the biggest driver is going to be the rates impact in Hong Kong.

Okay. It's interesting. Can we -- I mean, we spoke a little bit about impacts on ECLs of Russia, Ukraine, you mentioned specific detail on that. We've obviously spoken a little bit about what's happening in terms of COVID in Hong Kong. And I guess, you have the China CRE overlay in Q4. There's obviously been a lot of news on the extent of a slowdown, the reactions about slowdown in China today. So I wonder if you could talk a little bit about sort of where you see the risks on that book. In particular, how you would see potentially about overlay increasing or decreasing going forward. And maybe just talk a little bit about how comfortable you feel with the rest of the book in light of higher inflation?

Yes. So there's a lot in that question, Nick. But on commercial real estate in China, just as a reminder, we -- at the end of the year, we had a book of about $21 billion, about $12 billion was sitting in Hong Kong to Mainland China real estate developers. The -- and against that, we had about $0.5 billion of ECL reserves. I don't think there's been anything noteworthy in the last 3 weeks. We definitely didn't kitchen sink that $0.5 billion provision at year-end. The Chinese policy tightening that went on late last year that caused the liquidity squeeze in the sector, I think, has begun to ease the policy. There has been some policy loosening over the last couple of months. But we do think it will take a few quarters for that to sort of flow through the sector. So we're not really changing what we said 3 weeks ago. Yes, what has changed in ECLs, I think has been -- we do anticipate taking some write-downs against some of our Russian exposure. Again, as I said before, it's a relatively modest level of exposure in the context of the overall group. And we do think forward economic guidance is going to change. So you're obviously going to have to rethink some of the downside scenarios on forward economic guidance, shifting from downside COVID scenarios to downside war scenarios. And obviously, the impact -- we're not actually seeing any adverse impairment trends in Hong Kong, but we will probably see that reflected as in the forward economic guidance. Obviously, there will be some stress in that Hong Kong book, but we're not seeing anything at the moment.

Okay. Okay. Perfect. Can we move on from some of those macro issues and just talk about some of the things that are going to help you achieve your ROE targets? So obviously, you said you want to keep costs post-'22 and the 0% to 2% band. That's lower than you've achieved historically. So can you talk a little bit about what's happened in the bank over the last few rounds of restructuring and the investment that you put in, that gives you confidence on that cost target?

Yes. So look, I mean, I would say it's a bit of bottom-up and a bit of top-down. I would observe Noel and I weren't there when -- weren't doing the jobs that we now do when you had that previous cost inflation in the organization. I joined back end of 2018, where we did grow our cost 5.5% that year. I think Noel and I are definitely not going back to those days. The -- yes, bottom up, I think we've -- the cost processes and disciplines in the organization are just a lot, lot better over the last 3 years. There is now proper cost management disciplines operating across the organization. I think secondly, we've been investing and continue to invest significantly in technology. That is driving genuine large productivity improvements across the organization. And not just productivity, if you take something like trade, we're in the process of investing about $700 million in our global trade platforms. That's been fantastic for customers. The NPS in that business has gone up from the teens to the high-60s over the last few years. It's been great for the control environment, and we've also stripped cost out. COVID has opened up a bunch of new opportunity for us. So ways of working has changed. We've committed to get out of at least 40% of our commercial real estate. Yes, because we've adopted hybrid working. We are traveling a lot less. We used to spend $400 million in 2018 on travel. We said we're not going to spend more than $200 million going forward because of Zoom and because we just can figure out how to operate the business with a lot less travel. I would say top down though is as equally important. I mean, you heard Noel at full year results. I mean he was as clear as he could be that he's not going to allow cost to grow by more than 0% to 2% next year. Yes, you shouldn't underestimate his commitment and the tonality from the top. I was in a meeting earlier today where I was clear that it wasn't a sort of request for next year. It was -- this is what we've got to do and how we're going to do it. Yes, and relative to that target for next year, we need to probably save about another $1 billion, 3% of our cost base than what we've currently got in our plans. Every time at about this time of the year, we've normally got a gap that's bigger than that. So we'll figure it out over the next few months.

And I mean, obviously, a lot of what you referred to there was control and top down and looking at that, I mean, how do you think over the last sort of 4 years, the culture of the organization has changed to achieve that?

Yes. And I know there's sort of lots of sort of stories about what our culture is or was in the past. Look, I've been there just over 3 years now, I'm one of the longest-serving members of the group executive. So most of the group executive team has changed. Most of us in turn have changed, most of the teams that report to us. So if you went through the top 200 people in the bank, I would say the great majority of them are either new to the bank or new enroll. And so there has been a sort of pretty fundamental cultural revolution at the top of the house. And that's now driving through the organization. So yes, I think a lot of this is just down to behaviors as I've said to the team today of you all were told that you had to cut 3% of your household budget, you would do it. But if I tell them, they've got to save $1 billion of cost savings, I have to spend a couple of weeks of people complaining about the fact they can't do it. But you can't, so it's just driven by behaviors, I think a lot of it.

Okay. And then I think in answer as well to the previous question, you mentioned technology spend and that's clearly increase continue or increase significantly and will continue. What have been the main areas of focus for you in the last 2 years there? What are the main areas going forward? And when you benchmark yourself against peers, how do you sort of think about how much you should be spending?

Yes. I mean, if you look at our cost structure today, we spent about -- the total cost structure is about $32 billion, about $6 billion of that spent on technology, $19 billion is spent on direct people cost. About another $4 billion is spent on managed service providers, consultants, contractors and the like. So you actually want to be spending more on technology in order to drive significant productivity improvement through -- in the front office, it's on the retail side, it's how to get everyone to bank on the mobile. I think I'm quite optimistic on that because in COVID, actually cohorts who weren't comfortable with using mobile banking, became very comfortable with using mobile banking. We've seen a very dramatic acceleration towards digital channels. I mean, yesterday here in the U.K., we announced a further round of branch closures, which is very much driven by just a lack of customer demand to go into branches. ATM usage here in the U.K. has declined 40% pre-COVID to post-COVID. Yes, on the corporate and relationship manager side, it's how do you invest in technology to massively drive-up relationship manager productivity and get all the simple stuff done online. And then the back office, it's all about mass automation. Look at my team today, half of what I have 6,900 people in finance, half of them do manual processing and reconciliation work. A great bulk of that can be automated over the coming years. We've got a big investment going into what we call finance on the cloud, where we're basically taking all of our data up on to the cloud, creating a single set of reporting engines. That will open up a very large-scaled opportunity for us to both reduce costs and massively improve the speed at which we can deliver information out to stakeholders and massively improve the control environment. So yes, I just -- yes, I'm a massive bull on the ability of big banks to transform their cost basis over the next few years through smart investment in technology.

Okay. So I've got one more question, and I've got a few more, but we'll open up after this. So if we can just talk about Asian wealth management, which you've identified as a big area for growth and an opportunity obviously for future investment. So when we think about that, how important are the different bits in terms of onshore China, offshore China, non-China? And what are the challenges you see in each area there?

Yes. If you look at our business today, that today, the business is predominantly a Hong Kong-based wealth business. Yes, we have -- as per -- the 3 priority markets outside of Hong Kong, Mainland China, Singapore, India, they're all different. In Mainland China, we are seeking to go after the onshore affluent and high net worth wealth customer base. We do think we bring a set of skills and capabilities out of Hong Kong that will allow us to compete effectively in that market. We launched a new wealth venture -- insurance venture called Pinnacle at the start of last year with aspirations to hire about 3,500 agents over the next few years. We hired 700 next year. The principal challenge in that business is always getting the licenses that you need to get and the time, you need to get them and being able to recruit agents. So far, I think we're comfortably on track. Singapore, I think Singapore is going to be one of the 2 primary offshore financial centers in Asia together with Hong Kong. We recognize that we need to make sure that we're properly diversified into Singapore. Again, some of this we're supplementing with acquisitions. We bought AXA's insurance business there. We're now the 7th largest insurance business in Singapore, significantly increased the customers that we can sell wealth product to. In India, 2 things. Domestically, I think we're trying to penetrate the market largely digitally. We also think we can do a much better job with the ex-pat Indian community than we've done in the past. We're very, very good at banking the ethnic Chinese community around the world. We probably have a market share in the high single digits versus very low single digits in the Indian affluent market. And again, if you think about where we've been doing bolt-on M&A activity, we bought a life insurance company in Singapore, we bought a small asset manager in India. We're negotiating to increase our stake in our Indian life company. We've increased our stake in our Chinese life company. So it's all consistent with the organic strategy.

So I'm going to open it up to the audience for Q&A. If you wish to ask a question, please raise your hand. Gentlemen, just there.

I was hoping for you to give us some comments on what you're observing in terms of loan growth in this environment. I think you were aspiring for a rebound this year.

Yes. So I have been aspiring for a rebound for a while. The -- okay, I mean, if you go back where have we been seeing growth? We've been seeing good growth in U.K. mortgages. That continues. We've been seeing good growth in Hong Kong mortgages. That may be a bit slower for a few months, given events in Hong Kong. We've been seeing very good growth in trade. We expect that to continue. On the retail side, consumer spending had -- consumer spending on cards has definitely come back. What has not yet come back is people rolling their balances. We think that's just a question of time. And we do think that actually the cost-of-living squeeze that we're going to see in many parts of the world will actually mean that we'll start to see rolled credit balances. What we're not yet seeing is a sustained recovery in corporate lending. If you think about global GDP, effectively, the global corporate sector is continuing to delever. That is not a phenomenon that will continue. At some point, you will get a sustained and very quick bounce back. Yes, if you'd asked us 6 months ago, we thought we were almost at that point. We then had Omicron come, which gained quite a bit of confidence. Omicron has almost washed through. Now it's Russia, Ukraine. But we do think that the -- they will come on time. It probably has been pushed back a few months, but certainly by the time we get to the second half of this year, we should be beginning to see a sustained improvement in the corporate lending activity.

Okay. Have we got any more questions? So I'm going to ask one on to -- going to ask one on RWAs. I mean you've been exceeding your RWA saves over the last couple of years and reiteration about, I think, in the 4Q results. So how have you been able to do that? And is there more to come? Or would we expect that not to happen?

Yes. I mean, I think when we set up that RWA save program a couple of years ago, we had pretty detailed plans about how we were going to deliver it. And yes, we basically executed according to the plan. So I mean, I think the teams have done a very, very good job principally in the U.S. and potentially in Europe, why were we doing it because returns were unacceptable. So we've been very focused on how do we make sure that we get the returns of our U.S. business and our European business up. We've exited the -- we've now completed the sales of our U.S. retail banks and we have announced the sale of our French retail bank. There's a very complex migration involved in the sales. So it won't close until the second half of next year. We've been through and significantly repositioned the customer bases in Continental Europe and the U.S. We've exited a very large number of domestically focused customers where we just said we haven't got a right to win. The part of the program that I think -- so I wouldn't be baking in -- we've said at the full year that relative to the $110 billion program that we were comfortable at about $120 billion at this point by the end of this year. We -- the part of the program that, frankly, has been more disappointing has been the redeployment of that capital into Asia. And that's very much driven by the impact of COVID over the last couple of years, which just has meant that there hasn't been the ability to profitably redeploy that capital.

And given your answer to previous question on delevering, anything you'd hope about what turnaround presumably. Are there are any more questions from the audience? Just gentleman there just behind.

I would like to ask about -- specifically about China. I mean you have the regulatory risk building there, sanctions risk, potential sanctions risk or -- and then at the same time, you have the real estate problem there. I'm sure about HSBC's exposure is off to high-quality means. But nevertheless, there is always some lockdown impact on the loan portfolio. So how are you thinking about China in the next couple of years, right?

Yes, it would be unsurprising, I guess, for you to hear it, that we're massive bulls on the China growth opportunity. The China real estate portfolio having 2% of our global loan portfolio allocated to China real estate doesn't feel like a misallocation of the group's loan book. So the -- what happened late last year was a very significant policy shift, which led to a very significant liquidity squeeze on the sector, which no one had anticipated. Yes, we think the losses are not immaterial. We took a $500 million additional provision into Q4, but it is comfortably manageable in the context of the overall group. We are the biggest foreign bank in China. We have -- despite being the biggest foreign bank in China, we have less than 0.2% market share of total Chinese lending. So yes, in many ways, our ability to grow in China is not driven by the macroeconomic prospects of China, it's driven by our ability to build capability and recruit the right people. So yes, we think it's a secular multiyear growth opportunity for us and yes, there's nothing going on in the current environment that would cause us to detract from that. In relation to Russia, Ukraine and thinking about how that may escalate, you can imagine all kinds of things. So we're looking at all lots of different scenarios at the moment, downside scenarios at the moment.

Any more questions from the audience? And maybe I can ask a little bit about green transition. I mean as a bank, obviously, you've done a lot of work on that. I think the quality of what you published in terms of sort of how you're moving there and sort of the sign-ups you've made to different bodies there is ahead of what a lot of other people doing this. Can you just talk about what you see as the biggest challenge in doing and sort of implementing this transition to net-zero? And how do you think you deal with those challenges?

Yes. I mean if you look at the various parts of our sustainability agenda, yes, in terms of our own admissions, we've committed to be net-zero by 2030. Since 2019, we've halved our admissions. I think that has been helped, frankly, by COVID because we've been in the office less and we've been traveling a lot less. So it will probably bounce up a bit this year. But we've got pretty detailed plans for the next 8 years about how we're going to deliver to that objective. We said we're going to finance the green financing of $750 billion to $1 trillion. Yes, we're basically seeing the volume of that business double pretty much every year at the moment, and I'm very comfortable that we will meet that objective. We've also said that for our finance submissions, we'll be net-zero by 2050. On that, we do think it is a significant opportunity. We do view it as another industrial revolution going to happen over the next 10 to 20 years, given the scale of industrial change required in order for the planet to be sustainable by 2050. I can't stress enough how much things have to change amongst industrial customer base for us to get to that net-zero target by 2050. Therefore, we are scaling up massively. We are the biggest financer in green financing. We are massively -- are probably spending an additional $250 million this year to build up our climate capabilities internally. Yes, and it's front to back in the organization. I would say the biggest challenge that we have today is the lack of data on our customer base. So if we go out to all of our customer base and say, in the same way, if someone came to us and said, show us your transition plan, we can show them a very, very detailed transition plan out to 2030, how we get to net-zero, what we need to do buildings, transport, fuel, everything, what the cost of that transition is for us year-by-year. If we go out to our customers today, most of them can't tell us that. So the biggest impediment to us at the moment is working with our customers to build up robust transition plans. And in some parts of the world, they barely started on those transition plans. So I would think over the next 2 to 3 years, yes, we will be just quantum leaps ahead in terms of our ability to sit in a room like this and talk to you about how we're going to achieve those targets. We've come out at full year results with the first 2, oil and gas sector and the power and utility sector. This year, we'll be out with a further 6 or so sectors. That will cover over 80% of our wholesale admissions that we finance, which are very, very concentrated on a handful of sectors. But overall, I think this, I think, will be very big bank friendly because of the cost and the investment required for banks to get smart on this. There's an enormous amount of data that you require, enormous investment into stress testing, enormous investment into risk analysis required and it will be tough for the smaller banks to do that. So I do think that this is a part of the world that -- and this transition will favor people like us.

And how do those conversations go with customers when you sit down and talk to them?

Well, look, I think if you go out to oil and gas customers today, that they all agree on the need to transition. I think some of them would dispute whether or not the IEA analysis is the right analysis to look at. I don't think there's any dispute at all about those customers needing to transition. And that some of them have got decent transition plans at the moment, others are still being thought.

Okay, any more questions? Yes.

You alluded earlier to your exit from France in a number of markets. Could you please clarify some of the statements that were made with regards to Banamex in Mexico and whether you'd be looking at that? And then on the other hands, given how much appetite there for these assets. Personally, I still don't understand why you are in Mexico. I mean the NAFTA things and so on and stand by the retail parts. And well, broadly, if the other markets you're looking at exiting?

Yes. Well, I can be very clear that we're not looking at Banamex. So I don't think anyone in this room would stand up and applaud if I said anything else. But we're definitely not looking at Banamex. Yes. Look, I mean, there's a handful of smaller countries around the world that, frankly, if we could exit, we would exit. So you would have seen earlier this week, perhaps that we announced the sale of our Greek business. But where we can, there will be sort of small portfolio tie-up -- cleanup around the world. We do think for the integrity of our business model, we're the biggest global trade bank in the world. When we go out and look at big multinational customers, typically, they operate in 50 to 80 countries in the world. We operate in just over 60 today. We think that probably somewhere in the 50 to 60 countries is where we need as a network. Citi today, I think, is closer to 80 as our main competitor. So yes, I think the big problem child for us were U.S. retail and French retail. We've now exited those. I think a lot of the other stuff that we're looking at, you won't notice financially whether or not we're in Greece or out of Greece. It's more the operational complexity and share of mind that it sort of eliminates as you get out of these places.

Do we have any more questions? Can we talk -- I mean you spoke -- you just mentioned trade then. And obviously, one of the big trends that people are talking about is opening up a capital account in China and increased use of the RMB. Sort of how do you -- how beneficial do you think that will be for you? I mean, obviously, it should be somewhere where you have a competitive advantage. But have you thought about sort of the quantification of how big it could be for you?

Well, the -- yes, given the investment that we've made in trade, we are continuing to build share and trade at the moment. We're the biggest trade bank in revenues by a factor of 2. And we're continuing to build share across Asia. I think it will personally take years for the renminbi to be as significant. Trade is basically done in dollars today. And it will take some time before renminbi has a significant impact on the trade market. You're right, it will benefit us when it comes. But with or without the shift to renminbi, I think, yes, the -- again, the scale of investment, with us, we can afford to spend $700 million investing in our global trade franchise. There's not many banks in the world that can afford to do that, investment in technology required. So many of these trends around technology at the moment. I think for those bank -- all of the banks that need to transition to being a more digitally-enabled business model. It's the big banks that can afford that investment, I think.

Yes. That's true. I've got one final question, and then we'll just check if there's any more from the audience. We spoke about RWAs before and the saves you have there. And obviously, one of the things that people have been very excited about as being the share buybacks and the dividend. So could you just talk a little bit about sort of market expectations for your capital returns and whether or not you agree with them?

So well, just -- look, when I arrived, we had a pretty unsustainable distribution policy. We were paying out $0.51 year in, year out, which was in some years more than what we were earning. So we have reset that distribution policy to be a 40% to 55% payout ratio through the cycle. I think within that range, it gives us enough flexibility. So last year, for example, we got a significant benefit from ECL write-backs that allowed us -- yes, we rightly decided, I think, to pay out at the bottom end of the range. This year in a more normalized year, you should expect that -- us to be further up in that range in terms of payout. We also said, we've run a pretty conservative position on capital through COVID. We think we're through that now. So we now want to get back within our 14% to 14.5% capital range. We gave you quite a bit of detail at full year results about what all the one-offs were in there this year that you should look at. But we will use buybacks to get us to use surplus capital, if we can't find alternative uses for that capital. But I think you should see our distribution policy as primarily dividends and buybacks using -- being used to regulate our capital position where we have excess capital rather than as a continuous program. So we're sort of comfortable really with what's in consensus numbers at the moment around buybacks. But yes.

Thank you very much. One last opportunity. Any more questions from the floor? Okay, Ewen, thank you very much for your time. It's a very interesting discussion.

Thanks a lot, Nick.

And thanks a lot for joining.