National Australia Bank Limited (NAB) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the National Australia Bank Investor Presentation. [Operator Instructions] Please go ahead.

Thank you for joining us on this audio webcast to discuss the acquisition of Citigroup's Australian Consumer business. I'm Sally Mihell, Head of Investor Relations at NAB. Presenting today will be Ross McEwan, our group CEO; Rachel Slade, our Group Executive Personal Banking; and Gary Lennon, our Group CFO. We will be referring to the slide pack, which we lodged with the ASX this afternoon. After running through the key slides in the presentation pack, we'll open up to Q&A. I'll now hand over to Ross.

Thanks very much, Sally, and thanks for joining us this afternoon for this preaching on our acquisition of Citigroup's Consumer Banking business in Australia. Look, we know it's been a busy time for you, but we believe it would be helpful to talk you through directly about this acquisition. Although it's relatively small, it's important strategically for our personal banking business. It also comes at a time when we're building momentum across our personal bank and as you've seen with recent market share results. You may recall that when we refreshed our strategy last year, we identified that we needed to build a simpler, more digital personal bank that could deliver better outcomes for our customers, colleagues and shareholders. This acquisition is an exciting opportunity that will help accelerate the execution of that strategy. The market for unsecured lending and payments more broadly is always evolving, and it's very competitive. We saw this last week, the proposed merger of 2 largely unregulated payment companies who have ambitions to expand in our markets. In this changing landscape, we are thinking more broadly about our customer proposition and the value we can bring to our customer relationships. And personal banking, access to payments and transaction data will be critical tool to drive innovation and deliver market-leading customer experiences. As part of this acquisition, we will also be investing in a new platform that will support these outcomes. I'm also looking forward to welcoming the Citigroup management team that will be joining us when the transaction completes. This team brings specialized product expertise and strong relationships with blue chip white-label providers. Rachel will talk to the strategic rationale for the acquisition in more detail shortly as well as being aligned to our strategic ambition, the acquisition is financially attractive for shareholders. The total equity consideration of $1.2 billion implies a multiple of 8x earnings for the business acquired and the transaction is expected to be cash EPS and cash ROE accretive from completion. Gary will talk you through the key financial implications shortly. We'll be working very hard to achieve our target completion by March 2022. However, this will be subject to the time it takes for the regular approval, which includes APRA, ACCC and the Federal Treasurer. As the executive of Personal Banking, Rachel will be accountable for the integration of the Citi Group business with our existing personal banking business, along with the investment in the new unsecured lending platform. We've included a slide in the appendix, which summarizes our approach to integrating these businesses. This integration plan has been a key focus to date and is designed to minimize the impacts on customers. By establishing a separate integration office, we will also minimize any distractions for our Board of personal banking leadership team who can focus on getting on with their job. Given the quality and depth of Rachel's leadership team, I'm confident we can successfully execute this transaction and deliver the benefits for our customers, colleagues and ultimately, our shareholders. I'll now hand over to Rachel to talk in more detail about how this acquisition accelerates our personal banking strategy.

Thank you, Ross. I'm also very excited to announce this acquisition today. As he said, our strategy for personal banking is to be simple and digital. And a key focus over the last 12 months has been on delivering a simple and digital home lending and everyday banking experience, while continuing to respond to the changing behavior of our customers. We've been innovating across these areas with the launch last year of StraightUp, which was Australia's first-ever no interest credit card, and we're building great momentum in home lending with our ambition to deliver Australia's simplest home loans. On Slide 3 of the presentation, we've provided an overview of the Citigroup business being acquired. And while the primary attraction is the opportunity in unsecured lending, we're also acquiring approximately $8 billion of home loans and about $9 billion of deposits and importantly, access to over 1 million customers in total. These a high-quality portfolios broadly aligned to the NAB product offerings and the customers in these portfolios will be migrated across to the NAB platform. You'll also see a small wealth management book being acquired. This business includes some specialist wealth products for sophisticated wholesale investors. Between now and completion, we'll be undertaking some more detailed work to identify the opportunities to integrate the wealth business into JBWere in our private bank and to enhance the product and service offering for those acquired customers. We turn to Slide 4. The pace and change and the competitive intensity in the payment space continues to accelerate and scale and expertise are critical to ensuring that we can continue to deliver great products and services and outcomes for customers. Credit cards are an important product for our customers. They're the most common form of personal debt in Australia and they remain a key payment towards the customers. There are more than 16 million credit cards in the hands of Australians. As the landscape continues to evolve access to payment and transaction data will increasingly play a key role in delivering a differentiated service to customers. Credit cards account for more than 275 million payments per month and represent over 40% of all card transactions. As you can see in the chart on Slide 4, the value of credit card payments has steadily increased over time until being disrupted by COVID-19. And although international spending continues to be impacted by travel restrictions. You can see the total value of monthly payments up at about $27 billion, which is almost back to pre-COVID levels. If we go to the next slide. We believe this acquisition will help us accelerate our ambition to deliver a simple, more digital personal bank by supporting our investment in a new platform and through access to the expertise of Citi Group's management team. I'm positive that our investment in a strategic technology platform will deliver ongoing innovation in unsecured lending and payment products and services. This will show up in things like speed to decision, personalization and new propositions. And note that while this platform is being built, the Citigroup products will continue to be hosted on the Citigroup's global systems. We're very excited, too, to be gaining the expertise of the management team in Australia who have an average tenure at Citigroup of 10 years. They bring to us deep specialist expertise in unsecured lending and digital marketing with those gained by being part of one of the largest card issuers globally. This capability includes experience in developing and growing white-label relationships with blue chip clients and delivering on that digitally. They also bring a more sophisticated approach to campaign modeling and analytics. We, of course, are already an experienced partner in the white label space with mortgages through our advantage business, and we are leading NPS advantage will be supplemented now by white label opportunities in the unsecured lending space that Citigroup brings. We see an important opportunity to further expand these white label relationships with both existing and new partners and serve a broader customer base through our common Australian brands. And then on Slide 6 here, we highlight the incremental scale outside unsecured lending in mortgages and deposits that brought to the personal bank. Together, these portfolios bring approximately 400,000 potential new customers to NAB. I'll now hand over to Gary, who's going to run us through the numbers.

Thanks, Rachel. I turn now to Slide 7. We have identified total synergies of approximately $130 million per annum on a pretax basis, representing approximately 30% of the stand-alone cost base of the businesses to be acquired. These are expected to be achieved over 3 years, with the majority to be achieved in the first 2 years. These synergies will be driven by a combination of our unsecured lending businesses on the new technology platform and the associated savings in group infrastructure. There are also savings identified across support functions, vendor contracts and property rationalization. As Rachel outlined, while we've not included these in our base case, there are also potential revenue upside from expanding the white label relationships. We expect to incur acquisitions and integration costs of $375 million in total. The majority of these costs are expected to be incurred in FY '22 and FY '23. This includes approximately $165 million for the new unsecured lending technology platforms. Turning now to Slide 8. As we noted upfront as well as being aligned to our strategy, the acquisition is financially attractive to shareholders. In terms of incremental financial impact for NAB, the Citigroup business being acquired, generated approximately $330 million of pre-provision profits and $145 million in cash NPAT for the year to June '21. The equity consideration required to fund the acquisition premium plus the incremental risk-weighted assets is approximately $1.2 billion. This implies a multiple of 8x pro forma cash NPAT. The acquisition is expected to be marginally cash EPS and cash ROE accretive from completion with the modest impact reflecting the relative size of the acquisition. In considering the forecast contribution the business will make to NAB, the are 2 important points to highlight. Firstly, for any broker originated mortgage book, attrition is a key issue. Clearly, we'll be taking steps to maximize retention, but we've modeled forecast earnings on the basis the mortgage book will decline over time. Secondly, card balances in the short term may continue to be impacted by the elevated repayment rates we've seen during COVID. Over the medium term, we are confident that our investment in systems and access to Citigroup's capability will help drive growth in this portfolio. As you would be aware, our strategic ambition includes targets for cash group OpEx to be $7.7 billion between FY '23 and FY '25. Once we've undertaken more detailed analysis, we intend to update the market in the first half '22 results on the impact of this acquisition on the group OpEx targets. In the meantime, we will continue to manage towards the $7.7 billion target. Sally, I'll now hand back to you for Q&A.

Thanks, Gary. Before I pass to the operator to moderate the Q&A, just the usual reminder to please limit your questions to 2. I'll now hand across to the operator. Thank you.

[Operator Instructions] Your first question comes from Andrew Lyons with Goldman Sachs.

Just 2 questions for me. Just on Slide 11. You note that you'll be entering discussions with the white label partners. Can you just confirm that all the white label partners do have change of control terms in their contracts? Firstly, whether there's any financial protection for NAB to the extent that you were to lose any of those contracts? And finally, just if there -- if you've had any early discussions just with partners about the process of shifting from Citi on to NAB? And then just a second question. You've noted that you'll be spending $165 million on a new unsecured lending platform. Can you just maybe help us to understand why the unsecured book isn't just being put on the existing -- NAB's existing systems? Or does, I guess, this acquisition provide you with an opportunity to sort of upgrade the product suite -- or sorry, the platform for the broader personal bank?

Yes. Look, thanks, Andrew. I'll take the first and Rachel you take up on the new system. Look, there are -- look, I'm not going to go into the details of the white label agreements, but there are protections for both the white label partners on change of ownership and also we have some protection on the negotiated position with Citi. We have had preliminary conversations with the major players on the white label space and told them about our rationale for taking over this business and our ongoing support. And to date, it's been quite positive, but time tells. And whenever you do disrupt [indiscernible] time. People sometimes want to rethink that at this stage, we're pretty positive about the conversations we've been having. We do want to stay very strongly in the white label business, and we've expressed that desire to all parties and also expand the business that we have with them in different ways. -- some different things that the bank -- this bank brings now that Citi may be [indiscernible] to do. Which brings us to the second point of your question, which is around the systems capability, which is a big part of this and I'll pass over to you, Rachel, just talk about our thinking behind why our new system and the need for...

Yes, sure. Thanks, Ross. We obviously pushed them [indiscernible] we see different -- a few different pathways to integration on this transaction. And frankly, we see the rising competitive intensity in the space and the scale that this acquisition brings us. It actually is a really unique opportunity for us to or to build out a new platform. And of course, the technology -- Citi's technology doesn't come with the deal. So we'll stand up new tech and then migrate the Citi products and services on over to that and NAB products and services for that matter and we'll be able to get something very, very modern and nimble, out of the box so it's pretty unique and exciting from NAB's perspective.

Your next question comes from Andrew Takes with JPMorgan.

So I have a couple. Firstly, what gives you comfort from the ACCC perspective on competition, noting that this acquisition would take the big 4 to over 90% share of the APRA credit card system and that the ACCC has already said that they would look closely at any such deal. And second question, just around white label, obviously, being a big driver of the customer base. And not in recent times has been tending towards more direct customer acquisitions. So just interested in the thoughts around that strategy not a strategic fit, but just a different part to what -- the one you've been taking recently.

Yes. Look, just on the -- there has been a significant reduction in competition. We don't believe we reset that that's the case, but we have to leave that with the ACCC to do the investigation. There are quite a few players that don't sit in APRA numbers. So I think if you look across the industry, our view is there are a lot of competitors today, and there will be after this as well. So from that perspective, even this acquisition doesn't take us to a #1 position that takes us to a 2 position that we took all of the white label included and there are certainly less a number probably in the third position if it was excluding out the white label that books after. We're staying in the white label business so that we don't reduce any competition from those players that we look after here. And we see that as something we want to stay in that business. So you raised the second point about white label. We're actually pretty strong on the white label business for mortgages and have been -- we see that as a strategic area we're staying in, and we see this as an opportunity to get into the white labeling and the unsecured business that we're not today. So we've had -- we do have strength in the secured part of the white label shore business called Advantage, and that's going very, very well. It's probably one of the highest net promoter scores and the highest score in the mortgage market today. So when we do well, we know we can do it very, very well. So we do see that as an opportunity. And it is a scale business. And with the new system underpinning it with scale on the day job, we think we can do a very good job in this space, but it does include white labeling. There's some very good partners in the white-label arrangement, and we look forward to doing business with them and enhancing that business as well because we do bring some other capabilities that they know we'll be able to use , be that white label or through other parts of our business and particularly our corporate and business bank.

Your next question comes from Victor German with Macquarie.

I was hoping to actually follow up on the earlier question with respect to IT. In this year, you've particularly made 2 acquisitions, 86 400 where you tried to accelerate growth in new bank and support IT platform there. And it sounds like with this transaction, you're also using the opportunity to invest $165 million to build and improve your systems. And while you're doing that based on the cost that you're looking to incur, it looks like you'll be paying a reasonable amount of money for using Citi platform. I guess my question is sort of what message should we take from all this with respect to the broader systems for the rest of the bank and the potential need to actually address some additional underinvestment in other parts of the bank? And is that $7.7 billion OpEx target still reasonable in your mind, Ross, now that you've been in the bank for a while, and you've observed all the systems that are in place?

Yes. Thanks, Victor. Can I start with just a wee bit of history over the last 4 years, where the bank has, first off, look to stabilize its platforms because we were having a completely unacceptable level of outages because our technology was not resilient enough all day and every day in the marketplace. So first, 3 years of that 4 years was making sure that the platforms were resilient and [stood up], and we set ourselves a fairly aggressive target of reducing outages, which we have been meeting and we've set ourselves in 2021, a reduction of [ 30% ]of outages, bringing it down to a much more acceptable level. So that was the first 3 years of the technology plan. Now that we have created good stability in our core systems and replaced many of the [ linkages ], we are now looking at what makes a difference for customers and for our colleagues. And that's the part we are now on. The 86 400 was one that we chose not to distract the [indiscernible] star of that bank by bringing it across onto our core systems. We thought it would be better if we found a system or let them build their own system that was more dynamic. That was much better suited for a smaller bank, and that's why we chose 86,00 and that integration between those 2 players onto the 86 400 platform will happen in the next 12 to 15 months. Planning is pretty well done and work underway. And this one here is really an opportunity to look at the unsecured systems which we operate, which are quite old. And they are, in the next few years, ready for upgrade anyway. And we're just taking the opportunity now that we've secured the subject to approve, of course, to secure the Citigroup Consumer Business here, bringing them both across onto a new platform over time. But what we have got is now stable platforms. And now we're looking to upgrade our systems and integrate with what customers see and feel and also what our own staff does all day and every day. So it's a -- and I think the amount we're spending is the right amount for this bank, and we can do a lot with $1.2 billion to $1.3 billion a year. That's a lot of money. And we have certainly shown in the last year as we've been much more disciplined with our project management that, that is enough money to make a real difference in the bank.

So you don't feel that there is other areas where you would like to spend additional money given that you have fairly significant, as you highlight surface capital position to accelerate some of that momentum in technology in other parts of the business, because you don't feel like you need to take additional costs?

At this stage, no. What I said, we're spending $1.2 billion to $1.3 billion on the business on an annual basis. It gets to a point where you can keep throwing money at it and it doesn't make it one difference. The last 100 to 200 usually, it's find the benefit for. So I think a much more disciplined approach that we're taking now is giving us a much better result, and we're spending enough to make a difference in this marketplace. And as you've seen from what we've been doing from a market share perspective from personal bank and also in our business bank, the strategy is working.

Victor, it's Gary. I would like to just add to what Ross said. And as we've said and Ross has said on a number of occasions, it's really taking a balanced approach to this. So we're looking to grow, and that's our first use of capital to grow where we see there's opportunities. And there are, certainly in Rachel's business, we are seeing plenty of opportunities at the moment. And I think balancing that focus on growth with a focus on productivity, and that goes to all the system decisions as well, where you're balancing efficiency and how do we get cost out and improve our productivity of our platform while seeking opportunities for growth where you have to be more digitized in terms of what you're delivering to customers. So all the way through, we haven't had an all-the-way growth of it or all the way cost out to it. It's been a balance in some respects, sort of more new ones we have the ability to respond to opportunities when we see them.

Your next question comes from Brian Johnson with Jefferies.

Congratulations on what extensively looks like a pretty good acquisition, but a few questions. The first one is, when we have a look on Slide 7, you're basically saying that there's acquisition costs of $375 million, of which $165 million is to build the new system. But then below it, you say that you're amortizing it over 5 years. Ross, can we get a feeling what the total spend on the new system for the unsecured credit will be? Surely, you're not going to -- you're saying -- you see what I mean, you're saying $165 million over 2 years, but you're saying you amortize it over 5. And I wouldn't have thought you amortized it at the same run rate in the early years as you're building it. Can we just get a feeling for what the total budget is for the spend on this?

Got the numbers here on the actual. Yes, Brian, it's the $165 million is the number. How that will turn out in the P&L? Will the original upfront OpEx will go through integration, and then we'll amortize the balance of proportion that we capitalize over the 5 years. Well, that's just an estimate 5 years [indiscernible]. But in terms of cash and mortgage, we should be focused on to $165 million.

So $165 million. Okay, I think that's a little bit clumsy explained in the slide. The second one, Gary, is when we have a look at NAB. You guys have got a very low capitalization threshold on your software. You've had heaps of opportunities to lift it. But when you have a look at like the 86 400 decision, it's really telling us that the state of the software wasn't that flash. When we have a look at the unsecured credit, you're telling us the same thing. Is there an opportunity here to really just take a very big hit on the capitalized software? Take -- it costs you nothing. And as I say, your capitalization threshold had -- you increased it from $2 million to $5 million in FY '20, but that's still well below your peers, which makes your balance look high. Is there an opportunity to reset down that capital -- to increase the capitalization threshold?

Well, we've got no plans on that at the moment. And something we will regularly have a look at, but we're pretty comfortable with where that currently sits. And over time, you've seen that threshold going up. And actually, the amount where we OpEx first capitalized, there's more OpEx is more the trend and less capitalization and also the useful life, particularly when you're investing in digital assets and these front-end customer-facing assets tend to be shorter. Whereas, as Ross talked about the previous phase, we've been going through in the long-term foundational infrastructure tends to have a longer and useful life.

Recently couple [indiscernible] balance, Brian, but I get your point, when I moved it from the $2 million to $5 million in my first few months here, I think Phil has moved from $0.5 million to $2 million only for a short period of time before me. So -- but [indiscernible] comes to little bit [indiscernible]. We are running a pretty balanced and disciplined approach to where we're spending the money. And as Gary said, a lot of it is around technology, which is getting a shorter life span to it anyway.

Yes. It's not so much about what you're spending on it, Ross, it's really about just bringing it to what the balance should be. I mean the point I'm trying to make is that when we have a look at it, the last 2 transactions you've done, have told us that the IT probably isn't as good as we thought. And yet you've got this very low capitalization threshold. And at some point, you run out of the opportunity to basically address it. I'd really commend you, I think it would be a very sensible thing to do. Just a final thing, if I may. On Slide 5, you mentioned the horrible words, by now pay later. Now we've read a little bit on what Citi are doing here, but it looks maybe like the CBA one, which is basically to the merchant, it will look like a MasterCard product and to the retail customer look like buy now, pay later. Could you just give us your feeling about how you see this by now pay later product that Citibank working on actually working, because I believe it's due to launch very shortly. So can I get a feeling on what the interchange fee is to the retailer and what it looks like to the customer?

Brian, I won't give you that detail here because they haven't launched the product yet. I wouldn't want to preempt them on that. But other than say they are working on a product launch just as we are. We see them as different -- and into different groupings. So we're pretty comfortable with the continuing along with a number of other developments we're working on. But to what I'm seeing, as we saw in the credit card industry, what, 20-odd years ago, we start with a reasonably healthy margin on interchange and quietly it gets lower and lower. And I think you're starting to see that happen with the buy now pay later. It's exactly the same thing happening. And we think we generally, we suppose, with this deal with Citi and its white label partners and through ourselves with our own customers, I think we've got put a reasonably good proposition into the marketplace for both merchant and the consumer feeling quite different ways to traditional buy now pay later...

So NAB is working on one and Citibank is working on one?

Yes, we have.Well, we've got 2 quite distinct customer groupings. One is a white label customer grouping. And the other one is our own customer groupings in [indiscernible], which we've got, as you know, tens of thousands of them.

Your next question comes from Richard Wiles with Morgan Stanley.

I've got a couple of questions. Firstly, $145 million of earnings on about $1 billion of net assets or the acquisition price of $1.2 billion looks pretty low for a business which is 2/3 mortgages and 1/3 unsecured lending. So could you give us any more detail on why that return is low? Is it because the Citigroup cost base is too high? Or is it because the margins in the mortgage book are low? Or does it have something to do with the mix of the unsecured lending business?

Yes. So Richard, [indiscernible]. Look, I think there is something to the -- in terms of the $145 million, that is the Citibank cost base, and we don't think that, that would -- now there's a lot of costs that we already have. So on a marginal basis of what costs come across to us at a little more attractive, and that's why we've called out the $130 million in synergy benefits that we'll get over those 2 to 3 years. So I think that's an important factor to keep into consideration as well.

And [indiscernible] quite a bit of that cost base is not sitting on shore. So it's a sitting offshore because it's an outsourced arrangement to their -- in their outsourcing as offshore arrangement. So we believe we can bring some of that all [ tethered ] that back on to shore into a structure where we already have ourselves. And there won't be much change to the onshore activity because it's more customer related.

Okay. And just my second question. I think the way to interpret your commentary on the financial impact is that cash EPS on completion implies the impact pre-synergies. But then you say $130 million of synergies will be largely offset by the mortgage revenue decline. So does that mean that even on a post-synergies basis, the transaction is only marginally EPS and ROE accretive?

Again, there's a few things to point out there. One, the really attractive part of the transaction is what Ross and Rachel talked about the strategic acceleration of the strategy, the capability that we get the 1 million plus in customers that come across from the associated data. So that is the core. Certainly, the financial aspects, we think are fair and attractive. The exact question on where we'll end up net-net will really depends on, and this is part of driving some of the integration costs to get the integration right. The decline on the revenue book will be less the amount of customers that we can retain, and we're very focused on that to try to retain as many customers as possible. And so we have to get in a position that any deterioration on the revenue side will be more than offset by the synergies we get on the cost side. So net-net, our plan is to be in [indiscernible], not net square. So then you're starting to get a little bit more accretive over time. But in the context, it's not -- in the context holdback was relatively small in terms of the credit just by nature of the size of the transaction.

Your next question comes from Nathan Zaia with MorningStar.

I think you've already covered off what I was curious about is more unsecured lending is currently being disrupted. I was just concerned that how you would think about whether NAB would be falling behind if its focus is on building a new platform, but you're fairly comfortable you can bring new products to market like simultaneously by sounds of things.

Yes. Look, we believe the capabilities both of the setting team and analysis, we can bring product to market maybe even more relevant by a more flexible system, which Rachel talked about. We don't believe that the credit card business is in massive decline. You saw a drop because of COVID. People are sitting at home, not buying a lot of goods over the online. They're not going out and shopping much. They're not having a beer and a meal on a Thursday night, Friday night or Saturday night. And they're getting $750 into their accounts and they're paying off their credit card and any debt that they have. So you did see credit usage come down. But as we're showing here, it's starting to come back up again, we believe that it will stay as a very strong part of the payment structure. If you have a look 30 years of history of payments, they change constantly. And I think you're just seeing another sort of iterative change in the payment structures going on at the moment with buy now pay later. They still account for a very small percentage of all payments going through the marketplace. So the credit cards are about 40-odd-percent. We still think this is attractive market to be in. But you do need some scale

And the other thing we're seeing is definitely still appetite for new propositions and innovation markets. If I refer -- I talked a little bit earlier about our StraightUp, no interest credit card that we launched last year. It still accounts for 1 in 3 applications we see for that product. And 60% of those customers are under 35, 70% of them are new to credit, which I think is a really interesting [indiscernible] so this -- the proposition is still appealing.

[Operator Instructions] Your next question is a follow-up from Brian Johnson with Jefferies.

Just the integration costs, that will be taken through the notable items as opposed through the cash earnings, correct?

The integration cost, normally with the exit and the take on the [indiscernible] from noncash.

Okay. So -- okay. And then the second one, if I may, Gary. You're building an unsecured lending platform, but you've got a big book of housing, and you're telling us that you'll get some accreditation. What's the pathway to basically transition the housing book onto your systems? And how confident are you that you will be able to get advanced accreditation for like within that time frame?

You talk about the advanced [indiscernible], I'll take that. The integration retraces pretty straightforward [indiscernible] and lending book, so just be straightforward migration over time.

So it matched out beautifully with your existing system, does it, Rachel?

Yes, pretty much.

Okay. And Brian, on the -- Rachel also touched on earlier to what we believe is high-quality mortgage book and what you need is to get the data across. So that's all been part of the transaction discussions with Citi to make sure we've got access to that data and enough of the history. And once you get the history on that data, you bring it across, then we have to work it through in our models and then it's the engagement with APRA on do we have enough data to validate our advanced models and then we go through the accreditation phase. Now [indiscernible] they said 3 years, we hope to do a lot better than that, but that's sort of more of a conservative end.

And Gary, you guys have already spoken to APRA about that approach that you get to use the historic data?

Yes. It's quite standard, that approach. And we've spoken to APRA about the transaction already and the fact that we'll be going through that much.

[Operator Instructions]

It sounds like we might have come to the end of questioning. But just [indiscernible] as I go back [indiscernible] whilst it's a small financial transaction for us strategically [indiscernible]. Therefore, good. Thank you very much for the questions. I thought it was worthwhile just spending some time on it. And we'll obviously get some features to get to or cross to get approval, both ACCC, APRA and the Federal Treasurer, and we'll start the process now. Thank you very much for your questions. So thanks for organizing at very short notice. I know you've all got a reasonably busy week, and we'll be calling -- Gary will [indiscernible] to you later in the week.

I thought that would be Monday.

No. Monday, no. [indiscernible] there will be a Q3 out later in the week. I do want to start doing lots and lots of presentation [indiscernible]. Thank you very much for your time. Thanks for organizing, Sally.

Thanks. And if anyone has any further questions, just reach out to Investor Relations.

Yes. Thank you.

That does conclude our conference for today. Thank you for participating. You may now disconnect.