Banco De Sabadell Sa Ord

Good morning and welcome to Banco Cerdel's fourth quarter 2023 results presentation audio webcast. Thank you for joining. Our CEO, Cesar González Bueno, and our CFO, Leopoldo Alvear, will present the main highlights and details of the commercial and financial performance of the bank in the quarter, as well as for the whole of 2023. The presentation will be followed by Q&A session. With no further delay, let me now hand it over to our CEO, Cesar González Bueno.

Thank you, Gerardo. Good morning, everyone, and thank you for joining us for our annual result presentation. I would like to start by going through the key messages of 2023 on slide four. First of all, Groups NII grew by more than 24% in the year. The yearly growth ex-DSB was even higher at 34%. Second, asset quality performance has been better than we initially anticipated. Total NPAs decreased by 3% in the year, while the coverage ratio increased by 3 percentage points and reached 56%. Group total costs of risk stand at 55 basis points, which represents a yearly improvement of 5 basis points. Third, group net profits reached €1,332,000,000, an all-time high. TSB delivered a net profit of €175,000,000. stand-alone. Fourth, the Board has decided to distribute a 50% payout which represents a 55% increase in shareholder remuneration. The remuneration combines two elements, a cash dividend for a total of 6 euro cents per share and a new share buyback program for a total amount of 340 million. Finally, our return on tangible equity stands at 11.5 while our Q1 ratio reached 13.21, increasing by 67 basis points in the year. In slide 5, we see the evolution of business volumes. The commercial gap of the group improved by 2 billion euros in the year, since total performing loans decreased by 4.1% and unbalanced sheet funds decreased by less, by 2%. The 4.1 year-on-year decrease of performing loans was driven by a 4.8 decrease in Spain and a 4% decrease in the UK. Total customer funds on the right-hand side of the slide remain flattish year-on-year. On-balance sheet funds declined by 2%, while off-balance sheet funds grew by more than 5%. When looking at the quarterly evolution, the trend is similar. Finally, our commercial gap improved by 2 billion euros in the year, driving our loan-to-deposit ratio to 94%. On slide 6, we see the lending origination in Spain. Mortgage origination volumes in 2023 fell by 34% compared with 2022 following the current market slowdown. On the other hand, consumer loan origination increased by 25% on a year-on-year basis. We are growing and we are doing it in a healthy way from a risk perspective thanks to more pre-approved loans and more segmented pricing. Regarding business banking, loan origination and new credit facilities increased by 7% over the year. As I explained in previous quarters, a significant amount of eco-granted credit facilities expired in 2023 and they were renewed as regular facilities. This has no relevant impact on the stock although it does have a relevant impact on repricing. Finally, working capital posted a slight increase of 1%. On slide 7, payment services performed well in 2023. Card turnover increased by 7% year-on-year, while point-of-sale turnover increased by 11%. In the lower half of the slide, we can see that customer funds in savings and investment products in Spain reached the total of 56.6 billion euros. This represents an increase of 9.1 billion euros in the year. Term deposits increased by 4 billion, other unbalanced sheet products increased by 3 billion, and unbalanced sheet products increased by 2.1 billion euros. Moving to slide 8, performing loan book by segments and products excluding TSB. The stock of performing loans in Spain declined by 1.3% in the quarter and by 4.8% in the year. As I explained before, demand remained subdued during the year in mid- and long-term lending, mainly due to a higher interest rate environment. In contrast, the stock of consumer loans grew by 14.5% in 2023. Strong growth in a healthy way, as I mentioned earlier. Moving to the international business performance, lending grew by 1.3% in the year. On slide 9, the mortgage book at TSB decreased by 5.9% in the year in local currency. However, mortgage origination remained flat in the quarter and new mortgage applications increased slightly. Customer deposits at the right-hand side of the slide decreased by 4.3% in the year. The gradual trend of customer funds switching from current accounts to savings accounts continued during the quarter. In September, we increased the remuneration of our savings products, taking their costs to 2.4%. After that increase, we saw no further material increases during the fourth quarter. Our loan-to-depot ratio remained broadly stable in the year, ending at 104%. On slide 10, TSB delivered a remarkable net profit in the year, and its contribution to the group reached 195 million euros. Going through the P&L, NII increased by 4.1% in the year, but decreased by 7.1% in the quarter. Mortgage pricing and margins are still under pressure in the UK market, and the positive contribution of the structural hedge at TSB is not fully upsetting this pressure yet. Fees decreased by 5.4% in the year. Total recurrent costs increased by 2.8, a figure well below the current British inflation rate. And finally, provisions declined by 26% year-on-year. All in all, net profit reached £175 million, increasing by 70% versus 2022. These very positive results were delivered even though £53 million were recorded in the year as a one-off restructuring costs and write-offs. I will cover this in a minute. Return on tangible equity reached 8.9% or 10.9% excluding one-offs. Quarter one stands at 16.7%. If TSB had a more normalized quarter one ratio, for instance, 14%, return on tangible equity would stand at 12.7% excluding one-offs. Finally, TSB will distribute a dividend of £120 million to Group, which implies a payout ratio of around 70%. On slide 11, looking backwards, the turnaround of TSB is remarkable. Over the last three years, TSB has focused on its core business, mortgages. The mortgage stock increased by 10% since 2020, and it currently represents over 94% of its loan book. Its average cost of risk is below two basis points. Secondly, financial results have been completely turned around, going from recording a loss of £160 million in 2020 to recording £175 million of net profit this year. Thirdly, TSB is a well-capitalized bank, and its solvency is above the sector average despite its low risk profile. The courtier one stands at 16.7, more than 450 basis points above capital requirements, even after distributing a dividend payout of almost 70% to Sabadell. And finally, efficiency. TSB has reduced its cost base by halfing its number of branches since 2020, and by reducing its workforce by almost 20%. Cost to income has improved by 27 percentage points in three years, but it is still above peers' average. We believe there is room to become more efficient by reducing the cost base further and converging efficiency with UK peers. On slide 12, TSB has specific levers to improve its profitability. Let me go into details about the outlook of the different lines of the P&L. 2024 will be a transitional year in terms of revenues as the higher cost of deposits and tight front book mortgage margins will continue to offset the positive contribution from the structural hedge. However, We are much more optimistic about 2025 and 2026 and onwards as the cost of deposit stabilizes and mortgage margins begin to recover from extremely depressed level. But furthermore, and this is very relevant, we will start to see the full benefit of the structural hedge in 2025 and onwards. In the interest of prudence, we are not assuming any material loan growth in the coming years. Regarding costs, we have recorded 53 million pounds of restructuring charges, 29 million as restructuring costs, and 24 million in write-offs of some unused assets. As a result, TSB will benefit from 53 million pounds of savings in recurrent costs 77% of those savings are due to materialize in 2024 and the rest will come through in 2025. This will represent gross cost savings of more than 6% compared to TSB's current cost base and a payback period of 1.1 years. Therefore, taking into account the efficiency measures, we should see total costs continue to decline specifically by around 3% in 2024 and around 1% in 2025, including inflation impacts. In terms of provisions, cost of risk will remain stable considering 2023 provisions as the run rate going forward. Considering these dynamics in 2024, we expect TSP's return on tangible equity to reach a similar level than that of 2023 so it can be considered a transitional year. In 2025, return on tangible equity will improve clearly. Going back to group performance, in slide 13, NII grew by 24.3%, while fees reduced by 7%, recurrent costs grew by 3.5%, Core results reached €3.1 billion, which means a solid 29.9% increase year-on-year. Provisions decreased in the year underpinned by improved asset quality. We recorded a record net profit of €1.332 billion. And return on tangible equity reached 11.5, while our capital ratio stands at 13.21 after improving by 67 basis points in the year. In slide 14, we compare our performance against the financial targets we had set for this year. As you can see, we have exceeded most of the targets we set in 21. Due to the good evolution of NII, fees and costs, pre-provision profit over risk-weighted assets reached 363 basis points, well above the target we had set. Total cost of risk stood at 55 basis points at the end of 2023, while the NPA ratio stood at 4.1%, in both cases better than the established target. Courtier Wall and MDA Buffer have largely overcome the targets while increasing our payout ratio. And finally, return on tangible equity has jumped from 0% in 2020 to 11.5% in 2023, which reflects the bank's consistent delivery during the last three years. And last but not least, sustainability has become one of the key pillars of our strategy. Our inclusion in the Dow Jones Sustainability Europe Index is a reflection of our positive evolution. In slide 15, we are sharing the results of the execution of the strategy. In the interest of time, I won't go through all the details of the slide, but you can see a summary of the strategic priorities for each business on the left-hand side of the slide, followed by some examples of the results delivered by the strategy. On the right-hand side of the slide, you can clearly see the improvement on return on tangible equity and the cost-to-income ratio across all business units. The rapid and decisive execution of this strategy together with a more benign environment have been key in turning Group's financial results around. On slide 16, we are now ready to leverage on all the efforts of the last three years to hopefully boost growth it will depend also on the market evolution we keep having very clear priorities for each business in retail banking radical growth in digital customer acquisition furthermore we want to become the main bank for more customers we will leverage on the digital capabilities we have in place and we will intensify the use of data in business banking leap forward in customer engagement. We have specific levers to reinforce our sound franchise, such as the partnership with Nexi or the new relationship model for SMEs we have recently implemented. The second priority in business banking is a further reduction of cost of risk. We are implementing improved risk management processes and tools. These improvements are effective to reduce the cost of risk when we backtest their results. In corporate and investment banking, Rayrock management on a customer-by-customer basis will continue to be key to drive further profitable growth. In TSB, we are going to significantly improve its cost-to-income ratio, closing the gap with peers. I have already talked about this. Finally, in Mexico, growth in retail deposits over the coming years will allow this franchise to reduce the cost of funding in pesos. For that, a new digital proposition for individuals will be launched shortly. In summary, we have now the tools in place to boost growth if the market shows momentum. Moving to shareholder remuneration on slide 17. We will distribute 50% of our 2023 net profit. This translates into 666 million euros to remunerate our shareholders, which is an increase of 55% in the year and implies a dividend yield above 10%. This capital distribution will combine a cash dividend and a new share buyback program. On the other hand, 326 million euros will be allocated to cash dividend, which represents a total cash dividend of 6 cents per share and an increase of 50% compared to last year. On the other hand, 340 million will be used to carry out a new share buyback program, which is equivalent to 6 cents per share or 6% of the current market cap. This represents an increase of 67% versus the buyback program executed last year out of 22 earnings. For non-recurrent remuneration, the Board has decided that capital excess above the fully loaded Q1 capital ratio of 13% post Basel IV will be considered as distributable. The Board will determine the timing and structure of this distribution. With this, I will hand over to Leo, which will cover the part of the presentation concerning the bank's financials in more detail.

Thank you, Cesar, and good morning, everyone. Moving on to the financial results, we recorded a net profit of €304 million at the group level in Q4, taking our full-year earnings to a total of €1,332 million. Our quarterly results were mainly impacted by two elements. Firstly, the tax on deposits of credit institutions, IDEC, and the annual payment to the deposit guarantee scheme amounting to 34 and 132 million euros respectively. And secondly, the non-recurring costs related to the efficiency initiative being undertaken in TSB, as Cesar explained before, which amounted to 33 million euros in gross terms. The 1,332 million euros profits for the year allowed us to post a return on tangible equity of 11.5% within our guidance for the year. We'll now go through different items of the P&L in more detail. Starting with NII in slide 20, NII dipped by 2.5% on a quarterly basis, driven basically by TSB's NII, as I explained before, and by the impact of the minimum required reserves. We can see different moving parts of the NII bridge on the top right hand side. So looking at the XTSB perimeter, we can see that overall there was a positive contribution to the group NII in the amount of 3 million euros. XTSB's customer NII had a negative contribution of 10 million euros, as it was impacted by persistently low loan demand in the sector, with volumes generating a reduction of 16 million euros, and the foreign currencies producing a reduction of 4 million euros. On the other hand, the customer margin still grew and added 10 million euros due to the repricing of loans, while the cost of deposits increased at a slower pace to the loans' evolution, and more importantly, also to previous quarters. Moving along to the right, the ALCO portfolio made a positive contribution of 8 million euros, This, together with higher wholesale funding costs, related mainly to higher ERIBER, produced a combined impact that was almost neutral. From the liquidity contribution side, the interest received on the excess liquidity deposited at the EZB made a positive contribution of 16 million euros, since the average balances for the quarter were higher than the previous one. TSB's NII, as I explained earlier, was behind 80% of the NII contraction for the group. This evolution was driven mainly by 5 million euros of one-off items and by a step-up in saving products costs. Nevertheless, it is important to mention that the savings remuneration have remained mostly stable since the end of September. This is, the cost of deposits, front book, has remained broadly stable throughout the quarter. Therefore, we do not expect this downward delta in TSB's NII to continue in the coming quarters. As a matter of fact, what we expect is that fourth quarter NII will represent the bottom for TSB. Finally, in Q4-23, we saw the loss of the NII linked to the non-remuneration of the MRR, which deducted €9 million of NII from the group. Customer spread and NIM, on the other hand, grew by 46 basis points and 37 basis points respectively, remaining quite stable in the year. Moving on the following slide, we show you our guidance for the year. We expect NII to grow in the low single digits in 2024. And to explain this in further detail, we have split NII in three different repricing blocks. The first one covers the customer margin excluding TSB. The second, the contribution of capital markets, in other words, alcohol, wholesale funding, and excess liquidity. While the third one relates to TSB's evolution. As per the ex-TSB customer margin, the repricing of loans linked to variable rates, mainly the 12-month arrival, will still see a positive pickup in the first months of the year. On top of that, we have 8 billion euros of fixed rate loans, mainly to corporates, which have not yet been repriced in this cycle and will do so in 2024, producing yields around 300 basis points higher. We expect deposit costs to increase in Spain during 2024, but at a much slower pace than in 2023, given the decrease in forward interest rates. With regards to volumes, we see 2024 as a transition year in which demand will improve but might not fully recover. All in all, we expect the average customer spread in 2024 to be similar to the one in Q4-23. Therefore, all these moving parts should drive a positive contribution of this packet. Within the second block, as per the outcome, we have been gradually reinvesting our maturities at better rates, whilst at the same time reducing the hedge portion, thus reducing our exposure to variable rates. On the other hand, we have also been shifting part of our wholesale funding towards variable rates, increasing the cost of funding to variable rates. Regarding the excess of liquidity, it's worth reminding that the deposit facility rate in 2023 was 3.3% on average, which is very similar to the average of the current forward curve for the year 2024. Moreover, as I explained before, we currently have more excess liquidity than we did on average in 2023. Therefore, these two tailwinds, the ALCO and the liquidity remuneration, should be able to counteract the effects of both the non-remuneration of MRR and the higher wholesale funding costs, producing a positive impact on the NII also from this bucket. And finally, as per TSB, in 4Q23, the 4Q23 figure should mark the bottom, as I previously mentioned. NIA will gradually improve as the cost of deposit stabilizes, because it's been pretty stable in the fourth quarter already, and the structural hedge contribution increases. Regarding the structural hedge, let me remind you that this is a 21.5 billion portfolio of five-year swaps on which we receive fixed rate, basically a five-year swap, distributed on a straight line basis. The fixed rate of swaps that are due to mature in 2024 is 0.4%, in contrast to the front book yield of the five-year swap rate, which is around 3.7%. In other words, more than 300 basic points pick up. This will be a key factor supporting TSB's NII, but not only in 24, but more importantly, in 2025 and onwards. Putting all these drivers together, we estimate a low single-digit decline for TSB's NII in 2024. Therefore, all in all, we believe the group NII should increase by the low single digits in 2024. Or in other words, we see first half NII in 2024 to be similar to second half NII in 2023, but second half NII in 2024 to be above first half NII in 2023. Turning on to fees, on slide 22, the fees declined in the year by 7% while we recorded a minus 3.2% in the quarter. This downward trend has been mainly driven by several factors. On the one hand, overall asset management fees have been materially impacted by two factors. The first and biggest one has been the insurance fees. As guided, we changed the commercialization of house insurance premium from ad front to annual premiums. This has represented an impact of circa 30 million euros in the year or 2.2 percentage points in total fees. This is a one-off and therefore we will not see this negative delta in 2024. For the reminder of asset management fees, we have been subdued through the year and specifically in the quarter as the success fees were almost zero. Services have been weighted down by current account maintenance fees waived during the year while credit risk and contingent risk fees have decreased in the quarter as a result of subdued activity, but are positive in the year. Going forward, we expect fees to fall by the mid single digits in 2024. But it's very important to mention that this is mainly because of the reclassification impact of the payment business disposal, which will already be accretive in 2024 P&L. Nevertheless, in the fee line, it will imply a reclassification of 30 million fees, so fees will go down by 30 million, which will be offset by lower costs, this is by cost savings, and a reduction of impairments, plus a slightly positive contribution from the equity accounted income. In other words, after we do the deal, we will have at least the same, if not a higher profit before tax, but we will have an impact on the fee line of minus 32, as mentioned. For the reminder of the fee lines in 24, we expect to see a positive underlying trend in all fees, except for current account fees due to the changes in legislation that prevents banks to charge certain fees to claim customers who are in arrears, and because strategically it makes sense to reduce rates or waive certain fees within a positive interest rate environment. Moving on to costs, on the next slide, the recurrent cost base remained broadly stable in the quarter, with a slight improvement of minus 0.2%. In year-on-year terms, recurring costs rose by 3.5%, well in line with our guidance. And non-recurring costs, as I explained earlier, we recorded 33 million euros in the quarter related to new efficiency initiatives in the UK, aiming to further optimize TSB's cost-to-income ratio. As you can see on the right-hand side, the cost-to-income ratio was down by more than 4 percentage points in the year, even when considering the whole cost base in the ratio. This is the recurring costs plus TSB restructuring costs. At the group level, the cost-to-income ratio for 2023 stands at 51.4%, while ex-TSB it is 45.4%. For 2024, we expect our cost base to increase by 2.5%, despite inflationary environment, thanks to, among other things, the launched cost-reducing initiatives in TSB. On slide 24, we take a very brief look at core results, calculated as NII plus fees minus recurrent costs. As you can see, in 2023, the group's core results increased by 29.9%. On the right-hand side, we can see that the driver that led these wider doors in the year was NII, more than upsetting the rest of the lines. Moving on to the lower part of the P&L on slide 25, we cover credit cost of risk and other provisions. In 2023, the group's credit cost of risk stood at 43 basis points, while total cost of risk amounted to 55 basis points. These numbers have performed better than our year-end guidance, which was initially 65 basis points, improved to below 60 basis points in second quarter 23. This evolution has been bolstered by better than expected evolution of MPAs, driven by the fact that delinquency continues to be at low levels, as we will see later. Taking a look at the breakdown of total provisions in the quarter, on the top right-hand side, we booked 174 million euros of loan loss provisions in the quarter. This is the 43 basis points that we mentioned before. Nine million euros of foreclosed asset provisions. 22 million euros of MPA management costs, which could be considered a run rate. And finally, other provisions, which are normally mainly associated with litigations and other assets in permits, stood at 23 million euros. Moving on to the following slide and continuing with provisions, expectations for the year, let me highlight that we believe that cost of risk will keep on improving in 2024. This is, it should be lower than the 55 basis points recorded in 2023. Credit cost of risk weights the most, with 43 out of the total 55. Going forward, we foresee a gradual improvement, driven by a Benin macro scenario, a diversified and sound balance sheet, for example, 60% of fixed mortgages in Spain, and an already settled evolution on our cost of risk management actions. The rest of provisions, namely foreclosed assets, MPA management costs, and other provisions, mainly litigations, amounted for 12 basis points in 23, and we expect them to remain broadly stable throughout 2024. Moving on, on the next section, I will walk you through our asset quality, liquidity, and solvency. Starting with the asset quality, in the next three slides, we show the evolution of problematic assets. Slide 28, you can see that the NPL ratio increased by 10 basis points during the year to 3.52%, but entirely due to the reduction of the loan book. Since in terms of NPLs, they decreased by 37 million in the year, fostered by a reduction of 114 million euros in the quarter. On the other hand, even though NPL volumes have decreased, it is worth noting that total coverage ratio improved during the last quarters, rising by 3 percentage points in the year to 58%, while our coverage on stage 3 loans is 42.3% at group level, also improving by 3 percentage points in the year, and higher, 45.5%, excluding TSB. Looking at the exposures by stages and coverage on the right-hand side, our stage two exposure dropped by 2 billion euros. This evolution is mostly explained by repayments within the portfolio, as well as migration to stage one of some debtors from the hospitality sector, which is a sector that is clearly recovered since the COVID crisis. In terms of our close assets, the stock declined by 16% in the year. Today, the portfolio represents less than 1 billion euros. 21% of the stock we held at the beginning of 23 has been sold during the last 12 months, with an average premium of 5%, which shows that these assets are correctly marked to market on our balance sheet. Let me also highlight the coverage ratio for this portion increased by two percentage points in the year to 40%, and that 95% of Volklos assets are finished buildings. If we consider both MPLs and foreclosed assets, total MPAs have decreased in the year by 3%, while total coverage increased by more than 3 percentage points in the year to 56%. Gross MPA ratio remains stable at 4.1, while the net MPA ratio stood at 1.8%, with an improvement of 10 basis points in the year because of the increase of coverage. As we can see on slide 30, in summary, the evolution of the key metrics in relation to asset quality and credit risk have been robust. Firstly, the level of stage two loans, usually a consistent leading indicators to determine how the linkage levels might evolve, went down by 17% year on year, which gives a sense of the improved credit risk performance of our book. Moreover, our stage two coverage ratio also increased by 54 basis points. meaning that we are reducing our Stage 2 loans while at the same time increasing their coverage. Secondly, total MPAs decreased by 3% over the year, with again an improvement in the MPA coverage ratio of 3 percentage points. And finally, cost of risk improved by 5 basis points when compared to 2022. This good evolution of asset quality and cost of risk has been supported by the conservative structure and well-devisified composition of the group's loan book. And what's more, by a strategic evolution of our risk management culture, which has been and is a core part of our strategic focus. To give some examples of this trend, mortgage in Spain over the last seven years were mostly originated at fixed rates with low loan-to-values. We also have a very long-lasting relationship with our business banking customers of over 10 years on average. or more than 80% of the new consumer loans have been originated as pre-approved loans. Altogether, this good starting point makes us confident that our asset quality will keep on improving going forward, which should translate into a reduction of cost of risk as we are guiding for 2024. Moving on to liquidity, on the next slide, the group ended the year with an ample liquidity position, which has further improved in the last quarter. This is reflected on the 50 billion euros worth of high-quality liquid assets, as well as the LCR, which is stood at 228% for the group, 8 percentage points higher than in Q3. The loan-to-deposit ratio ended the quarter at 94%, marginally better than in the previous quarter. In terms of European Central Bank funding, 5 billion euros remain outstanding, will be mature in the next March. In fact, at the end of the year, the liquidity deposited at the EZB was more than four times the outstanding TLT Euro balance. Finally, in the UK, we currently have 4 billion outstanding under TF-SME, most of which will mature in the second half of 2025. And to end with this slide, I would like to share the improvements in credit ratings received through the year. Moody's upgraded their rating from BAA2 to BAA3, on a stable outlook based on the good evolution and experience in terms of asset quality and profitability. Fitch also assigned as a positive outlook on the back of expectations that Sabadell's profitability will continue to structurally improve. And finally, S&P also improved its outlook from stable to positive, reflecting the continued delivery of our strategic plan and improved profitability of our franchise. Turning on to the next slide, we can see our umbrella position. We recently received the updated EMBRL and subordination requirements applicable to us on a consolidated basis, which come into force in 2024. It should be mentioned that we're comfortable meeting EMBRL requirements in terms of both risk-weighted assets and leverage ratio exposure, as well as we're also very compliant with both the absolute and subordinated requirements. On top of this, we have built a comfortable management buffer on all the requirements, which eases our funding plans significantly. need for 2024. The issuance plans will therefore focus on optimizing the cost and sources of funding while maintaining capital buckets and the embryo management buffer. In 2023, we have printed a total of more than 6 billion euros across the whole capital structure. Additionally, as for the scheduled 2024 embryo issuances, which will be lower than in 2023, we have already issued 750 million euros senior preferred debt deal in January. Finally, moving to the next slide, we see that we continue to generate capital organically as our profitability improves. Our fully loaded CT1 ratio stands at 13.21%, having increased by eight basis points in the quarter and more importantly, by 67 basis points on a year-on-year basis. When we look at the quarterly evolution in more detail, first of all, we can see that organic capital generation of 19 basis points, including the accrual of 50% dividend payout. Secondly, the fair value reserves adjustments of our fixed income portfolio display a small positive contribution with a generation of two basis points. And finally, the operational risk update based on higher gross operating income implied an impact of 13 basis points in the quarter. From a regulatory perspective, the CD1 ratio also stood at 13.21% on a phase-in basis, which implies a solid MDA buffer of 428 basis points, including the NEWSREP requirement, which has increased the MDA buffer by 26 basis points in the year. Finally, I would like to remind you that we have already estimated the regulatory impact of implementing Basel IV, which is basically operational risk, from January 25, and this stands around 50 basis points. No other regulatory headwinds are expected in the coming quarters. And with this, I hand over to Cesar, who will conclude our presentation today.