Julius Baer Gruppe Namen

Good morning, ladies and gentlemen. A warm welcome to all of you from the Julius Baer offices in Zurich, from where we present our results for the first half of 2023. I trust you can see our presentation on your screens. And for all our participants who dialed in over the phone, you will have the opportunity to ask questions at the end of the presentation. I am, as always, joined by our CFO, Evi Kostakis. Good morning, Evi. A warm welcome to you. In the first half of 2023, Julius Baer has again delivered a solid performance, positioning us well for future growth. This was achieved in a challenging environment for both us and our clients. Earlier this year, we all bore witness to notable events in the financial sector on both sides of the Atlantic, such as the collapse of Silicon Valley Bank in the US and, closer to home, the orchestrated takeover of Credit Suisse here in Switzerland. These events triggered uncertainty in financial markets as well as with clients. Geopolitical and economic challenges have remained in focus and continue to fuel investment concerns. To name a few, the tense relationship between the US and China, the Russian war in Ukraine that appears no closer to finding a solution, continuing fears over inflation and possible recessions are keeping market sentiment on the downside, a delay in global IPO markets reigniting and thereby failing to fuel wealth creation, and a general lack of volatility which is weighing on clients' propensity to trade. Against this backdrop, Julius Baer has again proven the strength and resilience of its business model, regardless of conditions. At the same time, the Swiss Financial Center has proven its strength and agility. I will come back to that later. EWI will provide greater details on our solid financial results and performance in the second part of the presentation. But here are some of the highlights. Net new money accelerated in the second quarter. Profitability increased. Our capital position was further strengthened. And we improved our cost income ratio despite once again investing in growth at the start of our new strategic cycle. This leads us to our strategy and our newly launched 2023-25 strategic cycle that we have already started to execute in a disciplined manner. An immediate focus in these first six months has been placed on growth and in particular investing in and developing talent. I will provide greater detail on this later. At the same time, we have continued to invest in our value proposition and taken important steps forward in our digital and hybrid journey. But before we dive into the results, let me quickly take one step back and look at the overall positioning of the bank. First and foremost, Julius Baer's crystal clear focus on wealthy private clients, serving only high net worth and ultra high net worth clients at scale, provides us with a clear advantage for stability and growth. In these times of complexity, we can fully focus on our clients and be relevant to them with our advice. And we avoid the conflicts of interest inherent in managing multiple business lines. I have said on other occasions, and maybe with a smile, that it is good to be the CEO of Julius Baer, and at this moment in time this may be particularly true. Even with a focused business model, our revenue sources are diversified. This generates resilience over economic cycles. What do I mean exactly by diversified? Geographic diversity with our presence across Asia, Europe and South America. Within this, a mix of mature and emerging markets with varied growth dynamics. our ability to cover the two main segments, most sophisticated ultra-high network clients, as well as a broader array of high network clients in a scalable manner, our integrated business model that includes being a bank and a wealth manager, and last but not least, diversification in terms of recurring versus transaction-based revenues. It is thanks to this variety that we have been able to continuously produce outstanding results. Not just in 2021 and 2022, which were the best group results in our history, but even now, as we progress through 2023. The strategic decisions and transformation we took in the last strategic cycle spanning 2020 to 2022 have been fully validated. Our current strategic cycle is all about quality growth, and the beginning of 2023 has allowed us to accelerate this track. I will provide you with more details after Evi's presentation. But first, let me conclude with a couple of words on the Swiss Financial Center. We all witnessed with concern and considerable surprise the events that unfolded in the first half of this year. Switzerland successfully solved the idiosyncratic problems of one large and systemically important bank over a weekend and succeeded to do so without market disruption. and Switzerland continues to firmly lead international cross-border wealth management. This strength is rooted in our economic and political stability, the strength of the Swiss franc, and in a broad ecosystem that comprises 239 strong banks. Julius Baer is now the number two listed bank by market capitalization in Switzerland. And now, I hand over to Evie, who will provide a detailed rundown of our first half results.

Thank you, Philip, and good morning, everyone. As usual, on page seven, I would like to start with an overview of those market developments that had a meaningful bearing on the performance of our business. First of all, looking at the securities markets and foreign exchange. With some exceptions, stock markets were generally up in the first six months, but the delivery of that positive return was quite dispersed. For example, while the Nasdaq was up a whopping 39%, the Hang Seng Index was down minus 4%. Bonds, relevant for our AUM as well as the capital OCI development, ended the first half in positive territory, even though in the last two months of the quarter, they trended down as yields picked up. Finally, I would like to highlight here the US dollar, which was down 3% in the first six months of the year, but that decline has accelerated quite a bit in July so far. In comparing our first half results with the results of a year ago, of course, one of the biggest drivers has been the sharp rise in interest rates. The market consensus and indeed also our own house view is that we are getting close to the end of that rate hiking cycle and we have updated our rate guidance accordingly later in this presentation. The third set of graphs shows that the yield curve inversion in our three key currencies has worsened since the start of this year. This is one of the factors that has played a role in the client deleveraging that we have continued to see play out, to which I will come back when we discuss net inflows later on. Finally, market volatility has fallen to very low levels again, which is relevant for the trading component within our income from financial instruments revenue line, but more on that in a bit. Moving on to the AUM development on slide eight. Mainly on the back of market performance and net new money, which together more than offset the impact from the stronger Swiss franc, assets under management grew to 441 billion, an increase of 4% since the start of the year. Monthly average AUM, important for the margin calculations, came down by 5% from the level of a year ago, but is up plus 2% from 2H22. Assets under custody went up by 11%, thereby taking total client assets over the half a trillion mark to $515 billion. Proceeding to net new money on slide 9. As we already mentioned in May in our interim management statement, net inflows started slowly this year, but then began to pick up in the last two months of the second quarter. At the end of April, we were at 3.5 billion, and just two months later, by the end of June, this number had more than doubled to 7.1 billion. Flows continue to be impacted by client deleveraging, and the pronounced yield curve inversion that I referred to before is certainly a factor here, as is the higher absolute level of interest rates, and probably also the fact that clients still feel somewhat uncertain as to the direction of markets in spite of the dispersed rally year-to-date in equity markets. Without this deleveraging impact, net inflows were at $9.2 billion. We had solid inflows from a number of our key markets, including from clients domiciled in Switzerland, as well as elsewhere in Europe, with especially noteworthy contributions from the UK and Ireland, Spain and Luxembourg, in Asia, especially Hong Kong after the reopening of the borders, as well as India, in the Middle East, and also in Israel. So let's now turn to revenues on slide 10. The overall revenue development once again underlined the resilience of our business model. While revenues were impacted by the year-on-year decline in average assets under management and the decline in client activity and volatility, this negative impact was more than offset by the benefit from higher rates on our NII and our quasi-NII in the form of treasury swap income. As a result, operating income grew by 9% to just over $2 billion. So going through the revenues line by line, NII grew by 36% to $464 million as higher rates benefited the income from loans despite the lower credit volumes, the interest income from our treasury portfolio, and the interest undue from banks and receivables from securities financing transactions. These interest income benefits were partly offset by substantial rise in cost of deposits as clients moved cash from current accounts into call and time deposits to take advantage of the higher rates. Net commission and fee income fell by 8% to $963 million. Recurring fee income declined in line with a 5% year-on-year decrease in monthly average AUM. And a slowdown in client activity led to lower transaction-driven commission income year-on-year, although it was good to see activity pick up from the very low levels we experienced in H222 of last year. Net income from financial instruments at fair value through profit and loss grew by 26% to $596 million. The higher rates led to a significant increase in treasury swap income, i.e. the quasi net interest income to which I referred to before, the benefit of which offset the lower contribution from the more activity and volatility driven income related to FX, precious metals and structured products. Other ordinary results decreased by $8 million to $4 million. Net credit recoveries on financial assets of $2 million underline the group's prudent management of credit risks and the quality of its exposure. Turning the page to slide 11. In gross margin terms, one can see the different moving revenue parts in a different and perhaps more digestible way. And in order to help that view, we have slightly changed the presentation from how we used to show it previously. The main graph on the left shows, as usual, the split according to the IFRS accounting conventions. From that graph, one sees, first of all, that the annualized gross margin increased by 12 basis points year on year to 93 basis points of average AUM. driven by large increases in the contributions from NAI to 21 basis points from 15 basis points and from net income from financial instruments at fair value through profit and loss to 27 basis points from 21 basis points. This was slightly offset by a small decrease of two basis points in the commission and fee gross margin to 44 basis points. On the right-hand side, you see, first of all, the split of the commission and fee gross margin into recurring fees, which stayed for now at 36 basis points, and which we clearly aim to grow over 39 basis points in 2025, and the other more activity-driven commission components, which came down from a year ago to eight basis points, even though recovering a bit from the multi-year low in H-222. The second graph on the right hand side shows the split of income from financial instruments at fair value through profit and loss into interest rate driven treasury swap income, which went up massively year on year to 15 basis points from six basis points. And the other component, which is more driven by client activity and market volatility, which declined year on year to 12 basis points from 15 basis points a year ago. new component on this slide are the bubbles below the main graph where we combine first of all nii and treasury swap income or quasi nii as i like to call it into interest driven income which improved by 15 basis points year on year to 36 basis points but up just one basis point from where we were in h2 and secondly we combine the more activity driven um dependent items in commission of the income and income from financial instruments at fair value through profit and loss into a total activity driven number down four basis points year on year to 20 basis points but stable compared to h2 and the recurring income number is simply the one you also see on the commission fee split on the right hand side at 36 basis points Now turning to our interest rate sensitivity slide. I certainly don't have to explain to this morning's audience that the interest rate environment changed dramatically over the past year. But maybe just as a reminder, in 2022, U.S. rates were raised by 425 basis points from a zero rate starting point. And Euro and Swiss franc rates by 250 and 170 basis points respectively from a starting point of negative rates. In the first half of 2023, rates went up further still, with the ECB raising its deposit facility rate by another 150 basis points, and the US Federal Reserve and the Swiss National Bank each by another 75 basis points. Last year, in May, and again in July, we started guiding in more detail for our P&L sensitivity in gross margin terms to these rate hikes. And in February, I was able to conclude that the realized margin uplift in H222 ended up largely in line with our guidance, not only in terms of the estimated benefit to NII and swap income, but also in terms of the partial offset from clients shifting cash from current accounts into call and time deposits. In February, as part of our full year results presentation, we also updated our guidance and in summary we indicated that we believed that the gross margin had more or less reached peak rate hike benefit in H2 as the benefits of higher rates to NII and quasi-NII would be balanced by higher deposit costs due to further terming out at higher rates. As we saw in the previous slide where we discussed the gross margin development, that's indeed also how it largely played out in H1 with the total interest driven gross margin component going up by just one additional basis point from where we were in H2 22. looking at H2 23 from where we are today in terms of balance sheet size balance sheet structure, and AUM levels, we believe again that the total interest-driven gross margin component is likely to remain stable from what it was in H1. In the graph on the left, we show, as we did before, the expected further benefits of further 100 basis point rate hikes in the key currencies, assuming the terming out continues to develop as we expect it will in such scenarios. And to reiterate, our current assessment is that there would be little to no further gross margin benefit from here. For the outlook for 2024 and beyond, we will have to start considering the possibility of rate cuts, as well as obviously the further development of the current account volumes and the overall deposit base. Which is why, on the left-hand side, we now have also included an estimate of what happens when rates go down by 100 basis points. We assume that for the first 100 basis point rate decline, there will be no shift out of term and call deposits. Based on that assumption, our current best estimate under the customary setter's Paribus conditions is that for a 100 basis point decline in dollar rates, we would see a two basis point negative gross margin impact, and for a 100 basis point decline in Euro and Swiss franc rates, the estimated gross margin impact would be one basis point. Let's turn to OPEX on slide 13. The successful reset in cost efficiency in the 2020-2022 strategic cycle has created room to fund growth investments for the current cycle. As we outlined in the May 2022 strategy update, as we confirmed in February, we will place an increased focus on attracting top talent to further scale our presence in our key markets and our targeted investments in technology and innovation. In H1, adjusted operating expenses grew to just below $1.4 billion, an increase of 5% year-on-year, well below the 9% increase in operating income. And as a result, the cost-to-income ratio improved to 65.3%. Personnel costs rose by 5% to almost $881 million. Payroll costs were up broadly in line with the year-on-year rise in the average number of staff. Performance-based remuneration went up as well, and these increases were partly offset by somewhat lower pension fund-related costs. General expenses rose by 2% to 396 million, excluding legal provisions and operational losses, which declined to 59 million. General expenses were up 7% year-on-year, mainly due to IT-related project and software expenses, as well as an increase in costs related to travel and client events, following the further relaxation of COVID-related restrictions, especially in Asia, with the opening up in Hong Kong earlier this year. Depreciation and amortization went up by 14% to 108 million following the rise in IT-related investments in recent years. putting it all together in terms of profit development. With a 14% increase in adjusted net profit, the business has made an excellent start into the new strategic cycle, as our operating jaws widen year on year, with operating income up 9% and operating expenses up 5%. Adjusted profit before tax actually grew even faster, by 19%, but the tax rate increased from 12% to 16% due to a higher profit contribution from relatively high tax jurisdictions. The pre-tax margin rose by six basis points to 30 basis points. And thanks to the buyback completed earlier this year, the increase in adjusted earnings per share was 16%. And finally, the return on CET1 capital increased by four percentage points to 34%, underlining our highly capital generative wealth management focused business model. Our guidance for the adjusted tax rate has changed somewhat as we now foresee higher tax jurisdictions contributing relatively more to overall profit. So for 2023, we're currently expecting an effective tax rate in the 15 to 16% range. And from next year, when the OECD minimum tax rates kick in, potentially somewhat higher than 16%. Moving on to the balance sheet on slide 15. Our solid strong balance sheet remains highly liquid with 12% of assets in cash, a loan-to-deposit ratio of 62%, and a liquidity coverage ratio of over 300%. Impacted by the weakening of the U.S. dollar and other key currencies, deposits decreased to 69 billion Swiss francs, and as I described earlier, the shift from current accounts into term and call deposits continued, with the latter now making up 56% of the overall due to customers' position compared to 43% six months ago. The loan book decreased to 43 billion as client deleveraging shrank the Lombard loan book with the mortgage book remaining stable. The treasury portfolio saw a slight decrease to 16 billion and cash stayed at 12 billion. Turning to the capital development on slide 16 and starting with the CT1 ratio on the left-hand side. Above the graph on the left, you see the RWA declining somewhat by 0.3 billion, or 1%, mainly following a decrease in credit and market risk positions. You can find the details, as always, in the appendix. CET1 capital rose by 0.3 billion or 9%, mainly driven by strong net profit generation, 2.5% in CET1 ratio terms, and to a much smaller extent by the initial pull-to-par reversal of last year's decline in the value of bonds held in the group's treasury portfolio. This capital benefit clearly outstripped the impacts of the dividend accrual and the completion of the share buyback program at the end of February, which together cost 2% in CET1 ratio terms. Putting it all together, this resulted in a CET1 capital ratio of 15.5% at the end of June. On the right-hand side, we saw the updated pull-to-par estimate. We saw 54 million OCI reversal benefit in H1, and of the remaining 525 million amount, we would currently estimate under stable market conditions that approximately 19% will reverse in H222, around a third in 24, around a quarter in 25, and the remaining balance in 26 and beyond. Finally, our risk density guidance remains unchanged at 21 to 23% for the next three years. Before handing it over to Philip, a quick review of the improvement in the Tier 1 leverage ratio on slide 17. As a result of the CT1 capital development and additionally helped by the successful placement of 400 million euros of new AT1 securities in February, Tier 1 capital increased by 0.6 billion to 13% to 5.2 billion francs. The leverage exposure fell by 4%, broadly in line with a 5% decline in the size of the balance sheet. As a consequence, the Tier 1 leverage ratio increased to 5.1%, very comfortably above the regulatory floor of 3%. And with that, I now hand back to Philip for the latest update on our strategic progress.

Thank you very much, Evi, for the in-depth view into our results. Let me now provide a strategic perspective on what has happened in the first half of the year, as well as a quick outlook for the second half of 2023. In May last year, we presented our new strategic cycle Focus, Scale and Innovate. We are focusing on our clients, on wealth management, but also focusing on further developing the value proposition for our clients, the quality of our business and the quality of our revenues. We are scaling the business in our key markets, driving growth, giving us the right critical mass in all the key geographies where we choose to be active. This is where we made the greatest inroads so far this year. And we have continued innovating wealth management through digital advancement of our operating model and upgrading the client experience. We started 2023 with a very strong focus on organic growth, hiring and people development. We first showed a pickup in hiring figures in the interim management statement. I'm glad to report that Julius Baer hired net 57 relationship managers in the first six months of 2023. On a gross basis, this corresponds to a triple-digit intake of relationship managers over this period. And even more impressive, this means an increase in the number of RMs year on year of more than 8%. Our new hires come from a variety of international wealth management champions and this has been the result of relationship and network building over the long term and underlines our appeal as an employer of choice. True to our strategy, new hires are particularly geared towards the geographies where we want to grow to scale. We only hire relationship managers with a strategic client-based fit, both geographically and segment-wise. who match and enrich our corporate culture, who share our views on risk appetite and risk management, and who are capable to scale their books in line with our aspirations, with our support, of course. To this last point, let me remind that our AUM per RM increased by 20% over the last three years alone. Our compensation model for RMs introduced in 2020 has continued to prove its success in rewarding and incentivizing top performers not only through our transition phase over the last three years, but also in our current phase of accelerated hiring. Over the course of last year, through the first six months of 2023, and looking further ahead, even as the talent market heats up, We continue to firmly and strictly apply the highest standards of quality in the industry to all our hires as introduced over the past years. And looking ahead, I can confirm that we continue to have an attractive pipeline for hiring in all our focus markets throughout the rest of this year and further into this cycle. Alongside the hiring of top talent, we want to ensure that we are close to our clients in the markets in which we operate. This is why we are constantly investing in our global footprint. Judging by the distribution of our assets under management by client domicile for Julius Baer, this means we have a strong position in our home market in Switzerland, but then an almost equal share in Western Europe, in Asia, and in other growth markets. And along these same geographic lines, we have also been investing. Starting from east to west, we have moved our Hong Kong office into new premises at Tu Tai Ku Place, opened this year. That new office space brought together for the first time everyone in Julius Baer Hong Kong and flagged a key commitment to Hong Kong as a financial center and hub for our Greater China business, and it provides us with future opportunities to grow. We have expansion plans in Singapore, already our second largest group location by employees, that will provide us with additional possibilities to further drive our technology and operations platforms. This will happen at the latest early next year. In India, where we have been present since 2015, longer and more consistently than any other international bank, we have just opened our seventh office in Pune. We will also move to new premises in Mumbai later this year and are currently relocating our Delhi office to bigger and smarter premises, with longer-term plans to grow up to 10 locations in the country. Last year, we reported the opening of our new Qatar office, the first office opened after the pandemic, and we continue to expand there. But we are also investing here in Western Europe. For example, in the UK, we have also just moved our London activities to new highly attractive and sustainable premises and are planning a new office location in Northern UK in the second half of the year. And last but not least, we have increased capacity in our Brazil office in line with our growth ambitions for this exciting country. These are a few examples of how we continue to develop our global footprint in line with our local and global hiring efforts in our growth markets. We have talked about hiring, about our local presence, but equally important is the development of our own in-house talent. As you remember from our May 22 strategy presentation, our future growth will not solely hinge on attracting the best talent, but also our ability to develop our own talent internally. I am glad to report on our progress in this area. First, our graduate program. It helps us attract top-caliber university students globally, thanks in part to its appealing four-month international rotation. This year we hired more than 30 graduates, a part of them inclined facing roles. This global program adds to our cultural and educational diversity. The key pillar of future RM development lies with our associate relationship manager program. Recently launched, it is being ramped up to full capacity by 24. We launched a pilot for 20 associates in 23 and are targeting an intake of 30 people next year, bringing the total cumulative number of participants by then to 50. The Associate RM program provides a multi-year on-the-job training program for in-house talent to become our next generation of relationship managers. On-the-job training in front teams is combined with modern classroom learning and in some cases external certification to provide the best possible and broadest education in the industry. Associate RMs will not only establish a pool of top educated bankers for the future, they will also help us drive the generational change within our front teams at scale and across the globe. We don't stop there. So far this year, more than 350 employees globally have successfully completed either the assistant RM or the account manager training programs. These roles are critical in ensuring flawless service to our clients and in managing direct client contact and account relationships consistently and smoothly. Employees in turn have the chance to further upgrade their profiles and increase their client-facing experience. This also increases the attractiveness of their roles and our appeal as an employer. Last but not least, We enjoy one of the best benches of seasoned relationship managers across the globe. However, this also means we have to address continuity. This is why we have long established a proactive and structured succession progress. We want to allow our top talent to stay on as long as possible, while at the same time ensure a frictionless succession and transition to the next generation. On a final note, let me highlight that we are committed to grow talent across the firm, not just in client-facing roles. It is crucial for our future operating model to ensure a healthy balance between external hires and internal growth. And hence, we are supporting internal development of mobility across all functions from front to middle and back office. Following people and scale, let me now touch on our value proposition. As part of focus, we continue to develop our offering in line with client needs, with market trends, and with an eye on the long-term evolution of our industry. This includes specific product launches, but also investments in scalable platforms and tools. Let me list some relevant examples from the first half of 2023. We have launched a series of in-house funds that reflect our convictions and capabilities. It is crucial to highlight that this remains firmly within the context of our managed open architecture, where we give clients access to the best solutions in the market, but at the same time are proud to promote our own distinctive capabilities. Part of this category is the JAB Global Income Opportunities Fund, with which we raised approximately 230 million of seeding capital from clients just in the first two months. Overall, total net flows into our in-house funds up to June year-to-date amounted to more than 1 billion Swiss franc. We also added further to our private equity offering, recognizing the important role of private markets for our clients. Within this context, our flagship vintage program has just held its second closing. Private markets are becoming an important contributor of recurring revenues in the future. On the platform side, I want to mention the developments in markets and our ability to deliver highly customized investment solutions. Adding new sophisticated payoffs to the toolbox is almost becoming routine, as is arming our clients with even more powerful algorithms and access to substantial computation power, for example, to optimize structured products on the fly, e.g. towards a specific target yield. Our efforts and progress are getting recognized and we are proud that Julius Baer funds created for our private clients are of institutional quality. Some 50% of the assets in these funds are in strategies with top five or four star Morningstar ratings. This is a ratio that many asset managers would envy. This is again testament to us focusing on where we can truly deliver distinctive performance to our clients. An important part of our value proposition today is what we do for sustainability. This is an integral part of how Julius Baer operates, and let me quickly run through some of the recent developments. Overall, we continue with our result-oriented approach to sustainability. We are determined to pride our clients with the best possible choices available to implement their convictions in the ES&G space. At the same time, we are also committed to being responsible citizens. We want to walk the talk alongside our clients. This is why we've been pushing forward and progressing with our climate strategy. We are convinced that stewardship plays an important role and we are actively involving our clients to achieve this. We believe that data and transparency must be at the basis of every action and decision. That is why we've been both leading and pioneering as a large private bank with our ESG client reporting. Our approach to this, based on proprietary methodology, has earned us the award for Best Private Bank for Technology for ESG Reporting Globally at PWM's WealthTech Awards this year. First-time distribution of these reports happened in 2022 for clients booked in Switzerland and Luxembourg, with the ambition for a global rollout by 2025. Our efforts have also been recognized by rating agencies, with a recent upgrade by MSCI in their ESG rating of Julius Paire to AA and Morningstar's Sustainalytics risk classification reduced from medium to low risk, Also noteworthy, our inclusion in the Bloomberg Gender Equality Index. And we do not rest on our laurels. We continue to foster in-house expertise through our dedicated Sustainability Front Ambassador Club, which now comprises 250 senior client-facing employees globally. Let me conclude by looking at our innovation efforts. I will be brief on this, as we will provide a more comprehensive update with our full year 23 results. Innovation still plays a key role for Julius Baer, and we have established our ambitions for this in our strategy presentation of 2022. We also increased our planned spending on business transformation and technology across the 23 to 25 cycle to 1 billion Swiss francs in total. We are progressing in our various transformation topics and technology agendas as previously laid out on this slide. Today, I'd like to take a step back and focus on the overall design work for our business transformation agenda. We have progressed in this thorough design phase in the first half of this year to prepare carefully for the rest of our strategic cycle and the years to come and maximize our effectiveness. Julius Baer has for a long time followed three strategic priorities to create a highly scalable backend, supporting us in our growth ambitions towards 2030 and beyond, to create operating leverage in our business model by offering the best technology support to our relationship managers and staff, making the human factor scalable, and to digitally enable our clients and ensure state-of-the-art delivery of our value proposition. Underpinning these three priorities is our ambition to harmonize our global operating model, allowing us to deliver a consistent client experience and maximize synergies in our wealth management model. In the first half of 2023, we have formulated the aspirations and principles underpinning our operating model of the future with a look far into the 2030s. We are developing a specific target design and transformation roadmap for our business to support the realization of our goals. And we will provide you with more information when we present our full year results. At the same time, we are cautiously ramping up additional investments, as already announced, and expect to move towards an acceleration of delivery mode in 2024. I look forward to reporting back to you at our next meeting. To conclude, let me shift to what lies ahead in the next half year. In the second half of 2023, we will continue to deliver on our strategy of focus, scale and innovate. We will maintain hiring momentum and drive further growth in our focus markets. We will continue to strengthen our offering and drive recurring revenues. Many of the solutions I've outlined earlier today will support this. And we will finalize the design of our key future operating model and the related transformational investments as I just reported. Across all of this, we will continue to maintain a firm grasp on risk, which has served us well in the last years. Last but not least, true to our purpose, we will continue to create value beyond wealth, keeping our eyes firmly focused on the needs of our clients, but also on the needs of all stakeholders. Thank you very much indeed. This concludes my remarks, and we are now ready to hand over to the floor and the phone lines for our Q&A. The first question is from Hubert Lang from Bank of America.