I will now hand over the call to your host, Kurt De Baenst, General Manager Investor, to begin today's conference. Thank you. Thank you, operator. Also from my side, a very good morning to all of you from the headquarters of KBC in Brussels, and welcome to the KBC Conference Call. Today is Thursday, August 8, 2024 and we are hosting the conference call of the second quarter results of KBC. As usual, we have Johan Thijs, Group CEO, with us, as well as our Group CFO, Luc Popelier, and they will both elaborate on the results and add some additional insight. As such, it's my pleasure to give the floor to our CEO, Johan Thijs, who will quickly run you through the presentation. Thank you very much, Kurt, and also from my side, a warm welcome to the announcement of the Second Quarter Results. As usual, we start with the key takeaways, and, well, second quarter of this year, 2024, was again a quarter with an excellent net result. EUR 925 million was posted over this quarter, and this is a result of KBC firing on all its cylinders. We have been in that perspective doing once again in highly diversified bank insurance asset management integrated model, and that is indeed returning positive results. Let me highlight a little bit more in detail what it means. So we have seen in this quarter a strong growth of our lending book. We have seen deposit customer deposit inflow, which is a very important one, as we all know, given the interest rates. This resulted in higher net interest income. It also allowed us to increase our guidance on the full year 2024 for the net interest income. We now put it at EUR 5.5 billion ballpark. More detail about that later on. We do have an increase of our fee and commission income, as well as our results from the sale of our non-life insurance business. There is an upward move of our financial instruments at fair value, and on the positive side as well, via the negative number, we have a decline of our costs, which means, in this perspective, indeed, a positive outcome. Cost income ratio now stands at 42% before the bank taxes, and that is really perfectly in line, a little bit better even than our guidance. In that perspective, also, the loan loss ratio is perfectly in line with what we guided, as a matter of fact, substantially better, and there's no surprise to see that we do have a solid capital and liquidity position. The latter allows us also to announce an interim dividend of EUR 1 per share, which will be as normal, distributed on the first of November. For completeness sake, I also want to highlight again, we already announced that with a separate press release, that we concluded our share buyback for a total of EUR 1.3 billion, and that it was finalized roughly, what is it? Eight days ago, so the end of July. Now, in summary, good results, return on equity 15%, and all the other ratios are very solid. If I go in, like, traditionally, over a couple of things, highlighting what it is, build up 85% on the insurance side, 85% on the banking side, 15% on the insurance side. That would be the day if we would hit 85% of our income via the insurance company. But also very important, that is, the productivity gains, which we continue to book via the usage of AI and via the usage of our service bot, Kate. 4.8 million of our customers are using it on a regular basis. That also means that 4.8 million of customers are confronted with the fact that Kate becomes smarter and smarter. Two-thirds of their questions are solved by Kate without any interference of a human being, which generates a lot of productivity gains and also generates a good NPS score with our customers. Kate is also more and more involved in sales. Over the period of 12 months, she directly concluded 137,000 sales, which is quite a strong number, and is, for good understanding, an average over the 12 months. And if you look at the detail, you see that it is ramping up towards the end of that period. In other words, it is not something which is not going to improve going forward. In that perspective, also to highlight that KBC was nominated, amongst others, by the Financial Times, as one of the sustainability leaders in Europe, which also qualifies us for supporting our customers better in the transition towards a more sustainable economy. And that is, as we all know, a very crucial element, and in that perspective, we can play ultimately a role. On the next page, you can see the diversification of KBC Group. That is, the split up between the net interest income and the asset management income and insurance income. The split up is roughly 50/50, which means that indeed KBC has a very diversified position on its income side. In terms of the strategic focus, I'll skip that because this is the things that you already know. Then on the one-off slide, which is the next one. This quarter is characterized by hardly any one-off, so we can give you a full picture without excluding too much of detail on certain elements. Let me go through the biggest P&L contributor in terms of exposure and size, that is net interest income. Net interest income is up EUR 10 million on the quarter, and that is an increase of 1%, which is driven, and that is something which is very important going forward, which is driven by a continued increase of our commercial transformation result. That is indeed good news. It is up EUR 10 million, which is driven by two things. First of all, the reinvestment yields, which are creeping up, and then the second thing is that we also saw, again, what we saw in, and that's a very crucial one, core deposits flowing in. I'll come back in a second to that. But also, a positive move on current accounts and savings accounts in the second quarter. Next to that, are also increase of our lending income. The lending income was up on the back of strong growth of our volumes. So we guided the market that we would see for the full year a growth of roughly 3%. Well, if you look at the numbers on the graph, then we have seen 2% on the quarter, 4% on the year, and if you look at the total number for the year to date, we are at 2.48% growth. Which means that also that perspective, we will update our guidance, and we will bring the 3% to 4% for the full year. The volume growth was partly offset by the pressure, which is still going on, on the commercial margins. That is not for every country the same, but in essence, if I would summarize it all, there is still pressure, commercial pressure on those margin, and that is mitigating positive impact of the higher volumes. But nevertheless, the interest income generated out of the lending book in the combination of the two elements is positively, positively evolving. For good understanding, the total margin on the net interest side is now 210 basis points, which is two basis points higher than it was previous quarter. In terms of the other positive contributor, we have EUR 27 million of net interest income on inflation-linked bonds, which is significantly better than previous quarter. And we have lower funding costs on our participations. What are elements which are partly offsetting? We do see, indeed, commercial pressure on the margins on the lending side, but we also had some commercial pressure on the savings side in Belgium, where we do have a payout in this quarter of our loyalty premium, our fidelity premium. On the other hand, we do see the commercial pressure on the term deposits, where we have a slightly lower net interest income side. And then we do see slightly lower net interest income side on the actually the subordinated debt and the wholesale funding cost, which is linked to our LCR management. And then same thing can be said about short-term cash management, which is also linked to that short-term cash management, as well as the evolution of the interest rates. But let me highlight more in detail the evolution of the things which really matter, and that is the evolution of our deposit side. You can see that on the next slide. In the second quarter, we did have an inflow of EUR 5 billion of current accounts, saving accounts, split up EUR 3.6 billion on the current accounts and EUR 1.4 billion on the saving account. This is an important one, and if you look over the quarter, then we can clearly see that the trend has shifted over the quarter. In May, we had a kind of stable evolution. That means, no further shifts, because that was mainly it in the past, between current account, saving accounts and term deposits. And then in June, we had a strong inflow, mainly also in Belgium, of that deposit side. So it is not contributing yet to the net interest income in the second quarter. It will start to contribute to net interest income in the quarter three, four, and following. In that perspective, also, we do see a decline of the term deposits. This is mainly triggered by Czech Republic and to a lesser extent, Hungary. And that is also a consequence of the rate cuts which are happening in those countries. As you all know, the Czech National Bank, as well as the Hungarian National Bank, have cut in several snaps, significantly downwards their policy rates, and that is immediately translated in the attractiveness of term deposits, be it less attract, and therefore, people start to deposit more monies from term deposits on back again on their saving accounts. We do see that trend clearly in both countries, and that has translated itself in the decline of EUR 1.9 billion on the term deposits. Let me say it differently. We do see indeed a slowdown of the shifts between current accounts, saving accounts, and term deposits, a slowdown of the shifts between higher yielding buckets to lower yielding buckets. If you translate that over the full year, then you see the same trends, be it different numbers for current accounts, saving accounts, and term deposits, and in total, we do have EUR 5.9 billion of core—EUR 5.8 billion, sorry, core money flowing in. But it's clearly indicating that the shift is happening and that the—or the trend is happening with a clear shift, first of all, more volumes, and secondly, lower shifts from current account, saving accounts to term deposits, which is indeed going forward an important message to bring. Sidestep I would like to make, that is obviously we are very aware of what is going to happen in the next quarter, in the month of September, because in Belgium, the State Note matures, and that is clearly going to have an impact on our commercial approach going forward as well. Let me shift to net fee and commission income. EUR 623 million is EUR 90 million more than previous quarter. That is 1% up, and it is EUR 39 million more than previous year. That is 7% up, and that is driven by two things. First of all, the increase of the asset management services fee, or the management fees, as it is called. And second thing is the fees which are generated through banking services. Let me start with the former. So the management, asset management service increased significantly, and it is mainly driven by higher management fee. Entry fees, good news there is margin went up, and it is driven by sales. The sales are compared with the record sales of the first quarter, and therefore it's slightly down. But be aware, also in the second quarter, we had a positive inflow of customer monies of EUR 0.7 billion, which brings the total for this year to EUR 2.6 billion. I said last year, when we had a record, performance, that as something was, quite extraordinary. Well, we were almost at the same level in the first half of 2024 compared to the absolute record of 2023, EUR 2.8 billion versus EUR 2.6 billion. In that growth is also, once again, to be highlighted, the success of the regular investment plans. You know how it works? Well, out of that inflow, in, roughly EUR 0.4 billion is dedicated to, the regular investment plans. In terms of the bank services, it's actually positive news on all the sides. The payment fees were up, the network income was up, and the credit file fees were up. It was slightly lower, securities fees, which is mainly to do with, the commercial activities in that perspective. And then traditionally, the higher distribution fee, higher distribution fees, on the banking products, were partly offsetting this. In terms of the insurance business, non-life up 8% written premium, 9% earned premium, with a good underwriting result of 87% combined ratio, which I think is indeed an absolute good number. Life insurance business, at first glance, because the number clearly says it's down 15% and 19% year-over-year and quarter-over-quarter. On the other hand, let me nuance that a little bit. This compared with an absolute top performance in quarter one of this year and quarter two of last year, and both quarters were driven by explicit commercial campaigns on the unit-linked side, on the private banking side, and then the seasonality of the interest rates products is also not helping really, the performance in this quarter. But nevertheless, we had an excellent result in this quarter, and to express that, if you combine the first quarter and the second quarter this year, you compare it to the same half, half year or last quarter, then we have sold EUR 200 million more than last year. So in this perspective, also the life insurance sales side was doing very well in this quarter. For good understanding, the margin which we have on that product is further increasing. CSM now stands at roughly 17%, 16.9% to be precise. Financial instruments at fair value, well, positive evolution on the quarter, EUR 58 million up. And this is mainly driven by two things. First of all, a quite good performance on the dealing room side, but we compared it with an absolute top performance in the first quarter. The difference there is EUR 41 million, and we have on the derivative side a strong increase, so it's EUR 1 million positive, but you compare it with an absolute downer in the first quarter of 2024. The difference is more than EUR 100 million. Well, you know, I can give you the full detail, but this is mainly driven by a couple of technical things, like the ineffectiveness of our hedge accounting and also FX results on dividend payments upstream from Czech Republic. Both of them are explaining more than half of that detail. All other things have to do with interest rate option and interest rate swaps and the cash Brussels - I mean, the combination of the things I mentioned is EUR 80 million. So explaining the full detail on this matter. Let me also give you a short notice on the short comment on net other income. EUR 51 million is perfectly aligned with the historical average, which is roughly EUR 45 million-EUR 50 million. So this is perfectly aligned. So let me not waste any further time, but go to the cost side. If you look at the cost side, a very good performance. Costs are super well controlled in this quarter. If you compare it with the same period last year, then the costs are down 2%. I exclude, for good understanding, bank taxes. And if you compare it with the previous quarter, then it's up 1%. But you know, seasonality in this perspective doesn't make it easy to compare quarter-on-quarter. Now, let me give you a bit more detail. The reason why the quarter, why the evolution is what it is, has to do with the fact that staff costs are obviously influenced by inflation, but that inflation is offset, by, or partly offset by the fact that we have been continuously monitoring our FTEs and have been bringing this down. Inflation is also impacting ICT costs, and also there, in that perspective, we do some mitigating actions. And all in all, if you translate it, all those mitigating actions and the inflationary pressure, then you end up with the numbers which are there. There is an important comparison, differentiating parameter year on year, and that is the impact of Ireland. Ireland was in 2023, also in the second quarter, and is no longer or to a substantially lower extent in the second quarter. And that explains the big difference between year-on-year comparison. If we would exclude that, then the cost evolution would be flattish. Also there, we do see some impact of the FX position. But costs are well in control, and this is also explained by the cost income ratio, which now stands at 42%, down compared to the 43% of last year. On the bank taxes side, well, there are certainties in life, which means that bank taxes are constantly upward pressed. And also we see this again, we had extra bank taxes in Slovakia, and we do have additional bank taxes in Hungary. As you may have noticed also, that is Mister or the government in Hungary has decided that there is an extra levy to come. That extra levy is potentially mitigated by the fact that banks can buy bonds to offset at least 50% or max 50% of that extra levy. Well, if we bring everything into account, then the total potential impact of, first of all, the prolongation of existing tax, secondly, the impact of the new levy is up to EUR 40 million before mitigation by buying bonds. So in this perspective, this is really the max number. And last, but not least, we had a decrease of the deposit guarantee scheme in Belgium because the lower number of deposits which were in reality there in comparison with the reference which was used by the Belgian government to calculate those taxes, that has resulted in a EUR 32 million of decrease of the taxes. Ultimately, at year-end, we do, we do assume that we're going to pay roughly EUR 640 million of bank taxes, which are on the next page, explained in a split up per country or per business unit. Let me shift to impairments. Impairments are at a very low level, and if you compare it with the super low level of previous quarter, then it's slightly up. What we do see in the lending book is EUR 58 million of impairments, which is slightly up compared to previous quarter, and it has to do with two files, two corporate files in our foreign branches, which are totaling the two combined, and so the split up is 50/50, EUR 29 million. So on our normal lending book, the vast increase is related to two files. If you would look at the other remaining part of the lending book, we hardly see any impairments. And what is also very crucial, we don't see any major shift or any worth mentioning shift on the PD side of that lending book going forward. There's also translated in an impaired loans ratio, which is 2.1%. If you use the EBA definition, it's 1.47%, which is clearly lower than the average of Europe, which is 1.9%. Credit cost ratio, as I mentioned, stands at 10 basis points if you exclude the buffer. If you would include the buffer, it stands at nine basis points. Now, mentioning the buffer, we have an increase of our buffer of EUR 14 million. The ECL buffer now stands at... Sorry, the ECL geographical emerging risk buffer stands at EUR 237 million after that increase. Why increase? Well, that has to do with the usage of parameters. One of those parameters is inflation. You might know that in Belgium, despite the deflationary trend, there was, for this quarter, an uptick of inflation, and that uptick generated, together with lowering the confidence of the consumers, it triggered an extra increase of the buffer of EUR 50 million in Belgium. We did apply the same model for other countries, where we saw a release of buffer, and the combined total is a EUR 14 million upward. We expect this buffer to evolve as we speak, in the next coming quarters. If you sum up all those bits and pieces and you look at the capital side, then our capital ratio stands at the end of the quarter at 15.1%, which is an excellent result. Now, the increase of the buffer is mitigated because of the strong growth of the volumes. So given the fact that we have grown stronger than we indicated, we do see our risk-weighted assets, which are linked to our operational business, so linked to the growth of our lending book, so it's stronger increase than what we guided. Why is that? It's mainly because it's driven by growth in the corporate segment. And as you know, the corporate segment is heavier risk-weighted than, for instance, the retail segment, and that is translated as a stronger increase, resulting in 15.1% capital ratio. In terms of the buffers, which you can see on the next page, we now have buffers on the OCR side of 4.2% and on the MDA side of 3.9%, without using the optimization of CRD V, Article 104. KBC has not filled up all the buckets, definitely not on the AT1 side, therefore, remaining 35 basis points can be used as well. In terms of the leverage ratio, we stand at 5.5%, and on the liquidity side, we have very solid buffers compared to the required levels of the authorities. 160% short-term cash management, 139 on the long-term, on the mid-term cash management, and the solvency side of the insurance standard, 200, on a very solid 200%, which is double of the requirement of the authority. The small decline has to do with some concentration risk. It's not even worth it to mention it, but it is still at a very high, elevated level, 200%. Which brings me to the forward-looking part. Well, there are two sides to the story. What about economic growth, and how does that impact our way going forward? You know, we do expect that, in the euro area, growth will be, we'll call it moderate, or, and that moderate growth will bring it ultimately to roughly a bit more than 1%. Also going forward, 2025, 2026, we think it will be in the same area, 1.2, 1.3%. It depends a little bit where you are in Europe. If you're in Western Europe, it will be a little lower. If we are in, in the Eastern, Central Europe, where, obviously for us, a big part of our activity is located, we speak about a bit higher, growth levels, roughly one to one or 50 basis points higher. On the inflationary side, despite the deflationary trend, we do see an inflation position, which is slightly above the required level of 2% of the central banks. We speak about 2.2-2.3%. So in that perspective, we do expect further rate cuts to happen going forward, starting in the Eurozone in September, and further rate cuts in Czech Republic and Hungary. According to what they have been announcing earlier, we do see that trend evolving. How do we translate that into our, our guidance? Well, you know, given what I said also on the inflow of deposits, a couple of compensatory elements which could be there, amongst others, the competition, and I think that is the strongest element which we have to observe, and that will be influencing where we are, ultimately are, at the end of this year. We are putting our guidance now at EUR 5.5 billion ballpark, compared to the previous guiding, which was saying, floor EUR 5.3 billion, ceiling EUR 5.5 billion. So we go to the upside in this perspective, and we clearly also upgrade the 4% on the, on the lending side. All other elements, we have chosen not to change them, also because we are going into a planning process anyway, going forward, and that is also indicating why we did not change the guidance on the longer term or the midterm. That's for two reasons. First of all, huge volatility on the forwards, which are obviously impacting the income side. And then secondly, also, we, in principle, only update longer term guidance once a year, and that is always on the back of a budget exercise, which now starts in September. Potentially one of your questions might be, what about the impact on risk-weighted assets given Basel IV and the consequential postponement of the IRB to be? Well, we will update those numbers on the back of the third quarter results. So announcements will be done on this matter in November, and then we will include all the elements I just highlighted. For KBC, the FRTB impact is hardly, let me use the word negligible, so it is having very little impact. I would keep it here, and I'm not going to go into the detail of the countries, but I will give back the floor to Kurt, which will guide us through your questions. Thank you very much. Thank you, Johan. I open the floor now for questions. Please restrict the number of questions to two, to allow for a maximum number of people to raise questions. Thank you. Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the first question from line, Bernard Petra from CAPTRUST. The line is open now, please go ahead. Yes, good morning. Yeah, I don't know if Luc is in the room, but I want to thank him for all the time and the very good answers, and it was a great pleasure to work with Luc. Yeah, good luck for your new challenge, obviously. So the first question is on net interest income. Yeah, thanks for the upgrade for 2024. I was just wondering how you think about your more long-term NI guidance of at least 1.8%. You know, it seems that yeah, the mix shift is looking a bit more positive now. Also the pass-through rate, you know, after two quarters, things have been pretty stable. Also, you know, kind of the outlook on the State Note, I think, I guess you get a bit of visibility on this as well. On the other side, obviously, the forward rate have been trending down very recently. I think you were expecting 2.5% ECB rate end of 2024. So I wanted to get your view or your stance on this 1.8%, at least 1.8%, NII growth for 2023, 2026. And the second question is on the cost guidance of less than 1.7%. I think you are doing extremely great on OpEx. So if I take OpEx, ex bank tax, and including insurance commission for H1, I think you are, yeah, I think you are basically, flat, EUR 2.3 billion, roughly. So I appreciate that, you know, you expect always a, an accrual, effect, in the fourth quarter, but it's, it has to be a pretty brutal, effect in the fourth quarter to, to get close to the upper end of, of your guidance. So yeah, I was wondering why you did not update, the cost guidance, at this stage. Do you expect, something we, we don't know, in, in terms of cost, cost inflation in the second part of the year? Thank you very much. Thank you very much, Bernard, for your questions, and I'm not sure who you want to answer your question. Is it me, or is it only Luc? I am not sure, but let me start myself, and then Luc will give you the second part, okay? For good understanding in general, on guidance in general perspective, we didn't want to update the guidance, because indeed, you're right, we could update every single guidance which we have given, both for the year 2024, and for the year 2025, 2026. But as I said, this was intended not to be the policy. Why did we change the guidance for 2024 on the net interest income side? Because it's so obvious that we will shoot significantly above, and it's also quite crucial.... for going forward, for what it means also for, for you guys to calculate what the impact might be. Now, let me come back to your first question on net interest income on the CAGR. I mean, I think you, in your question, you already highlighted the crucial elements in this perspective. First of all, there are two elements which are constantly influencing the evolution of our net interest income. That is, I mean, the big influences. That is volumes on one side, and then obviously margin, so including pass-through. In that perspective, if you look at volumes, well, in 2024, we had a big impact because of the September 2023 State Note, which took away a lot of volumes and has negative impact on our volumes anyway, in 2024. We do expect. So in September fifth, the State Note matures, and then obviously everybody is preparing itself to try to get back the monies which were flowing out. In our case, there was EUR 5.7 billion. Also, KBC is prepared for bringing back as much as possible of that money. We already took some initiatives, as you might have picked up in the market, but we are clearly ready for bringing back as much as possible of that money. What it will be and how it will quote it, that is something you will see going forward. We don't disclose in detail because that would give insight in our professional strategy. Sorry, in our commercial strategy going forward, would not be wise. But let me summarize it as follows: We try to get in as much of that volume as possible, but the impact on the net interest income in 2024 will be limited. It is different for year 2025 and 2026. There, the impact is significant. Now, the second thing is, and also there, your analysis was correct. The second element is the margin which we make, so the margin on our replicating portfolio on the one hand, and then secondly, the margin which is influenced by shifts between current account, saving accounts, and term deposits, as a matter of fact, how much money is passed through to our-- of that margin, is passed through to our customers. And also there, we see a change, at least at the end of the second quarter. It's quite clear that the shifts between current accounts, saving accounts, and term deposits, let me translate it different, from high margin to lower margin, is changing. It means that the evolution on our net interest income is becoming positive. That's one of the reasons why commercial results, current commercial transformation results increased in the second quarter, and the biggest impact you start to see quarter three, quarter four, and then definitely going forward. In that perspective, the trends which we see in Central Europe, in essence, Czech Republic and Hungary, is crucial. We have seen rate cuts very significantly in 2024, quarter one and two, and that has translated itself in a shift on the customer side or, or a smaller shift on the customer side, from term deposits, even back to current accounts and certainly also saving accounts. As a matter of fact, has a positive impact on the margin. You will see the impact of that in quarter two, three, four, and the following. We do expect rate cuts as of September in the Eurozone as well, and we will potentially see the same impact in the Eurozone on those shifts going forward. Impact to be seen probably more in 2025 than in 2024, 2024. Last but not least, we use for calculation purposes, the forwards of January. If you look at the forwards, now, then they are more or less in line with what we have seen in January. Now, talking about forwards, they have been jumping up and down the last week, so things will change in that perspective. But as we have calculated, what we have guided with forwards of January, we are more or less in line with what is now currently the forward going forward. So if you start combining all these things, volumes, margins, shifts, then clearly, you could say we are easily getting that CAGR of 1.8%. Why didn't we adapt going forward in the long term? Because of what I said, budget reasons and the volatility on the forwards. We will do that exercise anyway and announce that in the course of, of, the first quarter next year, traditionally. On the, the, the second element for 2024, there is one crucial element which we don't have an answer on, and that is the reason why we remain a little bit, conservative. That is, what about competition, giving the State Note and the consequences of that competition after the, maturity of the State Note? Given that uncertainty, we feel comfortable with the 5.5 ballpark, and we definitely feel comfortable with the 1.8% CAGR, but we don't adapt the guidance. Hey, you're on, on the, the cost side. I think indeed it looks flat, half year, on half year, but you cannot extrapolate that for the second half. The main, the main reason, or one of the important reasons, is Ireland. Because in Ireland, in the first half of 2023, we still had about EUR 80 million of costs, as we still had quite a lot of infrastructure and FD people on our payroll. This of course reduced quite heavily in the second half and also in the first half of this year. So there is this Irish effect you have to take out, and you cannot get that repeated in the second half. That's an important factor. Secondly, typically we increase wages across the group in April, so the effect of a wage increase, so, is not evenly distributed over the years. We have more effects in the second half of the year, and we should also add that currently there is a catch-up effect in Central and Eastern Europe. Costs for wages in the last years when inflation was high was lower than inflation. But now we see the reverse, that there is a catch-up effect because of tight labor markets, and the loss of purchasing power is now, that they had in the last few years, is being caught up by the market. So, we have a higher effect than inflation, particularly Central Eastern Europe, less so in Belgium. Thirdly, that is a bit smaller, we also had very successful rollout of further terminals modules in Hungary and Slovakia, which means that the depreciation of those assets started earlier than we thought, you know. So that's actually a success, but on the other hand, it does mean depreciation starts earlier. And this is just a shift, of course, from 2025 to 2024. But that will mainly affect the second half of 2024. And of course, last but not least, you also have the full quarter year-end effect, where we always, always see there's a bit of a hockey stick. We try to avoid that, but we never succeed, as you know, yeah. So these are the elements or, as of the reasons why you should not keep the cost flat for the second half, as well. Right. Thank you, very clear answers. Thank you. Thank you. We will take the next question from line, Tarik El Mejjad, from Bank of America. The line is open now, please go ahead. Hi, good morning, everyone. I would like also to say, to wish good luck to Luc, for the next career adventure, and thanks for all the help for all these years, taking KBC to where it is strong today, as a whole team. I have also a couple of questions, please. Thank you, Johan, for the very detailed explanations on the NII. I guess what you explained all for the 25 and above is what you had in mind, basically, given the assumptions in the beginning of the year. I mean, that all makes sense, and I think it comforts the guidance. I mean, back on 2024, early this year, you were constructive on volume growth on deposit margins. Then you had the competition on deposits, which you sound now, much more constructive on your ability to capture some of these deposits, and at decent pricing, and the volume growth, you upgraded the guidance. So, is there still a chance that you, you go above 5.5, or, you know, given it's later in the year, that that's the number, and then we should more look forward for 2025, that could be, like a knock-on positive effect on that? So this is, number one. Number two is on the, on the cost for Hungary banking tax, so EUR 40 million in the second half this year. What about 2025? Should we assume something around EUR 60-80 million? I just have some guidance there. And then on, on capital and Basel IV, why, why should we expect an update in Q3? What is it related to? Because I thought that's the exercise you've done in the early this year, gave us kind of the pattern in terms of RW inflation. I understand that FRTB, but you commented, and it's obvious for you, it's a very small number. So just to, to understand what kind of updates should we expect. Thank you. Thanks, Tarik, for your question. Let me answer, for sure, the first one. So, I mean, you know, we have all the components on the table, so we have the volume. I'm talking about 2024, for good understanding. We have all the components on the table, the volumes, and the margins. Margins are influenced by two things, the way we have replicated our portfolio, and as you know, we have shifted some of our shorter term impacts to the longer term impact, which will clearly benefit not in 2024, and that is a negative impact, but it will have a positive impact on the net interest income of 2025. So we locked in the higher rates for longer, impacting negatively, the short-term benefit in 2024. And then the second thing is, the shifts between current account, saving accounts, and term deposits, we have seen at the, in the month of June, which is the end of the third quarter, at the end of the second quarter. We have seen a trend shift in that perspective. Now, the trend shift is mainly in Central Europe. In Belgium, we have still seen a growth of term deposits, and that has to do with competition. So, that is clearly a positive trend. We have seen the replicating portfolio yields increase also in the second quarter, and we will continue to see that going forward. The reason that we did not, and that we stick to the EUR 5.5 billion, which we're comfortable with, the reason that we do not increase that, according to what you asked, EUR 5.6 billion, is obvious. That is, there is one big unknown, and is what about competition? On the volume side, I'm pretty sure that we will attract a significant amount of the State Note, but what I cannot predict now, in detail, that is what is going to be the position of our peers, our competitors, going forward. Until now, the proposals which we are today, eighth of August, the State Note matures the fifth of September, so still a month to go. Until now, the proposals are perfectly in line and sound in terms of where the forwards are, where the rates are, and so on, so forth. So this is perfectly in line. If we continue to have this sound behavior for the period to come, then the outcome will be more or less in line with what I said on the guidance for 2024. If we start to behave irrational, giving away all margins, and we continue to do so, then, so as a matter of fact, if it would be a real war on deposits, then it is better to be a bit conservative in terms of where we are with our guidance. And for that reason, we think 5.5 ballpark is the precise number. In that perspective, I think the announcement of the third quarter results will give more detail, because then we are at, at the end of the State Note campaign, and we will clearly have insights where we are with, with the competition going forward. All the other stuff, lending, income, and so on, so forth, I explained, we do expect that to be the same line as what we have seen in the first half of this year. We expect this to be more or less in the same perspective in the second part. In terms of bank taxes in Hungary, I'll give the floor to Luc. Okay, Tarik, and also Benoit, by the way, many thanks for those kind words. That is very much appreciated, and I will miss you all, guys, I can tell you. But to give an answer on the EUR 40 million, up to EUR 40 million extra bank tax in Hungary, for next years, actually the up to EUR 40 million has three components. There is, first of all, an increase of the financial transaction levy, that will continue the next years. And, well, is to the, the, of course, the law can still change, but we assume that it will still continue the next years, that the transaction levy increase, of, will continue. There's an additional fee that has been introduced by the Hungarian government, which is a fee on the conversion of foreign exchange on Hungarian forints to other currencies and vice versa. A charge is being levied there, and that will normally also continue in the next years. The third one, third part is an increase in the windfall tax. Now, there is a particular element that is that the extra windfall tax can be offset to some extent, and that depends on the extra purchase of Hungarian government bonds. So if you buy more government bonds compared to last year, then a portion of that can offset the extra windfall tax. We've assumed already in the EUR 40 million that we have purchased extra bonds, and the way we've done that means that for next year, we should be neutral, more or less, for next year. So that means that there would be actually a reduction of the EUR 40 million, yeah. But of course, I, the details I cannot provide you at the moment. Then the other one is on Basel IV. Why we said that we update in November? Well, we have updated the Basel IV impact in the third quarter of last year, and we just want to do that each year at the same time. Plus, it is just before Basel IV will take full effect, so we want to give you a last overview of where we are at that point in time. But we do not expect there to be any material changes. Obviously, there will be changes because we will change the balance sheet on which we made the calculations, and because you saw that it is based on a static balance sheet last time. We will update the balance sheet, so there will be moving parts that will influence the numbers. And secondly, there's of course FRTB, where you will have a shift to 26 from 25, and that will, of course, be a positive element. But again, this also will not be material for us. Very clear. Thank you very much. Thank you. We will take the next question from line, Giulia Miotto from Morgan Stanley. The line is open now, please go ahead. Hi, good morning. Thank you for taking my questions, two from me as well. In terms of sensitivity, because as you mentioned, the curve is moving around a lot. I believe last time you disclosed this, it was EUR 70 million for 25 basis points across curves. Is the sensitivity still, you know, valid? Would you update it? And any more color by currency, say, euro versus Czech koruna, for instance. That's my first question. And then secondly, totally appreciate that the impairments, the EUR 68 million, are related to sort of isolated files, but bankruptcies are ticking higher in Belgium. And so if you can give us some comments on, you know, whether you are seeing cost of risk pick up from here. And then... Sorry, if I can squeeze in another one. On Central Eastern Europe, investors sometimes worry that the Czech Republic and Slovakia can be quite impacted by the slowdown in Germany, especially when it comes to corporate sentiment and investments and ultimately, loan growth. What are you seeing on the ground on this theme? Thank you, and thank you, Luc, from me as well, and all the best for the future. Thank you, Giulia. Yeah. Okay, I will thank you very much, also Giulia, for these kind words. On the sensitivity, we've not given an update, but the reason is that basically, even the curves move around all the time, the sensitivities have not fundamentally changed. So the last time we gave an update was EUR 70 million for a parallel shift in the curve of 25 basis points for the full curve. Yeah, and you had to take approximately 50/50 for the short term. That means up to one year and 50% of that for the long term. That has not fundamentally changed. It has decreased a little bit, given of course, that we have continued to lengthen our duration, but fundamentally, no big change. And also for Czech Republic, sensitivity is about EUR 3 million, so 25 basis points. Again, a parallel shift of the short term curve, only the short term curve. That includes all effect, and it's a full year NII, full year versus last year. On the bankruptcy, do you wanna give? Yeah. We'll take the bankruptcy question. And then Giulia, on the bankruptcies, well, indeed, in the Belgian newspaper, there was an article a couple of weeks ago indicating that we had an uptick of the number of bankruptcy. Total was 5,800 now. Well, the first reaction obviously is how does that translate into the books of KBC? Now, for good understanding the nature of those bankruptcies, you need to reflect the comparison period. So we're comparing with the period just after COVID, where amongst others, there was a strong support from the government as elsewhere in Europe. And second thing is, there was a period in Belgium, where it was impossible to go bankrupt because there was a law saying that defaults were suspended for a certain period of time. So we're comparing apples and pears in this perspective. So this is purely the statistical explanation. Now, when I look into the books of KBC, in particular in Belgium, then we don't see those defaults materializing in our books at all. Also because a big chunk of those defaults are in a particular type of business where KBC is not involved at all, among others, hotel, restaurants, cafe business, our exposure is quite limited, and a big chunk of the defaults, which we mentioned newspapers, were particularly related to those three sectors. So I don't see this translated into our books. If I look at the PD migration, so individual PD, PD migration one, two, three, four, and so on, so forth, we do hardly see any shifts. And on the impairments itself, I already mentioned that during the main call, the main presentation, that is also there. We don't see them popping up. For good understanding, the Belgian files where we did impairments on in this quarter, were files which were on our radar already for a longer period, for several years. So in this perspective, it is not linked at all to the news article, which we have seen. And then what about the growth and the growth evolution going forward? How is this going to be translated amongst others, the slowdown in Germany into our growth in the Central European area? We could split it up in different countries, for instance, in Czech Republic. Well, indeed, Germany has a slower growth as the rest of Europe. In that perspective, this is nothing new. This is already the case for 2024. We don't see that necessarily immediately translated into our Central European growth performance. As a matter of fact, if we look at the current numbers, the actual numbers in terms of loan growth, we do see in the Central European countries, a little bit different country per country. But anyway, in general, the countries in Central Europe are outperforming the growth levels, which you have seen in, let me call it Western Europe, among others, in Belgium and for sure, the German side, where, as you know, we are hardly active. So in this perspective, we continue to see the trend or we expect to continue to see the trend of the first half translated into the second half and also going forward. 25, we do expect similar things, but we give far more flavor on that in the course of the first quarter next year. So in summary, we do not see a translated slowdown of Germany in the first half of this year in our production in Central Europe. This is not for the every country the same. I make, I'll give you a little bit more flavor. Slovakia, in that perspective, is a bit slower than the other countries, and we do not expect any change of that trend in the second half of this year. Perhaps to complement this, I think also for the longer, the next few years, we don't think that German difficulties will have a big impact on Central and Eastern Europe. The reason is that we see clearly, first of all, the EU funds flowing into Central and Eastern Europe, and that is quite an important factor. That's more than one percentage points GDP per year for these countries, and that will continue. That is independent from Germany. Secondly, we see also strong FDI inflows into Central and Eastern Europe, also independent from Germany. An example is the fact that there will be a nuclear plant built in Czech Republic, where that will be tens and tens of billions of euros that will be flowing into the country to build those, mostly with local labor and suppliers, to a large extent. Secondly, an example is Hungary, which attracted factories from China. ... to build electrical vehicles. So we see strong FDI inflow in those countries. And, the convergence with Central and Eastern Europe towards Western European standards is continuing, in our view, given the fact that there is still an important labor cost arbitrage, and there is still a near-shoring towards those countries. Thank you. Thank you. We will take the next question from Ra, from line Raul Sinha from JP Morgan. The line is open now, please go ahead. Hi, good morning. Thanks very much for taking my questions, and my best wishes to Luc as well. I've got one follow-up, and then two questions, if I may. The follow-up is just on the EUR 3.6 billion inflow into current accounts. It sounds to me like this was mainly in Belgium and looks like it happened in June. I was just wondering whether you think this is linked to the rate cut. And is this sort of an inflection point in customer behavior, in your view? The two questions that I do have, unrelated: first one is on the reinvestment yields, which was positive in the second quarter. One of your peers commented yesterday that the replicating portfolio is a slight drag for them on a mark-to-market basis at the current level of swap rates. My understanding is that your portfolio has got much lower or significantly low yielding swaps maturing. So I was just wondering if you could clarify for us that the reinvestment yield is still likely to be positive for you at the current level of swaps. And if you don't mind, just my last question is on just the cost efficiency ratio at 42%, obviously well below your targets, but also obviously much better than your peers. My question is, are you looking at how much of your, let's say, better performance on cost efficiency, is down to some of the investments you have been early to make in the tech side on AI? You know, you flagged 4.8 million customers are using Kate, you know, 137K sales. This must be impacting your cost efficiency ratios positively. So I'm just wondering if you've got a sense of how much advantage you have over other peers in terms of cost efficiency because of this. Thank you. Thanks, Raul, for your question. So, on the cost inflow, sorry, the deposit inflow. Well, I mean, of course, Belgium is the country with the biggest of the highest welfare, and as a consequence, also the highest part of our portfolio in terms of deposits. But as a matter of fact, we have seen, in, let's say it as follows: stabilization of the inflows of deposits in month four and month five, so in April and in May. And we haven't seen a slight uptick starting in May and significantly increasing in June. This is the pattern which we have seen. Second thing is, and that is on term deposits, that is shared back to, to current accounts or saving accounts, that is mainly Central Europe, Czech Republic, and Hungary. Now, in terms of inflows, well, we did see inflows indeed in Belgium, but we also saw inflows, in the same pattern as I just explained in Czech Republic and in Hungary. Slovakia and Bulgaria, in that perspective, were flattish. So there was a small increase, but it's, I mean, it's negligible. Now, of course, when you look at the nominal numbers, Belgium is by far the biggest one, yeah? In terms of the contribution to the result, obviously, the euros which come in in Belgium are far more significant than the Czech korunas and the Hungarian forints. In terms of shifts, for good understanding, in Belgium, we had a further slight increase of our term deposits in the second quarter in Belgium as well, and that is due to competition, that is to the way how we prepare for the State Note going forward. I'll give Luc the floor for the second part of that question. Yes. As you know, we have quite a long duration on replicating portfolio, both current accounts and saving account deposits, all for a while, and we've been increasing that duration the last, say, two years to anticipate a reduction in interest rates. That secondly, we have been invested our replicating portfolio on a cyclical basis. That means that we invest on a 10-year nine-year eight years seven years, and so on, so all the buckets spread over a 10-year period. That means that in our current government in our current bond portfolio, there are still a lot of bonds which date from a very low interest rate environment. That means that the average yield on the current portfolio, replicating portfolio, is still well below the current rates. That means that the positive tailwinds will continue for quite a while, and each quarter as well. Each quarter, a little bit up, for many quarters to come and many years to come even. ... So that's the second answer, and you take the third answer, Johan? Yep. Yes, indeed. So indeed, Raul, your analysis is correct. So we have indeed a very favorable position on our cost income side, and, you know, cost income is two levers, the cost side and then income. If we focus only on the cost side, then indeed the evolution of our cost side, which is very positive, also, if you compare it with certain of our peers, is driven amongst others by, and to a big extent, by the investments which we have been doing in the past in terms of artificial intelligence, and clearly that is extrapolated or that is expressed most in the uses of our service bot. But as I always said, and that's sometimes not well captured, most people think that the investments which we are doing on the AI side are translated into Kate as a front-end tool. Well, reality is a bit a bit different. Of course, it has an impact on the front-end side, but we have always, from day one, invested in the integration of Kate into the operational activities of KBC Group. There's a particular slide in our pack that's in there for many, many quarters. Kurt is diving into the pack to find the precise number. But the reality is that because we implemented the artificial intelligence tool in the entire organization, driving the operational processes in a, what we call straightforward way, that means that if Kate is doing something for a customer, then no human being is interfering. So it means efficiency gains, the economy of scale is 100%. Well, that way of working has been the way of working of AI application in KBC Group since day one, and that translates into productivity gains, depending a little bit on the country, between 1% and 1.5%, on average, so CAGR. And that means very significant cost saving. We can express that in numbers of FTEs and so on and so forth. We have decided not to disclose those numbers in detail, because we want to have more and more evidence of the way of working of Kate and the impact on our operations. To give you... I will, I will lift one tip of the veil. We, at least, and this on a very super conservative way, estimated Kate has a positive impact on our FTEs of at least 200 FTEs per month. So translated differently, she does easily the work of 200 FTEs in Belgium. If I would slightly change the assumptions which are underlying, we can easily, increase that number with 100 FTEs. Now, the same is true on the commercial side. I already referred to the, to the main, presentation, that Kate is generating, 137,000 sales without the intervention of human beings, and that is also impacting the cost income ratio, but then on the income side. The slide I was referring to, where the integration of Kate in the operational processes of KBC is explained, is on page 47. It's called the Kate Brain, and that, translate in full what I just said, but then in a graphic way. Thank you very much. Thank you. We will take the next question from line, Samuel Morland-Smith from Barclays. The line is open now, please go ahead. Hi, thanks for taking my questions, and of course, I wish the best of luck to you, Luc, on your new venture. So I've got two questions, both on the competitive landscape in Belgium and your pricing. So firstly, on Belgian mortgages, a slight pickup here in the course of the growth levels, still well below historical. I'm just wondering if you could give some color on how much of that is the difficult environment for loan demand in Belgium, but also how much of that is you choosing not to originate, given the low spread that you print on slide 25, I think it is, it appears to be around 40 bps in Q2. Sam, can I interrupt you? Yes, of course. There's a very poor quality of the line. We can hardly understand what you're saying. Could you? I mean, I don't know how come. Yes, thanks. Give it a try, please. Yep. I won't repeat it all, but of course, thank you to Luc, and good luck. I had two questions on the competitive landscape in Belgium. Hopefully, my line's a bit better. Firstly, on Belgian mortgages, a slight pickup here in the quarter, growth level's still below historical. I'm just wondering if you could give some color on how much that's driven by a difficult loan demand environment in Belgium, but also how much of it is driven by your own decision, given, you know, the spreads you're printing on slide 25 appear to be around 40 basis points in Q2. Are you also choosing not to originate, given those spreads? And then on deposit pricing, I appreciate you can't be kind of too specific with forward-looking statements, but we've seen some of your smaller peers in the Czech Republic track rates down with close to an 80% pass-through. It's been much more limited for CSOB, albeit starting from a lower base. Just wondering if we should apply that dynamic to Belgium, i.e., would you expect challenger banks in Belgium to track ECB deposit rates down much quicker than KBC would? And then, as a small follow-up is, should we think about the main driver for your deposit pricing as the central bank rate or, or the yield on your replicating portfolio? Thank you very much. So thank you, Sam, for repeating the question. Now, we understood indeed, better what, what you were asking. So let me come, let me answer your first one. So indeed, there is a strong competition going on in Belgium on the mortgages, and there has been a general decline of the demand of our customers, that has been triggered by a couple of elements, which go back in time, amongst others, the fiscal—sorry, the tax incentives, which were historically there in Belgium, has been, have been reviewed in Belgium, a bit more than what is it? Well, eight-nine months ago, and that has had a negative impact on the whole market in terms of the production of new mortgages. Now, what is important is that you also made reference to the margin, which is linked to that. Now, what is important to understand is that in the total offer of mortgages in Belgium, KBC has maintained or slightly increased even its market share. So our market share is roughly 1.1-1.6% up compared to our historical average, which means that we hold our ground in that market and in terms of margins, you know, how we think about margin. I think it's quite crucial to have a solid margin. You made a reference to roughly 40 basis points. We don't disclose the precise number, but indeed, in the booklet or in the presentation, that is the detail per quarter. So in that perspective, we are in line with what is market standards, and yes, as you have seen, the market standard brought the margin down. But the pickup which you have seen is only a slight correction on what the production was, let me say, something two years ago. For good understanding, we were perfectly in line, even a little bit better than what we anticipated at the beginning of the year in terms of our budget, so we're perfectly on line. On the deposit pricing, perhaps yes, we don't think that... Well, challenger banks, we don't know how they're gonna react, how they're gonna react the same way as in Czech Republic or not. That is very difficult to predict. There's an entirely different market here. What we do keep an eye on is how our large competitors react to that. Also, we have no insight into their commercial actions, but over time, we think that the big banks will also track down the ECB rates over the next few years. Now, the extent and the timing of that, that is a big unknown, of course, so we'll need to constantly monitor the markets in that respect. For us, the ECB rate is, as you know, less important. We look at the reinvestment yields of our replication portfolio, and as you know, replication portfolio yields are further increasing quarter by quarter and also year by year. So that means that if rates would stay the same here, that our margin improves. If the rates would come down, tracking the further cuts in ECB rates, then the margin would even further widen. So that was an extra leverage. I should make a caveat, and that is, given what Johan said about the potential heightened competition around the State Notes, that there is always a risk that interest rates on savings accounts can increase. As a matter of fact, in our guidance, we have taken into account that we had to increase to some extent the saving account rate. And next year, depends on where the ultimate, let's say, the equilibrium ECB rate will end up, that will determine whether further interest rates increases could be possible next year. As you know, the pass-through in Belgium is relatively low compared to other countries, yeah. We also need to watch what will happen next years in terms of rate potential rate increases on savings accounts next year. Thank you very much. Very clear. Thank you. We will take the next question from line, Chris Hallam from Goldman Sachs. The line is open now. Please go ahead. Yeah, good morning. Thank you for taking my questions. And first and foremost, good luck, Luc, and I hope you manage to have a bit of a break over the next three weeks before the move. So first, another sort of follow-up on deposit mix, slide seven, showing the drop in term deposits in Q2, and I guess you talked, you know, a lot of that is Czech Republic, where headline rates on term deposit products have been becoming less attractive as rates come down. So should we think about that as how you'd like the playbook to look for Belgium over the next 18 months? So in September, you're gonna see an inflow into term products, with the State Notes. Those will mature, let's say, you know, by September next year, at which point the ECB policy rate will be significantly lower, the term offerings won't be so attractive, and the maturing money, term money, moves into call. Is that how we should think about how you would like to manage your deposit mix in Belgium over the next year and a half, in the context of falling policy rates and the maturing State Note? And then secondly, Clarification just on capital planning. You've said obviously again, that you're gonna review the surplus capital threshold in the first half of 2025. Several of your peers are going to see higher than expected quarter one capital ratios in early 2025 due to the delay in FRTB, right, the one-year delay. When you calibrate your new capital ratio target in early 2025, do you expect to perform with the peer group ratios for that dynamic? Thank you. ... Okay, I will take the first question. So I think indeed what you're saying is a perfect reasoning. We also think that if rates of ECB are cut substantially enough, and at the moment, we think that is the case, at least in our assumptions, that there will be less appetite for our clients to enter into term deposits, locking it up for six months or a year, and then prefer to keep the liquidity on the savings account in the first instance. So that certainly will be something that could offset potential increase in savings account rates that I mentioned before. So it's an interplay between, how much pass-through do you give on savings accounts, making it more attractive versus, how many—if you don't, how many are going to switch from term deposit savings accounts anyway? We think that last will be predominant, will prevail. So there will be a positive effect, next year, we believe. And then, Chris, on your second question on capital. Well, yes, indeed, we are going to update where we will be with our thresholds, with the 15%, and that will happen indeed in, in the first half of, of next year. In terms of, the update on November, which we're going to give on the risk-weighted assets, that's a different, has a different purpose. That is, give complete transparency to the market, where we are in terms of the impact of Basel IV. We already highlighted that. Now we have a new element that is the postponement of FRTB with 12 months. But as I said, it is hardly going to... I mean, it's not going to have a significant impact on us. So intrinsically, that FRTB postponement or the whole analysis around Basel IV as a consequence is one driver, but FRTB is not going to influence that, or the postponement of FRTB is not going to influence our position in terms of when and how we will deal with the threshold. So more information on that will be given, as I said, in the course of the first half of 2025, so no changes there. Right. And Johan, just to follow up on that second point, I think what you said before is the surplus capital threshold, at least part of the sort of input to that decision, is where your peers are in terms of capital ratios. And so what I meant by the question was not necessarily FRTB for KBC, but if a certain number of your peers have a higher than usual CET1 ratio, just because of the delay, I guess the peer group average has to be normalized, right? In early 2025, for the fact that they have an artificially high CET1 ratio for a period of time, for 12 months. So I'm just trying to see whether or not you've kind of taken into account the fact that another bank may have a slightly higher, higher capital ratio than you'd previously expected because of their own FRTB delays. Yeah. Yes, indeed. I mean, your analysis is fully correct. So indeed, two elements. First of all, we take into account our peers, and in that perspective, we will observe, and that's one of the reasons why we do it, in the first half of a year, so that we have better insights where our peers are, not only on the actual numbers, but also in terms of what their policies are on capital distribution. Now, the second element, and you're spot on, obviously is going to influence where they are with their risk-weighted assets, and as a consequence, with their capital ratios. So we also take that information into account as well. And let me say something else. We will also take into account the fact that Basel IV is phasing in over a longer period. For instance, the impact of the floors, and we are speaking about 2020 to the tail of that range, 2023, ultimately, 2030, 2032, it will have a potential impact. Well, you know, given the time delay between today and 2032 or 2033 ultimately, there's a lot of water going to flow through this Schelde before that happens, and it means also that there can be a lot of mitigating actions taken. So we will position ourselves also on the question, what are you going to do with the tail when you take into account your capital position? So the answer to your follow-up or your clarification on your second question is, indeed, you're right. We will take into account peers, and we will take into account specific circumstances of the Basel IV directive. Super helpful. Thank you. Thank you. We will take the next question from Kiri Vijayarajah from HSBC. The line is open now, please go ahead. Yes. Morning, everyone, and firstly, best wishes from my side as well, to Luc on the next role. Yeah, so a couple of questions remaining. So just firstly, the uptick on the volume growth target from 3% to 4%. Obviously, the momentum in the first half is already consistent with that. But could you just elaborate a bit more on where we should be a bit more optimistic, in terms of our growth, volume growth assumptions? It sounds like the big Belgian mortgage book is still a bit subdued, given the margin outlook. So where's the acceleration, if you like, gonna come from versus your previous thinking? And then on the deposit inflows, you, you've given us a lot of detail on the various moving parts, so, you know, thanks, thanks for that clarity. But conceptually, you know, given the volatility we've seen in the last couple of quarters in terms of the deposit flows across the different buckets, I'm wondering, do you need to be a bit more cautious in allowing a lower proportion of those deposits to flow into the reinvestment portfolio? I know you're talking about increasing duration, but commensurately, are you also holding a bit more as kind of overnight cash just because of all these larger movements than you've historically seen in the various buckets of your deposit base? So how should we think about that, please? Thank you. ...Thanks for your questions, Kiri. Let me take quickly the first one. So in essence, the uptick of the volume growth is throughout the book, throughout the entire portfolio, throughout the entire group. As I said, all countries are a little bit different, and we do see obviously, also given the size of the book, a bit percentage, relatively speaking, percentage wise, a bit stronger growth in Central Europe. But the growth uptick, so the fact that or the trigger, which allowed us to upgrade from 3%-4%, is not specifically linked to one country, but it is linked to the performance in the entire group. And then it's also linked clearly to the growth in the, the corporate book, whereas the mortgage book is more in line with what you have seen, and that detail is by the way, also provided in the back. On the dynamics with the inflows in deposits in the different countries, you're right. What we typically do when we see large inflows, we typically want to first analyze how stable those deposits are. So that means that in first instance, we keep them on a short-term basis, which of course, in a reverse yield curve, which has a positive impact. And depending on the stability analysis that we have pursued, we then lengthen the duration of that part, partly so investing in longer term bonds, also on a cyclical basis, as I explained before. So yes, there is an effect of that in the third quarter. Understood. Great. Thanks, guys. Thank you. We will take the next question from Guillaume Tiberghien from BNP Paribas. The line is open now, please go ahead. Yes, good morning and good luck, Luc. So the two questions are: number one, on the cost, the bank tax. Obviously in Belgium, you've had a release of EUR 32 million, which I guess is partly coming from the money you lost from the government bond. So is a starting point for next year the 317 of Q1 rather than the 285 of H1? And similarly, just to clarify on the Hungarian one, you mentioned the +40, and then you said it's neutral for next year. So does it mean -40 compared with this year, or flat compared with this year? So that's on bank tax. The second question is on the cost of risk. Can you remind us exactly what you do in the foreign branches outside of Belgium? Because every time there seems to be an accident in terms of cost of risk, that seems to be driven by one or two large files in those branches. So if you could sort of explain what you do and what's the outlook for that. Thank you. So, I'll take the question on the bank taxes. So the first question on the bank taxes, we should take the full year or the current one? Of course, it's yes, the current one. You're absolutely right. So it will be lower by that amount that you mentioned. As for Hungary, what I meant about the EUR 40 million, and it's up to EUR 40 million, depending on how much bonds we can or how we can buy extra in the market. But suppose we do not buy any extra bonds, there are three components that I mentioned. Two components relate first to the financial transaction levy, which has been increased. That will continue, so it will be at that level. The second one is the EVIC's conversion fee, for any EVIC conversion that happens with clients, again, a new fee has to be paid. It will also continue, so there will not be a reduction, next year on the country, depending on the activity volumes, and we could assume that there will be more activity next year, that will actually slightly increase. On the last aspect, the windfall tax, there we think that can be neutralized. That means that it'll be going down, yeah, and that is, well, quite a substantial amount of the EUR 40 million. Yeah. Could it be paying? Yeah. Yeah. So, oops, I did not switch on my microphone. Sorry, for that, Guillaume. So on the cost of risk, so let me nuance a little bit your, your question. You said it's each and every time, the foreign branches, this is fortunately not the case. So, in this instance or in this quarter, indeed, we had by coincidence, 2 files which were related, and the two biggest ones, and then EUR 29 million out of the EUR 58 million were linked to, those foreign branches. But how, what is our policy and how does it work? Well, in essence, the foreign branches are doing business for customers which have activities in our core countries. In this perspective, one of the files, I don't know, are we allowed to, to, to... No, we're not allowed to mention the name, sorry, but one of the—I mean, the two files were having activities in our core countries, Belgium, Czech Republic, and so on, support. And, the mothership of that company is then located in one of our neighboring countries, and for that reason, it is linked to the foreign branches. But it always starts from also credit and credit demand in the local countries. Now, each and every quarter, definitely not the case. In previous quarters it was always, the files were always in essence, in one of our core countries. And let me repeat what I said, we are still at historic low levels in terms of cost of risk. And maybe I can add that we, we had the same question, obviously, both at the group ExCo and the board, to see whether this was something happening more in foreign branches. We did an analysis, not recently, but did an analysis, and we could not see any material differences in credit costs between Belgium and the foreign branches. Yeah. But obviously, it, it happens that it sometimes happens that these accidents happen in foreign branches, because we do have a lot of foreign entities which do business in Belgium. And therefore, as a proportion of the foreign branch portfolio, one failure has a big impact in the foreign branch, compared to Belgium, which has a much wider and diversified portfolio. Yeah. Thank you. Perhaps not one thing on the bank tax in Hungary. We just had a short discussion, and we're going to disclose broadly that about 50% of the EUR 40 million is due to windfall tax, and the other half, more or less half, is due to the extra financial transaction levy and the foreign exchange conversion fee. So that was it. Thank you. Thank you. We will take the next question from line, Mohit Kumar from Berenberg. The line is open now, please go ahead. Good morning, and thanks very much for taking my questions, and best of luck to Luc in his next role. Another one on loan growth, please. You spoke quite positively at the last quarter on your Belgium corporate lending pipeline. Are you still feeling very positive about that? And yeah, any additional updates there would be welcome, please. And then secondly, on Czech NII, do you still guide for it to be at least flat year-on-year? Or might you upgrade that guidance a little bit? What do you see as the key risks there, I guess, for NII to be only flat year-on-year, assuming constant currency effects? Thank you. Thanks, for your questions. Let me take the first one. So the reason why we upgraded the growth level, 3%-4% at least, has to do with the fact that indeed, you can see the evolution in the book throughout the group. And it means, amongst others, that corporate lending activities in Belgium have a good outlook. So as I will use your wording, the pipeline in that perspective is positive. Also, let's be aware, the dynamics of growth, because we always make comparison quarter on quarter and year on year. The dynamics in the perspective are very important. If I look specifically at Belgium, last year, fourth quarter, we had an extremely strong quarter. Therefore, we had a little bit of a subdued first quarter this year, that is, as normal, the traditional fallout. So what we do see is second quarter was very strong. We continue to see a very well-filled pipeline, so therefore we continue to see a continued strong growth in this year. For that reason, I mentioned already, the year-to-date production numbers in total group 2.48%. Let's be careful making comparison quarter to quarter; in the fourth quarter, we'll make for Belgium, specifically a comparison with an extremely strong quarter. So even if the number looks a little bit, statistically a little bit low, it is still a strong performance. So short answer to your question, and corporate lending pipeline is filled in all countries, including Belgium. On the Czech NII, given that we see an improvement even in the loan growth, margin development to some extent as well, and then what we see on the deposit side, which shifts back to current accounts, savings accounts, as well. I'm getting a little bit more bullish in the fact that I wouldn't say flattish, but perhaps slightly up, yeah. To what extent, I cannot tell you at the moment. We need to look at further evolvement in the next quarter, but slightly up probably compared to last year. Great. Thank you very much. Yeah, we will take the last question from line, Anke Reingen from RBC. The line is open now, please go ahead. Hi, Anke, your line is open now, please go ahead. Apologies. I hope you can hear me now. All the best to Luc, and thanks so much. Two simple questions, please. The first is on the spreads and front book spreads in Belgium again. Do you think with rates coming down, there is an opportunity for those spreads to increase? And is the higher spread in SME and corporate loans in Belgium in Q2 indicator of this? And then secondly, sorry, to come back on the large files provisioning. Do you think there's sort of like, could potentially more of these legacy cases now coming through? Or do you think as the pressure, the pressure will be coming off now as rates are coming down, and how quickly would you actually see a deterioration in the asset quality? Does it take, like, a half year for the accounts to come in, or would it be much quicker, unless obviously someone doesn't pay? Thank you very much. ... On the spreads front, front book, we see continuous competitive pressures. So yes, we were hopeful that spread, that the decrease in rates would give some room for margin improvement. We do see that here and there in Central and Eastern Europe. For Belgium, I would be more cautious about this aspect, because we feel there's still a lot of competition, particularly on mortgages, on the corporate and SME book that is more short-term fixation periods, where it's more a spread business than a pure yield absolute yield business. There, we think margins will be more or less stable, yeah. But, I'm not too optimistic about that tailwind. Then, Anke, on your second question, about the impairments and are mainly on the larger files. So first of all, it's a bit unfortunate I could not mention the name because otherwise it would give immediate answer to your question, but we can't disclose the names. But let me answer as follows. No, there is no big pipeline of legacy files. Very straightforward. There is not. The last indeed two or three bigger impairments which we have had also in previous quarter were linked to files which were well known. That is indeed correct, and therefore, perhaps it gives you the sentiment that is all linked to the legacy book, and that is all linked to files which have been on the radar screen for, let me say, something five years. This is definitely true for at least three files, which we have mentioned in this year, but it is definitely not the case for the remainder of the portfolio. So we don't have a set of legacy files, which are potentially boiling up in the quarters to come. So in essence, as a matter of fact, we feel so super comfortable with our guidance, and it's no big surprise. And given the fact that we don't see any shifts or significant shifts at our PD classes, there is no expectation whatsoever that this would be different for the existing book, and there are not a whole bunch of legacy cases which might change that picture. Okay, thank you very much. Thank you. It appears no further question. I'll hand it back over to your host, so for closing remarks. Thank you very much for the interesting questions. This sums it up for this call. I would like to thank you for your attendance and enjoy the rest of the day. Cheers! Thank you for joining today's call. You may now disconnect.