Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the Deutsche Bank Q4 2022 Fixed Income conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press Star followed by 1 on your touchtone telephone. Please press the Star key followed by 0 for operator assistance. I would now like to turn the conference over to Philip Teuchner. Please go ahead. Good afternoon or good morning. Thank you all for joining us today. On the call, our Group Treasurer, Richard Stewart, will take us through some fixed income specific topics. For the subsequent Q&A session, we also have our CFO, James von Moltke, with us to answer your questions. The slides that accompany the topics are available for download from our website at db.com. After the presentation, we will be happy to take your questions. Before we get started, I just want to remind you that the presentation may contain forward-looking statements which may not develop as we currently expect. Please take note of the precautionary warning at the end of our materials. With that, let me hand over to Richard. Thank you, Philip. Welcome from me. Three and a half years ago, we set ourselves some key financial goals for the end of 2022. Today, we would like to talk to you through what we have achieved and to highlight how Deutsche Bank today is a fundamentally different bank. Let me start with the five decisive actions we took as we launched our transformation strategy in 2019 on slide one. Firstly, we created four client-centric divisions which have delivered stable growth as promised. In 2022, these four businesses contributed to our best profits for 15 years. These divisions complement each other and provide well-diversified earning streams. We are now a better balanced bank. We are particularly pleased that the Corporate and Private Banks together more than doubled their contributions since 2018, contributing just over 70% of the group's pre-tax profits in 2022. Secondly, we exited businesses and activities which were not core to our strategy. We exited equities trading, transferred our Global Prime Finance business, refocused our rates business, and downsized or disposed of other non-strategic activities. Our Capital Release Unit reduced leverage exposure from non-strategic activities by 91% and risk-weighted assets by 83%, excluding RDOAs from operational risk. This enabled us to redeploy capital into our core businesses. Thirdly, we cut costs. Compared to the pre-transformation level of 2018, we reduced our cost-income ratio by 18 percentage points. We achieved this while absorbing more than EUR 8 billion of transformation-related costs. Fourthly, we committed to and invested in controls and technology to support growth. Finally, we managed and freed up capital. The Capital Release Unit played an important role here, contributing around 45 basis points on a net basis to our CET1 ratio. Let me cover the impact delivering the transformation plan has had on our profitability and financial stability on slide two. We are pleased that all divisions delivered significant positive operating leverage on an annual basis since 2018. We intend to continue to deliver operating leverage for the group on an annual basis going forward. Our returns have improved every year since 2019. We have reduced non-interest expenses over the period. We will continue to be disciplined on costs, including working on additional measures to offset cost pressures in line with our 2025 target of a cost-income ratio below 62.5%. Finally, our capital remains resilient. Since 2018, we absorbed around 270 basis points of capital headwinds from regulatory impacts on our transformation plan and ended the year at 13.4%, around 300 basis points above our regulatory requirements. Let me now turn to our performance in 2022 on slide three. Our achievements have positioned us to build and maintain a trajectory of sustainable growth, this is reflected in our 2022 results. Revenues are above EUR 27 billion, well ahead of what we had planned in 2019, despite the business exits I mentioned. All four core businesses produced positive operational leverage compared to their pre-transformation levels. In 2022, our reported post-tax return on tangible equity was above 9%, including a deferred tax valuation adjustment. In terms of profitability, we delivered our highest profit since 2007 at EUR 5.6 billion before tax. Our cost-income ratio is 75%, significantly below the pre-transformation level of 93% in 2018. Pre-provision profit for group was nearly EUR 7 billion in 2022. We proved resilience during the challenging environment of the past few years. This regained resilience was also recognized by the credit rating agencies. Since 2021, we have received four upgrades of the three leading agencies, and we are confident to have further momentum. We have maintained disciplined risk management and a strong balance sheet, as you can see on slide four. In order to maintain this discipline going forward, we continue to invest in our people and risk management capabilities, as well as controls and technology, which support timely and proactive risk management. This enables us to manage risks dynamically within our frameworks and, most importantly, within our risk appetite. We continuously monitor emerging risks, run downside analyses and stress tests, and operate a comprehensive limit framework across all risk types. In this way, we can respond proactively to changes in our operating environment, as you have seen us do in 2022 during the escalating war in Ukraine and the stress on European energy supplies. Despite challenges throughout the year, our risk management approach helps us maintain strong risk and balance sheet metrics. Our provision for credit losses was 25 basis points of average loans in 2022, in line with our guidance provided back in March. Let us now dig a bit deeper into some treasury related topics over the next slides. Slide five provides further details on the developments in our loan and deposit books over the quarter. All figures in the commentary are adjusted for FX effects. Overall, loans have declined by EUR 2 billion in the quarter. Loans in the Corporate Bank have decreased by EUR 5 billion, driven by active portfolio management over year-end, as well as EUR 2 billion of episodic effects. In the Investment Bank, loan growth in the quarter has been EUR 4 billion, driven by strong demand across FIC in high quality structured lending, coupled with moderate growth in origination and advisory. Given the macroeconomic environment, we remain very focused on managing the client demand in FIC within our risk appetite. In the Private Bank, loans remained essentially flat. For this year, we continue to expect moderate loan growth, predominantly in the Corporate Bank and Private Bank. Moving to deposits, where our book grew by EUR 4 billion compared to the previous quarter. This growth has been driven mostly by targeted measures in the Corporate Bank, as well as some episodic growth. Deposits in the Private Bank have remained essentially flat. In 2023, we are focused on structurally increasing deposits in both the Corporate and Private Banks, in line with our TLTRO repayment plans and business strategy. Turning to slide six, I would like to provide an update of the interest rate tailwind we expect to see going forward. In March 2022, we guided that interest rate tailwinds net of funding cost offsets would add approximately 1 percentage point to the revenue compound annual growth rate from 2021 to 2025. This figure has risen to approximately 1.5 percentage points from our 2022 landing point based on rates and funding spreads as of the 20th of January. You can see the divisional CAGRs net of funding impacts on the right-hand side of the slide. As we want to give you a consistent view across rate and funding cost impacts, these figures are based on the evolution of our planned liability stack rather than a purely static balance sheet, but do not include the impacts of planned lending growth. In 2023, we expect to see strong interest rate impacts due to the timing effects resulting from the rapid pace of interest rate rises. By 2025, the rollover of our hedge portfolios will have offset the reduction in this timing effect, resulting in the net interest income benefit being maintained. Noted at our third quarter call, the sequential tailwind from 2022 to 2023 is expected to be approximately EUR 1 billion for the full year. Moving to slide seven, highlighting the development of our key liquidity metrics. Throughout the fourth quarter, we have maintained our robust liquidity position. While our daily average liquidity coverage ratio during the quarter was at our target level of 130%, the increase of the spot LCR at year-end was driven by strong cash balances and positive FX impacts. Compared to the third quarter, the liquidity coverage ratio increased by 6 percentage points to 142%. The surplus above minimum requirements increased by about EUR 4 billion to EUR 64 billion quarter on quarter, mainly driven by significantly lower net cash outflows. The stock of our high quality liquid assets decreased by about EUR 8 billion during the fourth quarter due to our prepayment of TLTRO and a weaker US dollar. Net cash outflows also significantly decreased as a result of lower derivative outflows, committed facilities, as well as our efforts to further optimize the deposit book. For this year, we remain committed to support business growth and continue to manage the LCR conservatively towards 130%. The net stable funding ratio increased to 119%, which is within our target range. This represents a surplus of EUR 98 billion above the regulatory requirement. The available longer-term stable funding sources for the bank continue to be well diversified and are driven by a robust deposit franchise, which contributes about two-thirds to the group's stable funding sources. Over the course of 2023, we aim to maintain this funding mix, with the remaining TLTRO being gradually replaced by covered bonds and deposit growth. Turning to capital on slide 8, our common equity tier one ratio came in at 13.4%, a 3 basis point increase compared to the previous quarter. FX translation effects contributed 2 basis points. 3 basis points of the increase came from capital supply changes, reflecting our strong organic capital generation from net income, largely offset by higher regulatory deductions for deferred tax assets, shareholder dividends, and additional Tier 1 coupons. Credit risk weighted assets led to a 7 basis points ratio increase versus the previous quarter, as the impact of regulatory model changes was more than offset by tight risk management in our core bank. Market risk RWA increased, leading to a 9 basis point ratio decline versus the previous quarter. The higher market risk resulted from higher SFAR levels, mainly driven by a change in the applicable stress window versus the prior quarter. Operational risk weighted assets were essentially flat compared to the previous quarter. Looking ahead, we expect our CET1 ratio to remain subject to volatility, principally due to regulatory model reviews and ECB audits. 2022, amendments were made in particular to models for our midcap portfolio and our German retail portfolio. We expect model changes for the wholesale portfolio to follow in phases. Our first set was implemented in the fourth quarter of last year with an RWA impact of around EUR 2.5 billion. The models for the larger portfolio of financial institutions and large corporates will follow over the course of this year. Our market risk qualitative multiplier is currently being reviewed from which we expect a decrease. We expect to be able to absorb model related impacts via continued retention of earnings, but the timing of regulatory model decisions is likely to create CET1 ratio volatility. That said, we aim to end 2023 with a CET1 ratio of 200 basis points above our maximum distributable amount threshold, expected to be 11.2%. Our capital ratios remain well above regulatory requirements as shown on slide 9. The CET1 MDA buffer now stands at 288 basis points or EUR 10 billion of CET1 capital, down by 1 basis point quarter-on-quarter. While the CET1 ratio increased by 3 basis points in the quarter, the distance to MDA decreased due to the higher countercyclical capital buffer setting in the UK of 4 basis points. Our buffer to the total capital requirement increased to 330 basis points, most notably from our EUR 1.25 billion AT1 issuance in November. As of first of February, our CET1 ratio requirement has increased by approximately 60 basis points, including 11 basis points from a higher setting of Pillar 2 requirements by the ECB and approximately 50 basis points from the introduction of the German countercyclical buffer and the German systemic risk buffer for residential mortgages. This still leaves us with a comfortable pro forma buffer over the first quarter CET1 requirement of approximately 230 basis points or EUR 8 billion of CET1 capital. Moving to slide 10. We ended the year with a leverage ratio of 4.6%, fully in line with our 2022 target of around 4.5% and an increase of 25 basis points versus the prior quarter. FX translation effects resulted in a 5 basis point leverage ratio increase, principally due to a weaker US dollar. 11 basis points came from higher Tier 1 capital, reflecting higher CET1 capital and our AT1 issuance in November. 9 basis point increase came from the seasonal reduction in trading activities at year-end. We continue to operate with significant loss absorbing capacity well above all our requirements, as shown on slide 11. The MREL surface, as our most binding constraint, has decreased by EUR 2 billion to EUR 18 billion over the quarter. This decrease was driven by lower regulatory capital and a rolldown of eligible liabilities, partially offset by a lower MREL requirement due to the FX driven decline in risk-weighted assets. We are well prepared to absorb the approximately EUR 2 billion impact from known regulatory changes, most notably the higher German buffer requirements, which became effective on the first of February, and a further approximately EUR 1 billion from new MREL requirements we expect to take effect sometime in the first half of 2023. Our loss absorbing capacity buffer remains at a comfortable level, even including these changes on a pro forma basis, and continues to provide us with the flexibility to pause issuing new eligible liability instruments for approximately one year. Moving now to our issuance plan on slide 12. We closed the year with a total issuance volume of EUR 24 billion in 2022, excluding EUR 4.3 billion of structured notes, which were not part of our original plan. This is in line with our previous guidance of ending the year at the upper end of a EUR 15 billion-EUR 20 billion range. During the fourth quarter of 2022, we issued EUR 4.8 billion in senior preferred, CoCo Bond and AT1 format, the latter supporting our balance sheet and lending franchise. Offsetting that, we prepaid EUR 11 billions of TLTRO in December and an additional EUR 5 billion in January, reducing our outstanding to EUR 29 billion. For this point forward, we expect to reduce our TLTRO outstanding by EUR 3 billion-EUR 4 billion per quarter through a combination of prepayments and the maturity profile of our remaining TLTRO tranches. Turning now to 2023, we expect slightly lower requirements compared to 2022 and guide to a range of EUR 13 billion-EUR 18 billion with a focus on senior non-preferred and covered bonds. January was a very busy month for financial issuance in the capital markets, with EUR market issuance being up more than 50% compared to January 2022 levels. We were also active and issued roughly EUR 4 billion in January, split between covered bonds, senior preferred and senior non-preferred issuance in the global capital markets. This equates to 30% of the lower end of our full year issuance plan. In addition, we issued our inaugural Panda bond following recent regulatory changes by PBOC and SAFE to facilitate foreign remittance of Panda bond proceeds. This will further boost our credentials as a leading foreign DCM house in China. Furthermore, we published the final results of our dollar LIBOR consent solicitation on the 19th of January. As you have seen, our senior non-preferred instrument met the requirements at the second meeting and the coupon will be amended to reset over SOFR, whereas the AT1 security did not meet the requirements and continues to reference dollar IBOR swap rates. Whilst we are disappointed, we note that the reset does not occur until April 2025. Before going to your questions, let me conclude with a summary on slide 13. As the environment changes, so does our business mix, and the more favorable interest rate backdrop has created a strong step up for further revenue growth. Let me conclude with a few words on how we see 2023. With regards to revenues, we anticipate performance around the midpoint or range between EUR 28 billion-EUR 29 billion, reflecting the impact of interest rates, particularly in the Corporate Bank and Private Bank, as well as robust organic business growth. This will be partly offset by some normalization in other businesses, notably FIC. On the cost side, we remain focused on delivering positive operating leverage, a key driver as we work towards our 2025 goals. We anticipate inflationary pressures but also benefits from our cost efficiency measures. For 2023, we expect to keep our non-interest expenses broadly flat in 2022. Our risk management discipline, coupled with more benign macroeconomic and credit environment in recent weeks, supports our provision for credit loss guidance of 25 to 30 basis points of average loans for 2023. Our current outlook would tend towards the lower end of that range. In other words, essentially flat to 2022. We started the year with a strong CET1 ratio to support growth and absorb the upcoming regulatory driven volatility. With that, I will finish and we look forward to your questions. Ladies and gentlemen, at this time, we will begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their touchdown telephone. If you wish to remove yourself from the question queue, you may press star followed by two. Anyone who has a question may press star followed by one at this time. Our first question is from the line of Lee Street from Citigroup. Please go ahead. Hello. Thanks for doing the call, and thank you for taking my questions. I've got three, please. Firstly, obviously, I'm sure as you do get many questions on your upcoming call, you have 4.296% Tier 2. I know in the past you've stated you're going to take an economic approach to calls. Do you care to add anything to your thoughts surrounding the potential call or not so advantaged ahead of time? Secondly, on ratings, you mentioned sort of optimistic view for ratings this year. Do you expect further upgrades this year? Linked to that, do you have a specific sort of rating target in mind, like, you know, getting your senior non-preferred to, you know, being A-rated or anything similar to that? Finally, the point you just mentioned on the dollar additional tier one and the consent which wasn't passed. Obviously, if you were not to call that bond, I suppose the question is what happens with the coupon? You know, if no further action is taken, will that just end up effectively fixing? That'd be my three questions. Thank you. Thanks, Lee, and thanks for joining on a Friday afternoon. I'll take the Tier 2 security question first. Regarding our, I guess, our dollar one and a half billion Tier 2 security, callable in May. As you rightly said, we continue to make decisions regarding the exercise of those call rights close to the exercise date. As usual, our decision balances the interests of all our key stakeholders and factoring in all relevant economic factors, including the usefulness of the issue with the capital, funding, rating agency metrics, as well as the cost of the instrument versus alternatives. As you probably are sure aware, the call window for the security is actually from the 25th of March to 24th of April 2023. We are monitoring this topic and the market closely. We'd note that the rally we've seen in our spreads over recent months obviously would impact that decision. As always, any call of a capital instrument is subject to regulatory approval. In terms of, I think ratings was your next question. Overall, we are happy with the trajectory we've had over the last years with four upgrades at the leading three rating agencies, but feel there is more room, as I've said in my prepared remarks. We feel that compared to peers; we have on average still around a notch catch-up potential. When we look at specific agencies, obviously Moody's was second half of last year, we had the upgrade there. When I think about Fitch, they're on positive outlook. That was confirmed in September last year. We therefore expect that positive outlook will get resolved at some point during 2023. Fitch in their last report stated that they expect further improvements in profitability together with maintaining a CET1 ratio above 12.5% and a leverage ratio above 4.5%. We think we made good progress on all those factors. So, we're hopeful there. In addition, I guess I think Fitch have flagged that any upgrade would require only a moderate impact from the economic downturn on the, on the bank's capitalization. Turning to S&P, they currently have our ratings on stable outlook. In the recent published commentaries, which will show on our IR website, S&P appreciates the progress the bank has made throughout its transformational program. At the same time, the agency refers to the expectation of a supportive macroeconomic environment as a prerequisite to upgrade our ratings. Over the last few weeks and months even, the economic projections have improved significantly compared to views a few months ago. Again, we remain optimistic there. In terms of consent solicitation regarding the AT1, absent any further action, the fallback language takes effect, which we'll see is a dealer poll, and if that fails, a fixing equal to the last available fixing. Obviously, we can do that thing like debt exchanges as well at some point. Hopefully those answer your questions, Lee, but thank you for the questions. Yep, very clear, and thanks for your answers. The next question is from the line of Soumya Sarkar from Barclays. Please go ahead. Hello. Yeah, thanks for the presentation and taking my questions. I had two please. First, you said you were looking to grow the deposits. Is the deposit growth target for 2023 broadly similar to what you saw in 2022? How is the deposit development trending? You know, it's only early for 2023, but any comment on that? If given that you have TLTRO repayments, if the deposit development is not in line, are you looking at issuing more senior preferred bonds, for example, or it would still be more covered bonds? That would be my first question. Second question would be, you mentioned that, you had looking for a, you know, a year-end target of like, at least 200 basis points, buffered for MDA. Is that kind of like a floor throughout the year, or could we see the MDA buffer, given the CET1 volatility you pointed out, go below that 200 basis points number as well? Thank you. Okay. Thank you very much for your questions. I guess deposit growth. Deposit volumes, both for the Corporate Bank and the Private Bank in 2022 were very stable. The, you know, what we're planning for this year is some targeted campaigns in both our Corporate Bank and Private Bank. The Private Bank campaign has only just started, so it's a little bit too early. But we are expecting overall deposit growth to be slightly above the full year at 2022 and steady throughout the year. I think that is, yeah, we feel pretty confident about our deposit outlook. In terms of TLTRO, there we repaid, EUR 11 billion in Q4, and a further EUR 5 billion in January. In terms of the roll-off profile, we have sort of EUR 3 billion-EUR 4 billion or so a quarter all the way out to I guess the end of the maturity of the tranches in, in sort of Q2, Q3 of 2024. We kind of feel very comfortable around that roll-off profile with no kind of cliff edge effect. This is why, and that roll-off profile we will be funded through deposit growth, or through our current bond issuance plans. That would be, I guess the deposit question. In terms of MDA, we expect to see Q1 requirement of approximately 11.2% by the end of Q4 2023, reflecting already announced changes to the countercyclical buffers becoming applicable throughout the year. We expect further ECB decisions related to internal credit risk model audits to conclude also during the year. Some with likely CET1 ratio burden and others with some potential benefits. However, there is uncertainty on the ultimate timing and magnitude of those impacts, and consequently, we expect some CET1 ratio volatility during the year. Overall, we expect a CET1 ratio by year end of 20 basis points above our MDA threshold. Thank you. The next question is from the line of Iuliana Golub from GS. Please go ahead. Good afternoon. Thank you for the presentation and for taking my questions. I have 2, please. First, would it be fair to assume that in terms of capital instrument issuance, that would be skewed towards your two issuance, given that you have some amortization in your bullet Tier 2 securities and that you're comfortably meeting your AT1 requirements? The second one would be if you could please give us a flavor on the RWA development in 2023. Thank you. Thank you, Iuliana, for joining. In terms of capital issuance, we are, yeah, as you rightly said, we have a, we're in a good place in both our tier two and tier one, I guess, instruments right now. As ever, what we do is think about our own business growth opportunities, that does drive our decision as to which part of the capital stack to allocate to that business growth. In terms of, you know, Tier 2 issuance and what our plans are in that space, again, that's just something we will be thinking about opportunistically as we do any other issuance. In terms of Tier 1, as you know, we kind of issued in November, I think on our in terms of our issuance plans for this year, we expected somewhere between zero issuance, or up to EUR 2 billion or so. Again, that would be kind of more opportunistic, but it's more about where the opportunities are within our franchises to deploy that capital and leverage. It's James. I might take the RWA question. Look, we do expect growth from the businesses, and that's something we want to fund with our capital. We think that's moderate growth. We've talked in the past about sort of low single digit growth in the businesses as we just, you know, grow the franchise over time. To Richard's earlier comments, we will have increases from model audits, where the magnitude, the timing is uncertain. You know, we're tracking obviously upwards with all of that said, but that model uncertainty makes it hard, to be honest, to predict the year-end number on it. We'll have to give you updates as the year goes by. Understood. Thank you very much. Thank you, luliana. The next question is from the line of Robert Smalley, Fixed Income Analyst. Please go ahead. Hi, thanks for taking my question, and thanks for doing the call. Wanted to ask about the loan loss provision. You're going to hold it steady for 2023 versus last year. Fixing that at that level as we go into a slowing economy, albeit less than maybe originally thought, would that speak to more of discretionary and general provisions and management overlays within that provision? At the same time, on the call yesterday, I think, the discussion was that, credit issues may be more idiosyncratic in 2023, which may speak to more specific provisioning. If you could walk me through how all of that ends up with a flat provision, and the thinking behind that, I'd appreciate it. Second part of the question is kind of the same. It seems that most of the credit issues, large credit issues that we're seeing, over the past 12 to 18 months, are not really the result of risk management as much as they are, due diligence issues. Can you talk about your due diligence? You've avoided a lot of these issues, and how that's changed over the past 18, 24 months, given what we've seen in losses around the financial system, idiosyncratic losses, that is? Thanks. Sure. Robert, it's James, and thanks for joining. Thanks for your questions. You know, just looking at Olivier's commentary yesterday, I guess one important part is in the way that the IFRS 9, you know, works, we're basically looking at 2023 as a year in which more likely the provisioning we take will be Stage 3, so, you know, based on impairment events. In some respect, it's therefore very path dependent. It's hard to guess which credits will deteriorate to be an impairment and when. Obviously we take a view based on the portfolio, the risks we see, the environment and so on. The study is, you know, is a forecast, but it's a, it's an educated view based on everything that's going on there. I wouldn't at this point expect that we'd be taking overlays. We're, as you know, reasonably, you know, I don't want to say reluctant. We think overlays are entirely appropriate when the result of the ratings, the models create an expected loss number that you or NSCLP that you think may understate the risks in the books and therefore a more prudent approach is needed. We're not reticent to take overlays, but typically we don't see a need for them. We would not build that into our forecasting. Now, if you ask yourself, well, what is essentially flat to this year, to 2022? You know, it's a level of credit loss provisions between, let's say, or what is consistent with our guidance, EUR 300-325 a quarter. If you look at our history, that's actually a reasonably significant level of CLPs or and Stage 3, absent sort of a significant stress event. This, this current outlook, sort of a milder recessionary environment and slowdown, you know, we think produces that type of outcome. And we don't think that's necessarily an overly optimistic way of looking at it. To answer your question, not including overlays or events that could take place during this year, which is why we decided to keep a range even as we indicate, you know, our comfort today with the low end of the range. Look, on the due diligence side, you know, one of the nice things is we talk about our underwriting standards, we talk about the quality of our risk organization. In many respects, we rely on the ordinary course due diligence that we do in the second line. We rely on the quality of the relationships, understanding our clients and their needs in the first line. You're always learning over time and adapting your processes to what you learn and to the environment, looking at the value of collateral, the, you know, the development of those markets. Hence, you know, I don't wanna say we're fixed in place, but we feel very confident in our processes and in the capabilities of our people in the due diligence. It's one of the pillars we rely on as we think about the risk profile of the company. Hope that color helps, Robert. Yes, it does. Thanks for the detail. My pleasure. The next question is from the line of Ellie [Dann] from Morgan Stanley. Please go ahead. Hi there. Thanks for your presentation. I'd like to ask a question on the old Deutsche Postb ank CMS bonds. Do you have any plans for these? I'm wondering if you just look at them simply as cheap perpetual funding, and if there's any encouragement from your supervisors to get rid of them. Thank you for the question. It's always an interesting one that we think about a lot ourselves. To answer your question kind of the best way is we think to ourselves that You know, it's on our balance sheets, it's relatively efficient for us on our balance sheet. That's why it's not seen which is the regulators, I guess, think, you know, or pressurizing us, I guess, to do anything about. Having said that, where we kind of feel that things are attractive for us to take action on because we're coming up to various exercise dates, then of course, we do consider that. Yeah. The short answer is that we're not under any pressure to do anything with those particular securities. Thank you. The next question is from the line of Corinne Cunningham from Autonomous. Please go ahead. Afternoon, everyone. I have a couple of questions, kind of related. One on refinancing costs. You've got something in your forecast on, I guess how that flows into margin expectations. The other one is on the LCR, and there's quite a big difference between the average during the quarter and then the year-end. When I try and tie this back to what you're saying about replacement of TLTRO funding, I'm finding it a bit difficult to tie it all up. If you look at the Q4 redemption in TLTRO, there's not really much of that was covered by the net increase in deposits and loans. You didn't really issue much in the way of covered bonds in Q4. Yet you had potentially what looked like quite a significant inflow of deposits over the, over the quarter end. Can you just explain a bit about what's moving behind the LCR and maybe also give us what the average for Q3 was as well? You said the average for Q4 was 130. What was the average in Q3? Thank you. Certainly. I think, you know Q3 was from memory just to sort of try to take questions sort of in a bit of a random order. The Q3 was just above 130 on a daily averaging basis. In Q4, we were quite pleased with our steering. We were kind of running sort of daily averages, like you say, around the 130 for most of the quarter. There was a bit of a spike right at year-end, which was a bit just driven by seasonal factors which kind of took us to the 142 number 9. Starting again, in Q1 again, we're kind of back to a sort of daily averaging of close to our target level. I think that's, you know, the liquidity steering I think is working exactly how we're looking to target. In the fourth quarter, we had a very good job of optimizing our deposit book. Essentially just making it as ratio efficient as we can, which allowed the facilitate the repayment of the TLTRO. As you know, the sort of TLTRO impact on the LCR depends on that classification. Yeah, at quarter end, it was only a bit above EUR 20 billion support of the LCR versus around EUR 30 billion at the end of Q3. That reduction in reliance was achieved without the LCR going down through deposit optimization and lower derivatives marked to market. Hopefully that answers your question. Thank you. On the point about margins and your expectations. What kind of cost of funding, typical cost of funding are you factoring in there? Is this entirely driven by paying more on deposits? We factor in a market implied number in the numbers we show in the deck. As of the 20th of January, so that'll be market implied rates as well as market implied issuance spreads. That's for, you know, like you say, for both deposits and for issuance. Sorry to press on this, but are you forecasting just that spreads stay the same, that they perhaps improve in line with credit ratings? First, understanding your question correctly in terms of our, what we're assuming happens in terms of our spreads. Is that what you're kind of saying far on the issuance side? Yeah. Your wholesale funding spread, yeah. Exactly. We just take the current issuance spreads as of, I think, the, for this deck, the 20th of January. Essentially over time, we assume some sort of convergence to our peers, given we do trade wide to our peers. Just we just bake that in because over the next few years, just because as we said earlier around rating agencies, we do kind of feel there is gonna be an uplift. At some point or certainly hopeful there'll be an uplift at some point. In that sense, that's how we price the issuance curve. Thank you very much. The next question is from the line of Brajesh Kumar from Société Générale. Please go ahead. Team, hi Brajesh from Soc Gen. Thanks as always for doing this call. My first question on issuance has already been answered. I'll take this opportunity to hear from you, your views in general on asset quality in FY 2023. Related to that, how much is your direct and indirect exposure to Adani Group? The next one. I missed a bit when you talked about the LIBOR consent solicitation. Can you please repeat that? Mr. Brajesh, it's James. I'll take the first question. On specific clients, you know, except in exceptional circumstances, we don't really comment. As yesterday, you know, we do point to our general sort of conservative underwriting collateralization and risk management, you know, whether it applies to all situations. But we don't go into individual client names. The overall asset quality environment for 2023 is, as I got into a little bit with Robert, you know, we think there are and as all of you talked about yesterday, there are obviously some watch portfolios, so we're not complacent at all about the environment we're in. You know, recessions typically produce a credit cycle. Rising rates produces some amount of, you know, stress in borrowers that may be highly leveraged or where, you know, cash flow or asset characteristics are deteriorating. It's something we watch very carefully. I'll say that, you know, if there are watch portfolios, the ones that we point to for sure would be the commercial real estate market globally, you know, some of the middle market, midcap enterprises that we lend to, and obviously households that whether through inflation, energy costs or other reasons may come under pressure. In fairness, as we look at all of those sectors, though, the downside that we thought might emerge in 2023 just doesn't appear to be emerging. That's why I think you probably hear from us and our peers, a more optimistic view about the credit environment than we might have expected three or four months ago. Our portfolio quality overall has been quite stable. When you look at forward indicators, you know, NPE has gone down. There's been stability more or by and large in our internal ratings, and sort of Stage 2 events and those types of things. As we look at all those indicators, the portfolio looks stable to us. As all of you talked about yesterday, you know, we like the way we manage the portfolio in terms of diversification, hedging, so risk diversification and management overall. We'd like to think that stands us in good stead regardless of the cycle we're in. As the cycle appears to be milder right now than we might have expected, that we've come into the year with a higher degree of optimism. Okay. I guess to answer your question, I guess the on the solicitation. Back in end of January, we had a senior non-preferred FRN which passed, and so that will then move to SOFA. Then we had an AT1 security as well, which didn't get the quorum. Now, I guess the, I mean, the options, again, we haven't made any decision on any of these, but, you know, relies on fallback language or debt exchanges or calling the security itself. That's what we're trying to say. Okay. Super. Just one quick clarification. In your issuance slide twelve, the footnote says for 2023, this includes only senior preferred issuances. Does this mean EUR 1 to billion or EUR 1 billion-EUR 2 billion will be only senior preferred and no structure in that? That's how I should read it? Yeah, that's right. This page doesn't include structured notes. Okay. Super. Thank you. No, that. Just to add to that's because it's covered out of our investment banking franchise rather than traditionally it's been out of treasury. The next question is from a line of Daniel David from Autonomous. Please go ahead. Hi. Good afternoon, and thanks for taking my questions. Just on that, LIBOR consent, just interested to hear if you considered attaching a fee to maybe get that over the line. I've just got two more, just one on the MREL buffer. I know you've answered this in or talked about this in previous quarters, how the MREL buffer kind of is impacted by LGF. If I kind of think about that on RWA basis, I think that 5% buffer is probably a bit bigger than what we kind of think is reasonable for MREL buffers. I'm just thinking, is that EUR 18 billion, 5%, reasonable to kind of stick around or could we see that coming down a bit? finally, just to maybe round off on funding, just interested in the longer term funding plans, is the ECB's MRO or LTRO factored in? If not, why? Is it clearly a cost optimization point, or is there any other pressure to move away completely from central bank funding and move towards the covered bond and deposit growth that you talk about? Thanks. Thank you for your questions. I guess the first one was around the solicitation question. And then whether a fee to get something over the line. We need to follow regulatory guidance to have a value neutral transition. That's what we were attempting to do. That didn't work. You know, something we may consider further down the line, but no rush at this stage. In terms of MREL, there's No assumed reliance on MRO or LTRO. Currently, so in other words, the EUR 18 billion numbers we're comfortable with right now. In terms of moving away from central bank funding, yeah, currently it's not economic to do so versus our base case funding plans. No pressure to do so. Also, no further operations are announced, so we would not build a reliance on that in our future funding plans. Going back to MREL, it will come down a bit already through the countercyclical buffer. We did disclose a EUR 3 billion reduction on a pro forma basis on one of the slides. Okay, thanks. The next question is from the line of James Hyde from PGIM Fixed Income. Please go ahead. Hi. Hi, Richard. Hi, James. Thank you for doing this. I've got two bigger picture questions and one very specific one. I'll start with that one. The EUR 4 billion leverage finance exposures of was very comforting, but I just wanna make sure. Does that include all the exposures in fair value books and trading books and in undrawn commitments? That's my first question. The next two questions are about risk-weighted assets and capital allocation. First of all, with this folding in of the CRU into the corporate center, what's the outlook for the op risk RWAs there? Do they run off or do they somehow... Is it something that you just wait for Basel 3.1 or Basel IV, whatever you wanna call it, to this, especially in light of what you said yesterday about the maybe Basel 3.1 is looking a bit heavier than the EUR 20 billion. I just wondered, you know, what's the outlook for that? Does it fall off before? Broader, one of the things that was mentioned about, you know, the Brussels proposals and the floors. It was mentioned that, you know, some areas you will have to, you know, allocate capital away from. I think I even heard you say from German mortgages. I'm just wondering, what would that be? Would you be doing full securitizations? How would you do this? Does it also involve, again, revisiting whether you stay in Spain and Italy? Thanks. James, it's James. Thanks for joining as always, and glad to have you with us. I'll answer the second two questions. Look, we got to what we think is a floor on the op risk. Now, you never know. It's in the model's approach. There are sometimes little adjustments, but by and large, we think we've stabilized around where we are through to Basel 3.1 in January of 2025. We will move to that sort of new approach and therefore the CRU, given that its revenue driven, the CRU will no longer, you know, attract op risk RWA, and we'll have to move to a new allocation system. It's with us for the next couple of years and will be reported in the associated capital reported in CNO. Then I would expect from 2025, there'll be a change in the allocation methodology that we still need to decide on. Around the floors, you know, all of the events that are going on do change, you know, the capital that each part of the balance sheet attracts. Whether it's floors, model adjustments, limitation, definition of default, you know, or countercyclical buffers, let alone a sectoral buffer. There are things that we build into our methodologies, our internal allocations, and then express themselves in both client pricing and in the returns that we earn from it. Yes, we do react to what's going on. I think those reactions are always a little bit evolutionary rather than revolutionary. You have to understand that, you know, there's client relationships. There's obviously ancillary business that comes from certain businesses, let's say like LDCM. It's never as simple as, you know, costs going up or capital charges going up, and therefore hurdle rates becoming more challenging, and so you're out. It's never quite as simple as that, but it obviously does affect our thinking of capital allocation. It's, it's why as we, as we think about the, the path we're on, the further we diverge from what we think the economic capital requirements of certain businesses are, in a sense, the tougher it gets. You know, you talked about mortgages. You know, we've been bringing up the capitalization through a number of these factors of what is one of the safest assets on our balance sheet, which is German mortgages, which is an ironic situation, but it does cause us to look at the overall profitability of the business. Right. Thank you. On the $4 billion, I believe the answer is it's all in, James, in terms of the exposures. Great. Thank you very much. Pleasure. There are no further questions at this time. I hand back to Philip Teuchner for closing comments. Thank you, Natalie. Just to finish up, thank you all for joining us today. You know where the IR team is if you have any further questions, and we look forward talking to you soon again. Goodbye. Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you for joining and have a pleasant day. Goodbye.