Welcome to Barclays Full Year 2022 results Fixed Income conference call. I will now hand you over to Anna Cross, Group Finance Director, and Dan Fairclough, Group Treasurer. Good afternoon, everyone, welcome to the Fixed Income Investor Call for our 2022 results. I'm joined today by Dan Fairclough, our Group Treasurer. Let me begin with a brief overview of our performance over the last year before speaking to a few slides on the careful positioning of risk across our portfolio, given the attention this topic naturally receives from our bondholders. I'll hand over to Dan for his overview of our balance sheet. Beginning with slide 3, as Venk at and I reported this morning, it was another year of delivery across our businesses with a statutory return on tangible equity of 10.4%. Income growth of 14% outweighed the 6% growth in operating costs, which exclude bank levy and litigation and conduct, or L&C. Despite the increase of GBP 1.2 billion in L&C, profit before impairment was up 9% with a statutory cost income ratio of 67%. This earnings momentum and capital discipline is reflected in the year-end CET1 ratio of 13.9%. The impairment charge for the quarter, GBP 1.5 billion and GBP 1.2 billion for the full year with a loan loss rate of 30 basis points. Turning to the next slide for more detail on impairment and the outlook. The forecast baseline macroeconomic variables, or MEVs, we have used at the full year for modeled impairment are worse than at Q3 and the start of the year. This increased modeled impairment by circa GBP 0.3 billion in the quarter, but we utilized part of the post-model adjustment for economic uncertainty as planned to offset this, leaving GBP 0.3 billion of the uncertainty PMA. Our total impairment allowance at the year-end was GBP 6.2 billion, a slight decrease in the quarter from GBP 6.4 billion, with strong coverage ratios across the portfolio. Given current economics, we would expect the loan loss ratios for full year 2023 to be in the 50-60 basis point range, closer to historical levels. This will be affected by product mix, including planned growth in U.S. cards and by changes in the macroeconomic outlook. On slide 5, we've updated here the metrics we shared at Q3 to illustrate consumer credit quality. In the U.K., our growth has been in mortgages, while U.K. cards has reduced by around 40% since 2019. We continue to see high levels of repayments in U.K. cards, arrears rates remain stable and low. Consumer behavior and the risk performance confirm that the quality of the card book overall has improved, and this is reflected in some reduction in coverage, but the ratio is still 7.6% in UK cards, with 19.2% coverage of Stage 2 balances. We've grown US cards but have maintained strong coverage levels with 8.1% overall and 33.6% Stage 2 coverage. A few comments now on our wholesale risk management. As we have grown share in CIB, we have managed risk carefully. Whilst RWAs in the CIB have grown, the increase year-on-year has been the result of the stronger US dollar and regulatory changes. There was actually a slight decrease from other business-related factors. We also kept tight control on leverage, with leverage exposure for the group down year on year despite FX and the growth in financing. Looking at the wholesale lending risk, CIB loans to customers and banks at advertised cost grew by GBP 18 billion last year or GBP 15 billion excluding FX. Most of this increase is in lower-risk areas of corporate lending, and we've increased the first loss credit protection. Commercial real estate lending as a sector is facing some headwinds in respect of valuation and liquidity. Total CRE loans across the group are GBP 16.6 billion, down year on year and just 4% of our total loan book. It is an area where we have taken a cautious approach, with UK exposure broadly static for a number of years and well collateralized. Another topical area is leveraged lending commitments. We have actively managed down pipelines over the last couple of quarters, halving our syndicate commitments, and have taken some marks on remaining positions in the corporate lending income line. In summary, we feel confident in our risk management across our lending portfolios and trading businesses, and remain very focused in readiness for potential deterioration in the macroeconomic environment. With that, I'll hand over to Dan for the balance sheet highlights. Thanks, Anna. We ended the year with strong balance sheet metrics, leaving us well positioned for the year ahead. Our CET1 ratio is 13.9%. The MREL ratio was 33.5%, and the LCR was 165%. On all these metrics, we are holding prudent headrooms above minimum requirements. Beginning with capital on slide nine, by delivering our target RoTSE, we accreted circa 150 basis points of capital over the year, with 31 basis points generated in Q4. Over the quarter, we used capital to invest in the business to manage the impact of the unwind of prior pension arrangements and to accrete the CET1 ratio. We closed the quarter at 13.9%, the top end of our CET1 target range. This morning we announced a full year dividend of GBP 0.05, taking the total for 2022 to GBP 0.0725, which is up 20% from the prior year. In addition, we announced a share buyback of GBP 500 million, taking the total buyback for the year to GBP 1 billion. Looking ahead at the first quarter, we expect RWAs to grow as we take advantage of current business opportunities, which are likely to result in a moderation of the CET1 ratio. This is a typical capital trajectory for us in the first quarter of the year. On the slide, we highlight some of the other moving parts this quarter, including the announced share buyback, the reduction of IFRS 9 transitional relief, and the completion of the Kensington acquisition. Taking into account these items, the ratio would reduce by circa 40 basis points or to 13.5%. Turning to the next slide on our capital targets. We continue to have our long-standing capital target of 13%-40%, and we believe this puts us in a strong position versus our requirements. This slide shows the impact of the reintroduction in December of the UK countercyclical buffer, or CCYB, which translated into a circa 40 basis points requirement. Currently, the FPC expects to increase the UK CCYB a further percentage point to 2% in July, which will result, all other things being equal, to another circa 40 basis points increase to our requirements. As mentioned before, these changes have been fully factored into our capital target range. Turning now to pensions. The primary defined benefit scheme, the UK Retirement Fund, or UKRF, maintains a balanced portfolio following the completion of a multi-year de-risking plan. Its strong funding position and well matched profile helped it to withstand the headwinds in the gilt market in September and October last year. As communicated, throughout 2022, we accelerated GBP 1.25 billion of deficit reduction contributions in Q4 as a result of the unwind of prior pension arrangements. This had a circa 30 basis points impact in the quarter and was absorbed within our capital plan. We are also pleased to have now concluded the triennial actuarial valuation of the UKRF with a GBP 2 billion funding surplus. As a result of this, we have agreed with the pension trustee that we do not need to make any further deficit contributions, which reduces the previously flat capital track in 2023 of circa GBP 300 million. This robust position has also helped simplify our future capital planning. Turning to Basel 3.1. We welcomed the consultation paper published by the PRA in November, which helps the industry to have better visibility on the potential impacts. Following further analysis, we have revised our estimated day one impact of the changes to the lower end of our prior 5%-10% of RWA guidance pre-mitigation. There remains a lot of work to do in the implementation. We will have more information on the estimated impact in due course, in particular, following the QIS exercise in Q2 and upon publication of the PRA's final rule set. The consultation process concludes at the end of this quarter. We will continue to discuss with the PRA during this period areas that we think should be amended, particularly taking into account the equivalent European proposals and those now expected from the US in April. In the CP, we noted the comment that a review of the Pillar 2A framework is scheduled to take place by 2024 to ensure that the additional risks captured in Pillar 1 are not double counted in the existing Pillar 2A framework. This is very important and we think particularly relevant for a number of areas in the proposals such as operational risk. Turning to the next slide, which illustrates the structure of our total capital stack. Our total capital position of 20.8% continues to provide a prudent headroom of 410 basis points above the regulatory minimum. You can see on this slide that we hold 3.9% of RWAs in AT1 format, which increased from the prior quarter of 3.8% due in part to the recovery of Sterling. The position incorporates headroom to the 2.3% regulatory prescribed level as we explicitly run a buffer for RWA and FX fluctuations. We also choose to hold some of our total capital requirements in AT1 rather than Tier 2 form, given the relative economics and the additional leverage benefit that AT1 provides over Tier 2. We deploy this into liquid balancing opportunity in our markets business and monitor the economics carefully to ensure this remains commercially attractive. We also show on the slide the core profile of our whole focus shift capital instruments. We continue to evaluate all calls using a range of economic factors, including the direct and indirect P&L implications from refinancing and the impact on our broader wholesale funding stack. On legacy capital, we remain very comfortable with our current position and approach as presented to the Bank of England in our resolvability plans. Over 2022, we've reduced legacy securities by GBP 2.4 billion, which leaves only GBP 1.5 billion remaining, of which GBP 1.4 billion pound notional continues to qualify as regulatory capital. Moving on to the wider MREL funding stack. As you can see on the slide, we continue to run a prudent MREL position in excess of requirements. This was supported by circa GBP 50 billion of MREL issuance in 2022. This elevated funding level was due to two primary factors. Firstly, as sharp rises in interest rates during the year meant the book values of our MREL stack decreased. This move did contain some offsets over the year given FX moves as we are a large US dollar issuer. Secondly, the positive market conditions in the second half of the year presented us with the opportunity to de-risk our issuance plan for this year with some pre-funding. From where we stand today, our MREL funding plan for the remainder of 2023 is circa GBP 10 billion. As usual, we expect to seek issuance across senior, Tier 2, and AT1 in a range of currencies. Let me turn to slide 15 to talk about our liquidity position in more detail. The liquidity pool of GBP 318 billion and our Pillar 1 LCR of 165% represent a GBP 117 billion surplus to minimum requirements. We have also disclosed our net stable funding ratio, which was 137% and well above the 100% requirement. This reflects the long-standing prudent approach we take in managing our funding profile with access to a diverse range of stable funding sources. This, of course, includes our deposits, which grew circa GBP 20 billion over the year. In the last quarter, deposit balances reduced by GBP 16 billion due to seasonal fluctuations in corporate deposits. However, removing the seasonality, the underlying total deposit volumes are stable. We continue to monitor deposit balances closely as an important indicator of potential consumer stress, but we're not currently observing evidence of this. Turning to slide 16. The structural hedge program continues to be a key provider of net interest benefit to the group and has grown by circa GBP 35 billion over the year, albeit it reduced modestly in Q4. As the interest rate sensitivity chart shows, the program is a major contributor to income benefit from rising rates, particularly in the outer years, and our Q4 hedge contribution has almost doubled year-on-year. The reinvestment rates on the hedge are still well above the average rate and the maturing rate, and therefore, we expect a significant further tailwind from rate rises, even if the hedge size reduces further due to product switching dynamics. Turning to credit ratings on slide 17. Improving our credit ratings continues to be a key strategic priority, and we maintain an active dialogue with all the agencies. Through this engagement, we were delighted that Moody's placed Barclays PLC on review for upgrade at the end of the year. Per their stated timelines, we expect another ratings committee soon to conclude the results of the review. Converting our positive outlook with S&P to an upgrade continues to be a priority too. We note that whilst the group is on review for upgrade with Moody's, our main subsidiary, Barclays Bank PLC, which accounts for 80% of the group's balance sheet, is on negative outlook, which has caused some confusion in the market. The negative outlook reflects sector-wide action by Moody's following the U.K. sovereign ratings outlook being placed on negative and U.K. operating subsidiaries with a notch of government support were mechanistically also placed on negative. We would highlight Moody's own published comment on the specific case of Barclays, which notes that should the group be upgraded following the review for upgrade, it should be expected for this to neutralize the negative outlook for Barclays Bank PLC. Let me finish with an update on the sustainable impact capital portfolio. This program is housed in treasury within the principal investments business, where the growth stage equity investing and portfolio managing capability sits. This is a global mandate to invest in climate tech startups. In December, we announced that we were significantly increasing our commitment from GBP 175 million by 2025 to GBP 500 million by 2027. The portfolio currently stands at GBP 89 million. We seek to invest in startups that are enabling transition within carbon-intensive sectors, particularly where we have meaningful client exposure, such as energy and power, real estate, and transport. This synergistic approach, in turn, helps us support clients as they transition to a low carbon economy through introductions to innovative technologies. To summarize, we were pleased to deliver strong and stable metrics across our balance sheet, and we continue to support the group's execution of our strategy as we navigate a challenging macroeconomic backdrop. I'll hand back to A nna. Thank you, Dan. We would now like to open the call up to questions, and I hope you have found this call helpful. Operator, please go ahead. If you wish to ask a question, please press star followed by one on your telephone keypad. If you change your mind and wish to remove your question, please press star followed by two. When preparing to ask your question, please ensure that your phone is unmuted locally. To confirm, that's star followed by one to ask a question. Our first question today comes from Lee Street from Citigroup. Please go ahead, Lee. Your line is now open. Thank you. Hello, good afternoon, thanks for taking my questions. I have two please. Firstly, obviously there was a bit of a fall in Risk-Weighted Assets in the fourth quarter. Any commentary on how you might expect Risk-Weighted Assets to evolve over the course of 2023, please? Secondly, you highlighted your the healthy position of the pension fund at the moment. You know, have you given any consideration or is there any scope to do some form of, you know, buyout or even partial buyback to, you know, effectively remove the future risk associated with that at all? Is that possible? They're my two questions. Thank you. Thanks, Lee Street. It's Emma. Nice to talk to you. I'll take the first part of that, and then I'll hand over to Dan Fairclough for the pension part. Q4 was somewhat of a low point in terms of RWA. There are a few things going on in there. We clearly saw an FX move in the quarter. We saw also, or we called out the reduction that we've taken in terms of our leveraged finance portfolio. Actually markets activity, not just us, but more broadly, was pretty low going into the end of the quarter. Conversely, Q1 tends to be our seasonal high point of RWAs. You are going to see us lean into that opportunity and put some RWAs to work in the markets business over the next quarter. We called that out, I think, in our results. That's why we've been really thoughtful about getting to the midpoint as a pro forma in terms of capital. Beyond that, I would say we will pursue growth opportunities as we see them. We'll do so in a really disciplined way. You've seen us grow US cards. Each business is generating a strong ROCE and actually generating capital for itself. We're also mindful of the macroeconomic environment. We haven't seen any procyclicality yet. We are very much looking out for it. I'd expect to see us grow back to a Q1 peak. Thereafter, I would see probably more balanced growth across the portfolio, just mindful of the environment. Hey, Lee, I'll pick up the second question. Look, we're always considering options, but the principle strategy here is one of de-risking. This has been a multi-year journey really since structural reform. We've been working with the trustees to de-risk the pension fund position. This has involved de-risking the asset composition, matching it better against liabilities. You'll also note in the annual report, we've also undertaken some longevity hedging to further reduce the risk. I think we would, we would expect to continue that strategy really of de-risking to ensure that the pension fund does not have a material impact on us going forward. All right. That's clear. Thank you very much. Bye. Thank you. Next question, please. The next question comes from Robert Smalley from UBS. Please go ahead, Robert. Your line is now open. Hi. Thanks for taking my question. Thanks for doing the call. Some questions around credit cards, both U.K. and U.S. I see that Stage 2 has in the U.S. is up a little bit. Stage 2 for the U.K. over the past couple of years down. C ould you talk about your methodology about moving cards from Stage 1 to Stage 2? One of your competitors did some of that on a discretionary basis. If I could get a little background on your methodology there, number one. Then number two, where do you see this going over the next year given the economic slowdown? 3, if in fact you're saying you're not seeing much deterioration, so far, given macro factors, et cetera, are there other types of statistics or financials that we should be looking at that'll give us a better clue on what's gonna happen with the consumer portfolios through 2023? Thanks. Thanks, Rob. Thanks for that, question. The two books are performing in different ways, and in large part it's because it's customer sentiment is different in the two, in the two economies. What we see in the US is that the US customer is more confident, more inclined to borrow. That's obviously, been added to by the fact that we've onboarded the Gap book. We've got organic growth, and then we've got growth from Gap. Now, when we contrast their behavior to pre-pandemic though, although it's started to normalize, it's still really quite different. Repayment rates on cards remain high. And although we've seen delinquency rates tick up a little, they are still below what we would have expected to see pre-pandemic. There's nothing there of concern. What we see is some Stage migration, but let me describe to you how that can happen. Firstly, purely by using your card and by purchasing more, there is a possibility that you would move from Stage 1 to Stage 2, because the more you use your card, clearly that will drive up your probability of default. It might not indicate that you are going to default, but it will have moved in absolute terms. A movement in Stages is exactly what we expect to see when customers start spending money again. The second thing I would say is that as we onboarded Gap, it was all onboarded at Stage 1. That's merely what the accounting rules require us to do. What happens over time is those customers settle into the Stage that we would expect them to be in sort of longer term. You've got both those impacts going on in the U.S. The opposite is true in the U.K., because in the U.K., whilst customers are spending more, they're not borrowing more. That's merely, I think, because the U.K. outlook, certainly from an immediate perspective, is bleaker. Therefore, what they are doing is they are repaying at levels that are even higher than during COVID. We've actually seen our interest earning lending balances in the U.K. fall. You've got the opposite effect going on in the U.K., but the methodology applies to both books the same. What's happening, in terms of, economically, I mean, to some extent it's not a surprise because these books were constructed to absorb affordability stress, both in terms of our secured and our unsecured lending. Because when we extend credit to someone, we extensively stress test their affordability. If you think about the fact that they, you know, levels of indebtedness across both economies are actually materially lower than they were pre-COVID. Add to that the fact that unemployment remains very low in both economies, it shouldn't really surprise us that what is clearly affordability stress is not translating through to credit stress. We really can't see that anywhere. You know, our arrears levels are very low and stable in the U.K. and in the U.S. Whilst they've ticked up a little, as I said, they're below the pre-pandemic level. The last thing I'd say is that our coverage in both U.S. cards and U.K. cards is high. For U.S. cards, it's 8.1% overall, and Stage 3 balances are covered by 33%. We believe that that's probably elevated relative to our peers there. In the UK, 7.6% overall and nearly 20% on Stage 2. E ven if the economy does turn, you should probably note that our macroeconomic variables that we've used in the fourth quarter are a deterioration from those used in the third quarter. Even if it does turn, we feel that we have got, you know, good robust provisions to cover that eventuality. That's very helpful. If I could follow up on one thing. Given the high payment rate on UK cards, how does that translate into the net interest margin? Can you quantify how many kind of lost basis points of NIM you have as a result of the high payment rates? It's definitely impacted on our NIM, and we talked about that a little bit on the equity call this morning. Mm-hmm. We haven't disclosed that. You can see quarter-on-quarter what's happening to our Barclaycard income. You can also see the other side of that in impairments. At this point in time, you know, whilst we really would like our UK card stock to grow, we're pretty happy with the trade-off between those two things. I think the lead indicators for card growth are definitely there. We're gonna have to see consumer sentiment change before we see meaningful growth in interest earning lending. That's great. Thanks again. Thank you. Next question, please. Our next question comes from Paul Fenner-Leitao from Societe Generale. Please go ahead, Paul, and proceed with your question. Hello, Anna. Hello, Dan. I think both Steve and Bob both covered most of my questions. I guess one, you know, you talked about what's going on in the credit card business. You've talked about, you know, deposits not really moving, and these are kind of, you know, some forward indicators. One of the things either you or someone else mentioned over the last sort of six months, what's going on in the use of, you know, debit cards and, you know, consumer behavior. You know, what are you seeing there that kind of indicates, you know, what might happen to Stage 2 over the course of the year and any kind of indicators of some early signs of stress? You know, there's asset quality is the big bogeyman out there. You know, any meeting that you have people to discuss, it's just extraordinary that, you know, there's no kind of early signs of that happening. I'd just love a little bit of color on that. Then the other question is the other one that just hadn't been talked about, which is CRE. What you're seeing there and, you know, any color you can give on your book and, you know, any danger signs. Thank you so much. Okay, why don't I start, and I'm sure Dan might add. I mean, we have access to a considerable amount of data, not just through credit and debit card, but also obviously through our Mastercard payment business. What we see is customers acting really rationally, so that they are moving their spending towards essential spending. We see less on what we would regard as non-essential spending. That spending is pretty much holding up. Interestingly, they're still keen to travel, which may count as essential or non-essential, depending on your point of view. You know, we are seeing customers react in a way that shows that they are managing their affordability pressure in a very rational way. That hasn't really changed, to be honest. It's very, very consistent as we sort of exit last year and indeed come into this year. Dan, anything from deposit detour? I mean, Paul, I think we talked about this before, but we spend a lot of time actually looking at deposits, particularly saving deposits, and breaking that down by, you know, demographics, socioeconomic deposit sizes, and just looking at that as an indicator of any early signs of consumer distress on the rates. That's obviously one of the early things that people will do, run down savings. As we said in the script, we're not seeing it materially, but I think that's a pretty good lead indicator at a sort of individual level. As relates to CRE, I mean, we've given some disclosure on CRE in the quarter. You can see that our exposure has fallen a little, and actually we've managed our UK exposure pretty flat, actually for a number of years now. The level of Stage 3 assets within CRE is very low. You can see that in our disclosures under the focus sectors. Actually we would say that the LTV profile across the whole portfolio is low. It's well collateralized. Our perspective is that any stress scenario can be covered. As you might imagine, at this point in the market, we are very focused on ensuring that we have up-to-date valuations on this portfolio, which we are doing regularly. You'll see that we note it under our selected sectors area. That means essentially that it's attracting additional management focus. It doesn't mean to say that we are seeing significant impairment there. It just means that we know that that sector is under pressure. You can see overall, it's a very low proportion of our group loans. It's around 4%. We're broadly happy with it. The last thing I would say is that as we run our impairment scenarios for all of our portfolios, but particularly CRE, we're obviously looking forward to a slightly deteriorated outlook. In the CRE portfolios, we're actually running some quite significant reductions in CRE valuations as part of those scenarios. That still doesn't give us cause for concern given the nature of the book. Great. Thank you very much. Okay. Thank you. Next question, please. The next question comes from Daniel David from Autonomous. Please go ahead. Your line is now open. Good afternoon, all. Thanks for taking my questions. I've got three. Just the first one is just on issuance plans, if you could provide a bit more detail on types, whether you'd still expect to be a majority dollar issuer. You could t alk about covered bonds and how covered bond issuance might evolve with TFSME roll off in the coming years. The second one is just on the unswapped assets and the liquidity pool. I'm just interested a bit more on that, whether it was a strategy to optimize income, given the market or if it was an operational issue, and if so, what's being done to resolve? Finally, favorite topic of legacy. Just interested on your DISCOs, whether there's been any change to the classification or the way that you view them after the EBA's letter on DNB. I'm thinking about the early tax call. Then just on those with regard to LIBOR, do you intend to use the synthetic dollar LIBOR extension after June cessation? Thanks. Thanks, Dan. I'll take those. In terms of issuance plans, I mean, we've said that we are going to do GBP 10 billion. We've got that left to do. We'll be active across all of the tiers, as we said in the script. We'll obviously be somewhat opportunistic in terms of currency. We'll be driven by market demand and pricing. Given the depth of the US dollar market, I think you should expect that we'll continue to be a big issuer in the US dollar market. It does provide the depth and the confidence of execution for us. Sorry, you had a question on covered bonds. We obviously issued a covered bond this year. We run a very significant liquidity surplus in the U.K., it's not something we will do very frequently. We will maintain some name in the market, and we'll look at it periodically. The TFSME repayment is not a particularly big driver of our liquidity position, particularly given the size of surplus that we run. I think your second question was about unswapped assets in the liquidity pool. The vast majority of assets in the liquidity pool is held with cash at central banks. You know, it's kind of 84% or so of the total liquidity pool. There's a portion that is held in securities. A lot of that is on an asset swap basis, and a very small proportion of it will be actively managed from a fixed rate perspective. That portion obviously will contribute both to net interest margin, but will also contribute to trading income. We sort of manage it, we manage it holistically, and it generates positive returns overall. Your last question was on the DISCOs. Could you just repeat the question again? Yeah. I guess we saw a letter from the EBA with regard to DNB's DISCOs, and they were quite explicit on the way that they viewed a couple of points. I guess that what came out of that was that they should have declassified them earlier than they had done. I think you guys still call them Tier 2 until June 25. I'm just wondering if there's a change in that view, given what the EBA said, and I know it's EBA versus Bank of England. Yeah. Secondly, just on synthetic LIBOR, whether you intend to use synthetic LIBOR as an extension post-June this year. Okay. Obviously, we're watching the DNB and the EBA debate with interest. Obviously, we're not governed by the EBA. There's no equivalent guidance from the PRA, and we've been consistent in our treatment for some time with these instruments as Tier 2. That's probably all on that point. In terms of synthetic LIBOR, I think also a little bit too early to say anything here. It's still under consultation. We expect that probably not to resolve until into Q2. Nothing further to add on that at the moment. Thanks. Just on the first question, you kind of touched upon LCR just quickly. Do you guys have a target LCR? I know it's kind of elevated at the moment. Do you kind of see a number longer term where you'd kind of look to manage towards? Not particularly. Obviously, we've got risk limits that ensure that we're always prudent to regulatory minimums. You know, therefore the remaining output of the LCR is largely due to balancing strategy and mixture of assets and liabilities. We're very focused on making sure that the liability base is as economic and commercial as possible. We do routinely go through and ensure that the funding mix and cost is in the right place. I wouldn't call out a specific LCR target. Okay. Thanks a lot. Okay, thank you. Next question, please. The next question comes from Ellie Dann from Morgan Stanley. Please go ahead, Ellie. Your line is now open. Hi there. I wanted to ask another legacy question. It's kind of about the legacy Tier 1 preference shares. I understand these are now grandfathered as Tier 2 capital June 2025. Because they're coordinated at the OpCo, I guess it doesn't count towards MREL. Just wondering how you're thinking about these and whether it makes sense to keep these amount standing. I mean, I'm probably won't comment on individual securities. You know, I think we've said before, the key for us in our consideration in this area is the treatment as regulatory capital, because that's obviously what provides the Bank of England stabilization power. That's really the key cornerstone of our philosophy here. Okay. Thank you. Sorry, Ellie, did you have another question? No, that's all. all. Thank you. Thanks, please. Can we have the next question, please? Our next question comes from Daniel Crooke from Goldman Sachs. Please go ahead, your line is now open. Hi there, thanks for taking my question. Just the first one on the surplus on the pension. I know there are some changes in how the regulator is looking at that in Pillar 2. Is there some scope to see a potential reduction there? Just another one on synthetic LIBOR. I was just wondering if you'd looked at the potential impacts on both the assets and the liability side, or do you have an idea of how much might be affected, given that we could have a potential end to that. Just a third one, if I may, that perhaps dropped off the call this morning. I think I got a semi partial answer there earlier. Just what was the other 33 impact in the Barclays UK NIM? That'd be great. I think we called out last year that we expected a benefit in the Pillar 2 calculation from the de-risking of the pension position that has occurred, and we have had a reduction in Pillar 2. Unfortunately, that has been offset by the change of calculation in the way that the PRA determines the Pillar 2 number. Over the COVID area, they allowed that to actually move with RWAs. They've now reverted back to fixing that on a periodic basis against RWAs. The two things have largely offset in the overall number. We have had the benefit in terms of the pension de-risking point. In terms of synthetic LIBOR, I mean, we're still focusing on reducing the LIBOR exposures that we've got, and we're focusing on that on the assets and the liabilities. That's an ongoing journey. It's a combination of both final consultation on synthetic LIBOR and what we're left with in terms of that, in terms of that journey. We think we're actively working it down. Let me take the second half. Of that 33 basis points is broadly half and half between product impacts and the treasury impacts, which Dan just reflected upon. The product impact, we're seeing some compression in mortgage margins, in part because of the nature of the market. Very low loan-to-value, low margin product really out there. A lot of churn. Also a reduction in interest earning lending for cars, as I mentioned before, although there's some offset to that within the impairment line. We have not yet seen significant liability migration, but that's something we might expect to see in the future. What Dan referred to before was some securities held in the U.K. liquidity buffer in fixed rate form. The cost of funding those clearly spiked a bit in the fourth quarter. Therefore we've seen that margin on those compress. As he said, it's a short-term impact, because they tend to be short-dated and they are actively managed. That part of it we expect to dissipate over time. I'm sorry. Could you confirm just on the dissipating over time, what sort of duration are we talking about there? Is that 1 year or? Significantly less than that. We would expect this to be. Ah. significantly removed in early part of the year. Yeah. Okay. Thank you for your question. Next question, please. Our next question comes from Tom Jenkins from Jefferies. Please go ahead, Tom. Your line is now open. Hello there. I won't be very long because Daniel and Emma have asked most of my questions already. Just on the forgetting, my favorite topic of legacies, but getting onto the new issuance calendar current this year, which you've highlighted for Emma of about 10 yards. Should we just assume that it'll be following or tracking much along the lines of your redemption schedule? For example, you've got, for example, an AT1 coming up in September, I think two and a half yards or so in USD. Should that be our sort of our guiding lights as it were? Or should we be thinking it in a different way in terms of the makeup of your $10 billion? Thank you. We'll never comment on upcoming calls for obvious reasons. I think to be honest, what we did last year is a pretty good guide as well in terms of the type of mix and shape that you would expect of our issuance. Lovely. Thank you very much. That's perfect. Thank you. Thanks, Tom. I think the next question is our final question. Our final question today comes from Robert Mumby from Ossian Global Investments. Please go ahead. Your line is now open. Good afternoon. Hope you can hear me. Thanks very much for taking my question. It's quite a quick one. Regarding your capital and your MDA hurdle, which is currently 11.3%, and as you point out, we've got about 11.7% at start of Q3 with the further introduction of UK countercyclical buffer. Your CET1 is currently 13.9%, but obviously you've got some headwinds in Q1 next year, which it spits around to around 13.5%. By my reckoning, your MDA buffer falls about 180 basis points. I'm just wondering whether you think that is sufficient? Also you've got a target of 13%-14%, and given that your, you know, MDA hurdle is up to 11.7%, whether you would up the lower bound? Yeah. We've obviously designed our longstanding capital target with this in mind, this increase in the countercyclical has obviously been in the wings for some time. We're very comfortable with the range. I probably make a couple of points in terms of why we're comfortable. Firstly, we've operated with that range in the past. Secondly, we're obviously highly capital generative. 150 basis points of CET1 accretion, and that's the sort of 10% RoTE target that provides us with quite significant room to maneuver in terms of the buffer. Thirdly, the expectation would be as has been evidenced, that in the event we did hit a macro stress, we would expect the regulator to reduce the CCYB. For all those reasons, I think we're comfortable even after the introduction of the CCYB, operating in the target capital range. Okay, thanks so much. Thank you. There is actually one more question. Operator, can you take the next one please? The next question comes from James Hyde from PGIM. Please go ahead. Your line is now open. Sorry to sneak in at the last moment, but I had assumed someone else would ask about this. I mean, leverage lending. I mean, I always try and find what the exposure is, and I can't. Commitments down 50% since H1 2022. I mean, can we at all scale this? Initially, I thought it would have something to do with that $54 billion corporate lending exposures first loss, 32% on these loans. On the call, earlier call, it sounded like you said these are predominantly for leverage lending. Did I mishear that, to try and scale it or can you help me in any other way? It, peers do give this exposure. Okay. Thank you. Thank you, James. The GBP 54 billion that relates to the first loss protection is actually corporate lending, so not leveraged lending. We haven't disclosed our leverage exposure. We have clearly disclosed that we've reduced it by 50% over the last two quarters. That's reflective of the wider environment. We are operating well within our risk limits. You know, we've taken appropriate marks at the end of the quarter. The other thing I would say is that we do obviously hedge these exposures as well. We use tail hedges. The costs of those is going through the corporate lending line. When we talk about marks, we're talking about net marks. You know, it's important business for us. We feel like we're well positioned in it, given the risk decisions we've made. This time, you don't seem to have called it out as three-digit millions, the impact of which you had done in some previous quarters. Is that fair? Yes. Over the year, I think the net marks are actually GBP 335, and it's about I would call GBP 84 in the fourth quarter. Okay, that's very helpful. Thank you very much. Thank you. Well, it looks like there are no more questions, but thank you for joining the call today. Really appreciate the time, and we will see you in meetings over the coming weeks, I'm sure. Thank you. Thank you. That concludes today's conference call.