Credit Suisse Group AG

Christian Stark - Head-Investor Relations Tidjane Thiam - Chief Executive Officer David R. Mathers - Chief Financial Officer

Andrew P. Coombs - Citigroup Global Markets Ltd.

Daniele Brupbacher - UBS AG (Broker) Alevizos Alevizakos - HSBC Bank Plc (Broker) Jeremy C. Sigee - Barclays Capital Securities Ltd.

Kinner Lakhani - Deutsche Bank AG (Broker UK) Kian Abouhossein - JPMorgan Securities Plc Huw van Steenis - Morgan Stanley & Co. International Plc Andrew Stimpson - Bank of America Merrill Lynch Jernej Omahen - Goldman Sachs International Stefan-Michael Stalmann - Autonomous Research LLP

Good morning and welcome to the first quarter 2016 results call. Before we begin, let me remind you of the important precautionary statements on slide two, including the statements on non-GAAP measures and Basel III disclosures.

I now turn it over to Tidjane Thiam, our CEO.

Thank you, Christian, and good morning, everyone. Thank you all for joining the call.

With me today is David Mathers, our Chief Financial Officer, and all our executive team in Zurich. So, this morning, we will present the first quarter results for Credit Suisse and, of course, take your questions at the end of the session.

First, let me run through summary of our financials for the quarter. This slide, slide two gives you an overview of our financial performance in Q1.

As you can see, we delivered a profitable quarter for each of our wealth management-focused businesses APAC, Asia Pacific; IWM, International Wealth Management; and the Swiss Universal Bank, which we call internally SUB. Together, they generated around CHF 1 billion of PTI.

In Global Markets and in IBCM, Investment Banking and Capital Markets, we incurred losses, as you can see here, together with the result of our Strategic Restructuring Unit (sic) [Strategic Resolution Unit] (2:00), SRU, we therefore recorded a net loss of CHF 302 million, attributable to shareholders and a pre-tax loss of CHF 484 million at the group level, if you can see at the bottom of the chart. David, after me, will give you more details on the key drivers of these results division by division.

What I'd like to do in my section is to update you on the execution of our strategy and highlight a few key aspects of these results. So I'll start with our key messages.

In the first three months of this year, we are focused on three simple areas, first one is execution, the second one is profitable growth and the third one is capital. So, I'll take this in turn.

Firstly, we continue to execute on our restructuring program with discipline. Our group-wide cost reduction program continues to move at pace and given our progress to-date, we are confident that we will meet or beat our operating cost base target of CHF 19.8 billion by end 2016.

Second, the accelerated restructuring of Global Markets is well underway. We have a new and simplified structure.

We are reducing our fixed cost base and reducing our exposure to market risk through the cycle. We continue to make progress in the wind-down of the SRU, which is crucial to the achievement of our strategic and financial objectives.

So that's on execution. The second area, where we are focused has been to generate profitable quality growth in our chosen markets and activities.

In the challenging environment that we've all seen in the first quarter. All of our wealth management focused businesses have performed well.

Together, they are profitable and have generated around CHF 1 billion of PTI in the quarter. Moving to IBCM, which is another growth area for us.

Our IBCM strategy, as you know, has been to pivot towards M&A and ECM. This is being implemented successfully and is reflected in an improved shared of wallet.

Lastly, but importantly, we have been able to maintain our capital position, facing a sharp fall in client activity levels and lower market volumes. We have used a number of levers, cost control, RWA and leverage reduction to deliver a stable look-through CET1 ratio of 11.4%.

Going forward, we aim to operate within a range of 11% to 12% in 2016. Let me then in the following minutes give you some more color on the progress we have made.

I will start by addressing the actions we are taking around restructuring the bank. What you see on this slide is our adjusted total operating expenses at constant FX rates.

So we have made good progress towards our group cost reduction targets. We needed to bring cost down materially after a fourth quarter at CHF 5.8 billion and that is what we have achieved through a combination of measures.

Our cost base of CHF 4.8 billion in 1Q 2016 is 17% lower against 4Q 2015 and 8% lower year-on-year. Based on the progress to date, we are confident that we will meet or beat our group cost target of CHF 19.8 billion by year-end.

Turning now to head count reductions largely supporting that progress on cost, when we presented the accelerated restructuring of Global Markets in March, we announced an additional head count reduction of 2,000 that you can see on the left here, bringing our group-wide head count reduction target to 6,000 for the full year 2016. As of May 10, in green here, we have achieved 3,500 head count reduction or 58% of our 6,000 head count reduction target for 2016.

That is an additional 700 head count reduction since March 23, leaving a balance of 2,500 head count reduction to be actioned between now and the end of 2016. To put this in monetary terms, in the first quarter of 2016, we have achieved, on an annualized basis, more than half of CHF 1.4 billion of net cost savings we are targeting for 2016.

We will not relent on the pace of our cost saving measures for the remainder of the year and beyond. Moving now to Global Markets and its restructuring.

We call it GMAR, internally, Global Markets Accelerated Restructuring. We have defined an (7:00) with a simplified structure and a materially lower cost base, a business model that is less capital consumptive with $60 billion of RWA versus $75 billion today and that would generate a risk-adjusted return on capital of 15% in normalized markets.

Thirdly, a lower risk profile, better aligned to the size of our balance sheet with reduced earning volatility for the cycle. We are implementing this program.

We have put in place a new structure, focused on equities, credits, solutions and I should add electronic – electronic platform. GM will continue to provide differentiated product offering and provide crucial support to our International Wealth Management and IBCM divisions.

In parallel, GM will focus on quality core client relationships, prioritizing a greater share of wallet and higher recurring revenues. We have been implemented actions that have already generated annual realized savings of $260 million and actioned over 1,000 of our targeted head count reduction to-date.

We have also managed capital proactively in a way that's allowed us to absorb $7 billion of regulatory driven RWA increases over past 12 months. Lastly, we have significantly de-risked the business with the reduction of fixed income inventories against the prior quarter.

Distressed credit assets exposure is 79% down, and U.S. CLO has been reduced by 81%.

So, in summary, we're making good progressing, achieving important milestones against our objective to create positive operational leverage within GM through lower costs, reduced our risk profile and reduced the volatility of earnings. Clearly, our results in 2016 will remain highly dependent on market conditions and current activity levels.

However, at the end of risk restructuring, the division is expected to be more profitable, consume less capital and generate more stable earnings. Moving now to the last of our big restructuring topics, the SRU.

The Strategic Resolution Unit, SRU, is critical in the successful execution of our strategy through the run-down of expenses and the wind-down or exit of businesses. The SRU has reduced RWA by CHF 7 billion over the past quarter and reduced expenses too, excluding restructuring costs, which is the right way to look at it, reduced them by 24% versus the prior quarter.

So, to sum up, we have made good progress on execution. We have lowered our cost base.

The Global Market Accelerated Restructuring is on track. We have reduced our exposure to market risk and the SRU continues the wind-down of non-core assets effectively and efficiently.

So, now let's turn to our second priority, key to our medium-term and long-term perspective, profitable growth. APAC delivered a good performance in 1Q.

We have had profitable growth and we believe strongly that we have outperformed our peer group in the region in a challenging market environment. We recorded net new assets of CHF 4.3 billion in the quarter with a stable gross margin at 81 basis points.

Assets flows were strong considering the level of disruption experienced by Asian markets in 1Q and inflows were largely driven by our ultra-high net worth clients. In 1Q 2016, an additional 40 RMs, relationship managers, joined APAC, achieving a net increase now of 100 relationship managers since 1Q 2015, well on our way to achieve our 800 target for 2018.

We now have approximately 630 relationship managers in APAC. This performance was underpinned by our geographic diversification across the region with Southeast Asia, Japan and Greater China contributing in roughly equal measure to a quarter of solid performance.

And last but not least, at the bottom of the chart there, you can see that APAC was able to deliver a return on regulatory capital of 20%, so (11:30). Let's move now to International Wealth Management.

There we registered net new assets of CHF 6.9 billion in the first three months of the year. I want to single out within this number the performance of Private Banking with a significant turnaround from outflows of CHF 700 million in 1Q 2015 to inflows of CHF 5.4 billion in 1Q 2016.

This improvement is consistent with our strategy of prioritizing Wealth Management, and highlights the progress we have been able to make in the first quarter with the gross margin, as you can see on the right here at 109 basis points, an improvement against the prior quarter, further reflecting the quality nature of our flows. Adjusted return on regulatory capital was 24%.

Inflows have been broad based across regions (12:31) it's a very important point, which is across the board really, with loan penetration up to 14% from 12% in the first quarter of 2015. Mandate penetration increased to 30% from 27% in 1Q 2015, so year-on-year, 27% to 30%, with cumulative mandate sales now at CHF 7.8 billion since 1Q 2015, driven by the sale of our flagship product, Credit Suisse Invest.

Here too we have been recruiting. We initiated the recruitment of 90 relationship managers in 1Q, of which 40 have already joined and 50 have committed to join and are going to join in the coming weeks.

Of these, two-thirds are focused on serving clients in emerging economies, and approximately 80% are senior hires with an established track record and well-established client portfolios. The recent addition of a 23-member (13:26) team to bolster our client coverage in Mexico further highlights the attractiveness of a platform that Iqbal Khan and the team are building in IWM.

So let's move now to Switzerland. The Swiss Universal Bank has delivered a quarter of profitable growth.

Adjusted PTI of CHF 466 million increased by 12% against the same period last year, a very creditable number in a market that is considered as mature, and again, by 39% against the prior quarter, so Q4 2015. Adjusted return on regulatory capital was up 3 percentage points year-on-year, to 16% – it's actually 2 percentage points, so, it's 14% to 16%.

We recorded NNA of CHF 3 billion across the division. In Private Banking, the gross margin improved to 139 basis points against 130 basis points in 1Q 2015, so here again, quality growth in flows, at very good margins.

Mandate penetration, another important KPI for us, went to 27% from 15% in 1Q 2015, a notable achievement. And on the cost side, we have accelerated our 2016 cost saving program, with nearly 50% of our planned reductions for 2016 initiated in 1Q 2016.

The improvement noted in our adjusted cost-income ratio to 64% is a reflection of the progress being made across the whole division as we make preparations for an IPO in 2017, so again, well done to us and the team. Good progress within – in a core market for us.

IBCM, led by Jim Amine here, is another bright spot, because they had a resilient quarter against a difficult market backdrop for all our financing activities. M&A was a highlight for Credit Suisse during the quarter.

Advisory revenues did well, and the forward pipeline remained strong. Against 1Q 2015, CHF 230 million of revenue in the current quarter, as you can see here, represents a material improvement year-over-year, as well as significant outperformance against our peers, leading to an increase in share of wallet.

IBCM is a strong, capital-light franchise with businesses that are expected to deliver a high return on regulatory capital under normalized market conditions. Our M&A and financing capabilities are attractive to our ultra-high net worth clients across the group, and a high degree of synergy exists between IBCM and our Wealth Management business.

To give a concrete example of the synergies, there is currently a strong interest in outbound M&A among Chinese corporates and entrepreneurs. Our strength in the ultra-high net worth individual segment in Asia positions us well to capitalize on this trend.

For instance, during 1Q 2016, IBCM advised on ChemChina's CHF 47 billion acquisition of Syngenta, and on HNA's CHF 1.4 billion acquisition of Gategroup, just to pick two examples. In a quarter where market volumes in M&A, ECM, LEFIN (16:47) and DCM were, respectively, down 13%, 50%, 35% and 7%, IBCM was able to increase gross revenues by 3%.

We continue to make targeted investments in IBCM to expand and deepen our client coverage. This includes strategic new hires that we have announced over the past quarter.

Finally, last but not least, capital. We have remained focused on managing capital proactively, in spite of a CHF 484 million pre-tax loss that we reported this quarter.

We have been able to maintain a look-through CET1 ratio of 11.4% at the end of 1Q 2016, the highest level we have ever achieved. This is a good outcome, given that we face material regulatory-driven RWA increases since 1Q 2015 that we have managed to absorb.

So, before handing over to David, let me conclude by saying, we have been executing our strategy with discipline in challenging markets to reduce cost and risk across our businesses, with Global Markets at head office (17:57) and Tim O'Hara and his team have done a great job there, okay, which I salute. Our continued focus on quality growth in Switzerland, in International Wealth Management, in Asia-Pacific, has resulted in a good quarter in all our wealth management-focused businesses.

And despite operating at a loss in 1Q 2016 and absorbing the effects of several billions of regulatory-driven RWA increases, we maintain a strong look-through CET1 ratio, at 11.4%. I will let now David present our financial results in more detail before I come back to close.

Thank you, Tidjane. Good morning.

I'd also like to thank you for joining our first quarter earnings call today. So I'd like to start, please, on slide 17, with a summary of our quarterly earnings.

As we said last quarter, we will continue to share our results on both a reported and an adjusted basis. And in the first quarter, the adjustment items included CHF 255 million restructuring charges relating to the implementation of our strategy, as well as the cumulative translation adjustments related to the sale of Credit Suisse Gibraltar that we announced during the first quarter.

We exclude these items on an adjusted basis to better reflect the operating performance of our businesses. We provide a full reconciliation of our adjusted and our reported profits for the group, and for each of our divisions, on slides 44 to 47 in the appendix.

Now for the first quarter, we reported a group net loss of CHF 302 million. The group had an overall pre-tax loss of CHF 484 million on revenues of CHF 4.6 billion.

On an adjusted basis, we had a pre-tax loss of CHF 173 million for the group. We delivered a combined adjusted pre-tax profit of CHF 997 million from the Swiss Universal Bank, Asia Pacific and the International Wealth Management businesses.

This, however, was offset by losses in Global Markets, Investment Banking and Capital Markets, and in the SRU division. As Tidjane's already summarized, the Global Markets division was adversely impacted by challenging market conditions, continued mark-to-market losses, and low levels of client activity in the quarter.

The performance of IBCM was similarly impacted by these effects. And, whilst oil prices have recovered in the quarter, we still saw some impairments relating to the cumulative fall in oil prices that happened in 2015.

So I'd now like to walk you through our quarterly group performance in more detail, and start with capital on slide 18. Clearly, the first quarter was a challenging period for capital generation, given the losses that we saw in Global Markets, IBCM, and the drag from the SRU.

We're therefore very pleased that we managed to increase the amount of capital that we deployed to our growth markets, whilst maintaining our look-through CET1 ratio at 11.4%. What we show on slide 18 are the movements in CET1 capital in the first quarter.

So we start with a pre-tax loss of CHF 484 million, and we also saw CHF 300 million of CET1-related tax outflows in the first quarter, where they net out the capital used for our cash dividend accrual and FX movements, partially offset by a capital benefit of CHF 300 million, to result in a CET1 level of CHF 31.8 billion at the end of the first quarter. Now matching this decline in CET1 capital, we achieved a reduction in risk-weighted assets of CHF 10 billion since the end of last year.

This was driven by CHF 8 billion of business reductions across Global Markets, IBCM and the SRU, CHF 5 billion of FX movements, and then partly offset by methodology changes of CHF 3 billion. But as a result of the overall reduction in RWA, our look-through CET1 ratio was constant quarter-on-quarter at 11.4%.

We saw a similar effect in our leverage ratio, with total leverage exposure reduced by about CHF 18 billion Q-on-Q, resulting in an unchanged leverage ratio of 3.3% on an equity basis. Now that 3.3% falls slightly short of the new Swiss TBTF rules, which we expect to be published shortly and to come into effect in July, which will require us to operate with CET1 leverage ratio of 3.5%, but by 2020.

But I would note that we already exceed the going concern leverage requirement of 5.0%, again effective in 2020. Our ratio was 5.1% at the end of March.

And I'd just like to remind you that when we spoke in March, we communicated that we intended to operate with CET1 ratio between 11% to 12% through 2016, subject to any major litigation costs. That remains our intention.

And so far in the first quarter, we've raised a total about CHF 140 million of CET1 capital through various initiatives including business sales. Let's turn now to slide 19 to review our group RWA and leverage positions in more detail.

So as we said, we reduced group RWA by CHF 10 billion since the end of 2015. But what's important to note is over the course of the first quarter, we released CHF 6 billion of RWA from the SRU.

And we reinvested CHF 2 billion in our growth markets. If you look at leverage, you can see that the impact of our de-leveraging program has been very pronounced.

We reduced our leverage exposure by CHF 133 billion or 12% since the first quarter of 2015. That was driven by a reduction of CHF 62 billion in Global Markets as well as CHF 59 billion in the run-off of assets within the Strategic Resolution Unit, primarily formerly investment banking assets that were transferred into this division.

So let's now turn to the division results and start with the Swiss Universal Bank on slide 21. For the first quarter, the Swiss Universal Bank delivered a reported pre-tax profit of CHF 426 million on revenues of CHF 1.3 billion.

Excluding the CHF 40 million in restructuring costs in the quarter, the pre-tax income was CHF 466 million, 9% ahead year-on-year. But as we compare to the first quarter of last year, I would remind you that in July of 2015, we deconsolidated Swisscard.

We continue to have the same economic interest in Swisscard; but this income, following the deconsolidation, is no longer reported above the line within our pre-tax results. Adjusting for the impact of the deconsolidation of Swisscard, our adjusted pre-tax profit of CHF 466 million improved from CHF 415 million, an increase of 12% since the first quarter of 2015.

I think it's key to note that the division's return on capital increased from 13% to 16% year-on-year. And the cost to income ratio improved to 64%, down from 67% in the first quarter of 2015 and (25:24) to the goal we announced last October to deliver a sub-60% cost-to-income ratio.

If we look at risk-weighted assets, as we've gone before, the Swiss Universal Bank continues to be adversely affected by certain regulatory items, primarily the phase-in of the Swiss mortgage multipliers. And this was the primary driver of the CHF 3 billion in risk-weighted assets quarter-on-quarter.

Now I'd (25:50) like to spend a few minutes reviewing the two businesses within the Swiss Universal Bank; the Private Banking business has delivered an adjusted pre-tax income of CHF 235 million for the quarter, up 2% year-on-year, again excluding the impact from the Swisscard deconsolidation. Net interest income continued to benefit from the SNB's decision to remove the minimum – exchange rate between the Swiss franc and the euro in January of 2015.

Recurring commissions and fees were broadly stable year-on-year, again adjusting for the impact of the Swisscard deconsolidation. That said, we did see a significant reduction in transaction activity in the first quarter compared to the very active first quarter in 2015 following the SNB's decision last year.

Private Banking delivered net new assets of CHF 0.7 billion in the quarter, in line with the quarterly average of last year and showing a solid recovery from the negative flows of CHF 2.9 billion in the fourth quarter of 2015. But I'd note that the adjusted gross margin of 139 basis points was up by nine basis points from the first quarter of last year, again adjusting for Swisscard.

And on the same basis, the net margin improved to 39 basis points, the highest level in the last couple of years. And this strong improvement's primarily driven by the trends in net interest income year-on-year.

If we look at Corporate and Institutional Banking, for the first quarter, we saw an adjusted pre-tax income of CHF 231 million; that's 26% up year-on-year. We saw some of the same benefits as in the Private Bank with significant improvement in net interest income year-on-year, partly offset by lower income in the replication portfolio and reduced transaction activity.

I think one final point to note is that after a slow start to the year, we see strong momentum in the Investment Banking business in Switzerland, with 52 announced deals in the first quarter. And combined, these transactions represent over CHF 50 billion in deal volume, which we expect to recognize in revenues in the upcoming quarters, clearly subject to market conditions.

So let's turn now to International Wealth Management please on slide 22. So, IWM started the year with good momentum, with year-on-year growth in revenues and pre-tax income and very strong net new asset generation.

For the first quarter, IWM reported pre-tax income of CHF 270 million, 3% up year-on-year. And adjusting for the CHF 9 million in restructuring costs, pre-tax income was up 10% year-on-year.

Net revenues of CHF 1.1 billion improved by 4% year-on-year, predominantly driven by the growth in Private Banking and the adjusted return on regulatory capital improved to 24%. If we look at the individual businesses within IWM, the Private Bank reported a pre-tax income of CHF 202 million for the first quarter and CHF 212 million excluding the CHF 10 million of restructuring costs that we took, 2% up on a year ago.

This was driven by revenue growth in the business, but partly offset by increased investment in our risk and to a lesser extent our compliance infrastructure. Looking at the Private Banking trends, we saw higher lending and deposit margins which contributed to a 37% growth in net interest income year-on-year.

Slightly lower assets under management drove a slight reduction in recurring commissions and fees, but transaction activity also declined. As we said before, last year included the benefit from higher client activity following the SNB's decision.

This though was partly offset by slightly higher revenues from structured product solutions where we successfully introduced to our ultra-high (29:33) net worth clients as part of our strategy to deliver high-quality products to this group. If we look at net new assets, the Private Banking delivered strong inflows of CHF 5.4 billion, roughly two-thirds from emerging markets and one-third from Europe.

That represents annualized growth rate of 7%; and that includes regularization outflows of roughly CHF 1 billion. I think as important as net new assets, the adjusted growth and the net margins both increased year-on-year, I think underlying the quality of the assets that we've acquired in recent quarters.

Just lastly on Private Banking, I'd note that we saw a continued momentum in relationship management hires. We added 90 RMs in the first quarter.

Approximately 80% of the hires are senior-level managers and the majority of these hires are focused on emerging market coverage. Of the new hires, 40 have already begun working and 50 are committed to start in the coming months.

At the same time, the new hires in the quarter were offset by a managed reduction of 80 relationship managers due to the structural transfer to the SRU, as well as the planned reduction in coverage across lower wealth bands in lower growth markets. If we look briefly at Asset Management, clearly it's been a very difficult environment so far this year, but our first quarter results did benefit from a significant private equity realization in the quarter.

AM reported a pre-tax profit of CHF 68 million and excluding restructuring, CHF 67 million, an increase of 46% year-on-year. We made significant progress reducing expenses, with operating expenses down by 8%, improving our cost to income ratio to 79%.

We also saw net new assets of CHF 1.5 billion. I think it's (31:18) strong given the market environment in which we're actually operating.

And that was driven by inflows in traditional products including index and real estate. Let's move to Asia Pacific please on slide 23.

In this region, we saw – the first quarter saw a continuation of the challenging market conditions that began in the second half of last year, particularly in equities. Given the market environment, I think I'm very pleased to see that the business reported a pre-tax profit of CHF 251 million, albeit lower than last year.

But I'd also note that revenues and pre-tax income in this business improved from the 4Q level which saw similarly difficult market conditions. Consistent with our stated strategy, we've made significant growth investments in our platform in APAC as we continued to attract quality talent and we also invested in our risk and our control infrastructure.

As a result, we saw an increase in our operating expenses year-on-year. If we look at the businesses within APAC, within Private Banking, we saw a pre-tax profit of CHF 102 million compared to CHF 108 million in the first quarter of last year.

Our diversified geographic footprint as well as strong ultra-high and high net worth client activity contributed to solid absolute results. We added 40 new Relationship Managers in the quarter and 100 over the past year.

If we look at net new assets, we saw inflows of CHF 4.3 billion in the first quarter with an annualized net new asset growth of 11% supported by the new RM production and the majority of the contribution was from the ultra-high-net worth clients segment. And finally, I'd note that our gross and our net margins were stable, I think again underlying the quality of the net new assets acquired in the quarter.

Within the Investment Banking businesses in Asia Pacific, in the first quarter, we reported pre-tax income of $154 million. This was about 60% down year-on-year, reflecting the challenging market environment during the quarter, particularly in equity markets.

Equity sales and trading revenue in APAC declined by 42%, reflecting these conditions particularly in equity derivatives. But notwithstanding this market environment, Credit Suisse gained share in equities trading.

Our estimated market share was 6.4% in the quarter, up from 5.2% in the first quarter of 2015. Our Fixed Income businesses in Asia Pacific were broadly stable, primarily driven by increased activity in macro products, but slightly offset by lower emerging market revenues.

So let me now turn to Global Markets on slide 24. Our Global Markets business has been very adversely affected by the difficult conditions we've seen across both equities and fixed income in the first quarter.

Our performance was also impacted by structural changes to our business model as we restructured this area to a less volatile and lower risk model. Specifically, we incurred mark-to-market losses as we decreased inventory to reduce the risk profile of the portfolios.

And notably, as you may recall, last week, we announced we completed the sale of the bulk of our distressed assets to TPG. This resulted in a loss of $100 million in respect of that sales, of which CHF 96 million has been included in our first quarter numbers.

If we look at the first quarter results on a reported basis. Global Markets saw a pre-tax loss of $649 million in the first quarter.

This includes restructuring charges of $102 million. And adjusting for these, we saw a pre-tax loss of $547 million.

Overall, these results were in line with the guidance that we gave on March 23, with revenues down 46% year-on-year excluding the mark-to-market losses. First quarter equity sales and trading revenues of $566 million declined by 32% compared to the first quarter of 2015.

Looking at our performance compared to the first quarter of last year, we had lower derivative revenues due to weak market conditions in our structured and corporate businesses. And we also saw reduced cash equity revenues as lower European trading volumes offset increased commissions from higher volumes in the United States.

But against that, the Prime Service business delivered a resilient performance with significantly lower leverage and a return on assets of 135 basis points. Turning to fixed income, this was clearly a very difficult quarter given both the challenging environment and approximately $400 million in mark-to-market losses.

Offsetting this difficult revenue environment though, we have been successful in reducing our expenses with adjusted operating expenses down by 12% year-on-year. A key driver in this was the reduction in compensation expenses including deferred compensation, which was down $107 million or 40% year-on-year, following the prior decision we made to reduce both deferral rates and the overall number – value of awards in prior years.

This was partly offset by investments in our risk, regulatory and compliance infrastructure. Provisions for credit losses of $69 million increased significantly compared to the first quarter 2015, reflecting adverse developments on non-fair value loans in our corporate lending portfolio, primarily energy-related which I'll come in a minute.

Now let's to turn to slide 25 and look at the risk profile in Global Markets. This slide provides an update around the mark-to-market losses incurred across our portfolio.

As we said, we've already successfully completed the sale of the bulk of the remaining portfolio to TPG. Overall in the first quarter, we saw marks of $443 million across Global Markets and IBCM which compares to marks of $633 million last quarter.

And if you look at the components of our mark-to-market losses, you can see that we incurred the losses more substantially in the trading-related areas. Our trading book mark-to-market write-downs totaled $357 million in the quarter.

The marks within the distressed and par portfolios include, as I said already, the CHF 96 million of exit costs relating to the sale of our distressed portfolio to TPG. Now away from the trading books, the losses were much more muted.

In leveraged finance underwriting, we had a mark-to-market write-down of only $22 million in the quarter and that was fully offset by carryover in those (37:38) same positions. In the Corporate Bank, we had mark-to-market writes of $64 million in the first quarter, but this includes $72 million of oil and gas provisions.

Whilst we do expect some further impairments to come in the oil and gas portfolio due to the cumulative impact of the oil price falls last year, we do think we're through the worst of this at these levels of oil prices. I think it's also important to note that given the significant de-risk in the business, including the sale of the – most of the distressed portfolio, Global Markets has clearly made very substantial progress towards reducing the draw-down on maximum quarterly pre-tax losses by 50% under a severe stress scenario that we aimed as we outlined as one of our goals on March 23.

Let's turn now to the Investment Bank and Capital Markets Segment. So clearly, similar to Global Markets, the results in IBCM were impacted by the market environment with significantly lower street activity across all products.

For the first quarter, IBCM delivered gross revenues after joint venture splits with Global Markets of $456 million, up by 3% year-on-year. Notwithstanding the difficult market conditions in equity and debt underwriting, we delivered a very strong performance in advisory with M&A revenues more than doubled year-on-year.

And we achieved this notwithstanding the fact that street M&A fees are down by about 16% year-on-year. If we look at equity underwriting, the volatility in equity markets severely impacted the level of IPO activity, which drove revenues down by nearly 55% year-on-year, which I think is in line with the level of street fee decline we saw in the period.

First quarter debt underwriting revenues declined by 19% and that's slightly better than the market decline of 27%. Just briefly on capital, IWA was down by about 8% compared to the end of last year, driven by a decrease in the underwriting portfolio.

Let me turn now to conclude for the Strategic Resolution Unit on slide 27. So the SRU was formed in October of 2015.

And since that time, we've made significant progress with respect of our capital mitigation and the reduction in pre-tax drag on our overall group results. If you look at performance, you can see we've significantly reduced our operating expenses from over CHF 1 billion last year to CHF 566 million in the last quarter.

Now on an adjusted basis, which I think correctly excludes restructuring and major litigation expenses, our costs are CHF 489 million, down by 24% quarter-on-quarter. Reduction in costs is a core target for the SRU and was primarily clearly driven by reductions in both restructuring and litigation expenses, but also by the savings from the exit of our U.S.

Private Banking business. Within the U.S.

platform, expenses were predominantly driven by a reduction in people-related expenses. Headcount peaked last year in the U.S.

business at around 1,100 people. And at the end of March, head count had reduced to 350 and today it's around 80 people.

There will be some delay into how these translate into expense reductions given the normal notice periods. And (40:55) we've already seen some benefit from head count reductions, we will continue to see costs come down in SRU throughout 2016 as a result of this initiative and other steps we're actually taking within the SRU.

Negative net revenues in the quarter were a result of valuation losses as well as the spend related to exit portfolios. The valuation losses were predominantly taking the emerging market and credit loan (41:19) portfolios, which clearly were adversely affected by the market conditions we saw.

We took valuation losses of CHF 177 million in the SRU, including 46% in provisions for credit losses in the quarter. Notwithstanding these market conditions that we made substantial progress on capital reduction in the SRU and we're ahead of the schedule to meet our capital targets for the unit.

In our group, we reduced RWA by CHF 7 billion or 16% compared to the end of 2015. Leverage exposure was down by CHF 16 billion or 12% compared to the end of last year.

These reductions were achieved across a broad range of exits and mitigations and at a relatively low cost. The exits are generally accomplished at less than 1%, somewhat better than the guidance we've given so far.

I would note though that whilst we hope not to see a repeat of the valuation marks in subsequent quarters, we would expect to see continued losses as we exit from this portfolio. So on that point, I'd like to conclude the results portion of this presentation and hand back to Tidjane, please.

Thank you. Thank you, David.

Before we take your questions, please let me summarize 1Q 2016 from our perspective and comment briefly on the outlook for 2Q. We have been executing in 1Q our restructuring program with discipline and are making good progress.

Our Wealth Management-focused divisions achieved a quarter of profitable growth, attracting quality inflows of assets and generating in aggregate CHF 1 billion of PTI. IBCM is demonstrating that its pivot towards M&A and ECM is on track and Global Market is being restructured effectively.

Lastly, our look-through CET1 ratio has remained stable at 11.4% in challenging market conditions and we expect to operate in a range of 11% to 12% for the remainder of the year. Regarding our outlook, we have seen effectively more constructive markets in April.

However, we remain cautious for 2Q as transaction volumes are still lower than in previous years and a number of macroeconomic and political factors continue to weigh on client sentiment. Before I finish, I would like to flag that we will hold an Investor Day in the fourth quarter this year and our Investor Relations team will provide more details in due course with regard to timing and location.

We look forward to welcoming you all to that event. And with that, we will now take your questions.

Thank you for your attention.

Hey, good morning. Three questions from me please, one on net new money, one on capital and then one on the Corporate Center.

Firstly on net new money, a very good result compared to the fourth quarter, but the net new money flows are less than you guided to in your preannouncement in mid-March, particularly in the Swiss Universal Bank. So perhaps you could elaborate on what changed between the preannouncement and today in terms of the net new money flows.

Second question on capital; you reiterated the 11% to 12% core tier one range during full year 2016. You're already in the middle of this range and you've come in better than expectations for the first quarter, and it was widely expected to be the lowest quarter.

So why do you continue to believe that you won't breach that 12% mark this year, particularly when you've still got the CHF 1 billion of asset sales to process, so perhaps an update on those as well, please. And then finally, on the Corporate Center, you've seen a better result there versus prior quarters, and it appears to be due to a better Other revenues result, as well as a negative compensation number.

So perhaps you could just provide a bit more detail on what's driving that as well, please. Thank you.

Okay. Good morning, Andrew, and thank you very much.

I'll take the first one and let David deal with the two others, and thanks for noting that the flows were strong; but you're right – they're different from the indication given in mid-March. But NNA is volatile.

You will see that the APAC number is actually higher than the number we gave in March, and quite materially, and the Swiss number is lower. We go through a very rigorous verification process every time on NNA.

And what happened is that one flow in Switzerland that we classified initially as AUM, through that rigorous assessment, was considered AUC. The client wanted to leave it in cash, and that's most of that difference.

So it's a reclassification at the end of the quarter. David?

So on the second two points then, in terms just on the capital position, I mean I think there's several factors here. Firstly, I think what we're pleased with in the first quarter was, we actually did manage to balance continued investment in our growth markets, so Asia Pacific, IWM and the Swiss Universal Bank, whilst basically reducing the amount of capital we had in the SRU by CHF 7 billion, and basically maintaining our CET1 ratio at 11.4%, notwithstanding the loss we actually suffered in the first quarter.

So I think we felt we got that balance about right in the first quarter. I think it's very important to us to actually continue to drive towards some of the growth goals we laid out last October, and that's clearly a core part of what we're doing and that's a balance we intend to, I think, walk in the remainder of 2016.

I think – clearly I think, as Tidjane said, we have seen some improvement in market conditions in April and in May. But I think I'd be a bit cautious of the environment.

We do have a significant transformation to actually do within the Global Markets business. As we said before, in the second quarter, we'll be moving CHF 10 billion to CHF 15 billion of RWA into the SRU; so there will be some losses related to that.

So I'd just be a little bit cautious that we do – we need; A, need to be aware of those market conditions, which clearly have been difficult for the first quarter; and B, we actually need to actually run off those assets, and there will be some costs to that, and we'll give you much more detail on that in the second quarter. I think the second point is, normally in the second quarter, we do see some capital costs relating to our share awards and deliveries.

That's typically in the, sort of, 10 basis points to 15 basis points. I don't see any particular reason why that will be different this year; so I think that's a further measure to be cautious.

So I think, at this point, I think quite happy to talk about a range of 11% to 12% pre-litigation expense; and that's what we would like to target, I think. I think the third point really, on the Corporate Center, a number of technical points there.

So I think firstly, as you say, there's actually a negative compensation number. That relates to the fact that we actually maintain the mark-to-market position of certain comp instruments which were actually linked to our stock price within the CC.

As you know, the stock price did fall in the first quarter, but it actually generates gains in the Corporate Center. So clearly, one would hope the stock price will improve, and this situation would normalize going forward.

I think the second point, you did notice Other revenues there. We – as part of our Equity Derivatives business, we do have positions in our own shares.

And again, the volatility related to that is actually booked in the Corporate Center. So we saw some gains there as well.

So those would be the primary technical factors within the Corporate Center.

Okay. Is that okay, Andrew?

Very useful. Thank you.

Okay, thank you.

One final point, basically. We did actually make some good treasury revenues within the Corporate Center as well, reflecting the fixed income market.

So hopefully, that would be more sustainable.

Okay. Thank you.

Thank you, David. All right.

So, shall we move to our next question?

Yeah, good morning and thank you for the presentation. I had a few smaller questions in Private Banking in general.

And to start with IWM, the gross margin, 109 basis points, I think was the highest in three years. Could you just talk about what stands behind the high level in the first quarter?

And then, probably related to this, mandate penetration went up in most areas. And particularly in SUB, obviously it almost doubled within a year.

Can you just talk about the profitability differential between known mandates and mandates, if that's possible? And then, just lastly on the Swiss IPO, can you just give us an update there in terms of the steps you still have had this year, like Creation (50:19), Legal Entity and some of those milestones, that would be useful?

Thank you very much.

Okay. Thank you.

Thank you, Daniele. Lot of questions on PB.

David, you have a summary of margins in PB; you want to go through that?

Yes, I would actually. So firstly, just – there's couple of slides in the appendices worth looking at.

I'd probably start on slide 35, which has the Private Bank trends, I think within the International Wealth Management division, which I think was the core of the question. So what you see there essentially is clearly, net interest income improved from CHF 220 million to CHF 301 million; recurring commissions and fees slightly down.

But I would note what we said before about, we have been quite successful in terms of selling more structured products. You've seen that in terms of mandates as well.

The only reason it's slightly down is just the number of assets we actually have is slightly down. And transaction activity was lower, but perhaps not as low as people were expecting.

I think maybe it was more resilient than people were expecting. Clearly, the first quarter of last year was very good at CHF 241 million with the SNB action, but essentially, transaction activity in the first quarter was stable compared to that – I mean, look, it's a good result, I think, is the sort of bottom line.

Now if you actually just translate that into gross margins, as you say, you end up with an adjusted gross margin of 109% compared to 97%, and adjusted net margin of 30% against 27%. I think the second slide, just to look at, really gets to the whole question, the broader question, around margins across our Private Banking business on page 31.

You can see similar trends. You can see the gross margin for IWM; as I've mentioned before, from 97% to 109%, net from 27% to 30%.

If we look at the SUB, 130% to 139% and net – I'm sorry, apologize – on page 31, on the Swiss Universal Bank...

There are a lot of numbers on the page.

The net margin improved from 36% to 39%. And in Asia Pacific, it was stable there.

But I think that stability does reflect perhaps the pace of growth we're actually driving there, in terms of higher expenses. So I mean...

And the number you're referring to is the adjusted one...

The adjusted one...

(52:18) discount because otherwise, the raw numbers indicate a different evolution. So...

That's right.

The correct ones are the ones excluding Swisscard.

So, as Tidjane is pointing out, the Swisscard deconsolidation does reduce the reported margins. And it reduces that primarily through the recurring margin component, because there's about CHF 56 million recurring revenues in Swisscard which were excluded.

Which explains the movement in recurring income.

So therefore, you do need to exclude that, which gives that. But I think, stepping back, I think the key point here is, it is pretty much driving to trend.

I think, as Tidjane referred to before, we are very conservative about assets we actually recognize as AUM. You remember we actually tightened our policy around this in the third quarter of last year.

So there is (53:02). But I think the balance of revenues here is exactly what we said we'd do.

Essentially, you have seen the strength in net interest income. We're clearly doing things to protect and grow recurring fees as much as possible, ex the Swisscard effect.

Transaction activities are a bit more, obviously, open to market conditions.

I'd agree (53:24). Maybe the other thing we said very clearly – quickly about that, is that it's broad-based, really.

I think that's a particularly pleasing aspect of the IWM flows. They're really across regions, both in emerging markets and...

And in Europe.

Exactly, and in Europe. Mandate penetration and differences in profitability.

I think, I'm not sure I'd add much. I think that the usual trends, as you know, is the ultra-high net worth business tends to have a low gross margin.

But the dilution on the net margin is normally less, because some of the operating expenses are lower relative to the size of the business. And I think, in terms of ultra-high net worth penetration, it was about 47% across all of our Private Banking businesses in terms of that; so broadly stable with the trends that you actually reported before.

And then you were asking about the IPO. I mean, the first thing I will say is that I'm really pleased with the increase in return on capital in the Swiss business, because one of the drivers of this IPO is really our desire to see the value of that asset recognized in our share price.

And we've always believed that there was a material upside there, but not (54:33) fully recognized. So, again, credit to Thomas and his team, two points increase in one year is very good, and we're driving towards a very attractive asset, I believe, a very attractive valuation.

So part of preparation for the IPO is improving the operational performance; that's really the first block absolutely necessary and the second block is the legal work. The second (54:56) Legal Entity Switzerland and there, we're working very closely with the regulator, because the Legal Entity Switzerland is not identical to the Swiss Universal Bank; I think there are differences at the margin, (55:10) STS and our trading activities, some of the support centers, et cetera, where there are differences of footprint there.

But the registration for banking license has been made on time and we are on track for completing that process in Q4, looking at Thomas here, Q4 2016 – October, yeah.

Thank you.

Okay. Thank you, Daniele.

Thank you.

Okay. Next question?

Hi, good morning, a few questions from me if I may. First of all, I just had a question, a general question regarding this year.

So if – let's suggest that there's going to be a statutory loss for the full 2016, is there any kind of preliminary discussion with FINMA, whether they may just say block the dividend if the losses continue? That's question number one.

And then secondly, I'm just trying to understand basically, David, on your comments, whether this is a one-off element or whether the actual mark-to-market losses and actually gains this quarter on the Corporate Center actually should be taken off as one-off item because for example, there were gains this quarter; but actually next quarter, there may be some losses similar to the fair value of own debt? And then third question is in the annual general meeting, you've actually raised the capital, the ability to raise capital for acquisitions.

Is it something that you believe that will be on your agenda before the IPO at the end of next year? Thanks very much.

David, you take the first one on FINMA and the dividend and losses, statutory losses.

I think firstly I think I don't think we would fairly necessarily – we're certainly not making a full-year projection for our results basically now that we're in (57:07) now basically. So I'm not really going to comment on your suggestion we might make a statutory loss for full 2016; that would seem pretty forward looking as a statement at this point, frankly.

And therefore, I think it's difficult to really comment on FINMA's view on these things. I mean clearly we did have a loss last year due to the goodwill write-off we took.

And I think yet, obviously we're actually paying a dividend with a scrip alternative which was approved by our general assembly last week. So I think it seems a bit forward looking or rather presumptive I think in terms of making a comment around the full year.

I think within the Corporate Center, I think I've been clear in terms of the major components here. Firstly, if you go back to what we actually said last October, we did substantially streamline the Corporate Center.

It now basically contains treasury and some of the comp-related volatility and it contains certain parent group expenses and it retains the legal entity program, the expenses for which I'm happy to say are actually beginning to reduce. If you look at the CC numbers this quarter, I think there were some things there which I think are definitely recurring; so I don't think it would improve treasury performance.

So we'll see how that goes. And there were some things which reflect that volatility, so for example around the compensation norm (58:27) and the trading your own shares effects.

Those were clearly a positive in the first quarter; they could easily be a negative in subsequent quarters. Should we exclude them?

No. I think we're trying to – I think our process for adjusted numbers; we've actually laid out in terms of what we exclude, which is restructuring and significant litigation costs.

Those numbers are actually now included within our GAAP accounts. So they have to meet formal standards.

They have to be sustainable. Otherwise, I think we would have a challenge from the FCC around that.

So it's not appropriate. And we've adopted (58:56) that discipline here basically.

But I think I'd be pretty clear to you in terms of the trends in CC; it was better than one would have expected in normal course. But there are some sustainable items in there such as the reduction in the (59:09) drag and certainly the other revenues which one hope would be mostly (59:10) repeatable.

I think the third question was a formal question. No, I think the AGM authorization is something we've actually requested each year.

We normally try to have a reserve around about 100 million shares available for acquisitions. And that is renewed each year and it was renewed this year as part of that basically.

From a technical point of view, it's a related – and the same reserve is what we use for the scrip dividend, so the number might not be quite what you expect because we have to get authorization for the scrip as well as for acquisitions within that category of our share class. But there's nothing unusual within that request.

(59:48).

Yeah, thank you very much.

Okay. Thank you.

So, next question.

Morning. Two or three questions, please.

Firstly on the path back to breakeven and profitability in Global Markets, if I add back the mark-to-market, it looks underlying revenues in the quarter are just below CHF 1.4 billion and the costs, ex restructuring, are just above CHF 1.4 billion, so you're sort of slightly loss making in the quarter. I just wondered – so I take your point about the exit costs.

But just switching (1:00:25) on operating costs, how rapidly do we see some of these cost savings coming through? You're saying you've already achieved the head count reduction equivalent to CHF 260 million annualized.

Will we see the operating cost base in Global Markets come out already in 2Q at a sort of CHF 1.3 billion, CHF 1.2 billion level? Will we see a step down in the near term such that that unit can reliably be break-even or even profitable?

That's my first question. The second question is just on the IWM Private Banking gross margins that you noted which are now after (1:00:59) the sort of 109 basis points having been also pretty good in 4Q, 107 basis points.

Are we viewing these as a sustainable base level from which we move forward? And that's it.

Okay. So I think on the first one, as I said, I think I mean I think Tidjane has given a very clear summary of the operating conditions in which we currently trade.

And as I said, whilst April was better, I think we have to recognize this is a very challenging macro environment. Some of the conditions which obviously resulted in 4Q being difficult on 1Q, but it could easily recur in the balance of this year.

There's still the same macro effects that we saw in the first quarter. So just be cautious and I think that's there basically.

This is not an easy environment in which to operate. I think...

...But I think taking account of that, I mean should we see the costs come down is my point really.

I think the second point is we'll obviously make every step we can to get the expense reductions in as early as possible. But I think it's worth recalling that there are people typically around three months notice period and it takes time for that process to actually go through.

So regardless, even if we announced and (1:02:08) execute everything on March 23 which we didn't because it does take time to put this in place, there is a timing and a phasing for this. So I think the reductions will come through; but I would be careful about how much comes through in the second quarter.

And Jeremy, on a technical point, which you understand as well as I do, the balance will shift because we will actually be restating our numbers with the reload into the SRU because as we move that CHF 10 billion to CHF 15 billion of assets into the SRU, certain infrastructural costs will actually go with it because the SRU will be involved in running off some of the infrastructure relating to those assets. So the numbers you'll see for Global Markets in due course, when they're restated for this in 2Q and we report against 2Q won't be the same as this.

So I've answered your question really on a pre-restatement basis. Clearly the basis for that will shift with the SRU reload.

Understood.

I think that's the central point really Jeremy, that's why we're not giving you a clearer answer at this point. I think once we restate at 2Q, you'll have a clearer visibility on the economics of Global Market and what's happening in the remaining Global Market.

But I would say a good rule of thumb is kind of two to three quarters. You get a lag between the quarter in which you take or announce or notify and the quarter in which we benefit materially, two to three quarter is a good rule of thumb to do your forecast, I think.

The other question was on IWM and its annual margins. Short answer is yes, I think that's a good level of margin and something we can sustain.

Barring a big disruption in macroeconomic conditions, that is something we can intend to extend. There's a potential there.

We said loan penetration has gone from 12% to 14%. That will feed into the net interest income over time.

The appetite for loan is real among our ultra as these are high-quality risks where we have a very good track record. With our risk functions, we're very good at assessing those risk and the margins from those transactions are very good on a risk-adjusted basis; so there is room for expansion in IWM at stable margins, I would say.

Very clear. That's good to hear.

Thank you.

Thank you.

Yes. Good morning.

Yeah, I just wanted to follow up on this question or theme of margin sustainability. In particular, thinking about the net interest income or the net interest income component of the gross margin.

If we compare where we are today in terms of the NII component of gross margins, it's substantially up from where we were four or five quarters ago. I think in total, we're up from 40 basis points to 52 basis points if I added all the private banking units together.

And I remember a debate last year that we were having about how this was benefiting from swap income, the negative Swiss franc rate environment. So I guess I wanted to ask the question again how sustainable this is, especially if the environment of interest rates normalized to, say, zero rate?

Second question was to think about obviously the shift to your kind of lower risk, lower inventory model within the Investment Bank. I guess now that you've had a few months of restructuring through the FICC business, do you have any kind of preliminary thoughts as to what the kind of end-stage revenue go-to level might be for the FICC business?

FICC business has historically made about CHF 4.5 million if I think of underlying 2014-2015. And just trying to get a sense of where is this going to end up.

Also the losses that you've experienced in recent months, how does that impact the models and the risk-weights going forward? And the final question, apologies for this – the CHF 1 billion capital gain that you look to recognize this year.

What are the earnings implications of that? Thank you.

Sorry, I'm not sure I got the last one, the CHF 1 billion capital gain, you said what – the line wasn't very good. What was the...

Yes. So what are the early implications of that?

Will there be any earnings implications?

Okay. All right.

Thank you very much.

Thank you.

Okay. We'll try to take them in order.

First one is net interest income sustainability. David.

Yeah. So I think clearly there are a number of components to the net interest income as we're actually seeing across the businesses.

I think as Tidjane mentioned before, expanding the loan penetration in our Private Banking business is a core component of our strategy and that applies outside of Switzerland as well as inside of Switzerland. And I think the momentum that we're seeing in IWM and Asia Pacific is a core part of what we're doing there.

It's important both in terms of revenues; it's important in terms of the broader client relationship we have and the profitability we enjoy from those assets. So it's a core part of what we're doing.

And clearly that's one reason why you're seeing the risk and compliance controls related to that increasing because that needs to be matched by a step-up in the appropriate control environment to actually support it. I think the point you're sort of (1:07:32) touching on really is the benefit that we see from the negative interest income in the negative interest rate environment here in Switzerland.

I think as Tidjane said, I think his projection really in terms of where we are in terms of that is based on where we are today in terms of the interest rate environment. Clearly if the interest rate environment was to substantially normalize, then you would see a drop in net interest income to zero and then it would actually improve again basically as rates go positive at that point if we're in an unusual position in terms of that book.

But I think it's fair to say that's certainly a component of what we're actually doing here. And to be clear, that is a benefit which primarily affects the Swiss Universal Bank as opposed to the IWM business.

So I think if I was to step back, I would say clearly for the IWM business, I think we've got the (1:08:25) things we're actually doing in terms of expanding our loan penetration. Within the SUB, you have (1:08:30) some risk in terms of the Swiss franc rate environment.

Asia Pacific is clearly more driven by those same factors.

Also, if I can add a counterbalancing effect on the deposits because we are not passing the negative interest rates to – so if rates moved in the other direction, you would lose that downside issue (1:08:48).

Exactly.

On the retail side. So there are counterbalancing effects.

Yeah.

It's not completely straightforward. Is that okay?

Yeah.

Okay. Then yes, you were asking about fixed income, very hard to give you a revenue forecast.

I don't think at this stage, we would do that. But the way we think about the business, we said we would take it down to a CHF 5.4 billion cost base.

If you want a global revenue number, it's anywhere between kind of CHF 6.5 billion and CHF 7.5 billion, to give you a sense. And we think we can generate, in normalized conditions, I insist on those words, a 15% return on capital on that basis on an RWA of CHF 60 billion, right and the leverage significantly reduced.

So that's what we are trending to. Clearly, our process to get there is painful because again, the results of Global Markets are not that surprising, if you just think about what we are doing.

If you tell a business I will give you much less capital to work with, you will get a revenue decrease from that. And when you're looking at the RWA available in 1Q 2015 and RWA available in 1Q 2016, you need to take into account the RWA inflation.

Actually, on average across the quarter, our business had much less capital to work with in 1Q 2016; that's one impact. Second impact is market demand.

So you are shrinking the capital available and at a time when demand is collapsing anywhere like 30% or 40% and you then have the opportunity cost in the time of your teams because they are working quite hard to drive the RWA down and as they are doing that, they can trade. And finally, you have a fixed cost base which is, by definition, fixed.

So you are stuck with a cost base that you can only attack over time and you have a pretty ugly revenue picture. So I'm sorry.

I mean what's happening is actually quite rational and explainable. Currently, if we look at the drivers of that performance and then if you add mark-downs, you end up with the revenues we've had; there is nothing extraordinary about those revenues.

They are logical given where we are and the restructuring we are undergoing. But it will, as you said, it will – will evolve (1:11:19) because once the RWA has been reduced, once our cost has been taken out, considering that you have derisk too, you reach a really, really quite attractive platform that can focus on clients.

But at the end, what we want to do is serve our clients. (1:11:35) servicing our clients, provide good products and they like to buy from us.

And we will be then in a position to do that; so sorry if it's a long answer, but it is worth running for that logic. Do the losses feed into the RWA, David, what was the next question?

I think we probably need to get back to you on that. I think we definitely saw some increase in the risk-weighted asset utilization of the bank from the market volatility that we saw because that does come through some of those drivers.

And some of that, we actually (1:12:09) hedging in the quarter, therefore mitigating the cost of that. But I think there was still some residual adverse effect and you see that primarily in the businesses that have Investment Banking assets; so Global Markets, but actually also in the SRU numbers as a consequence of that volatility.

I think I'm not (1:12:25) expecting any changes in our models per se relating to the losses we saw in the first quarter. I think it's more market volatility impact in terms of how that comes through in terms of some of the final calculations.

And the CHF 1 billion capital gain.

I do apologize. I think it would depend on the exact mix of assets as we finalize the sales in the balance of this year that there would be, for example, on a (1:12:48), there certainly would be a gain on some of the others; that would not be the case basically and we'll disclose those as we go through the year.

Okay. Is that okay?

Great, thanks a lot. Yes, thank you, Tidjane.

All right, thank you. No problem.

Next question.

Yeah. Hi, thanks for taking my questions.

The first question is on your cost number that you had at the beginning of the slide, the 8% decline; it's about CHF 400 million. And if I look at your page 112 in your release, it looks like you have about CHF 300 million of deferred decline and you have clearly guided to ongoing deferred decline.

But it looks like you're using all the deferred decline more or less of CHF 400 million for the full year already in the first quarter; just want to try to understand this if I'm looking at this correctly or not. The second question is related to the inventory exposure that you have left.

You give the percentages; but clearly there are hedges; there are sales. So I was wondering if you can give me more exact numbers, I can calculate something; but I don't think it's exact and both for the distressed book as well as the CLO book.

And in that context, how should we think about mark-to-market going forward because I'm sure you have macro hedges. Should we think about credit spreads as a good guide or would you say that is inaccurate as such?

And lastly, just coming back to your discussion on revenues, you mentioned on slide eight reduction (1:14:47) volatility of earnings in Global Markets by 50% in a stressed scenario. Now that, to me, means much less revenues assuming less risk.

At the same time, you reiterate the cost base from the Investor Day. So just trying to square your P&L in the IB, this less risk.

Okay. Thank you.

Thank you, Kian. Do you want to take the deferral...

Yeah. So, let me just start on the overall cost numbers.

So I think, if we actually look at the adjusted cost number, you can see it drop from CHF 5.8 billion in the fourth quarter, which did, as I think we outlined quite clearly at that time, include a number of significant one-offs. So I think probably a fairer comparison is with the CHF 5.2 billion we actually had in the first quarter year ago.

So clearly, we're pleased to see it down from CHF 5.2 billion to CHF 4.8 billion. If you look back what we said on March 23, when we actually gave more detailed cost items, we said we're looking to be at or below CHF 19.8 billion which equates to a cost number of CHF 4.95 billion.

So I think it's good news clearly that the CHF 4.8 billion is actually less than the run rate we need to achieve in terms of assessing that target. But I would caution – two points, really.

The first quarter does tend to be normally low in terms of expenses. And secondly, the point we discussed before around the Corporate Center in terms of volatility around some of the account (1:16:16) charges actually affects these overall numbers as well.

So that actually reduces our expense run rate in the first quarter. Now, clearly against that, we come back to the comments we have made before, which is we have achieved significant reductions of head count predominantly around contracts to consultants, but across the bank.

But the costs for that normally take a couple of quarters to actually come through. So, I think it's – what you are actually seeing in terms of the overall expense reduction is, if the CHF 4.8 billion number is relatively low, it's not impossible that it actually could go up in the second quarter and then drop down as the more structural changes we have actually coming through it.

So that would be my broad picture in terms of guidance around that. So I think we're pleased with the CHF 4.8 billion number.

But I don't think we should be declaring victory at this point in terms of our cost goals. It does put us well very much on track for being at or below the CHF 19.8 billion number.

Just a follow-up on that, David, it looks like it's all deferred based on page 112. It's no real cost reduction, it's just adjustment to the deferred that you guided to in the fourth quarter after you took the one-time hit.

Compared clearly to the – so the deferred comes down for two reasons. One, essentially we reduced the EV over the last three years.

So the actual amount that what you've actually given over the last three years is actually low and that comes through this year. And secondly, clearly – and that was obviously more marked in 2015 than in prior years.

And secondly, we reduced our – the amount we deferred by about a CHF 150 million and that gave us about a CHF 25 million benefit from the reductions in deferral. And then thirdly, we also get these CC effects as well which gives us some swings.

I think that's what distorting the analysis you see there.

If I may (1:17:54) I think the more interesting number is the other number we gave you. We said of a CHF 1.4 billion net, which is the net cost reduction, the CHF 21.2 billion minus CHF 19.8 billion.

We've done more than half of that. That's real.

Yeah.

That gives you a sense of the run rate of savings being achieved, because when we take (1:18:14) taken out. We low – also keep in mind, when we take (1:18:18) infrastructure coming with it.

This is some risk and some compliance and some systems, et cetera that we don't have to do it anymore. So the kind of CHF 700 million of net cost reduction, for me, is the cleanest number.

The quarterly absolute cost is interesting but it's full of noise and it's not going to tell you much about the story. Really – I think good number is the half of CHF 1.4 billion, more than half of CHF 1.4 billion.

Okay.

Yeah.

(1:18:48)

Okay.

Because what you say in the differed comp numbers is you see the reductions that went before, than you see this volatility effect we have before. So that supercharge is the benefit in the first quarter.

As I am sure as you take through the rest of earnings release, you will see that certain costs, such as our non-comp expenses, professional services and contractual (1:19:04) are actually ahead of where they were a year ago. That's not particularly surprising, because we talked about some of the investments in risk compliance-related IT investment we actually made a year ago.

The ramp-up for that peaked in the fourth quarter and it's coming down. So that's the overall story of our cost reduction.

So if you think, going forward, we have the sustainable benefit in terms of lower differed comp. We will then start to see the ramp down in terms of those non-comp expenses as the other measures we are taking actually kick through, which Tidjane summarized, and that drives us through it.

But what you are seeing here, as Tidjane said, is the noise around that quarterly volatility. As you see through it, you can see those are the components of the cost moves.

And that's why we showed you the head count, because (1:19:44) taken out are definitely going to flow through.

Yeah.

In the coming quarters, but then again, with deferral, and we are not – it's really a key reform, because (1:19:54) when I arrived was double (1:19:58). We thought people who are costing us a lot of money.

And people were very unhappy with the money they received. And that's not a good place to be, but that's what happens if you defer a lot.

People get very little, and you're pushing forward this kind of wall of money. So, yes, there is a lot of commotion when we – we had CHF 5.8 billion in the fourth quarter, but really, in there was the cost of changing that once and for all, so that we actually (1:20:23) the comp.

So that when you move it down, because you have a downturn there, some of it flows it to a bottom line and to our shareholder, which, before we had the disconnect that you could make a very harsh decision and really no benefit to your bottom line. So...

I hear you, Tidjane, but you've just taken the cost up front, it's a net present value for shareholder is actually negative, because you're paying it upfront. There is no clawbacks anymore, but that's a different discussion.

You are creating flexibility, but you pay people up front, there is no change.

I see a lot of heads moving here negatively, that you cannot see, but we shall see, let us see.

Okay.

I think there is clawback.

Yeah. I think your second question, then, was on the size of the positions, post the sale, we have CHF 598 million of distressed market value after the disposals that were accomplished in the fourth quarter, the first quarter, and then the sale of the distressed business, if that's helpful

Sale was CHF 200 million.

CHF 200 million?

CHF 200 million.

Okay. That's very helpful.

So, it's helpful (1:21:27). Okay.

Yeah.

I think the third question was actually really just on the revenue impact in terms of the reduction in the – I don't think, Tidjane, there's much we probably add to what you said before, which is, I think we've given guidance that the point of the restructuring is to have a Global Markets business which can achieve a 10% post-tax return in tough conditions like we are seeing now, and 15% in more normalized ones. And the target expense base we have, as Tidjane said, that gives you a revenue range of CHF 7 billion plus-minus, depending on how you put it.

That's what we need to achieve. Now clearly, that's going to have to be achieved with a lower level – I'd say a more appropriate level of risk appetite.

Okay. That's very helpful.

And lastly, just on the mark-to-market of the remaining exposure, is it fair to look at credit indices, or you think that's not a good idea, don't go that way, because we have hedges against it?

I personally wouldn't look at that for a different reason, Kian, which is the positions are very idiosyncratic. And I think trying to find an index that actually relates to it, I think, is very misleading.

And I think it reflects that idiosyncrasy. So that remain – I think it's very likely we'll finalize that this quarter, the bulk of that CHF 598 million we're moving across the SRU and we'll be reporting it in there, basically.

It is idiosyncratic. That said, it clearly, as you know, (1:22:44) I don't think credit indices give you much guidance around the performance of these types of assets.

But it will be still a mark-to-market book, so it will go up and down based on fair valuation ...

Absolutely, yes, yes.

But it is basically one-fifth of what it used to be. So you can (1:23:01) to be one-fifth of what they would have been.

It was and is a trading book. Therefore, it's fair value (1:23:07) you don't have the option to change it basically, even if we move it to SRU.

And we've looked at the composition of a portfolio, you really have taken out a big chunk of a standard deviation of that division, as we – we said 50%. If you take – if you run your simulations in extreme scenarios, you could go (1:23:27) draw-down, with the reduction we've done, we've taken out about – close to 50% of it.

So you're in a much less volatile earning stream.

Yeah. Thank you.

I apologize for taking so much time.

No no, it's always interesting, always, always very interesting questions. So, thank you.

Any more?

Good morning. Thanks very much for your helpful discussion on your progress this morning.

Just two questions. First, I was just interested to understand, are there any lasting knock-on implications from your trading losses, either on capital comments or (1:24:00) on regulatory costs?

So for instance, if you go into the CCAR process for the first time, do you think there's a risk you might potentially fail the U.S. stress test, either quantitatively because of higher stresses, or qualitatively, because of concerns on process, and what would that mean for cost of capital?

And then secondly, just on SUB IPO, I realize that you're hesitant to give us many more details at this stage, but just to help investors get their hands around the valuation impact. Could you sort of guide us of what sort of Core Tier 1 or leverage requirement you think an independent entity would need to run at?

Because clearly, they're not going to be able to run at the minimums of 10% and 3.5% that you are using in your management accounts at the moment. So for instance, if you had a, let's say, 50 bps – I think leverage is the key constraint on return (1:24:43) on capital, if you had a 50 bps buffer, that would mean that, of the CHF 2 billion to CHF 4 billion you raised, you'd need to keep at least CHF 1 billion in the SUB, which would take a further 2 points off the SUB's ROE.

So maybe just, talk us a little bit about what you think is the target ratio and therefore, what is the realistic ROE for a SUB IPO business? Thanks.

Thank you and good morning, Huw. I'll take the first one and maybe let David take the second one.

On the first one, we actually have done a lot of work. And it's been one of drivers of the accelerating restructuring on CCAR.

And all the things we are cutting, beyond the two books we've been focusing on (1:25:19) products that is being cut very, very significantly in the restructuring that Tim presented in March. So fundamentally, this is designed to pass comfortably CCAR, and also to be very comfortable from a liquidity perspective.

So we are driving towards July 1. I think (1:25:39) and we think we're well on track, and part of the reason why we like this new GM structure is that it passes CCAR.

So we have no particular concerns in that area.

Okay.

Okay. You...

I think – just on the – in terms of the IPO, I don't think – I think it's somewhat premature to give us much more details on this. As we said before, the application to the payment (1:26:06) for the new entity is on track.

We are anticipating go-live in the fourth quarter, ideally October, for this entity. And we will be able to give more numbers at that point.

I think I would say, just in terms of the capital requirements for this entity, I actually don't see leverage as being the key constraint on this. It will be around the amount of (1:26:27) we have basically, and particularly, the rules environment.

For that, I think you know, as we gave guidance in October last year, that we are all looking forward to new standard rules (1:26:36) and things like that. And I think that will be part of our discussions with FINMA.

I don't wish (1:26:40) to anticipate that at this point, but I would say that's probably more (1:26:43) likely to be the key factor than purely leverage.

But would it be fair to say you will need to (1:26:48) buffer over the minimum, so you might need to retain at least CHF 1 billion of the capital you raise in the SUB you actually put out?

(1:26:55) I think, at this point, we did give guidance that we would expect to achieve between CHF 2 billion to CHF 4 billion of capital benefit from the IPO of a minority stake. I think that very much does remain our view at this point.

Everything we've seen in the – work we've done over the last six months since we announced this would very much support that.

Okay. Thank you.

Okay, all right. Thank you, Huw.

Any more questions?

Good morning, guys. I've just got a strategy question here, the other ones have been asked already.

A lot of the businesses that you've been cutting, clearly, there has been some volatility and that's not desired. So you've been cutting a lot of businesses which are very risk-weight intensive, but you're already running a group which is leverage constrained as it is.

And so I am just wondering, when you look forward three years, four years, five years, whether you think – are you worried that the bank might be very leverage constrained in the future? Because if that is the case, and even if you achieve very good costs, then it's always going to limit the amount of – limit the ROE you'll be able to achieve.

So, just how you're thinking about the shape of the bank, between risk-weight intensive businesses and leverage-constrained businesses, please? Thanks.

Thank you. Thank you, Andrew.

It's a very good point. My first one about capital is that, I would say, in financial services, one should always have more than one lens to look at capital, maybe it's my insurance background talking, but I really think that's vital.

You always optimize for more than one capital metric. Otherwise, you really bound to run in trouble.

So today, we are leverage-constrained. I think we were clear on that in October, that really for the next two years, three years, we are leverage-constrained.

But when you look at the dynamics of a bank, what we've cut and the shape that the bank is taking, actually that constraint goes away and you become RWA constraint, which doesn't mean that when we should take our eyes off leverage, but to my first comment, because otherwise you'll become leverage-constraint again. But I think that's the big picture and, actually, we think it's quite a positive message, but in the end, (1:29:22) sensitive.

And it's probably a better way to run the bank in the long-term in terms of metric. So, David, I don't know if you want to...

I think that's a very, very good summary. I mean, I think, at this point, clearly we're at 3.3% Common Equity Tier 1 leverage against the Swiss rules, which we do expect to be published in the next few weeks.

And then, basically go into effect on July 1, which requires to be at 3.5%. In total concern – total leverage, as I said before, on my current understanding of those rules, we would be at 5.1% against the 5% requirement.

So I think we're leverage constraint, but obviously not deeply so, primarily given the success of the deleveraging which we'd actually conducted over the last year with over CHF 130 billion of leverage that's been removed. As Tidjane says though, and as we guided last October, the broad changes around RWA which is still out there, would expect to swap it around for us being RWA constraint.

I think the only thing I would say to update what we said from October is, if anything, those rules look back a year or so later now than we expected then. So, it's possible leverage might be our primary constraint rather than RWA, but we would expect to swap around at some point.

That is really helpful. Thanks and any comments you can give around what buffer you think it eventually run at above the leverage ratio, if that was the constraint, obviously, (1:30:49) risk-weight further if that was the constraint.

But do you know where it might end up running at?

I don't think I have a buffer...

Do you have a buffer to that number?

I think when we did our Investor Day last October, we did quite a lot of forward-looking projections in terms of the RWA impact and gave a quite a lot of guidance at that point. I think given that there were several years to this actually happening and the rules are still being published and then like to be refined, I think – I don't think the estimate, I can give today would be any best than what we said last time basically in terms of the ratios we like to operate at.

Okay. Fine.

Thank you.

Okay. Thank you.

Thank you, Andrew. I think we have a few more questions.

So we will prolong the call. I think we're in overtime.

But let's try and get through the questions. Maybe we'll give shorter answers.

Next question, please.

Okay. Good morning from my side as well.

I just got two questions left and hopefully that would be short. The first one on your outlook statement for the second quarter.

Can I just ask a simple question? If the environment continues as it has up until this point in the second quarter, do you expect Credit Suisse to make a loss or do you expect Credit Suisse to be profitable in Q2?

And the second question is on page 23. Can I just ask you to explain the dynamics of adding 100 relationship managers in the Private Bank?

So I'm looking at the slide that says financial overview Asia Pacific. And I am looking at the key metrics.

So Credit Suisse added 100 advisors, but the risk-weighted assets are flat. The balance sheet is down.

The net new assets are down year-on-year, so the productivity of these advisors seems to have fallen by this 20% and the pre-tax profit has halved. So how do you think about that?

Thank you very much.

No, no, very good point. (1:32:55)

Well, I don't think we really want to add much to what Tidjane and I have actually said already about the market environment. I think you should forecast on the basis of that.

I think the only input I give to that really would be just relates to the excess (1:33:13) losses around the SRU in the sense, I think – I've said this before, the whole point of the SRU is to be run down as quickly as possible. So if we have to take losses in order to accelerate that and release the capital, that's going to be a much better trade than actually keeping the operating infrastructure going around that basically.

And it's very difficult to guess when and how that would actually get (1:33:34), but I think that's just an important point to keep in mind. I think, the second one, clearly in terms of the Global Markets business, I think we've said what we said in terms of the environment and the cost there.

I think you should make your own estimates around that. I don't think we're going to commit at this point to our 2Q outlook.

I'm really thinking (1:33:50) your question. I think the SRU is what makes it hard to answer.

All I'll be willing to say is, if things did not move from what we've seen up to now to today, I think the result would be better than in Q1. That's what I'll be willing to say, which doesn't tell you much but I think that's sort of it (1:34:10).

So there has been an improvement in April/May of Q1. But when we've had so many reversal, these markets have been so volatile, so freaky (1:34:19) and I'm just very reluctant to say anything else probably looking (1:34:23).

On Asia, actually thank you for asking the question, it's a really important point. I said very quickly in my remarks that we outperformed our peers.

I'll say it more strongly now, and that's the central point about Asia because we can all see that PTI went down from CHF 465 million to CHF 200 million-something. And I was looking with home loan (1:34:42) yesterday at quarter-by-quarter evolution of us versus our peers in Asia over the last two, three years.

What I can tell you is that this Q1 is the best we've ever had on a relative basis. So people who were two to one-and-a-half of our size on a quarterly basis are now our size in absolute terms in terms of PTI, the reason why we're pleased with this.

So you have to really look at it as a relative performance story rather than look at the absolute flow, 2015 over 2016, 2016 over 2015, I completely review (1:35:20) flow is lower. But in this context, we have done extremely well.

And I've used the example this morning when, for instance, CHF 1 billion of this CHF 4.2 billion is referrals to the PB from the IB. So the IB people bringing business to the PB.

We think the model is working well. I can also tell you that we have had a record account opening – record number of account openings in Q1 in our history, which bode well for the future.

So, the RMs, what they bring you first is account openings. So that increase – that spike in account openings is directly a consequence of the RMs.

First they have to open the accounts, which is a big deal, so that means they've gone to a client (1:36:06) Credit Suisse, and our client is opening an account with Credit Suisse, and then they'll bring the flows. So, yes, you're right to say about RWA is flat because we've seen that really a small deleveraging in Asia, very minor or small deleveraging (1:36:19) but we continue to invest in building those things because honestly we think that the upside later from having taken these people on board is very material.

And it's already helped us outperform everybody else.

And I think, there's a supplemental (1:36:34) slide in the appendix, Jeremy, on page 37, which has the Asia Pacific Private Banking numbers, just a few points to note, which is I think notwithstanding the market environment in which we're actually operating, transaction revenues in APAC/Russia CHF 128 million compared to CHF 129 million a year ago, which...

CHF 124 million (1:36:51) in 4Q.

In 4Q, which I think gives you an idea of the environment we're actually in there. I think that actually means that our Private Banking revenues were actually slightly ahead of where they were a year (1:37:00) notwithstanding that environment.

Clearly profits are down, but that does reflect the investments we're actually making. I think, as Tidjane said, there is some deleveraging which explains the lending numbers, but I think obviously gross margin maintained at 81 and net margin at 28 against 29.

I think the conditions we're operating, I think, does show that the strength we're actually seeing from this expansion in the RMs, and I think it also shows the quality of both the RMs and the assets we're actually acquiring.

Right. And so if anything, it has given us even more confidence in the resilience of the model because frankly this was a terrible quarter in terms of market conditions.

So this performance is quite impressive actually (1:37:38).

The balance sheet being down is purely what (1:37:42) being called in?

There was just a small amount of deal (1:37:45). I mean, I think, many banks have actually commented on the market conditions we saw.

Yeah, there were some deleveraging in the quarter.

Okay. Thank you very much.

Which by the way, I think, underlines the point about net new assets. If you have deleveraging and CHF 4.3 billion of net new assets, I think it does says something about the quality of the assets.

Is that okay?

All right. I see.

Okay. Thanks a lot.

Okay, thank you. (1:38:08).

Okay, next and last question, operator, please.

Yes. Good morning, gentlemen.

Thanks for taking the questions. I have three, please.

The first one, Global Markets on the March 23, you guided for 40% to 45% down on trading and now it turned out to be about 46%, and I guess March probably should have helped but it didn't. So could you give a little bit more color on whether you are actually losing ground in businesses where you would not like to lose grounds?

Are there, from your point of view, signs of, let's say, contagion (1:38:55) into businesses that you like to keep like an equities that's kept you from performing a bit better than the 40% to 45% initial guidance? The second question around share-based compensation, please.

Slide 18 shows that there was a positive about CHF 400 million effect from share-based compensation in your CET1. Could you maybe explain why there was a positive effect from this?

And maybe related to this, I think you need to deliver about 60 million shares to employees this spring, could you maybe provide a bit of color on what this would do to either your share count or your CET1 capital or whether that is already digested in your numbers? And the final question goes back to the net interest income in IWM, Private Banking specifically dragging you (1:39:48) a little bit with the performance in net interest income plus 37% year-on-year, loans plus 5%, how did you do this?

And also the net interest margin over loans is north of 300 basis points, which is very impressive also considering the type of clients that you're dealing with. I would be very happy to get a bit more color on that, please.

Thank you.

Sure, thank you.

So I think taking in sequence, so I think first, obviously we made a statement actually on March 23. So I think that did include March, and I view somewhat (14:40:26) of March.

So clearly 40%, 45% is what we guided at that point, it came out at 46%. I think not a great quarter, not much to really add in terms of that basically, and it was difficult from a market sense, but I think also difficult in terms of the number of things we had to achieve in terms of our RWA usage in the business basically.

We were very focused actually on making sure that we were disciplined in terms of our capital allocation. Clearly I think you've correctly adjusted for the TPG effect as well in terms of the sale basically.

I think, just on the second point, just in terms of the capital impact, yes, we're talking about CHF 300 million, part of that is the impact from share-based compensation because until we actually deliver, we (1:41:11) some capital. It's not the only thing, it's a bit of a – it's that plus other items relating to certain threshold effects we have in our capital.

There is always going to be some noise around it. I think, in terms of guidance, I think I did mention in that before, and I think (1:41:26) adverse impact from deliveries around the sort of 10 to 15 basis points in the second quarter.

I think we talked about that in the context of the CET1, I think that's probably a fair number to stick in, in terms of your assumptions around deliveries in the second quarter. It's clearly taken partly through the period and then partly basically actually on delivery in the second quarter really.

So that's all I'd really probably say around the CET1 impact.

I'll take maybe the IWB. I understand you're surprised at some of these numbers.

What we can say about that is, that it's good, good client segmentation and good execution. We have a range of current profitability in our (1:42:07) portfolio both on the loan and on the deposit side.

And we hope (1:42:12) that IWM has worked very well both on the loan side to move the balance sheet towards higher profitability clients, and on the deposit side also to do the same as creating margin expansion. So there has been material margin expansion in IWM.

It's good execution really.

Okay. Thank you very much.

You're welcome.

Well, I am afraid we have extended the call by about 15 minutes. We haven't (1:42:38) other commitment this morning.

It was (1:42:40) pleasure talking to you, as always. I'm sure you have more questions and don't hesitate to come back to us.

IR will be very pleased to answer your questions. So thank you for attending the call this morning, and see you all soon.

Thank you.