Erste Group Bank AG

Thomas Sommerauer – Investor Relations Andreas Treichl – Chief Executive Officer Willibald Cernko – Chief Risk Officer Gernot Mittendorfer – Chief Financial Officer

Anna Marshall – JPMorgan Benjamin Goy – Deutsche Bank Gabor Kemeny – Autonomous Research Simon Nellis – Citi Bank Riccardo Rovere – Mediobanca Johannes Thormann – HSBC Alan Webborn – Societe Generale Andrea Vercellone – Exane Hadrien De Belle – KBW Stefan Maxian – Raiffeisen Centrobank Victoria Cherevach – Bank of America Merrill Lynch Giulia Miotto – Morgan Stanley

Thank you very much, operator. And good morning to everybody who is listening in from Vienna.

Today’s call will be hosted by Andreas Treichl, Chief Executive Officer of Erste Group; Gernot Mittendorfer, Chief Financial Officer of Erste Group; and Willibald Cernko, Chief Risk Officer of Erste Group. They will lead you through a brief presentation highlighting the achievements of Q2 2018 and of the first half 2018, and after that, we will be ready to take and answer your questions.

Before handing over to Andreas Treichl, let me point out Page number two, which contains the disclaimer. And with this, Andreas, take it away, please.

Thank you very much. Good morning, ladies and gentlemen.

Let’s start on Page four. Second quarter net profits are up by 30% to €438 million based on a slight increase in the operating income.

Expenses are coming down somewhat also on an annual basis for the first six months, 24% up vis-a-vis last year. If you look at the ratios on Page five, basically a stable net interest margin.

If you’ll look at the countries later on, the only country where margins have come down a bit is the Czech Republic. That’s basically a switch with central bank money and has very little to do with business.

So business margins are stable this year in the region. Costs finally have come down a bit.

So our cost-income ratio in the second quarter moved down to 58.8% from 64.3% in the first quarter. Risk costs, extremely low in the second quarter and in the first quarter.

And as a result of all of that, the return on equity in the second quarter of 2018 went up to 12.8%, and the return on tangible equity up to 14.6%. If you look on Page six, the asset side, again strong growth on client loans and customer deposits.

Loans went up by 3.7%, so slightly over 7% on an annual basis. And deposits actually grew by almost 8% on an annual basis.

So continuing money flowing in, although we’ve been able to move quite a bit more into asset management products, which you can also see in rising commission income. If you look at the main ratios on Page seven, our loan-to-deposit ratio stable at 92.3%.

NPL coverage has improved to 72%. At the same time, the nonperforming loan ratio went from 4% down to 3.6%.

And our core equity Tier 1 is down to 12.5%. And that’s due to the currency effect in the Czech Republic and a bit in Hungary and the minority shareholders that we bought out at BCR, but year-end, you will see 13% in front of the fully loaded Basel III ratio.

Liquidity coverage ratio and leverage ratio, almost stable. If you look at the business environment, on Page nine.

Actually it’s still going on pretty well. GDP growth is holding up.

Basically the whole region is outperforming the rest of Europe. In some countries exports are picking up again.

In all countries domestic demand is relatively high. And across the board, you see inflation at 2% or even higher.

Also a good performance on the unemployment rate and the general government balance. Public debt is coming down in all countries, except in Romania where it’s more or less stable.

So overall I think you can say it’s pretty good performance of Central and Eastern European region in 2018, with a pretty good outlook also for 2019. Now on the interest rate side, Page 10, not much happened other than in the Czech Republic where rates have gone up, and a bit in Romania also and in Hungary.

And as it looks like chances are that we can see another rate hike in the Czech Republic already this week, which would be, of course, positive for us. On the currency side, Page 11.

Rather strangely but the strengthening of the euro vis-a-vis the Czech crown, which now in July has come down again a bit, but other than that, I think, rather stable currency, with the exception of the Hungarian forint and where also the central bank has been quite explicit that we should live with a weaker forint for a while. Relatively stable in the other countries.

If you look at our market shares, you see them either stable or slightly increasing. The only place where market share is going down a bit still is on the corporate loan side in Romania, but also in Romania retail loans are finally picking up.

And across the board, actually we’re gaining slightly market share in both corporate and the retail business. As a consequence of that, as you can see on Page 14, our performing loan stock has been growing very nicely, double digit in the Czech Republic and Slovakia and Hungary and Serbia.

As you know, there are – both in Czech Republic and Romania, there are considerations of limiting the growth on the mortgage lending side. That is not really worrying us a bit given that we are relatively conservative already in our – on our LTV and debt-to-income requirements.

So that will not limit our growth potential. Might be high single digit during the next quarters.

On the customer deposit side still a high inflow, although we don’t pay any interest on deposits. We’re doing our best to get our clients into structured asset management products that bring them a yield pickup.

We’re doing a good job on that, but we could can do a lot more on that if we have materials available. If you look on Page 16, the net interest margin really rather stable across the board.

And on the operating income, you see pretty good results, particularly in the second quarter. And finally, out of the mix of NIIs and fee income, we see operating income on the rise.

Operating expenses have been coming down a bit in the second quarter, and we’re working hard on improving our performance on that front across-the-board. So as a result of that, you see in – on Page 19, almost in all countries, improvement of the efficiency ratios.

And with that, I’d like to hand over to Willi for the risk.

Thank you very much. And summarizing Pages 20, 21 and 22.

We are able to show continued asset quality improvements. Firstly, the ingredients, a well-performing economy, recoveries, less inflows of NPLs and the quality-driven risk policy.

When it comes to the outlook, risk costs will remain at a historically low level. NPL ratios will further go down, expected to come down below 3.5% during the course of the upcoming months.

And the NPL coverage ratio is at a very nice level of way above 70%. With that, I want to hand over to Gernot Mittendorfer.

Good morning from my side. We continue on Page 26.

No big changes in the picture that we are seeing, loan-to-deposit ratio relatively stable in this quarter because of lower inflow of deposits and a continuous development on the lending side. Page 27 shows you the reflection of growth of performing loans and reduction of nonperforming loans.

So the year-to-date growth number on the performing loans is 4%, which is a very nice development, and we hope that this will be continuing. The next two pages, we just simply show the same development as in the last quarters: a very solid liquidity buffer, a very solid liquidity situation; liquidity coverage ratio at 447.5%, well above any limits and requirements.

And a quick look on Page 31, on the maturity profile of the debt. We were issuing mortgage bonds this year.

And we have taken advantage of the very favorable market conditions, so the maturity profile is very favorable, very low, maximum concentration of €3.1 billion in the year 2022. We continue on Page 32, capital ratios.

As already mentioned, we had a currency impact of 14 basis points. And the minority stake that is already reflected in the capital, the closing is expected in the second half of 2018.

This has an impact of nine basis points. And the phased-in Basel III ratio is 12.6%, and the fully loaded 12.5%.

And with this, I hand over to Andreas for the outlook.

Okay, thank you very much. So for the remainder of 2018 and 2019, actually from an economic point of view, a good outlook, with maybe some positive developments on the interest rate front.

Basic economic indicators in the region should stay very positive, as a consequence. Of course, expense management will be very, very important.

We see wages rising in almost all our countries due to extremely low unemployment or, as in the Czech Republic, even full employment, but overall I think it is a positive development. In that region that we operate in, Brexit might actually could have a positive effect, as some of the citizens of our countries might return and increase our labor supply.

So overall, yes, given also that we don’t see any problems coming up on the risk front, we’re rather positive for our business outlook. We’ve kept the ROTE target for 2018 stable, 10% plus.

It’s going to be 10% plus. And we might add a couple of pluses maybe, but we decided to keep it as it was.

Our assumptions for that are continuing to be slightly growing revenues based on the loan growth that we presently see and, hopefully, falling expenses on a group level. What can change that?

Yes, basically only bad management or bad politics: the one thing, I hope we can avoid; the other thing, unfortunately, that we have little influence on. Thanks very much for listening in.

We’re now ready to take any questions you might have.

Good morning, thank you for the presentation. My first question is, predictably, on costs.

So it’s good to see cost-price decelerating this quarter. I was wondering if this performance of 3% year-on-year growth is in line with your expectations.

And could you provide an update on the scope of cost savings beyond 2018? My second question is on capital.

Apart from earnings inclusion, what will be the key drivers of improvement towards 13% by the year-end? For example, what is the scope for improvements from new operational risk model to roll?

Thank you.

Yes, on the costs side is the second quarter is exactly reflecting what we were saying. We said we will have higher costs in the first six months and with a decelerating trend.

And we are continuously working on our cost base and for the rest of the year. The 2019, we will make a comment at the earliest with the third quarter results.

We have certain elements that are negative for the cost performance, like wage inflation in certain countries, but on the other hand, you could see that we are managing to reduce our costs on a quarterly basis. So an update, you will get in the third – third quarter results.

On the capital, we are expecting a meaningful contribution from the op risk model in the range of 30 basis points. That should help, but in addition we see a positive underlying profit development that is helping on the capital side as well.

And as you see, the Czech crown has moved already in a different direction. And we will see some reversals on the negative impacts that we have seen in the second quarter.

Yes. Hi good morning.

Two questions, please, from my side. First, on Czech Republic, net interest income went down slightly in the quarter.

Of course, part of that was FX, but yes, your loans are growing. And just wondering, to see growth from here, do you need another rate hike?

Or can you maybe comment on any trends you’re seeing? And then secondly, on fees you are making good progress, but also again Czech Republic and some of the other large CEE countries are lagging a bit behind the overall group.

Any special initiatives to improve your fee income/asset management in particular? Thank you.

Again, on the Czech NII, that is entirely the depreciation of the Czech crown and nothing else. You can see from year-end actually on – NII grew very nicely.

And of course, another rate hike would be very helpful.

Yes, on the fee development, we are very happy with the fee development overall in the group. I mean we are moving towards our €2 billion annual fee target.

Czech Republic is still suffering from the move towards net interest income in certain products and has not recovered from these. And in addition, you have the FX, currency exchange affecting as well.

So we are not really particularly worried about the development. We are taking the very nice fee growth that we could show in the group.

Okay, thank you.

Hi, a clarification on your NII guidance, please. So you slightly changed the guidance.

As I read it, you are saying you don’t need further rate hikes from here to achieve a slight revenue growth, so does this mean that further rate hikes would actually create upside from here? And coming back to the Czech NII point, how do you feel about your Czech interest rate sensitivity now that we already have – already had a few rate hikes and just another one very recently?

So the reason why we took out the further was that we were basing our outlook at the beginning of the year on two rate hikes in the Czech Republic and a similar two to three in Romania. And they were already achieved, and we don’t – we expect another rate hike in the Czech Republic.

Romania remains to be seen. The rate hikes that are coming from this level will have a lower impact than the first two to three rate hikes, but they will be definitely supportive of our net interest income development.

Okay, I think you were mentioning a 20 million, 25 million NII upside from the earlier rate hikes.

Yes.

Okay, so you think this should be slightly lower from here.

Yes.

Okay, thank you.

Hi, thanks very much. Actually a number of my questions have been answered, but could I ask about trading income?

I think, before this year, the quarterly run rate was around €60 million. And now it’s quite a bit lower.

I’m wondering if something’s changed. Or do you think that’s just a temporary anomaly?

That will be my first question.

First, you have to add the two lines. It’s not going to – you should not simply look just at the trading line.

You have to include the valuation line as well. And the second thing is, last year, there were trading opportunities in the Czech Republic in – on Czech crown because a lot of speculation was around the exit from the currency floor.

And there we had a very nice contribution from these. And this opportunity is not anymore in the market, but we are seeing a stabilization of our trading result right now.

Pair up the two lines. A €50 million quarterly positive contribution can be expected.

And just on the capital. I missed the first couple minutes of the call.

I think you said there were a number of one-offs that negatively impacted the capital walk. Could you just repeat?

Yes. There was a depreciation of Czech crown and forint in the second quarter.

And we’ve included the purchase of the remaining or the six-plus percent of BCR. The transaction should be closed in the second half of the year, but it’s already reflected in the capital.

And both add up to 22 basis points negative impact on the capital.

Thanks. And then one last thing.

What was the dividend accrual that you’ve put through for this year?

€0.70.

€0.70. Thank you.

Yes, good morning to everybody. Two, three questions, if I may.

The first one is on RWA growth. I see a couple – €2.2 billion in this quarter, quarter-on-quarter, which is more or less the same growth we – I’ve – I noticed in the loan book.

So it’s like saying that the loan book that is growing is somehow weighted 100% or very close to 100%. We know that your risk weights are fairly high but maybe not that high.

Is there any particular reason why, let’s say, the RWA growth in absolute terms looks to be very, very similar to the one in the loan book? This is my first question.

The second question I have is on NII. Again, on the hedging, something I asked you last quarter.

Last quarter, the hedging, the contribution from the derivatives – the hedging of the derivatives was negative by five– or very, very little. So it’s something like €4 million.

This quarter seems to be, if I understand it correctly, something like €75 million, something like that, €77 million, to be precise. If I remember correctly, last time, you said that the contributions of the line should have been structurally lower, but €75 million is more or less the average that you reported in 2017.

So I just wanted to better understand. What is driving that peculiar contribution of – to your NII?

And the very final question I have: If I understand it correctly, Mr. Treichl, you stated you might had a couple of pluses to your 10% ROTE.

Would you be in the position to explain a little bit better what couple of pluses mean? Thanks.

Well, I’m – I don’t really – I said it because I don’t want to explain it in too much detail. If you’re at 13% and your forecast is 10%, it’s not a hugely impressive forecast.

So basically I was thinking about the apparel business where you have sizes of X and – extra large and double extra large. So I’ve – it’s just an early morning remark on my side, nothing else.

So on the RWA question. There are two effects in – that are inflating the RWAs in the second quarter.

One is a securitization that expired that will be renewed in the fourth quarter. That will have a relief in the fourth quarter of €600 million.

And a shift in some positions in the Czech Republic that had a €300 million RWA impact up. And the securitization, the expiring, was €400 million, so €700 million is not related to loan growth.

And on the NII and the hedging.

It’s less hedge accounting. And it’s IFRS fine-tuning that we are doing, so I think the line should be less volatile and stabilizing going forward.

Okay, thank you. If I may get back one second to the sort of €700 million that you mentioned of RWA, just to understand it correctly.

Is the €700 million, let’s say, a number that will – should theoretically disappear by the end of the year? Is that – did I get it right here?

I said €600 million should be disappearing out of the €700 million towards the end of the year, but we still have to work on this securitization. It’s planned for the fourth quarter.

Alright. Thanks very clear.

Good morning everybody. Johannes Thormann from HSBC.

Also three questions, please. First of all, a follow-up on the costs.

Is it fair to assume that the decelerating cost trend will be mostly hitting the other cost line? Or can we also expect personnel expenses to come down after the renewed rise in Q2?

Secondly, on your tax rate, you are guiding for 22% and only for even more in the next years. What is your current basis assumption for 2018 tax rate and also probably for 2019 and 2020?

And last but not least, how often do you have to revalue the Hungarian government put option? Is there a regular thing or only if there’s a major difference in business?

Thank you.

So the tax – I’ll start with the tax ratio. We had an effect in the second quarter that we had to build the tax asset in Hungary because the results and the outlook were improving.

And so this was driving down the tax ratio in the second quarter. For the full year, we are expecting the tax ratio between 20% and 22%, somewhere in that area.

And around 22% is our basic assumption for next year as well. On the put option, this valuation is having a trigger point where we – up to that level we don’t reflect it in our P&L and – but when the trigger is reached, then we are reflecting it in the P&L.

And it’s done on a quarterly basis and reflected in our quarterly results. On the cost question, PEREX, we see wage inflation in almost all CEE countries and had a collective agreement in Austria around 2%.

So it will be extremely difficult to keep the PEREX line in a – flat or see a reduction there. So I would say that we will not have a contribution on our cost program from the PEREX line, on our cost target.

Okay, thank you.

Hi, thanks for the call. Could you just explain and detail that technical element in the Czech Republic in terms of why the margin has gone down in the second quarter?

Because clearly it looks as if it’s just interest expense. And just to sort of confirm that you haven’t seen any changes in deposit costs.

And is – this sort of one-off shift from cash to something else, is that an – ongoing? So is the sort of Q2 margin level where we should be moving forward from?

That would be helpful. And I guess, sort of secondly, I mean, this is a quarter that you’re not talking about George, but could you talk about George and tell me whether you feel that there’s sort of progress as you’ve now gone through two quarters?

And are you making any money out of it? Is it starting to maybe produce any sort of revenues in terms of fees?

How do you feel progress is going there? Thank you.

Well, it’s very easy. In the Czech Republic it’s a shift from overnight deposit account to two-week SIPOs.

And this is then a basis for the calculation of the net interest margin. And we are making more net interest income and just simply a calculation effect that is reducing the margins.

So we take advantage of the high interest rates, and this is something that we will continue doing. George?

Okay, on the Georgia side. Austria, Czech Republic, Slovakia are now fully operational.

We’re gaining clients, so you could fairly assume that a substantial part of the growth that we presently have is on the retail side. And if you look at deposit growth, most of the deposit growth in the quarter that came from retail is due to George in those three markets.

We’ve introduced a couple of new products, which are coming up relatively well. On the consumer lending side, out of new volume, now we have refreshed the figures also from Austria, where 16% of the loans sold through George.

So digital sales are on the rise. We’re not yet there that we can give you exact profitability of the digital channels, but you will get more and more detailed numbers towards the end of the year.

And towards the end of the year also, we will have Romania, hopefully, fully on track with George. So presently we have 2.5 million users, rising.

And very likely that, by the end of the year, we’ll be above three million.

That’s helpful, thank you.

Good morning. Three questions from my side as well.

First one, on NII, just some clarifications. If you can give us some colors on what is the €7 million one-off in Austria.

And where is it booked, in which segment? And also, on the €14 million reclassification from trading to NII booked in the corporate center, is this a permanent shift?

Or is it something you have done this quarter and then it drops back to trading income next quarter, i.e. should we permanently have €14 million lower trading income and €14 million higher NII going forward?

And second question is on costs. And I just wanted to know if relative to last year you have changed or not the accrual rate for variable compensation.

I suppose you mostly book it in Q4. And I don’t know if it’s – if something has changed this year.

And also to try to reconcile your guidance of flat costs year-on-year – actually not flat, down costs year-on-year. And the third question is just a curiosity on dividend income, which I know is smaller but has rebased down relative to last year.

I just wanted to know if this is driven by perimeter change, i.e. you’ve sold something that was bringing you dividends and no longer within the future.

Or it’s just whatever you have paid, less dividends, this year than last year. Thank you.

So dividend income is a tick lower because we sold S IMMO towards the year-end last year but not – it’s not a significant meaningful number. Then on the costs side, accruals did not change.

We’re accruing the bonus on a quarterly basis and fine-tune it then in the fourth quarter according to the results that we have achieved. Then the €7 million, this was in the Erste Bank Österreich, and it was a correction and a fine-tuning of the IFRS 9 change.

And the trading shift of the €14 million, this is not – this will not be reversed. This is a between-the-line shift, and you should not expect this to be a permanent thing.

This is a – one correction that we’ve done in the second quarter.

Okay, clear. Thank you very much.

Good morning thanks for the presentation. One question on the loan growth in Romania.

It finally picked up to the kind of low single digits. Do you think there is an accelerating trends building there and we should have like close to high single-digit loan growth in the market soon?

So that will be my first question. And maybe in parallel to this comment, how are you seeing the pricing environment and with the rising rates in Romania and in Czech but particularly in Romania in terms of can you reprice your loans more than your funding cost is increasing?

How are the dynamics playing out there? So that would be the question on Romania.

And in the Czech market we’ve heard from your competitors there is a bit of pressure on mortgages. Could you confirm that it’s the case for you as well?

Thank you.

Yes, mortgages in the Czech Republic, there is pressure in the market, and obviously as competitors, so the pricing was not going up as the market was going up. It was changing but not enough.

Loan growth in Romania, yes, we are satisfied with the current development. We were mentioning already the discussion from the central banks, that they might impose some restrictions there.

Underlying, we see a positive development, and we will see how the regulator will react. On the pricing, it’s the situation seems to be a little bit better on the asset side in Romania than it is on the Czech Republic, but on the other hand, the liability pricing was already moving upwards in the Romanian market, whereas in the Czech market we have not seen a lot of moves until now.

Okay. Thank you.

Yes, good morning. Two question from my side.

First, on NIM trends. In Romania, actually when we see the bank rates growing further, do you expect actually your net interest margin trend that you had in the last quarter actually to continue based on that?

And second, in Hungary, how would you see net interest margin there behaving at the moment? And the second question would be in regard to this verdict of the Austrian court with regard to compensate corporate clients that – actually for not passing-on negative interest rates.

How would you expect that this would affect you? And if you have already booked something in that respect.

Thank you.

So the second question, on this corporate analysis with the first instance decision, which related to – not to us, we don’t expect then any impact out of this hearing. I think the question will be whether the court of appeal will confirm the decision of the first instance.

We don’t think that it will have an impact on us, and we did not create any kind of provisions.

On – let me say just quickly on Hungary that basically it’s the depreciation of the currency. If you look at local currency statements, NII has been growing.

And methodology change is affecting the capital benefit allocation in some of our business. That’s a one-off.

So it’s not really an NII decrease, but basically a major effect is the currency movements.

And on the margin side, I mean

We paid a bit more on – sort of the transformation margin in the asset liability management has come down. That was a bit offset by a higher NII in – actually in retail loans and in – also in deposits.

So business margins for us have not really changed in the second quarter in Hungary.

Okay.

Good morning. Thank you for taking my questions.

I just have a couple on – a couple of the more broader themes. The first was on George.

And you’ve already given some clarity on what’s happening there, but could I confirm a couple of things? The first was I think you said that 60% of loans in Austria for you are now distributed on George.

Did I understand that correctly?

15%.

15%, all right, okay. I thought that was quite high.

Great. Thank you.

And the second question is can you give some guidance around your market share, online market share in particular; and how that’s changing in Austria?

That’s relatively difficult to say, I guess, but you could – I – we know the numbers of online bank users in the other banks. We have overall with the savings banks about 20% market share.

I would guess that our market share in online banking is anywhere between 30% and 40% higher than our share overall, so that would mean it’s about 30%.

All right. Thank you.

And my final question was just on M&A, if you could give some color around your appetite to do M&A, what countries you’re considering, whether there’s been any progress to what you said over the last couple of conference calls. Thank you.

Yes. I mean we have a very – a fairly low-hanging appetite for acquiring banks.

And therefore, yes, it’s not – I mean we’re waiting for a real cheap opportunity. It hasn’t come up yet.

There is still a couple of opportunities around. If you ask me, I don’t really – I mean, unless we can really buy a nice market share and good clients, no operational problems, at less than 50% of book value, our interest is somewhat subdued.

We’d rather keep the money to move and support George in a new market. But if a great thing comes up, we’ll take it.

Understood, thank you very much.

Yes, thanks to taking my follow-up questions. On risk costs.

It looks like your wording is changing a little bit. If I remember correctly, last conference call, you were guiding to maximum 20 basis points risk costs.

Now we are halfway through the year. We have seen reversals.

NPLs are going down. NPL formation is negative.

You’re operating in countries where GDP is expected to grow 3%, 4%, so I would expect also the value of collaterals back in your, let’s say, deteriorated exposures to continue to hold up or maybe going up to in the price. Is there a reason why reversals all of a sudden should disappear?

Or do you have an idea when these reversals could actually turn into, I don’t want to say normal but, at least in negative numbers on credit losses?

Yes, this is a big question. What is the normalized level we want to talk about the short, mid-term?

We want to keep the guidance up, meaning less than 20 basis points cost of risk. Might be that in 2018 we’ll have significantly below that guidance we have given, but what we have seen is, yes, economies performing pretty well.

We see nice growth rates around. We are present in retail and corporate.

It is simply we want to take a bit more cautious approach. And when it comes to IFRS 9, we want to see a bit more volatility in the entire stuff.

So it’s a more – a cautious approach we have taken. So mid – short, mid-term, less than 20 basis points is the guidance I may confirm; 2018, probably significantly less than 20 basis points.

Okay, that’s clear thanks.

Hi, good morning. A couple of questions from me.

So the first one, on capital distribution and dividend. I believe you said that CET1 is expected to be above 13% by the end of the year.

Any updated thoughts on capital distribution and share buybacks from here? And then the second question, so we have heard you on M&A, but I believe in the past you have discussed entering new markets, perhaps even via George.

And any update on those conversations? Thank you.

This is exactly what I said before. I – we have a couple of opportunities in the markets that we’re in.

And some of them have passed. Some of them, we let pass.

Some of them are still around. We’re looking at them.

We have no urgency. We have no – I mean our interest is not so strong that we would be willing to move ahead.

We’re waiting. I think we are a very well-respected buyer in that region, but if we buy brick-and-mortar, we want to have it really cheap and no complication with it.

What we’re really interested in is that, now that we are finalizing the rollout of George in Romania, next year will be Croatia and Hungary. With that, we have the whole region covered, with the exception of Serbia.

Once that’s done and we are already sort of doing preparatory work for that, we would like to take George and move with it into a new market. That is a much more important target for us than buying a bank somewhere in our regions.

Got it. And your thoughts on dividend and capital distribution.

Well, I think we stick to what we said. Our preferred way of procedure will be that we, based on our results, are able to show a constant growth of dividend payout.

That’s, I think, what we’re looking forward for 2018. And if things go well, we’d like to continue on the same path in 2019 and beyond.

And if growth comes down and due to whatever reason our – we generate substantial capital surplus that we do not believe we would need to invest, we will start thinking about paying an extraordinary dividend or thinking about share buybacks, whatever is more advantageous. But there’s nothing that’s on our minds for this year.

Thank you.

Okay, thank you very much, ladies and gentlemen, for your interest and for your questions. Our next presentation will be on November 2nd, for the first 3 quarters of 2018.

And I hope we’re up for – again for some good news at that time. Thanks very much.

Have a great summer.