JPMorgan Chase & Company (JPM) — Q1 2018 Earnings Call Transcript

Thank you, operator, and good morning, everyone. Jamie is actually with clients today, so he is not able to join us this morning, but he sends his regards. Now, I'm going to take you through the earnings presentation which is available on our website. Please refer to the disclaimer at the back of the presentation. Starting on page one, the firm reported net income of $8.7 billion, EPS of $2.37, and a return on tangible common equity of 19% on revenue of $28.5 billion, benefiting from broad-based strength in performance, but also lower taxes and seasonality. This quarter's performance, on a core basis, pretax earnings grew 13% year-on-year, benefiting from higher rates, solid growth across other revenue drivers, and continued investments in our businesses. Even excluding the benefit of tax reform, net income was a clear record this quarter. Included in the results, you see on the page, approximately $500 million of mark-to-market gains on certain investments previously held at cost due to the adoption of a new accounting standard. These gains are reported in CIB markets revenue. Against that, there were other smaller, but nevertheless notable items, including changes in credit reserves, SBA, investment securities, and private equity losses and legal, which together substantially offset those gains. Underlined results continue to be strong. Average core loan growth excluding the CIB was 8% year-on-year, card sales and merchant processing volumes were up 12% and 15% respectively. We maintained our number one rank in global IB fees and had net income of $1 billion in the Commercial Bank. In Asset & Wealth Management, we saw strong long-term flows across all regions and 10% AUM growth. Turning to page two, some more details about the first quarter results. Before we get into the numbers on the performance drivers for the quarter, I do want to remind you that there have been a couple of adjustments to the numbers on the page, which are in line with the guidance we gave during the fourth quarter. First, we've started to see the impact of the new revenue recognition standard. This will have the full year impact of grossing up non-interest revenue and expense each by approximately $1.2 billion. The impact for the quarter of about $300 million is included here, and prior periods have been similarly restated. Second, as a result of tax reform, certain tax equivalent adjustments that are included in managed revenue are lower on a relative basis, and prior periods have not been restated. This impact, which was also about $300 million for the quarter, reduced revenues, split about 50/50 in NII versus NIR, offset in tax expense. So, with that, revenue of $28.5 billion was up $2.7 billion or 10% year-on-year. Net interest income was up $1.1 billion, mainly reflecting the impact of higher rates. Non-interest revenue was up $1.6 billion year-on-year, while it includes the mark-to-market gains mentioned earlier, it also includes approximately $400 million of losses on investment securities and legacy private equity investments. Adjusted expense of $16 billion was up 6% year-on-year, reflecting higher compensation expense as well as business growth, including auto lease depreciation. Credit cost of $1.2 billion was down $150 million year-on-year. Consumer charge-offs were in line with expectations and guidance, with no changes to reserves this quarter. In wholesale, we had a net reserve release of about $170 million driven by single oil and gas names. You'll see that our effective tax rate for the quarter ended a little above 18%, compared to the 17% guidance we provided, driven by a combination of higher pretax earnings as well as geographical mix. We're expecting the full-year effective tax rate to be closer to 20%. Shifting to balance sheet and capital on page three, we ended the first quarter with CET1 of 11.8%, down about 30 basis points versus last quarter. Capital generated was offset by net capital distributions and changes in AOCI. The reduction was driven by higher risk-weighted assets reflecting the increased level of market activity, which similarly impacted all other ratios. In the quarter, the firm distributed $6.7 billion of capital to shareholders, and last week, we submitted our 2018 CCAR Capital Plan to the Federal Reserve, but as you know, we can't provide any details of that at this stage. Before moving on to the lines of business, on page four, I'll briefly address this week's new capital news. Two new capital NPRs were released this week, the Stress Capital Buffer and eSLR. Starting with the Stress Capital Buffer, the proposal was broadly in line with the narrative and expectations that had been set. There is a comment period, and we intend to fully participate in the process, and are encouraged that there is an openness from current leadership to really consider feedback from the industry. On the positive side, we support the convergence of Stress and BAU capital, and in general, support simplification of the framework. We believe that the firm should be required to hold adequate capital to withstand severe stress, calibrated to the firm's specific exposures and risks. We also agree that many of the changes to the construct of the test, for example, not requiring to hold capital for full distributions during a stress environment, better reflect reality and Board-approved policies. However, if we are fundamentally reconsidering the contrast of minimum capital levels, then all of the building blocks should be in play, including the GSIB surcharge to ensure they all hang together. To reinforce points that we made previously, first and foremost, the fixed coefficients need to be recalibrated in light of the economic growth we have had. Second, the underlying premise for the surcharge and, more particularly, U.S. Gold plating is somewhat unnecessary for a firm compliant with all post-crisis reforms that directly address systemic risks, which includes the severity of CCAR stress, incorporating material GSIB-specific instructions. Beyond that, obvious challenges with the current proposal include the significant volatility and opacity in the said results, as well as challenges around implementation. Moving to page five and starting with Consumer & Community Banking, CCB generated $3.3 billion of net income and an ROE of 25%. Core loans are up 8% year-on-year, driven by Home Lending up 13%, Business Banking up 7%, Card up 5%, and Auto loans and leases up 6%. Deposits grew solidly at 6% year-on-year. We believe we continue to outpace the industry, which is experiencing a slowdown as consumers are increasing their allocations to investments, but also based on our data, they appear to be spending more, reflecting a continued high level of confidence. Client investment assets were up 13% year-on-year, with half of the growth from net new money flows and record flows this quarter. Active mobile users were up double-digit, and revenue of $12.6 billion was up 15% year-on-year. Consumer & Business Banking revenue was up 17% on higher NII, driven by continued margin expansion and deposit growth. Home Lending revenue was roughly flat, as portfolio loan spreads and production margin compression were predominantly offset by higher net servicing revenue. Card, Merchant Services, and Auto revenue was up 18%, including higher auto lease income, driven by Card due to lower net acquisition costs, higher loan balances, and margin expansion. The Card revenue rate was 11.6% in the quarter. Expense of $6.9 billion was up 8% year-on-year, driven by investments in technology and marketing, higher auto lease depreciation, and continued underlying business growth. The overhead ratio of 55% was roughly flat quarter-on-quarter despite seasonally higher payroll taxes and higher marketing expenses. Finally, on credit, the trends across our portfolio remain favorable. Charge-offs were driven by Card and were in line with guidance, with no reserve actions taken this quarter. Recall, last year included a net impact of a little over $200 million related to the student loan portfolio sale. Turning to page six and the Corporate & Investment Bank, CIB reported net income of $4 billion on revenue of $10.5 billion and an ROE of 22%. This quarter, we maintained our number one ranking in global investment banking fees as well as number one rank in North America and EMEA. Investment banking fees were $1.7 billion, down 10% from a record quarter last year, and strong performance in M&A was more than offset by lower debt and equity underwriting fees. Advisory fees were up 15% year-on-year as we saw good momentum and some large deals closed. We ranked number one in global M&A wallet, gaining share in every region. For the quarter, we announced and completed more deals than any other bank. Equity underwriting fees were down 19% in a market that was also down versus a strong first quarter last year, which included a number of large deals. This quarter, we ranked number three in a very competitive environment, and debt underwriting fees were down 18%, driven by a slow start to the year primarily due to increased market volatility, which reduced issuance. Despite these headwinds, we maintained our number one ranking globally and, looking forward to the rest of the year, the overall pipeline remains strong. Moving onto the market, total markets revenue was $6.6 billion, up 13% year-on-year reported. However, as mentioned, this includes the mark-to-market gains we called out on the front page and also includes a reduction of about $150 million reflecting lower tax equivalent adjustments year-on-year. Accounting for both of these items, market revenues would have been up about 7%. Fixed income markets adjusted revenue was flat versus a strong first quarter last year, with rates and spread markets returning to more normal levels following significant outperformance last year, offset by strong emerging markets and commodities performance. It was a record quarter for equities, with revenue up 25%. Driven by broad strength and continued momentum throughout the quarter, increased volatility benefitted all of equity derivatives. We also saw share gains in cash and continued client activity driving growth in prime as the investments we've made in the business are paying off. Treasury Services and Securities Services revenue were both $1.1 billion for the quarter, up 14% and 16% respectively, driven by higher rates and balances. Securities Services also benefited from asset-based fee growth on both market levels and new client activity. Finally, expense of $5.7 billion was up 9% year-on-year, half being higher compensation expenses, with a comp-to-revenue ratio of 29% and the remainder primarily driven by higher transaction costs in markets. Moving to Commercial Banking on page seven, another very good quarter with net income of $1 billion and an ROE of 20%. Revenue was up 7% year-on-year, driven by higher deposit NII as we continue to benefit from higher rates, partially offset by lower investment banking revenues. Sequentially, revenue was down 8%, largely due to the impact of tax reform. Gross investment banking revenues of $569 million were down 15% year-on-year due to a lower overall industry wallet and fewer large transactions versus last year. That said, the underlying flow of business remains robust. In fact, it was a record quarter for middle-market clients, and the pipeline looked strong. Expenses of $844 million were up year-on-year as we continue to invest in the business, both in bankers and technology. Loan balances were up 6% year-on-year and flat sequentially. C&I loans were up 5% on strength in our expansion markets as well as specialized industries, but down 1% sequentially, which is roughly in line with the industry. CRE loans were up 7% year-on-year and up 1% quarter-on-quarter, as competition is significantly elevated. While client sentiment is high in the wake of corporate tax reform, we're not seeing that yet, and we are maintaining pricing and credit discipline. Finally, credit performance continues to be very good with zero net charge-offs this quarter. Moving onto Asset & Wealth Management on page eight, Asset & Wealth Management reported net income of $770 million with a pretax margin of 26% and an ROE of 34%. Revenue of $3.5 billion was up 7% year-on-year, driven primarily by higher management fees on growth in AUM, as well as higher NII on deposit margin expansion and loan growth. Expense of $2.6 billion was down year-on-year as the first quarter of last year included nearly $400 million of legal expenses. Adjusted expense would have been up 8%, driven by higher external fees and revenues, as well as higher compensation. This quarter, we saw net long-term inflows of $16 billion, including $5 billion in active equities, with strength across all regions benefiting from strong long-term performance. We saw net liquidity outflows of $21 billion, largely driven by a combination of recent M&A activity and the impacts of cash repatriation due to tax reform. AUM of $2 trillion and overall client assets of $2.8 trillion were up 10% and 9% respectively on high market levels globally, as well as net inflows. Deposits were down 9% year-on-year, reflecting the migration into investments, but were about flat sequentially on seasonally higher balances. Finally, we had record loan balances up 12%, with strength in both mortgage as well as other loans globally. Moving to page nine and Corporate, Corporate reported a net loss of $383 million. The net loss of $1.87 million in treasury and CIO was primarily due to losses related to security sales. The net loss of $196 million in other Corporate reflects approximately a $100 million after-tax loss on legacy private equity investments, as well as a net tax expense on adjustments and true-up of certain reserves. You'll recall that last year included a legal benefit, and our quarter, of course, included the impact of tax reform. Finally, turning the page 10. Given Investor Day is only six weeks behind us, we have not changed our guidance for the full year 2018. To wrap up, we are pleased with the firm's performance this quarter, with all our businesses showing continued and broad strength in an overall environment that remains supportive. While acknowledging the tailwinds of tax reform and higher rates, the consistent performance of business drivers is translating into topline growth and positive operating leverage, with revenues and pretax income both up double-digits year-on-year. So, with that operator, we can take some questions.

Hi, good morning Marianne. Wanted to talk about LIBOR; we saw a big increase this quarter. Can you remind us how LIBOR affects you, kind of pros and cons, where do you have LIBOR sensitivity on the asset side and where do you have it on the funding cost sensitivity to LIBOR? And how should we think net-net about that?

Yes. So, I'll sort of end with the op shop which is that net-net the impact to our results in the quarter was very modestly positive. A pretty small number in the positive direction. We've actually seen this before. I can't remember if it was a year or so ago. We are most sensitive as you know to the front-end of the rate, but principally to IOER and prime. While we do have exposure to LIBOR repricing, it's both on the asset and liability side. As you mentioned, we also have a combination of one-month and three-month LIBOR. Looking across the assets and liabilities side, they material offset; we don't have significant mismatches. As a consequence, obviously, we benefit from a higher level of obsolete short rate, but the basis widening hasn't been very meaningful to our NII. Examples of assets that we price off LIBOR include the Commercial Banking loans and obviously unhedged or hedged long-term debt on the liability side.

Okay. And then just as a follow-up, wondering about the drivers of the 7% expected growth in fee income for this year. At Investor Day, you mentioned you've got some bounce back from headwinds in Card and markets, but also core growth of about $2.5 billion you mentioned. So, what are the drivers of that overall 7% fee income, if you could just give us some color there? That would be great.

So, let's start with three relatively big drivers. Yes, we now have laxer big Sapphire reserves and high premium vintages; our net acquisition costs are substantially lower, and that has been a tailwind for us. We are seeing regular way BAU growth in Cards, NIR, and the sort of related drivers. Similarly, mark-to-markets, as we talked about, after the first quarter performance—that's a driver. Additionally, the ongoing growth in the Auto lease income space, which is significant. Outside of that, you can look at our underlying drivers across the board in terms of new accounts and debit trends in Card sales and Asset Management fees as a driver too, so there is obviously a level of market dependency to it; a bit of the outsized year-on-year increase is due to the tailwinds of Card and market, both in the trading and in the Asset Management base.

Hi. Thanks very much.

Hey, Glenn.

Hello. There's a comment in the prepared text on Lending and Commercial Banking being intensely competitive and led to no real growth. Yet, I saw your comments about 5% and 7% C&I growth and CRE growth. I wonder if you could flush that out a little bit more about the competitive landscape, and I guess that's a pricing issue mostly?

Yes, I'll start with year-over-year; we're still getting significant benefits from our investment and expansion markets. Also, as you know, we have a pretty unique offering in terms of first-term lending. For a period of time in both of those bases, we've materially outperformed the market, and we're still seeing the benefit of that in our year-over-year numbers. Quarter-over-quarter—the trouble with C&I loans is there can also be some volatility associated with held-to-sell mortgage portfolios, seasonality and such. So, what we're seeing quarter-over-quarter is just the impact of the overall industry-wide slowdown, and you're right, it's not just pricing; we're continuing to be very selective and cautious given where we are in the cycle. However, we are not expecting flat for the year; we expect mid-single-digit growth for the year. We still believe there should be demand. In the C&I and commercial real estate space, competition has significantly stepped up, which has led to fierce pricing compression.

Thanks. And I just want a quick follow-up on your other comments related to capital proposals. The simple question I have is hearing you loud and clear on everything related to risk-based capital, but the clear improvement on the leverage side in the SLR. Theoretically, I know that's just a proposal right now; would that free up more activity in repo land and other short-term investments that soak up leverage capital but not risk-based capital?

Generally, across the industry—I suspect the answer to the question is yes—but remember for us that we haven't been constrained by leverage—Tier 1 leverage or SLR over the last several years. This is a result, obviously, of the business mix we have and our operating model, which allows us to socialize some of our results across the company, so we wouldn't expect there to be significant changes.

Hi.

Hi.

Can you just give a little bit more of your expectations for consumer and specifically, digital banking? The active online users were up 5% year-over-year, but for the quarter, it was up 12% annualized. I know there's always risk in annualizing numbers, so is that change in online users seasonal or structural? Just a little more color on that.

Okay. I'll give you my best thought. I would say it's a little bit more structural than it is seasonal. We've been seeing continued growth in both digital and especially, the mobile channels. This is largely due to adding features and, as we discussed at Investor Day, making it compelling for people to digitally move money, which engages them in all the benefits that come with that. Additionally, we've added digital account opening, making it easier for consumers. I can't give you exact amounts for what is driving which, but we expect a structural acceleration.

And then a follow-up on that. Is this money stickier or not? If you could elaborate more on the deposit base, I know you've been cautious in saying that money could flee more easily because of the digital. On the other hand, does it become more sticky because you have these connections?

Yes. I've mentioned that we believe those customers are more loyal; they spend more and bring in more deposits and investments. We noted the stat at Investor Day that digitally active customers exhibit more Card spend, both debit and credit, in addition to higher deposits and investments. Overall, it's beneficial for our franchise to have these customers engaged, and we hope they also use our branches. As for deposit status, we've discussed two theses. One is that with technology, transparency, higher rates, and the value of retail deposits, we expect to see higher reprice. We haven't changed our expectation on that, but we haven't seen it unfold yet. We've observed migrations in Asset and Wealth Management balances, which is expected to be a leading indicator for what we might see. This will develop over the following year.

Hi, good morning.

Hey Matt.

Can you provide an update on your interest rate sensitivity with the recent move in rates that we've had?

I'm sorry, say again?

Just an update on your interest rate sensitivity from here?

Okay. We've seen two things happen. We've rolled forward a quarter; I think our earnings-at-risk disclosed at the end of last quarter was $1.7 billion. If you go forward a quarter, that comes down a little less due to realized rate benefits, but we've also seen, as you know, an increase in rates of about 40 basis points, which will also have a significant impact. So, I expect $1.7 billion to decline meaningfully by the end of the third quarter, but you'll see those disclosures in our Q.

Okay. And then separately, within the trading businesses, there was a big increase in the average VAR. There's a lot of volatility in many products and markets, but can you provide insight on how much the VAR increased? You had some increase in trading revenues, but perhaps not as much as one might think given the VAR increase; is there any correlation?

Yes, I think it's very difficult to draw a straight line between VAR and all of its complexities and revenues in any one quarter. To clarify, the increase was related primarily to volatility and less so to positions, whereas some volatility was significant. We wouldn't expect that level to continue, although we would anticipate periods of significant volatility as well. Less than half of the increase is due to higher client activity in the CIB, impacting balance sheet and risk-weighted assets.

Hi. Good morning.

Hi Erika.

My first question is if the Stress Capital Buffer becomes final as proposed, and the industry now has a BAU CET1 minimum that could move year to year. How does that change your outlook on dividends and buybacks from here?

When we think about capital planning, rightly you would expect us to consider over more than a one-year cycle. We have very significant earnings capacity and don't want to fluctuate too much. There will be some implications of the potential for volatility in the calibration of management buffers. You saw our Investor Day sort of guidance that we would expect to try and pay out around 100%. Our ratios are below 12%, which puts us on reasonably solid footing to understand how the rules play out. Lastly, I hope and believe, through the comment period, the implications of volatility will be properly explored, and some mechanism will be considered to smooth things out, as we want to pay out a strong healthy dividend on growing earnings.

Got it. And my follow-up question relates to your response to Glenn's question on SLR. There seems to be excitement from investors regarding the 4Q banking sub SLR at 6.7%, off a 6% minimum going to 4.75%. To ensure I understood your response, regarding low-risk weight exposure according to that constraint, the leverage exposure feeds into the size component of the GSIB surcharge calculation. For there to be more freed balance sheet, do you also need to recalibrate the GSIB surcharge? Did I get that?

Yes, that's definitely one of the factors. However, we have been running 70 basis points above our minimum. So, if you reduce the minimum by another 100 or 200 basis points, whatever the number is, we already have excess capacity. We think about our resource use, maximizing SCA and haven't felt extraordinarily constrained. While we'll continue to make every decision based on marginal SCA, you are correct; there are local impacts to consider as well, such as our stock price affecting GSIB.

Hi, good morning Marianne.

Good morning, Betsy.

Question on LIBOR; I know you discussed it relative to the loan book. I'm curious how the LIBOR changes impacted trading?

In the fixed income space, LIBOR was a factor in our discussions, and even in equities, to be honest, but it was not materially impacting our trading results.

And the follow-up is on the mark-to-market gains that you called out, the $505 million. You've identified it as mark-to-market gains on certain equity investments. I wanted to understand why it's showing up in fixed income instead of equity trading line; is that the correct interpretation?

Yes, many of these investments are years old and relate to strategic investments with business activity. For instance, financial market infrastructure, clearinghouses, or exchanges; all sales and strategic investments are potentially related to other parts of the business. It just happens that these investments years ago relate to fixed income more than equities; also, they were previously at cost, and since there are observable prices, this quarter we have to reflect that.

Hey, good morning. A question regarding the TCGA — we all wonder if it's going to impact loan growth, but how might it affect credit, particularly on the Corporate side with higher cash flows and a lower tax rate? What is your outlook on reserving and expected loss rates going forward?

Across the board, actually, all the way from corporate to middle market, we expect higher earnings, more free cash. Generally speaking, this would improve the credit quality of the portfolio. We will only see that reflected as we get financials, but positive impacts are expected over time. It benefits credit overall, especially in a rising rate environment.

Right, okay, thanks. Following up on asset yields, we observed overall asset yields increased given the higher rate environment, but securities portfolio yields decreased. Is that due to a shortening duration, or simply a mix issue? Shouldn't we expect security yields to rise in this environment?

Yes, you should. What it is, actually, is the tax equivalent adjustments I've mentioned. You're seeing the impact of lower tax gross-ups, which affects portfolio and investment securities. If you were to adjust for that, they would have been in line with rates.

Thanks. Good morning. Marianne, you mentioned on the consumer side, you had no incremental reserving actions. I wonder if you can give us a state of the consumer. Do you feel better about consumers now or was that also related to just improved growth metrics in Card and Auto?

We feel really good about the consumer. While overall levels of consumer indebtedness have peaked, particularly in student lending, there has been ample time to prepare balance sheets, and people are liquid. Debt service burdens remain manageable, and confidence is high, which should positively affect consumer behavior. We see that reflected in spending data, where continued confidence indicates some spur in spending. Our expectation is optimistic; our portfolio particularly skews towards higher quality credit, showing no signs of fragility.

Got it. On my follow-up, the Card revenue rate showed a nice increase to 11.6%, and you've aimed for 11.25% by mid-year. Can you provide updated thoughts on the trajectory and where you expect that to go over time now?

Much like we've mentioned regarding Card charge-offs, there is seasonality. The first quarter revenue rate typically is seasonally higher. Having said that, we have seen revenue outperformance in the Card space. If you were to ask me, targeting 11.25% is a very solid expectation, likely to be higher for the year.

Hello. Can you hear me?

Yes, we can hear you.

I apologize if you already addressed this question, but can you discuss your feelings about the investment banking pipeline? It was a soft quarter for you and others, but how do you see the deal activity pipeline in light of the guidance provided at the Investor Day regarding Advisory and ECM?

I'll discuss the quarter briefly; it's important and instructive. Last quarter was a record for us. While we didn't want to downplay it, we did perform relatively well despite lower equity market results. If you inspect our ECM and DCM results, they were down for various reasons—some outside our control, some addressable. Some hoped-to-close deals shifted to Q2. Overall, the M&A pipeline remains strong and ahead of this time last year. As long as the market remains constructive, we should maintain reasonable momentum. M&A should benefit more than DCM as things progress.

Great, thank you very much.

Good morning, Marianne.

Good morning.

Can you provide any insight into your franchise and consumer franchise? Are there parts of the country that are more competitive for deposits, like metro New York versus California versus Texas? What are you seeing geographically on deposit growth and competition?

We compete with everyone—large money center banks, regional banks, local banks. There's plenty of competition, and we monitor market dynamics closely. I wouldn't highlight any particular area as having more pressure; competition remains strong everywhere, and we do well in various markets. Our strategies adapt as needed.

Okay. Sorry if you addressed this; I had to jump off the call for a minute. The deposit beta, where does it stand today? You gave a trajectory on your Investor Day; are you still on that trajectory?

Yes, when discussing deposit betas, there's a full spectrum. We are, as an industry, firmly on a repricing journey. The state of play depends on the business and the client. In wholesale, top-end reprice is reasonably high. However, as you move toward retail, we're still early in this journey, given the absolute level of rates. We continue to observe migrations for a few quarters, as people reassess deposits versus investments. While we feel confident, we expect some future normalization. We're still central in outlook regarding trajectory as we've discussed.

Yes, good morning. You touched on this in a tangential way. If we look at your Card fees on a consolidated basis back in 2014, 2015 before the Sapphire launch, it was running around $1.5 billion a quarter, it bottomed out late 2016 to early 2017 at $900 million, and now you’re at $1.275 billion. Should we expect—once Sapphire matures—to go back toward $1.5-$1.6 billion a quarter, or is that ancient history?

I can't comment specifically on dollars but will state we expect our revenue rate for 2018 will likely exceed the previously expected 11.25%. We’ve largely seen the Sapphire reserve quarters in the rearview mirror. From here, we grow with our accounts and businesses. We have experienced some structural step-downs from the reprice of our card co-brand relationships; however, ongoing growth is expected as we proceed.

Hi, thank you for taking my question. Equities were clearly strong in the quarter, but could you give us a geographical split? I'm particularly interested in any impact from the new regulation, especially MiFID II, in either cash or derivatives?

Globally, we’ve focused on investing in bankers, salespeople, and technology, building our platforms across cash and prime space. We previously lagged in international synthetic prime and now have a best-in-class platform, contributing to growth. EMEA and international prime have notably increased. Regarding MiFID II, while there were concerns about trading pullbacks, we witnessed resilient markets. We see material increases in EMEA electronic trading, which could signify permanence. Specifically, we face some concentration among players. Although the in-scope wallet is down and margins are pressured, we’re gaining share and benefiting from increased volumes.

Thank you.

Okay, thank you all very much.