The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Raul Sinha - JPMorgan Chase & Co, Research Division - Analyst
: I've got quite a few, but perhaps might start there with 3 and come back if we get more time. So firstly, I think you reiterated it quite a few times
that loan growth is -- this is an output of your strategy and your pricing discipline. But this cycle is obviously quite different from historical ones in
the sense that mainstream banks are coming out with very strong capital liquidity, which is very, unlike the case post the GFC, where you saw
strong loan growth. And yet, what we have seen this year is your loan growth has picked up again to roughly 8% from being flat in the previous
year. So I was wondering if you could talk a little bit about what you are seeing in terms of the combined sort of competitive landscape across your
many businesses? And what that means for the loan book trajectory going forward? That's the first one.
The second one is on your cost outlook commentary. I was wondering if you could give us a little bit more color on your statement that your cash
investment spend is expected to stabilize over the next few years. If I just look at the numbers, the investment spend is -- it's doubled over 3 years.
It was up 30% over the past year. So a little bit more color there would really help.
And then thirdly, just trying to understand the technology and your positioning in terms of technology platforms. Could you give us an overall
sense of how many of your businesses are on brand-new technology platforms? How many of them are on legacy or, let's say, platform that could
be upgraded, just to give us a sense of where you are in the technology transformation process?
Question: Benjamin Toms - RBC Capital Markets, Research Division - Analyst
: Two for me, please. Firstly, conceptually, what level of NIM does management think that the banking division can get back to in a normalized world
post COVID-19, assuming no rise in interest rates? And then secondly, probably a question for Andy. What's the longer-term correct level of CET1
ratio for this business? And if you're not able to put a number on it, perhaps you could give us some color why unlike the bank Close Brothers
doesn't use CET1 management target externally?
Question: Benjamin Toms - RBC Capital Markets, Research Division - Analyst
: I've got 2, please. Firstly, for -- probably for Martin, what portion of the bank's AUMs can be classed as sustainable, responsible investment funds?
And then this is kind of more a broad ESG question. When do you think that Close Brothers might sign up to the Net-Zero Banking Alliance? And
then, Phillip, I think you mentioned in the presentation that Winterflood's trading level have been very strong now for every year, and you also
stated that the business has moved on from 60,000 trades a day. What do you think a post-COVID-19 average number of trades a day looks like?
Question: Edward Hugo Anson Firth - Keefe, Bruyette & Woods Limited, Research Division - Analyst
: I guess I had 2 sort of related strategic questions. I mean if I look at the wider banking market at the moment, we -- I guess, you would say it's
characterized by a massive change in terms of digital new entrants, application of artificial intelligence, people targeting new markets, et cetera.
And I'm just struggling a bit to get a sense of what are you seeing from your competitors in your market? I mean my sense is it's not changing an
awful lot. Is that fair? Or are you seeing a lot of new people attacking some of your more lucrative segment? So I guess, that would be my first
question.
And then my second question would be, it's probably a question you get very bored of being asked, but I'll ask it again anyway. If I look at some
of your businesses, they're not obviously related to others of your businesses. And obviously, Asset Management would be an obvious one. And
I'm just wondering why you think you're the best owner necessary for that business. I think you talked about further acquisitions to scale it up. I
guess Asset Management is a scale business. And I'm just questioning or wondering why it wouldn't make more sense for that business to be scaled
up into some of the huge mega asset managers that are around, if that makes sense.
Question: Edward Hugo Anson Firth - Keefe, Bruyette & Woods Limited, Research Division - Analyst
: Say, could I just come back...
Question: Edward Hugo Anson Firth - Keefe, Bruyette & Woods Limited, Research Division - Analyst
: Well, could I just come back on the competitive question? Are you seeing -- I mean broadly speaking, is it the same competitors who you have
been competing with for the last 5 years? Or are you seeing new sort of digitally enabled, with the tech-type guys coming in? How is the landscape
changing or not at all?
Question: Edward Hugo Anson Firth - Keefe, Bruyette & Woods Limited, Research Division - Analyst
: Yes. No, that's very helpful.
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