Good morning, everyone and welcome to the first quarter 2016 result presentation of BBVA. I am Luisa Gomez Bravo, Global Head of Investor Relations; and here with me today are Carlos Torres, Chief Executive Officer of the Group; and Jaime Saenz de Tejada, our Chief Financial Officer. As usual, Carlos will begin with the presentation of results and we will be moving straight away to the Q&A after that. I am well aware that today is a busy day for all because there are a lot of banks presenting results, so we will try to answer as many questions as possible during this presentation, but needless to say the IR team will remain available throughout the day to answer any pending questions. So good morning, Carlos and over to you.

Thank you, Luisa and good morning everyone. And welcome to our audio webcast for the first quarter results. I would like to start to by pointing out that it has been an abnormally low quarter in terms of earnings because we were impacted not only by the seasonality that is normal in the first quarter, it tends to be lower quarter in general but by the challenging conditions in the markets. If you recall, in our last webcast, our presentation in February, we were precisely talking about the uncertainties, macro uncertainties associated with China and the negative interest rates and the uncertainties around the emerging markets in general, the oil price that have really come down, etcetera, that has all had an impact definitely in our first quarter numbers. In terms of the corporate and investment banking business that has had a much worse performance than what we had anticipated and in terms of the net trading income that was also lower. And then we were also in the comparison versus a year ago, we're negatively impacted by the worse FX rates that first quarter versus -- the first quarter in the comparison are now much lower. Now having said that we have seen strong performance of our core revenues and as you will see very strong performance in emerging markets which is very good news. And also good news in Spain regarding impairments which drive down the total amount of impairments on provisions for the Group and that is both in the banking activity in Spain as well as in the real estate. We also have risk indicators that have a good evolution and improvement in general impacted negatively in the U.S. but other than that good evolution. And capital generation which is strong in the quarter and very…

[Operator Instructions]

Okay we will move first straight on to the Q&A, a Group question from Santiago Lopez, from Exane BNP Paribas. The first quarter of every year has been in fact the best quarter since 2010, five years running with just one exception. Could you please elaborate about your statement that the first quarter is seasonally weak because that is clearly not the case based on the numbers reported by the Company over the past six years.

Okay. I was referring to the core revenues, the core banking activity and revenues associated with it. If you look at the bottom line, there are other effects that have changed the pattern in the past. But it's certainly true that the activity is seasonal and the first quarter is a weaker one. We have the summer in the Southern Hemisphere with the vacations there. And in Spain and Mexico traditionally, we have very strong fourth quarters, commercially speaking. And therefore we do see that pattern of weaker core revenues in our franchises in the first quarter. That's what I was referring to.

Thank you on FX Stefan Nadialkov from Citigroup and Jose Abad from Goldman Sachs asks FX impact ForEx impact cost of hedges and result of those hedges in the first quarter. And do you plan to increase the percentage of earnings hedged. More broadly, do you plan to reconsider your hedging policy?

Regarding the hedging policy it remains intact. As you know we had 70% of the FX movements on core capital and that remains true since the third quarter of last year and that policy hasn't changed. And in terms of P&L, we hedge the 12 months forward-looking earnings in the range between 30% and 50% depending on, of course, the cost associated with those hedges and our view of the evolution of currencies. As of today we're within those ranges and that is what we normally share with the market. The cost of the hedges, in terms of capital, have been 1.8 basis points during the first quarter of the year. So the annualized cost will be roughly 8 basis points to cover the 70% hedging in capital. And I think I'm answering all questions.

Okay, moving on to capital. Regarding the DTA levy, Francisco Raquel from Enemasuno and Mario Ropero from Fidentiis asked how much has been the DTA levy in the first quarter and for the full year? And where is it accounted for in the P&L?

The overall cost of the levy is estimated to be roughly €70 million net of taxes. The accrued number as of the first quarter is €80 million and is recorded at the corporate center as additional income tax.

Stefan Nadialkov from Citigroup asks if you could please give more details on the benefits from minorities in Peru?

Yes, that's associated with the directive explicitly states that when you have shares through a holding company, the minorities are not counted for towards the fully loaded ratio. So what we have done is agreed with our partners in Peru to move to a structure in which that holding company no longer is there. So we continue to have exactly the same percentage ownership and exactly the same political rights, etcetera. So nothing changes materially. It's just a formal change that allows us to not deduct the minority holdings in Peru that we were deducting until now.

Fabio Mostacci from Mirabaud asks how did the evolution of unrealized capital gains on sovereign bonds affect BBVA's core Tier 1 ratio this quarter?

The evolution has been a slightly positive and has had the available for sale capital unrealized capital gains. And it's had a slight positive impact in terms of capital.

Okay, Martha Sanchez from BoA, Merrill Lynch asks, dividend accrued in the first quarter, 4 basis points, seems equivalent to below a 30% payout ratio. Is this correct?

No, this is not the accrued dividend, by no means, we don't accrue. This is the payment in cash of the scrip that we paid in this first quarter, so the 4 basis points is just the cash out that deducts from capital.

Britta Schmidt from Autonomous asks what quarterly organic capital growth do you expect for the remaining quarters? What is the outlook for RWA growth in 2016?

Okay. As I think we've shared many times over, our objective is to reach an 11% core Tier 1 target at the end of 2017. And we think we have sufficient levers both of organic and inorganic to do so. And that's what we're set to accomplish. And the second is regarding RWA growth. We're expecting growth that should be between around 2% in 2016.

Okay, on following up also on regulation, what is your stance on regulation. Do you expect proposed changes to risk weights to be watered down? And also, you previously commented on sovereign risk weighted assets being a potential risk in the future. What is Management's current expectation on the topic that has attracted increasing attention?

Well, we've talked about this in the past. It's still work in progress and it's too early to know what the impact will be. We're confident that given the intent that the supervisors share with us on a regular basis around the closure of Basel III or Basel IV in general. In all respects, they are not seeking to overall increase the capital levels, but actually to correct some outliers and ensure a level playing field. And in that respect, we're confident that given the risk weights that in our case are larger and we have, as I've shared, the largest asset density and a good leverage ratio. In comparison with our peers we're confident that the net effect of all of these changes that are coming would not negatively affect us.

On Mexico revenues, Johan De Mulder from Bernstein, Jose Abad from Goldman Sachs and Arturo de Frias from Santander Investment Bolsa asks; first question, loan growth. Which segments are witnessing growth? And the second question is given increasing competition in Mexico, how do you expect margins in Bancomer to evolve over the year?

Okay. I think first quarter numbers reflects our continuation of the trend that initiated in the fourth quarter of last year. We're seeing very good levels of loan growth both in the consumer portfolio and in the SME book both around 20%, 25% year-on-year. And then very strong showing also in the first quarter. The consumer portfolio almost grew by 6% and the SME portfolio is slightly over 9%. Those are the trends that we should expect seeing going forward. And as that has taken place as expected, the resiliency of the customer spread has been again reflected in the first quarter numbers. Our customer spread reached again 10.8% which is reflects the good showing of the loan mix.

So overall in Mexico, as I commented also in the call, we're expecting double digit growth which is a bit more positive than what we had anticipated earlier on.

Okay, on asset quality on Mexico as well, Mario Ropero from Fidentiis and Johan De Mulder from Bernstein asks us to comment on the pickup and provision charges in the quarter, that means versus the fourth quarter. And on credit cost specifically, the impact of Pemex and other oil sector related companies in Mexico.

The increase in cost of risk in the quarter is directly correlated with a change in mix that I just mentioned in my previous answer. And it's perfectly consistent with the guidance that we've provided to the market. As you know, we're guiding for an increasing cost of risk to roughly 350 basis points for year end. That's something that we have not reached as if today, but it will be a process that will probably lead us to those levels at the end of the year because of that loan mix change. In the case of Pemex, nothing negative has happened in the quarter. On the contrary, I think that the minister of economy has supported Pemex and its supply chain through different measures during the quarter, remains investment grade. As you know our oil exposure in Mexico is 75 concentrated directly on Pemex and we're not expecting any increase in cost of risk associated with the oil and gas exposure in Mexico.

Stefan Nedialkov from Citigroup and Alvaro Serrano from Morgan Stanley ask, NII is up quarter-on quarter versus a weak start of the year in 2015 and fees are strong while provisions seem contained. Does this make you more optimistic about your 10% guidance for net profit growth in Mexico, guidance on NIM, cost of risk, loan growth for 2016? Carlos?

Yes, building on what I just mentioned, in fact we have seen activity growth double digit and that's our outlook for the year and NII should be growing in line with that growth in activity. Commissions also with healthy growth but more in line with the inflation and given that we will have lower growth of expenses than gross income, so positive jaws in 2016. The bottom line should be growing around double digit. Given also what Jaime just commented on asset quality and the cost of risk which we're guiding 350 basis points which is what we guided for in the past. So, yes, it's more positive the start of the year than we anticipated and we're now looking at that double digit bottom line growth for the year.

Britta Schmidt from Autonomous asks, the CNBV is considering changing provisioning policies, for example, on credit cards. Do you expect any of these changes to have an impact on Bancomer or its results as included in the BBVA Group?

I don't know specifically, Britta to what you are referring to but as of today we provision already the expected loss of the credit card portfolio using internal models. I think this is the most conservative way to do so and we should not expect any additional impact on that particular portfolio.

Okay. Moving on to South America, Mario Ropero from Fidentiis asks very strong cost growth. When do you expect this growth to fall in line at least with inflation expectations for the region?

Okay. Clearly, the increasing cost in the region is very much affected by two geographies, both Venezuela and Argentina because of the high inflation rates that -- ratings that we're seeing in both countries. Then on top of that as it was the case in the fourth quarter affected by the depreciation of many of the currencies, you know that we have certain contracts denominated in U.S. dollars and the depreciation that has taken place during the year continues to affect us. And last, but not least, the transformation process that we're developing does have also an impact in cost. We do expect those three impacts to slowly go down as the year goes by.

Okay, also Mario Ropero from Fidentiis and Fabio Mostacci from Mirabaud ask please comment on the material pick up in the NPL ratio in the quarter, 30 basis points in the region. Do you confirm your guidance on cost of risk in the region?

Yes, we saw an increase in NPL's numbers in the quarter, particularly concentrated in both Peru and Colombia. We've guided the market for an increasing cost of risk of something between 15 and 20 basis points during 2016 versus the 126 that we had last year. The reality of the first quarter is that we're well below those numbers, cost of risk in the quarter did not reach 1.2. So, we're not changing the guidance but clearly, as in the rest of the emerging economies cost of risk numbers are coming through clearly below the guidance that we've provided.

Moving on to Turkey. Stefan Nedialkov from Citigroup asks about the evolution of net interest income in the quarter. Any change in accounting methodology?

Yes, indeed I have seen some confusion around this. So, clearly the quarter has been a very good quarter in Turkey and net interest income has grown strongly. The only reason why the nominal growth rate that you're seeing at 7.7% is because there is accounting change that I explained briefly whereby we're reclassifying the cost of the swap funding in lira to the NII and priorly that was in the net trading income. So, in order to understand the evolution it's actually better to look at both things together, also it's a growth rate of around 17% if you look at net interest income plus net trading income evolution.

Jose Abad from Goldman Sachs asks what's behind the large decline in cost of risk in Turkey?

I think as you all probably remember, the fourth quarter of 2015 included certain one offs that increased the cost of risk at the end of the year. We did not have those one-offs in the first quarter and that's the main explanation of the improvement, but it is true what I also said about South America. We're guiding for a cost of risk number stable in Turkey at around 1.1% as it was more or less last year and clearly first quarter numbers came well below that guidance.

Okay. Sofie Peterzens from JP Morgan asks about guidance on outlook for Turkey including loan growth, margins, asset quality.

Pretty much what Garanti shared in their presentation yesterday and before. So, in terms of our outlook for the activity continued double digit growth because we have -- are seeing nice growth in Turkey's lira loans. Some deterioration on the NPLs because of the changes in the global environment but cost of risk, as Jaime just commented, stable around 1.1% even if the performance year to date has been better than that. We will have however in our numbers double digit growth in costs due to the amortization of the intangibles which you are not seeing in the Garanti numbers themselves. That will be the only difference I would say.

Moving on to the U.S., asset quality. Johan De Mulder from Bernstein, Mario Ropero from Fidentiis, Stefan Nedialkov from Citigroup, Fabio Mostacci from Mirabaud, Isabel Cameron from Goldman Sachs, Britta Schmidt from Autonomous, Derek Quinn from KBW, Luis Pena from Fidentiis, Alex Koagne from Natixis and Sofie Peterzens from JP Morgan asks a few questions on asset quality in the U.S. First, can you provide more color on the reason for jumping NPLs, how much pain do you expect going forward? I'm going to read the questions all together because I think the answer is going to be pretty common. Credit costs in the U.S. increased this quarter, how much of this was driven by oil and gas provisions? What are the €40 million other provisions related to? And are they in the provisioning guidance of around 20 basis points increase year-on-year? Shall we expect similar provisions in the U.S. as in the first quarter in 2016 and coming quarters? And the guidance overall for cost of risk, is it reiterated for 2016 including the oil and gas? So, basically if we can explain a little bit what's going on here in the oil and gas exposure in the U.S.?

Indeed, we had a deterioration in the cost of risk in the U.S. mainly associated with provisions on the oil and gas. We have the shared national credit review which resulted in additional provisions and there might be a certain front loading here given how the oil prices actually behaved which has been better than expected and better than what was really assumed in such a review. But there has been an impact in terms of deterioration of ratings which has in turn generated the need for additional provisioning in oil and gas and a couple of big tickets in basic materials as well. So the cost of risk has gone up to 63 basis points in the quarter which is worse than our guidance. We don't believe this will be repeated in coming quarters. Although, we, as I mentioned, also are looking now at a worse cost of risk for the entire year than what we had guided for around 10 basis points additionally. So that would make it an increase of actually 30 basis points not 20 basis points versus 2015. The €40 million are associated with a few one offs that have to do with the unfunded exposure mainly which should not be significant in future quarters. I don't know, Jaime, if you wanted to add anything else?

Okay. Also in the U.S. regarding M&A, Daragh Quinn from KBW asks if we consider M&A opportunities in Texas.

Well, as always, we don't comment much on specific M&A. If there are opportunities, we'll look at them and we analyze them based on the strategic fit and the value. Right now in the U.S. we're not focused on looking for additional M&A, but actually to improve the performance of our franchise there in all respects.

Okay, moving on to the question on ALCO portfolio. Francisco Raquel from Enemasuno Equities and Mario Ropero from Fidentiis ask if we can please update on the size, yield and duration of the ALCO portfolio.

The size of the ALCO portfolio remains broadly in line with last year, a slight decrease of around €1.3 billion. It's around €34 billion. On top of this, you will have to add the €10 billion coming from Catalunya Caixa. Out of that €5.5 billion are sovereign bonds. The duration has gone down significantly in the quarter. It's down to 2.7 from 3.5 last year.

Okay, moving on to Spain on the banking business regarding the net interest income evolution. Francisco Raquel from Enemasuno, Mario Ropero from Fidentiis, Stefan Nedialkov from Citigroup, Johan De Mulder from Bernstein, Fabio Mostacci from Mirabaud, Isabel Cameron from Goldman Sachs, Alvaro Serrano from Morgan Stanley, Alfredo Alonso from Kepler Cheuvreux, Daragh Quinn from KBW, Robert Noble from RBC, Luis Pena from Fidentiis and Sofie Peterzens from JP Morgan asks about the quarterly performance, specifically. Can you please explain the quarter-on quarter fall in Spain in NII given the resilient customer spread? Is it related to the bond portfolio contribution or to wholesale banking activities? Also, they ask if we can update our flattish NII guidance for the full year. When do you expect NII to bottom in Spain and what is the loan growth outlook for Spain overall for the year?

Okay. I'm going to try to develop may be a little bit further than in previous questions. Clearly, volumes have not performed well. Volumes are down by 1.3% quarter on quarter. We're not seeing a changing trend in the evolution of the mortgage book. It went down again by 1.1% during this quarter. So although we're expecting a slower deleveraging, as the year goes by the year-on-year rate remains around 4%. The consumer portfolio continues to grow and year-on-year still presents a good number. A certain slowdown has been in the commercial book. After an extremely strong fourth quarter, we saw a decrease in the growth rates and they became negative and it went down by a little over 1%. The public sector book continues to deleverage and we'll continue to deleverage at similar rates as last year. So all-in-all, we're not changing the guidance on volumes, but clearly will be more challenging to reach the flat numbers that we're expecting for the year, taking into account how the first quarter has started. But as Carlos has just said, there is certain [indiscernible] in numbers in Spain and you do need to factor these in. And regarding customer spreads, I think again we're seeing strong resiliency in the evolution of the customer spread number. It is true that yields are down by 10 basis points. But everything has a consequences -- as a consequence of the lower EURIBOR rates that we're experiencing and not because a decrease in -- not because of a spread compression due to further competition. It is true that the mortgage portfolio front book spread went down a little and also the large corporate book, but both the SME portfolio and the consumer portfolio behaved very well. What we continue to see and this is further…

Thank you, Jaime. I think that we've already then covered the questions that Robert Noble from RBC, Alex Koagne, Natixis had on TLTRO. And we've also covered the questions that Mario Ropero from Fidentiis, Johan De Mulder from Bernstein and Isabel Cameron from Goldman Sachs had on spreads. So a very comprehensive answer. On fees. Francisco Raquel from Enemasuno Equities, Mario Ropero from Fidentiis asks if the fee income is growing or state of income is growing well below our 10% full-year guidance. Can you comment on the transfer this quarter and update guidance, please?

Yes. The quarter was very much influenced by lower fees in the corporate and investment banking business in general and the weaker markets had a big impact in the evolution of our fee business in Spain. We also had softer quarter in fees in asset management given also how the markets behaved and the lower value of the assets under management as a consequence of that. And as a consequence of that lower evolution, we're guiding now to a lower growth rate of our commissions, closer now to mid-single-digit.

On expenses, Francisco Raquel from Enemasuno Equities, Arturo de Frias from Santander Investment Bolsa, Alfredo Alonso from Kepler Cheuvreux and Fabio Mostacci from Mirabaud ask about expenses in Spain, do you have any plans for cost cutting and branch network optimization in Spain and the corporate center beyond the Caixa Catalunya synergies?

Well, we're constantly having plans to be more efficient, right now the focus in Spain is clearly to integrate Catalunya Caixa and we should be deriving synergies from that materializing towards the end of this year. And overall, we will be seeing growth in expenses in 2016 due to the fact that we will have four more months of Catalunya Caixa and we have the restructuring costs associated with that. And beyond that we continue to work in being more efficient in Spain, the corporate center and in other businesses as well. And clearly, as I have shared in the past, among the six strategic priorities, number five is precisely to do with increasing our efficiency and I think we can very well have a big impact here by leveraging technology to have leaner operations, a better distribution model and we will be working on that in Spain and elsewhere.

Following up on Caixa Catalunya, could you give detail on restructuring expenses and other non-recurring costs in the quarter?

As you know, the restructuring cost expected for Catalunya Caixa were roughly €450 million. We accounted €250 million in the PPA and roughly the remainder between 2015, 2016 and 2017. Out of that €100 million will be accounted during 2016 and it will be more or less spread out evenly during the four quarters.

On asset quality, Isabel Cameron from Goldman Sachs states, impairments for financial assets and cost of risk were broadly flat quarter-on quarter. Have we reached a new run rate or do you expect to see further improvements?

I think here we will repeat the guidance that we gave that we would have a cost of risk including the banking activity as well as our real-estate activity, that would be below 60 basis points. And here we might have a situation in which the guidance might seem conservative, so the same as it was challenging on the topline but we maintain it because we do have levers that we're working on to achieve that guidance on the revenue side, on the net interest income, here we have a situation in which we do maintain the cost of risk given the situation in Spain, but we also believe that that might be an easier target to achieve.

On strategy, Johan De Mulder from Bernstein and Sofie Peterzens from JP Morgan asks if we have any plans to acquire any Spanish bank in the light of the high competition in Spain?

No specific plans, there is a lot of talk on consolidation of course, not least from the supervisor and given the environment of negative rates and increased competition because of liquidity injections, etcetera, the consolidation should make sense. But we're, right now, focused on improving our business more than seeking for M&A.

Johan De Mulder from Bernstein asks of the impact of recent Madrid court decision dated 7th of April on removal of mortgage floor clauses?

It does not affect us, as you know we're not a party in this court ruling because BBVA ceased to apply its floors back in 2013.

Also on the floors issue, [indiscernible] asks, assuming a negative European ruling regarding total retroactivity do you expect the direct implementation had a negative effect in your financial statements?

No, there wouldn't be a direct implementation. First of all, we believe that we're talking about a Supreme Court decision, the highest court in Spain with unanimous votes of all the members in the plenary session and we believe that that should be upheld by the High Court of Justice that is reviewing the case, but of course we don't know what might happen. And depending on that decision we would see what that impact could be, but it is too difficult to speculate on it and certainly would not be an automatic implementation given that in any event this would be on a case by case basis depending on the contract and the demands by the customers.

Moving on to real estate, Isabel Cameron from Goldman Sachs asks if you expect to see an acceleration in real estate asset disposals, what are the current liquidity conditions for sales and where are you selling relative to book value?

Well, I think the underlying trends more or less remain the same as in 2015. As long as job creation remains strong in Spain asset sales still continue to behave well, remember that asset sales grew by 10% overall in system last year and that is more or less the run rate that we're expecting for 2016, a number around 440,000 units, overall. The behavior of the first quarter has been very strong and we have been able to significantly increase both year-on-year then both in terms of units and in terms of volumes the asset disposals. Regarding the profitability of these sales, we made again a profit in this first quarter and that is a total amount of €26 million, but again I do want to stress that the message that we want to convey is that the provisioning levels that we have on the portfolio are robust and that should continue to allow us to continue to increase asset sales without significant P&L impact.

And also on this regard talking about provisions in real estate, Luis Pena from Fidentiis Gestion asks about the outlook for provisions in the whole year of 2016.

The guidance that we provide on Spain is an aggregate guidance, of course the risk between banking activities and real estate. And as Carlos has just said the guidance remains the same, below 60 basis points, although it is true that again the beginning of the year has been very good and it might be seen as a conservative guidance.

On digital banking, Britta Schmidt from Autonomous asks what is the average ROE uplift you see in digital customers versus non-digital customers?

Well, first of all it is hard to determine consolidated here but we clearly see that as we compare the activity that customers that are active in the digital channels have with the interactions with the Bank and the products and services that they bank with us increase dramatically as they digitize, but there might be cross effects there. But it is certainly very correlated and in terms of generating not only more business but actually increased customer satisfaction, the NPS, the net promoter scores of customers that are heavy users or more users of the digital channels, mobile in particular, are markedly superior to those of the branch lovers so to speak, number of interactions multiply many fold and margins and profitability of the Bank with such customers as well. And then of course the cost equation would be a lot better as well to the extent that if we have the customer do it yourself which is what we achieve to foster, to allow customers to do by themselves what they want to do by themselves without forcing them to interact through the channels that we chose without forcing them to go to the branch, as we do that we would have a cost advantage, we're having a cost advantage as well which marginally, it is not a direct implementation but overall as we transform our model we would have a significantly improved cost to income ratios.

On the corporate center, Mario Ropero from Findentiis, Fransisco Raquel from Enemasuno Andrea Filtri from Mediobanca asks can you explain the quarter-on quarter in evolution in NII at the corporate center and how this line should evolve in the coming quarters? And also Mario Ropero from Findetiis and Andrea Filtri from Mediobanca asks about what happened to cost to go up so much in the corporate center this quarter?

The NII line in the corporate center is going to be affected by some PPA calculations from the Catalunya Caixa acquisition. And that's what justifies mainly the differences between the previous quarter. Regarding expense, expenses again also in the corporate center are affected on the quarter-on quarter comparison by abnormally low numbers in the fourth quarter of last year and on a year-on-year basis mainly by certain cost again associated with Catalunya Caixa. One thing, on guidance I will like to share that the guidance on the corporate center has slightly changed and we're guiding for an overall negative contribution of the corporate center that should be between €850 million and €900 million for the year.

We've had a few more questions coming in on capital in general. So I'm just going to go back to that topic. Jose Abad from Goldman Sachs asks if we have any plans for RWA optimization?

Okay that's as you can imagine this is an ongoing process that the Bank does on a permanent basis. And that's as you can imagine of course an additional lever that we have to reach our targets.

Yes, also because it's one of our strategic priorities as well, number four, to have return on capital as the guide to all of our decision making. And we're emphasizing that also as it regards optimizing the denominators on not only the return but the capital that we're using to generate that return. And as a consequence of the focus we're putting on that, we should be optimizing that equation.

Juan Tuesta from JB Capital asks if we can explain the decrease of the core Tier 1 phase in ratio from 12.1% to 11.6% in the quarter.

Yes and the biggest impact is as a consequence of the phase in. So you're seeing the decrease in the core but also the increase in the Tier 1 number as a consequence of that impact. And the reorganization in Peru, that Carlos has mentioned before has not been finalized yet. It is already signed but not fully closed. It is not included in the [indiscernible] number.

Andrea Filtri from Mediobanca says, your core Tier 1 fully loaded is ahead of SREP and trending up. Why maintain the scrip dividend policy?

Well, we're trending up and we're on track to meet our target which is to reach an 11% which will be the goal for our fully loaded ratio sometime next year. And we don't see a reason to change dividend policy given where we're going.

Muriel Perren from Citi and Thomas Weber from Commerce Bank asks if we could please give an update on annual requirements and how do you expect to meet them. In particular do you expect Spain to follow Germany in the way they implement the BRD, i.e., go for statutory senior subordination. Or are you intending to issue Tier 3. What is the timing around this? And should we expect more subordinated debt Tier 2 issuance this year. Or are you not looking to go beyond the minimum requirements given you say you have fully filled the buckets?

Okay. I think we still need the further clarification on MREL. As you know we're expecting to receive the number after the summer. And we will also need further clarification on whether or not MREL eligible debt needs to be effectively subordinated. So that does not allow yet to be very precise on the way that we're expecting to fund MREL. And we will have - we would like to see convergence within Europe. I think that's something that would allow the market to price better the different instruments so far. That is not something that we're seeing. So it is not easy to see exactly whether or not we're going to follow the German approach or not. So as of today, taking into account that we're well above the 2% requirement in the Tier 2 bucket and no additional sub debt is expected. If that is required, following [indiscernible] by MREL then we'll have to clearly reassess these expectations. What I think is important regarding MREL is that the numbers that we're expecting do not significantly change the funding structure of the Bank. We have significant wholesale banking, wholesale maturities in the next three years in an amount of roughly €20 billion. And our intention will be to refinance in MREL eligible debts those maturities or whatever the format is.

We have no more questions coming in this call. So obviously, please free to get in touch with IR if you have any other pending questions throughout the day or whenever you feel that the information is required.

Thank you all very much for the questions. Thank you, Jaime. Thank you, Carlos.

Thank you.