Good morning, everyone and welcome to the Third Quarter 2019 Results Presentation. I'm Gloria Couceiro, Head of Investor Relations, and here with me today is Onur Genc, Chief Executive Officer of the Group and Jaime Saenz de Tejada, BBVA Group's CFO. As in previous quarters, Onur will begin with a presentation of Group's results and then Jaime will review the business areas. We will move straight to the live Q&A session after that. And now, I would turn it over to Onur to start with the presentation.

Thank you, Gloria. Good morning to everyone and welcome to BBVA's third 2019 results audio webcast. So let's jump into it. Starting slide 3. Once again, we are reporting an excellent quarter in our view in terms of results, in terms of value creation and capital generation. So on this page, our net attributable profit on the left-hand side of the page. In the third quarter, it's EUR1, 225 million. At the constant parameter which is basically excluding the recurrent operations and the capital gains from the sale of BBVA Chile in the third quarter of 2018. Our net attributable profit grows 6.1% year-over-year. There are two other key and important messages on this page. In the middle of the page you can see that we continue to deliver outstanding value for our shareholders. The year-on-year evolution of our tangible book value per share plus dividends is in our view, extraordinary. And growing 14.2% year-over-year. The annualized, year-to-date growth, if you take the nine months and annualize it, that same percentage is actually 16%, which is even better. And then on the right hand side of the page, I need to highlight once again that our strong capacity to generate capital is obvious in these numbers. In this regard our fully loaded CET1 ratio has increased 22 bps in the year and as you know, this is happening even after absorbing 24 bps due to regulatory impacts, namely TRIM and IFRS-16 in the first half of 2019. It's also worth to mention that we are already within our capital target range of 11.5% to 12%. Moving on to slide 4 and to be more specific on the quarter, let's highlight some of the key metrics and the evolution of some of our core performance metrics. For comparison purposes, the year-over-year…

Thank you, Onur and good morning everybody. Let me begin with Spain. The economy remains strong and even if GDP slowing down, we still expected to grow by 1.9% this year and 1.6% in 2020. Maintaining a gap of nearly 1 to 4 percentage point above the growth rate in the eurozone, net attributable profit in the first nine months of the year decreased by 2.5% that's a EUR27 million, mainly explained by a significant reduction in NTI down by EUR202 million and the increase in other provisions at 63 as 2018 included significant provision releases in the real estate business as Onur has already mentioned. Both negative impacts are partially offset by lower impairments. Thanks to the sale of a mortgage portfolio in Q2 that release EUR85 million in provisions. The main P&L highlights are first of all, NII in the first nine months of the year decreases by 1.9% year-on-year, in line with our 2019 guidance of 1.2% decrease. The positive evolution of the commercial activity and the customer spread was more than offset by the lower contribution from the ALCO portfolio and the EUR32 million impacts coming from IFRS-16. We have a good - we had a strong growth in fees in Q2, up over 5% versus last year, supported by both CIB Asset Management and retail banking fees. We confirm our guidance that fees will go up in the low single-digit level in 2019. Cost continues to go down 3% year-on-year. Thanks to our transformation efforts. Cost of risk stands at a solid 23 basis points, excluding the provision release from the market's portfolio sale we did in Q2 with coverage and the NPL ratio further improving this quarter. The quarter-on-quarter increase in cost of risk is fully explained by the extraordinary real estate write-offs in…

All right. Yes. I would like to reiterate once again that the very strong core business fundamentals. Operating income growing nearly at double-digit, 9.7% growth in operating income. The continuous improvement in efficiency, where we keep maintaining our best-in-class position versus competitors. Sound risk indicators, very positive evolution in the year, thanks to our diversified footprint. Capital position, our capital position is even stronger today, we reached the target range for the CET1 fully loaded ratio much earlier than expected and we keep maintaining it at those levels, and we continue to improve. We continue delivering on outstanding shareholder value creation and double-digit profitability. We are at the forefront of our European peer group. And finally, we continue ahead of the curve in digital transformation, positively impacting key business drivers such as growth, customer experience, and efficiency. All-in-all, I would say we had excellent results; we had excellent results in the third quarter, driven by our unique and diversified footprint and business model. With this, I conclude the presentation. Thank you very much for listening. Now I give the floor back to Gloria.

Thank you, Onur. We are now ready to move into the live Q&A session. So first question please?

[Operator Instructions] Our first question today comes from Alvaro Serrano of Morgan Stanley. Alvaro, your line is open.

Good morning. Thanks for taking my questions. My first question is on Spain and the NII. I know you've reiterated the guidance for this year and don't give guidance beyond this year. But a question on general trends. In your ability to sustain, if I think about sequentially from here on the NII, obviously lower rates will feed through, volume growth; it doesn't appear too strong anywhere in Spain. But you also got levers like charging for large deposits, et cetera, et cetera. So could you give us some commentary around - do you think you're able to sustain this current level of NII going forward, despite the headwinds into next year, or given your management levers that you may or may not apply, do you think this is a good run rate or some color around that, given the different trends that I've touched on. And the second question is on capital, if you can give us an update on the different - it's been discussed, the disposal of the consumer business in Chile. The joint venture insurance the [indiscernible] development, maybe you can give us an update of where we are apart from organic? If there is any more levers that we should look forward to or give us a sense of how much - how material those things could be?

Thank you. Thank you for both questions, Alvaro. So very quickly on Spain and net interest income. As you said we don't provide guidance for the upcoming years. We had the guidance of minus 1% to minus 2% for 2019. We have one more quarter to go. And we still stick with our original guidance for 2019. For 2020, as I said, we don't provide guidance yet. The only thing I would say is obviously there are headwinds and tailwinds and we'll try to use our management capacity to try to balance them as much as possible. You mentioned some negative topics obviously, but there also some positive things. The - obviously the TLTRO III conditions that the 2-tier deposit system, it will help the Spain business units in 2020. And as you can see here, I mean when we were starting the year with the cost of deposits, it was 8 bps and overtime, we have taken them down to 5 bps and the 3 bps is - it's very valuable to achieve that decline. So we are doing the things that we can to be able to manage the headwinds and we will discuss on more specific guidance in the next quarterly call. Regarding capital, you mentioned topics that are mainly inorganic and M&A related and, on those topics, obviously it depends whether we execute those deals are not and we are for value creation. If you don't see any value creation, we don't do those deals. So, but I would not comment on them, because they might not happen. The only thing I would say is our organic capital generation capacity. I hope you see it from the numbers, it's very robust. I mean 22 bps in the year despite the fact that we have weathered 24 bps from regulatory topics and still growing 22 bps. It does point out to our organic generation - organic capital generation capacity. So I'm very happy with what we have been doing organically and we will continue to create organic capital.

Our next question today comes from Sofie Peterzens of JP Morgan. Sofie, your line is open.

Yes, hi. Here is Sofie from JP Morgan. So I'd like to continue on the capital topic. This quarter I can't see that you dig any trim impact, but could you just remind us what regulatory capital headwinds you expect going forward? How much additional Trim impact to expect? Anything from Basel IV impact that you can give us? And if you expect to see any impact on any pension adjustments in the coming quarters that will be my first question. And my second question would be on M&A, both in Spain and outside of Spain. Could you just elaborate a little bit how you got a flick at the opportunities to grow inside Spain? How did you view kind of organic versus inorganic growth and if you're looking potentially at inorganic growth, what are kind of growth do you think that you're looking for? Thank you.

Okay. So on capital, we have provided guidance at the beginning of the year that these regulatory impacts would be in the range of around 30s basically, it was the IFRS-16, 11 bps and TRIM 20. As you might remember in the second quarter, we said we are prudentially taking 13 bps from TRIM into the capital numbers already. So 13 bps, 3 bps from the market risk and 10 bps from the mortgage portfolio basically, and that the time that we said for the mortgage portfolio, our expectation we haven't received the final letter, but our expectation was going to be another 10 bps to be realized. We don't know the exact timing of when we will receive the letter, but we still expect that 10 additional bps will come either this year or next year. As you all know the TRIM schedule is such that all the field work will be completed by the end of 2019 and then the impact might come either 2019 and 2020. So we are at the end of that cycle. So basically Trim exercises is close to be complete, the only remaining one is the low default portfolios and we expect the impact of that to come in 2020, but it's very tough to judge at the moment, because we haven't received any guidance yet. So we are done with the TRIM except the additional 10 bps that will come from mortgage, whenever we received the letter and then the low default portfolios. The rest of the TRIM exercise has been as you know, completed already. And given the fact that we - our usage of internal models is quite low. The impact on TRIMs on BBVA has been - as compared to our peer group basically has been relatively low. To…

Our next question today comes from Jose Abad of Goldman Sachs. Jose, your line is open.

Hello, good morning. Thank you very much for the presentation. I have two questions on Spain. The first one is that, as Jaime pointed out earlier. The most recent high focus indicators point to economic slowdown, which seems to be particularly driven by weaker household consumption. So with that in mind, should we expect an increase in the cost of risk next year beyond the 20 bps guidance for this one? And related to this, I saw in the - but you are growing actually the back book of consumer lending at 15% - north of 15% year-on-year. Could you please tell us, at which rate did you grow the front book of consumer lending in Q3? And maybe provide some color about your expectations going forward about originations. On a separate question, which is on fixed-rate mortgages? Could you please comment on the competitive dynamics, as well as on your strategy in this particular segment? Thank you very much.

Thank you, Jose. Maybe do you want to take the first one Jaime, on Spain? You commented on it already, so why don't you follow from there?

Yes, you were asking about the impact on cost of risk of potentially slow down as you know, Jose, we don't provide guidance beyond 2019. But as I've said already, we still think that we will end the year, we think the guidance that we have provided at the beginning of the year. So without the impact from the sale of the mortgage portfolio that we did in Q2, we're expecting cost of risk guidance of around 20 basis points at this end of this year. And how the back book is behaving, on the spreads on the back book, especially on the consumer side and the reality that back book spreads are deals are behaving quite well. We're not seeing any pressure on yields. They are improving in mortgages, in consumer loans, in various small businesses even in corporates. Only the public sector portfolio and the mid-size company book reducing the deals slightly. The consumer portfolio is behaving quite well. The year-on-year rates are - is slowing down a little bit versus the second quarter of last year. Of this year in - as of June we were growing at yearly level for 18% we were down to slightly over 15%. So it's true that the year-on-year levels are slowing down. Cost of risk is not having any increase, any relevant increase in this portfolio and behaving quite well. On the fixed rate question on mortgages and how things are changing, it's true that the front book fixed rate and fixed-rated product is down slightly versus the second quarter, roughly 15 basis points and that is due to the lower rate levels that we've had in Spain over to these last three months. The mix of mortgage - of fixed-rate mortgages in Spain has a slightly increase this quarter to slightly over 60%, versus an average of 50% that we've had in the first half of the year.

Our next question comes from Andrea Unzueta of Credit Suisse. Andrea, your line is open.

Hi, thank you for taking my question. Both of my questions are on Mexico actually. You mentioned that NII was supported by a higher contribution from the ALCO portfolio. And could you give us a bit of color on how big that contribution is holding the ALCO portfolio is? What's the yield on the duration? And the second question is on the NPLs. The NPL ratio has by 40 basis points in the last two quarters and it was very stable during 2018. So I was wondering if you could explain a bit how asset quality is progressing. Thank you.

Very good. Andrea, thank you. Thanks for both questions. The first topic is around the growth in the net interest income and the ALCO portfolio. As you can see, the core of the growth is driven by the volume growth and while maintaining - more or less maintaining the margins. If you look into the growth in our volumes, year-over-year growth in our loan book in Mexico is 5.4%. If you look into our year-over-year growth in net interest income is around 4%. So most of the growth is actually coming from the net interest income book and net interest income coming from volumes. We are growing our business in Mexico. Some contribution from ALCO but not a major contribution. On the NPLs. As you can see, the cost of risk is actually very stable in Mexico and the NPL has gone up. The reason for the NPL increase is the fact that, it's a definition change. We have moved from three past due installments to 90 days past two, to harmonize of definition of NPLs all around the globe. And as a result, some portfolio which was there and, in most cases, which we already provisioned for, has moved into NPL, so it's a definition change. The key metric that we should look into obviously is the cost of risk and cost of risk is 298 bps. Again if you remember, if you take the average of the past 10 years, our cost of risk was 340 bps. Last year, we had 300 - around 300 bps cost of risk and it was the best year ever. And so far, this year we are doing even better than that. So this cost of risk is actually making us extremely happy.

Just to point out that two thirds of the increase in NPLs is coming from that -

Definition change.

The criteria change that Onur has mentioned.

Our next question today comes from Ben Toms of RBC. Ben, your line is open.

Good morning. Thank you for taking my question. Just one from me, please. I'm not quite sure how correct you, I think you adjusted your cost of risk guidance in Turkey for Q4 and for the full year down. Did you say that you expected to come in lower than the 250 bps you just given before? If so, how much lower than the 250 bps please? Thank you.

Yes. Go, go. Jaime, why don't you go? We have a good answer to this one. Anyone can pick it up. So take it.

Well, I did say, I did say that the guidance will be improved it would be below 250, I haven't said anything different. Through that we started the year with a cost of risk expectation of 300 basis points, mid-year we will reduce it to 250, and now we are expecting that number to be below that. Let's leave it there.

Our next question today comes from Carlos Cobo of Societe Generale. Carlos, your line is open.

Hi, thank you very much for the presentation. Quick question, follow-up on consumer credit. Sorry, it's a bit long, I will take a while, ready as if you are - we have been reading some headlines that you're targeting non-existing clients of the bank in Spain, but considering that the credit depository in Spain is on the negative of defaults. It's difficult to gather those data on client and to price it properly. So I was wondering how you plan to do it. What's the growth target for this type of business and if you are doing the same in Mexico actually, because that's why you are gaining market share growing with non-banking clients of the Group? Lastly, do you fear there could be - I mean do you think is the right the phase of the cycle to do that approach of higher risk clients outside the bank and there could be a mis-pricing I think happening in the US or I mean how do you calibrate this risk? Second, on capital, if you could explain the - in slide 10, the other impacts, which is negative by 5 basis points. You explain that part of that are Argentina and the US currency impact, but what is the balancing positive to make it that round up to minus 5 please. Thank you.

Carlos, could you please repeat the last question, please in Argentina. The minus 5 bps, minus 5 sorry?

The others on the capital. Yes, Jaime, sorry. It is just if you could that split that minus 5 basis points other capital impact, we know two negatives minus four, Argentina minus 4 FX in the US dollar. What is the balancing positive? Thank you very much.

Thank you. So the first one on the - Carlos, thank you for both questions. Very good questions. On the consumer, first of all, the growth that we are seeing in Spain and in Mexico and for - as a matter of fact, in other countries at the moment is only our existing customers. Because we have not started the other program yet. So in the context of, for example, the Spanish growth 15% growth that you see on the stock, that 15% growth is driven by our existing customers and 89% of the origination that we do - 89% of the origination that we do, it's coming from what we call pre-approved loans to our customers that we know very well and in most cases that have their salaries, the payrolls with our bank. So it's a known customer to us, we have seen their behavior for many years; we have the clear safeguard of the payroll account being with us and so on. So - and we don't see - so at the moment, we don't see any concern whatsoever on that book at all. On the contrary, I mean, we look into these things with a very simple principle. We call it through the cycle, through the cycle return on capital. So if we have a portfolio, a book to build up to go for, we look into whether through the cycle, we can make decent returns out of that book. In the case of consumer loans in Spain for example. Our current cost in the yield on the loan is around 7%. 7%, okay? Obviously, the risk cost is much higher. But when you incorporate the risk cost, when you look into the capital that you deployed for that book, the return is justifying such a…

On the 5 bps in others. We do not have the Argentinean impact that we talked previously about. Here we have the impact mainly from the FX, which was minus six basis points, in which the US represents four basis points. In this column, we also represent the mark-to-market and the held to collect and sale portfolios, that is up by 1 basis points in the quarter, that's minus one coming from the equity portfolios and plus two from the fixed income book. The impact of Argentina, it's in the RWA column. And this minus four basis points impact is due to the sovereign rating downgrade that increases foreign currency exposure to 150% versus 150%. The sovereign exposure in foreign currency together with also increase in waiting for some Argentinean corporate.

Our next question today comes from Andrea Filtri of Mediobanca. Andrea, your line is open.

Yes, thank you. A question on your capital target. Is your 11.5% to 12% CET1 target could pre and post Basel IV. And could you please give us the contributions from the different ALCO portfolios by geography in the Q3 results? And finally, can you remind us the US units’ sensitivity to interest rates? Thank you.

Very good. Andrea. Thank you for the questions. I'll take one and three. Jaime, maybe you talk about the ALCO portfolio. On the first one, the capital target 11.50 to 12 is a pre or post Basel IV. After Basel IV, we might need to really, I mean this target is a dynamic target, we will look into it after the implementation of Basel IV and then we might revise it, we will look into it. It's at the moment for today. I mean for pre-Basel IV basically. And if you remember what we said last time, is we would expect to be within this range in 2019 towards the lower end of the range, which we already are. And at the end of 2020, we will try to be at the upper end of this range, upper end of this range. And we still with that strategy. And those two years our goal and those two years are pre-Basel IV obviously. And then, the second question was on the contribution on the ALCO portfolio.

Yes. We never provide the contribution of the ALCO portfolios to the different P&Ls. But we do provide in the Annex, a lot of detail and how they behave, and the size of the different portfolios, the mix between held to collect on sale and held to collect and the largest - also additional information on the largest portfolio, which is the euro book.

And on the NII sensitivity which is the third question. We provide this to plus-minus 100 bps step function parallel movements in the curve. So with minus 100 bps parallel movement. The net interest income of the euro balance sheet is going to be minus 7% impact, minus 7%. If you remember in the last quarterly call, this number was around minus 8% to minus 9%, but we have taken it down because of the TLTRO and also the tiering system. In the USA, it's between again 100 bps downward adjustments to the curves, step function minus 8% to minus 9% impact on net interest income. In Mexico, minus 2% to minus 3%, in South America is a blended geography minus 2% to minus 3% close to minus 2% and in Turkey, basically there is very limited sensitivity.

Our next question today comes from Ignacio Cerezo of UBS. Ignacio, your line is open.

Yes. Hello, good morning and thank you for the presentation. First question is on the capital, if you can give us the size of low default portfolio and you're expecting to get some news flow in next year and which are the geographies is concentrated on? And the second one, I think I've seen in Mexico the cap of the cost of deposits. So considering the direction of interest rates. I was wondering what is behind this. Thank you.

Ignacio, on the first one, the size of the low default portfolio, if you're asking for total amount that we are looking into, I don't have the exact number at the moment, but it's the FI book and it's the corporate book basically - corporate book and you can very easily deduct it out from the numbers that we are providing in the presentation as well. But those are the two books that we are looking into. On the cost of deposit in Mexico, I couldn't get the full question. You were asking why it has gone up.

Yes, I mean your cost of deposit going up 16 basis points in the quarter when rates are going down? So wondering why.

Yes. So the costs of deposits have gone up a bit because we wanted to fund more of our balance sheet through deposits. So it's completely normal and given the curve now in Mexico. So, as you know, the Bank of Mexico has started the software, the ease in curve. So the curves are coming down as a result that growth is going to be stabilized and in the next quarters, you will see that curve to come down actually. It was mainly because of the market situation and the fact that our appetite of, we wanted to fund our growth through the process.

Yes, it hasn't had any - actually any impact on NII. Because these new deposit - this new - this funding it used to be funded through the ALCO portfolio, through a short-term funding. That has been canceled and now we are using deposits with clients especially corporates and SMEs to fund our needs.

That's why you see the 4% growth in net interest income in Mexico.

Our next question today comes from Fernando Gil of Barclays. Fernando, your line is now open.

All right. Good morning. Thank you for the presentation. Do you have a question on Turkey NII? I think your guidance for higher NII for 2020 versus 2019. So just wanted to check and half the contribution from the CPI Linkers possible? Thank you very much.

I think - we had trouble in hearing. But I think for Turkey because -

About the NII in Turkey for next year and the contribution on the CPI Linkers. I think I heard that you were guiding to higher NII in 2020 versus 2019, but I just want to check.

No. We don't provide guidance for 2020.

It was more - Fernando, it was for 2019. We originally guided in 2019 that the NII excluding CPI to be flat. And we are now revising that guidance to upwards. And we are saying that the NII excluding CPI will grow in 2019 rather than staying flat. That was the comment that was made by Jaime, previously.

Okay, understood. And the contribution from the CPI Linkers?

Fernando, again, sorry, we cannot hear you very well, so can you say it again?

CPI Linkers contribution to NII.

It's going to be - it's going to be lower in the third and fourth quarter, because the inflation expectations have come down. And as I mentioned, versus last year CPI Linkers has contributed EUR133 million less this year than last. So the contribution would be less from CPI obviously, because the inflation is going to be much lower.

In the third quarter, the contribution was EUR100 million.

Our next question today comes from Carlos Peixoto of CaixaBank. Carlos, your line is open.

Hello, good morning. Carlos Peixoto here from CaixaBank. I was just - just a couple of questions. The first one would actually be on litigation thing. I mean recently or this week we've seen Spanish court or the special Supreme Court ruling on overdraft commissions. And I was wondering if you could give us some color on the how much those types of provisions represent for, sorry, those types of commissions represent BBVA and whether do you think that there is the risk of familiar lawsuits? I know that this one was involving different bank, but I was just wondering whether there could be some cross ruling here for BBVA? Secondly, just to get a bit of a feeling. So you're seeing NII in Spain declining by 1% to 2% for the full year. If I understood correctly, how do you perceive in terms of volume growth not only for this year, but also in mainly for next year, do you think that we're now at - closer to turning of the cycle on that front? Or as the macroeconomic cycle seems to be slowing down over recent times? We should actually be expecting much of volume growth over the coming quarters. Thank you very much.

Perfect. On the first one, Carlos, thanks for the questions on the litigation. As you said, this is a case of another bank on the overdraft fees. It was come out on October 29. The ruling was on a specific overdraft clause fee. It does not say that every overdraft fee is void by definition, and so on. So based on what we have seen. The ruling does not affect BBVA. According to Bank of Spain, the old draft fee much related to the expenses linked to the recovery processes and we think BBVA fulfills this requirement. So it was a very, very specific case, and we don't expect any material impact to come out of it for BBVA. For growth. Obviously, we maintain our guidance that we have said originally, which is the flat loan growth for the year. So it's a bit slightly year-over-year minus 0.8% this quarter. But we maintain our guidance because the 4th quarter typically, the quarter of good loan production. So we maintain our guidance of 2019 staying flat. For next year again, we don't provide guidance for next year, but the volumes will probably be softening - will be a bit on the positive side because in the context of the mortgage deleveraging coming down a bit. We would see probably some positive dynamics coming for mortgages and if we can maintain the growth in the other portfolios, I wouldn't expect radically negative situation at all. I mean we will probably be in that range that we have provided for 2019.

Our next question today comes from Britta Schmidt of Autonomous Research. Britta, your line is open.

Yes, I have two questions please. One in Mexico, 5% loan growth year-on-year in the quarter, there is 1% loan growth, we see decline in retail volumes as well. I think previously you've given a message of high single-digit loan growth in Mexico, do you think that in Q4 you can pick up and can you give us a little bit of insight into whether this lower growth is demand driven or whether you're more cautious on pricing in certain segments? And then secondly on the NPLs. In terms of change in definition, I think I might have missed something there, is it something you did this quarter? Is it something that where you can point us to different regions being more impacted and is it something that's also going to change the run rate of NPL inflows going forward? Thank you.

Perfect. Britta, thank you for both questions. The first one on the growth in Mexico. As you say 5.4% is year-over-year as of September. We think that we will still achieve that high single-digit growth at the end of the year, because as I said, in general, the fourth quarter is typically a good season for new production. So we'll - we maintain our guidance basically. The answer to your questions, we maintain our guidance of high single-digit growth. In terms of the NPL definition, as I said, the change was - it's a methodology thing, but you count installments and if you are 3 installments short delinquency than originally, that was the NPL definition. Now that we move that from installments number of installments to number of days and that basically creates a one-off effect. That's the reason why the NPL has gone up, but it has nothing to do with the quality of the portfolio, with the cost of risk and so on. You did this one step change once and then we will continue as it. So there is nothing to be concerned about.

Our next question is from Marta Romero of Bank of America. Marta, your line is open.

Good morning. Thank you very much. The first question is on the US, I'm trying to understand your commitment to allocating capital in there. The annual loan growth is slowing down fast to just about 1% compared to 3% last year - in Q2, sorry. Is this a reflection of the environment or that you put in the foot on the brake with rates not going up in the foreseeable future? Do you think you will be able to make your cost effect quickly in that market? Are you open to selling or merging your bank with another player in order to extract cost synergies? The second question is on capital, on EBA guidelines and ECB calendar provisions. Do you expect any negative impact next year from kind of provisions on your capital, and in 2021 from defaulted exposures? And on - if there is a headwind based on the exposure you have today; do you feel like you need to step up the disposal of NPLs? And do you think your coverage levels in Spain are adequate for that? Thank you.

Thank you, Marta. The second one, Jaime, why don't you take it up on the NPL definitions. I give all the good ones to you, because it's a positive, the positive story there as well. But on the first one. On the US, as you said, we have - the growth has come down - came down - come down a bit. But in terms of the overall strategy, if you are asking, because you are asking merging, consolidating and so on. As I mentioned, we don't - we analyze opportunities all the time, but our focus is very clear. Our focus is organic growth and that's what we are trying to do in the USA. As I mentioned many times before, we are in the sweet spot of the US market. We are in geographies; we are in states that have been growing much higher than the rest of the US. And these are very large markets that we feel we can create value. Texas by itself is $1.8 trillion economy; we are the fourth largest bank in Texas. And we have an amazing growth opportunity in Texas. So we would like to explore that organic growth opportunity as much as we can. And we feel given also our digital capabilities that we can create a differentiation in those markets that we are in. If you are in a very good market and if you believe you can leverage things that others cannot do, like digital that we have been putting so much focus on in the past few years. Then there is a value creation opportunity and we want to explore that value creation opportunity. In terms of the growth though, it has come down. You're saying 1%. So because the market has not grown up - has not grown as much lately either. And as I said in the last quarterly calls, we have to be careful in terms of cost of risk. And as you have seen, we committed in the last quarterly calls that our cost of risk would be in the 80 bps to 90 bps range, which is - where it is now. So given that cost of risk and return, again through the cycle return calculations, we are picking our bets and picking the portfolios that we want to grow in, and that's what still giving us a 1.4% growth year-over-year. Basically in short, we are committed to the US market, we believe we have an organic growth story to have in the US and we will go after that one. On the NPLs?

On the second question. I don't particularly expect EBA - the EBA guidelines to have significant impact on us. As you know, they mainly affect the PTs and LGDs estimations for advance models and we only use IRB models for one third of our credit RWA. So it shouldn't be relevant. And then as you know, the ECB the SSM one when coming to the bank and doing TRIM some tight inspection et cetera, they already use these EBA guidelines in the review on how we calculate RWA. So I think within the impacts are well provided, this impact will be there. We're still working on the potential impacts on the new definition of default and that is something that we're going to need the whole 2020 to have an idea. I don't think this will particularly change and the way we manage our NPLs. I think we've been quite proactive in reducing the NPLs, especially in Europe over the last few years. And it shouldn't significantly affect our strategy.

Our final question today comes from Yalan Liu of ACF. Yalan, your line is open.

Good morning and thanks for taking my question. Just two very quick questions. One on the ECB Chile, and TLTRO III. What are your plans and how much are the savings you can - cost savings from these two new ECB measures? And then second goodwill. I mean, when is your impairment test view on your goodwill? And how comfortable are you on the resilience of your assumptions used to calculate your goodwill, particularly in the US and Turkey, please? Thank you.

I'll give the second one to you again, Jaime. On the first one ECB and TLTRO III, are we planning to use it? The answer is yes. TLTRO III with the new and revised guidelines, we want to leverage our allotment capacity and also for the tiering system as well. The total combined effect of this is going to be EUR75 million in net interest income in 2020. On the goodwill impairment?

We have to analyze valuations every single quarter. This is an ongoing exercise. And as of now, we feel confident, of course with the valuations that we have in place, and we will continue to review and update this number every single quarter. It will clearly depend on the expectations of both franchises for the next few years and also in general devaluation that banks in those geographies also have.

Okay, thank you. Thank you, Yalan. And thank you very much to all of you for participating in this call. And let me, of course; remind you that the entire IR team will remain available to answer any questions you may have. So thank you very much and have a great day.