Thank you, Antonio, and good morning, everyone. I'm delighted to be here to present the results for the first time. This morning, I'll update you on our performance in the first half. I'll then cover our balance sheet, funding, liquidity and capital positions. As you heard from Antonio, in the first half, we delivered a resilient underlying performance, with improvements in costs and impairments offsetting the expected decrease in income with an NI impacted by the smaller balance sheet and higher funding costs and ROI by subdued demand and adverse economic assumptions and weather in insurance. Underlying profit for the half year is GBP 1.1 billion for the group and GBP 3 billion for the core business. Management profit for the group was GBP 1.2 billion, but this was after a number of offsetting items. Volatility of our own debt was a charge of GBP 357 million. There's a mark-to-market movement in our EMTNs and ECNs and reflects improvement in credit spreads towards the end of the half. Assets and bond sales of GBP 585 million comprised the loss on asset disposals associated fair value unwind and gains on bond sales. Other volatile items have a charge of GBP 452 million, it's mostly timing and accounts and economic mismatches as we hedge out the group's interest rates and FX exposures. Liability management of GBP 168 million is a gain on our own debt purchases while the fair value unwind of GBP 157 million is significantly down on prior year, which included a much higher level of impairments. That brings us to the management profit of GBP 1.2 billion for the group and GBP 2.7 billion for the core. Looking now more closely at underlying profit and starting with income. Underlying income of GBP 9.2 billion is GBP 1.9 billion down…

Thank you, George. Good morning, everybody. I'd like spend a few minutes updating you on the progress on costs and the simplification program that I talked about when we were here last in February. Starting with total costs. We've seen a reduction of 6% compared to the first half of 2011. The key driver in the lower cost has been the simplification program, where run rate savings have now reached GBP 512 million, up from GBP 242 million at the end of 2011. Simplification investment cost GBP 274 million in the first half. The savings from the program that we're reporting today are ahead of our original plan and are completely consistent with the increased target to GBP 1.7 billion of savings in 2014 and an exit run rate of GBP 1.9 billion. To put some context on these results, it's worth looking longer-term trend. Cost have reduced significantly since the acquisition for HBOS, but the key point here is the last 5 half years of cost have progressively reduced half year on half year: Firstly, through the integration program and, now, through simplification. This is after reinvestment in our strategic programs and it's a pattern we very much like and we're working hard to continue. I'm sure you'll note that, typically, the second half year reductions are not as strong as the first. This is largely due to the U.K. bank levy, which accrues in the second half. For example, the levy cost last year were GBP 189 million. Moving to the half and half comparison. Here's some more detail on how the 6% reduction came about. There were final synergies of GBP 168 million from the integration program and then very material benefits from simplification amounting to GBP 298 million in the first 6 months. These savings are…

It's Chris Manners from Morgan Stanley here. Just 2 questions if I may. The first one was you've had sort of 6-plus quarters of sequential falling net interest margin on a group basis and you're guiding that the second half is going to be sort of 193 basis points and so, the margin should actually start to tick up from here, would it be possible to run us through what the biggest moving parts are? Is it repricing, funding mix, funding the lending scheme, et cetera? And the second one was just on the core loan book. Obviously it shrank by GBP 8 billion in the first half, stabilization in the second quarter, how do you see the outlook here, I mean, the way that I look that it is that if you've got 7.7% Basel III core Tier 1 Ratio, the financial policy committee is indicating that you can actually [ph] raise capital levels, that capital will still be a constraint on your thinking about growing that core loan book? António Horta-Osório: Look, starting by the NIM, as I said at year end results, we expected NIM to go down this year by the same amount as last year and I said it should be concentrated on the first half and then flattening out. So we have exactly the same guidance both in terms of intensity and shape as we have and as you are seeing. How do I see things going further? Well, as I have said then, as our core loan-to-deposit ratio reaches 100%, our funding -- our wholesale funding costs will progressively decrease and given that we are offsetting the repricing of liabilities with the repricing of the loans, I believe we will see the NIM progressively ticking up and in my -- my expectation is…

[indiscernible] Just on the [indiscernible] if I can followup on your comments from the previous question. The bank of England clearly expects that the U.K. banks will grow lending to the economy. From what I'm hearing from you, that's probably not going to happen at least until June next year. What kind of pressures would you expect from the regulator if being a large participant, you're not able to deliver some stability in your U.K. lending as an aggregate number and whether you need to, I mean, react based on what regulatory pressures you may get on the back of that? And my second question would be on asset quality. You have stated that you expect lower impairments that before. Given the macro political outlook, I would think that's quite a brave guidance where you must be seeing something in your operations that gives you that confidence, if you could just elaborate on where some of the quarter-on-quarter, half-on-half strengths are coming from. António Horta-Osório: Well, on your first question, I strongly disagree with what you said because the purpose of the Bank of England scheme and the objective overall of the regulators in this shift towards growth is exactly to support 2 segments: First, small businesses, which do not have access to other funding sources; and second, first time buyers in the mortgage markets. We are keeping a very strong focus on first time buyers and although our market share in gross lending in mortgages is 18%, we kept a 25% market share in first-time buyers, where as I said we are giving 1 out of 4 new mortgage loans in the half. So we will continue the first time buyer efforts, and the reason why our mortgage book is decreasing is because people are repaying their loans, which…

I'm going to frustrate you today by not giving a precise number. Part of that is because precisely as you said, this is actually evolving regulations. There was a meeting this week, which didn't shed too much light on what precisely that meant. So I can't give you that precise number. Obviously, we do have flexibility in terms of the balance sheet structure, in terms of how we might deploy it to support some of our core lending activities. So I won't be precise. But the big message is that optionality is there, through all the hard work and endeavor of the last 18 months and puts us in a very good position, but sorry, I will not and I cannot give you what a precise pound, shilling, pence number that equates to.

Sandy Chen from Cenkos Securities. I just have one question and it's going back to impairments and related to the mortgage book. Looking at the U.K. mortgage book, 40% on a loan-to-value basis is still 80% LTV or above, 23% is still 90% LTV or above. Are your improved impairment assumptions based on a relatively flat set of house prices over the next 12 months? Or are you factoring in, say, the 5% to 10%, 15% house price declines that some economists, as you say, are looking for and if that is, is there -- what's going on in terms of that underlying dynamic and to the impairment assumptions? António Horta-Osório: Well, I have my chief economist on the first row. So I cannot comment anything else about the economists. Our forecast in the group is for reasonably flat house prices, which we had -- last year, we had forecast minus 2%, which actually happened. This year we forecast reasonably flat house prices, which are happening and therefore we forecast accordingly. So as you saw and this one mentioned, the non-performing loans are trending downwards. we thought in the beginning of the year they would trend slightly upwards as I think I said it's time. So they're trending better than we thought and the house prices are behaving according to flat house prices in spite of some predictions they might follow. I really don't share that to you because I think that in the U.K. as long as interest rates are very low, as you know, there is no oversupply because of housing permits and, therefore, it is reasonable to consider reasonably flat prices and that's what we consider, I mean, we have to provision according to an expected view and not according to the extreme scenario. Of course, we…

It's Cormac Leech here from Liberum Capital -- I'm not sure if this is on -- I just had 2 questions, one on the NIM, I think you guided that from first quarter of next year, maybe we see the NIM for the group start to tick up slightly. Just wondering, are you making any assumptions about Bank of England base rate changes in that forecast? In other words, if we, for example, saw a 25 basis point cut in the Bank of England base rate, would that change the guidance for the group? And I just had a question on the operating income. António Horta-Osório: I am assuming flat interest rates for the rest of our 3-year plan, which is the reason why we said in November last year that our guidance in terms of income-orientated targets would be delayed beyond '14, but achievable over time. Because 12 months ago, the structure of the yield curve was positive, as you know, market was expecting interest rates to start increasing 6 months ago. Now we are assuming interest rates at 0.5% throughout '14 and it is on debt basis that I gave you my assumptions. So, of course, if there was a cut in interest rates there would be an impact on NIM.

Can I just ask one follow-on just to invite you possibly provide a little bit more transparency on how much of your mortgage book is available to reprice over the next couple of years. Because I'm conscious of the old legacy Lloyds TSB book, I'm not sure if you're willing to comment on that or not. António Horta-Osório: We have never commented on that. And then to be honest, I mean, I don't know those numbers by heart. There is a proportion of the book that we can't reprise on an individual basis, as you know, and another one that we can, like we did in the Halifax book in May. And we can do that in that part of the book if we want going forward but what I just told you does not take into consideration any unilateral repricement in the same way that when I said that NIM guidance for this year was in line with previous year. We had, as I said at that time, incorporated the reprising of May in the estimate. So this new estimate has interest rates flat throughout '14, number one; number two, no unilateral increase in mortgage price included.

And just briefly, on other operating income, if I'm modeling that forward, is it fair to assume that it should track average interest earning assets or would you expect the growth in other operating income to be higher or lower than average interest earning assets going forward? António Horta-Osório: That's a good question as well, as we said in the strategy review, we expect OOI to trend towards 50% of total income so it should grow over time, as it is slightly growing. This quarter, second quarter was not good because the markets were very, very bad. And although we have very little exposure to markets, obviously, our corporate lines were more standing still, as you know, given what happened. And on the other hand, also given the markets, all our investment products through the insurance business and into affluence and private customers were not sold, given they prefer deposits where we are performing above expectations and go through NII instead of investment products. I expect this percentage to increase over time, as I said at the strategy review, and all the investments we are doing on the growth initiatives are mainly orientated exactly at OOI initiatives because we have substantial segments and products in the market, which are OOI driven, where we have subscale market shares, for example, in FX products to our medium-sized corporations or SMEs, as I said last year, interest rates, money markets, in terms of retail, we are subscale in terms of asset management and the affluence of the private space. So most of the 20 growth initiatives where we have already invested, as I said, GBP 600 million, are mostly orientated at generating OOI and therefore, the percentage should increase towards 50% over time. Mike, please. Can we give the microphone here to Mike.

It's Tom Rayner. Could I just -- just a couple of follow-ups on what you've just said actually. I mean, the insurance revenue did look a little bit weak in the first half, sales margins and returns on policy holder funds all seem to contribute. I'm just wondering if the retail distribution review can make a big enough difference to sort of offset this fairly difficult environment and then I just got a second follow-up question on the margin, if that's okay. António Horta-Osório: So that first question, George is going to give you more color on it.

Okay. I mean on -- well, on the insurance, I think we said in the presentation, there are a number of factors that impacted the results. First, it was obviously just the economic assumptions, so the lowering the assumptions at the start of the year basically means that the value of enforced is going to unwind at a lower rate and that accounted for about GBP 100 million of the movement in insurance result from first half last year to first half this year. And, obviously, we had the God-awful weather over the summer, which again I think was in sort of GBP 50 million, GBP 60 million swing factor in terms of half year on half year. Then in sales of products, yes, I mean, going back to part of the earlier comment, it's been a difficult quarter for sales of particular products. Also, there's things like the retail branch prepares for RDR. What we have seen compensating that, though, again, I think as we said in the presentation and the release, we've seen very strong sales to the IFA market of corporate pensions, where we very much lead the market. Core pensions hit our required returns. They make our required returns, but they are at the lower end, and when you see that slight drop in the EV from new business, it's just increasing proportion of corporate pensions that's pulled that slightly back from the equivalent number last year. António Horta-Osório: And you had a question on the margin, Tom?

Yes, just -- could you comment on, I don't know what you've said about the margin, how material the issue of structural product hedging is to account margin and the sort of guidance that you're offering us? António Horta-Osório: We don't comment on our hedging in detail but as we said before we have some hedges, what we are doing, I mean, and I'll tell you about that direction so you understand our reasoning. As a bank -- as a bank, we are basically a hedged bank. We are a retail and commercial Bank. We have a basic [indiscernible] position, which is basically hedged, and we may open small positions according to what's happening in the market. So relating to your question on the hedge, what we are seeing is that given the very low interest rate levels in the long end on gilts, we have growingly thought and decided among ourselves that it makes less and less sense to have hedges connected to the gilts' portfolio given that it doesn't make a lot of sense to put our capital into sub-CPI yields for 10 years. And so we have progressively stopped additional hedging and then we have sold some of the gilts on those hedges as you saw when George explained the volatile items, because we think that those interest rates trend lower and lower, it makes sense for us at the minimum accrual costs to increase the duration of our liabilities. So that's as far as I'm going to go on this one. Michael?

Michael Helsby from Merrill Lynch. Just 2 questions: Firstly, at the strategy day, your talks about Verde having a GBP 500 million PBT contribution. Clearly, it didn't turn out that way. So, I was wondering if you could give us a best guess on what the PBT and we'll be transferring over. Because, I think most of us have got GBP 500 million to GBP 600 million still in the models. António Horta-Osório: That's a very good point. Well, what can I say on Verde [indiscernible] color. It is true that we had absolutely forecasted that but that was in line with the big balance sheet and there was the option, at the request of the buyers, we discussed many times, to go to a lower balance sheet and the final outcome will reach with the corp, at their request was for an even lower balance sheet and, therefore, the impact on results of the sale is much lower in terms of the net income we forgo than originally forecasted.

[indiscernible] We've looked at this a variety ways. And it's a bit of which assumptions you plug in and the timing but to endorse what you said, we certainly don't expect it to have a -- the disposal to have a material impact on the sort of BAU trends at the PBT level within our business. António Horta-Osório: And I mean as you can expect, given it is not a good moment to sell assets as we said all along, and we had to do this, I mean, we like these assets, as we said, but it was a mandated new sale given the rescue of HBOS. This was clearly the best proposal that Lloyds board was faced with and given it was a sale below book value, our strategy was, as you just said, to minimize what we were selling and, therefore, to have as least capital as possible and results included on the sale, which is what we basically did. And I think that apart from being the best offer Lloyds board was faced with, it is clearly the best earner for our customers and for our employees.

And just separately, your funding position is beginning to evolve now quite rapidly, clearly to your benefit but it does mean that the mix between short-term and long-term has now started to change quite rapidly as well. You've always talked in the past about 50-50, it doesn't feel like that's the right...

I mean, I never talked about 50-50.

Maybe, okay. So, maybe George's predecessor talked about 50-50. António Horta-Osório: Like I never talk about big NIMs.

My NIM's bigger than yours. So I just wonder if you can give us an update on how you see, George, the funding position evolving now you're in charge of the ship.

Well, I'm not going to give you any categoric percentages. In one of discussions that we've had internal losses in terms of things like the short-term or the wholesale. So, what is the right number? How low can you go in terms of keeping access to markets open and thinking of the world ahead where you're going to have entities that, in the years to come, are going to sit outside of things like ringfenced bank, who needs to leave their own access to markets. So I won't be precise because it will depend upon the price at the time but as the FD, I sure as hell like the percentage of the more than 1 year going up. António Horta-Osório: Michael, I think, it's very important, relative to your question, to really understand -- and now I can speak about it because we have had a very favorable ratings outcome and the progress is done, as you said, so this is the type of things you can only speak when you have solved the problem, not before you solve the problem. When you had 18 months ago, GBP 300 billion of wholesale funding, out of which GBP 150 million short-term, I really think, as I said at the time, that was not the proper balance and imagine what would have happened should the ratings review have been done. Now, we have GBP 73 million of short-term funding. So less than half -- 1.5 years and less than half means more than GBP 75 billion. Those costs of LIBOR, now the cost is at least 200 basis points. So it means GBP 1.5 billion less in NII but that was a free lunch. That was something, in my opinion, that should have never been there in the first place because we were basically funding a mortgage portfolio with a 5-year duration with short-term wholesale funding.

Rohith Chandra-Rajan from Barclays. A couple if I could please. One, on the wholesale bank. On your numbers, pretax return on risk weighted is about half at wholesale as it is at retail and if we look I guess with the pre-provision level it's more like 1/3 and it consumes more capital and all of those metrics, I guess, get worse under Basel III. I appreciate you're going to give us more detail at Q3. But I was just wondering if you could give us some early hints towards your thinking in terms of the scale and the focus of that business going forward. And then I have second one on noncore. António Horta-Osório: It's very easy. I mean, as I said in my speech, either the income will go up or the capital will go down to the division and I think it will be a combination of the 2. So we have absolutely increase the returns. The strategy last year was absolutely correct in the sense, let's maximizes share of wallet of customer instead of being a wholesale bank just focused on lending. We have been doing good progress on those items as you can see from the market shares, installing capital markets issues, in terms of the arena platform, number of customers, money market transactions. But still the environment worries a lot [ph], number one; second, the ICB is very clear and the further returns, as you say, are not acceptable, as I said, and they will have to increase either through increasing income or decreasing capital allocation to the division and I think it will be a combination of the [indiscernible] and we'll give you more detail as Q3 IMS.

And any indication just in terms of the scale of the capital reduction. António Horta-Osório: I'll give you more details in the Q3 IMS. Second question is?

Very briefly, noncore, so less than GBP 70 billion by the end of 2014, at which you will drop reporting, just wondering -- wanted to clarify whether that's a very straightforwardly reporting and you'll continue to look to reduce those assets or whether what's left you would consider core or it takes just a long time to work them out. António Horta-Osório: No. I think that's a very fair point. Basically what we think is the following: So in '14, instead of GBP 90 billion, we will get to GBP 70 billion. And I know that is -- I hope the decreasing concern that we have time bombs left in what we don't sell, because we continue to sell ahead of target in a capital accretive way and across the board. But the only thing we can do to increase your degree of confidence is continuing to sell, which we'll continue to do. So it's a matter of time. But relating to the center of your question, when we reach GBP 70 billion in '14, half will be the retail assets like the self-certified mortgages in the U.K. and the retail mortgages in Ireland, which as you know, we cannot sell in terms of they are in SVR, it's the option of the client. They are quite sticky. And the U.K. ones perform well. It's just a closed book because we don't do self-certified anymore. And the Irish ones do not perform well and therefore, we are provisioning them much quicker than others where we have already, as you know, declared impaired assets above the 90 days over. We have 22% impaired ratio, which is more than the 90 days operation and we have covered those at the 72% coverage level. So the ones that are not good, we are covering, provisioning as much as possible, as quickly as possible. The self-certified book, which is most of it is GBP 29 billion, as you know. It's a good book but it's not core. So by '14, those GBP 35 billion of assets will come into the core book and we will run them off and you can very well extrapolate the behavior because they are known, they are retail, they are sticky, they are predictable. The other GBP 35 billion or less nonretail, noncore assets, we will cease reporting because given they will be less than 5% of our funded assets. They will become, in our view, nonmaterial and, therefore, we will bring them back and report as a single bank. But as you correctly ask, we will continue to run them down to 0.

[indiscernible] from JPMorgan. If I can just ask about PPI. Would you be able to clarify some of the assumptions behind the GBP 700 million provisioning. And the reason I ask is from the outside, it appears that if you take the FSA [ph] data, for example, which was about GBP 730 million for the industry in May. If you annualize that, if you take that for a quarter even, that means GBP 2 billion plus for the industry with 50% market share for Lloyds and HBOS. That means GBP 1 billion a quarter for the group as an ongoing run rate. And then when I look at the remaining charge in your balance sheet, it looks like you've probably got GBP 1.3 billion left. So would you probably quantify what assumptions you put behind the provisioning. Do you expect claim rates to tick down from here or have you sort of assumed it to stay at the same levels?

The company's approach to PPI provision has been entirely the right one, going back to the early mover on the original GBP 3.2 billion and then at Q1 going for the GBP 375 million, which basically costed what we've seen as a -- the company had seen it as a spike in PPI claims at that particular time and that was costed and that was costed based on the assumption that it would revert back to previous assessments in terms of claim levels. As you know, what has actually happened since is that claims actually stay at a higher level. We have in the last few weeks seen a decline, slight decline in those claims numbers coming through which is caused for encouragement without getting carried away with it. The GBP 700 million that we have provided this time has been based upon both an assessment, obviously, of the claims that we're receiving. But studies into populations in terms of ones we receive from expectations for future mailings, et cetera and the propensity of those peoples to complain. So we have applied as much high science as one can to this particular number. Yes, the run rate remains significant, I think we've got about GBP 4.3 billion I should say as the aggregate provision. I think we talk about GBP 2.9 billion in terms of spent to date within the RNS, so you can work out sort of run rates, et cetera. I'm not going to give you the precise components of how it's built up because it doesn't mean anything. We have based our assessment on what we think the cost will be and we've done it in the most appropriate way that we can. That all said, future claims levels are uncertain and much as I would love to tell you that, that is -- there's a line under that, there is still uncertainty.

And just a quick follow-up on the capital treatment of the subdebt that you will be underwriting for the core group, whenever that comes in, we obviously don't know the amount, should we assume that to be deduction against capital?

I may have to get back to you. I mean there sort of a material amount but I will get back to you on the treatment to that.

It's Manus Costello from Autonomous. You talked a lot about the improvements in impairment trends. If I look in core Q2 versus Q1, there was quite a big step up in fact in impairment in Q2, I wonder if you could give us an indication of which divisions drove that step up quarter-on-quarter. And then I have a follow-on, on that please. António Horta-Osório: Juan, can give you color on that. But just to introduce your point. We have said specifically in Q1 that the dip in the AQR of the core book, 2.35% or 2.36%, was too small and abnormal. So we are basically recovering the trend but the overall number, as Juan said, is very positive. It's below our guidance for the future 50 to 60 basis points. But Juan will tell you exactly what happened anyway. Juan Colombás: There is some seasonality in some of the portfolios between sort of the Q1 is normally the strange quarter. Let's say you close the accounts in the previous quarter and there's normally [indiscernible] many things. And so some of the variances between the Q1 and Q2 are due to these different treatment between quarters. It is not a change in trends. You can see it from the different quarters' information that we have provided to you.

Indeed. So just to follow on that, on the basis, therefore, that Q2 is normalized in terms of your pretax return on risk weighted assets, that means we see a continual decline in the return on risk weighted assets in the core bank and I wondered, I mean, this looks like it's the lowest return for the last 7 quarters, at least. I wondered if you could give us an indication of when you would improve core return on risk weighted assets if 1Q was just an aberration? António Horta-Osório: I thought I had already answered that question, but I will tell you again. So if costs are going to continue to go down, impairments, all trends are in the direction of going down and our NIM is going to improve by March and the volumes by June. I think you have all the ingredients you need. Right? Robert?

Robert Law, Nomura. I've got 2 questions, please. Firstly on the ICB issue, I'm interested that you're looking at accelerating, creating a ringfenced bank. Could you give us some idea of what you think, as a result of this, the cost to the organization will be of the ringfencing? António Horta-Osório: Well, what I said exactly and I think that's a very fair point, by the way. But what I said exactly is the following: We do not have a strategic question to answer. Like most of our peers, we said last year, we are going to be a U.K.-centered retail and commercial bank with our wholesale bank focused on creating value around the retail and the commercial bank. So we do not have a strategic existential question and therefore, we are able, as we have already 90% of our assets inside the ring fence, we are able to move very quickly into being a ringfenced bank. As I said in my speech, therefore, we think the uncertainty for investors and for customers may be advantageous for us in going to a ringfenced bank sooner. But if it is advantageous for us, because as you said correctly, there are costs in terms of setting up the ringfenced bank. Those costs for us are not very high. If in the discussions with the regulators we see it is favorable for our shareholders and customers to move ahead, we will. And we think it'll be and therefore, it is likely that we will be a ringfenced bank well ahead of regulatory requirements. As we evolve in our discussions with the regulator that we are now going to start, we will report to you more on that straight off. But I think, strategically, it is very clear where we are going and I think that should take away a lot of uncertainty in terms of direction of this bank for the future, which I think we are the only one that can really do this.

So if I paraphrase that, does that imply you think the bulk of your cost would be one-off in nature and any ongoing cost thereafter would be pretty immaterial to the group, is that a fair statement? António Horta-Osório: Excuse me. I didn't understand.

The bulk of your costs would be one-off in nature. António Horta-Osório: Yes.

And ongoing cost will be immaterial? António Horta-Osório: That is absolutely correct, that's exactly what is behind this thinking.

The second area is in terms of the noncore business. Now that your planning to discontinue reporting it for 2015, could you give us some idea of what financial performance is at the moment of the assets that your will be retaining, so we can get some idea of where we think your underlying sustainable... António Horta-Osório: Well, that is a very fair point as well, Robert, but we are seeing it that the way. We will retain the GBP 35 billion of retail assets, which you can -- the disclosure we are now giving is much bigger than before so you can assess the behavior of the U.K. self-certified book and of the Irish retail mortgages, you have that information. The other, at most, GBP 35 billion, which we'll then bring back into the core book. We aren't going to do that because it becomes immaterial, but it is not because it will be a rump full of problems. As I said many times, we are selling the noncore assets across the board based on risk concerns and we will continue to do so and in a capital accretive way. We have on the table, every 15 days, at maximum level in the bank, all the noncore assets, all in process of being sold, and as markets evolve, as buyers comes up, as prices change, we are going to sell them all. So our estimate at the moment is that instead of GBP 90 billion by '14, we will have only GBP 70 billion, given that the retail ones are stable and sticky. We will bring them in the bank and you can model them and the other GBP 35 million at most, we will bring in the core bank, which will continue to exit. They will not be there forever and I cannot tell you at this moment, because I don't know exactly which ones they will be because we have everything on the table that we can sell. It may happen that we get to '14 and instead of a GBP 70 billion, we have less because we said GBP 70 billion or less. So let's discuss that as we go. I think the main take here is instead of GBP 90 billion we are going to go to GBP 70 billion. Second, it'll become immaterial because it's 5% of non-return on core. So we don't think it is worth reporting separately. And, third, we are doing this in a capital accretive way. And by the way, in a very different, difficult quarter, because quarter 2 was very difficult and we sold, for example, our remaining exposure in Australia, which was terrible and it was sold and everything together was again sold in a capital accretive way. Difficult to have such a bad portfolio in Australia. That's why you were laughing, I guess. Such a good country, such a bad portfolio. Things happen.

It's Claire Kane from RBC. Can I have a follow-up on your other operating income trends, please. In the core business, I believe in Q2, it's down 4% quarter-on-quarter, 15% year-on-year and you did mention that there's more of a push towards deposits rather than savings products. António Horta-Osório: It was not a push. It's client preference. We usually don't push things.

Can you then maybe give us an indication of the marginal cost of these deposits, if you're seeing these come down. And, also, how that ties up will you aim to get the 25% market share? António Horta-Osório: Yes, that marginal cost of deposits has been around for us 200 basis points, we measure, as I told you many times, we absolutely measure the cost of deposits versus wholesale funding. And the reason why we have been growing deposits at twice the market rate is twofold. First, because the customers have been having a natural preference for the products we have given to them, for example, in the ISA season with the same value date as of the request of the customer, which was very important given the cues that happened last year, for example, or in October last year when we set out, for the first time, at drawing lottery process in Halifax, which we now have close to 1 million customers enrolled. So first is the customers' preference. But second, we are only growing the deposit, as I said many times, as long as the marginal cost of deposits as you asked was lower than our marginal wholesale funding costs. And given that the wholesale funding costs was much more expensive, we have continued to increase deposits and those marginal deposits were probably around 200, 200-something basis points. Given that now our rating has relatively improved and that we have additional schemes as we have discussed previously, it is likely that on the margin, we skew our portfolio a little bit less towards deposits and a bit more towards lending, given the funding for lending scheme. But overall, this is a marginal thing and the main thing you can, I think you should take is customers, given the financial markets conditions in the first half, have preferred deposits to investment products that has an impact in LOI and benefits NII because our wholesale funding costs were higher. So we just accepted what the clients want and as times move depending on customers' preference, probably we will go back to OOI, which we also think will be enhanced by the fact that the retail distribution review is putting the market a bit on hold because there is uncertainty and therefore, when it is implemented in January '13, you should see a more natural behavior depending on the client's response to the distribution review. More questions?

Peter Toeman from HSBC. Coming to your statement about dividend, are you sort of signaling here that FSA or other regulators might preclude you from making a dividend payment until your Basel III [ph] fully loaded number gets to, say, 10% or is there some other thinking here? António Horta-Osório: No, and I haven't yet commented if it was difficult to have painted [ph] anything. No, what I said in Q1 was -- I told you in Q1 that when we knew the White Paper content, in terms of the ICB and the draft Basel III paper on CRD 4, we would give you what we thought was the likely path to dividends. We now have the White Paper of the ICB, which does not present any significant differences to what we thought, but unfortunately as you know, the CRD consultation paper was delayed to September. So we think we will only be give you that path in quarter 3 at the Q3 IMS. In any case, as I said in Q1 IMS, we are following a capital maximization strategy, which is based on lower noncore in a capital accretive way and lower costs and lower impairments on the core book. So whatever will be the content of the CRD 4 paper, we would not change our strategic direction because we are maximizing capital as much as we can and in spite of the one-off hits that we have, we have been generating between 20 and 30 basis points of core Tier 1 capital per quarter. In January '11, this bank was 10.2%, now it's 11.3%. So 110 basis points higher with a PPI rate of GBP 4.3 billion. So we are maximizing capital generation, we think the core book is very powerful, as we told you. Key leading retail…