Good morning, everyone. For those of you who I haven't met, I'm Norman Blackwell, Chairman of Lloyds Banking Group since April this year. And on behalf of the board and the executive team, I'd like to welcome you to the presentation of our results for the 9 months ended September 2014, and our strategic update. I'm introducing this session this morning because, as well as the results, in a moment, our Chief Executive, António Horta-Osório, and members of the executive team will present the key strategic priorities for the group for the next 2 years. Before that, however, I'd like to hand over to George Culmer, our Chief Financial Officer, who'll run through the key financial and operational highlights from our third quarter results, which we issued to the market this morning. And after he's given you that overview, there will be an opportunity to ask a few questions on the results before we move on to the strategic update, which is main focus of this morning's presentation. So thank you. Over to you, George.

Thank you, Norman. And good morning, everyone. Thanks for coming. As Norman said, I will cover the Q3 IMS. And as said, I will tend to move pretty rapidly and then we can get on to the strategic update. So in 2014, we've continued to make strong progress with improved profitability, increased lending and deposits in key customer segments, and we've continued to strengthen and reshape the balance sheet. And this reshaping is now substantially complete. The runoff portfolio was GBP 23 billion in September. We remain firmly on track to achieve our improved guidance of less than GBP 20 billion by the year-end. In addition, in September, as you know, we successfully disposed of a further 11.5% of TSB, taking our remaining shareholding to 50%. On financial strength, we've seen a further significant strengthening of the core Tier 1 and leverage ratios. And we've also seen excellent progress on financial performance, with strong improvements in both our underlying and statutory profit after tax. Finally, you've seen this weekend's announcement that we passed the EBA stress test. As you know, the EBA stress test was especially punitive with regards to U.K. residential and corporate real estate market. As you'd expect, we adopted a thorough and conservative approach to our modeling, and we're pleased that the test highlighted the strongly capital-generative nature of our business, which will obviously continue to benefit us as we move forward. As you know, the PRA stress tests are published on the 16th of December. These tests are even more targeted at U.K. residential and corporate exposures, but also contain some significant modeling differences to the EBA. And with the strength of our balance sheet and capital position, I expect to pass the PRA test. Looking at the financials, then, in more detail. Q3 income, excluding…

So have we got microphones, or we'll just -- I can probably hear you from there, but...

I'm not sure. Chintan Joshi from Nomura. Just had one on your asset margin relative to Q3 [ph]. Could you give us a sense of [ph] how much of the LCR growth rate you have in there [ph] would remain on a quantity run rate [ph]? You've given us a 10% number in Q1. I just wondered to see that you may be [ph] changing that and also if you could give us [indiscernible] difference between the C&G book [ph] and the other booking.

Okay. Well, first off, on the margin question. As I said, the overall margin in Q3 was about 2.51%, which I think compare with about 2.48% in terms of Q2. And the trends, as I said in the presentation, are familiar ones to you. I've got -- I think the liabilities was, only 5 or 6 basis points benefit in there, off about 3 or 4 from the assets. And I've seen that mix pretty consistently as I've actually moved through the period. On the SVR book, I think the -- particularly on the Halifax one, I think it's still just under -- a shade under about GBP 60 billion. I think it's about GBP 59 billion. And we haven't seen any material movements in terms of changes in attrition rates recently. So I mean if you go back 18 months, I think that was a shade over GBP 60 billion, about GBP 62 billion, GBP 63 billion. As I said, it's now about GBP 58 million, GBP 59 billion, but we haven't seen any material changes in attrition rates on that book recently. And I'll probably -- I'll get back to you on differences between attrition to that and the C&G book. Other question?

I think I might have the mic at the back here. It's Tom Rayner from Exane BNP. Can I have a couple, please? I mean, just on the P&L items. Noninterest income seems to be the one where -- I think your last guidance was for stable in the second half. It seems to have been a little bit weaker than that. And I just wondered if you've got any more visibility now on whether Q3 is really the sort of run rate for noninterest income. And then I also have a second question on PPI, please.

Yes, okay, right. Yes, the GBP 1.6 billion, you're right. It was slightly down on GBP 1.7 billion and slightly disappointing. When you look across the divisions, there are some interesting things. Now if you look, for example, at commercial, commercial was flat on OOI Q3 versus Q2, which is encouraging, as well as Consumer Finance. Retail was marginally down, I think, about GBP 20 million Q3 on Q2, higher transaction costs, use of other ATMs, et cetera, sort of being the main drivers there. The main one, actually, in terms of churn was probably insurance, where we had some adverse claims experiences compared with the write-back in Q2. And I think the net swing of those effects had about a GBP 40 million impact. We've also been benefiting from the transfer of assets from the commercial business into the insurance business, and we had a lower level of that in Q3. So again, I think the insurance business, in aggregate, was about GBP 90 million down Q3 versus Q2. As I look forward, I said, GBP 1.6 million, it will be nice to get to about GBP 1.7 billion in Q4. I would certainly expect a stronger performance from the insurance business in Q4. And provided that the other businesses can continue on trends, then I think we've got a reasonable chance of getting to that GBP 1.7 billion. The backdrop hasn't changed. Conditions do remain tough, et cetera. And as we move forward, we would be looking to grow the OOI book, but again, I would sort of temper sort of ambitions and expectations in terms of the rate of that growth because some of those fundamentals around the conduct regime and the backdrop are going to stay present. But as I said, GBP 1.6 billion, slightly down, as you say, but let's see how Q4 pans out, but I would hope for about GBP 1.7 billion, provided we can get the sort of hopeful turnaround in insurance.

Just on PPI. I mean, obviously, looking at unutilized provisions versus current monthly spend, et cetera, it doesn't really help get us to the right answer on when the sort of PPI charges might stop. Is there an element here which is probably not possible to analyze, but just reflecting things like record keeping, so when claims are now -- claims management companies are trying to push back further and further in time, it's actually just cheaper for the banks to settle rather than even try and dig out records which may no longer exist? And I was wondering if there's a -- following on from that, there's an issue that a moratorium needs to be called at some point. Are you able to comment on your thoughts about that?

Okay, there is no specific records issue. I mean, obviously, within that, the further one goes back in time, the less evidence one has. And certainly, in terms of any submitted PPI complaint, you've got 8 weeks to turn around. What one has to do is effectively carry out a sort of fact file in terms of the customer's conditions at the time. And you've got to go back in time and actually re-create that, and then you've got to look at the conditions around the sale and make sure that all the disclosures were made. But unlike some other stories you might heard, we have no specific issue around cutoff points in terms of data or in terms of information or anything like that. What we are seeing and the reason for provisions, as I said in the presentation, reactive complaints, which were down 18% year-on-year but they were up in the quarter. And what happens is we factor that into our model in terms of projecting future claims. And if I have a period of flat and then I think they're up about 2% or 3%, I extrapolate that out. And obviously, the area under the curve comes back to the amount that we've -- you're seeing today. Of the GBP 900 million, some GBP 660 million relates to that reactive bit. The good news, I suppose, would be in the 3 weeks since the quarter end, is that claims are down, but I would caution that is but 3 weeks. And I think we've given some sensitivities in the RNS that says, were claims stay at the same Q2 levels that we've seen -- sorry, the Q3 levels, there will be something like a further GBP 600 million that will be required. But we have seen claims reduce of late. In terms of things like moratorium, it's tough. And at various times, various initiatives commence, but enabling to get agreements amongst the regulator, the consumer groups and the banks is proving a tough task. And the idea is attractive and it certainly appeals, but definitely -- but getting down into the detail and then getting to a situation where each party can walk away from the room and declare that they've got what they wanted has so far proved beyond the parties. But going back to your original question: There is no data issue. We continue to deal with complaints. What we're seeing, though, is reactives have been sticky. No sort of spike up in things like CMCs. It's just CMCs are staying the course. Whereas fluctuating between about 49% and 69%, I think they've averaged about 60% over the last 8 weeks or so, but if -- we just remain subject to what's happens on those reactives.

It's Sandy Chen from Cenkos Securities. Just one question, actually. In the Q3, there was a GBP 900 million top-up on PPI, but it seemed like no other top-ups on other regulatory fines. I mean, should we interpret that as, particularly looking at the ForEx investigations, that you don't expect any further fines related to that?

That is correct. You're correct in both observations. There were no other top-ups. And in terms of the ForEx, we weren't in the put terms of the first tranche of banks asked to look at that. We went to the FCA and said that we should conduct our own investigation, which we did. We have taken those findings back to the FCA. And our work in that, to all intents and purpose, is complete.

Just had a quick question on the revised impairment guidance, which implies 40 basis points charge in the fourth quarter, from 20 in the third. You characteristically, through the course of this year and, I guess, the second half of last, have been quite cautious on that. And so just trying to square that guidance with your expectation of further falls in NPLs but a big pickup in the charge, please.

Q4 is always when one takes a good, hard look at the book, and in terms of sort of forward guidance, I think there's an element of that as well. But what I would say to you, it doesn't reflect any change in terms of the overall trends that we're seeing. I think it's more reflective in terms of the internal seasonality of process than one sort of the sort of external changes in terms of what's going on in the market. But I think it remains a good news story.

It's Jason Napier from Deutsche. Two, please. The first, on the topic of stress tests. It appears that the process that the PRA is taking a run through perhaps will be a bit more logical from a revenue and cost standpoint, but I wonder whether there was any reason why tougher assumptions on house prices, CRE, interest rates, unemployment, GDP, don't automatically lead to a higher cumulative loss than the EUR 25 billion that was in the weekend disclosures. And then secondly, the disclosure or the bridge that you've given on interest income. Quite clearly, the repricing of deposits has been very powerful so far. There's less use of tactical brands. The mix is improving. Your LDR is at target. Can you give any sort of sense as to where the mark-to-market deposit costs are relative to back book or the pace of repricing you'd expect and also whether you're reiterating sort of flat margin over the next 6 to 12 months?

Okay, in terms of the first, obviously, yes, the EBA stress tests, which I talked to at the speech and obviously you've all seen and in terms of our 6.2% in terms of the transitional basis. And obviously, as you're alluding to, that we also show the 6% on a -- basically on a fully loaded basis. And obviously, the potential or otherwise look forward to the PRA stress tests, which I said had been announced on the 16th. Again, as you all know and then as you articulated, that is more severe on the housing market in terms of assumptions, in terms of HPI, et cetera, et cetera. So all things being equal, the first thing one would presume would be that, whatever we scored on EBA, will go down on PRA, which is the sort of first pass and we should accept. Going the other way, though, again, as you're probably aware, there are some major modeling methodological differences between the EBA and the PRA. And we would certainly expect to, and in fact we do, benefit quite substantially from that change in methodology. And examples would be, as you know, things like the no cure on the mortgages, which has a very significant effect. In Europe, it's a couple of billions in terms of impairments, in terms of the removal of cost floors and removal of caps in terms of income. Again, they have a very material impact upon our numbers. So one -- what first pass should play in, yes, I've got a more severe stress, so it's a negative, but then when we see the more realistic PRA scenarios, we would expect to see -- or rather we do get significant credits from the modeling of those through our numbers. And as I said in…

It's Andrew Coombs from Citi. And 2 questions from me, please. Just firstly, coming back to the NIM. I won't push you on guidance for next year, but purely looking at your full year guidance for 2.45%, given what you've published in Q3, it would seem to imply a small downtick in Q4, not huge but ever so slight. Am I reading too much into that? Is it a case of prudent guidance? Or do you expect that you're at a turning point on the NIM trajectory?

It's not a turning point. It certainly is not a turning point. And you may be reading too much into that. You're reading into the few basis points, 2.51% versus 2.48% sort of quarter-on-quarter. You're into the sort of sphere of science. Yes, you are not -- we are not signaling that I've reached some inversion point or anything like that, so rest assured.

And on -- just on the loan book, you've seen a further contraction during the quarter. Part of that is due to the runoff portfolio. You also highlight Global Corporates and taking a step back there. You've given guidance in the full year for your expectation for the runoff portfolio, but perhaps you could just give us an idea of how much further there is to run on the Global Corporates side.

I would expect further contraction on the Global Corporates. And actually, that will be particularly stark because, Q4 last year, we actually had a very strong quarter in terms of building that Global Corporates book. So I struggle to remember. I -- but I would expect to see some further contraction. We can give you the number later, but I would expect to see further contraction in Global Corporates, particularly on a year-to-year basis, in Q4. Should we -- okay, should we move on with the event? Raul Sinha - JP Morgan Chase & Co, Research Division: Here, Josh [ph]. I've got the mic, so if I can have a quick couple of follow-ups. Right here. It's Raul Sinha from JPMorgan. I can assume my questions won't keep you. Just focusing back on the runoff portfolio of GBP 23 billion. I didn't find the disclosure, so apologies if I missed it, but could you tell us what is the Irish element of that and what the coverage ratio on the Irish element of that is? Have you taken any write-backs in this quarter? And how has the trend of write-backs progressed through the year? I think this is something that you have obviously seen in your accounts.

The -- I mean, in the Irish one, in terms of the P&L charge, there has -- we continue to impair against the Irish portfolio, but there's been about GBP 100 million of write-backs and releases, when I look at the 9-month data. In terms of the net position, the -- I can tell you the percentage move here because, actually, the net exposure is down about 25% from the start of the year in terms of the 9-month stage. In terms of the net, I'm trying to straighten out what the number is. Juan, do you know what the net book is? Juan Colombás: For the commercial book, it's 1.7. And for the Retail, it's around 6.

Yes, yes. And it's down 25% year-on-year. Okay, with that, I will hand back to Norman.

Thank you, George. Before António moves on to outline the key components of the strategy update, I'd just like to provide some brief context. Lloyds Banking Group, we believe, enters the next phase of its strategic journey from a position of strength, having substantially delivered against its key strategic priorities over the last 3 years. This has reshaped the group to focus on the U.K. and return the balance sheet to full strength with a much reduced funding requirement, while generating a significant improvement in underlying profitability. In the light of these achievements and as evidence of our rehabilitation, the U.K. government, as you know, has started the process of selling down its stake in Lloyds Banking Group. While we're proud of these achievements, the board recognizes that this is just the staging post, not the end of the strategic journey, and there are significant changes in the environment that the group needs to address in the next phase of our development. We, therefore, spend a significant amount of time discussing how we can take the business forward, recognizing the impact of the evolving regulatory and competitive environment as well as customers' changing needs in an increasingly digitized world by having our U.K. Retail- and Commercial Banking-focused business model. And as we look ahead, we recognize that the digital transformation in particular will be fundamental. And together with the external factors of competition and regulation expect to result in a pace of change across the U.K. financial services sector that is unprecedented, with more fundamental change occurring over the next 10 years than has happened over the past 200 years. Alongside this strategic challenge, our other priority is rebuilding trust. The U.K. financial services sector as a whole faces the major challenge of rebuilding trust with key stakeholders, including customers,…

Good morning, everybody, and thank you, Miguel. This section of the presentation will focus on how our digital transformation will work in harmony with changes in our branch and telephone networks and how that produces a coherent and customer-focused distribution strategy. We thought deeply about emerging customer trends and how activities will migrate between channels as we form this distribution strategy. And let me explain how we've arrived at our conclusions, starting with a reminder of our current strategy. Our multibrand, multichannel and multisegment strategy gives us fabulous reach across customer demographics, customer needs types and attitude or preferences. Lloyds Bank and Bank of Scotland are relationship brands. They're expert and knowledgeable and relationship-orientated, whilst Halifax is a High Street challenger, offering friendly, easy and straightforward banking. Our scale allows us the flexibility to develop tailored propositions and to deliver them at a lower cost, because we use shared platforms and shared back-office functions. A great example of our competitive delivery of the same product through different brands would be comparing the highly successful launch of Club Lloyds this year, which delivers long-term value in the current account space for Lloyds customers, alongside our continued success in Halifax current account switcher offers, delivering immediate reward and simplicity. Our multibrand approach helps us to maximize distribution reach. Just looking at our primary active current account holders, the customer overlap is very small, just 2% of our 14 million customers. Customers are increasingly adopting a multichannel approach. And multichannel customers create more value for the group. The needs of customers are changing, as we've talked about in the last 2 presentations. Increasingly, customers are expecting more convenience, personalized products and services and seamless service across channels. The continued evolution of digital and mobile is key. As Miguel mentioned, our new mobile banking…

Thank you, Alison. And good morning again. I'm going to briefly cover the third of our strategic priorities, becoming simpler and more efficient, and then make a few comments on financial strength and targets. Starting with becoming simpler and more efficient. We're entering the next phase of Simplification from a position of strength with a strong track record of delivery and outperformance against previous targets. As you recall, our original Simplification program was launched in 2011 and set out to deliver financial benefits through the reduction in the cost base and the reinvestment of 1/3 of those savings back into the business. In terms of targets, by the time the program completes later this year, we will have achieved run rate savings of GBP 2 billion per annum, some GBP 300 million ahead of our initial guidance, at a cost of about GBP 2.4 billion, which are charged below the line. These savings have been achieved through automation, simplification of end-to-end processes, better workflow management and improved demand management, including reducing our supplier numbers by over half. For our customers, this improvement in operational efficiency has also helped improve the service and value we provide and their experience. As a result, we've seen our Net Promoter Score increase by over 50% and complaints are down also by over 50%. For our colleagues, we have eliminated highly manual tasks, promoted training and development and given them more time to focus on the needs of the customer. We have, at the same time, improved efficiency by reducing the layers of organization to 7. And these changes have all had a positive impact on our workforce with employee engagement up 27%. With the success of the original program, what we're announcing today is the next phase of Simplification. And we are targeting further…

Feel free to ask questions to any of us. But since I suspect it's mostly going to be for António, I'm going to leave him work through them. Maybe not. António Mota de Sousa Horta-Osório: Wait for the microphone. So the microphones are taken. Well, speak up.

It's Martin Leitgeb here from Goldman. Just a clarification, please. One, obviously on the move to digital and your branch presence, could you provide a bit more light on -- obviously, the focus is here on the personnel and the number of branches. Out of the 9,000 job cuts, how many of those will be in the branches? So how can I imagine the branch to be in terms of average employee per branch now and going forward? And I'm just trying to understand really in terms of this massive move from here to digital, is this 2015 to 2017 plan as far as it gets? Or is there basically a 1- or 2-year potential for full improvement if this transition really happens to that extent? And the second question is with regards to competition, competition on the mortgage side, and yes, you mentioned there's an increasing competition on the retail side. I was just wondering if you could shed a bit of light on the expectation of net interest margin there. And previously, I think you mentioned that the leverage ratio is a potential mitigant here. So where would the leverage ratio, probably this Friday, need to be in order to probably impact a certain element of competition on the mortgage side? António Mota de Sousa Horta-Osório: Right. It's a very comprehensive set of questions. Look, relating to your first question, and then Alison can give you some color on that. And relating to the financial questions, George can also give you some color on that. But what I think is important to understand is, I mean, we are here to serve our customers like any other company. And customers are strongly evolving in the way they bank. And they are now in an exponential, if you want, behavior.…

Yes. Just a little in terms of the consolidation strategy, which is sort of 200 closure with some openings, so netting down to around 150 of the 3-year period. The fact that we're using a consolidation strategy means that we will close slightly larger branches because the 2 branches within reasonable distance of each other are necessarily urban branches rather than rural. And we will still deploy other alternative strategies with some of our smaller branches, like staying open but for reduced hours and branch -- staff sharing between branches, and even, as we do in many communities in Scotland, delivery of service from the other mobile source, which is a mobile van that goes around and delivers to the communities during the week. So there are other alternatives that we have to sort of dial up and down our position. But we're expecting that 200 to be the plan if all goes as we have predicted.

And on the leverage, I mean, I presume we will all find out on Friday. And I assume you've all heard various stories along the way. I think the most extreme I heard was the sort of 5% of pure core Tier 1 equity, which would have interesting consequences, one presumes. I don't expect it to be that. I do expect that it will start with a 4%. Whether it then goes up in 25 basis points, I don't know, blocks, who knows. But I would have thought when you go north of 4%, when you look at where some of our peers currently are, that will have an immediate impact, one would've thought, upon pricing, from the one way one positions oneself. So I would have thought in terms of where it bites, it's pretty close to biting already. And I would feel pretty sure that what is said on Friday will bite with a number of -- whether it's monolines or other people that we compete against. António Mota de Sousa Horta-Osório: Yes. Because I mean, again if you -- elaborating on what George said, and I have said this at the half year results, if you consider that depending obviously where the leverage ratio will be, but most likely if you believe the leverage ratio will be between 4% and 5%, as George was saying, you have at least 3 of the largest 5 banks in the U.K. below 4%. And therefore, the marginal cost of capital for mortgages, which today will be, if you want -- if you assume 15% risk-weighted assets on mortgages with an 11% capital ratio, it will go like from 70x to either 20% or 25%. And therefore, given that it is the marginal cost of capital of the restrictive ratio that…

Yes. Chirantan Barua - Sanford C. Bernstein & Co., LLC., Research Division: Why is it getting worse? What has fundamentally changed in the last few years? Why has capital gone up?

It's hard to say, actually... Chirantan Barua - Sanford C. Bernstein & Co., LLC., Research Division: Why has capital -- so when you planned your strategy, you said you planned it around an 11% core Tier 1 ratio, right? And we see it increasing for every year, whereas actually you've simplified your business models. So where is the disconnect between where you started off with your strategy and the regulatory pressures coming in right now? What are they scared of?

It's probably a question best asked to Moore Gates [ph] and Harry Wolf [ph] and the Euro Hub [ph]. So look, I mean, and as I said actually in the sort of Q3 stuff coming up, we work off around the island [ph], so we work off steady-state because when we do our bottom-up, that was, to us, was an appropriate capital position given the risks inherent in our business which we modeled, et cetera, et cetera. Now since we did that, the longer the authorities, be they over here, be they Europe, wherever, talk about things, it only ratchets up. And I think as I said this morning, we're aware that there are risks out there, and they're risks that actually, when one looks at the symmetry of risks, it's more likely to be higher than the number that we talked about than less. And I don't think that is an LBG issue. I think that is just us and parts of sector and just in parts of the world in which we currently live. So when I make the comments about where I think the risk might be going to our capital position, that isn't Lloyds. That's just us being part of the sector and how I read the prevailing mood music coming back from the authorities. So it's a sort of sectoral rather than an individual company comment. António Mota de Sousa Horta-Osório: So I'm going to ask a different question now. Who has the microphone?

It's Ed Firth here from Macquarie. I just had, I guess, 3 quick questions. The first one was a strategic question. I guess, when you look at other industries that have been through the sort of the digitization that you're talking about, we've seen a significant reduction in cost, but also a significant impact on revenue margins in particular. So I just wonder -- I just invite you, would you give us some idea as to what you're expecting over the planned horizon and perhaps further forward in terms of what you think in terms of overall revenue margins? António Mota de Sousa Horta-Osório: Okay. Well, absolutely right, and that's something we have debated amongst ourselves. And that is absolutely part of digitization, but I would see it in a slightly different context. I would see it in the context that given that people now access banking like any other sector in a much more effective distribution model, the costs of getting the services and goods they want are much less. And therefore, as a consequence of the same model, also the revenues that you can generate can be lower given the lower cost structure. #2, this is not a 3-year program. This will be a generational program, as well for the reasons I told you relating to the different segments of the population and how they age. And in my opinion, and I know we have a different view on this, but we strongly believe the branch network will have a very important role for the next foreseeable future. And I have to tell you that I now managed banks for 21 years and I already heard of the branch disappearance 21 years ago and they are still here. So the way we see this going forward is the revenues through digital -- and so you have to see the mix versus the other channels, the revenues are normally lower margins. But on the other hand, volumes are increasing exponentially. So it's not only margins. It's margin times volume. And you have to see that the marginal cost is almost 0. And what we have to do and why we try to put ourselves at the forefront of this long-term process by creating a digital division, making that digital division across the group present at executive committee to have a central attention, central allocation of resources, is exactly to start adjusting our customer base with the front foot so starting doing that ahead of our competitors exactly because the lower trends are in the direction that you mentioned. But I think this is good for society, and it will be good for the banks that adapt in a proactive way by lowering their cost structure successfully as you increase significantly the volume sold, but of course, you will have lower margins per product.

And can I just ask one supplementary? Just in terms of the mortgages and your expectations in terms of a leverage ratio, somewhere in 4%, 5%, something like that. I mean, you've also -- also got the discussion about minimum risk weightings on mortgage and obviously if you do apply a 4% leverage, you got a huge disparity between capital allocation under leverage and capital allocation under risk-based capital. So are you also expecting some sort of increase in risk or imposition of a minimum risk weighting to try and reduce that disparity? António Mota de Sousa Horta-Osório: Well, from our -- I don't know if you want to comment as well, from our discussions with the regulators, which we have already shared with you several times, and they haven't changed, our view is that, no, that they will do what you're saying through the leverage ratio. They are not worried about the path of the housing market. We just started to recover 1.5 years ago, based on the Help to Buy schemes and funding for lending schemes. And should they become worried, we believe they would do risk weights on new business only and through LTV bounds. But we do not believe this is on their priority at the moment from the conversations we have with them. Manus? Please, can you hand a microphone over there to Manus. Sorry, we don't see really well because of these lights.

I have 2 questions actually, please. One for António, one for George. António, you said in your presentation that you think the U.K. market is highly competitive, but the CMA would appear to disagree with you, and the Labor party certainly disagrees with you. I wonder if you could discuss how your strategy, as presented today, might have to evolve if that competition review comes out differently, what would be your approach? And my second question for George is that, George, you talked about a 20% total capital ratio, whereas, you're currently at about 18% on a fully loaded basis. So should we now assume that you actually have a deficit of sub debt rather than a surplus of sub debt? Because in the past, you'd always talked there might be a margin benefit from knocking out some sub debt, but it now looks like you might actually have some kind of headwind from having to fill that TLAC gap. António Mota de Sousa Horta-Osório: Okay. So let me start with the first one while George has the time to think about your second one. Look, Manus, I think it's great to have this type of debate in the U.K. And to be very precise, what I said is that I believe that the Retail sector in the U.K. is highly competitive. I do not believe that is exactly the case in small business customers, as I have said already previously several times. And the reason why is because while when you look at the Retail sector, you have a wide choice -- a wide variety of choices for customers with quite transferable -- transparent conditions, as you now have the 7-day switching mechanism, which enabled people to switch without risks. When you go to the small business sector, people…

And on TLAC, yes, as you know, we have a -- as you said we have on a sort of fully loaded basis, our total capital is about 18%, our transition's about 20%. And I think, irrespective of whether one think that's enough, I think that stands in very good comparison with our U.K. peers, we have less ratios than certainly with our European peers, a number of whom very significantly less ratios and that or smaller capital stacks than that I should say. In terms of where to from here, again, you would've read and you've seen, whether it's leaked papers or briefings or whatever in terms of expectations where that TLAC is going to land. Certainly I would agree with you, my expectation is, over the next few years we'll be a sort of net issuer rather than a net redeemer. And whether I'm shooting for 22% or whatever the final figure lands upon is still to be determined. But I would say that we started that journey much better positioned than everybody else. What I would also say is therefore while the quantum of that capital stack might increase in terms of the unit cost, there's a lot of again a more expensive issuance to be put on in terms of sort of the prices here as well as off. You will basically see this whole unit costs come down. But I would certainly expect to be a net issuer, but I would certainly expect a large number of our peers to be issuing significantly more amounts of sub debt than ourselves. António Mota de Sousa Horta-Osório: Okay. Additional questions?

There was one on the backwards side there.

Hi, it's Fahed from Redburn. I had a couple of questions. The first one is on the cost-to-income ratio. So your 45% cost-to-income ratio target, is that in line with your 2.5% base rate assumption in '17, as well? And if base rates weren't to go up, let's just say they stay flat, does your 45% cost-to-income ratio come under threat a little bit? And the second question was just on your 13.5% to 15% ROT guidance. Just based on 11.5% cost of equity -- I'm sorry, core Tier 1, but if you're talking about kind of 4% to 5% leverage ratio, which is kind of your expectations, then you have talked a lot about, parallelly, those 2 in the core Tier 1 leverage. So that's probably more like a 12% to 13%. And considering you're already at 12% and capital generation isn't your issue, why not set your ROT target on a higher capital base rather than setting it at 11.5%?

I mean, both of those, yes, I mean, the fundamental presumption made in the plan is that we get to about 2.5% in terms of base rate in 2017. And that feed through into the cost-to-income ratio. And you're right, we use the basic, an 11.5% capital requirement. And now in terms of the costs, yes, there's a whole lot of things that can change, whether it's the flavor of competition, whether it's macroeconomic, whether it's the regulatory in terms of the capital. I think what we're sort of saying to you in particular regards that ROE target is that it's built upon a number of those assumptions. Were a number of those assumptions to deviate, we would still be striving to hit that ROE, be it the base rates, be it slight movements in capital requirements, et cetera. The range that we've set, we would still be striving to hit within the prescribed framework. So obviously, if it moves extremely, then that will have consequences. I would have to go back and look at that. But if I'm talking about differences between 11.5%, 12.5% or whatever, if I'm talking about 2.5%, 1.5%, we will do what we can to hit those targets, be it the cost income or be it the ROE target. What we've set is built on assumptions, we all know that assumptions can change. But obviously, this is a change within reasonable parameters. We will run the business to endeavor to hit those targets we have set today.

In the back? Raul Sinha - JP Morgan Chase & Co, Research Division: Hi, it's Raul Sinha from JPMorgan. Can I have 2 questions, please? One, just following up from a previous discussion about the impact of the digital strategy. Clearly, I think one of the concerns the market might have is the impact on fee income or other income off of digital strategy where a cross sell becomes a lot more difficult, especially in the new regulatory environment and customers clearly are able to distinguish and choose banks quite easily online, which obviously changes customer behavior materially compared to maybe to last decade you've seen. So to what extent are your targets already anticipate maybe a shift from OOI towards NII in pricing? And can you talk about the structure pressures that you see on other income going forward, whether you think that the outlook for growth there is as strong as it is for NII? That's my first question. And then the second one, sorry. António Mota de Sousa Horta-Osório: Wait. [indiscernible] Look, I'm just going to make a very small comment and Miguel will elaborate on the behavior of the cost and what we anticipate and George can tell you about OOI. And what you said is correct. We have been saying for some quarters now that given the evolving regulatory environment, especially relating to conduct, you should consider our income more as a whole, because there is some transfer between commissions and, therefore, OOI into NII. We have been saying that for a few quarters now. Secondly, what you said about the trends are correct. We have incorporated it in our plans. And Miguel can give you some color and examples about that. Miguel-Ángel Rodríguez-Sola: So the transfer between OOI and NII within the channel to…

Very good. Thank you, Miguel. And your second question was?

The second one was on interest rate sensitivity. Obviously, in the past, you've talked about the fact that you've hedged, particularly, for the current balance sheet, on interest rate rises. And you don't scan amongst the other U.K. banks as particularly sensitive to interest rates. Some of them don't have as much hedging as you have in place. But is it fair to assume that if we look at potentially a 3-year time horizon and we look at the back end of that, your interest rate sensitivity is a lot higher than what is implied by the current hedge position?

Yes, I mean, that would broadly be correct. I mean, as previously communicated in terms of the hedging position, et cetera, we'll not be, on a short-term basis, sensitive to interest rates because it's the bank's policy to actually set out and be predictable and sustainable as possible in terms of NII stream. But obviously as you move out of that in terms of the hedge rolling over, being reinvested, et cetera, as the ability of margin management increases, yes, as we move out in terms of -- towards those longer-rate base rate-type assumptions, you will get earnings pickup. And it sort of plays back into the sort of last sort of question in terms of base rates deviate from the central assumption, what is our ability to manage it? All that I can do is I can exhort to you that we will do our utmost to hit the targets, if the base rate deviates from that assumptions or if the capital deviates from that assumption, et cetera. But the better hedge roll over that you gather [ph] and the more there is, the more beneficial to income.

Jason?

Thank you. Jason Napier from Deutsche. A question on the Commercial Banking division, if I could. Near enough half of the risk-weighted assets in the group, pretty close to your long-run cost income target. And the return in the first half probably did better than you'd expect to see, given that leads were almost 0. Could you just talk a little bit, perhaps P&L-wise, where the uplift is supposed to come from in the 2.4% return on risk weights? Is it better margins? Is there really a cost story in this division? Do you expect the risk-weighted assets to grow in the next 3 years, and those sorts of things? António Mota de Sousa Horta-Osório: Right. Well, some comments about that, because you're right, it has a huge proportion of our capital. Fortunately, quite less now because RWAs have been reduced 40% over the planned period, which was very disciplined and appropriate capital management from Andrew and his team. And as you said, we have better-than-expected results in terms of return on risk-weighted assets in spite of quite adverse market conditions. So at 1.96% of return on RWAs, we are quite close to the 2.0% target for next year. And that's why Andrew, and we as a team, we decided we could lift the bar again and target 2.4% return on risk-weighted assets by 2017. What is on the basis of that strategy? Well, on the basis of that strategy is, on one hand, increased volume growth. As we continue in terms of new markets and SMEs, we continue to grow SMEs significantly above the market, but mid-market lending growth is now turning positive as we have anticipated. And we expect it to grow as well above the market and positively going forward, on one hand. And secondly, relating to…

Hi, Sandy Chen from Cenkos again. Yes, I just wanted to ask about the digital side. I think, particularly on the Retail, the other part of digital, which seems really a part that you haven't talked much about is price comparison websites and the effect that they might have on pricing. I mean, if you could give some additional color in terms of the percentage of, say, new mortgages, new savings, term deposits that flow through price comparison websites. What's the price sensitivity of that? How that's changed? And maybe, if there's expectations that the high price sensitivity, rate sensitivity because of those price comparison websites will lessen. Because it seems like what you're assuming is that there might be some ability to get better water spreads in your mortgage business. And I'm wondering how that plays versus the channel. António Mota de Sousa Horta-Osório: Okay. So some comments. I really can't tell you exactly how many come from that. I really don't know. We can give you more color later on. But strategically speaking, and I was telling to Manus, that is another factor -- I totally agree with you. When I mentioned the Internet, it is another factor why I believe that the Retail market in the U.K. is very competitive. People go to the Internet either to access the channel in savings, for example, or to compare pricing in a transparent way and they switch because they different bank accounts. That's why I strongly believe that's an additional factor why it is very competitive. Second point, we are not predicating our Plan, this is very important, on an increase of mortgage margins. I just said [ph] the point of questions from you, as I had said previously, that looking strategically I think the leverage ratio, depending on…

Chintan Joshi from Nomura. Another mass market bank in Sweden gave a very similar strategy around digitalization, cost savings last week. But there, the focus was on absolute cost savings as digitalization saves costs. Thinking about your cost saving target, GBP 1 billion, looking at your track record, you have got GBP 2 billion of cost savings, which meant absolute cost base went from GBP 11 billion to GBP 9 billion, looking at Slide #53. I mean, what should we think about absolute cost? Because essentially, this is going into the direction of lower revenues and lower costs. And that seems to be the gist of your message as well. And then a couple of quick follow-ups. António Mota de Sousa Horta-Osório: I thought you were going to say, Chintain, that they were imitating our strategy. But...

Both are mass market, both are doing the same thing. So there's clearly logic there. António Mota de Sousa Horta-Osório: Yes, but there is a big difference, in my opinion, between what's happening in Scandinavia and the U.K, not to speak on the parts of the Continental Europe. In Scandinavia, the trends for customers to be only digital, in my opinion, and according to what I speak to my colleague CEOs in Scandinavia, are much more advanced. So I don't know if in the U.K. that means 10 years, 20 years, 30 years. But they are much more advanced, according to what they tell me. They want to reduce their branch network to almost 0, as you probably know, and that's why probably they have a nominal cost trend downwards. We have a different view in terms of how you give customers value and want to use banking. We have a different view on the timing of these trends, which is clear, but we think the timing is different. So we want to go behind the curve because we think there is a huge correlation between current account market share and branch market share, as Alison explained. So if we go behind the curve, we think we minimize the loss of revenue opportunities while we maintain the bulk of our multichannel model. And therefore, in our specific case, according to the assumptions that George told you economically, we think that costs will go slightly up with revenues going up more than costs. That's why the cost-to-income decreases every year. But of course, assumptions may change, things may change like 3 years ago, and we are very careful, as you said, in terms of how we deploy our costs. Should the revenue opportunities look different, we have the lever of the costs and our risk appetite to model. And that's what management is all about. But on our central case, we think we are now on a growth phase, that the U.K. economy has started to grow sustainably only after 12 month, and it is in the beginning of the cycle. We have finished strengthening and reshaping, and we are completely ready to move from strengthening and reshaping into digital and growth, keeping simplifying and invest. And therefore, we have significant growth opportunities, in our opinion, that require significant investments, as we described to you. But given that we do not want increment costs, we are going to fund those investments with this additional Simplification program that funds those investments. And therefore, we expect costs to go slightly up with revenues going up more and that's why the cost-to-income goes down every year and trends over time to the 45%.

That was helpful. Just a couple of quick follow-ups. With the branch closures focused on urban areas, is there a potential for gains from asset sales given where property prices are? António Mota de Sousa Horta-Osório: Alison?

No, sir.

And...

Yes, I will just add to the rest of the sentence, which is -- that which is a larger proportion of our real estate is leased.

I'd just like to see those in the capital deck [ph]. And the second question just for George. The GBP 1.6 billion, how is it divided by you? Do you expect it to be more upfront? Or will it be evenly spread out?

There will be a slight phase into the start as opposed to the end. So I mean, I know that sounds incredibly vague, but that's probably all I'm going to say. So there'll be more in year 1 than in year 3.

I think we can take one more question, because we have to finish by 12. Any additional questions? Please.

It's Andrew Coombs from Citi. I'll keep it short, in that case, just 2 questions rather than 3.

You can ask 2 or 3; we'll answer 1.

I just want to ask one question in terms of the branding. I fully understand the rationale for retaining Lloyds Halifax Bank of Scotland, but given the extent which you've seen deposit outflows from Birmingham Midshires and Scottish Widows Bank, and that's been active on your behalf, does the flexibility on pricing that those brands offer more than offset the additional complexity and costs on those? Essentially, what is the rationale for retaining those 2 brands? And then my second question, just on dividends. I think it's fair to assume you won't be able to communicate anything until 16th of December in terms of this year. But going forward, given that we're going to be getting an annual PRA stress test exercise and the methodology will be adapted each year, how confident can you be on a 50% payout ratio? António Mota de Sousa Horta-Osório: Okay. Alison will start with the branch and the brand's expansion.

Yes, so I'll start with the brand's first, and you named 2, but we have other tactical brands as well. And we continuously keep them under review and in fact, recently decided that we would withdraw from one of the tactical brands for the reasons that you just outlined. Birmingham Midshire is a particularly important brand for us because it's also a mortgage brand. And so it covers both sides of the balance sheet. And we do a number of the specialist area of mortgages through that brand. And Scottish Widows Bank is a wholly-owned, held its own banking license. At the moment we're quite comfortable that it fits neatly within the portfolio and gives us flexibility if we want to scale up quickly on savings for some reason or keep the back book just ticking over. António Mota de Sousa Horta-Osório: And just to complement what Alison said in terms of your -- in terms of, does it make sense, as you say, in terms of complexity versus simplicity? Alison explained to you in terms of the brands why it makes a lot of sense. But going a bit further, I strongly believe that customers going forward and also through digital, they will want as segmented an offering as possible. So ideally, each customer wants, as you all know, an offering for himself. He wants a targeted offering per individual. The reason why you can't do that, as you said, is because of the complexities and the costs of doing that. So in my opinion, if we are able, as I think we are, through a multibrand strategy, to segment with differentiated offerings according to different customer needs, and at the same time, having all that the client doesn't see integrated and therefore, lowering the unit cost is the best way to maximize the cost-to-income in terms of revenues versus costs. And that is a very, very strategic point. Then of course, according to our tactical position in any moment, as Alison explained to you, we have a different approach to relationship brands versus tactical brands in the context of our total loan to deposit ratio and in terms of profitability considerations.

And very quickly, I'm going to say, I mean, I'm very confident the deliverability of our dividend strategy. I mean, you see there -- in what we've said to you in terms of capital generation, you see in the numbers that we've set out today. You see it in the R&S that we set out on Sunday in terms of response to the EBA. And we already talked about the capital generation that you've seen in the first half, again you've seen in the 9 months. We talked about next year you'll have consolidating ones which will be included in that. And also the EBA stress test results themselves, where everyone's focus is obviously on the sort of 6.2 or the 6. There was a number in there in terms of capital generation by 2016 which had us at I think it was 13.6, and I think well ahead of the rest of our U.K. peers in terms of capital generation over the period. And you'll see that in the numbers in the 9 months what the bank can deliver.

I think as António said, we'll all need to draw the session to a close at that point. I'm conscious it's been a very long morning but hopefully, it's given you a good sense of what's driving our strategy and what that means in terms of objectives and targets for our business model. There'll obviously be opportunities to ask more questions in the weeks and months ahead. But for the moment, thank you all very much for coming. I appreciate it.