Operator: The next question comes from Britta Schmidt from Autonomous Research. Please go ahead. Your line is now open.
Britta Schmidt: Yes. Hi there. Thank you for taking my question. Two fairly short ones. In Turkey, you described the customer spread as having bottomed now, but can you give us a figure as to what was it in September, October versus the start of the quarter? And whether you expect more net interest income growth to help offset the inflation pressure on the cost base within Q4. And then slightly related to that, what is your expectation for the cost to income ratio for the full year and also the José development in Q4, given that there are some revenue impact such as, for example, the deposit insurance, fund charge in Spain? Thank you.
Onur Genc: On the first one, very quickly and directly to the answer, customer spread in July, if I am not mistaken, now, Britta, it was minus 250 basis points and minus 240 basis points in July, and it was 100 basis points positive, 190 basis points in September. That’s why we are saying that it has peaked. So, the average that you see in the documentation is composed of very negative numbers in July. And since then, improving, improving, improving, September number is 190 basis points. On cost-to-income, we still will have clearly independent of the deposit guarantee fund. We will have positive jaws in the year for sure. We don’t have a clear guidance or clear target that we communicated to the market on cost to income, but it will be clearly positive jobs.
Patricia Bueno: Thank you, Britta. Next question please.
Operator: The next question today comes from the line of Carlos Peixoto from CaixaBank. Please go ahead. Your line is now open.
Carlos Peixoto: Yes. Hi. Good morning. A couple of questions – I have three questions, actually, with quick ones, I hope. So, the first one is actually on the group’s cost of risk guidance earlier in the year, you – the guidance was around 100 basis points for the full year. Right now, we are actually at – or it was actually at 111 basis points in the nine months. I was wondering if you still see those 100 basis points as achievable, or should we expect a level somewhat above that? Second question would be on the cost of risk guidance in Turkey. I am sorry if you had already mentioned, but if I missed it. The final one was actually a follow-up on the bond swap in Mexico. I was just wondering if you could give us a bit more details, namely the amounts that were swapped. And if I understood correctly, you saw a 9.5% yield in bonds to 5.5% was added. So, this has a positive impact on NII over the medium-term, right, just to make sure. Thank you.
Onur Genc: Very good, on the first one, yes, we did mention it. It’s going to be slightly worse than 111 basis points is the guidance for the cost of risk. And Carlos, as we mentioned also before, it’s mainly driven by the mix. The mix that we are growing more in Mexico and less in Spain and the fact that we are growing more in retail Mexico and retail, South America EBIT than other segments in Mexico, especially less growth in corporates in Mexico, but slight deterioration as compared to 111 basis points that we already have in the third quarter. Then the cost of risk for Turkey, I don’t think we have provided guidance on that one. But what we can tell you is that the 26 basis points that you see is much lower than our traditional average.
And given the fact that inflation was so high, it was very low. Now, that the rates are going up, there will be some negative impact. So, again, not a major, major impact, but it will be increasing from the 26 basis point levels that you are seeing. In terms of the loan swap, you are right, it’s part of what I discussed before. We wanted to reduce the sensitivity of our future earnings to the rate declines. As part of that, we wanted to buy duration and we wanted to buy longer term. And as part of that, we participated in this swap. It was around €2.5 billion in gross amount. We gave to the government 1 year, as you said, 5.5% yield, and we bought 4 years, 9.5% yield. That had an implication. NII impact is limited still. But the NTI impact was minus €82 million.
So, the reason that the Mexican overall profit and Mexican NTI, if you look into the details, has come down in the quarter is because of the swap. But we really do think that it might have a very short-term impact on the profitability. But we do think that it was a great deal, and we do think that it will, again, ensure great future earnings in Mexico going forward.
Patricia Bueno: Thank you, Carlos. Next question please.
Operator: The next question comes from Ignacio Ulargui from BNP Paribas. Please go ahead, Ignacio. Your line is now open.
Ignacio Ulargui: Hi. This is Ignacio Ulargui from BNP Paribas. Thanks for taking my questions. I just have two questions. If you could update us on the percentage of deposits, which are being remunerated in Spain regardless of whether the Artem side, particularly focusing on the corporate side? And also, I just wanted to get a bit of if I just look to your strategy, I got the impression that you have bought some additional bonds in Spain in the euro balance sheet. And from the comments that you did about mortgage growth and trying to secure a bit of long-term yielding assets, I get the impression that you are protecting yourself ahead of rate cuts. If I just look then to the sensitivity in the euro balance sheet, it’s more or less unchanged. I mean can you help me just to reconcile both dynamics, the 5% to 10% rate sensitivity with the strategy on the ALCO and the rolling the total mortgages at fixed rates? Thanks.
Onur Genc: Very good. Thank you, Ignacio for the question. On the first one, I mentioned it, but let me answer your question with those better breakdown that I have shared with everyone, which is in the case of CIB and large clients, and again, some private banking business also is in the same range. But 85% is the better that we already see, 85%. In the case of Banco de Empresas, as we call it, which is the mid-corporate, the company segment, the beta is around 35%. And in the case of retail, retail include mainly the mass segment, it’s less than 5%. These are the betas. As you can see for the mass segment, we don’t pay basically. And as we discussed maybe many times before, it goes back to the liquidity, it goes back to the fact that deposits are not the scarce resource in Spain, given the fact that there is so much liquidity and given the fact that every day, given the deleverage in the balance sheets, given the lower stock balances in credit, that liquidity is increasing.
Regarding the Spain euro balance sheet, very good question, Ignacio, as always. It’s – but if you go back to the end of year, beginning of this year, beginning of 2025, we were telling you that the sensitivity to an NII to rate is 10% to 15%. That’s how we started – how we ended last year. Then we have changed that to 5% to 10% and 5% to 10% is a very large range. You are right that you cannot really see this fixing that we are doing. I can tell you that it has really come down. The number is around 6% now. So, we are at the bottom end of the range that you are seeing. So, we started last year, around 15% to be fair. Today, 100 basis points decline in the rates would only have a 6% decline in NII. And it has been a continuous gradual and we accelerated on this, especially in this last quarter, to be fair, but we have been, again, taking negative carry, taking negative carry, I repeat it, to be able to ensure the future earnings of the bank.
I mean negative carry, and we are typically buying middle of the curve 5 years to 6 years. 5 years to 6 years, Spanish sovereign bond, for example, was yielding 3.5%. We could have chosen to put that money into the ECB at 4%, but we said, no, we want to fix this. So, 5-year to 6-year Spanish sovereign, although it gives less than the liquidity facility and 50 basis points less, you wanted to be doing some of this fixing. As a result, the sensitivity is the 6%.
