So we don’t expect basically cost or risk to deteriorate in the U.S.
Jose Garcia-Cantera: Sofie, the NII at the Corporate Center. The NII at the Corporate Center basically comes from the relationship between the Corporate Center with the balance sheet in Spain. And there are two different balance sheets in Spain. One is the commercial balance sheet in Spain and we make it as an like an independent bank. So we charge to Spain the TLAC MREL costs. We charge the financing of the ALCO portfolio and a couple of other things. So net Commercial Spain balance sheet, we charge around 1.4 billion for those items. And then, we also have a CIB balance sheet in Spain. That’s group CIB booked in Spain, plus the branches. And like Ana said, we isolate the CIB business from interest rate risk. So, there is an intra group transfer pricing for the CIB business that is in the balance sheet of Spain, and that’s around 800 million.
So, although we remunerate the commercial gap in Spain, you see a commercial gap that is the difference between loans of 228 billion and deposits of 308 billion, the difference is 80 billion we remunerate that gap at the central bank rate, but then we charge these items that I explained, making Spain equivalent to a country and isolating CIB against the TTI. So obviously, when rates are up, we have at the corporate center higher income from the TTI coming from CIB. As rates will come down, that should also come down.
Operator: Next question is from Francisco Riquel from Alantra Equities. Please go ahead.
Francisco Riquel: I want to ask about the capital. About the 16%, do you stick to your 50% payout ratio, but yet the capital build is limited in 24% as per your guidance. So I wonder what are the regulatory impacts that we should expect, if any? What are the moving parts impacting the 24% capital ratios. And second here is the 12% capital target, the threat CET1 has been raised by 75 basis points in the last two years to 9.6%. So regulators could also impose further countercyclical buffers. So in this context, do you think that the 12% capital target post Basel IV is still valid? Or would you be looking to increase this part over time? Thank you.
Ana Botin: So in terms of capital, we are very comfortable with our level of current capital. It’s over 12%, not 12%. And just very important, it’s over 12% fully loaded after Basel III, so, again, really important that we are comfortable. We have ample buffers in terms of the regulatory requirements. The second point is that every year, we’re generating more and more capital organically. We are a compound compounder. We’re adding to equity, and we’re investing in profitable growth for the future and this is really important. So this is allowing us enough capital to grow. We have put in place a very ambitious and successful program in terms of rotation of the balance sheet. So as you can see, the net RWA growth last year was zero, but increasing the front book, profitability.
And so again, we’re aiming to, in terms of capital build this year, on a like-for-like basis, we went from 12 to 12.50. We’re now accruing the buyback in December, so that means 12.30. That goes up from 12, and that’s after increasing the payout to 50%, as you know, from 40. So again, we’re generating more and more capital. We generated 10 billion of capital this year. It’s much, much larger than the last few years. We continue to aim as you’ve seen to grow profitability next year, which should increase the capital generation and give us space to both fund out growth, increasing returns to shareholders as we make more money and we generate more capital. And next year, we will have the Basel III, but the number that we are projecting for the end of this year is 12.40 to 12.50 from the 12.30 for the end of ’24, we expect that number to be exactly the same on day one.
Again, 12.40 to 12.50 by the end of the year and on day one in January, the same, the final impact in ’28, we estimate 25, 30 basis points. So, that would mean that on January 1, ’25, we would be compliant already with the fully loaded down the road, with the 12.40, 12.50 that I’m saying. Anything else on the requirements you want to say on the P2R and P2G because?
Hector Grisi: We will generate between 10% to 15% of organic capital per quarter and we expect to have around 35 basis points of regulatory charges, of which 20 will be up I mean, front loading Basel III. So that’s why by the end of December ’24, the ratio that we will publish will be already fully Basel III compliant, as Ana just explained. And the capital ratio of 12.40 to 12.50 will be the same on December 31st and on January 1, 2025, because we will not have any impact from Basel III on day one. That impact will be absorbed in 2024 and in terms of the 12% and headroom.
Ana Botin: I believe one of the few European banks that under the stress test doesn’t breach MD&A, I mean, there’s not very many. The headroom is very comfortable. We have hundreds of basis points. I never know, if we’ve given this number or not. But we have a management buffer that is absolutely more than enough to satisfy our economic, our risk appetite, and the regulators. So, we’re comfortable with our position and will be even better on a nominal basis, which again, we don’t think that is the only number we should look at. But on a nominal basis, 12 months from now we’re going to be in a much better position even than we are today vis-à-vis our peers.
