Guy Stebbings: I have one on costs and then one follow-up on deposit mix. So on costs, on Slide 12, just trying to understand the sort of the rationale assumptions behind the different arrows. For BUK, some inflation you had recently, understandable. CC&P, continue to invest and expect some revenue momentum. But I guess it’s the CIB, which is most nuanced or hardest to call, I imagine. And we entered 2023 with a tough Investment Banking backdrop. There’s a higher borrowing on FICC for the year-over-year comps and, more generally, the markets expecting lower revenues this year than last. I guess there is inflation. There is investment but perhaps less inflation to the CIB on things like IB, payments and other line items. So I’m just trying to gauge if revenue is down a reasonable amount in 2023 as some of you expect, should we still expect the cost to grow?
So any sort of thoughts around that would be very useful. And then on the deposit mix, it’s interesting to hear that you sound a lot more conservative than you have in the past, even though we’re sort of nearing the end of policy rate hikes if the curves are right and deposit competition hasn’t intensified at least in terms of term rates in the past month or so. So it seems like from your comments, there’s quite a lag as to how it works through into customer behavior. With that in mind, if late this year rates are flat or even falling, do you think we could still be seeing negative deposit mix work through at that time?
Anna Cross: Thanks, Guy. So in terms of costs, you’re right to point out that the dynamics by business are really different. So BUK is really a margin story. So what we’re doing now is we’re driving efficiency as fast and as far as we can in order to make sure that, that drops through to the bottom line, and you’ll see that BUK costs are actually down in the current year. We’re guiding to sort of, I would say, modestly up, if you look at the direction of that arrow. CCP is different, and CIB is different. They are not only margin stories. There are opportunities for growth. And therefore, you should expect us to lean into them as we have done in the current year. Now in CCP, that’s a bit more straightforward because it relates to onboarding Gap.
It also relates to restarting the sort of partner machine post COVID. That’s very straightforward. You can see the costs going in, in Q2 of this year and the revenues following thereafter. That has led to a high-quality increase in income, so GBP 800 million up year-on-year, as I said. CIB is more difficult to call, but this is a business that we’ve invested in steadily over a number of years, and we’re seeing the benefit of that now. As I said before, it’s performed across 3 very different years and 3 very different environments. And there’s one thing having diversification. But for those businesses to operate well, you have to invest in them. And actually, our cost-income ratio and the sort of progression of our cost and income is not significantly different to those of our U.S. peers if you were to line us up.
So expect us to continue to invest both in terms of markets and in terms of banking selectively where we see the opportunity to attract talent in sectors that we think are important for the future. And we will also continue to invest in corporate. That’s people and technology, by the way. So I’d say 2 more things. The first is don’t forget the momentum that we’ve got in financing. Don’t forget the momentum that we’ve got in transaction banking within that business. And of course, this is the area of the bank where we probably have more cost flex because we are able to speed up or slow down our technology investments. We are able to that flex our comp, so we will do that to the extent that we think it’s appropriate and the income line is coming off.
And in terms of deposit rates and deposit composition, as I’ve said before, it’s broadly — well, it’s very much in line with our strategy to drive good savings behavior with our customer set. It looks like that’s very much a market-wide strategy as well, not least from what we see in pricing but also comments at the , rather. And so I think it’s something that will remain. I’ve said for a while that actually, the bigger effect here is not so much about pass-through. Policy rates may be coming to a peak. But its customers’ desire to migrate, and that will be prompted by a number of things, which may be competing. The fact is the movement in policy rates, as I said before, may prompt behavior. But equally, in the current environment, customers are keen to manage perhaps higher than normal sort of operational , if you like, because of the economic uncertainty.
So there’s some offsetting impacts, we have not been down this path for many, many years, which is why we’re being cautious. But we’ll update you as we go. And everything that I’ve said and all of those considerations are built into our NIM guidance of greater than 320. Okay. So thank you, Guy. I think we’ve got time for one more question. So we’ll take the next one in the queue, please.
Operator: Our final question today comes from Rob Noble from Deutsche Bank.
Robert Noble: Just on a couple of things. On the hedge, you say you run with a buffer, but the hedge declined in size in Q4. So just wondering if something happened that you didn’t expect. And obviously, the composition of the hedge, how much of it is linked to corporate deposits? And if we look forward on deposits, we talked a lot about the mix of deposits and how that will drive differences in expectations. But what about the level? Because you’re actually seeing deposits decline in shouldn’t expect that to continue. And then secondly, just you mentioned reversion — sorry, churn rates speeding up. What’s the average time spent on reversion rates that’s built into your effective interest rate models? And what’s the kind of on-the-ground experience that you’ve seen right now?
