Georges Elhedery: Thank you, Noel. Thank you, Perlie. Let’s move to next question, please.
Operator: Our next question today comes from Rob Noble from Deutsche. Please accept the prompt to unmute your line and ask your question.
Robert Noble: Good morning. Thank you for taking my questions. Just on the treasury sales, you’ve announced another potential 400 million in Q4. Why not do them all in Q3? What’s the advantage of waiting if you’re just going to realize a loss and do another? Why not just do them all now? Secondly, just a little bit more on China. What’s the sensitivity of the balance sheet to rates in China? How concerned are you about the rate differential between China and Hong Kong? What are the moving parts of that differential on all of the businesses not just the commercial side? Thanks.
Georges Elhedery: Thank you, Rob. On your first point, look, this is a matter of phasing it in time so that we’re doing it thoughtfully, carefully. We’re evaluating the impact every time we do an activity. So I don’t think there’s a — we didn’t put a cut off per se for Q3 and Q4. As you can see, the numbers aren’t mathematically or aren’t kind of — they don’t follow a given symmetry. It’s just a matter of where we are on the journey when we kind of cut off the books on the 30th September, but we carry this activity throughout and we look for the right market opportunities to do it. I think this is this way we look at it. With regards to your second point, a couple of things I can share here, Rob. The first one is the rate sensitivity of China.
So just to give you an indication, the impact of the China NIM on our hedge or our Asia NIM is about 3 basis points. So the fact that we have some rate compression in China simply because of the policy rates compression, this has affected our overall Asia NIM by a couple of basis points. So that’s the quantum or the magnitude given, obviously, the size and scale we have in Hong Kong versus the size and scale we have in mainland China and other geographies. The second one to call out is that the rate differential. We expect it to remain for a matter of many quarters, probably a couple of years, which does mean that offshore — that mainland Chinese customers borrowing offshore in Hong Kong will probably remain subdued for the next couple of years, because it’s much cheaper for them to borrow at lower rates in RMB.
And this headwind is likely to continue for the next couple of years. Now on the flipside, again, because of the rate differential, the growth in wealth that we observe in Hong Kong is obviously a positive and a beneficiary of a differential. So the fact that we’re seeing more wealth build up in Hong Kong, the fact that we’re seeing more demand for our insurance products and capabilities in Hong Kong also reflects the fact that for mainland Chinese, for some of them and subject to their quotas, they’re allowed to do, et cetera, it is interesting. It’s an attractive proposition to invest offshore because they’re getting the right pickup. So we’re seeing the benefits of that when we talk about our insurance business in Hong Kong and our new business CSM, while we’re seeing the challenge on the other side.
Look, all this at the end to say is we remain very optimistic in the medium to long term on both Hong Kong and mainland China. And we just need to see some of the short-term difficulties play out specifically in mainland China specifically in the real estate sector until we recover and are able to see some of the momentum back on positive growth there. Thank you, Rob. I suggest we move to the next question.
Operator: We have time for one last question today from Andrew Coombs from Citigroup. Please accept the prompt to unmute your line and ask your question.
