Your second question, Andrew, around product transfer versus new business. Yes, you’re right pointed out. We have a completion margin that is 50 basis points, that 50 basis points is a blended average based upon new business and based upon product transfer. Just to give you some idea without putting too precise numbers on it, but product transfer is materially ahead of that, sorry, forgive me, new business is materially ahead of that 50 basis points completion margin. So quite a bit ahead of it. Product transfer is, typically, we’ve seen it around sort of 35 basis points to 40 basis points in that zone. The issue with both of these numbers, both new business and product transfer, Andrew, is that, at a time of swaps volatility, the spreads go up and down in line with the swaps.
So you have a price out there that then gets affected by the swaps, even though, obviously, we are hedging our exposures as best we can to make sure that we’re not exposed. I think what we need, Andrew, in order to figure out what is the true equilibrium pricing within the mortgage market is a period swap stability that then allows people to price with a degree of certainty as we go forward, which in turn will give us some insight as to what a true a mortgage equilibrium margin looks like. As you know, in the past, we thought that it is north of 50 basis points. I think we continue to think that in part — in no small part because actually a 50 basis points completion margin is produced at a time of tremendous and mostly upwards swap volatility, which has compressed margins.
So we continue to adhere to the view that over time, if we do get that paring stability, we should see margin spreads moving out from the 50 basis points that we’re seeing. But to be clear, we’re not banking on that in the guidance that we’re giving you for Group margins as we stand today.
Charlie Nunn: Then you build, William, which I know you’ve said a few times, but just it’s worth reinforcing in this context is, because product transfers for existing customers, we understand their risk, we can look at their broader relationship. We see good economic returns at the kind of rates that Williams talking about. And so we’re very comfortable with the returns on this margin. But I think the opportunity with that stability that we should see starting to come around to see what happens, as William said, is on the upside. Thanks, Andrew.
William Chalmers: I think there may be one more question. And then there’s one comments I’d like to make actually before we wrap up. Let’s take the question first.
Operator: Thank you. As you know, this call is scheduled for 90 minutes and we have now reached the end of the allotted time. So this will be the last question we have time for this morning. If you have any further questions, please contact the Lloyd’s Investor Relations team. Our final question is from Joseph Dickerson from Jefferies. Your line is unmuted. Please go ahead.
Joseph Dickerson: Hi. Thank you, gentlemen, for taking my question. You’ve provided a very strong return on tangible equity guidance of greater than 14% this year and I think your existing RoTE guidance for next year is greater than 13%. I guess, is that stale at this point or could you discuss the moving parts as to how we go from 13% — 14% — greater than 14% down to greater than 13%. Is this normalization of TNAV? Is it lower rates and the impact on NIM? I guess what would be the drivers of that or is this something that likely to be updated in the future? Thanks.
