There’s an uncertainty around your deposit dynamic near-term. But the thing that presumably gives you confidence longer term is this really quite substantial hedge tailwinds. So any kind of color you can give us around your confidence there around the size and the income profile would be great? Thank you.
William Chalmers: Yeah. Thanks, Aman. I will — there’s three questions there, around what happened to hedge maturities over the course of this year, around the tailwind looking into 2024 and around structural hedge drivers going forward. I’ll answer all three, but I will turn to Charlie actually on some of the deposit dynamics on the third in particular to add further context. The — Aman, on the first question around structural hedge maturities, as I said, it’s maturities of around GBP20 billion looking into H2 as we stand today. I think at Q1, I probably talked about H2 maturities of around GBP25 million, something like that number. What’s going on to reduce that GBP5 billion, it’s effectively pre-hedging Aman. So we manage the structural hedge according to principles of income stability in order to produce a predictable earnings profile, which in turn allows us to make predictable distributions to shareholders, the source of value and the second principle being one of shareholder value.
And so when we see opportunities to manage at the margin, if you like, then we’ll lock in some of the hedges in accordance with that and that’s what we saw in the period during Q2. And as a result, the hedge maturities in Q3 and Q4 have gone down from circa GBP25 billion to more like GBP20 billion as we have sought to lock in the shape of the curve in the interest of securing income on a stable basis for the group going forward. So it’s pre-hedging in short, Aman. Second of your question, the structural hedge tailwind going into 2024. We — as you say, we put forward a circa GBP800 million further tailwind to the Group looking in 2024 as a result of the GBP40 billion of structural hedge maturities that we expect to see. So those hedge maturities, I won’t give you a precise number, but it will be a little bit in excess of the 1.2%, but it will be around that zone for the 2024 period.
That suggests that based upon the rates that we looked at as of the 30th of June, that GBP800 million tailwind is what makes sense. Generally speaking, we managed this reasonably conservatively so that we can predict with confidence what we’re going to deliver to you. That, in turn, is then subject to the volatilities of markets at any given point. And so if we overlay a kind of market implied analysis, if you like, on top of the hedge analysis that we give you, there’s probably a little bit of conservatism built in there. But it’s not 50% to be clear, Aman. So it isn’t going to be a question of delivering GBP1.2 billion versus GBP800 million. Based upon market-implied analysis, it might be a nut higher than GBP800 million, but not of the order of magnitude that you were indicating.
Third point, structural hedge drivers. Let’s be clear, what we’re talking about here is around the edges, right? We are talking about a marginal reduction, a modest reduction as we turned it in the overall size of the structural hedge of GBP255 billion. As I said earlier on, we’ve seen rate changes in between quarter one and quarter two for the three-year rate, for example, relevant obviously to three and a half year weighted average life of the hedge of over 1%. If you take that as a proportion of what the rates were as of Q1, that’s like 25% of the rates of Q1. So it’s gone from roughly 4.25% to roughly 5.25% over that time period. That’s a very significant, in fact, I would say, overwhelming adjustment versus the type of modest reduction that we see in the overall size of the hedge.
