Good morning everyone and welcome. Thank you for coming along at what is kind of short notice, circumstances dictate that as I am sure you understand.
I have quite a lot of slides to go through today; I am going to go through some of them very quickly. I thought given the short notice, and given that I know all of you will want to go and think about this, I thought it was better to try and produce a slide pack that kind of held together logically. I will skip over some of the slides very quickly because I know a lot of you are familiar with a lot of the strategic rationale here and a lot of you have been following Citizens pretty closely over the year. But I have tried to in the slide presentation you are about to see set out the whole logic and rationale as coherently as I can.
The agenda for this morning then: first of all, I will go through the acquisition, looking at the bit about Citizens, the strategic rationale, why we have alighted on Mellon, what we propose to do with Mellon, some of the financials and give you some insight into the due diligence which we have been undertaking.
The acquisition of Mellon: a quick look at Citizens, and I will emphasise quick! We are not doing geography lessons today, but I always find it is helpful just to remind ourselves where Citizens operates at the moment tucked away up there in the north east: New Hampshire, Massachusetts, Rhode Island and Connecticut.
We are number two bank in New England with quite different market shares in the different States. Connecticut: we are really in Connecticut as a sort of rump of other businesses we have bought as opposed to trying to establish a position in Connecticut, which is why it does look quite as impressive on this slide as the others. We are number two bank in New England. We are number two in Massachusetts, being a particular major part of the business.
The number of customers, to the nearest: 1.3 million households, 120,000 business customers, about 280 branches, 147 supermarket branches and 7,200 or so employees.
Citizens balance sheet: you will hear me say this more than once today but a deposit-led organisation. This is principally a deposit-taking business, with customer deposits of $25 billion of which only $17 billion is out in loans and advances to customers, the rest is in cash or principally Government securities. That has been shape of Citizens. It has change a little bit with the acquisition of State Street, changed a little bit with the acquisition of UST which had a slightly different mix but, as shown on this slide, that is the inherent shape of the Citizens balance sheet.
Pro forma figures for 2000: they are slightly different from the figures we published - I am just trying to get you to a figure that excludes some of the one-off costs that were in Citizens last year, and we will return to these figures later as we line them up against the Mellon franchise we have acquired. Last year generated $567 million pre-tax, a cost:income ratio of 54.9 per cent, bearing in mind that you are only seeing part year effects in there of the UST acquisition.
The figures we will be showing you for Citizens this time around are much better than this. The Citizens cost:income ratio is on a downward trajectory as the benefits of the UST and State Street acquisitions flow through and as the strong double-digit organic growth in the business continues to take its toll.
Looking at Citizens activities, as shown on this slide, they are very straightforward - no rocket science features in any of these lines. We actively work to keep the business straightforward and simple because that is what the customer base looks for.
Citizens comes to be where it is - you have heard all this before - but there have been a series of 17 acquisitions over the last ten years.
Profit growth: you will see driven not just by the acquisitions, driven also by organic growth, a steady progression upwards.
During all that time clearly views on credit quality in the US have changed, the US economic outlook and the US economic reality has changed somewhat during that period. I thought you would just be interested in that slide to give you a sense of where Citizens has been during that time. In the early nineties provisioning never got beyond, or the provision charge, never got beyond 1 per cent for loans. As we worked our way through some of the problem banks that we had bought and worked that through, 1996 is not an error on the slide, the charge in 1996 was 0.0 per cent of the loan book.
That is a bit of background on Citizens. You are all pretty familiar with that anyway.
So why are we looking to move out of the region? This is precisely a slide which I put up at the Full Year Results announcement where, if you remember, I was going through what we perceived to be our strategic priorities in the UK, in Europe and the United States. This was how I saw it then and I wouldn’t say I particularly see it any differently now.
Organic growth is happening in Citizens and it is strong, our corporate banking business in the United States is doing well, and we see opportunities to buy other businesses. But by far the most attractive opportunity we saw at that time was the opportunity to take the Citizens model out of New England to get involved in a market extension and that is what we are here to talk about today, the acquisition of Mellon is a market extension for us.
Why is market extension something we think is attractive? Well, I am telling you what you know, but clearly banking is a high fixed cost business. The infrastructure that comes with those high fixed costs, however, can be leveraged quite effectively, particularly the high IT cost. IT can be leveraged very effectively over distance and by going out of region we have the opportunity to do precisely that.
Citizens has a core competency in acquisition and integration and absorption of bank businesses, it has a core competency in turnaround and in generating organic revenue growth which are precisely what the Mellon franchise needs.
There are limited acquisition opportunities left in New England, as much as a result of the 17 we have completed in the last ten years, and there are clearly fewer with every one we do. Believe or not, there are still some attractive opportunities in New England but were we to make more it just further reduces our options. By moving out into a new region we create greater opportunity, greater options.
I think it is important though to highlight that we are not in any great hurry to develop those, we are not planning to go out and conquer continental US or to be swaggering about with our cheque book trying to buy lots of banks. I think this is a terribly selective and careful process that we need to go through in identifying any other targets and, of course, the reality of absorbing Mellon take us out of the game in terms of acquisitions I would think for easily 12 months.
I don’t want you to be thinking that we have embarked on some spree. We have thought about this long and hard and we have thought about Mellon for quite a long time now, so we stepping out, we are creating options for ourselves, but when I talk about strategic options I am not talking about things I expect to be coming back to you with in the near term.
That is the rationale. How come we alighted on Mellon? Well, back to the sort of geography page with this slide! I said in looking to move out of region it didn’t seem really credible that we could move from New England to California or to Florida. Leaving aside the other issues about some of those States, it just didn’t seem something that we could really leverage the platform. An important part of the leveraging we are going to talk about later is the ability of Citizens head office and support functions to support both businesses - that is kind of hard if your people are always on the plane to California! It had to be somewhere nearby and this is nearby.
Looking first of all at the sheer size of those States in total, Pennsylvania alone has more potential customers than the whole of New England added up, 4.6 million households and 445,000 small businesses. Mellon is represented in New Jersey and Delaware but it is a much smaller part of the franchise, so these are on the slide for the sake of completeness, but the main game here is in Pennsylvania - and you will see us contrasting that with Citizens at the bottom of the slide.
Various people say, ‘oh yes, but Pennsylvania is not a very exciting place to be’, and I expect if excitement and thrills are what you are looking for it possible isn’t! But in terms of growth in income, which is one of the metrics that will drive our business, the figures ‘scrub up’ pretty reasonably in levels of household income, compared not entirely unreasonably with New England, so there is opportunity there. As I say, it possibly will not come top of your list as a potential holiday destination but, nevertheless, there are plenty of customers and there is plenty of growth there for us to tap into.
The franchise is heavily focused around the major centres in Pennsylvania, of Philadelphia and Pittsburgh, and in each of those locations we are number three by deposit share and with market shares that you see on this slide around about 10 per cent in each. The competition is slightly different in the two centres but each with much larger market shares than we currently have.
It is important I think in thinking about Mellon to recognise that Mellon themselves have been actively managing this business for what they call return rather than growth and I think, perhaps less kindly, it could be described as harvesting the business rather than managing it even for return. I think it has proved again one of my theories that when you start to manage something for anything other than growth you don’t achieve it and so in managing it for return they have managed to diminish the return - while they have been managing it for return!
Looking at the franchises side by side, this slide shows the actual number of customers we have now as opposed to the number of potential customers. It is about half the number of customers that Citizens currently has both in personal and business customers, branch numbers though are not entirely dissimilar, and there are some in supermarkets. The actual branch numbers, as you can see, are not dissimilar. Employee numbers are 4,000 whereas in Citizens it is 7,000.
Looking at the balance sheets, there are similarities and differences. Again a strongly deposit-led business, $13.4 billion of deposits but a very much smaller proportion of lending, loans and advances to customers, in this franchise and even the $6.1 billion I would suggest slightly overstates the lending position. Included in that is just under $2 billion of student loans which are 100 per cent guaranteed by the US Government and so, if you like, the risk element of lending is only about $4 billion.
Back into the pro forma world. You will appreciate that what we are buying is not an existing business, there is no figures to go to where we had the opportunity to pick the loans we wanted and to pick out parts of business, so what we are looking at here on the slide is a pro forma of the performance of that Mellon Division. That said, we believe this is a fair comparison with Citizens, we have put equity in there to try and align the two, and you will see at a glance that again it is just under half Citizens size in terms of profits before tax - very much less efficient than Citizens.
Beginning with what the business does, there are great similarities with Citizens. A very simply straightforward product range - rocket science does not feature in the Mellon product range or frame of mind either, and that isn’t a criticism, we do view that actually as a strength. So a very similar product range.
Some analysis of the opportunity, on this slide. The cost:income ratios are obviously different and we see that as clearly an opportunity. When you start to delve into the reasons for that, it is interesting, that it doesn’t so much come down to cost per employee it is back to this income issue again. I guess that is a by product of managing a business for return for a number of years, it is the income that suffers first. So it is not wildly inefficient in terms of cost, the reason the cost:income ratio is so high is the rather poor income performance.
In terms of lending, Mellon shift in a year the personal loans that Citizens will shift in a month, quite a dramatic difference between the two. You can see that the branch deposits and loan origination are just two different levels of achievement and performance.
So that is really why we have alighted on Mellon. It is in the right place, it is in the right type of business, it is in a condition that is ripe to be improved, it is ripe to be integrated and it is ripe to have its income trajectory reversed and put right. There are a number of uncanny similarities in fact to some of the issues we faced at NatWest to the issues we see in Mellon as regards income generation.
So what are we going to do? Well, the objective here is very straightforward. It is to focus on restoring growth, improving efficiency and increasing profit flow, principally from that restoration of growth although there are clearly some cost savings to be had.
Other things we are going to do: improving the customer proposition. This comes back I think to the reality of life that we cannot generate quality earnings unless we are looking after our customers and our people as well as our Shareholders. The customer is not getting a great deal in Mellon. We have been in and done quite a lot of mystery shopping, we have visited all of the branches and we have mystery shopped the operations.
This is not a good business to be a customer of. One of the mystery shopping anecdotes, people walking into the empty branches and milling about for 10 minutes and nobody talks to them. You go to open a checking account and you get recommended to another institution. Now I know we talked about that with some of you during NatWest, about how your own staff identify more closely with the customer’s interests than with the organisation’s and if your products get sufficiently far off the money the staff start to recommend the customer to go elsewhere. That is where we at just now in Mellon.
It is easily fixed. Citizens has got some strong products that can be wheeled straight in here, the basic money transmission account, and Citizens offers free ATM access and free bill payment. Now that doesn’t seem wildly exciting to UK retail banking customers but that is a point, that is not something that a Mellon customer enjoys at the moment. It has been very helpful to Citizens in growing their business and we simply roll that straight into the franchise, which is the point we touch on here. Our plans revolve basically around just doing what we do in Citizens, in Mellon.
Minimising the changes to customers: again rule number one, let’s not get the customers upset here, let’s not go in and cause any upset, let’s go in and just let the customer see. The first thing the customer will see will be improvements to the product and improvements to the service.
Invest in our people: there is no sales incentive programme in Mellon. We will put the Citizens XL Programme in straightaway. It is very similar to the programme we have in the UK. It gets our people focused on the things that matter, it gets them much higher or in this case it gets them a proportion of their income linked to sales performance and, funnily enough, that produces the sales performance.
No branch closures are envisaged as a result of this, there is no overlap. As I said earlier, we visited all of the locations, they are all in what we would term to be “A” locations, so we are content where the branches are; they are fundamental good and well placed.
Other elements of this: on this slide, this will all be ringing various bells I hope as this is basically conceptually identical with what we are doing in NatWest, with the one exception which I will touch on. We will establish a separate manufacturing capability in the US to service both of our businesses. We will be going on to the Citizens Alltel platform, it is readily scaleable. The Citizens product range basic functionality is very similar to this so we are not anticipating a very complex migration.
We will need to change brand which is not, as you know, our first choice in these matters. Presently we need to run with the separate brand, and Mellon are keeping their brand obviously. We have a transitional arrangement with them and so through to completion it stays as Mellon and for a period thereafter it stays as Mellon until we introduce a new brand.
A betting man would probably put money on it being “Citizens” as the brand we run with, but I think it is important that we go in and do the market research and the thorough diligence and understanding of what matters to our customers, because personally I don’t care about the brand but the brand has got to work in the market place and it has got to work for the customers, so it doesn’t particularly trouble me if it is not Citizens, if there is some other brand that works. As I say, a betting man would probably see the Citizens name over the branches, but that is something we will need to manage with considerable care.
As ever, getting the reporting lines clear at the outset, responsibilities established, the budgets established, the detailed plans. The due diligence process has been so extensive that we now have detailed implementation plans in place, that we can roll straight into, and we do anticipate a rapid transition process. And, as ever, our targets are closely aligned with management incentives.
This slide shows the simplified management structure, and again we have seen this before. We will have the two customer-facing businesses separate, a common manufacturing platform and all the head office and support functions common, and notably the credit function will go straight on to the Citizens credit function at the outset.
I have alluded clearly enough I think to some of the income issues. As we did with NatWest, rather than just say there is an income problem and we are going to fix it we have tried to go in and get some specificity around the things we are actually going to do to generate incremental income over and above base case.
This is not all we think we can do with revenue, we recognise there will be a base case growth behind this, but we can see specific things that need to be done and need to be done fairly quickly, and I have summarised them here on this slide. We reckon that the annualised effect in 2004 will be about $242 million of additional revenue which would have a P&L benefit of about $104 million - the number of initiatives are there at the side of the slide.
Can we do $242 million? Is it an achievable figure on top of base case? Well, it is only 8 per cent per annum income growth and this is a business that was basically actively managed into decline. There is considerable anecdotal evidence of people being chastised for obtaining more deposits than was in budget because budget was for deposits to decline. Mellon was trying to release capital from this business so branches actually securing more deposits were tying capital up - I just have great difficulty in identifying with that kind of strategy but that is the reality of what was happening!
We are starting from a low base here and so I don’t think 8 per cent per annum on top of base case is really pushing the boat out. As ever, we have the bottom-up action plans to do this, this is not just guessing at a number, and we have had them reported on by Deloitte & Touche.
How they will be implemented going forward: as this slide shows, a fairly straightforward progression there. I should mention that we don’t anticipate completion of this transaction until the last quarter of this year, November or December time by the time we get through the various regulatory approvals, so it is not that we plan to hang about during this year, it is just that we won’t be ‘in the chair’, as it were, to start implementing all of these.
In terms of the net impact on the P&L account resulting, those were gross revenue figures. On this slide, these are the post cost figures and P&L affected figures. That is the profile we envisage.
Turning to the cost side of the equation, same thought process - let’s bottom-up building up initiatives, what do we think we can do? We reckon basically we can do just around about $100 million from 14 initiatives. Is $100 million the right number? Well, I think we could probably do more than $100 million but $100 million is a fairly safe number. We have to recognise it is only about 8 per cent of the pro forma cost of the combined organisation. It is 22 per cent of the smaller party’s cost which is another one of these sort of benchmarks. If you remember the NatWest situation, the figure was 37 per cent of the smaller party’s cost.
Now there are clear differences here from the NatWest situation, there isn’t the same physical overlap and there isn’t quite the same degree of physical de duplication, but by the same token we are basically turning off an IT platform, we are turning off the all the head office functions, we are turning off the credit functions, so there are some pretty big costs to take out here. We have got a bottom-up plan and at $100 million we are comfortable that we can deliver that number to you.
We covered this slide, it is again based on a bottom-up analysis and we have had them reviewed by Deloitte & Touche. In terms of phasing of those (cost savings), we think they will be implemented in this sort of profile, quite a lot upfront, a higher proportion in the first year than was the case in NatWest.
The next slide, the impact on profit and loss following, I think is self evident.
In terms of integration costs, the exceptional charge, this slide shows what we think will happen. We can start doing some of it we think at the very end of this year as almost on day one you can go in and start doing some things. We think we can achieve that at that point.
This slide shows I suppose a sort of summary common sense test. We did this again in the NatWest transaction. Just taking the current businesses, adding them together based on their current numbers and applying our revenue synergies and our income synergies, to say now do these look completely stupid? Is this taking us to somewhere it just doesn’t seem possible? I think the short answer is, no, it doesn’t take us somewhere that is impossible.
The notion that we could get this business down to 51.8 per cent I don’t think is at all challenging, in fact, I think it would be rather disappointing if we only got to 51.8 per cent. Citizens is already below that figure and my sense of the natural cost:income ratio for this part of the business is much lower, and I think I would take comfort from that slide that we can deliver these numbers.
Let’s look now at some of the specific financials around the transaction. The amount we are paying to Mellon, the consideration, when you look at the Mellon releases and so on, the price they will be mentioning is the same as the price we are mentioning of US$2.1 billion. That is the cheque, if you like, that we will be writing to them, determined as being negotiated as a premium on the deposit base, so whatever the deposit base is on the day will be the price we will pay. There are certain caps and callers around that but it will fluctuate around what we think; we will pay them that percentage of the deposit base on the day. As I mentioned earlier, we are getting $13.4 billion of deposits. Is 16 per cent a sensible number? Well, yes, we think so.
I just highlight on this slide some recent transactions and the deposit premiums paid there.
A feature that is relevant also to note is that because what we are paying to Mellon is exclusively goodwill the tax treatment of that in the US is that will be tax deductible in our hands, so there is a not insubstantial tax benefit comes from that as we amortise the goodwill over a 15 year period. Taking into account the price and the capital we need to put into the business we comfortably exceed our hurdle rate of 12 per cent post-tax - we comfortably exceed that!
We calculate the impact in the first year as broadly neutral and thereafter accretive to our Shareholders. I think that helps to take the pressure off in terms of the need to do other transactions. If we don’t do another deal that’s fine, this is accretive to our Shareholders. Sometimes you get yourself into a situation where when you are making a strategic step up the first transaction you try and justify - the fact is it is dilutive because it creates a platform for the next one, and I am sure you have heard this. I was perhaps kind of winding myself up a little bit to think our first one could well be justified if it was dilutive; it is a very happy state of affairs I think that this is accretive in its own right and so it takes the heat off in terms of any need to do a subsequent transaction.
As to timetable, there are no Shareholder approvals required on the Mellon side or on our side, regulatory approval is required and that is being worked on and, as I said earlier, we anticipate completion by December of this year.
What have we been doing to check that we are not buying ourselves any problems here? A very expensive due diligence exercise covering quite a number of different aspects, not just the sort of ‘sanity’ checks on the assets and liabilities being acquired, but also to look at the business and get a clear understanding of whether we will be able to turn the revenue around and get an understanding of precisely what needs to be done.
As you can see from the slide, across quite a number of areas were addressed with separate teams, all of them featuring a majority of people who have done this several times before. The due diligence exercise was pretty substantial, we had about 4,000 man-days of effort that went into it. It wasn’t constrained in any way and we could have carried on and done more, but really felt at that point that got us to where we needed to be.
The loans: you would not have to spend too much time thinking what you wanted specifically to look at in due diligence to work out that you wanted to look at the loan book. It is a particularly good time to be doing due diligence in the United States because any thoughts you might have had of bringing the ‘rose-tinted spectacles’ with you could be instantly abandoned; this exercise was conducted against a very cynical outlook as to credit quality.
But in looking at the portfolio, I mentioned earlier the student loans which are US Government secured loans, they are 100 per cent secured by the US Government, so we did not spend too much time on looking at those. The consumer loans of $600 million, there is a very large number of them. We did some statistical analysis there and satisfied ourselves on their credit processes around those. The other portfolio: it is possible to get very high coverage in terms of value coverage and we have achieved 77 per cent and 95 per cent respectively in terms of the loans we have looked.
The due diligence process has been used by Citizens for some time now. It is not just a case of people sitting in darkened rooms flicking through loans files and going, ‘yes that is okay, that is okay’. We go through a mock credit committee process where the reviewer is required to review the file and prepare a submission which then goes before a credit committee of ours which determines whether we do or don’t like the loan. I think that brings quite a considerable degree of rigour to the process and it takes a lot of time but it has proven in the past to be pretty reliable. On this occasion we had the opportunity to ‘cherry pick’ the loans we wanted to take, so anything we didn’t like the look of we just left behind.
Provision coverage: we have taken some non-performing loans, more as a sort of tactical exercise on the basis that then enabled us to take the $75 million provision that came along with them, so we are about 300 per cent covered on the apparent NPLs. That compares with Citizens and that would put us well into the top quartile in terms of that coverage amongst US banks.
Other features of this transaction that are worth bearing in mind when you are hitting due diligence mode is that because we are buying part of a business and we are buying it from a vendor who will continue to be in business we have extensive representations and warranties. This is a friendly transaction. We have known Mellon for a long time and we are going to be ‘holding hands’ as we go forward with this business until we de-couple. Mellon is very anxious to ensure the aftermath of this transaction in their local community, which is quite tight, that this goes smoothly and well, and so that influences the process and influences the outcome.
We have got indemnification for two years in terms of breaches and so forth and we have got a very comprehensive servicing arrangement to cover those things upon which we rely on Mellon from day one until such time as we bring them on to our own platform.
Now I think it is only fair when we are asking our Shareholders for support that we provide our best insight into how the business is currently performing. In an ideal world we would be having this conversation in a couple of weeks when we do our full Interim presentation in the normal fashion. We are just short of being in a position today where we could do our full Interim presentation, so what I am going to tell you now is I think in technical terms a profit estimate.
The six months to June 2001: all the business units are performing well. All the performance trajectories you could see during the course of last year and in last year’s year end results are continuing into this year. Integration of NatWest is fully on track; IT integration is fully on track, all of the progress we are making on the revenue synergies and the cost synergies are exceeding our targets as we were at the year end. Those sort of trajectories have continued into the current year; there are no discontinuities in there.
Our income is up by 14 per cent across the Group. Our costs are down by 1 per cent. Provisions are up by 19 per cent in a period when the book has gone up probably by about 15 per cent. When you turn this around, we are going to be talking a lot about and I suspect there will be one or two questions about provisions today, and I am intent on talking a lot about provisions at the full Interim Results announcement because I think there are many popular misconceptions floating around at the moment.
Let’s just be clear, as a proportion of our loan book the fluctuation we are seeing here is something like 0.03 per cent. This is not indicative of any change in credit quality or any concerns that we have about credit quality. As I repeatedly and painstakingly say every time we talk about the P&L charge, the P&L charge doesn’t matter, what is important is the level of provision you carry against your book. You can’t manage the P&L charge, you can only manage your book and you must always be provided adequately, and that is where we are at.
All of that taken together, our profit is up 37 per cent to £2,751 million. I mentioned earlier this is a profit estimate. Believe me, that is the profit figure. I don’t have 10 per cent up my sleeve or 5 per cent - well let’s not go into that! - but I certainly don’t have 10 per cent up my sleeve as people sometimes assume you always do in profit estimate. It is another happy coincidence that the number just ends with a “1” again - that is the profit number you will see!
A number that you know I know and love is the cost:income ratio because I think it is such a key metric of our business. I am pleased at the progress on that front. There is a lot more to come but we are down to 48.1 per cent at the end of the six months as against 55.7 per cent this time last year.
The credit quality remains strong. It is probably appropriate to touch just on that issue again. The Trading Statement seemed to wrong-foot some people and that is no-one’s fault other than mine. Clearly I am sorry if we have wrong footed anyone because it is never our intention to wrong-foot people, but any thought that we were trying to send coded messages or hidden message it is really not our style. There are no hidden messages in there.
Credit quality has deteriorated marginally, in absolute terms it remains strong. If company profits go down that causes credit quality in a measured sense to go down but it doesn’t take it anywhere near a point where we are concerned about provisions. So there were no hidden messages, credit quality was strong and we see it continuing at strong levels, albeit it fluctuates as the well-being of our underlying customer base fluctuates. We will be returning to this subject at length at the Interim Results presentation.
Also, the outlook on margins. I said last year at this time that we saw margins for the remainder of last year as being flat and I think that was viewed with total incredulity; sure enough, our margins were flat. I said that going into this year we could perhaps see as interest rates got lower a greater pressure on margins but it was kind of a few bases points.
The margins we are looking at in the first half are basically flat but as interest rates stable there are structural pressures which come on, there are a few bases points, so I am not losing any sleep about margin and I would encourage you not to do so either. Also bear in mind that well over half our income is not margin, but we will talk more about margin and I think it is easier to talk about margin when I am giving you the full Interim presentation.
To summarise then. We see market extension as a logical thing to do in the United States, and I know we have talked with many of you individually about that, and we have talked to these presentations before. we think this is a good transaction not just in terms of the fact, that it is a market extension, but in its own right the numbers stack up and make sense. It is a low risk transaction of a business in which you have got clear growth opportunity.
It opens up a number of strategic options for the future, and I must stress options. We don’t have to do anything but the range of things now which are do-able is much greater than it was. We will see whether we do any of them but it certainly feels better to have the option than not to have it.
All of this takes place against a backdrop of very strong growth in the Group income and the profit, and growth that is spread across our business units and growth that is very much in line with the promises and hopes that I think we articulated in respect of the business.
Our outlook is still positive. There seems to be more economic hypotheses out there than you can shake a stick at, at the moment, and I don’t know which one is right. I make it my business to not try and alight on a particular scenario but to try and position our businesses such that we will be able to prosper and generate superior earnings for our Shareholders in any credible scenario and I remain confident that we are able to do that.
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