Executives
Renato Fassbind - CFO
Christoph Brunner - COO of Private Banking
Larry Haber - COO of Asset Management
David Mathers - Head of Finance and Strategy of Investment Banking
Analysts
Jon Peace - Lehman Brothers
Matthew Clark - KBW
Kinner Lakhani - ABN AMRO
Jeremy Sigee - Citigroup
Georg Kanders - WestLB
Peter Casanova - MainFirst
Derek de Vries - Merrill Lynch
Huw van Steenis - Morgan Stanley
Kian Abouhossein - JPMorgan
Philipp Zieschang - UBS
Anke Reinken - Execution
Claudia Meier - Bank Vontobel
Peter Thorne - Helvea
Credit Suisse Group (CS) Q3 2007 Earnings Call November 1, 2007 5:00 AM ET
Operator
Welcome, and thank you for joining the Credit Suisse Group third quarter 2007 results conference call. (Operator Instructions).
At this time, I would like to turn the conference over to Mr. Renato Fassbind, Chief Financial Officer of Credit Suisse Group. Please go ahead, Mr. Fassbind.
Renato Fassbind
Yes. Thank you and good morning for joining us for the Credit Suisse third quarter 2007 results presentation. I assume that you have downloaded the slide presentation and related materials from our website. This earnings call we will follow the usual format you know already from Q1.
First, I will walk you through the presentation and then we will be happy to answer any questions you may have. And for that I will be joined by Christoph Brunner, our COO for Private Banking, Larry Haber, our COO for Asset Management and David Mathers, our Head for Finance and Strategy of the Investment Banking division.
On slide two let me first remind you of the cautionary statement regarding this presentation. Let me begin the discussion of the results with slide three. Extreme market conditions and events characterized to the third quarter of 2007, affecting many of our businesses and leading to lower financial results in the period.
Results for the first nine months of the year, however, reached record levels as our global diversification and balanced business mix helped us to mitigate the overall impact of the more difficult operating environment and sustain solid profitability.
Net income in the third quarter was CHF1.3 billion, 31% lower than in the third quarter last year which included income from discontinued operations of CHF424 million. This was result in line with our guidance given at the end of the quarter, expecting a net income of CHF1.3 billion plus minus 20%. Income from continuing operations was down 11%, and diluted earnings per share stood at CHF1.18 for the quarter.
For the first nine months of the year, net income totaled a record CHF7.2 billion, driven by record contributions from Private Banking and Investment Banking.
Diluted earnings from continuing operations per share for the nine months period increased 31% to CHF6.43 and return on equity improved to 22.5%. The quarter also included a significant positive contribution on the tax line. We recognized a deferred tax asset in the amount of CHF350 million. This was in respect of prior year losses in the U.S. and does not relate to this quarter's performance.
Our overall operating performance, although affected by the challenging market, has outperformed compared to our peers. We know our risk exposures, and, although the market impact was more severe than expected, we continue to manage and monitor the risks diligently through these challenging markets.
Let me turn to our nine months performance on slide four. Pre-tax income in Investment Banking stood at CHF4.5 billion for the first nine months of the year, with a pre-tax margin of close to 28%.
The nine months pre-tax income in Private Banking increased to CHF4.1 billion, which is 19% up on last year's level, with a pre-tax margin of 41%. The nine months pre-tax income in Asset Management stood at CHF601 million, up on reported results from last year. The pre-tax margin in that division stands at close to 27%.
Let me continue with slide five. We continued to make progress on our cost management initiatives as revenues grew by 13% and growth in total operating expenses was contained at 9%.
We are making good progress towards our commitment to achieve top quartile levels of efficiency, and we are confident that we can achieve substantial gains going forward by re-engineering systems and processes and by streamlining our operating capabilities.
Let me look at the results in Investment Banking, starting on slide six. Investment Banking results declined sharply, driven to a large extent by the dislocation of structured products and credit markets.
We booked a CHF1.1 billion fair value write-down on our funded and unfunded non-investment trade loan commitments net of fees and hedges. These value adjustments amounted to CHF2.2 billion before taking account of fees and hedges.
These markdowns relate to our pipeline of leveraged acquisition financing, including both bank loans and bridge loans. These marks are on our total amount of leverage loan commitments.
Let me repeat. We marked the entire book as at the end of this September and look at each loan component separately. We also do not assume that agreed loan terms may be restructured prior to funding.
We look at trading activity in the market to confirm the marks and feel very confident about the data used to determine the marks. In this regard, we have seen some transaction activity right at or are subsequent to the end of the third quarter which we believe further validates the values we have assigned to our position.
Let me give you some details on the size of the commitments and how these have changed during the quarter. At the end of the third quarter, our funded and un-funded non-investment trade commitments stood at $52 billion, up from $39 billion at the end of the second quarter. This increase resulted from commitments we expanded on a few large transactions in early July, following several months of negotiations with the deal sponsors.
In addition, we were not involved in the vast majority of the transactions that were brought to the market in late July, August, and early September, as our forward calendar going into the quarter was more skewed towards the fourth quarter and early 2008.
At quarter end, only around $8 billion of our commitments were funded, including transactions in the process of being securitized. This demonstrates our disciplined approach to this business in the recent environment and our strong distribution capabilities. In fact, several major commitments in place at the end of the third quarter have been successfully executed.
In structured products, the mortgage sector continued to experience liquidity challenges and increased delinquencies. The recorded markdowns of CHF1.1 billion related to our structured products business including RMBS, CMBS, and CDOs, net of fees and hedges. On a gross basis, we recorded markdowns of CHF2.5 billion.
Let me give you some further detail on this CHF1.1 billion markdown. In broad terms, the markdown is equally split across the three product areas mentioned; RMBS, CMBS, and CDOs. In addition, it's important to note that the impact from subprime exposures was slightly positive in the quarter.
As we indicated with our second quarter results, we continue to feel comfortably positioned in terms of our balance sheet exposure to residential subprime, as evidenced by the positive contribution during the third quarter. And our CDO exposure is a fraction of what has been recently disclosed by some of our peers and is de minimis.
In our trading operations, our specialists are responsible for making their positions on a daily basis with price testing and verification performed by a separate and independent function, our product control department, which, by the way, reports to me.
We have processes in place to ensure that the reported fair values, including those derived from models, are appropriate and determined on a reasonable basis. Independent functions review and refine the mathematical models used to calculate the value of our complex products.
Finally, I want to add that we have very limited exposure to commercial paper conduits, an activity that we have historically avoided. Regarding CIF, let me clarify that we do not sponsor any of these structures, and have a limited amount of liquidity lines with well capitalized third-party entities that have negligible exposure to subprime.
Let's look at the Investment Banking businesses in detail, starting with fixed income trading on slide seven. This is obviously the area that was most affected by the valuation reductions I have just mentioned.
At the back of this presentation, on slide 22, you will find a slide that shows you how the total CHF2.2 billion in net valuation reductions are reported within Investment Banking revenues. Fixed income trading includes marks in the amount of CHF1.6 billion.
In addition, the U.S. high grade business was negatively impacted by widening credit spreads, particularly on financial institutions with subprime exposure, and the decrease in market liquidity.
The commodities business also recorded lower revenues due to poor trading performance in the energy sector. We continue to build out our commodities business with the objective of a more balanced, diverse platform. We recorded strong performances in interest rate products, on higher volumes and a shift to higher quality credit instruments in the quarter.
The life insurance finance business and emerging markets trading also had strong results during the quarter. Fixed income trading also included a fair value gain of CHF560 million due to wider spreads on our long-term debt.
Fair value adjustments in our long-term debt act as a hedge against movements in credit spreads in our earnings. The mark-to-market gain on our liabilities reflects the same general market movements in spreads we saw in our loan portfolio.
We'll now continue with the equity trading results on slide eight. These results reflect a strong performance across our cash derivatives and client services businesses, offset by losses in certain equity prop trading strategies, including approximately CHF300 million in quantitative trading strategies.
This loss is primarily related to the statistical and risk arbitrage strategies. We have deployed some of these strategies in our equity trading operations with great success, for some time.
In August, however, decreased investment-risk appetite coincided with a substantial increase in equity market volatility, the result of an extremely negative cycle of sharp, rapid declines in stock prices unrelated to fundamental values and, in turn, unanticipated losses in our portfolio. Over the long run, and showing consistent application, we nevertheless believe this investment approach should continue to be successful.
On the positive side during the quarter, the cash business benefited from the increased deal activity, trading volumes and client flows, as well as the continued strong performance of AES, our industry leading, automated trading platform.
Prime services revenues increased by over 50% compared to last year, as our global platform benefited from growth in client balances and new client mandates. Equity derivatives results improved significantly relative to a weak third quarter last year. And equity trading also benefited from a fair value gain of CHF62 million due to wider spreads on our long-term debt.
We will now continue with the advisory and underwriting results on slide nine. Debt underwriting revenues declined 81%, reflecting lower levels of activity and markdowns of CHF199 million on structured product positions, predominantly CDO assets.
Equity underwriting increased 46% due to higher levels of industrywide equity issuance as well as improved market share. Compared to the previous quarter, equity underwriting declined in line with the lower level of industrywide equity issuance activity.
Advisory fees increased 17% from last year in line with higher market activity, partially offset by lower revenues in the private funds group, which raises capital for hedge funds, private equity and real estate funds. The decrease compared to the previous quarter was driven by lower M&A activity versus a strong second quarter.
Many of you have raised questions about the outlook of the M&A business, as it was recently driven by a very active financial sponsor client base. While we have seen a slowdown in sponsor activity in the U.S., sponsor activity in Europe and Asia, particularly in the emerging markets, continues to be strong.
Corporate activity in the U.S. has also picked up as asset prices have come down a bit, and sponsors no longer represent the very aggressive competition. And let's not disregard the amount of money sponsors still expect to put to work.
It is our likely scenario that, as soon as the banks distribute the majority of the commitments sitting on their books, acquisition finance will pick up again, although at somewhat lower leverage levels. Slow deals smaller ones for now, have already begun and we expect this to continue.
Let me continue with cost in IB on slide 10. Compensation to revenue ratio was 40% in the quarter. The current quarter's calculation was applied consistent with the first half-year. There has been no change in our approach to share based awards or in our assumptions regarding compensation deferrals. But the cumulative nine months, the ratio is at 50% and is now running in line with the full year 2006. However, the final compensation, and let me just be very specific, the final compensation levels for 2007 will be determined based on the strengths and breadth of the fourth quarter results.
G&A expenses were flat on the same period last year, but up slightly on the previous quarter, primarily from higher transaction related fees. Most other general and administrative expenses declined.
We clearly remain focused on cost initiatives in the Investment Bank and the progress we have made, to-date, helps us through these more challenging markets. But we are still committed to driving absolute costs lower from the levels we are currently at.
Let me move to Private Banking, starting with slide 11. Wealth Management recorded pre-tax income of CHF900 million, which was up 32% on the same quarter last year. Pre-tax margins remain strong at the year-to-date, ahead of the 40% target. It is a good result in light of challenging markets with increased volatility leading to changes in clients' confidence and risk appetite.
We saw a relatively high level of client activity until mid August, despite the usual summer slowdown. This was followed by lower client activity in the volatile markets persisting until mid September. We then started to see signs of some return in clients' confidence and activity until the quarter end.
In this volatile period, we saw a degree of rebalancing of client assets from equities into bonds and cash, and some signs of deleveraging. There was also an increase in demand for total return product.
Let's look at the revenues on slide 12. We have seen a strong development of our recurring revenues. As you can see, they're up 29% on the same period in 2006, and up 21% in the year-to-date comparisons.
Recurring revenues have now risen to represent close to 70% of total revenues, as we have seen higher commissions and fees from the growing asset base and focus on sales of managed assets. We have also seen higher net interest income from lower funding costs and higher liability margins and volumes.
Our transaction-based revenues were also up year-on-year by 23%, from higher brokerage and issuing fees. They fell compared to the previous quarter as the summer slowdown and reduced client activity took effect.
Let me turn to the gross margin and asset development on the next slide. Looking first at gross margin, you can see our gross margin is at 112 basis points for the quarter. In the nine months year-to-date figures, we see a steady progression of three basis points, reflecting the higher recurring revenue streams and lower transaction based margin.
Looking at net asset inflow, we see net new assets of CHF9.7 billion in the quarter. Our annualized growth rate in the quarter was 4.5% but looking at the rolling four quarters rate, it was 6.2%, thus ahead of our 6% target.
I will continue with Corporate & Retail Banking on slide 14. Sound economic fundamentals provided a continuing positive environment, as pre-tax income rose 15% to CHF389 million.
Net interest income benefited from higher liability volumes and margins and lower funding costs, which partially offset by lower asset margins. We continue to see a low level of new provisions and overall a small net release of credit provisions.
With that, let me move to our third segment, to Asset Management, with slide 15. Asset Management recorded a pre-tax income of CHF45 million in the quarter, down significantly against both comparable periods. Market conditions, primarily reflecting the extreme liquidity situation, adversely impacted our overall results in two areas.
First, we saw significant outflows in our money market funds and, as a result, we took steps to reposition certain of our U.S. money market funds and purchase securities from these funds. These securities, including asset backed commercial papers, floating rate notes, and notes issued by structured investment and CDO vehicles.
We put valuation reductions on these securities in the amount of CHF146 million. We purchased these securities to address liquidity concerns caused by the U.S. market's extreme conditions.
Second, we recorded lower private equity gains. Outside these effects, our business showed momentum, with stable margins and healthy new asset inflows in higher margin businesses.
As shown on slide 16, revenues before the CHF146 million charge and private equity gains, totaled CHF681 million, that is up 3% from the previous quarter, and up 13% from last year. And as shown below the chart, the gross margin on assets under management remained stable at 37 basis points for the quarter.
As shown on top of the chart, private equity gains declined to CHF59 million, adversely affected by the challenging market conditions during the third quarter. Our strategy of geographic diversification in private equity has made this business less dependent on the U.S. private equity cycle, as we saw gains increase in the non-US margins.
Finally, a brief comment on net new assets in that segment on slide 17. Actually we saw net new money outflow with CHF21 billion net during the quarter. It is driven by an out flowing money market assets of CHF27 billion, mainly for corporate, offset by continued good inflows of CHF7 billion in our higher margin assets, including balanced and alternative investments.
With that, let me make some comments on capital management on the next slide, number 18. First, our share repurchase program. As a result, to be prudent, due to the challenging operating environment, we have been reducing our share buyback activity, but expect to complete the CHF8 billion repurchase program during 2008.
As of today, we are at CHF3.7 billion, with two more months to go until year end. Our Tier 1 ratio reduced by 100 basis points to 12%. As you can see from the chart, risk weighted assets remain flat, but the Tier 1 capital is down. This is due to reduction in shareholders' equity, as the contribution from net income was more than offset by share repurchases and foreign exchange-related translation adjustments.
In terms of our funding positions, our liquidity and funding measures and a strong capital base helped us to maintain a comfortable liquidity profile throughout the dislocation of the market during the third quarter. We consistently had good access to funding sources, also benefitting from our large and stable customer deposit base.
From a risk perspective, I would describe the third quarter as a period of stress in terms of market events, as we began reducing our risks at the end of last year and continued managing down this risk in the first half of 2007.
Not surprisingly, we have experienced seven VaR tax testing exceptions during the quarter. Market events we saw in the quarter went well into the tail end of the distribution curve of our VaR models, which were in line with expected outcomes from our stress testing simulations. The financial result, although significantly down against previous quarters, was within our range of expectations, given the severe market events combined with the risks we have taken.
Go to slide 19. In summary, we remain committed to our key performance indicators as shown on this slide and our goals over the medium term, namely: a double-digit diluted EPS growth rate; two: a growth in net new assets of about 6% over the cycle; three: a return on equity above 20%; and four: top quartile efficiency ratios.
We are now seeing encouraging signs that conditions are improving in a number of areas, although it is too early to predict when the effect of market segments will return to more normal activity levels.
The global economic fundamentals remain healthy. Capital formation and wealth creation continue at high levels, with the emerging markets playing an increasingly important role in global growth. These trends are driving convergence in the financial needs of private, institutional, and corporate clients, and demand for sophisticated financial capabilities that transcend traditional financial categories.
Turning to slide 20, let me conclude with a few comments on the relative strength of our results. Our performance in the third quarter meant the progress made on the nine months basis reaffirmed the importance of our integrated global business model, in driving revenues and enhancing efficiency throughout the entire market cycle.
We recognize the importance as an integrated Bank of expanding and diversifying our revenue streams, particularly within investment banking. We are accelerating the growth of high-priority businesses, including commodities, derivatives and prime services.
In addition, we are continuing to expand our private banking presence in key growth markets, driving growth initiatives centered on high margin capabilities within asset management. Our integrated global business model also enables us to improve our operating leverage. Enhancing our efficiency and continuing to reduce our costs remains an area of strategic focus.
With that, I would like to ask the conference operator to initiate the questions-and-answer session.
Question-and-Answer Session
Operator
We will now begin the question-and-answer session. (Operator Instructions). The first question is from Mr. Jon Peace, Lehman Brothers. Please go ahead, sir.
Jon Peace - Lehman Brothers
Yes, morning. I had two questions, please. The first one is just on your balance sheet exposures and your write-downs. I just wondered: if you could give us a bit more color on the level of CDOs, RMBS and CMBS against which you took your charges? I think you said your CDO was de minimis, do you mean: less than CHF1 billion? And: what was the size of RMBS and CMBS? And the charges you took on those instruments: are you happy with those charges as you see things today on the 1st of November having seen the market deterioration in the last month?
And the second question was just on your capital situation. Under Basel II, I think you had indicated just before you expected to be slightly worse off. What kind of impact do you see from that now? And, with your recommitment to the accelerated share buyback, what do you foresee for dividend growth next year? And: do you see your dividend basis as CHF2.24 or CHF2.70? Thanks very much.
Renato Fassbind
Okay, thank you for the question. We are not giving our present exposures we have on the balance sheet in numbers on the items you mentioned. As we said, both in subprime and in CDOs, they are de minimis. I think on the residential mortgage area, we are pretty well-positioned there, and, of course, CMBS is an important business for us, as you know from the past, and that is an area where for the time being more comfortable with the assets as well.
So, coming back to your question, if the charges reflect what we feel it should be. I have to be very clear on that, that this is at the end of the September, and we fair value our positions on an almost daily basis in some of the areas and that is what we felt according to the models and according to the market data we had the right positioning.
On the capital question, you asked the -- I lost myself. The Basel II, sorry, yes, of course. The Basel II impact, as you know, we have indicated a number of some 15% or 1.5 percentage points in Tier 1 ratio at the target of 10% Tier 1 ratio. We are comfortable that we will be within that. It might even slightly be better than that at the end of the day, but we maintain that for the time being.
And, as I said before, we are committed and confident that we finish the announced share buyback program of CHF8 billion early -- already in 2008 rather than in 2010.
Jon Peace - Lehman Brothers
Thanks. And, just on the dividend: do you see your base next year as CHF2.24 or CHF2.70? And: do you plan to grow that in conjunction with the buyback? Thanks.
Renato Fassbind
That has a lot to do now with how the business goes, and we haven't taken any decision on that. As you know, we are focusing on a dividend per share policy where we want to have decent increases over time. But, it's too early now to say anything about the dividend.
Jon Peace - Lehman Brothers
Okay. Thanks very much.
Renato Fassbind
Welcome.
Operator
Next question is from Mr. Matthew Clark, KBW. Please go ahead.
Matthew Clark - KBW
Good morning. A couple of questions: First question is just on the Private Banking division in both the inflows and the hiring there which have sometimes been lower than the peer group. I'm just interested: why you're not willing to be more aggressive in terms of your ambitions there? Why stick to the 6% inflow target when you generated above that in recent history when the peer group…?
Renato Fassbind
Hold on, can you hold on a second because we can hardly hear you.
David Mathers
Did you say private banking inflows and hiring or investment banking inflows and hiring, sorry?
Matthew Clark - KBW
I'm sorry I'll start again. The question was on the Wealth Management business, and the inflows and hiring there. Basically: why are you not being more ambitious with your targets, given both your recent history on inflows and also the levels being generated by the peer group?
Renato Fassbind
Christoph: can you take that?
Christoph Brunner
Actually our target is really to have 3,500 RMs in Wealth Management by end of 2009. In 2006 net new numbers are up by 110, in 2007 so far by 190, so we really expect that we are reaching our target because we are showing good momentum.
And we also have a very good hiring pipeline looking forward. However, as we mentioned also in the past, we are not prepared to take new RMs on board for every price. So, we are also looking really at our performance and productivity figures.
Matthew Clark - KBW
Okay, but there are members of the peer group who are able to hire at materially faster rates, while still maintaining their profitability. I'm just interested: whether you're still happy with your model or whether you're reviewing your strategy there?
Christoph Brunner
Actually, we're still happy with our model and we have no plans to change the model.
Matthew Clark - KBW
Okay. Thanks very much.
Operator
The next question is from Mr. Kinner Lakhani, ABN AMRO. Please go ahead, sir.
Kinner Lakhani - ABN AMRO
Yes, hi. Two questions, firstly just a follow-up on Wealth Management. Clearly, the revenue margin was quite resilient. I was wondering: if you could look ahead on that one and see where you think investor confidence and the revenue margin could go in the near term? It could be that the revenue margin in the short term in the third quarter was just supported by repositioning. Do you see a dent on investor confidence?
And the second question is really in terms of the assets bought out from the money market fund. How do you feel about the potential for further markdowns going forward on that area?
Renato Fassbind
I would assume you mean pre-tax margins in Wealth Management, right?
Kinner Lakhani - ABN AMRO
The revenue margin, I apologize.
Renato Fassbind
The 112 basis points?
Kinner Lakhani - ABN AMRO
Exactly.
Renato Fassbind
Okay. As we said in the past, we see no reasons why this should not be sustainable going forward, and I think we are on track in keeping that at that level. And, from that perspective, we are confident.
Kinner Lakhani - ABN AMRO
And investor confidence, you think, is not dented yet, basically?
Renato Fassbind
Say it again?
Kinner Lakhani - ABN AMRO
Investor confidence is not dented yet?
Christoph Brunner
Looking at investor confidence, or at volumes, this really picked up since end of September, so we had a very good October, so to say. Looking at our margin development what you really see is that we increased our recurring margin and this is our strategy.
As you know, we launched some initiatives like excellence in price management, like increasing the share of managed assets, and this really helps to increase the recurring margin. In addition to that lower funding costs also helped.
Renato Fassbind
The other question, Larry?
Larry Haber
On the value adjustment that we provided for the money market securities acquired by [technical difficulty] we're comfortable with the valuations that were provided, and those valuations were managed through exactly the same process controls, in many instances the same individuals that do similar work for the Investment Bank. So we're comfortable with those valuations at the end of the quarter.
Kinner Lakhani - ABN AMRO
And: would you be comfortable as of today with those valuations?
Renato Fassbind
This is of course something we can't answer, because we are fair valuing all our positions on an ongoing basis and we don't give any fourth quarter results yet.
Kinner Lakhani - ABN AMRO
Okay, thank you. That's fine.
Renato Fassbind
Thank you.
Operator
The next question is from Mr. Jeremy Sigee, Citigroup. Please go ahead, sir.
Jeremy Sigee - Citigroup
Thank you. A couple of questions, please. One: just a clarification, the discussion earlier on about the markdowns. I just wanted to be sure, you're saying that you marked to the 30th of September, and my question would be: is that correct? And also: if you had seen further deteriorations, like other people, would you have had to adjust the mark for what you'd seen in October? So, that's the first question.
The second question was on costs, actually, mainly in the Investment Bank. Could you clarify how your comp accrual is calculated? Is it done as a percent of revenues or as a percent of profit pre-bonuses?
And then thirdly, I guess, on Investment Banking: could you talk about the non-comp costs? You mentioned why they've gone up: could you talk in a bit more detail on that? And: should we expect those to come back down again in the next quarter?
Renato Fassbind
Let me take the first question first on the marks. Again, we are fair valuing our positions at almost on a daily or weekly or monthly quarterly basis and, of course, we did so at the end of September.
And on that date, we are communicating that and I will not give any indications on how these have moved now in the quarter. And, as they are fair value marks, they can move both ways, depending on how the markets move. So you have to accept that we are not giving any indications about fourth quarter now.
Jeremy Sigee - Citigroup
Sorry to interrupt, but at other firms, if there had been a significant movement in October, they would feel compelled by their accounting rules to make the adjustment even in reporting these 3Q figures. Are you saying that your rules don't work that way, you simply mark at 30th of September?
Renato Fassbind
Whatever our peers did, that's on their own discretion, and if they felt compelled, because they have their own problems, to come out with some October numbers that is not what I'm doing here. We are talking about the third quarter and I don't give any indication on how the fourth quarter is going at that moment. So that's typically normal practice.
Jeremy Sigee - Citigroup
Okay.
David Mathers
Moving on to your compensation question, moving on to the compensation point, we look at our compensation on the basis of the results for the year-to-date, and the amount of compensation that we expect to pay people. That's clearly driven by the revenue performance; it's driven by the business performance.
I think we've made it clear in the first two quarters comments that we would expect to true up the accruals we've made in those first two quarters as we went through the year. And then, when we got to this point in the year, we looked at the 50% ratio as being about right on the basis of the performance we'd seen for the first nine months.
I think as Renato commented in his presentation, clearly the full year out term will depend upon how we actually do in the fourth quarter and how the whole environment proceeds over the next few months.
Just on the non-comp costs, I think that clearly they are slightly up against the Q2 number and slightly down against the number a year ago. I think two points. I think we've consistently cautioned against looking at non-comp as a percentage of revenues because I don't think it's particularly helpful or gives a particularly clear indication of where things are going.
And the answer to: why the number actually went up slightly in the third quarter against the second quarter? There are a number of small factors, but I would point to two factors. There was some stamp duty costs relating to our Brazilian business, which came through in Q3 and there was also some recruitment costs, which we actually book in this line as well basically.
Jeremy Sigee - Citigroup
And so: can we expect that to continue its downward progress as in recent quarters?
David Mathers
I'm not going to make a comment.
Jeremy Sigee - Citigroup
Okay.
David Mathers
I would say that the [IBNA], the Bank as a whole is very committed to its cost program. We're continuing to do a lot of work in this area and, I think, we're generally pleased with how that's going. But there's always going to be one-off items in any particular quarter which can influence the trend.
Jeremy Sigee - Citigroup
Sounds good! Thanks very much.
Renato Fassbind
You're welcome.
Operator
The next question is from Mr. Georg Kanders, WestLB. Please go ahead, sir.
Georg Kanders - WestLB
Yes, I would like you to elaborate a little bit more on your trading losses in equity, as you mentioned the part of the CHF300 million in the special strategy. But: are the losses in other trading areas significant or are they really negligible?
David Mathers
Sorry, we couldn't quite hear you. I think the question was about the equity trading business and the CHF300 million of losses we actually disclosed in Q3. Is that correct?
Georg Kanders - WestLB
Yes, but, as I read from the statements these CHF300 million: are not all the losses in the equities?
David Mathers
No, that's correct. Those are the ones that we -- I think clearly equity prop is a volatile business, and in fairness the CHF300 million that we disclosed in the third quarter relating to the quantitative and risk strategies, we thought it was meaningful to disclose them because I think of the unusual conditions we actually faced during August.
And having said that, I would say that the results were obviously very good in the first half, and that CHF300 million was primarily, if you don't mind me describing it this way, a give back of what we'd actually earned in the prior period to that. And, overall, the performance of the equity prop group for the full nine months I'd describe as more than satisfactory.
Georg Kanders - WestLB
Yes, but were these losses in other areas in total also significant? Or: is the CHF300 million just the bulk of the losses?
Renato Fassbind
If it was significant, we would have disclosed it, and if you look at the nine months results, you can see that we have a very positive development in the equity division.
Georg Kanders - WestLB
So: there's not much to add to this CHF300 million? That's the question.
Renato Fassbind
No, there's much to be disclosed.
Georg Kanders - WestLB
Okay, thanks.
Operator
The next question is from Mr. Peter Casanova, MainFirst. Please go ahead, sir.
Peter Casanova - MainFirst
Yes, good morning. Thank you very much. I would like to clarify what your comments on the leverage finance. Did I understand correct that you said it went up from CHF49 billion to CHF52 billion? And did you also say that out of CHF52 billion, CHF8 billion is funded?
Larry Haber
Sorry, I didn't hear that.
Renato Fassbind
Can you come a bit closer, it's very difficult to hear from us?
Peter Casanova - MainFirst
Oh sorry, yes, is this better now?
Larry Haber
Yes, I can hear you.
Peter Casanova - MainFirst
Yes, so the leverage finances. My understanding is that's the only area where you give exposure, you said from CHF49 billion and first half up to CHF52 billion in third quarter and of this CHF52 billion, CHF8 billion is funded, is this correct?
David Mathers
Yes, in Swiss franc terms, you went from CHF48 billion to CHF60 billion, in dollar terms from $39 billion to CHF52 billion.
Peter Casanova - MainFirst
Okay, perfect.
David Mathers
That's, just to be explicit, that's the funded and unfunded non-investment grade leverage financing.
Peter Casanova - MainFirst
Okay. And on the RMBS, CDO, CMPS, there's nothing to say at this point, because, obviously, this makes very difficult for us to have a strong opinion on your stock going forward.
Renato Fassbind
Just not getting the balances down, as I said before, I can't emphasize this, but we are not giving out any numbers.
Larry Haber
I think (inaudible) as Renato said, essentially, there were three components in the CHF1.1 billion of net write-downs, and that's split roughly equally between the three areas we identified.
Renato Fassbind
Yes.
Larry Haber
And as I also said, we actually did make a small net profit in our purely subprime positions in the third quarter.
Peter Casanova - MainFirst
Yes, I fully understand. Our trouble is that it is looking backwards. Obviously, we need to have a feel on the future, but let's leave that aside. May I ask another question on the compensation development in Q3? How did the bonus accrual work? Did you actually reverse bonus accrued from the second quarter? Or: is it still about a net charge in the third quarter?
David Mathers
Mathematically, I think you can do the numbers. Clearly, the accrual rate in the third quarter was 40.0%. The accrual rate in the first two quarters was 51.5%. So, obviously, the percentage rate declined and clearly that would imply that there was some give back or reduction in the absolute bonuses between the first two quarters and the third quarter.
Peter Casanova - MainFirst
Okay. Thank you very much.
Operator
The next question comes from Mr. Derek de Vries, Merrill Lynch. Please go ahead, sir.
Derek de Vries - Merrill Lynch
Thanks, good morning. I have three questions, but maybe before I do that, I just wanted to acknowledge how helpful the risk disclosure you guys gave in January and again in May, and your investor days has been in the last couple of months. So, good marks on corporate communications to you guys.
Now, three questions. The first question is given your large use of hedging on your AVS portfolio, I was wondering: if you could quantify, or at least qualify, what kind of exposure you had to the monoline insurers? That would be helpful.
The second question I have relates to the CMBS, where you guys are clearly a market leader. I would assume the market froze up during the Q3 period, but I was wondering: if you could give us an update on how much it progressed during the period? And also, I'm wondering: if any of your write-downs that you disclosed relate to CMBS?
And then the last question relates to the VaR, it's spiked up, I guess, as the quarter came to a close. I'm wondering: if that's just the volatility impact that you had flagged previously? Or: if that's a decision on your part to take some more risks?
David Mathers
I guess, from the top then, in terms of hedging and monoline exposure, I think, the answer is probably much the same as you've heard from other people over the last few weeks. We do have some exposure to the monolines as part of our hedging policies, but it's primarily regarded highest quality assets which we'll give out here, and it's very well diversified. So, not enormously meaningful, but there is, definitely, some there.
And with regard to the second question, that was on the CMBS business and liquidity. I think, if I actually might take the third one first, I think we did disclose that in the CHF1.1 billion of net write-downs, or fair value adjustments, that we took in the third quarter. That was split roughly equally between CDOs, the residential mortgage businesses, and CMBS. So: yes, we did take some adjustments in the fair value of the CMBS assets. And that did include some adjustments for liquidity which is coming back to your second point.
So on liquidity I think, generally speaking, I think you're absolutely right; CMBS is a major business for us. We disclosed our positions at the end of last year and we talked more about it at the investor day back in January. So, I think, you were aware it's an important business for us.
And liquidity-wise, it is important to say two things: Just like the fundamental economics of CMBS are obviously different to those of RMBS, because the business is clearly driven by corporate cash flow and corporate credit policy. And that's very different to the residential market, point one.
Point two, clearly the environment differs significantly between the Americas, between UK and Europe, and the Asia in terms of the underlying fundamentals. I think, we would say the underlying fundamentals in both Asia and Europe are actually pretty good from an economic point of view. And, actually in the States, I think they're fine, but clearly, there is obviously more concerns about future economic distances tapers elsewhere, but so far, I am not too worried.
In terms of the liquidity points, I think really, as the outlook statement said, that we have seen earlier signs of an encouraging return to liquidity. I would say certainly in the United States, we've seen that, and less so in Europe from a liquidity point of view. Notwithstanding the fact, that the fundamental economics of the business and the assets is quite good.
Then, hopefully, we can come back on this, but on VaR, if you actually look at page 60 of the MD&A, there's an analysis there of the move in VaR. And you will see essentially that we have disclosed something about halfway down on the first column, that the one day 99% VaR would have been CHF126 million compared to CHF100 due to the data set changes which we've loaded during the period. And there has been some increase in our interest rate on credit spread VaR. And that data set changes the primary driver, there's clearly some movement in the position as well.
Derek de Vries - Merrill Lynch
Great, thank you.
Operator
The next question is from Mr. Huw van Steenis, Morgan Stanley. Please go ahead, sir.
Huw van Steenis - Morgan Stanley
Yes, good morning. I have two questions. First is on comp again. It's 30% of your revenues in the third quarter in the Investment Bank, with a 6.22 of credit spread widening fair value benefits. If I deduct that your comp to revenue is actually 57% for the quarter. I was just wondering: if I've understood correctly that your comp revenue is going up in the quarter?
Are you really saying you are actually paying staff a cut of the fact your credit spreads are widening? In which case, your bankers must be laughing all the way to the bank this year, because your credit spreads have widened further in Q4. Or: are you really saying that actually you've got much less flexibility on comp than perhaps you first thought?
David Mathers
I don't think there's much that we would really want to add to what we've said before. The fair value credit move is to some extent a contra in terms of the position moves we've seen elsewhere, and I think once you keep that in mind when looking at the numbers.
The overall comp ratio of 40% has been assessed on the basis of our revenues profitability for the year to date, more accurately to the end of the first -- Q3 and what we expect to pay on that basis.
Huw van Steenis - Morgan Stanley
But even if I do it on the full year basis, your comp ratio would be 52%, so, actually, an increase on the Q2 run rate so again, your comp revenue has actually gone up, even on a year-to-date basis.
David Mathers
I think I've said already, that we regard the fair value credit as partly a contra, so I probably wouldn't agree with your analysis. And I think, as Renato said, basically, in terms of the Q4 outlook, we'll talk about that in the Q4.
Huw van Steenis - Morgan Stanley
Okay. Then, just secondly on the private bank: I think 4.5% is obviously a very good number. Could you perhaps just give us some color on which regions you're getting it from? And: whether you've started to see any reversal yet of in Asia? Where, obviously, you had seen some defections too, leading to some outflows.
Renato Fassbind
If I understood you correctly, you're asking: where the M&As are coming from, correct?
Huw van Steenis - Morgan Stanley
I'm sorry?
Renato Fassbind
You're asking: where the M&As are coming from originally?
Huw van Steenis - Morgan Stanley
Well: how, yes, the new assets are coming from regionally in the private bank? Because, obviously, it's a very good number, but: any sense of which regions are developing it? And: has Asia remained a little bit weaker because of the people who have left?
Christoph Brunner
So overall, what we have seen is really a slower quarter in terms of net new asset inflows, due to probably both the summer seasonal effects and also some deleveraging we saw on the credit side. Originally, we had a strong result in Europe and satisfying net inflows in Asia, Switzerland and in Clariden Leu. But, overall, we think we certainly can do better and we will.
Four reasons make us confident that we will show increased momentum in asset gathering. First, we now have all the regional and mortgage management teams in place. Second, we now can full deleverage the established growth platform in Europe and in the main emerging markets. Third, we are making good progress in terms of net new RMs with a good hiring pipeline. And fourth, we see increasingly good incremental M&A flows from IB and Asset Management into PB.
Renato Fassbind
Let me add to that, private bank has a clear mandate, not just to buy market share or net new assets, but also keep up the profitability, meaning: the gross margins in the business. And, as you can see and as we have just reconfirmed, we want to stay there. And, for us, besides volume, the profitability is equally important.
Huw van Steenis - Morgan Stanley
Great! Thank you.
Renato Fassbind
Welcome.
Operator
The next question is from Mr. Kian Abouhossein, JPMorgan. Please go ahead, sir.
Kian Abouhossein - JPMorgan
Yes, hi. I have three questions. The first one is…
Renato Fassbind
Can you get closer to the mic please, in order to hear you?
Kian Abouhossein - JPMorgan
Yes, is that better? I have three questions. The first one is related to your level three assets. Could you tell me what the other level three assets are, the CHF42 billion? First of all, that's very good disclosure, but: I would love to have a little bit more detail, if possible?
And the second question is: could you talk about how through the quarter your warehouse exposure has changed in the three sub-segments, CDO, CMBS and RMBS? I don't need to have absolute numbers, but: can you give me an indication of percentage of how your net exposure has changed through the quarter, from beginning to the end, roughly?
And the third question relates to subprime. Can you give me an idea of how big your overall net subprime exposure is within the total Group?
David Mathers
I think, if I talk about the warehouse delta. I think first basically, we reduced the warehouses consistently for the first three quarters. I don't think we're going to comment on moves into the fourth quarter. There's not much to add there.
Clearly, you can look at the leverage finance funding calendar externally and see that there have been deals funded since the end of the quarter. But I think, going beyond that, I probably wouldn't want to at the moment basically.
Kian Abouhossein - JPMorgan
But: can you give us an idea, if I look at, let's say, your CMBS business, that from the beginning of the third quarter to the end, has it reduced by 30% your net exposure, has it been 50%? So: can we have an idea of how the risk has changed, as you've gone through the write-downs and through, I assume, further disposals?
David Mathers
Was that question on CMBS?
Kian Abouhossein - JPMorgan
Yes, CMBS, CDOs and RMBS. That's basically just to get an idea of the percentage change, roughly, from the beginning of the quarter to the end of the quarter.
David Mathers
I think, we made it clear we're not going to disclose our acquisitions on CMBS, I think: “full stop” really.
Kian Abouhossein - JPMorgan
Okay.
Renato Fassbind
On your question on the increase of level three assets, by the way, these level three assets reflect a 6% in relation to our total assets. So that's just to put that into perception. The increase was due to actually three areas.
It was corporate derivatives and the equities world, it was mortgages held for sale, and it was medium term notes and commercial paper backed by ABS Securities. Those are the three major market pocket drivers for the increase.
David Mathers
I think, your final question, actually, was on: the Group's subprime as opposed to the Investment Banking subprime?
Kian Abouhossein - JPMorgan
That's correct, yes.
David Mathers
On the Investment Banking subprime, I think I'd make two -- reiterate what Renato said, that our position subprime is once net of our hedging and risk mitigation efforts essentially is de minimis basically. I think for the Group…
Renato Fassbind
Well, the same goes for the Group. We have our exposure to really the largest extent in Investment Banking.
Kian Abouhossein - JPMorgan
Okay. And: if I can add one more question on CMBS? You seem to be the only Bank that actually talks about CMBS issues. And I'm wondering, and you probably have looked at other peers as well: why is that? Why do you seem to be taking write-downs and your peers aren't? I know you're very large player, but other large players don't seem to highlight this as any particular issue.
Renato Fassbind
I think you have to ask that question to our peers, not to us. We offer fair value on our positions on a regular basis, as I mentioned before, and we also looked at these positions and fair valued them at the end of the quarter. I cannot judge on why our peers have not taken any actions in that area.
David Mathers
Can I just add to Renato's comment? As I said before, I think the fair value adjustment for the CMBS does include an assessment of the liquidity as well.
Kian Abouhossein - JPMorgan
Okay. Thank you very much.
Renato Fassbind
Welcome.
Operator
The next question is from Mr. Philipp Zieschang of UBS. Please go ahead, sir.
Philipp Zieschang - UBS
God morning. I have a couple of questions again on the private bank. Just, could you comment, because when you basically issued your 6% target in terms of net new money, probably nobody in the market really thought that this was ambitious? So: how do you view this target, given that you had a couple of rather slower quarters now? Is that going to be a stretch or are you happy if you make it?
And, in that sense: could you disclose what percentage of net new money growth actually came over the past few years from increased leverage within your clients' portfolios?
And the third component of that: could you comment how your business would look like excluding your loss making U.S. brokerage business? And: is there material impact in terms of client flows? And also, if you might comment on: what time horizon you have in terms of fixing this? Thanks.
Renato Fassbind
I will answer the first question very straight on. We are confident that the 6% target is the right one and we stick to that. And we always said this is a 6% target over the cycle. We are well within that, as you can see in the fourth quarter rolling average, which I think is a good indicator.
On the trend we are above that, so the answer is: yes, we stick to that target, we have no reasons to reduce that. As a matter of fact, as you may recall, we have increased that a couple of quarters back to 6% from 5%. Christoph: do you have an answer for the other?
Christoph Brunner
Actually, the U.S. business basically in the third quarter in Americas, we had no net new inflows in net new assets. So, we are not satisfied with that one, as you know. What we are doing in U.S., we are turning this business around into a high-end wealth management offering. We stick to that plan and currently there is no plan to sell that business.
Philipp Zieschang - UBS
And, in terms of the leverage within the client portfolio, because you've mentioned that…?
Christoph Brunner
Actually if you look at the loan book, the loan tables, I think this is on page 58, you'll see that we had a reduction of some about more than CHF1 billion and, more or less, this is really the deleveraging effect in the third quarter.
Philipp Zieschang - UBS
Thank you.
Operator
(Operator Instructions). The next question is from Mrs. Anke Reinken, Execution. Please go ahead, madam.
Anke Reinken - Execution
Yes (inaudible).
Renato Fassbind
We cannot hear you at all.
Anke Reinken - Execution
Hello, can you hear me?
Renato Fassbind
Now we can hear you, yes.
Anke Reinken - Execution
Sorry. Following up on the private bank and the net inflows again: why do you think your net inflows, 4% of assets, on this quarter, over a couple of quarters, you seem to be underperforming your closest peers. Is it a function of, maybe, regional gap? And: do you think you have closed this now with the recent hires in Asia?
Secondly, on the recurring margin, even if I adjust for the reclassification in assets, there seems to be like an ongoing step change in the recurring margin. Do you think that current levels at around 76 basis points are at sustainable levels?
Then thirdly, you have given us a level of leveraged finance revenues in 2006, which were around CHF2 billion. Where are we now in terms of in the third quarter, if we ex the write-downs? So, if we see how much of a step change we have already seen on the revenue side from leveraged finance. Thank you.
Renato Fassbind
Do you want to start, Christoph?
Christoph Brunner
So, as I said before, we think we can do better than the 4.5% and we stick to our target that we will be above 6% in terms of net new assets. As Renato mentioned before, we are not prepared to buy our market share for any price. You can do that especially in the ultra high net worth business.
I also mentioned that we think we have the growth platforms now to expand or to accelerate as the gathering, and I think we certainly can do better in emerging markets like Latin, like Eastern Europe, like Asia. We had very good results, as I've mentioned before, in Europe and also good results here in Switzerland.
David Mathers
On the leveraged finance point, as you say, we disclosed the revenues last year at CHF2 billion. I think, quite clearly, given CHF1.1 billion of write-downs that the revenues are clearly less this year than last year.
Anke Reinken - Execution
But: ex the write-downs?
David Mathers
I'm sorry?
Anke Reinken - Execution
Ex the write-downs? So: how much of the underlying revenues have already declined in leveraged finance?
David Mathers
I will not comment.
Renato Fassbind
We will not give that number.
Anke Reinken - Execution
Okay. And: the recurring margin in Private Banking?
Christoph Brunner
You're talking about: the gross margin we have in there?
Anke Reinken - Execution
Yes. Basically, there seem to be a shift in gross margin.
Christoph Brunner
The recurring margin?
Anke Reinken - Execution
Yes. The recurring margin has improved, so: is this sustainable and are you sort of like think there's an ongoing level?
Renato Fassbind
It's fair to say it has improved and I think it's also, it's particularly a result of the efforts that the private bank made in order to increase the revenues out of the recurring business. Maybe, Christoph, you can give more flavor about that?
Christoph Brunner
Looking at the nine months improvement, recurring margin is up by 5 basis points. Roughly 3 basis points are coming from interest income and the main drivers within interest income is lower funding costs, and the second most important driver there is higher interest income from liabilities, stemming from higher liability volumes and higher liability margins.
2 basis points then are coming really from non-interest income and the main drivers there are really management fees out of managed assets, and, as I mentioned before, also our pricing initiative where we changed pricing in a way to have more recurring revenue.
Anke Reinken - Execution
Thank you.
Renato Fassbind
Thank you.
Operator
The next question is from Mrs. Claudia Meier, Bank Vontobel. Please go ahead, madam.
Claudia Meier - Bank Vontobel
Good morning. I have three questions if I may. The first one would be: are you disclosing the share of ultra high net worth individuals within your private bank?
And then second question is: I've seen that the CEO of Clariden Leu has just stepped down and been replaced. Probably, you could give us an update on what your strategy is with the independent private banks, Clariden Leu?
And then the third question would be on the leveraged finance exposure, I'm not sure I got the reason: why your exposure has actually trended upwards? So, if you could again, re-elaborate on this one? Thank you very much.
Renato Fassbind
Let me take the first two ones on the ultra high net worth, we do not give the split as you may appreciate. On the CEO for the Clariden Leu, I think, it's fair to say that they have done a great job in integrating actually the four banks into the Clariden Leu Independent Private Bank.
Our strategy remains the same as it was before. This is an important part of our Private Banking business, and it will be managed accordingly with particularities that this has had from a smaller scale point of view and from a very particular client deal. And it was just so that the old CEO felt that his path was finished and he decided to retire. He has successfully integrated the business, which was a great job done, and Mr. Nutzi has now taken over as CEO.
And David: can you answer on lev fin?
David Mathers
Sure. On leveraged finance, in Swiss franc terms, as you rightly say, in terms of our funded and unfounded non-investment grade, we opened at CHF48 billion and we closed at CHF60 billion and: why was that?
We had five transactions which came through in early July which we'd been negotiating through the second quarter and that, basically, added CHF20 billion to our commitments.
I'm not going to be too specific, but I think if one looks at what's publicly available, TXU was one of those. We were actually an advisor of the company as opposed to the acquiring syndicate, and therefore, we actually came into the funding comparatively late in terms of final docs compared to that where our competitors were.
So, it would probably be fairer to say that our opening positioning was more like, rather than being CHF48 billion, was more like CHF68 billion, and it's then obviously come down to CHF60 billion by the end of the third quarter.
I think the other factor in terms of the relative moves is the point that Renato made just in terms of the funding timetable. We were involved in very few deals that actually had to fund in July and August, I think the deals which were publicly available, I think you can see which ones those were. And that was partly a decision by us in terms of the deals we wanted to be involved with, deals we didn't and I think Paul Calello made that point back at the Q2s at the beginning of August.
However, that meant that given that a lot of our business, therefore, was loaded towards the end of the third quarter and the fourth quarter that the reduction from, let's say, that fair opening position of more like CHF68 billion, is therefore only about CHF8 million. Actually, that's not really true because there's been some new commitments taken on as well, but, I think, that gives you a better idea of the moves in our lev fin positions.
Claudia Meier - Bank Vontobel
Thank you very much.
Renato Fassbind
Thank you.
Operator
The last question is from Mr. Peter Thorne, Helvea. Please go ahead, sir.
Peter Thorne - Helvea
Yes. Sorry to labor the issue, but you say you have de minimis subprime exposure, the values of subprime hard in the next few weeks or have done already. Is it fair to say that you've got de minimis extra valuation provisions to book or is there some other issues concern there?
And secondly, in your summary you say you have -- the results reaffirm the importance of the integrated global business model. Exactly where is that clear in the results? I really can't see it anywhere.
Renato Fassbind
Now let me take the second one first. I mean we're going to have roughly, I would say, CHF0.5 billion of revenues, more so to say in 2007 than in 2006, due to the integrated banks through all the activities we have to cross reference businesses, to refurbish them, and so forth. That has helped, not only to increase revenues on one side, but, in particular, also to keep up results in the integrated banking framework and making sure that we have the right positions in the various divisions.
And another just one example is that 10% of the M&A from IPOs have been channeled, so to say, into the private bank in order to increase net new assets there. So, there are various examples of how the integrated bank has worked properly and has helped us in the third quarter to sustain profitability levels we are at.
David Mathers
On the subprime point, I think we have said that our position is de minimis and that is partly a competent position and partly a result of the positions and partly a result of the risk mitigation we've taken. And I'd caution that risk mitigation is not simply index hedges, it's a more complex strategy than that.
But the position, net-net, is de minimis in a risk sense basically, so one can presume what one wants from that basically, but that's where we are. But that's on regard to subprime residential.
Peter Thorne - Helvea
Thank you.
Renato Fassbind
Next question. Okay. So there are no more questions? Thanks a lot for your questions. Now we will go over to questions for media. There are no questions in the media either.
Operator
That's correct, Mr. Fassbind. There are no questions from media.
Renato Fassbind
Okay. Then I thank everybody that participated, wish you a great day, and thanks for your interest for Credit Suisse.
Operator
Ladies and gentlemen, the conference call is now over. You may disconnect your telephone. Thank you for joining and have a nice day.
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