Crown prince discussed ways from prevent the war from escalating as the you and a best of demands secretarygeneral resign for saying the october 7 attack did not happen in a vacuum. Microsoft jumping in late u. S. Trading after the cloud unit is worth picks up steam. Rival alphabet sinking as they are offering lags. Bank earnings continued rollout. Deutsche bank meeting estimates where they spent finish pumping santander some better than expected thirdquarter net income. We will speak exclusively to the cfo later this hour. I want to get a recap on the numbers which is important when we look at Deutsche Bank. We are seeing estimates and they are kind of being met but you are not seeing much outperformance. This is stark contrast to what you saw with unicredit but thirdquarter net revenue is 7. 1 3 billion in the estimate was 7. 1 one billion. Pretax profit is 1. 7 billion euros. The estimate was 1. 6 billion. There 2023 Net Litigation charges are exceeding their 2022 levels as well. I wonder how much of that will influence some of their bottom line. They are raising their cap outlook as well. Increase in Net Interest Income when we are talking about their bottom line. It looks like the credit loss provisions are to 45 million as well. Caution there when you look at loanloss provisions. In contrast to what we saw with unicredit. We will bring the interview with the Deutsche Bank cfo at 6 30 a. M. U. K. Time. I want to the santander story and it is a similar theme when you are seeing the numbers come in close to estimates. Other core net income is 2. 9 billion and the estimate was 2. 8 billion. Thirdquarter Net Interest Income is coming in stronger but that will be a function of interestrate moves. 11. 2 billion is the estimates. Loanloss provisions i what is standing out to me. 3. 3 billion and the estimate was 3 billion. They are saying that things are looking good and they will carry positive momentum into 2024. The headlines that we are watching for we will ask the csuite is what is going on in brazil and the United States and the push outside of europe is numbers we want to know. We will ask all that in an interview with the exclusive conversation with the santander cfo in 30 minutes. Lets get a quick check on the markets because caution in the banking space, a little bit of caution equity markets as well. Euro stoxx 50 futures higher by 0. 1 . Ftse 100 futures marginally higher. No major conviction. Light volume trade already but it is interesting in the u. S. Markets because we are returning to the cell the u. S. Equity story. Nasdaq 100 futures taking a beating, down 0. 4 . That is going to be a function i think of the earnings story that you saw in u. S. Trade. Lets look at the moves you sought in posthours trading. Microsoft, alphabet, a tale of two clouds. Microsoft says there cloud offering will be outperforming and they will be growing faster than expected. Alphabet saying the exact opposite. You can see the stock moving in both directions. Snap inc. As well, the Parent Company of snapchat is higher by 0. 4 . They are talking about ad revenue again, an interesting dynamic when we are questioning on the macro narrative whether or not we are seeing contractions or slowdowns. When you look at the tech space, it does not seem like its. A quick check on the cross asset story. The bond market absolutely matters in this context. A move five basis points lower, seeing volatility but the 10 year yield is virtually unchanged at 4. 8 prepared how much caution as they are baked into the long end Duration Risk and how many people are willing to take that risk on in light of the 16 basis point move you saw earlier this week . How much of that is spooking the bond trader . That will have a big effect on the dollar specifically which right now seems to be at the whim of the mexican peso. We will watch that closely. Brent crudes meantime trading just shy of the 80 handle. It is only down by 0. 2 . Lets go back to one of the biggest market moving stories which is the tech earnings. Alphabet shares falling and google cloud growth missing estimates. Microsoft bouncing after posting the strongest sales increase in six quarters. Matt bloxham is all over it and he joins me bright and early this morning from Bloomberg Intelligence. Thank you so much. Lets start with microsoft in the cloud growth. Last quarter, a 26 increase was seen as kind of you poor big tech company. Now they completely turned around. How . Matt i have been on the front foot in ai and they are rolling out into their products and that has made acceleration in the cloud growth of 29 . This is a tale of two clouds here as you said when you contrast that with google. Googles cloud growth is still pretty strong in the high 20 year on year. The number people are looking at more as a private performance. For longtime googles cloud revenue was going but still losing money. They got a small amount of profit this quarter but they missed by almost 50 on the profit, hundreds of millions of dollars. A mixture of that and you are not seeing the same acceleration of growth as microsoft. You have to invest more heavily than we thought to deliver that grade. Maybe a quarter or two behind microsoft in terms of getting the benefit of the corporate spending on aim for structure. Kriti does on ai infrastructure. Kriti does the stamp of the dream for Amazon Web Services and is there hope to recapture market share . Matt i think so. Google is a number three player in cloud. Microsoft and aws are well ahead of them. This will encourage them to double down on what they are doing. They have a clear ai strategy and is a little bit behind in terms of timescale to what we have seen from microsoft. Microsoft surprised everybody with everything around openai, chatgpt, and the speed with which they deployed ai tools into their microsoft suite of products. There is a bit of catchup to do. Kriti and by a bigger margin as well. Amazon and Microsoft Web services are neck and neck. Bloomberg intelligences Matthew Bloxham brings us that crucial analysis of this morning. That will affect the trade around the world. Asian markets is where i want to go next. Avril hong has the update process singapore. Walk us through it. Avril asia stocks are mostly higher today on the back of china stimulus push in the sectors are doing well which are tied to the consumer and infrastructure related names although many of the regions gauges are actually paring gains from earlier on in the session including the hang seng as well as the csi 300. Metals are rallying on the back of those stimulus measures, but we are seeing worth mentioning here, the selling on australia bonds as well as the broader australian miners are rallying today because we got the hotter than expected inflation print out of australia. Thats bringing those rate hikes back into play. Lets zoom in on what we got out of china is in the past day. We see how it is going to issue additional sovereign debt worth about ¥1 trillion. This is going towards Disaster Relief and construction and also raising the fiscal deficit ratio. All this is supposed to stimulate the chinese economy. These are rare moves and not to mention, what would from chinese president jinping, the unprecedented visit to the pboc but putting it into perspective, even though these moves are seen as rare, they are not the big bang stimulus that traders might have wanted. And they are not addressing the issues in property sector either. Lets take a look. What we are seeing in hong kong because we also got executive there delivering a policy address and announcing those cuts to taxes related to property as well as stock trades. These are the sectors we are watching in the message here is pretty clear that the health of the Property Industry in the city is key to the Financial Health of hong kong overall. So, some stimulus coming out of the Greater China region despite those economic headwinds that we are seeing globally. Kriti its interesting, the macro and micro almost contradict each other and that is what we are seeing. A row in singapore with that story avril hong in singapore that story. You have to factor in the geopolitics as well and that is where it gets tricky. I want to bring in the latest from the middle east. President biden and Mohammed Bin Salman have discussed efforts to prevent the conflict between hamas and israel from escalating. Lets bring in oliver crook in tel aviv. Walk us through what they have discussed at a time when it feels like they are on the opposite sides of the negotiating table. Oliver yeah, i think perhaps the most significant thing we can take from this is actually happened, these men were speaking on the phone, and this is something that has been a strained relationship over bidens president xi. Presidency. Again, it is to reduce escalation and this is going to be the key fear for many countries in the region but also they discussed aid. We should mention the number of aid trucks that went into gaza yesterday really fell precipitously according to the humanitarian organizations. This is something biden separately has said they really need to be doing better on and getting more in. Lincoln has caused called for potential positives to allow that to happen. At the center of the debate is fueled. The yuan agency says they will run out of fuel today and that will affect the u. N. Agency says they will run out of fuel and that will affect their ability and is being used by hamas to wage war efforts. We know the idf is continuing to strike gaza in very large volumes and they also struck with interior returning fire that came from there overnight. On the hostage question, they were dropping leaflets yesterday in gaza in arabic in if you have any information on where houses is being held give it to us and protection and safe passage to the degree that they can do so. Kriti really interesting color about the ground efforts you are seeing. Every incremental move to get the hostages back to safety is one that is being monitored on a large geopolitical scale as well. I want to talk about the political side as well when it comes to the united nations. This is not usually something we think about we talk about geopolitics and as dire of a situation with the israeli you and Ambassador Haley now demanded a secretarygeneral Antonio Buteras resign. Why is this such a controversy . Oliver at the heart was a speech that the secretarygeneral Antonio Butera escape at the yuan yesterday where gave at the u. N. Saying there were clear violations of humanitarian law. I will quote the grievances of the Palestinian People cannot justify the attacks of hamas of the collective punishment of the Palestinian People. However, and this is the part of the israelis took issue with, it is important to recognize that the rep the attacks by hamas did not happen in a vacuum. He said palestinians were subjected to 56 years of suffocating occupation. This was not well received by the israelis. They canceled a meeting with a secretarygeneral of the ambassador to the yuan and demanded he resigned saying he was shocked by the speech and it proved beyond a doubt that the secretarygeneral is complete disconnected from the reality in our region and he expressed understanding for terrorism and murder just to take a step back, with israelis, hamas is not an acceptable entity to be on the border. The goal is to dismantle them. Hamas is still firing rockets into israel as israel attacks hamas. The israelis are not targeting civilians and are doing every effort to preserve civilian life the f the question will be at what cost . Many people have affirmed israels right to selfdefense. The question is where does the line cross particularly as we understand the death toll is crossing 5000 people in gaza. Kriti a truly tragic humanitarian situation as you have outlined. Bloombergs oliver crook in tel aviv. He was talking about the humanitarian and geopolitics of it all. Israel has actually gotten their Credit Outlook cut by s P Global Ratings down to negative. They are predicting longstanding consequences of the israelhamas war and saying it will not go away anytime soon. That will have ramifications for their National Economies in a way that has never had before. They labeled israels rating at a aa negative, the fourth highest from the top. Now it looks like they have them on the negative and they were previously considered stable. The dollar shekel is seeing weakness on the israeli currency. Coming up, we go live to tokyo to speak to the nissan ceo at the japanese mobility show. We will cover the expansion of the ev model range and much more. Stick with us. This is bloomberg. Kriti the latest report from Bloomberg Intelligence on japanese automakers forecast robust sales next year in japan as well as the u. S. Due to pentup demand and better supply. But it warned sales in china will be lackluster due to ev competition and a scaling down of government incentives. Joining us now from the japan mobility show as nissan ceo and president , makoto uchida. What are your plans to unveil at the japan mobility show . Makoto thank you for having me on your show. I am very happy to be here after four years from the nissan and we want to make sure that we have a five concept car today at the japan mobility show. One of our new concepts we have for motorsports, we call this a hyper force which can enable farther the demand for people of the future. We cannot forget to say that nissan is one of the pioneers of the ev, and we have a lot of the connectivity as well as the intelligencently, the battery we putting out as a concept for this car. Kriti it is fascinating that nissan is actually leaning more and more into the ev space whereas even right here in london in the u. K. You are starting to see the brakes quite literally being put slammed on the idea that the transition to ev can happen so quickly. Prime minister rishi sunak made comments as well. Talk to us a little bit about the competitive nature of nissan right now. You are up against china specifically, which is the leader in electrification around the world. What is nissan doing to increase that competitiveness . Makoto yeah, let me first establish what nissan is doing towards 2030. We are going to electrify vehicles with an average of 19 and we are confident on how we want to bring value to the customer further. Of course, we need to be careful of what is happening in the market today with competition that we cannot ignore the situation of the newcomers coming. Theres a lot of competitive nests everywhere competitors everywhere among of the key areas we are focusing is how we can make sure to secure the cost competitiveness while still electrification transition and take more time. I think the speed coming to market is much faster than what we were expecting, and probably the customer accessing the ev price level will be going down. We have to be prepared and we are planning to get cost competitiveness so we can make our presence in the market. At the same time, we can make sure to give the value beyond the vehicle to the electrified vehicle to our customer and especially on the new generation. That is what we are testing, our concept car and how we can deliver farther the value beyond the vehicle to the customer in the future. Kriti the fact that your talk about bringing more value to the customer, bringing down the price point, accelerating the transition, this all seems like a very expensive aspect. Are you at all worried about the cost associated with this . Some of you global peers are pulling back. General motors has actively said we are pulling back on our ev strategy because of the cost. How can you afford it . Makoto well, we need to be careful and look at what is our midterm plan and beyond and how we are going to make sure, for instance, with the alliance that we have with renault, mitsubishi and is very challenging to do it alone. Therefore, we decided to further invest and whether renault will create an ev or tech company. We want to maximize our relation for the next age, knowing that they will be a massive investment that will be required to satisfy electrification and how we can further optimize our cost side, including the products and that will require electrified vehicles. We are making a midterm plan and beyond discussion with our partners and that is where we want to find the most optimum ways how we can be competitive in the market while we can make sure to deliver our value to the customer. Kriti wow, you are up against steep, edition, but we so appreciate you bringing us your ev strategy. Makoto uchida the nissan ceo and president at the japan mobility show. Stick with us. This is bloomberg. Kriti i want to bring your stories from around the world starting with texas instruments. Shares fell in u. S. Late trade after the Company Issued a disappointing revenue forecast for the current period and warned demand remains sluggish for Electronic Components and industrial equipment. The outlook bodes poorly for the chip industry attempting recovery from a punishing, punishing slowdown. Snap in the meantime has returned to Revenue Growth in the Third Quarter after two periods of declines. Sales decreased 5. 4 after work to revamp snapchat advertising business last year. The company is morning progress could be stalled due to advertiser delays spurred by the war in israel as well as gaza. A lot to digest on the tech fronts but coming up on the program, we have European Bank earnings. Deutsche bank thirdquarter revenue meets estimates. The bank is planning to step up shareholder payouts. We will bring our interview with the cfo to just a moment. They are talking about loanloss provisions and earnings story will talk about Deutsche Bank and what they do in the face of this recessionary call in europe. How much weakness is there in the broader environment and how prepared is Deutsche Bank to tekelec . Two tactile ashto tackle it . Stick with us. Tears plenty more ahead. This is bloomberg. Nice footwork. Man, youre lucky, watching live sports never used to be this easy. Now you can stream all your games like its nothing. Yes [ cheers ] yeah woho running up and down that field looks tough. Its a pitch. Get way more into what youre into when you stream on the xfinity 10g network. So, youve got the power of xfinity at home. Now take it outside with xfinity mobile. Like speed . Its the Fastest Mobile Service around. With the best price for two lines of unlimited. Only 30 bucks a line per month. Thats hundreds in savings a year when you wave bye to the other guys. All on the most reliable 5g network nationwide. You really shouldnt walk out the front door without it. Switch today at xfinitymobile. Com. Hi, im katie, ive lost 110 pounds on golo in just over a year. Golo is different than other programs i had been on because i was specifically looking for something that helped with insulin resistance. I had had conversations with my physician indicating that that was probably an issue that i was facing and making it more difficult for me to sustain weight loss. Golo has been more sustainable. I can fit it into family life, i can make meals that the whole family will enjoy. It just works in everyday life as a mom. Kriti good morning. This is daybreak europe. Im kriti gupta in london. A highstakes phone call. The u. S. President and Saudi Crown Prince discuss ways to prevent the war from escalating. It all comes as israels u. N. And as of the demands the secretarygeneral resigned for saying october 7 attack did not happen in a vacuum. A tale of two clouds. Microsoft jumps in late u. S. Trading as their cloud unit azure picks up steam. European Bank Earnings continue. Deutsche bank, net revenue meeting estimates. We will speak to the cfo later this hour. Spains biggest bank is posting betterthanexpected thirdquarter net income. We will speak to the santander cfo exclusively in a few minutes. That is where i want to take a moment and dive into the numbers. With Deutsche Bank, they are talking about accelerating their payout to shareholders, higher income from the Corporate Bank and deposit inflows, offsetting the weaker trading results. A turnaround story and you are seeing real strength when it comes to the Deutsche Bank story and the broader story banks. Trading revenue was propping up banks in the way their volumes were not. Deutsche bank numbers instead and it looks like pretax profits are one point 1. 7 2 billion the estimates are 1. 6 billion. Deutsche bank loanloss provisions lately higher but they have room to release additional 3 billion euros in capital thanks to Asset Allocation and regulatory effects. It is less severe than initially expected. Dani burger caught up with the Deutsche Bank cfo earlier. Take a listen to what they had to say. Jose we have been more and more confident as the years have gone by firstly in Net Interest Income outlook as you have seen with the rate environment, and also better than modeled expectations on passthroughs. The deposit books in the Corporate Bank and private banks are performing extremely well. We think that is something that will persist for a little bit longer but at the same time, the businesses have been building momentum, even as the market environment has been unsettled. We are pleased with the progress so far this year. Dani nims being able to stay as they are for longer, that surprised many. How much longer do you think Net Interest Income can hold up given some people started to talk about the benefits of higher rates starting to wane . James i would say on a longterm basis, the benefits of higher rate will be with us into 2025 and beyond. This is not yet, i would say, a fully normalized rate environment for banks. What is viewed to be somewhat temporary is this what we call deposit data affect or the passthrough of Interest Rate increases to clients. The industry has outperformed its expectations, recognizing that we come from a period of very low rates for a very long time. Now, that may still persist for a time. It reflects the competitive environment that we are in and the value our client see of the relationships and services the banks are providing. And for now, that is persistent, and we think that can persist for the balance of the year. Our deposit revenues were actually on the underlying basis in both deposit books essentially flat over the course of the second two the Third Quarter. We are pleased with the Ongoing Development there. Dani youve also had an additional 3 billion euros in capital released, more than expected by 2025. How much of that eventually gets returned to shareholders . James it is too early to say. At 13. 9 cet1, common equity tier one we have significant the outperformed our expectations on capital that puts us in a complete different place from where we have been for a while, building capital for regulatory inflation. Now i think we can look to a Capital Distribution path with a lot more confidence, as we are saying today, we can both accelerate and expand on that Capital Distributional path that we laid out to shareholders, which was a billion in respect of 2021 and 2025. Theres of site upside to that but it is too early to say how much and how soon. Dani you also have 2 higher additional cost, not that unusual for this inflationary environment. You did announce cuts earlier this year. Our more cuts coming . James yes. We will continue to work with discipline on the cost base. We laid out to investors a goal to run the company essentially flat for a considerable period of time, and what that means is we are working every day on Cost Reduction measures, which at the very least, should offset the impact of inflation. And also allow us to invest the businesses with our own resources, and also complete the investments that we have talked about for the last couple of years in both technology and controls. So, a lot going on underneath the surface, but we think we have the tools, the discipline, and we are just continuing to roll out new measures, new initiatives to make sure we achieve the exact the objectives we set out. Dani do have a figure for the additional cost cuts and the do do they entail job cuts . James we announced a 2 billion gross reduction in costs and we up that to 2. 5 by dollars we are working to achieve that. 2. 5 billion. It will result in job reductions. We are trying to find ways to drive efficiency based on investors with investments we have made with technology or the effectiveness and efficiency of our controls will be get the level of maturity. We have a path ahead of us for several years of being able to harvest some of the improvements we have made in the company, the investments we have made over the past several years. Kriti that was Deutsche Bank cfo speaking to bloombergs dani burger there. I want to get a check on the markets because we are getting a lot of crosscurrents. You have geopolitics, monetary policy, and earnings stories we are digesting. It looks like the euro stoxx 50 futures are not doing a whole lot. He did have a lower margin earlier so they are being traded but there is no conviction yet. As be futures down 0. 3 . Ftse futures are down 0. 3 . The nasdaq is down and it is interesting given the story we had overnight. Microsoft and alphabet reporting different cloud numbers. Microsoft is the number one and Cloud Services around the world whereas alphabet is a distant number three. That will give you insight into what this race for Cloud Business looks like. Microsoft closing after our tree session by 4 . Alphabet taken it down 6 . The almost secret winters nap inc. Winners snap inc. They are actually higher by 0. 4 in afterhours trading because they said they are strategy might be working. Advertising in tech as a beacon of the broader Global Economy and how it might be doing. I want to go cross asset and talk about the bond market. We had massive volatility earlier in the week geopolitically driven and some of the positioning driven. You are seeing a real hesitation for the 10 year yield to move any more than one or two basis points. 4. 83 there. It is down five basis points for the 2year yield. The bond market is catching a bed. Catching a bid. The dollar is stranded between the aussie dollar and the mexican peso. The bloomberg dollar index in the middle. It is trading just shy of 88, brent crude down 0. 3 . Here are stories were are watching around the world. Which he has seen sales fall as demand for luxury goods slows down gucci has seen sales fall 9 , missing estimates. The results showed all kering units had a quarterly revenue. Drop except for eyewear. Uniper has raised the full year profit estimates. The company said hedging activities tied to its Power Generation and natural gas pipeline businesses played a significant role in the positive results. The bullish forecast comes a year after the government bailed uniper out one of the biggest rescue packages in german corporate history. Meanwhile, semiconductor toolmaker Asm International has posted thirdquarter sales that Beat Estimates with revenue rising 9 , all thanks in part to a significantly higher contribution from china. Asm says it does not expect material additional impact u. S. Export control measures that worked that were imposed earlier this month. Some big tech and mixed results. Alphabet sinking postmarket and google quarterly cloud revenue trailing objectives. Microsoft jumped and those sales are beating estimates. It all comes down to the cloud story. Ed ludlow dives into the numbers. Ed it is a tale of two cloud providers, alphabet the Parent Company of google pretty much only missed in the Cloud Division sales of 8. 4 one billion below estimates of 8. 6 billion or so, missing on the bottom line that units as well. The way that ruth porat the president and cio and cfo of alba did to me is in the Third Quarter, there was cost optimization from customers which is cloud speak basically for customers that cut back in specific areas. Although alphabet beat the top and bottom line and altered divisions, strengthen search advertising, stabilization and resilience than new two ads as well there is concern that cloud is central to googles future growth. In that area of cloud it is a distant third behind amazon aws and microsoft azure. Compare and contrast with microsoft azure it is going back six quarters azure and azure growth was 27 . Corporate cloud was 24 . Of the investments microsoft put into ai and backing it and backing it in leveraging the gpt technology, basically adding it to the existing suite of software it is now starting to show up in the financials. A big test of that will be november 1 when we get Microsoft Office 365 copilots, something that you will have to pay more for to have generative ai back version of office. If that continues to see sales momentum, it bodes well for microsofts position not just in cloud Blitz Software generally speaking generally speaking. Ed ludlow. Kriti i want to stick with one more its in the tech space when it comes to meta. California and more than 30 states are suing them over claims the social media platforms instagram and facebook have fed young people hard from cockpit harmful content to boost profits. That is your tech roundup. We hit almost every major tech company. I want to bring you breaking headlines. Country garden defaulting on the dollar bond declared for the first time. The trustee notice said this was an event default on the bond, the official wording. There was risk which is why Country Garden stock has plummeted into a penny stock. A lot of investors would say it was just a matter of time but now it has officially happened. Country garden defaulting on their dollar bond declared for the first time. We will bring more headlines and comments as we get them. Coming up, santanders net income these Beat Estimates. Can the bank carry positive momentum into next year . We will discuss that with the santander cfo, jose garcia cantera. That exclusive interview next. This is bloomberg. Kriti welcome back to daybreak era. Im kriti gupta in london. Spains biggest bank had better than expected thirdquarter income. With us now is the cfo of banco santander, jose garcia cantera. Lets get right into it scared these numbers are pretty strong. Where is the biggest growth . Jose thank you for having us on the program. Again, we have delivered another very strong set of results of the 9 million customers in the first nine months of the year, growing revenue to double digits and improving efficiency as part of our transformation program. We have earned 2. 9 billion in the quarter. They are record figures for santander. This is equivalent to return on tangible equity of 14. 8 . Dividend plus share has grown 12 in the first five months of the year. While we have strengthened our capital to 12. 3 . A very good set of results. Basically the key variable that explains these results is our diversification. We have very good performance in europe improving profitability in all countries and we are starting to see benefits of lower rates in latin america. Kriti well, they certainly are very crucial numbers, and before i move on the different pieces of your business i want to ask you first about your loanloss provisions because those are actually higher than the market was expecting. The estimate was 3. 1 billion and you reported 3. 3 billion in loanloss provisions. How much of that as a result of the macroeconomic take out of santander . Jose we expect we have guided the market for cost of risk to be below 1. 2 . It was 1. 13 in september and we are in line and actually better than our estimates for the year. We are better than the 1. 2 by december. Obviously, we have some normalization of the cost of risk in some economies as the rates go up. But we are starting to see actually much better performance in the outlook is improving in countries where the rates are coming down, like in brazil. Overall, we are very pleased with our asset quality evolution. The key variable for future is the strength of the labor markets. Labor markets are very strong in all economies where we operate. So we dont see a deterioration in asset quality in the coming quarters. Kriti it all sounds great on the surface and i want to dive into the brazil conversation in a moment. Those provisions are up by 1 5. Tell me where the spots of distress might actually be. Jose the increase is coming in the u. S. The business in the u. S. Is normalizing. The provision for the auto business in the u. S. Is low in the first half of the year and they tend to go up to the second half of the year. They are gradually normalizing. We believe though that the change our business makes will lead to significant lower provisions than what we had on the prepandemic levels. In europe, we are seeing higher provisions in the u. K. Coming from very low levels, actually a reversal provisions last year. But asset quality and provisions are improving in spain, improving in brazil, flat in mexico. Overall, as i said, very much in line with our expectations. Kriti lets go to the brazilian story as well. We know that is one of your largest markets for sand had air. Talk to us a bit about the risk four santander. Talk about the Brazil Company coming under pressure and commodity and costofliving. Where is the reason through into your bottom line . Jose when Interest Rates started to go up, we tightened our credit standards. We went into this period with a significantly more prudent policies. We have seen that in the sense that we have been growing a bit less. This is a country with very low penetration and we have been growing our own portfolio and the Single Digits in the last couple of years. Interest rates have already started to come down, down 100 basis points from 1375 to 1235. We expect them to come down another 100 basis points more before the year end and maybe 200 or 250 next year. Lower rates actually helps in terms of volumes, and we would expect to recover doubledigit growth next year. Also in terms of asset quality, we had an increase in asset quality. There was an increase in the cost of rates. Now the rates have come down and we have seen an improvement. So we are very confident that our profitability in brazil will turn around and start improving significantly next year from 2023. Kriti are you confident though that increase in volumes is going to make up for your net interest margin, the idea here simply being that if you do see that dramatic decrease in rates, 100 or 250 basis points, you have that much volume to make that up . Jose send latin america and brazil is a good example, we have actually negative sensitivity to rate. We repriced deposits immediately where loans take a bit of time. As Interest Rates go down, our margins actually expand. When Interest Rates went up, our margins contracted, and thats why our profitability went down in the last couple of years, one of the reasons. As Interest Rates go down, the opposite is going to happen. Our margins will widen while we have a recovery in loan growth. At the same time, an improvement in asset quality. Actually, we are very confident about profitability in brazil and it will improve in 2024 significantly. Kriti lets take that concept and apply it to perhaps you are more european piece of the equation as well. Loans and advances to customers decreased about 7 yearoveryear. That growth you are seeing in latin america and brazil specifically, how worried are you about needing to cover the losses right here in europe . Jose in europe, we are seeing very, very muted long loan demand. In other countries this is the natural result of higher rates, but also we are seeing significant early mortgage repayments. So, our customers are using the savings they have been accumulating postpandemic to repay their mortgages early. So we are in limited loan demand and most of the contraction is coming from the very large European Companies on early mortgage repayments. That explains basically the contraction of our Loan Portfolio in europe. Kriti lets go from europe to the u. S. We are doing a tour around the world with you this morning, jose, and we appreciate your patience. In the United States and the fallout of the Credit Suisse debacle in ubs takeover, theres a lot of market share in the Investment Banking space, specifically wall street for sand had air four santander to make their mark. Santander is looking to double the size of corporate Investment Banking in the u. S. How is that going . Jose corporate Investment Banking is more corporate than Investment Banking. We have been growing in a very consistent and profitable manner over the last few years basically with a very customer centric strategy playing to our strength which is our physical presence in north america, europe, and south america. As a result, we have developed a very profitable, efficient, Investment Banking business, probably the most efficient around the world with the cost of 40 . With these processes, we have been attracting talent in all places, europe, south america, north america. Today we announced we are going to strengthen our presence in the u. K. And the u. S. We believe these will allow us to continue with the strategy of profitable and consistent growth. Kriti jose, you say it is profitable and it is indeed profitable, but it is also one of your most expensive parts of the businesses as you look to grow a completely natural part of the growth process. Given the macroeconomic environment, is that something that santander is going to double down on . At what point do you say this is too expensive and we have to pull out . Jose our model is significant a different from what other banks do in this phase. We are customer centric and our cost income is 40 . It traditionally is in this industry exceeds 50 or 70 . Our model is really very efficient and given our presence in north america, europe, and south america, we can be a very key player in capturing the flows that exist between these three regions of the world. Those are our strengths, and we have demonstrated this in the past. Playing to our strengths meaning sustainable and profitable growth. Kriti it is something we will monitor very closely. We thank you so much for your insights and your tour around the world for us. That is our exclusive interview with the ceo of santander, Jose Antonio Garcia cantera. Plenty more ahead. Stick with us. This is bloomberg. Kriti welcome back to daybreak europe. Im kriti gupta in london. We are in the thick of the earnings season. We have lloyds in a few minutes. These are the numbers i want to highlight. Next revenue estimate is 4. 7 one billion pounds. The margins are in focus. How much are they able to capitalize on higher Interest Income rates and that is where this number matters, net interest margin. It is higher by 3. 1 , the number you want to watch that could affect how lloyds trades at the european open. This is everything you want to keep in eps of just two pence does that change as lloyd reports in a few seconds. Up next, markets today with the allstar team. Stick with us. This is bloomberg. The power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. jennifer the reason why golo customers have such long term success home of the xfinity 10g network. Is because we focus on real foods in the right balance learn more today. So you get the results you want. 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