We speak with the c. E. O. Imminently. After that Deutsche Banks c. E. O. Joins us. No moves expected from the fed but markets will want clarity on the pace of asset purchases. Before then, First Quarter u. S. G. D. P. Will show the initial virus damage. Magnus they will. Or not. Eantime damage Deutsche Bank, lets get to the eadline. Weve seen this reflected across the spectrum over credit suisse. Good volatility. The americans also doing quite nicelyful. But when it comes to credit loss provisions for this year, youre looking at 35 to 45 basis points of loans. In basis point term , the outflows on management side of 2 billion. Two billion ewe roes, excuse me. A triumphnt 1. 5rk the market accounts for 1. 69. This has been the lead number there is a live on the blg there. The credit loss vision 25 to 75 points. Nejra dont miss our interview. 7 00 a. M. You see futures leading after alphabet results. We could see yields slightly higher. Dollar extend losses an even with oil, yesterday, you saw s p advise clients to sell down june contract wesms saw powerful losses again. W. T. I. Bouncing back today and italian bonds will be very much in focus of being out a cycle downgrade. The stable outlook may ease fears to move of noninvestment grade. Well keep an eye on that as well as all the earnings. Back to the loan losses, they have surged less than feared. For the First Quarter came in at 154 million euro, well under the estimate of 318 million euro sms total operating income came in the a two billion euro, slightly under the estimate of 2. 04. Net income was at 433 million euros. Joining us to discuss on the phone is the Bank President and group c. E. O. Frank. Great to have you with us on the show. Thank you for joining us. Lets talk about the outlook, the longer term outlook for Loan Loss Provisions. I understand there might be some difficulty to make any con claugs on that. Can you give us guidance on the outlook for Loan Loss Provisions for the year 2020. Thank you. Yeah, let me just start with a ouple of comments. Nordea is answering this crisis in vor strong position. We also enter the crisis with a welldiversified credit portfolio but of course there will be higher provisions due to the uncertain economic outlook. That is what we see in q1. When we look at the provision we need to have it in two parts. The first one is, you can say, the loan redser vations. These are low. 34 million euro, that is basis points for the portfolio. It looked quite sthrong in the quarter. On top of that one we haveing mored adjustment to have 122 to cover for the likely near term impacts on our Customer Base near term. So the question of course from you will be ok, what is the longer outlook then . And that is too early to onclude about. Magnus good morning to you, frank. It is very early and there are many variables. Whats the single Biggest Issue in your exposure to oil and energy . Can you quantify that . The scale of your exposure to oil and energy and the level of those loans or credit that youve made that are in a risky position of having to be provided for. If you look at the most exposed sectors, you can say then you need to remember before we answer that question that we are very big retail bank, also quite a big corporate book. But the corporate book when you look into which sectors is not that big actually. We look at the most expected to be most impacted by the directly impact from corona now, were talking about. 5 of our loan portfolio. Then im talking about reaching trades. Anticipation. Oil and gas andoff shore and so on and so on. It is not that, of course it is a substantial number but not that big an amount. We have coverage for wealth coverage when coit tom when it comes to that portfolio already. So of course its hard to say what will happen within the portfolio. What we did was, as i mentioned, we added aing mored adjustment of 120 in this quarter. With the earlier adjustments we have done we have now 327 million euro ining mored adjustments leading up to a total allowance of 2. 4 billion euro losses. What it will look like in the coming quarters is to too soon to say. Nejra still too early to say about coming quarters. In terms of taking a massive hit if the coronavirus shock, id like to get a flavor of how more demand for corporate loans, specifically for revolving Credit Facilities what that looks like for you and whether it means that the bulk of impairments may be booked in the Second Quarter . Yeah, the activity level has been very high. We have had like a pick up of 30 in the quart for the relation to corporate meetings r interactions with customers. Ic say the amount of loan applications in march has been 30 billion euros. We are talking about quite big numbers. I think the look at our customers, they are in very good shape, of course they are concerned but they have been quite satisfied to try to stabilize the Balance Sheet. Then of course longer term will be a risk migration potentially. We also have updates and that we will do later on in accordance with guidance from the regulators and what that will lead to, it is too early to onclude. Magnus frank, what is going to change . What is going to materially change as you deal with the evolving world of covid, shutdowns an reopening . Are you going to have to look at lening standards . How are you going to operate Going Forward . Will there be new risk metrics . What are you and the board considering implementing in terms of risk Going Forward . When you say lending standards, try to help me so i can will you tight then lending standards, will you stop lending to certain sectors . Whats your rue at this stage . Yeah, what we need to remember is that it is not now you should change your credit policy. That you should have done a long time ago. When youre entering the crisis, you enter the crisis with the portfolio. If you dont have done that then of course you will have a tough time potentially now. What we need to remember is that we if you look back on n; rdeas track record on losses it has been strong. Looking back to also the financial crisis and the way we came out of that one and hand they would crisis, grew the business, we handled the risk side, that is we have a strong credit culture. We have a strong credit book. Then we also need to remember that the last couple of, three, four years, we have risked, we have left marks, we have left or exited certain segments where we thought that we saw the risk was too high for some also oil and offshore. Credit ick to our policy. We of course are cautious. But with the situation we have, with the situation we have, we are here to support our customers. Magnus frank, we hear the cautionary tale there in terms of looking after guardians of capital. We wish you well in the rest of your day. Heres headline this is wednesday morning. U. S. Coronavirus cases up, above 58,000. Thats more american lives lost than in the vietnam war. President donald trump is signing an executive order saying the closure is threatening the food supply chain. The agency is delivering an out of cycle downgrade. One level above junk. Timing of the move may catch some investors offguard as fitch wasnt scheduled to hold its next review until july 10. Ut stabilized. In ia is still in discussions with china about the origin of the coronavirus. There are talks of boycotts of australian products. British airways is cutting 12,000 jobs, about 30 of its work force as part of a restructuring for a long down turn in the airline industry. 1. 3 billion euro charge from fuel and currency hedges added added to the carriers First Quarter losses. With the planes grounded, the results are likely to be significantly worse in the Second Quarter. Global news 24 hours a day on pick by quick bloomberg. Coming up, creating the list of First Quarter revenue for Standard Charter. Andy hallford joins us. Thats next. This is bloomberg. This is a bigger event than the 2008 financial crisis. Its probably 20 trillion. Magnus this is bloomberg day break you were. Standard charter set aside 956 million against potential losses as problem loans spike during the coronavirus pandemic. Joining us now is the International Banks emerging markets focus lender reported its provisions in 2015. Its not just virus impacting the lender, Standard Charter has also found itself plagued by a string of corporate scandals, potentially affecting as much as 600 million in loans. Joining us now is the c. F. O. Andy hallford. So andy, great to have you with nejra and i this morning. The market wants to get to grips with understanding where you are right now with your loan loss provision an how bad a number we could look at for 2020. So take us through the numbers and the guidance for the end of the year. Ok. Good morning to you. Just very quickly on the numbers, weve actually had a strong start to the year. Especially given the external environment. Top 5 or 6 for the quarter. That was in a period when particularly the coronavirus was mpacted of this northern asia. Overall, a strong top line, who controlled expenses, the one area was the credit impacts. Like with most banks there has been obviously a need to top up on provisions. When you put all of that together the underlying profit is down 10 in the period and that would have been increased but for the extra credit impairment. Its coming in strong. He markets most impacted earliest are those of that nature and we are eseeing that. Particularly now into europe. The hope we have is that northern asian markets would be the first ones to recover from this. Markets,t they are the how this does play out, that should give us some confidence as we go through the next courses, which will be difficult for everybody, we should come ut better than some. Nejra its great that you are already looking to the recovery. But if i could get a sense from you still on the estimated credit impairment for 2020. Hsbc yesterday gave a range for 2020 of ecl provisions of between 7 billion to 11 billion. Can you give us a ballpark figure they have 2020 credit impairment . Incredibly difficult to predict. As you will understand there are many, many moving parts here. What this will be most dependent upon is probably two or three things. Firstly, the success that countries have moving out of lockdown. If we see countries like is happening tentatively in northern asia coming through this quicker, that will bode well for credit impairment. If it takes longer, obviously, there will be more likelihood of credit impairment. Secondly the extent to which states support businesses and helps them get through the period. Many governments have reached yet to ot of those have become effect. Oil prices will clearly play a role as well. The reason ill put a number thope full year, it will be a higher year on credit impairment. We are well capitalized, well able to afford it. We will see how it turns out and all will become clear then. Magnus i caution use a cautious use of language there. 505 ask you, youve got million stage three impairments, you say its due to two separate exposures. One in Commodity Trading and one in health care. Can i ask you is that n. M. C. And hinyong and if so can you break 505 million the between the trader and health care provider. Youre right, about half our chart is what we call phase three, where we have an observable problem. We do comment upon particular we dont comment on particular client names or client situations. Those two names have been well publicized. We have wrapped up any major implosions which we know of, that was included in that number. Nejra well be straight back with you. Andy halford. Great to have you with us. Taking a look at the market. Were deep in corporate earnings system, theres a strong wisconsin on risk on tone. U. S. Futures higher, particularly nasdaq futures after the alphabet results. Europe looks to be higher as well but keep an eye on b. P. I. s. A stable outlook may limit the 10year yield. W. T. I. Bounce back a little but is it just Short Covering after a punishing two days . This is bloomberg. Nejra this is bloomberg day break you were. Lets get back to andy halford, c. F. O. Of Standard Charters. Thank you for sticking around. Lets pick up a little bit on corporate clients. Hsbc said yesterday that theyve actually seen some corporate clients begin repaying Loan Facility that theyve recently drawn down in the early stages of the crisis. Are you seeing the same trend at Standard Charters . Yes, we all are. I think what happened in early march, this was sectorwide, was a number of clients who felt that just to be safe they should draw down facilities they had got in place already and make sure that essentially the cash was in the bank and that there are they were safe from the liquidity point of view. As the months rolls on, coming into april, many of those corporates have realized that actually the Banking System here was not the issue, it will be a customer command issue and hence we have, like others it sounds, seen actually some replacement, some reduction in the drawdowns and new back to more normalized levels. Magnus maybe past the peak frenzy there. Fitch downgraded your outlook to negative from stable. They did say you have strong liquidity but warned on your oil and Energy Exposure 15 billion, i want to get a sense of how much of that is at risk, andy. Are you preparing for zero prices again on oil . If so, how . Yes, fitch has take then view across the sector they changed the outlook not the rating on those. So i think that is understandable in the world that e live in. Its one of the air yeas do lend it to. I think what is important to understand there is that the level of lending we have got is now probably about 20 compared with 2015 when we were setting about the restructuring of the business and the areas in which we have ranked have actually become much more select. The proportion which is to high grade investment is significantly higher than it was before. More of this is shorter term and therefore it will work through. So im concerned by it but obviously very low oil prices we eed to monitor that carefully. Nejra weve not not gutch weve not got much time yet but i want to talk about buybacks and dividends. Any word on resumption of those . They have both been suspended for now, as most people are aware. We will look at the end they have year whether or not those come out and see where the forward position looks to be and then make further decisions at that point in time. Magnus ok. A lot to expect in the next conversation between the three of us then, andy. In terms of provisions and dividends and buybacks. We wish you well in these turbulent times. Andy halford, c. F. O. Of Standard Charter. Coming up, the global death toll om coronavirus just topped 217,000. The u. S. Has over a million cases. We discuss the pandemic right here on bloomberg. Westbound manus good morning from bloombergs middles headquarters in dubai. Middle east headquarters in dubai. U. S. Coronavirus cases top one million as the governments Infectious Disease specialist is optimistic. Standard chartered reports the biggest provision since 2015, and Deutsche Bank sees revenue slightly lower. No moves expected from the fed today, but markets will want clarity on the pace of asset purchases. Show therter gdp will initial weight of virus damage. Weve had a little bit of auto news. What have you got . Nejra daimler confirming its 2020 guidance. It started with a gradual ramp up of production and net liquidity of industrial operations down to 9. 3 billion euros at the end of the First Quarter, but its really the guidance line to draw your attention to. We just had a conversation with Standard Chartered cfo, and we were both trying to get guidance in terms of credit loss provisions for 2020. He said it is hard to predict those, but they will clearly be higher than recent years. He would not commit on the dividend, the buyback, guidance. What we can tell you is people a lot less branding. Remy cointreau sees sales dropping. , currentull year 5. 25ting profit is a lower. Its a pretty stunning blowup number. Revenue drops 25 . Fullyear profit down, so they are giving guidance, and you know where people drink remy cointreau. Its in china. He got a little bit of vw. You got the car is what happened . Nejra i know. For someone who doesnt even have a driving license. Severely below 2019, that is the red headline, so seeing Sales Revenue significantly below 2019. It is the 2020 deliveries significantly below 2019. That is not going to come as much of a surprise. The take away is that it expects profit to drop severely after fallout from the coronavirus pandemic force factory stoppages. Vw had abandoned its earnings outlook earlier this month, so we are getting a little bit of guidance there in terms of the 20, but it is going to avoid the 2020 loss despite a severe hit from the pandemic. Quick withs take a around the markets. You just heard the cfo from Standard Chartered talking about recovery, recovery of north asia. Asian markets back in bull territory. Aussie dollar, if you want to pay the recovery trade, where do you want to belong . Is it in the aussie dollar trade . Is rollingitself over. Brent manages to eke out a gain of 3. 3 percent. Rolet across, you have a look at some of the other market cash bonds closed and asia. These are the futures. It is fed day. Dollard about the rolling over. Dollar down. That is a dollar story less so than a yen story. Room . Need an evans thats a question we will be asking. The unitedabout states. 8 million coronavirus ,ases, over 50,000 deaths within double the deaths of italy. Issident trump says it necessary to keep the countrys Meat Industry and poultry supply chain operational. We have leaders giving more detail plans of how they will ease the lockdown. France looking at reopening shops on may 11. Spain has said eight weeks to remove restrictions and reach a new normal. At chief strategist principal global investments. Global stocks up 27 . Moodys telling me we are facing a global recession. 26 Million People unemployed in the United States of america. Does it tally for you . You are right. The application is incredible when you look at the underlying economics. On the fiscal side, i think it really did almost go over what people were originally anticipating, so there has been a lot of moves, but if we look at how quickly markets move down and watch and the gravity of the situation and much, it did mean markets just expectations very, very quickly and come to terms with the unprecedented drop in activity we were likely to experience in q2. See the pmi data from last week coming in extremely weak, the market does not seem moved. They are already looking sound after 2021. Mindsets the market that the worst is behind us . So even if we get a drawdown, if not going to be anything too extreme . I think it is. Policy making, we need to take out a lot of panic and the liquidity concerns that were starting to overwhelm markets. Doing that, they put this extremely bad news behind them. I know markets are certainly not pressing that in and we are slightly concerned that if that does happen, you could see renewed calls again, but the one positive is policymakers are were of what they need, so think the intervention will be quicker, a lot more targeted, even more so than we saw in march. Manus the biggest global volatility markets seem to be in the oil markets. We are going to show viewers a chart. The relationship between the s p the highest in six weeks, and then you have the bloomberg commodity index, the lowest since 1974. My question to you is this the markets seem as if we will press again on the dime side the downside on oil, and that has huge consequences, doesnt it . You know, it does. Last week when we did see oil , it. Oil prices move could not have brought closer to home how much the devastation of Economic Activity has been. Of course, theres supply issues and the technical squeezes we saw, but, you know, world is to what the facing, which is as long as you have demand structures, this will continue to weigh on sentiment, and it will, i think, just weigh on investors looking at the future. How is this recovery going to play out . Recovery and Economic Activity is going to be verys tilting. Id like to get your take on how much italy is going to play out on broader sentiment. We get this out cycle down rate by fitch thinking with a stable outlook, that might limit the upside when the market gets going in about 20 minutes time, but when you look at italy, how does that impact your view of, say, european equities and the euro, if at all . It does. It is down to italy and spain, there is a second recession, i think the epicenter will be italy. It always has been. As they have suffered through this coronavirus, they simply the same as asia. Almoststarting to hear at revising of european sentiment. Countries need to acknowledge that they do need to step in and. Rovide some aid we think that could be a problem. Hat continues to grow the key will be where does the eu summit go over the next few months . Willing will they be to draw on the ease and, especially if the ecb is willing to expend purchases. We will keep an eye on those. You are staying with us. Now lets get to the first word news. In the u. K. , Prime Minister tellinghnsons top aide us Dominic Cummings was more than a bystander at a meeting meeting of scientific experts. Politicaldenies experts influenced the meeting, saying it is inappropriate for politicians to influence the meetings. He stable outlook may ease fears of a future cut to noninvestment grade. Samsung is warning of a prophet slide this quarter as the coronavirus pandemic is hurting demand for smartphones and gadgets. The memory chip business is expected to remain solid but overall earnings to decline. How about shares surging after First Quarter results . Cloud and you two businesses kept growing. Sales came in at over 33 billion, up 14 from a year ago. Youtube revenue jumped by over a third and google cloud topline sword. Global news 24 hours a day on air and it quick take on bloomberg powered by more than 2700 journalists and analysts and more than 120 countries. Breaking lines from airbus, quite a few to get through here as the ceo is speaking on a conference call, saying that airline spending cutbacks were not fully visible in the First Quarter. Orders still good and helicopters, military, and space, but the urgent priority is cash containment in the shortterm. Airbus is also addressing longterm cash structure, deferring and spending noncritical activities according to the cfo. He also says april, the month we tougher,f course, was so maybe that gives a signal for what is to come. They see deteriorating cash flow this quarter but say that government funding should not be necessary, so there is a lot to take in, they cfo saying the company has seen challenges on the customer and the supplier side and that airbus cannot support the entire aerospace ecosystem. Selected supporting customers and suppliers. Coming up, it is a big day for the u. S. Economy. Meetsy afterward, the fed. This is bloomberg. We saw a risk to the outlook for the economy and chose to act. Reduced the target range for our policy Interest Rate by one percentage point, bringing it close to zero. We are deploying these lending powers to an unprecedented extent. We will continue to use these powers forcefully, proactively, and aggressively until we are confident we are solidly on the road to recovery. That was a recap of the fed response to the pandemic ahead of todays fomc meeting. After cutting rates and pledging up to 2. 3 trillion in loans, policymakers are now likely to focus on other steps to save the economy. Investors will look for guidance on the question of yield curve targeting and on Forward Guidance for rates. The fed meeting comes on what is set to be a historic day. The record loan u. S. Expansion is all but certain to come to an end with the release of First Quarter gdp data. Figures are expected to show the economy shrank amid the covid19 pandemic. Principal Global Investors is still with us. Theres a number of things investors are looking out for. Weve mentioned a couple there, the pace of bond purchases, yield curve control. What is most important for the market to hear from jerome . Owell today as you said, there will be significant market focus, that i do not think there will be any major announcements at todays meeting. If you remember, at the previous meeting in the statement, it sounded as if they would essentially destroy a lot of the assistance they are providing once the pandemic is over. Two than expect Interest Rates to rise once the pandemic is , we expect to be given some clarity by Jerome Powell today. Risk . Isnt that the many people accused them last time around of being so quick to talk about an exit plan that they minimize the risk. You lose maximum impact if you rush talk about normalization. Rate or need an express an inflation rate, and express focus for the market. Is that a real risk that they suboptimal lies their maximum impact . I think it is possible they do announce a marker of where they could start withdrawing a lot of the stimulus. I think maybe one of their reluctance as will be, again, after the financial crisis, they also have to revisit and change what the market has put down. We should not be anticipating. Ny kind of tightening there is no doubt that during the press conference, Jerome Powell will be pressed on a number of issues. Tuff like yield curve control these are things he will be , and it will be important for him to suggest we will provide support if deemed necessary. Factorshould investors deflation risk into the portfolio . I think it is a risk, but when we look out further on for the longterm investor, we start to think that with the changes in pricing we are anticipating, there will be an influence and pressure over the longerterm. Thank you very much out for those inflation risks. Yet, australia managed to deliver a banner year. We go live to new york to discuss the political ramifications of Donald Trumps order for meat plants to stay open. This is bloomberg. Manus President Trump has designed has signed an executive order setting up a showdown with companies. Is trump exactly proposing . What it means is that theident trump is deeming Meat Processing plant Critical Infrastructure in order to keep the country fed. We talk about Meat Processing plants, we are talking beef, chicken, eggs, and pork, and it comes as estimates say about 80 of capacity could be shut down. This comes after we heard from tyson foods, which is the biggest and the United States. Even though we did have workers fall ill in march, a lot of these supply chains kept going. Theres just a handful of companies that can do this and keep the economy fed, but and keep the country fed, but theyve come under immense pressure from activists and unions. One union saying at least 20 workers have died from the coronavirus and another 5000 have either tested positive or had to selfquarantine. This morning, President Trump is going to be meeting with industry leaders, so this story is not over just yet. Nejra we will be back with you tomorrow. European futures slightly in the green. A stable outlook might limit the upside. This is bloomberg. Anna good morning. Welcome to Bloomberg Markets european open. Im anna edwards live in london, alongside matt miller in berlin. Matt good morning. Say return tokets risk. Stock markets climb as a beat by alphabet buoys sentiment. It is a heavy earnings day on the dax here in germany. Futures are pointing higher. The cash trade is just an hour away. We have a lot in terms of earnings, as i said, and that includes Deutsche Bank. I spoke with the cfo by telephone a few minutes ago. Take a listen. Think continued Balance Sheet strength is certainly visible in our numbers. I think the ratio remains very strong. Our liquidity remains strong, so that is obviously a good foundational starting point. On the p l, what i think you are seeing is the impact of a restructuring and the Strategic Decisions we made last year, so we were very gratified to see the Business Performance had to the core bank in particular where with the Revenue Growth of 7 , expense reductions of 4 , we created 11 operating