Bank of Cyprus Holdings PLC · CSECY:BOCH
Bank of Cyprus — 9M 2017 Earnings Presentation
60 slides from Bank of Cyprus's earnings presentation, Nov 21, 2017
Slide 1: Group Financial Results for the nine months ended 30 September 2017
Bank of Cyprus Group Group1 Financial Results for the nine months ended 30 September 2017 21 November 2017 Financial information included in this presentation is neither reviewed nor audited by the Group’s external auditors. They are presented in Euro (€) and all amounts are rounded as indicated. A
Slide 2: 9M2017 - Highlights
9M2017 - Highlights Continued • Ten consecutive quarters of NPE reduction Progress on • NPEs down by €588 mn qoq to €9.2 bn (down by 17% during 9M2017 and by 39% since December 2014) ‘organic’ Balance • Coverage at 49%; medium term target substantially achieved; coverage now above EU average1 Sheet
Slide 3: Continued progress on NPEs reduction
Continued progress on NPEs reduction €1.9 bn reduction in NPEs in 9M2017; down by 39% since peak €1.1 bn reduction in 90+DPD in 9M2017; down by 45% since peak NPEs (€ bn) NPEs ratio 90+DPD (€ bn) 90+DPD ratio 63% 62% 60% 53% 15.0 50% 60% 14.0 55% 52% 50% 50% 41% 40% 48% 39% 50% 37% 40% 12.7 11.0 10.
Slide 4: Coverage ratio above EU average
Coverage ratio above EU average Medium term target of 50% NPE provision coverage substantially achieved 50% by year end 45% EU average 68% 65% 65% 63% 60% 58% 58% 57% 54% 51% 50% 49% 48% 45% 45% 45% 41% 40% 36% 33% 33% 31% 31% 29% 29% 29% 27% 26% 26% RO SI HU CZ PL BG HR SK AT FR IT BOC GR BE PT ES
Slide 5: €1.7 bn NPEs reduction in 9M2017 (Cy operations)
€1.7 bn NPEs reduction in 9M2017 (Cy operations) Reduction continues through curing of restructured loans, collections, write offs and consensual foreclosures (DFAs) FY2016 NPE net reduction : c.€2.8 bn 9M2017 NPE net reduction : c.€1.7 bn 0.85 (1.63) (1.12) (0.86) 0.57 (1.30) (0.66) (0.30) 13.26 10
Slide 6: Multi-tiered strategies launched to accelerate de-risking
Multi-tiered strategies launched to accelerate de-risking Group -Gross loans €19.3 bn Performing • High quality new business Performing • Re-defaults of new lending in the past 24 months <2% Performing €10.1 bn 10.1 Forborne, no impairments no arrears • Expect majority of €1.4 bn to exit NPE status
Slide 7: REMU – the engine for dealing with foreclosed assets
REMU – the engine for dealing with foreclosed assets 1 REMU focus now on sales (Group) € mn 356 (204) BV1 (31) 1,427 1,548 Stock as at 01 Jan 17 Additions Sales Impairment loss Stock as at 30 Sept 2017 2 2 Property stock split – on boarded at conservative carrying value3 (Group) Cyprus: €1,397 mn €
Slide 8: Robust REMU sales, to be further supported by launch of Real Estate Fund
Robust REMU sales, to be further supported by launch of Real Estate Fund €364 mn offers accepted ytd (c.€300 mn sales agreed); REMU profit of €24 mn in 9M2017 4 Sales > €380 mn achieved since REMU established (Group) Sales Cyprus Sales Greece and Romania • Launching of listed Real Estate fund in Cyp
Slide 9: New lending of €1.7 bn in 9M2017 exceeding new lending in FY2016
New lending of €1.7 bn in 9M2017 exceeding new lending in FY2016 Focused on new Good Quality Business; Robust new lending, supporting the Cypriot economy 9M2017– Total New Lending of €1.7 bn (Group) Tourism & Trade core sectors Contribution to 1H2017 Real GDP growth in p.p. (total 3.6%) 424 Cyprus U
Slide 10: Capital ratios remain adequate
Capital ratios remain adequate Organic capital rebuild through operating profitability and b/sheet management 1.8% min SREP requirement COR 2018 6.3% (8.8%) <1.0% >13% (1.0%) 14.0% 12.3% 12.4% 9.5% 9.5% 9.5% 9.375% 1 CET 1 Operating RWA reduction Provisions Other CET 1 CET 1 (transitional) 2018 Oper
Slide 11: Lower SREP capital requirement expected for 2018
Lower SREP capital requirement expected for 2018 SREP 20185: CET1 ratio reduced to 9.375% SREP 20185: Total Capital ratio reduced to 12.875% 1 2 1` Pillar 1 Pillar 2 CCB Pillar 1 AT1 capital 4 Tier 2 capital Pillar 2R CCB 2 13.00% 12.875% 12.4% 9.50% 9.375% 13.8% 1.25% 1.875% 1.25% 1.875% 3.75% 3.00
Slide 12: Improved funding and liquidity position putting pressure on NIM
Improved funding and liquidity position putting pressure on NIM Lower L/D ratio due to increase in deposits 3 3 Downward pressure on L/D due to increase in deposits c.€730 mn increase in deposits in 3Q2017 1 Loan to deposit ratio EU average Loan to deposit ratio 2 Cyprus non-IBU Cyprus IBU UK Other
Slide 13: De-risking is reducing net loans…
De-risking is reducing net loans… Group Net Loans down 14% driven by 34% reduction of Legacy Net Loans 1 2 Net Loans € bn Performing Legacy 14% reduction of Group net loans 17.1 14.8 7.2 42% -34% 4.7 32% 9.9 +1% 10.1 58% 68% Dec-15 Sep-17 Dec-15 Sep-17 Performing • Net loans broadly flat, yet share
Slide 14: …resulting in lower Interest Income and NIM
…resulting in lower Interest Income and NIM Interest Income declines due to Lower Interest Income on loans Interest Income on Loans € mn Performing Legacy (pre FTP1) 231 217 203 204 200 195 180 118 106 96 91 87 92 77 113 111 107 113 108 108 103 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 52 bps NIM reduction
Slide 15: Profitability: NII & NIM trends – Performing vs Legacy
NII & NIM trends – Performing vs Legacy Additional 30 September 2017 Performing1 Legacy2 Provisions Group in 2Q2017 Interest Income on loans (€ mn) (9M2017) 318 257 575 (pre FTP)3 • Performing Book is expected to grow and to increasingly drive Group results Profitability Provisions4 13 (256) (486) (
Slide 16: Non interest income up 11% qoq, driven by €12 mn profit on REMU sales
Non interest income up 11% qoq, driven by €12 mn profit on REMU sales Analysis of Non Interest Income (€ mn) – Quarterly Net FX gains / (losses) & Net gains/(losses) on other financial instruments, and other income. Gains/(losses) from revaluation and disposal of investment properties and on disposa
Slide 17: Total expenses stable; Focus on costs containment initiatives
Total expenses stable; Focus on costs containment initiatives Total operating expenses (€ mn) Staff costs Other operating expenses • Staff costs at €57 mn for 3Q2017, at same levels as 2Q17 96 96 101 100 92 93 95 • Other operating expenses at €43 mn for 3Q2017, at same 38 37 41 44 43 levels as 2Q17
Slide 18: Operating profitability of 3Q2017 directed to provisions
Operating profitability of 3Q2017 directed to provisions (9M) € mn 9M2017 9M2016 3Q2017 2Q2017 qoq % Key Highlights yoy% Net Interest Income 454 524 138 160 -14% -13% • NII and NIM for 3Q2017 amounted Non interest income 239 193 85 77 24% to €138 mn and 2.86% 11% respectively, compared to €160 Total
Slide 19: Basis for forward guidance
Basis for forward guidance Reaffirming 2018 Preliminary Guidance of EPS ~c. €0.40 and CET1 > 13% • Interest Income impacted by the reduction of Legacy Loans, 2018 NIM expected ~2.75% • Short term outlook is dependent on speed of reduction of Legacy book and growth of Performing book Revenue Outlook
Slide 20: On track to deliver Group KPIs
On track to deliver Group KPIs Key performance Dec- Sept- Medium Type Preliminary 2018 EPS6 Guidance maintained indicators 2016 2017 Term Targets 90+ DPD ratio 41% 37% <20% <30% NPEs ratio 55% 48% <30% <40% Asset quality NPEs coverage 41% 49% >50% Substantially delivered Provisioning charge1 1.7% 4.
Slide 21: Key takeaways
Key takeaways Continued • Ten consecutive quarters of NPE reduction Progress on • NPEs down by €588 mn qoq to €9.2 bn (down by 17% during 9M2017 and by 39% since December 2014) ‘organic’ Balance • Coverage at 49%; medium term target substantially achieved; coverage now above EU average1 Sheet repair
Slide 22: Key Information and Contact Details
Key Information and Contact Details Credit Ratings: Standard & Poor’s Global Ratings: Long-term issuer credit rating: Assigned at B/B on 23 October 2017 (positive outlook) Short-term issuer credit rating: Assigned at B/B on 23 October 2017 Fitch Ratings: Long-term Issuer Default Rating: Affirmed to
Slide 23: Appendix – Macroeconomic overview
Appendix – Macroeconomic overview 23
Slide 24: Cypriot economy on a sustainable growth path
Cypriot economy on a sustainable growth path GDP growth of 3.9% in 3Q2017 Falling unemployment rate Real GDP growth (%) Unemployment rate 18.0% 15.9% 16.1% 16.0% 14.9% 2010 2011 2012 2013 2014 2015 2016 1Q2017 2Q2017 3Q2017 2017E 3.7% 3.9% 3.9% 3.4% 2.8% 14.0% 13.0% 1.3% 1.7% 0.3% 11.8% 11.5% 12.0%
Slide 25: Economic activity on the back of improving macro fundamentals
on the back of improving macro fundamentals Economic activity has been broadly based Tourism arrivals (mn) Tourism Revenues with main drivers tourism and construction Contribution to 2017H1 Real GDP growth in € bn % of GDP percentage points (total 3,6%) 4.00 3.6 14.2% 3.50 13.0% 1.1 3.2 1.0 11.5% 11
Slide 26: Appendix – Additional asset quality slides
Appendix – Additional asset quality slides 26
Slide 27: Ten consecutive quarters of improving credit quality trends
Ten consecutive quarters of improving credit quality trends High correlation between formation of problem loans & economic cycle Quarterly change of 90+ DPD (€ mn) 90+ DPD (€ bn) Slow deterioration Stabilisation Recovery Economic crisis 13.0 13.0 13.0 12.8 12.8 12.7 12.6 12.6 • €1.1 bn or 14% 12.0 1
Slide 28: Restructuring efforts continue; re-default level stable
Restructuring efforts continue; re-default level stable Quarterly evolution of restructuring activity (€ bn) (Cy operations) 1 2 Restructured loans Write offs & non contractual write offs DFAs 2.2 2.0 0.3 0.4 0.4 1.3 0.3 1.1 0.8 0.9 0.9 0.7 1.50 0.2 0.7 1.33 1.26 0.2 0.2 0.5 0.2 0.1 0.20.1 0.81 0.2
Slide 29: NPE inflows reduced by c.40% qoq; NPE exits as expected (Cy)
NPE inflows reduced by c.40% qoq; NPE exits as expected (Cy) NPEs inflows (€ bn) Redefaults New inflows Inflows as % performing loans 4.0% 4.5% 4.0% • Slowing of new inflows confirm: 2.8% 2.9% 2.8% 3.5% quality of new lending 2.6% 3.0% 2.4% 0.27 0.22 0.23 2.5% success of prior restructurings 0.1
Slide 30: 50% NPE provision coverage substantially achieved
50% NPE provision coverage substantially achieved On track to meet medium-term-target by year end Quarterly CoR at 1.5% and approaching medium term target Quarterly Provisions for impairment of customer loans (€ mn) Quarterly Cost of Risk - Group (excluding additional provisions in 2Q17)1 NPEs provi
Slide 31: Continuous progress across all segments
Continuous progress across all segments Focus shifts to Retail and SME after intense Corporate attention NPEs (Cy) €8.81 bn Corporate Dec 15 6.56 Exits (2.42) NPE ratio 46.4% Corporate 1.87 Inflows 0.37 Dec-16 4.51 NPE provision Exits (1.20) coverage 51.5% €3.48 bn Inflows 0.17 NPE total coverage 11
Slide 32: Gross loans by Geography and by Customer Type
Gross loans by Geography and by Customer Type Gross loans by geography 30 September 2017 (%) 1 Total Cyprus UK Other countries (€ bn) 1.8% 7.8% 22.59 21.85 21.08 20.60 20.13 20.01 1.21 0.72 1.17 0.70 19.50 19.25 0.33 1.18 0.63 1.23 0.60 1.30 0.56 0.51 0.38 Other countries 1 1.44 1.43 1.51 UK 20.66 1
Slide 33: NPEs by Geography and by Customer Type
NPEs by Geography and by Customer Type NPEs by geography 30 September 2017 (%) 1 Total Cyprus UK Other countries (€ bn) 13.97 13.33 0.64 12.49 0.07 0.06 0.63 0.05 0.57 11.03 10.37 3.7% 9.75 0.2% Other countries 1 0.02 0.51 0.02 0.46 9.16 0.02 0.38 0.02 0.33 13.26 12.64 UK 11.87 10.50 9.89 9.35 8.81
Slide 34: NPE provision coverage increasing to 47%; Total coverage (Cy) at 115%
NPE provision coverage increasing to 47%; Total coverage (Cy) at 115% Adequate NPE total coverage when collateral is included (Cyprus operations) Loan loss reserves Tangible Collateral1 Corporate SME Retail-Housing Retail-Other Total BoC –Cyprus 119% 118% 115% 115% 115% 114% 114% 112% 112% 109% 108%
Slide 35: Asset Quality- 90+ DPD analysis
Asset Quality- 90+ DPD analysis (€ mn) Sep-17 Jun-17 Mar-17 Dec-16 Sept-16 A. Gross Loans after Fair value on Initial recognition 18,532 18,693 19,142 19,202 19,607 Fair value on Initial recognition 721 812 869 928 989 B. Gross Loans 19,253 19,505 20,011 20,130 20,596 B1. Loans with no arrears 11,24
Slide 36: Momentum continues in 90+ DPD reduction as inflows are stabilised
Momentum continues in 90+ DPD reduction as inflows are stabilised Additional tools resolve long outstanding loan portfolios (Cyprus operations) FY2016: 90+ DPD net reduction : c.€2.8 bn 9M2017: 90+ DPD net reduction : c.€1 bn 0.56 (1.58) (1.09) (0.74) 0.53 (0.71) 10.63 (0.61) (0.16) 7.78 6.83 Dec 20
Slide 37: 90+ DPD provision coverage boosted to 62%; Total Coverage (Cy) at 125%
90+ DPD provision coverage boosted to 62%; Total Coverage (Cy) at 125% 23 pp1 coverage ratio increase since 1Q2014; over €2.7 bn additional provisions 2 Quarterly Provisions for impairment of customer loans (€ mn) 90+ DPD coverage ratio 61% 62% 53% 54% 54% 54% 48% 49% 42% 43% 630 41% 41% 592 39% 39%
Slide 38: Fair value of collateral and credit enhancements held by the Group
Fair value of collateral and credit enhancements held by the Group 30 Sep 2017 Loans and advances to customers (€ mn) Cash 333 Securities 350 Letters of credit / guarantee 265 Property 21,775 Other 658 Surplus collateral (10,212) Net collateral 13,169 38
Slide 39: 90+ DPD by Geography and business line
90+ DPD by Geography and business line 90+ DPD by Geography (€ bn) 90+ DPD ratios by Geography 1 1 Cyprus UK Other countries Cyprus UK Other countries 10.29 100% 100% 0.63 0.06 9.27 91% 90% 90% 90% 89% 0.57 8.77 0.05 8.31 0.53 8.01 0.06 0.51 7.56 48% 0.02 0.46 45% 44% 43% 42% 40% 0.02 7.18 39% 9.60
Slide 40: Further Analysis of 90+ DPD by Business Line
Further Analysis of 90+ DPD by Business Line1 90+ DPD by business line (€ bn) Corporate SMEs Housing Consumer Credit 2 RRD-Major Corporations RRD- Corporates RRD-SMEs RRD-Retail RRD-Terminated corporates RRD-Terminated SMEs & Retail 10.29 9.27 8.77 2.95 8.01 8.31 2.91 7.56 7.18 2.90 2.93 2.88 2.23 2
Slide 41: Analysis of Loans and 90+ DPD ratios by Business Line
Analysis of Loans and 90+ DPD ratios by Business Line1 Gross loans by business line (€ bn) 31.03.16 30.06.16 30.09.16 31.12.16 31.03.17 30.06.17 30.09.17 % of total 26% 8% 16% 6% 4% 8% 6% 3% 9% 14% 5.09 5.02 5.02 4.40 4.31 4.15 4.10 3.62 3.61 3.58 3.54 3.51 3.09 3.02 2.94 2.93 2.92 2.91 2.88 2.81 2.
Slide 42: Analysis of Loans and 90+ DPD ratios by Economic Activity
Analysis of Loans and 90+ DPD ratios by Economic Activity Gross loans by economic activity (€ bn) 31.03.16 31.06.16 30.09.16 31.12.16 31.03.17 30.06.17 30.09.17 % of % of total 11% 11% 3% 4% 7% 8% 15% 13% 16% 17% 35% 35% 7% 7% 6% 5% total 7.25 7.17 7.11 7.09 7.03 6.88 6.83 3.92 3.43 3.36 3.33 3.32 3
Slide 43: Rescheduled Loans for the Cyprus Operations
Rescheduled Loans for the Cyprus Operations Rescheduled Loans by customer type (€ bn) Rescheduled Loans (€ bn) Retail housing Retail consumer SMEs Corporate 8.3 8.1 7.8 7.4 7.1 6.9 316 1.7 6.7 1.7 1.7 0.6 1.7 1.7 (955) 0.6 0.6 1.6 1.5 1.7 0.6 0.6 0.5 1.8 1.7 0.6 1.7 1.6 1.6 (20) 1.6 7,402 (299) 216
Slide 44: Rescheduled Loans – Asset Quality
Rescheduled Loans – Asset Quality € ‘000 United Cyprus Greece Russia Romania Total Kingdom 30 September 2017 Neither past due nor impaired 3,459,877 - - 4,839 96 3,464,812 Past due but not impaired 1,335,179 - - 1,025 62 1,336,266 Impaired 1,865,243 338 77,102 1,927 39,415 1,984,025 Total 6,660,299
Slide 45: Reconciliation of 90+ DPD to NPEs Cyprus Operations (Sep 17)
Reconciliation of 90+ DPD to NPES Cyprus Operations (€ bn) (Sep 17) 8.8 0.2 0.1 0.2 0.6 6.8 0.9 6.5 0.3 €2.0 bn with arrears Impaired -no Total 90+ DPD with forbearance re-forborne within Forborne >30+ Contagion effect Other NPEs >90+DPD arrears measure<90+ 2 years DPD reclassification DPD adjustmen
Slide 46: Appendix – Additional financial information
Appendix – Additional financial information 46
Slide 47: Consolidated Balance Sheet
Consolidated Balance Sheet % % € mn change 30.09.17 31.12.16 € mn change 30.09.17 31.12.16 Cash and balances with Deposits by banks 10% 479 435 82% 2,739 1,506 Central Banks Funding from central banks -2% 830 850 Loans and advances to -11% 972 1,088 banks Repurchase agreements 1% 259 257 Debt securi
Slide 48: Income Statement Review
Income Statement Review € mn 9M2017 9M2016 3Q2017 2Q2017 qoq % (9M) yoy% Net Interest Income 454 524 138 160 -14% -13% Net fee and commission income 133 112 45 45 0% 19% Insurance income net of insurance claims 39 35 14 15 5% 13% Core income 626 671 197 220 -10% -7% Other income 67 46 26 17 42% 45%
Slide 49: Analysis of Interest Income and Interest Expense
Analysis of Interest Income and Interest Expense Analysis of Interest Income 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017 2Q2017 3Q2017 Loans and advances to customers 231 217 203 204 195 200 180 Loans and advances to banks and central banks 1 3 4 (3) 2 1 0 Investments available-for-sale 3 2 3 3 4 5 5 Investm
Slide 50: Core Cypriot business
Core Cypriot business 9M2017 Cyprus Vs Group performance (€ mn) Strong market shares maintained Loans Deposits 94% 95% 88% 100% 83% 41.4% 41.1% 40.4% 657 693 39.5% 39.4% 39.1% 38.7% 37.9% 427 454 381 380 27 36 -36 -1 -93 32.3% -277 31.3% 31.1% -313 30.8% 30.3% -439 29.0% 28.2% 28.2% -532 Net interes
Slide 51: Income Statement bridge for 9M2017
Income Statement bridge for 9M2017 € mn Underlying basis Reclassification Statutory Basis Net interest income 454 454 Net fee and commission income 133 133 Net foreign exchange gains and net gains on other financial instruments 32 32 Insurance income net of insurance claims 39 39 Net gains from reva
Slide 52: Cyprus: Income Statement by business line for 9M2017
Cyprus: Income Statement by business line for 9M2017 Wealth & International Consumer SME Corporate Brokerage & Total € mn Banking RRD REMU Insurance Other Banking Banking Banking Asset Cyprus Management Net interest income 164 39 76 51 8 106 (13) 0 (4) 427 Net fee & commission income 38 7 10 49 2 9
Slide 53: Careful Expansion of BOC UK operations
Careful Expansion of BOC UK operations Gross loans and customer deposits Loans by sector at 30 September 2017 Gross loans (£ bn) 1% 1% 1.32 Corporate 1.24 17% 1.09 SMEs 0.93 Consumer credit 0.83 81% 0.74 Housing Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 Sep 2017 Core operating profitability is ri
Slide 54: Risk Weighted Assets – Regulatory Capital
Risk Weighted Assets – Regulatory Capital Risk weighted assets by Geography (€ mn) Equity and Regulatory Capital (€ mn) 30.09.16 31.12.16 31.03.17 30.06.17 30.09.17 30.09.16 31.12.16 31.03.17 30.06.17 30.09.17 Cyprus 17,675 17,554 17,336 16,128 16,098 Russia 15 1451 33 32 30 Shareholders’ equity 3,0
Slide 55: Analysis of Deposits by Currency and by Type
Analysis of Deposits by Currency and by Type Deposits by Currency 30 September 2017 (%) Total EUR USD GBP Other Currencies EUR USD GBP Other currencies (€ bn) 17.31 1.0% 16.51 16.54 16.58 15.64 0.18 11.4% 0.22 0.15 0.14 14.75 0.20 1.98 14.13 1.69 1.69 1.81 0.16 0.24 1.63 1.76 1.61 2.20 2.10 1.80 1.6
Slide 56: Analysis of Deposits by Sector and cost of deposits
Analysis of Deposits by Sector and cost of deposits Deposits by customer Sector Total Corporate SME Retail (€ bn) 17.31 16.51 16.54 16.58 15.64 14.75 14.13 8.59 8.98 9.06 9.36 9.73 8.43 8.15 0.75 0.80 0.80 0.87 0.90 0.70 0.74 5.58 6.30 6.73 6.68 6.35 6.68 5.28 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-
Slide 57: BOC - Main performance indicators
BOC - Main performance indicators Ratios Group 9M2017 Net Interest Margin 3.18% Performance Cost to income ratio 45% Loans to deposits 85% 90+ DPD / 90+ DPD ratio €7,182 mn (37%) 90+ DPD coverage 62% Asset Quality Cost of risk (annualised) 4.1%1 Provisions / Gross Loans 23.2% Transitional Common Equ
Slide 58: Reduction in Overseas Non-Core Exposures
Reduction in Overseas Non-Core Exposures Overseas non-core exposures1 (€ mn) Russia: Net exposure Romania: Net exposure Serbia: Net exposure Greece: Net exposure • In addition, at 30 September 2017, there were €169 mn of overseas exposures in Greece (€173 mn as at 30 June 2017) not identified as non
Slide 59: Non-Performing Loans definition
Non-Performing Loans definition Non-Performing Exposures (NPEs) –as per the EBA definition: In 2014 the European Banking Authority (EBA) published its reporting standards on forbearance and non-performing exposures (NPEs). According to the EBA standards, a loan is considered a non-performing exposur
Slide 60: Disclaimer
Disclaimer Certain statements, beliefs and opinions in this presentation are forward-looking. Such statements can be generally identified by the use of terms such as “believes”, “expects”, “may”, “will”, “should”, “would”, “could”, “plans”, “anticipates” and comparable terms and the negatives of suc