nejra: good morning from bloomberg's european headquarters in the city of london. i am nejra cehic. manus: and i am manus cranny in dubai. this is "bloomberg daybreak: europe," and these are today's top stories. nejra: most asian equities build on gains. wall street strategists jump on the up the bandwagon. jpmorgan talks of a rolling squeeze higher. the pound packs a punch. hopes of progress in brexit talks gives sterling a lift ahead of the boe. credit suisse reports in the next few moments. we will get an update on the restructuring from the ceo this hour. ♪

manus: welcome to "bloomberg daybreak: europe." breaking news from deutsche bank in the first instance. ducked in the numbers. they said these are in distress. the european bank stress test results have been released. deutsche bank is to be more hard-hit in the stress test, the bank's key measure of financial strength. these are the immediate top lines coming through on the stress -- on the potential stress tests for deutsche bank, course, they had a tough time in their numbers just the other day, so the key measure of financial strength is said to fall. they are said to have placed in the lower half of the bank tests, so it's going to be a tough one for the bank over there. people talking about capital, cost reductions, possibly having to do a deal was commerce bank. speaking of banks, you have

ing on the tank. underlying pretax is 2.1 2 billion euros. 1.19 billionwas euros. that's a beat on the pretax. looking ahead to these numbers, the money laundering fine was set to cast a long shadow. and agreed to pay in september. the cfo stepped down in september as well. so looking to some of the other numbers coming through, the third quarter underlying cost to 39.7 percent. the third quarter net interest income at 3.5 billion euros coming through. also third-quarter 2018 that results at 776 million euros, but that underlying pretax is a beat. we had the numbers from ing. let's go straight to amsterdam and speak to the ceo of ing. he joins us for his first

interview of the day. ongratulations on that beat the third quarter underlying pretax. as i was saying, the big focus for the market is how ing is to absorb that 775 million euro settlement for the money laundering allegations by dutch dutchtute or's -- prosecutors. how did you observe this fine in the third quarter? ralph: good morning. clearly, you know, the fine marks this third quarter, not just theuse -- sentiment that has happened in the news that has come out. toclearly kind of is a shock some of our people and certainly also some of our clients. so having said that, for us, this was nothing new. knew that there were shortcomings in our processes. we did not wait for a fine to

come out. the improvement process is around client on boarding, client activity monitoring. we started these 18 months ago. we will have to continue those going forward. financially, we took it out once in a special item. as you can see in our net result of 776 million. underlying at the development, you actually see that the business itself is profiting from all the changes we have made. the transformations we have gone through in the past with additional primary customers coming on, 200,000, with the interest margin just increasing a little bit as well. costs under control. decreasing queuing queue -- decreasing. it gives us a net result of -- ralph, everybody

has got to get on from misdemeanors of the past. you will not be the first or last bank to have to deal with a tough time. you take the banks forward. for shareholders, 775 million euros of a penalty, what does dividends?or you say they ing final dividend proposal for 2018 will be made at year-end. is the dividend under threat? ralph: no, it's not. what we have indicated is that we are taking this hit in the third quarter. to the nettributed profit and have reserved that for the payout of the dividend. in the fourth quarter, we continue to reserve the net profit to pay out progressive dividends. ralph, another fallout of course from the money laundering allegations is that your cfo stepped down in september. how is the search progressing for a new cfo? ralph: let me first say that we

regret him stepping down a lot. closer still. at this moment, we are in the cfo.ss of hiring a new you know that for a bank, it has to go through many different approval processes, and we are in the midst of that. manus: in terms of the biggest risk, what are you going to do to rewrite that reputation? what action are you going to take to really sort of change the perspective of the bank? so i think that is a very valid point here. reputation, customer confidence, these are two core elements a bank needs to have. clearly, we got it on. we will have to work on that. the only way to work on that is

to just work hard, make sure that these things do not happen again, that you get your processes under control, that you improve your on boarding, improve your activity monitoring , so it is a lot of hard work in order to regain trust and confidence in society, from first society, as well as from your comments. as i indicated in the third quarter, we saw a continuation of new clients coming on board and primary clients coming on board, which is a sign that, yes, certainly, there has been a hit on the reputation. on the other side, our services, the way we look at how we improve our customer experience, they are actually all up, in most cases, in seven countries out of the 13 which were active. it's a lot of hard work to get this back.

nejra: the cost income ratio, this is something that has concerned investors in the past, being above your target. the number coming in at 49.7%. is this a material improvement, and does this mean that the digital strategy and investments in that is working better now? there's been a lot of challenges. 2018: well, if you look at as a year, we always said from the beginning when we announced our transformation that 2018 was going to be an investment year, but already in the third quarter, you see quarter on byrter are costs coming down 1.5%. you see costs going down in areas like belgium, where we know the transformation had the biggest impact. we csc's coming down in belgian. -- belgium over the same period and the costs going down, so yes, we do see some of these wass decreasing, but there still quite some investment to

go on the digital front. see in the cost income ratio is one that will continue, and we have always indicated that 52% cost income ratio would be more on the backend of the horizon of our plan, which was 2020. manus: ralph, what banks do as they lend money. you outperformed her peers up until recent -- your peers. up until recently to my you were above your peers. that, it would appear, has stalled. what is deliverable in terms of loan growth? the thing that you do to make money? well, actually, we do not see the loan growth coming down so quickly, as you may be hinting at. in the first two quarters, we were beyond the 3% to 4% guidance that we have given. in the third quarter, we see loan growth of six point in

billion dollars, which is still good loan growth. we see a little bit more -- the first two quarters had rapid growth. loan growth itself, it's not the most important thing. on the income side, you know that we have very strict discipline in the way that we price our loans. and if we cannot make it in one quarter in a specific sector on a specific geography, we can make it somewhere else, so you really have to look at loan growth over a period of time. not necessarily on a quarter by quarter basis, but even this quarter, 6.8 alien in court lending growth, we are quite happy with -- 6.8 billion in court lending growth, we are quite happy with manus: that. i'm sure you will be a happy man. year. back to once per you will be able to tell if it is a long-term trend. thank you very much for taking the time this morning to go through the numbers and give us your explanation of what's going

on at the bank. ralph hamers, ceo of ing, thank you very much for your time. stay with banking. we will hear a little bit more on credit suisse later on. it would appear this seems to be a momentary delay in the delivery of the results. at can see the interview 6:30 this morning on daybreak. let's get a little bit more on the world stage. yvonne man has the latest from hong kong. the u.k.'s financial services sector will get continued access to european union markets after brexit. that is according to a report in the times newspaper studying unidentified government sources. the paper said negotiators tentatively agreed on all aspects of the future partnership on services as well as the exchange of data. the pound jumped after the publication of a letter from the u.k.'s brexit secretary in which he hailed a great deal of progress and predicted a deal by november 21. simonforeign minister

cited an upbeat note on the prospects for an agreement. get think it is possible to a deal in november, but i think that deal needs to be based on the work that both negotiating teams are doing and also the commitments that have already been made in these negotiations. yvonne: president trump says he is prepared to deploy as many as 15,000 troops to the u.s.-mexico detain a curve of migrants traveling north to the u.s. thelly in florida, president doubled down on his house to deny american citizenship to children born of unauthorized immigrants. it was the first stop on a 11-day tour, llc trump hold rallies in eight states to save republican control of the senate. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am yvonne man in hong kong. this is bloomberg.

manus. manus: yvonne, thank you very theking news finally from credit suisse team and it is amiss on the net income basis for the bank. three years of losses at this bank. he has delivered a third quarter miss. 420 -- let me break these numbers down for you. you are seeing 424 million. 478. they are however saying they are on track to deliver their 2018 targets. revenue is also a miss. 4.89 on the revenue number. 5.05. what you are -- hearing is of course -- barclays got away. ubs outperformed. it is all about tidjane thiam' strategy in terms of reallocating capital. sbarclays was a beat. it looks as if credit suisse has ducked on the revenue and the net income side of the business.

a little later, we are going to hear from the credit suisse ceo, who will no doubt explain the meis and everything behind the numbers. s -- the miss and everything behind the numbers. most asian equities in the green. a bit of divergence between china and japan. japan is lower. this after the worst month for global stocks in more than six years. meanwhile, the yuan remains at the weakest level in a decade after china's leadership stick malls -- signals that further leadership levels are being planned. our guest joins us. great to have the with us. we are starting up with a bit of a -- not so much a bang, but a whimper. they did have the best two days of gains in u.s. equities since february over the past couple of sessions. wall street is getting up the. when struck -- upbeat. use the thinking about

-- should you be thinking about selling again? >> in the u.k., the earnings started and it has been quite positive. so we have had about 15% of the u.k. market reporting this week. hsbc beat. bp beats. the u.k. market is looking very cheap if we look at it from a dividend yield point of view for example. .he yield is about 4% this is higher than it was in 2011. the european crisis, so to us, it looks like that is good value. we are going to have to leave it there. this is one of the morning's record of the morning for it is a crash of earnings. we will get deeper into the conversation shortly. .e have another ceo for you their earnings have hit the table. us for an exclusive interview.

miss?e thiam, how did you what went wrong? he will explain. nejra: when you are traveling to work, if you have two separate from the tv, tune into bloomberg radio on your bloomberg device or dab digital radio in the london area. it is a busy morning. this is bloomberg. ♪

nejra: "bloomberg daybreak: europe this is "bloomberg daybreak: europe." i am narrative -- this is "bloomberg daybreak: europe." i am meriting its. manus: i am manus cranny. assets for the nine-month period of 209.4 billion swiss frames. joining us now from frankford is then.

-- zeno staub. storye look at the growth , you have done a deal recently. youg after u.s. taxpayers, bought a business, you are building that business. is that the direction of travel and are we going to see more deals like this? for us, our key priority has been and still is organic growth. the story over the last seven years shows we have been able to grow our business organically successfully. we have seen the markets and the capabilities we have designed, but we always like to do add-on acquisitions which would bolster our growth. the deal we where able to view is strong testimony to that. it gives additional volumes to clients and a core market of ours, which is the u.s., and it gives us a long-term partnership

for further client referrals with the u.s. background, so that is a nice add-on to our core organic growth strategy. nejra: good morning. just a couple of days ago, i spoke to philipp hildebrand of ubs, and we had a great conversation about consolidation in the method antonin -- asset management and banking. he expects there to be more in the industry at least, so i'm going to be cheeky and get this question in. has anyone approached you? zeno: we are a fiercely independent company, backed by ownership and majority chair holder ship. families control the majority of capital involved. we still believe in and are anvinced that to have independent client focused strategy is best for our clients, for our shareholders, for our teams, so no.

vulnerable atfeel all, or do you want to be in an aggressive stance in this marketplace? i want to get a sense of how you feel about the consolidation story at the moment. zeno: well, you know, a few thoughts on that. first, we think that the management -- wealth management industry will not consolidate like cars or pharmaceuticals as economies of scale as long as you have a focused strategy of a client centric wealth manager. it's simply not there at the full logic of some of the other industries, so we think, as long an asset manager, you have to be very careful to preserve your key competitive edge.

that is to be focused and nimble enough to really move the capital of your clients in a way that you can add value. nevertheless, we think consolidation in the structural change of the market will continue, so we are clearly positioned to be a winner of the change process, and i think the numbers prove it, but you will for us goingdlines to a merger equals or going for a very, very large acquisition. we will only execute deals that we can digest, that's it culturally, and that add value to clients and our shareholders. nejra: yes. apologies. i do need to correct myself. i was talking about philipp hildebrand. i have so many names in my head this morning. he is from blackrock, not ubs. i wanted to ask a question to you about ubs. ubs says it wants to manage the wealth of persons once again.

do you see them as competition for your own plans in this? -- in this business? zeno: first of all, i am not here to comment on ubs strategies, but from what we it is and, brokerage-tilted approach broaderclients, much offering. we are very focused, very nimble, and we will stick in the niche to offer our clients diversifyinglobal mandate, access to global diversification on the back of a swiss driven advisor. in a wealth management niche. we do not compete against firms from wall street. we are specialists. manus: ok. you always pointed out the specialities of your company. joiningu very much for us this morning. now, reports of progress of exit

pound --ons stall the saw the pound jump. services will have continued access to the european markets. in a letter to apartment, the lead negotiator says he thinks by deal can be struck november 21. all of this comes ahead of the bank of england's rate decision today. is head of equity research at waivers and. i don't think i have had a day where i have had so much good news in the past two years talking about brexit. is it too early to rerate brexit? what do you make of that times story? it is really quite stunning. if it is true. tineke: if it is true, it is fantastic news. one of the things that markets do not like nds uncertainty. and many companies we meet find it extremely difficult to prepare for the uncertainties,

so any clarity on how businesses can continue to operate commercially going forward is fantastic, and it's got to be goodness we're you quake -- for u.k. equities. nejra: what would be the best way to tactically trade equities on news like this? tineke: we are a long-term investment house and we would advocate taking stocks up that have really great positions in the u.k. markets, and there are plenty examples of that. and if, clearly, if the pound strengthens dramatically, typically, there tends to be -- that tends to be good for the mid-cap side of the markets. they simply make more money in the u.k. economy. , thankok, tineke frikkee you so much for joining us this morning. up next, we speak exclusively with an apple supplier. when you are traveling to work, tune in to bloomberg radio on

your mobile device or dab digital radio in the london radio -- london area. this is bloomberg. ♪

margaret: u.s. equities -- nejra: u.s. equities had their best day of gains since february, but things petered out a bit in the asia session. you are seeing divergence across the regional benchmark. see strong gains in chinese equities, japan is underperforming, the nikkei down over 1%. a little bit of a mixed picture in the asian session. manus: you know what i noticed, the aussie dollar was really strong in terms of the chinese stimulus. this is a question you really have to focus on. the