WEBVTT - ASML Chief on China Chips, HSBC Restructuring, GM Earnings 0:00:00.120 --> 0:00:06.760 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.240 --> 0:00:12.160 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:12.240 --> 0:00:14.920 weekdays at ten am Eastern on Apple, card Playing and 0:00:15.040 --> 0:00:17.960 Broun Auto with the Bloomberg Business App. Listen on demand 0:00:18.000 --> 0:00:22.080 wherever you get your podcasts, or watch us live on YouTube. 0:00:22.720 --> 0:00:25.080 Mollie Smith sitting in for Alex Steel on Paul Sweeney. 0:00:25.079 --> 0:00:27.240 You're live here on our Bloomberg Interactive Broker Studio or 0:00:27.240 --> 0:00:30.600 streaming live on YouTube as well. Which seems like for 0:00:30.640 --> 0:00:33.080 the last five, six, seven years, there's been this growing 0:00:33.520 --> 0:00:38.440 tech cold war between China and the West, and now 0:00:38.440 --> 0:00:41.600 we've got a story out about the chip maker. ASML 0:00:41.640 --> 0:00:45.040 Holdings a CEO, he expects pressure to grow from the 0:00:45.200 --> 0:00:49.360 US to further restrict sales of semiconductor technology to China. 0:00:49.680 --> 0:00:52.080 That's the biggest market for the Dutch producer of chip 0:00:52.120 --> 0:00:54.520 making machines. Man Deep Sing joins us, he's the our 0:00:54.640 --> 0:00:57.080 tech dude, He's ahead of all the technology stuff at 0:00:57.080 --> 0:01:00.880 Bloomberg Intelligence. Man Deep talk to us about the chip 0:01:00.960 --> 0:01:05.440 market China as a customer, how do you think this 0:01:05.480 --> 0:01:07.760 is going to play out? Because again it feels like 0:01:07.800 --> 0:01:10.080 there is this tech cold war that's right there. 0:01:10.560 --> 0:01:13.360 Yeah, I mean when you look at a company like SML, 0:01:13.560 --> 0:01:16.680 which almost did you know, forty five percent of their 0:01:16.720 --> 0:01:20.720 revenue from selling to Chinese customers over the past twelve 0:01:20.720 --> 0:01:24.920 months and they guide it to that percentage going to 0:01:25.040 --> 0:01:29.400 about twenty percent next year. So clearly the deceleration is 0:01:29.560 --> 0:01:33.319 huge in terms of the China exposure, and partly that 0:01:33.400 --> 0:01:35.479 has to do with the you know, the Cold War 0:01:35.600 --> 0:01:40.440 or the geopolitical element that you just alluded to. And look, 0:01:40.880 --> 0:01:46.760 it's not surprising given ASML the machines they make underpin 0:01:46.959 --> 0:01:51.960 the latest factories that are producing these chips that everyone 0:01:52.000 --> 0:01:55.280 wants to train their AI on. So when you look 0:01:55.320 --> 0:01:59.680 at the semiconductor chain, I mean ASML sits at pretty 0:01:59.760 --> 0:02:03.840 much at the bottom end of what it takes to 0:02:03.880 --> 0:02:07.720 set up a semiconductor factory. They are deemed as one 0:02:07.760 --> 0:02:10.400 of the biggest beneficiaries of the Chips Act. When you 0:02:10.440 --> 0:02:13.639 think about you know, the US government wanting to set 0:02:13.720 --> 0:02:16.320 up semiconductor fabs in the US, they are one of 0:02:16.400 --> 0:02:20.160 the prime beneficiaries. But then the offset is the China 0:02:20.240 --> 0:02:22.640 business that is going down, and that's why you're seeing 0:02:22.720 --> 0:02:24.600 you know, valuation compressed recently. 0:02:24.840 --> 0:02:26.680 Can you just help catch us all up here, Mandy, 0:02:26.720 --> 0:02:29.959 because this has been a crazy week with ASML, going 0:02:30.000 --> 0:02:32.760 back to the earnings announcement last week when they cut 0:02:32.760 --> 0:02:35.400 their outlook for next year. You know, the orders were 0:02:35.520 --> 0:02:39.400 very disappointing. This triggered this whole route in the semiconductor industry. 0:02:39.400 --> 0:02:41.160 Can you just catch us all up here on like 0:02:41.200 --> 0:02:42.880 what the past week has been like? 0:02:43.080 --> 0:02:46.480 Yeah, in fact, it's been a roller coaster because you 0:02:46.560 --> 0:02:50.040 had the ASML disappointment and then TSMC comes out the 0:02:50.080 --> 0:02:52.840 next day and they say AI revenue will be almost 0:02:52.919 --> 0:02:56.040 mid teens, which was negligible over the past you know, 0:02:56.240 --> 0:02:59.800 three quarters. So clearly there's been a big kind of 0:03:00.400 --> 0:03:04.480 sentiment when it comes to TSMC being very bullish on 0:03:04.520 --> 0:03:09.160 AI versus ASML downplaying you know, the next twelve months. 0:03:09.200 --> 0:03:13.000 And that's partly to do with where TSMC sits, which 0:03:13.040 --> 0:03:16.840 is they are getting all these orders from Nvidia as 0:03:16.840 --> 0:03:19.680 well as other hyperscalers who want to get their chips 0:03:19.680 --> 0:03:25.400 manufactured at TSMC, whereas ASML has got two companies that 0:03:25.480 --> 0:03:29.600 are pulling back on their orders, Intel and Samsung, and 0:03:29.680 --> 0:03:32.959 TSMC is the only one that's buying from ASML right now. 0:03:33.000 --> 0:03:36.760 So TSMC has a lot of bargaining power because they 0:03:36.800 --> 0:03:39.880 are the only ones who can raise their capex. Intel 0:03:40.080 --> 0:03:45.040 is really struggling. Samsung, we have heard, is also struggling now. 0:03:45.120 --> 0:03:48.720 So both those companies, the next two big buyers of ASML, 0:03:49.000 --> 0:03:51.320 are looking to pair back their spend and that's why 0:03:51.360 --> 0:03:53.680 I think TSMC is in a great spot both from 0:03:53.720 --> 0:03:57.360 the customer side as well as having the supplier bargaining power. 0:03:57.800 --> 0:04:01.000 All Right, ASML is a Dutch company. If the US 0:04:01.000 --> 0:04:02.520 tells me to do something, why don't I just tell 0:04:02.560 --> 0:04:03.520 them to go take a hike? 0:04:04.360 --> 0:04:08.280 Well, I mean it goes back to how these kind 0:04:08.320 --> 0:04:11.680 of countries work as a block. Look, I think when 0:04:11.920 --> 0:04:17.120 the US government kind of asks a country to enforce 0:04:17.240 --> 0:04:20.320 their restrictions, then most of the times they end up 0:04:20.360 --> 0:04:24.560 doing that because of you know, the trading aspect of 0:04:24.600 --> 0:04:28.040 how these companies just operate as a block. And in 0:04:28.080 --> 0:04:32.039 this case, I think the restrictions are very targeted towards 0:04:32.120 --> 0:04:38.760 the advanced machines that are used for latest leading node manufacturing. 0:04:38.839 --> 0:04:44.920 So I think again it comes down to how the 0:04:44.920 --> 0:04:49.840 politics of it is really focused on, and it's hard 0:04:49.880 --> 0:04:52.159 for the companies to control that, right, So if the 0:04:52.200 --> 0:04:55.919 governments agree on something they have to comply with the restrictions. 0:04:55.600 --> 0:04:57.719 So we have the ASML CEO. 0:04:57.839 --> 0:05:01.000 He's been speaking at the Bloomberg Tech Summit recently, and 0:05:01.680 --> 0:05:03.960 he said last week that he sees the chip market's 0:05:04.000 --> 0:05:07.159 long way to recovery extending well into next year. I 0:05:07.160 --> 0:05:09.640 think that's a fair timeline given all of what's going 0:05:09.640 --> 0:05:10.880 on in the industry right now. 0:05:11.480 --> 0:05:14.279 I mean there are two pockets here. One is the 0:05:14.400 --> 0:05:18.039 AI pocket, which is really firing on all cylinders. I mean, 0:05:18.120 --> 0:05:21.720 companies have insatiable demand and we've seen that with TSMC 0:05:21.880 --> 0:05:28.040 and Nvidia really kind of talking about it endlessly. On 0:05:28.080 --> 0:05:33.120 the other side, the traditional markets like smartphones, PCs, autos, 0:05:33.560 --> 0:05:36.560 they're still slow. I mean, there has been a rebound, 0:05:36.560 --> 0:05:40.480 but it's been very kind of flatish for a few quarters. 0:05:40.520 --> 0:05:43.800 And even the prognosis is not like you're going to 0:05:43.880 --> 0:05:47.680 see massive acceleration in top round growth. So that's where 0:05:47.800 --> 0:05:51.120 I think companies that are exposed to AI are growing 0:05:51.240 --> 0:05:54.200 much faster than the companies that are exposed to these 0:05:54.240 --> 0:05:55.400 traditional land markets. 0:05:55.480 --> 0:05:58.800 And is that just because the market for smartphones is 0:05:58.839 --> 0:06:01.640 pretty saturated at this point? Like don't we all pretty 0:06:01.680 --> 0:06:04.440 much a lot? I mean, it seems pretty ubiquitous now, 0:06:04.440 --> 0:06:06.599 I mean, how much more are there really like these 0:06:06.640 --> 0:06:08.520 big markets that are waiting to be tapped into. 0:06:08.920 --> 0:06:11.880 I mean that's where AI will play a role in 0:06:12.000 --> 0:06:15.919 terms of driving upgrade for your smartphone. It's just right now, 0:06:16.080 --> 0:06:20.120 AI is being consumed and deployed almost solely on cloud. 0:06:20.480 --> 0:06:23.320 That's where the cloud vendors are seeing it in their results. 0:06:23.400 --> 0:06:28.640 But for every edge device, whether it's PC, smartphone, nobody 0:06:28.680 --> 0:06:32.680 has talked about using AI on the device. I mean, 0:06:32.680 --> 0:06:34.800 you can do it through your app that is running 0:06:34.800 --> 0:06:37.280 on the cloud, but you don't need to upgrade your 0:06:37.400 --> 0:06:39.400 smartphone for that, And that's the big driver. 0:06:39.520 --> 0:06:42.040 I just upgraded to the iPhone sixteen pro. Somebody told 0:06:42.080 --> 0:06:46.840 me that you're partner what's his name, anurag upgrade. Look 0:06:47.000 --> 0:06:48.719 you show me a bill of goods here trying to 0:06:48.720 --> 0:06:51.360 pad the Apple numbers it is. 0:06:51.320 --> 0:06:53.920 And look it's it still has a great camera, So 0:06:54.080 --> 0:06:55.320 I think that upgrade. 0:06:55.400 --> 0:06:57.440 I was in Ireland. I was in Ireland for like 0:06:57.480 --> 0:07:00.240 eight days. I took three pictures, two of like sheep 0:07:00.279 --> 0:07:00.880 and one of the pig. 0:07:01.240 --> 0:07:04.000 You're under your lif outset fall. 0:07:05.080 --> 0:07:06.640 What's the fascination. 0:07:06.200 --> 0:07:06.839 With the sheep ball? 0:07:07.400 --> 0:07:10.440 There's more sheep than people there, and they're everywhere. 0:07:10.600 --> 0:07:12.400 I mean, it's unbelievable. No wonder my. 0:07:12.920 --> 0:07:15.400 People left when the first potato a bit All right, 0:07:15.440 --> 0:07:16.640 men Deep saying thank you so much. 0:07:16.640 --> 0:07:17.280 We appreciated. 0:07:17.280 --> 0:07:20.320 Men Deep sing senior tech industry analysts for Bloomberg Intelligence, 0:07:20.600 --> 0:07:22.400 trying to figure out what's going on in the chip 0:07:22.400 --> 0:07:25.080 business again ASML, they're cautious. 0:07:25.200 --> 0:07:26.920 Taiwan Simmy says, no, no, no, no, no. 0:07:26.960 --> 0:07:28.000 Business is still good. 0:07:28.040 --> 0:07:30.680 So honestly, I'm trying to more figure out what's going 0:07:30.720 --> 0:07:32.040 on with your picture taking. 0:07:32.280 --> 0:07:34.760 Yeah, personally, I'm like what you have to show for 0:07:34.880 --> 0:07:35.120 from that? 0:07:36.480 --> 0:07:39.000 You know, you got to live the moment, be in 0:07:39.040 --> 0:07:42.000 the moment, stop recording it and taking photos of it, 0:07:42.120 --> 0:07:42.880 just live in it. 0:07:42.960 --> 0:07:44.960 I think this is really just like right here, this 0:07:45.040 --> 0:07:46.840 is like the difference between what a man and a 0:07:46.880 --> 0:07:48.000 woman would take pictures of. 0:07:48.440 --> 0:07:51.240 I think it's more generational. Actually yeah, okay, we could 0:07:51.280 --> 0:07:52.280 do generational too. 0:07:52.280 --> 0:07:54.559 I mean, you know, you see a picture from thirty 0:07:54.600 --> 0:07:56.400 forty years ago, if Tiger Woods hitting a shout a 0:07:56.480 --> 0:07:58.320 Jack Nicholas, nobody has a phone out. 0:07:58.520 --> 0:07:59.960 But now go figure. 0:08:01.600 --> 0:08:05.480 You're listening to the Bloomberg Intelligence podcast. Catch us Live 0:08:05.560 --> 0:08:09.040 weekdays at ten am Eastern on applecard Play and Android 0:08:09.080 --> 0:08:11.880 Auto with the Bloomberg Business app. You can also listen 0:08:12.000 --> 0:08:15.080 live on Amazon Alexa from our flagship New York station 0:08:15.440 --> 0:08:19.200 just say Alexa playing Bloomberg eleven thirty. 0:08:19.600 --> 0:08:22.920 Let's talk about European banks. We had the big US 0:08:22.960 --> 0:08:25.040 banks report over the last week or so, really strong 0:08:25.160 --> 0:08:28.840 numbers coming out of the big global US banks and 0:08:28.960 --> 0:08:31.000 investment banks. We're going to get some of the European 0:08:31.040 --> 0:08:33.000 folks coming up, and we also got some news coming 0:08:33.040 --> 0:08:37.000 out of HSBC, one of the big European and Asian banks. 0:08:37.080 --> 0:08:38.120 Kind of a little restructuring there. 0:08:38.160 --> 0:08:42.120 So let's check in with our euro banks official, Tamash Netzel. 0:08:42.160 --> 0:08:46.240 He's a senior European banks analyst for Bloomberg Intelligence. Tomash, 0:08:46.240 --> 0:08:47.640 thanks so much for joining us here. 0:08:47.800 --> 0:08:49.079 Talk to us about HSBC. 0:08:49.280 --> 0:08:52.240 First here they got a pretty big restructuring going on 0:08:52.559 --> 0:08:55.080 at this bank. Tell us what's going on there at HSBC. 0:08:56.080 --> 0:08:59.120 Yes, thank you very much for having me. Yes, definitely. Today, 0:08:59.280 --> 0:09:01.760 all over the U you can hear the biggest restructuring 0:09:01.840 --> 0:09:04.080 in almost a decade. And I would say that I 0:09:04.120 --> 0:09:06.920 think it is the continuation of overhaul over restructuring of 0:09:06.960 --> 0:09:10.280 the business which started at the beginning of twenty twenty 0:09:10.400 --> 0:09:13.880 more or less by previous COEO. We have got new 0:09:13.920 --> 0:09:16.440 CEO starting his job at first of September, and I 0:09:16.480 --> 0:09:19.640 think one of his one of his priority was how 0:09:19.679 --> 0:09:21.920 to how to make sure that we can sustain meetings 0:09:22.040 --> 0:09:25.720 rot for beyond two the twenty four to twenty five 0:09:26.040 --> 0:09:28.400 how do we deal with the business in the clinic 0:09:28.480 --> 0:09:31.160 interest rate environment? And what do we do with the costs? 0:09:31.240 --> 0:09:35.280 And the restructuring of the of his business he proposed 0:09:35.559 --> 0:09:38.480 and introduced from first January twenty twenty five is just 0:09:38.520 --> 0:09:41.560 to address others the issues that the HSBC is facing, 0:09:41.559 --> 0:09:44.200 and the biggest one is of course controlling the cost 0:09:45.160 --> 0:09:45.880 Can you talk. 0:09:45.720 --> 0:09:47.800 To us about what some of those costs are? 0:09:47.960 --> 0:09:50.360 And I mean when I hear firms are trying to 0:09:50.400 --> 0:09:53.200 cut costs, I immediately think they're trying to cut jobs. 0:09:53.200 --> 0:09:57.840 And if that's also going to be part of this restructuring, yeah, that's. 0:09:57.640 --> 0:09:59.360 You know, that's very interesting because you know they talk 0:09:59.400 --> 0:10:03.000 about the restatturing, they talk about new divisions, new heads 0:10:03.000 --> 0:10:05.960 of the divisions, et cetera. And maybe there's a maybe 0:10:06.040 --> 0:10:09.080 six cuts on the executive committee. But we don't get 0:10:09.080 --> 0:10:11.079 any numbers. We don't know how much the restructuring is 0:10:11.120 --> 0:10:13.680 gonna cost. We don't know what is the black figure 0:10:13.840 --> 0:10:16.920 in terms of cost savings they would have to expect 0:10:16.960 --> 0:10:18.800 and more more important, we don't know how much this 0:10:18.920 --> 0:10:22.320 restructuring will cost. So yes, definitely there's lots of details. 0:10:22.320 --> 0:10:25.200 There's lots of promises with restructuring, but you know, we 0:10:25.240 --> 0:10:27.920 are yet still short on details. So we would like 0:10:27.960 --> 0:10:30.600 definitely know where the cost CUDEG may come. Where they're 0:10:30.640 --> 0:10:35.480 gonna cut jobs, potentially some jobs if they emerge two divisions. 0:10:35.520 --> 0:10:38.680 There are definitely some overlaps in operations, so there's definitely 0:10:38.679 --> 0:10:43.280 some podcasts jobs, potential cuts. So of course we don't 0:10:43.320 --> 0:10:45.000 know anything of this yet right. I think there was 0:10:45.040 --> 0:10:48.520 a rumors that two fo weeks ago that reported by 0:10:48.520 --> 0:10:51.120 Field of Times that there's a around three hundred millions 0:10:51.120 --> 0:10:53.920 of savings planned by new new management. We don't know 0:10:53.960 --> 0:10:56.120 whether that's true. It has not been confirmed, but I 0:10:56.120 --> 0:10:59.200 think three hundred millions would not be enough for HSBC 0:10:59.320 --> 0:11:03.280 to move that on the investment sentiment. If you look 0:11:03.320 --> 0:11:05.720 at the forecast for for for HSBC at the moment, 0:11:05.760 --> 0:11:07.520 you know the revenue is going to grow by not 0:11:08.200 --> 0:11:11.280 around five million dollars in the next two years, threw 0:11:11.280 --> 0:11:14.160 twenty twenty six. Costs are going to grow by more 0:11:14.160 --> 0:11:17.480 than two billions, So they have quite negative gap which 0:11:17.480 --> 0:11:19.559 they which the CEO I think will have to address 0:11:19.600 --> 0:11:23.080 with more details and more and more more about to 0:11:23.200 --> 0:11:24.000 the point of the plan. 0:11:24.480 --> 0:11:26.439 It sounds like you could all use a lot more 0:11:26.440 --> 0:11:26.959 detail here. 0:11:27.000 --> 0:11:28.480 What I heard you just say is that we don't 0:11:28.520 --> 0:11:30.679 know a lot of what all of these details are 0:11:30.720 --> 0:11:32.520 going to be. I mean, it looks like the stocks 0:11:32.559 --> 0:11:36.520 mildly up a little bit today, houses generally being received 0:11:36.520 --> 0:11:38.880 you know, by you, by the broader analyst community. 0:11:39.920 --> 0:11:40.160 Yeah. 0:11:40.200 --> 0:11:42.880 Well our initial directional Yeah, well, well done. This is 0:11:42.920 --> 0:11:46.400 this is the right step in the right directional shoulding 0:11:47.040 --> 0:11:52.199 separating Hong Kong and China business, creating new new divisions, 0:11:52.360 --> 0:11:56.200 hoping creating some synergies post PRODUCTIBA. It's all good, it's 0:11:56.280 --> 0:11:58.480 all good on paper, but you know, we don't know details. 0:11:58.480 --> 0:12:00.960 We don't know. That's why the h shares price today 0:12:01.000 --> 0:12:03.520 shroud off this news kind of right with flatish. I 0:12:03.520 --> 0:12:07.200 think market is expecting more from from more bold moves 0:12:07.200 --> 0:12:12.560 by new CEO. There's definitely more deeply cost savings measure 0:12:12.600 --> 0:12:14.600 needed for a bout the banks. So I think we're 0:12:14.640 --> 0:12:17.800 going to expect day reporting three KY results next week. 0:12:18.240 --> 0:12:20.120 We don't know how much they're going to disclose over there. 0:12:20.200 --> 0:12:22.960 Maybe more will be disclosed during the four KY results, 0:12:22.960 --> 0:12:25.480 but as soon as as as long as we don't 0:12:25.520 --> 0:12:28.520 have much details nothing to work on, it's very difficult 0:12:28.559 --> 0:12:31.640 to gauge what is the direction of travels for ROT 0:12:31.800 --> 0:12:33.720 and HBC and where they want to go to. We 0:12:33.800 --> 0:12:36.800 do have our focus at the on HSBC. We we 0:12:36.920 --> 0:12:38.800 talk about where they can cut costs, how they can 0:12:38.840 --> 0:12:41.880 boost productivity with a better age of those but you know, 0:12:42.400 --> 0:12:44.960 we expect as well as management to come with a 0:12:45.000 --> 0:12:47.400 solid plan to do deliver on those metrics. 0:12:47.960 --> 0:12:49.680 To mush let's zoom out a little bit on your 0:12:49.720 --> 0:12:51.839 European bank coverage. We've had the US some of the 0:12:51.880 --> 0:12:54.400 big US banks report and some pretty solid numbers, mostly 0:12:54.440 --> 0:12:56.679 on the capital market side. What are you expecting from 0:12:56.679 --> 0:12:58.440 the European banks this earnings season? 0:12:59.440 --> 0:13:02.160 Yeah, so definitely know the focus will be on on 0:13:02.240 --> 0:13:05.400 the clinic interest rates and the impact on NII because 0:13:05.800 --> 0:13:08.160 European banks being running on this on this high interest 0:13:08.240 --> 0:13:10.160 rates for quite a long time and with now the 0:13:10.160 --> 0:13:12.680 expectations the interest will gone down, so there's some revenue 0:13:12.679 --> 0:13:15.559 pressure coming. But if you look at the geographical you know, 0:13:15.600 --> 0:13:19.000 it's very interesting to look at Europe from perspective or 0:13:19.120 --> 0:13:21.400 UK banks and europe banks or UK banks are very 0:13:21.400 --> 0:13:24.920 well positioned to the clinic interest rates because of the hedges. 0:13:24.960 --> 0:13:27.839 The for revenue forecast is for four to six persons 0:13:27.840 --> 0:13:30.480 through twenty twenty six, which is much higher than other 0:13:30.559 --> 0:13:33.400 European banks. So there are some banks which are exposed 0:13:33.400 --> 0:13:36.360 positively let's put to the clinic interest rates, which can 0:13:36.400 --> 0:13:38.800 be against common sense, but yes they are UK bank 0:13:38.800 --> 0:13:41.400 to go the headges. European banks know they struggle more 0:13:41.400 --> 0:13:44.600 with an II revenue generation. Then when when you look 0:13:44.640 --> 0:13:47.280 at you know, low base of investment bank revenues for 0:13:47.440 --> 0:13:49.600 backers and the others know that can be a positively 0:13:49.960 --> 0:13:52.840 maybe a positive surprise over there as well. So in 0:13:52.880 --> 0:13:55.400 general I think, you know, we're going to expect more 0:13:55.679 --> 0:13:59.199 comments on out of twenty five and how revenue will 0:13:59.760 --> 0:14:04.359 will travel next year. Course rights are going to cut 0:14:04.520 --> 0:14:07.560 more aggrecively and that would be determined the performance of 0:14:07.559 --> 0:14:08.319 the short crisis. 0:14:08.440 --> 0:14:11.160 Tomash Great Stuff has always appreciated Tomas set so he's 0:14:11.200 --> 0:14:14.600 a senior European banks analyst for Bloomberg Intelligency is based 0:14:14.640 --> 0:14:19.160 in London. HSBC is in the news today kicking off 0:14:19.160 --> 0:14:21.880 for restructuring and trying to get that cost structure more 0:14:21.880 --> 0:14:23.200 in line with what they expect to be at a 0:14:23.240 --> 0:14:27.400 tighter revenue environment with interest rates coming down. New CFO, 0:14:27.520 --> 0:14:30.000 the first female CFO, and the bank's history. 0:14:30.040 --> 0:14:30.640 How cool is that. 0:14:32.240 --> 0:14:36.120 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:14:36.200 --> 0:14:39.280 weekdays at ten am Eastern on Affo card playing Android 0:14:39.320 --> 0:14:42.400 otto with the Bloomberg Business App. Listen on demand wherever 0:14:42.480 --> 0:14:46.320 you get your podcasts, or watch us live on YouTube. 0:14:47.040 --> 0:14:48.760 Let's talk about real banking, regional banking. 0:14:48.800 --> 0:14:50.120 Joe Castillia joins us. 0:14:50.200 --> 0:14:54.320 Castilia joins us President and CEO of Citizens Bank of Edmond. 0:14:54.360 --> 0:14:56.560 That would be Edmen, Oklahoma. 0:14:56.640 --> 0:15:00.720 Right now, which is basically by Google maps, oklahom. 0:15:00.360 --> 0:15:01.480 Because I have no idea where that is. 0:15:01.560 --> 0:15:04.200 It's basically Oklahoma City, so you're right there in Oka City. 0:15:04.760 --> 0:15:06.320 So there's a lot of stuff going on in the 0:15:06.400 --> 0:15:09.280 National Cowboy and Western Heritage Museum. 0:15:09.480 --> 0:15:10.680 That would be my first stop. 0:15:10.720 --> 0:15:13.280 I mean, I would think going on Oklahoma football game now. 0:15:13.320 --> 0:15:16.360 That yeah, Oklahoma that would be a little bit, Yes, 0:15:16.600 --> 0:15:18.600 a little bit. Jill, thanks so much for joining us here. 0:15:18.680 --> 0:15:21.720 Talk to us about your bank. Who is your customer 0:15:22.440 --> 0:15:23.320 for your bank? 0:15:23.440 --> 0:15:25.840 Yeah, So I get the privilege of being a CEO 0:15:26.040 --> 0:15:28.600 of a one location, one hundred and twenty four year 0:15:28.640 --> 0:15:31.920 old community bank located in suburban Oklahoma City and we're 0:15:31.960 --> 0:15:33.320 located on the same intersection and. 0:15:33.400 --> 0:15:35.040 We've been since nineteen oh one. 0:15:35.240 --> 0:15:38.720 So that's history, very very trying to a very traditional 0:15:38.760 --> 0:15:42.520 community bank. The name of citizens been citizens since nineteen 0:15:42.560 --> 0:15:45.560 oh one. Literally citizens pulling their money together kind of 0:15:45.560 --> 0:15:48.800 the first like crowdsourcing and then loaning and money out 0:15:48.840 --> 0:15:52.040 to the rest of the community. But on our board 0:15:52.480 --> 0:15:54.240 about in two thousand and eight, thousand and nine, the 0:15:54.240 --> 0:15:56.960 bank went through a turnaround and after that point decided 0:15:57.000 --> 0:15:57.760 we want to be here. 0:15:57.600 --> 0:15:59.400 For another one hundred years. And so it's a very 0:15:59.400 --> 0:16:01.280 technologic forward bank. 0:16:01.600 --> 0:16:04.600 So we just launched a digital military bank, so we 0:16:04.680 --> 0:16:08.280 have a large military group that's part of our customer base. 0:16:08.360 --> 0:16:10.840 But it's primarily just a traditional community bank where the 0:16:10.880 --> 0:16:12.760 geographic center. 0:16:12.880 --> 0:16:15.240 Militaries all through your family, right. 0:16:15.280 --> 0:16:19.240 Yeah, So I was enlisted, my husband retired Army's sons 0:16:19.400 --> 0:16:20.520 Army daughters. 0:16:20.240 --> 0:16:24.680 Navy, well not just West Point Enaval Academy. That's right, Wow, 0:16:24.720 --> 0:16:25.520 you did your research. 0:16:25.600 --> 0:16:27.680 Yeah, So I mean so I mean so for a 0:16:27.720 --> 0:16:31.200 bank like yours, I mean it's I need a checking account, 0:16:31.240 --> 0:16:32.280 I need a savings account. 0:16:32.360 --> 0:16:33.160 Do I do? 0:16:33.160 --> 0:16:34.960 Do you guys also do like a mortgage and we 0:16:35.040 --> 0:16:36.600 do business loans and all that type of thing. 0:16:36.640 --> 0:16:39.120 It is the whenever people say like you should have 0:16:39.160 --> 0:16:41.080 a niche market and that's the way to be successful, 0:16:41.120 --> 0:16:42.400 we're the antithesis to that. 0:16:42.600 --> 0:16:44.800 So we do everything. So one stop shop for every 0:16:44.920 --> 0:16:45.600 it is everything. 0:16:45.680 --> 0:16:49.080 So I literally will work with a small business perspective 0:16:49.080 --> 0:16:51.760 owner for three years to help them get bankable so 0:16:51.880 --> 0:16:54.760 they can achieve their dream, help with families, buy their 0:16:54.800 --> 0:16:58.200 first home, get that first checking account, stavements account for 0:16:58.520 --> 0:17:01.400 a youngster. So I mean it's being part of someone's life. 0:17:01.440 --> 0:17:03.800 And even like when in this environment where the interst 0:17:03.840 --> 0:17:06.359 rate's changing, if there's any kind of difficulty with the business, 0:17:06.359 --> 0:17:10.879 we're just walking along the entire way. As someone gets alone. 0:17:10.920 --> 0:17:13.400 It's not just ending in with that transaction. It's really 0:17:13.480 --> 0:17:14.800 a relationship over time. 0:17:15.040 --> 0:17:17.000 And what are your clients coming to you for? Like 0:17:17.040 --> 0:17:20.679 when whether it's an individual or a business like what. 0:17:21.000 --> 0:17:23.240 I'm sure they most hear, Oh, rates are going down, 0:17:23.320 --> 0:17:26.359 but you know, inflation and whatever, and they're probably all like, 0:17:26.359 --> 0:17:27.800 they have a lot of questions for you, I'm sure, 0:17:27.840 --> 0:17:30.200 So what are they coming to you for most these days? 0:17:30.280 --> 0:17:33.000 Yeah, so we talk really more holistically about the whole business. 0:17:33.040 --> 0:17:34.879 So it may be that their costs are going up, 0:17:34.920 --> 0:17:37.159 and how do I know achieve some a scale or 0:17:37.160 --> 0:17:39.119 how do I partner to be able to get input 0:17:39.160 --> 0:17:39.720 costs lower? 0:17:39.840 --> 0:17:41.320 What are some different labor options. 0:17:41.320 --> 0:17:43.480 Some of them have left their businesses where they've hired 0:17:43.480 --> 0:17:46.080 employees now to run and start off the family owned business. 0:17:46.320 --> 0:17:48.200 Well now they're having to move back in the business 0:17:48.240 --> 0:17:51.080 because they can't afford the labor costs associated with it. 0:17:51.160 --> 0:17:53.600 So it's really talking about it all holistically and how 0:17:53.600 --> 0:17:56.399 do we help them be a competitive advantage for them 0:17:56.400 --> 0:17:58.600 to be able to manage their business the best way possible. 0:17:58.800 --> 0:18:00.439 And if that means that it's a lowe own that 0:18:00.480 --> 0:18:02.880 we can provide, or if it's investing in some type 0:18:02.880 --> 0:18:06.720 of money market or other asset, and then we're helping 0:18:06.720 --> 0:18:07.879 them make those decisions. 0:18:08.520 --> 0:18:10.720 You know, when Molly and I hear from the you know, 0:18:10.760 --> 0:18:12.439 the big banks when they report their earning is one 0:18:12.480 --> 0:18:13.919 of the things they say they're spending money is in 0:18:14.000 --> 0:18:16.960 tech technology. But for a bank of your size, how 0:18:16.960 --> 0:18:19.719 does technology do you? Guys have to play in that 0:18:19.760 --> 0:18:21.239 game too and have all the apps and do all 0:18:21.240 --> 0:18:21.879 that kind of stuff. 0:18:21.920 --> 0:18:24.960 There is no customers not going to say I'm not 0:18:25.000 --> 0:18:27.639 going to have the same quality of banking services at 0:18:27.720 --> 0:18:29.400 your bank that I can have somewhere. 0:18:29.119 --> 0:18:30.000 Else at Chase. 0:18:30.280 --> 0:18:32.440 So we have to provide the same level of technology, 0:18:32.480 --> 0:18:35.800 and even better we invent technology. We have a patent 0:18:35.880 --> 0:18:40.159 on a small business remote small business kind ATM and 0:18:40.200 --> 0:18:41.520 they're a little bank invented. 0:18:41.680 --> 0:18:43.480 And I would. 0:18:43.359 --> 0:18:45.280 Challenge you if you open your account as a doesn's 0:18:45.320 --> 0:18:47.040 bank evment, I bet that you would have a better 0:18:47.119 --> 0:18:49.680 experience doing that then you would at a large institution 0:18:50.240 --> 0:18:52.560 for no cost. You can sit there and have your 0:18:52.680 --> 0:18:55.480 checking account, wunch your credit score, not have a lot 0:18:55.520 --> 0:18:57.159 of fees, and then be able to call me or 0:18:57.200 --> 0:18:59.760 tech spee twenty four to seven the bank CEO to 0:18:59.800 --> 0:19:01.239 say hey, I have a question about this. 0:19:01.320 --> 0:19:05.000 Wow that yeah, imagine, I'm not sure. 0:19:05.200 --> 0:19:07.560