Cembra Money Bank AG (CMBN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the first half results 2020 conference call and live webcast. I'm Moira, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Robert Oudmayer, CEO; Mr. Pascal Perritaz, CFO; and Mr. Volker Gloe, CRO of Cembra Money Bank. Please go ahead, gentlemen.

Yes. Thank you, Moira, and good morning, everyone. I'm here -- well, my name is Robert. I'm here with Pascal and with Volker to talk about the first half year results from Cembra. If you go to the summary page. As you see, there's a net income of CHF 74.1 million, which is 6% lower than last year, but quite resilient. It might be also the financing receivables are quite resilient. It went down 3% with lower volumes and lower attrition. So we had some lower application levels in the second quarter. But what we see is that people stay where they are, they try less. So you see quite resilient receivable levels. Net revenues increased by 22% mainly driven by the acquisition of cashgate. And you see an 11% decrease in commission and fee with a link to the lower cards spend as a result of the lockdown, and we'll give you some more insight, of course, in this one afterwards. Loss rate, very stable, 0.9% during the first 6 months of the year; return on equity at 13.8%; Tier 1 capital ratio at 17%; and last but not least, the cashgate integration successfully completed at the 4th of July. So if you move to the next page, I want to talk a bit about the markets. Let's start with the personal loan market. So the personal loan market went down 2% year-over-year, which is also very resilient. If you look at the Cembra receivables, we went down 4%. And basically, I would say that it's a very good number. Remember one thing, when we did the cashgate acquisition, we said that we would expect to lose some receivables due to the cashgate acquisition in both personal loan and in auto. So far, the market share was stable at 44%. The dis-synergies from the cashgate integration so far has been very limited. I think we have to be a bit cautious with this because also remember that we didn't get too much new volume in there. We had a lot of low attrition. People normally stay in this kind of situations in their loans, and they don't go. So I think basically, we should lose a bit of market share after the cashgate integration. But so far, it's very stable at 44%. Same story basically on the auto. Our market share is 22% versus 23% in December '19. So very limited dis-synergies from cashgate integration. Also, we haven't lost a lot there. The market is a bit different there. You see that new cars went down 34% in the first half of 2020, and then used car is only 7%. But typically, what you see is that in these times of crisis, people move a bit more to the used car market. Also when you order now a new car, you probably have a waiting time of 4, 5 months because some of the factories has been closed for about 2 months. So you see that the used car market is still doing quite well. With this crisis in the new car market, 34% is, of course, a huge decrease, and also the expectation for the full year 2020 are not very positive on the new car market. Our net financing receivables went down 3%. We've been doing quite well on the used cars. We saw basically when -- after the reopening of the market at mid-May, 11th of May, that we saw a lot of auto applications coming in again. So the auto business, in my view, is in a very good shape. Credit cards. We went over the 1 million credit cards. So the cards issued were 7% up year-on-year. We are now over 1 million. The good news is that Cembra outperformed the market in the first 5 months because those numbers are from the first 5 months. The market was down 19%. We were down 9% on transactional volumes. Why was that? I think we are more a local card, so we are not typically travel card. We're also very strong in Migros. So also the retail spend on cards has been quite nice in the first -- in the second quarter, sorry. And I think we are, in that sense, more resilient. Market share slightly increased at 14%. And NFC, very strong still, 20% market share as of May 2020. On the next page, I'd like to give you a bit more insight in the card transactional volumes and the revenues. What you see is basically this is the first time that we really disclosed the volumes by month. You see the strong side of the year in January, February. Then in March, went down kind of by 16%. April, really down -- the biggest downtime, basically not a lot of spend. Then in May, recovery. And basically in June, in my view, very positive numbers at the same level as last year, a little bit better than last year. You'll also see the market there. So we are outperforming the market. The revenues are not recovering as quickly as the volumes. So what you typically see is that 2 events probably important. One is the 11th of May when the dealerships and the retailers reopened again. You see also in May the rebound. And then the next big event was, of course, the 16th of June, where the international borders reopened again. So in the first half year numbers, you don't see a lot of FX from the international volumes because only in the 16th of June the borders reopened. We see some nice traction now. It's coming back step by step. But in the first half year, you see volumes recovering, where the international spend has not been recovering a lot. The other message, what it gives you is that the market is moving from cash to cards more and more. We have seen several studies where the cash payments are coming down and down. Also I think helpful was the increase from the limits, the contact limit, from CHF 40 to CHF 80. You see more and more people spending the cards, and they're not paying cash anymore. One last remark on this page is on the interest income that went up. So you see that interest income went up from CHF 38.3 million to CHF 41.6 million, which tells you that the revolve rate also went up quite a bit. Moving to the next page, cashgate integration. A few words on this one. The branch network is completely consolidated. So we combined already the headquarters in Zurich in December '19, also the service center and now -- was combined in December '19. The branches has also been now completely integrated in July, 2 months later than planned, due to the COVID situation. We couldn't move the people. We also took advantage of the whole situation to accelerate the branch consolidation. We are bank -- now down from 17 to 13 branches, what you should consider as a stable number for the next period. I think the whole situation showed us that digitalization is accelerating, and we took advantage to close a few more branches. On the business integration, the complete integration was done early July. So 95% of the transactional (sic) [ transitional ] service agreements are terminated. One is still in place. It was also foreseen. That will be the collections TSA until next year. We transferred already all the employees to Cembra, and all the systems were migrated as well. So basically, the integration was completed in 11 months with no surprises on cost and benefits. A few words on the commercial consolidation. So we're originating basically from 1 system in auto and on -- for brokers since the 1st of June. We also built cashgate as an online brand. So there, we're also completely on track on the commercial consolidation. What has to be still done is basically the legal merger, which is foreseen for next year. So further back-end consolidation, which is probably in 2022. And some synergies, I think the synergies are gradually coming in, and we're well on track to deliver on the benefits as we announced last year with the cashgate acquisition. With that, I would like to hand over to Pascal, who is going to give you more details on the first half 2020 financial results.

Thank you, Robert, and good morning, everyone. Cembra reports resilient half year's results with a strong business performance during the COVID-19 pandemic and the consequence of lockdown of the Swiss economy, as already mentioned by Robert. Let me dig deeper into the numbers starting with the P&L, Page 8. The interest income grew by 22% as a result of the cashgate acquisition. And excluding cashgate, the underlying interest income growth would have been around 1%. The interest expense was 28% higher at CHF 13.7 million, and this reflects the CHF 1.4 billion increase in funding for the acquisition of cashgate. The overall 11% decrease in commission and fees income was due to lower cards spend as a result of the lockdown in Switzerland, partially offset by higher insurance and loan and lease fees mainly from the acquisitions. Swissbilling mainly drives the increase in other. As already mentioned by Robert earlier, the overall cards revenues decreased by 11%, with interest income up 9%. As you can -- and as you can see here, the commissions and fees income decreasing by 27% or CHF 13 million. During the COVID situation, we observed the shift in our source of revenues from cards with higher interest income driven by higher interest-bearing assets and lower commissions due to the significant reduction in spending abroad, mainly due to travel restrictions. The number of cards issued continued to increase, up 7%, above 1 million, and with the transaction volume declining by 7% year-on-year, respectively, 9% for the first 5 months compared to the 19% reductions in the market. We also observed very different differences in volume by industries for the first 6 months, and I just want to give you here some examples. So transactions volume for grocery stores went up 40%. Volume as for electronics went up 31%; furniture, 20%. On the opposite, travel agencies, car rental went down 60%; airline, 50%; hotels, lodging, 45%. The provisions for losses increased by CHF 11 million, and this is primarily due to the acquisitions. And despite the unfavorable environment, this results in a loss of 0.9%, in line with the prior year's. Volker will mention later, we also recorded a so-called environmental reserves of CHF 2.3 million to strengthen the allowance for losses of the personal loan portfolio and to proactively reflect the changing economic environment in the context of COVID. Again, Volker will provide more insights in a couple of minutes. And finally, the OpEx, operating expense, increased by 21%. The cost/income was 50.3% for the first 6 months compared to 46.5% in the same period last year. And adjusted for the integration cost of cashgate, the cost/income would have been 47.9%. I will further comment in one of the next slides. Next page, the net revenue by source. So in the personal loan business, the receivables declined by 4%, and the repricing of the fee loan book though following the implementation of the interest cap in 2016 is more or less completed. Therefore, the 23% increase in the interest income to CHF 97 million is primarily due to the acquisitions in the second half of 2019. The yield of 7.4% was as expected, and I would expect this yield to remain stable for the full year 2020. On the auto lease and loan, the net financing went down 3% in the reporting period. The interest income, 32% higher with a yield of 4.5%. Again, here is the increase due to the acquisitions, and I will also expect this yield to remain stable for the full year 2020. In the credit cards, net financing declined by 4%. The interest income in the card business grew by 9%, with a yield of 8.2%. The change in the yield is not driven by pricing change but by lower noninterest-bearing assets during the lockdown. Let's go now on this -- to the next page and discuss the operating expense. Personnel expense or compensation and benefits came to CHF 65.8 million. This is up 15%. And this is following the addition of 134 FTEs, which are related to the cashgate acquisition, as well as some additional FTEs to support our growth in card, Swissbilling and online business. The increase in marketing is largely driven by cashgate online and the launch of the Cembra SME business in February and partially offset by temporary reductions of our marketing spend during the COVID situation. The 98% increase in depreciations and amortizations are due to the CHF 5.9 million amortization of the CHF 52 million intangible assets that we booked at day 1 of the acquisition of cashgate to be amortized over -- or depreciated over a 5-year period. On the cashgate, already mentioned by Robert. So we are pleased with the progress we made with the cashgate, and we completed the operational integrations in line with time line and costs related to the transactions. Integrations and transition agreements were lower than expected. After the people and the commercial integrations, last key milestone was the successful IT carve-out achieved this month. Remaining will be the legal merger plan in 2021. We incurred CHF 6 million integration and transition costs for the first half of the year related to cashgate after the CHF 8 million incurred in 2019, as already disclosed in our full year 2019 results. In addition, we capitalized around CHF 5 million of costs to be depreciated in the next 5 years. So in total, the integration and transaction costs related to the cashgate acquisition are expected to be around CHF 20 million compared to the original assumption of CHF 25 million. So adjusted for the integration cost and the transition services agreement with the seller, the cost/income ratio stood at 47.9% compared to the 50.3%, including this cost. Finally, last year, we announced that we would invest around CHF 40 million in digitization and product development for the first -- for the period 2019/2021. We incurred CHF 7.1 million for this H1 2020 compared to CHF 6.5 million for the period in 2019. Let's go now on the balance sheet. Look, on the balance sheet, the group total net financing receivables amounted to CHF 6.4 billion, a decline of 3% compared to year-end 2019. And this is largely attributable to the impact of the COVID-19 lockdown in Switzerland. The decrease in funding was in line though with the decline in assets. Finally, on the equity, the shareholders' equity decreased by 3%. After -- Cembra, we paid out the full dividend in April 2020 of CHF 110 million for the financial year 2019, and this was obviously partially offset by the net income for the first 6 months of this year. On the funding. The group funding portfolio declined by 3%, as just mentioned, in line with the lower asset base. The funding mix remained stable compared to the end of 2019, 57% deposit, 43% nondeposit. The weighted average duration was slightly reduced to 2.8 years compared to 2.9 years we had at the end of 2019. And the period end funding cost was 43 basis points versus 44 we had at the end of 2019. The reductions of the cost of funds is mainly driven though by lower cost related to the ABS. As already mentioned several times, we placed on ABS in 8 -- in March with CHF 250 million of principals. I would like now to hand over to Volker for the provisions for losses.

Thanks, Pascal, and good morning, everyone. For the first half of 2020, we can report a stable loss performance with a loss rate of 0.9%, which is in line with the normalized number from the same period last year and also in line with what we have been seeing in the years before. Translated into absolute numbers, the loss provision for the first half came in at CHF 30.2 million, which is around CHF 8 million higher than the adjusted for one-off number in 2019. The main explanation, and Pascal highlighted that already here, is the loss provisioning for the cashgate portfolio that obviously was not part of the 2019 number. And hence, we also see that the loss rate as a percentage then is stable. There is one more item that should be mentioned around the loss provision in the first half of 2020. The loss provision contains the booking of an additional allowance of CHF 2.3 million that we call an environmental reserve. Due to the current COVID-19 environment, its implications on the macroeconomy and the fact that we haven't seen any material impact on the credit quality of our portfolios yet, we decided to book an additional allowance due to this uncertainty. This is obviously a very prudent approach, and the macro future will then show if and to what extent this additional allowance is actually needed or not. As mentioned so far, we haven't seen any clear impact of COVID-19 on the loss performance. Also, portfolio quality metrics with 30-plus delinquencies at 2.1% and NPL ratio at 0.7% remained strong and stable relative to prior periods when normalized for their one-off effects in the past, so in a like-for-like comparison. In the current environment, we obviously continue to remain cautious around our risk taking. When the outbreak of the pandemic started, we worked very hard in implementing measures to protect the credit quality of our portfolio by strengthening collections activities and also by restricting specific high-risk segments in our product lines. So far, it has paid off, and we see a solid loss performance that we, based on what we know today, also would expect for the full year of 2020. And with that, I hand it back to Pascal to talk about the capital position.

Thank you, Volker. So on the capital, the Cembra remains very well capitalized with solid Tier 1 ratio of 17%, which is at target level, compared to 16.3% we had as of December 2019, and a core equity ratio of [ 44 percentage ]. The risk-weighted assets decreased in line with the reduction of assets. And with that, I would like to hand over to Robert.

Thank you, Pascal. Just a few words on the macroeconomic outlook. I just want to really keep it short here. We followed here basically the second numbers, the last -- the latest second numbers, which predicts a shrink of 6.2% in 2020 and a 5.3% recovery on the GDP in '21. You also know probably the interest rate expectations. They are supposed to remain negative for long term, and then the unemployment rate going to 3.8% this year and 4.1% that year -- next year. This is basically what we've taken, in general, in our predictions. But I think the next page is probably more interesting. This is the H2 priorities and how we adjust to the new economic reality. Basically 5 things on this page. Now the first one is continue to deliver despite COVID-19. So I think regaining organic revenue growth in all business lines is important to us. Manage costs very tightly, aligning with the revenue development. You know that we have been quite restricted on marketing expense and external expenses. And then also accelerate the digital transformation. So continuing to deliver in an economical difficult environment with a supposed recovery in '21, where we will not jeopardize any of the long-term plans that we have. So it's a short-term management of the crisis. That also bring you to the next point, so continuous focus on risk performance. We have implemented tighter underwriting rules and some additional risk assessments. We strengthened collection processes, and we have increased the staffing and training on the collection side. We've deployed limited debt restructuring solutions. We don't use them a lot, to be honest, because we've implemented this in March. We have not seen quite high usage of those restructuring solutions. But also on our focus on risk performance, I always say now being successful in consumer finances, being successful on risk management. And I think it proves a little bit to -- it -- probably it helps a lot to focus on risk performance. Then I think the cards business is very important to us. We are investing in CRM. We're also investing in the self-servicing of cards. I think with 1 million cards, part of the cost management and part of the also CRM is really getting more self-serving of cards. But on the Migros Bank, the cards launch of the Migros Bank has been delayed. The -- basically, the reason for this is that Migros Bank has a new CEO. They're also in the middle of the COVID crisis, and they're reviewing the project portfolio. It's not off, it has been delayed so far. Then drive existing and new partnership. We have a healthy pipeline as well for new partnership on the cards business. A few words on the new products. We haven't spoken about SME, about Swissbilling. So SME, we launched the SME business the 14th of February. It was probably the most unfortunate date to do it. With all the COVID-19 loans, we stopped basically originating -- we stopped originating new business. I think we'll regain this one in early next year, so I don't think it makes a lot of sense now to try to book a lot of volumes on the SME side. I still believe strongly in the product. I still believe strongly in the setup. So I think we're going to restart the SME launch early next year. That will be my best guess so far. Swissbilling, we continue to scale up Swissbilling. They were live. They're completely live, with Swisscom Directories. The live went a little bit later than planned, but they're live since beginning of April. That's probably why the revenues are a bit lower in the first half than expected. They also signed another big contract with the TX Group, which is formerly Tamedia. They expect to be live early next year. It's also billing as a service. So we really see scale in Swissbilling coming up. Last but not least, on the ESG performance, I think some good successes there. We got upgraded to A in April 2020 from MSCI after the upgrade from BBB in June 2019. Sustainalytics upgraded us to low ESG risk, ranked us #1 amongst 112 consumer finance companies. So also, I think on ESG, we are making quite some very nice improvements. Finally, the outlook before we hand over to the Q&A. In general, I think Cembra is well positioned to manage the future. The assets are of strong quality, 100% Swiss consumer finance, proven historic risk performance. The capital position is solid, and we have secured a long-term funding. So for 2020, we expect to deliver a resilient business performance, with revenues being impacted mainly by overall lower volumes in credit cards and also with solid loss performance expected for the full year 2020. The midterm targets remain unchanged, so an ROE above 15% and Tier 1 capital of at least 17%, 60% to 70% dividend payout ratio and net income delivery on cashgate as planned. So with that, I would like to hand it over to the Q&A session.

[Operator Instructions] The first question is from Andreas Venditti from Vontobel.

Yes. Maybe to start on the credit cards, obviously, most impacted business. And thank you very much for the additional disclosure on a monthly basis, very helpful. Did I get it correctly that basically what the usual pattern is, is that after transactional volumes increase, we should see also revenues obviously follow? And second one also, is the reason for the delta there driven by foreign travel, which is obviously still very slow, I guess? Then maybe on the operating expense side, you mentioned the branch closures that obviously had some costs in the first half. Can you maybe quantify that? And also, can you maybe quantify the benefits we should see going forward and whether these will already be in the numbers of the second half? Finally, on the -- maybe a bit more color in terms of the loss performance and how you manage that basically on the risk management. So maybe you can add a bit more color in terms of what you're doing in terms of managing that. Regarding the collection processes, what has been changed, and also this debt restructuring solutions you mentioned, how this really looks like. And finally, did I get it correct that by solid loss performance for the full year, basically, this means a similar loss performance of -- as in the past, i.e., around 1%?

Thank you, Andreas. I think you split the questions nicely among the 3 of us. So I would take the first one, and then OpEx will be taken by Pascal, and the loss performance is, I think, the piece for Volker afterwards. So on the credit cards, what you typically saw is basically, as of beginning of March, the international spend stopped completely. So basically -- there are basically 3 ways for international spend that we normally see in our business. One is cross-border shopping, how people go in the weekends. And again, no, we're not a travel card. It's -- we are -- our customer only uses the card when he goes on holiday or when he does cross-border shopping. We're not a frequent traveler card. So 3 ways of shopping: one is basically the weekend cross-border shopping; second one is people who start to book holidays in March and April; and the third one is basically spending in the summer when they are abroad. Those are basically the main resources of international spend. Well, the cross-border shopping stopped completely basically because the borders were closed till the 16th of June. Then people did not book any holidays, so hotels, airlines, all those things that were basically not happening. And what we see now is that people go over the board and they go on holiday. They start booking holidays, and they'll also start spending money in Italy, when they are in France, spending on the cards. So -- but basically, until the 16th of June, basically, nothing happened there. So you basically had 2, 3 completely lost months. So I'm not sure it comes completely back. I think the long haul is still far away. We're not in the U.S. yet with holidays. And I think the European travel is coming back, and it also will help the credit cards. So really, the foreign level was the bigger issue for us in the second quarter. I think the spend on itself is not so bad because you see it really coming up already in June, which is basically domestic spend. On the OpEx side, Pascal, please give some info there.

So regarding the branch closure, the group, we recognized an impairment loss of CHF 575,000 on operating lease for this period due to the planned closure of the various branches. So this is here what we reported. And look, on the synergies, ultimately, we are very pleased with the progress we make on the realizations of synergies related to cashgate. And also the synergies, so we are finally able to confirm that we will deliver the incremental net income -- run rate net income between CHF 25 million to CHF 30 million in 2020 as planned and as already mentioned several times.

Yes. A few comments on the loss performance and giving a bit more color on how we are managing that. I mean obviously, in expectation of an economic downturn, the things that you obviously need to do is to manage collections for the credit risk that you already have on the balance sheet, and you need to be cautious on the additional credit risk that you are taking on the balance sheet. So we were very early in March already in rolling out collection strategies and also kind of staffing up collections to ensure that the collections processes are really running smoothly. So we are monitoring them closely. We have kind of additional resources in so that we don't run into any backlogs in collections. And we are also applying some collections tools to help customers that are in financial difficulties. And here, you can think about prolongation. So if a customer has a personal loan, we've just prolonged it by 1 month in the end and the customer has a payment-free month in between, or we do a short-term payment plan with the customer. But as Robert mentioned earlier, these tools are actually not very much used because we put some thresholds in place so that the customer needs to evidence that he or she is actually hit by COVID-19 as the consequences of that. So we are quite cautious in using these tools. And over the last weeks, we actually see also that the demand for these tools is decreasing. So it's an insignificant portion of the portfolio that is affected by that. And on the underwriting, it has also been mentioned that we are kind of cautious on SME lending. We are cautious on exposed segments. Think about people that work currently in the travel industry or in restaurants. Here, we're obviously are extra cautious in granting new credits and loans to this. And then you asked the question about the solid loss performance. So what do we mean by that? And I mean we're obviously not guiding to a loss performance on the number level. But we -- I think we can say that we wouldn't, based on what we know today, expect any material deviations from the loss performance that we have seen in the past. But the environment is still very fragile. I mean we don't know if a second wave is coming. And therefore, we chose the more cautious wording to talk about a solid loss performance.

The next question is from Máté Nemes from UBS.

Yes. I have a couple of questions, please. Firstly, on development of net financing receivables. We saw the details, 3%, 4% decline in most segments. But Robert, I think you alluded to the fact that some of it actually might be just simply attrition as a result of the cashgate integration. Could you give us some color or your best guess, what is really coming from the cashgate attrition, and what is perhaps lower demand, or on the flip side, lower lending appetite from your perspective? And also maybe an outlook for the second half, how much of this could be coming back and what could be the key levers? Secondly, a follow-up on the card fees. I think it's much appreciated the detail on the monthly revenue run rate or revenue performance versus last year. Could you talk a little bit about what has happened really since the opening of the borders? And what are you seeing in July numbers? Is that trend continuing? Is really foreign spend coming back? And should we expect basically an extrapolation of the current trend, perhaps not to completely full year -- last year's levels but something close in the second half? And thirdly, a question for Volker. Maybe the CHF 2.3 million environmental reserve, if I understand correctly, this is a general provision. Could you give us a little insight in terms of how this is calculated? And then what are the key drivers of this?

So thank you, Máté. I will take the first 2 questions, and then the last one is, of course, for Volker. So on the receivables, it's not easy to say. I think if you look at the market now, the market of personal loans went down 2%. And so I would say that if you look at the performance, 2% is probably driven by the market and 2% probably driven by the cashgate integration. What we always said is if we acquire somebody who's #3 in the market and we combine the assets, we're going to lose some market share. I'll give you one example, on the Tesla side. So Tesla was working exclusively with Cembra and with cashgate. They always have a second provider in the market. So they do bring now a second provider. So we will lose some of the Tesla volumes, which is logical and I think normal. So I think it's difficult to guide this for the rest of the year. But I think in our business plan, when we acquired cashgate, we have really put some loss of market share in there. And we always said we think we can deliver CHF 25 million to CHF 30 million net income because we don't know how much market share it's going to be. And it's going to be a mix between synergies on the cost side and some dis-synergies on the revenue side. So far, the dis-synergies are very limited, but also the new applications has been a bit lower than expected. So you don't really know. So I expect that we will lose some market share this year. I think that will be normal. But I'm very hesitant to give you an outlook for the second half. On the card fees, I understand the question. I understand that everybody wants to know how it's going to be in the second half. Honestly, I don't know. What I've seen since the opening of the borders is that international spend is coming up, not at the level as last year because the big international volumes, the big international long-haul travel is not there, but it's picking up nicely. July and August are important months for us. I can't comment basically on the July numbers though. So far, I think we'll be very -- not very prudent to tell you now what I think it's going to be. I think we see a pickup in volumes in July. We see also a pickup in international spend. But again, I'm a bit like Volker. Let's see if there's a second wave or not. This environment is still very volatile. You also see some releases about potential second waves, countries locked again. So I will be very, very hesitant to give you really an expectation for the second half. I think I can't do it at the moment. But it's turning to the right direction for sure.

Yes. And one kind of more item around the environmental reserve. I mean the standard reserving models that we are using for calculating allowances for future losses, they basically look into the past and they look into the present distribution of the receivables along kind of risk classes, but they are not looking too much into the future. But we are now in a situation where we know that we have probably a macro downturn ahead of us, and the standard reserve models have not taken that into account. So there is a timing gap until they have considered that. And because of that, we put the environmental reserve in place, and we kind of calculated the amount by using benchmarks that we had from the 2008, 2009 financial crisis. And at that time, and we mentioned that before also, the portfolio has been quite resilient. So we also kind of expect resilience now, but there can be a tiny impact by the change of the macro variables into what it means for the default behavior on our book. And we just want -- didn't want to wait until we see it in reality in our book. We just wanted to anticipate that and accelerate that and took it, therefore, already into the loss provisioning for the first half.