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

Ladies and gentlemen, welcome to the Cembra Full Year 2020 Results Conference Call and Live Webcast. I am Paolo, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. The presentation will be followed by a Q&A session. [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, Paolo, and good morning, everyone. I'm here with Pascal and Volker to talk about the 2020 results. And let's just start immediately with the 2020 highlights. I will talk a bit about the highlights, and then Pascal and Volker will talk about the financial results, and I will come back to you then on the outlook. And then, of course, as always, we have the Q&A. If you look at the 2020 highlights, our net income was CHF 152.9 million, which was a reduction of 4% versus 2019, and EPS is CHF 5.21, what I would call resilient results. Receivables were 4% lower with a more resilient business, especially in the auto business in the second half of 2020. We will really talk a bit more in detail afterwards about the receivables. Net revenues were up 4% with interest income up 13%, mainly driven by the acquisition of cashgate. And commission and fee income was down 17%, completely driven by COVID-19 lockdowns and restrictions. I would say very strong loss rate at 0.9%. Higher cost/income ratio, a little bit higher, driven by 2 things: the acquisition of cashgate and, of course, also the lower revenues. ROE was at 13.8% with strong Tier 1 capital ratio of 17.7%. Proposed dividend is unchanged at CHF 3.75, which will mean a payout ratio of 72%. If you look at the next page to the products and markets. First of all, I'll talk a little bit about the personal loan market. What you see in general is that in a crisis like this, people are starting to save more and basically take less credit out. Savings quota, for example, in [ Switzerland, for ] 20% to 27%. So there were higher savings. Volumes were lower. So you see that the market was down 3%. Also, the volumes at Cembra were lower. We also saw lower attrition. We also tightened the underwriting rules quite a bit at the start of COVID, and then we had some of the cashgate effect. I'll talk a bit more about the assets in the next page here, but the market share went slowly down from 44% in 2019 to 43% in 2020. If you look at the auto market, auto market -- the new car registration were down 24%. If you remember the first half of the year, they were down 34%. So they recovered a bit in the second half, but still, minus 24% is in line with Europe. Used cars were pretty stable, minus 2% market where the first half of the year still showed a minus 7%, but was basically almost unchanged. If you look at Cembra, our financing receivables went down 2%, but they were slightly increasing in the second half of the year. Our leasing share went down from 23% to 21%, it was already at 22% at half year, mainly due to aggressive pricing by captive store. You saw that the new cars that we sold were set pretty aggressively in the market with very, very low prices. We moved more and more to used cars as well, which also has a higher share of loans. Partnerships are performing well. E-vehicles are outperforming the market. Maybe one word on e-vehicles. The new e-vehicles registration were 14% in Switzerland, up from 6%. So it is really taking off in the Swiss market. Moving to credit cards. The transactional volumes were down 15% over the year. Cembra cards issued plus 5% up, so we have now more than 1 million credit cards despite closure of partner retail outlets. So we saw that Fnac Conforama had been closed quite a bit in 2020. But still, we had 5% more cards issued. The market share of card transactional volumes increased from 12% to 14%. So we did, I think, a good job on the transactional volumes. And contactless is still very strong. We have a 20% market share in the total market of contactless. I think probably more interesting to talk a bit more about, the asset evolution. If you look at the next page to the receivables. So we've tried to give you a little bit more color on the year on the assets evolution. So you clearly see that the Cembra assets were down in the lockdown. We lost assets at 3% of the lockdown, and the restrictions in November, December also gave us a 1% lower assets. Outside the lockdown, we were basically flat. So 3 product lines. Let's start with the personal loan ones. We're at minus 8% on the personal loans. So we saw clearly that there was a lower demand. You see that the market effect is about 3%, then we had reduced activity in Eny cooperation. We lost 2% of assets due to much lower volumes in Eny cooperation. And then there was a 3% loss, which I would say was a mix between underwriting restrictions that we put clearly in place at the beginning of the lockdown and cashgate dissynergies. We always said that when we take over cashgate, you will see some dissynergies by losing some of the volumes by the same agents, these kind of things. So in total, minus 8%, but was in line with our expectations. And it's also clearly market-driven. People are just very cautious in the personal loan market. If you look at auto, you see a minus 2%. You see really an effect of the lockdown in April, May, June, and then it recovers in August. And you see basically that we had a nice rebound in the second half of the year. So auto is still doing quite well in 2020. Cards is really driven by volumes. You see that in lockdowns or in restrictions, the volumes go down. The interest-bearing assets are quite stable. The noninterest-bearing assets are really going up and down with the volumes. So lower volumes in December and also in November due to COVID-19. It had also an effect on the asset place. If we move to the next page, the operational highlights. I would just focus on 5 things really quickly now. First of all, I think Cembra has been proven to be very resilient. The business performance has been resilient. We have long-term partnerships in place. I think we are very disciplined in cost management. Our cost of funds are long term and very stable. Risk performance is extremely good and better than the long-term average. So this is a very resilient business that also in the year, in 2020, can perform very well. Cashgate integration was completed in 11 months, and we will deliver on the expected benefits. So in July 2020, we integrated cashgate completely. We're also looking at growth. So 2020 was also a year, how do you prepare to rebound to growth? So Swissbilling is growing. There are new partnerships. You've seen the announcement. The SME value proposition was launched in February 2020. It was on hold due to COVID-19, and it's still on hold, but it was launched. And then also, we signed a partnership agreement with IKEA for cards and other products, and we will be live in March or April this year with the IKEA partnership. Then a lot of focus on digital transformation. I think there was an acceleration on the digital transformation. We have digital solutions for personal loans and SMEs in place, personal loans also, thanks to the cashgate acquisition. We're investing heavily in digital card solutions. We will have an improved value proposition for cards in the digital side this year, and we're reducing our branch network. If you exclude the cashgate branches, we also went down from 17 branches to 13, and we're consolidating step-by-step the branches. Remember, about 2, 3 years ago, we still had 26 branches. Last but not least, an enhanced focus on sustainability. For the details, you can look in the appendix at Page 22 afterwards. But we have improved ESG ratings everywhere and recognition in sustainability indices. And then Great Place to Work was renewed and had improved results. So also as a company, I think we're on a good track here. For the details on the financial results, I'm going to hand the -- hand over to Pascal now, and he will start with the P&L.

Thank you, Robert, and good morning, everyone. Let me start with reinforcing what Robert just said. Cembra had a strong business performance in 2020, and our business model proved resilient. Our conservative, disciplined, consistent risk management approach, though, is really paying off. And yes, the lockdown in Switzerland and abroad had a clear impact on our business, particularly on the credit card fees. This was partially offset by our solid loss performance as well as our tight and timely expense management. Let's now dig deeper into the 2020 numbers, starting with the profit and loss. The net income decreased by 4% to CHF 152.9 million or CHF 5.21 per share. This translates into a 13.8% return on equity. The net revenues rose by 4% to CHF 497.2 million. Net interest income grew by 13%, mainly as a result of the 12 month of cashgate revenues in 2020 compared to the 4 month in 2019. Interest expense was down 3% lower at 26.9%, and this is due to the lower debt and favorable repricing of our funding portfolio. In total, the commission and fees income decreased by 17% to CHF 122.3 million. The increase in insurance and loan lease fees are due to the effect of the acquisitions. The decrease in card fees was mainly driven by the lower spending abroad due to the continued of the travel restrictions following the COVID pandemic. I will further comment on the cost revenue in one of my next page. Cembra delivered a solid loss performance despite COVID-19 impact on the economy. The provisions for losses increased by CHF 11.3 million to CHF 56.4 million primarily due to higher financing receivables following the acquisitions again. The loss rate remained in line with prior years, and Volker, our Chief Risk, will further comment soon. The total operating expense increased by 7% mainly due to the acquisitions and integrations of cashgate. The cost/income ratio came to 49.8% compared to 48.3% in 2019. Finally, the reductions in the ROE is largely due to the increase of the average equity from 2019 to 2020. Let's spend a bit more time around the revenues now. The net revenue grow by 4%, as stated earlier and as you can see on the left side, with interest income increasing by 12% to CHF 402 million, mainly due to acquisitions of cashgate. In his 2020 highlights, Robert already provided insight behind the reductions in the net financing receivables by business. In personal loan, interest income increased by 10% to CHF 190.7 million due to the acquisition of cashgate. The yield remained stable. Similar as in auto, interest income was 17% higher at CHF 129.4 million with a stable yield at 4.5 percentage. And finally, in the credit cards, interest income grew by 5% with a yield of 8.3%. I think this is important to remark that this change in the yield is not driven by pricing changes, but by lower noninterest-bearing assets during the lockdown. Some words on the cards, cards volume and revenues. As you can see, the first economic lockdown from March to June as well as the economic restrictions from November had a clear impact on the cards transaction volume and the card revenues. The volumes declined by 5%, respectively, 7% for the first half of the year and almost back at 2019 level in the second half of the year. We observed sustainable shift to do card payment and away from cash, resulting in an increase in domestic volume, offset by lower international volume due to the travel restrictions. We are, of course, pleased with our continued outperformance compared to the rest of the credit card market during this period. We have seen difference in volume growth by industries in 2020, and I want to give you a few examples. Volumes for grocery stores went up 63%. Garden, do-it-yourself, building materials went up 39%. Electronics, digital goods, went up 26%. On the opposite, airlines went down 75%. Travel agencies, rental car, 69%; lodging, 32%. The overall card revenues decreased by 14%, as you can see on this page, with the interest income increasing by 5% and the commission and fees income decreasing by 29%. During the COVID-19 situations, we observed a shift in our source of revenue from cards with higher interest income driven by higher interest-bearing assets, mainly due to the increase in the issued cards, more than offset by lower commission and fees income due to the significant reductions in the spending abroad, mainly due to the travel restrictions as I mentioned before. Not only transactions volume rebounded in June, but also the card net revenues variance to prior year improved from minus 29% on a year-on-year comparison in April to 11% in November before the second economic restrictions had an impact late in the year, respectively, in December. Some further comments on the operating expense. As mentioned before, total operating expense increased by 7% and the cost/income ratio increased to 49.8%. Adjusted for the integration cost and the transition services agreement with the cashgate seller, the cost/income stood at 48.1%. The personnel expense came to CHF 129.5 million, raising 8%, and this is due to the increase of the average number of FTEs compared to 2019 and predominantly from cashgate. The number of the full-time equivalent employees declined from 963 to 928 by the end of 2020, and this is largely driven, though, by the synergy realizations from the acquisitions. Professional services included in 2019 some extraordinary one-offs related to the cashgate transactions cost. Increase in IT was largely related to cashgate integrations under run as well as strategic investments, as an example, in digital platforms, digital cards, as mentioned earlier by Robert. Underlying depreciations and amortizations. The 36% increase was mainly due to the CHF 11.7 million amortizations of the intangible assets for the full year 2020 compared to CHF 4.3 million in 2019 for 4 months only. As you might remember, these intangible assets we have booked with the acquisition of cashgate and are mainly related to customer relationships, trademarks, and are depreciated over 5 years. At the end of the remaining -- at year-end, the remaining intangible assets related to cashgate was CHF 44.6 million. Robert already mentioned although in his opening the cashgate acquisition and the successful integrations. We paid back CHF 1.45 billion bridge financing after 6 months and completed the integration in 12 months. People, commercial, financial integrations as well IT carve-outs went smoothly because of the thorough integrations planning, extraordinary teamwork, commitment and an excellent collaboration with the seller to execute the carve-out. We are particularly pleased with the asset quality and the underlying loss performance of this business. The total integration cost for cashgate came to around CHF 21 million compared to the original assumptions mentioned of CHF 25 million. We incurred in 2020 CHF 8 million, after CHF 8 million incurred in 2019. And in addition, we capitalized around CHF 5 million costs, which we will depreciate over 5 years. The expense synergies have been triggered in the course of 2020. We've closed off branches from 26 just after the cashgate acquisitions to 13. Reductions of net FTEs across the bank from 963 to 928 as mentioned before, vendor consolidations, marketing synergies as other examples. Robert also commented earlier on the revenue dissynergies related to P loan and auto assets as expected. We are confident to confirm the run rate net incremental income out of cashgate in 2021 of CHF 25 million to CHF 30 million, or simply said differently, without these acquisitions, our net income will be around CHF 25 million to CHF 30 million lower in 2021. We are very happy to report to our shareholders today that the delivery of the cashgate integrations has been a full success, and our business is fully integrated into Cembra. Few words on innovations. And in 2019, we announced that we would invest around CHF 40 million in digital and product development for the period 2019-2021. We incurred CHF 13 million for the full year 2020. In 2021, our main investments related -- are related to digital card innovations. Let me finish these sections with our overall approach to expense management. Common to all industries is the need for greater speed control amid ongoing and unprecedented uncertainties due to COVID. In 2020, we carefully assess our discretionary spend and take necessary measures to address the lower revenues for the credit card, but without jeopardizing our long-term strategic investment and ambition. As always, we'll remain disciplined in our approach to cost management, which is part of our Cembra DNA. On the balance sheet. The group total net financing receivables at the end of the year amounted to CHF 6.3 billion, which is 4% compared to 2019. For personal loan, the decline of 8%, 3% attributed to lower demand due to the consumer confidence in COVID, 2% related to reduced activities with our Eny cooperations and 3% related to underwriting restrictions and cashgate dissynergies, as mentioned already before by Robert. On the auto side, we are pleased with the rebound we have seen in the second half of the year. And the lower assets were largely due to the lower volumes in December following the stated economic restrictions in Switzerland since November. The shareholder equity increased by 3% to CHF 1.127 billion after Cembra payout the 2019 dividend of CHF 110 million in April 2020. A few words from the funding, stable funding. In 2020, our funding portfolio declined by 5%, in line with lower asset base. The funding mix remained stable with a well-balanced and diversified funding profile of 44% nondeposit and 56% deposit. The duration -- the weighted average duration was 2.7 year and the period-end funding cost was stable at 45 basis points, close to the contractual maturity of the asset side for the durations. The main transactions in 2020 was our sixth ABS in March amounting to CHF 250 million at 0% with a contractual maturity of 10 years and an optional redemption date of 4 years from the date of issuance. And due to the increase in assets following the acquisitions and in line with our prudent risk management approach, we opportunistically increased our undrawn revolving credit line by CHF 50 million from CHF 350 million to CHF 400 million. With that, I would like to hand over to Volker for comments on the loss line.

Thank you very much, Pascal. Yes, for 2020, we can report a loss provision of CHF 56.4 million, which is at first sight and in absolute terms, considerably higher than the CHF 45.1 million in the previous year. But there are 2 items that need to be mentioned. Firstly, in 2019, we considered only the fourth month of loss provision for the cashgate portfolio due to the timing of the acquisition. And now for 2020, we have obviously in for 12 months, so for the full period. Furthermore, in 2019, there was a one-off effect related to the synchronization of the collections with the write-off procedures that gave the 2019 number a benefit of around CHF 6 million. So in normalization, it would be needed. So if we normalize and rather look at the loss rate as the better metric to make the comparison over time, the 2020 and 2019 loss numbers are absolutely comparable at a level of 0.9% and also very consistent with the longer-term average that we have been reporting. The underlying asset quality also evidenced this consistency. And the level of 30-day-plus delinquencies stayed at 1.8%, exactly on the same level as in all the years before. The NPL ratio came in at 0.7%, which is a slight uptick to the year before, but this is rather related to rounding because the change is just very small in the second decimal. Considering the pandemic and its consequences in the macro environment, we can say that the overall loss performance and also general credit risk performance in 2020 has been quite solid. The consistency and also discipline in the risk-taking, but also the implemented measures in the beginning of the COVID-19 pandemic are certainly paying off. Governmental measures to support the economy in Switzerland probably also played a certain role. But what should be highlighted is that we observe the customer behavior that can be characterized as both cautious and diligent, which means that there is a generally good discipline in fulfilling contractual payment obligations. But customers also show a certain degree of caution when taking up new loans or increasing existing loans. Going forward, we obviously aim to be -- to continue to be prudent in our risk-taking. But as you can imagine, it is in the current environment rather difficult to come with any exact forecast. I guess what we can say, though, is that based on the risk metrics in the last year and also in the prior years and also considering what we know today, our base scenario for the current period is that we would expect a continued resilience in the loss performance. And with that, I hand it back to Pascal for the capital position.

We remain very well capitalized with strong Tier 1 ratio of 17.7% and a common equity as a Tier 1 ratio of 15%. Around 50% of the increase in Q1 capital ratio is related to the increase of the numerator of the capital and 50% by lower risk-weighted assets, in line with the reductions of the net financing receivables. Given though our resilient financial performance, the Board of Directors will recommend a stable and attractive dividend of CHF 3.75 per share at the Annual General Meeting. This represents a payout ratio of 70%, which is slightly above our mid-term payout target range. Thank you for listening. And now I would like to hand over to Robert for the priorities and outlook 2021.

Yes. Thank you, Pascal. Thank you, Volker, for the detailed explanations of the numbers. If you look at 2021, we've been focusing on -- basically on 4 priorities. The first one is really continue to deliver in a difficult environment with COVID-19. We have a resilient business. We think we can regain organic revenue growth with continuation of risk management, funding and cost management. We have been proven to be very disciplined on this one. We will continue this discipline. Then innovative the card business now, I mean, drive new and existing partnerships. I'm excited that we have announced that we have IKEA, and we're going to be live with IKEA in the coming months. Not only with cards, but all these other digital solutions, including Swissbilling. We continue to invest in digital card solutions. We will have a cards mobile first program life somewhere in the second half of this year, and we think that it will really change the way we work with cards. We also, a third priority, will maintain the focus on ESG. So sustainability is extremely important to us. And I also think that we are preparing for a new way of working. I don't think we're going to be all in the office anymore. And the way we're going to work is going to be differently in the future. And as you know, this is my last earnings call as a CEO. I'm leaving the business after 12 years. I'm very happy that the Board has chosen Holger Laubenthal as my successor. I know Holger since 2005, and it's a really good choice. It's a person who is really very well-known and very well home in consumer finance. We will have a smooth transition. It's not only me, I have also a very strong team in place, with a good CFO, an excellent Management Board. I will stay here in March and April to do a smooth transition to Holger, and I think this will go very well. If you look at '21, at the outlook. Look, I know it's not an easy time at the moment, but I'm personally convinced that whenever people have the time and they can go again, they will go traveling again. So I think the second half of the year, revenues will go up again if the measures get loosened. The COVID restrictions are tough for everyone, also for us. So you see an impact on the current spend, but I'm convinced it will come back. So we expect a resilient business performance with revenue being impacted by COVID-19. But also in the second half of the year, following the forecast of the economic recovery, a growth in cards fee income again. As Volker spoke already, we are confident that we have a solid loss performance for the year '21. And as Pascal already confirmed, net income delivery on cashgate is as planned. So our mid-term targets basically are still the same: a ROE of above 15%; a Tier 1 capital ratio of at least 17%; and a 60% to 70% dividend payout ratio and return excess capital when we are above 19% capital. With that, I would open it up for question and answers, and the 3 of us are very happy to take all your questions.

[Operator Instructions] The first question comes from the line of Andreas Venditti from Vontobel.

A couple of questions. On the auto business, you did quite well. That was a good achievement. We have now, I think, a new entrant as a -- market entrant as a partner for Tesla, which is Swissquote. Can you comment on anything that you see in terms of impact on the market from this new entrant? Then second one, maybe if you can comment on your expectations or what you see for the new IKEA partnership, which I think is going to be launched in March. What do you expect there? I guess you also had costs for the project possibly or likely already in 2020. Maybe you can quantify that. Then also in terms of the SME. Obviously, it's on hold. What's the outlook there? When do you plan a relaunch? And also, do you think there's any changes in the business case compared to pre-COVID for this business? And finally, maybe an outlook on the yield for the 3 businesses.

Thank you, Andreas. Almost all questions for me. But the last one, I can at least give to Pascal. But I will try to answer the first one. So the first question was about Swissquote and the entrance of a new leasing company there together with Tesla. Look, Tesla has big plans to grow their market share in the market, and they need more partners though. I mean they cannot rely on 1 or 2 partners. So I think it's logical that they have a cooperation, not just a partner. I think 3 partners is fine. I don't think you can have only 1 partner. I don't know what the effect is going to be. I mean we are still with Tesla on the commercial side. We are planning to have a loan product with Tesla as well. We did great volumes in last year. Tesla will continue to grow in that view. I mean they're in a good shape. They have new models coming out. There will be another player in the market. I mean it's completely fine because this is the market practice. On the IKEA partnership, the second question, I'm personally excited. It's -- I don't want to raise expectations that it's going to be -- that everything is going to be fantastic on day 1. However, they have 1.7 million family members in IKEA, and we're going to target those family members to get them to a credit card. We also have Swissbilling in there. We're also going to have some other products there. Cards mobile first that's going to be live in the second half of the year will be first used for IKEA customers and then for other customers. So I think over time -- and again I'm hesitant to give you a number right now because I don't even know when the shops are opening again, so -- but over time, I think it's a huge opportunity for us. It's much bigger than Conforama Fnac. It's not as big as Migros, of course, but 1.7 million family members. It's an extremely good brand. I think it gives a very good opportunity for Cembra. Hesitant to give you any numbers, Andreas, and I think you understand that. On the SME, the third question, look, the day almost that we launched the SME business, we had a nice competitor in a market that's called government. They offloaded the market with loans with no interest and no amortization for 5 years. I think that, that provided a lot of liquidity in the market, and I think the liquidity is still there. So I think it will be wrong to relaunch SME right now. I think on mid-term, I still believe in SME. I think it's a very good value proposition. It's completely online. I don't think the first 6 months in this year, we will launch it. It's probably too early. And I think after the summer, we have to see how the world is changing, how the world is developing. So it might possibly that we launch in the second half, maybe even a bit later. But for the moment, I will be very -- I don't know, Volker, I think he's agreeing with me there. I will be very restrictive in doing SME launch because I think there's still a lot of liquidity in the market. Then the fourth question was an outlook on the yield. Pascal, you want to say a word?

Yes. So first, in 2020, we have been able to defend our pricing strategy despite the COVID situations. Of course, we would like to keep the overall yield a little stable also in 2021, but I think we need to be much more agile than in the past to see also what could be the impact of COVID and assess on a regular basis.

But I think, maybe in addition to this one, we really defended the yields in 2020. And for me, it's the right thing to do. So I don't think we're going to trade heavily price for assets. That's not in our DNA. We have never done this, and I don't see that happening in '21. I think yield is very important for us. I hope that answers all your questions, Andreas.

The next question comes from the line of Andreas Brun from Crédit Suisse.

I've got 4 questions. The first one, did you release the additional loan loss provisions made in H1? Then the second one, you showed that net financing receivables during lockdowns came down on your side. Does this holds true also for the current year, for 2021, so far? And then 2 questions on the credit cards. Could you please elaborate on the growth of the number of cards? It was 5% versus 10% in the last couple of years. Is this only due to COVID? Or is there also a general like downtrend in demand? And then the second one on the credit card. Like if one would adjust for FX-related fees, which are not there currently, do you see pressure on fees per card in general and especially in Switzerland? Yes, that's it.

Okay. Thank you, Andreas. I will give the first question to Volker, then I'll take 2 and 3. And the fourth one, I'm giving to Pascal. So on the release and loan loss provisions, Volker?

Yes. The quick answer is no. And just kind of to give a bit of context. So in the first half, we booked an additional reserve, which we still have. At the end of the year, it was CHF 2.2 million, which is something that we called an environmental reserve that we booked on key loans to be prepared for any kind of effect that the macroeconomic downturn might show that we would have not captured in our standard reserving models. But also there, we run a very prudent approach. We didn't see the need to release it because it's still in the macroeconomic situation that is fragile, so we keep it enabled.

Okay. Andreas, could you just repeat your second question? I'm not sure if I completely captured it.

On your slides, you showed that net financing receivables during periods of lockdowns came down. They were negative versus the periods during summer. My question is if this holds true year-to-date in 2021 as well in lockdown. So is it like -- can we expect that during phases of lockdowns, it's still on the negative side?

It's difficult to say. It's a good question. It's difficult to say. What we see so far, but we're only 8 weeks into the new year, is that application levels of personal loans and auto are much better than they were in the first lockdown last year. So we seem to deal better as a country with this lockdown. What we saw basically in 2020, that we had a sharp drop in personal loan applications and in auto applications in March, April, May. We have a bit of a drop this year in January, February, but it's much lower than we had last year. So I can't answer your question. What I see is our auto business is basically almost continuing as normal. It's a little bit lower at the moment. It's only 8 weeks. So I don't know what's going to happen in the next 3, 4, 5 weeks, I can't tell you, but that's what I say. In general, I think on the car side, it's very clear that when you have much lower volumes, you get lower assets. And when the volumes come up, they just pick up. There's much more fluctuation there. Your third question was on the credit cards and the growth on the numbers of cards, which was 5% last year. I think it's mainly due to COVID. I think the -- if you look at the cards growth, normally, we are about normally about 10%. And I think there was really a slowdown on COVID. Also, we're going to launch IKEA, so I expect also some credit cards there. But it's difficult to say how much it's going to be in this year. But I think the 5% was really driven by COVID measures. The FX adjustment, Pascal?

Yes.

For the cards.

So obviously, when we refer to international revenues in card business, this is, of course, on one side, of the pure FX markups we have. This is also related to the international interchange locked fees where you might know that actually [indiscernible] the -- higher than the domestic fees. And yes, we see other pressures on the fees, on the margin, like we have seen for many, many years. There are new market entries, so there are new strategic moves. But on the other side, we have been always able to offset with some further growth of our business. And this is what we plan to do. This is what we are doing. We have announced the cooperations with IKEA Switzerland as an example, and this is how we want to basically offset potentially the lower fees and commissions with higher growth.

We now have a question from the line of Benjamin Goy from Deutsche Bank.

Two questions from my side, please. First, on loan growth. Just wondering, will we see a recovery only in H2 given the broader macroeconomic recovery? Or do you think it's already sufficient when lockdowns are lifted in H1 to see somewhat of a volume recovery? And then secondly, you commented at least on some trends in 2021 on the yields. I was wondering if there is any thoughts on the potential entry of PostFinance into lending amid their privatization plans and your impact or -- and impact on Cembra or why you are more defensive maybe?

Yes. Benjamin, thanks for your questions. I think I will take them both. First of all, the loan growth, what we see is that people are very cautious and people are waiting to spend the money and to go out. The savings [ sort of ] went up significantly in 2020. People are very cautious. Personally, I think that whenever we get out of lockdown, people want to go traveling, people want to kind of spend money and people also need loans. So I guess that the loan will pick up as soon as we are really out of lockdown and people can start traveling again. That's why you will see, in my view, spending in the market, and that will also have an effect on loans. How much it's going to be? I cannot tell you, but my personal expectation is that it will not be only in the half year. Depending when we have really loosened the measures, it will start happening. Your question on PostFinance, I don't see any impact there. I think PostFinance will be in -- in finance, it will probably more -- maybe more in mortgage than in personal loans also. So I don't think that's going to have any impact on us. I might be wrong, but I think I'm right. So I don't see them as a competitor. So I don't see any impact from the entrants in the '21 market.

The next question comes from the line of Máté Nemes from UBS.

I have 3 questions, please. Firstly, just a follow-up on the year-to-date applications for personal loans, autos and perhaps cards as well. I'm just wondering, have you seen any change in terms of the quality of applications? And if you perhaps compare the acceptance rate of these applications currently versus pre-COVID, and has there been any change from this perspective? And secondly, a question on cost base, perhaps for Pascal. Would it be possible actually to discuss the main moving parts of the cost base going into 2021? Shall we expect actually further decline, for example, in professional service fees and maybe any major change on the IT expenses line? And lastly, a question -- a broader question maybe for Robert. Do you see an increased threat from buy-now-pay-later solutions in Switzerland as some of the large retailers started offering these payment solutions? Is that a credible large-, medium-term threat? And if so, what can you do -- what are you doing to mitigate that?