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

Good morning, everyone. I am thrilled to be here today with my team and yourself. I've had 9 months on this job now. You know what they say about time flying when you're having fun. And it's my very own Chapter 2 here at Cembra after 3.5 years in the early 2000s. So we set this up as we discussed at the half year results to really just get a chance to get to know each other bit better, right? Myself, my team here, and that's the spirit of the day today. And we've also taken a fair amount of time in the last month really reviewing how we're positioned in the market and how we're going to take this great business and position it for success in the future. So deep dive on our strategy, and we're excited to be able to talk to you about this today. We're aware this is a much anticipated event, not least given the announcement around the termination of the Migros relationship. So it's really a great opportunity for us to walk you through the story in detail and in its entirety. So the theme of today is reimagining Cembra. So what do we mean by that? As I've said many times before, right, this is a very strong business with incredible substance at the core. And at the same time, we all know our markets are changing rapidly, and they have been changing rapidly, and that pace of change isn't going to go away, right? And so this is all about taking this business, taking all our strengths, adding to it and repositioning it for continued success in the marketplace and leadership going forward. So this is what we'll walk you through today in this sequence. It starts with our strategic ambition, which really combines leadership in consumer finance with leadership and technology to deliver intuitive, compelling solutions for our customers' needs here in the Swiss market. We'll explain how we're going to do this on the back of our Cembra DNA at the foundation, which is really our fundamental strengths, what defines us. And at the core of that, it starts with what I call the credit factory. And the people who make all this happen and who've allowed us to build the leadership positions over decades. Then there are 4 strategic programs, which we'll walk you through today. First one is operational excellence. This is about simplifying what we do. And it's also about transforming our technology stack to become future-proof and deliver both significantly further improved service proposition for growth. And importantly, meaningful efficiency improvements with over CHF 30 million of cost savings over time per year. And I said on several occasions before, that we have to get our commercial aggressiveness back. And we will show you today as well how we're going to do that. And this is, number one, about our core businesses and how we accelerate growth in these businesses. In personal loans, we're going to simplify our operating model. We differentiate our product set, and we will enhance our digital journeys, both for customers and partners. In auto, we have a couple of new messages for you because this business has somewhat been sort of a nonevent in a sense. And the new message here is we're going to reposition this business for growth as well. We're going to build a new platform, which will be a step change in servicing performance, allow us to expand market reach and new partnerships and drive meaningful efficiency in this business as well, setting ourselves up for growth. And then cards, of course, a topic everybody is interested in. We're going to launch our digital engagement layer in the first quarter of next year, very excited about that. We'll grow our partner universe, and we'll also expand our product offering into a new innovative B2C value proposition to return to pre-COVID levels in assets and revenues by 2023 in this business. So that's the core businesses. And then we're also looking at new growth opportunities. And we're super excited. I'm super excited about what we can do in embedded finance and particularly with our payment technology subsidiary, Swissbilling in buy now, pay later and more on that later as well. And then finally, all of this is underpinned by cultural transformation. We have an incredibly strong committed team. And we want to become even more customer-centric, more agile, embrace learning environment of trustful collaboration for all of our associates. So these actions in combination will deliver the continued financial performance that you should expect from us. As we said, ROE will be temporarily reduced in line with previous guidance based on recovering from the Migros situation as well as investments into technology, and then back to 15% or more from 2024 onwards. Our plan also includes a dividend of CHF 3.75 for 2021, the same or more next year. and growing from there on, supported by EPS growth as well. So with that, I'm pleased to be able to introduce my partners on the team with us today here. We've got Pascal Perritaz, our CFO. I think you all know him. We have Volker Gloe, who I think also many of you will have interacted with, our Head of Risk -- Chief Risk Officer with over 2 decades of experience in managing risk and analytics functions. We have Niklaus Mannhart, our Chief Operating Officer, leading Operations and Technology, and over 2 decades of experience in the field both with a large bank and also with the leading top-tier consulting firm. And I'm also very excited, oh, he's there, yes, to welcome Peter Schnellmann back to the team. So Peter and I go back what, 15, 16 years yes, 16 years. He was with us before, and I'm thrilled to have him back. He's got deep expertise about the market. He's probably as good a sales leader you can get in consumer finance in Switzerland. So thrilled to have him back and he'll be joining us on the stage later on today. And with us also from the management board, Emanuel Hofacker, our General Counsel, great safe pair of hands over 15 years with Cembra. And also in the room, we have, of course, Marcus Händel, our Head of Investor Relations. We have Alain Moroni, Head of Strategy and PD. And then we have Carsten Jochem, who Head sales for the cards business, and he's been with us in that business since its inception. So that's the team in the room here today. So the next couple of hours, this is the agenda. I'm going to start with the strategic ambition. We're right in that already. Volker will talk about our Cembra DNA, then we'll hand over to Niklaus for the operational excellence piece. We'll take a Q&A, short break. Then we'll come back to the commercial section. Peter and I will talk about accelerating growth in our core businesses. We'll talk about the buy now, pay later opportunity that I mentioned. And then Pascal will bring it home telling us how all this is reflected in the financials and drives the performance that you're looking for and that we're going to bring. And we'll wrap it up and take a few more questions, and that will be the day. So look, before we dive into the meat, allow me to just take a step back and just share a few simple facts about our leading businesses here. So nothing you see on this page happens by accident, right? Not the 1 million customers, not the leading positions that we've had the privilege of holding for decades. And certainly not the 15.9% ROE on average since the IPO and the annual dividend growth of 4%. Nothing happens by accent, right? All of this happens because of who we are, because of our deeply embedded capabilities because of the customer intimacy we've built and our teams have built and the passion our thousand of associates bring to work every day. And nothing and no single event can take that away from us. So I just wanted to start with that. So look, when you think about strategy, you ought to start with what's going on in the market, right? And as I've said before, there's a ton of stuff happening. So I thought I would just highlight the top 3, 4 things that we're seeing because they're relevant to us, relevant to what we do here in our market in Switzerland. So first, I think it's fair to say this continues to be a very attractive market. right? It's high GDP per capita. It's very broadly distributed across the population, which implies great market depth and balanced with a -- coupled with a balanced regulatory framework. It's a great foundation for us to grow in this market and develop in this market. And it's also, I think, an excellent way to invest into one of the strongest consumer economies in the world. Digitization is everywhere, right? Everywhere you look, there's digitalization, whether it's integrating digital and mobile channels into seamless experiences and journeys for customers, intuitive customer journeys. This is critical as more and more of our business also shifts into digital and online, right? Already today, about half of all person loans are taking out via digital channels. In payments, the share of mobile payments over the last 12 months has more than doubled to over 10%, right? So this is clearly a trend that we're looking at. And on the back of this. We see operating models changing rapidly as well, right, where we used to be in heavy monolithic, hardcoded systems, impossible to make changes in the near term. Now things are moving into Software-as-a-Service, cloud-based, et cetera. Let me give you an example. In one of my previous roles, I was amongst others, overseeing a large consumer electronics retailer. And we, in the past, had everything hardcoded in SAP. So if you want to offer a simple, as you would as a retailer, buy one, get one free, we'd have to wait for the next SAP release 6 months down the road. It's not a good place to be, right? So when you move that into a modular architecture with open APIs and you can do these things, these changes overnight. And the same applies in financial services, the exact same right? And so what does it do? Increased release frequency, which is a meaningful benefit to the customer, significantly drives efficiency and huge cost out opportunities. So lastly, and this is something we haven't talked so much with you about, but I'm quite excited about is the trend towards integrating payment and financing decisions directly and more seamlessly into customer journeys. And this really is a meaningful growth opportunity. And let me just tell you a little bit more we think about in the next couple of pages. So I first joined this business in February 2003. And I remember one of the typical customer journeys for us for us, a customer comes into a branch, applies for personal loan. They go through the underwriting process, assume they get approved, right? So then they come back at some point and then they get their money in cash. They put that cash, CHF 50,000 into bag. They get on a tram. They go to the next use car market, and they buy a car, right? And so that was one of the standard customer journeys we would have served. And by the way, we still serve this occasionally to date. But clearly, that's the minority, right? So the world has really changed rapidly in terms of these journeys, and we observe a shift of financing decisions very much from prepurchase to at purchase and post purchase, within the customer journey when they buy something with the money that they're looking to borrow. And the customers demand flexibility and seamless experiences along that journey. And technology allows actually for that to take place and for that to be provided. So that is what we call embedded finance, right, which is really embedding financing directly and conveniently into the customer journey around the product, the process and the product they want to buy. So for example, this has already been the case in a sense in our auto leasing business, right, where we are integrated at the point of sale with the dealers. That too is shifting as some of these distribution models are shifting more into online. In cards and invoices, you see this going into mobile applications, right? And it's important too to note that this trend transcends traditional product markets, right? And we were illustrating here which products we see increasingly being applied where in these customer journeys and purchase process. In a sense, consumer finance is finally delivering on its promising name, which is it's centered around the consumer and not primarily around the product. And that's what we find exciting here. Now the good news from our perspective is as Cembra, we're very well positioned to win in the space. We've illustrated this on the right in terms of our existing capabilities, and we're already present in all of these products, some more than others, and that is really something that differentiates us as well from the competition. And this matters because if you look at where growth comes from in the market in the future, a large chunk, we estimate this embedded finance space to grow 12% per year up until 2025. So it's a meaningful increase. Now at the same time, I want to reassure you, there's also growth to be had in our core markets, particularly given the absolute amount that's in here. So let me just recap very quick. The strengths that I talked about, right, attractive market, digitization, operating model changes, and embedded finance, integrating financing into customer journeys. What does all that mean for us? Well, it tells us what it takes to win, right? And so these are our core beliefs, and this is really what guided the programs that we put together to win in the market that we'll talk about in a minute. So I'll just walk you through this quickly. The first one is excellence in our core. This is our DNA that I talked about, asserting leadership in our foundational capabilities, risk management, customer intimacy, our people. The second is with everything that's happening around customer behavior, we have to get even much closer than we are today to our customer, really focusing on customer journey, focusing on customer outcomes and provide solutions precisely where and when the customer is looking for them and can use them. Third, simple business models win. There's no question, right? With the dynamics in the market and again, the changes in customer behavior and the expectation in customer behavior, you have to be agile. You have to be flexible. You have to be able to react quickly to these changes. Scalability, adaptability, all required for sustained leadership. And last, it is something I said before, fundamentally, if you want to be a leader in consumer finance in the future, you have to be a leader in technology. One will not come without the other, right? So this is really how we think about what it takes to win for us in the market. And it defines the strategic programs that I talked about before, you've seen a different version of the page before. So I just want to walk in a little bit more detail through this year. Starting with our Cembra DNA. And at the heart of that, the credit factory. And look, Volker, I apologize at the risk of stealing a little bit of your thunder later on. But I would challenge anyone in the room to go and find a consumer finance business with a flat NPL line through the worst financial crisis of our living memories, through the pandemic and other histories -- other hiccups in recent history. We really know the art and the science of risk management. And that is a basis for our stable loss performance and also our strong ratings. The operational excellence, we'll build a state-of-the-art simplified operating model with a future-proof tech stack that will deliver over CHF 30 million of annual savings and also deliver strong cost income performance, and importantly, will position us for sustained growth in all markets. Accelerating growth in our core business will improve customer experience, differentiate our products and grow our market reach. We'll talk about that in more detail later as well. And then together with the opportunity you talked about embedded finance, particularly Swissbilling, this will provide growth both on the asset side and an outsized growth on the fee side. Last, not least, culture transformation. To make all this happen, we'll refresh how we work together as a team and more on that in a moment. So overall, this will deliver over 15% ROE after the temporary reduction that we explained. Continued strong capital position, stable dividend, subsequently growing back on strong EPS growth. Cumulative EPS growth we see through 2026 of 20% to 30%. So I'll just be brief on this page, but I want to pause on this, culture, and why? Look, you can't find this in the P&L, obviously. But our confidence to deliver as in the past and in the future is based on the strong culture that we have and moving this culture as well to the next level. And as we look at the challenges and opportunities ahead, there's a great opportunity to build our strengths, focus on starting everything we do with a customer-first mindset. We want to create a more agile organization that's focused on learning, collaboration and mutual support. We have a road map in place to do that, and I'm excited to be tackling this together with my team as we go into the new year. Secondly, structure follows strategy. So we're also making a few organizational adjustments. And to ensure we execute as one team, we're essentially splitting the commercial area into 2 functions. One is sales and distribution, which will be delivering our top line this quarter, next quarter and the year; and product innovation, which is really more developing tomorrow's propositions along customer journeys that we see. So think about the commercial run and the commercial build. That will do a few things for us. It will ensure more customer-centric versus product-centric approaches. It will also ensure that we can pool relevant resources along these functional lines. Importantly, it will also enable building platforms, which Nck will talk about in more detail, particularly in terms of technology and systems across the entire business of Cembra. And then lastly, the product organization will drive cross-function collaboration to design customer experience, customer journeys on an ongoing basis. Now given the importance of the card business and the pivotal year ahead of us there in 2022, with all the challenges, but even more with all the opportunities that we see, we're going to bundle the activities in the cards business that will report directly to me. And in addition, we will bring a -- we will put a transformation team together with a transformation leader who will make sure in partnership with us on the leadership team that we're 100% on track with the changes in technology, with the commercial programs, with the culture transformation that we talked about. So with that, let me hand over to Volker, our Chief Risk Officer. And roll up your his sleeves because he will take you through the shop floor of the credit factory. Volker over to you.

Thank you, Holger, and good morning, everyone. Yes, the Cembra DNA. The Cembra DNA describes some of our core competencies. It describes who we actually are. There are 3 areas that I want to cover under this chapter. The first one is, as Holger just mentioned, the illustration of Cembra as a credit factory. The second one is a short update on ESG topics. And the third item is then to highlight the passion of our employees to perform and to serve our customers. So let's move into the first part, the illustration of Cembra as a credit factory. And we chose this image as a credit factory because on the one hand, it illustrates that we are a mass business. We have more than 1 million customers. It also indicates that we are very process-oriented with high efficient processes, we deliver high-quality output. And it's probably also a short indication that we do not perceive ourselves as the stereo type of traditional banking, but we are consumer finance experts. So very operational, very hands-on. What I can say and what's very, very clear, this credit factory has been delivering a consistent set of numbers over many, many years. We are illustrating it here on the top right with the loss rate. The loss rate since the IPO, if we exclude one-offs, has always been around 1%. So very solid performance, very stable over time. And the same also goes for the NPL ratios, nonperforming loan ratios, which has been stable for more than a decade, especially when you compare that with benchmarks in other markets and with other banks. Where there has been always volatility depending on the macro stress environment, we do not see that in our book. It's a very resilient business model. We have a high quality of assets. And therefore, the NPLs is also very stable over time. And it's probably also a consequence of the market that we are playing in. We are a Swiss pure play. This is our market. We are the biggest player in the market. We have decades of experience, and as mentioned, more than 1 million customers. So we have a certain risk diversification that is actually inherent in the business model because of our size. We are using several products in the space of consumer finance. We are using several distribution channels. We are going to the market with several brands, and that all leads into a certain risk diversification. And probably it's also worth mentioning that the Swiss consumers are very risk aware and generally have a good payment morale which actually brings me to the processes in the credit factory. There are 4 processes that we want to highlight here in detail. One is the customer selection. So who are actually the Cembra customers? The second one is the underwriting. So how do we make sure that we understand the credit risk that we are putting on our balance sheet. The third one is then the portfolio management. So once we have an asset on the balance sheet, how do we control risk? And the fourth process is in cases where customers might fall in arrears, how do we then service these customers? How do we deal with collections. So I've been briefly mentioning already Swiss consumers which leads me actually into the first process of the credit factory, the customer selection. And there are 2 messages that I want to give on this slide. One is that Cembra is not only exposed to a specific segment. We are broad on the market. We are covering the whole market. And the second message that I want to give is when it comes to the profile of Cembra customers, it's actually very similar to the profile of Swiss consumers in general. We picked out a couple of demographic variables to illustrate that. On the upper left, you can see the age distribution. The bars illustrating the Cembra distribution and in the background, the gray area illustrating the population. And you can see that we have 2 areas where Cembra customers are underrepresented. It's the young customers and the old customers. So why is that? The main driver behind is simply affordability. In the young customer group, young people typically do not have the necessary capacity to service debt. Therefore, we're obviously very cautious in granting credits in this group. And if we grant credits, we grant in average smaller credits so that there is the affordability to also repay the credit. And affordability is probably also explaining the other end of the distribution, the other tail of the distribution, where it's more about the older customers. There typically affordability is very good. But it's probably so good that the demand for credit is decreasing. But otherwise, beyond kind of these 2 tails of the curve, it's pretty much a reflection of the overall population and its affordability driving the differences. Talking about affordability, I mean, what's driving affordability. It's typically the income situation, which we illustrate on the upper right. And also here, it's a continuation of the same story. We are underrepresented in the segments of the market with low income because people would not have the capacity to service debt. So we obviously, as a responsible lender, not granting credits to these people. What's worth mentioning, I think, is that typically, there is this prejudice that consumer finance is targeting low-income customers or low-income consumers. This is something when we look into our databases that we simply cannot evidence, we cannot see that. Look rather at the right of the scale, there is actually a group of customers with very high income. Nonetheless, there is demand for consumer finance products. And it's probably driven by the fact that the kind of reason for taking up a consumer finance product is not solely need for money. It's also an aspect of convenience. Holger earlier on used the term embedded finance. So embedded in the purchase actually embedded in the consumption itself. And I think that's a reflection of it. One needs to be very close to where consumption actually happens. And consequently, we also get to a profile of Swiss consumers in average. I mean, we wouldn't have just to use a few demographic attributes to illustrate that. But obviously, with more than 1 million customers, we have a lot of information, a lot of data about customers, which actually is an asset for us. And this asset is something that we certainly use in the next process of the credit factory that I want to go into, and that is the underwriting. In the underwriting, again, 2 messages that I want to give upfront. One message is, as I just highlighted, the importance of data and analytics. And the second message is that we do and run this process in a very thorough way. We want to understand the credit risk that we are putting on our book because we understand it as a part of our responsible lending approach. A certain part of the underwriting is actually determined by the Consumer Credit Act in Switzerland. But it's always complemented by a set of internal rules that we are applying. And to give you a data point there, if we look, for instance, into personal loan applications that we are declining, where we don't grant the credit, about 40% is just simply due to internal rules. And internal rules target more the creditworthiness of the customer, not so much the affordability. So here, you can think about all the scorings that we are using. And for the scorings, I mean, we illustrate here on the upper left, so-called distribution of credit grades, and they are based on scoring. So it's a categorization of credit risk at the end of the day, and the level of credit risk is probably not so important. It's more important that it's stable over time because this stability and the risk appetite, this consistency that we maintain over time is actually what generates then also pretty constant risk metrics as we saw earlier on, on loss rates and on NPL ratios. So the scoring is very important for us. We have a lot of expertise in the area just because of the fact that we have such a big database, so many customers and also so much history. And it's not only about demographic variables. It's also behavioral information that we have. We know the spending pattern of our credit card customers. We know, and that's probably from a risk perspective even more important, the repayment pattern of our customers. So we can use that in optimizing -- for optimizing our underwriting strategies. And yes, data is an asset for us. Later on in the presentation, Niklaus will actually talk more about an investment program where we invest into new systems and new applications. Just keep in mind, they all produce data. They all generate data. So this is obviously something where we also can become more and more important. And then just kind of in the more recent past, a lot of buzz around the topic of data you might have heard about big data, machine learning and all these kind of things. We have it obviously on the radar screen. We are looking into that. It's probably not only relevant for risk management. It's also relevant for improving, yes, the customer service, the customer journeys, CRM activities. So there are many kind of use cases in this area. But let's also be real. The true evidence of success needs also be done because there is this simple saying that there is no better predictor for future behavior than past behavior. And we have a lot of past behavior on our databases that we can already use today and we certainly do. There is one more item that I want to mention before I actually leave the page on underwriting, and that is the pricing for risk. Because in underwriting, decisions should not only deliver decisions that says, yes or no, we grant a credit, yes or no. It should also -- well, first of all, determine the size of the credit, so the credit amount, but it should also generate the correct pricing for this risk that we are taking. We have been, 2 slides before, talking about the loss rate of 1% in average over the last couple of years. But the 1% doesn't need to be a holy grail. There might be segments where we actually want to increase our risk appetite to, for instance, 2% loss rate. But the precondition is that we get priced for the risk. In the end of the day, it's a profitability calculation in total. So we need to understand the risk and we need to price for it. This is something that we already do today. We try to illustrate it here on the bottom left with kind of verification of our cut-off strategies that we also do profitability base. But this is also an area where we still can become better, to be more tailored to every single customer segment and identify the right pricing for these. So on underwriting, it's a lot about the topic of data. And data is actually also a topic that builds the bridge now to the next process in the credit factory, the portfolio management. Here, we're obviously monitoring the risk that we have already on the balance sheet. And in case something unexpected would happen, we would swiftly react. And on this page, I also want to cover one other topic, which is the consideration of sufficient allowances for losses -- for future losses. So let's go into the first part, monitoring of portfolio performance and swift reactions where necessary. What we display here is our reaction to COVID. When COVID came in the first quarter of 2020, well, it's a crisis situation, and there is a set of tools that you can then apply in risk management. It's actually not very complicated. It's 3 basic rules that you need to apply. One is maintaining the business operations. The business needs to continue to run, simple as that. The second is make sure that the customers are still paying. The cash flow cannot stop. So also this by kind of focusing on the collections activities was then also focused on. And the third area, and that's the one that I want to display here is try to restrict further exposures to segments that are hit by the pandemic or its macroeconomic consequences. So we restricted some segments. And here, you can think about people that are working, for instance, in the restaurant and hotel sector because it was with a lockdown very visible that they might have an impact on their own income. And you can see on the graph on the upper right, what we are measuring afterwards. So as soon as we have restricted, so it was kind of from the hindsight, absolutely the right timing, the dark blue line indicates that the risk level has been increasing right afterwards. So we were obviously doing the right things, which is also based on decades of experience, so we know what to do in these situations. As mentioned, there is one other topic that I would like to cover under the area of portfolio management, and that is around the reserving or the allowances for losses. Today, we apply an incurred loss concept in line with U.S. GAAP. This gives us a reserve level coverage, reserve coverage, that's the allowances divided by the receivables of 1.4%. And actually, over the last couple of periods, it has rather been increasing, which I believe is the appropriate thing during a pandemic to be rather conservative there. The NPL coverage, that's the allowances divided by the NPLs, is on a level a bit north of 200%. So a very healthy level, probably also driven by quite conservative write-off procedures that we are applying in the business. And this conservative or this prudence in the reserving approach is also something that we continue with when we move from an incurred loss concept that we currently have into the so-called CECL standard. CECL, stands for the current expected credit losses. This will become applicable for Cembra in the beginning of 2023 under U.S. GAAP. And this is a more forward-looking concept. So it takes into account all the expected losses through the whole life of a loan, and it also contains some macroeconomic components, so a weighting of macroeconomic scenarios for the future. What it also would mean is that the reserve level, being at reserve coverage or NPL coverage are expected to increase in the beginning of 2023 because of the application of the CECL standard. The quantitative impact of it, the estimated quantitative impact of it is already taken into consideration when we later on look into the financial outlook for the outer years. So it's in the numbers there, and there will also be a few more details shared on that. So we have been now running through 3 processes of the credit factory. And all of these processes have as a target to somehow limit the credit risk that we are taking on the balance sheet and avoid that customers are defaulting. Because when a customer defaults, it neither serves the bank nor does it serve the customer. So this is what we want to avoid. Nonetheless, we are not always successful with that. There is always a residual risk that a customer becomes overdue for instance, because of a change in the personal situation. And here, you can think about unemployment, sickness, divorce. So -- and these are still our customers, and we need to service them well. And that is what we are doing in our collections process, the fourth process in the credit factory. And here, again, 2 messages upfront. One is that the process in collections itself moves from the early phases in a very industrialized way to a more individualized approach on late collections processes. And then I also want to highlight that the collectability of assets in late collections is still quite good. So let's start with the early collections process. So as soon as a customer becomes overdue, we try to obviously find solutions for the customer so that the repayment capability is enabled by rearranging payment schedules, for instance, or deferring payments. This is, as mentioned, a very industrialized approach. It's also kind of falling into a credit factory approach, and we are tightly monitoring and measuring the processes. And we try to be as efficient as possible because we do not want to waste our resources. We only want to take contact with customers where we actually need to do it. It's not -- we don't want to kind of get in contact with customers that just forgot to make a payment. So here, we obviously are very much focused on automation. We use an automated dialer to make these calls. We use text messages to remind customers to pay. And we also, in this area, we use a lot of scoring and segmentation, so a lot of analytics to really target the right customers there. And obviously, if a customer is in payment difficulties, we also want to apply tools. And here also, we illustrate what happened in the beginning of COVID, on the top right graph, you can see that. The demand for tools, collections tools to support the customer with rearranging the payment schedule increase in demand for a very short period of time. You can see here that it went up to 500 accounts that actually used tools like an extension like a deferral of a payment which probably might sound a lot, 500 accounts, but we need to put it in relation. We are talking about the whole personal loan book here with more than 100,000 accounts. So it's -- in total, the payment morale was still kept also under the COVID crisis, which probably also explains the very solid loss performance that we also see this year. And in the late collections process, the industrialized approach moves more into an individualized approach because these are customers that have more severe payment difficulties. And obviously, we use our most experienced employees to find here really individual solutions for the customer because we understand also ourselves here as a responsible lender, we need to find a responsible solution for these customers in these situations. Nonetheless, collectibility is still very good. We illustrated here on the bottom left with so-called vintage recovery drafts. They are measuring after what period of time we have collected what percentage of the written-off amount. And to read the graph, you can see it on the right end of the curves, after 4 years, after the right-off moment, we have nonetheless collected 50% of what has been written off. So collectability is still intact somehow. So that's kind of the 4 processes of the credit factory that I wanted to highlight. I think what goes across are 2 topics. One is data and analytics and the importance of it. And the second is we are a responsible lender. And responsible lending is also a topic that in the context of ESG is important. Let me run you briefly through ESG and give you a short update there. We look at sustainability topics, not as a temporary focus area. We actually look at it as a possibility to evidence the robustness and resilience that we have in our business. And we have put ourselves targets in place. Let me briefly run you through this E, S and G components of it. So on environment, we have already been reducing our direct emissions, and we have put ourselves a target in place to continue with that. You can read it out here. By 2025, we want to decrease by 75%. So a pretty ambitious target. On the area of social, that's probably also where the whole area of responsible financing and responsible lending falls force in. We have put ourselves a target on NPS, the Net Promoter Score. It's a metric for measuring customer satisfaction, customer loyalty. We have been measuring it for quite a while, but now we also put here a target in place. We're also of the belief that we need happy employees to have a good service for our customers. So we also put ourselves a target on the trust index in the Great Place to Work context. We want to be a great place to work for our employees, and we are actually certified. And in the area of G, governance, this is a traditional strength area that we have, and we want to continue to be strong in this area. Since last year, we have a Sustainability Committee that is actually chaired by our CEO, by Holger. We have also linked sustainability into the executive compensation, and we also intend here and have put ourselves a target that we are among the first smaller Swiss companies where we get externally reviewed on our sustainability report. I will not go through all the recognition on the right-hand side. I think we are very proud of that, and we are very committed to this topic. I want to go into one more element, and that's around our employees because I've been talking about the credit factory, and you can probably understand the credit factory as a bit of the hardware. But we need the employees, the people to run it, which is more of the software. And this is obviously very important for us. And we have a very diverse workforce. It's a very experienced workforce. We look at them as ambassadors. They are very passionate about performing, passionate about serving our customers. And they're also very close to our customers. And consequently, we get from our customers, very positive feedback. I mean I was actually a couple of weeks ago, sitting in a meeting with a corporation partner, and I'm probably not quoting it exactly now. But basically, the message was you and Cembra, you do not always have the lowest prices in the market. You and Cembra, you do not always immediately implement the latest technology, but what you have are the best people. And I think there is very much truth in that. I might have exaggerated now a bit, but this is kind of the key of the message. But it's probably also not so good if you hear this message and the feedback from our customers from me, but if you hear it directly from the source. And this is what we have prepared. If we go into a short video where you can then hear about the feedback from our customers. [Presentation]

Excellent. So you've heard it directly from our customers, right? So just a quick recap where we stand. So Volker talked through the Cembra DNA, our credit factory our people, our customers. Volker, I have to say your words coupled with these persistently flat NPLs always give me a great sense of comfort. So with that, let me shift gears here into operational excellence. Nik will present this. Two key messages here, simplifying what we do and renewing our tech stack. Nik, over to you.

So thank you, Holger, and welcome, everyone. I'm delighted to be here to present to you operational excellence program. The operational excellence program aims to radically simplify our operating model and to transform our technology landscape to improve efficiency and to pave the way for profitable growth. We aim to achieve this by reducing our costs annually by CHF 30 million, at least CHF 30 million. The investments to realize these cost savings are CHF 55 million. And with a greenfield approach, we lower the execution risk and speed up implementation. I will now explain in detail how we address operational excellence. The full benefit will be realized by simplifying our operating model and transforming our technology landscape. In our new operating model, we continue to focus on customer value with stronger focus on digital interactions and self-service. We will redesign our processes to make them standardized, simple and user-friendly. This is a prerequisite to integrate new partners faster with the digital customer experience. Our organization will become more flexible to respond to customer needs and market trends. This new operating model is based on our new technology landscape. Seamless mobile experience for our products and maximized efficiency through automation will lead to an excellent customer experience with speed and scale at optimal cost. The new solution is based on future-ready technology and the strengthening of our core capabilities. The idea of the greenfield approach is to reduce the execution risk to get stuck in the middle, while transforming from our current operating model and IT into the new world. Instead, we fundamentally simplify our processes and build the new landscape from scratch. In doing so, we will be able to implement the solution much faster and break up with our legacy structure. As a result, we will be able to realize the benefits much earlier. This approach also lowers the execution risks as our current IT landscape with the current operating model continues to run until the new one is set up. We will implement our new solutions product by product in order to enable future growth and realize cost reduction gradually starting from year 1. To give you a sense of what we mean with a simplified operating model, I will give you some examples. The next level of technology will unlock new opportunities for us. Let me start with customer experience. Our customer experiences us mostly with paper and limited online and mobile experience. Depending on the channel, our customer experience has a different look and feel as well as different processes. In the future, customer experience will be very different. It will be based on mobile solutions with unified user interfaces and seamless integration with our online solutions. Concrete, our customer can start applying for a new product in the mobile solution and at any time, switch to the online channel and continue the process there. Of course, the other way around is also possible. Let me go to processes. To reach this new customer experience, we have to get rid of complex often paper-based processes. Today, we print thousands of papers, send 10 thousands of letters, et cetera. In the future, we want to reduce this paper and aspire to avoid paper wherever we can. Therefore, we need to introduce simplified, standardized and highly automated processes, which will reduce our costs substantially and give our customers a faster response experience. We have many data available and use them heavily as Volker has explained in the previous section. However, we collect this data mainly for reporting. In the past, it was okay when during an onboarding process, a decision for a new product took hours. However, COVID-19 has accelerated the usage of digital channels and therefore, real-time decision making is necessary. We are going to introduce real-time decision making and personalization. This enables us instantly onboard customers within minutes and support event-based personalized marketing. To give you an example for a credit card. Imagine you are in a retailer store and you want to apply for a credit card with the retailer's loyalty program. You take your mobile phone. You scan your QR code. You type in the required information. Then you do a self onboarding by taking your passport or ID. You scan with your camera on one side, the other side. You scan your face. Shortly after, you download the app and you can start using your credit card instantly. This we're going to launch in Q1 next year. The demand to interact with our partners, digital and real time is increasing. Our answer to fulfill this demand of standardized API interfaces. This solution reduces the effort and implementation time to connect with partners. With the same technology, we can also integrate third-party services. Scalability. To cope with volume variations very cost effectively, we need fast scalable solutions. We realize this by moving from a client server and host-based architecture to cloud technology services and hyper converged infrastructure. Thanks to this technology, we can easily and at lower cost, try out new solutions and profit from available third-party capabilities. At the beginning, I introduced our simplified operating model and our transformed technology landscape. Of course, the realization goes hand-in-hand. Whenever we place a system, we also change our operating model. Next, I will explain how we are going to implement our transformation. Our transformation is structured into 3 streams. First, customer value and experience. We launched our new credit card mobile app and onboard all our cardholders. Step-wise, we will integrate all Cembra products with the advantage for the customer to have one app for all the products. The expansion of sales service increases the customer experience and reduces our costs. Finally, we built the capabilities for event-based personalized marketing to increase customer and business value as Holger and Peter will explain in their sections. This stream will contribute CHF 3 million to CHF 5 million to our cost reductions. Simplified operating model. In the second stream, we simplify our operating model by radically redesigning our processes and establish a new digital operating model. The leasing business will be the first on our journey to establish the digital operating model. All other products will follow in a few years later. Our core banking solution will leverage third-party core banking services and for implementation and operation. In combination with our simplified and automated processes, the digital experience is highly scalable, reduces costs and increases efficiency. Overall, this stream contributes CHF 20 million to CHF 25 million to our cost reductions. In our third stream, future-ready technology, we build a new future-ready IT infrastructure. The new data center follows the approach of a hybrid cloud setup which allows us to gradually benefit from services available in public clouds while keeping the core and the tight governance. We will also leverage our data by establishing a real-time data analytics environment. This enables us to generate event-based customer value. In other words, engage customers at the right time to generate value for them and for us. This stream will contribute CHF 3 million to CHF 5 million to our cost reductions. To give you the comfort that we deliver on operational excellence, we are revealing more details on our journey. I will now explain in more details about our road map and milestones to complete the transformation by 2025 and realized net savings of more than CHF 30 million, more than CHF 30 million in 2026 with a positive net savings in 2024. On the left side, you find our 3 streams that I have explained before, and along the time line, you find our major milestones. The implementation will be done in a step-wise approach. Each year, we are going to introduce new solutions, realizing the benefit in the following year. This avoids huge upfront investments over a longer period before any benefit is realized. We have already started our journey with 4 strategic initiatives: the mobile app for credit card, our self-service expansions, the new leasing platform and our IT infrastructure transformation. I will focus on a few milestones and explain them in more details now. Let me focus on 2022. In Q1 next year, we will deliver the new self-onboarding and mobile solution for credit card, as I have shown you before. And at the end of the year, the new leasing solution will be launched. Currently, we are testing our new mobile app for credit card with selected customers to get feedback and further improve our app. Beginning of Q2, we launch our self-onboarding and mobile app for IKEA. Next, we are going to roll out our mobile app to all customers. In Q2, we will extend the self-service capabilities to increase customer experience and start using our cost. Of course, this is an ongoing process as over time, new requirements from customers and partners will be implemented. In our second stream, simplified operating model, we are in the preparation phase for our new auto leasing platform. In Q1, we will start the implementation together with the service provider. Over the next 12 months, we built an end-to-end auto leasing platform based on software as a service. Our processes will be completely redesigned with the goal to introduce simplified, highly automated digital processes. Beginning of 2023, we start doing new business on the new leasing platform. On top of the reduced cost, the new leasing solution enables us to offer services to third parties, for instance, captives through our standardized API interface. In our third stream, future-ready technology, we already have initiated our cloud technology and hyper converged infrastructure transformation project. In Q1, we will start the implementation by moving our locally managed data center into a third-party data center to avoid major required investments. This new setup is the base for the hybrid cloud technology setup we are targeting for. In 2023, our journey continues. We migrate our leasing contracts from the old systems to our new systems and start replacing of our savings systems. This replacement is a prerequisite to start decommissioning for our legacy platform to reduce IT costs. In parallel, our new data center is cloud integration enabled. This means we are prepared to integrate other cloud solutions. In 2023, we also established a real-time data lake that will form the basis for event-driven marketing and real-time analysis. In 2024, all of our products are covered by the unified mobile app. Our customer will use only one app for all our products. Once this is completed, we are prepared to leverage from all the embedded finance capabilities we have developed. We will complete our new savings system as well as loan system and will start the replacement of the card processing system. In the last year of this program, we complete the implementation of the new credit card processing system and the decommissioning of the remaining parts of our legacy IT systems. The transformation over the next 4 years reduces our cost base by at least CHF 30 million, at least CHF 30 million with a positive net savings in year 2024. Pascal will further comment on the numbers in his section. Ladies and gentlemen, it has been a short introduction to our operational excellence program on which I worked with the leadership team for quite some time, and we are keen to implement. Let me summarize. The goal of the program is to radically simplify our operating model and to fundamentally transform our technology landscape. This will require investments of CHF 55 million over the next 4 years. As a result, we aim to achieve annual savings of at least CHF 30 million, gradually increasing after year 1 and fully effective in 2026. And we pave the way for accelerating our growth.

All right. So quite some detail here on the technology roadmap. But look, we wanted to make sure that we give you a sense for what we're doing here, right, and give you the comfort that there is a game plan around the investments and the returns that we're seeing in this. And I can tell you, there's a number of pages behind each of these horizontal page here. But hopefully, that gives you a sense how we think about this. So we're now at the first sort of round of Q&A here, and then we'll take a short break before we dive into the next section. I'd like to ask if we can please limit the questions to the topics that we've covered so far. We'll have plenty of opportunity to talk about products, auto, personal loans, cards later on. But I just wanted to take a short break and see if there's any questions on the sections so far and happy to take them from here. So let's dive right in. We'll take the questions in the room first.

This is Daniel Regli from Octavian. I have quickly 2 questions to Volker on the loss performance. One is on page 16. Just if you could explain, obviously, with the line for personal loans. Sorry, it's a very pure technical question, but this 30-plus delinquencies seem to trend up since end of 2018, I would have rather expected the opposite given that you have acquired the cascade portfolio during this time, which is -- was labeled as higher quality than your existing portfolio. If you could explain this to me? And then the second question is about the loss rates also in particularly during the pandemic and how far was this supported pilot say government support programs? And what is your expectation for the loss rate going forward when these government support packages are fading out?

Thank you for the questions. On the first one, it is actually a truly technical explanation that I give now. And the increase that we see on the 30-plus delinquencies is actually also visible on the NPL ratio for personal loan is driven by a change that we implemented at that time when we move the timing of when we charge off an account from the balance sheet from a timing after 120 days to a timing to 180 days. This is something that was also disclosed at that time. And we did that in order to align the collections processes, better with the right of processes because we observed that especially on long tenure personal loans, we would actually write off the accounts from the balance sheet without having actually proven their collectibility because we would not have even initiated the legal procedures on these loans. So therefore, we adapted that. You will see when -- I mean, in the recent report that we published, we also made a correction for that. So we kind of excluded these. And if you would take that into account, the line is actually flat. It's kind of no worsening behind in the portfolio. And on the second question, very good question. I think there are many elements that contribute to a strong loss performance during the pandemic and one is certainly the governmental measures that we're taking. And unfortunately, I'm not able to break it actually down what contributes to what because we also did some restrictions on our end, as I highlighted. And we also strengthened some collections activities in order to maintain the cash flow that is coming in. And when we see this mix of things that has been applied, it's always hard to say what contributes to what. I think what we could expect for the future is, I mean, over the longer term, the business has always had a loss rate around 1%. And we have always been consistent in our risk appetite, and we plan to be consistent in our risk appetite. So when governmental measures are reduced, I would actually expect that the loss rate gradually probably comes back to this level of 1% because one should also respect that the tightening measures that we put in place during the pandemic, we have now lifted them again because we are now optimistic again about the future. And therefore, it would make sense to gradually go back to around 1% as a level, but it will not happen from one day to another. It will creep in over time. So for -- I mean will see it later on in the financial section, the projections for the future. And for the loss rate, we are communicating there that we expect the level less or equal than 1%. And I guess for next year, it's probably rather less and then it becomes more equal.

This is Mate Nemes from UBS. I have 2 questions, please. First one, perhaps still for Volker on risk. And that is really on CECL. So firstly, can you confirm that the below we're at 1% loss rate already reflects the CECL change? And this is indicative for the next couple of years. And also, if I may ask, would you expect a bit more volatility and post cyclicality in loss rate as a result of the transition to CECL? And then finally, have you done any back testing perhaps on 2020, how the loss rate would have looked like under CECL? That will be my first set of questions. And the second set or the second area I'm interested in is on cost savings at the CHF 30 million or at least CHF30 million cost savings, is that a net figure? And is that on an absolute basis? If you could confirm that i.e., should we expect the cost base to move from, let's say, CHF 247 million, CHF 245 million to CHF 249 million to around CHF 215 million to CHF 219 million by 2026?

Thanks, Máté, for the question. So we are -- indeed Volker will start. Glad we brought you along Volker, good question for you. And then Pascal will take the second question.

Actually very good question. Thank you for that. So on CECL, CECL is a change in the calculation of the allowances for losses. So it's more of a balance sheet than a P&L item. So -- and since -- I mean, the majority of the changes are driven by the fact that the reserving will be done for the full life of a loan, which basically increases the reserve balances, increases the allowances, which would mean that it not automatically changes the loss rate because loss rate is obviously a loss provision on the P&L metric. So we would expect that the allowances go up, while the loss rates are hardly affected. But you have certainly a point here when it comes to the volatility because since the reserve balance is higher, every percentage change on a higher base, obviously, also means a higher impact in absolute numbers. But I think we have evidenced over the past years that we can manage the loss performance pretty well, which also kind of leaves us in a situation where we are quite comfortable in predicting the loss rate going forward. And as mentioned, we will highlight that in the financial section of the presentation, where we communicate that it -- we expect it to be less than or equal than 1%. And yes, when it comes to the back testing, we have been doing some back testing and actually, the modeling we have put in place literally now in this quarter, and we intend to use the next year to find exactly more out about the volatility before we then implement in the beginning of 2023.

Pascal?

I think back to -- back to the second question. The CHF 30 million of net savings recurring savings, and I will further comment later in my sections. And we will disclose separately in the future how we execute on this net savings. Regarding the second question, absolute or not, at the end, although we will also guide on the cost-income ratio to take into considerations the development of both at all the costs and the income. And we say for the 2022, 2023 should be stable -- around stable compared to where we are in 2021 and then a gradual reductions of the cost income ratio up to 2026, below 39%.

Daniel Regli from Octavian. Sorry, another follow-up question on the loss rates you talked about Volker. Can you please put this 1% in perspective to the cashgate acquisition. Obviously, this should have had an impact on your overall loss rate and pre to the acquisition, obviously, it was rather 1.1%. And after it was rather 0.9%. And now you're guiding us towards 1% again. So do you expect an increase in the loss rate overall?

Yes. On cashgate, I think the loss rate of cashgate is pretty much comparable to what we have been seeing in general also before because there is also a certain product mix in the cashgate portfolio because it was personal loan and auto leases. Obviously, the cashgate when it -- prior to the acquisition, they were quite aggressive when it comes to the pricing element, which also meant that they could probably not take the same risk level, the same risk tolerance as tremble hearts. They might be slightly under the average of genre, but not materially. So the cashgate impact is something that I would not necessarily read out of the changes of the overall loss rate. When it comes to your question about kind of a potential increase in the loss rate going forward, I think also there, it would not be cashgate driven. It would be rather in the area of what I mentioned before that currently during COVID times, we see a quite favorable loss performance, probably also just caused by the fact that in a lockdown, customers and people cannot use their money for consumption, so they are probably more diligent on repaying credits. And we obviously plan for a future where the -- there were no further lockdowns are coming where the pandemic is going over. And therefore, also normal consumption patterns would kick in again. Overall, no material changes that I would foresee, but I would expect a gradual normalization from the situation that we are currently in.

Andreas Venditti, Vontobel. And I'd be interested in -- from Nick, a bit more of information about your partners in technology. Maybe if you can share who you plan to work with these projects? You mentioned third-party platform. If you could tell us with whom you're planning to do all these -- the current investments?

So on the mobile solution, we are partnering with Backbase. And on the new leasing platform, we are currently in negotiation, and we disclose this once we have decided on it.

Perhaps if there's no question in the room at the moment, anything we have. Please.

[indiscernible] from Z Capital. Two topics, one to you, Volker. It was very interesting to see the whole process and all these steps. Now obviously, cost of selection cannot be the key point. If you compare with your competition and the advantages you have against the local competition, which one of all the elements that you showed us of the 4 is probably the one, if you had to name one, which is the most relevant for you in comparing it to the competition, and your obviously better NPL rates and so on and so forth? And the second topic to you, Holger, I just wanted to -- I mean, you talked about the cost -- I mean, embedded finance and the customer centricity that you wanted to have more and more. Have you -- if I think about embedded finance, isn't it maybe even for the customer, less and less of relevance, who does the financing for their purchasing needs rather just it needs to be on the spot. They need to be fast, you deliver quickly, but not so much who's really behind that. So how is customer centricity so important for you guys?

Sure. Volker will start, and then I'll take the second one.

Yes, on the first question, what kind of -- what is the process where we see the competitive advantage? I think I would highlight the underwriting process. And the reason why is the availability of data and the history of data, I think that's where we have a competitive advantage, especially relative to new entrants in the market because when a new entrant comes into the market, they lack this history. So typically, they don't manage to maintain consistency in their risk appetite over time, while we do, while we understand the risk that we are taking on the book. And in the end of the day, the people driving that, I think we have very good people that bring this expertise to analyze the data and make kind of tangible output of this data and run these processes also operationally that are actually doing the underwriting. I think that's certainly a competitive strength that we have in place.

Yes. Thanks, Volker. Look -- again, on your second question, I think it's a great question. Look, in a sense, we have a strong brand, right, today, and people know us for the brand. But firmly, I believe you're only as good as your product is today, as your service is today, as your customer is willing to take it, right? And that doesn't change with embedded finance. In the end, it continues to come down to -- and this is also why we're talking about these intuitive compelling simplicity of the solutions where and when the customers need it. I think it comes down to, do you have the right proposition that resonates then that the customer in the end is willing to pay for. And so I think in a sense, it really drives that very notion of getting closer to the customer because their expectations are changing and the way they use the products are changing, and their journeys are changing, right? And whereas in the past, again, this was mostly physical, and I gave you some examples. In the future, as it's integrated into mobile apps, into digital apps directly into the journeys. I think the way to make a difference is to be there where the customer needs you with the right proposition in product. I think the other thing I would add, which sort of is adjacent to this that sets us apart is the experience we have in the market both in terms of knowing the partner universes, but also knowing customer behavior, which Volker talked about at length, I think also sets us apart. Because at the end, underlying all this continues to be credit. There continues to be credit. That's the market that we play in. And I think it's fair to say not many people know this market like ourselves, right? So those are the 2, 3 things I'd say to this, if that helps.

[indiscernible] from Octavian. On the Page 25, you show a road map how you're doing -- going to implement your bigger landscape transformation. My question is I see from 2024, 2025, you expect to decommission your legacy system. If you had a delay in this how that would impact your cost saving if you cannot decommission as fast as you planned?

Do you want to start, Nick?

Yes. I mean the legacy decommissioning starts, of course, whenever we can. The first big thing is, as I've mentioned in my presentation, once we have the savings away. The reason for that is we have it on a similar -- on a big old host machine, and we can start decommissioning that starting already end of '23. So that's the biggest contributor, also the whole legacy decommissioning. And then, of course, once the credit card processing, you can also take commissioning afterwards, the second big one. All the others are just minor systems.

I would just add to the things thing exactly. I think as -- I think he's explained this well previously, right, that is precisely why we're staging this. Because we want to derisk, we want to make sure that we have the execution lined up. And as I said, there's a lot of work and detail that went into this, and we're comfortable that we have the right plan together in terms of executing. Perhaps, operator, any questions that's come through on the phone before we go to the webcast here?

There are no questions from the phone.

Nothing on the phone. So we have a question here on the web, what do you mean by increasing yield and margin pressure across markets? Look -- thanks for the question. Something we talked about at the half year as well. And in a sense, not something completely new. I started my explanation on the market trends with this is an attractive market. Well, an attractive market attracts other players who come into the market, right? And so that is something that we've always seen, we've always been able to deal with, but we see it as well today. And again, with technology enablement, you get different players that come into a market with different kinds of ambitions, some of them looking to make quick money. We're in this for the long game.We -- this is what we do. This is our core business. And so it's not something that we're not used to dealing with, but that's really what drives some of this. I would add to the earlier point as well that we've made. Volker has alluded to this, right? In the end, it's more than yield. It really is what we deliver at the bottom line. And so there's more than focusing on yield. We said before, the easiest way for us to gain share we were work -- by dropping price, but we're not going to do that. This discussion here really is around, and we'll get to the next section as well, how do we make sure that we have winning value propositions in the market so we can keep the margins where we want them to be. Any other questions here? There's something that's on the screen, but I can't read the -- here you go. Let me just read this, can you further elaborate on the rationale for the data center move? You mentioned high investments for legacy technology, but what can the data center provide that you can't and who is the technology partner? I mean all the legacy technology is already paid for. So let me lead in. I want to make sure we understand the question correctly, right. Niklaus can talk about the data center here in a second. I think you already responded to the question on partners. The element of legacy technology in this question is really around what Niklaus just explained, which is as we set up with this greenfield approach, we will, over time, decommission older systems. That's the kind of legacy, if you want to turn around that. Nick, would you add anything on the data centers, in that move?

Yes. On the data center move, what we mean, we currently have in our building a small data center and it is end of life, which means we need to renovate also in the building and invest heavily, and we avoid this investing by going out into another data center. It's currently also in negotiations. So therefore, we're not disclosed to whom we go into.

Thank you, Nick. I think there's one more question here. If we can scroll down a bit. Question regarding full product coverage in app. Can you use the same app for different cards like IKEA, TCS, et cetera? Or you need to relabel the app for each partner? So the question is, with our app, and I presume this relates to the customer first app, be able to handle different cards. Look, I think we, first -- for perhaps understand reasons we're not going to want to disclose every feature in the app because we don't want give anybody a head start in terms of what we're doing. But what I will say is the app will clearly be focused on significantly improving user experience. And so yes, you can have your cards in there. Yes, you can service your cards in there. Yes, you can do your onboarding, as Niklaus explained and many other things. It's going to be, I believe, a real game changer for us from interacting with customers and from customer use perspective, that's how I would respond to that. Is that all that we have on the web so far? Good. Good for now. Then let's take a 20-minute break. We'll reconvene at 10:50 and then we'll get into the commercial section, and I look forward to continued discussion. Thank you so much so far. [Break]

Great. So welcome back, everyone, in the room, on the phone, on webcast. I hope everybody got the chance to take a quick break, a bite, something to drink. So we're under the second section here. We're now going into the commercial part of the discussion. We'll talk about business acceleration in our core business. Peter will kick this off in a second. We'll talk about embedded finance and buy now pay later in particular, and then we get to the financial section with Pascal. So a couple of words on the commercial section. Look, and I think I've said this before a few times. We are a leader in our markets. And that says there's really only one way to play this game. It's only one way, and that's offense. This is why I put in the personal loan task force when I started. This is why I brought back Peter. This is why we talked about the things we did this morning in terms of getting ourselves future-proof from a technology and business operating model simplicity perspective, right? And so with that, I'd say, Peter, I'm throwing in a little bit at the deep end here. I recognize he's only just rejoining the management board, but I know you can handle that. So over to you.

Thank you, Holger. Hello, everybody. My name is Peter Schnellmann. I'm glad to be here. It's good to be back at Cembra and in the consumer finance industry, where I actually spent most of my career. And I literally know everybody and a lot of players and people. Actually, it's pretty funny when I in the last couple of weeks in my job met a lot of relevant players in the market. I recognize that I really know a lot of those. I've seen them starting their platforms, their businesses, even seen them starting their apprenticeships in the industry. So I mean, we really have a deep corner stone in this consumer lending business and so do a lot of people of our business have. It's impressive to see how this business has developed over the last year also digitized. And nevertheless, impressive as well how relevant relationships are, especially in these pandemic times, where the market definitely has been different than before. As the bank explained throughout the year, the market has slowed due to pandemic and uncertain consumer outlook. But we have seen confidence coming back and expecting one single-digit growth going forward. The pandemic has also accelerated digitization in a rather traditional market and this trend we expect to continue. This also goes with the consolidation that can be observed along traditional physical creditor originators. This change comes with an increasing platform and ecosystem structure, as Holger has elaborated, powered by technology, but also by behavior of the market. As an example, while in the past, a customer spoke every 1, 2 year to us about lending. Today, we see him in many touch points over a year coming to us or to talk about lending. When Holger came in this spring and asked me to lead the task force and to look at the new pandemic reality, hopefully, soon post-pandemic reality in consumer lending, we started a task force, cross-function the bank, rolled up the sleeves and started immediately looking at stabilizing assets, ensuring long-term profitability through actions like pricing, risk, operational adjustments and to stimulate sales throughout the cycles of COVID. I mean just imagine doing consumer lending, promotion and business in uncertain period of lockdowns, reopenings, people unsecure, if they have a job or not, even employees being in home-office quarantine or even sick, this is hard work. And I mean it's really been a challenge to manage that through this period. But look, no matter what, we achieved the stabilized assets in the second half and we are moving back in growth mode now. And I think this shows you how strong this team and this network is. Today, Cembra is the undisputed leader in this attractive market. This is our home turf. Given our share, we serve customers across the segments and the needs, as Holger already touched in his section how diverse this is. To continue to do this successfully, it takes a couple of things: more differentiated products and services with strong capabilities across traditional and new channels. Simple and intuitive processes are critical both for efficiency and also change customer service expectations. In addition to address partner professionalization is critical to be able to collaborate seamlessly with such distribution partner. That's actually where we see digitization shifting the fastest, and I think this also has been elaborated by Holger and by Nick with the platform. Cembra is uniquely positioned to win in this market. And let me explain to you why that is. It will start with distribution. Given our history, scale and market share, by definition, we serve multiple segments. This is a key strength of us, which we continue to leverage with our omnichannel presence. The mix and self-selection of channels by customers is moving so. Distribution is shifting more and more online, and particularly new customer acquisition comes increasingly through tech-savy partners or digital channels. Branches on the other side are a strong complementary differentiator for our existing customer base. Our market and manage sales team is a high-performance engine both for personalized service and lending-wise, which is driving customer loyalty. I think also Volker has explained that. Of course, data helps us here because we do have the data to talk to those customers and know what to do. This hasn't changed. Even so customers may onboard or contact us more digitally. Our dual brand strategy is another cornerstone of addressing market segmentation and landing behavior. Cembra continues to operate as a leading value brand with a higher risk return profile. Cashgate, on the other hand, is positioned clearly for online and do-it-yourself customers with less need for personalized service, mostly at lower price points. This enables us to play the full spectrum of customers today and tomorrow. To stay ahead of competition, there are 3 distinct actions we are currently driving. First, we will focus and simplify our operation model and adapt to the changing needs for an effective digital distribution. We see that as key. This means we strengthen and regroup our sales teams in the branches to focus on value-added personal services and one-to-one lending advice. In addition, we centralized and streamlined servicing and onboarding of the digital customers to increase efficiency and speed, all that to deliver on customer experience in every channel. Second, we will further diversify our products and services for more differentiated offerings. One fits all is no more the right thing in this business. We will be segmenting our customers based on behavior and purpose of the lending to offer specific product and more relevant propositions. Today already, we are the only operator that offers the full suite of consumer financing products to our customers, including loans, cards, leasing, buy now pay later, even savings. This, again, allows us to have a long-term relationship with our customers throughout the entire customer life cycle. Third, given the shift in channel mix, we will speed up the digital journeys and the ease of use. We integrate ourselves more homogeneously with our established and new distribution partners, such as banks, brokers, retailers and platform. I'll give you an example. For us, it is key to be seamlessly integrated on a partner platform such as finance cloud or [ components ] that the loan origination can happen seamlessly for the customer. This is key to success, and that's also where embedded finance is going and our digital journey is going. Overall, this will ensure to future-proof our leadership position, return the business to growth in line with the market and hold our market share, whilst, of course, keeping returns stable. That was my deep dive on loans. Now over to auto. Auto is another anchor of our business. We love this business. Our CEO comes originally from the auto industry and worked, of course, for a large German manufacturer, but also many others of our industry or of our bank come from the industry, like car dealers or importers. Like that, our auto business is since many years a cornerstone in the Swiss car financing industry. In the past few years, this has been not much more than a repeating story with auto. Today, it's a bit different. And that's because we have a new message. This is growth. Through the strategic period, we want to grow market share, we want to grow receivables and we want to grow returns. I will get to the how in a minute, but let me first briefly update on the market. The market here is a very robust with strong underlying fundamentals. In spite of some temporary challenges related to global supply chains, we do see changing consumer behavior -- change in consumer behavior with subscription models, slowly taking a share of the pie and online distribution increasing. That said, the key channel for distribution continues to be the network of dealers. At the core, this is very local, regional market-driven business where relationship matters. And we know this business inside out. Some of our senior commercial leaders have spent 20 years and more with us. Thanks to this team and our strong distribution organization with decades on the ground experience and relationships, we have established ourselves as a leader in this space. You've heard it from our partner on the video directly before. This network and this expertise will continue to be a central element of our success going forward. So what are the key actions we are taking. This is back to Nick's point earlier. Our completely new platform, which will go live in a year from now will be a game changer for us and for the customers. That can be said clearly. You know in the past and in many areas today, the decision time on a lease application may have been okay to take a couple of hours or even a day. With sales moving online and even more mobile, that is changing rapidly, customers demand decisions in minutes, if not instantly. Our new platform will deliver this and give us a step change in servicing existing customers as well as strong proposition for embedded finance in online platforms. Our new technology will also power more product differentiation and product bundles. And I think that's an interesting one. Think of an insurance or another added value service on it. And we will be able to offer embedded financing solutions across the entire value chain from the importer or distributor to the dealership to the end customer, all seamlessly integrated within one system, great value for customers and partners and the significant expansion of the market. So with this, we plan to acquire new importers relationships, launch online subscription model partnerships, strengthen or grow our core market share through stronger value propositions, add new services and product bundles and increase operational efficiency. Altogether, delivering growth in market share, financing receivables and return, in our opinion, a really good story. Handing back to Holger for the cards piece.

Peter, thank you. So some of you have told me in the break, you're looking forward to this section. So let me dive into it. The cards business. Look, I know that's a topic of interest to you, and it is a topic of interest for us for the obvious reasons. So this really is, I think, the day-to-day is a great opportunity to just take a step back and walk you through how we think about the entire story here. How we think about the portfolio, the profitability around the portfolio? How we think about retaining profitability from the Migros relationship and what opportunities we see going forward in this business. But before, let me just briefly start a bit with the market here. So the good news is we've seen a continued gradual recovery after the extended period of lockdowns. We spoke about that in summer, that trends continued and it's also reflected in our performance. So we're quite pleased with that. On a macro level, the further reducing use of cash continues to provide tailwinds to the credit card business. We're also seeing that. And then look, in terms of retailers and our co-brand relationships, we quite -- we still -- we continue to see quite good interest from the retailing space in terms of combinations of credit cards with loyalty programs to really drive differentiation and bring customers back to the stores. So as Cembra, I think we're really well positioned in this market, right, leader in the co-branding space. In fact, if you think about it, we've really been in retail sales finance already since the '90s. And I remember my days in the early 2000s here when we're already in that space before we even launched credit cards. And then since then, over the last 15, 16 years, have built a strong position, really strong position, leading franchise in the co-branding space, embedded capabilities into our teams, we speak the language of our partners. We understand what they need. We understand how we can help them build and grow their businesses. And these deep relationships continue to be in place. And look, this is not only leading to strong partner satisfaction, but also to end consumer satisfaction, right? And this matters because every customer has, what, 2, 3-ish cards in their wallet. You want to make sure that yours is top and gets used, right? And so our market shares in volumes as well as contactless transactions does compare favorably to the competition. Now let me kind of put the Migros relationship into this context. So the Migros card obviously has been the key driver of growth in this portfolio for a while. It's also true though that since 2016, roughly, we've seen a slowdown in this growth. And the relationship does come with strings attached, which we've talked about, there's exclusivity. So other food retailers are off limits. It is a great card product that receives strong views from consumers. But it's also a one-size-fits-all card product out there for 850,000 cards that we have. So no tailoring to specific segments, no tailoring to specific needs or behaviors from the customers. We also haven't been able to really effectively cross-sell and upsell on this portfolio. That's what we usually do. That's our machine. That's we talk about in terms of the breadth of products that we have. We haven't been able to do this given the nature of the relationship. And then lastly, you guys know Migros they're in a broad range of activities. And so adding services, third-party services has been close to impossible for us. So I think, look at it this way, right, great partnership, and we'd love to continue it. We will make no mistake. But at the same time, I think the upshot here is that we now have significantly more degrees of freedom in terms of what we do in the cards business going forward. And importantly, we have an in-house team that because of the history I just explained, the 25 or so years in retail sales finance, the more than 15 years in co-brand cards has the capabilities. And I can tell you from the energy that I get when I talk to the team is 100% fired up to prove that we can continue to win in this market. Confirmed Carsten? Yes, thumbs up there you go. So look. Let me -- we've explained before how we arrived at the guidance here. And I'll pre to this was saying, as we stand here today, sort of 5 months on from the initial announcement of this -- of the pending termination, I'm actually more convinced about the guidance that we've given. And the reason for this is because, as you may recall, we put a dedicated team on to this challenge immediately when we had announced this. And since then, they've actually confirmed a lot of the hypothesis that was at hypothesis the time, backed it up with data in terms of the custom profiles, customer segmentation, making really good progress in terms of new value proposition and other things, a bit more on this later. So we can, with assurance, reconfirm the guidance. Now I've also asked for your understanding in the past that we can't go into a ton of detail on what we know about the customers. We really don't want to give the competition a head start. But I do want to highlight just one point here in terms of -- some points how we grow and retain profitability. We have well over 1 million cards out in the market, and they generate enormous amounts of data. And so I want to share this one particular highly particularly powerful point with you, you see on this page. So we know from the analytics that we've done that less than 50% of the customers across our cards portfolio make up almost 90% of the profitability. And we also know from the analysis on the behavior data that those customers tend to be amongst the more loyal customers. And so it's these kinds of insights and many more like this that we're using to design propositions, that we're using to design migration strategies, that we're using to design communication materials, that we're using to design what we're going to do as and when this relationship comes to end next summer. I've also said before, we were looking to put in place a dedicated retention in which we have. They don't have much to do yet because I can tell you, we don't see any usage patterns changes by customers yet. And so again, there's great continued demand for the product. It's sticky. It works well, customers like it. And so again, we're confident about the guidance here. Now how does all this sort of give us that confidence? And let me illustrate that on this page both on financing receivables as well as on net revenues. So first, we've seen the sound recovery in transaction volumes and fees coming out of the lockdowns. The asset base has really -- continues to prove to be very, very resilient. There's obviously some continued uncertainty around COVID but the general point that we've seen this over and over again, coming out of lockdowns, things come back quickly. And we're quite pleased with that, and that gives us good confidence. You also have seen probably the precedent case when UBS took over the cards program with Core from Swisscard. And that also clearly illustrates stickiness and loyalty in these programs. I think I mentioned the data points before 15 months into that transition, less than 40% of the customers had actually applied for a new card. We know from ABS documentation from Swisscard that their number of cards, this was beginning of this year, really hasn't moved much since that transition. And so we have to remember that for many customers, cards are actually low-involvement products. They're sticky, right? They work. And look, if I have my card, I do have one too here and it works. Why should I change it? Why should I go through the hassle of reunderwriting, of sending my documents, of finding all my loan statements, of salary statements, all those kind of things. When I can say we sit there, get a new card sent to my home, open the letter and immediately it works. And so we do believe this again is part of our advantage in this situation. Now even more importantly, we have been very active even before, but certainly since this announcement in terms of driving growth across the portfolio and particularly specifically to the situation here. Really, as I said, being able to confirm the underlying hypothesis that provided the guidance for us. And these are the 5 key actions that we're driving. So the first one is accelerating growth with our existing partners in the co-branding space, right, like IKEA and TCS. It's business as usual. That's what we're doing, and there's good potential for 2022. Secondly, we already mentioned that we're launching a completely revised front-end engagement layer for our customers in the first quarter next year. Niklaus talked about this and showed you a bit how it's going to work. And I'm thrilled about this. And this will be a game changer for our entire portfolio, a whole new way of engaging with customers, a whole new way of more touch points with customers, ease of use, everything we talked about in the opening section. And for us, also a great way for life cycle management across the portfolio. Third thing is we will be launching a completely revamped value proposition with our own cards around mid next year. And again, I will not be able to tell you all the details here because this is obviously of competitive nature. But what I can reassure you is that we're on track to deliver this and there's some really innovative features that are going to come with that program. Fourth, our transition program is gaining great shape, and we'll be ready for timely execution. And then last not least, we always have discussions with other co-branding partners. Clearly, over the last months, we've been intensifying these, and I am very pleased, very pleased with how they are progressing. So I'm actually quite optimistic we were able to come with some good news around this one or 2 co-branding partners around mid-22 as well. So with all of these actions, we're confirming again guidance that we've given to you and we're also confident in terms of our longer-term outlook to recover to pre-COVID levels in assets and revenues by 2023. Look, I think if you take a step back, '22 will clearly be a transition year for us in the cards business. I think that is clear. But if I engage with our task force, if I engage with our teams that drive these new propositions, if we talk to market participants, the longer the more, I am convinced it's going to be reset for a new growth trajectory. We have the capabilities. We're building the programs to execute and we're resetting this business onto a new growth track, and that's what we're going to do. All right. So I get all the fun stuff today. So now off to the next growth area here with buy now pay later, which we talked about a bit in the morning already. And let me just kind of start with how this works, this product, so we kind of ground ourselves. So essentially, starts with a customer going to buy a consumer product, pays in installments. It could be anywhere between a few hundred and several thousand swiss francs. And it's applicable both in online and offline environments. The buy now pay later provider pays the merchant who immediately receives their funds minus a fee. And the customer typically equally immediately has access to the products that they buy. And in addition, because of the typical amounts and the modalities of the payment schedules, there's typically a much simplified credit approval process that applies. So what makes it so attractive? I mean, you can see how this drives significant benefits to all parties. In essence, if you think about it, the product really materially removes barriers out of this process and the transaction. For the consumer, it's convenience, it's fixable and safe payments with tailored payment options. And for the merchant, it's an omnichannel solution, but actually it's much more than that, and they increasingly realize it, it's actually a traffic acquisition and marketing tool for new customers because you can essentially promote certain product categories, you can attract new customers. So it's hugely beneficial. And that's also what drives some of these variations you see somewhere in the space. On the right side here, it's actually quite staggering if you look at the growth rates on a global scale, in Sweden up to 25% penetration e-commerce payments. And that's up from mid-single digits not too long ago. Switzerland is sort of in that space, mid-single digits. So it also gives you a good sense of the growth that we would expect in the market. Let me spend a bit more on this. So we can articulate the business case that we're seeing here. So retail sales in Switzerland just under CHF 110 billion, forecast to grow about 2% per year, primarily driven by online sales. And in financing volume supporting these retail sales is forecast to grow about 7% per year. So penetration increasing. And that, in turn, is mostly driven by buy now pay later. So we see this, we forecast this to be a very sizable CHF 3 billion to CHF 4 billion volume market by 2025. And on the right, you see the players in this market today. And let me give you some context on why we think our payment technology subsidiary swissbilling has an edge. Look, they may have been a little bit under the radar screen so far. But that doesn't mean they haven't been working hard and having made great progress in growing their customer base, relationships, capabilities, et cetera. So we acquired this business in 2017, and they really have leading capabilities in billing in terms of fully integrated paid by invoice services, both in online and offline environments. Interesting data point, Switzerland today already about 80% of those who buy online choose to pay the invoice. And the way swissbilling gets in this in most cases, the service to the merchant includes financing the invoices, merchant is paid immediately, and then Swissbilling handles the billing, the doing, the collection and the risk management. Underlying this is very, very strong risk management capabilities in the business, AI-based technology to integrate into the merchants' customer journey and will provide a seamless service to the consumers. And I think, look, the outcome of all this, I think, has been remarkable. We work with already today with over 1,100 merchants in Switzerland, more than 200 of them in buy now pay later. We have over 800,000 recurring customers. And this year, we're looking to process about 1.3 million invoices. That makes CHF 315 million of billing volume, CHF 125 million of financing volume, which, look, hard to assess the specifics on share, but probably put us in about a 10% to 20% market share range at this point where we are. So let me just reference a couple of examples here. For both the largest sports retailer in Switzerland, Ochsner Sport, you see here as well as for IKEA global market leader in furniture retailing, swissbilling is providing a buy now pay later solution and a paper invoice solution in their online stores. And by the way, both of these in the past have worked with a well-known international by now pay later provider, whom I'm sure all of you have heard of. So we actually are very well positioned to compete in this market. Why did they choose us? Well, it's because of the comprehensive of our solution because we have a deep local market understanding. We know the behavior of customers. We know what they want. We know how to service them and because we are able to tailor our offers directly to what these retailers want and need. So the example on the right is -- I apologize, it's in German, but it's actually a live snapshot from the website where you can see under the Swiss billing payment options you can choose to pay in one invoice or to pay buy now pay later, in this case, in 3 installments over 3 months. So let's hear this directly from these guys how they think about us. [Presentation]

So very much focused on quality, very much focused on local market, very much focused on their customers and very much focused on understanding how the market works. And that's what won us this deal, and that's the strength that we bring to the table. So how does swissbilling fit in with our overall strategy? Let me spend a minute on this as well. So you know the chamber side. Traditionally, mostly focused on classic loan, leasing and cards products. Swissbilling on the other end operates in payments, invoice processing, invoice financing and buy now pay later, which is outside the CCI, the Consumer Credit Act. Now we know from our own as well as external research, that users of buy now pay later products are also significantly more likely than nonusers to rely as well on other types of credit, more often revolve on credit cards. And so -- as we explained before, our financing methods increasingly used more interchangeable across touch points. And as we've seen the strength in embedded finance now buy now pay later gain traction, we've been developing comprehensive cross-sell, upsell and monetization strategies around this collaboration. And that's really what we're setting ourselves up to do here. And again, I think given our broad range of products and our broad range of channels and partners in the market, I think we're uniquely positioned to gain increasing traction and actually grow profitably from the outset. The key point in this is monetization. It's hard to make money of just one single product via monoliner. And as much as I love some of those valuations you expect from us a significant return on equity. There's a framework that we're executing towards, and we'll continue to do that. And so I think what sets us apart in this space is the ability because we have the entire chain of products across touch points, across channels, there's a monetization player for us. I think it's much, much clearer than if you're just a monoliner. So let me just briefly summarize the strategy of what we're doing here. So again, I think great starting position, over 800,000 recurring customers over 1,100 merchants. Important side note, you know we're regulated banks, swissbillings is part of a regulated bank. Again, that is trusted by all stakeholders. I think that also gives us a bit an edge sets us apart from the competition. They've been great in winning partners. And by the way, in winning partners because of the combination between Cembra and swissbilling. That's how we want IKEA, for example, because we have more than one product. We have the entire range to offer and we plan to do more of that going forward. We're profitable today. And given our broad products that have explained, we've got strong monetization capabilities ahead of us. A few key initiatives for this coming year. The first one is to scale up our presence in the German-speaking part of Switzerland, the company's base in the French part, where they have actually even higher penetration. So we have a good plan to grow mostly with about 200 merchants, mostly in the German speaking part. Second, we're going to introduce an account solution, which will allow the consumer to even more flexibly manage their payments. And then in parallel, and I mentioned this before, the power of this product for merchants really push that side to help customers, meaning our merchants to use this product as a marketing and sales acquisition -- sales driving tool. And then lastly, in '23, we're also looking to extend this product to merchants who were not integrated into the payment and checkout processes yet. So look, whilst this market is nascent and in the end, it depends on the participants to drive it meaning folks like ourselves and growth is very big. But our ambition underpinned by our business plan is to generate CHF 1 billion or more of financing volume by 2026 and an incremental CHF 10 million to CHF 20 million of net income to the business. So I think an exciting journey ahead for us here. That's what we had on the business acceleration and the new growth section. So let me hand over to Pascal to bring it home and talk to us about the financials and the capital framework and all that. Thank you.

Thank you, Holger, and good morning, everyone. Before we talk about our financial ambitions, let's first update on the 2021 numbers. We expect a robust and resilient business performance for 2021 with a net income estimate between CHF 159 million to CHF 162 million, respectively, and earnings per share of around CHF 5.40 to CHF 5.50 which is 4% to 5% increase compared to prior year. And this is the aligned or in line with the outlook we gave in summertime. The net revenues are expected to be minus 2% to minus 3% for the full year, with the second half of the year broadly flat compared to prior years following card recoveries, as you can see, in the middle of this chart. We had ROE in terms of transaction volume, plus 14% compared to pre-COVID level 2019 for the period July to November. And for the same period, in terms of revenues, you can see on the bottom, basically the gap -- the revenue gap is narrowing. In terms of asset development, It was plus 1%, total assets from June to November. With confirmations of stabilizations of the plan assets, stable auto and the credit card assets growing as a result of increased transaction volume. Obviously, more update on 2021 in February with the full year update. The Cembra equity story is actually a straightforward story. Assets grew in line with the GDP. High ROE, strong capitalizations and an attractive and increasing dividend. And we deliver on this since the IPO. We have an EPS growth, which is a mix of organic and inorganic activities, particularly with the acquisitions of swissbilling, EFL and cashgate later. We demonstrated during the COVID situation, a resilient business performance. For the first 6 months of this year, 42 -- 14.2 % ROE in COVID situations. And many of our peers are actually as a reporting return on tangible equities if you report or if we would report on the return on tangible equity, we would be at 18% for the first 6 months of the year. We delivered this attractive and growing dividend, plus 4% on the CAGR basis from 2013. And because of the strong capitalization or supported by strong capitalizations, although very attractive cost of fund also driven by a balanced and well-diversified funding portfolio. Still a bit of the past, profitability by source. Going forward, we will introduce a new alternative metrics, which is called the return on financing receivables or we could call it actually the net margin. And why do we introduce these metrics. So in the past, we often commented on the yield development as an indications for our guidance for margin development. But margin is the sum of several components, including, of course, the yield, but interest expense, provision for losses, operating expense, taxes. So in the future, we will decompose our profit by source and improve our disclosure to better explain the movement in margin. Why do we show on this page 2016? It's quite simple. On one side, as though it was the revisions of the interest cap in Switzerland and reductions for 15% to 10%, 4% loan in auto business as an example, but it was also the first year after the introductions of negative interest rates in Switzerland. And as you can see, as though it had some impact ultimately on the net interest income. The commission and fees increased during that period from 2016 to 2019, obviously, in line as with the increase of the card growth. And you can also see -- this was -- or the net interest income reduction was partly offset on 1 side by favorable as provisions for losses, but also -- or -- and with operating expense being flat. 2021 will, obviously, as we provided a more detailed in February. But in total, you obviously see as the impact of the COVID situations on the commission and fees, and we expect a return on financing for 2021 in total to be around 2.5%. So now let's move to the outlook. On the left side, this is a recap of our expectations for future asset growth as presented earlier by Peter and Holger. At a group level, we expect an asset growth or net financing growth of around 1% to 3% per year. I want also to mention once again that the strategic program buy now pay later will contribute mainly to commission and fees. This is fast turning assets business. Therefore, it's not primarily an asset growth or interest income business. On the right side, we expect our return on financing receivables to increase over time, first, stable and then increase over time with an anticipated pressure on the net interest margin, which is driven by pricing competitions and also assuming some increase in interest expense over time. And we clearly expect this to be offset on one side at all by the increase in commission and fees, clearly supported by buy now pay later growth, but also supported by COVID recoveries and the impact on the cards business. And clearly also, we expect a major contributions from the operation excellence, strategic initiatives, which was presented before by Niklaus where we expect ultimately as the net savings of CHF 30 million plus annual by 2026, latest. So let's talk about expense. The strategic program, operational excellence is instrumental to further drive efficiencies and scalability in our operating model and contribute materially to the improvement of our net margin. We heard before that we expect the benefits realizations in excess of CHF 30 million in form of annual expense savings. And these are recurring savings. The savings are driven by automation, stabilizations and decommissions of legacy system, which is mainly driven by the simplified operating model, as I mentioned earlier. This will reduce our compensation benefits from 55% to 47% or below of the total OpEx over time, which make our operating model more scalable. In order to deliver on this CHF 30 million annual savings, we will invest CHF 55 million in operating excellence. And as you can see here on the left side, you can see the shape of the cost and benefits with the expected positive net savings by 2024. 50% to 60% of this CHF 55 million investments are related to build the core banking to simplify our operating model and 30% to 40% are related to future proven technology. Our ambition is to reduce materially our cost income ratio from today 51%, around 51% to below 39% at the end of strategic cycle, below 39% at the end of the strategic cycle. This will bring us also closer to some of our international peers, particularly in the Nordics region. And in 2022 and 2023, we expect the cost/income ratio to be largely stable. As a result of on one side, the investments in the card strategy but also the investments in our strategic program, operational excellence. Let's talk about funding. We have a balanced and well-diversified funding portfolio. We manage prudently our liquidity and interest rate risk. As you can also see on the table below. Liquidity coverage, as an example, are far above the minimum regulatory requirements of 100% or you can also take as an example of the leverage ratio, which is although far above the minimal 3% Basel III requirements. And this shows the prudent approach to our risk management. Following the August announcement, our Cembra credit spread increased temporary by 30 bps, and we covered fast and stabilized again at prior level a few weeks later. This show the strong confidence of our fixed income investors in the strength of our balance sheet despite the loss of one of our important partner. And regarding change in interest rates, Cembra, we have usually lower exposure to interest rates change compared to many of our Swiss banks or competitors in leasing's business. We actually anticipate a favorable impact in case of interest rates rise as repricing of the liabilities will lag due to a slightly negative duration's gap we have today. Let's talk about capital management and outlook. First, as a reminder, we use the standardized approach of Basel III framework for the calculation of capital adequacy requirements for credit, market and operational risk. As you can see on the bottom left, 86% of the risk-weighted assets are allocated to credit risks, which -- and we don't have the market risk, which shows also the simplicity of our balance sheet. In the past, we demonstrated an effective use of capital to the benefits of our shareholders. We set a minimum or a midterm target of 17%. And we used excess capital, as an example, in 2019 to finance growth for the cashgate acquisitions, temporary going below the target with a clear path how to achieve the target of 17% in a short period of time. We paid out extraordinary dividend for the financial year 2016. And even during the COVID period in 2020, we also paid out an ordinary dividend slightly above the range of 60% to 70% to ensure a stable dividend per share. For the future, the Tier 1 capital ratio of 17% isn't changed. We want to maintain our credit rating to the benefits of attractive cost of funding. The upper limit of 19% on the distributions of excess capital is removed because we want to enhance our returns through capital redeployment already above 17%. And we want to allocate capital to further drive organic and profitable growth. Similar to the past, we will continue to explore opportunistic M&A following our disciplined financial and capital management, as we have demonstrated in the past, we drive as all synergies from acquisitions. And to the extent, excess capital is not deployed with such growth, we will redistribute excess capital in form of stock buyback or special dividends. As part of the cashgate acquisition, we placed an additional Tier1. And going forward, we want to continue or we want to consider continue hybrid funding in the future, but of course, depending on market conditions. And finally, as already mentioned by Holger, we will implement the current expected credit loss as of January -- first of January 2023 under -- as required by the U.S. GAAP standards and also the FINMA Accounting Ordinance. And this will have an impact -- a one-off impact on the Tier1 ratio between 0.6 to 0.9 during the strategic cycle 2022 to 2026. EPS outlook. We expect to grow our EPS by 20% to 30% over the strategic cycle, and this is supported by our strategic initiatives. On one side, operational excellence will be a key contributor to the EPS growth. But you see as well that the profitable growth out of the business accelerations in p loan, in auto, in cards and new growth opportunities will be EPS accretive. And as we discussed before, we will further redeploy excess capital to drive profitable growth. From EPS growth, let's move to dividend, dividend per share outlook. We want to maintain an attractive and increasing dividend. What does it mean? For 2021, we plan to pay a dividend of CHF 3.75, same level as what we paid last year. For 2022, the dividend is expected to be at least CHF 3.75. And afterwards, we intend to increase the dividend based on sustainable earnings growth, subject to a minimum of the prior year dividend per share. So let's recap on our financial targets. We have the existing targets today which are return on equity as a Tier 1 capital ratio and the dividend pressure. For the return on equity, we mentioned before 2022, 2023, slightly decreased 13% to 14%, with the ambitions starting 2024 to deliver, again, a return on equity above 15%. Tier 1 capital ratio unchanged and dividend per share for 2022, at least CHF 3.75. And then, as mentioned before, 2023 to 2026 increasing. To track the strategic execution or to monitor the strategy execution, we will implement additional targets, one as being the asset growth, 1% to 3% in line with GDP. Also the EPS, the cumulative EPS growth we mentioned before, the 20% to 30% as a result of the implementation of the strategic programs. The cost/income ratio stable as all, above 50% is probably stable as of for 2022, 2023. We have a clear ambition to gradually reduce to less or below 39% in 2026. And we discussed before with Holger before, the risk performance, provisions for losses expected to be broadly in line or with the historic performance we delivered at 1% or below. I, of course, mentioned several times, we will also implement or improve our additional disclosures, one being the profit by source, we will report a savings so far from the operational excellence, buy now pay later, the improved is on the Swissbilling disclosure. And ultimately, we will show as well as a return on tangible equity in addition to return on equity. Let me summarize before I hand over to you, Holger. We remain focused in continuing to create shareholder value. We know our company very well. We have a clear road map on how to execute on our strategy and with thorough understanding -- understand the opportunities of this strategy as well as the challenges. And as usual, and actually, as we do it today, we communicate frequently as with you, with our shareholders and welcome very much the continued dialogue. Thank you. And with that, I hand over to you.

Excellent. So let me briefly wrap up here, and then we'll take some more questions here in the audience and for those remotely with us. So starting with our ambition, right? Combining leadership in our core in consumer finance, with leadership and technology to deliver the most intuitive and compelling solutions for our customers in consumer finance here in Switzerland. We're doing this from a position of strength. And Volker walked you through our credit factory, our passionate teams and you've heard from our customers what they like about us. To execute against the vision, we're driving 4 distinct strategic programs. Niklaus talked about operational excellence, how we simplify what we do and how we put our tech stack onto a future-proof infrastructure to take over CHF 30 million of annual cost out and to significantly increase -- further increase our proposition to our customers and partners. We talked about accelerating growth in our core businesses and also the opportunities we're seeing with buy now pay later and embedded finance, and all of this underpinned by cultural transformation that really takes all the good things we have, all the strengths we have and lifts us to the next level. All this will deliver 15% or more ROE from 2024 onwards and a dividend of CHF 3.75 this year, the same or more next year, growing from there onwards backed by strong EPS growth. That's what we had to present today. And now I'm excited to take some more questions and engage in dialogue with you. So floor is yours, please.

Nicolas Bürki, Mirabaud Management. Unless I missed it, I think you did not show the time distribution of the CHF 55 million cost. Can you elaborate a bit on that, please?

Sure. Pascal, do you want to give some context on the distribution there?

So can we show the Page 47. So you see here on the bottom line, as basically all the costs, the P&L OpEx impact, including depreciations of the investments, the CHF 55 million. So you see, as from a P&L standpoint, the biggest impact will be in 2024 at the same time where we expect the benefits to come in.

Yes. Máté Nemes, UBS. I have a couple of questions, please. Maybe first starting with capital management. Just to make sure I understand the new capital management framework, can you clarify how the decision process will look like once you hit the 17% Tier 1 ratio? And you don't see near-term or imminent organic growth opportunities nor M&A transactions in the pipeline, you would distribute that excess capital about 17%. Am I interpreting this right? Or there is perhaps a bit more flexibility to the approach?

Let Pascal talk to that in a second, but just a quick pre-load, and you gave part of the answer in your question, right? Clear priorities, right? We have a growth plan here that delivers organic growth. Secondly, as we've always said in the past, right, strategy enabling M&A absolutely in the cards, right? So that is also the case. And then you get to the third option, and then I'll let Pascal briefly walk through that in terms of distribution.

Yes. So as I mentioned before, we have demonstrated in the past an effective use of capital, and we'll continue also to do so. We've had a regular -- we will have regular assessments on our capital position. So taking into consideration the business opportunities we see in the market. Taking into consideration so the development of our core business as well as organic growth. Looking at the M&A. So I think we have demonstrated in the past that we are able to execute on opportunistic cases. And of course, it's -- a set a time if we don't see this business opportunities coming, then we will redeploy excess capital than in form of buyback or special dividends.

That's very clear. And one more question to the Pascal, perhaps a slightly technical one. You mentioned that you would consider additional hybrid capital, assuming [ 81 ]. What sort of size do you have in mind here? And then what would be the other criteria would apply?

So not size at this point, no -- so at this point in time really depend on the market conditions. For now, we are very pleased with the capital structure we have as well with -- we also diversified as a funding, including the convertible additional Tier1. Then of course, on the equity side, but nothing in mind other than saying that actually we like hybrid funding.

Andreas from Bank Vontobel. 1 or 2 for Pascal on Page 50. Could you elaborate on the contribution from capital redeployment, what do you mean exactly by that? And the second one, how would your ROE targets compared to the old levels given that, yes, the CECL reduces the overall capital level? Then one for Holger. You didn't talk about the IKEA card growth. How did it go so far year-to-date. And how does actually the launch of the Mobile First in Q1 2022 compared to your former plans? Is it a delay? And if so, why did it happen?

Yes. Thank you for the question. Pascal, do you want to start? And then I take the commercial ones.

Well, look, the capital redeployment, the way we calculate it is ultimately as to redeploy all the excess capital we generate from the business above 17%, but also taking into consideration the forms of acquisitions or forms of strategic partnerships, as an example, or as I mentioned before, in former 3 distributions of the excess capital for -- via special dividends or buyback. So that's the way it's shown here. In terms of ROE, clearly, as all the target is always to come back a little to the midterm target as we had in the past as at a 15%. Yes, we have been a bit higher over this period of strategic cycles, but also taking it constitutes market situations and the investments we are making at this point in time as our ambition is to deliver the 15 or plus -- or 15% or plus. And the last one was, I think, for you.

All right. Yes, yes. Yes. Thanks, Pascal. So on the IKEA question, and thanks for the question, Andreas. Look, it's a great partnership. We're excited about it, right? It's one of the -- I think, the second largest loyalty program in the country, well over 1 million participants. So significant potential. Relative to the overall book in our cards portfolio, the piece that IKEA plays is still fairly small, I think it's fair to say. So there's a lot of growth to be had for us ahead in 2022. But I would say the relationship is very strong, and that's where it starts. And we've always said in these co-branding relationships, it's not necessarily day 1 that counts from an execution or sort of number of cards perspective, it's really are you committed to the partnership. One data point I will give you is, a couple of months ago, I think we launched buy now pay later with them as well. And that's actually taking off extraordinarily well in terms of the online shops. So things are coming together there, right? Now you asked another question around the Cards Mobile First. So that is a bit delayed from our very initial plan, and there's 2 reasons for this. One was during the pandemic, there was just some logistical challenges in terms of collaboration between the teams, but also, in collaboration with our partners, particularly IKEA, we're adding some features to the launch scope. So this is really out of that relationship. And so we're excited for that to be coming out in the first quarter.

This is Daniel Regli from Octavian, again. Actually, a lot of questions. I limit myself for the moment to 2 or 3. One is, can you maybe talk again a little bit on the market structure in personal loans and out-leasing in loans? And obviously, you're currently having market shares of 41%, respectively, [ 21% ] and your targeted market share is not very different from this. So you don't expect to gain market share in both markets. And then the second question would be on this -- the launch of this proprietary credit card proposition. And can you maybe elaborate it a bit in how this stands in relation to your current existing proprietary credit card. Is there any kind of cannibalization of the existing offer? Or will this also be replaced by this new proposition?

Can we start with those.

Yes, please.

And we'll have -- we'll take the other ones, too, to make sure you guys don't walk out with open questions. Look, on the market -- and Peter, you can add to this if I miss something. But -- so in personal loans, as you know, we've had some challenges on the asset side, right, over the last few years. And a lot of this is driven by deliberate restrictions in our underwriting policy, some of it cashgate synergies. And some of this also, I think, as I said before, right, we got to make sure we are strongly present in the market, right? And so I think Peter walked you through what we're going to do there. And we will return this business to growth. Now at 41% market share, we also want to be realistic, right? We're not going to undercut ourselves in price to gain share, right? We're not going to do that. That's not the business we're in. And so look, organically, that's sort of what we're looking at, right? We talked a bit before about if there are inorganic opportunities, we'll consider those. There's also, if you want, some more consideration of the competitive competition in the vehicle right, in terms of potential growth there. But I think the message I want to make sure you can take away here is we are resetting that business to growth in line with the market. We want to make sure we retain our share and also the profitability. Now on the auto side -- a bit different on the auto side. So I think we talked about this before, too. This has always been a bit of voice over in the past, right? We like the business, and I still -- we still like it. I think it's a great business. We have outstanding distribution, outstanding relationships in this market. And so what we're doing here actually with the new platform that we're talking about is efficiency and growth enabling. So we are looking to grow our share. We are looking to increase our margins, against what we've seen. And I think it should have said on the page is what, let me just go back to that auto page so you get the full view here. There you go, right? So we're 21% today. We do want to grow the share. We want to grow receivables a bit ahead of the market and also the return, right, with the measures that we just explained, right? It's a new platform, meaning new products and services, significantly improved servicing times and also a way to more effectively and efficiently work with importers. So we're actually quite excited about what we're doing here and repositioning this business from a -- we like it to -- we still like it. We like it even more with growth perspective. And hopefully, that answers your question there in terms of auto. To your question on the proprietary card, look, again, and I can't give you a ton of details on this. But again, we've got a dedicated team working through the proposition. That value proposition is coming together nicely. We're engaging the right kind of external parties, agencies, et cetera, to get ready for the launch there. I think this will be a significant product for us, right? I think we haven't really put our existing card into the center of what we do commercially, right. And now, I think this is a bit what I was alluding to before, right? We've been, for all the right reasons, really focused on particularly one relationship. I think we now have the opportunity here, this is the energy, I think I'm feeling about this, right? Yes, we want to continue to be a very strong [ co-band ] player and leader in the market, and we can add to this, right? And so this is one of the things that I'm quite excited about. And yes, look, we're looking forward to the launch in the summer.

And just maybe, if I may, one follow-up on co-branding partners, you envisaging 1 to 2 new co-branding partners over the course of the next years. Has your approach to wooing for these partners already changed? Or are you bound to wait until the Migros partnership ended mid next year to go to certain partners?

Yes, I'm glad you're asking the question, somebody would have, right? But no, look, we talk to everyone and I wouldn't say everyone in the market, but we're talking to partners across the spectrum in the market. right? There's folks you've always talked to, and the universe has now opened up for us, right? And so those conversations, you can assume we're progressing along the lines across industries, if you want. And as I said, I'm pleased with the way these conversations are progressing across the board.

[indiscernible]. A number -- a handful of maybe short questions. First on the personal loans business, and while your ambition is 1% to 2% growth in receivables, p.a. What's your expected market growth in this business? I'm not sure if you mentioned that. Second, on the auto business, you need to replace platform, your business platform. Is that -- is it just outdated, not up to speed anymore? Or are you really feeling that you're losing market share in this business? And additionally, there, if you talk about additional captives, are you talking about new entrants into the market in Switzerland carmakers? Or are we talking about captives giving up their business, looking for a second source of financing? Or what are we talking about? And if I may, on cards. On Page 33, you've shown this -- the loyalty -- the loyal customers are being the profitable ones. How do you -- give us a feel on how you define the loyalty, by what you measure that? Just a feel, I know it's probably...

[indiscernible].

And then on the BNPL, just briefly, when you target CHF 1 billion in financing volumes, you're not talking about net financing receivables, I would assume. And maybe just confirm that. And the last one, a very quick one on RWA outlook compared to net financing receivables targets or outlook. Is there anything in between that? I mean should we expect a different kind of RWA growth?

Yes. Thank you for the questions. Actually, perhaps, Pascal, if you want to start with the last 2 on the financing ones of buy now pay later and the RWA outlook and then I'll take the commercial questions.

No, usually our business, though the development of the RWA that we quite correlated with the development of the financing receivables so similar in the past. Exactly, you are right, the CHF 1 billion of its financing, so it's not assets. As I mentioned, for buy now pay later, this is mainly -- this is a fast turning assets. So the contribution is mainly as a commission and fees coming from customer or merchant fees.

Thanks, Pascal. This one addition I would make to this fully agreed -- right the fee-based business. It's also a bit of feeder business, though, right? And I've alluded to this before, our research -- external research clearly show that there is a link between buy now pay later users and proximity to other credit products, right? So we really look at it as a way if you want to bring our whole product suite to bear with this new product that we're growing here. So let me go through some of the other questions you raised, personal loan. Yes, look, we may not have mentioned it, but we actually -- that's what we're looking at, right? We want to grow in line with the market. That's also why you see our market share remaining where it is. That's the ambition, right? And again, that's against the challenge that we've had in the last 18, 24 months, recognizing it's a pretty high market share, I would say, clear market leader, right? But that's what you should expect, right? It's growing in line with the market, retaining our share and the profitability. That's on the personal loan side. Also, look, I would say it's not so much we need a new platform. I mean the business runs well. In fact, runs extraordinarily well, right? You heard some of the customer feedback there, and we could give you hundreds of more dealers to speak with. Great collaboration. Yields this year are looking great in the second half. We're keeping our market share. It works, right? Now -- but we are not here to just manage a status quo, right? That's not my philosophy of running a business, right? I'm out there, I want us to be out there every day to say, what can we do better, right? And so here's an opportunity for us. Here's an opportunity to become significantly more efficient. There's an opportunity to significantly increase our value proposition for dealers and for end customers in this space. And so that's what we're going after, right? And so that also allows us to come out with this confidence to say that, look, that's an opportunity to grow share and to also grow returns in this business. I hope that helps with the question. And to your point around other partners, well, look, it's a little bit of both, right? It could be existing importers. But it also -- and maybe that's also what you're alluding to, right, the distribution structures are also changing here, right? They are online players, they are just platforms, et cetera, et cetera, right? And this new platform that we're bringing in will also be because of the nature of how it's structured, the cloud-based, the open API infrastructure will also enable us to much more efficiently and effectively work with those partners. So there is -- yes, there is a bit that side too, which is an investment in the future of card distribution, right? We're the market leader in the space. We will be the market leader in 2, 3, 5 years from now, and this is what it takes to ensure that. That's our clear ambition. Now Page 33. So you're pushing me a little bit here. But let me -- look, 2 things. One, and as I've said, right, we have a dedicated team that works through this. And that team is leading another group of people who've done not much else in the last 5 months other than slicing and dicing and digging through data like there's no tomorrow, right? And so I could show you probably 10, 15 other really cool insights that we found. Now I ask for an understanding, we don't, because we want to -- this is proprietary knowledge and this is -- for competitive reasons, we don't want to give anybody a headstart here. But I wanted to share this point with you. And so basically, what we've done here is we have -- we think about it, right, we've segmented the portfolio -- the entire cards portfolio by profitability. And we've got 15 years of data, and we've mapped against that behaviors, right? Usage patterns, attrition, new customers, what comes in, what comes out, you can see the movie, right? And so -- and we've done that across criteria. And so that's the outcome that you're seeing here. And hopefully, that helps a bit with your question on that part. I think I covered everything you asked, right?

[indiscernible] BNPL volumes, this CHF 1 billion, how much of that -- how much receivables do you expect out of that [indiscernible]?

Pascal?

Yes, you can take the Page 46 -- around CHF 300 million.

Is there a question here in the room?

Máté Nemes from UBS. I have a few smaller questions. Firstly, on the auto business. You mentioned the opportunity in the subscription model. Could you give us a bit more details on this. With whom would you do this? And also, how does the economics of this business differ from your typical leasing business? So that's the first question. Secondly, one on the trading update. I see from the slide that personal loan receivables seem to be flat -- flattish in the second half of the year. And I think in the H1 call, you mentioned you're putting quite a special emphasis on turning that business around. Is there any discrepancy here? Is it basically a purely market-driven development? Or what's the reason for this? And thirdly, on costs. Pascal, you mentioned that you would expect a reduced share of compensation and benefits going from 55% to 47%. Could you give us a sense of what does this mean in terms of headcount and the composition of the stat base? How you intend to achieve this?

All right. Excellent. Thank you. Let me take the first 2 and then I hand over to Pascal. So auto subscription models. Look, to me, this is -- again, it has to be -- and it is a matter of just business as usual, right? If you're the market leader in this space, you have to be on top of these trends, right? And look, this market is still nascent. It's small, but it's growing. We've seen it grow in other countries and regions, and it's forecast to be anywhere around probably 20% at some point in other markets, but also in Switzerland, right? And so simple answer is you cannot engage with that channel if you're the market leader, right? And so that's where we're coming from. And look, you can assume that we're talking to all market participants around these kind of things. That's sort of just our basic philosophy around this. We're a market leader. We want to retain leadership. And so we're engaging with various participants. In terms of the economics, look, I don't see them changing dramatically. I don't see them changing dramatically. The processes there will likely become sort of more efficient, which will help us a bit on the cost side. Pricing in the end on leasing and loan is market driven. The other thing I would say is, as we -- as I alluded to, as we build this new platform that we're seeing, we have a good opportunity to actually add products that will give us more fee and other sorts of income in terms of that. And so overall, by and large, you've seen us on the page as well, we'd rather expect increasing returns in this portfolio, and that factors in some of these models that we talked about. And then your second question on the personal loan side, the trading update. Yes, I think what we said was that -- indeed, we put this -- I put this task force on to it -- onto the business because I wanted to make sure that we have the right sense of urgency and produce the right outcomes in this -- in the personal loan business. Again, as a market leader, our ambition clearly is to retain market share, right? Now -- and I think we said at half year, we want to stabilize the business, and that's what we've done, right? And Peter and the team have actually, I think, done a really nice job in getting us there after the challenge that we've seen over the last couple of years. And the good news is you've now met the guy, and he's on the hook to deliver it back to growth, and he said so clearly, right? You all heard it. I heard it too. So that's the next step.

[indiscernible] I mean COVID is still here. I mean, of course, we are still prudent in underwriting. We are not doing any stupid mistakes and therefore, I think stabilizing is the right thing to do now. And I think we're moving now back in the growth mode. That's the idea.

Perhaps, do we have some questions on the phone?

There is an old one regarding the annual savings.

Sorry. I'm sorry about that. Yes, of course, the savings on the technology program, right? Go ahead, Pascal.

So back to the CHF 30 million annual cost savings. The large majority of the CHF 30 million will be achieved with the reductions in personnel costs. So basically, it's a result of automation standardizations and the remaining part though will mainly be related as well to decommissioning of legacy system. The reduction in personnel costs is expected to be managed through natural fluctuations. You can look at our annual report, we have an attrition ratio of around 10%. It's around a period of now 5 years that we will deliver on these programs. We are responsible. We'll manage these situations in responsible matters and be also very diligent with hiring as new people. But at this point in time, it's expected to be managed through natural situation.

Do we have some questions on the phone?

We have a question from Mr. Benjamin Goy from Deutsche Bank.

Maybe one just to double check on the net cost savings. So does it mean you're roughly aiming for CHF 220 million of cost base going forward from 2026 onwards? And then 2 questions on buy now pay later. I mean you mentioned that roughly CHF 300 million is the target initially. And can you help us a bit understand what the revenue impact is? Because I think those should be -- I mean you said they're turning part, obviously, but the margin should be if you analyze is quite attractive. So is it fair to assume this is well into the double digits the margin on buy now pay later? And then the second question on BNPL is, when I look at the leading players at the moment, they have lost rates that probably -- Holger wouldn't be asleep at night, yes. So just wondering how is the Cembra approach with typically rather high loss rates? And how would you compete in the business against very aggressive players who seem to be mainly growth focused and not P&L optimizing for now?

Great. Thank you for the question. Pascal, do you want to take the first 2 on the net cost saving and the revenue situation with buy now pay later?

Yes. So net cost savings, to clarify, we commit that all to the CHF 30 million annual savings by 2026. This is an absolute numbers. And we also commit as part of the targets to a cost/income ratio of 39% or below by 2026. So it doesn't mean that it's default, although it will be as [ 220 ], although it's really depending on how the revenue will develop. This is why we have these kind of 2 metrics on 1 side is all the net savings from the strategic programs, operational excellence, which should materially contribute to the reductions in the cost to income ratio. And the second one...

Buy now pay later, the revenue?

On the margin, look, I think it's -- we estimate that the CHF 10 million to CHF 20 million, 1% to 2%. It's broadly in line as though with what we have seen in this market in the past, but it's difficult to give an indication so for the future, this is why the range is relatively broad at this point in time. We really see as in the next 3, 5 years, what kind of mergers -- margins are possible on the Swiss market. On the loss, you want to...

It's actually a very good question that you asked on the loss side. We've now have been going through the chapter of the Cembra DNA. I mentioned in the side comment that there might be segments where actually the 1% loss rate is not yet to be expected in isolation, but we need to be priced for the risk. And I think especially the buy now pay later market is probably in this category because the loss rate is always measured to receivables, and Pascal has been highlighting that buy now pay later is more of a transactional business. So it's not generating too many assets. Nonetheless, I'm convinced that we can manage losses diligently, also in buy now pay later because we are in the Swiss market, which is typically a bit more conservative market compared to other countries where buy now pay later players are active. I think it's also about kind of picking the right retailers to collaborate with, which also drives loss performance and can control loss performance. And I think also we need to put it into context of the overall business because, yes, we might have from a loss rate perspective, a slightly higher percentage on buy now pay later. But buy now pay later in context of the overall Cembra business is still small. So it will not immediately impact the overall loss rate of the business. And again, it will be acceptable with the higher loss rate in this segment if we get the pricing growth.

Thanks, Volker. And 2 quick things I'd add, right? So one, even today, the business is profitable, right? And let's not forget, they've been operating for 10 years. We bought them in 2017, but they've been operating for 10 years today. They have a sense of what they do. I think risk management there is actually quite strong and quite advanced in many ways. And then the second thing I would also add here is -- we got to keep in mind this is not a stand-alone business, right? This, for us, is, again, both the feeder business, but also part of our Cembra product universe, right, in terms of life cycle management, et cetera. And I mentioned before, our monetization strategy, our cross-sell strategy and everything that we're building around that really capitalized on that. And yes, we do have Volker to keep us honest on this and make sure that we do all the right things. So thanks for the question. Anything else on the phone?

No further questions from the phone, sir.

Thanks. And then let me take a few that we have on the screen here. First one, is there no cannibalization between buy now pay later and credit cards, which business is more attractive for Cembra? Good question. Thank you. Well, look, we like both businesses. That's the short answer. The slightly longer is we don't anticipate cannibalization here. If anything, as I said, you could see as buy now pay later a bit of a feeder business. It's also a slightly different use case. It tends to be a bit more instant, a bit more fast paced in the sense in terms of customer usage than in the cards business. In the cards business, we'll continue to benefit just from the macro environment that we talked about, right, replacing cash increasing, right? So that tailwind is still there. So we really, again, I don't see much cannibalization here. I think it's slightly different use cases, really look at them in a complementary way. And if anything, again, given the cross-sell opportunities that we're looking at, we're trying to get 1 plus 1 to be more than 2 here. So another question here. Your growth assumption in personal loans of 1% to 2%, 2% to 4% in auto stand above historical organic development, do these targets include inorganic growth? Or do you expect to take more market share in the future, without negative pricing or profitability effect? In brackets. I like that bracket, and I agree with it. We want to keep our profitability in place. Look, we -- I think the way to think about this is, we're a market leader, we want to grow in line with the market. That's how it starts, right? And so if the market is about 1% to 2% p loans as we see, that's what we want to do. And we really want to do this organically. Now it may not be spot on every month or every quarter. But as a general direction, that's what we want to do. And we want to do the same in auto. Now in auto, the 2% to 4% is slightly above market growth, and that's because of what we explained before, right, we're building a new platform, new propositions, can add some products and that should give us some tailwind. As I've also said, if there are opportunities in the market to accelerate our growth plans and they are a good fit with what we do in Switzerland, then we'd certainly attain that. But the general principle is we want to grow in line with the market, right? And again, that may not hit every month or quarter, but in general principle, that's what you should expect from us. One more question here online. With the transition to a cloud-based data management, which data protection issues do you expect? And on a related subject, how robust will your solution be against cyber tech communication outage and other potential disruptions? Great question. And I can tell you something that we monitor very closely, right? And I'll let perhaps Nik start. And then Volker , you can add a bit as well on the cyber risk side. Nik, do you want to...

Yes, I can take all over this one. It depends now what you're talking about. If you're talking about a public client, for instance, like you're going into Microsoft Cloud or et cetera, then the cyber risk is compared to when we do it on our own is quite low because they're investing multimillions, more than CHF 200 million, for instance, in Microsoft's case. In cyber, cyber measures to protect against that one, which we are not able to invest, obviously. The second thing is in our cloud or the private cloud, of course, we follow our standards that we have like we have currently in our own data center. Volker, you might want to add on this topic?

Yes, I think you covered already a lot around it. I mean cyber risk is, obviously, something that we have on our radar screen because that's also a risk that general in the banking sphere, currently highly discussed in Switzerland. I think we are well protected with the cyber framework that we have put in place. And kind of related to cloud, there are obviously also technologies that kind of would protect the data better, which is kind of in the area of [indiscernible] encryption and all these kind of things. And we will certainly look into the measures and find the appropriate measures to protect the data because I've been kind of highlighting the data a lot in my part of the presentation. This is an asset for us, and we need to protect our assets, and we need to deal with this asset in a very responsible way. So we are very aware of what we are doing now.

Thanks, Volker. I go through another few questions here on the web. In your buy now pay later initiative, will you be able, for instance, to offer clients 0 interest for a time period if they pay the full amount within the period. I'll answer this way. So there's a range of things -- a range of, I'd say, arrangements you can set up between provider and merchants and 0 interest is certainly one of the features on these products. And then there's a different revenue source and sometimes that's funded by the merchant, right? So the different arrangements that you can make. And again, it sort of goes back a bit to what we talked about before, which is that merchants really recognize this as a tool to build sales and attract sales and as a marketing tool. So the short answer to that is, yes, these kind of features can be incorporated. Another question on buy now pay later. The newcomers in this space have been growing quickly with card-based products as it gives them -- the question disappeared. Can you bring it back up. I think, I mean from memory, I think it was around what is our -- what are our -- there we go, have been growing quickly with card-based products that gives them instant acceptance at 80 million merchants worldwide. Corner Bank recently introduced Click & Go. Can you speak a bit about strategic priorities given that your card-based product is planned relatively late in '23? We'll find this page again. One second. I go back to the buy now pay later pages. Yes. So look, I mean this is a list of initiatives that we presented before, right? So there's the near-term things that we're doing -- that we're doing in the new year, which is really accelerating onboarding partners in the country, particularly in the German-speaking part will be a little underrepresented given the nature of the business out from the French part of Switzerland. The product extension for consumers, as we talked about, an account-based solutions, they can more flexibly manage their payments and then also really develop this as the marketing tool that I talked about with merchants in terms of helping them win in their business models. So the card-based product, as this question rightly alludes to, is something that we're planning for 2023. But look, I mean, I would say, I would say, for us, with this set of initiatives, I think we feel that we have the right pillars in place to grow in this market. That's the way I think about it. The other thing, again, to keep in mind is the ability to cross-sell and leverage our entire product suite across customers and channels. And that's something that we've been building out, which, again, I think, should help us stay ahead of the competition in the space. Let's see. I think there were a few more questions further down here on the screen. If we can scroll down a bit, then we take those 2. Is that all? Is there nothing more on the screen? That's it? Okay. Anything else on the phone?

There are no further questions, sir.

We've got something more in the room here? Please, yes.

Daniel Regli from Octavian. Again, this might be a bit of a philosophical question. But I mean, when I was, unfortunately, a bit late. But in the beginning, you started -- you talked about embedded finance. And what you talked about to me sounded like typical application of blockchain solutions. So can you maybe elaborate a bit on whether you're envisaging something in relation to blockchain? Or is this completely not relevant for your business? Or what are your thoughts about this?

Yes. Look, great question. And I would say not yet. That's the way I would put it. But hopefully, one of the things you're taking away here is, right, and I'll just repeat this, you want to be a consumer finance leader in the future, you have to be technology leader in the future. And so you can be certain we'll be looking at these kind of trends, right, and see if there's opportunities that create value for customers, that create value for our shareholders, and we look at those, right? And so I -- fundamentally, I firmly -- one of these trends excite me, right? I really am -- I really think what technology offers us these days. It's just -- it's phenomenal, right? There's so much potential there. But two, look, again, we want to lead in the space. We have to be on top of these trends, right? And hopefully, you've taken that away. Technology will play a more prominent role for us going forward. And so as and when there's things there, and if you have a suggestion, happy to talk. But as and when things are moving in that direction, we'll certainly consider that. Any other questions in the room? Webcast? Phone? Good. Then I would say, look, ladies and gentlemen, thank you so much for the time today. Just a quick wrap again. We're excited. Reimagining Cembra. Hopefully, you get the gist of what we're looking to do. A great business, a great set of capabilities, great set of skills, a lot of good customer intimacy, credit factory, our DNA, we talked about. We're taking this business and repositioning it for sustained success in the market. And we're very excited about this journey. Culture transformation to come to that 4 strategic programs we talked about. And as you've seen and heard, we're not waiting to kick this off, we're right into it, right? And so we'll see you in the new year to update you on where we're going with these initiatives. We'll have a full update on the year. If we don't see and speak each other, then please stay healthy and safe and happy holiday season. Merry Christmas, all the best for '22, and we're excited to get into this journey as a team and then speak to you soon. Thank you so much.