Commerzbank AG (CBK.DE) Earnings Call Transcript & Summary

Great. Thank you very much for joining us on the last day of the financial conference in London. I have with me Carsten, Commerzbank CFO. First of all, it's a great day to have you with us because this is the day a year ago, you were announced as CFO of Commerzbank. So it's a perfect timing to give us an exact update after 1 year of announcement. And maybe Carsten, I can start there.

Can you give us a little bit of your impression considering you were at Commerzbank, left and came back, how things have changed, but also kind of what are the top-down issues for Commerzbank at this point, more from a top-down strategic perspectives that are a focus for you and the management team?

Yes, very happy to do that. And Kian, thank you very much for having me also in this fantastic hall here. So indeed, it has been exactly 1 year since my announcement. I started beginning of this year, so there was a bit of time in between, but quite a bit has changed during that period of time. You asked around what strategically has changed also from possibly the time that I experienced in the bank before I rejoined. I think the firm at the moment is really best described as fully focused and unified in its voice from management to the employees to our employee representatives in actually getting our strategy and active that we're having. And talking about that strategy, we announced our strategy beginning of the year, focusing on '28, focusing on growth and transformation. And that probably is what is accompanying us every single day, seeing how we can grow the business further for our customers, and strategic points we are clearly looking at, at the moment is also what's happening economically in Germany. So I would say this is pretty much what we're looking at mostly.

And starting on Germany and German stimulus, clearly, a lot of questions of how do you see that actually feeding into your numbers? What are your expectations? There's also a lot of concern, maybe it's more delayed, and as a result, there's maybe over-excitement on German stimulus when you talk to investors. Can you give us an update how you think about it? What are your expectations? And how does that impact the bank?

Yes. Look, the stimulus package came to life earlier this year, and I always like to go back to the very beginning of this year when we didn't have a stimulus package at all, no government actually at that point in time. So quite a lot has happened since beginning of the year. And I think that from the get-go is a very positive thing to look at. Looking a bit at our expectation for the stimulus package and the impact it will have also for the economy in Germany, we are currently looking at a 1.2% GDP growth next year, which admittedly is not the highest. But if you consider the last years, actually, this is a quite big step up now. And a good portion out of this, actually close to 1 percentage point, 0.8 is what we think is going to be fueled by the stimulus package and all the investments and then follow-on investments that we are seeing. So for us, clearly being so ingrained in the German economy via our customers, clearly, it will have an impact. It shall have an impact once these packages actually come to life via actual spending.

And if we go maybe a level down and we now look a little bit at net interest income and how that gets impacted by also the top-down environment, you've given a guidance of EUR 8.4 billion for 2026. You actually increased that at your last investor update. Can you tell us the path to that? Your guidance has been EUR 8.2 billion for this year? And the kind of the environment and the potential of improvement that you see further considering you went on a path of continuous beating that number clearly in terms of expectations?

Yes. Well, we started into the year actually with a target of EUR 7.7 billion, so even lower, and we upgraded that in summer. The reason why we went into the year expecting a number that is apparently now lower than the strong performance we have seen, I think was, first and foremost, coming out of a relatively okay-ish, high-ish interest rate environment in the last years, knowing that we were going into a slight rate cut cycle. So expectation was to, first and foremost, keep the interest income stable. We did this throughout the full year and managed our books quite intensively also via having a stabilization. We have a good portion of the deposit base that we're having invested in, in what we call replication portfolio. So stabilizing longer-term portfolio, which supports the NII, and doing this throughout the year, we saw actually that we are having more stable and structurally sort of consistent output out of these portfolios, which effectively brought us to this upgrade. For this year, we are now expecting EUR 8.2 billion for the year. For next year, as we said, we are upgrading this to EUR 8.4 billion. Reason why we did this at this point in time before we actually guide for the full year in February with all the other line items was that coming out of our strategy, it's clearly already above what we originally anticipated for '26, and in terms of the stability of this portfolio, for us, again, we are seeing this coming in, in a quite stable and strong way. We are on an upward trajectory for net interest income in any case in our strategy towards '28. And we'll see, I think, towards February, what this will also mean for the follow-on years, but it will definitely be supportive.

And is there a possibility that we should be looking at a further update on NII in the full year results for '27-'28?

Well, we've so far not really split out the '27-'28 figures for NII. We have a target for '28 out. I think what I can say is already with the structural changes we made to our book in summer, it became clear that we will have an add-on for the follow-on years, which will carry through also to '28. So I think it's fair to assume that a good portion of the uplift that we've seen throughout the year will also carry stably throughout the following years. And in February, I think we will -- not only for '26 but we will see actually what we can guide for. But in general, it's not wrong to assume that part of this uplift will carry through and basically add on to the full series until '28.

But you're generally comfortable with the consensus that you're seeing, especially for '28, where you have given a guidance, but there's -- the numbers are already well above that from what I can see.

Yes, given what we've seen this year and for next year, I think the direction is the right one. Yes, yes.

And if we unpack NII a little bit more between lending, so asset side, liability side and clearly structural hedge in that context. Can we talk, first of all, about loan growth? Mortgage growth in Germany hasn't really picked up. You mentioned, I think, in the third quarter call, a little bit of an improvement. But corporate client growth has been very strong at 13% year-on-year. So how should we think about the lending picture going forward within your operations?

Yes. Let's start with the mortgage side, which actually was pretty strong in our books, especially in Q3. So as many of you know, we've come out of a phase where, given housing prices, interest rate levels, there was a bit of a depressed mortgage market, but this has been continuously picking up. So in the third quarter, we actually saw a quite healthy front book, close to EUR 3 billion actually, also considerably higher than in Q2. Overall book, back book declined a bit. That is also what we showed in Q3, but that is mostly because we have early termination rights for customers usually in the middle of the year. So there's a technical effect. And then the new mortgages will be drawn upon and then basically roll into the book the next quarter. So from that perspective, also the mortgage side is stable to rather inclining again. I should also say at prevailing rates and margins. So there's no change in the appetite or margin expectation from our end. When it comes to the corporate side, we did actually have a super strong sort of year-on-year 13% growth in the book mostly fueled by our customer business pretty much split half-half into international business, but also German business. And that we see a quite broad range of loan demand coming in. What you will have seen in Q3, particularly, we see a heightened demand from the public sector in Germany, which we interpret as the first signs of the investment packages, the infrastructure packages, which are drawn upon from the public side, if you want so, and hence, the loan demand from that end. And with that, we see really good sort of risk-adjusted returns in terms of margins on this portfolio. But this, I would expect to skip a bit more into the classical corporate book next year once we see the stimulus packages really kicking in. So to your question on how do we see the loan growth continuing, we have a loan growth expectation that is quite strong over the full strategy cycle. Clearly, the growth we've seen over the last year is super healthy. Let's see how that carries on, but especially the corporate book, I expect to come in strongly next year.

And in corporate segment, you guided towards 8% per annum growth. So we are on track.

Yes. Absolutely, yes. We're on track. And as always, with the strategy announcement, I think it's fair to assume that there's always a bit of a structure also when it comes to volume growth. So starting off, especially at a time when the German economy is still a bit sluggish, and where there's a lot of positive momentum now and impulse and also we're getting this feedback from our customers that there is a more sort of forward-looking view, clearly, it helps a lot to start into the strategy cycle with such a strong year of growth, yes.

And can you talk a little bit about the lending margin? You mentioned on the mortgage side, still attractive, both mortgages and on the corporate side. How are mortgage -- how are lending margins behaving as I assume it's a competitive environment out there for banks to participate in that growth?

Yes. Yes, absolutely. Especially, I think on the mortgage side, the German mortgage market is a heavily competed one or competed for. So margins on that end have been stable actually for us. I think I can also say that margins and the front book that we're seeing at the moment is really healthy. So it's not only holding, but rather having slightly positive tune in it. On the corporate side, really depends a bit what part of the book we are looking at. All parts by themselves are stable in terms of margin or slightly positive/attractive at the moment. If we're looking at the distribution of the loans that we have been seeing in terms of growth, given that there's a good portion of public sector in it. So municipalities, but also municipality near business, which is often from a margin perspective, a bit closer to corporates. This is what I meant earlier by good risk-adjusted returns because it also comes at super low risk clearly. But this, I would, again, expect to rather shift into the sort of more margin healthy portion of the book next year. But overall, rather stable and positively tuned margins, despite the competition.

Yes, sounds positive. Yes. And maybe moving from there to the liability side, deposit growth, you had some very successful campaigns of getting deposits in. How should we think about deposit growth in terms of volumes? And also in this context, can you talk about is there a mix shift happening between checking, savings accounts, so to say, or term deposits? And clearly, you've given beta guidance. So if we package that all together, you guided to, I think, 43% beta in the fourth quarter stage. And just wondering how you think -- how you see that developing?

Yes. Yes, then let's start with the activity we've seen and we've been active in ourselves. I think especially beginning of the year was pretty heavily competed for. We saw quite large promotional offers by the competition actually attracting quite a lot of deposit inflow. That was a period of time in Q1, Q2, we didn't want to participate in that market. It also became a bit more subdued towards summer. In summer, we went out with a larger promotional offer ourselves. We collected EUR 8 billion within a few weeks at the conditions we wanted to actually have. So clearly, that's always a bit more expensive than collecting the deposits on a regular basis. But we have quite good behavioral, let's say, data on what customers also do, how sticky these deposits are once the promotional offers run out. So for us, in short, I would say this was a rather regular sort of activity we had in the market, targeted to the amount we wanted to collect within the budget we wanted to spend, and that's probably also it for this year so far. General development also over the next years is clearly an incline. We want to continue growing sort of the deposit base. I think competition has always been high in that space, but that's what we're aiming for.

And in terms of beta, you're still on track.

Yes. On the beta, I think when we went into the year, we were cautious in seeing where would especially this year's development go. On the personal customer side or personal customer deposits, clearly a question of competition. On the corporate customer side, always an interplay also with what is required for them from an economic perspective, depleting the deposits versus taking in loans. But from a beta perspective, we've actually seen very good margin management on our side. You correctly said we are guiding for 43% in Q4. The overall year, we'll be averaging out more towards the 40% range. And then we'll have to see how this trends into next year. So I think Q4 is probably the, I call it, the exit velocity, if you want so, on the personal customer and the corporate customer side, and personal customers will be dominated by whatever competition is out there. Corporates likely stable at this relatively high level, if you want, so mostly because of the current interest rate level altogether.

And what is the risk that considering -- I mean, Germany has excess deposits as a system. But what is the risk that lending picks up, especially in the corporate side, and also on the mortgage side, it starts to come through on a net basis that there could be more customer deposit pressure, so to say, or competition, I should say, to finance that?

Yes, absolutely. I mean I think that's definitely a scenario that could kick in, especially if you consider positively that all of the stimulus will have an effect at some point. So it's not an unlikely scenario. And if you want to, I mean, we're having around EUR 280 billion of deposits altogether collected via corporate customers, personal customers. So we are quite active in the market, and we have a pretty good overview of what's happening and which economic cycle, how do the customers behave, what are the pricing points we have to put out. So from that perspective, you see me rather curious and relaxed to see what's coming in collecting deposits. If the demand is really picking up heavily on the loan side, that's clearly also what we can manage. I mean we have the resources at this point in time, also very conveniently supported by securitization transaction. So in terms of capacity to further grow, I think we are exactly prepared for that in line with our strategy.

And customer behavior on the retail side hasn't changed materially between more term deposits and checking accounts?

Not really. What -- I think what you will always see in a rather rate declining cycle, even at this moment where it's not coming from super high interest rates levels, but we are in a slight decline, so the lower the rates are, let's say, the less selective retail customers are also when it comes to differentiating between current account and term deposits. So there's always a drift towards more term deposits and more attractive offers, the higher the rates are. So this is clearly having a bit of a mark, but no structural shifts we are seeing.

And maybe we finish then on the structural hedge. Structural hedge is EUR 147 billion. You have mentioned in the past that it could go based on your modeling up to roughly EUR 200 billion, in that range. I mean why not move there quicker, considering your deposits are expected to grow as it would help your NII quite significantly?

Yes. I think that's a prudent management of the overall book. The slightly above EUR 200 billion you mentioned, that's technically what we could model from a modeling perspective. So we're looking into all of the deposits that are coming in. We look at the stickiness levels, EUR 208 billion is basically what we can model. What's then coming out of the models in terms of expected depletion rates, drawdown rates, et cetera, is having quite a structure. So the EUR 147 billion which you can expect to likely be adjusted rather upwards a bit with the deposits we're having, but that is basically what we are happy to have also as a bit of a cushion towards what's happening in the market. If there's quick drawdowns, I don't have to unwind the stabilizing portfolio so quickly. So let's call that prudent.

I guess that's a difference between running a bank and running a spreadsheet, so on the analyst side. It's always easy for us to say. If we move to the fee side, you have a guidance of EUR 4.8 billion by '28. So it's about 6% annual growth, but you're already running at 7%.

Yes.

So things look pretty healthy. Could you talk about what is driving that and unpack a little bit the fee side, what should drive it going forward?

Yes. So what we set out in our strategy to '28 was basically a CAGR of 7% on the commission income side. And again, my earlier comments, running or going -- entering into a strategy cycle, I should say it this way, always comes with a bit of a structure. So you have to ramp up and then you sort of roll into the run rate. So having this strong start into the strategy cycle with 7% to date this year already is a really good start, fully fueled by our underlying client business, and that's the positive thing. So we basically see increases in every single product category and customer area. And if I take this apart a bit also in terms of what's coming in the next years, on the personal customer side, I think this is now reaping a bit the fruits also from previous changes in the setup, in the advisory setup, which we triggered years ago, but also which went into last month, completing sort of reshaping our advisory model towards customers, focusing much more also on to value-add products, products for customers with more complex needs when it comes to securities advisory, wealth management, et cetera. So that's fueling it. Pretty prominently this summer, actually, we changed our fee model for current accounts and actually charging the better part of -- actually the full part of our accounts in the main brand now, and contacted 2.5 million customers and actually asked them to please pay up for the accounts going forward. And the return rates actually of accepting this or bringing in further funds to actually make certain thresholds to not pay is coming in quite nicely. So this is all underlying business that is fueling the commission income. And then lastly, on the corporate client side, what we are clearly seeing is, yes, revenue that is coming in, fees, commissions that are coming in, in line with our loan growth. So it's usually connected to actual customer activity plus then, of course, our trade finance and markets business, which also brings in a bit. So in terms of growth in the next years, as this is all linked towards the customer and volume growth we are seeing coming in at the moment, I'm actually very much looking forward to the 7% growth.

Yes. It feels like it's just ramping up, so to say. And in that context, you mentioned clearly lending growth has an impact, et cetera, as well on the fee side. You talked a lot about lending and stimulus impact, et cetera. But on the fee side, is there anywhere for us as analysts think about, okay, how can I translate German stimulus into fee? Should we do it through lending? Or is there other measures that we should look at to get a feeling of what is the potential?

That's an interesting one to fill the spreadsheet. Yes, I mean, first and foremost, looking at the corporate customer side, I mean the logical sequence would be stimulus actually is coming to life. You see additional activity in terms of production, in terms of providing services, takeout of loans, but clearly also increased trade and trade finance business coming out of this. So I would say, on the corporate side, it's not wrong to go via general volume growth and then also seeing how the stimulus really sort of affects GDP going forward. On the personal customer side, I would always say this is really dependent on customer activity, which we're continuously ramping up. But also, I mean, once if we follow that logic, once the economy actually becomes more stable, clearly, this will have a slightly delayed impact, but impact also in every single person's pocket. So ultimately, we would expect that this is coming in. Then another point, probably still a bit on the horizon, but there's also political initiatives at the moment in Germany to rather fuel securities-based investing also for personal pensions in the end, a discussion that I think is long overdue in Germany, but it's at least now gaining speed. So if something like this comes in, I think that is also something to consider for in a few years because this clearly fuels a lot of the investments.

And maybe we then move to net fair value results, which were minus EUR 60 million on the 9-month stage in '25, but you're guiding towards EUR 500 million in '26. And there's been some question, how do we get there. Maybe you can explain what happened and how do we see that delta?

Yes. So there's two ways to go about this. I can come from this year or I can start actually with next, and I'll start with next year. So we have a net fair value guidance of EUR 500 million for next year. And if you disseminate the net fair value line, there's a few components in it. The most important component is our customer-driven business. So usually corporate client side business, which is fueling the net fair value. That is coming in at a fair and stable rate, and this is effectively underpinning this EUR 500 million. What we then have in addition is in a year like this, and this explains a bit the difference to the 9-month result at the moment, net fair value result also has counter positions of interest rate hedges that we had in the book. So clearly, there is a portion that came in this year, which stands partially against net interest income. So you see a bit of a distortion of the underlying sort of base client business. This, I wouldn't expect next year, given the interest rate environment. So that should actually leave that clean, if you want so. And then there's another component, which usually stands against the other income, which is inefficiencies and hedges from an accounting perspective. So there can always be a bit of a noise level around the net fair value. But if you look into next year and if you take out these effects for this, then effectively, next year, the EUR 500 million is the underlying business. Ideally, we see this growing and then potentially a bit of fluctuation against other income from the hedges.

And if we then move towards cost, you guided to 50% cost income by '28. We have a forecast of 57% this year. Should we think about the cost income improvement kind of a linear movement in terms of continuous improvement to get there? And tell us about the drivers that are impacting your cost base?

Yes. So then let's start with the movement. It won't be exactly linear. Our strategy in itself is a growth and transitioning strategy. So you will see that over the years, the aim is not to -- besides diligently managing the cost base, clearly is not to run down the cost base, but it's rather have an incline in business activity and in income. And if you look at the measures that we've taken, we see a slight structure where we will see additional costs or, let's say, costs that run down a bit slower, especially next year, the following year. So for this, we have 57% as a guidance for the cost/income ratio. For next year, it's 56%. And then it will drop off towards 50%. Main reason is that within the strategy, we are transforming a good portion of our staff base from within Germany, especially headquarter, especially operations based into our near-shoring or shoring in-sourcing hubs. And there's a period of time where we want to, a, allow for a handover of tasks, hence, a slightly sort of a delayed decline or stronger decline of the cost as was planned. And then secondly, we want to also facilitate the reduction of head count in Germany in a socially responsible manner, which we fully negotiated and contractually signed off with the workers' council. So hence, you see a bit of a structure. But I think the important thing on the cost side is base costs managed very diligently and staying stable/coming down and then the cost income ratio is fueled by income.

And in the context of cost, clearly, a large proportion is still always with the branches. Should we think about further branch measures in terms of potential reductions?

Yes, you're talking to the CFO now. But on a serious note, we've pretty much transformed the branch setup we've had over the last year significantly. If you consider a few years back, we had 4-digit number of branches in Germany. I think the number of 1,000 branches was hovering around for quite a while. We've reduced this now to 400 branches and transformed the branch setup in itself. So it's not so much the classical branch where a customer comes in and we basically have inbound business. A good portion of these branches are now outbound advisory hubs, which we've positioned so that we are using this much, much more for active customer advisory or outbound calls as well if we need to. So the branch structure has changed quite a lot. At the moment, this is a good mix. But clearly, we are very much looking into exploring also digital channels via our brands. So I think time will tell what size is the right one. At the moment, this is exactly what we need for our advisory setup.

And moving towards asset quality, you have a guidance of 25 basis points by '28. Do you see any major issues on the credit side? It feels like there is not much concern in the market at this point, either on CRE or other areas from your perspective, any...

Yes. Well, I mean, we're very selective in what we have in our book. Let's put it this way, there's areas which we were active in, in very past times that we're also deliberately not active in that much anymore. So our book in itself actually is really stable what we're seeing this year. And we could also demonstrate that in the Q3 numbers is effectively a stable book with no surprises in it. Risk guidance or risk result guidance for this year, we just took down because we expect at the current rates and still pending Q4 and everything that we don't see any extraordinary movements. The interesting discussion clearly is how is the economy in Germany continuing to develop. But again, on that end, I'm rather on the slightly more positive side because I think the signaling and the stimulus that is actually coming in must leave a mark. The investment packages are too large. The current commitment to actually changing also some of the conditions around it are so concrete and this will leave a mark and hence, should hopefully also support the credit book going forward. But on our end, you're absolutely right, we're running very stable also towards '28. Nothing I would have to cautiously warn you on here.

And if you look at capital, which is very healthy, above your guidance, clearly, and you have a payout ratio target or guidance of 100% by '28 continuously. What would trigger a change? I mean what is it on your side that you say, okay, we want to go above that? And secondly, what do you have to illustrate to your regulator in order to get a approval to get to a level of above 100%?

Yes, it's -- I think that's one of the favorite questions the last month. Capital base is strong.

14.7%.

Yes, at the moment. We took it actually up from an original guidance for this year of 14%. So actually, we've come in quite strongly, perfectly in line with how business generally is developing for us. And you saw that in the numbers. So we've basically planned out a path of returning 100% over the next years in line with our strategy to arrive at a target capital ratio of 13.5%, which we, at this point in time, deem the right level to underpin our business and also be able to yield proper returns for our investors. So consider the next years until '28 also as a path towards that target ratio. The discussion with the regulator is, of course, a regular one on this. And clearly, there's different positions that the parties are looking at. I would tend to say that if you look at it from a regulatory perspective, there's always an ambition to keep capital in the system to rather sort of stabilize more than less. There's no benefit in actually encouraging too much of a flush out of capital. And then from our perspective, I think we are very much focused on having the exact right level of capital in order to also have a proper return. So if we were to have a discussion with the regulator to go above the currently agreed levels, then I think that really depends on the current state of, a, the overall system, and then clearly, our own health. But the second I would always assume is then there, otherwise we wouldn't ask. And we have to take that year by year.

And in terms of finishing the -- before we're opening up to the audience, you -- just in terms of your interaction with your main shareholder, maybe you can talk a little bit how is that different from any other investor? How does the interaction work? And in that context, clearly, a potential -- I mean your defense from a potential bid, the way I understand it from the wording is basically, it doesn't make a lot of sense to do that because considering where the numbers don't stack up, a lot of it is related to that in terms of your overall defense at least the way I interpret it. Can you talk about that? First of all, what are the interactions and what is, so to say, your defense mechanism in that sense?

Yes. So in terms of interaction, I think you can consider the interaction being the exact same as we have it with every shareholder that we're having, regular investor relations meetings around the quarterly figures, absolutely professional. So nothing out of the ordinary. That's one thing we don't discuss clearly in these meetings. But apart from that, nothing out of the ordinary. When it comes to the defense, as you call it, I wouldn't put it too much towards only hinting at the spreadsheet, so to say. That's the result. What we're actually focusing on is generating a lot of value with our strategy and implementing that one. And I think that is what we've demonstrated. If you look at the market capitalization, at the share price incline, at the business and the numbers that are coming in, that is, if you want, so not our defense, but this is what we're focusing on, providing and then creating value for our shareholders. And that, in turn, gives us the benefit of having a market capitalization that I think at this point in time, puts a question mark behind value accretion for investors in a potential change of the setup.

We open up for questions. Yes, please. There's a mic on the table, yes.

And there's a growing fashion in Germany for retail deposit collection to be price led and you talked about that yourself. Is there any evidence that there is a growing proportion of the deposit base which is becoming price-sensitive? Or should we think about this as the same part of money, which is price sensitive, but rotating between the banks?

Yes. Thanks, [ Ian ]. Good question. So the activity we have seen this year certainly was interesting to watch because we have seen deposit collection by competitors and also us that were marked by really attractive offers for customers. I can only talk for ourselves. We are doing this because we have a pretty good set of, let's call it, behavioral data on what's happening with these deposits afterwards. So when we are going into the market with attractive rates, it's also to attract the full customer relationship. So the offers that we had out in the market were high, were also partially going beyond ECB deposit rates, but only if you brought your full customer relationship actually to us. So there is a point of not only attracting the deposits but also longer-standing customer relationship. We know that works for some customers; for some, it doesn't. Some are indeed actually very, let's say, fluent in picking the banks they deposit their money with because they are very sensitive to where the rate is, and we don't really see this portion to increase, at least not in our numbers. So there's always a portion of depositors that jump for the next highest offer. But with every single run that we collect deposits on, we have a relatively high sticky quota even once the promotional rate drops off, and we managed to keep a good portion of those customers in. Those that move on, we usually see a similar amount of customers moving on and then coming back. It really depends a bit on where this is going in the next years, clearly. I think the market is growing, but it's also becoming more competitive. So I think we'll have to watch that space. In terms of our competitiveness level, I always like to also highlight that we have a quite large depositor base and also good channels with our two brands in the German market to collect deposits. So we know quite well what's happening at which point in time in the market also regarding competitive offers. And we're watching this, of course. So I think we have to take that quarter by quarter, Ian.

Can you remind me when you do a deposit campaign, price-led, what proportion of those deposits you assume remain with you on the other side of the [indiscernible]?

Yes, we usually don't put that number out. But if I say the better part, then it's literally the better part. So consider that really depending a bit on where we are to be in the upper part of the 100%. So it's not less than half. It's not much more.

Great. Thank you very much, Carsten. Thanks for joining us. And it looks like a very much operational gearing going all in the right direction even beyond, from our perspective, at least the guided numbers here.

Perfect. Thank you very much, Kian. Thank you.

Thank you.