Grenke AG (0R97.IL) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Grenke AG's new business update of the first quarter of 2023. My name is [ Milena Hooseman ], I'm part of the Investor Relations team.

Today, I'm taking the opportunity to ask our CEO and Interim CFO, Dr. Sebastian Hirsch a few questions. Welcome, Dr. Hirsch.

Thank you. And also a warm welcome from my side.

Dr. Hirsch, the new business figures show Grenke has had a good start to the new year with the first quarter. What were the driving factors behind this?

Yes. The driving factor behind this was at the end of the day, the great performance of all of our employees across the world. So we did a very good job. We took the right action with ending of last year going forward in migration, our condition on the one hand, and we accelerated our new business growth just 1 year ago, and that is now the speed we would like to have, we need to fulfill our guidance and to fulfill our sales approach. And at the end of the day, there's no specific region or no specific country I can point out. So across regions, across sectors and across object categories, a very good development in the first quarter of 2023.

In terms of profitability, Grenke was able to maintain the level of the previous year's quarter. How do you rate this development?

Yes. In more detail, we didn't maintain. So we are back on the level we were in Q1 last quarter. During the last year, the margin was down and dropped because of the interest rates. And we are now back on a level as we were before the rates' drastic hikes. And that is a very good performance, and it proves that we have the right management to measure our expected losses because risk is part of our CM2 but also our opportunities, our installments, including funding costs. So it's proven now that we are able to pass things through higher funding costs into our business, as you mentioned, over the last year, and that's a very good news.

The markets are volatile and also times are very uncertain. How do you assess the current environment for Grenke.

Yes. And on the one hand, it's a bit difficult. So we have the capital markets on the one hand, it's very volatile. And so funding via capital market at the moment for us is not that easy. On the other hand, with our good funding mix, we built up over the last years, we are very satisfied. So we can achieve our liquidity needs for our new business with other sources, for example, Grenke Bank, the deposit business is developing very well over the last quarters and also over the last weeks. And that is part of our success, part of our volume, achieving that in an environment like this. On the other hand, we see an unbroken demand because, of course, the market is a bit nervous. Banking -- banks are more conservative, giving loans to small, medium enterprises, small medium enterprises taking care for their own cash. You will get also interest rates on deposits. It was different a year ago. So they are not willing to take liquidity and invest and that is opening opportunities for us. The most important thing for us is to having the liquidity on the one hand to doing our business, to taking those opportunities and to being careful in the right level between risk, risk appetite on the one hand and our conditions to having the right risk assessment. And we have a proven risk assessment with data, with experience since decades, and that's key at the moment to going forward with our business.

Thank you, Dr. Hirsch, for your comments. Ladies and gentlemen, this concludes the new business update for Grenke for the first quarter of 2023. Thank you for your interest. We look forward to you tuning in again next time. Until then, we wish you the very best.