Grenke AG (GLJ) Earnings Call Transcript & Summary

Good morning, and welcome from Baden-Baden, ladies and gentlemen, to our financial year figures 2025. My name is Franziska Randt. I'm the Head of IR Department, and I have the pleasure that today here with me is our CEO, Sebastian Hirsch; and CFO, Martin Paal. Welcome. We will start with the presentations. And right after that, you will have the opportunity to ask questions. Without further ado, I will now hand over the floor to Sebastian.

Thank you, Franziska, and a warm welcome from my side. Thank you, ladies and gentlemen, for joining our earnings call today. Ladies and gentlemen, looking back at 2025, the year was once again shaped by a challenging environment and ongoing geopolitical tensions, and it seems to be persistent. But despite these challenges, we successfully navigated our business through the year. Let me briefly summarize last year's performance step by step. First of all, we are proud to have achieved the goal we set for 2025, even so forecasts were and remain difficult. With group earnings of EUR 71.8 million, we have delivered under tough circumstances. Above all, we increased our profits quarter-after-quarter last year, which I will come back later. That said, we also remain self-critical. We are not there yet, and we know we must do better. We know that we need to increase our return on equity, but 2025 was an important milestone on our path, but we are not at the finish line yet in terms of profitability. Secondly, geopolitical tension, macroeconomic uncertainty and the highest level of corporate insolvencies in 2 decades created a complex environment, which we navigated well. Our loss rate remained at an elevated level of 1.7% compared to the historic average level of 1.5%. But we were able to almost entirely offset this by a significant increase in our operating result before damages. At the same time, we remain confident. Even in a tense macroeconomic and geopolitical environment, we remain firmly in control. It is one of GRENKE's strengths to deal with such situations. Third, a major turning point was the good development of our cost/income ratio. And this is not a one-off event, but rather a reflection of our commitment to increase our profitability by efficiency. It demonstrates that our digitalization program, our strict cost discipline, our process optimization and automation in conjunction with our strategy, with our growth strategy are delivering results. Fourth, with a clear strategy and the right team and a well-defined road map ahead, we are confident in our path forward. With Isabel Tufet joining us as new COO in September, our Executive Board team is now complete. Welcome, Isabel, again. #5, for us, 2025 was also a year in which we manifest important fundamentals and brought critical unresolved issues to a close. So it was particularly important for me that we also delivered the financial purchase of our remaining franchise company and the initiation of the sale of our factoring segment. And finally, we have achieved again a solid growth in the past year. With EUR 3.3 billion, it's technically a new record because we never have achieved sales figures like this before. But the crucial thing is that we have recorded the future income through our contribution margin too and that the portfolio will continue to generate in the coming years with rising income. And that's the foundation for our ultimate goal. We are aiming for 10% return on equity after tax by 2030. And this is a path and not a walk in the park, a path we have chosen and we are pursuing with our strength and determination. Our Compass needle is pointed in that direction to a double-digit return on equity. And again, 2025 shows that we are on the right track. Ladies and gentlemen, this slide reflects the balance sheet substance and the growing income of recent years. You can see how our new business growth translates into our annual figures. Our leasing receivables are growing constantly, and we have surpassed EUR 7 billion last year. This is important since it is expressed in the increase in our operating income to now more than EUR 660 million. And we won't stop here. We continue to set ambitious growth targets because we are convinced belief, especially in uncertain times that leasing is the solution of necessary small ticket investments. for small, medium enterprise, entrepreneurs, doctors and the public sector. But it's more than leasing volume growth and operating income. Our focus and mission are clear: increase our holistic profitability and grow our return on equity to a sustainable double-digit level, as I mentioned. It means specifically, we are aiming for 10% in 2030. To achieve that, we have 3 key levers that are important for steering our business. First, operating income, as shown before. Second, our operating cost; and third, risk and risk management. You may know them already since we introduced and presented this logic last year. Proper capital allocation is equally important because return on equity is not a question of the group perspective. We brought it down to each subsidiary to each unit. And on the top is our ultimate KPI return on equity. So let's move on step by step. Operating income is expanding. We've seen that 2 slides before. This part is driven by volume growth and margin in our business, and we expressed that in our contribution margin, too. And the continued expansion of our leasing business directly drives operating income. But there's a second reason why growth and leasing volume from a strategic point of view is important and a strategic pillar for us. By sending with our customers and partners even in that challenging times, we build trust, reliability and long-term partnerships. And this strategy has a long proven track record in past crisis. And so we can outperform the market and gain market shares. When it comes to our cost structure, we not only feel that we are on the right track, but the figures also prove it. We are now seeing the results of what we have constantly focused in recent years. Income growth should exceed cost growth by a factor of minimum 1.5. With an increase of only 7% year-on-year of our cost against an increase of more than 14% of our income, we have outperformed that goal last year. Now we must do everything we can to ensure that cost/income ratio does not rise again. And at the same day at the same time, lay the foundation for further efficiency gains, not least through digitalization and constant reevaluation of our processes right through controlled self-disruption. Every euro spent must contribute to our return on equity. At first glance, it's not that easy. Therefore, every euro spend must add value in terms of customer benefit or competitive advantages. And if we are unable to determine this, we must also have the courage to consciously decide not to do certain things. We are starting doing this and want to continue it because in addition to digitalization, this mindset is central to success in our small ticket business. Ladies and gentlemen, over the last quarters, we have reported extensively on the topic of risk. And yes, it remains an important factor for us, too. On the one hand, we cannot ignore developments as evidenced by the significant increase in risk provisions. Exactly. But we can also say with conviction that we can handle it exactly. We have the data and the tool to assess the current portfolio sensibly. Above all, however, we can draw the necessary conclusions for the future because 2 facts are decisive. Firstly, yesterday's insolvencies cannot be changed, not even by me, even if I'd like to do. And secondly, the crucial element is to determine whether these developments are systematic and whether the structural changes are taking place. And what does that insight mean for us when our customer, namely a small, medium enterprise submit a leasing request to us today. And this is happening more than 10,000 times a week, a leasing request. And that's a critical point where we can make a difference with data-driven insights. Today, we can reject the request what we would have approved based on yesterday's data and knowledge. And that is what we have done. We have become more selective and cautious when it comes to accepting new business in that environment. However, this also means that in case of doubt, we now accept slightly lower growth rates for new business. With regards to development of our risk provisions, I would like to underline that also the increase of almost 50% looks somewhat steep, but not all of it will end up in real defaults. Martin will tell you more about in detail later. And I would like to make one point clear based on our empirical evidence and my experience. It would be the best and the most stable in principle, if we consistently set aside 1.5% each year as risk provision in good times and bad times. As an entrepreneur with a long-term perspective, this leads to a fair picture, which is also confirmed by our statistics. You can see this level in the dotted line on the right chart. Of course, this is not compatible with IFRS regulations and accounting principles. That is why these fluctuations are also part of the picture for a certain extent. But it is important to take a step back and classify the deviation from the normal level in good times and bad times. And then to keep a cool head in times of both of overperformance and underperformance. And it means today, yes, our loss rate is higher than long-term average of 1.5%, as mentioned and explained. But first, we have seen worse, and we feel confident to be able to steer our business also through these times of uncertainty. But second, the fluctuations are not nearly as severe for us as elsewhere because we have strong safeguards, thanks to our diversification. So adding all 3 components, income cost and risk, we were able to increase our group earnings to roughly EUR 72 million last year. Our return on equity after taxes remained at the same level of 5.2%. Nonetheless, we are back on right course to improve profitability. And what I mean by that, I will demonstrate to you on the next slide. Ladies and gentlemen, challenges are not new over the last couple of years, so to say, 2024 was also such a year. The sharp rise in insolvencies at that time means that our quarterly profits in the second half of the year and even into early '25 were relatively low. You may remember. But here comes an important fact and maybe the most important one for 2025. We have been able to increase our group earnings steadily quarter -- every quarter throughout 2025. And this underscores the fact that we have regained the necessary momentum to increase our profitability. And it proves beyond doubt that we have made it. We initiated and we executed the turnaround in our earnings, thereby laying the foundation for improving our return on equity on the path to the target of 2030. And with that, I would like to hand over to Martin for more details for the last year's figures.

Yes. Thank you, Sebastian, and also a very warm welcome from my side. As Sebastian lined out, 2025 was a challenging but also a successful year for GRENKE. Following our strategic levers, I'd like to start the financial figures for 2025 with our operating income side. Looking at our top line performance for '25, we saw continued solid growth in our leasing new business, reaching EUR 3.3 billion after EUR 3.1 billion in 2024, mainly driven by our top 3 markets, Germany, France and Italy. The increase by 7.8% is a strong signal as we were and are operating in a macroeconomic environment of high uncertainty, volatility and ambiguity, resulting in hesitant investment behavior by businesses. In Germany and France, we saw an overall contraction of the leasing sector. And despite these challenging circumstances, we achieved significant new business growth in these markets and we were thereby able to expand our position. Our third biggest market, Italy, we grew in line with the market development, maintaining our leading position. And as just mentioned, the improvement of our top line performance in 2025 was largely driven by our strong growth in the DACH region of 13.7% or EUR 96 million, of which our home market, Germany made up the lion's share. But also Western Europe and Southern Europe saw solid increases in a continuously challenging environment, growing by 8.5% and 8.9%, respectively. In contrast to these positive developments, our Northern Eastern Europe region experienced a normalization of new businesses coming in some 5% below last year's results. This development is mainly attributed to 2 factors. Firstly, a base effect after very strong growth in the previous year in this region, which was significantly above long-term average. And secondly, the sudden end of subsidies for e-bike leasing in Finland and an adjustment of our reseller network in the U.K., which resulted in a softer new business there. Our future core markets, on the other hand, in the other regions, however, continued on their anticipated steep growth trajectory, increasing new business by 21.2% or EUR 41 million. And driven by a strong performance in the U.S. and Australia, our future core markets developed steadily and according to plan, continuously gaining momentum. After this detailed view of our top-line performance in '25, let's now move on to our operating result before settlement of claims and risk provision. Under the impression of elevated insolvencies in our markets and a high cost/income ratio at the end of '24, we set out to improve our cost efficiency in 2025. Accordingly, we applied strict cost discipline measures and we are vigilant regarding our spending. At the same time, we continued necessary investments into our future, such as into further digitization. These investments, especially into our digital infrastructure are now showing first effects and will continue to add to an improved cost efficiency. At the end of 2025, we can report our measures are working and showing significant effect. In 2025, we grew our operating income by 14.7%, driven equally by higher net interest income from our existing portfolio as well as by improved profits from new and service business, including disposals. In other words, the growing new business of the past years translates increasingly into a solid operating income supported by our most recent new business. Looking at our cost development, we see clearly the effect of our efficiency measures. Our cost base increased by only 7%, mainly driven by higher staff costs remaining significantly below our operating income growth. So consequently, our operating result improved by 26% compared to last year, while our cost/income ratio improved by 4 percentage points to 55.2%. So we are proud to have achieved such significant increase in the operating result before settlement of claims and risk provisions and strongly improving our cost efficiency. Increasing profitability will continue to be our path in 2025 -- sorry, 2026. In 2025, the high level of macroeconomic uncertainty, erupting conflicts and disruptions to global trade continued to impact our customers. Accordingly, insolvencies and defaults remained elevated. And while we saw a stabilization of defaults throughout 2025, they, however, remained on a high level. We took measures to address this development, working closely with our customers to enable them to fulfill their contracts. Still, the impact of these insolvencies and defaults showed in our figures. Our settlements of claims and risk provisions rose, as Sebastian already lined out from EUR 131 million to EUR 196 million in 2025, resulting in a loss rate of 1.7%. Despite this steep increase, risk provisions in Stage 3, which contain our nonperforming loans increased by some 23%. So what I would like to stress, even though our loss rate remains elevated at 1.7% above the long-term average of 1.5% our coverage ratio in Stage 3 remained stable at almost 60% or in other words, 60% of the nonperforming lease receivables were and are already provisioned for. And as mentioned in earnings calls throughout last year, we have already accounted for higher loss rates in our newly settled leasing contracts. Let us now come to our capital allocation, and I understand this is a topic that many of you are eager to hear more about. For that reason, let me start with the most important message right away. Our equity is growing, and we have sufficient headroom for continued growth over the coming years. Consequently, we do not plan a capital increase in the midterm. With an equity ratio of 15.6%, we have continued to improve the use of our existing capital, striving for a more efficient capital allocation. We will continue on our path of retaining roughly 75% of our profits, while paying out 25% in dividend, further expanding our equity base as a foundation for future growth. And given our growth targets and our clear bottom line focus, our current structure provides sufficient headroom for the years to come. Coming from the equity to debt capital, we continued our proven diversified funding mix strategy. Relying on our 4 debt pillars in 2025, senior unsecured made up around 43% of our debt as we issued our next 2 benchmark bonds of each EUR 500 million in May and September 2025 at a 5.25% and 3.875% coupon, respectively. So we view this as a success on many layers since, firstly, it shows the trust of our investors to invest in GRENKE bonds. Secondly, our own credit spread is coming down gradually. And thirdly, and most importantly, we are raising sufficient capital for our ambitious growth targets. Furthermore, I am happy that we successfully launched our first bond of AUD 125 million in August last year, underpinning our strategic ambitions in Australia as a future core market. And the deposit business of GRENKE Bank remained an essential pillar of refinancing for us, covering 31% of our debt. Asset-Backed refinancing such as through ABCPs and global loans made up 17% or roughly EUR 1.2 billion. Here, it's worth mentioning is a new global loan of EUR 200 million by the German state-owned Investment and Development Bank, KfW, which was granted early 2026. And this underlines the strong trust and good reputation GRENKE has regained in recent years. With the proceeds, we support SME customers in Germany with favorable leasing conditions, enabling investments in their businesses. And lastly, our most recent pillar external bank funding accounted for 9% of our refinancing. In this category falls also the EUR 150 million revolving credit facility with our Italian corporation partner, Intesa Sanpaolo, which was signed in January this year. So overall, we are well equipped with our funding mix to finance our growth ambitions and maintain a strong cash position. So ladies and gentlemen, allow me to provide you with a short summary of the financial highlights that I just presented. What is most important, we achieved a modest group earnings growth to roughly EUR 72 million and met our guidance of EUR 71 million to EUR 81 million for 2025. This achievement was driven by a strong increase in operating income, outperforming our cost development and vastly compensating for a higher loss rate. In the volatile macroeconomic circumstances we are operating in, this is a real success. Our return on equity after tax remained stable -- of course, we are not satisfied with that. We still have some way to go, but we are making clear operational progress towards greater profitability. And with that, I give back to Sebastian.

Thank you, Martin, for your remarks. And also thank you to your team to Franziska to giving us that structure. And may you got it the navigator on the right top, pretty impressive to having that structure. Ladies and gentlemen, it's only March, and there have been already so many events that cause a high degree of uncertainty. At this stage, we don't see any immediate impact of the recent strike against Iran or the bombardament in the region on our business. We remain in close contact with our colleagues in Dubai. Most importantly, all our employees are safe and for the time being, our local operations continue without major disruption. However, the extent to which ongoing conflicts such as issues in Iran or Ukraine may affect supply chains and consequently, economic growth in our key markets, Europe cannot yet be fully assessed. We will continue to monitor developments closely as the situation evolves. Also, we can neither control nor influence these developments. We will continue to focus on our business and how we can steer through it successfully. Regardless of the terrible wars, and I personally pray fervently for peace in the world. But also in peace, one thing will remain. The world is changing. Technology is changing faster and faster. Competitiveness for regions, countries, companies as well as small, medium enterprises are decisive. There's a need to invest and leasing is one part of the solution. Last year, 324,000 investments became true because of our partners and us with leasing. This is a way we will continue. And we are aware of, by the way, we are part of a changing world and need to disrupt ourselves in technology, processes, not only our customers' world is changing. To summarize the outlook for '26, it's driving on site. And that has nothing to do with caution, but with common sense. This also includes the fact that we issued our first benchmark bond in '26 a few weeks ago, as Martin mentioned, with foresight in order to secure liquidity for our new business, but also with the experience gained in the recent years of actively exploiting relatively core market -- capital market windows. Even if we accept that the -- that the excess liquidity will probably cost us a small single-digit million amount in additional interest expenses over the course of the year. One thing is certain. This decision has already proven to be the right one and has also been incorporated into our forecast. For 2026, we aim to reach a group earnings between EUR 74 million and EUR 86 million and the leasing new business growth of between EUR 3.4 billion to EUR 3.6 billion. As a basis for these targets, we assumed a range in our loss ratio between 1.6% and 1.7% and a cost/income ratio of 55%. We will continue our profitable growth path, utilizing our strength and expanding globally. Ladies and gentlemen, now it is important to drive on site, as I mentioned, but it's only one part of the metal. It's at least as important to be clear in the long-term goal. Our focus remains clear. As I mentioned, we are aiming for 10% return on equity for 2030, and we want to achieve a double-digit return on equity on a sustainable and regular basis. And this means that we must increase our return on equity, our levers. We must increase our return on equity 1 percentage point every year. Yes, this will be a challenge, but a challenge I am convinced and confident we will master. We continue to focus all our efforts on our bottom line profitability, namely our group earnings. To achieve this, we continue to review and optimize our processes, further digitize, where possible and make sure to use the potential of new technologies such as AI. Equally important to us is the continuous growth of our leasing portfolio globally. Yet we will not grow at the expense of a higher risk profile. We are and we will be selective in our approach regarding markets, customers and margins. But we will also take market opportunities. And at the same time, we want to use our existing capital base more efficiently. And allow me to make clear what Martin mentioned, it's very clear for us that we do not need any additional equity in the midterm to finance our growth ambitions. Our focus is to expand return on equity and with retained earnings building the capital foundation for growth. Thank you very much.

Thank you, Sebastian. Thank you, Martin, for your presentation. Ladies and gentlemen, we will now enter into the Q&A session. [Operator Instructions] So first one, Marius Fuhrberg from Berenberg.

Actually, a couple of them with regards to the guidance. So for 2026, you basically guide for a flat cost/income ratio, considering that your top line will probably grow on the back of expiring lower volumes automatically basically. What exactly is driving the cost line accordingly so that you expect flattish cost-income ratio instead of a further improvement? The second question is regarding your new business guidance. You mentioned that you will not -- or that you deliberately sometimes do not accept new business in order to keep your portfolio clean. But have you considered a more dynamic pricing instead of declining requests and accepting lower growth rates? So because when you price higher, the DP2 basically should remain unchanged. And then a last question from my side is the franchises -- sorry if I missed that, but did you mention that you bought back the last franchises. So for the P&L, should we expect no minorities going forward?

So I would like to start maybe with the new business guidance. You're absolutely right. You have always both in as possible you can drive us to your business with pricing with the conditions. And at the end, it will express in your contribution margin, too. On the other hand, you can also say, okay, no, and we don't do the business. We would like to care for the overall risk portfolio, for the overall risk mix at that time. And so as I mentioned, we do both. And we have also take care that pricing is let's say, you have to be very careful with pricing because we would like to have good risk portfolio. So we would like to have the very good rating, so to say, and they are not willing to pay the highest price and the highest risk premium. And we will avoid, let's say, worse business. And then pricing could be also dangerous and then you're running in an adverse selection and that we would not like to do. So it's not only about pricing, it's more about a clear risk assessment, and we would like to keep our cost sorry, our contribution margin more or less stable over the group average. I think Martin will say something about the cost/income ratio, made one point there. We have one impact which will be part of our P&L that year, the last double cost in terms of our digitalization program moving into the cloud on the one hand and having no physical data center on the other hand, and that will run off per end of that year. There's a double impact we have that year in our thing. So the cost of cloud and at the same time, the, let's say, old cost depreciation of our data center, and that will be not the case in '27 and in the ongoing years. And the other things, I think you will go for it.

Yes. Thank you, Sebastian. I just follow-up on your question on the cost/income ratio. Sebastian already mentioned the cost side. It is also driven by FTE growth where we are really careful on how much FTEs we will add to our current FTEs, but this will also be part of the cost growth. The other side is the income side. And if you had look at our P&L in 2025, you saw, for example, a large part of gains and losses, especially gains from disposals, which we do not expect at that range going forward. So this will then lead to a lower growth rate in terms of the income side. And taking those together, we will end up with this cost/income ratio for 2026 with a guidance of around 55%. Your question on franchiser, yes, you are right. We have bought the last franchiser with one caveat. There's one minority stake of our franchise in the U.S. of the former U.S. franchise, which is near to be closed, but that doesn't have such impact. And then from the franchiser side, the minorities will leave, so to speak, our balance sheet. However, since last year, we have new minorities, namely the 17% stake of Intesa Sanpaolo in our Italian company, which will be going forward, have some effect on the equity side of the balance sheet in terms of minorities and also when it comes to the income side or the result of noncontrolling interest -- noncontrolling minorities here.

Let me make one point here in the U.S., it's Managing Director, there's no institutional investors or something like that involved in the franchise company.

Okay. So if there are no follow-up questions, we have the next person in line, Roland Pfäender from ODDO, please.

Some questions from my side. I would like to come back to operating cost growth. Looking at your staff costs, I think they increased close to 9% more than new leasing business growth. So midterm leasing -- midpoint leasing growth, I think it's 6% for the current year. So what would we need to expect for staff cost growth? Is there any chance that it's 5% or lower? So what's your planning on this number? I think it's an important point. Second, you touched on AI disruption. Did you pencil in any disruptive effects on small and medium companies going insolvent the next some years out of this movement? Or is it not yet into your figures? Or what are your expectations here? And the third question on your equity ratio. Could you maybe mention the buffer you still have regarding the level your rating agencies are requiring?

Yes. Mr. Pfäender. Let me start right away with your first question on the operating cost side regarding staff. Yes, what I can say is that we plan for staff cost of not double digits. So we really expect a single-digit growth. I would say something between 5% and 10% to really land at the end below 5% is, from my point of view, too optimistic from today's view, but somewhere single digit, but between 5% and 10% would be worth a planning figure. On your last question on the equity -- on the regulatory equity ratios, Well, we have last year had some transactions, especially the Intesa transaction that I just mentioned, other smaller transaction, which put a lot of goodwill on our balance sheet. And that doesn't affect our balance sheet equity ratio, but at the end, the regulatory capital ratios, which has to be deducted from this technical point of view. And that was one reason or the most important reason why our regulatory capital ratios have come down to 15.2% currently. For what is regulatory really required, we have around 150 basis points headroom, and we feel pretty comfortable with that. We are using all optimization figures from our data quality to always make sure that we have enough headroom and stay to have enough headroom on our regulatory capital ratios.

Yes. Thank you, Martin, and thank you for your question. And may to AI, I believe in that AI is more an opportunity also for small, medium enterprise and especially for the small ones, maybe to deal better with all the regulations we have to fulfill, especially in Europe, maybe to burning down bureaucracy. Internally, we call it, don't run your bureau crazy and AI could be very helpful. And especially for small, medium enterprises and the small companies, it's not that easy to find employees at the right time -- at the right time, at a right place. And therefore, AI could be very, very helpful. But of course, there would be a disruption and a huge disruption. But overall, I see more opportunities as it was always when a technology disruption was pretty strong in the past.

So we have the next question in our audio line from Mr. Lukesch from Kepler Cheuvreux.

Three questions, if I may. One on costs. I realize that the selling and admin costs were down 2% quarter-on-quarter, and that compares to a kind of seasonal increase of 10% to 25% in Q4 over the last 4 years. So I was wondering like what was driving this? You mentioned some efficiency gains, but it would be great if we have a bit more detail on Q4, especially and also how this then evolves in '26. On the capital side, maybe 2 follow-ups. I didn't fully grab the comment on the minorities with Intesa. So maybe you can highlight again what is changing for '26 compared to '25 minorities? And in terms of the regulatory buffer, you just mentioned 150 basis points based on a 15.2% equity ratio. Could you please also here like elaborate a bit more what was requested by the regulator, why you think 150 basis point buffer to which level is sufficient -- because thinking in bank terms, we usually see more reference to the SREP ratio, the core Tier 1 ratio, where we usually see 250 basis points plus as a buffer taken by management. And then on the loss rates, I was wondering, you mentioned the 1.6% to 1.7% after having reported 1.7%, you're highlighting the high defaults, you're highlighting the uncertainty. So what makes you believe that this number goes down this year? And maybe you can also give us a split about the regional trends that you're expecting, you say you factored in a kind of 1.5% normalized cost rate. I think that is potentially also for the CM2 margin calculation. How do you think that this will evolve? And yes, with a 60% coverage ratio, I was just wondering like how regulator is looking at that because I remember you saying that in general, it's not so easy to collect the residual value of defaulted assets.

I would like to start and may -- or I'm sure that Martin will add some more details. At first, quite easy answer for the first question regarding to the cost in Q4. The effort for selling, especially for selling is the highest one in Q4. And therefore, you will always see a bit more cost linked to that. The new business is very strong in Q4. And also in Q4, we are laying the foundation for the next year in building relationships with new dealers, with existing dealers and so on. So there's something like a correlation that you have always to keep in mind, especially when you look to the selling cost. And regarding to the loss rate, the loss rate is a tricky thing, as I mentioned in my speech, a loss rate of 1.6% or 1.7% means at the end of the day, with the rising volume we have an increase of bad debts of nonperforming loans of 10% to 15% at the end of the day, means the decrease in loss rate, it looks like a decrease in loss rate means not a decrease in new defaults because we're expecting more or less the same level of defaults in comparison to last year, but we are not expecting an increase as we saw last year and in the second half of the year in '24 compared to the previous years. So compared to last year, it's more or less a slower increase. But overall, it's an increase. And that means at the end of the day that the loss rate looks stable. And Martin mentioned it in the chart, and that is very important. You have always to look in the balance sheet. So what is the level of risk provisioning overall and what is the difference between risk provisioning last year, this year and the year to come. And the difference is expressed in our P&L, and this difference divided through the leasing volume is our loss rate. So it looks stable. But overall, we are expecting the same level, more or less the same level as we saw in the last year. And also from a region perspective, the assumption is more or less the same over the region. So we expect that South Europe and also France, as it was expressed by Martin in this chart will be nearly on the same level.