Hypoport SE (HYQ) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Webcast Results Full Year 2022 of Hypoport SE. At our customers request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions via the telephone lines. I now hand you over to Ronald Slabke, who will lead you through the conference. Please go ahead.

Yes. Welcome from my side as well. We are looking back at a full year 2022 [indiscernible]. And as usually, I will go with you for market environment and the numbers of the segments. I will focus today a little bit more on the market environment because I feel the need to explain more what happened actually and especially what it means when we're looking forward in the near-term and long-term future. And we are [indiscernible] talking about the German housing market. Okay. But you are aware of this, that Hypoport SE is present in three industries here in Germany, Credit, Real Estate and Insurance. You are aware of this that Hypoport is a network of double-digit numbers of subsidiaries in the industries digitalizing them. But with the focus still in -- or let's say, heavy exposure to the German mortgage market. So let's go to the German mortgage market. What actually happened with what influenced the year 2022 [indiscernible]. So when you want to understand the German housing market and the German mortgage market, we need to look back more than a decade in the time before 2011, where this market was best described as stable. We had a low number of units finished because of a stable base of inhabitant. Actually, we expect it to shrink in Germany from a number of people living here, households as well. Rents were stable, more or less growing with inflation rate, real estate prices were stable, more or less growing with inflation rate. Mortgage volume was stable, something around EUR 50 billion per quarter, plus/minus EUR 5 billion. It was a pretty boring market when I entered this market more than 20 years ago, and it stayed like this until 2011. So we -- actually, what comes from this time is a heavy regulation of new constructions and [indiscernible] market. New constructions because we expect it to just focus on modernization and maybe already a little bit energy efficiency at this time. So we wanted to increase the density of our cities, not really building new. And when you see Germany, we never have the intention to in the last 20 years to build a lot of suburbans or something like this, things that you know from [indiscernible] markets. So we wanted to increase the density of our cities. And in the renting market, because of the huge stability, be regulated it heavily to make sure that, let's say, the landlord and rentees are fine with a stable situation. So what changed in 2011 was the -- a bit of the movement within the European Union, so an integrated labor market. And because of the lack of labor of a certain level of skills here in Germany, since 2011, Germany sees a net inflow of people, hundred thousands every year, migrating to Germany, net and increasing the number of inhabitants in Germany. So from a more or less stable to shrinking economy, Germany turned to grow. In the first couple of years, we had enough of vacant space in especially the metropolitan areas, which was being occupied, some vacancies were reduced and slowly rents and real estate prices started to climb, especially the prices faster than the rents for a long period of time, you can say, until 2021 because of declining interest rates as well. During this time, the prices in average doubled in Germany, while our mortgage volume in the market just grew from EUR 50 billion or from around EUR 50 billion to around EUR 70 billion. The reason for this underperformance of the mortgage market is that not more equity related to it, but [indiscernible], especially German households missed this opportunity over a period of a decade, and there are studies that show that more than 1 million people that you would have expected to buy when you see who bought before 2011, didn't buy after 2011. So we had the declining homeownership ratio in Germany during a period of low interest rates because Germans didn't trust in this price increases which they saw in this decade. And yes, since 2015, institutions like Bundesbank warned that prices are inflated and kept families from switching from renting market to the homeownership market. From today's perspective, a huge disaster for our society. Okay. So just to understand, the German mortgage market was not in the booming state until 2021. It was just a slow growth, thanks to the huge demand for housing here in Germany. So now we are reaching the year 2022. And with this, from the beginning of the year, a high level of -- an increasing level of inflation. As the market expected, ECB [indiscernible] policy, they stopped buying government bonds and later started to increase the short-term interest rates. So [indiscernible] a sharp increase in long-term interest rates. You can say from a mortgage perspective [indiscernible] we rose from roughly 1% and below interest rate for a 10-year mortgage to close to 4% in the late summer of last year. So 300 basis points up in interest rates. This leaded in the beginning of the year to a spike in mortgage volume. In the first quarter, we closed more than EUR 80 billion in mortgages, a new record high for Germany because lots of people closed existing financing projects for building homes, buying homes or refinanced mortgages [indiscernible] the next couple of months or years. In the second quarter, we saw a normalization of this volume. And for us, surprising, or for everyone surprising, you can say, after the summer, people didn't come back and the mortgage volume [indiscernible] mortgage volume in the market tanked to a level unseen before. Today, it's easy to explain why this happened because it never happened before, we were all surprised. Core reason is that [indiscernible] Germans acquire home or plan to build a home because of a trigger event. I will come back to this later. These trigger events just occur and normally take a couple of months for a German family after a trigger event to close a deal for a home ownership. During the year 2022, we saw in the beginning because of the sharp rise of interest rate that people were -- had difficulties to adjust the reality to their dream and everyone starts in this process with an unfulfillable [indiscernible] dream of a home. But because of the sharp rise of interest rates in the first half of the year, people couldn't catch up fast enough with the rising costs and couldn't [indiscernible] as fast as they should have done this. And in the second half of the year, people saw that real estate prices were trickling down, something you could read all the time in newspapers. So the hope of better deals of being able to afford your dream state and interest rate more or less stayed stable on a certain level since summer last year in the last 8 months, you can say the 10-year interest rate is pretty in the same range all the time. So people in the second half of the year waited for the opportunity to buy something cheaper. And we saw declining prices by roughly 15% over the time on average. So the hope to be able to acquire something, which is close to your dream [indiscernible]. And with this, we ended the year 2022. And we communicated this already that especially in the last quarter, we saw that we reached a new baseline, you can say, a low level but a stable level [indiscernible] we looked on the 3 months at the end of the year. So for now, in this environment, Hypoport performed and -- let's look at the details of the, let's say, 3 product areas of the mortgage market, how they developed [indiscernible] slightly better. And then I will come to the results [indiscernible] in this environment. So the sharpest decline in the -- during 2022, we saw in new constructions. You can say that at the end of the year, roughly only 1/4 of the volume was left from previous -- compared to previous year. So the building included because of high construction prices on one side and this sharp increase in the cost of the interest rate side. And no hope of declining prices short term to be fair. So nobody -- let's say, nobody [indiscernible]. Only 35% roughly of the people still find something to build something in the near-term future. This is no surprise in the end. The highest impact had a decline in purchase, so existing homes to be acquired by someone looking for a new apartment, roughly 50% down from the peak, 30%, 40% down from previous year. Here you have -- here you see this mismatch between what I'm able to afford and what is the current price level and this just slowly declining prices of properties, it doesn't match still. It would have to decline roughly 1/3 to meet the affordability that people had a year ago. A little bit surprising for us, the decline in refinancing. Yes, at the beginning of the year, we saw a peak outside of the typical renewing volume because people really use this short-term interest rates, which were sharp going up to refinance already future mortgages more than they usually do, but it stayed on a pretty low level to the end of the year. And slowly, we see that people are waiting pretty long before they really refinance them something so they postponed this decision as long as possible, hoping that the interest rates will come down. And as well, a little bit surprising, modernization. So energy efficiency, decarbonization is on a pretty low level in the second half of 2022, even when there is more and more political pressure to do this. And even when there are some incentives and subsidies to do it, but people hesitate to invest in their properties, something which is not in line with the general agenda that we see right now. So this is the development in this, let's say, 4 segments of the market for core segment of the market. And now we get to the area of how Hypoport segments performed. We start this usually with the Credit platform [indiscernible] mortgage business, but as well, there's the personal loan business on EUROPACE. And besides EUROPACE, there's [indiscernible] capital in this segment with the business in corporate loans. In the mortgage business, EUROPACE lost 8% of its transaction volume. We were close to EUR 100 billion a year ago, ended up EUR 90 billion of mortgages and the Building Society segment product last year. This looks like that we just went with the market because market was down roughly 9% as well. Be aware that Bundesbank, the market reference of Bundesbank is these are delayed in numbers and delayed in figures, they need to be already in the balance sheets of the banks. So they saw this decline a couple of months after we saw the decline in the transaction volume already. So while we saw a stabilization at the end of the year, Bundesbank is still going down, especially when you see the January numbers. So with this in mind, we are absolutely certain that we gained market share last year, double digit. And one reference point which we have Interhyp, the largest German mortgage broker, who reported its numbers and was down 15% last year based on volume. And this 15% is in our perspective, still a market share gain because Interhyp usually, as we gain market share, so we expect the market in reality to be down roughly 20% compared to Interhyp and our numbers. Okay. This said, even in this special environment, we see a market share gain, and we see this in all 4 segments of the market, pretty visible in the cooperative banking area, plus of 3% in the volume still. So we don't know how much the cooperative banking sector lost in market share or in volume last year, but we can expect an outperformance of minimum 25% of this number. A little bit more difficult with the savings banks, minus 7%. What we see and feel in the market is that they lost market share in 2022. So they underperformed the market. And when the market [indiscernible], they may have ended up with minus 25%, minus 30%. So in relative, we gained market shares in this group and about this, we are certain. Private banks were pretty stable from the market share last year. We were slightly growing. So everything in line [indiscernible] in the first half of the year, lost some market share because in the time of lots of volume banks prioritized in their credit decision process, their own branches. And mortgage brokers lost some market share. In the second half of the year in this tough market environment, branch networks of banks heavily underperformed in the mortgage brokers. So even if the mortgage brokers lost significant in volume, bank branches lost much more. We see this on the EUROPACE platform as well. There's a difference of roughly 20% in performance between bank branches and brokers using EUROPACE. And this is just an indication how heavily traditional operated bank branches we hit, which are not even users of EUROPACE. So from a EUROPACE perspective, the good news is that our stronghold in the mortgage progress in this new end market environment of higher interest rates and consumers who need to compare a lot and find the best deal are growing and expanding their market share because with this, there is a natural way for EUROPACE to grow besides the fact that EUROPACE will keep gaining market share in cooperative and savings banks as well. Next product area, personal loan business, plus 99% in a more or less stable market environment. Our focus on B2B and you have a white-label personal loan business for banks and advisers is paying back. It's more needed to have [indiscernible] when you're operating in this competitive market environment where consumers tend to compare as well, find the best deal online. And if you want to be competitive in this, you need to have a traditional way to access consumers, you need your pace as well. Nice development last year is the rollout of GENOFLEX in the cooperative banking sector. So besides the private banks, now the next group is adapting to a more open approach for their client base. And with the successful initial launch last year, we expect a further growth here in 2023. The last product area in the Credit platform is corporate loans and financial advising, especially regarding subsidies here in Germany, still under the old government, we saw great subsidy programs for German Mittelstand, especially climate-related and energy efficiency-related. This leads to a lot of business for REM Capital at the second half of 2021 and first half of 2022. The new government is now in place for almost 15 months. Still, there are no new subsidy programs, everything what they bought up in this first year of their being responsible for these areas still, let's say, small budget we expect over the period of -- until the next voting [indiscernible] due in now 3.5 years that they need to live up to their expectations and the Ministry for Business is run by the [indiscernible] party. So we expect a sharp change in the next 3 years. But for now and for the second half of 2022, the attractiveness of the government-sponsored program was low. And so was the new project volume of REM Capital it's not an unusual level for REM Capital, but we are for now pretty far away from their extremely high and attractive environment, which we saw a year ago. So in total for the Credit platform, it was an -- you can -- it may look like a stable year. So after record first half year, we lost in a year-over-year comparison in the second half of the year significant in volume because of the market environment, especially in the mortgage market, but as well because of the special situation in the small and medium enterprise financing build world. So you could say it was a tough year and looking back, we had to adjust our structures. We had to cut down on our workforce in the credit platform as well. But already mentioned here, we kept all innovative projects live going forward. So especially around the mortgage world with our heavy investments in consumer-facing technology, automated advice processes and automated credit decision processes, we keep investing there because we see this as a core driver for future market share gains and margin expansion in the EUROPACE World. Next segment, [indiscernible] Private Clients. As you know, [indiscernible] system is in the core mortgage brokerage business as well. Dr. Klein lost 7% in this market environment. So gained market share as well, outperformed Interhyp, the closest comparable -- closest competitor by 8%, which is great. So a great performance of Dr. Klein in this direct competition and especially in the second half of the year, with this tough market environment, we see that our decentralized structures of [indiscernible] in the local communities performs better than what bank branches can do in this business. So out of this crisis, mortgage brokers will leave as winners in every local business plus the online world is already heavily dominated by them and consumers, which are more attracted to information right now, consider for a much longer time, what they are going to do are more often in touch with mortgage brokers than they were before this crisis environment. Unfortunately, for the first time in over a decade, lost a number of advisers. Our franchisees are smart as well. They see that they have [indiscernible] advice on, so they reduced their workforce. They keep the better converting advisers, but especially advisers at a weak performance had to leave the franchise system. And so we lost 40 of them. This -- it's a pity because it was hard to build it up. On the other side, this resizing is necessary in the core market environment. And I'm sure we will be able to regain this as soon as the number of leads is going up again at our franchisees, will react fast at this moment as well. From a financial perspective, it was not a record year for Dr. Klein as well [indiscernible] for a long period, but still, Dr. Klein performed all in all pretty well in this situation, stayed pretty profitable over the whole year and even at the end of the year and the most toughest situation of the market, which we saw by now, was profit and cash flow positive and made a good business. Okay. Next segment, Real Estate. You're aware of this that we split the market in 3 groups. We have a home ownership market, which is shrinking, as I say, but still something around 20 million units, 40% to 45% market share here in Germany, which is our core focus with the whole EUROPACE mortgage business, Dr. Klein business [indiscernible]. Besides this, is the renting market, and you can say there are 2 types of renting market, the housing companies, typically municipal-owned or cooperative-owned, so social housing with roughly 6 million units. Another target group that we serve under [indiscernible] Dr. Klein -- they are, you can say, stable. They are -- let's say -- I will talk about this in a moment. Let me talk about the financing platform. And in between, you have a group of smaller landlords, particularly private, which bought renting apartments for their pension or do this a little bit more professional. This is an area of business with 60 million units, which we are not really addressing. And from today's perspective, I'm pretty happy about this because this is a market which is under pressure because of regulation. And looking forward, I expect this market to shrink in favor of the homeownership market. But let's say, first, 2022, how we performed. Let's look first on the homeownership market where we use our strong position in the mortgage market with slowly every third mortgage going for EUROPACE here in the market, to use this strength, to expand the valuation worked as well in 2022. We increased our market share in valuation to roughly 11%. So in the value chain to go [indiscernible] the other direction in front of you, it's more difficult that we lost market share there. The reason here is that our core target group, the real estate agent of banks lost heavily market share because let's put it mildly, when you need to sell a home really when selling homes is your core competence, you can't just sit in the branch of a bank. You need to be more active [indiscernible] beginning of the year [indiscernible] you just had to manage the process. But since the second quarter, you really need to sell something and selling is not a stronghold of real estate agents of banks. And second, even with our support, they are still far behind in digitalization and online presence and people are much more intensive research in looking around and other agent groups are more effective at this. And we see as well a growing C2C market here in Germany, which the banks still don't address properly. So how does the different units performed in this in detail. So [indiscernible] on the transaction side and the real estate broker side grew. So we could add additional clients, especially in the competitive banking sector, where market has still a huge growth potential. But at the same moment because of mergers between savings banks or between cooperative banks, the gross number declined. In total, their transaction volume declined by 28%. Market was down, no figures out right now, but our expectation, 15% to 20% and they lost 28%. And we could gain revenue because of additional services on the platform and the very successful FIO business in the managing system for the renting market, so ERP system for homeowners grew from a small basis, but it's getting slowly significant here in this number. Let's say, struggling environment, strong declines, but we were growing and -- but have to invest substantially in this business to gain traction here. Talking about gaining traction, Value AG with a strong link to our other mortgage businesses could gain additional clients. So more and more banks use more and more services of Value AG and the number of valuations went up. So the number of involvements in the value chain of Value AG increased with this, but it's -- let's say, the Value AG was in 2022, not affected by the total market environment, most of the time, we had difficulties to scale our business with the amount of new clients that we were onboarding and deliver the execution resources for this. And we're hit heavily [indiscernible] in the second quarter [indiscernible] because of a rollback of all Corona-linked [indiscernible] for the banks. This surprised us the necessary adjustment in our resources to be able to offline again, do the valuation and inspections costed us a lot of money and a lot of [indiscernible]. In the third quarter, loan was EUR 3 million. And in the fourth quarter, it was another substantial amount added to this. And [indiscernible] all just to hold back to now this video inspections allowed again at the end of the year, but they put a traveling issue that the LTV [indiscernible] inspect the property remotely. So still, it's not that the digitalization efficiencies coming back fast. So with this very volatile regulatory environment, Value AG lost a substantial amount of money, even without this $2 billion market around, this was a very intensive year for Value AG and fully unnecessary in this moment. Okay. Third product area, housing associations. So I said already it's a stable environment. So especially from the number of units you can say they don't change, the number of partners they own and manage. Recently, they started to build, you could say, in 2022, this stopped -- so there the number of new social houses financed dropped sharply here in Germany because of the interest rate rise in combination with too high regulation of building and renting housing. So the whole real estate industry and especially the housing associations are in some kind of strike. They don't finance anymore, they don't plan to build anything until the regulatory environment has changed. We could -- in this really tough environment, outperform the market or take heavily market share. We found the things that had to be financed still, especially in the area of modernization, some acquired properties when the price was okay. And we could even increase in this environment in our mortgage volume on the financing platform for housing associations by 2% and our revenue out of this by 25%. So a very successful year for this unit. It will be challenging in 2023 if the regulatory environment is not changing. Overall, for the segment, a year of growth, plus 12%, which is fine, but the heavy investments, especially Value AG costed us too much money in 2022. And this [indiscernible] the whole segment is not fully affected by the market environment, but we focus especially in this area, our approach to reduce costs and find a new balance between investments and future growth. Well, last segment, Insurance. And let's say, we entered insurance already 7 years ago with the goal to be a little bit less dependent on the lending market and especially the mortgage market. Unfortunately, still we couldn't go to a size where the stability of the insurance industry, the EUR 3 million in the fourth quarter another substantial amount added to this gives stability to [indiscernible] in general. But now in the current environment in this personal loan business and the [indiscernible] mortgage business, especially we can say that, thanks that the insurance industry is just a stable market environment, small incremental growth in premiums and not affected by recession, inflation or our other core macroeconomic events that we see right now. We have 3 areas of digitalization product areas where we digitalize the personal insurance part, the Smart InsurTech, the employer linked pension market with ePension and the industrial insurance market [indiscernible]. All 3 are relevant markets here in Germany. In all 3, we have small market shares for now with a different growth speed, you can say. In the private insurance area, the Smart InsurTech, we are still in the process of migrating existing clients, which we acquired with existing on-premise solutions to a centralized platform, 10% of migration in the last year, additional [indiscernible] of volume in the last year is below expectation. We had heavy investments in the last 5 years in this area to speed up this process of migration, we were not successful to speed it up. So as -- and because of they need to readjust our investment strategy for the group in general, we reduced our investments and we don't try the additional investments anymore to speed this process up and we don't expect it to slow it down, to be honest, for the upcoming years. The validation rate increased to 30%. So our links -- our interfaces with insurer increase their relevance for the volume. So for the first time, you can say more than EUR 1 billion in the platform is synced automatically that the information in the databases of the insurance companies. So for every additional service, this is relevant as we have this quality of information of data in a joint platform, but still it's a long way to go to finish the migration and finish the integration with the insurance companies here. Yes, it will be -- it will stay a growth path. I'm sure about this, just we will not invest so heavily anymore in this area. And it's part of our saving program that we executed at the end of last year. Completely different story. The industrial insurance market there does an acquisition we gave [indiscernible] traction on the client base, managing their existing insurance portfolios. And together with them in the last year identified the need for a platform for auctioning new insurance risks in industries. We've got a pretty good feedback for this idea of our existing clients and as well potential new clients for the platform. We are in the development process for the platform. And in summer this year, we expect to go live with a better and change the way how industrial insurances are underwritten here in Germany. This is a pretty cool thing. And we expect here a potential, very valuable business to be identified, next to this pretty slow-moving private insurance business. Yes, the last one as well, faster developing than expected to be fair. Our employee-linked pension digitalization platform where there's a huge level of complexity between these 4 parties involved where a lot of data needs to be exchanged and lots of complexity is there. And especially employers to fulfill the obligations there need the technology, and we are here in a good position in the market. Just 2 grown-up companies are competing to digitalize this market. And it has, as you can see, a huge potential in front of us. Okay. In total, insurance business was growing last year. The 26% looks better than it actually was -- there was an acquisition of AMEXPool, which for the first time recognized in our numbers, organic, we grew by 6%, still outperforming the increase or the growth of the industry substantially, but well, it's -- the dynamic was below our expectation. And so we have used our effort and investments going forward in 2023. So 2022 will be the last year where we lost money in this segment. And I expect the growth speed to sustain in this area of high 1 digit and maybe we reach the double digit, thanks to the industrial area. So these are the 4 segments. When we look on the total group level and the total year, you can say, rules of probability, thanks to this sharp change in market environment that we were, let's say, pretty surprised by the intensity of the drop in our core market. When you look on just the fourth quarter, you see that the current market environment is costing us revenue and profitability. But with the necessary adjustments that we did at the end of last year, we feel pretty comfortable going forward even if the market environment would stay tough for a longer period. On a long-term view, yes, you can say in 2022, Hypoport entered a new phase after 7 years of strong growth from 2014 to 2021. We are now in some kind of quality growth, we call it where, in the tough market environment, we will take market share to grow. And as soon as we see a normalization of our -- especially core market, we expect a fast increase in profitability, and it will not take 7 years from now. How long it will take? We talk about in the next area. But before we look at the market, just a reminder, we communicated this already. In the fourth quarter, we reduced our workforce and restructured a lot of areas as well in our other costs. We had one-off -- net one-off effect of minus EUR 4 million to execute this all end of last year. But with this, our cost base compared to the third quarter was reduced by roughly EUR 10 million per quarter. So for 2023, we expect EUR 35 million to EUR 40 million less cost than we would have had if we would have continued with the cost of Q3. It's a pity that we lost so many talents on the way. But as you know, we were in a heavy investment situation in the beginning of the year and had a lot of ideas which we [indiscernible] where we looked for new opportunities. We stayed with the -- there's all the projects which are already visible to clients and where we see traction. So especially on the mortgage business world or qualify in the insurance industry or GENOFLEX with the corporate banking sector and personal loans, there, we keep investing because we see the near-term chance and see this as very, very well invested money even right now in the second -- in the current circumstances. And for us, it's enough that we are cash flow positive. Even in these circumstances, we don't need to generate exceeding profitability right now to -- by shutting down more innovative projects. So we keep the balance between where we are still putting our money even in the tough situations and where we see the trends in this market environment as well. Yes, short about our capital increase. We raised EUR 50 million, especially as a signal to everyone in our core industries that Hypoport [indiscernible] strong, reliable partner in every market environment. So calculate with us, solve your problems with us. We are part of the solution. We are not weak. We don't try to get a bargain [indiscernible] right now, try to get a solution for your problem with us. This is where you are -- where you need to look at. Okay. So looking at our core market and the question how does going to perform near time? You need to understand how the German mortgage market works? How German households actually decide to make an investment and acquire their first home and leaving the renting market, entering the homeownership market. So core trigger events are children. Especially to build something new, you do this because you expect children or they just arrived. To purchase your first home, it's typically as well triggered by children, sometimes as well because [indiscernible] move together, sometimes because you divorced and you need an additional home and sometimes because you changed the area of your living, you moved to a different metropolitan area, and you were used to live in your own home and you want to do it again. So these are the reasons why you are buying. In Germany, you don't upgrade because interest rates are low or you can afford more -- Germans buy once and they leave their home with their [indiscernible]. And this is very important to understand this because not the interest rate change, it's the core reason right now why the market is down. The core reason why the market is down right now is that the trigger events are there, but people need to adjust their dreams to the reality. And reality is right now, mortgage rates of roughly 3.5% to 4% and trickling down property prices. This trickling down of property prices gives you an incentive to wait. So as long they trickle down, people still have the hope that they can afford more than they could right now. So the adjustment of the dream with which you entered this decision process is slowed down. From our perspective, let's say, the current price drop is 15% from the peak in May last year, on average. To be fair, especially energy-efficient homes dropped much less, more or less close to zero, while energy inefficient dropped sharper. But on average, we saw a drop of 15%. And depending on what you are looking for this for you the idea for the total market is 15%. If you would like a total adjustment to the interest rate increase, which occurred in the beginning of 2022, you would need a price drop of roughly 30% to 35% over time because of increasing incomes, the affordability gap closes from both sides. So we are at minus 15% on the top line of the price, and we are with the income 5% to 10% up. And let's say, it's a -- was the first one to buy or is able to buy a property, it's going to close the [indiscernible]. It's not the average of income. It's what the target group, and these are, let's say, we are not talking about social housing here, we are talking about people who are able to afford a home, the upper 1/3 of the German income level. So the ones who is developing its income the fastest, catches the properties first. So the gap is slowly closing. We see this as well in the dynamic and the price changes. We started slow in May this in the summer, 1% per month decline in property prices. At the end of the year, we reached roughly 2% per month. And now we are already down to 1% decline only. So the decline is slowing down as we expect in the next couple of months already that we are getting to a stable price environment. And just the short after this, we will see increasing prices here again. Core reasons of net migration is high demand if the renting market is fully frozen. Sharp increases in rents, you can say, plus 10% easily right now on a yearly basis. City of Munich just reported a 21% increase compared to 2 years ago. And for Berlin, the second-largest portal here reported last week, an increase of 27% on a quarterly basis. So the renting market is really fully frozen now and -- so if you have an increasing income, you have a trigger event, you just need to buy to solve this [indiscernible] what you are really able to afford. And we see these dynamics ongoing. And as I said, I expect for the next couple of months already a turning point. From there, we expect that, thanks to the frozen renting market, we will see transaction numbers higher than before 2022. In the beginning, were still lower volumes per transaction because of the lower prices. So from this EUR 250 billion to EUR 300 billion market we had in 2021, when we leave this current situation, we will come to a roughly 250 plus billion market for the same type of acquisition of properties and building properties. What comes on top of this is the [indiscernible] investments that are needed. So for Germany right now, the laws are implemented to upgrade your heating starting first of -- effective January 1, 2024, which will lead to additional investments within the next 10 years of roughly EUR 1,000 billion. And plus from on EU level right now [indiscernible] in final negotiation where all homes with an energy efficiency level below needs to be upgraded until 2023 -- '22, sorry, 2032, so in the next 10 years, which leads to additional investments of EUR 1,500 billion here in Germany. So part of these investments are renting market or more or less a good half of it. But for the homeownership market, we expect investment needs in efforts for the next 10 years just based on the current regulation and the current environment of EUR 80 billion in addition. So this adds up to a total market of something around EUR 350 billion in the near-time future from a market volume where we are right now in January -- Bundesbank reported EUR 13 billion. So EUR 150 billion, if you analyze it. So more than doubling of the market volume we expect for the upcoming years. The [indiscernible] how fast it's going to get there and not if. And with this in mind, we put our guidance into perspective. So for this year, it's really difficult to predict the -- how fast this transformation of the market will go forward with, let's say, a slow speed and slow normalization, we expect still in comparison to last year, a decline on a full year basis. We are pretty sure that our first half of this year is better than the second half of last year. But this first half of last year was really a record level. If the second half of this year, we get close enough where we do not so, we expect a decline in revenue in total from up to 10% and a decline in our profitability of up to 30% for a total year with just a certain level of normalization. From an investor perspective, from my perspective, much more important is our long-term view. From here, they have double-digit growth then. And I just described that we are talking about a EUR 350 billion market, up to EUR 400 billion market from a EUR 150 billion where we are right now. So there's a huge growth potential and our incremental margin in most of our business model is 100%. So the question is will 2024 or 2025, be a new record year for Hypoport, not if there is coming a new record year for Hypoport. Our last record year was 2021, this is not long ago. And we have a track record of double-digit growth for 20 years, and we will keep getting back on this track as soon as we see a normalization in our core market. Okay. With this said, I'm happy to answer additional questions if I didn't answer everything which was out there already.

[Operator Instructions] There seem to be no questions. For closing remarks, I go back to the speaker.

No problem if all questions are answered. If you have some more, contact our IR. Actually, what I did mention is after the -- we saw a stabilization already in the last few months of the last year, January, February was in line with business perspective. So we saw the [indiscernible] from here, we see incremental movements up. And this in mind, in 2 months, we will update you on the development of the first quarter here. How fast the environment is developing, how we are performing in this. I'm pretty sure that from here, there's only one direction and happy to keep you updated there. Thanks for your time, and see you here at the beginning of May.

Ladies and gentlemen, thank you for your attendance. This call has concluded. You may disconnect.