Swissquote Group Holding SA (SQN) Earnings Call Transcript & Summary

So ladies and gentlemen, very good morning to our press conference for half year results for 2023. I wish you all a warm welcome. We will start immediately with our press conference. [Operator Instructions] The presentation will take about 20 minutes. And then we will have a few minutes for the Q&A at the end of the presentation. So I will just now mute my video, and then we will be able to start. So let's start immediately with a few numbers for our half year results. So it was a very good half year. Actually, from a revenue standpoint, it was even the best in our history. We generated CHF 265.6 million of revenue. It's a little bit better than the one we did in the, let's say, very exceptional half year 2021 when everything was going up. If you remember, this was COVID time and I think every bank in the world made a fantastic first half 2021. But with pleasure, we realized even better results here in the first half 2023 in a financial and banking environment which is complicated, I have to say, stock markets are complicated. But what really triggered this very good results is stable revenue from our net and commission income here compared to the second half 2022, slightly growing. But here, you see immediately the impact that made the difference was generated interest revenue on our balance sheet. So we have a few slides about this a little bit later. But all in, a very good half year with CHF 265.6 million of revenues. We also have very good client assets. We have -- and this is a record, we are now at CHF 56.9 billion of assets. It has been triggered by decent market performance compared with -- if you compare with the second half 2022. You can see it here in black, this is the net new that we captured in the first half at CHF 3 billion. This is more or less in line with our expectations. We have a target of CHF 7 billion for 2023. And we [Technical Difficulty] currently about a little bit less than half, but we estimate that the second half, there will be some acceleration on that -- from that standpoint. You see here, if you looked at the CHF 56.9 billion, the cash part represents about 17%. This is very stable compared to other half year and to our historical numbers that has always been a little bit about these figures. The real impact on the revenue is not the cash part, which is stable, but really the changing interest rate environment in the market that really triggered, let's say, normal interest revenue after this period of negative interest we went through. The other factor to watch is -- besides the net new monies of CHF 3 billion, here on the left side, you have the historical figures. You see really there is the -- this year 2021, that was a little bit exceptional where we had net new monies in the magnitude of CHF 5 billion. H1 2022 was targeted by some external growth. It was the integration of the bank we acquired in Luxembourg. But here you see, again, we are, let's say, back to our normal growth, which is this famous 3 -- CHF 6 billion to CHF 7 billion we are targeting a year and you can see here that in H1, it was a little bit better than H2 2022. We went from CHF 2.7 billion to CHF 3 billion. On the number of clients, this is a very stable growth here. We are now at 555,000 clients. And you see also that the average assets per customer is very stable as well. We are around CHF 100,000. So this obviously is -- it's just the average, so dividing the assets by the number of clients. But behind that, there are very different realities. From very small clients to very big clients, we have a very diverse clientele, but this is what makes us this both a little bit special and unique. In the financial landscape, we are able to attract and able to serve a very large base of clients. So these clients here, we have computed a few interesting numbers. We always got the questions, but are the new clients as good as the old clients we already have? And here, we tried to put a little bit in numbers. So we have the 555,266 accounts. And if we look at the maturity of those clients, we have clients that we acquired between 2019 and 2022, and this represents 48%. And we have then in gray the clients up to 2018. So even all the clients, this represents 46%. And then we have the new clients. These are the ones that we acquired in 2023 and this represents 6% of the total. Now this 6%, they generated 5% of our revenue. So this is about normal. It's a little bit lower because, obviously, the one clients we acquired at the very last day of the first half had no time to contribute to the revenue. This will happen in the second half, obviously. But it's just to show you that it's about normal. So we are trying -- we are able to attract clients with the same behavior and also the same revenue profile. And you see the same here on the asset side. So the 6% of new clients now holds 3% of total assets. There are also, I believe, the same phenomenon. You first open the account and then, obviously, as you like the service you are paying in and using our services. So this 3% here, when we look at the figures by the end of the year, will obviously grow to -- normally to 6%. And then we have the rest of the clients with a fair normal distribution, and these numbers are coherent. So it also shows that there's no distraction in quality of clients. It's a very stable, stable growth machine, even though we are active now not only in Switzerland but in many parts of the world. Speaking about that and looking at the CHF 3 billion of net new money, so first of all, where does it come from? The biggest part is from Switzerland. This represents 59% of the net new money growth, but 41% comes from the international clients, and you have here, on the left side in the world, you have distribution where it actually comes from. And then the type of clientele we are acquiring. So B2C, these are assets from clients acquired directly through the platform, but we do also have a very good white label and software and solutions for B2C clients, so asset manager, other banks, white label solution. So it's actually B2B2C. And the one, and this represents 67% of the CHF 3 billion of assets. Also a figure that is quite common to Swissquote. And looking at the net revenues and the distribution. It's good news that now it is very balanced. Now the Swiss business represents a little bit more than half of our revenue. This was a target we had, going from a pure Swiss provider to something with an international footprint, and these numbers are growing. So it's about half-half, but we expect this to grow even further. So we are investing a lot of efforts and money in our international expansion. And as you can see, this starts to pay off since non-Swiss domiciled clients now represent 48% of the revenue. And if you look at the typology of clients, from a pure B2C to B2B, B2B2C, you can see that the B2C part now represents 71% and the rest, about a third, is the business we do with institutional clients, whether it's for a B2B2C service like the one [indiscernible], for example, or whether it's a pure institutional clients, this would apply in these sectors and represent about 1/3 of our net revenues. And if you look now by asset class, let me start with the charts on the right. This is quite an interesting chart and you see the transaction based and then the nontransaction-based revenue. And here for the first time ever, the nontransaction-based revenue has been bigger. And this obviously is because of the margin we made on the cash positions of the clients. So it's a reflection on -- a little bit on the current market situation. If the markets would revive a little bit and becoming more interesting, then you will certainly see the 43% here of transaction-based income growing again, but you will still keep the good margins we do on the interest rates. So what's the normal situation? We don't think that what's happened in '18, '19, '20 and '21 was a normal situation. It was targeted by negative interest. So in a way, it's back to normal since now you get decent revenues out of the cash positions of the clients. And we expect this to stay there. We don't anticipate, at least in our forecast in our numbers, big movements on the interest rate side. We don't anticipate that certainly the interest rates in Switzerland will continue to grow. We think that we have reached some kind of a plateau and it will stay there for a while. And this will also mean that we will be able to capture the interest rate revenue going forward. But of course, on the net fee and commission side, if now, we're coming to an end of this interest rate hike, we anticipate that the markets here will gain in volatility, which in turn will push our nontransaction -- transaction-based revenue to a higher number. But we're coming to that a little bit later. It's not the scenario we have taken in our forecast for the second half. We stayed a little bit on the cautious side, and we simply anticipated the second half, which is more or less in what we achieved in the first half of 2023. But to that a little bit later. Here on the left side, also always interesting. You see a little bit the distribution, where are we making our money, with what type of financial products. Obviously, the cash part here is a big part. It's about 40%, but then the rest in shares and foreign exchange and all this also represents interesting revenue potential for -- or actual revenue for our bank. Now having a look at our growth. So you have certainly seen that the number of the staff members continues to grow. This is a very active strategy from Swissquote. We invest in our future. So we don't take all the leverage out we could from our existing business because we think that we have to develop the tools and the products for the future, and this is happening now. So we do invest in our technology and you see here that the big part of the 1,110 staff members we have, this is the part here in orange, about 1/3, more than 1/3, 400 staff. This is pure technology. These are IT specialists, developers that are developing the new products. And here also, because we are a bank, you see that the compliance and risk staff is increasing. This is kind of normal. With an ever-growing client base, you also need to have the proper organizations and the right people in place to serve the clients and to make sure that we are compliant with all the regulators in all parts of the world, and this is made through systems and organization. And this, in turn, is increasing the number of staff. On the sales side, this is quite stable. We don't think that we need to have a bigger sales force since we are an online bank and most of the client relations are made through our marketing and through the various tools we have developed, so here you see a big stability, and the rest is mainly support and you see here that we have a stable but these -- but good growth over the year. So it's very much in control and it's also very much triggered by the strategy of the company. Now if you go to the right side, looking at our expense distribution. So the first thing you can see, and this is in black here, is the variable remuneration which has been accrued in our figures. We anticipate to have a very good year. We think that it will be a record in terms of profitability. So we are accruing the variable remuneration that we will pay to our staff at the end of the year, and you see this growing compared to last year. And then the marketing expenses is growing as well, not exploding, but growing. Also, this is linked to our marketing strategy. We are an online product, and you need to bring this to the market through different means. You know that we are a sponsor of UEFA and this helps a lot in growing our business, mainly in Europe. And we think that this is a very sound marketing strategy and the numbers here are reasonable. So all in, the market -- the expenses amounts to CHF 138.4 million. And this here, I think it's on the next slide, creates a pretax profit, which is up by 30.4% compared to the second half last year at CHF 124.9 million. After taxes, net we keep CHF 106.5 million of net profit. This compared now to the revenue and the pretax profit, so we have a pretax profit margin of 47%. You see it growing since the second half of 2021. And it is also one of the targets, we have to say -- to stay in that region of above 46%. And if you can see here, over the last half year, this has been very stable and it shows that there is leverage in our company and in the service we are providing. Now let's have a look at our balance sheet. Since this is the -- this was a big driver of our revenue in the first half 2023. Well, first of all, what you can see is that the total balance sheet has grown to now to CHF 10.6 billion. So that's CHF 400 million more than at the end of the second half last year. It's -- and look at the liability side, cash position, we did grow from CHF 4.2 million to CHF 4.4 million (sic) [ CHF 4.2 billion to CHF 4.4 billion ]. This is in Swiss francs, this is a very good number. This is also proof that we do attract clients that they are keeping cash with us here. And also on the dollar side, it went from CHF 2.2 billion to CHF 2.3 billion. The situation in euro is a bit different. There, we lost about CHF 100 million, but it's mainly -- this is not outflow of money. This is mainly due to investments in financial positions which also have an impact on our -- on the cash positions of our clients. And you see our total equity here growing from CHF 741 million to almost CHF 800 million in the second half, triggered by the profit we are generating. Now what are we doing with the cash? Well, a big part is still with central banks. This represents more than 45% of the -- of our total balance sheet. You see here, this amounts CHF 5 billion, which is not invested. It's with the central bank but good news is that this also is now generating revenue. We have treasury bills about CHF 759 million. And then we have various cash positions at counterparties for CHF 1.5 billion. The investment security portfolio here at CHF 2 billion. It did grow from CHF 1.7 billion to CHF 2 billion. This is because we think that we are now coming to the end of the rate increase. So it's a good strategy to start to be a little bit longer because we do not anticipate higher interest. So it's the strategy we have to be super careful in the past now is paying off, and we are able to go a little bit longer with our maturities. But still, as we are super cautious in our approach, we still have a liquidity coverage ratio which is very high. It's -- it came down a little bit from the second last -- from the second half 2022, but still it's almost 400%. We are far above the minimum of 100%, which is required. Same thing for the funding ratio here with 262% or so, a very sound and solid number. The interest rate risk came down at 4.7%. You see that the max here is 15%, and it has improved even compared to the second half last year, since it went down from 6.2% to 4.7%. What I would like to show you on the next slide is how we do making -- how we are making our money. It's a little bit complicated slides, but we had it already last year. So let me explain to you. So if you go on the upper left corner, you see our total assets of CHF 56.9 billion -- client assets, CHF 56.9 billion. And you have the cash part, 17%, we mentioned before. Now 17% of CHF 56.9 billion, that represents CHF 9.4 billion. This is the number here in the middle of the chart. And you see that only 31% of this CHF 9.4 billion is actually invested. It's invested in 2 things. First, the -- and this is on the right side. We have our investment security portfolio. This is CHF 2.1 billion, this is out of the CHF 2.9 billion. And you see here a few technical numbers. You see the average maturity, which is less than 3 years. And also, you see the average margins we're making here at 170 bps. So as this investment portfolio will mature, we will, of course, reinvest and take new positions so the average margins going forward will have the tendency to decrease. And we also have a margin lending portfolio. This is CHF 0.8 billion. These are mainly Lombard loans, I think, up to CHF 600 million. And then we also have the leasing business with Tesla, which represents the rest, about CHF 200 million. So all in, CHF 0.8 billion, which is also generating a margin. It's about the -- the reference rate, which is generating is between 1.5 (sic) [ 150 ] and 300 bps. If I could just go one -- back one slide here. There is something I wanted to show you, which is that the loan portfolio. You see that it did come down a little bit from CHF 814 million to CHF 791 million. So nothing dramatic. But of course, when interest rates are rising, the Lombard loans are becoming more expensive and certain clients would then cancel their Lombard loans and take action because it's becoming a little bit more expensive. So it's kind of a normal behavior here. But again, out of this CHF 800 million, so CHF 791 million, you can see the figure here, CHF 0.8 billion, the biggest part is Lombard loans. Now going back to the figures in the middle. What are we doing with the rest of this CHF 9.4 billion, well, not a lot for now. So the liquidity portfolio represents CHF 6.5 billion. So that's the 69% of the CHF 9.4 billion. And you see how it is distributed. It's -- there, we mainly get the interbank rates, SARON for Switzerland for Swiss francs, for example, and then we are capturing between 1% to 1.7%. And all this together, so the loans and the investment securities portfolio and then the liquidity portfolio is generating CHF 102.7 million. You can see in our figures. So easy to understand that it's much more we can extract from this -- from our cash position, especially taking into consideration the very good rates we have. We didn't do it so far because we're still in a very active increase of interest rates from the central bank. So it was not a good idea to be too aggressive there. But now since we are coming to the end of the interest rate hike, it's a good strategy to be a little bit longer, still preserving our good ratios, of course. But there, we think that we can extract better interest income out of the -- out of our cash position. Now CHF 102.7 million now added to the CHF 162.9 million we do with noninterest income generates the net revenues of CHF 265.6 million for the first half, which again, as I mentioned, is the best -- our best figures ever in the history of Swissquote. So the equity here is about almost at CHF 800 million. Why is it growing? That's simply because we are making profit now half year after half year and you see it growing strongly since H1 2022. We are paying out part of that profit to -- as dividend and know our dividend policy. But still the biggest part is actually kept at Swissquote and is used as potential fuel to finance the growth we will have over the next half year. So this explains the very high Tier 1 capital ratio of 25.5% here. You see it stable since the second half of 2022. And obviously, it's far above the 11.2% of -- required as a category 4 -- as currently a category 4 bank. Let's look at the guidance for 2023. So we revised upwards the guidance. Remember, we were at CHF 490 million for the entire year when we announced the yearly figures last -- at the beginning of the year. We now think that we will be able to produce CHF 530 million of revenues for the entire year, and this will then generate a CHF 250 million of pretax profit. It's needless to say that this would be our absolute best figures historically as a quarter of -- at the end of net -- of pretax profit is -- would be the best numbers we will ever have produced. We are very confident that we can reach this number and it's a sign of the soundness and the quality of our operations. Now another look, which is important to understand when we do a longer term forecast, what we try to compute is the assets grow. This is the main trigger we are looking at. I mentioned already before this CHF 6 billion to CHF 7 billion of net new money we are targeting. And then the question is what type of margin can we make on that asset? So the way we compute this, you have to be careful. It's not the margin on assets on the specific products. We do more than 3 basis points on crypto assets, but it's the margin compared to the total assets, okay? So this is the reason why you can sum them up and then come to these global numbers of 94 basis points generated in the first half that we aim to generate in 2023. And you see that the biggest part here, this is -- it comes from securities trading. This will add 57 basis points in 2023, then the interest part, this is 34. And then you see that the crypto business that has been so active back in 2021, we only think that it will generate about 3 basis points compared to total assets. So we still are very active in the crypto space. We didn't exit the business. In the contrary, we are developing our tools, our services, but we are no longer dependent on the crypto performance and good volatility on the crypto assets. This has been completed derisked from our operations. But still, if we would see an end of the crypto winter, obviously, we would strongly benefit from that situation. And you would see these 3 basis points going up and then fueling even larger growth. And also, as you can see here, if you compare with 2022, 2023, we think that we'll do about the same margins, 57. So we don't think that there has been a fundamental change. So 2022 was a difficult year, as we remember, in -- for the market volatility and the market performance in general. And we think, at least in our estimate and the way we construct our budget, we don't think that 2023 will be different from that standpoint. We will never be short of a good surprise. Now you can have better performance on the crypto assets and, suddenly, strong volatility coming back, we could imagine that since the interest rates hike, we have come to an end that this will then, in turn, have a positive impact on the market -- the stock market and the stock performance. And then you would see this part growing. So there is potential for lots of good surprises. But we have -- we are a cautious bank, not only in the way we are dealing with our balance sheet, but also in the way we are doing our forecast. So we're staying a little bit on the cautious side of thing, and this gives the forecasts here or the estimates for the full year of more than CHF 0.5 billion revenue and almost CHF 0.25 billion of pretax profit for 2023. So we're almost coming to an end here of our presentation. There's only one thing I would like to mention. We have a new launch, a new product, which has just started, we call it Invest Easy. These are, as the name says, our easy investment tools for people who do not want to invest directly in stocks. They would like to do it with tools, and we have developed one of this tool. Now the interesting part here is that we also have a saving part. So you could only keep the cash and then we will pay up to 2% on interest rates if you want to only hold the cash. So this is what most of the banks will do here. Currently in Switzerland, you would have low interest rates paid on your trading accounts, but then higher interest on the saving -- into the saving part. And we are doing the same and it makes sense. Now if you don't want to take risk with your investments, then probably having just a saving part that plays a decent return. It's one of our good strategy, and this is a tool we do -- we are now offering. And here, a look on our Investor Relations agenda. So we'll have a very active period to come. We will participate to the Baader Investment Conference in Munich, and this is on the 21st of September. Beginning of November, we are participating to the ZKB Swiss Equity Conference. And then in March -- on the March 14 of next year, we will already present the full year results 2023. And we already have the dates here for our General Meeting, which is 14th of -- 8th of May. We also have here some of the key figures. I've mentioned most of them here on the second page. It is just one. I would like to show you, which is the new accounts. So you have to know that they are not part of the 555,000 clients we are mentioning, but it's a very strongly growing business. We have, as I speak, passed the threshold of 150,000 clients. And also, you see that the client assets is growing at the same magnitude. We are now more than CHF 1 billion of assets for clients using our Yuh joint venture products. This is the joint venture. We do have this PostFinance and we are very happy in the way it is progressing. Looking at the numbers here, you see that the net results from investments here is still a loss. It's CHF 2.3 million in the first half. This is the view from Swissquote. Since we are providing services to you, we do charge these services to the joint venture, but we're also paying for the loss currently and this represents a non-meaningful numbers of CHF 2.3 million, but we estimate that with the current growth, you will break even shortly and then we'll have a positive margin contribution to the entire group. Here, I think we're coming to an end of my presentation. I hope you liked it. And of course, we are now taking a few questions. Just to mention here, I am with -- here at the desk in Gland at the headquarter, I am with Céline Lüthi, she is the Head Finance and she will be delighted to take financial questions you may have. But we also have remotely our CFO who is joining via telephone and he is also eager to answer your questions. I'm not 100% sure whether he has a good quality of his phone connection. So let's try but, of course, [ I am available ].

So who would like to take the first questions? I see that Daniel Regli from Crédit Suisse is raising his hand. So please, Daniel, go ahead.

I have 4 of them, if I may. And the first is quickly on your full year revenue guidance. And I would want to ask you whether you can give some additional color, particularly on the net interest income side. You already mentioned that it's relatively cautious. I just made a quick calculation on the basis points you give on the slide. I assume your net interest income assumption is about CHF 195 million for the full year. In first half year, that's about CHF 102.5 million, give or take. So your assumptions for the H2 are a little bit more cautious with regards to net interest income, or what should I read into these numbers? And then the second question is a bit on like the sensitivity of the cost line to, let's say, additional revenues. So you alluded to that your guidance is relatively cautious. What would it mean to the cost line, if you kind of add a certain amount of additional revenues to the number you are giving? And then the third question is on -- can you give us some color a bit on the trends in bank activity you have seen throughout the first half year but also maybe into June or maybe starting of August -- July and starting of August? And then last but not least, have you seen any additional benefit with regards to client additions through the special situations we are having among the big banks in Switzerland?

We lost you for the -- are you back?

I hope so.

Yes, you're -- I thought your third question is about the trend in client activity, right?

Exactly.

And you have the last question?

Yes, exactly. It's about whether you have seen an additional benefit with regards to client additions through the special situation we are having in Switzerland among the big banks?

Okay. Okay. Let me start with the last one. So no, we haven't. Actually, as you can see, the growth is quite stable. But we haven't been the first recipient of the outflow of the assets from Crédit Suisse, which has -- there has been a trend in the very dramatic moments of the fall of Crédit Suisse. But I would say that the type of client relations they had and the one actually that would flee the bank didn't necessarily come to Swissquote. As I mentioned, we are in the retail segment. We do not offer private banking services. We do not offer services -- investment banking services. So I think they are probably banks that were better positioned than we are to get the biggest chunk of this money. And also to mention that the assets of Crédit Suisse Switzerland, I don't think they did change so much. So this is more of an international trend that Crédit Suisse went through, unfortunately. So going back to your first question about the full year, yes, true. We are cautious because we want to surprise the market with potential good news. No, that's a joke. Now what we did actually, we took our budget 2023, the one we did at the beginning of the year, and then we increased our interest revenue forecast by 10%. But that would -- but your numbers, your numbers are correct. There's a certain number of cautiousness in there. It's triggered by the fact that the competitive situation on the Swiss market will probably also drive some appetite from the clients on the interest revenue side. They want to see money, they want to earn something. I mentioned the saving portfolio that we now have launched. Of course, whatever you pay back to the clients is a net margin less that you earn from the market. So there, we are ready to keep up with competition if suddenly there is a strong move on that side. This is the reason why we have been a little bit cautious on the interest rate revenue, where we have been, let's say, cautious as well is on the other factors, mainly the net fee and commission income. It's super difficult to tell what is -- what will happen in the second half of 2023. The international situation, as I do, and to see whether that would trigger suddenly market movements or market volatility is super difficult. So we just decided that more or less, we'll do there, our budget. And altogether, it's still -- it will be still a growth. So if we do CHF 250 million of pretax, this means that we will do about the same pretax profit that we need in the first half of 2023. Of course, again, I agree it's a little bit on the cautious side, and we could surprise the market with better numbers. Now on the cost line, I think the good news or the potential good news I mentioned earlier in terms of activity or higher interest revenue will more or less go bottom line because our cost base will grow, but very slowly, especially in the second half. So even though we will add a few more staff, you can see there is a certain plateau that we are now reaching and in nature, we are cautious. But this is when now the leverage effect of our business model will kick in. It's not because suddenly the clients are making one tractions -- on average, one tractions more a year that this will generate any additional cost. So this will straight go to our pretax profit. And I don't know if I already have replied to the third question, if we see any trend in client activity. No, it's a very boring moment for investors, tied with uncertainty. If you look at the VIX number, I think we are at a historically low, nothing really is happening on the market. There's a lot of expectations with international events that can happen. We need to have a clear indication now. We're coming to an end of the interest rates hike, but there also the forecasts are sluggish. So this, in turn, makes the clients very careful and very cautious in their position taking. So we don't expect, at least in our budget in our forecast, any change in client activity for 2023. We, however, think that this is not a normal situation. We think that situation has normalized in terms of interest revenue because the previous situation was not normal for sure. Negative interest is not a normal situation. But now we also don't think that the current client activity is normal. You see here, if you divide the number of transactions here we did in the first half of 2023, you can see it here, we did 2.3 million transactions. This is about the numbers we have in the second half of 2022. And the strong decrease compared with 2022, there is absolutely potential for growth there. If markets would just come back a little bit to normal, then you would see jumping back to more than 3 million. And this will have a strong impact on our figures. And then, as I mentioned, this would go almost bottom line.

Can I add one quick follow-up on the NII guidance? Can you maybe quickly talk about the NII run rate at the exit of H1?

What -- when you say run rate, what do you mean?

For example, the monthly net interest income in June.

In June, yes. Well, I think it's the best month ever because it's -- we are in a growing interest rates environment. So month after month is getting a little bit better. Simply because our cash is sitting at central banks and there, every interest will cash immediately. But I don't have the figure for -- CHF 16 million, okay, which is -- CHF 16.3 million -- yes, so Céline gave me the numbers. So it's CHF 16.3 million for June which is CHF 200,000 better than CHF 16.1 million we had in May. Good morning René, how are you?

Nevertheless, a few follow-up questions. So first of all, let's start with the operating expenses, annual report half year -- no, half year report on Page 12. Well, I always have maybe the feeling that when you are achieving higher revenues, you also tend to spend a little bit more on the operating expenses. And what is interesting here, I mean, to include some provisions, you have higher depreciation and amortization. So again, from that point of view, I guess you explained already revenues up in H2, but operating expenses should remain at a more reasonable rate. And this brings me then to my next question. I thought that the pretax margin is a little bit higher than 47% because top line was driven by net interest income and here, you have not hardly any cost. So from that point of view, yes, don't you think that the pretax margin should be closer to 49%, 50%? That's the first question. Then, again, pushbacks I got from investors or clients is that your clients might put a little bit pressure on you for higher deposit rate. But as I understand, I mean for timing in Switzerland, there is no pressure also from other banks. So this is good news. And I don't know if you've seen, there was an article today in a news blog talking about windfall tax on interest income also in Switzerland. That's what we have seen in Italy the last 2 days. So just your thought here. And perhaps also on 2025, the midterm targets, I have not seen any comments here to you confirming the target of approximately CHF 750 million in revenues and CHF 350 million pretax.

Okay. Okay. So -- well, let me take the first one. It's true that we -- since we haven't changed our 2025 forecast, we haven't put the same charge we had already put in there. But we absolutely do confirm CHF 350 million of pretax. That's the goal. And I think we're going there. We're growing between the CHF 6 billion to CHF 7 billion of net new money a year. If we assume that we can keep this 90 basis points of margins, we will create the CHF 750 million of revenue and then turn the CHF 350 million of pretax profit. Let me try to see if -- for the expenses.

I'm here. I'm here, Marc. René, do you hear me? So you asked about your question about expenses. The pretax margin, I understand you expected a bit more. It's true that net interest income could mechanically imply almost an entire impact on the profitability. That being said, the management is not here, let's say, to maximize the year 2023, but rather to focus on medium-term growth. So we had the same type of, I would say, situation back in 2021 or in 2020 when we had a strong increase in net revenues. We have invested part of this increase in net revenues for medium term and future growth. And I think this is the same case here. We take part of this benefit to hire a bit more people, invest a bit more in the future projects because we have a medium-term outlook to reach. And the pretax margin, I think, it's still in line with what we have guided short term and medium term. So this is what I can say about the pretax margin. We have not tried to maximize the 2023. In terms of customer deposits, you are right, the pressure is relatively low for the time being. On the interest income, Marc mentioned, we have been conservative, I think, with the revised guidance. You may remember at the beginning of the year, we kept some buffer in our gross interest income in case we should pay something later on this year. We certainly have kept something for the second half year, not necessarily the same amount in absolute terms but probably half of it. We have kept a bit in case we need to pay something to customers later on, again, focusing on medium-term growth and not the next 6 months growth. I hope it fulfills your expectations in terms of response.

Yes, that's fine.

Yes, I think René also made a reference to Page 12. And there you can see -- you want to say something about the dissolution of the provision at the end of last year and the new provisions we created in 2023 because this creates a difference of about CHF 3 million that obviously have an impact also on the margin.

Yes. So the provision, it's a bit more described in the annual report that is basically linked to the various litigations and claims that we may have. So we have customers that may file a claim with us, then we try to determine what the [indiscernible] risk, and we may accrue the provision for it. Then in general, with time going on, if we see that there is no response from the customer, no further action from the customer, we may release part of this provision. So it should have -- when years are more positive, your appetite to bet on these claims is rather low, and you may accrue rather well. And in the years where basically it's a bit more difficult, sometimes basically, you might be more inclined to revise or, let's say, reassess the potential risk. In general, you see there are years where we accrue, there are years where we release. It's very seldom that we have effectively to pay something, but I think it's a discipline to accrue for these potential claims that may sometimes materialize in something more tangible. So it's -- when we prepare the budget, we budget basically a percentage of the net revenues to give you a bit of color on how you could model it.

Yes, that's fine. Just before I hand over to Chris, just one last question, a confirmation on page -- on Slide 6, I guess this is Slide 7 in your presentation, on your customers. I did some calculation, and key finding was that the new clients and the clients in the bracket 2019 to 2021 generate much higher revenue margins. I mean just a confirmation or is it just some stupid analyst calculation?

Well, you're right, specifically, it represents 48%. And then in turn, it's up, say, 54%. We know that the clients 2019-2022 were good clients saving. They -- also we are climbing the wealth chain. So we are able -- if you look at the average deposits per client is going up as well. So with the improvement of our service level, we can offer better services to a different type of clientele. And this, in turn, makes the revenue a little bit more juicy for us. And that's a fair assumption. And we think that also in 2023, we hope that we'll have the same phenomenon. Thank you, René. And now Christoph, sorry.

They are all related to net interest income. To start with, could you, first of all, confirm the CHF 16.2 million of net interest income you have generated in June? So if I extrapolate this for the half year [Technical Difficulty] or just the confirmation that you said, CHF 16.2 million?

Okay. Are you still with us, Yvan?

Yes. Yes, Christoph, sorry, I should have intervened. I'm [indiscernible], but my number would have been CHF 18 million to be exact. So as a CFO, the net interest income of June is CHF 18 million.

And the second question is on your customer deposits, which were up 2% versus the second half. Could you give us some color of the contribution of net -- of your net client wins to this deposit I see?

Sorry, could you repeat again the question, Christoph?

So you have added 2% to your deposit base, which amount has come from new clients. This is the question.

Yes. So your question is to which extent the net new money are more invested perhaps compared to the past. I don't see a big change here. We may just keep in mind that we have a bit more B2B2C in the net new monies than usually. It's probably a timely situation. I think they are not always linear. So it could be that the net new monies are a bit more invested than in general, but you see that overall cash deposits still represent 17% of the total assets. So there is no, I would say, substantial change, but it could be that the net new monies were a bit more invested than usually. If it's a question you have.

Okay. And as a follow-up question on deposit flows. If we go a little bit more into detail, do you see the threat that clients are shifting deposits more into money market funds and that such flows could somewhat erode your deposit base going forward?

Yes. So theoretically, I say yes, it's a risk. Then it could be we have decided where we split the net revenues by asset class. And here, you see that basically what is representing investment fund, ETF fixed income products, represented something that if I double check, yes, 17%. So it has somehow increased a bit. Last year, it was closer to 11%. So it has increased a bit. We can see that there is a trend of customers to move more to this type of product, perhaps, compared to other products [indiscernible] at the same time a decrease. But again, the proportion of cash out of the total client assets is relatively stable. So I think there is a shift towards increasing activity, but not necessarily at the cost of the level of cash.

Okay. Good. The next question is on your deposit rates. I mean you have already released 10 basis points for Swiss francs you pay to B2C clients, 20 basis points on USD. Could you give us some color on the deposit rates you pay to B2B clients?

Well, it's a case by case discussion. We say we have B2B customers connected also, so we cannot give a lot of information. It's probably something that is similar to what is applied with other bank counterparties. In general, we either pay nothing or we pay -- it's the reference rate [Technical Difficulty] basis points. So -- and this was already implemented at the time when interest rates were negative because the B2B customers, we were, let's say, less kind to accept the cost of negative rates. So it was already implemented back when they were negative. So I think it's probably predicting now what you would see in the industry. So we take [Technical Difficulty] this is what we may remunerate the B2B customer. That being said, pure B2B customers will probably keep not a lot of cash with Swissquote. If you are a small bank partnering with Swissquote, you may have an exposure personally. And you may want to monitor the exposure you take vis-a-vis a creditor that is accredited with Swissquote so that the -- probably, I would say, it's [indiscernible] to think that B2B, they have less cash in proportion than invested in assets we secured. We even have B2B customers, they have only invested assets with us, but they keep the cash and they just send the money that is required to settle the transaction.

Okay. Two questions left. What is the potential to increase your investment portfolio to preserve the current interest rates level for longer? Where can it go in terms of billions?

So I will say -- and I would say that with the given size of the balance sheet, the level is probably rather appropriate. This is at the CFO point of view. If the balance sheet continues to grow, we may increase the debt securities portfolio, but not necessarily in relative importance. So for the time being, I think we're well positioned and with the growth of the balance sheet that I expect for the next 6 months, I would not expect the debt securities portfolio to change substantially in the next 6 months. For the time being, I think we have increased a bit compared to the beginning of the year, but we -- it was more with the willingness to anticipate a little bit the situation at your hand rather than this being representative of speed of increase in the next month.

Okay. And as a last question, you mentioned the Tesla portfolio you have on the balance sheet. Could you remind us who is bearing the residual value risk, please?

Yes. So the residual value is basically we have a buyback agreement with Tesla. So at the end of the leasing credit, they take back the car from the customer and so this is their risk. At the same time, what we do at Swissquote level is we hedge the Tesla risk because basically it means that the residual value, we have a Tesla counterparty risk, and this is hedged the credit default swaps. So we don't take the Tesla credit risk in our balance sheet.

I don't see any additional hand raised by the community. So this gives me the opportunity to thank you dearly for participating to the presentation this morning. And of course, I know we will have some investors relation talks tomorrow and the day after and also here at the headquarter. We are always here for you. If you have any additional questions, don't hesitate to call us. We would be delighted to answer. So here, I would then close the presentation this morning. Again, thank you for participating, and have a wonderful day.