flatexDEGIRO AG

Ladies and gentlemen, hello and welcome to the FLATx D0 2022 preliminary figures analysis call. Please note this call is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand over to your host, Mr. Frank Niage, CEO, to begin today's conference. Thank you.

Good morning, everyone. I welcome you to our preliminary earnings call 2022. First of all, I have to start and excuse my friend and colleague, Mohamed Shawour, due to the loss of his father. and the attendance of the funeral today, and we all here from Frankfurt send him our condolences. In the call today, therefore, is my new colleague, the CFO, Dr. Benon Janos, and obviously Achim Schreck, our head of IR, like always. We will split the presentation among the three of us, and I will start now. Let me summarize quickly and give you a sneak preview of what we've prepared today as it is a lot of information and as I like to give you six key takeaways from the CEO point of view with respect to the presentation. First, the situation with the regulator. Second, the robust financials. Third, The improvement was ESG. Fourth, more transparency in the future. Fifth, higher profitability due to cost discipline. And last but not least, our guidance comes in very conservative and cautious due to the geopolitical situation, inflation, and interest environment. And obviously we included today only the status quo with respect to the actual interest rates. Let me start first with the situation of our regulator. The 44 audit is finished and the necessary project to resolve the findings is on track. There was a misdemeanor proceeding, which came to an end. and were relating to incidents out of the years 20 and 21. The fine is non-material from an accounting point of view. The appointment of a special representative allows the BaFin to adjust and post capital measures, and we would not have to wait for a regular follow-up audit in 12 to 24 months. The project teams are working on all relevant findings full steam with a clear focus of more form over substance. Our project plan has been cleared by two audit firms.

Finally, we are on good terms with the regulator.

Second, we showed robust financials in 2022, although it was one of our toughest year in the industry with respect to the geopolitical situation, the inflation and the interest tax. Nevertheless, we managed to exceed 400 million in revenues. We exceeded 183 million in EBITDA. and we managed to exceed net profit of over 100 million the first time in the history of our company. And as I said, in a very challenging year, 2022. Commercially, we won over 460,000 new client accounts and we settled 67 million transactions. The assets under custody dropped only from 43 billion to 39 billion, although the major indices dropped much more, as you all know. This goes to our clients and shows the quality of our clients. Third, ESG, environmental, social, and governance. We work very hard the last 12 months to improve. And we did that before the audit results were disclosed. And thanks to the feedback of several conversations we had with you, our shareholders, we managed to enlarge the management board from two to four members. Further, we increased the supervisory board members from three to four. And there is more to come on the next annual general meeting, which will take place in June. Further, our ESG rating has improved a lot. With respect to Morningstar, we managed to reach top five position out of 146 companies. And obviously there are some other ratings which have not yet all been updated. But obviously this does not mean that we are at the end. We will continue to improve here and there is more to come. Fourth, we will focus in the future more on transparency. And already today we have provided you with three new KPIs, the number of new accounts, the number of trades, and the assets under custody. And we will do this now every month. And fifth, we will increase profitability due to cost discipline. As we already said, we will no longer guide trades. as it is not serious anymore during those challenging times. But as I mentioned, we've introduced the monthly KPIs and therefore provide you with more transparency. We've also decided to not continue with sports sponsoring in the future anymore, as this went very well with respect to brand awareness. And you will see that later in our presentation. and the brand awareness increased a lot over the last couple of years, but we will focus more in the future on conversion. We will end the sponsoring of Sevilla in summer, and we will become the co-sponsor of Borussia Mönchengladbach in 24, and continue as co-sponsor until 27, as contractually agreed. Therefore, we will have a significant reduction in the marketing budget in the coming years. And my colleague, Dr. Venonianos, will provide you more details later. We will still grow more than our competitors, but with a higher focus on profitability. Higher interest rates will contribute significantly on top of everything. Again, My colleague will provide you with more details. And let's shift gears now. I'm happy to hand over to Dr. Benon Janos, our CFO. Good morning.

If we take the U.S. market as an example, the S&P 500 finished 2022 down 19.4%. That is the seventh worst in this index, stretching back more than 90 years. 2022 is comparable to the Great Depression, the 2000 dot-com bust, or the 2008 great financial crisis. To make matters worse, this time bond investments also fell significantly in value, given the sharply rising interest rate environment, further dampening trading and investing interests. Yet, Flatex, the hero, was able to deliver the second best financial year in terms of revenue, and best year in terms of reported net income. We observed an industry-wide muted customer trading activity with approximately 67 million trades within our group in 2022. At the same time, we saw in the second half of 2022, and particularly in Q4, the first positive impact from higher interest rates. Our customer base continued to grow double digit and we saw continued net cash inflow onto our platform. With 407 million euros, we saw a decline of approximately 3% of the reported 2021 revenues of 417 million. A more proper representation, which excludes positive one-off effects of approximately 38 million due to releases from the long-term variable compensation plan, leads to adjusted revenues of 369 million, which in turn represents a 12% decline of the reported 21 revenue figures. I will revert back to this in more detail shortly. The 369 million in adjusted revenues are comprised of commission income of 272 million, interest income of 72 million, and other income of approximately 25 million. To illustrate the muted trading activity in Europe, we have charted the daily average revenue trades per customer and compared to industry trends. Our development through the year is in line to what we see from other European peers. A strong 2022 Q1 with almost 22 million trades was followed by two spring and summer quarters of 16.2 and 15.3 million trades respectively, with a further decline in Q4 to 13.6 million trades. Yesterday, we have for the first time, and we will come to this later, published January trade numbers of 5.3 million, an increase month over month of 25%, but a decrease of 28% year on year for the month of January. A similar but not identical pattern has been observed in our customer growth number of 462,000 additional accounts on a gross level. A seasonally strong Q1 with 185,000 net additions has been followed by three similar quarters of gross additions, has been followed by three similar quarters of approximately 90,000 gross additions per quarter, resulting in a customer account growth rate of more than 20% compared to the end of 2021 or beginning of 2022, respectively. The breakdown of account growth into net customer growth can be summarized as follows. Normal churn of minus 53,000, corresponding to a retention rate of almost 98%, yielded 409,000 net customer account additions. We off-boarded 73,000 customers in total, representing one, the closure of the Dehiro Austria brand, two, the discontinuation of the Flapex brand in the Netherlands, as well as three, the exit from the Norwegian, and four, Hungarian market for our brand Dehiro. In addition, five, A number of B2B accounts were also terminated after ending of the respective business relationships. The resulting net customer account growth number of 336,000 clients puts us above comparable peers in Europe. Commission per trade started off at 426 euros per trade in Q1 and decreased to 390 euros in the fourth quarter. This is reflected in the smaller percentage of high revenues transaction compared to, for example, savings plans. The latter is typically more stable throughout the year, given more regular automated executions. Therefore, in a less active trading environment, the relative share of such constant savings plans increases. This slide reflects the organic decline of minus 18% in our brokerage business with adjusted EBITDA of 145 million for 2022 compared to 177 million in 2021. Both EBITDA numbers here are adjusted for one of personnel expenses for long-term variable compensation and in 2021 in addition, for personal expenses related to the merger of Flatex De Hero Bank and De Hero BV. In 2022, we spent 49 million on marketing. Marketing expenses in both 2021 and 2022 were between 45 and 50 million, driven by the creation and distribution of the European-wide documentary, True Stories of Investing, and other increased brand awareness campaigns. The development of marketing expenses throughout 2022 shows that we are capable of adjusting our marketing spend on relatively short notice in relation to the market environment. We will continue to do so in 2023 and I will revert to this later. On brand awareness, we have successfully increased our brand awareness in our key markets and consider now this part of the group marketing efforts as accomplished, finalized, and finished. Allow me a comment on the developments of our assets under custody. Assets under custody at Fletex de Giro declined from 43.8 billion euros to 39.5 billion euros at year-end 2022, representing a decline of only minus 10%. While securities in total declined from 41 billion euros to 36.2 billion euros, client cash deposits grew from 2.8 billion to approximately 3.2 billion. One of the influencing stabilizing factors for securities under custody was the decline of the currency Euro versus the US dollar in 2022. Let me make at this stage a referral to our yesterday published January 2023 numbers for a second time, showing total assets under custody at the end of January 2023 at 43.5 billion euros and thereof the cash position of Euro 3.5 billion. Gross cash customer inflows of 13.4 billion euros billion euros in 2022 were offset by 7.5 billion euros in normal withdrawals resulting in the net cash inflow number of 5.9 billion euros. Thereof, about 5.2 billion euros were reinvested into financial markets on our platform, reducing the number to approximately 0.6 billion euros. Of the 0.6 billion euros, About a third can be attributed to a reduction of our margins loans outstanding with the remainder of 0.4 billion being the positive cash under custody development from end of 2022 versus end of 2021. Let us move now onto our strategy going forward. Now, despite all challenges, we delivered a financially solid 2022. So what is the underlying outlook for our 2023 guidance and our mid-term ambition? After 14 years of sustainable growth, two years of an abnormally bullish brokerage environment during COVID, the mean stock hype and zero interest rate policies, only to be followed in 2022, By the worst year with respect to retail brokerage sentiment in our history, we focus towards a strategy of higher profitability growth. On the one hand, this includes optimizing our product and pricing strategies and to increase our market share by leveraging our strengths and expertise, as well as attracting long-term trading clients in continental Europe. On the other hand, Focus on our margins as we mature in our corporate evolution will be a significant part of this strategy. This includes more stringent operational cost monitoring, reducing our cost base to operational improvements, as well as general cost management. We want to ensure that we are maximizing our margins and are well positioned to drive sustained margin improvement. Combined with customer growth, we will also focus on higher profitability to our shareholders within our strategy. The implemented product and marketing strategies plus the given environment allowed for unusually high client growth periods in 2020 and 2021. Since 2020, we grew our customer base by almost 200%. We are aware of the fact that the environment has changed. Going forward, we need to prioritize the quality of growth the quality of our products and services, as well as enhancing the overall client experience more than before. We still believe in the secular trends, in the digitization and the increase in financial literacy, especially in the underdeveloped continental European markets where we have a very unique positioning. However, at a different speed than estimated in the past. Thus, the first takeaway in the outlook session for today The vision 2026 of very high growth rates that we gave two years ago, aiming for 7 to 8 million clients, has been revised given the changed environment and will be formally dropped. Key to our sustainable success in the past was our triple P strategy as in platform, product, and price. That is what distinguished us from competition and will continue to define the future path of the company. long-term but sustainable customer growth, cost discipline, and corresponding margins. We will continue to grow Pan-European's best investment platform. Over the last three years, we managed to position Slatex and Tejero in most growth markets as the quality broker, with significant investments made into brand awareness and indirect marketing, as we saw a few minutes ago in the brand awareness overview. We will now channel our marketing efforts mainly into targeted marketing and pull marketing efforts. This will involve leveraging our data and analytics to improve conversion in our existing markets and invest more effectively to attract trading-oriented clients, leading to the second takeaway. We will adjust our marketing strategy towards more targeted marketing. As a consequence, as Frank Niehager already alluded to, FlatX De Hero will discontinue the main sponsor brand awareness activities of European football clubs. This will lead to football-related marketing cost reductions starting in 2024 and resulting in a high single-digit million cost saving per year. After years of investments into our brand development, we will focus on attracting and retaining high-quality clients. Putting our product and platform first as well as rolling out already existing products into new geographies, is a key low-hanging synergy that pays in on the long run on both customer growth and margin. So the third takeaway, we aim to increase our operational margins towards the benchmark margins of established and mature local European players. Also, the market is generally expected to grow mid-term with a speed of high single percentage. We aim to grow our customer base 1.5 to two times faster than our benchmark peers by having the advantage of our distinctive footprint in 16 countries that allows us to efficiently allocate marketing spending across those geographies. For more than a decade, both brands, Flatex and Dehiro, have been price leaders when it comes to quality brokerage services. We always have focused on maximizing the value we deliver to our clients by offering an exceptionally broad range of products and services. But we will also continue to optimize our pricing and revenue strategies. When we acquired the HIRO, we highlighted that we need to find the right equilibrium between growth and profitability. In 2020 and 2021, given the inviting environment, growth was clearly in the foreground. In 2022, we benefited from newly introduced products and selectively raised prices at the Giro. As a fourth takeaway, we will further assess sensible product and pricing strategies to improve margins and long-term value for our shareholders, while offering our clients a best-in-market investing experience. Over the recent two years, we increased the revenue per trade from approximately 4 euros to more than 5 euros, and aim to develop it mid-term more towards the six euro range. As of January 1st, we increased the pricing for our margin loans at De Giro and Flatex by one percentage point each, reflecting only partially the ECB interest rate environment. In the previous years, we have guided for total trades in the current year at the beginning of each year. While we as management can have influence on business metrics such as customer growth or monetization incentives, trading activity of clients is very difficult to forecast properly. Market conditions, investor sentiment, and other external factors can significantly impact trading volume and liquidity as we have seen back to back in the last three years. As we cannot accurately forecast client activity, the fifth takeaway we will not guide trade numbers anymore. When we come in a minute to the guidance for 2023, obviously there is an underlying assumption for trade number to derive a revenue guidance. But please let us be very specific on this topic. This 2023 number is a variable based on current environment and not a formal trade count guidance or estimate, neither for the whole year nor mid-term. Before ending the discussion around top-line drivers, one more thing on transparency. Since we do not forecast client and transaction numbers anymore, we would like to conclude with the already indicated six takeaways. Starting yesterday, we will disclose monthly commercial numbers, including gross account growth number, number of transactions, and assets under custody amongst others. We hope this allows the market to better follow and understand the development of our top-line drivers. It also follows peer benchmark standards and strengthens governance. The numbers will be published on every third working day of the month for the previous month. I will now briefly hand over to Achim Schreck, our Head of Investor Relations, to share a few more facts on our monthly reporting going forward.

Thank you, Benon, and welcome from my side as well. As already mentioned, given that we are no longer guiding on the number of trades, we believe it's fair and helpful to the market to provide the monthly development on those commercial KPIs, not just for the recent month and the month before, but providing as well the 13-month overview, which we believe will help also to get a bit of an understanding for seasonal patterns and understanding the developments throughout the year for all the mentioned KPIs that there are customer account growth on a gross and net basis, as well as the development of our assets under custody, including the split between securities and cash held by our clients, as well as the current levels of the margin loan book. And additionally, the trading activities, again, split also what we believe very relevant to us at the business in high revenue trade. So stocks and bonds versus lower revenue trades like ETFs and savings plans. As Beno mentioned, we will provide those figures every morning of the third working day after the close of the month. So you will have those data available in line also with the peer publication. I would hand over back to you Ben.

Before coming to the guidance, one final comment. Given the maturity stage of our business and by carefully targeting our marketing activities to our most effective markets, we can ensure that we are maximizing the return on our marketing investments and reducing suboptimal investments. Over the recent years, we have invested significantly in our brand awareness activities. Now it is time to leverage and focus on conversion. Let me repeat the second takeaway. We have decided to discontinue the main sponsor brand efforts with Borussia Mönchengladbach and FC Seville after the contract run out, which will save 2024 and onwards a significant single-digit million amount annually. Guidance. The revenue guidance 2023 is based on an assumed trade number of 65 million transactions, and is based approximately on the trading activity in Q2 to Q4 of 2022. This assumed trade number might be higher or lower depending on external factors. Half of the analysts will probably agree with that number, half are a bit more optimistic. Again, we cannot control that number explicitly, but want nevertheless to give a perspective. So assuming a trade number of 65 million and forecasting a commission per trade of 4.10 euros, we expect a commission income of approximately 265 million euros. Additionally, we will monetize our client deposits on two ends. We assume the volume of margin loans to be on average at 900 million euros and expect an average yield of 4%. contributing another 36 million euros. The short-term dated Treasury portfolio is assumed to be on average at 2.5 billion euros with an average yield of the current ECB deposit rate of 2.5 million euros, contributing 62.5 million euros. Both the margin loan book as well as the Treasury book are only an assumption and might fluctuate depending on trading activity, customer deposits, and customer growth. The same holds true for yield that as of today seem to be pointing up and potential rate hikes may not be fully reflected, but the year is long and we might also encounter interest rate cuts later in the year. Including other operational income of 15 million euros from our B2B brokerage business, we expect a total revenue number of 380 million for 2023. For informational purpose, we assume the costs of goods sold to stay at a level of 17 to 19% of total revenues. Deviations here might also result based on assets under custody and thus cost of custody as well as various exchange fees that might change. For 2023, we guide operational expenses consisting of personal marketing and general and administrative expenses in the rates on 150 to 160 million euros. This includes a stricter marketing budget and structural cost savings. Through these initiatives, we will manage not only to continue to develop a solid regulatory framework, but also a cost-effective business model that delivers more sustainable results. As a key contributor to operational cost savings, the marketing budget for 2023 is expected to be around mid-30 million euros, significantly lower than 2022, where we were close to 50 million euros. For clarification purposes and to avoid surprises after Q1 results, we would like to highlight, as usually, the quarterly split of the marketing budget in 2022 is similar to 2022, i.e. 40 to up to 50% of the 2023 budget is spent and allocated in Q1 of 2023, given the seasonal high client interest at the beginning of each year to change his or her brokerage provider or to open a new brokerage account. Also, we will at the same time continue to invest into areas of regulatory importance. Having said all this, we will work towards growing our margins. A key driver of margins is the number of trades, given the fact that each additional trade generates an incremental more than 4 euros in commission and converts into 80% bottom line margins. We cannot control the transaction number explicitly. Nevertheless, given the first two months of operational business and the operational cost focus, we are confident to deliver already in 2023 a margin step up compared to 2022. Based on the mentioned assumptions, for 2023, we expect an adjusted EBITDA margin of 40% plus, and an adjusted profit before tax margin of 30% plus. As always, the adjustments refer only to building and releasing provisions for long-term variable employee compensation and nothing else. Let me summarize the underlying assumptions for this year's guidance. First, trading activity cannot be controlled and depends heavily on external factors. January and February trading figures are supporting our assumptions made. We have initiated certain operational cost measures that will support the margin expansion midterm with first effects to be seen this year. Over the recent weeks, we have analyzed the status quo diligently and understand clearly where we need to sharpen our strategy. We have had successful 15 years. Among the leading mature online brokers, we are a pan-European player with plenty of additional potential ahead of us. We will continue to leverage market opportunities when they come up. However, we'll focus day-to-day on what we can control, solid and high-quality customer growth, as well as strong margin generation while strengthening the governance of our regulated business. Thank you very much for your attention. We would now like to open up on the Q&A session.

Ladies and gentlemen, as a reminder, if you'd like to ask a question or make a contribution from today's call, please press star 1 now on your telephone keypad. To redraw your question, please press star 2. The first question comes from the line of Marius Ferberg calling from Warder Research. Please go ahead.

Yeah. Hi, everyone. Thanks for taking my question. A couple of them from my side, if I may. The first one with regards to the barfing, the appointment of a special representative by the barfing, should we see this more as a sign of severity of the special audit which was conducted, or how should we think of what the specific role of this special representative is? And second, also on the barfing, what is your expectation on the the risk mitigation for the de jure margin loans and when they will be usable again or what is your schedule on this. Another question on marketing. You mentioned that you plan to have about 50 million in marketing. Looking at last year, this breaks down to customer acquisition costs of around 106 euros additional customer, whereas in previous times this was rather in the area of around 50 Euro. So should we expect this figure to remain that high, especially for the year 2023, or how do you look at that? And lastly, just for confirmation, when you say that you're growing stronger than peers and all the figures you compare to competitors, you refer to listed competitors. Am I wrong? Am I right there? So this does not include probably your main competitor, Treasury Public, which is private, right?

Okay, Marius. Thanks for Those questions I will start and then hand over to Dr. Benonianos. With respect to the situation of the Bafin, you have to understand the following. In the normal course of business, after an audit 44, there will be a follow-up audit in 12 to 24 months earliest. That's the normal procedure. Due to the fact that we have a special representative auditor coming in by end of the first quarter, there is a possibility to change the imposed measures together with the BaFin earlier than waiting for the follow-up audit. Second, the special representative auditor will observe how we have improved those findings and will obviously take samples and report it to BaFin to come then to a conclusion whether the measures will continue or can be lifted. I think that is all to your, oh, the second part was what does it mean with respect to the margin loans? So with respect to the margin loans, If the auditor and BaFin together comes to the conclusion that the measures can be lifted, our risk-weighted today 75% view on the marginals of de jure are no longer applicable, and we can go back to the old view where there is zero risk-weighted assets, and obviously that would free up 75 million of regulatory capital.

I'm happy to address the second part of the question. On the marketing spend, you mentioned when you posed your question that we plan on spending 50 million euros in 2023. The number for 2023 is expected to be more in the mid 30 million range. So let's call this 35 or 36 million. And indeed, your assumption on our targeted marketing efforts leading to a reduction in the customer acquisition cost per new customer account is right, and we expect it to decline given the activities and the numbers that we have provided. And your final question was on the comparison to competitors. My colleague, Ahim Schreck, can finish the question, but I'll start off with saying if we have properly communicated numbers from competitors and peers. We are happy to use them, but many, particularly not public companies, simply don't provide public data, which makes it hard to quantify the respective comparison. But, Ahim, please add as needed.

Yes, no, absolutely right. Obviously, in order to compare data, we need to have reliable, official data. That's one. The other point we would like to make clear, surely, is that new brokers in Germany and outside Germany are not the ones that we would consider our main peers in the market as they are aiming for a completely different customer group and we stress for a long period of time in the presentation now again that our focus is on high quality customers, people with trading experience and a different profile from those peers which we also and therefore justified to rather compare ourselves to the listed here.

Next question, please.

The next question comes from the line of Ian Wright calling from Autonomous Research. Please go ahead.

Hi there. Thanks for the presentation and for taking my questions. Just a couple from my side, please. Can you just talk us through progress you've made to date with regard to additional hiring that I think was mentioned on the December update with respect to the findings of the BaFin special audit. And can you provide a sense of the total additional costs to remediate the findings of the special audit that are embedded within your guidance? for 2023, please. If you could provide a sense of that, that would be helpful, I think. And then secondly, just some sensitivities around commission revenue per trade. Can you tell us what percentage of trade in 4Q were regular investing trades and what was the average commission revenue per trade there, please, just to help us to understand how that could change if activity were to recover? Thank you.

Yeah, thanks for your questions, Ian. I will start with respect to the hiring process. We've hired a new head and a new deputy for regulatory reporting and have further added staff to that. We've also hired a new head of internal audit and a deputy and we will add further staff. We have also appointed a person to run internal controls globally in our group and have hired staff to that person. We've also increased people in the compliance department. All in all, the key positions have been replaced and people who were responsible in the past for those findings, which were part of the misdemeanor proceedings, have left the company. I would say we've made great progress. The total add-off cost, I would say, is a single-digit million figure, mid-single-digit million figure, due to those proceedings and the fine and additional cost. But from our point of view, reasonable. That goes to the first part of your questions. I hand over to my colleagues for the other part.

you specifically asked for the percentage of higher revenue trades in the fourth quarter, if I understood it correctly. And that number stands at 71%. And what we do not do, we do not disclose the absolute number of high revenue trades and the absolute value of a high revenue trade compared to a no high revenue trade. We hope that that answers your questions.

Yeah, that's helpful. On the second one, I was looking for the... I just think the opposite side of that number. So 29% of the trade in 4Q were basically regular monthly investing trades. I understood those to be sort of charged around one euro per transaction. Have I got that right, please, in terms of thinking about then the sensitivity?

We don't disclose that. And... It's not a wrong assumption, but depending on the number of savings plans, plenty of which are at zero cost, the number also may be actually a bit lower. But we don't properly track the number and communicate the number.

Okay, got it.

Thank you.

Next question. We currently have no questions coming through, so as a final reminder, if you'd like to ask a question, please press star one now. The next question comes from the line of Marius Ferberg again, calling from Warder Research. Please go ahead.

Just one follow-up from myself. With regards to your new monthly statistics, which I highly appreciate that you report them from now on, the share of transactions that you report there in cash products and also ETFs and funds, there's a gap to to reach 100% of more or less 10% in the past. Is it fair to assume that these 10% refer to especially ETP trades?

Hi, Sachin speaking. No, it's not ETP trades. It's all other kinds of trades, CFD, Forex, et cetera. The ETP trades would be included in the cash product.

Okay, thank you. Next question comes from the line of Christoph Blyfert calling from BNP Paribas Exxon. Please go ahead.

Good morning and thank you for taking my question. The first question is on pricing. We have currently seen BACs having implemented a monthly service fee of 3 euros. Given that competition is increasing prices, do you have any plans to increase your pricing and to further improve monetization in the course of the year? Then secondly, on deposits, your deposits per client is relatively low. What is the reason for not being more aggressive on the deposit rate and using higher deposit rates to gain new customers? And the third question is on capital. Could you remind us on your SREP requirement and on the minimum capital ratio you feel comfortable with in the future? Thank you.

So your first question with respect to pricing, and you refer to a monthly service fee. We do not plan to introduce a monthly service fee. That should be stated quite clearly and openly. However, as alluded previously, we plan on increasing, of course, the monetization. And in the presentation, we gave you a couple of examples to remind you maybe on one. we are increasing, have raised prices for our margin loans by 1%. That is clearly much lower than what the interest rate environment has done. So yes, we plan on to continue to monetize the platform, but not by the introduction of a monthly service fee.

Yeah, I'm happy to answer your second question, Christoph. Why are we not more aggressive with respect to deposits? First of all, The clients of FlatX D0 are equity-driven. They are not fixed income-driven. They've never been. Second, we saw significant inflows last year, and although interest environment has already changed and history, we've never paid interest as our clients use that money to trade. And as I said, rather alpha or equity-driven type of clients, and they are not interest-driven. And we do not plan to introduce interest on the trading deposit. At the end of the day, as I said, clients are not fixed income driven. And we offer account services, safe custody account services for free. Some of our products are without trading fees. And that's part of our business model. We are not planning to change that. And although we are not planning to change that, we see a lot of new clients come in and we see a lot of cash coming in from our clients, which proves our story right. And then for the last part of your question, I hand over back to Beno.

Your last question referred to the SREP amount, which stands at 5% for the group. And we will publish all details on that as usual in our Basel Pillar 3 transparency report which will be published at the end of April.

You said your SRIP requirement is 5%. That's correct. And on the CET1 side?

What do you mean exactly? Total capital ratios or overall capital? Our total overall requirement at year-end 2022 stood at 15.56%. Okay, very clear.

Thank you.

The next question comes from the line of Benjamin Conkey calling from KBW. Please go ahead.

Good morning, gentlemen. Thanks for taking my question as well. Just a follow-up from the previous speaker. Generally around price increases, and Ben, it sounded like in your presentation that you're rather looking at potential price increases hikes rather than winning additional customers via price cuts, for example. So it seems like it was good experience by raising handling fees at Digiro, for example, obviously the introduction of FX fees. Any plans to further adjust upwards the pricing in your underlying product offering? I guess that would be my first question. And the second a bit difficult to grasp or rather intangible when you elaborate or when you allude to product innovation or further improving a product offering in a rather commoditized market, I guess. But if you could maybe give some sort of, I don't know, sneak preview or some more elaborate a little further what you may be potentially thinking about when you talk about further innovation product innovation, product adjustments. And maybe lastly, potentially around that as well, maybe a quick update on partnerships. And I guess the robo is the one that's most advanced. I mean, maybe if you want to go out on crypto as well, and arguably still crypto winter, but just generally wanted to get an understanding how partnerships work on your platform. If you see a good uptake or an uptake as expected from your client base, and if there are plans to further add partners going forward. Thank you.

Yeah, maybe I start with your rather intangible question. We've started the friends and family phase for the robo-advice. This is on plan. With respect to crypto, we are not in a hurry due to crypto winter times. Let's call it this way. With respect to further product innovation, we want to offer in our core markets and growth markets the possibility to trade ETB products. And we've started that, and there's more to come. But obviously, we like to report once we have... all the facts together and are introducing it and not before. In the meantime, we strongly focus on our internal 44 improvement of the identified findings and we are working hard on resolving the identified issues with respect to the margin loans of De Giro in order to free up the regulatory capital. That is our focus and we stay focused and we like to report once that has been resolved and after the fact. I hand over to Bino.

Yeah, I will address the first part of your question with respect to price hikes and managing the platform. You mentioned that we sort of don't plan to attract new clients. Well, that's of course not quite the case. We still plan on growing and new clients will continue to add on to our existing business and revenues. On price hikes, we do not plan to have revolutionary things such as the introduction of a service fee as I excluded that already before, but it will be an evolutionary shift allowing to participate from the general trend, from the inflation environment that we have, and the general tendency to increase prices. And I'm happy to give you one example. You also asked about product innovation. Our exchange-traded product business at Tejiro is in the process of being ported into other geographies, and we are currently rolling out that product. So, whereas in the past, clients in in X countries can benefit from those transactions. Coming this year, we will add a few more countries such as, for example, Italy to be included in that. So having 16 countries and a broad shelf of products allows us to position them as needed and as demanded by the local customer base.

Great. Thank you very much.

And the last question comes from the line of Ming Shanshan, going from Deutsche Bank. Please go ahead.

Hi, thank you very much for taking my questions. So most of the questions have been answered. So just one last question on the business expansion in terms of geographic expansions. So you mentioned that you exit from Norway. And can you tell us what's your focus for the next year? And I'm trying to understand whether there's any other off-boarding activities is going to happen next year. Thank you.

Yeah, thanks for your question. We are not planning to off-board any other markets. We want to focus on the 16 markets. Norway and Hungary both have different currencies than Euro. Obviously, we like to simplify, but the main reason was that we didn't win a lot of clients in those countries. especially compared to our other 16 markets. So in order to focus and simplify it, we off-boarded, and it was a small number of clients in those countries. Achim, you have the number?

6,000 in both countries combined.

Yeah, 6,000 in both countries combined, so that was not really much. And keep in mind, when we bought the Giro, Hungary and Norway were already in, So over the last couple of years, not much happened over there. So therefore, we focus on the remaining 16 countries and no plans to change that for the time being.

Okay, thank you very much.

There are no further questions. So I will hand you back to your host to conclude today's conference.

Yeah, thank you all for taking the time and questions. Thank you very much, and we wish you all a good day. Bye-bye.

Thank you for joining today's call.

You may now disconnect.

Hello there.

Can you hear me? Hello. Hello there.

Hello there. We are now back into the host room. On my side, we could hear very well. The audio was really clear. That was pretty good, so I have to say. And we had roughly 12, 13 participants today. But I will send you the list straight away after the call, so you will receive it within 10, 15 minutes or so. okay great thank you okay okay nor is at all nor is at all um john young yeah speak to you speak to you later okay okay so you're doing the second one today too um not sure no i can't see it on my um okay my listing okay yeah it would be probably someone else okay okay all right then Thanks, Jan, for your time, and have a good rest of the day. Speak to you next time. Bye. Yeah, bye.