CTT - Correios De Portugal, S.A.

good day and welcome to ctt first half 2023 results call my name is priscilla and i'll be your coordinator for today's event 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'll be connected to an operator i will now hand you over to your host mr Joao Bento, the CEO, Mr. Guy Pacheco, the CFO, to begin today's conference. Please go ahead, sir. Thank you.

Thank you, Priscilla. Good morning, everyone. Welcome to our first half webcast, where we are talking about the great quarter with all business areas performing very well. And I would emphasize the performance of Express and Parasoft. that through a robust growth in volumes, revenues and profitability, somehow rendered the right results, given the capacity investments that we had. This is indeed, for Express Investors, a record-setting quarter. If you follow me on the left-hand side of slide number four, We started exactly with parcels on Iberia, strong volume rebound across our E&P platform, driving revenues and profitable growth in Portugal and Spain. In Portugal, we have seen a sustained acceleration of volumes and revenues and margin. And in Spain, it was mostly a very strong growth both in large and small clients that provided this very interesting result and outlook. As for mail, we are now grabbing the benefits of the new price mechanism, given that price increases compensated volume declines. Nevertheless, we remain focused on profitability and on cost-cutting to deliver EBIT growth, and that's why with a sloppish revenues performance, we had a significant improvement on EBIT. As for the public debt, we are now back to what we are considering a normal or normalized demand of public debt, following the changes in the economic conditions of the main project, the savings certificate. And we remain focused on transforming the retail network towards services. namely with this new acceleration on insurance distribution where we are already observing the first very relevant results. As for the bank, Both volume, volumes growth and higher rates both contributed to improved profitability and the bank remained focused on strengthening client relations against the backdrop of healthy banking client growth in the quarter. With all this, we've seen revenues growing 12.7% year-on-year, reflecting the already mentioned growth in all segments, with E&P itself accelerating some 25% in the quarter year-on-year. And with that, we have produced a $22.7 million recurring EBIT, or roughly 90% growth. Finally, we are also showing a strong operating cash flow generation, $55.6 million in the first half, almost tripling the results from last year. Free cash flow went up to $48 million, or 12.5 times growth year-on-year. And this is also the quarter where we spread our dividend of around $18 million. or 125 cents per share. Consolidated net cash position of 7.6 million, a significant improvement again, and with the bank equity accounted, our net debt stood at now 174.6 million or down almost 18 million versus the numbers of year end 22. With that, we have, moving to slide number five, the details of the revenue and margins that somehow reflect the comments I've already produced, so quite obvious growth on all business areas. And then I would invite you to move to slide number six, where we describe our main features of E&P in Portugal. We have indeed registered the fifth consecutive quarter of sustained acceleration in volumes and in revenues, benefiting from operational leverage, and we have also seen very distinct results on margin. Indeed, this growth of revenues is based on growth in all types of clients, And therefore, we are showing this chart on the bottom left-hand side with the diversified client base, which implies resilience in this type of growth in the sense that, well, we cope with different dynamics in different parts of the economy that produce or induce last-mile deliveries. Revenues have grown significantly in Portugal, double digits, and growth in revenues is a combination of not only growth in volumes, but also an improvement in margin given better pricing. This is also a period where we have somehow absorbed all the main impacts of cost inflation that we've seen in recent times. Moving to the right-hand side, this generated an increased operational efficiency and leverage that allowed for a 34% growth in EBITDA and a 70% growth on EBIT, producing, again, a double-digit EBIT margin, which we render very, very relevant. Moving to slide number seven. We see the situation in Spain with record volumes driving increased profitability due to a much higher operating leverage, benefiting from private investments, as we've seen and we've referred many times in the past. We have built the capacity, we have the quality in Spain, and with volumes growing to numbers that we were aiming at and working towards this achievement, we are now seeing the results. Indeed, we have a 4-4 growth in the quarter, and in fact, it has been accelerating through the quarter. And again, this is the result of growth not only in large clients, but also in small clients. And you can observe on the bottom left side, we've seen in the quarter a 59% growth on smaller clients. Indeed, moving to the middle chart, we see that the top five clients have, in fact, reduced their contribution to growth. We rendered this as an interesting feature of the dynamics of the demand in Spain. We have produced 36.6% growth in revenues, 75% growth in EBITDA, and it's possible to qualify growth on EBIT with a significant growth of 1.2 million euros, which is a number we've never achieved before. So we have a very promising second quarter on E&P, both in Portugal and Spain, as I said, but also we also have good prospects for the year. And I'd like to invite now my colleague, João Souza, to comment on the Express and Passage Outlook and following for mail and financial services as well.

João, to you. Thank you, João. Like João was saying, in Portugal we have managed to have a justified customer base in business sector and also in the dimension of the company. That guarantees a better way to managing the uncertainty of the market. And in Spain, the increase of date of the SMEs and the consequent reduction of the dependence of the largest customers also gives us security to manage in a better way the numbers in Spain. In both countries, we see a very positive commercial pipeline that gives us a very positive outlook for the future and for the rest of the year. Coming for the mail business on slide eight, despite the effort of managing the drop mail traffic, getting market share in a share of quality in customers and managing churn with business solutions that is growing year on year, The address mail volume decreased minus 7.3% against the same period of last year, but the average revenue per item increased 7.1%. This comes from the new price calculation format. It also gives us a clear view for the future and helps us to control the decrease of mail volumes in the future from the price format. The increase in average price per item allow us to reach 90.8 million euros of revenues in this quarter. This is a very slight decrease compared with previous year of minus 0.8%. But also in this business area, we continue to control the costs to help to managing the drop mail in this business area. Coming for slide nine, financial services. After a strong growth in the recent quarters, we already have seen in the last weeks of June a daily placement equivalent to the historical values. We come from the same values that we have seen before this growth in the last quarters. We are doing several initiatives, mainly in customer experience, to help to maintain these volumes and managing the churn of these volumes. Nowadays, the customer can schedule the visit to a store in our website and upload all the documents. This helps us to reach the younger segment and also to manage in a better way these placements. So, as you can see in the market, this is very important. But saying this, the placement of the second quarter in 2023 growth compared with the same period in the previous year, more than 287%. In financial services, where are the public debt placements, we reach a revenue of 17.6 million, so plus 42.9%, and an EBIT of 9.9 million euros, an increase of 65.8% against last year. But what I want to highlight here is we continue to position the CTT Retail Network in a platform to sell savings, insurance and credit service to the Portuguese citizens. We have a powerful brand. We have a very important talking in our stores that allow us to bring more services to our stores. And it's still early days, but we're beginning selling insurance in April of this year. And we are already very happy with the performance. Nowadays, we have more than 85% of our stores already selling insurance. And we, as you can see in the numbers, in June we already reached more than 60,000 customers doing simulations and presenting our offer. This is very important also to managing the future. We see this like an avenue of growth because, as you know, insurance services is a monthly guaranteed revenue and allows us also to protect our future. Coming for the results of the bank, I'm going to ask you to... Thank you, João.

So in page 10, we have some of the bank's key figures. The bank continues its accelerated growth path. with acceleration in the growth of customers. Accounts grew 7.7% since June last year, and also in resources we see acceleration versus the first quarter this year. Volumes also keep growing, especially in auto loans, where we are growing 16.4%, and mortgages also accelerating 7.6% of growth. Nevertheless, originations are going even higher. We are witnessing a lot of prepayments in the market right now. Yields also improving, especially on mortgage, of course, on the back of improving interest rates. But we are also repricing and doing another repricing effort on outdoor loans where we already see improvements in yield. And also to respond to the current market environment, we start paying or increasing our cost of deposits that now reach 0.28%. On the next slide, we can see numbers of revenues and profitability. Revenues of the bank grew 19.7%, namely driven by net recent income. that with the higher volume but also with the expansion on net interest margin that now stands at 0.9% driving all of that growth. Also coupled with a good cost performance, our cost to income decreased in the period and our cost of risk is pretty much contained and drove EBIT to 5.4 million in the quarter. which itself drove our road that is now at 8.3% in our annualized ways and pretty much aligned with our mid-term targets. On slide 13, we can see our financial review with our main financial KPIs where we have a very strong set of financials. with strong growth in revenues, 12.7%. Our EBIT also growing 89.2%. Specific items of 8.4 million in the quarter. This is mainly two events. First, we resumed our optimization of our structure in Melanadas Division. where we continue to see opportunities to optimize our structure. We booked the 3 million euros one-off related with the suspension of labor agreements of 62 people with a payback below two years. And we continue to see opportunities to further increase these optimizations that will then flow to our P&L in the next quarter. We also have a 5 million euros book due to the exit of our previous headquarters. Following a slowdown in the office rental markets, we are taking longer than we expected to sublease the headquarters. We still have 2.5 years of contract and we provision one year of rent to encompass the time that will take to sublet the remaining of the building. Net profit also with good progress, net $9.9 million in the quarter, free cash flow of $8.3 million. We continue to have analysis generation and operational cash flow. On the next slide, we see our revenue evolution. a strong growth which I would like to highlight with a very strong and positive contribution from all business units. Express and parcel, of course, being the most significant progress with 25% growth. We also, with a positive contribution from the Portuguese operations that grew 13.6%. and Spain with a very high growth of 36.6% with the onboarding of large accounts and growth on all the segments as Joan already mentioned. We also see a very good progress on the diversification of customers that remains our main focus on this area. Melanes are growing 0.4 million with a positive contribution of business solutions mail pretty much sustained, that is our main focus here in this area, with 0.8% decline. Financial services and retail still benefiting from an exceptionally high demand in April and May. As commented, since the 5th of June, we saw placements resume the previous trend, so the trend that we witnessed before the second half of 22, so first half of 22 and the end of the year of 21 is the kind of placement that we are seeing. Nevertheless, placements reached 3.8 billion in the quarter. That's the revenues growth of 42.9%. Banco CTP growing 5.9 million on the back of net interest income. both factor of higher volumes and expression of the margin that now reached 2.9%. In page 15, we see our OPEX also increasing 8.1% in the quarter, mainly driven by express and parcels and financial services. Express and parcels, we saw an increase of 22.5%. Nevertheless, we see a unit cost reduction in Iberia despite this inflationary context. That is basically the impact, the effect of Spain being more and more closer to reaching critical mass and we continue to see the fruits of the focus on investment in efficiency throughout the two geographies where we see Benefits of that starting to flow through the P&L. Melanes are declining 0.2 million euros, but I would like to highlight that we are to cope with wage inflation of 2.6 million euros on the quarter. That is the fact following the agreement with the union, the wage agreement with the union. Financial services growing 1.4 million. That is basically linked to the increased activity in our stores. And Banco also growing 2.6 million euros, also increase in activity related costs. Our cost of risk pretty much contained and stable, 1.3%, stood at 1.3 on this quarter. The next page, page 16, we can see our EBIT that is growing 10.7 million euros in the quarter with also a positive contribution from all business units. Express and parcels increasing 2.8 million with margin reaching 11.8% in Portugal and 2.8% in Spain, but in Spain with a sustained improvement throughout the quarter and with very positive outlook. Melanesa also improving 0.6 million due to stable revenues and good cost control. Financial services still growing on the back of the exceptionally high demand, namely so in April and May. And like CTT growing 3.3 million, a very strong quarter with positive trends based on revenues, be it on a good cost control and also risk performance. Page 17 shows our cash flow. In the first half, operating cash flow stood in 55.6 million euros, a strong operational performance. Our working capital suffered on the second quarter from namely all that growth in parcels, that brought more effort in terms of working capital, but also a negative evolution in our DPO, but something that will be recovering throughout the year. Free cash flow of 47.9 million euros and our We, in terms of net debt, that is actually a net cash position including the liabilities of 7.6 million euros in the first half. And with that, I'll hand you over back to João Bento for his final remarks.

Thank you, Gui. So, summarizing, we had an excellent quarter. with our idea in express and personal operations growing, expanding its margin, and offering a solid outlook for the forthcoming months of this year. In May, we see the price increase protecting us from decline in inflation, but we remain very, very focused on cost and efficiency. to compensate for volume decline and improving margins. We have also seen an intense commercial activity that is allowing us to grow significantly our insurance distribution now on the backdrop of the agreement with Generali, while savings are normalizing the previous levels of placement. Banco CTP continuing to deliver growth on number of clients, on volume, and on revenue, thus enhancing its profitability en route for the levels of profitability that have been announced in the capital market today. And all in all, we have a very strong quarter with consolidated revenue and recurring EBIT growing across all business areas. It was also a quarter for strong cash flow generation, and we see our financial flexibility improving. We have launched during this quarter our new €20 million share buyback, which complements the annual dividend, but that, by the way, was also paid this quarter in May. And with all this, we believe that it enables CGD to reaffirm and the management to reaffirm our recurring EBIT guidance of at least €18 million in 2023, thus rendering its opening on the right-hand side to be probably better than this. And with that, I thank you for your attention and we remain available for Q&A.

Thank you, sir. Ladies and gentlemen, if you would like to ask a question or make a contribution on today's call, please press star 1 on your telephone keypad. We'll now take our first question from Marco Limiti from Barclays. Please go ahead. Your line is open.

Hi, good morning. Thanks for taking my question. I've got actually two questions. One is on parcels in Spain. Clearly, volume growth of 44% is kind of a very big number, especially if we consider the first quarter where volumes, if I'm not wrong, were actually down year on year. So just wondering what happened there. Have you onboarded some very large new customer? So yeah, just if you could give a bit more color on the different drivers of the growth. And still on Spanish parcel volumes. Revenues are up year-to-year, but a bit below volume growth, so unit price is going down. Therefore, if you could explain again what's the mix in that volume growth, also referring to the price mix. The second question is about the financial services. We've seen in June, as you show in your slides, a normalization in public debt placement. And if you can give a bit more color on what are your expectations, should we wait, should we expect the June run rate as the new run rate for the second half of the year? Or June maybe it was lower than what you think is the run rate for the second half of the year because, I don't know, very hot weather and people not going out much. Not sure.

Thank you very much. Thank you, Marco.

So coming to your first question, we have in fact onboarded a large client that was already a client of ours, but not only one large client. We have in fact a couple of new large clients and we have grown substantially on SMEs. But even for those large clients that we are acquiring and that are increasing their volumes, it's also a result of interesting commercial activity and new dynamics in the market that we are observing. Some of the Chinese e-sellers are now trying to reduce the number of agents in between their launching of products and last mile distribution. And so we are now operating directly with some large clients that we were distributing through other partners. But the main note I'd like to make is that it's been a contribution of several clients, two of them large clients. we see this tendency probably to improve for the future. The revenues higher but below volume growth, that's exactly because we have in fact smaller packets, so a higher contribution of Chinese e-commerce flowing through Spain and therefore smaller price per packet, and there could be no other ways to produce that, but in any case, to have that result, but in any case, we see very interesting margins associated with this growth. Finally, on the question on financial services, in fact, as Guy already mentioned, June was influenced by a strong let's say movement that we have from before in the last place days of June we have seen demand coming falling to the numbers that we used to have before so our our guidance would be more on the 1 1 billion 1.1 billion as our average placement which is what we are observing in the final days of all of Sorry, this is per quarter, of course. So roughly a little bit more than half a million we have in June is still higher than the normalized number. Something in which we have, I would say, a strong confidence is that the limitation that this new series for 50,000 euros per account will be removed when the year starts because one of the reasons why government has done this was that the percentage of public debt that was placed in retail was too high in their view and they wanted to limit that but also leave an option for retail to save throughout this throughout this type of product. We believe that next year we have a new budget and we will have, well, I'm sorry, more than sure that we're going to have a new higher limit, which probably could bring the normal placement to a slightly higher number than it will be for the rest of this year. Thank you.

Thank you. And if I can just have a quick follow-up question. Just want to confirm what you have said on your expectations for partial volume growth in Spain. Can you confirm you said that you think that the trajectory will remain similar to second quarter, if not further accelerating into the second half of the year? Did I get that right? Thank you.

Thank you, Marco.

We need to take into account seasonality, so we are now starting summer, and so normally summer would observe, especially in Spain, even more than in Portugal, lower economic activity and also from the consumer side in any case we see we see a strong demand and and volumes remaining high but of course you need to one needs to take into account that there is some seasonality so probably a slightly lower demand throughout the summer and then build up for the peak season in any case we are now we are now acting at levels of last year's peak season, which is somehow, I wouldn't say unexpected, because we believe it's a consequence of our commercial activity, but it's in these very high numbers.

Thank you.

Thank you, Marco. We'll move on to our next participant, Philip Leite from CaixaBank. Please go ahead. Your line is open.

Hi, good morning, everyone. I have three questions, if I may. First one on express and parcels, because I'm still trying to understand the evolution of margins in Portugal, because the improvement was significant. And correct me if I'm wrong, but I believe that it was one of the best margins ever in these units. Was this related only with higher volumes or there was any significant cost cutting, cost to structure? Are you using more your own distribution network to justify this margin in EMT and in Portugal? And for the future also, if you see the more than 11% EBIT margin of this quarter as recurrent and normal going forward, or should we expect some stabilization more close to the historical levels of high single digits. Second question in terms of guidance for full year, because in first off, you already did 60% of the 80 million recurrent target for full year, and it's still missing the seasonal strong quarter of the year, which is typically the last quarter. Do you see your guidance as too conservative because you are keeping it as you mentioned? And last question regarding real estate, if you can provide us an update on the deal.

Thank you, Philippe, for your questions. I'll take the first one and the last one, and I'll leave guidance to João Bento. Express and parcels in Portugal good performance what we are seeing as already mentioned in Spain we are seeing this market friends of having smaller and smaller size of objects that enable us as to to increase the synergies between our networks in Portugal where we with this new kind of profile of volumes, we can leverage more on the male network. Also, lower volumes on the male side enable us to increase those synergies. We also have been very much focusing on the improvement of margins in both countries. especially on this inflationary context, and we see all those measures bringing or delivering results. We see margins, I wouldn't say above the current margins, but pretty much stable around these levels in Portugal. Spanish still room to improve. because I should highlight that the growth was sustained growth throughout the quarter from the levels that we saw in the first quarter where margins were still negative in Spain. So I think the average is negatively affected, but we remain for Spain confident with our mid-term guidance that is high single digits. numbers of margin in Spain as well. In terms of real estate, we affirm our belief that we'll do the closing in the fourth quarter. We are now with this legal and administrative process of detaching the assets and sorting out all the the legal requirements and permits that are needed and all the tax issues around the portfolio. But I should say that we are up to date on the timetable, so nothing to highlight. We will reaffirm our objectives of closing in the first quarter.

Okay. Thank you, Philippe. Given the guidance. Well, we have provided, from the beginning of this year, a guidance opened in the right-hand side. And that was justified by the fact that we have an obvious uncertainty regarding the behavior of the public debt placement. That was extraordinary and, in a way, was not dependent solely on CPD behavior. Of course, we had to prepare the network to be able to answer to the high demand, which we did, but we never knew how long it would take. As we all know, that extraordinary effect ended in the beginning of June, and so we have part of that extra contribution throughout the two first months of this quarter, but it's not going to be here anymore. And so what I would like to, and we aim that, or we, according to our expectations, this should produce an 8 to 10 million euro decline on that external contribution. And so the fact that we reaffirmed the guidance to be at least 18 million euros and leave it again open on the right-hand side, we believe it's not conservative, as you said, and it's associated with the confidence that we have that it provided all the business areas continue to uh deliver as we expect it to be it could be even better so in a way you can read this at least 80 million years as having upside risk despite the the the the end of the extraordinary contribution of public debt thank you thank you

Once again, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. We'll move on to Antonio Saladas from AS Independent Research. Please go ahead. Your line is open.

Hi, good morning. Thank you for taking my questions and thank you for the presentation. So I have two. First one is related to the rank and the non-performing exposure that keeps increasing and the And one of the reasons, if I understood well, is related to the credit card loans. So I don't know if you can update us on your partnership, ex-partnership with Universo, and what should we expect over the second half related with the credit card loans? Because I thought that they should start to come down, but at the time I'm just seeing NPEs increasing and decreasing. as I mentioned, partially explained by credit card loans that are increasing. So the second question is related to financial services. On average, in the past, you usually placed more or less 80% of the total certificates. So I noticed that over the second quarter, the average figure was just 75%. So apparently, the online application from the government or from the authorities are increasing the market share. So could you elaborate on this or explain or say something about this trend? Thank you very much.

Thank you, Antonio.

I'll be taking the first one. Yes, the NPE's evolution is pretty much driven by our credit card partnership with Banco Universo. That, as you mentioned, should start to come down. And because of the dynamics of the portfolio, we are a run-off portfolio. We should expect the NPE's exposure to continue to increase until the end of the partnership because of the mechanics behind those kind of dynamics on the portfolio. In the rest of the portfolio, we don't see any big increase on risk, pretty much the opposite. We see stabilizing trends on the risk profile of the NPE.

Thank you for the question. About the second question, the market share we see right now is the same that we had before of this huge growth. As you know, to open an account, the Portuguese citizen needs to come to the CTT stores. And after this growth, we see the same market share. So now the growth of the last week of June, it was or sorry, the market share was of the people that still already have the accounts and just putting more money. Saying this, we are developing, like I told before, we are developing also a better customer experience in digital, so a customer right now can schedule a visit to our stores and upload already the documents to create a better experience. And in the future, we're going also to have more developments that allow us to compete with this, if I can say this, with all the digital platforms from this GCP. What we see with these first weeks of this new solution customer experience is more young people putting their savings in public placements. So I think we are reaching even another segment to this offer.

Thank you very much. Just regarding the NPEs and the partnership with Univers, when do you think that partnership will end, effectively will end? Through the year or just in the next year?

No, it will be before year-end. Just on the year-end, it will be in December.

So when we finish NPEs, it should come down?

Yes.

Okay. Okay. Thank you very much.

Thank you. We'll move on to Arthur Amaro from CaixaBank. Please go ahead. Your line is open.

Hi. Good morning, everyone. I think this question was already mentioned by Flip Light. but just to understand what are the main reasons behind the difference of the profitability between express and parcels in Spain and in Portugal, because EBITDA margins in Portugal, at least from what I've seen in the presentation, they're close to the double of EBITDA margins in Spain. So if you can give us a little explanation on what's the difference between the substantial difference. Thank you.

Thank you for your question. It's basically the factor of two things. First, because Spain, although with a very strong growth, is still reaching critical mass. Throughout the quarter, we saw a sustained improvement in margin. That doesn't translate on the average of the quarter. but nevertheless that underlying trend is there and we should expect on average the margin of Spain to increase closer to Portuguese but never forget that in Portugal we have these I should say we have this good synergy between networks or advantage, yes, thank you, was a word I was looking for. We have the advantage of the mail network where we can have a lower unit cost to deliver a parcel to that installed capacity that with the current mix of volumes that are smaller profile in terms of volume that we had in the past increased the efficiency of that distribution. We also invest in technology in order to decide within each object which network delivers it according to the profile of the object and that is being proven very helpful on maximizing the parcels in the network, in the base network, that during the second quarter increased 18% versus the second quarter last year. In Spain, we see this improvement profile, although we will always be, in a way, at discount the margin versus partial because of the advantage of the main network.

very very clear just a little follow-up if I might so these would you say that is that the current EBITDA margins in Portugal are sustainable by saying this so can we assume this kind of margins going forth there is no one-off event here increasing artificial increasing the margin so we can assume this kind of margins going forward

Yes, around this number, one couple percentage points below or above. It's a sustainable margin, no big one-off to our life. It's actually this improvement on all the efficiency in which we use each network that we have available in Portugal.

Okay. Thank you very much, Guy.

Thank you. We'll take our next question from Marco Limiti from Barclays. Please go ahead. Your line is open. Hi, Marco.

Hi there. Sorry, I was on mute. Yeah, thanks for taking my follow-up question. During the presentation, if I'm not wrong, I think you mentioned a six-year one-off in staff costs. Can you confirm I got that right? And can you clarify if that was in the second quarter or was across a number of quarters? And so if that $6 million, we should expect that $6 million to drop off of the cost base. And what are the cost benefits coming from structuring related to the one-off cost?

Thank you. Thank you, Michael.

I think you are referring to the specific items. So on the specific items, we booked a 3 million euros provision to account for the suspension of labor agreements of employees on the mail and other business units. This is a one-off that we book every time we do one of these movements. We have a payback below two years on this kind of initiative. We should see the benefits of that movement throughout the next quarter, and we see further improvements or further opportunities to do more of these actions in the near future. And just to highlight that this movement was also made on the end of the quarter, so still to flow the benefits through the P&L, but already booking the one-off.

Shall we expect the benefits probably equal to the one-off? So now it's a 6 million one-off, and then we should expect 6 million less benefits.

cost in the future so it's a two-year it's a two-year payback on a three million one off so it should be one point one point five one point six million euros benefits throughout one year so forever thank you

Dear speakers, it appears there is no further question at this time. I'd like to turn the conference back to Mr. Joao Bento for any additional closing remarks. Thank you.

Thank you, Priscilla. Well, thank you all for attending and for your very interesting questions. We remain available to interact throughout our IR team, as always. And I also would like to announce that we are now aiming at having a reverse world show event about the bank, about the strategy update for the bank by the end of September, and you should receive a safe-to-date notice at any time now. And with this, I thank you once more for you to be here with us, enjoying the results of a great quarter. Good morning.

Thank you for joining today's call. You may now disconnect. Have a nice day everyone.

Thank you Priscilla. Have a nice day. Thank you.

Thank you.