CTT - Correios De Portugal, S.A.

Hello and welcome to the CTT9M 2023 results conference. My name is Karen and I'll be your coordinator for today's event. Please note this conference 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 zero and you will be connected to an operator. I will now hand you over to your host, Durao Bento, to begin today's conference. Thank you.

Thank you, Karen. Good morning, everyone. Welcome to the nine-month CTD results presentation. We are reporting yet again a strong revenue, sorry, a strong quarter if you follow me on slide number four, mostly on E&P and venture CTP coupled with a solid cash flow performance. So starting with parcels or with E&P, we had in Portugal a significant growth volume and we have now actually indeed volumes ahead of peak season and ready for a great peak season. While in Spain, we had a very strong growth both in large clients and in smaller clients, which is something that is also noticeable. Moving to mail, this was a quarter with softer than expected mail volumes, mostly due to digitization and this decline in volume was not enough to offset the price increases that we have given the new formula. of the construction contract. We remain focused on cost control and we believe that it's something that will somehow with the new formula, well, provide the tool for a better performance of oil. On retail and financial services, We had, as we all know, a very high level of public debt placements in the beginning of the year. Then with the re-rating of the rates, volumes came down, and came down also because we have very strict ceilings on the volumes that each account can provide. And therefore, with that, we had a decline in terms of placement. Our focus, our commercial focus now, remains on the distribution of insurance and other services as well as on revamping the digital placement that we're going to have soon. The bank has a very strong growth in deposits in line with the announced strategy. In fact, grabbing market share in terms of deposits with the resilient growth on loans and therefore is moving towards the targets for 2025 at a very strong and steady place. All in all, it was a quarter which delivered revenues up 9% year-on-year with, of course, as I said, expressing parcels in the bank accelerating. In expressing parcels, we have 36.5% growth. In the bank, almost 20%. And hence, it provided for 12% 0.7 million euros of recurring EBIT, or if you want an accumulated 68 million for the first nine months of the year, or 75%, 76% higher than last year. In fact, we have now an accumulated recurring EBIT, which is higher than the whole of 2022. And this was mostly the result of excellent performance on express and parcels and demand. With this, we have provided strong operating cash flow with roughly 29% ahead of last year, free cash flow more than doubling to 64.5 billion and it provides for a consolidated net cash position of 22 million euros or a 51 million improvement versus last year. With the bank accounted on equity account, the net debt now stands at 176 million or slightly close to 10% lower than it was one year ago. Moving to slide five, well, just a picture on how the recurring gap has grown in all segments, and it did so against a more challenging macroeconomic environment that we are all testing. We can see on the chart on the right-hand side the positive contribution of all business areas so far, and also I'll call your attention to the number on the revenues on next-person parcels at $88.1 million, getting close to revenues in this quarter for miles, which is something that will be more and more a trend in our business structure. Moving to slide number six, I'm getting into the details of expressing parcels. So as I said, the charts show a very resilient growth since e-commerce adoption increases in Portugal. And although we see declining lines in the right-hand side of the chart, these represent still very high growth, 20.5% on volumes, and 14% on revenues. And also on the basis of a very diversified pool of clients, as you can see on the pie chart on the right, which provides for some comfort in the structure of our customers in Portugal. Moving to slide number seven, we can assess the robust margin expansion that we have. with 15% growth in revenues. This then transforms on 47.5% on growth in EBITDA and 160% of growth on EBIT. Demonstrating how operational leverage delivers sustainable growth in margins, a trend that we see building up in our portfolio. Moving to slide number eight and looking at Spain, also very high rate, I would say impressive growth rate with 69% growth in volumes in the quarter, which is truly outstanding, or the 76% on smaller clients, which is an important factor. that we'd like to call the orientation, since the fact that in Spain we have very large clients, this is a very important trend, the fact that we are growing even more on smaller clients. And with this, this high grow is fueled by old segments, as I said, with the smaller ones outperforming the larger ones, and hence improving diversification of the customer base. Moving to slide number nine. we see even more so than in Portugal how the growth and operational leverage enables margin expansion. And in fact, we came to an EBIT margin in Spain of 6.1%, which is a result of a 58% growth on revenues, 190% growth on EBITDA, and a hugely positive accumulated EBIT In the chart on the right-hand side, you can see the comparison between this third quarter two years ago, 21, then last year, almost breaking even, and now with a very positive accumulated EBIT, which is, of course, very good news. So, shift capacity upgrades to protect quality. at much higher volumes. This is very important, and we believe that the quality that we are able to deliver in Nigeria, and of course in Spain, is probably one of the key success factors for the present situation on the E&P business. And with this, I will hand the floor to Françoise to guide us on the mail business unit and on financial service and retail.

Thank you, João. So as you can see on slide 10, address mail revenues decreased minus 3.9% versus last year, come to 80.9 million euros in the third quarter of 2023. This comes from a mix of average revenue per item that we can increase 9.2%, but the software mail volumes penalized the revenues when you see a decreasing of less 12% on the volumes in this quarter. We know this is a business very volatile, so in that way we're still working on solutions we have is because we want to be part of the process of the digitalization of the customers with the solutions we have in like fitting and finishing mail rooms and so on. So in that way, being part of this process and helping the customers in this path. And also in the same way we see the e-commerce growing in Portugal, we also believe that we can use mail to help the startups and the small companies using mail on this business. Saying this, on the slide 11, we continue to focus on profitability. As you can see, our costs in the third quarter comes for 100 million, and this is a decrease compared with last year. If you put here the 3.4 million coming from Baltic, even with inflation growing in this quarter, And this comes from to a recurring rate of 100K in this concept. We know that for drivers, profitability in mild is volumes and pricing. In volumes, we already speak in the slide before, and in costs, we already have the We already have taken 83 people removed from the company in the first nine months of the year. That counts for 4.2 million costs that, if you look for in the light, impact in EBIT is 2.5, and we are planning for this quarter and for the next year more 200 persons, people that we want to remove from the company. that allow us to take care about 12 to 15 million euros of costs, and we look for an impact of 5 to 5.5 million euros. Coming for slide 12, financial services and retail, we can see that less than the attractive rates and the impact in the placement and profitability of this business area. We come from 883 million euros of public debt placements in this quarter. That comes for 8.5 million euros of revenues, a decrease of 44.6%, and a recurring EBIT for 4.9 million euros. Saying this, the margin increase from 44.8 to 58.2%. I think it's important to explain in this front, we are working in two major fronts. The first one is the digital front. We are still working to have the best, we think we can have the best digital front for public placements in the future. That's something that we are working in this quarter. and grab all the new savers that wants to do this process by digital. Just to remember you that in the last quarter we already launched in the market the capability the customer to schedule in our website the visit to the store and upload all the documents that we have more than 3,000 customers. and visit schedule and we think with this bringing this process to our app it's going to help us uh to grab more market share market share in the future and also using the more than 10 000 persons that use our app in a in a daily in a daily basis saying this we are working in uh into front like someone was telling it was saying the same before insurance products. Now we see almost our stores already selling these insurance products and we see an increasing of client interactions and doing simulations that help us a lot to sell these products. And also we communicated this quarter the partnership with Prosur that we think also its services well connected with our strategic for retail In that way, we think we have two major points here. The first one is working on digital for public placements, and the second one is up more services well connected with this strategic point that we have these savings and credits we want to develop here. Now, I pass to Guido Pacheco.

Thank you, João. Good morning to all. On page 16, we can see the Banco key figures with a steady progress towards our 2024 target, be it in accounts, be it in business volumes. Our accounts grew 35,000 up to this quarter, and our loans and resources growing 0.6 billion in the first nine months. In the top of the chart, we can see that we are trading per quarter above what is needed to fulfill our targets, so a clear and strong progress here. On the next page, we can see more detailed key figures for the bank where we see our customer deposits were very impressive growth of 21% against the backdrop of the Portuguese market declining. 4.3%. The auto loans and mortgage also with a good progress, 10.4% and 7%, although here we see some pressure on the evolution of the market. In terms of yields, very steady yields on the auto loans, 6.2%, and a very strong progress on mortgage that are now up to 3.1%. Also, the cost of deposits are going up as the banking industry starts to react in this front. On the next page, we see also a strong set of results, I should say, with revenues up 19.3%, so with net interest margin reaching 3%. This is, of course, being driven by net interest margin. With the cost of risk under control and the higher efficiency, we saw our EBIT more than doubling versus last year, 8.5 million in the third quarter, 22% of EBIT margin, and our profit before taxes also with a very impressive growth. Our return on tangible equity in this quarter reached 11.5% double digits for the first time. On the slide 17, we start our financial review where we can see a good quarter consolidating a very strong performance up to the nine months of the year. Revenue is growing 8.6%. Our recurring EBITDA stable when we are exiting these very strong periods of financial debt placements that fuel our growth in the last four quarters. Our net income reaching 9.5 million in the quarter, 35.5 million in the nine months, and our free cash flow for the third quarter to the 16.6 million. On the slide 18, we can see the retail revenue evolution with a very, very strong contribution from Express and Parcels and a strong contribution from Banco CTT. Our parcels business growing 35% year-on-year on revenues, with our Portuguese operations growing 20.5 million in volumes and more than 13% in revenues. In Spain, we see a fantastic acceleration to 68.9% in revenues. We grow across all segments with a good progress in diversification, as Joan already mentioned. And I should highlight that this is done against a backdrop of e-commerce that is rather flat. in the beginning of this year and for some quarters now. Mail another decline in 3.8 million with an acceleration of the decline of mail volumes, especially on the financial sector, where it seems to be a new acceleration for digitalization. Financial service declining 6.9 million with debt placements below 900 million. With a difficult comparison, well, the third quarter last year was the first quarter of this high period of demand, where we placed 1.7 billion, and that's the comparison that shows on the revenue dynamic. The lack of competitiveness of the product right now vis-a-vis term deposits and the volume cap introduced by the Portuguese government is withholding the growth of the placements. The cap is something that we see starting next year being removed and as such fueling again the placements of these products. Banco revenue is growing 6.2 million on the back of net interest income expansion and driven also by higher volumes and higher yields. On OPEX slide 19, we can see an increase of 9.7% driven by Banco unexpected parcels. Our expression parcels increased 28% our cost, 17.9 million euros, which is a normally difficult quarter for parcels in terms of unit costs. I think this quarter we show a very good progress in unit costs with much resilience and a strong progress on margins, especially in Spain. Our unit cost is declining in Iberia despite we are in an inflationary context that is pushing namely wages and energy upwards. This is a fact that we are reaching critical mass in Spain and our continuous investments in efficiency are paying off and as such we see resilient margins in this unit. Melanedas decline in €0.7 million if we account for the one-off of the other quarters, more than compensating the wage inflation that was due in €2.6 million in this quarter. Financial services decline in €3.4 million, and this is completely linked with the decrease in the activity that we saw. And Banco CTT increasing €1.8 million. directly also with activity. The cost of risk in the second quarter declined and still at 1.2%. That is a progress or improvement year on year. On slide 20, we see our recurring EBIT that was roughly flat And where we see a change on the contribution by business units versus the nine months, that is in line with what was anticipated. Express and parcels, the main contributors with a very strong progress in express and parcels. That is a trend that we see. going forward. Mail is a difficult comparable on costs because of the effect of the death quarter and higher than anticipated declining volumes. Financial services declining after this abnormally high demand. This comparable will be remaining here until the second quarter next year. Ambrex CTT growing 4.4 million euros due to strong growth in net interest, high efficiency, and good cost-to-risk performance. All in all, we see these two big contributors to our growth, the expression path of Ambrex CTT as the strong motors of our improvement in profitability going forward. And with that, on the next slide, we still have the cash flow generation on slide 21. Our cash flow through the operational cash flows to the 76.2 million euros with a strong operational performance, free cash flow 64.5 million euros. We have now a consolidated cash position, including lease liabilities of 21.7 million euros. With that, I'll pass you to his final remarks.

Thank you. Summarizing slide 23, this was a very good quarter with strong revenue growth, improved profitability, and we want to draw your attention this is happening while the macroeconomic environment is somehow deteriorating. This was the result mostly of the performance of Parcels and the bank. Indeed, on Parcels, we've seen a very strong growth with market share gains in Portugal and Spain, with margin expansion, and with that, we feel very confident for the forthcoming peak season. Online, we continue working on pricing. but mostly on cost reduction, and we believe that with the new formula and with the price increase for next year, and all the cost reduction initiatives that we will be able to cope with this softer demand that we are seeing. Well, for public debt, well, everything has been said. We see that the placement is normalizing. and we now are focusing on the distribution of insurance and other services and also in the short medium term on the digital placement that we believe will bring again market share gains. The bank continues to grow in all fronts, in clients, in volumes, in profitability and towards actually the 2025 target that we have recently updated with the reverse mutual that we did. This was a quarter that provided a steady and strong cash flow as seen and supporting already existing financial flexibility. We also kept executing the 20 million share buyback program that complements our dividend policy. And with that, and as a result of the performance that we have described, namely against the backdrop of very good performance of Express Interest, we have decided to upgrade yet again our recurring EBIT that now stands to at least 85 million euros. We close the presentation and remain available for answering to your questions. Thank you.

Ladies and gentlemen, as a reminder, if you would like to ask a question on today's call, please press star 1 on your telephone keypad. We'll take our first question from Joel Safara from Banco Santander. Your line is open. Please go ahead.

Yes. Hi. Good morning. So I have two questions. From my side, the first one just, and I think Guy mentioned this briefly, but just wanted to understand a bit on the sustainability of these margins and if there was any particular driver for the unit cost to be so low in this third quarter. I would say we're talking about pretty strong margins for this business, around 8% in Portugal, 6% in Spain, in habit margins. So if you could a bit elaborate on what's the sustainability of these margins, obviously with the usual volatility due to seasonality, but it seems that as long as revenues keep growing, this should be sustainable. So just my first question will be just to touch on that. And then the second one regarding, I mean, what the recent decision by Anacom to approve the new quality service indicators, basically reducing it to eight instead of 24 before. I have two questions regarding this. I mean, first, I understand this will only be applied from January 25, so the question here is what will happen in the meantime, so what is Anacom's view on the quality indicators that you deliver in 23 and 24, and what does this mean, what can this imply in terms of either additional capex or any fines? And then the second, just regarding these indicators, if you feel comfortable that you can achieve them and if you could give us a bit of overview on that. Those are my questions. Thank you.

Our next question comes from Michael Limited from Barclays.

Sorry. Sorry. Sorry. Yeah, go ahead. I'd like some of the questions. I will start with the – thank you, Jerome, for your question. I will start with the quality KPI and then hand over to Guy for the sustainability of our EBIT margin. The quality indicators proposal that came to the public should not have come to the public because the law is quite clear and has no ambiguity whatsoever. It says that the quality indicators are set by a government ruling, in Portuguese, Portaria, following a proposal by ANACOM after hearing the representatives of the customers. So this is not supposed to be a public hearing and we are handling that accordingly. I will anyhow disclose that this is not what it looks like because in fact these new eight indicators, they are a condensation of all the previous indicators and therefore our view is that this proposal is rather useless because it doesn't conform with the law, not in terms of process, nor in terms of the content. And I would only expand to a final example, which is, as you know, the law and the contract state that indicators should be in line and using the average of European countries, and these eight indicators address six different products, and the European average is 2.7 products. So, in general, this is just one example of many that we could provide. This does not comply with the law, and therefore we are not, of course, we are participating in the public hearing, but we are also moving ourselves towards, well, getting, making sure that the proposal and finally the KPIs will comply with law. With this, I would pass to Guy to answer the first question.

On sustainability of margins, So we are, I should say, at least on the second quarter of strong progress on margins. Normally the summer, especially on August, is very challenging because all the market normally has softer volumes. All the providers have softer volumes during August. And because we cannot dismantle operations only for one month and to resume on the next, we normally have higher unit costs. This quarter, we had very strong volumes, even in August, that enabled us to dilute our fixed base costs during August. And that is a function of we are sustainably above a threshold of volumes, be it in Portugal and Spain, that enable us to be on these kind of mountains. So they are sustainable as we see volumes sustainable going forward and pretty much in line in what were your assumption during your question. its foreseeable sustainable margins, even some improvement vis-à-vis the quarter in what should be sustainable margins going forward.

Perfect. Thank you very much.

Our next question comes from Marco Limite from Barclays. Your line is open. Please go ahead.

Hi, good morning. Thanks for taking my questions. The first question is on Spain. So just a follow-up question there. Clearly, you are benefiting from volumes growing a lot, 60%, 70%. And I guess Spain, for the first time, Spain profitability was higher than the Portuguese profitability for the first time. So I'm just wondering when we should expect basically volume growth to normalize more closer to the underlying market growth. So when your campaign of new clients acquisition will sort of normalize a higher base and from there, we should expect that just more of a normal growth. Second question is on capital allocation. So you recently announced about 25 million of compensation from the state. So when are you gonna receive that amount of cash? And similarly, when you're going to cash in from the real estate stake disposal, and what do you intend to do with all of that money? Thank you.

Thank you, Marco.

On Spain, we've been acting and performing and grabbing the benefits of an attacker, a sensible attacker, in the sense that we still have a very small market share, although growing at an interesting pace. It's very hard to answer to what should be the normalized growth rate. What we see is that, and Guy already mentioned that, we see the situation in Spain where e-commerce is not growing. We've been able to specialize very significantly on out of Europe e-commerce. We have this vertical of customs clearance and combined with sorting. So we believe we have a very significant quality. We have a very integrated operation with Portugal, more and more. So we see that we have a significant number of rivers that would allow us to keep some growth, but of course it's 70% is not sustainable, but it's still early days to establish what would be a normal market growth. Coming to capital allocation, so this 23 million euros, we expect to receive them somewhere next year. These processes, well, there are tweaks and... and ways of spawning these and the state has used them as usually does in these processes and so the funds should come next year. As for the real estate cash in, we've said that we want to complete legal before year end. Part of the cash would come into tranches and we think that we are so far comfortably executing that front. What to do with this money? We've said that very clearly. We want to reserve room for additional efficiency, so some part of these funds are going to be invested on additional efficiency, mainly by reducing our workforce base. We want to provide and keep providing an interesting level of shareholder remuneration. As we said, we have now, after two years, a stable and explicit dividend policy of between 35% and 50% of net profit. And when we have available cash, opportunistically, we will perform share buybacks, as we are doing exactly now, And third, we want to reserve some room for additional growth and non-organic growth on the agrarian space. So this is, well, the final end of this fund is going to be a mix of these three capital allocation destinations, so to say. Thank you.

Thank you.

Our next question comes from Felipe Leite from CaixaBank. Your line is open. Please go ahead.

Hi. Good morning, everyone. I have two questions, if I may. The first one is regarding mail and mail prices for next year because I believe that the 12-month preference period for next year price increase ended in June. Do you already have some view or what is your belief in terms of magnitude of price increase for next year? If you can share it with us. And second question, also regarding mail, if you can give us the breakdown in terms of volume, evolution during this quarter from regulated mail and bulk mail, just to understand what's the type of mail that has a higher volume drop because On regulated mail, you can recover the drop on next year prices, but on bulk mail, you cannot recover it, just to understand the breakdown. Thank you.

Thank you, Philippe.

So, on mail prices, as you know, we are now – you rightly said that the data is computed between June and June. The numbers are now known. The formation of class is a combination of a number of things. The most obvious one is the pure application of the formula, and then the constraints that we have of various kinds, just to remind some of them. We have a constraint on the normal letter. We have a constraint on no more than 15% in any project on the three years, no more than I believe 30% on three years and 50% on one year. With all that, what we can say is that the price increase will be clearly above the one we had this year. We are now in the process of negotiating, or not negotiating, arranging that, discussing that, because there's no negotiation. It's very factual. and we should come up with disclosing that number as soon as it is finally set up, but clearly about what we have this year. On the second question, Guy will answer.

Thank you, Philippe. You asked the details on the appendix on slide 7, but nevertheless, just commenting that we are an increase decline or a higher decline in both regulated and competitive mail but the sharper increase was on regulated mail and also in some customers on bulk but very concentrated on financial services so some banks some specific banks are changing the dynamics in terms of of statements and we had some changes in law for insurance companies regarding the green card and that is showing also those kind of digitalization measures on that sector.

Our next question comes from Antonio Saladas from AES Research. Your line is open. Please go ahead.

Good morning. Thank you very much for taking my questions. I'm still related with the address mail and chat for over the third quarter. Do you think that the customers changing the way and the digitalization and so on, if you've related with the price increases that you apply easier or not? So that's the first question. And the second question is related with the competitive environment in the express and parcels. I don't know if you can explain a little bit more because your performance in Spain is very strong and taking considerations of the market, it's not growing so much. And you are getting market share for sure. But in Portugal, how it is, how you are playing? I guess that you are just keeping your market share, nevertheless. I'm just at my own, I'm just receiving more and more suppliers, different suppliers, so my feeling is that competitive environment is increasing, so I don't know if you can elaborate on this.

Thank you very much.

On mail, let's see, it's It's very difficult to assess if it's this elasticity. I think it's both factors. But on big customers, what we see is very sharp changes in dynamics in very concentrated clients. So it's where we see dramatic falls on these things after movements like the bank statements finishing the ring cards and all of that. On regulated mail, it depends on the quarter, but until right now, we increased prices in March. We didn't saw such dramatic change on volumes, so difficult to assess if it is elasticity or not. On Spain, It's important to understand that the market, although it's not growing that much, there are very swings or some dramatic swings between the players that operate there. Namely, out of Europe players that are gaining share aggressively. and we are lucky enough to be actually providing services to everyone and also to those out of Europe players that are driving the rules. But we are also growing on the smaller clients so we see ourselves as an attacker on the market and as such we keep grabbing share and that I think it's our obligation as we have the market stance that we have in Spain. In Portugal, we see ourselves growing at least as the market, but we see ourselves also gaining share. What do you see in your home? that I'm not always sure if it is a good proxy for the market, but it's normal because what we have is a number of players that only operate in very dense areas like Lisbon and Porto that can be geographically competitive, but not nationwide. We ourselves are also having tariffs that edge our exposure to that because we have tariffs oriented to density in order to give less space for them, but we don't see that dynamic. We are growing slightly above the market and we are gaining share. It's at least our view.

Okay. Thank you very much.

Our next question comes from Autor Amaro from CaixaBank. Your line is open. Please go ahead.

Hi. Good morning, everyone. Just one question, if I may. We witness EBIT guidance revision upwards. I think it's fair to assume that this EBIT target has been achieved quite supported by the performance of financial services. Meanwhile, we see a very significant slowdown of this segment. It generated 5 million euros this quarter. If we annualize this, we're talking about roughly 20 million per year. My question is, how are you incorporating these new trends in your EBIT target for 2025, which is, if I'm correct, the average point is 110 million euros. And this is my question. Thank you.

Thank you, Ortur.

So, you are right that the financial service is playing a different role. We are clearly in line with the targets for 2025. We are not happy with the level of placement that we have now. We've already mentioned a few measures that we are active on. The digital channel will be probably one of the most relevant ones. We are also, I cannot say pretty sure, but with very strong confidence that the caps per account will be removed, hopefully back to the five times more, the previous 250K. Large replacements occur mostly on our branches, so we are confident that that will improve. But we see very positive trends on express and parcels, on the bank, We have a very edged portfolio and diversification is in fact the most relevant sustainability lever for a postal operator. And so we keep, I would say, strongly confident that we are in a conversion path towards the – well, in a soft way towards the expectations that we have forward to the market, you know, capital markets. We've seen, for example, the bank achieving this quarter return on terms of equity. That is, well, surprisingly ahead of what we had in mind. So we are pretty confident that we will be there, even if with the slight contribution of the various business areas.

Okay. Thank you very much. Well, very clear your answer.

Ladies and gentlemen, as a final reminder, if you would like to ask a question, press star 1 on your keypad now. Our next question does come from Marco Limite from Barclays. Your line is open. Please go ahead.

Hi. Thanks for taking a follow-up question from me. So back to the Spanish volumes. Would it be possible to know what's the split between domestic volumes versus cross-border volumes? I'm just aware that there were a few press articles mentioning some security issues with some of the Asian retailers' apps. Thank you.

Thank you, Marco.

I'm not sure I understood well the security issue, but we have, I would say, a predominance of large customers. Most of them are out of Europe. We are not, of course, we don't disclose data on a customer-by-customer basis, but I would say that there is a significant contribution of out-of-Europe customers in Spain. also in Portugal and also because most of the out-of-Europe volumes in Portugal come from Spain. I probably can add that and this also goes to a point that I believe Antonio Salares mentioned earlier on why are we so grabbing market share in Spain. We have developed this specialization on auto of Europe and especially Chinese e-commerce players because, as you know, a few years ago, Chinese e-commerce would come into Europe, actually into the world through the postal network. And hence, postal operators have had the privilege, opportunity to replace when those players abandoned the mail network. to replace them and we were very well positioned to do that in Portugal. So that's one of the reasons why we have this privileged relation with that segment of the market. Also, as I've mentioned before, we have launched a customs clearance operation in Madrid earlier this year and this is the only operation where customs clearance and sorting are together. which we believe is also a competitive advantage. And so, I mean, we are going to disclose customer by customer, but you may trust that there is a significant importance on out-of-view customers. Okay, thank you. Those can complement my comments.

Yeah, what I think is, what you are seeing in Spain is the result of our vetting diversification of our customers. So, like Joan was saying, that we focus on these out-of-Europe customers and also Chinese that before comes from mild, we grab this traffic for Portugal and Spain. for express and parcels, but we also are very happy what we are seeing growing in SMEs and in big customers. So what we can say, we see a very good numbers on these diversification in Spain in different segments and different dimension of customers and also using for to distribute in Spain and also for cross-border. In the same way, if you allow me, We are also very happy with the diversification in Portugal because you see different sizes of companies and different sectors that allow us to manage the different economic environments, also for the traffic in Spain. We can say that using the backdrop of the Iberian proposition we have, that we know that it's a unique thing And we don't see any computer using these like we have been using. This brings us a very happy growth in Spain with diversification of the customers.

Okay, thank you.

Our last question in the queue is from Joao Safara from Banco Santander. Your line is open. Please go ahead.

Last question from my side. In this quarter in particularly, we've seen the market share of your market share of the total placements reducing significantly, if I'm not mistaken. I think third quarter last year was around 80% of the total public debt flows. meaning new subscriptions, obviously, and this year close to 63%, 62%. I mean, the question here is, first, was there a new competitor for placing these products, or is this just the digital segment of... of the public credit agency that had a higher market share in this quarter? And also, if you expect this to be a trend also in the future?

Thank you, João, for your question. So, as you know, with the growth of what you have been seeing from the last quarter of last year and also the first half of this year, of new savers comes a lot of new young people putting their savings on public tech placements. These allow us to bring for these services more digital persons. That's what we are competing. That's why it's so important, like I said before, we have a very good experience and the capacity we're going to put in our app for these servers also can use our digital channel. So what we have strong feelings for the future is when we deploy this digital channel from CTP, that we're going to grab more market share for the future. And I think that's the big difference.

Okay, that's digital. Just to follow up on that, do you have any date for the launch of this digital platform?

Most likely beginning of next year. Okay, thank you.

There are no further questions, so I will hand you back over to your host, Joel Benton, CEO, to conclude today's conference.

Thank you again for coming and for your questions. And, of course, we remain available to our IR team. to follow up once. Thank you very much. Have a nice day and have a nice weekend.

Thank you for joining today's call. You may now disconnect.