Hypoport Ag

Dear ladies and gentlemen, welcome to the webcast results Q3 2022 of HyperPort SE. At our customer's request, this conference will be recorded. As a reminder, all participants will be in listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to Ronat Lapke, who will lead you through the conference. Please go ahead.

Thank you. Welcome from my side as well to the presentation of the Q3 results. As you know, we are operating in three core industries here in Germany, credit, real estate, and insurance. And especially in the world between credit and real estate, there happened a lot in the last quarter, so a lot to talk about. But first of all, let's look on the total group. We see that Hypoport is growing over the period of the last nine months. We had the net growth. And when you look on the third quarter and see how our market shares in the different industries develop, we keep digitalizing these two industries. And when markets are down, then just our numbers are coming down slightly as well. We can't change how the market looks like right now. So how our total numbers look like, revenues up still double-digit when you look on the three quarters behind us. Profitability stable compared to last year for now. And when you look on the different segments, we saw a double-digit growth in the credit world. And compared to the market, which is when you just look figures of Bundesbank flat. Bundesbank is heavily delayed. So let's say we are certain that we took market share even our private client division where we are at plus 5% in this comparison and take into consideration that all the references are slightly delayed. Yeah, property finance or real estate and property platform plus 16% in revenue. compared to the market of minus 6% based on GAVOS. We expect GAVOS to correct this down as well. I don't see that they expected this changes in the second half of the year. And good use insurance plus 35% from our side in a stable market environment. This market is really stable. It stays stable. Premium volume plus 1%. As always, a secure market environment is something that gives us some baseline here right now. Okay, I said a lot about markets already and that something is going on. Most of you will be aware of this. Just have a look together on the numbers. German residential mortgage volume based on Bundesbank in the last 15 years. You can see for a period until 2015. It was pretty stable around 45 to 15 billion per quarter. From there, we grew to, let's say, a level of 70, 75 billion, thanks to increasing property prices here in Germany. Parallel, we saw a decline in transactions, so this was not a market who was going hot, especially German residentials. and not used to this price development and they didn't buy. So the market slowed down until beginning of this year. And when interest rates started to rise, we saw some additional volume in the market. Sales cycles got short. We peaked with the transaction volume or the new mortgage volume at about 80 billion in the first quarter. and since then saw a decline which this market never saw in the last 25 years. So current figures of Bundesbank says for the third quarter we were roughly at 55 billion. This is delayed because the reports of banks to Bundesbank happens pretty late in the process. When we look on the market, we would say third quarter was below or on the level of the financial crisis in 2009 roughly. So a really special market environment. You could say a black swan, something unusual for the German residential mortgage market in general. So how we got here? First of all, and you are aware of this, Worldwide, we saw a rise in inflation since more than a year now. And with the peak inflation rate now in Germany from about 8%, this is a historical and not documented area for Germany. Late, ECB reacted on this and started to increase the short-term interest rate. Already before this, you can say since the beginning of the year, markets reacted and changed the long-term interest rate, resulting in a heavy change as well in the cost of mortgages in Germany because German buyers, homeowners tend to refinance 10 years plus fixed rate interest rate mortgages, so they are heavily linked to the long-term interest rate in Europe and Germany. So Bund, 10 years Bund is a typical comparison for us and with the increase in the bond markets of the interest rates, the mortgage market went up as well. From 1% to 4% means for the typical homeowner that their monthly payment roughly doubled. And this had a heavy impact on the affordability of homes. Everything that you could afford a couple of weeks ago, you couldn't afford anymore a couple of weeks later. In today's perspective, the property you dreamed of buying a year ago, you can't afford today anymore. This leads already a lot of seekers, potential buyers to reconsider their decision and wait for a better environment. Better environment is a lot of hope in this, and I tend to call this speculation. So the buyer side hopes for a sharp decline in prices, something you often read in newspapers for the last roughly seven years now, that German property prices are inflated by 15% to 30%. You read the same today. And the buyer side hopes now that the prices fast comes down so that they need, that it gets again affordable to buy more or less the same property that you could have bought a year ago. In reality, we saw prices peaking in April. And since then they came down roughly by 3% by now. So as steady, small declining of prices in average. Overall, Germany, we have regions where it's a little bit, dropped a little bit more already. We have stable regions here like Berlin in the pricing, but overall a 3% decline. So the hope of buyers in the last month that prices will decline sharp didn't realize. And so family searchers, seekers tend to wait for a better opportunity. This is a core reason as well why this market is right now in a dysfunctional situation because on the other side, the seller side, the owners of properties look on the inflation and think that just waiting will bring their prices up with an extremely high inflation rate right now. The cost of constructing a home went up between 15% to 20% year-over-year. Every brick you own gets fast more valuable. And so the seller side is maybe a little bit irrational, but expect prices to fast come back to the level we saw in April and even exceed this. So they are waiting. And in this deadlock situation, we see a sharp drop in transactions. Another part of the market is new constructions. As well, sharp decline. I can go over to the next slide here. When we look on the UBS figures, we can see that year or year, new constructions are down by 50%. When you look on the historic level of construction here in Germany, you can say that for a long time, we were around 150,000 to 200,000 units in Germany. Then it took us 10 years to ramp up the production of new homes to 300,000 units, which we reached the last two years. Now, with this decline of 50% to, again, our expectation level for next year, 150,000 units, We see that the long ramp-up phase to finally get enough homes ready for all the migration that we see, all the sharp increase in households which we see here in Germany, is again back to a depressing level. Because we need 400,000 units to be finished every year to just stabilize this market. And with a production of 150,000, It's far below what is needed to compensate the net migration to Germany because of the need of our labor market. And this as well gives some hope for the seller side. So the declining construction will stabilize this market and will make sure that house prices doesn't come down as fast and as far as the seeker side is concerned. hoping for right now. This is all in an environment where we look into an upcoming recession. It's still not clear if it's a mild one or a harder one. It depends a lot from the energy prices, which came down lately a lot. So it will be interesting to see how rough the situation will be. But to make this clear, it's not that German households don't buy because of an upcoming recession. they are not buying because of the hope of lower prices and the inability to fast adjust their, let's say, what they are seeking for to their affordability level. So the better choice, in our opinion, would be to just buy a smaller or cheaper apartment than date for the chance that prices come down. We don't expect this to happen. We expect maximum 10%. We expect maximum a decline of 10% in property values, and from there we will increase again. And again, a lot of people will miss the chance to leave the renting market and acquire a home. By the way, renting market is a very special situation here in Germany. We have a high rent regulation. So it's difficult to increase rent of existing renties. And you can't terminate a rent contract. It's infinite. And with this, it really gets difficult for investors to acquire properties and rent, especially when the rent is in the property already. So the renting market under these conditions is limited. There's not a lot of new supply coming to the renting market. If you want to change your home and you have to leave an existing renting apartment, the chance to find a similar expensive new apartment is extremely low. The pressure in this market, which is constantly increasing because of trigger events and families Trigger event means you want to move together, you get children, or you want to split. With these trigger events, there is a rising pressure in the market, and the only chance to really solve this problem, especially in metropolitan areas, is by acquiring a home. Now, you don't have a chance anymore to rent something. This market dried out. Okay. That's the situation for now. Looking on the performance of the different units in this market environment, we start as always with the credit platform. Europace with their core product mortgages in the center, and we are moving via personal loans to this corporate finance business offering capital and funding port later. Mortgage volume on Europace up 4% for the first nine months, down So the slightly double-digit when you just look on the third quarter, a massive slowdown compared to the last years because of the market environment in the third quarter. So this sharp decline in market volume of something around 30% and partially in 50% in new construction is something that we feel in our numbers where we can't decouple from the market, even when we expect to take market share right now, thanks to the fact that mortgage brokers and price comparisons, what their core offering is, is something which gets much more expensive, much more interesting and important, again, for consumers. Parallel development in this market, interest saving product Bausparren here in Germany. We see there quite an impressive rally in the market, plus 17% up this volume. On Europace, plus 10%. In Europace, Bausparren is usually sold together with a mortgage product and secures the interest rate after this mortgage product ends its fixed interest period. That's why not as fast growing as the market because in the market it is as well sold just as a saving product to optionally use it in the future for a mortgage. So not linked to a direct mortgage financing right now. A lot of consumers try to secure the current interest rate for a future buying in 10 to 20 years and are using this Bausch-Bahn right now for this. When we look on the different sales channels, in third quarter we expect that brokers took market share from bank branches again. We expect this because the consumers who are seeking a mortgage right now are much more sensitive regarding rates. We see this in our own broker channel that the advice process takes longer. And we are talking much longer about affordability and the effective rate of the products. While in the cooperative bank and savings bank world, we see a certain slowdown on activity on our platform, and we expect that a similar slowdown is going on in the branches. There are some reports, especially from some heads of savings bank organizations, in certain regions that since September they don't see any mortgage business in their branches anymore. Whatever this means in numbers, so it's not public, but we expect that in this heavily slowed down market, especially banks with traditional sales approach are under stress. It still means our numbers in both sectors are up. We are gaining market share there. This is certain. We just are in the current environment a little uncertain how high our structural gain is, how much market share we take. So next product, personal loan business. Something which slowed down during the first three quarters in Germany. where we take heavy market shares, plus 37% for the first nine months. We see there's very slowdown together with the market, but we are gaining in absolute numbers and relatively a lot of market share. The reason for this is that our offering via independent advisors and the banks is more focused on restructuring existing loan portfolios of consumers. While the slowdown is focused on new loans generated on the point of sale where consumers reduce their consume and that is their appetite for new credits. While in the restructuring business, you can say the tough time before and during the recession is still on the way. For this market, we see as well quite some potential in the next quarter. Together, this team bank, we are rolling out Europace in the corporate banking sector called Canoflex. We are still in a pilot phase, but with good results. More and more corporate banks joined this and offer for their restructuring the Europace solution to their clients. Next credit market, corporate finance here in Germany, dominated still by our advice approach linked to subsidies and subsidized loans for the German Mittelstand. In this business, we had a strong first half of the year as well, thanks to an attractive program of still the old government. which funded the energetic modernization of buildings here in Germany. And we enabled the German to use this to optimize their CO2 exposure. The new government still didn't bring any relevant programs to the market. We are facing right now a period where we see a lot of demand on the client side. German Mittelstand is under stress in the current market environment, but there are still no fitting support programs from the government side to meet this need. The credit appetite of German banks in corporate loans declined. Risk profiles got thicker. So the increasing need for financing is not met as well by the supply side of the banking industry. There's growing a market for private placements credit forms here in Germany right now to meet this need. But for now, third quarter was not the time for a lot of transactions. And even then, it's a revised business. We are as well transaction-based here. And so we saw a significant slowdown in the corporate finance business. Parallel, we are working on the digitalization of this market. We launched FundingPod together with one of the larger German corporate finance banks here. And for now, the market environment slows down the rollout because the fit and credit criteria makes it more difficult to match business between the needs of the, let's say the corporates and the offerings of banks. But looking forward, especially the increased appetite of middle stand for financing in the current environment increases the market volume, which we will see after normalization of the market going to make environment as well. So in total for the credit platform, it means that we were still growing double digit on nine month basis, but strongly supported by Intensive growth in the first half of the year. Third quarter was, for this segment, first time for a long period below the comparable quarter in the last year. And profitability went sharp down in the third quarter. Looking forward, we don't expect anymore to meet our target here that we see a double-digit growth atop the bottom line. The current slowdown in the private mortgage business is too intensive to compensate this with market share growth. And as well, when you look on profitability, even when I will introduce you to our cost savings program, under German labor conditions, it's nothing you can adjust fast. So we see the slowdown in profitability. We saw it in the third quarter. You will see it in the fourth quarter as well. So next business, and a segment fully exposed to the mortgage business here in Germany, our private client business with the franchise network Dr. Klein, 200 franchisees employing more than 600 advisors, something which profited a lot in the first half of the year from the good market environment, but now under this current situation saw a sharp decline in their in client demand which even which additional taking of market share can't be compensated in this speed. So Dr. Klein still grew by 5% on a nine month figures, but saw a sharp drop of more than 20% in volume in the third quarter. Again, when you compare this to Bundesbank, which right now reports a zero flat volume, take into consideration that there is a time lag between what Bundesbank considers. So Dr. Klein took market share over the period of nine months, and we are pretty sure when we see the numbers of Bundesbank in the next couple of months that we will get the confirmation that he took market share as well in the third quarter, just in a fast declining market environment. What is important is because the market will come back that we keep as much advisors of our franchises as possible. This is a complicated process because our franchises are independent. To hire new people in this environment is, let's say, it's difficult to convince them to do this because it just doesn't make sense because there is not enough advice there. not enough demand there for advice. So we can't keep our track of double-digit growth and headcount here right now. So we are right now at plus 3% and we expect a further decline because it just makes sense from the perspective of an owner to reduce its exposure and reduce the number of people he employs. So the good news is that from this perspective of risk profile that this huge workforce is not on our payroll and so we are a little bit more flexible here than other market participants, especially bank branches where the advisors are just on the payroll. And it gets really costly in such a market environment and you have not the cost structure for your workforce. The segment in total reported still a small growth in line with the volume growth plus 5%. Profitability is already declining because of the hard hit in volume decline in the first quarter, in the third quarter. Let's say a scalable business model on the way up is unfortunately as well a scalable business model on the way down. We are losing faster the profitability than we are reducing our revenue side here. Minus 41% on the third quarter on the EBIT side is a result of the scalable business model. Our interest to keep our franchise system and our central function for the franchise system as intact as possible for the upcoming normalization of the market. So our next platform, housing, real estate. Here we are addressing roughly 60% of the market. On one side, we address together with the private mortgage business we just talked about, Home ownership, the self-occupied market. On the other side, we address the institutional housing sector, the social landlords here in Germany. I told you a little bit earlier that the renting market is in a different but as well a heavy stress because of rent regulation. is not offering solutions anymore for the seekers. This is especially a situation for the private, typically small landlords here in Germany. The rent regulation, the increasing cost to maintain property, and if you have to refinance it or you want to buy new, the sharp increase in interest rates, makes it pretty tough to operate as a landlord. Lots of small landlords are sitting on high increase in book value of their properties and we really hope that the current stress level brings them to sell the properties to homeowners who seek to own their home and we expect in the the next couple of quarters that there is a shift in home ownership here in Germany because of the stress . We are just focused on the home owner occupied market or the institutional sector, so a change with whatever happens in this housing market is something that helps us in the two markets that we address. First market, we address home ownership with the strong position of Europace, roughly 30% market share here in the mortgage business. With SAFIRE, we address the transaction market, market share down. Then you expect that the gave us number of roughly 180 billion euro is correct. We expect this number to decline. But as well, we see that banks with their real estate agent offerings are under intensive stress. And we are offering a dissolution to them. More about this in a moment. On the other side, property valuation, something where we heavily invested in the last years and quarters. Market share up first time above 10%. So we are gaining market share here. a market which is still not affected by the decline, but will come down as well slightly with the decline in mortgage volume and numbers of transactions here. Okay, first more details about the transaction side of the market. We gain clients, especially in the competitive banking sector, thanks to thicker cooperation between GenoPace and FHIR. And the fact that for banks to generate leads out of their own agent business is getting more and more important and we digitalized this process. In general, our clients lost volume sharply, minus 26% in the first nine months. And accelerating even when you compare the quarterly results. This tells you a little bit about what's going on in the real estate agent market here right now. We could grow our revenue side in this market because we offer solutions. Especially to bring potential buyers or convert potential buyers or the buyer to a mortgage is something which gets more and more valuable, especially in the stressed market environment right now and where we are able to gain on both sides, on the agent side, additional clients and or on the mortgage advice side, additional banks using your business. In the value AG world of valuation, we have a good traction in signing up the new clients out of the world of valuation. a corporate partner of your case. They start to use first services, so valuation volume increases a double digit. Product mix is a little bit not in our favor right now, so cheaper products are typically used first, and so our revenue increases slightly below the valuation increase, but we are growing it. That's the important part. Something very sad happened in the third quarter, at the beginning actually. BaFin, German regulator, decided to discontinue the video-based inspection option. So, we were inspecting 40% properties, and we talk about more than 10,000 properties per month via a digital approach with the clients. And this ended this because it was linked to the corona and by ending this visual inspections, they created a lot of stress in VALUAG because suddenly we have to again bring some inspector physical to the property. It means he needs to drive there and we had to hire a lot of people. We needed additional infrastructure and the whole system was imbalanced in the third quarter to supply the banks with the necessary inspection of properties. So we are in the process of getting this transformation done away from digital back to the offline way. And in a costly way, we solved this more or less in the third quarter. Still has a lot of optimization ongoing. We are working on this in the fourth quarter. But this was an expensive change in regulation which Bath-In gave us here. Now we switch to the institutional housing association side. A business which was or an industry which used the low interest rates, still low interest rates in the first half of the year a lot and intensively. In the third quarter, they slowed down new projects and finances significantly, so similar to the private client sector. Similar reasons, sharp increase in interest rates, they are not met by sharp decline in property values or typical usage of mortgages here is as well the energetic modernization of properties. They slowed down this kind of project as well because of a mismatch between interest rate costs and ability to increase rent. This industry waits for two things to change. First, prices. And you can say in this professional environment, the probability of sharp decline in prices is higher than in the consumer segment because you meet professionals here and for them, a discounted cash flow on the portfolio, on the property, is a typical way to And with the sharp increase in interest rate, the VCF models gives a clear view that existing apartment complex were devalued. So we expect in the next couple of quarters a positive change here that we will see again transactions and this sector is committed to acquire, even in the current times, renting apartments because they usually are municipal owned or cooperative owned and they follow the interests of their shareholders in this case. Parallel to this, the German housing sector needs to get CO2 neutral. Until 2024, the sector needs to invest 500 billion Euro to improve the energy efficiency of their existing housing stock and this is something where we expect as well an increase, a sharp increase in mortgage volume in the next couple of quarters. Just what is needed is the right subsidy programs as well from a government side, something the current government is committed to, just executed by now. So the pressure is rising as well on the political side here to deliver what they talked about. In general, the whole segment is growing, double-digit. of the permission for the virtual inspections and cost us an extra of 3 million Euro in the third quarter, so the transformation was very expensive. It will still cost us some money in the fourth quarter, but we will come back to normality here in the beginning of next year. In general, you can say This was a heavy investment case for us in third quarter and actually as well in the whole first nine months. It's an area where we have to look pretty much in detail how we want to go forward, how many projects parallel we are going to fund based on the change of the general probability of output. So last segment, insurance. You are aware of this. We have an offering already active with Smart Insurtech for private insurances, e-pensions that corporate or employer-linked insurances, and during the year decided to address the industrial insurance business, which we are in as well as a separate product line. In all three product lines, we are now pretty focused on this business models which are in there. We are in a restructuring case already during the whole year and made some good progress with all three of these product areas. First of all, private insurance business plus 40% in the migrated volume to a transaction-based model. Could be faster, still slow down, too much this focus for a long time for Smart InsurTech because there was some industrial business in it and we started with the IT projects of our clients to bring them forward to ramp up this part of fully digitalized policies in our portfolio and in our IT system. But we are progressing and the new focus that we shaped this year, it takes effect and will increase speed and profitability in this product area. And the good news here, market is not affected by the geopolitical environment right now, so we are able to organically grow here. Industrial business. You can say at the beginning of the year, we were pretty surprised about our role in this business. You can say there is a relevant share already of the industrial insurance business here in Germany, which is powered by our traditional insurance management software. And together with our clients, we decided to develop a platform for insurance. for the underwriting risks. This is under development right now, and we plan to launch this in the first half of 2023. So this is an opportunity for us, which we see here, to monetize on the strategic position that we have in the market. And last product area, ePension. It's an employer-linked insurance product for pension. since a couple of months now as well. Health insurance, it's a fast-growing business where we digitalize existing portfolios, optimize the processes between the HR department of the employer, the employee, and the insurance company, and gain traction here, signed up some interesting clients, and the 44% are on a clean growth track here. For the whole segments, including an unorganic acquisition of AMEX pool. Without this, it would just be 5%. This is below our expectations. That's why the restructuring during this year, we finished the nine months is slightly declining possibility, but it's part of the, or is one of the reasons of the change in focus and the new structure we gave this unit. For this year, we expect to stay on track, no major changes from market environment. And for next year, we expect that we see the turnaround here finally because of the new focus that we gave the units. Okay. In total, we are still on track. take market share in all three industries we are still on track with the growth path when you look on the nine month figures q3 was a first time depressed by the market environment i can't stress this enough we let's say we saw a sharp detail in profitability in q3 but with the first two very strong quarters we are still on level like last year. Yes, so from our perspective, something significant changed, and when we look on a long-term perspective, we see that Hyperport once again enters a new phase of corporate development, you can say. We started with seven years of startup-like growth, fast top-end bottom line. Then we had the crisis environment around financial crisis where we were keeping our probability stable and we are just taking market share in the depressed market environment or more or less stable market environment. Then we saw a long period of eight years of strong growth and expanding our business top and bottom line again. And now a new crisis environment started and we need to focus again on growth quality, expand our market share in a declining market environment. This will cost us probability now and for the next couple of quarters. We will talk about this in a moment. But at the end of this period, we will be stronger and, again, a different, much larger, much more important company for the whole market than we are right now. So talking about the outlook a little bit, what's going on right now and how long it may take this very special market environment which we see right now in the private mortgage business. We see some important factors which keeps owners and seekers right now to close deals. From the perspective especially of the seeker, the potential buyer side, The high interest rate level is keeping them from doing transactions. Poverty prices don't fall fast enough in their perspective. Inflation takes a toll on the affordability because other things get more expensive. Income doesn't rise so fast right now like prices of day-to-day goods. We see, especially for the building side, this construction costs are heavily affected, plus 15 to plus 20 percent. It gets really difficult to stay in budget or to create a new project. Energy costs, this is already normalizing again, but additional regulation linked to energy efficiency. is a pain and the lack of compensating subsidy programs for the new regulation is an issue and needs to be addressed. And our current government has a Green Party in it and by now they are far behind what the last government offered in subsidies for homeowners and builders to get more energy efficiency. Okay, the negative factors, the positive ones that will drive transaction volume back to normal. First, trigger events happen all the time in Germany, and the Germans buy because of trigger events. So people want to move together. People get children. They need more space. People want to split and need separate homes or apartments. This is something which triggers transactions in Germany. And this is happening, just the transactions are missing, means the stress in families are just accumulating right now. And it does this already for a longer period. In the last decade, roughly a million people less switched from renting to home ownership because they fear the too high prices, now they fear or they hope again on declining prices sooner or later the stress is so high that they need to do something. And this is, it's like, it's a market where the pressure is fast rising right now. So beside this, what is good is numbers of properties offered on the market are increasing. Plus 50% roughly compared to last year right now. So there is more supply coming to the market. This is great. On the other side, for this families, households under stress, the option to rent something is shrinking. Less and less renting supply. Sharp increase in rents. So new rents, you really can't increase existing rents a lot. New rents went up 1.6% in the third quarter. So on a yearly basis, we talk already about 7% rent increase. This is not far away from the inflation, and this is terrifying. And the other option is just to acquire something and have a stable annuity payment for the next 10 to 15 years. Inflation may as well have an impact on the attractiveness of inflation. homeownership because historically value of property increased together with the inflation rate. We see that things that are already under construction are more seldom sold to investors, so the chance that homeowners, which usually refinance using business models which are using is higher. The regulation around energy efficiency may increase supply, especially from older households which can't afford to renew their home and increase the energy level like government is forcing them to. Some renties may see as well the energy bill and decide to switchover and energy efficient homeownership. So there's a lot of pressure coming from this as well to the market and which may increase the liquidity in this market and with this the number of transactions. And yeah, last but not least, this is what I said, our government sooner or later needs to live up to its expectation and bring some subsidy programs to the market which address climate change or housing crisis. And we are facing here a more and more tougher environment right now. So it needs to come. Okay. Beside this, Hypoport as a group is working on this cost structure. Because with the current stressed environment and knowing that this will not vanish in a couple of weeks or months, we are working on this that we decrease our cost level across the whole group. We expect to reduce our workforce by up to 10%. We expect to add some additional options for our employees to just work part-time. So the 80% is a wide offering to a lot of employees to just reduce our cost base. in alignment with the decline of the market. We expect this to be effective in the first quarter 2023. Under German labor rules, it takes some time to adjust, but you will see the results in Q1 figures, and it will be substantial to meet the declining within your site. What we will continue is our focus on keeping market share in strong position, so we will continue innovative projects which live up to the expectations short term, where we see results in Q1 or during 2003 already. We will postpone and delay and pause projects which have a farther reach in all of our segments. How long can this period of, let's say, depressed, stressed market environment be? Historically, we saw declines of maximum four to six quarters in Germany. We saw now already two quarters of decline. Because of the black swan and we never explained something like this, we are uncertain how long it will take. So our prediction is in total four to eight quarters. And if you subtract the two quarters which are gone already, so still two to six quarters it may take. until the market normalizes again. For this period, we are preparing ourselves now with our cost cutting program as well and looking then forward for the new ways and then after normalization of this market. When you think as an investor about this, after this period of stress environment, expect German mortgage market to be a very attractive position and expect us to have taken market share during this period and be a more relevant player even in this. So just to give you some numbers, when you look on the historic environment that we never saw a really boom in Germany in the mortgage market, we talk about an average volume of 280 billion in mortgage volume, which will come back. And this is in addition to be powered by a strong net migration to Germany. So a lot of more people who will look for a solution, will drive prices up, will drive construction up again, and pretty sure will drive up the efficiency of usage space as well. In Germany, we had for a long period now a tendency that the square meter per person went up constantly. The German government wants to get to a level of 400,000 people units built per year. Our expectations that we see right now a sharp drop and let's say the Q3 numbers only affect 150,000 units built. This is far away from this what is needed. So if government doesn't find a way to normalize this via subsidies, the stress on the pricing side will be even higher. We expect that there will come a solution. And with this, an additional of 30 billion per year is needed to get from, let's say, our last level of 200,000 units to these 400,000 units that are actually needed. Next is the whole energetic transformation of the housing sector until 2020, that is 2045, to bring the German housing stock to a new level. And neutral energy efficiency level, there are 3.5 trillion Euro needed to be invested. For the housing, for the home ownership market, which is roughly 50% of this, it means to invest 80 billion per year. Still, the incentives are missing, but the stress is there. And if you want to meet this, this additional 80 billion need to come and be defined somehow. So they will increase the volume of the mortgage market. And last but not least, there are a million households who missed in the last decade to move from renting to home ownership. They are waiting for the opportunity. And their renting market is locked. It's not going to give them any relief. So some of them will have to migrate to the home ownership market via a mortgage and buying a home. So in total, we expect after the normalization of the market, the German mortgage market will come back to a volume of 300 to 400 billion again. We saw this already in the last quarter that this is possible, and we expect this again, and there's a lot of macro dynamic here, long-term trends that will power this. So when you look on Hyperport, this is an opportunity right now. We are in this opportunity. So talking about opportunity, expect us to grow double-digit above market. And as long as the market is normal and stable, it means a double-digit growth. If something like right now occurs, the period delivers an underperformance on the profitability level, But this is only short term as long as this occurs. So for now, we don't update our guidance for this year anymore. We will see how we finish this. We will have some restructuring costs in the fourth quarter. Next time when we talk to each other in the beginning of March, we will give you a guidance for 2023, knowing how the market started then. work in our cost efficiency program and try to use as much opportunities in the market as possible and gain traction here and get market shares for the upcoming normalization. Okay. So at this moment, I would like to hand over to the moderator. If there are some questions from your side, feel free to ask.

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Okay, thank you. Yeah, so let's hope that I answered all questions already during my presentation. If you have further questions, please contact our IR. We are working here with a huge focus on using this trademark environment in the best interest of our shareholders. Let's stay in touch beginning of March. We will come with an update about how we are going forward, what we achieved already, and where we see the potential for the near-term future. Up until then, stay safe. Bye-bye.

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