Hypoport Ag

0.6 was real estate and mortgage business and 0.1 was financing platform expect as well in the second half of this year a similar type of let's call it tax returns linked to investments that we do and expect this to continue in the upcoming years as long as German government provide this type of let's say subsidies for investing companies here in Germany. And let's say the amount may decline. It depends on what is approved, what is not approved. In the first half of this year, there were a significant investment from the last years which we got tax returns for.

Right. Thanks. I hope this answers the questions. However, if not, Olivia, please come back. I do not hesitate to cycle back. The next one is from an investor from the US. Could you tell us a little bit more about the market share gains we've seen with Finmas in H1 26? Any specific new innovative features or which have supported that growth maybe?

Yes, so let's say we are, you are aware of this that in savings banks industry we are in a joint venture with finance informatics the centralized IT service provider of the savings banks and together with them for years now we develop integrative solutions to to bring Europace technology and marketplace technology and features to the saving banks. And currently we are in a rollout process of, we call it the ethos. It's an integration of the marketplace feature in the solution of the savings bank. the finance informatic for mortgage applications within savings banks and let's say the main shift will be actually in the third quarter when not on the application by application basis the use of a savings bank is deciding if he or she uses your pace feature to compare products for the for a given application. But starting in autumn, a saving bank will centralize, decide if this feature is obligatory for all applications within the saving bank. So not on a case by case basis anymore, but for the new world starting in third quarter, it will be a decision of the saving bank for the whole business. and this will boost our penetration of the savings banks industry with Europass technology.

Okay, thanks.

So it's more kind of opt-out decision instead of the... Yeah, it's an opt-in for all users of one bank and not a single user decision anymore, how to act.

Yeah. Okay. Yep. Right. Great. So the next one is from another investor from North America. So can you please help us understand the end market growth underpinning the guidance range for the year?

Let's say... we said already in the guidance that there is a positive or potentially negative impact from a market side for our EBIT guidance from minus 2 to plus 10 million and let's say the The underlying expectation is that we see a slightly declining or a single digit percent growth of the mortgage market. plus there are some other markets as well which are relevant to the overall group performance as well. So you can say roughly when you just look at the mortgage market in roughly a 10% between the top and the lower end of our market expectation.

All right, thanks. There's a follow up. Can you please tell us about more about the deal won by Corrify?

Deal won?

The deal. Deals won. So we have, I think it's just the census, I assume, because we have a strong increase of the volume. So it's 81% plus. So if there are any big deals, I think this is more the question.

Let's say Cori Fiers over the last 18 months, you can say, gained the confidence of...

Sorry, I'm not sure. Maybe we've lost Ronald's connection here. I'm pretty sure not Ronald himself, but the connection obviously.

So we will wait a moment and hopefully we'll be back. Okay, we'll be back in a moment.

So in the meantime, don't hesitate to raise any new questions. Hey, welcome back.

That's a bug, I would call it here that I have to switch off my phone that not accidentally in between is the opinion I should use my phone to connect here. This happens.

Yeah, this happened again. Okay. No, Robin. So we stopped at Cori Phi, so the last 18 months, yeah.

yeah yeah that we gain confidence and sign contracts with a mid single digit number of relevant insurance age brokers in this industrial insurance space and which are now step by step migrating with their portfolio and their client base to qualify so there was nothing Extraordinary in the second quarter, just one or two more which migrated another part of their business. And all in all, I would say we are still in some kind of a better testing phase, but we gain confidence and our partners gain confidence that Corrify is the solution for this market.

right thanks um in the meantime there's another question regarding the insurance platform and therefore maybe we have to give a little bit more context about finding partners and so on because the question is does this momentum this positive momentum of insurance platforms change our desire to find a partner for this business Maybe you can give a little bit of color on this finding a partner topic as well.

Yeah, let's say in general, we changed our strategy now four years ago with the massive change in the interest environment and our profitability that we saw that to break through in the insurance market, the necessary investments can't be done just out of Hyperport's cash flow. So Let's say we optimize the business model, split down our expenses, and now I would say on a healthy way of growth, just this growth will not lead us to a market dominance in a short period of a couple of years. This is not going to bring us where we are with Europace in the mortgage business. But we want to get there and we are certain that the insurance market needs platforms like us. So we are constantly in evaluations and talks with potential strategic partners to speed up this process and partner with the right market leading entities here. So does the current performance change something in this? No. Even when we see that our success is increasing our attractiveness for strategic partners, we don't see that without them that we are able to achieve a market standard role here as we did in the mortgage business.

Yeah. Okay, thanks. I hope this clarified the question. If not, please come back. And as a reminder, just type your questions in the chat or if this, however, because of technical reasons, is not allowed to you because of your IT security organization. You could just write me an email and I can forward this to Ronald or highlight this here as well. The next question is coming also from an investor from the US. So the question is how, if at all, has AI impacted your Europe-based business so far this year? Any updates on potential MCP offering or partnerships with large AI companies?

Okay, affected with, let's say, intensive a change in how we develop Europace and with a lot of ideas, early implementations, products in a better stage to enhance the Europace experience for users with AI-based features. So this is what happened. We are in contact regarding MCP service for the personal loan business, not for the mortgage business for now. And so there's nothing to announce regarding flow of business for now. are technically prepared and we are focusing on features where we see a short-term monetization option along our current customer base.

okay um the next one is a a little bit harder cut to capital allocation so how would you describe your capital allocation priorities at the moment between capital expansion buyback or M&A so these three topics capital expansion buyback or M&A which one is rank one, two, three.

Actually, I would say yes, rank one is buyback. We don't see that we should invest more right now than we do already. So not more capex. So let's say steady level of capex and getting better in execution. And we don't see that M&A is a feasible option right now because our current level of complexity is high enough. So I'm not saying that it's a no-go area. I would say the right team or the right product would come by, but it's not our focus at all. So I would say number one is buying back shares if possible and applicable. Yep. Right.

So... That seems that was the last one. As a reminder, once again, please type in your questions or write me an email so I can highlight this here. This next one, which is also from the investor side, following up on the question before, is there a reason why we haven't seen a buyback in Q2?

As I said, it would be our preferred options if applicable. And during Q2, we couldn't do any buyback because of ongoing non-disclosed project.

So the next one is coming in. Switching back to Europace. How is Europace One initiative going with the original banks?

Yeah, okay. Maybe Europace One.

What is Europace One exactly?

So Europace One is our subscription model to get enhanced typically AI-based features in Europace, a bundle of features along the value chain. And we introduced this roughly a year ago. to the broker segment of the market and are in the mid-hundreds of subscribers here by now. But to answer this question, even when it not was asked by now, see some potential, see still a lot of potential in speeding up this process of gaining here subscriptions. So we are not fully happy with the progress we have here in the broker segment. So at the end of the second quarter, we introduced this as well to our banking partners in their branch networks with a slightly different pricing model. So that's transaction-based, not subscription-based. And we sell it there for a higher transaction fee. yeah yeah and let's say the sales purchase process started roughly two months ago and we got the first signatures by now it is still too early to judge on the success with the regional banks here specifically yep great thanks hope this answers the questions however if not please follow up

Could you comment on the individual loss-making business units for the remainder of the year?

Yes. Let's start with Value Ag in real estate and mortgage business. We expect positive contribution on EBIT level for the second half of this year. So effective break even for Value Ag. And with a successful first half of the year, we are confident that we will reach this. Next is Dr. Klein WoWiDigital with WoWiPort as an ERP solution for the housing associations. Here we are still in an investment phase and we'll have as well still a significant loss in the second half of this year. Let's say roughly a million euro per half of a year is our run rate there right now. and we expect their breakeven in 2027. and the last is Corify as well with a declining loss level but let's say getting closer to neutral in the second half of this year is still with a slightly lower confidence level because of the let's say the stage of this business model. We are there as well on a low level of investment I think you are aware of this. It's an early stage product and a pretty long sales cycle. We see that we get closer to the point that we are as well willing to increase our investments again when the client base improved. Very clear. Thanks.

There are two questions regarding mortgages, so I will group this a little bit here. The first one is specific on Deutsche Bank. You have described in further course that the decision of Deutsche Bank to give up market share was temporary, but it seems now that it's a little bit more permanent development or a little bit stickier. What are the implications for Europace and Starpool and is it right that ING seems to be benefiting out of this?

So let's say I expect this decision to reduce the new mortgage volume to the current level is a tactical decision and is something that is constantly reconsidered as well within Deutsche Bank. and it's linked to capital allocation within Deutsche Bank and the question of the attractiveness of the German mortgage business relative to other operations the bank has. So I'm certain that we see that the Deutsche Bank will return when this let's call it balance shifts in the favor of German mortgage business again. and I'm certain that this is something that we will all see still. So it's nothing that will take decades for Deutsche Bank. I got to know Deutsche Bank as a very HR organization when it comes to this kind of capital allocation decisions. Who profited from the withdrawal? I would say Deutsche Bank was serving especially complex mortgage products and had a strong position there. And I would say most parts of the gains went to regional banks, not to ING. While ING was pretty successful in the last 18 months in the competition, but with a very standardized product. And they took market share from others, especially as well from regional banks because of their lack of digitalization of their mortgage operation, where ING was simply stronger. Now we lost Jan, maybe because of the same issue. So why when you just look on the numbers, you could say that ING improved, increased their market share and Deutsche Bank lost market share. The real flow was Deutsche Bank lost to regional banks and regional banks lost to ING out of two different, let's say in two different, slightly different areas of the market.

Thanks and sorry for this. Yes, it was some issue with the camera. So the next one is still with mortgages, but let's stay with the private banks. So any process of acquiring any new customers in this segment, so to the private bank segment?

Yeah, so unfortunately, the private bank segment in Germany is small. We saw in the first half of the year a new announced market entrance. This is a Tago Bank backed by a French banking group, as you know. And Tago decided to use Europace for their operation here. We wish TARGO all the best and hope that they achieve their goals in the market in the upcoming years. Our technology is also a choice for this. So beside this, nothing we are able to disclose for now. We would be happy to see more European banks entering the German market because it's attractive as ING shows that when you have a very digital approach, good funding, then you can easily build a strong position in the German mortgage market. There's a lot of space left here. Okay, very clear. Thanks.

And there is And thank you from the UK investors regarding your answer to the Deutsche Bank. Just to direct this to you as well. So the next question is on mortgage market a little bit more overall. Are we expecting still a wave of higher refinancing activities in 27, 28?

yes yes we do so we we expect to to see a vital refinancing market starting in 2027 because the current level of refinancing is let's say unsustainable unsustainable when you look on the portfolio volume of German mortgages outstanding They need to be refined. There is no other way. Exactly.

Right. Okay. I don't see any questions regarding mortgages or EuroPay. So let's jump to the next topic, which is a little bit more high level, I assume, because the question is pretty short. Why is EBIT growth Q4 weighted? So this is the question. I'm also not sure, this is just what I can read here. My interpretation is why we are expecting a strong Q4. If we are right, please correct us, but maybe this is a good start.

Now let's say we saw this in the last years that Q4 always delivered a certain level of outperformance. In some business model, it's pretty obvious. So everything what is linked to subsidized loans and other tax credits and similar things, regarding the Mittelstand's business of REM capital, so the financing platform. It's heavily linked to the year-end closing of the subsidizing entity. and as well from this planning process and let's say project planning process of German Mittelstand a major part of this business is done in the false water. We saw as well some cyclical moves in housing associations and let's say often in the last quarter as well in the overall mortgage market business we see some let's say certain developments of shifts in volume with impacts as well the Let's say the certainty of high commission events which influence in the last quarter profitability are allocated there because then it gets certain that certain trigger events for certain commissions are reached in the end.

Okay, thanks. I hope we got this question right. If not, however, please come back to us. The next one is regarding mortgages and interest rates. So it is given the level of interest rates, do you foresee banks offering concessions for refinancing?

Let's say it's a difficult concession for refinancing. Let's say normally banks try to refinanced the mortgages which are already on the balance sheet with a higher margin. So typically it's because of the stickiness of this product, banks try to earn higher margins out of refinancing. and the job of especially mortgage brokers or other banks using your places to convince the client that shifting to another bank saves so much money that it's worth the work and the hassle to do this. um so it so in this context the word concession doesn't fit really so um yeah i could just guess if it's about uh when we see higher mortgage rates then the original the the loan to be refinanced had if banks could be willing to lower the mortgage rate to reduce the a burden on the consumer level. I don't see this actually as a relevant issue in Germany. Let's say the rates and the included repayment part for mortgages which were underwritten in the low interest rate environment of 2016 until 2022, secured that even with higher mortgage rate, and this is what we see right now, something around 4%, there's no issue for the borrower to to handle this increase in interest rates. I don't see any default risk for banks or any need for concessions regarding the mortgage rate for banks here in Germany in 2027 and onward.

Okay, thanks. Hope we got this question right. If not, please come back. The next one is a little bit more specific to financing platforms and Q2, so not H1, but in Q2 in special, what was reason of the 12% jump in operating expenses in financing platform in Q2?

We had this question already in a German call. So this is, let's say, it's a short period. Let's say we had a user conference of Wobiport, which was the largest ever and the most expensive one ever. And we do this once a year. This triggers a couple of hundred thousand euro extra cost one time up to the next user conference. and some other, let's say, small extraordinary payments. So nothing recurring. It's not a trend to increase cost in this segment significant. It's linked to a very short period. And in the end, a smaller segment is where you are looking at. Yeah. Thanks for this. Normal volatility on the cost side. In general, we are very strict in our cost management. Correct.

I think the moment I don't see any additional questions or so not in my emails. Once again as a reminder, please type your questions in into the chat or you can highlight this or share this via email with me. Just browsing if I missed a question, it don't seem so.

Let's say you are willing to answer questions as well outside of there. I'm pretty sure, yeah, investor relations sometimes do all the day.

So it seems that there are no additional questions. So we wish all the best to you and have a great summer, the rest of the summer. And thanks for this call. We hopefully see in conferences in autumn, the next days. So thanks for this Q&A, Ronald. and thanks everyone for joining. So have a good rest of the day. Yes. See you in three months here. Yep. Bye bye. Bye.