Intrum AB (publ)

Good morning, everyone, and welcome to the Q1 2022 results presentation. My name is Anders Engdahl. I'm the CEO of Intrum. And with me, I have Michael Lederner, our CFO. If we turn to page three of the presentation. I'm very pleased with the performance in the first quarter of 2022, which exceeded our own expectations. As we've highlighted in recent quarters, as we've left the pandemic behind us, We've seen the return of seasonality to our business, where we see slower business activity in the first and third quarters and higher activity in the second and fourth. Despite being a seasonally slower quarter, we see a strong underlying organic growth trajectory across all our segments of the business, with cash revenues up 10% and cash EBITDA up 12% versus the less seasonally affected Q1 2021, making it an even more difficult comparison. Servicing revenues were up 4% versus Q1 2021 and we see continued improvement in new case inflows in CMS and strategic markets continued to perform strongly across all three markets. It was also a very strong quarter commercially where we saw one of the strongest quarters ever in terms of new contract signings. Portfolio investments continued its strong performance with strong self-funded growth with attractive returns and minimal volatility. Gross collections stood at 110% of active forecast and cash return on invested capital of approximately 10%. We also see a growing pipeline of new investment opportunities and a high level of activity across all markets. The transformation program continued at full speed and we continue to build out our global front office footprint. We recently migrated cases in Greece And we also recently added Sweden to the new platform. We also initiated the work to add five more countries to the platform during 2022, in line with our plan. We turn to page four. If we put our current performance in context of the longer-term performance of Intrum, we see that since the merger in 2017, Intrum has delivered 10% cumulative annual growth in cash data continued margin improvement, and 19% KR in cash EPS versus 2018. This is achieved while deleveraging the balance sheet, reducing our leverage ratio from 4.3 times to 3.8 currently. And in this context, we are convinced that we can deliver on our financial targets of double-digit cash EPS growth while delivering on our leverage target and reaching that range of 2.5 to 3.5 times net debt to cash EBITDA. Turn to page five. Looking at the market conditions for our servicing segments, since the outbreak of the war in Ukraine, consumer confidence has substantially decreased, inflation and interest rates have risen, and European growth outlook has been revised downwards. At the same time, we see double-digit growth in demand for consumer credit, and savings rates have dropped back to pre-pandemic levels. In our business, we've already seen increased new inflow volumes in, for example, the utility bills segment, and our clients are now preparing for increased volumes of overdue consumer credits during the second half of this year. The interim with our strong banks and finance franchise is well positioned to capture new servicing volumes in the banks and finance segment from our clients. We also see a strong pipeline of new client opportunities as more banks look to outsource collections. This potential is further amplified by the scalability that the transformation program provides. Turning to page six. Market outlook for our portfolio investment segment remains supportive, and while bank MPL ratios remain low, ECB statistics reveal high and increasing level of doubtful credits. At the same time, market cost of funding is materially up due to rising rates, and the competitive environment remains intense but rational. Overall, the supply levels of portfolios is approaching pre-pandemic levels with more and larger portfolios coming for sale. For Interim, this presents a strong front book environment with a strong pipeline across all markets, where our servicing franchise provides us with privileged access to transactions. The strong pipeline continues to allow us to be selective and disciplined in our underwriting, supporting stable and attractive risk-reward also going forward. Our deployment levels for 2022 consisted with self-funded double-digit growth in line with 2021. Our strong and stable backbook performance is built on diversified and a granular backbook with sustainable payment plans, which is expected to continue to perform well also in the current more challenging macro environment. Let's turn to page seven. The transformation program continues according to plan, and the spend to date is approximately 3% below budget. We migrated a complicated secured portfolio in Greece, and we recently added Sweden as the fifth country to the platform. This quarter, we've also started to prepare five new countries for migrations that will start to migrate volumes to the new platform during 2022, which means that we expect to have 10 countries live by the end of the year. Turning to page eight. The cost to collect ratio in Q1 2022 has meaningfully improved compared to Q1 2021, going from 6.9 to 6.1% during the quarter, based primarily on higher collection volumes compared to last year. We remain on track to deliver approximately 300 million SEC or run rate savings from the program by the end of 2022, and the full one billion by year end 2023. In addition, we're currently developing the technology roadmap that will allow us to introduce advanced analytics and automation into our core processes based on the common platform that we see will continue to generate benefits beyond 2023. We expect to revert with further details regarding this during the coming quarters. Turning to page nine. Our sustainability work continues and I'm very pleased with the progress made. All sustainability KPIs are improving year over year. And in addition, during Q1 2022, we developed a new global sustainability policy to further clarify the governance, responsibilities and expectations throughout the business and in relation to key stakeholders. And with that, I hand it over to you, Michael, to take us through the financial performance.

Thank you, Anders, and good morning, everybody. I'm now looking at page 11 of the presentation. group key financials. In the first quarter of 2022, we posted a strong underlying performance. And just as a reminder, Q1 is a quarter that is usually seasonally slower. At the end of Q4, we communicated our expectation that 2022 would see a normal seasonality pattern following 2020 and 2021 that were distorted by the pandemic. A normal seasonality pattern is also what we now see unfolding in Q1 and into Q2. A normal seasonality pattern means a slower Q1, a seasonally strong Q2, a slower summer quarter, and a strong finish to the year in Q4. But coming back to Q1. Supported by the strong underlying performance trajectory I mentioned before, we saw cash revenues, cash EBITDA and cash EBIT increase both in comparison to the first quarter last year, as well as in a rolling 12-month basis versus the full year of 2021. Relative to Q1 2021, cash revenues increased by 10%, from 5.2 to 5.8 billion. Cash EBITDA also increased. from 2.7 to 3 billion, or 12%, showing more limited operating leverage than we would usually expect. This is due to expenses increasing in comparison to Q1 2021, predominantly driven by the FX development, as well as external spend, which is expected to produce incremental revenues in the coming quarters. Cash even increased 3% versus the first quarter of last year to just over 1.4 billion. This lower growth in cash EBIT is due to a relative increase in replenishment capex. In Q1, we had a normal rolling 12-month money on money multiple of 2.04 times, down from 2.18 times a year ago. We see a level of around two times as sustainable going forward and in line with levels experienced in the second half of 2021, as well as during all of 2019. Further to this, We continue to deliver on our deleveraging trajectory with the leverage ratio now down to 3.8 times. The deleveraging trajectory is particularly evident when looking at the same quarter over a longer period of time. We went from 4.5 times in Q1 2020 to 4.1 times in Q1 2021 to now 3.8 times, a reduction of between 0.3 and 0.4 times each year. I'm now turning to page 12, group cash earnings generation. On a rolling 12-month basis, we again see the same developments coming through that I have just talked about. Growth in cash revenues of 6% translates into an increase of cash EBITDA of 8%, with operating leverage being lowered due to the 5% expenses increase I explained earlier. Lower other capex due to reduced investments into our legacy is more than offsetting the relative increase in replenishment capex due to higher money on money multiple, resulting in a cash EBIT increase of 9%. Cash net financials and tax were significantly higher in Q1 than during the first quarter of 2021. This is mostly due to the facing of cash taxes being more front-loaded this year. We expect this to reverse in Q2. From a returns perspective, we generated a recurring cash earnings yield on shareholders' equity of 13%, and based on adjusted net income, a return on equity of 15%. Looking at the segments and starting with CMS on page 13, we continue to see improving new case inflows, with particularly utility claims up significantly. Higher value financial claim inflows are coming back. however, at a slower pace to date. In addition to this underlying trajectory, the increasing utilization of credit Anders mentioned earlier is expected to also be supportive here in due course. Based on this, we now see growing cash revenues both versus Q1 2021, up 2%, as well as in a rolling 12-month basis in comparison to the full year 2021. We ended Q1 2022 with cash revenues of 1.1 billion. At the cash EBITDA and cash EBIT level, we however see the impact of the higher expenses with a cash EBITDA of 324 million and a cash EBIT of 314 million, as well as a cash return on invested capital of 6.6% for the quarter and an 18% adjusted margin. I need to emphasize that the underlying cost trajectory in aggregate is on track. as shown by the progress made on the FTE cost to collect compared to the same quarter last year, highlighted by Anders earlier. The way to think about this conceptually is that we have, when looking at CMS, collected more with more or less stable level of underlying direct costs. From a revenue perspective, however, the case mix also matters. And here, a higher share of lower value, lower margin, non-financial claims, mostly invoices, leads to only a small increase in revenues. The observed cost increase over and on top of this is largely due to external spend, which will generate revenues in the coming quarters, for example, legal spend. I'm now turning to strategic markets on page 14. Here we see really strong underlying performance across all three markets, with cash revenues up 5%, cash EBITDA up 12%, and cash EBITDA up 13%. In fact, all cash and accounting metrics are up. This trajectory is particularly remarkable as in Q1 2021, circa 14% of cash revenues were of a more transactional nature, which in 2022 have been more than fully replaced by asset-based revenues in combination with stronger operational performance. What is also pleasing is that all three markets are contributing substantially to the strong result in Q1. In Italy, we saw growth in assets under management, as well as significant performance improvement. Greece and Spain continue to perform strongly. In Spain, the loss of the SARAB contract will impact revenues later this year. The associated impact on profits in Spain will, however, be immaterial. To sum it up, cash revenues for the quarter were $1.4 billion, cash EBIT $728 million, and cash ROIC 19.8%. The adjusted segment earnings margin came in at 32%. Onto portfolio investments on page 15. Here, the very strong performance continues into Q1. Outperformance for the quarter was 110% of active forecast, with gross cash collections up 15% compared to Q1 last year and cash revenues up 16%. Similarly, cash EBITDA increased by 19% to $2.5 billion in Q1. Cash EBIT also improved by 14% to $942 million, somewhat impacted by higher replenishment capex, as explained earlier. Cash ROIC for the segment was 9.6%. To put this trajectory into perspective, cash revenues EBITDA and EBIT not only increased in comparison to Q1 2021, but also in comparison to Q4 2021, when we had a seasonally strong finish to the year. Another point to note is that the quality of our earnings has also improved. with accounting earnings from joint ventures down from 196 million to 126 million and cash from joint ventures up to 88 million from 44 million compared to Q1 2021. We made portfolio investments of 1.8 billion during Q1, roughly in line with last year and consistent with a run rate of just over 8 billion per year. Now turning to page 16. The difference between our cost of funds and the last 12 months average unlevered underwriting IRR is roughly stable at 3.8 times. Our liquidity position remains strong with 20 billion at the end of Q1. And another point to note, particularly in this rising rates environment, is that 75% of the net debt is fixed rates and longer dated with maturities between 2024 and 2027. In fact, We do not have any significant debt maturities before 2024. I'm now looking at page 17. We continue to make progress and remain on track towards our medium term financial targets. Also in terms of our leverage target, we continue to decrease our leverage ratio with a clear path towards our target range of two and a half to three and a half times. which we expect to reach according to the timeline set out at the capital markets day in late 2020. A leverage ratio equal to or lower than three and a half times by the end of this year. And with this, I hand it back to Anders for some concluding remarks.

Thank you, Michael. So if we turn to page 19. So to summarize, Q1 was a strong performance in a seasonally slower quarter, and as we look into the second quarter, we expect a seasonally strong Q2. Looking at the segments, as we look forward in CMS, we expect to see continued growth in new case inflow, with financial change growth increasing during the second half of 2022. We expect recent new signings to start contributing positively during the year, and the macro environment to lead to increasing late payment volumes in the economy. In strategic markets, we expect to see continued strong momentum across all three jurisdictions and continued broadening of the client franchise and further improved margins as the Sareb contract is continued. For portfolio investments, portfolio sales volumes are approaching pre-pandemic levels, which is reflected in a strong pipeline of privileged transactions. The strength of our pipeline allows us to continue to be selective and choose portfolios delivering attractive, risk-adjusted returns. The deployment trajectory is expected to be consistent with an annual run rate at slightly above 8 billion SEC, resulting in a continued, self-funded, double-digit growth path. Backbook outperformance continues to be supported by granular, sustainable payment plans, and we remain optimistic that the current outperformance levels will continue near term. The one Interim Transformation Program benefits will start becoming visible during 2022 with a run rate of approximately 300 million SEC at the end of 2022 and the full 1 billion SEC benefits reached by the year end 2023. Beyond that and into 2024, we can see continued benefit potential as we continue to implement advanced analytics and automation into our core processes. Overall, this leads us to be confident to deliver on our financial targets of at least 10% growth in cash EPS and to reduce our leverage ratio down to our target range of three and a half times or better by the year end 2022. And with that, we're ready to open up for your questions.

Ladies and gentlemen, if you have a question for the speakers, please press 01 on your telephone keypads. Our first question comes from the line of Jakob Heslevik of SEB. Please go ahead.

Hi, good morning, Anders and Michael. So my first question is on the SARAB contract. I mean, if Spain represents slightly less than 33% of strategic market revenues, and from what I understand, the SARAB contract could represent up to half of the Spanish operations in income. I mean, even if we assume margins are really low, which you said, I mean, there will be negative operational leverage if you can't reduce a fixed cost before the contract expires in June. So my question is more, what is your plan for Spain going forward? Will you focus more on Greece, which has demonstrated strong profitability over the last quarters? Or are there enough volume in Spain to replace this Arab contract? What's your thoughts here, basically?

First of all, your understanding of the importance of Sareb in Spain is completely incorrect. I mean, from a revenue perspective, it contributes approximately 30 million euros worth of revenues on an annualized basis. As we said, the profit impact, so that's approximately the revenue impact it will have from a strategic markets point of view. So 300 million SEK annualized. then from a profit point of view it's immaterial and given i mean the amount of people who work with this is less than 10 percent of our staff in the spanish operation which means that we will be able to manage the you know the adjustment of the operating platform through ordinary uh normal uh attrition so there's no we don't need to do any restructuring we have no specific cost associated with it and it's you know it's quite i mean it's So we have many larger clients in the Spanish business than Tourette. It's the fourth or fifth largest client, so it's not that big. So from our perspective, this is not a, you know, it doesn't really make a difference from a profit point of view. But from a revenue point of view, of course, it will reduce, but it also means that the margin improvement that we will see coming through in the Spanish business, as well as it will have an impact on the strategic market business, It will have a continued positive impact on the margins and strategic markets. So hopefully that clarifies the SREB point.

Maybe to add to that, Jacob, the second half of your question. I think, as I've laid out, all our three strategic markets are really doing well and contributing to the strong performance trajectory we see. So that means we will continue to focus on all three strategic markets and really continue to unlock that potential that we see there.

All right, great. Thanks for the clarification. My second question is on the higher inflation environment. I mean, I'm just curious what shifts you are seeing take hold today in the midst of rising rates, inflation, supply chain challenges, geopolitics, and also the return of the great power complex. I mean, what are the new risks and challenges? And if you could talk a little bit about how you're evolving and positioning Intrum to capitalize on all of that.

I think the immediate impact is, of course, the reduced affordability, particularly at the consumer side, that it's been highlighted by both the ECB and the Swedish Riksbank and many other regulators around the risks of deteriorating credit quality from a bank lending perspective. That's already evident in terms of doubtful credits, and speaking to our clients, they are preparing themselves for having to manage greater volumes of late payments and increasing defaults during the second half of this year. At the same time as this has happened, we've also seen a reversion of The savings rates, as well as a substantive increase in the utilization of consumer credit, it's also evident in the European Bank statistics, that in a sense helps obviously the economy to fund some of these affordability challenges in the short term, but obviously will also deteriorate credit quality into the second half of this year and into next year. From our perspective, our clients are indicating strongly to us that we should expect to support them with more work for them to send out more cases under existing contracts. And we're having strong, and as we said, also one of the strongest new signing quarters that we've ever seen in the CMS business in terms of new contract signings, because more banks are looking to outsource more collections. I think all of that taken together leads us to be quite optimistic about the outlook for new inflows into those servicing segments over the coming capital quarters.

Okay, that's good to know and maybe also a quick comment on what you see in the funding cost versus pricing level in the new investment market when the rate increases. I mean how quickly do you expect it to adjust?

I think we continue to see, as you said, we see expanding volumes of portfolios for sale. We're continuing to see effectively back to pre-pandemic levels in terms of pipeline. It's broad activity across the markets that we operate in, which allows us to continue to be very selective and disciplined in our underwriting, which allows us then, and also the amount of privileged transactions that we can generate from a servicing franchise helps us to be able to capitalize on that. So we continue to see, at least in the short to medium term, a stable underwriting environment, despite obviously its intense competition and so forth. But it's not irrational, and I would expect as the effect of increasing interest rates feed through into profitability for the sector at large, I think that will also have an effect on underwriting returns. All right, great. Thank you so much.

Our next question comes from the line of Patrick Berzelius of ABG. Please go ahead.

Thank you. I have a couple of questions from my part. The first one is regarding cost of sales. It's up 8% quarter over quarter and 11% year over year. You mentioned here on the call and talked a little bit about it. But could you expand a little bit what is driving this increase in external spending and how should we think about this cost growth the coming quarter?

Thank you for the question. When I look at it, and especially in a quarter-over-quarter comparison, we have a couple of components to think about. So on the one hand, obviously, FX plays an often substantial part in this context. On the other hand, we also obviously have the transformation running through, which is there in the background, and it's not an ISE. It's coming through the normal cost line. We also have, as I mentioned before, external spend. And what I mean by external spend is that in a more normal environment or in the normal environment as we're experiencing now, Q1 is a quarter where you essentially invest and stock up the larder for what you harvest throughout the rest of the year. So we do see that external spend. And one example is, for example, sending cases to the execution authority, so Kronofagnen in Sweden, that you do in Q1, you pay for it, and then you capitalize on that in terms of revenues during the second quarter and beyond. And with that specific example, we already see the returns given the tax return season in Sweden. So that's a little bit how it stacks up and builds up.

Can that mean that some external spend in the following quarters will disappear or is it more of a stable level and it will not increase?

Some of this will move out in the coming quarters.

Okay, thank you. Another area which you touched upon in the CEO wording was that you've seen an increasing trend of new case inflow. We have seen variations of this comment for a couple of quarters now. Can you specify more clearly when you expect we can see this materialize in the numbers, please?

We are seeing new case info growth, and as Michael commented upon, we've seen that particularly continue in the non-financial segments. And utility bills, as an example, has been increasing quite substantially over the last six months. The new case inflows from a financial claim point of view is increasing, but is not at the same growth rate yet as for the non-financial claims. That means that the mix is more tilted towards invoices, lower balances, and that doesn't drive revenues as fast and as much as the higher balance claims. As we see the reversion of the financial claims coming back into the mix, we'll also expect to see that to drive more quickly, positively, revenue side on the CMS side later into the year. But, I mean, also, you know, overall new inflow growth is positive for revenues. And, you know, we are optimistic about the outlook for growth in the CMS business. On top of that, with a very strong new signings quarter that, as we mentioned, put on more clients to the platform that will also have a positive impact. I think what we've seen is, so that's in CMS, but I think we've seen it more clearly and the development in the strategic markets has been faster and there we see that coming through to much greater extent as we are, the underlying growth in strategic markets is actually very strong. We are continuing to see a strong increase of collection levels in those in that segment So it's moving faster in strategic markets. It's not quite as fast, but it's you know, substantially positive also in CMS Okay, I understand

And then a last question from me is regarding the rising interest rate. You talked about this on the funding slide. It is a hot topic. Can you update us again how this impacts you, and do you have any updated quantitative interest sensitivity that you can share with us, how the rate increase impacts you in the numbers, please?

We don't have an updated sensitivity, but I think it's really the points I laid out before. So 75% of our net debt, which is principally the Euro bonds we have outstanding with maturities between 2024 and 2027, is fixed rate. So it means from that perspective, we don't have anything major upcoming until 2024. and three quarters of our outstanding net debt is fixed rate. So that I think is an important statement on that front. Obviously, we do have some variable rate securities out there as well, but we should remember in line with the comment Anders made earlier, that also on the asset side, we have a self-liquidating portfolio that is being replenished at prevailing market rates. So there's a sync to a certain extent between the asset side and the liability side. But to the loop back where I started, I think that the 75% fixed rate, that is really something that we've worked with and that we see as a competitive advantage. Okay, got it.

Thank you. Our next question comes from the line of Ermin Keric of Carnegie. Please go ahead.

Good morning. Thanks for taking the questions. Perhaps on the leverage, it seems like you expect to be within your target range this year. How should we think about it then for the coming years? Do you have any kind of preferred level within that range or will you start to increase your dividends or investments or how should we think about it when you're actually within your target range?

I think I'll start with that. From my perspective, the key element is really to deliver on our target. That's the primary focus. And as you can see from the trajectory we have delivered, I gave the example of Q1 2020, Q1 2021, and now Q1 2022, if you draw a line, you see us getting into that range. And that's something we've worked very hard with and we continue to execute on. But I think when it comes to looking forward and the more strategic aspects, I'd hand that over to Anders.

I think it's fair to say that we will stay within the range. uh obviously it gives us more flexibility to utilize more levers to optimize both from a uh you know new business opportunity point of view as well as from a financial and and capital structure point of view once we're inside that range and obviously we have uh you know operational opportunities that we can utilize but also we can then start thinking about dividends or buybacks or other means right of um utilizing that if you don't have those operational or business opportunities to pursue. I think our current objective is to deliver on the target and we will stay inside the range once we have reached it. But as you said, it gives us more flexibility beyond that timeframe of the end of the year.

Thanks for the call on that. Then on the common costs, they're obviously up a bit quarter on quarter. Is the external spend impacting that anything, or is that mainly within the servicing segments? And is this inflation then maybe perhaps driven by the transformation program primarily, or how should we think about that?

I think the same comments hold true on that as well. So obviously you have an element of FX in that as well, in the quarter over quarter comparison. um you do have an external spend element and as i said you you do have the transformation going through in the background as well um i mean when you think about it anders also mentioned that we had a really strong focus had and have a really strong focus on commercial activities and usually there's a bit of a lead up time and lead cost that's one example

in this context but obviously that is then a question of phasing as we do expect those revenues to to more than cover uh in due course okay thanks then just one final more philosophical question um in the swedish for safe consumer protection reports they're writing about they want to do more of a deep dive on uh both sales of consumer credit, but also debt collection. And it seems like they're mainly targeting smaller and medium-sized debt collectors. I think this is a trend we've seen generally across Europe, that the authorities are looking more closely to the sector. Do you see any gains from that, that you as a kind of market leader are gaining market share on the back of those kind of reviews, or how does that impact the competitive environments?

I think as we've said all since, the big step in this direction is the EU regulation that takes effect towards the end of next year that will require all debt collection companies that operate financial claims to be licensed and regulated in all the markets where we operate. We are already operating in many of our markets as a licensed and regulated entity and for us our ethical collection principles the way we approach our business, and our requirements from our clients from a consumer journey and customer treatment point of view, is much stronger than what any market regulation, at this point in time at least, imposed on us. So from our perspective, we see this as a very positive step from a competitive point perspective that all parties in the market are required to operate in an ethical way that we can you know the customer treatment point becomes a forefront of the mind of the regulators because we're already operating like that and for us obviously with the scale and size that we have you know we already taking that cost in a sense right and having built that those strong processes and policies internally and the fact that then all operators in the market have to do the same we see as a competitive positive for us. So we are all strongly in favor of continued regulation in our market because it will create a level playing field.

That's very helpful. Thank you.

Our next question comes from the line of Richard Strand of Nordea. Please go ahead.

Hi and good morning. Two questions from my side. Starting off with the inflationary environment that you described. Any impact so far on your investment portfolio back book and also if you could share any factors that you would keep under close watch when it comes to the repayment of your back book there? Is it unemployment or disposable income or any other factor that you see as most key to keeping up your yields there?

We have not seen any impact whatsoever on our back book performance of the high inflationary environment and of course the high inflationary environment with high food and energy prices which has not yet been reflected, at least in salary inflation, means a reduced affordability for consumers in particular. That has not had any big impact on our backlog performance, and we do not expect it to have an impact near term, as highlighted in my comment. And we continue to see strong performance outlook into the second quarter of this year. what is important to keep in mind is what i mentioned also about the composition of our back book it's composed of a very very large number of small regular payments as we have built up the book of sustainable payment plans that are designed to you know for to allow our customers to maintain those payment plans also throughout you know changing conditions of the personal situation And I think that's the most important one to keep in mind is it's not dependent on or on the margin or on the sort of, it's not very sensitive to that. And we saw it during the pandemic. It continued to perform very well. We saw it for that matter in previous crisis as well. It has this very limited impact on the performance. That said, I think the Very strong performance that we saw during last year. I think the longer term development in an environment with increasing inflows, we should see a reversion to our longer term trend, which has been in the range of 105 to 110% performance over the medium to long term. But short term, we don't see that impact.

Okay, thank you. Then the next question on the price discipline among acquirers of portfolio investments in the market currently. Your overall impression there and also have you seen that competitors have started taking higher funding costs into consideration in their pricing?

It's very hard to judge what competitors do and do not. I think what we see is a continued stable environment in the sense that it's competitive but people appear to be irrational so we don't see people going overboard in any part of the market where we operate I think what is important from our perspective is always to maintain a strong footprint dialogues with our clients and to leverage our servicing footprint that gives us access to privileged transactions that allow us to be at the competitive advantage to be able to maintain a a you know highly attractive risk reward profile on the investment that we choose to make out of that pipeline which way oh and our odds sizes the amount of investments that we do in any quarter or in any year i think that that selection process that discipline that we have institutionalized into our underwriting process and our internal governance processes allows us to continue to extract the value out of that but i think we don't see any uh you know anyone going uh overboard on being, you know, irrational. At the same time, I think it will take, you know, a quarter or two probably before we start to see the underlying interest rate rises to be reflected as, you know, it depends on the circumstances of the individual competitor, of course, but I would suggest that you speak to them about that. Okay. Thank you.

Just to remind everyone, if you would like to ask a question, please press 01 on your telephone keypad. And we have no further questions at this time. Please go ahead, speakers.

Okay. Well, thank you very much, everyone, for joining. Appreciate you taking your time. And thank you. So we'll close the call. Thank you.