Welcome, ladies and gentlemen. Good morning from Baden-Baden to our today's earnings call regarding the half year financial report 2026.

My name is Franziska Randt. I'm Head of the IR Department.

And I have the extreme pleasure that today here with me is both CEO, Dr. Sebastian Hirsch, and CFO, Dr.

Martin Paal. Welcome.

We will start with the presentation. And right after, we will enter into our Q&A session.

Before we get started, let me remind you that this presentation contains forward-looking statements based on current assumptions and expectations, which are subject to significant risks and uncertainties. The key assumptions and influencing factors are explained during the presentation and in the disclaimer at the end of this material.

Please take this into account when assessing the information provided. With that, I will now hand over the call to our CEO, Sebastian.

Please go ahead.

Thank you, Franziska, and a warm welcome also from my side. Ladies and gentlemen, when we last spoke, we discussed an environment characterized by uncertainty, geopolitical tensions, weak economic growth and persistently high insolvencies.

And this environment has not fundamentally changed. Nevertheless, we have increased our profit by nearly 25% and our return on equity by 80 basis points in the first half.

We are in line with our plan. So I could simply hand over to Martin right here and let him take you through the details and figures.

But that would be too easy because the situation deserves a closer look and, more importantly, some perspective. There are 2 sides of our first half performance.

On the one hand, the risk environment remains challenging. On the other hand, our operating business is getting stronger.

But before we put this into perspective, let me start with what matters most to me. We are on track.

Four facts explain why, and they also capture the 2 sides of our first half performance. First, investment activity remains weakly globally.

Despite this environment, we generated new business of around EUR 1.6 billion. Second, we are winning market share, particularly in Germany, France and Italy, but also in North America.

We are seeing momentum. So even in a weak investment environment, GRENKE continues to expand.

Third, insolvencies remain high. Our loss rate of around 2% reflects us.

We take this seriously, and we will come back to how we're addressing it later on. And fourth, and this is particularly important to us, our operating leverage is clearly visible.

Our income is growing faster than our cost, and our cost/income ratio has improved significantly. So yes, the environment remains challenging, but our business is getting stronger.

And that is why I say we are on track. So these are the 4 facts of the first half 2026.

That's why the earnings are increasing compared to last year. We don't want to downplay a challenging environment, quite the opposite, like in our daily business.

But we also need to put what we see today into perspective. And to do that, I would like to take a step back and look at how our business has developed over the last past 6 years because 1 quarter alone does not tell the whole story.

Let's start with the foundation of our business volume. After the decline during the pandemic, you know that we returned to growth.

New business has increased significantly and with the usual time lag, this has translated into growing asset base. Our total assets have grown to EUR 9.2 billion.

And this matters because today's asset base is a foundation for tomorrow's income. And this is exactly what we see in the next step.

Our asset base grows, our income follows. Operating income has increased to EUR 182 million, roughly 50% since the low point in 2022.

The growth we generated in previous years is increasingly translating into income today. Before we add the next dimension, let me take one crucial point.

This happens because of a robust portfolio. The fact that it generates this level of income is not only strong evidence of its underlying quality, it's evidence of its power.

Of course, we are seeing elevated losses, and I will come to that in a moment, but there's no doubt about the fundamental strength of our portfolio, and that distinction matters. Now let's add risk.

And here, we should not sugarcoat what we see. The risk environment has deteriorated and the loss rate is too high.

But when we look at the absolute risk expense over time, this also reflects the significant growth of our portfolio. More volume naturally means more absolute risk.

But that's only one part of the picture. What is putting pressure on us today is the elevated loss rate, and that is driven by the macroeconomic environment..

We take both into account when we're steering our business, the current macro data and our volume development. Finally, let's add costs.

And now look at what happens when we bring income and costs together. The gap is widening.

That is operating leverage. Following years of investments and consolidation, costs have broadly stabilized while income continues to grow.

And this widening gap is where our operating leverage becomes visible. And now let's zoom in on the last 2.5 years.

And there's a reason why I'm showing you the period. Around 3 years ago, may you remember, we started to systematically strengthen our operating performance.

And over the last 6 quarters, that work has become increasingly visible in a clear trend emerging. Income has grown significantly, while costs have remained broadly stable.

This is operating leverage we have been working towards. And you can see the impact on our cost/income ratio.

It has improved steadily from 64.4% at the end of '24 to 50.6% today. And this is not a quarterly effect.

It is a result of disciplined work and fundamental improvements that are increasingly taking effect. And this creates flexibility we need to navigate even in a challenging environment.

And at the same time, gives us confidence that we are on the right track to increase our return on equity. So what does that mean for the full year's guidance 2026?

First, we confirm our earnings guidance of EUR 74 million to EUR 86 million. For new business, given the continued weakness in investment activity, we currently expect to come in at the lower end of our guidance of EUR 3.4 billion to EUR 3.6 billion range.

There are, however, 2 important underlying parameters I would like to point out where our expectations have changed and which is important for our earnings. On risk, the macroeconomic environment has proved more challenging than we expected at the beginning of the year.

We, therefore, expect the loss rate to remain elevated. Although portfolio growth should help bring the full year's ratio below 2%.

On cost efficiency, it is the opposite. Our operating leverage is developing faster and better than expected.

And now we expect our cost/income ratio to come in below our previous assumptions. In other words, higher risk is being offset by stronger operating income and stronger operating performance.

And that is why we remain on track for our earnings guidance 2026. Martin will later give you some insight on contribution margin 2 and equity ratio for 2026.

But ladies and gentlemen, 2026 is not our destination. It is one step on a longer path.

Our ambition remains unchanged: 10% return on equity by 2030. And what I've shown you today is also how we intend to get there.

First, income, we continue to grow our portfolio selectively and translate that growth into sustainable income. Second, risk, we will manage risk with discipline based on data and clear decisions.

And third, cost efficiency. We will continue to expand our operating leverage through digitalization and standardization.

Income, risk, cost. These are the 3 levers on our path to create value and achieve 10% return on equity.

The environment remains challenging. We do not ignore that.

But our business is getting stronger and our measures are working. This gives us flexibility to absorb the elevated risk burden and steer our business with composure and discipline.

We remain on track for '26 and on our path towards 10% return on equity. Thank you.

And with that, I hand over to Martin.

Thank you, Sebastian, and also a very warm welcome from my side. Now let's take a closer look at our financial figures regarding the first half year of 2026.

Following our strategic value levers, I would like to start with our operating income side. The foundation for our operating income creation is our leasing new business, not only of the past quarter, but the overall running lease portfolio, as Sebastian just showed you a second ago.

In the first half of 2026, we achieved an increase in leasing new business by 1.4% to EUR 1.6 billion despite the continuous challenging environment. And with that, we are quite pleased.

Leasing new business growth was mainly attributable to our core markets with a strong performance in Germany, followed by France and Italy. And as you can see on this slide, new business in our DACH region rose by 7.5%, up to EUR 405 million, while Western Europe increased by 3% to EUR 429 million.

And Southern Europe recorded a 3.1% growth to EUR 422 million. In our Northern Eastern region, however, we saw a decline in new business by around 11% compared to the first 6 months of last year to EUR 273 million.

And alongside a strong first half year in 2025 in this region, this primarily stemmed from the end of subsidies for e-bikes in Finland in the second half of last year as well as a greater steering towards higher local overall profitability in other countries such as, for example, Denmark or Sweden. Our other regions, which include our future core markets like the U.S., Canada and Australia, however, maintained their growth with 3.3% to EUR 116 million.

And especially here, our U.S. business, which doubled in size as well as Canada with around 10% growth, drove the performance in this region over the past 6 months.

And this development underlines the growing relevance of these markets for us. So overall, we achieved growth across our markets despite, in some cases, a significant decline in overall investment activity, allowing us to increase our market shares in many countries.

This performance enabled us to maintain our leasing new business at a solid level. We use our CM2 margin as a key metric to steer quality or, in essence, profitability of our leasing new business during the period.

At 15.9% for the first half of 2026 and 15.6% in Q2, our CM2 margin accounts especially for 2 facts. The interest rate environment, reflecting the newest increase in ECB interest rate, which we saw at the end of the second quarter.

In the previous year's first half, we still profited from some tailwind of lowered interest rates. And second, our CM2 margin also reflects the currently elevated level of risk provisions.

Since Germany continues to achieve a strong performance in new business, its share in the overall new business portfolio also increases. And with traditionally lower CM2 margins there, this slightly affected our group CM2 margin as well.

Most important for our steering of our CM2 margin is that our measures for risk-adequate pricing and proactive management of our portfolio are taking effect. And with roughly 16% CM2 margin for the first half of 2026, we feel comfortable given the macroeconomic environment we face today.

And reflecting this, we expect our CM2 margin to reach around 16% for the remaining year. Let's move on to our P&L.

In the first 6 months of this year, we saw strong growth in our operating income by 11% to EUR 353 million, driven by both our growing net interest income of EUR 250 million as well as a strong profit from new and service business of EUR 138 million, including gains from disposals. At the same time, we managed to keep our cost development on a slow level with costs of EUR 182 million, increasing only by 1.5% compared to the first half of 2025..

Our continuous efforts in cost discipline as well as efficiency measures showed satisfactory effects. And this led us to a significant improvement of our operating result before settlement of claims and risk provision by roughly 23% to EUR 171 million.

And our cost/income ratio improved from 56.4% to 51.6% accordingly. So throughout 2026, we will continue on this path, strengthening our operational efficiency towards higher profitability.

After operating income and operating costs, I'm now heading over to our third strategic key lever, risk. So let me also be frank, the first half of 2026 was characterized by continued uncertainty in the economic environment, also impacting our customers and their payment behavior.

In consequence, we observed persistently high insolvencies and a still elevated level of defaults. Therefore, the settlement of claims and risk provisions rose from EUR 95 million to EUR 119 million, resulting in a loss rate of 2%.

Even though our loss rate remains notably elevated above our long-term average of 1.5%, our operating leverage largely compensates for this increase. And as mentioned some slides before, we have already accounted for higher loss rates in our newly settled leasing contracts while continuing our efforts in debt collection for defaulted contracts such as AI solutions with call agents.

Ladies and gentlemen, our goal remains clear: to sustainably increase our return on equity to 10% by 2030. Throughout the first half of 2026, we already registered notable progress.

Our group earnings came in at EUR 32.6 million compared to EUR 26.2 million in the previous first half year. Worth mentioning in that context is a slightly higher tax rate with 26.4%, which was influenced by a one-off effect in Q2, but also resulting from current shifts favoring our core markets of Germany, France and Italy.

At the end, our group earnings led us to a return on equity after taxes annualized of 4.6% or as Sebastian just mentioned, a plus of 80 basis points. As you know, return on equity can fluctuate since it is an annualized figure, but what genuinely matters is the profitability curve over time.

And we are on the right track since we have advanced consistently. Primarily, we improved our cost/income ratio significantly.

The combination of a strong revenue growth with strict and disciplined cost management are crucial for our path towards higher profitability, no matter the macroeconomic environment. And in the light of this development, we maintain ongoing confidence that our return on equity will continue to improve throughout the second half of the year.

Before we enter into our Q&A session, I'll now turn a short look to our funding mix, which provides the financial foundation for our leasing growth. As you are aware, our funding mix relies on 4 debt pillars.

After our debt debut issuance with the first local bond in Australian dollar in last year's Q3, we achieved a successful placement of our first Canadian dollar bond in May this year. The new bond issued with a volume of CAD 100 million provides dedicated refinancing for our local leasing activities in Canada, underlying the relevance as one of our future core markets next to Australia and the U.S.

So at the end, our senior unsecured pillar now stands at EUR 3.5 billion, accounting for 47% of our funding mix. To move on with our pillars, deposit business accounted for EUR 2.3 billion, while our asset-backed pillar totaled almost EUR 1 billion.

And completing our funding mix, external bank funding amounted to nearly EUR 600 million. This pillar also includes revolving credit facilities we have in place, for example, with our partner Intesa Sanpaolo in Italy.

Ladies and gentlemen, in the current volatile market environment, we place particular importance on maintaining a funding base that offers sufficient liquidity and reliable execution capacity. Our funding mix gives us a solid refinancing foundation to support our future growth ambitions in leasing new business.

And with an expected equity ratio of around 15% by the end of the year, we are well equipped to support further growth. And with that, we are now looking forward to your questions.

Thank you very much for your attention. Now back to you, Franziska.

Thank you very much, Sebastian. Thank you, Martin, for your presentation.

Ladies and gentlemen, we will now enter into our Q&A session. Now, depending through which link you've joined us today, you can ask a written or oral question.

If you see a little hand symbol at the top of your screen, you're welcome to raise your hand in case of questions to ask another question. Please note at this stage that all lines are muted.

I will call up your name. Your line is being unmuted.

And then don't forget, please unmute your device. But you're also welcome to use the chat function for the Q&A you might have.

So we have a first question coming from Marius Fuhrberg from Berenberg.

A few of them if I may. The first one on the cost-income ratio, which developed quite well in Q2.

Would you consider this stable? Or did you put extraordinary effort on costs in order to protect profitability in the quarter, which means could the cost development catch up once loss ratio is coming down?

Second question on new business. Apart from the Finland base effect, do you generally see lower demand from broad customer base against the backdrop of the overall economy?

And the third question here to -- once again, a bit more color, please, on Sweden and Denmark. You mentioned active steering in those countries.

But have those countries showed significantly lower profitability in the past? Because looking at the CM2 margin in Northern Europe, it appeared fairly high.

And also with your chart just recently shown with the risk development, it appeared that Northern Europe have remained fairly stable with regards to risk costs. And therefore, please give us a little bit more color why you have steered down new business against this setup.

And the last one on the disposal side, which were a record high in Q2, whereas you mentioned in previous calls that it will sooner or later come down. Any feeling when we should expect a respective development and or when -- how long we should expect those to remain as high?

Thanks for the first question. I will take the first 2 and then Martin will add the answers.

First, cost/income ratio. From the trend perspective, we guess that it is sustainable.

Quarter-by-quarter, there will be maybe a bit migration because of different income development and maybe some cost impact in a single quarter. So it's important to putting it more in a long-term or midterm perspective as we did at the beginning of my presentation, but that ratio and that operating leverage should be sustainable.

And there's no link between cost and the performance in risk. So I don't see there any link that when risk come down, then costs are going up or something like that, that will not be the case.

To be honest, when new business is growing faster when we're expanding new business, and we may see also some special costs for sales that is more linked to that, but there's no link between risk and cost.. So the cost/income ratio is more or less free from the risk development.

For Finland, it's -- on the one hand, the lower demand because of the macroeconomic environment and the down in the leasing for bikes, for e-bikes is also sustainable because it was stopped in the middle of last year, if I'm right. So we also see the base impact is now running off.

So in the second half of the year, especially in the fourth quarter that year and then next year, we will not have that base impact from the e-bike business. So that is sustainable.

In terms of the overall demand, Finland is more or less in line with all the Nordic countries. Maybe Martin will give some color to Sweden and Denmark.

And also to the disposals, just one comment from my side. In a long-term perspective, you should always see the profit or losses of disposals together with the interest income because at the end of the day, it's a gambling between the expected residual value at the beginning for the interest calculation of the leasing receivables and only the difference between the expected residual value at the beginning and the realized residual value at the end is then in that profit line.

And when there is a difference, we always adjust our expectation. So interest income or interest earnings and that line on a long-term perspective, you should put together when you analyze that.

Yes. Mr.

Fuhrberg, happy to answer the third question regarding Sweden and Denmark. Well, I could have pointed out maybe also other countries in Northern Eastern region because this region is, in general, not performing well.

You have seen it in the new business figures. But especially pointing to Denmark and Sweden means that we steer a country specifically if we see a difference between maybe the macroeconomic challenges that affects the country or affect all countries or whether we see in the specific countries kind of, as you mentioned, low profitability, for example, where we then even more go in and are more selective in our reseller network, where we are more active in taking them out of our reseller portfolio.

And that, in the first instance, always has an effect on our leasing new business because it directly has an impact on this leasing new business production. And then boarding on new resellers where we build up trust with them takes some while, and that's why I pointed out here, Sweden and Denmark specifically.

Maybe just one addition to the disposal gains, which Sebastian just explained. Factor is also that we see that our customers are going on to lease for a longer period of time, their contracts, maybe because they think the objects are still working, while changing them.

Maybe there are in the delivery change, some issues that we do not get the objects -- this has all to do at the end with the customer behavior, how long they continue to use their objects. And the longer they use it, the higher is the disposal income.

We are evaluating this clearly. This is not a one-off effect in this quarter.

We have seen that over the last 5 to 6 quarters that we have that elevated disposal income. And also, as Sebastian just mentioned, it is always the situation that it is either in the -- on the interest income side or in the disposal income at the end, depending on the residual values we are estimating at the beginning of a contract.

Thank you very much. We have another question coming from the audio line from Roland Pfäender from ODDO.

Some questions from my side, please. First of all, could you comment on the loss rate according to your major countries you operate in?

So where are the biggest deviations to your expectations you had in, let's say, in the beginning of the year? That's the first question.

Now coming back to cost development. Yes, you had some improvements there.

But do you see it even differently now as your leasing business or leasing volume looks like to grow less than maybe expected earlier? So will you do more on cost development?

Could you even see costs really declining year-over-year going forward in this scenario? What's your stance here?

And the last question on tax rate. You have a new business mix.

What is the underlying tax rate to this business mix?

Thanks for the second round. I will start again.

And take the first one, the loss rate. Martin mentioned it in the presentation, I guess it is Page 17.

There you see the settlement of claims and risk provisioning by regions, and they can also point out the region behind the DACH region is Germany is the biggest country, Western Europe is France and Southern Europe, it's Spain and Italy. And to make a long story short, that are the main drivers because of volume.

Martin mentioned it as well across regions, we have a deviation in our expectation from the beginning of the year because of the macroeconomic environment. And then it's clear that the most important regions and countries of volume are also the driver in terms of deviation.

And maybe one comment to the loss rate. The lower new business as maybe expected at the beginning of the year, and you're also saying now that we will reach the lower end of our guidance range.

It has a small volume impact and has also an impact on the loss ratio because the ratio we divide the settlement of claims and risk provisioning through the volume and the volume is a bit lower and that drives a bit. It's not the main driver, but when it will continue over the year, we're talking about 10 basis points loss ratio because of lower risk -- lower losses.

And that maybe is a link to the next question. Martin can answer some things about the cost development improvement.

We are taking care on volume and quality. And that overall should bring us to growth of the total assets and growth of the relevant volume for the income.

And for sure, the growth pace at the moment in new business is not that high. It was a very slow growth rate for the first half of the year, but steered by quality, selective by countries.

You see that Germany or the DACH region with different pace than Southern Europe and Northern Europe, it depends a bit on the demand perspective, but also on our steering. And we would like to growing our portfolio, growing our overall substance for the income.

That is the most important thing and mixing that the right volume with the right risk appetite, so to say, will bring us to more volume, more substance and at the end of the day to a growing income.

Mr. Pfäender, happy to add something to the second one on cost development.

When I remember in the last years and quarters, we were -- or we were coming from cost increases of almost double digit or even higher. Then we took it down to only single-digit expectations of cost growth.

Now we are seeing 1.5% on a half year basis comparison. I think we have really done a lot of efforts there.

I do not see currently that a nominal decline of costs compared to the last year. We are happy with this development.

If we end up there at the end of the year, somewhere in the low-digit cost growth, then the cost/income ratio will reflect also this what we currently see, namely a cost/income ratio below 55%. Regarding the tax rate of our business mix, our 3 largest countries which have a high contribution currently, especially Germany, Italy and France, have high tax rates, especially Italy, we are talking about something around 30%, Germany and France in the higher 20s.

And if they have a large contribution, then the tax rate increases. However, we had in this quarter, especially a one-off effect in our tax rate regarding -- there was a tax audit in France, which resulted in expenses that were not tax deductible, contributing also to this higher tax rate in that quarter.

Just one follow-up. I was actually asking regarding the loss rate.

Do you see one single country behaving worse than others in comparison? Or is it, yes, the movement across the board like you mentioned before?

It's more across the board. The smaller countries are different because the portfolio is different and the portfolio is maybe not showing the overall macroeconomic environment.

But in the bigger countries where we are having losses more or less across the landscape of industries, it's more or less the same. And it's -- from a statistical point of view also, when you have a lower expected loss, your today's unexpected loss, so to say, or your realized loss deviation is absolutely lower than when your absolute risk at the beginning was higher.

So in euro, it means in Germany, the realized deviation is lower in euro than in France or in Spain, for example, because we're talking about 3.5% in previous year, our expected loss estimation at the beginning in Germany. In France, it was around 6%.

And in Spain, it was about 7%, 7.5%. And so the euro deviation is, of course, because of that higher starting level also higher.

But when you take it into account countries measuring industries is more or less the same in the bigger countries.

Okay. So we have a next question coming from Mr.

Lukesch from Kepler Cheuvreux.

First question would be on the loss rate and the decrease you -- kind of expect or imply with your guidance for H2. Why is that given the negative trend that we have seen over the last quarters?

And what loss rate exactly have you now factored into your CM2 margin calculation?

Okay. That's single question, single answer.

Thanks for that, Mr. Lukesch.

We expect a loss rate below 2%. On the one hand, the volume will increase because of the portfolio impact and of the ongoing new business and the estimated growth.

On the other hand, we are more selective with the current data. We are adjusting as often as it is sensible from our perspective with the current data, with our current measurement.

So the quality of the portfolio is more fitting to the today's macroeconomic environment. The leasing portfolio we set 2 years ago was not fitting maybe perfectly to the today's environment because we are not aware of the situation in 2 years, we can estimate that.

And that is why the loss rates should come down on the one hand. Volume will increase.

The settlement and risk provisioning should be more or less in euro on the same level. And that gives us, on the one hand, confidence.

On the other hand, it's the estimation for a decreasing loss rate below 2%.

So it's fair to assume that it's up from kind of 1.6% to 1.7% towards, let's say, 1.9% in your model, if you say below 2%, that this is reflected? Or is it just really a little increase to 1.7% or 1.8%?

It depends on the volume expectation at the end of the day. And -- but it's fair to say 1.8%, 1.9%.

It depends on the volume. I guess the fair assumption is to say, okay, let's assume that the absolute expenses for settlement of claims and risk provisioning will be on the same level as it was in the first half of the year.

Second question would be on -- again on the gains from disposals. Usually, we do see an uptick throughout the year.

You mentioned that this is a kind of mechanism to be read together with the NII. I was just wondering if you see that uptick trend to continue throughout the year with now the EUR 10 million jump or hike we have seen or to EUR 10 million.

And I would be interested in what kind of volumes you disposed in order to make that gain and if these volumes were very different to earlier quarters? And also if you do have some decreasing about the timing of the disposals.

Let me start with the volumes that are now part or form part of this disposal income. You can have a look approximately 4 years back into our new business portfolios of 2021, 2022 because these contracts that are running out -- that were settled then are running out today or in these days, in these quarters.

And at that time, we had new business portfolios that were significantly lower as opposed to portfolios today. So lower relatively volumes as opposed to other years are now coming into this -- or entering into this disposal income.

And this has, because of this portfolio effect, already a positive effect on gains of disposal because Sebastian just mentioned it, we assume a residual value for the whole portfolio. And if then a relatively lower part of the portfolio comes back, coupled with relatively more contracts that go into subsequent lease, this triggers at the end, the higher disposal gains in this period.

And as I said, this is not a one-off effect in this quarter. We have seen positive disposal income over the last 5 to 6 quarters.

We expect that we see positive one over the next quarters as well. But what is also the truth that this will go down over the next years because then new business portfolios with higher business volume, namely '22, '23, especially will run out and then the direction will be the other way around.

Some flavor to the portion of the business. We are seeing now a lease volume, so the initial running contracts with a net acquisition cost of roughly EUR 12 billion, if I'm right.

And roughly 5% of that is a leasing contract and disposal. It's very stable over the period of years.

There are sometimes a bit more, sometimes a bit less. It depends on the macroeconomic environment.

And Martin mentioned that before as your colleague asked the question to the earnings of disposal. There's one thing important.

In times like this, when you are an entrepreneur and you say, okay, my leasing contract is running to an end for my whatever IT infrastructure for machinery or something like that, it is working. And now I can make a decision, okay, I can go for new investment or I can say, okay, a running system, the situation is not clear what will happen tomorrow, uncertainty environment, may I will stay with that.

I know what I should pay and I go forward and make a retention for half year or full year. And to expect that, that is a sustainable behavior and to price that in today's or tomorrow's leasing contract in the expected residual value is not that easy.

We had said some years ago after the pandemic, may you remember there was a bit the same impact. We saw a lot of secondary rentals because of the bottlenecks in the supply chain at that time.

And it's a bit the same in some cases that and to find there the right level, okay, what are we taking as a sustainable trend -- as sustainable taking it into the new contracts for the interest calculation and some things like what I described is maybe more or less a trend we see today, and it's too early to say if it is a sustainable value driver, sorry, for the residual value.

Maybe last question, Mr. Lukesch.

Yes. Last one would be on the other comprehensive income line.

The shareholder profit was reduced by EUR 2 million due to hedging this quarter. I was just wondering like how this could play out for the next quarters to come, if you do have any visibility here?

And maybe a very last one to follow up on the tax rate. You mentioned the impact.

Could you maybe quantify the impact due to the one-off in France?

The one-off in France makes up a low single-digit number in the tax rate, 1, 2 percentage points in the tax rate. The effect in the other comprehensive income relates to our hedging in an economic sense.

We see FX in the P&L and other operating income, namely other operating expense, so to speak, because there are the value changes in the derivatives in the FX derivatives that we use for hedging of FX currency risks. And the other part is shown in the equity under other comprehensive income, namely that results from FX translation if we go from single audits from single accounts of our entities to the group account when you translate this at the end of the quarter.

This is economically not an issue, but we sometimes see some differences in the quarterly accounting or recognition within P&L and within other comprehensive income directly in equity.

Any view for H2?

Sorry?

Any view for H2, how this will develop over the next quarters to come, supportive or rather a drag?

In the total period at the end, this levels out between P&L impact and OCI effect. From quarter-to-quarter, the fluctuation is a result of the FX changes in the currencies where we are operating in.

So we have the next question coming from Dr. Haessler from DZ Bank.

Two short quick questions. On the disposal gains again, sorry, you said that this is linked to NII.

Do I interpret it correctly that because you have somewhat lower new business and therefore, lower NII because your customers don't renew or don't sign up for a new contract, but continue the old contract? Is this the right way to see it because you said it's linked to NII?

I will start directly because I opened the box earlier. It's linked to -- what you are saying is very interesting because it's more linked to the new business performance.

And so each contract, which is in retention is a potential new contract for tomorrow. That's right, but it's more a tactical question in terms of sales.

What I mentioned is NII. The NII and the interest income in leasing is calculated by an average 4 years leasing installments.

And then we estimate the residual value based on our statistical data. And that cash flows, the leasing installments plus at the end, the expected residual value, you're looking for the discount rate to the net investment, and that is the initial cost we have.

So the net acquisition value we pay for the asset. And that's why the estimated residual value drives the interest.

And with that interest, we are calculating the interest income each quarter, each month, so to say, because you split the leasing installment in an interest part and amortization part like in the loan. But you have to take in account in line with IFRS estimated residual value.

And the deviation between your estimation at the beginning and the realization at the end. So after 4 years, you estimate it EUR 500 million as residual value and you can earn EUR 600 million, you have a deviation of EUR 100 million, and that's a profit of EUR 100 million because EUR 500 million residual value is on your account on your asset.

You get EUR 600 million from disposals from whatever as cash in and the difference, EUR 100 million, that is your profit. When you get EUR 400 million, you have a loss of EUR 100 million.

And for all the contracts which are running into the end of the lease term, we are doing that from an accounting perspective. And each -- in minimum each year, we check, okay, is our residual value estimation fair?

Is it right? Or is there an adjustment needed based on country, lease term and object category because it's different a copy machine and notebook or a dentist chair is -- there's a different estimation of that residual value.

Okay. Second question would be, I mean, I know that you only give normally the development of risk costs on a country basis, but could you maybe comment a little bit on how risk costs develop by object type or whether you see any objects where risk costs are particularly high?

Or is it also relatively even spread?

Object type is maybe not the main driver of what we see or what we saw over the last couple of quarters is that bigger tickets are, so to say, far more risky than the smaller tickets. It could also be linked to, okay, when you have to pay more monthly, it's more burden to bring the cash and to pay that in the today's situation for the small, medium enterprises more that bigger tickets are risky, but it depends also a bit on the region and it depends also on the industry and on the country and overall, and that is why we are focusing on small tickets is that the diversification in the small ticket area is pretty high, and that's the best shield against risk.

So again, it's not an object type. It's more linked to a bigger ticket as bigger the tickets are more you will get, let's say, a higher absolute risk realized in your P&L at the end of the day.

So one fail in the bigger ticket is more absolute deviation than one fail in the small ticket environment.

Now we have another question from the audio line again from Mr. Roland Pfaender.

Just a follow-up. You mentioned you're gaining market share in your leasing business.

I'm wondering, is this also due to pricing? And if yes, why would you undercut, for example, market pricing?

I would actually expect that the market would need to push for higher pricing, looking at the volatility in the market also coming from macro shocks, loss volatility. Why is not the market pricing in general higher, also looking at your returns not covering cost of capital?

And I guess for the industry, it should not be very different.

Yes, good question. Thanks.

First, when we look to that, we have to split CM2, and CM1 and CM2. CM1 is pretty stable.

I guess CM1 was a bit higher than Q4 last year, and that reflects more or less the market price for the lessee, what is the leasing installment I've to pay, what is our funding cost on the other hand. And if I'm right, CM1 is nearly 11%, and it's pretty good for that environment because interest rates rising and there's always pressure on CM1 normally.

So when I look to the market price, I would like to say, okay, the market price is a bit higher than in previous quarters. In CM2, we adjust expected credit loss from today's knowledge from today's performance of the portfolio.

And so the expected credit loss in CM2 is higher than in previous quarters and previous years, and that is pressure on the CM2 margin at the end of the day. And in the market, there you have 2 groups of clients demanding for leasing, the healthy client and the not healthy client.

And at the beginning, it's always the same, you don't know that. But a client who is healthy today, is strong, have a good performance, maybe also in that environment, and there are some small and medium enterprises in that environment, they are performing well.

They are not willing to pay much for funding or for leasing because they know they are strong. On the other hand, you have a weaker -- maybe industry is a weaker client, and they are able to pay a higher market price, as you mentioned.

And in our business, a bit a mixture of that. So we are not willing to winning market shares in that environment via pricing.

It's more winning market shares to being present to being there for a fair price, a good balance between risk and income for us and winning market shares means 2 things in our business. On the one hand, when we're looking to that customer, and on the other hand, also looking to the dealer to making a business with a reseller and dealer in times like this, it's also a sustainable relationship to dealers and resellers.

And that is trust and that trust is building future and that future is a base for new business of tomorrow when hopefully, the macro environment is more stable, maybe better, but more stable would be also better than it is today. So winning market shares has always 2 sides, the end customer on the one hand, but also the long-term relationship to resellers and dealers.

And we know that from the pandemic, we know that from the financial crisis and several things that, that strong relationship we are covering today is the base for future.

So we're moving to some written questions from our chat, which are regarding our balance sheet. And there, the person asked why the cash balance was reduced and what are our plans for the second half of this year regarding any bond issuances?

Yes. When we have a look at our cash balance, this is always a date effect or to date issue because we make the cut at the 30th of June and then we see what is on our cash balance.

We deliberately steer it over the year depending on when we make, for example, larger capital market transactions. It is, on the one hand, important to have some cash buffer if we need it for our new business, when we expect higher growth and to fund that.

On the other hand, having too much cash on our balance sheet on the one hand, weighs on some ratios. And on the other hand, we want to deploy it in more earning in higher return earning leasing contracts.

So having too much cash on the balance is not helpful at the end as well. So at the end, it is a balance and between a trade-off between cash buffer and the return side, but this is deliberately steered by us.

When we stick to ratios, the question is about the regulatory CET1 ratio, if we already know how high that is.

Yes. We have a CET1 ratio currently, which is above 14%.

We have a total capital ratio, which is above 17%. There is quite some buffer above what is required from a regulatory perspective, which we feel comfortable with.

And there was a follow-up question regarding the steering of Sweden and Denmark and the decisions and the steering we took there. Was it more CM2, new business, cost of risk driven?

What were really the factors why we needed that active steering?

At the end, this is always a mixture of everything. If you imagine a scenario where we have extensively higher risks at the end realized than we expected at the beginning of a contract, then it comes back on the one hand to the customer, but also to the reseller who brought us this business.

And then we take measures to, at the end, get rid of that reseller, as I mentioned, and go for new ones. And to having this relationship established means at the first time, shrinking new business instantaneously.

And with the buildup of this new relationship with new resellers, this takes quite a while to have this buildup then also in new business.

So thank you. I don't see any questions from the audio line or in the chat function.

I will just give it some seconds. So seems to be there are no further questions.

Thank you very much for joining us today. Thank you, Sebastian.

Thank you, Martin, for your presentations and answering all those questions. Please do not hesitate to get in touch.

If there are further questions that spring to your mind, we're always happy to help just drop us an e-mail at [email protected]. So in the upcoming weeks, we will be quite busy traveling to different conferences in Frankfurt, Munich and Hamburg.

So I kindly invite you to check out our corporate calendar. On November 12, we will issue our Q3 report.

So you're also welcome to stay tuned. And as Sebastian mentioned, we're on track.

So stay tuned. And this concludes the conference for today.

You may disconnect now. Take care, and goodbye.

Thank you very much. Bye-bye.