[Non-English content]. Good morning. Welcome to the CTT Capital Markets Day. Firstly, I would like to thank you for your presence. I really mean this within the context of the pandemic and within the context of the efforts that we are doing in coming back, on the roads and coming back in contact with the markets in person. Thank you. We appreciate the effort that you made. We will have a full morning, so let's get started straightaway. Just to outline the agenda for the morning, we will have a welcome session where we will do the, basically the strategic review of the industry and of, and of CTT.
We will also have the morning organized in the logistics part or the B2B part, as we call it, where we will have the mail and the parcels, and where we will go through the operations and the profitability initiatives that we are doing. We will have a Q&A. I would say a short Q&A focusing on the three prior sessions, and we will have a coffee break. In the second part of the morning, we will basically have our B2C arms, our retail arms, financial services and retail and Banco CTT. We will outline our ESG strategy, particularly our net zero goals, which we have just announced, and we will highlight the financial ambition and take you through the guidance that we just published.
Finally, we will have a wrap-up and a Q&A. Regarding the Q&A, a few words, basically to say that in each of the Q&A moments, we will start with questions from the room, but this is also a virtual event and we have investors participating from home or from work. We will take batteries of questions here initially in the room, and then we will take questions from investors that are participating virtually. For these online participants, we have a moderator. You can either ask written questions in the chat, or you can ask questions in real time. Please coordinate with the online moderator that we have in place.
Finally, just before asking João to join us, I'll spend a few seconds basically displaying and reminding of our disclaimer and safe harbor disclosures which apply throughout the presentation. Once again, thank you very much, and I hope you have a good event. João, please, the floor is yours.
It's my privilege to launch the works today. I was just thinking this morning coming here that it's almost exactly three years since I joined as CEO of CTT and gathered an impressive leadership team with my executive team's colleagues, a high number of top managers, and not much longer after a board, a great board by the way. If I had to elect a common sense or attribute for all these people, that would be probably one of commitment. Commitment towards a project and that is in fact turning an old company, a 500 years old company with a main declining business into a growth case. For that purpose, I think that...
For that reason, I think that committed to deliver, which has been our motto in recent years, is quite appropriate. Committed to deliver, in the sense that we are committed to deliver, of course, parcels and letters timely and with quality, but also to deliver what's expected from us from all stakeholders. For today, as a different way of framing what we are going to discuss and the way forward, we have added to this that we are committed to deliver e-commerce in Iberia, because this is a way of synthesizing all we do in logistics and in B2B. The Iberian nature of our presence, as you're going to see, and it's measurable, it's extremely important these days, ever more, when we go forward.
Also committed to deliver growth in our retail services platform in Portugal because this is the platform connected with our digital channels is where we serve B2C, as we already mentioned. This is the platform that serves the bank, that serves public debt, that serves insurance partners, that serves, well, social security and a number of partners enlarging and expanding going forward. Is with this vision and this motto in mind that we decided to proceed, but in a better, faster and greener way. These are concerns that are present throughout the whole of the deployment of our strategy. Under this vision, I think that we can declare appropriately that we've gone through a truly transformation journey. Why is this?
When we came, the company was mostly a mail company with 2/3 of its revenues generated on mail. Mail was, and still is, a declining issue more globally, not because of anything particular of Portugal. It was only 1/3 of our revenues that were associated with diversification and hopefully growth. That was not even profitable in those days. When we closed account last year, three years afterwards, for the first time in our history, mail not only declined absolutely, but for the first time, came to be just below half of our revenues. A mail company that was losing its main business, but that was able to grow and to grow through these new growth areas.
If it's reasonably impressive in terms of revenues, it's even more so in terms of profitability, because we came from a negative contribution of the diversification areas to a very significant contribution to what we call now growth areas. To the point of those growth areas today representing almost three-quarters of our recurring EBIT. I think it's fair to say that we've been through a really transformational journey. We did so because the sector is also transforming itself, and we had to comply with that and take that as an opportunity. Why is the sector changing? Well, in many ways.
It's changing on the course of digitalization of the economy, and in our particular case, the impact it has in e-commerce, but also on the change in consumer habits and expectations for obvious reasons. Digitalization and e-commerce growth is one of the main factors for transformation. New supply chains and the way they organize, another one for sure. The way consumers demand more convenience, more speed, it's of course an important lever. The technological change, it applies to all sectors of the economy and certainly very much so to logistics and e-commerce. A particular one for the posts, which is the fact that one which is in fact quite general, which is the fact that this complexity and this new digitalization journey applies for a number of partners.
The idea of someone, one single business partner being able to help in the transformation journey. Now, yes, a particular one for posts, which is the fact that generally across the world, brick-and-mortar branches are closing. Posts and those with USO concession contracts do have to maintain a relevant presence in the territory, and then it's our obligation to leverage on this fact. Finally, more than ever, all stakeholders requiring sustainable and social responsible business, and that's why we've given so much importance today to the deployment of a new strategy also with new and very demanding ESG commitments.
If you follow me through any of these, starting with digitalization, we came from an impressive 15 letters to one parcel in the beginning of the century to almost parity in global terms. This is obviously because mail has been steadily declining, but parcels has also been increasing on a monotonic way. The situation is not that different for Portugal. In fact, we came from even more impressive 30 letters to one parcel, not yet to parity, but in only 20 years we have declined this much and the mix has changed this much. This is why it's so important for us to follow this trend also for mail. That's why our e-carta or e-letter, as João Sousa will explain later, or our certified email via CTT is now reaching almost 2 million users.
Because in fact, some of these users of mail remains users of mail in a different way. Moving to the decentralization of supply chains. Well, we are all aware that most of international commerce is sourced in the South Pacific area, and particularly in China. The supply chain needs to comply with this peculiarity. Global suppliers have organized themselves by deploying more and more, larger and larger, more and more efficient fulfillment centers in a global way. This brings a new role for regional players, because it's for regional players to complement this on last mile. That's how, why it is so important for us to present ourselves and to behave ourselves as a truly regional player for Iberia. Moving to the third one. I'm sorry.
It's also because of that we have been increasing our fulfillment capacity. Just to illustrate that, from the last nine sorting centers that we've opened, on six of them we have reserved and designed for e-fulfillment space. Moving on to consumers are in fact demanding more flexibility, more sustainability, more convenience in the points of presence. This is why everyone is deploying lockers. More than half of the European e-sellers already offer a PUDO alternative for delivering their parcels. But they also expect their parcels to arrive no later than the next day. It's convenience and speed. This goes to a point in which a significant number of customers is willing to pay more to receive on same day.
In China, this goes up to a third, and some of them declare that they'd pay as much as EUR 1 or $1 to have extra fast delivery. There is the issue of technology. Technology, well, moves everything across the industry. Of course, it enhances the power of users, but it also enables other types of delivery, more sophisticated, faster. In what concerns the use of data and big data and analytics, it's the main promoter. Well, probably Amazon Spain knows more about my personal taste than my children or even my wife, I don't know. The use of big data and of course, more than in anything else, the impact it has on operations with, well, sensors, robots, and man stuff.
Technology is, of course, a lever and a driver for change also in our sector. It creates new markets. Just to give you one example, EUR 10 billion is the expected market size for same-day delivery in only three years' time. Moving to the issue of digitalization and the search for partners that would fulfill these needs in a one-stop shop approach. This is the value chain of logistics. This image, if anything, shows that it is a bit complex and it is extremely populated. From advertising to management of returns, value-added services, payments in between, fulfillment. Delivery, that's our early presence here. CTT is covering part of this value chain and aiming to cover even more.
Then, as we're going to see also across the morning, we have a number of services, either through partnerships or internally developed or internalized, and our aim is to serve the full value chain for e-commerce, both in Portugal and in Spain, so in Iberia. This peculiarity of mail. This is an impressive chart that shows how branches in general, banks, utilities, you name it, are closing down. The fact that we need to comply with a significant level of density compels us to leverage on this obligation. This density is funded by the economics of the concession contract. We need to leverage on this and do more with this impressive asset, which is a way of combining for B2C, the physical world with the digital world, which we believe are developing better than anyone.
Finally, the issue of ESG and all stakeholders requiring more and more responsible business. In our particular case, with an emphasis on the environment because the postal industry is by nature, very brown. We perform hundreds of millions of kilometers per year, and therefore, we need to do something, we need to act. We need to act because we believe so. But also because there is a mesh of constraints that come on one side from the regulatory side, which is especially relevant in Europe, as you all know. On the other side, by customers, because customers are expecting us to behave more responsibly and to be greener, but also in the way we need to engage employees in our value proposition.
Of course, last but not the least, investors, because we know that there is a premium for companies that do perform and commit to proper ESG targets. We do all this within the framework of the UN SDGs, that we've chosen those that are more relevant for our industry. We need to set a strategy and to fine-tune a strategy that conforms with all these requirements, different stakeholders, but we need to turn this into achievable and understandable commitments, and we are going to disclose that more. We've done that early, and Maria José will also guide us through our agenda on ESG. The sector is changing. It's changing a lot. We believe CTT sees this transformation as an opportunity, and we have delivered. We have delivered.
This is the same chart now unfolding, business by business nature, both in revenues and recurring EBIT. We have symmetrical contributions. Our main business back in 2018, mail, contributed negatively in both revenues and margin, and then all the others with positive contributions. I think we may state that we have converted declined mail revenues in higher diversified growth business revenues. We have transformed the company and we became a growth company. History. With positive contributions from all the diversification areas, Express & Parcels the highest contributor in terms of revenues, and the bank the highest contributor in terms of increased profitability. All of them, Financial Services & Retail, also contributing to a more positive story.
In this period, we have done a lot and we want to stress three what we call key achievements in this period. The first one being the turnaround in Spain. The second one being the breakthrough. The third one being the awarding of a new concession contract for mail. Coming to the first one, Spanish turnaround. The Spanish turnaround is based on three levers, quite simple to describe. We have a CapEx, an investment plan. We have very strict KPIs. We've announced that we would follow these, and if diverging, we would probably go elsewhere, but we did it. The first one was to switch to our own operations model. B2C is the growing thing. Franchisees are not efficient in delivering to B2B.
We were basically Tourline Express was basically a franchisee-based operation, and we turned that into an own operation. As we're going to see, we have operated a huge number of operating centers in Spain, because in Portugal we were already properly covered. A significant market share gain and with scale, significantly higher efficiency. João Sousa will guide us through what's been done in greater detail. With that, we've been able to anticipate our declared target of positive EBITDA during this year, anticipated that to a full year positive EBITDA last year, so quite ahead of time. We had a first period where we had to handle legacy, and then we started a period that we believe and we are very confident it's going to be a growth period.
The contribution of Spain to our Iberian approach will be more and more important. Landmark achievement number two, the bank breakthrough. This is a case, as Luís will then explain in further detail, of great success in the launching of a bank network and the acquisition of customers. We have a very rich customer base now, young, with significant affluence. We have now more than EUR 1 billion of consumer finance in our book, both through partnerships and using our own internal assets and expertise. We have already EUR 700 million of off-balance sheet, just to mention three of the main areas where the bank was successful.
After five years, only the bank in a very, well, not so favorable environment for the banking industry, we managed to have a bank with a proven business model, a clear strategy, and that achieved profitability in these adverse conditions. Which is good. It sounds like it looks like a startup growing, but with the exception that it also is profitable. We brought the bank to a position in which we start generating and seeing interest for equity partners, potentially at no discount. Which is good, because in the long run, we don't see ourselves as having to be the majority or the only owner of this bank or even the majority owner of this bank. Moving to key landmark number three, the concession contract.
There are three main levers on a concession contract for USO. Price, quality, and density. This is what matters. In the framework of a new postal law that somehow was approved late last year, we have negotiated a new concession agreement in much better terms, both regarding price, because the criteria are now to be based on historical data and not predictions, and they will be established by agreement. We are, as we speak, in fact, even yesterday we had a meeting. We are negotiating with the regulator and the general director, directors for consumers, the criteria that should set the prices that then we will propose and will be approved by the grantor, that is government. This is for two- to three-year terms, because for this year, things have been arranged in a similar way.
That's why you have this 6.8% price raise for this year. The new quality criteria that should follow for those two three-year periods on quality are to again be approved by the government, proposed by the regulator, but following European best practices. This is granted in the new law and in the new contract. It even states that it needs to comply with the average of comparable countries in Europe. A great process. On progress. On density, things are pretty the same. We were comfortable with what we have, and there's not much to add. Going forward, I believe that I can say we envisage a better, faster, and greener CTT, which is a well-diversified company with its five business areas.
I know that we only report four because business and commerce services is still small and young, and we are reporting this as others together with Mail one day. Hopefully, we shall render this independent and sizable. Also with the proper separation between B2B and B2C, so a quite ample offer and always in a better, faster, and greener way. Moving to Mail, we have a simple strategy based on three levers again. It sounds like we are consultants. The first one, it's price. Why in price? Well, in price, of course, we have the increase itself, and we have much higher flexibility than we used to have. We have more flexibility to compete, to manage churn. Again, João will enlighten us more about this in a moment.
Digital services, because in digital services, this is where we are going to grab part of the lost mail, and the offer is becoming richer and richer. We can combine this with our physical presence in the territory. Finally, business solutions because we are inside the customer's house, and then it's our obligation to increase share of wallet with customers. We are doing now things with companies, BPO stuff in companies that are very, very remotely with mail, but we inside the continuum because we were there, and we started doing other things, and this is going to be very significant. Moving to parcels. Well, the most important note I'd like to drop here is that we are an Iberian partner. We have an Iberian approach, and this is very important for a number of reasons.
This is a table very hard to read on purpose because we just want to call your attention to this. Iberia is the fourth-largest e-commerce market in Europe. Only behind UK, Germany, and France. It's not only the fourth largest, but it's also the one that is growing faster. This is because Spain is moving towards the average of European in terms of e-commerce adoption. Portugal is still lagging behind. Even in Portugal, it's for reasons that it's our obligation to resolve. Portugal has been typically an early adopter of technology. This was the case for cell phones, ATMs, electronic tools, and why not e-commerce? Well, we are also adopting e-commerce at a faster way, but out of Portugal.
In fact, we rank fourth in the country with the highest level of international e-commerce, meaning that we buy in Spain, we buy in China, in U.K., in France, Germany because we have a scarcity of e-sellers. Being a periphery country, well, the large e-tailers didn't come yet. Amazon is still not here. Zalando is not here. About You just came a couple of months ago. Also because the Portuguese large retailers, they were a bit lazy, if I'm allowed to say so. It was the pandemic that actually woke them up. The small companies because of lack of sophistication, and we are doing a lot. We have created more with our tools, more than 3,000 online shops for small companies in the recent past.
This is also why it is so important for us to present ourselves as an Iberian operator. We are now even using this CTT Iberia brand. We plan and operate at an Iberian level more and more with integrations across Iberia in parcels and with a unique integration between mail and parcels as the other João Gaspar da Silva will also let us know when he talks about operations. This is extremely important because Portugal and Spain are the largest trade partner of each other. Because of that, most companies, they hire parcel operators at an Iberian level. This is absolutely fundamental for us.
The importance of Spain can be seen here for this Iberian approach because Spain has a contribution to our revenues growing, going forward, and even more so on contribution to growth. Moving to financial services and retail. Well, we have this unique capillarity. We excel in public debt, and now we hope to do the same in non-life insurance. We can leverage on thousands of people that come to our stores every day, and even more so, hopefully soon, through our digital channels. We are already doing so and can leverage on being a platform for services. We serve the bank. We serve CTT. We serve the Social Security. We serve utilities. We serve the tax authority. This idea of being a platform for services is, in fact, quite convincing.
We are emerging as the convenience platform for services. In some places, it's quite easy to sell because we are the only ones there. Finally, moving to the bank. The bank is a case of, from now on, fast-forward growth based on three axes. It's going to be expanded by Luís, of course. First one, monetize the customer base. As I said, it's a very rich customer base.
Excel in life savings. Here, capturing the tradition and trust that the CTT brand has. CTT has been placing Portuguese Republic's debt in the retail for ages. It's in fact the only channel to do so. A third axis regarding consumer lending, which is a growth business. We have quite significant aspirations in this area. The final word on ESG, just to stress that while we know the world needs to decarbonize, we are in fact an unfortunate contributor to carbonizing it and we need to act, and we will do so by adopting 100% EVs in our own fleet, 50% already in 2025. 2025 is tomorrow, we know.
We want to achieve gender parity in mid and top management in 2025, tomorrow. We will have half of our mid managers with incentives, variable remuneration associated with ESG matters. We want to have three-quarters of our procurement purchases to be done locally, that is in Portugal and Spain, again, in 2025. With this, we are committed to deliver e-commerce in Iberia, deliver growth in our retail platform in Portugal in a better, faster, and greener way. I believe we are ready. Thank you.
Good morning and welcome. This morning, I'm going to present to you the strategy for mail, parcels, and e-commerce solutions. Beginning with mail, we can see that business is under transformation from the last years.
We see a decreasing of the rate of mail decreasing from 2018 to 2021, - 18 percentage points. When you look for 2021, we see that the rate of the mail business now is less than 50%. However, when we look for all the total revenues of CTT, we see an increasing, and the revenues are increasing 6 percentage points per year. This means that the business is a transformation in mail, and mail business EBIT is still a strong contributor for the EBIT of CTT. We compare much better than our peers. We think that's going to happen and going to continue in the future through a more and efficient modern operational structure, and also, like João Bento already talked about, because of the new concession contract.
This give us flexibility to increase pricing and also to managing the churn of our customers. For us, mail is an asset and still an opportunity. Why is an asset? Creates the opportunity to contact with all the companies in Portugal. Because of mail, and we have mail on CTT, we have relationship with the large corporate customers, the SMEs, the public entities, and also give us a lot of assets like a strong brand. I can say that it's the best-recognized brand in Portugal. Have the relationship with the customers, like I told you. A very huge capillary presence with account managers and more than 500 stores in Portugal. Most of all, a very good knowledge about the process and the flows of the digitalizations of large companies. Because of all of these assets allow us to have a very good relationship with our customers.
We know all the process, that's why we can develop now, connected with mail, tailor-made solutions from document management to BPO and contact centers and standard design solutions for SMEs, mainly digital and self-services. I'm going to talk a lot about SMEs. Why? Because in Iberia, more than 98% of the companies are SMEs. If you want to be the number one, we need to take care about this sector and this segment that typical large companies don't take care about. We're going to realize our strategy for mail in three pillars. The first one, price strategy. Like I told before, the new USO contract allow us to increase pricing and most of all, managing the churn of our customer base. This is a very good opportunity for us. The second one, digital services.
We know that the companies are using digital services, and they're going to use, and we don't have anything against that. We just want to be part of that process, and we can help the customers to do this process. The last one is Business Solutions, where we are developing a lot of the new solutions and the new revenue streams to our companies. I'm going to show you right now what we are doing in digital service. I'm going to present to you two solutions we have, part of our portfolio. The first one, ViaCTT.
We can say that is a unique solutions that allow our business to connect with the consumers and promote security, where we already have more than 1.8 million users, all the companies over there, and we are aiming to achieve more than 50% of the Portuguese households. The other solution we have on digital is e-carta, or for the English, e-letter, that allow us mainly the SMEs to send mail without printing or manually packing. That way take all the friction of sending a letter for the companies. Because in the SMEs, typically, the problem is not the pricing, it's the friction and the work they need to send a letter. This solution can be part of the digitalization of the SMEs.
Coming for business solutions where we are complementing the mail value offering, where we are developing all our offers related with mail, like from mail rooms to predictive finishing, agile, physical and digital. Where we are integrated the solutions with the knowledge I talked before we have from the customers. Developing tailor-made BPOs and self-service solutions for SMEs. Very, very important, helping the government to achieve greater process efficiency. We are aiming to increase the revenues 3.5x when you compare with 2019. Inside of this, we acquired recently NewSpring Services to reinforce our Business Solutions offer. We are very happy, I can say, with these assets and also with the first results for the months.
What we want to do with NewSpring Services is expand the market share this company already have in bank and insurance. Helping to bring NewSpring Services to penetrations in other sectors like utilities and retail, where CTT have a very good relationship. One more time, moving for the SMEs doing standardized solutions. With that, we want to promote the rate of the revenues of business solutions from 7% to 22% on the total of revenues of Mail & Other and Business Solutions until 2025. With all of these assets and all of this knowledge, we can say that we have an extended offer, we can say that's unique in Portugal. The companies from the corporate and public entities, we can help them to support the business or empower the business. I want to highlight this marketing and advertising.
This is very important for us. We are reinventing this business because also CTT is an advertising company. With the information we have from the customer, joining the physical and the digital, we can also help our customers to promote and empower their business. We have a full range of solutions for our customers. One more time, more digital and self-service solutions for SMEs. To do this, we need to deliver, and we are a delivery company. That's why channels is so important. We come from a single channel face-to-face to a multi-channel company with more than 300 key account managers around Iberia, inside sales involved in outbound agents and more than 500 stores around the country. We know what we want to do with them.
Our key account managers want to take care about the large and medium companies, try to managing the share of wallet. Inside sales and outbound going to take care about the small companies, try to promote new services, acquire new customers. Digital channels and direct channels stores going to work with micro companies, consumers, try to leverage the incoming traffic. We take care and we look very important for our go to market, so the way we are doing this. We can say that in mail, the mail highlights, the new USO contract provide us stability and sustainability to the post business. Mail is a hook to bring extended offer, like I told you, for large and corporate and SMEs. We have in our portfolio a wide range of tailor-made solutions and standard services for SMEs, and CTT is a multi-channel presence.
Before I enter to parcels, I like to say that in a 500-year-old business, we are still young. Coming for parcels. We realize our strategy for parcels in three major points. A unique Iberian setup, like João Bento already told you, is very important. We don't care if it's Portugal or Spain. For us, the market is Iberia. Be the real one-stop shop supplier for companies. Last but not the least, because quality and relationship with the customer is very important, have a superior multi-channel customer experience. Enter on the unique Iberian setup. We can say that we have a unique Iberian operation. We have launched several initiatives to deployment this unique operation. We have right now more than 17 depots serving both countries. We have now sorting capacity more than 940K per hour. We cover D+1 all Iberia.
You don't care if you need to deliver in Barcelona or in Lisbon and Porto or Madrid. We have more than 300 key account managers serving all these countries. This is unique. That's why we create this CTT Iberia, and I think we are the first logistics company to have this brand. Even this is already an asset. Nobody can say that Iberia in this name. We see that Iberian flows, like also João talk about the potential of this Iberia market. It's an opportunity for us in volumes and in EBIT. That's why we are creating a strong Iberian footprint with a different offer.
No other company works and looks like an Iberian if you look for our competitors. We are looking for the early days of fulfillment for e-commerce and also one more time taking care about SMEs. We have a package of e-commerce suites for SMEs, very, very important. From the advertising solutions, online stores, payments, and so on, and I'm going to explain a little more in front. To take care about this Iberian market, we begin to put both teams, Portugal and Spain, working together. This Iberian coordination begins with operations because quality of services is critical in our business and the customer pays this quality of services. We're beginning to share the commercial know-how, information about customers.
That's why you're going to see most of the big customers work with us in Portugal and Spain, sharing practices about products and sharing know-how about both markets. That's really Iberian company. What we are working right now is on product catalog, value-added services, expansion. The last mile offering we have in Portugal to Spain, expanding the product offer we have in both markets. That is, we can say that the customer, we don't care if it's in Portugal and Spain, the experience they need to have with CTT, with CTT Iberia, need to be the same. Coming to Portugal. Now I'm going to explain a little bit about Portugal and Spain. We come from increasing of revenues of 40% per year, as you can see, since 2018 to 2021 in Portugal.
Our aiming for the future is to maintain the market position and reinforcing one more time the best in class. Again, quality is very, very important in our business. Now you're going to do this like a consultant, like João said, with three different steps. The first one, have the highest offer in the market. Nobody have a offer like us. So the customer don't need to go into another operator. We have offers like next day delivery, two-man delivery, cargo, same day delivery, green delivery. If it's today, anybody's getting a new offer, we're going to have next tomorrow. So the companies can work with us. The second one was benefit from the growth of e-commerce in Portugal. We can say that today we have more than 50% of market share of the global marketplaces like Amazon and Alibaba.
When you look for the 50 out of the largest 20 sellers in Portugal, works also closely with CTT. The last one, it was the new offers we created for two different reasons. The first one, for the companies who wants to go for the first time online. We have online stores. That's where we put more than 3,000 new SMEs working online for the first time. We create fairs for the agriculturists sell their products in the pandemic. We also have solutions for companies that already are in retail, in brick and mortar, but they need to develop in their online business. We also have solutions for them. That way help the market to grow and because we are leaders, we're going to grow with the market.
When you look at Spain, we see that we have a 28% increase in revenues since 2018 until 2021. Here also very ambitious, we have a lot of ambitions also for this market, like everybody can understand. We want to outgrow the market, gaining market share and to reach the high single-digit market share by 2025. Again, how we're going to do this? Three different steps. First one was implementing a new operational model. Like João talked about, we're changing from a franchise model to our own operations. That was the best way to guarantee better quality of services and also reduce costs. The second one was gaining the largest e-commerce players so that we can guarantee volumes and scale.
Because of these two ones are already on green, it's not because of the ESG, it's because already done. We have positive EBITDA in 2021 earlier than we expect. Now to grab the market share we want, we are implementing a new commercial model and also extending the service offer for the future, so that's this is going to allow us to continue to grow in Spain and capture the results we want. Saying this, CTT Express has a significant market in Spain, and we think we are well-positioned to maintain the leadership positioning in Portugal. The second step is be the real one-stop-shop player or supplier for e-commerce companies. I can say, and we use these words a lot, but I think it's real, we have a unique position. Nobody in the market have this kind of offers.
An SME or a corporate company can talk with us if they are in the pre-sales phase, sales or post-sales, we have offer for everyone. If you want to create a brand, if you want to create an online store, if you need payments, if you want logistics, returns or customer support, we can do everything on a bundle or for different phases for our companies. One more time, tailor-made for corporates or standardization solutions for SMEs. I'm going to highlight two of them, so the payments and the logistics, and the other ones you already know what we have. On logistics, we want to grab the early stage of the fulfillment for e-commerce because we have very few fulfillment companies around the world.
Fulfillment for e-commerce that grabs value-added service for the e-commerce is totally new, and more new even in Portugal and Spain. That's why we are looking for this. Fits a lot with CTT. Increases thickness in the commerce customers, and we expect that this market is going to grow 15% per year. We are a growth company. We need to have services that help us to grow, and we can look for inorganic roles to accelerate this strategic. In payments, I think everybody in the room knows we have PayShop, a very important brand with services, but we want to come from bill payments and cash in person to digital payments, and with that, achieve 9% of market share in 2025. This helps us, the commerce suite, because to have payments, one more time, is something unique we have inside of our portfolio.
We can say, and everybody have a company inside of the room can talk with us, we can help her to support the business with our solutions, we can empower the business with our solutions, and because it's our core, we can deliver the business to our consumers. We are the real partners for the companies in Portugal, and we want to take this also to Spain and the real partners to the companies in Spain. Last, because we are here, we like our employees, we like our shareholders, but what is more important, customer. We want to give to our customers a very good customer experience. I'm going to show two different things we are doing. The first one is the convenience of delivering. We have a PUDOS network with more than 2,400 PUDOS in Portugal.
We count with 350 lockers. Our CTT stores, our partners in CTT and Payshop. We want to achieve 5,000-6,000 PUDOS network, and we want to take also this strategy again to Spain because we are an Iberian company. I would like to also highlight we are building the largest locker network in Portugal already with a very good brand we call Locky. Locky can wait for you for your package with more than 350 lockers. Very happy to say that these lockers are 100% locally made in Portugal, and we want to achieve 1,000 lockers until the end of 2022. We already have these 350 lockers in the real places that are important for customers, shopping malls, retail networks, gas stations, and so on.
One more time, we want to take these to Spain. Last but not least, we can, with all this evolution on CTT, from a product-centric focus, more than three different digital touch points with the customers, and we want to go for a B2B, B2C company, understand all the company needs, and have a portal experience for B2B. Just one portal where they have all the services, they can have the same relationship and the same experience they can have in the company, in this portal. For B2C, we are creating and constructing right now an app that will put all the service over there, so the customer on the phone can have all the services about CTT and maybe from some partners.
That's why you can say that we, CTT, have a unique position to capture the growth of the commerce in Iberia, grab share in Spain, and support the market growth in Portugal, be the real one-stop shop in e-commerce, including fulfillment across Iberia, and giving for our customers the best customer experience. With that, we can say we are committed to delivery like João Bento already told you. Thank you very much.
Morning, everyone. These have been very eventful times at our operations. These have been very busy times, and these have been transformation times as we adjust our operational blueprint to the business priorities that João just shared with us. Over the next 20 minutes, I will cover our operations contributed to the turnaround of our CEP business, how we are handling declining mail volumes in Portugal, and how we are addressing this challenge of sustaining the productivity levels in this context of declining mail. Also, the portfolio of initiatives we have in place to keep driving down unit costs, to consolidate the turnaround of our CEP business and to provide a better customer experience. Now, before we move into the detail, I would like to start by giving you some context on our starting point.
When we set out on this transformation path, our operations in Spain and in Portugal faced very specific challenges. In Spain, we have a loss-making business. We have a subscale operation, most of which was outsourced to the franchisees. We have a legacy IT system that the business felt didn't respond to changing consumer needs. It didn't respond to what the market was calling from us. In Portugal, the situation was different. We had similar constraints with our IT system. We already had some integration of parcels into our mail network, but these two networks were still managed independently. Finally, during the peak periods, we ran into capacity constraints that impacted our ability to deliver quality during these peak periods.
Above all, these were two independently planned, independently managed networks that posed significant opportunities to capture synergies. Network integration in Iberia has been a very important element of the turnaround process. How did we go about doing this? Our vision for our Iberian network is to give our clients what they want. Most of our clients see the Portuguese and the Spanish market as a single Iberian market. They want to have consistent processes, and they want to provide their clients with a seamless experience across both markets. In order to do that, we want to have consistent and completely aligned processes in our operations in Iberia. In order to do so, we need to have a common IT platform, and we have a roadmap in place to get there.
An important enabler for us to be able to align our IT platform is having a consistent degree of control over our operations, both in Spain and in Portugal. Finally, we want to deploy a unique network capable of delivering day plus one in the entire peninsula. Now, as we started moving and implementing this vision, we have been able to improve the quality of service in very challenging times, amidst the pandemic, several confinements. What we have seen is an improvement in quality scores in both countries, but mostly in the cross-border flows. We still have room to improve, and by 2025, we expect to improve on top of what we have already achieved.
I will now detail a couple of these points, starting with our technical architecture. In the long run, we want to have a common IT system. But the challenge here is how to do that while keeping the operations running. We have set a migration plan in place by which we'll be deploying new software pieces, deploying new features, and disconnecting different components of our legacy system. There are three, what we call, foundation elements for us to be able to do this. The microservice approach is what will allow us to implement new pieces, to deploy new features without having to shut down, to disconnect entire modules of our legacy system.
The event bus, that is a core component that allows the different pieces to communicate, to publish events into the bus without having to deal with the complexity of the entire ecosystem. The API management platform that will facilitate collaboration across the different developing teams, having clear standards in place with also significant security gains. It's these elements that have been allowing us to deploy new features, but different features aligned with the business priorities in each country. In Spain, we have already implemented a new app, a new drivers mobility app that we are now rolling out in Portugal. The same solution we implemented in Spain is now being rolled out in Portugal.
The same for the Iberian suppliers portal, where we manage the interactions with our suppliers, namely with our last-mile suppliers. We have implemented 100% traceability solution across both markets. The technical part is in place, and we are now rolling it out, adjusting the procedures. Finally, the decision server. It's an important part of our parcel integration strategy into the mail network, which I will address shortly. A second important element has been creating a unique network from these two networks that grew independently over time. We have consolidated the linehaul design of both networks. Last year, for the first time, we started a joint network planning exercise for our sortation centers.
We have also adjusted our last-mile operations, the departure times of our last-mile vans, to be able to guarantee 100% coverage in the Iberian territory. Another important element of the turnaround was capacity expansion. Over the last three years, we have more than tripled our sorting capacity in Iberia. We now have about 2/3 of the capacity expansion plans executed. We intend to keep adding capacity until 2025. Towards the end of this year, we hope to bring live a new sortation center that will support our customs clearing process in Spain, in the center of the Iberian Peninsula, entirely dedicated to the customs clearance of international e-commerce flows. We didn't just add the capacity on the sortation piece.
Adding fulfillment capacity is a very important element of our value proposition to e-sellers. We believe that by having fulfillment capacity adjacent to our sortation nodes, we are able to provide more competitive cut-off times. We have already expanded our fulfillment capacity to more than 30,000 square meters. In the last nine sortation centers, we have added fulfillment capacity in six of these. Finally, on last mile, where we have opened 27 new distribution centers in Spain as we took over the operations management from the franchisees, and in Portugal, upgrading facilities and also tweaking the distribution model to guarantee more last mile distribution capacity. We believe the infrastructure we now have in place is becoming a competitive advantage.
Besides allowing us to deliver in 24 hours in Iberia, it also allows us to provide value to our customers' operations, be it by offering later cut-off times, by providing more flexibility for us to be able to cope with peaks in our client's demand. Once we have the new customs clearance center up and running in Madrid, we'll be able to merge the customs clearance and the sortation operations, thus reducing the lead time for international e-commerce. This infrastructure is also becoming a stepping stone for cost reduction initiatives, for efficiency improvement initiatives. This has also been one of the central pieces of the business turnaround. We have a large array of initiatives in place. I will just comment a few.
We have deployed business intelligence apps for our operational managers across the logistics chain. We have these in place in sortation centers for our transportation operations and for last mile. This is very important for us to be able to monitor how we are executing and to quickly adjust and adapt, react to deviations. We have revised the contract structure with our last mile providers, both in Portugal and in Spain. For the first time, we have centrally defined last mile rates that allows us to have consistent rates in regions with comparable delivery densities. This new contract structure also has in place the mechanisms that will allow us to capture a portion of the savings from additional efficiency gains. Technology deployment, obviously, is also playing an important role. We have been deploying new route optimization systems.
The drivers' mobility map app that I have already mentioned. We have also been deploying some solutions to streamline the delivery process itself. The important thing with this is that even marginal gains in millions of deliveries result in substantial cost savings. Obviously the deployment of a parcel network, which is Lev2Go. What we call the pit stop model. The idea is to slash the time our drivers spend in the distribution centers loading the vans. The idea is that they get to the pit stop, they scan 1, 2, 3, 4 backpacks with parcels, and off they go to distribute. These initiatives have been allowing us to reduce unit costs.
This is an example for, from our last mile costs that account for roughly 2/3 of our direct cost structure. We have been able to reduce costs even in the first quarter of 2022 in a very high inflation environment. We have been able to reduce unit costs. Obviously, there is an external variable which is energy inflation, but we believe that under reasonable scenarios for energy inflation, we will be able to continue delivering unit cost reductions. Now moving on to our strategy to cope with declining mail volumes. Network integration, again, is also a cornerstone of our strategy to deal with declining mail volumes and to manage productivity and drive productivity gains in such an environment. This is not new to CTT.
We have started pushing parcels through the mail network back in 2015. Over the last years, we have been able to increase the number of parcels delivered by mailmen by 60%. What we need to accelerate the integration of the express parcels in the mail network was to, one, integrate the management. As of last quarter of 2021, we have common management for the regional networks of mail and parcels. We have also put in place what we believe is the best-in-class integration strategy of parcels into the mail network using what we call the decision server. What is the decision server? For roughly three-quarters of our parcels, we need to decide which network will deliver that parcel, the mail network or the express network.
What the decision server does is to optimize the way we make this decision. It pushes into the mail network the parcels that are more suitable to be delivered by fixed routes, the smaller parcels, the lighter parcels, typically the commerce parcels and the ones that have no time window commitment. What we gain by doing this, well, we get quality because we are pushing to that network the parcels that the network is more capable of delivering. We get cost efficiency and carbon efficiency because we get to deliver more parcels with just a marginal effort.
This is also proving to be an important capacity management, or I should say demand management, tool because by daily adjusting the parcel capacity that each is able to receive, we are managing the demand and thus ensuring better quality in the delivery of these parcels. Besides pushing more parcels into the mail network, another important element for us to manage productivity in last mile is to revise the way we plan and we deploy our resources and the way we are set up to distribute on the last mile of mail. An important contribution for this has been the rollout in 2021 of the Shamrock model. This is a model that we first piloted in the end of 2020 and that we rolled out last year.
It is now implemented in 40% of the hubs that account for 60% of the routes. I will not go through the details of this model, but for those of you who are interested, I will invite you to join us during the break at the stand where my colleagues will be more than happy to take you through it. There is an important idea, however, I would like to point out. This model has clearly been outperforming our traditional XY model. It has been allowing us to reduce costs, to increase productivity, and to increase the number of parcels delivered by each mailman. We know this is not enough.
We know that mail will continue to decline, so we have a pipeline of distribution improvement initiatives of new distribution models that we plan to test this year in the third quarter of this year to then roll out in 2023. Again, I will not take you through the details. Just a quick comment on this last one. The elementary segments distribution model is what will help us break away from the rigidity of fixed distribution routes. The idea is that we optimize the route composition on a daily basis based on incoming volumes and available resources. Now as you may imagine with all this going on, this has been very demanding for our teams.
We need a governing idea that helps our people realize what is going on and engages our frontline staff to bring them along in this journey. We are doing this by rolling out a lean operating model. Besides the typical components of such projects, shop floor optimization, visual management, structured daily briefings, for us at CTT, this is really a vehicle for cultural transformation.
We want our people to think of their responsibility as mailmen, as frontline employees, not just being responsible for execute, but to execute and help us think how we should get things done and how to improve our operations. I would highlight that based on this, we intend to, by the end of this year, establish a short-term variable compensation program for our mailmen based on performance, both in terms of quality and productivity. Now, I've been sharing with you what we have been doing internally in our operations, but we have also been working on upgrading the way we interact with our customers. Over the last year, we have broadened the reach of our customer care channels. We are now on Facebook, on Instagram, and on WhatsApp.
Next month, we will be also present in LinkedIn, on Twitter, so we'll have customer care channels supported by LinkedIn and Twitter. Second important component, we have been placing a significant bet in self-service and automation. This is important to keep the unit cost of interaction under control. Even if these applications are relatively recent, we have already achieved very interesting deflection rates, reducing the workload on our customer care agents. Finally, we are planning to deploy towards the end of this year, in time for this year's peak, some functionalities to improve the delivery experience of our clients. One-hour delivery window prediction based on the execution of the route by the mailman and the distributors, live delivery tracking, and one-time password as proof of delivery.
As of now, we already have an NPS score north of 50 points both in Portugal and in Spain, and we believe as we deploy more features to improve the delivery experience of our clients, this score will also improve. In short, we believe we have taken the steps to establish the best integrated CEP network in Iberia. This has been paramount to the turnaround of our CEP operation. We have the capacity in place to not just support, but to drive e-commerce growth and attain economies of scale and capture efficiency gains. We have what we believe is a state-of-the-art parcel integration strategy that will be key to help us continue driving productivity in the postal network despite declining mail volumes. Three priorities going forward.
One, proceed with the integration of the Iberia networks, of the Portuguese and Spanish network. We have learned a lot, but we still have a lot to do. Second, efficiency. We need to be relentlessly focused on reducing unit costs. This will be critical to consolidate the turnaround of our CEP operation. This will be critical to cope with declining mail volumes. Finally, customer experience. Customer experience is an overused buzzword. So let me emphasize the importance of this for us. When I first got to CTT four years ago, we were a very different company. I can testify that we are now, and our frontline people are now much more customer-oriented than they were back then. That being said, we still have a long, long way to go.
We believe that our people need to become truly obsessed with customer experience, especially our frontline staff, our operational staff, as they play a critical role in not only on the quality, but also on how our clients perceive quality. We are truly committed to making this idea of improve our customer experience the governing idea that helps us engage our people, transform our operations, and we believe this will be critical for CTT's growth and for our future success. Thank you very much.
It's now time for Q&A. I'll probably ask you to reserve the financial targets kind of questions to the second Q&A after we go through Guy's presentation.
Starting with the people in the room, then following with online questions live, and finally, as Nuno mentioned, possible written questions. Up to you. Myself, Guy, and our colleagues, all the presenters will be obviously available and pleased to answer to your questions. I know the presentations were great, but you might have to fill out our curiosity.
Yes, please.
Good morning. My first question is to understand this e-commerce growth that you have 20% in Portugal and 15% in Spain. To understand how this already accounts with the actual situation when we see the Zalando that you mentioned it and the ASOS with the constant profit warnings with the e-commerce now declining. Could be only one year, but we in the actual situation, we don't know. To understand how sustainable this growth could be for next years. How do you see that?
Thank you. A few more questions.
Hi. Can you hear me? I was just curious how you come to the 9% market share in payments in Iberia number. Where are you starting? Can I just have some of the calculations behind that?
Hi. How much in your operational efficiencies plan do you target to improve the joint letter parcel delivery? Is that like a strong pillar of cost savings, or how do you target, yeah, operating efficiencies in the last mile deliveries?
Basically you are targeting increasing digital market share by 2025. But recently we had news of large e-commerce investing heavily in its own distribution network. Do you see it as a risk or how you see it?
A follow-up on a point already raised. Are you able, for example, to adjust your network if e-commerce for some reason grows less than expected? This is a trend, as mentioned here in Europe and even in the U.S., the retailers that are doing better like Costco, on e-commerce revenue is growing less than on the physical side. Is your expansion plan in terms of capacity rigid, or are you able to adjust it, given the evolution of e-commerce demand? Thank you.
Okay. I think we have a pretty interesting set of questions to start with. First one about e-commerce growth and how we cope with the present decline in e-commerce. I'll probably deliver a general comment and we can reinforce that regarding the assumptions that we have in the plan. Guy will be explicit on that in his presentation. We still have all the reputable sources advocating growth for Portugal and Spain, and the decline in e-commerce is within that framework. If things go differently, then we have other ideas, and I will reserve that for Guy's presentation and eventually comments.
Yes, the assumptions that we have is taking into account the present situation regarding the dynamics of e-commerce in both markets. João Sousa, would you like to add something on this question?
I can elaborate a little bit more. We have this base case of growth still. Our report, all the sources we have, point to that central scenario. We think we continue to have a catch-up effect in all the regions we operate. There is convergence on still in any scenario to the European average that will continue to drive growth. We have market share leverage for us to continue to grow as well. As such, we think we can attain. We have seen growth resuming in Portugal after a difficult first quarter. We are seeing things still very resilient in Portugal.
In Spain, we have the market share and the underlying dynamics to capture.
Well, about the doubt on how we compute 9% payments in Iberia, it was not in Iberia. It was not payments at large, but maybe João can be explicit on that.
Yes. Good morning. We had accounting just for Portugal. It's where we are right now, payments. We are just looking for the payments we are doing inside of CTT, so it's not comparable, but we can give you more details. Okay.
Third question, how much of our cost savings come from joint delivery? We have mentioned, and João Gaspar da Silva. This is a session full of Joãos, as you've noticed. We're going to diversify for the second part. João has mentioned the trend and the evolution we have from back 2018 on the amount of parcels delivered by mail. Sorry, the amount of parcels delivered by mail people, but that is only one aspect of efficiency that we are grabbing, and I would probably ask João to expand on this.
I would just highlight. Yes. I would just highlight two additional elements. First, the update of the distribution model doesn't aim just to increase our parcel distribution capacity. We are updating and increasing the frequency by which we update what we call the distribution studies that basically define the setup in each distribution hub. By doing that more frequently, we'll be able to adjust our infrastructure to the declining mail volumes. We are also starting to deploy different distribution models in different regions depending on the specific distribution density to optimize the operations at a local level. A second point I would highlight is capacity management. The mail network, the mail distribution network by nature tends to be very rigid, so it relies on a fixed route structure.
What we are doing is moving to more variable capacity models. This implies having more reliable demand forecasts, and it implies giving our managers the tools to be able to react to deviations between the forecasts and the reality. I'm sorry, I don't know who asked the question, but an important element of the last distribution model, the third distribution model that we will be piloting towards the end of this year, aims at breaking away from the fixed route structure and start having a more variable structure. In order to do that, you'll need to optimize on a daily basis based on the amount of volumes that got to the distribution hub, and also based on available resources.
The concept or the idea behind this model is that the hub manager will be able to input the available resources and the system knowing the incoming volumes will establish the number of routes and the sequence for those routes. I'll be more than happy-
Thank you very much.
to share more details in the stand.
João was going through a second version of the presentation. Thank you.
On the question of big retailer or big marketplaces entering the last mile. In the past few years, we witnessed these big e-tailers and marketplaces driving more and more share of the market, and that scale enabled some of them to go to last mile. Although not at a nationwide level, only in very high density areas where the economics work for them. Since the pandemic began, this concentration stopped worldwide. We have not seen this big concentration to continue. We are seeing actually the reversing of this concentration, so the market's becoming more fragmented.
As such, we don't see in the future this scale continue to be present in a larger number of marketplaces, being Amazon probably in Iberia, the only big one doing last mile. We are not seeing that scale effect enabling more competitors or marketplaces to compete with us on last mile. Nevertheless, we see this always concentrated to high density areas and the pure last miles continue to have the opportunity to operate in the nationally wide, be it in Portugal, be it in Spain. We are also adjusting our ways we price to our customers to hedge against that because we are aligning prices with density.
That, in a way, also reduces the space to arbitrage between the difference of unit costs that higher density brings, and it's less profitable for them to enter the space. Until now, we see that evolving well. On the question on capacity and how flexible were our investments, João shared with you, I don't know if you remember, João Gaspar, a chart with Iberia with our sortation centers. We have been deploying this strategy of having a lot of operational nodes that then we are increasing the sortation capacity. We start with a node that has no sortation, so no automation, so no big CapEx when we start.
As volumes evolve, we increase tactically the capacity of those nodes, and that is enabling us to have some linearity to our CapEx. Of course, it's still step changes, but not very big and bulk investments. We are talking about sorters that are below EUR 1 million of investment. Of course, sometimes we need to deploy more than one, and that enables us to have linearity on the investment. We have been heavily successful until this point to slowly increase CapEx and capacity as we have the volumes to be there. Of course, capacity needs to move ahead of the volumes, but there is linearity, and we of course, if the scenario changes, we see a lot of flexibility on CapEx.
Coming to the final question in the room about the ability to adjust if e-commerce goes down. It was partly answered in the sense that, for example, for peak seasons, we have, I would say, sudden gains of capacity by opening centers or, increasing our capacity so the same way can go, downwards. The most important thing here is that in Spain, delivery is fully outsourced. In Portugal, the amount of outsource is still very, very important, and we have this flexibility that has been explained of deploying of balancing between the outsource network and the internal network. We have a number of tools that we can use, if we need to somehow manage for a decline in e-commerce demands.
We have it seems two questions from the outer world. The first one if we believe it is possible to continue to reduce last mile costs on a scenario of high inflation especially on fuel and energy costs. I will start and then maybe Guy and João Sousa can expand on this. We have with a significant part of our customers we have a hedge relation with them regarding fuel costs because we don't even discuss. It's embedded in the contractual relation and therefore it's going to be more expensive for them and neutral for the operator in between ourselves. We are now closing that round. This was about 1/3 of our customer base.
For another third, we are now closing the round of embedding within the negotiations, annual negotiations or regular negotiations on price increase, the issue of additional petrol costs. We have then a final third in which things are a bit harder, which are the very big sharks, because they have a well a bargaining power that is very strong and well, it's up to a negotiation that it's not always resolved towards our interests, because it's more difficult to very large customers, which are also not only big customers, big companies, but they have a very big component of our volumes with us. That of course, it's a bit more difficult.
All in all, we are managing the best part of the hedging of the fuel costs. Still, it's going to be some erosion, which means that we need to work harder in all the other efficiency levers. I don't know if Guy or João, you want to add anything.
Just to refer to that on last mile costs, 20%-25% of the last mile is actually fuel costs. Of course, it depends on the long-term view on fuel inflation. There are scenarios where we can decrease. We are also moving to have a more electric fleet. Until now, we see it's more possible to hedge the inflation costs on energy more than fuel. Why? Because we are increasing our own energy production on solar. We aim to have between 15% and 20% of the energy we'll produce on top of our buildings. We are hedging more than the end of this year because we have the energy hedged until the end of this year with a long-term contract to try to taper down the energy.
We see ability to model more the energy prices than on fuel. The transition of the fleet to the electric fleet will help as well as we go. As I mentioned, fuel is the relevant part of the last mile, but not the biggest part.
We have a second question from remote participants. How do we plan to grow market share in Spain? Are we planning any inorganic play? Actually, when talking about capital allocation, Guy will be explicit on that. But we've been stating that both for fulfillment and last mile, we are looking at opportunities to speed up our growth if opportunities do exist at interesting multiples. It could happen, although we have a significant ambition to grow also organically. Anything additionally here, Guy?
I'd say we João Sousa covered a little bit of this on your presentation. I lost my sound.
Try again.
Hello? Yeah. We are transitioning this growth strategy from big e-tailers. First we targeted the big marketplaces as e-tailers to help us grow fast. We are now entering a second year of local big e-players, e-tailers, and we are changing our strategy to address more and more SMEs with deploying commercial sales force and tools to help the sales force address that market. We have extensive experience in managing channels to address B2B in Portugal, but we are converging to Spain as well to continue penetrating these other tiers of the market.
We continue to see opportunity to grow market share, especially on what we also covered extensively on the cross-border market, where we continue to have competitive advantage, leveraging on the Portuguese operation, and with the markets as they are very integrated and we start from a low market share positioning on that market, we continue to see the ability to grow share.
Okay.
Okay. Thank you very much.
There's António raising his hand. António Seladas.
Okay. Yes, of course, António, go ahead.
Sorry. Some stores are offering to the customers to pick the package in the store instead of doing last mile. How do you see this, and is this something that could threaten your strategy? Thank you very much.
Well, it's an interesting new trend. We are active on that. We are part of that for very renowned e-tailers in Portugal. The very lockers that are used for click and collect are ours. There is a threat, but there is also an opportunity. I would ask João Sousa to expand on this.
Yes. Thank you. The way we see it, and this is comparable also for the question about how we see large retailers using their own fleet. In the way that the market here is still an opportunity for us. Because when the retailers are doing that, they are pushing for the e-commerce side. They're going to put the market to grow. You see for the market grow in Portugal, we need to put more people buying online and more companies selling online. For now, we are looking for that. Of course, we prefer to deliver at home of our customers, but it's good because that means that the retailers are pushing for the e-commerce side. For us, in this area is still an opportunity.
In the same way, like, I just want to highlight the last question about the large retailers using their own fleet. Is also an opportunity because they the same way that we see that in Amazon, the other ones want to compete to Amazon, but don't have the same muscle. They are asking to CTT to be the right partner in like a white label to compete against the Amazon. So this, we can take these threats and put like an opportunity for us.
Just complementing on this narrative. We know from market studies, it's known that online buyers prefer convenience. Going to the store is always second option for them. As João said, they are in fact contributing to increase in e-commerce, and eventually these will be customers that prefer to have received, well, their parcels at home, at their jobs, or in a Locky locker, hopefully. Okay, Nuno.
Okay. Thank you. Thank you very much.
Thank you.
We will now allow ourselves some time for a break. As you know, we have kind of expo with various stands on the areas that we are covering throughout the presentation. If you want to also take the opportunity not only to grab a bite, but to go through the various stands where we have people welcoming you there and answering any questions that you may have.
In the next few minutes, we will talk about Financial Services & Retail. Financial Services & Retail, it's an important EBIT contributor for CTT, but we want to keep growing. Capitalizing on a strong track record and a clear identity in financial services. Last year, we placed more than EUR 4 billion in public debt, but also we want to play an important role in non-life insurance products.
On the services and retail products, leveraging our capillarity and traffic, we want to bring new services and products for our customers. In Financial Services, the ambition is to keep our capacity of public debt sales and become a leading distribution network of non-life insurance. How we will do it? Increasing penetration in customer base, adapting our portfolio, creating offers for small and micro-businesses. All of this with a multi-channel strategy. Managing our customer data with some tools such as CRM, but other tools to understand our buyers' behaviors and understand their expectations to have a tailored customer proposal. Of course, leveraging and taking advantage of our cross-selling potential. We know we need to improve our sales HR skills and improve our capacity to advertise our stores.
With what I mentioned in the last slide and with new tools, better training, and a loyalty program, we want to increase our conversion of financial products in customer set, reaching 50% coming in 2025, coming from 8% in 2021. Of course, public debt is a very important revenue stream for CTT. 8% of our individual clients come to our stores to buy public debt. We know that more or less 20% of our frequent clients, they are aware of our public debt offer, but they don't use it. We see a huge potential in our customer base, but also bringing new customers for this kind of products. We remain committed as the main retail provider of public debt with a clear savings product strategy between CTT and Banco CTT.
Working with our partners, we want to increase our offer mainly on non-life insurance, bringing new products at health and appliance protection, but also motorcycle, also sports. Of course, on money transfer services, trying to explore new international corridors and on payment and in payment service, tax payments, air transport subsidies into payments and everything that makes sense for our customers to bring to our offer. Financial solutions for small and micro business. We have launched this with money transfer services, with health plan for companies and municipalities, and all the mandatory insurance for the companies. Of course, leveraging in our customer base all of this with a complementary way with Banco CTT strategy. In retail, our ambition is to become a one-stop shop for our customer service needs.
Of course, leveraging in our traffic but also increasingly digital and self-service functionalities. We want to be the place to solve for our customers in a convenient way the daily service requirements. We are the unique network with this capillarity. With more or less 2,400 points of presence, we are in all municipalities. As you can see on this map, we are the unique network with this proximity with the citizens, and this is a very important asset for CTT. We have more than 65K unique visits per day. More or less 7% of our active clients visit our network at least once a month.
Our parcels are gaining relevance, the reasons why customers come to our stores, and we have a new stores concept with very good results and with a new offer of digital and self-service functionalities, results that we will see on the next slide. Increasing 7% of total revenues, but also on Payshop and also on the other products of retail and services. In our net promoter scores with very good results when compare with other retail stores. In self-service, 24/7, very interesting numbers. 30% of the package are picked up when the store is closed, and 29% of our customers that use our vending machine use it when the store is closed.
We want to be the place to solve for our customers with all the convenience. The daily service requirements now focus on subsidies, payments, documentation renewal, but also we see a huge potential in other servicing, shipping services, energy and telco contracts, and everything that we can bring to this network to make sense for our customers. We have a well-established financial services franchise. Operating other contracts, banks, insurance, government, and we want to be a leading distributor in non-life insurance. We have huge traffic in our stores and we aim to be an important platform for individual, small and medium companies. We are the unique network with this capillarity. We are the unique network with this proximity, and we believe we are the unique network with this sense of services for the citizens in this country. Thank you very much.
Hello, good morning. Thank you for your presence. Team from communication, also thank you for my photo. It was at least 10 years ago. This, by the way, reminds me, this day in 2016 when we opened the bank. We launched the bank with the simultaneous opening of 50 branches. I think this never happened before in Portugal. Together with the physical branches, from day one, we had available for clients, digital channels. This two things together, I'm sure never happened before, and I guess will never happen in the future because, 50 branches and digital channels together in the same day, it's not repeatable.
We like to see ourselves as one of a kind in the sense that we bridge the world of fintechs that are associated with digital, with affordability, with convenience, with very strong assets, legacy assets that come from our shareholder and partner, CTT. Those are associated with a very well-recognized and trusted brand, a nationwide distribution channel, by the way, with a human touch. A model where we share resources, physical resources, technical resources, human resources, which really is a different model. We like also to make sure the bank offers to the clients simple products. Not many products, but simple and low costs. In fact, products that are the typical products that 99% of the population need.
We are talking retail. To make sure that we have a good offer, we have also an ecosystem of partnerships to offer third-party best-in-class products. It's this value proposition that gave us the confidence that we would be able to attract clients to the bank in a market that is a mature market, where there are lots of banks. It's a new kid on the block that comes, how can we be successful? How can we attract clients? This was the concept. A unique and difficult to replicate value proposition, simple, affordable, designed for retail customers. In fact, what happened is that in a few years we came from absolute zero clients to more than 570,000 clients. Who are these people?
These people they came from other banks, from incumbents. They came because they like the offer of Banco CTT. Surprisingly, I think surprisingly for all of us, these people. They are young. The core age of our clients is between 30 and 40 years old. They are urban, they are professionally active, they are active digital users. This is a profile of a customer base that is surprisingly rich and with a very high potential. Therefore, we had to do business with this client base. That was obvious. In fact, we reached so far, I think, levels, volumes of business that are very considerable. On the resources side, we have right now almost EUR 3 billion in resources. Over EUR 2 billion are deposits.
Probably a few months ago, you'd tell me, "Why do you have so many deposits? Interest rates are negative. This is a loss-making business." It is not today, and it will not be in the future. It has not been in the past. And these deposits, they are quite fragmented. They are small deposits from many people, which give us a base of deposits that is very stable and low cost. By the way, 70% come from current accounts, and on average, we have around EUR 50,000 per customer. But on top of that, we have more than EUR 700 million on off-balance savings products.
This is quite important because here we have longer-term savings, so we get loyalty from clients, good margins, and diversification of risk, adapting the products to the risk profile and the duration of the investment the clients want. We have on the asset side, we already have a quite sizable consumer credit book with high margins, over EUR 1 billion by end of last year, coming from zero in 2018. A mortgage book of around EUR 600 million, which has been a product that, I mean, was launched immediately, I think one year after we launched the bank. We have clients, we have a rich customer base, and we have business with those clients.
Therefore, if you have clients, you have business, you need to reach profitability. I think this slide in a way is a good reading of the story of the bank. 2019 and 2020, they represent the years of investment, building a customer base, building this infrastructure, building this franchise requires an investment. Then, we had to reach and we had an objective to reach breakeven by 2020. In beginning of 2020, everybody in the bank knew that our target was to get to achieve breakeven by 2020. This was something that everybody knew in the bank. We had this everywhere in all our communication, internal communication.
really, we did breakeven in 2020, despite the fact that 2020 was very difficult. I mean, it went well the first quarter. The second quarter, we had the pandemic, moratoriums, as you know. By summer, we were afraid that we could not reach breakeven. We did it. Was an important milestone. 2021, already, EUR 16 million of net profits. Still with a big contribution from specific items, which is basically the sale of sovereign bonds, taking advantage of a period of very low interest rates in the market. Above all, organic growth, with revenues growing over 27% per year and costs only 9%. Improving our cost-to-income ratio to 79%.
With the cost of risk very well controlled at 1%. We should also mention the acquisition of 321 Crédito, which was, I believe, an exceptional investment. It brought profits immediately since day one. Since the acquisition, it has also been a catalyst for profitable growth of the bank as a whole. It brings risk management experience in consumer, and was an exceptional opportunity for the bank to deploy the excess of deposits that you saw in the beginning in the context of negative interest rates, so we could get profitability from those deposits. This is where we are today. Franchise business profitability. Going forward, we have really to focus and accelerate value creation.
The strategy for the future is clear and is based on three levers. The first lever is in a way a tailwind that we got from the work that we've been doing in the past years. The two other levers are business lines with a high level of profitability where we are doing pretty well and we want to focus the bank going forward. All this with the targets of achieving a return on tangible equity between 11% and 13% by 2025. Lever by lever. First one, to monetize the customer base. We have three axes here. The first one is that we still have room to be a price attacker. We got a lot of clients since the beginning as we saw.
People asked us, "Well, is this sustainable? Can you continue to grow clients, if you change your position of zero commissions?" Or asking it in another way, "Is it possible, is it sustainable a bank with zero commissions with this level of interest rates?" The proof is yes, because we've been starting to charge commissions to the accounts. By 2021, we had already EUR 12.5 per current account and the current accounts continued to grow. Our target going forward is to continue to grow the customer base, and still we believe we have room to increase the level of commissions per accounts. Second block is to increase the banking relationships.
I think for a new bank it's quite impressive the fact that already 40% of our clients say that their primary banking relationship is with Banco CTT. The average tenure of those clients with us is still low, it's only three years. We see room to move to over 60% of primary relations with the bank. Which means this movement will be done through increasing cross-selling. This is the way we will increase the loyalty and deepen the relationships between clients and the bank. The third is more an exogenous context that comes from the monetary situation. Interest rates are going up, and this is obviously favorable for the bank.
We have a balance sheet that benefits from that because we have a, as we saw before, deposit base that is very stable, low cost, very fragmented, and so less prone to have increase in this cost base of deposits. Secondly, we have a mortgage portfolio that is more than 90% variable interest rates. As this mortgage portfolio reprices, we get obviously better interest revenues. On top of that, we have a significant amount of excess liquidity from the deposits that are today kept at ECB, and that we've been now investing as interest rates go up. Second lever is bank insurance. I think we've been doing very, very well on bank insurance.
Bank insurance, as you can see, has been growing over 40% per year in the last three years. We launched this end of 2018. This is, again, an excellent product. Is very profitable to the bank. Does not consume capital. We have partners. We have a good commission on this product. We have a large customer base with high potential for cross-selling. We are, as we speak, digitizing the sales process, tailoring some products to affluent-like products. Here again, we have also targets, and we expect to have a portfolio of EUR 1.5 billion by 2025.
Another business line with high levels of profitability, no capital consumption, and with all the conditions to penetrate our customer base. Third lever, the consumer lending. Here we believe we are very well positioned to be a reference player on consumer lending. We expect to go up in the ranking of players until 2025. We have now a book of around EUR 1.1 billion. We should have a book of around EUR 1.7 billion by 2025. For that, we have three engines that combine well between themselves, and by the way, reduce the risk of execution having the three engines.
The first one is the auto loans, where we expect to reach EUR 1 billion by 2025, total book by expanding the footprint and the share of wallet of 321 Crédito. We have the credit cards, where most important driver is the partnership that we have with Sonae. The organic growth is there. On top of that, we are about to launch a co-branded Banco CTT Universo credit card that will be sold in our network, very soon. Third, personal loans, where again, taking advantage of our customer base with proper risk models and propensity models and complemented by CRM, and complemented also with digital sales that are already working.
This will increase significantly in the years to come. Monetizing the customer base on top of that, focus on two high profitability business lines. This is to achieve profitability, because in the end, what we are looking for is profitability. How this profitability will come? We start with still at excluding, I mean, excluding the specific items, the sales of bonds in 2021. We come from a 2% return on tangible equity level. The main contributor for this growth in profitability will be revenue growth. This revenue will come from what I've just explained before, monetization and focus on those two business lines in particular. You have efficiency gains.
Efficiency gains that come from scale and from the fact that we have this model with CTT sharing resources, a unique situation that allows us for synergetic efficiencies. Of course, then you have on the other side, more consumer lending, a tougher context, with higher interest rates and inflation. We will be prudent on the impairment side. In the end, by 2025, we should have a return on tangible equity between 11% and 13%. This plan is self-funded, meaning that, we'll be funded through the balance sheets, both capital-wise and obviously liquidity-wise, and is seeking to maintain capital ratios at a level of 15%. All in all, Banco CTT has already a proven track record.
It's a new bank with a unique value proposition, well-designed for retail in Portugal, has a sizable and profitable franchise, 570,000 clients with a young, urban, digital profile, and has a clear growth strategy. Continue to grow the customer base while strengthening relationships with those customers and focusing on high profitability business lines, the consumer lending and the off-balance sheet savings. All this to be a big contributor for CTT Group. I would say it's a strong plan with strong aspirations, self-funded, based on a high-quality franchise that has been built together until now, and based also on a great team that we have in the bank and a great cooperation that we have with CTT, in particular with the CTT network. Thank you very much.
Hello, everyone. [Non-English content] . I'm very pleased to be here today, and I will be presenting CTT sustainability vision for the upcoming years. We have set a plan across the environmental, the social, and the governance dimensions. Our aim is to have a positive footprint in terms of the impact that we have on people and also on the planet. First, I will start with a brief overview of where we stand, and then we will go to the goals and detail one another. All of us already heard that climate emergency is one of the biggest challenges of our times. At CTT, we were made aware of this very soon, and we start working to reduce our carbon footprint.
In this sense, we already reduced our overall carbon emissions by 20% since 2013, and we will continue to develop this plan with energy efficiency measures, producing renewable energy, as already was mentioned, and doing other initiatives that I will detail afterwards. We are very happy to be distinguished with leadership positions in the main environmental ratings, and also climate change is not the only front that we are working on. We will continue to address other environmental issues to improve our environmental proficiency. Of course, people engagement and their well-being is very relevant. As you already know, CTT is the oldest company in Portugal. This means that besides being innovative and resilient, we also take people engagement, safety, and their well-being very as key for our business.
We have been developing a strong plan of action across several levels, such as employee experience, health and safety, road safety. This is also important matter. As you also may know, we have thousands of drivers that travel every day the streets in Portugal and Spain, so road safety is also very important issues for us. We have set a CTT road safety program since 2015 that has also been distinguished with several positive awards, and we'll continue to develop these programs. As already said, presence and proximity are key values of CTT business. We now cover 100% of the municipalities in Portugal, and we have a growing presence in Iberia, in Spain.
During last years, during the pandemic, we also launched several digital solutions that help local commerce and small producers to face the constraints of this pandemic. We have also always meant to have a positive social footprint on the communities where we are present in Portugal and in Spain. Last but not least, in terms of governance, of course, we promote a regular engagement with our stakeholders. We annually report our ESG initiatives and our performance against targets on a regular basis through several channels, and we will keep doing that. I will just add that we are also updating some governance principles that we will soon launch to our employees.
This was a brief overview, and now I ask your attention please to our future strategy for the upcoming years. We are aiming to reach net zero by 2030. Of course, this will require an acceleration of the electrification of our fleet, especially in the last mile. We will continue with our energy efficiency plan and our carbon management plan, where CTT is placed as a leader among others in the sector. This is our environmental goal. It's a strong goal to tackle climate change. Regarding people's well-being and development, we are seeking to achieve, as already mentioned, a goal of gender parity on top and mid management by 2025. We will continue our employee development plan to retain and attract people and to promote their satisfaction and well-being.
In terms of our presence in Iberia, we have a volunteering program, and we have put some social impact initiatives in favor of the communities. We have several partnerships with non-profit organizations, and we intend to reinforce this work for the benefits of the community in Portugal and in Spain. Last but not least, again, in terms of governance, we intend to launch ESG incentives to top and mid management in order to boost employee engagement in sustainability initiatives. This is our vision for the upcoming years. We think we will create a positive social and environmental footprint in people and on the planet by doing so, and we are committed to achieve these goals.
Our vision is also supported in several initiatives, and we will highlight some of the next ten initiatives, some more than the others. In order to become net zero by 2030, I will detail this initiative in particular in next. We intend to reach 100% of last mile vehicles by 2030 and 50% by 2025. This is one main lever. We will engage and promote a stronger engagement with our supply chain in order to help them to also accelerate the decarbonization of their fleets.
On other environmental subjects and we know that our customers have changed their profile, and they are very aware of the environmental and social impacts, or becoming more aware of the social and environmental impacts of the services and the products that they buy. At CTT, we already started this path in order to have a greener and more positive offer with GreenMile, for example, that we launched 10 years ago. We expanded some of the GreenMile features to other portfolios. Today, I would like to highlight a new product that we launched very recently. I brought a unit of this. This is the reusable package, CTT reusable packaging. We launched this for e-commerce.
It's designed to live up to 50 cycles. If you compare this package with the alternatives, this results in a bigger reduction in terms of raw material and also waste, the amount of waste that it's produced with the packages for e-commerce. We think this is one way to do it, and it's a very positive package. If you want to see it later, it's here available for you. We will also. Of course, green procurement is key for all three initiatives and the key areas that we are working on. The aim is to keep improving our environmental proficiency. Now related to our net zero goal.
Of course that we want to go further and faster in terms of electrification. We already mentioned that. We with our in particular in the last mile. We know that the business case during last years for electrification wasn't positive, but now it is, in particular to this segment, so it's where we will concentrate our efforts. The reason is because 70% of our overall emissions are related to road transportation. This means that we have to manage this large part of emissions. Also, CTT is already procuring green electricity for 100% of our buildings. We are also starting, as already mentioned, to produce renewable energies with solar panels in some of our biggest operational centers.
Our major footprint regards to road transportation, owned and subcontracted, and it's where we will concentrate our efforts. The technology exists. The investment that we need to apply according to our business case is feasible, so we are committed to this in order to achieve net zero. After doing all the efforts to reduce our carbon footprint with electrification, energy efficiency measures, training, creating awareness, we will then offset the remaining carbon emissions. This is our path to reach this target.
In terms of employee engagement, we will continue to develop our plan, and I will just mention some of the initiatives that we are putting in already in place. In terms under diversity and inclusion, in order to reach our goal of gender parity, we intend to launch a recruitment and training approach dedicated to this goal. We are also implementing several other initiatives. For example, as we all know, in times such as the present, where people are thinking in new ways of working, we are also tackling that in order to improve employee satisfaction and their needs. We intend to redesign working areas and launch innovative tools that will help us achieve that.
Also, in terms of health and safety, we perform very well in this matter. As we saw before, we will maintain our high standard measures in terms of health and safety. I would just like to highlight our CTT road safety program that we will develop according to the United Nations commitments in terms of accidents and fatalities by 2030, which will be zero. We intend to be zero. In order to reach a positive impact in Portugal and in Spain, in our communities, we will reinforce our volunteering program and implement social impact actions, and we will continue and reinforce our investment in these initiatives. We already have some.
In this picture we can see an image, a positive image of our A Tree for the Forest campaign, for example, which is a reforestation campaign that we launched several years ago with Quercus, which is one of the most influential NGOs in Portugal. We invite people, our employees and their families to participate, and we also engage with the public at large. We already reached, with this campaign, 100,000 trees, native trees planted in Portugal, with the participation of hundreds of volunteers that join this cause. Our aim is this.
We will put our CTT network and our communication channels for the benefit of these causes, the causes of our partners, and we take these causes as our own for the benefit of all. As I said, we are preparing to launch several of governance principles, but here I'd just like to highlight that we will be launching ESG incentives linked to the goals that we are presenting today in order to improve and to reinforce and boost employee engagement in these initiatives. Our vision calls every employee, all employees, to take part and participate in this program. Of course, we will have our governance bodies that will ensure the applicability of the roadmap till 2025 and 2030, our longer terms goals.
Now I would just like to end with a final note, stating that sustainability is in CTT's DNA. We have ambition to be on the forefront on environmental commitments, to keep leading in the sector, and in Iberia. We aim to be a top employer in Portugal and to have a positive footprint, social footprint, in Portugal and in Spain. This is it. Thank you for listening, and I hope that with this plan we can contribute to a better and sustainable future for us and the planet. Thank you.
Good morning, everyone. We are coming to an end of this intense morning. First, we still have to go through the financial ambitions and guidance. CTT, as João shared with you thoroughly on this presentation, has been on this deep transformation journey. We have been diversifying away from mail to growth business that now account for more than 50% of our top line, and even more of our EBIT generation, more than 70%. We have been doing this with growth. Strong growth in every division except mail. Parcels and the bank, of course, contributing the most. Parcels benefiting from these strong trends on e-commerce. The bank being continue to grow its credit book and monetizing its already extensive customer base.
It's because of that that we think we have now conditions to be a company exposed to sustained growth. Not only because we have a mix of business that is geared towards the growth business, but also because during this time, the last three years, we solve two fundamental issues. We were able to deliver the turnaround of Spain. The bank since 2020 became profitable. Now all of our growth businesses are delivering profitable growth. We'll be growing on the back of the Iberian e-commerce. That is one of our strongest levers of growth going forward. We'll be accelerating consumer credit, savings and insurance to both our arms, Banco CTT and the retail network.
We'll strive to achieve a more sustainable mail business with a new lever that comes from the new concession contract that we were able to renew in the beginning of this year with more pricing power, with all the efficiency measures that we continue to push in our operations to deliver sustainability to mail. At the same time, we are also elevating our ESG commitments, as Maria shared with you, being the highlight, the net zero in 2030. With all of this, we have ambitious targets to grow our revenues between 7%-10% until 2025, to achieve a recurring EBIT between EUR 100 million and EUR 120 million, doubling in the top guidance range.
During this morning, my colleagues, I hope it was a very detailed view on the strategy of how to achieve this. Two growth drivers, Express & Parcels, where we'll be benefiting from the market dynamics, will be gaining share because our competitive position still allows for that market share gains and will be improving margins. The bank will be a top player on consumer finance. We'll also accelerate the off-balance sheet savings and also will include efficiency gains to achieve double-digit return on tangible equity until 2025. Financial Services is also contributing positively. Business Solutions, it will be an additional lever to bring sustainability to the mail as we aim to gain share of wallets of our corporate customers, and with that, being more optionality to the sustainable mail business.
Operations we covered thoroughly and also a key driver for mail. Of course, to support this growth, we need to invest. We'll continue to invest in our business. We aim to invest EUR 40-45 million per annum until 2025, primarily directed to automation in parcels, sorting capacity and lockers deployment, higher efficiency and digital experience across our business and to reinforce quality. Of course, we know that the macro context has been very volatile in the beginning of this year. We have seen all the central banks revising slightly downwards their projections and all other financial institutions, but still the base case is a scenario of growth. As such, that is our central scenario. We know the scenario for recession is increasing.
We think we have a resilient portfolio of businesses. Mail is countercyclical. It's been reinforced that countercyclicality with the new concession contract. We have the financial services arm that also can overperform during tougher times, and we have levers of adjustment. We have CapEx, as we already answered that question, to react if the growth is not there. I'm presenting an example of things that we can do because we have still a relevant part of outsourcing costs in last mile that we can redirect to the mail network if we come to an aggressive scenario, and we still have a robust balance sheet to weather us through those tough times. Nevertheless, we are already working on additional efficiency measures.
We aim to save between EUR 15 million and EUR 20 million per annum with a very broad range of initiatives that goes from the solar panels that we thoroughly mentioned, the electrification of the fleet, exiting part of our headquarters because the pandemic brought us that flexibility and even the reductions of headcount that we have on the last years can help us do that. A very broad set of initiatives. We are already seeing those benefits flow through during the second half of this year, EUR 5 million to EUR 6 million, accelerating during 2023 to stabilize in 2024 to full impact on that year. A word on guidance on this year. We know that we had a very tough first quarter as you know. We have been seeing improving trends.
We aim to have a second quarter between flat year-on-year with a small decline. As we shared with you in our last call, we see our EBIT generation geared to the second quarter. We have been seeing mail pricing effects coming to a full effect that will flow through entirely or in full in the second half of the year. The meaning is it will be annualizing after July. We have been seeing parcels improving, and we see reinforced growth on the second half. Banco CTT will also contribute further for the growth. With the efficiency measures that I just shared, we remain committed to deliver a guidance above EUR 65 million on this year. We are also announcing a new financial framework.
On shareholder remuneration, we want to ensure that we can continue to invest in our business growth, and reinforcing our business model. We want to keep an attractive shareholder policy with this intent to have a payout ratio between 35% and 50%. Announcing also a leverage ratio to maintain a very prudent approach to our financial position of below 2.5 times net debt to EBITDA, excluding the bank, or including it in the equity method. We see our cash flow benefit from growth and operating leverage. As Luís shared with you, the bank has a self-funded plan. Organically, it has levers to fund the existing plan.
We'll be allocating capital primarily to the growth and transformation of the business and to the recurrent shareholder remuneration that I already mentioned. We see excess cash to be further enhanced with opportunities that we want to materialize still this year. The bank, strategic partnership and real estate optimization. That further financial flexibility to be used in potential M&A or to reinforce shareholder remuneration through opportunistic share buybacks programs, to enhance our shareholder remuneration. I'll now detail these two additional sources of cash. Banco CTT, for some time it seemed not possible to bring a strategic partner to the bank. Now we have received several offers of interest to be a strategic partner of the bank.
We are seeing this strategic partnership to materialize through a share capital increase reserved for a minority stake, hopefully with no or little discount. At the same time, we are looking for an insurance distribution agreement of exclusive nature between life and non-life products to reinforce and broaden our product offering in both our networks. I have a disclaimer that I'm not going through, but I'll invite you to read it. Also, we are pursuing optimization of our real estate, a dual strategy. We have a portfolio optimization on our yield-generating assets and asset by asset optimization for our development assets.
We have a small number of assets, but very valuable, located in city centers that where we see opportunities to have mixed-use development and with the kind of returns that development brings, that will take time in order to crystallize the most value to CTT, and that's why we will be following an asset-by-asset optimization. On the remainder of the assets, we'll be announcing, or we already started exclusive negotiations to create a vehicle to be invested by an institutional investor aiming to have a minority stake, around 25% of that vehicle that will incorporate the 400 assets. That will be also trying to optimize further the value of those assets as we still have a big portion of those assets that are not occupied or fully used that we can further enhance.
It will be a vehicle where we can grow our operations footprint with build-to-suit opportunities as our operations continue to grow in Iberia. There will be the optionality to do that through this vehicle. We chose to share with you how we see the value chain for e-commerce logistics in Iberia. CTT has more than 95% of its business between last mile and returns. We have been trying to explore organically entering in the fulfillment area. We see opportunities in the B2C e-commerce fulfillment of growth.
We see it as an increasing loyalty of our customers, so it will increase the stickiness of the last mile and also can shift the market shares of last mile. We'll be looking to reinforce our capabilities on fulfillment to grow faster, always with an Iberian approach. We will be also active and to see if there are opportunities on the last mile. Three key messages for you today. We have the ambition to foster strong growth. We are crystallizing our asset pool with additional financial flexibility to deploy it in growing and reinforcing further our footprint in Iberia and to increase our shareholder remuneration. Thank you.
We're coming to an end of a very intense and hopefully informative session.
It's now time for wrapping up before the final round of Q&A. I believe it's fair to say that CTT is ready and geared for growth. This is the moment for the closure. Going on a fast-forward way through what we've seen, the sector is changing. We are grabbing those changes as opportunities on top of digitalization of the economy, changing consumer expectations and behavior. We seized that. We transformed ourselves. Along this way, we have several achievements. Three of them we have detailed given the importance they have towards our present and future. Going forward, we have well, truly diversified company with a strong component of what we are now calling growth businesses. We do this by capturing our Iberian nature and presenting ourselves as a one-stop shop for e-commerce.
Extremely relevant already in Portugal and now unfolding to the remaining part of Iberia, that is Spain. Leveraging on proximity and trust and this idea of our unique network as being the platform for provision of convenience services, and with an increased focus on efficiency, which is in fact the second lever that's taking into account the concession contract, has turned mail into a different story going forward. All of this at the forefront of environmental, social, and governance practices. We are leveraging on a number of strategic assets. We've summarized that in three, again. First one, the unique Iberian sales force underpinned by the access we have to B2B clients, we are there.
Everyone is a customer, every company of CTT, because of mail, and therefore, there is a unique opportunity and the same applying to B2C because of the retail network. A strong and very trusted brand for people and businesses alike. Thirdly, because we have an unmatched last mile Iberian integrated network for deliveries. Beyond this, we also have what we believe to be a wide and rich product and services offer, well-balanced, enhancing the best of our assets, and of course, capitalizing on a very experienced leadership team. With that, our commitments. 10%-10% growth in revenues.
14%-19% growth on EBIT, meaning EUR 1.1 billion-EUR 1.35 billion of revenues and between EUR 100 million and EUR 120 million of recurrent EBIT by 2025. Being the fastest-growing e-commerce logistics player in Iberia. Maximize share of wallet on top of the relation we have through mail on business and commerce services with our B2B customers. To bring the bank to an increased level of profitability with a return on tangible equity between 11% and 13%. Having our retail arm emerging as the proximity platform for convenience services. Remaining a top employer in terms of employee experience, diversity, inclusion, health, and safety. CTT was already considered this year the best employer for the transportation sector.
Achieving net zero in 2030 with this intermediate target of 100% of EV for last mile, but 50% of that already in 2025. Combine in an optimal way shareholder remuneration and the ability to invest in our own business. Of course, all of this in a better, faster, and greener way. Thank you. With this, we would open for our last Q&A round, now with no restrictions on the financial targets.
Thank you. I would start with something that maybe I missed in the presentation, and if you could elaborate on that in terms of dividend policy and dividend commitment, if you could be more specific on this. That would be my first question, and I have three questions. The second question has to do with the partnership in the bank. I mean, here, what I wanted to understand, you mentioned capital increase in the bank with the new partner coming in, which obviously should drive further growth in the bank. The question here is that if that's included in your strategic plan. The revenue growth, EBIT growth that we saw there in the presentation if it contemplates this partnership.
Lastly, on the real estate initiative, here just to clarify if there's any capital commitment from you to. I mean, you mentioned there will be a development in these assets. Just to understand what's your commitment there. Thank you.
Thank you, João.
First question. On your guidance, I would like to understand basically what will be the drivers for this improvement on H2, especially given that during last year you netted in recurrent EBIT around EUR 30 or EUR 31, you are guiding to EUR 44-EUR 48. If I look at the current quarter, I see EUR 10-14, which should have already in place the new mail concession or contract, let's say it like this. On the bank, I would like to have, if possible, a sense on NII to arrive at, for example, for +100 basis points in NII, what would be the improvement in your revenues? I would like also to understand in terms of cost of risk volatility that you mentioned here on the presentation.
If you see an increase in cost of risk, I see that during last year, your credit portfolio ended at EUR 1.5 billion or EUR 1.6 billion. I see it on the presentation 1.1%-1.3%. Basically, do you foresee an increase in cost of risk? If yes, would this increase be offset by the increase in revenue? Thank you.
Yeah. I think so. You start, Guy, with dividend policy and commitment.
Let's say, we won't guide a specific dividend per share. Our commitment is to that payout ratio between 35% and 50%. With the targets we have, we aim to have an increasing remuneration in line with the profile with the profitability of the company that we foresee within that guidance. In terms of the bank partnership, you are right. I add that reference to the slide, but I forgot to specifically mention. The plan doesn't include additional uses from the proceeds of the capital increase.
We have other areas to work on using those proceeds, ROE accretive, namely, if the environment allows to reinforce more consumer credit and mortgage because we have been prioritizing consumer credit versus mortgage because of the returns and the scarcity of capital. We have a natural share that we are not fully using right now in mortgage where assets and even the LTV requirements seem to be evolving in the right way. It will be a more profitable business even with interest rates increasing. We have the ability even to our natural share or if we want to grow share to increase the placements there. We have initiatives to deploy the extra capital even when it appears.
Let me just reinforce a bit of context for the dividend issue with a pretty obvious statement.
We've been moving from being a traditional post to being closer to logistics operator. Well, great consensus in the board was generated towards the dividend policy also should be geared towards something in between post and logistics. Hence, the range that we have now set for the payout. There was the question on capital commitment for development. Guy can comment on this. Well, there are other tools to reinforce needs for development. In any case, Guy will give you the right answer.
We are seeing this vehicle to start fully unlevered. The contribution of the institution will be fully on equity. The vehicle will have leverage capacity to do the developments for the portfolio assets that we'll be incorporating in that vehicle. For the asset by asset development, we see every asset as a project, and then we can also leverage those individual projects if needed be, depending on the timing that we chose to monetize those assets. As you know, as the opportunities evolve, the kind of IRRs that investors command by the stage that the development is changing a lot.
Because we don't have a specific need of capital from those assets, we can afford to optimize when we exit those assets and then reinforcing the value capture by CTT. For the second half, you're right. There is ambition on our guidance. We see the second half benefiting not only from the price that we already see this quarter and part of the improving trends come from that. There is another effect that is still at play this quarter, and it was on the first quarter, that is the de minimis. The de minimis reached the top in between April and May last year, then started to decrease in June and then washing through. That will help as well. Parcels are being on a recovery profile.
We saw Spain performing, Portugal not performing on the first quarter, both in deceleration. We are seeing this converging to growth again. The bank continues to have a strong positive contribution that will come in the second half. On top of that, we have the cost initiatives that I shared.
We have in this round the final question on the bank and cost of risk volatility. Luís, would you like to stand up for that one? How, if cost of risk volatility increase, it could be offset by rising Euribor.
Yeah. Would you-
Try again.
Can we have sound for Luís, please?
Yes. Sound.
Okay. That's okay.
It's okay now? Okay, thank you. The two questions. What can I say is that, first of all, yes, the balance sheet of the bank is positively exposed to increases in interest rates. That obviously depending on the actual increase in interest rates, we may expect an increase in net interest margin in the next years by 0.1-0.2 percentage points. Exactly what is the impact on revenues of an increase of 100 basis points in market rates? I mean, this is information that I cannot share with you.
Of course, we have our interest rate model and we manage the interest rate risk, and we measure within certain boundaries the impacts on changes in interest rates on our economic value of the bank. This is too much detail to share. Regarding cost of risk offsetting being offset by increases in Euribor with the macroeconomic scenario that we are using and that was exposed here, yes, I can say that the increase in interest rates will offset the increase in cost of risk. Thank you.
Yes, Arthur?
I just have one final question from my side. Looking here at the group recurring EBIT, your ambition of reaching EUR 100 million to EUR 120 million by 2025. I see that the new gross business contribution should be 80%-90%. If you can give us a little breakdown between this new gross business or by saying by 2025, which business will have the highest contribution for EBIT, namely between Express & Parcels and Banco CTT, if possible.
Any more?
I get it now. I have one question regarding the concession agreement. As far as I understood, it was one year plus three plus three. The first year was already. Well, it's now in the process. What can we expect for the coming three years? Is the same behavior that we saw last year or not? I don't know if you can share with us something about this. Thank you.
Thank you, António Seladas. Another question. Two questions there, please.
Hi. Can you please clarify what's the balance sheet policy? I mean, you are mentioning below 2.5x net EBITDA, which is way higher than where you are at the moment. I'm just trying to understand if that's a cap that you want to keep, or if that's a level you wanna be, which implies a very efficient use of the capital, and therefore we should expect a lot of M&A or buybacks. Secondly, in your guidance, if you can clarify what's your assumption for parcel volume growth from 2022-2025, both in Portugal and Spain, and what's your assumption for mail volume decline. Thank you.
Yes, please.
No. The first question is on the EUR 8.5 million investment for your efficiency plan. Do you have in three years around EUR 8 million of investment necessary? Is this amount included in your CapEx guidance? This is the first one. I think the question about the cost of risk volatility, it was in the presentation, it is in second quarter. I wanted to understand well what is behind this volatility in the cost of risk, if you can explain that. What is the ROE that you are assuming in your plan to achieve a ROTE of between 11%-13%? What is the ROE projections that you are assuming on that?
If possible, if you can give the implicit contribution of the EBIT of the bank implicit in this return on tangible equity.
Implicit. Can you repeat the last part? Sorry, João. The implicit.
The implicit contribution to the EBIT of your plan implicit in this return on tangible equity of 11%.
Okay. Thank you. A lot of questions. Arthur, thank you so much, but the answer is obviously that we are not disclosing the business by business contribution. Otherwise, we would have made it here, and we reserve that freedom for the times ahead. Then, António's question regarding the concession contract. It is indeed one plus three plus three. And what we expect is in fact a confirmation of your conjecture. What we are now discussing with ANACOM and the director general for consumers is a set of criteria and the fundamental aspects that we want to preserve, and we cannot disclose what's going on there, but it's our assumption.
We are targeting to somehow be successful in that. First we need to hedge as always, as it happened in the past for inflation, hedge for volume decline, but in a proper way that is using historical data, as I've mentioned in the presentation, rather than predictions that then can, well, go wrong. Also, to have some consideration for efficiency, and all weighted in a proper way. That's our expectation. That is how things are being discussed. That's what happened, in fact, as you said, for 2022. Hopefully this will be the criteria. The mechanic is that we propose with those criteria established, we propose a concrete set of price increases and that would be hopefully approved by government.
On balance sheet policy, I would resort to Guy. If the 2.5 x is a target or a.
The 2.5, I'm firstly to clarify that that excludes the bank, both in net and in EBIT. It includes the lease liabilities. Of course, it allows us room to have more leverage if it's needed according to the situation that I've outlined to M&A, potential M&A or to additional remuneration that we'll be assessing.
Every year. On the mail volumes and parcels, we won't disclose more data points. We think we provide you with a very detailed set of data points in parcels. Mail volumes, I can comment that we see the same trends over the last year, so mid-to-high single-digit volume declines, and that's what is on our estimates. The implicit contribution of the bank, I think João already replied. Of course, parcels and the bank will be the most contributors. We won't rank it, but I think you can understand that from everything we shared.
Yes, we have this question on the EUR 8 million of costs associated with the savings measures.
That is included on the guidance.
This set of three questions regarding the bank, volatility on cost of risk. Luís, please explain a little bit more on that. The assumption for the arrival that will lead us to this 11%-13% return on tangible equity and how much, at least conceptually, EBIT is being considered for this, for achieving that target. Because we are not disclosing.
No.
EBIT business by business, that one is, it's obviously answered in advance. There is an EBIT contribution for that. Let's stick with the original assumption and volatility of cost of risk.
If I understood well, the question is on whether the adjustments of the models will bring or not volatility. Our current vision on that is that we have cost of risk below, before adjustments, below trend on the first quarter. We'll be above trend on the second quarter after adjustments, and then we expect stability from then on, again, on the current macroeconomic scenario. Regarding interest rates that are embedded in the plan, what we are expecting is a progressive evolution to interest margin rates of around 1.6%, which is compatible with the GDP growth that we also presented in the macroeconomic scenario.
That I think it's aligned with the projections of Banco de Portugal as well.
Yes.
Yeah.
Yes. Although the Bank of Portugal has a bit higher GDP growth.
Yeah, 2.6 GDP in the Bank of Portugal with the exact 1.6% of rates.
Correct.
Any more questions from the room? Yes, please, Sofia.
Thank you. Just on the bank, to clarify one thing. Regarding the presentation, you focused on extracting more value from customers. I would like to understand if this customer segment will remain as individuals or private consumer-led lending. Or we could see Banco CTT engaging in SMEs, given you're actually developing your one-stop shop for services, and we could see SMEs actually being a new segment in the bank. On e-commerce data gathering on the parcels that you manage in the infrastructure, do you collect any trends on the types of sectors that show more dynamic? Do you think that could be a lead for you to focus, for example, and develop your fulfillment targets, for example?
Thank you. Any more questions from the room? There's one over there.
Just one more question from me. On the real estate, spin-off that you're doing, can you please clarify how much of the book value or how much of the asset base is actually not utilized and up for sale? Thanks.
Just a final question. Regarding the bank-
We need a microphone, please.
Regarding the bank, your current targets are very ambitious and if achieved, I think that will be. We have to give you congratulations. Why are you thinking now to sell minorities or to create a minority stake at this stage and not expect three or four years to create the minorities? Thank you.
A final one on the bank. What is the invested equity that you expect in 2025 to achieve this return on tangible equity level?
Okay. Thank you again. I will invite Luís to expand on the opportunity for SMEs and which customer base are we considering for this. João could expand, João Sousa please, on the trends, sectoral trends, with higher dynamics that Sofia alluded to. Luís, up to you, please. SMEs.
SMEs.
In the framework of 2020-2025.
Yes. I mean, being very direct, we are not expecting within this time frame to launch a specific business line for SMEs. It's not something that is far away from our thoughts as we have been building capacities that we believe would fit well with the type of business model that are needed for SMEs in Portugal that we still believe are not well covered. Having said that, we have so much work still to be done on private individual clients to execute well this plan, not losing focus, not putting more investment on the bank, reaching the profitability that is required.
For now at least, we do not envisage, I mean, the launch of an SME business.
On the parcel side, if I understand well the sectors you are asking, we have two main sectors we see growing on the parcel side. It is fashion and electronics. Then inside of what we call marketplaces is amount of a lot of things. I think for fulfillment strategy more than just the sectors is the way we developing value-added services for the customers. The late cutoff hours. The customers, our customers are trying to understand how can bring more quality in the way they deliver the package, in hours, speed, and so on. This is even more important than the sectors. Okay.
Actually, building on this one, we were discussing this at dinner with the example of a large retailer, brick-and-mortar retailer that is now going online. The facilities, the tools, the infrastructure for e-commerce logistics is quite different because it's just picking a very small number of very diverse pieces. A huge range of categories and then minor portions of each. That is in itself implies a different set of tools and as I said infrastructure, robotics and so on. It's more covering something that is now emerging, which is fulfillment for e-commerce that provides an opportunity. Moving to the real estate, how much of the book value is included? Guy, please.
Well, we talking.
It's not utilized. I believe that was the question. Yes.
It's the book value. I cannot say. We can follow up offline. I can share that we have 25% of the square meters vacant. That is not to be extrapolated to 25% of the buildings vacant because some of them, we have reduced the footprint of CTT. For instance, a building that included a storefront, we continue to occupy the storefront and we render vacant the floors above the store. 35% of the square meters, not to say that it's fully vacant to be disposed. Also to say that those square meters that we published in the beginning of the week already include rentals from third parties. There is already rental income on that portfolio.
We have this much anticipated question by António Seladas, which is intellectually challenging. In fact what we believe is that bringing a partner to the bank at this stage will conform with the previous commitments that we have of not bringing additional capital to the bank. It's very important to stress that the bank is able to generate through its balance sheet and business the capital it needs to fulfill the targets that have been shared with you today. There are opportunities, and Guy mentioned that conceptually, that we see accretive to do more with more capital. It's in that sense hasten the development of this bank and its growth, but it's also bringing, if that would be the case, additional business lines, additional expertise that will in itself be also accretive.
That's the reason why we will eventually go along those lines. Nevertheless, the good news is that not so long ago, if we did a partnership for some reason, we'd have to offer to the bank or to sell it at a very high discount, and things seem to be changing dramatically. I will ask Luís to comment on the capital that will be there in 2025, but with the obvious statement that the capital on top of the existing one will be generated internally by the bank.
Yes. I think this is the point. I mean, as we mentioned, the plan is self-funded, so the equity will be generated by the bank itself, either through results or utilizing the balance sheet. For this plan, no further equity from shareholders will be required.
Well, with no further questions in the room, we might move to the remote questions. We are seeing one. Now the sun is making it more difficult. The first one is about saving solutions for the bank. This is a question for the bank. Like investment funds as an alternative to traditional deposits is increasing demand for that. I'm sorry?
My question?
My question is how you see your offer for the next three years. More specifically, are you thinking to extend your offer in investment funds and PPRs? PPRs are already a huge part of what we do. Luís, please.
Yes. I mean, we've been diversifying our savings products, all of them wrapped in insurance products, due to the fact that we are not a financial intermediary. We now, as we speak, can only sell insurance products. Why? Because it's another regulator, it's more regulatory costs. Does not mean that we cannot go through this route in the forthcoming future. For now, we believe that we are able to diversify the offer using insurance products, and namely unit links that could very well fit the needs of our clients. On top of that, there are also fiscal considerations on the insurance products. Diversification, yes.
The portfolio is already pretty well diversified, but we are continuing to work with our partners in order to continue to adapt the offer to the risk profile and the needs of our clients. I mean, this is an area of focus of the management of the bank, as I said, and we will keep growing fast on this front.
We have another question, a remote one. I will dare to start answering to this one. Luís, again, for the bank, how confident are you in the growth of the bank's customer base, in particular, if you plan to align commissions with those of peers? We do plan, as was shown, to increase commissions and the revenue stream from that, but always in a clearly competitive manner. If you want to add anything else.
No, it's exactly that. We still have room to improve the commissions per account, but still being well below the market. We will not lose the price taker stance that we had so far. We can combine this growth of customers with still an increase in those commissions. By the way, despite the fact that we've been increasing the commissions, in BASEF, we are still the preferred bank for people that want to open a new account in the new bank. We are still the primary bank according to BASEF.
Okay. It seems that questions are for the moment done. We'll remain, of course, available, all of us, the executive team, the speakers, the investor relations team. Allow me a more intimate note to thank Nuno and his team, and Miguel Salema Garção and his communication team, and also, of course, my dear colleagues here on the stage. Thank you a lot for, well, willing to come to CTT's Capital Markets Day. It's been a pleasure. We are not leaving. We are staying with you. Before you start managing your orders and buying shares, please join us for a quick lunch. We remain with the stands open and, of course, available for interacting with you, as always. Thank you very much again.