Ladies and gentlemen, welcome to Ayvens' third quarter 2024 results conference call. Today's speakers will be Tim Albertsen, CEO, and Patrick Sommelet, Deputy CEO and CFO. I now hand over to Mr. Tim Albertsen. Please go ahead.
Thank you. Good morning, ladies and gentlemen, and welcome to this Ayvens Q3 and nine months 2024 results conference call. I'm hosting this call with Patrick Sommelet. First, I will present the highlights of our Q3 2024, and then, as always, Patrick will comment on our financial results, and then we'll take all the questions you may have afterwards. Let's go directly to slide five.
Ayvens has continued to deliver steadily on its integration roadmap with robust business and financial performance in a continued contrasted environment. Starting with the financial performance, underlying margins stood at 521 basis points this quarter and 530 basis points over the last nine months of this year. This level is in line with the group's financial objectives and reflects the measures implemented over the last few quarters to restore profitability.
Thanks to our continuous focus on cost control, our cost-to-income ratio stood at 63.4% in Q3 2024, confirming the improving trend begun in the previous quarters. On the used car sales, Ayvens is reaping the benefits of our best-in-class combined remarketing channels that allow it to leverage its most profitable markets to optimize resale volumes and prices, notably on electric vehicles.
As a result, used car sales results per unit remained at a high level at €1,420 per unit, a decrease of only €60 compared to Q2 2024, this in an expected normalization of the used car market prices. Bottom line, our net income group share came in at €147 million as it was strongly impacted by the negative non-recurring items this quarter. This, Patrick, will give you more details on in a few minutes.
Our capital position is strong with a CET1 ratio at 12.6% at the end of Q3 2024, up from 12.5% at the end of Q2 2024. Now turning to our integration journey, the group has continued to move forward and reached major milestones this quarter. First, IT platforms have successfully been migrated in five countries since we obtained the DNO. These five countries represent 26% of our fleet.
The IT migration notably concerned France mid-October, one of our two flagship entities, where employees now operate in a single IT environment in one building and under our new Ayvens brand. The new integrated IT systems enable harmonized business processes throughout the migrated entities concerned and will allow us to start extracting cost synergies in the coming quarters.
The ongoing integration of our legacy treasury center has made significant progress, together with a strong increase in Ayvens' derivatives portfolio, which will significantly reduce the volatility of our financial results going forward. In parallel, rebranding has continued to be rolled out, now covering 32 countries out of 42 in total.
Also, the group's banking activity has been positioned under the new global mobility brand, Ayvens Bank, which is a key asset in supporting the group's funding and development strategy. Overall, the group recorded 32 million of synergies this quarter versus 27 million last quarter and 20 million in Q1 2024. So, with €80 million of synergies year to date, we are on track to reach our objectives of €120 million for the full year 2024.
Last but not least, I'm happy to share that EcoVadis has awarded Ayvens the Platinum Medal, which places our group in the top 1% of companies assessed worldwide by EcoVadis over the last 12 months. This clearly illustrates our commitment to be better with every move as a leading global sustainable mobility player. Let's turn to page six and look at our earning assets. Our earning assets increased by 5.8% year on year to EUR 53.1 billion.
On a quarterly basis, earning assets remained broadly flat, resulting from our commercial selective approach over the last few quarters to maintain margins at a satisfactory level and onboard sound EV asset values. This has led us to consciously adjust the fleet downwards in some selected countries, notably in the U.K. and Turkey, where market dynamics are and will remain less attractive. As a result, the total fleet is down 1.6% versus September 2023.
EV penetration in terms of car delivery stood again at 39% in Q3 2024, a similar level compared to last quarter. Battery electric vehicles penetration was 27%, and plug-in hybrids penetration was 12%. Let me now hand over to Patrick, who will comment on our financial results.
Thank you, Tim, and good morning, ladies and gentlemen. In Q3 2024, Ayvens demonstrated the strength of its business model and market positioning in a softening economic environment and contrasted perspectives in the auto sector. The gross operating income stood at EUR 724 million this quarter.
The decrease compared to the previous quarter, which stood at EUR 785 million, was mainly driven by significant non-recurring items, which stood at EUR 47 million this quarter versus EUR 21 million in Q2 2024, and to some extent to somewhat lower service margin in July 2024. If I compare versus Q3 last year, the decrease was fully explained by the EUR 127 million swing in non-recurring items, which stood at the time at positive EUR 80 million.
The group's underlying financial performance remained solid, with robust underlying margins, which stood at €693 million, corresponding to 521 basis points of earning assets, the used car sales results, which is continuing on its gradual normalization trend at €77 million in Q3 2024. This is down versus the €91 million we recorded in Q2 2024, but up versus €66 million in Q3 2023, whose accounting result was strongly hit by impact of previous reduction in depreciation costs and CPA.
Let's now move to page nine to further comment on our margins. Our leasing and service margins stood at €647 million in Q3 2024 versus €694 million in Q2 2024 and €693 million on an underlying basis. Again, July 2024 was marked by lower service margin linked to lower activity mostly to lower factory rental revenues. August and September were back to satisfactory levels.
When looking at margins over the first nine months of 2024, they stood at 530 basis points of earning assets, which is in line with our financial and commercial strategy. If I now zoom into non-recurring items this quarter, there were notably the results of the significant decrease in interest rates by 70 to 80 basis points since the end of June. This has negatively hit the mark-to-market valuation of our derivatives portfolio for a total amount of €54 million.
As Tim said earlier, this interest rate swap portfolio has been significantly downsized along with a review of our funding sources in foreign currency. As a result, the mark-to-market value of the derivatives as of 30th of September 2024 now stands at €14 million versus €70 million three months ago, with a sensitivity that has been brought down to €2 million per 10 basis point of rate variation.
Therefore, going forward, the volatility of this portfolio and that of Ayvens P&L will be drastically reduced. Finally, you will know that hyperinflation in Turkey had a positive EUR 10 million impact this quarter compared to negative EUR 37 million in Q2 2024, as car prices have been better correlated with the overall Turkish CPI. Let us now move to page 10 to look at the car sales results.
On slide 10, you will have noticed that this slide has changed very little compared to last quarter, reflecting the very gradual decrease in used car sales price. As you can see on the graph on the left-hand side, the used car sales result per unit has continued to trend slightly down with a similar pattern as previously.
Again, this quarter, the evolution by growth range shows that UCS results on ICE still at high level and a negative impact on BEV, which has somewhat plateaued. This is also helped by the effectiveness of our remarketing channels, which allow us to leverage our most profitable markets and optimize both resale volumes and price, notably on BEV.
Overall, excluding the impact of previous reduction in depreciation costs and CPA, underlying UCS profit was at €1,420 per unit in Q3 2024 versus €1,480 in Q2 2024, a limited decrease. On a reported basis, the result per unit is slightly down quarter on quarter at €493 versus €575 in Q2. We sold 157,000 cars this quarter, a stable number versus Q2, demonstrating our strong remarketing capability. I will now comment on operating expenses on the next page.
In Q3 2024, operating expenses are down quarter on quarter by 3% with reduction both in CPA and underlying expenses. Starting with CPA, it stood at EUR 20 million this quarter, as some of the spend will move into early 2025. This amount will most probably pick up in Q4 2024 as IT integration has now moved ahead.
Full-year CPA spend should not reach the EUR 190 million we had planned initially and should land around EUR 130 for the full year. Q3 2024, underlying operating expenses decreased by 3% compared to Q2 2024, reflecting our continued strong cost discipline, notably on IT costs. If we look at the first nine months of 2024, underlying costs have remained broadly stable on a like-for-like basis at +0.5% year on year, despite inflation still running at sustained levels, illustrating our tight monitoring of costs.
The underlying cost-to-income ratio in Q3 2024 stood at 63.4% and 64.3% for nine months 2024. I will now comment on the rest of the income statement on the next page. Cost of risk was down EUR 29 million versus EUR 31 million in Q2 2024, and after EUR 33 million in Q1. Expressed as a percentage of earning assets, the cost of risk stood at 22 basis points in Q3 and 23 basis points on nine months at a mid-cycle level.
The effective tax rate, which stood at 35.5% this quarter, was negatively impacted by hyperinflation in Turkey and to a lesser extent by the group restructuring executed in the context of Ayvens' integration roadmaps, which generates short-term tax frictions. Over the first nine months of 2024, Ayvens' effective tax rate stood just below 31%, in line with our expectations.
Net income group share stood at EUR 147 million this quarter, a quarter-on-quarter decrease mostly due to the negative EUR 60 million pre-tax swing impact on the mark-to-market of derivatives versus Q2. You can see that excluding the negative mark-to-market of swaps net income would be at around EUR 190 million and ROTE at around 9.5%.
If we now move to the next slide to comment on the risk-weighted assets in capital, you can see that RWA increased this quarter by around EUR 500 million to reach EUR 58.3 billion versus EUR 57.8 billion at end June 2024. This increase has been mostly driven by our cash position, which we deposit with Société Générale. The amount of our deposit increased by EUR 1.6 billion over the quarter, and the portion we deposit over three months would generate a higher RWA charge has also increased.
All in all, this cash position generated an increase in EUR 700 million of the RWA credit, partially offset by a decrease in RWA coming from the rest of our balance sheet, notably linked to decrease in flexible fees and balance sheet optimization. As a result of this evolution of our capital generation as well, CET1 stood at 12.6% at the end of Q3 versus 12.5% at the end of Q2. This is a strong level standing at 224 basis points over the MDA. This concludes our presentation. Thank you for listening, and we are now ready to take any questions you may have.
Ladies and gentlemen, if you wish to ask a question, please press star and one on your telephone. The first question is from Sharlotte Kumar of Deutsche Bank.
Good morning. I hope you are able to hear me well. Thank you for taking my questions. I have two questions. Firstly, can you highlight the reasons for the margin weakness? I know you had already flagged during the second quarter results that the second quarter margin may not be sustainable, but Q2 level was a touch lower than your broad 530-550 basis points guidance.
So, maybe what were the reasons and what do you kind of, what is the way forward from here? So that would be my first question. And second, can you also speak about some of the risks, say, residual values, particularly in the BEV space, given recent weakness in that market? Thank you.
Thank you, Charlotte. Let me start with your second question first, and then I'll hand over to Patrick on the margins. So, as you have seen, the used car market seems to be holding up quite well. We have spent significant resources to work on the residual values and also on our, let's say, capacity to channel the EVs in the right channels.
First of all, more than 50% of our EV sales is actually done cross-border, meaning that they're sold in another country than where they were originated because it's quite a fragmented market, and you see very different prices in different markets. So we have a strong capability to actually send the cars to where we get the best price, and we are utilizing that. So it's true that we have seen quite a significant drop on the used car sales price of EVs over the last quarters.
Having said that, in Q3, we have seen a stabilization and in some markets actually an improvement. So, and you know, all the months we have seen here, we see that as a continued trend, at least for October as well. And then, of course, as you probably know, we explained last time we have taken quite significant actions on residual values on all new BEVs that we put on the fleet.
So we do believe we have the right positioning there today. And we have also, on top of that, we are accelerating our capacity to do second-life lease, third-life lease for these cars. And that's an ongoing activity that we're going to roll out. So I hope that answers the question on RVs and EVs. Patrick, on margin?
Yes. Thank you for your question. On the margin, actually, when we look at the detail of the quarter, and I don't like to give intra-quarter information, but it's always good to have a trend and to understand exactly the numbers. So the July margin, service margin was weaker, and August and September were back to satisfactory levels, and the leasing margin was in line with expectations.
So there is a weakness in part of the service margin, which I mentioned, and which is a full pitch of rentals, which are lower as the order book goes down, which is this activity going down as well, because usually it is an activity which is behaving well when our customers are waiting for their cars. Obviously, now that the order book is shortening, they are waiting less long, so they rent less, they do less short-term rentals.
Also, in July, in some countries, we have a bit of a seasonal impact related to the fact that most of some of our clients in France, in particular, would get their car ready for holidays, and we have higher RMT costs in July. So that's more that's not a general observation across countries, but in some countries, it does happen. Again, that explained a somewhat lower July, that's a EUR 15 million only difference in service margin a quarter or another, altogether a limited magnitude.
Thank you for that, and in terms of the outlook going forward, are you confident of kind of increasing it to, say, the low end of the 530 basis points that you had guided earlier?
You know, we have given indication that we see no reason today to contradict or to change.
Thank you.
The next question is from Kiri Vijayarajah of HSBC.
Yes, good morning, everyone. A couple of questions. So firstly, coming back to that core margin evolution, and look, thanks for the additional color, but your average contract duration is, what, more or less four years now. And I'm really looking for a better explanation as to why kind of contract repricing efforts seems to have played out in the space of just three to four quarters instead of that three to four years that you'd expect, given how long your average contracts last.
And then secondly, in terms of the kind of eventual pivot towards organic growth in the fleet, I know we talked a bit about it on the last earnings call, but there seems to be much less discussion of it today. So I'm just wondering, have you turned more cautious on the overall sort of volume growth outlook for the next few quarters?
I know you'll probably give us new guidance for fleet growth with the fourth quarter earnings, but just in terms of the tone of the discussion, there just seems less discussion of sort of chasing, using the benefits of being the lowest, most efficient producer in the industry and chasing volume growth. So I just wondered how we should interpret that. Thank you.
Thanks, Kiri. I'll start with your second question as well, and then I'll hand over to Patrick for the margin question. So I think we have spent a significant amount and resources to really look deep into our business and the structural profitability of the different clients, partners, segments, countries. And I think that was a necessary exercise to actually start looking at where we want to grow because we want to start growing again, and we have actually put actions in place to get back to that.
And the first signs are that we are stabilizing the order bank, so that's the good news. But we have also taken quite significant decisions. As I stated in the introduction, we have a few countries where we consciously want to actually decrease our footprint for different reasons.
UK is one of them, and it's actually the bulk of, let's say, the reduction that we are seeing for the time being is coming from two, three countries. And I think now we have a plan. We know exactly where we, first of all, have a good capacity to grow, where there is segment that has some interesting perspectives and where we know the profitability is at the level that supports our, let's say, future objectives on margin and also what kind of clients obviously is in those segments.
So there is a plan that was actually initiated a couple of months ago, and we are starting, as I said, to see the first effects of that. And I'll give you any guidance where we want to be for next year, but we definitely want to start growing the fleet a bit again. And the margin?
Yes, on the margin, Kiri. The stabilization on the margin in 2024 is mostly due to leasing margin in a context of stable, slightly, and now more strongly decreasing interest rates. The leasing margin in some countries can also be adapted to some customers depending on the level of interest rates. Not all the countries, not all the customers, but in some.
But I would say generally, when rates are going down or stabilizing or going down, it is easier for a fixed lender to generate leasing margin as in any fixed-rate lending business. The service margin is still coming back slower into satisfactory territory. On one side, there are the synergies which we are seeing in our service margin, which are going in nicely. On the other side, there is still the impact of auto parts inflation.
It's true that now main street inflation is coming down, but we know and we see that in some countries, auto parts, I mean, in the Netherlands, for example, where you have auto parts inflation, which remains relatively high in a very tense labor market in our workshops for the repair of cars. So that's something that we look at very closely and that we expect to monitor an increase in the months and years to come. Again, in the Q3, the BIP is really concentrated in July.
Okay. Thank you very much, James.
The next question is from Geoffroy Michalet of Oddo BHF.
Yeah. Thank you for taking my question. First question is on the difference, sequential difference between the earning assets that are stable and the funded fleet that is down -1.2%. So we understand there is kind of a change in the mood where you were more in a mode reignite the growth in Q2, and it seems a bit more risk-off.
Can you also comment a bit on the competition, notably, because we saw Arval results saying that they were suffering from the used car sale results, whereas it's a bit the contrary for you. Maybe they're paying for their too aggressive policy over the past two years, but maybe we can have your comment on that. Also wondering if the earning asset guidance is out of reach now for this year?
Also on the margin, again, maybe if we could have some color on the impact of the new cars entering the fleet and that may erode the margins, or if there is also an impact of the outgoing cars from the fleet. On you touched a bit with some auto parts, but maybe there are other items that you would like to highlight. Thank you.
Yeah. Thank you, Geoffroy. Yeah. So let me start with your first question, and I'll hand over to Patrick for the market question. So I think. I mean, I think we have taken decisions in terms of our margin, but we also took some very clear decisions in Q1, basically, to protect our balance sheet in terms of EVs. Competition has been quite slow to adapt,
I would say, which, of course, have had an impact also on our capacity to ride some of this business. Having said that, it looks like the market is getting better educated, especially around electric vehicles, and that we are seeing a more homogeneous way of looking at residual values going forward, which should help us as well. But it's very clear that we don't want to grow for the sake of growth.
That's not really where we want to grow, fleet and net earning assets if the margins are at the right place, and again, we are in a structurally growing market, so we do still see segments and areas of the market, some countries where there is still plenty of opportunities, and that is pretty much what we're addressing, but clearly,
we have been in a position for probably six, maybe even nine months where we have taken decisions that not necessarily were completely followed by the market, which have had an impact, but as I said, it looks like the market is getting better educated on the future of EVs and residual values on these cars.
So in terms of, I cannot really comment on the used car sales on the Arval side, but what we are seeing is a stabilization at a high level for the time being, mainly driven by the fact there is a short supply of nice cars in Europe because the new car sales have been down since 2020.
And then, of course, the fact that people have, let's say, been a bit more slow to adapt to EVs is creating, obviously, a demand in the market that is healthy for our residual values on nice cars in particular. But we do anticipate still that there is a normalization of the used car market over the coming years, but it looks like it's good news that it is a bit slower than we anticipated. On the margins, Patrick.
Yes. Thank you, Geoffroy. So indeed, the front book now that the new production, if I may say, is better priced, especially on the service margin side, because as you can imagine, for the past three years, we have had high inflation, again, even higher inflation on the auto parts, and we are not protected in our contract against higher inflation.
So as the inflation has been volatile on the upside for the past three years, the back book, the stock of, in some countries at least, the stock was severely hit in terms of service margin and remarketing margin in particular. But now the new production, it's fair to say, with inflation going down, the new production at the price has been adapted, and it's also part of the effort of repricing we have been conducting since the Q3 of 2023.
In time, we will see the effect of this repriced service margin in our overall margin in our disclosure. That's actually taking place in most of the significant we are in in Europe, where we can confirm that the service margin is today, especially on the RMT side, which is the one impacted by the partition. It's better priced on the new production than on the stock. I don't know if this answers your question.
Yeah. Maybe just one follow-up on that. Roughly, for how long do you still see a drag for the backbook in some countries where inflation on auto parts was strong? Thank you.
The average contract maturity is 42 months, so that we can see it's coming. It's going to go out progressively in the next one to two years, indeed.
Yeah. But it's not more concentrated in some quarters or some semesters than others, you would say?
I think what we can say, Geoffrey, is that this is mainly related to the western part of our European markets. In the eastern part of our European markets, typically, we have had an inflation priced in because there has been inflation in these markets for 15, 20 years. In the western part of Europe, we have not seen inflation of any significance, probably, and hence, it's related to that part of the book, which is, of course, the majority of our business.
Okay. And maybe last one. Could you help us maybe quantify, let's say, the positive effect of the front book and the negative effect of the backbook, roughly speaking?
It's very difficult to say because it depends very much on each country, and the countries are quite very differently and have a local dynamic. So it's something which is a bit difficult to comment on in general business.
Okay. Thank you. That was all for me. Thank you very much.
Thank you, Geoffroy.
Thank you.
The next question is from Julien Onillon of Stifel.
Yes. Good morning. I have three questions. The first, could you comment or do you have a view about the possibility of a penalty made by the French government on, because this discussion currently on the budget, that corporates' fleets will not go quickly enough toward EVs because there is some talk that they may put some tax or penalties specifically to corporates which are not moving to EVs fast enough. Have you an idea about what could be the impact for you?
That's one question, even if it's quite early to think about that. Second question will be again a bit about the tax. The French government has decided that all companies making EUR 1 billion of revenue in France will have to pay exceptional tax. Have you made a measure what could be the impact for you in Q4?
Because I guess you make more than EUR 1 billion of revenue in France. Have you made what could be in euros the impact in Q4, if there is any impact on the tax income? And finally, final question. Last year, your used car sales jumped dramatically. You sold a lot of cars in Q4 last year. I mean, you mentioned that the used car market is stabilizing much better than you were anticipating right now. Are you planning to do the same phenomenon, or should we expect the same phenomenon, a big jump in the number of used cars sold in Q4 we have seen last year, or it should be more stable because you don't have so much inventory to sell? Thank you.
Thanks, Julien. Let me take your first and your third question first, and then I'll hand over to Patrick. So I think, first of all, the discussions around mandating either companies or companies like us to have a certain percentage of EVs in our new sales, we are clearly against. We don't think that that's the right way to do it.
That's a position we have taken in France, and that's also a position we have taken European-wide. We are in close discussions with the European Commission on these subjects, and we were also part of the discussions that took place, I think, four or five months ago in France on the same subject. So it's difficult to see how it pans out. I mean, we are not against electrification at all. We think that that's the right direction to go, but it needs to be under the right conditions. That is actually what we're pushing for.
We're working through our European association, Leaseurope, where I'm a board member myself, and we are in close contact with decision-makers on these things, where obviously, if the whole ecosystem works well together, that means the manufacturers, companies like ours, charging facilities, and the whole ecosystem obviously is facilitating the transformation in the right way.
We would not necessarily be against accelerating electrification, but it's clear that it cannot be just put on one player or one part of the market. It has to be, and I think what the discussion we have seems to be reasoning, I would say, at least at the European level today.
On the used cars, I think what happened in the end of 2023 was a bit of a coincidence because somehow all players, including also some of the manufacturers, the captives of the manufacturers and some of the bigger players, including Ayvens, we sold a big number of cars, as you mentioned, in the last quarter of 2023, to actually deflate a bit up to the year end.
And obviously, somehow everybody did the same, and that actually had a really, really negative effect on the market prices at that point. We have our stocks fully under control, to be honest. We are selling around 150-160,000 cars per quarter, and that's also what we expect to sell in Q4, perhaps a bit less. But our stocks today are where we want them to be to a very large extent, and we do not anticipate to accelerate sales for that matter. Maybe on the tax?
On the tax, yes, it's difficult to comment on something which is not stabilized yet, but what we can expect, as we see the project today, is a limited impact on us for a number of reasons. One of them being that we have a holding in France, and the holding is bearing a lot of costs. So it's something which increases the taxable income, but also some specific features of the leasing business, which makes it that the taxable income is lower than the accounting income. Overall, but again, we will wait the final tax. Overall, we don't expect a major impact in Q4 nor in 2025.
Okay. May I come back a bit on the penalty? Potentially, again, it's a discussion in France right now, but my question was also, if there is a, let's say, a penalty if a corporate is not moving fast enough toward, let's say, EVs, it could be the question would be, would it impact your customer, which will have to pay the penalty, or you as a sort of supplier of fleets? That's a bit of the question now. Fleets belongs to you, but it's for one customer in direction. So what do you think it could happen if something happened like that? And if there was a penalty, would it be impacting your customer and directly you will invoice a higher price? It's impacting you. How do you see the eventual negativity of such an event?
Yeah. I think, again, also coming back to the tax question, there's a lot of speculation, and I think initially the proposal was to actually put the mandates on the leasing companies and rental companies. Now, I think the one that is on the table now is actually that it's the corporate client who will have the penalty, which means that obviously our customers will ask for having more electric vehicles than they have today.
Now, actually, on the new order in France, the intake of EVs is pretty much on par with most of the other European countries. So I mean, in the case where there would be a mandate put on leasing companies, it would then be up to us to obviously consider what kind of residual values is right in that scenario and judge the risk.
So it's a bit difficult, Julien, to really give you a very clear answer on that because, again, there are several different discussions ongoing. Again, if there is a mandate that will eventually mandate us to be at a certain level of electrification by 2032, 2033, I don't think there will be necessarily any negative impact. But if they would start implementing mandates coming from 2026, 2027,
it could be questionable whether that is the natural rhythm of electrification, and that could have some impact. But I mean, at this point, the market is adjusting themselves to a very large extent. And of course, we are an important player, and we play a role in the way we look at this market. We will continue to look at our balance sheet and ensure that we don't take too much risk on that particular part.
Okay. Thank you very much. Very clear.
The next question is from Matthew Clark of Mediobanca.
Good morning. So just coming back to the interest rate environment, I mean, interest rates are falling or look to be falling much faster than would have perhaps been expected when you formulated your margin guidance. So how does that affect your 530-550 basis points margin guidance? Should we be looking more to the upper end of that or above that as a result of the lower interest rates? Yeah. That's my question, please.
Hello, Matthew. No, we don't really change our outcome for the year. And why is that? Is it that simply the benefit from lower interest rates is not material enough, or is it offsetting negatives? No, but first of all, as a stock business, we have made some borrowings, mostly in the first part of the year, so we are not benefiting fully in 2024 for the lower interest rates. Second, as we said in the Q2, in some countries, and we are being very selective, as you know, we want to regulate growth,
so we need to be somewhat more aggressive at the beginning of the year. So we are passing some of these interest decreases to our customers. You see that we have now. We are now slightly deflating. That deflation is mostly correlated to one or two countries in which we want to limit our position due to either risk or limited profitability. But the fact is that on a more general basis, we need to accompany this decrease to our customers if we want to restart growth. So that's the two main reasons that I can cite that I can give you at the moment.
Okay. Thank you.
Thank you, Matthew.
For any further questions, please press star and one on your telephone. Mr. Albertsen, there are no more questions registered at this time. I'll turn the call back to you.
Thank you very much. Well, thank you for listening, and thank you for the questions. And don't hesitate to reach out to our investor relation teams if you might have further questions. Thank you for your time, and have a good day. Goodbye. Thank you.
Ladies and gentlemen, this concludes today's Ayvens Conference call. Thank you for your participation. You may now disconnect.