MLP.DEMLP.DEXETRA
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Operator: Good afternoon, ladies and gentlemen, and welcome to the MLP SE conference call regarding the publication of the results for the third quarter 2025 and first 9 months 2025. [Operator Instructions] Let me now turn the floor over to your host, Pascal Locher.
Unknown Executive: Thank you very much, and welcome to MLP's conference call to our results for the third quarter and the first 9 months of 2025. With me today is our CFO, Reinhard Loose. He will guide you through the presentation. And of course, we are happy to take your questions after the presentation. So please go ahead, Reinhard.
Reinhard Loose: Thank you, Pascal, and good afternoon, ladies and gentlemen. First of all, please allow me to present the key message for the first 9 months of the financial year 2025. MLP remains firmly and vigorously on its good course. Even one-off effects, which need to be processed at times as it is the case this year, do not change this. We provided information on this last Friday. Within the MLP Group, we benefit more than ever from our broad and strategically interlinked positioning, which provides additional stability and at the same time, generates sustainable growth year after year. During the first 9 months of this year, we were able to achieve new highs in total revenue despite a persistently difficult macroeconomic environment. This is a remarkable achievement by our team, not least because, as I already reported at the half year stage, we have not experienced and are still not experiencing any tailwind in parts of our markets. Businesses and consumers alike are unsettled. The U.S. President's so-called Liberation Day in particular, with the drastic tariffs shook the capital markets in April and still has an impact today. However, the lack of political decisions, the ongoing economic downturn and not least recent rising unemployment are also cause for concern. Despite operating in such a difficult environment, the MLP Group still succeeded in setting new highs in key figures for future business development. This applies to both the assets under management of EUR 64.2 billion and the managed non-life insurance premium volume of EUR 794 million. In terms of earnings before interest and taxes, EBIT, the MLP Group stands at EUR 61.1 million after 9 months in 2025, which is below the previous year's record high figure of EUR 66.4 million. In the third quarter of '25, we achieved EUR 18.3 million and thus, even slightly exceeded the very strong prior year quarter. One thing is particularly noteworthy about this development, our well-established and very successful consulting business, namely the intensive support we provide to our clients. We are their preferred dialogue partner for all financial matters. A closer look at the previous year's comparative figure makes this particularly clear. Q3 EBIT 2024 includes significantly larger EBIT contributions from performance-based compensation at FERI and from the interest rate business of MLP Banking. This shows the enormous growth and substance that we have already achieved in the MLP Group in recent years. As already reported, we have adjusted our EBIT forecast for the current year. This was due to changed expectations regarding the level of performance-based compensation in wealth management and the real estate development business. In addition, we are seeing a weaker than originally expected old-age provision business. As previously announced, we also intend to focus the business of our group company, Deutschland.Immobilien, and thereby making it less susceptible to risk. We will benefit from this very soon, just like from our extensive IT investments, which I talked about at the half year point. The IT investments are focused particularly on artificial intelligence, which is increasingly being integrated into our consulting services, for example, in the preparation of client meetings by our consultants. And last but not least, we'll further strengthen our position in the corporate client business, among other things, through innovative and digital companies that we have established within the MLP Group in a targeted manner and whose development we are actively advancing. This means we are following our proven path to success. We have increased our EBIT midterm planning for 2028 to between EUR 140 million and EUR 155 million. On our way there, the current year is above all a year of transition, a year in which we have invested and focused. Regardless of the necessary responses to changing markets, our business model is so robust that we have set ourselves even more ambitious yet realistic targets for 2028. The fact that we are implementing this increase in our targets at this particular point in time once again underpins how sustainably we have positioned the MLP Group for this path. You can find an overview of revenue development on Slide 4 of the presentation. In the first 9 months of 2025, MLP increased the total revenue to a new high of around EUR 773 million. The share of recurring revenue was almost 70% at the end of '24, highlighting the great and sustainable stability of our business model. We earn recurring revenue from the continuous high-quality service provided to our existing clients throughout the MLP Group, above all the Property & Casualty and Wealth competence fields. The remaining share of sales revenue generated from our new business, particularly in the Life & Health competence field. In the first 9 months of '25, the group grew particularly strongly in the Property & Casualty competence fields with an increase of 7%. Compared to the same period of the previous year, MLP was able to significantly increase the managed non-life insurance premium volume. MLP also achieved growth in the Life & Health competence field with an increase of 4%, driven primarily by the health insurance business included in this figure and to a lesser extent, by the old-age provision business. After the first 9 months of the year, the Wealth competence field recorded a slight decline in revenue of minus 2%, primarily as a result of significantly lower performance-based compensation. This requires new record levels to be achieved in the underlying concepts even after market-related setbacks. Without the performance-based compensation, the Wealth competence field would also have recorded growth with the corresponding figure standing at 4%. While we recorded lower interest income as expected due to the declining interest rates, we were able to achieve double-digit growth rates in real estate brokerage and loans and mortgages. This is yet another example of the strength of our business model, which is based on multiple pillars. Finally, a brief look at the Others competence field. As expected, revenue was slightly lower here due to the plan that strictly implemented reduction of market and business-related risks in the real estate development business. I've addressed this repeatedly during the previous quarters. And with the step announced last Friday at Deutschland.Immobilien, we now intend to end real estate project development, for which we ourselves are also responsible for construction and thus make our real estate business less risky. We will, therefore, no longer initiate such projects. Only the existing projects will be carried out by us to completion. The growing and continuing trust in our consulting services displayed by our clients is also reflected in the key figures. They are extremely important for future revenue development. It is therefore all the more pleasing that we were able to increase assets under management to a new high of EUR 64.2 billion. To the best of our knowledge, this makes us the second largest bank independent asset manager in Germany today. Let's take a quick look at our other key figure. We were also able to increase the managed non-life insurance premium volume to another record high of EUR 794 million. As of the 30th of September, the MLP Group's consultants served 597,400 family clients. The gross number of newly acquired family clients was 15,500. We also supported a further 27,800 corporate and institutional clients in the MLP Group. The number of consultants rose to 2,121 during the course of the year, primarily as a result of our successful trainee program. This program, which is very attractive for young professionals, equips employed junior consultants at MLP with the skills they need to succeed as self-employed consultants. Indeed, 495 trainees had already joined the program by the end of September '25 since its launch in mid-'23. You can find in the bridged version of the current income statement on Slide 8. In the first 9 months of '25, the MLP Group recorded EBIT of EUR 61.1 million, which, as already communicated, was below the exceptional strong figure from the same period last year, but significantly above the average of the past 5 years with average figures EUR 47.6 million. If you now take a brief look at the right-hand section of the slide, you will see key performance indicators that underpin our strong balance sheet. Our shareholders' equity amounts to EUR 577 million. The regulatory core capital ratio was at 17.9% as of the 30th of September, which remains significantly above the requirements of the regulatory authorities. The liquidity coverage ratio or LCR for short, serves as a benchmark for short-term liquidity and stress scenarios and is therefore an indicator of resilience. At 1,124%, it is also well above the 100% minimum required by regulatory authorities. Let me come back to our recently revised EBIT forecast of EUR 90 million to EUR 100 million for the whole year before possible one-off effects resulting from focusing of the real estate business in terms of EBIT. However, these effects should not exceed EUR 12 million and might also even have an impact on EBIT of the financial year '25. We are more convinced than ever that we will continue our operational business success. In the current financial year, we expect sales revenue to slightly increase in the Property & Casualty competence field in particular. In the Wealth competence field, we continue to expect revenues in '25 to remain at the previous year's high level, though we remain cautious in view of the volatility of the capital markets. Of course, it also cannot be ruled out that there may be positive capital markets developments from which we would benefit directly in the Wealth competence field. In line with developments in the first 9 months, we are now anticipating stable revenue in the Life & Health competence field, having previously expected a slight increase in revenue. Within this competence field, we continue to expect a slight increase in revenue from health insurance and expect now stable revenue from old-age provision. Irrespective of this, we are keeping a very close eye on our costs. As already mentioned, we have slightly increased our midterm planning for the end of '28. The corridor now ranges from EUR 140 million to EUR 105 million -- EUR 155 million, sorry. Previously, it was EUR 140 million to EUR 150 million. We continue to expect total revenue of EUR 1.3 billion to EUR 1.4 billion. Performance-based compensation at FERI, which can only be planned and influenced to a limited extent, has once again been considered cautiously and therefore, only included to a limited extent in the increased planning. We have left unchanged from the previous planning. In this context, I had already referred to the enormous substance of our operating business, which we have continuously built up over the past few years. This is also reflected in our planning for continued significant growth in key figures, namely the managed non-life insurance premium volume and the assets under management. The expanding asset under management, FERI has significant further potential as an asset manager, underpinning by highly professional and modern investment research. In the area of alternative assets, with over EUR 18 billion under management, FERI already maintains one of the largest expert teams in Germany. The strategic development of potential and consulting family clients, the targeted expansion of the corporate client business and the multi-asset approach for institutional clients should lead to growth in all competence fields. The planned significant increase in earnings is also supported by our digitalization strategy with a particular focus on AI applications, which are expected to drive ongoing efficiency gains and further improve client support. Our development of AI service agent continues at full speed. At the final stage, we'll offer clients 24/7 [ visibility ] and complete processing of simple matters. An AI system, which makes the sometimes time-consuming preparation for client appointments significantly easier for our consultants has already reached the practical testing phase. For example, the AI can extract the relevant data for financial consulting from documents uploaded by clients and sought and stored in the right place in our systems to directly support the consultants. These new technologies are used throughout the MLP Group in a very targeted manner, but also always responsibly. Ladies and gentlemen, allow me now to move on to the summary. Firstly, our strategically developed positioning is proving itself more than ever, especially in phases without a tailwind from the market and also when it is necessary to deal with one-off effects, which can occur from time to time. Secondly, artificial intelligence as part of our digital strategy is already an additional efficiency and growth factor today and will remain so well into the future. We'll also remain vigorously active in this field. Thirdly, our increased midterm planning for the end of 2028 underlines our sustainable growth path. In the coming years, we will benefit from the fact that we have now focused our real estate business and at the same time, made strategic investments. Many thanks for your time and your interest. I'm now happy to take any questions.
Operator: [Operator Instructions] The first question at the moment comes from Henry Wendisch, NuWays.
Henry Wendisch: Thank you, Reinhard, for the presentation. A couple of questions from my side. Let's go with the obvious one I always ask is the net inflows and the performance fee metrics that we have seen in Q3 for our modeling. And then on the same topic, more or less regarding the guidance cut, you said was a mix of 3 things. One is a lower expectation of performance fees and of course, the real estate development that is not turning out the way it might have been looked like at the start of the year. And what is sort of a little bit of a surprise for me is the weaker old-age expectation now. Could you give us maybe a little bit of a split? So which of these 3 developments was the biggest one or to what extent? And then directly a follow-up on that, why has sort of your old-age provision business outlook for Q4? It's very, very important for the fourth quarter. So why has your outlook a little bit changed there? I've seen you launched a new product, the portfolio [ Venter ]. So what is sort of the -- how can we think of this new outlook of yours in the old-age space? And then I think the very positive highlight here is the underlying profitability. It was a very strong gain. And also sales, if you include performance fees, you grew by 5% on a Q3 basis. So that looks very good. And I think the biggest improvement we've seen in profitability was in banking. Could you shed some more light on what has happened there? I've seen a positive effect in the so-called the [indiscernible]. Maybe that's something that's behind this, but I don't really understand yet what is the real driver here, the banking business underlying profitability. So even if you include the net interest income, which has declined, of course, as well, the profitability is still very -- on a very good level there in banking. So what's going on there?
Reinhard Loose: Henry, thanks for your questions. And I start with the, let's say, easy one to answer the net inflows. The net inflows for the whole group for the -- let's say, the gross inflow for the whole year was EUR 4.2 billion, and the gross outflow for the whole year was also EUR 4.2 billion. And then we have overall performance of EUR 1.2 billion. Obviously, mixed in different areas. Your next question will be where does it come from? We had outflow of a bigger customer with a consulting mandate in -- with extremely low margin, but with some interesting assets under management. And therefore, the -- in the area of the company sector there was relatively weak for the whole year. This was more or less explanation a little bit to the net inflows. The performance fees for the whole year was EUR 4.8 million. And I think this leads to your question then for the underlying business. And I just would like to compare for everyone here on the call, the performance fee for the first 9 months in '24 was EUR 26.8 million. That means we have EUR 22 million less performance fees in 9 months and only in [ license ], only EUR 5 million less profit finally that underlines that the rest of the business in general was quite okay, I think just to underline this. The guidance cut, yes, performance fee real estate is clear. Old-age provision, old-age provision, we will have a very strong last quarter, but perhaps not as strong as we expected. That's clear. And what's the reason for that? We see, let's say, very, very good activities in the wealth management area. And we know that our consultants are obviously only have 24 hours a day. And at the moment, they invest more time in wealth management than in old-age provision. And therefore, we have a little bit mixed feelings about this. On one side, we are extremely happy what's going on in the wealth management area, especially, let's say, in the area of private -- of the private consultants. The inflows are extremely good there, but this has then the result that they have less time to consult their customers in old-age provision. And that was the reason why we were a little more cautious there. But again, there will be a strong quarter, but perhaps less strong than we would have expected in the beginning. On the other side, we will see better results, I think, in the wealth management area in the last quarter in the private clients business. And therefore, as you also said, the underlying profitability was quite good. One reason for this profitability, of course, was the banking sector. There you also see as an outcome, what I just mentioned, the inflows in this area. We have, in the first 9 months, more than EUR 1 billion net inflow in the private customer sector in the banking with obviously the best margins in the wealth management in the whole group. And therefore, this supports the banking business and in the risk -- the [indiscernible] risk sector. We were relatively cautious concerning risks last year. And therefore, the comparison last year to this year is that we are good provided in the risk sector already from last year onwards, and therefore, we had to do less this year. That was the reason why the risk figure in comparison to last year is quite good. And I hope, Henry, I have answered all your questions with that.
Henry Wendisch: Yes. Just one follow-up on the banking. So does this imply that this elevated margin is going to stay there at these levels? Or do you see an effect coming back in Q4 maybe and also into 2026?
Reinhard Loose: As always, it's depending a little bit on the development in the market. But for '25, now 13th of November, we don't expect declining margins in the banking sector [indiscernible].
Operator: The next question comes from Jochen Schmitt, Metzler.
Jochen Schmitt: I have 3 questions, please. Firstly, what's your new expectation for performance fees for the full year? Secondly, excluding any exit costs, do you expect a negative EBIT from property development in Q4? And thirdly, the EBIT range of your new guidance, may that implicitly be read as sort of headroom for the Financial Consulting segment for which Q4 is seasonally the strongest quarter for full year EBIT, but which may be somewhat volatile. These are my questions.
Reinhard Loose: Mr. Schmitt, the performance fee in our original plan, we expected a low double-digit figure for performance fee. I just reported that we have until now EUR 4.8 million performance fee for the first 9 months. I would expect something like a lower EUR 1 million number to add on this EUR 4.8 million, but we will be definitely somewhere between EUR 5 million and EUR 8 million, I would say, just to give some numbers there. On the property and the real estate sector, that's a good question. The question was if we expect a negative result in the last quarter in the real estate segment, I would altogether expect a negative figure there. Yes. And then the EBIT -- I think I lost the last question. Can you please repeat the last question again?
Jochen Schmitt: Yes, sure. I mean you have implicitly left a range of EUR 10 million in your new outlook for the full year, but this also refers to the fourth quarter. And what may bring you to the lower or to the upper end? Is it finally the performance of the Financial Consulting segment? That's my question.
Reinhard Loose: Obviously -- thanks. Obviously, the area of performance fee left leaves some volatility for the last quarter. We are quite happy with all the other segments at the moment. And therefore, let's say, to reach the upper area, I think we should see -- we have to see no negative or let's say, some positive effects, not perhaps positive result, but at least some positive effects in the real estate segment and some perhaps a little tailwind on performance fees that would help us to come to the upper area of this range.
Operator: So at the moment, there seem to be no further questions. [Operator Instructions] So as there are no further questions at this point, I'd like to hand it back to you, Mr. Locher.
Unknown Executive: Okay. So if there are no further questions, I would like to thank you for taking part in our conference call. And of course, you can reach us if any further questions arrive later. I wish you a good afternoon. Thank you, and goodbye.