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Good morning, everybody. I'm pleased to welcome you to our today's conference call. Today's agenda covers our results for the second quarter and first half of 2022, together with the outlook for the full year.
I'm joined by our CEO, Jochen Klosges; and our CFO, Marc Hess, who will take you through the presentation, which will be followed by a question-and-answer session.
And now I'm pleased to hand over to you, Jochen. The floor is yours.
Thank you, Jurgen, and good morning. Ladies and gentlemen, I would also like to welcome you to our conference call to discuss our results of the second quarter. We brought the presentation of our quarterly results followed by 1 day compared to the original schedule. This was due to the fact that our Annual General Meeting was also scheduled for today. As you know, things have unfortunately turned out differently.
Last Thursday, we communicated that we had to postpone the Annual General Meeting to the 31st of August. Due to a technical fault, we were unable to guarantee that all shareholders entitled to vote actually received the convening notice. This has now been ensured by postponing the AGM, and we apologize for the inconvenience to all concerned. In order to avoid any further confusion following this fault, which has been annoying for all of us, we are sticking to the adjusted Q2 time line, meaning that we are presenting preliminary figures today, and the full interim report tomorrow.
Let me now turn to our business development. On Page 2, you see Aareal Bank has generated good results in the quarter under review despite a very challenging market environment and higher loss allowance. Our operating profit is up by around 50% compared to the same quarter of the previous year. And we are seeing positive results from our strategy, with our income rising faster than our costs. Our capital position remains very strong with a CET1 ratio of 19.8% despite significant portfolio growth. And we are continuing to work on diversifying our sources of funding, Marc Hess will provide more details on this in a moment.
Overall, following a successful first half of the year, Aareal Bank is on track to achieve its targets. Therefore, we are again confirming our full year earnings guidance today. However, what the future will bring in terms of geopolitical and economic developments remains uncertain. We cannot influence these developments, but we can do -- but what we can do is to anticipate potential risks at an early stage, and then actively manage them in the best possible way. We will apply a sense of proportion, and remain sensitive to risk in all our growth initiatives. This is also why we have taken changed risk parameters and worsened macroeconomic forecast into account in determining the loss allowance for the second quarter. Therefore, overall, thanks to our earnings power and financial strength, we are prepared in the best possible way for times of high volatility and economic challenges.
Ladies and gentlemen, Atlantic BidCo successful takeover offer was another material development during the second quarter. Allow me to briefly provide an update, and to explain to you where we stand today. In June, our shareholders tendered approximately 84% of our shares to the bidder company, which was led by Advent, Centerbridge and the Canadian Pension Plan Investment Board. The offer was thus accepted by a very large majority of our shareholders. Atlantic BidCo is therefore expected to become the new majority shareholder of Aareal Bank. Subject to the necessary regulatory approvals, the transaction is expected to close, and the tender shares are expected to be transferred in the fourth quarter of the current year or in the first quarter of the next year.
With the support of these new investors, we will continue to consistently implement our strategy. In addition, retention of our profits will contribute to our growth in the years ahead. So much concerning the takeover offer.
Now turning to our segments. I will discuss each of them in more detail shortly, but let me highlight here that we achieved growth in all 3 of our business lines in the second quarter. Specifically, we were able to increase the credit portfolio and the volume of deposits. Profit growth was driven by net interest income and net commission income, both of which increased once again. In fact, net interest income has now reached the highest quarterly level since 2016. And in addition, Aareon posted another increase in sales revenues.
At this point, I would like to hand over to Marc Hess, who will be guiding you through the key financial indicators for the second quarter. Over to you, Marc.
Yes. Thank you, Jochen. Good morning, everybody, from my side. Jochen just said it, we can present to you a set of good quarterly results this morning. Operating profit is 50% above last year's second quarter. And that improvement is driven by a decent momentum in our top line, and really puts us in the position to even digest one-off burdens like the higher loan loss provisions due to the adjustments of our risk parameters in Russia or even the cost of the public tender offer. I think, in general, we can say that these results are proving again that our updated Next Level strategy, which we presented in early 2021, is working well.
So let's move to the details on the next pages. As you can see it here, a key driver of our top line is the net interest income. Again, it is up by 20% versus second quarter last year based on a very good new business development and thus portfolio growth at margin levels above our own plan and absolutely in line with our strict standards -- strict risk standards. But fee income is gaining momentum, too. We were able to increase it by EUR 9 million or 15% in the second quarter. Aareon contributed EUR 7 million, as you can read it here, partially by M&A, but more than 50% of the growth is organic, and that is a really pleasing development. And BDS contributed to fee income expansion as well, being EUR 2 million above last year's level.
Costs, as you can see on Page 8, are up by EUR 24 million versus last year. And I think that needs some further explanation. Main drivers are one-offs, both in the bank and in Aareon. The increase in the bank by EUR 13 million is easily explained by the EUR 12 million one-off cost for the public tender offer that we booked in the second quarter. So I think we can say that the very good underlying cost development is proving again that our promise to grow at very low marginal costs has become reality. The cost income ratio for the bank stood at 41% in the second quarter. And this is despite of the one-offs, so including the one-offs.
The cost increase of EUR 11 million in Aareon is also driven by one-offs like the restructuring costs following our acquisition of Momentum and a write-down of our legacy software in Sweden. The base increase from last year's acquisition was EUR 4 million. Risk provisions was comparatively high in Q2 with EUR 58 million. The reason, as just mentioned by Jochen is the adjustment of our risk parameters that now include a protracted war in Ukraine and the associated sanctions. The effect from these parameter adjustments was EUR 24 million in total. In this context of these adjustments, we also had to recalculate the loan loss provisions for our remaining Russian exposure, which led to an increase by EUR 22 million.
So our loan in Moscow is now covered with a 40% risk provision against its total exposure. Be reminded here that from the economic perspective, it generates a good debt service coverage. However, the money cannot be transferred due to the Russian counter sanctions.
So let's turn to the nonperforming loans. The decrease of our NPLs is heading into the right direction, clearly. COVID-related burdens are failing, especially in hotels, as you can see it here. The share of NPL has halved to 15% from 32% at the year-end 2021 in this object class hotels. Jochen Klosges will give you more insight supporting these positive developments in a few minutes. We didn't have any new NPL in the second quarter. NPL volume is down by EUR 180 million. So excluding the default of our Russian loan, which was obviously not COVID-driven, we wouldn't have had any new NPL in the first half of 2022, and would have reduced our NPLs by EUR 340 million or more than 20%. So a clear recovery from COVID.
On that positive note, back to you, Jochen.
Thanks, Marc. Yes, let me first turn to Structured Property Financing, on Page 11. So you see we are well on track with our growth strategy and importantly, at good margins. New business originated during the second quarter totaled EUR 1.8 billion after very dynamic levels of new business origination in the first quarter. The total for the first half of the year amounted to EUR 5.2 billion and was, therefore, markedly above the previous year's figure.
During the first 6 months, we were able to maintain the average margin for new business at 227 basis points, which is clearly above the projection for this year. At the same time, average loan-to-value ratios for newly originated loans have been running at a very good conservative level of 56%.
On Page 12, we show -- we give you a portfolio overview. You see our total portfolio volume has risen to EUR 31.3 billion, also influenced by positive currency effects during the second quarter. This means that we have already achieved our portfolio target for 2022 in the first half of the year. We're also making good progress with our ESG activities, having originated around EUR 350 million in green new business during the first half of the year. This is the financing of buildings that meet our green criteria and for which the customer is contractually obliged to provide confirming evidence over the entire contract period, and around EUR 200 million in green new business has been added since the end of June.
Our commercial real estate portfolio is becoming increasingly green compared to 17% at year-end '21 at the end of this year June, 21% of our commercial real estate portfolio was secured by green buildings. This correspondence to a volume of totally EUR 6.4 billion.
Next page, you see the key quality indicators of our portfolio along to value and yield on debt, and both have continued to improve. What is particularly welcome is that the indicators for hotels and retail properties, asset classes, which were particularly hard hit during the course of the coronavirus pandemic, have recovered significantly as we had predicted. The pandemic was the ultimate stress test for these sectors. Therefore, we feel duly prepared for what may lie ahead. After all, what has helped us throughout the pandemic still helps us today, we are broadly diversified across sectors and regions, and work with professional and financially strong clients. We will continue to monitor diversification of our new business closely, of course.
This brings us now to Banking & Digital Solutions, where we continue to make good progress, both in terms of net commission income, which has increased further as well as in the volume of deposits, which has risen continuously over recent years to a current average of around EUR 13.4 billion. As the ECB no longer charges negative interest, we have not applied deposit fees since August 1.
Growth in deposits supports growth in our lending business. Deposits from the housing industry represent an additional source of funding for us. And with rising interest rates, these deposits will generate additional income from 2023 onwards. Our aim in this segment is particularly to open up new markets and client groups, and to grow further through cross-selling with existing clients. At present, more than 4,100 corporate clients throughout Germany are using our process optimizing products and banking services.
On Page 15, we turn to Aareon. Aareon increased sales revenues to EUR 147 million, up 10% in the first half of the year despite the ongoing transition to a subscription-based business model. Growth in business from Digital Solutions continued to be particularly strong. The transformation to platform-based solutions continues to progress well with software-as-a-service products achieving a 20% increase in sales revenues in the first half of this year. This growth comes from 3 sources. Firstly, new business with new products and new clients. Secondly, Aareon's M&A activities. And thirdly, the change from on-premise to cloud solution models in our existing client portfolio. So software-as-a-service and subscription-based products stabilize and further increase the already high share of income from recurring sources.
Adjusted EBITDA increased to EUR 32 million in the first half of the year, and the margin remained stable at 22%. During the second quarter, Aareon also achieved further successes in M&A. Most importantly, it significantly expanded its market position in Scandinavia with the acquisition of Momentum Software Group. The Swedish company develops, sells and implements software as a service for property management and energy monitoring. With this acquisition, which, by the way, is the biggest in its history, in the history of Aareon, Aareon is strengthening as a market-leading position in Scandinavia. In Europe, Aareon is already #1 or #2 in each of its core regions, and we see potential for further growth in its market.
Hartmut Thomsen, Aareon's new CEO has been strengthening and repositioning the company's Management Board. Rumyana Trencheva and Ernesto Marinelli were appointed to the Management Board on the first of July.
Ernesto Marinelli has assumed the newly created Management Board function of Chief People Officer, thus reinforcing the key aspects of personal recruiting and employee development at Management Board level.
Rumy Trencheva was appointed Chief Market Officer. With the international and broad sales experience, she will, in particular, contribute to Aareon's drive for international growth.
So Marc Hess will now outline our capital position and funding activities. Please, Marc, over to you again.
Yes. Thank you, Jochen. Our capital ratios, I think, are speaking for themselves. We reached 19.8% CET1 ratio. Basel IV phase in the second quarter, so a very solid number. The increase was backed obviously by waiving the '21 and '22 dividend, in line with the terms and conditions of the PTO. On top of the decrease of our pension liabilities in line with the interest rate increase contributed to that positive development.
With regards to funding, on the next page, we are well on track as well, including our second green bond issuance in July, we are well advanced in our own funding plan. In addition, we are aiming to further diversifying our funding mix, our new issuer rating from Moody's a good A3, puts us in the position to address new investors who require a second rating on top of the A- from Fitch. On top, we have taken a first step towards retail funding by launching the cooperation with raise in and Deutsche Bank that perfectly is complementing our stable housing industry deposits. And by doing so, we have added another interesting tool to our toolbox of funding instruments, successful -- after successfully establishing our European commercial paper program in Q4 last year and the relaunch of our prior placements this year. So back to you, Jochen.
So thank you, Marc. And outlook, you see always a kind of difficult task in that very volatile environment. However, we confirm our operating profit guidance. This chart here is basically unchanged compared to the one we showed during our Q1 presentation. However, in the meantime, we increased the guidance referring admin expenses due to the costs in connection with the successful PTO of Atlantic BidCo. And on the other side, we are a bit more optimistic about the development of our net interest income, which so far showed this year a very promising development.
In summary, I would say unchanged. But again, important, the disclaimer that we all hope to get back to a more predictable environment, which is currently unfortunately not yet the case. So in the meantime, we will once again work hard to achieve our targets.
So with that, let's conclude by summarizing. Ladies and gentlemen, our group has yet again reported a strong operating performance despite the current challenging and difficult environment. We have continued to pursue our growth strategy across all 3 segments, consistently and according to plan. but we are also continuing monitoring risk and adopting a selective stance in all 3 business lines. We remain on course to achieve our earnings targets.
We, therefore, also confirm our full year earnings guidance but would like to point out that it remains difficult to predict what the future will bring in terms of geopolitical and macroeconomic developments. We cannot influence these developments. Nevertheless, we can anticipate potential risks at an early stage, and then actively manage them in the best possible way.
Thanks to our strong market position in all 3 business lines, and thanks to our strong capitalization and our sophisticated risk management skills and our earnings power. We are preparing for uncertain times ahead in the best possible manner.
So thank you for your attention. Marc and I will be very happy to answer your questions now. Thanks.
[Operator Instructions] The first question is from the line of Johannes Thormann with HSBC.
Johannes Thormann, HSBC. Three questions from my side. First of all, on the retail funding where -- the raising in Deutsche Bank, why did you -- for this toolbox because it seems relatively expensive considering your cheap quality retail deposit base from the housing industry. Secondly, on the risk density of your [indiscernible] calculation. I'm a bit puzzled. Your risk provisionings are only going up and our -- the models are showing more macroeconomic guess, and then your risk density goes down. I would have expected an increase in risk density. And probably this is also the suspicion of some regulators that the internal risk models are too optimistic in some scenarios. Can you elaborate a bit more what has driven the decline in the risk density? And last but not least, just on your dividend outlook, as you cancel '21 and '22 dividends, what should be in our model for the years to come?
Johannes, thank you very much for your question. The first question on the retail deposits, as I just said, for us, it's another instrument to further diversify funding. I think we are just learning in this moment on a macro level, how important it is when it comes to supply chains and sources that you are diversified.
And well, as you say, if you compare it to our housing industry deposits, these retail deposits may be a little bit more expensive. However, if you compare it to unsecured funding, pricing is even favorable. So it's somehow positioned in between. And as I just said, it's just a further diversification, which I think is very important in these times.
Risk density. I think it's a very good observation that you are currently mentioning. It's a little bit more tricky. If you read -- yes, it's really complicated. If you read, let's say, the footnote in detail, maybe you get a little more insight, but I'm happy to explain. We always calculated the Basel IV level in this higher-off approach, which we are still doing. And as we communicated, we applied conservative measures for the revised IRBA. Therefore, the revised IRBA Basel IV always led to higher RWAs. We have now been through a series of assessments with the regulator.
So most of these conservative parameters were able to be removed. And this is why first time, the KSA -- so the standard approach with the 50% floor leads to higher RWAs than the rise IRBA. That means we are really looking conservative on that basis. And this is why you see now a positive development even on RWAs. So it's not calculated on internal models anymore. It's really now on the case a 50%, which is leading to the higher RWAs.
And on dividends, as it was said in the PTO, the investors support our growth strategy. Obviously, we are careful. We know that risk standards don't have to be violated, and this is especially true in these difficult times. So the only thing we can say is if we can really grow to a maximum, let's say, in the more blue sky scenario, then this would be supported with low or no dividends going forward. If we're somewhere in between, some dividends may be paid, but it's really too early to say, as Jochen just mentioned. We are living in very difficult -- or in times that are very difficult to predict. And this is then, unfortunately, also true for future dividend payments and will, of course, be discussed when we are doing the joint business case.
The next question is from the line of Tobias Lukesch with Kepler Cheuvreux.
Yes. Two questions from my side, please. Firstly, on...
Sorry. Tobias, we can hardly hear you. Could you speak up a little bit?
Okay. Do you hear me better? Can you hear me better?
Yes. Thank you, yes.
Yes. Sorry for that. Firstly, on the markets, maybe you can share with us your current focus in the various market areas, maybe also the spot of most concern, and also with regards to your own portfolio, right? I mean you mentioned the very good development in hotels, et cetera. But where do you see pressure points basically going forward?
And secondly -- and again, touching on the funding and the increase in deposits. Is there any deposit base level where you say this is something we would target going forward to supplement the more expensive senior unsecured? And maybe a last point on the Aareon growth, and maybe you can again quickly touch on some inorganic growth elements in H1, and how this compares to the expected development in H2.
Yes. Thank you, Tobias. Yes, on the markets. Yes. So obviously, I see still a significant difference between forecasts and the current development. What does it mean? So currently, when you take a look at various reports from wherever about potential developments, you see everybody who is preparing these reports is clearly -- let's call it, off-risk motives and rather cautious about forecast. And that's, I guess, it's completely okay for this current situation.
However, we can see in reality in the markets on a day-to-day basis is yes, there is still a reduced -- slightly reduced amount of transactions going on compared to pre-pandemic levels. But I guess on a global scale, it's probably 5% down compared -- 5% to 10% down compared to numbers we saw in 2019. So in summary, a much better development than most of us expected. And of course, we have a clear focus on our first -- in our hotel portfolio. There, we see clear recoveries. We see increasing levels of occupancy and also room rates. And you can see that on the back of our yield on that. We shall regarding hotel portfolio. I guess the lowest point mark was 2% or 2.5% as seen in early '21, and now we are back at roughly 7% yield on that. That shows you that the industry is doing well, currently. Same is true, of course, for retail, which was always pretty much stable during the course of the pandemic. And logistics is still very much sought after. And additionally, offices are still -- offices in good locations -- and good locations are still able to generate a decent rental income. So it's very difficult to predict what's going to be the outcome.
Again, I mentioned that, I guess, during our last call, for me, of course, the biggest risk is always when I think about commercial estate long-term recession. So if we are going into a long-term recession then we are going into a different risk environment. But this is currently hopefully not the base assumption of the most participants in these markets. So it's very, very important for us always to monitor what is really going on in the market and to see how fits that to the -- to our scenarios, and of course, also to our forecast. I hope that answers your question. And then I would like to hand over to Marc for the -- for your question regarding the funding and deposits.
Yes. Hello, Tobias. Obviously, yes, we have a target level, which you can find on Page 21, for our deposits -- for the housing industry deposits. So that's above EUR 12 billion, was originally around EUR 12 billion. You can see we are well above that level, EUR 13.4 billion. However, also, let me say, this is a midterm target, and includes potential effects of the ESF reform that comes in place first of January next year. So we have modeled some outflows here.
If you're asking me today, are we optimistic that we will be well above the EUR 12 billion, yes, I would be because we have generated a good buffer with the EUR 13.4 billion. But I think we want to be on the safe side here. And this is another driver of why we think diversification of funding is 1 key requirement.
Yes. And then going back to your last question, referring to Aareon growth. So I would like to highlight 3 topics which are always pretty much important to me when I take a look at Aareon's growth development. So we are targeting very ambitious targets for the forthcoming years. And so when I take a look and summarize whether this was predominantly successful year or not, from my first look, always refers to the progress in terms of market position and market share. Therefore, in our presentation, Page 16 is very important because that shows you that we really made good progress in -- with this target.
We're now #1 or #2 in our European markets, and that's the situation for our growth activities in the next years. And secondly, of course, our target to sell more digital solution products, developed and innovated by Aareon, into our ERP clients, and to really generate synergies between the ERP systems and the new Digital Solutions products. And that's also making good progress and made good progress within the first half of this year.
And my third point is then, of course, how can we increase the share of recurring revenues, and that refers to the strategy that we're trying to convince more and more clients in new business and, of course, also within M&A activities, but also within our existing client base to switch from an on-premise system. That means that these systems basically run within the systems of our clients to a cloud-based system, which is provided by Aareon. And that leads then to shift generally from license to subscription fees. And that's also important, and we reported also good progress on that side. So therefore, we saw a good development even though we are still targeting very ambitious objectives. But I guess, Aareon is on a good path to reach an ongoing growth within the existing business. And of course, we're trying to add future businesses as well via M&A. This is always a part of our target. I hope that answers your question, Tobias.
The next question is from the line of [ Andreas Kramer ] with W&W Asset Management.
Yes. I have one question regarding the recent green issue, the senior preferred bond by mid of July. It was very priced -- it was priced very attractively for investors. What was the exact reason for the issue at that time? Was it only the funding plan? Or are there other reasons? Because market environment was rather poor at this time, and there were no hardly -- no other issues at that time. And what were these funds used for?
Yes. Thank you, Andreas, for your question. You're right. We paid a 300 bps, including new issuance premium. And in hindsight, given that since then, the markets have developed quite favorably. This was maybe a little bit more than what we have paid now. But obviously, it was the last window before the summer break. I think we all agree that after that, issuance would not have been possible. So why did we decide to print them we are a frequent issuer. So we are at the market on a regular basis. That means sometimes you catch very good spreads, sometimes you pay a little bit more.
This was definitely when we paid a little bit more. But it was finally decision to go before summer break or after summer break. And as you say, we were the only bank that went to the market or one of the very few at that time. On the other hand, we are seeing that many are lining up just to tap the market right after the summer break. So it may become a little bit crowded. And this is what we said there is a lot of geopolitical uncertainty in the market, currently. We would not like to predict how this develops during summer break. And as said, many want to -- issuance to issue then. And therefore, we thought it was a good idea to do that before and thereby basically complete our funding plan for the next quarters. So these were our thoughts.
And the money was used for what exactly, for some of these projects?
No. To really -- yes, of course. Yes, it was issued out of our green covered pool, asset pool, as Jochen just explained. This has even increased from 17% to 21%. So here, we have still a lot of potential. It was only our second issuance. Currently, we have EUR 1.35 billion outstanding in green instruments, 2 times, EUR 500 million unsecured benchmark, and European commercial paper of EUR 350 million. So it was just used to fund our growth. As you can see here, we are very well on track. We are even above our original target of EUR 31 billion for the end of this year. Now in June 2022, we can be very selective. There is a lot of good business around, and this is -- of course, how we fund it, obviously, as you know, yes, unsecured is only a minor part of our funding mix. We are basically funding with our deposits and by issuing funds.
[Operator Instructions] The next question is from the line of [ Theimo Dums ] with DZ Bank.
I have 3 questions as well, please. So starting with the, let's say, volatile revenue items, could you give some color on the derecognition and fair value hedge results? I know that this is obviously quite volatile, but just what we should think about that also looking forward in terms of increased volatility. That would be question number one. Then on your new business, could you give some color on the margin expansion compared with the previous quarter, and also with the slowdown in volume here? And could you also elaborate on your change NII guidance? I mean it looks a bit conservative here also with the new business targets, given that you basically concluded already in H1 with the previous new business target. So this would be question number two. And then last question is a little kind of a follow-up to Tobias' question on the -- on your market observation. Could you observe any change in behavior from your clients? Are they maybe more hesitant in light of the changed macro picture, and also the increased recession for years starting basically or intensified, let's say, 2 months ago? And is there a difference among the different investor types?
Yes. [ Theimo ], thank you very much for your questions. Regarding the more volatile components, the recognition income and fair value and hedge results. Yes, the recognition income was above average in the second quarter with EUR 13 million. Here, on top of the ordinary prepayment contribution, which was in line and which I think will also not change going forward from the level that we have with the given volatility. We had an extraordinary contribution from, let's say, reshuffling our treasury portfolio. We are not talking about big amounts, around EUR 400 million, where we sold some sub severance because here the spread widening was, let's say, below market average, and we brought into some covered bonds and thereby realized some EUR 8 million, I think it was additional contribution here from the sale of this EUR 400 million. So nothing that should be repeated. If you're looking ahead. In fair value hedge result, also with EUR 9 million higher contribution. Here, we have seen some volatility between the tenure rates and the risk-free rates, which led to a positive one-off. We directly hedged that volatility in the second quarter. In the past, they have moved very much in parallel. So this was definitely driven by the geopolitical situation. But it's now fully hedged, and therefore, you should not expect some further volatility going ahead.
Yes. [ Theimo], to your second and third question, Yes, you see we reported a new business margin of 227 basis points and -- in the first half. That is roughly 20, 22 basis points above our own planning numbers. And therefore, we regard this as a clear success. And this in connection with still conservative LTV levels of 56% in Q2. And -- yes, so what we see is -- obviously, what we saw is obviously -- and that was reported already with the Q1 figures that we had a very strong first quarter in terms of new business.
And we always said, okay, this is a good starting point for us to be a bit more selective in the next quarters. So our guidance for new business is still between EUR 7 billion and EUR 8 billion this year. And you see the number which we generated new business in the second quarter, EUR 1.9 billion. That shows you we've been a bit more selective. And we have a very -- pretty much good, filled pipeline in place. And therefore, we are optimistic to increase our net interest income over the next couple of quarters as well.
However, referring to your question about the clients. I guess, clients are also a bit more picky when it comes to new investments, but they are still pretty active. And after 1 or 2 years in the pandemic, we basically saw no real repricing of assets during the last 1 or 2 years. The question is now, will that going to happen in the course of a recession or increasing interest rates. This is something which also drives the decisions of our clients. We are in close discussions with them. And so all in all, I would say clients, and we are both a bit more on the conservative side when it comes to investments and refinancing of investments. And -- but that is a natural development in times like lease.
[Operator Instructions] The last question is from the line of Philipp Häßler with Pareto Securities.
Yes. Philipp Häßler from Pareto. Luckily, I have only one question. So I can do it easily. I wanted to come back to the net interest income in the second half. Maybe you could shed some light on your expectation because there are different factors like the higher interest rates, TLTRO, the floor caps. Maybe you could give us some idea maybe what the impact of those was in Q2, and what you expect for the second half.
Yes. For the second half, we basically expect a stable development. I think we have seen a lot of the upside from increasing the portfolio and the margin in the first half. So I would currently expect a stable development, basically, on that level.
In the interest of time, we have to finish the Q&A session here, and I hand back to Jochen Klosges for closing comments.
Yes. Thank you, everybody, for joining this morning, a bit earlier than usual. And if you have further questions, I guess, Jurgen, you're available with your colleagues and your team to answer further questions. And yes, thanks for your attention, and see you as soon as possible. Thank you very much. Bye-bye.
Thank you. Bye-bye.