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Welcome to our today's earnings call on the occasion of the publication of our Q1 results 2021. My name is Anke Linnartz, and I'm Head of IR at GRENKE. With me today are Antje Leminsky, our CEO; and Sebastian Hirsch, our CFO. Just before we led into things, I would like to let you know that this call is being recorded and will be archived on our website. We will start off with the presentations by Antje Leminsky and Sebastian Hirsch and are going to have a Q&A session right after that. I stop here and I pass the call on to Antje Leminsky.
Thank you very much, Ms. Linnartz, and ladies and gentlemen, thank you very much for joining our call today. As announced, we would now like to provide you with more detail on our business figures for the first quarter 2021. First, the most important news, GRENKE is on track with the first quarter. With the results of first quarter 2021, we have proven once more that we are very profitable despite the huge crisis that we have had to deal with over the past several months. And as a result, we can present very respectable results again in the first quarter of this year. This gives us confidence in our further performance for the rest of the year and especially in the period that will follow the end of the pandemic. So let's take a look at the figures in detail now. At EUR 536 million, the GRENKE Group's new business was slightly below the level in the previous quarter, the fourth quarter of 2020. While we continue to tightly manage our business, as you know, the negative impact of the third wave of the corona pandemic around the turn of the year affected not only the global economy but also, of course, GRENKE. In comparison to the same quarter of the previous year, the Q1 2020, we recorded a greater decline in business of 38.5%. And naturally, this is due to the fact that the first quarter last year, which was largely unaffected by the coronavirus, was a customarily strong quarter at that time. Presently, we are firmly convinced that our new business will develop positively again in the further course of this year. Fortunately, there are signs that the pandemic is subsiding, which is cause for all of us to be confident, including our clients. Let's take a look at the contribution margin, too. Its development reflects our consistent focus on the small ticket business and leasing, and above all, our risk-adjusted management. The PM2 (sic) [ CM2 ] an important key figure of our profitability, as you know, remained stable at 19.5% versus the previous quarter but has increased significantly compared to the first quarter 2020 when the contribution margin was at the level of 18.2%. The net profit in the first 3 months was EUR 14 million. We consider this a success in the view of the circumstances, of course, and particularly in light of the extraordinary expenses that we had to deal with due to the audit and consulting costs. GRENKE's equity ratio of 16.5% in the first quarter was comfortably above our target of at least 16%. And this is also clear evidence for us of our financial strength, which is especially important when we look ahead and we look forward. Against this backdrop, we have decided to propose a dividend of EUR 0.26 per share to the Annual General Meeting. The proposed amount will enable us to take advantage of both business opportunities while at the same time allow our shareholders to participate in GRENKE AG's success. However, you know the final decision on this subject will, of course, be made by our shareholders at our virtual AGM on July 29 this year. As already mentioned, we generated new business in the first quarter of EUR 536 million. And the graph provides you a good illustration of this plateau effect that we have been driving towards alongside with the pandemic for the last 4 quarters. But as I said before, our business development over the past several weeks is giving us confidence that we can expect business to gradually pick up again in the second half of the year. And you may also be familiar with our presentation on the right-hand side of the slide, which is stable leasing accounts for about 2/3 of our new business and therefore continues to be our core segment. On the next slide, let's take a quick look at our new business by segment in the first quarter compared to the same last year. So compared to the, again, strong first quarter of 2020 largely unaffected by the pandemic, our business declined basically in all segments, as you can see here. In the Leasing segment, however, we recorded the largest percentage decline with a minus of 46.3%. And here, a short look at our Leasing business by region. Lots of number on the slide. I think what you should look at is the fact that the order of the top 3 regions changed significantly due to our management and the very different course of the pandemic in the different countries and the different regions. And as a result, as you can see here on the slide, the DACH region turned out to be the strongest region in first quarter of this year, followed by Western and Southern Europe. On our next slide, we have a look at the leasing object categories. You can see on the left-hand side of the chart that the distribution of new business among the various groups of object has not changed significantly. It is constant over a long time now. IT equipment and machinery continue to account for more than 50% of our new business in the first quarter as well. And something that positively stands out is our mean contract value of just under EUR 7,500 versus EUR 9,000 in the same quarter of the previous year. This is also no coincidence that the result of our deliberate enhanced focus on small ticket business and risk diversification in the course of the pandemic. And ladies and gentlemen, I would now like to hand over to our Chief Financial Officer, Sebastian Hirsch, for further comments on our business figures. Then before we take your questions, I will briefly explain where we stand in the -- on the issue of the special audits, and I will also give you a brief outlook on the further course of this year. So Sebastian, please.
Yes. Thanks, Antje, and a warm welcome from my side, too, and thanks for joining our call today. I would like to start with a bit more deep dive in our contribution margin development from quarter-to-quarter Q1 2020 to '21. And what we see here in the blue chart is, as Antje mentioned, that we have a decrease of volume. Also, we see that in our CM1 and CM2 in euro. But the most important information here is that our CM1 margin level is quite stable with roughly 12.7% compared to 12.9%. And especially, the CM2 margin was 19.5%, is above the CM2 margin in Q1 2020. And what's important to underline, as Antje mentioned, the average ticket size was EUR 7,400, the small ticket focus. And our risk focus is the reason for that development. On the next slide, we can see our P&L. You are aware of that chart, and I would like to pass you through our key figures in that P&L. We're starting with a net interest income of EUR 95.1 million, a decrease of 9.2%. And that's quite important to having in our books a strong business of the previous year from the volume perspective but also from the margin perspective and also the strong CM1 margin over the last months. That's why the decrease is only 9.2%. So profit from new business and service business dropped by roughly 19%. Here, the impact of the new business volume is quite higher than in the net interest income. Also, our costs are developing. The personnel costs are quite stable. But the sales, general and administration costs are higher than in the Q1 2020. And the main impact here is an increase in our consulting and audit expenses because of the long-running audits we had also in Q1. And some EUR 11 million in Q1 are for that kind of cost, consulting and audit expenses and that are, therefore, EUR 6.7 million for the special audits, which are running -- or were running during Q1. Overall, that brings us to an operating result of EUR 19.7 million. If we take all that in account as the published figures, we have a cost/income ratio of 51.2%. And when we adjust the cost/income ratio with extraordinary components with EUR 6.7 million extra costs which are not sustainable, then we have achieved a pro forma cost/income ratio of 46% in Q1. And that positions us well on track to realize our cost/income ratio target of below 50% for the full fiscal year 2021. Our risk costs evolved positively because of the stable payment behavior of our customers in the first 5 months of the year 2021. And taking all that in account, we are achieving EUR 40 million, well on track to realize our full year guidance of EUR 50 million to EUR 70 million after tax. And one comment to earnings per shares. That amounts on EUR 0.12. And please be aware and take in account that this amount is net. That means after the full annual coupon for the hybrid or AT1 interest payments that's always due in March, and the interest payment for hybrid is a bit higher than in the last year because the last issuing of hybrid was in 2019, and that's now the first full year of interest paying at that quarter, means at end of March in 2021. On the next chart, we see our customary drill down on absolute risk provisions by stage of impairment. And important is that figures are showing us the balance sheet perspective, and that's a P&L perspective, means that is a risk provision on the balance sheet. But first, I would like to underline that the loss rate of 2.0% is absolutely in line with our expectation and our target. The largest euro amount of provisioning continues in Stage 3 for running leasing receivables on the one hand and for the bad debts on the other hand. And the main driver is, as it was in the last year, the Italian business. And we have increased our provisioning coverage ratio to 62.1% at all. The German business is, as always, quite stable also from the risk provisioning perspective. And an additional information, the volume of deferrals decreased by roughly 50% compared to the end of 2020. So we can turn to the next slide, which bring us to the cash flow. The cash flow statement of Q1 2021, also stable as it was in the past. And it's, again, a good demonstration, how well our maturity-based funding plays out, especially during challenging times. The cash flow from existing business was roughly EUR 321 million, very strong and especially driven by a high number of repayments from lessees, the lessees' payments and the lower number of repayments of refinancing. And that brought us a room to fund our new business with our own cash flow and a smaller portion to adding a deposit business of roughly EUR 100 million and taking some smaller actions in other refinancing activities. All in all, we ended the quarter with a positive cash flow from operating activities of EUR 132.6 million. And the next slide shows us our funding mix. That's quite important for our cash flows, for our cash flow statement in combination with our leasing receivables. And you are aware of -- we are looking to do a funding offer at that time. That's important and bring us a strong cash flow structure we had and we have. And there is not a significant change compared to the end of 2020. The most important pillar is the senior unsecured funding, but it's also a diverse pillar with more than 50% of our funding and also the GRENKE Bank, quite important with 1/3 of our financial debt in the group. And we are looking forward to managing our liquidity with ongoing new business, with rising new business per end of the year, the second half of the year with our diverse funding book. And now I would like to hand over back to Antje.
Thank you, Sebastian. Ladies and gentlemen, following the numerous accusations, last autumn, we promised you a complete clarification. We can tell you the complexity of the issues caused this to take longer than we expected initially. However, from the very start, it was clear to us, to the Board of Directors as well as to the Supervisory Board that the thoroughness must take precedence over speed. It was a matter of course for us to actively support the auditors as well to the best of our ability in all investigations, investigations that often reach back far into the past. And it was important to us personally to quickly identify weaknesses and swiftly initiate the appropriate measures to become an even better company after this. And we can't repeat it often enough to -- our tremendous thanks to our many employees at GRENKE AG who accompanied us in this process very often day and night for over a total of 8 months now. Moreover, we have made enormous progress. So we closed the difficult 2020 financial year with a significant profit. We received an unqualified audit opinion on the annual financial statements after the extremely intensive audit by KPMG. And as promised, we also promptly published our 2020 Annual Report just recently. We are also pleased to report that further progress has been made in the audits conducted by Mazars on behalf of BaFin. All audit procedures within the scope of the special audit in accordance with Section 44 of German Banking Act have been complete now. And GRENKE has now received the corresponding reports from BaFin. We are now, again, reviewing and completing our improvement measures on this basis in close consultation with BaFin. And BaFin, of course, will decide on the further course of action. And ladies and gentlemen, in this context, please let me remind you once again that we, as GRENKE, also commissioned the auditing firm Warth & Klein Grant Thornton last autumn to examine our franchise business in all aspects. And as you know, we will soon be taking over the remaining 13 franchise companies, and we will integrate them into the consolidated group. We plan to complete this incidentally with the support of external advisers both in the process of evaluating the purchase prices and also in conducting the negotiations. We told you before, we want to do this by 2022, and we will naturally keep you informed on the progress of this. So as you can see, we have reached a very important milestone now, and we are looking ahead with tremendous confidence. Even in the difficult time of the pandemic, GRENKE is proving to be a stable company with a business model that is intact in every respect and with the best prospects for the future. With close to 1 million current leases now, we are very well positioned in our markets. We enjoy the trust of our customers, and our strategic focus on the small ticket business is paying off. However, as already announced earlier, 2021 will be a year of transition for GRENKE. The lower level of new business will be reflected in the operating income still for the full year '21. And as it stands now, we continue to expect a net profit of between EUR 50 million and EUR 60 million. New leasing business will range between EUR 1.7 billion and EUR 2.0 billion, and we expect our equity ratio to be above our target of at least 16%. Ladies and gentlemen, in the past months and here, we have had to fight tremendous headwinds from the various directions, but we have held our ground. And not only that, but we are also now on track. We currently expect the end of the pandemic to usher in a new growth phase for the GRENKE Group. GRENKE is a strong company. That's what we believe in and we are firmly convinced of. So now we are happy to take your questions. Thank you.
So the line should be open now for Marius Fuhrberg from Warburg Research.
Actually, I have a couple of ones. First one, maybe with regards to the special audit, of course. Did the final audit statement of Mazars differ in any significant matter from what was said in February already? And -- or did you also -- did you further receive any new insight compared to the February statement?
Okay. So you want us to take the question step by step, Mr. Fuhrberg, or do you want to...
Yes, I think that's better.
Okay. Okay. So then let me start with -- yes, that's fine. It's fully okay. So let me start with the special audits. As I said, we've just received the reports a few days ago. So it will definitely take us some more time to really review everything in detail. Of course, it's a lot more detailed than the preliminary report that we received in February. This will take us time. We will check -- double check all those information with the measures that we've already started to define. And then, of course, in the first next step, we will align with BaFin, and after that, of course, let you know about the results that we see from the report.
Okay. And do you plan to also publish new insight or new -- more details on the final outcome? Or just the actions you will take to meet the requirement of BaFin?
Actually, we haven't decided yet on the format of further reporting. This is something we will have to decide. But for the moment, I can tell you, our focus is on reviewing the details and really making sure that we understand every subject, again, talk with BaFin and then decide on the format of report -- or further report. But of course, the results in certain format will be made transparent.
Okay. That's clear. And another one maybe on the enforcement review that's currently ongoing. Can you provide us any interim statement that can be met with this regard? Or any further information you can give us here?
Sebastian?
Yes, I can. So we have everything -- we are aware of publishing our financial report for the fiscal year 2020 with some changes. And from the time line, we think that we will receive as it was for the special audit on the Bank Act in Germany about the same way that we will receive a report. We did not yet. And then we will see. But we don't estimate some new things in that report. So we think that we are aware of all the issues, all the points, and we reflected that in our balance sheet for 2020.
Okay. Then the line shall be open now for Tobias Lukesch, please.
Yes. I would go one by one, if I may. I would start with the new business. In your annual report, you made the statement that you expect in the medium term to be around the new leasing business of 2019, i.e., around the EUR 2.85 billion. I was just wondering, is that something we should expect already for '22? Or is it rather a '23 number you have in mind?
Yes. It's not that easy from today's point of view to answer that in detail, which is, let's say, the quarter where we can be back on the level of 2019. We would like to stay on track. We are on track, and we'd like to come back to that level, that's for sure. And so we see a better new business and volume for the rest of the year, for the second half of the year. And then it's quite important how the second -- the third quarter and the fourth quarter 2021 will be and what does it mean for 2022. So it could be that we can see a 2019 level in 2022, in the second half of 2022. It could also be that it is only in the first quarter '23. It's part of the future. Important is in that year that we fulfill our guidance for that year, come back with a stronger new business in the second half of the year. And then we are on a good track to come back to that level.
Okay. If I take the EUR 50 million to EUR 70 million net profit guidance, and based on the Q1 results, you mentioned EUR 6.7 million in one-off costs due to the consulting and audit fees and also the hybrids that impacted the quarter, if I just like roughly add back, let's say, EUR 10 million, right, on that -- or let's make it to EUR 25 million net profit without the hybrid and the one-off costs, which might be a kind of run rate for the next quarters, I get to EUR 75 million. And adding this, I get to close to EUR 90 million. I was just wondering the midpoint of EUR 60 million and the difference of EUR 30 million, how is that split between NII and potentially, it's like some cost effect that might come over time? Just to get an understanding because my reading is that risk cost-wise, I think you will stay more or less at the level of receivables where you are, that the loss ratio of 2% you achieved right now will not change risk cost thematically over the quarters, at least in your forecast. So how is that EUR 30 million basically split between NII and cost?
Yes. I will take the question. And at first, important is the EUR 40 million is before hybrid we published today. That is our net profit but before hybrid. And you're right, when we split out the EUR 6.7 million, we are close to the previous year Q1. But it's a pretty challenging time. Also the Q2, there are the audits we are running. We are now in the final processing. We will also have in Q2 some extraordinary costs for that in audits and so on that will stop hopefully in Q3 and Q4. Then we will not see that. And again, it's a pretty challenging time in terms of COVID-19, in terms of the long-run audits. And I think after the half year result, that's the right time to see where we are and what is maybe an adjustment in guidance for the time being. And for today, we are staying on that guidance, EUR 50 million to EUR 70 million. And it's quite fair to stay on that with that result from the quarter 1.
Okay. On Stage 1, 2, 3 exposures and the impairments, you booked basically also deferred exposures you have. If I understood you correctly, you said that the coverage ratio of Stage 3 is up to 62.1% from 57.3%, but it implies a kind of 5% decrease of Stage 3 exposure to EUR 640 million roughly. Could you give us a split from Stage 1 to Stage 3, please? And maybe highlight Italy, which you pointed out basically last time as the main driver. And if you could also give us the number of contracts and the exposure of [ current depos ], that would be much appreciated.
Yes. So sorry, I can't point out the detailed numbers of contracts or exposure. We can do that and we will do that for the half year's result. Again, you can see that also for the annual figures, there was not a significant change in the portfolio. The new business is quite stable and the book is quite stable. So you can work with the tables we announced some weeks ago. And in very detailed, the ratios and the relations there are quite stable also for the first quarter 2021. And Italy as the main driver, that's right, means the main driver in terms of volume and risk provisioning as it was on the last year.
Okay. The final one, if I may, on funding. In the last call, you mentioned that you did not tap the capital market basically year-to-date. Has that changed since we talked last time, i.e., in May? Have there been any bond placements, any promissory notes? So far, I think you just have redeemed some of the instruments. That has to be no issuance.
No, there was no new issuance, not significantly. Some smaller actions and asset-based funding and so on but not significantly. We had a strong liquidity situation, and because of the new business volume, there was not a need to take action there. And looking forward, it depends. And as always, it's a function of new business, need of cash. We managed that well over the last months and quarters. And if it's necessary, then we will go back to the capital market and -- but not in May -- or we did not in May or April.
[Operator Instructions] And the next question comes from Johannes Thormann, HSBC.
Three questions from my side, please. First of all, on the new business volumes, a follow-up. You have already seen April and May volumes. And you sound very cautious on the Q2 volumes. Normally, I would expect with the easing of the lockdown in June that the third quarter, which is seasonally always the strongest quarter of the -- strongest month of the quarter, that the second quarter should be better. And can you elaborate a bit on the volumes we should expect for the Q2? Also, like it's a step-up from Q1 or rather flattish or even downward? Secondly, on the profit or loss from disposal, you historically explained that this is linked to new business volumes. Especially, rising new business volumes pile up higher costs. Now we've seen falling new business volumes but still a step up in the loss from disposal. What has been driving this? And last but not least, you indicated that you will consolidate the last franchise subsidiaries in the next quarter, and then we'll pay for it. Can you elaborate which kind of payment you want? Do you pay out of your cash? Do you need to issue shares? Or should that -- what's the planning for this?
Yes. Okay. I will take the questions. But first, talking about new business volume, the development of new business and the volume was quite stable and more driven by the pandemic. It's more comparable to the last Q2. It was not a normal Q2. Hopefully, we will see more or less normal Q3 and Q4, but Q2 was -- April and May were more driven by the pandemic. So it's quite stable compared to Q4, Q1 and Q2 in the last year. You are right, the expectations are better because of the developments, but it's more in thinking and expectations and not really in business behavior. What it means in our business, investments for small/medium enterprises, I think that will need some time. Maybe it could be a better June, but that we have to wait for. We expected for the second half of the year, in the summer and after the summer, that should be better than the first half of the year. And the loss of disposals, that's right. It's a small migration. It's not that big. And as you are aware of, the disposal business is more driven of the volume of the past. And so there was a higher volume, but the change there or the difference there is quite low. And there's no trend in making business, in selling used objects or something like that, it's quite stable. And so we have to see it over the year, but should be more or less stable. And the franchise consolidation is right. We consolidated all the franchisees, and the legal stuff, it's outstanding to take the shares of the franchise companies and pay for the shares. It's right. And it's not finally decided, but we are able to covering the franchise price, the purchase price, with our own cash, with equity we have, that we are aware of, that we are knowing. You have to take in account that the 16% guidance we have by our own, from a balance sheet perspective, is not further a need from a regulatory or rating perspective. So to be in line with the rating perspective or the regulatory perspective, a 15% balance sheet-based equity ratio is quite enough and quite comfortable to cover all the requirements in terms of equity. So our equity is strong enough. Cash and liquidity is strong enough. But maybe there could be some other solutions. The next step is to evaluate the franchise companies, and then we can decide what is the right way to pay.
Then we'd like to move on to Roland Pfander from ODDO BHF, please.
Yes. Two questions from my side. Maybe the first one on the risk appetite going in the second half of the year. You're positive regarding your business growth on the volumes. So either you grow via higher demand or you also change your risk appetite. So is there any planning to increase the conversion rate, for example? So please comment on this aspect.Secondly, product availability of your leasing products. Obviously, in the market out there, there are some semiconductor shortages and other shortages. So do you see yourself impacted by this availability and customers not being able to get the product they would like to have?
Maybe to take your second question first. Indeed, at some point in time, there have been problems with product availability. We all know that we are dependent, especially on the supply chain from Asia as we look at IT and machinery goods. However, we could not see this to a really tremendous extent. And right now, it is not to the extent that we would really see it in the demand -- in the numbers on our side. However, of course, we have to take that into account that at least, to a limited extent, this can happen, that sometimes products are simply not available. In terms of risk appetite, of course, as you can see in the numbers, the average contract volume has dropped, which means that we were focusing on even smaller ticket sizes. We expect that to raise to normal levels in the further course of the year. We would -- therefore, this means that we will also see bigger investments with some clients so that the average ticket size will raise. As it comes to the object categories itself, we don't expect changes as well as with the industries that we are focusing on as we get back to the normal level. You know that over the course of the pandemic, we were a little restrictive to those industries, which were especially dependent on the pandemic. But this, of course, should normalize over time.
Maybe a follow-up. Could you also comment regarding this catch-up regarding the regional bit? So would you be willing to take on more Italian business, for example? So would it be more positive maybe regarding the state help within Europe that might be not that problematic going forward?
I think the mix we have now in countries and the region is quite stable and quite good also looking forward. And when we go forward with further growth in new business, then we have to take the right action, what is the right growth speed for each country, for each region but for the portfolio as well. What we saw in the last year and in the last quarter is that the German business is quite stable as we are aware of. And so it's not the plan to extend tomorrow's Italian business and growing there 30% or 40%, but we would like to cover in profitable growth in each region where we can grow. And also Germany and the DACH region, also France are very important markets for the next years and also for the next steps. So it's not the plan to concentrate only on one region or one country. All the countries are important for us, and we would like to have a diverse portfolio today and also in the future.
Okay. There are no further questions for the moment. [Operator Instructions] And there's another question from Dr. Haessler from Pareto.
Yes. Philipp Haessler from Pareto. I have 2 questions. Firstly, I would like -- whether you comment on the competitive development in the various markets. How are your competitors behaving? Have they -- are there some competitors who have become more aggressive? Have there been any new competitors evolving? How do the banks develop, behave? And then secondly, only a short number question. You were mentioning that you expect special audit costs again for Q2. Maybe you could be a little bit more specific. Would that be on the same level, i.e., EUR 7 million like in Q1? Or would it be lower? Those are my 2 questions.
The cost?
So maybe I'll start with the cost and then we can go forward with our competitive landscape and hand over to Antje. And the cost, yes, it's fair to say that could maybe be close to the Q1 figure, nearly on the same level, as we announced for the last year, roughly EUR 10 million extra cost. And for that year, we expect roughly [ EUR 15 million ] extra cost and then it's quite fair to say nearly on the same level. And then that should be lower in Q3 and Q4. Absolutely, we will not see that kind of cost.
So I think I remember we've talked about the competitive environment on one of the last times we already touched on this. It hasn't really dramatically changed over the course of the past few months. I think what we can see is that our main competitors -- and you know we see banks as well as companies in our core business, so leasing, factoring businesses as well as start-ups, which might only take a chunk of the value change that we are offering as our key competitors. And of course, over the course of the pandemic, all of them have been, to some extent, more restrictive in their business. And depending on the market, the same as in our books, as we can see in our books, they were more or less aggressive and very cautious, especially on certain industries where they were active in. So it didn't really change the picture of competitors overall from our point of view. But honestly, we also had some other focus over the last couple of months. It is not something that we monitor on a minute base. We will definitely -- as we get back to the normal track, definitely look into that again and update our information and might want to give you an update on that next time.
Okay. Now the line should be open for Christoph Blieffert from Commerzbank.
I have 2, please. The first is a follow-up question on your new business. And if I see the figures for Italy, volumes are down some 62% in the first quarter. It would be great if you could elaborate a little bit why is that much down and help us understanding whether it's supply or demand problem.The second question is on asset quality. Your coverage ratio for Stage 3 is up 500 basis points quarter-on-quarter to some 62%. What is the reason for this sharp increase? And what do we expect for the rest of the year?
Yes. At first, the second question, when we look to the increase and compared Q1 to Q1, if I am right, and just to take in account that the deferral program was not in place in Q1 in the last year, that's quite new. And there, you can see that also in the annual figures, there's a management adjustment in place for the deferrals and some deferrals -- or leasing contracts with the deferral also in Stage 1 or Stage 2 that you can see also on our slides we show today and also in the last call, that the deferrals, you can see in all stages. And in Q1 last year, there was not a significant deferral in place per end of March because we started the deferral program with end of March and April was peak of deferrals. I think that's the main driver for that. And the Italian new business, you are right, it dropped down. And it's part of our -- of steering our business, taking in account the risk and also the pandemic, what kind of sectors are linked to the pandemic, which country is more affected by the pandemic. And we had a strong growth over the last years, as I mentioned before, especially in Italy. And that's why we managed the Italian business, especially in that crisis, more careful. So it's not only a demand question but also a demand question because the economy in Italy was harder down than in Germany or other European countries. Tourism is quite important for the Italian economy, not only for hotelier and restaurants, for the whole economy. And that's the main reason, but also we manage the business and still the business, they are quite careful.
Okay. And there's a follow-up question from Tobias Lukesch, Kepler Cheuvreux.
Yes. Quickly touching on the insurance business. I mean this is a profit line which contributed kind of 25% in the past. Now it's even up in the pandemic to close to 1/3, if I'm not mistaken. I was wondering, I mean, going forward, should we expect this line to be as stable and even kind of growing as it was in the past? Or would you expect here potentially also to have, in some cases, a lower profitability to some extent?And then potentially, if I may follow up on this regional question with regards to Italy. In the past, you also mentioned Spain, which grew still a lot a year ago, also the U.K. Have you also changed the business approach more to these countries? Or would you expect these countries to potentially to reemerge faster than it's the case for Italy?
Yes. Maybe we'll start with the second question. I think that's always the question, how the development of the market is, how we can go with our business in line with our contribution margin development, our contribution margin steering, and we would like to achieve a good profitability. And at the end of the day, if that is possible in other regions, other markets, and the markets are big enough, we would like to go sustainable in markets. Then it could be an opportunity. And U.K. and Spain are well developing markets over the last year, so that is an opportunity to grow there but also in other regions and other markets, as I mentioned before. Service business, you have to take into account the service business is driven by new business but more by the existing portfolio because that kind of service business for our GRENKE Protect is driven for each running contract. So there's a number of running contracts or the number of contracts under management. The volume of these assets is a better driver, parameter to go forward with that business. And so we will see a bit lower growth over the next quarters because of the lower new business volume last year and that year. And that means also that a number of running contracts will not increase as high as it was in the past. But it's a ratio to the number of contracts, to the volume under management. We think that, that will be stable and should be stable also for the next years.
So there seem to be no further questions for our call today, which is why this would conclude our call. Thank you very much for joining us today. And if questions bring to mind after the session, please just e-mail to us. And just to remind you, our new business figure will be published on July 2. Have a great day, and best of luck. You may disconnect now. Thank you, and goodbye.
Thank you.
Thank you. Bye-bye.