© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the publication of quarterly statement for the first quarter 2023 of GRENKE AG. [Operator Instructions]. I would now like to turn the conference over to Ms. Anke Linnartz. Please go ahead, madam.
Ladies and gentlemen, welcome to our Q1 '23 results call with the company webcast. We are very pleased that you take the time to participate in our call. My name is Anke Linnartz, from Head of IR. And with me today is Dr. Sebastian Hirsch, our CEO and CFO. We will start with the presentation, and we'll have time for Q&A right afterwards. So let's get started. Sebastian, the floor is yours.
Thank you, Anke, and a warm welcome, ladies and gentlemen. Thanks for joining us today. So I will start with the macroeconomics because the macroeconomic level, the beginning of 2023, continue to be challenging. Inflation in our market remains high and interest rates keep increasing steadily. ECB just recently announced further increase of key interest rate now to 3.75% in May 2023, but the interest rate policy and above all the speed of interest rate adjustments is different in Europe. That results in volatile currency rates. Further, the financial sector was under pressure, driven by the developments in the U.S.A. and Switzerland. With uncertainty remaining in the industry. In the leasing business, market participants are increasingly optimistic. The ifo business climate index for leasing industry rose slightly again in April 23, while adjusting the current market situation rather pessimistically, expectations for growth have increased significantly in the sector. The current macroeconomic environment also puts pressure on small, medium enterprise companies, and that are our target customers as you are aware of. The liquidity becomes increasingly expensive while prices for investments are rising, too. Still the need for investments is unbroken that we see also in our new business. As financing partner of small medium enterprises, our servers are more crucial than ever. We provide liquidity saving solutions for immediate investments. Our importance in this field is reflected in the continuous high demand and new business growth we experienced in the first month of that year. A key to our high demand is the focus on our customers' needs. Industry introducting green economy objects such as eBikes has proven highly successful over the last couple of years and also in the first quarter of 2023. And we continue to grow in this field, expanding our product portfolio and enabling our customers to become more sustainable. Ladies and gentlemen, we had a successful start into 2023. As I had pointed out at the presentation of our annual report in March, we want to continue growth in our leasing new business. We would like to increase CM2 margin and become a more efficient equity ratio. And today, I can say that we have made great steps towards to these goals. Not only have we grown our leasing new business by over 22% compared to Q1 last year. We have also achieved this at a CM2 level with 16.7%, which is very great. And this underlines our ability on rising interest rates. So we can parse through that rising interest rates with a little delay, as we mentioned, in the last year and also with the beginning of that year, while growing our portfolio and that in a challenging environment. One thing I would also like to point out is a very positive development of our operating income because that operating income in line with our CM2 on the new business, so nearly the same thing. The growth of the last quarters in new business, the volume growth on the one hand and the right level of CM2 means the right balance at the end of the day between interest expense on the one hand, which are rising and interest income on the other hand, and of course, the risk portfolio means the risk measurement of our portfolio, which is included in the operating income. And now with our digital excellence program, we have laid the foundation to make our processes more efficient across the globe, across the world with our leasing business, and which will lead in positive effects also on the long run in our P&L, as mentioned at the beginning of the year. And furthermore, another milestone was the acquisition of the shares of the Australian franchise companies, which we consider a strong move. Because Australia is one of our new core markets -- will be one of our core markets in the future with a huge potential of small, medium enterprises, a huge potential for further great and set great potential we would like to cover on the long term and the midterm run, just like we see it for the U.S. and also the Canadian market. And despite that, I would like to point out that just in May, we decided that we will stop new leasing business in Turkey since the company has not been able to operate profitably on the last years, and that's why we decided that. And furthermore, the Turkish lira is a very heavy impact in currencies, the fluctuations of volatility there is, over the last years, very high, and that has also affected on the group's accounts. And that's why we decided to stop new business there, and we'll decide in the future how we would like to go forward with the existing portfolio there. From the overall numbers, the Turkish portfolio is very small and not that relevant for the group. And lastly, we are delighted to report that we made a strategic investment with the acquisition of roughly 25% of the shares of Miete [indiscernible] fancy. And Miete [indiscernible] fancy is a perfect fit for us because it offers enormous potential for our clients and also for us for GRENKE. With Miete [ fience fancy ] and its innovative software technology, we will be able to offer Plug'n'Lease in a perfect way. And this Plug'n'Lease solutions for our resellers and our customers, we strengthen our sales infrastructure internationally. Ladies and gentlemen, you see here our strong growth performance in new business over the last 6 quarters, double-digit growth, 6 quarters again, and that is a base for our portfolio. So we achieved a strong growth over the last quarters with our action we took across the globe, across regions. It was important to achieve that. And at the end of the day, that will mean that we will lead in our guidance for new business for that year between EUR 2.6 billion to EUR 2.8 billion. And then we are back on the level of 2019. So on the pre-COVID level. And after that, we would like to go for further growth across this EUR 3 billion new business. And the absolute volume is the one part of the game. And the second part, as mentioned before, is CM2. So let's take a look at the interest environment and our CM2 development. You remember this chart, we've shown that also in the last quarter or for the years and presentation, and that is a very important for us. The blue line that is the interest rate environment, the interest rate development. And here, we've shown not the ECB rate, that is a 2 years interest rate swap for 2 years euro bonds. And that is quite important because our duration is roughly 2 years, and that is the most important interest rate reflecting to the portfolio of GRENKE. And we see the rising interest rates since '21 and now with 3.4% -- 3.4% Q4 '22 and '23, it's roughly stable. And much more important is in line to that the development of our contribution margin to part of our contribution margin two is the contribution margin one, and that reflects our net interest margin on an overall perspective. And with 16.7% in Q1, we are back on a level we would like to achieve roughly 17%. That's our long-term goal. Also for that year, we would like to be in the area of 17%. And after the 15.5% in Q4, it's a great move. On the one hand, our sales guys did a great job that we can show now 16.7%, which is a very healthy CM2 margin for our portfolio. And as mentioned before, we see that also in our P&L.
That means, on the one hand, we are able to grow. We are able to pass things through in the CM1 and CM2 higher interest rates. And what that means for the long-term run is that our book will grow with our new business expectations that shown here, may you remember that chart, the line divides the bars in two parts, the part down the line with more or less blue bars, that is our existing portfolio that locked in per end of '22. The second line, that is the part of the portfolio we locked in, in 2023 and more or less green bars, that is a new business portfolio, we would like to achieve over the next couple of years, over the next 5 years. And quite important, with that portfolio, we would like to achieve with that growth, we would like to cover -- CM2 means a contribution margin too of roughly EUR 3.2 billion. And that correspondence to our operating income at the end of the day, and that is a huge number. So let's go to the financials, and let's look back in Q1 '23, What are the main impacts and what are the main drivers for our P&L. The P&L is shown here on that slight -- slide from the logic approach, how is our P&L built and working. And at first, we see a very good development in operating income that we pointed out also today morning in our press release, I said that before in the first pages, the 9.1% in operating income plus compared to the last year is very important for us, and that reflects several things.
On the one hand, the net interest income. Here, we have including interest income, on the one hand, means the earnings from our lessees and the interest expenses on the other hand, too. And of course, the interest expenses rose compared to last year with roughly EUR 24 million. We have now nearly the level of Q4. In the last year, it was roughly EUR 13.5 million, and because of the higher interest rates on the one hand and also because of our higher volume, that number is higher. We have also to take into account the settlement of claims and risk provisioning because we're always looking when we go to making new business is our condition, is our leasing income means our interest income in line with our risk premium we can achieve on the market. So the overall operating income show us a very good development. And also looking to the cost-income ratio, we see here is very good because income ratio means at the end of it, we're taking the cost that's aligned with EUR 72 million and taking the income, but the income not includes the risk provisioning, as we mentioned, and there, we achieved a cost/income ratio compared to Q4 '22, which is slightly lower. And that is a very good information because personnel costs are a bit less than in Q4 '22, more than in Q1 2022. And also the cost for sales and administration are slightly stable. The rising costs here, the main impact compared to, say, Q1 2022 is because of the rise in staff costs, higher staff cost because may you remember, we adjusted our remuneration system last year on a more modern model for our employees worldwide. And in August last year, we paid an extra for the inflation. And when we compare now Q1 '22 to Q1 '23, of course, this impact is also part of those figures and of the, let's say, difference between '22 and '23. Over the year, that will be lower because in Q3 and Q4, that impact was also part of the P&L in the last year. And I would like to outline two extraordinary impacts, I'm sure you wrap that in the morning and that is a bit -- the blue bars here, you can see on the right-hand side, the 213% and the 343%, huge numbers in terms of deviation, and I would like to point out the impacts. At first, we have to deal with a high fluctuation in currencies, especially in Q1 and per end of Q1. And the main driver of currencies was the Turkish lira on the one hand, Norway and also the Polish Zloty on the other hand. And what happened here is we have to evaluate our leasing receivables per end of March, as always, so at the last day of the quarter of the year, you have to evaluate that. And there, you take the exchange rate of the day per end of March. And this evaluation means the difference in the currencies is directly linked to the equities. It's not part of the P&L because of the consolidation. But we are going to hedge our portfolios. We are going to hedge our currency portfolios. And so we have also to deal with [ derivates ], quite easy forward rates for that currencies and the valuation of that forward rates you see in the line other operating costs or other operating income. It depends on the direction of movements, on an economic view, it's a matched hedge. So there's no economic mismatch. But on the valuations view during the term of the hedge, it could be that you have a different exchange rate for the leasing receivables, the exchange rate per end of March, and a market fare valuation for your [ derivates ] for your forward per end of March. And that's linked to that, what I mentioned at the beginning, that the interest rates are different, that interest rate policy of the central banks are different. And also the expectation of interest rates for the future are different from country to country. And the second impact is in the other financial results, so you will see a negative impact of roughly EUR 1.6 million, and that is related to an interest rate hedge in our ABCP funding, and it's also not part of our hedge accounting at the moment. We talked about that last year. There, the impact was positive. We had a positive impact of roughly EUR 4 million in Q1 last year because of the moving interest rates across the year, set positive market value build up. And now that market value will go down because the hedge were realized. And then you have to go down with your market value, and you will see the difference in that line. So our extraordinary impact and especially the valuation of currency is quite extraordinary. And we -- from today's perspective, kind of say, how the valuation of currencies, of interest rates will go forward that would be not serious. But we are not expect that, that will move forward because the development in interest rate changes and central bank behavior was specific in the first quarter '23. Overall, it results in a net income of EUR 15.9 million and take into account the operating income development, the cost development, we are very satisfied with that result. To make it a bit more clear what the development of operating business is what is actually we can too, what is the result of that we did we would like to show now 2 slides. The first one is this, on the one hand, because of the volume growth, you see the growth in leasing receivables. It's quite important for us for the substance for our embedded value, this leasing book is based for interest income. And this leasing book is rising over the last 5 quarters because of the very good new business development. And also the interest income is rising over the last quarters that we've shown here. And there is important, the volume on the one hand and moving in interest rates and conditions at the end of the day. And that should move over the year over the next year quarter-by-quarter because we are steadily growing. And this slide is also important there we look to cost and a wider range, not only cost/income ratio reflected, we look to costs, including risk and funding. So let's move a bit more in detail to -- I would like to start with cost of funding that is a green line with a cycle, may you see that green line is rising. For sure, we talked about because of the higher volume on the one hand and because of higher funding costs of the other hand -- on the other hand, it is rising. And we expect that this will go forward because interest rates are moving and volume is moving. So you should expect that we will see rising absolute numbers in interest expense, but also the absolute numbers of interest income will grow because of volume growth and very good margin development. The second one, let's move to settlement of claims and risk provisioning and that's the green line. And there you see, of course, a move in from Q4 to Q1 '22 -- '21 to '22. And the set is very stable. Our payment behavior or the payment behavior of our clients is very stable since quarters. We are nearly below the pre-COVID level in terms of reminder -- ratios in terms of reminder processing. So the payment behavior is quite stable. And we have a growing portfolio, but our risk provisioning is stable in the Q1 '23, a bit low set results in the loss rate of 1.2%. And we expect that, that will move slightly forward on a stable way. And last but not least, the two important things for costs and also relevant for the cost/income ratio is our staff cost on the one hand and selling and administration costs or expenses on the other hand. And there, we can also see, starting with the staff cost, as explained before, is a new remuneration system in the last year results on that curve. Now it's pretty stable compared to the last years or the last quarter level means Q4 2022. And we expect to go forward with that, of course, for growing, for the things we would like to achieve in the future, we will need new staff, and you will see a rising number over the next quarters, but not in that range in that growth rate as it was in the last year.
And in terms of administration and selling costs, you see from a trend perspective, it's a bit lower, and that effect is maybe because there are no further running cost for the extra audit for managing the extra audit at the beginning of last year, may you remember, there, we had some extra costs, and now we are moving in a more or less stable level. So both of that are in a very good development and our operating costs are under control. I mentioned that in terms of risk provisioning in terms of cost of risk, the payment behavior of our clients is very stable and that gave and that gives us confidence for the future in terms of the loss rate in terms of risk provisioning for the several stages under IFRS 9. And we've shown here the stages under IFRS. You can see that also in the numbers there is no surprise. It's very stable and also forward-looking. And we expect, and we stick to our guidance that we expect a maximum 1.5% loss rate from today's perspective, it will be more a bit lower, so below 1.5%.
Our cash flow statement, we point out that chart again because it's a bit different view. Overall, the cash flow is -- was very strong in Q1. We did some funding, especially GRENKE Bank with our deposit business, very strong. The capital market funding was and is not that easy, and that's why we are very happy to have GRENKE Bank in our portfolio with a deposit business. Also, the payments by leases are very stable, roughly EUR 600 million, that's the income cash flow from our existing portfolio. And together with a stable payment behavior that brings us a good inflow for new business on the one hand and also for the repayments of our refinancing because we are matched funded. So from a cash flow perspective, a very good quarter. And I mentioned the funding, especially GRENKE Bank here, the green portion -- sorry, the gray portion, very important with roughly 22% of our balance sheet. The deposit business developed very well. But also the other boxes are important, stable and healthy equity ratio, a bit lower as per end of the year, roughly 20% because of our growth as expected. ABCP funding is running very well, especially in some bigger markets in Germany, France, where we implemented that funding without maturity transformation, without currency, currency transformation also plays in U.K. or in Brazil, for example. And as you mentioned, always one of the best ways to fund our business, but we need a minimum size of the portfolio to go for that. And the senior unsecured market, the bond market, on the one hand and also some smaller things, RCFs, promissory notes, and there are some credit lines not in use that gives us confidence and coverage to going forward with our growth also in times like this when the capital market is not that open as we would like to have it. And as I mentioned before, over the last couple of months, the capital market was not easy, not only for GRENKE, for many smaller issuers, and that's why GRENKE Bank is important, our ABCP funding is important and our stable relationships to several banks we have.
Yes, some words to Miete [ fience fancy ]. That is a platform for renting business, very close and from an international thinking to leasing. And with that platform, customers can quite easy go to -- to going for a rental for whatever equipment you would like to have. And we would like to implement that, that makes leasing, that makes renting as easy as online shopping for private clients. We would not like to do that for private clients. We would like to do that for small medium enterprises and there we would implement like a button in our dealer shops, so in the web shop whenever a dealer will have some, then you can go directly for this. It's a strategic investment, 25% we took and we have the opportunity over the next years to take over the whole company if it works. And if we would like to do that, the most important thing for us is the technical solution, the software solution. That is the interesting part of that, and that's why we decided to go for that requirement. It's not in terms of sales or getting a sales partner, it's a technical solution to being able to implement that into dealer shops that was very interesting for us and important.
And so we decided to take the shares to buy that solution and not build that solution by our own. And now we come to the guidance for that year '23 and also the outlook of '24. As I mentioned before, we are well on track in terms of operating business. The EUR 2.6 billion to EUR 2.8 billion is our goal to achieve that in new business and numbers and figures have shown us that we are well on track on that. And in '24, we would like to cover more than EUR 3 billion in new business and then the pre-COVID level is also behind us. So that year and a step on that year to come back on the 2019 level, right, quite important for us. We stick to our guidance in terms of net profit for the group between EUR 80 million and EUR 90 million, as mentioned before. Of course, in Q1, we have an extraordinary impact because of the market environment of the currencies, but we see a strong portfolio. We see a strong operating income that is what we can -- may bring in to compensate this by our own and also the development of the markets go 1x in that direction, 1x in the other direction when we're talking about currency rates. Equity ratio will be stable above our long-term growth, 16%. In terms of the cost-income ratio, we need and we will do that rising in an income because of the growing portfolio of the growing contribution margin on the one hand, and we will stick to having our operating costs under control as shown in Q1. Loss rate, we talked about it's stable in the expectations and the CM2 margin development in Q1 was very good, very healthy. And also there, we stick to our goal. It should be roughly in the area of 17%. And to summarize it and the key takeaways today, we delivered. We are on a strong growth on a strong double-digit growth. So we are on a strong growth path, and we will go forward for that. We constantly expand into new products. It's also quite important now, product object categories to serve our customer needs and to cover the needs of our customers with more medium enterprises with Miete [ fiance fancy ], we speed up our idea, our vision to go for Plug'n'Lease strategy, and we are absolutely on track to meet our targets in '23 and to cover our long-term outlook.
So thank you very much, and now I'm happy and to go for your question.
Yes. Thank you very much for your presentation. This was really interesting and a lot of news, and I'm sure there will be a lot of questions. [Operator Instructions] But here are the first questions. We'll start with Marius Fuhrberg from Warburg Research.
A couple from my side. First one would be, to what extent should we expect the interest income to benefit from bit forwarding of higher interest over the next quarters? Or should I say, should we expect the times of declining net interest in terms to the overall going forward? The second question is regarding your digitalization program, what is your expectation on the cost distribution of the digitalization program over the remaining quarters? And how much of that will become visible in the P&L? And the third one also, the consideration of the program. What makes you confident already, [indiscernible] identify the main drivers of profit growth, especially in the context of your rising cost for the program, but you will be able to achieve your target of EUR 80 million to EUR 90 million net income?
Yes. Thank you, Mr. Fuhrberg, for your question. I would like to start with the first one in terms of what does it mean in the interest environment looking forward in net interest income. On the one hand, from a CM2 perspective, we are, let's say, more or less stable way, also the operating income, shown as that, so for the future, the time will be over that the net interest margin or the net interest income will decline. But we have to take in account, may also for the next quarter that the contribution margin 2 of the last year as part of our portfolio and part of our P&L that year. So the 15.5% in TM2 and also the lower CM1 we saw now in the first quarter and also in the second and the third quarter, that will be part of the P&L. The better contribution margin 2 of new business in Q1 and in Q2 compared to the 15.5%, we cover that or compensate that a bit. So looking forward, you have to take that in account. But with the growth in new business and with a stable cost income -- sorry, contribution margin, we will not expect further declining from a midterm run in net interest income.
And we have also taken into account that interest income is linked to two figures, the interest income and the earnings the part of the CM1 is linked to the interest environment at the cost of funding. But at the end of the day, also to the cost of risk and so to the settlement of claims and risk provisioning. So when we have lower cost of risk, you will also see a bit lower interest income. Otherwise, when you go for more risk, you can earn more risk premium and that is also part of the interest income. The digitalization program for the remaining quarters, we expect for that roughly EUR 10 million to EUR 12 million cost for that. In the first quarter, it was a bit lower because we started that program. It was roughly EUR 2 million. You see that in the IT costs, we separated for IT projects, but also a portion for employees. When we go for new employees, our employees are working on that program is also part of that investment. So it's not only the IT project cost, and we will point that out more over the next quarters, if you are going more in investing in that. We started that in the first quarter, and you can expect roughly EUR 10 million to EUR 12 million for the year, and it will be quite linear for the rest of the year. And the main driver for our growth expectations in terms of profit are to -- main three things. The first one is the impact on currencies was extraordinary in Q1. And of course, it's not serious to say the currency will develop and the one was in the other direction. But again, it was extraordinary. And so we are expecting a not that, that will go forward. May it could be compensated, may not that we will see at the end of the day. So the second most important driver is our business. So our operating business is running. Our operating business is going forward, growing and that was a very good margin that we've shown in Q1 and that will go forward from our today's figures, we see that. And the costs are under control. So we managed our costs quite good in the first quarter, and that means all the costs on the one hand, personnel costs, selling administration costs and last but not least, the cost of risk. And that is a very good development compared to the extraordinary impacts. And so we are confident to achieving our guidance.
The next question is from the line of Roland Pfänder with ODDO BHF. Please go ahead.
Two questions from my side, please. Could you speak a little bit about your funding cost, maybe also starting with GRENKE Bank, your deposit business? Do you see the competition for interest rates coming through and how we direct with this? And in general, how do you see your funding cost developing within the -- and 2 margin? I think that market pricing what you use? But how do you compare it to the funding costs you actually plan for or pipe experiencing?
So the second question maybe on SG&A costs. How directly leased are these costs to your business growth? Because I was surprised in the quarter, it actually went down. And how could -- maybe you could speak a little bit about the sensitivity of this cost item going forward?
Yes. First, in terms of funding costs compared to the competitors and you can see that -- when you go to a platform like [ indiscernible ] or [ Balo ]. You will see the rate of GRENKE Bank, you see the rates of other competitors, also some leasing competitors, some manufacturers which are able to fund via a bank and some funding rate at the moment for deposit is roughly 3.5%. For us, it's quite important to covering here also no maturity transformation. So we would like to go for funding in the 2, 3, 4 years area, may sometimes in the 1 year's area, but we would not like to go for overnight deposits or something like that. And also that interest rates rose across the last months. And that is very stable. The inflow was very stable, and it's managed by pricing. When you are in that ranking under the top 3 or top 5, it depends a bit on the level of security. It means we are in the German deposit fund, deposits in Germany are also covered by the German government. So that is very safe for a deposit line. In some other countries, it's different. But when you are top 3 or top 5, then you will see an inflow and when you are number 6, number 10, then you will see lower inflow. It's the same. And it's also stable over the last couple of months and also after the issues in Switzerland and U.S. the Silicon Valley Bank or with Credit Suisse, there, we did not saw any changes in behaviors of our clients, our existing clients, and there was no change in the behavior of new clients. And funding costs for capital markets, for that capital markets, it's not that easy to point out. Maybe you can look to our yields in the bond, which are listed, the bonds which are listed there is a huge 6% -- 6.5%. We also know when you go for issuance, a bond, then you have to take care for a new issuance premium, and that's very volatile over the last [year], so to say, but you can expect a 6.5% to 7.5% if it's possible necessary to go for that capital markets and our duration means 2 to 5 years. It depends on the market environment. And that is what we priced in, in our contribution margin 1 and 2. That is what we show each day to our sales force to our sales guys and which is at the end of the day, it's a decision maker, if you go for that contract or not. So the current interest environment and interest rates are part of our contribution margin calculation and the mix between deposit business, the mix between senior unsecured, as we've shown in our funding toolbox and also the ABCP programs if accessible for the countries. And last but not least, selling and admin costs. I think that it looked like a very good level at the moment. We have to take in account the extraordinary impacts over the last year But it is linked to new business development, especially the sales cost, you see the extra line going more for sales, making more campaigns going out that you have to take in account. So achieving more traffic in the market to going out for dealers and again, making campaigns and especially the selling costs will also rise that we have also -- so what we saw that also over the last years before 2019 too, and administration costs are more linked to the number of running contracts. And that's -- I mean selling costs, more number of new contracts and the administration costs are more linked to the number of running contracts.
So the next question on our line is from Tobias Lukesch from Kepler Cheuvreux.
Yes. Three questions, if I may. First, on the franchise companies. Could you give us the new leasing business that you generated with the franchise companies in Q1 and connecting also the growth rate that we saw year-on-year. Secondly, a question on cash flow or cash handling. A little bit surprised actually to see cash balances up to EUR 830 million again? I was expecting more to be around the EUR [ 0.5 ] billion space that we saw in the past, and that was also my takeaway basically from the Q4 results call. So maybe you can share with us your thinking around the further increase here of cash balances, Will that quickly normalized? Is that kind of refinancing, how do you handle that? And thirdly, on the Miete24 on that acquisition, what kind of volumes actually did you generate via this platform in the past? And what are your expectations going forward with regards to generating new business volume over that platform?
May I start with the last one, say, Miete24 or [ Rent24 ] whatever the starting point to going live as a platform as our sales channel will be in June. So there was -- in that way, we would like to do that forward. No business generated in the past. Miete24 was like a dealer for us and it was a small portion of new business, so not that relevant. That here is to keeping that idea and the technology as, let's say, a virtual and online digital dealer reseller in our business, and that starting point will be in June 23. And the franchise company's new business, may we can see it a bit in our other regions. So the main portion of the other region or the franchise companies in Canada and Australia that are the main drivers and the companies also U.S. is included. And [ Chile ] is included, and Brazil, we have to point out, but I think that is a very good indicator because Brazil is not so huge.
And so overall, new business of the former franchise companies out of [indiscernible] revolves was EUR 31 million, including Brazil, with a low single-digit new business volumes, the growth was 17.6%. And we expect for the franchise companies a growth pace of 20%, 25%. It depends a bit on the market, and two of them are very important, Australia and Canada because that are franchise companies today with a new business on a year's perspective of more than EUR 10 million. And then -- or now it's the question to go for EUR 50 million and then come closer to the EUR 100 million, but that will take a bit of time and a bit of years. And when you would like to have more details, and we would like to come back to you and talking about.
And the cash flow question, you are absolutely right and quite good question. Just to take an account there that this cash flow is based on last day of March and in middle of April, there was a bond payback of EUR 300 million with more than EUR 300 million, and that was covered by our cash in. On the one hand, that is why on the -- let's say, on the daily view that cash and cash equivalent liquidity looks very high, but it's only a view on a day on the flowing base. It's a bit lower as we expected roughly EUR 200 million to EUR 500 million. And again, there was a huge bond, and we had to pay back in April, and we did. And on the one hand, we have the payment of the lessees on the next day is beginning of April. But because of that, it was, let's say, more or less a bit careful to having a portion for paying back a bond.
Very clear. If I can have one follow-up, if I may on the potential paybacks of bonds. Are there further paybacks you expect or which I do basically this year, and to what extent do you expect to increase the deposits now in this quarter or over the year? -- my understanding again is that here it's still some [leeway] rights to a kind of new normal that you're approaching?
Yes, of course, there is some leeway and we would like to widening that as long as it is for us and for our perspective, a sense for the deposit business, but we would also like to cover to be present in each segment to being present in the senior unsecured, in the bond and capital market as best as we can to being present with our bank relationships, as I pointed out also on the senior unsecured part and going forward for ABCP, ABS programs and also the GRENKE Bank. And when you would like to know about our bond structure, you can see that also on our web page, the next big bond is EUR 300 million in -- it was beginning of October. So it's also linked to our match funding beginning of October, the quality payment for our lessees and our EUR 300 million bond we have to pay back. And then from the big tickets that year is covered.
So the next one is also supposed to be financed or refinanced and by deposits?
It depends on the market, yes. It depends on the environment. Of course, we did some small action on the capital markets, some tabs to bring our smaller ones closer to a benchmark deal. So it depends really on market. We talked about a lot to investors making, as I mentioned, smaller things. public bond at the moment may not possible, but the world can change as always, and we are ready for doing whatever the best solution for GRENKE and for our portfolios. And so the portfolio structure we have today looks stable and may it could be that we shift that EUR 300 million to deposit business. But then it's a question of new business because it's EUR 300 million payback in October is covered by leasing payments of the lessees and the rest is, let's say, a function of liquidity need for new business.
So I have two questions coming via chat. So the first one, I'm going to read to all of us, and it's focused on, again, on Miete [ fience fancy ]. It's about which markets will you focus on with Miete [ fience fancy ] in the near term? And how fast do you believe you can expand your joint business to other GRENKE countries?
So we will start in Germany, that's for sure. And Miete [ fience fancy ] to go to other countries and it's place also in other countries, for example, in Austria. So it's possible to do that fast but we would like to move first in Germany, making the first steps seeing what is successful, what is not successful and then we would like to expand it in Europe. And for us, important, our main markets, of course, I made some smaller markets like Switzerland and Austria because it's possible for the Miete [ fience fancy ], too.
Thank you. And we have another one now regarding GRENKE Bank. And the question is whether there has been an outflow of deposits in the first 5 months of this year, like we have seen this at regional banks in the U.S, and what part of the customer deposits is daily due?
Yes. There was no outflow. There was no extreme behavior of our existing clients. We have to take in account that our deposits are term deposits. There's a small portion, I think less than EUR 100 million is daily deposit from very stable and long-term customers. The main portion of our funding is term deposits. So it's on the one hand, not said easy to go and take the money as client.
And on the other hand, there was also no traffic by phone or something I said that customer, I would like to get my money back. So the things we saw in U.S. was not happened in Germany, I guess, overall and especially not at GRENKE Bank. And as I mentioned before, we were also able to generate new deposit business at that time.
So thank you, and I'll switch back now to another question in our call from Philipp Häßler from Pareto Securities.
I have two questions. Firstly, just a clarification. You were mentioning the one-offs, EUR 1.6 million from the ABCP. Could you perhaps also give us the figure for FX? What's the volume of the one-off was?
And then on the planned acquisition on the remaining franchise companies. If I remember correctly, you wanted to close those during the first half of this year. Maybe you can give us an update whether this is still your target?
Yes. First, the extraordinary impact for ABCP was EUR 1.6 million. To make that clear that has to take into account if the interest rate environment will not change that will go forward because last year, it was roughly EUR 10 million extraordinary positive impact. And you will see that then, again, because that is part of the hedge. You will see lower funding costs on the one hand and the different direction is on the valuation of the [ derivate ] for the interest rate hedge. It's different to the currency hedge. That's different. That was roughly EUR 4 million, the extraordinary impact as I described before. And that's different. That's extraordinary and also from today's perspective, a one-off impact.
And the franchise companies, so that's right, important for us to cover Australia. In Q1, we are now working on the last one, especially on the Canadian business on Chile, and [ Atlanta ] that's the outstanding franchise leasing companies, and we are in progress. We are in finalizing the fairness opinion because that's important as always for us to cover that by fairness opinion. The due diligence is done. The valuation is more or less done. Of course, the interest environment is very dynamic. And from time to time, you have to adjust the valuation and now we are waiting for the last steps, and we are also in dialogue with the investors to moving forward that and to covering that per mid of the year.
Thank you. So I have another question from our chat participants. And it's again regarding our new business growth. And how far we can increase our CM2 margin in order to reflect increased refinancing costs and whether there is sort of a threshold that would keep us away from growing the business?
Yes. At the moment, we see that we can pass through our funding cost. And as I mentioned before, we're taking today's interest environment for today's calculation, and we see that it is working. So we don't see or feel a threshold in terms of funding costs in our business. In terms of how far we can increase CM2, we have to take in account the risk premium because as long as you go to, as you may 18% or whatever percentage of CM2, it's quite important to taking care for the right level between risk -- your risk model and the income you would like to own. And it's a risk premium then right. So the 17% we pointed out last year, and we reflected also that year is a very stable ratio, where we, from our experience, get a good risk premium on the one hand for our risk measurement and we're having a good balance between interest income and interest expense.
So we have no further questions. As far as I can see, but there's another one now on the chat. I'm happy to read that to all of us, and it's about the Canadian franchise company, which was said is very important for GRENKE. When do you expect will the acquisition of the Canadian GRENKE franchise company will be completed by when? I think this has already been answered, but again.
We would like to cover the acquisition per mid of the year. When you're asking after complete acquisition and with all the formal steps to going to Notary and something like that could be per end of the year, but the next step is to having finalized investor's opinion, then we can, from our perspective, deciding the Board and with the Supervisory Board and then we can finalize the negotiation of the SPA is a contract and that we would like to achieve per mid of the year.
Thank you. So if you ask a question, it's the perfect time to do so. Otherwise, if there are no further questions, questions coming up, this will conclude our call. Ladies and gentlemen, thank you very much for joining our call for participating, and have a pleasant day. And please note that our Q2 new business figures will be released on July 5. Thank you very much, and goodbye. You can disconnect now.