Gruppo MutuiOnline SpA

MIL:MOL

Earnings Call Transcript 2022-Q1

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the presentation of Gruppo MutuiOnline First Quarter 2022 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Marco Pescarmona, Chairman; Mr. Alessandro Fracassi, CEO; and Mr. Francesco Masciandaro, CFO of Gruppo MutuiOnline. Please go ahead, gentlemen.

[Marco Pescarmona, executive]

Thank you, and welcome, everybody, to our call. And as usual, we will rely on the presentation that is available on our website. We assume that you have it in front of you, and we go to Page 17 of the presentation with the Q1 highlights.

In the first quarter of 2022, revenues are EUR 77.9 million, and that's down 0.5% year-on-year, and the mix of revenues is 44% from the Broking Division and 56% from the BPO Division. The operating income, the EBIT is EUR 16.5 million, which is up 3.1% year-on-year, and that is 64% from the Broking Division and 36% from the BPO Division. But you have to keep in mind that the BPO Division is affected by the effect of PPA amortization. So the actual performance, we think, is more reflected by the EBITDA. The EBITDA, in fact, is EUR 21.4 million in the first quarter of 2022. That's down 2.9% year-on-year, and it comes for 58% from the Broking Division and 42% [indiscernible]. The EBITDA margin is 27.4%, and that compares to 28.1% for the same period of the previous year.

In terms of net income, in Q1 2022, we have EUR 11.6 million, and that's down 11.5% compared to the EUR 13.1 million of Q1 of the previous year. But the difference, if you look at the results of Q1 2021, is from a financial item. It's not from an operational item and not from taxation either.

So this is the overall performance in the quarter, and which, by the way, is, we would say, overall, broadly speaking, in line with the expectations that we state and then also, I think, the expectations of the analysts.

What is important this time is the update on the evolution of the Italian residential mortgage market, also because this has been the main driver of our performance in the last 2 quarters and is likely to be relevant also for the coming couple of quarters. And this is because, as you know, there is an adjustment taking place there in remortgages.

In particular, in terms of recent evolution, we had the contraction of the market in -- also in Q1 2022 on a year-on-year basis. And this is because of a strong decline in remortgages, while purchase mortgages have been growing. And this is, as I said, in line with expectations, and it is also consistent with the previous quarter.

If we look at market data, Assofin, the lenders association, reports declining origination flows in January by 14.9%; in February, by just 0.3%; and in March by 5.4%. And for the entire Q1, the origination flows, the gross flows are down year-on-year overall by 6.4%. And this comes from the drop of 73.1% of remortgages and the growth of purchase mortgages by 9.5%. And this growth of purchase mortgages is coming in part from the growth in the number of contracts, which were up 5.6%, so more mortgages; and for 3.9% comes from the increase in the average amount, which is also something that is -- was very much expected.

If you look at the data from CRIF, the credit bureau, which are basically forward-looking data, you see a picture of a drop of credit report inquiries of 28.2% in January; we didn't publish the figure for February. 25.8% for March and 24.3% still year-on-year for April. So this would point to a contraction of the market.

And I would say based on -- let's say, what we are seeing is these demand figures, especially the CRIF data that are not particularly exciting, but also we know that there is increasing geopolitical and economic uncertainty. This has not have probably a terrible impact, but still, it affects consumers' propensity to do things. We have seen rising interest rates. This is also by itself not such a big factor, but still it is relevant because it makes mortgages a bit more expensive.

And also what is important to mention, which was discussed in the last 1 or 2 weeks in Italian newspapers, is that there are some issues with a segment of the mortgage market in the current interest rate environment. Let me explain.

There is a portion of mortgages. I would say, they are maybe, I don't know, 20% of the market at most. But say, 10% to 20% of the market that are sort of facilitated or subsidized mortgages for young people. Basically, it's a scheme that was introduced a year ago, more or less, to help people below 36 years of age to buy a property. And basically, they can buy a property with lower transaction costs, so it's lower stamp duty and so on. And also they are entitled to a state guarantee on the mortgage that makes it possible to get higher loan-to-value and basically reduces the risk for the lenders.

And so this is an attractive combination of facilitations. And so it's not a surprise that people are using this. Maybe people that would have bought the property anyway are now using this product. The problem is that because this is a product with some state help or guarantee, the state basically put a condition on the cost of this product. And basically, the condition is that the rate charged on these mortgages should not be higher than the average market rates. So the idea is this shouldn't cost more than the average of the market.

The problem is that the way the regulation is written, this is looking at past averages. And for fixed rate products, basically, you know for a mortgage to be eligible for this, its rate should not be above the average of, I think, the previous quarter, something like that. And of course, in a situation in which interest rates are increasing, which is the situation of the first month of 2022, it's -- if your cap is the average market rate of the previous quarter, it's impossible to be profitable for a bank. So almost all the banks have pulled -- temporarily pulled these products from the market. And so people that would qualify for these are potentially waiting, some are taking different products, but many of them are most likely to wait. And there are people working on fixing the regulation because this was not an intended effect, but still it's creating a temporary supply issue, so which shows...

[Alessandro Fracassi, executive]

That even if a government is led by a former central banker regulation on interest rates on mortgage can be not exactly in line, but just as a side comment.

[Marco Pescarmona, executive]

Yes. It's -- I mean it was -- I mean, overall, it's a good setup and so on, but no one had noticed this decision. We hadn't noticed it ourselves either, and we were just -- we just found out when the product started disappearing and also the banks were puzzled, that they couldn't - could no longer do them. And everybody is scrambling to try to get this fixed. Of course, this fixes itself if interest rates are stable or slightly increasing. But today, with a steeper increase in recent weeks, this is an issue. So this is also affecting, let's say, the short-term outlook in a way that was impossible to anticipate even a month ago.

So based on this, we -- I would say our outlook is slightly worsened for the mortgage market. And it's quite likely, the market itself will contract also in Q2 but potentially even in Q3, so it will be, I would say, deeper contraction. Now Q2 will still have an impact from remortgages. And then depending also on how things evolve, but also Q3 could be negative for the market. So this is the thing to keep in mind in general.

In terms of the performance of our divisions, on Page 19, you have the figures of the Broking Division. Broking Division actually had the revenues of EUR 34.3 million, which is up 6.7% year-on-year compared to EUR 31.9 million in the same period of 2021. And this is, I would say, slightly surprising because, of course, we suffer from the decline in the mortgage business, and that's still our biggest business.

What really helped us here was an exceptional performance for energy contracts, and then I'll comment about this later, which was a bit of surprise in terms of its strength. And anyway, both the EBITDA and the EBIT are basically flat year-on-year. EBITDA is at EUR 12.3 million, and EBIT is at EUR 10.5 million. That's flat year-on-year. And of course, what is shrinking is the mortgage business where we have higher margins, and the other businesses that are -- that have nice margins but not as high as mortgages are compensating. And that's why despite growing revenues, you see flat profitability.

In terms of the details of where the performance of the Broking Division comes from, well, first of all, the performance was very much in line with expectations and what we said in the past. And it comes from mortgage broking mostly. Mortgage broking -- so remortgage volumes strongly down year-on-year. And let's say, let's take the market as a reference for the type of contraction we could have seen. But we have a higher market share in remortgages than in purchase mortgages. So this is having a heavier impact on us than it has on the average of the market.

So -- and of course, we also saw growing volumes of purchase mortgages. But again, because as the proportion of remortgages are more important for us than for the market, the negative impact, I would say, was bigger than that on the market overall.

And I would say now we see -- also we observed -- not only in the figure that we said before, but also in what we see, we observed a slowdown in -- starting from Q2 compared to our previous expectations, which were of growth of purchase mortgages. And this is, in part, certain because by this supply issue and in part by the general geopolitical and economic conditions and so on.

And so we would say now, instead of saying this before that we should expect growth of purchase mortgages for the rest of the year, we should assume probably or at least it's prudent to assume stable, slightly declining volumes of purchased mortgages brokered by us in the coming months. And we still really have to see the impact and understand the impact also in terms of substitution of these subsidized mortgages if people are taking different products instead or if they are waiting. And if they are waiting, maybe we have a weaker couple of months, and then this is compensated later. We still don't really know. But overall, I would say it's prudent not to assume growth in the coming months or a couple of quarters. So the final quarter of mortgages would be much less relevant in the overall picture. But for now, it's important to consider this change in -- I mean, not catastrophic, but still a relevant change in expectations.

And instead, more positively, we have seen solid year-on-year growth in Insurance Broking, in Consumer Loan Broking and E-Commerce Price Comparison. And we expect this to continue. Actually, here, we don't see any particular issue. Also from a competitive standpoint, I think we are doing pretty well.

Finally, it's worth mentioning in more detail, Telco & Energy Comparison. I mean, Telco was nothing special, but Energy was very, very strong, especially in March, we have seen energy prices really skyrocketing. And people realize that, and they were looking for alternatives. And for a while, especially in March, we had a combination of high energy prices that people could see from their bills and still some fixed price products that were quite attractive. So it was a crazy month.

And then, however, what happened is that there was a restriction on the supply. Basically, the energy companies are still all in business. So they're all in decent shape. There are no issues there in terms of their ability to be on the market. But they no longer offer fixed price products. And so they are all indexed products. And at present, these indexed products are just marginally cheaper than there is like a sort of administered tariff, in Italy, it's called [ higher ] protection tariff, which is like set by the state, which still represented decent proportion of the market. And so it's difficult to beat this. So switching is less interesting for people in terms of alternative.

I mean there is a lot of interest in comparing prices in finding alternatives. But unless you -- I mean if you do misselling, of course, you could do a lot of volumes because there is interest. But if you do things in a proper way, it's very difficult to find something that is really interesting for the consumer. And so we see a rapid normalization of volumes starting from April. So we have, let's say, back to normal, no longer this spike for the reasons that I've mentioned.

Alessandro, do you want to continue with the BPO Division?

[Alessandro Fracassi, executive]

Yes. Yes. I hope everyone can hear me well, and I'll continue as long as you can hear me. So the BPO Division performance saw a reduction in revenues. As you saw, basically, we went down EUR 3 million in revenues and EBITDA also was reduced basically in a proportional way. EBITDA margin, in terms of percentage, basically, remained unchanged, just a slight reduction but which is more linked to one-off effects than anything else.

As Marco already commented, the EBIT margin has improved, but this is really not connected to operating considerations, but it's just a reduction in amortization that is linked to former previous acquisitions. And we're basically seeing some of that price amortization declining. And so that's why the EBIT margin is improving.

In terms of commenting what has happened in these 3 months, we had a very significant impact, obviously, of that minus 74% that Marco commented on the reduction in refinancing and especially in the para-notary services that are linked to refinancing. This appears particularly penalizing in these first few months as the last -- I'd say the first quarter of 2021 was a peak period. And therefore, the comparison up years, particularly bad in this first 3 months. But anyway, this reduction would have been much -- the impact of this reduction on the results of the division was basically reduced by half, thanks to the performance of the other business line. So instead of 3, we probably would have lost something like EUR 6 million in revenues if we were just looking at the mortgage BPO.

The business lines in BPO that has basically counterbalanced but not obviously totally, the reduction in mortgages are Investment Services BPO, which grew double digit; Insurance BPO, which grew high single digits; and the Real Estate Services BPO, which also grew double digit. But here, it's not just organic growth. By the way, organic growth is linked to the Ecobonus services, the one that already improved the business line performance in the last quarter of 2021. It has also impacted the good performance by a change in perimeter. It's clear that since March 1, we are reporting the numbers of Centro Europa Servizi, a bolt-on acquisition again we announced in the first quarter. And so we're already seeing the numbers for 1 month, and it is also part of the reason why we see here double-digit growth.

Also, we had a positive impact in this first quarter, both in terms of revenues and finally also in terms of EBITDA from our fintech project in specialty finance in offering small and medium enterprise guaranteed loans through our lending entities, Centro Finanziamenti S.p.A.

As you might remember, Centro Finanziamenti is a lending activity that we use basically as a sandbox for innovation. We don't want to be a lender of scale, but we do some projects that show our potential clients how technology processes can be used to improve effectiveness, commercial effectiveness, efficiency in terms of cost and also how this can actually be totally compliant. You know that's something -- especially in Italy, compliance issues as of today, we have been able to put in place effective processes that are fully compliant. So there was also a positive thing for the first quarter of 2022.

And relative to the remaining business lines of the BPO, so the Loans BPO and the Leasing and Rental BPO business lines, they are basically stable relative to the first quarter of 2021. So as we look to the next quarter, I would say that we will see a reduction in the impact of this penalizing comparison, and we'll still see growth from the other business lines. So we expect to have numbers in the second quarter of 2022 similar to those of 2021 and before closing the gap as the situation of the mortgages stabilizes to normal levels that are the ones that we saw at the end of 2021.

I'll say that this is basically concludes my part. So back to you, Marco.

[Marco Pescarmona, executive]

But I think -- thank you, Alex, that we are at the end of the presentation, so we can open to Q&A.

[Operator]

[Operator Instructions] The first question comes from Aleksandra Arsova of Equita.

[Aleksandra Arsova, analyst]

Two questions from my end. The first one is on the outlook. So it's definitely more cautious than before. So having said that, if it's reasonable for the entire year 2022 to assume a decline in mortgage revenues in a range, let's say, mid-teens. So this is the first one.

Then the second one is about cost evolution. So in the first quarter, you experienced something like 10% growth in personnel costs, which I assume most of which is organic. And although you mentioned some increase in marketing costs, so do you see any potential pressure on margins due to inflation? And what is the evolution of costs in the coming months?

And the last one, it's about your M&A strategy. Do you have some potential deals in pipeline? And then maybe a comment on the newspapers reported a couple of days ago that the process for the disposal of Facile has started. So could you maybe share with us if you may or may not be interested in taking part in this process.

[Marco Pescarmona, executive]

Okay. Thank you. Let's say, yes, the outlook for mortgage is more cautious for the reasons that we explained. It's -- we still hope to see growth of purchase mortgages in the final months of the year for the market. And at that point, the normalization of remortgages will no longer be present. So hopefully, the [ fourth ] quarter of the year should be up unless we have a big surprises.

And I would say instead for the coming months, yes, certainly double-digit contraction is possible. I mean, overall, I think the figure that you put forward could be -- but it's really hard to say. It's a possibility, let's say, for the -- depending on how the first quarter goes, we will -- and also the fourth quarter goes, we might be doing slightly better or in line with that or slightly worse. But it's a ballpark figure that is a meaningful figure. But really, we have to see how the situation evolves in the coming quarters.

I would say whatever expectations people had, I think it makes sense to tune them down for 1 or 2 quarters. And then they should be back to normal, unless we end up in a very unstable economic or geopolitical situation. So the message is really that mainly Q2 and maybe Q3 should be slightly more conservative or in a more conservative way. So this is for the first question.

And by the way, Alessandro said that for BPO, the impact, for instance, of remortgages will be less and less relevant in the coming months, and we will already see the better comparison at the end of Q2. But again, this figure is a meaningful figure. By the way, on the BPO side, the revenues that we are losing are the lowest margin revenues, so that will help also a little bit in terms of the overall results.

In terms of the growth of personnel costs in Q1 2022, I would say it's overall organic. I mean there are no big discontinuities. Certainly, we are not hiring a lot of people in a situation of declining volumes in some of our businesses, especially operational people. So I would say, there is nothing particular to be expected there. There is inflation for now only in very specific professional roles like developers or some other, like data scientists. But overall, in Italy, wage inflation is not present across the board, and we should be able to put this back at least for a while.

And we increased the marketing costs. Well, of course, we spend more money in part to compensate or in situations of lower demand and, in other cases, just to continue to push growth. But here as well, I would say, we don't see any particular pressure on margins.

Of course, you could expect to see -- as mortgages decline and other businesses grow, you could see a shift to businesses within broking with lower average margins that are expanding by themselves. So in all the businesses of the Broking Division that we mentioned that are growing, in general, we see expanding margins over time. But these margins are still lower than the margins in our mortgage business. So that will be the dynamic.

But in terms of at the single business level, we don't expect to have pressure, of course, in mortgages with weaker demand or lower conversion because people come and don't find the products that they were expecting, et cetera, the margins could temporarily decline. But there is nothing structural, I would say.

And finally, our M&A strategy. I would say, in general, we never stated a specific M&A strategy, but we have been doing a lot of acquisitions mostly -- I mean, of acquisitions within BPO, bolt-on acquisitions or to introduce new verticals. That's been a very sensible way to allocate our capital within broking, just not enough operators to relieve the strategy. So the last acquisition was assessed tariff, but there are not many things. Of course, there is this big competitor of ours. It's our main competitor, as you know, Facile, that is on the market.

From the rumors in the market, I mean, from what we know, I would say it seems quite unrealistic that something could happen on our side. But because we see what are realistic expectations, I would say, and both in terms of what people could think, the business could be worse and also the potential growth and in particular, I mean -- and of course, also people are still talking about that as if nothing has happened in the markets. And so I would say, for us, it would be interesting because there are synergies. So we would be the best buyer, of course. But it is difficult to see the conditions right now for that.

[Alessandro Fracassi, executive]

Yes, if I can add something. I mean you should look at our market cap today and then look at our Broking Division, which is incomparable to Facile, which is bigger, has grown faster, both in terms of revenues and in terms of EBITDA in the last 5 years. So -- and then you compare to the expectations that there are today in -- at least that are rumored today, and you see that there is a disconnect between at least what the public markets are seeing and what the expectations are on the private markets.

[Marco Pescarmona, executive]

And of course, maybe we have a better understanding of the quality of different things and so on or we just refer our staff. But -- so overall, it's -- we think it's unlikely that -- not impossible, but that something could happen. And so I think we are done with the questions.

[Operator]

The next question is from Marco Cristofori of Intesa Sanpaolo.

[Marco Cristofori, analyst]

The first one is on MoneySuperMarket. I noticed that you increased your stake, investing nearly EUR 16 million in the quarter. So just to understand, if you want to increase further this investment and if you are looking to any commercial partnership with this group trying to do also an industrial partnership and not only in financial investment.

And secondly, if you can maybe give more color to your most recent acquisition that will be consolidated from Q2. How much are you expecting in terms of revenues and additional revenues, I mean and if there are potential synergies with these companies?

[Marco Pescarmona, executive]

Okay. I will take the first, and Alessandro will take the second. And regarding MoneySuperMarket, it's a business that we think we understand. It's in a different market, but it's exactly the type of business that we are in with our Broking Division. And we look at this mostly as a financial investment of something where -- in a sector where we understand the industrial details, so we can read the performance possibly better than average, hopefully.

And by the way -- so we think this makes sense in terms of what we have paid for our stake and the outlook for the business. And also we are not super happy to have too much money sitting on our bank account. So that's also an important factor, especially if there is inflation, having money on the bank account is not great.

So -- and in terms of industrial ties, this is a business that you know that is very similar to what we do in Italy, but it is in a different market, and there are no real synergies. So you could have exchanges of know-how, you could maybe have some -- learn from each other, but you wouldn't buy a company or a stake of the tie for that. You can do it making friends with some colleagues in another country. You are not competitors and you share your best practices. So this is certainly a possibility, but it's not the driver for an investment. So this is, I would say, the answer for -- sorry, you asked also whether we wanted to buy more, okay?

[Marco Cristofori, analyst]

Exactly.

[Marco Pescarmona, executive]

Well, look, in the United Kingdom, the reporting regulations are that you have to report every passing of a 1% threshold. So it's 3%, 4%, 5%, et cetera. Every 1%, you have to report it. So whatever we do will be visible, and I wouldn't say anything in advance also because we might decide over time based on -- also on other M&A opportunities because, of course, buying another 1% is within our means. But if we want to make -- today -- but if we make an acquisition and if a acquisition is relevant, you know that could be depending on the opportunity, a better use of our resources. So we also have to keep that constraint.

I would say, just keep reading -- keep looking at the regulatory reporting, if you want to see if we have done something or not or -- but no, we don't have a particular outlook on that.

[Alessandro Fracassi, executive]

Relative to Centro Servizi Europa, well, it's a small company, as you said, a bolt-on acquisition that offers information services and also para-notary services relative to real estate processes and also and more specifically real estate processes connected to the nonperforming loans. That is their core niche. But where we see the synergies is in selling para-notary services to banks. Their client base is different from ours. So we see potentially some commercial synergies. There is also the possibility to use specialized people that are working today in our para-notary services and that are becoming less and less at full capacity to be used in a business where instead, there is more demand and also this company has been able to increase market share in the recent past. And I think also, thanks to our boost, it will be able to grow faster.

Anyway, we're talking about something north of EUR 10 million in revenues, more or less, yearly. So that's to give you an idea. So that's what -- on a year basis, you should be expecting as an addition. But as we said, we just started in March, adding it to our real estate services.

Other services can come from using our process technology, our workflow technology to the processes, which are efficient, but no less as they could be with all the force of our tools, our IT platform. So this is a transformation where we will undergo during, let's say, starting now and then for the rest of probably 2022 as we integrate the business in our real estate service business line. I hope this answer the question.

[Operator]

The next question is from Raphaël Moreau of Amiral.

[Raphaël Moreau, analyst]

Just a quick one on your fintech. Do you have any idea in terms of volume, how much did it represent? Is it recurring business already? And yes, what could we expect maybe for the rest of the year?

[Alessandro Fracassi, executive]

There are -- you can find in the press some details of this project because it's a project where we were able to involve also the European Investment Fund as part of the funding to this exercise, which is basically a solution for brokers of -- so physical brokers that want to work with banks in offering to small and medium enterprise the guaranteed loans. So we created a platform together with one of these brokers. It's called the IGLOO platform. And we are working with them to optimize processes, interfaces and the speed of getting to yes. And we expect to originate, during the course of 2022, around EUR 160 million of loans that are going to be then distributed to a securitization vehicle, which is funded partially from -- for senior notes from Intesa Sanpaolo and [ ACOs ]. And then for the mezzanine note by the European Investment Fund. So that's the kind of thing that we set up.

We -- as I said, we have no intention to bring it to a larger scale than this. We might repeat it in the future, but the objective is to held this kind of operating platform to other players in the market that are interested in this kind of solutions.

[Raphaël Moreau, analyst]

And maybe in terms of revenue and profitability that was generated?

[Alessandro Fracassi, executive]

I think we are not disclosing this. But anyway, it's not particularly significant, as you can imagine from something that accounts for EUR 160 million in total origination in a year.

[Marco Pescarmona, executive]

Well, one thing that we said was that this project was absorbing resources in the past and now it is profitable. And so at least it is something that is no longer consuming.

[Alessandro Fracassi, executive]

Yes, yes, yes. It will be -- it was profitable in Q1 and will be profitable for the overall year in 2022.

[Operator]

The next question is from Filippo Prini of Kepler.

[Filippo Prini, analyst]

I have got 3 questions. First one is can you give an indication for your net debt at the end of the year? And more generally, if you believe that you should be able to generate cash clearly before the outlays for M&A, dividends and buyback.

The second, just getting back for a second on the mortgage per cluster [indiscernible]. Sorry if I missed it, but could you remember me how much the weight of the segment of the total production of mortgages last year?

And the final question, maybe looking back at your history on remortgages. If you look at the mortgage market in Italy in the last 20 years, maybe we can export the 2 moments of decline. The first one across 2007, 2009, where, by the way, you managed to increase your revenues, maybe because you've got a smaller size, but you've been able to -- be a reference for clients looking at the [ opportunity to wait ]. And another decline was in 2012 where, by the way, you have been affected by the market.

So maybe it's too early to say, but according to your experience, if things will get worse, should we be in the position of 2007 and '08 or the position of 2012?

[Marco Pescarmona, executive]

Okay. Maybe we start from this one. And no, certainly, we don't expect, even with the worsening of the situation to see 2012 again. I mean, 2012, the Italian state was on -- I would say, almost on the brink of a default. The Italian banks were in a similar situation or at least it was the perception of a large portion of the capital markets. And the shock was very, very homogeneous. And then also, this was, first, a supply shock, but very, very serious. I mean banks were asking us to do plans on what to do if we had to go back to the lira.

And then in response to this situation, which was perceived as critical, we had some governments that started doing a tightening of fiscal spending and so on and also some regulatory -- some reforms and so on. But this had a very, very negative psychologic adverse effect on consumer confidence. So first, it was a supply issue or an issue of the financial system. Then that was stabilized, but the way it was stabilized was the -- let's say, not the by product, but let's say, the byproduct of the policies of what you could read in the newspapers, et cetera. It was so scary for Italian consumers that for the next, at least 5 years, they stopped buying durable goods. They stopped buying property. They just thought, I'll save money because I don't know if I will have a pension or if I will have a job 3 years from now.

And this is not the situation for a number of reasons. So I would really give to that scenario, a probability that is just like comparable to a more affecting a lot of European countries. So I would say very low probability.

It's not going to be like 2009 either, I would say, because in 2009, it was another financial crisis different within the financial crisis of 2009, negatively...

[Technical Difficulty]

[Operator]

Excuse me. Just one moment. I have to reconnect the moderator, please.

[Marco Pescarmona, executive]

Okay. Sorry. Hello?

[Operator]

Please go ahead, sir.

[Marco Pescarmona, executive]

Okay. So it's not like 2009 because that was a financial shock affecting only some lenders, the bigger international lenders and not others, very nonhomogeneous. So overall, there was a recession, but the market was on nonhomogeneous that there was a lot of benefit from switching. And we were able to increase our market share because of that.

Now we don't see any of those 2 scenarios. The most likely scenario, if the situation worsens, is similar to what you have in a recession. So let's say that overall, in the market, there are just -- apart from the remortgages, but fewer mortgages being done, maybe the market goes down by 20% year-on-year. It's such a very serious recession, 25%, 30%, but that would be already very, very serious.

So we see -- and this is not the situation we are in. The situation we are in is still not like that. But a serious deterioration would most likely lead to a drop of, say, 20%, something like that, 30% really to be pessimistic. But we will not be able to compensate that most likely with market share because this would come from demand and not from supply. Of course, we would see some growth in market share because of the penetration, but the shock would be on the demand side if we see the deterioration. I don't expect anything to happen on the supply side, especially with the European financial institutions will not allow any fragmentation, I would say, of the financial markets.

Going to the cash generation, looking at the outlook that the different analysts have published, we will have a performance that is similar to the previous year overall. And I mean let's take that as a reference point. And if that happens, we'll keep generating a lot of cash. We even have deferred tax assets. So we will have very nice cash generation. And you look at any of the models that are there, and it's very simple to see that -- I don't know what we will generate, but let's say, whatever, we just take the net income, and that's a good indication if we don't do M&A. Is there any other question or other parts of the question?

[Operator]

We do have a question now from [ Paolo Cipriani ], a private investor.

[Unknown Attendee]

I'm just interested regarding the E-Commerce Price Comparison. You mentioned that [ TT1 ] is growing. I mean it's a solid year-on-year growth. Can you just please elaborate a bit more and maybe further details about that because there is like some comparables with Q1 2021 since there was the lockdown. And yes, how it's growing and if you just maybe you could say something.

[Marco Pescarmona, executive]

Well, it is -- I would say it is growing. That's a business also where we are able to apply some price increases year after year, also because all the other traffic acquisition channels are seeing price inflation. And I think Q1 of last year was a good quarter, but not an incredibly strong quarter. So we are back to a more normal situation. I would say this is a business where what we are seeing or what one should expect, I would say, is growth similar to the growth of E-Commerce.

And the very strong year was 2020, then 2021 was weaker. I mean we had to spend a lot of money to compensate for weaker demand and so on. And 2021 looks more like -- sorry, 2022 looks more like a normal year of -- in the evolution of this type of business.

[Operator]

[Operator Instructions] Gentlemen, there are no questions registered at this time.

[Marco Pescarmona, executive]

Okay. Okay. So I would say we are done. We thank you for participating. And we're as always, available also for one-on-one calls, and we'll talk to you in the next quarterly call. Thank you.

[Alessandro Fracassi, executive]

Thank you very much.

[Marco Pescarmona, executive]

Thank you. Bye-bye.

[Alessandro Fracassi, executive]

Bye, everyone.

[Francesco Masciandaro, executive]

Thank you. Bye.

[Operator]

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephone.