Intercorp Financial Services Inc

NYSE:IFS

Earnings Call Transcript 2018-Q2

[Operator]

Good morning, and welcome to Intercorp Financial Services Second Quarter 2018 Conference Call. [Operator Instructions].

It's now my pleasure to turn the call over to Rafael Borja of i-advize Corporate Communications. Please go ahead.

[Rafael Borja, executive]

Thank you, and good morning, everyone. On today's call, Intercorp Financial Services will discuss its second quarter 2018 earnings. We are very pleased to have with us Mr. Luis Felipe Castellanos, Chief Executive Officer of Intercorp Financial Services; Mrs. Michela Casassa, Chief Financial Officer of Intercorp Financial Services; Mr. Gonzalo Basadre, Chief Executive Officer of Interseguro; and Mr. Bruno Ferreccio, Deputy CEO of Inteligo Group. They will be discussing the results that were distributed on Wednesday, August 8. There is also a presentation to accompany these results. If you didn't receive a copy of the presentation or the earnings, it is now available on the company's website, ifs.com.pe, to download a copy. Otherwise, for any reason, if you need any assistance today, please call i-advize in New York at [phone].

I would like to remind you that today's call is for investors and analysts only. Therefore, questions from the media will not be taken. It is now my pleasure to turn the call over to Mrs. Michela Casassa, Intercorp's Chief Financial Officer, for her presentation. Mrs. Casassa, please go ahead.

[Michela Ramat, executive]

Thank you. Good morning, and welcome to Intercorp Financial Services second quarter earnings call. As shown in Page 2 of the presentation, the second quarter 2018 has seen a 43% year-on-year growth in the IFS recurring earnings, resulting in a 21.5% return on equity, with strong results at all operating companies.

At Interbank, record earnings of PEN 289 million in the second quarter, driven by a further acceleration of loan growth to 14% year-on-year, supported by a 15% year-on-year growth in credit cards, which allowed us to regain the #1 position in the market, and also thanks to a better economic environment in the country. Our strong focus on digital transformation continues to show results, with growing figures in all our main digital indicators.

At Interseguro, still recovery in gross premiums plus collections, with a 22% growth quarter-on-quarter and 60% year-on-year, which has allowed the company to gain market share.

We have registered a onetime adjustment of PEN 145 million in the quarter due to the adoption of the new Peruvian mortality tables. This impact can be deferred in 10 years in local accounting standards, but we are fully accounting it under IFRS in this quarter.

Moreover, as mentioned in the previous call, we have adjusted a discount rate for the calculation of technical reserves for the mismatched portion of the portfolio to align it to best practices. This has resulted in an increase of PEN 519 million in equity due to a lower stock of technical reserves required.

Going forward, this change reduces the initial technical loss on the sale of new products and will better reflect the company's profitability.

Interseguro's analyzed ROE for the second quarter, excluding the previously mentioned onetime adjustment, is 15%.

At Inteligo, strong profitability in the second quarter, with a 27% ROE in earnings reaching PEN 46 million, with asset under management resuming growth.

Now let's have a look at IFS key performance indicators on Page #4.

At IFS, net profit was PEN 205 million in the second quarter or PEN 350 million when excluding the PEN 145 million onetime adjustment at Interseguro. Annualized ROE reached 21.5%. Efficiency ratio remained stable quarter-on-quarter at 34.4%, down from the 37.8% in the same quarter of the previous year.

NIM at Interbank improved 30 basis points in the quarter, up to 5.8%. And risk-adjusted NIM continued to improve an additional 20 basis points in this quarter, up to 4.1%.

Total capital ratio for Interbank stands at 16.7%, with core equity Tier 1 reaching 10.3% as of June this year.

Gross premiums plus collections at Interseguro increased 22% on a quarterly basis, thanks to a recovery of the market and increasing market share. The return on investment was 5.4%, impacted by a negative PEN 19 million mark-to-market on investment.

Without that effect, recurring investment would have been 6%. Fiscal financial services at Inteligo grew 12.3% year-on-year, with a recovery of growth in asset under management plus deposits of 4.2% during the quarter.

On Page #5, relevant net income for dividend generation in the second quarter increased 13% year-on-year or PEN 34 million for Interbank, 171% year-on-year or PEN 54 million for Interseguro and decreased 18% or PEN 10 million for Inteligo.

Please turn to the following pages for a brief overview of the quarterly net earnings of IFS 3 segments.

On Page 7, starting with Interbank, the second quarter net profit reached PEN 289 million, a 38.3% increase year-on-year, mainly thanks to a recovery of top line growth, coupled with an improvement in cost of risk, mainly due to a release of provisions from the construction sector companies and a further improvement in the cost of risk of retail and credit cards as well as controlled expenses.

Second quarter return on equity was 24% or 20.4% when excluding the positive effect of the construction sector companies.

Net interest income grew 6% year-on-year, with NIM improving 30 basis points in the quarter and risk-adjusted NIM improving 20 basis points in the quarter thanks to a 17.9% decrease in loan provision expenses, which improved cost of risk 80 basis points year-on-year down to 2.4%.

On Page 8, we are showing the further evolution of our digital transformation indicators. As explained during the last call, the first phase of our digital transformation was focused on building capabilities that would allow clients to perform their day-to-day transactions digitally, then afterwards, to be able to acquire products and services digitally.

Now we are entering a second phase in which we are increasing our efforts for educating clients to foster usage of our existing transactional capabilities, and also to teach them how to buy products and services online while completing the full set of digital capabilities.

For these reasons, we have been substantially increasing our IT investments, which, as of 2018, are 3x 2015 figures. This has also allowed us to decrease the number of branches, which stands today at 270 from a peak of 290 in January 2016 and from 282 in March 2017.

Digital customers, who include clients that interact with the bank through our mobile application or home banking, have reached 45% as of June this year from 34% in June last year and 43% in March this year, representing roughly a 40% increase year-on-year in number of digital customers.

The percentage of transactions performed off branches has continued to increase, reaching 94% as of June 2018 from 87% last year. Still, due to the cash economy present in the country, a large number of plain vanilla transactions, including deposits, withdrawals, payment of utilities and credit cards, is still performed in branches, which means we need to continue educating clients via our efforts in branches and contact centers to migrate them to our already existing digital solutions.

The percentage of functionalities that are available our -- on our digital channels, which includes transactions, sales of new products and self-service features, has continued to increase, reaching 94% as of June this year from 90% a year earlier. We continue to focus our efforts on trying to digitize client interactions and to improve the customer experience of our clients with the development of new and enhanced functionalities through our 22 squads working with agile methodology.

Digital sales and self-service interactions have increased their penetration 29% in June this year, from 12% in June last year, and from 15% in March this year, growing in number of interactions more than 170% year-on-year.

We are now able to digitally open new accounts, sell credit cards and loans through credit cards, increase credit card lines, among other products. In terms of self-service functionalities, an example is credit card installments through mobile banking, which have reached a penetration of around 90% and have driven the number of such installments to grow roughly 5x.

Moreover, we have launched some functionalities that are only available in our mobile banking, which have gained traction in clients’ preference in few months. This includes $mart, a feature that allows clients to organize and take control of their expenses, which is used by approximately 20% of our digital customers. And our digital Piggy Bank, a one-swipe feature that allows clients save money at higher rates within an existing savings account, which has reached a penetration of almost 10% of our digital clients.

In Page 10, at Interbank, performing loans growth accelerated to 5.9% on a quarterly basis as a result of increases of 5% in retail loans and 6.8% in commercial loans.

Credit cards' growth furtherly accelerated to 9.1% during the quarter, reaching 15.2% increase year-on-year, where we have recovered the leadership position, mainly by targeting good credit profile clients within our existing portfolio.

Performing loans grew 13.6% year-on-year due to a balance increase of 13.7% in retail loans and 13.5% in commercial loans.

Retail loans grew year-on-year, mainly due to increases of 15.2% in credit cards, 14.2% in mortgages and 11.8% in other consumer loans.

We have been able to increase our market share in total loans by 30 basis points on a quarterly basis and by 40 basis points on a yearly basis.

On Page 11, retail deposits increased 1.2 -- 1.8% on a quarterly basis and 11.4% on a yearly basis, allowing us to gain 10 basis points of market share in the quarter. Average cost of funds has improved 30 basis points year-on-year, but increased 10 basis points this quarter.

On Page 12, asset quality continued to improve in the second quarter, with cost of risk decreasing 10 basis points quarter-on-quarter and 80 basis points year-on-year, down to 2.4%.

We are normalizing our cost of risk from a reported figure of 1.5% to exclude the decrease in provisions, resulting from a strong decrease in expected losses of construction companies for PEN 63 million during the quarter.

The improvement in cost of risk, normalized, is mainly coming from retail banking, which has registered a decrease in cost of risk of 100 basis points on a quarterly basis and 250 basis points on a yearly basis. The yearly improvement is mainly due to credit cards, which have seen an improvement of 570 basis points year-on-year, thanks to an improvement in the risk profile of the client portfolio to a better behavior of clients to all the different actions undertaken for improving underwriting and collection processes and to the recovery in growth.

The quarterly improvement is mainly due to other consumer loans and not in mortgages, which have decreased substantially their cost of risk as well as to a further decrease of 20 basis points in the cost of risk of credit cards.

NPL ratio remains flat quarter-on-quarter at 3.1%, with NPL coverage ratio at 126%.

In Page 13, we are also showing the figures and their SBS standards. So we're looking at this comparable figures to the system. Interbank's past due loan ratio remained flat in the quarter at 2.7%, below the system average of 3.1%. And the coverage ratio also here remains strong at 177%.

When looking at the PDL breakdown, we can see within retail that consumer PDL ratio has improved 10 basis points, down to 2.1% in the quarter, and is below the system average of 2.5%.

However, the most important trend is the further improvement in credit card PDL ratio of 40 basis points, down to 4.4%, and well below the system average of 4.8%.

Mortgages' PDL ratio has remained flat in the quarter, while the system ratio increased 10 basis points. The trend in cost of risk in local GAAP is very similar to what we previously described for IFRS. Our cost of risk in local GAAP of 2.3% in this quarter remains above the system average of 1.9%, mainly due to the portfolio mix with the higher incidence of retail and credit cards when compared to the system and to the other big 3 banks.

Normalizing the effect of our portfolio mix, our ratio would be 1.8%, below the system average.

At Page 15, Interbank's capital ratio of 16.7% was 500 basis points above its risk-adjusted minimum requirement, established at 11.7%, and above the system average of 15.1%.

Core equity Tier 1 ratio has continued to improve during the quarter, reaching 10.3%.

Please turn to the following pages to discuss Interseguro's results.

As previously mentioned, we are introducing 2 accounting changes to Interseguro's numbers that finalize the ratio and profits with our auditors as we described in previous calls. The first one is related to the discount rates. We have reviewed the interest rate used to calculate the technical reserve requirements for the mismatched portion of assets and liabilities to include a premium. This has increased equity in PEN 519 million due to lower technical reserves as a result of a higher discount rate and also a positive impact of result, which, for this quarter, is PEN 7 million.

Secondly, we have registered a onetime adjustment of PEN 145 million in the quarter due to the adoption of the new Peruvian mortality tables published by the Peruvian insurance regulator earlier this year.

This negative impact, as we mentioned before, can be deferred in 10 years in local accounting standard. But we are fully accounting it under IFRS in this quarter.

On Page 18, gross premiums and collections in the second quarter have increased 22% and 60% year-on-year. Annuities, including private and regulated, increased 50% quarter-on-quarter as a result of a higher market share, which reached 30.6% and to a recovery of the market.

Retail insurance increased 6% on a quarterly basis. And individual life, together with disability and survivorship, shows strong yearly increases, mainly due to the incorporation of Seguros Sura.

On Page 19, total premium earned, less claims and benefits, resulted in a loss of PEN 186 million, mainly explained by the onetime adjustment of technical reserves.

Excluding that effect, Interseguro's total premium earned, less claims and benefits, would have been PEN 41.4 million negative, representing a strong improvement quarter-on-quarter, also thanks to the change in discount rates previously explained.

On Page 20, in the second quarter, Interseguro investment portfolio reached PEN 11 billion, which represents a slight decrease on a quarterly basis and a 91.4% increase on a yearly basis. The quarterly decrease was explained by a smaller fixed income portfolio as a consequence of the sale of securities and a lower trading result.

The yearly growth is mainly explained by the merger with Seguros Sura's investment portfolio. Results from investments in the second quarter was PEN 149 million, which represented a 5.4% return on Interseguro's investment portfolio and includes a PEN 19 million loss mark-to-market on the quarter.

Excluding such effects, the return on Interseguro's investment portfolio would have been 6%, showing a recovery.

Starting on Page 22, we will discuss Inteligo's results. Inteligo's net interest and similar income in the second quarter was PEN 28.7 million, a PEN 4.7 million or 20% quarterly increase and a PEN 3.7 million or 15% yearly increase.

This performance was attributed to incremental distributions on Inteligo's proprietary portfolio after the acquisition of debt instruments starting to work. Net fee income from financial services was PEN 32 million, a slight quarterly decrease explained by lower income from brokerage and custody services. When compared to the previous year, net fee income from financial services increased PEN 3.6 million or 12%, explained by higher fees associated with incremental rebalancing activities of client portfolios.

Inteligo's other income reached PEN 3.7 million in the second quarter, a PEN 3.2 million increase on a quarterly basis, which was explained by a better mark-to-market performance by Inteligo's proprietary portfolio. Other income decreased 82% year-on-year due to optimal market conditions during the second quarter of 2017 that prompted the sale of securities in such quarter.

Inteligo's other expenses have been relatively stable versus comparable periods. They reached PEN 19 million in the second quarter, which represents a 4.5%, and decreased PEN 1 million or 4.8% on a yearly basis.

On Slide #23, asset under managements plus deposits reached PEN 14.5 billion in the second quarter, a PEN 585 million or 4.2% growth on a quarterly basis. This result was mostly attributed to the opening of new accounts due to a strengthened prospection strategy. Inteligo's loan portfolio reached PEN 1.3 billion in the second quarter, relatively flat and registering a 23% decrease year-on-year.

Revenues generated by Inteligo were PEN 65 million, a 12.5% increase on a quarterly basis and 13% decrease year-on-year. Growth versus previous quarter was mostly explained by incremental distribution of Inteligo's proprietary portfolio recognized with the net interest and similar income. The decrease in revenues year-on-year was explained by lower other income due to optimal market conditions during the previous year. Inteligo's bank fee income, divided by asset under management, remained stable at 1% in the quarter.

As consequence of these results, Inteligo's net profit in the second quarter reached PEN 46 million, an increase of 13% on a quarterly basis, which led to the recovery of Inteligo's ROE to 26.5% compared to the 22.3% reported in the first quarter.

Finally, we are also very proud to let you know that Interbank has been named Bank of the Year in Peru in 2018 by Euromoney, highlighting the bank's financial performance, service quality and growth.

In addition to this recognition, as of July 2018, IFS is part of the Lima Stock Exchange Good Corporate Governance Index, which acknowledges companies with the best corporate governance standards in Peru. As a result, IFS investors economically benefit from this as certain regulatory fees that are applied to the trading of shares are subject to 90% reduction and the objective of promoting a higher liquidity of these shares.

Now we welcome any questions you may have.

[Operator]

[Operator Instructions] We'll go first to Jason Mollin with Scotiabank.

[Jason Mollin, analyst]

My first question is on loan growth. It was quite robust, particularly in the credit card segment. You mentioned that your growth is related to clients that are already part of -- have already been clients. What are you doing to gain this market share and grow at this 15% year-on-year? Are you actively going after the clients? Is there more demand that's coming to you? What's driving this growth, particularly in credit cards?

[Michela Ramat, executive]

We've been undertaking a series of actions, but I would say that one of the most important ones is the focus that we are having on the consumption part of the usage of credit cards. We've been strengthening, for example, our internet website where clients can now [Foreign Language]

[Luis Castellanos López-Torres, executive]

Exchange.

[Michela Ramat, executive]

They can exchange the points that they have in gaining over time. It's a new website that actually we launched some months ago, and that has gained a lot of traction and increased, pretty much, customer satisfaction. This, together with some other commercial actions, has led the billing of credit cards to grow more than 15% year-on-year. This is one of the things that is helping, if you want, increase the share of wallet within these clients, especially this year.

Of course, before -- prior to that, as you may recall, we were not growing in our volumes of credit cards because we were still tightening our credit underwriting standards. So after, I would say, maybe it was October, November last year when we started growing, these are the actions that we've been pushing strongly, if you want, to gain share of wallet within these clients, which are mostly focused on the upper risk profile part of our portfolio.

[Jason Mollin, analyst]

That's helpful. And what about -- looking at the expected delinquency because of this growth, should we expect -- I mean, clearly, if there -- you're going after your best clients and you're targeting them, we would imagine that they're on the better side of the quality for that segment. But is -- should we be expecting, given the change in mix, that there would be more provisions related to the [indiscernible]?

[Michela Ramat, executive]

Not really, Jason. Because as you can see from the numbers that we are showing also in the second quarter, knowing when we showed the provisions, which actually include expected loss now under IFRS 9, we have even slightly improved that number since last quarter. And we are not seeing any sign of deterioration because, as I was explaining before, we are targeting the best risk profile clients. So up to today, we are not seeing any sign of deterioration that should, let's say, point any increasing provisions. Of course, yes for the increasing volume, but not as a ratio over the total portfolio.

[Jason Mollin, analyst]

Okay. And just my last question would be related to any other expected onetime adjustments, perhaps in insurance, we saw the adoption of the new mortality tables or change. I guess, discount rates can always change. But should we be expecting anything in the second half of the year?

[Michela Ramat, executive]

We are not foreseeing anything. Actually, we now have undertaken the changes in the first quarter, and these were the last ones that we were expecting.

[Operator]

We'll take our next question from Andres Soto with Santander.

[Andres Soto, analyst]

My first question is related to loan growth potential. Definitely, it's a big pickup in loan growth this quarter, which was sort of in line with what happened in Peru, which expanded GDP 6% in real time since second Q. So I would like to understand how sustainable is this level of growth that we saw this quarter. And more generally speaking, what is your current assessment of the multiplier between loan growth and nominal GDP growth at this point in the cycle?

[Michela Ramat, executive]

Thank you for your questions. Regarding what we are expecting for year-end, we gave a guidance at the beginning of the year. But let's say that the market should grow between, I don't know, 7% and 9%, and we were going to outbid that number.

Of course, as we stand today, as of June, we have registered a 13.6% growth in the portfolio, mainly, I would say, thanks to 2 things that have been higher than what we were expecting at the beginning. Now first, the recovery of credit cards that have been better than what we envisioned; and the second one is commercial loans, but commercial loans more related to corporate loans than to the other loans, okay? And on this second portion, it is not really that this higher growth is 100% linked to a recovery of the economy, but also to some clients that are financing locally. Some of [indiscernible] that they were financing before, maybe with foreign banks or capital markets, okay?

So basically, for year-end, what we are expecting is something that should be -- I mean, of course in the 2-digit area, but maybe something similar to what we have shown today with one doubt or one, if you want, uncertainty, which is, again, what is going to happen to corporate banking, okay? Because there, it's easy to gain market share or to grow more, depending on prices. One of the things that has pushed the resuming growth in credit card has been a slight recovery also of the internal demand. But for sure, we have been growing more than that, okay? So basically, our expectations for this year is something in the area of low 2-digit, okay? And we will have to see for next year what happens depending on the recovery of the economy, whether or not this is sustainable.

[Andres Soto, analyst]

Perfect. And my second question is related to your insurance business. Excluding the effect of the new mortality tables, return on equity was 15%, as you mentioned before. I was wondering if you can share with us your expectation in terms of medium-term profitability for this business segment.

[Michela Ramat, executive]

This number that we are showing today, the 15% ROE, it's like the first time now, with all the changes that we believe reflect better the performance of Interseguro, okay? So basically, these are the levels which we should be seeing going forward.

[Operator]

We'll take our next question from Sebastián Gallego with CrediCorp.

[Sebastian Gallego, analyst]

I have 2 questions. The first one, can you provide more color on the release on provisions on the construction sector? What's your expectation going forward? Whether there's a chance to release further provisions. And the second question is related -- also a follow-up on the insurance business. You mentioned the target on ROE, but I just want to understand a bit better, how are you going to achieve these? What are the main drivers, taking into account that there won't be additional accounting changes?

[Michela Ramat, executive]

Let's discuss first the question on release on provisions. In release of provisions of construction companies, actually, what has -- if you want -- impacted these figures is that since the beginning of the year up until today, we have reduced our exposure with this group of companies, okay? And moreover, we've seen the -- those companies -- let's say that the profits have improved, okay? So basically, when you look at the IFRS figures, which are reflecting the expected loss on those construction sector companies, the expected loss, which is lifetime for some of them, has decreased substantially. In local GAAP, I don't know if you remember, but we made these voluntary provisions at the beginning of the year. Even there, there have been some recent provisions. But still, in one accounting or the other, we have, roughly speaking, PEN 70 million to PEN 80 million stock of provisions, which are still kept there for this group of construction companies. I don't know if that answers the first question.

[Sebastian Gallego, analyst]

Yes. Are you talking about PEN 70 million to PEN 80 million? Am I...

[Michela Ramat, executive]

Soles. Yes, soles. Soles, yes.

[Sebastian Gallego, analyst]

Okay, perfect. [indiscernible]

[Michela Ramat, executive]

And for the insurance -- sorry, say again, are you -- if I'm okay with that first question.

[Sebastian Gallego, analyst]

Yes, that's totally fine.

[Michela Ramat, executive]

For insurance, let me pass it to my -- to Gonzalo Basadre.

[Gonzalo José Brazzini, executive]

Yes. The profitability of the company comes mainly from the -- from managing its current portfolio, both on the asset side and the liability side. Just with the profitability of the investment portfolio, less the payments we need to do to our annuity holders, we feel pretty confident that we can reach the profitability targets Michela mentioned.

[Sebastian Gallego, analyst]

Okay. And just a follow up, actually, on that one. We saw that there was a marginal improvement on the real estate return on the investments. Can you talk a bit more about the outlook coming from the real estate investments of your portfolio? And how do you think about this portfolio in the upcoming years?

[Gonzalo José Brazzini, executive]

Sure, sure. We are very positive of our real estate portfolio. We have a pretty sizable land bank of properties, plus we received some more from the merger with Sura. We've been working very hard to make those assets work for us, making them -- renting them or selling them. So you will -- you've seen that improvement in profitability. We expect that to continue in the following quarters.

[Sebastian Gallego, analyst]

Okay. And just actually, one follow-up on the provisions, Michela, if I may. I don't know if you mentioned in the answer whether or not there is a chance to release further provisions in the upcoming quarters?

[Michela Ramat, executive]

Of course, as I mentioned to you, we still have some provisions for these construction companies, okay? So that will depend on the evolution of those companies. It is likely that there will be some [ externally driven ] provisions, but I don't think to such extent at this time. Because this time, as we're talking about the first 6 months, okay, or this quarter, this time I think it's happening a little bit more sizable than what could be in the next month.

[Operator]

[Operator Instructions] We'll go next to [ Isaac Lontol ] with [ Prima ALC ].

[Unknown Analyst]

One question on my side, and it's related to the adjustment in technical reserves. Could you please give us a little bit more color if this adjustment comes from Interseguro's portfolio or Sura's portfolio?

[Michela Ramat, executive]

Actually, this comes from the total portfolio, okay? Because the calculation of technical reserves is coming from -- as we have changed that discount rate, we applied it to the full portfolio. So it's a mix of both portfolios.

[Unknown Analyst]

Okay. And if you could -- could you please give us a little bit more color? This adjustment is related to an increase in local currency, foreign currency, inflation, [indiscernible].

[Gonzalo José Brazzini, executive]

Let me give you some color. The methodology of calculating those reserves has changed. The way it was done before is that, for all matched payments we had to make, we used a interest rate to calculate reserves that will have equal to our investment return. For the unmatched payments, we used a 3% interest rate. Now we are using -- we're using a -- the risk-free rate of return, plus a liquidity premium, which is more or less around 50 basis points. That's what the reserves have -- that the positive effect on equity base on reserves. In addition to that, we changed our mortality tables for all our portfolio, both that came from Sura and that came from Interseguro. And we are using the new mortality tables published by the SBS, which are a lot more conservative. And that's the PEN 145 million hit on this quarter.

[Operator]

[Operator Instructions] We'll go next to Jose Block with Profuturo.

[Jose Antonio Block, analyst]

I would like to understand if record earnings at Interbank level are 100% [ recurrent ] or mainly proportion of the results [indiscernible] the release of the [ voluntary ] provisions that you mentioned?

[Michela Ramat, executive]

Yes. Actually, a portion of the earnings in this quarter is coming from that release. That, as was previously also asked, there could be some additional release in provision from the construction companies if the behavior of such companies is good. For sure, this quarter, that has been a little bit higher than what we expect in the forthcoming quarters.

[Operator]

And it appears we have no further questions. I'll return the floor to management for closing remarks.

[Michela Ramat, executive]

Okay. Thank you very much, everybody, for joining our call. And hope to see you in the third quarter conference call.

Thank you. Bye-bye.

[Operator]

And this will conclude today's program. Thank you for your participation. You may now disconnect. Have a great day.