Deutsche Boerse AG

XETRA:DB1

Earnings Call Transcript 2021-Q3

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the Deutsche Börse AG Analyst and Investor Conference Call regarding the Q3 2021 results. [Operator Instructions] Let me now turn the floor over to Mr. Jan Strecker.

[Jan Strecker, Head of Investor Relations]

Welcome, ladies and gentlemen, and thank you for joining us today to go through our Q3 2021 results. With me are Theodor Weimer, Chief Executive Officer; and Gregor Pottmeyer, Chief Financial Officer. Theodor and Gregor will take you through the presentation today, and afterwards, we will be happy to take your questions. The presentation materials for this call have been sent out already via email and can also be downloaded from the Investor Relations section of our website. As usual, this conference call will be recorded and is available for replay. Let me now hand over to you, Theodor.

[Theodor Weimer, CEO & Chairman of Executive Board]

Thank you, Jan. Welcome, ladies and gentlemen, from my side as well. Let me start today's call with an update on the implementation progress of our strategy. Afterwards, Gregor will presenting the financial results, as always, in greater detail. The third quarter was the first period for quite some time where we did not see significant cyclical swings in either direction. Therefore, the 18% net revenue growth resulted purely from the secular and inorganic growth efforts, which form our growth strategy. Let me highlight the key developments in the different reporting segments along our value chain. In our pre-trading business, we saw the Qontigo Index and Analytics segment delivering the 10% growth we are targeting as part of our midterm plan, and this also some cold COVID headwinds remained. In the Institutional Shareholder Services segment, we again achieved a performance significantly above our initial expectations. Amongst others, this was driven by higher double-digit growth in ESG-related products and services. For our Financial Derivatives segment, Eurex, some cyclical headwinds remained, but secular growth due to product innovation offset them. With lower comparables and a more uncertain market environment, it increasingly feels like Eurex's performance is improving. In our commodities segment, EEX, the secular growth trend of higher market share related to the proliferation of renewables was complemented by cyclical tailwind due to the significantly increased energy prices. In the foreign exchange segment, 360T, we delivered solid growth areas on rates in a low-volatility environment and thus continued to outperform our main peers. In the cash equity segment, Xetra, similar to the development of Eurex, we observed a slight improvement of the cyclical environment since August with some year-over-year volume growth. While small net interest income headwinds persisted in the third quarter for our post-trading segment, Clearstream, secular growth exceeded our expectations and resulted in solid year-over-year growth. With 28% organic growth in the third quarter, the Investment Fund Services segment, IFS, continues to be the, by far, best performing asset of the group. Once more significantly exceeding our even high growth expectations. It is great to see our organic growth and the benefit from M&A are coming together in this area. Whilst every quarter is different, we expect to now enter a phase with many more like-for-like comparables on the cyclical side. This will help us to continue showing the true organic and inorganic growth potential in our business model. The potential upswing of the cyclical part of our business resulting from rising inflation, potential tapering of the central banks and ultimately, rising rates in the longer term would be quite powerful additional growth potential that is not yet included in our guidance. Since the announcement of our midterm targets last year, we have made good progress towards our 10% compound annual growth rate formula, as you can see on Slide 2. As we all expected, net revenue in the first half of this year was under some cyclical pressure because of the record activity levels at the beginning of last year. However, we were able to successfully mitigate these effects with continued secular net revenue growth and an increasing M&A contribution. Due to the cyclical headwinds we experienced, we decided to manage the organic operating cost as prudently as possible. In addition, our continuous improvement efforts are paying off. Therefore, the overall operating cost increase in the first 9 months of the year was entirely driven by consolidation effects. With this, we are well on track to deliver upon our guidance for 2021, and the development is also fully in line with the expected Compass 2023 growth trajectory. In order to deliver upon our midterm targets, we'll continue to pursue our successful M&A agenda. The M&A focus areas you see on Page 3 of the presentation are the part of our business that benefit the most from an inorganic increase of breadth and scale. Let me briefly summarize the current development of our M&A activities. The integration of our latest major acquisition, Institutional Shareholder Services, is very well on track. The initial guidance of more than 5% net revenue growth has proven to be on the conservative side. Our ambition is double-digit growth, which also includes further small acquisitions. We are not shut by new businesses, but we are also continuously reviewing our existing portfolio of assets. In 2020, we sold, as you are fully aware of, the regulatory reporting hub to market access. In September, we announced the sale of our 50% stake in REGIS-TR to Iberclear. The transaction is expected to close in the first quarter next year and will result in a proceed of around EUR 50 million. This helps us fund new initiatives. The acquisition of the majority stake in Crypto Finance again is now scheduled to close in the fourth quarter. Especially with its crypto storage offering, it is an important strategic step on our way to building a trusted and fully regulated digital asset ecosystem in Europe. In terms of further M&A opportunities, the high valuation environment we are currently in is certainly challenging, but we continue to see concrete opportunities, mainly in pre-trading data and analytics and in the fund business, where our requirement of a strong strategic fit, good synergy potential, sensible financials and high growth uncertainty are met. Before I hand over to Gregor, let me give you an update on our portfolio of minority investments, which includes a broad range of attractive businesses along our value chain, as you can see on Slide 4 of your presentation. Also, we have invested more than EUR 200 million across our corporate venture capital portfolio and other minority investments, and we have now decided to generally increase the funding by another EUR 200 million on a case-by-case decision basis. The first new investment is a Series B investment in WeMatch, which is a Tel Aviv-based fintech company, focusing on trading workflows for the wholesale derivatives industry. In the third quarter, we saw a very favorable development of our portfolio. The value of our stake in AI-powered tech platform Clarity AI increased by more than EUR 30 million due to a new financing round. Since this day it's held at fair value, it resulted in a positive impact, of course, on our income statement. The value of our stakes in Forge and Trumid has also developed very favorably. Both organizations are now valued at roughly USD 2 billion or more with Forge planning to go public in the stack deal, but those stakes will continue to be hidden reserves since they are not held at fair value. With that, let me now hand it over to you, Gregor.

[Gregor Pottmeyer, CFO & Member of Executive Board]

Thank you, Theodor. Let me start with the detailed financials in the third quarter on Page 5 of the presentation. Organic net revenue growth of 7% was entirely driven by secular factors. For the first time this year, cyclical net revenue drivers were broadly neutral as we entered a more like-for-like comparables environment. Inorganic net revenue growth amounted to 11% and was mainly driven by the consolidation of ISS in February. Consequently, the operating cost growth was almost entirely driven by consolidation effects. The EBITDA includes the result from financial investments of EUR 37 million, which benefited from the revaluation of our stake in Clarity AI. Depreciation amounted to EUR 73 million and includes effect of around EUR 25 million related to purchase price allocation of acquired assets in accordance with IFRS. On this basis, the cash EPS amounted to EUR 1.74, an increase of 36%. On Page 6, we show the development of financials in the first 9 months of 2021. With the addition of the third quarter, these numbers are now starting to improve, but they still suffer from the effect of some strong cyclical headwinds in the first half of the year. In order to compensate for these effects, we engaged in prudent cost management which limited the overall operating cost increase in the first 9 months to consolidation effects. On Slide 7, we provide an overview of the 3 components of net revenue growth in the first 9 months compared to the same period in 2019, which is a Compass-based year. Consolidation effects resulted in a compound annual growth rate of 5%. Secular growth being the key component of our strategy to increase net revenue developed as planned with a CAGR of 6%. The cyclical growth contribution was negative at a CAGR of minus 2%. This was caused by much lower net interest income at Clearstream and lower trading activity at Eurex, particularly in index derivatives. I'm now turning to the quarterly results of the segments, starting with Eurex on Page 8. While we saw some temporary spikes on average, market volatility was still relatively low in the past quarter. As a result, index derivatives and margin fees continued to decline against the previous year. This was partly offset by a speculation around inflation and long-term rates, which made interest rate derivatives grow by double-digit rates. Some of the cyclical headwinds for Eurex are offset by product innovation, particularly in Index derivatives. With this, we address multiple trends. We support the trend towards more sustainable investing and are the leading global provider for ESG derivatives. We see ourselves well positioned to benefit from the ongoing trend towards passive investments. For instance, by being the leading exchange in terms of open interest in MSCI derivatives. We also continue to support the futurization of OTC derivatives. For example, with the expansion of our Total Return Futures segment. In addition, we are promoting the trend towards micro-sized contracts and crypto derivatives where we see a substantial increase of client demand. Our commodity business, EEX, shown on Page 9, started to accelerate in the third quarter for 2 reasons: First, we saw continued secular growth through market share expansion in light of the trend towards renewables; second, gas and power prices started to rise significantly in August, which resulted in a substantial increase of short-term trading and hedging activities. Judging from the current market environment, this development is expected to continue well into autumn and winter. Let me now turn to Page 10 and the FX business. Even though FX market volatility continues to be on a very low level, we saw good volume and net revenue growth in the third quarter. This was particularly driven by the onboarding of new corporate and buy-side clients with a solid pipeline for the coming quarters. Proof for the success is single-digit year-to-date net revenue growth against comparables that include a record first quarter last year. With this, we are outperforming our biggest peer in Europe. Next, I'm turning to Page 11 in our cash market, Xetra, where we saw broadly stable net revenue despite a weaker market volatility environment compared to last year. Operating costs were managed to be flat as well. EBITDA declined because we booked the initial double-digit gain from the better performance at Tradegate last year. This year, the contribution amounted to now regular level at around EUR 7 million per quarter. For our post-trading segment, Clearstream, on Slide 12, the third quarter was the first with overall net revenue growth since Q1 2020. This is due to the remaining small interest rate-related headwinds and being overcompensated by a solid growth in custody and collateral management. Due to increased amounts of bonds outstanding and higher equity market valuation, the assets under custody are currently growing above our expectation. Despite all the market turbulences, the last month of negative year-over-year growth of assets under custody was March 2018. This shows a steadily growing nature of our post-trading business very well. The Investment Funds Services segments, which you find on Page 13, even improved its strong performance compared to the first half year with 28% organic net revenue growth in the third quarter. This was based on the continuous onboarding of new clients and portfolios, both in custody and on our distribution platform. The synergies between the 2 offerings are now starting to play out nicely, and we expect growth rates above our guidance to persist for the time being. In addition, we see further M&A opportunity to increase both the scale and scope of the offerings. To give you more insight into our high-growth business segments, we are inviting you to a series of business deep dive meetings. We will start with the ISS segment on November 10, and the IFS segment on November 29 and will continue this next year. Slide 14 shows the Qontigo segment, which benefited from net revenue growth across all line items and achieved our 10% growth target. EBITDA includes a gain of around EUR 32 million from the revaluation of our minority stakes in Clarity AI. On Slide 15, we show the Institutional Shareholder Services segment, which again outperformed our expectation in the third quarter. Growth is mainly driven by the strong performance of corporate solutions and ESG analytics, but the well-established governance solution business also showed mid-single-digit growth. After announcing 3 smaller M&A transactions this year already, a few additional projects are well underway. Beyond this, we see further opportunities to complement the business inorganically going forward. The combination of strong organic growth prospects and the addition of M&A from time to time should reside in double-digit overall net revenue growth. The last page of today's presentation shows our guidance for 2021 in the context of our Compass 2023 mid-term plan. Although Eurex developed weaker than expected for cyclical reasons, we are completely in line with our guidance for the full year at around EUR 3.5 billion net revenue and around EUR 2.0 billion EBITDA. This is because we saw better-than-expected secular growth, particularly in the IFS segment. In addition, the inorganic growth component is slightly larger than expected due to early closing of the IFS acquisition. Furthermore, the accelerated full purchase of Fund Centre and the favorable development of some minority investment is a tailwind. This concludes our presentation. Thank you for your attention. We are now looking forward to your questions.

[Operator]

[Operator Instructions] The first question comes from Benjamin Goy, Deutsche Bank.

[Benjamin Goy, Research Analyst]

One question. You now at EUR 1.45 billion EBITDA, so you might say you're a bit ahead of your run rate for the full year. I was just wondering how you think about particular cost spending going into the fourth quarter, and whether you have kind of a buffer? Also Eurex looks to be off to a good start in October? Or -- yes, could you also come out above that level?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes. Thanks, Benjamin, for the question. So far, with regard to the cost topic. So you have seen over the first 9 months is rough -- basically flattish on a constant portfolio basis, and that's also my expectation for the fourth quarter. We confirm our guidance for the full year. So -- and I do not want to speculate around buffer. So our confirmation is that we achieve our targets.

[Operator]

The next question comes from Arnaud Giblat, Exane BNP.

[Arnaud Maurice Andre Giblat, MD & Research Analyst]

I've got a question on IFS. I was wondering if you could give us a bit more color around the acquisitions of the Fund platforms and the successful upselling you've had. What are the kind of sizes of migrations that you're heading towards for the Fund platforms, the margin uplift that take place as a consequence of an upsell? What's the picture you're having to distribute is to convince them to move to [indiscernible].

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes. Thanks, Arnaud, for the question around investment fund services. So we have a big advantage, big USP. So we have established here a platform, a process [indiscernible] platform, where we have a more standardized process, and we have more than 50% cost advantage compared to the back-office processes in the banks. And therefore, there's cost pressure in the banks is always the case. So we have a high benefit here. And here, we are also ahead of our customers. And so far, we have such a long customer pipeline who wants to connect to our platform or to do outsourcing or even to sell our business, all of these 3 options, I think you know. So that we are very confident that the current level on an organic basis and in the first half year, it was 26%. In the third quarter, it was 28% purely on organic growth. And on top, there's M&A in inorganic growth. This will continue over the next year. So very positive, very strong development.

[Operator]

Next question comes from Gurjit Kambo, JPMorgan.

[Gurjit Singh Kambo, Head of Diversified Financials Research]

Just a couple of questions. So firstly, in terms of the Crypto Finance, can I just confirm you're saying, there'll be EUR 20 million of revenues in the final quarter? Is that for the full quarter firstly? And can you give us sort of any indication of what sort of margins that business makes. That's the first question. And then secondly, just around the, I guess, the more cyclical businesses. I think there's been some changes in the tick sizes of some of the products. Has that had any impact either negative or positive do you think on volumes? Those are the 2 questions.

[Gregor Pottmeyer, CFO & Member of Executive Board]

Okay. Gurjit, thank you. So with regard to Crypto Finance, so the EUR 20 million we say, so that is basically the full year number for 2021, roughly. So -- and as we expect consolidation now within the next week, so it will be just a fraction out of that. But with regard to 2022, we are very confident that you will see in that asset high double-digit growth on the revenue side. And even the asset is currently also has a nice profitability, and obviously, that's also a scalable business because Deutsche Börse will help Crypto Finance here to scale up. And so far, you will also see a nice margin increase here.

[Theodor Weimer, CEO & Chairman of Executive Board]

And with regard to the Eurex tick size, Gurjit. So this is something we are regularly reviewing depending on the development in the order books, and indeed, in summer, we decided to change the tick size for some of the key benchmark index products. This has been done in consultation with market participants. We've consulted with around 100 buy-side firms, and it's beneficial for them because it reduces the implicit transaction costs if the tick size is smaller. So evidence has shown this in the past similar constellations on Eurex and other exchanges, and therefore, it should be beneficial to the buy side going forward.

[Operator]

The next question comes from Jochen Schmitt, Metzler.

[Jochen Schmitt, Research Analyst]

I have one question on custody net revenues of Clearstream. In Q4 '20, these revenues were impacted by fee rebates, if I remember correctly. Will there be a similar effect in Q4 this year? Or may we assume quarter-on-quarter growth for Clearstream's custodian net revenues in Q4? That's my question.

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes, Jochen, thanks for the question. As we have mentioned in our presentation, so the Clearstream custody business is a constantly growing business. And so far, over the last 3 years, every quarter, it's basically increased. And that's also our expectation for the next quarter, but also for the next year. So overall, we guide from 3% to 5% net revenue growth on a secular basis, if you exclude basically the NII impact. And I do not expect that there is a drop in Q4.

[Operator]

The next question comes from Tobias Lukesch, Kepler Cheuvreux.

[Tobias Lukesch, Equity Research Analyst]

A quick question on the ISS segment, the actual surprise this quarter. The EUR 69 million in revenue, could you quickly elaborate how sustainable that is? Where the uptick is actually coming from? And how we should basically expect the Q4 performance to be?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes. Indeed, ISS was a very strong quarter with EUR 69 million, where we had an increase on a like-for-like basis of 16%. So yes, so a year ago, we basically said when we were in the process to acquire ISS that we expect at least a growth of 5%. So meanwhile, you see our announcement that we basically changed it to basically 10% growth, including some smaller M&A contribution and the additional, let's say, 6% in Q3. So it was a very positive development. And the reason is that specifically, the 2 areas, so the ESG data analytics has much higher growth rate. It's clearly above 20% growth rate. And the more we continue with it, so the share of that kind of product growth increase. And so far, this will also help us to increase our growth rate here. The second segment that is growing double digit is a governance solution topic where we basically concise customers in the different area, and even though the governance solution basically where ISS is coming from as mid-single-digit cost. So overall, I would not guide that we say we will continue with the 16% within the next quarter, but double-digit growth is an expectation what we have here for the next 2 years.

[Tobias Lukesch, Equity Research Analyst]

So you would not expect a sudden drop in Q4, right? So mid-60s to the higher 60s is something which is sustainable then?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes, I expect something above 60.

[Operator]

The next question comes from Andrew Coombs, Citi.

[Andrew Philip Coombs, Director]

Three questions from me, please. Number one, the revised guidance in ISS revenues previously more than 5%, now more than 10%. But in your commentary, you said that embeds some smaller M&A. So perhaps, you could just clarify how much of the increase from more than 5% to more than 10% is because you're now more or you now have more conviction on the M&A pipeline versus how much of the improvement is organic related? That would be the first question. Second question would be on results and strategic investments, the minority investments and you talked about a 2x money multiple. Can you just provide a bit of color on the accounting methodology there? Is it IPV guidelines, third-party auditing, any clarity you can provide on how regularly you revalue those stakes? And then the final question on Eurex. I think you previously said a EUR 20 million revenue opportunity on some of the MSCI derivative product launches? Any update on there, and in terms of time frame for recognizing that?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes, Andrew, thanks for the 3 questions. So I think I covered the ISS question, but I will repeat it. So we say, it's a double-digit growth. So I don't want to say, it's more than 10%. So we say, it's basically double-digit growth here. And we said, we include some smaller M&A contributions here. So that's in the range of, let's say, 2% to 3% roughly. So -- and the organic growth is 7% to 8%. So roughly in that area. I would expect that ISS will continue to develop over the next 1 to 2 years. So that's the answer to the ISS question. With regard to the minority investment, here we changed methodology from an accounting perspective for 2 or now for 3 assets. So the majority of investments we did in the past really not shown with an impact in the P&L. So it's just shown in the equity in our balance sheet. So there's more than 2x multiple we show in the equity. And you have to decide it when you acquire assets, then you have to decide how -- what kind of accounting method you pick. And therefore, the Clarity AI and our 360X and now the new assets we made as an investment, WeMatch. So these 3 assets -- currently, these 3, we will show them as a fair value valuation in our P&L. So any time there is another investment areas, A, B, C, D, so that will be revalued. And obviously, we expect that we increase our value here, but there's obviously a fluctuation behind it. So it's market pricing what we take here. So no internal cash flow analysis, discounted cash flow, whatever. So it's market prices. And for this, we have -- again, Clarity AI, 360X and WeMatch, you will see impact in the P&L. For all the other investments we did in the past, we will be impacting the -- purely in the equity. And for the future, as we said, we also want to invest another EUR 200 million for the next 3 years is how the majority will be shown as fair value. Third question, Eurex MSCI derivatives. Yes, very positive development. We said, in our speaking notes, we are #1 in the MSCI derivatives and part on a global basis. So you are aware that we have the lead year for the MSCI in Europe and also in Asia, so not in U.S. And therefore, we expect really more than double-digit growth on this element. And so it's more than EUR 20 million already this year. And I always like to compare -- look at our product, we make EUR 400 million to EUR 500 million. I don't want to tell you that out of this, more than EUR 20 million MSCI derivatives, you will see some comparable we show on the euro stock side. But it shows you that there should be high potential for us really to increase that value -- this value here in MSCI derivatives.

[Operator]

The next question comes from Ian White, Autonomous Research.

[Ian White, Research Analyst]

Just a couple of quick follow-ups from me, please. Firstly, is there any help you can provide us on the venture capital portfolio, and how to think about further growth in the value you expect to accrue to the group there over the next 18 months or so, please? I wondered if there are any internal projections you might maintain for any of those minority stakes, for example, that could help to inform that discussion? And just secondly, is there anything you'd say about the pipeline for analytics revenues in Qontigo? I wonder if there are any specific plans there to boost sales efforts significantly during the fourth quarter now that the COVID travel restrictions have been very substantially relaxed. Those are my 2 questions, please.

[Gregor Pottmeyer, CFO & Member of Executive Board]

All right. Yes, with regards to the venture portfolio, maybe to explain it a little bit broader. So far, over the last 3 years, we invested some EUR 200 million and the focus is technology, innovation, digital assets and so on. And so far, we are quite successful. From a financial perspective, I said it's more than multiple of 2x. But it's as important as from a strategic perspective that we learn new technology, new assets, new development, digitization, tokenization. So that is of strategic value for Deutsche Börse, and therefore, we do not rule out that if we identify an investment where we own, let's say, some 10% to 20% in the beginning that we are also interested to acquire majority if it's core strategic for Deutsche Börse. And for instance, for 360X, where we started to go into nonfinancial asset class like real estate, like art or like esports, we think we can create with the competencies of Deutsche Börse as IT technology-leading provider that we can create new marketplaces here. And our expectation is that we really increase the value. And for 360X, for instance, what is under the leadership of Carlo Kölzer, who developed in his former career the FX business here in [ Germany ] in 360T, and he was able to create close a unicorn. So why it's not possible that another unicorn here in 360X. So that is basically our investment where we are committed, and we have all the good reasons to believe that we are successful here. With regards to your second question around Qontigo and Analytics, yes, indeed, we see now a positive development here. And so still, we have headwind out of the COVID situation, specifically in the U.S. market. So we see progress here in Q3, and we expect further progress here in Q4. Q4 is usually the quarter with the strongest net revenue basis in Qontigo, specifically in the Analytics business, and we expect the same will happen this year. So you will see continued growth and double-digit growth is our expectation for the next years for Qontigo overall and including Analytics.

[Operator]

The next question comes from Martin Price, Jefferies.

[Martin Gerald Price, Equity Analyst]

My question was actually on the post-trade business. I was wondering how the new German digital securities law potentially changes the way you can offer issuance, custody and settlement services. And to what extent that could be a game changer in terms of cost savings or margins within the domestic central securities depository or broader Clearstream business over the longer term?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes. Thanks, Martin. Good question on technology. Yes, obviously, it's very good that Germany opens up here now for digital certificates basically, and that helps to boost our strategy. We invest currently in a new digital platform for Clearstream, and obviously, any regulation what the process here is very positive. So our principal logic is that we go for digital CSD, for digital ICSD that tokenization is a core element here. And you know that this tokenization, we did now for our collateral management activities, what is bundled under HQLAX, where the most important market participants already connected. And it's very much appreciated because we are overall able to increase the efficiency of the market here. And then we will see what kind of benefit we have to give to the market participants and what kind of benefits we can keep for us, but overall, I think it's a very important development. And with our leading technology, I think we are ahead of the others, and that will have positive impact for Deutsche Börse.

[Operator]

The next question comes from Michael Werner, UBS.

[Michael Joseph Werner, Executive Director and Equity Research Analyst]

Two questions, and apologies if you addressed one of these before. But we saw in Q3, the financial expenses have come down quite sharply, and I think you alluded to some tax refunds leading to a lower number in Q3. I was just wondering what that number would have been in a more normalized environment? And then second, I was just wondering if you guys, as a company, have been seeing any pressure with regards to wage inflation or expect any pressure from wage inflation or any other type of inflation. I know you guys have an annual productivity drive to improve productivity by 2% to 3% a year. Is there any way to potentially increase that productivity efficiency to address any inflationary pressures on the cost side?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Thanks, Michael, for the question. With regard to the financial result, there is a onetime effect of EUR 7 million. So we show minus EUR 4 million. The real number would be minus 11. And the effect is out of the used rate for provision for interest on taxes. So, so far in Germany, the rate was 6% and that was from an authority perspective that this is not the right number as an interest rate. And so we included now some 3%, so basically half of it. And so the effect overall on the outstanding tax provisions is roughly EUR 7 million, so as a onetime effect in Q3. With regard to the second question of the wage inflation, yes, we -- obviously, currently, there is higher inflation rate, and so far, we have not decided what is the inflationary salary increase next year. So we are still in the process to charge on that. But you can see our commitment that in principle, we want to increase the efficiency in our process via our continuous improvement process that we are able to cover that inflationary increase on salaries, and that's also our target for the next year.

[Theodor Weimer, CEO & Chairman of Executive Board]

And in addition, Mike -- Theodor speaking here. The majority of our people, the vast bulk of our cost on the HR side are coming from people who are not organized by the trade unions. So where we have voluntary component in there, and therefore, we do not expect a huge inflation drift higher than in the past. That's not the case.

[Operator]

The next question comes from Johannes Thormann, HSBC.

[Johannes Thormann, Global Head of Exchanges and Analyst]

Johannes Thormann. One follow-up question and one other, please. On Clearstream, you elaborated that the revenue growth guidance on NII -- excluding the NII effect. How large will be the miss of the NII guidance this year? And what do you expect as a rebound next year? And secondly, at 360T, your fixed trading units, we saw good revenue growth, but this did not translate into better EBITDA. Is this business still too small? How can you scale this business?

[Gregor Pottmeyer, CFO & Member of Executive Board]

Yes. So the first question on NII, I think we achieved now the bottom is some roughly EUR 50 million NII. This year, it's basically purely the 30 basis point fee income from -- for euro and for U.S. dollar-denominated cash collaterals we hold. So that should be the bottom. And with regard to the outlook, it depends basically when the interest rates and here the short-term interest rates will increase. So you have seen some indications that U.K. will potentially do with that also an expectation that U.S. could do something next year, Europe, I don't know. So you have basically to make your assumptions, but in principle, there is upside potential for next year and for 2023, what I would also expect. And the customer cash balance is still around, let's say, roughly EUR 15 billion, 50% is U.S. dollar, 35% is euro and 15% are other currencies. And now you could make also your math what you would assume for the next 1 or 2 years. With regard to 360T EBITDA. So there's an impact out of onetime costs at -- on the EBITDA number. So the real operational number is that we have also double-digit growth on EBITDA. So let's say, 10% on revenue. And then we have at least the same on the EBITDA, if I exclude some onetime allocation costs here. So there is a scalability and this is insured and will happen in the future.

[Jan Strecker, Head of Investor Relations]

All right. With this, we answered the last question on today's call. Thank you very much for your participation, and have a good day.