LendingClub Corp Q4 FY2021 Earnings Call

Good day, and welcome to LendingClub's Fourth Quarter and Full Year 2021 Earnings Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Sameer Gokhale, Head of Investor Relations. Please go ahead, sir.

Thank you, and good afternoon. Welcome to LendingClub's fourth quarter 2021 earnings conference call. Joining me today to talk about our results and recent events are Scott Sanborn, CEO; and Tom Casey, CFO. You can find the presentation accompanying our earnings release on the Investor Relations section of our website. On the call, in addition to questions from analysts, we will also be answering some of the questions that were submitted for consideration by email. Our remarks today will include forward-looking statements that are based on our current expectations, forecasts and involve risks and uncertainties. These statements include, but are not limited to, our competitive advantage in strategy, macroeconomic conditions, platform volume, future products and services and future business and financial performance. Our actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are described in today's press release and our most recent Form 10-K and 10-Q, each filed with the SEC, as well as our subsequent filings made with the Securities and Exchange Commission, including our upcoming Form 10-K. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. And now, I'd like to turn the call over to Scott.

All right. Thanks, Sameer. Good afternoon, everyone, and thank you for joining us. We closed out 2021 in the strongest position in our history. Despite the typical seasonal Q4 headwinds, we delivered record results well above expectations, while maintaining our discipline and our focus on prime consumers. Q4 caps a transformative year for LendingClub as we successfully executed the strategy we laid out back in February, achieving several milestones, including: one, creating America's first digital marketplace bank, allowing us to combine the growth and innovation of fintech with the profit and resiliency of a bank; two, generating record revenue and profitability as we leveraged our data and member base advantages to return to scale and market leadership; and three, transforming and strengthening the economics of our business by continuing our focus on operating efficiency and benefiting from our bank capabilities, which includes adding a recurring and resilient revenue stream in the form of net interest income. We more than doubled our revenue for the full year, while notching records in each of the last two quarters while significantly increasing our earnings power. And we're just getting started. We plan to deliver another record year in 2022, delivering strong and sustainable levels of originations, revenue and earnings, while continuing to invest in our business to generate sustained growth in the years to come. Our target for the year is to deliver 40% revenue growth at the midpoint and an additional $120 million in earnings. We believe our core capabilities and strategic advantages will allow us to successfully navigate environmental factors, such as the virus, competitive activity, credit normalization and rising interest rates. As we enter 2022, we expect consumer demand to build as credit card balances recover towards their pre-pandemic levels, increasing our total addressable market. If the country were to enter another variant-driven lockdown, consumer spending could be temporarily constrained, but we do not believe our average member will be overly impacted for an extended period. While we expect the market to remain competitive, we're comfortable that our significant advantages will enable us to efficiently generate revenue at among the lowest acquisition costs in the industry, particularly given our large and loyal member base. Also, with the addition of the bank, we're now able to increase our pace of testing and innovation, while also increasing the lifetime value of our customers, allowing us to further penetrate the market and capture more value. Now with respect to credit underwriting, we will maintain our consistent focus on our core membership, prime customers with an average annual income of roughly $100,000. Following a recent period of historically low delinquencies, we expect vintages beginning in the second half of 2021 to return to pre-COVID levels and have underwritten, priced and reserved accordingly. The initial data we are seeing for early delinquencies for Q3 and Q4 provides support for our assumptions. I've long said that credit is a data problem. And with 150 billion cells of data captured on more than $70 billion in loans over 15 years through multiple credit and interest rate cycles, we have created a competitive advantage that is difficult to replicate. Our continued investment in our data infrastructure is allowing us to lean into this advantage. Lastly, it's worth touching on the general expectation of rising rates. I'd note that we've been through a rising rate environment before and have a grounded view of expectations based on our experience. I'll break it down into three buckets: impact on our borrowers, impact on loan investors and impact on LendingClub. The borrowers coming to us to refinance credit card debt will not experience a decline in demand due to rising rates. In fact, since cards are pegged to a floating rate, an increase in APR could actually stimulate consumers to seek value and alternative options like LendingClub. With strong balance sheets and low unemployment levels, we don't anticipate rising rates to put significant payment stress on our core customers. For loan investors, the short duration of our asset allows us to reprice quickly and maintain attractive risk-adjusted returns. Most of our marketplace loans are sold to banks, where we anticipate funding costs to rise more slowly given the significant deposits they already have on hand. For LendingClub, we expect the impact of rising rates in 2022 to be muted. We expect that any increase in the cost of funds on new deposits used to fund our balance sheet growth will be more than offset by the increased mix of high-yielding consumer loans. So summing it all up, we feel good about our position, and we expect to deliver strong results this year given our competitive advantages, operating momentum and large addressable market. We're a leader among a small group of fintechs who operate a bank. We have a proven track record of generating strong returns on our investments. With the attractive economics of our marketplace bank model, this is the right time to further invest to deliver durable and even stronger earnings growth. Our investments in 2022 will focus on three areas: one, building our on-balance sheet loan portfolio by holding 15% to 25% of personal loan originations to drive sustained recurring revenue and high ROEs. We also plan to begin holding a portion of the loans generated in our purchase finance business. In Q4, we integrated this operation onto our common platform to leverage our data and servicing capabilities. We now expect to generate similar returns to our core unsecured lending business, but with differentiated acquisition channels that skew towards even higher prime customers. Loans on our balance sheet generate three times the earnings of loans sold, and the investment is accretive within 12 months. Our second investment area is in marketing and product experience to increase the percentage of loans from new customers back to approximately 50%, further penetrating our market opportunity and increasing the lifetime value as they become repeat members for loans and eventually other products. Our third area of investment is in infrastructure to further integrate banking data and to move forward as a mobile-first, cloud-based digital bank. This is where the consumer is headed, and it's where we must continue to meet their expectations. Consumers want financial services that are seamless and on their terms, and they want personalized and predictive tools and information to make better and faster decisions. Our marketplace bank already delivers against these needs, and we're building a next-generation set of capabilities to meet future demand. Before I turn it over to Tom to discuss the financial results in detail, I'd like to give a huge shout-out to our highly engaged and resilient employee base at LendingClub. Thank you all for a great year, and I can't wait to tackle 2022 together. We are well-positioned to thrive. All right, Tom, over to you.

Thanks, Scott. Our strong financial results reflect the power of our new digital marketplace banking model, which combines our industry-leading marketplace technology with the strategic and financial advantages of our digital banking platform. Our efforts to radically transform over the last year are now complete as promised and position LendingClub to continue to build on this strong momentum as we enter 2022. Before I get into the quarterly results, I would like to ask those listening to the call today to please have our earnings presentation and press release open as I'll be referencing them in my remarks today. During the quarter, we were pleased to drive better-than-expected results through solid execution. Revenues grew 7% sequentially to $262 million, exceeding our range of $240 million to $250 million. Net income for the quarter was $29.1 million, which is also well above our target range of $20 million to $25 million. During the quarter, we benefited from better-than-expected credit performance and reinvested those benefits into increased loan retention. Our revenue growth again exceeded origination growth as the mix of our recurring net interest income increased by 27% for the quarter and now represents 32% of our quarterly revenue. As you'll see on Page 12 of our earnings presentation, our net interest margin at the bank continued to increase during the quarter to 8.25%, up 119 basis points sequentially due to the higher mix of consumer loans. As a reminder, this growth in net interest margin also factors in an 8 basis points increase in funding costs during the quarter. Total loan originations for the quarter were $3.1 billion, exceeding our guidance range of $2.8 billion to $3 billion despite the seasonally lower loan demand we typically see in the fourth quarter. Marketplace revenues were down a modest 2% from the third quarter, reflecting fewer loans sold and higher held-for-investment (HFI) portfolio retention of 25% in the quarter compared to 20% in the third quarter. Reminder, we earned about three times more income on loans we retained versus selling them. Therefore, keeping more loans on the balance sheet provides a very attractive return on investment. With respect to our recurring stream of net interest income, it's worth highlighting that it continues to exceed our loan loss provisions on the increased volume of retained loans. This is an important milestone for our business model because this net interest income essentially funds the CECL provision as we grow our loan portfolio, creating a highly profitable recurring revenue stream that will continue to accelerate our overall revenue growth. We also continue to see favorable credit performance in our loan portfolio, which you can see on Slide 14. While recent market growth is disproportionately in lower quality credit, on the left side of the page, you'll see that we have continued to maintain a focus on our high-quality prime customers with average FICOs well above 700 and incomes above $100,000. You can also see that our held-for-investment consumer loan portfolio is even higher quality and that early delinquencies have performed very well compared to pre-pandemic vintages. Importantly, our underwriting, pricing and provisioning all assumed normalization of credit. For the fourth quarter, you'll see on Page 6 of our earnings release that net charge-offs on our consumer portfolio were $5.4 million, up from $3.1 million last quarter. We expect charge-offs to continue to increase as we grow our consumer loan portfolio and credit performance normalizes. As you can see on Page 5 of our earnings release, our allowance for loan and lease losses on consumer loans held for investment is approximately 6.4% to cover expected losses over the life of the loan. Also on Page 6, you can see our health for investment consumer loan portfolio grew to over $2 billion, or 18% sequentially at the end of the quarter. The consumer portfolio growth was impacted by the intended sale of the yacht loan portfolio, where we transferred approximately $250 million of loans to held for sale. Over the course of 2022, we would expect to offset the sale of the yacht portfolio with growth in our consumer loans, including secured auto and patient finance products. During the quarter, we also grew our deposit base by 11% to $3.1 billion, with average interest-bearing deposit rates increasing to 38 basis points from 30 basis points as we grew our savings deposits by $304 million. In 2022, we expect interest rates for these savings accounts will increase. However, just as we saw in the fourth quarter, the higher mix of consumer loans will more than offset the higher funding costs, allowing our net interest margin to further increase. Lastly, a reminder that our loan portfolio has a very short duration of about 1.5 years on average. So as rates increase and the portfolio runs off, we have the ability to reprice the loans to reflect the new rate environment. Our strong bottom-line earnings for the quarter continue to generate ample capital, allowing us to continue to grow our loan portfolio. At the end of the year, our Tier 1 leverage ratio at the bank was 14.3%, compared to our targeted level of 11%. In addition, we have a deferred tax asset of approximately $200 million, which currently has a 100% valuation allowance reported against it. Over time, with continued profitability, we expect the valuation allowance to be reversed, further adding to our book value. Scott mentioned earlier a number of investments we're making in 2022, and I'd like to share some comments on how we're thinking about the returns. I want to be clear that we will continue to make investments when we believe that they have an attractive payback. Our investments in growing the consumer loan portfolio are generally generating material returns, and you saw that in 2021, and we'll see the impact on our guidance for 2022. Marketing investments are increasing our member base and delivering very attractive lifetime value. Finally, our technology investments are modernizing our platform, integrating banking and loan products, providing more products and services for our members. We currently have an incredible opportunity to strengthen our position over our competitors by leveraging the economic power of our business, and we believe that the positive results of these investments will become even more apparent over time. Now before I go into 2022, I want to bring your attention to Page 8 of our earnings presentation. This page demonstrates the significant transformation of our company over the past two years. On similar origination volumes in the fourth quarter of 2019 and the fourth quarter of 2021, we are now earning $74 million of additional revenue and $29 million of additional net income quarterly. This has fundamentally changed the revenue and income profile of the Company and positions us well for 2022 and beyond. Now let's turn to the operating environment we expect in 2022. First, as Scott indicated earlier, our guidance assumes generally favorable conditions while acknowledging the dynamic nature of the environment. Second, while we expect the market for consumer loans to continue to be strong amid higher interest rates, we remain focused on revenue growth. While originations are important, they are no longer the sole driver of our quarterly revenue. For the year, we expect total originations to be approximately $13 billion. Lastly, we expect to continue to grow investments in the areas we have discussed: portfolio growth with 15% to 25% of originations retained, increased member acquisition, and further development of our technology infrastructure. All these investments have very high rates of return, increasing our long-term revenue growth and making our business model more durable over time. With that backdrop, we expect to continue to build our revenue and net income growth trajectory. For 2022, we expect revenues between $1.1 billion to $1.2 billion for the full year, which implies an annual growth rate of 34% to 47%. We project another strong year of earnings between $130 million and $150 million for the year, which is six to seven times the increase over our 2021 results. Now let's shift to first quarter guidance. The first quarter is seasonally our lowest quarter. For the quarter, we are guiding to $255 million to $265 million of revenue and net income of $25 million to $30 million. When compared to 1Q of '21, revenues are up $149 million to $159 million, and net income is up $72 million to $77 million. As you can see, we have a very exciting year ahead of us to further improve our financial profile and drive long-term shareholder value. Let me turn it over to the operator for Q&A.

Thank you. We will now begin the question-and-answer session. Our first question will come from David Chiaverini with Wedbush. Please go ahead.

Thanks for taking the question. I wanted to start with the origination guidance. When I look at the $13 billion for 2022 and compare that to the average for the second half of 2021, it looks like it's about 5% above that level, which seems conservative to me. Could you provide some commentary around that?

Yes, David, this is Scott. Thank you for your question. The business has seasonal trends, and as we look at the second half of the year, it's important to note that our strongest quarters are Q2 and Q3. Conversely, Q4 and Q1 tend to be slower seasons. Right now, we're at levels similar to pre-COVID times. While we don’t have Q4 market data yet, we expect it to be around those levels as well. The significant growth we've seen in the past year mainly comes from subprime and near-prime segments, which we don’t heavily participate in. That's why we emphasized in our prepared remarks that our growth is returning to our primary prime customer base. We expect that market to grow, although it's lagging because these customers did not benefit as much from government support, resulting in reduced balances due to their cautious spending. We'll monitor how the year unfolds; typically, we experience a slowdown transitioning from Q4 to Q1, with activity increasing afterward. We believe we are well positioned for growth if the prime market, which is critical for us, starts to strengthen.

And in terms of the mix of originations, you guys have spoken about auto refi. Can you talk about how much auto refi is in there, if at all? And what type of tailwind that could provide as you scale into it?

Yes. I mean, the numbers for auto, I'm not going to give a specific guide on that. The actual numbers are small. The growth rate is obviously quite high coming off of the base. I would say we're out of scale this year where that business is able to cover its costs, and we expect the growth to be disproportionate but not a meaningful contributor to the financials in the near future. Just a reminder that the refi business we’re in is about saving customers money off of their existing car loans. So the core growth will come from us further penetrating the market in the personal loan space.

Okay. And then last one on originations. You guys retained about 25% for the balance sheet. I know you've historically said 15% to 25% is a good range. Has that range changed at all? Should we be thinking about 25% going forward?

David, I think, as we said, 15% to 25% is our guidance. We went up to the higher end of the range this quarter in part because we did see some favorability in credit, which allowed us to redeploy that back into the balance sheet. It makes financial sense since we earn three times as much money on it as we do on a sale. We want to defer some of that revenue recognized on a sale and improve our net interest income next year. You’ll see us ebb and flow in that range. Obviously, we’re motivated to make it as high as we can, but it is based on facts and circumstances with market conditions, our profile, and our capital levels.

Our next question will come from Bill Ryan with Seaport Research Partners. Please go ahead.

Thanks for taking my questions. First one, just on the provisioning rate and sort of looking at, obviously, you retained a little bit more loans. So you put up a little bit more provision. I think the percentage was a little bit higher. And I know you're using a present value approach on establishing the CECL reserves. What kind of provisioning rate as a percent of retained originations should we be thinking about through the course of 2022, and over time, as the portfolio matures and the present value effect unwinds? Thanks.

Yes. I think we put up about 6% on a present value basis. That will creep up from there over the life of the loan. So I think for modeling purposes, you're probably in that range of about 6% to 7%. The early portfolios will come in, as I said, around 6% to 6.5%, and then we're going to get some accretion, which adds a little bit. Again, it's proportional because you've got quarters now of seasoned portfolios that are all accreting at slightly different rates. But I would say in the ballpark of around 6% to 6.5% seems to be a good guide for where we think we'll be. Keep in mind that we did see some favorability this quarter, as you saw that factor through the provision line a little bit. But that's an example where we're putting up pretty significant amounts of CECL reserves when we retain these assets. So, the fact that we held another 5 points is a significant impact on revenue and earnings. We called that out in our press release to make sure you understand the implications of that. But that's about a $10 million swing for the additional loans we held this quarter.

Okay. As a follow-up, your marketing expense as a percentage of originations has slightly increased this quarter, not much compared to Q3. Historically, you mentioned it was around 1.9% to 1.95% before the pandemic, and you anticipate it will rise as you target new customers. How should we consider the timeline for that increase?

Well, I think there are a couple of things to highlight. The numbers I gave you are still pretty good. We think we'll get back to the pre-pandemic type of range in marketing. We feel very good about our efficiency there. One thing that will affect that line item is some of the growth we're expecting in funding. On the deposit side, you'll see some impact from deposit market. I would say, that’s probably somewhere in the $10 million range next year that we really didn't have to do this year because we had extra deposits and so we didn’t really begin marketing until maybe the third and fourth quarter. What you'll see next year is a full year of funding activities and we expect to see efficiencies in personal loans continue, but we will be ramping up some of our focus on new members. We feel good about our lifetime value. So we will invest additional margin into growing our member base. But those numbers are still pretty good, in that range; pre-pandemic we were running around 2% or so. So that number is where I think we’ll land. We’ll evaluate that on a quarterly basis, but we feel good about our efficiency and ability to attract new members.

Just to add to that, for next year, I think that number is the right place to anchor. As Tom mentioned, given that our value from customers is increasing, the actual return on that investment is also rising. Notably, flat marketing spend in a seasonally slower quarter, while still increasing our mix of new customers, we think was a positive outcome.

Our next question will come from Giuliano Bologna with Compass Point. Please go ahead.

Thanks for taking my questions. One of the first things I want to clarify was some of the investments that you're making. Is there any sense of the magnitude of the additional investments on the technology side and some of the other sides? If I raise retention to 25%, obviously that increases your model. What about increasing marketing significantly higher and managing other expenses? I'm trying to understand how much the investments in technology and the platform will amount to?

Yes. I think we can provide some context for you. We're going to invest in three areas. We're planning on retaining about $300 million more at the midpoint of 20%, which is roughly an additional $20 million of earnings that we will defer. This improves our revenue stream and increases our total lifetime value. We expect to invest about $25 million in marketing, which will be divided between deposits, new member acquisition, and growing our volumes. We also have about $25 million earmarked for technology investments, which include modernizing our tech stack, bringing banking systems to the cloud, and engaging customers with mobile application design. These are the significant investments we're making. Also, we benefited from taxes this year, so we will face tax expenses moving forward. But we've also factored in wage inflation in our expense base. We have exciting opportunities ahead in driving growth.

And as I consider the model perspective, one of the areas I want to further understand is marketing. I believe last quarter you mentioned around 100,000 new customers. I'm not sure where that stands for this quarter, but that implies maybe 35% to 40% new customers. You're discussing getting to 50%, could you provide insight into how much higher your marketing expenses as a percentage of volumes might increase as you transition?

Yes. I think what I mentioned previously to Bill is that 1.95% to 2% range seems to be a fairly good estimate for now. I don’t want to guide specifically by quarter, but our pre-pandemic levels ran in that range and possibly a little higher. So we believe 2% is likely our target for marketing as we move forward. That will depend on market conditions, but we have confidence in our efficiency and capability to attract new members.

That sounds good. And then one last question, you discussed some of the purchase rate loans and retaining those; is there an estimate of how much the origination volumes were in there, and how much retention could be expected?

Yes. This is really exciting. We're thrilled about the purchase finance business. We are now the issuing bank for about 30% of that business and will be retaining it on our books. So that’s a pretty significant impact year-over-year. That, combined with the sale—specifically, the lost interest income on the sale—amounts to about $50 million as we choose to maintain cash flow into HFI rather than a gain-on-sale model we had in 2021. That’s approximately $300 million, which has a major impact year-over-year. The transition positions that business differently and enhances profitability, as the loans are high-yielding prime loans, similar to personal loan economics, so we’re excited about revenue growth in that model.

I would note that it's a smaller base but similar to auto; we do expect disproportionate growth. Also worth repeating, in addition to providing diversified acquisition sources for new customers, the customers coming through that channel have a very appealing profile—typically around 740 FICO—making them prime customers.

Our next question will come from John Rowan with Janney. Please go ahead.

Forgive me if you addressed this already. What was the charge-off rate at the bank? And what do you think that number is with a fully mature book?

The charge-off rate was about 1.9% for the quarter. The portfolio is maturing as we expect it to grow. We won't hit our target until well into next year. I believe it will be somewhere in the 4% to 4.5% range, depending on the mix. The growth rate has kept that charge-off number down, but it will go up as the portfolio matures. For the quarter, I stated 1% and we expect to rise throughout the year. We also have a strong provisioning strategy that considers the quality of our originations. We're closely monitoring credit quality.

And obviously, the margin profile of the bank has changed considerably as you're putting on higher-yielding assets. How much more do you think there is to move up on the margin?

Yes, you're specifically talking about the net interest margin (NIM), right?

Correct. We've seen nice growth in the NIM over the last few quarters, at 8.25% this quarter. We're expecting that to continue as we remix the portfolio. I think we could hit the circa 9% level, providing another 75 basis points to a full point depending on the factors we've discussed with auto and other mix variables. We're also growing our commercial businesses, so I think 9% is an internal target for us.

Our next question will come from Stephen Kwok with KBW. Please go ahead.

Thanks for taking my question. I just had a follow-up around the unsecured consumer loan yield. I know the yield came down a little bit, around 30 basis points sequentially. Was that related to mix or seasonality? What type of yields are you projecting for the fourth quarter and 2022?

Yes. So some of the yields that you see in the financial statements are the coupon plus the impact of deferring fees and costs. That fee and cost comes in as additional interest income. What you're seeing in the quarter and fourth quarter is some impact from prepayments. As prepayments pick up, the remaining unamortized fee is brought in through interest income. So we’ve experienced a slightly higher yield than expected. The underlying numbers are consistent quarter-over-quarter, but it's primarily due to mix with higher quality loans. So, total prices may be about 30 basis points lower. It's not a massive shift. However, you’ll continue to see movements in the interest-earning asset numbers as we sell loans related to yacht loans, for example.

Just to reiterate, prepayments were elevated during the pandemic. We expect them to normalize this year. As those return to normal levels, you'll see impacts.

Got it. Should we assume something like the mid 15% or 15% range as a good run rate for the yield?

Yes. It's difficult to predict, primarily driven by prepayments. I would be wary of forecasting yields too far out. Our prime customers are in very good health, leading to substantial prepayment activity, particularly during the pandemic. We cannot forecast with certainty how long this will continue.

This concludes our question-and-answer session. I would like to turn the conference back over to Sameer Gokhale for pre-submitted questions.

Thanks. A few questions came in from our retail investors. So why don't we go ahead and try some of those? The first question we received was regarding increasing profitability since becoming a bank. Has that changed your willingness to spend more than pre-COVID levels on customer acquisition or expanding your credit box to get more customers?

As our lifetime value increases, we have the capacity to invest more in customer acquisition because we will earn more from those customers. As Tom mentioned, for this year, our expectation is to be back at pre-pandemic levels. In terms of credit box, that typically refers to willingness to take on lower credit, which will not be our focus. We intend to participate more at the upper end of the market because we indeed have a lower cost of funds since the bank acquisition, allowing us to competitively price in that area.

Great. Let's go to the next question. An investor asks, will we be looking at reserve releases as vintages season and credit performance continues to perform strongly or will we have less upfront provisioning required for the newly acquired loans? How will this be presented in the future?

It's a good question. The dynamics suggest that because we're growing our loan portfolio quickly, it’s one of the strengths of our model. We’re able to originate very high-quality loans and retain a portion of our originations on the balance sheet. If we do see favorable credit vintages, that will reduce our provision, but we don’t expect to be releasing provisions. We expect to be adding more loans to the balance sheet. This activity will cause our net provision to decline as a percentage, but the total provision will still be high due to CECL accounting. We're planning to grow our balance sheet next year. Last year we had about $2.3 billion of loans retained and our current guidance is $2.6 billion at midpoint. We are looking to put assets to work, and this will create attractive income stream while providing clear visibility for future revenue. You can see this building momentum in net interest income.

Great. And one last question. Are you planning to sell auto loans or balance sheet all of your production? And how long until the auto business gets scaled?

Similar to our purchase finance and personal loan business, this will involve a combination of marketplace and balance sheet. This strategy enables us to reach a broader range of customers, leading to efficient marketing and balancing strong in-period revenue with long-term recurring revenue while being flexible in various market conditions. In terms of scale, we won't disclose specific origination numbers, but as a measure, we expect the business to cover its costs this year.

Okay, great. Well, I think those are all the questions we have time for today. Thank you all for joining us on the call. If you have additional questions, please feel free to reach out to the Investor Relations team. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.