Erste Group Bank Ag S/Adr

for the 2024 Results Conference Call-Off as the group. My name is Caroline, and I'll be your coordinator for today's event. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen-only mode. However, you'll have an opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your questions. If you require assistance at any point, please press star 0, and you'll be connected to an operator. I will now hand over the call to your host, Thomas Samarilla, to begin today's conference. Thank you.

Thank you very much, Caroline, and also a very warm welcome to everybody who is listening in on behalf of the group. We follow our usual conference call routine this time. So the call will be hosted by Willy Czernko, our Chief Executive Officer, Stefan Dörfler, our Chief Financial Officer, and Alexandra Habela-Drabek, our Chief Risk Officer. They will lead you through a brief presentation highlighting the achievements of the first quarter 2024. And after that, they are ready to take your questions. Before I hand over to Willy, my customary remark on forward-looking statements, as usual in this call, management will make forward-looking statements and accordingly the disclaimer on page two of the presentation fully applies to those statements. And with this I hand over to Willy.

Thank you, Thomas. Ladies and gentlemen, good morning and once again welcome to our first quarter 24 conference call. Last year, we have raised the bar as far as financial performance is concerned, and accordingly, I'm proud to report to you that in the first quarter, 24, we continued where we have left off in 23. I'm on page four of the presentation. Both operating profit and net profit are up year on year, as well as quarter on quarter. This was in no small measure due to NRI consolidating close to record levels, fees continuing on their growth path, and net trading and fair value result benefiting from positive valuation effects. Cost inflation was also less pronounced as deposit insurance contributions were significantly lower than in 23. Risk costs remained moderate. Overall, we posted a return on tangible equity of 17.2%, I think an excellent level for this time of the year, bearing in mind the upfront booking of various regulatory costs and banking taxes. To sum it up, we made a strong start to 2024, and accordingly, we are optimistic on delivering the financial goals we have set ourselves at the start of the year. Our excellent P&L performance, and I'm on slide 5 in the meantime, is fully reflected in the P&L dashboard. Net interest margin continued to consolidate around the level of 2.5%. fully in line with our expectations. The cost-income ratio is already well in line with the guidance we provided for the full year, as the risk-cost ratio is at 18 basis points, notably without any release of FLI provisions or overlays. And with all of this, we printed a return on tangible equity in the very healthy double digits in the first quarter of 24, as already mentioned. When it comes to the development of the balance sheet, I'm on page 6 already. Volume trends were muted in the first quarter. In addition, to being negatively affected by FX translation, especially in the Czech Republic and Hungary. A weak loan demand was not unexpected, as you always assume that loan growth will be back-end loaded in 2024, supported by low interest rates, and as far as Austria is concerned, also underpinned by a relaxation of macroprudential measures. and a government support scheme for the construction industry that was passed by Parliament just a week ago. Both should lead to a higher mortgage demand in the rest of the year. Consequently, we stick to our full-year growth target of 5%. Customer deposit volumes increased by 1.1% year-to-date, with our core retail and SME deposits being broadly stable. once again underscoring the strengths of our deposit franchise. Moving to our key balance sheet indicators on slide 7, all readings remained in the optimal range. Our loan-to-deposit ratio declined slightly, reflecting muted loan development and healthy deposit growth, as already mentioned. Asset quality continued to be satisfactory, with the MPL ratio staying flat at 2.3%. In Austria, we saw a mild increase in defaults, primarily at the minority-owned savings banks, while CE continued to perform very well. At the same time, MPL coverage, excluding collateral, remained almost flat at 84%. Our capital generation also remained strong in the first quarter. On a pro forma basis, we posted a C to 1 ratio of 15.5%. The slight quarter-on-quarter decline was driven by somewhat higher risk-weighted asset inflation. In terms of share buybacks, there are no changes to what we already said. We have already applied for a second share buyback in the amount of 500 million euros to the ECB. and hope to complete it successfully by year-end 2024. And with this, let's now have a look at the operating environment. I'm on slide 9 now. For 2024, our economies are projecting a moderate economic recovery in our core markets. Importantly, all markets are expected to do better than in 2023. Inflation should moderate further, providing room for central banks to cut interest rates. When exactly and how much is still a matter of debate, but our expectation certainly is that the downward rate cycle is fully underway in the Czech Republic and Hungary and will also start in the Eurozone in 2024. Other economic metrics, such as unemployment, fiscal and external balances, are expected to remain in good shape across our region in 2024, and all of this should brighten volume growth perspectives as we progress through 2024. Talking about volume growth, and I'm on page 10 in the meantime, let's have a look at the latest trends in our retail business. Housing loan stock remained broadly stable in currency-adjusted terms as the slow recovery in new business volumes continued with health increases seen particularly in the Czech Republic and Hungary. Demand in Austria, on the other hand, remained weak as many customers were holding back to take advantage of a government support package for the construction industry which includes an abolishing of the stamp duty for the first-time homebuyers until a value threshold of €500,000. This package in the meantime has been implemented by the Parliament and consequently we expect to have a positive volume effect in the rest of 2024. On the other hand, consumer loan demand was satisfactory, with strong demand seen particularly in Romania in the past quarter. On the liability side, our retail deposit base was broadly stable year-to-date. As regards deposit pass-through, retail pass-through rates continued moving up in Austria, but still at a moderate speed, and customers, while continuing to shift some overnight deposits into term and savings accounts and to investments, of course, still maintain more than 50% of their deposits in current accounts. This notwithstanding, we continue to see strong growth in the stock of securities savings plans, confirming the positive trend that started in the second half of 2022. Moving to corporates and markets business on page 11. Underlying corporate loan growth was actually somewhat better than reported figures implied on the upper right-hand chart. This was due to the fixed depreciation, shaving off approximately 400 million euros from the euro total, and the minor resegmentation from SME to the retail segment in the amount of 600 million euros. If we take this into account, we actually saw a reasonable start to the year. What is even more reassuring is that the deal buy plan started to build up, budding well for volume development in the remainder of the year. Within the corporate deposit business, we saw some increased activity with public sector entities, but other than that, a pretty uneventful quarter with deposit volumes increasing somewhat year-to-date. The markets business continued its strong performance. We were involved in the issuance of €52 billion worth of bonds and generated healthy income and secured this business. Asset management also enjoyed a good start to the year, with assets under management growing by 4% to €81 billion, with good net sales in Czech Republic, Hungary and Austria. This supported our strong feed performance. On the digital front, not to forget, the corporate business also made good progress. In the meantime, we have, as you know, onboarded almost 40,000 customers to George Business in Austria, and the first 600 in Romania. Now I hand over to Stefan for the presentation of the quarterly operating trends. Stefan, please.