Moneta Money Bk

Dear ladies and gentlemen, welcome to the conference call of Moneta Money Bank AF. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by the zero on your telephone for an operator assistance. May I now hand over to you, Mr. Spurney, Chief Executive Operator and Chairman of the Board of Directors. Sir, please go ahead.

Good afternoon, ladies and gentlemen. It is my pleasure to introduce today's presentation of Momentum Money Bank 2020, results, early cover, both the full year and the developments of the last quarter. First and foremost, I have with me Linda Cavanova, our Head of Investor Relations. Then let me introduce other presenters. We have Karl Norman Fox, our Chief Risk Officer. We have Mr. Andrew Gerber, Chief Product Marketing Officer. We also have Mr. Novosny, Jan Novosny, Chief Business Development Officer on the commercial side, and Jan Srecek, our CFO. I would like to ask you please to turn attention to page number four of the presentation, which is going to provide a couple of highlights on governance of the bank. If you look at the MSCI index, the bank achieved in 2020 an A rating of corporate governance, which pleases us. Secondly, we are also increasingly environmentally conscientious band where we reduce carbon footprint by close to 60% and we will continue in doing so and we are also very proud of the fact that Moneta is the only Czech company included in the Bloomberg Gender Equality Index, where we had a stable score for a second year running. If you turn the page to page number five, Let me briefly comment our achievements of 2020 from financial perspective. The bank generated operating income of 12.1 billion crowns. We've incurred cost base of 5.5 billion. This translates into E-Conferment profit increase of 19.5% and incidentally this actually meets the very original guidance that we provided prior to breakout of the COVID-19 pandemic. Cost of risk heavily impacted by the pandemic. We have incurred 3.6 billion cost of risk in 2020 and all of the above translates into net profit of 2.6 billion. Then if we continue on page six, commercial and other quality indicators of the banks. The bank generated the deposit growth in excess of 47%. It also paralleled that growth with lending expansion, which is nearly at 45%. We've registered the increase of non-performing loans. We currently stand at 2.8% level. With respect to capital position, we recommend a strong capital of 18.2%, which is the total capital equity ratio, and enjoy solid liquidity expressed in 190% liquidity coverage ratio. Turning the page, one of the key subsequent events of following closure of the year is the receipt of key documents from VPF Group. VPF Group sends us a proposal, initially voluntary, offers to purchase. up to 20 or 29% of our shares at 80 crowns per share. With respect to this matter, we've provided the position statement of the Management Board as required by the Czech legislation. In addition to that, the intent of ETF Group is to stimulate the bank into acquisitions and mergers, a frequent merger of Airbanks and certain affiliated companies, and I'm sure we will cover this matter in context of the Q&A session. Now, if you allow me, I will turn to our strategy and how we perform against strategies that we've published and provide reporting again. If you look at patient time and trends, here we cover both commercial and financial targets of the bank and I would summarize that the bank is developing quite well in the context of the target of increasing the shares. of profitable and return-producing retail banking. If we then look at retail and small business targets, what is positive here is that we have successfully, through both organic and acquisition-related growth, significantly increased our position in relevant mortgage lending. We are successfully defending position in unsecured retail market share obeyed the COC year 2020 was a challenging year and we also successfully developed both deposit-taking market share as well as distribution of third-party asset management products and this is coupled with success on the ability of Moneta to distribute insurance products If we turn the page and we look at financial targets, overall the bank produced 10.8% return on tangible equity, which we consider satisfactory result in view of the crisis that we've experienced throughout 2020. We've also suffered due to that decrease of incremental profitability of the small business sub-segments in the line where we've posted significant anticipatory provisioning. If we then look at the overall quality and sustainability of our risk position, I think what is very important here is that our NPL position still remains relatively low, albeit we have, and you will see later, downgraded significant portion of the book in anticipation of potential losses. being incurred in conjunction with the COVID-19 pandemic. It essentially increased our coverage of the lending portfolio. The overall coverage stands at 2.6% and coverage of non-performing exposures is at 110%. So it's above the target that we have. And lastly, due to both organic and acquisition driven growth, we successfully increased the client base of the bank to nearly and beyond 1.2 million customers and we comment on that also later in the presentation. On pages 11 and 12, we provide you with a more granular overview of the bank's performance. So, few comments here. Undevelopment of the retail franchise lending growth accomplished exceeds 68% year-on-year, while the deposit-taking activity in retail exceeds 60-65%. This is again a sheet driven by the acquisition. Memo S, the bank generated respectable rates of growth through organic expansion. Lending the organic growth was at 15%, in excess of 15% on deposit-taking. 21%. You will see that these brokerages also stand very well against the development of the overall market. On the entire franchise basis, mortgage lending expanded at the rate of 124%. while the organic growth in that category nearly comes at 40%. On unsecured lending, the bank reports a very good headline growth number of 20.6% year-on-year growth, but this is cheaply and entirely driven due to the acquisition of Western Rose. Our pre-acquisition perimeter portfolio actually decreased by 6.4% and this is due to lower demand for consumer-related lending in the Czech Republic during 2020 when the new production suffered and contracted by more than 30%. What is also important here However, with the production we have accomplished, we actually increased new production market share, what was available on the market. to about 20% while in 2019 we had about 16% market share on average of the new production. If I then move on to the small business franchise again, we've generated respectable growth of nearly 19% of the loan portfolio. On the core deposit growth, we had even better results appearing 30% growth on the 8.2TB specific and it shows that the bank successfully developed primary banking type of our services with this sub-segment of customers that is self-employed, professional and trades people and the like. If you look at our lending activity, what was in this segment very decisive for us, is the ability to distribute in a fairly industrial manner, all with related guarantees. But according to cheque, Moravian Guarantee Bank, we had in some months, Around 50% market share in providing COVID guaranteed loans where the bank enjoys state guarantee of up to 90% of the loan exposure. This was a great success as our market share is very much disproportionate to the overall market share of the bank. In terms of SME banking, I would say that here, again, on pre-acquisition basis, we have flat portfolios slightly increasing due to the system growth, as the system growth finances home improvements from condominiums and co-ops. We continue to enjoy above the market strong yields from the SME portfolio and we have again successfully managed $3.8 billion of loans which are covered by the state. This pertains mainly to working capital facilities and you will see that the nominal value of working capital facilities limit is significantly higher than a year ago and a significant portion of that increase is covered by state guarantees. We've also generated a respectable growth of 11.7% on FME. On digital capabilities, we continue to expand both digital usage and distribution through digital channels and this is evident from the numbers. Turning the page to page number 12. If you look at our exposition, I have commented this, what is important is that the overall coverage of our long portfolios through long loss provision allowances increased to a level of 267 basis points from 2019 year end level at 194%. So 194 basis points as it shows. that the bank deployed conservative policies and I dare to say that we are in top 10% in terms of coverage among the banks operating in Czech Republic. Capital position super strong, 18.2% with CT1 ratio exceeding 15% and this time frame to excess capital that the bank commands in absolute number of 6.4 billion. This is excess over regulatory requirements plus the 100 basis points management buffer. So, and you will see that also in the capital section, the RWA density remains stable and grows at 6.4 billion. but has a rate of growth of our overall loan exposures. On cost control, here I would like to get across the message that on pre-acquisition basis, our cost base remains flat. It actually decreased by 20 basis points. and the inflation in our operating costs is driven by acquisition of external and related integration and restructuring charges. So we report a very good cost income ratio which if you adjusted for one-off impact of the estimate of acquisition would come at 5% higher. We would be below 51% on the cost income ratio basis. And I'm the Acquired Experimenter, Acquired Experimenter of WesternRock. We have lost in synergies of $300 million. We accomplished the legal merger of WesternRock Mortgage Funds. And we've also improved commercial performance, obtaining 12.8% market share on suspicion for take-up of new building savings contracts, etc. I'll let the interest rate get subsidized by premium provided by the state. So, overall, we believe the situation is satisfactory, it's not favorable. I would like to comment a little bit on the shape of our operating platform. I think the key word here is that we saw efficiency improvement throughout 2020. If you look at employment in the bank, it increased by 60 FTEs to the level of 3,009 FTEs. Please bear in mind that the acquisition of WesternRock brought roughly 300 SEs into the bank in the second quarter of 2020. So through efficiency driven actions of the management, we've actually accomplished fairly significant efficiency improvement. With respect to branches, We ended the year with 159 units, decreasing free space by about 2,500 square meters, and in January, as an event subsequent, we are closing additional six units, so the branch network will be somewhere around 153. We've also added last year Thai-Asian network which we've inherited from Dexedros. That network has 51 consultation offices which we do not pay for. These are financed by the agents themselves. However, their brand is Simuneta, improving recognition and relevance of Simuneta brand. On ATM, we have optimized the ATM network for efficiency, closing about 80 locations. This action was prepared actually in the fourth quarter of 2019 prior to the pandemic. Significantly improving cost positions and we are the only bank in Czech Republic that actually reduced the ATM, the only ATM network. The same, we've installed 66 new machines throughout the year, eliminating some significant operational risk arising from outbases. Outdated equipment that's been inherited from the previous owner of the bank and you can see that we've substantially increased the compact life and he has positive development overall on development of the client base through both organic and acquisition growth and he's registered significant improvement in usage of outages growth of our digital channel. Now if I could ask you On page 15 I would like to start with the key macroeconomic indicators on GDP. The contraction of GDP has come in at a better rate than was previously expected by market participants. The contraction is now estimated at 5.6% while at last quarter we reported more than 7% expected contraction. The forecast for 2021 has been actually yesterday increased by the Czech National Bank to a level of 2.2% from the 1.7 that we had here and the Bloomberg consensus is 3.5%. Here we also show you industrial production and foreign trade which both suffered throughout 2020 due to various restrictions and emergency states declared in the Czech Republic and on the GDP development The only government spending creates a positive contribution to GDP. All the other three categories are unfortunately negative. Nonetheless, even with the government stimulus, Czech Republic maintains Strong Rating and AA Linus with a stable Outlook. Now, turning phase to phase 16, we commented briefly on the job market and expected level of employment. If you look at 2020, the Czech Statistical Office reports unemployment at 8.2%, so we have a fairly strong increase from the level of 2019 with the market consensus expecting the unemployment to rise to 4.5% during the current year. If you then look at demand for employment and job vacancies and unemployed You can see that Czech Republic still remains positive gas in vacancies against unemployment. However, that gas is narrowing quite significantly compared to 2019. And then if we look at another indicator and that is the State Budget Deficit, in 2020 the current forecast is that the deficit will come in in excess of 367 billion. This is a record number in the history of Czech Republic and I believe this is actually a record number in the history of Czechoslovakia. all the way back to 1918. We've never had a budget deficit like this. From the current year 2021, the deficit is expected to be 320 billion. This is agreed upon deficit by the parliament of Czech Republic. The January number of the deficit came in at more than 31 billion crowns and it doesn't have impact of the tax relief that were agreed upon by the Parliament in December 2020, so the number could be higher. In other words, the government is doing whatever it can to support the stability of the economy and employment. On page 17, briefly on inflation and interest rates. The inflation for 2020 3.2% with expectations that this number will come down to 2.6% and consensus by the market analysts that rate hikes will come. If you look at statements published by the Czech National Bank as of yesterday, there was a strong theme of normalization of the monetary policy in the second half of the year, made conditional to some other comments. All of this reflects itself into the exchange rate of the Czech crown, as the Czech crown is currently the strongest against Euro since beginning of this crisis in February and March of last year. And the last comment on the operating environment on page 18. We tried to summarize level of bankruptcies or insolvencies of individual entrepreneurs and of the country. You can see that actually the number throughout the 2020 has decreased and it does not seem currently to cause any concern, nonetheless we are remaining cautious on this front. I have commented with reflected into the 2020 provisioning policy and approach that we adopted. Now if you allow me, I will briefly comment on the banking market zero trend and how Moneta stands against such. so if we can go to page number 20 we start with the deposit market the deposit market expanded to about 4.9 trillion grams the market overall grew uh in excess of nine percent while as we have said moneta um moneta grew in excess of 47 percent and this is the most visible from the retail deposit position where we generated not only high growth but currently we command 192 billion of deposits entering the year with a position of 116 billion of deposits if I round it up to a whole number. We've also had double the market growth on the commercial deposit side although we do not really take deposits from large depositors Corporate Deposits. We've increased the deposit position by 7 billion 65 billion overall. So we consider this performance to be fairly good. On page 21, we take you through development of the lending markets in Czech Republic. The overall lending market which we consider relevant to our trade count figures of Czech National Bank stands at 8.2 trillion crowns. The market expanded 3.8% while the generated growth in excess of 45%. This is most noticeable again from the retail side where retail, as you know, is part of our strategy where we've increased the portfolio to a level in excess of 165 billion crowns. and on commercial side, we have increased the portfolio by about 10 billion to 76.6 billion, which translates into headline growth of 13%. So, throughout the difficulty of the recombination, of acquisition and solid organic growth the bank managed to expand substantially. On the next page, on page 22, let us comment on development of pricing. Unfortunately, the pricing on the asset side continues to deteriorate. You can see that the market is deteriorating both on mortgages and on accused credit. In unsecured credits in the fourth quarter, we reduced our pricing through various promotions and marketing communication and we came in 40 basis points below the market as we have sought to obtain additional volumes in the market. Nonetheless, the situation is complex as I said. In the entire year, the lending activity decreased by 30%, even though we've increased our market share on new volumes from 16% to 20%, comparing 2020 results to 2019. On mortgages, price-wise, we are aligned with the market. On deposits, we show you details subsequently in the presentation. We've had success with repricing and lowering the cost of funds. This is visible from both annual and quarterly numbers and this process will continue throughout the first quarter of 2021 and will be fully visible in Paris. in the second quarter of 2021. So let me stop here before I turn over to Jan. I want to again reiterate 2020 operationally was a very difficult year. The bank fulfilled most of its strategic aspirations except Facing significant difficulties on the unconfused consumer market. Nonetheless, we are firmly in line and exceeding the strategic aspirations that we have set for the bank. And now, Jan will take you through the guidance and our results.

Thank you so much. Good afternoon ladies and gentlemen. As you can see on page 24, in 2020, Moneta successfully delivered against all Guided metrics with outperformance at several places. On operating income by 100 million, accompanied by a tickle-reducing Guided cost of rate, And on net profit, we are at about 200 million more, which is also reflected in higher return on tangible equity. Now if you turn two pages, We can review our 2020 income statement in more detail. Last year, our profit was heavily impacted by three material events. Starting with the positives, it was the acquisition reflected in one-off gain of $1.1 billion and subsequent consolidation of three quarters. On the negatives, COVID-19 pandemic led to elevation of profits by $2.8 billion and subsequent lowering of the interest rate environment, which put more pressure on the net interest margin. Despite the negatives, we delivered 4.5% growth of the net interest income, which supported the operating income growth of 15%. Elevated cost base, as you will see in a minute, was driven by the acquisition, while on the pre-quisition parameters, we kept cost base even at thick growth 2019 level. and nearly 7 times higher cost of rates resulted in the net profit decrease by 35% year-on-year. So altogether, the reported cost-income ratio dropped to 45.7%. However, the ratio will be by nearly 5% higher once we exclude 1% gain from the acquisition. Now, on page 27, on the right-hand side, we provide you with the decomposition of net interest income. The interest income strengthening came predominantly from the loan portfolio expansion by nearly 45% year-on-year. This upside was partially offset by continuing to lose erosion caused by changing product mix and worsened interest rate environment. The chart below shows positive effects of continuing repricing actions of our customer deposit base. This obviously helps to partially compensate for yield erosion in land use. Further details of these actions will be provided in the balance sheet section later. And the third component of the NII composes of the other interest bearing assets and liabilities. In the second half of the year, the interest income from our investment portfolio of government bonds and from excess liquidity was almost fully offset by higher cost of hedging and wholesale funding costs. On the next page, you can see the composition of the next year's commission income. The incomes are rented out by 1.3% and are expensive, including by nearly 30% year-on-year. Main drivers of the elevated fee expense are conditions paid to the tight agents network of building savings bank for distribution deposit products and accounting declassification of summer investment from fees to operating expenses as these concerns predominantly are outlined. The red space through further decomposition of the income side. You can see positive and negative trends there. On the positive, the third party commission income scheme was expanded by 5.6%. In 2020, we doubled the distributed volume of investment funds with the great support of our new specialized sales network and further amplified by the management decision to rely rather on the trailing fee instead of the opening fee. And secondly, the servicing fee income increased by 10.5% year-on-year and we successfully reversed the decreasing trend through consolidation of the very same product generating recurring servicing fees. And on the negative, the transactional activity slowdown of COVID-19 outbreak predominantly on ATMs resulted in the transaction fee income decline by 15.2%. Now, let's have a look on the cost performance. Firstly, the trade position perimeter. On the right hand side, you can see that the cost base of the trade position perimeter was many stable, or more precisely, at many basis points below the last year. This demonstrates continuing strong short discipline of the bank. There are basically too many inflationary pressures underneath, visible on the DNA line and regulatory charges, which is predominantly a contribution to the deposit insurance fund connected with our customer deposit base expansion. These pressures are successfully offset mainly through low marketing expenditure during country lockdowns and savings on rental costs. And if we turn the page, we can continue with the consolidated view. In this instance, if we go from the chart on the left-hand side, it has basically two main drivers. First and foremost, the acquisition, namely a consolidated cost base of acquired entities, together with balance cost of their post-acquisition structural integration with Moneta. The incremental cost base was partially offset by already realized cost synergies. However, the full potential of $300 million will be realized only in 2021. And secondly, higher personal expenses were impacted by two factors. The first was of equity acquisition and the second, accrual for management bonuses, recognizing the cost water. It is important to highlight here that the accrual for 2020 is at 60% of the previous year, aligned with the performance on the bottom line. So this concludes the profit and loss section and now I will hand you over to Jan Novotny who will continue with the balance sheet section.

Thank you very much Jan. Now in next few minutes I would like to walk you together with my fellow colleague Andrew Devers through the balance sheet development section of today's presentation. Let me start on the page 33, where you can see the development of our overall balance sheet in the last 5 quarters. You can see that we have ended up with a 3.01 billion cheque round at the end of the fourth quarter 2020, and you can also see more detailed overview of the composition on both sides of the balance sheet. We have expanded it by more than 80% in check-downs throughout 2020 with a steep growth especially in net customer loans by more than 44.5% as well as in core customer deposits by even more 47.4% both thanks to the acquisition of former business entities as well as thanks to a very healthy organic growth in several categories that we will cover on next few days. You can also see that as of Q4 we have reduced our position in both repo operations and reverse repo operations and we have increased our portfolio investment securities by almost 10 billion cheque rounds year on year. Now on the next page, on the page 34, you can see more details for the last mentioned categories. We have reached almost 36 billion cheque rounds in investment books as we are having a very comfortable liquidity position and we are optimizing it with the yield shown on the right side of the page. One more important fact to mention is that we are investing solely into the Czech government bonds. Now, let me move to the next page, page 35, which is showing the evolution of our long group for the last nine quarters in a split by customer segment. You can see that despite the expected COVID environment, we have been very successful in delivering our long-term strategy to grow our lending group both organically and through acquisitions. The total growth of the lending group was almost 45% in 2020, and we delivered this growth mainly in our strategic segment, being in retail and small business, From a share perspective, we are proud that those two combined have reached more than 70% share on our lending book at the end of 2020 and it is fully aligned with our strategy to be a retail and small business plan for the customers on the tech market. Now let me move to the next page where you can see the development of the loan portfolio yields. You can see that there was an increase of average yields throughout 2020 mainly due to the shift of the overall portfolio composition to electricity and secure mortgage lending. This is impacting the retail part of the portfolio but also due to the private changes especially on the commercial portfolio yields on loans priced based on the flow rate. As you can see on the right side of the page, all factors have an impact starting from the second quarter, meaning the private change, as well as the acquisition of large mortgage portfolio in formal history of NCP, but you can also see that the margin has stabilized in the following quarters. So that was a brief overall book overview, and now let's dive a little deeper into the product categories and SEO's evolution, starting with the retail part of the portfolio. And for this section, please let me hand over to Andrew.

Thank you Jan. So on page 37 we show the detailed developments of the retail loan portfolio. Overall growth of 68.1% year-over-year, which is significantly supported by the integration of Dixon Watch, which added 49.9 billion in receivables. Underlying organic growth, on the other hand, was still healthy at 15.3% year-over-year, which is more than double the rate of the market, which is up 6.9%. Mortgages obviously continue to be the key driver of growth, with the portfolio up 124%, including the acquisition, but the underlying organic growth remains extremely strong at 39.9%. The mortgage market in the Czech Republic remains very robust, and despite our relatively conservative positioning for the market in the second quarter, in response to the first wave of the pandemic. We were able to build a very strong pipeline during the second half of the year. And in the fourth quarter, our market share on new production reached 17%, which is the highest we've ever had on a 14 basis. Our consumer loan portfolio grew 20.3% year over year, however on an organic basis it declined 6.4%, driven again by our extremely cautious positioning in the second quarter and subsequently relatively weak demand in the market more broadly. We also transferred approximately $1.2 billion of balances to MGL as a result of the new payment moratorium we introduced in the fourth quarter and this contributes about 2.4% of the decline in the balances in this segment. At present we see little sign of a mean for recovery in demand in this market and we expect this business line to remain challenging throughout 2021. Similarly, when you look at the revolving products, we continue to see decline there as there's lower demand for short-term credit and clients accumulating more or higher deposits in current accounts, which obviously affects this segment. In the out-of-loan portfolio, it declined 16.6%, which was driven by lower new sales, largely as a result of mandated closures of the dealerships on which we rely for distribution here. And we also see generally lower demand for cars, especially in the second-hand market, which is where the bulk of our business is. Moving on to page 38 we cover the yield development on the retail loan portfolio. The yield on the mortgage portfolio is broadly stable throughout 2020 at 2.2% with a 10 basis point decline visible in the fourth quarter. We expect this trend to continue in 2021 as we see lower new business rates in the market, 10 to 15 basis points below this level. Overall, we expect to see the portfolio rates continue to decline gradually in line with this trend. On consumer loans, the yield declined 110 basis points to 7.9%, driven largely by the integration of the Distant Rock portfolio, which consists of lower-priced, housing-purpose loans. On an organic basis, the decline was only 20 basis points, which reflects the long-term trend in this category, driven by continued price competition in the market. As you saw earlier, new business rates dropped 50 basis points across the market and we expect this to continue into 2021 and our new business pricing fell further as a result of needing to align more closely with the market. Again, we expect to have to remain competitive in this segment throughout this year as we face fairly aggressive competition. In terms of auto and credit cards, you see the yields are broadly stable. The two charts at the bottom of the page.

Thank you very much Andrew. Now please let me walk you through the similar overview for the commercial book on the page 39. You can see that we have achieved a growth of more than 13% year-on-year. You can also notice a small growth of the portfolio at the end of 2020 due to a seasonal decrease of the working capital line usage. However, the working capital product line is still a very well growing portfolio with a year-on-year growth of more than 17% as you can see on the chart on the right side of the page. Here we were very successful in implementing several state guarantee schemes which allowed us not only to grow profitably the portfolio, but also allows us to greatly improve our risk position from a collateral perspective. Similar approach we have also successfully implemented in our new volume production in small business where, again, we have improved significantly our risk position thanks to usage of the state guarantee schemes and at the same time we have successfully maintained a creditory growth of this product line by 18.6% in year-on-year comparison. Now, please let me turn your attention to the page 40, where you can see the development of the loan yields on commercial rules. As I have already mentioned on previous pages, the key impact on the commercial yield was the drop of private during Q2, with a slow impact during Q3. You can see that this has been stabilized in Q4, with a slight difference in small business, whereas the guarantee schemes in production allow us to allocate significantly less capital to new production, as well as significantly improve our risk position, when it decided to decrease slightly the pricing of new production, while maintaining very high profitability of this product line. The second exception is our yield on loan for tutorial and auto, where we continue to improve our commercial terms with our partners, which leads to overall improvement of the loan yield in 2019. So that is all for commercial loan groups, and now please let me thank you for your attention, and I'll go back to Andrew, who will filter the rest of the balance sheet section of today's presentation. Thank you, Yannick.

So in the next section we present some details on the deposit portfolio but in the interest of time I'm going to focus really on the cost of funding which is detailed on page 42. So overall cost of funds dropped 28 basis points year-on-year. This was driven by 16 basis points decrease in core customer deposits and 110 basis points decrease in wholesale funding. The core customer deposits began to benefit from a series of repricing actions initiated in the second and third quarter. In total, we repriced approximately $75 billion in savings balances, with this effect rolling in from August onwards. and based on these actions we expect to see some continued improvement throughout the first half of this year where the costs should drop to around 35 basis points on the full customer deposits by the middle of the year. And today we've been able to achieve this without any significant outflows in the portfolio. The other important driver here is that we continue to enjoy strong growth on the current account balances, where we obviously don't pay any interest. So as we continue to maintain the pace of growth there, this further feeds into the toss for funding. As I said, on the following pages we detail the development of the balances in the individual categories, but I will skip over that and hand over to Norman, who will take you through the risk metrics and asset quality. Alright, thank you Andrew, good afternoon.

We are now on page 47, with a total view of profit risk for 2019 and 2020. Due to the COVID pandemic, the 2020 cost of risk sharply increased year-over-year and ended up close to 3.6 billion or 1.74%. The volume of provisions was booked in the first and the second quarter of last year. Looking at the two segments, the retail portfolio showed a cost of risk of 1.6% where the commercial portfolio ended up with 1.63%. On the following page, page 48, here we provide a more granular view on the key drivers of the book-out. The impact of the macro deterioration and the direct COVID-related measures on provisioning account is foreclosed to 2.8 billion, or 1.35%. If yet, the book-out is related to the acquisition of reasonable and adjusted total 2020 cost of rates for these two aforementioned elements, then the core cost of risk amounts to just 20% on which in fact constitutes a slight improvement year over year. Going to page 49, we have an overview of receivables and no-loss provisioning balances over the last eight quarters. As you can see on the chart, provisioning balances nearly doubled year over year and reached close to $6 billion. Despite the significantly increased amount of the loan book, the overall coverage increased year-over-year from 1.9% to a solid 2.6%. On the next page, page 16, we have a breakdown of the college-related book-up of provisions and the total amount of those 2.8 million. There are basically four categories driving this. One, 1.5 billion impact stemming from the macro inputs into the IS&I model. The second, more than 700 million migrations to stage 2 and 3 driven by portfolio monitoring. The third element, more than $400 million related to post-moratorium loan destructuring. And last but not least, almost $100 million for exposures in certain industries and individual commercial exposures with an increased risk profile. Moving to page 51, we have a more granular breakdown of the erosion of the MPL stock over the last five quarters. Quote-over-quote, the NPL ratio increased from 1.5% to 2.3%. This is almost entirely driven by the fact that we have adopted a prudent approach by having moved altogether around 1.9 million since day three in the fourth quarter, and these are exposures of helpfulness, adding on for additional payment holidays or restructuring. The vast majority of these videos are retail exposures that comparatively small share our commercial customers. Going to page 52, the chart shows development of the MPL formation throughout 2020. Adjusted for the amount of downgrading exposure in the amount of roughly 1.9 billion, requiring restructuring or additional payment holidays, the new formation of MPL from the core performance shows similar numbers like in the 15 quarter. As a result, the total MGL stock increased from $3.4 billion in September to $5.4 billion at the year end. On the next page, page 53, we show the evolution of delinquency since the whole quarter of 2019. The two charts here show that the different delinquency budgets benefited from the various payment moratoriums, mostly in the second half of the year. However, we expect delinquency to rise again going forward following the end of the different payment holiday programs and potentially declining governmental support. Going to page 54, We have no review of loan portfolio balances and cover shifts broken down into stage 1 to 3. As a result of the downgrading of receivables throughout the years due to the current impact on our customers, stage 2 receivables increased from more than $4 billion to close to $14 billion in December. In the last quarter, we moved more than two buildings to Stage 3, almost entirely due to its closures requiring the structuring of payment holidays after the state-sponsored moratorium which ended in October. This also led to a shift of underlying provisioning balances from Stage 2 to Stage 3. On the next page 55, we show the development of receivables covered by payment holidays over the last three quarters. While at the peak of the moratorium, we reported a total of $34 billion capitalized. At the end of December, we had a total of $1.6 billion plus around $300 million economically connected groups of residuals. In retail, the moratorium penetration dropped from a bit more than 15% to 0.9%, and in commercial, we saw a drop from 15% to 0.2%. Summarizing the risk section. The bottom line message is that through World Ranking, we have built up substantial coverage for COVID-related credit risks of almost 2.8 billion. This coverage provides protection against customers ultimately deporting in coming periods. Needless to say, developments around infection rates and government support to companies and individuals and the impact on GDP and unemployment rates will determine how the instances will evolve going forward and henceforth require close ongoing monitoring. With that, I hand over to Jan Sittweg.

Thank you, Norman. In fact, Oktava, I would be very brief about the capital. and on page 57, which portrays some capital position of Moneta with positive trends recorded across all four metrics. And if you flip the page, I can comment on the excess capital positions. At year end, Moneta recorded the highest level of excess capital over its year one capital targets, including 100 basis points management buffer. The 6.4 excess capital contains 2.1 billion of accrued dividends from net profit of 2020. I want to point out that we didn't ask the CNB for accrued division into the regulatory capital to emphasize our intention to pay it out to our shareholders this year imminently after we get regulatory green light. However, three hours ago we had quarterly review of financial results with the supervision of the CNB during which they emphasize their intention to fully follow the guidance of the European regulators. With this respect, and as you probably know, this guidance limits dividend payouts at 20 basis points of RWA, risk-weighted assets, or 15% of Cumulated Net Profit of 2019 and 2020, depends what it will lower. Nevertheless, the guidance is currently valid only until September, which provides still some chance to pay out the rest in the fourth quarter this year. So, with that, I will now hand over to Tomasz Kuning, who completes the presentation.

Very well, that takes us to our guidance on page number 16. We republished the guidance with the intention to confirm it. The target net profit for 2021 remains 2.8 billion and this guidance consists of the following. We would like to generate minimum Minimum operating income at $11.2 billion or hopefully exceeded. The cost base should stay flat at $5.5 billion or below. On the strength of the synergies that we've realized and offsetting some of the inflationary pressures that we feel. which would translate into premium permanent profits of the bank at minimum $5.7 billion or higher. Our cost of rates is projected in the range of 80 to 100 basis points. on the evolution of the Czech economy as well on the additional volumes that we generate through organic growth and we hope we actually pray that the effective tax rate stays at 20% so this should then play into earnings per share at 5.5 5 crown 5.5 crown per share and in increase on the return on bankable equity to come in at minimum 12% or higher. So this is the guidance. On pages 61 through 62, you see the key assumptions that we have underneath the plan, so perhaps a couple of words on the balance sheet on page 62. In 2021, the minimum target is to increase The lending portfolio of the bank, this is gross performing, it doesn't include NPL, 243.2 billion, with growth being aimed at the retail portfolio. where we project the stability or slight decrease in the commercial book. And the commercial book comes down because we expect repayment of the leasing portfolio and we expect growth on the small business franchise and some other movements in the composition of the portfolio. We are aiming not to increase the volume, but rather to improve the mix, providing a better capital return. And on the retail, we are aiming for improvement of both mortgages and unsecured lending. Just for your illustration, in 2020, The bank did 32 billion in mortgages with new mortgage volume and it provided so called 9 billion of what we call super net, this is the incremental lending on unsecured. Just for comparison in 2019 on the unsecured lending we did 14 billion. The challenge is on secure lending as the market is very competitive. On the deposit side, we are looking at a minimum target of $273 billion. the improvement mainly on the retail side where we are seeking to call down some of the higher interest rate deposits on the commercial. So all the eyes are on development of the retail franchise of Moneta Money Bank. Perhaps a couple of words on investor interaction. We are planning to have the first quarter disclosure on 29th of April. We are also going to, we are planning some conferences and therefore all that goes through it because it is fairly clear. All of it will be virtual as we have learned to do. Thank you. We will now begin the question and answer session. If you have some questions for our speakers, please write them

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If you find your question is always answered before, you can dial 0 and 2 to cancel your question. If you are using speaker equipment today, please lift the headset before making your selection. One moment please for the first question. We have a first question from Anna Marshall. The floor is yours.

Good afternoon. Thank you for the presentation. Two topics from my side, please. Firstly, to follow up on your comment about dividends, I just wanted to understand purely theoretically what the scenarios could be in terms of potential distributions in Q4, the year after the Regulatory Restrictions in the expired state, would you aim to distribute whatever you've accrued for 2020, i.e. 80% of 2020 earnings already in that one quarter, or would it be part of that in Q4 and then potentially elevated distributions in the coming years? Basically, how are you looking at that matter? And the second topic is the strategic matters in relation to the CPF proposals. Just wanted to ask you for an update on, perhaps in more detail than was mentioned in the management opinion in terms of the benefits of the tie-up essential acquisition of Airbank and as well as these two other affiliates and also how would you look to mitigate the potential risks related to this acquisition. Thank you.

The first element is again, I want to be crystal clear here, we presented to the International Bank our business plan going forward. and spent considerable amount of time discussing the business plan with them in context of our 2020 results. We plan to, in the fourth quarter, we have 3.9 billion distribution plans for fourth quarter of 2021 subject to regulatory approval and this figure consists of two elements. First, The profits accrued for dividend in 2020 which equals roughly 2.1 and 1.8 billion to pay from the profits not distributed and kept by the bank for 2019. So this is what we are committed to propose and discuss with the Czech National Bank. I ask this question today and I was told that the bank will follow the CBO or respectively the board recommendations which is very clear and they have unequivocally taken that position vis-a-vis our communication to the market. I also asked them to be allowed to make that comment to our investors so that we manage expectations accordingly. And based on shareholder feedback, if you look at the ECB allowance, this would come at around, it would come at around payment of 300 million. And we on balance are probably not going to propose this because the administrative costs Related to paying $300 million to our shareholder base is not really favorable if you spend a lot of time with respect to guarding and managing the withholding taxes and the back domicile of our investors. So it would be very painful for us to do such a small distribution. So this is on the dividend. On the PPF, if you don't mind, I will not make any comments on the benefits or risks at this point. Our position on that is that if we were successfully mastering and approving such transactions, we have a real chance. to acquire additional 5% of the profit pool of the Czech national and of the Czech banking system. And if you look at the profit pool on 2019 basis, it's 91 billion. 5% I think everybody can calculate that. In 2020 COVID coming year the net profit of the Czech banking system as third quarter was 39 billion. I think it's reasonable to expect that the bank this year will generate 52 to 55 billion crowns on invested equity that's the total equity, is at $575 billion. So I think if you focus on retail banking, on the profitable segments of retail banking, we will obtain a disproportionate share of the profit pool in medium term. And for me, the medium term is two to three years, and I think... We've had proven on a forward transaction that we can handle things fairly quickly. If nothing else, we can merge companies within six months of acquiring them. So, from that perspective, mitigation of rates. Unfortunately, I have a different view on rates here because if you look at Moneta's books, We hold unsecured portfolios slightly below 40 billion pounds. 70% of that portfolio are related to so-called consolidation loans, where the banks consolidate competitors and own exposures. While if you look at Purchase Related Financing, they have smaller tickets and a lot better diversified rate profile. And I don't want to judge what we will find there. This is my experience, very successful experience from Slovakia when I went for Banka Intesa, I acquired Quattro and Triangle, which today are very still contributing significant value to VUB's profitability. So I don't want to judge it now, but we will manage the rates as we have. We have actually sold 20 billion of non-performing loans that we've inherited from the previous owner at an extraordinary gain of $2 billion. So I think that speaks for itself. And I am not making any conclusions now. What I'm simply saying, we will look at it, and if we believe it's good, we will put it in front of our shareholders. And that's all that we can say at this moment.

Thank you.

The next question comes from Simon Mellis, Citibash.

The floor is yours. Oh, hi. Thanks very much for the presentation. Just following up on the PPS transaction, I'm just wondering if, I mean, you've obviously looked at this, but are there any risks that they wouldn't have to make a mandatory buyout offer at 80 if they did exceed a 30% stake? I mean, are there any... Scenarios where they wouldn't actually have to tender for the free float in your view.

Thank you. By the way, I very carefully studied your report on that. I believe you have a mistake in the accretion under the city scenario, including the synergies. The accretion is actually 8%. It's not zero under your own calculation, and I think you put out one of the best reports that I have seen. Yes, there is risk. There is a risk that they will not make the mandatory sender offer and the risk is called time. Should they acquire 20% in us and subsequently the transaction, if the transaction were to take place 12 months from that day, that is the acquisition, there is a risk of time because the 80 pounds per share They have to pay as long as the change of control, potential change of control occurs within 12 months time horizon. So this is the first thing. And last one, because I cannot I cannot keep any other. And I would comment that they have made a public statement, which is actually very unusual for them, that they will do it as easy. And they have also made a public commitment that the bank will remain traded. So I hope, I try, that they will keep this commitment.

Thank you. Interesting. I'll take a look at my analysis and correct any mistakes there.

Sorry about that.

I'll check that and correct it. That's very helpful. Do you think that this kind of signals, if they do want to keep it listed, that they are Open and willing to potentially renegotiating the share exchange terms, because it seems like to me that the terms are not particularly satisfactory for shareholders, given it doesn't imply much of a control premium. That at least is the ground for sure.

If we frame it around dual models, which is dual, one is based on the Citibank model of our performance and second is based on our guidance, I think you are correct. In short, in medium term, because you look at it on 2023 basis, In your calculation, I think what is for delay, and it's not for us to decide, for shareholders to decide, is that a larger bank is typically more of a loss in the long-term horizon. and that I think debasable, the benefit is obviously debasable from short term value perspective and as I have said I do not want to make any value related statements until I go through the due diligence.

Okay, fair enough. Maybe I can ask just some questions on the operating result then. I see that the consumer loan yield that you're writing is below now the market, and I think that's driven by the acquisition effect. Are you expecting to be able to claw back and increase that consumer loan yield over time, or is that going to be under continued pressure in your view?

I will make the opening comment which is effectively with respect to our internal targets on consumer loans we have ended 1.6 billion short of volume for 2021. So we have not fulfilled the plan. We tried to rectify the matter through pricing and intensity of marketing communication in the fourth quarter and we were successful because we've taken more than 20% of the market. Currently, in the month of January, the bank runs at 5% deficit to its current target. So we've improved the production, however, if we are continuing at this pace for the entire year, which is a ridiculous statement, we would come in 5% below our target. And this would cause a significant issue not for 2021 performance, it causes an issue, but we would see a gap in our related revenue in 2022 and in 2023. This is the reality which we face currently. And currently, we are operating in the first month of the year. We improved the price. Andrew, can you help me out to get the details?

In the beginning of the year, we're about 20 basis points above the fourth quarter level. But I think what I would say is we will need to stay competitive in this market now because, as Somesh has highlighted, we have to build market share about where we would normally be in the fourth quarter in order to get closer to So, entire equation on the back front

The level of our production and price and the second level is the level of extraordinary repayment that we see in the bank and that has increased quite substantially and I think when we come out with first quarter we will again reintroduce reporting on repayment of the portfolio but what is remarkable 2020 is the following. If you look at the exposures of the moratorium, about $3 billion of that were extraordinarily repaid by the customers. So we've seen Significant spike in repayment activity as people, good, honest people with good intentions are trying to reduce their debt quite dramatically in the face of uncertainty of COVID. so it is very difficult to make a call on that and I have previously commented that the target of the bank is to continue at the level of 2019 in order to rectify the situation but the situation is difficult yeah yeah very clear thanks so much the next question is from Andrej Novacek SSBC the floor is yours

Thank you. First, I just have a follow-up question on consumer lending volumes, especially in the last quarter, but really in the last two quarters. The lack of growth, is it solely due to the lockdown, or is there more behind it, such as, for example, when you had lost customers and you acquired some different ones?

I think if you look at the bank, and we've reported on it at all quarters, we have so-called pre-approved limits where we try to approximate the internal lending capacity based on customers whom we know. So the capacity is sufficient to accommodate the growth of 21. However, the demand is The demand is extremely low. If you look at our digital spend, we reduce the digital spend by about 30% and we optimize it. We generate roughly 2020 versus 2019 about 140% of the leads. So we have increase in leads. However, the conversion of those leads, especially on digital lending, dropped down by 60% because of risk concerns and because of price points and because customers don't take the loans. But the latter is the most important. People simply don't take it out. This is very important. And as a way of strategy, in late 2019, we've introduced Money Bk Bk Bk Bk Bk and said we will continue on diversification of our books to smaller tickets and to debtors who have lower who have lower indebtments and higher DSPI ratios. So that change of strategy led partially to decrease of the of the growth in the Unsecured Consumer Lending Strategy and we believe this was the right move because post-COVID what we are observing is that the highest default that we have are unconsolidated loans which has for the last 10 years The consolidation loans are now having a lot higher rates of defaults because for the last 10 years, as you have the rates coming down, people were able to consolidate, get a SOPA, and he pays today, where the final product of that was lower monthly payment. This now becomes increasingly more difficult. So those are the customers who are the most vulnerable, and I repeat and underline, we have departed from this, from this, in November of 2019.

Okay, so there's a lot of other factors And on PPF if you can answer it What are the related parties transactions regulations? Hypothetically would air bank have to be formally merged with home credit? So there's not to be an issue. I mean air bank having such liquidity to spend No, that's incorrect. Herbank would be merged as an end product with Moneta and Moneta would own

Home Credit, it has two entities, Czech Republic, Slovakia, and the third entity that Home Credit operates is called Zonky. You can find it on www.zonky.cz, which is a quasi peer-to-peer platform. However, most of the funding is provided through the group. So they have a digital platform, they have point of sale and credit card lending, and they have So the structure, today there are sister companies. If the transactions were consummated, we would merge AirBank to Moneta. So that would become a single entity and we would own those as subsidiaries. And if you look at our structure, today we have two business subsidiaries. One is called Moneta Auto. which has a balance sheet of approximately 7.3 billion, which competes head-to-head with Home Credit. Moneta Autofinance is used automobiles and is a profitable, solid company where we have where the yields that we show you in the yield section of our ranking are on both retail and commercial side. And second business entity that we have is called Monetary Ring. This was bought in 2014 by GE. It was bought from Volksbank. and this is an entity that we have put last year into effective runoff as the leading category in the Czech market has become very difficult to maintain due to VAT and other tax-related issues. So we today have two subsidiaries. We would merge Airbank with Moneta Proper and we would most likely amalgamate Home Credit with Moneta Auto as they are two direct competitors. And just for you to understand, in Czech markets, every major bank Operates such entity. Commerční banka Liberália Asocijete General has something called ESSO. There was also privately held company which they have successfully purchased more than 15 years ago. Our competitor, Erste Bank, owns something called S-Auto. This is actually the largest vendor of this semi-secured credit for empty-use vehicles. And we also have a very large player on the check market, which is called HelloBanka, which is 100% owned by VMT Paribas Group. That company That company also competes with us in this space where they are a lot more focused on credit card issuance and on point of sale retailers. So this is the market landscape where if If and when we will take out a significant competitor in a fairly concentrated market.

Thank you very much.

Our next question is from Klaus. Please feel free to speak. Mr. Umek, the floor is yours.

Hello.

Hi, sorry. Can you hear me?

You can hear me, Klaus. Please go ahead.

Sorry, guys. It's Oliver Kudl here. I think we've, because of the passcode, we haven't had registration because of stuff. Sorry for that. So, yeah. So, first of all, congratulations on the strong results in a very positive environment. And perhaps one first question around the... Management Recommendation for the 80 Krona takeover price, partial takeover. You obviously mentioned the excess capital, $6 billion today, also the $1.8 billion of related provisions that you've taken, and this could result in a significant upside. How do you think of this capital in the context of that price? It's not something that we've seen in the management process.

We have thoroughly considered this. I think that if you look at the 180 day average we have published this. If you look at the closing price we also published this and obviously I would think that given The granularity of information that we provide, where in the third quarter we published the excess capital and we are very consistent, I would expect that the capital markets are intelligent enough to evaluate the excess capital and the earning potential of the bank. So I don't really have anything to say on that because it's not my place to say. And I would like to add that this is not the capital position, and I'm sorry, based on your voice, this is not Klaus Zumeck. I know Klaus Zumeck quite intimately and the voice. I'm sorry, Oliver, I think it could be Mr. Sutil on the line. So we have a bit of misunderstanding. Okay, thank you.

Maybe the next question, I mean, obviously you've also done the benchmarking analysis on the broker recommendation and the price. and that was pre-announcement, of course. Some of the targets then come up post the announcement, so the analyst went back and revised the models. I was wondering, you know, these are not, of course, with a control premium, which the target price is in this case. So I'm wondering, you know, how you kind of feel about that, using that as a justification for the validity of the target price. Yeah.

However, we have not evaluated appropriateness or otherwise with respect to control premium or anything else. We basically stated the same. I think that you're trying to lay as outdoors something which doesn't belong on our doormat. I think that given the fact that more than 50% of the bank is owned by professional institutional investors, they will make a judgment call on all of them. We have simply done our best from the share that belongs to us and we will know We will not make any additional comments on that, because we've laid it out in the position. I'm trying to create a situation where your question actually implies the answer. And I'm sorry, we expect Petruski to distribute your product, we are engaged continuously with your boss. Mr. Umek spends a lot of time on Moneta and we have spoken our view so I don't know what else to tell you because there is nothing to say and we have individually and collectively said that the management of Moneta will hold its shares understood, ok

Maybe the next question on the direct lending that you mentioned that has been under pressure a little bit. I'm trying to understand whether the other assets, apart from AirBank, whether that's a good fit in the current environment, the risk side. I understand it's early days and you will obviously go through due diligence. But just generally speaking, whether that's, in your view, a good fit in the current environment, pandemic and post-COVID world.

I try to explain my outside-in view and I underline outside-in view that in my opinion Outside-in, I believe that the purchase point lending, if you go to a furniture shop and you buy credenza for 36 months installments, is actually a lot safer than refinancing an unemployed miner from Thailand who has had 12 different credits. which averaged at 15% ACI and if I refinance him at 7% and give him a 20% top up, I am better off. So this is my view. I've tried to explain it. And actually, you know what? If I look at last 20 years of their performance, the facts speak in favor of my outside and you.

Okay. And perhaps on the kind of next step, the short term, on the transaction, I mean, obviously you said you would now kind of engage immediately and start working and going through the, starting the due diligence. I'm just trying to understand timing around that. When would you expect to...

We are going to appoint advisors next week. So currently we are in a position of having their proposals. We are trying to make that a competitive process. in order to balance price and quality. So I hope that we will have advisors lined up. In terms of investment banks, we have JP Morgan. We will take one of the advisors from Big Four. We are also studying requests for the results from law firms. So this is one package. I think it will take us a couple weeks to begin and ultimately we would like to bring the results to shareholders. at the end of April. Whether we are able to manage this schedule or not, I caution because it could take a little bit more. These are not publicly paid MCPs. I'm sure it will be a It will take some time, so we will go through the process. And by the way, I have called Mr. Missendorfer, who you used in a video of Petrus, and I asked him whether he would independently review the proposal and the due diligence work in order to appease Mr. Hummert, your boss. I will talk to him on Monday whether he is available to do so.

That's a good idea. Thanks. Last question from my side on the should this kind of not go through. You've mentioned obviously that you've been actively looking at potential acquisitions. I think you've mentioned two acquisitions. Is that then becoming your focus? Should this transaction not be voted in by shareholders, for example? Or what would you think of as a B plan as a standalone entity going forward?

I'm sorry, I didn't understand the question. Can you try to paraphrase it for me? I really didn't.

I apologize. Sure, sure. Question was, if you would continue pursuing the potential acquisition that you mentioned you were looking into prior to the PPF approach, should the...

and even when an alternative which has better value for our shareholders comes we will entertain it. One is an acquisition and second is a potential takeover of Moneta and he has consistently said throughout the post IPO history of this bank that if somebody comes with an offer and wants to take over Moneta no problem. We are open to that and he has said very clearly and transparently in our position that there has been discussions and that matter is not closed so we say fine let's keep if it comes if it comes we will consider it on both ends ok makes sense take care I will take care thank you

The next question is from Robert from PKO. The floor is yours.

Hello, everyone. Thank you for your presentation. I have maybe two or three quick questions. First, is my understanding correct that keeping home credit as a stand-alone entity does contribute positively, has advantages with regard to risk-related assets? Secondly, assuming that we'll get a 25-bid hike in the reference rates this year what would you expect in terms of the impact on the average loan rate especially in the corporate and the mortgage segment because you mentioned ongoing competition a couple of times during your presentation so would you expect the average pricing in those two segments to go up by a fully 25 bps or by a smaller amount. So that would be it for now.

I'm sorry, I don't want to take floor for my colleagues, but if there is a hike of 25 interest points, we will get benefits from the hedge position that we have in the bank. However, on the consumer lending, this will have impact not whatsoever. And there is plenty of research by the Czech National Bank that decays are driven not by the interest rate environment, but by the $100 index of competitors net. So the more competitors there are, the faster the erosion of the train. So that's the first part.

Yes, that's why I asked only about the corporate and the mortgage payments. That's correct, yes.

If you look on the composition of our commercial portfolio as provided on page 39, then you can clearly see the product detail. The immediate impact of investing high would be some places into the breaking capital which currently the bank holds at 10.5 billion. So this portfolio, the new portfolio will go up immediately. In terms of the investment portfolio, those 45% of the exposure is at the floating rate, the rest is on fixed rate. So we can add additionally about 20 billion of the exposure that will be raised up again as well. But the rest will basically remain at the rate as it is because it's at fixed rate. But if you look on our whole bunch in totality, you can estimate that 25 basis point height means about 100 million, approximately 100 million positive impact on DNII. However, what is important, in our business plan as we published in October last year, we have already reflected two hikes as these were guided by the Czech Nation Bank in the previous outlook as well. So in terms of the change or impact to our business plan, this basically does not provide any incremental upside.

Hopefully this answers your question.

Okay. And the home credit and restricted assets impact?

It was very fun, really, because these assets have, today, if you look at the way the business model of Home Credit originates along, it is a 10% self-insured bank with a 7% yield. This is put into a special purpose vehicle, and their business model is that the premium finances operational expenses The premium paid finances operational expenses of loan credits and they effectively hold securitized portfolios of these receivables in the air bank. So it has no impact if you merge the banks on the equated assets. It will have the same weight as our consumer lending. So there is no impact per se. but it will increase proportionately with the increase of size of Antecu's portfolio.

Okay, thank you.

Before we start with the next question, here's a little reminder. If you want to ask a question, please press 0 and 1. We now have a new question Please introduce yourself and your company and ask your question. The floor is yours.

Hello, can you hear me? Yes, we can. We can hear you clearly.

Great.

It's Stefano Darby from B2C Pactual. Two questions for me, if I may, please. The first one is...

I just wanted to understand a little bit how the Czech Central Bank works and how long you expect the review of the conditional part of the PPS tender, how long you expect it to be and whether you envisage any issue.

I presumably ask not because they're already a regulated entity, but I'd like to hear your view. and the second point is you've been very generous in the explanations that you provided in the assessment of the offer and you added quite a bit of detail about other potential strategic interests in the company including someone else that at some point in the past had made a potential takeover offer for Moneta now the question is this the takeover sorry the partial tender offer by PTF has a deadline of February 26th

So, how likely do you think it is that this other party will show up before that date?

Because at that date, the shareholders need to decide whether they're going to give their shares to PPS or whether they're going to kick them potentially to give them to someone else. And if PPS gets a 20% stake, presumably it would put everybody else at a strategic disadvantage.

So, what do you think is going to happen there and what can you do to avoid that? Please.

Well, let's see. Ivan now came in with a question. First and foremost, the probability of someone else showing up. I dare not to assess this because the chance is there. I would ask perhaps that The date on the offer in the proposal that we had received is actually due. They have the option to make the offer longer till I believe March 5th. So there are two days actually to be precise.

Second, how our central bank works.

It is the most prudent, I think imagine the German regulator, the German central bank and combine German supervision with the Bundesbank and you get the answer. It is a very prudent institution with a simple view of the world. The higher capital the better, the lower dividends more splendid. And if there is anything that could be controversial, it will be taken under the microscope. And from a deadline point of view, they will take their time to consider. So if there is anything which is a related party transaction, it will receive more than 50% of attention than it is where. an unrelated part of the transaction. So this is why Julián wants to add something.

I'm just thinking, if I understand the question correctly, you also asked how long it would take the Czech National Bank to enter the potential request from DTS to increase from 10% to about 10%.

They are here today.

Yes, that's right.

And I think I think you can expect that Czech National Bank rarely issues any decision prior to that administrative deadline. So he in-hounds on 60 days.

Okay, but conversely, could it be more than 60 days? Could they decide, well, we're going to issue it indefinitely?

Convertly, it can be anything because Chex National Bank Considerance, just let me provide you an example, there was a Chinese group going under the name of CEFC which took a 10% position in one of the Chex banks and subsequently wanted to increase it to 50. And the Czech National Bank considered this for so long that the Chinese group went bankrupt and disappeared. So they took 18 months to study the Chinese, never coming to a decision, and then the Chinese simply disappeared.

Well, I guess in that case they did their job, right? Because they prevented an acquisition from an unstable party.

That's correct. Well, thank you very much for your answers and congratulations on the results.

As a reminder, if you want to ask a question, please press 0 There are no further questions.

So ladies and gentlemen, let me make concluding remarks. I would like to thank my colleagues and I would like to also thank our staff for We would also like to thank our shareholders across. We will continue to seek to improve the government standards of the bank. We will also continue to find alternatives. for the bank and we will reflect back to the UPS proposal. We will keep you posted as much as we can throughout the process and we expect that it will be formally published on Monday when the legal deadline runs out. And I really thank you for your attention and we appreciate all the questions that you received and I wish you wonderful weekends.

Ladies and gentlemen, thank you for your attention. This call has been concluded. You may disconnect.