Moneta Money Bk

Dear ladies and gentlemen, welcome to the conference call of Moneta Money Bank regarding the first quarter of 2023 financial results. Please note that this conference call will be recorded. This event will have a live presentation followed by a Q&A session. And as a reminder, all participants will be in listen only mode. May I now hand over to Mr. Thurney, who will lead you through the conference call. Sir, please go ahead.

Good morning, ladies and gentlemen. I have the pleasure of opening today's presentation of our first quarter results for the year. If we turn to page two, we've generated a net profit of 1.2 billion crowns. This is based on the strength of operating income of 2.8 billion. which is 6% down compared to comparable quarter last year. However, if you look at the structure of the operating income, we actually have a quite good performance on the net fees and commissions. On operating expenses, these are stable. At 1.5 billion, the operating expenses increased significantly Nominally by 1.6%, and this is namely due to increase in mandatory charges that we have to contribute to regulatory funds operating profit at 1.3 billion. We had a very good quarter with respect to cost of risk. We released 90 million crowns, and this is based on good performance of the underlying portfolios, and even more importantly, on a very successful disposal of NPLs in the first quarter, which not only supported the cost of risk, but also reduced quite significantly both the absolute amount of NPLs and the relevant ratio. If we turn page to page three, if you look at our balance sheet, the absolute size of balance sheet, exceeded 400 billion crowns. This is on the strength of deposit growth. We had at the end of first quarter, 350 billion, which constitutes a 19% growth year on year. However, if you look at the first quarter, We have raised additional 16 billion in deposits. Hence, we have a very high volume of high quality liquid assets consisting of cash and government bonds, the HQLA increased by nearly 68%. And that in turn transfers itself into highest liquidity coverage ratio ever, 274%. Now, if we take a brief look at the asset side, our gross performing loan portfolio showing an asset growth of 3.4%. This is coming namely from the retail. The loan to deposit ratio declined to 76%. So this is also the lowest loan to deposit ratio ever since we have come to the public markets. and the investment portfolio hold to maturity at 80 billion. If we then look at the relative metrics of the bank, this is on page four, we improved the yield on the loan portfolio overall by 40 basis points. So we expect that by the end of this year, we will come near or at 5%. through repricing of the existing portfolio. Cost of funds increased 2.9% for the first quarter and we expect that with our current strategy this might climb up a little bit. Nonetheless, net interest margin of the bank at 2.1 for the remainder of the year We expect this to be stable at 2%. And we also provide you later on in the presentation our forecast of the net interest income for the following three quarters. Capital position solid on consolidated basis at 18.1%. and we will go through detail of both consolidated and individual capital adequacy later on in the presentation. The result turns into return on tangible equity of 16.8%. And finally, not finally, actually, let's look at the operating platform. We currently operate 140 branches As you can see, year to year, we have closed 9% of the branch network and this adjustment is right sizing of the network to the efficacy of our digital strategy and we will continue in this endeavor for the next two years. If you look at ATM infrastructure, as you know, last year, We have successfully entered into alliance with Commerční banka, subsidiary of Societe General. During the first quarter, we materialized agreements with Unicredit and Airbank, so we have expense-free access now to more than 2,000 ATM machines in the country. and this will enable us later on in the year to consider how to make withdrawals, how to put fees on withdrawals in the second half of the year or fourth quarter rather on the non-alliance network and further improve the net fees and commissions position in the bank. In our fight against inflation, we have decreased the employment in the bank to 2,553 FTEs. This constitutes nearly 13% decrease year on year. The decrease is 50% related to improvements in productivity in the bank and about 50% of the decrease is a result of lower demand namely for our credit products. If you look at the client base, it's developing steadily. Even the growth slowed down compared to last year. Somewhat last year we recorded 5.4%. Now first quarter generated a 4.6% growth in the customer base. And we continue to have solid performance on the digital channels. If you look at our mobile banking platform, within a year, it attracted 333,000 of new users. This is partly a result of our cybersecurity strategy, where we request push notifications through the mobile banking platform to access internet bank, and also We are trying to discontinue SMS messages as they are prone to cybersecurity fraud. On the following page on Tuesday, two days ago, we held a shareholder meeting. The shareholder meeting was successful from our perspective. There were four key decisions made at the shareholder meeting. Number one, we've elected Mrs. the current CFO of PPF Group into our supervisory board. Secondly, we've approved financial statements, both consolidated and individual. Third, We have approved management remuneration report successfully. And fourth point is that we received shareholder support for eight crowns per share dividend distribution, which will be paid on 25th of May, if I remember correctly, the day. With that, I will turn over to Klara. who will give you a brief view on the operating environment from the perspective of our macro in the Czech Republic.

Thank you, so I'm turning to page number eight and let me comment on the macroeconomic environment. From the GDP evolution point of view, the Czech economy is slowing down while the GDP growth for 2022 was two and a half percent. In the fourth quarter, it reached 0.3% and in the first quarter, and the first quarter 2023 will be 0.6% negative. For the full year, the Ministry of Finance is expecting economic stagnation. The forecast stands at 0.3%. However, this does not seem to impact unemployment dramatically. In February, the unemployment rate was 2.5%. The full year expectation is at 2.7%. The economy, therefore, managed to absorb the last year's wave of Ukrainian refugees into the labor market. The country continues to experience significant budgetary deficit since 2020 this year, the budgetary deficit has been framed at 295 billion crowns in March, it has already reached 166.2 billion. The government seeks to consolidate the state budget by a lower spent and increased taxation. However, it seems to have limited ability to influence mandatory expenditures in the short term. So while the government maintains the original target, the 295 billion reaching of it might be a challenge. The government debt as a percentage of GDP has reached 44.1%. which is still way below the Euro area. Now let me comment on page number nine, the inflation and interest rates. The inflation remains high in March. It has reached 15%. The key contributors are food and housing. We can observe some decline in fuel related costs. The expectation of the Czech National Bank for 2023 is 10.8%. Interest rates are reflecting this development and the monetary policy of the Czech National Bank. The Czech National Bank has been keeping the two weeks report rate at 7% since 2022 and we do not expect a decline in the near future. yield curve remains inverted. The short-term one-month driver is at 7.1%, while the long-term is at 4.5%. As a result of the inflation and the interest rate environment, we would expect interest rate decreases only later in 2023. So this is it for the macroeconomic environment, and let me hand over to Andrew for the digital successes.