Moneta Money Bk

Hello and welcome to the Moneta Money Bank 1H 2023 financial results. My name is Terry and I'll be the conference operator for today's webinar. All participants will have the opportunity to ask questions today and you can do this by using the raise hand icon or the Q&A chat box, both found on your Zoom toolbar. Alternatively, if you have joined us on the phone, you can press star followed by one on your telephone keypad. Today's speakers are Mr. Thomas Burney, Mr. Jan Fritschek, and Mr. Jan Novotny, and Mr. Karl Norman-Facht. I would now like to hand over to Mr. Thomas Burney to begin. Please go ahead.

Good morning, ladies and gentlemen. I had the pleasure of covering the first part of our presentation. So if we can turn to page number two. We first cover the quarterly the quarterly result in the second quarter of the current year. We delivered net profit of 1.26 billion pounds. This is 4% quarter on quarter growth. I think more importantly. If you look at the result of the quarter, we are also delivering strong net interest income. Net interest income increased more than 6% quarter on quarter, and it exceeds the forecast that we provided to you in February, 2023. by about 180 million. So we look with confidence into second half of the year. The other positive news with respect to the quarter relates to net fees and commissions. On the quarterly basis, this category of income increased by 7.6% and this is due to strength of our distribution in asset management as well as insurance delivering a solid result. If you look at the cost base of the bank on quarterly basis, it had declined by more than 11%, even though we caught a tail end of mandatory contributions, namely to the deposit insurance fund, which had changed prices at the last minute. And we suffered a higher charge on insurance during May 2023. Nonetheless, we believe that the result is in line with our guidance and with our operating plan. During the second quarter, we incurred a risk charge of about 150 million. The first quarter was impacted by both disposal of significant NPL portfolio, which produced material gain. And also we had some releases of provisions, a very tail end of the COVID related provisioning. Now with that, I would turn to page three, where we look at the semi-annual results published this morning. If you look at the net profit, we stand at 2.5 billion crowns, rounded up by 20 million. This is, in our view, a good result in a view of guidance, which we will cover at the end of this presentation, where we increase the minimum net profit target to 4.7 billion from 4.3 billion. If we briefly cover the other categories, which will be commented upon by Jan Fricek on operating income, 5.9 billion. So in order to meet the guidance for this year, 12 billion, we have to produce additional 6.1 billion in operating income. And we're confident that the number will come in based on evolution of the second quarter. is under control. I would mind you that the 2.9 billion has in it more than 300 million of mandatory regulatory contributions, which always impact the first half of the year. This year, second quarter, as I said, we suffered additional additional charge. The semiannual cost of risk at 30 million, this is combining the excellent first quarter with the normalized second quarter charge that we have in the P&L, which I covered on the previous page. Now, if we continue to the balance sheet, If you look at our activity for past 12 months, in response to the high interest rate environment, we shifted the business model to focus on deposit gathering. The deposit gathering produces growth of 24% and the higher volume of deposits supports the growth of the net interest income. We ended up with 368 billion. Nonetheless, if you were to add The additional 2.8 billion that we placed in subordinated deposit just not included in this figure, the growth would be even higher. And I would like to underline that our growth of deposit base comes at three times the market growth. The deposit base also positively impacts the liquidity ratios where we have increased the liquidity by 120% or de facto 66 billion crowns on year to year basis. Now, if we turn to the lending base to our performing loan portfolio, it stands flat at 269 billion. This is in line with our strategy where we focus on two aspects of the loan portfolio. First aspect is underwriting high margin, high rate products. Second aspect is gradually pricing of the portfolio, both of which these aspects will be covered by Jan Novotny in his part of the presentation. Now, if we turn into the evolution of our operating platform. If you look at the operating platform, the most important development concerns employment of the bank. Last year, I believe it was in October, 2022, we announced a target of 2,500 FTEs. So we come in at the target. We are actually 11 FTEs short, but this restructuring, Money Bk Bk is related to productivity improvements or discontinuation of some business activities which we found inadequate in terms of return on capital. If you look at the other aspects of the operating platform of the positive, we reached agreement with four banks to not only share ATM infrastructure with respect to withdrawals, but we are planning to implement by the end of the year functionality of deposits. We believe that this will not only improve our cost position, contribute to CO2 reduction targets, but also broaden reach of Bonetta for those clients that need to meet the ATM infrastructure for deposits. We grow the client base and digital I will cover in separate part of the presentation. Now, with that in mind, let's take a look at the operating environment as we would like to present some key numbers. Now, if we look at page seven, the operating environment is frankly challenging. On one hand, you have economic stagnation, but the most optimistic forecasts with respect to GDP growth for this year, it comes in about half a percent. Hence, the economy is clearly slowing down. The positive factor remains with respect to unemployment because the unemployment is hardly moving up and this in our view contributes to benign credit environment to continue benign credit environment, which actually is most likely and it's very true as the metrics on risk management are at historical lows and this will be covered by Norman in his part of the presentation.

We continue to suffer from high inflation which is followed by