Moneta Money Bk

Ladies and gentlemen, welcome to the conference call of Manita Money Bank regarding 1Q2024 financial results. Please note that this conference call will be recorded. This event will have a live presentation followed by a Q&A session. As a reminder, all participants will be in a listen-only mode. Today's speakers are Mr. Tomas Sperny, Mr. Karl-Norman Vekt, Mr. Jan Vrycek, Mr. Jan Novotny, and Mr. Andrew Gerber. May I now hand over to Mr. Sperny, who will lead you through the conference call. Sir, please go ahead.

Good morning, ladies and gentlemen. I have the pleasure of beginning today's presentation of our quarterly result. I would ask you to turn to page two. We ended the quarter with a net profit of 1.3 billion crowns. This constitutes a 5.6% increase, 5.8% increase against the comparable quarter of last year. The result was accomplished on the basis of improving operating income. The growth in operating income at 9.6% and The category reached 3.1 billion crowns. The net profit translates, amongst other, into 17.1% return on intangible equity. If you look at broadly the balance sheet of the bank, we are continuing in fairly rapid growth. The total assets of the bank reached 468 billion, increasing at 15.7%. This is on basis. a vastly improved funding base of the bank, which reached 423 billion and grew nearly 17%. We do have stable loan book. The loan book is at 267 billion. Slight increase from previous year of 0.3%. Nonetheless, the increase is quite notable if you compare the fourth quarter versus the current quarter where we have returned the loan book back to growth. On the following page, just a brief comment on our AGM, which was held this Tuesday on April 23rd. We have successfully approved all of the points proposed by the management with the support of three proxy agencies, which we are grateful for. We also had very high participation at the shareholder meeting. It exceeded 74%. The most important item on the agenda was the dividend payments. So we have approval to pay out on May 21st, nine crowns per share. And in totality, that is 4.6 billion. Now, let me provide a brief view of the macroeconomic environment. If we turn to page five, you see the profile of the of the GDP, which against comparable quarter really remains unchanged. With respect to the forecast for the year, the Ministry of Finance expects growth of 1.2% in the GDP. The government debt essentially remains stable with respect as a percentage of the GDP. And you can see that Budget deficit is narrowing on the basis of the current government's action. So for this year, it is planned to reach 252 billion. And we continue to enjoy Low unemployment, 2.7% as of February. Nonetheless, the unemployment rate is expected to slightly increase to a level of 3%. Turning a page to number six. uh we provide a view on inflation and uh interest rates if you look at the inflation it is abating quite rapidly uh in march uh the monthly figure uh reached two percent so we are at the czech national bank's target inflation um on this basis The Czech National Bank elected to decrease the key rate to be repo. They have done it so far three times and currently we stand at 575 basis points. With respect to forward-looking view, Chernobyl will meet on the 2nd of May and the market expects with the consensus is around an additional 50 basis cuts cut into the report. Nonetheless, or on top of that, if you look at the market expectations expressed through the yield curve based on interest rate swaps, we can see that the current expectation is actually higher than what we had at the year end. and the market expects that the rates will stabilize by the end of the year at 4%, which is about 100 basis points higher than what we expected when putting together the plan for the current year. So we have a reason to believe that the bank will have some positive momentum with respect to the ability to generate core earnings. On the following page, we provide a view on the currency. Czech crown has been weakening against a pair of major currencies. It depreciated against the euro at a rate of 7.5% on annual basis, and likewise against the dollar by 8.1%. We think the main cause of the depreciation of the currency is that the convergence story of Czech Republic is pretty much played out. And the country's currency is very much dependent upon the interest rate differential. And in both currencies, you can see quite rapid decline of the interest rate differential. Here we illustrated, on two year swap. Interestingly enough, the differential is now negative to the dollar rate. On the following page, we summarize development of the banking market, starting with deposits and how Moneta performs within this context. If you look at the overall deposit market of resident deposits, it reached nearly 7 trillion crowns, grew on annual basis by 7.6%, and we have vastly outperformed the market growth where Moneta grew by more than 16%, reaching in February 407 billion in the deposit funding base. The success is visible from the nearly 18% growth on retail and likewise we outperformed the commercial deposit market by nearly Delivering growth of 11%. If you turn the page, we look at the lending market in the country. the volume of loans nearly at 4 trillion crowns, growing on annual basis by more than 6%. Against that, we held the portfolio stable, decreasing the total portfolio by 20 basis points. This is due to the fact that we have taken a defensive posture on lending last year based on the projections of GDP contraction and based on our view that earnings in retail have not matched the inflation, so we took a more careful position. Nonetheless, if you look at the retail and commercial gross loans of Moneta, we've turned the corner and returned back to growth both in retail and commercial segments. Now, this will be further substantiated down the line in the presentation when we show you the lending intensity and the volumes that we are putting on the books to support this claim that we have returned back to growth. So with that in mind, the bank delivers more than 17% return on tangible equity on the strength of net profit of 1.3 billion, rounded slightly up. Now I will ask my colleague Andrew Gerber to walk you through the operating platform development of the bank.

Thank you Tomáš and good morning ladies and gentlemen. On page 11 we present some highlights of the digital platform which is a critical distribution and service channel for the bank. We had almost 23 million payment service and sales transactions conducted through the digital platform in the first quarter. And we continue to see strong growth in these metrics. In terms of digital platform users, we had growth of 11% year over year. And likewise, in daily average visits, we had growth of nearly 15% year over year, outpacing the growth in the user base as we see customers becoming ever more On page 12, we present some detail behind the development of the platform users and the transaction numbers. And here I think the key takeaway is the growing importance of the mobile banking platform as the driver of growth. So you can see that the mobile banking platform now accounts for 77% of the users of the digital platform and 79% of the transactions. And at the same time, you see that the internet banking platform as a standalone channel continues to decline in importance. On page 13, we present a snapshot of the distribution channel mix for a number of the key products. And here I would observe the critical role that the digital channels now play in a number of key areas, including consumer loans, term deposits, and FX. where it's the dominant channel. At the same time, it's important to say that the branch network continues to play an important role in the distribution of some of the more complex products such as mortgages, pensions, and a number of the insurance products. And what we continue to see and we see perhaps an increasing frequency is clients choosing to start the process online, but ultimately ending up in the branch at some stage during the process. So it's important that these two channels continue to complement each other and support the development of the business. On page 14, we present an overview of the branch network. Here you see the branch visits declining year over year down 18%. But as I said, the branch network continues to play an important role in the distribution of some of the more complex and high value products. In the first quarter, we conducted an analysis of the lifetime value contributed by the respective channels and what that shows is that the branch network continues to contribute significantly larger share of lifetime value by virtue of the fact that it's an important channel for distribution of high value products such as life insurance, investments and mortgages, as I said. In terms of number of branches, we ended the quarter at 134 branches. This is down six year over year. And likewise, the staffing of the branch network decreased 3.5%, reflecting the smaller network and our determination to maintain cost discipline. So that concludes the brief overview of the operating platform. And with that, I will hand over to Jan Fricek, who will take you through the profit and loss development.