Moneta Money Bk

Ladies and gentlemen, welcome to the conference call of Manetta Money Bank regarding FY2024 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. Thomas Sperney, Mr. Carl Norman Vect, Mr. Jan Frijec, Mr. Andrew Gerber, and Mr. Jan Novotny. May I now hand over to Mr. Sperney, who will lead you through the conference call. Sir, please go ahead.

Good morning. Welcome to everyone. We will present the results of 2024 and fourth quarter. If we can begin on page number two. During the past year, Monetobank generated operating income of 12.9 billion with growth of 6.3% against 2023. Our cost base remains stable at 5.7 billion. And on this basis, we accomplished the bank generated net profit of 5.8 billion. This constitutes increase of 11.7% versus the year before. In terms of growth, the bank accomplished growth in its balance sheet of 8% and we reached level of 495 billion. This is due to increased funding base of the bank. The funding base increased by 9% to a level of 452 billion. And our net loan portfolio grew by nearly 5%, 4.7% to be exact, to a level of 275 billion. If we then go to other key metrics of the bank, we continue to enjoy strong capital adequacy position with that ratio coming at 18.2 and we have excess over the legal requirement plus the management target of 3.2%. The excess can be expressed in financial terms. It is 5.5 billion excluding the accrued dividend from earnings of 2024. The accrued dividend equals to 5.1 billion crowns and we intend to propose dividend per share in the amount of 10 crowns at the April shareholder meeting. If you look at the other important ratio, which is MREL, we also have a comfortable position at 27%. Based on profitability of the bank, if you look at the return that we accomplished this year with respect to return on tangible equity, this is in excess of 20% and it increased, the return increased by 2.4% compared to the previous year. On this basis, the bank accomplished good total shareholder return in the amount of 48%. This has two components, obviously. The dividend stream paid out in 2024, which equals to 12 crowns per share, and the rest comes from the share appreciation. On the following page, We show our performance against the minimum targets that we communicated to you in February 2024. Obviously, we have exceeded the net profit target by the amount of nearly 12%. However, if you look at the performance of the bank, it is better across virtually all P&L lines. Now, I would like to comment briefly on the macroeconomic environment in the Czech Republic. If you look at GDP growth, Today is actually the number where the official growth number is being published. So the expectations are that the Czech economy grew in 2024 by 1.1%. The forward-looking estimate by Ministry of Finance is that the economy will grow at 2.3%. To that, one has to add the risk of import tariffs imposed by the Trump administration and the Ministry of Finance estimates that that could take out approximately 50% of the future. I apologize, 50%. GDP growth estimate. If you look at government debt, it's slightly increased nonetheless, Czech Republic still of approximately one half against the average of the 20 Eurozone countries. Positive news is that the budget deficit that had been approved in the country's budget narrows. It is set The target for the government is set at 241 billion crowns, and here you see the five-year development, so it's substantially lower than the amounts incurred in the COVID pandemic years. Let's look at interest rates. We start with inflation. If we look at the 2024 inflation at 2.4% in the monthly, the year-end monthly at 3%. So the inflation is still above the Czech National Bank's target. Nonetheless, the steep decline in inflation materialized itself in eight subsequent key rate reductions. So currently we are at 4% and the expectation in our business plan is that this rate will go down to 3% or the average for the 2025 will be at 3.3%. If you look at the yield curve, you can see the dramatic evolution of the yield curve, which has flattened. What is interesting here is that the expectations of mid to long term rates, which were prevalent at the end of 23, have now increased by approximately 50 basis points across the various maturities. So this is the operating environment. And now let's go to Moneta's operating platform and its evolution throughout the year. On page nine, we portrayed The growth in the customer base, we are reaching 1.6 billion with the net growth in customer base of 1.4%. The customer growth decelerated due to decrease of interest rates and subsequently pricing of deposits. We have optimized the branch network, closing 10 branches in the fourth quarter. And currently we run network of 124 units. and based on digital performance and other metrics, we will continue to optimize the network. We enjoy wide reach. through ATM network, which we share with three competitor banks that remained fairly stable. Nonetheless, we are planning to add more deposit taking machines throughout the year 2025. In terms of employment, the bank reduced employment somewhat, nearly 1%. We ended up the year with 2,490 FTE equivalent. You can see that we are reducing network in the frontline. This is really linked to branch closure and optimization of the frontline personnel. On the other hand, we are increasing people on the back of the bank. If I had to summarize the key trends, we are investing more people into management of the digital platform of the bank. We are also investing people into risk management, namely into valuations in order to take benefit from the CRR3 and other functions related to either ESG or compliance related matters. Turning page, speaking of digital, In terms of digital users, we reached 1.5 million. The base grew 7.3%, which we consider a healthy growth number. Overall, 95% of our customer base today is digital enabled. In terms of touchdowns with customers through the digital platform, we are close to 700,000 visits a day, 684. But perhaps more important is the growth, the touchdowns growth annually at the rate of more than 12%. And this growth is mirrored into transactional intensity. If you look at payments, again, we have growth of 13% through the digital platform. And most importantly, we invested significant resources in the past two years into servicing capability through digital. And this grows more almost 24%. This enables us to increase productivity and reduce costs of servicing in terms of servicing our customers. We have 26% plus growth in loan applications through the digital. and sales transactions grew nearly 9% last year. Turning a page briefly on the branch network, if you look at footfall or visits into the branches, these have declined 16%. Obviously, some role is played by the branch closure, but I would say it's minimal. the network attractiveness for transactions is lower. However, if you look at If you look at loan applications, we have nearly 490,000 applications with a growth of close to 12%. So the branch network is very important to us both for the lending activity. It is also very important to us for distribution of bank assurance and also for distribution of wealth management products. 590,000 customers are using the branch network. This is a decline of 10% and we see a dramatic decline of cash transactions in the network. These are both withdrawals and deposits. The decline here is nearly by one quarter, specifically it is 23.6% year on year. a turning page brief commentary on the on the contact center. This is another important channel to us. We've had inbound traffic of 791,000. This is nearly 5% decline year on year. We maintain stable staff in order to have a reasonable level of services. What is very interesting and important to us is that the email communication to our contact center has declined by one fifth. We put that on the account of increased serviceability of customers through the digital digital platform. And we also use the contact center for both inbound and outbound distribution of simple insurance products. Here we have grown the lifetime value produced by our colleagues by nearly 48% and the value is 154 million crowns and we try to expand this activity. On page 13, Brief commentary on the ATM network. We currently operate 557 ATMs and we will keep modernizing the network. However, the investment goes into cash deposit enabled machines. If you look at the deposit transactions, we have realized 2 million transactions. This grows nearly 20% and this becomes a very important channel enabling our customers to deposit their receipts into the bank. On the other hand, with higher, let's say, digitization of payments, we see a decline in the withdrawals through the ATMs by nearly 5%. And again, the digital platform is taking predominance on service transactions, where we see decline of service transactions on the ATMs. On page 14, we summarize achievements that we have done on three dimensions, which is daily banking, credit distribution, fee income, and we provide you with some summary of actions that we plan to take in order to enhance our value proposition to customers. I will not go through this because I think it's relatively... Self-explanatory. This focuses on retail. Overall, our investments into digital are now very much focused on covering small business and our SME customers as we would like to digitize as much of the processes. and at the same time enable digital sales, namely of credit and fee products to those customers. Thank you for your attention and I'll hand over to Jan Fricek who will walk you through the details of our P&L.

Thank you so much. Good morning, ladies and gentlemen. I'm now on page 16 and it's my pleasure to walk you through the profit and loss statement section. Let me repeat the key financials. In 2024, Moneta delivered net profit of 5.8 billion, representing earnings per share of 11.4 crowns and a return on tangible equity of 20.4%. More than 600 million higher net profit was delivered on the basis of operating income growth of 6.3%, or 764 million in absolute amount, closing the year at 12.9 billion. Revenue line growth is a result of net interest income increase by 4% year on year, driven by balance sheet expansion accompanied by significant repricing of the deposit base. And on net fee and commission income line, we report 16.6% increase, which is a result of ongoing strong performance in distribution of third-party products, namely wealth management products and insurance. On a cost base, we report a stable development at 5.7 billion level, which resulted in the cost to income reduction to 44%. Cost of risk client shows a net cost of 386 million or 14 basis points of the average loan portfolio. which is a result at the lower end of our guided range, 10 to 30 basis points. So altogether net profit of 5.8 billion is the highest result Moneta delivered so far. Let me continue on page 17 with net interest income development. Moneta had a very strong fourth quarter last year, delivering 11.4% growth year on year and 5.4% improvement against the previous quarter. At the same time, this resulted to the net interest margin improvement to 202 basis points in the fourth quarter. Drivers of the development are provided on the right side. Interest income from lending is up by 91 million. While treasury income decline is attributable to two week report rate reduction during the year. On the other hand, 1.1 billion reduction of cost of funding was achieved predominantly through seven repricing actions of our key retail savings product. On page 18, we can continue with NetVN commission income development. Also in this area, we delivered very strong fourth quarter being by 23% up year on year and 8% up against the previous quarter. Development in this area is predominantly a function of our performance in distribution of third-party products, which we report in the Top chart on the right side and I will comment in more detail this on the following two pages. First of all, on page 19, wealth management products distribution. In 2024, we achieved more than 54% expansion of the outstanding amount of distributed wealth management products, which resulted in trail fee income growth of 73% to 441 million in 2024. The outstanding amount expansion was predominantly delivered through 23.5 billion of new investments made by our customers. And this together with the higher pricing resulted in more than quadrupled opening fee income to a level of 298 million in 2024. So all together in this franchise, we delivered 739 million, which is by 123% better result than in 2023. And if you flip the page, I can continue with the insurance products distribution. This franchise generated an income of 1.2 billion in 2024, which is by only 1% improvement against the previous year. However, and this is important, the result of 2023 was greatly supported by one-offs of 224 million. So if adjusted for that, on a recurring basis, we achieved 19% improvement year on year. This improvement was driven by majority of insurance products in our offer, namely life insurance, personal belongings protection, as well as payment Now, let me move forward to page 21, where we report net income from financial operations development, which is down by 3.3%, reaching 860 million in 2024. The decline is predominantly function of lower result from hedging. However, this was partially compensated by improved FX margin and extraordinary gain on bond sale. And we complete this section on page 22 with operating expenses management. As mentioned before, we maintained cost-based stable at 5.7 billion, which is a result of a combination of three categories reporting savings. Out of four, the highest saving was achieved in the regulatory charges front. On the other hand, personal expenses are up by 6.4%, which is driven by higher variable compensations to our front office line, reflecting improved distribution performance and also increasing average salary, which results from persistent inflation and pressure on the labor market. So this was profit and loss statement section and I will now hand over to my colleague Andrew Gelba who will continue with the balance sheet development.