Moneta Money Bk

Dear ladies and gentlemen, welcome to the conference call of Money to Money Bank regarding 1Q2025 financial results. Please note that this conference call will be recorded. This event will also have a live presentation followed by a Q&A session. As a reminder, all participants are on listen-only mode. Today's speakers will be Mr. Thomas Spurney, Mr. Carl Norman Vogt, Mr. Jan Fricht, Mr. Jan Novitsny, and Mr. Andrew Gerber. May I please now hand over to Mr. Spurney who will lead you through the conference call. Sir, please go ahead.

Good morning, ladies and gentlemen. Again, I have the pleasure to open up the call and present our quarterly results. So if I can ask you to turn attention to page two of the presentation. During the first quarter of this year, we have generated operating income at the level of 3.4 billion. This is 8.4% higher than in the relevant quarter of last year. Main contributors to the growth of operating income is net interest income and net fees and commissions. Additionally to that, we have incurred operating expenses at the level of 1.5 billion crowns. The operating expense level is nearly identical to that of in the first quarter of 2024. Henceforth, the bank delivers net profit for the period in the amount of 1.5 billion. This constitutes a 14% improvement against last year. With respect to the growth of our franchise, the total asset base of the bank reached 501 billion, which is 7% higher. The growth in the in the balance sheet is driven by the funding base. The funding base of the bank reached 456 billion and had grown in this period by 7.8%. And in parallel to that, we generate growth on the side of lending. The growth is at 4% level and we reach 278 billion crowns in the portfolio. Here, I would like to remind that the target on the loan portfolio for this year is 288 billion. And on customer deposits, it stands at 435 billion. So with respect to deposits, we are actually at the target or slightly above it. And with respect to the loan portfolio, we have 10 billion to go in the remaining three quarters of this year. Turning a page, looking at important other figures. We have capital adequacy at the level of 19.1%. The excess capital stands at nearly 4% translated into an absolute amount. It is in totality 6.4 billion crowns of capital. over the regulatory requirement, which translates to 12.5 crowns per share. With respect to risk-weighted assets, these were reduced by 3.6% year on year and the main source of the RWA reduction concerns implementation of CRR3. So this is a good news. Importantly, also importantly, the MREL ratio stands currently or stood at the end of the quarter at 28.7%. So we have significant excess here at the level of 6.3%. And this is an important ratio, one of the enablers to continue with shareholder distributions into the future. With respect to return on capital, untangible equity, the return constitutes 19.5%. So this is again an improvement against comparable period. The cost income ratio adjusted for the one-off regulatory costs is at 40%. The unadjusted ratio is 44, if I remember correctly. if I remember correctly. Yesterday, we have held annual shareholder meeting. I have the pleasure to report that all of the points proposed by the management of the bank were successfully approved and the margin of approval or rather the rate of approval stands at 98% or higher. The participation at the shareholder meeting was at 75%. So we also have had good participation by our shareholders. And now let me comment the macroeconomic or the operating environment that we are experiencing here in Czech Republic. If we turn to page number six, we start with GDP. Last year, 2024, we had really non-consequential growth of 1% of the GDP. The forecast for this year stands at 2% GDP growth. However, this estimate was calculated or estimated before the Liberation Day in the US. So we will have to contend for the remainder of the year with the fallout of the US administration's policies on trade and other. So it's difficult to say whether this will materialize. With respect to the Czech Republic's indebtedness, you can see that in the third quarter of 2014, it reached 43.6%, so the tendency is towards higher indebtedness, and we can expect that both the government deficit and the indebtedness will increase if for nothing other than the need to spend additional funds on defense of the country and there is a built inflation into the mandatory payments. Speaking of the state budget, At the end of March, the state deficit was at level of 91 billion against the target of 241 billion crowns for this year. I think the quarterly number doesn't really predict the outcome, but it might be difficult for the government to actually predict to actually reach and not surpass the level of 241 billion. What is positive is that unemployment in Czech Republic remains benign. It is at low level, 2.6%, so we have to hope that this holds. The forecast for 2025 is at 2.8%, but I would really like to underline here that the estimates of unemployment were done before evaluating the economic growth. Turning page a little bit on inflation and on interest rate environment. Starting with inflation, the latest figure is 2.7% inflation year on year. So the tendency continues to be on the downward trend. The inflation is decreasing. However, in relative terms, it is 30% above the Czech National Bank's target of 2% annual inflation. annual inflation. However, it seems that the inflation is abating. With respect to the key rate, we had, what was it, seven or eight decreases of the key rate. And if you look at the market yield curve development, I think we provide a good illustration what happened in the last 12 months. The dotted line represents... the yield curve at the end of first quarter, 24 and the black line, the lowest one shows where we are currently. So there is a dramatic movement in the interest rate environment. So this is with respect to the macro. If we look at the operating platform starting on page nine, We continue to have growth in the client base. It is at 1.1% level and the bank serves 1.6 billion customers. If you look at the branch network, this is unchanged from the last quarter of 2024, where in the third quarter we closed 10 branch units. Here I would like to highlight that medium term we are aiming to have 100 units. Nonetheless, we are also, or additionally, we are also relocating number of units, modernizing them, and increasing density of coverage, namely in the metropolitan area of Prague. As you know, we share network ATM network with the other partners, the network remains stable at 1900 at 1900 machines, and I will come back to that later in the presentation. We decreased employment level in the bank by 2.2% year on year and we currently employ on full-time equivalent basis 2,453 people. You can see that the front-end employee numbers are being impacted by by branch closure and some efficiency driven actions across the frontline units. We have a stable level of employees in the control and enabling functions. This is due to, I would say two factors. We are faced with additional regulatory requirements, namely in the realm of Financial and Non-Financial Disclosures concerning ESG and we are also preparing for responsibilities that will come on basis of EBA regulation in January 2026. Additionally, we continue to invest into digital capabilities and this keeps the staff stable. On page 10, we turn to the critical part of the business model of the bank. This is digital platform. Overall, we have 1.6 million registered users. So this grows, the digital penetration grows at 8.3% year on year. We intermediate through the digital 713 users. touch points on average daily. This grows by 7% rounded up and this concerns users of our internet banking platform which is declining and majority of the daily touch points are through the central mobile banking application that we operate. In line with that, you can see increase in financial intermediation with respect to payments. Payments number grew by 7.5%. So this is a testimony that we are increasing interaction with our customers and intermediation overall. We have 5.5 million servicing transactions and significant increase of nearly 14% on received or accepted loan applications through the digital channels and you can see a fairly dramatic increase on sales transactions. nearly 24% or 123,000 during the first quarter of the current year. Looking at the branch network, there are several trends in the branch network. First and foremost, we are closing cash desks, cashiers in a number of our branches based on the fact that it was expensive and ineffectual. from a cost perspective, and we are trying to move the cash traffic onto the ATMs. Henceforth, you can see fairly dramatic decrease of cash transactions at the level of nearly 40% 37 to be correct. We are also having less traffic in the branches. This necessitates relocation of the branches into better areas which have higher footfall, namely shopping centers and locations where we can get better traffic. And you can also observe decline in the number of employed staff in the branches. This is related to the closure of two units. And additionally, the loan application seems to be flowing through the digital. We have nearly 10% decrease in the branches. Nonetheless, what is important The network receives very high NPS satisfaction level of 82 and this is stable over time despite the changes that we are making and we expect that this might decline in the next quarter as we reduce or eliminate the cash transactions. The third leg of our operating platform is the contact center. Likewise, similar to the branch network, we have less inbound calls, decrease of 9%. This is due to the fact that we offer better services through the digital platform and this is to try to change a whole host of processes into self-care, which ideally is automated and doesn't involve human interaction. Similar trend as with the inbound calls is observable from the email communications with clients. As we get better on the digital, we face which are relatively costly. We have also shortened the call center hours in order to improve efficiency and this will be efficiency of calls and reduction of the abandoned. rate on the inbound. We increased the staff a little bit in order to boost the insurance sales and this is supported by the fairly, if I may, fantastic growth that we have in the lifetime value of the insurance sales. This grew nearly 37% to 44 million in line with our strategy to support the fee growth. Lastly, with respect to the operating platform, we have the ATM network and here I would like to highlight that overall number of withdrawals is decreasing as people are beginning to use more and more. of contactless payments. This is a good news for our cost structure and it's visible from the numbers. With respect to deposits, we see an entirely different situation where our investment into deposit machines is well justified because we are able to make this more efficient and we are also able to make it more efficient through the strategic partnership that we have with the three competitors and we share their ATMs that are capable of taking our deposits and the number of transactions and grow. testifies to the correctness of this strategy. With that, I would like to say that with respect to the first quarter, our financial results testify to confidence that we will be we are we are on good way to meet the minimum target of six billion that's point number one point number two from commercial perspective as you will see from the from the presentation we continue to generate good volumes both on the deposit side and on the landing side and thirdly With respect to all, we are slightly ahead of our operating plan. So we consider the first quarter result in the singular to be satisfying. And with that, I will turn over to Jan Freček, who will walk you through the PML development in a greater detail. Thank you very much.

Thank you, Tomáš. Good morning, ladies and gentlemen. I am now on page 15, and it's my pleasure to walk you through the profit and loss statement section. Let me repeat the key financials. In the first quarter, Moneta delivered net profit of nearly $1,500 million, representing 2.9 crowns per share, and return on tangible equity of 19.5%. Operating income of nearly 3.4 billion is up by 8.4% year-on-year. Delivered on the basis of net interest income growth of 12.6%, supported by a repriced deposit base and the balance sheet expansion. A net fee and commission income up by 14.6%, primarily due to ongoing strong performance in the wealth management industry. Product Distribution. These positive trends were partially offset by decline reported in the other income category due to lower FX derivative results and absence of bond sale gain in Q12. Operating expenses remained stable at 1,500 million, including yearly regulatory contributions of 195 million fully recognized in January this year. On the cost of risk line, we incurred benign result of 151 million crowns or 22 basis points of the average net loan portfolio. Let me continue on page 16. With the detail of net interest income development, as I mentioned before, year on year we report a growth of 12.6%, while the decline of 3.8% against the prior quarter is fully attributable to doubled mandatory minimum reserves, which effectively means additional 8 billion of liquidity placed in the central bank at the zero interest rate. On the right, we provide the development of, sorry, drivers of the net interest income development. First of all, lending interest income is up by 124 million, supported by the loan portfolio expansion, while treasury income decreased by nearly 1,200 million, in line with the gradual decline of the two-week repo rate. Nonetheless, lower market rates enabled us to repride the deposit base and to achieve reduction in cost of funds by more than 1300 million year on year. If we continue on page 17, here we provide a similar view on the development of net fee and commission income. We had a great quarter delivering growth of 14.6% year-on-year and 4.2% growth against the prior quarter. This has predominantly two main drivers. First of all, as I mentioned, strong performance in distribution of wealth management products and also improved commercial terms with Visa, which resulted in a lower fee expense, which is visible in the bottom chart. On page 18, let me add more detail to the performance in the wealth management products distribution. We delivered income growth of 51% on the basis of a 41% expansion of the outstanding amount of distributed wealth management products and ongoing solid performance in the distribution during the first quarter. These trends are also reflected in the opening income growth of nearly 72% year-on-year and the income growth of 39%. Let me continue on page 19 with the performance in the insurance product distribution. solid quarter delivering 4.6% growth of recurrent income while on the reported level we show a decline of 8% which is a function of 39 million of one-offs realized in Q1 2024. So the growth of recurrent income was delivered predominantly due to improved performance in distribution life insurance, visible in the bottom right corner, and also improved performance in distribution payment and protection insurance. These were slightly offset by slowdown in distribution pension insurance. And we completed this section on page 20 with the cost-based development. As mentioned before, we maintain cost-based stable at 1,500 million. And you can also see that three out of four reported categories on this slide are showing cost saving. First of all, regulatory charges are down by 14.5% year-on-year, predominantly due to lower contribution to Resolution Fund. Depreciation and amortization charges declined, resulting from extended use of several key software, what we did in the first quarter, and personal expenses decreased by 1.8%, resulting from lower employment intensity, year-on-year by 2.2%, expressed in a number of FTAs. With that, let me hand over to my colleague Andrew Gerber, who will continue with the balance sheet section.