Moneta Money Bk

Ladies and gentlemen, welcome to the conference call of Manetta Money Bank regarding 3Q 2025 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. Tomasz Sperny, Mr. Karl Norman Fecht, Mr. Jan Fliczek, Mr. Jan Nowotny, and Mr. Andrew Gerber. 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 honor and the pleasure of presenting the third quarter result. If I can ask you to turn to page number two, I would like to summarize our performance on a year-to-date basis. With respect to net profit, we have delivered 4.9 billion. This is 15.7% higher than in comparable period last year. The result comes on basis of revenue growth, which stands at more than 9%, and we reached 10.3 billion. We have stable cost base, operating expenses remain at level of 4.2 billion and additionally cost of risk year to date at 16 basis points. With respect to the total assets of the bank we stand at 499 billion constituting growth of 2.3% and in line with our original expectations from February 2025. If you look at the loan book The loan book grows at a level of 6.3%. This is consistent with what I commented as a target growth at the end of the second quarter and the overall loan portfolio 288 billion. Funding base increased by more than 3% to a level of 458 billion. What I guess is the most important message from today is that we stand behind the upgraded guidance in the corridor of 6.3 to 6.4 billion crowns for the full year 2025 unless something really extraordinary happens in the market or to us. If you turn page on to number three, briefly on the capital position. So at the end of September, we enjoyed overall capital-equity ratio at 20%, with an excess of capital against the management target at the relative level of 4.7%. Tier 1 at 15.2% with excess in Tier 1 of 2.7%. This translates into 4.5 billion crowns out of which we will distribute roughly 2 billion subject to positive vote on the Interim Dividend that we proposed two weeks ago. and this will obviously decrease the tier 1. We also enjoy a super strong morale ratio on the individual basis. That ratio improved by 6.9% and this improvement is driven partly by successful issuance of tier 2 capital instrument. in the amount of 100 million euro and we issued it on the 9th of September so at the end of the quarter now if I may I will turn to The positive news here is that Czech economy is growing. It is growing at 2.6%. 2.6% against initial estimates of 2-2.1% at the beginning of this year. So this is positive. For the full year, the expectations across the spectrum are 2.6% for the for the full year. With respect to government debt and government deficit, the deficit this year is projected at $241 billion. The third quarter number of the deficit amounts to $254 billion. What is also perhaps important for 2026 budget, which shows deficit of 281 billion. Nonetheless, we have change of government, so we will see what the incoming administration will do with that. The other positive news is that unemployment remains low and is stable, and this, both the economic growth, low unemployment, positively project into the NPL ratio and cost of risk of the bank. Now let's go to inflation on page 6. Currently at 2.8%. The inflation still remains above the Czech National Bank's target. and if you look at the CPI at 2.6% so it increased during the 9 months of this year from the level of last year so given the inflation, the government deficit the Czech National Bank changed its stance on the monetary policy, the key rate remained stable from May at 3.5% and through the commentaries of the Czech National Bank, one would assume they expect the rates to remain at a stable level for a longer period of time. Now if we look at it from the market yield curve, which is constructed on a short-term based on Pribor and on a medium to long-term based on the swap market, you see a remarkable shift. If you look at the dotted line, this was the expectation at September 2024, so the yield curve at the medium to long-term was fairly positive. The latest, which is the dark blue line, shows you that the short end has come down significantly. Nonetheless, the medium and long term shifted upwards. Major part of the shift happened already in 2024. Nonetheless, there is continued upward trend of the medium to long term rates, even though these have abated a bit during the month of October. So, minding that, let me move to the operating platform, which defines our business model. This is on page A. The bank enjoys a customer base of 1.6 million. The customer base is growing at a relatively slow rate of 0.5%. If you then look at the branch network, we have rationalized The branch network to a level of 122 units. 9% of the branches were closed. And we are focusing on number one issue is relocation of branches to more attractive locations. And we strengthen our position in the product market. With respect to ATM network which we share with three other banks, this remains fairly stable at 1,942 machines. We reduced overall in the bank employment by nearly 2% to a full-time level equivalent of 2,465 and you see a relatively notable decrease of the frontline employment by 4.5% to slightly above 1,300 and you see 1.3% increase on the other functions in the bank which stood at 1,149 the end of the quarter again on a full-time equivalent basis. This is chiefly driven by expansion of the IT personnel, namely in the realm of digital development as the bank seeks to further improve digital capabilities, both introducing new products, new options and closing some of the gaps that we have between the physical and digital worlds. Now, if we turn the page, digital platform, 1.6 million users, we have four components of the digital platform, where the most important is constituted by the mobile banking platform, which we call SmartBanka, that is growing at 11% usage, and SmartBanka has 1.3 million registered users. So we have fairly solid growth in moving customers from the physical to the digital world. We have also solid growth of 5.8% on usage. This is expressed in average daily visits. And we have robust growth on the intermediation that the bank performs. servicing transactions and we have decline of loan applications on the digital platform and this is due to I would say two factors one factor one factor is the fact that we change our credit policy where people on the digital take typically smaller tickets and ended up Historically with a high number of loans we changed that to a policy that you can take maximum three loans and then if you want to adjust your lending position we consolidated and that obviously has impact on the on the number of lending transactions. With respect to sales transactions, fairly decent growth of nearly 5%. Moving on to page 10, to the branch network, I commented the rationalization of the network. If you look at it from the updates of how many people we employ, within the network, the decline is at 5.8%. And what is interesting here, as we have been closing branches and reducing the staff somewhat, we improved the Net Promoter Score of the branch network to a level of 88 points and this constitutes 7.8% improvement. Nonetheless, The bank struggles with the intensity of footfall within the branches. Visits declined by more than 17%. and this is attributable to two factors. First factor is closure of branches and second factor is lesser interest in visiting the branches. People are moving to digital and this movement is unstoppable and for our investments and for the core part of the network Distribution of third-party products lags behind our expectations in terms of growth. We have decline of 10% and this is chiefly driven by lower production on pension fund insurance. However, this is also as a result of our focus on quality and cash flow flowing into these products, and we believe we have significantly improved the cash flow flowing into the funds. Our partner, Natsunale Nederlanden, manages it. And second factor of the decline was the Liberation Day. We saw some market volatility in terms of wealth management products and we lost two months of production due to the market uncertainties and obviously this has recovered since then. Loan applications down by 7.2%. Again, it is attributable to branch closure and to the policy we instituted on consolidation for multiple borrowers. Page 11, let me comment on the contact center. We have 71% net promoter score, which we consider substandard in a view of the branch network. Henceforth, on a temporary basis, we increase staff in the call center due to the fact that we would like to improve the service ratio in terms of percentage of answered calls. Nonetheless, we have very good level of decline of email communications and this is attributable to our efforts across products and services on the digital platform. So we see decline here and we have healthy growth in terms of lifetime value of income generated by insurance sales both incoming and outgoing on the call center. Here the plan The bank plans to rationalize the employment. Nonetheless, this is going to take some time as we are deploying artificial intelligence tools in order to increase the efficiency of the compact center. and lastly very quickly on the ATM network on page 12 what is important is that we enjoy through the cooperation wide network we have an excellent market position in deposit machines and we rationalize the machines that we own in line with the market in the next two to three years we will have to we will rationalize the ATM network and the target is that we will take it down to 510 machines reducing the cost and intensity of cash transportation and maintenance of the Moneta-owned network. If you look at the performance of the network, we see fairly significant decline in cash withdrawal and digital people moving into the realm of digital payments. With respect to deposits, we see exactly the opposite trend. We have super strong growth of 20% in terms of number of deposit transactions as we enjoy the wide network of deposit machines. further improve because this year our partner, one of our partners, Make Credit Bank should join the system. Henceforth we will gain some additional machines and the network is also fairly important in terms of simple service transactions where we see healthy growth of 6.6% and if you look at the intensity of the service transactions on the ATM network. It is fairly significant. With that, we have enjoyed The best result in terms of nine months performance. We also delivered the strongest quarter in history of the bank. We also enjoy benign credit environment. On those basis I would like to reaffirm that the management targets the range of 6.3 to 6.4 billion crowns in net profit for this year. And I will hand over to my colleague, our CFO, Jan Precek, to walk you through the P&L and other components. Thank you, Tomáš.

Good morning, ladies and gentlemen. I am now on page 14, and it's my pleasure to walk you through the profit and loss statements. Let me repeat the key financials. In the first nine months, Moneta delivered net profit of 4.9 billion, representing a year-on-year growth of 15%. per share reached 9.6 crowns and return on tangible equity improved to 23.1%. Operating income reached 10.3 billion in the first three quarters and this represents year-on-year growth of 9.1%. This was supported by net interest income growth of 11.6% stemming from higher lending income and reduced cost of funds. And this was accompanied by net fee and commission income growth of 12.4%, stemming from ongoing solid performance in distribution asset management products, together with reduced fee expense. On the other hand, other income line shows a decline of 24%, and this is driven by lower result of FX derivatives, together with the bond sale gain realized last year and not repeated this year. On the cost base, you can see that we managed the cost base broadly stable year-on-year. We show only marginal increase of 90 basis points. And this together with higher operating income resulted in a significant improvement of the cost-to-income ratio from 44% to 40.7% this year. On the Cost of Risk Line, we report a benign result of 342 million or 16 basis points of the Average Loan Portfolio, which is at a similar level as reported last year. Let me now continue on page 15, where we report a detailed view on Net Interest Income Development. In the third quarter, we delivered year-on-year growth of 7.9% and 2.7% improvement Drivers of this development are provided on the right side. If I start from the top, lending interest income is up by $134 million, supported by loan portfolio expansion by 6.2%. Gradual increase of the two-week repo rate resulted in lower treasury income by 622 million, 29 million year-on-year. However, this enabled us to continue with the repricing of our client deposits. And as you can see, a lower cost of funding by 677 million, more than offset reduction in treasury income. Moving forward, on page 16, we provide similar view on the Net Fee and Commission Income development. Here we delivered year-on-year growth of 13.9% and 5% improvement quarter-on-quarter. On the right, we provide key drivers of this development and as you can see, we delivered improvement across all three categories. Namely, third-party commission income is up by 46 million euro a year, mostly supported by improved performance in distribution of management products, while insurance products distribution remain broadly stable. Fee income category shows year-on-year increase of 23 million, supported by both penalty fee income improvement by 14%, together with transactional and servicing fee income improvement of 3% year-on-year. And lastly, fee expense shows year-on-year decline of 36 million, which is an improvement, supported by improved commercial terms with Visa already at the beginning of the year. On page 17, we provide a detailed view on wealth management product distribution. In the first three quarters, we generated 639 million of income in this franchise, which represents a significant improvement of 24.7% year-on-year. And this was delivered on the basis of the significant expansion of outstanding amount of distributed wealth management products by 34.6%. This year we have also expanded our network of investment specialists by 15 bankers in order to strengthen our distribution capacity going forward. Nonetheless, this year our customers invested with us $16,250,000, which is by 5%, 5.4% less than the amount invested last year. And this is mostly attributable to the drop in volume following the Liberation Day announcement in April this year. In summary, opening fee is up by 14.8%, supported by higher effective opening fee, and trail fee increased by 31.3%, supported by expansion of the outstanding ML. On page 18, we provide the detailed view on insurance product distribution. As you can see, in the first three quarters, we generated $864 million. of income in this franchise, which is just marginally better than the income delivered last year on the current basis. However, on top last year, we realized the one-off gain of $39 million, not repeated this year. In terms of number of sold insurance products, this year we distributed 143,500 of insurance policies, which is by 3.2% less comparing to same period last year. And this is mostly driven by slowdown in distribution of pension insurance products in the first half of the year. On the other hand, we improved our performance in distribution of payment protection insurance as well as Life Insurance. And we complete this section on page 19 with the Cost Based Management. As mentioned before, we managed to keep costs stable. The marginal increase of 36 million is mostly attributable to Admin Cost category, which is the only category showing an increase by 8.1% year-on-year. And out of that, the most pronounced increase is in the IT area, where we had incremental expenditures with migration to the cloud. Apart from that, regulatory charges are down by 9.7%, supported by a lower contribution to the Resolution Fund. Depreciation and amortization charge is also below last year by 4.1%, predominantly supported by extension use of life of key software applications, what we did in the first quarter this year. And we managed to keep stable personal costs year on year at 1877 million, which is a function of persisting inflation of average salaries, fully offset by a reduction in FTES by 1.9%. So this is all from the profit and loss statement section and I will now hand over to my colleague Jan Novotny for the balance sheet.