Moneta Money Bk

Dear ladies and gentlemen, welcome to the conference call of Moneta Money Bank regarding full year 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. Carl Norman-Fex, Mr. Jan Fricek, Mr. Jan Novotny, and Mr. Andrew Gerber. May I now hand over to Mr. Fex, who will lead you through the conference call. Please go ahead.

All right. Thank you very much. Good morning, ladies and gentlemen. I have the pleasure to present to you Moneta Money Bank's 2025 financial results. Before we start with the presentation, I would like to apologize on behalf of our CEO, Tomasz Bruni, who cannot attend this call this morning since he contracted the flu and for that reason had to stay at home. So that said, We start on page two with the key highlights of our last year's financial performance. We start with the operating income, which came in at $13.9 billion, which is an increase of almost 8% year over year, both driven by a strong growth in the net interest income and the net fee and commission income in both segments. If you look at the operating expenses, this remains a challenge throughout the year. But I think the fact that it grew by only 2% shows that we kept costs pretty much under control. And as a result of that, the cost-to-income ratio even further improved by 2.4 percentage points to the deep below 42%. This allowed us to generate a net profit. of 6.5 billion. It also means we outperformed the initial guidance we published in January last year by half a billion share crowns. And this constitutes an increase of almost 12%. Looking at the balance sheet, here we saw a growth of almost 2% reaching a level of 505 billion share crowns. The contribution of the growth came both from lending and also increases in the funding base. The loan portfolio reached the level of 292 billion or almost 6% expansion, and the funding base showed an increase of 2.5%. If we go to the next page, here on page three, We have capital ratios and information on the returns. So let me start on the top left. The card, the capital adequacy ratio reached a level of 18.7%, which constitutes an excess of 3.4 percentage points of the relevant capital management targets which we have in place. ratio 14.1% and the MRL ratio 27.5% which is an excess of 5.2 percentage points. In terms of dividend, so in the back of the net profit and the strong capital ratios which we display here, we intend to propose a dividend of 11.5 crowns per share or an absolute amount 5.9 billion. If you look at the total shareholder return, constituting the appreciation of the share price and the net profit, then we generated a total shareholder return of an excess of 70% in 25 compared to 48% that we recorded in 24. And in terms of the return on tangible equity ratio, here we saw a significant increase of 3 percentage points, reaching a level of 23.4%. If we move to the next page, this shall illustrate the variances of our actual results versus the initial guidance back in January 25. Obviously, the most important is the over-delivery of the net profits, or 8.4% from $6 billion to $6.5 billion. If you look at the individual lines on the P&L, the key driver, obviously, was the total operating income, which came in better by $300 million, or 2.4%. OPEX, we kept very much under control, and we overperformed, as such, contributing $100 million to the results. And cost of risk ultimately came in on the bottom of the provided updated guidance of 15 to 35 basis points since the cost of risk only amounted to 16 bps. And the absolute amount meant 300 million on top supporting the process. The last one, obviously, earnings to share, 11.7 in the guidance, 12.7 now based on the actual results, which means one crown more, or 8.4%. And the return on natural equity also outperformed our guidance by 15% or 3 percentage points. And then we ended up with 23%. Now to put the result a little bit into perspective, what was the environment we were operating in last year, looking at the macro. To start with, obviously, the most important thing is the GDP, which came in widely better than initially assumed and much better than what we had in 24. So the forecast is 2.5% for for last year compared to 1.2% in 2024. Unemployment rate, a very important variable for our retail unsecured lending franchise. We always look very careful at these numbers. Yes, there have been increasing steadily, but from a very, very low level. And there's a 2.9%. This is the latest data which we have available. It's still a very moderate number. And also, you will see it on the later pages. We do not expect the rates to significantly go beyond that level in future periods. In terms of government debt, that also has been on the rise steadily. The latest number, 43.3%, government debt as a percentage of GDP, but still well below the average of the 20 countries within the Euro area, which shows a value of 87%. And the state budget deficit has been increasing year over year from 271 to 291. The latest number we are aware of for 2026 is state deficit of 310 billion. So this would mean another increase by around 20 billion year over year. And on the second page of the macro, here we show a few more details on the inflation. This is a key driver for the Czech National Bank to consider for their considerations on the interest rate level. So either you look at inflation or CPI, both levels still are above the Czech National Bank's targets. So at the level of 2.1% and 2.5% respectively. The key contributors for the inflation numbers of the values in December continue to be food and beverage, S&B, housing, energy, and anything with people doing their free time related to recreation. restaurants and hotels, so these were the main driver of the latest inflation numbers. The two-week repo rate is very important. I mean, it has been flat since May last year. As a matter of fact, the Monetary Policy Council will meet this week on Thursday to decide on the new rate, and the current expectation is that the rate remains unchanged. Yeah, I think that would include my short introduction. And with that, I would hand over to Andrew to share with you the latest on the operating platform.

Thanks a lot. Good morning, ladies and gentlemen. So moving to page nine, we look at the overall operating platform of the bank, which consists of our digital channels, our branch network, the contact center, and, of course, the ATM network. Overall, the bank serves, at the end of 2025, 1.6 million clients. which was broadly flat year-over-year. Our branch network stood at 122 units. This is down two year-over-year as we continue to rationalize the locations that we operate. The shared ATM network that we operate with three other banks stood at 1,942 machines. It's probably stable, and it's the second-largest network in the country. In terms of the employment base of the bank, We have 2,469 FTE on average during 2025. This is 1.9% lower year-over-year. And looking specifically at the front office employees, we have 1,313 FTE down 4.7% year-over-year. And this reflects our continued focus on the efficiency of deployment of resources specifically in the front office. and you see the number of employees in other positions, non-front office employees, 1,155 FTE, up 1.6% year-over-year. Moving to page 10, we look specifically at the digital platform of the bank. This really consists of four key assets. One is the primary website, moneta.csat. and then the two digital banking applications, Smart Bunker for mobile and Internet Bunker for desktop users. Overall, the digital platform users by the end of the year stood at 1.6 million. This is up 8.3% and brings us very close to our target of 100% penetration of the client-based digital channels. We have 720,000 daily visits on average during 2025. This is 5.3% higher year over year. And in terms of payment transactions, we saw 79.3 million, up 8.4%. We granted 28 billion of new loans through the digital platform, up 43.3% year over year. This reflects both general improvement in demand for lending, which you will see later on in the presentation, in the lending that we're granting. In terms of sales transactions, we made more than 83,000 sales transactions, 2% higher, and servicing transactions, 23.4 million, 1.5% higher. Moving to page 10, we look at the branch network. As I said, we had 122 branches, 1,054 FTE deployed in the branch network. We continue to achieve very high levels of client satisfaction with MPS standing at 90, up 9.8% year-over-year. We continue to see decreasing branch visits down 15.4% year-over-year as clients continue to shift much of their daily banking activity into digital banking applications. In terms of third-party product distribution, we sold 167,000 units. This is down 10.4% year-over-year with the decline driven primarily by two insurance products, We granted 48.2 billion lending via the branch network, up 12.1% year over year. Moving now to page 12, we look at the contact center. The contact center deals with five main types of communication, telephony, email, web, chat, and social media. We handle 774,000 inbound calls. This is 2.1% lower year-over-year. In terms of numbers of staff, We have 221 staff members. This is 9.4% year-over-year as we increase the staffing in some areas to focus on improving customer service. And again, we achieve very high level of customer satisfaction with NPS standing at 80% and 14.3% year-over-year. We answered 94.8% of calls. This is 1.3% higher year over year. And we handled 136,000 pieces of email communication, which was down 18.3% year over year. And finally, in terms of insurance sales, we generated $164 million in lifetime income, which is 6.4% year over year. And finally, on page 13, we look at the ATM network. As I said, the network stood at 1,942 machines, of which 812 are now deposit ATMs, which is roughly 41% of the network. And our own ATM network stood at 561 units, which is stable. In terms of usage of the network, we see a decline, 7.5% year-over-year decline in withdrawal transactions as the market continues to move away from cash. At the same time, the expanded deposit capability led to 22% encouraging clients to move away from physical branches for these types of transactions. So that concludes the operating model section. And with that, I will hand over to Jan, who will take you through the profit and loss development.

Thank you, Andrew. Good morning, ladies and gentlemen. I'm now on page 15. It's my pleasure to welcome you to the net profit and loss statement section. Let me repeat the key financials. In 2025, Moneta delivered net profit of 6.5 billion, representing year-on-year growth of 11.9%. Earnings per share reached 12.7 crowns, and return on tax equity 23.4%, representing 3 percentage points improvement year-on-year. Operating income stood at 13.9 billion, which represents year-on-year growth of 7.8%. And this was delivered on the basis of net internet income growth of 8.8%, stemming from higher lending income and the reduced cost of funding. And also, net fee and commission income line shows a year-on-year improvement of 11.1%, driven by ongoing solid performance in distribution of wealth management products and lower fee expense. On the other hand, other income line shows a decline, which is attributable to a lower result of ethics derivatives. On the cost base, we report the marginal growth of 2%. Predominantly, higher cost were incurred in personal area and IT area. However, 2% operating expenses growth together with operating income growth of 7.8%. resulted in a significant improvement of the cost-to-income ratio to 41.9%. On the cost of risk iron, we report the benign result of 444,116 basis points on the Average Growth Portfolio. Moving forward, on page 16, we provide a detailed analysis of the net interest income development. In the fourth quarter, we delivered year-on-year growth of 1.4%, despite the marginal decline by 1% against the third quarter, which is attributable to intense competition on the deposit market. If you look at the drivers of the year-on-year growth, let me start on the top. We achieved lending interest income growth of 195 million, supported by loan portfolio expansion of 5.8%. And also a lower interest rate environment enabled us to gradually reprice our deposit base down, which resulted in a cost of funds that decreased by 250 million. On the other hand, lower interest rate environment resulted in a drop of treasury income by 400 On page 17, we can continue with a similar analysis of Net Fee and Commission Income. In the fourth quarter, we delivered the year-on-year growth of 7.5% and also 1.9% improvement against the third quarter. If you look at the individual categories, third-party commission income remains broadly stable year-on-year. However, He improved performance in distribution of wealth management. This was compensated by a decline in distribution of insurance. Fee income went up marginally, predominantly supported by higher penalties. And fee expense decreased since the beginning of 2025, resulted from renegotiated commercial terms with Visa. On page 18, we provide a detailed view on our performance in distribution of wealth management. As you can see in the top left corner, in 2025, we delivered nearly $900 million of commission income, upside 21% year-on-year. And this was predominantly supported by higher trail fees, by 31%, somewhat resulting from the significant 33% expansion of the outstanding amount of distributed wealth management products. Also opening sealant up by 6.7%, reaching 318 million, despite the 5%, nearly 5% decline of distributed volume. I'd like also to point it out that in 2025, we successfully expanded the network of of investment specialists from 48 to 67 investment bankers in order to strengthen our distribution capacity on the market where we project a significant growth potential in the future. On page 19, we can comment on development in the insurance product distribution. In 2025, we delivered a commission income of $1,146 million, which represents a marginal 2.2% decline year-on-year on the recurring basis. And this is attributable to a lower number of sole insurance products by 3.3%. If you look at the performance in the individual product categories, first of all, we improved the performance in distribution of payment protection insurance by 6% and we maintained stable slightly improving performance in the life insurance distribution. However, the commission income from the life insurance was negatively impacted by elevated amount of commission clawbacks due to higher number of cancelled contracts. In terms of the pension insurance, we distributed in the second half of the year. On page 20, you can continue with the cost base analysis. As mentioned before, the cost base increased marginally by 2% year on year, reaching 5.8 billion. This is below our original budget of 5.9 billion. And if you look at the individual categories, regulatory charges went down by 9.7% and also and amortization charge increased by 5.1%. On the other hand, admin costs increased by 6% or 100 by 100 million, predominantly due to incremental costs incurred in the IT area. And personal cost is the second increasing category, up by about 100 million or 3.9%. due to higher self-incentives based to the front line resulting from improved self-performance and also increase of the average salary only partially mitigated by a reduction in the number of employees by 109% expressed in the FTEs. On page 21, we added a new slide analyzing our cost performance over the last five years. If I start with the personal cost on the left, personal cost grew by 2% annually in average. And this is a function of a persisting pressure on the wages, on the wage inflation, only partially mitigated by a gradual reduction of number of employees from more than 3,000 in 2021 to less than 2,500 in 2025. If you get the Admin Cost Category from the right, this category grew by 2.2%, where the vast majority of incremental costs were incurred in IT, on migration to cloud, on strengthening our cyber and also on digital platform development. On page 22 we conclude this section with depreciation and amortization category. There we achieved 0.7% annual depreciation. Reduction, which is a function or this is in line with a stable development of fixed assets position. Out of that, intangible assets went down due to ongoing investments into the digital platform development and also IT infrastructure. On the other hand, tangible assets went down in line with our gradual reduction of number of branch units. And now that's all for the profit and loss statement section, and I will now hand over to Andrew, who will continue with the balance sheet development. Thank you.

Thank you, Jan. So moving to page 24, we take a high-level look at the development of the loan portfolio and the funding base of the bank. Overall, the loan portfolio grew 5.8% year over year, 1.4% in the fourth quarter, driven by a strong rebound in new lending performance. At the same time, the loan portfolio yield decreased five basis points year over year, reaching 485 basis points. This is driven by gradual repricing of the floating rate part of the commercial portfolio, partially offset by upward repricing of the mortgage portfolio as that moves Looking at the funding base, we grew 2.5% year-over-year, 1.2% in the fourth quarter, reaching $463.7 billion. And at the same time, we saw the cost of funding decrease 83 basis points to 216 basis points as we gradually repriced the deposit portfolio in response to the low repo rates in the market. Moving to page 25. We take a look at the balance sheet overall, which expanded by 9.5 billion cheque rounds due to expansion in the deposit base. On the left-hand side, on the asset side, you can see that the growth predominantly went into net customer loans up 5.7%. Securities up 3% year-over-year. And on the liability side, as I said, you can see that the growth is driven by growth in customer deposits up 2.5% year-over-year. Moving to page 26, we look at the new lending performance. New lending volumes were up 22% year-over-year due to improved demand in both the retail and the commercial segments. Retail new lending was up 20.6% year-over-year, driven by strong performance in mortgages, up 22%, and consumer loans up 19.7% year-over-year. The commercial segment showed slightly faster growth, up 23.8% year-over-year, with small business growing particularly strongly at 31.4%, and SME up 21.2%. That's also very strong, very strong performance. On page 27, we see that the new lending volume translated into 5.8% growth in the loan portfolio. And looking at the segmental split, you see retail up 2.4%, while small business growing very strongly at 26.1%, and the SME portfolio up also strongly at 9.5%. On page 28, we look more closely at the retail loan portfolio, where we see that the mortgage portfolio was up 2.8% at 6.6% as we saw rebounding the bond for consumer loans. Again, the other loans can agree down 12.8%. This is driven primarily by the runoff of the bridging loans portfolio, which is a legacy portfolio that we're no longer originating to. On page 29, we take a similar view of the commercial portfolio where you can see the growth with investment loans up 14.3% and small business loans up 26.1%. Again, as we saw, more demand for these products across the market. And finally, moving to page 30, we take a look at the development of the yield of the loan portfolio. The yield overall was stable at 4.9% year-over-year, with the improvement in retail to 4.4%, driven predominantly by gradual as it moves through refixation, while the commercial portfolio decreased to 5.7%, driven by repricing of the floating rate part of that portfolio. So overall, I'd say it's a solid year for lending. We, of course, would have liked to have grown a bit faster, but we continue to see and we continue to carefully balance our growth submission against the type of profitability that we think is appropriate in these business lines. And that concludes the asset side and I'll now hand over to Jan who will take you through the liability side of balance sheets.

Thank you very much, Andrew, and good morning, ladies and gentlemen. Please let me continue with the overall view of our deposit position and its development. On the page 31, we are showing the evolution of the overall customer deposits and wholesale funding. We have reached almost 464 billion check rounds at the end of the year, which represents a solid growth of 2.5%. You can see also the split per segment with 2.2% growth in retail, 3.3% in commercial, and 3.0% in wholesale. On the next page, page 32, we are showing the evolution of the customer deposits and funding costs by each month of 2025. What is visible here is that successful management of the depository pricing enabled significant improvement of the net interest margin. This is depicted in the bottom chart on this page. Now moving to even better story, on the page 33, we are showing the evolution of the combined deposits and assets under management position. And you can see that the combined value has reached 410 billion cheque rounds, meaning that on the top of the solid deposit growth, we have added almost 33% of wealth management products, resulting in overall growth of the combined category by excellent rates of 7%. On the next two pages, pages 34 and 35, we are splitting the customer deposits per product. On the page 34 is the retail deposits, with overall 2.2% yearly growth. And on the page 35, the commercial deposits yielded overall growth on a rate of 3.3%. Now let's move to the last page of this section, page 36, where we have prepared sort of a 2.3 for the evolution of the cost of funds. In the last 12 months, we have decreased the average cost of funds by 25 basis points, which is different by customer deposits down by 0.29%, as shown in the chart in the middle of the page. And on the right side, you can see the evolution per segment, with retail ending up at the level of 2.11%, and commercial at 1.52%, and the end of 2025. And that was the last page of the Balanchine Development section of the presentation. Thank you very much for your attention, and please let me hand over back to Norman.

All right, thank you, Jan. This takes us to the risk section on page 13.8, with an overview of key risk metrics Let me start on the top left. So, cost of risk came in at 16 basis points last year, which is the two basis points increase year over year. Loan loss provision coverage dropped from 145% to 1.24. The key drivers for the drop are the MPL sales and also releases on the management overlays. And the total MPL loan coverage at a solid 122.1%. And the MPL ratio dropped from 1.3% by 30 bps to 1%, which is an all-time low we have recorded at Moneta. Moving to page 39, here we have a more granular view on cost of risk. So in absolute numbers, The 16 base points translate to 444 million check rounds compared to 386 back in 24. Now, the last year's results were supported by various elements. One is the MPLs, where we disposed around 1.3 million check rounds of MPLs, generating a free tax gain of $115 million. Moreover, we did releases of the management overlays throughout the year, adding another $246 million. And last but not least, we also did some adjustments within our IFRS 9 model in the year, which supports the cost of risk planning. On the next page, page 40, here we have five data points each for the non-portfolio provisions coverages and MPLs. Again, let me start on the top left. The gross loan receivables increased by more than $15 billion year-over-year, or 5.5%. At the same time, loan loss provisions dropped from $4 billion to $3.5 billion, which has dropped by around $400 million. The ending balance of 3.65 still includes management overlays of 148, which dropped from almost 400 million to the current level. The no-loss provision coverage I touched upon before, and the stock of MPLs decreased year-over-year by 570 million, with an ending balance a tick shy of 3 billion. Then we can move to the next page, page 41. Here we have an overview of MPL in and out flows since December 24. Let me just concentrate on the far right of the page, Q4 of 25. Basically what we see here, we saw a drop of MPLs by 200 million quarter over quarter. This was basically driven by a lower amount of MPL formation and the debt sales which we contacted. This brings us to the last page of the risk section, the page on delinquencies, 30, 60, and 90 plus. I think that the charge is self-explanatory and simply shows that remains to be on a very low level and oscillates within a certain corridor up and down since more than three years, basically. So summarizing the risk section, I think we can say credit performance with the cost of risk or 16 basis points was solid and was not only well within the guidance, but it was on the bottom end of the provided guidance of 15 to 35 basis points. With the management releases we have conducted last year, the ending balance of 148 million, these are earmarked for potential risk stemming from the re-fixation of residential retail mortgages. So should these risks not materialize throughout the year, then the assumption is that we would gradually relieve those overlays and supporting the cost of risk line overall. Obviously assuming that no other material risks materialize on the commercial front or any changes on the macro front. And that would conclude the risk part and I think this takes us to liquidity.

Thank you, Norman. Ladies and gentlemen, I am now on page 44 and will continue with the liquidity management. During the whole 2025, Moneta maintained a robust and stable liquidity position, which is demonstrated across all ratios on the page, namely loan-to-deposit ratio in the topless corner showing The share of high-quality liquid assets on customer deposits also remained stable at 40% at the end of 2025. Below that, we report the regulatory ratios, liquidity coverage ratio, and the net stable funding ratio. Both are significantly above the 100% regulatory limit. On page 45, we report the development of high-quality liquid assets position. Year-on-year, we report the decline of 6.7%, while still the 174 billion of high-quality liquid assets at the end of 2020. 5% significant excess of liquidity. The decline is visible in the category balances at the central bank. And this has three drivers. First of all, 8 billion of liquidity were allocated to cover higher mandatory reserves. at the beginning of 2025. Secondly, second portion of liquidity was utilized in loan portfolio expansion. And thirdly, the remaining portion was invested in government bonds, which is visible in the increase of the position in government bonds. Now let me move forward to capital management section starting on page 47. Also capital position remains solid and robust demonstrated by capital request ratio of 18.7% against the management target of 50 and more. and also Tier 1 Capitale Classe students 14-13% against the management target of 12.5%. In absolute amount the excess capital of students 5.7 billion which is up by 2.5% year on year and out of that the distributable portion of Tier 1 capital of students 2.7 billion which represents more than 5 counts per share. And if you look at the chart in the bottom corner, you can see that the expected dividend stream, which includes the expected dividend of 11 crowns per share, 11.5 crowns per share, or 5.9 billion, is up by 19%. Moving forward, on page 48, we provide more detail to the capital position on a consolidated level. The total capital and absolute amount stood at 30.8 billion from the stable year-on-year, while the risk-weighted asset density significantly improved from 35% to 32.6%, resulting from successful implementation of the CRR-3 at the beginning of 2025. This also resulted in the risk-rated asset decrease from $173.5 to $164.8 billion despite low portfolio expansion by 5.8%. And below that, the excess capital development or the charge of the excess capital development clearly shows that on the top of the excess amount we hold accrual for the dividend distribution of 5.9. And we go through this section on page 49 with the capital position on the individual level. The capital position Again, broadly stable versus 2024. And the similar trend, as I commented on a consolidated level, is visible on risk-weighted assets and density development. More importantly, Merrill and Rekha's ratio stood at 27.5% at the end of December 2025. which is by 5.17% above the Brown Management target. So that's all from the Capital Management section. And I will now hand over to Norman for the market guidance and final remarks. Thank you very much.

All right, Hande. Thank you very much. This takes us to page 61, I guess. So on that page, we show you the updated guidance compared to what we have seen In a nutshell, what we aim to deliver here is a cumulative earning per share of north of 72 crowns, which translates into a growth of 5.9%. If we look at the individual lines of the P&L, starting with total operating income, So for 26, we expect total operating income of 14.6 and then moving up to 17.5, which translates into a CAGR of 4.6%. Total operating expenses, $6 billion in 26 and then moving up to $6.5 billion or a CAGR of 2%, which I consider fairly moderate. So this is certainly aspirational. and we are confident to be in the position to deliver under that. Cost of risk, the outer years here, we have not changed the guidance. We left the corridor of 25 to 45 basis points, but we narrowed the corridor of the 26 and here anticipate the guidance of 20 to 35 basis points. Now all that together will translate into a net profit of 6.6 billion this year. and then going up to 8.3 billion in 2030, which constitutes the 5.9% increase I mentioned before. In terms of earnings dividend per share, obviously the growth rate remained the same, but the earnings per share 12.9 and dividend per share 11.6 in 26, and then moving up to 16.2 and 14.6 crowns per share. And ROTE, Here we would expect a further increase by two percentage points over the period from 23% in 26 to 25% in 2030. Moving to page 52, here what we tried to do is to show what was the aggregate of net profits based on the previous market guidance which we published in January 25 and today. So the last one anticipated 27.3 billion net profit. The current one, 28.8 billion, which constitutes a 5.5% increase. Likewise, the ROTE If you just compare at the base year 26 from the previous guidance of 20%, now we would move up to 24% in the year 29. And then more importantly on the next page, I think this illustrates the net profit generation capacity and the variance compared to the last five years' period, comprising the years 21 to 25. So based on the actual numbers, we generated a net profit of a tick shy of $27 billion. For the future five years, 2016 to 2030, we anticipate, based on the guidance, a net profit of $37 billion or almost 40% increase, which is the equivalent of almost $10.5 billion check rounds. If we look at a couple of assumptions, which I think is very important to understand, we have made to get to this new guidance. And let me go down to page 54 on key macroeconomic assumptions for this plan. Obviously, we anticipate solid GDP growth. More than similar to what we expect to have seen in 25, so somewhere in the corridor, anywhere between 2.5, 2.4, 2.5%. Unemployment rates, as I said earlier, a very important ingredient to anticipate the loss potential on our credit portfolio in the retail space. no further increase beyond what we have seen to 26 it would peak at three percent and then stay flat on the level of 2.9 inflation um 2.2 in 26 2.5 27 and then down the road two percent and the repo rate i think is one of the most important assumptions we have made here would remain flat throughout the period of guidance and the exchange rate would also remain unchanged to the levels we are currently seeing. If we move to the next page, page 55, this will give one more level of details on the assumptions on the loan portfolio. cross-performing loans are expected to grow by a CAGR of 6.1%. This means around 100 billion increase during the period. The key growth driver is here commercial, which will contribute around two-thirds of the growth during that period or a CAGR of 10.2% while the retail franchise lending will support the growth by around one-third or 3.5%. On the other hand side, the customer deposits, here we have a reverse sort of expected development between retail and commercial. So here retail should be the growth driver with a 3.9% CAGR and increasing deposits by 70 billion during the period and in commercial we expect 2.4% growth from 109 billion to 123 billion. So I think this guidance I think is both aspirational and to some extent also conservative, conservative in particular in the year 26. Since in 26 we are facing a couple of uncertainties we are confident we are going to manage. But I think it's important to highlight them. One is the degree of retention of residential mortgages during the refixation period. We're having around $37 billion of such mortgages to be refixed. Obviously, we try to retain as many as possible. We have bespoke retention tools for that, but there's always a degree of uncertainty, and I think it's important to highlight that. Number two, equally important is the view and the decisions to be made by the Czech National Bank on the two week repo rate as we assume a flat rate throughout the year. So should there be any change, obviously this would have an impact at least on the short term before we are in a position to fully reprice everything on the liability and SSI going forward. So that's something which we are going to observe very carefully. As I said before, challenging as in previous years, but I think we have the tools available to address that. And last but not least, on the cost of risk front, yes, we assume a benign environment based on the macro variables which we have shared with you. What we cannot tell yet is how the resixed mortgages will behave on the credit performance. That's why we still have this overlay in place. But assuming these risks will not crystallize, obviously they would support the cost of risk time. In terms of revenue generation capacity, needless to say, we want and we strive to maintain the momentum on the new origination, originations in particular in the retail unsecured space and also the small business space, which we have observed in particular in the second half of last year. The first numbers of 26, making confidence that we are on a good track but this requires constant attention and the second pillar of our income obviously is our distribution capabilities in the wealth management but also on the insurance front to ensure that we maintain the same momentum and hopefully markets will allow us to distribute the wealth management products like we did in 2005. So that concludes our presentation. Maybe two more housekeeping things on two events. One is obviously the AGM, which we are going to have in April, on the 21st of April, where we intend to propose the dividends, as was highlighted before. And number two, a few days later, on the 24th of April, we're going to have the Q1 earnings lease. So that would conclude our presentation, and I will hand over back to you for a Q&A session. Thank you.

Thank you. We will now begin today's Q&A session. If you would like to ask a question and have joined, please write it in the chat in the browser or use the raised hand function on your screen. Before speaking, please make sure that your local device is unmuted. Once your question is answered, please cancel the raise hand function. If you have joined us via the phone, please press star followed by one on your telephone keypad to enter the queue. Our next question comes from Thomas Unger. Please make sure that you're unmuted locally and proceed to ask your question.

Yes, hello. Good morning. Thank you very much for taking my question. I hope you can hear me well. Congratulations on the results. Thank you for the presentation. I'd like to ask you about your, you just were talking about the assumptions underlying your midterm guidance and I'd like to go in somewhat more detail if that's okay. The main change in the guidance that I see is on the total operating income which was raised. I assume that this was a result of higher projections for the net interest income. and I'd like to ask you what caused these changes. Was it mainly the repo rate assumption that you listed from 3.0 to 3.5 stable throughout the whole time horizon? Was it a change in the composition of the loan portfolio or loan growth or any other reasons? That will be my first question. My second question would be on the net interest margin near term Where do you see it developing for the coming quarters? Was Q3 the bottom for the funding costs, for the interest expenses? And yeah, just in general, where do you see it developing? And then just one detailed question on the P&L in Q4, the results from financial operations. Maybe I've missed it, but it's been strong in Q4. What was the reason? What was the driver for that in this quarter in particular? Thank you.

All right. Thank you for the question, Thomas. I will take the first one, and the other two will be taken by Ola. Now, as I mentioned during the guidance, the growth is driven by the loan growth. We have a CAGR of 6.1% during the reporting period. And the key products here are clearly in commercial. More precisely, it's the small business loans, which we want to continue to grow, perhaps, which we have seen over the last couple of years. And we see continued strong potential in that segment. Obviously, customer deposits, repricing, this will not end. But as you have seen from the numbers, It got more difficult towards the end of Q3 and Q4. Competition is there and customers are more price sensitive and also more savvy in reallocating their funds in case you made premature steps and adjusted. So that's why we couldn't significantly further reduce, actually slightly increase the cost of funding in the last quarter. But we are confident that we can manage this going forward. The second pillar, obviously fee income. Wealth Management being the number one. Now here, we depend on the markets, so this we cannot influence, but currently we assume markets will support our ambition to grow the segment further. You have seen it in the number of advisors, which we have added in our franchise. So we have much more distribution capacity in that area, allowing us to reach our customers. And so right now we are confident that this is possible, that we can deliver on the targets. Insurance, here the results in 2025 have been mixed. As you have seen, DPI is still very strong. We will pay more attention on life insurance and pension. and obviously also what we can do to reduce cancellation rates to support the income line on the fees. And so I would say it's a mix of all driving to growth, so it's not, it cannot be reduced to a single item, so it's a combination of all these aspects. And we'll hand over to Jan on the other two.

Yeah, so your second question. Most about the Net Interest Margin Projection. We ended up with 200 basis points Net Interest Margin and we project improvement to 215 or between 215 to 220 in the next three years gradual improvement. This will be driven by two main sources. First of all, repricing of mortgages, as was mentioned, about 45% of our mortgage book will go to the fixation point this year and next year. And from that, we expect to improve the yield on these mortgages next year by about 150 basis points. So that's the first main reason, main driver. The second one is ongoing strong growth of the small business loan portfolio, specifically the secured part, where the position now is at $20 billion and we project to double the position in the next two to three years. And then your specific question was about the net income from financial operations development or actually the increase in the fourth quarter against the third quarter. We reported a decrease of about $90 million. And this has two main drivers. The biggest one is the home sale gain. a disposal of our bond portfolio of about 2.5 billion exposure and we disposable gain of 50 million crowns and besides that we also realized one of gain on ethics we analyzed ethics margin of 27 or 30 million crowns these two drivers so that around one note shouldn't be projected as a new normal in 2024. Thank you very much.

Understood. Thank you very much for your answers. Can I just follow up with a question on your loan portfolio composition now moving more towards small business, retail, Growth has been weaker in Q4. Mortgage balance is going back slightly. Can you talk a bit about the development on your mortgage portfolio?

Yes, the development of mortgage portfolio is this. We project mortgage book growth between 3 to 4% in the next five years. This is a relatively conservative growth potential. Our aspiration would be certainly higher. However, it is also a function of margin that will be available to realize on the market. Currently, the competition in 2025 was quite significant. Margins narrowed down from 100 to 110 basis points to a corridor of 50 to 60 basis points. at the year end. And with this profitability, taking this profitability into consideration, we are more aspirational on the loan portfolio growth in commercial segment than in retail. Therefore, the composition of the loan portfolio over next five years will be gradually changing where the share of commercial Exposures will slightly or gradually go up while the share of retail portfolio will be going up. In total, loan portfolio is expected to grow at the north of 5%, as you saw in the guidance.

Right.

And this is reflected, as you've seen, it's also reflected that the growth of lending comes by two-thirds from the commercial segment. And so we are trying to really harvest the opportunities which we see out there, in particular on the secured business loans, to grab as much market share as possible.

Right. Thank you very much.

Thank you. Our next question comes from Timur Baratov. Hi. Why do you expect conservative growth in 2026 in terms of net income? Also, do you have any estimations as to extra dividend payments in 2026 like you did in 2025? Thank you.

Yeah. As I said when I commented, on the guidance, aspirational and conservative at the same time. So conservative, particularly as regards the year 26, for the very reasons I presented to you, which is the mortgage re-fixation, the 37 billion, which have to be re-fixed. So we try to retain as many as possible. should we perform better than what we have in the plan then obviously there's an upside but this is too early to say because this is a very dynamic market. The second one is the ripple rate where we assume a flat rate throughout the year so any change in terms of a drop would would be a risk. So we have embedded here some conservatism in the plan and to ensure that we can maintain the momentum on the lending front. We are confident we can do so, but there's always a factor of uncertainty, which we are also affected in. So to that extent, you can say, yes, it's conservative. Why is the growth not more? But the growth is more compared to the last guidance provided back in January. So this would explain the reason why we have

On this topic, I don't want to speculate whether there will be an interim dividend this year as we paid in the last two years. However, the fact is we follow our capital management strategy to distribute any excess capital if there is. even beyond the 90% dividend payout. At the end of 2025, our distributable excess of Tier 1 capital stood at 2.7 billion, five crowns per share, as I mentioned. And we will get to the point to decide about potential dividend at the end of 2025. and sooner in the third quarter as we did in 2025 and 2024 but I would also mention we are now in the very early stage in a consideration about the securitization part of our loan portfolio where we see a potential on the capital front to release some capital and strengthen our excess capital position. But again, now it is quite early to speculate. And the fact is that the position of Volata remains robust.

Thank you. As a reminder, if you would like to ask a question on today's call and you've joined us via Zoom, please use the raised hand icon on the bottom tab. Alternatively, you can type your question into the Q&A box. If you've dialed into the call, please press star followed by one on your telephone keypad. We'll pause for just a moment. It looks like we have no further questions in the queue at this time. So with that, I'll hand over to Mr. Fecht with some closing remarks.

All right. So first of all, thank you very much for joining this call and just wrapping up the call overall on our results. I think we can look back at a successful 2025. We clearly outperformed on our guidance on net profits by half a billion or 12%. I think we showed that we can reignite the engine on the landings. The landing volumes went up by 22% across all segments. Net fee and commission showed solid growth of 11%. We hope that we can continue the journey also this year. Cost growth was moderate. Despite all the headwinds we are seeing out there, both on the salary front and suppliers, that's because we're really under tight control, allowing us to deliver a very solid cost-income ratio of 41.9%. Equity capital position remains strong. And last but not least, the intention to propose an 11.5 crowns dividend to share I would like to thank the management team and of course our entire staff not only for delivering results but outperforming the guidance and I would like to thank you the audience for attending this call and we're looking forward to reporting out hopefully good results for our Q1 earnings call on the 21st of April. Thank you very much.

Thank you. This concludes today's webinar. Thank you all for joining. You may now disconnect from the call. Goodbye.