Moneta Money Bk

Dear ladies and gentlemen, welcome to the conference call of Moneta Money Bank regarding 1H2026 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. Karl Nomenfecht Mr. Jan Fricek and Mr. Jan Novotny May I now hand over to Mr. Thomas Sperny who will lead you through the conference call Sir, please go ahead Good morning ladies and gentlemen I have the pleasure of opening today's conference call So let me start with a summary of where Moneta stands If I can ask you to turn to page number 2 During the first semester of 2026, we delivered net profit of 3.3 billion, whereas that constitutes an improvement of more than 8% against comparable periods of previous year. The improved profitability comes on back of Increasing operating income came in at 7.2 billion and we have improvement on net interest income coupled with improvement on net fee and commission income which you will see. uh... throughout the presentation uh... operating uh... operating expenses the cost is stable came in at 2.9 billion as a very small increase of 0.2 0.2 percent with respect to the balance sheet uh... we focus the bank uh... on growth in lending activity uh... the portfolio grew by more than 9% and reached level of $3.10 billion. At the same time, given our targets with respect to cost of funds and gradual improvement in the net interest margin of the bank, the funding base increased to a level of $481 billion, which is slightly more than 4%. Increasing size of balance sheet, 525 billion, actually stable against last quarter, but we cannot forget that in the second quarter we made fairly material dividend distribution. Now turning into capital, We have capital adequacy ratio of 20%. This is an improvement of 4.5 percentage points. This comes on the basis of completing the structure of our capital optimization structure. Optimized structure of the capital. We issued 150 million euro 81 instrument. and this obviously translates into a better capital position. Nonetheless, with CET1 ratio at 13.1% distance and access to the management target, and we also enjoy a comfortable morale position on an individual basis, well over 28% with significant access and that is coupled also with solid liquidity position where the LCR stands at 300% and the performance in the first semester translates into stable return on tangible equity and also stable return with respect to ROE. Now, let me turn to key messages that the bank would like to convey with respect to the first semester and the rest of the year. For the rest of the year, we are targeting lending growth in the range of 7.5% to 9.5%, where the current run rate stands at 9.5%. 9.1% and this is in line with the strategy of the bank to refocus it a little bit into high margin products which concerns mainly self-employed small businesses and entrepreneurs and you will see it in the balance sheet section how that evolves. With respect to deposit growth we have conservative Target of 2.5 to 3.5% and this is linked to the fact that we would like to keep the cost of funds as stable as possible and we also have to keep in mind the target to improve the name and for This is where we currently stand on the deposit strategy that could change should the expansion of the loan book exceed our expectations. Nonetheless, this is the current position of the bank. With respect to net interest margin, the target is reached by the end of the year a range of 215 to 220%, which is a function of, I would say, two developments. One is the repricing of the legacy exposures, and obviously also supported by the current lending mix. And I think you will see poor results of that in 2021. 2027. We also continue successfully with the distribution of third-party products, which is simply put insurance and wealth management. The wealth management is quite important. The year-end target is the range of 92.5 to 95 billion of distributed volumes. coupled with a sales target of $22 billion, where during the first semester we distributed $10.9 billion. Assuming there will be no negative events in the capital markets or increased instability, we are fairly confident to be able to get there. With respect to the operating income, on the next page, We are targeting operating income at a level of 14.8 billion. This would translate into year-on-year growth, should we achieve it, of 6.1%, and this incorporates a number of factors. On the cost management, against the maximum cost level, which we communicated through the February 3rd guidance, we would like to save at minimum 75 million, so this will also hopefully support some upside that we are seeking to communicate at the moment, and we would like to keep the cost-income ratio below 40%. We stand committed to the cost of risk management and a result of 20 to 35 basis points obeyed. There are several factors that need to be mentioned here. Number one, the bank no longer has management overlays, which at the root of those post-COVID pandemic, gradually we released overlays because the risks associated with them did not materialize. So in the future, and this is reflected in the guidance, you see elevation of the cost of risk, and this is clear from the guidance that our expectations are at that elevated level. For this year, we stand behind the range. I think we will see somewhere around middle of the range or slightly higher. Nonetheless, this is incorporated into the into the upside on the net profit of the bank. What is positive here is the fact that we increased lending and with the increased lending you have at the inception of those loans into the balance sheet obviously higher level of provisioning related to stage 1. The second positive is that we keep the balance sheet clean of NPLs. RAND has historically lowest NPL ratio and if you look at the NPL disposal target, we are well above in the first semester and by the end of the year we would like to accomplish disposal of NPLs in the total amount of 1.1 billion. for the year we are on the road to accomplish that. Taking all these factors together, we expect or we elevate the minimum profitability target of the bank for the 2026 to 6.8 billion and we certainly hope to achieve it. So now, these are the key messages. Let me speak a little bit about the operating environment. And we start with GDP, unemployment, indebtedness, and government deficit. So for this year, the prediction of GDP growth is 2.5%. We saw growth in the first quarter of 2.2% and we are waiting for the first semester numbers. Given the overall market expansion in lending activity, I would say that the second quarter will come in better than the first quarter. There is nothing really to comment with respect to the indebtedness of the Czech Republic. Perhaps more importantly, the government deficit, as you know, had been predicted at 310 billion. The current deficit stands at 184 billion. I think there will be pressure to meet the $310 billion number given the policies of the current government, given the pressure to increase investments into re-arming Czech Republic and some additional factors that will play into that part of the picture. We see a nascent but steady increase of the unemployment. So far, when you look at Norman's part of the presentation, this does not translate into increasing past dues in the bank, but we are cautiously, let's say, monitoring this and will adjust credit policies should the increase continue and become become material. Now let's go to inflation and interest rates. We see abating inflation. The numbers so far look good despite the conflict in the Middle East. Nonetheless, the key benchmark rate has been increased by Czech National Bank. Czech National Bank cites several reasons for this action. Number one, growth in wages. Number two, government deficits and spending. Number three, uncertainty with respect to impact of the conflict in the Middle East. Broadly speaking, we expect that the key rate might increase to 4%. additional 25 basis points and there is a very high probability attached to it and the Central Bank communicates very clearly that it would like to slow down the lending expansion, mainly on retail. The Central Bank also mentions that it would like to slow down cost of housing in Czech Republic, which has been steady. So those are, let's say, the cited reasons beyond this action. If you look at the yield curve, the black line represents the mid-year position. We are actually above that, so we can call it parallel shift. I think that we might see additional increases in the medium to long term rates and if I had to simplify it a lot this is the lingering fear from increasing inflation and I think we will live with higher rates for some time to come. Now briefly on the operating platform this is on page the summary is on page 10 I would say stable. What we see on development of customer base, the world is mess and this is directly linked to the rates that we offer on deposit products where we are at the lower end of the market. We continue to close and relocate branches. This becomes evident once you look at the development of our digital banking performance and ability to distribute products through that channel. Stable ATM coverage of the country and with respect to employment, we have slight decrease. However, there is a significant shift within the bank from front-end positions uh... when the reduction is again caused by the success of digital channels uh... and we see shifts into uh... into uh... IT related functions as we as we try to stay on the vanguard of digitalization uh... secondly as we put more transactions and higher volumes to the bank that impacts risk management it also impacts uh... Back Offices and it also impacts some other functions where we seek to increase efficiency and improve consistency through projects implementing artificial intelligence nonetheless this is a medium to long term role as we are experimenting effectively in that realm and we will evaluate the results and inform you in the upcoming quarters. Turning a page to digital platform, I think what is notable on the digital platform is that we significantly improved the volumes that we originate through digital channels. The 56% growth is, in my view, respectable. With respect to other elements of this, I would say the most notable success is on servicing transactions, where we are able to shift the servicing from human interaction into the digital realm. And second, I think what is important is the bank continues in growth of intermediation, and this is evident from the 9% growth with respect to payment transactions in the bank. Now let's look at the branch network. What you see on the branch network is steady decline of branch visits. We do not calculate into this number interaction of our Salesforce with respect to Some of the elements of the business model, we will do it, so the numbers will improve. Nonetheless, I think the trend is very clear that branch visits are becoming less important. With that in mind, the branch network remains quite important with respect to our ability to distribute third-party products where we have a fairly high element of advisory and the human interaction is important and secondly the branch network remains material to our ability to originate credit both in terms of volume and in terms of growth we posted nearly 37% growth within the branch network on origination and fourth The transition of the branch network is lesser coverage and better location. So we will close branches, but we are also modernizing the network in terms of seeking better engagement areas to improve the traffic in whatever remains in the next three years of the of the branch network as such. Turning into contact center, I think one of the important things to highlight here is email communication. As we are converting and improving our serviceability through the digital channels, you see twice material decline in email interaction. We have steady, slightly increasing volume of calls in the call center and this is one of the areas where we wish to deploy artificial intelligence to really work on preventing the calls rather than reducing them to better understanding what we have to improve in the product structure or in the service capability. through the digital. We decreased the staff, we I think communicated that well in the previous quarter while we improved quite significantly the performance metrics of the contact center and slightly improved the client satisfaction with that platform. On the ATM network, very briefly, what is transpiring here is investment into deposit machines. It's not only us, it's not only Moneta, it's the other key partners that we have in the shared network are all investing in deposit taking capability. This is evidenced also by the fairly strong growth of deposit-taking through ATMs and it's also linked to the fact that Moneta and other banks are seeking to make branches cashless and to provide 24-7 deposit-taking capacity. Here I would highlight that we remain at the vanguard of innovation. as the bank introduced recently capacity to take Euro denominated deposits and by November of this year we would like to enable all parts of the network with respect to Euro withdrawal capacity. So far we are covering the belt of Czech Republic which which is adjacent to Germany and Austria, as many people seek employment in those countries, so we want to provide the convenience on the Euro deposits. I sometimes jokingly say that we are implementing Euro ahead of Czech Republic. And with that in mind, let me summarize the performance. The net profit is 20 billion, The bank aims at robust term trades in terms of key products on the asset side around the loan book. We have realistic expectations with respect to deposit expansion under the current scenario and all factors taken into account. We improve the minimum Net profit target by 200 million to 6.8 billion. And I will turn over to Jan, whom will walk you through the details of our P&L composition. Thank you.

Good morning, ladies and gentlemen. I am 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 the first half of the year, Moneta delivered net profit of 3.3 billion, representing here year-on-year improvement of 8.1%, earnings per share of 6.5 crowns, and stable return on tangible equity of 23.3%. Improved profitability was delivered on the back of revenue growth of 6.5%, reaching $7.2 billion, which is a combination of net interest income growth of 8.5%, stemming from ongoing lending growth accompanied by improved net interest margin, and also net fee and commission income growth of 6.2%, driven by ongoing solid performance in the distribution of third-party products. On the other hand, operating income decline is a result of flow, a result of financial derivatives only partially mitigated by higher client ethics income. On the cost base, we managed to keep our cost base stable below 2.9 billion, which together with the revenue growth resulted in the cost to income ratio improvement to 38.4%. And on the credit cost line, we report credit costs of $414 million, or 28 basis points of the average loan portfolio, which is at the midpoint of our guided range, 20 to 35 basis points. Moving forward on page 17, we can analyze in detail net interest income development. In the second quarter, we delivered year-on-year growth of 9.2% and also improvement of 5% against the previous quarter. This was accompanied by higher net interest margin reaching 2.1%. The key driver of the growth is the interest income from the lending which went up by 10.3% and this is a combination of the lending growth focused on the high margin products accompanied by repricing of the mortgage book. Treasury income went down year on year in line with the average to week rate decline and last but not least higher interest income is a function of the deposit base expansion. On page 18, we provide a similar view on the net fee and commission income development. We have very strong second quarter delivering year-on-year growth of 10.8% and 5% against the first quarter of this year. Drivers of debt are provided on the right side. First of all, the third-party commission income went up by 23.8% together, and out of that, the commission income generated by the wealth management products increased by 49%, and from the insurance products went up by 7%. The free income category shows year-on-year growth of 25 million, which is a combination of higher penalties by nearly 15%, and 3% growth of transactional and servicing fees. Fee expense is up year-on-year by $15 million, which corresponds to the one-off bonus we obtained and recognized in the second quarter of last year. On page 19, we can look at the wealth management product distribution in more detail. In the first half of the year, the commission income improved by 33%. and this is driven by higher trail feed by 46.6% reaching 371 million which is a function of the expansion of outstanding amount of distributed wealth management products by 31.5% reaching more than 88.5 billion crowns at the end of June and also in the first half of the year our customers invested with us 10.9 which generated opening fee of 173 billion up by 11.6% EUR. On page 20, we provide performance in the distribution of insurance products. The commission income improved year-on-year in the first half of the year by 2.9% and also this year we sold more insurance policies by 1.5%. insurance policies sold. On the right side we provide more detail about performance in individual categories or product detail and you can see that we improve the performance in three out of four categories namely income generated by the payment protection insurance increased by 9.2% year-on-year from the pension insurance by 17.9% The commission income generated by other insurance products increased by 6.1%. On the other hand, we suffered a slowdown in the distribution of life insurance, resulting in a lower income by 11.7%. On page 21, we can continue with the cost base development. As mentioned before, we achieved a stable cost base below 2.9 billion. And the composition shows that two categories report an inflation and increase, namely regulatory charges are up by 8.7%. This is in line with the deposit base expansion or mostly driven by the deposit base expansion. and also personal costs are up by 8.8% year-on-year. This I will comment in more detail on the following page. On the other hand, this inflation was mitigated by the savings reported by other two cost categories. Depreciation and amortization charge is down by 8.7% and also admin costs are declining by 7.8% year-on-year. On page 22 we can look at the personal cost development in more detail. The reported growth of 8.9% is a combination of higher recurrent costs by 8.3%, stemming from the average salary increase of 6.3%, partially mitigated by a lower workforce by 2%. And in the second quarter, we incurred 75 million of PANOP costs, representing performance-driven variable compensation for the manager. And we complete this section on page 23, where we report admin costs development in detail. In the second quarter, we report the decline of 9.4% year-on-year, mostly visible in the IT costs and marketing costs. In case of the marketing cost saving, this is rather temporary due to a different timing of campaigns this year versus last. So this was my last comment to the Profit and Loss Statement section and I will now hand over to my co-host, Jan Rogozny, for the balance sheet development. Thank you.