Komercni Banka As

Hello. Good afternoon. Good morning, ladies and gentlemen. Welcome from Komershnyi Banka. Thank you for sharing your time with us today. It is the 30th of April 2025, and we are going to discuss the results of Komershnyi Banka Group for the first quarter of 2025. Please note that this call is being recorded and just I have just started recording. Our speakers today will be Jan Juchelka, Chairman of the Board of Directors and CEO of Koneční banka, Jiří Šperl, Chief Financial Officer, and Didier Collin, Chief Risk Officer. And standing by in case you have questions for them are Jitka Hobová, Chief Operating Officer, Margo Simpson, Chief Digital Officer, Miroslav Hirschel, Head of Retail Banking, and David Formánek, Head of Corporate and Investment Banking. As always, we will begin with the presentation of results, which will be followed by a question and answer session. During this presentation part, all participants will be on listen-only mode. We would appreciate if you could keep your microphones muted during that time. Now, let me ask the CEO, Jan Juchelka, to begin the presentation. Jan, please.

All right. Ladies and gentlemen, welcome to the presentation of Q1 results for Komercní banka group. Together with my colleagues, we are keen to lead you through the presentation and answer your questions afterwards. The highlights of the first quarter are the following. Komercní has continued fulfilling its role in Czech economy. we were growing not only the number of clients, which was by 60,000 to the current level of 1.7 million, together with ongoing migration of clients from old technological stack to the new technological stack, but also we continue the needs of our clients in the field of financing. The loans were growing by almost 3% on year-over-year comparison. Housing loans by almost 55% compared with the first quarter of 2024. And then... having also good news on the side of deposits, where despite the fact that they were stable or slightly below, then the growth was realized on the side of current accounts, which is giving us back not only liquidity, but also also NII. The mutual funds were growing by double digit growth more or less traditionally, but we want to bring this dynamism back to the levels which we are used to in the previous quarters. So no complacency, no space for complacency here. Whereas the other assets under management, such as pension schemes and life insurance reserves were growing, were at zero or in slightly negative territory. The total capital ratio, i.e. the balance sheet, was at the level of 18.7%, quarter one, 17.7%. along to deposit ratio 81.9 and both long term and short term liquidity ratios at more than satisfactory levels. So on that side, the balance sheet remains very, very strong. Speaking about P&L, so the translation into P&L is We are bringing to our shareholders one of the strongest, if not the strongest first quarter in the history of bank, of our bank, and bringing 4.2 billion Czech crowns of group net income, which is almost 50% higher on year over year comparison. Earnings per share are landing at the level of 22.17 Czech koruna per share. Cost of risk, which was one of the contributors into this result, is in negative territory, 22 bps, thanks to the release of provisions. Cost to income lending slightly above 50% of reported numbers would be 47.2 should IFRIC remains renewerized. ROE 13 percent, 13.7 under the fulfillment of the same condition. So, let me move to the next page, which is the macroeco. Czech Republic remains, let's say, a growing country, even though in rather mediocre intervals or mediocre scope. In Q4, the GDP was up by 0.7 and Q on Q basis and 1.8 year over year, mainly supported by the activities of households and government consumption. Wages were up by 7.2%, which means also that there was a growth of real wages by 4.2%, hence the households bringing to the market more economic activity. Unemployment compressed still below 3% at the level of 2.7% as of February 2025. The inflation at the same level, 2.7% on year-over-year basis in March, and Czech National Bank remained at the level of 3.75% with the short-term rate, short-term variable rate. CZK 25 per euro, stronger by 0.9%, and 23.21 vis-à-vis US dollar. The market rates, three months prior to 3.72, down by 20 bps year-to-date, then 10 years IRS at 3.78. down by two bips, and five years IRS, 3.56, minus 10 bips year-to-date. The Czech Gavis, 10 years, 4.29, slightly up by seven bips on us of year-to-date. What is pretty nicely self-explanatory part of this page is the right-hand bottom side. where our colleagues have displayed the composition of Czech exports by sector and composition of Czech exports by country, where we see that the logic and deliveries and contributions of our industries is mainly in the field of motor vehicles and having Germany slash European Union as the main trading partner. for the direct connections or direct exchange. The United States being at a level of 2.9% of our exports, one should remain in the context of hectic discussions around and decisions around tariffs that there are also indirect exports to the United States through Germany mainly. Yeah, so we can move probably to the next page and see the business performance. Gross loans to clients were growing by 2.9%. as I mentioned already, driven mainly by housing loans, both KB mortgages and loans from Modera Piramida went up by 54.5% compared to the first quarter of 24 and by 6% compared to Q4, 2024. So, which is reminding us the old good times where all the mortgage production is going at full speed. And after the transformation of Mudra Pyramida, who is now the only and sole provider of housing loans that we have our ambitions also in the commercial side of the origination of new mortgages. Group lending in general, 2.9% up. The parts below the housing loans is showing with the let's say, nice contribution of small businesses and corporates, whereas the SGEF is bringing us somehow to lower levels as we used to be, and we believe that the leasing financing will be growing up as the year will go. So, So, this is the slide. This is the picture. Sorry, I confused you maybe a little bit. 2.6% corporate clients, 0.7 small businesses. And SGAF, I stick to what I mentioned, 2.1%. So we would rather see that above 5% growth. And we believe that SGAF will go back to these levels. So next page is showing our contribution to remarkable transactions. in the financing of our corporate clients. So you can see at page number nine, please. I don't see the page moving. Yes, nine. One back. Yes, this one. We were active all over the place, all over the segments, all over the sectors, including municipalities. We have picked up one green financing to Accolade, which is one of the largest clients in real estate development. Next page is showing us the developments on deposit side. The deposits are slightly down, even though, as I mentioned, the composition of current accounts chipping in almost 5% growth is, let's say, bringing back the hope that the trend of growing current accounts volumes will be continuing. And the term and saving accounts are down by 6.3%. Our traditional strength, which is investments and investment products, up by 8.1%. The main contributor being Amundi and private banking. The other two main contributors, like insurance reserves and client assets under management in KB Pension Company, are slightly below, slightly in the negative territory. So here probably I should stop myself and hand over to Jiří Šperl, our CFO for the financial performance.

Thank you. Thank you, Jan. Good afternoon. Indeed, financial wise, the group generated a very solid quarter. at the level of 4.2 billion, as mentioned already by Bayan, i.e. almost by 50% year-on-year. I can confirm that it is the best first quarter in the history of the group. At the same time, it is fair to add that the result was positively influenced by the first release of the provisions and also by decrease of the regulatory charges. As said, in absolute terms, cost of risk and regulatory charges contributed the most year-on-year, as visualized on the chart, the waterfall chart on the left-hand side. Cost of risk by almost 1 billion CZK, on regulatory charges almost 400 million CZK. Of course, no surprise that this transposed positively also to the profitability indicators Janos mentioning ROE, so I will add ROTE on tangible equity, which is growing even more to the level of 15.5 IFRIC 21 adjusted. Quarter on quarter we went a bit down, which is, however, given more by the base effect than anything else. We were mentioning three months ago that the Q4 last year was one of the best quarters in the history of the group. Let's move to the balance sheet, please. So balance sheet total assets went a bit down here in Europe. by minus 1.8%. There is a slight recovery, quarter over quarter, but less than expected, to be frank, and influenced by slowdown in the deposits mainly, as Jan was already commenting. On asset side, quarter over quarter perspective, the loans basically stayed flat-ish, while the liquidity surplus was placed mainly into repo with the central bank. The Gavi's, Czech Gavi's investments are basically flourished. And this is bringing me to net interest income category. So it was growing year on year by two percentage points, supported both by income from loans, plus 4% and income from deposit. plus 6% while both other NII and NII from IB went a bit down. The correction in a quarter over quarter perspective is almost solely influenced by doubling of the minimal obligatory reserves that started as of January the first this year. that are, as you might know, non-interest-bearing. So at that time, we were quantifying the impact and the yearly impact was quantified at the level of roughly 800 million CZK. So the quarterly impact is roughly at the level of 200 million CZK. To say without this impact, NIA would grow slightly, but still less than one percentage point. It's of course also transposed into NIM, Net Interest Margin, that is very much comparable both quarter over quarter and year on year and landing for Q1 at the level of 1.71. Let's move to the fees and commissions. Fees and commissions remain still one of the drivers of the growth. Year-on-year growing still double the gif by very strong 11.2 percentage points with two very clear drivers. First one, it is fees coming from the specialized financial services and I should say another super strong quarter, adding more than half a billion check-arounds mainly due to continuing of bond issuance, loan syndication, there is a growth in income from the private banking, et cetera, et cetera. And the second driver is a very good quarter in the era of fees from cross-selling following the sales of the non-bank assets under management as mentioned by young, and this category is growing, you know, nearly by 11%, From the quarterly perspective, there is a correction down. Not a big surprise. Here I can say that it's mainly influenced by the extraordinarily high Q4 2020 thought, as you were commenting on that roughly three months ago. Still, however, above the, to say, run rate. So good quarter. Financial operations, please. So financial patients are growing or income from financial patients are growing by roughly 12% on a year-on-year basis with both components, key components growing and contributing dynamically. So it's the case of capital markets plus 15% and also effects from the structural book growing by 9%. As usual, I would like to add that the blue part is much more stable. So we very much appreciate that. On the quarter-over-quarter perspective, there is a slight drop. I mean, the overall financial operations income, which is rather of seasonal nature. In absolute terms, more than 900 million check-arounds is still above our run rate. And the results of Q3 and Q4 last year was rather extraordinary. OPEX, please. OPEX was going down by 4.4%, influenced mainly by first lower regulatory charges, but also other categories are pretty under control. Let's go briefly through all of them. So personal expenses are growing by plus 4% due to the increase of the base salary, roughly one year ago. But at the same time, we are reporting that the number of the employees is lower year on year by more than 4%, exactly in line with our plan. In terms of GAE going relatively significantly down minus 4%, and here the savings go basically across the board. I was already touching regulatory funds. So here it is like around 370 million check rounds down. And according to our expectation, This is kind of a new normal in terms of resolution fund charges and deposit insurance fund charges because the fund is already filled. And finally, depreciation and amortization still have a growing double digit, which should not be normally surprised because it's still in the middle of the transformation. So it is a kind of mirror of activation of the assets, mainly from the new digital bank. Probably one comment to the bottom right chart on the bottom right chart. It's true that quarter over quarter costs are going a bit up, up around 5%. But to say if we adjust by regulatory charges, which have to be booked in Q1, Q2, Also, quarter over quarter costs would go a bit down. So even the trend is visible here. So that's all from me now and passing over to Didier. Please, Didier, go ahead.