Komercni Banka As

Welcome from Koneczny Barka. Thank you for sharing your time with us. Again, this time it is the 31st of July 2025 today and we are going to discuss the second quarter of 2025. Please note that this call is being recorded. Our speakers today will be Jan Michalka, Chairman of the Management Board and CEO of Komerský Banka, Ježiš Perolovic, Chief Financial Officer and Didier Collin, Chief Risk Officer. And standing by and ready to answer your questions for them are Margu Simson, Chief Digital Officer, Miroslav Hirschel, Head of Retail Banking and Katarína Korucová, Head of CodeThread and Investment Banking. As always we will begin with the presentation of results which will be followed by a questions and answer session. During the presentation part Please, we would appreciate if you could keep your microphone muted and all participants will be on listen-only mode. So that's for the housekeeping and now let me ask the CBO Jani Falka to begin the presentation.

Thank you. Hello everyone, thank you for being with us.

It's my pleasure together with my colleagues to lead you through the presentation and obviously we are very much looking forward for the questions. Let me kick off with the opening page by saying that we are coming to the market with probably unexpectedly high level of increase of the bottom line. And I think that we need to provide a bit of comments on how did we get there, as we are mainly counting with release of provisions as one of the contributors to the Q2 results. Having said that, Komeční is being built on rock-solid balance sheets, very strong on the side of capital, very strong on the side of the quality of our assets, and pretty solid growth in the commercial activities across all the relevant segments. Konechny was growing not only on that side, but also by number of clients. We have 47,000 more heading towards 1.8 million for the bank. KB Plus, as a new application, is already taking care of 1.3. million clients, out of which approximately 1 million are the migrated clients from the old world to the new world. For the entire group, heavy group in Czech Republic and Slovakia, it's 2.2 million clients. Loans were growing by 4.3% on year-over-year basis, quarter-over-quarter by 1.2%. One of the main contributors here were mortgages and housing loans. provided either from the mortgage loan production or the housing loans as they are defined for the building savings company Modra Piramida. Deposits were slightly down, 2.6%. We don't like it. We have taken active measures for turning the trend into positive numbers. One of the first signs which we like and we hope is the beginning of of the new trend is the growth of current accounts by 1.8% on year-over-year basis. Where we are remaining strong is the activity with clients on the side of investment into asset center management outside the balance sheet of the bank, which in our case is mainly the joint solutions with Amundi. or insurance products provided by the joint venture with and the pension schemes by 100% owned subsidiary of a pension company of KB. So here we are going by 8% on year-over-year basis, 2.5 by quarter-over-quarter. Inside this category, the mutual funds were growing by double the hit, 14.2% on year-over-year basis. All that translated into the results is the group net income for second quarter, 4.6 billion, is by 30.6% higher on year-over-year basis. Translated into net profit per share, it's 24.48%. Cost of income nicely compressed, deeply below 50%, so 45.7. And ROE bringing back to the market is close to 15%. First half of the year, again, very strong growth of the bottom line, 8.8 billion by almost 39%, 46.54 CZK per share. Cost to income, 48%, and ROE, 14.4. Slightly adjusted under the assumption if it was linearized. Balance sheet and capital, as I have already mentioned, very strong position, 18.6% of the total capital ratio, 17.7 to 1. 17.7% to 1. Loss to deposits, slightly up, but still in the very safe territory of 83.5%. and both the short-term and long-term liquidity high over the, above the prescribed levels. Komechny Banka was recognized by Visa as the number one sustainable bank. It goes hand-in-hand with the ESG Group Alert by World Best Bank for ESG by Euromoney. And our colleague from the Board of Directors, Vicka Chaubova, was recognized as number one woman in payments by Visa Awards for 2024. Let me invite you for the next page, which is describing the current status of transformation of Komerční banka. The new digital bank will be done very soon for retail, so all the technological systems are up and running with very solid stability. We have 1.3 million users already inside, out of which 1 million migrated from the old world to the new world. So we have approximately 600,000 clients ahead of us as far as retail is concerned, and we want to be finished at the end of this year. We have very promising statistics coming back to us from the usage of KB+, which is the name of the application, which is between number one and number two most downloaded banking or financial applications in the country. Also, thanks to the fact that the migrated clients we will need to have it available for functioning with KDE. We have put in place significant simplifications all over the place. Processes, all the procedures, how we are creating the software, how we are creating the development of new products, moving completely to 100% digital communication available with clients, etc., etc., which is also bringing very significant cost benefits from all these aspects. You may have noticed that cost management is one of the strongest disciplines, not only for the previous quarter, but If you allow me, I will take it as a signature discipline for KB on a longer term basis. What will be the next steps? As I have already mentioned, completion of individual client migration in 2025, continuing with entrepreneurs, physical persons and entrepreneurs, legal persons down the road, 2026, 2027, and we will search for means whether we can potentially accelerate it. leveraging for the upsell and cross-sell opportunities on the new technologies because not only the statistics of stability and increasing net promoter score but also statistics of having digital channel as a full-fledged sales channel are actually promising and we would like to take out the entire burden from our people who are running the bank on a daily basis and selling products, the entire burden of being in two parallel systems and being busy with the migrations and concentrate fully towards the service and sales mainly of our products towards clients in 2006 and on. So we are expecting the NPI contribution stemming from that, sustaining or increasing NTF levels. As time goes, with each and every additional usage of the application, clients are happier after the little stress which they might have with migration from the old to the new wall. So on that front, we will push all the buttons related to organic growth for 2026 and on. We will continue investing into modernization of technologies, obviously, and further strengthen the competitive positioning of commercial bankers in the era of digital banking, or if you allow me, universal banking with strong digital background. We have also included a couple of deals. One of them is pretty important for us. This is the 100% acquisition of guests. Can you please, can you go back, yeah. Yeah, this one. So, where we were acquiring 49.9% currently being the only owner of this beautiful equipment finance company. A little bit low importance but still worth to mention is the disposal of 24.8% of KG stake in Roger, which is a digital factoring platform to Orbea, which will bring this company to the international markets as an expert for factoring financing in in Europe, and disposal down the road, envisaged disposal of the minority stake in Abrex, which is the, sorry, not disposal, but acquisition of 4% of Abrex from the founders of Abrex, which is a very, I would say, successful crowdfunding investment platform. Let's move to next page. Now let me zoom on macroeco. We are lucky that we are making our business in stable country on a growing trajectory, which is not given in the current environment. The country is growing on on GDP in second quarter 2025 moderately by 0.2, quarter over quarter by 2.4%, mainly driven by the consumption and investments of households. Weightage went up by 6.7% in first quarter. Obviously, this is the season for adjusting the salaries and when all the collective negotiations are being finalized in the first quarter. The unemployment rate remains very low, 2.8%, and we have, as you know, in the country, we have more or less a bit of structural issue of unavailability of working power. The consumer price inflation is inside the corridor of tolerance by Czech National Bank, being in June in 2.9% year-over-year increase. Czech National Bank remains at 3.5%. We are now very cautiously reading their comments before the next meeting. where they might be reacting on that front. The corona has been stronger by 13th of June by 0.9% towards Euro and by 8.5% towards USD, which is a bit volatile nowadays in the season of concluding the political elections. agreements over tariffs between United States of America and Europe. We are patiently waiting for the written form and the finalization of these negotiations, even though the overall impact towards the GDP in Czech Republic is still expected, accordingly to our macroeco theme, below 1% rather in the territory of 0.5% than higher. What is probably worth to mention here is that we are stemming from very healthy conditions of public finance, which is the public finance balance is minus 2.2 or 2.3 respectively between 24 and 26. expected and with very low overall indebtedness towards GDP in the territory of 46 to 47 percent, which is qualifying us among the healthiest countries as far as the public finances concerned. Let's move to the next page, please. And we are already coming to the business development. loans are up by 4.3%, mainly driven by mortgages and housing loans, as I have already mentioned. But also, hand in hand with that, this is the business loans for our corporate clients, which are growing by 5.1%. Commercially, has grown also the consumer lending part of loans by moderate 2.2%. When we dive deeper into corporate lending, it was mainly driven by financing of the local economy. We are also happy with guest contribution by 0.5% growth. A little bit less happy with 1.7% of the growth of that financing of SMEs, which is also a bit of... indicator where are the potential gaps which we can which we can which not only can but which we are addressing and which we are focusing on next page please here you see that KB incorporate financing was all over the place public sector private sector some of our some of those clients which are listed here were provided by financing which helped them to really go through like transformative projects for their companies and we are keen to continue playing our role here as one of the strongest corporate financiers for check clients in the corporate world but also on the side of public sector. Let me invite you to the next page which is dedicated to deposits. Slightly down, we are not happy with the trend We are doing our best to reverse it. You might have noticed we have a pretty strong campaign currently on attracting more money to saving accounts and term deposits in order to stop the decrease. On the side of current accounts, we hope it's the beginning of a new trend, the moderate growth of 1.8%. It's very important to be back into positive territory, especially in this non-paid type of deposits. Even between quarters, even between first and second quarter, the dynamics of the declines were slowed down, attracted by this trend of increasing current accounts. Speaking about building savings, we are not completely panicking here because we are falling down hand in hand with the market. So it sounds nominally high number, nonetheless critical things what is happening on the markets. Asset under management outside the bank, driven mainly by mutual funds, which are growing by double digit, 14.2%, followed by moderately growing insurance products, insurance investment products, and the pension schemes oscillating long-term around zero. The sales of mutual funds is continuing in a very strong drop sale We are working intensively on the composition of the investments in order to invite our clients to more like longer-term solutions. Next page is already dedicated to our CFO, so I'm handing over to Jiri Staro. Thank you.