Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Moneta Money Bank AS (XPRA:MONET, Financial) delivered a net profit of CZK2.7 billion in the first half of 2024, representing a 9% year-on-year increase.
- The bank achieved a 20% return on tangible equity, indicating strong profitability.
- Operating income increased by 6% year-on-year to CZK6.2 billion, driven by higher commission income from wealth management and insurance products.
- The bank's funding base grew by 14%, reaching CZK443 billion, demonstrating strong deposit gathering capabilities.
- Digital platform usage is growing, with nearly 700,000 daily touch points and a 34% increase in loan applications through the platform.
Negative Points
- The loan portfolio growth was modest at 3%, indicating slower lending activity compared to the deposit growth.
- The Czech crown is weakening against both the euro and the dollar, impacting the bank's currency exchange operations.
- The cost of funds remains a concern, although it has decreased by 30 basis points, it still poses a challenge in a competitive market.
- The bank's net interest income decreased by 2.6% year-on-year due to lower repo rates, affecting overall profitability.
- There is uncertainty regarding the potential implementation of a bank tax in 2025, which could impact future profitability.
Q & A Highlights
Q: Can you provide insights on the retail engine growth and why lower rates might not lead to significant acceleration?
A: The year-to-date growth is solid. The guidance was constructed conservatively, considering slow GDP growth. We aim to grow the portfolio to CZK280 billion by year-end, but this is aspirational. The overall lending market is expected to grow around 5% in the next 24 months, and we will adjust our activity accordingly. (Tomas Spurny, CEO)
Q: Could you elaborate on the loan and deposit repricing trends and any expected changes?
A: Year-to-date, new lending has a contractual yield of 7.05%, with recent production at 7.4%. The increase is due to focusing on high-margin products. We plan to continue mortgage growth, which may lower yields. On deposit repricing, we will follow the market tactically, aiming to stay between large banks offering low rates and smaller banks offering high rates. (Tomas Spurny, CEO)
Q: Are the releases of management overlays incorporated into your guidance for 2024 and 2025?
A: Yes, the releases of management overlays are built into our operating plan and are part of the guidance. (Tomas Spurny, CEO)
Q: What is the probability of paying out excess capital, and what portion might be paid out?
A: The decision on excess capital distribution will be deferred. We need to understand loan book behavior and update our five-year plan. The probability of payout will be clearer after these assessments. (Tomas Spurny, CEO)
Q: What is driving the strong growth in the deposit base despite declining savings rates?
A: MONETA offers attractive propositions, paying a premium over large banks. Our communication strategy focuses on accurate and consistent numbers, attracting deposits. We typically gain market share from large banks while losing some to smaller competitors. (Tomas Spurny, CEO)
Q: Are there any key risks in the second half that might affect net profit guidance?
A: The main risk is the potential of large exposures becoming NPLs, but currently, there are no signs of this. The bank has 10% of its provisioning stock set aside in management overlays, reducing the risk. (Tomas Spurny, CEO)
Q: What are your views on the potential for a bank tax?
A: The probability of a bank tax for 2024 is less than 20%, but for 2025, it could be around 50% due to upcoming parliamentary elections. Discussions on bank tax often align with electoral cycles. (Tomas Spurny, CEO)
Q: Is there any plan or chance of an extra dividend?
A: Currently, we are not considering an extra dividend. The decision will be deferred due to changes in corporate governance and uncertainty in lending development. (Tomas Spurny, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
