Release Date: October 24, 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) reported a year-to-date profit of CZK4.2 billion, marking a 6.6% increase year-on-year.
- The bank's return on tangible equity is nearly 20%, indicating strong profitability.
- Operating income increased by nearly 5% to CZK9.5 billion, driven by a 14.5% growth in net fee and commission income.
- The bank's capital adequacy ratio stands at a solid 19.2%, with a surplus capital of CZK7.2 billion.
- Moneta Money Bank AS (XPRA:MONET) plans to propose an extraordinary dividend of CZK3 per share, reflecting strong capital position and profitability.
Negative Points
- The bank is underperforming in the lending market, with a growth of only 0.5% against the market's 4.6%.
- There is a notable decline in branch visits by nearly 15%, indicating a shift away from physical banking.
- Personnel costs increased by 6.3%, driven by higher sales incentives and increased average salaries.
- The bank's treasury income decreased by 21% year-on-year, reflecting a declining 2-week repo rate.
- The commercial loan book yields have not reduced despite rate cuts, indicating potential challenges in adjusting to market conditions.
Q & A Highlights
Q: Despite strong new lending momentum this year, net loans didn't grow in 3Q, which partly seems to be related to your cautious stance on the mortgages. How do you anticipate net loan growth in Q4 '24 and into 2025?
A: Tomas Spurny, CEO: We expect growth if we maintain stable balances and current growth. October performance was stronger than September, especially in mortgages, with a pipeline of CZK8 billion, the highest since 2022. Commercial pipeline is also strong with 800 transactions worth CZK9 billion. We have commitments exceeding CZK10 billion, indicating optimism for growth.
Q: You've achieved notable relief in funding costs through deposit repricing efforts. Given the current interest rate trend and competitive landscape, how much further improvement do you foresee in the coming quarters?
A: Tomas Spurny, CEO: We foresee marginal improvement and will react to additional rate cuts. We have a plan for the rest of the year, focusing on decreasing funding costs without losing liquidity. Our strong cross-selling into wealth management is supported by existing deposits, indicating stronger growth than shown on the balance sheet.
Q: Looking ahead to 2025, how do you view NII considering growth dynamics, ease funding costs, but also the recent changes in reserve requirements?
A: Tomas Spurny, CEO: We are confident in absorbing the additional regulatory costs and maintaining our net profit target for 2025. We will provide further updates in early 2025.
Q: Can you advise on your regulatory funding strategy for 2025, particularly regarding the CZK Tier 2 bonds and potential international bond issuance?
A: Tomas Spurny, CEO: We plan not to call the Tier 2 instrument in January 2025 due to its price advantage. We are considering a small Tier 2 issuance in the second half of 2025, but no decision has been made yet.
Q: Why hasn't the commercial loan book yields reduced despite rate cuts since it's a floating rate book? How should we think about overall loan yields going forward?
A: Jan Fricek, CFO: Only part of the portfolio is on floating rates; the majority is fixed. Growth in high-margin categories like small business loans has helped maintain yields. We expect yields to decline slightly in 2025, but the impact will be marginal due to the fixed nature of the portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
