AB Artea bankas (ROE1L) Earnings Call Transcript & Summary

Hello dear investors. Welcome to Šiauliu Bankas webinar, which is dedicated to our rebranding. We're approaching to the time where we need to make final decisions on the new brand, and I think it's a good opportunity for you to hear a bit more about our insights and information on the new brand. So today's speakers will be Raimonda Gudaite, she's the Chief Marketing Officer in our group; and myself, Vytautas Sinius, CEO. So let's get started. So in today's agenda, we're going to cover how the new brand is linked to our strategic goals. Also, we'll drill a bit deeper to the new brand itself about idea, the concept, the visual and also we'll give some insights about the nearest future perspectives. So section strategic goals. The question why we do it now? How it's linked with the strategic advantages? How we strengthen our strategic advantages by changing the name, and what is our rebrand ambition? So why now? At the beginning of last year, we presented new strategy where we upgraded our mission statement, vision, ambition. So with that, we raised that we want to create banking that empowers, empowers with progressive, customer-centric and caring service. Also, we want to be the bank who's been chosen by the clients, employees, partners and of course, investors that wants to grow with us. And we want to create the best conditions for financial, professional and national growth. With that, we raised our ambition that we want to be the best bank in Lithuania by 2029. And we want to measure that in several categories. So to create exceptional client experience, also growing faster than the market, to be the top-of-mind choice for financial services among Lithuanian clients, definitely deliver superior shareholder returns and to be in the 3 top best employers in the country in financial services. So that set of our strategy shows that we need to do some extra strategic priorities. And we raised those listed in the slide when we said that we need to upgrade our core banking system. That's one of the enablers, and we are working hard on that development. We also to maintain and remain both on the ground, I mean, being physical and also be strong in a digital environment. So we are committed to the digital, as we call, service provision. Also rebranding what we are talking today, it is one of our enablers, and we think that will lead us to our new ambition. Also 2 cultures that we try to be combined and work together. It's a customer-centric, being at the core of our thoughts of delivering services to the client and also very well working together with the risk management and compliance culture delivering services to the client. And definitely ESG, where we want to make some tangible projects in this area to be delivered -- to be our model long term and sustainable. And by that, we definitely want to create sustainably mid- to high teens return for the shareholders. So brand investments are inevitable to achieve growth. We say that because historically, the bank was mainly focused on the SME clients and is built on the name of one city or one region, which in sometimes, it's treated as a still regional and more local. And that's why we want to move out of this perception to the clearly national. And I think the new name will definitely provide that, that we maintain our localness being close to Lithuanian businesses and clients. But in the other -- on the other hand, we will be purely national and the name will be well -- I believe will be well perceived by the local people, but also easy to understand and easy to communicate for international. With the new name, we expect to acquire more new client segments to unlock younger generation, to unlock more urban client segments. I believe that would -- definitely will be a very good mix of the ones who were historically Šiauliu Bankas clients and those who will choose to bank with a new brand. After the merger with INVL, we've seen that, that client segment also needs some change with the name and with the accents on the investment products, which were brought to the Šiauliu Bankas group after this merger. So again, this part will also benefit with this change. And the last but not least is our different brands that we're having today. So we have banks brand. We have SB Lizingas, who is our consumer financing business. We also have our asset management business with the SB asset management name, also life insurance. So all of them are having the different names and logos. And with that, we'll make an umbrella brand, which will help to communicate one message clearly from our group to all of our clients. So with the new name, we aim to create a leading Lithuanian brand in foreign bank market. And with that, we would like to underline our competitive advantage in the client experience. So we've historically been strong in client experience. And with a new modern approach, I think we will reinforce our accessibility and expertise upgraded banking model. So with that, intro, I would like to pass my word to colleague, Raimonda, and she will present the brand much deeper in this essence. Welcome, Raimonda, please.

Thank you. Hello, everyone. So now we switch to some softer parts, like presenting our positioning strategy, new name and identity and all the brand system we created. So while creating a new brand, we focused on strategic clients, such our competitive advantages, our strengths, value for customers, investors and the future possibilities on the market. When we are talking about our positioning key values and key advantage that we are focused on, so we are talking about flexibility, we are talking about expertise, we are talking about accessibility and national role. And then we can -- now we can go a little bit deeper in every of single our advantages. So when we are talking about our brand, when we are talking about our positioning, it are not just a buzzwords, it's our advantages. And it's real values, real categories that we have strategically designed as the current and future identifiers of differentiation. And understanding the national needs and business context makes us flexible. Flexible in different areas like mortgages, business financing, retail lending and cash operations. And we are really proud, and as Vytautas said, about our expertise and experts and pension funds and business financing and investments that makes us really great in this category, and also consulting. When we are talking about accessibility, we are talking about off-line and online synergization and omnichannel approach. We are still remaining the widest chain of bank branches here, and we're leading our experience in different areas. Talking about national role. We'll have everything for being a national champion. And it's really important that we can create localized solutions for our customers based on their needs. We can activate local initiatives and still keep the local capital here in Lithuania. Also, we are planning to work more on ESG strategy, that's so important for these times and for investors and for our customers, too. So what's our brand promise? So when we are seeing all the strategic advantages that we put on, on this way, we also renewed our brand promise. So seeing our differentiation in the Lithuanian market, we are renewing our brand promise and saying that we are still and always closer to you. The bank closer to you and what does it mean that we are closer to our customers. We understand better their needs. We understand how to create the products for the Lithuanian marketing -- market and we understand the better because we see the client here in Lithuania and feel all the things you really want and feel. So what is our new name? So the name came from our strategic choice. While other banks are moving away from Lithuania, are changing their headquarters from Lithuania to other countries, we are still here and we are the bank that is coming closer. And the name is Artea. And I will pronounce it in Lithuanian because it's quite important. Artea is about getting closer. And we made a modern word of -- the modern form of world Artea. And arti in Lithuanian and means closer, and arteja is getting closer for every customer, every investor that they have. On the brand and for a long time, we were seen as very regional bank, and Vytautas mentioned that. But now we are making a switch and saying that we are the bank for all Lithuania. And we are reaching the higher value and a major set of segments, still maintaining a pan-Lithuanian focus. Our new name strategy combines expertise and modernity, and you will see in the next slides about our brand identity. And with the new brand, we are aiming for a new level of quality and integrity. So that's why we are unifying the group under one single brand name. And this is how it looks like. So until now, we had and we have 4 different brands for bank, insurance, investment and consumer financing. And now we are changing and unifying brand channels and experience under one name, Artea. And on the other hand, you see Artea Lizingas. We are planning to use prefix Lizingas for several years till Artea Lizingas reaches its former awareness. We have a huge category of customers that believe in Lizingas, and that's why we are leaving the prefix there. So how will our brand look like? Our brand, visually the entity, was created by studying the traditional Lithuanian patterns, such as national bands, paintings, wood covering, bed spreads, national costumes and so on and so forth. And during the research, we discovered that all cultural background had the same repeating pattern. So we took it, made modern and set up as part of our brand identity. So here, you can see the modern pattern that is created from the historical things in Lithuania. And it's modern, it's dynamic, it's full of colors and movement and will be translated in different marketing materials and so on. So from modern pattern, we designed our symbol. It's the letter A, the anagram that is dynamic, symbolizing the growth, the costs upwards and the mobility. So here we can see, altogether, the symbol and the name that becomes a logotype. When we are talking about rebrand, we are thinking about different touch points what we need to cover on the rebrand. So we are changing our web design, app design, our physical appearance in the branches, different marketing material, our creative angles and so on. So here is like an illusion of the design of our new card and we are changing all the lineup of our cards with new identity and new design, also the illustration of the app. And here is the illustration of everything that comes together, the pattern, the fonts, the brand and our future perspective that where we are going to move. So now it's time for some few things like rollout plan and question part. So how we are working right now on the brand. So we have a preparation stage. We had an announcement on the beginning of March. And then we will have a shareholders meeting at the end of March for voting for the new brand. And then we will go for a launch. So to summarize and to put the key points and that was for our shareholders, so we are achieving our national image, improving consideration differentiation on the marketing. Also, we are increasing marketing effectiveness through group brand and our quality marketing platform that we have created. And also what is very important, we are improving our digital and physical channels and new sales on existing customers and attracting new audience. So the presentation of the brand and the new identity is over, and I will ask you Vytautas to join for questions.

Thank you, Raimonda. I hope information was insightful and it was interesting to hear about our new brand. And thank you for questions that we've received. So I will read it through, and we'll try to answer them. What are the costs of the bank's rebranding? Are they attributed in the bank's financial guidance for 2025? Yes, the estimation of our investments due to the new brand is in the range of EUR 5 million, and that covers different areas of costs related with that. So partly, it's, of course, the marketing and the PR part, which is important to communicate new brand, because this is a new name and we need to come back with awareness and even to increase that. So the part is related with the marketing and PR. The other part is IT cost because we need to make some adjustments in the current IT systems so to upgrade with the new name, and it covers the whole group of the bank with all the subsidiaries. The other parts are also the physical network, where we'll need to change the names on our branch network. So that's the main investment areas. And we treat that as a longer-term investment to our brand. And as I mentioned earlier, that we are having a pretty ambitious strategy, and will see that part of costs that we are planning to -- and already plan to attribute in 2025. As we mentioned, we will treat that as one-off costs. They will pay off in the longer term by easy acquisition of our clients and a growth of the bank. Okay. The next question is, you have indicated rebrand in a long-term banking strategy in 2029. Why you consider now is the time for rebranding? Okay. Already we touched that area during the presentation, but maybe to emphasize that this is -- already 10 years has passed since the bank made the last upgrade of its brand, so that was a change of a logo. So it was 2015. So one thing that is it's good time to time to make some brand refreshment and new things. And we always before that considered when is it best to think for the new name knowing that we had some limitations with the Šiauliu Bankas, with the name. So the thing was -- the first thing is the timing. So it really has passed some substantial time since the last upgrade. The second thing is the our new strategy, as already mentioned, that we lifted our ambitious bar to a much different level, and we need additional enablers to reach that strategy, to reach that ambition. Therefore, the timing is good since we are starting with the new strategy. So it's -- we're starting as a second year of our strategy. We made a preparation phase, and now we're already working with those enablers. So that's one of the reasons that we come with a rebranding now. The other thing, it's a merger with INVL Retail that gave another dimension for Šiauliu Bankas group to expand our business model to the retail segment to more for the retail clients. And as I already mentioned, for some new segments, we see that with a new name we will be -- it will be easier to ask or to invite those customers to come to our bank. And yes, so I think that's the main reason. And one more reason I remembered worth to mention is that with the new banking system, it's much better to make all those deployments already to the new technological platform. So since we are in this project and we're planning to launch a new system next year, therefore, the preparation for the new system is much better to have with a new name. And we have another question, I think, it comes mainly for Raimonda, please.

Okay. I see a question that stands for me. When exactly Šiauliu Bankas will change the name? Okay. I understand it's very important for the competitors to know the exact day. But on the legal side, first of all, we will have, at the end of March, our stakeholders' meeting. And then after their decision, we will announce the exactly day when we're launching our new brand. . So if we don't have any questions, so thank you for watching and keep going with a new brand. Thank you.