Banca Transilvania S.A. (TLV) Earnings Call Transcript & Summary

Thank you for standing by. I'm Vassilios, your Chorus Call operator. Welcome, and thank you for joining the Banca Transilvania conference call to present and discuss the year-end 2024 financial results. Please note that this conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Omer Tetik, CEO; Mr. George Calinescu, Deputy CEO, CFO; Mr. Catalin Caragea, Deputy CEO, Chief Risk Officer; and Mr. Aurel Bernat, Executive Director of Financial Institutions and Investor Relations. Mr. Tetik, you may now proceed.

Hello. Thank you for joining our earnings call for year 2024. And we will try to explain you some numbers which we consider significant and important, also based on your questions that we already received. We are trying to -- we will try to allocate also a decent amount of time for Q&A. We are somehow sorry for delaying the call, the earnings call, but it was intentional because usually, we were doing the earnings call in the second half of February, towards the end of February. But this year, for Banca Transilvania Financial Group, it was a special month of February and special last weekend of February because in Romania, Banca Transilvania successfully finalized over the weekend, its merger and full integration in terms of legal, operational and administrative integration with OTP Bank Romania. And in Moldova, Victoriabank has successfully completed its integration with BCR Chisinau. So actually, on third of March, we have opened only 1 bank out of 2 in Romania and same in Moldova. I would like to thank the teams on both sides. And also, if some of you are our customers, sorry for any inconvenience for a very short period of systems and interruptions on Saturday late night. We are happy that we have now a large group of OTP customers already interacting with us. We will -- I will try to give also details later on. But it is positive, an important milestone for us in terms of market share in terms of proving our fourth acquisition and integration successfully, and this one actually in Romania had been done in a record time. We have kind of even did -- we overperformed our best performance and managed to have the integration in 7 months without giving up customers, without giving up products and services, more than 95% of OTP customers are already with BT, transacting and receiving their banking products and services from us. In terms of the, I'll say, a snapshot of 2024 and the trends until 2024, George later will give you more details about the financial data that we have produced and presented. As you see, we try to also show last 5 years' trends. So when we look back actually in 5 years -- in the last 5 years, including COVID pandemic, including the beginning of the war in Ukraine and all the energy crisis, inflation increase, interest rate volatility, each year, we have managed to deliver a very robust growth. And even in the last year, our total assets have grown almost 14%. Our net loans has grown 13.8%. So double-digit growth both in loans and deposits, thanks to the trust of Romanian customers in Romania and abroad, our loan-to-deposit ratio, so liquidity ratio is also very strong at 57%. With all the volatility that we had been witnessing in the interest rate environment, still, we are, I would say, comfortably growing our net interest income. We are actually growing our net interest income with the existing customers as well without increasing necessarily our interest rates, but also offering them more products. But the most important and the thing that makes us proud is that our fees and commissions income. We have been very loud, very, let's say, ambitious about this. We have been saying that we want to grow double digit every year, except 2020 when there were, let's say, unprecedented events, definitely. Each year, we have managed to grow high double-digit amounts, on average, 15%. This is the case also for 2024. And this is also, I would say, almost the guidance for 2025. We will come back to the guidance for 2025 later on. While we have been doing integrations, acquisitions very, let's say, solid organic growth, our cost of risk had been at very low levels, although we are offering guidance up to 100 basis points maybe on a yearly basis. We have been managing to keep it at very low basis points when we closed the year with 50 basis points. Definitely, there were some adjustments done in the last quarter of the year. I will let also Catalin to give some insight about this, which is also related basically mainly with our methodology adjustments revisions with the macroeconomic changes in and around us, in Romania around us. Our net profit grew 42% with 27% return on equity. And we are enjoying with a significant buffer, strong capital ratios, our capital adequacy ratio being over 23.5%. For macroeconomic landscape, I will let Aurel to give some insight about how Romanian economy banking system had been doing. Although recently, the news that we had been hearing from rating agencies and external partners weren't is encouraging. Still also, we will try to explain, starting with Aurel, why we are still optimistic about Romania.

Thank you, Omer, for that, and sorry for my voice. From time to time, I always want to prove myself that I'm invincible. And as you can see, I'm not against the flu. So I will be giving you a few details concerning the Romanian landscape, obviously, in a shape and manner that you are already used to. First of all, I would just touch a little bit on the 3 pillars that we always envisage as our potential of growth. First of all, there is the share size of Romania in terms of population, which represent internal consumption and also economic output. So it's still there and unchanged, second relevant in the region. On the other hand, we play our cards always, regarding the gaps that must be closed on a medium and long term compared to the European average. So there, we have the real GDP per capita versus the region that we are in and also the European landscape, obviously, with high potential on medium and long term. And on the third hand, we would have also overall debt to GDP, which is located in the lower, let's say, landscape compared to our European peers, we are talking about 53% debt to GDP. Going back to what all these 3 pillars -- how they contribute at the end of the day, we have a real GDP growth of over 3% for the last decade. Despite the fact that in 2024, we had a margin of 1% GDP increase, to be more precise, with 0.9% GDP increase over the last year. Nevertheless, for the years to come, for instance, for 2025 and onwards, we see building up some more strength in terms of GDP growth, talking about figures marginally to 2% and even higher for the next couple of years onwards. In terms of inflation, what we are seeing during the last couple of years is the decrease in real term. We are having now a 5.5% inflation rate, which is still sticky due to 2 different things. One of them is, by all means internal consumption, which is still strong. And on the other hand, we are having the increase in wages. So from this perspective, the level of 5.5% despite the fact that it is sticky, it is still a level low enough in order not to create disappointment within the market. What I would add is that the GDP growth for 2024 was a little bit lower due to external demand, which wasn't a direct and obvious reason internally, but it is related to our business partners from the Western European side as well as the increase in energy prices and perhaps some fiscal pressure that we saw during the year. Going forward, in terms of banking indicators, you see the market shares of BT and the rest of the representative banks. Here, we must add that these figures are relevant at midyear '24. So it doesn't count for the integration of OTP in what Banca Transilvania is concerned. On the other hand, if we take a look to the key highlights of the Romanian banking sector, we see at least the most relevant ones, let's say, the non-performing loan ratio is 2.46% at the level of entire industry. The cost-to-income marginally lower than 50%. We still have a solid sector in terms of profitability. The average return on equity is 18% plus. And also good, comfortable buffers in terms of NPL coverage, capital adequacy ratio at 23.66%. When we take a look to the loans and the corporate household side and as well, the deposits, what we are seeing is that all of them had a positive outcome, much better, much higher, obviously, than the European average. For the corporate loan side, we had higher single digit, as well as for the households, which had obvious deviation from the European average. So there, we saw a strong pickup. In terms of corporate deposits, despite the fact that they were on a downward sloping trend, they are still above the European average. Single digit, but the households had a double-digit increase, which presents a strong capacity of households and overall economy in terms of deposits. The non-performing ratios, non-performing loan ratios, I already touched there. What is relevant is that we are now in the average of the peer group despite the fact that back a couple of years ago, we were the outliers. Now we might say that we have a very comfortable NPL ratio as well as the Tier 1. This would be, in a nutshell, the presentation, the macroeconomic presentation, and I will jump forward with Catalin here. Thank you -- or George. Yes. Thank you.

Thank you very much. So going into the business performance in the year 2024, we can say that the bank performed very well, both at the individual level and also at the group level at consolidated level. We do have a very nice growth, as Omer presented a little bit earlier in terms of double digits, almost in all the main areas of the P&L on the balance sheet. Let's focus first on profitability, where net interest income increased by 28% at the level of the bank and 31.4% at the level of the group. Of course, this is being driven also by the fact that we have OTP in the group in the year 2024. But focusing only on the bank level, you can see that net interest margin increased in the year 2024 by 26 basis points. bringing us to a level of 3.43% at the end of the year. And this was maintained throughout the year at almost constant level, as you will see in the next page, when we go into more details on the revenues. In terms of net fees and commission income, again, double-digit growth, 14.7% at the level of the bank, 17.4% at the level of the group. This growth at the level of the bank is driven by purely, an increase in the transactions processed by the bank. In the year 2024, we had more than RON 2 billion transaction processed for our clients during the year. Again, we'll go into more details in the next page of the presentation when we talk a little bit more detail on the revenues. Operating expenses increased 27% at the level of the bank and 38% at the level of the group. Again, we have here, 2 outliers that are one-offs. First of all, at the level of the bank, we have the turnover tax, which kicked in the year 2024. And for us, it's at an amount of almost RON 270 million during the year. And also the expenses with the integration of OTP Bank, part of them are booked at the level of BT. Let's say, 35% of them. And the rest, 65% at the level of OTP Bank, and they hit the consolidated level of expenses, that's why you see a bigger increase in terms of operating expenses at the level of consolidation. If you look at the cost-to-income ratio, even though we did have this effect of the -- of this turnover tax reflected, you see that we managed to maintain at an individual level, cost-to-income ratio that it's comfortable, around 45%. And this is even lower if we take out the effect of the turnover tax one-off that we had in 2024. Again, we'll see in 2 pages, more details on this. Net result at the level of the bank, RON 3.5 billion is 42% more than last year, RON 4.73 billion at the level of the consolidated results. This includes, of course, a bargaining gain on the 2 transactions that we have closed in the year 2024. I remind you that we also closed BCR Chisinau and also OTP with a little bit above RON 800 million in terms of bargaining gain for the cumulated transactions, with the majority of the bargaining gain coming from the OTP Group acquisition. Going further into an analysis of the balance sheet evolution, like we mentioned earlier, total assets increased 13.9%. We do have an increase in total assets, which is higher than the increase at the bank level -- at the bank system level. The bank system level was a little bit lower than 10%. And we do have a consolidated level, 22.4% increase. This is being driven, of course, by the increase in assets following the acquisition of OTP. In terms of gross loans, with 13.5%, we also exceed the growth at banking system level. And also on the deposit side, with 12.2%, we performed better than the market. In terms of capital ratios, the bank shows very good capital ratios at the end of the year 2024 with 23.5% total capital ratio at the end of 2024, and 20.08% on consolidated level. We do have very good cost of risk in the year, 0.49% for the whole year of 2024. This is in accordance with the guidance that we gave in the last investor call of the year in September. And from this point of view, we do have a slight increase versus last year, but this is in accordance with our expectations and the budgeted amount. NPL ratio was 2.07%. We are well below the market average for Romania, the market average as it was presented a little bit earlier by Aurel, you see -- you saw it is at almost 2.5%. With 2.07%, we are below the market average for the banking system in Romania. Now if you go further and we look at the trends in income, again, we look at net interest income, 28.1% increase at the level of individual results. And here, I would mention, like I said earlier, the increase in the net interest margin. Net interest margin increased in the year from the end of 2023 to 3.43% at the end of the year. And what's important to see in the upper right-hand side of the slide is actually, the bank managed to keep a very good level of net interest margin, irrespective of the evolution of the underlying rate on the market. So you see, for example, 2020, 2021, rates both on euro side and on local currency side were very low. And the bank managed to maintain a very good net interest margin in that period as well with levels above 2.6%, 2.8% for the local bank in Romania. And as interest rates increased, we managed to increase ourselves, net interest margin for the bank. In terms of net fees and commissions, as I mentioned before, with 2 billion transactions that we have recorded at the level of the bank last year, this number of transactions coming from 2 areas. So first of all, we increased the number of transactions that we have for the current customers of the bank with additional features, additional transactions usage on their behalf. But also, we have a big number of new customers coming in. And from that point of view, the number of customers increased by 350,000 in the year 2024. And here, we're talking about both retail and corporate customers. This provides a very good base for further increase in net fees and commission income, like Omer was mentioning a little bit earlier, we do believe that this double-digit growth will continue to increase in the next year. And I remind you, like we said in the previous conference calls, we are, after a period where we adjusted our net fees and commission to make it -- to make them a little bit more simple, a little bit more easier to understand, and this was well received by our customers. In terms of net income composition, you see on the lower right-hand side, the majority of the income is coming from net interest income with 67.3%. When we compare this to our peers, our peers have a higher proportion of net interest income in total income coming from net interest income, around 75%. We have more from other sources of income than net interest income, and we plan to continue this focus on other sources of income rather than net interest income in the future as well. I will not go into details on the other -- on net fees and commission. We talked about it in the previous slide. So here, you see they have 14 -- 15.4 percentage points out of the total revenues at the bank level. And the third next is the net trading income, and here, the majority of the revenues are coming from FX and derivative related results. In terms of operating expenses, as I mentioned before, you look at cost-to-income ratio without the effect of this turnover tax, we would have a 42.1% cost-to-income ratio. Again, this shows that despite the fact that we had the turnover tax, despite the fact that we had also, the expenses related to the integration of OTP, the bank managed to keep a very good cost control in the year 2024. And it help us keep this ratio at a comfortable level. In terms of personnel expenses, personnel expenses are the biggest chunk of operational expenses. You see there the increase, it's 20.5%. If you take a look at these expenses and you try to split the increase into sources, we do have chunk coming from inflationary pressure and increase in staff. And here, out of the 20.5%, we'll talk about 15%, maybe related to either increase in staff or also inflationary pressures and increases in salary. But the rest is coming from items such as training expenses, which have increased in the year 2024 and also bonuses, which have increased in the year 2024 to cover the fact that the performance was awarded for some big items happening either at the end of last year or during the year 2024. So going back to other operating expenses, you see the increase of 49%. This is affected by the turnover tax. And we've put a special presentation in the graph to see in graphical format, how much of that is actually coming from the turnover tax. So if you take away this almost RON 270 million, the increase remains a reasonable increase. So we're talking about an increase that is related to IT expenses, licenses, which have increased by 28% in the year. And also POS usage and we talk about the expenses related to integration of OTP that were booked at the level of the bank. Like I mentioned before, around 35% of the expenses that were booked in the year 2024 related to integration or booked at BT level, with 65% being booked at the level of OTP. And as you will see a little bit later in the presentation, in the year 2024, we booked almost 70% of the overall budget for integration for OTP, with the rest being booked in the year 2025. Now if you take a look at this cost analysis and you take away all these one-off items that I mentioned, the increase would have been around 15%, 16% during the year 2024 in terms of operating expenses. Now we talked a lot about big increases, but I think last quarter, we started to present a little bit also the efficiency of our personnel. So we do have a 2% increase in the number of staff in the year 2024. However, if you take a look at the efficiency being reflected as total assets over the number of active employees in the year, you will see that we have increased tremendously in the year 2024, this efficiency. And also, if you take a look at the last 5 years, you will see this ratio increasing from 12.4% to almost 19%, 19% at the end of 2024. I will leave now, Omer, to talk about portfolio growth and a little bit about the business side. So, Omer?

Yes. Thank you, George. Indeed, as I mentioned at the beginning, 2024 in terms of loan growth, maybe it was the year of companies, year of investments. We have seen robust growth in loan portfolio for companies from micro, small to large corporates, a growth of 17.5%, with retail lending portfolio growing almost 8%. So on average, we grew our loan portfolio 13.8%, which is significantly higher than the market average [ hoppers ] [ Lending ], it was most of the consumer loans, especially at the beginning of interest rates. And concerns about macroeconomic evolution. On the other hand, in the third quarter and fourth quarter, we have seen that the appetite of retail customers also came back, and we have managed to grant at the end of the year more than 15,000 mortgages, new production being very close to EUR 1 billion for 2024. But still, as I said, the real growth came from the company's portfolio. By the way, the numbers that we represent here at the presentation and the percentages we mentioned, they do not include OTP. So they are about our organic growth and the numbers of OTP will come on top of these. in retail mortgages with all the difficulties in the market, also the customers facing due to, let's say, increased prices, inflation, and higher interest rates. Still, we see a good appetite also in the green mortgages lending, and we have managed to grant last year, more than 1,700 mortgages with green certificates, if I may say so, amounting to more than RON 550 million, close to RON 600 million. In corporate banking, we have seen the growth definitely supported by impact of public investments, impact of European and European Union and Romanian state-supported programs. And our loan portfolio -- companies loan portfolio reached RON 52.3 billion. We have been always enjoying strong, let's say, confidence from especially retail customers in terms of their choice of bank where they save their money, they invest their savings. We see -- also later, you will see the numbers of our subsidies. We see also high growth in better asset management, but also, our deposit growth was spectacular, I would say, in retail side, we have grown 13.6%. In companies, our deposits from different sizes of companies grew 9.6%. Still also coming back to foreign exchange rate or demand for foreign exchange. I'd say, almost 70% of the customers, retail or corporate, have wanted actually, their new deposits in 2024 had been in local currency, in lei. So this shows also the continuous local trust into the exchange rates into the strength of the National Bank's policies, National Bank of Romania's policies. In retail banking, our total new production had been almost EUR 2 billion, RON 8.8 billion at the beginning of the year, very much supported by consumer lending and then with higher growth in mortgages lending. And in corporate banking, our new production was RON 26.6 billion. Here, the bigger chunk definitely was mid-corporates and large corporates. But this is also helping us a lot in terms of the growth for micro lending or in retail banking because it brings each of these big companies being also a good ecosystem supply chain with them salary accounts, new, let's say, retail accounts with them. I cannot ignore also the benefit of government programs addressing SMEs. [ We may invest ] farmers credit, all constructors credit type of programs. And we also hope that the accelerated growth of the EU funds absorption will even accelerate further in the coming years, and it will support the growth of investments in infrastructure, in health care and education, what the country needs, and it will put definitely Romania in a better position. Thank you.

Good afternoon. I will take it from here with the risk side. I will start first depicting the capital ratios when coming about the group, the BT Group. What can be observed here is that the capital ratio at the group level stays above 20%, slightly above 20%. If you remember, as of June, our capital ratio was around 26%. And the evolution -- the downward evolution was triggered by 2 main events, events that we are proud of: the first 1 being the OTP acquisition, which is, of course, seen at the group level. OTP at year-end 2024 being seen as a subsidiary, and the organic growth the bank showed throughout the year of around of 13% -- 13-plus percent in terms of assets. This can be also visible in the left bottom slide, where you can see that the group, the BT Group increased its own funds by around 20% in order to support the growth, both via merger where the mergers and the organic evolution. When looking to the RWA evolution and also the RWA density, we can see a stable pattern, showing also the stable risk profile of the bank and of the group. But we can say also a very significant uplift of the RWA, which is totally in line with the asset evolution. Out of the around of [ RON 18 billion ] plus RWA growth at the group level, less than half is triggered by the OTP portfolio, by the OTP acquisition. If we go further to the BT stand-alone, to the BT Bank, we can see here that the capital ratio stands well above our targeted and announced targeted minimum targeted 20% total capital adequacy ratio. Similar as the group, only that the bank it has a buffer here for the OTP incorporation, which just happened last weekend. And here as well, we can notice if we compare with June, when we benefited by the first transitory provisions of the Basel IV when the capital ratio was slightly above 27%. Here, we are also witnessing a downward trend also triggered by the loan growth that happened in the second part of the year on both sides, private individuals and companies, but more especially on company side. Similar as for the group, you can see also when looking to the own funds, so left bottom chart, you can see another 20% increase in the own funds mainly triggered by the half year profit in corporation that I will talk about slightly a bit later in the slides. Also in the bank, we can see the stability when coming about RWA density. The only difference when looking to the group is that here, the uplift in RWA is slightly lower because here, we don't see the OTP acquisition here, we see solid organic growth and any other RWA changes triggered by the regulatory framework. We are -- here, we are again committing and we are showing our targeted minimum level of the total capital ratio of 20%, although you will see it throughout the year also that we will stay well above this level. And when compared also with the minimum capital ratio imposed by the regulator, which currently stands at around 17.2%, we have a very comfortable buffer. Here, we introduced, let's say, a very explanatory slide about the capital evolution, the capital ratio evolution throughout 2024. And what we -- besides the movement throughout the year or within the year, what we would like to share with you here is the self capitalization that the bank holds. And here, you can see it in the bar called profit H1 '24, which when compared with the RWA that the bank is producing, it shows the sustainability of the bank from the capital generation and the capital position. We are estimating that this self capitalization will be sustainable and will be also our way of managing the capital throughout the next year and the years to come. And moving to the liquidity and MREL strategy. Of course, due to our balance sheet composition, we are benefiting from a very strong liquidity position. Our main liquidity indicator, LCR and NSFR, being well above the minimum regulatory and risk appetite statement of the bank. But in the same time, we are also showing a growth in the loan-to-deposit ratio, a growth which is also showing our capability of supporting the financial intermediation at the economy level and at the banking system level. When looking to the MREL strategy, here, we are showing the evolution from June to December because this is relevant. I just want to remind you that the MREL strategy of the bank is always seen at the group level, this being the regulatory requirement. You can see here, a drop from our buffer of more than 700 basis points to 229, the drop in the buffer being triggered by the OTP acquisition. Basically, if you remember, this was also our announcement and guidance that we build up this buffer in order to account for the acquisition to come. Again, here, we are sticking on our minimum target to maintain a 50 basis point buffer on top of the minimum regulatory MREL requirement. Although currently, we have a buffer more than the 50 basis points also in our capital planning for the upcoming period, we are looking to maintain this buffer and even more. If we look to the asset quality, again, we can explain -- the figures are explaining a prudent underwriting standard and coming about the loan generation. We are closing the year with NPE ratio of 2.07%, this being well above -- well below the market average. And in the same time, we can see that on the cost of risk, we are seeing a slight uplift in Q4. Although this is -- we've seen our guidance. If you remember, we are communicating a guidance of around 60 basis points in September. However, it will be to depict or to slice the risk cost from [ Q4 ] from fourth quarter. We can inform you that the regular inflow of NPLs coming out of pure portfolio quality is similar to Q2 and Q3. Only that in Q4, the bank built additional reserves for the uncertainties, which are seen at horizon, and we also had a slight methodological change in the risk cost recognition. So all in all, we are confident and we don't see any early warning signals today when coming about the loan book. We can also inform you that into the risk cost in Q4, in the reserve that we booked, we accounted also for additional uncertainties when coming about certain industrial sectors. Here, I would call the agriculture, which might see some vulnerabilities, the portfolio might show some vulnerabilities and auto trade. What can be seen easily on the left bottom slide, if we look, for example, to the BT individual, so the BT stand-alone, the bank stand-alone, we can see a slight growth and constant growth of [ Stage 1 ] part of the book. This is triggered especially by the loan growth and by bringing in the portfolio, good quality loans. If we'll go further and we will speak a bit about EMTN status and our, let's say, small history of issuance. Sorry here, it was more typo. The first bullet point refers to 2024. We know that we spoke about this also in the last conference. However, we can -- we would like to emphasize 1 more time, our presence in the market and our capability of attracting MREL eligible bonds. And we can also -- we would like also to commit that for the -- for this year for most probably another issuance, which will be linked minimum with some rollovers that we will have to pursue, but most probably dependent also of the market and of the evolution of the bank portfolio, we might see or might approach it also from different angles. And last but not least, I would like to close my presentation with a few highlights about the -- our credit ratings issued by the 2 rating agencies which are rating Banca Transilvania. Moody's, where it was confirmed our rating, our long-term deposit rating Baa2 with a positive outlook for -- into 2024. So this being -- the sentiment being upgraded from stable to positive. And we can proudly say that, Fitch upgraded the long-term rating of BT to investment grade for the first time in the first instance with a stable outlook, but of course, afterwards, revised in line with the sovereign update to negative. And this is also something that is showing the stability and the capital position and how strong is the balance sheet of BT and the BT Group. Aurel?

Thanks a lot. Jumping to another slide full with fulfillment, I will be touching a little bit on the sustainability updates. Very relevant Sustainalytics rating that we are having improved. It's 14.9 from a score a little bit higher than that. So it is a definite improvement in this regard, in this respect. The FTSE Russell Index is also 3.3 in terms of ESG score on a revised methodology. So we are above the sector's average. Also relevant is the Romanian Corporate Sustainability and Transparency Index, which gave us the Gold Level Recognition, just like the Refinitiv one, which places us 73rd place out of 1,100 banks assessed worldwide. In terms of VEKTOR score given by the Romanian Association of Investor Relations, we are, for the sixth year in a row, placed with the maximum score. In terms of sustainable finance, last year, we had the inaugural sustainable finance framework as well as in terms of fun fact of ESG, 64% of the issuances were subscribed by investors with an ESG mandate. We also published -- and this is a moment in which I'm also thanking to all the people that contributed to it -- the allocation and impact report, which was published back in late September '24. In terms of community, I will highlight our BT Stup initiative, which initiated 2.5 years ago has engaged more than 7,500 entrepreneurs and more than 630 new businesses were launched there as a support for the economy. And on the other hand, obviously, we are still active in the agri business in the agricultural sector, where we had an initiative, which cultivates future agricultural leaders. I go back to Omer in terms of digital and the developments there. Meanwhile, we will be also switching to the first slide. Thank you.

Yes. Thank you, Aurel. I mean, BT Pay in the -- our, I would say, super app, our colleagues are saying the unlimited app is growing tremendously. Our number of users has grown 27%, and the fund transfers, 54%. BT Pay from a basic peer-to-peer payment application a couple of years ago, now, it is becoming -- at the end of this year, it will become our 1 and only application for retail customers, where from online account opening, savings, investments, lending, bancassurance, asset management insurances, even, let's say, kids, junior account management and several other facilities are already available or will be available. We have also more than 145,000 already, kids using BT Pay for their payments, giving them also to their parents, the chance to offer kids financial education, safe payments and control over the payments. We are also happy to see that the offer of BT Asset Management on BT Pay got a good traction, and more than 46,000 new customers have been onboarded just through BT Pay, opting for better asset management products. Last year, this time, when we go back to BT GO, our all-inclusive, all-in-one banking platform for companies. Last year, I wasn't sure to put details about BT GO in the presentation because we were speaking about 10,000 customers, a couple of million lei payments. So we were discussing internally, shall we discuss this later or not, but we were comfortable about where we will reach. And at the end of this year, BT GO will become also the unique application for companies, already, I would say, more than 207,000 enrolled users. The good thing is that also we see more than 40% of new customers coming from OTP. Already in the first couple of days, I mean, the first 2 days of interaction with us, they enrolled to BT GO so that they will be also hopefully issuing their invoices, they will be making their payments and cash flow management through BT GO. But now the numbers look definitely different. And from a couple of million, now we are discussing total payments of RON 22 billion last year and more than 40,000 electronic invoices e-Factura being issued. So we have a lot to do on BT GO in order to increase the number of services and features, but we have already a good track record and experience from BT Pay. And we know our customers well on the especially micro and mid-corporate segment, what they need, how they need. So at the end of the year, BT GO will become this all in one, all inclusive banking application for companies. As regard to BT Financial Group...

I will pick this up. So with respect to BT Financial Group, I don't want to keep the conversation longer. We spent, I think, the most time of all our presentations on the results of the bank primarily. I want you to remember 2 numbers, RON 1 billion and RON 6 billion. So we have RON 6 billion in assets under management in terms of BT Asset Management, RON 6 billion assets in BT Leasing. BT Leasing actually broke first, the record in terms of merger rapidness, if I can say so, because they merged with OTP Leasing at the beginning of December 2024, so they're already one company by now. Victoriabank, RON 6 billion in terms of assets. And then the smaller companies, but smaller that are growing, BT Direct BT Mic with more than RON 1 billion in terms of assets and growing rapidly with very good results for both of them in terms of profitability. Salt Bank, as you see in the second part of this short presentation on the group still is not on breakeven, but the client base is growing very rapidly. They had 380,000 clients at the end of December. I guess, by now, there are over 400,000 clients of Salt Bank already because they're growing very, very rapidly. So without further ado, I want to give some details on OTP entities under integration to the group. As we mentioned before, almost RON 700 million bargaining gain, recognized the closing, nontaxable. This is decided. It's not a matter of the debate. So this is the tax treatment recently in Romania. So we had a very, very fast integration project. As Omer mentioned earlier, 7 months, we merged last weekend. We had over 200 people that are involved on a daily basis almost, with 31 integrations teams and more than 1,000 colleagues involved overall in this project. We kept 27 branches out of the 95 that OTP had and 600 people of the 1,700. The split between head office and branches is almost 50-50, 300 and 300. We expect to have cost synergies of 55% of OTP cost base forecasted in the year 2025. And as Omer mentioned, a very high rate of client retention in the year, 95% of active retail clients and more than 90% of the legal entity clients remain with us following the acquisition. Integration costs estimated at RON 227 million, including transaction costs, 70% already booked in the year 2024, 30% will be booked in the 2025. Most of them book at the level of OTP, and I remind everybody that the P&L of OTP will not be shown as P&L of BT in the year 2025, it will be shown as retained earnings in the year. That's it from my side. I think we covered everything that I had to mention on.

Before we switch to Q&A, because we had been asked by some analysts to offer some guidance. Please take these numbers, which we will leave definitely on the presentation in the public space. They are subject to approval of our budgets, by the shareholders' assembly. But how we construct our budget is that we still foresee growth of our loan book by 8% organically and 20% together with OTP and deposits to grow 6% organically, together with OTP, 13%. Here, the 6% is, I would say, management's view, not being very competitive due to our high liquidity position. Here, we see high flexibility. I mean, if you will go above the market average in terms of interest rates, we can attract even more. We can go even to low single-digit growth. But having our position, we don't think it is necessary -- it will be necessary. Our net interest income to grow around 23% and we are comfortable that we will deliver. Also coming back to some of the questions, we were comfortable to deliver around 300 basis points net interest income. We are continuously very ambitious by ourselves before going in front of the shareholders that we want to grow our net fee and commission income 23%. Definitely here, the new customers coming from OTP also will help, because we have a lot to show, a lot to offer to them. So at the end, all these efforts, despite all the challenges around us, should deliver a return on equity of 26%, with continuous solid capital adequacy ratio of 22%. I would say that we switch to Q&A. There are also some overlapping questions. So in case we skip your question, just -- we will answer it through someone else's question. If anything left behind, please do not hesitate to contact Diana and our Investor Relations team, so that we will manage to address all your observations or questions. Thank you.

Okay. Thank you, everyone, for being with us today as well from my side. We begin with the first set of questions coming from Odile Bagao from Consilium Investments. Odile wants to know about the update on the political situation in Romania and potential effects on the bank. And what would be the sustainable return on equity for the group now that all acquisitions are integrated?

Odile, thank you for the question. This is -- this was the question we were hoping not to receive. But I would say, difficult to answer, definitely, political situation is very volatile. But on the other hand, whatever the situation it is, we know that the elections will be in May. Most probably, there are 2 rounds of elections. I'll say, governing parties are -- the coalition likes to -- or seems to stick further. On the other hand, although we are not delusional or we are not ignorant to the realities around us, if you look at the history of BT and Romania in the last 35 years, we have seen different political crisis, different local events and incidents. This didn't hinder our growth in the -- This didn't hinder our positive focus on business and on customers. I wouldn't like to go to the extreme that it will create some even opportunities for us, but it may. That's why how -- if there will be hard times, it will be also our time to show what we can do, how we can do, and this is a unique opportunity that BT will enter this new era, if there is any, with the highest capital and liquidity position in Southern Eastern Europe. As regard to return on equity, I don't want to commit anything again before, how say, shareholders' assembly and approval, but we are not targeting or we are not budgeting return on equity below 20%. So I guess what we can do in the years to come. We have shown it also in increasing interest rate environment and decreasing interest environment. So sticking with our customers growing with them, having -- benefiting from the size that we have, I think we can deliver 22%, 23% return on equity year-to-year from now on. Definitely, this is also a message to my colleagues about the budget to come.

Thank you. Next question comes from Adam Motala from Pekao. What would be your initial net interest margin outlook for 2025 for BT Group?

So we estimate that we'll start the year 2025 with around 3.5% net interest margin as well. The evolution of the rates on the local market, at least for the first half of the year until elections will be -- result will be known are not estimated to vary very much from what we had at the end of the year.

Next question comes from PKO BP Securities, from Robert Brzoza. First question, should we treat the 2024 risk charges at a sustainable level going forward? From the operating expenses, how much of the quarter-on-quarter change is due to seasonability and how much will stay as a higher quarterly run rate going forward?

I guess there's a question about OTP?

Yes. Robert, obviously, this chart, definitely, as Catalin also mentioned, we revised our methodology. So we have been saying this quite frequently that considering our customer profile, customer base, Romanian economic stance and so on. A natural, a normal cost of risk would be most probably around 100 basis points, but we managed to keep it below. So I guess 60 basis points will be aggressive, but I don't expect it to go over 80 basis points this year because we already see customers' behavior in the first couple of months of the year, and we are comfortable with it. And most probably, [ it will. ] Definitely, there are a lot of one-offs related to OTP integration, which, unless we do a new acquisition and integration, which cannot happen at least in the next few quarters, the impact will be diluted. So you will see, I'll say, lower increases or lower surprises in the cost [Audio Gap]

Okay. Moving on. Next set of questions comes from Miguel Dias, Wood & Company. First of all, do we expect any regulatory or extra tax burden we should be concerned in 2025? And what would be the impact from Basel IV on capital ratios?

I will also take over. I mean, even, let's say, administrative wise, we don't see any significant change or actually any change in the fiscal code this year because the existing government already said that it is not the case at least for this year. And if after the presidential elections, there will be some adjustments, anything which will be done might effect 2026 and onwards. So we are partly -- we are making our assumptions with the current status. On the other hand, we are not also [Audio Gap] for us that the banking tax, which created a RON 270 million burden last year to be diminished to be abolished very soon. And in terms of Basel IV, I will let Catalin to give the answer, but the impact is around 10 to 12 basis points basically.

In the previous meetings, indeed, we also estimated the Basel IV impact now because we stepped into 2025, also as a prerequisite for the exercise [Audio Gap] We announced you, we are the first solo Romanian bank which is engaged in this exercise. And according to our estimation, indeed, this is [ Basel ] neutral impact couple of basis points in total [Audio Gap]

From Miguel Dias. What segment do you see as main driver in 2025 in terms of loan growth? And what are you expecting in terms of [Audio Gap]

I guess, as mentioned, we are expecting together with OTP, around 13%, organically around 6% growth. Here, as I said, we are factoring in that [Audio Gap] economic situation and volatility companies will be much more attentive to manage their cash flows, while the interest rates are either stable or in a slightly decreasing trend, they don't want to keep too much cash at bank accounts. But still, we are considering a growth of 13%. Second question was, sorry?

Deposits. Expectation for...

Main driver for loan growth.

Main driver for loan growth, this year, it will remain mid-corporates and large corporates because positive -- although consumption is still solid. It's growing -- it's not growing aggressively, but it's growing in real terms, higher than GDP growth higher than inflation still. The real investments which are happening is in infrastructure, in health care, as I mentioned in the energy sector. So we think that company's sector will be the main driving force. But this doesn't mean that we are giving up nor we will ignore retail banking. We have a very strong franchise there. So we want to continuously increase our market share as we did in 2024. But the growth, I guess, induced by the market will come from company segment.

Okay. Next question comes from Raiffeisen Bank International from Ruslan Gadeev. Ruslan asked us about our debt issuance strategy for this year. And if we envisage any material recalibration of the MREL targets due to the merger of OTP Romania.

Okay. I will take the first -- the second part of the question with the recalibration of the MREL target, and then I will give the floor to Aurel. Yes, indeed, we will see a slight increase in the minimum requirement of MREL target. This is driven by the immediate fact that the bank size increased, and this is driven by the mechanical calculation of the capital buffers. So yes, although we entered in the year with a minimum MREL requirement from the last year, which is 30.1%, we will see a slight increase in the minimum capital ratio -- minimum MREL requirement, which will be easily absorbed by our capital and eligible liabilities position. As regards the new issuance, I will give the floor to Aurel.

Thank you, Catalin. So for the new issuances in 2024, we are not under pressure right now to making some very fast movements. But what we can take into account is that during the second half of 2025, we will be in the market with a new issuance. What is relevant and what you were always asking us as investors was that you would very much appreciate to see Banca Transilvania as a frequent issuer in the market, and this is a request and also a promise that we want to keep and to be there. So most probably, we'll be seeing the investors in MREL during the second half of this year.

Okay. Next set of question comes from Swiss Capital, Mrs. Daniela Mandru. In terms of dividend distribution, what are your expectations? Do you see any NPE ratio increases in the next year? And what would be the final net loans and deposits from the OTP acquisition in RON million?

As regard to how NPE ratio, yes, we think that there will be pressure for a slight increase. Still, we think that we will remain below the market average and below 2.5%, let's say, indication of the also regulators. But we are preparing our budget for a slight increase. This is also related to -- I mean, due to the fact that, again, macroeconomic conditions are changing, fiscal burden on some companies already being felt and also inflation impact through wages and -- so on company's portfolio is being felt. We have to see the impact of tariffs, if any, and how on Romanian economy and businesses, although Romania is -- Romania's main trading partner is Europe itself. So we are more or less that -- the second one or the first one, actually, Diana, if you can repeat? Yes. Sorry, again, it is, how to say, my subconscious is ignoring the questions that I don't want to answer. Sorry for that. Thank you for addressing this, Daniela. I wouldn't like to give a guidance, this is a delicate situation. We would say that -- I mean, I don't think we will disappoint the long-term investors. But on the other hand, before the approval of the shareholders, I mean before we convoked approval shareholders, I don't want to mention a number. There have been some analysts circulating -- guesstimating some numbers. I think they are almost there in terms of what we are planning to propose, but the number you will see soon at the end of this month once we send the GSM notifications.

Yes. The last question was related to how many loans were transferred from OTP. So I can say that on transfer, we transferred around RON 11.5 billion at fair value from OTP. The gross value very high, but talking about fair value is RON 11 billion, RON 10.5 billion. And on the liability side, I think we're below RON 11 billion, RON 10.5 billion on deposits from clients transfer.

Okay. At this point, we don't have any other questions coming from analysts and investors. I think we covered some of them. Second, yes, so we have another last-minute questions regarding the presence of Banca Transilvania operations in European countries with large populations of Romanian migrants.

Maybe using this opportunity, I wouldn't say Romanian immigrants, but European [ students ] of Romanian origin. We have, in Banca Transilvania, we have identified almost 600,000, so over 600,000 customers from diaspora, Romanian diaspora. We have already a presence -- a physical presence with our branch in Italy, in Rome. Latvia region is 1 of the most, let's say, dense regions in terms of Romanian diaspora. And actually, just today, we are announcing the launch of BT Pay and special packages in Italy, certified for Italian or Italian customers or residents in Italy. Our plans also through Salt Bank, Salt Bank includes going to countries where we see high density of Romanian population like U.K., Spain, Italy and Germany. But our -- I mean, in terms of operating and having physical presence, we have only BT Italy, except our subsidiary, Victoriabank, in Moldova.

So that would conclude the Q&A session for today's earnings call. I would give the floor back for management for final comments and last messages from today.

Thank you for joining us. It was a bit longer than maybe also you planned -- we planned. But I would also like to thank our shareholders, analysts, investors because your questions challenge us. They guide us. Our interactions with you, different platforms are very helpful. They're useful, and this is the best consultancy, the real consultants, advisers that we can get. On the other hand, I'm also glad that we managed to deliver a year with good results, starting 2025 with 2 successful integrations. So regardless of the maybe sentiment surrounding us, we are still optimistic about Romanian economy. We think that about to be -- Romania about to become energetically independent, agriculture sector having a good year already with the signs that we have quite a big population, 1 of the largest in Europe and second largest in Central Eastern Europe. IT sectors, good infrastructure, good actually, even Internet and communication infrastructure. I think Romania is positioned well. And still in an economy with very low financial inclusion, we have good opportunities. So I hope that once we present our budget, the ambitious aggressive budget, we will altogether make everything possible to deliver it, not to disappoint people trusting us, starting from customers to -- up to our shareholders. Thank you again for joining us, hope to hear you soon once we will also have the GSM convocation and budget announcements. Thanks a lot.

Ladies and gentlemen, following the conference call, we would like to announce you that the Investor Relations team in Banca Transilvania will send you a short survey about the content and format of the conference call. Thank you for your input. The conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.