Komercní banka, a.s. ($KOMB)

Welcome from Komercni banka, and thank you for sharing your time with us today. It is the 30th of April 2026, and we are going to discuss the results of Komercni banka Group for the first quarter of this year 2026. Please note that this call is being recorded. Our presentators today will be Jan Juchelka, Chairman of Management Board and CEO of Komercni banka; and Etienne Loulergue, Chief Financial Officer. We also have ready to answer your questions Anne Kouchkovsky, Chief Risk Officer; Miroslav Hirsl, Head of Retail Banking; Katarina Kurucova, Head of Corporate and Investment Banking; Jitka Haubova, Chief Operations Officer; and Margus Simson, Chief Digital Officer. As always, we will begin with the presentation of results, which will be later followed by a questions and answer session. [Operators Instructions]. So that's it from me. Now I would like to hand over to Jan Juchelka to begin the presentation. Thank you.

All right. Thank you for being with us. Welcome, everyone. It's my pleasure together with the team to guide you through the presentation of Q1 2026 results. Before we start flipping the pages, let me say that the first quarter of 2026 was framed by the fact that back in 2025, we finalized the transfer of retail clients to brand new, completely new technological stack, which is for us, the technology was not the target. The technology was the enabler to finalize, let's say, much more simplified way we work. We prepare innovations. We are putting products in front of our clients, and we do it in much less number of people after simplifying the organizational -- or the organic run in the way which you know from the past. So by closing 2025, we are also opening the quarter, which made us much more busy with decisions related to volumes, related to sales, related to commercial activities, obviously, related to management of capital liquidity and risk, but we were -- and we continue being very much oriented towards the sales and towards getting back the market shares, which we believe we deserve. How it was translated into numbers, you can start -- you can start seeing the Page #4. Page #4, and I will read it from the right to the left is showing very, very strong traction on the side of sales of loans, 7.6% on a year-over-year basis and even almost 1% chipped in vis-a-vis the last quarter of '25, which was already on its own very strong. Beneath these numbers, there is strong contribution of corporate and strong contribution of retail. So we are glad that both engines are working at a very high performance. Let me say the housing loans, here, we are taking from the market what is ours, which is more than 20% of the newly produced mortgage loans on the Czech market and taking the benefit from the wave of either new financing or refinancing of existing loans. On the side of deposits, we are growing by 8.7% on a year-over-year basis. Here, we are consciously deciding on building durable long-term foundations for the future growth of loan productions and the financing of Czech economy. And again, when we compare deposits with the previous quarter, it's almost 4% on top of it. Assets under management, even though some of our subsidiaries were making very good job -- for example, pension company and the insurance business went up by 5% each -- the sales of investment funds and investment solutions was somehow lagging behind our expectations, even though mildly growing by almost 1%. Q-on-Q, we are down by 3%. Having said that, I need to confess also the fact that by building the portfolio under management, mainly of Amundi and other products, mainly from private banking, we are also increasing the quality of these investments. So there is much less money market short-term investments and much more longer-term solutions either from the field of equity investments or from the field of fixed income. Let me move to the balance sheet and capital. As always, we are very prudent. We are keeping the capital ratio at a very high level, 18.2%. Core Tier 1 remains 16.8%, loans to deposits in safe territory of 80.1%. And both long-term and short-term indicators of our liquidity remain strongly above the required levels. ROTE, we are delivering 14%. If it was linearized, we would be delivering almost 15%, 14.8%. The cost of risk remains in the territory of net release, so which is representing high quality of our assets despite the fact that we are growing the loan book much faster than it used to be a year before. All that translated into net income. We are at CZK 4 billion for the first quarter. Translated into value per share, it's CZK 21.23 per share. Cost to income, 48.1%. And again, if IFRIC was linearized, we would achieve 44.8%. Even with 48.1%, we are 2.2 percentage points below the first quarter of 2025. Most remarkable events here were that first, the AGM approved distribution of profit for 2025 at the level which was presented by the Board of Directors at CZK 25.6 per share, so 100% distribution. The record date is 5th of May. The payment date is 25th of May. We have new or reelected or reconfirmed members of the Supervisory Board. So the nonexecutive body, Cecile Bartenieff, which will remain the Chairperson of the Supervisory Board; Herve de Kerdrel, Independent Director; Bruno Delas, Head of IT for the entire Societe Generale Group; and Pierre Villeroy de Galhau, Head of Strategy of BoursoBank, our sister companies, our fully digital sister company in France. By reading these names, I'm proud to say that we are increasing the expertise and collective skill set of this nonexecutive body of Komercni banka even going, let's say, to the level of modernization and higher level of overall knowledge of what is important and strategic for Komercni banka of today. Pierre Villeroy de Galhau was also elected as an Audit Committee member, and we have KPMG confirmed as a statutory auditor. When speaking about fast-growing volumes and commercial activities of KB, it couldn't go forward without growing our client base. KB Group customers are at the level of almost 2.3 million, up by almost 60,000 on year-over-year. KB users is very close to 1.7 million users, so enjoying the new solution of KB+ platform is 0.5 million larger number compared to first quarter of 2025. Also, as I mentioned at the beginning, thanks to the fact that we have finalized the migration of clients from the old to the new systems. Capital and liquidity enhancement, we were active in -- on the market. We successfully printed EUR 750 million covered bond, more or less in the middle of the peak of the crisis in Iran. So we are glad to say that also when referring to the pricing of this issue, Komercni banka quality -- asset quality was recognized by the investors in a very positive way. We have also issued Tier 2 instruments at the level of EUR 150 million working on optimization of our capital structure. We can move to the next page, please. The macroeconomic environment remained very stable, very predictable. We are lucky to make our business in a growing country. The GDP end of year growth was 2.6%, and we expect similar pace of growth also for 2026. The unemployment remained in very mild levels of 3.2% at the end of February. Industrial production kicking back 1.3% of growth and construction 4.1%, which is very strong growth. So it seems that not only private investments, but also the overall atmosphere created by the new government, which is very much pro investment and pro-business, is playing a role here. So on one hand, households driving the -- mainly driving the growth of GDP, followed by strong activity of corporate seen and supported by active approach of the government towards investments. Inflation, 1.9%. Everyone speaks about inflation, the translation of the energy prices into the inflation, et cetera. For the time being, Czech National Bank has not yet reacted on anything by increasing the rate. Nonetheless, everywhere in the world, obviously, there is strong debate what might be happening on this front. i.e., Czech koruna interest rates remain unchanged at the level of CNB 2 weeks repo rate, 3.5%. And we have 10 years IRS growing by 82 bps to 4.38% and 10 years govies growing to 4.93%. So reflecting on those potential tensions on the side of inflation. Czech koruna weakening on Q-on-Q, so reacting on the existing geopolitical tensions on longer-term horizon year-over-year is stronger by 1.8% or eventually by 7.6% versus euro or versus U.S. dollar, respectively. So we can move to the commercial and business results, if you allow me. Gross loans, 7.6% up. You can see on the right-hand side, upper part of the page, that it was driven by mortgages to retail clients by almost 10% growth, hand-in-hand with financing of businesses, 8.4%. We are back to the market with consumer lending. Here, I can say very proudly that our solution, which is embedded into KB+, and increased activity of both the branches and the contact center are bringing back very positive growth of volumes of consumer lending without jeopardizing in any particular moment the cost of risk. So we are back to the market growing, taking the higher market share than last year and penetrating mainly our clientele, which is, let's say, creating enough space for us to be fast, efficient and without impacting negatively the risk part of this equation. The sales volumes of housing loans, which is mortgages mainly, and to some extent also the housing loans by Modra, are up by 107.3%. So we are very close to record high levels of origination of mortgages. We are taking the appropriate part of the market share from the new production. And let me remind that we do that with 1/2 of people compared to the times before the transformation. So on that front, there is a lot of simplification, a lot of digitization of the process, a lot of redesigning of our mortgage products and being very attractive for the retail clients and for the third parties. So that is loans -- sorry, just one more sentence. When you break down the loans for businesses, you see that also our 100% owned leasing company named SGEF delivered even double-digit growth in the first quarter at 11.5%, which is, let's say, moving them forward in the peloton of their competitors. And speaking about large corporations, we were all over the place for the transformative transactions of our large clients. The smaller businesses were somehow lagging behind, but lagging behind by growing by 7%. I think it's -- for me, at least, it's a joy to make this comment of lagging behind by 7% growth. So let me move to next page. Obviously, when speaking about loans, and you will see that in the speech of Etienne, there is a compression of margins on the market. So we are floating with the market as far as margins are concerned. On that front, let's see whether some sort of normalization will be in place in the next period of time, in the upcoming period of time, which might help us also on the side of creating more NBI and growing more -- much faster the top line. The selected corporate deals, we're all over the place, municipal clients, municipal companies or municipality-owned companies, large clients of CPF, huge real estate transactions and others. So public, private, Komercni played a significant role in these important deals and by servicing our key clients. I don't have too much to say here, so we can move to deposits. The deposits were growing by 8.7%. The composition is pretty clear. It's individual deposits by 11%, business deposits by 8%. So nicely -- I would say, nicely distributed. We do care about healthy and durable and sustainable composition of these foundations of our funding vis-a-vis the ambitious targets on the side of financing of Czech economy. In the composition of products, you can see that 18% growth by saving accounts and term deposits is beating the close to zero or mediocre growth of 1.2% on the side of current accounts. We were chipping in almost 4% growth vis-a-vis the last quarter of 2025. It's very, very important for us that the momentum which we created already in the fourth quarter is further accelerated and is bringing more volumes into the balance sheet of KB. On the flip side of the same coin, we have assets under management growing in a very mild way of 0.8%. You can see -- and I have already mentioned that at the beginning that the insurance origination is bringing 4.5% and pension company 5% of growth, whereas the solutions which we are selling together with Amundi are below the expectation. Nonetheless, having said that, we have in Amundi Solutions, much less money market, much more equity and fixed income. So we believe that also on that front, it will be longer term, durable, and the trend will be step-by-step improved. That's the part related to deposits. That's probably also the time to hand over to Etienne. Thank you.

Thank you, Jan. Good afternoon, everyone. So I will guide you through the profit and loss statement. Let's start with the overview. The net profit of Komercni banka Group for the first quarter of 2026 stands at CZK 4.009 billion, and it is supported by a very strong positive jaws effect, representing minus 2.2 percentage points, we will comment later, but partially offset by a lower contribution of the net releases in cost of risk in this quarter when we compare to last year same period. So the main component of the variation of the net profit, which is in a net decline compared to last year first quarter by minus 4.2%. There are three main components. The first one, the most visible in the center of this graph is the impact of the net cost of risk. Let me remind that in Q1 2026, we were in strong and exceptional net releases at approximately CZK 500 million for the first quarter '25. In the first quarter '26, it's still excellent, with again a net release, but approximately CZK 100 million. So the net difference year-on-year is minus CZK 400 million in contribution to the bottom line of the first quarter. But on the other hand, we are progressing very well on resetting our OpEx base, and we have a net improvement of the OpEx base by approximately CZK 200 million year-on-year composed by CZK 222 million improvement on our own internal OpEx is slightly compensated by a higher need of contribution to the resolution front as Czech National Bank decided to increase the contribution of the whole banking system. So we were called for a higher percentage to this resolution fund. The third component of the evolution of the net profit is, of course, the top line, the net banking income, which is overall flattish year-on-year with a combination of various trends. Net interest income is in progress, CZK 39 million, representing 0.6% and also a strong support from the net profit of financial operations as our IB delivered an excellent quarter at the beginning of 2026. Unfortunately, we have a net decrease in the fees and commission for CZK 130 million. We will comment a little bit later. If we look at the bottom of the page, you can see the different ratios. I will comment only the return on average equity, which stands at 13.2% if we consider the linearization of the IFRIC 21, especially Resolution Fund and Deposit Insurance Fund contribution. So 13.2% for this first quarter and decreased by approximately 50 basis points compared to last year same period due to the fact that the net profit decreased again mostly because of a difference in net cost of risk. Regarding the return on tangible equity at 14.8% in linearized IFRIC 21 view, we are also in slight -- decreased by 50 basis points compared to same quarter last year for the same reason. If we move on to the next page, a short reminder of the evolution of the balance sheet. Strong growth of our balance sheet year-on-year, plus 10%, and it's mostly concentrated in the last quarter with plus 9% if we compare to the opening balance of 2026. The drivers for growth are first, the commercial activity, both on liability side with higher pace of collection of deposit, plus 9% year-on-year of the deposit growth. On the asset side, by the acceleration in the growth of the loan books, plus 6.4% year-on-year. It is completed by the issuance of several financial instruments, as mentioned at the beginning of the presentation. We have issued an additional trench of subordinated debt to continue to diversify and consolidate our regulatory funds. So EUR 150 million of additional subordinated debt. We have also issued new senior nonpreferred instrument which are mandatory to address the MREL ratio, so the minimum required own fund and eligible liabilities, which is regulatory ratio we have to respect. EUR 300 million issued during the course of the first quarter. I take the opportunity to emphasize that we are continuously improving our liquidity profile. By issuing all these instruments and also the government bonds program mentioned at the beginning, we were able to improve our liquidity coverage ratio by 3 percentage point from 159% to 162% at the end of this first quarter and the net stable funding ratio as well, reaching the level of 142%, growing by 12 points during this quarter. We can move to the next page to go in more details of the net banking income, and we start with the net interest income. The net interest income is globally growing year-on-year by CZK 40 million, representing 0.6%. The third driver that I want to mention in this growth is the net interest income coming from loans on which we have the benefit of a strong volume effect considering the solid commercial momentum we have on loan progression. However, we also suffer from the pressure we can see on the market regarding the new spreads. It's interesting to mention that in the area, for example, of mortgage loans, the market is not yet transmitting the increase we observed in the long tenure of the rate curve to the client pricing and that's why there is a pressure on the margins for this type of loans. The second component is the net interest income coming from deposits. This one is in a slight net decrease year-on-year. So despite also a volume effect, which is positive, we are growing our deposit base. We suffer from a new repartition of our mix of deposits, which is more now composed of paid deposit, especially savings accounts and term deposits. So in the ratio paid/nonpaid, we see a higher pace of increase of the paid deposit, which is weighting negatively on the net interest income this quarter. Two other components that are interesting to mention. Of course, we have the net interest income coming from the IB activity, which is in slight decline in Q1 '26 versus Q1 '25. But of course, this kind of activity is always volatile. And on the other hand, you will see that the net profit from financial operation of IB activities are progressing very well. Last comment, we also have some improvements in the net interest income on the other items of the balance sheet, especially all related to the own funds and senior nonpreferred instruments on which we are able to deliver an improved net interest income, thanks to better yields on the replacement and slightly lower cost of these instruments. We can move to the Page 15, please, to comment on the fees and commission evolution. On this aggregate of the net banking income, we see a net decrease year-on-year, minus CZK 130 million, representing 7.3%. However, important to mention that within this mix of fees, we see a nice progression of fees coming from cross-selling, including our strong performance in insurance, pension company and also in mutual funds. Even though we are increasing the outstanding in assets under management, there are still a satisfactory level of sales, and we are able to generate some fees in this respect. Second category of fees progressing, the deposit product fees. As we have finished to migrate our clients to the new subscription plans, we are able to collect a better level of deposit product fees. And it enables to compensate the decrease we observed in transaction fees where we have, as a consequence of the migration to the subscription plan, a lower volume of revenues coming from wire transfer and other daily banking activities. Regarding the loan fees, we have a small decline, especially in the area of consumer loans. Even though we progress in volumes, we see that the market practice is putting a bit of pressure on this, and we collected less fees on this project. Last, we have the specialized financial services and others, which are in [Technical Difficulty] lower activity in fee generating operation in corporate segment, especially on bond issuances and loan syndication. On top of that, we were less active in asset under management sales for the private banking segment in this quarter compared to the same quarter last year. Last comment on the fees and commissions. There is [Technical Difficulty] with what we observed in the second quarter and the first quarter '25, which are very comparable quarters. If we move to the next page for the net profit from financial operation. This is a strong increase year-on-year, 11%, representing CZK 100 million growth and it is mostly driven by the commercial activity with a strong performance of sales, especially in the field of interest rate hedging and forex exchange hedging. And we are also containing a slight decrease in net gain from the FX payment transactions. We observe an increasing number of transaction [Technical Difficulty] on these kinds of transactions. Overall, the quarter of IB in the beginning of 2026, as you can see at the bottom of the page, is at an excellent level, above CZK 1 billion for the quarter. Now we move to the operating expenses. The operating expenses are in net decline by CZK 200 million, representing 4.3%, and it is clearly the benefits from all the measures we took in the course of 2025 by transforming the bank, developing the digital channels while transforming in parallel the network and also the headquarter of the bank. This massive effort delivered last year enables now to have a lower number of FTEs in 2026, minus 10% if we compare to the same quarter last year, which enables us to deliver minus 11% in the personnel staff costs. We are also maintaining, of course, a strong discipline on the general and administrative expenses, which were maintained flat year-on-year despite the impact of inflation on several lines. We absorbed this effect by higher discipline and reduced IT support costs. Regarding the depreciation, also strong performance as we are able to maintain them flattish. We have an increase of depreciation in the field of IT assets, but it is compensated by a decrease in depreciation coming from the real estate assets that we still do have on the balance sheet. One last comment again on the resolution fund and other contribution fund. It is a slight increase, 7% year-on-year. So it's lower than the average of the increase requested to the banking system. The cost-to-income ratio benefits from the strong positive jaws effect. The reported cost-to-income ratio, so including fully the impact of resolution fund and deposit guarantee fund stands at 48.1%, decreased by 2.2 points. And if we linearize the impact, it's at 44.8%, decreased by 2.4 points compared to same period last year. So we maintain an excellent discipline on costs. Moving now to the cost of risk and the asset quality. On the cost of risk, we are in net releases again this quarter. It is the fifth quarter consecutively. CZK 101 million of net releases this quarter to be compared to CZK 496 million net releases in Q1 2025. The composition of the net releases in Q1 2026 are as follow: CZK 127 million net releases in the nonretail segment, mostly supported by the fact that we had again some successful resolution of fewer corporate files; and in the segment of retail, very limited net creation of cost of risk for an amount of CZK 26 million. If we look at it in basis points on the bottom right of the page, you can see that overall, it's a net release of 4 basis points, supported by 11 basis points net release in non-retail and a net creation of only 2 basis points in retail. Next slide, please, for the asset quality. So net cost of risk is a confirmation of our excellent asset quality, which continues to improve. The nonperforming loan ratio is again declining this quarter. It stands at the end of March at 1.5%, minus 10 basis points compared to the opening balance and minus 50 basis points compared to March 2025. Important also to mention that we remain with a comfortable level of coverage of our portfolio in terms of provision. We have 48.4% coverage rate. You can see it on the bottom right of the page, progressing compared to last year and progressing compared to the position as of end of December. So despite increase in cost of risk, we continue to improve our coverage. We continue with the capital adequacy ratio -- next slide. You can see on the bottom right of the page, the total capital adequacy ratio at the end of March stands at 18.16%. It is composed by 16.8% of Core Equity Tier 1 and 1.4% of Tier 2 instrument as we increased our subordinated debt. The progress of this total capital adequacy ratio since the beginning of the year represents 24 basis points, and it is composed as follow. The first item is of course the growth of our loan book driving to a growth of risk weighted assets on the balance sheet, representing CZK 14 billion growth of the credit risk-weighted assets, representing an impact of minus 32 basis points in the ratio. But we have the incorporation of the first quarter profit for 69 basis points, minus the provision for the dividend guidance that we have announced 2 months ago for 80%. So the net impact is plus 14 basis points net in the ratio. And it is completed by the new subordinated debt, EUR 150 million, representing additional Tier 2 in the ratio for 63 basis points. So we maintain a solid level of capitalization in order to support our commercial growth in the coming quarters. We can now conclude with the update of our outlook for the year 2026. You can see the first column is a reminder of the growth in 2025 full year; second column, a reminder of the growth of this quarter; and in the middle, our outlook for the full year 2026. First, regarding the commercial activity, both on loans and deposits. We confirm our outlook for high single-digit growth as we are comforted in our assumption by a solid momentum in this first quarter and a solid pipeline for the next quarter. Regarding revenues, we gave a new outlook at mid-single-digit growth for the full year. For the first quarter, we are at flattish level, let's say, zero plus growth of the net banking income. However, we expect to benefit from seasonality and an acceleration in the field of fees and commissions and to continue with volume effects to grow higher our top line. Regarding operating expenses, we posted a net decrease in the first quarter. But on the full year basis, this advance will slightly decrease as we will compare to quarters where we already started the transformation in 2025. So we maintain a guidance for 2026 at low single-digit growth for operating expenses. The combination of the two will enable to again deliver a positive effect in the cost-to-income, and we target to have cost-to-income ratio in the range 44% to 45%. Regarding the net cost of risk, even though we have benefitted from a very positive net cost of risk in the first quarter of 2026, we maintain a position of prudence considering the macroeconomic environment and the geopolitical context. Therefore, we maintain an outlook with a net creation of cost of risk on a full year basis. And so far, we maintain the range in 10 to 20 basis points. It will enable to deliver a return on equity approximately at 13% bottom line. And of course, we will maintain the total capital adequacy ratio in corridor comprised between 17.5% and 18.5% to maintain the solidity of the bank. I finished here. So I propose to give back the floor to the Jan Juchelka to open your questions.

Thank you, Jan and Etienne. So now we will be happy to answer your questions. Let me remind you that this meeting is being recorded. [Operator Instructions] So our first question comes from the line of Mate Nemes from UBS.

I have three of them. The first one would be on corporate lending. I think in Q4, you had really strong results on that front. It seems like there's a bit of a pause in Q1. I think you called out some refinancing and repayments in the first quarter. Could you give us a sense for the remainder of the year, how is the pipeline looking in the corporate business specifically? The second question would be on deposits and deposit trends. It looks like terms of savings accounts grew by more than 20% quarter-on-quarter. Could you talk about what drove this? It seems like current accounts are down 9% sequentially. So clearly, there's some shift towards term and savings. But anything other than that, that you would call out to what extent do you expect these trends to continue and for term and savings deposits to grow share from here and then perhaps have an impact on net interest margin? The last question would be on the asset side on competition in lending. Could you perhaps give us a sense on front book product margins and where exactly you are seeing pressure? Is it consumer or also corporate lending? Any color on that would be helpful.

So if I may take the question concerning the corporate, starting with the last one maybe. Yes, we do see pressure on the margins also on the corporate side, basically across the board. Czech Republic remains very competitive in terms of pricing for the corporate segments. That always has been the case, and there is no change in it. If we compare the performance on the first quarter versus the fourth quarter, actually, you are right that we've seen some transactions sliding forward into second quarter, which we hoped would be closed already in the first quarter. So that is one of the parameters. But the pipeline is still strong. And as CEO mentioned in his opening speech, we did see a strong demand from the clients. The pipeline is full, and we are confident on onboarding more transactions going forward.

Etienne, shall I go on deposits for retail and then you will probably wrap it up at the end?

Yes.

So what you see happening on retail deposits, basically, there are two things that you commented. First is savings. Why? I would say -- I mean, saving accounts. I would say we are more generous in conditions. And I don't speak only about pricing. It's including other parameters such as tiers definition, savings and so on and so forth, because we see that saving accounts are very popular in Czech banking market among the clients and we just needed to improve our competitiveness to certain extent. What is positive that most of the money that you see as an increment on saving accounts are coming from outside of the bank. So I can't say money being moved from current accounts to saving accounts. Of course, there is a certain percentage of cannibalization, but it's more than acceptable for the moment. So this is the first thing to your second question, and then I'll probably start answering the third one on margins. So consumer loans, we still consider margins to be very attractive. Now on the production, we observe something around 200 bps, even though it used to be a bit more. And what those lower margins bring is compensated or close to be compensated by higher volumes. So I'm not saying that the mechanics works perfectly well like that it is partially able to compensate. For mortgages, margins are quite low. I have to say that this is true for the whole market, but it is usually symptom of cost of funds moving fast up or being very volatile. Then while banks try to keep interest rates for clients at some reasonably predictable level or committed level for a certain time between the application and the disbursement, it creates those margins that are pretty low. We believe that once the cost of funds stabilizes, it should not last too long, we will come back to more normal environment. So this is my take on retail.

Yes, indeed, if I can add the CFO point of view on the margins regarding mortgages, it's exactly what Miroslav explained. We have seen an increase of the interest rate curve for the longer tenures, not for the short-term rates, but longer term, we already observed an increase. While this increase is not translated yet by the market into the client pricing for mortgages, it will probably happen in the coming months. But in the first quarter, it was not the case. That's why it created a pressure on the margins on mortgages. And it's also true for consumer loans, which Miroslav explained, the competitive pressure that we observed on cost of funding impact. Regard the collection of deposit, yes, again, our strategy is to regain our market shares in this respect. In the past year, we have slightly lost market shares in retail deposits. We want to be back and be more attractive and convincing to our existing clients and also new clients. That's why we make an effort in our pricing and attractiveness while remaining fully consistent with the market. Of course, we are not at all an outlier, but we want to raise the awareness that we have on that so far for liquidity.

[Operator Instructions] The next question comes from Jovan Sikimic from ODDO.

So just maybe a follow-up on the last question. So basically, if I understand it correctly, so you're doing fine on volumes, right? But actually, the guidance, which -- the revenue guidance, which has been lowered a bit from mid to high to just to mid, basically is a factor of competitive pressure, right, going forward. So basically, if the pressure continues like it was in Q1, so also this kind of guidance getting tight. Is it a correct assumption or...?

Yes, it is correct.

[Operator Instructions] It seems that we are very transparent. Jovan. You have another question?

Yes. You are very transparent. On fees, right, what's the strategy now to bring it back on growth path, right? So you have raised some concerns about some products which were not going well. So basically transactions, right, if I'm not mistaken, and these other fees, right? So what should happen in the next quarters to bring the fees really on growing trajectory again?

Yes. So before Miroslav will take the retail part and potentially Katarina the corporate part, I probably owe you also a couple of words related to the previous question. So what I mentioned at the beginning was not simply a marketing pitch. It's really like the quarter framed by our very systematic, very diligent approach to go deeper into the wallet of our retail, but not only retail clients when using the new platform of KB+ out of which we have much better data on the behaviors of our clients. We are using new engine for fully digital proposition on the side of consumer lending and we are also making the record high production on the side of mortgages. So this is everything like volumes are there. We are floating with the margins and the margins are stressed by, on one side, very huge appetite for assets on the entire banking market and increasing price of money at the 3 years, 5 years horizon, yes. So this is the first one. Second one, which are fees. We have put in direct competition some of our saving solutions exactly with the most popular part of -- historically most popular part of the investment funds, which is money market to some extent and some, let's say, shorter-term nature of investments. Nonetheless, as Miroslav already mentioned, the cannibalization also on that front is not like dramatic. What is happening there is that we are selling less of the products or less of the units of investments on the other hand with a bit better structure of durable, sustainable, longer-term type of investments. So the clients should be repeating their investments on much, much longer horizon, which is not immediately visible in the generation of fees. On the side of corporate, we have not yet seen in full steam the activities of municipalities where we believe that they will get a bit more financing or demand a bit more financing on facing the next cycle of getting the European money for the municipal infrastructure projects. So it might be bringing a bit more activity from the side of corporate. Obviously, we have a promising pipeline of deals on the side of corporate and investment banking. So the large clientele, the large corporate clients, where we do believe we will be able to collect more fees down the road, but it has not yet been materialized to the extent which will be satisfiable also for us on that front. I will ask Miroslav, potentially Katarina to complement to me.

Always pleasure, but I think I will need a minute or two to give you the full story. First, I will start by saying what was happening in retail in 2025. We needed to move remaining retail clients to the new bank, and we needed to execute the reorganization and streamlining of the distribution network, letting hundreds of people go, I think almost 1/2 the managers go. All those things were very healthy for the bank. But starting January this year, we are in, I would say, full new shape and ready to boost our commercial activities. And looking at business figures, you see it is happening. So this is the first important statement. It was all the time in the plan, and now we can see the uplift in commercial performance. On the other hand, for those fee generated kind of business, such as assets under management and insurance, it takes some time before these commercial activities are translated into P&L, into fees. So we believe that this will be one of the drivers of us growing the fees again. So this is probably the first point. The second one, let me explain that on Czech retail market, there's no way to charge on transactions anymore. This is one. Nobody does it. And if you would start, you would just be out of the market, first thing. And second, you just need to have a premium account in your offer. Not fully fledged, not the perfect solution, but something for fee needs to be there. So we somehow made this part of our pricing policy. When I look at the migration at moving clients from the old pricing schemes to the new pricing, we are not losing money, which is positive, even though we accepted those new trends. We keep them very mildly growing. But now we need to start with cross-selling and upselling, so that we fully utilize the potential of making money on tariffs and those sort of packages, if you wish. So these are probably the 3 main points or angles on which I see our fees getting better in the not-too-distant future.

Maybe just one sentence because Jan pretty much covered the corporate himself. What I mentioned in the first question that we saw some transactions sliding from quarter 1 to quarter 2. Those would be the transactions which shall bring fees because we are looking at the transactions in the large corporate segment clients.

[Operator Instructions] The next question comes from the line of Shane Mathews from WhiteOak Capital.

Just a general question on the system as a whole. If you are seeing, let's say, competition rising and margin pressures coming through, there should be some mispricing of risk happening at the system level, right? So is that a broader concern you are having at this point in time? And just your general view on how this can, let's say, continue, right? Because after having this sort of coming through, right, this pricing of risk in the market if everyone is getting competitive on lending side and your funding cost pressures are still persistent.

I would rather say no. Because as you saw, our asset quality remains excellent and even continuously progressing. We have not changed anything in our granting process in terms of frame. The risk appetite remains the same. We are simply using it for commercial purposes. So we are not taking risk that we believe should not that -- generally on our balance sheet. We are still very strict about this. This is for us. And within the market, I don't have indication, but the market overall is at risk of deterioration...

Again, probably speaking about the compression of margins on the market, one should remind that what was happening on the side of the supervisor. Czech National Bank has somehow tightened the rule for so-called investment mortgages, which is a mortgage which is not serving your permanent address of housing, with the initial effective date 1st of April, if I'm not mistaken. So on that front, people were in hurry to take loans exactly on the time, when in parallel with this measure, the price of money was increasing. The banks were keen to get more assets on the balance sheet. As a result of that, they sacrificed part of the margin. That should not be a sustainable and durable event. We believe that it was peaking or, let's say, squeezing the market for a certain period of time and the rebound is expected at least in the field of mortgages. Correct me, Etienne, if you think differently, but this is how we were analyzing the market. And we want it simply to be part of this game and not to sacrifice too much of volumes because also mortgages are very sticky part of our production proposition or product proposition and we can build the appropriate cross-sell around that.

Yes, I fully agree. I just confirm it's part of our analysis. That's why we allow ourselves to grow into mortgages even at a slightly lower margin because we are convinced we can generate cross-sell in the long-term with domiciliation of the wages, enabling to support the average level of deposits. And also completing the equipment of our clients with our solutions could be asset management, could be insurance product, et cetera. So we are sure that in the long-term, we add several basis points additional to the profitability of the client, thanks to mortgages.

Thank you very much. At the moment, we don't seem to have any further questions. So I'm handing back to Jan for a concluding remark.

All right. So thank you very much for being with us. I know that today is very rich on various presentations of results, not only of financial institutions. Hence, we super appreciate your presence at our call. We obviously, remain at your disposal for potential further questions in the meantime. And we are looking forward to seeing you at latest in a quarter time -- next quarter of 2026. Thank you very much, and enjoy the rest of the day. Thanks.

Thank you. This has concluded the presentation. You can now disconnect.

Thank you. Bye-bye.