MONETA Money Bank, a.s. (MONET) Earnings Call Transcript & Summary

Dear ladies and gentlemen, welcome to the conference call of MONETA Money Bank regarding 1H 2025 financial results. Please note that this conference call will be recorded. This event will have a live presentation followed by a Q&A session. [Operator Instructions]. Today's speakers are Mr. Tomas Spurny; Mr. Carl Normann Vokt; Mr. Jan Fricek; and Mr. Andrew Gerber. May I now hand over to Mr. Spurny, who will lead you through the conference call. Sir, please go ahead.

Thank you. Good morning, ladies and gentlemen. I have the pleasure and the honor to introduce today's conference call. First and foremost, I would like to actually express thanks to the management of the bank, to the management team and to everybody in the bank as we report the best ever quarter today. If we turn our attention to Page 2, the bank generated net profit of CZK 3.1 billion. The net profit comes in on the strength of our operating income. Operating income grew at 9%, and we reached CZK 6.8 billion. Henceforth, we are exactly in line with the full year guidance on the operating income. If you then later on, we will look at the details of solid growth posted in the net interest income category and continued growth of the fee income. Apart from growing revenue streams, we accomplished to contain the operating cost base at the level of CZK 2.9 billion. We call it stable here. It actually expanded by 1.2%, which we consider a good result given everything else. The bank continues to grow. The growth of the bank is driven through deposit taking. If you look at the funding base, the funding base expanded at the level of more than 4% and reached CZK 462 billion. Here, I would like to note that this is despite deposit repricing. And I also would like to note that 70% of our asset management franchise is funded through transmission of the deposits into the third-party wealth management, which grows 38%. We are continuing in accelerating the lending growth. If you look at our loan book position at CZK 284 billion, growing at 4.4%. Majority of the growth is focused on small business and SME as under the CRR, we are actually reducing, as you will see on the next page, the density of risk-weighted assets, and we are obtaining a very good capital return on the commercial franchise of the bank. And the total balance sheet stands currently at CZK 503 billion. If we turn the page to #3, some couple of comments on capital and liquidity. Currently, the capital adequacy ratio stands at 18.5%. Henceforth, we have excess capital at the level of 3.3 percentage points and the overall excess capital is at CZK 5.5 billion. Therefore, we are sufficiently equipped with capital to continue the lending expansion. The density of risk-weighted assets actually decreased by 2.1 percentage points and stands at 33.3%. We are in a very comfortable position on the MREL ratio, even though the MREL requirement has increased by about 1%. And the liquidity of the bank continues to be excellent, continues to be very strong. You will see that we are carrying HQLA assets in the amount of nearly CZK 180 billion. I would like to, on the following 2 pages, highlight what we aim to achieve this year and what is the main focus of the management. If you look at the lending growth, by the end of the year, we would like to post overall loan book growth in the range of 5.5% to 6%. So for second half of the year, we are aiming to expand the lending activity. In the last 6 months, we were able to generate growth on the commercial side of 8.7% and our retail 3.3%. In this respect, we are in a relatively comfortable position as we command sizable pipeline in mortgages. As of this morning, the pipeline in mortgages stood at CZK 8.5 billion, and we continue to experience strong demand from both SME and small business franchises that we operate. So I think we are on a good path to achieve this target. On deposit growth, we expect to end the year with 2% to 2.5% deposit growth, and this is due to the fact that we initiate repricing of the deposits, most notably we reduced the rate on savings accounts by 10 basis points, and this is effective August 1. At the end of June, the average cost of funding, core cost of funding for June stood at 196 basis points. And we would like by the end of the year, December average to come in at 170 to 175 basis points. This is depending upon the Central Bank take additional monetary easing step of 25 basis points probably in the fourth quarter. However, the probability of that remains uncertain as we had seen elevated inflation, and I'll come back to it, in the month of May. Net interest margin, as you are aware, we had a negative development due to first remuneration on mandatory reserves and the second negative development as of beginning of this year was the fact that the mandatory reserves were doubled. Nonetheless, we would like to, by the end of the year, land with the net interest income margin within the range of 2.05% to 2.15%. The range is dependent upon the monetary easing step to materialize in the second half of the year. We continued during the first half of the year to successfully expand the third-party distribution franchise. By the end of the year, we would like to accomplish year-end volume of CZK 75 billion. We have a good chance of getting there as we have passed CZK 68.5 billion this week. So the hiccups that came on the back of Liberation Day in the U.S., uncertainty about the tariff policy of the United States and subsequent volatility in the markets, we are coming back to better distribution numbers, and we've also expanded the distribution capability in asset management. Henceforth, we have a good chance to fulfill this target. We are also taking steps to improve distribution of pension funds, albeit this make a relatively small proportion of our revenues. And obviously, we are focusing on other categories of insurance to return the current revenues back to growth. On cost management, by the end of the year, we would like to end up within the range of 41% to 42% of cost-income ratio, and we see on the cost side upside of CZK 75 million to CZK 125 million. So assuming if we come in the middle of this range, we should cap the cost base at somewhere around CZK 5.8 billion, which would be equivalent of last year, and we are successfully absorbing the cost increases related to inflation clauses, which are built into a number of contracts that the bank where the bank procures services or goods. On risk management, we had a good 6-month run. We came in at 19 basis points. For the remainder of the year, we expect or we would like to land within the range of 17.5 to 22.5 basis points. This is obviously expecting that there will not be any larger defaults. Nonetheless, we have no evidence of any larger exposures to be on the way to trouble. And aside from that, we have the best position with respect to balance sheet health historically, I would say, since the IPO and perhaps since the establishment of this bank. Currently, we enjoy very low NPL ratio of 1.2%. This is thanks to successful disposal of NPLs during the first half of the year. And during the second half of the year, subject to favorable market conditions and prices offered for these assets, we would like to dispose of additional CZK 300 million to CZK 600 million of NPLs that the bank generated in the past. So if I look at it in summary, we see CZK 300 million to CZK 400 million upside against the minimum target guidance of CZK 6 billion. Obviously, this is subject to several uncertainties, but we think that the probability of us overperforming the minimum target fairly materially in this range of 5% plus is within the reach of the management of the bank. So we hope to come good on this thesis, and we decided to share it with you. With respect to distribution to shareholders, we continue to accrue the current earnings at 90% level. And if we are able to reach the upside potential that will have an impact, obviously, on the earnings per share, and therefore, on the distribution of dividend in April, May of next year. So this is our position -- summary of our position right now. Let me make a brief comments on the macroeconomic environment, if we turn to that. If you look at the GDP growth, the GDP growth is projected at 2%. The first quarter number came in at 2.4%. So the GDP performed better. The growth was better than expected. We will see the second quarter relatively shortly. And I actually do believe that the consumer demand, which drove the number in the first quarter or during the first quarter will continue to hold this projected amongst other into the mortgage demand, which remains strong, somewhat expecting overperforming our expectations. If you look at indebtedness of Czech Republic and deficit of public finance, if I start with the deficit, CZK 152 billion to date. What is underneath that? If you go into detail, it's actually receipts to treasury have increased by 5.7% due to better economic activity, profitability of companies and also to better tax collection. So I would say on the deficit, if I had to make a statement, I would say mildly optimistic that the current government actually, albeit in relatively small steps, is getting the deficit under control. We are not at the 2% of domestic criteria, but the situation is certainly better than in the pre-COVID and COVID years. Indebtedness of Czech Republic remains remarkably low. We have elections in November, and I expect that in 2027, we will see stronger investment into public assets and infrastructure as we are likely to experience push for the infrastructure. And obviously, we will see more government spending on defense. If we look at unemployment, it remains remarkably low compared to our partners within the EU. On the unemployment, I would say the only negative factor is that if you look at the numbers of job seekers and the numbers of open positions, there is a negative deficit for the first time in some years. However, the unemployment remains low. If we go to inflation, we had seen inflation numbers relatively disappointing at 2.9% year-on-year. It's the latest reported number. The Central Bank made an interesting statement, which effectively says that it does not want to converge to the 2% target, but it is saying that what happened in the past happened in the past, and 2% is valid for the future period. So I find this interesting, nonetheless, that is the reality. And end of period changed the latest numbers, we have seen 2.6%. So overall, the Central Bank is more cautious on additional monetary steps and the governor of the Central Bank, Mr. Michl stated that he will fight inflation rigorously. If you look at the key rate, the key rate now stands at 3.5%, and on the yield curve, we see normalization, effectively the lower -- the shorter parts of the curve coming down, and we see some movement up on the medium and long term of the curve. So we expect that the shape of the curve will normalize and that we will see stability in the interest rate for some foreseeable future. This should work for us positively in context of the upcoming year 2026. And why does it work positively for us? Well, if the interest rates stay at the current level, our assumptions on the mortgage repricing will be actually better -- or the reality will be better than what we have assumed in the business plan. And in 2026, we will reprice nearly CZK 38 billion of our mortgage book, henceforth this should contribute to positive future -- near future of the bank. Let me briefly comment on the operating platform. We have 3 pillars of the operating platform. If I summarize it, we continue to grow the client base of the bank. We reached -- exceeded 1.6 million customers. We are continuing to grow, albeit at a slower pace. If you look at the branch network, we are continuing on two paths here. We are closing branches that no longer make sense for us from a profitability point of view. I believe we have closed 12 or 13 branches in the past 12 months, and we have 4 additional to be closed by the end of this year. So this is one path. The second path, we are actually interesting in those locations that provide us with strong profitability, good service numbers on the customers and on customer reach and all of that. We continue to enjoy a very strong market position in ATMs through our own and shared network. So we operate nearly 2,000 ATMs and have in ATMs about -- reached about 35% share of the machines in the Czech Republic. We have reduced the employment base in the bank by 2%. So currently or at the end of second quarter, we employed on full-time equivalent basis, 2,461 colleagues. If you look at evolution of the front end of the bank, the reduction has been stronger. It's 4% reduction, and this is due to the fact that in about 1/3 -- more than 1/3 of the network, we have discontinued cashier services, and we provide those via ATM machines. So we take cash deposits through ATMs, and we will continue on this path in order to reduce the cost load of the branch network. The remainder of the employment base is stable and this actually masks a couple of important developments. With the expansion and deeper traction of digital channels, we have to add resources within digital and IT professions overall. This is one impact. Second impact, with respect to ESG, we are faced with more requirements on disclosure and on data gathering and some other aspects of ESG. So we need to add resources there. We also invest in some other parts of the bank, which create relevant value. But the trend of having higher demand for data, IT engineers, AI-related professions is very visible, notable in the bank. If I turn into the digital platform, we have 1.6 million users. The user number grows quite substantially, by nearly 9%. This is due to the fact that the mobile app now services 1.25 million customers, and it's visible in some of the metrics. If you look at daily touch points expanding at 6%, 720,000 per day. So this is the most important channel of interaction with our customers. If you look at the success of the application from transaction number point of view, the transactions expanded 8% and reached nearly CZK 39 million. The platform is also very important with respect to servicing. We see a stable picture and the servicing demand usually comes 6 to 9 months after the user downloads the application and learns the capabilities. We have nearly 2% expansion on loan applications. And if you examine sales transactions through digital, there is a very healthy increase of nearly 13%. If we then go to the branch network, the branch network, what is the very important trend, which we are seeking to reverse. However, it's probably unreversible is that lower portion of our clientele uses the branches. The visits declined by nearly 18%. We also have a lower distribution of third-party products. This is partly due to lower demand in the second quarter for asset management products, but it's also a function of the fact that many of the third-party products, namely simple insurance is now procured by our customers through the digital platform. And we have decline in the loan applications as the key delivery. 70% of consumer lending is now intermediated through the digital platform, 28% of our mortgages are intermediated through the digital platform and a significant portion of the small business lending is likewise procured through the digital platform. And this, by the way, helps us to maintain the cost picture that the bank enjoyed for the last 9 years. If we look at the third element of the model, which is contact center, we have added resources in the contact center due to the fact that we would like to improve the NPS so that it's comparable to the bank overall. And the bank overall, we have 89 in the call center, we have 71, as we have fairly -- we have been fairly focused on the cost reduction there, implementation of AI, which had proven to be troublesome. So on temporary basis, we add resources before we address some of the inefficiencies of the AI-driven instruments that we are using in this round. Nonetheless, we also see decline of calls into the call center, and this is attributable to the success of self-service utilities provided through the digital channels. Here, I would like to point out so that it doesn't get lost in the detail, that we are extremely successful in distributing insurance products, both through the inbound and outbound services that the bank provides and this is growing at nearly 25%. So we consider it very successful part of the telephone interaction with our customer base. And very briefly, on the ATM network, there's not much to report. It remains stable on the key metrics apart from 2. What we see is continued decline in cash withdrawals as our customers use cashless payments more intensively, and this is a good development. And second good development is that we see dramatic expansion of usage of deposit services, which we provide through the shared network, and we operate nearly 800 machines, which we share with our partners. So again, this innovative contract that we entered into in 2023 now enables us to significantly reduce the cost load of the branch network. So with that, I will depart and I will hand over to Jan Fricek. Before I do that, again, I would like to stress that I'm very grateful to the staff of the bank as we post a good result. I think the good result is substantiated by our ability. If we reach the CZK 6.3 billion minimum benchmark of the upside, we will have increased the earnings of the bank by CZK 500 million against last year. And I consider that a worthwhile goal to accomplish, and I am very satisfied with that. And now we go to Jan, walk you through the details the P&L.

Thank you, Tomas. Good morning, ladies and gentlemen. I'm now on Page 16, and it's my pleasure to continue with the profit and loss statement. Let me repeat the key financials. In the first half of the year, MONETA delivered net profit of CZK 3.1 billion, representing year-on-year growth of 14.4% and also earnings per share of CZK 6.1 and a return on tangible equity of 23.4%, improvement year-on-year by 3.4 percentage points. Operating income of CZK 6.8 billion is up by 9.1% year-on-year, and this was delivered on the basis of net interest income growth of 13.7%, stemming from the cost of funds reduction and loan portfolio expansion, accompanied by net fee and commission income growth of 11.7%, which is predominantly driven by continued solid performance in distribution and wealth management products and fee expense reduction. On the other hand, other income line shows a decline year-on-year, which is a result of lower income from FX derivatives and also bond sale gain which we realized in 2024 and was not repeated in 2025. On the cost base, we managed the cost base stable within the CZK 2.9 billion budget. And together with operating income growth of 9.1%, this resulted in the cost-to-income ratio improvement to 40.9%. And on the cost of risk line, we incurred a benign result of CZK 268 million or 19 basis points of the average loan portfolio. Moving forward on Page 17, we provide more detail to the net interest income development. As you can see, we had excellent second quarter, delivering year-on-year growth of 14.7% and also quarter-to-quarter growth of 3.6%. Drivers of the development are provided on the right side. If I start from the top, lending interest income is up by CZK 87 million or 2.5% in relative terms, and this is driven by loan portfolio expansion. On the other hand, treasury income decreased by CZK 900 million, which is fully attributable to gradual reduction of the 2-week repo rate, which enabled us to continue with the repricing of customer deposits. And as a result, we reduced cost of funds by CZK 1.1 billion year-on-year, which more than offset lower treasury income. Moving forward on Page 18, we provide a similar view on the development of net fee and commission income. In the second quarter, we delivered a year-on-year growth of 8.8%. And this has 2 main drivers. First of all, fee income improved year-on-year by CZK 24 million in both reported categories, namely penalty income up by 10% and transaction and servicing income -- fee income improved by 4.4%. 2/3 of the improvement in the fee income category is generated in the mortgage franchise. Secondly, as mentioned last time, improved commercial terms with Visa resulted in the fee expense reduction provided in the bottom right column. On Page 19, let me briefly comment in more detail our performance in distribution wealth management products. We had excellent first half of the year, delivering year-on-year growth of the income by 22.2% on the basis of outstanding amount of distributed wealth management product expansion by 38.4%. On the right, you can see that our customers in the first half of the year invested CZK 10.7 billion into these products, which is a result behind the last year's performance, predominantly due to lower invested volume in April following the liberation date announcement. Since then, we observed the recovery. We observed increasing volumes with June volume and nearly doubling the volume of April. We believe that with the current production, we are well positioned to get the outstanding amount of distributed wealth management funds to CZK 75 billion level, as was mentioned by Tomas at the beginning. On Page 20, let me briefly comment on the performance in distribution insurance products, where we delivered only marginal growth of 1.6% year-on-year on a recurrent basis. This is a combination of improved performance in distribution and payment protection insurance and also life insurance. On the other hand, we report a slowdown in the distribution of pension insurance. And on Page 21, let me complete this section with the cost-based development. As mentioned before, cost base was managed stable or the growth is only marginal within the CZK 2.9 billion budget. And 3 out of 4 reported categories show a cost reduction year-on-year, namely regulatory charges are down by 9.7%, driven by lower contribution to the resolution fund. Secondly, depreciation and amortization charge decreased by 3.1% year-on-year, stemming from extension remaining useful life of several key softwares what we did in the first quarter. The only category showing an increase year-on-year is the admin costs. The growth is 11% and predominantly is concentrated in IT and facilities areas. And last but not least, we achieved personnel cost reduction of 1% year-on-year, predominantly due to lower number of FTEs by 2% year-on-year. So this is all to the profit and loss statement section, and I will now hand over to my colleague, Andrew Gerber for the balance sheet. Thank you.

Thank you, Jan. Good morning, ladies and gentlemen. So moving to Page 23, we take a high-level look at the loan portfolio and funding base of the bank. Overall, the loan portfolio grew 4.4% year-over-year and 2.8% in the first half of this year, as we refocused on lending activity. The loan portfolio yield decreased 8 basis points, reaching 4.83%. This is a result of gradual repricing of the floating part of the commercial loan portfolio as rates moved down. On the funding base, we saw growth of 4.2% year-over-year and 2.1% in the first half of the year, reaching EUR 461.9 billion. And here, we saw a 120 basis points improvement in the cost of funding, reaching 2.22% as a result of our ongoing repricing of the loan portfolios -- deposit portfolios in response to lower interest rates. Moving to Page 24, we have an overview of the balance sheet. On the asset side, you see the growth is driven by net customer loans, up 4.5%, and also by investment securities, up 21.3%. Looking at the liability side, we see deposit growth of 2.9% year-over-year and also growth in the issued bonds as a result of the MREL bond issued in the third quarter of last year. On Page 25, we look at the new lending volume of the bank in the first half of the year. Overall, new lending volumes increased 24.2% year-over-year, reaching CZK 35.9 billion as we intensified our focus on lending activities across all products. In retail, the new lending volume was up 21.9% year-over-year, reaching CZK 21.4 billion, with mortgages up 33.3% and consumer loans up 14.7%. Similarly, in commercial, the overall lending volumes were up 27.7% year-over-year, with small business growing strongly, up 39.3%, and SME up 23.8%, also very strong performance. On Page 26, we take a segmental view of the balance sheet development. As I said, overall, the loan portfolio grew 4.4% year-over-year, with retail growing 2.3%, small business up 21.8% and SME up 6.1%. And we have some more detail on the specific development of each of the segments later in the presentation. Looking in detail at the -- on Page 27 at the detail of the retail loan portfolio. As I said before, the growth was 2.3% overall with mortgages and consumer loans contributing almost equally. Mortgage portfolio growing 3.1% and consumer loans 3.4%. The category other, which is declining 9.7% includes the revolving products and the building savings bridging loans, where the latter is the primary driver of the decline as this is effectively a runoff portfolio. Moving to Page 28. We look at a similar view on the commercial portfolio, where we see small business loan portfolio grew 21.8% year-over-year and the investment loan portfolio grew 14.1%. And in both cases, this is driven by strong performance in secured lending, where we have a very strong and well-differentiated proposition. Moving to Page 29, we look at the loan portfolio yield. The loan portfolio yield overall was broadly stable, decreasing 10 basis points year-over-year, reaching 4.8%. In retail, we had a small increase, up 10 basis points, reaching 4.3%, and in commercial, a decline of 40 basis points, which is driven by the repricing of the floating part of the portfolio, as I mentioned earlier. Moving to the funding base on Page 30. As I said earlier, the overall funding base grew 4.2%, with retail up 2.8%, commercial up 3% and wholesale growing strongly, but driven by the bond issuance last year. On Page 31, we look at the detail of the customer deposit base, the cost of funds and the impact that has on NIM development. And I think what's strong here is that we were able to deliver 2.9% growth in the deposit base, while simultaneously reducing the cost of funding by 109 basis points over the period. And that naturally flowed through to NIM where we saw a 9-basis-point improvement in the NIM despite the negative impact of the doubling of the mandatory reserves, which came into effect at the beginning of the year. So I think overall, this has been a strong performance on deposits. On Page 32, we look at the detail of the retail deposit portfolio. And here, you see the growth is contributed more or less equally by current accounts up 3.4% year-over-year and savings, term and other deposits up 2.7%. Similarly, on Page 33, we look at the commercial portfolio, where we see current account deposits grew 12% year-over-year, with savings, term and other deposits declining 4.2%. However, here, I would say that this is simply an indication of the natural volatility that we have in the commercial base, where we have larger deposits, which come and go at different times of the year. And this is also the explanation for the decline in the first half of this year. We typically see higher inflows in the fourth quarter of the year and then normalization in the first half of the year. I would say that overall, the trend is broadly positive on commercial deposits in a similar way to retail. And finally, on Page 34, we look at the cost of funds development. Overall, the cost of funds decreased 110 basis points, reaching 219 basis points. In customer deposits, we saw improvement of 118 basis points to 206, and in wholesale funding, a small increase of 27 basis points. And looking across retail and commercial, we see 123-basis-point improvement in retail and 97 in commercial, as we've worked on the repricing of both portfolios. So overall, I think we've had a strong first half of the year, strong performance on new lending, translating into solid growth in the [ key ] portfolios and growth continued in the deposit base despite the repricing effort. So with that, I will hand over to Normann, who will take you through the key risk metrics and asset quality section. All right.

Thank you, Andrew, and good morning. And we continue with the risk section on Page 36, where we have an overview of key risk metrics for the first half of this year and last year. Let me start on the top left of the page. So cost of risk came in at 19 basis points, which is 1-basis-point higher than the same period in '24. It's well within the provided guidance of 15 to 35 basis points for the full year. In terms of loan loss provision coverages, here, we ended up with a value of 1.37, which is a 30 basis points drop compared to the year before. The main drivers of the drop are the NPL disposals and the partial releases of ECL management overlays. In terms of total nonperforming loan coverage, here, we saw a flat development. If you look at the second -- the first half number, 113.7% compared to 113.6% at the year-end. And as mentioned before, the nonperforming loan ratio dropped by 20 basis points to 1.2%, which is a historically low value recorded actually in history of the bank. Let me continue on Page 37 with a more detailed overview on cost of risk for the last 5 quarters. So we just look at Q2 of '25. Here, we ended up with a cost of risk of CZK 117 million. Looking at the two segments, retail CZK 61 million or 13 basis points, Commercial CZK 56 million or 23 basis points. For the first half overall, we benefited also from gains from NPL sales in the amount of CZK 54 million, and we also conducted two releases on the ECL management overlay in the amount of CZK 56 million in Q1 and CZK 99 million in the second quarter. On the next page, Page 38. Here, we have 5 data points, each regarding the development of the loan portfolio, NPL balances, loan loss allowances and coverages. The top left of the chart, you can see the loan portfolio grew by more than CZK 11.5 billion or 4.2% year-over-year, whilst at the same time, the loan loss provisions dropped by around CZK 680 million. Out of the total balance of provisions of CZK 3.9 billion, we still have CZK 239 million of management overlays. Coverages I commented before, and the NPL balances dropped by around CZK 500 million year-over-year with an ending ratio of 1.2% at the end of Q2. Moving to Page 39. Here, we show the development of NPL in and outflows since June '24. Just looking at Q2 of this year, you can see that the NPL balances dropped by around CZK 150 million with an ending balance of slightly shy of CZK 3.5 billion. We benefited from lower NPL formation in the quarter, but also from higher cure rates. And this takes me to the last page of the risk section page on Page 40. Here, we show the evolution of delinquency rates, 30, 60, 90 plus since 2020. I think the chart is basically pretty much self-explanatory. Delinquency rates have remained on a fairly low level. In case of the 30 and 90 plus, we saw even a further drop quarter-over-quarter in the second quarter of this year. So summarizing the risk section, I think overall, we have seen a fairly good credit performance with the cost of risk coming in at 19 basis points. We had a positive impact coming from the debt sales with a nominal IFRS on balance value of more than CZK 600 million. We have not seen yet any adverse impact on our customers as a result of the continuing trade tariff discussions, but we will obviously watch the space. And lastly, the ECL management overlays, here, the current assumption is that we will be largely releasing those until the year-end, unless any significant changes occurred [indiscernible] or we happen to have a larger deposit. And with that, I hand over back to [indiscernible] on liquidity. Thank you.

Thank you, Normann. Tomas already commented on our robust liquidity position, hence I will be quick with this section. On Page 42, we summarize key liquidity ratios. As you can see, loan-to-deposit ratio stood at 65% and share of high-quality liquid assets being at 41% at the end of June. And below that, we report regulatory ratios, both are significantly above the 100% regulatory limit. On Page 43, we provide development of the high-quality liquid assets position. The position remained broadly stable at CZK 179 billion, while the share of government bonds within the position has increased from CZK 89 billion to CZK 115 billion at the end of June, which supports our net interest income generation capacity. And now we can move forward to the capital management section starting on Page 45, with key capital ratios on the consolidated level. As mentioned at the beginning, at the end of June, MONETA report capital adequacy ratio of 18.5% against the management target of 15.5% and Tier 1 capital adequacy ratio being at 15% against the management target of 12.5%. In absolute amount, excess capital stood at CZK 5.5 billion, remaining stable since the beginning of the year, while Tier 1 excess capital, this is the distributed portion of the excess capital, has increased to CZK 4.3 billion. And risk-weighted assets in the last chart on the page reports 3.3% reduction, which is a combination of benefits stemming from the CRR3 introduction at the beginning of the year, partially offset by loan portfolio expansion and related risk weighted assets increase. On Page 6, we provide more detail to the regulatory capital position on the consolidated level. The position itself remains stable at CZK 31 billion. The only decrease of Tier 2 instrument is attributable to partial reduction of the efficiency of Tier 2 instrument. Risk weighted asset density improved to 33.3%. And what is important to highlight is that MONETA continues to accrue 90% of current yield consolidated profit aside from the regulatory capital for the -- as a reserve for future dividend distribution. And this is kept on top of the excess capital of CZK 5.5 billion. So altogether, at the end of June, we maintained available of CZK 8.8 billion. And on Page 47, we report capital position on individual level. The position remains stable at CZK 45.5 billion with a significant excess of MREL adequacy over the MREL target. And here, I want to also comment that despite we maintain robust capital position on both levels with a significant excess, there is still room for further optimization. Hence, we seek to raise EUR 100 million of Tier 2 instrument in the third quarter, ideally at the beginning [indiscernible]. So that was the last comment from myself to the typical position. And now I will hand over back to Tomas. Thank you.

If we turn briefly to Page 49, it encapsulates the medium-term guidance. So if I split it into two components, if I look at 2025, as we communicated today, we see the upside at the level of CZK 300 million to CZK 400 million. Henceforth, we -- with respect to growth of net profit against comparable period, we should deliver growth in the profitability of the bank within the range of 8% to 10%. Majority of the growth is driven by growth in the operating income, smaller part is driven through the cost containment. And obviously, we hope to have good performance on the cost of risk. If I then take a broader view on the 5-year guidance, the minimum aim is to deliver a cumulative net profit of CZK 33.3 billion, and I compare that through the calculations that we regularly do. Recalculating the plan based on each 6-month experience of the bank, I would say that we are on a good path to have the ability to overachieve the target -- the cumulative target of CZK 33.3 billion. I don't want to go into the details of the factors because it's preliminary. We have to wait for the end of the year. But on the positivity scale, we are somewhere at the third quartile of what is possible to be positive about. Obviously, the key risk is election year. We don't know what will come with respect to bank taxation and these things or any other structural changes that we saw in the third quarter of last year when the Central Bank decided to end remuneration of the mandatory reserves and subsequently decided to double them. Henceforth, this is very difficult or rather it's impossible to predict for us. But I would like to underline, strongly underline [indiscernible]. We are positive and we are proud of the result that we have delivered despite the challenges in the second quarter, as those challenges were not internal, but exogenous to the bank, and we can do very little about evolution of the market based on the U.S. administration policies. So with that, I will turn over to you, and we will answer your questions with the utmost precision the capabilities for us.

[Operator Instructions] Our first question will come from the line of Thomas Unger.

I hope you can understand me well. First, I would like to ask you on the upside that you see CZK 300 million to CZK 400 million net profit guidance for 2025. If you could break that down into the sources, the drivers of where you see that better performance coming from. I understand that at the end of the presentation just a few minutes ago, you talked about most of it coming from operating income. If you could just detail a bit more. You gave specifics on the OpEx, and I'd like to know what you -- what upside you see from operating income as well as risk costs? And then secondly, Mr. Spurny, you talked to the press in the morning and said that you see significant opportunities from the planned boost in defense spending as well as infrastructure spending. Do you see MONETA specifically and directly benefiting from that? And if so, in what areas of your business? And then lastly, if I may, on your excess capital, it was stable at CZK 5.5 billion in the first half of 2025. I understand that you use that as a resource to fund your -- the growth of your franchise. But do you see any scope of additional capital distribution in the coming quarters?

Right. So let's start from the back and work our way towards the numbers. On the capital, we will review the capital based on the third quarter results. We will review it in the -- at the beginning of fourth quarter, and we will decide whether to retain the capital or whether to take any other step as we did last year. And in this respect, we are quite predictable, because I think we are consistent as a bank. We treat our shareholders very well from a disclosure point of view, which is I'm sure nice, but we also treat our shareholders well from dividend distribution point of view because in the years we have paid, on relative terms, if I remember the number correctly, 88% of our earnings to shareholders. So this is a policy that I have instituted in the bank, understanding that many of our shareholders, if not majority, are dividend seekers, and we will continue to behave in the same manner. On the defense, we have already benefited in the past 3 years. Mainly we benefit from defense on the lending side, which subsequently translates into fees, namely on foreign payments and it also translates into benefits on FX margin in the bank. Specifically, I cannot disclose any names, but I'm very proud that we have stood at inception of one of the Czech groups, which is no longer Czech, but it is global, and we have contributed to that. We seek to contribute this group, refers many of their partners, manufacturing or other and the bank due to the fact that we don't have hypocritic policy of the foreign-owned banks in the Czech Republic, we have never rejected those customers based on the fact that they operate in the defense realm. This gave us historical advantage over our foreign competitors, and we understand the local environment, we understand the government policy, and we are also committed to support Ukraine in its quest to remain a whole country. So we are benefiting, unfortunately from the conflict. And in the future, I'm sure we will benefit from the rearmament in Europe as Czech Republic has traditionally been very good manufacturer of whatever you need for defense. In fact, we actually own a significant part of the Austrian defense industry now. And on the upside, the CZK 300 million [indiscernible]. Normann doesn't like that. And on the upside, CZK 200 million on the revenue, which is the minimum increase against the target. If I have my way, then CZK 100 million on cost base and the rest coming from the cost of risk if we continue on the same path that we are on current year.

[Operator Instructions] Our next question has been submitted by Louis Miles, who asks, given the strong performance of the credit market, would you also consider issuing AT1 to add to your capital management toolkit? And second question, is there any part of your business that you think could benefit from inorganic growth in order to accelerate returns?

Let's start with the easy one, which is inorganic growth. Of course, we would benefit from that. It depends on the significant shareholders that hold more than 50% of MONETA and that will be ultimately their decision. And I have nothing to add beyond that. What was the first part? AT1, right?

On AT1, we considered the opportunity to raise AT1 as a new source of capital several times in the past, but we never found real benefit of the issuance. So at this moment, we seek to raise Tier 2 instrument and AT1 is not in the plan.

[Operator Instructions] We have no further questions at this time. I will now hand over to Mr. Spurny for closing remarks.

I think we have record participation on the call today. So I'm tremendously grateful to you for your interest in the bank. MONETA is our passion of the people who sit in this room and of, I hope, majority of people in the bank. We have management conference today where majority of staff participate, and I really am proud of all of the people that I work with because we are in an unenviable position. The valuation of the bank is high, the pressure for us to deliver is tremendous. And let me tell you that I'm absolutely convinced that we will exceed your expectations. And with that, I will wish you a great summer, and I can't wait until we report the third quarter results, because it will be even better than the one we presented today. And with that, all of you have a good day and the rest of the summer. Thank you very much.

This concludes today's webinar. Thank you all for joining. You may now disconnect from the call.