Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Addiko Bank AG (WBO:ADKO, Financial) reported a 31% year-on-year increase in net profit, reaching EUR25.5 million.
- The return on average tangible equity improved from 5.4% to 6.6% year-on-year.
- Net interest income increased by 11.5% despite higher funding costs, and net commission income grew by 8.4%.
- The bank's NPE ratio decreased to 2.8%, with a strong NPE coverage ratio of 80.7%.
- The capital position remains robust with a 20.4% fully loaded CET1 ratio, indicating strong financial health.
Negative Points
- The SME business growth slowed down due to market factors, impacting overall business performance.
- Extraordinary expenses related to shareholder activities amounted to EUR2.9 million, affecting the first half results.
- Operational expenditures for 2024 are expected to increase from below EUR191 million to below EUR195 million.
- The bank faces challenges in the SME segment, particularly in Serbia, with some portfolio worsening.
- Uncertainty surrounds the success of the NLB takeover offer due to unclear situations with significant shares locked in option contracts.
Q & A Highlights
Q: Have you seen any impact on your commercial activity due to the two takeover bids? Also, did you receive any feedback from regulators about the bids, particularly in Bosnia, Serbia, and Croatia?
A: There was no direct feedback from regulators in the mentioned countries regarding the takeover bids. As for commercial activity, there was no direct impact on our customer business. The consumer segment showed good growth, while the SME segment experienced lower growth due to market factors, not the takeover bids.
Q: Can you provide a breakdown of the EUR2.9 million costs related to shareholder actions or takeovers?
A: The costs include fees for a financial advisor, a fairness opinion on the NLB offer, legal fees, and an independent expert report by PwC, as required by Austrian law. The majority of the costs are related to the financial advisor and the fairness opinion, followed by legal fees.
Q: Is the growth in fees and commissions sustainable, and can we expect more of it in the future?
A: Yes, the growth is sustainable. We expect continued support from card-related fees and new SME products driving fee growth. However, growth will be on a nominal basis, so don't expect a 9% increase every quarter.
Q: With the slowdown in SME growth, what measures are being taken to return to growth, and will ECB rate cuts impact this?
A: We anticipate SME growth to increase with ECB rate cuts. We are also launching secured lending products for existing and new customers, focusing on specific countries and industries to drive growth.
Q: Why was there an increase in post-model provisions this quarter despite improving outlooks in most countries?
A: The increase from EUR6.5 million to EUR9.3 million was driven by additional provisions required by the ECB for certain portfolios in Slovenia and a mathematical adjustment based on our methodology. We will review these levels when updating our IFRS 9 models later in the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
