Release Date: November 07, 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 25% year-on-year improvement in net profit, reaching EUR37.7 million in Q3 2024.
- The bank's net interest income increased by 8.5% year-on-year, despite higher funding costs.
- Consumer lending saw a strong 22% year-over-year growth, outperforming the market.
- The bank's capital position remains robust with a 21.1% fully loaded CET1 ratio.
- Operational improvements, such as the acceleration program, have led to a 90% automatic decision level in consumer business risk management.
Negative Points
- SME loan growth was muted, particularly in Serbia, impacting overall loan book growth.
- Extraordinary expenses related to shareholder activities amounted to EUR3 million, affecting the operating result.
- The unpredictable shareholder situation has negatively impacted business operations and staff motivation.
- Regulatory pressures in some markets are curbing fee increases, impacting net commission income.
- The bank faces challenges in the SME segment, with market demand shrinking and increased competition leading to price reductions.
Q & A Highlights
Q: Could expanding into larger ticket sizes help restart growth in the SME segment, given the current challenging demand?
A: Herbert Juranek, CEO, stated that Addiko Bank will not change its strategy and will stick to smaller ticket sizes. However, they are considering enhancing their business model in certain areas to get back on the growth track. Ganesh Krishnamoorthi, Chief Market, IT & Digitalization Officer, added that they are exploring secured lending and adjusting prices to regain market share, particularly in Serbia.
Q: Does the midterm target include the effects of the Romanian market entry?
A: Ganesh Krishnamoorthi confirmed that Romania is part of the midterm target, but they plan to start slowly and increase as they gain more experience in the new market. Edgar Flaggl, CFO, noted that while Romania is included in the targets, its impact on the bottom line will be minimal initially.
Q: What impact do you expect from the upcoming Serbian law limiting interest rates on consumer lending?
A: Edgar Flaggl explained that while the new legislation might not significantly affect consumer loans, they expect to book a modification loss in Q4 related to the mortgage rate cap extension. The impact on the industry could be significant, but Addiko Bank's small mortgage book limits its effect on them.
Q: With the ongoing changes in the interest rate curve, is this a burden or a gain for Addiko Bank?
A: Edgar Flaggl mentioned that while lower rates could lead to reduced loan pricing and early repayments, they also lessen pressure on deposit costs. Ganesh Krishnamoorthi added that lower rates might stimulate SME market growth, presenting a growth opportunity for Addiko Bank.
Q: Are there any changes in the shareholder structure following the recent increase in share price and turnover?
A: Edgar Flaggl stated that any changes in shareholder structure are publicly available through major holding notifications, which are also published on Addiko Bank's website.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
