Today is the 30th of April, 2026, and we are going to discuss the results of Komerční banka Group for the first quarter of this year, 2026. Please note that this call is being recorded.

Our presenters today will be Jan Juchelka, Chairman of Management Board and CEO of Komerční banka, and Etienne Loulergue, Chief Financial Officer. We also have ready to answer your questions Ondrej Kuczkowski, Chief Risk Officer; Miroslav Hiršl, Head of Retail Banking; Katarína Kurucová, Head of Corporate and Investment Banking; Jitka Haubová, 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 answers session. During the presentation part, all participants will be on listen-only mode.

We would appreciate if you could keep your microphones muted during that time. That's it from me, and now I would like to hand over to Jan Juchelka to begin the presentation.

Thank you.

All right. Thank you for for being with us.

Welcome, everyone. It's my pleasure, together with the 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, technology was not the target, 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 the organigram in the way which you know which you know from the past. By closing 2025, we were 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 and risk, but we were and we continue being very much oriented towards the sales and towards getting back the market share which we believe we deserve.

How it was translated into numbers, you can start you can you can start seeing at the page number 4. Page number 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-à-vis the last quarter of '25, which was already on its own very strong.

Beneath these these numbers, there is strong contribution of corporate and strong contribution of retail, we are glad that both engines are are working and 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.

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 pension company and the insurance business went up by 5% each, the sales of investment funds and investment solutions were somewhat lagging behind our expectations, even though mildly growing by almost almost 1%.

Q-on-Q, we are down by 3%. Having said that, I need to 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.

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 let me move to the balance sheet and capital.

As always, we are very prudent. We are keeping the capital ratio at very high level, 18.2%.

Core Tier 1 remains 16.8%. Loans to deposits in safe territory of 80.1%.

Both long-term and short-term indicators of our liquidity remain strongly above the required the required levels. RoTE, we are delivering 14%.

If IFRIC was linearized, we would delivering we would be delivering almost 15%, 14.8%. The cost of risk remains at the in the in the territory of net release, which is representing high quality of our assets, despite the fact that we are growing the loan book much faster than than it used to be a year before.

All that translated into net income, we are at 4 4 billion Czech koruna for the first quarter, translated into value per share, it's 21.23 Czech koruna per share. Cost-to-income, 48.1%, and again, if if IFRIC was linearized, we would achieve 44.8%.

Even 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 which was presented by the board of directors at 25.6 Czech koruna per share, 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, the non-executive body: Cécile Bartenieff, which will remain the chairperson of the supervisory board; Hervé de Kerdrel, independent director; Bruno Delas, head of IT for the entire Société Générale Group; and Pierre-Yves de Gallot, head of strategy of Boursorama, our sister company, our fully digital sister company in in France.

By by reading these names, I am proud to say that we are increasing the expertise and collective skill set of this non-executive body of Komerční banka and even going, let's say, to the level of modernization and and higher level of overall knowledge of what is important and strategic for Komerční banka of today. Pierre-Yves de Gallot was also elected as an audit committee member, and we have KPMG confirmed as a as statutory auditor.

When speaking about fast-growing volumes and commercial activities of KB, it couldn't go forward without growing a client base. KB Group customers are at the level of almost 2.3 million, up by almost 60,000 on a year-over-year.

KB users at is is very close to 1.7 million users, enjoying the new solution of KB+ KB+ platform is half a million larger number compared to first quarter of 2025, also, as I mentioned at the beginning, thanks to the fact that we have we have finalized the the migration of clients from the old to the new systems. Capital and liquidity enhancement: we were active in on the markets.

We successfully printed €750 million covered bond, more or less in the middle of the of the peak of the crisis in Iran. We are glad to say that also when referring to the pricing of this issue, Komerční banka's quality, assets quality, was recognized by the by the investors at in in in very in very positive way.

We have also issued Tier 2 instrument at the level of €150 million, working on optimization of our capital structure. We can move to the next page, please.

The macroeconomic environment remains very stable, very predictable. We are lucky to make our business in 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 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. 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.

On one hand, households driving the mainly driving the the the growth of GDP, followed by strong activity of corporate scene and supported by active approach of the government towards investments. Inflation, 1.9%.

Everyone speaks about inflation, the translation of the energy prices into into into the inflation, etc. For the time being, Czech National Bank has not yet reacted on anything by by by increasing the rates.

Nonetheless, as everywhere in the world, obviously, that there is strong debate what what might be happening on on this on this front. I.e.

Czech koruna interest rates remain unchanged at the level of two-week repo rate, 3.5%, and we have 10-years IRS growing by 82 bps to 4.38, and 10-years Czech government bonds growing to 4.93, reflecting on those potential tensions on the side of inflation. Czech koruna weakening on on on Q-on-Q, reacting on the existing geopolitical tensions.

On on longer-term horizon, year-over-year is stronger by 1.8 and or eventually by 7.6 versus euro or versus euro or versus versus US dollar respectively. 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 of the page, that it was driven it was driven by by mortgages to retail clients by almost 10% growth hand in hand with with financing of businesses, 8.4%.

We are back to the market with consumer lending. Here I can see here I can say very proudly that our solution, which is embedded into KB+, and increased activity of both the the branches and the contact center is are are bringing back very very positive growth of volumes of consumer lending without jeopardizing, in any particular moment, the the the cost of risk.

We are we are back to the market, growing, taking the the higher market share than last year, and and and penetrating mainly our clientele, which is, let's say, creating enough space for us to be fast, efficient, and without without without without impacting negatively the the risk the risk part of this equation. The sales volumes of housing loans, which is mortgages mainly, and I know, to some extent, also the the the housing loans by Modrá, are up by 107.3%.

We are very close to record-high levels of origination of mortgages. We are taking the appropriate part of the market share from from the new production, and let me remind that we do that with one-half of people compared to to the times before the transformation.

On that front, there 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 for the retail clients and for the third parties. That that is loans.

Sorry, just one 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 double-digit growth in the in the first quarter at 11.5%, which which is, let's say, moving them forward in the peloton of of their competitors.

Speaking about about large corporations, we were all over the place for the transformative transactions of our large clients. The the smaller businesses were somehow lagging behind, but lagging behind by growing by 7%.

It's, I think it's it's for me at least, it's it's a joy to to to make this to make this comment to make this comment of lagging behind by 7% growth. Let let me move to next to next page.

Obviously, when speaking about about loans, and you will see that in the speech of Etienne, there is a there is a there is a compression of of margins on the market. We are floating with the margin.

We are floating with the market as far as margins are concerned. On that on that front, let's see whether some sort of normalization will be 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 more and growing more much faster the the top line.

The selected corporate deals: we were all over the place. Municipal clients, municipal companies, or municipality-owned companies, large clients of PPF, huge real estate transactions, and others.

Public, private, Komerční played a significant role in these important deals and by by servicing our our our key clients. I don't have too much to say here, we can move to to deposits.

The deposits were growing by 8.7%. The composition is pretty clear.

It's individual deposits by 11%, business deposits by 8%. Nicely, I would say, nicely distributed.

We do care about healthy and durable and sustainable composition of these foundations of of our funding vis-à-vis vis-à-vis the ambitious targets on the side of financing of 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 or or or mediocre growth of 1.2% on the side of on the side of current current accounts.

We were chipping in almost 4% growth vis-à-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 is bringing more volumes into into the balance sheet of into the balance sheet of KB.

On on the flip side of the same coin, we have assets under management growing in very mild way of 0.8%. You can see, as I 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 are are are below below the below the expectation.

Nonetheless, having having said that, we have in Amundi solutions much less money market, much more equity and fixed income. We believe that also on that front, it will be longer-term, durable, and the trend will be step-by-step step-by-step improved, 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.

I will guide you through the profit and loss statement. Let's start with the overview.

The net profit of Komerční banka Group for the first quarter of 2026 stands at 4 billion and 9 million Czech crown, and it is supported by a very strong positive jaws effect representing -2.2 percentage point, we will comment later, but partially offset by lower contribution of the net releases in cost of risk in this quarter when we compare to last year same period. The main component of the variation of the net profit, which is in net decline compared to last year first quarter by -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 even exceptional net releases at approximately 500 million Czech crown for the first quarter '25.

In the first quarter '26, it's still excellent with, again, a net release, but approximately 100 million Czech crown, the net difference year on year is -400 million Czech crown in contribution to the bottom line of the first quarter. 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 200 million Czech crown year on year composed by 222 improvement on our own internal OpExes, slightly compensated by a higher need of contribution to the Resolution Fund as the Czech National Bank decided to increase the contribution of the whole banking system, 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, 39 million Czech crown 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 130 million Czech crown. 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 Resolution Fund and deposit guarantee fund contributions.

So 13.2% for this first quarter, in decrease 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 a linearized IFRIC 21 view, we are also in slight decrease by 50 basis points compared to same quarter last year for the same reasons.

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, +10%, and it's mostly concentrated in the last quarter with +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, +9% year on year of the deposit growth, and on the asset side, by the acceleration in the growth of the loan books, +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 tranche of subordinated debt to continue to diversify and consolidate our regulatory own funds, €150 million of additional subordinated debt. We have also issued new senior non-preferred instruments, which are mandatory to address the MREL ratio, the minimum require own funds and eligible liabilities, which is regulatory ratio we have to respect, €300 million issued during the course of the first quarter.

I take the opportunity to emphasize that we are continuously improving our liquidity profile, and by issuing all these instruments and also the covered bonds program mentioned at the beginning, we were able to improve our liquidity coverage ratio by 3 percentage points from 159 to 162 at the end of this first quarter, and the net stable funding ratio as well, reaching a 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 14 million Czech crown representing 0.6%. The first 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 tenor 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.

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. In the ratio paid, non-paid, we see an 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 2026 versus Q1 2025, but of course, this kind of activity is always volatile, and on the other hand, you will see that the net profit from financial operations 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 non-preferred 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, -130 million Czech crown representing 7.3%.

However, important to mention that within the 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 decreasing the outstanding in asset 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 product. Last, we have the specialized financial services and others, which are in decline year over year, mostly explained by the fact that we have a 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 indeed this decrease year on year, however, the level of fees observed in the first quarter 2026 is very comparable with what we observed in the second quarter and the third 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 100 million Czech crown 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 transactions, but as we have implemented fully now the multi-currency account in KB+, we generate a lower spread on this kind 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 1 billion Czech crown for the quarter. Now we move to the operating expenses.

The operating expenses are in net decline by 200 million Czech crown 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, -10% if we compare to the same quarter last year, which enables to deliver -11% in the personnel staff costs.

We are also maintaining, of course, a strong discipline on the general 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 reduce 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, it's lower than the average of the increase requested to the banking systems. The cost-to-income ratio benefits from this strong positive jaws effect.

The reported cost-to-income ratio, including fully the impact of Resolution Fund and deposit guarantee fund, stands at 48.1%, in decrease by 2.2 point. If we linearize the impact, it's at 44.8%, in decrease by 2.4 points compared to same period last year.

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, 101 million Czech crown of net releases this quarter, to be compared to 496 million Czech crown net releases in Q1 2025.

The composition of the net releases in Q1 2026 are as follow: 127 million Czech crown net releases in the non-retail segment, mostly supported by the fact that we had again some successful resolution of few corporate files; and in the segment of retail, a very limited net creation of cost of risk for an amount of 26 million Czech crown. If we look at it in basis point on the bottom right of the page, you can see that overall, it's a net release of 4 basis point, supported by 11 basis point net release in non-retail, and a net creation of only 2 basis points in retail.

Next slide, please, for the asset quality. The net cost of risk is a confirmation of our excellent asset quality, which continues to improve.

The non-performing loan ratio is again declining this quarter. It stands at the end of March at 1.5%, -10 basis points compared to the opening balance, and -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.

Despite a net release in cost of risk, we continue to improve our coverage. We continue with the capital adequacy ratio.

Next slide, yes. 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 debts. The progress of this total capital adequacy ratio since the beginning of the year represent 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 14 billion Czech crown growth of the credit risk risk-weighted asset representing an impact of -32 basis point in the ratio. We have, on the incorporation of the first profit for 69 basis point, minus the provision for the dividend guidance that we have announced two months ago for 80%.

The net impact is +14 basis point net in the ratio. It is completed by the new subordinated debt, €150 million representing additional Tier 2 in the ratio for 63 basis point.

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, 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 a 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 quarters.

Regarding revenues, we give a new outlook at mid single-digit growth for the full year. For the first quarter, we are at flattish level, let's say 0+ 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 a full-year basis, this advance will slightly decrease as we will compare to quarters where we already started the transformation in 2025.

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 jaws effect in the cost-to-income, and we target to have cost-to-income ratio in a range 44% to 45%.

Regarding the net cost of risk, even though we have benefited 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 point.

It will enable to deliver a return on equity approximately at 13% bottom line. Of course, we will maintain the total capital adequacy ratio in a corridor comprised between 17.5% and 18.5% to maintain the solidity of the bank.

I have finished here, I propose to give back the floor to Jan Juchelka or to open your questions.

Thank you, Jan and Etienne. Now we will be happy to answer your questions.

Let me remind you that this meeting is being recorded. If you wish to ask a question, please click on the raise hand icon on the top bar of the screen and then please wait for me to call you.

If you are connected through a telephone, then I will invite you to ask your question later on. Our first question comes from the line of Mate Nemes from UBS.

Mate, over to you.

Yes, good afternoon and thank you for taking my questions. I have three of them.

The first one would be on corporate lending. I think in Q4, you had a strong result on that front.

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's the pipeline looking in the corporate business specifically? The second question would be on deposits and deposit trends.

It looks like term and 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. Clearly, there's some shift towards term and savings.

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're seeing pressure?

Is it consumer or also corporate lending? Any color on that would be helpful.

Thank you.

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. That is one of the parameters.

The pipeline is still strong, and as CEO mentioned in his opening speech, we did see strong demand from the clients, the pipeline is full, and we are confident on onboarding more transactions going forward.

Etienne, shall I on deposits for retail, and then you will probably wrap it up in the end? Okay.

What you see happening on retail deposits, basically, there are two things that you commented. First is savings.

Why? I would say 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, ceilings, 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, I can't say it's money being moved from current accounts to saving accounts.

Of course, there is certain percentage of cannibalization, but it's more than acceptable for the moment. This is the first thing to your second question.

Then I will probably start answering the third one on margins. For 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. What those lower margins bring is compensated or close to be compensated by higher volume.

I'm not saying that the mechanics works perfectly well like that, but 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 this 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 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, which should not last too long, we will come back to more normal environment. 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 tenors, not for the short-term rates, but longer tenors, we already observed an increase, while this increase is not translated yet by the market to 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.

It's also true for consumer loans, but to much lower extent. It's more a competitive pressure that we observed than a cost of funding impact.

It's more the competition. Regarding the collection of deposits, yes, again, our strategy is to regain our market shares in this respect.

In the past years, 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 to 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 are an attractive bank also for deposits.

Thank you. That is very helpful.

I appreciate the color.

Thank you. Once again, if you have a question, please tap the raise hand button.

The next question comes from Jovan Sikimic from Oddo. Jovan, please go ahead.

Thanks, Jakub. Hi, everyone.

Just maybe a follow-up on the last question. Basically, if I understand it correctly, you're doing fine on volumes, right?

Actually, the revenue guidance which has been lowered a bit from mid-to-high to just mid, basically is a factor of competitive pressure, right, going forward. Basically, if the pressure continues like it was in Q1, also this kind of guidance getting tight.

Is it correct assumption, or?

Yes, it is correct.

Perfect. Thank you.

Thank you. If you wish to ask a question and you are connected through a telephone, you can unmute yourself pressing typically star and 6, and then you can ask your question.

Or, of course, you can still use the raise hand button.

It seems that we are very transparent. Jovan, you have another question?

Please go ahead.

Yes, you're very transparent, indeed. On fees, right, what's the strategy now to bring it back on growth path, right?

You have raised some concerns about some products which are not going well. Basically, transactions, right, if I'm not mistaken, and these other fees, right?

What should happen in the next quarters to bring the fees really on growing trajectory again?

Before Miroslav will take the retail part and potentially Katarína the corporate part, I probably owe you also couple of words related to the previous question. What I mentioned at the beginning was not simply a marketing pitch.

It's really 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.

This is everything, 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, yeah? This is the first one.

The second one, which are fees, we have put in direct competition some of our saving solutions exactly with 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 dramatic, yeah?

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.

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 they will demand a bit more financing on facing the next cycle of getting the European money for the municipal infrastructure projects.

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, the large corporate clients, where we do believe we'll be able to collect more fees down the road, but it has not yet been materialized to the extent which would be satisfiable also for us on that front.

I will ask Miroslav, potentially Katarína, to compliment to me. Thank you.

I'm always polite, but I think I'll need a minute or two to give you the full story. First, I'll 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, letting almost one-half of 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.

Looking at business figures, you see it is happening. This is the first important statement.

It was all the time the plan, and now we can see the uplifts in commercial performance. On the other hand, for those fee-generated kinds of business, such as assets under management and insurance, it takes some time before these commercial activities are translated into P&L, into fees.

We believe that this will be one of the drivers of us growing the fees again. This is probably first point.

The second one, let me explain that on Czech retail market, there's no way to charge for transactions anymore. This is gone.

Nobody does it, and if you would start, you would just be out of the market. First thing.

The second, you just need to have a freemium account in your offer. Not fully fledged, not the perfect solution, but something for free needs to be there.

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 schemes, we are not losing money, which is positive, even though we accepted those new trends.

We keep that very mildly growing. 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.

These are probably the three main points or angles on which I see our fees getting better in 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 transactions in the large corporate segment clients.

Super, great. Appreciate your detailed answer.

Thank you.

Thanks a lot. Let me give you another opportunity to ask your question by either pressing the raise hand or unmuting yourself via telephone.

The next question comes from the line of Shane Mathews from White Oak Capital. Shane, go ahead.

Thank you. Thank you for the opportunity.

Just this is a general question on the system as a whole, that if you're seeing, let's say, competition rising and margin pressures coming through, there should be some mispricing of risk happening as a system level, right? Is that a broader concern you're having at this point in time, and just your general view on how this can, let's say, continue, right?

Because after a point, this will sort of come in through, right? Mispricing 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 framework, enfin, the risk appetite remained the same.

We are simply using it for commercial purposes, we are not taking risk that we believe should not be on our balance sheet. We are still very strict about this.

This is for us, and within the market, I don't have any indication that the market overall is at risk of deterioration.

Feeling the same.

Sure. 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, if I am not mistaken, 1st of April, if I am not mistaken.

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, and 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 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 wanted simply to be part of this game and not to sacrifice too much of volumes, because also mortgages are very sticky part of our products proposition, and we can build the appropriate cross-seller around that. Thank you.

Fully agree. I just confirm it's part of our analysis.

That's why we allow ourselves to grant mortgages even at a slightly lower margin, because we are convinced we can generate then 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 other solutions, could be asset management, could be insurance products, etc. We are sure that in the long term, we add several basis points additional to the profitability of the client thanks to mortgages.

That's very clear. Thank you.

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

All right. 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.

Thank you in 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.