Full Year 2024 Cembra Money Bank AG Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mate Nemes - UBS Investment Bank - Analyst : Yes. Okay. Good morning and thank you for the presentation. I have a couple of questions, please. The first one is on the net interest margin. You mentioned that you expect the net interest margins to stabilize in 2025. I just wanted to clarify whether you mean stabilization at 5.6% that you printed in 2024, or at a slightly higher level, perhaps the exit run rate as shown in H2? The second question is related still partly to interest income and to risk. I think Volker, you mentioned that you're shifting or adjusting the profile a little bit towards lower risk exposures. And I'm just wondering, what is the implication then for interest income and NII? Are we going to see perhaps some pressure on yield in personal loans or credit cards and that is perhaps offset by somewhat lower cost of risk going forward? Is that the right way to think about it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 8:00AM, CMBN.S - Full Year 2024 Cembra Money Bank AG Earnings Call And the last question would be on capital allocation. Clearly, you had 50 basis points better-than-expected Tier 1 ratio. Also, the Basel IV impact is at 50 basis points, the lower end of the previous guidance range. So that just suggests you should be in a position to have quite meaningful surplus capital in 2025. Could you share your thoughts about capital allocation? Are we likely to see perhaps somewhat higher payouts, maybe special dividends? Or do you have aspirations perhaps on the M&A front? And if so, are there perhaps interesting targets on the horizon? Thank you.

Question: Mate Nemes - UBS Investment Bank - Analyst : Thank you very much.

Question: Daniel Regli - Zurcher Kantonalbank - Analyst : Good morning and thanks for having my questions. I have actually three. One is on cost income ratio. One is on the net interest margin and one is then again on the credit quality. And sorry here, maybe it's a little bit of a follow-up to Mate's questions. So first on the cost/income ratio. So you aim to be at below 45%, and you aim to be at below 39% in 2026, so one year later. So can you maybe just help me understand a bit the bridge between '25 and '26? What exactly are the moving parts here to get from, let's say, below 45% to below 39%? Then on the net interest margin, I was just wondering, obviously, a good performance on the net interest margin in this year. However, we have seen the Federal Council already reducing the maximum rates beginning of this year. And probably given the moves we have seen by the Central Bank and expected further moves by the Central Bank, most likely, we will see another reduction in maximum rates towards the end of this year or in H2. What do you expect would this have in terms of margin impact for, let's say, 2026? And then last but not least, on the credit quality. Obviously, we have seen a slight pickup in the loss rate at 1.1%. And if I understand it correctly, it would have even been 1.2% adjusting for these one-offs. I think you mentioned CHF6.7 million one-offs. Can you just first tell me these one-offs, did they happen in H1 or H2? Or were they spread across the whole year? And secondly, shouldn't we then kind of in the short-term, expect a slightly higher loan loss rate, particularly looking at the nonperforming loans measures and the kind of 30 days due measures? Thanks.

Question: Daniel Regli - Zurcher Kantonalbank - Analyst : Sorry, can I maybe quickly follow-up on this one? Just this CHF15 million to CHF20 million cost reductions you state for 2025. So will they kind of be -- will they be fully visible in the 2025 cost line? Or is this kind of the exit run rate of cost reductions you will have achieved by year-end 2025?

Question: Daniel Regli - Zurcher Kantonalbank - Analyst : Okay. And then more to come in 2026?

Question: Daniel Regli - Zurcher Kantonalbank - Analyst : And then just restructuring expense, you don't plan any for 2025 anymore, I heard you say?

Question: Daniel Regli - Zurcher Kantonalbank - Analyst : Okay. Perfect. Thanks.

Question: Daniel Regli - Zurcher Kantonalbank - Analyst : Okay. I think now I got it. Thank you for the explanation.

Question: Daniel Regli - Zurcher Kantonalbank - Analyst : But can you maybe give some kind of color on what do you expect for 2026 in terms of net interest margin? I assume that the reductions on the Central Bank rates are more immediate and then obviously, the effect on the asset side or the yields is kind of -- comes with a certain time lag. Thus, in the moment when Central Bank reduces rates, it kind of helps you a bit on the net interest margin. But in the moment when the Federal Council reduces the maximum rate, it should kind of negatively affect your net interest margin. So is this more or less correct? Or would you disagree with this statement?

Question: Daniel Regli - Zurcher Kantonalbank - Analyst : Okay. Thank you.

Question: Daniel Regli - Zurcher Kantonalbank - Analyst : Hello. I have another question or two, if I may. Just one on Buy Now, Pay Later and the second one on kind of the growth outlook. On Buy Now, Pay Later, I remember you have been talking about portfolio optimizations with H1 results. Can you maybe talk a little bit about what do you expect from Buy Now, Pay Later over the next, let's say, 12 months? Have you concluded with this portfolio optimization exercise? And can we expect Buy Now, Pay Later to return to growth in the next 12 months? Or is this kind of still ongoing? And then secondly, obviously, we have seen financing receivables down slightly year on year. What do you expect going forward? Is this also kind of an ongoing thing that we should expect the balance sheet numbers to rather, let's say, be stable or slightly down while margins are kind of improving? Or do we see a return to growth there as well?

Question: Daniel Regli - Zurcher Kantonalbank - Analyst : Can I just quickly ask a follow-up question on the Buy Now, Pay Later business? Can you give us some kind of indication where we stand today? Obviously, in two years, you want to have CHF10 million to CHF20 million net profit contribution. But is it breakeven today? Or is it -- yeah, what -- how much is the gap to the CHF10 million to CHF20 million?

Question: Daniel Regli - Zurcher Kantonalbank - Analyst : I see. Okay. Thanks.