Earnings call transcript: Addiko Bank’s Q1 2025 results show mixed performance

Addiko Bank reported its first-quarter 2025 earnings, revealing a slight decline in net profit compared to the previous year. Despite challenges in the SME market, the bank demonstrated strong growth in its consumer business. The stock remained stable at €22.74, reflecting a balanced investor sentiment. According to InvestingPro analysis, the bank maintains a strong financial health score of 3.3, rated as "GREAT," with particularly robust momentum and relative value metrics.

Key Takeaways

• Net profit for Q1 2025 was €14.5 million, down from €15.6 million in Q1 2024.
• The bank achieved an 8% year-on-year growth in net commission income.
• Digital lending initiatives expanded in Croatia, Slovenia, and Romania.
• The cost-income ratio stood at 63%, with a focus on reducing it further.
• The SME market remains challenging, affecting overall growth prospects.

Company Performance

Addiko Bank’s performance in the first quarter of 2025 showed resilience in its consumer segment, with double-digit growth. While the SME sector posed significant challenges, impacting the bank’s overall financial results, the bank maintains a healthy debt-to-equity ratio of just 0.02. The bank continues to lead in digital consumer lending, leveraging its strong capital position and innovative solutions, with analysts forecasting 13% revenue growth for FY2025.

Financial Highlights

• Revenue: Not disclosed
• Net profit: €14.5 million (down from €15.6 million in Q1 2024)
• Earnings per share: €0.75
• Operating result: €25.3 million
• Return on average tangible equity: 7.1%
• Cost-income ratio: 63%

Outlook & Guidance

Addiko Bank aims to reduce its cost of funding to 115 basis points, down from 127 basis points in Q1. The bank anticipates improvement in SME volume growth in the latter half of 2025, with ambitions to continue achieving double-digit growth in the consumer business. However, the mid-term loan growth target of over 6% CAGR could be at risk if SME volumes do not recover.

Executive Commentary

CEO Herbert emphasized the bank’s commitment to improving efficiency, stating, "Our clear goal is to get closer to 50 [cost-income ratio] in a stepwise approach." He also highlighted the bank’s cautious approach, noting, "We are taking a limited risk approach, meaning we are very lean on the cost side." Ganesh, Business Development, described 2025 as a transitional year focused on adjusting the SME business model.

Risks and Challenges

• Continued pressure in the SME market could hinder overall growth.
• Regulatory changes affecting banking fees and interest rates pose challenges.
• Aggressive pricing strategies in the competitive SME segment.
• Macroeconomic conditions in Central and Southeastern Europe, despite being positive, bring uncertainty.
• Achieving the targeted cost-income ratio reduction requires careful cost management.

Addiko Bank’s first-quarter results highlight its strengths in consumer lending and digital innovation, while also acknowledging the hurdles in the SME sector. The bank’s strategic focus and robust capital position provide a foundation for future growth, albeit with challenges ahead. Based on InvestingPro’s Fair Value analysis, the stock appears slightly undervalued, suggesting potential upside for investors. For comprehensive insights, including detailed valuation metrics and growth projections, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.

Full transcript - Addiko Bank AG (ADKO) Q1 2025:

Healy, Chorus Call Operator, Chorus Call: Ladies and gentlemen, welcome to the Adeco Bank Results First Quarter twenty twenty five Conference Call. I am Healy, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. The conference must not be recorded for publication or broadcast.

At this time, it’s my pleasure to hand over to Herbert, CEO. Please go ahead.

Herbert, CEO, Adeco Bank: Good afternoon, ladies and gentlemen. Very welcome to the presentation of the first quarter results twenty twenty five of Adecobank AG on behalf of my colleagues, Ganesh, Pade, Edgar and Sara. We have prepared the following agenda for you. I will start with the highlights of the first quarter and then pass on to Garnish, who will update you on our achievements on the business side. Afterwards, Edgar will provide you with more insights on our financial performance and today will inform you about developments in the risk area.

At the end, I will do a short wrap up and comment on our outlook 2025 before we move on to Q and A. So let’s begin with the highlights. We achieved a net profit in the first quarter twenty twenty five of €14,500,000 compared to €15,600,000 last year. This results in a return on average tangible equity of 7.1% and consequently in €0.75 earnings per share. The operating result ended up at €25,300,000 The main differences compared with the first quarter twenty twenty four are based on the lower interest environment and on the absence of positive one offs in 2025.

Nevertheless, we were able to grow our active customer base by 4% year on year. Moreover, based on our initiatives on the business side, we managed to again achieve a strong double digit growth in our consumer business. However, on the SME side, we are still confronted with lower demand and with an aggressive pricing approach of our competitors. Garnish will give you more insights on what we will do to ignite growth in the respective sub segments of all business of all our SME business going forward. Our net interest income went down by 1.8% year on year, driven by the lower interest rate environment.

It’s worthwhile to mention that we managed to compensate a part of the negative effects coming from the lower income of the variable back book and the National Bank deposits with the increase of our consumer business and with new investments into our sovereign bond portfolio. Our net commission income grew by 8% year on year on the back of good sales performance. So altogether, our net banking income slightly increased despite the lower interest rate environment. Now let’s look at the risk side. The NPE ratio is stable at 3% and our NPE volume stands at €147,000,000 compared to €145,000,000 last year.

Our coverage ratio is at comfortable 80.9%. Our cost of risk on net loans ended up at 0.1% or €4,600,000 Tadre will give you more details on our risk situation later during his part of the presentation. The funding situation remained quite strong with a slight growth in our deposit base to €5,300,000,000 deposits, resulting in a loan to deposit ratio of 66%. Our liquidity coverage ratio is currently above 430% at group level. And finally, our capital position is also very strong with a 21.7% CET1 ratio based on preliminary Basel IV regulations.

I would like to share two more bits of information. We did achieve all necessary reporting requirements regarding the corporate sustainability reporting directive and our ESG action plan, including all its initiatives is progressing as planned. Now, let’s look at the recent key topics. Our Annual General Meeting was held on the 04/18/2025 with all agenda items approved. Approximately 43% of our capital represented by shareholders have registered and approximately 36% have participated.

The mandates of Mr. Johannes Broch and Mr. Sarban Dalbockoff as members of the Supervisory Board have been prolonged for another three years. As already published, the dividend payment for 2024 is suspended due to the recommendations of the ECB in the light of the current shareholder situation of Adecobank AG. Nevertheless, our dividend policy to distribute circa 50% of the attributable net profit remains in place, of course, subject to ECB recommendations.

At the end of Q1, we successfully entered the Romanian market with a fully automated consumer lending solution. Customers do not even need to open an account with Adeco by using their existing accounts for our loans. We see Romania as a very attractive opportunity for our business model, given the size, the scale and the degree of the digital majority of the market. However, we are taking a limited risk approach, meaning we are very lean on the cost side and we are very diligent, especially in the first phase in terms of acceptance criteria for new customers. We will now increase our marketing activities and hence, we will carefully increase our business there.

Furthermore, in parallel, we will start to prepare an online deposit solution for Romania to cover the other side of the balance sheet. We will keep you posted on the progress of our business activities in Romania. Now let me hand over to Karnes to give you more information on our business development.

Ganesh, Business Development, Adeco Bank: Thank you, Hebert. Good afternoon, everyone. Moving to Page five. I’m pleased to inform you we started the year with strong business results in Consumer segment, resulting in impressive 16% year over year growth in new business generation with a premium yield of 7.2% despite of continued low interest rate environment. On the SME side, the demand has been more restrained with competition dropping prices steeply to stimulate demand.

This in turn prompted many existing client paying back loans earlier due to the high fixed prices originated last years. In response, we proactively taken a selective approach in certain markets and industries concentrating on high quality, smaller ticket business with better yield premiums. This strategic focus has given us an yield of 5.2% and with a 2% year over year growth in new business generation. More on SME turnaround in the next page. Overall, our focused loan book grew 4% year over year or 5% when excluding the medium SME segment with a total blended yield of 6.6%.

This focus book now represents 90 of our total loan portfolio focusing on high return scalable lending. Please turn on to Page six for a detailed outlook. Let’s take a look closer look at consumer segment. I’m pleased to share this quarter marks a significant digital milestone for Adinko. We have successfully launched end to end digital lending without any human interventions in three of our core markets.

With this launch, new customers can now apply for loans entirely online without needing to open a current account, and this allows to compare our loan offers with those of their house bank within minutes from anywhere and without stepping into a branch. We are proud to be the first to offer this fully digital product in Croatia, Slovenia and Romania, which Serbia is set to follow later this quarter. In parallel, we are advancing in branch digitalization to improve both efficiency and customer experience. Initiatives includes the role of paperless signature packs, PSD2 based salary verifications and new public services such as issuing electronic signatures in our Serbian branches. We are also strengthening our point of sale lending proposition, expanding our partner network to four sixty eight partners across nine fifty seven locations, this broader footprint is enabling us to reach more customers and grow our business effectively.

In addition, we recently launched a partnership in Bosnia And Herzegovina with a plan rolled out in Croatia expected to support growth in upcoming quarters. Finally, we continue to drive non lending revenue through improved features in cards, Google Pay, Bank Assurance and account packages, leading to 13% year over year increase in net commission income. In summary, our strategy of targeting digitally engaged and point of sale finance customers with lower ticket, high yield lending, followed by upselling in the branch into higher value consumer loans is delivering strong result. As a result, we have a 16% year over year growth in consumer business this quarter. Now over to the SMEs.

Our core business model remains unchanged to be the fastest provider of unsecured, low ticket loans to underserved micro and small enterprises through our digital agents platform. As mentioned earlier, we are facing challenges related to demand and aggressive pricing in the market. To respond effectively and reignite growth, we have taken some strategic steps. Number one, turnaround plan in Serbia. We launched a comprehensive turnaround plan with a newly appointed SME leadership team in Serbia led by the new CEO of our Serbian entity.

Early signs in Q1s are encouraging and we are confident this renewed focus will translate into strong performance in the coming quarters. Number two, pricing adjustments. We are adjusting our pricing strategy to retain and win back market share, particularly in refinancing from competitors. Number three, broaden product range. We are now focusing on offering a mix of partially secured and unsecured loans with slightly higher ticket size, targeting both existing and new customers.

This helps us retain valuable relationship while balancing risk and demand. Number four, new partnerships. We are actively exploring partnerships that allow merchants to finance purchases through Article, expanding our SME reach and relevance. Number five, strengthening core competence. We aim to reduce time to cash and enhance our online presence by delivering a simplified user friendly experience and more efficient processes.

Additionally, we are growing our customer base through new products launched last year such as auto overdraft and insurance offerings, which further enrich our SME ecosystem and diversify revenue streams. Overall, we believe these initiatives will help us to return to growth in the SME segment, particularly by closing the largest performance gap we currently see in Serbia. To summarize, this year is a transitional one, focused on adjusting our SME business model and launching new USPs that enhance speed, convenience and value both for consumers and SME segments. These investments are essential not only to drive future growth, but also to strengthen our specialization and stay ahead of our competition and most importantly, justify our high margin premiums in a low interest rate environment. Please let me hand over to Edgar.

Edgar, Financial Officer, Adeco Bank: Thank you, Ganesh, and hi, everybody. We are on Page eight, where we printed the composition of our result for the first quarter twenty twenty five. I would say we had a decent start into, let’s call it, a rather vibrant year globally. Net interest income came in relatively stable with a slight decrease of 1.8% year over year, while we had six rate cuts since June 2024. The quarterly drop of 3.9% is predominantly related to the repricing of the variable back book, which represents roughly 15%, so 15% of our total book and is predominantly related to SME.

Taking it a level deeper, our key revenue driver, the interest income came in stable or slightly down by 0.7% year over year. This stable development in such a significantly changed rate environment was supported by our focus segments, which in fact recorded a 3% year over year increase. The contribution from treasury and liquidity management naturally decreased, but supported by our bond investments, which have been done previously by just 1.4% year over year. Our NIM landed at three seventy basis points versus three eighty nine basis points a year earlier. We ended the first quarter with above 90% of our book in high yielding focus loans compared to 87% a year earlier.

So exactly in the ballpark we were aiming for at this time. Briefly on interest expenses, which ramped up and reached the peak throughout the year 2024. We naturally started the year 2025 with higher funding costs compared to the first quarter of twenty twenty four. We have already seen funding costs to come down, landing at 127 basis points for the first quarter twenty twenty five, also driven by a higher share of stable term deposits compared to a year earlier. So all in line with our expectations.

On the volume side, we are currently above what we had originally planned and roughly $270,000,000, so $270,000,000 compared to the first quarter of last year higher compared to the first quarter last year. So for 2025, we do expect the downward trend in terms of funding costs to continue, targeting roughly 115 basis points, while the structure should remain relatively stable, also depending on market dynamics. Over to the net commission income, which despite the usual seasonality effects in the first quarter, continued on a good trend, showing an increase of 8% year over year. And that mainly from accounts and packages, bank assurance and card business. As already mentioned in the last call, we are increasingly seeing regulators and governmentpolitics in our markets aiming to court fee increases or fees in general.

This obviously keeps weighing in on the NCI momentum and will have an impact towards the second half. Now to the other income, which comprises the net result of financial instruments and the other operating result. The year over year development was relatively stable with twenty twenty five now reflecting front loaded deposit insurance costs of $800,000 in Slovenia, which is an increase of GBP 600,000.0 year over year. The first quarter last year also included net positive one offs, as Herbert just mentioned. Next to the general administrative expenses, insured OpEx, which increased by 4.1% year over year.

While we managed to contain higher increases, it remains quite a challenge to keep further up drifts as low as possible here. Our resulting cost income ratio stood at 63%, which shows the business growth and there with top line growth is key to a further improvement on that front. Overall, the operating result was 11.5% lower than in the first quarter of twenty twenty four. The next item is the other result, which includes costs for legal claims as well as for operational banking risks. As you can see, a rather benign quarter where we have allocated some additional provisions for new legal claims in Slovenia.

The main point in Slovenia will be what the higher courts will rule upon regarding the application of the statute of limitation, and if that will be in line with the dominant legal opinions. Now credit loss expenses, which in short, broadly came in line with our expectations. Tade will provide more insights in a moment. So altogether, on that result before tax, we are roughly stable year over year, which given the changed environment is a good development. However, as already disclosed earlier, a change in the Slovenian tax law, which shortens the timeframe for the usage of deferred tax losses from previously unlimited to now five years, causes higher tax expenses in 2025.

The effect in the first quarter amounts to roughly CHF0.8 million versus CHF0 in last year. To conclude, we managed to achieve a net profit of million in a significantly changed environment, which corresponds to a 7.1% return on average tangible equity. Over to Page nine, which illustrates our strong capital position. At the end of the first quarter twenty twenty five, our capital ratio landed at a strong 21.7% and all of that in CET1. As usual, this is excluding interim profit and accrued dividends for the 2025 result.

As you already know, there is no deduction of dividends out of 2024 profit. Briefly on Basel IV or CRR III for that matter, which came into force in 2025. We have reflected the elements that are in place. Our disclosure is based on preliminary calculations, given that the provider covering many banks here in Austria is not yet fully done with implementation and the regulatory reporting deadline is in June 2025. On that note, we are currently not expecting a sizable difference here in the final numbers.

So to summarize, we maintained a very strong capital position with substantial room for continued growth, and growth is what we need to further improve financial performance. And now over to Tade to share insights on risk management.

Tade, Risk Management, Adeco Bank: Thank you, Edgar, and good afternoon, everyone. We go to the credit risk on Page 10. The first quarter of twenty twenty five developed close to our expectations. We have observed quite stable situation in Serbia compared to otherwise more volatile and negative credit risk development in 2024. I have outlined already in the previous earnings calls.

The consumer segment in Slovenia remains somewhat below our quality expectations risk wise, but additional risk restrictions were implemented in the first quarter as also announced. Overall, we ended the quarter with slightly higher NPL volume at €147,000,000 that resulted in 3% NPL ratio. By write offs and portfolio sales, we plan to decrease this volume in the following quarters. On the right hand side chart, we can see that in the first quarter, we had EUR 2,500,000.0 net NPE inflow. This is EUR 6,000,000 lower than in the same period last year.

However, it is not an indication that all further quarters will follow the same development. Much is depending on overall macroeconomic situation and uncertainties linked to that. However, and overall, the portfolio remains of a good quality. Let’s move to the next page. In the first quarter twenty twenty five, credit loss expenses totaled at a relatively low EUR4.6 million, leading to a cost of risk of 0.13% on a net loan basis.

This was the level better than our expectations and was delivered by collections that were planned later in the year and others that were not anticipated at all. As usual, provisions were released in the non focus segment resulting in a positive cost of risk of 0.5% and allocated in the focus segment with negative cost of risk of 0.2% for consumer and 0.2% negative 0.2% for SME. The post model adjustment remained on the level of €1,400,000 This is the same level as the end of twenty twenty four. To cover for sub portfolios where not enough data is available for precise PD calibration. To conclude, in general, I’m satisfied with the risk situation and risk profile of our portfolio as we end the first quarter of twenty twenty five.

The Serbian portfolio is so far showing much better behavior than in the previous year, which is in line with predictions that I shared with you also in previously, the consumer portfolio in Slovenia will take some additional time to show a better picture, which we will achieve by introducing stricter risk rules as needed. Thank you for your attention and turning back to Herbert.

Herbert, CEO, Adeco Bank: Thank you, David. Let’s move on to outlook and guidance. In the upper part of the slide, you see our current outlook figures, which we leave unchanged for the time being. However, global uncertainties increased significantly during the first quarter to a large part driven by the new presidency in The United States. In addition to potential negative influences coming from this agenda, we see an increasing number of impediments driven by governments or regulators, which might limit our revenue generation capabilities.

These regulations are impacting our underwriting criteria, capping interest rates and fees or canceling certain fees at all. Altogether, in addition to what was said before, the macroeconomic situation also leads to a bit of reservation and wait and see attitude with part of our SME customers. Now, if despite all our new initiatives, SME volume growth would stay muted for an extended period, our limited or our mid term loan growth target of more than 6% compound annual growth rate might be impacted. However, we are confident that the investments into our SME platform will pay off in the mid to long term and increase our revenue potential going forward. Furthermore, based on actual forecasts, the positive macro backdrop in the CSEE region remains intact.

Consequently, we see our ambition to outperform the market and to deliver double digit growth in the consumer business on solid ground. As a matter of course, we will keep our prudent risk approach in terms of risk management to balance growth versus risk appetite as a priority over volume growth. Together with our team, we strive to get closer to our goal to be the best specialist bank for consumers and SMEs in Southeast Europe. On that basis, we continue to work with full energy to further improve the bank to create value for our clients and for our shareholders. With that, I would like to conclude the presentation, Our next earnings call to present to you the half year results is scheduled for the August 13.

I would like to thank you for your attention. We are now ready for your questions. Operator, back to you.

Healy, Chorus Call Operator, Chorus Call: We will now begin the question and answer session. The first question comes from the line of Ben Maher Please go ahead.

Ben Maher, Analyst: Hi. Thank you for taking my questions in the presentation. I just have a couple of quick ones, please. You mentioned the cost of funding will continue to decline down towards 115 basis points, I think you said. Sorry if I missed this, how does this compare to the first quarter of this year?

My second question is just I was hoping I was wondering if you could provide a bit more color, please, on when you would like how you think about the medium term growth target, say, SME growth remains weak in the second quarter, would that potentially trigger a review? Or is it something you’d have to look at more towards in the second half of this year if growth remained weak? And so my third question, some digital offering in Romania sounds very promising. I just wanted to get a better understanding on the account opening points. You say anyone can open anyone can use the digital solution without an Adecco account.

Is that did I understand that correctly? Sorry. Thank you.

Herbert, CEO, Adeco Bank: So I would suggest, Edgar, if you can answer the first question.

Edgar, Financial Officer, Adeco Bank: Sure. So on the cost of funding, we are targeting, as you rightfully said, 15, so 115 basis points for the full year. The first quarter came in at 127 basis points. Now there is also a page for the deck further back in the deck, I believe it’s around Page 29, 20 eight or something, which shows you a bit of the deposit structure as well. Where you also see that the funding on the holding level, which is mainly on the deposits is much higher priced than the network deposits in our banks in the CSE markets.

And also, I mean, this already expensive online deposit part is coming down significantly with relatively short term deposit maturities. So we are in good spirit actually, also according to our latest forecasts that we will be very close, if not spot on to the 115, one hundred 15 basis points cost of fund. The second question is probably for Herbert. Yes.

Herbert, CEO, Adeco Bank: So concerning the SME growth, we expect based on the measures which were described also by Garnish in his presentation that we see an upward strength in the second half of the year. We don’t expect, you know, the revival now of in in in in the second quarter, but more in the third and in the fourth quarter of this year. And and on Romania, Karish, you want to comment?

Ganesh, Business Development, Adeco Bank: Yeah. And on on Romania, yes. So any new customers can actually apply for digital loan online and get their loan in eight minutes. And the the the the best the the best USP there, which doesn’t exist in the market is you can compare your offer, you know, with your house bank and and see see and compare this and make a decision what they want to do. So I think for new business in Romania, we are the only one currently offering a lending solution in an eight minutes store.

Herbert, CEO, Adeco Bank: It automatically But, Mike, how does it work without the account? This was the question.

Ganesh, Business Development, Adeco Bank: So, basically, you as a new customer can apply digitally, and we have many sources to check your eligibility of the customers from a risk point of view, as well as also on the KYC side. We have so many data sources also including salary verification from Anna, which helps us to verify the customers also from a salary point of view. So this helps you. We do not need any account in this case to verify the customers. Hope I answered your question.

Ben Maher, Analyst: Yeah. Thank you. That actually sounds very good. Thank you.

Healy, Chorus Call Operator, Chorus Call: The next question comes from the line of Naden Doritic from the Osterbank. Please go ahead.

Mladen Doritic, Analyst, Osterbank: Good afternoon, gentlemen. Thank you for the call. Congratulations on the result. A couple of questions from my side. First of all, the SME.

So I noticed in your slide with the small tickets and on micro and medium SME that the small tickets business is still suffering while the medium SME is gaining. Will that be a kind of a new strategy, new moves. So will you kind of return to the bigger SME tickets? I heard you mentioned the new strategy and especially turnaround in Serbia for quite a couple of times. But if if if you can add some more flavor in this particular area.

Herbert, CEO, Adeco Bank: Yeah. May maybe I start and and and, Garnish, if you if if you add then your your perspective. So we don’t change the strategy. So we we continue with our strategy, and small and and micros are still our our core audience on the SMB side. With all the initiatives we are doing, we believe that we can also reignite growth there in the second half of the year.

But this does not mean that the medium tickets, we will leave out. And as you see, we see growth potential there, which which we are using. Arnaud, do want to let a comment on it?

Ganesh, Business Development, Adeco Bank: Yeah. I was just letting I think the main topic on the micro and small business is also we are adjusting our pricing expectations for this unsecured fast loans. I think this will trigger us growth going forward. We always kept quite a big premium, but as the market rates are going down, it’s a there’s a necessity for us to reflect the situation market situation there. So that that’s one of the key key activities.

The second one, in terms of also there’s also small segment. We are looking at small and medium focus on slightly larger tickets overall, but there we found some niche segments which we want to focus. But our primary focus is still our small tickets on the micro and micro and small businesses. Maybe, Vladimir.

Edgar, Financial Officer, Adeco Bank: This is Edgar speaking. Thanks. Thanks for the question. Great to have you on the call. Just a technical element is also that every year you have a kind of a resegmentation effect of small SMEs, which have, in terms of annual gross revenue, outgrown the threshold to be still a small, and they become medium.

Doesn’t change the client relationship as such, just changes the sub segment, so to speak.

Mladen Doritic, Analyst, Osterbank: Understood. Understood. Thank you. One question regarding the interest rates. So yes, we had the reduction in monetary policies.

Can you maybe assess of how much the rates are pressured by the competitors as I see I’m sitting here in Serbia, so I see a lots of the Central Bank trying to curb interest rates, but I think the banks are going even below those bands. Do you feel a big pressure on this side? I mean, I’m sure I would assume you cannot pinpoint the the the the exact weighting of how much of which is is affecting interest rates, but but maybe if if you can give us some some some flavor on this too.

Ganesh, Business Development, Adeco Bank: Yeah. I will just answer, Ladan, in two ways. First of all, on SME, you heard me saying that the competition is quite dropping the price quite steeply. And they are following, you know, all the interest rate cards and beyond to gain volume because as the demand is going down, they need to stimulate volume with much lower price. So we took an approach to still keep a quite a sizable premium versus the market.

We may we may slightly adjust it down to drive the growth as I as previously pointed out on the SME side. Whereas in the consumer side, we see again a drop there from the competition. In this place, we still keep our premium price compared to the competition. We will not drop those prices corresponding to the competition because we do have USPs which justifies high margins and we see a good growth coming in consumer. So that’s how we will balance the price equation.

Mladen Doritic, Analyst, Osterbank: Thank you. Thank you, Ganesh. Thank you very much. And just regarding the latest reading on the capital adequacy ratios, so this 21.6. This is with the undistributed profit in right?

Edgar, Financial Officer, Adeco Bank: Correct, Mladen. So the 21.7 includes the audited profit for the year 2024 and does not deduct any 2024 dividend. Mhmm. As for the year 2025, as every year and as usual, so we have not changed our disclosure here or methodology, the 14,500,000.0 profit, for example, in the first quarter twenty twenty five is not included in the capital.

Mladen Doritic, Analyst, Osterbank: Is not included. Not Good. Okay. That’s all from my side. Thank you once again and see you in a quarter.

Herbert, CEO, Adeco Bank: Thank you very much,

Tade, Risk Management, Adeco Bank: Graven. Ladies

Healy, Chorus Call Operator, Chorus Call: and gentlemen, that was the last question. I would now like to turn the conference back over to Sara for questions on the webcast.

Sara, Webcast Q&A, Adeco Bank: Thank you, operator. We have received, one question via the Q and A tool. And the question is, please better explain the deterioration of profitability and especially to I ratio, which is significantly worse when compared with the leading peer banks in the region?

Edgar, Financial Officer, Adeco Bank: Okay. So thanks, Sara. I will take that. Whatever the leading peer banks are that that are being looked at. If you look at recent disclosures, also NovoLogan Skaban just disclosed today.

Also, ERSDARIF hasn’t disclosed a couple of couple of days ago. We would not consider them as direct peers, obviously, from the business model and also from the regional footprint. So let’s stick with NLB for a second. NLB is actually down on a net profit 10% year over year, and and this includes also an acquisition of of the of this SLS leasing part. Still a very good result, which they printed and I would congratulate them for that.

When you look at the cost income ratio, so yes, 63% is well above the comparative peers, let’s call it this way. We are, as I said also in my part, we are depending on further growing our portfolio. We are doing this following a prudent risk approach. So we are not just dropping volumes into the balance sheet regardless of the price and risk profile. And in this sense, we are very careful.

This also sometimes limits in more volatile times demand on one hand, but also the appetite from an internal side. So on the cost side, we have actually increased only 4.1% year over year. This is significantly below any peer. And on that front, we need to work on the top line to get the costincome ratio closer to the peers, whoever the peers are in this sense. But please also note that the cost income ratio of many banks that have predominantly variable portfolios after the six rate hikes rate cuts since June 2024 until the end of the first quarter, actually now seven as of today, you also see this naturally in banking p and l’s.

Herbert, CEO, Adeco Bank: Yeah. Maybe one last comment in the overall context to that. Our clear goal is to get closer to 50 in in the stepwise approach.

Sara, Webcast Q&A, Adeco Bank: Thank you. This was the last and only question, and I would like to hand over to Herbert for closing remarks.

Herbert, CEO, Adeco Bank: So thank you very much for your attention. We see us the next time in August in our report on the half year results. Thank you very much and have a good day. Goodbye.

Healy, Chorus Call Operator, Chorus Call: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

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