Welcome from Komercni banka and thank you for sharing your time with us today. It is the 6th of February 2025 and we are going to discuss the results of Komercni banka Group for the Full-Year and the Fourth Quarter of 2024. Please note that this call is being recorded. Our speakers today will be Jan Juchelka, Chairman of the Board and CEO of Komercni banka, Jiri Sperl, Chief Financial Officer, and Didier Colin, Chief Risk Officer. Standing by in case of your questions are Jitka Haubova, Chief Operating Officer, Margus Simson, Chief Digital Officer, Miroslav Hirsl, Head of Retail Banking, and David Formanek, Head of Corporate and Investment Banking. As usually, we will begin with the presentation of results, which will be later followed by questions-and-answers session. During the presentation part, all participants will be on a listen-only mode. We would appreciate if you could keep your microphones muted during the time. And now let me ask the CEO, Jan Juchelka, to begin the presentation. Thank you.

All right. Thank you, everyone. Sorry, did you hear anything or nothing?

Nothing.

All right, so I will repeat my opening speech. Thank you very much. Welcome, everyone. Thank you for giving us the opportunity to stay in front of you together with the leadership team of Komercni banka and lead you through the presentation of Q4 2024 results and the entire year 2024 results. Before we jump into the pages, just let me say that we highly appreciate your work when covering KB shares and also having the opportunity to see the reaction of the market on today's presentation. We are very glad for this type of, for this level of trust. Speaking about Komercni banka in 2024, we were more or less all over the place, we were still at the beginning of the year in the first quarter in charge of paying secured receivables for the clients of Sberbank on behalf of the guarantee fund of the financial markets here. We started at the beginning of the year a huge migration wave of our retail clients from the old world to the new world and I'm glad to say that we achieved more than 1 million users in the application KB+. We continued our intensive investments into technologies and innovations and in parallel with that we were able to grow the NPS also on the new application. In September this year -- in September 2024, there were huge floods in the country. We were at hand to our clients either retail or corporate in postponing the repayments, in taking care of the insurance claims together with our sister company Komercni pojistovna and we donated almost CZK15 million through our foundation of Komercni banka. In 2024, we remained one of the largest taxpayers in the country and in 2024, we have also made significant steps forward in the transformation of retail banking from organizational and operational point of view as well as in the transformation of Modra pyramida building 7 company which in fact became the only center of expertise for housing loans in our group and took over the entire responsibility for the customer journey related to housing. So let me invite you to the kickoff page. I will be very brief. All the hard work which I have just described was translated into growth of deposit of our clients by 2.3% on year-over-year basis, client loans by 2.5% inside which the new sales of housing sales totaled at 34.1% which means that the clients are back to ask for housing loans, mortgages and the clients are back reacting also on the decreasing prices. Other assets under management grew by 11% in total. Inside this category, the mutual funds by more than 20% so continuous dynamic growth of the assets under management outside the balance sheet of the bank. Insurance premium written, the life insurance grew by 2.9% out of which risk life insurance by 13% and the non-life insurance by 18% on year-over-year comparison like this double-digit growth and it just confirms strong position of Komercni pojistovna at the Czech market. Komercni banka remained one of the best capitalized companies and banks in the economy. The total capital ratio remained at 18.77% core Tier 1, 17.64%. From liquidity perspective, again, confirmation of strong position of LCR 166%, NSFR respectively 131%. All of this inside let's say very comfortable territory of loan to deposit ratio of 82.9%. It was translated into very strong income statement. The group net income is at the CZK1.2 billion. We contributed in the fourth quarter which was the biggest or, let's say, the strongest quarter ever in the history of the bank from revenues perspective and one of the strongest for net profit contribution point of view. So the contribution to the total net income was CZK4.7 million last year, the Q4 2024. Earnings per share 91.3% -- sorry, CZK91.3, which we proposed as a Board of Directors of Komercni banka to be entirely distributed in the form of dividends. Cost of risk remained extremely low. The high quality of our assets brought us to 11 basis points at the end of the year of 2024. Cost to income ratio was compressed below 50% at the level of 48.2%, whereas in the fourth quarter it was at the level of 43.6%. ROE on standalone basis delivered by KB to the market is 13.7% and 13.1% [ph]. Komercni banka as part of its decision, please can you confirm you can hear me because it's changing how the picture, I don't see the presentation now. So let me just use --

We can see the presentation and we can hear you.

I don't see the presentation, sorry. I need to open another. Yeah, I can see it now. So you can still remain in the highlights. Okay. So here, just last sentence, as part of our decision making process, we finalized the disposal of headquarter building in the center of Prague, the Vsclavskr nsmesti 42. The buyer was city of Prague, so we are confident the house will be serving the Prague citizens down the road. Obviously, whatever you see as a reported number versus recurring number, the difference between those two goes to the account of the net profit realized through this disposal. Komercni banka grew its number of clients migrated from the old to the new world above 1 million users. Komercni banka was also awarded as a responsible bank of the year in 2024. Komercni was the Supervisor Board of our bank, re-elected my person for the next term starting August 5 of 2025. And as I mentioned already, we are giving back to the market the entire profit -- the entire net profit subject to the approval of supervisory board and the general assembly of the shareholders. We can move to the next page, please. Macroeconomic environment. I would say, was framed by pretty well-known indicators, i.e. rather mediocre growth, but still growth of Czech GDP accompanied by a continuously tight labor market with very low levels of unemployment below 3%. Inflation seems to be under control, if I may say, back to the corridor where the central bank wants to see it and is further compressing and being followed by the reaction of Czech national bank to the levels of 4%, which is minus 300 bps on year-over-year comparison. Czech koruna remained vis-a-vis euro at more or less flat at CZK25.2 per EUR1 and CZK24.2 per $1. So on that front, no big drama has been happening. And I'd say this level of Czech crown is somehow at least helping the traditional exporters amongst our corporate clients. We can probably move to the next page, which is related to loans. The gross loans grew by 2.5%, mainly driven by already mentioned good dynamics of financing for retail, i.e. mortgages and consumer lending, respectively, and a rather mediocre growth of corporate financing. Inside the corporate financing, what is probably remarkable here is still almost 7% growth of the financing through SGEF leasing. Let me remind that based on our SPA, which we signed with SGEF International, Komercni should become 100% owner of this company, more or less in weeks. What is probably worth to mention and combine a little bit of macro with a picture of the performance of financing for retail by Komercni banka is the 34.1% year-over-year new sales of mortgages and building savings loans combined with a strong demand of people and second, let's say, favorable evolution of pricing of mortgages during 2024, which we believe will be continuing also during 2025. Maybe we can go to next page. Here we are showing the transactions which we have achieved in Q4. You can see that Komercni was all over the place, accompanying its corporate clients in fulfillment of their projects. We were also at hand to very important and transformative transactions such as Czechoslovak Group and its acquisition and expansion of their businesses into the United States. We are also mentioning Slovenske elektrarne. There was a total refinancing of the company after putting at work so-called Mochovce 3, which is the newly built and finalized nuclear capacity in Slovakia. Let me also say that Slovakia became emission-free energy producer and large exporter of energy after completion of this construction. We are very proud of being close to Slovenske in their construction part and we are remaining their partner when they started to operate the new power plant. Let's move to next page, which is dedicated to deposits. The deposits were up by 2.3%. What is probably important to say is that we very much like the distribution of this growth between current accounts and remunerated savings. So we see that after a few quarters when it was completely different, this time the current accounts are growing by 5%, whereas we see slight decrease in the field of term deposits and saving accounts. Having said that, Czech retail client has found a certain habit to get remunerations from its deposits. Hence, they are searching for more or higher returns in the field of investment products. I am proud to say that the assets under management in mutual funds, which we are selling either through our private banking or together with Amundi, grew by 21%. There was a mediocre growth on the KB life insurance reserves, and the pension fund company. In total, it totaled a double-digit growth of 11%. So that's it from my side. I'm handing over to Jiri, our CFO. Thank you.

Thank you very much, Jan. Good afternoon, everyone. Indeed, the KB Group delivered extraordinary results in Q4 last year. It is, by the way, the third quarter in a row when net income after tax is growing, as is visible from the right upper chart. Of course, I'm talking about the underlying profitability, right? So, without the impact of the sale of Vsclavskr nsmesti. The waterfall chart is visualizing the main drivers of the profitability on a four-year basis, right? It is, from the chart, clearly visible that mainly fees and commissions are contributing positively, growing by almost CZK900 million year-over-year. Regulatory charges decrease also contributed positively by almost CZK0.5 billion, which, by the way, was expected. On the other hand, still, NII is on a full-year perspective still in a bit negative territory, but with very good trends, as I will show you in a minute. Naturally, OpEx, and now referring to OpEx without regulatory charges, are increased not too much. It's around 2.3%, again, details later. But definitely, it is below the inflation. And on top of that, in this situation, we are transforming the bank full steam. And also, cost of risk is higher than in 2023. But here, it's clearly the base effect. The absolute provisions creation was not high in 2024. The point is that in 2023, the cost of risk was around zero. And, of course, the general comment. So, all-in-all, this leads to the underlying profits at the level of CZK14.8 billion, i.e. slightly below the last year. But if you add the profit from the sale of the Vsclavskr nsmesti, net income after taxes jumping to CZK17.2 billion, growing year-on-year by more than 10%. This, of course, transposed also to the profitability indicators, as already Jan was commenting. So, let's move to the balance sheet. The total assets went up by 1.3%. No surprise that on the liability side, supported mainly by deposits. On asset side, placed to the loans. There is one structural change that is worth to comment. Maybe I was touching already three months ago, but it's a bit of a reshuffle of the investments of the liquidity surpluses, right? In 2024, as it's visible from the chart, we are preferring to invest into the Czech [indiscernible], growing roughly by CZK20 billion, while the volumes of repo with central bank went slightly down. Jan was mentioning some liquidity indicators, maybe to add LTD, loan to deposit ratio. So, it is still in a very safe territory at the level of 18.3%. Net interest income -- well, so, as I see or would like to convey two key messages. On a full-year basis, as I was mentioning before, still there is a bit negative. And basically, it is still partially, negatively influenced by weaker NII from investment banking and also by increase of the regulatory interest costs, right? What I mean are the instruments for emerald obligations. Currently, we completed it. By the way, we are not planning none for 2025, maybe in 2026, while income from the loans was growing, again, on a 12-month basis, very solid pace. And here, we can see an indicator that both volumes and price effects was positive. On top of my head, the average spread on loans increased by 30s basis points, which is not a kind of magic, but it is, to say, a bit of a recovery of interest, because in the years before 2024, the spread was going down. And still, on a full-year basis, income from deposits is basically quite flattish. The positive quarterly dynamics I was referring to before is shown at the bottom right chart. And it's my kind of pleasure to say that Q4 is another quarter. And here it is, in this case, it is the third one in a row growing. And what is, from my perspective, even more positive is that so-called core NII, core net interest income, i.e., income from the loans and deposits are already fully contributing positively, quarter-over-quarter, etc., etc. And mainly, the income from the deposits are growing dynamically. Of course, what helped was kind of improvement of the structure, yes. And basically, the lower cost of funds in the environment of declining of the market interest rates. All-in-all, this transports into NIM slightly growing, quarter-over-quarter. It is by 10 basis points to the level of 174%. Still, year-over-year, it is slightly negative. But already now, I can indicate that in 2025, we are expecting and are going to guide the slight increase of NIM by comparable 10 basis points, like was the case between Q4 and Q3. Fees and commissions, without any doubt, the best quarter in the history of the bank -- of the Group. It's CZK2.4 billion on a quarterly basis. This led to the full-year growth, double digit, more completely, 13.7%, with two main drivers. And probably not surprising, first, fees from cross-selling, up by 23% due to a very dynamic growth of the non-bank assets under management, as is one of the strategic priorities of the bank. And second, a very successful specialized financial services fees generated in Q4, due to kind of services with a high value to our corporate clients. And Jan was mentioning some of these transactions already before. In terms of financial operations, it is also adding good increments, so it's another quarter above CZK1 billion. I remember that I was commenting three months ago that Q3 results in this category was historically the highest, so we are not so far from this very good result. And what is also positive is that both components are contributing still at a quarterly perspective. On the full-year basis, the income is, and it is by chance, absolutely the same like one year ago, i.e. CZK3.832 million. And what is, again, worse to mention is that the structure has changed. And I can say that in a very positive direction, because the growth on a yearly basis, it is very much influenced by net gains on FX from payments, i.e. mainly FX transactions on a structural book, while capital markets are going a bit down. And last, before passing on to the year, is cost side. As mentioned before, the costs are growing by 2.3% year-on-year, i.e. below inflation. Personal costs are growing a bit faster by 5%, as an implication of the annual salary increase, I think, as of April 1, last year, offset partially by the decrease of the employees in 2024. In terms of GAE, and again, excluding resolution and other similar funds, it's under very prudent control, so growing only by 2%. What supported the cost side was the resolution and similar funds, as I commented before. And again, no surprise on depreciation and amortization, growing still of low teens, double-digit, as a mirror of activation of the new assets, like related to the transformation, mainly a new digital bank. All-in-all, this led to a cost-income ratio at 48.2%. Again, now I can indicate that cost-income targets for 2025 are going to continue this positive trend, i.e. south. So that's from me now, and I'm passing forward to Didier. Didier, please go ahead.

Thank you, Jiri. Good afternoon, everyone. Turning to the asset quality in the fourth quarter, there's probably one main takeaway, which is the improving trend in the default trade for the three portfolios which were a little bit under pressure in the recent quarters, namely the consumer lending, the small business lending, and the SME lending portfolios. So in the fourth quarter, we have started to see the favorable reversal of this default trade. And second point, without any change from the previous quarters, is the continued resilience of both the large corporate and the mortgage loan portfolio, large corporate being near zero default level, and the mortgage loan portfolio being very close to the historically low point which we reached in 2022. So translating this default rate input or drivers into the IFRS 9 risk classification of the loan book, in fact, as you can see on the slide, the key word is stability. The exposure classified in Stage 2 grew very moderately. And what is very important to keep in mind and hasn't changed in the recent quarters is that the intensity of migration between those asset classes, S1 and S2, continued to be very low in the first quarter, further confirming the stability and the resilience of our non-defaulted portfolio. The exposure of part of our loan book classified in default or in Stage 3 remained very stable quarter-on-quarter. So this, in fact, is clearly illustrated by a very stable Stage 2 ratio, fluctuating within the 14% to 15% range, a slightly contracting NPL ratio or S2 ratio going under the level of 2% in the fourth quarter. And the provision coverage for this defaulted portfolio that was very stable in the fourth quarter due to the limited provisioning activity in the fourth quarter. So turning to the cost of risk overview for the fourth quarter on the next slide. And starting with the quarterly view, we, in fact, reached a lower level than we expected and a low level of CZK40 million. And behind this low level, in fact, you have three main supporting favorable risk drivers. The first one is the one I just mentioned, which is the default rate contraction of the recently more sensitive portfolio, consumer loans, small business and SME. The second one is in the fourth quarter, we started to record a better rating distribution for the non-defaulted small business portfolio, which produced some favorable effect into our quarterly cost of risk. And finally, the better outlook for residential prices generated some technical IFRS 9 release last quarter. So in terms of structure, we booked CZK150 million for the corporate segments. And in fact, this quarterly creation was concentrated on one single non-defaulted client situation. So again, a good sign in terms of the overall resilience of our loan book. The creation for coming from the retail portfolios was way below the average, the quarterly average at CZK90 million. And we also booked in provision release almost CZK200 million coming from those technical IFRS 9 recalibration coming from this better outlook in the area of residential real estate prices. One word on our so-called inflation or post-inflation overlays, we kept them stable through the fourth quarter as it was announced to you last November. And this stability approach is being reassessed in the context I just mentioned, which is the context of resilience and stability of our default rates, which will generate some potential release in the next three years under our central macroeconomic scenario. One word on the table, which is at the bottom of the slide, on the right-hand side, showing to you the structure of the full-year cost of risk for 2024 at 11 bps. In fact, you see that the defaulted portfolio contributed for only 1 basis point, which is the best illustration of our strong loan recovery performance last year, both for the corporate and for the retail portfolio. And the 10 bps on the non-defaulted is a good illustration of our prudent approach regarding the provisioning of the non-defaulted part of the loan book. And one short final word for this cost of risk section on the guidance for 2025. In fact, we will guide you at the levels of cost of risk, which again are expected to be way below the cycle level, which is anywhere between 20 bps and 30 bps. And this has three underlying elements. One, which is a situation that we had mentioned to you last November, which is the favorable evolution of one of our corporate client situation, which will generate the material amount of provision release most likely in the first quarter. And then two important assumptions. One is that under the central scenario, and as I just mentioned, we plan on gradually reversing our inflation or post-inflation overlays currently scheduled over the next three years. And the second important and reasonable assumption is in terms of the further stability of our default risk across all portfolios, whether products or client segments. And that concludes this cost of risk section. And now I'm handing over back to you, Jiri. Thank you.

Thanks, Didier. Shall we move to the next slide? Yes. Well, the capital remains very strong as of the year, and the capital adequacy is at the level of 18.8%, i.e. as for now wide, roughly 210 basis points above the minimum requirement by CNB, and even above the management buffer. Just to remind, the management buffer of KB is between 50 basis points and 200 basis points. The bottom chart is describing the capital generation and consumption. So it's clear that the bank created a bit more than 300 basis points of new fresh capital, and at the same time, created a dividend provision at the same size. As consumption of capital via risk-related assets is marginal, all-in-all, the capital adequacy is basically flourish. Right. In terms of other capital instruments in 2024, we didn't need to go, and we didn't go neither for sub-debt due to capital, nor for the senior non-preferred loans. And now it seems that it is likely that due to the really strong capitalization, this will not be the case neither for 2025. And this is bringing me to the capital management dividends chapter. Jan already, could we move please? Yes. Jan already touching the point. So given the very strong capital, as I mentioned before, KB Board of Directors proposes to the annual general meeting payment of dividends worth CZK70.2 billion, which represents 100% of the consolidated 2024 net profit. This is also the case for the guidance for 2025. To say, based on our simulations, the capital adequacy will remain very strong even in 2025, even this year, even if we return the profit to our shareholders. And that's why for 2025, BoD has decided to maintain the dividend policy at an exceptional level of 100% of the attributable net profit generated in 2025. Of course, ready during the Q&A session to answer your dedicated questions. And the last slide of the presentation is about the outlook for 2025. Again, Jan already touching on macros. So let me move directly to the banking market assumptions. It is expected that both loans and deposits are going to grow by mid-single digit. And in both categories, retail a bit faster than corporate. On this market, KB would like to grow even a bit faster. And again, it's mainly the case of retail as we are around the end of its transformation. So we need now to monetize on the given investments more. In terms of financials, the ambition is high. So we are guiding that revenue should grow by high single-digit rate on a year-on-year basis. And the main driver here is going to be net interest income. But also other categories, i.e. fees and commissions and net profit on the financial operations will contribute positively. OpEx is expected and I think here it is a bit variation versus what we were guiding three months ago for 2025. Expected to fall a bit below single digit. I think last time, we were guiding more or less variation. And what you can see behind is continuing overall simplification, optimization of the branch network, number of the branches is going to go down further. And also related decrease in the number of the employees. And in 2025, we are talking about roughly 500 employees and that's to deliver one of the strategic targets in terms of FTEs. Of course, what will also help, well, of course, what will also help is, again, resolution fund charges, as was the case in 2024. And here, based on the announcement of the resolution authority, we are expecting it to go down on top of my head roughly by CZK300 million. So, of course, this will help as well. That's OpEx. Didier was covering credit risk in terms of potential risk of these prognosis or outlook. It's very much about the geopolitical risks. So, that's it. I'm stopping now and passing the word back to the studio. Thank you for attention.

Thanks to all the presenters. In the next part of our today's meeting, we will be happy to answer your questions. Let me remind you that this meeting is being recorded. [Operator Instructions]. And it will be coming from Robert Groza from PECA BP [ph]. Robert, please go on.

Thank you and good afternoon. Congratulations on the really excellent result. I have a question on those cross-selling fees. Namely, how sustainable do you think is that jump and the new level of cross-selling fees? How much of that higher level in business is coming from the changes in the distributed funds? I saw that you distributed a much larger amount of equity and other funds compared to previous quarters. I'm curious to know whether that money is flowing into, I would presume, global funds or maybe some part of that also reaching local equity funds. So, that would be another question about the sustainability and the outlook for capital market products in general going forward. Thank you.

Okay, thank you for your question. I will start and probably Miroslav will continue. The growth in the area of cross-selling fees is very much driven by strong sales of wealth management solutions across retail market sub-segments. And it is relevant for all sub-segments. What I mean is mass markets to private banking, including mutual funds, insurance solutions, etc. The assets under management, just to remind what Jan was commenting on before, were growing year-on-year by 11%. The cross-sell fees by roughly on top of my head, 13.7. So, there is a clear correlation. As you are correctly mentioning, there is one structural change and that's the client started to listen more to the investments into more dynamic solutions before it was more about the investments into money market funds. And, of course, these more dynamic solutions are generating also more attractive fees for the bank. Specifically in Q4, the growth was boosted by reaching the threshold for the performance fees in pension fund of KB. And to say that openly, this is not sustainable, right? So, this level of cross-sell fees, this is not a new normal and you should rather expect a correction in Q1 next year. Thank you. Miroslav, do you want to complete me off?

Yes, just a few sentences looking at the fees generated by retail. A few comments there. We do show quite solid growth of premium insurance. Insurance premium double-digit was in life and non-life for a few years already and we still believe that we can keep moving forward there. This is not true to the one that is linked to sort of investment-saving part of the insurance. It is already commented but I'm speaking about products that are really like insurance slash protection and they are quite promising. And the second, not only volume of investment funds but also the structure as you may have seen it on one of our slides, where we started the year with approximately 25% of products or investments going to equity and we ended up by 50%. So, if you would ask me for consolidated view of the whole year it is probably 40% and it helps us a lot on fees generation. On the other hand, fees for payment transactions in retail in Czech Republic are almost non-existent and if they are still some and they will disappear soon and we need to play smart with pricing for packages or for day-to-day banking solutions. So, this is like a very short summary of what I see happening around.

If I may add maybe two more questions about the insights here. Could you share, I mean I'm sorry if I had missed that, how much of the quarter-to-quarter growth in fees from cross-selling they jumped from 570 to more than 960 was coming from that performance-based fee expansion fund, that's one. And second, you've mentioned a successful transition of customers and onboarding the new platform. I'm wondering how -- what, I mean how, what's the share of fee business being generated by the new platform and how do you see the prospects of this digital distribution different or improving perhaps the overall business performance in the aspects of the digital distribution of various products across the bank?

Well, I will start with the first part of the question. The performance fees are basically coming from all of the -- let's say, companies we are talking about was at the level of CZK250 million, CZK300 million. So, this part could be attributed as non-recurring. I believe this was behind your question. And the second part, I'm leaving to Miroslav.

There's no fees generated by the new platform per se, by the way. It's still clients that we migrate or clients that we acquire them. And the value proposition and the pricing on the market is changing and we do follow the change. As I commented, transactions zero, packages a bit. It is a practice on the market that we have to provide an account free of charge, quite solidly equipped, which is 50% of our production at the moment, be it through acquisition or be it through migration. On the other hand, what we wanted to see at the very beginning is that once we migrate the clients from the old bank to the new one, we keep at least the same revenues. And we do keep at least the same revenues, which is giving us solid base for cross-selling and increasing a bit. On the other hand, I don't believe we will achieve a lot more by increasing the price per unit. We will have to achieve a lot more by having more units with clients, with products, being whatever of this kind.

Thank you very much.

You're welcome.

Thank you. [Operator Instructions]. We may have one more from Robert. Rob, would you like to ask one more?

Yeah, sure. I would use this opportunity maybe to ask about capital distribution plans for the future. As I understand, this higher payout, which you foretell out of 2025 earnings is a sort of a sign of an increased confidence in the profitability of the bank, I believe. And I think, I mean, if you could maybe, if you may comment on more strategic goals regarding the payout in the coming years, provided that the new online platform delivers and that the competition for, be it a deposit or loans, doesn't materially heat up in the Czech banking system. So, in other words, the current ROE prevails. In such circumstances, would you consider maintaining somewhat higher payout ratios in the subsequent years post-'25 than were the average, so to say, norm before COVID struck?

Yeah, should I start or you won't? Okay. Well, I would say that the fact that we are able to increase on an extraordinary basis the payout ratio in 2025 is saying very much about the very strong discipline in the capital management, very much supported by the fact that for the time being, and I was commenting on that before, that the main driver of the growth is going to be retail, of course, with naturally much lower risk rates, while the corporate is going to grow only with the market. In terms of the time beyond 2025, just what I can say is that if we are in the similar situation like now, of course, we are not going to sit on shareholders' funds, but at the same time, it is a policy of the bank not to guide dividend payouts beyond the next 12 months. So, everything I can comment on now. Thank you.

Right, I appreciate the answer. Maybe one more on taxation tax rates, because I believe the '24 effective tax rate was only slightly above 15%, whereas the headline corporate tax rate in the Czech Republic is much higher these days, and the average effective tax rate for the bank for the past several years was at the level of 18%. So, my question is, with the headline 21% corporate income tax rate, where do you see yourselves over the coming few years? Are there ways for the bank to maintain this relatively low tax rate going forward? Or where do you think you can find yourself with what level of average taxation over the coming year, or later on also? Thank you.

Okay, thank you for the interesting question. The answer in one word is no. 15% is not kind of a new normal. Why? Because from this perspective, 2024 was kind of extraordinary, because the income from the sale of Vsclavskr nsmesti was net of tax, right? We were not selling the building itself, but we are selling the company, and based on local legislation, tax legislation, this is after some time tests, free of tax. So, for the years to come, you can expect, let's say, similar effective taxation like it was before 2024, i.e. around 18%, maybe with a slight potential to even improve, but 18% is a good guidance.

Got it. Many thanks.

Thank you. So, the next question is coming from the line of Shane Mathews. Shane, please, can you introduce yourself and ask your question? Thank you.

Yes. Hi, thank you for the opportunity, Shane from WhiteOak Capital. Just one question. I think the improvement in the deficit structure has been quite impressive, and I think you've been guiding for the past couple of quarters, but I just want to understand the sharp, let's say, improvement, let's say, in the current accounts, improving quite rapidly quarter-on-quarter. I just want to understand how, let's say, just get a better insight of what exactly drove this, let's say, improvement over the past quarter. And I think you mentioned in the guidance as well, you expect the share of current accounts to be more or less stable going forward. So, I wanted to get your thoughts around this current account mix, the sharp move quarter-on-quarter, and how you're thinking about this going forward?

I can start. I'll touch the question. Well, that's true that the shift between the paid deposits and unpaid deposits in Q4, quarter-over-quarter, was tremendous. Here, just I would like to remind one thing, i.e. that the end of the year is kind of extraordinary months, and it is, or quarter, if you wish, and it is very much related still to the resolution fund charges. And this leads first to slight decline on the deposits, the deposit base, simply the banks, all banks, are a bit demotivating clients to place money within the bank, because it is costly. And it was the case also, well, one year ago. And at the same time, there is a shift between paid and unpaid. So, I would make some conclusions on that once it is confirmed in Q1. Definitely, what I'm expecting during the Q1, that there will be at least partial shift back to the paid deposits. Thank you.

Right, thank you.

[Operator Instructions]. So, it seems the presentation has been pretty clear, maybe even clearer than before. Sorry, [indiscernible] from UBS is going to ask his question. Please, Matt, go ahead.

Yes, good afternoon, and thank you for taking my questions. Two questions, please. Firstly, would be on Didier comments regarding the release of inflation reserves over, I think you said, three years. Should we think of this as a gradual release over a time period or not necessarily? So, what would be the profile? And the second question would be on capital and capital trajectory. Should we expect any meaningful sort of non-organic or regulatory effects in RDB consumption or RDB growth over 2025, or this should be roughly developing in line with loan groups?

So, I will start with your first question regarding these IFRS 9 overlay reserves. And as you correctly mentioned, the release under a central scenario will be gradual over the period '25 to '27. That's currently our plan.

Do you want Didier also to comment on the risk-related assets? I can do that.

Go ahead.

Okay, well, of course, as of 2025, there is a new regulatory frame, Basel IV. Here we are just confirming what we are saying, I think, three months or six months ago, that the impact of Basel IV into the capital will be rather minor in terms of credit risk. On top of my head, we are talking about low tens of basis points. On the other hand, there will be even positive impact coming mainly in the area of the market risk. And here, our current expectation is, let's say, high tens of basis points positive, right? So, that's the second important expectation we are working with. And the third one, which is not very much about the regulatory changes, but about improvements in our capital management. And that's IRBA on one of our subsidiaries, which is, as Jan was mentioning, becoming soon fully owned by KB, that's SGEF. And here, we are expecting that in probably, not probably, in 2026, this will, of course, further make capital consumption more efficient. So that's probably three main aspects we are expecting in the years to come.

That's great. Thank you.

Thank you. And there is going to be another question from Shane Mathews from WhiteOak Capital. Shane, please go ahead.

Yes, thank you. Thank you for the opportunity. One more question. On the NII, let's say, recovery into 2025, I think, last year, last two years, there's been some negative impact from the hedging income, hedging expenses. And in the last two, three quarters, this, let's say, impact has been less negative over time. So this 2025, should we expect this to also, let's say, gradually recover, and this negative impact to also normalize over time, so that NII growth would be driven by two main factors, this hedging losses, let's say, reducing over time, and also, let's say, the income spreads with the income in the mix of deficits?

Yes, I probably would not make some conclusions on the hedging, you call it hedging losses. Of course, the picture is more colorful, right? Hedging operations are hedging -- let's say, overall structural position of the bank, right? So what is going to be really the main driver of NII mainly in 2025 are volumes, right, first. And second, continuing decline of the cost of funds may be to say that in March 2024, there was the cost of funds was the highest through the cycle, it was a level of 2.4. And since that time, cost of funds is declining relatively significantly. So for the time being, I'm talking about the whole bank, right? It is different for retail versus CIB. But currently, the cost of funds of KB is around 1.5%. And we are expecting that this trend is going to continue. In terms of loans, I was touching the past during my presentation. So measured by spreads on stock in 2024, it increased a bit, simply the banks didn't go down with the loans prices, the same speed like the market rates. And we are expecting for 2025, the trends to continue. So last year, we were talking about 3 basis points. So we believe that in 2025, it could continue and to add another, I don't know, 4 basis points or 5 basis points. It is -- of course, also consistent with a bit of a change of the structure of the production because the highest growth is expected in consumer financing, consumer loans, where the margins are still relatively the highest. Thank you.

Got it. That's really great. Thank you.

So now let's give a few more seconds to provide opportunity for anyone to ask a question. So the next question is coming from the line of Mr. Josef Karasek. Mr. Karasek, please, could you introduce yourself and ask a question?

Thanks. Thanks for taking the question. I'm just an independent investor. So I have a question, what's your assumption behind the return on equity for 2025 and beyond?

We were touching the point last time. So for 2025, it is, we were getting between 13% and 14%. At the same time, the original target for 2025 was at the level of 15%. And what we are seeing is that the delivery of this target is expected by one year later, i.e. in 2026. So in 2026, at least 15%.

All right. Thank you. And congratulations for the Q4.

Thank you.

Thank you. We don't seem to have any further questions at the moment. So I would like to ask the CEO for the concluding remark.

Thank you very much. Once again, thank you all for being with us, not only today, but also through your investments or when covering and analyzing KB shares, we very much appreciate that. Our ambition for 2025, obviously, is to continue with the migration of retail clients from the old world to the new world, capitalize on the new technologies and organization which became lighter over time, orchestrating the sales channels in retail amongst digital brick-and-mortar branches, tight agents, network and contact centers, which we have at hand, combined with third parties, in order to deliver strong commercial and business performance. On the side of macroeconomic outlook, we do believe that Czech Republic will remain a stable country with slightly increased growth compared to 2024. Hence, if we play our role responsibly in the economy of the Czech Republic, we should be able to continue this story of KB as you see it. Thank you very much again. I'm wishing you all a nice day and I'm looking forward together with the management team to see you at the latest at the occasion of the next quarter presentation. Thank you very much.

Thank you very much. This has concluded the meeting. You can now disconnect.