merzbank AG(US:CRZBY)2022-02-17 19:20Financial Data and Key Metrics Changes - The company reported a net result of €430 million for 2021, despite extraordinary burdens of nearly €2 billion, achieving an operating profit of €1.2 billion [3][15][17] - The operating result for Q4 2021 reached €141 million, with a net result of €421 million, including a tax gain of €199 million [15][16] - The CET1 ratio improved to 13.6%, with a buffer to MDA increasing to 420 basis points [16][39] Business Line Data and Key Metrics Changes - In the Private and Small Business Customers (PSBC) segment, net commission income increased by €215 million or 11% year-on-year, with Q4 alone showing a €53 million improvement [19][29] - The Corporate Clients segment maintained loan volumes while increasing average RWA efficiency to 5.2% [30] - The Securities business saw a volume increase supported by a net inflow of around €4 billion in Q4 [27] Market Data and Key Metrics Changes - mBank benefited from rising interest rates in Poland, leading to an expected €200 million increase in NII per year [23] - The Polish Central Bank's rate hikes have positively impacted mBank's financials, with expectations of further increases throughout the year [23][80] Company Strategy and Development Direction - The company aims to resume dividend payments with a payout ratio of 30% starting in 2022, with plans to increase payouts to 50% thereafter [14] - A strong focus on sustainability is emphasized, with targets for a net-zero credit and investment portfolio by 2050 [11][12] - The company is actively streamlining its international network and optimizing its branch network, reducing the number of branches from 800 to 550 in 2021 [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in taking positive momentum into 2022, expecting a net result of more than €1 billion [14][41] - The company anticipates challenges but remains committed to achieving strategic and financial targets [13] - Management highlighted the importance of maintaining cost discipline while navigating inflationary pressures [24][63] Other Important Information - The company has made significant progress in its redundancy program, with over 6,000 job reductions already secured [7][56] - The risk result for Q4 was €313 million, with an overall cost of risk on loans for the year at 22 basis points [26] Q&A Session Summary Question: On net interest income (NII) guidance - Management indicated that the guidance for NII is conservative, with expectations to exceed the Q4 levels in 2022, driven by higher NII from mBank due to rate increases in Poland [45][51] Question: On capital return timing - Management confirmed that dividends would be considered quarterly, with final decisions made in 2023, and share buybacks would require regulatory approval [46][48] Question: On the redundancy program timeline - Management stated that the remaining job reductions would occur over the two-year transformation period, with no slippage in the timeline [56][58] Question: On share buybacks discussions with the ECB - Management confirmed ongoing discussions with the ECB regarding share buybacks, emphasizing the need for further progress in transformation [58][59] Question: On customer churn expectations - Management expects some churn in 2022 due to branch closures but believes it will be manageable and offset by future growth [29][70]