Financial Data and Key Metrics Changes - The net result for the first nine months reached EUR1.9 billion, translating into a return on tangible equity (RoTE) of 8.8%, on track to meet the target of at least 8% for 2024 [6][56] - The CET1 ratio has been increased to 14.8%, with expectations to reach 15% by year-end 2024 [7][51] - The cost/income ratio for Q3 was reported at 58%, with a target of 60% for the full year [21][39] Business Line Data and Key Metrics Changes - Fee income increased by 7.6% year-on-year, driven by growth in transaction banking, lending, and FX trading [25][26] - Corporate Clients reported strong performance in trade finance and syndication, maintaining a cost/income ratio of 44% [46] - PSBC Germany's revenues remained stable, with growth in the securities business offsetting lower net interest income [47] Market Data and Key Metrics Changes - The forecast for risk-weighted assets (RWA) at year-end 2024 is EUR174 billion, down from EUR177 billion previously expected [10] - The company anticipates a total RWA relief of EUR10 billion by 2027 compared to earlier planning [11] Company Strategy and Development Direction - The execution of Strategy 2027 remains a priority, with a focus on capital optimization and cost efficiency [4][20] - A new strategy is being developed, with a presentation scheduled for February 2025 [5][20] - The company aims to grow revenues, particularly in net commission income, by expanding offerings for ultra-high net-worth individuals [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue targets of EUR10.9 billion for 2024, with an improved outlook for net interest income [55] - The economic environment is expected to remain challenging, with GDP growth projected at only 0.2% for 2025 [81] - Management noted that while default rates are expected to normalize, corporate clients have shown resilience [65][81] Other Important Information - A share buyback of EUR600 million is set to commence, with an additional buyback of up to EUR400 million planned [7][53] - The company is committed to a capital return policy targeting at least 70% of profits [54] Q&A Session Summary Question: Net interest income trajectory into 2025 - Management indicated a gradual adjustment of core money offerings and emphasized the importance of considering NII and fair value together [61] Question: Climate risk provisions - Management explained the decision to book collective provisions for climate risk early, aligning with regulatory expectations [61] Question: Mark-to-market of assets and liabilities - Management stated that updates on the mark-to-market will be disclosed at year-end [63] Question: NII guidance if rates fall below 2% - Management confirmed that the sensitivity analysis provided covers the expected range for next year [64] Question: Customer relations amid capital management - Management reassured that client relationships remain unchanged and emphasized support for clients [69] Question: RWA efficiency and capital distribution - Management discussed the gradual approach to capital return and the potential for increased capital distribution in the future [70] Question: Provisioning and methodology changes - Management indicated no immediate changes in provisioning methodology are expected, but future regulatory updates cannot be ruled out [80] Question: Growth in core businesses amid economic challenges - Management expressed confidence in growth despite economic headwinds, particularly in the Mittelstand segment [81] Question: NII expectations for Q4 - Management projected a slight decrease in NII for Q4 due to time effects and market conditions [84] Question: CET1 ratio target and capital return - Management clarified that the CET1 ratio target remains at 13.5%, with a forecasted ratio of 15% by year-end 2024 [85]
merzbank AG(CRZBY) - 2024 Q3 - Earnings Call Transcript