ProCredit Aktie

Ladies and gentlemen, welcome to the ProCredit Holding Q1 2026 Results Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The replay of the conference will be published on the ProCredit Holding website in the Investor Relations section. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Eriola Bibolli. Please go ahead.

Good afternoon from Frankfurt, and welcome to our call to discuss ProCredit Group's results for the first quarter 2026. My name is Eriola Bibolli. I am the Chairperson of the Management Board of ProCredit Holding, and I'm joined today by Christian Dagrosa, our Chief Financial Officer.

The slide deck accompanying this presentation is available on our website, and a recording of this call will be made available in the coming days. Before we begin, let me draw your attention to the customary disclaimer regarding forward-looking statements, which is included at the end of the presentation. We expect today's earnings call to last approximately 30 minutes. Following our presentation, we will, as always, be happy to take your questions. I will focus on the key developments of the first quarter, provide an update on the progress we are making against our strategic road map and offer some broader context on the macroeconomic environment. Christian will then take you through the group business and financial results in greater detail, including the key drivers of our performance in the first quarter.

Overall, we see a solid start to the year, very much in line with our expectations, confirming the trajectory outlined at our Q4 earnings call in March. Loan growth has continued at a healthy pace with particularly strong momentum in our micro and retail segments, which remain central to our strategic positioning. This growth is increasingly supported by ongoing improvements in our operating model and the early benefits of our digital initiatives, which are gradually translating into stronger underlying business dynamics.

Operating income has shown a promising development, increasing by approximately 5%, driven in particular by positive trajectory of net interest income by now. One of the most encouraging developments is the continued acceleration in client growth across all segments, which serves as a key leading indicator for our franchise. The expansion of our client base, especially in retail and micro is fundamental to building a more granular, scalable and profitable banking platform over the medium term. In particular, our micro enterprise client base grew by a strong 10% in just 1 quarter, more than 3x as much as in the first quarter of last year, supported by a clear strategic focus in the segment across our network. At the bottom line, the group results broadly reflect these dynamics, solid operational performance, continued investments in our strategic transformation and the usual seasonal effects observed in the first quarter.

Overall, profitability is developing as expected with a return on equity of 8% and a cost income ratio of 71.2%. Finally, as previously communicated in our last earnings call, we remain fully committed to our dividend policy. We propose a dividend of EUR 0.47 per share, in line with that framework. This slide now rather serves as a snapshot of all KPIs, most of which I just covered. Let me just add that loan portfolio quality remained broadly steady compared to the beginning of the year.

Capitalization remains at a solid level of 12.9% CET1, although slightly reduced year-to-date. Also, let me note at this point that we have not yet performed the IFRS 5 reclassification of ProCredit Bank Ecuador. We rather expect this to happen later in the year. Let me now turn to our geographic footprint and recent developments across our markets. We have delivered solid growth dynamics across markets and segments with particularly strong performances in Ukraine, Kosovo, Bulgaria, Bosnia and Albania.

Overall, market conditions remain supportive for further expansion and deeper segment penetration. We continue to benefit from rising income levels in our markets, resilient private consumption and sustained flow of foreign direct investments. In addition, structural convergence towards the EU, ongoing infrastructure investments and improving financial inclusion are further underpinning demand for banking services across our region. While the outlook for our region remains positive, we continue to operate in an environment of elevated geopolitical uncertainty.

The war in Ukraine remains the most significant source of risk for the region with ongoing attacks on energy infrastructure, which continue to affect both households and businesses. Christian will come back to this point. At the same time, while the human tragedy continues to unfold, we and our colleagues in Ukraine have welcomed the approval of the EU financing package of approximately EUR 90 billion, which provides important funding support to the country through 2027.

The recent escalation in the Middle East adds another layer of global uncertainty, particularly with respect to energy markets and overall investor sentiment. At this stage, however, we do not see any direct material impact on our clients nor operations. Historically, our micro and SME clients have demonstrated a high degree of resilience to external shocks, including energy price volatility and supply chain disruptions as seen during COVID-19 period and the disruption of Russian gas supplies.

While we do not currently observe any structural deterioration in the operating environment in our markets, we continue to monitor these developments very closely, and we assess any potential indirect effects on our markets. As mentioned earlier, one of the highlights of this quarter is the emergence of a new dynamic in client acquisition, reflecting stronger business focus on micro and retail client segments, supported by increasing automation of our front-end solutions and processes as well as important improvements in the internal frameworks and workflows.

In the micro segment, we onboarded approximately 3,500 active clients in the first quarter, averaging more than 1,000 customers per month, representing an increase of around 2,600 compared to the first quarter of 2025. These clients are already contributing meaningfully to the growth in both loan and deposit volume while enhancing the granularity and the resilience on both sides of the balance sheet. Our retail client base increased by around 8,600 active clients, which represents a solid start, but it is still well below our ambition. We expect a more pronounced acceleration over the course of the year as we further roll out our retail value proposition in all subsidiaries across the group.

In this context, we successfully launched our new mobile banking application in North Macedonia and Albania during the first quarter, making another important step in scaling up our digital retail banking platform. Let me then briefly reiterate our outlook for 2026. The first quarter provided a solid base for our ambitious plans for business expansion in this year. We continue to expect loan growth in the range of 12% to 15% in our core markets, where we continue to see attractive profitable growth opportunities despite the turbulences in the global energy markets and supply chains.

Our approximately 7% return on investment expectation is based on several drivers like income growth, continued costs from investments in digitalization and a number of one-off effects, including impacts related to the anticipated Ecuador divestment and the temporary elevated tax measures in Ukraine and Romania. It also reflects new run rate costs from the euro introduction in Bulgaria and the RWA efficiency measures, which we expect to fully materialize in the course of the year.

Christian will give you an update later on. We expect the cost-income ratio to remain on the level of 2025. In the medium term, our objective remains to grow the loan portfolio below -- beyond EUR 10 billion, while significantly increasing the number of clients across all segments. At the same time, we aim to improve profitability to an ROE of around 13% to 14%, supported by scale, digitalization and a more granular balance sheet. Operationally, this should translate into a material improvement in cost efficiency with the cost-income ratio moving towards the 57% mark. The first quarter provided further confirmation that we are on the right path with accelerated client growth, continued balance sheet transformation and steady progress in our digital rollout. With this, let me pass the word to Christian for further details.

Thank you, Eriola, and good afternoon also from my side. In terms of loan growth, we continue to maintain the high pace of the last 2 years and accelerate particularly in the lower volume segments, micro and retail that provide higher yields and greater scaling potential. Our micro client portfolio grew a strong 10.5%, adding more than 15% to the top line growth figure. And retail loans added almost 30% to total growth, growing by 5.4%, both in housing and consumer loans.

Year-on-year, we have grown 43% in micro and 25% in retail, which has helped to grow the share of these segments in total loans by 3 percentage points to now 19%. Considering the contribution of the small segment, which also shows for structurally better yields than medium clients, some 86% of the first quarter growth came from higher-yielding segments and their share in total loans grew by 7 percentage points over the last 2 years since the inception of our new strategy.

It is encouraging that these dynamics are increasingly more accelerating across our network as they move the balance sheet transformation forward. On deposits, the key takeaways are similar. Our growing focus on the micro segment has brought good deposit growth from micro enterprises, which has helped absorb the seasonal outflow from SME accounts that is typical for the first quarter.

More importantly, micro enterprise deposits add granularity and are typically held on current accounts. Increasing the share of sight and savings deposits remains a strategic priority for the group as it supports a structurally stronger net interest margin profile. More than 60% of the year-on-year deposit growth of almost EUR 900 million came in the form of these deposits, marking a significant turnaround from prior year growth dynamics.

Operating income developed positively, increasing 4.7% year-on-year, supported by solid net interest income growth of 8.6%. This marks an important inflection point compared with the previous year when operating income was still declining due to pronounced repricing effects from lower policy rates. With these effects now largely absorbed, underlying volume growth is beginning to translate more clearly into earnings momentum.

The anticipated impact of the euro introduction in Bulgaria and the RWA efficiency measures outlined in our annual outlook during the previous call explain why the income growth has not been more pronounced. These effects add approximately 2 percentage points to the run rate cost income ratio, which has, therefore, remained broadly stable year-on-year.

Now looking more closely at net interest income. Year-on-year growth of EUR 7.3 million or 8.6% was strong and reflects the solid business momentum achieved over the last 12 months. As illustrated in the graph below, negative repricing effects have now become relatively modest, allowing underlying volume growth to translate more clearly into meaningful income gains. Volume effects contributed more than EUR 13 million to the asset side, while the impact on the liability side remained limited to approximately EUR 3.5 million. The net interest margin remained stable year-on-year despite higher levels of subordinated debt and structural wholesale funding, demonstrating that these effects have been effectively absorbed.

Quarter-on-quarter, net interest margin was approximately 7 basis points lower than in quarter 4, primarily due to adverse day count effects corresponding to a low single-digit million euro impact on net interest income. Move on. Net fee income declined year-on-year by EUR 1 million as expected and in line with the explanations provided in our outlook for the year. The introduction of the euro in Bulgaria on January 1, 2026, is expected to support higher trade volumes and enhance the country's attractiveness for foreign direct investment, creating meaningful medium-term opportunities for the group. In the near term, however, the transition has reduced fee and commission income potential, particularly in foreign exchange transactions, which had a low single-digit million euro impact in the quarter.

In addition, the introduction of SEPA in several of our markets has led to lower margins on international hard currency payments. Fee expenses also include costs related to loan guarantee and insurance programs for which there is no corresponding income. These expenses increased by EUR 300,000 year-on-year, primarily driven by the expansion of the MIGA framework and a synthetic securitization transaction in Bulgaria, both of which contributed to improved RWA efficiency.

Operationally, we continue to see steady growth in fee-generating transaction volumes, supported by our focus on expanding the client base and further enhancing our product offering, including trade finance. At the same time, we are focused on strengthening the House Bank concept by deploying a structured cross-selling strategy to deepen client engagement and increase wallet share.

Costs increased moderately by approximately 5%, primarily driven by personnel and IT expenses. While headcount remained broadly stable since quarter 1 '25, the increase in staff costs reflects higher average wage levels. IT-related expenditures also rose alongside higher depreciation charges, which are mainly attributable to increased amortization of internally developed software assets.

The cost income ratio remained stable year-on-year. As previously highlighted, this reflects the inclusion of new underlying hedging-related expenses supporting RWA efficiency as well as the impact of the euro introduction in Bulgaria. Together, these factors contribute approximately 2 percentage points to the run rate cost income ratio.

Moving on to loss allowances, which remained well contained at 14 basis points on an annualized basis. This represents an increase compared to the first quarter of 2025 when we still benefited from a net release of provisions. In the current quarter, roughly half of the additional loss allowances were recognized at the level of our Ukrainian subsidiary, reflecting emerging risks associated with intensified attacks on the country's energy infrastructure and their impact on certain clients.

Despite this, our Ukrainian portfolio continues to demonstrate strong resilience in an exceptionally challenging environment. The default rate as of March 31, 2026, stood at a low 2.3%, broadly returning to pre-war levels.

The ongoing conflict in the Middle East represents an additional emerging risk factor for the global economy and international supply chains. We have conducted a preliminary portfolio assessment to identify clients with more direct exposure to the region. These exposures amounting to approximately EUR 10 million have been added to our watch list, although they're currently showing no signs of underperformance.

I will not repeat Eriola Bibolli's comments on client resilience in periods of global volatility, but they are very relevant as this resilience has consistently been a key strength of our group. At the same time, we remain mindful that potential disruptions to supply chains and energy prices may have some impact on some of our clients down the road. Given the inherent uncertainty around the duration and intensity of the conflict, this will continue to be closely monitored and assessed on an ongoing basis.

Moving on to portfolio quality. I will not dwell on these credit risk indicators as they remain broadly stable. We have some increase in Stage 2 as we cautiously transferred exposures of around EUR 130 million related to SMEs operating in sectors with high sensitivity to oil and gas prices. As the risk profile of these exposures has not changed, the impact on provisions of these transfers was largely immaterial.

Now turning briefly to segment performance. I would also highlight the improved results at ProCredit Bank Ecuador, which has returned to breakeven after a prolonged period of underperformance. For the 2 core segments, ROE was around 11% and cost-income ratio around 60% with portfolio growth rate of 2% to 3%.

And finally, on our capital position, our regulatory capital remains broadly stable in quarter 1, while RWA show an increase by around EUR 140 million. This figure reflects quarter 1 business growth as well as an EUR 80 million increase in operational risk-weighted assets due to the annual recalibration of this indicator.

Worth mentioning, we continue the execution of RWA optimization measures, which led in quarter 1 to a decrease in market risk RWA. Including quarter 4 profit attribution, the CET1 ratio at the end of the quarter stood at 12.9%. And on a pro forma basis, that is, including also quarter 1 profits, 2/3 of it, CET1 ratio stands at 13.1%.

And now to conclude, coming back to the messages at the beginning of the call. Let me summarize a solid start to this year with accelerated growth in the higher-yielding lower volume client segments, micro and retail. Financially, we start to see emerging structural improvements, particularly in our net interest income that led to an increase in operating income by 5% year-on-year. On the expense side, we remain disciplined, but of course, continue to invest, particularly in IT and our digital product rollouts. We continue to monitor the situation in the Middle East very closely and assess the potential impact on our clients on an ongoing basis.

Our guidance for the year of around 7% ROE is confirmed and also concludes the anticipated effects from the planned divestiture of our bank in Ecuador. And finally, we also remain committed to our medium-term outlook and see potential for around 13% to 14% ROE plus upside from Ukraine. And with that, I conclude the presentation and open the floor to your questions.

[Operator Instructions]

The first question comes from the line of Milosz Papst from Edison Group.

I have 2, if I may. Firstly, can you tell us maybe more about the current interest rate ceilings in Bosnia and Kosovo and to what extent does this affect your business? And secondly, do you have any expectations in terms of the magnitude of the positive impact on your loan growth in Bulgaria from the adoption? You've mentioned possibility of higher FDIs. And do you have any particular expectations in terms of the extent of loan growth acceleration?

For your questions. On the interest rate ceilings in Bosnia and Kosovo, let me remark that the ceilings, first of all, they're integrated in our broader interest rate risk management framework. I don't have the exact effects now at hand. What we are doing in many of our markets does not only include Bosnia and Kosovo is we do not necessarily pass on the entire Euribor on to clients. There is always a delta that we maintain to effectively manage interest rate risk.

So for example, if the Euribor is right now 2% at this point, probably it's an amount somewhere between 1% and 1.5% that is passed on to clients in the case of Kosovo, which allows flexibility in case deposit rates were to increase, but that's just as an example.

On Bulgaria, the more immediate impact on loan growth in Bulgaria for now remains to be seen; to be honest, we have grown strongly in Bulgaria in the first quarter. It's around 3.5%. We don't want to attribute everything to the euro introduction since the underlying dynamics in this bank have been strong before. But naturally, we do expect continued or increased foreign direct investment in the country, which will drive business growth and increase the demand for financing, especially in SMEs.

The next question comes from the line of Marius Fuhrberg from Berenberg.

First one would be on the net interest margin. When do you expect the higher share of the higher-yielding segments to reflect in an improving net interest margin? As of now, it looks or it is quite stable right now?

Second question on cost side. How much of the announced one-off costs that you mentioned in Q4 were already included in Q1? And should we expect a significant step-up of costs through the remainder of the year?

And the last question on Ecuador. Do you expect any changes with regards to the purchase price? Or is that fixed as agreed in March following that Ecuador turned positive in profitability? So -- and finally, will the planned costs regarding the Ecuador strip off come in as expected?

Thank you, Marius. On the net interest margin, let me remark that we essentially already see improvements now because what we managed is to absorb structurally higher interest expenses on the holding due to additional subordinated debt and additional wholesale funding that was taken in the course of 2025 without a reduction in the net interest margin.

So it is already driving margin stabilization. Of course, we foresee that the net interest margin would start growing as the balance sheet transformation moves. Let's be clear, the balance sheet transformation is a process that doesn't happen overnight. We have now increased the share of the higher-yield segments since the end of 2023 by 7 percentage points.

We believe that especially in this year, we will find a new growth dynamic, especially in the micro segment that will further enhance this dynamic. And on retail, the growth pattern is still mixed between consumer lending and housing, obviously, with very different interest rate profiles. So we expect the dynamic to intensify that will -- that should translate in a higher net interest margin, supported obviously by the initiatives on the deposit side where we want to attract more site deposits.

Also let us be reminded here that here only in 2025, we have begun showing the dynamic we wanted to see, meaning growing predominantly in site deposits as opposed to TDAs, which was the case in '22, '23 and '24. So this on that point. On the costs, indeed, quarter 1 is always relatively slow in terms of costs because some of the initiatives that drive the business, I would specifically think of marketing costs, but there are many others. They typically materialize in the second and third quarter.

Besides, obviously, we continue to drive important IT initiatives. So I would, at this point, not expect a stagnation at this level, but of course, for costs to increase, not excessively, but somewhat steadily in the coming quarters. However, we do count on operating income to grow faster and so that we see gradual improvements, structural improvements in the P&L.

On Ecuador, all statements that were made at the beginning of the year remain valid. So there's no changes expected. The agreements that were made, they need to be formalized going forward, but there are no changes in that. So everything that we said in our outlook report remains valid.

The next question comes from the line of Andreas Pläsier from Warburg Research.

Firstly, on the loan growth, should we expect here an acceleration of the loan growth, which could support the NIM? And second question is regarding the NCI development. You have some headwinds in Q1 due to the effect from Bulgaria and SEPA introduction. Should we already expect a positive development in Q3 and Q4 year-on-year? Would be my questions.

Thank you very much for your questions. Regarding the loan growth expectation, I support that the structure of loan growth, it is of utmost importance for this year and for the medium term. And this is one of the main levers to support not just sustaining but increasing the net interest margin. I can report that in the first quarter, 80% of loan growth came from granular segments, micro, retail, non-purpose, and small loans, which is precisely what we have targeted as a structure. And this was a strong contribution to the stability of the net interest margin on the asset side perspective. And we have targeted a similar structure of growth for the remainder of the year, which is expected to further accelerate the more we advance with process simplification in the lower-end segments and the further rollout of the loan origination tool in the subsidiaries as we speak.

Regarding the second question on the impact on the Bulgarian euro conversion and the introduction and implementation of SEPA payments, in 5 of our countries, including the expected migration to SEPA in Serbia this month. The impact, I would say, is mixed. In particular, in Bulgaria, we reported that we lost significantly fee income, in particular, FX-related fee income, which was in a rather severe magnitude.

At the same time, SEPA payments already has a negative impact on the fee income for the group because it's a reduction on the euro payments across Eurozone, and we felt already in all the countries where SEPA has been introduced rather a reduction in the fee income with a few markets, in particular, North Macedonia that remains rather neutral.

Whether we have a positive or negative impact on the SEPA payment depends sometimes on the floors that the domestic regulators impose on SEPA payment fees based on which the picture of what the impact is country by country varies and, aggregated on the group, as I said, the impact of these 2 developments was negative. At the same time, we have mentioned in the call in March that we have a strong focus on stabilizing the net fee income as a potential pool of diversifying our revenue. And the key focus there is on accelerating trade finance facilities. And at the same time, we have introduced a project of launching investment and insurance services to our retail and SME customers. With insurance, we are already in the feasibility phase, and we hope we can roll out the services that can start yielding fee income in the second half of the year.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Eriola Bibolli for any closing remarks.

Thank you very much to analysts for the engaging questions and for their continued coverage of our group. If there are any further questions following the call, please feel free to reach out to our Investor Relations team. Adena and her colleagues will, of course, be happy to assist you.

We look forward to speaking with you again at our next results presentation on August 13 for the quarter 2 results. We hope to welcome many of our investors at our AGM on June 3. Thank you very much, and have a good day.

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 line.

Goodbye.

Ladies and gentlemen, welcome to the Full Year 2025 Results Conference Call. I'm Sargen, the Chorus Call Operator.

[Operator Instructions]

The conference is being recorded. The replay of the conference will be published on the ProCredit Holding website in the Investor Relations section. The presentation will be followed by a Q&A session.

[Operator Instructions]

The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Eriola Bibolli. Please go ahead.

Good afternoon from Frankfurt, and welcome to our call to discuss ProCredit Group's results for the Fourth Quarter and Full Year 2025. My name is Eriola Bibolli, and since the beginning of this month, I am the Chair of the Management Board of ProCredit Holding. This is the first time I'm speaking in this setting, and I want to take the opportunity to introduce myself. I joined the Group more than 20 years ago. And in many ways, my entire professional life has been shaped by ProCredit. Over these 2 decades, I have had the privilege of witnessing, firsthand, the very important role our Group has played in the development of the countries we operate. Since its inception, our Group has been dedicated to building strong, transparent and well governing banking institutions in countries and markets that were, in many cases, still in transition.

In Kosovo where I worked for 2 decades. ProCredit Bank played an instrumental role in the reconstruction of the country, laying the foundations of the financial system architecture that was being established as well as to supporting largely the economic and private sector development through dedicated commitment to SMEs. At a time when the country had begun to rebuild its institutions and economic foundations. ProCredit Bank in Kosovo has consistently promoted transparency, responsibility, robust corporate governance, helping to build trust among clients, regulators and international investors, values that were not common in the market at the time.

Equally important has been the Group's long-standing investment in people through extensive trainings and a strong institutional identity and culture. Over the years, thousands of finance professionals have grown and developed within the ProCredit environment. Today, many of them continue to shape financial systems across our markets by holding leading positions in financial institutions, international organizations and government entities. Taken together, the Group's impact in our markets extends beyond banking. It has contributed to institutional building, to sustainable economic development and help lay the foundations for more professional, more stable and more inclusive financial markets in the region.

We have been part of that journey it has been both inspiring and deeply rewarding. And it is now privileged to take on this role at a time when the Group is entering the next stage of its development.

Joining me today is Christian Dagrosa, our Chief Financial Officer, who I'm sure does not need an introduction. We expect today's presentation to take slightly longer than usual as we will provide a more detailed update on the execution of our business strategy, a journey that began 2 years ago. The slide deck accompanying our discourse today has been made available on our website. After our presentation, as usual, we will allow sufficient time for questions. Before we begin, let me also draw your attention to the customary disclaimer regarding forward-looking statements, which is included at the end of the presentation.

Let me briefly walk you through today's agenda. I will start by outlining the key developments in 2025 and where we stand today in the execution of our strategic roadmap. Over the past year, we have made strong operational progress, while advancing our strategic transition and we'll provide some context around both. Christian will then take you through the Group's financial results in greater detail, including the key drivers behind our performance in 2025. Finally, I'll come back to the Group's outlook, both short and medium term, and share some broader context on the opportunities ahead.

2025 has been a year in which our strategy has firmly moved into execution mode. Loan and deposit growth was strong at around 13% without currency effects, driven primarily by the continued expansion of our core customer segments. This reflects both strong demand in our markets and the strengthening of our position with SMEs, micro enterprises and increasingly retail banking clients. 2025 showed a particularly encouraging progress in terms of the structural growth with more than 60% of new deposits coming from site and savings deposits compared to the previous year. We are now beginning to deliver on the greater granularity in our funding structure which will support stronger net margins over time.

From a financial perspective, our results are in line with the updated guidance we communicated in Q4 last year. Return on equity is 7.8%, within the expected range of around 7% to 8%, but below our initial outlook for the year. Christian will cover the details, but the broader context of these results is shaped by the substantial investments in digital infrastructure, operating model transformation and the scaling of our retail banking franchise. The transformation of our technology and digital capabilities, which will shape, not only our retail banking, is progressing at an accelerated pace. Core digital service solutions have now been fully rolled out in ProCredit Bank Kosovo, which effectively serves as a blueprint for other banks in the Group. Launches in several additional banks are already underway, and we expect the majority of implementations to be completed during 2026.

It is worth noting that we confirm our interest to divest our operations in Ecuador. We are confident progressing with these efforts, and we expect to finalize the divestiture during 2026. The transaction is anticipated to have a financial impact in the profitability of the group, which is reflected in the ROE for 2026. Overall, we view 2025 as a year in which the foundations of our strategic transition have been firmly laid, while the medium-term trajectory we outlined 2 years ago particularly the ROE target of 13% to 14% remains fully on track. And of course, we firmly intend to deliver on our dividend policy this year as well, and we plan to propose a dividend of EUR 0.47 per share to the AGM in June this year.

This slide rather complements my summary on the performance, so I would note well. Loans grew at a solid pace, around 13% adjusted for currency effects, while deposits expanded at a comparable rate driven largely by retail customers and mainly inside and saving accounts. Asset quality is robust, even though our Stage 3 ratio increased and Christian will provide more insights. And our capital position remains strong with a CET1 ratio comfortably above regulatory requirements at around 13.1%. Taken together, these results reflect the banking group that is ambitiously growing its business, while making significant investments in its future operating platform, positioning itself to unlock substantial value for its shareholders.

One of the most encouraging development since the launch of our updated business strategy in early 2024 has been the strong loan growth in the low volume segments. Micro business lending and smaller volume loan exposures have expanded particularly strong with volumes increasing by roughly 43% in the last 2 years. This segment is strategically important for us. It broadens the base of our SME ecosystem, creates a more granular portfolio structure and supports lending margins. In parallel, we have seen a clear acceleration in retail client deposits, which have grown by 40% since the end of 2023, reflecting our increased focus on this segment.

Notably, much of this growth has been achieved without the full supporting infrastructure progress place, highlighting the significant upside for that potential as we accelerate these developments in 2026 and 2027. We are seeing clear evidence that the ecosystem approach we are developing across SMEs, micro enterprises and retail customers is beginning to gain traction. Our growth momentum is visible across the entire region we operate. All ProCredit banks is Southeastern and Eastern Europe are currently expanding their client base and loan portfolios are healthy, supported by favorable macroeconomic conditions and our strong positioning in the MSME segment.

During the year, we surpassed an important milestone, more than 80,000 SME customers across the region. This underscores the strength of our SME franchise, where our ability to build and maintain trust-based long-term client relationships, combined with the high quality of our holistic banking services, creates a differentiated value proposition and high barriers to replication. At the same time, we are beginning to see the early impact of our renewed focus on digital retail banking. In the Group's early years, Retail Banking was actually an important part of our business model.

Over time, the focus shifted more towards SMEs. Today, with the digital capabilities we are building, we believe we have a unique opportunity to reestablish a strong position in retail, this time as a modern digital-first bank. The macroeconomic outlook for our region continues to be favorable. Growth prospects in Southeastern and Eastern Europe remain significantly stronger than in Euro area. Many of our countries continue to benefit from structural convergence dynamics, strong domestic demand and ongoing foreign direct investment. Inflation levels have stabilized and remained comparatively moderate, while consumption and investment continue to support economic expansion.

Another important structural factor is the continued momentum around EU accession processes in several countries. In Bulgaria, the adoption of the euro, which came into effect in January this year represents a particularly significant step which is expected to further stimulate investments, tourism and cross-border trade, while eliminating foreign exchange risk for business and financial institutions. The war in Ukraine unfortunately remains an ongoing human catastrophe, a major factor of uncertainty for the region and the continent as a whole.

However, International institutions continue to show strong commitment to support the country and the entire Eastern flank and economic resilience has been notable. Regarding the impact of global development, the discussions around the new tariff system has had limited direct impact on our countries so far due to the limited interconnectedness of the economies of our countries with the U.S. economy. Notably, broader geopolitical tensions, particularly the recent escalations in the Middle East are creating a new wave of uncertainty for the global economy. While we are monitoring these developments closely, at this stage, we do not see direct specific vulnerabilities for our region nor for our core customer segments.

As mentioned, I want to spend some time on strategic priorities in today's call to provide transparency on where we stand today and on what we plan to execute in 2026. Our strategy is built around 3 core priorities: profitability; growth; and positioning. Our focus on profitability is about unlocking the value that remains untapped in our business model. By expanding the balance sheet through a modern, scalable digital banking infrastructure, we can realize the full growth potential of our business. We can achieve stronger volume growth, while simultaneously restructuring our balance sheet into more granular and diversified positions, which will help improve margins on both sides.

Additionally, deepening client engagements and improving strategic cross-selling will boost noninterest income across both current and future clients. Our growth focus is on scaling operations and attracting more new-to-bank clients. Over the medium term, we aim to grow the loan portfolio beyond EUR 10 billion and reach a critical size in each market as well as the critical size for the Group, overall. And finally, positioning. We aim to further strengthen our position as a leading bank for MSMEs by deepening the house bank relationships with our clients. At the same time, we are establishing a new identity as a regional digital attacker in retail banking, aiming to deliver a highly convenient and a trusted mobile-first daily banking experience.

At the heart of this strategy is a triple-engine ecosystem created through the interaction of our SME, micro and retail customers. SME clients remain the cornerstone of our franchise. They form the backbone of our competitive advantage, our strong brand and the defining relationships in our markets. Through these connections, we gained deep insights into local business networks, including owners, employees, suppliers, their own social networks, all of whom represent potential retail clients. Micro businesses are often directly embedded in these supply chains with a highly automated operating model and the digital lending capabilities we are building, this segment can scale significantly and efficiently.

We currently serve roughly 30,000 micro customers, and we see substantial room for further expansion. Retail Banking provides a strong foundation for our funding model. By tapping local markets, we are building a broad and diversified deposit base made up of granular low-cost balances. This does not only strengthens the stability of our balance sheet, but also creates opportunities to scale our lending, support SMEs and micro businesses and deepen our relationship with communities.

In short, a retail-driven funding model allows us to grow sustainably, while unlocking long-term value. The strength of our triple-engine business model, SME, micro and retail lies in its ability to create both value and profitability. By working together, these segments create a mutually reinforcing ecosystem that allows ProCredit franchise to reach its full potential. The transformation of our digital capabilities is one of the most important initiatives currently underway, and it goes well beyond establishing a just strong retail banking franchise.

At its core, we are building a scalable digital banking platform while maintaining full technological sovereignty and alignment with our responsible banking model. For clients, this means a fundamentally improved banking experience. A new mobile banking application for retail clients was launched in mid-2025, representing a major infrastructure milestone. It enables fully digital onboarding, seamless account opening and increasingly also straight through digital lending journeys for retail and micro clients.

At the same time, new features are continuously being rolled out across markets for both MSME and retail clients. But more importantly, we are also transforming the way we operate. Our delivery model is increasingly organized around agile squads and product-oriented teams. AI-supported development tools and automation will help us accelerate increasingly more software life cycle and reduce time to market. From a technology perspective, we are modernizing the core banking platform and introducing micro service architecture with expanded APIs and a stronger data foundation.

This will allow us to truly scale the business over the coming years. At last, let's have a look where we stand today. Over the past 2 years, we have focused heavily on building the capabilities and infrastructure required for digital scale. We have modernized large part of the core banking architecture and launched our new mobile banking application in 4 banks. Digital onboarding for retail clients has already been introduced and the first steps towards automated consumer lending have been implemented. ProCredit Bank Kosovo, as mentioned earlier, has effectively become the full implementation of this model, and it is our first bank with a mobile-first retail banking model in place.

In 2026, our focus shifts to large-scale rollouts across the group. For retail banking, this includes deploying the new mobile app, digital onboarding and digital lending capabilities across the remaining banks. For MSMEs, we will launch end-to-end digital loan origination processes for micro customers, and we will introduce new Internet banking capabilities for SMEs. The remaining solution rollouts in 2027 include credit card functionalities and advanced CRM capabilities. Beyond the timeline, Digital innovation will continue to be a core focus for the group. It would be an illusion to think of digitalization as a one-off transformation with a defined end point.

Rather, it is an ongoing process that requires constant refinement of our technology platform, operating model and customer experience. New technologies, evolving client expectations and regulatory developments, will continue to shape the way banking services are delivered. Our objective, therefore, is not to simply complete a set of rollouts and developments, but to establish the capabilities and organizational structures within our Group that will allow us to innovate continuously and to adapt quickly as the digital landscape evolves. Looking ahead, our ambition is to transform ProCredit into a Banking Group capable of generating returns on equity of approximately 13% to 14% and with potential upside. Several drivers will support this trajectory.

First, scale, automation and operational efficiency as we expand the client base and reach critical size in each market. Second, we will deepen the SME house bank model, while scaling micro segment through automated processes. Third, we are building our retail banking into a regional digital banking franchise with a seamless mobile-first experience. Digital excellence will be the foundation for faster execution. Greater efficiency and more effective capital deployment. Meanwhile, our balance sheet will become increasingly granular as micro and retail exposures expand.

From an operational perspective, our medium-term KPIs are clear. Grow the number of active clients across all segments, increase the share of micro and consumer loans, increase the share of retail customer deposits to 50%, mainly in current and savings accounts, drive digital usage above 90% among retail clients and ensure more sales are executed digitally. And finally, we continue to focus on capital efficiency, including reducing the Group's RWA density to below 60%. We have made good progress on this in Q4 2025, and Christian will share more details shortly.

With that overview of our strategic progress and operating environment. I will now hand over to Christian. He will take you through the business and financial performance for 2025 in more detail.

Thank you, Eriola, and good afternoon, everyone, also from my side. Let me begin straight away with the development of our loan portfolio. We recorded strong loan portfolio growth during the year, with expansion across all markets and client segments. On an FX-adjusted basis, the loan book increased by 13.1%.

Importantly, about 80% of that growth came from the lower volume segments that are central to the strategic repositioning Eriola just described. Micro lending expanded particularly strongly with volumes increasing by around 42% year-on-year. Retail lending also developed very dynamically growing by approximately 29%. As a result, the share of lower volume exposures in the total loan portfolio continues to increase meaningfully since the introduction of the new strategy in early 2024, the share has risen by 6 percentage points and now stands at around 48%.

This reflects the increase in granularity of the balance sheet and demonstrates clear progress in executing the strategic shift towards a broader and more diversified client base. We also saw strong deposit growth during the year, essentially mirroring the strong development on the lending side. Retail client deposits increased their share of total deposits by roughly 1 percentage point during 2025. And and by about 3 percentage points since the start of the strategic transition.

But the more important development concerns the structure of deposit growth. In 2024, the vast majority of deposit inflows still came in the form of term deposits which are relatively expensive, especially given the prevailing interest rate environment. This was one of the key reasons why refinancing costs were higher than initially expected, which in turn put pressure on margins and the cost income ratio. In 2025, this picture changed significantly. More than 60% of deposits came from site and savings deposits. This represents a clear improvement in the quality of funding growth and reflects the strengthening of our transactional banking relationships with clients.

In our view, this is a tangible sign that the strategic transformation of our retail franchise is beginning to translate into funding benefits, which has already resulted in slight but steady expansion of the net interest margin in recent quarters. Looking at the income statement more broadly. Operating income declined slightly by about 1.1% year-on-year. The main driver was a decline in policy rates during the year, which has led to a reduction in net interest income despite the meaningful volume effects. Lower rates, particularly affected the return on liquidity holdings, especially balances held at central banks, while market deposit rates for customer funding remained comparatively elevated.

This goes in particular for term deposits, which as just explained, were the major source of refinancing in 2024. On the positive side, interest income from customer loans increased by more than EUR 21 million or 5%, which would have been enough to offset the EUR 11 million increase in interest expenses. Also positive is that net fee and commission income continued to grow, increasing by around EUR 5 million year-on-year. This was primarily driven by higher transaction volumes and stronger foreign exchange business.

This, too, is a sign of ongoing strategic execution and progress as client wallet shares are increasing, and we're expanding in areas that were previously largely underdeveloped such as trade finance. The cost income ratio remains clearly elevated at around 73%, reflecting 3 major factors.

First, the strategic investments undertaken in the last 2 years, which from the basis of the ongoing transformation of the Group. Second, the persistently high deposit rates in the market environment, which drive higher interest expenses. And lastly, the continued big earnings performance of ProCredit Bank Ecuador, which accounted for a cost-income ratio of 135% in 2025. Let's move to interest income. In the fourth quarter, net interest income amounted to EUR 92.2 million, corresponding to a net interest margin of 3.3%. Compared with the previous quarter, net interest income increased by EUR 2.7 million, an improvement mainly driven by continued business expansion and increasingly stabilizing weighted average interest rates on assets.

On the liability side, market deposit rates remained relatively elevated, which continues to influence funding costs. However, steady structural improvements in our refinancing has helped stabilize interest expenses to some extent. For the full year, net interest income declined by EUR 5.3 million or about 1.5% year-on-year with net interest margin at around 3.2%. The underlying dynamics are relatively straight forward. Strong loan growth drove a significant increase in interest income, but this was offset by repricing effect on assets and persistently higher pricing on the liability side.

In addition, higher volumes of term deposits and subordinated debt led to volume-driven increase in interest expenses. While market headwinds are likely to remain, the quarter-on-quarter trends seen in 2025 are encouraging, and we are actively reinforcing the fundamental drivers of this progress. Let's turn to net fee and commission income. In the fourth quarter, net fees amounted to EUR 25.6 million. This represents an increase of nearly 7% compared with the previous quarter, and roughly 5% compared with the same quarter last year.

The improvement was broad-based with payments, account maintenance fees, documentary business, car transactions and foreign exchange services, all contributing to the increase. For the full year, net fee and commission income grew by EUR 5.1 million or about 5.5%. Payment Services were the largest contributor, increasing by around EUR 2.4 million. Higher transaction volumes more than compensated for the slightly negative effect from the introduction of Saber payments in some of our markets. Foreign exchange transactions also continued their steady upward trend, contributing roughly EUR 2.8 million in additional income. And lastly, income from Documentary business increased by around EUR 1.3 million which represents a strong growth of 17% and reflects the progress we are making in deepening client relationships within the SME segment.

The only area showing a decline was card services with a net contribution decreased by around EUR 1.5 million, mainly due to higher fees charged by card providers. Moving on. Personnel and administrative expenses in the fourth quarter amounted to EUR 91.6 million. This quarter included several seasonal and one-off items. For example, we recognized an impairment of around EUR 2.8 million related to certain internally developed IT assets that are now being replaced by new technology as part of the broader digital transformation. Marketing expenses also increased by around EUR 1.7 million, mainly reflecting targeted campaigns accompanying product rollouts, and IT expenses increased by approximately EUR 1.1 million as the rollout of new digital systems continues across the Group at an accelerated pace.

Personnel costs rose around -- rose by around EUR 1.2 million in the fourth quarter, largely due to onetime effects like the recognition of provisions for untaken vacation as well as an increase in severance payments. Looking at the full year more broadly, personnel and administrative expenses increased by EUR 19.7 million or 6.5%. The largest component of this increase relates to personnel expenses, which rose by EUR 12.8 million, largely as a consequence of the significant recruitment efforts in 2024 when the Group added more than 700 employees.

The remaining increases mainly reflect higher IT spending and depreciation associated with our investments in technology as well as branches. Turning to credit risk. In the fourth quarter, we recorded a net release of provisions of approximately EUR 5.7 million following the regular year-end update of risk parameters, offsetting some of the extraordinary provisions of quarter 3. Total balance sheet loss allowance now stand around EUR 188 million. The overall level of provisions increased during the year, primarily as a result of strong loan growth and certain credit risk developments.

These increases were partly offset by write-offs and some currency-related effects. Management overlays are now at around EUR 50 million, post-parameter review, representing about 27% of total provisions. These overlays continue to provide a prudent buffer against macroeconomic uncertainty and potential credit risk developments. Now let's have a look at portfolio quality.

Overall, portfolio quality indicators remain solid. However, the share of impaired loans increased in 2025 to around 3%. This development is largely related to several project finance exposures that we already discussed during our quarter 3 call. These exposures have now migrated from Stage 2 to Stage 3 which also explains the increase in the default ratio as well as the corresponding reduction in Stage 2 exposures. Importantly, this transition has not resulted in a material increase in provisions.

Most of these projects related to renewable energy developments, the construction progress has been slower than originally anticipated. The main challenge has been delayed in implementation rather than fundamental project liability. Based on our current assessment, we continue to believe that these projects will remain economically sound once construction and electrification are fully completed. Now looking briefly at the regional distribution of results, the Southeastern European segment continues to represent the largest contribution to the Group's performance, adding almost EUR 100 million to Group profit.

Strong loan growth and stable asset quality supported solid profitability across the region. Eastern Europe also delivered positive contributions also thanks to a strong FX adjusted loan growth of close to 20%, including strong business expansion in Ukraine. In both segments, ROEs are between 12% and 15% with cost income ratios at around 60%. Ecuador contributed negatively to the Group result, EUR 10.7 million for the full year. The defining deficiencies remain the same as in 2024, high refinancing costs, cap lending rates and a difficult market environment and with a deteriorated security situation.

On a positive note, results have significantly stabilized in the second half of the year, and we expect the bank to breakeven in quarter 1 this year. We expect that stabilized earnings situation will provide a solid off ramp to achieve regulatory approval for the planned divestment. And finally, let me briefly address capital and risk-weighted assets. The CET1 ratio remained stable at around 13.1%. This figure already reflects the recognition of the results for the first 3 quarters of 2025.

Capital levels, therefore, remains solidly above the regulatory requirements of 10.3% for CET1, 12.5% for Tier 1 and 15.6% for total capital. The total capital ratio increased slightly to 16.3% compared with the year-end level, mainly due to the issuance of additional subordinated debt. Risk-weighted assets increased in the area of credit risk, reflecting the strong organic growth in MSME and retail lending, and therefore, the continued execution of the Group's strategy.

Basel IV impacts are already incorporated in the reported RWA numbers. Market risk-weighted assets declined by around EUR 200 million, primarily due to a new framework for open currency position hedging adopted by ProCredit Holding in late 2025. In essence, the holding acquires hedges for local currencies in its markets of operation to steer the maximum impact of FX changes to its regulatory capital positions.

As a result of the first hedges acquired in December, RWA density decreased by around 3.5 percentage points to 62.9%. Looking ahead, we plan further reductions in market risk RWA, pending regulatory approval to recognize the remaining open currency position as structurally hedged. This structural hedge reflects the natural offset between capital held in foreign currency and RWA is denominated in the same currencies. While this hedging framework will have a negative effect on the P&L going forward, assuming regulatory approval, it is a capital measure with an attractive cost of capital for shareholders.

To summarize, 2025 was characterized by strong portfolio expansion, particularly in the strategically important lower volume segments, continued growth in transaction-driven fee income and tangible progress in improving the structure of our funding base. At the same time, profitability remains influenced by the elevated interest rate environment for deposits and the substantial investments we are undertaking to transform the Group's digital capabilities and operating platform.

With that, I will hand the call back to Eriola, who will provide some perspectives on the outlook for the Group going forward.

Thank you, Christian. Let me conclude then with our expectations for 2026 and the medium-term trajectory of the Group. In 2026, we expect our strong business expansion to continue driving meaningful income growth and net interest margin stability. Our balance sheet transformation will support this through faster loan growth in high-yield segments, micro, small and retail and a more cost-efficient deposit structure focused on current and savings accounts. In addition, the focus of this year remains on the following strategic developments.

Number one, progress in digitalization transformation; and number two, implementation of the capital optimization initiatives, laying both the foundation for scalable growth and income generation in 2026 and beyond. On digitalization, I want to highlight again that our digital and technology transformation is central to strengthening our position as a leading bank for MSMEs and it is critical to our ambition to become a convenient, trusted, mobile-first retail bank across our markets.

But this transformation will continue to require significant investment in 2026 and will influence our cost base in the years ahead. On capital optimization, Christian outlined our updated hedging framework. This initiative alone is expected to significantly reduce the market risk-weighted assets and enhance our capital efficiency essential to asset growth, but the estimated cost for this transaction are around EUR 6 million in 2026. Hence, these investments in digitalization and capital optimization, will weigh on return on equity this year, but we consider them essential to enable ambitious growth and long-term value creation in the years to come.

In addition to that, the profitability of 2026 will be affected by a number of one-offs, but I won't go into detail. They are covered and quantified on a separate page in the appendix. In short, they include the expected P&L impact from the planned divestiture of our ProCredit Bank in Ecuador and headwinds from temporary tax increases in Ukraine and Romania. Overall, we expect profitability and cost efficiency to stay broadly in line with 2025.

For ROE, we cautiously guide for a level of around 7%. Although, we estimate higher net interest income, stronger business expansion and progress in balance sheet transformation, factoring in the effects mentioned above, the level of ROE remains at 7% in 2026. What is important to us, though, we target strong loan growth of 12% to 15% for continued operations, assuming market conditions remain stable despite global uncertainties, including tensions in the Middle East. Currently, we do not see direct impact in our region. Our capital position remains strong with the CET1 ratio projected at approximately 13%.

Let me conclude today's presentation by reaffirming our medium-term outlook and expressing our confidence in our ability to achieve our strategic targets by 2029. The progress we made during 2025 has been particularly important in this regard. During the year, we established the key foundations for the Group's transformation. We accelerated growth in our strategic client segments, made tangible progress in reshaping the balance sheet and importantly, advanced our digital banking capabilities at a pace that has already significantly strengthened our future operating model.

With rollouts taking place across our network through 2026, we are eager to leverage these new capabilities. Looking ahead, we aim to grow the loan portfolio beyond EUR 10 billion, an important milestone but by no means the end point. As we continue to scale our SME, micro and retail ecosystems across our markets, we believe our franchise has the potential to grow well beyond this level. We also aim to substantially increase profitability, targeting ROE of 13% to 14% with further upside potential from Ukraine.

The operational advantages of scale, digitalization and a more granular balance sheet should enable us to bring the cost income ratio down to roughly 57% over the medium term. We pursue these targets from a position of strengthened capabilities. The Group has now more advanced digital infrastructure, more efficient processes and greater organizational capabilities than ever before. We continue to invest in our people who remain the key drivers of our success.

With committed teams across all markets and a clear strategic direction. We are well positioned to unlock the full potential of the ProCredit Group and deliver sustainable shareholder value in the years ahead. And with that, I conclude the presentation, and I open the floor for your questions.

[Operator Instructions]

You have the first question coming from Milosz Papst from Edison Group.

Let me start with discussing your cost base in 2026. I think previously, the base case was that the extensive investments in the implementation of your new strategy were gradually coming to an end, which would have a stabilizing effect on the cost base, basically. Now the question is what do you expect for next year? Are there any incremental costs on top of what you expected, previously in terms of digitalization spend and headcount growth. Maybe you can also give us an update on the expansion of the branch network. And then you've mentioned that you've recognized impairment on internally developed IT. Does it mean that there will be incremental costs from some IT developments, which are done externally now. Maybe I'll stop there.

Thank you, Milosz. I will take this and see if Eriola has anything to add beyond that. Indeed, the messaging last year was that some of the really most radical investment programs were flattening out. This includes, obviously, the increase in staff as well as the expansion of the branch network. Both is true because in 2024, we added some 700, 800 people to our network. We significantly grew the branch network. These investments had visibly come to an end in 2025. Goes without saying that going forward, costs will continue to grow specifically on IT. That is clear.

And on staff, we will have to increase on a need basis, right? But this does not mean another increase, such as we have seen in 2024. So this just to contextualize a bit the assertions we made in 2025 with going forward, costs will continue to grow. But we are much more focused on developing income side, structurally improving net interest margins, scaling the operations and therefore, having a healthy income growth that more than offsets the cost basis.

And on the IT developments, we can share that the write-off that we undertook now, they are obviously also cleaning the way from an accounting perspective moving forward. We have developed new new systems internally. These are largely internally developed. But they're replacing the old ones, hence, the onetime write-off in 2025.

Okay, perfect. And then maybe the next question would be on how much of the increase in cost next year will be recurring versus one-off? I'm not expecting you to quantify it in detail, but I remember that you previously guided, I think, for the EUR 27 million increase, a EUR 27 million increase in additional network costs from office rent, depreciation, IT costs and marketing expenses, which were meant to be recurring. So can you give us some background on that as well?

Well, we have included a slide in the annex that covers in more detail the the one-off expenses that we expect for 2026. These include, of course, the divestiture from ProCredit Bank Ecuador, which we expect to be in a high single-digit to low double-digit million amount. We already covered the hedging framework, which will add approximately EUR 5 million to EUR 6 million in additional costs. We have -- the fact that Bulgaria adopted the euro, we will -- which is obviously beneficial for the country for financial institutions, for SMEs as a whole, the benefits that are reflected. It comes with an expected decline in net fee income in a mid single-digit million amount. And we have headwinds from the tax environment, specifically in Ukraine, which we once again introduced an income tax of 50% as well as Romania, which introduced a revenue tax of 4% here, we expect high single-digit to low double-digit million impact.

So these effects alone, they -- yes, they can be added up to a sizable amount, and they're mostly onetime in nature or when they're not a onetime in nature, such as the hedging framework, then they provide tangible long-term added value and shareholder value. Then on the operating costs, I don't want to say too much. We will continue to invest in IT. This is, as Eriola said, not a onetime rollout of individual systems that once implemented, will stay forever. We have to continue investing in digitalization in the years to come. And on the other expenses, we will see moderate growth that is reflecting also the fact that we have ambitious expansion plans.

Okay. And understood. Yes. So I was smartly asking about potential one-off costs on digital -- on rolling out the digital infrastructure. So I understand that there will be no major one-off, let's say, product costs, which will not reoccur in the final years. It's more about continuous investments in the infrastructure, right?

Is more about continuous investments. Certainly, IT will be the area where costs will be increasing more visibly, while in most other cases, we expect moderate increases and what will not explicitly taking into account, which is rather a medium-term benefit is once digitalization projects are fully completed, our potential upside effect from efficiency measures that can be leveraged throughout the Group. This is not explicitly discussed and mentioned here, we don't foresee this to be happening in '26 or '27, but simply see this as a long-term upside and reflect this in our medium-term expectations.

I can add here announced to -- in part of your question, we do not plan further increase of the branch network. We have already achieved an optimum size of the branch network and the focus is now on the rollout of digital initiatives and the full utilization of the existing branch network, which complements the delivery channel for the customers and on staff increases, it is a moderate increase more on strengthening new capabilities on the digital product development side, retail banking side. But we do not see structural investments and increase in costs on the traditional banking channel.

Okay. Perfect. That's very helpful. And my last question would be on the sale of the Ecuadorian Bank. I know that you can't go into details, but can you give us a very broad sense of what initial buyers' interest you see for this asset? or is it too early to say?

Well, Milosz, at this point, we have agreed economic terms with a -- we have received an offer with specific economic terms to which we agreed in an informal way. We are now at a stage where we need to engage with the regulators. So all of this transaction remains pending regulatory approval. What we can say at this stage is that starting quarter 1, the entity will be classified as held for sale under IFRS 5.

Next question comes from Knud Hinkel from Pareto Securities.

First things first. Mr. Bibolli very nice to meet you for the first time. Now coming to my question, you say...

Mr. Hinkel your line quality was not good. Can you speak again?

Hello?

Now we can hear you again.

Okay. Probably because I am on traveling, that's probably the reason why the connection is not super good.

Nevertheless, on my questions. On Page 11, there was a number that caught my eye that was that digital sales share should go up from 70% to 90%. Is my reading correct that this is one of your central initiatives going forward as new CEO, this is my first question. Are there additional strategic initiatives that you plan -- that you would outline here in this call. That would be my second question. Then thirdly, can you confirm, I mean, the return on equity will remain at the same level in '26 as in '25. But this is entirely due to higher investments as opposed to higher risk costs that were impacting the result at the [ five ] that would be my fourth question. And my fifth question is ProCredit was a little bit special always, a special bank in my view, will ProCredit keep it's ESG-focused approach to banking under your office, Mr. Bibolli. So that would be my five question.

Thank you very much for your questions. I confirm our ambition to continue with the digital transformation of the Group and the building of our new retail banking mobile-first model. And at the heart of such a model, we confirm that we aim to achieve a digital usage above 90%, meaning our value proposition is tailored around a convenient daily banking, and we expect our customers to transact digitally, up to 90% of the volume of transactions without reliance on other channels of distribution. And at the same time, we expect most of sales to be conducted digitally, which is a different dimension of digital retail banking. And this is a central initiative.

At the same time, we commit that, up to 50%, 55% of our loan origination for granular lending in micro and in consumer loans to be done digitally in the next 2 years. And these are, for us, the key initiatives that we'll be focusing on going forward. There are other associated or related transformational initiatives. But in terms of capturing operational KPIs, these 2 would be the most important one, supporting the main objective to achieve and improve the medium-term ROE of the Group in the range of 13% to 14%.

Then I would answer on your last question on the ESG focus. Clearly, ProCredit Group will continue to be an impact driven and sustainability-driven banking Group. We are anchored the way we do business is responsible, ethical, and we are committed to the ESG agenda and ought not change anything in the identity and the focus of the Group. Nevertheless, while we remain focused on sustainability, we are focused on the sustainability of our business model first, and this is why I underscored my priorities into strengthening the profitability of the Group, ensuring that the Group can achieve growth, and it's a fit for the future institution, and we achieve the positioning required in each market and as a small Banking Group. All of this anchored in an impactful and sustainability-driven business model. Can you please repeat the second question Mr. Hinkel.

Yes. My second question was on the ROE. So in '25 I think the ROE was impacted by higher risk costs. For the next year, you pointed to higher investment to digitalization and a number of special items. Can you confirm that this low higher risk costs resulting from portfolio issues or something in this area. So that was in my question.

Indeed you are right. Part of the ROE in 2025 was affected by the increased cost of risk that we already informed the capital markets in our disclosure in November 2025. The estimation for 2026 is that the cost of risk could remain at rather moderate levels. We do not see -- we do not foresee any one-off effect or increase enhancement risks. At the same time, the main drivers of the ROE this year would remain, I repeat, we would see growth in net interest income, and we'll see an increasing trend in the net interest margin. However, this would not be in the magnitude high enough to compensate for still required investments in the digital and technology transformation and the accelerated rollout that we plan to conduct in 2026 that would continue to weigh the OpEx in 2026.

Then as Christian explained, we are undertaking measures to strengthen our capital base, which from the P&L perspective, they have material costs that in the short term that would affect the P&L, but they are essential and required to support the growth potential of the Group forward. And last, it is a combination of the other effect, as Christian explained, the planned divestiture of Ecuador, combined with the depleted fee income from Bulgaria and the introduction of SEPA payments in 2 of our countries and the increased tax rates in Ukraine and in Romania aggregated together are sizable, and they come at a time when we are still push to continue with our investments in digitalization because that's strategically and critically important for the Group.

As a result, increased in net interest income would not be high enough to absorb and compensate for all these effects aggregated together. But we do not foresee in this picture an elevated cost of risk for 2026.

The next question comes from Marius Fuhrberg back from Berenberg.

Once again, on the cost side, please. The extraordinary effect that you mentioned on Page 28 of your presentation. Am I right to assume that basically all the effects above the tax effects are included in the cost income ratio. So when I deduct all those extraordinary effects, your cost/income ratio for 2026 would probably be more in ballpark area of like 68%, 69%.

And a second question with regard to your NPL ratio, that jumped quite significantly in Q4 to 3%, while the cost of risk showed in that release of provisions. Was this all connected to the project delays, so the Stage 3 increase to project delays in, I think, it was Bulgaria. And how should we expect the further development of these positions? So when would these NPL result in effective cost increases? Or do you expect a recovery? So what are your thoughts on this?

Thank you, Marius, for the questions for joining today's call. On the cost side, we -- on purpose, we did not create a normalized ROE in cost income ratio. So I don't want to confirm this roundabout figure. But obviously, from a technical perspective, you're right, the tax expenses -- the income tax expense from Ukraine would not go into the cost income ratio. The Romanian tax in Romania is not an income tax per se.

So this is booked in the administrative expenses, the revenue tax. But in principle, it's right also what Eriola said in this year, we plan to significantly increase core revenues from net interest income above all in structurally also from net fees, but there is the offsetting factor from Bulgaria, which is why net fees will likely not grow significantly, but the driver is, of course, net interest income.

Then we have the increases in the cost base that are more strategic in IT, less on personnel, but some close to nothing in terms of the network and then the one-off effects that are the reason why both cost/income ratio and ROE are a bit stagnant. Obviously, without the one-off effect, we would see an improvement in both ratios.

On the NPL it's exactly, as I said, the cost of risk impact was largely already absorbed in quarter 3 when we -- when these exposures that were already in Stage 2 were transferred into a higher risk class, and we provisioned prudently in this instance, and had already communicated then that should these exposures transfer into Stage 3, we would not expect any additional significant P&L effect, and this is exactly what happened in quarter 4, we transferred them into Stage 3 as the delays -- the construction continued not to be resolved.

Now I cannot speak really about the expectation of further development of these projects. As I mentioned, fundamentally, the economically sound projects, how they will be dealt with going forward. We will have to see. We are right now focused on moving forward with electrification and construction. That is our focus. Otherwise, the NPL ratio without these projects is closer to 2.0%, which is as you know, for our market, is an extremely strong figure, and we don't expect any significant development from this year cautious, nonetheless, about the broader geopolitical environment and the tensions that broke out in the Middle East, naturally, this can have very broad global economic implications, which are not really specific to our markets, but our markets are part of the global ecosystem. But at this point, we don't see a significant shift here.

There are no more questions at this time. I would now like to turn the conference back over to Eriola Bibolli for any closing remarks.

Thank you very much to the analysts for the thoughtful and engaging questions. Today's call...

Sorry to interrupt you, Ms. Bibolli . We have a last note question coming from Andreas Pläsier from Warburg Research.

Only 2 questions left. Firstly, coming to your return on equity target in 2029. Should we here expect a more hockey stick development until 2029 or can we already expect a substantial improvement into the double-digit return on equity range next year? That would be the first one.

And the second one is regarding your NII development. We have a positive development already in last year. Do you expect a strong contribution to your revenues in this year? Should we expect here also an improvement of the NII margin in 2026?

Thank you very much for your question. We do not foresee a further hockey stick on the ROE going forward to 2029. We have already indicated that the year 2025 and 2026 have been the years of the acceleration of our digital transformation and the rollout of the digital initiatives across the Group, which largely are expected to be implemented by the end of 2026, beginning of 2027.

And as a result, the significant weight of the costs required to undertake these investments, it is already reflected in these 2 years. From the year 2027 onwards, we foresee further investments and improvement in the digital infrastructure, but we will see a stronger magnitude of growth in the net interest income and fee income, simply being able to scale a different level of growth and increasing not only the volume, but further improving the structure of growth towards high yield, low volume loans and further improving the cost of deposits, that would hopefully decrease the interest expenses on the deposit side. As a result, the expectation is to see further on a gradual improve of ROE reaching hopefully, 13%, 14% to 2029.

And similarly, the answer to your second question on the development of the net interest income, we see further incremental improvements and increase in the net interest income and the net interest margin as a result of our successful progress with the balance sheet transformation and achievement of the targeted volume of growth in the right structure in the granular segments on both sides of the balance sheet that would enable the Group to just show a steady incremental increase, net interest margin, net interest income and ROE.

There are no more questions at this time. I would now like to turn the conference back over to Eriola Bibolli for any closing remarks.

Thank you very much again to the analysts for all your thoughtful and engaging questions today. Today's call, as said, was somewhat longer than our usual sessions, but we felt it was an important moment to take the time to provide a more comprehensive update on the progress we are making in the strategic transformation of the Group. We appreciate your interest and your continued engagement with ProCredit.

If there are any further questions following this call, please feel free to reach out to our Investor Relations team. Nadine and her colleagues will, of course, be happy to assist you. We look forward to speaking with you again at our next results presentations on May 13 for the Q1 '26 results. Thank you very much, and you have a good day.

Ladies and gentlemen, the conference is now over and you may now disconnect your lines. Goodbye.

A warm welcome to everybody on this call on the half year and quarter 2 results of 2025 for the ProCredit Group. My name is Hubert Spechtenhauser. I'm the Chairman of the Management Board. As always, I'm joined by Christian Dagrosa, our Chief Financial Officer. We plan for some 30 minutes to cover today's call. As always, the presentation is also available on our website. We will, of course, give sufficient time for any questions you may have.

Let me also provide you with the usual warning to pay particular attention to the cautionary statements regarding forward-looking comments that you will find at the end of the results presentation. We have the usual structure to today's presentation. I will take you through the sections covering the highlights of this first half year, while Christian will take you through the details of our financial results, risk and asset quality indicators.

When we presented our updated business strategy at the Capital Markets Day in March 2024, we identified 2024 and 2025 as critical transition years for laying the groundwork for our ambitious new vision. These years are essential not only for switching the business dynamics on the ground to deliver strong and continuous growth and transformation, but also for implementing key investments in staff, branches, IT and marketing, ensuring a long-term scalable and sustainable foundation, all while maintaining robust levels of profitability in the meantime.

Following a successful 2024, we continue to make strong balanced progress in the first half of 2025. Our loan portfolio grew dynamically, supported by favorable market conditions and strong momentum across our banking operations. Adjusted for foreign exchange effects, total loan volume increased by a robust 7.2% in the first 6 months across all markets in Eastern and Southeastern Europe. This includes a newly resumed growth dynamic in Ukraine.

Our focus remains on micro, small and retail segments, which offer higher diversification, stronger margins and an optimized risk-weighted asset structure. Like last year, these segments accounted again for about 70% of our top line growth. Profitability remains on a good level of 9% return on equity, which is slightly below but broadly in line with our guidance for the year. Since mid-2024, we have faced margin pressure due to declining ECB and local policy rates, leading to asset repricing, in particular, relating to our placements with central banks.

Deposit rates, however, remain relatively sticky, partly due to ongoing geopolitical uncertainty affecting liquidity across our markets. Offsetting these pressures, we benefit from strong fee income, a stabilized cost base, thanks to the fact that costs related to strategic investments are now largely absorbed and a continued low cost of risk. The difficult market conditions in Ecuador still represent major headwinds for the group and the bank contributed again negatively to the group results. Without that contribution, the group's return on equity would stand at 10%.

In Ukraine, it is worth mentioning that following the signing of an investment guarantee with the Federal Republic of Germany in December 2024, covering EUR 20 million of equity in our Ukrainian subsidiary, we are now able to and are expanding our Ukrainian operations without increasing downside risk at the group level.

Slide 3 is rather complementary to the summary I just provided. We see the pronounced foreign exchange effects on our balance sheet growth. The good net result amid strong portfolio quality and low cost of risk and at this time, a still elevated cost/income ratio. Our capital base remains solid with a CET1 ratio of 13.1% as partial profit attribution, net of dividend accrual and other deductions compensated for the risk-weighted assets increase that resulted from the strong business expansion.

This slide shows the execution of our strategy in a different light. The progress made since inception of the new strategy in early 2024. In the last 18 months, we achieved a substantial loan growth with our smaller volume segments of 30%, a key development in the long-term transformation of our balance sheet. Also, we grew in a balanced and regionally diversified way, laying particular focus on attaining critical size in markets where our footprint has historically been comparatively small.

In Albania, Bosnia, Georgia, Moldova and Romania, we grew in average by 22% in 18 months. The FX-adjusted figure would be even higher. The granularity we are targeting on the lending side is mirrored in our approach to deposits. We are gradually enhancing the positioning of ProCredit as an attractive bank for private clients in our markets, driving a broad-based retail strategy in recognition of the fact that retail deposits represent the most important source of refinancing across our markets.

Over the past 18 months, we have added more than 30,000 retail clients, leading to a 26% increase in our retail deposit base. While deposit rates remain elevated in most of our markets, we are confident that our expanding retail customer base will, over time, not only support strong MSME lending growth, but also contribute to structurally lowering our refinancing costs. All in all, we are highly satisfied with the path and dynamic of our structural transformation and are confident that over time, it will translate in visible P&L performance effects.

We are seeing strong broad-based expansion of our lending business across our map, with strong growth rates in half year 1 of around 7% to 10% in most markets adjusted by currency effects. This is supported by robust GDP growth across our region, significantly outpassing that of the euro area, combined with low banking sector penetration and the increasing geopolitical and macroeconomic relevance of our markets.

Our SME clients are showing increased appetite for investments in spite of the broader geopolitical uncertainty, specifically related to how tariffs are going to impact the global economy in the years to come. But also domestic demand is increasing sharply in the region, fueled by rising wages, increased public and private investments and easing inflation. A standout development is our performance in Ukraine.

Adjusted for foreign exchange effects, we grew 13% in Ukraine, also attracting new clients in an otherwise still restricted lending environment. This exemplifies the strategic value of our partnerships with governments and supernational institutions that share our vision of combining sustainable business growth with positive impact. In 2024, we made substantial progress in recruitment and branch network modernization. As a result, we see broadly stable headcount in 2025 with only marginal additions to our branch footprint.

Ongoing IT investments, primarily reflected in higher operational costs at our software company, Quipu, are propelling several key initiatives such as digital onboarding on retail clients, enhanced [ E&M banking platforms ], installment-based credit card offerings and improved customer relationship management systems. We are also preparing to be among the first movers in our markets with the integration of SEPA, Apple Pay, and Google Pay. These developments aim to enable us to serve larger numbers of retail clients efficiently while offering a modern, comprehensive product suite.

While most of these innovations will be launched over the coming quarters, for instance, our new mobile banking platform went live in Kosovo last month and will be rolled out gradually to the other markets in the following months, the associated upfront investments have already been largely absorbed. Finally, we have deliberately slowed the path of marketing spend, shifting towards more targeted campaigns that promote new products and functionalities.

Recognizing that strategic investments take time to yield measurable results, we expect these growth catalysts to begin contributing to the already good business momentum more meaningfully over time. As for our outlook for 2025, we confirm our targets for the loan growth of around 12%, a return on equity of around 10% and a CET1 ratio of around 13%. On loan growth, our outlook is now based on the growth adjusted for currency effects as we effectively have seen a significant level of currency movements this year so far.

It is worth noting, though, that the risk factors to our guidance have indeed heightened somewhat given the increased macroeconomic uncertainty. With regards to cost/income ratio, we updated our expectation for this year to around 70%, reflecting the effects from the repricing of short-term assets, in particular, our deposits with central banks and at the same time, market interest rates being sticky on customer deposits.

So overall, we see the group well on track for this year, delivering on the financial metrics on the one hand side, whilst making strong progress on the strategic initiatives and our growth and transformation strategy on the other side. With the execution of key strategic priorities well on track from igniting a good growth and transformation dynamic in all our banks to moving forward and completing strategic investment initiatives to establishing a notable presence in the retail sector of our markets, we remain self-assured in our path and optimistic about achieving our medium-term ambitions.

We plan to grow our loan portfolio to a volume of above EUR 10 billion, which will allow us to realize important scaling effects and bring the cost-income ratio to a level of approximately 57%. Our return on equity ambition of around 13% to 14% does not include any upside potential from broader reconstruction efforts in Ukraine, which would allow us to engage and grow boldly in a market which has historically provided very attractive returns.

We see an upside to our medium-term return on equity in a potential stabilization and reconstruction scenario of around 1.5 percentage points. Needless to say, throughout our ambitious growth path for the upcoming years, we remain committed to our dividend policy. With that, I will now give the word to Christian, who will give you more details on the group results.

Yes. Thank you, Hubert, and good afternoon to everyone also from my side, and welcome to our presentation. I will keep the summary of our business development brief as Hubert has already covered the key highlights. The top line growth amounted to EUR 347 million or 4.9% was significantly impacted by the marked appreciation of the euro against local currencies in the first half of the year. Adjusted for these foreign exchange effects, underlying growth was a strong 7.2%, representing just over EUR 0.5 billion.

The continued execution of our strategic priorities is most evident in the rising share of smaller volume segments within the total loan portfolio. This share has increased by approximately 4 percentage points since the launch of our revised strategy 18 months ago and continues to trend upward towards our target level of around 50%.

Similarly, on the deposit side, our strategic progress is clearly reflected in the growing share of retail deposits within our overall deposit base. This share has increased by 2 percentage points year-to-date and by 4 percentage points since the beginning of 2024. While new retail deposits remain predominantly in the form of term deposits, a reflection of prevailing market conditions despite falling policy rates, this is consistent with the broader market conditions in our region.

Elevated investment appetite, shaped by ongoing geopolitical uncertainty and persistent inflation concerns has led to tighter liquidity and prompted more aggressive deposit gathering strategies by many banks in the market. FX effects also influenced the headline deposit figures. The year-to-date reduction of EUR 72 million masks an underlying increase of approximately EUR 120 million or 1.5%. This growth was driven almost entirely by retail deposits, while business deposits declined modestly, in line with typical seasonal patterns.

Let's move to the P&L. Operating income as of June 25 was at EUR 213 million, a EUR 6.6 million decline with respect to the previous year. Net interest income reduced by around EUR 9 million, mainly due to the dynamics of receiving policy rates, which began setting in sometime in quarter 2 last year. These dynamics have slowed down in the recent months, but income from central banks and other short-term investments have decreased as a consequence by more than EUR 13 million year-on-year.

Net fee income, on the other hand, increased by a good EUR 2.7 million. The cost/income ratio stands at an elevated level of 70.9%, mainly due to the comprehensive investment initiatives from last year. It is worth highlighting that we now see the cost increases from those strategic investments as largely absorbed. Let's turn to net interest income. Quarter-on-quarter, net interest income increased by EUR 1.4 million with the net interest margin also expanding by around 6 basis points.

While these trends are naturally encouraging, we view them cautiously as they are partially influenced by calendar effects and reduction of excess liquidity earlier in the year. Nonetheless, the data supports our observation. Market deposit rates have broadly stabilized and the pace of negative repricing is clearly slowing down. Year-on-year, net interest income has reduced, mostly due to the marked reduction of income from cash and cash equivalents, driven by lower policy rates. This has only been partially offset by the positive volume effects from our strong business growth.

Conversely, deposit rates rose throughout 2024 as they adjusted to the higher interest rate environment, albeit with a time lag. They have since stabilized at relatively elevated levels. In addition, interest expenses in H1 '25 were higher due to the issuance of subordinated green bonds in early -- in April 2024. Overall, our income from cash and cash equivalents dropped by EUR 13.4 million due to the repricing effect, while income from loans to customers increased by EUR 11.1 million, wherein the strong volume effect outweighed the partial repricing of loans in some of our markets.

Looking forward, we are confident that our granular loan and deposit growth and transformation strategy, as Hubert has highlighted earlier, will structurally support net interest margin. Now quickly on fee income. I explained it last quarter, but let me repeat one last time. We realigned our chart of accounts and now show the income from FX transactions, which basically are payment services to clients in fee income and result from FX revaluation in the other operating income. Amount of previous periods have been restated according to this new logic.

Quarter 2 net fee income was 8.4% above the previous quarter. Quarter 1 is always seasonally weaker due to lower economic activity immediately after the holiday season. However, beyond that, the quarter-on-quarter dynamic is achieved through all major sources of income.

Year-on-year, we also see a 6.2% increase driven above all by our payment and FX business, while our income from cards reduced due to an increase of provider fees, which we mentioned in earlier calls. Overall, the positive dynamics in our fee business are a reflection of our growing client base, both in MSME and retail, which drives number and volume of transactions.

Moving on to personnel and administrative expenses. Personnel expenses are more or less on quarter 1 level, reflecting the stable headcount since the beginning of the year, reaffirming what Hubert said earlier. Strategic investments in staff are essentially completed. Administrative expenses are slightly higher than in quarter 1, mainly related to onetime consulting costs that were fully expensed in quarter 2. Beyond that, we see stable dynamics in all major expense items.

Year-on-year, the increase in personnel and admin expenses is more marked at around EUR 10.4 million, but corresponds almost entirely to strategic investments undertaken in 2024 as the associated costs of these investments are only, to a limited extent, reflected in the half year '24 numbers. These investments of last year include an expansion of staff of more than 700 people and the opening of 47 branches and service points.

Loss allowances continue on overall low levels. In quarter 2, we recorded EUR 1.1 million in provisioning expenses corresponding to an annualized cost of risk of just about 6 basis points and bringing the year-to-date figure to EUR 300,000. Good portfolio quality and systematically high recoveries from written-off loans are the major catalyst for these continued benign cost of risk. Our loss allowance on balance sheet remained largely stable with management overlays representing close to EUR 60 million or 1/3 of total provisions.

The share of defaulted loans has remained broadly stable at 2.1% since the beginning of the year with no material credit risk events observed. With the exception of Ecuador, credit quality remains solid and consistent across geographies and sectors, including agriculture, where last year we had observed some drought-related deterioration. As new U.S. tariffs begin to take a more permanent form, the broad implications for the global economy remain uncertain.

However, we currently do not anticipate any significant first round impact on our client base, given that the U.S. is not a major export destination for most of our markets with the exception of Ecuador, which, however, is unlikely to suffer from a relative disadvantage from these tariffs. Following a preliminary portfolio review, we have across the group proactively reclassified EUR 72.6 million in exposures to clients considered more sensitive to U.S. tariffs into Stage 2.

We will continue monitoring these clients more closely, but expect at this point no deterioration of credit quality in these exposures. Looking further ahead, it remains to be seen how the global economy will adjust to the newly emerging trade environment. For now, we observe a somewhat heightened investment appetite, both in fixed and working capital assets, which in part serves as a hedge against expected inflation.

Now let's look at segment performance. We see all -- we see well-performing geographic segments in Southeastern and Eastern Europe with good loan growth in the case of Eastern Europe adjusted by FX effects and annualized ROEs of around 13% to 15% and a cost/income ratio of around 60%. The contribution of group functions was more negative than last year by an amount of EUR 4.2 million, which reflects above all the investments in the group's IT company, Quipu as well as the strengthening support functions on the level of ProCredit Holding.

This includes the establishment of centralized teams for business development. Higher interest rates from the green Tier 2 bond issued in April last year are also borne by this segment. Ecuador contributed negatively to the group result by around EUR 5.4 million. So the underlying dynamics on earnings, business development and liquidity are overall positive, the entity continues to be negatively affected -- continues to negatively affect the consolidated result. Without the contribution of PCB Ecuador, the ROE would stand at 10.0% and the cost-income ratio at 67.9%.

Finally, this last slide shows the regulatory capital position. As of June 30, our CET1 ratio stands at a solid level of 13.1%, well above the regulatory requirement of 9.9%. In half year 1, RWA has increased mainly in the form of loans to customers, while RWA is in the form of exposures to central banks came down from the high year-end level due to the seasonal reduction of excess liquidity.

Our core capital increased by EUR 19 million with respect to the end of last year, mostly due to the attribution of H2 '24 and H1 '25 results, net of 1/3 of dividend accrual and other temporary deductions. Now with this, let me conclude our presentation for today. Hubert and I are now looking forward to taking your questions.

[Operator Instructions] Our first question comes from Milosz Papst with Edison Group.

I have a couple of questions related to your balance sheet on the refinancing side. So when we look at your deposit growth in the first half of the year on an FX-adjusted basis, it was 1.5%. And of course, in absolute terms, it reflects seasonal factors, especially in Q1. But I think that the growth rate is slightly below the average growth in the first half of the year in previous years.

So I wonder whether this is just some short-term fluctuations or there are any particular reasons like increased competition for deposits, maybe the fact that you don't run any major marketing campaigns now? Or is it just because of the broader uncertainty across the globe?

Then at the last AGM, your shareholders authorized you to issue profit participation rights, so [indiscernible] up to EUR 200 million. So are you able to give us some indication on the potential timing of the issue at this stage? Would it be this or next year? Or is it too early to discuss this? And maybe more broadly tied to the slower growth in deposits, I've also seen that you've issued EUR 100 million of debt securities. So in this context, can you talk us through your strategy in terms of your balance sheet management?

Thank you, Milosz. Let me begin and see if we have anything to add. So starting on the deposits, indeed, in this year, even the FX-adjusted growth of around EUR 120 million is a bit below the dynamics that we've seen in previous years. First half year results on deposits are typically subject to seasonality effects. These are dominant primarily in quarter 4, where significant liquidity comes into the account of our business clients and that liquidity is then typically reduced in the course of the following 6 months.

Admittedly, in this year, this dynamic was a bit more pronounced in the first half year. So we're talking about accounts from legal entities, specifically businesses, not so much retail. Retail has been very steady and essentially all the increase that we achieved came from retail. On the business account side, one can only assume that the broader geopolitical dynamics related to tariffs and the broader uncertainty that is triggered by the discussions on tariffs have led to some more increased investment appetite from many businesses.

Many have bought working capital. Many have invested also more long term. All of that could be a means of hedging against expectations of future inflation, which might be a result of these tariffs. But at this point, we don't know. What we can say for sure is that these investments ultimately would come in a type of cycle sort of if you invest in working capital, this money will come back eventually. And this is the observation that we've made in previous years that half year 2 is particularly strong in deposits and the same expectation we have for this year.

On the profit participation rights, indeed, this was on the agenda of our AGM and has been fully endorsed by our shareholders. Ultimately, this is just one additional tool in our capital management toolkit that is very good to have. At this point, we have no indication or also no clear plans of when to issue such instruments. And ultimately, the last question was on the debt securities. The debt securities in the first instance are not necessarily a reflection of our deposit-taking business. Debt securities are issued by ProCredit Holding in Frankfurt, where we do not -- where the holding does not have any deposit business.

These issuance are rather a tool of liquidity management by the holding company as the holding company has regular repayments, regular transactions with its banks. So essentially, with this transaction, we replaced other repayments in the form of debt securities from previous months and quarters.

[Operator Instructions] Our next question comes from Knud Hinkel with Pareto Securities.

I have 3 questions, if I may. First of all, I've seen that in the regions that you have a negative interest result in Germany. Is that because -- is that because of the factors you just mentioned because of the headquarter is located in Germany that you have some functions there, which don't have in other regions that you have a negative interest result in the region?

Secondly, you merely described the recent development in Ecuador. Are there any news on the strategic level? Have you that -- you can share with us on Ecuador, that would be helpful. And a more general question at the end. You are now at cost/income ratio of slightly above 70% and the goal is to get to 57% in a couple of years, so in the midterm.

Assuming that costs will not stand still in the next years, but grow with inflation rate, let's say, 3% or so, that means that income must increase by low double-digit numbers for a couple of years in a row, which -- I mean, what makes you confident that this is possible given a little bit sluggish growth in the first half of the year.

We let me start with the question regarding cost/income ratio. Indeed, we plan to reduce our cost-income ratio in the course of the next year to 57% and it is mainly a function of income growing more strongly than cost. As Christian said before, the substantial increase in our cost base due to the strategic investments in our staff, in our branch network modernization, in IT and in marketing, which we indicated last year to set a foundation for a growth and transformation strategy have been largely absorbed. And we do now expect to continue to grow strongly.

As you might recall, we grew with more than 12% last year. We -- our loan book, we also grew this year in the first half of the year, FX adjusted with 7.2%, and we guide for a growth rate of 12% for the full year, and we do not intend to slow down in this growth ambition. We aim to be north of EUR 10 billion in loans to customers in the medium term. That's the one element.

The second element beside growth is the transformation of our balance sheet. As we explained in our Capital Markets Day and continue to explain is that we want to have a more granular balance sheet on both sides, i.e., in loans by focusing very strongly on the so-called lower volume segments. i.e., private individuals, micro clients and small enterprises, and they accounted last year and this year for more than 70% of our growth.

They typically come with higher margins with higher -- with a better utilization of the risk-weighted assets and also with a higher reciprocity. And we do the same on the liability side by also focusing on more granular growth and by increasing the contribution of retail clients and retail clients do, on average, provide a way less expensive deposit base.

And therefore, by doing these 2 things, number one, growing at the path which we are growing at right now and by transforming our balance sheet and therefore, structurally supporting the margin development, we are confident that over time, we will reach this 57%.

Then let me take the question on Ecuador and the German segment. Beginning with the German segment indeed the negative interest result in Germany is a result that we have a holding company, which obviously does not have any customer lending business. It does lending to subsidiaries to a limited extent, but has a broader liability side with a lot of debt securities that were issued on the capital market that is driving essentially the negative net interest income that includes obviously also subordinated debt, which is the most expensive instrument on the German segment's balance sheet, if you like.

On Ecuador, indeed, one can say this has been the biggest disappointment in this first half year, the relatively high loss of EUR 5.4 million, which is broadly in line with the dynamics from last year. It's a combination of adverse developments. There's continued operating income reductions each quarter due to very low and still capped lending rates in Ecuador. Refinancing rates driven by high dollar rates, resulting obviously in a natural margin pressure and also the need to keep very high liquidity buffers that have no or close to no yield given the precarious liquidity situation in the market.

One should say, though, that there is a light at the end of the tunnel on both these funds. Market rates for deposits have come down, meaning that refinancing will become cheaper going forward or the repricing effect will naturally take time to trickle its way through the system. And also the liquidity situation in the market has improved also with some support from the IMF, meaning also that the excess liquidity in Ecuador can be optimized going forward.

It remains a very challenging market environment, clearly, and we're actively steering against a difficult situation. But this remains the priority, turning the bank around. And I know what you're alluding to with when you say -- when you talk about strategic options, there's nothing new to report. And indeed, the priority is to turn the bank around before talking about anything else.

We have a follow-up question from Milosz Papst.

I have 2 follow-up questions. One is related to the average interest rate on your loan book across client segments. When you announced your updated strategy, you've given us some indication in terms of the average interest rate across medium-sized clients, small clients, micro clients.

And I just wonder whether based on what you've seen recently in terms of the -- what you've seen across your loan book is broadly in line with what you've indicated back then? That will be my first question. And secondly, do you see any indications that there might be, again, a special banking tax in Ukraine introduced similar to last year? Or are there no indications at this stage?

Thank you, Milosz. Yes, good questions on the average interest rates. Indeed, we have seen the average income on loans decrease, in fact, with respect to 2023 data, which was the point in time based on which we did the analysis for the Capital Markets Day. The reason is clear, there's a significant reduction in policy rates, around 65%, 70% of our loan portfolio is variable. So there has been a repricing across the markets for loans.

But the margins are broadly stable across these segments and what we manifestated in the Capital Markets Day about the approximate 1 percentage point difference as you go down segment by client, segment by client, segment in the margin, that still holds true today. Your second question was on the Ukraine tax here. At this point, there is no indication whatsoever from any officials on the Ukrainian government that we could recycle into giving you more insight. So there's no indication that this tax will be implemented this year.

Okay. Yes. So obviously, I meant the margins -- the difference in margin because the different client segment rather than the absolute interest rate. Sorry for not being clear on that. So yes, this was exactly what I wanted to ask about.

Ladies and gentlemen, this was our last question. I hand back over to Mr. Spechtenhauser for any closing remarks.

Thank you all for your interest and participation in our results call. We hope to have given you as much transparency as possible. If you have any additional questions, please do not hesitate to contact Nadine. The next scheduled conference call will take place when we publish our quarter 3 2025 results on November 13. Thank you once again for your participation.