MONETA Money Bank not ready for share buyback as Q1 beats estimates

PRAGUE, April 27 (Reuters) - Czech lender MONETA Money Bank posted a less-than-expected 6% year-on-year drop in net profit in the first quarter as it showed a net release of bad loan provisions, while it also eased chances of a share buyback going ahead. The bank has seen elevated interest rates in the current high-inflation environment help profits. But it faces state windfall taxes and is slowing lending amid weaker demand and as inflation hits households and their potential ability to repay. With a high capital position, the bank had earlier raised the possibility of discussing a share buyback once it met new MREL capital requirements. Chief Executive Tomas Spurny said the view was changing and it was not a good time to discuss it. "The next two or three years will be about consolidation of state finances. If you try to do a buyback, I think it will invite a very negative reaction from the regulator and Ministry of Finance," he told journalists on a conference call.

"I do not think it is wise to even think about it right now under these circumstances." Bank shareholders this week approved an 8 crown per share dividend. Shares traded up 0.7% at 85.60 crowns early on Thursday. MONETA said it expected to raise another 3.5 billion crowns
($164.60 million) to meet its full-year capital requirement. The sixth biggest Czech lender posted a net profit of 1.22 billion crowns in the first quarter, above a Reuters poll average estimate of 917 million.

Net interest income fell as funding costs rose, while the bank said this line should improve in coming quarters. The company confirmed its outlook for net profit of at least 4.3 billion this year. With uncertainty around whether the Czech National Bank may begin cutting its base interest rate of 7% this year, MONETA has decreased the variable part of its balance sheet to protect the outlook if no rate cuts come, Spurny said.
($1 = 21.2640 Czech crowns) (Reporting by Jason Hovet; Editing by Robert Birsel)

Reuters

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MONETA Money Bank not ready for share buyback as Q1 beats estimates

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