Welcome from Komerční banka. Thank you for sharing your time with us. This time it is the 31st of July 2025 today, and we are going to discuss the.
This meeting is being recorded. This meeting is being transcribed.
Of 2025. Please note that this call is being recorded. Our speakers today will be Jan Juchelka, Chairman of the Management Board and CEO of Komerční banka, Jiří Šperl, Chief Financial Officer, and Didier Colin, Chief Risk Officer. Standing by and ready to answer your questions for them are Margus Simson, Chief Digital Officer, Miroslav Hirsl, Head of Retail Banking, and Katarína Kurucová, Head of Corporate and Investment Banking. As always, we will begin with the presentation of results, which will be followed by a question and answer session. During the presentation part, we would appreciate it if you could keep your microphone muted, and all participants will be on a listen-only mode. That's for the housekeeping. Now let me ask the CEO, Jan Juchelka, to begin the presentation. Thank you.
Hello, everyone. Thank you for being with us. It's my pleasure together with my colleagues to lead you through the presentation. We are very much looking forward to your questions. Let me kick off with the opening page by saying that we are coming to the market with probably an unexpectedly high level of increase of the bottom line. I think that we need to provide a bit of comments on how did we get there, as we are mainly counting with the release of provisions as one of the contributors to the Q2 results. Having said that, Komerční is being built on a rock-solid balance sheet, very strong on the side of capital, very strong on the side of the quality of our assets, and pretty solid growth in the commercial activities across all the relevant segments.
Komerční was growing not only on that side, but also by a number of clients. We have 47,000 more heading towards 1.8 million for the bank. KB+ as the new application is already taking care of 1.3 million clients, out of which approximately 1 million are the migrated clients from the old world to the new world. For the entire group, KB Group in Czech Republic and Slovakia, it's 2.2 million clients. Loans, we're growing by 4.3% on a year-over-year basis, quarter- over- quarter by 1.2%. One of the main contributors here were mortgages and housing loans provided either from the mortgage loan production or the housing loans as they are defined for the building savings company, Modrá pyramida . Deposits were slightly down, 2.6%. We don't like it. We have taken active measures for turning the trend into positive numbers.
One of the first signs which we like and we hope is the beginning of a new trend is the growth of current accounts by 1.8% on a year-over-year basis. Where we are remaining strong is the activity with clients on the side of investment into assets under management outside the balance sheet of the bank, which in our case is mainly the joint solutions with Amundi or insurance products provided by Komerční Pojišťovna, the joint venture with SG Assurance, and the pension schemes by a 100% owned subsidiary pension company of KB. Here we were growing by 8% on a year-over-year basis, 2.5% by quarter- over- quarter. Inside this category, the mutual funds were growing by double digits, 14.2% on a year-over-year basis. All that translated into the results is the group net income for the second quarter, CZK 4.6 billion, is by 30.6% higher on a year-over-year basis.
Translated into net profit per share, it's 24.48. Cost-to-income nicely compressed, deeply below 50%, so 45.7%. And ROE, bringing back to the market, is close to 15%. First half of the year, again, very strong growth of the bottom line, CZK 8.8 billion, by almost 39%, CZK 46.64 per share. Cost-to-income, 48%, and ROE, 14.4%, slightly adjusted under the assumption if it was linearized. Balance sheet and capital, as I have already mentioned, very strong position, 18.6% of the total capital ratio, 17.7% P/1. Loans to deposits, slightly up, but still in the very safe territory of 83.5%. Both the short-term and long-term liquidity are high above the prescribed levels. Komerční banka was recognized by Visa as the number one sustainable bank. It goes hand in hand with the SG Group award as a World's Best Bank for ESG by Euromoney.
Our colleague from the Board of Directors, Jitka Haubová, was recognized as the number one woman in payments by Visa Awards for 2024. Let me invite you for the next page, which is describing the current status of transformation of Komerční banka. The new digital bank will be done very soon for retail. All the technological systems are up and running with very solid stability. We have 1.3 million users already in site, out of which 1 million migrated from the old world to the new world. We have approximately 600,000 clients ahead of us as far as retail is concerned, and we want to be finished at the end of this year.
We have very promising statistics coming back to us from the usage of KB+, which is the name of the application, which is between number one and number two most downloaded banking or financial applications in the country. Also, thanks to the fact that the migrated clients will need to have it available for functioning with KB. We have put in place significant simplifications all over the place, processes, all the procedures, how we are creating the software, how we are creating the development of new products, moving completely to 100% digital communication available with clients, etc., etc., which is also bringing back significant cost benefit from all these aspects. You may have noticed that cost management is one of the strongest disciplines, not only for the previous quarter, but if you allow me, I will take it as a signature discipline for KB on a longer-term basis.
What will be the next steps? As I have already mentioned, completion of individual clients' migration in 2025, continuing with entrepreneurs, physical persons, and entrepreneurs, legal persons down the road, 2026, 2027, and we will search for means whether we can potentially accelerate this. Leveraging for the up-sell and cross-sell opportunities on the new technologies because not only the statistics of stability and increasing net promoter score, but also statistics of having a digital channel as a full-fledged sales channel are pretty promising. We would like to take out the entire burden from our people who are running the bank on a daily basis and selling products, the entire burden of being in two parallel systems and being busy with the migrations and concentrate fully towards the service and sales mainly of our products towards clients in 2026 and on.
We are expecting the NBI contribution stemming from that, sustaining or increasing NPS levels. As time goes, with each and every additional usage of the application, clients are happier after the little stress which they might have with migration from the old to the new world. On that front, we will push all the buttons related to organic growth for 2026 and on. We will continue investing into modernization of technologies, obviously, and further strengthen the competitive positioning of Komerční banka in the era of digital banking, or if you allow me, universal banking with a strong digital background. We have also concluded a couple of deals. One of them is pretty important for us. This is the 100% acquisition of SGEF. Can you please, can you go back? Yeah. Yeah, this one. Where we were acquiring 49.9%, currently being the only owner of this beautiful equipment finance company.
A little bit low importance, but still worth to mention is the disposal of 24.8% of KB stake in Roger, which is a digital factoring platform to Orbian, which will bring this company to the international markets as an expert for factoring financing in Europe. Disposal down the road, envisage the disposal of the minority stake in Upvest, which is the, sorry, not disposal, but acquisition of 4% of Upvest from the founders of Upvest, which is a very, I would say, successful crowdfunding investment platform. Let's move to the next page. Now, let me zoom on Macroeco. We are lucky that we are making our business in a stable country with a growing trajectory, which is not given in the current environment.
The country is growing on GDP in the second quarter of 2025, moderately by 0.2, quarter- over- quarter by 2.4%, mainly driven by the consumption and investments of households. Wages went up by 6.7% in the first quarter. Obviously, this is the season for adjusting the salaries and when all the collective negotiations are being finalized in the first quarter. The unemployment rate remains very low, 2.8%. We have, as you know, in the country, more or less a bit of structural issue of unavailability of working power. The consumer price inflation is inside the corridor of tolerance by Czech National Bank, being in June in 2.9% year-over-year increase. Czech National Bank remains at 3.5%. We are now very cautiously reading their comments before the next meeting where they might be reacting on that front.
Czech Kč has been stronger by 13th of June, by 0.9% towards euro, and by 8.5% towards USD, which is a bit volatile nowadays in the season of concluding the political agreements over tariffs between the United States of America and Europe. We are patiently waiting for the written form and the finalization of these negotiations, even though the overall impact towards the GDP in Czech Republic is still expected, according to our Macroeco team, below 1%, rather in the territory of 0.5% than higher.
What is probably worth to mention here is that we are stemming from very healthy conditions of public finance, which is the public finance balance is at - 2.2 or -2.3, respectively, between 24 and 26 expected, and with very low overall indebtedness towards GDP in the territory of 46%- 47%, which is qualifying us among the healthiest countries as far as the public finance is concerned. Let's move to the next page, please. We are already coming to the business development. Loans are up by 4.3%, mainly driven by mortgages and housing loans, as I have already mentioned. Also hand in hand with that, this is the business loans for our corporate clients, which are growing by 5.1%. Komerční has grown also the consumer lending part of loans by a moderate 2.2%.
When we dive deeper into corporate lending, it was mainly driven by financing of the local economy. We are also happy with SGEF contribution by 4.5% growth. A little bit less happy with 1.7% of the growth of financing of SMEs, which is also a bit of an indicator where are the potential gaps, which we can, which not only can, but which we are addressing and which we are focusing on. Next page, please. Here you see that KB in corporate financing was all over the place. Public sector, private sector, some of those clients which are listed here were provided by financing, which helped them to really go through like transformative projects for their companies. We are keen to continue playing our role here as one of the strongest corporate financiers for Czech clients in the corporate world, but also on the side of public sector.
Let me invite you to the next page, which is dedicated to deposits. Slightly down. We are not happy with the trends. We are doing our best to reverse it. You might have noticed we have a pretty strong campaign currently on attracting more money to savings accounts and term deposits in order to stop the decrease. On the side of current accounts, we hope it's the beginning of a new trend. The moderate growth of 1.8% is very important to be back into positive territory, especially in this non-paid type of deposits. Even between quarters, even between first and second quarter, the dynamics of the decrease were slowed down, attracted by this trend of increasing current accounts. Speaking about building savings, we are not completely panicking here because we are falling down hand in hand with the market.
It sounds a nominally high number, nonetheless pretty copying what is happening on the market. Assets under management outside the bank, driven mainly by mutual funds, which are growing by double digit 14.2%, followed by moderately growing insurance products, insurance investment products, and the pension schemes oscillating long-term around zero. The sales of mutual funds are continuing in a very strong growth sale. We are working intensively on the composition of the investments in order to invite our clients to more like longer-term solutions. Next page is already dedicated to our CFO, so I'm handing over to Jiří Šperl. Thank you.
Thank you, Jan Juchelka. Indeed, Fed is strong financial performance in the first half of this year, i.e., CZK 8.8 billion , i.e., plus almost 40% year-on-year. What's even more positive is that almost all categories contributed positively as visible in the left chart.
The highest positive contribution is coming from a significantly improved cost of risk that is roughly CZK 1.6 billion year-on-year, reflecting, as mentioned by Jan, the superior quality of our loan portfolio. No doubt Didier is going to comment on that later in deeper detail. The quarterly dynamics is traditionally visible on the right upper chart. Quarter- over- quarter growing by a strong 10%, year-on-year even more, by almost 1/3. Again, strongly influenced among others by cost of risk. For now, this echoes transpose directly into the strong capability indicators as shown at the bottom left. ROTE is at the level of 16.6, historically adjusted, and ROA 1.1%. If you move to the balance sheet, it's accelerated as well, i.e., year-over-year is roughly 4.6%. On the liability side, the client deposits remain more or less flattish.
The growth on the liabilities is driven mainly by amount due to the bank growing by roughly CZK 60 billion year-on-year. On the asset side, 3.5% growth of the client loans was complemented with the placement of the liquidity surplus into the Czech JOIC, growing by almost CZK 40 billion. The growth in this category was visible mainly in the second half of the year. Let's move to main accounting categories. Let's start with the net interest income. Here to say that despite the doubling of non-interest-bearing mandatory reserves since the beginning of the year, January 1st this year, six months NII is growing by 3% year-on-year. It's a right upper chart. It's supported mainly by NII from the deposits, jumping by 7% year-on-year. The main reason behind is an improved structure, as was already commented by Jan.
Still, at year-on-year evolution, income from the loans was up by 2 percentage points. Here, it was driven mainly by volumes while the spreads remained comparable. In terms of a quarter- over- quarter perspective, and that's right bottom chart, NII remains basically flattish, where basically all categories are growing, but the income from the investment banking, to say, it is not as much undelivered on our investment banking guide, but rather a bit changed of the structure of the income. In Q2, investment banking was delivering a bit more in the financial operations, I mean, accounting-wise. As I'm going to have to comment in a minute. In terms of net interest margins, left upper chart, it is both year-on-year and quarter- over- quarter flattish at 1.7%. By the end of the year, we are expecting a slight rise due to continuing improvements in the structure of the deposits.
This is bringing me to fees and commissions. The fees and commissions are growing strongly year-on-year, plus almost 5%. Here, the champions are kind of obvious. The first, it is fees from cross-sell growing by 13.1% year-on-year, following the dynamic sales. That, of course, grows of the outstandings as well of non-bank assets under management, as was commented already by Jan. Second, super high dynamics of the income from the specialized financial services, that gray part in the chart. Granted, mainly to our CIB clients and also PREF clients. That's mainly loan syndication, state finance, structured products, etc., etc. From a quarter- over- quarter perspective, there is a decline, minus 6.5%, mainly influenced by, let's call it, base assets. Why? In Q1 this year, there was above average income from the specialized financial services, as I was commenting right now.
On top of that, in Q2, we generated a bit below the run rate performance in this category. Other categories of fees and commissions are rather growing. In Q2, it's mainly about the transaction fees and cross-sell fees. Let's move to the financial operations. Year-on-year growing, also dynamically, by a strong almost 12%. Influenced positively mainly by capital markets operation growing by a very strong 24% year-on-year. Specifically here, Q3 and Q4 last year were super successful, a quarter supported by decent interest hedging activity, reflecting the financing volumes and the rate shift. If you move to the quarter-over-quarter evolution, the bottom chart, the income is basically flattish quarter- over- quarter. There is a slight increase, like around 2 percentage points, where both categories are growing at a similar pace.
Capital markets were a bit hit by unstable global economic backdrop that led to fluctuations in client activity during the previous two quarters. Maybe here one comment for the net gains on effect from payments. The comment is related for Q3, for upcoming quarters. Our expectation is that this category will jump again due to the seasonal increase of mainly cash payments, both domestic and foreign. It is always the case, and you can see this also in the right chart below in the evolution Q2 and Q3 2024. The last slide before passing towards Q3 is related to OpEx. Costs are traditionally very much under control. OpEx is going down by almost 4% year-on-year. ESCO's decline in the regulatory charges helps, but even without this effect, the cost would not grow.
If you go into structure in a bit deeper detail, the personnel costs are down minus 1 percentage point. Here are basically two factors offsetting each other. So, ESCO's, there was an annual salary increase starting from April this year by average 2.5%. At the same time, it was more than offset by the decrease of the number of the employees year-on-year by almost 5%, which is further evidence that the efficiency of the group is continuously increasing. In terms of SGEF, I would say there are no specific, let's say, items where we were saying the overall savings is - 6%, and basically, it went across the board. I also already commented regulatory funds already during the Q1. Just one cost category growing is depreciation and amortization growing by 10%. The message is the same.
It is still reflecting mainly investments in digitization of the bank, Jan was commenting at the very beginning of this presentation. Costs quarter-over-quarter, bottom chart declining heavily. It's by 10%. On the other hand, there is an exciting clear that the bank is, as you might know, the bank is obliged to book the regulatory charges, mainly resolution fund charges already in Q1. Cost-to-income ratio, left bottom chart. I'm commenting yesterday's historic line arrived. It's at 46.9%, proving again the increase of the efficiency of the bank, of the group. Year-over-year, it is improving by 3 percentage points. I can already now indicate that the improving trend is going to continue even further. That's it from now. Now I'm passing towards to Didier. Didier, please go ahead.
Thank you, Jiří . Good morning, everyone. Regarding asset quality, I will walk you through the traditional three main topics. The first one, which is not represented on this slide, is a brief update on the evolution of our default rates during the second quarter. For the SME portfolio, we continue to witness a contraction of our default rates, in fact, returning to the long-term average following the peak we had sometime last year. We also continue to recover from moderate contraction for the consumer lending portfolio. We have our two near-zero default rate portfolios, which are the mortgage loan portfolio and the large corporate portfolio. Here, no change, continued strong level of resilience.
Going a little bit the other way, but without any cause for concern, was our small business lending portfolio, whose default rate increased a bit in the second quarter, but still at levels that are well within the gross margin for that particular portfolio. That's for the default rate. Now, when looking at the composition of our loan book by IFRS 9 classification, there has been a quite material shift in the second quarter following the reversal of our post-inflation overlay assigned to the mortgage loan portfolio, which was planned and announced to you in the previous quarter. This explains most of this decrease you can see on the screen from nearly CZK 120 billion down to slightly below CZK 90 billion. This is the main evolution.
The L3 category continued to marginally decrease, but nothing really spectacular here, and in fact, completely consistent with the observed default rate, which has stability, which I just commented briefly on a minute ago. The third and last point for this slide is the resulting metric, which we report, i.e., lower S2 ratio from 14% in the first quarter down to around 10% in the second quarter. Stable NPL or S3 ratio now being slightly below 2%, and a stable provision coverage ratio for defaulted exposure that continued to fluctuate around the level of 45%, which puts us very much in line with the regional level for that particular metric. That's for the asset quality. Going on to the next slide, which gives you the overview of our cost of risk for the second quarter.
For the second quarter, we booked a level of cost of risk slightly above a net release of CZK 500 million . This half a billion, in fact, has two main components: CZK 500 million or slightly below CZK 500 million, CZK 479 million exactly in net reversal coming from the corporate portfolio. This is justified or explained mainly by some partial net reversal of our overlay reserves booked on the non-defaulted exposure. The second element is the one you see on the slide, which is for slightly below CZK 50 million in net releases coming from the retail portfolio.
This is the net result from what I just mentioned before, which is the reversal of the mortgage loan portfolio overlay for something in the range of CZK 200 million, partially offset by some provision creations reflecting the usual mix of new defaults at a low intensity level and some standard quarterly IFRS 9 adjustments. This is for the quarter view, and the semester view is very similar at 22 basis points in the negative territory. Here you have the three main components which are familiar to you. One was the release of some client individual reserves in the first quarter, which we commented at the beginning of May. We did these partial releases of some portfolio reserves on the non-defaulted corporate portfolio in the second quarter.
The third smaller item is the one I just mentioned, which is the release of the so-called post-inflation overlay related to the mortgage loan portfolio and in line with the resilience of that particular portfolio. This is what gives you this low point of - 22 bps for the first semester. In that context, we decided to readjust or to revise our year-end guidance at a level taking into account this Q2 evolution, as well as the planned further releases for the second half of the year for the retail on-taker portfolios. This would take us at a level around, if not below, 0 bps for the full year. I will now hand over back to you, Jiří. Thank you.
Thank you, Didier. Let's move to the capital. Just briefly, the current capital request is still very strong, despite the fact that we are creating provisions, as you know, for 100% dividend payment. As of end of June, it's at 18.6%, i.e., slightly down yesterday. Slightly means in this case, only 14 basis points, so it was very negligible. All in all, it means that we are like 200 basis points above the regulatory minimum. It is just at the upper edge of our best management buffer. One comment very quickly: density is basically yesterday's space at a very comparable level, i.e., 36.6%. The last slide of the presentation is focusing, as traditionally, on the outlook. Basically, we are not changing the 2025 full-year outlook with three exceptions. The first one is there is a slight postponing in the expected monetary policy era of ČNB.
More concretely, now ČNB is expected to cut a two-week repo rate gradually to 3% terminal rate by the first half of 2026. The previous guidance was by the end of 2025. In terms of growth, it is relevant and valid both for the banking market and KB business outlook. Both loans and deposits, still the expectation is a mid-single digit, so there are basically no changes. The second change is a bit downgrade of the revenues. Now, what we are saying is that revenues are going to grow at low to mid-single digit. Three months ago, we were saying mid-single digit. The main reason behind is a bit of a gap or slowdown in net interest income and also net fees and commissions. That's one thing. On the other hand, the management of the bank decided to put together some extra efforts on OpEx side.
Here, we are upgrading the guidance to the decline of costs at the mid-single digit rate. Three months ago, it was low to mid-single digit. Skipping credit risk, as it was commented by Didier, in terms of potential risks of the guidance, there are no changes. It's mainly about the geopolitical conflicts. That's all for now. I'm returning towards the studio. Thank you.
Thanks to all presenters. In the next part of today's meeting, we will be happy to answer your questions. Let me remind you that this meeting is being recorded. If you have a question, please click on the icon with a raised hand at the upper part of your screen, and then please wait to be called. If you are connected through a telephone, then I will invite you to ask your question later on. Our first question is coming from Rob Cross from Beckel BPE. Rob, please go ahead.
Good morning, everyone. Thank you for the presentation. I have one question on the fees development. I think this line has been a little bit disappointing. As I understand, you are offering flat fee packages to customers deciding to join the new online platform of the bank. This, in effect, as I understand, is changing the profile of the fee business going forward, as this could be now less sensitive or insensitive at all to the potential positive volume effect. This is my question. Has the fee business character, I mean, elasticity to the volume of the underlying business, changed going forward so that now a higher share of fees would not be responsive to, say, transactional deposits and other volumes? The main drivers would thus shift to capital markets and cross-selling segments of the fee business. Thank you.
Jiří, would it be okay if I start answering by the retail part of the area, if I may?
Sure.
Because I think you are touching quite important points, and we paid a lot of attention to this conversion. You may remember that we were the last bank on the Czech market asking clients to pay fees, maintenance fees for any current account. It was not an easy position for a few years. We took the opportunity of building a new bank as something that we can change the fee policy. It's true that an important part of our clients is not paying anything for the current account as such, for the simple one. On the other hand, if you look at the structure of fees, we succeeded to convert the original portfolio of accounts into the new one without losing any fees.
Even after we migrate, the fees are slightly higher than it was before because those higher tariffs that are paid compensate for the loss that we incurred on those tariffs that are free of charge. This is one point. We succeeded to maneuver through that difficult or sensitive point without any loss. On the other hand, it would be inevitable anyway because the position of the bank, which is charging everyone for even a simple current account, was just not sustainable in the long term. If I am giving you an understandable answer now.
Yes, indeed. What does it imply for the future growth of the fee business? Is there still competition from fintech, which is going to put a lid on the fee, especially retail fees? How would you assess, what are the, say, three-year targets on the fees like? Is it more lower single digit or higher single digit? Thank you.
For a lower or higher single digit, I may let you recommend the prediction. In terms of substance, what I'm saying is that we are now perfectly competitive in terms of pricing for day-to-day banking products. First point. Second, we didn't lose anything in the conversion process to the new bank. The third one, we will not be able to increase the unit price. This is not possible on this market. While growing the number of clients, we should grow the number of fees, speaking about the day-to-day banking part of the business.
With the growing number of transactions, will it positively still affect the fee business going forward as well?
On retail, no. This is not the case for any single bank on the market because transactions for retail clients are just not charged. This disappeared from the market. This is a very new thing some time ago. We were the last Mohican among the others.
I can't complement to MedEc, and I have to comment. The first one related to Q2. Maybe it's important to understand that so far, majority of the migrated clients are the smart market, right? A non-negligible part of them have selected the basic packages with a rather lower fee charge. For the time being, we are already in the migration of equivalent clients. ESCO, and it is proved throughout the time that the initial lines are selecting better, i.e., higher packages. That's one comment. Other comment is the question of guidance for the years to come in retail fees. It will be at the range of mid to high, not a bonus. Average fees on the customer is expected to increase. Thank you.
That's clear. If I may, one last point. Do you envisage at any point also a shift in the fee business for the corporate clients to a more flat-based fee as opposed to volume-based fees?
I will start with the corporate component. ESCO, there is a very direct correlation between the volumes, right? It's on the corporate side, mainly on specialized services from the financial operations. Here, definitely, we need low volumes. Very clear correlation, yes.
Thank you so much.
Thank you. If you have a question, please use the raise the hand button. If you would like to ask your question via telephone, please unmute yourself by pressing star and six, usually, and then ask your question directly. Our next question comes from Mate Nemes from UBS. Mate, please.
Good morning. Thank you very much for the presentation. Two questions, please. The first one would be on renewal lending or lending growth, and specifically on corporate lendings. It seems like in the second quarter, growth was mostly driven by working capital finance, which I would think is a somewhat lower margin and shorter duration as well. What can you tell us about demand in the pipeline in investment type of loans and a more structural longer-based recovery in corporate volumes, perhaps in the second half or having an eye on next year as well? That's the first question. The second question would be on costs. Clearly, there's a very, very clear trajectory of improving efficiency on that side and net cost takeout. I think, Jiří, you mentioned that you expect these improving trends to continue in costs as well.
Can you be more specific, be it in absolute terms or in terms of cost-to-income ratios, particularly for financial year 2026? Thank you.
To answer the questions concerning the lending horizon in corporate, we do not have any significant stress concerning the pipeline. The pipeline is there. The thing we need to work on, and this is actually one of the first steps of my mission, is to be able to deliver on the pipeline in a reasonable amount of time. This is particularly true for the SME segments, where we are now evaluating the results of a pilot of a more industrial approach to be approval with the aim to increase or to shorten time periods on the credit process. On the large corp, we also see a handful of really nice transactions being materialized in the short term.
For the second quarter, in particular, we were trying to equip ourselves with more appropriate sizing of various sectorial limits, which were a little bit limiting our growth in the large corps during the second quarter. This being done, we believe that the second half of the year in the large corporate segment will be much more fruitful than we've seen so far.
I will focus on the second question, which was about costs, improving efficiency, etc. Yes, you are right that the efficiency is improving. I think GES issued a guidance that for full year 2025, we are targeting cost-to-income at the level of 44%. Why? Basically, we are delivering as committed during 2020 during the announcing of CB 2025 strategy. The measure is listed at that time. We are, according to the plans, releasing employees as the efficiency is increasing or is going end to end, paperless, etc. ESCO's digital sales increased significantly, on top of my head, from 10% five years ago to more than 50% right now, which is allowing us also to close branches. The original target was 200 branches at the end of 2025. It's already the case. We are at 185, and this will be the end of the year very likely, right?
To conclude, at the end of this year, around 44% cost-to-income ratio for 2025. You know that we are guiding easily during Q3, Q4 is our presentation, but I can at least indicate the direction. In terms of costs, we are expecting to have them flattish, plus minus. On the top line, we are expecting a jump in revenues benefiting from the completed transformations at the retail side. Thank you. I hope it helps.
If I may just amend a few sentences on both points, and thank you for this question. As far as corporate financing is concerned, you have taken a rather forward-looking position. Having said that, we are in a pretty, pretty heavy preparation stage of public investments into infrastructure of all kinds. You can imagine the energy sector. You can imagine the public infrastructure for railways and roads. Here, Komerční is in very intensive discussion with all the relevant counterparts about the future investment. We believe that it will multiply somehow also the investments stemming from the private sector. We want to play our role in that. Sorry for taking maybe longer for a forward-looking view because when you look back, the level of uncertainty, the level of delayed decisions on investments, mainly in the mid-caps, but not only, was pretty visible.
I, together with Katarína, remain rather positive on the pipeline here, ignoring consciously the fact that we have a few really super active large corporations in the country which are expanding abroad and making fantastic M&A deals in other countries. In all of these important projects, KB , together with SG Group, plays a role of either first line of the syndication or first line of the syndication plus advisory role. Speaking about costs, it's not coming randomly. It's a result of very hard work which we have been conducting between 2020 and today. You may have recalled that back in 2020, when announcing the main assumptions regarding the transformation program of KB , we were pretty severe on the side of cost savings and cost savings across the bank's front offices, middle office, back office, combined with the heavy investment into digitization.
Now we are in one of the advanced stages, if not the very final stage of this story, taking also the benefits on the side of costs. It's very hard. It's very bold, but it's not coming out of the blue. It's a long-term trend which is bringing its results as we speak. Thank you.
Thank you very much, all of you.
Thank you. Once again, please use the raise the hand button or ask your question directly by unmuting yourself. I'll call it a few more seconds to ask your question if there is any. We don't seem to have any further questions, so I would like to ask the CEO for his concluding remark today.
On those questions, you're muted.
Okay. Thank you very much. It seems that the presentation which we have delivered is self-explanatory. Combined with the report you have received in the morning, you have enough information. In between, we are obviously ready to answer any of your questions should you ask on the lateral basis. Speaking about the results, you are obviously aware that beating the expectations of bottom line is very good. The creation of value for the shareholders is simply there. We are also aware that the composition, how we get there, was not completely optimal.
Let me say that the first-class asset quality, which is translated into these releases of provisions and extremely low level of cost of risk, combined with very strong balance sheets from both capital and liquidity point of view, amended by very strict cost management delivered by the management of this bank, is creating our underlying pillars for attacking the market once we have all the retail clients migrated into the new digital bank, i.e., beginning of 2026, where the whole system will be fully equipped by all the functionalities which we are planning. Speaking about on more like social or societal point of view, today we are having Didier Colin last time amongst us. I wanted to thank Didier for his seven years of very hard work on the side of risk management. He will be replaced by Anne de Kouchkovsky . I'm just referring to our recent official statement.
Anne will join us 1st of September, and we are very much looking forward to this new member of the team. Speaking about new members of the team, today it was the premier for Katarína Kurucová. She did very well. Thank you for your reaction on the corporate financing question. Also, Katarína, I'm wishing you all the best, and I'm very much looking forward to the further cooperation. Thank you, everyone, once again. Enjoy the rest of the day. Thank you on behalf of Komerční banka management for your trust vis-à-vis our bank. We stay at your disposal for potential further questions. Thank you.
Thank you, all. This has concluded the meeting. You can now disconnect. Thank you.
Thank you. Bye.
Goodbye.
See you soon. Bye.
Goodbye.
Goodbye.
This meeting is no longer being held.