Good afternoon, ladies and gentlemen. Let me welcome you to the presentation of the First Quarter Results 2023 of Addiko Bank on behalf of my colleagues, Ganesh, Tadej, Edgar, and Konstantin. We have prepared the following agenda for you. I will start with an executive summary of our key figures and then pass on to Ganesh, who will update you on our achievements on the business side. In the second chapter, Edgar will provide you with the insight on our financial performance, and Tadej will inform you about our progress in the risk area. At the end, I will present to you the cornerstones of our Acceleration Program and our current outlook on 2023 before we move on to Q&A. Let's begin with the highlights. The results of the first quarter are quite positive.
We are able to increase our net profit by 50% year-on-year from EUR 6.5 million to EUR 9.7 million. This leads to EUR 0.50 earnings per share in the first quarter. The return on average tangible equity went from 3.3% in Q1 last year to 5.4% this year. Our operating result jumped up by more than 40% year-on-year to EUR 20.3 million despite inflationary impacts on the expense side. This positive result is based on a double-digit year-on-year growth in our focus business and the solid cost management in the given environment. In addition, we were able to improve our net interest income by 26% year-on-year based on our consumer and SME business, as well as to our liquidity management income.
Based on our pricing activities, we increased our yields in new business by more than 100 basis points year-on-year. Our new Acceleration Program is supporting these developments and is on track. I will come back to that later on. Let's touch the risk side. Our cost of risk stayed at low 13 basis points, and we have kept our management overlay on the same level as per year-end 2022. The NPE volume was slightly reduced by EUR 2 million since year-end to EUR 161 million, with an NPE ratio of on-balance loans at currently 3.4%. Our NPE coverage ratio further improved from 75.4% to 77%. The funding situation remains strong with EUR 4.9 billion deposits and the liquidity coverage ratio of approximately 360%.
Last but not least, our capital position is also very strong with a 20% fully loaded CET1 ratio. As you might know, we had the AGM on the 21st of April with all agenda topics approved, and we paid EUR 1.21 dividend per share on the 4th of May. Our share buyback program is ongoing since the 11th of April. Let's look at our business development. My intro message on this page is that we did not change our prudent risk approach. Still, we were able to grow further our focus portfolio by 11% year-on-year. If we exclude the medium SME business, our growth rate was even +16% year-on-year.
The consumer book grew by 9% year-on-year because the growth rate in the first quarter went down to 2%, driven by tightened risk criteria and by lower demand. We see the slowdown in loan demand on the consumer side in the first quarter, we still confirm that we are within our guidance to reach a double-digit growth in our focus book in the full year 2023. We also confirm that we will continue our work to find sweet spots for profitable business activities. Despite the fact that we tightened the underwriting criteria based on the current economic environment, we managed to increase our new business generation by 7% year-on-year. Based on our active repricing activities, we achieved to move our focus yield up by 92 basis points versus the previous quarter to a blended rate of 6%.
Our new business yield in consumer is currently 7.5%, and in SMEs, 5.3%. These repricing activities will continue. Our total focus book stands currently at 83% of gross performing loans. The intended decrease of the low-yielding medium SME business is now at -20% year-on-year. Nevertheless, we succeeded to grow the SME book by 12% to EUR 1,243 million, driven by the 29% increase of the micro and small SME book. Needless to say, we will continue to drive business growth, but at the same time, make sure that we find the right balance based on our prudent risk approach, taking into account the current environment. This, of course, includes also to go on with optimizing our deposit base.
With that, I would like to hand over to Ganesh to give you more insight on our business activities.
Many thanks, Herbert. Good afternoon, everyone. On to page 5. I am pleased to inform you we started the year with strong business results in spite of volatile market environment, reflected in inflationary headwinds and significant movements in rates, resulting in lower demand in Q1. On lending side, our growth in new consumer and SME client acquisitions continued even after we adapted our risk appetite and risk controls to reflect the market conditions and pushed increased pricing. Furthermore, on deposit side, we continue to ramp up in term deposits while keeping the volumes stable. I am proud to say that our business model has not only provided value to the customers, but also proven to be strong and resilient in these volatile times.
Going deeper into consumer segment, our strategy is to sell lower ticket loans to a new digital savvy and point of sale customer segments through partnership and digital channels using speed and convenience as an USP. We continue to execute this strategy in Q1 by improving our digital lending capabilities and signing 50 more new partners and communicated with strong marketing campaigns. I'm glad to inform you we have improved our digital lending solution in Croatia, where customers no longer require going to the branch to sign their lending contracts. So far, customers like this new convenience feature and are willing to pay higher price for it. Our other entities across the region will follow suit in the next quarters. We will discuss more about the expansion strategy through partnership in the next slide.
We were successful in driving strong 54% growth in new customer acquisition, followed by 118 basis points increase in yields and stable development in gross disbursements quarter-over-quarter. We are hoping the competition will start to follow our lead in increasing their loan prices. On the SME front, our key focus on SME business is to sell lower ticket size loans combined with mandatory account packages to underserved micro and small segments through our digital agent platform with speed as a clear USP. As we continue to automate and increase speed in time to yes and time to cash, we also added a new feature in Q1 for our SMEs in Slovenia. Most recently, we launched a new online solution to our SME clients, where clients can apply for loan online and get a loan offer without even interacting with loan agents.
This new feature, first in the market, will also be launched in our largest markets in the next quarters, thereby adding a new distribution channel for the SME business line. Overall, we are seeing a strong growth rates with 16% in new business and 154 basis points higher pricing year-over-year, mainly driven by micro and small SME business this quarter. To summarize our business priorities, even in this volatile market conditions, we as a management team will continue to execute our strategy with a fine-tuned business model and continue to innovate and provide value to the customers. Moving on to page 6.
We wanted to give you a preview on how our digital lending capabilities with the Addiko partnership toolbox are not only providing a superior customer experience online, but also enable 380 partners in various industries to provide financing products and thereby expanding our reach to customers at the point of sale throughout the Addiko's ecosystem. Our agile partnership team has consistently onboarded new partners on our plug and play partnership toolbox, and we are seeing lots of interest from our new partners to get on with this opportunity as it increases their sales and customers as well. Additionally, for customers, it's a convenient opportunity to get their products financed whenever and wherever they need, which is lacking throughout the region today. Consequently, we are seeing significant customer interest in the point-of-sale lending product, contributing with 70% to our customer acquisition overall.
Even though it contributes only to 10% of current business due to smaller ticket size, these new customer bases have excellent affinity for potential upselling of higher ticket size loans in the future. Last but not least, we will work on integration of more financial products like co-branded cards, accounts, et cetera, into the Partnership Toolbox to provide true embedded financing solution for our partners. To sum it up, we are on a good path to deliver our vision to become the best specialist bank in the region, and that we are convinced that Addiko ecosystem is the key to achieve this specialist status. With that, please let me hand over to Edgar for the financials.
Thank you, Ganesh. Hi, everybody. Now to page eight in our financials for the first quarter, 2023. Starting on the left side of the page, the main drivers of our results. The net interest income improved significantly by 26.5% year-over-year, which I think is a solid start. Let's begin on the asset side, the three main drivers which enabled a 34% year-over-year increase in interest income. First, the successful repricing of our new business, specifically the loans written during the second half of last year and the continued new business pricing this year. Second, the variable share of our loan book, which is roughly 26%, has repriced as a consequence of the performed rate hikes. Those two elements alone contributed to a 21% year-over-year increase in interest income. Third, our treasury and liquidity management.
That is interest income from our plain vanilla bond portfolio and our cash held at national banks, specifically in the three EU countries, Austria, Slovenia, and Croatia. As a reminder, Croatia joined the euro from the 1st of January this year. Our treasury and liquidity management income almost doubled versus the previous quarter, is up more than 200% year-over-year, and mainly driven by our cash position at the national banks in the EU entities. Over to the liability side. With the rising rate environment, we naturally also recorded an increase in funding costs for a stable deposit base, which so far has been offset with higher income from our treasury and liquidity management activities I just mentioned. It's worthwhile to point out here that roughly 60%, so 60, of our deposits are covered by local deposit guarantee schemes,
We are in good shape here. The second main income driver, net commission income, was, as previously guided, down year-over-year, mainly due to lost income from a fixed DCC business in Croatia as a direct consequence of Croatia joining the euro. Taking this and a few other small effects into account, so like for like, the NCI would have been stable with a small increase of 3% year-over-year. In summary, a solid development on Net Banking Income, showing a good momentum with an increase of 16.4% year-over-year or 5.5% compared to the last quarter. The other income continues to be mainly driven by lower gains from the sale of financial assets, which is fully in line with our strategy and higher deposit insurance costs in Croatia. Down to operating expenses, which are, read unsurprisingly, up due to significantly elevated inflation.
These increases partially consumed the positive impacts we achieved from cost reduction initiatives we performed during the Transformation Program. In addition, the first quarter includes front-loaded charges in addition to EUR 540,000, which are related to the remainder of the euro implementation project costs in Croatia. All this led to a significant improvement of our earnings power, which is reflected in a 40%+ year-over-year increase of the operating result. The next item is the other result, which includes costs for legal claims as well as operational risks. We booked EUR 3 million altogether on the back of the usual quarterly review of legal provisions, mainly related to Swiss franc legal claims, as well as for operational risks, such as around early repayment fees in Slovenia. This reflects the continued prudent approach on legal and operational risks and takes into account recent developments.
Credit loss expenses, once again, remained relatively benign. Tadej will provide an update on this in a moment. At the bottom line, all this allowed us to achieve the unaudited net profit of EUR 9.7 million versus EUR 6.5 million a year earlier. A few remarks on the right-hand side of the page. The chart on the upper right-hand side illustrates a continued and accelerated trend in Net Banking Income generation. We had some good tailwinds starting into a challenging year, 2023, and achieved a solid development in NIM, good income trajectory, and better than expected cost containment. All this allowing our cost-income ratio to continue inching down towards our target. Over to page 9, which illustrates once again our strong capital position.
At the end of the first quarter, our capital ratio, and that is excluding interim profit or accrued dividends, remained stable at a strong 20% fully loaded, and all of that in CET1. Starting with this year, the IFRS 9 transitional capital rules expired, which means there is no difference between transitional and fully loaded regulatory capital anymore. Another noteworthy element, we experienced some positive development in OCI, so +EUR 7.7 million related to our debt instruments or bonds that are measured at fair value for OCI. This trend of recovery so far has continued also after the end of the first quarter.
Shortly on RWAs, we recorded a slight increase due to growth in the focus loan book, while the development also reflects a roughly EUR 40 million, so 40, one-off reduction, so positive, related to structural FX on the Croatian kuna, which is now gone since the introduction of the euro in Croatia. To summarize, a strong capital position with substantial buffers. Now to page 10, where we provided additional transparency on our plain vanilla investment portfolio. On the top of the page, we printed the evolution year-over-year, which clearly illustrates the shift towards high-quality government bonds. Which is in line with Addiko's prudent investment approach and our treasury investment strategy that was implemented roughly a year ago.
The usage of liquidity, which is generated from maturities of the old fair value through OCI book, is balanced between business growth, the cash position we hold at local national banks, and new bond investments which are placed into our hold to collect book in the EU entities. Down to the bottom of the page, roughly 30%, so three zero, of the investment portfolio overall is now in the hold to collect or HTC book. For the remainder, any market value changes are fully reflected in the reported equity and capital base. This includes negative fair value reserves of - EUR 78 million for the fair value for OCI book we have seen build up in the last year. As mentioned earlier, is now slowly showing a recovery.
In that sense, these negative reserves will continuously decrease until the maturity of the instruments based on the high credit quality and the expectation that the issuers, predominantly CSEE governments, will repay those bonds at maturity. The overall average maturity is roughly four years, and more than half of that will mature until the end of the year 2026. In a bit more than three years from now. Now, a few more insights before handing over to Tadej. Let me provide you answers to two questions that, given the current environment, have surely crossed your minds. First, on the amount of what is often referred to as unrealized losses.
The answer to that is there is no noteworthy difference between the market value and the book value within our HTC book, or to be more specific, less than 3% as of the end of the first quarter this year. Roughly half of that is related to highly rated Croatian government bonds. Second, given our specialist business strategy, our exposure to commercial real estate is very low, so roughly only 0.8% of total exposure. Let me now hand over to Tadej to provide more insights on our excellent asset quality and risk metrics.
Thank you, Edgar, good afternoon, everyone. We go to slide 11. In the first quarter of 2023, the quality of our credit portfolio continued to be inside our expectations and remained stable. High inflation so far doesn't have a visible impact on our clients' performance, the quality of private individuals has continued to be supported by very low unemployment rates. Somewhat better economic predictions that we keep seeing do indicate that there is a high probability that the portfolio quality will remain. While at the same time, we are estimating that the uncertainty around the future economic development also remains high. The NPE ratio remained stable at 3.4%, while in absolute terms, the NPE portfolio was decreased further since year-end 2022 to EUR 161 million during the first quarter of this year.
As the right-hand side chart illustrates quite nicely, we have achieved a low net NP outflow of EUR 1.8 million during the first quarter, therefore overall managed to keep NP stable. We are diligently monitoring the portfolio development and are continuously fine-tuning the risk criteria to adjust appropriately to the macroeconomic environment. I continue on slide 12. Credit loss expenses in the first quarter of 2023 came in at EUR 4.5 million, resulting in a cost of risk of low 0.13% on a net loan basis. While consumer and SME were naturally the source of credit loss expenses, the non-focus portfolio remains a source of provision releases with positive cost of risk of 0.32%. The post-model adjustment, recognized at the level of EUR 20.7 million, remains unchanged from year-end 2022.
These risk costs are below our expectations and were supported by a strong development of the economies where we operate compared to what we projected toward the end of last year. Additionally, as it said before, we continue to observe strong labor market, which has a positive impact on the quality of our private individual's portfolio. I can conclude that the current macroeconomic situation supports the stable credit risk situation of the bank, while we are keeping a conservative stance to other types of risks, especially liquidity and market risk. We continue to closely monitor market developments and the environment of increasing interest rates, but we remain optimistic regarding our risk position overall. With that, I hand back to Herbert.
Thank you, Tadej. Let me give you some background on our new group-wide program. As already introduced in our presentation in March this year, we have designed the Acceleration Program to drive further value generation. To clarify this right away, the title of the program does not mean that we want to boost our growth at the cost of unwanted risks. We want to keep our current risk profile. Nevertheless, we are convinced that we must build on our achievements and accelerate on our capabilities for our customers to create incremental value. Last time, I explained to you three pillars at a glance. Today, I would like to dig a bit deeper and elaborate on our overarching goals as promised. Over the past two years, we have significantly improved our digital platform to better serve our customers.
Now, we want to take the next step and leverage, optimize, and extract the maximum out of it. What does that mean? The first pillar is dedicated to enable constant sustainable business growth. We will continue to launch E2E digital capabilities to extract and to attract digital-savvy customers and further expand through our Addiko partnership ecosystem. We will amplify our product offering for consumers and SMEs based on our enhanced platform and the partnerships. For instance, we will boost our card business via tailored functionalities. At the same time, we will retire unprofitable services, and of course, we will further improve and refine our marketing capabilities. All of that shall make sure that we want to grow our focus business in a sustainable and profitable way.
We decided furthermore that we will use 2023 to evaluate a potential geographical expansion into a new CSEE market to leverage our digital platform and to further increase scalability. This assessment project shall last until Q4 this year. Based on the outcome, we will decide on a potential expansion of our business model into a new market. Our second pillar of the program is designed to address operational excellence, to achieve further end-to-end optimization of our core processes. This means automation as much as possible to further accelerate the convenience level of our clients. We have made substantial improvements in our business intelligence reporting systems. This helps us to understand our customers better, and it also helps us to reap the benefits, like fine-tuning our products and services to the advantage of both the customer and the bank.
Finally, faster and automized processes shall also lead to cost savings potential going forward. The third pillar will enable us to reach our goal to further improve our risk management capabilities and to strive for excellence in this area. We will invest into our IT systems to establish a scalable and automated leading-edge underwriting, monitoring, and reporting environment. In the current economic situation, we consider the importance of data management and analytics in the risk management area even more important. That's why we will further enhance our skills in this field, and we will continue to concentrate on effective NPE management to create value for the bank. The overall goal of the program is to get closer to our ambition to become the best specialist bank for consumers and SMEs in Southeast Europe. Finally, let's get to the outlook for 2023.
As the Russian-Ukrainian war is still ongoing and inflation is not going down as hoped by some market participants, we still expect that the negative factors influencing the economic environment will continue for the foreseeable time. In that context, we see two topics with which we deal and have to manage. Number one, naturally, we see some impact from the economic environment on our business in the sense that demand on loans is slowing down. This will have an effect on our growth dynamics if this development will increase. Number two, many of our competitors are still reserved towards increasing loan pricing, ignoring the changes in the interest rate environment. However, we are assertive that we will find ways to counterbalance negative influences and that we are able to keep our premium positioning in pricing.
Therefore, we are positive that we will still be able to deliver on our goals, and consequently, we will leave our outlook in all dimensions for 2023 unchanged. We, the management team of Addiko, are confident on our business model as well as on the opportunities in our markets. We continue to work with full energy to further improve the bank to create value for our clients and for our shareholders. With that, I would like to conclude the presentation. I would like to thank you for your attention. We are now ready for your questions. Operator, back to you.
The first question is from the line of Mladen Todić with Erste Bank. Please go ahead.
Hear me? Hello.
We hear you, Mladen.
Great. Thank you. First of all, congratulations on your very nice result. I have couple of questions, so maybe we'll go one by one. I noticed recently, actually in April that Vienna Institute, the one you are following with the macro forecasts, have slightly. Actually did a mixed exercise across the region where you operate. Some of those forecasts have been lower down, for example, in Serbia, in Slovenia. Do you expect that you will further adjust your provisions on IFRS model and. Yeah, that will be basically the topic.
Yeah.
I can answer that, Today speaking. No, we currently don't anticipate that this will have material impact on our level of our provisions. As you know, we have quite a prudent approach here and some differences that will not have a big impact, presumably on our IFRS 9.
Yes. I agree, because, I mean, these are minor adjustments by a half percentage point, which on big macro picture doesn't have to mean a lot. Anyway, thanks for the insight on this. I also noticed across your geography that loans in Serbia actually had very weak performance. Can you give me some color on that particular story?
Sorry, Mladen. Can you say again, loans in Serbia?
In Serbia, I looked through your spreadsheet you provide and I noticed that all of your subsidiaries performed well.
In nine.
With the loans growth in the first quarter. In Serbia there are negative moments. Is that correct? Maybe I did made a mistake.
Thanks, Mladen. This is Ganesh. You're right. In Q4, Q3, Q4 last year, we had a slow developments in Serbia, especially in the situation where we had a liquidity squeeze in the market. We were a bit careful with our lending there. However, I have to say, in Q1, in the recent months, we actually are back to our performance, what we used to do, and we are back on the growth growth story here.
Okay. Can you tell me maybe the further developments, of course, the funding rates and deposit rates are going up. Do you expect that they will continue that direction? How much can you, how should I say, how much of power you have to keep this growth slower than the active interest rates, of course?
Sure. Mladen, thanks for the question. This is Edgar speaking. You know, that's a very good question, and there's not a straight answer to that. Why? Because there's many communicating vessels. Overall, what we have observed is, that, A, we have a very stable deposit base, and if you take it all together we have you know, significant excess liquidity.
If you add to that we're actually running down non-focus deal, which frees up liquidity. I think from that perspective, we are in a very favorable position. Of course, we have seen pricing going up, and we have reflected that not only in our initial plan but also in our recent forecasts. The guidance that we gave with the disclosure of the full year results in March is still standing strong in that sense. Of course, we don't know if there is any crazy developments happening in the market where deposit pricing, you know, jumps up massively. We have not seen that yet so far. We have seen increases in, specifically in Serbia, which is also related to the, you know, liquidity situation. It's not so much a squeeze anymore as it was last year. It has calmed down a lot.
Still local funding in RSD is still, I would call it a scarce resource compared to the European banking sector in EUR. Pricing has gone up for this. We have also seen that, in Slovenia, deposit pricing has inched up. Now, Croatia, for example, where most of our liquidity is, has not moved much or not at all, so far.
Mm-hmm.
In a sense, we expect increasing liquidity costs until the year end. Yes, we do. At the same time, you know, we also have a counterbalancing from the treasury, and cash at local national banks income, specifically in the EU entities. So far everything is on track. We're observing this, of course, on a very regular basis.
Thank you very much, Edgar. I read in your report that there is still no updates regarding MREL requirements for Slovenian subsidiaries. Do you have anything to add this or we just have to wait for the official update?
Yeah. This is Edgar again. I think there is nothing changed to our previous disclosure. We are in the right to be heard process in that sense. As very often, a right to be heard means you have the right to be heard, but nothing changes. We do not expect any material changes to that. Which means, we will most likely get an MREL in Slovenia, which means that we have... I think as of today, we would have a gap which needs to be closed in a phase-in period of EUR 5 million, roughly, which, you know, can relatively, I don't wanna say easily, but it can be closed with using internal resources.
Okay, if you just can remind me when can we expect some new updates regarding capital requirements that's still early to say?
I think in this environment it's a bit too early to say.
Mm-hmm.
You know, if you listen to regulators, they are of course, being very cautious, which, you know, is part of doing their job. We're also very prudent on our end in that sense. Right now We don't have a crystal ball, which gives us now, in a sense, any numbers that we could provide as an update for capital requirements going forward. It's a bit too late. Too early, sorry.
Sure. Sure. Thanks. Final question, regarding the Acceleration Program. I mean, I read there's lots of description and descriptive, but can be any figure assigned to track the progress in this? Or, it will be just kind of, how should I say, the narrative of the future bank strategy?
Well, I mean, the Acceleration Program is a kind of facilitator in order to reach our midterm goals, you know. I mean.
Mm-hmm.
We want to get them, to get to these goals, as fast as possible. The program will help us on this way to get faster there.
Okay. Thank you very much. That's all for me. Thank you.
Thank you, Mladen.
Thanks, Mladen.
Thank you.
Thank you.
Ladies and gentlemen, at the moment, we have no further questions via telephone line. I would like to hand over to Constantin Gussich.
Thank you, operator. I have a couple of questions from Hugo Cruz from KBW. Unfortunately, he could not join today's call, so he sent us his questions via email. Let me hand over to Herbert to answer them.
What I would do, we have three questions, and I would just read the questions and then also give the answers to the questions. The first question is, can you please give us an update on the legal issues with CHF loans in Slovenia and Croatia? I would suggest to start with Slovenia. As you know, the Constitutional Court of Slovenia abolished the so-called Swiss Franc Law in December 2022. Following that, the Ministry of Finance at the Bank of Slovenia approached the banking association with their request that the parties should start discussions how to settle the court out of case. We have taken an active role to find a solution for cases with real social vulnerable customers, and this process is ongoing.
If all banks participate, we could come to such a solution in the second quarter. That's our hunch today. Overall, I have to make the comment that this should not change our guidance for 2023, so if we need to build a provision for that.
In Croatia, we are back testing and updating our provisioning every quarter. The statute of limitations for Swiss Franc loans will expire June 2023, this year, quite soon. Consequently, after that, no further lawsuits can be filed. This means by the end of the year, it will be seen how many lawsuits were actually filed until June. Because there is a time lag until we get the information from the courts about the filed lawsuits. We will then know by the end of the year if further provisions might be necessary. There is still an uncertainty overall because the Croatian Supreme Court, as we disclosed, made a decision in December last year.
That also legal, legally, these legacy converted loans. Those loans that already have been compensated should be entitled to penalty interest. We made a provision in the amount of around about EUR 5.4 million in the first quarter last year for that. However, this decision of the Supreme Court has to pass the so-called record service. The record service, as far as we know, did not approve and adopt, you know, this decision of the Supreme Court. As far as we know, it is not, it is not valid for the time being. This was the answer to the first question.
The second question is, the presentation talks about potential expansion to other markets. Which markets and in what segments? What is the potential timeline and financial impact of such an expansion? Our targets for 2023 is to assess whether an expansion into a new market is value accretive for shareholders. We are early in this process and are assessing the most efficient approach regarding a digital operating model. And we're also checking the leveraging capabilities that we have. There is a handful of markets we have been looking at, and we would like to focus the next steps of this investment on one very large market in CSEE. For the time being, it's a bit too early to provide more flavor.
What I can tell you is that our guidance for 2023 is not affected. The midterm targets we published in March this year do not include an expansion, as we already disclosed that in our year-end results in March. The third question is, the group is implementing an Acceleration Program from 2022 to the first half year of 2024. Are the group's midterms from the last result call for the last result call the end game for this Acceleration Program? If not, when are we going to have financial targets for this Acceleration Program? As I just explained, similar to the question we just got from Mladen. The idea is simple.
We set the tone with the successful execution of the Transformation Program last year. We continue with the Acceleration Program, with that, we want to drive actions towards achieving our midterm targets we disclosed in March. In this sense, as said, the Acceleration Program is not the end game, but a facilitator. Okay. I have one more question from an individual investor via the webcast. I will read it out. Question regarding the long-term PIF board remuneration component. Could you please explain the key driver to trigger the long-term component of the PIF bonus as approved during the last AGM, i.e., what is the starting share price and how much does the Total Shareholder Return need to increase until year-end 2025? Okay, I will answer this question.
As included and explained in the documents of the AGM, the starting share price, so the average of the fourth quarter 2022, was EUR 11.19. The Total Shareholder Return needs to increase by 60% until the fourth quarter of 2025 to activate the long-term PIF goal. This means to be slightly below EUR 18. That would be the numbers. Okay, thank you. I have no more questions on the webcast. Operator, back to you.
Ladies and gentlemen, there are no further questions at this time. I hand back to Herbert Juranek, CEO, for closing comments.
I would like to take the opportunity to thank you for your attendance to our call and for your interest into our results. We, as a management board, will now go back to work and, you know, do our best in order to give you also positive results for the half year. And doing our best in order to create value for you as a shareholder. With that, I would like to close and thank you