Interview with Jiří Hrouda: It is not enough to save today, it is necessary to invest

Many industries have been hit hard during the Covid period and are inhaling for further growth. I see a good opportunity, for example, in the field of tourism, accommodation and catering, says Jiří Hrouda, the head of the Creditas investment group.

Last year, a new investment group - Creditas - was quietly established, where one of the richest Czechs, Pavel Hubáček, concentrated his companies, which had previously operated under the UniCapital brand. The architect of the changes is a young banker, Jiří Hrouda, who worked for Citibank in the Czech Republic and later in London. The new group manages assets exceeding 80 billion crowns and stands on three main legs: banking, energy and real estate.

Definitely the largest asset of the Creditas Group is the Creditas Bank, which, however, with assets of over 70 billion crowns, is one of small banks in the Czech Republic. Do you think that such small banks will survive in the future or will have to look for a partner in the market?
We definitely see a trend of consolidation in the banking market, not only in the Czech Republic but also abroad. This is partly due to the fact that the environment of financial markets is becoming more and more demanding in terms of regulation, business opportunities and so on.

However, we still see an opportunity in the market. Of course, we will probably never be able to compete with the big banks on the full scale.

In general, I would say that our bank as such is doing well. Today, we have about 130,000 clients, and we have been able to significantly expand our balance sheet total. And I admit that we have quite big plans with the bank.

For example, you will attract clients with a higher interest rate on savings accounts. How do you want to grow in that competitive market?
Creditas Bank is, at the moment, I think, still one of the banks that offer one of the most attractive appreciation for savings products on the market. However, as we say to our clients, saving is not the only way to bring you money.

We work quite actively with clients in the field of investment. Because we believe that in the future it will be necessary not only to save, but also to invest. We see, for example, inflation on the market, what it does with all asset prices and so on. So this is one area that we want to intensively focus on in the coming years.

We have been working for a long time to be able to provide our clients with very attractive basic products, whether it is our current account, which we consider to be one of the best on the market, not only in terms of fees and functionality.

How do you think the connection of Air Bank and Moneta Money Bank will influence the banking market?
It is definitely a very interesting step. We will see what happens to Moneta Bank as such, because I personally see a difference there, for example in the cultures of both companies.

I think that the integration of Air Bank and Moneta Bank into one functional unit will be quite challenging. On the other hand, it probably makes a lot of sense economically from the shareholders' point of view.

I think it can bring interesting changes to the market for clients. This means what the new institution will be able to offer, what clients it will acquire.

So I am quite curious what it will bring. I think we may be surprised. And I can really imagine that there may be other transactions on the Czech market in the coming years.

Will you be part of them?
As our shareholder says - of course, every asset in our group is possibly available at the right price. Because we are really an investment group.

But as I mentioned at the beginning, we have big plans with the bank at the moment. We are not actively looking for an opportunity to exit in the horizon of many coming years. So if something fundamental does not happen, I do not expect Creditas Bank to be part of the changes in the banking market on the part of the seller.

You have recently obtained an investment company license. What funds will you offer so that they will bring a sufficiently high appreciation and be attractive enough?
Creditas investment company is already licensed as an investment fund manager. We have been working on this project for quite a long time. This is related to our long-term strategy of offering attractive investment products.

The project is starting now. We plan to open more funds later this year. I admit that we are considering offering even funds that are, say, purely of market assets, whether they are bonds or stocks. Which is something that's missing in our offer right now.

And I think that even for clients, as an initial investment, it can be a little easier than investing, for example, in a fund of qualified investors, which we currently offer.

And we are actively looking at real estate. Our group invests relatively intensively in it. At the same time, we want to offer our clients real estate investments, so we want to open especially such types of funds in the coming year and years.

You worked for Citibank in London for several years in a team that managed the bank's global liquidity. So you watch the markets quite closely. What is your outlook for this year? Where do you see opportunities?
I think a relatively important area will be what central banks do with rates. Because it can influence exchange rates. And this can eventually change the appreciation of assets in the local currency of investors.

This will be quite a major effect for this year. We see that the big central banks are still holding the rhetoric in the sense: we want to keep rates essentially at zero during the year, or in the case of the European Central Bank in minus.

On the other hand, macroeconomic indicators tend to indicate that inflation is accelerating, so we will see its development.

I admit that I am not an alternative investor. I normally invest in stocks, equity funds. I admit that mainly in foreign titles. I think there are still opportunities.

There are a lot of industries that were hit hard at the time of the covid pandemic, and are now taking a little breath for further growth. I see a good opportunity, for example, in the field of tourism, hospitality (accommodation, catering, editor's note) and travel in general. There, I think we should experience a recovery.

Personally, I'm quite a fan of technology investment. On the other hand, due to the current evaluation of these titles, I would be more vigilant in this type of investment.

Yes. Valuations are huge in technology.
I do not see on the horizon yet that there will be any crisis this year. I would not expect it. But never say never. Covid also wasn’t expected and it came.

The Creditas Group was established only last year, from Pavel Hubáček's companies, which were fragmented or under the UniCapital brand. What should the investment group actually look like in the future?

For many years, we operated as a group that had a relatively separate banking and non-investment part.

As the whole group developed and grew, a relatively crucial impulse came and we wanted to unite the group. And also to make the whole corporate structure a bit more transparent and define the key pillars that we have been developing for many years, that is energy, financial services, real estate.

This was the main impetus for the whole reorganization that gave birth to the new Creditas Group. Now we want to focus on the main key pillars. That means, as I said, we have big plans with Creditas Bank.

We have similar big ambitious plans in the energy sector. Energy in general is an interesting industry, it's really very long-term - the things that are happening there. So we're looking at the long-term horizon of what's going to happen there. And, of course, real estate could be said to be in the DNA of our group from the beginning and will continue to be in it.

Is clarifying that structure a preparation for the entry of a potential minority investor that would allow for faster growth?
You should ask our shareholders. We have a relatively strong balance sheet at the moment, and relatively solid funds for further investments. From this point of view, I do not see the need to get other investor money. Of course, as I say, this is more of a question for our shareholders, but I do not know that we would be considering such a thing.

You mentioned in the past that as a group you want to earn two billion a year. At present, however, you earn "only" higher hundreds of millions. How do you want to achieve this?
In part, we expect growth in the aforementioned bank. In previous years, we were primarily focused on the growth of the balance sheet total. On acquiring new clients. I would almost say at the expense of profitability.

We must now get to significantly higher profitability of Creditas Bank. This is a plan for the coming years that we are working on intensively.

The other major asset we have in our portfolio is our energy services, our energy sector. We really have very ambitious goals there for the coming years. It's a bit related to what's going on in the energy market. There are big changes there, so we see a great opportunity there.

And the last is real estate. In our group, these are real estate developments, residential construction, especially in the capital cities. In the coming years, those projects should be completed, finished, sold. And of course another part of the planned profits will come from that. To put it simply - really relatively balanced between the three pillars we want to focus on.

Will you yourself benefit from future profits as the head of the investment group? Do you have a management program that you would become a minority shareholder in the future, as is the case with other large groups?
A quote from Postřižiny movie comes to my mind: "You must try harder, manager." Now seriously, we have relatively competitive rating systems within the group. At the moment, we do not have the form of any stock options. But I think it's kind of a mission for me.

I'm really happy to be a part of it, because when I joined the group about five years ago, we were significantly smaller. We were heard less. I'm also extremely proud of the journey we've taken.

By that, I do not mean that it is only my credit. This is really more of a vision and determination of our shareholder, but I am very happy to be a part of it and I think that the evaluation in the group is really competitive for me as well as for other managers.