Alior Bank Sa Unsp/Adr

Good morning ladies and gentlemen, I would like to welcome you to the financial performance conference of Allure Bank SA and we have the following persons representing the bank.

Iwona Duda, Acting CEO, and two gentlemen, Maciej Brzozowski, Chief Risk Officer, and Dariusz Schwed, CEO, responsible for business. And now I pass the floor to the Acting CEO, Iwona Duda.

Warm welcome, ladies and gentlemen, at our consecutive Financial Performance Conference Today we are going to talk about the fourth quarter performance and for the whole 2021. So 2021 and the fourth quarter was another very good quarter, whereas in the third quarter we closed with the level of 80 million. The fourth quarter we closed at the level of 120 million. And each quarter of the last year we closed with a positive result and no doubt that on the second quarter was a breakthrough and then we re-bounced and under

not favourable business environment with low interest rates faced by the whole banking sector and also the pandemic constraints and also consequently the behaviour. of our customers both business and retail when it comes to the ratios in the fourth quarter of 2020 the roe was a level of 7.4 percent which is a good level then The TCI ratio was at the level of 47 against 43% in the fourth quarter 2019. So please note that this decline, which is shown in this slide, it is under the specific COVID environment, which shows that this is very good performance because in 2019 It was when we operated in normal business environment.

And when it comes to the cost of financing, it is smaller. It is 0.26% and Previously, it was at the level of 1.12% in fourth quarter 2019.

Of course, we looked at the revenue side and the cost side. We sought various methods and when it comes to the revenue side, no doubt that we recorded excellent sales of the mortgage loans.

In the fourth quarter we sold mortgage loans worth almost 900 million zloty.

So hopefully we will have also very good sales of mortgage loans in the months to come. Then lease sales was also very good.

In the fourth quarter 2020, it was worth 684 million, up by 11% on a year-to-year. And there was a collapse of the lease sales because of the COVID outbreak, but then the market rebounds and now it's going up.

Then the higher purchase loans, it exceeded, it reached almost 1.5 billion zlotys. To be more precise, 1.46.

So, when it comes to the assets under management of our investment fund,

fund company, the record sales, net sales in the fourth quarter 2020 reached the value 225 million and the total value of assets under management was up by 44% to reach the value of 1.14 billion zloty. And we keep emphasizing

very safe capital position of the bank. The tier 1 was at the level of 13.55%, which means 505 basis points above the regulatory minimum, which means by more than 2.4 billion, and the TCR at the level of 15.85% more by 535 basis points, which translates into 2.58 billion zlotys.

And the cost of risk in the fourth quarter of the last year also declined from the level of 289 million in the third quarter 2020 to 233 million in the fourth quarter 2020, which means that the COR index on a quarter-to-quarter basis declined from 1.86% to 1.48%. And please know that in the Alior Bank we are not having problems with the mortgage loans denominated in Swiss francs, because the share of such loans in our mortgage loan portfolio is marginal. So, in fact, the value of such mortgage loans in Swiss francs is insignificant.

And next slide, please.

And on the first graph you can see that despite the material deterioration of the business environment we have generated stable performance so all the figures are up and please note that at the beginning of 2019 in the fourth quarter of 2019 the net profit was at the level of 12.5 million and after the one year later in the fourth quarter 2020

The net profit was at the level of 120 million zlotys. And where are we at the moment?

Our assets is 78.6 billion zlotys, which means that the total assets are up by 2.5% on a year-to-year basis.

Deposits.

worth 66.9 billion zloty, which means up by 2.9% on a year-to-year. Then retail customers. Now we have more than 4 million retail customers, up by 0.5%. 8% on a year-to-year basis.

And we are very happy because now the retail customers, they are really limiting their activities in the pandemic environment. Now business customers, business customer segment, we have 239 business customers, up by 6.6% on a year-to-year basis. Now the online customers are up by 35% on a year-to-year basis. Now the total number of online customers is 616,000.

And we are very happy because, as you can see, this is the best evidence that We are doing very well in the digital channels and the customers are very happy with our digital solutions. So no doubt that we are going to further increase the number of online customers.

We are also migrating non-online customers to the online channel.

The next point I wanted to make, I would like to come back to the ratios which are important from the prudential point of view and conservative point of view. Tier 1 and TCR. Let me tell you what is the trend. It is an upward trend, which indicates a very good position of the bank. And also the LCR, which is the liquidity ratio, also is at a very good level.

But we have further plans.

We want to further increase our operational efficiency and we are currently already implementing the cost savings initiatives. We identified some of them that are in the pipeline. We want to implement them in various areas such as wage costs, IT costs, then we also review all our real estates with the lease contracts, also company car fleet, and also the cost of subsidiaries.

And when it comes to our expectations towards Alior Bank Group, we want to find cost initiatives in the subsidiaries similar to the parent company, but also we want to also seek

And furthermore, we have ambitions to reduce the operating costs by at least 100 million polizloty on an annual basis.

And another element we would like to draw your attention to, we want to focus now on the ECO products and on ECO channels.

Of course, we are already present in this segment, but we would like to establish our strong presence in the eco channel and in eco products areas. So as a matter of fact, we have in every area, we have offered in consumer finance for the retail and business customers. Also in the lease area, we want to finance, for example, photovoltaic panels. And then the total volume in value terms at the end of 2020 was The value was at the level of 1.4 billion zlotys, but we are more ambitious than that. We want to make our offer more attractive.

We want to build actively the green deal, offering eco products for the customers, but of course we must be green also inside the bank.

And of course, when it comes to environment, we want to cooperate with the National Fund of Environmental Protection and Water Management under such programs like Clean Electromobility,

And we want also to finance the renewable energy sources, products, and hopefully in this manner we will contribute to the improvement of climate.

And then awards, these awards we received in the past. We are still happy with them, but you already know them. But no doubt that we are having these awards constantly anchored in our presentation to make you realize that both customers and also the market analysts, they appreciate our activities. That is the reason why we received so many awards to date. When it comes to our operations, I pass the floor to my colleague. Dariusz Szwed, the CEO for business. And now let me start my presentation. We are very proud of what we achieved. No doubt that it is due to the hard work of our workers working in our branch offices. So we are very, really grateful to our employees. We appreciate their efforts. And let me start with the mortgage loans and their sales. We focus on them. This is number one on our priority agenda.

More than 2,000 new customers. So this is the product that in which we have, it's our anchor product, stabilizes our portfolio, it gives us breath, we can generate long-term margin. So we are going to develop the mortgage lending segment, which is supported by the mortgage lending centers. And as you can see, the growth was plus 78% on a year-to-year basis. Then comes the cash loan, which is a core product, especially in the pre-COVID times. So in the fourth quarter,

quarter, the sales stabilized at the level of 1 billion zlotys, more or less. So this result was driven by two factors.

First of all is the approach of our risk department to lending. No doubt that this is a very good approach, a reasonable approach. We know what were the historical challenges.

And also in the times of pandemic, the customers are not willing to take cash loans.

However, this is not true for higher purchase loans. Because in consumer finance segment we recorded another record quarter.

So this is the highest ever sales that we posted in the fourth quarter in the consumer finance area. And this growth trend is continued now in the first quarter of this year. And please note that we on a year, on an annual basis, we gained, we acquired 1.4 million new consumer finance customers. We also offer not only accounts but also cards, but also insurance products. And no doubt that an information for analysts when it comes to mortgage loans, now we have more than 5% and during the summer holes peak it was even

share of the market exceeded 7%.

But then in the fourth quarter there was a decline because other banks understood that mortgage lending is a safe product and they took some proactive measures. Nevertheless, even closing the year at the level of more than 5%, is also very handsome level. Then, of course, pandemic, coronavirus, COVID-19, it forced the bank to change the approach to the market. We modernized the bank

we have implemented the new online solutions. So today the customer can reach our bank using broadband solutions and we have more users than ever of mobile apps.

Also, the number of the customers with constantly growing inflows on their accounts is on the increase. And the customers like our digital solutions more and more.

So let me just signal out the core of our capabilities. So the most recent mobile

apps allow our users to pay for public transport first or to pay for parking fees when they leave cars somewhere in the city and then when it comes to nps it's up by one percent

You could say that 1% is not much, but when you look in value terms, it's more impressive. So the relationship NPS after the decline in the third quarter, in the fourth quarter, we came back.

To the previous level, the customers became convinced that we are safe, that we offer safe environment, that we offer disinfectants, we offer masks, so they don't have to be afraid, they still can come to our branch. offices to our brick and mortar offices. Now, when it comes to the fourth quarter, the sales was 1.3 billion zlotys. The fourth quarter was more stable, spread over a higher number of the lending products. And I mentioned at the previous conferences that our ambition is to exceed

the sales level of 1 billion zlotys.

Of course, I would like to explain the stabilization of the micro-lending business. The micro-customers The microbusinesses are the most vulnerable to any crisis, to any pandemic events, so any changes taking place in the market are immediately reflected in the microbusiness segment. So we are making sure that this trend is still up. So, please remember that this is still an upward trend. In terms of the business customers, this is a similar trend. We are very happy with this trend. And Bank Connect, this is the combination, the merger of the accounting systems

banking accounts.

So, if you decide to combine your banking, your accounting system with the Alior Bank, this is a really strong tie symbiosis and we appreciate that very much. And we want to offer more and more products to the customers. and the number of the customers who use their payroll accounts with Allure Bank is on the increase and we are happy with this level.

Let me go back to the micro customers and their portfolio. The first slide shows the number of those customers and it grows this number. These people trust us and they want to stay with us. They do not take loans, first of all, because they do not need so much cash as they used to before the pandemic. But it also shows that the time when they start to believe that the pandemic is over, and they will start, the numbers will grow and we're going to feed them with investment and operating loans and that, the micro-portfolio will get stabilized. But please note that these customers are increasingly strongly linked with us. They pay the insurance premiums over our channels. Three-fourths of our customers use the debit cards. Well, it's quite hard work done by our account managers who have reached this. And this slide also shows our ability to generate the fee and commissions incomes the higher number of transactions per customer higher fees and commissions and we can see that also in the quarter-to-quarter trends we are have always been and we are active in the support and assistance programs which help the people to survive the COVID era. Our most 2.7 billion Zloty people received via the bank from the PFR fund. then the subsidies reached 360 million zlotys, so we are active here too. We were among the first banks prepared to go ahead with the 2.0 shield. We have developed an interface to support our customers. The guarantees, well, we are still leaders in the De Minimis program, so we serve our customers who are happy to benefit from that. What we offer to the business customers online We are in touch with the analysts and we are happy to help our customers in this difficult time. We have a lot of promotion campaigns, the LOTUS stations. People get discounts on petrol on these stations. We can acquire new customers, especially those who use those petrol stations. So we keep looking around and finding new areas and we want to keep our shareholders happy. Now, we put a strong emphasis on keeping our customers to be able to do anything they can at the self-service system. So we keep developing that platform and we will keep developing it. We will add new and new components to it so that the customers will be served. There is an application for the larger customers too. 43% of all post-sale instructions were done over that platform. So not just the sales as such, but also anything that comes after can be done in this way very quickly. Now, just a few numbers, just two issues for you to remember. 37% of micro-accounts opened last year over online system. and qualified signature, so we can offer to our micro customers a credit process up to 200,000 zlotys without showing up at the bank, just by using the qualified signature. So this qualified signature is enough for them to have the transaction done without physically showing up at the bank. Whoever is afraid of that, they can do it from home. or from their office. Now, closing, I want to stress that two of our key companies, Allure TFI and Leasing, the fourth quarter belongs to them. They built the foundations for the strong balance sheet this year. Allure Leasing, their sales grew over 700 million. It's a historically high, record high value. We are developing the services. We want to go ahead with the vendor services. Alior has a bit more to do in this field, so we will certainly go for it. quite actively. We have a wide distribution network and quite a number of outlets. If they work out those branches, we have more than 200,000 micro customers, each of them drive a car. So just multiply that times this number. How big amounts can that reach? IRTFI is another company which I mentioned a quarter ago on our press conference. We wanted to exceed 20 million of assets so we have done that. Now in January we reached 1.3 billion and we have coordinated these sales distribution channels. We want to take advantage of this market situation. I think we can do it as good or even better than others. So, we're happy with these figures, with the growing number of customers. It's over 10,000 such customers. and the growth is 280% as a result of our hard work and the growing confidence people have in this bank. The surveys show that Allure Bank is recovering quickly after its unhappy time when we had our credit portfolio was on the heavy risk situations. So now we've stabilized the situation. Maciej will continue on that soon. So we want to take advantage of all the opportunities which show up. And now risk. Maciej Brzozowski, go ahead, please. As the slide shows, the year 2020 was quite a huge challenge to risk. sector and the banking of course. This year we focused on four key things, but we continue our very strict and careful approach to risk. The first thing we focused on was an active support to the bank customers by giving them credit holidays. Then the management of the credit models during the unprecedented COVID epidemic. And then we also focus on dynamic management of the credit policies, including the risk involved here, the risk which accompanies our customers these days. And we are consistently jointly with the sales people and others to maintain the high quality of our products sold and also the quality in relation to the risk. We want to sell safer, better and to take lower risks. The next slide is about the credit holidays. The group, the whole group, distributed 91 000 to the individual clients 16.7 000 to in in leasing these are quite high numbers almost 9 billion for the whole bank and the segment if you distribute that to segments it's almost 5 billion to individual customers What you can see here at the bottom is the share of payments which have been done completely. It's 93% for the whole bank. So this is quite an early measure of risk. It's 30 days, not any longer. So this is an early warning, in fact. There are statutory holidays, which are different than these here, because in that case, somebody must, the customers say that he lost his job. And here it's 30 million, only 30 million zlotys are late with repayments for longer than 30 days. So it's quite a good, quite a good proportion. It also shows us how the risk is changing. At the beginning of the COVID pandemic, we had expected that people will love to stay in the credit holiday as long as possible. But what they do actually is that they prefer to... So many people were actually saved by the credit holidays and others quickly come back to the normal repayments as soon as they can. And this slide shows our vision, our imagination about the industries, low, medium and high risk industries. We divided them into such categories. You know, the high risk was the shopping galleries, restaurants, tourism, transport. We did not specify the skiing resorts. But anyway, look how the turnovers on their accounts changed. When the COVID broke out, it dropped 6%. The turnovers. No, it grew 6% up. Then by the end of the year, it's 36%. So it looks like that industry is doing quite well. Now the medium risk was first minus 4%, now it's 22%. What about the high risk again, high risk segment? 32% of declines in April and now it's 10% today. That's a global rate. So it seems that from the risk point of view, the world has managed to survive and show quite a good performance in this difficult time. Now, the quality of the credit portfolio, it did not deteriorate significantly during the COVID time. This is the delay in 30 days and more delay in prepayments. When you compare the end of 2019, the rate was 1.68. At the end of 2020, it was 1.42. In the meantime, you had the COVID outbreak, which should dragged that value down strongly, but it didn't because we were quick enough to address this problem and keep the quality at an unchanged level. Here, in last April, the quality of the credits. You know, the delay is longer than 30 days. We were afraid that it might continue or be extended over the whole year, but it didn't. At the end of the year, we can only see 0.8 percent. So it's quite a nice, nice, satisfactory performance. And the credit quality has not been deteriorated. As Dariusz said, the mortgage loans have grown. There's no quality deterioration at all. Right. So we did not pay with credit qualities at all. Now the structure of the risk costs and the quality of the credit portfolio. This structure as you can see does not under the left bar shows the total The structure has changed a little bit. There is a bit more retail customers in relation to what we had before, some 3% growth, and a small decline on the business customer side. The individual customers, well, as Mr. Schwed mentioned and Madam CEO said, and I mentioned that before too, So, just look at this segment where we speak about the loans on property, because from the risk point of view, this portfolio is very good. Now, business customers, are you leasing a growth we have seen here? Quite a good part of our business. They offer simple products to customers. But let's go to the most interesting part, the bottom part of the slide. It's the impairment, impaired loans. You cannot see here any material growth, but 14.48 more or less for the whole bank. coverage with provisions is here at the bottom. It's a great, great increase in the fourth quarter of 2019 and 55.1618 now. So this number shows how the bank, how careful the bank was about the risk. and how it managed to make the buffers and cushions to protect itself against any adverse events. Then the next thing is the cost of risk. After the great growth that we saw in 2020, at the end of the third quarter now, these levels have become much lower. And in the fourth quarter, the total risk cost was 1.4%. remembering that we are in the COVID pandemic environment, so we cannot be very sure about what will happen, but I'm happy now that we will manage to keep these values unchanged in the federal quarter of Stockholm. Now we have changes in our lending policies, which are producing increasingly better results. the write-downs on the expected losses are declining. I have partly discussed that before, but if you have a look at this bottom right corner of the slide, the individual customers, how the risk costs have changed 11% down quarter to quarter. so which is very good trend for us. In the business segment, the cost of risk has declined too by 30% quarter-to-quarter and 53% year-on-year. So I hope these figures were all good prognostics for the nearest future and the rest of this year. Let's go on, please. Now, to explain to you our approach to the question of risk, there was a question whether we're going to make more write-downs because of the COVID. I said no, because the bank did very well in his conservative policy before. And now, on the right-hand side of the slide, you will see our approach to the risk model perhaps we addressed all the factors which describe the risk so we estimated the problems people might have with the repayment that is the default potential then how they were how much more financial needs they would have in connection with the COVID. We assumed that the recovery of the non-payable portfolios would occur. And we also thought that there might be a change in the recovery of the biggest customers. So we addressed all these potential problems and we made a few macroeconomic scenarios and now we have reviewed all that and the macroeconomic parameters and rates confirm that we were right to be so conservative and now we estimate that three scenarios should be taken into consideration the optimistic medium and pessimistic In simple words, it would be connected with the real GDP in 2021, and the base scenario would be 60% of coming through, pessimistic 25%, optimistic much 15%. So we are careful in this too. Despite the decline in the overdue portfolios, we have seen the growth in the valuation parameters. So, we have increased these numbers down to 70, then second basket 13%, which is much more than in 2020, and the coverage with the write-downs on the expected loss grew in 2022. And let me repeat again that the coverage with all the write-downs grew by 11.17%. So I believe that this is quite a safe cushion and a buffer in case things go worse and that although we are reaching now quite good performance numbers and we expect that people will come back from the credit holidays, we will continue to be as conservative as we've been so far because We must be on the safe side if something really bad happens, because who knows? Hopefully, we will not need to face such things. So I wish myself and everybody to see the COVID pandemic over at last. And a brief summary of the credit quality. The bank Of course, we'll try to sell more and more. These two slides show that the quality has not deteriorated in comparison with the previous years. Our cash loan, which is most sensitive to risk, so these delays did not grow. We keep the same quality level and the same with the business customers. Of course, there are some higher costs caused by the COVID. There was a small change in the first quarter, but it wasn't material. So I think that seems to be time to discuss the financial performance. in all the areas. So, we start with the fourth quarter total income. As you can see in the slide, the result on the interest was 666.7, so it's a little decline, but it's nothing strange, in fact, in this environment of the low interest rates. We tried to look for some new income sources, so we've increased our results on fees and commissions. We reached 177.7, then other business 67.7. The total cost at the level minus 731.3, down by 2%. Now gross is 180.1 and net result as we said in the fourth quarter we closed with the net profit 120.3 and that is also can be seen in other rates. The credit to deposit 84.0 Cost income 41.74, net interest margin 3.63. So that's how it is in the fourth quarter. And in the same quarter, we had some one-off events. First of all, we made the write-down after taking over the Meritum Bank, minus 40 million zlotys, and we deconsolidated the Ruch chain, 12 million zlotys, and we wrote down minus 23 million zlotys, and we dissolved the provisions for the bonuses, which is plus 4.15 million. We have also done an extra write-down on the small TSU E35 million zlotys and an extra profit 48 million zlotys by selling securities. And the interest rate result includes the additional provisions related to the early repayments of loans. As regards the annual performance, the numbers are here. The total is more than 3 billion, then total cost minus 3 billion 71, gross and net 311.2 and this net result although it's still a loss it's much better than our forecast we have done better than our own forecasts so we are happy to have achieved that because that all that seems to be the stable trends the third quarter was very good Fourth quarter was even better and the early results we have seen so far until today seem to be quite good too. So that makes us quite happy in fact. Now the components. I must repeat that the COVID effects and the low interest rates were factors that played a strong role on earlier performance and on the whole banking sector aspect. So, 328 million is the effect of the changed interest rates. So, Alior definitely experienced these lower interest rates. So, whenever these rates will grow, we will have a good starting point to restore it. Please note that in the fourth quarter, we have shown 0.26. Analysts will understand that if you try to calculate that, you will reach 0.23, but we showed 26 because of that difference between the third and fourth quarter. Nevertheless, To be very open and transparent, we want to present 26, but really it was 23. The interest margin, we expect it to grow, and it's very good, and shareholders should be optimistic too. The credit to deposits, well, we are now on the over liquid market, so this rate must be lower than in the previous quarter, but it tells us that our lending is offering new opportunities to us. And in the question and answers session, I will explain our plans to you and our interest income. The composition of that you can see in the slide. This gray line shows the fourth quarter. It's lower than the third quarter. That is because of the one-off change in the settlements. That is because of the TSUE verdict. The next slide is about the fees and commissions. Here on the left side is The greatest problem was the decline in the exchange and FX transactions in the first quarter when the interest rates went down rapidly and there was a lot of uncertainty. So we had a kind of a gap which we found difficult to fill later in later quarters. But anyway, our ability to generate fees and commissions is growing is stronger so the activity of our brokers also add to these higher fees and commissions and they these bars show the growing or stable trends. So what we have done in the right time proved to be a good move. It's good we've done that because now we take some benefits of that. We get more transactions. We do not have any negative experience of customers who would leave us because of something Conversely, we give them more products and we get more customers. And the cost of operation, not much can be added to what Madam CEO said, but 47% is the rate, cost, the income, which is quite higher than in 2019, but now how it was in the individual quarters. In the first quarter, it was 50.7%. In the last one, it was 41.7%. So, of course, you can discuss why it was so, but remembering these 100 million zlotys of the planned costs, This information should be remembered here. We try to keep the cost as low as possible. Thank you. Now, please ask your questions if you wish so.

Question one. Mikołaj Alemańczyk.

The results of the bank were again charged by, burdened by the little TSU. Will that happen again in this year? And have you made adequate provisions for that? Well, as regards the small TSUE, we know that the market had to face that for the first time after September 2019, so our bank made the biggest provisions by the end of 2019 for that purpose. In February 2020, we added some more, 99 zlotys of provisions we added to it. because we wanted to be very conservative and careful. Now we decided to add 35 million more provisions. But as you can see, these provisions are each time a bit smaller. We are watching the situation very carefully. There is not much historical experience. That's why we To be on the safe side, we are making these provisions, but we do not expect any high activity of our customers in this field. Thank you. And the next question is, what kind of provisions against COVID will Allier close in 2020? Well, 2020, 418 million zlotys. Easy. the same as in the second quarter.

Okay, the next question.

The guidance of the risk costs 2.2, will it stay for this year or it is not yet a stable macro environment? Well, of course, we will keep that. We will try to reach the level of this rate as low as possible. I mentioned that before that we've made a buffer of provisions and reserves to be safe and there's no one can now say that things will happen this way or that way later in the year. Last March nobody would be able to predict the actual situation that we see now. So, yes, we expect trends to continue. Thank you. Has the bank sold any NPL portfolio in the fourth quarter? The bank, of course, tries to reduce the NPLs, right? And the resource that we have, and we try to reduce it, So, we have sold the portfolio of NPLs of about 390 million zlotys. Thank you. And another question. What was actually the financial assets right down 23 million zlotys? What was it? That was... because we reviewed our non-financial assets and that's why we have – what we have identified there. So, to be – to sort it out completely, we have decided to go ahead with this number. There were some selected non-key applications. Thank you. And the next question, please. Is the bank thinking of buying the call options earlier? I don't understand the question. The bonds and call options? No, no, we're not planning anything like that.

I would like to ask for a comment on the outlook for the payment and provision in 2021.

Could you please comment the outlook for the fee and charges result in 2021? So we are proactive. We are working jointly with the business customers. And when it comes to the fee income, the trend that started in the third and fourth quarter, we hope that this trend will be continued and that we will be supported by the strategy that we want to update. And at the turn of the first quarter, we are going to announce the updated strategy. business strategy, and then the bank will be even more profitable. And we are going to acquire customers, not only retail customers, but business customers. And also we want to be more active in the echo segment in echo products. We want to participate in the power transformation talking, starting with the photovoltaic farms. I mean, starting with the Mr Smith, the average pole, and then ending up with the large power generators having photovoltaic farms. So we want to be very active and we are hoping that the potential of subsidies, the pool of subsidies that will come to Poland will require the participation of of the banking sector and then of course the new number of customers. It should also translate into an increase of the fee income and also the repricing that we made. We are hoping that the old portfolio will be gradually replaced with the new portfolio with the new price levels. So hopefully this repricing will also bring some tangible results. Thank you for this answer. Next question. In the fourth quarter 2020, the cost of risk was at low level, 1.48% versus 2.2, updated level. And given the standardized risk level, at 2.2 so do you think that the potential profit will be zero at the end of the year and this is not such a straightforward analysis but please note that in the fourth quarter of the last year the profit was mainly hit by the one of events such as the case of the Merit Meritum Company. However, if you add this cost of risk at the level of 2.2%, I believe that there is still potential for profit growth. Thank you for your answer. We are waiting for more questions. Please be patient. Just wait a sec. Okay, next question. Could you please quantify the negative impact on the Tier 1 capital in 2001 under the temporary regulations mitigating the impact of ERS-9? We estimate the impact at the level of 0.4%. And then in the next consecutive two years, the consecutive tranches will be accounted for. OK, we're waiting for more questions. Of course, some of the questions are about all your stock prices, all your share prices. And of course, we refrain from any comments. Taking into account the market turmoil in 2020, are you considering the update of the strategy? So the current binding strategy is for the year 2022. No doubt that this current strategy must be updated, and this will be done by the end of the first quarter this year. But I can already tell you that the major directions for growth are still valid, which is the leader of new technologies. then also taking care for the customer. So our services must be convenient. Then the customer should be able to take advantage of not only banking products, but also other products and we want to take advantage of being a member of PZU Group. We want to offer cross-selling, also insurance products through our banking network. And also, I would just want to signal out that we want to extend our product offer also in the environment friendly area, the green area. We call it the Green Deal. So there are no more questions. Thank you very much for this press conference. We also would like to thank you by