Alior Bank Sa Unsp/Adr

Good morning, ladies and gentlemen. My name is Dominik Prokop and I'm the head of the Investor Relationship and Ownership Supervision Department. Welcome to this press conference presenting results after Q2 of 2022. The conference will be divided into two parts. In the first part, our speakers will present the financial results in the presentation. In the second part, we shall have a Q&A session. Let me introduce to you, together with us, we have Grzegorz Olszewski, the President of the Management Board of the Bank, and Mr. Radomir Gibała, our CFO. Sir, over to you. And now, ladies and gentlemen, I can only kindly ask you to write down your questions in the chat window. And the chat window is open starting now. Good morning. Welcome at the press conference. to present our results for the first half of 2022, including Q2. I shall focus on the areas that we haven't discussed so far. Rather, we have teased about them, and we want to live up to our promises. As I said, the first half of 2022 was a very good time for us in terms of

interest year-on-year, it went up by 46%.

However, I would like to draw your attention to fee income plus 22% year-on-year. That is a source of stable income for the future. With our portfolio of products with good quality of our services, we are set to succeed. That's what we are going to focus on. Coming back to our results, what you see here is 216 million of profit. That's indeed a very good result, including... the protection scheme premium in the amount of 195 million PLN, and also the fact that we did not pay the contribution to the BFG, that's 30 million. The total impact of these events was approximately 128 million. It was a record year for the bank, meaning that they increased interest rates good loan portfolio paid off. As I said before, we shouldn't forget about the improved interest income. Now let me move on to our indicators and the topics that we have announced previously during our presentations.

Let me first start with a brief summary.

As we said, C2I, we promised to you to be really disciplined in terms of cost. The environment, the surroundings are unique. The inflation rate is really high. Cost pressure is extreme on every level. However, if we look at C2I, that's around 49%. However, in the model that we presented to you for Q1, i.e., we assume that we paid a contribution for BFG but not for the protection scheme, the result would be 36.9%. That's a very good one, one of the better ones in the sector. As for the remaining cost items, our results are still very good, better than what was assumed. That's noteworthy.

We will be intending to go along the same trajectory. However, we are also aware of the cost pressure in areas such as development, for instance.

We wouldn't like to limit our spending and not impede our development. Our E15.9 and NIM 5.11 going upwards. We are constantly under pressure. We see greater competitiveness in terms of deposits. However, from the very beginning of the year, our strategy was to present our offers, which were highly competitive, in different periods of time. This pays off now. Our deposit base is safe and sound, and that's a very big advantage for us. However, in terms of acquisitions, that also is a serious advantage. I will come back to it later on in my presentation. We have taken advantage of this fact very wisely. And two further items that we wanted to focus on, like we did during the previous presentation, cost of risk. COR stays on a moderate level. That's better than what we assumed. And 146% is indeed a good result. We are, however, expecting this parameter to worsen slightly. Looking at our portfolio, we would assume that this worsening will not be a major one.

However, it will still be below the levels that might be considered threatening that might make our alarm light go on.

For the time being, we are on a safe level. NPL 10.7, indeed, we paid a lot of attention to that element in our previous presentations. We said that in order to enter the economic deceleration process with higher interest rate, our cost of handling not only in the segment of companies, but also individual customers. We need to improve the quality of our business customers portfolio. That's the plan that we are implementing.

We are on the level of 10.70 now. I cannot tell you whether we will go below 10% or not.

It's much harder to do that. However, in the longer timeframe, it is our strategic objective to reduce our NBL to a single-digit level. Now, let me move on to our key products. I would like to start with the mortgage loans results.

The market decelerated heavily, much more heavily than we did. Our offer is focused on major cities such as Warsaw and Krakow. It is very popular.

And thanks to that, we were able to increase our share in new sales and the market share. Our portfolio increased as well, even though the market is tough. Up until now, we've been systematically emphasizing that despite the negative outlook because of the credit vacation introduced by the Polish government, we are of the opinion that from the perspective of loan portfolio, it's very important to develop that In the longer timeframe, I think that mortgage loans have a huge potential. Yes, fair enough. Right now, we are experiencing a slight serious acceleration. However, we have the additional buffer. And once certain barriers related to creditworthiness are overcome, we have to be ready. That's what we are working on. That's why we have implemented the Housing Without Contribution program. At the same time, with the credit of vacation, we are the only bank to offer such a product on the market. Now let me move on to cash loans. The Polish market is very saturated in comparison with other European markets.

The growth potential, hence, is limited.

We will, however, be trying to concentrate on profitability of the portfolio and on its quality. We want the portfolio to generate positive return. However, the quality of the portfolio cannot diminish. Percentage-wise, we are almost 100% doing it in the automatic mode. That means that we have a good overview of the process and the cost of risk is low. We are an absolute leader when it comes to consumer finance loans and this position is safe. Our main competitive advantage is the technological advancement of our processes. Our competitors focus on the price, we focus on the process.

Thanks to our key partners who

appreciate our technological advancement. We are able to continuously improve the process, including verification. That's a topic that I spoke about during the previous conference.

Our share is going up, and our results are not deteriorating either. Therefore, this segment is still an apple in the eye of our company.

We will be focusing on the development of e-commerce especially. I've already mentioned our deposits. We said that it can be a tool to improve our quality, our acquisitions. We want to build lasting relationships with customers. So that's the key point. We want to have loyal and lasting relationships with customers. That's what we are going to focus on.

Please note The graph in the left bottom corner, quarter on quarter and year on year, the difference speaks for itself.

Let's see the number of customers with systematic incomes. We are working hard. However, we are not resting on our laurels. We want to be a strong player, not only when it comes to deposits, but also When it comes to additional services, the number of customers using Vieto payment for highways and those who are paying for public transportation tickets is increasing. As for digital channels here and here, the number of customers using our mobile app is growing. This is a constant trend observed throughout the quarters. We have more and more customers using our mobile applications. And also, in terms of our development, we want to focus on that segment particularly. That is why we are working heavily on improving our effectiveness of the app. The offer for our customers is presented differently. Currently, we are also working on making sure that at the beginning of 2023, we will be able to show you the new face of our mobile app. Hopefully, it will be even better rated by our customers than the current one. It will increase our NPS even higher. Now, to summarize the results, I would like to focus on the business customers segment. You see the results speak for themselves. NPR year-on-year is minus 3.7 percentage point. We've promised to you that By working on our processes, we will be aiming at increasing our portfolio. This worked out quarter on quarter. We are going up when it comes to the loan portfolio. That's our absolute priority to keep that trend. Let's look at the results. The results in Q2 are... better than in Q2 2021. And bear in mind, back then, interest rates were much lower and the willingness and the demand for such loans was much higher. This is a clear sign that we've improved our processes, our loan and sales processes.

But much remains to be done still.

We see huge potential. We need to tap into it. We know where we are going, and we know what effort is necessary. The market is not easy. The sentiment not only among individual customers but also in the business sector is rather negative, but that can be a chance for us.

We know that there are banks that will be limiting their

loan activity in the company sector. We, however, want to focus on the quality of our business portfolio. The results are best exemplified by what you see here. This is a balance of assets in regular service going up year on year and quarter on quarter. The sign is very visible. That's a clear improvement. As I have announced at the beginning of the year, we wanted to work hard on it. Today, we see that we are reaping the fruit. Also, the share of new sales to preferred industries is going up for us.

That means that we are implementing the goals of our strategy.

The share of assets in collection also went up. Again, we see a huge potential in this respect. The same applies to share of factoring in new sales. The growth is 7 percentage points with the new economic environment. This trend is here to stay.

And last but not least,

best show you that we are working hard on improving the quality of the portfolio, of making sure that Alier is a good investment asset. Our balance of assets in collection went down significantly. Now, let me move on to the next topic. We see a greater automation of credit and remote services processes. more remote services offers. 55% is the current share of automated decisions in new sales. This is the area where individual customers have We've grown accustomed to automated decisions. The share is growing when it comes to businesses, business customers. In the longer timeframe, I'm sure it will never be as high as among individual customers. Individual approach among businesses, especially big businesses, is more important. However, when it comes to SMEs and micro companies, we are able to have a very good share of automated decisions. This is a trajectory that we would like to pursue. We want to be better and better at providing it.

The number of active cards growth as well as non-cash transactions.

You can see that what has been improved is the transaction activity and this refers to the improvement of our fee results. So without this relational banking transaction activity, there will be no improvement for us. This is an absolute priority that has been addressed and will be addressed as a part of our strategy that is going to be presented at the end of the year. Let's move on to the conclusion when it comes to our technological transformation. Please note our special hotline that we took pride in during the last conference. It is already operating. I'm talking about outcoming calls. Close to 30% of the entire traffic When it comes to incoming calls right now, also, upcoming calls are being serviced. This is one of the projects that has been awarded on the European stage, and we are so happy about it. When it comes to mortgage loans, we also offer a very modern simulator It is available on the internet website for our customers so that we are able to improve the quality service. We try to streamline, optimize all the offers when it comes to mobile banking, also including deposits, but this is going to be developed even stronger during the next month so that the entire mobile offer is available in a beneficial manner. When it comes to development, generally I'm talking about people who came to us from Ukraine, we are able to deliver services in the Ukrainian language. Close to 95 percent of them use our mobile application. We as a bank have been appreciated as the bank providing best services for Ukrainian citizens, both when it comes to mobile as well as brick-and-mortar sector. So this is the best conclusion of the entire effort of our team that was provided in the first half of the year. Now, payments, when it comes to... Fast payments, tactile payments without using your phone, using just a watch. We believe that it is going to be developed even further. Right now you can use Xiaomi mobile pay services and for us this is just the very next chapter when it comes to ameliorating transactional activity and relations when it comes to both individual customers and generally end. I would like to conclude our corporate social responsibility area. Here I have to acknowledge all the employees of the bank and the entire institution of Alior Bank. And thanks to this, people who came here to Poland were able to be offered long-term help. Two major projects implemented in Samość and in Warsaw. In Warsaw, it's a comprehensive project in the building in Towarowa in cooperation with the city council and UNICEF and other institutions. This is one of the major aid centers here in Warsaw for refugees where a very comprehensive kind of help can be provided. Both parents as well as children are taken care of and as of September they will be provided e-learning Yesterday, we had the ambassador visiting Poland, the ambassador from UNICEF, and Alior Bank was really acknowledged for all the effort. This is the very best example of the cooperation between private sector, corporate social responsibility area, and... The city representatives. So to conclude, the very first six months, very positive. Those areas where it was possible, we proved to be really prepared when it comes to credit risk as well as growth generally. We are going to continue active efforts when it comes to individual customers, when it comes to mortgages as well as cash loans. as well as acquisition and transactional activity. I'm talking about our main relations. For us, this is going to be a top priority as regards business customers. We'll aim at ameliorating the quality of portfolio and increase transactional activity. We'll try to... improve the quality of the portfolio and will try to attach an even greater importance to transactional activity. Thank you very much and right now I'd like to give the floor over to Radomir Gibawa. Ladies and gentlemen, welcome. We heard a lot from Grzegorz about the financial results and I'll try to guide you through the slides in the area of finances as well as risk in general. So let's start from, or the profits and losses, it is going to be illustrated in the slides, the fee result as well as the general results, interest income, but

We have to see the big picture.

Please note, when it comes to excluding one singular event, that is contributions to ABS, the result would be close to 1.5 billion Polish zlotys when it comes to the first half of the year. I know that you don't always enjoy generalizations of this kind, but it only indicates that we are able to generate on a sustainable basis profitable business on the part of the bank. The contribution for the system of protection of commercial banks, the protection scheme, the result came to $216 million for the second quarter. And moreover, what seems to be significant is the dynamics of the revenue as compared with the dynamics of the cost. Because the second quarter, and I'm talking about the contribution for the protection scheme, I believe that we are still viable and we are able to operate and the trend seems to be positive. So revenue is growing more dynamically as compared with our costs. And also please note the return on capital. If it hadn't been for the adjustment, it would account for close to 20% or so. We have to consider the conditions pertaining to very high interest rates in which the bank has to operate. Now, the result... The interest income keeps growing quarter on quarter or year on year. And there is a clear-cut growing trend. The assets, as mentioned, are not that overestimated, but it is clearly visible that year on year, that when it comes to... The interest income, it seems to be growing. Net interest margin, it is above 5%. This is one of the highest benchmarks in the sector. And this is a perfect reflection of our so-called asset mix, as Grzegorz mentioned on numerous occasions. We are a genuine leader when it comes to unsecure positions. I'm talking about cash loans or installment loans. And we wish to continue to remain the leader. At the same time, we would like to increase the share of mortgage loans. Of course, when it comes to the so-called net interest margin, it has to be compared with the cost of funding. You can see the line here at the top right corner. As you know, it keeps growing. I'm sure you are observing the marketplace very carefully. So I'm not going to give you too many details. However, please note that we... As the bank, as of the third quarter, we try to focus on transactional activity and relations. We try to offer the best possible offers. Nevertheless, we don't want to differ too much from our competition. We don't want to lag behind our competition. We did our homework. As a sizeable bank, we try to make sure that the costs of funding are controlled. And looking further, obviously, we have to consider what's going next. I'm talking about the competition on the marketplace, and we also have to consider the entire macroeconomic situation. Let's move on. Our fee income, as we heard from the CEO, our growth continues to be a two-digit year on year. It's close to 20%. This is not an easy task. It's a strenuous job, but we try to continue our efforts when it comes to the transactional activity and relations. It is all appreciated by our customers. You can see it here in the graph in all those lines. Some events on the marketplace seem to be helpful, especially during the first and the second quarter. And also, especially in the second quarter, I'm talking about the exchange of foreign currencies, FX. You can see the position here as well as other positions to be considered. Consider it is all very positive. Apart from insurances here, the volume was slightly lower year on year when it comes to loans. So obviously we hope to continue further growth so that this... income, commission income is continued, but it depends on the growth of our balance as well as the general market related situation. Now, costs in general, we heard a lot today about the costs and our budgetary discipline. Let me remind you that this is not an easy task because we continue to operate under the raging inflation. that influences each and every category. You can see year on year, especially if you consider specific quarters. If you take a look at employee expenses, there has been a growth as well as general costs. You can see this orange line here when it comes to steady costs of renting out premises, marketing. This is not just the inflation, but just very informed activities on the part of the market so that we can offer products that are as attractive as possible. But if you take a look at the general picture, big picture, I can risk a statement that we are able to keep a tight rein on our costs. 426 million per quarter, that's an isolated incident. But apart from that, costs are being controlled by us. If it hadn't been for that, probably I could say that it's 37%, one of the best results on the marketplace. So including this event, this is close to 49%. And just to finish discussing this slide, you can see in the bullet points, that we took the liberty of adjusting it slightly. If we were to consider though excluding the contribution for the support scheme, protection scheme, As well as the borrower support fund scheme, it would be close to 190 million. That's the threshold when it comes to the year 2021. It should be slightly higher, but our ambition is to keep a tight rein on our costs. Okay. And we seem to be moving in the right direction in this respect. Now let's talk about strategy as we heard from Grzegorz very soon. So at the turn of 2022 and 2023, we would like to bring you closer to our brand new strategy of the bank. Nevertheless, we tried to compare all the key indicators, and our projections were as follows, that already six months ago, we had some numbers projected, but the situation seems to be changing dynamically. Nevertheless, the changes seem to be mainly... positive so let's talk about business volume 89 billion that seems to be quite a challenge that's the goal for 2022 but as we heard from our ceo we should try to grow in each and every sector, even when it comes to mortgage loans, where the market dynamics is very slow, as you know, especially, I mean, both when it comes to corporate customers as well as unsecured positions. Let's move on. Profitability. Here, the ambition of the management of the bank is the same. We want to be above the cost of the capital, and this is being implemented. Let's move on to the NIMH. As I mentioned before, this margin seems to be higher. The projections from 18 months ago were lower. And the costs of income, as mentioned before, we believe that we should be able to generate a much better indicator as compared with our projections. Now, risk and capital, I don't want to repeat myself. We will move on to more slides in this respect. But let's start with the cost of risk. Each and every quarter, we've been commenting on their shape. and some possible future projections.

But before I talk about that, let's talk about in part loans.

In part loans, you can see that's 10.7 on the entire portfolio. So we can see that we try to use each and every method possible to support this trend. And we try to generate one-digit values depending on the market-related situation. either write-offs or sales of receivables or diluting it all, but in a positive manner, increasing our portfolio. We try to make sure that it is being optimized and streamlined.

At the bottom of the slide, you can see the information related to the corporate and retail segment. The keyword is relative. Let me underscore that. We are relating it to the bank as a whole. 3.7 is the accumulated in the greater. It's above the market rate and still we are not resting on our laurels. We continue to be active in this respect. Now let me move on to the cost of risk. If you look at the bottom part of the slide, you see that we are slightly going up when it comes to the cost of risk, Q1 compared to Q2.

And that was what we had assumed, actually. We haven't noticed any default or delays.

As of the 30th of June, we can present to you the updated FIE scenario with different scenarios. Looking at the current situation on the market, we are following the guidance 1.6% in 2022. The second half of the year will definitely be a greater challenge for us, but that's what we have braced for. That's what's in our plan. We just want to keep you up to speed of what the situation should be like. For the time being, it's one point. At the end of the year, that should be 1.6%. Moving on to capital and liquidity, as I mentioned before, looking at Tier 1 or TCR, we see the same picture. We have a surplus, a buffer of sorts. in tier one that's 266 bps versus the minimum level set by the polish regulator and when it comes to tcr it's over 200 bps in both cases we are In the black, it's a significant surplus, as my colleague announced, that puts us in a good position to get ready for a harder period that our Polish economy is going to enter soon. Let me comment on the bottom right-hand corner, decomposition of change in TCR. Well, there are three factors behind the four. The bonds, the valuation of the bonds. We don't own many bonds in absolute terms in our balance sheet, but that has an impact on top of that depreciation. and a slightly different approach to risk-weighted average. Nevertheless, we are still well above the regulatory limits. And now let me draw your attention to liquidity ratios. That's the upper hand right corner, LCR and NSFR. Again, as you can clearly see, we are well above the limits assumed by the bank and demanded by the regulator. To conclude my part, let me underscore the bullet points that are our guiding motive of the presentation. We keep repeating them to you, and now we will be more than happy to take your questions.

Thank you very much indeed.

First question, will Alier be able to avoid the loss in Q3 2022? Well, let's look at the results after Q1. The only event that will impact Q3, as we have announced, is the burden related to credit vacation scheme introduced by the Polish government. Full stop. There is no further information that I could share with you impacting our results in Q3. No other news. And the rest, well, we could make some forecasts and projections for Q3. Fair enough. But these would only be forecasts. We are doing our best to ensure that the result after Q3 and whole year is as best as possible. Well, to complement my colleague's words, this is a very specific question. Q3 or after three quarters?

Well, if we keep the

current shares when it comes to our loan customers it should be a positive result but of course there are factors that we cannot control such as interest rates thank you very much question number two Alur T2 capital is depreciated in Alur very quickly what's your plan thank you very much for the question Well, somehow anticipating the question we spoke about the decomposition of TCR, I can only echo my own words. It's still on a level well above the requirements of the Polish Financial Security Authority and all the other indicators are also in the black. There is no risk to our surpluses. Of course, we are planning to renew subordinated bonds. The change is somehow due to the depreciation of the subordinated bonds, but we cannot disregard the market situation, especially on the debt market.

Thank you. Next question.

In which customer segments is the increase of the cost of risk most likely as for the second half of 2022? Well, in terms of... individual customers. It will not come as a new thing. Cash loans are at a higher risk. They are not covered with the vacation scheme unlike mortgages. The so-called credit vacation will also support cash loans because if there is a person who has a mortgage and a cash loan,

this person will have more at his or her disposal in the wallet. In our opinion, the segments that are at the highest risk are micro customers,

And you should know that we have a very high level of BGK guarantees coverage, which mitigates the risk. Apart from that, the micro segment, as I mentioned, is at the highest risk. It's very much susceptible to increase of the cost of labor, cost of raw materials. The general economic sentiment is worsening. That's why it is here that we would expect some higher risk. However, with the economic slowdown, the labor market will remain strong in our view. As a result, the sector of individual customers will still be doing really well.

Thank you very much.

Fourth question. What was the impact of cash flow hedge on the interest result in Q2 2022? What is the current valuation of cash flow hedge?

Well, we have spoken about it after Q1.

The impact of cash flow hedge is minus 179,249,000 on cumulative basis from the beginning of the year. That's also in the report. In the interest note, the current valuation of our cash flow hedge is over 2 billion gross. That is 1.7 around net. However, data as of the 30th of June, now looking at the profitability curve, we see that the situation is volatile. Right now, it is going in the right direction. It is going north. Thank you very much. Next question. What lies behind the fact that for the third quarter in a row there is a drop in consumer loans and a drop in investment loans for the fourth quarter in the row? As for consumer loans and individual customers, share-wise, compared to the size of the bank and its tenure on the market. We are a leader. We are a leader in cash loans.

Growth-wise, we see a very strong pressure from our competitors, mostly in terms of profitability of loans.

That is why we have been systematically concentrating on making sure that our portfolio is profitable.

and is characterized by good quality of risk.

The period of aggressive growth of cash loans portfolio is reflected in the current situation. Let's look at our portfolio of non-serviced loans. Our strategy does not allow us to dynamically grow in that segment and, at the same time, to be limiting the portfolio of loans. We are focusing on quality and profitability. Let me repeat that again. That is our main objective. Of course, we are working on it. That's a work in progress. We want to put a halt to this tendency. We are improving our digital processes, especially mobile banking, internet banking.

We are sparing no effort here.

We are also focusing on telephone banking. There is a strong focus within the bank to improve the quality of our processes in this area. And we also want to increase the availability of loans, so-called ready-to-go loans that do not require one's creditworthiness check. The objectives are defined. However, we need some time to work on it, to reverse the trend. On top of that, we are also working on projects that I cannot announce yet, but they will be launched this year, and they will be highly competitive, bringing us not only profitability, but also increasing our market share. Let me now turn to investment loans. First, we are now in a totally different economic situation. Up until now, the bank has not been focusing on the construction area. However, it is our strategy now to improve the quality of our portfolio, i.e., improve the quality not only risk-wise but also relationship-wise, i.e., our customer has factoring services, investment loan, e-fax, foreign exchange services. That is our main goal right now. We don't want to focus on one specific type of loan only. The question related to investment loans, well, let me say that we want to be an all-stop shop We want to include a comprehensive portfolio of services including for instance leasing finances. Up until now this has been our focus only for individual customers and financing of passenger vehicles. Now we want to expand that. We want to focus on the portfolio and the entire portfolio to strengthen our relationships with our customers. Thank you very much. We have a plethora of questions related to growth of interest income in the quarters to come. What's your take on that? Well, thank you very much, Well, let's look at the current economic conditions. My answer would be yes, without the one-off impact of the credit vacation. The bank is bracing for the interest margin to grow. But the growth will be dependent on three factors.

First of all, the interest on loans.

For a couple of months to come, it will be going up. in the aftermath of the decisions of the Monetary Policy Council. As I already mentioned, on top of that, we have the cost of deposit. This cost is going up. It will be going up. But the decisive element will definitely be the market forces. And on top of that, we have the third factor, decreasing impact of cash flow hedge. I've spoken about the data as of the 30th of June. We still see the impact of our transactions. So the negative impact of hedge accounting on our interest result will be decreasing with time. Looking at the current level, 180 million per quarter, we will be going towards zero level within a timeframe of two and a half. Yeah, that's the average maturity of our hedging portfolio. With all that in mind, we are expecting a positive result.

Thank you so much.

And the next question. What will be the amount of the contribution when it comes to the support fund? What are your projections or expectations on the part of the bank? Currently, when it comes to the contribution itself, we are unable to assess it precisely. Why? Because we are unable to assess exactly which are exactly the banks that will fail to meet the criteria of providing contributions to the fund. The algorithms itself seems to be quite complex. simple, yet we are awaiting further information. If we were to neglect the assumption and return just to the simplicity of the algorithm itself, the contribution of Alior Bank would account for close to 40 million Polish zlotys. But please note, yet again, that we are awaiting the decision on the part of the Fund Council. which will help us to assess precisely which banks will contribute and which will not contribute to the fund. So the situation could possibly differ significantly. Thank you so much.

And the next question refers to REL.

Generally, what are the assessments when it comes to real issuances for the years 2022, 2023? And the bank, does it meet this criterion at the end of 2022? If I may, BFG presented the path to reaching all the requirements. So let's put some chronological order to it. By the end of 2022, when it comes to the needs of the bank, it's close to 500 million Polish zlotys approximately. By the end of 2023, we expect that it will be 1.1 billion Polish zlotys. are we planning to reach this requirement in accordance with the expectations on the part of the bank guarantee fund yes but Judging by those milestones or checkpoints, probably as of at the end of the 30th of June, the bank is in a position to satisfy the criterion. And also, once the credit vacation is also considered, we will be able to meet this criterion. Thank you very much. And the next question. What about the seasonability of FX margin on account of commissions and fees? The main factor to be considered is the result of our foreign exchange office as well as what happened once the war broke out. Also, what we are observing is the increased activity of exchanging foreign currencies. The FX office itself has a high value, which augurs well for the future, that when it comes to foreign currency exchanges, this is one of the leading platforms. in this respect. Thank you so much. And the next question, can you see that there is a risk when it comes to growing financing costs, especially when it comes to third quarter, it will be higher than the margin income, net margin income, because it grew a lot in the second quarter. There is always a risk of this kind, but if we are to include this one-off effect of the credit vacation, Probably most banks, or at least the majority of the banks, will be able to recognize this effect in the third quarter. Currently, we assess this risk to be quite low. And here we can see a number of positive factors influencing the growth of the margin, as mentioned by me before. that is overvaluing the loans following the decisions of the Monetary Policy Council as well as the declining impact of the cash flow flat. So hopefully this will be higher as compared with the cost of deposits. it goes without saying that the situation is as follows perhaps it sounds like a cliche but the situation keeps changing dynamically and if we are to assess it as today the risk of lowering margin is quite low.

Thank you so much.

And now the next question when it comes to Tier 1. What is your guidance for Tier 1 in 2022 once all the regulatory costs have been considered? We'd like to... Just maintain the current situation. Let me remind you that there is the sizeable buffer as compared with the regulatory minimum. Thank you. And the next question. What is the value of new sales when it comes to consumption loans if you are to maintain the portfolio of gross loans at a sustainable level? As I understand, we are talking about the sales as such. It hinges heavily on several factors because here the life cycle of a customer is significantly lower because those loans are fast rotating ones as compared to mortgage loans. And additionally, one's interest rates are have been increased, we can see that there is this effect of additional payments. Some customers decided to pay excessively to provide a surplus of installments which only shows that the situation of our customers seems to be quite positive and this also explains relatively low costs of risk. If you are to consider the results of the new sales and lowering portfolio what is to be seen is this that keeps changing slightly depending on the market situation. Our priority is to hamper this negative trend, but we don't want our portfolio to be less profitable on account of debt. Perhaps we would need to illustrate a decent Excel model. If our life cycle of a loan is four years, And as Grzegorz mentioned, we would like to remain in this very competitive segment. Perhaps we need a simple model to explain it all. Thank you so much. This is it. Thank you very much for taking part in our conference. I would like to acknowledge our speakers. Should you have any questions, please make sure that you use our special investor relations postbox. And thank you so much. Thank you.