Bank Polska Kasa Sa Ord

Dzień dobry. Dzień dobry.

Good afternoon, ladies and gentlemen. A very warm welcome at a conference dedicated to the presentation of the results of Bank of the USA for the first half of 2026. We have Cezary Szybukowski, CEO, Dagmara, and Ernest Pytlarczyk. And over to the CEO. Thank you. Okay, there are good forecasts for the second half of the year, so we are optimistic. Profits are under pressure, but you are all aware of that. We operate in the environment of the highest tax thresholds in Europe. so the surplus of income tax also hits the results of the bank it is worth stressing that our core categories continue to grow core categories of credit assets may be slightly less in mortgage loans but here we have the kind of thinking that I shared with you at previous conferences that is we as a bank try to reposition ourselves as the bank that has a holistic approach to the market rather than focusing only on the volume drivers in the fourth quarter we expect a very decent commissions growth annually that is 11% up the bank also keeps increasing its digital penetration in retail banking. Here we had some backlog, but I think we are quite deft in catching up with the leaders and the strong capital position that Mara will probably tell you a few words about the issuances that we had previously this year and have actually completed our plan for this year. Key reference point, I think, May be it's worth saying that cost incumeration normalized that results from BFG charges continues that our ambitions rebath our ambition levels I have repeatedly said that the bank is in the process of investing reorganizing and I do not approach this target dogmatically. So the fact that we stay around the 35% is our achievement. The portfolio growth, risks, costs and the control margin will probably talk you through that in greater detail. The good news is also that in those areas of client activity where the bank is still underway in terms of market share, we see continuous growth. You can see that both in consumer finance and in micro business funding volume and the flagship element medium market. That's our key element in terms of positioning. So we can say that all segments decently contributed to our results of the first half of the year. You will find here the indication of the most salient and ambitious growth parameters with reference to sales or scale of revenues from individual types of operations. and trusteeship services maybe that is not the major business line but still very valuable because this generates valuable revenues and commissions and we attach a lot of importance to that as you might recall from the presentation of our strategy that is undoubtedly a focus we pursue and against our peers we are doing well I referred to the strategy presentation. We still have a year's horizon within this strategy because it was a short-term strategy in which we wanted to prove to ourselves that the bank was capable of organic growth. And it seems that our market shares do grow. Sa Ord Sa Ord Sa Ord Kasa Sa Ord Kasa Sa Ord Saorda Saorda for analysts and investors that might not be such an important issue but I would like to stress one thing namely something that we started last year namely the return to The AOSA as the most international locker bank with the focus on, with ambitions on travelling and Last year we had the first promotion focused on travel and now we have a greater scale promotion to encourage traveling among our customers. And the first summary of the results indicates that it seems to bring fruit. that means that the bank needs to reposition itself yesterday actually I experienced two events one was with the client and another was with a business partner that was a client of a bank PKLBP who complained about the bank PKLBP by writing directly to me and in the second case that was a partner who works with our bank and he still misspelled the name of our bank So that's something that set us thinking. There are several products, well, prepaid MasterCard from SME, you can read about that. For sure it matters for SMEs, but this does not change the world to a greater extent. And the important thing is that we... consistently build the availability of our services for digital channels. Historically, we had lag behind the market in this regard, but now we can say freely that we are at par with our competitors. and also we endeavor to have a big bank in digital services and show a new phase of the HLSA in the retail banking to show us some more modern banks. a person who now uses mobile app of PKOSA I must say that on a few occasions I was surprised by its features I tended to think it was maybe not that good and now we can say that we are really a star with the market and now PLPAY it matters because for the younger clients this is an attractive feature travel package has already been mentioned so we can say that let's wait for next year and some transactions that we concluded this quarter. Of course, here you can see a list of major transactions. In the second quarter, maybe it is worth focusing on us being the arranger and dealer in euro bonds for BGK. we signed a strategic agreement we are the main domestic partner with aspirations to go beyond that market so here we have those 2 billion euros that BGK had it is also worth mentioning the transaction which seems to have disappeared from my slide but Kasa Sa Ord

We have a GDP forecast 3.5% which is a slight downward revision.

The reason was a weaker beginning of the first quarter. The second quarter was quite good and we have to say that Poland is not the epicenter of the events related to the oil crisis with the war in Iran. We had a well-timed CPM package. We were afraid this would hit the consumers, but basically the timing of CPM was such that the consumers did not feel quite so strongly that hit. The inflation expectations have not destabilized and it seems that our economy has coped best in Europe with this situation. The rest of the year is likely to be similar. Some investments slightly less consumption and the investments will drive the economy but also the banking business. We see that in our long portfolio of enterprises. In reality we hope that this will continue and also we prepared a report that discusses several years ahead not all topics especially macroeconomic topics for Poland have been well investigated so we made an attempt to Sa Ord Sa Ord Sa Ord Sa Ord AI story keeps coming back in various narratives across the world and it also seems that the AI popularity wave also boosts a variety of sectors here. We are to a small extent dependent on imports, but it's easy to build here. On top of that there is this nuclear energy theme because Polish electorate is quite favorable to nuclear energy which is not typical of the entire Europe and that makes Poland stand out against the backdrop of Europe. We spend almost 5% of GDP on armaments and that is not likely to change anytime soon. If you follow the news that is probably... The first wave of the expenses on armaments is mainly focused on local content and in the second wave there will be more interesting things going on because there will be more collaboration with European enterprises with better know-how and if we can talk about positive fiscal multipliers the second wave of course we also have to note that the armaments increase will have a positive impact on GDP but also there are some challenges that Europe has to face Chinese shock Europe will reach for protectionist policies a variety of customs barriers plus there will be an attempt to structure supply chains based on European resources. Poland has an extensive industrial base and it's impossible to think of this industrialization escaping Poland or bypassing Poland plus location in the right place in Europe. So these are the three pillars and as a result we are quite optimistic about Poland noting greater growth in GDP than other large European countries.

For the current year, it's 3.5% compared to on average below 1% in mid-size EU member states. And a few words about the nominal dimension. A few months ago, there was major concern that we will have major interest cuts Then the market locked in four cuts. We didn't believe in that story. And now we are at the point where the National Bank of Poland starts talking about the cuts. As I mentioned earlier, Poland was handling the oil shock pretty well. And now the inflation is not really sticky because once it becomes sticky, it's really hard to manage it later and reverse the trend. Nothing dramatic happened here. Our prediction is that there will be no interest rate hikes. We don't have the automatic transmission that ACV goes up, we go up accordingly. Next year, we will probably see a cut, but not a major one. So the environment will be with higher values, especially with mortgage loans, especially with such a curve, with such expectations regarding the interest rate, the prospects for refinancing. It can burn you. and it will happen eventually. Today, like the five, six of the financing happens outside of the mother bank. So that's an interesting point. Large volumes amongst the corporates spill over to smaller players and the AI team and the defense team. I believe that it's an interesting macro environment for the defense sector. Good afternoon, everyone. So perhaps a few words about the actual numbers. Our lending was up by 10% in total. This is yet another quarter when we are growing faster than anticipated in our strategy. I would identify two areas, retail and corporate. In terms of corporate loans, MIT, SME, and large corporations are growing at a two-digit rate. When it comes to MIT and SME, For the past six months, we acquired over 1,000 new customers, which is excellent news. In terms of the large corporations, they are up by nearly 13%, only a two-year basis. And we would like to keep that lending-based corporate dynamics for the next quarters. In terms of the retail lending... We have a major uptick in cash loans. The volumes were up by 16%, with sales 16% up year to year. In Q2, we've seen the record high sales of cash loans, 2.3 billion ZL. Mortgage loans were growing at a slower rate, one digit growth. Now, moving on to the deposit side, total deposits were up by nearly 7%, retail 8%, corporate 11%. We are really happy to see current accounts moving up. Last year, it was 73%, and this year, at the end of June, we've seen 75%, over 75%. This is the share of the current accounts. And we keep on opening new accounts. We opened nearly 230,000 premium accounts and przekorzystne accounts and more than one third of it is dedicated to customers under the age of 26. In terms of investment funds, you may remember that at the end of Q1 we faced some challenges in the market because of the war This gap is being filled, slowly but steady, and in June we've been at 4.4 billion zlaris. And a few words about issuances. Last six months were quite active on the euro market. We had three issuances. 1.71 billion euro in total value. What I should say is that the terms were really excellent for the execution of all three issuances. And we see a growing base of international investors. So this is a major feature for the past six months. In terms of NIMS, On a year-to-year, average VIGOR was down by 150 BPS. Our net interest margin was down by 35 to 36 basis points, depending on treatment. Two things that need to be acknowledged. Lower interest rates, and that was offset to some extent by higher volumes. We explained in our strategy that we want to make sure that across all the key segments where we were underweight at tax, micro, SME and mid, we want to really grow our market share and we want to grow at a faster pace than historically and we've been delivering accordingly. which translates positively in offsetting the negative effects of low interest rates and the NIL decline. So looking forward, we are actually positive about NIL. and we believe that the interest rate cuts from last year and the one interest rate cut that we had this year has been properly accounted for in the current level of NIM. And there's about a sensitivity to interest rate cuts. It stands for 15 basis points per 100 basis points in terms of cuts. What has already happened and what helps us manage this sensitivity is, as I said, growing volumes of our loans and, on the other hand, the hedging strategy that we had in place and the growing volume of IRSs. We do see the dominance of periodically fixed rates in our mortgages, and we also manage our deposit side of the balance sheet. In terms of commission and income, another strong quarter, 11% growth on a year-to-year basis. And as you can notice, we've seen growth across all the contributing categories. So commissions on loans, on cards, assets management, strong two-digit growth, but there are contributors such as Account fees and FX margin. Now, moving on to the costs. We make sure that we keep operating costs under discipline. As our CEO mentioned, we are transforming the bank and we continue to invest, so there are two health drivers in the cost space. On one side, we see the cost of wages, and the cost of wages has been going up year to year. The rate is one digit rate. And on the other hand, we have assets and depreciations, and here the growth is two digits. And this is the result of the IT investments, new strategy projects, and the more active marketing efforts. As I mentioned, we are investing actively in the bank, which means that depreciation, as a sort of translation of the CAPEX, will be growing. And now over to Marcin. Thank you. There is a cost of risk. They continue to be stable. It was 3.42 basis points for the last quarter and 47.42 year-to-year. So we stay within the range that we've been sitting in for some time, and there are two contributing factors that are well familiar. Very low cost of risk in the retail segment, where the loss ratio is very low. and that's also connected to the new estimates of the rate of the segments where we see the last likelihood of the default. Now, in the corporate segment and enterprise segment, the cost of risks are oscillating within the normalized levels for the long-term projections. And it's still lower than some years ago. And that affects our MPLs. Actually, MPL has been quite stable and it was even declining because we sold the MPL retail portfolio approximately 200 million in nominal value, 26 million in profit in Q2. And the MPL coverage has been non-performing. loans, so the coverage has been growing slightly and it's higher in the enterprise and corporate segment because of the lengthy court proceedings in case of bankruptcy or restructuring processes involving larger and more complex entities that might have overture against. So, finally, let's highlight some facts about the capital. We keep a strong capital position. We have the surplus in CD and then the total capital ratio. We, in our strategy, we say that 50 to 75% of the net profit will be paid out in the dividend and with these Capital ratios, we are all safe with it. In terms of MREL, again, we meet the criteria and we reach the ultimate level with an above 24%, even taking into account the increase of the anti-cyclical buffer that will happen in September this year. We are working on two things. One is securitization. And that should materialize at the turn of 26-27. And another thing is 81 issuance. And that would be all. Thank you. Thank you. Now it's time for questions and answers. And we encourage you to ask questions in our screening window. And you can send them an email to myself. Some analysts have been asking what about the credit spreads and what is the competition level in the area of the credit margins. Let me take this question. We see a major pressure on the margins here, especially in the corporate segment. And now when we look at where we sit in the market and given that each bank has the ambition to grow in the corporate sector, I have to say that this is the strongest pressure by far. There is a handful of questions about European Court of Justice ruling. Well, we disclosed the amount in our report. The question is whether this is just one of charge to PLN and what is expected to happen next. Well, I would like to really distance myself from the role of the advisor of the law chancellery and the legal chancellors or law firms so I would rather refrain from comments here this phenomenon is the affliction of the Polish market but the discussion is ongoing how to interpret this ruling and my personal opinion is that we should stop offering this product in the current form the form that was challenged The ruling of the ECJ implies that we should really split it in two elements that were combined into the package, which would be difficult for the customers. The whole area, I should say, of the customer protection is sort of shifting towards such a direction where many products will be very complex from the customer point of view and they will be just tick the boxes without really thinking many of us do it daily because there are so many legal requirements but this is not digestible for the customers and by itself they become the source of risks that we are discussing here we are not discussing the credit risk here we are not discussing the balance sheet risk in Poland we tend to focus on the Legal risks. And legal risks are byproducts of the emerging industry that is living of it. So my answer to that is that we estimated a certain scenario. I'm not going to explain it in detail, but I'm not going to make it a secret since I am the chair of the of the Polish Bank Association Board, but we have a discussion within the banking sector and as a community we have already voiced our opinion to ECJ how this product could be offered in reasonable terms and how to settle the contracts that are currently active.

There is a question regarding interest margin. Is it already reaching the bottom and possibly what kind of trajectory here we can expect in the second half of the year? As I have mentioned, reductions in interest rates both this year and last year should be included in the margin for the second quarter and we do not expect any material decreases further. There was also some interest in our description of the slide on write-offs about this one-off client disappearance. Did it matter for the second quarter and what can we expect in the upcoming quarter? Well, we wrote that it had an impact. So let me add some information. 420 million, that was the cost of the write-off, and for this client that was about 100 million. For the future, the environment is stable, and if we have this kind of a client, in the future there is a few bit increase in the cost of risk and that is shown in our quarterly results so basically the trajectory in the near future is to be stable with possible some changes that are very difficult to predict now

Polish market about 500 million

And one more business question. Does the bank plan to introduce personal investment accounts, OKI, and do you think that this new product could support brokerage business and asset management? Well, I generally think that the evolution of the retail market in Poland is likely to go in the direction of the increasing importance of asset management-like product. We are coming to an end of the time when banks differentiated themselves by availability of this type of transactions. Deposits and loans, well, I'm afraid to start discussing this because it is full of legal traps. and I think regulators and the entire financial sector should think carefully which products could engender more risks but considering how quickly the society at large is getting richer because the indicators showing the increase in revenues are quite aggressive and we can see that in our operation. So the importance of long-term products for saving will also gain an importance also in the context of demographic changes. This is definitely something we will consider. And one more question regarding why we reduced our estimate of sensitivity of results to 10-15 points. We increased the scale of hedging instruments, IRSs mainly. Importantly, we are talking about hedging per se and the budgeting window that is up to two years. versus structural hedging which was characteristic of our operations earlier hence the difference of five BPSs to what we had previously there are no further questions as of now but please do continue asking questions on any topics you might have and have a happy holiday very enjoyable holiday Thank you.