Erste Bank Polska Sa

11 o'clock. My name is Agnieszka Dolżycka. I'm responsible for investor relations in Santander Bank Polska. I'd like to welcome you today at the presentation of the financial results for quarter three 2021. Together with us today are Michał Tajewski, CEO, Maciej Raluca, CFO, and Wojciech Karski, responsible for the financial accounting area. During the presentation you can ask questions via the internet or you can send the questions to my email agnieszka.dlżycka at funtunder.pl and after the presentation we will answer the questions and now let me hand over to Michał Gajewski, the CEO. Good morning once again, Michał Gajewski speaking. Welcome at the presentation of the financial results after three quarters of the year. From the point of view of the core banking business, I can say that this period was successful. There are a few challenges in the sector, but we stay optimistic. We expect that in the next quarters, business loan volumes will still grow. especially in the corporate segment. But before I go to the results, I would like to burst with some success. Yesterday, we received two awards. We have been ranked the first in the Business Friendly Bank by Forbes, and we are also ranked third in Friendly Bank ranking by Newsweek in the traditional banking category. It is very important for us that we recognize and that our activities and services for retail and SME customers are visible on the market. Recently, we have also received a financial provider of the year award. And now let's discuss slide number seven with the results. As a group, we provide services to over 7 million customers, out of which 5.4 million is services from Santander Bank Polska. Together with Santander Consumer, we have over 3 million digital customers. The deposit portfolio grew by 6% year-on-year and totaled $177 billion. The gross loan portfolio grew by 2% year-on-year to nearly $152 billion. assets grew by 5% year on year and totaled nearly $234 billion. Customer funds grew by 9% year on year, and this is currently $197 billion. And now slide number eight. In quarter three alone, we generated a net profit of $544 million. That is twice as much as in the previous quarter. When compared to Q3 of the previous year, the net profit grew by 13%. After three quarters year-to-date, the profit attributable to shareholders was over $918 million. On a comparative basis, so excluding a few factors and assuming a fixed level of BGF contributions, the attributable profit grew by 22% year-on-year. You may find the details about comparative data in the presentation and in the reports. The net interest income in Q3 alone was $1.44 billion, and when compared to Q3 of the previous year, it was better by 4%. It was $4.2 billion year-to-date and was lower by 5% year-on-year. The net fee income in Q3 was $635 million. It grew by 15% when compared to Q3 last year and by 6% quarter-on-quarter. Year-to-date, the NFC income was $1.85 billion. It increased by 17% year-on-year, which is a very solid result. Total income of the three quarters was $6.6 billion. It increased by 3% year-on-year and slightly dropped on a quarterly basis. When compared to quarter three last year, the income grew by 5.4%. ROE was 4.1%, and on a comparative basis, 8.4%. And the group has a significant capital surplus of 12 billion zlot, while the bank has got over 13 billion zlot, which, of course, significantly impacts ROE. At the end of September, we had a very strong capital position, much above the requirements. Our T1 was over 18% and TCR was over 20%. Slide 10. Let's talk about our customers now. The number of digital customers is growing, as you can see. We already have 2.6 million digital customers and 327,000 among SMEs and 20,000 among large corporates. The number of mobile users is also on the rise, currently over 2 million. The number of mobile banking transactions is also growing. In quarter two, you had over 40 million retail transactions and 3.5 million SME transactions.

We've been continuing expanding our offering, and that's reflected on slide 11 and 12. Let me just mention a couple of new things. The first thing is that since July, we have been issuing eco-friendly cars made in 85% of upcycled plastic. We already issued nearly 400,000 such cars. We also launched a module in our mobile application that enables easy savings called MyGo. After two months, the number of registered users was more than 100,000. We also launched the AutoPay service for individual and business clients. For essence, we introduced the text message authorization of the product. We've been actively supporting large corporate focus on international expansion. We keep organizing webinars for clients interested in exports to the UK. And our third portal is Bank of China and the Dubai Islamic Bank Joint Trade Alliance. Now let's discuss slide number 13. Let's talk about retail banking. Here we posted mortgage loan sales reaching an all-time high after three quarters. After three quarters, we sold mortgages worth $6.4 billion, and in quarter three alone it was $2.8 billion. Compared to quarter three 2020, we sold twice as many mortgage loans as before. In Q3, in September alone, it was nearly $1 billion loss, and this is the best monthly outturn in the history. After three quarters, we sold $5.3 billion worth of cash loans. In Q3 alone, it was $2 billion loss. And so far, this has been the best result. On a year-on-year basis, this is more by 37%, and quarter-on-quarter by 8%. We keep posting high sales through digital remote channels, and after three quarters, this reached 44%. The sales through buy-by-click accounted for 16% of the total sales of cash flow. The net sales of investment funds at the end of September stood at 2.9 billion dollars in the quarter of the year alone. It was... 338 million, which was one of the highest on the market. The assets of managed by Santander and TFI at the end of quarter three totaled 19.2 billion slots. In the SME segment, first of all, we saw really good sales of Weezing as their sales increased here by 21% quarter on quarter, totaling 915 billion slots. In quarter three alone, the sales of credit products stayed flat, as before. In business banking, we posted 32% higher sales of credit limits. We also posted good results when it comes to services for exporters. The turnover on the FX platform increased by 41%, while the utilization of the fixed finance limits increased by 43%. In corporate investment banking, we saw robust growth in the capital market revenues. We also posted higher revenues from advisory at the time of mergers and acquisitions. We are also actively participating in transforming the energy sector by financing photovoltaic farms.

And now let's talk about balance sheet. Slide 15, gross loans portfolio grew by 3% for us in 2017. Sometimes the consumer dropped by 5% as a result of the consolidated level. As I said, we have a 2% increase year-on-year. That is almost $152 billion. I have already talked about loans in the retail segment, while in the SME segment we recorded a growth in the loan portfolio by 6% year-on-year, which resulted to a large extent from higher drawdown of existing credit lines and business banking loans have been at a similar level as in the previous year. And the largest company segments, the loans grew by 6% year on year. Um, I mentioned good performance of leasing. We have a growth by 12% in the leasing portfolio. The net sales was $5 billion and grew by 34% year-on-year. The factoring subsidiary recorded also good results. Its portfolio increased by 23% year-on-year up to $6.4 billion. We are optimistic about the upcoming months. In the retail segment, the double-digit growth in mortgage loans is likely to continue. While in the consumer loans, we will continue this positive trend observed in previous quarters. When it comes to business loans, we can see further improvement. New sales of loans is already at the pre-pandemic level. Weak growth in the balance sheet in this segment results from higher repayments than usually. According to our current macroeconomic projections, total loans in the sector will grow by 4.9%, including by 3% for businesses. Slide 16, customer deposits grew by 6% year-on-year. This results from annual growth in retail deposits by 6% and business deposits by 7%. At the end of September, this was over $177 billion. A year-on-year deposit grew by over $10 billion. We can see a material growth in savings accounts and current accounts, and at the same time, the term deposits are on the decrease. At the end of quarter three, investment fund assets were higher by one-third year-on-year, and in quarter three alone, there was an increase by 3% quarter-on-quarter. slide 17, net interest income and net interest margin. The net interest income in quarter three alone was $1.44 billion. And when compared to quarter three of the previous year, it was better by 4%. Year to date, it was $4.2 billion and was lower by 5% year on year. In quarter three, the dynamics of interest income was $1.2 9%, whereas interest expenses dropped by 4.8%. Annualized net interest margin at the end of September grew by 5 basis points to 2.64%. This results from three factors, a decrease in interest expenses on deposits due to further decrease in the volume of term deposits, Secondly, acceleration in cash loan, mortgage loan, and corporate loan sales. And also a decrease in the value of investments in debt securities, which mitigated the negative impact of this portfolio on the net interest margin. As we said before, when it comes to the net interest margin and net interest income, quarter one has been the weakest so far, but there has been a progress. And we hope that the interest margin will improve in next quarter as well. This may refer to our current report after the Monetary Policy Council's decision on interest rate hikes. We published a report and we stated that the impact of the interest rate hike on our net interest income can range from $1 $300 million to $350 million in our bank and from $35 to $45 million in Santander Consumer. Of course, those are the figures for the next 12 months, assuming a steady balance sheet. Net fee income, we can say that we have been successful in this line in quarter three and We had a growth by 15% to 635 million when compared to quarter three. And here today, the net fee income was 1.85 billion. It increased by 17%. The good news is that higher fees are visible across all business lines, both in retail and business banking.