Erste Bank Polska Sa

welcome everyone at the teleconference about presentation of the financial results after quarter one 2022 together with us today there are the ceo Michal Gajewski and the CFO Maciej Rejluga and the chief economist and Wojciech Skalski responsible for financial accounting area that is responsible for the financial report published today. So please ask your questions through the link online and to my email address. I'm Agnieszka Dowrzycka. I'm head of investor relations. So over to you, the CEO. Hello, everyone. Good morning. Michał Gajewski speaking. Welcome at the presentation of the bank's performance after quarter one. As you know, the first three months of the year have been good, but we are aware that the next quarter will be under a strong pressure of both economic and geopolitical situation. There are many risk factors ahead that make the future highly uncertain. For example, the war in Ukraine. that of course will affect our performance in the long term. Yet so far we have not seen the significant impact of the war on the results in quarter one. On top of our core business, this quarter we conducted many social responsibility activities supporting our customers and guests from Ukraine. We are strongly impressed by the engagement and empathy of our employees both in branch banking and business support center and also volunteers and humanitarian organizations. As a bank, we focused on delivering various solutions to our customers from Ukraine. We simplified our procedures to make it easier for them to open an account and get a debit card. We proposed our customers also free of charge APM withdrawal and transfers to and from Ukraine. we cooperated with the united nations high commissioner for refugees as the only bank in poland we developed a tool based on bleak check system together with our customers we raised four million two hundred fifty thousand uh slots and then we doubled your impact for ukraine fundraiser the entire amount will be earmarked for humanitarian organizations that will be used for assistance and medical aid in Poland and Ukraine. Now let's go to slide number seven. As a group, we provide services to over 7.2 million customers, out of which 5.5 million in Santander Bank Poland. Together with Santander Consumer, we have almost 3.4 million active digital customers. We have over 2.5 million active mobile customers, which means a 25% increase year-on-year. Customer deposits totaled over 187 billion slots and increased 4% year-on-year. The gross loan volume increased by 5% year-on-year to over 156 billion slots. Assets grew by 4% year-on-year to 246 billion slots. Customer funds were 201 billion slots, which means 2% growth year on year. In slide number eight, we have key financial results. Of course, I will discuss the results for quarter one in detail further on. Now let me highlight only the key items. So the net profit of 960 million zlot, which is a significantly higher number than in previous periods. Net interest income of 2,244,000,000 zlot grew by 63% year-on-year. Net income grew by 8% year-on-year. In total, 661 million zlotys. The total income was 2,988,000,000 zlotys and grew by 41% year-on-year and 17% against Q4 last year. ROLA was 8.6%. And let me remind you that its denominator is under a strong influence of the capital surplus. which at the group level is about 9 billion. CCR for the group was 18%, Tier 1 over 16%. Those indicators decreased by about 19 basis points versus last year. And let me highlight that we have a very strong position and a decent capital surplus. The level of the indicators is significantly higher than regulatory thresholds. and it ensures total security of our business and stable growth now slide number 10 our customers 3.1 million active digital customers in the bank of which 2.8 million in the retail segment 323 000 sme customers we record double digit growth all the way and 21 thousand large companies, 4% growth year on year. The number of mobile customers has been also on the rise. Currently, we have almost 2.3 million customers using mobile channels in annual terms. This means a 21% increase in retail, 23% in SMEs, and 20% in corporate banking. The number of mobile transactions has also grown. In quarter one, we had almost 49 million retail transactions. That is 32% more than a year before. Slides 11 and 12 are devoted to new products and educational activities. We simplified and shortened online cash loan application process. We improved the referral. program added cash loan calculator in Santander PL portal. In the SME segment, we support our customers by organizing webinars with Google and Shopper. We are improving the credit workflow for large companies. We implemented the factoring service and services for a capital group.

Let us move now to business data. Let us start with retail, slide number 13. We've maintained high sales of mortgage loans amid the shrinking market. In quarter one, we saw loans worth 2.9 billion slots. Compared to quarter one last year, that was twice more. Yet, quarter on quarter, this is a decline by 10%. The sales of cash loans, which stood at 2.2 billion slots, And that was another record high quarter. The volumes allowed us to come back to the pre-pandemic levels. Year on year, this is the growth by 38%. And on a quarterly basis, this is 8%. We also have here high sales via remote channels. And in quarter one, these sales accounted of up to 54% of the total sales. investment funds, TFI. In this case, we saw negative sales and high level of redemption. This is, of course, the result of uncertainty and volatility on the financial markets. In the F&E segment, the leasing in quarter one, the sixth year was stable, growth by 0.4% at $825 million. The leasing portfolio increased by 16% year-on-year. And in quarter one, the sales of credit products in the SME segment increased by 8% quarter-on-quarter, standing at 1.3 billion slots. In business banking, we saw good results. When it comes to services for exporters, the turnover on the ethics platform increased by 40%. while the use of finance limits increased by 37%. Transactional banking fees increased by 42% year-on-year, while the sales of credit limits increased by 20%. In corporate and investment banking, we saw a big growth in income from transactional banking. Also, the income from transactions on financial markets, treasury services, and trade finance increased. As part of our responsible banking agenda, we provided financing to producers of energy from renewable sources, thanks to which 150 megawatts of energy will be generated. As part of the Polish transformation of the Polish energy system, we were also providing advice on the acquisition in the renewable sectors. Slide number 15, growth loans portfolio. On the consolidated basis, it increased by 5.23% year-on-year, close to 156 billion blocks. I've already mentioned sales in the retail and SME segments. In business banking, loans increased by 9% year-on-year, while in the segment of the biggest companies, they increased by 4% year-on-year. The leading portfolio grew by 11% year-on-year, up to 12 billion slots. The net sales was close to 1.6 billion slots, increasing by 2% year-on-year. The factoring company saw the growth in turnover by 17% year-on-year, while its portfolio increased by 15%. Our plans for this year are ambitious. We want to grow quicker than the market. especially in loans, our current outlook says that the loans will grow in the sector by 3.4% approximately, and the deposits are to grow by 1.3%.

Now slide 16, customer funds. Customer deposits grew by 4% year-on-year, and As I said, at the end of March, they totaled over 187 billion zlot. Retail deposits grew by 6% year-on-year. Business deposits grew by 2% year-on-year. So year-on-year deposits grew in total by almost 8 billion zlot. We can see an increase in term deposits by 6 billion zlot and 3 billion on current deposits. Investment fund assets, as I said, dropped due to the market situation. When it comes to the P&L, let's start with slide number 17, the margin, the net interest income in the quarter one was over 2.244 billion, better by 63%. The annualized net interest margin grew by 93 basis points up to 4.02%. This, of course, stems from higher interest rates, higher interest costs, acceleration of cash loans, mortgage loans and corporate loans, and the marginals also affected by higher yields on debt securities. One comment on that slide. the margins for 2021 that you can see in this slide, those amounts were converted in line with the change in the accounting rules with respect to the legal risk for foreign currency mortgage loans according to IFRS 9. In slide 18, net fee and commission income, In quarter one, the fee income was 661 million, so it grew by 8% year on year. This performance was quite solid. You remember that in quarter four, we had quite a strong position. Nevertheless, we are still growing. And the quarter on quarter increase was 3%. We observed very good results in accountants' transfer fees, brokerage fees, and FX fees, both on a quarterly and annual basis. When it comes to the income, slide 19, total income was almost 3 billion zlotys. Significantly better year-on-year and quarter-on-quarter. Of course, this net C income and net interest income largely contributed to that. Lower income on other businesses are linked directly with the situation of the financial market, but we are glad about our recurring income that is related to higher business activity of our customers.