Erste Bank Polska Sa

Good morning. It's half past ten. We'll start today's conference. My name is Agnieszka Dobrzywka. I'm Head of Investor Relations at Santander Bank Polska. I would like to welcome you at the presentation of the preliminary results of Santander Bank Polska for 2024. Today's presentation will be presented by Michal Gajewski, CEO, Maciere Luga, CFO, Wojciech Skalski, Head of Financial Accounting and Control Division. Before we start, I would like to remind you that you can ask questions via the link provided online and also you can send emails to my email address, The presentation we will discuss today is available at the website of Santander Bank Polska. And now let me hand over to our CEO. Good morning. Welcome at the presentation of the non-audited financial results after the fourth quarter of 2024. I'd like to highlight that those are preliminary data, while the full Audited report for 2024 will be published on the 25th of February. This was the first year of implementation of our new strategy. In each of the three pillars, which are total experience, total digitalization, and total responsibility, we've been working on strengthening our market position and our brand. We will continue supporting our customers We will keep taking care of our stakeholders and we will also keep building value for our shareholders. Last year we generated the gross profit of 7.3 billion and quarter for the gross profit was 1.5 billion. In 2024, the tax charges amounted to 2.8 billion zlots, including corporate income tax of 2 billion zlots and banking tax of 819 million. While the total regulatory costs amounted... And the tax regulatory charges totaled 785 million zlots, so we can see that our bank contributes a lot to the state treasury. In slide number seven, we can see the general operational data As a group, we provide services to over 7.5 million customers. The number of digital customers keeps growing. In Santander Bank Polska alone, we have 6 million customers, and the growth in the number of digital customers is nearly 8%, and mobile banking customers grew by nearly 13%. Customer deposits grew by 11%, $232 billion. The gross loans portfolio grew by 9% to $180 billion. The assets grew by 10%. Customer funds totaled $256 billion and grew by 12% year-on-year. Slide 8. Key financial results. Net profit of the group for 2024 was $5.2 billion. In Q4 alone, the net profit was $913 million and was charged with additional legal risks connected with Swiss franc loans. The net interest income was $13.9 billion, up by 6% year-on-year. In Q4 alone, it stood at $3.6 billion, up by 1%. This is the previous quarter. Net fee income totaled 2.9 billion plus, growing by 7% year-on-year. In quarter four, it was 726 million and was higher by 2% when compared to the same period of 2023. Compared to the previous quarter, the net interest income paid at the same very high level. Total income was 17.1 billion plus, growing by Our capital position, as you can see, is very high in space. Return on equity was 20.4%. We can vote for excellent liquidity. The LCR at the end of December was 215%. Slide 10 to 12 show general information about individual segments, new products offered to our customers in 2024. So I'd like to go straight to slide 13, showing business data. We have 4.7 million accounts for individual customers, up by 4% year-on-year. In Q4, according to our estimate data, we opened 110,000 new personal accounts and policy letters. During the year, we sold mortgage loans worth $11.2 billion lots and in quarter for a loan, $1.9 billion lots worth of mortgage loans in quarter for a loan. Almost 97% of the portfolio was based on adjustable fixed rate and the total share of loans was adjustable fixed rate loans. And the entire mortgage loan portfolio grew to nearly 42% at the end of December. And as a reminder, in September, it was 39.5%. In Q4, we granted cash loans worth $2.9 billion. Up by 18% versus the previous year. And in the entire year, we sold... Cash loans worth 11.4 billion slots, up by 18% year-on-year. Investment funds, net sales in quarter four totaled 1 billion. Retail assets at the end of quarter four were 24 billion slots. And our market share, almost 11%. In the SME segment, we've been developing dynamically as well. In quarter four, we opened almost 19,000 business accounts for SMEs. And in quarter four alone, we opened over 69,000 accounts. In quarter four alone, we sold loans to SMEs in the total amount of $1.3 billion, and in the entire year, $5.3 billion. Lease sales in 2024 was 4.2 billion slots, which means a growth by 11% here on your business and corporate banking. Credit volume grew by 12%. Credit limit sales grew by 16%. As you can see, we have also a double-digit growth in FX income. In trade finance, we grew by 25% year-on-year. Derivative transactions, very good growth. ECM services, also an impressive growth of 63%. And now the balance sheet. Let's start with loans, slide 15. I have already mentioned the growth in gross loans at the consolidated level by 9%. and 1% quarter-on-quarter.

Slide number 16, customer funds, deposits. They grew by 11%, and at the end of December, they totaled $232 billion. Comparing that year-on-year, the deposits grew by $22.7 billion. Profit and loss accounts, slide number 17, net income and margins. Net interest income totaled 13.9 billion dollars, growing 6% year-on-year. Interest income increased by 4%, while interest expense decreased by 1%. In quarter four, the net interest income totaled 3.6 billion dollars, growing by 1%, while the interest income grew by 2%, while interest expense increased by 4%. The net interest margin, annualized on a quarterly basis, was 5.27% in Q4. Slide number 18 outlines our net fee income. In the whole year, that was 2.9 billion zlot, and that's the growth by 7% year-on-year, including the growth driven by the activity of our clients in Transaction fees, credit fees, insurance fees, which grew dynamically by 9%. It's worth highlighting that we did it without growing our fees and charges. And that reflects how active our clients are. In quarter four, we continued earning high net fee income, just like in quarter three. Slide number 19. Income. Total income is was $17.1 billion and that was the growth by 7% year-on-year. If we deducted the effect of the so-called payment holidays, then our total income grew by 8% based on our preliminary data. Operating costs. Waterfall showed that we are really effective and the Total costs in 2024 were $5.1 billion. That was driven by high contributions to the banking guarantee fund, inflation, salary reviews, and a higher cost of services. Staff costs increased by 6% year-on-year. Administrative expenses, as we deduct regulatory expenses, they increased by 6%. The operational effectiveness ratio, that is cost-to-income ratio for the group, is at 29%. And for the bank itself, it is 28%. Provision for loan losses. The net balance was $983 million at the consolidated level. And in the quarter four alone, it was $75 million lost. The cost of risk in quarter four were approximately 60 basis points. And this balance of provisions after four quarters was lower than recorded in the previous year by 14%. And that's the effect of the good credit quality that we've been witnessing. In 2024, we sold debts worth more than $2 billion, which gave us the gain of $248 million. And that's the impact on the gross profit. In Q4, we sold the NPLs worth $831 million with the gain of $99 million. The key risk indicators remain at a satisfactory level in our opinion. The non-performing portfolio is at the phase 11. It does not account for more than 4.4% of the whole portfolio. In quarter four, we updated our parameters for calculating provisions. And this, thanks to the good quality of our loan books, actually reduced our net balance of provisions. Slide 22. I've already mentioned the regulatory costs, taxes, And the total burden related to that, and that was 3.1 billion in 2024. Tell me knock the year by number 23. Let me just highlight the costs related to legal risk across the year. That was 3.1 billion. In quarter for alone, that cost was more than 1.4 billion. So wrapping up, I think that 2024 was a really solid year for us. We continued growing our net interest income and fee income, and they continued nicely. They grew nicely. And I'm really happy with the growth in fees driven by the activity of our clients. Transactional fees, credit fees, insurance fees, which grew by 9%. Let me highlight again that we... Biggest fees grew without changing, raising our fees and charges, which reflects how active our clients are and how good relationship we have with them. When it comes to our business, I'm also happy with our performance. Our market shares grow and they grow profitably. And this is really something that bodes well for this year and thereafter. quite often ask us about our credit volumes. And as I've said, we are happy that we are growing in a profitable way, dynamic way, that we outpace the market, that we do not do it at the cost of higher risk. And we have the profitable growth both in loans and deposits. Thank you very much. And now the floor is yours. We've already got some questions.

We received 20 questions about numerous issues, Swiss francs, macroeconomic situation, margins, net interest income, capital dividends, loan provisions. So if anyone of you wants to ask any questions referring to those issues, please wait until we answer and then ask questions if our answers are not satisfactory. Okay, so maybe let me start with the questions about Swiss franc denominated loans. With the current status, I'll tell you about the settlements, claims, maybe let's start with the settlement in our final report and in our flash data we can also see that at the end of the year we made 13,000 settlements pre-court and those made after the case was filed with the court. And in Q4, we had 3,700 settlements. We offered settlements to 98% of active customers, including those customers who filed claims with the court and those who did not. We will provide the full data in our financial statement, but according to the data at the end of December, we can see that the group received claims totaling 7.9 billion lots. When it comes to the number of claims from customers who repaid their loans fully, We will provide the exact data in the report, but for the time being, it's 15%.