Erste Group Bank Ag S/Adr

Good afternoon, we have 9 o'clock, my name is Agnieszka Dobrzycka, I am responsible for investment relations at Erste Bank Polska and today I would like to welcome all of you very warmly to the presentation of financial results for the first quarter of 2026, for the first time Erste Bank Polska after the final change of name and after the weekend rebranding. We have with us today Michał Gajewski, President of the RST Bank of Poland and Maciej Reluga, Vice President of the RST Bank of Poland. Good morning. I would like to remind everyone at the beginning that during the whole time of this teleconference you can send your questions to me by e-mail. My e-mail is agnieszka.dodzyskamałpa.rst.pl You can also ask questions via the link in the interview. Mr. President, I give you the floor.

Thank you, Agnieszka. Once again, good morning to you. Welcome to our press conference. As Agnieszka said, this is the first result presentation, which we present as ERST Bank Poland. This is a symbolic moment for us. We are opening a new chapter in history. with new energy and the values that Group S gives us. In a moment I will discuss the financial results, but first I would like to emphasize that the first quarter was for us a time of intensive work on rebranding and integration with a new shareholder. It was one of the more complex operational enterprises on the Polish banking market. Everything went according to plan, in a safe and stable way and, most importantly, unnoticeable for our customers. We are, of course, fully focused on customers and further improvement of the offer and the quality of the offers. Returning to the results, the most important positions at the beginning, gross profit in the first quarter of 1 billion 816 million. I will add that our tax and regulatory burdens will amount to 1 billion 423 million. In the first quarter, the Group worked out a net profit of 1 billion 28 million. Let's move on to the fourth slide. Here we are serving 6.1 million customers. We currently have 4 million digital customers. This is an increase of 5% year-on-year. The vast majority of intermediaries, i.e. 4 million, use our mobile application. Here we also have an increase of 8% year-on-year. When it comes to client deposits, it is 228 billion, and in total from TFI it is 259 billion. The gross credit portfolio is PLN 182 billion, and the assets in general reached the level of PLN 304 billion. Slide 5. I was talking about net profit. The net profit is PLN 3.63 billion. From the provision of PLN 772 million, it increased by 6% annually. This is an all-time high. in our bank, a record quarter in this position ever. In general, the revenues are close to 4 billion, they are higher than a year ago, so you can see that on the top line, despite a 100% decline, a 6-fold decline, a 2% decline, the general revenues are significantly higher than a year ago. A strong capital position, ROE at the level of 20%, i.e. an attractive return for shareholders, excellent liquidity, LCR at the end of March, over 200%. In the 6th and 7th slides, we present detailed information about how our business is developing, how our clients are growing in individual segments. When it comes to detailed clients, we run 4.9 million personal gold accounts. An increase of 2% year-on-year. In the first quarter, we opened 132,000 accounts. This is 18% more than a year ago. We gave 3.9 billion cash loans, which is as much as 35% more year to year. Here we also have record monthly results. In March, 1.5 billion sales. This is again an all-time high. We have never had such excellent sales of cash loans. When it comes to mortgage loans, the first quarter was 2.6 billion. In March alone, it was over 1 billion in mortgage loans. Detailed investment funds reached a value of 30 billion. It was an increase of 28% annually. Also very good results. MŚP. In the first quarter, we established 22,000 companies, small and medium-sized companies. This is 9% more than a year ago. 1.4 billion credits for this segment. This is again 12% more than a year ago. We are still developing digital processes here. 126% increase in the volume of credits given entirely end-to-end online. Corporate banking. Here we observe the activity of clients also much higher than in the previous year, also in remote channels. We have a 9% increase in the volume of loans in this segment, an 8% increase in loan limits for this segment, so you can see that here the activity of customers and appetite for loans is improving in an important way. CIB, i.e. investment banking. We have very good results. They confirm our role as a leader in this market. Slide 9. Brutal loans. We are already moving on to the balance. At a consolidated level, the growth is 7% year-on-year. This balance position is 172 billion. In the annex, we have on slide 26, we show the continuation of the level of new sales. There, first of all, this cash rate deserves attention, 35% growth year-on-year. Slide 10, customer funds, 259 billion. Client deposits alone amounted to 228 billion. individual client deposits fell by 4%, but it is important to know that the structure is improving because the current deposits are growing by 10% and as a result of this change, it is beneficial when it comes to the structure of deposits. By the end of March, 26% of the total deposits were terminated, and a year ago it was almost 30%. Investment funds reached a level of almost 31 billion at the end of March and there was a 23% increase year-on-year. The account of the results, slide 11, we start with the interest rate result, it is close to 3.1 billion, it was lower than a year ago, 3.6, we all know for what reasons, 100% cuts, The decline in interest rates is partially compensated by a faster decline in interest rates, which, of course, reduces the pressure on this position of the score. In the annual volume, interest rates fell by 8, and costs by 22%. The interest rate in the first quarter was 4.53% and decreased by 11 base points. Of course, this is the result of Let's move on to the provisional results. As I said, the all-time high of PLN 782 million. There is a clear improvement year-on-year, but there is also a 3% increase in the quarterly volume. The increased activity of customers is also pleased. Here you can also see an increase in credit actions, because in credit provisions there is a clear increase in currencies and cards. as well as asset management and brokerage activity. In the context of the 100% interest rate cycle, it is of course an important element of income diversification and it is important that this position grows for us. Slide 13. Our income. The seventh quarter in a row is about PLN 4 billion. So, in spite of these downfalls again, it can be seen that here the revenues are staying at a high level. In the first quarter, the revenues in general even increased year to year, which is of course a very good message at the level of the top line of the report. The structure of revenues reflects the expectation of a shift, from interest rates to non-interest rates. In my opinion, we have a more favorable diversification of their sources. Maybe such an important thing, the share of the non-interest rate in total revenues has increased in the last year by a few percentage points to 23.3%. slide 14 operational costs, in total in the first quarter 1.7 billion, here there were of course many single-use factors, first of all BFG deposits, here is an important difference between the deposits last year and this year, and integration costs and rebranding. After excluding all these elements, the costs in the quarterly did not increase, a small increase of 0.2%. Important, certainly foreshadowing your questions. In the first quarter, integration costs amounted to PLN 24 million, and rebranding costs, which you can already observe in our app, in the departments, in the entire documentation, these rebranding costs in the first quarter are PLN 67 million. The 15th slide is the net return on the expected loan losses at the consolidated level, which is PLN 144.5 million. The risk rate is 37 bps, it remains at a good level. The quality of credit portfolios is good and resistant to the economic situation. Key risk indicators at a stable level in the GMPL index 3.6%, improved. Before the year, I remind you, it was 4%. We did not report significant unexpected events in the first quarter that would have an impact on the level of receipts. As you can see on the slide, the joint sale of credit credibility of the non-working portfolio reached a value of PLN 164 million and brought a gross profit of PLN 53 million. Summing up, slide 16. PLN 1.8 billion in gross profit, taxes, of course, much higher Therefore, the net result is 1.028. The costs of legal risk in foreign currencies, i.e. here we have francs, is 166 million PLN. We added. Our effective tax rate was 42.2%. When it comes to business activity, a record profit on provisions, very good sales and customer activity. Business Momentum is really, I think, used at a high level after this first quarter. Of course, all customer activities related to remote banking are growing. good growth when it comes to new customers. In MŚP, the acquisition there grows 14% year-on-year. In SELEKT, i.e. in this affluent segment, 15% increase in customer acquisition. So this year started very well. We are starting a new stage. We have a new brand. We continue this high efficiency. Of course, we want to build on this tradition of the ERSTE Group Bank and thus strengthen our market position. That's it for my presentation. I invite you to questions.

Do we already have questions, Agnieszka? Yes, the first question is maybe I'll take it to you, Michał. How is integration with the ERSTE Group going?

Yes, I still remember, of course, I'm saying this is not our first rodeo, I remember this integration that we also had with Santander. In my opinion, this integration is going well. You can see the trust of the auctioneer in us and you can also see the exchange of the best practices and the fact that and the fact that we are listening, not only we are listening, but we are also listening, so this integration, in my opinion, is going in the right way. We do it very professionally.

That's it. ...credits and deposits. Yes, when it comes to macro, indeed, from our last meeting, from the previous conference, A lot has changed, there are many signs of questions. Our forecasts have changed significantly since then, although in our reports we also present scenario forecasts, depending on how long the conflict will last, what will be the prices of raw materials, what will be the consequences for the global economy. We drew such a scenario of a slight risk, in which the economic growth drops by a few tenths of a percentage point and such a stress test scenario, where it can be a few points We are slowly moving towards this second scenario. We lowered the GDP from 3.9 to 3.8 this year. Inflation at the end of the year remains without major changes, although the average annual is higher. It is known that this is the effect of the government's actions, which neutralizes the effect of the growth of raw materials for households. Because this inflation will remain at such a level, We do not expect further 100% losses. A quarter ago we talked about the possibility of one loss of 25 base points. Now we assume that the stocks will be unchanged until the end of the year. The dynamics of deposits are high, probably around 7%. Maybe these deposits will grow faster, as they have been so far. Of course, there are a lot of risk factors here and I will also connect it with the next question, as we see the cost of risk, because it also depends on some measure from the macro, because at the moment we are not changing the macro scenario, this guidance on the cost of risk remains unchanged. We gave this year about 40-50. If this scenario materialized, let's say stress-tested, much more risky, we would move to the top of this section, but for today, as we observe the behavior of our customers, both when it comes to detailed customers and what is happening, what is happening in the first quarter when it comes to credit card payments, there is actually not much change in behavior when it comes to the situation of entrepreneurs, it also seems to us that This starting point and their current financial condition cause that we do not see a lot of threats for today, at least in this macroeconomic scenario that we describe. Even if it were to worsen a little more, it seems that the risks should be under control. That's it. If there are any more detailed questions, we ask. Then we have a question about Frank. How does the situation look when it comes to Frank's facilities? Quite a general question. Here, of course, a lot of information is in the report when it comes to the number of disputes and so on, but Michał, would you like to say something?

Yes, maybe it's worth saying that we are consistently implementing our plan in terms of including consultations with customers. Here, first of all, we want to find a solution that satisfies both sides. At the end of March, more than 13,000 contracts were signed, of which 643 were signed in the first quarter. We are also adding the costs of these contract solutions in our report in 2026. Here, too, you can see that these currency calls at the end of March fall in comparison with the previous quarters, which is currently about 12,500 cases. Here, too, when it comes to the COVID ratio, we have very high, close to 184%. It seems to me a little unnoticeable in connection with the last CUE passed these claims regarding free credit sanctions, these April CUE claims in the matters of francs. Here, the CUE has already clearly stated when it comes to the elimination of the concept of free credit, free housing. it was unambiguously rejected in this sentence on April 16th in an important way, limiting, actually eliminating this risk. It was also confirmed the principle of issuing clauses interrupting the expiration date and it was, let me remind you, our process strategy, our process strategy, we always issued clauses interrupting the expiration date, and it was, I would say, a unique strategy that we used, and it turned out that TSUE in this last sentence from 16.04. confirmed the validity of these bans. We consider it a great success for us that we have always followed this path. in disputes about capital, here it is also important to strengthen the process position of banks. And it also seems that this last one, what we already see, this last sentence causes an increase in the attractiveness of bonds as a quick and predictable solution to disputes. So I would say that after this part, There is definitely greater optimism here after this first quarter, also in connection with the last sentences of the European Court.

Good, thank you. The next question is a percentage result and a provisional result when it comes to our dynamics forecasts in the 26th year. Well, as you probably know, we do not give our predictions exactly what will happen in the twenty-sixth year. We give, I think, quite a lot of information systematically every quarter, which helps you to predict these lines. Maybe the provisional result, here we just provided such a guidance, more or less, that this dynamic year to year should be such a mid-single-digit, it after after the first quarter, in the first quarter it was 6%, so we are going according to expectations. The interest rate result, which is of course a bit more complicated, but again, as you will see, our guidance from the past, which do not actually change, because this sensitivity of the interest rate result, which we always talked about, to 100 base points of the discount at this balance sheet, it is around 250 million zlotych. Mówiliśmy o tym, że w znacznej mierze ten wzrost bilansu powinien to neutralizować, no i to widzicie właściwie Państwo w wyniku odsetkowym, jak na slajdzie 11 spojrzymy na wynik odsetkowy w 5 ostatnich kwartałów, to tam aż tak dużych zmian nie ma i to jest takie delikatne osuwanie się w dół. Marża odsetkowa w porównaniu z zeszłym rokiem 40 punktów niżej, mieliśmy 200 punktów obniżki, mówiliśmy o wpływie mniej więcej 15 plus base points, we are more or less exactly what we communicate, so there are probably no big surprises. These sensations remain unchanged. The share of loans on a permanent stop in the whole of loans remains at the level we were talking about a quarter ago, i.e. almost 60%, 58%. Here, too, maybe it's worth saying, because we also got such questions sometimes about Why is it staying at 58 and not growing further? It is worth saying that this 58 refers to such structural hedges, more long-term. We also have part of the portfolio on such short-term tactical hedges. In addition, there is a part of the portfolio on short-term loans, also on one-month VIVO, it is not secured and probably will not be. We also have part of the cash loans on REF and REIT. We also leave part of the portfolio of loans which is some kind of a buffer for prepayment, so actually there is a big difference in the future, we should expect, although something that we are trying to do is, of course, as the duration of this hedge falls, and we try to neutralize it with new transactions, to maintain this efficiency at a high level. That's probably it when it comes to NII and the provisional result, and we also have a question about the costs. What will be the overall cost dynamics and, of course, the question about the integration costs in the year 2026 and whether they will appear in the following years. What can I say? Integration costs. In addition to rebranding costs of PLN 250 million, which we have already communicated, In addition, we will have more or less the same amount as the impact of integration costs in the 26th year. Of course, there is some respect at this stage of the project, but I would rather accept it for the maximum amount. We will provide more details here in the next quarters. Maybe it is also worth, from the point of view of forecasting quarterly results, maybe you are interested in the distribution of rebranding costs. As you can see, in the first quarter it is more or less a quarter. but in the next quarter it will not be so equal. I think that we will not make a lot of mistakes assuming that in the second quarter it may be half of these total rebranding costs, and then the third, fourth quarter, this balance sheet already distributed evenly after 1.8. When it comes to the distribution of integration costs in time, the remaining amount, in addition to what you see that is already in the result account in the first quarter, I think that it can be assumed that it will be distributed more or less evenly in the next quarters of this year. And at this stage, about the costs related to the integration of the next units, which actually I will not say because there are no exact predictions, there will probably still be something from the point of view of amortization, it is rather not, because most of these costs are OPEX in this year, but something there in 2027 will probably still happen. we will inform you about it at the next conference. And the costs in general, how much they will increase, you can see that in the first quarter, these one-time costs, not only rebranding, integration, but above all BFG, they affect us on the cost list. If we took out all these costs, as Michał said, it's actually quarter to quarter, we are almost unchanged in costs. for this year, I think that it can be assumed that the increase in general costs will probably be some 4-5% if we turn off all these one-off things.

There is also a point related to the last question in the judgment on consumer projects. Does it mean losses for you? Here, perhaps the most important information is that we do not apply, i.e. we do not we are taking interest from the cost of loans. It's been a few years since we haven't used this practice, despite the fact that since 2014, the provisions of the Consumer Credit Act have been introduced in order to allow the financing of non-interest loans, We believe that this claim is contrary to this law. It is contrary to the WOKIK position from 2012 and 2013 and the WOKIK positions of the European Commission of our government presented in the process before TSUE. But there is this sentence. i w postępowaniu, które nie oceniał możliwości stosowania sankcji kredytu darmowego w przypadku stosowania praktyki sprzecznej z treścią orzeczenia. Jedynie się wypowiedział, że naliczanie odsetek od kwoty kredytu, która została przeznaczona na pożycie poza odsetkowych kosztów kredytów, że sprzeciwia, ten wyrok sprzeciwia się pobieraniu tego typu this type of interest. At the same time, he claims that something like the value of money in time exists. We are still analyzing this sentence in detail, what it may mean for us, but it seems that, first of all, there will be more of these questions concerning the free credit sanctions. I would like to remind you that in February, the SUE sentence talked about the possibility of using the free credit sanctions in the event of information obligations violations. There are no violations of this type of information. In my opinion, this is still a case that will continue which will be interpreted. We have after the 23rd, in the second instance, that is, after the TSUE sentence, we have three won cases in the Regional Court in Warsaw and in the Regional Court in Zielona Góra. So we'll see how it will continue to form.

There is one more question about Capital and emissions. How do I know that the Group will no longer meet the requirements of TILAK in relation to the change of the strategic shareholder? Will it influence the policy of banks in terms of capital? Does the bank plan to have regulatory consent for the payment of suspended profits? Is the emission of AT1 planned? The question is multifaceted, so maybe one at a time. We are no longer TILAK. Of course, we are bound by the requirements of MREL, which are lower than TILAC. This means, in short, probably lower emissions. Our next emissions will probably take place only in the autumn. What will be the amount, it is too early to say, because it also depends on the increase in the IRWA balance and depending on the amount, we will decide closer to this emission, whether it will be on the market whether it will be on the domestic market or on the foreign market, of course, it will also depend on the market conditions, but rather emissions can be expected from our side only after the holidays. It will not be an emission, for sure, AT1, taking into account our capital situation, at the moment we do not need it, this emission will be senior non-preferred most likely, And as for capital, yes, we still believe that our capital surpluses are very large and we have this capital at a very high level and we will be in contact with the regulator, we will talk about it. As for suspended profits, it seems to me that there is clarity that for those years when the criteria have not been met, these suspended profits will rather remain in the capital, which does not change the fact that Our capital factor is so large that it is sufficient to address as many risks as possible, not to mention that they would first have to go through the result, to address the necessary growth, which, as you can see, is and we have the capital for it, but the increases are, in addition to this, very large, so we will talk about it in the future.

Thank you very much. Thank you for your questions. Have a nice day. Thank you. Goodbye.

Goodbye. Goodbye.