ING Bank Slaski

Good morning. Welcome to our conference where we are going to sum up the results of the first quarter. Let me introduce Brunon Bartkewicz, the CEO, Barona Graczyk, the Vice CEO of Finance, Iza Rokicka next to me, responsible for investor relations. I'd like to thank you and welcome if you are listening to us from your screen and also at the venue. Brunon, over to you. Can we begin, please? Hello, good morning. The first quarter of 2023, we're in May. We're talking about March. In the meantime, as you all have noticed, a lot has been happening and will be happening. It is definitely another very interesting year for banks, including ours. And we make a lot of effort to make it boring. and constant, persistent growth in number of customers, more and more transactions, bigger transactional and sales activity. Those are difficult times for customers, high percentage rates, low predictability, a lot of good news and bad news at the same time, and all of that surrounded by the atmosphere of war and geopolitical conflict. Those are interesting but difficult times to make decisions, but times to make decisions here and now. And we are trying to be there for our customers. We're very happy to see that more and more customers are here with us too. It would seem that this should be a time where customers are looking around and looking at what's happening around them. But if you do look at page four of our abridged release, the number of growth of the customers, both retail and corporate, are good, good figures. Just as if times were steady and peaceful, which is very good news for us because it means that we are there to do something when needed. Client volumes year on year are looking quite good. And certainly what is a problem for all of us and a social problem is the fact that residential construction and mortgages are on a very low level. You will all have heard that there are signs of it picking up in March and April, but it's picking up from a very low baseline and a very slight pickup. let's not fool ourselves, this year will be rather weak in terms of mortgage loans and the adaptation of individual clients, retail clients to the situation on the market. The growth in the area of financial funds, we have seen some for two quarters and purchases of funds, not just bonds, deposits. well though those are flowing for acquisition campaigns of various institutions so it's proportionate so we've got a subsequent period of some tension in terms of trying to stabilize the bank's positions a big growth of deposits but a very low credit loan activity at the same time so the balance is going to a situation where it would seem that the rates should drop, because otherwise if they grow, and no one's speaking about that, we might be seeing some problems in the sector. So, at this bank we are trying to put our tasks into practice and continue what we always do, and we try to do regardless of the macroeconomic picture, and in my view we are doing quite well. we're quite successful. Our market share is growing relatively. There are some fluctuations depending on the quarter, but the trend, the increased trend of our market share is and continues to be there, which translates into what you see on page six, changing volumes. When we look at deposits from clients and those that are on the Bank's balance sheet is 20 billion year by year, and the loan activity is growing by 8 billion. It's not so bad. We were expecting lower figures this quarter. But what we're hoping is that this is a period of the biggest stagnation. Let's not use the word recession. I don't think it's justified. But I think that this is the time. So these are not record high figures. But in terms of the deposit volumes after this period where there was an outflow of cash towards bonds, well, this is what we're seeing right now. The situation shows that we're not far from the market average, actually, in this department. This translates into more stability in market conditions. looking at also the stability of the portfolio where we don't see major changes or what you seem to be asking about, a deterioration of the quality of the credit portfolio. You can't see that really in figures.

And this is not the outcome of the fact that you can't see because there are

You can't see this. We will see whether the moratoria will have had any influence in about a year or two. I can't see any reason for that happening, looking at comparable data. This translates into financial results, which, to be honest, are not far from what you are expecting. So I think we're going hand in hand here. The main difference is in the cost of risk. which is hardly a surprise. You're not aware of all the mechanisms that are the components of the macroeconomic models. So, more or less, we're looking at similar outcomes. Page 8 is a traditional slide of ours, and that's meeting our strategic goals. This pertains both to client activity, so the growth in numbers, and their activity. Through that, we measure whether our clients are still there and trust us and we are important in their lives, which allows us to model their stability and predict future and adjust accordingly. Regulatory compliance, a very important topic. That's our passport to operate further. There's a lot of changes and there will be more. you probably will be asking us about that so we have full compliance here with the rules and it seems that we proactively and conservatively put in place what we're being expected to do employees most important asset that we have here the situation is stable it is good both in terms of vacancies recruitment and employees data processing data modeling IT compliance we don't really have any problems practically with resources a safe and secure IT systems very good outcomes here recently, but we are making a lot of effort there to make sure they're adapted in the long term. We make sure that our architecture is apt for smart technologies, so smart contracts, cloud, and the whole project of changing our architecture, including vault by top machine as a concept. So all of these topics are in progress in the pipeline and they are progressing at the right pace. We are disclosing here to you our cloud rate. We're only launching this process, but it's active and it looks good. And some figures in ESG, we are not forgetting Ukraine. One new component was The very tragic seismic quake in the areas of Turkey and Syria, we did some funding and made a contribution, and we were successful because such were the needs of the local market. And I think we were quite quick to purchase 14 big tents. It cost 14 million zlotys, but we were able to procure them. It turns out that there's quite a number of suppliers here in Poland. It can host 100 people, and it's heated. One can host 100 people. We were able to organize supply to the province that needed them. So that has been our response to the events of the first quarters. This is very painful for us. I'm going to be open because due to the earthquake in Turkey, five of our colleagues, employees of ING, died. So additionally, that was meaningful for us. Now, Ukraine, power supply is not stable. So this quarter, we purchased power banks, advanced photovoltaic power banks for our colleagues. from Ukraine so that they could operate even with power cuts. They could continue with their lives and work. But I don't want our results to be dominated with tales about tragedies happening around us. All right then, perhaps maybe some more details about the results from Borena. Good morning. A brief summary from us of the financial results of the bank in the first quarter. Our profit, 909 million. That's a 15% growth year by year. I've been reading your comments and I hear that this is slightly higher than the expectations and consensus. One point here, our trading results in the first quarter indeed, it grew significantly and that was the result of the market activity of our treasury and financial markets. especially against the backdrop of currency and derivative transactions. Our cumulative ROE at the end is 10.7. It's only just above what it was the quarter before. Since it's a cumulative indicator that also takes into account the extraordinary costs of last year, this is below our long-term strategic goal, I must admit. The interest rates adjusted results, as you can see on this slide, grew by 6% year by year. and there's been a slight increase by one percentage point quarter by quarter. That's 1.37 billion zlotys. The interest rates margin dropped to 3.39 quarter to quarter from 3.05 a quarter before. The main reason of this drop is the slight decrease of profitability of assets together with dropping VBOR recently, and as you can see here, consistent growth of financing costs, but revenue grew by 3% and the cost of interest rates by 7%. impact of credit holidays was marginally positive, plus 23 million in the first quarter. As you can see as well, due to the large dynamic on deposit volumes, seeing the low demand for loans, that means that our rate show is down to 77 and is far from the optimal ratio. Now for commission, it's 524 million in this quarter, up by 2% quarter to quarter. And year by year, it's dropped by 5%. And what you can see here is a growth for financing is by 15% quarter by quarter and 9% year by year. This is the outcome of the settlements of commissions and the increased volumes in this segment. You can see that through the lens of changes in the balance sheets. What you can be happy about is the brokerage results growth and we're quite happy to see the net inflow to investment funds this quarter. We can see the net value finally of this From the perspective of what happened last year, this is still a negative trend, minus 29% year by year. Now, regarding exchange, this quarter, this item has dropped by 8%, 2% year by year, and a decrease in transaction, both in terms of their value and the... and the volume. Credit cards, we have an increase of 3% year by year, quarterly drop of 12%. We can see some seasonal fluctuations resulting from quite a lot of activity of clients in the fourth quarter and significantly smaller activity in the first quarter of this year. Now, for the fees for client accounts, there is a decrease in the revenue in that item due to the fact that clients are giving up the fees for credit balance, and that results from the drop in interest rates, costs. 1.163. This is a growth of 7% year by year and 37 quarter to quarter. And I think that I will perhaps stop here for a while. On the one hand, we do see changes in the regulatory costs. As you can see, due to the change of the DGS fund, Banks, including ours, were not charged with contributions to the guarantee fund, whereas last year we paid 54 million. And we also noted a lower fee to the restructuring fund. Last year it was 173 million, and this year we've got the BFG informing us, and after our results from the first quarter, it is 154 million. the resolution fund. It's worth noting down that we've got a slight change in how this is calculated and as a result the bank levy levels due to the changes earlier this year because Bonds guaranteed by Treasury and REPO have been excluded from the base used for the calculation of the levy. You can see an increase in the cost, quite significant. That's 21% year by year and 22% quarter to quarter. 20% quarter to quarter. And you will have noted that the quarterly increase results from the fact that in the fourth quarter, these costs were significantly lower than... the previous ones we commented on that that was due to some of the projects that were completed below the costs predicted and that trend is not observed in the first quarter the increase in the operational costs is the result of inflation and an increase of the costs that follow inflation, increased costs of goods and services, and the cost of labour that's also increasing. So I think these changes should not be a surprise to anyone. From the point of view of increased costs in our bank, they are similar to what we're observing also in the first quarter in the banking sector.