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.

In terms of personal costs, they have grown by 17% year on year. That is a result that obviously that is a result of the pay raises that we have introduced as a standard in April. So that is a regular increase. and visible element of the ONIA change. We have also changed the employment structure at the bank, another factor that causes changes to the average pay of our staff. A brief commentary with regard to the cost of risk this year. This quarter, it totalled 88 million zlotys. This quarter, we have not to have decided not to set up a reserve, a provision for the franc portfolio. After last year's developments, we have not sold any regular portfolios, but what you can see here, Well, we have noted a positive influence of macroeconomic factors, 158 million of positive factors, 14 million accountable for the retail sector and the remaining part corporate sector. That is an expected outcome of changes to interest rate. interest rates part, obviously, of the risk factors. Were we to summarize the cost of risk, well, or legal risk costs, barring the franc provision, 44 basis points. This is what it comes up to and this quarter, to be specific, 22 basis points. As aforementioned, On slide 15, we are presenting the portfolio quality for the bank. You can see a low and stable share of irregular loans in the overall bank's portfolio. We have only recorded a brief increase by 17 basis points in the corporate sector in the third quarter, but those actually increases are really minor. and only applying to that particular group of clients. Another thing that is quite visible is the observable drop in the share of the Stage 2 loans. That is also the effect, the outcome, and impact of macroeconomic factors, which naturally have also impacted the decrease of the stage two loans in our overall portfolio. With regard to capital adequacy, at the end of the first quarter, our consolidated total capital ratio reached 16.37%. The increase you can see here has arisen from the 1% increase in the ratio as a result of the General Shareholders' Assembly decision concerning the distribution of profits for 2022. And the positive results, positive outcomes are due to the delayed taxation payment or postponed taxes, deferred taxes, not to mention the fact that the grace period for correcting the equity value given debentures is now over, not to mention the fact that we are also amortizing the outcome of the quality of the portfolio for the implementation of IFRS 9. We have also received a decision of the guarantee of the banking of the bank's guarantee fund, and our quarterly report reads that the minimum levels have all been conformed to. We have reached the ratio with regard to the weighted capital or weighted assets. is absolutely adequate. That is also the direct outcome of the previous decision, the previous one having affected the interim ratio all in all five percentage points below average. That is also the effect of the decision through decision to take out a MREL loan for the next six years. Now that is all in terms of the results for the first quarter. Please ask your questions. Time has come for a quick Q&A session. Over to you ladies and gentlemen. Good morning. I would like to request more detailed information concerning the corporate loans portfolio, because you decided to show general outcomes, including leasing and other factors. Now, last week, the president of the of the debts office has pointed out that actually irregular the ratio of irregular loans has risen. Have you noticed a similar phenomenon in your bank? And thirdly, have you been affected by the change to the viable? Have you actually received any Have you been sued, for example? Let me comment, if I may. Now, with regard to the quality of our loan portfolio, I understand that you're asking a question concerning our products. Well, what we are showing here is a bunch of consolidated data. Basically speaking, specifically with regard to factoring portfolios in particular, they are very high quality and they show low irregularity ratios. The leasing portfolio is performing very well as well. So those are our... most observable phenomena in the bank portfolio. We are not showing the portfolio breakdown by product. In terms of mortgage loans, well, our presentation has, well, proves that we are basically not observing any phenomenon of deteriorating mortgage loan quality. Irregularities are really low. The portfolio is high quality. With regard to the Swiss franc portfolio, well, we have such a minimum share therein that it does not really affect our general situation. Well, we are aware of the credit information bureau. We have actually applied to the office with a request for clarification concerning their methodology. in order for us to be able to compare what we are recording with their recordings, with their records. I must say that we have been astonished ourselves to learn what they published, but possibly the devil is in the details. We are not aware of the Credit Information Office's methodology, so we are not aware of what that particular ratio means. And the third question? if you'd care to repeat. Well, you do know of the Katowice case, which obviously triggered an avalanche of debates concerning the topic. You probably know that the primary decision of the court pertaining to the suspension of repayments differentiating between the capital and the interest. Well, obviously, we are aware of what viable means. We are learning whatever we can in great detail. I would like to emphasize that with regard to greed-driven activities, the market is being tested. As in the case of the Swiss francs, obviously, we are trying to focus on such news that, for example, that the customers had not been properly informed At the outset, when taking the loan, that revival may change. I don't think that makes a lot of sense, but it goes without saying that we are definitely going to be witness to the justices' decisions. bias, if you will, or lack of being tested because there is a lot of money in it. I would like to draw your attention through the KSF representatives' comments. With regard to what they have said, they have made a very firm statement concerning Weibo. Nonetheless, I believe that it really makes sense to consider the nuts and bolts of the mechanism. So, yes, the Financial Stability Committee has made their comments, that is KSF. I definitely think it's worth our while to consider the nuts and bolts of the mechanism because there is a lot of money in it, or behind it, if you will. I would like to ask a question concerning the deposit market and the huge accruals or increases. Considering the loan portfolio and the rather low interest rates, I believe that what we are observing and you are observing is a reverse trend to what is observable in the U.S., where the loans are now shrinking. Could you please now tell us why such a huge number of deposits are coming into the sector? Well, you're actually not asking a question concerning the bank. You're asking a question concerning the overall sector. There are two aspects there, too. On the one hand, we have customer behavior, and on the other, we have the methodology as such. In terms of methodology as such, I would like to draw your attention to the fact that income Customer income in Poland is now growing year on year considerably. Remunerations are growing. And with regard to the volatility per period or per quarter, we have noted huge accruals because simply people have more money to be spent given their remuneration, but also because they are getting rid of financial assets in other areas, not to mention the cash surplus that we are definitely still facing in the wake of the pandemic. Do you remember the payout campaign that we were witness to at the end of the first quarter of 2020, that's, you know, 40 billion zlotys were at stake. Things are obviously happening very gradually. We have higher influx and higher spendings also tying in with higher consumption. People are simply spending more on consumption. The year-on-year trend has been distorted to a certain extent. Last year, People were only getting prepared for bond investment because they have not really been suffering of the outcomes of interest rate increases. Now that trend is slowly but surely coming to an end June, July this year probably. Which ultimately means that money is flowing in a great golden river into the banking sector. It's true, but it is not fully certain. We are by no means certain that this is there to stay. Nonetheless, it extends beyond the attractiveness of individual offers. Now, with regard to acquisition and retention offerings, in all probably you have already noticed certain tensions between banks, whereas were we to only consider the untreated records, unprocessed records, the revenue is definitely high. Nonetheless, that is the condition as of late March. I would like to point out that in all probability, or possibly, we might have to be patient and wait and see whether the trend is there to stay. A lot depends on consumption. Consumption in all probability will remain high, as suggested by trends. So people are spending, but people are also saving on their regular or current accounts. Now, is that the effect of fear? Are people saving out of fear, or are they saving for other consumption purposes? That is the question. For example, some are definitely saving to, let's say, purchase a flat later than originally planned, or are they simply accumulating cash? It is too early to conclude. And a related question, if I may, what is your opinion concerning the competitive struggle for deposits. Some banks have suggested that this competition is lower, which is apparent in terms of the term deposits. Well, it depends who sets those deposits up. Let us consider the current promotional campaigns, the offerings structure in general. Economically speaking, it definitely seems that banks ought to be shifting towards other offerings in terms of acquisitions and retentions. But, for example, given the media campaign, it is not necessarily so. One would be definitely hard-pressed to make a general conclusion concerning the market. We are definitely observing a certain market play, acquisitions versus increases in fees. When raising fees, obviously any bank will engage in an acquisition campaign in order to calm their customers. It seems that offerings ought to be dropping. This is exactly what we thought in March. Nonetheless, April and May have shown slightly different trends. It seems that 8% offerings ought to be vanishing off the banking market, whereas we have seen 8.5% offerings, even in May. Yes, isolated, but yes, they are there. So there is no such thing as a uniform trend. A uniform trend ought to be suggesting that things ought to be on the decline. And last but not least, I would like to ask a question concerning your costs in the first quarter. I would like to ask whether the cost is the new normal because the dynamics over 20% year on year minus regulation costs is a novelty. It used to be a one, not a two in the double digit, as the first digit in the double digit ratios. Well, what we have been observing is an acceleration of costs unquestionably in terms of commodities and services we are purchasing. We have noted a certain phenomenon of delay. In the early days of the inflation rate, the costs were not growing in proportion to inflation. Nonetheless, they have now reached the historical inflation levels. They have even actually gone well ahead thereof, giving rise to new inflation expectations, which means that we should probably get used to the thought that costs shall be growing in the banking sector and that historical cost levels are The cost of services are obviously different depending on the field that they pertain to. So with regard to your question, yes, in all probability, that is the new normal. Thank you very much. Now let us move to the Internet questions or online questions. Let's start with those concerning financial performance. Santander, among others, have asked, for information about the rate of pay raises this year in April. What kind of percentage are we talking about here? I am somewhat reluctant to show the increase because it is a somewhat ambiguous record. Whatever we could tell you now would in all probability give rise to misinterpretation in terms of the big picture. We are sticking by our declaration that our staff's pay remains attractive in comparison to what the market offers. I would also be inclined to admit that given an overall peer review, which is a regular practice of ours, not only in comparison with the banking sector, because actually not only the banking sector is a benchmark for us in terms of competing for talent. Nonetheless, we have moved towards an increase in the attractiveness of our offers and

pay this is mostly because we were expecting that this trend would be more pronounced so we have good salaries things are doing well and the trends are correct so the rise in since the 1st of April, of course, that's quite impactful. If you can just wait a moment, you will be seeing that in the results of the second quarter, for sure, and those will be quite unambiguous figures, but they will take into account many factors. I'm not going to just talk about one factor because you will then draw your conclusions about the overall tendency in remuneration and the structure of hiring. But this has been another year of decent salaries vis-à-vis the market, and even higher than the market average. But the numbers and figures published by companies, well, that's a very complex process, not just basic salaries. And since we're not disclosing that in the report, I'm slightly reticent to give a response or reluctant to give a response, but it will be more symptomatic in the second quarter and you will be able to draw the right conclusions, rest assured. Okay, let's move to the next question then. Ipoh Pema, when can we expect the decision on the potential dividend from the profit of 2022? If the ECJ verdict is convergent with the Ombudsman's opinion, should we exclude a dividend? Objectively speaking, the reason why we were given a warning from the Financial Supervision Authority to not hurry to pay a dividend, all of us have been notified about that on the market mostly probably links to the ecj verdict i would probably not want to actually make a prediction of what this decision is going to be i have no idea there that's hypothetical and there remains the um multitude of details and interpretation as to what it actually means. The calculation of supervision authority pointed towards a gap in the Commission's, quite a meaningful one, so you could boldly say that the sector is facing some challenges in the area of profitability and we need to make the right adjustments and see to what degree that is present and on what level the provisions need to be created due to that situation. We are disclosing some information and already now you can easily get access to some information that is the relationship between the level of provision making for legal disputes and Swiss Franc settlements. These are the other entities on the market Right now, PKI USA and us have higher ratios than other peers on the market. So it's not as if we are trying to figure out whether those costs are going to harm the bank. Still, we are talking about a burden that's present in the whole sector. So until we know the ECJ verdict, we cannot really make predictions about paying the dividend. I think we described that quite in detail. And that was the intention of the financial supervision authority. Now, announcing the date of the verdict, in my view, is not a sufficient reason to make such decisions today and announce them. Okay, to continue the Swiss franc topic, there are other topics. Can you see an increase in inquiries about credit history and to what extent do the lawsuits pertain to mortgage loans that have already been paid off. Our portfolio, let me say the following, is so small that I don't think it's a good point of reference here for the evaluation of such phenomena. Obviously, as you can see, the number of these lawsuits is growing, but it's 1,121 pending cases. 129 million zlotys is the amount, so it's really not a very big amount. And those are just dozens. And the resolved cases, well, we have 11 of them for, and only 27 for mortgages that have already been paid off. So those are really just residue results here. And A similar trend can be observed for loans that have already been paid off, where the number of disputes is also quite insignificant. We have to see this through the right lens. Well, when we look at the number of Swiss franc loans, uniquely Swiss franc loans is just over 6,000 in the bank's history. So we could say that those that are still active, well, we have just over 3,000 of them. So just to see the proportions vis-a-vis what we see on the market, And when we talk about gross amounts before the provisions are made, it's 145 million francs. The francs are probably the simplest form of reference here due to the dynamic. So all foreign currency mortgages, in our case, account for about 0.7 of what's present on the market. And if we look into the value of the security that we have, I think we can say that it's 0.26. not 0.026 of the percentage point. So we can see the increase. Do we see the increased interest of customers that have already paid off their mortgage? Yes. But let's remember that if we've had five people and now we have 15, well, then that is a significant increase of interest. But these are not figures still that would indicate that there is any increase any area of risk. Whether this is happening throughout the market, we don't know that. But naturally, the verdict and the communication from law firms automatically increases the interest of people who have already paid off their mortgages. In such cases, apart from court cases, let's remember the bank is quite active In the area of our settlement out-of-court settlement program according to a logical concept that President Yastrzemski presented a while ago about three or two and a half years ago so Yeah, we we have quite a lot of these out-of-court settlements and and these Proceedings are picking up the pace. It would look that people should sit on it and wait for the verdict, but let's remember that the mediation processes are also in progress, and that is not something that happens overnight either. So it's all in progress. It's all in the pipeline. But we're definitely not an entity that's representative of the market in this area. Unfortunately not. you heard our market share in this department. So I don't think on the basis of that you can make any conclusions. Okay, so just to wrap up the Swiss franc topic, have bank presidents really heard from the president of the financial supervision authority that there will be no act of law for Swiss francs and what are the predictive, The presidents have heard that there will be no Swiss franc act before the announcement of the ECJ verdict. And the ECJ verdict is going to be announced in six weeks. But we have not heard that there will never be an act. That's not the type of news that we've been given. Okay, going to another storyline, OCR, a significant increase of this ratio. What is the bank's plan to use the surplus in liquidity in order for it not to impact the financial results? Okay, let me take this question. Ladies and gentlemen, I think I've already answered this because from the point of view of the deposit surplus. I just started to make some quick notes during our conference and made some calculations. 20 billion ING, PKROSR 22, MBank 20.5, and that's the argument. From the economic point of view, it looks as though the banks should lower the interest rates of deposits. Will that stop the increase? Will that stop the cost? Yes. Will this socially be acceptable? No. Because nobody will understand in any case why banks should be lowering the interest rates of deposits when inflation is of 16%. So the banks have to offer deposits on the level of 16%. The level of awareness and economic education, well, is such. Banks are not treated as commercial entities, and they are. And that's why there's a problem understanding what's happening. So it's a very pertinent question, but it's not clear economically. From the technical point of view, let me add, of course, this is the outcome of the inflow, but also, on the other hand, the quality of the assets, the deposits, from the point of view of their stability. And what's particularly meaningful is the retail funds inflow that are of the highest level of stability. So they mostly impact the level of ECR. Also the clearing houses securities quality has improved and that has significantly impacted this ratio so the balance sheet structure has been changed slightly but also the changes that impact the whole technique of calculating this ratio let me tell you a story we're probably wrapping up soon so maybe the time has come to say to talk about anecdotes once upon a time there was a bank not a very big one and suddenly deposits started flowing in in large amounts because expectations on the increase of interest rates have made clients collect cash in deposits. So the bank then put this money into financial instruments that were available. Nobody took out loans, so it invested in government bonds. And it was either an option to do a short-term in order to create a liquidity buffer and then make a loss, or to put the money in for long-term deposits. And once the interest rates grew, there was a loss. And that's what the bank did. Customers started taking out the money quite abruptly and the bank started to realize the loss. And once the loss reached 1.8 billion, then the customers took the rest of their funds and the bank went bankrupt, signed by SVB. Okay, we've got questions from that poll. Let's go to those. Is there an outflow of deposits noted by the bank when there were banks in SVB and Credit Suisse? No. What was the purpose of lowering transaction limits in the retail sector? Increased transparency and protecting our customers from fraud attacks. It seems that the amount, the lower limit means that the potential for robbing our customers, our clients, is lower. And the wave is still significant. We need to push that wave off. It is not convenient for some clients, I know. But when we were doing the profiling, we came to the conclusion that such actions are fully justified. OK, let me just add, because this doesn't mean the client may not take out a larger amount, you just have to make a phone call. But it takes longer than one click, but it's safer due to the fact that Poland is a country where paying out funds can be done really quickly. So to close the chain of money that has been fraudulently taken away from customers is very quick. In other countries, there is a D plus one, D plus two transfer principle. In our country, the money flows instantly. It gets transferred very quickly. You can do that over half an hour. You can transfer money to 15 banks. We are vulnerable to such fraud, which means our clients are making losses, and that means we have to take actions. at the expense of the comfort of few, they protect also few, but from making a huge loss. And that's the choice we've made. Okay, to continue. The risk of outflow of deposits using the big contribution of remote channels is a soft spot for the sector. Yes, looking at the element of trust and guaranteeing. The situation of SVB, that's our reference point, I believe, the level of SVB, well, they never had a liquidity contract with the regulator, so they did not have the certainty. Plus, number two, the $250,000 alleged guarantee level for an entity that held money in SVB, venture capital, companies, startups, well, that amount, they had more money than the 250,000, right? So when you guarantee 100,000 euros in Poland, 450,000, that is a very high amount of money. vis-a-vis the percentage distribution of clients that have accounts with us. And we could see, observe such a reaction for companies, but here we do not have an extended duration in the portfolio to that extent. Now, if we look at that, that situation varies significantly. And the quicker pace of payouts and the quicker flow of money in Poland, which I already mentioned, that's very quick and very easy, but that doesn't mean that it has to lead to this amount. Regardless of this tending of the Polish bank, we're not looking at large outflows of guaranteed funds. We have seen some stories quite recently and really nothing much is happening there. If you have 20, 50, 70,000 euros and 100,000 is guaranteed, Polish people know that very well and they perfectly stay inactive because there is no need to take action. So those conditions are completely different. There are some fears about the quality of commercial real estate in the US and Europe. Are we seeing similar problems in our market? We certainly see these points. The quality of the portfolio depends to a large degree on the valuation of the real estate. In some areas and in some states of the US, we are seeing a 30% decrease So there are expectations that this might spread throughout the country and might impact in engagement and that's justified. Some banks have a surplus and that's how the American market is constructed, a surplus of an engagement in that sector. So this is a question of PacWest to a large extent So, well, the decrease of value by 30% is painful and is dangerous. Well, so far we have not seen such trends in Poland because even for commercial real estate, I would say the verification is on the level of zero or positive. Perhaps some impact will be seen in Europe. There's the factor of ESG. If some commercial property requires huge investments in order to meet the ESG requirements, then this could become a problem. But also, thankfully, it seems that Poland is somehow free of such risks because we have a portfolio of commercial properties that are relatively young, new. And that's the advantage of a country such as ours, which is growing. there are other countries that have a significant proportion of commercial properties built back in the 60s or 70s and that's a whole different situation. So I see no reason for what's happening in the US to transfer over here or to be able to in fact somehow the Polish market although undoubtedly there'll be more checks and investors will think about it.

That will definitely make investors think. They base their thinking on their portfolios. So I don't see any reason for that, although we may expect a reflected echo. Now let us move to other questions concerning the net interest rate performance. The negative hedging outcome is now by 50 million lower quarter on quarter. Is that a result of the Vibor change or is that the dilution, the outcome of the dilution of old hedging instruments? Let me tell you the following. That is the outcome of all factors as a whole. As we have told you, all instruments are dynamic and are following the Vibor change pattern. There is also a request to discuss the interest rate performance sensitivity to changes on changes to the market interest rates and changes to individual credit categories. In terms of margins for individual products, this is a question of the kind we do not answer. Now in terms of the vulnerability to changes to interest rates, let me reference, once I find it, what we revealed on an obligatory basis in our annual report. Let us bear in mind, however, that the balance sheet and interest rate structures have changed, so 100 basis points, yes, 100 basis points. Now, in the annual report, our vulnerability to the shift parallel shift by 100 basis points was 140 million minus 349 linearly but please consider the circumstances and changes in time which ultimately means that this may not necessarily hold true for the future in terms of margin structures. Now, there's also a question concerning the bank's MRL requirements. As we have already said a quarter before, depending on the VAS levels and the equity structures, that is a critical element. These needs have been estimated at approximately 5 billion zlotys this year. Now, with regard to the interest rate performance, is ING planning to expand their offer to include Treasury bonds as BKO, BP and SA did? ING has already been expressing the will to introduce such offerings several times. Thank you. There is a question concerning the mortgage loans, the 2% mortgage loans. Will the bank join the new programme that is now being proceeded in the Parliament? What are the risks and what is the overall potential impact of the 2% mortgage loan on the overall portfolio? Would you expect rise in demand or distortion to your portfolio structure. We do not expect any major impact on the market. Moreover, our operational principles include transparency, operability and capacity for the full awareness of the consequences of decisions made by our clients. Now, in case of an offering, that I believe is misleading when referred to as a 2% offer should give rise to a number of questions and doubts all boiling down to the question whether we are capable of structuring and delivering a mechanism allowing our customers to truly understand the product even over the entire 10-year period of that subsidy. So we have not yet made a decision. We are waiting for the mechanism to take on its ultimate form. And nonetheless, I would like to emphasize that I am trying to tell you and inform you what is the vantage point we will take before making a decision. We are considering the option. Nonetheless, we believe that the most important thing to consider are the consequences to our customers, including those consequences that are invisible. Also, given the relative inexperience of anybody buying a piece of property for the first time, we believe that This gives rise to many risks. Young and thus inexperienced customers are frequently incapable of making a conscious decision for the next 10 years. Now, should we compare their age? to the age of complete maturity and self-sufficiency, 10 years is a long time. That goes without saying, so the list of questions would be humongous. In closing, we have more general questions. Let me start with the following. Is ING planning to introduce the buy now, pay later mechanism? Deferred payment and other Well, we have already had such offerings. And Twisto, for example, how is Twisto developing? And payment of financials, to what extent have you taken that market over? Well, the two are completely separate. Twisto is a structure. designed to support buy now pay later We have even made an equity investment. We had an actor willing to be a very aggressive player on the market. Well, things have happened to him, got tangled up in his own bootlaces. You are all very much aware of the work performed by BSPA company we are shareholder in and the related Millennium pilot. project so we are taking a close look at what is going on and we don't believe that is going to be a game changer so I don't think we need any further deliberations. Now Paymento is a company that has been with us for a long time and Paymento has become part of our infrastructure of our software infrastructure Consequently, it was really, really advisable to make sure that nothing is going to happen to them. We actually made a deal with the owners of Paymento, including those who are now remaining operational. We agreed that we are going to take a slight shift through the partnership structure. We are going to be the ultimate owner. Since that is good for both sides, we made a deal. In 2021, the bank formally sold shares in Twisto as a result of the mergers and acquisitions market in Europe. Now, I have the final two general questions. You are a bank hugely competent in technology. How do you see the development of AI technologies in finance, especially given the tremendous progress in technologies such as chat GPT? When will AI-based solutions be made part of your offerings and what kind of works are you engaging in now in that particular field? Okay, everything is correct apart from the tense. It's not when we, when are we going to do it, it's when have we done it. Technological revolutions are all about evolution. The presence of AI, regardless of however we define it, is already part of structures of evolution. regular companies who are using AI very extensively, it goes without saying that cognitive models are picking up speed, picking up amazing speed, which obviously is a regular thing for any exponential growth. And at a certain point in time, it becomes part of the media fashion or fashionable media, if you will, and everybody talks about them. Now, nonetheless, you are going to stop talking about the explosion of AI and chat DPT in a couple of months and we are going to be still at it. You are talking about it to us because it is fashionable. AI structures are capable of talking to us today, and you know that. You all have smartphones, not to mention your car systems. It goes without saying that this world will be developing. ChatGPT was indubitably something of a violent step in proving what it can be done. Nonetheless, the use of GPT-4.0, to be precise, with the structure of allowing the system to be populated with our data, that's a song of the future, not least in view of data protection. Nonetheless, we have been confirming the inevitability of the system and mechanisms for a long time. The cloud system in ING definitely also is proof of that, is evidence of it. The cognitive side in terms of Polish language progress, a battle we have been fighting for years and an obstacle to many solutions, it will definitely be conducive to populating different bots with data. Clients are slowly but surely getting used to it. The quality of these chats is definitely far from perfect. Nonetheless, the technological progress will make all new applications will actually meet the Turing test requirements. Boundaries are going to be blurred and it is definitely going to affect our decision-making schemes or schemas, if you will. Nonetheless, the revolution is happening elsewhere. Automation, improvements to productivity, the tool schemas we are all using, the phenomena triggering our imagination such as media and so on and so forth. Let me remind you of the December 2022 campaign. Those are all really clever gimmicks. Nonetheless, it goes without saying that we have for years now been facing a revolution whereby processes in the backdrop of our thinking have joined the machinery that is already there, and it definitely is going to be a player. Nonetheless, in order to do that, you have to reconstruct the IT systems. You have to open it up and decentralize it. You have to decentralize it, deconstruct it, and cloud it up, so to speak. All these changes, including the access forces and response time, all these components are pieces to the puzzle. To respond to your question, well, it is happening. It has been happening for years. It's picking up speed, just as everything will in its own good time. Now, in order to be able to take advantage of accelerated technology, you have to comprehend it and use it. The fact that we have been using it for a long time, in all probability, makes it easier for us to use it. Nonetheless, it takes more than being enchanted with gadgets. Using them properly is a totally different kettle of fish. Now, the tempo of that revolution is a different thing. You have been witness to technological revolutions for years. I would also want to add one other thing that Polish banks don't have any other way out. They have to shift towards novel technologies given the requirements we are all facing today. Failing that, Polish banks will not be able to survive. I don't know whether that had been the intent behind actions that are basically to loads on the Polish banking system to force us into progress. Nonetheless, they have succeeded in forcing us into greater efforts. That's great. I would prefer to have more money but it is what it is. Innovation is a presence whenever there is a squeeze. We are definitely forcing inevitable innovation. Okay, that is really a great moment for closing our conference because we have exhausted the great majority of questions that we have received. Thank you very much for attending our conference and do join us in a quarter.