Mbank Sa

Good afternoon, ladies and gentlemen. Today we will present the results of MBank Group in the first quarter of 2023. The speakers today are Mr. Cezary Stypułkowski, Chief Executive Officer, Mr. Andreas Böger, Chief Financial Officer for the last time with us today, Mr. Marek Lusztyn, Chief Risk Officer, and Mr. Marcin Mazurek, Chief Economist.

Let's start.

I want to introduce to yourself Pascal Roland, who is, as it was in the public domain already announced, he will be our next CFO. As you know, Andreas is departing us to take over his very important position within the Commerce Bank Group. And Pascal, who, by the way, was with us, you know, some years ago already, returns back, if I may say, and he will take over as of 1st of May. So he will be the sort of the new first counterparty to many of yourself. At some point, we'll organize, you know, person-to-person meeting, you know, of Pascal with a group of interested people. And I think that that will be the more formal introduction. since Pascal is with us today, I think that that's the good platform for him to introduce himself to our, to Ali's investors and the people who will be on a regular basis meeting with him in the next years.

First quarter. Wealth.

As you know, since many quarters, we strongly believe we have an exceptionally strong business model and a fine base which generates significant revenues for the bank.

And we believe that people will be continued.

But the first quarter itself was very strong. Net interest income has grown, you know, on a quarterly basis by 6% in net fee and commissions, slightly above 7%, though the first quarter of last year was weaker, if I may say, comparing to the previous. But still we believe that fees and commissions will continue to be at a reasonable level. Efficiency, which we are very proud of, you know, on a quarterly basis, cost income is at 33.4%. Very important aspect, which unfortunately we have to report on a quarterly basis, is how much money we put aside for Swiss franc saga. This quarter, as it was pre-announced a few days ago, we put aside 8.08 million. That will be explained during the course of today's presentation. So the core cross-profit, that means, you know, what we have produced in our core bank was 1.3 billion, 1.1 billion, 360 million slots. At the same time, we've been able to keep the capital ratios at the level comparable to last year. That will be explained later on. The balance sheet figures are I would say rather flattish means, you know, the loans has gone by 1.1% on the quarterly basis. So in the context of 2023, we have to admit that, you know, there was even, I think, slights that was 1.3% less than the end of the first quarter last year. Well, we are benefiting from the deposits. The bank is growing its market share with this balance sheet item on a quarterly basis. It's 3.9% higher on the annual basis.

This is almost 12% higher than the previous year. Let's move on. Well,

What's worse to mention is that the total income has reached 2.5 billion slots to 2.561 billion. Significant growth compared to the previous year. As I have said, I think that this is partly driven by the net interest income which we have signaled last quarter or end of last year that it's stabilized, but, you know, we are still benefiting from the growth of this line. Cost income ratio on the annual basis, as you see, if you compare, you know, we are running right now on the core bank, you know, and the it will be even lower. The reported figure is 38.7%. But when we normalize the contributions to BFG, this is lower at 32% was last year. And, you know, comparing to this year, 28.7% respectively, and reported 33.4%. net profit on the core business debt means, you know, deducted, I would say not take into account, you know, the Swiss franc portfolio. We have increased this by 41% compared to the first quarter of last year, reaching almost 1 billion slots. If we calculate our return on equity based on the capital used for the core bank and the net profit, which we have generated on this capital. That is, as you see, very attractive figures of 73.5% generated as a return on equity in core business.

On the capital side,

despite all these events, which we'll be still commenting, we are, I would say, keeping the capital ratios at the relatively stable level, with some, I would say, reasonable set plus or minus, you know, the capital minima set for them.

Well,

We are in the times where ESG is one of the major topics which, you know, analysts suppose the banks, you know, to report. I think that, you know, talking about this perspective, a few issues which we are really focusing on. One is the security of our systems that we have introduced during the course of the first quarter. the new functionality on our mobile application, which is the verification of identity of our employees, the number of routes which happen in Poland, relating to the situations where someone is pretending to be the bank employee. That's the reason that we introduced this functionality, which allows the customer who fully aware about the person he's talking to from the bank and the customer needs to confirm that he's aware in the mobile application, which I think, you know, adds another layer of security to mobile applications or to the mobile applications of our customers and to the contacts which are generated by the bank or potentially criminals vis-a-vis the bank. So I think that that's something what is in line with our overall strategy to make our systems as secure as possible. First quarter is usually the annual event of Great Orchestra Christmas Charity, which we are supporting since six years, I believe, now. I think that we just renewed the contract with the charity, I think last October. We continue to support both with our own funds, but the most important is that we are able to mobilize our own clientele and we also provide the logistics to the charity. This year, again, our clients and us, we contributed slightly more than 10% of the overall revenues or collection of the money which has happened in the first quarter of 2023. We believe that we are one of the leading names in terms of providing financing to the green energy. And one of the, I would say, pop events in the 2023 was a consortium which was involved in the construction of a pledge of solar and wind project. Pledge of peace, you know, for those of you who are not aware. The center of Poland, and this is effectively the part of the old mining of the brown coal. I think that capacity is in the magnet of 200 megawatts, as I understand. There will be some questions. Marek is much better equipped than me to explain. And on top of that, there are some new developments, which obviously, you know, you have to have some humbleness in yourself. But since these issues are more and more important, We just, a few days ago, got the new rating from Sustain Analytics, which has been slightly improved compared to the previous year. We are one of the top 6% worldwide. I understand that this covers 1,000 banks. So we are very proud, obviously. The measurements criteria are still, I believe, you know, in the development. But, you know, it's better to be sort of a champion in this than on the tail side. My feeling is that, in this respect, Bank, as we have signaled already, is well positioned. And I think that, you know, we really focus... on not only announcing, but also delivering on this front. We also have started to be the member of the Bloomberg Gender Equality Index, which also, again, covers a number of financial institutions. I think that we are scoring recently well, and I believe that in this respect, the bank will be providing more and more information in the future. Buy and base, I would say not particular changes. We continue to acquire both on the retail and corporate side. I have to say that we sense that our acquisition specific of younger generation in Poland is very strong and we will be, I think, in the maybe reporting 2023 will be more specific about, you know, the demographics profile of the new acquisition of customers. Market shares, as you see on the right side, the deposits are flowing. On the lending side, you know, while there is some stabilization of our market share, On the enterprise side, you know, we are, as we used to be, between 8% and 10%, depending on the part of the, or the size of the balance sheet. Mobile banking, which is sort of emblem of mBank, continued transfer of clients on the mobile applications, very strong which I think sort of capsulizes the mobility and its usage. Since this is the application which basically is used by the mobile users, we are clearly number two of the PECA OPP. And the growth of usage of this application is really impressive. We are adopting new measurements for the description of the active clients. Currently, we are using these monthly active users, which is not only specific for the banking sector. This is a popular measurement. In our case, as you see over the last few years, there is a growth, obviously, in some other banks. The growth rates for the monthly active users can be higher because they started later. But what we see and what I think is the most important is the fact that more and more transactions, more and more... interaction with the bank, starting on the mobile application or in digital channels, and as it is reflected on the right, or I would say, southeast side of our charge 7, these ratios are going up, and we believe that, you know, this almost 87% of the retailer processes being initiated in the digital channels is something what differentiates us, not only in Poland, but I think worldwide. The next is sort of a wrap-up, which, you know, we will be addressing. Then we are moving to something what organizes our reporting and our meetings with yourself over the last, I think, three years. Obviously, this is the Swiss-language portfolio, and with this I will pass to to Marek to go through the details.

So, to start the presentation of the Swiss franc portfolio, from underscoring that the first quarter of 2023 was clearly led by the full-scale settlement program that was rolled out by MBank to literally all clients that are having active mortgage loans. with Swiss Francs, with us. And as of today, we are proud to report that we have over 5,000 settlements concluded by now. And since we have started the full-scale settlements program roughly five months ago, it shows that we are basically running at the speed of roughly 1,000 settlements a month since the inception. Looking at the level of risk exposure with respect to the Swiss franc portfolio, we would like to highlight that the overall exposure on the net basis adjusted for the provisions created decreased to roughly 1 billion Swiss francs. That constituted 4% of the overall total loan portfolio. Looking at the coverages, that was one of the best in class, if not best in class among the peers, with 61% of portfolio provision for legal risk. And if you would consider also the capital which is allocated for the non-core unit that stood at 1.4 billion at the end of Q1, that in total, brings us to a value of 9.5 billion zloty that is cumulative value of capital allocated for non-core and cumulative value of all Swiss franc related legal risk provisions created since the beginning of Swiss franc saga. And to give you comparatives to that, that is about twice as much as we would need to convert all the active Swiss mortgage loans into Zloty if we were to convert them at the FX rate at inception. So basically we have twice as much protection against legal risk coming from that portfolio as would be needed to convert all the active portfolio Zloty. into the Kenneth Chairman proposal. We also see some inflow of individual cases still into the courts. That's to that roughly 1.2 thousand cases that arrived in Q1 against the bank, but this is clearly smaller than the number of settlements concluded at the time. Also, when we look at the number of active mortgage loan contracts, which are still outstanding, we are happy to show the decline by nearly 20% compared to the end of 2021. The current number of active Swiss franc mortgage loans stands at 38,800 at the end of Q1. And then going to the next slide, that is the usual performance of the mBank business split into core and non-core. I have commented on the non-core performance in particular from the provision perspective and on that I hand over to Andreas to comment on the core business performance.

Thank you very much, Marek. So as previously stated also by Baba Cesari, the Cobain is really strong. Before I go into details, I would maybe take one topic up front, and let's briefly look at page eight, because you have seen that in the quarter, we have quite a high effective tax rate. And I may maybe explain this beforehand. You know we are applying IAS 34, so IAS 34 means that for interim financial statements, we're estimating effective tax rate for the full year. And then obviously in the full year, there's no more estimation because we know how much taxes we paid. What we've done in this quarter is we have obviously estimated effective tax rate, but we took the Swiss francs out. The effective tax rate without Swiss francs would have been 25.9%. And then the 808 million Swiss franc charge we booked in Q1, we treat it as fully non-tax deductible. That is a conservative approach, but we think that's the right time to do it like this. And this is why the effective tax rate right now is at 70%. And as I said, this is all about estimations. And obviously towards the year end, we always have finer tax rates. But as I've seen also some comments and we're expecting some questions on this, I think it's good to explain it here. It is IAS 34, and I think people were very nice who put together financial statements because it's also explained on page 34 in the consolidated financial report. That's more of a coincidence, but if you want to see what we do under IAS 34, look into the English version of the consolidated financial statements that is on page 34. With this, let's go a bit into the dynamics of the quarter and into the details. So we're on page 13. Loan volume, Cesare already said it, we're roughly flat in the quarter. You see corporate here a bit up with 4.5%, but that's mainly reverse repo and buy-sell-back transactions. The core corporate portfolio At 50.3 billion, that's like I think half a percentage point down, so basically flat. Retail, you actually see a minus of 1.3, but in this minus, so the minus is in total 900 million, but it has minus 1.1 billion in FX mortgage loans in, so the core portfolio was even growing a bit. But also on the core portfolio, we see that people who actually have money on deposits or have excess cash, also tend to repay loans early. And we have discussed this at length, that this might also contain strong traces of credit vacations, which the government imposed on us and clients. Obviously, it seems not everybody needed the money, but they spent the money on just repaying their mortgage loans. Let's go to the new lending business. The new lending, as we have discussed it in the last quarters, the mortgage loan new sales is strongly down. But we have seen now, if we look back, that Q4 was the low point. We are back at around 700 million. Well, we think we'll build from there, but we're not aggressively also going after that business. You know, rates are high due to inflation. The market is tight also due to credit vacations because the market is not liquid. People are not incentivized to sell their home if they are under credit vacations. Yeah, maybe one thing to remark, we had a steady increase in the fixed rate loan proportion of this, and this quarter was the first quarter where the fixed rate production in mortgage loans was higher than 50%, so we're a bit higher than 50% here. Non-mortgage loans, up in the quarter, down year over year, so a picture that was to be expected. As you know, our focus also here is not to gain market share, but the focus is to have a good margin here on the non-mortgage loans, and that's also what we want to have in the future. Two billion, I always say, in a quarter is actually quite a good production. Well, if that's below or above two billion, I would mainly look at the margins here for the next quarters. And a similar picture we have in corporate. You know that we like to run a tight portfolio. You see that K1, for example, is below a billion on the new sales and renewals, and that was also then reduced. weaker prints, but all at healthy margins. That's good. And on leasing, we in general see good dynamics, and you see this over the last quarters. Let's go to deposits. Well, if the loan-to-deposit ratio you've seen on the slides before is 67.2 and the loans are flat, something has happened in deposits, and Cesari was already mentioning this, we still see very good client inflow in deposits. 4% over the quarter and nearly 12% over the full year. In corporates, it's less pronounced, but what we really like in corporate, it's strongly transactional. We have 1.3 billion more of deposits. In the last quarter, we see the money is on current accounts, also next to term deposits, and we benefit from the good technology we have, good client base, and good transactionality here. Well, similar in retail, obviously retail is shifting a bit later, but we have 6 billion more, 6.15 billion more in deposits in the quarter. Out of this, roughly $4 billion is in term deposits, and we still have inflows in current and savings accounts. So that's also good. And over the full year, plus 16%, that's $17.9 billion new retail money in one year. I think that shows that the business model is really very, very strong. How does this translate into income? Income on the next page, what? Total revenues at record level. You heard that. The record level, clearly the biggest driver is net interest income. Net interest income roughly $120 million higher than in the quarter before. There is a special effect because we did verify the assumptions on the credit holidays. There's a $52 million positive effect on credit holidays. We will in the next quarter, obviously the credit holiday, it will be more – Less and less pronounced, so there will always be small effects, but I think that's the biggest one. Maybe to just recap, currently 80.9% of the whole portfolio is under credit vacation, with on average 7.2% installments for the whole lifecycle. That leads to a volume that is under credit vacation of $24.9 billion. And what we have in our assumption is that 82.5% of the overall volume of clients will come with the average of 7.7 installments. But you also see this in the disclosure documents. We're very transparent here on this. Next line item is net fee and commission income. Well, stronger than in the fourth quarter, but weaker than a year ago. A year ago, I would like to remind you, we booked the – Deposit fee for balances as of year end, that was 40 million. Obviously, now we're in the corporate sector. Now with high interest rates, we didn't charge this to our corporate clients at the year end. So that obviously makes a change. The income side for net fee and commission income year over year is a bit weaker, but it's mostly also higher net fee and commission costs. They're not always linear, but I think in general, 500 million per quarter is also a good guidance for what is to come over the next quarters for this year. Maybe one brief explanation also on what is in EMBA, minus 28.7 million. It's mostly from the losses of financial assets and liabilities. What did we do? For 49 million, we have sold low yielding bonds we were holding. We're always trying to, on the one hand, de-risk. On the other hand, if we get rid of low yielding bonds, we can actually invest the money into higher yielding. items, and that also explains why on the right side, for example, right upper hand, you see that the interest income from non-loan interest assets also have strong increase because we're optimizing the portfolio here. on a steady basis. Maybe to finish on the income, I've already guided a bit on Nesfian Commission income, so roughly stable. NII will remain strong, but we think this is a very, very high trend. We have discussed about it. There is pressure on margins. So for the next quarters, we would expect this to be, to some extent, lower than what you've seen here. Finally, let's go over to cost. So the cost rise is below the inflation rate. So that's on the one hand good, but costs are clearly still rising. Efficiency is excellent. As Ari already said, 33.4 reported. Normalized is even below 30. So that's a good starting point into this. If you do the comparisons, first quarter last year was a very, very low baseline to start with. But let's briefly go through, I think, the two major items. The one is staff costs, so personnel down quarter over quarter, but up year over year. And this is more, the 330 is more natural than the 290, because obviously we employ more staff. You see this year over year, 184 more people, mainly in compliance areas and oversight areas. And also, obviously, we did salary raises because of the very high Very high inflation. Administration cost is also up by 29 million quarter over quarter. Main drivers here is administration and real estate and IT. They make up for even more than the 29 million. So also other cost items have been lower, which is also not a bad sign. To summarize the cost side, obviously, we had BFG, $183 million in the quarter. We do not expect that we have to pay into a deposit guarantee scheme for the next three quarters. So we think this extraordinary item will stop in the first quarter. And obviously, with the BFG here, I think this is the highest item. For what we now see, this is the highest print in total cost over the year for the next quarters. So no extraordinaries on BFG, but obviously other cost items will rise over time, also following the inflation we have in the country.

And with this, I hand over to Marek Loschtyn. Thank you, Andreas.

So if you look at... the results from the loan loss provisioning point of view, we were running slightly higher cost of risk than in the previous quarter. That stood at 79 basis points, that's 238 million złoty. That was primarily driven by slightly higher provisions for retail loan portfolio, while on the corporate loan portfolio we still exported relatively low write-offs. If we look at the overall portfolio, Politi and Bank Group in Peblon portfolio stood almost flat as far as NPLs are concerned quarter to quarter. Also, there were no material changes with respect to coverage changes. Also, when we look at NPR by segment, we see a slight decrease in the corporate portfolio, a slight increase in the retail, primarily driven by the small increase of NPRs in the mortgage book. That is driven primarily by the fact that the book is relatively young. Looking at the capital and liquidity ratios, we are still having very significant buffers over the minimum capital requirements. That's 287 basis points, a total capital ratio above the minimum requirements as the end of March. And with all of that that we have discussed with respect to developments of loans and deposits, loan and deposit ratio dropped by almost 9 percentage points year-on-year to 67%, primarily driven by the increase of the deposit base. So that ended up in ample liquidity at M-Bank Group level with liquidity coverage ratio at 224%. percentage points that is over two times the minimum puzzle-free requirements for that ratio. Also, the net stable funding ratio is improved year on year and quarter to quarter. It stood up at 155% compared to 140 a year before.

And this brings us

to our chief economist, commenting on the macro outlook for Poland for coming months.

Thank you, Marek. Good afternoon, everyone. So, strange days came, just to quote the title of the movie picture. Poland is in a falling GDP growth path since the second quarter of 2022. I mean here the momentum, not only the dropping annual growth rates. At the same time, labor market stays strong, very strong. It seems that it is strongly limited from the supply side. So the overall reaction, if the slowdown is going to be continued, is not going to be, I would say, rampant. We are going to still have very strong labor market. There are more and more signs nowadays that consumption is close to the bottom. Business activity indicators are turning up. We had a lot of fiscal transfers in the first quarter, connected mostly with tax refunds. The consumers should feel better. We just wait for lower inflation to stop the negative dynamics of real wage growth. And I think it's going to properly economy in the next months. Still, we have to wait for the final print for the first quarter. It's going to be the worst in 2023. We estimate right now minus 1.2%. But various models indicate that it may even be lower. Afterwards, as I said, the direction is upwards, but still lower. Do not expect fireworks because still the whole 2023 is going to be at 0.4% and this forecast hasn't been changed for months. What is also strange in current environment is that the slowdown lasts four quarters. And yet we haven't seen any reaction in core inflation rates. Core inflation is indeed enjoying high momentum and it's not really changing. Inflation is falling mostly on base effects and on the lesser dynamics of food and energy prices. But yet we reached the top in inflation is going to be falling to around 10% in the year's end. And we think that core inflation and high momentum of core inflation is going to be rather encouraging MPC to leave rates unchanged at least till the end of the year. Let's turn to monetary aggregates. I don't think that anything meaningful is happening here because everything was well-flagged in recent reports beforehand. We are seeing that corporate loans are losing momentum and household loans already lost momentum. And it's a good, I guess, time to try to look for signals of a turnaround. It is possible that the new mortgage offered by the government is going to give reasons for such a turnaround. In the meanwhile, we are enjoying quite high deposit base. The divergence is because growth rates of deposits and loans are mostly visible in the household sector in the right-hand side graph. As far as financial markets are concerned, it seems that we are going a bit sideways. And I think that direction is quite clear. We are heading into lower market rates. Within a year or two, market rates will be lower than they are right now. But given the fact that the market right now also prices in quite substantial easing of monetary policy till the end of the year, I think that yields may go a bit up before they start again trading, trending down. As far as PLN is concerned, I think everything is evolving according to the forecast, because as we pass the peaks in European land rate, we are seeing some depreciation of the Polish currency. Well, it's not fast, and I guess it's going to be continued, but rather gradually. I think that the recent movements in European land are mostly triggered by unexpected improvement in current account balance. All in all, perspectives for PLN are still rather bleak, some tightening, some appreciation ahead, but still no fireworks. Thank you.

Thank you, Marcin. We have some questions from the Internet. I will try to... ask them in some topics. Do you see an increase in the number of motions for the history of payments from Swiss franc borrowers following the ECJ opinion?

We have not noticed a material increase of the new lawsuits after the ECJ opinion. You can see the statistics of on the slide, and basically what we have seen in April, as we speak, is not higher than the previous quarter results.

Out of 1,200, I think, which we have in the first quarter, I think the biggest inflow was in January. Is that It contradicts with the assumption in the question.

Can you discuss MREL issuance needs by the end of 2023?

I can do it. So basically, it has not significantly changed compared to when we have discussed this in the past. We plan to one, up to two issuances this year. Two benchmark issuances, that's up to basically 500 million issuances. per year, so we don't foresee us issuing more than a billion euro into tickets by the end of 2023. Of course, prevailing market conditions allowing for the issuances because the uncertainty related to, for example, Swiss francs and the geopolitical situation is clearly there.

Is the resolution fund charge of 182.9 Zloty a final number, or you are still waiting for the letter from the BFG with the final level?

Thanks for the detailed questions. It's final and not final. It's final for NBank SA. And, you know, BFG has interesting timing on this because we just got it this week. Also, MBanky potentially received the letter, but they received it a bit later. So there will be one million less, most likely, over the full year. But materially, that's it. And we are happy that we did receive the letter.

I think you already mentioned, but what is the net interest margin and outlook for upcoming quarters?

Yeah, as we said, it will remain strong. But we have to be mindful that there are most likely higher deposit costs and also that the loan production we're doing and the volumes that are there are actually quite low. On the other hand, what we do is interest rate risk management is a daily effort right now. So we're looking at the portfolio. I have said before that we're looking at low-yielding assets, and we're replacing them with higher-yielding assets. We're looking at the term structure. This is a daily optimization. We had the strong upward trend. We are obviously trying to keep it, but the long-term trend on this is more downwards, and this is why I also said I would expect that The first quarter most likely has the highest NII. First quarter also has the smallest number of business days. So this is all in the details, but the trend is generally slightly downwards.

Thank you. Can you please explain the drivers of tier one drop quarter on quarter?

Well, you've seen that TREA also increased a bit, but I think I would just like to remind you that the COVID quick fix did expire. The COVID quick fix, that only is roughly, I think, in the last quarter, we benefited by 40 basis points with this. To remind you, this is the negative valuation that we have in the whole collection for sale portfolio. There was a mitigating factor in that. And the mitigating factor is now erased. There's no mitigation in this at all. And that, I think, is the major biggest driver. We also discussed it in the last earnings call. This was expected. And, yeah, under this background to have the 290 and to be roughly flat, I think that's a good result on the buffers.

All right. also connected with this topic. Do you consider more active hedging in order to lock in current high interest rates for longer?

Yeah, with the more active hedging, I mean, what we do is, as I said, it's a daily effort to look at the interest rate position of the bank. We have Lower yielding assets maturing from the past. We are investing in some tranches where we have rolling models. We are not aggressively running an interest rate position, but obviously we're not only running the bank in short term, but part of the bank is in longer term. And it is always a debate of how much we actually want to put here Into these buckets, you've seen that the whole collecting portfolio had a high hit last year. We have recovered well, so there is some space, but we try to have a balanced approach. But part of the balance sheet obviously is also reinvested into longer tranches.

What is the expected cost of risk for 2023?

So as it's shown on the slide, with the outlook, we expect the outlook to be slightly negative for cost of risk. So we expect the cost of risk to be like in the range of 80 to 100 basis points for the whole year. But there is also a related question that I can take up simultaneously, because there is also a question related to the quality of the credit portfolio. And we are being asked if we see an increased level of overdue loans in retail portfolio, mortgage and consumer. So, I mean, we see a slight increase in the non-performing loans in the mortgage and consumer sub-segments of the portfolio. But this is not something that is, I would say, out of the history because the level of impairment losses that we have seen, for example, in Q1 2022 are roughly the same as in Q1 2023 as far as retail is concerned. What needs to be flagged is that with the increased level of interest rates combined with high inflation that in particular impacts food and energy prices, there are some segments in the portfolio where customers see their disposable income shrinking, but this is not something that is, I would say, of particular worry at this point in time. It's sticking up a bit, but I would not call it, say, an increased level, and we also see that this is something that is very much in line with the market trends for the overall banking sector in Poland.

Thank you. CFO mentioned that the new mortgage production is 50% fixed rate. What is the share of fixed rate mortgage loans in the portfolio?

That is also slowly evolving. It's obviously evolving a bit faster than the new sales because also part of the existing portfolio is actually a part where the clients are shifting from floating rate to fixed rate. On the overall stack of the full bank, we are below 20% still, but that is a growing figure here.

We are shifting clients from there.

because it's uh it's worth highlighting as uh said that part of our offer on settlements front to the swiss franc borrowers is a fixed rate that is like 499 for five years fixed which is one of the elements that we use to convince the clients to actually have lower installments than compared to today's mortgages, so that the overall payment burden is a bit lower than compared to newly taken Zloty loan.

Now we have quite a long question. I will read it in the whole. Gross loans of Swiss franc of 24.5 billion Swiss franc or 13.5 total loans benefit from credit holidays. The negative impact on your P&L is material as shown on page 16 of your presentation. Why then do you choose to treat this as an insignificant modification? What would be the impact if you treated it as significant modification?

Yeah, I think that's a very technical question. First of all, it's not 24.5 billion Swiss francs. It's 24.5 billion slots. These are loans that are under vacations. The thing with the significant or insignificant modification, that actually is an accounting term. Obviously, for us, the number is significant, but if you look at a loan that has a 30-year lifetime and 360 installments, that eight of these installments over the lifetime of the loan don't come, And that's more the dimension you have. So it stems from IFRS 9, and it's in the accounting world. And, say, the industry view on this, and I think it's good to take that long-term view, 360 installments and an eight-something doesn't happen. That's why it's called insignificant. It does not mean that the P&L effect is not material. It's very material, to be very clear, and we're not discounting this at all. But it more comes from the accounting world here, this approach.

Thank you for this explanation. Now we have some questions about court cases. How many out of 18,840 individual court cases relate to loans that have been already repaid? And what is the percentage in relation to inactive mortgage loans?

So, basically, as it comes to the pending court cases, we have 18.8 thousand pending court cases in total. And out of these, less than 20 percent, that is roughly 3.5 thousand of those cases relate to the rebate portfolio.

In case of CGEU ruling was in line with advocate general opinion, would this prompt a need for a one-off provisioning, as mentioned recently by new head of ZPP?

I think that that's the issue which I think is still being discussed. The question is the wording which will be used when you look into the advocate general opinion. Basically, it calls for the local legislation or usage of the local jurisprudence or local, leaving this to the subject, to the local courts. I personally believe that, you know, Polish legislation provides answer to these questions. And I think that, you know, the full clarification of which direction it will go will take some time. I don't think that it will be just almost instant necessity to buffer sort of the verdicts in the future.

Thank you. And I think the last question on ESG, how many percentage points MBank has in the GEI index?

Nice. Good to have a question that is not Swiss franc related. Our score in Bloomberg gender reporting framework, the overall score of GI is almost 76 points. And we need to highlight, we are proud to highlight that the panel that was assessing this gave us very high scores on disclosure scores, because the sub-score for disclosure stands at 98%. And also where we score very high is the dimension of equal pay and gender pay parity, where the score of MBank is 94%. So that has improved, actually, as far as equal pay and gender pay parity. It has improved year on year by almost 12 points. And also we have significantly improved as far as inclusive culture is concerned when the score went up by almost 7 percentage points. And then overall score has improved also year on year.

Thank you, one last question just came. Are you planning 81 issuance?

Not at the moment.

Okay, thank you very much. I think we've covered all the questions and I think Andrzej will have some final remarks.

Good, yeah. Thank you very much. As I was having the honor of the last 24 quarters of presenting to you, I would like to say some words at the end, because I would like to thank all interested parties, the investors, and analysts. I would like to thank for the personal meetings we also had, for the questions you had to us at the management board, also to me for the professional challenge. for the exchanges one-on-one, where I also try to quiz you sometimes to broaden my horizon, where I also learned a lot, because this actually helps us to reflect. It helps us to reflect to run the bank, but it also helps us to reflect on the quality of disclosures, on the quality of the financial statements. And also thanks to you, I think we have for the last at least 10 years won the best of the best for the best financial statements or highest quality financial statements. So I think that's a very positive note on which I can here depart. I wish you all the best for the future and thanks for the last six years.

Thank you very much. Thank you for your attention and have a nice long weekend.

Bye-bye.