ING Bank Slaski Stock

[Interpreted] Good morning. Let me welcome very warmly at the wrap-up of the second quarter of this year and first semester presentation will be run by Boleslawski, CEO, in charge of investments; Rafal Benecki, CFO, and my name is Piotr Utrata. I'm the Bespokman.

Bozena, let me hand it over to you.

[Interpreted] Good morning, ladies and gentlemen. Indeed, I would like to start out by saying that -- we are, as ING Bank Lansky very satisfied with Semester 1 performance for Consistently, our business and financial data illustrate that we deliver on the bit of life strategy of -- what is noteworthy is that in Q2, we obtained 101,000 new retail clients, which is the highest growth for 6 months, also 19,000 of companies, which is very good performance Q-to-Q.

We do believe that this is a result of combination of the attractiveness of our offer and very simple and intuitive digital processes. And this quarter, we offered to our clients subscription-based accounts, and we expand their functionality and value. For the smallest companies, micro companies, we produced a new digital way of opening an account with us, which was designed from the very basis to simplify and streamline the process.

And we are very much persuaded that this growth of consumer base shows that ING continues as #1 choice, 1 of #1 choices on the Polish market. We also in the credit portfolio by 9% year-on-year and deposits grew by 3% Q-on-Q and 16% year-on-year. And the second quarter shows record-breaking levels of sales of retail lending, 18% more year-on-year and 1% more Q-on-Q which gives us PLN 7.8 billion loan and closes with PLN 15.5 billion of new crowded exposures.

The retail credit offer increased 9% year-on-year to the tune of PLN 2 billion. On mortgage side, we have PLN 5.8 billion volume, which means 19% of growth year-on-year. This is also maintaining a record-breaking level from Q1 and a very strong second position on the Polish market. As you can see from the value of mortgage lending, we have the second largest in this back in this segment, and we have PLN 72 billion of mortgage loans exposure.

What is also noteworthy is that in the previous quarter, we rolled out the digital mortgage, which is a remote process available from my ING app, which speeds up access to housing loan that Q2 is also the first period when we fully integrate ING TFI, which is the second largest DFI on the Polish market. Thanks to this consolidation and merger.

The value of our investment products grew by 250% year-on-year and 133% Q-on-Q, reaching the sky level rocketing level, PLN 72 billion. And our market sharing TFI market measured by the value of capital funds is in excess of 15%. The value of commercial lending grew 7% year-on-year and 3% Q-on-Q. especially notewhere our loans in wholesale banking, 15% year-on-year and 4% Q-on-Q. And we embark on new major investments, which naturally promote the largest clients on the corporate side, but with ongoing processes and projects in the pipeline also in lower corporate banking sector, we will increase our exposure.

Also, I wish to tell you that those year-on-year growth in Q-on-Q growth are very spectacular from our perspective. Nevertheless, we do not rest on our laurels. We want to systematically grow and -- to this end, I would like to show you the overall tendencies for 5 years. We were on average growing at the rate of 7%, whereas the market growing 4% in loans.

On deposits, our average for 5 years is 10%, market average is 9%. What we want to bring to your attention is our strategy of developing deposit offer and growth of market shares. And to this end, I want to tell you that in the corporate sector, we grew from 10% to 10.5%. And on deposit retail, from 11%, we -- we grew from 10.4% to 11% and obtaining new customers and obtaining funds and opening up new accounts and deposit accounts is a response to the challenge to build banking relationship, which allows us to tap banking products at larger scale.

And this, of course, translates into all our results. At this stage, I would like to wrap up with the results and hand it over to Rafal from macroeconomic dealers.

[Interpreted] Good morning. Very warm welcome. In the utomacroeconomics as it stands. I would say that we have ready made data for Q2, the impact of the energy shock related to the first stage of the war is limited, slightly higher fuel prices slightly higher inflation slowdown on the revenue side and consumption has slowdown. However, the other growth engine that this investment is going on quite well independently, of geopolitics, which is also prompted by resilience and recovery fund structural funds and if we want to look through the lens of sectors of the economy in Q2, the construction sped up to reach 0.5%.

The industrial production also rebounded to some 5% retail on the contrary has slowed down Q2, all in now, shows growth to the tune of 3.8% and 3.4% for the whole year. If it wasn't for the second stage of a wall in the Middle East, we will review our projections upward, but we have Stage 2 of the war with Iran, so we are conservatively assessing growth at the tune of 3.4%, bearing in mind the risk that might be involved this year.

The economy will, to a large extent, be growing, thanks to public investments. And we see that the EU fund cycle speeding up and monies are disbursed, which translates into good construction performance and loan performance. What is going to be important is public investments, but private investments will also probably performed quite well. Looking at industries and sectors -- on the supply side, services performed very well.

Industry is also doing well, but very strong growth that we saw in June will not be repeated. And there is a structural change, contribution of services sector will be growing, industry will rebounce but not to the levels that we saw in the past. It doesn't imply that we will be like Estonia like economy with the dominating services sector. Nevertheless, services are not to be looked down on. And thanks to services, we weathered the stagnation period quite well recently, unlike our neighbors, and we are fairly optimistic as to the important share of the services sector in the overall economy.

Industry, as I'm saying, will slightly rebound, but it is not to be expected but we will return to the picture as it was 5 or 10 years ago, manufacturing was so important. The second factor is inflation, of course. And after the first stage of a war, inflation reached the target level. The readout of inflation in June was on target 2.5%. And in fuels, it was slightly below. The first stage of the war confirmed to us that the situation on the consumption side is not as good as it was in pandemics and the energy shock slightly bars, as I can show you on this slide, will have a selective impact on traveling, on recreation and leisure tourism and other disinflation factors continue to exit.

The influence imports from China Poland stands out in comparison to other countries as for the deflationary impact of exports from Asia. The supply the demand side and the domestic picture doesn't allow inflation to grow much beyond, which is a very important focus as the war still ranges and will probably continue for a while.

Looking at the motivations on the 2 sides of the conflict, it is likely to last a little bit longer. Nevertheless, we think that the inflationary effect will be transitional in 2027. So inflation will hit the inflationary rate target, and we do not assume any increases or decreases of interest rates in Poland, whereas next year, some 50 base -- basis points, bps are to be expected from the Polish Central Bank.

Now for the moment, the Polish Central Bank was most gentle and not interventional after July press conference, the market was assessing, evaluating the possible reductions, but the rhetoric has changed now, the board announces that interest rates will not be changed. So we are quite stable and this has bearing on the level of our currency unlike checks, who want to reduce, for increased interest rates unlike the Hungarians.

We have a fairly neutral position, and this has negative bearing on our currency standing in 2027, reductions are to be expected in terms of interest rates. But this year, known news. Two other areas that I want to highlight for your attention is the 5 years, we've been running project, which is the third item in our to case of macroeconomic tools next to projections of models, exel and econometrics we also employ qualitative analysis. We ran interviewed with business representatives. We want to know what kind of ambitions drive them, and we have had 30 interviews, and I will tell you briefly what the results and conclusions are.

[Interpreted] We are trying to understand the situation of Polish businesses and the wake of competition from China and demographic problems. In a natural, Polish companies seem very creative and going about those problems, but not creative enough in the area of innovation, crediting, leveraging and international expansion. These are conclusions.

In this graph, we are showing changes in employment recently, the growth in employment is mainly due to employing foreigners. And these are official data showing more and more foreigners on the published labor market. in our study, we've shown, however, that there's a large chunk of it is unregistered import of labor estimated at even PLN 0.5 million. So there are no conclusions to be drawn here. On the 1 hand, the business tends to be creative and going about the shortage of labor.

But on the other the creativity shows us keeping the status quo, the model based on cheap labor. And there's not enough creativity and audacity and the realm of innovation and investment. which is shown in the graph. Low level of automation expressed in terms of the count of robots per 10,000 of labor.

Please mind the changes, the new drives including data on data. So there are a few new robots as of recently. In 2022, there was a peak, and then we were back to a low account of new robotin sold, which is worrying. In this area, the creativity of the published business is not enough. Thirdly, look at international expansion. We are talking a lot about the business needing to scale up, including internationally at this stage of our economic development.

Looking at the FDI and the area of absorbing FDA, we are on the par with the neighbors. However, in the area of international expansion, we are lagging behind our neighbors, including the checks and the Hungarians. So this would be a short summary of our research, which is to be continued. This is our message. We are communicating to our clients. We are doing some organic work to show room for improvement.

Last but not least, just a few words because I'm conscious of time. We are -- we've analyzed the EU ETS reform, which is very important for our regulatory framework. Our CEO is alluding to that quite frequently. This past spring, there were high hopes on a major change in the ETS system. Western European leaders tended to say that the emission rights were expensive and decarbonization was not going fast enough. So the European Commission promised to reform the system.

We analyze the reforms, but we thought that they were quite limited -- too limited for the appetite. They are not changing the competitiveness of the European business. if anything, they might slow down the pace of growth in emission rights in the years to come. This would be all from my part.

[Interpreted] Thanks, Rafal. So -- to sum up the financials, the gross profit in Q2 amounted to PLN 1.9 billion. We know that this is higher than the market expectation. As a result, our gross result in the first half year amounted to PLN 3.2 billion, which was 15% growth year-on-year. It is, we believe, a result of consistent growth of commercial activity on the positive phenomenon on our P&L, our income grew 7% year-on-year, which is faster than the growth of operational costs, 6% year-on-year.

At the same time, we recorded 37% lower cost of risk. And the result in this quarter was -- saw a contribution of full consolidation. The provision results, 107% higher. And the overestimation of our shares in TFI to the fair value, the one-off result amounting to PLN 106 million.

The for estimation to the fair value, especially in the minority packages, not a simple thing to do because according to the accounting principles, we we're obliged to take and adjust the difference between the fair value and results by the control premium discount amounting to 18.7% vis-a-vis the pure transactional value.

At this point, we need to explain our approach to estimating legal risk this quarter. And here our interest income was corrected by PLN 12 million. In the wake of the ECJ consumer credit opinion. For a long time, we haven't capitalized the commission, and we haven't taken the commission for a long time already. So the PLN 12 million is a full effect following the court's decision.

At the same time, in this quarter, we set up an additional PLN 19 million provisions for legal risks -- we are very cautious and proactive as a bank by nature, looking at the legal environment we set up PLN 20 million for unauthorized transaction provisions and PLN 70 million per new provisions set up for other legal risks we can see resulting from consumer protection-related issues.

The antitrust office proceedings respectively, our bank and the sector and the ECG decisions. Also when it comes to one-offs and the tax consequences, we have a new effective tax rate. We expect it to amount to 37.3% vis-a-vis 39% we estimated after Q1. As a result, our net result this quarter amounted to PLN 1.2 billion which is year-on-year 5% higher.

Our net result, 6 months into the year is over PLN 2 billion, lower than last year. mainly due to a higher corporate income tax rates. Our ROE adjusted by macro cash flow had amounts to 20% which is in line with our strategy and above our long-term strategic objective.

To comment upon the net interest income, it's stable this past quarter. It amounted to PLN 2.3 billion which was the same level roughly as in the previous quarter, but it was higher 7% higher year-on-year. Our net interest margin was 13 bps lower quarter-on-quarter at 3.07%. As you can see here, there's a pressure on asset profitability.

Net interest income dropped by 17 bps quarter-on-quarter, down to 4.59%. It's a natural result of asset repricing at lower market interest rates looking at the interest rate changes as of lately. And as we mentioned before, growing pressure on margin and new production which is a result of a very tight competition on the Polish banking market.

In this quarter, our financing cost lowered by 2 bps to 1.63% which is a result of a mix of strategic actions. -- because we want to grow on the market on the deposit side, and it was also due to changing interest of basic resources collated by our clients. As a result, what would the considerably bigger growth of deposits and assets of our clients. Our LTD ratio this quarter lower to 72.6%. It's because the poses grew 7% 3% and quarter-on-quarter, respectively.

But please bear in mind that the market average is even lower than that. According to my data, it's 66%. And -- so we are still keeping this indicator above the market average.

Speaking of the commission income. There are many changes here after full consolidation of -- the capital market type commissions grew considerably in the past quarter, up to PLN 111 million versus PLN 53 million in the previous quarter. which is over 100% growth quarter-on-quarter and as much as 171% year-on-year.

Also, please bear in mind that the FX result grew 13% quarter-on-quarter and 5% year-on-year. As a result of higher transaction activity of our clients. So we are back to the trends of the past. We are also happy about our cards income, 17% growth quarter-on-quarter and 2% year-on-year as a result of higher activity of our clients. And the insurance result grew 3% quarter-on-quarter and 8% year-on-year. It's a seasonal effect in it.

You can see a slight reduction in commissions tied to financing. On the cost side, there are several things to mention. Our operational costs, including banking tax in Q2 amounted to PLN 1.3 billion, which is 6% more year-on-year. And cost grew 7% year-on-year and 10% quarter-on-quarter. The main driver here is personnel costs.

On the 1 hand, it's due to the pay raise announced before our wait to pay fund grew by 5%. But on the other hand, it's another result of full consolidation of TFI costs, which is reflected in various items and the P&L, personnel costs and costs included. And the consolidation also had the bearing on the management board cost apart from standard cost consolidation, as we mentioned before, we also have costs integration to be born after the ownership change.

It's already visible this quarter to be still visible in the next quarters. These are typical costs resulting from growing post transaction costs. We also have a new element here related to the depreciation of intangibles, identify as a result of Batstride allocation, which is identification of customer relations spend out from the transaction. They will stay a permanent element of P&L throughout the tenure of estimated relations identified in the process.

We also have higher marketing costs this quarter, PLN 11 million more. It's a result of a dedicated promotional campaigns around the assistant campaign and the mortgage campaign and growing IT costs. and directly a result of our technological demand as well as higher technological costs related to integrating ING TFI.

If we could switch quickly to the cost of risk Q2 of this year are very low cost of risk as compared to previous periods in total PLN 41 million of costs risk incurred as compared to PLN 193 million a year ago and PLN 111 million a quarter of low cost of risk is aided by several factors. We have positive result on NPL sales, especially in retail sector and also we updated macroeconomical projections.

Our models are very susceptible to any changes and fluctuations on the macroeconomic side. And after all the wiring situations related to the Middle East, we see the results of PLN 26 million of provisions set aside from macroeconomic risk also in the retail sector.

Hand in hand, what is also visible is that in this quarter, we have lower cost of risk in the corporate sector, we see reduced inflow of new exposures into Stage 3 -- and I do hope that tendency will prevail also for the future. As a result, our accumulated cost of risk was 33 bps and this is much below the long-term average, which is to the tune of 65 bps and as you know.

And in result, the contribution of lower cost of risks to the positive financial result on the growth and net side is tangible and is marked. As for the quality of portfolio, the share of third stage credit was 3.82% reduced by 12 bps and 3 bps year-on-year, which is, of course, the result of successful sales of NPLs on the 1 hand side. And on the other hand side, sales of the rest of our portfolio and a result of activities on the balance sheet side.

The corporate portfolio enhanced -- was enhanced by 11 bps which is due to the sales of NPLs and the new sales, which, by definition, will improve the results. The retail portfolio is very good. The NPL ratio was improved by 15 bps this quarter which has resulted -- which results from the sales of NPLs. We are very happy to see very solid quality on the side of mortgage lending. It is 0.4 more stable and versus a very good figure.

Also spinning off of NPL meant that provisioning ratio in Stage 3 could be reduced and is now at the level of 48%. And very briefly on our liquidity ratio after Q2 versus 14.9%, which is reduced by 88% of BPS and its impact on Tier 1 well, this is due to consolidation of ING TFI adjusted on risk-weighted assets versus related to the sales, but also the changes of the model we keep improving our model in order to customize it. to real day secumstances.

This brings me to the end of the presentation of results. Other questions.

Yes, there are many questions online. Let me start with reconfirming very request, could you reconfirm the impact of the Court of Justice ruling on the interest rate performance, PLN 12 billion, as I was saying. And this is a very conservative and adequate gauging looking at the implications of Court of Justice ruling.

And a follow-up, could you please expand on it the provisioning for the application of the Court of Justice ruling means that you will be very cautious concerning the commissioning of transactions.

[Interpreted] While the impact is very little, very meager. -- as you can see. We have had in our portfolio series certain loans offered by our branches where commissions were charged. And this is a very meager, very minute value as compared to the performance of the banking sector in this country. We are always cautious -- and we always keep evaluating legal risks.

So there may be some impact of ruling in the future, some residual impact, but -- according to estimate in terms of the adjustment of interest result and the rolling, we have like 100% of coverage of legal risk. And this is related also with the consumer production both safeguarded by the Polish antitrust and the Court of Justice ruling. And macro flow hedge impact on your interest result for this quarter.

Well, this is related to -- if I could have the right slide what is the value the value was not shown on the slide, but explicitly, there's impact of macro cash flow hedge on our interest result is not shown, but consistently, we've been implementing our hedging policy macro cash flow hedge. -- is an instrument that serves this purpose and bearing in mind the actions that we have taken so far. The delta is positive quarter-on-quarter.

There is another question. Could you tell us more precisely what was the impact of TFI consolidation on bank results and bank income.

As for commissions income -- this is more difficult to be calculated, if I may put it like this, because we -- of course, before full consolidation of TFI, we were distributing TFI units, and we had contribution of interest profit related to the distribution activity. Now this is all eliminated from the bottom line. And we do consolidate all the revenues, all the profit that we have from fin this respect.

What I can tell you right now of the top of my head is that the impact of consolidation on the commissions performance is to the tune of 50-ish -- PLN 50.5 million for the whole quarter 2 of 2026. And when it comes to consolidation on the operational cost side, generally speaking, I may tell you that this is more or less 1/2 of the costs that we were showing you in stand-alone NPL, which is to the tune of some PLN 11 million of impact on personnel and PLN 12 million on nonpersonnel costs.

But this is to be followed. This is to be what Q-on-Q, I don't want to show this explicit impact, the impact of consolidation of individual factors in our NPL.

[Interpreted] Now there is a number of questions concerning the mortgage market situation. Let me read them 1 by 1 so that you can dwell on them. How do you manage the risk of earlier repayment of mortgages bearing in mind all the intermediary costs, what is the share of refinancing in the mortgage loans portfolio? And how do you perform in new mortgages.

[Interpreted] Well, to take it 1 by one. We are #2 bank on the market in terms of our offerings of mortgage products -- of course, the sales in the banking sector is impacted by the high values on the refinancing. As I was describing the previous quarter, we are net beneficiary we refinance more than other banks refinanced to us. And we could see it in Q1, we could see it in Q2. In Q2, perhaps slightly less. Why? Because the refinancing share in the sales of new lending is important to the tune of 40% in our particular case for 2026.

So this percentage of new originations comes from refinancing of mortgage products. Now how we handle the refinancing risk. The first thing to be observed is that we want to make sure our offer is very competitive, attractive. We want to keep our second position on the mortgage market. So we consistently maintain the solid offer for fixed rate and variable rate products. And of course, price adjustment is very volatile.

And nevertheless, we monitor the market situation. And we try to adjust our offer in order to meet our strategic objectives the intermediary costs are a component of effective interest rates and are effectively accounted for in the maturity of life of product cycle. And you do not see any measurable results arising from earlier repayments of mortgage products.

[Interpreted] Well, following on competition on lending margins in the context of whole portfolio, BPO securities, do you see any pressure of reduced pressure on your margins?

Well, -- we don't see this. The Polish market is a very competitive market as it stands, no matter how you look at it. We don't see any pressure that would be reduced.

[Interpreted] There are also 2 questions about the reform of reference rates. I'll read out both. Can you see that after the reform, the effective wiper-based loan rates without adjustment spread will be lower. That's 1 question. And the second one, does bank use poles as an indicator for companies and individual clients lending?

[Interpreted] Let me start with the second question. We prepared a road map of implementing the new indicator. We are -- it's part of the strategy. According to the most recent decisions on the duration of Viper as of June. And according to the road map, we are constantly preparing for offering products based on pole.

No decisions taken yet -- so I'm not going to give you any date and times, but we are working on it quite hard, and we'll be ready to offer the products based on the new indicator according to the road map.

Now speaking of the previous question, the adjustment spread that is -- we think that the reference rate reform based on B. should include a cover land or replacement of indicators. Now the banking sector prepared comments to the draft regulatory adjustment. So it's still too early to say whether the replacement will be with or without the adjustment spread.

The gist of the reform according to BMR is full equivalents of replacement -- and we do assume that it will be met in the case of the Polish reform.

[Interpreted] And the last question for now. Are there any changes -- is there any impact of the cans covered bonds on the policy of the bank. As for covered bonds.

[Interpreted] As you could see, we are increasing the issuing of covered bonds -- and the process will be continued, ensuring long-term, more stable source of financing. Please bear in mind that 1 of the objectives of the long-term financing indicator launched by KNF was on the issuing of covered bonds on the Polish market. It's already happening for some time, and it's going to be continued.

We've got our issuing programs and will continue issuing the bonds. When it comes to the alter definition of the long-term financing rates, we welcome it very much. It's a result of positive response to the comments from the banking sector. And it ensures a very rational approach to long-term improvement of long-term financing structure vis-a-vis the value of mortgage loans. We very much welcome this change.

[Interpreted] Thank you very much. These will be all questions for today. And thank you very much, and see you next quarter.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good morning, very warm welcome, the wrap-up of Q1 for ING Bank Slaski. I would like to present our panelists today, Michal Boleslawski, CEO; Bozena Graczyk, Vice President, Vice CEO in charge of Finance; Iza Rokicka in charge of Investor Relations. My name is Piotr Utrata, I'm the spokesperson for the bank. Over to you, Michal.

Good morning, ladies and gentlemen. I will shed light on the key indicators for Q1 and hand over to Bozena for more details and more financial results. Starting from the number of clients in Q1, we have hit 4.7 million of individual clients serviced by the bank, which is 133,000 growth year-on-year. Let me also mention, but we will also mention this in the light of in the Beat of Life strategy rolled out for the next decade and how we need to acquire volumes to meet the targets. In terms of individual clients we'll need to increase the growth up to 200,000 net per year to get to 6.7 million in 2035. Growth. Growth of our clients was 88,000, which is comparable to Q1 of 2025 and was higher than the average quarterly growth of 77,000 of clients last year. In the strategy, we have assumed 350,000 average growth. So if we go on with 88,000 each quarter we'll certainly meet the assumed volume. The number on the corporate side was 599,000, which is 5,100 growth Q-on-Q and 24,000 year-on-year.

Here, in this respect, we don't need to speed up in order to achieve the level assumed in our strategy. And by 2035, we want to service 800,000 of corporate clients. As for volumes, the growth of mortgage lending was 12% year-on-year. That is PLN 9 billion more, reaching PLN 71 billion in total. The share of -- the market share on mortgage market was 14.26% higher and this was possible, thanks to record-breaking sales of mortgage products to the tune of PLN 6 billion in volume, which is 27% growth year-on-year. 18.1% was a market share in terms of mortgage products, which gives us the second highest position on the market.

The volume of consumer lending grew 15% year-on-year by PLN 1.3 billion, and the market share was 4.9 -- 4.94%, growing from 4.8% in Q1 2025. A new role of sales grew by 25% year-on-year to the tune of PLN [ 1.1 ] billion. The volume of retail deposit was 10% higher, reaching PLN 13.3 billion. And our market share increased by 10.4% as compared to 10.3% in Q1 2025, and 10.15% at the end of 2025.

So we are on a very good level to be reaching strategic targets on mortgage products and consumer lending as well as the retail deposits. Aspiring to the goals for 2035, assets in investment products grew by 33%, the tune of PLN 2.25 billion as a result of which the market share grew to 7.2% as compared with 7% in Q1 2025. So this is -- this accounts for 12% to target before integration with TFI Goldman Sachs.

As for loans, our private client lending slightly underperformed at the tune of 11.7%, but corporate lending grew by 5.7% and PLN 3.9 billion year-on-year was achieved, reaching PLN 63 billion for SMEs and PLN 40 billion for strategic clients. Here, I want to highlight to you but the entire corporate lending portfolio is in excess of PLN 100 billion. It is PLN 101.3 billion in particular.

However, private sector investments are insufficient. They are on an insufficient level. So that's why the lending is not growing as it would be desired and also for investment loans and refinancing loans or loans for renewal of machinery park and other fixed assets are offered at very low provision and -- commission and not always makes it any sense. So 0.4% for 10-year lending is by far insufficient. There are only 2 banks on the market who would go that down.

However, our approach is that it needs to make sense. And if they are underperforming, we will only -- will participate in this business only in a very limited scale, given that treasury bonds offer higher return on investment than such loans. We see no reasons why we should be exposed to this market on a massive scale, this is it for the highest numbers and keynote points.

And let me hand it over to Bozena Graczyk, our CFO.

Thank you. Good morning. Finalization of acquisition of 100% of shares in Goldman Sachs TFI. As you know, from our reporting, this transaction has closed last Friday and the total final value of acquisition was PLN 405 million, which has an impact on our Tier 1 capital, 32pb (Sic) [-0.32 b.p.]. And we showed a rollout, the full consolidation of financial results in our consolidated financial statements in the next quarters. So our statement will be heavily impacted by the transaction.

Please be warned in advance. The first acquisition and the takeover and the new assets will translate into recognition of purchase price allocation and intangibles that will be related to the pricing of the customer relations and we'll consolidate everything, including commission and fee revenues, also cost of operation will be subject to consolidations of -- structure of bottom line will be different because of this transaction.

There will be also additional results that will reflect the change in the value of our shares. Before transaction, we held 45%. Now we'll be holding 100% of shares, so there will be revaluation of assets through acquisition stages as reported. So, this will be really reflected in our bottom line in the light of full consolidation of TFI Goldman Sachs in the last 5 years from the first acquisition, TFI from the fifth position was now on the second position in terms of their market share in capital markets.

We are taking over the second largest entity of the kind from the market. And it is part of our strategy, In the Beat of Life. And now coming to Q1 and our performance in Q1. Our net interest income was PLN 823 million, we know from the market expectation. This is very close to what the market expects the gross profit grew by 3% year-on-year, which is a result of the growth of our commercial activity and the result before cost growth by 3%.

Given the declining interest rates, this is interesting. We have also stable risk costs. I must provide you a comment of the impact of effective tax rate. As you will know, nominal tax rate will be 30% this year. And the effective one that is reported here was 39%. And as we see on a quarterly basis and from what we know from the market consensus, you expect a lower tax rate, but this is a result of a number of factors, the higher nominal effective rate, contributed to the result as well as regulatory costs, which are not tax deductible. And as you can see, how they impact year-on-year, our final result.

If we assumed they were the same as in the previous year, the impact on the effective tax rate would be 2%. So it would be felt, new expected 34%. We've got 39%, but 2% are beyond our reasonable control because it a higher regulatory cost. The other factor that contributed by 2% to the final result was the influence of various differences that we can see in our financial results. So if we increase the rate to 30%, there will be a negative bearing on the effective tax rate. It will be felt most acutely this year, but it will be declining in the next 2 years to come, which, of course, calls for the quarterly calculation of deferred tax at present, we see the declining nominal rates, which, as a result, given the net impact of deferred tax will have a bearing on the effective tax rate, given market volatility and the impact of fair value -- on fair value and how they are all settled.

This will have a bearing on the effective tax rate. I'm telling you this in order to alert you to the changes from quarter-to-quarter in that tax rate in spite of all the smoothing and all the application of accountant rules of 39% or even 40-ish percent rate, on the basis of Q1 performance should not be a surprise.

Speaking of ROE, after Q1, ROE adjusted by macro cash flow hedge amounts to 19.6% against 20.2% same time last year. About our interest, net interest income in the first quarter, it amounted to PLN 2.3 billion, which means improvement by 6% year-on-year and by 2% quarter-on-quarter. Quarterly interest margin lowered by 6 bps quarter-on-quarter amounting to 3.24%. Although -- and the latter case, you should note that the first quarter was 2 days shorter than the preceding one, which has a real bearing on the level of the interest income as well as on the margin.

If we adjust the margin by the difference in the count of days in the quarter, our margin would have improved by 1 or 2 bps quarter-on-quarter. Clearly we are working in -- against dropping interest rates last year and the first quarter of this one, which exerts pressure on the asset profitability, which naturally enough is compensated by lower financing costs. Resulting from changing interest rates as well as from commercial activity in the area of effective interest on liabilities.

When it comes to LTV ratio, in the first quarter, it lowered down to 75.3% against 76.3% last quarter. As you could see and the commercial values, it's due to the fact that in this quarter, the deposit value was growing faster than the one of the loans. Although this ratio as the market shows is still one of the highest on the Polish banking market with the average for the industry being 66% only.

As for fees and commissions, in this quarter, it's -- the ratio stayed the same as last quarter. Year-on-year, we recorded 3% increase in that line. There were several contributors to this growth, mainly 36% growth in the commissions related to capital markets, in particular, as much as 46% growth in the area of commissions on investment funds.

As we said before, it's a result of the steadily growing assets volume in the area of investment funds. Last but not least, our clients have PLN 25 billion in funds at present. Also another growth contributor is the insurance commission, growing 6% year-on-year. It correlates heavily what the growth of mortgages portfolio. We also had 4% growth in commissions on bank accounts.

On the other hand, there was a slight drop in FX fees, 10% year-on-year and 6% quarter-on-quarter. The trend is a bit similar as in the rest of the industry related to our lower activity in FX transactions. We also recorded the drop in commissions on cards with the main driver being growing cost of card operations.

Our operational costs, along with the banking tax. Of course, Q1 has the heaviest burden of the tax amounted to PLN 1.5 billion, marking 6% year-on-year growth. Although speaking of bank's overheads, they grew 4% year-on-year, and the regulatory cost grew 12% year-on-year. In particular, the banking guarantee fund cost.

Within our overheads, they grew 5% year-on-year. As per usual, Q1 cost is a burden of the annual contribution towards the compulsory reconstruction of the bank amounting to 260 -- PLN 46 billion this year, marking 41% growth year-on-year. In the first quarter, we also bear the cost of the KNF, PLN 32 million. The cost is slightly lower than last year, where it amounted to PLN 35 million. Also, please note that as per the BFG's decision, the banks, ours included, shall not bear a guaranteed -- deposit guarantee fund costs.

Last year, the cost amounted to PLN 25 million for us. Within our overheads, the dominant position is the personnel cost growing 10% year-on-year. As we informed throughout 2025, it's also a cumulative effect of growing wages in April, as per usual. This year, in April too, we increased the wages of our people. As for the risk costs, they amounted to PLN 211 million, comparable to the level of last year. Here, please note that the write-offs are strongly correlated to macroeconomic data. which in this quarter grew by PLN 54 million, out of which PLN 49 million for the corporate segment.

Let me take this opportunity to remind you that our models and macro data contributing to the general provisioning level is to be observed. What happened last March in the Middle East also had a negative bearing on the estimated cost of risk. The old price is a factor for provisions within our models and in the macro data. So its impact is clearly visible.

In the corporate segment, it's been very stable year-on-year. In Q1, the cost was PLN 192 million, in the retail segment. On the other hand, we have a very good quality of our portfolio with a quarterly cost of PLN 19 million. Against the scale of our retail portfolio, the cost is a negligible burden.

As a result, our quarterly cost of risk is 46 bps, which is comparable to the past quarters. Speaking of the portfolio quality, the share of loans and Stage 3 amounted to 3.9%, which is still below the industry average, which as of February this year amounted to 4.4%. The retail portfolio quality -- now the NPL ratio is stable at a low level, with a very good, remarkably good quality of the mortgage portfolio and a very low rate of irregular loans in Stage 3 at 0.4% only. Speaking of provisioning ratio and Stage 3 lowered by 0.7%, it's a natural element resulting from a very good quality of collaterals. Only defaults have a remarkably lower provisioning level.

Last but not least about our capital adequacy. What happened in the first quarter was including in the capital and retrospective inclusion of the outstanding profit, after the profit share report 2025. The adjustment was 25 bps at the opening balance.

As a result, following the okay from the KNF, we could include the subordinated loan contributing nearly 86 bps to our capital adequacy ratio. There are some negative effects, though related to the increase in risk-weighted assets in Q1. In Tier 1 it's because of several factors. First and foremost, the end of the period for regulatory adjustment for revaluation provision, which ended at the end of 2025, it's no longer there and it lowers the ratio. There are also some temporary adjustments related to the difference between IFRS provisions on the expected loss ratio and of the IRB models. It's a temporary phenomenon, eliminated in the next reviews, which will be the end of my presentation and results, but please ask your questions.

[Operator Instructions]. We already have a few questions. So following what the CEO said about margins and corporate loans, what do we think about the mortgage market? Looking at the high share of the bank and new sales. Are we to understand that profitability is attractive to you?

Yes, Indeed, we do believe that the profitability is at the level guaranteeing the right return for us. And in general, it is acceptable. Although the margin level has dropped as well. It is also because of the part of the cycle of lowering interest rates. So it is to be stabilized now because we cannot -- we do not see any further lowering of the interest rates. And the margins and the area of mortgages in the bank will stay as they are.

Continuing about mortgages. What part of mortgages is due to refinancing. Is the bank still a beneficiary of the refinancing wave?

As you could see in the financial results and Q1 sales mounted to PLN 5.9 billion. It's a record figure in the sales of our mortgage loans. And yes, I can confirm indeed that we are still a beneficiary of refinancing loans in the banking sector. But it's a dozen or so percent of the total sales value in the quarter. So mainly, it's due to the needs of clients related to the first or next mortgage loan with no relationship with refinancing whatsoever.

There are some questions about the first quarter. What was the contribution of macro cash flow hedge in the result of the first quarter?

As you could see, quarter-on-quarter, the impact of it has been lower. Although there were some market developments contributing to the value of the revaluation reserve. In Q1, we are talking about roughly PLN 200 million of impact on our net interest margin and it's been dropping quarter-on-quarter. However, as you can see as well, the revaluation reserve in Q1 following the interest rate movement related to the Middle East situation and the macro data impacting the interest rates resulted in the increase of the revaluation reserve. Of course, we can see a major volatility in the market expectations.

Like Michal mentioned, there is no expectation to see any further lowering of interest rates. Macroeconomists are not on the same page when it comes to possible growth of interest rates. We could see the curves. So time will tell. And the Middle East developments will clearly have a major impact on the valuation reserve in the quarters to come.

There is also a question concerning the result in terms of how the total revenues and Bozena I think that you have preempted on this question. And 2 more questions to come. How we evaluate the impact of the war in the Middle East on the cost of risk in Q1 was it seen in the model provisions and reserves.

Well, I think that I also preempted on this question in my at macro data are felt extremely quickly from quarter-to-quarter, and they have a bearing on the evaluation of expected loss versus part of parameters built into corporate banking models and macro models that will have bearing on the cost of provisions and reserves in -- from quarter-to-quarter.

So the volatile situation has changed trajectories of many of macroeconomic indices in March, and this is reflected now in the market policies, and this is also reflected in our Q1 financial results.

And PLN 23 million of result in the other basic operation, what is it about?

Well, I do not recall more precisely, but this is about conciliation and settlement of various items which might have been presented in the final result because of certain client settlements being fully mature.

So no other questions are visible, which brings us to the close of our conference today and see you in the next end of quarter to present Q2 results.

Good morning, and welcome to our conference in which we are going to summarize 2025. Michal Boleslawski, President of the Board; Bozena Graczyk, Deputy President, responsible for Finance; Rafal Benecki, the Chief Economist; Iza Rokicka, who's responsible for Investor Relationships, who is going to chair this meeting with me. I'm Piotr Utrata. I'm the spokesperson for the bank. Michal, over to you.

Good morning. We have some good news that we would like to share with you. Let's begin with our customers. 2025 saw a 133,000 growth of retail customers, which is much more than in the previous year with a growth -- net growth of 309,000, which means 4.7 million retail customers. On the side of companies, the growth of 22,000 up to 554,000, which is nearly 600,000 companies that we have in our portfolio at the moment. Now in our strategy, -- we said that by 2035, we will have 800,000, which means we are on the right track. And if we maintain a similar level of growth, we will achieve this goal. For retail, we are speeding up, and we will try to continue accelerating this year, and the performance is definitely much better than in 2024.

Mortgage is particularly important and interesting. They grew by PLN 8 billion to PLN 69 billion. And our market share grew to 14.2%. This is in comparison to 13.5% in the previous year. So the growth was significant. When it comes to production, we were consistently in the second place on the market with a 19% share. And this is correct for pretty much every month and every quarter. Now for retail loans, the growth was PLN 2.1 billion, and we got close to a 5% market share, although the exact number is 4.93%. Year-on-year, the growth is 12%. And this, too, is an ambition area for us, and we want to keep building this segment as communicated in our strategy.

When it comes to corporate, loans grew by 5%, and this is PLN 4.6 billion to a level of PLN 101 billion. These growths were mostly related to investment lending. And for the biggest clients, these were loans for the public sector. Maybe I should rephrase this. This is for companies where the state treasury has a majority shareholding. For SMEs, the growth was about PLN 2.5 billion year-on-year, which is much more than in 2024 when it was less than PLN 1 billion. I think it was actually PLN 0.5 billion. This is not the level of increase that we would wish for yet, but certainly, there has been a growth.

On the side of deposits, market share was stable at about 10.24% for retail, 9.8% for corporate. And we do not have a more active policy in this respect because we have been waiting for an increased demand from enterprises in order to be able to rationally manage this. So these are the key data points from the point of view of the balance sheet of the bank and the basic dynamics. And let me also tell you something about what our competition situation is. When it comes to lending and to deposits, 2025 was a breakthrough year. We have leapfrogged over Santander, PLN 14 billion for loans, PLN 5 billion for deposits. So we are officially the third largest bank in Poland when it comes to these parameters. Our balance sheet -- Santander is still larger by PLN 26 billion, but this results from other positions, not from these 2 basic most important positions.

Thank you very much. Bozena? Over to Rafal.

Good morning. Let me briefly summarize the previous year and tell you something about our forecast for the coming years. 2026 will be yet another year of dynamic economic growth. We can see that the peso growth is 3.7%. It was also above 3% in the past few years. The Polish economy historically has not been growing very dynamically, but it's better than the region. And for the second year running, the Polish economy has been delivering over 3% in terms of the growth. Romania, Hungary are not doing so well. The Czech Republic is doing slightly better. Germany is not delivering that either. But this economic cycle is unusual. It's unusual because it is happening in spite of a reduction in employment. This is partly to do with the demographic situation but it also shows that some companies are in trouble and they are facing a huge increase of labor costs, whereas low inflation means their revenues are growing slower.

The economic cycle is also unusual because we are in the region, an industrial hub, but it's mostly services that are behind the growth. Transport, logistics and also more advanced services are part of this basket. 2026 will be more balanced when it comes to the different contributions, not just consumption, but also investment will be significant. Everyone is talking about public investments. And this is going to be the main factor that's going to generate half of the growth in 2026. This is our forecast on the use of EU funds with a growth of 0.8 percentage point through a larger grant absorption. 2027, we believe we will not see a breakdown because some of those grants and subsidies will move over to the following year. So 2027 will also have a good growth.

Now we are all hoping for the private sector and its investment. But here, it is not easy to be optimistic. The latest National Bank of Poland research shows that private companies are very cautious when it comes to investment whereas public companies or publicly held companies are much more dynamic when it comes to investment. But for the private sector, these plans are rather cautious. Inflation is another important part of it. When we talk to foreign investors, everybody is shocked to see that Poland is growing so fast while maintaining a low inflation. Well, this is possible because of a number of reasons. First of all, historically, this is unusual in terms of the cycle. We are not growing at 5%. We're growing at 3.4%. We don't have an investment boom. The revenue policy is quite cautious and the pace of growth of the minimum wage, public sector wages and the average disposable income is much slower, growing at closer to 3% rather than a double-digit pace like it did in the past years.

As a result, inflation is going down. There's a demand barrier. And we can see that the pricing policies of companies are changing. We had the cost impulses with a response on the revenue side. Right now, it's different, and the economy is much more cautious and balanced. Natural resources are another part of it and an expected slowdown in the pace of wage increase. And finally, we have the contribution of Chinese goods. We've been paying attention to this and drawing your attention to this since last year. At the beginning of the previous year, we had a questionnaire survey amongst companies, and it was clear that the competition from Chinese goods was very difficult. The Central Bank had a special analysis of it.

Now the contribution of the CHE imports from China is larger than in the region, and it's long-lasting. In Poland, the share of Chinese products is about 15%, and it's been growing. Our neighbors are at 7% or 8%. The graph at the bottom in the left-hand corner shows the imports of cheap goods from China that encourage disinflation. And this is the largest level of disinflation in the region. And this could be maintainable. A situation like this lasted for 4 years before the pandemic. So we are expecting an average inflation of 1.7% this year and a lowering of the rates to 3.25%. In terms of our predictions, we were very accurate last year. So we want to share this forecast too.

Now exports are another driving force behind the economic growth. We are seeing a bit of economic recovery in Germany finally, which is good news for the Polish economy. Now in terms of the structure, some of the sectors that are rebounding in Germany are not necessarily the sectors that buy things from Poland. So the Polish participation in the German supply chains is slightly different to what it used to be, but there is an economic recovery in Germany. It is now seen in the level of orders, not so much in industry. We are expecting a GDP growth in Germany of 1%, which is an improvement on years of stagnation. And in Germany, there is also a significant competition from China. So we are considering this to be a structural recovery, they still have lots of problems with the labor market and so on and so forth.

Now some words about our long-term forecasts. How can we maintain economic growth amidst demographic challenges and a low unemployment. Our analysis show that Poland indeed has a low unemployment level and people say that labor force is not easily obtainable. But if we compare Poland to other countries, we can see that some significant structural changes in the labor market are on the horizon. First of all, the share of large and small companies. We have a very large number of small companies, which is sometimes the strength of the Polish economy, but the large companies are not sufficient in terms of their number, and they tend to be more productive than the small ones.

Recently, there have been structural changes in the employment structure, and this is a flow from SMEs to large companies, for example, and an internationalization of business, which again is something that without it, it will be difficult for the Polish economy to grow. Over the past 20 years, the shifts between different economic sectors were very clear with an increase in services and decrease in agriculture, but we still have more people employed in agriculture than in other countries. So this could be a potential source of changes.

In services, our percentage of people employed in services is similar to the rest of the region, but it's still slightly lower than in the West. It's slightly lower than in the region and significantly lower than in the West. So this could also be changing in the coming years. You cannot grow without private investment in conditions like these. Without private investment, it's difficult to grow in this difficult employment situation. It's very important for the economic growth. And we have looked at it from a more international way. There are 2 schools of thoughts. According to one of them, businesses invest when they are generating a profit. And any book on corporate finance describe it as the Beijing Order theory. And the other approach is that private business optimizes and also optimize the capital structure and leverages it to increase its value.

Now the first theory, the Pecking Order theory, as it's known, is typical for less developed countries. Poland is now a developed country. We are proud to have achieved a significant GDP, and we are entering the G20, but companies are still behaving as if we were a very underdeveloped country, and this is something we're communicating to our clients, trying to make them realize that we can't grow with this approach to leverage and growth. And finally, institutions. We are a leader of growth and the leader of weak institutions and weak regulations. Now this is not just about EU regulations, but also Polish regulations. This is something the CEO loves very much. So I'm just pointing it out.

And finally, the forecast for deposits and for loans. Obviously, it's all about how corporate lending will grow. There's a lot of discussion about lending being pushed out by public investment. Well, we assume that corporate lending will grow at about 10% or 11% this year and mortgages quite solid at over PLN 100 billion, consumer lending growing well. And all of this in a situation of reduced interest rates. Now corporate margins are quite low, plus there are problems with unemployment -- with employment. So that will, at some point, translate into the lending situation. So we are hoping to lend more, not just to state-held companies, but to all of them. Right now, there is more lending to SMEs, and this is slowly moving to the large corporate sector as well, but we are hoping for more. And the deleveraging of the Polish economy finished last year, and we're hoping for the lending to have a larger share than before.

Good morning. I would like to conclude to add to what Michal said. I'd like to tell you about our financial results in Q4 and the entire 2025. When we were beginning the quarter, it seemed that it will be a boring and calm one. But after we provided you with a pleasant surprise, we've not had this development of being 15% above the consensus. It's very happy news in terms of commercial changes and results that we are communicating in our balance. And indeed, a lot has been happening in this quarter. Our bank generated net profit almost PLN 1.4 billion in Q4. It's 5% growth year-on-year and 23% quarter-to-quarter. In all of 2025, our financial result net was PLN 4.6 billion. It's 6% growth. These are historically high results of the bank, highest quarterly and annual results in the history of our institution.

Of course, there's a question, what are the key drivers that result in such growth? Well, I'd like to point out that it's possible due to our increased commercial activity. Our result before cost of operation was 9% growth and 6% quarter-to-quarter and 3% year-on-year in all of 2025. We identify lower risk costs in Q4, they went down by 25% and by 19% year-on-year in all of 2025. Of course, the net result was also impacted by one-off changes related to deferred tax for our institution. The net result increased by PLN 63 million because of that. It is a result of changing CIT rates in 2026. I also wanted to point out to a minor in percentage-wise, but still a significant and pointing to the opportunities that we are tapping into with the market variability.

Other revenues in Q4, PLN 164 million. We maintained the trend from the previous quarter. And I think it's also worth noting that in all of 2025, this item was PLN 624 million. I wanted to point out to the result on financial instruments, which are priced at fair value up to PLN 116 million. Also the sales of bonds and securities, PLN 43 million, a similar development to the previous quarters. We have PLN 25 million of a negative adjustment to collaterals. This is the same development related to changes of interest rates because the profitability curves and interest rate moves are not aligned. This is an accounting result, and it will be reversed in the next period.

The interest result was PLN 2.3 billion in Q4. That's a 5% growth quarter-to-quarter and 2% year-on-year. It is due to an improved interest margin. Michal talked about it. Loans increased by 2% quarter-to-quarter, 8% year-on-year. Deposits increased by 1% and 7%, respectively. Our quarterly interest margin improved by 15 basis points, 3.30%. This is mainly due to lower cost of financing. The cost fell by 17 basis points with a very stable level of profitability of assets. Our accumulated margin was 3.27%, going down by 5 basis points quarter-on-quarter and it's following lower interest rates of the market.

Credit to loan ratio was 76.6%, improving by 0.6%. It was due to faster lending by 2% quarter-to-quarter and deposits increased by 1%. The averages for the banking sector are still very low, our level, 77% has to be compared to the market average that we see from the National Bank of Poland reports and is 65.3% according to the NBP. Fees and commissions result PLN 598 million. It's roughly the same as Q3, but it increased by 6% year-on-year. In all of 2025, the fees and commissions increased by 3%. Here, I wanted to point out that fees related to the equity market increased by 29%, and we're very happy that 38% growth was related to investment funds. This is a result of very good growth of the market and high net inflows that we are monitoring.

Our retail customers at the end of the year had PLN 25 billion in investment funds. That's a 39% growth year-on-year and 9% quarter-to-quarter. 13% growth was in insurance commissions. This is due to our activity in selling mortgages, and it's a natural consequence of the 13% year-on-year and 3% quarter-to-quarter is the result. We also see high activity of our customers on bank accounts. We have recorded 6% growth year-on-year and 5% quarter-to-quarter of fees related to running these bank accounts. In all of 2025, we have 3% growth of fees and commissions. In a brief -- in a nutshell, it's a result of 15% of increasing charges related to the equity market, 8% increase of fees in insurance and 6% growth of revenues related to running the accounts.

In terms of our costs, in Q4, they amounted to PLN 1.2 billion. It's a 5% drop quarter-to-quarter and 6% increase in year-on-year. Our annual cost was PLN 5 billion, an increase of 8% year-on-year. I think you need to point out that in 2025, we've recorded 21% increase of regulatory costs and 5% growth of our own costs. They are naturally linked to increasing personnel costs due to the need to revise remuneration. We've had higher cost of marketing, IT, communication, including SWIFT. So these movements have contributed to the level of our cost, including inflation and our operational costs.

In terms of cost of risk, in this quarter, the cost of risk was PLN 189 million. In this line, we have PLN 59 million of provisions for CHF mortgages. It's a drop of 25% compared to the previous quarter. Like other banks in this quarter, we also sold irregular loans in the corporate segment. As a result, we've had PLN 9 million of a positive contribution. In this quarter, we have neutral impact of the adjustment related to macroeconomic parameter change. In the retail segment, this resulted in higher provisions in the corporate segment, a net drop. It's insignificant item. And what is also worth saying is that indeed, we are identifying lower cost of risk in the corporate segment. We have higher recovery, less irregular or nonperforming loans. As a result, the cost of risk in the corporate sector was PLN 56 million.

The cost of risk for all of 2025 was 45 basis points after removing CHF provisions. So looking at the trends of the 5 quarters that we are showing you here and our strategy, the cost of risk is within the long-term trend that we've been seeing in the past. In the terms of the quality of portfolio, Stage 3 loans decreased by 21 basis points to 3.7%. It's a result of sales of corporate loans supported by increased value of the lending portfolio. Here, I wanted to mention the very good quality of the retail portfolio. The NPL ratio is 1.2%. Mortgages are at a very low level of irregularity or nonperformance, and it's very important also due to the implementation of our strategy.

Provisioning ratio Stage 3 went down by 3.3 percentage points. It's currently 49%. It's a natural consequence of selling irregular nonperforming receivables. In terms of capital adequacy, TCR is 14.98%. It improved by 11 basis points in the quarter. There are a number of different developments. In Tier 1, it's due to the improvement of -- improvement loss on lending provisions. It's a transitional development before financial result is approved. And in this specific quarter, this was also linked to the sale of nonperforming receivables. On the other hand, risk-adjusted assets have increased as a result of lending. In October, we informed the market about a new subordinated loan of EUR 250 million being taken.

We received the KNF approval to have it included in our capital and the positive contribution will be around 83 basis points. And the information that we always share with you when talking about results for Q4, I would like to confirm that it is the intention of the Management Board to recommend to the Supervisory Board to pay dividend of 75% of the profit for 2025, in line with the dividend policy of the KNF, the Financial Supervision Authority. We meet all the requirements, and this is the recommendation that we're going to submit to the Supervisory Board. So as to have the maximum level allowed of dividend for 2025.

Let me remind you that in the context of what you can expect in terms of capital requirements and what will be the result of paying a dividend. As of Q3 of this year, we've seen a 1% growth of the anti-cyclical buffer. Then we're going to have another growth of 1 percentage point. As a result, the TCR will increase from 12.5% to 13.5% next year. At the same time, 25% of the net result that we will leave in our capital will naturally increase the capital indicators, it will amount to 98 basis points in addition.

Thank you very much, and we'll be happy to take your questions.

We'll begin with questions from the floor here in the room, and then we'll take questions from the Internet.

Konrad Krasuski, Bloomberg. I have 2 questions. The first is about the interest margin. This seems to be -- you seem to be the only bank in the country to see it improved of the [ CEO ] is because of the lower cost of financing. So the question is this reverse trend to what is the broad trend, can it be maintained in the coming quarters? And also what does it actually result from? We are talking about lower rates, but how long can you pose these positive tendencies without risking an outflow of customers?

And my second question is about what the CEO mentioned when he said that in corporate lending, the dominant weight in the growth is the large state-owned companies and corporations. Will this be maintained? And don't you think this might be a concentration risk for you in the future?

In a nutshell, as you can see in the presentation, we do have a reduced cost of financing, given a stable profitability on assets. Let me begin by saying that our bank tends to be less vulnerable to changing rates throughout the cycle. And this is one of the elements you have to bear in mind when thinking about how our interest margin is changing. And these measures, these indicators tell us a lot about the vulnerability of the interest -- performance interest results within a year. Secondly, it has to do with our competition. The number of days in a quarter and when you think about what the interest margin will be in Q1, you have to bear in mind there are fewer days. And given the scale, the size of the balance sheet, that has impact on the result and on the interest margin.

Now thirdly, in late Q3 and Q4, we reduced our standard interest on the OKO account, which translated directly into an increased interest margin.

As we said many times and as the representatives of the banking sector have been saying, the sensitivity of the interest margin to changing interest rates is obvious. So it's not something you can overlook. The interest margin in the banking sector will be going down as rates go down, and they will also go down in our bank. How fast this will happen will depend on the overarching interest rate policy and what can be very easily seen in the immense of NII. So this is an important element, I think. And another thing is that the lower the basis rate, the higher the sensitivity because there is a certain natural line for the maximum interest that can be present in the banking sector, especially on the passive side.

Now another impact is something we have talked about a lot before, namely with these over liquidity indicators, loans are very much in demand when it comes to banking products. So the competition among banks grows, which also translates or impacts the interest rates. So all of these factors that I've listed will impact how the interest margin accumulated and quarterly will look like going forward.

Now about corporate loans, it's a relative dependency. PLN 4.6 billion is the overall growth of corporate lending, and this includes both SMEs and large companies. The loan portfolio when you look at small and medium-sized and large ones is PLN 60 billion, whereas the largest is about PLN 40 billion. So if you look at that relatively, the dynamics was higher for the large companies, but in absolute numbers, the actual amount was smaller than the growth in SMEs, PLN 2.6 billion for the SMEs, PLN 1.9 billion for the large corporates, if I remember this number off the top of my head. So relatively speaking, this is what it looks like. PLN 1.9 billion in proportion to PLN 40 billion is more than PLN 2.6 billion against PLN 60 billion.

We are not afraid about concentration limits being impacted because we are paying attention to them. I think that's probably what you are referring to. Any company that has some state shareholding are always an important part of the balance sheet of every Polish bank. So looking at the constraints and the limits and also the prospects for the defense industry, for energy, for airports and other segments, we are certainly paying attention to it. From the point of view of the future development, the concentration limits, we might be getting closer to them. Right now, however, there is no such threat for the time being. So that's for state-owned companies.

When it comes to SMEs, it's all relative. It's all about how we segment them internally and how we perceive a particular company or which part of it of this basket it belongs to. All in all, like Rafal said, the sector did not generate the level of investment we will wish for. And most of investment comes from the public sector. So it is no surprise that a lot of the lending goes there. And this year is shaping up to be similar. There don't seem to be any grounds to think that any significant change is coming. We are paying attention to the concentration limits, and you can rest assured that if any threat of exceeding them were to materialize, we will be reacting, but we are still very far away from that point.

[indiscernible] Interia, to follow up on what my colleague has just said about the concentration limits. I would like to understand this well. Is it the case that if you have an energy company, a construction company, a maritime shipment company that has, for example, 20% of state shareholding. Let's say, there is 20% of shares owned by the state treasury in each of these companies. Is there a concentration limit for all of these companies, whatever the state treasury shareholding is or maybe you only count them if they are above 30% or below 20% or if it's close to 50%. Is there any sort of division into categories? Or maybe we have a concentration limit per branch, for example, a concentration limit for defense companies, a separate concentration limit for energy companies and so on. So what are these limits?

And also, secondly, how does that relate to bonds? Do you take all these things together or is it separate? And I have another question, which is about mortgages. What's the situation with mortgage refinancing? I think a quarter ago, you said that you were benefiting significantly from the refinancing of mortgage loans. Is the trend still present? Or has it now ended? If it's still there, what's the share of refinancing in the sales of new loans? And I have a third question about the tax on deferred assets. You mentioned that it's PLN 63 million, and that is included in this year's result. Does it mean that you will not be paying this tax next year? Am I correct in understanding this?

Let's finish talking about the concentration limits first. We have concentration limits that are sort of like trees that take into account all the shareholding in all the companies where the state treasury is a shareholder. In zlotys, the weight is zero. And in others, it's proportional to the shareholding. So when it comes to euro-denominated bonds, the weight is 20%. This is defined by some EU regulations as well. And all of that translates in how we look at companies where the state treasury is the ultimate owner of those entities. Now about a sectoral division, we don't have a concentration limit per sector. We just have our own risk appetite defined in certain ways per sector. Now we don't talk about it publicly. It's not open information, but we sometimes announce that a particular sector will be preferred or it will not be preferred depending on things like the sector's growth dynamics.

So this is our policy, but this is not something we talk about to the external world. But it's not like a concentration limit per se. It's more of our internal approach to individual sectors. About the deferred tax assets, over PLN 60 million positive influence. It is positive because in most banks, including ours, there are more assets than liabilities from the accounting result, which is not taxable yet. The deferred tax on assets means the accounting costs are there, but they are not tax costs at that point. Now the changing rate means that the financial result improves, and this will be qualified as a taxable cost depending on when those results materialize in 2026, '27 and so on. Now those will be taxed according to the rates that will be in place when they become costs. Now our loan provisions are the biggest item there, of course. So if you look at these PLN 63 million, that's the net impact as evaluated by us of the movements of those accounting adjustments are happening in the coming years.

Now about the refinancing for mortgages. What we can still see is a situation where there is a positive impact of refinancing on the growth of loans coming to us from other banks. As you have seen, our growth for portfolios are very high, and we are in the second place on the market. So obviously, part of that is also refinancing. What we have seen in 2025, especially in quarter 3 and 4, was that there were more applications for refinancing. Now it is higher in terms of growth for fixed rate loans. But in the Polish banking system, also the floating rate loans are being refinanced. If someone needs a mortgage, if they can pay back some of it or all of it earlier, they usually want to do it, especially given the higher interest rates that we saw during the course of 2025. So in principle, we can see increased refinancing of mortgages, and there's a growing trend for fixed rate mortgages. Given our market share in the sales of new loans, we can see a growing contribution of those refinance loans.

Kamil Stolarski, Santander Bank. Congratulations on commissions, overlapping Santander. Managing your resources is my question. The number of personnel fell by 4%, number of outlets by 25. And in the market, according to KNF data, the number of employees increased by 2%. So what is the reason for this difference in dynamics in employment? What is the difference between ING and the rest ING and the rest since we have this dynamic?

Well, we're consequently implementing a policy where we've been reducing our physical presence, and that was one of the reasons of falling employment. The second element was efficiencies in operations that we are implementing online digital variants of processes, which means that in operations, employment is being reduced, including KYC operations that we are trying to automate as much as possible. In terms of increased employment in banks, this is mainly due to the activity of banks after some less active time related to CHF mortgages. Millennium, mBank from the disclosed information, these are the banks that are increasing employment according to what we know. This is the reason on our side. It's hard for me to comment why things are different in other institutions. If you look at the physical presence, we have less than the 7 main banks. And this is related to how processes are designed on our side and our strategy. Increased numbers of customers do not mean that we need to employ more people.

Let me just add that it's worth looking at long-time trends. We've had periods when we were increasing net employment in a situation where other banks were maintaining employment or reducing employment. I think that apart from what Michal mentioned, you have to think about a different cycle of meeting needs, regulatory projects, investment projects. We had a period in our history when we were significantly increasing employment in compliance and risk areas related to KYC procedures. And that was a period that is already behind us. As we've been consistently communicating, we are continuously improving productivity and efficiency of our operations. And as a result, we can continuously reduce employment. There's a number of different factors at play here. It's due to the centralization, digitalization and the needs related to the implementation of projects, specifically in IT.

A detailed question on the other result on other. This is a result that has increased the most. Madam President mentioned it. I did not expect this growth. PLN 600 million is a lot and PLN 400 million is a result on FX. Has there been any structural change at the bank? That the result is not PLN 200 million, but PLN 600 million? Or is it the situation in the market during 2025?

Well, there are 2 factors, in my opinion. It's always something that is related to the balance sheet and variability of the market. The year 2025 saw a lot of volatility in terms of FX, but also interest rates. In many FX transactions, the -- in swap operations, interest rates are what matter very much. So nothing special happened. It's just that we've had the right market positions before they arise.

You recently had 2 changes in the Management Board. Do -- I understand the strategy has not been changed. Do you expect any new accents? Can you comment on that, please?

In terms of private banking and wholesale, this is where the changes were. In wholesale, it's effective as of the 1st of April. And we can tell you more once the change happens. But in general, as ING, we follow a long-term strategy, a strategy of continuation, maybe with some new elements related to the personality of the member of the Board, but we're not expecting any revolution in wholesale or private banking. In terms of private banking, we are saying, communicating that we're building this position. The role of the Management Board that was appointed in May ever was to build foundations and that there was an announcement that there would be a change on the 1st of January, and it happened. We have a new person with a new approach, a new insight resulting from the experience of another financial institution. And we see that this person is very good for the job. She comes from Santander.

We believe that this new approach will contribute to an even better performance of the strategy that we have defined. The growth in investment funds in more affluent customers, private banking customers. We believe that the Polish public will be more affluent. It will be aging. The public will be aging and becoming more affluent. This is something that Wojciech contributes to this area. In terms of wholesale, Agnieszka is well known from her work in a number of banks, and we believe that she will be able to successfully implement the strategy that we have adopted. We wanted to increase the value of wholesale loans 2.5x until 2035. It's not a major challenge in our opinion, and she will contribute her personal experience, bringing in some new elements. But in principle, we're going to follow the strategy that we've been implementing thus far.

Any other questions from the room? I'll take a question from the Internet. Personal income tax and CIT, the changes that are expected and the effective tax rate in 2026.

In the entire sector, we should expect a rate of close to 40%. Of course, there's the issue of regulatory costs that we still don't know. But I think you have to assume a rate closer to 40% than 35%.

Moving on to questions related to the interest result. A question to Rafal. What are our expectations in terms of the ultimate reference rate?

3.25% is our forecast. Financial markets always have alternative scenarios. The risk is that it may be a bit lower, but not below 3%. That's what we expect.

And about our commission margin and result, a question related to why do we have a flat performance of assets? And what was the delta of hedging on results for Q4?

The macro cash flow hedge specifically influenced the performance of assets. So this minor change, 1 basis point in 3 to 4 quarters demonstrates the effectiveness of our hedging strategy. And in this item, you have all that I already mentioned. It's accumulation of macro cash flow hedging, the volume dynamics, margin dynamics. So there is no single answer to this question, but our resilience to interest rate changes in the short term due to our hedging strategy is a big contributor here. In terms of the impact of the macro cash flow hedge, I think it's no mystery. It's no secret that we are seeing a positive quarterly contribution of the macro cash flow accounting per quarter. In this quarter, it was around PLN 900 million in terms of the change of the provision quarter-to-quarter. Not everything moves over to the commissions margin because that is also about the pricing of derivatives in the structure of the macro cash flow hedge.

There's a question about [indiscernible] NII and [indiscernible] at the end of 2025. Well, this information will be disclosed in our annual report. Right now, I can tell you that they are significantly below the regulatory required levels. They will be one of the lowest in the sector. I can say that looking at the information disclosed by other banks in previous quarters and the communication related to it. So please wait until the publication of our annual report. The 2 indicators will be disclosed there.

In the context of Q4 results, we have a question about the operating costs and specifically, what is behind the drop of general management costs quarter-to-quarter?

In this quarter, there are a number of different drivers that contribute to the quarterly level of cost because the activity of the bank is not the same in every quarter, particularly in the implementation of different projects. But in this quarter, I think what I can tell you is that we managed to complete our settlements with 2 major partners. As a result, the level of cost was lower than the one coming from the contractual conditions. So it's a result of the renegotiation of important projects.

Looking at the room, I see no hands. So I will continue with online questions. More about the outlook now for the future and a request for a comment -- price pressure from competitors for lending.

It is higher and higher. We saw it among business clients first. Demand and supply are quite different in this sector. So the margin is going down. Right now, there is also pressure for mortgages. The margin increasingly is shrinking and may continue to shrink as well. This is what we see, and we see what the competition is doing. They are lowering their prices. So that will also impact the market margins. On the corporate side, like we said, this is because banks are more willing -- much more willing to give loans than there is demand on the side of the corporates. So we have to fight for those loans much more especially that all banks, even those that used to be more passive because of the Swiss franc situation have now joined in the fray. And the same is now moving into the world of mortgages. But the growth of the market is significant in this segment. So the impact might be smaller than in the corporate clients.

Request about the commission outlook for the coming year.

As you know, we do not present this outlook in principle. For commissions, it also corresponds to the activity of our clients. According to our strategy and our observations from many years, we are assuming that our clients' activity will be going up as will the number of clients. So the commission result trends should be tracking this phenomena. I think that's all that I can say. The growth of commission is happening year after year. It might not be double digit. I don't think they could be, but they do track the level of activity among our clients, and this is the correct situation to be in.

At the end of Q4 is back in line with the requirements of the WFT.

Right now, none of these indicators is in place. It's at 40%. It was supposed to be binding next year. But in Q4, as you know, information appeared that the KNF is planning to introduce changes to the algorithm of calculating the WFD indicator, and it will be a significant change to the tune of 20%. And we are very much hoping that this joint effort from the sector and working with the KNF hopefully will mean that the WFD, which is the long-term financing indicator will be adjusted. And we certainly meet these new requirements. The 40% level according to the old definition was something we were supposed to meet by 2026. And now because of the adjustments, I don't think that level will be needed anymore. But this long-term financing indicator, the WFD will remain important from the point of view of the mortgage portfolio, but it won't be as difficult to reach as it used to be according to the old definition.

What is the decision -- what is the ruling you are expecting? What ruling are you expecting from the Court of Justice when it comes to WIBOR?

According to what has been announced, we are expecting to have a very positive the Advocate General's announcement leads us to believe that the result will be positive for us. The sector and the regulators have been emphasizing that WIBOR is an index that meets all the regulatory requirements. And this is also in line with the Advocate General's preliminary opinion.

There is one more question from the Internet that I will answer. What about the outstanding shares of Bank Slaski? And my answer is, this is a question you need to ask in Amsterdam, not here because it's about ING Group BV.

Thank you very much for joining the conference, and goodbye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good morning. Welcome to our conference. Today, we would like to announce our new strategy. And this strategy will be presented by Michal Boleslawski, the President of the Board of ING; Bozena Graczyk, the deputy responsible for Finance, CFO; [indiscernible], who is responsible for Private Banking and investments; and the Board, Marcin Gizycki, who is the Deputy President responsible for Business Banking, Marcin Gizycki Retail Banking; [indiscernible] wholesale banking; [indiscernible], responsible for operations; Joanna Erdman, responsible for risk; and [indiscernible] which [ IT ].

Okay. Michal to you, please.

Good morning, ladies and gentlemen. Before we tell you where we are going to be in 10 years' time, we have prepared a longer time frame than what is usually presented. I'd like to draw your attention to what has happened so far in the development of our bank of ING in Poland. We are part of the ING Group, which is currently present in 33 countries of the world. It services over 40 million customers. We're the third biggest bank of the group, we have evolved with time, we have become the third biggest bank. So we're part of a very big body that services enterprises, companies, persons and private customers all over the world. The bank at this point has about 4.7 million retail customers and about 600,000 -- nearly 600,000 corporate clients, including wholesale.

We are right now a recognized brand, we're the second, according to the surveys, the second best known banking brand. We are a bank that also -- what we're showing here is 2001, that was when ING Bank and Bank Slaski merged. And since then, we have had an 11-fold growth in terms of loans and deposits. And we have exceeded the figure of PLN 400 billion. We're a bank that has an 11% share in loans and a 10% share in deposit at this point when we sum up the retail and corporate.

Now regarding the changes that have taken in -- during those 10 years, please look at the slide here. Retail banking in loans has grown to 27x over these 25 years. So basically, we have grown by a bank every year and 13x on the side of deposits, ING has always been famous for deposits. And we've always collected them. I don't know if you remember, we used to even have problems because our share in mortgages back in 2006 or 2007 was 2.5%, and everybody was asking us at the time in 2008, why we weren't giving out Swiss franc mortgages. We were encouraged until 2008, but we were resilient to that trend. We never grew very fast. We started growing once the whole market made a zloty transactions.

In corporate banking, we are also quite leveled up, a very dynamic growth here. Please look a 9 tenfold growth in loans and deposits alike. Now for NPS and how our customers view it we can see according to the statistics that we can take from 3 different sources, and we extract the average retail, customers rate us very, very well. We are the market leader according to them. Similar for business clients. This is very well distributed to subsegments. And the studies that we have also include [ Revolut ]. We are, however, seeing rated better from the satisfaction -- from the point of view of the satisfaction of micro enterprises, Revolut has already featured in that ranking as a point of reference.

We were the first, and let me just remind you to offer some of the solutions. The savings account, for example, ING was the one that implemented it in Poland. We have become a recognizable savings bank from over a decade, we have introduced, pioneered some integrated solutions for the application, responsible app design. We pioneered [indiscernible], which is an Internet gate way for online transactions. So we were the first, which is important to remind. If something gets introduced by one bank, it usually takes 5 to 6 months for others to take it on because they're good in delivering the solutions. But we want to sustain this ambition in the future.

Now analyzing the trends and looking at what's happening in the economy and in the society here in Poland, we have developed a refreshed strategy. This is a strategy of continuation, continuity rather than very abrupt changes. You might have noticed the headlines in the news. Whenever we have announced things, we have always developed and implemented them. We are effective in implementing strategic goals, for example, acquiring Goldman, the remaining part of Goldman by ING. And this is what some of us have asked us after the second, third quarter and press conference, whether that was going to take -- it has taken place. We are unable to address your question earlier.

But please notice that we have delivered. We have also delivered all the other things that you saw in the previous slides, both in terms of market share, which has gradually been growing on the side of deposits and loans and a number of customers and those are quite conservative figures, I must say, because when we're showing the number of customers, these are customers that are actually banking with us, not just dormant with -- but have had an account for a while. Now we have created the message that I wanted to share with you. That's our motto, ING in the beat of life. Why have we used the world life and beat? Well, this is because we believe that we're part of this economy. We're part of this society, and we need to reflect in our strategy, all the changes that are happening and that apply to us all. And we will be talking about these changes. We will be communicating our vision to you, and we will be showing you trends that we believe will impact our development and our activity.

We need to be very vibrant. We believe we need to be part of the society, of the country, of Europe, and we need to, to some extent, shape the economic development and social development of our country and well integrated with our strategy. And we believe that as a large financial institution, we have a specific responsibility, a social responsibility that is linked to the fact that we will not be looking peacefully at things -- bad things happening to the society or to the environment. We will react instead. We have split this presentation to 4 segments. One of them is about people, demographics. Another one about generations and lifestyles. The third one is about the economy and the fourth one is about the technology.

I will sit down now. If you allow me, we will be sharing the remote control with my colleagues, I will show the first part, and I will put some questions on the table for my colleagues to pick up to tell you about how our bank will react to the changing phenomenon. So demographics to begin with.

As you know, the childbirth ratio in Poland has dropped to 1.1. This is an alarming level, which means that if we think about it, we are actually facing a giant problem that's going to apply going to be relevant for of us, there could be a real avalanche of right now or in a decade that are -- of events that's going to be -- that are going to be difficult to handle. This is a global tendency, however, if you think that this gap can be filled by immigrants, well, please look at how the map of the world has changed over the last 40 or 65 years that we have demonstrated. The blue countries that are marked with blue are the countries where the child birth rate has dropped below 2. It used to be orange or red in the past.

Please also look at Africa. It also very rapidly changes -- is changing. So the depopulation is also affecting this continent. Lately, India has dropped below 2. So in general terms, we are looking at a trend that is faster than anyone has expected statistically in the world, the generations are not being replaced because statistically, that takes 2.2 in order to replace the existing generation. Poland went in 2100 will probably drop to 90 million inhabitants. Our society is aging. You can hear the example of the 80s and what's happening right now.

On the right-hand side, please notice how quickly the number of people who are 80 or older is growing and how few children there are at the bottom of the pyramid and how many children who used to have during the demographic boom when I used to go to school, I remember afternoon classes I don't think anyone -- but it remembers having to go -- to send their children to school in the afternoon. This seems like an urban legend that never really happened. But this was the case. Schools were super full and now they're becoming empty. Now in 2025 to 2035, there will be over 2 million employees who will be gone. They will either retire or they will stop working. We will have to face the void that will have to be filled up if we want to continue growing on the level that we have right now.

The statistics are quite scary. Please look at the average pensioner. In 1980, you had 5 people working for an average pension, right now, well, I don't need to comment, right? There's a lot fewer people. And in 2050, there'll be a 1:1 ratio almost. So in general terms, well, there will be problems with the social benefit system that are linked to the depopulation and decrease in the number of people. But we're getting richer. Our purchasing power since we entered the EU has grown by over 160%. The society is becoming more and more affluent. It is being estimated that the number of millionaires in terms of dollars up to 2030 will triple and reach almost 260,000 people. This is also linked to the decision that we have taken to purchase, to acquire Goldman and to enter into the investment market quite widely because this is a product that we will be offering to this group of people. Eva will talk more about this.

So what is the bank intending to do about these trends? How is the bank going to address them. Eva and 3 of my colleagues from the Board will tell you more about it. So let me give the floor over to Marcin.

All right. So how are we going to address the trends that Michal has mentioned? This is our historical time line over the last decade, how our client base has grown, and the bottom shows the net growth that's about 100,000 customers, 100,000 a year and the growth of number of customers was over 300,000. There's going to be fewer and fewer customers on the market available. We will be changing our strategy. So we will want to increase the acquisition from 300 to 350, 380. But we will want to quite strongly look after the client base and to cater for them to make sure that we will have fewer departures.

It's about 150,000, 200,000 right now per year that leaves the bank for different reasons. We want to reduce this number to 150. It will be great if it was just 100. And definitely, we will want to limit the client, the churn. We will want to have more and more customers using more and more of our services because it increases customer loyalty. Another important element of our strategy, those are pensions and investments, that's especially true for my segment, so the mass market. And right now, our market share in the investment is about 6%. We would like it to double, we would like to exceed 1 million customers with a pension product. I think you can see the marketing activity that we have now. We have the cartoon character, [indiscernible] and some other commercials. We are looking at this as part of our social responsibility. So we want to be a bank that's associated with savings. It should talk about it. It should mention it, it should educate about savings. It is a massive impact on the quality of life of our customers and it's a preview of their pension life.

Okay. And the figure that Marcin has already mentioned the million of clients that are investing, I want to underline this, I want to stress that investment will be more and more common, and we'll be practiced by younger people who are increasingly demanding in terms of investments. We want to grow by threefold. So from 350,000, we want to grow to at least 1 million customers that will invest with ING. What is it that we need for that to happen?

We need 1 integrated platform because customers want convenience and transparency in how they are investing their money. So 1 platform would be [ My ING ], where we have everyday banking and everything that the customers need. So this will be a module used for funds and the brokerage office. And we need this platform to have all the products that the customers are expecting in 1 place and that we should be delivering in 1 place. So access to renowned Polish and foreign funds, including ING funds that we will be offering very soon, access to all the [ ECA and ECZA ] accounts for the brokerage house and to the stock exchange Poland and Polish and Global. That's our intention for investment.

Now regarding the corporate customers, we have a total of almost of 589,000 and we're quite ambitious. Of course, there is some similarity between retail, mass and small companies. So working on transactions and to reduce the churn, we have another big trend that we are going to react to and build a solution to. Smaller customers, they quite often seek information about how to open a company. They don't look at this -- for this information at the branch of the bank, luckily, those times are gone. We are building and developing a completely new ecosystem of supporting future entrepreneurs and young entrepreneurs, especially the smaller entrepreneurs. So starting with developing I think we're the only bank right now that is developing -- feel my love a portal supporting future entrepreneurs and getting knowledge of how to create a company, how to get inspired, how to conduct studies, what forms of taxations use, et cetera.

We have added just a week ago, we added the best in the country application that is -- that has intuitive assistance and is integrated with the Central Business register. And we are granting support for new and future entrepreneurs. We are quite intensely entering the channel that we were never present at. So search engines comparative websites. This will all lead to the fact that over the next decade, we will increase the number of companies by 40% to about 800,000 companies. For SMEs, this model with an adviser integrated is going to still be available. This is, I think, going to be a dominating model for a long time, but all the trends that I've mentioned are applicable mostly for smaller companies and future entrepreneurs.

In the wholesale area, we do realize and appreciate the Society of public response to the tendencies we've been describing. And in our strategy, we see 3 particular areas where there is a growing demand vis-a-vis the megatrends that the society sees. Health care, the first megatrend and the quality health care, medicine production, distribution, access, prevention, diagnostics and hospital stays. And we see that companies present on the market are more actively involved than ever, but also new players emerge and we want to support and finance with expansion and actively acquired such new clients' accounts.

Given the growing rate of prosperity in the society, we see more interest to see the world, and there are expanding airplane fleets to cater to the new increasing demand for tourist services. And there is also need to run settlements of all tourist transactions. And here, we are engaging very actively to acquiring new accounts, new clients in this area. And the third thing about demographics we see the new demand for employers and the new challenges, automation and digitization of logistic processes as illustrated on the screen, but also more widely, more broadly, automation, digitization of other operations, and we would like to acquire new clients also in this respect.

All the 3 areas are very much in the focus of our attention. But what is important for us is to remain active. We focus on the new onboarding integrated acquisition process deriving experience from the existing sectors, exchange of experiences with international companies and tapping on ING international experience and the process that we have tapped allowed us to access 100 new clients within the last year's time. So this will allow us to increase the revenue on new clients from 5% to 10% by 2035.

Apologies, a few words about private banking. Just to give you the full picture of all the market segments. We are a new tier but that has been set up as a set aside tier this year, but we've been active in private banking before. We want to be the bank of choice in private banking, and we want to triple the volume of private banking clients in the nearest time. What I was describing to you, talking about the platform and products very much applies to private banking clients as well because private banking clients are very much the same clients with similar expectations and they want to have access 24/7 to My ING, Moje and [indiscernible] to have full array of products available. And here, we decided to focus more on the relation-based model where advisers build relationships and stay with the clients for years to come.

This is also about banking for families. If we look at the Polish economy for the last 35 years, many new family businesses was set up and the lion's share in the Polish company, 80,000 new family businesses will be confronted with problem of succession will need to consider who is going to inherit their wealth, their assets their experience. And we want to be of assistance in this respect and make families alert to the existing problem of succession in family businesses. That's why we will take care of family foundations, which will allow to provide investments and provide full succession without partitioning of the existing family assets.

Thank you Eva. So in a nutshell, the first part of the presentation, which is about our clients. We intend, as you can see, to obtain 7.5 clients by 2035, both in retail and corporate tier. We want to come up with full pension of in view of the aging society. And we want to have new investments in excess of 12%, which will be obviously supported by the acquisition effort that we have just announced and will be coming back on 4 occasions during today's presentation to the slide. So that you know in which direction we want to go and expand and how we define ING in the beat of life.

Now the second segment of our presentation. Generation and lifestyle changes. Much has been happening in this respect so far we have on the marketplace, 5 generations, including Alpha that are not yet off age. And these are the areas where we will need to adjust to particular customer needs, clients' needs. Here, we briefly defined the typical features of each of the generation. Some people believe that people change as they are more and more mature. And some people believe that people stay as they were. And we want to cater to both models of aging corrugating nature. So we want to respond to the requirements of the Gen Z and Gen Alpha.

Gen Z, mind you, has started the labor market already, and they are on the marketplace. And for a certain trends that in spite of demographics, will make us particularly well destined to offer products, the products that next speakers are going to describe to you, 34% of people in Poland live in the housing stock that is densely populated, so to say, we are not as densely populated as other countries, but we still need more housing stock. It will change in time. But at this stage, 1/3 of the existing housing stock is overpopulated.

The blocks of flats, 20% of housing stock is blocks of flats which offers accommodation to 30% of people. And the life cycle for a blocks of apartments was designed for 40 years. Then it was renewed for another 40 years, but they will move away from the market. They will disappear from the market and people will look for new forms of accommodation and of living. And in 2013, the first blocks of flats built in 1940 and 1950 will age and they will be beyond their secure usability, and they will be not living worthy. Then a single down more than 14% of Polish people live in single households, which is very unlike the low -- the highest statistics in the United Kingdom, Denmark France. But certainly, we will not seeing much of cohabitation by home multigenerational families in Poland, any longer. There will be singles living in single households. And of course, social relations do change.

We spend more and more time online. Look at the evolution, 6.5 hours statistically per day is our online activity using a mobile, a tablet. So when we wake up, this is one of the dominating features of daily activity. Kids have been equipped with mobile. We are not evaluating these practices and 80% they are not yet 10 years old to be provided with a mobile. This is simply the fact of life. And the time spent on the phones is in excess of 4 hours per kid and 6 minutes just to learn online, just for comparison. So this is what is already happening and will be happening in the future and this is not only impacting on what we are going to do in our bank to accommodate the situation, but this is also more broadly about what is to be expected.

And my colleagues will tell you more about it. Marcin is the first on the list.

Yes. All right. So it all stands with our brand. Our brand is strong, as you have heard, and we hope it will remain strong or even stronger. We want to use the existing client base and the confidence and trust they have in us. And this way, we want to educate and generate new generations of our clients. And there are many people in our client base that are active opening up new accounts for their children. And blocks financial education and all other instruments, which help us to educate our clients about the philosophy and financial habits that are developed are also very important saving for the future. This is something we want to support with the whole strength of our brand.

We want to tap this opportunity because we do believe it will translate into our high-end growth and acquisition and the future power is very much before our eyes. We want to be a leading brand on the Polish market in 10 years' time. As for customer client satisfaction, it has been mentioned already, we are #1 amongst the bigger banks and we want to retain this leading position and even improve our performance. So our target is to be 30% or 40% better the #2 in the community of Polish banks. And we look at the new players coming into the market. So we are not only comparing ourselves against our peers but also among new arrivals and we want to improve our standing also in that respect.

How to do that? Acquisition growth, it's been mentioned already. Applications, they were briefly mentioned already. And we also want to top our brick and mortar presence and our expert knowledge in many, many areas. Something we want to share with our clients and also something about which we want to educate our clients also in our brick-and-mortar branches. And what is most difficult to be copied is the design of our in-house processes, digital and not digital. This is very important, and this is well appreciated by our clients as illustrated in our results, and we do hope to move along this line in the future.

This is our ratings in Google Play and App Store. So we are best-performing brand, one of the best-performing brands in Poland, in Europe and worldwide. Our app will -- mobile app will be constantly developing enriched with new functionalities, but it will be an evolutionary model and also we'll look at the new personalized features of applications so that it responds as well to the needs of alpha Gen Z, parents, affluent, the elderly and by the very nature of things, even if this is going to be 1 single application for all, it will be highly personalized and customized to the need.

It will be frictionless, -- so you will listen about the frictionlessness on many occasions today. And this is going to be designed so well so as to secure seamless transition without any too much time for thinking, stopping and considering what to do next. So this is certainly going to be one of our advantages, our strengths. Those processes will be frictionless, will be seamless. And what is going to be a common denominator for generations will be a conversation interface. So we'll be able to talk to our applications in order to caters to the needs of most very literate online and those who need more intuitive devices. So speech recognition and what we know from other companies will be also tapped in the decade or so in ING. And this is definitely the direction we want to go.

I think you recognize those logos very well. The common denominator for those companies is that very distributing a subscribers model and versus what ING wants to do in the future. It is not yet to be revealed that will be a dedicated press conference on the subject in Q1 next year to discuss this, but will be also developing on the subscriber space, and this has proven the best for other companies we want to follow to suit. Among business corporate clients, there are 2 things we want to do in the nearest future, and this is derived from a consideration that there is not much such a big difference between retail client and small business clients like companies owned by 1 person and operated by 1 person. And here, expectations and the desirability of simplicity is very much the same for individuals and for SMEs.

The first change, democratization of online banking for SMEs. So a dedicated channel of support to SMEs 100% remote based on expert knowledge, human operated but not requiring from anyone to go to a brick-and-mortar branch to meet an expert. All the research and all the pulse of public opinion shows that SMEs feel, love high and dry. If they need to take an out-of-the-box decision concerning their business and they need to travel fast for expertise. So remote sessions, audio/video chat sessions that are tested this year with 100 experts, experienced advisers who have been with us for years, will help you to contact us, without traveling to our physically existing brands. So we have the best of 2 worlds.

Digital world and universal around the clock bank, full expert knowledge made available in a very simple and digestible way, as Michal was showing to us. And second, consideration, how individual clients make their purchasing decisions. This is more frequently a marketplace formula. So we like to be in closed ecosystems. It's faster, more predictable, easier more competitive. And we thought that the same could be done with banking, especially for small enterprises and entrepreneurs. So in the coming quarters and years, we will be creating a brand of a bank, we're an entrepreneur and a small company will find everything almost everything to run their business. So from the point of view of a small business, we will make their lives easier. For entrepreneurs, we will make access easier to all the basic and extended instruments that entrepreneur and the small companies need to have access to since the moment they start considering doing business and creating business.

It will be launched fully very soon.

All right. Well, going back to mortgages. Regarding the historic data, you can see how over the last decade, we have been growing and nothing is changing here. We want to continue growing and even more. So we assume that today's volume of mortgages will be at least 2.5x bigger than it has been so far. We believe that we can acquire this for a while, we have been creating a mortgage and [ easy IPO ] project. This is visible on both sides, on the side of the bank, we can automate most of our processes to be resilient in terms of growing volumes, but also from the point of view of the customers we want them to be able to freely fill in the application and to get a mortgage online.

If they want to, if they so wish, the access to a bank's expert is still granted, but we do believe that we will be able to create such a process and that it will bring about the best customer experience. We believe that customers in Poland are at a stage where they are able to fill in such an application digitally online and take it to the very end. Another important element of our strategy are cash loans, consumer credits, whatever we call them. We're at the level of a 5% market share at the moment. We are building the market share gradually. But we do believe that the time has come for us to take a natural market share, which is about 8% market share. We are assuming that our customers are using these products, sometimes they go to the competitors. So they want to persuade them to come back. And we will perhaps be trying to be more open to new customers with such products.

We are creating a new process for incoming customers that are starting their relationship with our bank through such products. We want to refresh our offer of credit cards so that our customers are more willing to use them. We have a full portfolio of cards. We want this to be scaled up right now.

Ladies and gentlemen, in the area of risk, of course, this strategy is derives from our ambitious development plans and growth lines. And it stands for transformation. It's not a revolution, but it's a transformation. We want and we will be developing a scalable risk, simplifying risk, automate it. And one that's capable of effectively supporting ambitious development plans of our business lines. What does that stand for? First of all, effectiveness. We want to have very well working processes that are based on reliable data and modern tools. We will be simplifying, automating and configuring these processes so that everywhere we work, especially wherever we are exposed to a customer, for example, [ Easy IPO ] so that our processes are practically unrecognized or unnoticed by the customers. We want to shorten the decision time and scale up our business model.

Now the regulatory compliance, regulatory and control environment, well, perhaps will refrain from commenting on that. That's the domain or responsible of the risk division, and that's a natural and inherent responsibility but according to the ambitious development or goals, we want in this control environment to also be automated and simplified to the biggest possible extent and to -- for it to support ambitious growth.

Our tools, and I'm here referring precisely to models, we'll be very strongly linked to the client's portfolio to the life cycle and the relationship of the bank and the client. The models are inscribed in the whole relationship. We're talking about KYC onboarding processes, we're talking about complaints post-market processes, but also capital models. And our simple models such as consumer lending will be simplified in terms of their models, but the more demanding portfolios such as SMEs or wholesale banking area, we will perhaps be using the capital methods in such a way as to optimize it and free the capital to the support of our ambitious growth.

And our team competencies of the future support for business. This is something that we will be growing here, new skills, new competencies by learning and supporting new product. We have spoken a lot about the investment area. We will be also talking about our ambitions in the Wholesale Banking. Michal has mentioned that support to the energy transformation financing defense or infrastructure projects. We will be required a demanding but a strong support for business.

Ladies and gentlemen, in our strategy, we want to further develop the scalable operational model. This will allow us to service the dynamically growing business without a significant growth in costs. This, of course, will mean that our effectiveness will grow significantly. We are forecasting that up to 35% the sum of our deposits and loans will increase by 4%. And this will, of course, be possible, thanks to automation and the adoption of new technologies. The fast-growing digitization of banking services will impact the changing model of our operations. The vision of 2034 includes an organization that's mostly based on technology, data and AI. This is an organization where people will be cooperating with intelligent systems, this is an organization with expert knowledge will be invested in designing processes, developing operational platforms, tools, this -- these are operations where part of the manual operations will be dedicated to large transactions, will be dedicated to specific complicated complex solutions that we will be offering to our customers.

And still, we will be ensuring unchanged security and compliance with regulatory requirements. This is our first defense line operations. And what's most important, we will be ensuring customer satisfaction. And we will be creating the best possible customer experience in custom -- cooperation with the bank. The impact of operations is huge because mostly it's on the operational level that we interact with customers. The customers are mostly inside. The app always service the processes that are partially operational in nature. I wanted to stress that this will be an evolution. We are here already on this route, and we have been for a while.

And currently, the level of process automation in our bank is 80% measured by the STP Index. This means the level of operations that are initiated by ING business and then fully automated without human participation. This is already a very good outcome, but we are aspiring for it to be further improved and to further increase the automation of our processes because this is what our customers are expecting, this is due to the operational trends. The trends in the labor market, we know that the availability of resources is going to diminish and the availability of services provided by people is also going to be reduced.

The STP index comprises several dozens of key processes. We are selecting the 2 key groups of processes that are important from the point of view of our strategy. Onboarding, new customer acquisition, loans these are the current data. We aspire obviously to improve the automation levels. You can see a significant change in mortgages and the project that we conduct together with business and risk to automate mortgages, we are actually expecting an 80% level of automation in loan granting decision-making process. These are sales processes, entrepreneurs and companies -- well, we have presenting here information about launch of loans, so a certain level of service. So what's important is evolution, not revolution. We're on the throat here, we're automating and we have been automating these processes for years. We will be automating that further. We will use the potential of technology and AI. And I think that's quite obvious.

So summing up this block we are planning to grow in mortgages by 2.5 -- twofold, 2.5. We want to reach 8% share in cash loans, consumption loans, we want to introduce a subscription model that will create a loyalty to the bank. Based on the services that will be available, we will be creating the marketplace. We will be developing mobile banking further using voice as one of the elements that will link the youngest and the eldest users. We want to be the leader of PSA. We want to further automate the processes leaving -- leading to 95% of automation. We want to use voice bots and chatbots in such a way so as to facilitate the customer experience and respond to the changing needs of the world.

And all of that will be based on a safe attitude to risk that [ Asha ] has spoken about, modern finances scalable operational model. At the bottom of the slide, you can see these blocks in blue. We call them enablers and those -- the starting point for these points in orange to be possible to implement. Now let me say a few words about the economy. This is a map of the global supply chains or trade tendencies in 2000. The light blue was the domination of bright blue of the EU throughout the world that I'm sure we all recall. This is what the map looks like right now. So there's a deglobalization. And this is what we're going to face. The EU has, in fact, withdrawn from the majority of areas where we used to be leaders, the yellow is China.

At the same time, we're seeing an over regulation in the economy, which is due to various reasons. And a few examples here. In the EU over the last few years, we have had 13,000 regulations created. And at the same time, in the U.S., just over 5,000 that have mostly dealt with the functioning of businesses and enterprises. On the pharmaceutical market, that's another example, the EU has banned 2,537 various substances. They cannot be used in cosmetics whereas in the U.S., there is a total of 11.

Now if you look at the competitiveness of the Polish economy, this graph is also present for most European countries. Between 2015 and 2025, the competitiveness has decreased significantly. At the same time, Poland is facing huge opportunities due to the energy transformation. As you are quite aware, the Polish government is planning to spend over PLN 1 billion -- so PLN 1.1 billion, actually, PLN 1.1 billion on power plants. This is a very big driver for the economy in terms of modernizing the whole ecosystem. We will be building airports. This is apparently the amount that's going to be spent on the central airport. We will be joining these airports to the modern railway hub. These are further billions that are going to be spent on infrastructure. At the same time, we are increasing our defense systems going to spend almost PLN 2 trillion on defense. And those are all huge opportunities that banks such as ours are looking up to.

And let's hear from Michal [indiscernible] for a few words of comment.

As Michal has said, Polish economy is facing some mega trends and is in the process of transformation. In our strategy, we are focusing on 4 areas that we want to have a strategic participation. We are using both our existing knowledge and our balance sheet of ING but also the experience of ING from different countries that perhaps were earlier on the transformation route than we are here in Poland.

And the first key area is energy transformation facing the climate challenges, but also what needs to be looked at, a low effectiveness of the Polish economy when it comes to energy consumption and the use of energy. We are now showing you examples of companies that we are cooperating with effectively and financing some projects in the area of renewable energy. We're planning to base on these experiences for projects that we know are being planned for the upcoming years, but it's also worth looking at the fact that we are getting prepared to finance first energy projects based on the nuclear technology.

Logistics is another area that we want to look at both physical infrastructure, such as airports or ports, harbors. But also technological infrastructure, such as broadband or data centers, fiber optics and other infrastructures built by big players. These are projects that have been put in practice over the last 12 months, but also a basis for us to prepare to have some projects cofinance that are going to be rolled out in the upcoming years.

The next key area is, of course, the defense transformation. The first area that has been launched is financing acquisitions on the large scale. So procurement of army development on international markets. These are projects that are being coordinated with the Polish official BGK Bank. And we know that new acquisitions are being planned for the upcoming years. But another important pillar that's related to the technological development of our country, that is manufacturing and production, developing Polish armament system by both public or state-owned companies, but also private enterprises that are involved in, for example, manufacturing drones. We are actively involved. We are financing projects in those areas. Unfortunately, we cannot list them all, but we are also preparing to finance projects that we know are being planned for the nearest future.

And the plans that we know are being prepared. On the basis of that, we are forecasting that two, that we are going to be able to implement growth in terms of investment loans and loans supporting newly created supply chains and value chains. We can double our loaning and deposit volumes. Very often, the deposit side is a very important component for large investment projects.

There is a fourth area that we want to look at. Still, Michal mentioned deglobalization, a certain end of an era of large global economies. But to replace that, we will have new supply chains used by Polish enterprises that are more and more frequently going out to international markets. And we support them and have been supporting them from the expansion in a dozen or so of most recent months to the tune of PLN 13 billion, either for investment or offering and backing up their investments and our ability to support Polish companies expansion is possible, thanks to local presence offered by Bank Slaski, 10% of local presence, our sector-based knowledge. So our end expertise about individual sectors in which customers operate in our international network, which allows us to support our entrepreneurs as we want to roll out and go out to the American market, which is quite an interesting factor in our development and the development of Polish companies.

And bearing in mind the internationalization of the Polish economy, we also need to remember that Poland is on the receiving end of investments. Here, we have new companies arriving to the Polish market and expand their presence in Poland. This is more than 60 companies to date. And what is important is that the investment trend, the FDIs in Poland will be a growing tendency. Poland is seen as a strategic market for many players served by ING internationally. So we are ready in our strategy to support the foreign companies tapping the Polish market. We have such relations in 40-ish countries. We have also our sector knowledge and we have our strong international network which will help new arrivals on the Polish market.

And what we want to do in corporate tier is that we want to double the volume of transactions in our strategic planning period. And what is conducive is the growth of economy, what is not so conducive is the level of difficulty of investing in private sector. There is a lot of uncertainty. There is lots of overregulation, top Polish entrepreneurs as we are interviewed, say how long investment processes take in Poland as compared to other countries. And this has bearing on business and condition of doing business in Poland.

And what we want to do is to rebuild from scratch to paths manual path that is 60% of our volumes lending and semiautomatic path, where we have some 25% of our volumes. And since we have been market leaders on those 2 paths in recent years, we want to shortened and streamlined process to take 5 days for a fully automatic for manual path and today's for semi-automatic path where we are supported by dedicated algorithm. And we want to be able to advise and give tips, enhance some certain actions to be taken.

And 2 other areas I was mentioning to you is leasing and factoring. Historically, in leasing, we have been very strong. Leasing to medium and large companies is our strength. But leasing for smaller assets for SMEs is not so well penetrated by ING. So we want to arrive at the new quality and starting from January.

Next, we will turn around the process for the existing client base of leasing clients in ING. So we will be leasing on click functionality available. And this will be a new value proposition for the existing client base, and we want to expand on the vendor channel where we are still under represented leasing with service on subscription, which is an increasing chunk in the Polish leasing market. And ING leasing a new brand to be more accessible and simpler so that small and medium and prices associated with leasing engines as well. So we are with strong presence in the large and medium sector and not so strong presence in the small enterprises leasing sector.

So we want to be number 3 by 2030 and have fivefold market share growth yet by 2030, very ambitious plan. The bar is very high. And now coming to the factoring side. Here, we are very well placed. We are #3 following mergers with other factoring companies. So we are very close to the second and first position on the market. We are performing very well, equaling the large companies market sector and in SMEs. And we want to even further increase our presence in terms of factoring for small companies. We want to increase it tenfold. I think this is the simplest way to secure financing for SMEs in the nearest future. And it will also help the new startups and we will also change the name. It's not going to be ING Commercial Finance Poland. It will be ING Factoring as of next year. And here, we want to be #1 in factoring by 2030, all across the key categories, the number of clients, the volumes of turnover and we promised with the level we want to be #1 in Poland.

Ladies and gentlemen, those goals and the transactions that my colleagues have been describing to you are very well dovetailed with SG strategy. And here, there won't be any revolution to be expected. We will continue with the SG goals as they have been communicated in the integrated bank strategy, both on the side of environmental responsibility and social responsibility. So everything that is defense-related will be also fine-tuned with SG strategy. The first of our SG goals is PLN 5 billion to be earmarked by 2032 support. Energy investments related to renewables.

The second goal is more on the social side. And we want to make sure that 1 million of clients save or invest to support their pension income in the future. And the growth on the acquisition area on the mortgage side, we would like to make sure that some 50% of mortgage loans would involve energy-efficient premises and buildings with the demand for primary energy sources below 56-kilowatt hours per year and all other goals will be modified as the situation develops. But the 3 anchors will remain as they are, very much the axis of our strategy.

So in a nutshell, about this block of subjects, we want to participate in the Polish transformation and finance it. We want to expand on the leasing and factoring side. And in terms of factoring, we want to be #1. We want to acquire market leadership. And this is all founded on sustainable growth, scalable operations and security of our institution.

Let me now tap the fourth block of topics before we summarize everything. Let's focus on technology. The world keeps evolving. As you can see this is Quantum Computing and the acceleration in all processes, the number of users of individual services acquired. Twitter, ChatGPT 100 million hit by ChatGPT of the last 2 months. And you can see that the new solutions are more and more sublime and more human-oriented, 73% of the bold people said that open AI has passed the touring test. So most of us could not say if they was served by a machine or a human being. Because the machine started showing some human instincts in its behavior.

If we have quantum computing that has been announced 10 years ago in one of our presentations. And if it is in place, it will be a turnaround and computing power will increase sky high, also the breaking of codes will be a matter of a few minutes. So 5 minutes really. So it will have immense bearing on the functioning of the banking community as the banks go online and there will be a revolution on the marketplace. There will be disappearing professions that we have just removed from the screen right now. And we want to shoulder some of Europe pain as a bank because some of lawyers and general practitioners won't be needed any longer, but there will be new emerging professions. The question is to what extent and to what extent they are going to accompany us, there will be fewer of us. And there will be robotization.

We, as the bank, have nothing to do with it but there will be 1 billion of humanoids supporting the aging society by 2050. So this is the vision that will have a positive impact on the societies as we depopulate, age and feel more and more lonely. And on the negative side, 20 to 50 hackers attacks, cyber attacks are recorded in the Polish really to bid in the transmission grid, in the Polish energy sector or any of the walk of life, also in the banking sector. And this is the reality of today. And this given all the increase in computing capacities and processing capacities and growing AI strength. So this is an alarming tendency. How are we as a bank going to shoulder this challenge? [ Alisa and Matt ] will tell you more about it.

Ladies and gentlemen, let me start by noting that next of the changes in the systems and the availability of new functionalities to support our technology. We want to carry out 3 transformative processes in the bank to make us future ready in terms of banking technologies. Let me use a certain visual slide to illustrate the magnitude of transformation in store for us. The transformation of our central system, a very backbone of our operations as a bank. Something that determines most of our operations and business models. So the efficient and effective operation of the backbone is a must.

Our central system shown as a cube, it all started some 30 years ago. And for many years, the system was surrounded by additional subsystems interconnected with one another and the system is operating based on a very complex and rather costly platform. And the system operates very well, and we supported and sustained it. But looking into the future, we'll need to transform it. Why? In order to be able to handle larger volumes and newer technologies. What we have in place is very much big monolith and the programming languages are obsolete perhaps and are not edge cutting, so to say. And we want to identify individual chunks in the systems such as the general ledger catalog of products and commissions, and we will either migrate them to existing applications or create new applications.

So those new chunks will immigrate to new places. And as a result of this, the architecture of the application will be modernized. It will be leaner and more effective, and it will be cloud-based and online available. So we'll decide ourselves where it's going to operate in a data center in cloud provided by an external provider. So this is a revolutionary change. It will have bearing on business, on operations, and it will commit the whole bank.

The second revolutionary change transformation that has been ongoing since 2022 is our cloud migration, migration to public cloud. This migration is something that is happening and is well advanced, but we'll need to bring it to the very end to the completion. We want to obtain benefits of operating in the cloud and the operational stack and certain application building capacity will be now transferable and we will be able to decide ourselves where we want to have those applications operating whether a provider or in the data center, the decision will be ours. And we will reduce the size of such functionalities will reduce operational costs and maintenance costs.

The third very important transformation is the change of our analytical systems, data systems and data management systems and reporting platforms. Data are at the fuel in our bank and any other bank without actual proven and up-to-date data and data availability, it will be virtually impossible to operate. We have data lake and the central data warehouse. And we want to move away from what we have in data center with all the existing limitations of the data center, and we want to move them to the public cloud and the whole analytical and reporting system is going to be better supported by various analytical tools and cloud-based tools and will employ artificial intelligence more. Frequently, the process has started in the bank many years ago. And Alicia will tell you more about what is to be expected of our cooperation with AI.

As a result of all that operational have quicker access to data, better scalability of data and modern tools for data scientists. Over to Alicia, please.

Ladies and gentlemen, artificial intelligence is a broad concept in itself. So let me focus on the 3 particular AI technologies that are most relevant to us. For years, we've been using machine learning for bank, and we are pretty mature on that count. This is the technology, which allows us to perform advanced data analysis on various levels, statistical data, voice processing, image processing and many uses. Here, you have an analysis of real estate, something that we used to monitor mortgage loans, we also have a number of solutions in preventing money laundering, CDD and post transaction monitoring predictive models in monitoring of loan repayments.

These are also very advanced areas, the restructuring and the debt collection. But in our business activity, we use machine learning to personalize offers for customers, to personalize marketing communication, operational communication as well. This technology is still -- has still got a lot of potential, even though they're new, a lot better technologies, machine learning recently compared to machine learning. And this technology has broader solutions. And now regarding the implementations in our bank, let me just inform you that we have 3 generative models that are being implemented in our banking processes.

And that is the assistant for the complaint service process, which analyzes the content and generates the response for the customers. These are chatbots for business banking for corporate business banking customers. They're intuitive. They are built on generative technology that allows for bigger opportunities and the language of the communication becomes more natural. And the third application is to update the data and the CDD processes. So all of the AML obligatory processes. And that is the beginning. We are working on specific subsequent solutions, and there's going to be an increasing number of those.

And let me also mention the agentic AI. This is a technology that we look at because it's a solution that provides a lot of potential for us. It has a lot of potential, and we use applications in our process. Agentic AI is not just individual solutions that we apply to a process, but these are opportunities to automate the entire processes. So in the ING Group that we're part of, there's work going on and experiments going on concerning the use of agentic AI, especially in the loan processes, business banking or corporate segment, and we are going to follow suit. And that's in short what I was going to say.

Let's just mention one very important thing without which we couldn't really move forward. Let's remember that whatever happens in the bank, especially from the technological point of view, has to progress in accordance with regulations and the principles of risk management. Our goal is to ensure availability and integration and include cybersecurity and resilience to attacks. We will never cease in our efforts to maintain the bank's security level on an adequate level, and we will be continuing to invest and to improve it because there are changing trends and changing threats and we need to respond to what's happening.

Another thing is that we are planning to conduct a lot of tests and simulations that are going to make us more resilient and to show us the areas that need improvement whenever there are some unpredicted situations, emergencies such as attacks, malfunctions. These aspects are very important for us. We also want to continue our efforts in order to be the leader of the availability of our systems. There are quite a lot of them now, and we will definitely be having to ensure that our customers of especially the core system or migration to cloud do not feel that something like that is happening. That's a personal goal of mine. And last but not least, those are actions that are addressed to the bank as the organization, but we are also going to strongly increase our operational excellence and detection of fraud targeted at our customers. This is an important problem for the whole sector. And we have multiple ideas of -- for improvements in this sector on how to counteract the cyber criminality.

Thank you. Okay, to sum up, we have the same slide that we have been showing over and over again. We want all of these growth the development of our institution to be based on safe -- in a safe environment that we can function in. We want to make AI our ally, not an enemy because since humans have invented it, there is no turning back. We want to use AI, both for processes that are going to be automated but also prompts that will allow us to manage better. But all of that is based on data and figures because we are a bank.

So before we wrap up this presentation, let me give the floor to our CFO, Bozena Graczyk.

Okay. It is with great pleasure that I would like to present our strategy, sum up our strategy. We developed it for a period of 10 years. We believe that long-term strategy is the level of ambition we want to achieve consistently perhaps in a slightly boring way from an analytical point of view, I need to repeat that, but we are consistent in our drive to reach the goals. The long-term business goals have been presented, but I will repeat them again. And as well, because I know this is something that you're interested in, we want to show our long-term financial ambitions over the next 10 years.

What's a brand of ours is a consistency and action being consistent in terms of growth. I think you've seen a lot of evidence to that end, observing us over the last few years. Our favorite indicator that we like to look at is the increased commercial balance we have grown by 2.5x in terms of our loans and deposits. And I believe that the fact that we can consistently deliver growth is a component that makes us stand out in the market, and we want us to remain like that.

So starting with our customers, we want to have 7.5 million customers in 10 years. So that's over 40% more than what we have right now. We're assuming that the number of retail customers will grow by 2 million from 4.6 million to 6.6 million in 10 years. We want to triple the number of private banking customers and reached the results on the level of 50,000. In the corporate segment, we are assuming that our client base will grow by 40% from the current 573,000 to over 800,000 in 2035. We have spoken a few times about the fact that the investment and pension area is a key pillar of our strategy. So we want to put very ambitious goals here, we want the number of retail customers that are actively investing to grow threefold over this period from 324,000 to 1 million.

Now regarding our market share in investment and pension products, we are planning to at least double it. Currently, it is at the end of 2024, we wanted to be 12% in 10 years. And we believe that the transaction that has been announced today will be a significant pillar to the growth of that sector. Big emphasis on investment does not mean that we want to forget about the growing savings and deposits of our customers. We are assuming that we can double the balance of our deposit in terms of retail and business customers. For investment like Marcin has said, it is the mortgage that's our Chief Strategic product. It is a very important one from the point of view of our customers' goals, but also our strategic goals. Over the next decade, we want to grow by 2.5x from PLN 61 billion that we had towards the end of 2024.

So far, our share in consumer loans was 5% -- has been 5% in 2035, we wanted to be 8%. We are also drawing some ambitious goals in our corporate sector. We're assuming that the loan value will grow twofold. And like Marcin said before, we want to also look into lease and factoring services. And now about our financial ambitions. That's some information that you have been able to read in our current report. Perhaps let me start with the return on equity. We are estimating and planning for this indicator to be on the level of about 19%. Our strategic goal is not to improve it because for the recent years, we have been able to prove that this indicator is above the market average, thanks to big profitability but also effectiveness in terms of managing our equity. And we want this to be the case.

Still, we do not want growth. We want a return indicator on equity above the market average. Now cost to revenue. This is not the lowest on the market, but that's not a strategic goal. We want this level to be adequate and correspond to the quality and to how we conduct our investments. We want to have a technological advantage when we do business in Poland. But where we want to stand out is a lower long-term risk indicator. And from that point of view, we're making reference to the cost over the last 10 years, which is 60 basis points and is a long-term trend around which our cost of risk are evolving in our balance sheet structure.

And while we are communicating this strategy, we have updated our dividend policy. You have been able to read that the goal of our dividend policy is to be able to pay out a dividend on the level up to 75%. As you will know, I'm sure, because we talk about it frequently, it is our goal also to have sufficient equity to grow in accordance with all the regulatory requirements and growth is what we always put ahead of the dividend indicator -- dividend rate, but we want this level to be adequate to our equity capacity long term. We won the quality NPS rate for retail and business. Well, that's our strategic goal.

We want, in summary, I want to say that I hope you will be able to observe that we consistently deliver growth, adequate levels of return on equity and that we -- allowing our shareholders to enjoy these outcomes and our workers as well. Thank you.

And that's our definition of the beat of life, how as a bank, we want to be integrated in the changing society and changing economy. And over the next 10 years, we want to accompany you in the development of our country. Thank you very much.

We remain for that credit card is needed to book your hotel to rent a car, you need a card. So that's why we have target client campaigns to expand on card portfolio. I mean since in our client base, the credit card penetration is not big. And there is a massive potential to grow on. We have just hundreds of thousands of clients who have credit cards. And so I will allow you to rest said, but I will ask about pensions and investments. You've been saying that an integrated investment platform is needed and availability of pension investment funds. What is already there and what will be rolled out in the nearest future?

As for savings, our saving and investing with a view of your retirement, we have savings accounts and fund-based accounts. And as of next year, using our brokers office, there will be an additional path for investment for future pensioners.

And investment would taken more broadly, do you want to commit yourself to innovate Poland the most recently announced program?

Well, we will consider that.

And my last question, offer for corporations and companies, you said quite generally, but there will be like one-stop shop full ecosystem. And what's new will appear?

Well, give us some time, we want to not to reveal all the cards as yet, we'll do it step by step. But among the biggest banks, we have the most extensive product ecosystem, you may not see it every day in every day live next to factoring and next to leasing, we have sales terminals, we have Internet gateway. We have fuel cards, and this will be complemented with everything, basically everything that is needed for a small compact company. So if anyone uses it, one will be able to focus on coal business rather than the formalities that need to be satisfied in any company's life. So the time will come, it is very much as with subscriptions that will reveal all the offer.

Good afternoon, [indiscernible] Business Center. Let me just please the CEO and on the one hand, the demographic cake is shrinking, and we will -- we are heading for 30 million population in Poland, but you want to aggressively expand your client base. So do you want to wait and open price war with PKOBP, PKOS or Millennium or Santander because you haven't been clear about it.

And the second question is about automation. 95% of your mechanisms are to be automated, right? And you have not yet told us about your internal HR processes, would you like to layoff some of your HR or convert them into engineers? And the third question, a difficult one, but this is the last one. You rely very much in your strategy on major infrastructural investments, government investments and there is a sovereign risk or political risk. If the -- if it comes to the crunches with CPK or with defense spending, how will you secure your existence in the public sector?

Well, let me take the first question. First, remind me and this was -- well, we were trying to connect this and relate this. I mean, there will be decrease in the population of Poland, but it won't be felt that dramatically by 2030. This is not so much about growth of people, but rather limiting of churn, as Marcin was explaining. So we do not expect that we will be winning the price war against PKOBP, PKOS, this is not our goal and not our [ attendant ]. We want to build value add it otherwise. And we will try to pursue policy which will help us to reduce our churn.

If you look on the slides that have been attached historically, we were generating 400,000 new clients growth, but churn was consuming a major part of this growth. And this is something we want to turn around. The growth will be also funded on the new premises like the demand for new households and new living space. And the singles don't want to stay on a crowded space that is available right now. They will want to have their own households, more spacious, and we will try to cater to this newly emerging trend.

And the second strength over to Alice.

Yes, on automation, STP index that we were showing to you relates to business processes, by key processes, key operational processes. You asked about the HR processes and internal processes. Of course, automation will have bearing on our internal processes as much as risk will.

And in HR and in other departments with an ongoing automation. Does it result in laying off and redundancies?

Well, automation has been proceeding in ING for years. But we are doing the reskilling of our personnel and those who are processing clients requests are now designing new processes, building and designing processes from the operational side. And we, of course, assumes we accelerated absorption of artificial intelligence. It will happen, but we will educate our personnel on AI, we have the global AI track program focused on AI education and literacy. People come up with new ideas and they see it's worthwhile to expand their AI competencies. And AI will support us reduced employment.

I was showing you the growing volumes of deposits and loans per full-time equivalent but we are growing. And we reduce FTEs. You know it, and we communicated. There will be natural reductions of jobs knowing which processes are to be automated, but this is a very well balanced process. And I hope that this modus operandi will be adequate and opposite.

Michal, coming to your third question, by way of a paradox, I can see a political consensus in all the 4 areas that I was mentioning energy transformation especially the target pillar of the Polish mix that is nuclear. There is a consensus about it. There are differences as to the ways and means of arriving to the Polish nuclear energy, but there is consensus as to the concept itself. The same goes for defense. And the same goes for modernization of our infrastructure. As for the CPK hub, Central transportation hub, the bone of contention is who was the originator of a project, but this is very much about Polish [ Razon ] debt, and I do not see major differences between various political forces on the Polish political arena to this.

And also, financing new supply chains. Again, there is a consensus on this project, the Polish economy will be of crucial importance in the transformation of global supply chains. And also, if we loan, If we lend money, we know to whom we want to lend and how the bank will -- how the borrower is going to repay to us and the human factor that is our own employees, our own personnel. Well, we spent a lot of time on coming up with a value offered to our employees so that they come to your face and become more resilient and also psychological aspects of our functioning as a banking community. But tomorrow in [ Cato Vita ], we have a town hall meeting with all our employees. So we will have the repeated content of today and new aspects related with their day-to-day operations.

Hello Konrad Krasuski of Bloomberg 3 or 4 questions -- 2 questions instead of 3 or 4. Demographics and you've been speaking about it eloquently and bank was also saying so that we are approaching a new model, a new situation where we will all be somewhat more senior and gray haired. But don't you see any negative side in the development of your lending offer because what is happening right now is that Poland is not depopulating evenly. Perhaps you should customize your offer to regions or to the situation at hand in the regions. So someone may not be creditworthy when one lives in [ Bostock or Samos ] and are you going to be a bank for every one, a universal bank? Or are you going to focus on the islands of [ soliciting ] in Poland and prosperity in Poland?

And client loyalty and reduction of churn. What are you going to do if a major portion of your clients want to renegotiate a mortgage arrangement. Are you going to hope for loyalty? Or will you come up with some other solution?

I will start out until I invite Marcin to follow. We are not going to be a bank catering common those islands of prosperity and felicity, no. We are going to be there for the society at large and we value the property adequately. And if someone builds a house in the forest without an access road, we will be able to detect it, and we will not offer to refinance it even now. So there won't be any radical changes in the future. And of course, we will take into account growth tendencies for locality, if there is depopulation and growing unemployment rate the attractiveness of the region will collapse. And we will take this into account as we do right now. So there is no revolution in this respect.

And Marcin?

Yes, words from me and then over to [ Asha ]. As to the fixed rate, well, there has been the purpose of it. And we want to involve our clients with a dialogue, and we will invite our clients for potential renegotiation in a 5-year cycle, but not more frequently. And there will be an option, there will be a variable rate available, but we want to offer possibility and predictability to our clients. If we agree on something, let's continue for 5 years. And then we can renegotiate.

And in Poland, this 5-year period is relatively short. And if someone is confronted with an extreme situation, one may renegotiate more frequently but we'll need to check one's individual circumstances to make a decision. So each and every situation is different, but we want to promise and deliver as promised. So we don't want to promise something that we are not going to deliver on later on. So we are very much client oriented, and we want to take into account individual situations.

Yes. And from the risk angle and risk management angle. Well, it's not about those islands, those islands of prosperity and happiness. If they appear in Poland, they will have some impact on our lending model and lending decisions. But it will be the effect of the reason for taking such decisions. So we are far behind the time when it was the client's age at pre-determent everything. Now we are now looking at various scoring behavioral models that take into account various behaviors and various new data also taken from outside of the banking environment, and we can mitigate the risk appropriately.

Against this backdrop, this attitude will not be different at all to what we have right now. If there is no capacity to service indebtedness, then we can see that there is no area to establish a loan relationship with a client, and that fundamental attitude of the bank will be sustained.

Kamil Stolarski, Santander. Thank you very much for taking us into the future and the longer perspective that you've offered. I have as many as 3 questions. I want to ask you about the market shares, but in 2 main aggregates, credits, loans and deposits. You have provided an outlook of how much this was going to grow. And when I look at the history of ING, well, up to 2021, we were gaining market shares and the latest market -- record market share in deposit was in 2021. Now is today's strategy -- with the market faster than the market or is the market next to us and we want to be twice or 2.5x as good?

Well, we have this conversation on a quarterly basis, the loan-to-depo indicator ratio is very -- a strategic element for us as you are able to see in our presentation, we want to grow on both sides of the balance sheet, but we want to grow faster on the loan side so that the loan-to-depo ratio could systematically grow. And we indeed want to be back in the time when this was 90% plus. And this is still putting us as one of the leaders for this ratio. So already in the difficult situation of the structural over fluidity week and effectively loan money, and we can manage the balance sheet structure so that it's maximally effective.

Now regarding what's going to happen in the future and our market share in the future, we said before that we want to increase them. But let's also remember, this was very clear that we are going to function around huge growth in terms of volume, where the goal is not to sustain or increase market share, but to increase the volume in natural market. But naturally looking at our efficiency, we are assuming that our market share will be able to grow and will be growing.

Yes, you were right to remark that I must add because in general terms, we reflect our conduct in our loan capacity. So when we were aware that there's such excessive fluidity on the market. And we showed the treasury bonds constitute a big proportion of the balance sheet. There is a certain limit to how many T-bonds it makes sense to buy, right? So in general terms, we try and adjust on an ongoing basis. Now we're hoping that the big huge infrastructural prices will increase the demand for loans, both cash and also mortgage -- but at some point, perhaps some of the investments in the private sector will be launched, and we will be seeing the 2 parallel lines growing.

You have 2 more questions.

Yes, sadly, I do, if I may. My other question hedging. Is there anything that's going to change? ING today has the lowest interest rate margin. The last 4 quarters, the hedging cost is PLN 4 billion. My question is if something changes or not? If not, I won't take up your time.

I think frequently -- this is a question that's frequently asked. So we have answered it many times. Our goal is to deliver long-term value for our shareholders. So our strategy is not volatile in this area. So we are hoping, we are assuming that we will get a rather stable interest rates. But of course, this is a dynamic environment. This is not one tech strategy. It has some elements that evolve, this is a derivative of our long-term strategy.

And the last question, reference to an article that has recently been published an interview with a manager of an Italian bank. What are the relations of ING Group with the ING Bank and Group? And I wanted to ask you about the enabler seen in CapEx. When I look at the CapEx of ING in 2024, it was PLN 260 million and 5 years ago, it was PLN 436 million? So Well, I know that financial reports are not perfect, but these are the figures you are disclosing. And I'm looking at how revenues are changing. They have grown. Costs have increased by 70%, but amortization, just 9%. So those investments in technology, are they made on the level of the group or are they made by the bank? And isn't it an important enabler to increase investments? And from the point of view of investment outlet.

Okay, let me respond to what's happening in the P&L. This question was asked before, and we have responded to it already. Our goal is not to capitalize per se, but to implement projects in such a way, which is also our attitude -- agile attitude whereby we take small steps and apply short-term measures to deliver outcomes. And it is to a smaller degree that we now have very big enterprises that are capitalized, but we have a lot more outlays that are implemented immediately to our P&L. So please don't look through the lens of CapEx at the ability of the bank to implement projects.

We stand out from that point of view in the market. We have been looking at it from the point of view of different financial economic indicators and we OpEx to a much greater degree of projects than is typical for the sector. So that's why our share of investment outlay in our balance sheet is smaller, but cost to income does not necessarily have to be the smallest in the sector. Let me just add that our relationship with the ING Group is very good. You asked about the quality of this relationship. It is very good. We are happy to how -- and how we function -- with how we function in the ecosystem. We are a very important part of this group. And when there are -- we believe that there are solutions that are good, we will be replicating them here in Poland without having to reinvent the wheel.

So especially what [ Martek ] has mentioned, the ICBS transformation and some of the components that we will want to use on the basis of the licenses or the experiences that are functioning in the group already. Now effectiveness, added value to the clients and for us as an institution will be some of the defining points here. We will just be implementing those. And it's not a stage at which we can take the same solutions as we did at the beginning of the millennium or back in the '90s, and we cannot get inspired by every single aspect of what's happening in every country in Western Europe, we're at a different stage of this bank's development. But there are certain infrastructural things in certain solutions that we will definitely be using.

Any other questions from the room?

Okay, brokerage house city, just to -- central system. How do we understand that against the backdrop of -- what you just said there's a communication in December 2021. Back in the day, you said that you were implementing a centralized system. Just for layman, could you explain what that communication was all about where you are on this route? And to leaping forward towards the left, is it going to be more visible in the OpEx or at some point in the CapEx?

Yes, we communicated that we were using a central system of a specific producer. But based on the implementation process that lasted a few years, we came to the conclusion that, that wasn't the way we wanted to proceed with this transformation. We weren't able, due to the complexity of the system and the links I'm trying to explain it the best I can. We cannot select a specific product and then migrate 1 product after another because there's a lot of change that needs to happen around in the whole environment. So we need to change the attitude, we need to first prepare everything around and reduce the accounting role to the minimum. And then it is only then that we can consider going forward with a new product. But that is a multiannual transformation before we even -- I have been answered, but there is one that I would like to read out.

And against the backdrop of today's announcement of acquiring Goldman Sachs authority stake, I wanted to ask what the name of the institution will be after the transaction is finalized? Funds managed, but Goldman Sachs will be called ING? That's the announcement apparently. What about the managing institution? Are there any changes planned in the pricing policy and the management of the company and their offer?

Already some changes were made today formally -- has been going on for many years with this entity. I don't even want to mention when the ING asset management history started in this capital group. We have come well, quite -- we have come around quite a large historical period. And we need to wait a few months for all of these contents to be obtained. And then it will be INGTFI. The corporation is perfect, always has been. We have shared routes, and we will be talking together about that, and this will be under an orange color with -- that this entity can support our strategy and further develop. This used to be #5, but it has grown and is now the second largest asset management fund, and we have even more ambitious plans going forward.

These are all the questions. I'm looking around the room. Okay. Thank you so much, everyone. And let's continue informally.

Good morning. Welcome to our conference, during which we will present our performance in the past quarter and in the past 3 quarters as well. [Foreign Language]. My name is Piotr Utrata, and I'm the spokesman of the bank.

Michal, over to you.

Good morning. This quarter was kind of a boring, predictable quarter without any exciting events, but that's what I think is expected of a bank, to be stable and to continue its strategy. And this is indeed what this quarter was like.

The most important things that I would like to draw your attention to is that the bank has been growing in terms of the number of customers, especially in the retail segment. And the growth was 135,000 year-on-year. We have now reached nearly 4.7 million customers. On the corporate side, the growth was 18,000 year-on-year, bringing this to nearly 590,000, which means that we are developing our market share by attracting new businesses and new individuals to work with us. This is very important because we are very active in close -- in the closing accounts that are not used. So what I'm giving you is actual acquisition of customers. These aren't any passive customers that don't use our services.

In Q3, the growth of mortgage loans is particularly noteworthy. It was very good and very fast in Q3, and we are in the second place after PKO BP on the Polish market with a year-on-year growth of 46%. Our share in new sales is 18%. We are also doing well in cash flows. It's PLN 1.9 billion, which is 26% more than in the previous year. This isn't the share of the market we would like to see. Right now, the market share is 5.8%. A significant part of those loans is granted online.

Mutual funds are yet another area that's not worthy, with a growth of 33% year-on-year to PLN 22.6 billion. 3/4 of that was generated by net flows rather than the changes of the valuation. Our share in the market is 7.1%. The only area where there is more activity for corporate customers is in the area of factoring where the growth, which is posted on this slide, in our case, was significant compared to the market growth, which means we are increasing our market share. We're in the third place in the market. But if this trend can be maintained, we will be better than that.

For deposits, we are growing along with the market. We are not growing particularly faster because our lending to deposits ratio is very important to us. We could be getting more of them if we could translate them in all areas to loan, which is only possible on the retail side right now.

Now with loans, the growth is weaker in corporate, it's PLN 0.3 billion in the past quarter, and this is because of a number of things. And for the third quarter running or maybe even more than that, maybe even before I came to the bank, the investment of the private sector in the Polish economy is not growing. I'm not referring to the state investment. I'm just talking about private investment.

Now the second characteristic element has to do with the structure of our portfolio. We have a lot of lending, whereby we finance other financial situations, and all of them have the same strategy for loan to depot. We have over PLN 6 billion in terms of this investment. And these balances are growing.

Now we are hoping right now that the situation will improve in the future. But from the market point of view, we cannot see that improvement happening yet. We're also looking at margin levels that we are not interested in anymore. Sometimes, there are about 18 basis points or maybe 40 basis points. That's below the bank tax. As a result, we don't see any sense in participating in these transactions. We have to maintain some level of profitability even if you do get some cross-selling effect from those transactions.

So these are the key elements, key things that we want to draw your attention to, including the mortgage loans, investment funds and other things that were particularly good this quarter. Like I said, corporate loans were a bit weaker and deposits were neutral.

When talking about these phenomena, let me discuss the financial results. I'm always very happy when I can say that our financial results are in line with the consensus because that means that we are a predictable bank that operates in line with the market expectations, and we don't surprise people either one way or another. And this also happened this quarter. Like Michal said, it was quite a calm quarter, a quarter of steady growth in the areas where we believe we need these growth from a strategic point of view, where we're looking for the value growth, and that translates into our financial results.

So for Q3, we had a 1% growth of our net income year-on-year, with over PLN 3 billion after the 3 quarters, which is 7% year-on-year. When we look at the structure, these growths are mostly happening as a result of what's happening on the commercial side, and both assets and liabilities changes. And also including the macro data, especially the interest rates. So in this quarter, the growth was mostly seen in our overall income, with a 5% growth over 9 months.

Another contributing factor was the reduction of the cost of risk of the 9 months, it was PLN 653 million, which is 24% down. Now in this quarter, our cost of risk was PLN 251 million, which was more than in the second quarter, but I'm going to tell you why in a moment. Another contributing factor is something that you pointed out, namely -- this is yet another quarter with very good results in terms of FX transactions. And this mostly pertains to derivates-based transactions.

Now if I were to summarize our net interest income, let me just tell you that it was nearly PLN 2.2 billion, which is a 1% growth quarter-on-quarter. And this is a result of good trends in the net balance sheet volumes, like Michal said, the loans went up by 2%, deposits by 7%. And so our quarterly interest margin was down 5 basis points to 3.15%. And our cost of financing was kept at a level of 2.03%.

What we are seeing is the effect of the changing interest rates. The sensitivity of the balance sheet to those reductions is present in our bank and it's also typical of the wider banking sector. As you remember, both long term and short term, we are seeing our macro cash flow hedging strategies that take effect and they stabilize our interest margin, and we can indeed see a positive contribution this quarter compared to what happened when interest rates change. We have a -- the pricing of the assets and we also have a growing role of T-bonds that also have a positive contribution in the interest margin.

Let me also talk about our sensitivity to the reductions of interest rates. You may remember that in the past, we said our sensitivity, given a fixed balance sheet, we have about PLN 130 million. But as the rates went down, the sensitivity goes up a little bit, so it's a bit higher, but it's still at a market level.

What we also have to mention is our interest concerning the changing interest rates. There is a varying sentiment in the market, especially short term potential changes in Q4. Our macroeconomic team believe there will be no more interest rate changes before 2026. Ultimately, they should be at the level of 4%. This is the current expectation. But naturally, we are waiting for the decision of the Monetary Policy Council.

Our LTD was at 75.3%. This is the result of a slightly different dynamic of deposits and lending. 66.8% is the typical loan to depot on the market. So as a result of that, as Michal said before, we are more selective when looking at these growth, especially looking at the assets that do not generate the necessary margin.

For fees and commissions, after Q3, it's nearly PLN 600 million, 5% increase in FX, 4% this quarter from cards and a 3% contribution from insurance. And this is mostly related to our increased lending.

I also need to comment on what happened year-on-year to these 9 months. The biggest contributing factor, which is 11%, is the capital market, especially the growth of the assets of investment funds, and that's up 33% year-on-year, 7% for insurance and 6% for the current accounts that are related to the activity of our customers.

On the cost side, not much has really happened in Q3. We had PLN 1.246 billion in terms of costs, which is a slight reduction on the previous quarter. And there is a slight movement between the different categories of costs. But it pretty much remained flat quarter-on-quarter. There is an increase in cost of remunerations. We gave pay rises to our employees this year. We have increased our marketing costs to PLN 11 million. But on the other hand, we reduced other operating costs that are of a more periodic character or temporary character. And in this quarter, as you know, we had a provision of PLN 18 million for a penalty, and that's also part of the cost.

Cost of risk, as I mentioned, PLN 251 million this quarter, PLN 200 million applies to the corporate banking segment and PLN 51 million to retail banking. I think what matters here is the fact that in the previous quarter, we had 2 positive developments that lowered the quarterly cost of risk, positive contribution of sales of irregular liabilities and the positive impact of macroeconomic data, which has changed the trend in this quarter, particularly in corporate banking, where macroeconomic data and their impact on the cost of risks have caused an increase of cost by PLN 21 million.

What matters is also that we have a very satisfactory low level of cost of risk in our retail banking segment. The quarterly margin of cost of risk is 26 basis points. In corporates, it's a bit higher, but you can see that the comparison of Q3 '25 to '24 shows you a considerable drop in the cost of risk. We are prudently valuing our loan portfolio and we are looking at all the risks that we identify quarter-to-quarter in line with the standards of accounting.

In terms of the quality of the portfolio, irregular loans share is unchanged, 4%. We have a very good quality in retail contribution of mortgages is 0. It's a very healthy portfolio. In corporate banking, systematically, the share of nonperforming loans is a bit higher. In Q3, we are at 6.2%. This is a result of the cautious policy, particularly in Stage 3 in this quarter. Our coverage with provisions increased to 52.4%. Movement compared to previous quarters is linked to the sale of nonperforming receivables.

In terms of our capital adequacy, you can see the total capital ratio of 14.85%, which is 81 basis points lower. The key contributor risk-weighted assets. The increase in loans portfolio in this quarter, particularly in terms of mortgages, requires time so that it would be effective. That's why newly granted loans always impact negatively in the first period and then it eases out. Let me also point your attention to the fact that we did not include the interim result. So this is a transitional period and the indicators are lower as a result.

Let me just remind you that we have received a Tier 2 loan. We're waiting for the KNF approval. Tier 2 loan will be included in our capital ratios and it will increase the ratio by 80 basis points. And it's worth emphasizing that minimum levels of our capital ratios, and in this sector, are under the influence of the increase of the anti-cyclical buffer. So TCR is referred to 12.5%. And you should keep that in mind from the point of view of minimum levels and the surplus of our capital.

I think I'll end my short presentation here, and we'll be looking forward to your questions. Thank you.

Let's first take questions from the room, and then we'll proceed to questions asked online.

[Ryszard ] Kolasinski, Polityka Insights. How will you explain increased costs of interest funding?

If we're talking about nominal costs of funding, they are [ 203 ], and that's the same level of costs that we had in the previous quarter. But the total value is a result of the increase in volumes. So nominally, it's the same level. I meant the annual dynamics.

Are you satisfied with the answer? Or are you still waiting for an answer?

I wanted to ask about the full year dynamics, which factors are relevant?

The change of funding cost is related to increases of the levels of interest rates, all the activities related to the core rate, all of the promotional activities that we offer to customers and market behavior. So we always analyze the market situation in detail. We look at the behavior of interest rates in the context of our promotional offers and increasing volumes.

Right. Let's ask a question online from interia.pl. Corporate loans, why is the demand so low?

Well, the reasons are the same as for the last 9 years. There are no investments in the private sector. This is what I explained at the beginning. But we also talked about it last quarter and 2 quarters ago. The government is making arms purchases. There are loans related to energy infrastructure, but it's not the type of loans that will change the situation in the economy in general. It will not boost demand. So the main reason, I would say, and we talked about it, identified it, it's the overregulation of the economy, to such an extent that businesses do not see any sense in investing, and they do not see opportunities that the investments would generate higher returns or higher profits. They are specifically afraid of the reporting obligations and other elements related to the market.

I mean energy prices, for example, they do not see a clear perspective related to investments. So they are reluctant to invest. Some of these programs, some of these requirements have been frozen, but they did not -- they have not disappeared altogether. The discussions are still ongoing. So the environment is highly unpredictable, and it's difficult to invest.

And let me emphasize, we see that some increase in corporate loans, this is something that we have noticed, but it's invisible because this is offset by a loss on the side of financial institutions, which are consolidating in their own funding activities -- funding their activities, and they are increasing -- decreasing the funding needs in our bank, but this is not a level which would be adequate to a situation where the economy would be picking up because of investments.

Also the dropping interest rates, we don't think that any drops of interest rates is a reason for businesses to start investing. There are other elements that have to be addressed first because the cost of funding is not most important here. It's not the main factor.

We're waiting for more questions, maybe someone from the room? Right. I will take it as a good token that our results are clear and predictable.

My question is more general. If we have the time, I decided to ask it. What share in personnel costs are IT personnel costs? I know that this is a broad question. It's difficult to explain, but if you were to -- well, I'm trying to check what the IT costs in banks are, and I know there's a difference in terms of in-house IT outsourced CapEx related to IT. This is a missing element.

I don't remember what is the cost of functional IT in our personnel costs. But in terms of IT costs in the structure of our costs is comparable to other banks, 14% to 15%.

Roughly what percentage of personnel would be allocated to IT?

25%, I would say, less -- 20% or thereabouts of the total employment of the bank. 1,350 people work in the IT department, but there are also other forms of employment that are not reflected in the head count directly.

A question about the increase of CIT for banks. What impact do you see, CIT increase?

Well, for next year, we are not disclosing this information because they are linked to the expected financial results of the bank next year. I can only reflect on some forecasts from August, the estimates of higher CIT on our bank. The -- it was presented in analytical reports at PLN 800 million. But I do not want to comment on that. I can only share with you how the state -- how you are analyzing the changed rate of the tax 15%, 16%, that was what the analysts were predicting the impact would be.

There is one other effect that will be visible in the net financial results of the bank, once the new rate is announced, is the recalculation of assets and deferred tax. This will depend on the structure, short and long term of provisional differences in assets and liabilities. Deferred tax is active in our bank. So recalculation with the higher rates changing over time. That's the difficulty of calculating. There will be an impact in other words. It's different for every balance date because the due dates of these assets and liabilities is different, but we expect that the revaluation of assets with the higher rates will have a positive impact. That's what we expect.

On the financial results in 2025, having a positive impact on ROE, but the revaluation -- a one-off revaluation in 2025 will have consequences in each year because in each year, we will have to recalculate all the other provisional differences according to future rates that will be known by then. And there will also be variables over time. And the imprecise nature of estimates, which is natural, will be working positively or negatively in the results of future periods.

So it's not just the cost of earning the money, but also how they will be repriced in deferred tax -- the positions in deferred tax. That's one of the biggest difficulties in estimating this position at the end of 2025 and in future years. But the first reflection of the correction of deferred tax will happen in the quarter when new regulations are adopted. So not yet, in other words.

To follow up on that, if we assume the regulations are adopted in Q4, will that have an impact in Q4 already?

And a question about your dividend. Is there any guidance? Will you be at a similar level to the current year or maybe the previous years?

No, I don't want to discuss the situation in other banks. Every bank has a different situation. But in principle, if these regulations come into force in Q4 then the deferred tax will be changed, and that will be part of the financial results in Q4.

About the dividend, it's too early now to talk about it. I'll have to ask you to bear with us and wait for our conference in January or February, which is when we traditionally talk about a proposed dividend as we've done every year before.

We have a number of questions from the Internet. Let's try to give them a shot. Polish Press Agency asks, in the current situation, can you exceed PLN 5 billion in mortgage sales?

Let me have a look at Slide 19. We have exceeded PLN 5 billion this quarter. So I think that's it. So yes, the answer to the question is yes, we will.

The question is about your involvement in treasury securities. What are your prospects for the future when it comes to this?

This is dependent on the level of lending. If we cannot generate the amount of corporate lending that we would like to see, and then our share in T-bonds and National Bank of Poland Securities will go up. However, looking at the current dynamics, we believe we can improve our loan to depot. There are reasons to believe that. In the sectoral data, you can see that T-bonds are growing in terms of their share, which is now more than 30%. The same with -- on a smaller scale is also true in our bank, and this is mostly tied to the loan to depot indicator.

The next question is, can you see any tendency for people to refinance their mortgages through prepayments?

I have seen this question asked in other banks' conferences. When interest rates go down, you can expect people to pay up, and this is a phenomenon that can be seen in the banking sector. We have also seen it. To some extent, some people are paying a share of the loan. Some of them are paying back all of the loan. However, the value of sales in lending is very large in our case. So this element of refinancing is not really having an impact.

The next question is, what are your ambitions in terms of your interest income? Do you want to improve or maintain it?

I think you know the answer, we never disclose any such guidance, especially for interest margin. We don't talk about it. But if you look at the long-term trends, in terms of the margin, it basically tracks the changes in interest rates, but we do have our macro cash flow hedging policy, and it works.

I would like to go back to one of the questions from the Internet about the refinancing. What was the percentage? Because you mentioned PLN 5 billion. What was the percentage of the share of refinancing loans? In other words, of all of your loans, what percentage went into refinancing people's loans in other banks? And what percentage was new lending, new loans?

It's a dozen percent or so.

There are no more questions asked online. Is there anything from the floor? If there are no questions, then thank you very much for taking part of the conference, and we'll be happy to see you in 3 months. The next conference will be in early February. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]