Ladies and gentlemen, thank you for standing by. I'm Myrtle, your Chorus Call operator. Welcome and thank you for joining the Alpha Services and Holdings Conference Call to present and discuss the Q1 2021 Financial Results and Strategy Update. All participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a question and answer At this time, I would like to turn the conference over to Alfa Bank Management.
Gentlemen, you may now proceed.
Good morning, ladies and gentlemen, and thank Thank you for dialing on to the conference call on such a short notice. This is Vasilios Psaltis, Alfa Bank's CEO. I'm joined today by Lazarolfo Garifalo, our CFO I'm Nicholas Kristofopoulos, Head of Strategy and Dimitris Kristofopoulos, Head of IR. Today, together with announcing our financial results for the Q1, We will provide you with our latest strategy update reflecting the changes in the market environment since our last strategy announcement along also with an EUR 800,000,000 growth capital increase. In terms of order, allow us to start with the strategy update.
And then towards the end of the presentation, Lardos Porvada Ifalu will appraise us on the Q1 results. Before, however, starting the presentation, allow me to express my great appreciation and thankfulness to the full transaction team that managed the impossible to deliver on an accelerated schedule after working 3 days around the clock. Let's go straight to Page 4. Following an unprecedented financial crisis that has lasted for over a decade and on the back of the fiscal actions implemented to mitigate the impact The COVID pandemic, Greece has now come at the economic inflection point. It has managed to significantly improve its sovereign risk profile, Has already regained the trust of capital markets on the back of highly successful issues of short- and long term government bonds, And we have facilitated the cleanup of the Greek banks and PEs through the establishment of Herakolis program.
Greece is also one of the largest beneficiaries from the unprecedented funding package from the EU Next Generation Recovery and Resilience Facility, or RRF, as you will hear me calling it to the rest of the presentation that is expected to bring both direct and indirect benefits to GDP growth and the economy as a whole. As a result, Greece is well positioned to grow at a rate above the European growth rate for the next few years, with the RORF expected to contribute at least 1.2 to 2 percentage points per annum to our GDP growth. Banks are expected to be both significant supporters of this growth and beneficiaries of the normalization of the economic outlook. The Greek banking system has already made great strides in cleaning up its legacy issues and is now looking ahead towards a period of strong growth and improved investor sentiment towards the Greek economy. Capturing the full potential of this opportunity is expected to be the single most important goal for the banking system and for Alfa Bank in particular.
At no point in the medium term should banks be constrained to serve the duty of supporting the Greek economy, be that financial, Governance or Skills Act Related Constraints. With that in mind, we are proposing a bold but well balanced plan to raise capital of approximately €800,000,000 in order to be in a position to fully reap the benefits from the RRF growth potential. Securing at the outset of the growth this growth capital, we expect to deploy over the next few years. This will allow us to reach our profitability targets sooner, Provide us with the flexibility needed to commit financing to high value projects as they fit, allow us to be selective on the profitability profile of such projects And simultaneously enjoy the position of meeting all of our capital requirements throughout our business plan horizon. Importantly, this will also provide us with significant flexibility to optimize our capital structure and deploy our dividend strategy.
As you can see on Page 5, 2021 is expected to be a year of strong economic recovery, While during the coming years, real GDP is projected to grow at a higher pace. We need to focus on the following very significant drivers. Firstly, the economy is expected to rebound strongly on the back of strong base effects and a monumental RORF funding program. GDP is expected to grow by 4.6% on average in the period of 2021 to 2024, and this is considered conservative by most market participants As it only acknowledges a 1.2 percentage point increase in annual GDP stemming from the RRF. Secondly, GDP growth will be investment based, with investment expected to skyrocket in the coming years, rising by 15.1% on average per annum in 2021 to 2024.
This massive new investment inflow, both public and private, is expected to support economic expansion and create large fiscal multipliers for the economy. And finally, it seems we are now managing to attract significant foreign direct investments. The country's successful structural reform agenda, coupled with an improved debt risk profile, has been applauded by the markets in recent GGB issues. The average 10 year GDP spread averages 1.6% during January 2020 to April 2021, And this compares to an average spread of 8.3% in the previous decade. Turning on to Page 6.
There you can see that the national recovery plan called NIM Greece 2.0 It's expected to provide a unique opportunity for revitalizing the Greek economy and transforming its productive model towards an investment driven growth, support also and increased exposure of the business sector. As depicted in the graph, the course of economic growth in coming years It's expected to acquire distant and critical quality characteristics based on the high ratio of investment funds as compared to the past when the increase of the GDP was mainly driven by consumer spending, which in turn was fueled by rising public debt. National Recovery Plan anticipates a 7% increase in real GDP by 2026. This implies a 1.2 percentage points per annum on average, beyond the expected recovery over the medium term, with a prerequisite of the full absorption of available funds and implementation of the already planned structural reforms. Long term benefits beyond the 'twenty one to 'twenty six horizon are much greater, Driven by the restructuring and reengineering of the country's production model.
As you can see on Page 7, you can depict in the left hand side graph, the crisis of the last decade left an adverse legacy due causing considerable impairments on the country's capital stock and productivity. This investment peaked, while physical capital depreciation Remain higher than fixed capital formation for a prolonged period, resulting in the erosion of capital stock and the expansion of the investment gap. It is apparent from the graph that the main driver of investment reduction in the last decade was the collapse of residential investment. The impact of the pandemic on total investment in 2020 was relatively small, thanks to a timely increase in public investments and strong construction activity, which operated with limited restrictions during the lockdown periods. According to the Greek Ministry of Finance, Fresh investment is expected to increase rapidly with the share of investment to GDP rising from 10.3% in 2019 to 16% in 2024.
Charles, investment led recoveries are important, relying on the available resources of the National Recovery Plan as well as the banking sector efficiency to optimize money allocation through the loans from the RRF. Moving now to the right hand side graph, there There you can see that gross savings ratio remained negative from 2011 until 2019, reflecting that households spent a large amount of their savings during the period of 2012 to 2019 to cover the consumption needs as well as the fixed tax obligation payments. In 2020, the reduction in product consumption outpaced the drop in households' gross disposable income. Unsizable fiscal impetus aiming to support employment and alleviate tax obligations underpin households' disposable income and prevented further losses. Thus, households' gross savings ratio recorded gains in 2020, returning to a positive territory after 9 years.
According to the latest available forecast by the European Commission, households gross savings ratio is projected to remain on positive grounds. The efficient implementation of the vaccination campaign is expected to enable the realization of purchases contributing to private consumption growth from 2021 onwards, while households are expected to benefit from savings accumulated during the pandemic. The expected increase in the propensity to save over the private sector, combined with the low negative interest rate environment, and support demand and prices in financial investing. On Page 8, You can see that the real estate market is exiting from an 11 year steep downward repricing as a result of the deep recession that hit the Greek economy. Since 2018, there are clear signs of recovery of the real estate sector as a result of increased stability of the macro fund and attractive pricing of Greek real estate.
Most assets are still traded at below replacement cost levels. Values in all real estate asset classes are on a long term upward trend. Office, logistics and residential assets retained or increased price levels even throughout the pandemic. Based on the latest published data from the Bank of Greece, residential prices in the Q1 of 2021 compared to the quarter before in 2020. During this whole period of 1 year, we have seen them increasing by 3.2%.
The outlook for the real estate market is positive on the back of solid fundamentals and increasing foreign investor interest, primarily in office, residential, hospitality and logistics. Turning on Page 9, we see that the Greek economy is the recipient of a multitude of stimulus packages, all aimed our different and complementary parts of the value chain. VRRF is the most important of the programs with a total pocket of circa 34,000,000,000 The National Development Programme, the European Funds and the Cohesion Funds all contribute to a total envelope of EUR 82,000,000,000 over the next 6 years. As ERS is the real catalyst going forward, We're going to spend some time in the next few pages to go over its components in a bit more detail. And starting on from Page 10, you can see that the National Recovery Plan, which operationalizes the IFRS, constitutes a real game changer for the Greek economy, Not only because it is not only because of its sheer size relative to GDP, which is the highest in Europe, but more importantly, because it's a detailed, cohesive and well researched program.
Greece is expected to be beneficial Benefiting by around €31,000,000,000 of which €18,200,000,000 will take the form of grants and €12,700,000,000 in the form of loans Additional funds of up to €26,500,000,000 are expected to be mobilized, both in the form of bank debt and sponsor equity, Resulting in total mobilized program funds of EUR 57,000,000,000. The allocation of the National Recovery Plan, as disclosed, It's evenly balanced between green transition, employment and social cohesion, digital economy, innovation and product investment in Exovertion. Now let's go on Slide 11, where we can see the opportunity for the Greek banking sector through the total envelope of €57,000,000,000 of the RORF. The €18,000,000,000 of RORF grants Are expected to mobilize an additional 40% of funds or circa SEK 7,000,000,000 Of those, banks are expected to finance SEK 60%, Claiming around €4,000,000,000 of potential credit. The €13,000,000,000 of RRF loans are expected to mobilize an equal amount bank loans, another €13,000,000,000 while also mobilizing nearly €6,000,000,000 of equity.
Banks Would probably consider financing of up to 20% of certain equity positions subject to sponsored balance sheet structure. This Would result in circa EUR 14,000,000,000 of potential credit for banks. The above EUR 18,000,000,000 of RORF derived credit expansion It's only part of the growth story. The economy is also expected to grow on a stand alone basis, enabling credit expansion of another EUR 15,000,000,000. The yellow red fiscal multipliers would probably contribute to part of this growth.
Sectors that are not direct recipients of the program and we'll still enjoy its contribution to economic activity. The expected total business credit growth until 2026 It's €33,000,000,000 while the same amount during our planning period, I. E, up until 2024 is estimated at around €24,000,000,000 Now let's turn to the next page, Page 12. Our launchpad on this inflection point for the Greek Economy is our venerable franchise on the corporate and SME segments. Alfa Bank has long been the corporate bank of choice in Greece.
As a result, We have a substantial market share from which we will vote upwards. While we take a holistic corporate finance approach, Advising our clients on the optimal capital solutions. This approach is of particular significance in the project heavy IFRS, Which will rely on BTS, Concessions and Asset Prioritizations. This approach enables us to generate business beyond the straightforward balance sheet lending and to offer the full spectrum of capital tools to both corporates and investors, starting with our market leading asset management units. On Page 33, you can see some credential on our side spanning across the capital stack.
Now on Page 14, On the back of this positive macroeconomic backdrop, our franchise's strong positioning and our operational readiness to capitalize on this opportunity, We are launching an €800,000,000 capital raise, which will allow us to secure the growth capital we expect to deploy over the next few years. This is the last piece of the puzzle that will allow us to reach a 10% return on tangible book value by 2024. The way we see the buildup of the 10% return on tangible book value target for 2024 is as follows. First, we are continuing with our NPE cleanup with focus and discipline. With Galaxy already signed, We are launching EUR 8,100,000,000 of new NPE transactions that will allow us to normalize cost of risk at 60 basis points by 2024 as we will be reaching a group NPE ratio of circa 2%.
Nonperforming assets. Management operating expenses are also expected to be significantly reduced by circa 65% as a result of the decrease in our nonperforming asset stock. This will contribute at least 4 percentage points to return on tangible book value. Secondly, we are streamlining the core bank, driving efficiencies through our transformation plan. We expect an annual cost reduction of more than €60,000,000 between 'twenty one and 'twenty four, while front loading more than 75% of the Thirdly, we expect to see significant growth in fee income driven by our Rett driven lending activity, sustained growth in Wealth Management assets under management and the development of our bancassurance partnership with Generali.
We will focus on our partnership DNA to expand our fee generating potential. This We'll contribute another percentage point to return of tangible book value to reach 6%. 4th, the re leveraging of our balance sheet is expected to have one of the biggest positive uplifts to our return on tangible book value on the back of approximately €8,000,000,000 credit growth we expect in Greece. This is the reason we are raising equity capital us. It will allow us to double our expected loan growth in Greece by 2024, allowing us to increase our net interest income EUR150 1,000,000 in the next 4 years as well as generate additionally EUR35 1,000,000 net fee and commission income.
All this comes on top of what we would be able to do without the capital increase. This will contribute circa 3 percentage points Finally, we have a strong franchise in Romania, the only quick bank to have retained a presence in this large and high potential markets. We want to become a Tier 1 bank in the country and we will deploy capital towards profitable growth. This should contribute the final percentage point to our return on tangible book so as to reach 10%. Moving on, on the next page.
Alfoband is entering the last mile of the NPE cleanup that has started in 2017. Since then, we have managed to reduce our LPE stock by almost EUR 18,000,000,000 through both organic and inorganic means, with the latest step being the Galaxy securitization transactions for which closing is expected in June. Project Galaxy has been the largest securitization transaction ever executed in Greece. Despite the outbreak of the pandemic crisis in 2021. Alfa Bank managed to successfully launch and follow through the transaction until signing within just 10 months.
Once again, we draw great confidence for our internal capacity and capability to deliver large scale transactions even amidst very adverse conditions. The final leg of our NPE cleanup includes additional NPE transactions that we will discuss in more detail later on. The respective capital impact is fully absorbed within our existing capital buffers and internal capital measures. This We'll allow for a group NPE ratio of 7% and a group NPE ratio of 5% already by the end of 2022, Which is a reduction by 90% versus the 2017 levels, while by 2024, the balance sheet is expected to be restored at full half. The decisive reduction of the NPE stock, apart from restoring the health of the balance sheet, will also restore the health of our P and L, As the primary driver of our current cost of risk is the management of the E and P portfolio rather than any deterioration of our performing loans.
As such, cost of risk is expected to be reduced at circa 60 basis points over net loans, thus providing an uplift for our return on equity On Page 16, we outline the main driver of Cost efficiency enhancement within the next 2, 3 years that will allow our recurring cost basis to be reduced from over EUR 1,000,000,000 in 2020 to almost EUR 850,000,000 in 2024. As you can see, more than EUR 120,000,000 of cost improvement is From the reduction in NPE management costs, in line with the resolution of our NPE portfolio and reduction in associated services costs. Moreover, Alphabank has already launched its operations transformation program, which aims at modernizing the bank, increasing speed and quality of processes for optimization and investments in technology and automation, delivering a better and faster service to our customers. The transformation program is also focused on optimizing third party spend throughout spend categories, both through internal demand management and through renegotiation of arrangements with service providers. We expect significant benefits from this effort in outsourcing costs and in property and facility management expenses.
On Page 17, there we portray some additional details of our transformation program across its three dimensions: growing with our customers, tailoring our operating model to their needs and characteristics, revamping our internal operations, streamlining processes and third party spend, but also empowering our people through a modern performance management and reward system. The transformation will support our targets in both enhancing our revenues and increasing our efficiency through investments of more than 160,000,000 On Page 18, we lay out our ambitions on increasing fee and commission generation as well as key pillars we expect to drive this. Our expected strong growth in Fee income is driven by a mix of favorable external conditions, our strong strengths that make us very well positioned to benefit from these external drivers as well as our business approach based on forming strategic partnerships in order to benefit from specific expertise that partners could begin. External environment such as unprecedented lending volumes in coming years is expected to drive lending related fees for the sector in general. Additionally, expected growth in the affluent segment and wealth creation is expected to drive the demand for asset management products and related asset management fees.
Alfa Bank's strong position in Corporate Banking, including advisory business, as well as our market leadership position among the mass affluent clients should allow us to benefit from this market growth. Additionally, As we already discussed in our full year results, we have signed an exclusive bank assurance agreement with Generali, which is the 2nd largest non life and the 3rd largest life insurer in Greece, and we expect noticeable growth also in bancassurance fees. Lastly, In light of our rationale of attracting strong partners with specific expertise, we also intend to sell a stake in our merchant acquiring business in order to form a joint venture with a strong partner. This will allow us to capitalize on the growth of the Greek payment sector, whilst leveraging the technological expertise of Apartment. Page 19 underpins the reason for a capital raise and demonstrates the growth benefits that it allow us to achieve.
As shown on the top left hand side, we expect a total of €24,000,000,000 sector net credit growth for businesses in Greece fueled by the RRF. As shown on the top right hand chart, Alfa Bank expects to capture at least EUR 5,000,000,000 of that By 2024, after taking into account the participation of IFIs or debt capital markets in the total envelope. Here, we outline our projections for the total net new loan disbursements for business across the business plan's duration, and also our estimates for the period until 2026. As you can see, the growth is higher in the initial years of the plan after our REF program is launched, and we want to be best placed to take opportunity to capture this growth. The projected €5,000,000,000 of net New disbursement to businesses is expected to contribute almost 50% of the expected total net credit growth for the group of EUR 10,000,000,000 by 2024 that also includes loans to households and for shipping as well as net credit growth of EUR 2,000,000,000 in Romania.
The loan growth is expected to be the key driver behind the enhancement of our group return on tangible book by an additional 3 percentage points through both the interest income generated by the increased loan volumes, but also through the fee and commission income to be generated upon underwriting and through ancillary business associated with the new lending volumes. On Page 20, you can see that what happens this is what happens when opportunity meets preparation. A dedicated RORF PMO We'll ask for the nexus of activity accommodated by an already sanctioned risk appetite framework and middle office function rightsized for the occasion. We have set up an open architecture to leverage our efforts with a partnership network of big 4 firms and our RF fee service providers, But we aim not only to throw a wider net, but also to support our clients to promote better direct projects. And in addition, we want to offer the RF opportunity directly to investors and individual savers via RF feed investment products.
Now on Page 21, we're moving to our international footprint. And we believe Romania is an attractive growth market with a GDP that is similar, actually higher to that of Greece And with a growth outlook that is commensurate to Greece as it is also a significant beneficiary of the next generation of new funds. The Romanian Banking sector is relatively underpenetrated with significant catch up potential to broader EU levels. At the same time, it is quite profitable with an average return on average assets ranging from 15% from 13% to 15%, which is one of the highest in Europe. Having said that, though, it is evident that seismometers in Romania, hence our willingness to further expand our asset base.
Finally, we cannot ignore the fact that the banking sector is also ripe for consolidation given the relatively low concentration in market share of the top 5 payers. This is something that always we would be willing to look and potentially contemplate. On Page 22, there you can see that all the strategic initiatives are supported by We're a capitalized bank with an NPE ratio on par with European average. Such financial standing will also give us flexibility for dividend distribution. And on Page 23, AlphaBank is well positioned for transformation And we rely on its core competencies to deliver the strategic plan.
We are the oldest privately owned bank in Greece With strong competitive positioning, not only overall in Greece, but more particularly, we're also perceived as a reference bank for corporate customers in Greece. We have delivered significant digitalization efforts already and have become a leaner and more agile bank. These efforts were also more accelerated by COVID crisis, which have already helped us deliver significant efficiency gains. Additionally, Historically, we have been seen as the best in class bank in Greece in terms of organic capital generation and the largest bank in absolute EPI terms, and we believe our plan will set us apart from our peers even further. Lastly, our revamp strong corporate governance structure, Strong management team and reinforced performance culture will be the key enablers for us to deliver on the plan we have set forward.
And I think at this stage, I should pass the floor to Lazaros for his part of the presentation. Thank you, Vasilios, and good morning to everyone. We are now on Page 25. As Vasilios has portrayed in the first part of the presentation, AltaBank aims to achieve a double digit return on tangible book value and approximately EUR 600,000,000 net income by 2024. Let me walk you through the key profitability levers and initiatives behind these through the rest of the presentation.
Going to Page 26. The first pillar Our profitability increase for the group is already in motion. After the imminent completion of Project Galaxy, The group NPE ratio will stand at 26%, and it is expected to be reduced to 7% by the end of 2022, following a series of NPE securitization and sales transactions as well as the organic evolution of the remaining book. On the back of Galaxy, we expect to reduce NPEs by another 75% until the end of 2022, reaching a 90% reduction by 2024. We will discuss more on the planned NPE securitization and other transactions in the coming page.
The entry stock reduction is expected to drive cost of risk down to We have approximately 80 basis points over net loans in 2022 towards full normalization in 2024 at a modest 60 basis points. Turning to Page 27. We're confidently delivering an upsized ambition on our NPE deleveraging through a series of new transactions on the back of, a, the successful Galaxy transaction and the forging of a partnership with Davidson, Kettner and Sepal and b, our capital buffers, Our planned transactions add up to a total Gross book value of €8,100,000,000 equally split between HAPS and non HAPS deals. Our asset protections in transactions include projects Kosmos and Solar. Roche Posmos is a mainly resi secure portfolio of €3,500,000,000 gross book value.
We are quite advanced on the time plan and expect to receive the pre rating within the the summer of 2021 so as to have a finalized transaction by year end. CEPAL is going to be designated servicer. Projekt Shola is an SME portfolio of €400,000,000 gross book value for Alfa Bank that has been assigned by all systemic banks for management to an independent servicer. This is a portfolio which is quite mature in its underwriting and is expected to greatly benefit from a HAP structure. We expect the process to run-in early 2022.
On non HAP transactions, We include Project Orbit, Sky and certain single ticket wholesale and leasing exposures. Project Orbit is a retail unsecured portfolio of $1,300,000,000 gross book value. It was initially part of Galaxy and was excluded on the back of unfavorable market conditions during the COVID lockdown of 2020. Significantly, unsecured portfolios across Europe and Greece Have proven resilient, and investor interest appears strong. We expect to launch the transaction in the second half of the year with an aim to finalize by year end.
Project SKYY is a mixed portfolio of residential mortgages and corporate SME exposures in Cyprus of a total gross book value of €2,200,000,000 Having created our own credit acquisition component in Cyprus, We have already assigned all NPEs of the Sky perimeter to this entity, and we are quite advanced in our preparations to launch a transaction in the second half of the year. Our target is to finalize a deal in the first half of twenty twenty two. Finally, We have a small number of wholesale and leasing exposures of up to EUR 700,000,000 gross book value, for which we're working with CEPAL to identify the optimal transaction structure for a trade in 2022. As a result of the overall transaction activity, We expect to incur a total incremental loss of €1,300,000,000 or 16 basis points per 1,000,000,000 of gross book value sold. Around 25% of this loss budget, namely EUR 300,000,000 Has already been provided for in our Q1 2021 results.
Our total expected RWA relief It's €4,000,000,000 Turning on to Page 28. We further elaborate on our view on NPE information in coming years on the left hand side of the slide. As you can see, in 2021, we expect elevated NPE inflows, half of which expected from Moratoria. So we expect a positive overall NPE flow this year of around €600,000,000 However, going forward, we expect to return that the trends seen in previous years of net NPE outflows, partly driven by our effort on closing procedures. On the right hand side of the slide, you can see further information on our cost of risk evolution.
As you can see on the top part of the slide, a large proportion of our cost of risk was historically driven by transaction costs, Which we expect to normalize after 2021 when we finalize NPE cleanup. Additionally, last part of our annual loan provisioning Related to remedial management of the legacy stock of NPEs as opposed to new defaults. And as shown on the bottom graph, We expect the underlying cost of risk to also decrease significantly going forward as we reach normalized NPE levels. On the next page, page Slide 29, There, we show that Alfa Bank aims to achieve significant cost reduction in the period of the business plan and reached a costincome ratio of below 45% by 2024. A major part of this reduction is going to be driven by the reduction of the cost associated with the management of our perimeter of nonperforming assets.
After the already implemented carve out of our LP management operations To Shepali, the key component of non core costs is external servicing fees. The reduction of the applicable perimeter We'll also drive the respective costs, which give us high certainty of achievement. The second pillar of efficiency gains is our transformation effort, Which is going to affect both internal and external costs through cost optimization and automation as well as a reduction of third party spend through internal demand management and through the reconfiguration of a major outsourcing contract. In our international perimeter, costs are going to be further reduced through the sale of our operations in Albania and the United Kingdom. A reduction, however, that is going to be counterbalanced by our growth initiatives in Romania.
Overall, Cost reduction from 2021 to 2024 is expected to reach more than €170,000,000 And the bank is expected to be operating at a cost to income level of below 45% in 2024. Moving on to the revenue generation, Slide 30. Alfa Bank aims to deleverage its leadership position among affluent segment clients and the partnerships it has entered into to grow our net fee and commission income by approximately EUR 140,000,000 by 2024 from 2020 levels, which we, as you know, have been affected by COVID And as such, should represent the absolute base for our finger. By 2024, we expect almost double our fleet contribution to revenue the level seen in 2020. On the following page, we elaborate more on the key drivers for the fee growth.
One of the key drivers for higher fee income in the coming years is expected to be higher business activity An improvement in lending volumes in light of higher RRF driven lending, which will drive the growth in lending related fees as well as any ancillary M and A advisory as well as ECM and TCM business fees by approximately EUR 35,000,000 Verso's 2020 levels. Additionally, we believe there is scope for us to double the Bakka Assurance fee income by 2024 on the back of the exclusive partnership that we signed with Generali in December 2020. This partnership expands our product offering across Life and Non Life segments and allows to benefit from Generali's expertise combined with our distribution capabilities. We also expect to see significant growth in asset management related fees. With higher economic growth, we expect to see growth assets under management from current low base.
Whilst we do expect to see some pricing pressure, especially from digital competitors, Which we have embedded in the plan, we still see a scope for approximately €45,000,000 expansion in asset management fees by 2024 on the back of almost WAM volumes by 2024. When it comes to cards We expect to form a partnership by selling part of our stake in our merchant acquiring business later this year to Sladegi partner. This would have a potential for improving the overall growth in cards and payment fees on the back of additional expertise. However, due to the deconsolidation on merchant acquiring, we expect the current payment income fees to have net zero impact on our income statement by 2024. Whilst on one hand, it might appear an ambitious target to grow our fees by close to 10% per year by 2024.
We see this as a realistic target as we have significant room to still improve our feed generation capacity, not only when we think of our own operations, but also when compared to our Southern European peers in pre COVID years. All the initiatives we have put in place and higher economic activity should allow us to significantly narrow the gap to them by 2024. On the following slide, we zoom in on our expected net interest income evolution until 2024. As a result of the deleveraging of NPE book by approximately 90%, driven by our planned NPE transactions, The net interest income associated with these exposures will also be fully gone. This will result in a reduction of our interest income by approximately €400,000,000 This reduction, however, is partially set off by the expected growth of our performing book by close to €8,000,000,000 of net new disbursements in the period in Greece, Which will contribute an increase of close to €300,000,000 in interest income.
This is taking into account some expected pressure to the tune of 35 basis points on our lending margins for business loans, which will constitute the key component of overall increase. While for household lending, we expect a stable evolution of spreads during the business time period. No significant change is expected for the contribution of our securities book in total net interest income as the interest income from new assets booked for LCR purposes is expected to counterbalance the spread pressure of the existing book of sovereign debt. On the funding side, we expect to continue growing our deposits base, in line with recent trends of growth End of a continued shift of the product mix towards core deposits, thus producing an overall positive impact on net interest expense. However, in compliance to our MREL requirements in the period, we have planned additional senior debt issues, Which we expect will more than counterbalance the positive effect from deposits, thus driving an overall marginally negative on net interest income from the funding side.
Finally, our projected net assets growth in the international perimeter It's expected to have a small positive contribution to the overall net interest income with us. All in all, We expect a slight decrease of net interest income in the period of the business plan, albeit with substantial improvement in its quality, While we expect net interest margin to maintain a healthy level of 2%. Next page, moving on to our expected loan book evolution. The first thing to note is the significant derisking of the portfolio Porger's are expected to grow in total by close to 35% in the period on the back of the RRF fueled growth that we foresee for the coming years. Moreover, we also expect a noticeable shift in the composition of the book towards business credit exposures as business lending is expected to grow at more than double the pace as household lending overall for the period, with household lending growth coming also at a later stage.
As already discussed, Alfa Bank holds a strong position in business lending, And our credit risk appetite is aligned on capturing our fair share of the upcoming opportunities as we see significant value creation potential, targeting a return on the risk adjusted capital of more than 15% on the new business. Moving on to the next page. Our ambition in Romania, as discussed, is to develop into a 2 Tier 1 franchise. We are currently the only Greek bank with presence in this market and drag 6 Based on gross loans among privately owned banks, we are convinced that asset size and return on tangible book value are closely correlated in this With the largest banks commanding a significant performance premium versus mid tier players, valuations for such top tier players Are among the highest in Europe with an average price to book of 1.1 to 1.5 times and a PE multiple of 10. Our operation benefits from a very strong management team, a comfortable capital position with over €400,000,000 equity deployed, a balanced funding position, a specialization in mortgage and green lending and a platform that has been built for a larger balance sheet size.
We have also forged strong partnerships with IFIs and are exploring options to further enhance our scope of cooperation. Our plan is one of organic and inorganic expansion, aiming to nearly double our net launch in the period and to deploy all of our excess capital in new risk weighted assets. Through this strategy, we will conduct with rigorous discipline. We will aim to quadruple our net profit and deliver return on tangible book value of more than 11%. That will also allow Romania to contribute more than 10% of group's net income in 2024.
Moving on to Slide 35. We also have 4 smaller projects Ongoing, meant at generating additional capital through disposals or partnerships. The most significant one, Project Prometheus, includes finding a partner for our merchant acquiring business. This transaction should conclude this year and result in strong positive capital impact. The next two projects with JERA and Crown involves sale of our subsidiaries in Albania and London.
The overall impact on capital from those should be positive. However, we view this exercise as more of a streamlining our operations and limit management's attention spend on markets where the relative contribution to our business remains negligible. Finally, Project Skyline Involves forming a joint venture with a real estate partner to us to capture the positive momentum and form a unique investment proposition in the Greek market. This would be a capital accretive transaction through the consolidation of non performing assets, but would also serve a significant business development role, generating management fees and profits for the group. Overall, we expect a meaningful capital gain from the both transactions, Coupled to the release of almost €1,000,000,000 of risk weighted assets with further support mobilizing capital for growth we are envisaging.
Slide 36 provides additional clarity as to how we see the capital development and use of proceeds in the context of our business plan. As you see from steps 12 in the first quarter. Alfa Bank has enough capital to absorb all the negative effects of the ongoing NPT cleanup exercise and still have a pro form a total capital ratio of 16.9%. I want to pause here and reiterate this point. For several quarters now, we, as a management, Have been adamant about the ability to deliver NP cleanup without resorting to shareholders for additional capital for that.
This slide demonstrates that, indicating that nothing has changed in this respect. We do, however, See significant opportunity to releverage our balance sheet and the combined credit expansion between 20212023 We expect it to consume circa 2.5 percentage points of our risk weighted assets. This is where the proceeds of capital increase are deployed, Supporting the growth and gradual restoration of the profitability. The next slide should provide you with full confidence on the strong capital position of Alfa Bank throughout the forecast period on a both transitional and fully loaded basis. We have also indicated the applicable regulatory minimum.
Currently, as part of our plan, We have not assumed any AT1 issuance. In 2021, on fully loaded basis, we expect to report approximately 11.6 Fully loaded common equity Tier one ratio pro form a for capital increase as well. However, this does not take into account part of the RWA relief we Expect to realize also in 2022 after completing part of NPE transactions that would boost our fully loaded common equity Tier 1 by further 80 basis points to 12.4%. You can see that at 10 point in time, on a common equity Tier 1 level, we boast more than 200 basis points buffer over the required minimum even on a fully loaded basis. This buffer keeps growing as we move further into latter years and creates the opportunity for us to increase the efficiency of our capital base further by also providing us with optionality to optimize our capital structure in outer years by resorting to dividend payment from 2023.
Next page, Few highlights of the financial focus to indicate where we go from here and how we see the key financial metrics developing. As you can see on this slide, it includes much more data than you would normally expect to see in similar situations, which underscores management conviction in the numbers presented. On the top line level, the most important point to note That core income drop, driven by NPE resolutions, is more than offset by the growth agenda and increasing fee and commission income. We are reaching close to EUR 2,000,000,000 of core income in 2024. With a continued cost improvement, This translates to €1,100,000,000 of pre provision income in 2024, up from €800,000,000 we expect this year.
With cost of risk gradual normalization to 60 basis points, which we believe is still conservative with European average at around 30 to 40 basis points, we see that net income growing to above €600,000,000 in 2024, Which translates into return on tangible book value of 10%. It is worth highlighting 2 points. The profitability is already expected to look much better in 2022 with close to 7% return, While our capital adequacy ratio stays comfortably above 14% throughout the forecast period, reaching 18% in 2024. Finally, any NPE cleanup impacts have been budgeted to happen in 2021 to ensure the bank operates on a normalized, fully clean up basis from 2023, 2022 onwards. With all impacts accounted for and capital increase effect, the year end tangible book value should exceed EUR 5,400,000,000.
Starting with the 2020 year at EUR 7,700,000,000 tangible book value, The main impacts are decomposed into the following items: first, EUR 2,000,000,000 negative impact from Galax in Sepal 2nd, EUR 1,100,000,000 negative impact from the NPE transactions and internal capital measures and third, €800,000,000 from the capital increase. Concluding the strategy update presentation on Page 40. We at Alfa Bank Believe this is a unique moment for Greece and the banking sector, which we have not seen since the global financial crisis. For over 10 years, we have been dealing with negative implications of the crisis, going through phases of public shareholding, deep restructuring of the bank, capital management and finally, cleaning up the bank's balance sheets from non performing exposures. For the first time in more than a decade, We see a unique opportunity to see strong real GDP growth and loan growth given by the increased flow of EU funds, including the IRR rep, and this is why we have spent so much time discussing it today.
In that context, Alfa Bank is the best position to capitalize on this growth for all the reasons we have been discussing: strong capital base, Premium Corporate Banking franchise, deeply transformed, leaner and more agile bank. The proposed capital increase will support us on the path to 10% return on tangible book, a level which position us among more profitable banking franchises in Europe with increased ability to restart after almost 15 years of shareholder distribution. This transaction represents a unique entry point to a franchise posed to deliver on this ambitious plan. I'm turning back the floor to Lazarus to just highlight a few points on our Q1 results. With regards to the Q1 2021 results, I will now provide a summary of the key financial trends Looking at Slide 43 of the presentation.
Despite adverse conditions due to COVID-nineteen pandemic, our corporate provision income generation, namely our recurring profitability, Excluding trading gains and one off costs, increased by 16.4% quarter on quarter, reaching EUR 237,000,000. The solid performance reflects improved core banking income generation and the continued focus on cost discipline. More specifically, Net interest income stood at €400,000,000 for the quarter, up by 3% versus the Q4 of 2020, mainly reflecting a substantial de escalation of funding costs. Net interest income in the Q1 takes into account a benefit Of circa EUR 36,000,000 in relation to the application of the minus 1 negative rate granted by ECP Due to the accomplishment of the objective related to TLTR-three for the period June 2020 to March 2021. Moreover, fee income generation stood resilient in the quarter, demonstrating a quarterly increase of 0.5% to EUR 84,000,000 mostly attributed to a higher contribution from cards, asset gathering and back assurance.
On the OpEx side, recurring OpEx reduced by 5.6% versus the previous quarter, reaching EUR 258,000,000 primarily due to lower staff and administrative expenses. As a result, the corresponding cost to income ratio declined to 15.2% versus 57.4% in the previous quarter, improving operational efficiency. Total OpEx line for the group reached €418,000,000 negatively affected by €3,000,000 of restructuring costs and other one off charges, out of which approximately €97,000,000 are mostly attributed to a provision for a voluntary separation scheme cost, €19,000,000 to replacement of infrastructure on the back of our transformation program, while €27,000,000 It's related to goodwill and intangible assets impairment. Reported pre provision income stood at €137,500,000 versus EUR537,100,000 in the previous quarter, impacted by the one off charges and lower trading gains. In the Q1, trading income amounted to €61,000,000 versus €430,000,000 in the previous quarter.
Impairment losses came at €391,000,000 in the Q1, out of which €317,000,000 relating to inorganic NPE actions, with the majority attributed to the upsizing of our NPE portfolio sales perimeter in Cyprus, Project Sky I have been talking about. Excluding these impairments for transactions, the underlying cost of risk would have been less than 1% in the Q1. As a result of these transaction driven impairments and restructuring costs Booked in the quarter, we recorded a negative bottom line with loss after tax at €282,000,000 On capital adequacy, our total capital ratio stood at 18.3% in March 2021. The total capital ratio was negatively affected by the period result and the anticipated annual phasing in of IFRS 9 and Basel III amortization recognized in the Q1. While it was also impacted by lower fair value for OCI reserves, following the crystallization of gains from our investment securities portfolio and the impact from the deferred tax assets that exceed the 10% threshold.
On the positive side, capital was impacted by a decrease in risk weighted assets as well as a successful tiered issuance of €500,000,000 in March 2021, providing a buffer of €1,900,000,000 overall capital requirement of 14%. Galax impact of 2 80 basis points is anticipated to be booked in the Q1 of 2021 in the Q2 of 2021. Our common equity Tier 1 ratio stood at 16% as of 31 March 2021. The group's fully loaded Basel III total capital ratio stood at 16.5% at the end of the first quarter and the fully loaded Common Equity Tier 1, Part 14.2. On deposit gathering, the group's domestic private sector deposits Expanded by €300,000,000 in the Q1, stemming mainly from inflows by households.
In terms of new credit, we continue to steadfastly support our customers, and we disbursed EUR 1,100,000,000 of new loans in the Q1. Liquidity drawn from ECB increased to EUR 12,900,000,000 at the end of the Q1 or 18% of our total assets, reflecting the improvement in the bank's borrowing allowance following the ECB's notification to the TLTRO III terms and conditions announced in December 2020. Finally, on the asset quality, a flattish movement on NPE stock was observed in the Q1, With organic inflows being offset by curings and repayments, leading to an underlying cost of risk of less than 1%, as we mentioned earlier. At the end of March 2021, NPE ratio and risk pro form a for Galaxy Stood at 24% and NPL ratio at 13%, while group cash coverage pro form a for Galaxy Was further increased to 53%. And now let's open the floor to questions, Which we'll take from analysts in this call.
Thank you. Ladies and gentlemen, at this time, we'll begin with taking your questions. The first question comes from the line of Floriani Jonas with Axia Ventures. Please go ahead.
Hi, good morning guys. Thanks for the detailed presentation and for hosting the call today. My first question is on Slide 35. You are mentioning the sale of the estate in the car business and also the real estate JV. I was just wondering if you could give any color on this contribution I'm trying to understand the contribution on the SEK 1,100,000,000 that is the sum of the hit from the NPE transactions And the capital gains from the internal actions that you're going to take.
Second question also on capital. I take The comments on the call that you're not accounting for any AT1 issuance. So I'm just wondering how should I think About this going forward, are you going to play according to market conditions? And shall we still expect An issue could come in the next quarter or maybe in the over the short term if the conditions are the line of your strategy. And then finally, questions on Slide 27.
I So just wondering if this impairment you took and booked already in Q1 covers the transaction in full, but if there's any more adjustments expected. And also wondering if on this Transaction, you'll be also attaching the existing servicing agreement that is Credible in place. Also any views on the plans of the franchise? I mean, I See a lot of detail on the Romanian business and also given its slightly bigger than Cyprus, but how you're thinking about the plan for the polysilicon operation. Thank you.
Hi, Jonas. This is Lazarus. Coming to organic capital generation. As depicted on Page 36 of the Capital Waterfall, We provide for transactions which are going to support Organical capital at 1.1 percentage point. This is depicted in the space under 2 of the capital waterfall.
There you see the internal capital measures of 1.1. There, we include a performance securitization of approximately EUR 2,000,000,000 Life plus the profit on the sale of merchant acquiring a joint venture that we're planning to effect in the second half of the year. The sale of foreign subsidiaries are expected To bring additional benefits, mostly on RWA relief to the tune of EUR 600,000,000, whereas The joint venture on real estate is expected to bring an additional RWA deleveraging of €400,000,000 Well, that is definitely supporting internally capital and helps counterbalance the impact of additional transactions that we have put in our new NPE plan. You will see in the Capital Water through Page 36 additional transactions of €8,100,000,000 A cost an estimated cost in capital terms at 1.9 percentage points. The bulk of it is counterbalanced this internal capital measures.
And in addition, we will have the RWA relief out of these NPE transactions, which will account for an additional SEK0.7 billion in capital terms. So that's how the NPE plan Takes care of itself through internal capital generation. Next question on the AT1. No, we do not have a plan In the business case, we present to issue 81. It's not embedded in our figures to meet capital thresholds.
However, as you can see in the capital slide, we expect to have excess capital in 2023 and predominantly 2024. At that Point in time, we will consider capital optimization with a view to devise our dividend strategy. So AT1 is part this capital optimization exercise, not a means to reach capital targets. Your third question is about Sky. The Cypriot portfolio sale.
Actually, we're selling the entire stock of NPEs we have in Cipher in a single our outright sale. We have booked EUR 317,000,000 of losses to support this transaction in the Q1 of the year, and we expect some more to come. Under IFRS 9, we use the probability weighting to account for the NPE plan as Just come by, and we assess the situation and the progress of these projects. As I have guided, The loss budget of the new entry plan accounts to approximately €1,200,000,000 €1,300,000,000 Out of which, euros 300,000,000 is booked in the Q1 of the year. The remaining is to be booked in 20 2021.
And that will be part of our cost of risk guidance for the year to support the new NPE plan. Thank you.
The next question comes from the line of Parmesan Rozman with Ambrosia Capital. Please go ahead.
Hello. Many thanks for your time and presentation. Just on your cost of risk evolution 2024, given that you're significantly plan to reduce significant to the NPEs, are you being conservative for 22 with 80 bps, is there room for that to come lower? That's my first question. And on the cost side, Would it be possible to elaborate a bit more?
I know you've touched upon it, the efficiencies from the NPA management and also
Coming to Chorus, We have tried to portray what will be the impact from the reduction of the stock of NPEs. A good part of NPE management costs under the current configuration relates to servicing fees for what we have on balance sheet. As we deconsolidate, reservicing fees will fly out of the balance sheet. Moreover, you will appreciate that there are additional costs in the Bad Bank operation that relate to other expenses and fees, including taxes, legal fees and other servicing courses, which we have credibly portrayed in this Plan to go down by almost €100,000,000 and that is the bulk of healthy cost reduction in the period. Additional efficiencies are planned in the Greek operation on the back of the transformation plan, further investments in bridging efficiencies, both at the level of the branch network and the head office through various initiatives that have been launched and now are operational.
Therefore, we have also front loaded some restructuring charges to enable further streamlining of our operations, increase Enabling further voluntary separation schemes. That is a cost we booked in the Q1 of the year with initiatives already becoming operational in 2021. Your next question has to do with cost of risk. As you correctly pointed out, the reduction of the stock By itself, we lead to a significantly lower cost of risk. The bulk of our cost of risk in the last few years It was about managing the stock, our organic NPE management writers, Debt relief, liquidations and movement within the NPEs, that was all creating Lots of noise in our P and L with the consolidation of the NPEs and the losses that we will incur upfront to clean up the balance sheet.
The cost of risk figure is expected to dramatically go down in 2022. Now as I have described in my presentation, still we feel this is a modest and rather conservative Trajectory for cost of risk in the coming years, still at 0.6% cost of risk in 2024. This is double the cost of risk we see in Europe. However, given that we are in a post COVID the period. And we expect also a significant deleveraging of the balance sheet.
We would rather prefer to be conservative around projections
The next question comes from the line of Manolopoulos Konstantinos with Optima Bank. Please go ahead.
Yes, good morning from my side as well. Thanks for your presentation and the many details. I have three questions, if I may. One is on your NPE reduction plan on Page 27. The other one Has to do with the capital increase and your thoughts on the timeline.
And the third one is a technical one on the new provisions coming from Galaxy and the new transaction. So going to question number 1, On Page 27, you present your plan for the further NPE reduction. Could you please give us more color as to the Expected losses for each transaction. I think you said during the call that the total losses, Including the benefits from your internal capital generation are seen at EUR 1,100,000,000. So can you please give us more details as to the level of losses, please?
Yes. Hi. So this is Nicholas Krasantopoulos. Our NPE transaction envelope of SEK 8,100,000,000 is quite a complex, I would say, perimeter. It consists of both HAPS and non HAPS transactions in multiple jurisdictions.
So we have allowed for an end mill of €1,300,000,000 to cover for and eventuality in delivering this ambition. And at the same time, we are keeping within, I would say, the Galaxy loss budget metrics of around 20 to 21 bps of loss per €1,000,000,000 of transaction deployed. So We would rather keep the flexibility to work around this and at the same time, deliver within our Initial expectations. Don't forget that the incremental loss budget of EUR 1,300,000,000 also has EUR 300,000,000 already booked in Q1 2021.
Okay. Now on a technical note, How should we treat these losses accounting wise? I mean, will you book the Galaxy losses and the incremental losses From the new transactions on your provisions line or it's going to be a separate line at the P and L?
You will appreciate that following the highest down, we now have a whole And some of the impacts will be recorded at the level of the holding company, Which will be having the senior the Mezzanine Equity notes of haps related securitizations. So at that level, we will record the bulk of the losses for the HAPS related transactions. For other transactions, namely the Cypriot transaction, the losses will be recorded at the level of the operating company. So yes, you will see at the group level the entire loss budget being recorded in the year. And of course, we will also record again at the level of the group, at the holding level, the loss coming from Galaxy as per previous guidance.
Okay. And my final question has to do with the capital increase and its timeline. I know that you have called for an AGM on the 15th June. Could you give us a broad more color on the time line? I mean, assuming that you get the green light from the GM, When do you expect the process to initiate and conclude?
And when should we expect more news as to the level of the price range of the new shares to be offered. Thank you.
Today, we published the invitation to the AGM to be held on the 15th June. So you should expect a book building process and an offer in Greece to start towards the end of the month in June.
And I guess that the price range will be announced A few days after the approval, right, of the regime approval?
That's the standard.
Okay. Thank you.
The next question comes from the line of Buluguri Salixandros with Wootenco. Please go ahead.
Yes, hello. Quick questions on my end regarding the transactions in Cyprus. Will all do you plan to do this all €2,200,000,000 in one transaction or it could be split into a couple of transactions within the next 12 months? That's my first question. My second question, I'm sorry if that is somewhere in the presentation, I couldn't find it, regarding DNB and the coverage evolution, cash coverage in your business plan from 53% that it was in Q1.
How do you see it evolving in the Just a few years. Again, sorry if it's already there and I haven't managed to say The other another question is regarding your assumptions on MREL. I think you mentioned EUR 2,500,000,000 on what is the expected impact on NII? And finally, the The impact on NII. And finally, regarding Romania, you mentioned I noted that you mentioned that the market needs consolidation under good ROEs and so on.
So you could Could you potentially consider also a bolt on acquisition at some point in this market? Thank you.
All right. This is Lasios again. On the Sky transaction, We see benefits into bundling the total of exposures under one transaction. It's going to be one transaction. That's how we market the deal.
On your second question With regards to the evolution of NPE cash coverage, as you have seen, post Galaxy, the pro form a stands at 53 percent. I expect the cash coverage post the new NPE transactions to trend towards the F47 level. And then in 2022, build up to 50% and thereafter increase even more towards the 60% level. Your third question has to do with MREL. We plan issuance of senior preferred throughout the planning period By approximately €3,000,000,000 you should expect to see starting from 2021 the issuance of benchmark issue each year.
And for the costs, you can refer to recent In the Greek market, which you can use as epoxy for issuance cost, which is embedded in the plan. Alex, as far as remaining is concerned, Alfa Bank has set foot in the country in 'ninety three, which is one of the first foreign banks To be there, so we enjoy an excellent brand in the country. People do know us and also we have an excellent management team on the ground. After also many years, where also this country was constrained now, it is very obvious that it's not just already growing strong, but it will grow Even stronger. And thus, the capital allocation already existing is the one that allows us to grow.
Now in terms of finding inorganic opportunities to grow, this is something which is always circumstantial. We have as a strategic directive the interest to grow in this country, and we will examine specific opportunities As the new will not rise and if they pass the hurdle, the internal hurdle or not.
Thank you.
We have a follow-up question from the line of Manu Solos Vann with Ambrosia Capital. Please go ahead.
Hello. Thanks again for taking my question. You mentioned in your press release that you would consider priority for Shareholders, is it possible to elaborate on those plans? Thanks.
Thank you for the question. It's really important for what we are contemplating here. We want to give to all existing shareholders at a specific record date Close to the AGM and the bookbuilding process, priority allocation to the share capital increase. We do that in order to allow shareholders to preserve value and exercise if we show pro rata their right to participate in the share capital increase. Formally, it's a cancellation of preemptive rights.
That's what has been included also in the announcement in order to shorten the period for the share capital increase. I have the new shares trading earlier in July. However, we want to emphasize this, all shareholders, retail in Greece, institutional shareholders in Greece, Institutional shareholders outside Greece will have priority allocation to the book building process. Thank you.
The next question comes from the line Negro Alberto with Mediobanca. Please go ahead.
Yes. Thank you for the presentation. The first one is Just a clarification regarding the restructuring charges. If I understood while you already booked 75% of the total cost in Q1, when should we expect the remaining restructuring charges to be booked? And if you expect also to book some other charges in the coming years to reach the cost target?
And the second one is on the capital increase. As you all highlighted, the capital is enough to absorb the NPE cleanup and you are asking Fresh Capital to grow faster. Can you elaborate more on this and which are the main reasons behind this Even if you are projecting a fully loaded CET1 ratio above 14% in 2023, 2024, Yes, on Slide 36, you are showing the capital evolution where the capital increase will be Fully absorbed by the credit expansion, is the credit expansion including the generation of higher profits
in the same period? Thank you. On your first question regarding restructuring charges, you are right. We're taking the bulk in the Q1. There will be some further restructuring expenses through P and L our crude in 2021 2022.
We have to use IFRS criteria to book upfront only what can be booked as per accounting principles for restructuring charges. So yes, there will be some further restructuring charges for 2021 2022 to the tune of EUR 40,000,000 us portrayed in the relevant page. And that is P and L. That is charges through the P and L because in order to affect the cost efficiencies and transport the bank. We are planning also CapEx in IT to the tune of EUR 270,000,000 the planning horizon that is already projected in the relevant page for transformation costs.
Now your second question on capital. I think it's very clearly Portrait. That the cleanup of the balance sheet and the absorption of the costs The new transactions can be comfortably addressed through our existing capital buffers. You see that the cost of new transactions at 1.9%, even after Galaxy is booked in the Q2, it trends towards the 17% level. Coming to common equity Tier 1, again, we are having a comfortable buffer against minimum.
And at the end of 2021, which is the lowest year in the period, our fully loaded pro form a for the deconsolidation Of risk weighted assets that relate to this transaction is approximately 12.3%. So we feel that these are numbers which can comfortably support the argument that the existing capital buffers I can definitely support the NPE plan. On the other hand, there is RWA growth Relating to €10,000,000,000 of new net disbursements in the period. So the 2.5 Percent in capital terms, credit expansion requires a share capital increase of an equivalent size of 2.5% In order to make sure that our capital remains at around the 17% level, which is the management target for Capital at the cost.
Thank you. And sorry, this 2.5% credit expansion includes also the benefit from generating higher profits.
There is a small portion of Approximately EUR 150,000,000 that relates to profitability relating to credit expansion, and it is included in the relevant bar that you see there Making the 2.5 percentage points, yes. Okay. Thank you so much.
Thank you. Ladies and gentlemen, there are no further questions at this time. Will now turn the conference over to management for any closing comments. Thank you.
Ladies and gentlemen, thank you very much for your very large attendance of our Q1 results and strategy update call in such a short notice. Thank you for all your participation, your questions. And obviously, we are ready To take further of your questions in the days to come. And we're looking forward to meet you also, any of you I would want to do so. Otherwise, we will be standing to we're looking forward to meeting you again at the end of August for appraising you on our first half results.
Thank you very much.
Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling and have a pleasant evening.