Ladies and gentlemen, a very warm welcome to our quarterly performance conference here at Alior. The management board will give you information about the performance of the bank in the quarter. Just like during the first conference, Artur Chołody, the acting CEO of the bank, Tomasz Miklas, the deputy president and head of risk, Radomir Gibała, deputy president and head of finance department, will give you the details. In the second part, right after the presentation, we will move on to a Q&A.
Before I give the floor to the CEO, let me encourage everyone who is watching and listening to us to ask your questions during the first part, and that will be a good segue into the second part of the Q&A. Artur, over to you.
[Foriegn language] Szanowni Państwo, serdecznie witam na konferencji prasowej.
Ladies and gentlemen, a very warm welcome to this press conference where we summarize Alior's performance in the second quarter. We'll try to give you the results that we've obtained for the second quarter and also for the whole first half of the year. First of all, let me thank our customers for their trust in us and for our shareholders for believing in the future of Alior. And a big thank you to all the employees.
It is thanks to their work that we have achieved these very good results. The net profit for the second quarter is PLN 586 million, which is 16% up on the second quarter of 2023. Our net profit for the first half of the year is over PLN 1 billion. It's PLN 1.164 billion, which is 34% more than the first half of 2023. The Tier 1 ratio is at 17.12, and the TCR is at 17.53, and both are way above the regulatory minimums.
We have achieved a great success in terms of a significant decrease in the cost of risk, which amounted to PLN 39 million in the second quarter, which is 74% less than in the second quarter of 2023. CoR was 0.23% in Q2, and that's a 0.71% point down on the second quarter of the previous year.
Another success for the bank is that our NPL dropped to 6.78, which is a 2.76% point down over the past 12 months. In terms of our operations, the number of mobile app users is 1.2 million, which is 19% more than in late June 2023. The number of customers with regular cash inflows into the accounts was 1.126 million, which is 61,000 more than at the end of June 2023. In terms of mortgages, we went 14% up year-on-year to PLN 681 million, and the portfolio of residential real estate loans was PLN 19.8 billion, which is plus 22%.
The total share of residential real estate loans has now reached 23.3%. In May this year, the bank paid a dividend of PLN 577 million, which is PLN 4.47 per share. In May, the S&P rating agency gave us a BB plus rating with a positive outlook. This shows that it's likely that we will achieve our investment plans. Thank you very much. Let's now move on to the second part of the presentation. I will start with the indicator part, and then we'll move on to volumes.
As I look at the key indicators, I want to emphasize our interest margin, which is 5.94 after the first half. If we take into account the loan grace period, it's one of the highest values on the market. Return on capital is another thing we want to emphasize. Return on equity is 24.5%, and it would be 27% if adjusted for the loan holiday, as we call it. This is an annualized capital, annualized equity, which is higher by 25%.
That's what's being used for this ROE here. Now, the cost of risk, all the other values will be discussed by Tomek in the risk part. As we have seen, this trajectory is upward in terms of being better rather than worse. We've got a C/I index of 36%. That's very satisfactory for us in terms of the previous quarters, and it has remained at a level. Now, moving on to the volumes in terms of assets, it's 8% up, but we are mostly happy about the working loans that are up 11% in terms of gross performing loans.
What we have on the side of the liabilities is we invested in our loan portfolio, and that's mostly based on mortgages and also regular loans that are the drivers of this growth over the past four months. Any surplus goes into securities. As we move on to mortgages, as you can see, there's a year-over-year growth of 14%. Q-on-Q, we have a drop, and it's hardly surprising.
After all, we had the Safe Loan 2%, and that's where it seems to us that the bank used that opportunity very well with sales at PLN 3.6 billion in terms of the Safe Loans. As a result, we can see that our portfolio has grown by some 22%. As we have been changing the asset mix, we paid particular attention to making sure we are growing as a mortgage loan player on the market, and this is happening.
This is happening, and it's giving us very good results on our balance sheet. Even looking at this normalized quarter, the fixed rate loan rate is what you can see in the bottom left-hand corner, and the structure is improving as well. And that translates into the complete portfolio, which consists of fixed-rate mortgages that make up 24.4% of the total loan portfolio. And that's a very good trajectory.
In terms of cash loans, you probably know very well that we are one of the leaders in this segment, and we have got a market share of about 10% in terms of volume. This is a similar level year-on-year. What we are very clear in signaling to the market is that we care about a good margin and a good customer profile. This is something that we are paying attention to in this market, which is slightly growing. You will see that we are trying to migrate our sales towards remote channels as well.
As I move on to the consumer finance part, these are CF loans. This is a cyclic market with a peak in Q4. This is when consumption goes up, so as the provider of finance, we also use this opportunity. Now, this is where we are maintaining our leading position. We've got a nearly 19% market share, and we're very consistent in increasing our technological edge over the others based on what's available on the market.
For example, you can verify your identity using the mObywatel, mCitizen application, and there's an implementation of the PESEL number verification as well. So this would be it for the loan part for consumers. Thank you. Moving on to our business customer segment, we've got positive results here, but we can also see new challenges emerging for the second half of this year and for next year. 5.6% was the growth of our revenues, up to PLN 841 million in the first half.
Adjusted for the cost of risk, the growth was 25.7%, and the NPL was down by 4.31% points. We have maintained a very high position in terms of our clients in the construction industry. About 10% of that market belongs to Alior. The same goes for the JDG segment, which is self-employed, and that's a 9% share. Our market share remains at 5% in total in spite of a reduction there. We are preparing for new challenges in terms of the products and technology.
In technology, we want to automate the lending processes for micro companies, and we want to emphasize mobility solutions for our business consumers. In terms of other areas, we've got a renewable energy segment project, and we want to participate in the energy transition that's going on. As a bank, we also want to finance infrastructure-related projects that are tied with EU funding, and we are also planning to increase the volume of our leasing as part of our Alior Leasing Company.
Looking at our key efficiency indicators, the online sales in the micro segment went up by 25%, remote transactions by 31%, active Bank Connect services up by 84%, and this shows that we are putting a lot of emphasis on IT, new technologies, and innovation. In terms of stakeholders, including the media and the opinion-making circles, we have been recognized. On many occasions, we have received a Puls Biznesu Award, Money.pl Award.
But the most important piece of news was that our rating was confirmed by S&P. We received the BB+ rating, but our outlook was upgraded from stable to positive. Thank you. The second quarter and the whole first half of 2024 continue very good risk performance at Alior. The Tier 1 and TCR indicators are significantly above 17%. We have a big surplus above the regulatory requirements with PLN 4.2 billion and PLN 3.4 billion respectively.
Same goes for the MREL indicator. We issued bonds successfully in the first half, and we're considering another issue in the second half. In terms of liquidity, the bank is improving, and it's at very high levels. Short-term liquidity, LCR, is shown on the right-hand diagram, and the NSFR is also shown on the same diagram. The regulatory minimums are 100%, and these are 181% and 144% respectively.
[Foriegn language] Kolejny bardzo dobry kwartał dla nas. Osiągnęliśmy poziom 6.78 NPL dla grupy Alior Banku. I jak widzicie Państwo, kontynuujemy, a nawet przyspieszyliśmy ostatnio redukcję NPL-a versus rok 2020. To jest redukcja z poziomu 14.5 do poziomu 6.8. W zakresie kosztów ryzyka już w poprzednim roku osiągnęliśmy bardzo dużą poprawę i zeszliśmy poniżej 100 punktów bazowych, jeżeli chodzi o koszty ryzyka grupy. Ten rok jest jeszcze lepszy. W pierwszym półroczu osiągnęliśmy poziom 0.46.
Jest to wspierane oczywiście zdarzeniami jednorazowymi, o których mówiliśmy Państwu także podczas prezentacji wyników za pierwszy kwartał, ale te zdarzenia powtórzyły się w drugim kwartale. Mówię tutaj o restrukturyzacjach z pozytywnym wynikiem dużych klientów korporacyjnych, a także sprzedaży portfela NPL-a w 2024.
Large clients, and also from the point of view of the individual consumer. In terms of the cost of risk, it is expected to be at 65 basis points, and in the coming years and midterm at about 80 basis points. Now, as we move on towards the risk and the NPL improvements, recent quarters have seen a very dynamic improvement of these indicators. As you can see, when we look at retail consumers, it's 3.46, which is a very good value. It's much better than many other banks. And we are now focusing on improving our corporate NPL, which is about 11%.
However, as you can see, we have seen a lot of improvement. It has already gone down from 16%. The cost of risk has improved after the quarter, and it's not just in the bank, but it's also in the business client line and the retail consumer line. So to sum up the risk area at Alior, we are very good in safe in terms of equity.
We are very good in safe in terms of liquidity, with a lot of surplus above the required minimum. In terms of asset utilization, as we have in the past, we are improving this as we have in the past. Thank you. Thank you, Tomek. Let me give you some words about our financial results. In the synthetic look at our income statement, we'll emphasize some items later, but this is more general.
The key message from this slide is that we are at 34% after the first half in terms of our income. Our interest result was also better, and our cost of risks are much better, which is something that Tomek described extensively. So we are minimizing those costs, and we are trying to arrive at the market average. So this is what the quarter and the first half look like. There's also the money set aside for the credit holiday, which has been reduced recently. There is a lower number of requests for the loan holiday.
There is less interest from the consumers, but we are obligated by the binding standards to adjust the figures accordingly. Now, what we can also say is that we have a higher cost of legal risk, but that's again as a result of an increased amount of litigation. We believe that the Swiss franc segment, which is behind these values, it's PLN 108 million. It is now nearly 100% covered by the funding we have set aside.
Now, for the interest margin, we should probably discuss this slide, and especially the diagram in the top right-hand corner. It's our interest margin adjusted to margin at 6.22. Now, what this results from is that we have the variable part based on WIBOR, which is 100 basis points less than last year. That's about PLN 100 million less in terms of revenue, but we are making up for it with increased volume.
I think it's about PLN 75 million in terms of growth. Now, the cost of financing is also there. We are using the benefits of the liquid market, and we are optimizing this parameter to make sure we are as effective as possible. As you can see, it's significantly below 200 basis points. It was at 191 in the second quarter. So that's a significant improvement year-on-year and quarter-on-quarter. When we talk about the volumes, I didn't say this before, but we have a very attractive offer for our retail customers.
It's 7% in savings accounts. This is a result of the transaction conditions, and this is giving us good results. The number of personal accounts is up by 20%, and this was mostly growth achieved in the last quarter. So given the very competitive market, we do believe this is coming across as a very interesting offer to the customers, and that's why our acquisition on the market is high. So we're using this, and we are maintaining the interest margin ratio.
There is also an influence of hedging, which represents PLN 100 million difference year-on-year, which we already communicated to you in the course of earlier presentations. The middle line seems interesting. It is the NIM minus CoR, so the net margin minus the cost of risk. In case of the interest margin, we have observed stabilization, and as regards CoR, we've already heard that there's been an improvement compared to market values. We want to stress that because it seems a very attractive level and an indicator.
What I would also like to draw your attention to is the credit to deposit ratio, which is observing a considerable improvement in the leverage deposit ratio. You can see a great rise because we want to continue building our loan book and exchanging as much as possible of the financing into loans.
This is probably one of the highest rates in the market, almost 85% of the loan-to-deposit ratio. As concerns the fees and commissions results, it is a stable result. We continue with the communication that we've mentioned many times. We want to maintain attractive retail conditions, attractive pricing tables, which is appreciated by the customers, and this result is slowly being transferred into the general balance sheet result.
But in some part, we believe it will also be observed in the number of transactions and will be observed in the income statement. There's been a change in the model of settlements with one of the card operators, which is mentioned in the footnote, but you have heard these communications at different times, and it is clarified to interpret the lines better.
As concerns the cost, the banking sector and the whole of the economy is certainly under the influence of the inflation pressures. So year-over-year, our costs have grown by 11%, 16% the employment cost. Some of the banks have already published the results, so we can see that this represents the general market trends. What is optimistic, because obviously we work on all the items vigorously, is certain reductions in property costs and rents and the maintenance of our headquarters or branches.
You can see the reduction result, for instance, by decreasing the sp ace in Gdańsk. Similar exercises will take place also in Kraków. There's no use combating the trend. The hybrid model has become more and more widespread, and we will certainly use the opportunity in the days to come so that we obtain, on the one hand, attractive conditions for employees, but also savings.
Similarly, with the network of branches, we keep working on optimizing the branches structure, both in terms of contract and locations, as well as the number of branches. We grow in the indexes relating to property, IT, or marketing. The first one is relative to the growth, and the bank, the whole of the sector certainly covers all kinds of expenses. As for marketing, well, this is also a derivative of the sales levels of the campaigns that we are involved in.
This brings us to a very satisfying result, cost-to-income ratio, which is around 35%-36%, which is considerably below what we had posited in the strategic goals. And now I hand over to Artur to talk more about the strategy. We would like to tell you a few more words about the financial targets and the strategy in the years 2023/2024. All the strategic objectives have been realized, and we assume today that our strategy has been quite conservative.
The objectives have been met, but also in each of the items, we have considerable good results. NPL, we prognosed below 10%, and we went down to 6.8%. As regards CoR, we wanted to go below 1.6%, and we received 0.46%. Similarly, with other indices, we did better than the assumption that we had made for 2025. So all the goals had been realized and improved, and now we're working on the new strategy for 2025/2027. The strategy will certainly be very ambitious. Thank you very much.
This brings us to the end of the first session. We now move on to the question and answer session. The first question. What bank has the share of the fixed interest rate? As we mentioned in the slide, 24% as regards our volume.
But as concerns the new mortgage sales, it is at the level of 76% of the fixed interest loans. Thank you, Radomir. The next question. What was the approximate level of long-term financing after the second quarter of this year? At the end of the mid-year, 34% with relative to the recommended level. We lack PLN 1 million, PLN 1.3 billion. The level will be achieved in the future. Thank you so much.
The next question. What part of the assets is at the level of fixed interest at the second quarter? If we take into account the whole volume, I mentioned the mortgages at the fixed rate, but also there are cash loans at the fixed rates, and the second half, which is the hedging portfolio. Taking all that into account, we have to say it's about PLN 30 billion. Thank you, Radomir. The next question.
What is the outlook for the interest result for the second half of this year? Well, taking into account a certain consensus regarding the subsequent quarters and the environment where there would be no changes in the monetary policy, our NIM should be stabilized at similar levels than the ones that we have now. Thank you, Radomir.
What is the sensitivity of the interest realized, 100 basis points, for the change in interest rate? If we look at the fixed balance sheet and 100 basis points, it is a little above PLN 200 million in the horizon on one year until the end of the next quarter. NPL level went down below the 10% quite considerably, which was the target in the strategy. What is the further potential to bring the level even further down?
Obviously, we want to go down below 5%, and the current structure of the assets makes it possible. Thank you, Tomasz. What is the impact on the capital indices by the CRR and CRD regulations? According to our estimates, these regulations are still being modified, but it will be about 0.5% and 1% point. As regards our bank, we have a model of AMA as one of the few banks in Poland. So this effect resulted from the credit risk and operating risk. What is the reason for the drop in the number of customers in the retail sector?
Well, let me try to answer that. A large number of bank customers are the ones who use the installment loan. There is a big volatility in that particular group. There are seasonal variations because of the very nature of the installment loan. If you look at the presentation further, out of the 4.4 million, we have 1.3, 1.4 million who are the installment loans, and that certainly impacts the total number of customers. Thank you. Is there a space for bringing down the cost of deposits?
Well, let's put it more broadly. We're looking at the cost of financing in the context of the possible change of interest rates. Obviously, there is a competitive game in the market, and this has a huge impact on it. When we look at the interest results, the average cost is the one that we keep improving, and we are successful in that. It relates to the base of deposits, which is the background of the particular indicator.
We want to continue these activities, and as has been mentioned previously, we definitely want to use the fact that the sector is quite liquid, and with the change in the interest rates, we will be adjusting our actions. What was the positive impact of one-offs on the reserve balance? If we excluded the one-offs in the second quarter, the result would be similar to our midterm, which would be 0.8%. What is the balance value in the CHF loans, and to what extent is it covered by reserves?
I think I already mentioned that in the presentation. It's PLN 108 million, which is the balance value. It is almost 100% covered, and to be exact, 98% of that is covered by reserves. The planned MREL issue, what will be the size of the emission in the second half of this year? We consider between PLN 300 million-PLN 350 million value of the issue. What is the outlook on the corporate loan sector? Growth by 6% quarter-on-quarter is the highest quarterly growth over the seven-year period.
What was the reason for that, and what are the prospects for the future? This resulted from the activity in the market, from the work of our team in the corporate sector as concerns the subsequent quarters in the next year. We're looking at a number of initiatives which we will want to bring improvements in the market. We realize that there will be all kinds of EU funds available, which will be funneled towards the infrastructure sector, the large projects which will be realized by corporations, and that's where we see the space for Alior Bank.
We will want to be in collaboration with other banks in terms of investing in the largest projects. We realize what scale we have. We will want to develop the corporate sector also in the development of renewables and the green economy. Thank you. Other banks say that they win most litigation cases. Is it a different situation in Alior? If not, why? The reserve has been set up for 40% of size.
Well, we set up the reserves because we look conservatively, but we do win most of the cases, and I can confirm that we win most of them. Does the bank meet the O-II requirement? No. We do not meet that requirement. It entered into force in May this year. Most banks in Poland do not meet that requirement.
Our plan for reaching the requirement, which has been approved by the Supervisory Commission, is the second half of this year. Thank you. And that is all as regards the questions, so I thank you very much for taking part in this Q&A session.