Welcome, ladies and gentlemen, to our earnings conference for Q4 of last year. After summing up or completing 2021, this is gonna be a team presentation. I'll be joined today by Jean-Charles Aranda, who's the CFO, Michał Dybuła, who's the Chief Economist of the bank, and then Wojciech Kembłowski, who's the CRO. We'll do this, and we'll divide up the presentation into various roles. Before we go on to the slides, I wouldn't be able to refrain from saying, commenting on the fact that we're in a totally new set of circumstances, a new reality. Many people hadn't anticipated this, and so we haven't seen this in our environment for decades. This means that we're highly focused on helping our neighbors from Ukraine.
In our case, this is a special circumstance because we have a sister bank, which has a large number of employees, and the top priority for us is to ensure that our colleagues and their families who make the decision to come to Poland, we wanna help them, for them to feel safe and for them to have a place to live, and they'll have money to live with, and they'll have medical care. We're not sparing any effort or funds in order to make sure that that's happening. With the conviction, this is what needs to be done. We're helping our Ukrainian customers, where we have a relatively large number of customers, and we've basically exempted them from all fees. For nationals from Ukraine and Poland, we have a good offer, a simple process.
We've also been supporting our employees from Ukraine, providing them financially, psychologically in these nightmarish times for them not to feel that they're alone and that they're not gonna be alone. I'm proud of our bank and how we as Poles are reacting to this situation. We're showing that we're compassionate, and we're not apathetic. This horrible war will come to an end in the near future, and it will end in the right way. Ukraine will continue to be an independent and sovereign and democratic nation. With this emotional words, we need to talk about our results from last year. Let's go ahead and move on to the subject matter of the meeting. The agenda is rather typical, and we'll start with the macroeconomic environment, and Michał will talk about that.
Of course, it's changed over the last few days. As a result, I think this will be interesting to see how we perceive the impact of this conflict on the economic outlook in Poland. In terms of the most important information I can tell you, this was a year of dynamic growth, and it was still pandemic period with a large final wave which affected the business environment in Poland. I think we did quite well. Setting aside the profit where we had the impairments for Swiss franc loans, a lot of the business parameters show that we are an organization that's developing, that's growing, and that's a responsible organization. On the first slide, you can see several basic factors, facts, figures that show that we grew quite rapidly. This most recent year was the last year of the Fast Forward strategy.
In the near future, we will replace it with our new strategy. I'll talk about that in a little bit. In each one of the five pillars, we were able to achieve a lot, even though the circumstances were atypical, astonishing, surprising because of the pandemic, what happened with the interest rates, so on and so forth. You can see, ladies and gentlemen, here is our composite approach to each one of these pillars. I'm not gonna walk through each one of that. I think they're pretty clear and straightforward. They also confirm that we've grown, that we're growing at a fast pace. We received an award, the best bank from The Banker. This is the first time that our bank has received this award, and it's so nice.
For me and for all of us, it's an external confirmation of the fact that we've made some pretty significant progress in recent years. What's important to us and what will continue to be important is to be more and more digitalized as an organization and to have more and more processes that are available in a digital fashion to make sure that customers are more and more willing to utilize our solutions, to recommend them as based on their use patterns. You can see based on these bars, on these numbers, this is actually happening. Last year confirmed that the quality of our solutions and the way in which we deliver them to our customers is correct, and the absorption is better and better. We can say that this is going in a very good direction.
I mentioned Autenti because this is a bit of dimension because it's, you know, the sustainable part of our business. We're saving paper, and so we don't have to print out lots of documents. We were signing paperless documents, and so we're eliminating paper from our life. I can say for us it was and is important for us to be a sustainable bank and for us to have responsible growth. ESG, these three letters are strategically important to us, and this approach is built within our business lines. It's one of our KPIs, one of our goals and objectives. I'd like to mention here, last year we grew very rapidly in terms of new financing for sustainable purposes. We call this green. We had almost PLN 4 billion in financing for individual customers to do thermal modernizations.
PV installations in their homes, rooftops, lots of installations to do energy transition in Poland. We've given the first loan, which is a sustainability-linked loan to one of our core clusters. We're working with international financial institutions in order to orchestrate this transformation away from dirty power sector into a clean energy sector. Maybe I would share with you one reflection about the letter G. I think it's a good point in time to sum up. Last year we can say the management board composition changed. That's also true of the supervisory board. I'm very pleased with these changes. I'm proud we have two ladies in our management team. That's not the end of our path in terms of having a more diverse team, balanced team.
We used to have zero, now we have two, and in the supervisory board we have five women among the 12 persons who sit on the supervisory board. We can say that there's a clear development here. Diversity, inclusion for us are truly important values in our activities, in our hearts, and these are things that we're cultivating. If we look at our business activity, I like this slide because this shows what's been happening. You see year-over-year as well as quarter-over-quarter. If you look at this picture year-over-year, you can see that the growth rate is very positive in nearly every category. Q4, as I mentioned, was a little softer in terms of commercial activity. It seems that it was a softer quarter for the entire market. This was part of the fifth wave of the pandemic.
This was something that generated a lot of stress for the society. We also had the hikes in interest rates. If we look at the demand for credit products among individual customers, that was one thing. There is also certain pressure in terms of investment projects, products and asset management services. If we look at the growth rate, you can say that if we look at loans year-over-year, it was higher and we've increased our market share in the loan portfolio. Also on the deposit side, we're trying to control the growth. We're very liquid and here we're not so keen on the biggest possible growth. As you recall, there were quarters in which we had soft loan portfolio growth.
We were dissatisfied, we were working on it, and last year showed that we're able to grow our loan volumes. This is another piece of evidence that the bank is entering the path of constant growth. We have more and more customers, so we've crossed the 4 million threshold, and we want to continue growing steadily in terms of our customer base. If we look at our income and the other financial parameters, and you can say our net banking income was the highest in history, higher than in COVID year, and so non-COVID year, and so this is higher than the plan we had for 2021. Costs are under control. As a result, we can say that's the positive jaw effect, if you can say it this way. We had this C/I. The cost income ratio has improved.
There's still quite a bit more for us to do here. Our gross profit, you can say that it was strongly affected by the provision we set up last year for Swiss franc loans, and that means that Q4 was in the negative, was in the red. We wanted to show you what our gross profit and net profit would look like had it not been for the Swiss franc burden. We can say that the bank is an organization capable of generating more than PLN 1 billion in earnings per year. I think in the future, we'll see those kind of results generated in the future. We had to set up the provision for the Swiss franc loan and for the handling costs. At the end of the day, the net profit was PLN 176 million.
Despite the big provision, we've had, you know, more than PLN 1 billion in provisions for Swiss francs. Despite doing that, we had a positive net profit. Our net profit was in the black. Here you can see more information about the costs of risk and the provisions for the Swiss franc loans. I won't drill down into the provisions. In Q4, we've had a much bigger provision than in previous quarters, and this led to a negative result in Q4. The overall result for the full year was positive. The other cost of risk, if we net out Swiss francs, we were at a good level of 32 basis points. We can talk about that a little bit later. Q4 costs were higher for a few reasons.
Above all, because of presenting settlements with one of our subsidiaries in a different way. We have the positive growth rate in the banking activity, as you can see on this slide. We can talk about the macroeconomic environment.
Thank you very much, Przemysław. Welcome, ladies and gentlemen. I think in the current situation, it's a waste of time to talk about what the economy looked like in Q4 of last year and at the beginning of this year, because the war in Ukraine is changing everything. It changes how we perceive the future and what we might encounter in the world of finance and the economy. Today it's difficult to present a scenario or a forecast that would be based on macro aggregates.
Because the war is in progress, we're not gonna be able to, in a credible fashion, respond to any questions. We don't know what the political solution to this conflict will be and what the situation might look like in a few weeks from today or a few months from today. We are able to talk about certain trends or phenomena that will probably transpire. Poland, like most European countries, will be in a stagflation environment. Economic growth, whatever we had planned or assumed one or two weeks ago, will be lower. It'll be lower because of the slump in exports, because of less investments in the private sector, so households as well as companies. It'll also be softer because we'll have higher inflation leading to bigger erosion of our disposable income.
We see that commodities, not only oil and gas, but coal getting more expensive, but others will get more expensive. There'll be pressure, price pressure, and this may sustain or stay in place for a longer period of time. Stagflation is a big challenge for the central bank, especially at the time when inflation was already high or is high at the beginning of the year. The dilemma of what to do is quite difficult to identify. You have to look at the inflation and then the risk of acceleration, or should you try to support economic growth? My thoughts are as follows, that in the current situation, the most important thing is to stabilize expectations. That means that this cycle of sharpening monetary policy will be continued for some time now, what was started recently.
In terms of next steps, in terms of stabilizing the Polish zloty exchange rate, having in mind the rise in inflation, this is gonna be quite important. Last but not least, we can say the banking sector. Once again, it's very difficult to give ironclad forecasts because everything will depend on what's gonna happen on the macroeconomic side and the macro financial side, but we can anticipate that the demand for investment loans will fall off because private sector investments will be lower. Perhaps the slump in loans won't be as strong for working capital loans because the need to maintain and grow inventories will be sustained, and then loans for households. If we look at mortgage loans, the demand had started to fall off because of higher interest rates. It seems that this is gonna be rather probable.
I'll give the floor back to Przemysław. In fact, we'll give the floor to Jean-Charles. Thank you very much, Przemysław. Welcome.
In 2021, the scale of the business significantly increased. Loans grew by 13.1% year-to-year, and deposits grew by 12.1%. Net result amounted to PLN 176 million, -76% year-to-year, mainly due to the impact of the additional FX mortgage loan provisioning. NBI reached a level of PLN 4.8 billion +2.2% year-to-year, the main driver being fees and commission in which we achieve very good result, +14.5%. We have also to remember that, in 2020, we have benefited from few positive one-off in terms of net trading. In terms of cost, costs are under control, +1.5% year-to-year. Having in mind that we book significantly additional cost, legal cost related to the CHF mortgage loan.
Cost income ratio slightly decreased by 0.4 basis point, reaching the level of 52.9%. As already mentioned by Przemysław, we book PLN 1 billion additional provisioning for FX mortgage loan. Cost of risk remain fully under control. Loans portfolio grew by 13.1% year-to-year. Q4 was also really dynamic in this area. The positive information that we're able to grow two digit in both segment, institutional and individuals, and our market share reached a level of 6%. As regards the individual loans portfolio, the main driver remain the Swissie mortgage loan, which grew by 5.1% quarter-to-quarter and 20.5% year-to-year, which is a good achievement.
Positive trend as well in terms of cash loans, which grew by 5.3% year-over-year, slight decrease during the fourth quarter. Positive trend as well in terms of institutional customers loans, + 11.9% year-over-year, + 2% quarter-over-quarter. Very good performance in terms of institutional customers, which grew positively, 4.7% quarter-over-quarter 16.6% year-over-year, and again, very good result coming from the leasing. As regards the CHF mortgage loan portfolio, we have reviewed the model, and we have implemented a more conservative approach, assuming more future court cases on one side, and we have also implemented the scheme related to the negotiation. We have started negotiating with our customers, we have updated our model.
In terms of negotiation, which is the situation at the end of February, 1,900 customers receive an offer. At this stage, 373 accept from all these offers. Deposits grew by 12.1% year-over-year, 2.1% quarter-over-quarter. Bear in mind that there are some impacts coming from the interest rate hike, which I will discuss later. The main driver is coming from the institutional customers' deposits, which grew by 21% year-over-year. Individual customers' deposits grew by 2.7% year-over-year. Over the year, very good performance in terms of investment products, + 13.4%. As a result of interest rate hike, decrease in Q4, 8.4%, but over the period, very good achievement.
As a result of interest hike, the structure of the deposit slightly changed during Q4, so the share of the term deposit increased and the share of the current account slightly decreased. We are gradually adjusting the price of a deposit depending on the evolution of the interest rate. Net banking income. Year-to-year, net banking income grew by 2.2%, the main driver being fees and commission with very good achievement. All the bucket, in, it grew positively. Decrease in the net trading income, we have to remember that we get a significant positive impact in 2020 coming from the revaluation of BGK securities. During the fourth quarter, you can see positive trend, so +6.3% coming from the interest rate hike, visible in terms of NII. Specific focus on net interest income.
Margin decreasing year-over-year from 2.63% - 2.51% in terms of amount. Net NII grew by 2.6%, supported by the significant growth of the loans portfolio on one side, and the first impact coming from the interest rate hike. We get PLN 864 million in Q4, which is significantly higher than the amount we get in Q1 2020. Fees and commission, very good achievement. I already said +14.5% year-over-year. All the components being positively impacted. Assets under management, fees related to the account, insurance, so very good achievement. We can really say that we reach a certain level in terms of fees and commission. Net trading income year-over-year decreased by 15.4%.
Again, I would like to remind you that in 2020 we get significant positive impact coming from the currency and BGK securities revaluation, more than PLN 56 million on one side. In 2021 we get a negative impact coming from the revaluation of our derivatives hedging preferential loans portfolio. Quarter-over-quarter, slight decrease by 13.3%. If on one side the business we are doing with the customers is better, negative impact coming from the revaluation. Net interest income year-over-year slight decrease. Again, we have to keep in mind that in 2020 we are able to realize gains on securities sales, which did not occur in 2021. Quarter-over-quarter, slight decrease. Why? Two main component. The first one related to the negative revaluation of the preferential loan portfolio on one side.
The second topic, loss on sales of securities. Operating cost. I would say that costs are fully under control, + 1.5% year-over-year, which is good considering the level of inflation. Having in mind that we book more than PLN 80 million legal costs related to the CHF mortgage loan, which didn't occur in 2020. Specific explanation about Q4 vis-à-vis Q3. We change the presentation related to the settlement of with one of our subsidiary, so leasing entity. It means that in Q4, we impacted the cost by PLN 35 million coming from the previous quarter. If we normalize the cost in Q4, then this level will be PLN 669 million. This is the normalized level of cost in Q4.
On top, we are continuing on changing the model of the bank, and in Q4 we have closed additional 19 branches. Few words in terms of cost of risk.
Welcome, ladies and gentlemen. I'd like to begin with a basic statement to sum up this year in 2021. The situation in which nominally and as a percentage, so impairment loans or loans with impairment losses, phase three, they're falling in the bank. At the same time, we have more operating loans in phase one, and I believe this is desirable for a financial situation. If we look in greater detail at the cost of risk, which was PLN 266 million last year, and here we can present information about non-recurring events which contributed to that. In Q4, I'd like to focus on two items. One is the positive result in terms of cost of risk on mortgages.
This is a result of the high-quality portfolio and how it's been performing, as well as the changes take place as a result of the changes to the PD model, which led to discrimination of customers in terms of expected credit losses. The impact was PLN 20 million. For normal conditions, the losses would have been PLN 5 million without these changes to the model. The second important factor is the level of costs of risk for institutional customers in Q4, and here I'd like to draw your attention. We have certain legislative changes in the Code of Civil Procedure, which made it less possible to do debt collection on assets of farmers, so we had to set up provisions as a result.
Giving consideration to the fact that this legal state of affairs has once again been reversed, and so we anticipate that this provision in the first half of this year would be reversed. Now if we sum up the overall year, I'd like to draw your attention to several things which were very positive for our bank and for the quality of the portfolio. On one hand, the impact of new loans with impairments. In 2020 basically it was one half of what took place in 2020. We can say that was from PLN 1.4 billion to PLN 700 million. On the other hand, we've also sold impairment loan portfolios at very good prices as is mentioned here, of some PLN 790 million almost.
If we take a look at the impact of new loans in phase three impairment and then the impact of the sales to cover that, and we can say additionally that we had very good levels in terms of curing loans and repayments. In 2021 compared to 2020, they were three times larger with respect to impaired loans. It's more than PLN 900 million. If we pull all this together, the picture is as follows. We have a limited need to set up new provisions. We have a good level of provisions for loans that were impaired, then we sold impaired loan portfolios, and then we had good recoveries for loans where the provisions had been set up and that enabled us to reverse provisions. We also have a much smaller number of loans with impairments.
The amortized cost is PLN 3.2 billion. All of this means that we have this result of PLN 266 million, so 32 basis points. This slide basically sums up the year in 2020 and 2021. I hope at the end of the pandemic where we can say clearly that all of the support programs have been completed and more than 95% of the customers have returned to normal debt service on their loans. Here we have a breakdown, detailed breakdown of the situation by segments and we can state clearly that retail loans regardless of whether or not we're talking about mortgage loans or other loans, so car loans, cash loans. In 2021 we can say there was very good performance.
If we look at the other segments we also see the number of NPL loans is falling in terms of the volumes as well as the percentages. It seems that we're arriving at a borderline situation where it would be very limited to be able to reduce that ratio. We have, you know, amortized cost of 3.6, 3.8 along with fair value and it seems that this is the optimum level where we should maintain that in our institution. The next piece of information is about the various phases. We have phase one which is growing, where we have working loans, performing loans and that's very good. Non-performing loans are falling, so they're stable. Stage two, if we look at the graph on the bottom right, provision coverage.
We're around 58% as a rule over the course of the year, and then it fell to lower levels. This was because when we sold impaired loan portfolios they had high levels of provisioning. If we're selling cash loans some 80% is provisioned, sometimes higher. Then we had some of the loans where we had recoveries, cash flow recoveries. They were also very high in terms of the provision coverage, and that's why this ratio during the year fell. We came to the level of 58% at the end of 2021. Once again, we can say that 2022 has a very low level of impaired loan portfolio, and we have a very good coverage ratio, so provision coverage ratio in terms of having low cost of risk. I can give the floor to Jean-Charles.
Wojciech.
Thank you, Wojciech.
Our capital ratio is safe, significantly higher than the minimum capital requirement. Over the year, our capital ratio decreased for, I would say, two reasons. The first one is that RWA keep on growing over the years. We get the negative impact coming from the valuation of the securities, the results of the interest rate hike. Third explanation, we have not recognized half year results compared to the previous year. Capital ratio decreased over the years but remained significantly higher than the minimum capital requirement.
Ladies and gentlemen, we're coming closer to the end of the presentation, our presentation, and then we'll have a Q&A session. To sum up, 2021, we saw dynamic growth in terms of customer acquisition and sales, and this was a year in which we went forward very strongly. We're concentrating strongly on sustainable growth, and in each one of our segments, we're growing the sustainable financing, and we had solid financial performance. Although our financial result was strongly affected by the Swiss franc provision, it's hard to talk about priorities in such an uncertain set of circumstances. We'll react quickly and with agility depending on the needs of the moment, and that's one of the most important things we demand of leaders and managers in tough times. Lots of things can happen in the external environment, having in mind what's happening in the East, the pandemic.
How things will go, we'll see. I'd like to be an optimist. I'm usually an optimist, and here, that's also the case that I'm an optimist. So interest rates will go up. Cost of energy will probably go up, although there are various discussions on that subject. The history of the Swiss franc, the story of the Swiss franc will accompany us for several more years to come unless case law and legal regulations are rolled out. Nothing seems to portend this happening. Far away from that, we want to be a sustainable institution on having a common sense and approach to risk and focusing on internal processes, optimizing them, shortening, simplifying, automating and so on and so forth. These are things that we wanna do. We want to improve our performance, our efficiency and effectiveness.
We want to get our cost income ratio as low as possible. We also look at quality using the NPS, Net Promoter Score. We're looking at the number of complaints and times of handling. There's still a lot of work for us to do, and if we think about ESG, this was one of those areas where we want to be the market leader. We feel that we're a market leader. We want to strengthen that, and we would invite our competitors to be as active as possible here because there's a lot that we can do a lot of good things together. I mentioned at the beginning about our strategy. Let me tell you the following. On the 21st of March, we have the plan to hold the supervisory board meeting where we will discuss our new strategy.
If the supervisory board endorses the strategy prepared by the management board, we will want to announce that strategy to the market. I'd like to thank you very much for listening to our delivery of the presentation. We have questions, we'll start looking at them chronologically as part of our teamwork. I'll read the questions. There's basically a bunch of questions we've received from IPOPEMA, and the responses will be given step by step. Please quantify your exposure to the Russian, Ukrainian, and Belarusian currencies in your portfolio by companies, and what is your portfolio of mortgage loans in CHF? How big is your exposure having in mind the settlement program? How do you look at the cost of risk and the quality of assets in 2022?
How do you estimate the fee to be paid or the contribution to be paid to the banking guarantee fund? Do you intend to join the EPS system, having in mind the legislative work, and what are the operating costs this year? Will it be lower than the cost of inflation? Having in mind your restructuring process, will your costs grow at a lower level, having in mind the headcount restructuring? What is the level of provision set up in Q4 2021 dedicated to settlements with customers? Do you see competition for or pressure on deposit interest rates, and what about consumer loans? Well, we can look at these questions one by one. Perhaps we'll begin with Wojciech.
In terms of our exposure to countries Ukraine, Belarus, and Russia, well, the first thing, we've looked at the corporate portfolio in its entirety and our exposure where we have a direct loan to an entity that's operating in one of these three countries. Well, this is one exposure. From the point of view of the portfolio, the cost of risk it's not very significant. It's roughly PLN 5 million . If we define this in the following manner, that Polish entities that operate and are registered in Poland but have daughter companies or conduct business in one of these three markets, Ukraine, Belarus, or Russia, we've identified 59 such entities, and our exposure is PLN 1.3 billion , more or less, to all these entities. The situation varies by entity.
For example, somebody might be selling 5% or 10% of its production or its services to these countries, and as a result, we would assume that these entities can restructure their operations, even in an extreme situation where they would lose those customers, those companies would be able to continue functioning. We've looked at those companies. They've been presented to the credit committee this week. This is under total control. We will also check the portfolio additionally and look at the flows for smaller companies, SME companies, and also in the micro segment. Thank you.
Wojciech, maybe if you continue, how do you assess the cost of risk and the quality of assets in 2022? You've responded to this question to some extent.
When we had the pandemic and this type of question was posed, I always responded that if somebody's able to say how long the pandemic will last, then I would be able to tell you exactly what the cost of risk would be. It seems to me that this will depend very strongly on the macroeconomic development path. If I look at the first month, and here I'd like to use an example pertaining to retail and mortgage loans, at this stage, I would be less concerned. We have certain buffers we used when we calculated creditworthiness of retail customers, regardless of whether we talk about mortgage loans, which had floating rates, or car or cash loans that have a fixed rate. We've had buffers in place, and we've always done mortgage loans on LTVs of up to 80%, so without any additional insurance.
What we've observed is that the structure, the composition of the loans, so if we take a look at the growth in prices of energy, cost of electricity, natural gas, and other types of utilities, trash removal. Then if we look at the growth or the hike of interest rates for some of the society, for the middle class, and the increase in taxes, if we pull all this together, even if salaries are raised the disposable income is lower, and customers who are asking for mortgage loans their debt-to-income ratio is higher, and that means. Well, that's because costs of living are higher, interest rates are higher, the buffer is higher, and as a result, the free cash flow available to dedicate to debt service is smaller. I'm less worried about the portfolio that we have that's amortizing, and I'm more concerned about the upward pressure.
To have growth, you have to have creditworthiness, the ability to pay and service your debts. At this point, it's merely a risk or a threat. This is the situation that people will first service their financial liabilities and will spend less on consumption. A lot of our economic growth is related to consumption. That means in the second wave, when you go back to paying taxes, VAT, excise taxes, which were reduced under the Anti-Inflation Shield, this could mean that there will be less demand for the products of companies, and this may, in fact, affect the position of companies. The economy will not grow as fast as it has up until now or has been planned. Now we have a question about the provisioning for mortgage loans. I'll read it once again, ask Jean-Charles to respond.
How do you assess the current level of provisioning the portfolio of mortgage loans in FXs? What level of provisioning is dedicated to settlements with customers in Q4? How many settlements were signed for these loans? That would be it for now.
I think we made a significant step forward in Q4 by booking additional provisioning. When you look at our coverage ratio, we have one of the highest coverage ratios among the banking sector. I will say that the situation significantly changed in Q4 compared to Q3. What we are doing now is that we are observing all the parameters. The situation is evolving, I will say, every day, every week. It's what we're observing. When you look at the situation where we were and where we are, I consider that the situation is positive and the coverage ratio is at the proper level now.
At this stage?
Yes, at this stage. Second question about the number of settlement. [Ali], the share of the-
The share for-
Okay.
Of provisioning dedicated to-
15% of the provision is dedicated to the negotiation at this stage.
How many settlement agreements have we signed?
Signed. The figures are changing every day. I will say, I share with you that more than 360 customers already approve and agree with the proposal. 50% already sign the proposal. We have different step, formal step. One step is related to the mediation, so it has been done. 50% of the customers who agree with the proposal sign the proposal.
Still question to you.
What is your estimate of the fee, the contribution to the Bank Guarantee Fund for 2022?
The level of BFG contribution is in line with what we expect. We have to keep in mind that in 2021, the BFG contribution has been significantly lower, so we are coming back to normal. The targeted level of BR and DGS are known. I will say for that the level of BFG costs are in line with our expectations, no surprise.
The next question is about the EPS system and our plan. Maybe I'll respond quickly. In terms of creating such a system requires that all major banks should join in that, and I don't think we're the bank that would, you know, thwart these plans. It's a little too early to talk about any decisions in this area. What is the outlook for operating costs this year? Can the growth be below inflation? Jean-Charles.
We try to be below the inflation. We already discussed about one topic which related to the BFG, which will have a big impact in terms of evolution of the cost. We know what is the level of inflation and specifically with inflation on salary. We are already discussing about inflation, but inflation of salary is higher than the pure inflation, so it's one topic. What is important, and you have it in your question, so we are keeping on changing the business model of the bank. Yes, we'll have additional positive impact coming from the change of the model, and the goal is really to be better than the inflation. We have to be very careful. Many topics are changing on daily basis.
We already know what were the first estimates of the cost of energy. Depending on the evolution, the situation can significantly worsen. It's one topic, potential deterioration of the FX rate, which is one of the parameters for the rental. Yes, of course, we'll be under pressure. Overall, what I would like to say, we are discussing the evolution of cost, but one of our goals is to improve the cost income ratio. Overall, what we have to do is to generate more growth in NBI better and growth in operating expenses. This is our goal.
The last question, does the bank see pressure for interest rates on deposits and for consumer loans and mortgage loans? We live in a competitive market. Many customers are aware of the changes in interest rates, and we're managing this as best as we can, and we have a good result here, so I don't think we can say anything smarter than that. Now we have two questions from PKO BP Securities. Have you done analysis of your customers who are susceptible to the Ukrainian and Russian situation? We've already responded. The second question is asked in English. We have new questions coming in.
Impact of bonds revaluation on four-quarter results, Tier 1 ratio. Did you use the preferential transitory rules at the year-end? Yes, we use the transitory rules at the year-end. Exactly. So 70% of the unrealized losses were removed from the calculation.
Thank you very much. The next question. The Swiss franc exchange rate is moving up and the FX rates are changing, interest rates are rising. Will customers be willing to enter into these settlements? Well, that's reasonable. In recent days, we can say that we're gonna have to make an estimate or assess this over a slightly longer period of time. That was the last question that we've received. I see there's one more question. There's somebody in the studio. We're waiting for that final question. This is gonna be the final question we'll respond to during the conference, and we'll try to respond to the other questions in some other procedure. I don't see the question on the screen, so I'm not sure if it's actually made its way to me. One more second, please. Be patient. We haven't received it.
I've received it on my device here with the incoming questions. Now we have the question. Have you recorded significant growth in conversion of deposits from PLN into other currencies? And are people converting into euros or dollars, taking out withdrawals? I've been looking at daily updates since the beginning of what's happened with Russia and Ukraine. Of course, we see greater cash needs, withdrawals in euros and dollars. But in terms of converting, this is not a topic that's come across my desk yet. I don't know anything about this topic. Perhaps this topic hasn't generated that much significant emotion yet, or hasn't generated that significant emotion. That would be it. Ladies and gentlemen, we'd like to thank you very much for your virtual presence and attendance and your attention.
I really do hope that in the very near future, perhaps we'll meet to discuss our strategy once, if it's endorsed, that we'll have the opportunity to see each other face-to-face because we're speaking to cameras. We don't see your faces. This is a little bit different. It's worse than it used to be when we could sit together and look at one another face-to-face and have a coffee together. I wish you all the best, be healthy, and until next time. Thank you.