Good morning. Dzień dobry. Welcome, on this spring-like day, to the presentation of our preliminary results for the year 2025 and the Q4 2025 results. Our presentation is quite typical in terms of structure. I won't discuss the agenda, which you've seen every quarter. The new point, however, is that today we will report the preliminary annual results. Previously, we would only present Q4 results, followed by a later presentation of the annuals. Now, the key highlights. This was a good year for the bank. I'm ready to say that, a good year with many new records. Our profit was record high at close to PLN 3.1 billion. We also report record high income at close to PLN 8.2 billion. The annual profitability was supported by a very strong Q4, where we reported close to PLN 890 million in net profit.
Another highlight is the positive growth in volumes in Q4, especially in loans. The volume of our loans grew by 2.3%, quarter-on-quarter. I do hope this is a breaking point as we launch on the implementation of our new strategy. Our deposits grew substantially. More on this later. Q4 was unique with deposits, partly due to the seasonality we experienced in Q4. Looking at the key indicators, net ROE 18.7%, much above the cost of capital, up two percentage points year-on-year. Although the interest rates trajectory in 2025 was not favorable for the banking industry. We also improved on our cost-to-income ratio by also two percentage points. As you know, under our strategy, this is not our last word.
Let me also add that last year was the last year of the implementation of our GOb eyond strategy. I'm happy to say that we exceeded the financial targets under the strategy. The strategy is now passing into history as the bank is pursuing its new strategy, Accelerate 2030. And now, briefly on our net interest margin, 3.3% down year-on-year and down slightly quarter-on-quarter. But as we will soon discuss regarding our net interest income in Q4, this was quite positive with good volumes. A good year, a good quarter, and we are very optimistic about the future. Looking now at our commercial banking, I'm not going to discuss each and every item in the charts. Let me focus on personal accounts with a drop.
This is because we are no longer willing to acquire customers over paid for channels with intermediaries. I'm speaking of personal accounts rather than mortgages. We believe that our quality of the product offering and of our technology, that quality is sufficient for us to acquire customers organically. A snapshot of the growth rates in loans and deposits. I said that we grew our loan book significantly in Q4 and, quite well year on year. Quarter on quarter, the increase was reported both in individual customers' loans and even more so for our institutional customers, which is very much in line with our expectations for market trends. We believe that demand for financing on the part of companies, especially bigger companies, will be robust, and that we can play an important role meeting that demand. In deposits, a significant quarter-on-quarter increase, both for institutional clients due to seasonality.
We acquired monies that were retained in non-interest-bearing current accounts, improving our P&L, and we're also focusing on growing our deposit base with the right mix and right share of individual customers, deposits and accounts as reflected in Q4 results. One final point on this slide, the number of our customers. As you may recall, we often said last year that we are cleaning up our customer base. With this, the nominal number of customers went down. The good news is we have completed this systematic process as of the end of 2025. And we are not going to reiterate or to rerun this kind of operation in the coming quarters, which should reflect positively on the number of our customers.
Net banking income, as I said, was we report a significant growth by 5.6%, with lower cost of legal risk provisions relating to the mortgage portfolio. A very solid, that is low, cost of risk. All these factors, combined with rational cost management, more on that later, have helped to generate a net profit of over PLN 3 billion, with a positive mix of growth in revenue versus expenses. This is why the management board would recommend that the shareholders pay a dividend of 50% of net profit. We'll probably discuss the dividend later with one of the following slides. Looking now at quarter-on-quarter results, net banking income in an uptrend in the last quarter. Operating expenses, a very important factor, we keep the costs well under control with the right trajectory.
What helped this positive trajectory last year was a one-off relating to the regular review of costs of consultancy, especially, well, in very broad terms, rather than relating only to mortgages. Now, this had a very positive impact on our expenses. This was a one-off, so we are not expecting another positive impact of the kind in the coming quarters. However, we focus on our reasonable cost discipline, which is part of our DNA, and we will definitely continue with those efforts this year and beyond. I have mentioned the expenses and the income, the relationship between the two. Still, this is an area for improvement, we think. As you may recall, our strategic target for 2030 is to come down with the C/I below 38%. The cost of credit risk at 19 basis points annually.
We'll hear more on the cost of risk later. As you have seen, I'm sure we report a very low cost of credit risk quite steadily. Under the new strategy, Accelerate 2030, which focuses on growth, we allow for the cost of risk to grow to an average 40 basis points as a result of additional production of loans. Return on equity was very solid, and the net interest margin on the net assets in a downtrend due to rate cuts. The bank is focusing to optimize the cost of deposits. We are working on the credit margins and to grow the volumes, which should largely offset the rate cuts, those already in place and those expected in near future. Now, the macroeconomic environment. I turn over to Michał, our Chief Economist.
Good morning, and welcome. The macroeconomic situation in the economy is very good.
According to preliminary data, GDP grew more than 3.5% last year, and I think Q4 was close to 4%. This is the growth rate we expect in the coming months and quarters. I think it's not a surprise that we expect investments to be the main driver for the economy and GDP in 2026. In addition to EU funds, which will probably cross the record level of EUR 40 billion, another important contributor is CapEx in the corporate sector, that's more than 50% of total investments in the economy. Starting in mid-2025, these investments have been growing, so this means that investments will continue to grow steadily. This will be combined with a solid level of household spending.
According to preliminary figures for Q3, according to preliminary Q4 figures and Q3 figures, exports are on the rise, thanks to improvement in the economic conditions on the part of our main trade partner. This should not be impeded by inflation, especially when it comes to consumers. When it comes to companies, especially industry manufacturers, persistent inflation is not good, but will probably continue for a while more. But consumer inflation, CPI, well, is likely to average below the inflation target set by the NBP, the National Bank of Poland, in 2026, with external pressures and wage pressures slowing down. Lower inflation means more interest rate cuts. The communication and the press conference of the NBP governor, after the last meeting of the Monetary Policy Council, suggest quite clearly the direction for the rates.
After two months of a stop in relaxing monetary policy, we are in for further cuts, but those should not lead to any significant turbulences in the macro economy or in the financial markets, including the FX markets. The payment balance mix is completely in line with the current rate of the zloty to the euro, and it's not disturbing the economy at all or our exporters. Continued economic growth and lower rates mean more demand for loans. The trends we've seen in 2025, with fast improvement in lending, both in terms of the volumes and new sales in the key segments, corporate customers, consumer loans, and housing loans. All of this is likely to continue into 2026, with steady demand for loans. That's all from me. Thank you very much. Over to Mr. Konieczny.
Good morning, ladies and gentlemen. Well, 2025 was a very good financial year for our bank. PLN 3 billion net profit, resulting from a good dynamics of the operating profit that was based on a solid growth of interest income, supported by a very good revenue from our commercial activity, plus excellent cost discipline that was commented upon before. That year was also the year of lower credit risk and lower cost of the Swiss franc portfolio. PLN 3 billion Polish zlotys has, have also allowed the bank to build its strategy for 2030, and while selecting the tangible equity indicator, we are starting that journey from the level of 22.6, which is an excellent starting point looking forward.
The other financial parameters are a solid capital position, which we need, and we have it, so as to be able to continue the assets build up dynamic. We have very good liquidity and hopefully stabilizing net interest margin. If we look at the loan portfolio, I do believe that an important element that is worth remembering from this particular slide, is that it's yet another quarter of increasing loan activity, not only in the understanding of the new sales by the bank, but also in form of changes on the balance sheet. So the balance sheet value of our loans has grown again in every market segment, which is important to note, and practically in all the product groups.
From the perspective of our strategy, this is a very important element, positioning the bank on the growth path that we need and that we have assumed in our plan. Now, a few words about the Swiss franc loans portfolio. Here, the fourth quarter is the seasonal or periodic review of the parameters of the model that we use to calculate the value of necessary write-offs. Hence, in the fourth quarter, there are always some adjustments taking place. Nonetheless, in the real terms of the value of the write-offs, if you look at the dynamics of new lawsuits or new claims coming in in fourth quarter 2025 as compared to fourth quarter of 2024, you can see that there are much fewer new claims lodged. Thanks to this, we look into the future with more optimism.
As we communicated previously, during the presentation of our strategic objectives, we do not assume that the Swiss franc portfolio would stop generating write-offs. Nonetheless, based on the data that we see, we do believe that the value of those write-offs over time should be decreasing. Deposits. Well, in case of deposits, same in, as in previous quarters, the bank has been conducting a very cautious policy. We do try to obtain deposits in, within the structure that would give preference to retail banking, and the fourth quarter combines these actions with the seasonal inflow of funds from financial institutions, from our clients in the area of corporate banking. Here, given our relationship and our share in that sector, quite naturally, every December we have a major influx of funds into the bank.
These funds are largely seasonal, especially the corporate, funds outflow from our bank in the following weeks. So this has to be taken into account as you look at the dynamic of the deposits base. Investment products. 2025 was yet another year of increased production and growing interest of our clients in the investment products. This segment of our activity and this product group will be growing in importance as the interest rates decrease. In our business model, the offer of investment products is a very important element of our proposal for the clients who want to make savings, because, like I said before, our bank, has a very thoroughly thought through, structure of our financial assets, and we're working on it. So if our clients are looking for potentially higher rates of return, we do offer them investment products.
As for interest activity and dynamics, it would be worthwhile noting that in the environment of decreasing interest rates, one thing that is positive is that value of that activity, the result, net result, has grown quarter-on-quarter. It's not a major growth, but please look at the scale of changes and modification of interest rates. This shows us that this volume element is beginning to work, given our business scale, and stabilizes the value of our net interest income. As for income from fees and commissions, fourth quarter was good. The third quarter was somewhat weaker, but the fourth quarter saw us coming back to fairly typical levels, typical for us. Year-on-year, we also have some growth.
The main growth factors in the fees and commission area are cards, the area related to card transactions, as well as looking forward, it's important to note, it's also the banking and distribution of investment products, because that area, if you look at year-on-year dynamics, is growing very nicely indeed. Net trading income, very good year. We have a two-digit growth year-on-year. This is built of two elements. On one hand, we have solid growth in the client area, and here we should remember that this growth was realized in a period where we had very low price volatility in the market and low propensity among the clients, low propensity to hedge. So growth is interesting and makes us really happy as a bank.
The second element that contributed to that result was our activity in the area of assets and liabilities management, our own activity, which also supported quite robustly this dynamic we observed. Costs and expenses. In the area of expenses management, cost management, 2025 was a year of robust work on cost base, with a practical purpose of ensuring good discipline and management of resources that we have, plus a review of all the areas of the bank in order to reduce the cost pressure or relieve the costs on them. We did have some one-off events, as Mr. President mentioned, that helped us to achieve this result. Looking forward, as we said in case of strategy, we are going to continue activities related to maintaining the cost discipline. Nonetheless, we expect that the bank's cost base is going to grow this year.
So on one hand, we will see growth or increase of costs that are related to the scale of the bank's operation and our investment activities that we are going to continue. On the other hand, same as in previous period, we will continue working on increasing our cost efficiency and improving resource management and cost base control. As for net allowances on expected credit losses, I will give the floor to Włodek. Good morning, ladies and gentlemen. As for write-offs or credit risk allowances, they remained stable throughout the year. Two components are prominent as one-offs. Last year, first of them is that cycle of reinstating provisions for chemical industry transactions. And the second was the portfolio provision for clients who have built photovoltaic farms.
The total risk level was approximately 19 basis points in the fourth quarter. What happened was something that I found very desirable, namely, clear growth in working portfolio, while at the same time, we were able to restructure in the best possible way, the impaired, value portfolio. We have now only PLN 2.6 billion, and that translated on the, impaired, loans indicator below 3%. One, explanation for institutional clients, we see increasing, indicator for leasing, but this is, all attributable to a single client from windows, manufacturing sector. It, is a major leasing transaction. It does have its repayment schedule, and this shows its, its impact. As for phases or stages impact, it remains stable. First stage is growing, but the second and third are decreasing. They remain fairly, stable.
In third quarter, we have sold our impaired loans portfolio. We usually do it once in the first half of the year and once in the fourth quarter. Here, valuation was very positive, so at least on value. Now, capital adequacy levels, that's Piotr's area. Well, as for capital adequacy of the bank, it is very good. All the indicators and standards are maintained with buffers. We conduct a very cautious capital policy, which on one hand, after meeting all the requirements, or regulatory requirements, allows us to offer a payout of 50% of net profit for 2025 in form of dividend. The second part of the profit will be allocated to own equity, own capital, in order to continue support our strategy of increasing the scale of the bank's activity.
As I have mentioned, our capital position is strong. It is continually reinforced, so we are ready to take on more business. We are hoping for it, and we are working on materializing it. Thank you. We are coming towards the end of the presentation part. After this, the session of questions and potentially answers to those questions. So where are we? I do believe we all know where we are. We operate in Polish reality with its solid growth and unpredictable geopolitical environment. We do believe in the strength of our economy, and we are proud that Polish economy has developed a GDP on a level that qualified us to 20 largest economies in the world. I mean, when I think back to my student times, it was something unimaginable... and yet it happened.
We know that a decrease in inflation will translate in further relaxation of interest rates or reduced interest rates. What do we have in the market? We have a structural over-liquidity, and we expect this over-liquidity to grow in the coming years, despite the increased demand for financing. Generally, Polish economy will have a positive impact on our perspectives. Nonetheless, the uncertainty will remain. I have said that many times, let me repeat it again: I do believe that resolving the conflict in Ukraine in a format of a reasonable peace will be a massive impulse for Polish economy, for European economy, and will open new opportunities for Polish entrepreneurs in the area of rebuilding Ukraine. Of course, certain threats remain with regard of outflow of Ukrainian citizens who live currently in Poland coming back to their motherland.
So these, despite the fact that I'm trying to balance mentally these two factors, I still do believe that the positive impulse for the economy should be the dominant factor. And one more thing, we operate in a world of regulatory risks, legal risks. I do believe, excessive protection of consumers, which relieves the consumers of pretty much all the responsibility for the decisions they make. That, of course, results in threats. These, it is difficult to name them precisely today. The bank must have, and our bank does have the ability to anticipate risks and predicting them before they actually happen and impact the entire sector. Just to remind you, as I said before, now we live and breathe our new strategy. It was announced in December, has not changed since. It is ambitious, aspirational.
It gives us very specific, measurable, ambitious, but realistic goals. As you see on the slide, I have already mentioned the dividend that we will recommend for 2025. It is also our aspiration that the dividend payment indicator would reach 75% towards the end of our strategy period. You know what our plans are. Not everything is going to happen in the first quarter or even second. We will systematically introduce new ideas, new solutions to the market. Nonetheless, I do believe that positive trends will become visible even this year. So I believe this is it for the presentation part. Thank you very much for your attention, and now we invite you to ask questions that we will try to respond to.
... Kamil Stolarski, Santander Bank Polska,
Congratulations on your share price and on the second quarter of growing volumes. Question about the dividend. I understand the bank meets the requirements to pay out 75% of profits in dividend, but you are recommending 50%. Why? Is there any reason why you should not be paying more? As management board, we do believe that 50% is appropriate. If you look at it from the other side, leaving 50% of profits in the bank's capital will strengthen us, will give us more comfort, more comfort to our customers, to our investors, and it will, first of all, allow us to pursue the ambitious growth targets. Never say never, but I do hope the shareholders will accept the management board's recommendation. The final decision, of course, is with them.
As you said, we do meet all the criteria and requirements to pay out more in dividend. That's the regulatory requirements, of course, and also the capital, safety ratios of the bank. May I just say that we want to be pretty conservative in managing our balance sheet, to keep at least a 2%, two percentage point buffer over the minimum required by the regulator.
Growth in loans in 2026, what are your expectations?
Well, let me put it this way.
... I will deploy a communication strategy, if you like. On annual average, we believe our loan book will grow 7%, but it's not true of every quarter, this growth rate. But as we reported on the growth in previous quarters, we are working very hard to increase the growth rate to generate the effect under our strategy. But I don't want to talk about quarterly numbers. Andrzej Powierża, Citi Handlowy. I have four questions, three short ones and one general question. Can we go one by one? Of course. First question, to follow up on what Camille asked about. The growth in risk-weighted assets, are you expecting it to be in line with the growth rate in loans, or is there any reason why risk-weighted assets, the capital requirement, would grow faster or slower?
Well, I assume there will be a correlation with the growth in lending, which does not mean that the bank will not be actively looking for transactions and, mechanisms, as we did in the past. I'm thinking of risk transfers, in order to level off that growth. But these two kinds of events will not be fully correlated in every single quarter. So to take your question for the purpose of your assumptions, I would expect close correlation with growth in lending. Question number two: Net Interest Margin. I imagine in Q4, according to my calculations, the NIM was slightly disturbed by growth in deposits and interest-bearing assets at the end of Q4. So a technical question: NIM, as you reported in your presentation, is it based on end quarter data, or is it more accurate, including changes month by month or day by day?
I imagine that the growth in the NIM at the year's end is why the traditional calculation of the NIM would be lower. I'm trying to understand what drove the change in NII quarter after quarter. Was it partly due to change in volumes, to a drop in the actual NIM, reflecting the lower rates? When it comes to the trajectory of the net interest margin, there are several factors at play simultaneously. One key factor which did have an impact was the change in volumes as we reverted the trend in lending, although at lower margins, because the margin on loans is under competitive pressure. It did make a positive contribution. Another important factor that we are deploying is the support on the part of investments, asset management.
We are working in an environment where we get a lot of liabilities coming into the bank. These monies are invested, and we have a lot of pre-hedging operations that stabilize the drop in the NIM. So I cannot tell you exactly and technically how this was calculated, what formula was used. We can come back to that later bilaterally. But when it comes to the key drivers of the NIM, that's a combination of volumes, pressures on the margin, the on loans, reasonable management of liabilities, sources of funding, supported by hedging. These are the four major points in operation, which is why quarter-over-quarter, we reported what we did.
Thank you. Question number 3: I understand that the capital does not yet include any retained earnings of 2025.
No.
And my fourth, more general question, a philosophical one, if you would like. You mentioned that over-liquidity in the sector will persist, which would suggest that the bank's current concern, a lot of competition for loans, price-driven competition, will continue. So my first question is: what is your take on this competition? Where do you see more competition, which segments? And second, are there any reasons to believe that this competition will lessen or maybe intensify?
Let me take this question. I know it's about competition in the lending market, and colleagues could also answer, but I think that competition in the credit market in Poland has been strong and harsh for many years. It is my impression, verging on certainty, that it has intensified for several reasons. First of all, this sector has structural over-liquidity.
Now, we do not want to hold too many government or central bank instruments on our books, so we are actively seeking for credit-related assets, which means more competition and more pressure on the margin. The second important driver is new entrants in the Polish markets. You know who I mean. Number two, banks that relied more on retail banking are now turning more and more to corporate banking. So this pie is not growing very fast, but there are many more around the table to share the pie, and they are hungry. So no doubt that competition, competitiveness will remain strong.
It's partly distorted by the fact that at least two active market players issuing corporate loans, loans for the SMEs and for the public sector, do not pay the bank tax due to their mix, and so they can offer a lower cost of financing to customers compared to rational banks which are paying the bank tax. Could this lessen? That's a very hard question to answer. Unless we see full consolidation in the Polish market. What can be done about it, though? Well, first of all, it's important to be active, where price is not the only factor that matters. We are offering an ability to construct, to structure financing, and, it's important to offer fast, efficient, transparent processes. This is where we look for a competitive advantage rather than engage in throat-cutting price wars that could make loans unprofitable for banks.
Polish banking has already gone through that, where the pricing policy, to simplify things, made everything available free of charge, and the banks were cutting the branch they were all sitting on. So I do believe we will be definitely looking for our competitive advantage in the skills, abilities, experience, with structuring, finding, our intellectual capacity, efficient processes based on our cooperation with the BNP Paribas Group, access to know-how technology and global markets. I think these will be our strengths rather than cutting the branch we are all sitting on.
Jacek. Jacek Ramotowski. I would like to ask about your credit activity, loan activity, because you, I think, are the first bank that has shown a fairly level growth in all the segments of lending. I wanted to ask about enterprises. Is lending more or less evenly spread over small micro-enterprises and large ones, or do you have industries that stand out, like construction industry used to, or previously, photovoltaics? Everybody invested in photovoltaics. What is the situation in this respect? What is the diversification? Where are the loans more active, and where are they still a bit stagnating? Well, let me respond in a following manner. Look at what is happening in the market, and it has been going on for years. The main segment of demand for loans are larger enterprises.
So we do have a lending growth that is more or less concentrated in the larger enterprises segment. It has been going on for years. It's not something that we have observed changing over a quarter or a year or two. So most likely, it will remain so in the future. As for industry structure, of course, we cannot ignore what was happening in the real economy in terms of division into industries. We know that the industry, especially industrial processing, is only now recovering from a long and deep, it would seem, slump in terms of economic activity and investment activity. So here, the demand for loans in those industries that were traditionally driving the entire corporate demand for loans, we know that industry requires major investments and capital expenditures, frequently financed from external sources, such as bank loans....
So this is recovering, but we also had some service industries and business-adjacent industries, such as, transport, logistics, and so on. And ultimately, energy sector and public utilities, the lending was fairly strong in those sectors. Now, looking at what is happening in the economy and seeing a very clear recovery of investment demand, both domestically and abroad, I do believe we can hope that this reinvigorated demand for loans will continue to materialize in the coming quarters, also in the traditional industrial sectors, those that were traditionally responsible for the majority of corporate loans in our country. If we have no more questions in the room, let's move on to questions from online. We have a number.
Krzysztof Kropiłowski, Polityka Insight: What is the interest of loans in refinance-- of clients in refinancing mortgage loans, and, how many of the new mortgages are the result of refinancing? Well, let me respond in a manner maybe less precise than the asker would wish for. Refinancing is a major phenomenon in the market. It is obvious and understandable. The clients who have taken out mortgage loans at the interest rates that were a good few points higher than today, since they are unable to renegotiate terms with their own bank, are looking for refinancing. So we are in a situation in which when the interest rates were historically high, our activity in a mortgage market was negligible. So currently, we are a net beneficiary of that trend.
It is quite a significant number of new mortgage loan that result from our refinancing more expensive loans in other banks. I have already mentioned that, that as we think about this entire situation, I do not fully understand why the banks do not negotiate the price conditions with their clients in a more flexible manner. Because the final result is that it is the client who goes through the entire loan process in another bank to refinance the previous bank, and that bank loses the client, it loses the asset entirely and maybe even loses the client completely, rather than offer a more flexible proposal. So I do believe that the market will go in that direction really quickly, and the phenomenon of cross refinancing will cease to be as important as it is today.
The next question is from PKO BP: What level of reference rates are you expecting after the reduction? Well, this is in a strategy, and here I will take away from Michał Dybuła, because I have already learned that. We expect the interest rates to stabilize at the reference level of 3.5%. The next question: At the end of fourth quarter, did the bank meet the requirement of long-term financial required level of long-term financing and soft NII? Yes, the bank met both those requirements comfortably. BNP: To what extent revenues from hedging activity contributed to net income in interest result in 2025, and is it possible to maintain that scale through 2026?
Well, I would say that in case of hedging activity, as I mentioned before, and the result, it did have a major impact. If you permit, I will not specify on what scale. This year, we still will see a support from hedging activity, although probably the scale and impact will not be quite as substantial as in the previous period. Nonetheless, it will continue to have a positive impact on our net interest income result. Well, this covers all the questions from online. Thank you very much. Well, if there are no further questions... Indeed, thank you very much for participating in our conference, and we invite you to the subsequent ones. Wishing you all the best in the new year, 2026. See you!