Good morning and welcome to our conference dedicated to Q1 results. Our agenda is quite traditional, starting with the highlights, the macroeconomic environment, an overview of the financial results, and a look forward. We will then take your questions. I would like to welcome everyone present here in the room, we have a few participants, and also everyone joining us online. I understand many of you are taking part in the Impact Conference. We are not there because we are here with you. Let's begin. In Q1, our bank generated a solid net profit of PLN 488 million. This quarter brought continued efforts to address the Swiss franc loan risk. We set up PLN 240 million additional provisions, and we accelerated the pace of signing settlements with clients, a point we will discuss later on.
In the past quarter, our income lines improved across the board, especially our NFC and our FX income. At the same time, the economic slowdown is a fact. We can see that in the activity of our clients and the volumes of lending which dropped in our retail operations. We maintained the lending volumes in corporate banking. We'll see what happens in the upcoming quarters. Our costs remained under control and even dropped quarter- on- quarter. They increased net of BGF year- on- year, but well below inflation, which is due to our reasonable efforts to maintain cost discipline quarter after quarter. Last but not least, positive cost of risk. That is quite a unique highlight, and I go back to what we stressed many times on prior occasions. The quality of our portfolio remains solid and has not deteriorated.
Clearly, we are witnessing an economic slowdown, so it's hard to say how things will go, but as at the end of Q1, this was a positive highlight. Let's move on to our achievements in Q1 from the perspective of our 4 pillars. I'd like to stress a few points, including dynamic growth of sustainable financing, up by 42% year-on-year, PLN 7.5 billion at the end of March. You can see, we have specific strategic goals, and we have the ambition to be a sustainable finance leader in Poland. We will work hard to build up and maintain our leading position. For the next pillar, we continued to grow our digital channels. Our wealth management operation won a prestigious, coveted award. It has for years been considered the best wealth management business in Poland.
It is of strategic importance to our franchise. Finally, we grew the number of active SME and corporate clients, as well as premium and wealth management clients. I'd like to stress that our strategy provides for selective, smart development in those client segments which we consider to be the most prospective. We want to be the bank of first choice for our clients, a transactional bank. We are looking for clients who will use us as a transactional bank for their portfolio. We've been innovating with Broker ID, the first solution of its kind based on Autenti technology in the SME segment. We started using artificial intelligence in a smart and methodological way, in a responsible way. We are embarking on this journey. I believe banking has a long way to go here. Of course, AI has become quite a buzzword due to ChatGPT.
I believe we will stay smart and reasonable rather than getting overly emotional about AI. The next pillar together, you can see some of our achievements on the slide, but I'd like to stress our initiative concerning the reskilling of our employees in IT. We have a program. 644 people have applied for the 35 positions available, so many of our responsible employees want to improve their qualifications and improve in IT to possibly change gears on their career path. We will be considering an expansion of that program to allow our colleagues win new skills and improve their security in the job market. Concerning this picture, which is quite clear in and by itself, an increase in online or remote channel users and the users of our GOmobile application.
More and more of our clients have payment instruments on their mobile phones using them instead of plastic. We've seen a strong increase in our BLIK transactions. That's our national pride and banking and technological success. Now our digital banking is on an increase or in an uptrend. Now, another clear picture, as you can see, the most important highlights include strong growth in investment products quarter- on- quarter and year- on- year alike. This trend has become quite strong and clear. It is a positive trend. We've reported relatively high growth, and we believe this trend will continue. As for mortgage loans, don't be surprised by the 94% increase quarter- on- quarter because we started from a very low level.
We are very selective in mortgage lending, so the volumes in this segment are currently marginal, and this has continued to date. I've mentioned the increase in the number of active clients. It's on the slide. As for our market shares, we have reported a minor decrease in lending. As I've said before, this drop is of no concern. We are a conservative bank, as you can see by looking at our cost of risk. We do not want to compete with lending volumes. We will continue to pursue our rational policy and monitoring our lending volumes. As for deposits, our strategy provided for an increase of a liquidity buffer back in 2022. In Q1, we optimized the cost of our liquidity.
As a result, we reported a deposit attrition. The deposit base and the liquidity position are fully comfortable for us. The decrease in the market share is of no concern to us. Let's have a look at the financial results. As you can see, our income increased quarter-on-quarter and year-on-year. I've mentioned our expenses. Net of the BFG contribution, we are happy to see that our cost discipline remains solid. Swiss franc loans have been a legacy burden for us. That is not a secret. We have been monitoring trends in the case law. There are some individual judgments that are positive for banks with quite reasonable justifications.
There's a glimmer of hope that this follows from some overall reflection among Polish judges regarding cases where clients are claiming their agreements should be invalidated, agreements that have been served for years. It is not the bank's fault that the FX rate of the zloty to the Swiss franc has changed. The net result has grown, as you can see on the slide. Our cost income ratio is very relevant. It dropped. It is not yet systemically satisfactory. The cost of credit risk is positive, as I said before, due to the release of some of our provisions, which will be discussed later on. Our net interest margin on assets has stabilized, which is good news. The margin is not shrinking. We can see a positive trend impacting our revenue base.
Our return on equity, net ROE increased to 17%, which is above the cost of equity, cost of capital, a positive trend, although after several quarters. Well, this has not been seen in several quarters before. Net of the impact of credit holidays, the increase would be lower. In Q1, we adjusted by PLN 11 million the provisions we set up for credit holidays. It is not a very significant item. That's our introduction. Now let's have a look at the macroeconomic environment. Thank you very much, good morning, everyone. It seems that the economy in Q1 reached a turning point. Inflation peaked and started to decrease. It seems that business activity will gradually improve. First things first, however, the data we can see when it comes to industry, construction, and retail clearly suggests that year-on-year GDP in Q1 shrank.
Most of the available forward-looking indicators suggest that the worst is behind us, and the upcoming months and quarters will see an increase. What will support the outlook, especially regarding consumer spending, is the dropping inflation, which is driven by both lower inflation expectations as well as external factors, such as lower oil and gas prices, lower commodity prices, and the base effect. I think the upcoming months will see disinflation. As regards factors of greater concern, domestically, and factors that impact prices and are domestic in nature, we have not seen a breakthrough, and core inflation has remained high, above 12%. What does it mean for the monetary policy? The Polish Monetary Policy Council has not officially closed its tightening cycle, but that will probably happen at the upcoming meetings of the council.
Lower inflation will prompt the council to decide to stop tightening the policy. It is an open question when and how much the rates will first be cut in the coming months and quarters. One of the factors that should be underlined in the context of the financial and monetary conditions and the inflation or disinflation outlook is the strong appreciation of the Polish zloty that has been taking place since mid-April. As in the case of inflation, in my mind, this is due to lower commodity prices and an improving outlook of the Polish economy, which has also improved the trade deficit and the current account. That seems to be the main driver of the nominal appreciation of the zloty against both the euro and the dollar. The banking sector.
In the environment of high inflation, high nominal rates, and relatively weak market conditions, demand for loans remains low, as we see in volumes and new production, especially in household lending. However, there is a sign of hope, a glimmer of hope, some signs of improvement when you look at the situation now compared to the end of last year. To see a permanent improvement in lending, we need three things: lower inflation, faster GDP growth that is better market conditions, and eventually also lower interest rates. Thank you very much. Over to Mr. Aranda.
Good morning. As already mentioned by Przemek, we deliver solid financial results in the first quarter of 2023 in a context of low demand in loans and inflation, and also overall uncertain environment. Net result amounting to PLN 488 million, up by 76% compared to the previous year. NII increased by 18% compared to the previous year, supported by the increase in the interest rate, and also good performance in fees and commission and net trading income. Expense remain under control, +1.3% compared to the previous year, excluding the BFG impact on IPS creation, +8.3% compared to the previous year, meaning below inflation. Plus income ratio improve, reaching the level of 45.4%. We book additional provisioning related to the FX mortgage loan portfolio, PLN 234 million.
Finally, we benefit from the positive cost of risk in the first quarter, mainly explained by the forward-looking component updates and good recoveries. Liquidity situation is very strong. Customer deposit increased by 8.8% compared to the previous year. The good news related to the capital ratio, which improved by 38 basis points compared to the previous year, reaching the level of 11.65% in term of Tier 1 ratio. Challenging situation in the area of the loans portfolio, which decreased by 0.2% compared to the previous year with two different dynamics, +2.4% for institutional customers. However, slowdown observed during the first quarter. - 3.7% for individual loans portfolio, and further decrease in the first quarter 2023, down by 2.8%.
Second challenging area, which is not new one related to the CHF mortgage loan portfolio. We book additional CHF 234 million provision. The coverage ratio increase and reach a level of 52.4%. The good news is that we are keeping on converting the loans with our customers. We are able to negotiate with almost 3,000 customers, and we have finalized the process with our customers, 1,600 settlement totally and fully completed. Customer deposit, we get high level and stable level of liquidity. Slight decrease in the first quarter 2023, significant improvement compared to the previous year. What is important to highlight is that the cost of deposit have been stabilized from Q4 2022 to Q1 2023.
Slight decrease in the first quarter, but we have to mention that in term of fees spent on product, we are building the scale, rebuilding the scale to some extent. As you can see, we are above the level we get last year at the end of the first quarter, so PLN 6.6 billion in investment product. We are rebuilding the scale, which is positive in term of fees in the future. NII. NII up by 20% compared to the previous year. Slight decrease compared to the previous quarter. However, if we exclude the impact coming from the credit holidays adjustment, it would mean a slight increase by 3.6%. What is interesting is that we are able to improve the margin in Q1 compared to Q4 last year.
Another good quarter, I would say, in term of fees and commission, record level, CHF 225 million, including some one-off. Good quarter, but it doesn't mean that we're going to replicate in the future. Net trading income, another good quarter with a high level of transaction with our customers. Lower valuation of share on IRS hedging related to the loans portfolio measured at fair value and lower result on derivatives. Overall, a good performance in term of net trading income. Operating expenses, depreciation and amortization, I would say that the costs are under control. Inflation is high, however, the increase is moderate, so +1.2% compared to the previous year. As I mentioned at the beginning, +8.3% if we exclude BGF, so below inflation.
Quarter-over-quarter, +4.2%. What is, obviously that we are keeping on adjusting and changing the model of the bank, as you can see, gradual decrease in the number of FTE.
Let's start with the cost of risk, because we have a very specific situation in this quarter that the cost of risk is at the positive level. This is the consequence of the quality in the selection of assets, the quality of monitoring, response in difficult situation, the way of restructuring the debt, but also very efficient recovery of loans or liabilities on loans that lost value. We are in such a situation that for the last three and four years, we have not noted any high-value exposure that would default, which I don't think is anything negative. Of course, it's obvious that this will not last forever, because in any bank, things like that do happen.
The other part of the portfolio, which is valued or assessed collectively concerning the SME or retail part or personal finance, that performed in a very stable manner. Therefore, as a result, the predicted and the predictable and stable cost of risks were at a low level. On top of that, we have seen a one-off effects where we released almost PLN 64 million of provisions because, or thanks to parameters and forward-looking components in our macro model. Also over the last few years, we've managed to restructure the debt of one of our big customers. We've received payment, and therefore, we're able to release the provisions for PLN 37 million. This situation, as I said, is not something that we expect to be repeated, and it won't be the model where we have positive cost of risks.
Now, that needs to be very clearly stated. The consequence of the efforts that I've mentioned is the positive cost of risk in the first quarter. If we look at the mortgage portfolio, this portfolio also performs very well from the point of view of credit risk. We've got other costs related to that, some legal requirement costs or credit holidays. As regards the quality of this portfolio, I think it's very robust and sound, and the cost of risk is very low for the Polish zloty portfolio. We can't see any risks in this portfolio that could lead to any higher loss of value on those loans. Previously, as also said that we selected the customers, we looked at the customers who potentially could be in trouble if it weren't for the credit holidays.
We had that very well diagnosed. Once the credit holidays end this year, and if those customers were to have any problems with repayment, we have all that under control and properly diagnosed. There is no risk related to that. If we're talking about the quality of the portfolio, we are getting to some very low levels. This quality line is something that I would like to stabilize. Getting 3%, the level of 3% in our market condition seems to be the minimum level that should be our goal. We really shouldn't be trying to achieve 2.10%, because the bank has to take risk, and the consequence of taking on that risk are some non-performing loans. The 3.2% for the bank is something that we are satisfied with.
For the first time, in the nominal terms, we are below PLN 3 billion, which is also a very good result. We also sell our NPLs in the second and third quarter, so this is still ahead of us. When we look at individual segments, they also perform quality-wise. We don't see any negative trends here. The issue of staging and the coverage for those loans, we have very high coverage for stage two, which is harder, larger in volume, but it's stopped growing. In stage three, we have very good coverage, more than 60%. It may fall a little, decrease a little. You can also see it on the on this graph.
It happens once we sell those non-performing loans because there are a lot of provisions created for those loans. While if you look at the loans that are being paid, the provisions for those loans are not as big. With time, the provisions are then released and then created again, and we get back to those 60%. Just to sum it up, the situation from the point of view of credit risk, the situation is very stable, very predictable. As things stand now, there are no huge risks. Of course, we have to monitor the situation very closely, from the point of view of economic situation, GDP growth, to see whether micro and SMEs are not affected by the situation.
We start seeing that in the micro company segment and to what extent that can have consequences on the ability of individual customers to pay their loans, make their payments, to what extent we will have the only technical unemployment or in Poland or a higher level actual unemployment. We're monitoring the situation and adjusting our activities.
In the first quarter of 2022, two net results have been recognized in the financial equity. RWA decrease. On top the bonds, the valuation of bond portfolio improve. As a result, we're able to improve the Tier 1 ratio. From 11.28% in Q4 2022 to 11.65% in the first quarter. We are improving the situation compared to the minimum capital requirement.
Now we are getting to the end of our presentation. Two slides. The first that I would like to stop at a little, it is to illustrate the scale of the financial burdens related to regulatory requirements, external requirements, and the Swiss franc issue, which is something that has been affecting the bank since or the banking sector in general since 2016. The cost of those burdens is about PLN 8.7 billion.
The cost that you can see on this slide should really make an impression because they show in how specific the Market reality. They just show how very specific is the environment in which we run our banking business, how difficult it is to operate in this environment in such a way, so as to systematically increase the level of technology of services to generate good income above the cost of capital that is vested in the bank. The purpose of this slide is also to give some hope that the awareness of the level of burden imposed on the banking sector will get or reach those who take those decisions.
We also need to think about the disturbances in the banking sector in the United States as well. It's also presented with the hope that those who can take decisions make sure they care that our banking sector remain in a robust and is able to continue to support the economy, taking into account all the risks and uncertainties that are still with us, especially in the time of economic revival for which we hope to come in the next year. It's PLN 8.7 billion since 2016 in the case of our bank, which is not a very big banks. What are the prospects? What is the outlook? Of course, we will talk more about it during the Q&A session. Michal has told us about macroeconomic prospects and outlooks.
There are a lot of signs indicating that inflation has slowed down, although the level of core inflation is still a reason for concern. We will probably not see a recession. It will just be a slowdown. What we have been seeing so far is a very strong resilience of our customers, particularly companies, a resilience to the consequences of this slowdown. It looks like the Polish corporate sector is entering this difficult time with significant accumulated profits, so it's well prepared to survive. This year is also an election year, which of course, raises some concern, and we are monitoring the reality. I don't want to talk about politics. I'm not doing politics.
I hope that the electoral ideas of the political scene will be reasonable, responsible and taking into account medium and long-term economic interests of Poland. Risks related to that maybe with the Swiss franc loans are serious. We are dealing with this, also creating provisions, concluding settlements. The WIBOR issue, again, is something that is a reason for concern because it shows us that anything can really be questioned. That's the reality we are now living in. I hope that a very strong voice of the regulators and institutions responsible for the stability of the financial sector supporting integrity of WIBOR, plus, a number of expert opinions, that all that will protect us from the situation that would be similar to that with mortgage loans, that the situation will stabilize.
Of course, the risk is still there. What is a challenge in itself is the replacement of the reference indicator from WIBOR to WIRON, which is a very complex process. All banks are participating in that. All this is happening within the national working group. This is not really the topic for today's meeting. We will continue doing what we always do to improve the satisfaction of our customer, to make efforts and strive for selective reasonable growth, to continue being a leader in sustainable development and green financing. We will be managing the capital effectively. We will maintain our liquidity position at a safe level, at the same time optimizing the costs of this liquidity.
As regards the costs, we continue to be cost-disciplined, and we will continue doing that, particularly in this situation, in the conditions of high inflation. That will be all as regards the presentation. Now let's go to the Q&A session.
Adam Szafra, ISB. Good afternoon. 3 questions or requests for clarification. First, could you clarify the current status and outlook of corporate lending? You said in micro firms, you've seen some deterioration in the portfolio. How much has it deteriorated, and how do the different sectors do? I understand the situation may be diverse from sector to sector. Question number 2. Concerning the questioning of the WIBOR, the WIBOR benchmark. Have you seen those claims, and so what has been the outcome? Number three, congratulations on your ROE. Do you think you can keep it up in the coming quarters? Let me talk first about the micro issue that's quite specific.
If our impaired loans grow by PLN 10 million, PLN 15 million, that's still a growth, but it's marginal compared to the overall volume of our impaired loans. That was the only portfolio of impaired loans that grew. It's not really happening. As for corporate lending, we haven't seen an increase. We actually reported a drop. We are not expecting this segment to report a growth. What I would like to point out as regards the different sectors, the construction industry and the costs of production in the construction industry, that is an issue. Regarding WIBOR-related claims, we have received some of them. They have not yet been resolved in any case. At a meeting held by the Polish Bank Association a while ago, we were told that there were four cases resolved in the sector.
In all cases, the judgments were positive for the bank, two in the first and two in the second instance after an appeal. That gives us hope that reason will prevail as regards that questioning of the WIBOR benchmark. Return on equity is. Do you think you can keep it up? We do not publish any forward-looking projections unless Jean-Charles would like to comment. I would suspend my judgment here.
We have few information. First one, we have our target in our strategy, which have been disclosed. When you look at Q1 performance, we have to keep in mind that we benefit for few, I would say one-off. I mentioned them in terms of fees and commission and positive impact in terms of cost of risk. I think we can easily assume that a business model with a positive cost of risk all over the time is not sustainable. It's a way to some extent to adjust the ROE compared to the one we have in Q1. It's obvious that our goal is always to improve our financial performance, and I would say the normalized one.
Hubert Wikowski with questions about the sector. First, credit holidays. There are rumors that the credit holidays could be extended up to next year. What is your position if the credit holidays in the current shape are extended, which leads to some abuse because this system is used by people who don't really need that support? Is this possible, and what happens then? Second, the Court of Justice of the European Union's judgment to be published in June, do you think it's gonna be in line with the opinion of the Advocate General, which is not very favorable for the banks? Are there any news? Is there any news? Finally, what about today's decision concerning the interest rates? What will the Monetary Policy Council decide? Do you think there's gonna be any surprise there? Well, let me start from the very end.
I don't think they will change the rates today. I'm looking at Michal. He's nodding but very modestly. As regards your first two questions, I don't feel competent enough to be a prophet. We don't have a crystal ball on these two points. Regarding the Court of Justice's judgment, the position of the Advocate General has aroused a lot of very strong comments from commentators and from regulators. I do hope that the court will take a closer look at the issue at stake. It is not at all evident that the judgment should be in line with the opinion of the Advocate General.
This is typically the case, but here, the issue at stake is very significant, so I hope they will be very careful, and they will consider the very substantive arguments of systemically important institutions, including the Polish Financial Supervision Authority. The court will reflect and take a very reasonable position. On the issue of credit holidays, that is a point I have commented upon at prior occasions. The credit holidays that were implemented last year were a very bad idea, in my opinion. They allowed for a transfer of money from banks or their shareholders to a population of clients, regardless of their financial position, income level, et cetera. We know that the main beneficiaries were the holders of the biggest mortgage loans, which suggests they were the most affluent clients.
As for credit holidays implemented in Poland, the European Central Bank has taken a position, and so did the International Monetary Fund. They were both very critical. Bear in mind that since 2016, we've had a Borrower Support Fund, which was additionally expanded last year. There comes the 12% increase in income across the economy. On the one hand, the rates grew and the cost of mortgage loans based on floating rates increased. On the other hand, nominal income of Polish households, including borrowers, also increased. If you put on top the burdens imposed on the sector, if you add the turbulences in the international banking sector and the general uncertainty, I hope that the credit holidays will not be extended.
We know that the Minister of Finance is saying there have been no decisions. The decisions will be made mid-year. What those decisions will be, we do not know that, obviously. I can only say we hope those decisions will be rational, taking into account the broad context and the broad economic outlook, and also the positions of international institutions on the credit holidays as they are. We will see what the outcome will be. Thank you. We have received some questions online. Yes, we have several questions from analysts and journalists. We have put them together into thematic modules. The first question. Starting in Q2, are you expecting an decrease of the net interest margin? What is the trend in margins in different categories of loans? What is the sensitivity of your net interest income on with regard to the rates?
A few item. On the first one, as I explained at the beginning, we stabilize the cost of the deposit, from Q4 to Q1, 2023. We are not expecting significant increase in the cost of deposit. The goal is really to maintain and potentially to be better. In term of loans, repricing has been done, but as usual, we are trying to improve as well this area. It will mean that I cannot share any forecast. It's obvious and for everything. The goal is, let's say, at minimum to maintain the level of margin and potentially being better. We'll have to look at also some parameters, depending on the evolution of the market. In term of NII sensitivity, this information has been disclosed in the financial statement.
If 100 basis point up, it will be PLN 272 million. If 100 basis point down, PLN 222 million.
Do you know why the deposit volumes in Poland have remained so strong, especially given the low interest rates on deposits? In your opinion, what would have to happen for the banks to compete more aggressively for deposits? 2 other questions. What are your projections concerning an increase of interest costs this year? The banks are now over-liquid, and they are expecting inflation and rates to drop. Will they be trying to cut the interest rates on deposits? Well, deposits have been growing faster than loans because when it comes to the generation of deposits, this has to be seen from the perspective of the credit of the public sector, including the public deficit or the public debt. There are other sources which generate money, for instance, European funds.
Last but not least, we still see a rebound as some deposits that left the sector early last year when war broke out in Ukraine and uncertainty was very high are now making a comeback. This money is now returning to the banking sector. I think this explains the fast increase in deposit volumes, which is much faster than lending would suggest in the non-financial sector, the private clients.
The cost of deposit, I would say the answer is easy. If the over liquidity is staying in the banking sector, if no growth in the loans and either rate are going down, I think the answer is yes, we will adapt and it will go down.
Well, given the slowdown in the economy, a dropping demand for loans and very strong liquidity, it's hard to expect banks to pay more for deposits. I think the opposite trend should be expected. What is the potential of maintaining the NFC quarter after quarter? What are your expectations concerning the recent increase of fees? What is the reason for the quarter-over-quarter and year-over-year increase in fees on cards? What was the scale of the positive one-off in the NFC in Q1 2023?
Okay. Many question. I'm going to start with the last one. We can okay, give some range in term of one-off, let's say from PLN 30 million-PLN 40 million. If you exclude this one-off, you can get the normalized level of fees and commission. One question mark, which is still open, is what will be the real slowdown in the economy, which could be translated in the coming quarters on fees and commission. Maintaining PLN 325, I think easily we can assume that it's not sustainable for Q2.
The outlook for the cost of risk, the potential of positive changes to the model given the macro outlook. Has it been exhausted? In Q2, are you expecting to maintain a very good quality of your loan book? I'll take the second question first. I think if there's any significant change in the quality of our loan book quarter after quarter, that wouldn't speak very well about us as an institution. If there is any change, it is more long-lasting. It takes place over a longer period of time. I remember in 2011, when many construction companies went bankrupt in Poland, impairment loans grew 2% across the banking industry, but that was a real one-off. In mid-May, you're asking us whether we can maintain that in Q2.
Well, if I didn't know that, if I couldn't anticipate that, I wouldn't sleep well at night. I sleep well. I don't think we will see a dramatic difference here, a dramatic change in Q2. What was the first question again?
Outlook of the cost of risk.
Your outlook of the cost of risk. The potential of positive changes to the model due to the macro outlook, has it been exhausted? When it comes to the cost of risk, considering that in Q1 we heard that the quality of the loan book will not deteriorate, then the cost of risk should remain stable. We are not expecting in 2023 to have a positive cost of risk overall. When it comes to macro scenarios and their impact, this will depend on those scenarios. We cannot tell today whether this positive impact has already been tapped to the full extent. If there are any adverse scenarios, we hope there won't be any adverse scenarios, but if we see a recession, the impact will be adverse. I think in this case, we need to stay patient, and we will see. Thank you.
What's the scale of NPL portfolio will be subject to sale in Q2? Today, I can't give you the amount because we are now in the process in a tendering process. I know what is the amount that is included in the tendering procedure, but the procedure has not been completed yet. The price has not been set yet. It's not been agreed, and until that happens, we won't have a bank's decision as to which portfolios we're going to sell. Once we have the price, then we will take the decision about the sales, and we know what the actual volume it's going to be, which products, which loans, but it will definitely happen.
Outlook for operating expenses is 2023, including personnel staff costs.
We are looking, but our goal is to maintain our cost evolution below inflation. This is our goal.
The longer block of questions related to Swiss franc loans, FX loans. It is a concern the increase of number of lawsuits relating to those loans in the Q1 of 2023. What can be the reason for this increase? Is it already the effect of the Advocate General's opinion, or maybe we are still in to see this effect? Does the bank see the increase in inquiries concerning credit record? Well, the first part of the question is pure speculation really because we can't have any scientific proof to confirm what I will see. It seems that the Advocate General's opinion has contributed to the increase in the number of the litigations and also requests for credit record that is needed to prepare the claim, the lawsuit.
We can see this increase, and this increase, it is visible in the entire market. What was the reason for increase of provision of Swiss franc loan in the 1st Q 2023, and what part of that was devoted to settlements, was assigned for settlements, and which part to litigation?
provided, the main explanation in the increase in the number of cases, the impact of the statutory interest, in the losses. The provision which had been booked is related to the legal cases.
Could you remind us whether settlements are concluded on the terms proposed by the head of the Financial Supervision Authority or are they individual, individually negotiated parameters? Generally, we negotiate those terms individually, the guidance of the head of the Financial Supervision Authority is our reference here. What's the percentage of litigation that concerns the loans that have already been repaid?
10%.
Whether after the decision, in TSUE, which it follows the opinion of Advocate General, we should expect, one of, provisions for franc, Swiss franc for, loans?
We cannot anticipate what will be the outcome of the decision. The most important parameter on our side is that we never assume in our model any remuneration for the bank.
In other words, we simply don't know what exactly the decision of the court will be, what exactly will be in it, so we can multiply the scenarios and trying to anticipate how many provisions and what level of provisions we will be creating after it's published. It's just too early to say that. But after that decision is issued, after this judgment is issued, we will look at it closely and the appropriate decisions will be taken. Do you confirm the hypothesis which results from the big data that the franc Swiss franc loan holders, after they enter the process, they stop repaying their loans? Can you confirm that this is really the trend? Well, it's difficult to support such a thesis on the basis of the knowledge I have right now.
Now, the remaining blocks of questions. What are the needs for debt issues to meet the MREL requirements? Is expected by BNP Paribas for 2023? Does the bank plan MREL emissions for on the market or will this issue be just addressed to the shareholders?
MREL needs are in the range from PLN 2 billion-3 billion, but which will have to be calibrate depending on the evolution of the situation, and it will be done with the group in BNP Paribas.
Is the bank planning to participate in the subsidy program, Credit 2% or 2% loan? We are looking at those proposals, analyzing them, and we will soon be taking our decision. Can we count on a significant rebound in the sale of mortgage loans in second half of 2023? When will BNP go to return to more active sale of mortgages? We right now continue our prudent, very selective policy related to mortgage loans. If this changes, we will definitely let you know. What is the dynamics of different categories of loans that the bank is expecting this year? Well, you know that we don't provide this type of forecast, particularly split into different loan categories. We just don't provide this data.
Should the sale of BNP shares be expected because of meeting the obligations imposed by the Financial Supervision Authority? This is not a question to us. That is the management board of BNP Paribas Bank Polska. This question should be addressed to our majority shareholder. What is the negative evaluation of bonds which is included in Tier 1 funds? Do you see any risks for agro portfolio in connection with the current situation related to import of food products from Ukraine? We can't see such a risk because the context is really a turbulence, a confusion, whereas Polish agriculture in general is in a very good condition.
Last year was very, very good for the sector, a record-breaking year, in fact, right now, nothing, there are no signs to show that this year is going to be different. This is more related to the media reports. Let me also add that with the appreciated loans, the payments is very good with revolving loans. In fact, what happens is that if the loan is to be renewed, some customers just decide to close the revolving loan and just pay because they have the surplus of cash. That's what happens. That was the last question. This was the last question. That was the last one or are we still expecting the last question? Okay, if there are no more questions, let's face it.
Now we would like to thank you for your attention, thank you for your question, and wish you all the best and see you next time. That is next quarter. Goodbye.