Good afternoon, everyone. Welcome to Bank Millennium Second Quarter/First Half 2021 Results Call. With us, we have the usual presenters, our top management, Mr. João Brás Jorge, our CEO, and Mr. Fernando Bicho, Deputy Chairman of the Management Board and CFO. Without further ado, gentlemen, the floor is yours.
Good afternoon. Thank you for attending this presentation of our second quarter and first half results. We will start with page number five. As you remember from several months ago, we have treated this 2021 year as a transition year before the new strategy rollout. At the same time, we put forward some targets to be achieved during this year, namely, on one side, the quick recovery of the business results after the pandemic times. The second, the focus on operational efficiency, and the third, this target of full digitalization. Today, after closing the first half of the year, we can say that we are on the right track. After the end of the first half of the year, our net profit, excluding FX mortgage provisions, is up 87% year-on-year.
The sales of cash loans are higher by 14% year-on-year. Origination of mortgage loans were just in six months at the level of PLN 4.8 billion against our expected target of PLN 7 billion for the full year. On the other side, we continued the optimization of the branch network. The number of branches is down by 4% year-to-date on top of the reduction that we have done last year. The cost to income fell to 45%. Finally, in terms of digitalization, the share of digital clients as of the end of June was above 81%. The pages six and seven show the highlights of the key profit and loss items and key balance sheets and business items.
We will go through the details in the presentation, just here I would like to point out the strong growth of net fee and commission income by 11% year-on-year. The recovery of the net interest income in the second quarter versus the first, a growth of 5%. The significant reduction of cost in the first half of the year compared with last year by almost 13%. This strong rebound in the net profit without extraordinary items, namely, without these provisions for FX mortgage. The net profit in the first half of this year would reach PLN 474 million without these FX mortgage provisions. Important, the clear improvement in the cost to income ratio and the fact that excluding these extraordinary events, the bank would be able to show an ROE of almost 11%.
On the business front, a strong growth of loans also partially offset by a strong reduction of the FX mortgage portfolio by almost 22% year-on-year. Continuation of a very strong capital position. On page eight, we have a loss in the first half of the year of PLN 512 million, which was driven by the significant additional provisions for FX mortgage legal risk. Excluding these provisions, the net profit would be at PLN 474 million, driving this double-digit ROE adjusted of 10.9%. It is visible on the right-hand side of page eight, the positive evolution of the net profit without extraordinary items quarter after quarter, reaching PLN 268 million in the second quarter, an improvement of 30% quarter-on-quarter and 45% year-on-year. Operating income showing a growth in the second quarter of 6% quarter-on-quarter and 7% year-on-year.
In terms of the second quarter, as you can see on page nine, apart from what I already mentioned, we would highlight the rebound in NII and the improvement on the net interest margin by four basis points quarter-on-quarter. The growth of fee and commission income by 17% year-on-year. The adjusted ROE for the second quarter at 12.4%. Lower costs by 7% and increase of the coverage ratio of NPLs over 90 days to 124%. Looking now at net interest income on page 10. Clearly an improvement versus the picture that we showed a quarter ago. Now, year-to-date, we have net interest income only 4% lower than the same period of last year, after a growth of 5% of NII quarter-on-quarter.
This is driven on one side by low cost of the deposits that even fell by one basis point during the second quarter and on the other side, some improvement in the average interest from loans. As a consequence, the net interest margin improved four basis points to 2.6%. If we would keep these trends for the next quarters, it would be possible to have net interest income for the full year 2021 already above the 2020 year, which was significantly affected by the cut of the interest rates. On the net fee and commission income, strong performance, a growth of 11% year-on-year and 2% quarter-on-quarter. We have PLN 209 million of net fee and commission income in the second quarter of 2021, which is our record level ever. Moving to costs on page 11.
The total operating costs decreased to 13% year-on-year, supported by lower contributions to the Bank Guarantee Fund and a number of cost saving initiatives. If we would exclude the lower contributions to the Bank Guarantee Fund, the total reduction of costs would be still 7%. As a consequence, we have a clear improvement of the cost to income ratio from 47% to 45% in the first half of the year. We continue the process of optimization of the branch network. As already mentioned, we have now less 90 branches than one year ago, and also of the gradual reduction in the number of employees. On page 12, the quality of the loan portfolio remained very strong. The impaired loan ratio improved in the second quarter to 4.7%. As a consequence, the cost of risk remains low and was still lower than in the first quarter.
We had a total amount of provisions in the quarter of just PLN 57 million. The overall cost of risk this year is 63% below one year ago. Of course, we should remember that in the first half of last year, we had some COVID-19 related provisions of PLN 70 million, which also inflated the cost of risk of last year. We are benefiting now from much better picture and the cost of risk annualized as of the end of June was at 33 basis points over total loans. At the same time, the cost of risk is also being supported by sales of NPLs in the second quarter. These sales contributed on a gross basis to positively with PLN 19 million. Page 13, just a picture regarding private moratoria and public moratoria or credit holidays, as we call it.
Almost all credit holidays already expired and the quality of the loan portfolio that was under credit holidays remains solid with a relatively small percentage of those loans becoming non-performing. On page 14, regarding the FX mortgage portfolio. We had a continuation or even an acceleration of the reduction of the portfolio. This is driven by a combination of natural amortization of the book, conversions and early repayments of loans, and also FX variation. Finally, also the deduction from the gross amount of the loans of the amount of the provisions that we have created. As a combination of all these impacts, the share of FX mortgage loans originated by Bank Millennium in total loans was already below 14% in the end of June. We had still a relevant inflow of new court cases which increased by more than 1,700 during the quarter.
At the same time, we significantly increased the provisions for legal risk. As we announced by current report a few weeks ago, we have created another PLN 460 million of provisions in the second quarter. This increased the coverage ratio of provisions measured against the total FX mortgage book to close to 15%. Page 15, liquidity remains strong. Loan to deposit ratio even slightly lower than the previous quarter at 84%. Capital ratio is also very strong with a significant surplus above the minimum required levels. Moving now to the second part of the presentation about business development, starting with the highlights of the second quarter on page 17. As I already mentioned, loans had a significant growth of 6% year-on-year, even after this significant reduction on the net exposure of FX mortgage loans. We had new records in sales of new mortgage loans, PLN 2.6 billion.
Cash loan sales also up by 14% year-on-year. Investment products higher by 24% year-on-year. More than 2.1 million active digital customers, and customer deposits still growing 4% year-on-year, despite the significant cut of interest rates that we have applied to deposits during the last year. Page 18. Strong dynamics of retail loans, especially supported by the growth of mortgage loans. Overall, they grew 9%, while loans to companies also started to rebound and growing 3% year-on-year, and also a positive evolution of consumer loans, which have grown 4% year-on-year. Structure of the loan portfolio continues to change with the dilution of the FX mortgage portfolio. On the other side, a rebound in investment products, a growth of 4% quarter-on-quarter and 24% year-on-year with total investment funds in customers of almost PLN 9.5 billion. On page 19, our focus on digitalization continues to bear fruits.
The popularity of digital channels continues to grow. We finished the quarter with more than 2.1 million active digital users, a growth of 9% year-on-year, and 1.8 million mobile-only users, a growth of 15% year-on-year. Only in April, just as an example, our clients have logged into the mobile app more than 50 million times . Record-breaking number. In terms of support for the sales activity of the bank, we would highlight the 63% of the cash loans that were disbursed online and the 29% of current accounts that were opened online. This on the top of other numbers that you can see on page 19, which show a significant growth in other indicators such as BLIK transactions, internet payments, and so on. We continue to invest heavily in our digital solutions. Even today, we can announce that today we made available to our customers BLIK contactless payments.
We are the first bank in Poland that offers this solution of pure contactless mobile payments in shops. This was made available today for the first time. We continue to invest in streamlining digital processes. In this second quarter, we would highlight the launch of the mobile app for children and also the easier opening of the current account using open banking solution to confirm identity of the new customers. Page 21. This effort continues to receive external recognition, this time the recognition of Global Finance's The Innovators 2021, and also this fact that we were the first bank on the Polish market to use open banking for service personalization.
On page 22, continuation of the development and improvement of goodie, smart shopping platform, with another more than 200,000 new app downloads during the quarter, adding to a total of 2.5 million app downloads, and also significant amounts of generated cashback turnover and amounts of cashback passed back to customers. Page 23, just looking at the retail performance. The high growth of retail loans was driven by the growth of mortgage loans. The PLN mortgage loans grew by 27% year-on-year. The total growth of retail loans was 7% year-on-year or 18% if we would exclude FX mortgage loans. We had a growth of new mortgage origination, which was extremely strong. Just in the second quarter, PLN 2.6 billion, PLN 4.8 billion in the first half of the year, which marks a growth of 68% year-on-year and a market share of 13%.
On the consumer lending side, cash loan sales also rebounded and reached PLN 1.4 billion in the quarter, PLN 2.7 billion in the first half of the year, a recovery of 14% versus one year ago, and with a market share above 10%. In the retail banking, the number of customers continues to grow, and also the number of accounts, even after the closing of inactive accounts that was done in previous periods. Also we would highlight the significant growth of payment cards by 97,000 year-on-year. Moving to the corporate side on Page 25. Significant growth of current account balances by 22% year-on-year. While on the other side, of course, time deposits are lower than one year ago. Also important is the rebound in loans, which grew already as of the end of June, 2% year-on-year, especially pushed by factoring, which has a significant growth of 12% year-on-year.
Also, in general, showing a strong pickup in transaction activity. The rebound in factoring is visible on Page 26 with a growth of factoring turnover by 31% year-on-year, and also the rebound in leasing sales, which was one of the most affected activities by the pandemic in the first half of the year, now showing a growth in origination of 20% year-on-year. On Page 27, just also a reference to the novelties and improvements that also are being introduced for corporate banking clients. Apart from the document exchange model in Millennium, we also would highlight the availability now of the Millennium FX transaction platform 24 hours a day for five days a week. This finishes the most important aspects of our second quarter and first half results, and now we will be available for questions. Thank you.
Thank you very much, Fernando. The questions that have arrived so far, as usual, I have grouped into three categories, and the remaining questions we'll be answering as they come. The first group of questions related to our 2Q, our first half results. First will be very interesting to our employees. The question is average salary in second quarter was up 7.9% year-on-year. Have you revised salaries up?
We have a normal process of revisions, but I must say that it was more in a case by case in this situation. It's very clear that there is a big pressure in terms of salaries in the banking, and in the banking sector, let's call it like that, and in general terms in the Polish economy. Also for us, it's very clear that the retention and the adequate revision of salaries is always better than to go through a hiring process to reestablish the headcount or to search for a new person for the position. We believe that the headcount reduction has been crucial to finance this salary pressure that we are having in Poland. It's not only in Poland. I think it's across Europe and U.S.
There was not a general exercise, but there is a constant attention to the salary level of the employees in order to retention of talent.
Thank you. Second question was about our net interest income. Question was, why interest income on loans is growing faster than the loan growth itself in the second quarter?
What we have in interest from loans is a combination of sometimes normal accruals, some termination of loans, which also have additional contribution to the NII. It's a number. It's about also the recognition of commissions that were capitalized through time, both from retail loans and corporate loans. There is a number of factors that is not just the pure accrual of the loan portfolio. There are always a few events that can sometimes on a quarterly basis inflate a little or deflate a little the average level of net interest income. This is the first thing. The second is also that the economics of the loan growth continue to be positive in the sense that the average margins of origination of new mortgage loans continue to be higher than the average level of the book. This is important.
The growth has also a qualitative aspect that also gradually is reflected in NII. This is happening on mortgage, but also in consumer. The economics of the consumer new origination now is a little bit better than the economics that we had in the second quarter of last year, or third quarter of last year. This is also contributing to this improvement.
Thank you. There was also a handful of questions relating to our admin costs. Some described them as extraordinarily low. Others were asking about the positive cost side in admin.
I think this question is related to the table that we present in our financial statements. Again, the costs are also not a straight line in terms of recognition throughout the year. There are sometimes some extraordinary settlements or some extraordinary savings that are booked. We have a combination of when we compare, especially with this period with the same period of last year. We have clearly many different items that then are aggregated in this other line, which show clearly lower costs. For example, just as a reminder, one year ago in this line, we had extraordinary costs connected with the fighting the pandemic, with all the measures that we had to take in at the branch level, at security level, at safety level. This was inflating the costs at the same period of last year.
These costs this year almost did not exist or were much lower. There were a number of savings connected with a number of different items that per se are not huge, but when put together, contributed to this result. Some additional settlements of costs that turned out positive and that contributed to this, let's say, positive line extraordinarily in the second quarter of the year.
Thank you. I think the last question that relates to our second quarter results was about the FX line and the loss there. The question was about the explanation, the reasons for it.
Mainly, this time it's a little bit more visible. Also, the special conditions that the Bank gave to conversions or early repayments. The Bank, for a long time, is talking with the customers, in terms of Swiss francs, and trying to find always the best solution possible for each customer. As time goes by, there was a change also in the customer needs. There was a time that it was more the possibility of exchange of the collateral in order to maintain the loan, but to move to a different house. Later on, it was a more vision on in terms of early repayment. Today, with very low interest rates in zlotys the pure conversion, elimination of the risk of Swiss francs and stabilize the payment in zlotys at these levels have been the preference of the customers.
Of course, also the openness of the Bank sometimes in accepting conditions that are more favorable to customers. These have been interesting for our side, we believe that this is very important also at same time that from one side, the Bank is building provisions for future legal risks. This side is even better if the Bank is able to eliminate this risk by transforming exposures in Swiss francs in zlotys. This time, let's call it the success of this interaction with the customers, it was more visible also in our accounts.
There is a related question regarding how many agreements with FX borrowers have we already signed, have we changed the approach to settlements, what are the terms offered, and do we negotiate individually or do we have the common offers?
We negotiate individually because I understand that as a vision of the analysis, of course, a common approach to the portfolio, but we need to remind everybody that behind the portfolio, there is loans that are individual and each loan is a family. The family have a story. A lot of people meanwhile had a big capital gain in their apartment, so they can be selling their apartment to realize this gain that they had. Others are less successful stories, a divorce or a problem, and so they need to find another solutions. Other is just this elimination of the risk. We had 4,000 settlements during these, or 4,000 negotiations with successful agreement with customers year to date. This is nothing new. It's true that today the numbers are bigger, but we always had these individual interactions with customers.
This approach that we believe that this is our role. This is also always incented by the authorities, consumer protection, KNF, NBP, always there was this message to be open to talk with customers as much as possible, even if at the same time we are studying other alternatives that then these ones are more like a global approach, like the KNF proposal. Here it's not, it's individual approach that we are applying and that we are inviting all the customers to be open and to talk with the bank. We have special teams to address these subjects and to make all the calculations and simulations that the customers would like to get, even to understand what are their possibilities and the bank approach for their needs.
There's one additional question also about how many clients we have with FX mortgage. I can say we have a little bit more than 50,000 from originated by Bank Millennium.
Since we touched upon the FX mortgage and related subjects, why don't we stay in this area? There was also a question about FX provisions in the second quarter, what drove them and what is our thinking or outlook for the rest of the year? Whether they expect the same rate or not? FX mortgage provisions.
The drivers of the provisions are on one side, the number, the inflow of court cases and second, the probabilities of winning versus losing. As the recent trends were negative because we had on one side additional inflow of court cases, which was in fact the quarterly highest that we had. On the other side, the decisions of the courts continued to be negative. We have reflected this in the methodology of calculating the provisions. These were the two drivers of the provisions in the second quarter. Going forward, these will continue to be the two main drivers. On one side, the probability of the winning versus losing. Also the nature of the decisions of the courts because we still have decisions regarding declaring the loans not valid. We have sometimes decisions declaring the loans valid, but with PLN plus LIBOR.
There's still a lot of uncertainty regarding the final outcome, and for that we are still also waiting for the Supreme Court ruling, if there will be a ruling in the beginning of September to bring more clarity to this situation. These are the drivers, inflow of cases and the probabilities of winning versus losing.
Analysts are asking, do you think you need the KNF voluntary settlement now or will conversions just occur naturally going forward? There was also a couple of questions about our latest on the KNF, so to speak, conversions.
As a bank, we didn't have yet a decision on KNF, the proposal. As a team, we believe there is value on this proposal and we believe that this could be a good solution for the problem. To have the solution being able to apply, we need also to have a decision in Supreme Court. There is also a need to slightly reduce the expectations that the law firms are giving to the customers on non-remuneration of the loans. This clarity, it's important and is important that these slightly more positive or less negative for the banks, or more positive for the banks, decisions from the latest decision in Supreme Court by the panel of seven judges and the previous decision also in European Court of Justice.
It's important to have this reinforcement that this solution of loan for free, it's out of the table and that the solution of equality of a loan, of conditions of a loan in Swiss francs to a loan in zlotys would be more the adequate solution. This is important and so what we are doing at the moment is that we are, as we should, to make all the preparations from the bank side in operational terms, in IT terms, in process terms, to take then a recommendation and a decision to the supervisory board. In our calendar, this will be done after the session of September, September 2nd, of Supreme Court.
Just not to leave questions unanswered, just because there was still this question about the explanation about the breakdown of the reasons of the decrease of the portfolio of FX mortgage. As I mentioned, compared with one year ago, we have a reduction of around PLN 3.1 billion in the net portfolio. A little bit less than half of this was driven by deducting from the gross portfolio, the provisions that were created. A very small part was connected with FX impact, less around 4%-5%. The rest was driven by the natural repayments on one side, and then all the conversions and early repayments that also were done during the last 12 months, but especially stronger during these last six months.
I think we're largely done with questions relating to Swiss francs. There are still questions about the outlook and more general questions. First is about our appetite for sales of mortgages, because we have been a very strong originator. Do we plan to further increase the sales? Do we encounter bottlenecks while processing applications? Because apparently, some banks have additional hirings and have extended the time to decision to eight weeks. There were similar questions about our strategy to unsecured lending. We also have had strong performance. Are we offering these to non-Bank Millennium customers? What is the growth outlook? What is the price competition? There was also a question similar about the outlook for overall lending and corporate lending. Let's go together.
In terms of mortgage, we are at the level that we want to be. We even reframe a little bit ourselves in terms of production lately. We would like to see ourselves in average production in a monthly basis of around PLN 800 million. The bank already have a big exposure, PLN 800 million per month. The bank already have a big exposure in terms of mortgage, we would like to grow as balanced as possible. I would say that more or less, the productions that we are having is the productions that we would like to have in a constant basis. We like the risk profile of the production that we are having, the pricing that we are having at the moment. I think that's what we are very focused in also making the re-engineering of this process.
We are in the middle of that internal project. This will allow us to decide faster, to disperse faster, and even to have some alternatives that are fully digitalized. Without this need of hiring more people and also having such a delay process. In terms of consumer loans, today we are lately, in last months, is in the production, I would say, pre-COVID times. There is space to have, up to the end of the year, some growth here. We believe that also people will make new projects, personal changing in their houses, traveling, and so this will allow us to have increase on production.
I would say that it's 10%-15% higher than what we are producing. It's not a huge revolution, even because we are having a healthy production in risk terms. We don't believe in accepting higher risk levels, even if there is higher commissions or something like that. This is usually not a good idea. We have an activity of credit on point of sale. It was an area that was started with acquisition of Euro Bank. We are happy with this area. We are developing this area. We believe that there is also high potential on this part, especially also in the digital offer for this type of credits. I would say that this would be the driver for the credits to, we don't call it non-customers, we will call it new customers, because we have also the will of that they will become customers after this.
This will be our main activity for this type of credits for non-customers. In terms of corporate, we had a good activity in terms of factoring. Very good activity. We see some rebound in leasing. In terms of credit, we are in credit for companies. We are seeing some activity, especially in SME and mid-corporate, and we are happy with that. Also, as our bank, it is exposed to the Swiss franc risk. We need to manage in a proper way the Risk-Weighted Assets and with RWAs to have a proper manage to allow also to have, let's call it, savings of capital that will allow the bank then to make any kind of Swiss franc decisions without making any decision of capital increase and things like that.
For that to be possible, we need to have a very strong activity in commercial level and in the revenue level. Also, we need to have the proper management of RWAs to save capital to allow us to take the decisions in due time.
Thank you. There was also questions relating to our NII and NIM outlook for the second half and their drivers, particularly on the asset side. There was also a question about rates outlook in this context.
We do not expect changes of interest rates until the end of this year, although we believe that next year we could have an increase of interest rates. We are not counting with this for this year. The driver of NII and of NIM until the end of the year will be the volume growth on the loans side, plus the average yield and the margin that we will be able to achieve on the lending side, as we are expecting to continue to keep the stable cost of deposits at the current level. We are not expecting any further improvement in terms of cost of deposits. Also, we believe that also the average yield on our bond portfolio is stabilizing, so also, we don't expect to have much penalization coming from the bond portfolio.
These will be the drivers of the evolution for the second half of the year.
On a similar page, so to speak, there was also a question about the fee outlook, question about the cost management, which so far has been excellent. What do we think lies in the second half, particularly whether we have any plans with regard to branches of staff. Finally, there was a question about COVID rates and provisions, whether we write them back, and why was there a positive corporate cost of risk?
I think regarding fees, and as you saw in our presentation, where we are showing the evolution of fee and commission income for the last six quarters. Since the second quarter of last year, they have been steadily growing. Of course, some quarters we have more contribution from one item versus another, but in general, they have been going up. We do not expect jumps here in terms of performance. We expect continuation of gradual improvements going forward. Regarding, what was the other one?
Costs management.
Costs. The costs on a quarterly basis are not always regular. There are, of course, costs that are very regular through time, but there are others that can fluctuate between the quarters. Still, and as it was mentioned, we are also facing some pressure in terms of the staff costs due to the general situation in the market. Generally speaking, we continue to focus on initiatives that can streamline the bank, can improve the operational efficiency. Some of the projects take time to deliver concrete results, namely in this operational efficiency, including, for example, the mortgage-related initiatives that are being developed. We continue to have this clear target of gradual improvement of cost-to-income ratio overall. Now, the first half of the year was very positive with this cost-to-income around 45% level.
We still, for the medium term, of course, we want to achieve levels closer to the 40% level, and we will be developing solutions that can help us to continue to increase the operational efficiency and to reduce costs. In the short term, we do not expect any significant reductions in the branch network because we are after a significant reduction that took place during the last 15 to 18 months. Now it's just more fine-tuning, at least for the time being. This is not going to be a major contributor for the next few quarters, but there will be a number of initiatives that hopefully through time will also help to contribute to achieve this target of cost to income.
Sometimes we also have situation where the second half costs in some items like staff costs are usually lower than in the first half of the year. Some things will offset others, but we continue to be positive about what we can achieve in terms of further improvement of the cost to income ratio. Regarding corporate cost of risk or overall cost of risk, we are always in the process of applying parameters with the latest information that we have available. This happens both for retail and corporate portfolios. The situation that we have today in terms of IFRS models is different than what we had one year ago. One year ago, we had forward-looking information, which was very negative.
Basically, you probably remember that one year ago, we were putting some provisions for COVID, but really nobody could say that knew how things were going to develop. In fact, reality proved that we can estimate whatever we want, but then the reality is the reality. When we look back, we see that the last 12 months were much better than anybody was expecting one year ago. Our understanding is that the provisions that were done for COVID-19 one year ago, basically to a large extent, were not reflected in the reality. It's not that we reverted provisions that we have done in such a way, but we have now a positive macro scenario embedded in our models, which is completely different than the assumptions that we had one year ago.
On the top of that, there were a number of movements in terms of improvements of the situation of some loans and recoveries on another, and also methodological changes. We also incorporated a new default definition for corporate loans in the beginning of this year after a change that also we had done one year ago. Now the data tends to be much more stabilized after we made this significant move in terms of improving the default definition. This is the explanation that we can provide.
I think we largely answered the questions. Maybe one question to Mr. President is there was a question about the competitive position pricing and what do we think about whether we see increased pricing competition, different products, what's the strategic pricing situation?
On the market. The repricing movements from our side, they were done. I do not believe that we will see repricings in the market or increase of pricing, let's call it like that. Even when Fernando was saying about the higher increase of net interest income versus the increase of loan portfolio and everything like that, was a little bit for the repricing that was done. It's a mix between the commissions, insurance penetration in cash loans, for example, that somehow offset the interest rate cut. Today looks, there was also, if you remember well, some increase of commissions in terms of corporate, in terms of deposits of corporate, amounts in current accounts and all of that. That it was a way of the system to adjust to a very low-interest rate environment in the corporate side.
For time being, at least looks to me that the driver will be more volume. We are very optimistic with the business volumes now and for the next times. We see that the customers, they want to implement new ideas, make new investments, apply their savings, live, travel. There is a big intensity in terms of their life. It means that in our side, so in their financial life also, there is this increase. We expect a lot of activity in this part. Not a radical change, but a lot of activity. I don't know if it's fully understood by everybody the jump in terms of digitalization that was happening in the market and in our bank in particular, but I would say across the market.
There was a big jump in terms of digitalization, not only the customers that are using digital channels, but also the number of activities that the customers are doing through digital. The numbers of services and possibilities that are being done in digital. This will allow also the Bank to have a capacity to transact more, to sell more products, to be more efficient during this time. The competitive environment will be as intensive as it is today. I think that Poland is already maybe the most aggressive market in Europe, and will keep being, unless there is another wave of consolidation, because with consolidation, there is, of course, a radical change in terms of the competitive environment. I'm not forecasting this. I would say that the market will stay very competitive as it is.
Somehow, with a good performance, if we would take out the cost for our bank, but also for the system of the Swiss franc, the market would be extremely profitable, and it would be one of the best in Europe.
I will answer shortly two other questions. One is connected with sensitivity of NII to 100 basis points rate increase. This information is disclosed in the risk chapter of our financial statements, chapter number five. We are showing there that a parallel increase of 100 basis points of the yield curve would have a positive impact of around close to 11% in terms of NII during the next 12 months. Another question is regarding the outlook on risk costs for 2021 and the next year. We had similar question today in the morning with the journalists. What we answered is that we are really benefiting from lower cost of risk versus the historical average, as we presented 33 basis points over total loans. We still do not see relevant signs of deterioration in any of the portfolios.
It is possible that the second half of the year will still be very positive and that the overall cost of risk for the full year would still be clearly below the 50 basis points that we usually use to speak about or even not higher than 40 basis points for the full year. At least if the current trends will continue.
Okay. Thank you very much, gentlemen, for all your time. Any closing remarks or any other comments that you want to share with our audience? No. All right.
Just maybe we can highlight, because we had this question also in the morning about strategy. Looks to us that it was a good decision last year, to postpone one year to have the strategic exercise because it was good that we could address the impacts of COVID, the interest rate cut impact, but also this deterioration of the legal risks of Swiss francs. Today, our plans are that at the end of the year, we will present the strategy for the next three years. In the past, we presented in the third quarter results. Now this year, because it's also close to the Supreme Court decision and everything, we are pointing more to do this closer to the end of the year.
To have a separate moment and also to be able to be more accurate about all the impacts and also because, of course, we need to address a little bit, as usually we do, the three things. From one side, the legacy, and how we are managing this legacy risk. The intensity of the short-term results and some targets in terms of more immediate results, for these next three years. Also, then the vision that we will have for the organization and for the development of the bank. That it's an exercise that we already started, but that we will prolong a little bit more than usual in order to also incorporate all the facts and all the decisions and information that we'll still have up to the end of the year.
Okay, gentlemen. Thank you very much for all your insightful answers, and thank you very much the audience for taking part in our event. We will see you in late October, and before that, obviously, enjoy the summer, stay healthy, and good luck. Thank you very much.