Good afternoon, ladies and gentlemen. A very warm welcome at the conference dedicated to the presentation of the results of Bank Pekao SA for the first half of 2026. We have Cezary Stypułkowski, CEO, Dagmara, and Ernest Pytlarczyk. Over to the CEO.
There are good forecasts for the second half of the year, we are optimistic. Profits are under pressure, you are all aware of that. We operate in the environment of the highest tax thresholds in Europe. The surplus of income tax also hits the results of the bank. It is worth stressing that our core categories continue to grow. Core categories of credit assets, maybe slightly less in mortgage loans, here we have the kind of thinking that I shared with you at previous conferences.
We, as the bank, try to reposition ourselves as the bank that has a holistic approach to the market rather than focusing only on volume drivers. In the fourth quarter, we expect a very decent commissions growth. Annually, that is 11% up. The bank also keeps increasing its digital penetration in retail banking. Here, we had some backlog, I think we are quite deft in catching up with the leaders. A strong capital position, Dagmara will probably tell you a few words about the issuances that we had previously this year, that actually completed our plan for this year. Key reference point, I think, it's worth saying that cost income ratio normalized that results from BFG charges continues at our ambitions are above our ambition levels.
I have repeatedly said that the bank is in the process of investing, reorganizing, I do not approach this target dogmatically. The fact that we stay around the 35% is our achievement. The portfolio growth, risks, costs, the control, Marcin will probably talk you through that in greater detail. The good news is also that in those areas of client activity where the bank is still underweight in terms of market share, we see continuous growth. You can see that both in consumer finance and in micro business funding volume. The flagship element, medium market. That's our key element in terms of positioning. We can say that all segments decently contributed to our results of the first half of the year.
You will find here the indication of the most salient and ambitious growth parameters with reference to sales or scale of revenues from individual types of operations. Trusteeship services, maybe that is not the major business line, still very valuable because this generates valuable revenues since commissions, we attach a lot of importance to that. As you might recall from the presentation of our strategy, that is undoubtedly a focus we pursue. Against our peers, we are doing well. I referred to the strategy presentation. We still have a year's horizon within this strategy because it was a short-term strategy in which we wanted to prove to ourselves that the bank was capable of organic growth. It seems that our market shares do budge a little bit up. Of course, we cannot expect miracles.
We do not expect to completely transform the market within a short time. This opportunity existed historically in the past with our Italian predecessors in particular. We can say that this year has already confirmed that the bank does have this capability of mobilization, and that is something we are happy with. All those indicators may be except for ROE, but that is explainable by tax issues. We are everywhere else within our targets formulated in the strategy. We reach slightly above the horizon. We keep growing. We become more accessible. By slowly reorganizing the bank, we gain a little bit more of operational efficiency. Our offer is continually enriched. For analysts and investors, that might not be such an important issue, but I would like to stress one thing.
Something that we started last year, namely the return to Pekao SA as the most international local bank, with the focus on Polish ambitions on traveling. Last year we had the first promotion focused on travel. Now we have a greater scale promotion to encourage traveling among our customers. The first summary of the results indicates that it seems to bring fruit. That means that the bank needs to reposition itself. Yesterday, actually, I experienced two events. One was with a client and another was with a business partner. That was a client of Bank PKO BP, who complained about the Bank PKO BP by writing directly to me. In the second case, that was a partner who works with our bank, and he still misspelled the name of our bank. That is something that set us thinking.
There are several products, well, prepaid Mastercard from SME, you can read about that. For sure, it matters for SMEs, but this does not change the world to a greater extent. The important thing is that we consistently build availability of our services through digital channels. Historically, we had lagged behind the market in this regard, but now we can say freely that we are at par with our competitors. Also, we endeavor to have a big bank in digital services and show a new phase of Pekao SA in the retail banking to show us a more modern bank. As a person who now uses a mobile app of Pekao SA, I must say that on a few occasions I was surprised by its features.
I tended to think it was maybe not that good. Now we can say that we are really at par with the market. Now PeoPay, it matters because for the younger clients, this is an attractive feature. Travel package has already been mentioned. We can say that Let's wait for next year. Some transactions that we concluded this quarter. Of course, here you can see a list of major transactions. In the second quarter, maybe it is worth focusing on us being the arranger and dealer in Eurobonds for BGK. We signed a strategic agreement. We are the main domestic partner with aspirations to go beyond that market. Here we have those EUR 2 billion that BGK had.
It is also worth mentioning the transaction which seems to have disappeared from my slide. We are open to those customers who are firmly entrenched in the Polish market, but also who come to us and are interested in PLN funding. That allows me to hand over smoothly to my colleague, Ernest.
We have a GDP forecast 3.5%, which is a slight downward revision. The reason was a weaker beginning of the first quarter. The second quarter was quite good and we have to say that Poland is not the epicenter of the events related to the oil crisis with the war in Iran. We had a well-timed CPN package. We were afraid this would hit the consumers. Basically, the timing of CPN was such that the consumers did not feel quite so strongly that hit.
The inflation expectations have not destabilized. It seems that our economy has coped best in Europe with this situation. The rest of the year is likely to be similar. Some investments, slightly less consumption. The investments will drive the economy, but also the banking business. We see that in our loan portfolio of enterprises. In reality, we hope that this will continue. Also, we prepared a report that discusses several years ahead. Not all topics, especially macroeconomic topics for Poland, have been well investigated. We made an attempt to orient ourselves in the market and think of some signposts for the future. Energy transformation is something that makes a great macro difference. We are a construction site in terms of a variety of power plants, gas, wind, energy storage facilities.
AI story keeps coming back in various narratives across the world. It also seems that the AI popularity wave also boosts a variety of sectors here. We are, to only small extent, dependent on imports, plus it's easy to build here. On top of that, there is this nuclear energy theme because Polish electorate is quite favorable to nuclear energy, which is not typical of the entire Europe. That makes Poland stand out against the backdrop of Europe. We spend almost 5% of GDP on armaments. That is not likely to change anytime soon. If you follow the news, that is probably reason to justify the investments. The first wave of expenses on armaments is mainly focused on local content. In the second wave, there will be more interesting things going on because there will be more collaboration with European enterprises with better know-how.
If we can talk about positive fiscal multipliers, the second wave. Of course, we also have to note that the armaments increase will have a positive impact on GDP. Also, there are some challenges that Europe has to face. Chinese shock. Europe will reach for protectionist policies, a variety of customs barriers, plus there will be an attempt to structure supply chains based on European resources. Poland has an extensive industrial base. It's impossible to think of this industrialization escaping Poland or bypassing Poland, plus location in the right place in Europe. These are these three pillars. As a result, we are quite optimistic about Poland, noting greater growth in GDP than other large European countries. For the current year, it's 3.5%, compared to, on average, below 1% in mid-size EU member states. A few words about the nominal dimension.
A few months ago, there was major concern that we will have major interest cuts. The market locked in four cuts. We didn't believe in that story. Now we are at the point where the National Bank of Poland starts talking about the cuts. As I mentioned earlier, Poland was handling the oil shock pretty well. Now the inflation is not really sticky, because once it's become sticky, it's really hard to manage it later and reverse the trend. Nothing dramatic happened here. Our projection is that there will be no interest rate hikes. We don't have the automatic transmission that ECB goes up, we go up accordingly. Next year, we will probably see a cut, but not a major one.
The environment will be with the higher volumes, especially with mortgage loans, especially with such a curve, with such expectations regarding the interest rate. The prospects for refinancing become burning, and it will happen eventually. Today, the 5/6 of that financing happens outside of the mother bank. That's interesting point. Large volumes amongst the corporates sort of spill over to smaller players and the AI theme and the defense theme. I believe that is an interesting macro environment for the defense sector.
Good afternoon, everyone. Perhaps a few words about the actual numbers. Our lending was up by 10% in total. This is yet another quarter when we are growing faster than anticipated in our strategy. I would identify two areas, retail and corporate. In terms of corporate loans, mid, SME, and large corporations are growing at a two-digit rate.
When it comes to mid and SME, for the past six months, we acquired over 1,000 new customers, which is excellent news. In terms of the large corporations, they are up by nearly 13% on a year-to-year basis. We would like to keep that lending the corporate dynamics for the next quarters. In terms of the retail lending, we have a major uptick in cash loans. The volumes were up by 15%, with sales 16% up year-to-year. In Q2, we've seen the record high sales of cash loans, PLN 2.3 billion. Mortgage loans were growing at the slower rate, one-digit growth. Moving on to the deposit side. Total deposits were up by nearly 7%, retail 8%, corporates 11%. We are really happy to see current accounts moving up.
Last year, it was 73%. This year, at the end of June, we've seen over 75%. This is the share of the current accounts. We keep on opening new accounts. We opened nearly 230,000 Świat Premium accounts and Przekorzystne accounts.
More than 1/3 of it is dedicated to customer under the age of 26. In terms of investment funds, you may remember that at the end of Q1, we faced some challenges in the market because of the war. This gap is being filled slowly but steady. In June, we've been at PLN 4.4 billion. A few words about issuances. Last six months were quite active on the euro market. We had three issuances, EUR 1.71 billion in total value. What I should say is that the terms were really excellent for the execution of all three issuances. We see a growing base of international investors, so this is a major feature for the past six months. In terms of NIM, on a year-to-year average, WIBOR was down by 150 basis points.
Our net interest margin was down by 35 basis points-36 basis points, depending on treatment. Two things that need to be acknowledged, lower interest rates, and that was offset to some extent by higher volumes. We explained in our strategy that we want to make sure that across all the key segments where we were underweighted, PEX, Micro, SME, and Mid, we want to really grow our market share, and we want to grow at the faster pace than historically, and we've been delivering accordingly, which translates positively in offsetting the negative effect of low interest rates and the NIM decline. Looking forward, we are actually positive about NIM, and we believe that the interest rate cuts from last year and the one interest rate cut that we had this year has been properly accounted for in the current level of NIM.
In terms of our sensitivity to interest rate cuts, it's 10 basis points-15 basis points per 100 basis points in terms of cuts. What has already happened, and what helps us manage the sensitivity is, as I said, growing volumes of our loans, and on the other hand, the hedging strategy that we had in place and the growing volume of IRSs. We do see the dominance of periodically fixed rate in our mortgages that are newly sold, and we also manage our deposit side of the balance sheet. In terms of commission and income, another strong quarter, 11% on growth on a year-to-year basis. As you can notice, we've seen growth across all the contributing categories. Commissions on loans, on cards, asset management, strong two-digit growth, but there are other contributors such as account fees and FX margin. Now, moving on to the costs.
We make sure that we keep operating costs under discipline. As our CEO mentioned, we are transforming the bank, and we continue to invest, so there are two cost drivers in the cost base. On one side, we see the cost of wages, and the cost of wages have been going up year-to-year. The rate is one-digit rate. On the other hand, we have assets and depreciations, and here the growth is two-digit. This is the result of the IT investments, new strategy projects, and the more active marketing efforts. As I mentioned, we are investing actively in the bank, which means that depreciation as a sort of translation of the CapEx will be growing. Now over to Marcin.
Thank you. In terms of costs of risk, they continue to be stable. It was 42 basis points for the last quarter, 47 basis points and 42 basis points year-to-year. We stay within the range that we've been sitting in for some time, there are two contributing factors that are well familiar. Very low cost of risk in the retail segment where the loss ratio is very low. That's also connected to the new estimates of the write-offs in the segments where we see the less likelihood of the default. In the corporate segment and enterprise segment, the cost of risk are oscillating within the normalized levels for the long-term projections and is still lower than some years ago. That affects our NPLs. Actually, NPL has been quite stable, it was even declining because we sold the NPL retail portfolio, approximately PLN 200 million in nominal value, PLN 26 million in profit in Q2.
The NPL coverage, the non-performing loans. The coverage has been growing slightly, it's higher in the enterprise and corporate segment because of the lengthy court proceedings in case of bankruptcy or restructuring processes, involving larger and more complex entities. Dagmara, over to you again.
Finally, let's highlight some facts about the capital. We keep a strong capital position. We have the surplus and CET, the total capital ratio. In our strategy, we say that 50%-75% of the net profit will be paid out in the dividend. With these capital ratios, we are all safe with it. In terms of MREL, again, we meet the criteria and we reach the ultimate level with above 24%, even taking into account the increase of the anti-cyclical buffer that will happen in September this year. We are working on two things. One is securitization, that should materialize at the turn of 2026, 2027, another thing is AT1 issuance. That would be all. Thank you.
Thank you. Now it's time for questions and answers, we encourage you to ask questions in our streaming window, you can send an email to myself. Not many questions received so far. We understand that there are many conferences today, organized by different companies to share their performance numbers. I do have some questions from analysts. Some analysts have been asking, what about the credit spreads, what is the competition level in the area of the credit margins?
Let me take this question. We see a major pressure on the margins here, especially in the corporate segment.
Now when we look at where we sit in the market, given that each bank has the ambition to grow in the corporate sector, I have to say that this is the strongest pressure by far. There is a handful of questions about European Court of Justice ruling. We disclosed the amount in our report. The question is whether this is just one-off charge to PLN, what is expected to happen next. What I would like to really distance myself from the role of the advisor of the law chancellory and the legal chancellories or law firms. I would rather refrain from comments here. This phenomenon is the affliction of the Polish market, the discussion is ongoing how to interpret that ruling, my personal opinion is that we should stop offering this product in the current form, in the form that was challenged.
The ruling of the CJEU implies that we should really split it in two elements that were combined into the package, which will be difficult for the customers. The whole area, I should say, of the customer protection is sort of shifting towards such a direction where many products will be very complex from the customer point of view, and they will be just tick the boxes without really thinking. Many of us do it daily because there are so many legal requirements that this is not digestible for the customers. By itself, they become the source of risks that we are discussing here. We are not discussing the credit risk here. We are not discussing the balance sheet risk. In Poland, we tend to focus on the legal risk, and the legal risks are byproducts of the emerging industry that is living off it.
My answer to that is that we estimate as a certain scenario. I'm not going to explain it in details, but I'm not going to make it a secret since I am the chair of the Polish Bank Association Board. We have a discussion within the banking sector, and as a community, we have already voiced our opinion to CJEU how this product could be offered on reasonable terms and how to settle the contracts that are currently active.
There is a question regarding interest margin. Is it already reaching the bottom, and possibly what kind of trajectory here we can expect in the second half of the year?
As I have mentioned, reductions in interest rates both this year and last year, should be included in the margin for the second quarter, and we do not expect any material decreases further.
There was also some interest in our description of the slide on write-offs about this one-off client disappearance. Did it matter for the second quarter? What can we expect in the upcoming quarters?
Well, we wrote that it had an impact. Let me add some information. PLN 420 million, that was the cost of the write-off, and for this client, that was about PLN 100 million. As for the future, the environment is stable. If we have this kind of a client in the future, there is a few basis points increase in the costs of risk, and that is shown in our quarterly results. Basically, the trajectory in the near future is to be stable with possible some changes that are very difficult to predict now.
There are also a few questions related to the capital and issuance.
What will be the size of AT1 issuance, and when can we expect it?
We expect it at the turn of the year. The Polish market, about PLN 500 million.
One more business question. Does the bank plan to introduce personal investment accounts, OKI? Do you think that this new product could support brokerage business and asset management?
Well, I generally think that the evolution of the retail market in Poland is likely to go in the direction of increasing importance of asset management-like products. We are coming to an end of the time when banks differentiated themselves by availability of this type of transactions. Deposits and loans, well, I'm afraid to start discussing this because it is full of legal traps. I think regulators and the entire financial sector should think carefully which products could engender more risks.
Considering how quickly the society at large is getting richer, because the indicators showing the increase in revenues are quite aggressive, and we can see that in our operations. The importance of long-term products for saving will also gain an importance, also in the context of demographic changes. This is definitely something we will consider.
One more question regarding why we reduced our estimate of sensitivity of results to 10, 15 points.
We increased the scale of hedging instruments, IRSs mainly.
Importantly, we are talking about hedging per se in the budgeting window, that is up to two years, versus structural hedging, which was characteristic of our operations earlier, hence this difference of five BPSs to what we had previously.
There are no further questions as of now. Please do continue asking questions on any topics you might have. Have a happy holiday.
Very enjoyable holiday. Thank you