Good afternoon. Let me welcome you at the follow-up call after our Q4 2025 presentation. We have our CFO, Krzysztof Dresler, Jakub Niesłuchowski-
We welcome you.
From finance division. I hope our chief economist already joined us or will join us shortly, and of course we have our IR team. As usual, I suggest go straight to the Q&A session. I believe you have an opportunity to see the presentation and listen to our explanations during the 11 CET call. We are waiting for the questions. Filippo, please. Sorry. Gabor, please.
Hi. Thank you for the opportunity and for the call. First one is on the consumer protection charges. I believe this was an area where your reports kind of differed from the expectations a little bit. Can you walk us through especially what is the likelihood of recurrence of these charges in the coming quarters? That's the first question.
If I may start. On the one hand side, what you observe on the market, looking across also other banks, that our Polish customer protection office, in general increase the level of fees. You saw, for example, in our case it was PLN 79 million. In case of other market competitors, for example, Pekao SA, it was over PLN 100 million for some issues concerning credit holidays. BNP Paribas also got such higher amounts. In general, we expect that as we have some pending discussions with customer protection office, that we may have higher fines resulting from kind of general policy of Polish customer protection office. This is what we see on the market.
I would not call it recurring, but for the open proceedings with the office, we expect that in general, not only for us, but also for other banks, the fees might be higher than it used to be.
Actually-
Thank you.
It reflects quite conservative approach to this issue. We had talks with our auditor who may be expected a little less conservative approach based on market comparison, but we decided simply to be on the safe side. Even if there is a kind of over-provisioning, I would say, so we accept this because that's a new topic, quite new, and we decided simply to be on the safe side.
Yeah. That makes a lot of sense. If we could model something similar to this year for, I believe it was PLN 450 million.
As Jakub said, we do not expect it is a row. It's not recurring issue. Of course, it's still open topic, but our goal was based on our understanding at that time to secure for the future.
Yes.
the issue
Break down this amount, which was also presented in the financial statement. 79 is already for the fine which we got from the customer protection office . Of course, we'll make the appeal and we went all the way to limit the fine, but for now it's 79. What is tangible, it's not final for us. We have the decision for this one proceeding. We have other proceedings open, and already in 2025 we created reserve to cover future potential fines, as we presented it. Assuming that we'll have decisions for the other two proceedings with customer protection office, we see for now that we have already reserved, which was accounted in 2025.
For 2026, for now, we do not perceive a new amount. However, of course, we cannot exclude that we can get that the fines will be of different amount that we calculated based on our assumptions.
Very clear. Thank you. Moving to NII. Your guidance, I believe, is stable NII this year with volume growth, especially loan growth offsetting lower rates. Is this correct, or would you like to fine-tune it?
I would say that on the one hand side is volume growth. On the other hand side is an impact of hedges, which we have, and the rollover of the securities portfolio. Volume growth, lower cost of hedges, rollover of securities portfolio, which will also have positive.
A need of adaptation to market prices, especially on corporate side. Temporarily under pressure, we should accept a bit lower margins. In the longer run, probably we'll see higher margins due to mix. Now this segment is a bit under pressure.
Lower corporate.
Lower corporate lending spreads, you were saying.
Yes. Corporate, especially big corporates, small mid caps, the situation is more comfortable for us. Large corporations, yeah, there is a visible competition.
Right. Just staying with this topic, I believe your NII sensitivity guidance maybe increased a little bit, at least if I just simply divide the sensitivity you disclosed to 200 basis points, I get to PLN 860 million of NII impact from 100 basis points. Any. If you can remind us of your hedging policies.
Gabor, if you.
Change your list.
If you look from the sensitivity analysis for a 100 basis point move and compare to third quarter to fourth quarter, it's PLN 20 million.
From PLN 700- PLN 702 actually to PLN 724. From this perspective is nothing I would say extraordinary happened. It's just, you know. It sometimes depends when you calculate the impact because you have different dates of repricing. For example, our portfolio-gov is based on variable rate loans, et cetera. I would say it's nothing extraordinary here. It's just PLN 20 million.
Okay. Deposit hedges.
I think it's worth to say that this is not just linear sensitivity, 100 and 200 at current level, mainly because we have some deposit products priced around 100 basis points. While it's 100 basis points cut will have limited impact on this, we are able to absorb. In the case of the 200, our absorption limit are simply smaller. That's why it's not 860, as you said, but for 100 basis points it's 720, which we also disclosed during the previous call.
Very clear. The deposit hedges, are they still PLN 60 billion-PLN 70 billion notional or have you changed it, the book?
You mean deposit hedges or hedges in general? Because if you ask about hedging in the form of derivatives, we usually technically under hedge accounting, we predominantly hedge our mortgages book.
If you look from the hedge connections, right. We haven't changed our policy here. If you look from the perspective of volumes which we have, total volumes on the group level, in the fourth quarter we had around PLN 88 billion of hedges, both interest rate swaps and cross-currency interest rate swaps. At the end of third quarter, we got around PLN 89.5 billion. Slight decrease, and this slight decrease is predominantly for interest rate swaps. Slight increase of cross-currency interest rate swaps. Cross-currency interest rate swaps we apply for our Eurobond issuances. We have one bond in November last year, so that's why the amount of cross-currency interest rate swaps was increased. In general, we do not change our policy.
Our policy is first go for natural hedges. If you look at the end of 2025 on our mortgage book, around 46% is based on initial fixed rate for five years. Our consumer portfolio, which we also are converting to fixed rate, it was above 30% of fixed rate. This natural hedge plus of course securities portfolio at the end of 2025, close to 80% was based on fixed rate.
Very clear.
And, and then we-
Gabor,
Our hedges.
Gabor, I don't know how familiar you are with the interest rate management, risk management, but you can't calculate interest rate risk exposure based on the notional value of IRS. It's not enough. You simply should see the term structure of that and also the moment and the time, interest rates interest difference, fixed and float at the origination moment.
Yeah, yeah.
Based on that you can really calculate the interest rate exposure. That's why it's not. Even if we share the number or the amount of the notional value of interest rates, it doesn't answer the question, what is the level of hedge, what is the impact, and so on.
I guess that all feeds into your stated NII sensitivity so.
Yeah. We closed the gap from the perspective of interest rate sensitivity to meet the requirements, external, like SOT, NII, but also internal. We also have limits and thresholds internal where we have to be in line with that.
Thanks. If I can squeeze in one last question, please. A broader one, which was on your strategy targets. You announced this 18%+ ROE outlook when you presented the strategy. Do you think that's achievable if the CIT rate stays at the current level, if the corporate income tax rate stays at 30%? Actually, we don't know now, but it's challenging situation.
Of course, we will report this year in comparable conditions, simply the level after 30% corporate income tax and the previous one, 19%. Simply to be in. We planned and announcing the strategy, we didn't know that the corporate income tax is going to be 30%. That's why we will for sure report both numbers, the real one and in comparable conditions. Okay, we don't know where we'll be with interest rates because it's also important, will be important factor. We assume for now that we will have no significant CHF provisioning in this year and onwards. We'll see, as we explained many times and discussed with you many times, it's data-driven.
For now it looks promising, let's put it this way, but we'll see. Okay. It will have an impact on ROE in 2027. However, as we said, in 2027, in this horizon of 2027, for now, we see that we're able to achieve above 18% in 2027.
Assuming 26% CIT rate or 30?
26. 26 in 2027. Very clear.
Thanks for all the color. Thank you.
Do we have any other questions? I hope. Everything is clear, probably. Krishand, please.
Hi, thanks for the color on the NII and other bits, I guess. I was just looking at an aspiration. Sorry, I've been following you for some time, but I just still wanna be understanding what does the arrows mean here, actually. Like, you talk about fees and income, fees and commission income, it shows going up. How should we kind of read about this? Is it something which is you have done in the previous year in a sense, the YoY that you see that is being done? In terms of operating costs, how should I think about that? Is it like last year was a bit heavy on the cost? Does the trend continue or the YoY growth is gonna come down this year?
Just one last one, I guess, on the CHF litigation. I heard you say a lot of times 2026 will not have a significant FX litigation number. Like, how should I kind of understand that number in my model, actually, in terms of significant, actually? Like, how do I kind of understand that significance, not a significant hit to you?
In the context of fees and incomes, indeed, we had a good fourth quarter. Looking, I would say, ahead in 2026, because I understand this was the question about what we expect. We significantly grew our asset management business, which we are also going to grow in 2026, which again, for 2026, starting 2026, creates a very good basis for a management fee. From this perspective, we expect next, again, good year for asset management business. Along with also brokerage business. As we are also growing our customer base, so we expect that we will also grow our fees on the card business and FX business. If you compare 2024- 2025, please remember.
For card business, please remember that we had one-offs in 2024, which was between PLN 140 million and PLN 150 million. Positive one-offs in 2024. That's why you see. That's why the dynamic between 2024 and 2025 is not, I would say, based on pure business, which we did, but also one-offs resulting from the settlements with the card issuing companies. But in 2026, we expect that should be better than 2025 in the card business. Also along with growing number of customers, the fees on accounts also should be lower, higher, sorry. Also if we looking from the business development point of view, also provisions from the lending activity should be higher.
This is what we see on our side, and this is how you should think in the context of our fees and commissions business. Of course, what is not currently in fees and commissions line is insurance business run by our insurance companies. Here we also expect growth comparing 2025-20 26, taking into account also our strategic ambitions to grow the gross written premium very significantly in the next two years.
The cost side, there is a cost discipline. We have a plenty of initiatives to optimize, let's say, business as usual, side of, our activity. Here we will see dynamics inflation plus, low single digit on the. We still continue investments in strategic initiatives, ecosystems connected with gathering new clients on both retail side but also corporate side, energy transition and accessibility throughout the physical network of us. From this perspective, lower dynamic than reported last year, but still positive dynamic.
Yeah. This, on the other hand side, what we also can share is public information now that BFG set the fees for this contributions for the 2026 only for the resolution fund, no fees to the guarantee fund. Usually our share in resolution fund is lower than in the guarantee fund. This also should be positive in the context of cost base for 2026.
Łukasz, please.
Hi. Thank you very much. One question on risk cost. I mean, how much your risk models are sensitive to change in the macroeconomic input? I mean, assuming that this conflict in the Middle East is prolonged and long-term, I would say, or at least midterm, do you expect you will have to book some additional model-driven provision? Not necessarily, which will eventually materialize in the future, but simply model-driven provisions. Thank you.
On the retail side, we have like 80 different risk parameters, which we use to calculate the risk exposure and based on that to decide what should be adequate level of provisioning. On the other side, we also have sector provisioning where we include not only the sector exposure local, but also, generally speaking, geopolitical exposure, which can impact negatively on different sectors. From this perspective, I think that we also are on the conservative side that we created plenty of provisions to be prepared for such situation we see now. The real exposure on the Middle East, the situation, of Poland is limited.
I think that if the situation is like we observing now, we will not be in the position or need to create visible and material provisions to cover this geopolitical risk.
Yeah. In general, I would say our normal practice is to employ macroeconomic factors also in the expected loss calculation. We built three scenarios, base scenarios and two stress scenarios, in which we include GDP, unemployment rate, WIBOR rate, also CHF/PLN exchange rate, interest rates.
I do confirm we produce some macroeconomic scenarios. We cooperate closely with risk division, and they of course take into account the macroeconomic scenario in calculating provisions. Of course to summarize that, we also cyclically went through different stress tests where we have to embed a different stress test to calculate the real exposure in a black swan scenario. Based on that, we can only say that we have enough capital to amortize such situations.
Maybe I will add that recently we have also started to employ reverse geopolitical stress tests. We have already done one such exercise. Actually, the current developments are in line with one of the scenarios in this stress test exercise. We do all this stuff and our risk division is taking it into account.
Any other questions? I don't see, so I assume that this time our results were quite straightforward, and in fact, they were. In such a case, thank you for participating and hopefully see you with majority of you quite soon on different conferences.
Thank you very much.
Thank you and have a good day.
Thank you very much.
Thank you.
Bye. Bye-bye. Bye.