Addiko Bank AG (ADKO) Earnings Call Transcript & Summary

[Interpreted] Very good morning, ladies and gentlemen. In my capacity as Chairman of the Supervisory Board, I take over the chair in accordance with Section 116 Para 1 of the Stock Corporation Act and open today's AGM of Addiko Bank AG. After careful consideration, the Board of Management decided, in order to protect shareholders and other participants, to make use of the legal possibility of a virtual general meeting. Today's AGM will therefore be conducted as a virtual general meeting within the meaning of the COVID-19 law and the COVID-19 regulation and will be broadcast on the Internet in its entirety. I would like to welcome the shareholders of our company who are attending the Annual General Meeting on the Internet, some of you perhaps the second time this year. And I would like to expressly draw your attention to the fact that it's not permitted for individuals who watch the live stream of this AGM to make audio or video recordings of this AGM or parts thereof. Holding the AGM as a virtual general meeting in accordance with the COVID-19 regulation entails modifications in the course of the Annual General Meeting and in the exercise of shareholders' rights. And that will be explained in detail by notary public, Dr. Brix. First, the proposed resolutions on all items on the agenda will be presented to you en bloc. The special voting representatives will then get the floor to read out any motions for resolutions. This will be followed by the general debate, that is reading out and answering questions. After the questions on all agenda items have been answered, respective motions will be voted on in the order of the agenda and the proxy form to the special voting representatives in the version as made available on the company's website on the 6th and 12th of November 2020, unless I expressly indicate otherwise. I note that the notice convening today's Ordinary General Meeting of Shareholders was published in the Wiener Zeitung on 29th of October 2020 in due time in compliance with the provisions of Sections 106 of the Austrian Stock Corporation Act; and secondly, furthermore in accordance with Section 107 Para 3 of the Stock Corporation Act. Electronic European distribution by press release was carried out on the same day. In accordance with the new provisions of the Stock Exchange Law, the convening notice was also sent to shareholders via the chain of intermediaries in accordance with Article 180 Para 2 of the Austrian Stock Exchange Act 2018 on the 19th of November. The documents to be disclosed in accordance with Section 108 Para 3 and 4 of Stock Corporation Act were made available on the company's website on the 29th of October 2020 and the 6th of November 2020. And that included, in particular, information on the organizational and technical requirements for participation in accordance with Section 3 Para 3, in conjunction with Section 2, Para 4 of the COVID-19 regulation under company law; the proposed resolutions on agenda items 2 to 8; the policy on the principles governing the remuneration of members of the management board; the declarations of the candidates for the elections to the Supervisory Board; and item 8 of the agenda in accordance with Section 87 Para 2 of Stock Corporation Act, including their CVs; the proxy form for the special voting representatives; and a question form. Further documents were made available on the company's website on the 12th of November 2020 at the request, in accordance with Section 110 of Stock Corporation Act, of the shareholder, MW Funds Pte. Ltd. with the proposed resolution and reasoning for agenda item 5, proxy form for the special voting representatives in accordance with Section 3 Para 3 COVID-19 regulation and the company law, taking into account the present supplement. The notary, Dr. Brix, is requested to notarize the resolutions of today's Annual General Meeting, to supervise the voting and to record the minutes in accordance with Section 120 of Stock Corporation Act. I would now like to ask the notary, Dr. Brix, explain the modalities for exercising shareholders' rights at today's virtual general meeting and the proceeding of the general meeting.

[Interpreted] Yes, with pleasure. Shareholders, in the notice convening the AGM on 29th of October 2020, it was announced that today's AGM would be held as a virtual general meeting without the physical presence of shareholders. In addition, information on the organizational and technical requirements for participation in the AGM in accordance with Section 3 Para 3, in conjunction with Section 2 Para 4 of COVID-19 regulation, was made available on the company's website on the 29th of October. Today's AGM will take place in the presence of the Chairman of the Supervisory Board, Hans-Hermann Lotter; the Deputy Chairman, Henning Giesecke; CEO, Csongor Németh; and the Management Board members, Markus Krause and GaneshKumar Krishnamoorthi; the 4 special voting representatives, the lawyer Maria Brandstetter, the lawyer Verena Brauner, the lawyer Ewald Oberhammer and the legal expert Florian Beckermann, LL.M.; and myself as notary public. Thomas Becker and Wolfgang Wurm, representing the auditors Deloitte Audit Wirtschaftsprfungs GmbH Vienna, can be contacted by telephone and e-mail by the Management Board and the Chairman, and they will follow the Annual General Meeting via live stream. As representatives of the FMA, the state commissioners received an invitation to today's Annual General Meeting and have the opportunity to follow it via the live stream. The state commissioners may communicate with the Management Board or the Chairman of today's AGM during the AGM and if necessary, may contact with those mentioned. So how are the shareholders' rights exercised today? The exercise of voting rights, the right to propose resolutions and the right to raise objections is exercised exclusively by granting power of attorney and giving instructions to one of the special voting representatives proposed by the company. The right to information can also be exercised at the virtual AGM by the shareholders themselves or by their authorized representatives by means of electronic communication in text form by e-mail directly to the company, exclusively via this e-mail address, fragen.addiko@hauptversammlung.at. And now on the transmission and the proceedings of today's AGM in detail, in accordance with Section 3 para 4 COVID-19 regulation, in conjunction with Section 102 Para 4 Stock Corporation Act, the AGM is broadcast in full, in picture and sound, in real time on the Internet. Today's AGM will be held in German. Mr. Csongor Németh is going to present his comments and answer questions in English partly. The Board member, GaneshKumar Krishnamoorthi, will also answer questions in English. These statements will be translated from English into German simultaneously. By broadcasting the general meeting on the Internet, all shareholders who so wish will be able to follow the proceedings of the AGM in real time through this audio and video link and to follow the presentation of the proposed resolutions and the answers to the shareholders' questions. Now how is the right to information exercised in practice? The shareholders and as mentioned before, their proxies with a view to the right to information and the right to speak also have the opportunity during the Annual General Meeting to submit their questions in text form to the company electronically via e-mail within a certain time slot after the opening of the AGM exclusively to the e-mail address fragen.addiko@hauptversammlung.at. At today's Annual General Meeting, these questions will be read out by the Chairman of the Supervisory Board and then answered. Please use a simple e-mail that you send to the address fragen.addiko@hauptversammlung.at. This simple e-mail needs to include the first name and surname or company name of the shareholder, the date of birth or the company registered number of the shareholder in order to enable the company to establish the identity of the shareholder and to verify that it corresponds to the deposit confirmation. Please end your e-mail with your name, that is the reproduction of your signature, in accordance with Section 13 Para 2 of Stock Corporation Act and also indicate your deposit number as expressly requested in the information for participant, which was made available on the website on 29th of October 2020. Shareholders are also welcome to complete the question form provided on the website and submit it as a PDF file. This gives shareholders the opportunity to respond to developments at the Annual General Meeting themselves, for example, by asking questions or supplementary questions. The Chairman will be in charge of the time management of the AGM as he does for an AGM where shareholders are present. And he will announce in due course a specific time until which questions can be asked. Now on to the special voting representatives. Shareholders have the opportunity to amend their voting instructions in particular as regards to submission of motions for resolutions, for casting of votes or changes to their instructions on one or more items of the agenda, but also to raise objections to one or more items of the agenda with the relevant special voting representative during the AGM up to a certain point in time. Please use a simple e-mail to the e-mail address of your voting representatives to which you have sent a proxy form. The 4 representatives have the following e-mail addresses that you also see on the screen: brandstetter.addiko@hauptversammlung.at or brauner.addiko@hauptversammlung.at or oberhammer.addiko@hauptversammlung.at or : beckermann.addiko@hauptversammlung.at. In this simple e-mail, the person of the shareholder, that is the first name and surname or company name, date or birth or company registered number of the shareholder must be stated in order to enable the voting representative to determine the identity of and correspondence with the proxy. Please end your e-mail with your name, that is with your signature in accordance with Section 13 Para 2 of Stock Corporation Act and also indicate your deposit number, as mentioned earlier. Please note that during the AGM, only electronic communication with your voting representative is possible. That is to say by e-mail, and that is to say your voting representatives cannot be reached by telephone or text message. The time up to which instructions concerning the submission of motions, voting and objections are possible will also be determined by the Chairman in the course of the general meeting. This will probably be close to the end of the general debate. I would like to point out that it may be necessary to interrupt the virtual general meeting for a short time in order to reliably process the instructions received by voting representatives from shareholders during the general meeting or, if necessary, to examine and discuss in detail the procedure for motions or questions received. Now this was a summary of the structure of today's virtual Annual General Meeting as published on the company's website, in particular in the document information on the organizational and technical requirements for participation pursuant to Section 3 Para 3, in conjunction with Section 2 para 4 of the COVID-19 regulation under company law. And with that, I would like to hand over to the Chairman.

[Interpreted] Thank you very much, Dr. Brix for these explanations. As Chairman, I hereby dispose that today's AGM shall be held in the minute announced in the notice convening the meeting and in the information on the organizational and technical requirements for participation pursuant to Section 3 Para 3, in conjunction with Section 2 Para 4 of the COVID regulation under company law, which is available on the company's website and which has just been explained by the notary, Dr. Brix. The list of participants will be finalized before the first vote. I will sign it and inform you of the attendance. The list of participants will be made available for inspection by the special voting representatives present in this room. We are now starting with the agenda. Item 1 on the agenda, presentation of the annual financial statements, including: the management report and consolidated corporate governance report; consolidated financial statements, including the group management report and consolidated nonfinancial report; the proposal for the appropriation of profit; and the report submitted by the Supervisory Board for the 2019 business year. The adopted annual financial statements together with the management report and corporate governance report of the Board of Management and the consolidated financial statements, together with the group management report of the Board of Management and the report of the Supervisory Board for the 2019 business year, were made available on the company's website and can be downloaded there. The Supervisory Board held a total of 6 meetings in the 2019 business year and assisted the Management Board in an advisory capacity and was also responsible for the ongoing supervision of the management. In the context of the meetings of the Supervisory Board and its committees, the Management Board reported in detail on the financial situation and the business development of the Addiko Group. The Management Board discussed strategies and significant specific measures in detail with the Supervisory Board. Legal transactions requiring approval were submitted to the Supervisory Board, whereby the Supervisory Board was given sufficient opportunity to examine in detail all reports and resolutions proposed by the Management Board. In this context, the Supervisory Board has taken the necessary measures to satisfy itself of the legality and the appropriateness of the management of Addiko Group. The Supervisory Board has set up the following 5 standing committees: first, audit and compliance committee, which held 6 meetings in the business year 2019; a credit committee, also 6 meetings in the business year 2019; the risk committee, 5 meetings in the business year 2019; the nomination and remuneration Committee, 1 meeting in the 2019 business year; and the committee for Management Board matters, 1 meeting in the business year 2019. The Chairman of the Supervisory Board committees and myself as Chairman of the Supervisory Board of Addiko Bank AG regularly exchange information with the Management Board. The Supervisory Board was regularly informed about the following topics at meetings held at least quarterly: business performance in the previous quarter, business results, risk development and significant matters as well as significant legal disputes. In addition to the quarterly report, the Management Board also informed the Supervisory Board about current economic developments. Furthermore, individuals in key positions, in particular the compliance officer and the internal audit officer, reported regularly to the Supervisory Board. Annual financial statements of Addiko Bank AG and the consolidated financial statements of the Addiko Group as of December 31, 2019, were audited by Deloitte Audit Wirtschaftsprüfung Gmbh, and each received an unqualified audit opinion. The management report and the group management report were audited on the basis of the statutory provisions to determine whether they were consistent with the annual financial statements and the consolidated financial statements and whether they were prepared in accordance with the applicable legal requirements. The consolidated nonfinancial report was reviewed and found to be not significantly inconsistent with the consolidated financial statements or otherwise materially misstated. In accordance with the Austrian corporate governance code, I'm required to inform the Annual General Meeting of the principles of the remuneration system. These are summarized as follows. The remuneration of the members of the Management Board consists of fixed, performance-related variable and nonmonetary remuneration components, whereby the mutual value for the employee and the group is determined in accordance with the interest of shareholders. The fixed component, which is a key element of total remuneration, is determined according to the level of responsibility. The annual variable remuneration shall be based on the achievement of individual predefined targets and prudent risk management and should, in any event, be less than the fixed remuneration for the financial year in question. In 2019, the remuneration of the Management Board was defined in the remuneration guideline. This guideline provides a compensation framework that all Addiko companies apply when determining the compensation of their employees, management and Supervisory Boards. The objective is to enable the group to attract and retain employees and to ensure that the business objectives are achieved in line with the strategy, long-term objectives and risk profile. The principles set out in the policy also aim to reward performance and contribution in an appropriate relationship of fixed and variable compensation, which is market-based and prevents the Addiko Group from taking excessive risk while rewarding sustainability and long-term results. The remuneration of Management Board members must be clearly defined in the employment contract within the following framework: fixed remuneration based on the responsibility that constitutes a relevant part of the total salary; the variable annual remuneration as a function of the achievement of a previously determined individual target agreement and prudent risk management, which is lower than the fixed remuneration for the respective business year. In the event of premature termination by the company without serious cause or for a serious cause not attributable to the fault of the Management Board member as well as in the event of justified premature termination by the Management Board member for serious cause, for which the company is responsible, Management Board members may be entitled to a one-off compensation for loss of income for the period then remaining until the end of the fixed term. This one-off compensation may not exceed 9 months and may not be more than 10x the gross monthly basic salary plus the variable bonus calculated on the basis of the most recent target values and parameters, which assumes no more than 100% target achievement. Members of the Management Board are also entitled to insurance, including a D&O insurance, in accordance with existing group insurance contracts for members of the Management Board. Members of the Management Board participate in the defined benefits pension plan of the respective Addiko company on the -- under the same principles as employees. Members of the Management Board are not compensated for their functions as members of the Supervisory Board of an Addiko company. The term of contract of the members of the Board of management may not exceed 4 years. After having given you this information on the remuneration policy, I now ask the CEO, Mr. Csongor Németh, to present a report on the 2019 business year to the Annual General Meeting and to comment on the situation in the 2020 financial year.

[Interpreted] Thank you very much, Mr. Lotter. Good morning, dear shareholders, and a cordial welcome to the Addiko Bank AG's Annual General Meeting in 2020, which was originally planned for April, but as the COVID-19-related pandemic caused lockdowns, we decided to postpone it to today's date. I'm asking you for your indulgence and your patience as I present to you the annual financial statements 2019, including the management report in German. So please forgive me as German is not my native tongue, so forgive me for possible mispronunciations in German. First of all, allow me to introduce Addiko's group Management Board to you. Markus Krause is our Chief Risk and Financial Officer. Ganesh Krishnamoorthi leads the retail, IT and digital streams, and I serve as the group's CEO. On Slide 3, we have summarized for you the key highlights for 2019. It's only a mere 9 months ago when we closed the 2019 financials. But you may share the feeling that in terms of unexpected events taking place in this year 2020, it certainly seems like it has taken place a long time ago in a galaxy far, far away. As a consequence, we decided to also include recent financial figures from our latest Q3 disclosure to ensure that all of our shareholders get the most up-to-date information with regard to the key financials of Addiko Group and can vote on the resolutions proposed in the most important manner. We are very proud to complete 2019 by delivering a 32% improvement of our adjusted result after tax of EUR 40.7 million. This corresponds to a 32% improvement over the previous years. The adjustments include some positive as well as negative one-off effects, which we carefully assessed as being linked to the transformation of the bank and have been qualified as nonrecurrent. These were also scrutinized by our auditor. This includes for 2019 the negative effect from the Swiss franc conversion law in Serbia and legal provisions in Croatia related to historic Swiss franc loans. It also includes the costs of preparing and executing the IPO in July 2019. The reported result after tax for 2019 is EUR 35.1 million, which, in our view, represents a solid achievement, especially as it was our third profitable year in a row. Our portfolio's risk profile continued to improve with an NPE ratio down to 3.9% at year-end 2019. This illustrates our excellent portfolio quality with limited risk concentration. Over 90% of our loan exposure was and remains to be without any overdues. This reflects our prudent approach to executing our focused business strategy with sustainability of the risk profile being at the forefront of our activities, much more so than mere volume. In 2019, we had risk provision releases of EUR 2.9 million, mostly related to our non-focused portfolio, which overcompensated the provisions in our focused segments. Our NPE coverage stood at a solid 73.7%. In our focused portfolio -- our focused portfolio represented 62% of our total portfolio and has grown by 13% year-on-year. We continued our efforts in the direction of our digital transformation, and the business origination through digital channels was accelerated. In 2019, 9% of Addiko's unsecured consumer lending volume and 12% of SME volumes came via digital channels. We continued to rightsize our physical footprint, reaching a total number of 179 branches at year-end 2019. Addiko's transitional CET1 ratio stood at 17.7% at year-end 2019, including the 2019 profit and after deduction of the proposed dividend distribution of EUR 2.05 per share. That is almost exactly EUR 50 -- 40 million in total. This proposal, because of the current European-wide regulation or recommendation, is merely a conditional proposal. On Slide 4, we summarized how our straightforward business model as a specialist bank focus on consumer lending and SME banking in our region. Slide 5 shows our share price development over the past 18 months. This period can be broken down into 3 rather well-defined half year periods. First, a mere 4 months after the listing, in October 2019, we received the draft SREP decision, which, as the later slides will clearly indicate, have simply not anticipated the strong resilience and the quality of our portfolio and especially not the capital depletion projected by the regulator Addiko would face in a crisis. As the share price indicates, Addiko lost approximately 20% of its market capitalization at that time. Second, from March to July -- or August 2020, Addiko was hit hard by the outbreak of the COVID-19 pandemic and related uncertainties. This was also coupled with news on our previous largest shareholder fully exiting its position as well as some governance-related topics. The closing price of our share went as low as EUR 5.66. The period since our disclosure, midyear 2020, the situation looks much better, and we have recovered much of the lost ground. On Slide 6, we would like to show you 3 core messages: first, which -- the macroeconomic forecast we got from the Vienna Institute for Comparative Economic Studies and which are represented in our budget; second, the development of our business -- new business in our focused segment compared with the previous period; and third, our expectation regarding consumer credit and margins in our core consumer lending segment. Slide 7 describes the C-curve. In our view, there are 2 possible ways for banks to create sustainable return on adjusted equity. One is to be a truly large universal bank with an appropriate market share to benefit from economies of scale. The other possibility, ambitious, the journey Addiko Bank is on, is being a specialist player with only a few focus areas, who is efficiently delivering adequate returns with the right cost base while providing convenient services for our focused customers. Our balance sheet needs also to reflect our straightforward business model. We had an LCR of 175% at year-end 2019. Now it's over 210%. On the asset side, we had over EUR 2 billion in cash and investment portfolio and a loan book of approximately EUR 3.9 billion, being financed by EUR 900 million in equity and customer deposits of approximately EUR 4.8 billion. Our loan-to-deposit ratio stood at just over 80%. On Slide 9, you can see the year-on-year development of our key financial KPIs. And on bottom of the page, we have highlighted for you the main adjustments which have influenced both 2018 and 2019 reported figures. In 2019, the main adjustments were: first, the IPO-related costs of approximately EUR 2 million; second, a gain of EUR 4.3 million related to the restructuring procedure of a large Croatian retailer; third, the write-offs related to the Swiss franc conversion law in Serbia in the amount of EUR 8.1 million; and fourth, the provision in relation to the Croatian Supreme Court ruling regarding Swiss franc loans in the amount of EUR 8.7 million. On Slide 10, you can see the strong growth Addiko has been able to achieve in its focused segments over the past 4 years, with over 20% CAGR in unsecured consumer and almost 18% CAGR in SME. In 2019, both key segments increased by 13% to 14% with a net commission growth of over 3% in consumer and over 18% in SME, which helped to compensate the lower gross yields in the SME segment. The transformation of our book is reflected on Slide 11. The key to our value-creation model is growth in the focused segment and the gradual reduction or contraction of the non-focused area, which enables the freeing up of capital and liquidity, supporting what is higher earnings generation of Addiko Group. As you can see on the right-hand side of the slide, the growth in our focused segments has turned to being flat in 2020 while yields have remained stable with significantly reduced new disbursements. This was caused by: first, our proactive and swift tightening of underwriting parameters in mid-March 2020; second, in general, a reduction in economic and social activities caused by the pandemic; and third, a decreased number of loan applications as a more cautious approach was taken by most customers. Our non-focused book of mortgage, public and -- finance and large corporates has continued as planned to decrease by contractual maturity. Slide 12 shows you the fact that we were successful in continuing to decrease our nonperforming loan stock in terms of volume from above EUR 400 million in 2018 to EUR 277 million in 2019 while keeping our coverage ratios stable. On a later slide, I will also provide you with a brief update on Addiko's portfolio and the recent moratoria during 2020. On Slide 13, the key message is that Addiko has solid capital levels. The management was committed to pay a dividend for 2019. As we are currently even above the levels of the SREP 2020, containing a P2R of 4.1% and P2G of 4%, which we have challenged, we feel very confident to seek your conditional approval for the proposed dividend of EUR 2.05 per share. As to the summary of key developments during 2020, you will find that on Slide 14. Until the end of September 2020, we made a loss of EUR 6.4 million while, after 2 loss-making quarters, we made a profit in Q3 of EUR 5.8 million. We have set up provisions of almost EUR 38 million, predominantly driven by IFRS 9 model adjustments based on macroeconomic expectations and stage 2 developments. Regarding our reported operating result, which is a key performance indicator especially in crisis years, Addiko Group delivered over EUR 42 million, which is EUR 14 million more than in the same period in 2019. Our portfolio under moratoria has decreased by 34% compared to the first half of 2020 to EUR 667 million, and over 90% of our loan book remains without any delays. I've already elaborated on the very reassuring liquidity and capital position of the group. On Slide 15, we illustrate how net interest income, net commission income, operating expenses and credit loss expenses have developed this year. As you can see in the top left-hand corner, well, our margins remained stable. The stagnation in our focused book as well as the budgeted runoff of our non-focused book resulted in a year-on-year decrease in net interest income by 3.6%. Our interest margins remained stable. We have seen an even bigger drop of almost 11% in commission income year-on-year, mainly caused by the decreasing number of transactions and limited new business activities. We have managed to compensate some of the missing income by continuously focusing on costs while delivering on our digital value proposition. Previously, I already explained the development of risk provisions which we have set up this year. Operating expenses on Slide 16 have been decreasing as both personnel and administrative costs remain under close scrutiny. Some of these costs we would expect to return once the pandemic-related cloud clears, especially variable salaries, marketing, travel expenses, et cetera. But we remain confident that we will be able to lower our cost base further from currently below EUR 175 million by a further EUR 15 million by the end of 2022. As for 2019, the reduction in FTE numbers by 229 to a total of 2,739 and the closure of 17 branches in the second half were achieved. This has kept our operating expenses in line with 2018 despite IPO costs and has clearly contributed to cost improvements in 2020. On Slide 17, on the left-hand side, we aim to provide you with an overview of the exposure under moratoria in relation to the total gross expenditure of Addiko. On the right-hand side, you can see how the EUR 1 billion portfolio in moratoria as of the first half of 2020 has already decreased by roughly 1/3 and that by the end of the year, we expect to have less than EUR 100 million of loans still in moratorium. Over the past 8 months, we have taken all steps possible to ensure home-office possibilities for our staff and have been successful in maintaining all functions and services of our institution to our customers and stakeholders. We continue the professional dialogue with our regulators and with a reference to ensure a level playing field as to our capital ratios. We are finalizing our budgeting process and will seek the approval of our Supervisory Board once the new members are also acquainted with Addiko and its business plan. I'm confident that Addiko will deliver on its revised 2020 outlook. Esteemed shareholders, we are living in constantly changing times, and I hope we have managed to assure you that Addiko is managing its way through the crisis well and that we remain fully committed to sustainable shareholder value creation. The proposed dividend under agenda item 2 marks an important milestone on our journey to deliver on our previous commitments. Thank you very much for your patience and your attention, and stay healthy.

[Interpreted] I would like to thank the Management Board for this report. And I would now like to take this opportunity to thank the members of the Management Board as well as all employees of Addiko Bank AG in my own name and also on behalf of the Supervisory Board for their great commitment in the business year 2019 but particularly for their sterling work in the last months under really difficult conditions. I now present the proposed resolutions on all items of the agenda. On item 2, proposal on the allocation of profits. On 27th of July 2020, the European Central Bank recommended that until 1st of January 2021, no dividend should be paid out and no irrevocable commitment to pay out dividends should be undertaken by credit institutions for the financial years 2019 and 2020. You can read up on this, on the recommendation of the European Central Bank of 27th of July 2020 on dividend distributions during the COVID-19 pandemic and repealing recommendation ECB/2020/19, ECB/2020/35 and as well as 2020/C 251/01. Whether the European Central Bank will extend this recommendation or publish a new recommendation cannot be foreseen at present. In particular, it is not possible to foresee the criteria that would, if any, allow a dividend payment. The Management Board and the Supervisory Board consider it necessary in the interest of the company to comply with the recommendations of the European Central Bank. If the current recommendation of the European Central Bank is extended or a new recommendation of the European Central Bank is published, the Management Board will have to determine whether this recommendation is contrary to a dividend distribution. Should these 2 conditions precedent for a dividend payment not have been met by March 10, 2021, which also applies if any substantive or formal requirements for a permissible dividend payment are not fully met, no dividend will be paid particularly since the distribution of the balance sheet profit will have to be resolved at the next following general assembly. So the proposal: The Management Board and the Supervisory Board propose that from the balance sheet profit of EUR 40 million shown in the annual financial statements as of December 31, 2019, subject to the conditions precedent that, first, neither a recommendation of the European Central Bank would, in the company's view, conflict with the distribution of dividends nor a legally mandatory distribution ban is effective or applicable and second, at the time the preceding condition precedent is satisfied, the common equity Tier 1 capital ratio of Addiko Bank AG after distribution of the dividend, single, unconsolidated, is not lower than 18.6%, a dividend of EUR 2.05 is distributed for each dividend-entitled share. That means the total amount of the dividend would be EUR 39,975,000. If both conditions precedent are not satisfied until March 10, 2021, no dividend distribution shall take place. To the extent the balance sheet profit is not distributed in accordance with the above, it shall be carried forward to a new account. The remaining amount between EUR 40 million and the dividend payout of EUR 39,975,000, that is EUR 25,000, will be carried forward on new account anyway. Furthermore, the Board of Management and the Supervisory Board propose that the payment date for the dividend should be the 20th working day after the satisfaction of both conditions precedent. Item 3 on the agenda, resolution on formally approving the actions of the members of the Management Board for the 2019 business year. The Board of Management and the Supervisory Board propose that the actions of the members of the Board of management in office in the 2019 business year be formally approved for this period. Item 4, resolution on formally approving the actions of the members of the Supervisory Board for the 2019 business year. Again, the Board of Management and the Supervisory Board propose that the actions of the members of the Supervisory Board in office in the 2019 business year be formally approved toward this period. Item 5 on the agenda, resolution on the authorization of the Management Board to acquire own shares for the purpose of offering to employees, executives and members of the Management Board or Supervisory Board of the company or a company affiliated with it to acquire, pursuant to Section 65 Para 4 of Stock Corporation Act, up to 10% of the share capital for a period of 30 months from the day of the resolution by the general assembly. The Management Board and the Supervisory Board propose that the following resolution be adopted: authorization of Addiko Bank AG to acquire own shares for the purpose of offering to employees, executives and members of the Management Board of the company or a company affiliated with it to acquire, pursuant to Section 65 Para 1 -- Para 4 of Stock Corporation Act, up to 10% of the share capital for a period of 30 months from the day of the resolution by the general assembly. The equivalent value per no power value share to be acquired may not exceed or fall below the arithmetic average of the official closing prices published by the Vienna Stock Exchange of the shares of Addiko Bank AG listed on the Vienna Stock Exchange on the 20 trading days preceding the acquisition by more than 20%. This authorization applies for a period of 30 months from the day of the resolution by the general assembly and thus ends on May 27, 2023. I'm sure you have seen that there is a different proposal under this item of the agenda by MW Funds, and I'd like to comment that the Supervisory Board had decided to exclude itself from a possible stock option in order to comply with ECB guidelines and to confirm the independence of the Supervisory Board in exercising its supervision. I now come to the motion proposed by MW Funds Pte. The shareholder MW Funds Pte. Ltd. submitted a proposal for resolution in accordance with Section 110 of the Stock Corporation Act in a letter dated 11th of November 2020 and request the following resolution: authorization of Addiko Bank AG to acquire own shares for the purpose of offering to employees, executives and members of the Management Board, and this is the difference to the previous proposal, and the Supervisory Board of the company or a company affiliated with it to acquire, pursuant to Section 65 Para 1, #4 of Stock Corporation Act, up to 10% of the share capital for a period of 30 months from the day of the resolution by the general assembly. The equivalent value per no power value share to be acquired may not exceed or fall below the arithmetic average of the official closing prices published by the Vienna Stock Exchange of the shares of Addiko Bank AG listed on the Vienna Stock Exchange on the 20 days preceding the acquisition by more than 20%. This authorization applies for a period of 30 months from the day of the resolution by the general assembly and thus ends on May 27, 2023. And I would like to point out, shareholders and special voting representatives, I will first put to the vote the resolution proposed by shareholder MW Funds Pte. Ltd. If this proposal is carried by the required majority, then there will be no need for a vote on the proposed resolution by the Management Board and Supervisory Board. That was just information for our votes later. Now item 6, resolution on the revocation of the authorization granted at the general assembly on June 6, 2019, to acquire own shares in accordance with Section 65 Para 1, #8 and Para 1A and Para 1B of Stock Corporation Act with the simultaneous authorization of the Management Board to acquire, for no specific purpose, own shares of up to 10% of the share capital in accordance with Section 65 Para 1, #8 of Stock Corporation Act for a period of 30 months from the day of the resolution of the general assembly. The general assembly of the company has resolved on June 6, 2019, to authorize the Management Board to acquire up to 10% of the company's share capital as own shares of the company within the meaning of Section 65 of the Stock Corporation Act and to sell the acquired shares on the Vienna Stock Exchange in accordance with Section 65 Paras 1 (8), 1A and 1B of the Stock Corporation Act, provided that the company is listed on the stock exchange. This authorization should be revoked and granted again with the 30-month duration starting anew. The Management Board and the supervisory propose that the following resolutions be adopted: A, revocation of the authorization granted at the general assembly on June 6, 2019, to acquire own shares in accordance with Section 65 Para 1, #8 and Para 1A and Para 1B of Stock Corporation Act; and B, authorization of Addiko Bank AG according to Section 65 Para 1, #8 Stock Corporation Act to purchase own shares. Trading in own shares for profit is expressly excluded. The shares to be acquired may not exceed 10% of the share capital. The equivalent value per no power value share to be acquired may not exceed or fall below the arithmetic average of the official closing prices published by the Vienna Stock Exchange of the shares of Addiko Bank AG listed on the Vienna Stock Exchange on the 20 trading days preceding the acquisition by more than 20%. The Management Board is authorized to sell shares acquired based on this resolution. The Management Board is obliged to publish the respective buyback program as well as its duration and any resale program immediately before implementation in accordance with the provisions of the Stock Exchange Act. Every buyback and if applicable, resale program must comply with the principle of equal treatment of shareholders in accordance with Section 47A of Stock Corporation Act. The share of the share capital associated with own shares acquired by the company in accordance with Section 65 Paras 1, #1, 4; and 7 and 8 of the Stock Corporation Act, together with other own shares that the company has already acquired and still owns may not exceed 10% of the share capital. This authorization is valid for a period of 30 months from the day of the resolution of the general assembly and therefore ends on 27th of May 2023. Because of the revocation of the authorization and the resolution on the new authorization, extension is to be made possible for 30 months as of today. Now Item 7, resolution on the remuneration policy of the Management Board. At the Extraordinary General Assembly of Addiko Bank AG on 10th of July 2020, the remuneration policy of the Management Board of Addiko Bank AG and the remuneration policy of the Supervisory Board of Addiko Bank AG were presented as item 2 of the agenda. In the vote on the remuneration policy of the Management Board of Addiko Bank AG and the remuneration policy of the Supervisory Board of Addiko Bank AG, the motion for a resolution regarding the remuneration policy of the Management Board of Addiko Bank AG did not achieve the required majority and the general assembly thus rejected the remuneration policy of the Management Board of Addiko Bank AG as presented to the general assembly on 10th of July 2020 for resolution. In accordance with Section 78B Para 2 of Stock Corporation Act, Addiko Bank AG therefore has to present a revised remuneration policy at the next general assembly, which is today's AGM. The vote in the general assembly on the remuneration policy is very recommendatory in nature. The resolution cannot be challenged under Section 78B Para 1 of Stock Corporation Act. Supervisory Board has to make a proposal for a resolution on the remuneration policy in accordance with Section 108 Para 1 of Stock Corporation Act. This resolution proposal of the Supervisory Board and the remuneration policy have to be made in accordance with Section 108, Para 4, #4 of Stock Corporation Act, have to be made available on the website entered in the commercial register from the 21st day before the general assembly. In the meeting on November 4, 2020, the Supervisory Board of Addiko Bank AG set up the principles for the remuneration and the revised remuneration policy of the Management Board of Addiko Bank AG in accordance with Section 78A, in conjunction with Section 98A of Stock Corporation Act. The revised remuneration policy of the Addiko Bank AG Management Board will be made available -- was made available on November 6, 2020, the 21st day before the general assembly on Addiko Bank AG website, which is www.addiko.com, as stated in the commercial register. The Supervisory Board proposes that the revised remuneration policy for the Management Board of Addiko Bank AG, as made available on the website entered in the commercial register, be adopted. The revised remuneration policy of the Board of Management of Addiko Bank AG is attached to this proposed resolution as Annex 1, as published on the website. Now item 8 of the agenda, elections to the Supervisory Board. I announced my resignation from my function as Member and Chairman of the Supervisory Board at the end of the Annual General Meeting in the fourth quarter of 2020, which is at the end of today's Annual General Meeting. The Deputy Chairman of the Supervisory Board, Henning Giesecke, also announced his resignation from his position as member and Deputy Chairman of the Supervisory Board at the end of today's Annual General Meeting. In accordance with Article 12.1 of the Articles of Association, the Supervisory Board consists of 3 to 8 members elected by the Annual General Meeting of shareholder representatives. The Supervisory Board currently consists of 6 shareholder representatives. As a result of the resignations of myself and Henning Giesecke, 2 shareholder representatives would have to be elected at the Annual General meeting in order to achieve this number again. The Supervisory Board suggests that both seats should be filled so that the Supervisory Board, again, has 6 shareholder representatives elected by the General Meeting. Section 86 (7) of the Stock Corporation Act applies to Addiko Bank AG, although no objection was raised in accordance with Section 86 (9) of the Stock Corporation Act. After the last General Meeting, the Supervisory Board consists of 6 shareholder representatives and 2 members delegated by the Works Council in accordance with Section 110 of the law. Of the 6 shareholder representatives, 2 are men and 2 are women, both of the 2 employee representatives are male. In order to meet the requirements of Section 86 (7) Stock Corporation Act within the framework of overall compliance, at least 2 seats in 8 Supervisory Board seats must be occupied by women. The requirement of Section 86 (7) Stock Corporation Act is thus currently met and will also be met when 2 men are elected in the General Meeting. Shareholders who submit an election proposal to increase the number of current Supervisory Board seats on Item 8 of the agenda, Elections to the Supervisory Board, must take into account the requirement pursuant to Section 86 (7) Stock Corporation Act. An election contrary to Section 86 (7) Stock Corporation Act is invalid. Now the resolution proposals of the Supervisory Board. The Supervisory Board proposes that Herbert Juranek, year of birth, 1966; and Frank Schwab, year of birth, 1963, be elected to the Supervisory Board, with effect from the end of this General Meeting, in accordance with Article 12.2 of the Articles of Association or Section 87 (7) Stock Corporation Act, until the end of the General Meeting, which decides on the formal approval of the actions of the Supervisory Board for the 2021 financial year. The Nomination Committee of the Supervisory Board prepared these proposals and, when selecting the possible candidates, also took into account all the proposals that shareholders have made to the Supervisory Board to date. When submitting the proposal within the meaning of Section 87 (2a) Stock Corporation Act, attention was paid to the professional and personal qualifications of the member as well as the professionally balanced composition of the Supervisory Board and aspects of the diversity of the Supervisory Board with regard to the representation of both genders and the age structure as well as the internationality of the members appropriately. It is planned to vote separately on each vacant position in the upcoming General Meeting, that is to say, 2 individual votes. We reserve the right to rank the proposed person for the individual positions. Each proposed person has made a declaration in accordance with Section 87 (2) Stock Corporation Act, which is also available on the company's website. And in particular, declares that: first, all circumstances in connection with Section 87 (2) Stock Corporation Act have been disclosed and, after assessing the proposed person, there are no circumstances that could give rise to concerns about any bias; and second, that the proposed person has not been legally convicted of any criminal offense, in particular, none that calls into question his professional reliability in accordance with Section 87 (2a) sentence 3 Stock Corporation Act; and that third, there are no obstacles to appointment within the meaning of Section 86 (2) and (4) Stock Corporation Act. This ends the presentation of the reports and the proposed resolutions on all agenda items. Currently, the presence at today's AGM is as follows: according to the list of participants drawn up, pursuant to Section 117 of the Stock Corporation Act and signed by myself, 74 shareholders are represented by the 4 special proxies, representing 15,300,898, no-par value shares, which means that the AGM is correct on all the items on the agenda. The list of attendants will be made available electronically to the 4 special voting representatives. For data privacy reasons, we will -- the -- a list of participants will not be disclosed on the Internet. I now give the floor to each of the special voting representatives. Please let us know if proposals for resolutions have been received by -- from the shareholders you represent. If so, please read them out. If not, please let us know that you have not received proposals for resolutions. Mrs. Brandstetter?

[Interpreted] Mr. Chairman, I have received proposals for resolutions from 3 shareholders on Item 4. Shareholders 23, 24 and 25, they're asking for individual votes to be taken on the approval of the actions of the Supervisory Board members.

[Interpreted] Mrs. Brauner?

[Interpreted] Mr. Chairman, I have not received any proposals for resolutions.

[Interpreted] Mr. Oberhammer?

[Interpreted] Thank you, Mr. Chairman. I have not received any proposals for resolutions.

[Interpreted] And finally, and Mr. Beckermann?

[Interpreted] Thank you, Mr. Chairman. Good morning. I represent 13 shareholders, holding approximately 400,000 votes, and have not received any proposals for resolutions.

[Interpreted] I would ask notary Brix to minute this. And we now enter into the general debate, that is, the questions received will be read out and answered. I will read out the questions. And Mr. Németh, as CEO; and Markus Krause, as member of the Management Board; and Ganesh Krishnamoorthi will be asked to answer the questions. As far as questions concerning Management Board matters, remuneration policy, corporate governance and elections to the Supervisory Board, I will answer these questions. Don't be confused if I call up numbers. They only serve the purpose of correct minuting. The shareholder questions that are not covered by any of the items on the agenda will not be answered.

[Interpreted] I start with 3 comments received from IVA, representing investor interests. I will read out these comments. I'm afraid the order on my screen has been mixed up a bit, but here they are. So there is question 13. "We read out your comment on agenda item 5B, proposal by MW Funds Pte. Ltd. to extend the share offer to members of the Supervisory Board. This proposal is to be critically evaluated. In principle, shareholder status of any shareholder representative and Management Board is to be welcome from the perspective of investor protection. However, since the financial crisis of 2008 and '09, it has been contrary to good governance to allow Supervisory Board members to participate in share allocation programs, thereby creating possible false incentives. IVA will, therefore, vote against this motion." Question 14 -- or comment 14. "We are reading out your comment on agenda Item 6, authorization of the Management Board to acquire own shares for no specific purpose. Own share buybacks are measures not related to the business purpose. The company's capital should be used elsewhere." "For example, to extend the capital base, tier capital, in particular, better or in line with the company's purpose, or distributed. Furthermore, there is a risk of a buyback happening at a point in time which is not the best, or in favor of specific groups of shareholders. Such an anticipatory resolution, which is not bound to any conditions, may not only weaken the capital of the company, but also indirectly weaken the assets or rights of the shareholders. It should, therefore, be critically reviewed and rejected as no added value is designable." I move on to the last comment. "We are reading out your concluding remarks. With the resignation after this AGM of Supervisory Board members, Hans-Hermann Lotter and Henning Giesecke, the council -- the Board loses 2 competent and experienced members who have already accompanied the transformation process up to '19, up till the IPO. Anyone who has ever participated in an IPO knows the hardships of such an undertaking, and we would like to express our sincere thanks to the Supervisory Board members who are stepping down." I move on to questions that have been put by shareholder [ Dieter Peter-Michael ], #25. Mr. Peter-Michael: "We are reading out your opening statement. First of all, thanks to Investor Relations for good communication. Unfortunately, I didn't have enough time to read it all." And now we move on to the individual questions, starting with #16. Is it correct that the annual report of the bank concerns the Austrian part and the consolidated annual report concerns the entire bank, including Austria? Markus Krause will answer the question.

[Interpreted] Yes, this is correct. As mentioned in the annual report, the annual financial statements of Addiko Bank AG refer to this company. This is a company registered in Vienna, a fully licensed bank. The consolidated annual financial statements concern the group, including the parent, Addiko Bank AG.

[Interpreted] Question 17, also sent in by Dieter Peter-Michael. As to the dividend, my understanding is that the dividend is to be paid out in full, if there are no recommendations, to the contrary, by the ECB or the FMA. What's the amount? And what's the date of payment?

[Interpreted] We refer you to the text of the proposed resolution under agenda Item 2, which was disclosed on our website. The plan is to pay out a dividend of EUR 2.05 per share, assuming that there is no recommendation, to the contrary, from the ECB or a statutory distribution ban. Otherwise, at the time of this condition, the CET1 ratio of Addiko Bank AG, after distribution of the dividend on a solo and consolidated basis, must not below 18.6%. If these 2 conditions are not met, the profit will be carried forward to new account. If the conditions are met, the dividend will be paid out 20 working days thereafter.

[Interpreted] Question #9, also from Dieter Peter-Michael. Will the supervisory Board remuneration increase? With 2 new members, is there general increase in Supervisory Board remuneration plan for 2020? How many women are there on the Supervisory Board? An increase in remuneration due to the 2 new Supervisory Board members will not occur because the 2 new members replace the members stepping down. So there will still be 6 capital representatives. The remuneration was increased at the AGM in June 2019, and the details on the remuneration can be found on the web page in the Corporate Governance report 2019 and will be updated with the annual report 2020. We have 2 women on the Supervisory Board, Ms. Pilipovic Chaffey and Ms. Wildner. So the legal requirement is met. Question 20, from Dieter Peter-Michael. Personnel expenses, EUR 69.7 million, minus EUR 4.7 million for the Executive Board, that is EUR 92 million for 2,735 employees. Each employee receives, on average, a gross salary of EUR 32,600 per year, a number of employees in Austria, a number of employees in South Eastern Europe.

[Interpreted] Mr. Peter-Michael, as regards to your question, I'd like to give you the following answer. Total number of FTEs in 2019 in Austria was 125.5. The total number of employees in other countries in 2019 was 2,613.3, of which Croatia, 915.5; Slovenia, 326.3; Serbia, 530; Bosnia and Herzegovina, 686; Montenegro, 155.5.

[Interpreted] Thank you. Move on to question 18 from Mr. Peter-Michael, Management Board remuneration. It's hard to understand that there are considerable -- that there is considerable variable compensation, even if the share price is suffering so much, going down to 50%. What are these bonuses for? Who gets them? And what are the amounts?

[Interpreted] An amount of EUR 1.49 million in 2019 was paid out to 3 former Management Board members of Addiko Bank AG, Christian Kubitschek and Stefan Thomas, as a component of their salary and as bonuses for 2018. Most of the bonus is -- accrues over the coming years and its common practice to pay out later, unless a further risk has occurred. That's an approximate explanation. Therefore, you will find payout of this kind in subsequent years, but the payments were booked already in the previous years, in which the amounts were allocated to the Management Board member concerned.

[Interpreted] I move on to Question 22. A question from Mr. Peter-Michael. The cost-to-income ratio in 2019 was higher than 75%. What's the target for 2020, '21 and 2022? What further development of the NPL of 3.9% in 2019 can we expect for 2020 and 2021? I think that's a question for Markus Krause.

[Interpreted] Mr. Peter-Michael, I'd like to answer the first part of your question regarding the cost-income ratio. In our earnings call for the third quarter, we showed that our cost-income ratio is improving, and we've already communicated that costs in the coming year will be approximately -- well, 15. The costs will be reduced by EUR 15 million according to our plans, and this will be incorporated in our new 5-year plan, which is currently being finalized and will be adopted by the Supervisory Board. As regards to the NPE ratio, which is -- which was 3.9% at the end of 2019, on our gross exposures during the first quarter of 2020, we already succeeded in reducing it to 3.6%. In the -- it remained stable in Q2 and Q3, driven by the moratoria in relation to the COVID-19 situation in the individual countries. One also has to bear in mind that the entire stock of nonperforming loans has not increased significantly. The gross exposures, in fact, have rather gone down, driven by the lower revenues due to the COVID pandemic. And for the coming years, further developments will be taken into account in the 5-year plan.

[Interpreted] Thank you. Question 21, also submitted by Mr. Peter-Michael, which countries generate the best results? And which generate the worst results? And what does SREP, S-R-E-P, mean?

[Interpreted] As regards to the segments and countries, we'd like to refer you to Page 106 in the German version of the consolidated management report. And SREP stands for Supervisory Review and Evaluation Process. Once a year, the regulatory authorities perform a review, looking at the different types of risks of a company. And from that, they derive the Pillar 2 requirements and the Pillar 2 guidance for the company for the coming 12 months.

[Interpreted] Thank you. Question 23, Dieter Peter-Michael again. What do you expect for 2020 in terms of earnings? What are the most important parameters? Can we expect a dividend?

[Interpreted] As already indicated in the press release on the third quarter, the group expects the following for 2020 growth: lending volume, EUR 3.6 billion; net bank income, 7% to 10% below the 2019 level; operating expenses, less than EUR 175 million; loan loss expenses for financial assets, probably 1.5% of the average loans and advances to customers, and the CET1 ratio of more than 19% on the basis of the transitional provisions of CRR; and the proposed dividend for 2019, that is EUR 40 million, has already been deducted.

[Interpreted] So we have a final comment from Mr. Peter-Michael who says that, "Well, we are reading out your concluding remark." Mr. Peter-Michael says, "I thank all employees, and I wish the company after a difficult start, all the best, and a recovery of the share price for the benefit of our shareholders." We now move on to questions that have come in via the IVA. Question #2, a question from the IVA. 2020 is almost over. The earnings call for 2020 has already taken place. The effects of the COVID-19 situation are foreseeable, both internally and externally. The following questions: How many customers does Addiko Bank have? How many of them are served in the branches? How many of them exclusively online? And how many through intermediaries? Ganesh, that's a question for you.

We have about 700,000 retail customers across the 5 markets where Addiko Bank operates. All Addiko Bank customers have access to the branch network and the contact center support. We have intensified the contact center support with 20% more interactions versus pre-COVID, allowing customers to receive services remotely for a contrary risk of transactions. We have roughly 200,000 customers that are registered to the digital channels. The intermediary business is very limited. Only Slovenia has approximately 1% of their loan disbursement generated through POS lending.

[Foreign Language], Ganesh. [Interpreted] Thank you. Another question by IVA, what measures has the management been taking regarding headcounts, reduction of administrative expenses and securing the earnings base under the COVID-19 situation?

[Interpreted] In 2020, we closed 8 branches. The number of frontline employees was reduced by 62. In August 2020 compared to December 2019, rental costs for the branches were reduced by EUR 60,000. In response to the COVID situation, we took a number of measures in order to optimize costs and to react to changing customer needs. Opening hours were reduced, and customers were offered counseling services upon appointment. We introduced shifts and supported our teams in order to intervene whenever infections occur in branches. We've changed our processes in order to reduce the footfall in the branches. We expanded the contact center team and moved our services as far as possible to digital and phone channels.

[Interpreted] Question 4 by IVA. How has the NPE ratio changed in the individual business areas, provided a change has already occurred due to COVID-19? In which business segments do you expect the biggest changes? What costs have been incurred for credit insurance instruments? And what's the current price of credit insurance?

[Interpreted] The NPE ratio was reduced by almost 30 basis points in 2020, but the important thing is that the absolute amount of the nonperforming exposure went down by almost EUR 30 million. And the ratio, through the reduction in gross exposures, has been influenced, which, in turn, has been driven by the COVID crisis and the resultant decline in revenues. As regards credit insurance instruments, we have not added any to what we had before, and there are no additional costs as a result.

[Interpreted] Thank you. Question 5, another question from IVA. The Executive Board this year focused on IT, including was a specialized board member. In the last year's annual report on Page 17, the cost of the items are indicated to be EUR 33 million. How is this area being handled? And what developments can we expect?

Optimization, followed by standardization of our IT infrastructure, we believe this would help us to achieve synergies and enable key digital capabilities at significant lower cost. Changes in IT strategy are aimed at positively influencing 2021 results, with 10% lower OpEx and 50% CapEx savings.

[Foreign Language], Ganesh. [Interpreted] Question 6, another question from IVA. Could you tell us who are the 5 largest consultants? And what are their fees?

[Interpreted] In 2019 across the group, for legal and consultancy services, excluding costs of investor protection, amounted to EUR 8.7 million. As indicated in the annual financial statements, the 5 biggest consultants: Deloitte, EUR 1.98 million; KPMG, EUR 594,000; [ Schönherr ], EUR 406,000; Wolf Theiss, EUR 340,000; Ernst & Young, EUR 204,000.

[Interpreted] Thank you. Question 7, again, from IVA. Please indicate the 5 biggest legal cases and the amount in litigation or the provisions set up for this purpose?

[Interpreted] Thank you. Thank you for your question, IVA. The company has inherited a considerable volume of litigation. Over the past 4 years, the volume has been consistently reduced. Here are the numbers. At the beginning of 2017, we had an amount in dispute of EUR 1.2 billion and provisions of EUR 62.5 million. As of Q3 2020, the volume in dispute amounted to EUR 281 million and provisions stood at EUR 28.5 million. The 5 biggest cases concern the Croatian and Bosnian banks. Four of these cases were already mentioned in the prospectus. Another case in Croatia has seen an increase in the amount in dispute. It's now the biggest case of the group, and the amount in dispute is EUR 42 million.

[Interpreted] Thank you, Mr. Csongor. Another question from the IVA, question #8, Management Board remuneration. What are the costs incurred through the cancellation of Management Board contracts? Now I may remind you what I said at the beginning on remuneration in the contracts. We specify the limits so that we have a clear -- we have clear rules there. And the regulator has also imposed rather narrow limits. As regards the former Management Board members, the costs of a dissolution of their employment contracts amount to EUR 1.26 million. Question 9 from IVA. In 2020, there was the Commerzialbank scandal, where fake accounts were opened and fake amounts were booked. Which measures does Addiko Bank take to prevent such behavior? Have the policies been adapted accordingly? Markus Krause?

[Interpreted] First of all, I can tell you that our process are continuously subjected to risk assessment. But on the occasion of the Commerzialbank case, we've reviewed our processes, and we can tell you that all processes are clean. We apply the four-eyes principle. We have a clear segregation of duties, and we ensure that controlled processes are performed as they should.

[Interpreted] Thank you. Question 10 by the IVA. Was there an audit by AFREP, by the Austrian panel for enforcement? How much did it cost? And what were the results?

[Interpreted] On the 3rd -- on the 10th of March 2020, we received a notification from AFREP that the consolidated half year 2019 report and the year-end 2019 report would be audited. We got the first questions on the 17th of March, which were answered within the deadlines set. And since the beginning of the audit, we have been in regular contact with the auditor, and we think that all the questions received have been answered. We are now in the middle of the second round of questions, and the process is being supported by internal resources. We don't need any external personnel or consultant support.

[Interpreted] Thank you very much. We move on to question 11, again, from IVA. Related-party transactions are manageable in 2019, has the figure changed significantly in 2020?

[Interpreted] Thank you. As regards related parties, the development in 2020 is shown in Notes 36 and 79 of the midyear report. There have been no significant changes compared to 2019.

[Interpreted] And now on to question 12 from IVA. What is -- what was the focus of the 2019 audit? Was there a management letter? Did the auditor provide any other nonaudit consultancy services? How much, and for what purpose?

[Interpreted] For the 2019 annual financial statements, there were 2 topics: the valuation of loans, which is a focal point every year; and the second point was the legal risks in Croatia. In addition, for the audit of the solo financial statements of Addiko, the valuation of bonds was included as a critical issue. There was a management letter in 2019, and improvement proposals were made for the following areas: IFRS 9, expected credit loss calculation, IT, in the field of business continuity and disaster recovery as well as in the field of anti-money laundering. Internally, we set up an action plan and expect that most of these proposed improvements can be implemented before the end of this year. As regards Deloitte audit in 2019, nonaudit services in the amount of EUR 31,000 were provided for Addiko, mainly focused on the following 2 items: first-time application of IFRS 16 leases, and changes in the preparation of the consolidated financial statements of AI Lake in Luxembourg as this company is no longer the superordinate entity.

[Interpreted] Thank you. We have another question from IVA. But I think the answer is just being prepared. So I would suggest that we now continue with questions from the shareholder, Alexander Kozlik, and then come back again to the last question from the IVA. So question 26 by Alexander Kozlik. First of all, a statement. Dear Mr. Kozlik, we hereby now read your statement. "I would like to start by thanking the employees and the company's executive bodies for the 2019 results achieved in these difficult times. Special thanks go to the IR team for the good support of the small shareholders, coupled with the request to communicate business successes widely as the share price, unfortunately, does not reflect this." Now the questions by Mr. Kozlik, I start with question 27. What is the desired business plan for the next 3 years, just roughly? Mr. Csongor?

[Interpreted] Mr. Kozlik, our midterm targets are currently being reviewed during the finalization of the budget. And after the budget has been approved by the Supervisory Board, the updated midterm targets will be published.

[Interpreted] Thank you. Question 28, again, by Mr. Kozlik, legal consultancy and audit costs for the 2019 financial statements. Markus Krause?

[Interpreted] Thank you, Mr. Kozlik. This is the answer. Legal and consultancy costs of the financial statements of Addiko Bank AG in 2019, as described in Annex 19, amounted to EUR 6.4 million, which includes EUR 224,000 for the audit of the financial statement of Addiko Bank AG and the consolidated statement and EUR 310,000 for the review of the intermediate statements.

[Interpreted] Thank you. Question 28, again, a question by Mr. Kozlik. Was there a management letter? Markus?

[Interpreted] As already said, in answering another question, the answer is yes. There was a management letter in 2019, and I already mentioned the areas when answering the previous question.

[Interpreted] Now question 31, again, by Mr. Kozlik, is the administration mainly housed in open-plan offices? What are the current home-office regulations? What is the average number of square meters that an employee in the office has in his or her working environment? Csongor?

[Interpreted] Mr. Kozlik, staff members who can work from home are working from home currently. And our open-plan office has a minimum presence of staff members, whose presence is necessary. And social distancing and strict measures are being implemented in accordance with the guidelines of the national and local authorities in each of the countries where we are available. Surface area per staff member varies from country to country, but we always comply with the local requirements and regulations.

[Interpreted] Now question 32 by Mr. Kozlik. What direct or indirect state aid has Addiko Bank received or will receive in the future in connection with the granting of loans? Csongor?

[Interpreted] Mr. Kozlik, thank you for this question. Addiko Bank AG did not plan and does not plan to use any state aid from the Republic of Austria.