Bank Handlowy w Warszawie S.A. ($BHW)

Okay. Hello, everyone. My name is Adam Piotrak. I'm the Head of Investor Relations at Citi Handlowy. Welcome on earnings call for fourth quarter of Citi Handlowy. I'm with Maciej Krywoniuk, Head of Strategy and Investor Relations. We will go through the presentation, earnings presentation and -- which is available on the screen and also on our website. And after the presentation, there will be a Q&A session. Maciej, over to you.

Thank you very much. I will be walking you through the presentation that was shared with you. It's also available on our web page. And let me start on Page #2, which is a brief summary of 2025, which was a year for us where we converted client activity into growth. Just maybe as an introduction, in terms of the migration of our consumer banking to VeloBank, it's pretty much on track and the planned migration as shared with you previously is mid-2026. And in terms of the institutional banking, we -- it's my pleasure to share with you that we are executing the strategy of growth in this segment and quite a number of details will follow in the presentation. In terms of the '25 summary, very healthy growth of our institutional banking loan book. The growth was plus 22% year-over-year. It's translated into the highest level of the loan portfolio and the institutional banking in the history. It's at the same time, 3x higher than the market growth dynamics. So we, in a way, walk the talk here. In terms of the revenues, we increased revenues in every product group in 2025. We have 40% market share in the custody business in Poland. And when you look at trade finance, which is one of the few engines of growth for our strategic directions is plus 29% year-over-year in terms of the value of assets. We have been implementing AI tools pretty much to increase employees' productivity and effectiveness. Some of the tools are aimed at improving client experience. And all in all, we were focused on generating value for shareholders. Our ROE for the year was 19.7%. And since we are a dividend company, 75% of dividend payout, the regulator allowed to pay out up to 75% of net profit for 2025. Coming back to fourth quarter, which is Page 3 in the presentation. In terms of the top line numbers, the revenue at PLN 980 million, very solid net profit in the quarter at PLN 596 million. I shared the ROE levels with you. The balance sheet was growing 16% growth in the total loan book and 13% growth in total deposits. I mean the total bank here and growth details on the institutional portfolio will follow on the pages I'm going to share with you in a second. So strong capital position with TLAC TREA at the level of 25.4%. I mentioned the institutional banking client assets. The new financing amounted to PLN 1.4 billion that we granted to our clients in the fourth quarter. It translated into 2% growth quarter-over-quarter of the loan book. We were active in the client transactions on the capital markets. We were investing in our technology and digitizing the processes. It's well received by our clients when you look at the number of transactions that were processed online. The volume increased by 7% quarter-on-quarter. Lastly, the consumer banking business. Despite some of the migration-related activities, the business volumes are growing in this segment. And I mean here, both the client portfolio and assets under management, the details will follow shortly. Now moving on to Page #4, which is the institutional banking and the business volumes. I've shared with you that the loan book increased by 22% year-over-year. The quarterly growth was 2%. I think it's important to note that when you look at the portfolio level, which was above PLN 16 billion, we were able to increase the book by more than -- by almost PLN 3 billion, which is a representation of the 50% of the consumer banking loan portfolio. So we have been declaring that we are going to rebuild the client portfolio of consumer banking, which will be demerged and last year, the 50% of the size was already booked and the growth represents that. The deposit volumes year-on-year growth, 19% in terms of the quarter, slightly down, which is a year-end situation, and it's total to PLN 39.6 billion. The business volume dynamics, FX was down 16% of the transaction volumes, it was linked to the strengthening of Polish zloty versus USD. However, the value of transactions conducted through our brokerage department was up 65%. Pretty strong transactional activity, maybe not so visible in the number of cross-border money transfers, which was slightly down 2% year-over-year. But if you look at the value of trade finance assets, it was 29% up. The relationship banking area, the new financing granted and current financing volume was up 15% year-over-year. Page 5 is just a brief summary highlighting the key transactions that were executed recently and you see the different types of transactions from syndicated facilities through accelerated book building. We are -- our clients are executing the transactions. We are helping them grow and expand their business activities. Page 6, coming back to the consumer banking business volumes. The loan book was slightly up year-over-year and flattish quarter-over-quarter. The deposits at similar levels, both year-over-year, slight growth, 2% and 0% dynamics quarter-over-quarter. Kind of similar trends in FX to the institutional banking, slightly lower volumes in Q4, 3% down year-over-year in terms of the volumes. However, number of transactions was up by 6% in terms of the CitiKantor transactions, which is our online FX exchange tool. The important thing is that the client portfolio is growing. When you look at the private banking dynamics, number of Citigold private clients was up 13% year-over-year. And it's not only the client portfolio what follows the AUMs, and they were up last quarter. In fact, we have reached the record level of the assets under management portfolio. Page 7 is the social page. So we are active in the social activities through our Kronenberg Foundation. You see that there was a number of projects that were executed and also a significant number of employees that were involved and were behind the help that we have been providing to the community and the projects range from support for refugees from Ukraine, to improving access to sport for children with disabilities, food security. Different types of projects that are forming part of our social agenda and our contribution to the environment we operate in. Moving on to Page #9. Before I jump into the quarterly numbers, just maybe a step back and a brief summary of 2025. So net income of PLN 1.666 billion. It's a strong result achieved in declining rate environment. As you know, the rates were down by 175 basis points last year. It's impacted the net interest income, which I will discuss in a second. However, if you look at the interest revenue in the annual view, it was up 12%, which is a reflection of our loan portfolio growth. I mentioned the dividend. The dividend payout totaled to PLN 1.8 billion, which was a record payout for the bank and translated into the dividend yield of 13%. So it's among other priorities to create value for shareholders. The capital position is and remains strong. I would only comment that it will slightly improve post the demerger, having in mind the structure of the transaction. The presentation that I'm going to share with you, the following pages are in terms of the presentation format are splitting the business into continued operations, which is the institutional banking and discontinued operations, which is the consumer banking. So coming to total revenue in the institutional banking, when you look at the Q4 at PLN 732 million, it's comparable to last quarter despite the rate cuts. The lending book, as you heard, is growing. The trade finance book is also 24% up quarter-on-quarter. When you look at the consumer banking revenue, it's down by 7% quarter-on-quarter, 13% year-over-year. It's primarily impacted by the rate impact and I think it's important to note that in general, client revenue is increasing its share in the total revenue of the bank, and it's ensuring the more recurring character of the revenue mix. Moving on to Page #10, which is the net interest income page. PLN 511 million of net interest income in the institutional side last quarter, flattish versus Q3 and down 7%, which is a function of rates and NII on the consumer banking side at PLN 202 million. It's above the PLN 200 million mark. However, it's 7% down quarter-over-quarter, which again is primarily the impact of rates. I will draw your attention to the bottom right-hand side of the slide, where we are showing the client view and the dynamics of the interest income from clients. The quarterly view is plus 4% Q4 over Q4, and it's plus 12% when you look at full '25 versus full '24. So this is a reflection of our efforts in terms of building the client revenue and net interest income. When you look at Page 11, which is the net fee and commission income slide, the full year fees are up by 8% year-over-year. What's behind the growth is the custody business, it's the brokerage business and then that's the trade finance business as well. PLN 108 million recorded in institutional banking in the fourth quarter is 2% up quarter-over-quarter and behind the numbers is primarily brokerage and lending products. The fees line in the institutional -- sorry, consumer banking side was at PLN 40 million, down quarter-over-quarter by 13% and 3% down year-over-year, kind of seasonal effects here. And what's positive here is the investment product sales and growing client portfolio, which are positively contributing here. The treasury results, Page 12. This is where we booked PLN 680 million in the revenue line, and you see the composition of it. The most impacted line was the net interest income line and also a function of portfolio size, which reduced in Q4. The trends in the income on FX, which is the left -- bottom left side of the slide is the client activities in institutional banking and the client activity usually in the fourth quarter is seasonally strong, and it was the revenue from FX was up 5%. You see the mix of the balance sheet with slightly reduced share of the securities portfolio as a result of client receivables growth. And this is the trend that we are showing consistently and which you can observe in our quarterly disclosures. Moving on to cost of risk. Cost of risk -- sorry, not cost of risk. Before we jump to cost of risk expenses first. So expenses, we have been and we are characterized by strong cost discipline. We, in fact, are the only bank among peers with decreasing expense base. So when you look at the institutional banking, the cost base was down 3% Q-on-Q and 5% year-over-year. When you look at the cost income level at 23%, it's in line with our strategic commitments and the KPI that our cost income will be below 30% in the long term. Going through more detailed analysis of expenses, which is on the right-hand side, you see that the 2 line items that are growing are the staff expenses and the regulatory expenses. And the consumer banking, a few words here. The operating expenses amounted to PLN 204 million, significantly down 14% quarter-over-quarter. Lower costs are primarily linked to lower costs that we incurred, which are linked to the project of consumer bank exit. And now Page 14, which is the cost of risk, very healthy situation in our lending book. The Q4 in institutional banking, minus PLN 3 million. It's a result of the move between stages, some of the outstanding swaps from Stage 2 to Stage 1. It's linked with the improving financial standing of our clients. The consumer banking cost of risk amounted to PLN 5 million. And maybe briefly, if you look at our NPL levels, they are at 2.5%, whereas in the banking sector, the NPL ratio is at 6.6%. So significantly better vis-a-vis the market situation here. I think in summary, that will be it from my side in terms of going through the presentation, we are happy to take questions. So I open the floor for the Q&A session. Okay. If there are no questions, our contact details remain the same. So feel free to reach to us either by phone or by e-mail. You've got all the contact details on the web page as well under the Investor Relations tab. So thank you very much for today. It was a pleasure to share the Q4 earnings with you and looking forward to hearing from you soon.

Thank you, Maciej. See you, bye-bye.

Bye-bye.