BNP Paribas Bank Polska S.A. (BNP) Earnings Call Transcript & Summary

[Interpreted] Good morning, ladies and gentlemen. A warm welcome to all of you to this meeting where we are presenting our new strategy, GObeyond, our model or development for the next years to come. Let me tell you that in the recent days, weeks, we had a number of discussions about whether we should be presenting our strategy here now. Let me remind you that we promised during our conferences that we were supposed to present the strategy in the first quarter, which was a promise to the market by our Management Board. And thus, we came to the conclusion that regardless of the situation -- current situation, we were going according to the plan. And I must tell you that our strategy is, to a large extent, based on assumptions made before the breakout of the Ukraine war. Some have been modified since. Some have remained unchanged. This is because we do not know, simply we don't know how things will develop, how they will end, what the impact of the war situation will be on the situation in Europe and Poland and on the economy. So we are deeply convinced that our development and directions are right and correct, and we're going to carry them out, but still we reserve the right to modify some of our KPIs if the development of events will require that. Let me stress that at the very beginning of the war we looked through our portfolio in terms of exposure on Russia, Belarus and Ukraine, and our partners who operate significantly in those markets or our clients with capital deriving from those areas. And the result of this verification is positive in our opinion. We have absolutely insignificant direct exposure and very limited indirect exposure to these 3 countries, to these 3 markets. We believe that this situation will not increase material cost of risk because clients exposed to those markets are strongly diversified companies, and we are convinced that they will weather this situation untouched. For the last 3 weeks plus a few days, we have been focusing on helping refugees, particularly those that are employees of our sister bank in Ukraine, UKRSIBBANK. And we are strongly involved emotionally, operationally and otherwise, and we are convinced that it is our duty to be active as long as it is necessary. Let me add that from the very beginning of this war, we introduced a number of simplifications and operational processes for our Ukrainian clients. We waived most fees. We have simplified the process of opening current accounts for Ukrainians and we have supported materially our Ukrainian employees who have been with us also before the breakout of the war. We all hope that this terrible conflict will end soon and it'll end well for Europe. And for the world, people will stop dying and Ukraine will remain a free democratic state. The bank is managed by a team, ladies and gentlemen. This is the team. It is not a single person situation. It's a team game. This is something I stress strongly very often. We all as a team support this strategy we are about to present. Also, because we are a team, I'm only going to present the introduction to this and then colleagues will present subsequent chunks of the strategy. We are presenting you with our mission, a mission we have worked out under our new culture with a number of employees of the bank. I believe that this mission, as well stated, it reflects what we want to achieve, what we believe in and how we're going to operate. We introduced positive banking into the lives of our customers, reapplying to their financial needs and making their -- achieving their goals easier in a simple, thought-through and safe way, caring about the society and the environment. A lot of this will be reflected in our talking about the strategy. The plan for today is 4 blocks. We're going to talk about our current environment, about who we are. We will have a look at the GObeyond strategy and strategic initiatives that will make this strategy possible. Ladies and gentlemen, the world is changing in all dimensions and at many levels. We see trends such as e-commerce, digitization, sharing economy, cybersecurity, new ways of work strengthened by the pandemic, jobs that are here now, but will disappear in the future, aging society, growing wealth of an aging society, et cetera. We see these trends. We try to be ahead of them. We try to be proactive and provide solutions to our customers that are within the framework of these trends and even ahead of these. And this is the motive of this strategy and our way of operating now and in the future. Ladies and gentlemen, the climate, the global warming is a fact. I think it's clear to everybody. We've seen changes in Poland. Those of my age remember negative 20 centigrades in the winter. We're not seeing that anymore. We have tropical summers instead. ESG activities will be forced upon us by our clients, our customers, customers who are ever more aware and declare an ever-growing readiness to buy products and services of those producers that are climate responsible, who care for the environment, for whom it's one of the most important key strategic factors and not only limited to CSR. We are a front runner in terms of sustainable development. We have done a lot in these departments and we're going to do even more. Let me remind you that for a number of years, we are not funding coal, dirty economy or unfair animal production. We fund instead passionately renewable energy projects, smaller and bigger ones, including those allowing consumers to install photovoltaic panels on their rooftops, and we're going to do more of this. Remember that ESG is not only about the environment. It's also about the society and corporate governance standards of behavior. And this is fundamental and very important to us. Macroeconomics. Michal Dybula is here, our Chief Economist, who will join the team during the Q&A session. I might be taking away from him, but I want to tell that the changeability and uncertainty of times ahead make it very difficult to forecast the years to come. So we have defined a number of scenarios. The basic one created before the breakout of the war, a very positive one, and less positive. We don't know which way our economy is going to be headed. We don't know about inflation and interest rates. So -- although we assume they will grow. In any case, we believe that the Polish economy will be dynamic enough and resilient enough for Poland to remain on the growth path, although that growth might be lower than we formerly assumed. This shows you a more in-depth analysis of impact of individual factors on the economy. I'm not going to go through this in detail. I just draw your attention to the fact that most arrows are red, and that symbolizes negative impact on the economy and inflation. But there's a number of green elements as well. Time will tell which forces will be dominant and how the situation will be shaped for the economy in Poland and in the world. A lot depends on when the war finishes and how it ends, how and to what extent economies and countries are going to support one another. Challenges for the banking sector, ladies and gentlemen. These are 2 main ones, but there are more, of course. One, is changeability and uncertainty. The change in everything is the only anchor, the only sure thing ahead of us. The pandemic we have not mentioned yet so far, et cetera. What then banks have to do, what leaders have to do in banks is adapt swiftly and flexibly to these changes in the environment around us, make bold decisions fast. There is no other solution. Acting according to a long-term plan that is not corrected along the way will not be successful. The other challenge is foreign currency mortgage loans, of course, above all in CHF. This is the so-called legacy problem which is still in the sector. We are also part of that challenge. It burdens the balance sheets of the banks through legal risk provisions. And this is something we have to deal with for a number of years still, but we hope that this will stop being the dominant problem in the years to come, but we need to manage this challenge and be aware that the impact of Swiss franc mortgage loans will stay here for some time. What banks have to do is increase efficiency, digitize, look for optimization economies, use cloud computing, look for new business models, including subscription-based model. We don't need to own to use -- to be able to use. So car rental -- long-term car rental is increasing. We don't have to spend the whole amount to use the car; you can make monthly payments. Last year, we launched a mobile phone rental program, and this proves that innovative thinking and new business models make the bank look for new sources of revenue, and this is something we're going to continue on. Beyond banking is one of the elements we're going to work on intensely in the years to come. Branches. I've been saying for a number of years, and let me repeat that again, that I am not a believer in branches disappearing in the recent years to come. But I do believe that they will be transformed, their role will change, and they will shift from traditional places where you can cash a check, pay out cash, et cetera. They will become places of advisory where clients or customers come for high quality advisory by an expert in their crucial financial decisions to talk with competent specialists. Who are we? BNP Paribas Group, we are part of it. This is our leading strategic shareholder, the biggest banking group in Europe and one of the biggest in the world. Looking at the assets, you will see it is over EUR 2,600 billion. It's profitable with high revenue on equity -- return on equity with 200 years of history. I am proud of this parent company that I know will support us whenever we might need that in terms of business and solutions. It supports us in an ongoing manner. Of course, today, we are talking about the bank and our subsidiaries above all. This is the strategy of BNP Paribas Bank Poland. But remember that within the group, there is a number of specialized subsidiaries, companies that allow us to offer all kinds of services under one logo, under one roof. It's a comprehensive package. It's hard to think of a service or a product that we cannot deliver under the BNP Paribas umbrella. How do we change, ladies and gentlemen? How have we changed? In 2017, we were a middle-sized bank, still completing the integration between BNP Paribas, the old BNP Paribas with BGZ. Now 3, 4 years on, we are a big bank. We are a sixth in terms of size, in terms of balance in Poland, and we have improved our -- a number of our business parameters. We have acquired many clients. We are much more digitized, which is reflected in the dynamic of the users of our mobile application. We are an important player in the market that has built its scale as a result of a series of mergers and acquisitions growing organically. Our strategy, GObeyond, is about development, about further moving on under the model of organic growth. Our business model is strongly diversified. As you know, we are a universal bank. We work with all the sectors and all the client segments, starting with retail and small companies, wealth management where we are #1 in the market. We have SMEs, corporate clients, and the biggest corporations, Polish and international. Interestingly, which is not typical of big universal banks in Poland, as a share our revenues, the institutional revenues is 50-50 with retail banking and small enterprises. This model makes us more resilient to asymmetrical shocks and allows for growth and development in all areas. Under our strategy, we want to grow in all areas. We're active and the dynamic of growth might vary slightly, but there is growth potential -- development potential in every segment, client segment, and every product group where we are present. Ladies and gentlemen, SDGs, as we call them, the sustainable development goals, there are 17 of these. They were offered by the United Nations, a very important topic for us. For a long time, we have been carrying out this exercise under which we combine all we do with one or a number of SDGs. This is a series of examples how we see it. In terms of sustainable financing, we have made significant progress, and we have granted PLN 6.6 billion of loans -- sustainable loans, including PLN 4 billion last year only. I talked about not financing traditional coal, electric plants, power plants, and this is because what we do is for real. We have the courage to say, no, we're not going to do this. We can waive the possible revenue because values are more important for us. We care about the environment, and that's more important for us than maximization of short-term revenues. Our new culture. We started working on a new culture, on defining it last year. We involved many among our employees in this exercise, our colleagues. We work together on defining our goal, our mission, which I read out to you, and define key values that we are guided by transparency, courage, simplicity, cooperation and empowerment. These are values we live by, we are guided by and which we bring up in our conversations, which guide our decision-making processes. They are the basis of our behaviors, and we refer to them if we want to correct somebody else's behavior. We are strong believers and I am a strong believer in that only an organization based on strong values as its foundation has opportunities for growth, for gaining the trust of its clients, its customers and its employees. Ladies and gentlemen, we've done a lot in the recent years. We are strong group in Poland. In a number of areas, we are the market leaders. I mentioned wealth management. We're definitely a leader in terms of agro. We are acquiring ever more clients. They are ever more eager to use our channels -- digital channels and corporate banking CIB. We have a very good model -- integrated model for services to the biggest companies. I think that we are a leader in terms of international companies. In Poland, we have a modern system based on an internal branding go ecosystem ready for cloud computing with modern solutions to our clients. We are very glad with what we have already accomplished. Nevertheless, we stay modest, and we remember of what are the areas that we need to improve more. We know how much work is still to be done for us to become a brand that we all can be taking pride in. We need to make our customer service more excellent. We have to boost our customer satisfaction. We have to be very active in the area of improving our automation services and streamlining internal processes. For the last 3 years, we have focused most on customer-related services. This is where we've had our investments in the first place. Now other things need to be caught up with under the umbrella of this renewed strategy. This is more than about to happen. Our brand is not as broadly recognized as we would wish for, looking at the corporate banking and given our track record, i.e., small bank merging together to constitute a big one. Our exposure is pretty limited, and we are going to be elbowing our way through. And for technologies, we'll have to develop many new things. GObeyond strategy now, ladies and gentlemen. Our strategy is to be represented by a tree. This doesn't come as a coincidence, and this is very much illustrative of positive banking to one end. And we also trust it comes to illustrate 3 (sic) [ 4 ] pillars of our strategy beginning from the roots, the Together pillar. We focus on people. People are the most important thing for us. There is no bank without its people, without their belief and their convictions. Therefore, we'll be taking a proper character by developing new models of work. We'll be agile in this respect. We have already employed a new reality of hybrid working. And there is one more innovative solution to be rolled out in one of our regions, and we need to take care -- proper care of our people as they count the most should people be engaged. They will be also translated into the level of satisfaction on the part of our customers, which we hold especially dear. Now going up, we've got a Stronger pillar, and this is what we concentrate primarily on how to exploit and this robust international standing of the BNP Paribas Group to our benefit merged with newest technologies, merged with streamlining our processes, et cetera. So that what we do internally and externally vis-a-vis our customers goes on seamlessly and smoothly and is widely appreciated. The Up pillar, and moving on up towards the crown of the tree. As said beforehand, this is our intent to grow further. We've got all it takes to be able to grow dynamically. We'd like to have an excellent offer to all of our customers. We believe that we need to be present in multichannels and opted as a decision to be taken by a client where they want to cooperate with us. This is for them to choose. So this experience is theirs to make. We'll be working on it. That's for sure. We'll be trying to tailor-make accessible paths -- accessible pathways for the customers. We'll be acting in a transparent manner. And above all, positive -- the Positive pillar. And that's something that I repeat on and on, over and again, we like to be decent as a bank. We like to be a bank where people say, yes, they've been reliable. They've kept their promise. They've taken proper care of the natural environment. They have been modern, but they've got also this human face. And this is precisely the kind of bank that we want to be, and we want to become still. On this slide, please have a look at 3 our important KPIs. Above all, we are aiming at having ROE equivalent to around 12% in 2025. Secondly, thanks to our strategy, we aim to have this relation between cost and revenues to be on par with 48% in times embraced by the strategy. And the share of sustainable funding in our portfolio will be at 10%. These KPIs are further elaborated on in our slides. GObeyond. Our competition winner that has been called and made our colleagues. This is something that we fancy a lot. We very much enjoy this strategy as it is clearly here to show that we go beyond the traditional market. We'd like to draw the experiences of other worlds, of other universes. We are here to challenge status quo. And this is the kind of profile that we need to employ also within the very bank. We want to have our ideas. We want to be there to challenge our superiors. This should be implemented. Hierarchy is of lesser importance. What's of major importance is to how much we contribute to the development of the entire bank. That's it from now for me, and that's it for now from me and now...

[Interpreted] Together pillar. People matter the most. Should we be looking at roots, history, tradition, roots, it is all about business and also solid growth and also something that gives and the tree trying to grow. We are bold enough in taking our decisions. We earned our potential for responsibility to be taken. And not to be judged, we are keen to learning our lessons so that we can become ever more excellent, regardless of how old we are, where we come from, whether or not we are people with disabilities, and this all creates a picture of us being inclusive and diversified. And of course, we are looking at this through the prism of knowledge competencies and engagement. Our workplace is set to be flexible. It also aims to be cool for your personal growth as well as your professional growth. And this clearly also boosts the well-being among our employees. Volunteering campaigns have proven recently how important it is, how relevant it has become. We also advocate for hybrid modernities of work. This clearly sets the entire scope of work here in the bank, here in the homes or remote connections are also possible. We [ were in ] flexible working partners depending on your business needs. And this is the manner in which we develop a business environment which is hugely supportive of growth of the competencies of the future. Thus transforming is more than embedded in our DNA. The same applies to going digital, agile with scale. And Denis, the floor is yours.

We want to execute our strategy thanks to an Agile@Scale operating model. These are the roots of our tree. But it is also a deep transformation we have been implementing since 2 years. Today, already all the delivery activities of the bank are working under an Agile@Scale framework. It means it covers more or less everybody who was working before in the project mode. It represents more than 1,300 employees today. The problem I have is that agile is a buzz world overused. So let me be a bit specific in our case. The bank is organized now around 14 trades. Each trade is a big topic for us that are open banking, loans to individuals. And each trade is organized in products. A product is one team, business, IT function together. The team, the product, has the full ownership of the product experience, of the processes end-to-end on the IT systems related to the product, both for the change and the run. It is important to understand that the main thing is that this product, this team has the authority to decide, to act, to invest and sometimes to disinvest. Our role as the management board is to connect the dot and drive the direction defining only a few objectives. My message here is that agile at BNP Paribas Polska is not a vague concept of cooperation. This is a formal organization from the first of January this year. When we launched this transformation, we wanted to go 2x faster, better and happier. This is happening. One example, the product current account in the trade daily banking. The war in Ukraine started on the Thursday. On Monday morning, we were able to open current account to Ukrainian refugees, thanks to a simplified process. In the recent context that we face, our conviction on empowerment is deeper. So we'll go, for sure, beyond our Agile@Scale setup that we have already. We do believe that powers concentration does not help to make the world better. We do believe that having the courage to empower makes our bank stronger. This is what we mean by cooperation. So time to open the next chapter, Stronger, and we'll give the voice to Magda.

[Interpreted] Stronger. The stronger pillar means that we want to reinforce our cooperation with BNP Paribas Group, and we want to be very much about a dynamic development of technologies, which is going to happen through the renewed IT at scale technology and strategy. Why is that the case? Capability is going to be our new currency, and this is to reply to the ambition of growth in the GObeyond strategy. The actual heart of this strategy will be about platforms -- making platforms. This is going to involve an in-depth transformation of our core banking system. Our gains in the first place, how our customers are going to have a better UX experience, better products for the customer in a faster manner. And this is also foundation to have an open banking platform, and platforms are going to also be achieved through clouds, multi-cloud solutions, private and public clouds from multiple vendors. This is not only about the computation of power. It's also very much about modern services that we can purchase directly from the cloud. We are going to address this technological depth, and we are going to take care of the working environment for our colleagues. So that it has gone digital in its capability is very much also about partnerships. Partnerships and cooperation with our partners and startups will have a modern API marketplace. We are pushing internal IT teams, IT specialists' work and take pride in it. What about solutions for business, as this is going to be decided in the business tribes? For example, new Internet banking for our corporate customers or true omnichannel for retail customers. There is an entire list of plans to be coming into being in the years to come. How much will we invest in it? For this strategy, it's going to be PLN 500 million for new solutions for business as well as clients. Here, we'll invest PLN 3 billion. And I'm quite convinced that with these investments, our technological growth is going very much to be supportive of GObeyond pillar and the Stronger pillar. Kazimierz Labno, now the floor is yours.

[Interpreted] Good morning. One of the conditions for the strategy is about optimization of key processes. This is the area which is approached in a very orderly manner as we wanted to revamp all the processes of crucial importance from the perspective of clients. And the receipt of 38 processes, 9 of them is now being optimized, and has been so since last year. These processes have to be facilitated, have to be easier to trade, have to be more measurable. Of course, how do we want to see these processes more client-friendly and employee-friendly? Those processes have already been kick-started. All the processes have been attached to individual tribes, and this is not to say that tribes act unilaterally. We have teams, multidisciplinary teams. And therefore, we can approach this topic in a comprehensive manner. Revamping processes also entails a full revamp of the back office. We want to have 3 stages here. Stage #1 is all about a united -- unified front-end operations. We are developing a very modern system for Enterprise Workload Management to be integrated fully with our business solutions, with our business systems' arms will be going smoothly from the beginning to the very end for accounting in the main system. Plentiful -- lot of changes in organizations for operations. i.e., operations come out of a silo and are very closely attached to business, to one end to another end. Multiscaling element is there, i.e., employees can take measures in individual areas, which is especially important, but there is a peak that we need to do for apps, towards the end of the month most traditionally. And there is this final element to note, that is furthering robotization and AI-related solutions. This is something that we need to bolster by the implementation of around 15 new robots and IT-related solutions to be seen every single year.

Good morning, everyone. In the context of the digitalization of the banking business, data is a key topic. We have been doing a lot over the last years, and we get positive result. In the new plan, we are going to accelerate. We are going to leverage on customers' intelligence and real time data analytics in CRM. Our goals are quite clear. We want to increase the level of cross-sell and to upsell and we want to be more effective in the customers' retention. To do so, our target is to use more than 200 data use cases by 2025. We are going to implement modern hybrid architecture for data repository based on big data and relational database component built with cloud-ready technologies. Our AI lab will deliver dedicated centralized environment to simplify AI model development and operationalization. We were already well disciplined in terms of data management. We will keep this discipline and will become stronger with specific focus on data quality monitoring and data cleansing. Last but not least, we have to keep in mind that we changed a lot over the last years. So we have to simplify our data architecture. One example, one data warehouse, one financial system. What does it mean, GObeyond for data? We are going to leverage data and AI for streamlining processes and automation. [ Kajik ] spoke about this topic. I want to get a modern data hub with data analytics built on strong operation and data management fundamentals. And one important topic we are working for our customers. So we have to implement ethical and legal standard for our customers, data analytics and AI. Stronger also means that we have to keep on ensuring safe and optimal capital position, it's a cultural topic, while allowing the bank to grow and to invest. On top, our intention is to pay out up to 50% of the net result by 2025. It's an important change, an important target. We want to build a sustainable and attractive model for our shareholders to ensure the capacity to increase the level of free float. In terms of financing, I will say that our financing will stay diversified, based mainly on institutional and individual deposit supplemented with innovating and green financing. As for capital, what does it mean, GObeyond? Over the 2 last years, we have developed analytical information on capital consumption and profitability. It was quite interesting, quite challenging, but we did it. Now we want to translate these analytics into decision and process improvement. Capital management is closing the pillar stronger. And now I'm giving the floor to my colleagues, Przemek and [ Vovar ] for the pillar Up.

[Interpreted] Hello, ladies and gentlemen, we've seen Stronger and Together, it's time for Up now. So we're moving towards the branches. It's all about growth. And this is what we're going to talk about with my dear colleagues. Starting with retail customers because in Up, we're talking about having more happy customers using our products and above all in the omnichannel world using cutting-edge solutions. There's a lot of talk about clients-centrism, digitalization. All the leading institutions have been talking about the startups. Fintechs were created focusing precisely on these 2 areas. But importantly, we want to show you that in the Beyond format, we are beyond copying, following the steps of our competitors instead we're going to combine the best elements in those areas. Let's start with excellence in serving our customers. This is key to our strategy -- Beyond strategy. There has been talk about being local on the one hand and showing that we are close to our environment in the small town where we have a lot of branches still. And on the other hand, using the umbrella of the biggest international group in the euro area. That's number one. Number 2 is online channel approach. This is no novelty for start-ups and fintechs. Many among you have experience in this area. I know that when you're trying to have a meeting or a phone call in these difficult times, it's very difficult to reach anybody on the other end. In our case and talking about digitization on the one hand, that is a remote process that we are creating. And kind people in contact centers and in branches, on the other hand, in these difficult times when customers need solutions and advice are at the disposal of those customers. And the third element of Beyond is it's about being beyond the time horizon. We want to focus on providing services along generations that is starting with the teenager opening their first bank account till the elderly pensioner who picks up their retirement at the bank. We want to be top -- one of the top 3 in 2025 among the banks recommended in -- by customers in the market now. How are we going to acquire those customers?

Development of our products and processes, we are inspired by our customers. Our customers are putting in the first priority digital channels in their consumption or in their usage of services. That's why we will put on the first place in our investments into development of the products and processes, development of digital processes and products. And we will do it for the bank, and we will do it for our partners. We will work on personalization, simplification of our products and processes. And we will make them available to our customers in one click. Simple for the customer means technologically advanced for the bank. That's why we will work on the improvement of our knowledge, skills, technical capabilities in treatment of data, data of the bank and also data which are available for us thanks to open banking. We will continue to work on development of our skills in digitalization and robotization. We'll go beyond usual banking through organization of the specific platforms, which will focus on specific needs of our customers, like mobility or housing. And we will do it in cooperation with our partners inside and outside of the group. All of that will help us to grow our customer base to a level of 4.5 million individual customers, and major part of the net increase will go through the digital developments. We will continue to onboard our existing customer base into the digital. We will acquire new customers through digital channels through the digital relationships. And we hope that more than 50% of our sales will be done thanks to these digital channels and digital products. We will also promote responsible and sustainable consumption. We will support our current customers and partners. We will support them in education, in giving advice, in providing specific financial services, and we will go beyond usual banking through creation of eco processes, through helping of our customers to transform in a green way.

Thank you very much. Thank you very much. Although we sometimes speak different languages, we come from different countries, as you see, we have a joint goal in our strategy. And indeed, you have seen what numbers we're talking about and what scale of clients we are talking about in terms of retail clients. Micro customers are very often those same ones that have their individual account in one pocket and their micro clients -- business clients account in their second pocket. And this kind of business partner, and for those small enterprises at an early stage, that's what we want to be a partner for them. Talked about by Jean-Charles and [ Vova V ], this is the area of data our micro clients -- micro business clients vote with their feet by using -- by choosing particular products. And that's the kind of products we want to develop. Also beyond our bank, from outside of our bank by creating a digitized offer above our loans in the first place. The second part of the picture is effective inviting these clients to use our not only banking products, standard banking products, but also beyond that natural environment, that natural offer of a bank because these customers require all kinds of support, accounting and creation of reports, e-commerce support, et cetera. This is definitely the area that will mean a growth in digitization of these clients, much more so even than effective innovation. We are also very strong in food and agro department. This is what Bartosz Urbaniak will talk about that in detail.

[Interpreted] Food and agro is an area in which we are #1 and we have been for a number of years. It's part of the DNA of the bank. But it's important to know that the best years have been the recent years and the best single year was last year. So the question is what our goals are for the years to come. We would like to keep the role of the leader and strengthen it. We want to be #1 for this industry. We want to be the bank that supports changes in this sector. How do we do that? Well, through knowledge. Knowledge has been our advantage in the recent years, and we believe that it will continue to be this #1 advantage supporting us as #1. Why knowledge? Well, there are a lot of big challenges before our industry. Without these changes in the food and agro, we cannot win the fight for a better climate. And this shows that the involvement of this industry is absolutely crucial to improve the value -- the quality of the area and earth and the environment around us, which is also very important in the context of reconstruction post war. These are partly new challenges, partly surprising. But we are the ones who know how to use the knowledge. We have the knowledge, and we can put it to work and we can cooperate with those that want to partner with us in making the world a better place to live. We want to have a strong leader's role supporting change. We want to use this knowledge, put parameters on it and digitize it so that it's easy to use and available for our employees, and so that it is very fruitful in terms of particular effects. And the last element of this strategy is bolstering digitization of our relationship with clients. Our portal providing knowledge about the agro industry is one of the most popular in the market. We want to be a source of trust or a place where trust is built. We want to have a strong traditional brand in the changing world. That's what we want to be and do in agro, a place where cutting-edge technologies and tradition are combined.

We, as BNP Paribas, have a unique competitive edge. We are part of BNP Paribas Group. We are present in 28 countries in Europe and 65 in the world. In Europe, we have the largest corporate client base far ahead of any competitor here in this market. And we are leveraging on this in order, let's say, to develop our business with the Polish subsidiaries of our clients coming from Europe and beyond. We have organized ourselves with dedicated relationship managers, simplified processes. What we want is that our clients, when they do business in Poland, feel at home like they feel in their home country.

[Interpreted] Precisely. Both Bartek and Andre talked to you about what we want to do, what kind of client, customer we want to focus, what our competitive edges are. And I'll tell you how we want to achieve that and what's important for us from the point of view of delivering certain things. Number one is very important for our clients, that is digitization of services. And this is where we build on electronic banking. This process has been ongoing since last year. Module by module, we are handing over to our clients the elements of our system. This autumn, we're planning on completing this process. And I believe that this will result in a significant increase in the quality of client experience in using the system, what follows. And importantly, we want -- in the e-banking system, we want to offer services and clients so that the access, particularly from our SMEs and corporations, is simple and attractive. Plus we work based on ecosystems. Electronic banking is one of such ecosystems, but the other ecosystem is the client ecosystem where we have significant competitive advantage because we have unique competencies of risk assessment for international corporate clients and for local companies as well. And we can work on this link between provider, supplier and receiver. And like Bartek said, we are #1 in agro. So what we want to do is increase our share in food processing because in food producers, we are definite #1, but not only.

As you know, the color of the bank, the color of our logo is green. And the -- obviously, what we want to do in the next future is to have our balance sheet and our loan book even greener than it is now. We have as well organized ourselves with a setup with local expertise in green solutions. We can leverage on the group as well, with one of the leaders if not the leader in Europe right now, in green solutions. We've been, let's say, the kind of -- we've been really able, let's say, to start this green business with the first local green bond for one of our Polish clients. A bit later, we were able, let's say, to issue the first international green bond for one of our corporate clients as well. And even better, we were able, let's say, to start the first sustainability-linked loan. In Poland, for a client in the logistics sector, but not even in Poland, it was the first sustainability-linked loan in this sector in Europe. So we are very proud of it. So we need to leverage on this with the expertise of the group as well and leverage on this as well in order, let's say, to grow our business with the large corporate segment, providing CIB solutions, more sophisticated solutions, more tailor-made solutions to those clients as well because we know that we are able, let's say, to make a difference in this market in the next years.

[Interpreted] Andre has focused on big clients, corporations and investment clients. But really, in order to talk about greening our loan portfolio, we need an efficient portfolio -- an efficient credit process. In autumn, we modernized our system, and since late autumn has been operational fully. We have rate of improvement which allows for following up on incremental improvements in ongoing periods or subsequent periods, and we're going to shrink that process by a significant percent this year and in 2025. We want to be one of the top 3 processes in the market. That's our ambitious goal. That we want to achieve, and we believe that the loan process as one of the key elements is particularly important in our business, but also it impacts pricing so that it becomes a gateway for efficient and satisfying cross-selling of services that we have under the BNP Paribas umbrella in Poland. And this leads me to yet one other area that's of particular importance. We said what we want to achieve, how we want to achieve this with tools and processes. But SME and corporate banking would not be there if it weren't for people. This work with people on people is of particular importance in this area because we are strong believers in providing tailor-made solutions for our clients with total support of digitization, technology, et cetera, and people are the differentiating factor in the whole picture. So now Przemek Gdanski and Wojciech Kemblowski.

[Interpreted] Sustainable funding strategy and sustainable banking. This is going to be based on 4 pillars. We love to support our customers in their sustainable transition, ensuring them a wide access to dedicated solutions. We'll have to support products to be playing a positive role on the environment. We like to be funding renewables and energy efficiency. We'll be a promoter of e-mobility, green loans and green bonds. Second pillar will be all about introducing highest possible standards when it comes to ESG risk management. This is also there to mitigate ESG risk within activities to be taken by our customers. And thirdly, it will be carbon tracing and abating carbon in our portfolio -- on the portfolio. To this end, we have developed a competence, and that is competence. And there is a center to cooperate with our customers, supporting them for green transition by 2025. We'd like to have a full change of our portfolio structures with our sustainable funding rise from 4.5% to 10%. At the same time, an annual issuance of green bonds to be dedicated to our customers shall be at PLN 500 million per annum by 2025. Share of sustainable assets of our customers to be managed by our bank should go from 5% to 30%. ESG, ladies and gentlemen, is not about -- not only about green. It is also something entailing responsibilities in many dimensions. It's about being inclusive, being transparent, being accessible regardless of any limitations or restrictions that there might be of what given an individual customer can expect of us. We've got to have strategic goals whereby at least half of our branches are certified as objects without limitations or barriers, and customers can communicate via sign language in our branches. We hopefully are catering for the needs of those in need in terms of the whole organization. And we also act more locally in respective communities wherever we have an opportunity. We try our utmost to simplify our communications, but it has to be humane in the first play, without asterisks, without computer freezes, without grumbling. We need our customers to fully understand what we talk about and what they eventually are to sign. We have developed [ a deep organization ] that will support our measures taken for sustainable development. We've got a sustainability officer, Jarek Rot, has taken over it. He should be here in my stat but he's unfortunately out of office today. We've got this centralized entity to an another entity, and it does operate through that network of 100 sustainable development ambassadors in our organization. This sustainable approach in sync with sustainable development goals is something that permeates down to all of our branches and is embedded eventually within our DNA. That's the only way we may develop -- we may develop fast, but sustainably at the same time. Thank you.

[Interpreted] Ladies and gentlemen, now we are slowly bringing our presentation to a close. This is -- this will be followed by a Q&A, this strategy. So let me stress this has been a concerted effort featuring more than 200 colleagues. We've had a number of discussions and debates. We've had a work in dialogue with our strategic shareholder. We've masterminded 18 initiatives, and most of them are now being rolled out. And I'll address it a bit later, too. A big thank you to all of you, my dear colleagues, to all of you who have had their proper share in developing this strategy. We haven't taken advantage of external consultants. And therefore, we feel the strategy is, as said, ours. This hasn't been imposed from the outside. We have authored it on our own. Our strategy is in sync with the BNP Paribas Group to have been announced in February this year. This strategy is called, in abbreviated terms, DTS. Very much so about sustainable development technology sustainability, as I said. So these strategies are compatible, one with the other. We rejoice at how we look at these strategic terms, we see it all eye to eye. We have developed a total of 18 strategic initiatives. These strategies are either rolled out or to be rolled out. Some, as this agility strategy featuring 1,300 people for us to smile, maybe agile transformation is [ stopped here ]. We'll be following this model closely to see how it affects the other operations in the bank. We will have culture, other topics, structure, supporting structure, auxiliary structure for sustainable development. In the appendices you'll find all the data regarding initiatives. I'm not going to dive deep in it. Instead, let me just tell you who we are, who we want to be, but we also know how to do it, which path to pursue. We believe we've got a phenomenal team -- management team. We've got cream of the cream in terms of people. We can aim high with our strategy. Finishing off 4 pillars and a tree which symbolizes Together, Strong, Up as well as Positive. There are a number of KPIs that do come here to represent a dynamic growth of our bank, on one hand. And on the other hand, it is also evocative of how sustainable we want to be in this respect, as said. We trust in absolute terms that these are the right directions for us to grow. Times are far from certain, though. Therefore, we might want to modify certain of those conditions, all route with convenient conditions changing, some pertaining to quality, our social engagement, our share in sustainable funding. These are, I believe, more than bound to stay. The same holds true for KPIs related to technological transition as well as us going digital. As said, we trust this strategy is good. This strategy should be our guide throughout the coming years. We'll settle on it. It's hugely aspirational. We know it, especially under the current conditions. But with these people onboard, we know we will dive fast responsibly, taking care of the world that we live in. And hopefully, we will change the face of this world for a better one. And soon, we'll be back. [Break]

[Interpreted] And welcome back after this brief break. You can ask questions in different channels by via video. In the voice channel live, we've got some questions that have streamed in via chat. But would you be willing to ask questions via chat, do so at any time.

[Interpreted ] [ Michal Kolanski ]. New strategy is based primarily on the organic growth. Do you also consider, aside from it, new acquisitions, especially given the fact that other acquisitions have been very successful?

[Interpreted] I'm grateful that you've acknowledged our previous acquisitions. These have been far from easy and we've masterminded the art of acquisitions, but we do not focus any new acquisitions. We don't exclude though. We may want to buy some smaller entity of a select business model [ OTT ], to give you an example. It is going to be more opportunistic, so to say, a far more smaller scale enterprise vis-a-vis to what we have been doing in the past, and we'll be developing organically in the first place.

[Interpreted] [ Kamil Kazudski ]. 2 questions. In light of what the CEO said namely the industry will have to leave with the SHP problem, Do you think the risk of the growing LIBOR and lawsuits on the part of the customers may be a major topic in the future? Maybe this is why BNP is increasing interest rate of deposits, so that costs between deposit and credit center not deviate too much. We'll have this the same level for 10 years as regards the interest rates. What's changed in this respect?

[Interpreted] I'll touch on it and then [ Przemek ] will pick up on it, especially in the area of this 10-year firm interest credit. That's a difficult question, a political one slightly. And we are speaking of the free market economy, should in this context financial institutions be wary of lawsuits of their customers who were aware when they were taking loans based on changing interest rates. The bank informs clients about it showing them different scenarios concerning costs of the credit operations. I believe it is a rhetoric question. Should this kind of risk be eliminated 100% after this level? Rather not, but the bank offers mortgage loans for a firm interest rate for 5-year period and will be doing so for a 10-year period, and this is also a vehicle to mitigate risk. Can we see this question again? The second part of this question was whether this increase in interest rate is also somewhat linked to it. The difference between interest rate on credits as LIBOR grows on the one hand and on one hand deposits interest rates, this difference was huge. The gap was huge, therefore, with time this gap is going to change as interest rates change for savings accounts or fixed deposits. 10-year loans, would you like to dwell on it?

[Interpreted] It is on your disposal in this respect. I'll try to be precise in addressing this question. Banks have been assigned, have been maintaining such products and no goer. We were not among such banks. We not only say it's possible, we do it. Interest rates have been increased in the first place. In the second place, clients have acted accordingly. That is, they used 5-year period interest rates, which have been a market standard. Looking at how our clients behave, we naturally add up products to reply to it that are linked with increased interest rates in the first place. And secondly, we also respond to the needs of the clients. Our fixed rate for 5 years is the same as the one for 10 years. And this is ultimately a client who decides. They have a real impact as they decide what to do. And this is, at the end of the day, our responsibility to provide them with an appropriate array of services for them to use.

[Interpreted] Kamil Stolarski. Is the bank going to change the core IT system?

[Interpreted] As said before within IT and upscale, we need to -- we will have an in-depth transformation of the IT system. We won't replace it within the next 4 years, we'll prepare it for the future, so to say. The replacement from the third generation to the fourth generation does not bring much of the value to it. We'd like to have a modular structure instead in place. Should there be the integration in the cloud for the fourth generation of core banking, we'll be ready for it. So soon, we'll be having an in-depth transformation instead of freezing the whole system as such.

[Interpreted] Kamil Stolarski. What's the bank CapEx in 2022, 2025 vis-a-vis and the level of the previous years?

Slightly lower compared to the previous plan. We have to keep in mind that over the last years, we have to address 2 merger for which we invest a lot in IT. We also invest a lot in real estate to reshape the network, is not going to occur anymore. So it means that, overall, when you are comparing the previous plan with a new one, the level of investment will be slightly lower based on the current assumption.

[Interpreted] Perhaps there will be some live questions. Can we have some?

[Interpreted] [indiscernible] Looking at macro assumptions and normalization of the interest rates at the level of 2.5% to 3%, this cost restructuring should be important for ROE goals. What's the potential of the bank in this respect? And what are initiatives that you are planning to have in this respect? And how the branch network of the bank is set to change by 2025? And what's the split between CapEx and OpEx in the investment budget of IT? Is dividend to be paid before 2025?

[Interpreted] I believe this is a team work that we need to invest in answering this question. I can be the first one to answer as regards to the split CapEx, OpEx for IT investments. A reminder, PLN 1.5 billion, PLN 1.2 billion CapEx and rest is OpEx.

[Interpreted] So when it comes to this striving for cost restructuring, this is not going to happen in classical terms. However, what we are planning on to have is to boost the level of efficiency through streamlining and automating internal processes above all, which will naturally impact over the savings levels. But this is not to address something that was asking questions had in mind. As for the dividend to be paid between -- before 2025, what we declare here is to pay off dividend of 50% of profit for 2020, 2025. Should it be real, we'll do it to pay it beforehand.

[Interpreted] What will the branches network change by 2025? Let me stress one thing. It will change primarily in quality terms for quantity. And this is something that we've already had in 2018, 2020. We had been a bank that was responsible for 30% of reduction of branches within the whole domestic marketing sector. In recent years, though, we have been more -- we have been acting on an individual basis and take into consideration the situation in our regions and local communities. We go digital and we are very much ahead that market -- banking market dynamics. Efficiency also grows more than 10-fold. And this is something that boils down to our omnichannel model. We simplify a lot. And let me remind you, we are the second largest network of customers banking. So simplification, concentration of advisory in branches is something that will be decisive for -- in the period by 2025. Not just changing the mere number of branches, but branches will be also made adapted to the needs of our customers.

[Interpreted] Another question from Kamil Stolarski. Recently, as C/R ratio was merged at 40% in general employment banks, why in BNP Paribas is below 40%?

[Interpreted] Let me start. Jean-Charles might add something to what I say. Above all, ladies and gentlemen, we, as a product of many mergers and acquisitions and integrations, have to continue investing heavily in our IT infrastructure, which was said quite openly during the presentation. A deep transformation of the core system is the process through which many of our competitors do not have to go. We have many branches, including in small towns, servicing, to a large extent, our traditional clients from the agricultural industry. They are valuable clients for us, and we are not going to leave them out in the cold. This segment of clients is not as revenue generating as city-based ones or institutional clients. So on the revenue side, we have a certain deficit stemming from the particular structure of our portfolio. And finally, our cost/income ratio is higher than in our key competitors. And we've been living with this for a number of quarters, so going below 48% will be quite an effort. We're going to work on this, both on the revenue side by rebuilding our structure of customer base and working on cross-selling, and on the cost side. I believe that our strongly diversified business model means that our cost-to-income ratio will be slightly higher than in some of our competitors, and we are okay with that. Of course, we're going to work on our efficiency, we're going to automate, digitize, which will impact the ratio positively. But it's not really an absolute key factor for success for us. Jean-Charles?

Yes. Transformation, no, no, I'm not going to correct to make what you said. No, is totally right. You're totally right. The topic is we have to keep in mind what was the starting point as stated by Przemek. So if we remember 2016, so not a long time ago, bank was at the level of 71% cost-to-income ratio and our competitor were already at 45%, 47%. We successfully reduced the gap with the competition. But we have -- we have to work on a few areas, which have been mentioned by Przemek and our colleagues. So the efficiency or processes are we are working in improving the level of cross-sell or upsell. Volatile peak, we have been addressing. We are addressing and which is explaining the positive trend over the last year. So the goal is to converge, and 48% are the figures we are assuming at this stage. And we are keeping on and will keep on changing the model of the bank.

[Interpreted] One more question from Kamil Stolarski. If the strategy doesn't define any goals in terms of business outside the banking sector, what are the biggest hopes about?

[Interpreted] Let me say very briefly and then hand over to Denis to continue. We do not have specific goals in terms of the ideas that we already have in place that are beyond banking or outside banking, and particularly those that we don't yet have as ideas, and we believe we're going to come up with in the years to come because this is an area where innovation can emerge at any given moment in time. So that's all on my part. Denis?

Yes, it's included in our execution. Right now, in the agile landscape, for example, we have set up one tribe that we named Open Banking and is one of the biggest tribe in terms of investments to accelerate on the execution, to grow beyond banking. You ask on which topic we focus. These days, we have 2 priorities: it's e-commerce ecosystem, and the second one is to develop the API marketplace to be able to connect our plugs with the innovation ecosystem. And in parallel, we developed the innovation ecosystem. So we onboard fintech in finding solution with us. And also, we have launched a specific offer for innovative companies to bank the innovative companies and to be sure that we have it in an environment that will help us to go beyond banking. But by definition, not everything is planned. We focus on execution.

Thank you. And the last question, what are BNP Paribas experience with processing of the cloud by KNF, the supervisor, and is it the requirements? And is it not paralyzing new ideas?

[Interpreted] Well, we have the same challenges as other banks have. So the regulator's position is really very severe, and we are working on be aligned with the requirements of the regulator and the bank law on the one hand. And on the other hand, propose some solutions that are possible. This is the process. Our lawyers are working on it. We are carrying out all kinds of consultations with other banks with the sector, and we hope that in the next 3 years, the use of the public cloud will accelerate significantly.

[Interpreted] Let me add on top of that, that we are hopeful and almost certain that the regulator's position will evolve as time passes because an investment in the cloud in Poland by key players supported also by the national cloud, all that was done and the hope is that the financial sector would be a big user of that cloud. So I'm not convinced that as a result of discussions, the regulators and the bank's positions will be ever closer to one another.

[Interpreted] [indiscernible] Which of the strategic goals, the financial or nonfinancial, is the biggest challenge for the bank, one that might be the most difficult to achieve in the horizon of the strategy?

[Interpreted] Well, that's a very good question. And I think we should have answered it beforehand. In fact, let me give you a philosophical answer. Only the future to come will show which one is the toughest to achieve. Time will tell. Maybe ROE at around 12% will be very difficult because the market will be under the impact of the geopolitical situation. It's also possible that the goals will be upgraded upwards as a result of a positive development of the geopolitical situation. I'd say that for us, in the recent years, the big challenge has been the reconstruction of internal processes within the organization. We have a very strong thinking about a client focus that all of our activities are subdued to. And now it is time to go through an internal transition which is, of course, much more spectacular. And it's more difficult to demonstrate the impact of that on our profitability or increase of revenue. So that might be a challenge, but in the form of bringing up the energy that's necessary for bringing about that change that was also necessary in creating the change that was required by our customers. That was the last question because we have run over a little bit. Ladies and gentlemen, at this point, if you are still in front of the screens, we would like to thank you. I would like to thank you on behalf of the whole team. Thank you very much for your comments and questions. We are happy to take them. Please keep your fingers crossed for our strategy, and we'll do our best to deliver on it. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]