OTP Bank Nyrt. (OTP) Earnings Call Transcript & Summary

Dear ladies and gentlemen, welcome to the Q1 2020 Conference Call of OTP Bank. At our customers' request, this conference may be recorded. [Operator Instructions] May I now hand you over to Mr. László Bencsik, Chief Financial and Strategic Officer, who will lead you through this conference. Please go ahead, sir.

Thank you. Thank you. Good afternoon and good morning, depending where you are. Thank you for joining us today. I'm László Bencsik. First of all, a few words about the setup today, which is going to be different from what we have been doing for the last 10-or-so years. So we are going to have a larger group of presenters, not just myself speaking. And also, when you ask your questions, you -- one of our, from our group, people actually sitting in different locations because we are still under these protective measures regarding the virus situation, will attempt to answer the question. So I want to start with a very brief introduction and then Mr. Péter Krizsanovich, our Head of Strategy Planning and Controlling, will take over and tell you more about the volume and P&L, the composition dynamics. And then Mr. Péter Csányi will talk about the digital developments and how they apply to this very specific environment and to which extent they actually boosted our services and sales during this very specific period when we have actually -- the clients of less physical access to the bank and much more online access. And finally -- and I'm sure most interesting for you, we have our Chief Risk Officer, Mr. György Kiss-Haypál, telling you about the risk costs and why we decided to book the amount we did and what we may expect for the future. However, having said that, I have to say to the beginning that formally, we are not going to give guidance. In the written document, you don't see a new guidance. We believe that this is way too early to actually tell anything specifically numeric about this year. However, I mean certain trends we can highlight or certain expectations we can talk about as usual. So I hope you have managed to download the presentation, which is available on our website. It's in pretty much in the usual format. And we're going to go through the first -- actually, the entire pack in the order I just explained. It should take roughly 40, 45 minutes, and then we can jump into answering your questions, which I'm sure there will be plenty. So just a very general slide, Page 2, the environment turned around us and obviously, we are experiencing a different environment in the last 2 months than before. And therefore, in terms of our first Q numbers, the most important factor here -- we factored in this changing environment was the IFRS 9 forward-looking provisioning. And indeed, if you look into our numbers, you see a relatively high risk cost level where basically 90% of it is forward-looking IFRS 9 provisioning as opposed to actual portfolio deterioration or actually something we see in the portfolio. But Mr. Krizsanovich will talk about this more. And then we have seen a lot of regulatory measures, trying to help and -- our clients, economies, customers, companies, banks in the different countries where we operate. In the written document in the stock exchange report, we actually attempted for each country to give you a more or less up-to-date overview of these measures. And we are not going to talk about this during this session because it would take really too long. We made our best effort, but it may not be the most up-to-date in every term because, obviously, we have a very fast-changing environment. So one aspect here, which is very important is the moratoria -- moratoriums, which I'm going to talk about because that's actually one of the charge, which appears in the fiscal numbers. And then -- I mean, the way we adjusted to this environment, I'm actually very proud of the whole group, how well we managed to move or change the way we are serving customers either who include -- to home offices and headquarters or providing adequate safety equipment in the branches and having rotations in the branches. The service has been uninterrupted in all of the countries where we operate. And what we see here is a very strong shift from branch-based to digital. And this is the reason why we are going to have actual dedicated session to the digital services. Just to highlight how much we have not been interrupted by the virus in terms of operations, we just -- during the weekend on the first of -- 4th of May, we actually integrated our 2 Bulgarian banks. So since Monday, there's only one bank in Bulgaria, one bank, the SK Bank in the OTP Group, and this is now a fully integrated entity, in terms of organization in terms of people and in terms of IT. So we did the entire IT integration and merged over the weekend. And -- but likewise, across the group, IT developments continue and even accelerate, I would say, as many of the -- our processes actually accelerated in this very specific environment. Page 3, you see the numerics. As I said, is -- I mean, the big quarter-on-quarter and year-on-year decline was due to this IFRS 9 provisioning, which is out of the HUF 82 billion provision, -- sorry. Yes, we did in the first quarter, basically, the HUF 92 billion, basically, 90% of this was as related to IFRS 9, as I said. So you could have seen a much higher profit number here, should we not have taken the path, but we have taken. Some other banks apparently decided not to show much on this line and decided to show a realistic number. I mean -- and this is clearly forward looking, so it doesn't mean that we are going to experience similar levels of risk cost during the coming quarters. It should be obviously more. Now if we talk about the one-offs, the difference between accounting profit and adjusted profit. And on Page 4, you see 3 elements in the first quarter. One is the bank tax, which is less than normal bank tax as we have had for many years. You may have heard that there's another bank tax, another one-off levied this year. But this is -- this will be redeemable during the next couple of years. So this is not going to appear as a charge in the P&L. In fact, there will not be a P&L impact because we also -- will book a tax asset, so you should not worry about the bank tax aspects here. And then the other one is the moratorium. In most of the countries where we operate, moratoriums have been announced, either as a policy measure or, in some cases, more on a kind of self-organized way suggested by the banks like in Bulgaria. The next slide will talk a little bit more about this. And then the third is the kind of acquisition, one-offs. In this case, it was positive because we made an adjustment in the PPA in Slovenia. The last acquisition, which was around December last year. So Page 5 talks about the moratoriums and their different aspects. Basically, the number you see on Page 4 relates to Hungary, where we have an opt-out measure so customers can decide not to participate, but as a default, they do. And there's no capitalization. And interest is capitalized, but there's no interest on interest, right? In the future. And then -- so capitalization of interest actually means that interest, which is not paid this year, is capitalized. But on that capitalized interest, there's no interest in the future. So that's what no means here and yes is when there is interest on the capitalized interest. And this is the case in Serbia and Montenegro and Albania and Slovakia, where actually, out of these, it's Serbia, where we have a bigger number because it's an opt-out measure as well, similar to Hungary. It basically means that this number what we see in Hungary is the -- is kind of end of March situation. And customers can go in and out from the structure. So this number may be somewhat actually lower in case of Hungary in the future. And then we will give certain numbers for the other countries as well, but we not expect there'll be a smaller number than in Hungary. And in case of Serbia, where we actually it's interesting, the capitalized interest, there will not be any NPV effect, so that will be not booking at all. So just very briefly, a few words about the overall numbers, as you can see them, Page 6. The consolidated adjusted after-tax profit and the profit before tax, the composition. There will be more about this. I think the most interesting part is the last column, the right one. This is the quarter-on-quarter FX-adjusted without acquisition change. And what we see is that we have a relatively stable NII. We have lower net fee and commission income. That's because of the one-off in our asset management company. That is a big one-off in Q4 and can also -- typically securities-related income is lower in the first quarter this year than last year -- last quarter. And operating costs went down, I mean, this is something you might like to see. And certainly, that should be characteristic of this year that cost containment should be stronger than before. Okay. So then the composition by countries. Without going into details, obviously, each country has been under the impact of this IFRS 9 forward-looking provisioning. And there profits are, anyway, somewhat lower or the model is that the portfolio is actually very sensitive, very short term, like Russia. And in certain cases, it actually turn into negative, more about this later. Capital first Q, 13.9% common equity Tier 1 ratio in -- on Page 8, you see the big composition, how it actually evolved, and this does not include dividends because the national banks suggested -- authorities suggested in Hungary not to pay dividend at the end of September. That doesn't mean that we are not going to be able to pay advance dividend payments. The Board can make a decision up to 3 weeks of September to pay out advance dividend payments, and this is something what we are going to consider. So if you look under the composition, there's an FX effect on the risk-weighted assets and on the capital part as well. More of the same. So if you have a question to which extent our capital adequacy is impacted by currency movements and this is it. So basically, they balance each other out pretty much and there was some organic growth, regulatory impact, transition rules. This is going to be very important for the rest of the year because the transition rules may change, as you probably know. So maybe from the second or third quarter, the provisions that we’ve booked or booked because of movements between stages can be written back here in capital. And therefore, the capital position can be much better than -- then we have this possible change. And there was the -- and the negative part, the 0.3 billion was related to the available-for-sale portfolio negative impact. Again, this is a moving target, and this is related to moving rate environment in Hungary and the yield curve moving, but it has actually moved back somewhat, so we might see some improvement in this. Okay. And then down here in the right corner you see the requirements, actually. The very important part is that the other systemically important buffer was canceled for this year and next year. And then after -- only after 2 years, it will start to grow again, so that provides us much more room to grow to pay potentially incentive to do potential acquisitions. Liquidity, again, I'm going to be very short here, is abundant. We're sitting on 8.5 billion euro equivalent of liquid assets, and our net loan to deposit ratio, 80% liquidity coverage ratio actually improved. And the net liquidity position improved in March and April together. So if we take the virus period all together, then the liquidity increased substantially. And I think on Page 10, this something quite interesting, and I'm sure some of your questions will be related to this, and this is related to how does the rate and yield curve and different measures changes impact Hungarian NII. And as you can see, this is actually a kind of forward-looking estimation, so roughly almost up to HUF 11 billion NII increase is expected this year due to the changes in the rate environment. And here I give the floor to Péter Krizsanovich to kind of go through across sections in a relatively succinct and fast manner because I'd like have taken some more time than originally agreed. So please, Peter.

Yes. Thank you. Hopefully, you can hear me and really going to be fast and try to highlight the most important information in the next 15 minutes regarding the volumes and the operating profit in the first quarter. So on Page 11, you can see the present -- the loan volume dynamics in the third quarter. Overall, the consolidated and FX-adjusted performing loan volumes grew by 3%. This was 1% in the similar quarter of the previous year. So quite significant growth we could see in the first quarter. The performing portfolio grew the prices at OTP core in Hungary, plus 5%. This was mainly driven by the consumer loans, especially the so-called baby loan volumes. But other than that, the market condition, consumer cash loans, they are also increasing by 3%. And also corporate continued the strong performance of the recent periods. In Croatia, there, we had also 5% dose, mainly because of the corporate volumes with 9%. Actually, there was nothing specific. This was the kind of ordinary strong sales activity, so nothing -- there were no one-off items or specific deals. In Slovenia, we had 3% growth and there also, the corporate volumes increased significantly by 11%. That is mainly -- the largest part of that is related to the kind of seasonal drawdown of corporate credit lines. Regarding Slovenia, I would like to mention this minus 7% in consumer lending, but because that's -- on one side, this is technical. And on the other side, you have to keep in mind that this is a relatively small portfolio, only about 10% of the Slovenian book. And the technical reasons that decrease was the part of the overall draft volumes were reallocated to the corporate segment. Other than that, the consumer loans didn't decrease. Only the credit card utilization decreased somewhat in the first quarter. In Romania, we also had acquired decent growth 3%. And this -- last year, we started the strategic program -- the strategic initiative. And on a yearly basis, the volumes grew by -- already by 19%. In Russia, there, we had a 3% decrease, which is in terms of consumer lending, this is the usual seasonal trend or seasonality in the first quarter. Usually there in the first quarter, there is no large demand on consumer loans, and this happened also in this year. Regarding corporate, this minus 15% is kind of, let's say, relative because in the fourth quarter last year, so in the previous quarter, we had 33% growth. And what happened is that part of those deals were repaid or fully or partially. So that's the main reason behind this Russian volume dynamics. I think these are the most important elements of credit volumes. I will jump to the next page, Page 12, the deposits. Overall, 1% growth, basically, everywhere stable or increasing or seasonally decreasing. Seasonal decrease is especially true for Montenegro and Croatia for the retail segment. Other than that, there were no larger differences. In Romania, this minus 7% corporate decrease was related to 1 or 2 or a couple of larger deposits withdrawals. Going to the next page, I will have a few more informations regarding Hungary. On the left-hand side, you can see that there are -- mortgage loan disbursements grew by 73% on a yearly basis. And also, this quarter, this was mainly due to the improved demand and disbursement in this subsidized loans in this housing subsidy for families program, which was extended last year by the government. And then usually, as we mentioned earlier, in this segment, OTP has a strong market share. And this is also reflected in the contractual amounts of in the flow market share, which you can see there, which went up to 34.4%. Now actually, it's first mentioned that this is not a large data, managed data because we didn't have the market data. The publication data has changed by the National Bank, so this only relates to the first 2 months. Regarding cash flows. On the right-hand side, the performing cash loan volume grew by 23%, as I mentioned before, mainly driven by this baby loan volumes, baby loan disbursements. Our market share went in disbursement but went down somewhat to 37.8%. But actually, regarding stock market shares, it -- the growth was much smaller. You could even say that it was kind of stable. Household savings further increasing market share that we could observe in the first 2 months. Going to the next page, corporate in Hungary. 8% growth in the micro and small segment, which is -- and actually, on a yearly basis, this is 14%, which is very similar to the previous year. So there, the strong performance is really ongoing. Regarding medium and large corporate loans, the 4% is also high, but there, they are also taking care -- very careful regarding pricing and profitability. Here, what I would like to highlight that regarding market shares, you can see approximately 40 basis point drop in the market share but actually, what happened as far as if you find out or as far as you know, what happened that in the last quarter and in the previous quarter, in the fourth quarter of last year, the market -- on the market, some of large tickets were repaid. And then in this first quarter, they were drawn down once again. And basically, our volumes remained stable or even increased. So there was some asset volatility, and that calls according to information and knowledge that caused that market share decrease, not really organic change. Going to the next pages and talking about the -- our operating profit and first in debt total income. Total income shrank by 10%, HUF 32 billion, without the Slovenian acquisition. I would like -- and it's important to keep in mind everywhere that we are still on a quarterly basis, the Slovenian acquisition had an impact on the numbers. So when talking about the ordinary exchanges, you have to keep in mind that. So total income [ decreased ] by 10% without the acquisition, and that was mainly driven, as László mentioned before, by the net fee income and the other income. There are no interest income and not so much with the net interest income, which you can see and diligent to the net interest income on the Page 16. It was -- without the acquisition, without the Slovenian acquisition, more or less stable, minus 1%, which means minus HUF 3 billion. What's positive is the Hungarian NII, which could increase, which could grow by HUF 1 billion, 1%, mainly due to volumes, the margins, I'm going to talk about later, but margins were going down. And also positive percentage-wise. The Romanian increase of NII by 5%, and that was mostly driven by the volume dynamics, but also their margin increased somewhat. Now on the other side, what called the minus 1%, so altogether the decrease? At DSK, this is -- which we already mentioned in the previous quarter, I saw as I remember. Regarding off-balance-sheet items, certain swap deals, they are booked now differently. So most importantly, it is -- I would like to highlight that this is offset in the other income regarding the SC. So other than that, the NII remained stable and the margin as well. Russia is the second large decrease in the first quarter. This is because of the volumes, which I mentioned earlier. In the first quarter, there is the seasonal decrease of the volumes. And also I have to mention that the rate environment there, the interest rate environment there cause that loan rates, loan interest rates decreased, and that has also a negative impact on -- had also a negative impact on our NII in Russia. And then there, we have this other line in the net interest income, this minus HUF 2 billion, actually, it would be quite long to fully explain this here. What is important here then to highlight that this is offset in the other income. What happened is that usually, in a period, in a nominal variance, this line should be close to little because this is the consolidation impact of certain -- the intragroup interest income and expenses. But in the previous quarters, this was not true, so we had a positive amount. And because partly these interests were consolidated against other income lines. And that is what causes now, but this change actually is offset on the other income line. Now going to the next page, the net interest margin. Here, I will focus on the development and the reasons behind that, this drop -- this 19 basis points drop. But before that, on the positive side, I would like to mention the remaining net interest margin, which could increase mainly due to the funding side and the funding cost and deposit rates. But on a group level, this 19 basis points decrease was caused by this element. First of all, the -- including the Slovenian banking to the group. In the third quarter, it was fully for not only the volumes, but also the P&L was consolidated of the Slovenian bank. And the Slovenian bank has lower net interest margin compared to the group average without the Slovenian bank. So therefore, it decreased the impact of that on the group margin by 5 basis points. OTP core, the Hungarian margin went down by approximately 6 basis points, and that had an impact of 3 basis points on the group margin. That is basically mostly due to factors. First is the retail interest rate data decreasing, continuing the trend of the previous period, mostly in housing lines. And the other important element here is the larger repo volumes in the first quarter, at the end of the first quarter, which increased significantly the total effect, the total asset of OTP core and this way, they have some kind of dilutive impact on the net interest margin of the Hungarian operation. Ukraine, the next one there. The Ukrainian interest margin went down to 7.95% from 8.98% in the previous period. And that had an impact of 3 basis points in the group margin. That's fully related to the Ukrainian interest rate environment. Then the base rates went down to 10% at the end of the first quarter. And a year ago, at the end of the first quarter in '19 it was at 18%. And at the end of '19, it was 13.5%. And that had -- that caused the corporate rates are going down and also the consumer rates are going down. This is, by the way, partially offset with the composition because the competition of the Ukraine and big changes and the consumer lending at a higher rate now, but this can't offset such a high pace of interest rate decrease. DSK, the Bulgarian margin went down by 12 basis points and had this 4 basis points impact on the group margin. As I mentioned before, to calculate a net interest margin without the off-balance-sheet items, then the margin would have been flat. So this was mostly caused by this change in the swap accounting the slot interest income? And what we have this composition effect, what we call composition effect, which had a 5 basis point impact on the group margin. That is because the date of the Russian and the Ukrainian mostly is because of the rate of Russian and the Ukrainian and higher interest margin environment is decreasing in the consolidated loan book. I'm running out of time, but when I go to the next page. So the net fee and commission income, yes, this is -- the decrease there declined 22%, is mostly because of the fund management that that's been booked in the fourth quarter of the previous year. Other than that, it's seasonality. So usually, the first quarter is weaker in terms of transactions, and we have to book some one-off items in the third quarter in Hungary, like the transaction tax on banking transactions and fee paid to the resolution fund, so this is over in the last couple of years, though it has happened in the first quarter. And other than that, it's basically seasonality behind the growth of the net fee income in the first quarter on a quarterly basis. And then other income, across the board, the revaluation of securities. Also in some cases in Croatia and in Russia, the revaluation of corporate bonds and loss in investment units in Hungary, so basically this HUF 10 billion. There is also one structural change in Hungary, and that had an impact of minus HUF 1.4 billion. And that is regarding the collection income, the recovery at our collection company, were clearly doomed into other income. But starting from this quarter, it is bold into risk cost. So it's decreasing the risk cost, but not increasing anymore the other income and run rate. So basically, this structural change and the revaluation of securities, some loss on investment units and revaluation of corporate bonds a decline on the other income line. And then a couple of more sentences on operating costs on Page 20. It's more meaningful. I mean, in the first quarter, we had -- it is decreasing because -- mainly because the fourth quarter usually is higher due to certain marketing expenditures, estimates is expertise like that. But on a year-on-year basis, it grew by 4.5% without the impact of the Slovenian acquisition. What's very positive is the operation that you can see that without the impact of the acquisition, so the second acquisition that the merge is still ongoing. But without the impact of that, a 12% decrease was in the third -- on a yearly basis in the third quarter, meaning and proving that the synergies from the merger realized. There was a high increase in Romania, 18%. But as I mentioned, the volumes also grew by 90%. And then this cost increase is due to the strategic program, which we started last year. That has an impact on headcount and wages as well and to a certain extent also on operational costs. In Ukraine, it is high inflation, especially in terms of nominal wages. High-inflation environment, that had -- that was the most important reason behind this year-on-year dose. In Hungary, one last shot on that, 7% increase on a yearly basis, mostly due to personal expenditures and behind that mostly due to the nominal wage inflation in Hungary. Also, depreciation increased, but it's -- in nominal terms, it's a lower number, but relatively, they increased significantly. Because of the investments and spending, which -- mainly because of the investments and spending, which we will do into digitalization and into our IT infrastructure. That was what I meant to say. Thank you. And then I will hand it over to Mr. Péter Csányi, who is the Head and Managing Director of our Digital Development area.

Thank you, Peter. Let me be conscious of time and be very brief. On Page 21, we try to emphasize the number of steps we have taken to tackle the crisis. As Mr. Bencsik has already alluded, our switching to home office runs very smoothly. The digital development, the ongoing digital developments have not started. In fact, in certain cases, where we see an acceleration in the digital development, and this was very much helped by our transition to agile operations last year. In terms of the contact center, obviously, increasing volumes, but we have been able to reallocate resources effectively, and we have been also able to provide additional chatbot processes and robotic process automation in the back office to handle requests coming into the contact center. In the branches, we will talk a little bit about this a bit later. We have switched our efficiencies on to the education of our customers regarding by digital channels. And we have also introduced a couple of new campaigns after the pandemic started. If we go on to Page 22, we try to highlight to you some of the positive trends that we see in terms of retail digital channel penetration and usage. On the top left, you can see the weekly registration into new registrations to our mobile banking platform. As you can see after the virus started, we have seen a 17% increase in the average weekly new registration. On the top right, we track the number of digital volumes before and after the crisis in both the mobile banking platform and the Internetbank. We see a 12% increase in the number of digital log-ons. And on the bottom left regarding the active transactions performed on these platforms, you see across the board an increase 20%, if we look at all the functionalities, so 20% more at this transaction is taking place. If we look at certain specific functionalities, for example, check payment through the mobile platform, that has increased threefold. But overall, a 20% increase in the number of active transactions. On the bottom right, what we have tried to do is to decouple the effect of our digital incentive campaigns, which we started back in August last year. The preparation for the launch of our new platform and the add-on effect of coronavirus. We can see that roughly 3% increase in the number of users logging in at least once in the last 3 months due to the pandemic. We really hope that this trend can continue. And I believe that a number of our customers, which have previously not utilized these platforms and have started to utilize them now that will remain on the platform. Moving on to the next page. In the left-hand side, we show a registration and transaction numbers for our simple application. It's our second mobile application. We see both in new registrations and also the number of transactions, roughly a 50% increase compared to February. I believe it is quite unique. And what we see -- what you can see on the right-hand side is the digital channel usage among our corporate customer base. What we see is that corporate customers increased by around 10%, so the customers which use the online channels. And on the account transfers, which was the most -- the highest growth figures, 29%, 37% increase in the number of counties in NFE of the mid-, large-cap customers. If we go on to Page 24, we gathered some of the incentive somethings that we have introduced after the outtake of the virus to incentivize the usage of digital -- of the digital platforms. We introduced free digital money transfers up to HUF 100,000, which is appealing into roughly EUR 280 and a discount for application for the so-called virtual card each for the period of 3 months. And we have launched a number of online campaigns, which in turn -- which we intend to uphold also in the coming months and try to make this change to digital platforms a more long-term trend. In the branches, we increased, as I mentioned, the focus on the digital education of our clients. You see, obviously, a certain drop in the visits, but what you can say is that the share of online sales have increased as a percentage of the total disbursed volumes. And lastly, we are close to launching our completely new digital platform. The platform is already in a pilot phase, and we plan to start the gradual rollout among clients during the summer. And -- but we said that this is a completely renewal, not just of the front end, but also the technology behind it. These are the things I would have wanted to highlight with that. With that, I would like to pass it on to György Kiss-Haypál to talk about the risk costs.

Hi, everyone. Let me welcome everybody and all call participants today. And as you go to Page 25, my name is György Kiss-Haypál. I'm the Chief Risk Officer for OTP Group. So Page 25, I believe, is a good overview and a perspective on the developments over the last 7 years. Portfolio has grown significantly during these years, and the loan book itself grew more than 2.3x since 2015, for example. We have arrived in 2020 in a good half regarding 90+ in nonperforming loans and the loans -- low-risk cost environment, supported by strong cash recoveries from our NPL management company, OTP factory. You can see our DPD90+ figures there going down steeply. OTP is a little bit different bank than the others. We decided to keep our bad bank in-house, and we're managing our NPL books in-house. So 4.1% 90+ is a very, very good number for the third quarter -- for the first quarter. And as you can see, the first quarter provision is HUF 85 billion, which is a loss provision for impairments is a key focus for the first quarter, of course. That translated into 2.57% cost of risk. You can compare this cost of risk to previous years. Also, the previous year's low -- relatively low cost of risk in '16, '17, '18 and '19 is strongly supported by this cash recovery that I mentioned from our NPL management company, which has increased significantly over these 4 years. But the 2.5% even for this quarter is not -- is lower than the 13, 14 or 15 cost of risks. So how does this HUF 85 billion quarterly loss provision is composed and how did it get together? So let me briefly go Page 26 and 27. We are not going to be there all the countries here, but I would like to deliver some messages on the macro economy. This is important for our assumptions regarding and arriving at HUF 85 billion for the quarter. So some of the key summaries on Page 26 and 27, we already believe or we can reasonably expect that this region is likely to weather this economic crisis similarly to divest to the western economies. I hope you can hear that clearly. I see some strange noise in the background. So this crisis is this economy is in a relatively healthy and strong shape. There are no real major assessment in programs in the region anymore apart from some minor economies or segments of the portfolio. Substantial room for governments to provide easing and stimulus unlike in 2008 to 2009. Little or no pressure on most local currencies, and we can see lower public and private indebtedness, lower loan-to-deposit ratios including balance sheets over the region where OTP operates. You see substantial reserves in most economies. I would like to mention Hungary, Croatia and Russia, where it will be very useful for the economies. There's also ability to lower interest rates to lower our interest rates. There's no urgent view to increase them, which was completely the opposite back in 2008 and 2009. And last but not least, the virus seems to be spreading less severe, and the curves are flattening in most of the countries where we are operating. In addition, the structure of the economy is a little bit different compared to our vesting counterparts. There's less dependence on the service activities on the chart, which have been hit heavily in the western part of the world. So obviously, there is exception and creation on that these countries will be more severely hit. But this region is more agro and manufacturing-focused, especially in Serbia, Hungary, and Ukraine and Moldova. They give us some more better estimates for the future. So hence, the likely this relatively stronger would face similar GDP momentum in Western Europe or potentially even better. Now I'm not going through the -- not going through these country summaries. But I would like to move to Page 28, 29 and 30 and explain to you the composition of the HUF 85 billion quarterly reserves. Now for the quarterly reserve, around 90% of this reserve is add-on or management overlay, purely coming from forward-looking assessments over our segments Stage 2 portfolios. So there are 2 major impacts impacting this book up. One is the forward-looking adjustments coming from micro -- from macroeconomic assumptions for our PDs and LGDs. And I will talk about it a little bit right now. And the second major impact is the migration assumption on the corporate book, which is basically an assessment of significant increase in credit risk. And that's the -- these 2 are impacting the book up for the first quarter. So let's look at number one, which is macro assumptions impacting the parameters, PDs, LGDs. At the time of compiling the first quarter, OTP Bank assumed a GDP contraction of around 1% to 5% minus within OTP Group as a baseline scenario. And such forecast was building in line with IMF's global economic forecast in April. Now when modeling the parameters, we use different macro scenarios, including most severe and milder scenarios compared to the baseline one. Baseline scenario can be described through -- let's put it this way, more like a longer V shape curve. But the severe scenario is more of a deeper V shape curve. We modeled that during 2020 that there will be lower actual losses due to the moratoria and moratoria helping somewhat through better recoveries in '20 and mainly in Q1 2021. Uncertainties do exist around the shape, deepness of curve, the bounce, steepness and timing and potential second dip. And also uncertainties are there regarding effectiveness of moratorium measures. IFRS 9 model is honored in OTP with minor adjustments given the uncertainties above or given the conditions that I just mentioned. IFRS 9 is requiring us to cover the next 12 months' worth of losses for Stage 1 portfolio, which means basically estimated in model losses through formation of Stage 3 exposures over the next 4 quarters using LGD at the time of default. And also IFRS 9 is requiring us for lifetime losses for Stage 3 exposure. So that means we should have adequate reserves already now, today, for the Stage 3 portfolio balances calculated for Q1 2021. And that is the basis for our realistically conservative approach regarding Stage 1 and Stage 2 coverages. The second major impact impacting the HUF 81 million is this assessment of significant decrease in credit risk for the corporate book. We prepared an exercise the last couple of weeks with our subsidiaries. We had a collective assessment on increased credit risk based on industry segmentation, the virus impacting the industries and the assumed rating migration, credit rating migration in the different industrial segments. On Page 28, you can see that we grouped industries in 4 segments or 4 groups based on the assessment of the macroeconomic research center of OTP Group and also reviewed by risk teams of our subsidiaries. Now we allocated the declines/clients and exposure based on their industry codes. And you can see the share of the industries. And you can see that 70% -- around 70% of the portfolio is either no impacted or very lightly impacted by this crisis situation or by this virus situation. And 24% and 5% of the book is allocated to medium or high-impact portfolio. So I have to mention that in OTP corporate portfolio, that's basically 0 air transportation or almost 0 travel agency, tour operators and aircraft/ship manufacturing exposure. That 5% is mainly coming from accommodations, hotels and tour operators -- and passenger was at 10%. So we prepared this exercise. And on Page 29, you can see that we migrated the portfolio to Stage 2 from Stage 1 in the corporate book. On a consolidated level, we said in the fourth quarter, 5.3% Stage 2 share, and now we have 8.6%. But you can see the distribution in the different countries. Obviously, different countries have different exposures to different industries and different industry segments. So as a result of these 2 major sources of provision impact, which is macroeconomic assumptions for PD, LGD estimates, which was mainly impacting the Stage 1 reserves and also the exercise on corporate industry movements. We booked HUF 85 billion for COVID-19 as an add-on. And to put this into perspective, we already has, back in 2019, around HUF 200 billion for Stage 1 and Stage 2 reserves and to cover the 12 months assumed losses over 2020. And you can compare this EUR 85 billion in addition to this EUR 200 billion, which we had the last quarter. So all together, that's roughly about 40% increase in balance, in reserve balance. And a couple of more before I stop on this HUF 85 billion as a composition. 1/3 of this HUF 85 billion is mainly coming from this Stage 2 corporate migration analysis, so around 1/3 of it. And also -- and the rest is basically is the Stage 1 reserve increase, mainly on consumer and the retail book throughout the entire OTP Group. We also mentioned in the quarterly results that 1/3 of the overall amount is for retail and 2/3 is for corporate. So you can calculate that half of the corporate -- around a little bit less than half, of the corporate management overlay is coming from this exercise that we prepared and on the industry analysis and migrations to Stage 2. And geographical composition. 40% of the add-on is coming from OTP Hungary and Core, 15% is Bulgaria; and 16% is Russia. 15% of this overlay and 6% is coming from Croatia. So these 4 countries, Hungary, Bulgaria, Russia and Croatia are about 3/4 of the add-on. The rest is relatively evenly distributed on small amounts for the rest of the countries. So that's where I stop. I appreciate your patience. Thank you very much.

Thank you, György. And now I'd like to ask the operator to please open the floor for questions.

[Operator Instructions] And the first question is from Anna Marshall, Goldman Sachs.

Two questions, please. First one on asset quality. Just to confirm, how do you see the trajectory of cost of risk for the rest of the year, given that you stated that you took a conservative approach already in Q1. And generally, how -- I appreciate you didn't provide specific guidance yet, but how should we think about your cost of risk for this year, say, in comparison to the previous crisis peak and to EBA stress that adverse scenario, which is showing 350 basis points cost of risk. So that was my first question. And my second question is on cost. You've outlined the increasing take-up of digital and you mentioned more focus on cost containment. So I just wanted to ask for more color in terms of how you see cost dynamics this year and where exactly can you achieve cost savings?

Well, maybe I start to -- I'll start and then maybe György can chip in if he has further details on it. I mean, basically, we should look at the risk cost as -- in a way that IFRS 9 has this kind of forward-looking nature and the frontloading of risk cost, and that's going to be the risk. So in a -- if things go according to our assumptions then the second, third and fourth quarter risk rate should be much lower. And then actually, because if it's a V-shaped recovery, then the GDP growth between the second and the third, and the third and the fourth et cetera should be positive. So after this big jump now we actually can enter into a step-up -- step-by-step increasing GDP environment, which from an IFRS 9 point of view is being a positive outlook. So in all respect, I think what we should see as a fundamental lower risk cost in the coming quarters compared to what we have seen in the first quarter. And therefore, that more or less includes the answer to many questions. For this year, the risk cost rate should not be as high as we saw during the previous period. And in fact, the quarters can be lower than the first quarter was. Cost. In terms of cost areas, and certainly, there's some thinking where we started, how we can start to optimize the cost side. Obviously, this kind of home office way of operating -- operations gives a lot of learning and insight on how and what can be changed. And then we are just starting to look into this question and answer there's nothing tremendously concrete on that front yet. Maybe, György, you want to -- I'm sure there will be other questions regarding risks cost. So I mean, we try to be comprehensive here. So to kind of preempt having many similar answers. So I don't know, György if you have a...

No. Yes, I think you're completely right. It did not say this not forced to weight severe scenarios or most severe scenarios in a bigger manner than what we use to, and we have the shapes basically rolling out as we expected. The IFRS 9 is doing exactly what you just said, that we already frontloaded part of that cost -- risk cost and going out with adding additional weights to all those quarters where we see the upward trend of the GDP curve. So obviously, just applying the model as it is, there should not be a -- most likely a similar book-ups for 2020. Again, provided that the macro scenarios are not weighted severely going forward.

The next question is from Máté Nemes, UBS.

Yes. I had a question on NII and the other one on the cost of risk. Thank you for the details on the impact of higher BUBOR Internetbank rates. I was just wondering if you could discuss a little bit the effect of the provision of liquidity from the Central Bank actually needing to long tenors and perhaps your participation in weekly government bond auctions. So how should we think about volumes here? What could this mean actually for NII? And another question, perhaps on NII's growth, considering the effect of lower policy rates and the changing composition of the book in Ukraine, how should we think about net interest margin there? How significant of a drop would you expect there from current levels? And second topic, cost of risk. I was just wondering if you could give us a little bit more in terms of details of the macro assumptions there, particularly the weighting of the various scenarios that you mentioned and also perhaps maybe a word or two on assumptions, Ukraine and Russia in your scenarios, that would be very helpful.

Okay. Regarding cost of risk, again, I think we are more or less still where we could on this subject. I think we have gone much further ahead than some other banks have gone. So -- and these are models. So -- because as you can see, the DPD90+ ratio actually decreased, right? So it's not that we have adverse saving portfolio quality compared to -- I mean, in terms of the -- compared to the total loan amount. And models come from historic experiences, which were very, very different from what we have today, right? So what we have today is a deep dive and then an increase compared to that. And we have to figure out how to factor that into our models. So I would like to encourage you to take what we have given on the subject because if you go too much into details then you might lose the overall picture. So exactly that's the reason we have not gone into the very specifics here in order to provide you the interpretation. Regarding BUBOR positon, we used the National Bank facilities as much as they are available for us. So as much as a supply is given of these structures where we can actually make money, we try to use them. But they are not unlimited in the sense that they are allocated between banks and each region despite how much they do. So as much as we can get, we do try to participate and that has clearly a positive NII impact. In terms of policy rates and the Ukrainian net interest margin, I'd like to turn to Peter Krizsanovich. Maybe if you could elaborate a bit on just on how you see the Ukrainian NIM further development potential.

Yes. On the other side, it's not an easy question. Yes. First, I think it's composition of the loan book, it's quite hard and quite early to estimate it right now as what is going to happen with the volume evolution during the remaining part of the year. On the other side, maybe also György, our colleague, could add some details on what to expect regarding the rate cuts on the Ukrainian market. But all together, the interest rate decrease of the certain loan products might slow down and also the pricing due to the increasing risk might be going in the other direction. But I think it's not largely depends on the Ukrainian general interest rate environment.

The next question is from Gabor Kemeny, Autonomous Research.

I'd firstly like to ask about the Hungarian debt moratorium, please. Could you give us an indication about the participation rates you've seen so far and especially, the participation in the consumer unsecured portfolio? That will be useful. And I'd like to understand a bit more closely how you take into account the debt moratorium in your provisioning forecast. So is the moratorium something which could potentially help push out the asset quality deterioration and the provisioning and if so, shall we expect a step-up potential increase in provisioning after the end of the moratorium in early '21? My final question is a broader one on the net interest income. You talked about a number of positive drivers, including the Hungarian rate and including the NMB tools. There are a number of negative drivers, such as the lower Ukraine rates. Net-net, where do you see your NII going from here? Like with all the acquisitions in the numbers, shall we expect a roughly stable NII? Or do you see room to grow from here?

As -- in the last question is the NII should grow because volume growth will be actually quite visible due to the moratorium and the capitalization of interest. Therefore, revenues will stay high and then we have these add-ons. So we are actually quite positive on NII and volume development despite that we are actually in a difficult economic environment. Well, if -- how effective the moratoriums will be? Honestly, we don't know. That depends on how the economies will look like a year from now or by the end of this year. And as they reshape recovery, then these moratoriums can actually work very well. And then we -- in that case, we may be already overestimated the risk cost what we put in the IFRS 9 assumptions. In terms of Hungarian moratorium participation, cash flows, Peter, can you remind me what the number is?

Actually, I'm looking for it now. So...

Okay. Good. So that should come very soon. And so I don't know, György, on the risk side, if you want to add something to...

Well, the only thing I'd say, if we do our job right in terms of providing this IFRS 9 look ups for the first quarter, second quarter, I do not expect a step-up in provisioning in the first quarter next year. But it's why I said the effectiveness of the moratorium is still to be tested. In theory, moratorium should be positive on the risk cost assumptions.

Sorry, the participation currently regarding the cash loans and consumer lending is approximately 60% still in single moratorium.

And is this indicated for the total portfolio as well?

No, it's different. Our portfolio, it's different across the different segments.

I mean, can you give us some broad indications? We have been getting questions on this front. Would be useful, please.

Yes. In terms of corporate, it's around 40%. 45% we already -- are actually debt we already opted out from the moratorium. And in terms of mortgage, there, we don't have the very actual number. I can send it later on.

The next question is from Hai Thanh Len from Concorde Securities.

Just 2 questions from my side. So first of all, you said that FX rate changes should not impact your capital materially or capital adequacy. I was wondering if you could share with us your euro and rubble FX rate sensitivity, particularly if it is different from what you said or not. And my second question would be on loan disbursement figures in April. So it would be pretty helpful to see on your main markets what you -- what kind of origination numbers have you seen so far? And do you think it's the bottom basically that we observed in April or not?

Combination as a -- especially in an unsecured lending, that's dropped down. And I think this is going to be the most interesting topic on the second quarter conf call, apart from the risk cost, how the new volume and how demand actually shaped up. So I'd like to here ask for your patience, and we will go into this in detail when we present the second quarter numbers. The biggest, but I think what kind of -- in general terms or the way I can describe this situation is that, that we've seen a -- especially in unsecured lending, we've seen a decline across the group, much less in terms of corporate and mortgage demand, which is rolling up better. And your first question was related to euro and ruble.

About FX rate sensitivity, to the capital adequacy.

To the capital adequacy. Okay. That's a very specific question. I don't know. I have my colleague, Atanáz Popov on the line, who's responsible for capital calculation. Can we give just a very broad answer to this without being extremely specific? Or is it something we should try to answer off-line?

We can do it off-line as well. No problem.

Okay. Okay. Good.

The next question is from Andrzej Nowaczek, HSBC.

I have 2 or 3 questions. A follow-up question on cost, but specifically on synergies and integration costs related to some acquisitions. Under the circumstances, presumably, some of the benefits or charges will be delayed, am I right?

Sorry, some of the? We didn't hear it, sorry.

So would a... Yes, restructuring costs or synergies will have to be pushed out, right?

Not necessarily. As I just said, we complete finished the merge in Bulgaria. We did it in 15 months. So we acquired Société in Bulgaria in January '19 and in course of May, we had an integrated bank. And we are expecting the cost synergies to -- I mean, we have already realized quite a lot of cost synergies there and further synergies should come. So I wouldn't -- so far, at least we haven't -- we have not rescheduled these processes at all.

Okay. And my second question is on Russia. Are there any reasons to believe that the amount of losses in Russia, current downturn could be there where it was in 2014, 2015? What are the big differences here?

We have a much better bank, much better managed bank and a much better portfolio. We don't have this kind of -- most of the risk cost in '14, '15 came from the not-so-well-managed credit card portfolio there. So I would say a big chunk of the losses in '14 and '15 could have been not there if we had the portfolio like we have today, for instance. So in a sense, yes. I mean that's what we are calibrating for, a lower loss level than what we had in '14, '15.

Okay. And finally, what are the latest statistics in baby models, has there been any in the past?

No, that continues. The restructure continues. Obviously, there's some decrease because of the -- I mean, kind of demand filling up, but restructure continues.

The next question is from Marta Wasilewska, WOOD & Company.

I have a couple of clarification questions. The first one considers quite specifically the situation in Croatia. That is a very tourism-exposed country. And yet, there seems to be fairly little provisioning than in first quarter '20. Could you share any more color on how you see the situation in Croatia developing? My second question is a similar nature. It's about Bulgaria, that is actually in the first quarter provisioning around seems to be very much in the different side of the scope with a massive spike of provisioning that we haven't seen in this country for a very long time. Could we learn a little bit more detail, if possible, what has driven such an abrupt change and increase? And the last question, just for small clarification. In terms of older credit moratorium. So as you mentioned on slide number -- on the slide that regards the credit moratoriums -- sorry, I lost my presentation right now, that there is no interest. But basically, I want to clarify the provision that was made in the first quarter on interest accrual. As I understand, this is interest that, in theory, should be charged on the interest that will be accrued until the end of the year. Can we learn the amount of the interest that you expect to accrue until the end of the year in Hungarian subsidiary mostly? And can you give us a bit more detail on how the clients will return to do repayment? Whether they will face higher installments in January '21 or whether there will be an extension of the credit repayment timing?

Yes, there's an extension of the timing, and that's why the NPV changes. In fact, accounting-wise, we make much more money by this. So this's just the time value of the cash flow, which decreases but not -- clients pay longer. The exact number of the accrued, expected number, I think if you can try to check it. Meanwhile, I would like to give the floor to -- or the opportunity to answer the question on Bulgarian risk questions to György, Chief Risk Officer.

Okay. So let's start with Bulgaria. First of all, Bulgaria is our second largest book. So we tend to forget how big that book is. And the actual cost of risk percentage, so the annualized cost of risk percentage is 2.8%, which seems to be larger than the -- obviously than the -- well, it is larger than the previous quarters and months and years. But with 2.8%, it doesn't necessarily standout compared to the other subsidiaries. It is actually a reflection of the corporate book. It's the exercise that we did with the assumption based on the allocation of industries to the medium- and high-impact industries. And because particularly about gearing our portfolio, we have relatively high share in and limited -- and high-impact industry segments. Here we saw that probably one of the largest assumption, the largest number assumed to go to Stage 2 in the corporate book. And in the retail, we don't really see a big add-on at all. It's the corporate book allocation to Stage 2. And again, it's a relatively large corporate book. On Croatia, there, again, we took a very careful assumption for the corporate book. Yes, we have exposure to tourism there and -- in our portfolio. But I wouldn't say it's overly excessive. So we -- our portfolio is not entirely just lending on hotels and we've chosen investment to corporate. It's true that we are still in review of the consumer portfolio, how they are impacted in these industries. But again, I believe that the IFRS 9 general assumptions were adequate -- relatively conservatively adequate for the potential Stage 1 segment impact also in Croatia.

Perter, do we have number on the...

On the expected accrued interest, well, that's -- because what was booked is not the accrued interest in the first quarter. That was -- what we booked is not especially the add-on on this estimated impact of the NPV change. So in the first quarter, interest accruals were not significant. The moratoriums started in the end of March.

Yes. But if I may, I would appreciate if we could learn what was the level of new accrual assuming, I don't know, 75% or 100% acceptance ratio for the Hungarian business, that would be very helpful. There are different numbers lying on the sectoral level.

It is a bit more complex model and calculation. So I don't have that number here at hand.

Okay. So we'll finalize to let you know the, kind of the, ballpark figure because it's also -- I think it's a kind of quite detailed information.

The next question is from Lim, Kian Huat, CSAM Asset Management.

Thank you for the presentation and for the explanation on the result and, in particular, the cost of risk. I've got a couple of questions here to begin with, again, on the cost of risk. Can I just confirm and clarify that the HUF 85 billion that we are seeing, it's a one-off figure that based on the assumptions of contraction of 1% to 5% in GDP across the different -- in Hungary and in the different subsidiaries. If that scenario -- if that macro scenario plays out, we should not see further massive increase in provisioning for Q2 going forward? When I say additional provisioning, what I mean is that in Q2 and going forward, we should be expecting that 10% run rate for subsequent quarters as long as there are no meaningful change -- no significant deterioration of the macro assumptions that have been made so far. So that's my first question. My second question pertains to slide -- Page 28. Can I clarify the breakdown in stages of the loan book as of Q1 2020? This breakdown that we are seeing on Page 28, is this the current status of the loan book? Or is this already reflecting the forward-looking scenarios that were being used to arrive at that HUF 35 billion that we saw? If I may have a third question. Again, on Page 28, I see that the impact on industries such as energy and petroleum are considered a slight impact. I understand that this Page 28 pertains to the impact of COVID-19. But surely, with the link of COVID-19 on the general overall economy globally, we know what happened to energy prices. Surely, I don't think exposure to the energy sector should be classified as slight impact at this point in time. So can we have more color on this on how is the bank treating its exposure to the energy sector, in particular? I think Russia was being bought up. So maybe we can also have some color in Russia. That's -- they'll be my questions.

Okay. So first question, in a way, more or less, yes. So if we have a strong bounce back in the third, fourth quarter in terms of unit reverse, then we should see in the sale in first quarter and also second -- third and fourth quarter relatively modest risk cost levels. I think energy -- but I think it's better if I give the floor again to György regarding the slide pictures the situation before reclassification or after and then whether -- and to which extent our energy sector clients are different from potentially other energy clients globally.

Okay. So Page 28 is the percentages for the consolidated on and off-book corporate exposures and the individual country quarters exposures on and off-book as they are seen at the end of the quarter. So let's look at -- you asked, lets about say Russia, 9% of the corporate exposures are currently classified by our teams into the low impact industries, 75% into light impacts and basically 0 on the high impact. Our Russian corporate bookings is relatively small. It is concentrated on a few accounts, mainly in the wholesale and agricultural -- sorry, wholesale and pharmaceutical trading industry. That's where our corporate book is concentrated on. We have very limited exposures in the oil industry in Russia, which is a small book. We can debate whether the petroleum-related manufacturing is light impact or medium impact. I think for this exercise, it doesn't matter too much because we also had a migration exercise from light impact to Stage 2, so we didn't say that in light impact industries, there's 0 probability that the customers will go to Stage 2, that -- we had assumptions for that as well in the light impact, not 0. So again, for Russia, particularly, we don't have necessary concerns in our own portfolio exposures to the oil industry in themselves.

Sure. If I can interrupt at this point. On Page 29, you showed the breakdown according to stages and according to geographies. For the 1Q '20 figures, are these as of the end of the quarter itself? Or do this also reflect the forward-looking scenarios that you have described multiple times. If the figure on Page 29 are based on the latest figure, can we have some color on how your -- how the assumptions of that $85 billion would have changed those figures on Page 29.

I think I explained that first quarter of 2020 is, as you see, is the result of the allocation of the corporate portfolio from Stage 1 to Stage 2. That's why you see basically in every line, you see a big -- relatively big increase, say, OTP core, 4.2% at the end of last year, now 7% at the end of the first quarter. So it's assumed migration, and that's why the share of the portfolio is due to increase. So this is current estimate. And I explained that out of the HUF 85 billion, and we talked around 1/3, a little less than 1/3, is a result of the migration.

The next question is from line of Simon Nellis, Citibank.

Just another question on the moratorium. Apologies if you've answered this before. I joined the call a bit late. But what level of participation was assumed for the NPV hit that you booked in the quarter? I think there was roughly HUF 20 billion post-tax. That's my first question. Maybe you can just go one by one.

Sorry, I was...

Okay. I'll ask my question again. I was wondering what level of participation was assumed when you made the -- I think it was roughly a HUF 20 billion pretax -- sorry, post-tax impact on the moratorium in Hungary. Is that assuming 100% participation or lower?

No, no, no. It was -- at that time, the actual -- discussing the moratoriums at that time, the actual participation rate when the booking was made, that was used. So that was a previous state of the participation rate what we used into -- regarding this booking. And at that time, it was approximately big so the opt-out ratio approximately in the retail side was 30% to 35%, and on the corporate side, 40% to 45%.

Okay. So is that -- that has...

Sorry, that was not an estimation for the full year, and that's the actual state of opt-out ratios.

Would you expect that to change much in the quarter? Or not in the current quarter?

Yes, it's still increasing.

Still increasing.

It's still increasing.

And then on the NPV...

The opt-out -- sorry, the opt-out is increasing, right, Peter?

Yes, yes, yes. The opt-out is increasing.

So therefore, this number should decrease, in fact.

So your numbers should be decreased. Got it. Yes. Okay. Understood. And I know you're not in a position maybe to know for sure what the NPV hit would be in other countries. But can you give us a kind of range of what the impact could be. I guess, other countries have a similar setup, right?

No, the setups are very different. We have this Page 5, right? The first question is whether it's opt-in or opt-out. So participation rate is potentially much higher in an opt-out situation than an opt-in situation. The other question, whether there -- the capitalized interest, whether there's an interest on the capitalized interest because if there is, like in Serbia, which is the other country where there is an opt-out system, there's no negative NPV. So there's 0 NPV impact.

Right. But did you take a...

So far the volumes have been much, much, much lower in the other countries where there's an opt-in structure. In Serbia, it's relatively high because it's an opt-out structure, but it's also, again, there's no impact. But we don't expect similar numbers in this magnitude. First of all, as Peter said, as the opt-out increases in Hungary, we actually expect last this number to go smaller in Hungary. And the other -- and at the same time, we will have certain numbers coming from other countries but much smaller magnitude. Plus, we have to decide whether it's material in itself or not because if it's immaterial, then we don't do anything. Then we also have to make a decision whether something is direct recognition because the recognition and recognition, which is operationally much more difficult, and then you have then a lower NII in the future, but you don't have, at all, a one-off NPV change. So there's another structural question here, which we are looking deeper into in each country. There's nothing in the magnitude of what we have seen in the case of 100 for the first quarter should come. And you reinforce this message, Peter?

Yes. This is the situation.

He confirms. Okay. My other question would be on what -- could you tell us what the provisioning would have been if you used 100% probability for the severe scenario, just to kind of give us an idea of what kind of a more stressed scenario case could be? Instead of HUF 85 billion, what would have been the provision charge?

Don't push us too much, please.

If there are no further questions, I would like to hand back to you gentlemen for some closing remarks.

Okay. Well, thank you very much. Thank you very much for your participation, for very good questions.