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

Dear ladies and gentlemen, welcome to the OTP Bank Second Quarter 2021 Conference Call. This conference will be recorded. [Operator Instructions] May I now hand you over to Laszlo Bencsik, Chief Financial and Strategic Officer. Laszlo, please go ahead.

Thank you. Good morning or good afternoon, depending where you are, and thank you for joining us today on OTP Group's 2021 second quarter interim call -- Interim Report Conference Call. Thank you for joining us again. I mean, it's a pleasure to have you here in the middle of the summer. So thanks for all of you who decided to join us today. I mean, as usual, the presentation has been available on the website for a couple of hours and we are -- there seem to be some technical problem actually showing you the presentation, but I hope my colleagues will be able to solve it. So we revert to the old slides, I'm going to say which slide, and hopefully you can follow it [indiscernible] would be able to face -- to not being able to turn the pages on the presentation on the screen. So basically the second quarter was in line or slightly better than our expectations in many ways. And that obviously reflects in the adjusted after-tax profit of HUF 129 million, which is one of the highest ever. And I mean, this actually at HUF 246.5 billion profit altogether. Now, it seems -- okay. Good. It seems now we have the presentation here. And I think the -- probably the most interesting factor here is that in the first half of this year, we actually managed to increase the contribution of the foreign subsidiaries to almost 60%. So if you look at this page, the contribution from non-Hungarian entities was 58%. And that suggests that we have -- and there hasn't been any big one-offs in this number for the first half. And that means that actually we kind of achieve the situation where our foreign entities have more than 50% contribution to our profits and that actually is a result of the acquisitions that we have done over the years and some creates more diverse and distributed group in terms of geographies. There was one meaningful or sizable one-off item in the second quarter, and that was related to the extension of the moratorium. HUF 5.6 billion after-tax and just to remind you, this is the result of extending the moratorium from -- in Hungary from the end of June till the end of September. If we go further, maybe one more page. So here you can see the P&L composition. The fact that the profit more than doubled compared to the first half of last year is obviously not a surprise given that the risk cost was driving both periods. As opposed to booking $130 plus million risk cost last year in the first half, this year, it was only 18. So that difference caused biggest kind of difference in earnings overall. But if you look at the different lines, I think it's quite positive to see that after all the adjustments and we really compare apples with apples, then the operating profit will have one-offs and without risk costs obviously increased year-on-year 18%, and this is kind of comparing exactly the same matter exactly the same group members year-on-year, and revenues increased 11%. And some of it -- obviously, part of it is volume growth-related, primarily the interest income part. But the good thing is that the fees and commissions recovered. You probably remember that last year, that was kind of more sluggish line in revenues that together with the COVID situation and the negative impact on economic activity in the sections we had somewhat lower fee income last year, and that's kind of quite nicely recovered this year. So on a quarterly basis, we also made quite a progress. And on the fee line, especially 5% increase in revenues, but also net interest income rolled up quite nicely, and that is obviously linked to the volume growth and the stabilizing margins that we have seen. If you look at the results country-by-country then, basically, we have the same improvement everywhere. Due to lower risk costs, but maybe just to highlight a few maybe in Serbia, you can see the nice results we had in the first half compared -- especially compared to last year. Russia recovered very nicely in terms of earnings and return on equity, and this goes together with Ukraine in terms of profit contribution and Ukraine is also very strong. So across the group, I mean, in each country, I think we can be quite happy with the results, including or many where the actual net income is not -- is somewhat modest. I would say that here, just to remind you, here we are in middle of a strategic kind of transformation process where we are investing into organic growth of the bank, and that actually resulted in kind of larger increase in costs at the first phase and revenues. So -- but we do believe that this is the right path to take and to try to gain market share and reach a higher and better scale economy in the country. Maybe if we go to Page 7, which is about the net interest income dynamics. As you can see, in some countries like Hungary was particularly strong, obviously due to the stronger volume growth, but also the stabilizing margins or kind of slightly already increasing margins. Ukraine, extremely strong due to again volume growth, and where we have actually negative, these are, on one side, Bulgaria, Croatia and Slovenia, these are the either Eurozone or kind of close to the Eurozone countries in the group where we still see a very depressed margin situation. And Russia, obviously, due to the lower volumes as we discussed it before. We probably have been somewhat more conservative than we should have been, and also more than probably the market, therefore, we had some lower volumes last year. Nevertheless, the profitability is actually quite good in Russia due to the very low-risk cost because of this past very crucial [indiscernible] activity we had last year. On Page 8, you can see one of the kind of good news that after the -- now we have 2 quarters when the net interest margin stabilized on the -- on group level. It started in the first quarter and now the second quarter had the same impact. We have -- well, obviously, Hungary, where the rate hike started and we are in an increasing rate environment now, but also that's the case in Russia and Ukraine. So this is obviously helpful to stabilize the margin. Having said that, it's still not a spectacular growth. It's rather stabilization of the margin environment. If we turn our page to the volume dynamics, then on a quarter-on-quarter basis, you may remember that the first quarter was less than 3% growth. The second quarter really accelerated, and we had 5% growth, which is quite strong across the board, some really good numbers like Ukraine -- Ukraine and corporate lending this year was extremely good. And Hungary, 7% growth, but also Bulgaria 4%, Croatia 3%; Slovenia 4%, Romania 5%. So these are -- and these are just quarterly numbers, not annualized, which is due one quarter. And if you look at the first 6 months raise, then we have 6% group level and 10% in Hungary. And on this slide, we actually added or expanded our previous -- expanded on our previous guidance and said that based on what we see -- we have seen in the first half of this year, assuming that these trends continue, it's very likely or rather we expect group level volume growth to be stronger than 10%. So we expect a decent double-digit growth rate and performing loan volumes. And we believe that the Hungarian dynamics will continue. And like also in the other countries, and additionally and we really expect Russia to start the engines in the second half of the year. And hopefully, we should see the usual seasonal growth in the second half, especially in the fourth quarter in terms of volumes. So we -- on this slide, we kind of updated the guidance, and now we expect more than 10% growth. Deposit growth somewhat slowed down, and this is something we are actually quite happy about. The second quarter versus first quarter for a long time when loan growth exceeded deposit growth. And given that group level we have 77% net loan-to-deposit ratio, which is obviously suboptimal. It's not a really efficient balance sheet. We hope that kind of new trend is starting with this quarter. And in the future, we are going to see higher [indiscernible] growth in loan than in deposits. If you look at the first 6 months in deposits, we can turn the page, then it's 4%. And we can still -- in the first 6 months, you can see the nominal growth of deposits were still higher than loans, but in the second quarter, it was somewhat better. In terms of fee income, again, this is a line where we see a very strong recovery compared to last year and even on a quarter-on-quarter basis, there's a very good dynamic, so 14% and 12% respectively, in almost every country. In some countries, this is more related to the transactional activities, some countries more related to increasing lending activity. But basically, across the board, we see a very strong momentum on a quarterly and also in most cases on a yearly basis. So this is kind of catching up to the previous trend line to the normal -- previous normal in terms of fee income. Other income is -- I mean, quarter-on-quarter, there wasn't overall a lot of movements. We had some FX loss in Hungary, but that was kind of substantial or so. So overall, this is a line which is a year-on-year actual result [indiscernible] growth across the group. In terms of costs, we have a -- obviously, we made here a kind of methodology change. We reclassified the local taxes in Hungary to overall taxes, and they used to be in OpEx, but we learnt from our [indiscernible] that this is the kind of practice of the other banks in Hungary. So we followed the crowd in the SaaS. But we also believe that this makes our -- this change makes our numbers more comparable to any benchmark you might want to look at. So on these adjusted lines, year-on-year, we are at 3.1% cost for us. And if you look at some of the entities, you actually see year-on-year decrease in case of Bulgaria, Serbia, Montenegro. And these are the countries where we recently finished the merger. So this is still a kind of cost savings coming from the merger cost synergies. And maybe Serbia is something to look at, because here, we just finished the merger of the second acquisition in the second quarter this year. So this is the country where further sizable cost synergies are expected to come in the future. And as I flagged it before you see Romanian costs growing 29%, and this is what I refer to as our organic kind of strategic investment into our activities there. So a few more detailed slides and information on the Hungarian activities, and here -- we are actually quite happy with the results. And we believe that, ultimately, the best measure of performance is market share and the market share trends, whether it's growing or decreasing. And as you see, we are basically at historic highs in terms of market share in new mortgage production market share, in new cash loan production, market share in household savings. They all increased and they are all at maybe not historic highs because we -- in the [indiscernible] was really even more dominant in the market. But clearly, for the last 15 years, we have -- this has been the largest levels of market share. And if we go further into details here, this is partially due to the fact that we have been very active in channeling the different type of subsidized structures which are available to retail clients in Hungary to the actual users, the actual clients. And I mean, all of the structures we have acquired our market shares, even higher market shares usually in the product categories. And that is obviously related there to do, I mean, the level of trust and also obviously the accessibility and the availability of OTP having this very dominant multichannel coverage of the market in Hungary. We're still very much live and operational, strong branch network that we have across the country. We have a similar situation in corporate as well. I mean, our market share this year continues to grow. And if we take a kind of longer historical perspective here and compare to, let's say, 2008, 7.5% as has been only organic, where we have kind of 2.5x higher market share than we had 13 years ago, and it has all been achieved organically. And again, in the specific structures targeted, we're kind of subsidized by either by the Central Bank or by other means in Hungary. We tend to be very active. So we had 28% market share in the funding for growth, new program funding for COVID program, which was designed to mitigate the negative impact of the COVID situation, especially last year and first half of this year. But we have also been very active in micro and small corporate lending to Hungarian companies with 26% growth year-to-date, and this means that the trajectory, what we created last year actually continue. And this relatively strong volume dynamics compared with at least the last 6 months with very modest kind of portfolio deterioration or if you look at the stage 3 ratio, it actually declined. Obviously, the reason for the decline is the increasing denominator. But nevertheless, we are down to 5.4%. Stage 3 ratio there wasn't so much change in the Stage 2 ratio during this year. And also the coverage is, say, more or less stable. And we like to believe that we have been quite conservative in our provisioning. And if we compare our coverage ratios in Stage 3, the nonperforming or in Stage 1 and 2, which is practically the performing portfolio to some of the other regional players, and we can see that indeed actual reflects in the numbers. Moratorium, which was a big thing last year. It's still a big thing in Hungary, not in any other markets. So all the other markets, the moratoriums have been phased out, closed down. And I can kind of safely tell all the potential ramifications, negative and positive, have already built into the portfolio qualities that we can observe. So the only exception is Hungary where -- when I started the presentation, I said perfectly read it, it was even extended from the end of June till the end of September. Participation is down to 28%. A slower and retail --retail 39% and corporate 15%, and it's still in the opt-out structure. So everyone is in the moratorium unless these retail corporate clients won't ask for not being part of the moratorium. So far, again, I mean this is resulting kind of one-off losses that we booked, which relate to the time value of money. So it's not a -- in a way it's not a nominal revenue loss. It's a time value loss that we have duly booked them. And the underlying portfolio quality, we continue to monitor very closely. We have loads of information about these clients in Hungary in terms of their behavior characteristic, and we continue to monitor them and rate these customers according to their behavior or characteristics and we regularly update, therefore, the Stage 1, Stage 2 and Stage 3 classifications. So potentially the last subject is the equities. So we managed to further improve our capital position, the common equity tier 1 ratio, which in our case is the same as the tier. Our ratio was at 15.9% at the end of the second quarter. The other kind of related news is that, obviously, we've been part of the EBA stress test out of -- together with other 50-ish European banks. And the -- we were #12. It's not a competition. But nevertheless, we were quite content to see that in terms of the 3 years impact in the adverse scenario on the capital adequacy ratio, we were the 12 lowest. And that kind of reassures us that as much as the ratios, which are high, but the underlying resilience of the business model to external shocks is actually quite strong in European comparisons. Some highlights about the macro expectation. We obviously expect this recoveries to continue throughout '21. And even if there is another potential wave of the pandemic situation, then we believe that it should not disrupt fundamentally the kind of growth momentum what we have built, especially in lending. Maybe just a reminder that this very strong 5% quarterly volume growth actually happened in a quarter when especially in April, May, the COVID situation was actually quite strong and quite serious, especially Hungary. And despite of this relatively stressed pandemic or health situation, we actually served quite active business activity and increasing demand for [indiscernible]. Finally, the guidance update. As I said, we updated the expected loan growth above 10%. And we also updated the -- or kind of became more specific to this on the ROE guidance. We used to say that we expected it to be higher than last year, but now we are more specific. So we expect it to be somewhere -- the adjusted ROE to be somewhere between 18% and 20%. And that's also probably not very surprising because the first half result was 19.1%. So this is pretty much in line with where we are at the moment, where we were during the first half of this year. And obviously, that kind of implies that we expect the risk environment to be largely similar in the second half of this year than in the first half. In terms of dividends, I mean, we -- the HUF 190 billion after '19 and '20, it remains and deducted from our regulatory capital. We intend to pay this up at the shareholders. And we also according to -- or in line with the EU regulations, we calculated for the first half, HUF 42 billion dividend, which we deducted from the regulatory capital. So altogether, now we have HUF 161.5 billion deducted from our regulatory capital and capital ratios up to the end of June. So I think that's it. I tried to be kind of [indiscernible] this summer. But I'm sure you have very good questions. And everybody will have some opportunity to further elaborate. So please, operator, open the floor for questions.

[Operator Instruction] The first question is from Andrzej Nowaczek, HSBC.

I have 2 or 3 questions. First I guess the acquisition of NKBM will dilute your ROE next year, plus you're generating so much capital that it will be difficult to sustain the current ROE anyway. So just a usual question, is there a big acquisition around the corner? And what are your thoughts on a dividend outlook beyond that HUF 119 billion?

I mean, yes, I mean, if you -- but it also -- I mean, yes, the NKBM will somewhat dilute the group level ROE, but also it will dilute the cost of equity. So it's clear that we -- and those things go together, right? So yes, I mean, in the lower cost of equity, lower expected return environment, we achieved lower ROEs, but the ROEs visibly higher, it's truly higher than the expected return, then I think we do a good job. And that goes in line with the risk kind of profile of the group as well. So obviously if we expand in the Eurozone country, which is actually quite stable and quite kind of strong development path, then that's a different risk profile than some other group members. But then I think that's perfectly okay. In terms of acquisitions, there's nothing more I can report, nothing concrete, other than that we continue our efforts to secure further acquisitions, which deliver value for our shareholders and also for the clients we serve. And obviously, in case of NKBM, we are -- the deal has been struck, and now we are waiting for the ECB to approve the deal. And we expect that to happen somewhere end of first quarter, beginning of second quarter next year. Further acquisitions, again, maybe usually not talk about any concrete developments [indiscernible] so we kind of, I like to keep that custom. In terms of dividends, I mean, the HUF 119 billion amount is related to 2019 and 2020. So -- and the dividend, the suggested dividend for this year will be kind of defined to its due course. I don't think I can say much more at this moment. The demand is HUF 42 billion. Again, this is according to the specific formula, which must be applied when a bank kind of counts the interim profit into its capital ratios in case there's no approved dividend policy, which is -- and that's our case. So I think that's the answer.

And on costs, well, congratulations on your performance in H1, but are there some cost adjustments to be expected in the second half, such as salary hikes, some extra bonuses in December, just more spend on marketing and advertising?

I mean, the good thing about recovery is that there's increasing demand and increasing lending activity, more transactions, higher fee revenues. The answer is that inflation actually increases. And wage inflation and the -- I mean, in fact, the labor markets are back to the kind of pre-COVID level of tightness so to say. So yes, I mean we have to kind of follow that, and we have to remain competitive in terms of the wages what we pay to our colleagues in order to have the best talent. So yes, I mean certainly, personnel expenses are going to grow, and we are increasing wages during the second half of this year. So that's core. And -- well, these are the kind of 2 sides of the same coin. So higher activity, more loans, more fee revenues, even maybe some more supportive rate environment due to higher inflation, but on the other hand, much bigger pressure on the cost side. And that's -- but therefore, I think what we plan to look at is the cost-to-asset-ratio, and then if we even compared to last year, I think we have kind of achieved quite an improvement, but also in the cost-to-income. Now the cost-to-income becomes more and more meaningful now that the revenue margin seems to stabilize, right? So that's, again, potentially another metrics which is meaningful when comparing different periods. But nothing else, so we don't have any kind of big one-offs coming other than the fact that you just mentioned that we have to follow the market -- the labor market trends and adjust the salaries of employees.

And very quickly, if I may. On Russia -- Russian loan growth specifically, are you not concerned about the impact of the recent hikes -- risk weight hikes on consumer loan growth in the second half and into 2022?

No. I mean, this is -- in a way that can -- I mean, theoretically improve competitive dynamics and maybe even pricing. So we're quite happy to allocate the necessary capital to the activity there. In fact, we are well over-capitalized in Russia. We actually have lower volumes than a year ago. So this is not a concern for us. The question rather is whether this is still a dominant sales channel is the physical POS and our kind of cross-selling engine of credit cards and cash loans has built on this primarily physical POS channel acquired customers. And this is clearly not the highest growth segment of the market. So most of our efforts are actually directed at the moment to somehow try to capture more new businesses from other sources rather than the physical POS. So those are the kind of strong strategic initiatives that we pursue at the moment. And I hope that they will work, and I hope that we can actually get back to the kind of expected level of loan growth because, again, last year, we were probably too conservative in our lending, which resulted in quite a material decline in the portfolio. Having said that, this is obviously short term, very good for profits because it's also resulted in a very good portfolio quality. So in terms of returns and nominal profit, it's actually quite a good year, but we believe that we'll have some money on the table, and we did not fully capture the potential in the market. But honestly, we had [indiscernible] year ago, how bad potentially the COVID situation can develop in Russia.

The next question is Hai Thanh Le Phuong, Concorde Securities.

Just on the risk cost topic. Coming back to Russia, you said that risk cost was quite low in the first half of the year. And I think you already mentioned because of the asset mix. And does this mean that in the coming quarters or next years, we should expect a lower cost of risk and whether -- how much will it be? And my second question is also on provisions. I saw that underlying risk costs was basically zero in the second quarter, but other provisions were rather high compared to the previous quarters. What kind of items were in -- under this line, if you could elaborate on that?

So yes, I mean, the Russian risk cost rate, that was your kind of specific question. It ran down to 2%, right, which is, I think we haven't had such a low rate ever, I think. So in reasonably good years, we had between 5% and 7% risk cost rate in Russia. We think that this is -- the 2% is probably too low. So once we get back to the kind of optimal volume growth and optimal lending level, then it should go higher in order to maximize the return. But it should -- it -- at the moment, we think that it's not going to go up to this 5%, 7% level, maybe it will kind of remain below 5%, but certainly higher than the 2% that we have at the moment and which is the likely number for some more period until we see a bigger longer in the second half of the year. Yes, the other risk costs are related to some provisions we made for legal plans, some off-balance sheet risk we covered. And it's coming from [indiscernible].

The next question is from [indiscernible]. [Operator Instructions]

I have a few questions. So firstly, on the cost of risk, it's been of course very low in the first half with positive risk costs in Hungary. Should we expect this -- how should we think about the trajectory looking into 2022?

I mean last year, we provisioned quite conservatively or rather what happened was that we quite conservatively increased the Stage 2 volume. So we classified a lot of loans into Stage 2. We have not reversed these classifications. So we are still in Stage 2. So the extra kind of provisions we created last year is still there. And obviously, if the situation continues to improve and then at some point -- and these loans, which are now at Stage 2 will continue to perform. Then at some point, yes, we will revise this classification, and we classify them back to Stage 1, which ultimately result in some provision releases. So assuming that the recovery continues and now won't be a kind of turn-back or fallback or whatever, then at some point or maybe not at once, but more gradually, but certainly during the course of 2020, we should see some positive effect coming from reclassification back to Stage 1. So that's one element. The other element is just the underlying risk environment, which at the moment is quite positive and supportive. And honestly I don't know how long this is going to last. At the moment, there's no indication when it should end, right? So we don't see any -- so if you look at our GDP growth expectations, they're quite -- I mean, higher typically for countries around 5% higher next year, similar around 5%. So we expect a very kind of positive environment and relatively fast-growing economies. And sooner or later, I mean, the COVID situation will end and some of the specific industries, which were hit hard, like I don't know, foreign tourism to Hungary for instance, which is still very low, these are going to come back, and they're going to provide further boost and further demand growth. So in our best estimate or the best we can say is that for foreseeable future, we expect the continued strong economic activity. And therefore, in that environment, we expect lower risk cost. And maybe not 14 basis points. But just to remind you, in '19, so pre-COVID, we had 28 basis points risk cost. In '18, we have 23 basis point risk cost. So I don't see why we would not get -- we would not be in that ballpark level where we were in '18 and '19, if we are going to have a similarly growing economic environment. I know it was a long answer to a short question, but we -- yes.

No, it was very helpful. And then just one question on the recent trade hikes that we're seeing in Hungary and expectations that this will continue. Could we get some color about your sensitivity to the higher rates and how you see NIM evolving into next year again?

Yes. Well, we have already seen a lot of movement compared to the -- in activity for a number of years. So the base rate is now at 120 and further hikes are expected. The sensitivity at this level is certainly lower than 6 basis points before, where we started this -- or 60 basis points before where we started this year. But the further kind of -- another 10 basis point would translate potentially around HUF 5.5 billion of annual NII in Hungary. So we still are kind of -- we would still gain from further increases in the rate environment. There's increasing uncertainty because we are -- if there are further rate hikes and we are entering into territory where potentially deposit rates might start to grow. And this is -- this kind of inflection point is relatively difficult to model. But we will still benefit marginally from further rate hikes, even short term and long term, obviously, that's even more the case. And the overall impact on the NIM should be positive, obviously, in Hungary, but also on a group level. In the second quarter, not much of this is actually visible yet. So there is -- because typically the pricing takes 3 to 6 months, right, of the variable loans what we have, where really the -- most of the impact comes through. In the second quarter, I mean, you could not fully see the impact of the rate hikes so far. So they kind of fully phased in impact of what happened so far in Hungary will be visible in the first quarter next year. Therefore, certainly the Hungarian name should improve. And that should have a positive impact on the group level as well. And it's not just Hungary, it's also Russia, Ukraine, where we have increasing rate environment. So I think I'm getting more and more confident in saying that it seems that this kind of long kind of period of decreasing NIM is over. And then hopefully, we are getting into a different world, much smaller magnitude, but visible improvement in the group NIM can and actually should happen in the future.

[Operator Instructions]

Hello, this is Olga Veselova from Bank of America. Thank you very much for taking my questions. I have several questions today. One question is do you stick to your interest to your plans to consider M&A in Asia? My other question is again about Russia, what loan growth would you expect for Russian business in the next 1, 2 years? And also when you were speaking about Russian business, you mentioned that you may try to capture more businesses from other sources rather than the point-of-sale lending. So do you mean that you will consider other types of lending -- the consumer lending, not just point of sale? Or you mean non-lending businesses? So what exactly do you mean there? And my third question is more kind of big picture question. We noticed quite a bit of difference in the tone of Hungarian banks, not only OTP, but banks overall and the regulator. Banks sound quite upbeat, but the regulator extends payment moratorium. It extends dividend then. It says that the credit risks are elevated when it published its midyear financial stability report. So why do you think is that? What makes the regulator staying still conservative? And overall on the dividend limitations, what is the rationale for the National Bank of Hungary to stay cautious and extend the dividend limitations?

Okay. M&A, Asia, I think it has been clear that we have been exploring for unit in Uzbekistan. And we continue to explore those opportunities and our efforts may come to fruition. We find this country extremely interesting, very kind of early development phase in terms of the banking sector and young and fast-growing population, and in general a strong drive to modernize the country. Seems interesting, but we'll see. So there's nothing concrete I can talk about. The other story which we have to talk about was kind of maybe doing something in China in terms of consumer lending. It's still on the table that we may enter a joint venture with some local players. But again, there's nothing concrete I can talk about. The Chinese -- I mean, the kind of potential size of the transaction would be much smaller in China. And so I don't think that would be -- so from a kind of group perspective, the amount of potential investments we are talking about here is not big, but nevertheless, quite interesting. Chinese market is extremely advanced and developed in terms of consumer lending. And this is something we believe we should be part of it to at least see from close what happens there because there's an incredible service innovation and digital innovation going there. And in many sense, I think they are years ahead of what we have in general in Europe. So that's certainly a very exciting environment. But we -- if we do something, we're going to be quite careful and [indiscernible]. But again, there's nothing concrete at the moment I can talk about. Russian lending and diversifying. So what I said was that we have quite high reliance on physical -- physically distributed POS lines through physical agents. And this is the segment which is not growing. The online POS segment is growing. So the obvious way to diversify is to increase our share from the online distributed POS loans, and from other online distributed consumer loans primarily, that we started to be active in [ Cala ] for instance, in Russia, and that's actually growing quite fast. So we see from a kind of very low base in our case. And we have some other ideas, which I hope will -- help and surprise the market. But yes, so it's not like -- it's not fundamentally changing the business model of the bank. It's just strengthening the focus of other sales channels of pretty much existing products than the physical POS channel, which is especially during the COVID situation. So this COVID situation overall, not just Russia, everywhere, accelerated digital adaptation and therefore accelerated the move of customer spend from physical outlets and shops to online, and we have to follow that. And this is something we haven't been as strong and fast so far as we should have. So this is something we are working on very heavily to improve. So that was the comment I made on Russia. So we are not going to be an investment bank, for instance, in Russia. So we are not moving away from the current scope. Having said that, corporate has always been part of our business there, and -- but this is kind of usual corporate bank. The regulator, and you asked me about my comments on the view of the regulator, I'd rather not do that. So I'm actually -- it gives me comfort if the regulator and the supervisor is conservative and considers potential negative scenarios. So I think that's what they should do in order to protect the financial sector. Having said that, I don't know any fundamental reason why this is the case other than kind of general concern about potential ramifications of the COVID situation, where we don't see that in a way, neither in loan demand or in the quality of our portfolio. I don't know whether they see something which we don't see. They certainly have not told us. But I think it's perfectly okay. And I think it's actually quite good that they are concerned and try to protect the market. So I think that's what they should do. If we -- looking at the -- I mean, we had -- we have gone just through this stress test. The -- and which is -- I mean, obviously, we can always argue that it's good or not, the methodology. We actually think that this is the methodology of the stress test is extremely conservative and then under this conservative stress test conducted by the EBA, we did quite well. So I think that's another kind of objective external view on the potential risk of our portfolio. So I think -- I mean, we feel confident. And lastly, the fact that the regulator kind of is not overoptimistic, I think that's perfectly fine.

The next question is from Gabor Kemeny.

Firstly, a clarification. I seem to have made your estimate for the Hungarian rate sensitivity. Can you just repeat the number, please, 10 basis point increase implies how much additional NII?