Good good afternoon, everyone. Welcome on Citi Handlowy earnings earnings results for second quarter 2023.

My name is Adam Piotrak. I'm I'm the Head of Investor Relations.

I'm with Maciej Krywoniuk, Head of Strategy and Investor Relations Department. We will go through the key highlights of Citi Handlowy in second quarter and financial results.

The presentation is on your screen and also you can find on our website Investor Relations Citi Handlowy. Maciej, over to you.

Thank you very much, Adam. Hello, everyone.

Thank you thank you for joining the the Q2 earnings call for for Citi Handlowy. We'll start with the presentation and I invite you to the Q&A session at the end of the of the meeting.

Q2, quite quite intense quarter for us. We have completed the sale of our consumer business as as we have informed all of the stakeholders, and we embarked on the new chapter for the bank, which is the Bank for Global Business chapter where we laid out the plan for the dynamic growth in institutional banking.

More about the highlights of the second-quarter results. For the total bank, the revenue reached 878 million Polish zloty.

This is including Consumer Bank, and the net profit reached 321 million Polish zloty. This left us with RoE at the level of 21%, healthy returns.

It was the quarter characterized by the growth of the balance sheet with loans growing at 16% and deposits growing at 12%. This is post the exit from the from the consumer banks because at the end of the quarter, the balance sheet did not include the the consumer banking assets.

In a nutshell, that was the sixth-quarter sixth consecutive quarter of of the lending growth. The global clients remain a key pillar of the of the lending portfolio in the bank.

They hold a 38% share in the in the lending portfolio. We have been growing FX volumes, which grew by 14% Q-on-Q reaching record high levels.

It was a quarter with strong transactions executed both on the equity and debt markets, which the volume amounted to 7.4 billion Polish zloty. Briefly on page three, we want to touch on the new reporting structure for the segments post exit from the consumer banking.

As you can see, we we have implemented two new operating segments reflecting our integrated business model. The first one is Corporate Banking, which is encompassing the services and banking.

By services, we mean the transaction services and custody with liquidity management, payment products, trade finance, and custody services. The Relationship Banking represents the investment banking and financing solutions for our clients.

The Financial Markets segment is what at Citi terms is called Markets, and it covers both the client activities, the FX, risk management, capital markets, and brokerage, as well as interbank operations. By this, we mean debt financial instruments and derivatives.

We are capitalizing on our competitive advantages, primarily globality. We are present in 24 24 countries in Europe, and the the global clients are responsible for 41% of the bank's revenues.

The relationship we have in the bank are the long-standing relationships with heavy product load with 3.8% 3.8 products used by our institutional clients on average. More almost 60%, around 60% of clients are with us for at least 10 years.

Really long long-standing and deep relationships that we that we have with our clients. Moving on to volumes, which are on page four, the lending volumes in Corporate Banking grew by 2% quarter-on-quarter.

It's being 16% year-over-year. Primary driver in terms of the segments was the corporate clients segment with growth of 17% Q-on-Q and 22% year-over-year.

The deposit volumes were were also growing. They reached, in fact, surpassed 47 billion in the the deposit volume in the second quarter.

The deposit portfolio grew by 3% Q-on-Q and 12% year-over-year. In terms of the business volumes, you see the growth rates on the right-hand side on page four.

In fact, in every product line, the the volumes were growing. Especially strong transactional activity in the in our Services area where trade finance assets grew by 34% year-over-year, assets under custody were up 12% as well.

We have granted 1.4 billion of new financing to our clients. It includes also increases in in the current in the current facilities.

Moving on to landmark transactions, which are on page five, these are that just the flagship deals from from Q2. These are these are public, of course.

That's what we can share with you, but there was much more behind the the results. As you see, the the the key flagship transactions ranged from syndicated loans through through DCM transactions and also capital markets transactions.

We have been also granted the the Best Funding Solution, the Adam Smith Award for Play, where we have concluded the export agency-based financing. We have been also nominated and received the Poland's Best Investment Bank for M&A, Euromoney Award for 2023.

Traditionally, moving on to page six, Q2 and specifically June is a is a month where Global Community Day happens around the globe, and Citi Handlowy was also active here with more than 1,800 Citi volunteers supporting 117 organizations with with 24,000 beneficiaries. This is our our effort to be engaged in the communities we operate in every day.

Coming back to the business. Page eight, which is the the revenue picture for for the quarter, the the total revenue in Corporate Banking was the the total revenue, the top line, reached almost 700 million zloty, which is a decline quarter-over-quarter by 28% and also year-over-year on a quarterly basis.

However, if you look at the segment of Corporate Banking, it was up 7%. The drivers behind the growth were ranging through different product areas, from FX volumes, from payments, from trade finance, as well as brokerage.

In Financial Markets, the quarter specifically was down by 53%, but that's the reflection of the of the calendarization, in fact, because when you look at Markets results more in the long term, which we did as you can as you can see on the page, looking at the first half of 2023 vis-a-vis the 2022, in the corresponding period last year, the revenue was lower by 107 million, '23 represents 20% growth H1 to H1 year-over-year. Pretty balanced view in terms of the of the segment revenues.

It's a it's a well-balanced model in terms of the operating segments. Moving on to the next page, page nine, which is the Net Interest Income page, we have generated almost 460 million Polish zloty in in NII this quarter.

The growing lending volumes were supporting the growth in the client's interest income. When you look at the Corporate Banking segment, the the 2% growth is the reflection of the lending portfolio growth I've just mentioned.

In the Financial Markets space, the NII was down 9% and the drop was driven by the interest expenses. This is linked with the liquidity that was required to be accumulated for the Consumer Bank exit transaction.

A bit specific quarter in terms of the of the nature and the transactions that that we have executed. When you look at the at the interest rate forecast, we house view is that the rates will remain at 6.75%, which most likely would help to stabilize the net interest income levels.

Very strong quarter on pay page 10, very strong quarter in Net Fee and Commission line. In fact, contributed all businesses contributed to the to the results of 119 million zloty, which is 10% up Q-on-Q and 11% up year-over-year.

Strong fees related to capital markets. I've mentioned the transactions in the in the capital markets space and they were also supporting the the fee line growth.

The trade finance assets, which grew by 34% year-over-year, also contributed to the fee line. Moving on to page 11, which is the Financial Markets page, the the numbers, the treasury results numbers that you see on the page are the the view that is post transfer pricing, and Q2 revenues reached in Treasury 273 million.

Again, what's behind the the change, the primary components of the change are the trading results and the AFS results, but it's more a function of calendar. When you look, as mentioned, into first half to the first half last year, this year was 850 million, and last year was the 722 million of treasury results.

More to looking at this in the long term, quite quite strong first half in terms of the treasury results, as you see on the page, lower in the specifically in Q2. I think what worth noting on the page is also that despite of the growing volumes, the the slight drop in the income on FX client activities, 3% drop, it's attributed to to the higher tickets transactions where which are characterized by the by the slightly lower lower spread, and this is the the explanation for the 3% drop in the income on FX.

What's good news that right bottom graph, where revaluation reserve is growing, there is a positive change of around 200 million Polish zloty that that improved the position in in the revaluation reserves, positively impacting our capital position. Moving on to expenses, page 12.

Again, it's a quarter where the costs are down Q-on-Q by 37%, but it's important to remember that Q1 is a quarter where we we need to include the regulatory expenses in the in the P&L. In fact, on in the quarter, both the staff expenses and the admin expenses are slightly down by 4 and 3% Q-on-Q, the traditionally lower in Q2, it's also calendar effect in a way.

Moving on to to year-to-date view, the first half of '23 versus first half of '22, coming into more details, the the staff expenses were up. The the growth is 28 million.

There was also growth in the IT IT expenses. That's, in fact, the execution of our strategy of investing in platforms where we want to be more connected to better to better serve the the global needs of our clients.

In fact, the the the 40 million growth is the reflection of our investments in the in the IT platforms, and it's both the front and and back office, client-facing and and more process automation and tools for our employees linked to the automation. The regulatory expenses are up by 29% this year, the first half, and that's primarily contribution to the restructuring fund of the Banking Guarantee Fund.

Now moving on to page 13, which is the Cost of Risk page, the cost of risk, as you have noticed, is up, and, in fact, this the growth that you see in the in the cost of risk line is a representation of two client relationships that have been reclassified to stage three. I want to stress that these are pretty much isolated cases, and the overall portfolio quality remains good.

When you look at the cost of risk at 47 basis points this this quarter, it's elevated, but excluding the one-offs, the the the cost of risk remains at the healthy 19 basis points level. We are we are working with the clients to restructure, and we are heavily engaged with them at the moment.

Yes. In fact, this is it.

The page 14 is is a summary. I will just maybe point to strong returns with RoE at 21% and RoA at 2.3%, stressing the 321 million of net profit, some one-offs included in the results linked with real estate sale of one of our headquarters building, and this is also a representation of how we handle the stranded costs.

Post consumer exit, we did not require so much office space, and and we have decided to sell one of the Warsaw buildings. I think it's important to note that the core revenue line, which is 578 million, which is our underlying core business, is pretty stable.

The the strong capital position with capital ratio at 25.8% that you can see on the page is a function of the low lower credit risk requirements post Consumer Bank exit. This would be a brief summary from my side in terms of the quarterly performance of the bank, and happy to take questions.

I see there are no questions. Thank you very much again for joining.

If you need anything from the IR team, please reach out to us. In terms of the quarterly earnings, we see each other in November.

Thank you, Maciej. Have a nice evening.

Thank you. Bye-bye.