Good afternoon everyone, welcome to Bank Millennium 1Q results call. With us the usual speakers and presenters: Mr.

Joao Bras Jorge, our CEO, Chairman of the Board; Mr. Fernando Bicho, Deputy Chairman of the Board and CFO.

My name is Dariusz Górski. I'll be trying to manage or, let's say, control the call.

The drill, we typically do presentation first and then we are answering your questions. We follow as this time as well, although we want to make a small change.

Mr. Joao Bras Jorge will do the opening and also guide us briefly through key business achievements of the quarters because we are very proud of this time.

Over to you, Joao.

Thank you. Let's start on slide 5.

Slide 4, we have just an highlight of some of the awards that the bank received that just confirm that the bank is very focused by differentiating itself by the quality of services and the innovation of the products and the customer experience that provides. Page 5, we have in beginning just to highlight some of the business achievements.

As we initiate second year of the strategy, it's very visible the results that we are achieving and how successful the implementation of the strategy is being. As you can see, the total deposits year on year grew 13%.

Consumer loans year on year grew 5%. Net loans to companies, 40% year on year.

As you remember well, this was the biggest challenge that we had for this new strategy to build such a strong franchise in corporate banking as we already have in retail. Leasing with the portfolio grew 6% year on year, and also the growth of investment funds, 30%.

In last three years, we have been presenting the growth of investment funds every year around 30%. On the right side, we keep growing very well in organic way on customers.

In retail active customers, we already achieve 3,313,000, and this is a year-on-year acquisition of 150,000 customers active as net growth, with 95% of the customers being digital actives. Looking for the origination that gives a bigger flavor about the dynamics that we are having at the moment in commercial level, you can see that in cash loans, we had almost 2 billion PLN of production in first quarter, it was 1.9 billion PLN in production, which is 9% higher than the first quarter of 2025.

In mortgage loans, 2 billion 200 million PLN of production, and this is 179% higher than the first quarter one year ago. Corporate loans, 3.2 billion PLN, which is 122% higher year on year.

Leasing, 976 million PLN, 12% higher than the first quarter of last year. Factoring turnover, also with almost 8 billion PLN of turnover, which is 21% higher than one year ago.

This is a demonstration that the strategy is being successful implemented, that the results are visible, and that we are in front of a very dynamic business volumes that, of course, will translate also in the financial results. Now I will pass to Fernando.

Thank you. I will continue with the main financial highlights of the quarter on page 7.

We reported a net profit of 301 million PLN, a growth of 68% year on year. The net profit excluding extraordinary items stood at 514 million PLN, 28% lower than one year ago.

The return on equity on an adjusted basis, by splitting throughout the year contributions to the resolution fund, reached 15.2%, or 12.1% on a reported basis. We continue to show a very resilient net interest income despite a much lower interest rate environment.

In fact, our NII in the first quarter reached 1.4 billion PLN, just 2% down year on year, with the net interest margin at 3.65%, 58 basis points lower than one year ago. This against a background of a drop of the average three-month WIBOR of 199 basis points, almost 200 basis points decrease year on year.

We show some accelerating and well-diversified fee and commission growth, +12% year on year. The cost-to-income ratio on an adjusted basis at 39%.

The cost of credit risk continues to be relatively low and stood at 45 basis points over total loans, not being supported this quarter by any sale of NPLs. The NPL ratio further improved and reached an all-time low of 3.7%.

We also had relevant developments in terms of capital during the quarter. We significantly improved the total capital ratio that is now at 17.6% and the Tier 1 ratio that is now at 16.4% after reflecting the proceeds of the AT1 bond issue that we have done in January in the total amount of 1.5 billion PLN, as well as the retention in own funds of the second half 2025 net profit.

Consequently, we further increased the buffers over the minimum regulatory requirements, which were respectively at 5.8 percentage points and 6.6 percentage points. We also have solid buffers over the minimum MREL requirements, also supported by the issue of the AT1 in the first quarter.

The long-term funding ratio reached the targeted level of 40%, which was supposed to be met by year-end, and the loan-to-deposit ratio was flat at 58%. I will skip the tables of page 8 and 9 that give the more detailed information about important P&L items and different ratios, because we will see them throughout the presentation.

I would go directly to page number 10. As usual, we are presenting the status of the execution of the strategy 2025–2028 in terms of the main business, financial, and risk indicators.

We can say that we are generally on track to achieve the targets for 2028, with special emphasis this time on the execution progress that we have achieved in the corporate area, with a significant growth of the corporate loan book. Just as a reminder, we had targeted doubling the size of the corporate portfolio during this four-year period of the strategy.

Other indicators are also supportive in terms of the improvement of the ROE, reduction of the NPL ratio, continuation of the pace of significant growth of the customer base in retail, which is also now being followed by the growth of the customer base on the companies segment. On page 11, we see the evolution of the net profit that, as I mentioned, stood at 301 million PLN.

It must be highlighted that in the first quarter of this year, we had higher contributions to the banking guarantee fund, namely to the resolution fund, than one year ago, but this will be offset throughout the next three quarters due to the fact that there will be no contribution to deposit guarantee fund. When we will reach the end of the year, actually the contributions to the banking guarantee fund will be lower than in the year 2025.

Anyway, we have this inflated figure in the first quarter of the year when the resolution fund contribution is fully booked, and as a consequence, is inflated the admin costs and somehow deflated a little bit the net profit that would have been achieved otherwise. On a reported basis, we show an ROE of 12.1%, or 15.2% if we would spread out through the year the contributions to the banking guarantee fund.

On an adjusted basis, so as I mentioned, the net profit stood at 514 million PLN. On page 12, we see the evolution of the NII, which continued to be very resilient.

We had a drop of only 2% versus one year ago and 3% versus the fourth quarter of 2025. It is visible on the top right graph that we continue to have repricing of the loan portfolio, of the variable rate part of the loan portfolio, which translated into a reduction of the interest on loans to 6.75%.

At the same time, we managed to decrease the average cost of deposits by 17 basis points to 1.78%. The net interest margin marginally contracted in the quarter by 13 basis points versus the fourth quarter of '25.

On the net fee and commission income, we have some positive developments. After let's say a more difficult period last year, we already see clear signs of improvement with a growth of net fee and commission income by 12% year on year and 2% quarter on quarter, the growth year on year being supported by higher commissions from insurance and from investment products.

On page 13, on a reported basis, operating costs grew 12% year on year. If we exclude this BFG impact, the growth was 10%.

Other admin costs grew just 8%, we see signs of deceleration in the cost growth. The cost-to-income adjusted stood at 39.1%.

Asset quality continued to be strong, page 14, NPL ratio further down to 3.7%, cost of risk at 45 basis points over total loans, as I mentioned, no sales of NPLs in this quarter. Also I would stress the further improvement of the coverage ratio of impaired loans by total credit risk provisions from 74% one year ago to 82% in the end of March.

On page 15, capital position further improved in the quarter, mainly due to the issue of AT1 bonds and the retention in own funds of the net profit of the second half of the year. This was partially offset by a decrease in the valuation of the hold to collect and sell bond portfolio due to the correction in yields that happened in March.

On page 16, significant surplus also on MREL requirements, both MREL TREA, MREL TEM, and a very strong liquidity position, which puts us very well positioned for the further growth of the loan portfolio since we have now a loan-to-deposit ratio of only 58%. Last but not the least, we reached the level of 40% in terms of long-term funding ratio, according to the current definition of the ratio.

Of course, if the formula will be changed, we will have even bigger comfort in terms of the fulfillment of this new requirement. On page 17, regarding FX mortgage legal risk, we had, from one side, a significant drop in the overall costs connected with legal risk, on a pre-tax basis a drop of 61% year on year.

In terms of quarterly dynamics, we had an increase versus the previous quarter of the inflow of court cases to 893. Still, this is the second lowest inflow for many years of court cases.

On the other side, we had a lower number of settlements in the court and out of court proceedings, also due to different dynamics of the cases in the courts. We can say that from our side, we continue to do all the effort to continue to have the, as much possible, settlements regarding the existing court cases.

Moving now to the second part of the presentation regarding business development. We have visible signs of acceleration of loan growth.

Net loans on a consolidated basis grew by 5% year on year, or 6% if we exclude the FX mortgage portfolio. This despite the fact that we still have year-on-year a contraction of the PLN mortgage portfolio, although on a quarterly basis it already grew.

We continue to have a solid growth of consumer loan portfolio, 5% growth year on year, but especially, of course, the growth in this quarter was fueled by the significant growth of the corporate portfolio, including leasing and factoring, that grew 27% year on year, accelerating the growth pace vis-a-vis the previous quarter. As a consequence, the structure of the loan portfolio is gradually changing, with some dilution of the PLN mortgage portfolio and increase of the share of corporate, leasing, and factoring in total loans.

Customer deposits has also a strong performance, a growth of 13% year on year, both coming with similar growth rates from retail and from corporate, but also with an increase of the share of current accounts and savings accounts in total deposits and a decrease of time deposits. While in investment products, despite the turmoil in March, we still show a significant growth of 31% year on year, and particularly a growth of 39% of our Millennium TFI mutual funds.

On page 20, the sales of consumer loans in the quarter were solid, a growth of 9% year on year. Of course, much more visible is the significant jump in the sales of mortgage loans that grew by 79% year on year.

The origination in the first quarter reached 2.2 billion PLN, which allowed us to reach a market share closer to our natural market share of 7.7%. In cash loans sales, the market share is close to 9% in the first quarter.

Overall, we had a growth of retail customer funds by 15%, especially fueled by the growth of investment funds. On page 21, we continue to show a significant growth of the active number of retail clients.

On a net basis, the number of customers grew by 42,000 in the quarter, 150,000 year on year. At the same time, the microbusiness clients portfolio also further increased by 5,000 during the quarter.

Of course, this growth of customer base is followed by a significant growth of current accounts by 276,000 in the last 12 months, and cards by 229,000. On page 22, mobile app is in the center of our contact channels with our customer base.

We continue to show impressive numbers regarding the level of penetration of digital in our customer base. Just a few important figures: we ended the quarter with 3.13 million active digital users, a growth of 6% year on year; 2.94 million active users of our mobile app, a growth of 8% year on year, of which 2.43 million are active mobile-only users; and we had 2.26 million BLIK users in the first quarter, a growth of 9% year on year.

On the top on the right side, you can see the split of how our customers use the different digital channels. The digital processes are contributing to boost acquisition.

On page 23, you can see that in the first quarter, we had 69% digital share in current accounts acquisition, apart from already very high share in credit cards sales, 81%, or cash loans sales, 88%. This is being recognized externally.

We got the first place as best remote account opening process. Pages 24 and 25 further illustrate how we are putting the customer needs at the forefront of our digital development.

This is translated into very practical usage of our solutions. For example, 74% of the Family 800+ applications were submitted via the mobile app.

We are implementing solutions that promote cross-channel synergies, as illustrated on page 25. Page 26, we continue the development of the goodie platform.

This quarter, apart from the continuation of the relevant growth in terms of transactions with cashback, and we would highlight the establishment of strategic cooperation with Polish Payment Standard, the PSP, the operator of BLIK, in the area of multi-bank cashback platform. Moving to companies, page 27, we have a strong momentum in companies financing.

Total portfolio grew 27% year on year, and specifically loans to companies increased by 41% year on year. At the same time, total deposits grew by 13% year on year.

The origination of loans to companies in the first quarter was more than the double of the one registered in the first quarter 2025. Also, positive signs are coming from leasing, where new sales picked up visibly in March, and this allowed us already to have a 6% growth in the overall leasing portfolio.

Finally, on page 28, the acceleration of and momentum of the corporate business is also illustrated by the levels of leasing sales, +12% year on year, and factoring turnover, +21% year on year. These are the most important highlights of our first quarter results, and now we will go through the Q&A.

Thank you.

Thank you very much, Fernando. You're doing very well because we have practically no question referring to the content of the presentation and the past, this speaks for itself.

We give you a bit of a breathing space, why don't we start from questions relating to loans and deposits, and I will direct them or ask them to Joao. First question is: first quarter was another quarter when, despite strong sales, portfolio of PLN mortgages only grew 1% quarter on quarter.

Are early repayments behind it or refinancing? When do you expect an acceleration of the growth of the portfolio?

Also a question within this context: do you consider the mortgage market as attractive at the moment?

We believe that already next quarter, we will present or the same level than a year ago, or starting to show some growth in mortgage. It was 5.7 billion PLN the portfolio, we should be where we start.

It should be where we started. Just so if I remember, we have PLN mortgage, 35, 35.7, yes, we have 35.1 billion PLN, we should already present some growth next quarter.

Last year, of course we had also some intention of producing a little bit less. We end up to have this impact with an increase of the early amortization and some refinancing, we end up falling in terms of the portfolio more than we were expecting.

We explained this in the results presentation of last quarter, that the decrease was not so intentional and that it was our intention to stabilize and to start to grow. This is what we are doing at the moment.

We are producing, as it was shown, 2.2 billion PLN in the quarter. We should expect the same levels of production, maybe a little bit higher in the next quarters.

There is a mix here, and we need to remember that for our portfolio, we already have a reasonable, normal amortization. Besides that, there is also some early repayments, it's a partial or total early repayments, not just by refinancing, but by the customers per se, because all the processes are user-friendly, without commission.

Even in the mobile app, a customer can repay partially any amount that he wants of his mortgage. Of course, now there is the refinancing.

Putting together because we had also this kind of questions, 40% of our production is refinancing. We believe that should be aligned more or less with the market.

We think the market is attractive, but it's always a question of doing in a balanced way. What we are trying to fine-tune as much as possible is to do the right size of the mortgage portfolio, to do the right size of the production, also aligned with the market share that we have in retail and market share of customers and all of that.

We have been also giving some special conditions to green mortgage, mortgage that fulfill some ESG criteria, to build a better portfolio. I think that's all.

There was also a bit more nuanced question in that regards. How much of the mortgage sales results include or are a function of refinancing of loans from our own portfolio, effectively existing clients?

This is so we don't refinance ourselves in this perspective. Of course, we have some retention process in cases of the customers wenting outside, but is in a small amount.

Even when we go back to trying to understand the repayments, that's why I was so assertive that there is normal repayments. A lot of our customers repay the loan not by refinancing, but by their own cash or partial repayments, it's not so significant.

Some of the refinancing that is done, there is also a different tenor, sometimes more amount, sometimes it's not just a question of price, there is also a question of taking the opportunity of a lower interest rates environment to make a different structure of the finance. As I said, the percentage of our own, let's call it renegotiation of the rate, is small.

The percentage of our production that is refinance is 40%.

Thank you. Also have rather uncommon question, or rare one, about deposits.

Do you expect to continue reducing the share of term deposits throughout the year? What are you doing to change the mix and still grow the overall book?

I alert that the part that is not time deposits is also savings account. Depends a little bit what is the product preference, or the product that also the bank invest more in promoting.

The bank have been promoting savings account because believe that it's the most adequate product for the mass market. Being very liquid as our bank is, to be aggressive in the affluent or even in private banking on time deposits only makes sense if there is a strategy to attract the customer to further on allocate this amount in investments.

The deposit per se does not make a lot of sense. That's why the bank is promoting more the savings account because it's a tool for the standard savings and to attract mass market customers and also to initiate the journey first for savings and later on for investments.

These have been the strategy, the strategy have as a consequence the growth of the total deposits with the growth of the amount that is allocated in savings accounts plus current accounts. The amount, I would say in gross numbers, is a little bit 50/50 between savings accounts and current accounts.

As time goes by, you will see even maybe an increase of the savings account versus time deposits. In a traditionally way, what we grow in terms of total deposits is very similar what we grow in current accounts, which also shows primacy, increase of customers, and all of that.

There is always a challenge for us, sometimes we discuss it very internally a lot, because the bank is very liquid. We are always waiting to grow in the credit to allocate all of this liquidity.

Anyhow, because the growth is very much in mass market, it's a nonsense to block this normal growth because this will be blocking the growth of our own franchise in retail. We will keep growing as we are.

This is an issue about all the sectors, the banking sector is very liquid in Poland, but we will keep this developing of our retail bank.

Thank you very much. Fernando, over to you.

First question, let's get the historics out of the way. First question on the past: despite the balance sheet growth, the value of banking tax dropped.

What was behind this dichotomy?

The level of the banking tax is influenced by the size of the equity and by the size of the Polish government bonds portfolio. What we had during the first quarter was, first of all, the significant increase in our equity due to the issue of AT1 instrument, right, that was included in March in our own funds.

This contributes to decrease the base. Second, also some change of the composition of the liquid assets portfolio.

We had a little bit bigger part in Polish government bonds and less balance of NBP bills. These were the main drivers of the change of the base, which translated into a little bit lower, not substantially, but a little bit lower banking tax.

Thank you. We have received few questions on NII, let me aggregate them.

Could you please update on the NII guidance for '26 and '27 given the new rate outlook? By the way, do you have a new interest rate outlook?

How do you expect volumes and margins to behave in the rest of 2026?

When we started the year, our interest rate scenario was that interest rates would be cut to 3.5% until the middle of 2026 and then they would stay flat throughout the '27 and '28. This was our base macroeconomic scenario.

We have now NBP rate at 3.75%, and current market expectations is that this rate will stay stable, maybe until the end of the year. We cannot be sure, but at least this is the current market consensus.

What we expect is that this can be supportive to avoid further compression of the net interest margin. There is always some further compression that was coming from the gradual repricing of the portfolio that is variable rate, and so with the lower interest rates, of course there was some repricing that is visible in the average remuneration of the loans that I mentioned during the presentation.

If the interest rates will stabilize at the current level, what we can expect is some stabilization going further in terms of the net interest margin, but also we expect that the positive effects from the volume growth will start to play out, and namely that the growth of the loan portfolio gradually will replace part of the bond portfolio that we have, which would bring nominally higher yield, and so this volume growth would contribute to offset, let's say, the contraction of the margin that we have observed in the last 12 months. To summarize, we also, of course, have a partial protection through our bond portfolio in terms of the NII.

All in all, we expect that NII going forward will tend to be more stable. We are not making, let's say, projections for each quarter, usually we don't do this, but I think that the perspective for the year is that the volume growth throughout the year will tend to offset the reduction of margin that we have observed during the recent quarters.

For 2027, if the interest rates would remain stable, of course the perspective should be positive due to the continuation of the volume growth that should be beneficial for the NII.

Next question is on fees and commissions. Is low double-digit net fee and commission growth in first quarter a good proxy for the rest of the year?

I think we are positive in terms of the evolution of net fee and commission income, but it's too early to say whether we will be able to achieve double-digit growth. I think there is already some visible rebound, but also due to this recent market volatility, of course it's more difficult to predict how the commissions from investment funds will evolve.

It's obvious that when there is market turmoil or volatility, the inflows decrease or even, in specific moments, there can be some outflows, and this can have impact on the overall fees that are charged on the investment funds. I think we are positive that this year will be clearly better in terms of evolution of net fee and commission income versus the previous year.

It's too early to say whether a double-digit growth can be achieved.

Thank you. Now cost of risk.

Could you please update us on the cost of risk given the worse / uncertain macro environment? Is it still 50 basis points for the full year?

In our quarterly report that we published today in the morning, we also elaborate about the macroeconomic environment and the potential consequences of this war in the Middle East, which, of course, is subject to a large uncertainty due to the fact that is impossible to predict when this situation will finish and for how long the effects will stay and which effects will have more impact for the Polish economy. Our view so far is that until now we have not seen any material impact from this situation in the quality of the credit portfolio.

Of course, we have put into place the monitoring that is appropriate for this situations, both for the corporate and for the retail portfolio. This situation started less than two months ago, it's too early to take definitive conclusions about what is going to happen.

As I say, so far we do not see any material impacts on both the corporate and the retail portfolio. Also, the prospects for the growth of the Polish economy for this year are still very good.

The projections point to a GDP growth clearly above 3%, even if a few decimals below the original estimate, it's still a very strong economic growth, very low unemployment, growth of real wages, inflation at the end of March 3% year on year. For the time being, the situation is still relatively benign, but of course we will need to continue to monitor the evolution of the situation.

Thank you very much. Next question is on costs.

How much do you expect costs to grow in '26? Do you plan to achieve positive operating jaws this year?

The answer to the second is no. We don't expect to have positive jaws in the year '26.

We are investing a lot, especially due to the execution of this new strategy. Investment means IT and technological investments from one side and increase in the number of employees.

We are not in a stage of cost optimization for the time being. We are really investing in the future and also expecting that this investment will bring additional scale to the bank, which will be very important in the long run.

Having said that, what we expect this year is to show a clear deceleration of cost growth when compared with the year 2025. In the year 2025, we had a double-digit growth of costs.

This year we are targeting a single-digit growth of costs, both on admin and in staff costs. Of course, this is always more complex to achieve at the same time that we are significantly investing, our investment plan for this year is significant, I would say, but our expectation is that costs will grow single-digit.

However, revenues, due to the fact that the NII tends to be, let's say, flattish, I would say, versus last year, and this is the biggest revenue component, and even if the cost of risk will not be much higher than last year, of course it creates that on overall, we still will benefit from much lower costs related to FX mortgage, but on the other side, the operating jaws will be negative.

Thank you. Indeed, difficult to expect positive operating jaws in this environment.

One question on capital: operating risk requirements are growing. What trajectory do you expect by end of the year and in subsequent years?

How much of this growth relates to CHF portfolio?

The implementation of CRR3 last year brought a significant increase in the operational risk requirements for the bank, which we reported last year. The operational risk charges that are based on a three-year average are still relatively inflated.

What we expect at year-end is that the average will decrease. Most of the operational risk charge, or a significant part, comes from the costs related to legal risk.

We are using now the average of 2023, 2024, and 2025. '23 was the peak of such costs, it's obvious that when we will reach the end of the year and we will drop the year 2023, there will be some relief coming from the Swiss francs, this is the positive part.

On the other side, the operational risk charge is not only about legal risk, it has also other components, including the business component, which will continue to increase as the bank is growing. All in all, we expect that for 2027, the operational risk charge will be a little bit lower than what we have today.

Thank you. One interesting fresh questions just arrived on bond portfolio: revaluation of the securities portfolio, how exposed would the bank be in the case of sustained Polish government bond yields widening on the back of volatile markets, given the sizable bond portfolio?

It's difficult to in few words to explain, but just the big picture is we have a relatively large bond portfolio. It represents more 40-few percent, 45% of total assets, it's very high.

Not everything is Polish government bonds. We have one component which is around 12 billion PLN equivalent invested in Euro sovereign debt, which corresponds with excess of liquidity that we have also in foreign currency.

The other part that is invested in Polish government bonds is divided between hold to collect and hold to collect and sell portfolios. Of course, and by the way, the disclosure in the end of the year was done of the value of both portfolios.

During the first quarter of this year, of course we had a decrease of the valuation of the portfolio of hold to collect and sell. We had a positive amount of valuation at the end of the year of 250 million PLN, more or less, I don't have the number by heart, and in the end of the first quarter, we had a negative valuation of 90 million, we had a drop of valuation over 300 million PLN.

Not dramatic, part of it was already reversed in April, of course, as yields have come down. What protects us against significant volatility and increase of yields is the fact that the portfolio duration is not very very high, especially in the hold to collect and sell portfolio.

We have strict rules regarding the distribution of the portfolio through different tenors. Usually we do not invest in fixed-rate bonds with tenors above 5 years for the banking book.

As I said, we have the portfolio split throughout these tenors, which means that even in situations of volatility, the impacts are relatively contained. For the future, what we expect is, as the loan portfolio growth will accelerate, the portfolio of bonds will start to decrease, hopefully, and we will reach a more, let's say, normal position, because as I said, to have 45% of liquid assets is not so standard, but it's the result of the recent years dynamics where deposits grew much more than the growth of the loan portfolio.

Also, having said that, if you look at market data, you see that in the Polish banking system, deposits are systematically growing more than loans. That's why the system is so liquid.

We have, let's say, three remaining blocks. One would be the FX, shall we do it?

Okay. Why has the amount of new lawsuits increased and amicable solutions declined in the first quarter?

Do you see this as a change in trend? Sorry, I don't know if it was clearly heard.

I'll repeat the question, sorry.

No, it was.

It was, okay.

It was. The trends are difficult, there are some seasonality sometimes.

We cannot say that there is a reverse of the trend, but it's clear that there was a deceleration of the decreasing trend, let's call it like that. This is clear.

It's early to say that we achieve a plateau of levels of new cases, but the deceleration that we were seeing, or the level of the decrease, it's clear that it was a slightly change. We need to wait and see a little bit.

Also we need to see these consumers of repaid loans, how they behave and so we need a little bit more time. In terms of the settlements, we don't have much place to make settlements more.

We have been impressed is that the team is able to keep doing settlements lately because truly we have been pushing. First we were pushing for the 2,000s per quarter, then we push for the 1,000 per quarter, but we were expecting this decrease of settlements for a while.

First we moved for pre-court settlements to court settlements. This is a trend that now we still do, but it's very small, the numbers of pre-court settlements.

What we do more is court settlements at the moment. When we see the cases that we have versus the settlements that we have, we start to reach to a situation that there is no more customers that are open to make amicable settlements that we didn't contact with them 10 or 20 times.

I think we are running out of also the opportunities. Anyhow, we keep exactly the same openness before court, court, after first instance, after second So we are always open to find a solution for any kind of dispute with a customer.

Thank you, Joao. Fernando, one of your favorite questions on CHF: the reduction of CHF mortgage costs has been very material in the quarter.

What are your expectations for the remainder of '26? A similar one: can you update the guidance, does 50% decline year on year still make sense, or could this be a larger decline?

Last year we had a decrease of the pre-tax costs of around 34%, if I remember. Now in the first quarter, we had a decrease of 61% pre-tax.

In the previous meeting, we said that, based on our expectations, we were expecting to have further material drop of the costs related to FX mortgage during the year 2026. I would say that the drop can be 50% or higher.

Of course, based on the assumption that no further, let's say, negative developments will occur. Very recently, we had developments that were important, namely two weeks ago, or less than two weeks ago, three verdicts of the European Court of Justice that are supportive in terms of not, let's say, opening new, let's say, new downside risks.

For the time being, we don't see further downside or events that could have a material negative impact. That's why we think that it is possible to have this another significant drop of the costs.

Of course, it's something that we will be updating every quarter. The only thing that probably is a little bit behind our expectations is that the inflow did not drop as we did not have a continuation of the trend of five or six consecutive quarters of drop of the inflow of court cases.

This was something that we were not forecasting. On the other side, as I mentioned during the presentation, despite this increase in the quarter, it's the second lowest quarter for many years.

It's also not to dramatize, as I say this, and not to treat immediately this as an inversion of the trend.

Thank you very much. We're moving to a slightly different subject: interest-free loan sanction.

What is the outstanding volume of consumer loans with interest charged on credited costs?

We are not providing this type of information, as you can imagine. I think that the questions are being put in the context of the question of the decision of the European Court of Justice of last week.

I think that more important than the question about how much it is or not covered is what is the consequence of such a verdict, right? Which is I think we will need time to understand, because it's not clear that the decision of last week will translate into significant additional number of cases from one side or the application of the sanction on another, right?

I think that reading the verdict and the considerations that led to the verdict, I think it's not possible to conclude that automatically the sanction will be applied. By the way, the sanction was not being subject to appreciation by the court, was rather specific components of the loans that were done with the clients.

Joao, I think it's what we can say for now, right?

Yes, yes, yes. It's very important to understand well, because for us it's not clear how this is impact the free credit sanction.

We think that to give guidance on this subject could be very misleading. It can be nothing, or can be big, and it's too early to say.

What I can say, because we wrote it in our quarterly report today, is that the number of open court cases increased a little versus the previous quarter, but we have, on average, 100 cases per month. The number of cases that we have is 2,000-something, as we wrote in the report, and the statistics are still that bank, and the banks in general, are winning between 85% to 90% of the cases so far.

These are the facts until now.

All right. Second last question, again a slight let's say deviation from the normal subjects.

One of the participants is asking for an update on so-called long-term funding ratio. Could you please reveal your position in terms of the long-term funding ratio?

What is the status with the legally binding regulatory minimum? Was it eventually revised from 40% to 20%, and also entailing a change in calculation composition logic?

As we have shown in the presentation, with the current formula, we are at 40%, which is the requirement to be fulfilled by the year-end. If there will be a change in the ratio and in the way it is calculated to 20%, we will be above this target of 20%, I can say.

I will not be precise now. I think what we want is to see if really this is going to change and what is the final formula that will be adopted.

If what was announced a few months ago will materialize, we are clearly already above the 20% that would be the new target, we would have, let's say, more comfort in the fulfillment of the requirement versus the current situation.

It's 14:59, last question would be on which one? Exactly, this is the one kept for the last.

Can you comment on potential dividends and payout ratio? How much would Q1 profit boost CET1 ratio?

This actually I calculated, 50 basis points.

I think what we can say today is in the strategy, we have put as an objective to be able to return to dividend distribution in the year 2027 from the results of 2026. We still see that this is possible to be achieved, subject to the recommendations of KNF that will come by year-end regarding dividend policy of the Polish banks and any specific recommendation for us.

Our historical dividend policy was to distribute 35% to 50% of the net profit. I think that if we will start to distribute dividends, we will start from a lower payout in the beginning.

How much it can be, it's too early to say, but our intention continues to be to achieve also that objective that we have disclosed in our strategy.

More as an indication of normalization of the process and not so much by the amount. All the feedbacks with investors and everything, they have been very much giving less relevance for the dividend and being more focused about the growth and to keep capital to make this growth, especially in terms of the corporate credits.

We need to balance a little bit this, because it's very important that I said this last quarter, but and the numbers are very much the same, when we separate the new credit exposures, more or less is 1/3 below 30 million PLN, €3.5 million, then another third between 30 to 100 million PLN, it's up to €25 million, and then just a third higher than that. Moreover, 50% of the new exposures are new clients.

So 50% of the growth, it's from new clients, and as the team it's fully the same, the risk team is the same, so that was not a change of underwriting criteria, there is no relaxation of any type of risk management. We are very very happy with the openness of our customers for our value proposition, and also we are very proud and confident about the results that we are presenting and the continuation of that results.

For us, it's also important to be able to sustain this growth. We announce it, and we are very keen to if allowed by the regulator to distribute dividends.

As Fernando said, is more as a demonstration of normality than to have a concentration to distribute a big amount of the profits, because there is still a huge potential to deploy by the bank and to use this capital in this speedy speedy development that we are having at the moment.

Fernando is very meticulous about the questions, he does not allow any questions to remain unanswered, and he rightly noticed that maybe the question on the cost of risk wasn't directly answered. Question was about the guidance for the cost of risk in 2026.

Yes. Just to be clear, because I mentioned about this macro environment that we were not seeing material negative impacts both on the corporate and retail, what I missed to say is that we still expect the cost of risk during this year to be relatively benign.

Of course, we are not expecting to be so low as it was last year, which was 32 basis points over total loans, we are not guiding in that direction. We benefited last year from significant results from the sale of NPLs.

We are not assuming that it will always happen in the same scale. In the first quarter, 45 basis points over total loans is very similar to last year without the sale of NPLs.

I think that it is possible that during this year to be somewhere between 40 and 50 basis points over total loans. I think, for the time being, based on the information that we have, seems possible to be achieved.

Oh, it's a very specific guidance. Thank you very much, gentlemen, for your time and, as usual, very insightful questions.

Joao, would you like to have any closing remarks? No,

just that maybe because I spoke so much about corporate, now I will speak about retail. In retail, of course, it's more visible the progress that we did lately in mortgage, but we keep deploying our strategy connected with the primacy.

We deployed a new platform in terms of recommendation engine for customers. This is this hyper-personalization approach powered by AI.

We will, up to summer, onboard a million customer. We have already 500,000 customers being served by this approach.

We believe that with that we are building the competitive advantage of the bank for the future, and this is as relevant as 10 years ago was deploying digitalization in the banking system. This is something that will not have a major consequence in terms of increasing the volumes, but it will increase the customers that will interact with us with as main relation.

Besides more sales and more contacts and more interactions, also we have a very important thing for the bank, which is selling the same with less approaches. The constant approach to the customers sometimes also can be too much.

That's why we have, for example, in-sourced call center to not have a situation that we outsource approach and contact with the customers with a lower quality, although can be cheaper, but lower-quality interactions, sometimes too pushy, that creates customer attrition and lower Net Promoter Scores. We are keeping this approach.

We believe that these also will translate to be able to increase. The bank is keeping this customer acquisition at strong pace.

Now the challenge is keeping these 150,000 new customers that every year we onboard and maintain as active, but also to increase the interaction with them and being our bank as a primary bank. As we know, the demographics does not allow that all the banks will fulfill their targets of acquisition and growth, because unless we have a huge increase of the population, there will be no clients for everybody, at least as a first bank.

We keep deploying this. This is less visible, but is a very relevant activity that the bank invests a lot for several years, namely some regulatory authorization to deploying some technologies that are new and not tested and challenged.

We went also to go through the authorities about that. We believe that with this, we are building also a competitive advantage of the bank for the next 5 years.

Now that things are going faster, I cannot say 10 years, 5 years. That's it.

Thank you very much again, gentlemen. This concludes our call.

Thank you very much for participation, interest, time, and questions. Good luck to those who will be involved in CEE banks reporting on Thursday.

We heard there are six banks reporting on that day, good luck. Hopefully you will have a restful and peaceful long May weekend after that.

From us, see you here on the 28th of July. Thank you very much.

As usual, happy to answer any questions and requests you have in the meantime. Thank you very much.

Goodbye.