Cezary Stypułkowski: I will be brief. You have already expressed your opinions. I think that the key elements that we would like to stress are those that tax burden is quite significant. That is objective. All of us undergo this taxation, but it cost us a lot of money. As far as I know, the analysts had estimated it would be a greater amount than the actual one. However, we would like to stress the quality of our revenues, and that is another probably fifth or fourth quarter in a row where we have two digit growth in revenues from commissions.
Cezary Stypułkowski: I emphasized on a couple of occasions that it was important for us, so we wanted to rebuild our position in this. Well, maybe not completely the structure of commissions fees is fully satisfactory to us. But the changes in the table of commissions and fees are extremely complicated. Our regulator, the Office of Competition and Consumer Protection, makes things harder for us in terms of volumes. Above all, we need to take care of what we obtain in revenues, and we have to keep in mind our past experience in enforcing the regulations and obtaining the payments. We are seeing a narrowing gap between us and other banks in terms of digital channels. That is an important element of our strategy. It will be more visible next year.
Cezary Stypułkowski: Now we are working on solutions that I believe will allow us to make a serious leap forward and probably better service our customers, as well as better position ourselves against competitors. Regarding capital, there is not much to say. For many years now, we have consistently maintained our capital position with high dividend payments. So we deliver the dividends. We have been doing so for 30 years, so there is not much to add at this stage.
Cezary Stypułkowski: Of course, we take into account the pace of economic growth and the development of loan portfolios. We try to diversify the structure of our capital and be better prepared for any event in the future. You have analyzed most of these things, but probably some highlights from me would be cost-income ratio, where I keep reiterating my intellectual commitment to keep this ratio.
Cezary Stypułkowski: Of course, the details of the structure are quite complex, but as a main theme of our management and corporate culture, that is an important element to us. I have the feeling that it is necessary to make investments that can, at certain times, reduce this ratio, mainly because the bank in some areas had some backlog and it was behind its competitors. 34%, 36% is anyway a very good result.
Cezary Stypułkowski: Many of our competitors abroad might only wish for such a result. No problem in terms of capital NPL, which is important from the perspective of dividend payment, is also maintained in a disciplined manner. Cost of risks have been already commented on slightly higher in the corporate segment than used to be the case, but that is something that happens in the corporate segment. Growth of the loan portfolio, decent in those areas.
Cezary Stypułkowski: Which are of greatest interest to us, even very good. Cash loan volume, where we are still trying to make up for past shortages in market shares, areas of funding, that is micro-enterprises and SMEs. We are also growing there relatively quickly. The core of our banking, that is many enterprises and SMEs have relatively good growth ratios. I can say that all segments contributed to our results.
Cezary Stypułkowski: There were some exceptionally high growth rates that we experienced, and I would maybe focus on the elements of our ambitions. Trusteeship services generate very decent revenues and commissions, so we try to position ourselves as a clear leader in the Polish market. Leasing, in my opinion, we still have an insufficient position in lower tier of SMEs, and here we are making some efforts. For the time being, it materialized in the form of 17% growth.
Cezary Stypułkowski: We continue to have very high sales of mortgage loans. I commented on mortgage loans on so many occasions that maybe I will not discuss it unless you have any specific questions in the context of current circumstances in Poland. I would say that we are on the trajectory of achieving the goals which we announced in this room at the beginning of the year. That is a short-term strategic sprint. We see no major threats as of now, but it is still a trajectory and not goals that are set in stone. We keep the discipline, we keep our targets, and especially in the context of cost-income ratio, we will keep some flexibility. There is growth, accessibility of digital channels, and the adoption of digital channels is growing, but efficiency of those processes still leaves somewhat to be desired.
Cezary Stypułkowski: I do not think that for investors or analysts, that would be a key piece of information, but there were some projects that took shape in Q3, both in retail and in corporate segment, and they had some impact on our operational efficiency. Maybe one thing is worth signaling here, namely the need to build a better and more effective care for our clients who have the ambition to expand abroad. We signaled such an ambition, and Q3 is the one where we see those things happening. We have the first agreement with Raiffeisen group regarding three markets as of now, Austria, Czechia, and Romania. Agreements have been signed. We are now building infrastructure which should facilitate operations in those markets for our clients. We do not treat as a major element of building potential revenues at this stage.
Cezary Stypułkowski: We see it as an add-on service for our customers to increase their loyalty in our relationship. The other things are maybe to be discussed in another group. The thing that was the weakness of the bank, that is the availability of our services in digital channels and ability to provide some elements of the offer through the digital channels is improving. But still it is not at the level of our ambitions. Here we count on 2027 being a breakthrough year in retail segment and probably the end of next year will significantly improve our position especially for SMEs.
Cezary Stypułkowski: Because that's where the ailments are the biggest, and we have had a number of transactions that are in the public domain. There have been announcements concerning that. I would say that the bank here has a high level of expertise and is well appreciated by customers, and structuring work is something that we have been entrusted with. We would like to do more of these, but it's the nature of the market. I believe this would be all from me. We will now talk about the macroeconomic environment.
Ernest Pytlarczyk: So from the point of view of the economy, this has been a very good period. We are observing an investment boom, probably a two-digit dynamic for investments, mostly public investments, but this is spreading to strictly private investments too, so that there is no risk here that has appeared in the comment and in the public narrative that there's going to be an investment cliff. That's not happening.
Ernest Pytlarczyk: Most likely we're experiencing the peak of the economic activity and there are some clouds on the horizon appearing. 4% GDP is the forecast for this year. Next year, below 3%. The risks are mostly related to the outcomes of the Gulf War, so higher prices of fuel, but also higher prices of electricity and gas. This will most likely impact enterprises more towards the end of next year and their margins rather than households, which to a large degree will be protected from that.
Ernest Pytlarczyk: We're seeing this as the election year, but the consumer most likely will have a two plus and GDP probably a three minus. So we're just below the consensus probably with our forecast. But when we compare it to the EU average, Polish economy is still growing securely and one of the fastest growing economies in the large countries group. So it's not really overly pessimistic, but a slight adjustment taking into account the geopolitical situation.
Ernest Pytlarczyk: There's interesting things happening on the side of inflation. Inflation is going to be one of the reasons why you cannot be super optimistic towards the consumer. That is European consumer. The first semester there's been a smoothing out effect of consumption. The central banks in the world are raising interest rates. Ours will too. It has once already. The European Central Bank is doing this, Bank of England as well.
Ernest Pytlarczyk: Nordic banks are too, and most likely the Polish Central Bank will also be increasing interest rates, perhaps not yet November, but early next year. That is the difference between what we thought was going to happen a few months ago, that we were going to come out unscathed from the energy crisis. But now the inflation has been going on too long, too fast to ignore it. The central bank will have to react one way or another. From the point of view of the banking sector, this is an important piece of information because what was planned a few months back was a different environment because the interest rates are stable or even growing as opposed to decreasing. I do not believe that the volumes could drop significantly, but the dynamics should be slightly lower than this year.
Ernest Pytlarczyk: There is a continuation of a certain investment endeavor and effort. We saw lower rates and there was some delayed demand for refinancing last year. I think that next year will be a year of a more normalized reality. There is a decent economic growth still going on, although we have seen the peak and interest rates are going up still.
Dagmara Wojnar: Good afternoon. A little bit more about figures. Let us start with credit portfolio. It is growing by 10% year-on-year, and as usual, we are going to split this into two components. First of all, is corporate. The MID and SME, the sectors where we want to strengthen our position and continue growing. They are experiencing a two-digit growth, 14% year-on-year. For the second quarter running, we have a strong position in corporate credit of 14.4% growth.
Dagmara Wojnar: In retail, we had the ambition to grow and strengthen our market share in cash loans. It has been going on, growing by over 16%. In Q3, we noted record high sales of cash loans, PLN 2.3 billion. Now, deposits. The overall deposit base is growing by just under 10% year-on-year. For the assets of investment funds managed by Pekao TFI, at the end of September, they were almost PLN 47 billion. Millions zlotys, and they were 20% higher vis-à-vis the previous year.
Dagmara Wojnar: Now, when we talk about deposits, perhaps a small comment about LCR, 231%. The return of funds vested to us by our customers also is the offer of our account. The two specific bank accounts that we have, 360,000 banking accounts were opened. One third of those are for customers that we categorize as 26 years of age, so young customers. Now, for NIM.
Dagmara Wojnar: We are looking at dropping interest rates. That is the environment that we are experiencing. But our interest rate results year-on-year is comparable. It dropped by 0.2%, and the impact of lower interest rates has been compensated largely by growing volumes. Growing volumes in the segments that we used to communicate in our strategy in 2025, we used to consider key segments. So PAX, SME, and MID.
Dagmara Wojnar: We are also active in the deposits policy. So in Q3 of 2026, the NIM is at the level of 3.89. Last quarters, we spoke about vulnerability towards decreasing rates, but we have changed rhetoric. Now we are talking about vulnerability towards changes of interest rates, but it is about 10, 15 basis points interest rates net change with 100 points of change of interest rates. Now, the growth of commission income, all the categories are growing, as you can see.
Dagmara Wojnar: That derives, on the one hand, from our increased business action and increased. On one hand is the overheads, where we declared that we were going to be careful about the growth here. But on the other hand, we have the component of the cost for OPEX and amortization, where it is over 11%. This increase, as Cezary has said, has to do with the fact that we are investing, we are developing, we are investing in technology, in marketing, we have projects, and in people. We have projects linked to our strategy. Hence the increase in these two categories is high. I should say perhaps one more thing that perhaps is still not visible in the Q3 results, but it will be visible in Q4 results. Just like in previous years, we announced our program of the voluntary redundancies.
Dagmara Wojnar: It will include over 500 employees that volunteer for this program. The potential reserve in Q4 is being estimated, preliminary estimates, at the level of PLN 70 to 80 million, depending on the number of people that ultimately confirm their participation in the program. Now, despite these investments, the cost-to-revenue ratio is at the level of 34%. Cost of risks will be discussed by Marcin.
Marcin Gadomski: Thank you. Cost of risk remain at a stable level, meaning that in the range 40 to 50 basis points. This year, they are at 49 basis points, which is significantly lower than our strategic assumptions, which were at 65 to 70 basis points. Cost of risks in the corporate segment are slightly higher this year. As you can see in the slide, we had write-offs on two major clients. As a result, the cost of risk exceeded slightly 100 basis points. Also, we have very good portfolio quality. We see no problems in repayment of loans. It is also worth mentioning that the practically entire retail portfolio is valued by portfolio method. So we have situations of default and removal of defaults across the entire portfolio. Here, the situations are good. NPL ratio at a stable level.
Marcin Gadomski: We also made some write-offs of gross financial value for those assets which had 100% coverage with the write-off, with no recouping possible. We keep the buffer up to 5% NPL. Cover ratios also remain at satisfactory levels, and we believe that the quality of our loan portfolio in the upcoming quarters is going to remain on a stable and good level. Back to Dagmara.
Dagmara Wojnar: A few words about comparison of net profit for past year versus this one. As you can see, and as we discussed earlier, regulatory burdens grow by almost PLN 800 million year-on-year. That is both corporate income tax and contributions to the Bank Guarantee Fund. We have lower interest rate environment, but taking into account the volumes and the resultant commissions, those negative effects are partially offset. Profit for quarters, PLN 4.3 billion P&L. As regards capital position, it is strong.
Dagmara Wojnar: We have over 3 percentage point surplus in capital surplus over the requirements. Dividend potential in line with our strategy declarations. We declared 50% to 75% range. Marcin mentioned those NPL ratios below 5%, and we will see what the final values will be like for dividend payment, but it is premature to discuss it right now. MREL, also the requirements for minimum level of requirements for redemption or conversion, that is in line with our expectations. The last page shows our awards and distinctions. That is all from me.
Cezary Stypułkowski: Thank you. Now we can move on to the Q&A session. You can ask questions also on the website of our streaming. We have some guests here in the room. Very much thank you for being here. Let me start with questions related to our profits. I am now trying to group those questions by recurring themes. There are a few questions regarding interest margin in the last quarter and in the situation of changed interest rates. If you look at NIM, there are two things. On the one hand, the decreases in interest rates that we experienced should already be reflected in our P&L.
Cezary Stypułkowski: On the other hand, we have a situation where there are two elements that can potentially affect this NIM. Namely, on the one hand, we see significant competitive pressure in the banking market and post reform is ahead of us. So these are two elements to be kept in mind. In general, we expect under the existing macroeconomic conditions, unless Mr. Pytlarczyk stops me, I can say that the margin should rebound. It should. NII has probably already rebounded, and NIM will follow suit.
Cezary Stypułkowski: In the context of somewhat higher trajectory of interest rates, there is a question about our assessment of dynamic of loans, in particular in the corporate segment. Are we now seeing a peak in the growth dynamics, or is another acceleration possible in connection with new investment projects? Those major investment projects follow their own rules. There is always a question about government component. Will there be guarantees or not? So this is not really something that drives our decisions. It sounds interesting because the volumes are significant, but if I were an analyst, I would take this with a pinch of salt. Yes, we continue to expect the big project to be implemented.
Cezary Stypułkowski: Well, I would brief. If we look at the pipeline for the next quarter or 2 quarters, it seems that in terms of demand for corporate loans, it will be good, at least as we have seen recently, and maybe even slightly better. There was some interest in the market coming from our low level of dissolution of provisions for Swiss franc loans.
Cezary Stypułkowski: Let us start with the provisions for Swiss franc loans. Yes. In Q3, our level of dissolution of those provisions was at a low level, and that was the first quarter, actually, when we had any dissolution of such provisions. The inflow of Swiss franc cases is much slower than it used to be, and it is decreasing. On the other hand, you might recall that we are now implementing a program of settlements. It was announced over 10 months ago, and we consistently implement this.
Cezary Stypułkowski: It was just one quarter of reversal of the trend, and that is not a sufficient basis for making longer-term projections. But there is much lower dynamic in Swiss franc loans than it used to be. Sticking to the logic of P&L. Consumer protection. Also, there was a question about consumer protection. Do not anchor it. People will remember it too much, and they will explore it too much. Okay. So with regard to all those questions related to the Office of Competition and Consumer Protection, every quarter or every two quarters, something new is given to us. Not a long time ago, nobody commented the judgment of the European Court of Justice of April. And now, the things that have been identified until now are reflected in our results.
Cezary Stypułkowski: From the perspective of the judgment of April, we made the necessary disclosures in our P&L, and we established the necessary provisions. These were not updated in Q3. As regards returns to clients in light of the judgment of April, these returns were at the level of over PLN 10 million included in our books so far. Another question is about cost. This year we have seen a significant growth in CapEx that is mainly for investment and marketing. Will the growth rate of these costs decline significantly next year, or should we expect these costs to remain high, possibly in the context of rebranding? I think I have already said this in public. We do not expect full rebranding with a change of name.
Cezary Stypułkowski: But we need to build our recognizability, and we assume that next year we will offer new applications to the market, and naturally, we will have to support them and do not expect any reduction of marketing costs in this context. As I said earlier, it is not the time when the main headache of the management board of Pekao is cost management.
Cezary Stypułkowski: It may sound weird to those who have known me for a while. It sounds like something impossible, but under the present conditions, we have to take into account the need for the bank to make up for historical legacies. And briefly speaking, you are taking into account your sentiment we need to manage this properly. Now, for the cost of risk, there is the observation that it is slightly growing. Hence a question about further prospects and the two major exposures that impacted our corporate write-offs.
Cezary Stypułkowski: Do we want to mention the industries and generally the perspectives for the cost of risk in the nearest quarters? I have made a comment about this, really. It seems that the cost of risk that we should be expecting in the nearest quarters would be at about 50 basis points. On the one hand, the corporate part would have an average cost that does not change. The retail performs well. There could be fewer outcomes of the portfolio parameters updates. But to sum up, I think that 50 basis points is the right assumption to make. And the two customers that we have mentioned, perhaps I will mention just the industries
Cezary Stypułkowski: Not to disclose too much detail. One is from the transport infrastructure. That would be a good statement. The other is food retail. Historically, we have had very low cost of credit, of loan. Taking into account our strategy for 2026, 2027, we had assumed significant growth of the cost. The range that we are in, it is like 65, 75. Our assumption was, at the time, that it would be more or less 50/50. It would result from changing the portfolio structure, unsecured loans, smaller companies, so higher risk portfolio, but bigger profit. Also opening up in the portfolios that we already hold. Even if we were to go towards this, it would have to be coupled with a good satisfactory growth of the high-margin portfolios, so unsecured loans and smaller companies.
Marcin Gadomski: Yes. Our assumption was that the growth of loans would be on the level of 6% to 8%. Throughout the last quarters, they have been growing at a rate of about 10%. Also, when we first developed our strategy towards the end of 2024, we had assumed that the share of these high-margin segment was going to be about 34%. It was at the time. We wanted it to reach 38% by the end of the strategy. Right now, we are at a level of about 36%, perhaps even slightly above that, in terms of share. Hence, the credit risk grew and the cost of risk grew as a consequence. Yes, still below the assumptions.
Cezary Stypułkowski: Next question. The decrease of CIT rate and the expected market trends, is it going to allow an increased net profit? Well, we will have to wait and see what it is going to be like with the taxes. It is not very well predictable for the banking sector. Even in the public debate, there have been some proposals put forward to tighten taxes and to couple it with the capital return rate.
Cezary Stypułkowski: I am more inclined to say that I do not know rather than I do. "There are unknown unknowns," the famous phrase could be quoted here. I think we are in this area. I do not think there is any room for speculation. If it is sustained the way it is, it is going to be better. If it is going to be changed, it will worsen. Okay. To wrap up, what is our level of MREL coverage that we are targeting? 24% is the target. In our presentation, in the annex, you have some detailed slides with the trajectory and the pro forma, and everything is demonstrated in those. Okay.
[Analyst] (Citi Handlowy): Hello, Citi Handlowy. I would like to have a few questions. Perhaps I will ask them one by one to make it easier. First of all, I would like to congratulate you on the commission's results. This is a great dynamic, organic dynamic, the best in the sector. I will want to talk about the future and Q3 in NIM. It dropped slightly. The sector has been more or less a flat line. Some banks have managed to increase it. You said that you have bigger margins and their share growing, so that should be conducive to an improvement. What about your decreased margin in Q3? Is this a consequence of earlier events?
Dagmara Wojnar: Yes. It is a consequence of earlier events. We spoke about it in Q2. Most of this effect was taken into account in our results, and some slight to stabilize. We are hoping that it will react positively in the quarters to come.
[Analyst] (Citi Handlowy): Thank you. My second question, securitization. There has been a lot of transactions. What are your plans and ambitions in this segment?
Dagmara Wojnar: We are working intensely on it. Our assumption in the strategy was that it is going to be there. Yes, we are quite advanced. I would say this year perhaps not, but within a half a year horizon, it looks as though it is going to happen.
[Analyst] (Citi Handlowy): What is the scale? What would be the capital benefits? What is the target?
Dagmara Wojnar: Perhaps not. Well, midterm perspective. That is going to be the first exercise of this kind in our history, so it is not going to be huge. From the point of view of volume, it will be just a small few billion. The effect was 0.2, 0.3, perhaps.
[Analyst] (Citi Handlowy): Thank you. A short question. Towards the end of the year, the Financial Supervision Authority is going to specify some parameters towards the P2G. Do you have any extra decisions there?
Dagmara Wojnar: No, we are not expecting those either.
Cezary Stypułkowski: There was a comment out of mic.
[Analyst] (Citi Handlowy): Thank you. The last question, slightly sensitive, perhaps, the resolutions that are going to be voted during your next general shareholders meeting, and the impact on the remuneration of the board, that is easily calculated. How do you think it can generally impact the remuneration system in the bank, and what could be the further-reaching consequences?
Cezary Stypułkowski: Well, my opinion is quite clear. I think it is a solution that is mechanical and wrong. It makes it more difficult to manage organizations such as banks. Banks have their own pan-European regulation, and I think that this is what should be governing our structures. The tightening effort visible now in Poland and enforced in such a way has far-reaching outcomes, potentially, and make it more difficult to build a good management culture based on performance. Therefore, my view on that is quite clear. I could elaborate, but I think that perhaps this brief reply and concise reply pretty much says it all.
Cezary Stypułkowski: Are there any other questions? If not, thank you very much. As for the upcoming corporate events, we have extraordinary general shareholders meeting on 19 November. By 3 November, you need to register so you can celebrate. Well, the real celebration for shareholders is an ordinary general meeting. The extraordinary general meeting convened for the purpose we have announced is not a reason to celebrate. Okay. If you have any further questions, we will answer them on a one-to-one basis. Thank you very much for today, and see you at the next presentation.
