ING Bank Slaski SA
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[Interpreted] Good morning. Let me welcome you to our quarterly conference that will summarize Q2 and the first half. [ My name is Brunon Bartkiewicz. I am President of the Board. ] And we have Malgorzata Barska; Bozena Graczyk, responsible for Finance; Rafal Benecki, Chief Economist; as well as Iza Rokicka; Investor Relations; and the Chief Account (sic) [ Accountant ], Jolanta Alvarado Rodriguez.
Brunon, over to you.
[Interpreted] Let me start over with the mic on. Good morning. The 1st of August is a date that is not normally the day on which we have our financial conference, but this is the case today. Now we would like to proceed smoothly, and we would like to leave a lot of time for questions. And we have a number of interesting things to talk about.
First of all, there is NN Investment Partners transactions, and that's why we have Ms. Barska with us -- or Malgorzata, I should say, because we are on first name terms. We believe this might be an interesting topic for you and the transaction itself might be interesting. We did discuss it during our conversation about Q4 performance last year, so this comes as no surprise to you. But this has now become a fact because the financial supervisory body didn't have anything against it.
Traditionally, in the middle of the year, we also discuss macroeconomic factors. And then to summarize most of it, I was hoping that in Q2, I would be able to tell you we're going towards transparency predictiveness and stability. And this is not the case. Not so much for macroeconomics perhaps, but some of these elements will certainly be very interesting for you. And we've asked Rafal to debunk some of the myths that have grown around some elements that we used to scare each other are now no longer valid.
We believe that some of the elements that might be cause for concern are not the ones that the media talk about most. And I suppose there will be questions about the regulatory transparency and clarity, all sorts of regulations, equity levels and things like that. And we all know that these stability elements are not emerging at the pace that we were hoping for. However, it is our duty to run this business in a stable way and in a predictable way, and we are trying to achieve it to the extent that we can.
Now I should start this conference, just like every time, by saying our performance is in line with expectations, stable, good and predictable. We are not discussing anything about the future and our future performance. And basically, our business is predictable. But we are managing to achieve fast growth, and we're managing to be carrying out our targets and meeting our targets in the different business lines. We are speeding up, we are doing our thing, and the machine is in full swing in terms of what we've planned and what we are achieving.
In terms of lending, we have had a much higher pace than the average for the sector. So in terms of loans volumes, we are going up by 16% year-on-year, which is much better than the market. And in Q3, we'll be showing you a 10-year history and you'll see that the trend is the same.
That translates to how we manage our capitals, and our capital ratio is going down because of the very speedy and intensive loans volume going up. And I believe that banks that work in an effective way like us have the problem of -- a lot of burden being placed on the sector and banks here in Poland are now more and more facing the dilemma of whether we should be supporting the economy in its full swing in order to reap all the benefits from the economic growth or whether we should be managing the capital as it is imposed on us.
These 2 are connected with one another. The requirements are higher, whereas the same requirements for foreign bodies or for banks operating abroad are smaller. In other words, the Polish banking sector is working under more difficult conditions and the ROI for the Polish banking as a whole is worse. It is not the case for us, for ING here in Poland, but in general, this is the case. So we do have a structural problem here in Poland as far as the banking sector is concerned.
Now as for the numbers, I think the figures speak for themselves. We are growing faster than the market, which translates into a higher market share of course. Our revenues including the fees and commissions are going up. In terms of the costs, they are going up in a very controlled way. Over 1/2 of our costs growth in H1 was due to regulatory requirements. The other part of our costs growth that was salaries by and large.
Due to the market situation, I mean, the labor market, certainly salary growth will speed up in our bank too because this is the case on the Polish labor market. There is a lot of competition on the labor market and salaries are going up across the board. We will be commenting more about it in the coming quarter because this will be much more clear in medium term.
Having said this, I would now ask Bozena to present the transaction with NN Investment Partners. And then Malgorzata will kindly present her company that -- a great company run by the great CEO.
[Interpreted] You certainly know our regular reports where we described the parameters of purchasing 45% of the shares in NN Investment Partners TFI S.A., which we call NN TFI. In our yesterday's report, we informed you about this transaction being finalized. Everything has been signed. Also, there was no objection from the Polish national financial security.
And PLN 166 million was the actual value of the transaction, which is P/E ratio of 9.2. And if you look at price to assets under management, that ratio is 2%. Hopefully, as a result of this transaction, we'll bring about very attractive solutions for our customers, and this was the main reason -- the main business reason why we decided to go through with the transaction.
The PLN 166 million price is different by PLN 10 million from the original price. It was adjusted by the interest of 2.5% and is also adjusted vis-a-vis the dividend for 2018.
Now I'll ask Malgorzata for her part.
[Interpreted] Thank you very much for these kind words from Brunon and Bozena. It's a pleasure to be here, and I'm very happy to be able to tell you more about NN Investment Partners TFI. We have been present on the Polish market for some 20 years and we've been cooperating with ING Bank very closely from the get-go. And we have a lot of external distribution as well. And we used to use the same brand and the same name, so we are sort of back to our roots.
Right now, assets under management are over PLN 18 billion. PLN 15.4 million of that comes from investment funds or mutual funds. And we're in the fourth place on the Polish market with a market share of about 9%. We are managing a very broad range of products with 40 funds, and these are funds with a very diversified asset structure, which you will be able to see in the presentation in a minute.
Now some words about how we want to develop and what things are important for us. We want to keep our very wide distribution chain. We've got 33 distribution -- 36 distribution partners, including banks, brokerage houses and insurance companies 15 of those. We also want to be a leader on the pension market, on the pension product market. And the reason is that we are -- we originated from a Dutch company that has a lot of experience managing pension-related products and we were the first to start lifecycle products that were launched in 2012 that are dedicated for pension-related products.
And we were also one of the first ones to launch pension products. Right now, we're in the second place on the market as far as the so-called employees pension schemes are concerned or company pension schemes. We launched the first of them in 2001. So we certainly have a lot of experience as far as pension products are concerned.
And finally, we put a lot of emphasis on innovation. And given the owner that we have, this will come as no surprise. But what we mean by being innovative is, first of all, having modern innovative investment products. For example, like I said, we were the first to launch lifecycle products and we were also the first in 2012 to launch the so-called master feeder structures, where retail customers can invest on global markets. And right now, together with a bank, we are working on a robo advisory service, which we believe will make it simpler to invest in funds.
The second aspect is digitization and we're looking at it from 2 points of view. First of all, we want to improve our operating processes through robotization and digitization. And on the other hand, we are paying a lot of attention to customer service. 7 years ago, we started our direct sales platform for mutual funds and year-by-year we have seen growth both in terms of the volume of investment and the number of customers.
We have a mobile app with 13,000 downloads, which is #1 among all investment funds. And we've also launched a risk profiling tool recently, which helps our customers in the selection of the fund by looking at the particular customer's risk profile and then helping select the right fund.
And the latest novelty from 2 weeks ago is biometrics used for authentication. And this is not what we are used to. This is not your fingerprint scanner. It compares your photograph in your personal ID with a selfie you take with your phone. And we are the first TFI, the first funds company to introduce it.
And finally, corporate responsibility and corporate governance, other important points that we believe are also important for our customers. We now have 2 sustainable investment funds: a global one and a local one. And we'll be launching more of these funds because we believe this is what the customers are interested in.
And finally, just a single figure. Net sales for our funds is over PLN 1.2 billion. And this is a diversified volume of sales from different channels of distribution, but 1/2 of it was with corporate pension schemes.
I'm very happy that we are not so much starting, but perhaps getting closer in terms of our cooperation with the bank because we have been cooperating from the very first day, and it's a great added value for our customers I believe.
I'll be happy to answer any questions.
[Interpreted] Thank you very much, Malgorzata. That's in a moment. If you allow me, now we will have a very condensed set of news from Rafal, our Chief Economist. In my opinion, he brings fascinating news. What's going on, Rafal?
[Interpreted] Third year of consumption boom and 5% economic growth, that's in brief. GDP growth is expected to reach 4.5%. It's slightly below last year's result, but this is still very good economic growth. It's due to the boom that I described. This in turn is related to social programs and the labor market situation.
The electoral campaign brings new payments to the general public. It will raise the income of households by 1/2 in Q2, Q4. The speed will rise. So this element from 69% -- so the consumption boom will be extended from 2 to 3 years and it will also support deposit products.
A threat to this economic development is restricted labor and volatility, instability, external -- we expect payroll to remain 6.5 in terms of dynamics.
Some research from the National Bank of Poland suggests that the percentage of enterprises planning to increase pay has risen sharply. We see that there are additional benefits. Also the -- we assume that the growth of pay will be relatively stable. Inflation will be above 2% this year, above 3% next year, but we stick to our original scenario of unchanged interest rates.
Now a few words about the elements that influence the economic development speed in Poland. In Q3, we have recession in the industry of our main business partners. The question is when will it translate to the development in Poland? A recession in the industry of our Western partner does not translate into the speed of production in Poland and we've been wondering why. We see 2 reasons that are linked why it is the case. Internal demand in Europe is pretty strong thanks to the labor market, but also the budgetary stimulus, which materializes in our Western partner.
The second thing, we investigated detailed data on trade. Only 15% of manufacturing is exported outside of Europe. Outside of Europe, protectionism has harmed international trade and that's why the industry in Germany is in recession. But the internal market in Western Europe is pretty strong, and that's where Polish products are going and that's why we see the resilience.
Is the resilience sustainable? Well, for some quarters, yes, we have some budgetary stimulus in our Western partner. In Germany, we see stimulus fiscal (sic) [ fiscal stimulus ] easing, 0.8% of GDP spread over 2 years. And an interesting format, companies are decreasing labor time from 5 to 4 days, but the fifth day is paid from the federal budget. It extends the good economic development. That's why the Polish industry is benefiting from it. But it's not very sustainable. The recession in industry is also translating into the services market. We're seeing the first harbingers of that. So the situation is going to get a bit worse but not dramatically.
National investment, domestic investment is another component which is very important for good economic development. Last year was a period of very dynamic growth of investment, public investments in particular, an increase of 30%. But we see that we are at the peak. The nominal value of projects will be very big, but the speed will be much lower.
We are waiting for the pickup of private investments. This is a key element in this cycle. The behavior of private investments has -- is nonstandard, it's slower. There was some change in Q1. And private investments started behaving like in the past. They increased by around 14%. But we have doubts whether this speed is sustainable. When we looked at the structure, it turned out that 1/3 is the energy sector. In this definition, this is the private sector as defined by Eurostat. So this is the energy sector and the investments are not linked to the development cycle.
On Slide 16, you can see the estimated value of investments is going down. So the result from Q1, the good result in terms of private investments, and the total result is difficult to copy. And across the economy, they will grow in 1 digit speed, around 7% this year and 4% next year.
Another important element is the fiscal stimulus on Slide 18. I described that already. This is a big stimulus which will elevate the speed of the rise in income of households by 1/2. It's excessive in our opinion. In Germany, for comparisons, we have 0.8% of GDP spread over 2 years. But it will help maintain good economic development.
What does it mean for the public sector? You can say that most of the better income from taxes has been spent in social packages, and the deficit is even bigger than over the last 4 years. In the worst case scenario, the deficit of public finance sector may increase, the nominal one, not structural one, to 3.4%. It's a big expansion but not as big as we have seen in 2008 and '09 after the big crisis.
And the last thing, how does it all influence the interest rate policy and inflation? Well, inflation, the base inflation is rising gradually. We've had high forecast. 2.5% was expected at the end of this year. It is materializing right now. This is linked to the rise in prices of services, consumption boom. You can see it on Slide 17. Goods prices are rising slower. This is subject to international trade. Low inflation in the Eurozone is helping keep our inflation in check. But we are also experiencing drought in this country, so this will impact food prices. Inflation at the end of the year will be 2.7%. Next year, we will briefly breach 3%, the top defined by the National Bank of Poland.
So the Polish bank is in the counter phase compared to other central banks. But we think that interest rates will not change over the next 2 years, and the next move will be probably a cut in a more distant future.
But in the perspective of the coming months, the discussion about higher interest rates may increase. Four members of the council are talking about rises. They will not be in the majority in our opinion and the council will maintain the current interest rate levels. The Fed, the European Central Bank and other central banks in the region are doing different things to the National Bank of Poland, but you should be careful about the threshold of 3% of inflation.
Concluding the year will be pretty good. Next year, we assume will be slightly worse than the consensus, 3.3% GDP growth. We are close to potential but slightly worse than the consensus due to our view of external situation. We think that the instincts of President Trump should not generate a huge crisis, but it's been upon us for some time and it influences the international trade condition. And Europe is the weak spot at the moment and this is our main trading partner, so our forecasts for the next year are slightly worse.
[Interpreted] Now we are moving on to Bozena's part. Some more detailed light shed on our results.
[Interpreted] In the morning comments, you have analyzed our results in detail. But very briefly. In Q2 of '19, we had a net profit of PLN 470 million. Our result for the first 6 months, PLN 796 million. It's a growth of 15% year-on-year. We have to remember that this is still related to regulatory cost from Q1.
If you look at the lower part of the table, you can see that our result -- net result is increasing by 17% year-on-year. It is a very good result in our opinion. It is also a result of faster growth of income compared to expenses. Costs are in check. That's why the cost-to-income ratio adjusted in Q2 is 42.3%, an improvement of 1.2 percentage points, which is also a major achievement. Due to the change in income and expenses, our ROI is very -- ROE is very high, 12.6%. So we are well above 12%.
I'd like to take this opportunity to remind you again -- we talked about it extensively after the Q1 results -- our net result also includes the flattening of the efficient tax rate that includes the adjustment of income tax linked to regulatory costs. As a result, our effective tax rate is 25% compared to 25.9% after Q1. If I were to comment on the net interest income, our result is PLN 1.48 million (sic) [ PLN 1,047.7 million ], 4% growth quarter-to-quarter and 14% year-on-year. The increase can be attributed to higher business volumes in terms of loans and deposits. Our quarterly margin was 2.92%. It was flat year-on-year, but we have quarterly growth, which can attributed entirely to a quarter longer by 1 day.
Again I'd like to point your attention to our loans-to-deposits ratio. 89.9% is the result at the end of the quarter and it's higher compared to the period in 2018 and it's also higher than a quarter ago.
Now the most widely commented item in your comments from this morning the fees and commissions income. Indeed, this result is high. It's almost PLN 360 million, an increase of 10% quarter-to-quarter, 6% year-on-year.
As you noticed, this is a result from cards. PLN 55 million this quarter. As you remember from previous conferences, in Q2 of 2018 and in this quarter we've had one-off income from a settlement with our suppliers, on the one hand. And on the other hand, we also point to the transactional nature of our clients with debit cards and credit cards.
100% of POSs in Poland can now handle card transactions, proximity transactions, which effectively influences the number of transactions carried out by banking customers and outlines in particular -- our clients make 2.7 million transactions a day. This means 26% growth year-on-year. Against the background of the banking sector, our clients carry out 45 quarterly transactions, where the average is 34 transactions in the banking sector per quarter per card. The data shows that higher transaction numbers translate into our higher income in this element.
I'd like to also emphasize the great result with insurance. We have cross-linked sales with insurance products. You are not surprised how our commission's result is shaping. It's linked to capital markets. We have income from investment funds. This is a result of regulatory changes which took -- came into force in Q4 of 2018.
We also have lower volumes. Our volumes of our TFI clients year-on-year have gone down by 1%, whereas in the market there was a drop of 10%. And you can see it in the appendices to our presentation. We've had 5% growth of resources held by our clients in Q2, so we have this rejuvenated tendency to finance client resources in investment funds.
So this will be it as far as our situation in terms of fees and commissions. If there are any questions, I'll be happy to take them later.
Now about our expenses. In Q2, they were at PLN 581 million, which is a reduction on Q1. And it's very clear -- the regulatory costs, which were PLN 149 million in Q1, were only less than PLN 18 million this quarter. But if we do not look at the regulatory costs, if you leave them to the side, our costs grew by about PLN 8 million and this growth of expenses is pretty much all due to salary increases. As we normally do, these salary increases are normally introduced in April.
As Brunon said before, in medium term, after the M&A restructuring transactions are through and after certain branches have been closed, the dynamics of salaries will be much stronger because of the pressure on wages. Mind you, the head count is going up, which results from our development.
In terms of risks -- risk and the cost of risk, PLN 136 million was the total cost of risk, which is 0.5% growth. And in terms of cumulative cost of risk margin, it's 0.47%. If we look at the cost of risk in different segments, you can see the volatility from one quarter to another. And let me say this again. This is a permanent feature of the environment we're in. For example, the impairment models have macro forecasts included in them, so the changes of the macro indicators are introduced in our models every quarter, which increases the volatility. And it so happened this quarter that the adjustment of the macro forecasts had a negative impact on our provisions.
Right now, the macro parameters are more sensitive in retail portfolios than in corporate portfolios. The other element of our risk volatility or cost of risk volatility is the fact that those models are being constantly changed, which is the result of backtesting and validation tests and the development of the models resulting from the changing risk profile of our clients. In 2019, we are using Version 9. We have been using it for the second year running. So the first cycle of validation and backtesting is already behind us and that resulted in the necessity to change some elements of our models.
In the IFRS, for example, we have modified some of the thresholds for significant risk level where the loan has moved from Stage 1 to Stage 2. And in retail portfolios, we modified the LGT parameter due to the change in LGD.
So I hope this explains a lot. But if I were to summarize the quality of the portfolio and the provisions in different segments, I would like to draw your attention to the fact that our loans share in Stage 3 is now 3%. So it has gone up a little bit. And the indicators have gone up both in the corporate and the retail sector.
Importantly, if you look at Stage 2 share in gross portfolio, those indicators have gone down both for retail and for corporate. In the retail portfolios, this is due to a lot of sales and a lot of growth in volume. So Stage 2 share is going down. And on the other hand, this also results in the changes in the models that I mentioned before.
On the other hand, if you look at our provisioning ratio, it is very stable and there are no worrying information as far as this is concerned.
Now about capital adequacy. Our consolidated total capital ratio was 15.05%, which is about 0.5 percentage point less than in Q1, which is mostly due to risk-weighted assets going up as a result of the increased business volumes. And similarly to our decisions from previous years, we would like to include 70% of the profit as part of our capital, and this is the request we'll file with the KNF or the Polish national financial authority. And as a result, due to the purchase of the shares in NN TFI, our -- the fact we'll go down by 16 bps in the next quarter because of this transaction.
So this is it as far as our performance is concerned and we'll be happy to take your questions.
[Interpreted] I would like to ask about your sales in terms of mortgage. It's gone from PLN 2.1 billion up to PLN 3 billion. What about the margin? Have you changed your margin on mortgages? Or is it the same in the coming quarters?
[Interpreted] So you are asking about the future, which puts me in a difficult situation. I do not want to comment about the future. Stability and high efficiency is the foundation of how we operate in lending, especially in mortgages, which is labor intensive, so to say. Efficiency there is achieved by maintaining the stability of everything that revolves around margins. To reply to your question, the margin has not been changed. We have a stable approach.
[Interpreted] I would like to ask about -- maybe this is a bit of a side comment. What about the banking guarantee fund? Is the level of capital there adequate to the situation of the Polish banking sector in your opinion? Or perhaps you are forecasting that there will be the need for some additional payments into that banking guarantee fund next year?
[Interpreted] As you know, every country in the EU has been obliged to generate a fund like that one way or another. The banking tax in Poland, which is very high, is not used to fill the banking guarantee fund. Altogether, the burden on the Polish banking sector has to be considered very high. This year, it's about 27%, isn't it, Bozena? It is round about 27%. The previous banking guarantee fund head said that his had to be indexed. But the current head of the fund is saying he's going more towards stability.
The question is how quickly we want to achieve the levels imposed by the EU. But I still hope that some of this burden will go into strengthening the security system. And that's why we keep asking for a part of the banking tax to be used for that. So we are not saying lower the taxes, but we are saying increase the safety and security of the whole sector by shifting a part of the banking tax to strengthen the BRR. As you know, so far, this has not been -- this has not happened.
Now about whether we can foresee any threats when a particular bank has to be salvaged or rescued, well, there has been no public information about it, so we don't have any insider information about it. We know the same things as you know. So I know you keep track of that. We have not heard anything else.
[Interpreted] I would like to ask about the growth of salaries in the sector in the medium term. There was a year in the past when ING increased its salaries 3x. How do your salaries compare to the averages in the banking sector after those salary hikes in April?
[Interpreted] Comparing averages is the worst question. Our average salaries are adequate to the market because the lowest salaries in our market -- I'm sorry, the lowest salaries in our bank are much higher than the lowest salaries in the banking sector as a whole. We have this principle of having the lowest possible salary of PLN 4,000. In other words, the people who earn the lowest salary in ING are making more money than they would in a different bank. And this is a considerable share of the total population of employees.
Now we have the so-called payroll reports per pay grades. Every bank in Poland has similar data or the same data and they are looking at the same data from the sector. In Poland, there are no more than 2 polling companies that do this sort of research and everybody uses the same reports. So we can see from these reports -- and everybody can see that there is significant movement in salaries, and this pertains mostly to the lower levels of organizational chart, the specialists and the senior specialties. On these levels, the inflation is very much present. So the salary rises are not in executive positions. They have had the salary rises in the past and the movement is not that strong.
Then on the lowest, on the very lowest level, there isn't that much movement either, but there's a lot of restructuring going on there as well, as Bozena said. And it's difficult to have a reliable statistical data because there is so much restructuring going down on the lowest level.
But if you look at the specialists, as we call them, we can see that very clearly from statistics and everywhere that basically banks are fighting for those specialists, and that's why there is the movement in salaries.
[Interpreted] My second question pertains to the sensitivity of the retail segment and the cost of risk. I know that there are a number of impacts and factors, but which elements do you believe are the most crucial?
[Interpreted] In retail portfolio, the biggest macro indicator that influences them is the unemployment rate and it's a change in the longer time frame.
[Interpreted] And a question about the average value of your retail loans per customer.
[Interpreted] Can we disclose this information? We have not been disclosing this before.
[Interpreted] Every other bank reporting this did share this information with us. I'd appreciate it.
[Interpreted] Well, we'll be happy to provide you with this information for the next quarter. Right now, I would be hard-pressed to say whether this information is reaching everyone at the same pace.
[Interpreted] Are you interested in a particular group like cash loans and mortgages? Or just cash loans? Is that what you mean?
[Interpreted] Unfortunately, we cannot hear the comment from the floor. If you are talking about high-value, long-term loans, then we are also very conservative. We have the same warning signals from the KNF as everybody else.
[Interpreted] A question from the Internet. Let me read it out. It's about the commission.
[ If ] any of upcoming cross-border payment rules?
[Interpreted] I don't know if I'm supposed to answer in English or in Polish. Well, ladies and gentleman, it is about interpretation. Let me explain what I mean. According to some interpretations, banks should apply the same rates for payments made within the country and within the EU. So you should not apply different rules in terms of payment for a transfer. You should not also apply different rates. And this is a matter of interpretation. Also, this applies to ATM payments or POS operations. So the definition here is not very clearly defined, and as a result, from our perspective, it's not very clear what the impact may be. But I would not overdramatize the situation in any particular way.
Do we have any other question, [ Martha ]?
Well, the topic was very interesting a few years back when we were introducing the European payment. That was very significant at the time. Now it's all about interpretation, how do you treat the structures?
We indeed have varied rates for payments in domestic ATMs and ATMs in other countries. If a bank gives you free payment from an ATM in Poland and they have different rates for payment in other EU member states. We're not a bank which has this solution, but that may be a problem for some banks.
We have a question.
[Interpreted] I'm aware that the bank is not the key entity in the case, but Mr. President mentioned the Court of Justice ruling. The bank was mentioned as one of those which has received unfavorable decisions from Polish courts. I think there was one decision of a Polish court which was unfavorable.
[Interpreted] I would like to agree with you that we are not the best bank to have this question. I'd like to finish there. I used slightly different words to describe the problem. The problem of Swiss francs is still a source of uncertainty in the banking sector in terms of the future and it's a bad situation for all of us that it's been going on for so long.
So the topic of the Court of Justice decision. Well, it will not kill us, but it does not mean that it's not painful for many reasons. On the one hand, it's about reputation damage -- possible reputation damage, possible increases in court cases. It's not a nice thing to do -- to have a court case brought about by a client.
Secondly, it's a question about interpreting; from an accounting point of view the requirement to introduce provisions. It's very difficult to price the portfolios. Even if we have a portfolio which is not 0.8% of all Swiss franc mortgages in Poland, but it is still difficult for us. If we have to create provisions, the provisions will be painful.
And I have to be frank that if the worst-case scenario was to be implemented and we had to do it in Q1 -- in one quarter rather, we would possibly end up with a loss at the end of the quarter. That's the worst-case scenario. And in our case, it would be just one quarter. In the case of our friends from the market, it would be spread over more than one quarter. And that, considering all the other elements, is a pretty dangerous pattern.
If I were to talk about the future, this is the key destabilizing risk for the Polish banking sector. It is linked to what Rafal was talking about. "We are sending you some messages. We are talking and talking -- if we have a strong credit crunch resulting from Court of Justice decisions and the impact in the -- on the results of -- 2019 bank results.
We don't know when we can expect the ruling. We don't know whether it will be before or after the parliamentary elections. So there's a lot of uncertainty at the moment and that is a source of concern. The iceberg is moving and moving and we don't know whether it's going to melt before it reaches us or not. But the risk is significant and it is a very serious case.
[Interpreted] Do you see a likelihood that with an unfavorable ruling of the Court of Justice -- the ruling itself rather than what we're hearing, ING would instantly create a provision?
[Interpreted] Well, it's not up to ING. All banks would have to create provisions for that. It's based on accounting rules.
[Interpreted] ING I think is a bank which is more careful.
[Interpreted] Yes, I agree with you. Yes, I do agree with you as I seem to do often. Yes, indeed we would be very prudent and we would comply with the rules. But the rules apply to all.
[Interpreted] Let me just comment. This is a very difficult topic from the point of view of when and what size of potential provisions will be created. There is a discussion going on in the banking sector. The big 4 companies are also having a discussion about when, how high if -- how to present these consequences in the balance. And this discussion will go on.
There are many different factors that need to be considered when making a decision, and this is not easy to interpret how high the provision should be and when should it be created.
[Interpreted] And it's not the only aspect of the uncertainty and its impact on the market.
Rafal, I don't know if you've already prepared...
[Interpreted] Yes, we are sending our publication today, a publication on the subject. I cannot really discuss what's going to be in the publication, but please read it when it's available. But there's also the FX impact, that's the FX risk. One thing is the provisions and their impact and the second issue is the FX. And this will be described in our publication.
[Interpreted] A technical question about NN TFI results. We will see them next quarter, right, in the results.
[Interpreted] They will go through one line. We have a 45% share, so it will be visible our part in the results of NN TFI.
[Interpreted] Two questions from the Internet.
It's related on eco costs -- on eco case?
[Interpreted] We are not publishing any speculations about the future. And specifically, this is confidential. This is between us and a given entity. So we cannot speculate and we will not comment on this.
[Interpreted] And a question to Madam President of NN TFI.
Do you plan to employ additional people?
[Interpreted] Yes, we are planning. We've already employed people in sales and in operations to handle PPK, which is the employee capital plans.
[Interpreted] Last chance. If there are no further questions, thank you very much for attending this conference and you're invited to lunch.
[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]