Powszechna Kasa Oszczednosci Bank Polski SA

WSE:PKO

Earnings Call Analysis

Strong Growth and Record Profits Drive PKO Bank's Performance

PKO Bank Polski reported a robust quarter with a net profit of PLN 6.9 billion, a 42% year-on-year increase. The bank experienced a significant rise in its customer base, growing by over 240,000, alongside a 14% increase in savings portfolio to PLN 579 billion. Notably, the interest margin stabilized at 4.76%, and despite extraordinary items, the bank forecasts a 6% growth next year. Credit portfolios saw a substantial year-on-year increase of 35% in retail banking. The operating expense ratio remains below 30%, showcasing strong cost discipline and a solid capital position.

Strong Growth and Customer Acquisition

PKO Bank Polski reported a record-breaking performance for the third quarter and the first nine months of 2024, registering a net profit of PLN 6.85 billion, an impressive 42% increase year-over-year. This growth is attributed to the solid increase in the customer base, which added over 240,000 customers in the year. The total assets grew more than 8%, reaching PLN 512 billion, alongside a 14% growth in the savings portfolio, totaling PLN 579 billion.

Strong Financial Metrics

The bank maintains a robust capital position with a Tier 1 capital ratio of 17.35%, significantly above regulatory requirements. Key financial metrics include an interest margin of 4.76% and an ROE of 19.26%. Notably, if extraordinary items are excluded, the ROE jumps to over 28%. The non-performing loan (NPL) ratio has decreased to 3.47%, indicating strong asset quality.

Retail Banking Dynamism

Retail banking saw remarkable growth, with cash loans growing nearly 40% and mortgages increasing over 30%. The total portfolio for retail banking is up 35%, marking a significant upward trend. The bank aims to achieve a 6% growth in this segment in the next year, showcasing its robust strategy for customer engagement and product offerings.

Cost Discipline and Efficiency

The bank has effectively maintained cost discipline, achieving a cost-to-income ratio below 30%. The cost of risk continues to be in a favorable trend, showing a decrease by 15% year-over-year. These efforts contribute to a stable operational framework that supports the bank's profitability and growth objectives.

Business Innovations and Digital Initiatives

PKO Bank is focusing on expanding its digital capabilities, exemplified by the launch of a fully digital mortgage platform. This initiative has drastically reduced the time required to approve mortgage applications from 19 days to just a few hours, responding to customer demand for convenience and efficiency. Currently, nearly 40% of new customers are utilizing this digital process.

Future Outlook and Guidance

Looking forward, the bank is optimistic about maintaining its growth trajectory. The management anticipates continued expansion across various business lines, particularly in corporate banking, where they expect growth rates to reach around 6% for the coming year. Coupled with favorable economic indicators and a strong market position, PKO Bank aims to leverage these dynamics for further financial gains.

Conclusion

In summary, PKO Bank Polski is demonstrating robust growth fueled by an expanding customer base, effective cost management, and strategic innovations in digital banking. These factors, combined with a solid financial foundation and positive market outlooks, position the bank favorably for sustained growth and profitability in the coming quarters.

Earnings Call Transcript 2024-Q3

[Operator]

[Interpreted] Good morning, everyone. I would like to welcome everyone to the presentation of the results of PKO BP after 3 quarters of 2024. The presentation is going to be presented by Szymon Midera, Krzysztof Dresler and Piotr Mazur. Over to you.

[Szymon Midera, executive]

[Interpreted] Thank you very much. Well, it was a very good quarter and the record high 3 quarters of the current year.

Good morning. Welcome very cordially, everyone, to the presentation of the results of the bank, together with Christoph, CFO; and Piotr, CRO. And together, we are going to give this presentation to you.

Let us begin. I am very happy that this is another period of a dynamic growth of the number of customers. Year-on-year, this growth has been over 240,000. And as you know, it is not the last one that we are saying because in our strategy, we set forth a very ambitious objective for the base of the customers of PKO and up to PLN 50 million. We are sticking to this ambitious goal.

And in the coming quarters, I am convinced all of us will be able to see a very significant acceleration in the development of the customer base for the whole group. The trust by our customers translated into the business growth. We have 14% growth of the portfolio of savings, up to PLN 579 billion.

It really makes us very happy, but we also have a dynamic growth of the financing portfolio by over 9% to PLN 285 billion. The growth of business translates on to the balance sum growth by over 8% to PLN 512 billion. So these are total assets.

And everything is with very high Tier 1, which is 17.35 over 600 bps above the dividend criteria. NPL goes down, which makes us very happy, and it shows that there is no pressure on our customers' assets. We are at the level of 3.47%, the decrease in the quarter noted 12 basis points.

Now let us look at how the business results translated on to the financial results, which makes us very happy. And what I would like to draw your special attention to is the growth of the basic income by over 20%.

We kept the interest margin, and we were also able to go up to 4.76% -- and keeping in mind the cost discipline, we were able to get the net profit after quarter 3 at the level of PLN 6.9 billion.

If we were not to take into account extraordinary events, additional provisions for Swiss francs as well as credit vacation, that would be a profit that would be at the level of PLN 10.4 billion. So we keep a very high return on capital, which is 19.3%. Without extraordinary events, it is over 28%.

We are keeping the cost discipline. We are below 30% of cost to income and cost of risk is under full control. We went down by 4 basis points to 43 basis points.

Let us have a look deeper at the business in different areas. Let us start with retail. We have very good news to share with you here. New sales, both in cash loans as well as mortgages is characterized by extraordinary dynamics.

The portfolio of retail banking went up by 35%, but that dynamics in cash and mortgages is at a very high level indeed. It's almost 40% in cash, over 30% in mortgages.

And it shows that we are actually lubricating our business machinery, and we are consistently executing the organic growth strategy to strengthen the position of the bank in the market.

Our market share in these 2 lines went up in recent quarters significantly. We are at the level of almost 26% in mortgages. And we noted the growth by roughly 1.6 percentage points. And we are at 19% in cash loans. We went up by over 1 percentage point.

And it translates onto the growth of credit and loan volume by over 14%. And here, I also would like to show to you the sales of mutual funds. We have over 40% dynamics year-on-year. Let me repeat that it's over 40% year-on-year dynamics. We exceeded PLN 50 billion of the market share. And now it went above PLN 10 billion this year. We are increasing our market share. We are very close to 20%, 21%.

I would like to thank our customers very much for the trust invested in us. I also would like to thank all the people who work in retail and in particular, those of you who work in the sales network for great sales results and your everyday work with our customers.

Now a few words that I would like to spend talking about the digital mortgage because it is a very good example how you can revolutionize the market by introducing a fully digital advanced process. We are working on similar processes in other business lines.

We are already now in production in the context of selected market segments, and we have been doing this for over 1 month, and we have very positive experiences relating to that. We are definitely above 90% of customers who entered the process and who complete the process and they sign their contract digitally.

We have close to 40% share of new customers who use this process. And this is what we wanted to see. This innovation, this revolution we have brought about was supposed to bring new business to us and to new customers who are more sensitive to the time they have to spend on the process as well as the simplicity of the process.

The results of the recent weeks testify to the statements of our business under the product. Time to yes was shortened from 19 days to just a few days, including the time which is also necessary for the visit in the property. In very many cases, the time to yes is just a few hours.

We are very happy about this implementation. And consistently within the next months and quarters, we are going to expand the digital mortgage process on to the subsequent segments. We are going to be involved here in the financing of business operations of our customers. We also will be involved in the financing of the primary market, and we will bring about a full rollout of the project.

Corporate banking. As you know perfectly well, under our strategy, there is a very ambitious objective. We simply wanted to increase the share of corporate banking in the result structure.

Now it is something everyone in the Management Board is focusing on, in particular, the President of the Management Board, [indiscernible], and we are simply to develop in this area faster than our competition. This goal in the strategy is plus 2 percentage point of the market share in the financing of corporate business.

The data that we are presenting shows the return to the path of growth. Year-on-year, we have close to 2% of growth. But if we go deeper, we will see that the growth is much stronger because in the larger segment of strategic customers, we had a large multibillion payoffs. And we also have a change of the financing structure from the current loans to investment loans.

But if we go even deeper in the mid-corporate or large corporate segments that we identify in such categories between PLN 60 million to PLN 500 million revenues, the dynamics of the growth of portfolio amount to about 9%.

When we take into account the last quarter of 2024, we can see the capacity for the subsequent several percent of growth. And we keep up what we talked about during the presentation of the strategy when we said that we wanted to develop here in this area in the 2-digit pace, at a 2-digit pace. And we forecast this business to amount to about 6% growth next year.

So very briefly, this is what our business and financial results are like. And now I would like to give the floor to Krzysztof, and Krzysztof is going to tell us more about the different financial aspects. Over to you.

[Krzysztof Dresler, executive]

[Interpreted] Thank you very much, Szymon. Good morning, everyone. It is yet another good quarter of PKO Bank Polski behind us at PLN 6.850 billion. This is the profit of the bank for those 3 quarters. So the dynamics compared with last year is 42%.

We, as a bank, want to be predictable for the shareholders. That is why that less volatility of the financial result as well as the constant factors that support growth is very important. The dynamics of Q3 to Q1 -- to Q2, at the level of 5% makes us really very satisfied.

Extraordinary items were last year at the amount of PLN 3.42 billion. This year, PLN 3.8 billion. Those are significant burdens, I have to admit, especially those which are connected with the write-offs for the legal risk of the loans denominated in Swiss francs.

However, if we were to report the results without taking into account extraordinary events, we would be at the profit -- net profit of PLN 60 billion. The ROE for 3 quarters, 19.26%, is compliant with what we communicated recently when we talked about our appetite for ROE in the strategic segment. Without extraordinary events, we will be at the level over 28%.

We are really very happy that the dynamics of net profit is an effect of good business activity. It is really key for bank that the basic drivers of the activity contributed in a predictable manner and also supported the development of a solid financial base for capital and credit campaign in the future. The dynamics here in the core activity year-on-year is really very high, amounting to 20%.

You can see this, and so we are going to pay attention to very much. When we talk about the interest rate results here, the environment of very high interest rates will be over at a certain point of time. So it is also important for us that if we get any gaps in the interest rate result in connection with the decrease of the profit margin should be covered with additional volumes.

But the increase of the number of transactions with customers in different clients -- in different sectors -- is very important for the share of the commissions and fees in the strategic horizon was growing up. In the comparable conditions, the income from that core activity went up by 21%.

As far as the interest rate result, I would like to draw your attention to the following. We are stabilizing interest rate margin. As we told you, this quarter is going to give us an opportunity to slightly increase it. It is the result of the balance -- asset balance structure.

We still have some securities that are maturing and they are being replaced by new securities for the liquidity and investment portfolios. The current ones are characterized by a higher coupon. That is why we were able to slightly increase the interest rate margin quarter-on-quarter, the result year-on-year and this aspect is over 24%. So it really makes us particularly satisfied.

We are also satisfied that the dynamics is the result of a combination of the increased volumes as well as a slight movement in the area of the margin. We are showing that breakdown. We have been showing it from some perspective.

We are here talking about the structure of interest rate on assets and liabilities. And we can see that the liquidity of retail customers is not changing. It is even getting more stratified and the customers prefer holding their assets in some core accounts.

That is why we were able to improve the cost of financing. It means that it simply went down by 10 basis points. But the profit margin in the comparable conditions from the perspective of assets and the interest rate under comparable conditions without taking into account credit vacations of Q2 is comparable at the level of 7%. So it also makes us really very happy.

The effect of the profit margin growth is supported here from the perspective of the improvement of the cost of deposit financing. But the mix plays a role because the cash loan -- and the setup of the interest rate on loans -- is also properly reflected.

Let us now move on to the next part, that is the commissions from payments and the dynamics year-on-year is almost 14%. And this is another quarter where the incomes that were introduced for these all quarters, they show a double-digit results. And in this longer-term strategy in the longer-term horizon, we will probably, at some point, be facing this 1-digit dynamics. But still right now, we've been reporting double-digit dynamics.

And this is, first and foremost, the result of this bigger number of transactions, leasing credit cards credits, and we look at the contribution from the side of the commissions. And this is very important, and this is something that we'll definitely be focusing on in terms of what we were talking about the strategy.

Another important issue is that we do not intervene in the fees and payments table. So this is not the result of us changing prices that our customers have to pay. This is the result of higher number of transactions, which shows that customers are happy, and this is why they have been using them a lot.

And just like we promised, we also want to keep some -- discuss discipline below 30%. And this is a reason to be proud of in the bank of ours. The dynamics of activity, this is double digits, but low when it comes to high level of cost efficiency. And income and costs, they have improved by almost 2 percentage points during the year.

And I would also like to underline when we go deeper into these personnel costs in the third quarter, this is when we included also some reserve for expected rewards for our employees. The CEO has mentioned that. Thank you for your work. And this is why these annual rewards have been included. They will be paid off these bonuses in advance. And this is why we had a certain reserve this one-off event.

So cost efficiency, just like we have promised, we will try to deliver on that. This is much better than our strategic objective that was set at 35% maximum.

As you know, our whole net interest result is not only the result of our core activity, which means the sales of loans, our bonds portfolio and the cost of deposits. And for some time, we've also been very much active on the bonds market, which we emit as a bank.

We have over liquidity. There is over liquidity in the sector as a whole. This is over resolution because there is a lot of support for the capital in the situation when there is a resolution. And so these new bonds, this is something that we have an obligation to emit.

And here, you can see the numbers in the recent period. For the third quarter, we had EUR 750 million. These were senior non-preferred securities. And with every new issuance, we've been trying to improve this price benchmark, which not only means lower cost. But because we are on the European market, we are the biggest financial institution. This is why we are also responsible. We cannot drive these prices -- fuel these prices up.

And this is why we issued EUR 750 million. We emitted also Tier 2 on the national market, PLN 1.5 billion. And here, we are a little bit ahead of the time. Szymon has mentioned that we have this additional amount when it comes to capital over 600 points. But if we analyze the surplus in the perspective of 2, 3 years, which means once we have addressed this joint buffer, CR3 and all these requirements, well, they will be changing significantly in the coming times. So we've been consuming this surplus, and there is a strategic appetite for an increased credit portfolio.

Then we can say that it is our objective. We would like to have this buffer above these minimum requirements, but we would definitely get nervous if it would get below 1 point.

We will try to optimize our activities. Still, we are just talking a little bit ahead of that. This will become more clear to you because we will have CR3 coming into force at the beginning of next year.

So on my behalf, I also would like to thank all our employees, bank employees, our coworkers. Thank you for your hard work because without it, we would not have these strong results. And now over to you, Piotr.

[Piotr Mazur, executive]

[Interpreted] Good morning, ladies and gentlemen. Now cost of risk, there is no surprise here. And some of you might say that it's boring. But for me, it's quite exciting, to be honest.

And the reason for that is that business has been growing. But as you can see, the cost of risk have been in this good trend, even decreasing quarter-to-quarter. We reported a minor drop. And year-on-year, it's almost a drop of 15%, which makes us very happy indeed.

And I think that also when it comes to a nonworking credit portfolio, this also confirms this very good quality of the credit portfolio. And I also would like to comment on the table on the right side, where you can see provision coverage of receivables. And there is a slight drop.

This is about the portfolio, which is covered 100% about credits, and we are not expecting any recoveries. This is just a regular banking activity.

And I also would like to comment on the temperature on the dynamics on the portfolio. And this is something that you can see in this quarterly cost of credit risk. And when it comes to credit business, I think it's low and stable temperature. So you can see there are no significant changes visible.

Now consumer finance, here also the temperature is quite low and which is quite surprising, it's been decreasing a bit. And this -- our market share has been increasing, but our cost of risk has not changed. There is even a slight chance that it will drop. So this is a very good sign for the future.

And the last part is business and the temperature here is low, but we can see it's increasing a bit, and it seems quite natural. The reason for that is that during the pandemic, there was a significant drop of defaults in this portfolio. And it dropped almost to 0. And right now, this temperature has been returning to this normal regular temperature, which is 36.6 for humans. And we hope that it will not get higher.

Now when it comes to the portfolio quality, we do not have any fears. Now the legal risk cost, unfortunately, this is -- these are significant amounts. But fortunately, the trend is positive. It's been decreasing. And we hope that in the coming quarters, we will be able to end that.

And our coverage is almost 120%. It used to be 178,000 active, and now it's much, much lower, what remains. But the most important information about legal risk. This is this slide. This is mortgage settlement program. We told you that we had this plan that we had more amicable solutions than the number of court cases pending.

This is a very ambitious goal. We were not sure we would be able to achieve this objective. You can see that in the down part. The number of settlements in courts makes us very happy because we are able to convince our customers that the settlement is a good solution for everyone. It's better than very long court proceedings.

So from this place, I would like to thank our colleagues in the business. Thank you for working on these settlements. And I also would like to thank our legal teams because our legal teams have been working a lot on these settlements. And thank you for that.

And the last but not least, in terms of this summary of our capital position, solid capital position. We have the surplus, which makes us very happy about future perspectives when it comes to the business growth. Thank you.

And now to sum up, it was a good quarter, very good 9 months. And this is a very good sign, good in terms of our forecast for the objectives that we set out in our strategy. And there is very high business dynamics in retail. We have a 14% growth, and we have also new business lines. And in some of them, there was a 30%, 40% increase year-on-year. So we can see that it's been accelerating. This business machine, this acquisition machine, is working better and better, and it will bring results in the coming periods.

Now a higher ROE, cost discipline, the risk of cost is under control. All this shows that we are profitable and predictable. Thank you so much. And right now, we can answer your questions.

[Unknown Analyst]

[Interpreted] I have a question about the results. The interest rate result has improved and the structure of deposits also changed those -- the time deposits versus current deposits in all the categories, the current ones were growing and the time ones were increasing. So is it going still to improve the profit margin on interest rates?

[Unknown Executive]

[Interpreted] I mentioned that it results from the preference on liquidity of customers. It may be the case that with high interest rates, the propensity to have time deposits is greater.

When interest rates are lower, people keep their deposits on saving accounts. And it plays a lesser role. We see here the proof that the preference on liquidity plays a role.

But we also look at the savings in the aggregate version, also those that go outside of our assets, our balance sheet, but under management.

For example, assets of the investment fund or bonds, treasury bonds. So these are the places where customers are interested in -- from the perspective of them depositing their savings because the record high PLN 50 billion level of assets of PKO, we exceeded that in Q3.

We keep growing now while treasury bonds are still quite interesting for the customers. So when we were to look at it from the broader perspective, it would turn out that the mix of customer savings looks slightly differently, and we can see the aspect of balance sheet, shifting it from the time deposits to current deposits.

It is happening, but I believe that some of them from those time deposits, they were actually put on bonds.

[Unknown Analyst]

[Interpreted] There's another question. This is going to different temperatures in Q4, we can see that the provisions for Swiss francs are growing in Q4. I'm also thinking about the provisions for the loans for corporate clients. So is there a risk we are halfway through Q4. Do you think that the temperature will go up in those 2 segments?

[Unknown Executive]

[Interpreted] We are not afraid of the final results. The provisions of the portfolio are really very high. And at the time of the pandemic, we predicted that this is how it was going to develop, that there would be a decrease, and it has been taken into account.

But I warned you that we would be observing the increase in the nonworking portfolio. And in Q4, this growth is going to happen, but it will have no impact on the final result.

[Unknown Analyst]

[Interpreted] I have 3 questions. My first question, I would like to go back to the interest rate result. I noticed there that as compared with the previous quarter, the negative impact on hedging almost has not changed.

With having to do there, as a matter of fact, with the 2 categories of instruments. IRS and CRS. Can I ask you about the distribution of cost between these 2 categories?

[Unknown Executive]

[Interpreted] Right. So one by one. In this item, you can see historical portfolios of IRS that are still going to contribute this year with the increased interest rate cost. But we also have a portfolio of new IRS that is also deposited because the setup of those interest rates is still working, and we can see the results of that. And CIRs are also there.

I don't think that we are revealing that detailed information. What I can tell you is that we really -- the historical portfolio of IRS should be -- well, its impact should be eliminated from the financial result at the end of the current year. I'm talking here about a significant impact. And what is going to remain is the pure form of all the remaining instruments, and then we will be able to see that.

[Unknown Analyst]

[Interpreted] I understand that.

My second question is about CRR in Q3. Any estimates on the impact? Can we really hear anything about that?

[Unknown Executive]

[Interpreted] Those estimates are still being calculated. We still do not have all the regulations available that would very thoroughly describe all the technical details. The range is quite vast. And we don't want to quote it now.

Well, I am sure that there will be some growth, but everything depends on the interpretation of the regulator. There are still works underway. And there is a group of banks that work on a development of a standard. Within the coming weeks, I believe we will have some specific solution.

[Unknown Analyst]

[Interpreted] And the third question about the dividend. The end of the year is approaching. You considered the equity position as well as the credit campaign, the pace of it. So closer to which values can we be with the recommendation of the Board as far as the dividend is concerned?

[Unknown Executive]

[Interpreted] I think that you answered yourself the question. This is a solid equity base that we have. And it gives us a comfort that we can be moving around on the edges of the lane, if you will. We know which edge is more difficult from the perspective of the effort that we are undertaking.

I guess I will recommend to the colleagues from the Board that we were closer to the higher edge. But there is a different question because it is not a question of us. It is not our decision.

We are prepared to do this within that lane and also outside of the lane. And it is also true that we issue a lot of bonds and we open new markets for bonds. And we also analyze current and future needs, which we know. And we also try to investigate the market. If the structure of the capital was to change in any way, we simply have to be prepared to embrace it.

So when we look at the results that you can see now about like PLN 500 million in this line, it mainly results from the historical IRS portfolios. But as the time goes by, CIRs that secure our bonds for the time being, they will play a growing role, and they will be visible there.

[Operator]

[Interpreted] Let us move on to questions from our Internet audience. The first question is about the macroeconomic situation.

How do you interpret the recent data on retail sales in Poland? Do you think that it can change your assumptions pertaining to the interest rates and volumes?

[Unknown Executive]

[Interpreted] We are looking at it from 2 different perspectives. The first one is connected with September and the other one is the effect of the American elections that they can potentially work in 2 different directions.

So the readings for September have single-off events hidden in it, and it's worthwhile remembering fewer shopping days that we were able to note. And this is also the effect of the base of the previous year from the perspective of the sales of fuels.

If you remember the end of September, it was the run on fuels, and that was really very significant, very low prices at the gas stations, which were offered by one of the operators and the companies -- and people really had a lot of stored. So that amount of consumption was really noted.

From that perspective, we are sticking to our path, macroeconomic path, I mean, at least for the time being. What is happening in the U.S. and the effect of that from the perspective of interest rates can be such that Fed can reduce the order of magnitude of the cuts of interest rates.

We do not rule out that scenario. It may have some negative pressure on Polish zloty, which may lead to higher interest rates that can encourage people to deposit their funds.

So will it encourage more bold moves to reduce interest rates in Poland? It's difficult to judge. We look at it in a balanced way. The macroeconomic scenario is maintained, as you know.

The scenario of higher interest rates for a longer period from the perspective of the interest rate results helps the bank to keep the profit margin on interest rates at a higher level for a longer period.

And I would like also to add that our readings from the credit card transactions show very positive trends connected with the consumption of services. It are not taken into account in the consumption that we are now referring to -- so yes, we keep up the positive trend. Our macro shows that in October, we should have a positive result.

[Operator]

[Interpreted] NPL in retail, why this drop?

[Unknown Executive]

[Interpreted] I tried to talk about it in my presentation. We've been observing this portfolio, which has 100% provision. This is the result.

[Operator]

[Interpreted] All right. So what was the result of an increase of NPLs in some corporations?

[Unknown Executive]

[Interpreted] I was trying to explain that this temperature has been rising. It's still around 36.6, but before, it was simply much lower. So these levels remain decent, I would say. But still, we have to remain conscious of the fact that in recent years, there was quite a lot of money fueled into the economy, and there was also quite a lot of money coming into businesses.

This is why there was a significantly lower number of defaults. So we are getting back to normal.

[Operator]

[Interpreted] What is the sector expecting after changes in the bank tax?

[Unknown Executive]

[Interpreted] Well, I think we should wait for these changes to actually happen. We're very happy that it's being worked on, and we need the substantive discussion on the logic behind the banking tax or about the change of this logic. So let's wait and see.

But if there is a question about what we are expecting, well, looking forward, if the numbers do not change, if there is this message that it is good for the development of bank money allocation, well, this is definitely something that we would expect.

Yes. So it's a good direction. We -- you know that we are ambitious in terms of increased activity.

[Operator]

[Interpreted] Now digital mortgage, this is a breakthrough. How quickly will other banks be able to introduce such a solution?

[Unknown Executive]

[Interpreted] Well, it's a question to these other banks, I would say. And of course, we know that they've been on it. This is why we decided to speed up. We wanted to fully roll out the digital mortgage program.

And at the same time, we've been building this ecosystem because the digital mortgage itself -- this will not be the only thing that we'll be offering.

[Operator]

A fully digital process -- won't that decrease the quality of the mortgage process?

[Unknown Executive]

[Interpreted] I think to the contrary, because good customers go to good processes. And we hope that this will be the best process and so that we'll get the best customers who will ask for mortgage in PKO Bank Polski.

[Operator]

[Interpreted] Another question. In the coming quarters, will there still be write-offs in the case of postponement for payment after these court settlements?

[Unknown Executive]

[Interpreted] Well, we have a very rigid system of creating provisions in this particular segment. Maybe it's even too rigid. This is what we've been wondering about.

And as you can see, as you can follow the trend, it's a decreasing trend. And I think it will remain like that, and then it will cease to exist.

[Operator]

[Interpreted] I think this was the last question because you've addressed all other questions. So thank you so much, and we'll see you in a quarter's time for another result. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]