U.S. Markets close in 32 mins

Edited Transcript of ALR.WA earnings conference call or presentation 5-Nov-19 11:30am GMT

Q3 2019 Alior Bank SA Earnings Call

Warszawa Nov 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Alior Bank SA earnings conference call or presentation Tuesday, November 5, 2019 at 11:30:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Krzysztof Bachta

Alior Bank S.A. - CEO & President of the Management Board

* Tomasz Bilous

Alior Bank S.A. - Deputy CEO & VP of Management Board

================================================================================

Conference Call Participants

================================================================================

* Alan Ramsey Webborn

Societe Generale Cross Asset Research - Equity Analyst

* Jovan Sikimic

Raiffeisen CENTROBANK AG, Research Division - Financial Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Welcome to the conference call of Alior Bank S.A. regarding the presentation of the Third Quarter 2019 Results. At our customer's request, this conference will be recorded. (Operator Instructions) May I now hand you over to Krzysztof Bachta, CEO, who will lead you through this conference. Please go ahead, sir.

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [2]

--------------------------------------------------------------------------------

Good morning, and good afternoon. Welcome to our conference call after 3Q results. And as we had the presentation before, we are open to any questions you want to ask.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question received from Alan Webborn from Societe Generale.

--------------------------------------------------------------------------------

Alan Ramsey Webborn, Societe Generale Cross Asset Research - Equity Analyst [2]

--------------------------------------------------------------------------------

Thanks for taking the time this morning to talk to us. Could we look a little bit at the volume guidance that you gave in the presentation? I mean, from what I can see, you think you can grow the loan book by PLN 1.1 billion in Q4, which will get your gross loan up PLN 5 billion by the year-end. What is going to happen to the corporate book overall in Q4? Is it going to contract further? Because when I look at Slide 20, if the corporate book is going to stay stable in Q4, given the percentages that you've put in, it would suggest that you're going to have exceptionally strong growth in the sort of small micro side, maybe as much in Q4 as you did in the whole of the rest of the year, and that looks a little bit ambitious. So could you just talk about what you think the makeup of the new lending or the incremental lending that you're going to do in Q4 is? That was going to be my first question. Perhaps we could them take one after the other.

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [3]

--------------------------------------------------------------------------------

Okay. So this effect is derived from 2 facts. If you look at the Slide #20. It's -- first of all, because we have some repayments in the corporate book, and this is normal, I would say, repayments or the investments, loans are, let's say, finished in terms of the investment being made. And then there is the repayment, so it's normal, I would say, according to the timeline. And we expect, let's say, higher repayments in the coming quarters -- in the 3 coming quarters, and this is one fact.

Second is that, in the corporate book, we also -- we are working with some customers to serve, let's say, if we have a very large customer which is too big from our perspective, for example, one customer coming to get additional financing where this is already above our limit, so we want to serve this customer with other banks to do the consortium. So it means that it will be a joint loan divided by a couple banks here. So this is our, let's say, approach, as we want to have less concentrated risk according to different segments in terms of industries, but also in terms of one -- per one customer, right? So this is something we are doing. And this means that we have quite a good pipeline of new sales. But in the corporate segment, we believe that the overall effect will be that, in the fourth quarter, it will be declining because of the portfolio. But at the same time, this mid-corporate and the micro segment will grow. It's the effect of 2.

So the large corporates are decreasing, and at the same time, we see high potential in the small and medium, especially as we see quite a good uptick in inquiries from customers in this automatic process. We mentioned that this is up to PLN 20 million. And we also are planning, in the coming quarters, to do the semiautomatic process, even up to PLN 20 million. So it will mean that it will be easier and more reliable in terms of both timing but end result as well -- process, which will allow us to attack those small, medium enterprise.

--------------------------------------------------------------------------------

Alan Ramsey Webborn, Societe Generale Cross Asset Research - Equity Analyst [4]

--------------------------------------------------------------------------------

Okay. So the sort of the PLN 1.1 billion that we're expecting -- you're expecting to see in Q4 is all going to come from retail -- or actually more than that is going to come from retail. So you're expecting that the increase in gross loan volumes will -- in retail will be more than PLN 1.1 billion in Q4? Or am I misinterpreting that?

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [5]

--------------------------------------------------------------------------------

Well, it's a very detailed conversation about our sales plans, but you are right in terms of that we'll see in the coming quarter, first of all, uptick in corporate segment so mid and small in the corporate part. But also, we will see good performance in retail, which translates into the fact that, at the end of the day, most of the, let's say, this growth will come from retail part. And as you can see, we can do it because, in the Q3, we did PLN 1.1 billion. So quite sure that we'll also add some net increase also from the corporate side.

--------------------------------------------------------------------------------

Alan Ramsey Webborn, Societe Generale Cross Asset Research - Equity Analyst [6]

--------------------------------------------------------------------------------

Okay. Because I think I've seen some comments on the Newswires and so on saying that you reckon that you could get back up to PLN 1 billion a quarter in corporate, overall. Is that right what you said? And I'm not sure whether you said at what sort of time horizon you could do that in, but is that the target?

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [7]

--------------------------------------------------------------------------------

Yes. Basically, this is something we want to achieve in some time to come. But this is -- you need to remember that the repayment, if we look at them, they are scheduled in different quarters. So in the coming quarters, like fourth quarter, first quarter of next year and second quarter of next year, we will see some high peak of repayments, which are scheduled, right? So this is good from our perspective because it means that the loans are repaid, that this is a good business, profitable. Some of the repayments are also before the schedule. So it means, for example, that customer made an investment, and if this is a commercial property, for example, he is selling it to someone else and repaying the debt, which is even more profitable from our perspective because you really then -- we recognize some one-off profits after earlier repayments. So from our perspective, this is something good, but nevertheless, at the same time, we will do more diversified, small and medium tickets in the corporate segment, so that it contributes to the, overall, the bank growth.

So if we need to look at the numbers like in 3 years, the highest growth would be in the years 2021 and '22. Because in the first half of the year, next year, we still see some, let's say, large repayments, which are scheduled.

--------------------------------------------------------------------------------

Alan Ramsey Webborn, Societe Generale Cross Asset Research - Equity Analyst [8]

--------------------------------------------------------------------------------

Okay. So is the way to think about it is that the sort of -- you've had -- if you look back sort of 6 quarters or so on, you've been doing a lot better than PLN 1 billion a quarter. You've been sort of PLN 1.5 billion, PLN 1.6 billion and so on. So presumably, it means that, for the next few quarters, we are going to be more around sort of PLN 1.1 billion or than the PLN 1.5 billion, PLN 1.6 billion, presumably, it's going to take time to actually improve the overall sort of growth if you've got these repayments coming in, and presumably, it takes some time to up speed the SME and so on that it presumably takes a little while. So is it right to think that your gross volume increase for the next few quarters is actually going to be a bit weaker than it's been in the past? Is that the right way to look at it until your...

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [9]

--------------------------------------------------------------------------------

I wouldn't assume it because we see very strong growth in the retail and also in the segments that we were not growing. Because if you look at the business segment part, most of the growth was actually driven by large corporates in the previous quarters, starting from 2016, right? So we are changing it in the way that we have told. We see more and more inquiries for those small and medium tickets coming. So the pipeline -- we needed simply to learn our network to perform to what we wanted to do, and it took us actually, I would say, 2 quarters. So second quarter and third quarter. In this quarter, we see right now, we see that the results in terms of sales would be better. So if we are talking about growth, and we also see some potential also in more business. So if we are looking at net volume growth and also in the leasing, right? So if you are looking at the net volume growth, as we defined this in our presentation, we would rather see PLN 1 billion to PLN 1.5 billion per quarter in the coming year. And in the next year, it will be even higher than PLN 1.5 billion per quarter. So this is how you should somehow think about it.

--------------------------------------------------------------------------------

Alan Ramsey Webborn, Societe Generale Cross Asset Research - Equity Analyst [10]

--------------------------------------------------------------------------------

Okay. That's helpful. If we can move on now to the impact of the -- the ongoing impact of the ECJ judgment, the PLN 80 million that you referred to -- or PLN 79 million you referred to in your earlier current report. I mean, can you just sort of explain to me what you mean exactly by this? Will you be able to offset it by increasing volumes, so that, in 2 years' time, you will have recouped annually 4x PLN 80 million, so sort of PLN 320 million of lost NII? Or do you actually feel you can increase the margins on the portfolio to compensate? Where do you -- where does the balance come in terms of how you get that back?

--------------------------------------------------------------------------------

Tomasz Bilous, Alior Bank S.A. - Deputy CEO & VP of Management Board [11]

--------------------------------------------------------------------------------

This is Tomasz Bilous, CFO. So maybe I'll try to comment on that. We see like today, 3 major drivers of the income for the coming years and how to, let's say, come back to the income levels that we've had so far before the ECJ ruling. So first of all, of course, these are changes in the product offer related to cash loan, what Krzysztof, today, I think, quite complexly addressed during the presentation. So there are several aspects to that. The pricing, the consolidation, the approach to early repayments and also building potential for the clients to take new products if the consolidation is not so profitable anymore for us.

Also, we will be working on cost of acquisition. And I think here, we also have the space to lower it. Then the other important factor will be cost of funding and here, today, we are at the level higher than our peers. So there -- I think that I believe strongly we have a potential to go down with the cost of funding and therefore also improve the NIM.

And the third important aspect was, I think, present in all the -- almost all the business lines and all the slides is that we will be increasing this primary relationship and cross-sell our products to existing clients, where we have already a base of 4.3 million clients overall. So I think, there, we still have a very strong area for improvement for us. I -- also interest income but also fee and commission clients.

--------------------------------------------------------------------------------

Alan Ramsey Webborn, Societe Generale Cross Asset Research - Equity Analyst [12]

--------------------------------------------------------------------------------

Okay, that's helpful. I mean, obviously, in an environment that's very competitive and the fact that your -- the impact on your NII proportionately is somewhat higher than, say, for some of your larger competitors, do you think it is reasonable to think that you can increase the loan pricing and still be competitive in terms of the growth that you expect to achieve on retail? Because for some of your competitors, the impact is somewhat less. And probably by tweaking their funding costs, they can recoup what they've lost, whereas, in your case, PLN 80 million a quarter is a lot because of your particular focus in -- that your -- you do think you can actually make those changes and still be competitive.

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [13]

--------------------------------------------------------------------------------

Yes, because this is something which is impacting the whole market. So as you look at the strategies of each and every bank going from top 8, let's say, to 3. You will see that each and every bank is growing their financing and cash flow in order to find something that is profitable under current capital requirements and is improving and is adding positive ROE to the overall balance sheet of the bank, right? So everyone is growing their cash flow.

And in order to -- for the goal to be achievable, so it provides for better ROE, it has to be priced according to at least close to the maximum interest rate you can charge in Poland, right? So we believe that there is some space because each and every bank will look at it in a similar way. And this is one point.

And second, if you look to who we sell, we basically -- you can see also in our numbers for this quarter, we were increasing the prices for cash loans starting from the beginning of the year in terms of, let's say, improving the margin on the active side. And you can still see that the sales, actually, we were not growing the sales as fast as the whole market. But still, we were able to do the production we wanted. So this is -- so it means that we are able to do similar tickets in -- or even larger with good margin, at least, on the active side.

And on the passive side, at the same time, you need to remember that it's -- we see plenty of debt of it. So there is over-liquidity in the market. And -- but we even see it like from -- for example, when we quote corporate clients at level, for example, 30 or 40 bps lower than we used to, it results into some tickets still staying at our book, right? So it means that there's no other place for those monies to go because if there was probably someone would move their money to better offer, right? So it means that we see some other liquidity in terms of cost of funding. So that's why we have potential there. And as you see from our numbers, we were able to very fast grow the deposit base from the retail customers, at the same time, lowering rates and lower cost of funding, which is really untypical, if you look at the market conditions. And this is resulting from 2 parts. One, that we internally optimize our processes and our offer. So we are looking for the places where we have leakage in terms of cost of funding, and we are closing it and moving the money into places where we can better -- have better margins on it. So this is one point.

And second is good market conditions as others are also lowering deposit rates. And the same we provide, we believe that, in the cash loan, it should be similar story that the market will reprice it. And basically, if you have, for example, in Poland, a banking tax, which was introduced some time ago, then the whole market repriced, for example, mortgage loans. And this is typical you should do in such a case. And what we see right now, for example, is also other banks increasing mortgage loans rates. So it means that most of the banks are rather looking for increasing prices than to fight with the pricing.

--------------------------------------------------------------------------------

Tomasz Bilous, Alior Bank S.A. - Deputy CEO & VP of Management Board [14]

--------------------------------------------------------------------------------

On the other hand, what I think is also important and will be more important for the market starting from the fourth quarter. Maybe just said it for the sake of the discussion, we were, today, the only bank with a quarterly review. So I see the banks, let's say, are still analyzing several of these items that we have already provided for. So this will have an impact on their results quite soon. But then, let's not forget also about the second ECJ ruling, which has no impact on us, but has quite a significant impact on the overall -- on the other players on the market, the big ones. And they are in a situation where they have already decreased quite significantly cost of deposits. So they will have to look, they will have to look elsewhere for the new sources of income to cover for that. So I think there's an overall situation that -- looking from, let's say, a kind of subdued, I think everyone will be looking for margin.

--------------------------------------------------------------------------------

Alan Ramsey Webborn, Societe Generale Cross Asset Research - Equity Analyst [15]

--------------------------------------------------------------------------------

Okay, that's helpful. So not to lie to you, but a few more questions, if I can. The focus on the micro business, I mean, you've, up until now, given a view of sort of a normalized cost of risk of sort of PLN 1.7 billion to PLN 1.8 billion. I appreciate that we'll need to wait until March for your -- aware of -- for your new updated strategy. But do you think the increased focus on the micro businesses, everything else being equal, would be an upward push in terms of your risk costs or not? I mean, what do you feel about that sort of movement away? I mean, obviously, you've had issues on the legacy portfolio from large corporates, but what's the impact of growing the micro businesses?

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [16]

--------------------------------------------------------------------------------

Yes. So if you -- of course, if you would say that growing micro and leaving everything as it is in the current sector, of course, will mean increased cost of risk because this is segment with higher cost of risk than other segments, let's put it this way. But if you look, for example, at Slide #39. You will see that the micro is going exactly to the same level in the share of portfolio as leasing, while leasing is growing faster.

So it means that leasing, with lower -- significantly lower cost of risk because of the asset-based lending, it will -- let say, the effect on both and also the increased quality of the micro lending will also cut off intermediaries there, yes. So we did a lot of cutoffs in scorings, improved the quality of the process, for example, by better tracking external data bases about the customers. And also, we cut off intermediaries there. So it will mean that this quality of new sales is much more better than the portfolio. So this is the first point. And second is that with the growth of leasing at the same time, it will offset the effects of growing portfolio of micro loans.

--------------------------------------------------------------------------------

Tomasz Bilous, Alior Bank S.A. - Deputy CEO & VP of Management Board [17]

--------------------------------------------------------------------------------

What I can add is that, if you look at Slide #10, you will see, and we have already mentioned it on the presentation. Just to support what Krzysztof is saying, you can see that already in the third quarter, we have implemented changes in the procedures and policies around micro segment. That's why you see there a small drop down in new sales, which will be therefore, let's say, the portfolio will be built at a much better quality going forward. And also what you should be taking into account in terms of micro is of course the effects of Slide 18, where currently the coverage of the digital guarantees is 90%. And the overall level of the portfolio covered with the guarantees is, as you can see, growing quite rapidly because it's 11% throughout the year.

--------------------------------------------------------------------------------

Alan Ramsey Webborn, Societe Generale Cross Asset Research - Equity Analyst [18]

--------------------------------------------------------------------------------

Okay. That's very helpful. Just a few final questions. Was the whole of the sort of PLN 29 million bonus clawback made in the third quarter. Was that all in the third quarter? Or was that the year-to-date number, just to give us an idea? And I think you did also suggest that for the PLN 400 million per quarter was a sustainable run rate for operating costs. Is that -- could you just confirm that?

--------------------------------------------------------------------------------

Tomasz Bilous, Alior Bank S.A. - Deputy CEO & VP of Management Board [19]

--------------------------------------------------------------------------------

Yes. We have not been looking at solely the third quarter because we are accruing, of course, the bonus provisions each and every quarter with the development of the result. But looking at the potential result for this year, you know how it's affected with the ECJ ruling, we have decided just to release some part of the bonus provision for this year. All in all, yes, this PLN 400 million is our target. This was kind of one-off. We are still looking at the cost. And as Krzysztof said, we are looking also at the more structural improvement. And each and every quarter, we are working on that. So it might be, of course, to some extent, the fourth quarter will be slightly lower than PLN 400 million, but let's see.

--------------------------------------------------------------------------------

Alan Ramsey Webborn, Societe Generale Cross Asset Research - Equity Analyst [20]

--------------------------------------------------------------------------------

Okay. And I noticed also that, in Q3, that sort of the FTEs, the staff numbers actually fell a bit. Is that something that we'll continue to see? Or was that sort of just a particular impact in the third quarter?

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [21]

--------------------------------------------------------------------------------

Yes. So if you look at FTE numbers. Actually, this is something we are working on as well, but we do not plan anything, let's say, drastic here. It's either the case of looking for effectiveness in each and every part, and also using the natural fluctuation, I would say, of the FTEs who work for us in order to be more effective. So for example, if you look at contact center, we entered there with a higher number of FTEs. And we -- it's throughout the year to improve the quality of service, pick-up time and so on and so on. But at the same time, by improving processes, by also improving our own web page, for example, by also improving our internet banking and also mobile banking. We see that the number of people calling is simply diminishing. And that is a result, at the end of the day, that we are able to do the same or even better quality with lower number of staff, right? So this is something like, we call it like continuous improvement of the processes for customers but also internally operational processes. And we are using like opportunities to be more effective. The same will apply also, for example, for branches. So in case we see that we have the rental ending and we see that, in the current location, we do not need the branch and the market that we have closed the same location and other branches so we can move the traffic and customers to some other branches that's not that far away. We are able to be more effective on the cost base advantages.

So this is something we are continuously looking at. And you can see also that, at the same time, we have some salary expenses in Poland, as you know it, right? Because you can see it also in the results of other banks and remuneration costs growing. And so our goal simply is to still pay better to our people because we see pressure [affecting] some of the segments, but at the same time, to be as cost effective. So doing the same [toppers] and better job with lower number of FTEs. So this is something you should see in the coming quarter but not on drastic basis.

--------------------------------------------------------------------------------

Tomasz Bilous, Alior Bank S.A. - Deputy CEO & VP of Management Board [22]

--------------------------------------------------------------------------------

I think you will see (inaudible) also 2 general effects. First one is looking for the higher efficiency with the same number of FTEs, so with same resources because that's one way that we approach it. And in the medium and longer term, definitely, of course, I think, on the whole market, you can expect that the number of FTEs will be [reswitching]. That's the natural order.

--------------------------------------------------------------------------------

Alan Ramsey Webborn, Societe Generale Cross Asset Research - Equity Analyst [23]

--------------------------------------------------------------------------------

Okay, okay. And then probably a final question. And on, I guess, a more positive note, I mean, your fee income in Q3 was quite strong. I mean, clearly, historically, this has been a difficult area, but you do appear, despite some still pressures in capital markets areas and so on, to have done a good job in your Q3 fees. Now just sort of -- can you just tell me where you think that is coming from? Is it sustainable? Is the sort of PLN 170 million plus per quarter, something that you feel comfortable with? Were there any unusual items in Q3 because that was something that clearly did stand out a little bit.

--------------------------------------------------------------------------------

Tomasz Bilous, Alior Bank S.A. - Deputy CEO & VP of Management Board [24]

--------------------------------------------------------------------------------

There was no -- there was nothing unusual. So there was no kind of one-off situation. This is primarily driven by a nice result on the FX margin. So meaning that the strategy of our FX [counter] -- how do you call it -- I think that...

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [25]

--------------------------------------------------------------------------------

It's the Internet FX exchange.

--------------------------------------------------------------------------------

Tomasz Bilous, Alior Bank S.A. - Deputy CEO & VP of Management Board [26]

--------------------------------------------------------------------------------

Internet FX exchange, our new multi-currency card. And this is all -- it's all picking up, and this has been very well received by the clients. Of course, there might be some pickup resulting from the fact that it was a holiday period so the clients have been exchanging currency much more than they used to in the regular quarters. So I cannot promise you that this will be like a firm level for the next quarter. It shouldn't be kind of much worse, maybe slightly lower. But on the other hand, this is, I think, the line where we have a very strong area for improvement because, as Krzysztof, today, also elaborated on that, we still have a huge potential to cross-sell on the existing corporate clients, small and medium clients, micro clients. So I think this is the line where we will be improving.

--------------------------------------------------------------------------------

Operator [27]

--------------------------------------------------------------------------------

And the next question we received is from Jovan Sikimic from RCB.

--------------------------------------------------------------------------------

Jovan Sikimic, Raiffeisen CENTROBANK AG, Research Division - Financial Analyst [28]

--------------------------------------------------------------------------------

Actually a lot has been asked and already answered. That's good. I just have a couple of small questions or short questions. I mean this -- now you booked this impact from European Court of Justice, you split it, right, between NII and other operating expense?

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [29]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Jovan Sikimic, Raiffeisen CENTROBANK AG, Research Division - Financial Analyst [30]

--------------------------------------------------------------------------------

Is it now, for the fourth quarter, this PLN 79 million that you guided for NII, is it now also going to be split? Or is it the full NII impact?

--------------------------------------------------------------------------------

Tomasz Bilous, Alior Bank S.A. - Deputy CEO & VP of Management Board [31]

--------------------------------------------------------------------------------

No, this is full NII impact. And this is -- the split that we have done today is because PLN 57 million out of that whole amount of this PLN 102 million is relating to the potential claims of the clients that repaid loans in the past. So you cannot kind of clearly allocate it to the current interest income from the current period. So that's why it's presented separately. So the PLN 79 million estimation, yes, the estimation, given the historical, let's say, behaviors of the clients and the market, was actually meant to be in interest income.

--------------------------------------------------------------------------------

Jovan Sikimic, Raiffeisen CENTROBANK AG, Research Division - Financial Analyst [32]

--------------------------------------------------------------------------------

Okay. Perfect. So it's clear. And this PLN 79 million is something that we should expect for the next quarters, of course, on top of this. Or as a kind of mitigating factor you plan to do those measures that you already announced, right, on cash flows.

--------------------------------------------------------------------------------

Tomasz Bilous, Alior Bank S.A. - Deputy CEO & VP of Management Board [33]

--------------------------------------------------------------------------------

So this was something that we see as a regular quarterly, more or less, level, the total effect to the income. Of course, the actions that we will be taking were not included. So it should be -- this should be lower by each and every quarter, of course. Of course, it takes time to build a new portfolio, new rules and new policies, new pricing. So we'll see that picking up, I hope, already next year.

--------------------------------------------------------------------------------

Jovan Sikimic, Raiffeisen CENTROBANK AG, Research Division - Financial Analyst [34]

--------------------------------------------------------------------------------

Okay. On fees, I have a question. I mean last quarter, from -- let me check, from credit card -- for payment cards were low. This quarter they were a bit better, but still like I think net amount around PLN 3 million. So it's still very low compared to slightly sustainable...

--------------------------------------------------------------------------------

Tomasz Bilous, Alior Bank S.A. - Deputy CEO & VP of Management Board [35]

--------------------------------------------------------------------------------

This is still not at the level, let's say, we would like them to be. And I can assure you we are working on that.

--------------------------------------------------------------------------------

Jovan Sikimic, Raiffeisen CENTROBANK AG, Research Division - Financial Analyst [36]

--------------------------------------------------------------------------------

Okay. And on (inaudible), how much of corporate-related cost of risk were built for agribusiness in the third quarter, only in the third quarter, roughly?

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [37]

--------------------------------------------------------------------------------

Well, hard to say right now. But from my first perspective, I would say it was not that significant in the third quarter. Of course, there were probably some adjustments and declines, which are in the restructuring portfolios. But we wouldn't say this is something with significant impact. But at the same time, we also moved quite some of the customers from Phase 1 to Phase 2 to be better monitoring them, and also this impacted into some growth of agribusiness. But in general, I wouldn't say it was significant in the third quarter. But of course, influences the, let's say, the expected, let's put it this way, expected level of provisions in the corporate segment. So that was starting, but yes, I also kind of now recollect what was the amount.

--------------------------------------------------------------------------------

Jovan Sikimic, Raiffeisen CENTROBANK AG, Research Division - Financial Analyst [38]

--------------------------------------------------------------------------------

Okay. Okay. And last one from my side. I mean this on-site inspection by KNF. It's still ongoing, right? So and do you have any view how long should it take?

--------------------------------------------------------------------------------

Tomasz Bilous, Alior Bank S.A. - Deputy CEO & VP of Management Board [39]

--------------------------------------------------------------------------------

Yes. So usually, this is something, which takes 1 month, so I would say it's close to the end. And then we will see that protocol, and we will have a discussion with KNF. So this is something which is still ahead of us.

--------------------------------------------------------------------------------

Operator [40]

--------------------------------------------------------------------------------

(Operator Instructions) As there are no further questions, I hand back to Mr. Bachta.

--------------------------------------------------------------------------------

Krzysztof Bachta, Alior Bank S.A. - CEO & President of the Management Board [41]

--------------------------------------------------------------------------------

So thank you very much for this call. And please do not hesitate to ask us any questions you might have in the meantime. And next time, we'll see each other when we announce the strategy for the coming year. And thank you very much for today.

--------------------------------------------------------------------------------

Operator [42]

--------------------------------------------------------------------------------

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.