Political and Economic Context - Ivory Coast is facing civil unrest due to President Ouattara's plan to seek a fourth term, which is against Ivorian law [1][2] - Several potential candidates, including former Credit Suisse executive Tidjane Thiam, have been barred from running for office, increasing political tension [3] - Investors are concerned about the impact of political instability on the economy, which is the second largest in West Africa [3] Economic Performance and Risks - The World Bank indicates that Ivory Coast has been the fastest-growing economy in Africa, with an average growth rate of 8.2% over the past ten years [6] - Cocoa prices are fluctuating, and instability could negatively impact the country's reliance on cocoa exports [7][8] - Political instability could deter investment in Ivory Coast, where significant development has been ongoing [9] Regional Stability - Ivory Coast has been an example of stability in a region with considerable instability in neighboring countries [10] - The upcoming elections and potential for violence are a concern, as previous elections have turned violent [4]

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Inflation & Monetary Policy - Potential for the Federal Reserve to reduce rates if inflation decreases and the economy performs well [1] - Tariffs are one of many forces at work in the economy, including remilitarization, fiscal deficits, and demographics, which may drive slightly higher inflation [2] - Focus should be on growth, which is more important than minor fluctuations in inflation [2] Tariffs & Trade - Tariffs have been greatly moderated, with 15% applying to half of imports, which is manageable in many cases [3] - With imports around $4 trillion, an average tariff of 7-8% equates to $300 billion annually on a $30 trillion economy, which may have some effect [3] - The impact of tariffs is still uncertain, with some being passed on and some not, and more effects may be seen in the future [4] - Current tariffs are more moderate, thoughtful, and carefully implemented, potentially helping some companies export and encouraging manufacturing to return to the US [7] Fiscal Policy & Deficit - The US deficit is $2 trillion, and concerns exist about adding $2.5-3 trillion, leading to an increase from $30 trillion to $50 trillion in debt over 10 years [8] - The extraordinary additions to the deficit each year are more concerning than the $3 trillion figure [9] - The current tax bill is beneficial, but the deficit needs to be addressed, as 6.5-7% deficits cannot continue indefinitely [9] - There are too many tax breaks that should be eliminated, and multiyear budgeting could be implemented [10][11] Market & Risk Appetite - Risk appetite in the market is a little high, but not critically so [12] - $10 trillion was borrowed and spent in the last five years, likely globally, along with large amounts of quantitative easing (QE), which is still affecting the system and may be leading to higher asset prices [13] - High asset prices and low credit spreads suggest a longer way to fall, making the market cautious about valuations [13][14]

Group 1 - Emerging markets, particularly India, are identified as a significant source of growth, with the Indian economy projected to grow at a 6.4% CAGR in real terms [1] - The growth in India is accompanied by high volatility in the domestic market, indicating potential risks alongside opportunities [1]

Financial Data and Key Metrics Changes - The bank reported a net profit of PLN 1,035 million, representing an 18% year-on-year growth for Q2 2025, and a 10% growth year-on-year for the first six months [26] - The cost of risk decreased by 39% year-on-year, indicating improved risk management and lower provisions [27][39] - The cost-to-deposit ratio improved to 76.3%, one of the highest in the sector [35] Business Line Data and Key Metrics Changes - Retail customer base increased by nearly 80,000, while corporate customers grew by 20,000, totaling an annual increase of 155,000 clients [3][4] - Mortgage loans reached a total value of €5 billion in Q2, with a market share of 21% for new production [5] - Cash loans saw a 13% year-on-year increase, marking one of the best quarters in the bank's history [6] - Corporate loans grew by only 1.3% quarter-on-quarter and 3% year-on-year, with SMEs showing faster growth compared to larger corporations [7] Market Data and Key Metrics Changes - The Polish economy is projected to grow by 3.5% in 2025, outperforming regional neighbors like Romania and Hungary [10][11] - Household savings rates are solid, higher than pre-pandemic levels, which supports the bank's business model [12] - Investment in the construction sector is expected to rise slowly, with public investment beginning to increase [14][15] Company Strategy and Development Direction - The bank is focusing on increasing market share through active customer growth and digitization of processes [4][5] - A revision of the bank's strategy is underway, with plans to present it on November 19, emphasizing improved customer service and reduced reliance on physical branches [51][52] - The bank aims to enhance private banking services and mutual fund sales while maintaining a conservative approach to risk [54] Management's Comments on Operating Environment and Future Outlook - Management noted that while corporate lending is facing challenges, there is optimism for a rebound in the second half of the year [63] - The bank is prepared for potential impacts from interest rate changes, with a belief that their sensitivity to these changes is low due to effective risk management [46][47] - The outlook for mortgage lending remains positive, despite demographic challenges, with a significant demand for residential properties still expected [60][61] Other Important Information - The bank's interest margin is stable despite fluctuations in interest rates, supported by effective management of interest rate risk [34][33] - The bank is actively participating in discussions for a model mortgage loan contract to enhance consumer protection and simplify processes [69][71] Q&A Session Summary Question: Future evolution of profitability of interest assets - Management refrained from commenting on forward-looking data but acknowledged that lower interest rates would impact net profit sensitivity [46][47] Question: Impact of obligatory provision on performance - Expected impact on the banking sector is between PLN 1.5 billion and PLN 2 billion, proportional to each bank's market share [48] Question: Interest in fixed-rate mortgage loans - The share of fixed-rate loans has decreased from 80% to 60%, as customers prefer floating rates amid declining interest expectations [49][50] Question: Strategic priorities for the near future - A revised strategy will be presented on November 19, focusing on customer service improvements and operational efficiency [51][52] Question: Improvement in derivatives and FX - The growth in derivatives and FX was attributed to market volatility and effective trading management [56] Question: Cost of hedging remaining flat - The impact of hedging on financial performance should be analyzed over a longer time perspective rather than quarterly [57] Question: Mortgage loans as a fundamental product - The bank views mortgage loans as essential and plans to continue offering them despite market challenges [59][60]

Financial Data and Key Metrics Changes - The bank reported a net profit of PLN 1,035 million, representing an 18% year-on-year growth for Q2 2025, and a 10% growth year-on-year for the first six months [26] - The cost of risk decreased by 39% year-on-year, indicating improved risk management and lower provisions [27][39] - The total assets and liabilities showed consistent growth across all segments, contributing positively to the net result [27] Business Line Data and Key Metrics Changes - Retail customer base increased by nearly 80,000 in Q2, with a total annual increase of 155,000 clients [3][4] - Mortgage loans reached a total value of €5 billion in Q2, with a market share of 21% for new production [5][6] - Cash loans grew by 13% year-on-year, marking one of the best quarters in the bank's history [6] - Corporate loans saw a modest growth of 1.3% quarter-on-quarter and 3% year-on-year, with a notable increase in loans to SMEs [7][8] Market Data and Key Metrics Changes - The Polish economy is projected to grow by 3.5% in 2025, outperforming regional neighbors [10][11] - Household savings rates in Poland are solid, higher than pre-pandemic levels, which supports the bank's business model [12][13] - The bank's market share in mortgage loans is strong, but competition from alternative funding sources is impacting corporate lending margins [8][25] Company Strategy and Development Direction - The bank is focused on increasing market share through real growth based on active customers, emphasizing the importance of customer engagement [4] - A revision of the bank's strategy is underway, with plans to enhance customer service and reduce reliance on physical branches [52][53] - The bank aims to improve its private banking services and mutual fund offerings, reflecting a cautious yet optimistic approach to growth [54][55] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in the retail segment, despite challenges in corporate lending due to competitive pressures [25][66] - The bank anticipates a rebound in corporate lending, supported by public sector investments and lower interest rates [22][25] - Inflation is expected to stabilize around 2.8%, which may influence interest rate sensitivity and profitability [19][20] Other Important Information - The bank's cost-to-deposit ratio improved to 76.3%, one of the highest in the sector [35] - The non-performing loan (NPL) ratio remains stable at 3.9%, below the sector average, indicating strong asset quality [41][42] - Capital adequacy ratio stands at 15.66%, reflecting a solid financial position despite recent loan sales [44] Q&A Session Summary Question: Future evolution of profitability of interest assets - Management refrained from commenting on forward-looking profitability but noted that lower interest rates would impact net profit sensitivity [46][47] Question: Impact of obligatory provision on performance - The expected impact on the banking sector is between PLN 1.5 billion and PLN 2 billion, proportional to each bank's market share [48] Question: Interest in fixed-rate mortgage loans - The share of fixed-rate loans has decreased from 80% to 60%, as customers prefer floating rates amid declining interest expectations [49][50] Question: Strategic priorities for the near future - A revised strategy will be presented on November 19, focusing on customer service improvements and private banking initiatives [51][52] Question: Improvement in derivatives and FX - The growth in derivatives and FX was attributed to effective management and market volatility, leading to a 95% increase [56] Question: Cost of hedging and its impact - The cost of hedging remained flat despite rate reductions, with a focus on long-term analysis rather than short-term quarterly impacts [57][58] Question: Mortgage loans as a fundamental product - Management affirmed the importance of mortgage loans, citing ongoing demand despite demographic challenges [60][61] Question: Corporate lending margins and future expectations - Management expressed hope for a pickup in corporate lending in the second half of the year, influenced by regulatory factors and market conditions [62][66]

Inflation & Monetary Policy - Inflation remains above the target set by the Federal Reserve [1] - The Federal Reserve remains committed to its dual mandate of price stability and maximum employment [1] - No decisions have been made yet regarding the September Federal Open Market Committee (FOMC) meeting [1] Economic Outlook - Data suggests economic growth has slowed [1] - The current policy stance allows flexibility to respond to evolving economic conditions [1] External Factors - Tariffs added inflationary pressure on some goods, but the broader impact remains unclear [1]

Market Trends & Economic Outlook - The dominant trends expected this year are a weaker dollar and a steeper yield curve [1] - The economic backdrop presents crosscurrents, including tariff uncertainty, inflation, and real rates impacting future growth and potentially slowing down the US economy [3] - Fiscal stimulus expansion, coupled with resilient consumers, can drive capital expenditures, leading to increased productivity and company profitability [3] - Inflation is trending lower, although not at the Fed's desired pace, and inflation expectations are also decreasing, putting pressure on the short end of the yield curve [5] - Increased capital expenditure, higher productivity, and profitability, combined with a Fed rate cut, could be incredibly bullish for equities [9] - Continued tariff pressure and higher-than-expected inflation could act as catalysts for negative market outcomes [9] Investment Strategy - The firm advocates staying in higher quality assets in both fixed income and equities due to market uncertainty [10] - Investors are encouraged to focus on high-quality companies with high profitability, high free cash flow yields, and dividend-paying capabilities to protect against future volatility [11] - The firm favors intermediate bonds with higher quality, primarily investment grade, advising against venturing into the high yield sector [12]

Monetary Policy & Economic Growth - Bank Indonesia's policy rate cut is expected to stimulate the nation's economic growth [1] - Future monetary easing will be contingent on the stability of the Rupiah [1] Trade & International Relations - Indonesia announces a trade deal with the US [1]