Banco Comercial Portugues Aktie

Good day, and thank you for standing by. Welcome to the Millennium BCP First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Miguel Maya. Please go ahead.

Good morning, Miguel Maya speaking. Welcome to BCP Earnings Conference Call. As usual, I will mention the highlights of our performance and then Miguel Braganca and Bernardo Collaco will follow providing additional detail. The first quarter proved particularly challenging with global context marked by increasing instability and intensifying geopolitical tensions as conflicts erupted in the Middle East. These events have had a severe impact on international trade and energy costs worldwide, which in turn is affecting global economic growth.

Despite operating in a complex environment, the bank's performance remained strong. Net profit grew by more than 25% year-on-year, reaching EUR 306 million and translating into a return on equity of nearly 16%. This profitability underscores the resilience and the ability of our business model to generate sustainable value as outlined in our strategic plan for the cycle up to 2028. Our commitment to creating value is matched by our ambition to increase shareholder remuneration.

We exceeded our initial target in this matter having announced last quarter the intention to implement the shareholders' distribution of 90% of our results 2025, the competent authorities have meanwhile granted the required permission for our share buyback proposal of up to 40%. Yesterday, the Board of Directors approved the share buyback related to '25 profit that will lead to the acquisition of shares in the amount of EUR 407 million. In Portugal, we achieved a net income of EUR 265 million in the first quarter, an increase of 21% that reinforced the growth and profitability trajectory of previous quarters.

This result is grounded in a solid balance sheet, rigorous and effective NII management and due diligent cost control, while executing ongoing investments essential for the bank's future positioning. Our international operations posted a significant 65% increase notably driven by Bank Millennium in Poland, whose net profit rose by 68% to reach EUR 71 million. This performance was supported by a strong commercial momentum and a 61% reduction in charges related to FX mortgage loans.

The increasing containment of risk and impact associated with FX loans demonstrates the quality of the franchise and realize the potential for value creation of the operation in Poland. There was growth across several business lines, especially corporate lending, which increased by 26.5%, materializing an important priority of our strategic plan for this market. In Mozambique, although Millennium profitability continues to be heavily affected by sovereign rating impacts.

The bank delivered a positive performance. there was relevant commercial activity with notable increase in both customer resources and lending, maintaining a robust capital position with a capital ratio above 42% and rigorous risk management, ensuring the bank's balance sheet remains a benchmark in the market. Millennium bcp is, therefore, well capitalized and positioned to take advantage of the economic growth phase that will be driven by the resumption of major neutral gas projects. On a consolidated basis, the quality of our relationship banking model is evident with a rise of over 7% in customer loans and a nearly 8% growth in customer funds.

We continue to operate with a very strong capital ratios with the common equity Tier 1 at 15.1% and total capital at EUR 19.3 million. These figures already account for the maximum value of the share buyback equivalent to 40% of the 2025 net profit and include just 10% of this quarter's profit in line with the new shareholders' distribution policy.

At the same time, we are continuing to improve balance sheet quality with a reduction of EUR 238 million in NPEs year-on-year and a stable cost of risk around 35 basis points for the group and 33 basis points in Portugal. At group level, our customer base expanded almost 5% in the last 12 months, reaching the 7.4 million customers mark out of which nearly 2.9 million in Portugal. Most notably, mobile customers continue to grow at 8% per year, accounting for 75% of the group's customer base and 67% in Portugal. Individual and corporate clients continue to choose Millennium as their preferred bank and our services were again awarded this year with several relevant decisions.

Our ongoing investment and continuous customer-centric innovation in the mobile platform with a constant focus on outstanding user experience have resulted in a consistent poor trend in both interaction and sales. This quarter, customers carried out 6% more transactions on GAAP with a notable rise in transfers. Sales figures increased by 5% highlighted by 18% growth in card sales. Customers are increasingly choosing the app as their preferred method for conducting their most significant financial operations. as shown by the high penetration rates of the channel, for example, for service are mortgage related activities and the acquisition of personal loans or to perform financial investments.

With this week general meeting, as expected, the proposal submitted for the shareholders' decision are approved, a new term of office will begin. This will be a term of office in which we will maintain our purpose and commitment to innovation, operational efficiency, prudent risk management and a strong value creation for shareholders. It is an evolution to continuity, maintaining the performance trajectory that has been consistently recognized by the market, both in the description of the strategic plan and the increase of BCP value.

I would also like to take this opportunity to express my gratitude to the 2 members of the Executive Committee who are leaving, namely semiopen and Ritcher for their exceptional contributions throughout their code functions and in the preparation of the 2 outstanding professionals who will now join the executive team. Our commitment to creating more value remains unchanged. Miguel, the floor is yours.

Thank you. Thank you very much, Miguel. Presenting now the income statement, as you see a very resilient P&L with the net interest income in spite of the general reduction of interest rates growing 2.4% in contrast to what's happening in the majority of the banks in Europe, commissions growing also at a very healthy 8% mainly linked to asset management, insurance and payments and cards, which means that the core income -- so grew almost 4%.

Operating costs at 4.5% is our guidance with a strong contribution here from IT investment that is part of our general station as an institution to this new environment. The core operating profit growing in spite of the reduction of interest rates. On top of this, we have the income mainly in the sale of some legacy assets that was a positive evolution this quarter so that the profit before impairment and provisions grew around 10%.

In terms of impairments and the provisions, a very healthy evolution of the impairments that stayed constant in spite of the growth in the credit portfolio and the strong reduction of as anticipated of the legal risk charges in Poland. I would like to highlight these 4 indicators in Page 9 that clearly are our benchmarks and what we want to be with an RoTE of almost 17%, 16.6%, growth in the book value per share plus dividends per share above 18%. And an EPS growth above 29%. So it is a really positive development.

Going forward, we continue to expect an ROTE and the book value per share plus dividend per share growth in these high teens, as you are seeing here. In terms of EPS looking at the future, we also expect it to continue to grow materially above 15% for the years to come within the period of our strategic plan. Going now to our accounts in more detail, the NIM SHOWED the strong result using only 14 basis points in spite of reduction in interest rates in Poland. This explains why it was possible to grow the NII to 2.4%. It is to get a fortune with the volumes. The NIM in Portugal even increasing from 2.12% to 2.2%, which is a good NIM to have in a mature market, such as the Portuguese market, which together with the volume growth that we will see allowed us to grow around 10% in terms of NII in Portugal. In the international operations, I would remind that when you compare quarter-on-quarter, Poland, which is the main operation, reduced the benchmark interest rates in the market, almost 200 basis points. We only reduced the NIM around 60 basis points in spite of this 200 basis points reduction and the NII reduced to 3.7%.

As we have pointed out in our previous conference calls, our expectation for this year as the quarters flow as time goes by, is to have a quite stable NII when we compare it with last year with the volume growth compensating the reduction in interest rates. Fees and commissions also growing healthy, both in Portugal and international operations, 8.5% in Portugal, 7.4% in international operations, both in banking fees and commissions and market related. Market related Includes asset management. here, strong contribution from clients, transactionality, cards and asset management products. Other operating income, as you see here in Page 13, the net trading income in Portugal showing here a very positive evolution in the quarter, mainly linked to the sales of some legacy assets that is obviously not recurrent on a quarter-by-quarter basis.

So this around -- this difference is grows from EUR 13.3 million to EUR 37 million. I would classify the difference as a one-off. In the international operations, what we see is that there was some increase in mandatory contributions mainly in Poland. However, this has more with the mix of the military contribution. If we take a look at the full year we expect the mandatory contributions to be broadly constant in Poland. Operating costs evolving at the very content and disciplined way in spite of all the investments that we are doing, as you see here, in the other administrative costs in Portugal.

The cost to income at 36%, in Portugal the cost to income only at 31% so this clearly shows the competitive advantage that we have and the possibility that we have to remain and to be quite competitive in the market. Cost of risk also very contained. So we are not seeing in our market any warning signals in spite of what's happening in the Gulf and of course, the in Ukraine. So very much in line with our plan with a cost of risk in Portugal in the low 30s as we also have anticipated.

And in our international operations also reducing from 47 basis points to 41 basis points. This was achieved together with the continued reduction of our NPE so that today, as you see our hard NPE ratio. So the really the past due ratio is only at 1.2% and the more traditional NPE loan ratio at 2.3%. In terms of business activity, that explains this evolution of the P&L., we see that strong growth in customer funds, which shows the resilience of our business model and the ability that we have to originate new customer relationships and to deserve the trust of our customers in terms of our advisory businesses, asset management businesses that here grew more than 10%, as you see, but also in terms of term deposits and of the transactionality that shows up the demand deposits.

And this in the several geographies, you see Portugal, a more mature market. We have been growing and gaining market share, growing 6.3%. And in the international operations, where we are a challenger mainly in Poland, growing 11.1% with a very strong contribution, as you see here from asset management. The loan portfolio also growing well in Portugal, at 9.6%, as I had anticipated in the last call, our objective for this year is to see some deceleration mainly in the mortgage market. the mortgage market feels very, very healthy in Portugal. We are expecting some deceleration in Portugal.

However, to continue to grow looking forward at the mid-single-digit level, now more biased towards the SME and the corporate sector. In the international operations, slower growth, but a very good composition. So what we have said is that we wanted to rebalance our business mix in polontowards the corporate segment. As Miguel Maya commented, we grew more than 20% year-on-year on the corporate segment. This strong growth is continuing, showing that we really have a business model that works in Poland also for the and corporate segment.

This last year, we have reduced somewhat our mortgage portfolio. As we had commented, However, in the first quarter of this year, it has already stabilized. So the mortgage portfolio during last year, mainly in the last 2 quarters, was a drag in terms of volume growth, we'll start also to contribute in Poland to the growth of the credit portfolio. In terms of capital, as you see, a very, very strong capital position that compares well with the minimum capital ratios, both in terms of CET1 and in terms of total capital ratio.

Here, this next page, I think it's very important to understand the evolution of the capital. Of course, in the data that we had presented in December '25, the share buyback that we are now going to implement was not deducted yet because we don't have the authorization. It was disclosed that we had this objective and that this would represent 35 basis points. So on a pro forma basis, we'd have to adjust for the share buyback. Then the other elements of the capital waterfall, I would say, are more recurrent elements, and there is not so recurrent events.

So the P&L and, of course, the distribution of the P&L, as we are distributing almost everything as we are deducting from capital, 90% of the P&L is not contributing to increase materially to increase the capital ratio. On the other hand, we are continuing to grow on a healthy way, mainly in the corporate sector. both in Portugal and in Poland. This growth in the corporate sector, of course, consumes more RWAs than the growth in the mortgage segment.

And so these 20 basis points that we see here in the first 4 columns of the waterfall, what I would classify more as a more recurrent and more recurrent evolution of our capital ratio on a quarter-by-quarter basis. As I commented in the last call, as you may have recalled in our last call, I had commented that we would have -- we should expect a P&L before distributions between 55 and 65 basis points on a quarter-by-quarter basis.

We had here 70 basis points because of this extraordinary gain that we -- that I just commented. And in terms of RWA growth or RWA leads to exactly to this strong focus on the corporate business, we would have, so to say, a consumption of delays between 20 and 25 basis points. This is exactly what I said in the last conference call, and this is what I am reaffirming here. Then there are other elements in our capital waterfall that are not so recurring, so to say. namely the evolution of the IFS reserves. We do not have a very material exposure to interest rate in IFRS reserves in terms of our fair value rose portfolio. but still with the volatility that we had in the market, this has an impact, but of it has already been reversed, but there is some small -- there are some small changes here.

And as time goes by, some of the securitizations that we have, namely here, there was 1 important petition in Poland, lose a part of its contribution to the capital ratio. This is the view of the full year is not necessarily to be considered because what happens is that the securitizations lose their visibility, they reduce, so to say, the secured amount, so to say. But what happens is that we -- in the meantime, we prepare new securitizations. So right now, we -- as we did in the last years, we are preparing new securitizations to be executed in Q3 and Q4 that will represent between EUR 1 billion and EUR 2 billion of risk-weighted assets.

So this will be more than compensated as time goes by new securities. And these are some small effects that may work 1 way or another, all of them are below 5 basis points, typically linked to market risk or to operational risk or to minority deduction, so it's a small effect. So all in all, so the guidance that here, I would like here to comment is that it is a constructive view of the capital position. The capital is growing -- is evolving exactly aligned with what we wanted and it is, so to say, a virtuous capital consumption because the reason why we are consuming most of the capital is because we are being successful in terms of the implementation of our SME and corporate strategy in Poland, but also in Portugal.

This is the -- the MREL very comfortable about the MREL requirements. I will -- and we are executing our funding plan exactly as commented. The liquidity position very robust, as you say, with the net loans-to-deposit ratio at 68%, which is important because this is exactly what allows us to be very confident in terms of the management of our spreads on deposits. So if we were not in such a comfortable position, probably we would not be able to grow so heavily in terms of the deposit margin as we have right now. And I'll pass it now to Bernardo. Okay?

Thank you, Miguel, and good morning, ladies and gentlemen. This time, in order not to take too much of your time, I will briefly go through some of the slides, and I will not follow the full set of slides that you have as you already have the opportunity to look at it. So starting on Page 26. Net income in Portugal grew 21%, reaching EUR 265 million and as Miguel said, this performance was driven by the increase on NII of 9.1% and also by the strong improvement on fees and commissions that grew 8.5%. .

It's also important to highlight, as Miguel also stated, the disciplined management costs and costs in Portugal just rose 4.5%. On Page 27, net interest income stood at EUR 357 million in the first quarter of 2026, that is 9.8% above what was recorded in the first quarter of 2025 and this is equivalent to an improvement of almost EUR 32 million. Let me also highlight here that on a quarter-over-quarter basis, NII went up 4.1% and in the last -- this is something that we have shown. It's a constant and consistency in terms of NII growth over the last 6 quarters.

Regarding year-on-year evolution, as you can see also in the graph, I mean it's important to highlight the increase of the credit portfolio and also the strict management of deposits more than compensate the effect from lower interest rates. This means that the commercial activity was responsible for more than EUR 25 million of deposit evolution of NII year-on-year and this also, it's important to remember that -- it's important also to consider the decrease of almost 30 basis points of the average 3-month arrival that was registered in the first quarter of 26% compared with the first quarter of '25.

Moving to Page 28. Commissions amount to slightly more than EUR 160 million at the end of the first quarter '26, increasing 8.5% and that 8.5% compared with the same period of last year. Banking fees and commissions went up 7.1%, supported by higher contribution from cards and transfers. And also, let me highlight the strong contribution and improvement from bancassurance fees. Regarding market-related fees that there was a significant increase that is coming from security transactions, but also from asset management and third-party distribution of investment products.

Here also on this slide, as Miguel said, there was some change and improvement in terms of the trading line that as it was stated, it was mostly driven by gains from the disposal of some legacy assets stemming from the recovery of nonperforming loans. On Page 29, operating costs stood at EUR 176 million in the first quarter of '26, 4.5% above last year, and the increase in operating costs in the Portuguese operation was driven by the increase on admin costs and amortization and depreciation, as Miguel said, related with some investments and as you can see, staff costs were broadly stable compared with the previous -- with the first quarter of '25. Cost to income stood at 31%. That compares with 34% in Q1 last year.

And as I said, I will jump some slides, and if I may, I will ask you to move directly to Page 33 to derive on volume. On volumes and starting with customer funds. As you can see, there was a continuation of the growth trajectory. reaching at the end of the first quarter '26 more than EUR 75 billion compared with EUR 71 billion in March '25. This represents an increase of 6.3% and I think it's also important to highlight the growth on balance sheet funds, which grew 5.2%, driven by the stabilization of term deposits and the increase in demand deposits. Off-balance sheet funds posted also a positive growth, increasing more than 10%, and this reflects what I already said, the growth in terms of the distribution of third-party funds alongside with the positive performance recorded in sales of financial insurance products and by the improvement of assets under management.

Gross loans stood at EUR 44 billion at the end of March, EUR 9.6 billion above the EUR 40 billion reported at the end of the first quarter '25. And this growth reflects in 1 hand, an increase in mortgage lending, which rose by more than 11%. Simal driven with some support by the state incentives for young people and on the other hand, by the positive performance in corporate lending, which was materialized in a growth of 7.6% or more than EUR 1.3 billion debt in this portfolio related with companies.

Once again, I will ask you to jump some slides and move to Page 36. In the year, I mean living the Portuguese operation, let's have a quick look on the international operations that as you can see, there was a strong improvement and the contribution grew after deducting minorities almost 65%, reflecting mostly the strong improvement from the Polish operation. Bank Millennium, as I'm sure you have followed the results disclosure on the 28th of April. It's -- this improvement in the Polish operation was somehow -- I mean, apart from the positive evolution on volumes, but it was basically -- I mean, it was -- it has improved mainly with the decrease related with CHF with CHF costs. But it's also important to highlight regarding Poland that -- I mean it has been applied since the beginning of the year, a higher tax on banks.

There was also an increase in terms of mandatory contributions and the interest rates in Poland have decreased significantly. I will not detail I mean the following slides about Bank Milano, but I would like just to reinforce, as I said, the resilience of NII, taking into consideration that there was a reduction of almost 200 basis points on the 3-month vier registered in the first 3 months of '26 compared with 3 months waiver registered in the first 3 months of last year. So let's move to Page 40.

Once again, about volumes and starting with customer funds. As you can see, are still growing at a fast pace, reaching more than EUR 35 billion that compares with EUR 30.6 billion, and this is in euros from March 25. And regarding the loan book, it's important also to highlight the positive trends on mortgage lending not and the strong increase on loans to companies that grew more than 26% compared with March 2025. Loan book growth was not more pronounced due to the continued sharp reduction on the CHF mortgage portfolio. And to show that, I will ask you to move to the following page that provide some detailed information that I'm sure all of you are aware of it, but regarding the FX mortgage portfolio.

So here, once again, it's important to mention the strong drop of the CHF outstanding portfolio that registered a decrease of 44% on a year-on-year basis and 15% on a quarterly basis. The percentage of the CHF loan portfolio at the end of March was just 0.7% of the gross loan book that compares with 1.4% at the end of the first quarter 2025. Cumulative provisions for legal risk at the end of March '26 represented 169% of the outstanding CHF mortgage portfolio. And here, and it's also important to highlight the significant drop in the number of individual lawsuits that is explained by the effort of the banks to achieve extrajudicial agreements and even more relevant, as it was already mentioned, the significant drop of 61% of pretax costs related with CHF portfolio.

Turning to Page 32. Regards Milani Beam in Mozambique, reported net income amount slightly -- was slightly above breakeven and the results continue to be somehow constrained by the provisions associated with the exposure to the sovereign debt in local currency. But it's also important to highlight that from an operational standpoint, net operating revenues are growing almost 4% and costs are under control. And I will conclude here. But before we move to Q&A, I will hand the floor to Miguel again for some final remarks about the execution of the strategic plan on Page 47.

As you know, around 2 years ago. We have present 1.5 years ago, we have presented the plan to a market with a road map until 2028. that implies a further evolution and if I would even say transformation of the bank. a plan of growth in terms of number of customers in terms of making sure that these customers use the mobile channel, making sure that our cost to serve these customers and our service quality, both in terms of quality of the advisory and quality of the transactionality improves.

So as to achieve low cost to income, a very controlled cost of risk within the limits of a prudent CET1 ratio and an ROE ratio that was above benchmark. And all of these together with more distribution, so to say, of these values -- of the generated value to the shareholders. And at the time, what we had presented was 75%. What I would even here like to say is that in qualitative terms, we are clearly ahead of schedule. So in terms of the customers that we are acquisition in terms of business volumes, in terms of the conversion of our customers in a more mobile usage or digital-enabled customers, we are clearly ahead of schedule. And the fact that we are ahead of schedule in qualitative terms shows that our strategy is the correct strategy, and we want to maintain the strategy that we have defined and we have presented to the market.

Having said that, it is clear that we are overachieving this strategy in financial terms. So what we see is that we said that we would we intend to have an ROE above 13.5%, for instance, that is the synthetical measure, as you see. And we have an ROE today, close to 16%. And if we use the RoTE even clearly above these values. We have also, in the meantime, proposed to the AGM and communicate it to the market. a new shareholder distribution policy that is basically a table that depending on the need of capital, we could go up to 90% of value.

So very clearly, we are overachieving this plan, as I have commented in the first page that we have on here. We are -- we feel very comfortable that we will continue, as I commented in the first slide, I presented, we will continue to grow book value per share plus dividend per share on the high teens level. We will continue to grow, of course, EPS in the next years also on the high teens levels, and we are also having an ROD on the mid- to high teens. So -- of course, we have been giving this guidance to the market in several conference calls.

But with the results of Q3 without changing the strategy, so we will maintain the strategy. But with the results of the Q3, we will give a more formal guidance of what is our objective for 2028. And we hope that with all this transparency and with all this commitment from our teams and the confidence from our customers, we will continue to generate and create more value for the different stakeholders. Thank you very much.

[Operator Instructions] The first question today comes from the line of Max Mission from JB Capital.

Two questions from me, please. first 1 is on Portugal. Given the strong quarter-on-quarter pickup in the NIM and the still high loan book growth, how do you see your NII guidance for 2026, and also if you could give us a hint on how the current rate curve impacts your 2027 outlook would be super useful. And the second 1 is on your cost base. Some Iberian peers are executing head count optimization. Is this something BCP could consider as part of the digitalization and implementation of NII.

Okay. Thank you very much for your questions. In terms of NII, the last guidance I gave was the NII growth in Portugal growing between the mid-single digits and the high single digits. This was the last guidance I gave here. With the evolution that we've seen in the market interest rates, Right now, we are much in spite of the fact that the bank is quite hedged, but we are much closer to the high single digits. And this would run both for '26 and '27. So the NII guidance that I would like here -- I mean, assuming -- I mean, the market is very volatile.

But the NII guidance based on the current structure of interest rates, both for '26 and '27 is on the high single-digit area. Okay. In terms of costs, of course, we are in a transformation phase. We are in a transformation phase that -- the world is in the transformation phase. We are exploring all -- or most of the opportunities that AI gives us. We were clear innovators in terms of service model, in terms of mobile, in terms of everything that has to with technology. It's part of our DNA to be a technology-driven innovator. So I think the inception of BCP. And actually, there are several case studies on how BCP has been an innovator in technology since the inception.

But there is here, so to say, a J curve, so to say. So there is a phase of investment and then the size of savings of the cost typically takes some time. What we are trying to do is to make sure that we profit from these opportunities and that we reinvent ourselves. In the period of this plan, then I would say that the potential cost savings that we will be having and we will be having some cost savings will be invested exactly in the transformation to ensure that the bank continues to be a reference bank that the bank continues to be a main player in this. So I would not review our guidance, so to say, in terms of total costs in the mid-single-digit area.

What I would say is that the composition of these costs will become more and more different. So we will try -- we will probably have more and more as time goes by more costs related to change the bank more to IT, more to technology, more to training and somewhat less the pure traditional head count costs. So the guidance or we would keep the guidance in this mid-single-digit area for the time being.

Next question today comes from Ignacio Ulargui Lopez from BNP Paribas.

Have to, if I may, the first one, Miguel, looking to the capital performance, how should we think about it, you have just given some part of the impact that we have seen in the quarter might be a recovery throughout the year. But how should we think about capital and distribution into 2026? Is 90% still kind of the target payout ratio and linked to that, actually, if we see an acceleration of lending growth, could we expect a relevant acceleration as well in NII, there is a conversion effect on that profitability improvement that may be not captured at this stage in your guidance?

I mean the answer to the second question is yes, it's mathematics. So if the growth of the credit I mean accelerates even further. Of course, we will go even more than what I said. It's mathematical. But I would say that at this point in time, so much uncertainty in the world, probably what I would keep, so to say, the guidance that I gave in terms of volumes. -- except, I would say, is certainly all this uncertainty that we are seeing in the Gulf in Ukraine and so on, in a very, I would say, gold elect scenario, it's certainly the investment picks up potentially in this scenario, we would have a much higher growth in terms of grade, but this is not our base case.

In terms of our capital distribution strategy, First, I would like to highlight that we have been quite innovative here. So instead of doing what most banks do that is presenting a target payout ratio. What we have said is we wanted to come up with a situation in which we ensured a couple of objectives. First, we wanted to make sure that the market see through and almost anticipates what may happen based on the evolution of the bank. And that's why we have, so to say, a capital -- a maximum reference value for capital distribution that is a function of the ratio. This assures this transparency. Okay. But it also shows strategic flexibility. So certainly, there is a much better, so to say, opportunity. to create value in, let's say, growing SMEs in rate in Poland or in Portugal. we think that exactly the fact that we are giving quarter after quarter, very close to the market.

How we will resonant,how we'll go about it allows us also to mean do what at the end of the day is our main mission, that is to create value. So our -- I mean the capital distribution is a means. It's not an end. So what we want is to create value. And thirdly, transparency, strategic flexibility; and thirdly, what our strategy assures is exactly this balance between discipline so that we do not accumulate any needed capital and value creation. So the objective of the payout ratio is to ensure this discipline because the market puts a premium to this discipline. So the objective is not 90% per seat. The 90% is a means to ensure discipline and it's a means to be transparent, and this means to ensure the strategic flexibility with well.

Having said that, based on the projections that we have right now and based on the guidance that we've just given you, together, of course, with the fact that some of these securitizations that are coming to an end will be replaced by new securitizations, what I can comment is that it is still a likely scenario that we can reach the 90%. It's not the only possibility, but it is still likely. Of course, if we do not -- if we do not do it, it is for good reasons. It's because we are creating even more value, namely in terms of SME credit growth.

But it is still likely. It is not -- I mean, this is equity. It's not fixed income. So I cannot assure exactly what will be the growth of what our clients will do, how our competitors will move and what will be the growth of our credit portfolio in Portugal and Poland. What we have is I mean, this view will -- the reality will then will be the confrontation between the view and what will happen in the market in the next quarters.

I remind you that it's still the first quarter. So what we can commit to you is to -- keep you posted in every 1 of this quarter meetings, and you will see, I mean, much more in a much more transparent way and in a much closer way. What we will be doing and how we are reasoning and thinking about it.

Very clear. I mean, so in a sense, it will be that if the payout is 80 for the reason of growth, that would probably mean a better profile in the P&L? It is at the end of the day, the conclusion.

Yes. And of course, I mean, it's whether to have a smaller payout in a larger P&L than a larger payout in the smaller P&L, I would say.

Next question today is from Francisco Riquel from Alantra.

Yes. 2 for me, please, on margins and volumes. On margins. I wonder if you can update on the NII tailwind that we should expect from the hedging portfolio. Do you include in the appendix of the presentation with a yield of just 2.3% in '26, '27. And if you can share with us how you are managing those rollovers if you're already looking forward agreements or if you will just replace those hedges at the prevailing rate at the time. I mean this context just provided even for NII, I wanted to ask you about guidance for NIM in Portugal, which came up 2.2% in Q1, if you can please comment.

And my second question on volumes, the sector in Portugal is growing loans 8% and deposits 6%, so a 2 percentage point gap, the gap for BCP is 5 percentage points, so plus 10 and plus 5. I wonder if you want to close this gap or not in loans. So you've mentioned that you're going to slow down the growth in mortgages. I don't know if this is a housing demand or do you want to be conservative here. And then in deposits, you're growing a bit less than the sector.

If you can please explain what is driving this underperformance if it is growth in retail or corporate deposits?

Okay. So starting with your last question more around deposits gap and so on. So first, we are -- in individuals, we are clearly guiding some market share in terms of deposits. In the corporate sector, we are more opportunistic there, mainly in terms of term deposits. So we only quote when the price makes sense for us and given that we are in a -- because there is not so much franchise linked to it. So mainly in the large corporate deposits, we are not overpaying or we consider all the cost. And here and there, we -- I mean, we may lose 1 or other large deposits to a competitor that is -- that needs more, so to say, the deposits that we do.

But all in all, it is large core deposits. But all in all, as you see, we are evolving very much aligned with the system. In terms of the hedge of the balance sheet, as you see here in the ex we have here a hedge book and this hedging book that uses swaps and unhedged bonds, so to say, is used to hedge the balance sheet as a whole so to say. And because it is used to have the balance sheet as a whole, what we typically do is that we have our own metrics, typically the standard metrics of basis point value and the EV, so economic value sensitivity to interest rates.

And typically, what we do as most of the banks, according to guidance of the ADI is that most of our demand deposits are modeled to a large part is 5 years, not everything, but to a large part is years 5 years 0 coupon liability, if you want, most of it. So what we tend to do is that we use the interest rate swaps and the unhedged bonds to hedge, so to say, this -- I mean, the balance sheet as a whole, and we hedge both our demand deposits. so to say, the beta part of our time deposits. So typically, mainly when we'll take a look at NII. Typically, our term deposits have EBITDA of 50%. So we typically, in terms of NII hedging, we typically hedge, so to say, 50% of it to average, so to say, the sensitivity of our margin to interest rates.

So this means that our margin is not very sensitive to interest rate movements. As you see, when you compare with our competitors, we are in a very immunized margin. So the way to look at this slide in Page 55 is that on average, as these hedging positions mature and not all of them mature in Mondi. We typically will be maintaining, so to say, this level of EUR 33 billion, plus the increase in demand deposits. And we will typically be investing at the debt prevailing 5-year rates. So I think this is today, the 5-year rates are at 2.8%. So more than a headwind, I would say this is a tailwind. So you should look at this page as the opportunity that we have as time goes by to reinvest, for instance, '27, the difference between EUR 27 billion and EUR 32 billion that are now invested on average at 2.3%. There will be invested at 2.8% if the 5-year rates continue. So this will be a positive contribution to the margin going forward and not a negative contribution.

I'm sorry, in terms of volume, I'm here. I mean we don't -- to make it clear, we are not worried about having a commercial gap so to say. What we want to make sure is that the credit that we originate. I mean pays well our cost of equity and that the deposits that we, of course, originate are well priced, so to say. that we make money on the deposits. We want to grow in SME credit, and we want to grow in corporate credit as we have presented in our strategy.

However, what we don't want to do is to destroy value in this growth. So our -- I would say, we will not grow credit just because we want to close the gap. what we want to do is to make sure that every credit that's decided really pays well the cost of funding and the cost of equity. And we are not limited by the equity, but we are very disciplined in terms of our cost of equity because we prefer to distribute if we have excess capital, then to do well destroying business. So we are not worried about having a gap.

The next question comes from Carlos Pashto from CaseBank.

So I would actually have a couple of follow-ups, which would be 1 of them on NII. Basically, you operated or we put the guidance on the top end of the previous guidance on NII for Portugal. But basically, if we annualize first year NII and adjust for the day count, we will already be on a pro forma basis on a 8% year-on-year increase. So my question here is, shouldn't we see actually something above that, considering that you will be having some loan growth throughout the year and also some tailwinds from interest rates even though part of that is at.

Then the second question would be on capital or second follow-up would be on capital. Just a couple of issues here. So you mentioned securitizations of EUR 1 billion to EUR 2 billion I just wondering here to clarify the EUR 1 billion to EUR 2 billion are the impact or ways or are the size of the securitizations that you could be doing? And then still within capital the 100 basis points -- sorry, the 100 basis points increase in capital requirements in Poland in September, that should mean a lower deduction from minorities. Do you have an estimate on exactly how much -- what that mean? I'm calculating around 15 basis points, but I wanted to cross check that. And then just, sorry, finally, on cost of risk outlook, maybe if you could comment on what you're seeing? What your expectations and whether you're seeing any signs of situation in the corporate driven by the higher -- the rise in oil prices? .

Okay. Okay. I mean, first, in terms of NII, it is true that when we analyze what we have, we are already at 8%. But it is also true that mainly when we consider what we had achieved in the end of last year, it was also a positive -- it was also a positive evolution. So looking forward, we want to maintain this high single digit, maybe 9, maybe 7. It's also 8. So let's see. And based on the uncertainty that we are seeing right now is what we see. The credit growth, as you know, the main impact of the credit was mainly if it starts now or it starts later in the year.

I mean, in the year where the credit grows, it is not so much real for the NII. It becomes more material the year after because it did not contribute so much for the average balance, so to say. So credit growth even if we grow a lot riser, this may mean more EUR 10 million of NII, so to say. So it is not so sensitive, but it will be more sensitive the year after. And we will be here at the end of the year to see whether we can be more optimistic for 2027. But at least for 2026, I think that it's now prudent to focus on the high single digit.

In terms of RWA, the EUR 1 billion to EUR 2 billion are traditional SRTs and equivalent deals through insurance protection and so on and the values that I mentioned, they are not guaranteed, but we typically do them. We love them all the years. But the valves that I mentioned are RWAs in Portugal and in Poland, so to say. The cost of risk, as I commented in the presentation, we are not seeing any worrying warning signals that would point to an increase in the cost of risk. So neither in Portugal, not in Poland. Of course, it's early days. And of course, I mean, every day, we hear something new about Amos, and we do not know where the end will end today where it has ended or whether it will restart in 1 week and whether the fuel prices will stay high for a very long time. So it is a very complex situation, the situation that we have right now. But I would say in a baseline scenario and assuming that the situation normalizes the type -- the level of cost of risk that we are seeing right now, we do think it's recurrent. I'm sorry. I mean...

The additional requirements from Poland from September '26, that will be around 100 basis points. This will have an impact at CET1 at group level of around 30 basis points. But it's -- also important to highlight that I mean that this will have a positive impact on capital improvement. .

We'll now take the next question. This is from Alberto Fernandez from UBS.

I have 2. First, on operating jaws, you were expecting kind of flat operating jaws at a group level. So revenue is growing more or less in line with costs. Is this still the case? Or do you now expect like kind of positive jaws in '26 and '27, given volume growth on a better yield curve. And second, there has been recent news on Fosun looking to divest their stake. So do you see any risks of sales, a big player in Europe and then therefore, BCP becoming an M&A target? And what actions could you take to protect yourself on that happening?

Okay. And first, in terms of operating jaws, we have to separate Portugal from Poland, okay? In Portugal, effectively, what we are pointing to is a growth in costs in the mid-single-digit area. And right now, what I commented is that we were targeting in the mid- to high single digits, if NII goes to high single digit, there could be a slight positive operating jaws in terms of the recurrent NII and the recurring costs, so to say. Of course, there are always some nonrecurring items as it happened this quarter that was positive that may change this on a quarter-by-quarter basis, but this is a situation in which we are.

In Poland, as you know, we come from a situation in which the interest rates were very high, where they went down very sharply. And what we are trying is, in spite of the strong reduction of interest rates, to have stable NII. And the cost is the guidance in terms of cost, we are more on the high single-digit area. So in Poland, we will continue to have negative operating jaws but from a very -- I would say, from a very high value in terms of the NIM.

So all in all, this is the situation that we have. but I would say slightly more positive, at least in Portugal and Poland than what we had before. In terms of our equity investors and so on. I mean we are totally committed and totally focused initiating shareholder value and we do not condition any of our investors, neither institutional investors, no more strategic investors, not -- I mean, on what they want to do with their participation, what we are totally and relentless focus on is on generating value. And I don't think it is -- I mean, even advisable for me to comment on what's investors in BCP.

That's always an honor to have good investors in BCP. I mean, want to do with their participation. So we are totally focused on generating value, making sure that our share price reflects the cell. And I think this is the best thing to do for our shareholders.

Next question today comes from Marina Care from Jefferies.

First, I had a clarification, please. Your high single-digit NII growth guidance in Portugal for '26 and '27. Does it assume any hikes from the -- And if you could please remind us what is your NII sensitivity to 100 basis points higher rates in the Eurozone and if there is a meaningful difference between your year 1 and year 2 sensitivity? And then also on fees, I guess your fees are also performing better than your previous guidance. both at the group level and in Portugal, you are growing above 8% year-on-year. And I think previously, you were discussing about mid-single-digit growth in 2026. So just wondering if there is any upside there.

Starting with the fees. What I would like to comment is the difference in fees is to a large extent also related to market to market-related fees to asset management fees, and this depends a lot in the situation of the market. So what we had commented before was at mid-single digits in Portugal, probably right now, given the performance that we had in the first quarter more go between mid and high single digit, contingent on the market evolution.

The market has been volatile, as you know, the retail investors close, as you know, because you are active in the asset management area have also been volatile. We -- but if the market performs well, if the retail investors come back, so to say, mainly to investment products, there is room to go closer to the high single digit. If we have here more, can I say, a challenging market environment, probably the retail investors would focus more on deposits on balance sheet product.

Our projections and other guidance that we gave very much aligned, having list, so to say, the forward rates. When we give the guidance, we typically give it based on the forward rates. So the numbers that I gave was -- we basically, if you go to the present for as of today, if you -- in terms of that reflects, of course, ECB rate increases. In terms of our sensitivity, our sensitivity is very low to the margin. So our sensitivity in year 1 is both in Portugal and in Poland, around 2% to 3% of the NII for each 100 basis point increase in the interest rate.

So our NII sensitivity is very low. Our year 2 sensitivity is not an information that we have been giving publicly, probably is something that we have to improve. But let me check on -- and then when we start giving it, let me -- we'll give it in a more formal way, okay.

We'll move to the next question. And this is from Dmitry Kagan from Mediobanca.

Yes. Just 2 questions on volume growth in Portugal. Firstly, how much of the mortgage demand is driven by the current government scheme for young borrowers? And second, how would you see the resilience of corporate borrowers to the energy prices right now? And maybe if there's any guidance for the corporate loan growth in Portugal for this year?

I'm sorry, the connection is very, very poor. I only understood your -- the first question. .

If you can hear me better now?

Yes, yes, yes.

Yes. So the first question would be on the mortgages and Portugal. How much of the mortgage demand comes from the government schem for the young borrowers? And the second question is on corporate loan growth. Is there any guidance for this year? And how are the corporate borrowers resilient to the energy prices right now?

Okay. So in terms of the percentage of the production, it was done according to the guarantee was around 40%. In terms of the corporate loan growth, it is -- I mean, there is some expectancy right now in terms of how the situation will evolve. we do expect the loan growth to be around the mid-single digit, but this is probably 1 of the most volatile parts of the -- of our P&L because of -- the most uncertain part of our P&L because it depends a lot on investor confidence and corporate confidence and due to current volatility, I mean, some of the investments are being -- being at least postponed.

So I would say around mid-single digit, but it could be, I would say, low single digit or high single digits with an equal distribution. In terms of the impact of the crisis yet, as I've commented, we are not seeing yet any material impact of the crisis in terms of the business profitability of our customers. Until now, it is not happening. But we all know that if this takes too long. I mean the impact may be exponential. We take some comfort from the fact that Portugal has a large part of its energy from renewals and Portugal almost does not import any oil and gas from -- or move from the Pergens our providers come from other parts.

We will be more impacted by the price than the quantity. So let's see. I would say if there is an issue, I would say, probably that our economy will suffer much less than other economies. But of course, if the situation remains for very long, I mean, all the world will suffer. So we have to be realistic about this.

[Operator Instructions] We will now take our next question. This is from Cecilia Romero Reyes from Barclays.

The first 1 is on NII again. In hydrate scenario, do you expect the positive rates to remain stable with current levels -- at current levels? Or is there a risk of further pass-through than what we have seen in the past, given that you are now growing more on corporate and SME which are usually more rate-sensitive. And then I would like to clarify what are the rate assumptions that are embedded in your Poland NII guidance, which is currently flattish? .

And then the last 1 is on provisions. I know you just said that there is no reason to change cost of result look and you are not seeing any deceleration in our now comfortable, but obviously, the situation is very fluid. Do you have overlay provisions available that could be used in the macro scenario the teas to soften the impact of a changing macro scenario.

Okay. So in terms of provisions, we have our normal provisions, so to say, that come from the models. And then we have additional provisions exactly to -- so we have what we call the overlays that to cope with additional scenarios. This overlays are properly disclosed in our accounts and they are very exactly to cope with potential scenarios and they are allocated to industries that are most sensitive to the current risk so to say. Right now, the overlays are slightly above EUR 100 million in Portugal and around EUR 40 million in Poland.

That's the situation that we have right now for these overlays. But all in all, we think this is aligned. In terms of the stable NII or as you've seen, I mean, in Poland, the reference interest rate decreased very materially to around 200 -- around 200 basis points. Right now, the forward interest rates in Poland are reasonably stable. So -- and as I commented in the previous question, we typically give our guidance based on the forward interest rates. So it is based on the -- so the guidance that we gave was based on forward interest rates that are stable. This means that if this stability continues then to 2027. In 2027, we will start growing with volumes in 2026. Basically, what we are expecting is that the volume growth will compensate this massive reduction in interest rates that happened in Poland.

We'll now take the next question. This is from Luis Prattas from Autonomous Research.

My first 1 is on the NIM in Portugal this quarter. I think there was a small pickup in NIM for quarter Q-on-Q. I wanted to ask you what was the driver for this, whether there was any change in the mix, hedging or something else? Then my second question is on the CET1 this quarter as well. There was like a small headwind from available for sale. And given the strong recovery in equity and debt markets in April. My question is whether we should see a tailwind instead in Q2 and maybe the full recovery of the 10 bps negative that you felt in Q1.

Okay. Starting on your last question, as you correctly pointed out, this is sensitive to the market. Our sensitivity of the fare to OCI is very low. So with all that happened in the market, it only impacted our capital ratio 10 basis points, which is very little. And of course, a part of it has been already recovered in April. But that was where -- I mean, I do not want to disclose any nonpublic information, but you can -- it's reasonable to expect that as interest rates then reduce both in Portugal and in Poland. I mean this has an impact on the fair value through OCI. So a part of it has already been recovered.

I will not get into details because this is not public information. In terms of NIM, I mean, actually, our NIM is much more sensitive to the composition between credit and government debt portfolio than anything else. So there was not any special reason to explain this NIM except the fact that we are having a larger proportion of our -- of credit vis-a-vis government debt. And this has, of course, a higher spread in the meantime. as the interest rates have already picked up a little bit in our deposit spreads as we have EBITDA that is not 100%, but it's typically 50% even with the low sensitivity, this then has a small impact on the NIM.

But I would not make it too much on the NIM in any specific quarter. but there will be always some small volatility in the quarter-by-quarter NIM.

Maybe can I just do a quick brief follow-up. Maybe could you provide them a sensitivity sovereign spreads?

Sensitivity to the sovereign spreads. Yes, our sensitivity of our fair value OCI to sovereign spread is all the sovereigns the Polish sovereign, the Portree sovereign, the European Union Supernational go up by 25 basis points. the impact on our capital, so to say, would be around EUR 50 million. It's a small.

And there are no further questions. I will now hand over to Mr. Miguel Braganca for final remarks.

Thank you very much for your trust. Thank you very much for following our equity story and our story of value creation. We will continue to -- with our plan. and to grow and to create shareholder value and to adequately remunerate our shareholders, and we are sure that we will not disappoint you. Thank you very much. .

Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect. Speakers, please stand by.

Good day, and thank you for standing by. Welcome to Millennium bcp Full Year 2025 Earnings Conference Call and Webcast. [Operator Instructions] Please note that today's conference is being recorded.

I would now like to turn the conference over to your speaker, Mr. Miguel Maya, CEO. Please go ahead.

Good afternoon, Miguel Maya speaking. Welcome to BCP Earnings Conference Call. As usual, I will go through the highlights of our performance, followed by Miguel Bragança, who will provide further details.

From a macroeconomic perspective, 2025 proved to be a complex year. Ongoing conflicts and economic climate shaped by the impact of geopolitical tensions continue to have a relevant repercussions on global strategy.

On Europe, the economy's performance exceeded initial expectations, with Eurozone showing signs of transition from a stagnation to a slow recovery within a framework of controlled prices and the less restrictive monetary policy. Of particular note is the performance of the Portuguese economy, which stood out as one of the most promising, solid growth, high resilience and unemployment at record lows. The Polish economy recorded robust growth, supported by private consumption and investment with inflation dropping into target range.

In Mozambique too, inflation eased and economy is showing signs of recovery from the impact of instability experience, which worsened in the country's public finance and led to reductions in the sovereign debt rating, demonstrating a level of adaptability to deal with different context. The group's consolidated results exceeded the EUR 1 billion mark corresponding to a year-on-year increase of 12.4% and resulting in an ROE of 14.1%, an increase of more than 14% in earnings per share, reflecting the bank's ability to generate value for stakeholders through an active engagement with the business community and households. Strict management of the financial margin and intensive commercial activity supported by robust balance sheet contributed to an increase of 10.6% of net income in Portugal, surpassing EUR 869 million.

The total earnings from international operations reached EUR 292 million, marking a substantial year-on-year increase of 33%, mainly driven by Bank Millennium Poland, which saw its profits rose by 67% to EUR 284 million, further reinforcing the upward trend in this subsidiary's contribution to the group's net income. It should be noted that the charge associated with the FX mortgage loan portfolio, although still relevant, registered a significant decrease of 34%, strengthening our confidence that this risk is on a downward trajectory and does not compromise the growth potential we envision for the Polish market.

In Mozambique, bim net income was below EUR 4 million in 2025 due to being heavily affected by provision on exposure to sovereign debt, which this year amounted to EUR 82 million. I would like to emphasize that we have a solid operation with a very robust capital position and the balance sheet quality that is a benchmark in the market. The proven quality of bim franchise, combined with signs of economic recovery already visible together with the restart of large natural gas projects, which will have a significant contribution to economic growth and improvement of public finances gives confidence that this subsidiary will eventually convert to the targets that we have set for Mozambique in the strategic plan.

Our capacity for organic capital generation is reflected in BCP's robust capital position and the relevant earnings distribution to shareholders. We have ratios comfortably above regulatory requirements, with the CET1 at 15.9% and total capital at 19.9%. The quality of our retail banking business model, the driving force behind the growth in business volumes with loans increasing by 7.3% and customer funds are growing by 8.6%.

Customer funds stood above EUR 111 billion and loans to customers surpassed EUR 62 billion. At the same time, we maintained the trajectory of improving balance sheet quality by reducing nonperforming assets with NPE reduced by EUR 222 million throughout 2025. Despite the challenging context in which we operate, we maintained a strict and rigorous risk management of the balance sheet quality, which led us to achieve a cost of risk of 32 basis points, an indicator anchored below the target we set in the strategic plan.

The growth of the customer base demonstrates our ability to meet client expectations. We exceeded 7.3 million customers at the group level, of which 2.9 million in Portugal. The growth rate is even more noticeable at the level of mobile customers, which increased by 9% and stood at 5.4 million at group level, of which 1.9 million in Portugal. Mobile customers does represent 74% of our customer base, 66% in Portugal, an important indicator of our digital capabilities.

We are year after year recognized as the top choice of families and the leading bank for business. Customer-centric innovation results in substantial growth in mobile usage. In 2025, the number of transactions completely -- completed through the app increased by 15% with a notable 54% rise in the number of account openings. We also achieved 13% more sales compared to the previous year, particularly driven by a 49% increase in personal loan sales and a 47% increase in Savings Solutions sales.

These improvements stem from our strategy of targeting investments in technology to address customer requirements and in-house development of specialized skills, enabling us to launch very competitive digital solutions even when we compare with the Neo Banks offers. A prime example of this strategy is the digital offering we provide for mortgage products, which stands out as an innovative solution in the market and give us a significant competitive edge.

As we have always communicated to the market, in addition to our ongoing commitment to improving the quality of our products, processes and customer services, both in person and digitally, we have remained extremely rigorous in managing operational efficiency. This is evident in our cost-to-income ratio, which is firmly anchored below 40%. We have a strong focus on value creation, clearly reflecting the level of results achieved, coupled with a very strict approach to capital management.

This has led us to announce to the market a proposal to increase our shareholder distribution policy, which will be presented at the next general meeting, provided that the defined conditions are met and the necessary approvals from the supervisors are obtained. This policy would allow us for distribution of up to 90% of the annual net income, 50% through dividends and the share buyback program of up to 40%.

After the first year of the strategic plan, the results confirm our execution capabilities and allow us to be very confident about the BCP futures.

Miguel, floor is yours.

Thank you very much, ladies and gentlemen. As always, we'll be presenting here a short snapshot of our income statement. As you've seen in spite of the sharp reduction of interest rates in both the Eurozone and Poland, we were able to increase the net interest income in consolidated terms. Commissions also growing at the level of 4.3%, which means that core income has grown around 3%. The operating costs have grown at a faster pace, mainly in Poland due to wage inflation in the country, as you know.

But we were still able to increase the profit before impairment and provisions by around 6% in spite of the very good years in terms of core income that we had and in terms of interest rates that we had in the last years. The reduction of the legal risk charge for CHF in Poland. And the other provisions have made it possible for us to increase the profit before income tax, around 17%. And the net income after minorities and taxes around 12.4%.

In terms of the profitability of the group, we would highlight in Page 10 the growth of 2.4% in the NII. This 2.9% was achieved with a very healthy NIM of 2.9%. As you know, in Europe, the NIM of the Eurozone banks fluctuates between 2.5% -- I'm sorry, between 1.5% and 2% mostly. We were able to have -- to present a very resilient NIM of around 2.1% due to our very prudent hedging policy. This is what made it also possible together with the volume growth, which was very material in both Portugal and Poland to grow 0.2% in terms of NII.

In Poland also, we were able to -- in spite of the sharp reduction of interest rates, to present the NIM above 4%, which enabled us to achieve a growth of NII of 4.3%.

In terms of fees and commissions, also very healthy growth in Portugal, growing around 5.6%, both explained by banking fees and commissions and market-related fees.

Operating -- other operating income influenced by the reduction in mandatory contributions because this year, we have recovered due to the finalization of some legal processes, the additional contribution that we've made in previous years. So the mandatory contributions in Portugal reduced from EUR 40 million to around EUR 9 million, which explains this positive performance of around EUR 30 million in this line. In Poland, because of the end of the -- this was the first full year where we were totally normalized in terms of payment of bank taxes in Poland. And so that we had higher mandatory contributions because exactly of being a full year normalized vis-a-vis the year before where we were around half year.

Operating costs, a strong focus in terms of cost to income. So I would highlight here the ability to maintain a cost-to-income of 37%. In Portugal, this cost-to-income around 35%, so broadly constant, 34% to 35%. And this was achieved together with a focus in the reduction of headcount so that we had some additional restructuring costs of around EUR 23 million. In Poland due to the wage inflation that persists in the country, the costs have increased around 10%. But this is, I would say, the normal in an economy such as Poland.

In terms of cost of risk, aligned with the guidance that we have given around the 31% to 32%. In Portugal, broadly constant at 31 basis points -- I'm sorry, basis points. In terms of Poland, what we see is a slight growth from 33 to 34 basis points. I would like to highlight that in terms of composition in Poland, we have a higher share of cash loans and still a lower share of corporate loans.

We were able to continue to decrease the nonperforming exposures, as you see here in Page 15, by almost 18%, 23% in Portugal and the EBA ratio that includes all exposure, so to say, is already at 1.3%.

In terms of business activity, very, very healthy in terms of customer funds growing 8.6%, so almost 9% with already a healthy evolution of the off-balance sheet funds due to the performance of the market, this off-balance sheet funds are mainly distribution fees from investment trusts. And the demand deposits and term deposits also growing healthy in the several geographies.

In the international operations, growing 13.5%. Loan portfolio, this is also very, very interesting, growing 7%, of which 9.3% in Portugal, even considering the reduction in NPEs. In Poland, in the beginning of the year, we were more prudent in terms of the zloty mortgage loans. So we were not growing materially in zloty mortgages. This effect has been more than compensated by a growth of almost 20% in our corporate portfolio, which highlights a change in the business model and mix of the bank as we had envisaged.

Liquidity, a very healthy liquidity that enables us to keep and to manage the margin of deposits in an adequate way. MREL in Page 21, clearly above the requirement. As you see, both the TREA and the LRE, we have MREL of 33.3% in terms of TREA, which compares with a ratio of 28.9%. And in terms of MRE, almost double, so 12% that compares with a requirement of 6.9%.

Our funding plan is being executed exactly according to what has been commented to the market. We have issued an AT1 in Poland and the senior preferred in Portugal. This time, exceptionally, we will not comment in detail what we have sent to you in terms of the performance of the several geographies to make our presentation shorter and allow more time for questions. And I will go immediately to the part to Slide 44 in terms of capital and value generation.

As you see in Page 45, our common equity Tier 1 ratio with the present distribution policy of 75% being deducted from the P&L stood at 15.9% and our total capital ratio almost at 20%, at 29.9%, incorporating all the effects of CRR3, okay? These capital ratios compare very favorably with the requirements as of December of last year, but also with the requirements that are already in place since 1st of January. So we see here that we have a very comfortable buffer above the minimum requirements.

Comparing with September, our CET1 ratio is constant. In terms of the moving parts of the capital, the P&L since September, the P&L explains an increase of 57 basis points in our common equity Tier 1. As we are distributing 75% of the P&L, this translates into a reduction of this capital generation of 45 basis points. And our credit RWAs, mainly because of the strong growth that we had in the last quarter decreased by around 34 basis points. I would like to highlight that this type of P&L capital generation is 57 basis points. It's more or less between 50 and 60, it's more or less aligns with the capital generation that we have in the full year.

And in terms of other ways of credit because of the mix that we have, mainly in terms of corporate growth in Poland and of the strong growth in these segments, we have a capital consumption that was slightly above what was the capital consumption for the full year. So for the full year, it was around 74 basis points.

In the last quarter, it was 34 basis points. So it was somewhat above, I would say, the normal rate of RWA consumption. We had here other effects mainly linked to minorities. The very important effect here that is a little bit counterintuitive is when the capital requirements of Poland go up, we reduce the minority deductions. The capital requirements in Poland went up by 100 basis points and the amount of minority deductions in general that we had in Poland also were reduced and this explains a large part of this effect.

This is just the metrics that we have presented until 2028, just to show that we are very clearly above the business plan that we had presented for 2028 to the market. So we are clearly overperforming. And I would like here to focus more on these metrics. I think it's very important to keep in mind these metrics. So that we clearly see an RoTE on the mid-teens and our strong conviction is that the RoTE of the mid-teens is sustainable, and we see an EPS growth of -- also in the mid-teens.

And we also think that this EPS growth of the mid-teens across the business plan is also sustainable. So on top of this, what we clearly see is that the growth of book value per share plus dividend per share reaching almost 20%. So looking forward, what we see is that we do not see this year, so to say, as a one-off. We see this year based on a very strong franchise fundamentals to the point that we can envisage that we will most probably overachieve the plan that we presented in to you regarding the '28 values.

As Mr. Miguel Maya commented, this led us to the conclusion that we are in a situation of being able to propose to our shareholders and increase in the payout limit -- of the limit instead of the limit being 75%, having a limit of around 90%. And to give it more transparency and predictability to the market, we have here presented the schedule so that this limit will be a function of a certain schedule. So we will disclose to the market every quarter what is our capital ratio before deductions, before the deductions related to dividends and to share buybacks.

By the way, this value today is 17.7%, and we will disclose it to the market. And our limit instead of being fixed at 75%, we will have a reference limit of 90% if we are above 17.5% as we are right now. If we are between 16% and 17.5%, we will have a limit of around 80%. And if we are a limit below 16%, our limit will be 25% as it was before.

So in practice, this will allow you to project with a little bit more of foresight what our policy will be. Of course, this is subject to regulatory approval, and we have sent this request to the supervisors for approval, which we expect to obtain in the next months aligned with the period of the approval of the AGM -- of the results of the AGM, maybe a little bit later, a little bit sooner, but our AGM is also for May -- beginning of May. So we think we are on track for this. But of course, it is in the hands of the supervisor right now.

I will now stop for questions. We have here some -- as you've seen some news, so I'm expecting some questions from your side and that's it basically.

[Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Ignacio Ulargui Lopez from BNP Paribas.

I have 2 questions. The first one is on capital. You have provided a clearer framework that we value a lot in terms of distributions going forward. Just wanted to get a bit of your thoughts, Miguel, on how the capital generation should -- how we should think about organic capital generation in '26, '27. Should we expect it to be slightly above the net profit generation due to DTA consumption or any other moving parts that you may think? Linked to that, how do you see RWA growth evolving in 2026? I mean should we think a similar growth to 2026 -- sorry, to 2025, except for Basel IV first production impact?

And the second question is on costs. I mean you have taken for a couple of years already in a row some nonrecurring costs in Portugal. How should we think about costs going forward? And what will be the impact of that? And how should we think on the AI implications in terms of costs. There's been some banks already guiding for cost to income in the low 30s in Southern Europe. How should we think about the cost to income of BCP going forward?

Thank you very much for your questions. So in terms of capital generation, we expect the moving parts to be more or less aligned with the profit, with the P&L and RWA consumptions. In terms of P&L, we -- before distributions, what we are expecting are levels around 55 to 65 basis points per quarter. So this is -- of course, you may have here some quarters that are better, some quarters that are less good. And in terms of RWAs, it's always very difficult to tell.

A part of the RWAs will benefit from the DTA consumption because the first impact when we consume DTAs is a reduction of RWAs because these DTAs somehow have a higher RWA weight, mainly the deferred -- the timing differences. So that we would expect these RWAs to consume, I would say, between 20 to 25 basis points per quarter if we are able to grow at the speed at which we are able to grow. So this is basically in terms of the main moving parts of what we are expecting.

In terms of costs, I mean, we have a lot of initiatives in terms of AI. We think that the AI will increase the efficiency, both at a personal level. So the AI will be the new -- in the past, you have people that typed letters and now nobody uses somebody to type its e-mails. So the AI will be something that will be, on one hand, very disseminated for the different people in the organization.

And as we train the different people using AI in their functions, this will improve their productivity and their efficiency. This is on one hand. On the other hand, for everybody, I would say, it's like using a word processor. It's like using Excel, but we have to make sure that we train people. We are doing a large investment in this area. Then there are some processes where we will, of course, review -- that we will, of course, review and that will also increase the efficiency. Mainly what we are expecting here is some customer-facing processes linked to call centers, to bots, to contact centers, some documentation processes, some fraud prevention processes, et cetera, et cetera, et cetera.

But I would say, over this time horizon of 3 years, we are more, I would say, in an investing mood than in a clear mood of reaping the benefits. And what we are trying to do because it's very easy to make mistakes in this type of circumstances where everything changes so fast is to try not to underinvest, but also not to overinvest. So our rule of thumb here is to try to use the efficiency gains that we are having as time goes by to invest in AI, so that we maintain a reasonable cost-to-income ratio, but that we do not overshoot in terms of cost-to-income ratio in the short term because this would -- but use these buffers, so to say, the savings to invest in the future, to invest in AI, so as to maintain this cost to income.

As we all know, the cost to income is a ratio that relates cost to income. It's not only costs. So a critical factor here is as banks become more efficient, what part of this efficiency gets on -- passed on to price and to customers. And this is mainly when we speak around 3, 4 years down the road. We think it's very difficult to anticipate. We think a rule of thumb for us is that in competitive markets, I would say, the laggards generate an RoTE that is less than their cost of equity in a steady state.

I would say the banks that are normal will earn their cost of equity. The banks that as we tend to believe about ourselves that are overperformers will earn more than their cost of equity. So we expect to earn more than our cost of equity, of course, on a cycle-adjusted basis, but not extremely more than our cost of equity because, I mean, we don't own a monopoly. We are in a competitive market. The prices are there. But I would here say that a bank that clearly is focused on being on the top league in everything also in AI will probably be earning, as I was commenting, an average ROE on the mid- to high teens. That's the way we see it. In the short term, probably we are not expecting a very strong drop in cost to income or in ROE because we will be using these buffers, so to say, to invest for the future to ensure that our franchise is totally sustainable.

We are now going to proceed with our next question. And the question comes from the line of Alvaro Fernandez from UBS.

I have 2. First, you mentioned in the last conference call that you expected NII in Portugal to grow mid-single digit, both in '26 and '27. But given that volume dynamics continue quite strong, do you feel that there's upside to that guidance? So basically, your latest view here.

And second, how you're thinking about operating jaws, both in Portugal and Poland for the next couple of years, so for '26 and '27? So what level of revenue growth and cost inflation you see in both units?

Okay. Thank you very much for your questions. In terms of NII guidance, I would say, I'm somewhat more optimistic now. I think things have evolved favorably now than what it was 3 months ago. So 3 months ago, probably the guidance that we're giving is, it was mid-single digit in terms of the several lines of the income statement, including the NII based on the information that we have today. And of course, in spite of us not being too exposed to interest rates, there's always some exposure.

And as you know, 3 months ago, the futures of interest rates pointed to the interest rates coming down to 1.75 and then going up. And now what we are seeing is that a very flat Euribor at around 2%. I would say that the risks of NII growth of mid-single digits today are more tilted to the upside than to being higher than this than lower than this. I think this is important to say. So this -- in terms of Portugal, as I was commenting, our objective right now is to use the excess operating leverage benefit, so to say, to invest for the future. So this means that we will be growing costs more or less aligned with revenues so as to maintain this very healthy cost to income that we have right now.

In terms of Poland, as you know, the interest rates in Poland are somewhat of another cycle than in the Eurozone. In the Eurozone, the interest rates have already stabilized. In Poland, the cycle has not yet reached its bottom. What we expect is to have over the full year this year, a flattish NII in spite of volume growth and then progressively to grow -- to start growing, starting on '27 and more on '28.

What we see over the long term for Poland, as we all know, is that Poland has a very low ratio of credit to GDP, is less than half of the Eurozone. So the main benefit that we will have from Poland is once the volumes in Poland start converging to what will occur in -- or what are the levels in Europe. We think that this may be possible, I would say, in the next 5 years. We don't know exactly when the credit cycle will take off. But we don't -- we think that sooner or later in the next 3 to 5 years, there will be a convergence moment.

We are now going to proceed with our next question. And the questions come from the line of Maks Mishyn from JB Capital.

I have 3. The first one is on loan book growth in Portugal. It has been stellar in 2025. Can you please tell us what you are doing to gain market share and whether you plan to continue in 2026?

The second question would be regarding the guidance for Portugal. You already mentioned the NII, but could you also touch on fees and cost of risk, please, for 2026?

And the last one, you mentioned that you may overachieve 2028 targets. Does this mean that you may plan to update us sometime soon?

Starting with your last question, the updating is exactly what I'm doing now. So we -- in each conference call, one of the purposes of this conference call is to give you our updated view of what we expect in terms of guidance for the next year. So in each conference call, we somehow give or update the guidance that we are giving. And for the moment, that's what we intend to do. In terms of -- and effectively, I've just done it.

So in terms of the loan book in Portugal, there are here several facts. We have been focusing a lot in terms of commercial terms and reviewing our commercial systematic in Portugal so as to be even more proactive in this area, mainly in the corporate side. This is one part.

The other part is that you cannot forget that we are coming from a period where we have COVID first, then the issue of the invasion of Ukraine, then issues related to supply chains and how this would evolve. And more recently, issues around the uncertainty surrounding tariffs, okay? In all of those, up until, I would say, 1 year ago, with hindsight, but probably we have been very prudent, okay?

Looking now to the future, in spite of the uncertainty in terms of tariffs that just that we know, we see the world as somehow more predictable than what we saw 1 year ago. Not that it's very predictable, but we see -- looking forward, please, 4 years ago, there was starting of the war that nobody knew how it would end. One year ago, we did not know whether there would be a major tariff commercial war between Europe and the United States. And so right now, the way we see it is that these risks are somehow lower than what we thought some time ago. So we are adjusting our credit appetite, to the more, I would say, normalized view that we have now vis-a-vis the view that we had 3 years ago when there were moments in which it saw -- we almost saw that the world was almost -- I'm sorry for the expression, falling apart. Fortunately, the world did not fall apart. We do not regret being prudent in these areas because we do not know what would be the counter scenario.

But looking forward, what we see is that we feel more comfortable now in taking somewhat more risk, of course, always with prudence than when the war in Ukraine started or when there was a huge risk of tariff war, okay? So this is basically what we will expect us to gain our natural market share because BCP is the largest bank in the private sector in Portugal. And it's not the largest bank today in loans in Portugal in the private sector. So we ought to come back to our natural place, so to say.

The cost of risk, the way we see it is that the cost of risk that we see right now in Portugal is that this cost of risk absent a major recession in Europe, that is not our base case. We think that this cost of risk is reasonably sustainable. This cost of risk between 30 and 40 basis points is clearly sustainable. In Poland, as we diversify our book more from mortgages in zloties to corporates, the cost of risk will increase to a more normal cost of risk for banks that have an SME franchise.

We are not going to proceed with our next question. And the question comes from the line of Francisco Riquel from Alantra.

I want to elaborate on NII. First, you have disclosed in the appendix data about your interest rate hedging strategy regarding bonds, derivatives and the yield. And I wonder if you can comment on your strategy going forward regarding the size of the hedges that you plan to roll over, duration, potential reinvestment rates that we should expect and comment on the potential tailwinds to NII in '26 and '27, if any, from this hedging strategy.

And second is related to this, you mentioned upside risk to the mid-single-digit growth guidance in NII. So I wonder what is driving this upside risk. If it is because of volumes? Loans are stronger than expected, but I also see demand deposits growing in a healthy way or if it is related to the non-customer spread, if you can please elaborate.

Thank you very much for your questions. Starting with the last question. The main impact is volumes and mix. So we do expect the volumes to grow, and we expect to grow somewhat more in the corporate and the SME than what we have grown this year. And that's why we think that we will be able to grow around in the mid-single-digit area in Portugal.

In the -- by the way, if we grow between mid- and high single digits in Portugal and if we have our NII hedged, this will be the impact in terms of NII, okay?

In terms of the new slide that we have here provided in Page 54 -- or 57, I'm sorry. What you see in Page 57 is that in 2026, and by the way, in 2025, it was similar, we have a fixed rate book of around EUR 30.4 billion, which has an average interest rate of 2.3% this year, okay? This has a lot of products here. It has basically swaps, and it has also unhedged bonds. We have some bonds with asset swaps and others without asset swaps. Looking forward for a constant balance sheet, so to say, these hedges -- I'm sorry, these hedges, the interest rate risk that we have in our book. So this hedges the demand deposits and the beta of the term deposits. So that's the way we have to look at it.

So probably, this value will grow, that the EUR 30.4 billion will grow with demand deposits and 50% of the term deposits. This is how the total will grow, the total. The gap that we have, for instance, in '27 vis-a-vis the EUR 30 billion that we have introduced in '26, we will reinvest, so to say, we will reinvest, or we will invest in either in swaps or in bonds.

Typically, as a rule of thumb, our investment is in the 4- to 5-year area because our behavioral models in terms of demand deposits points to interest rate sensitivity concentrated on the 4- to 5-year area. So the way you should look at this is that every year, we will probably have a book of unhedged bonds and swaps, fixed rate swaps that will be in this order of magnitude. And the difference between these rates and the market -- and we will be reinvesting at the rate that -- at the time would be the difference between these rates and the market rates, more or less at the 4- to 5-year area.

As you see here, we are quite hedged right now because if we were to invest right now in the 4-year area, let's say, in the 4-year area, the 4-year swaps right now are at 2.33. So this means that if we reinvest in '27, the gap between EUR 24 billion and EUR 30 billion at 2.33. This will more or less yield the same in '27 as the ones that we are yielding in 2026, that is at 2.3. Of course, if we invest at -- in 5 years, we'll be investing at 2.4. But what I wanted you to -- the main message of this slide is to tell you that we have a book right now that is more or less aligned with the rates in the market.

If the rates in the market don't change substantially, this will smooth very much our NII, and this will allow us to continue to have a very low risk NII. For instance, if you compare the evolution of the NII in Portugal of our bank with the banks that have already presented results. And I think today, there was another bank presenting results. Our competitors have had a reduction of NII in the 2-digit area. And effectively, we have increased the NII last year, and this was exactly because of these hedges.

But we are very much aligned with the market. That's the main message here. Of course, if you believe that in 2027, the 5-year rate will go to 1%, this difference between EUR 24 billion and EUR 30 billion, you have to input in your model that the EUR 6 billion would be invested at 1%. This is clearly not our scenario, and I don't think it's a scenario of anybody withdrawn, but that's the way it will work.

We are now going to proceed with our next question. And the questions come from the line of Carlos Peixoto from CaixaBank BPI.

A couple of questions from my side as well. So the first one would actually be on the outlook on fees. I think I'm not sure you forgot this question before, sorry about that. Then on the CET1 ratio, I was also wondering, you mentioned the impact from lower directions from the increase in the minimum requirements. But do you have a visibility on the impact from the recognition of second half earnings in the CET1 ratio? Is that already considered there? Or that's a pending deduction? And then finally, just sorry, on the cost side. You mentioned growth in line with revenues. So I was basically wondering what type of revenue growth are you seeing for total revenues?

For revenues -- I'm sorry, Carlos, revenues where?

So basically, what type of growth you're expecting for revenues as a whole? Because you mentioned before, you see costs growing in line with that. And within that, are we talking about recurring costs or including the nonrecurring items?

Okay. Let me comment here. So revenues, I mean, starting with your last question. Revenues, we have a component that is very much franchise linked and predictable that are the fees and the NII, as you know, and another part that is intrinsically unpredictable that are the trading gains and other nonrecurrent parts.

The nonrecurrent parts, I would like to highlight that this year, we had a nonrecurrent of recovery of the additional, [indiscernible] of around EUR 30 million that we will not have in '26. So we had in '25, we'll not have in '26. We may have other nonrecurrent. But by definition, something that is a trading gain that is nonrecurrent are very difficult to predict. So I would not like to elaborate on this. But in terms of NII and commissions and fees, what you say, fees in the mid-single-digit area, NII in the mid -- I would say, in the mid- to high single-digit area and costs, I would say, also in the mid-single-digit area in Portugal. So that's the guidance that we think makes sense to give right now.

In terms of the income that we -- the ratio that we are presenting at a consolidated level, the ratio that you are presenting at consolidated level includes already the second half results at a consolidated level for everything, okay?

I was asking about the earnings from Poland because typically, you had that minority...

The earnings from Poland at consolidated level, we are recognizing this. In terms of the impact in minority interest, it's a little bit more complex, we have to see and then we'll comment to you.

We are now going to proceed with our next question. And the question comes from the line of Luis Pratas from Autonomous Research.

The first one is on Mozambique. So of course, this quarter, we saw high loan loss provisions and other provisions. In the past, this was often linked to sovereign debt downgrades. But I think recently, we have not seen any downgrades. So I wanted to ask you like what specifically drove the higher provisions this quarter? And what level of net income contribution we expect from this -- from Mozambique in 2026.

Then I have a quick clarification on the RWA growth. If we think about the relationship between loan growth and RWA growth in 2026 and going forward, shall we expect the same type of growth? Or like can you actually improve your RWA density through some managerial actions? And then my last question -- actually, this is it. So these are like my 2 questions.

Okay. In terms of -- starting with RWA growth. In terms of RWA growth, there are here several impacts. One is the credit RWA growth, and the credit RWA growth will grow, aligned with credit, but adjusted for the differences in mix. And I would here like to highlight that mainly in Poland, but not only in Portugal also, we are pretending to grow more in the corporate area that is more RWA intensive. So this is a negative. So of course, this inflates RWAs, and this is an important factor.

Another factor that's becoming more and more important is the RWA growth linked to operational risk. And the operational risk, as you know, is linked to right now according to CRR is linked to the lines of the income statement. So the more revenues you have, the more RWA for operational risk you have. And right now, you have a -- so if we are able to increase the NII, as we are expecting to increase in the fees and commissions that we are expecting to increase, this will translate into a higher RWA for -- RWAs for operational risk. I don't like particularly this model. But as you know, this is the model that is being implemented.

So the more revenues you have, the more RWA you have. So this impact is also -- it also has an impact. Of course, as time goes by, we will have here a benefit in terms of Poland, mainly in terms of -- there is also an RWA associated to the operational risk of the Polish mortgages so that provisions in the last 3 years somehow counts for the RWAs of operational risk in Poland. So as time goes by and there is -- we see the sharp reductions that we are seeing of the Swiss franc mortgage charges, we have this benefit.

We also have a benefit as time goes by because of the reduction of RWAs of DTAs. As you know, the timing differences have an RWA weight of 250%. As we consume these timing differences, this reduces, so to say, the weight of the RWAs of timing differences going forward. So all in all, we would be expecting, I would say, the RWA growth to grow aligned with the credit growth because the other effects somehow compensate each other, maybe a little bit less, but not much less.

In terms of Mozambique, I mean, Mozambique is a country that has a huge potential. And 1.5 years ago, as you know, the country faced social issues that then, of course, had its impact in terms of public finances. But there are right now very important green shoots in terms of international investments. So the sum of international, there are 3 very important companies that are investing in Mozambique in projects of more than EUR 50 billion.

So you have Total, the French company that had stopped its investment. It has already said, it will come back. You have Eni, the Italian company that is already there, and it's exploring another source of gas -- of natural gas. It has already said that it will restart its process on its second drilling field of natural gas. And now even with the support of and with the new targets of the U.S., you have the largest project that is of ExxonMobil of around $30 billion. That is reanalyzing the project and saying that it will come with a definite decision by mid of the year. So the first ones have already decided.

So structurally, you are seeing a comeback of the investment in Mozambique or very large projects. And this is projects that have been -- that were stalled in the last 2 years. And if you see the opinions from the international organizations, you see that the country is structurally solvent. I think this is important. It's the first message.

The second message is that it is a country with difficulties that are normal and that it will have some volatility. But we are there for the long term. So we feel very comfortable that over the cycle, over the long term, we will be earning ROEs comfortably above 20%, clearly, but with volatility. So there will be some years where we will be close to breakeven such as this year, and there will be years where we'll be making 30% ROE.

Fourth message. We don't have any intergroup funding. So basically, so we are very bullish in the country over the long term. But we are also cautious in terms of the risk that we take and our -- I mean, our risk appetite is the capital that we have there. This is also very important also to share with you our risk appetite is the capital that we have there, and we are prepared to contribute to the takeoff and to the society of the country, but with -- of course, with reason.

In terms of the provisions, I mean, the bank there has only exposure to sovereign debt in local currency. We have models in terms of this local currency debt. We don't think it is -- it makes sense for a country to default in its own currency when it has currency sovereignty. So we are comfortable that in principle, there will not be a haircut in this debt. But we have to calibrate, so to say, our risk models to the situation of the country. And right now, in spite of the fact that economically, the situation is better. And in terms of future, the situation is better. Right now in terms of public finances, the situation is challenging.

We are only exposed in local currency. We feel comfortable with that. We think that in '27, the bank will make -- will, of course, not be in breakeven and we'll be having a better result than in '26, but it will not be the normal year yet. It will not be a normal year yet. But over the medium term, we do think that this is a franchise that will pay off.

Actually, I remember the question that I wanted to ask the last one, I'm really sorry. After the recent storms and bad weather in Central Portugal, have you seen like any visible impact on BCP in terms of P&L or volumes? I mean the storms in Leiria, Figueira, Coimbra.

Yes. It's -- I mean it's a drama for many families. It is really this weather situation is -- I mean, it's very dramatic. But the way we see it right now, it is more painful up until now. So we are not seeing any material negative impacts in terms of credit losses or moratoria or something like that. So up until now, we are not seeing anything like that. We are following it very closely. It is a drama for some families, but we are not seeing anything that would affect materially our income this year.

We are now going to proceed with our next question. And the questions come from the line of Borja Ramirez from Citi.

Due to no answer from Borja, we're now going to proceed with the next question. And the questions come from the line of Miruna Chirea from Jefferies.

I just had a couple, please. Firstly, on Poland. Could you share with us your expectations for loan growth in the country in 2026? And how this is split between mortgage growth, which was negative in '25 and then corporate growth?

Secondly, a question on AI. There have been some concerns in the market over the last couple of weeks that Agentic AI might disrupt the savings market. Could you please share with us your thoughts on this topic? And maybe remind us what proportion of your total deposits in Portugal are current accounts?

And what is the average or the median balance of a Portuguese current account in BCP? And then just regarding to some comments earlier this afternoon made by the governor of the Bank of Portugal. He was saying that the bank is considering creating a new tax on the banking sector to cover supervision costs. I was just curious if you've been involved in any of these discussions? And if so, how large do you think this tax could be?

Okay. So starting with the last question. We have -- effectively, there was this statement from the government of the Bank of Portugal saying that they want to impute to the banks a supervision cost. We already have a supervision cost imposed by the ECB. So of course, our first reaction is that we -- I mean we would like to understand it better and because we already have one main supervisor.

But in any case, we don't expect it to be material to the point that it will affect materially our income statement. So it's not like really a tax. It's more like a supervisory charge to cover supervisory costs that we would expect that as most of our supervision is done by DCB that -- the amount that the Bank of Portugal will charge us would be small because it should be proportional to the cost that the Bank of Portugal will have.

In terms of AI and so on. So how do you see it? So first, we take AI very seriously, and we understand that the risks to business models of having AI is very important. But what -- how do we see ourselves positioned in this? So we are basically -- our focus to a large extent is in relationship banking and in daily banking. So the customers have a full banking relationship with us. And effectively, what they do is they have their -- I mean, their daily banking account, their transfers, their debit cards, everything they have it with us.

And we also have a model where we also have some human intervention for -- we are not a totally digital bank, so to say. We have also a digital solution, a digital -- more digital bank, but we are not totally a digital bank. So of course, we cannot guarantee totally the future, but we do think that monoliners of the banks that are based on one product, be it consumer credit, be it investments and so on, maybe more disrupted by AI than a bank whose main mission is to be close to the customer in its daily banking operations. So that's the way we see it.

Then we'll speak about the AI disruption models by Agentic AI. So that's how we see it. Of course, we want to be a player, if we are following it very closely. We also have our AI agents. We are using -- we want to be on the forefront also of this area. It's part of the DNA of BCP to be a very innovative bank in everything that has to do with systems and IT. But we are more protected, so to say, also than other banks based on our business model itself.

Yes, it is similar to what happened, I would say, 25, 30 years ago with Internet banking. So some customers will have liked it, others not. Others prefer to have this more hybid approach that we follow.

In terms of loan growth in Poland, in consumer loans, what we are seeing is that, that is the main product area of Bank Millennium is that we are now in our natural production. So we would expect for next year something similar that what we have had this year. In mortgage, we are expecting a recovery of the, I would say, in terms of the stock on the low to mid-single digits. And in corporate, we are expecting something closer to the low -- high single digits to low double digits. That's what you're seeing in corporate.

We are now going to proceed with our next question. And the questions come from the line of Sofie Peterzens from Goldman Sachs.

Here is Sofie from Goldman Sachs. So my first question would be going back to your core equity Tier 1. The core equity Tier 1 was almost 16%. Now with Q4 numbers, your target is about 13.5%. But you also mentioned that your organic capital generation after kind of RWA growth will be somewhere between 35 to 40 basis points a quarter. I mean will you ever go down to 13.5% core equity Tier 1? And would you kind of consider doing M&A or kind of deploy capital in a different way to reach 13.5% common equity Tier 1 target that you have?

And then my second question would be on the mortgage loan growth in Portugal. It was very strong in 2025, over 11% year-on-year in Portugal. In Spain, you have a lot of competition. Could you maybe just talk about the Portuguese mortgage market? How competitive is it? What is that the kind of pricing for mortgages? And how do you see the competitive dynamics in this market?

Starting with the mortgage. As I was just commenting, I mean, our business model is very much customer-focused and it's multiproduct. So the way we look at the mortgage is as a way to start a long-term relationship with the customer where we have the mortgage, but also have the daily banking that allows us to monitor the needs of the customer and the risk of the customer with a very sophisticated tried model that will allow us also to cross-sell, that allows us at different life stages to offer the adequate product at different life stages so that, I mean, we are able to offer an integrated solution where the customer is able to contract a lot of satisfaction of its needs with us.

Instead of shopping around because the customer has a lot of products with us, we are able to have a win-win situation in which we offer to the customer really value in each product because we have more products with the customer and he gets more value than if you would have shopped the products in several areas.

The mortgage market in Portuguese is a competitive market. The front book is between 75 to 85 basis points of production. But you have to consider the insurance, you have to consider the relationships, you have to consider everything that I was commenting. And we calculate the NPV of the relationships and of the customers, what we see is that it makes sense and you see it in the numbers, so to say.

In terms of the convergence of our capital ratio, as I have commented, our -- the capital ratio for us is not a target. It is a restriction, so to say. We want to grow. We want to achieve these RoTEs of the mid-teens that we are commenting to you subject to -- this is a restriction, subject to having more than 13.5% common equity Tier 1. So it's not a target. It is a restriction to our main target that is to generate shareholder value through an adequate RoTE. So this is the way we look at it.

We expect that as time goes by, exactly through this new policy where we can go up to 90% of the P&L in terms of distribution that as time goes by, our capital ratio will start to decline and converge to a value above 13.5%. When I say above 13.5%, it does not mean 13.5%. It is above 13.5%. Of course, you have to put there probably 100 basis points buffer above this 13.5%. But we will get there. We'll get there, but we will get in a healthy way, we will get there by healthily growing business with clients by having good value of loans and by distributing more capital to our shareholders than the needs that we have due to the RWA increase. So the RWA will increase more then the retained P&L and it is through this RWA that will increase more than through the retained P&L that we will get there.

In terms of M&A, I mean, M&A for us is not an objective on itself. And effectively, the plan that we have presented to the market was a plan of organic growth. Of course, when there are opportunities, we look at them. But we are very, very disciplined. So there was an opportunity in the market, as you know, some months ago. We look at it from the outside in. We reached the conclusion that at least based on our best estimations, it would not probably suit our target in terms of shareholder value generation and we'll not do it. So we are very disciplined. And to be honest, I'm not seeing any opportunity right now in the markets in which we are in that would clearly generate shareholder value.

We are now going to proceed with our next question. And the questions come from the line of Cecilia Romero Reyes from Barclays.

My first one is on other provisions. How much do you expect the other provisions, including the CHF mortgage provisions to fall over the course of the year? And what are the trends that you're seeing in the FX portfolio and renegotiation supporting this assumption?

Then I also wanted to ask, we were expecting a headwind due to the revaluation and recognition of deferred tax assets following the changes in the Portuguese tax regime. Was this included in capital this quarter? And what was the magnitude? Or is that still coming? And then finally, I wanted to ask on cost. You guided to group cost growing mid-single digits this year. In that cost guidance, how much should Poland costs grow?

In terms of the CHF costs, what we are seeing is clearly a trend of decreasing of inflow, a clear decreasing of inflow in terms of costs -- I'm sorry, of new cases in the courts and more negotiations with the customers. What we are seeing is that there is already -- this was already second year in a row where our total costs with Swiss francs have decreased.

You have to sum the provisions and the costs that are booked in the trading line. I think it's important. And our decrease this year was our decrease with the total costs of Swiss franc before taxes. Before the tax impact, it was positive, is around -- it was around 34%. And we expect for '26 to have an even higher decrease. So a much higher decrease than this 34%, I would say between 34% and 50%. So that's what we are expecting.

And then for the years after, what we were expecting is to have a natural charge for operational risks and for litigation, but that will be a part of the normal business that we'll, I mean, include everything that has to do with litigation, but what we expect is that this year, this will be the last year of really -- of a really important charge in terms of Swiss francs.

In terms of DTAs, effectively, there was a decrease in terms of DTAs and deferred taxes. I'm just checking here. So the decrease from September to December of DTAs is around before tax loss carry forward. So the timing differences, let me just check here, say, around EUR 200 million of less DTAs that we have in our books, of which around EUR 100 million in terms of guaranteed DTAs. I'm speaking here from September to December and the remaining around EUR 70 million, but of non-guaranteed DTAs. So this was already translated into the DTAs -- the relevant DTAs for our capital ratios. So the impact was already there.

The cost in Poland, I mean, Poland has its own inflation costs. We continue -- we will continue to have an evolution of the cost in Poland that are on the high single digits to the low double-digit area.

We are now going to proceed with our next question. And the questions come from the line of Borja Ramirez from Citi.

Sorry for my prior technical issues. I have 2. Firstly, on the NII, so I think it's very useful the disclosure you've provided on Slide 57. And I think you're probably one of the banks in Southern Europe with the highest level of hedges relative to deposits. So I didn't fully understand the NII guidance for -- like in the medium term, 2026, '27 and '28 . So in Portugal, so you're going to have mid-single-digit loan growth, but then you're going to have a tailwind on the structural hedge linked to the steep yield curve. So if you could kindly elaborate on that?

And then my second question would be on costs. If you could kindly provide details on the evolution in Portugal in the -- also beyond 2026...

I'm sorry. Just to make it clear. So first, in terms of NII, what I have commented is that we have hedged -- a quite hedged balance sheet so that our NII will grow more or less aligned with our volumes, okay? And we are expecting volumes to grow in the mid-single digit area. So our NII will grow in the next years mid- to high single digits because of the mix effect, okay? So mid- to high single digit, that's what we are expecting in the next years to occur in terms of NII.

In terms of costs, what I have -- I'm sorry, when -- in Page 57, I don't know whether you were there when I was explaining it. The objective of Page 57 was not to explain or to communicate that we have a high upside from our hedges. It's basically to say that our hedges are more or less at market level. So if you were to hedge everything now at market level because we have to look at the 5-year rate as a substitution for our hedges. And our hedges right now are more or less at the level of the 5-year rate.

So if we were to substitute right now our hedges, we would more or less -- be more or less where we are. So just to give you this idea. So this just confirms that we are aligned with volume growth and our hedges will contribute to it, okay?

In terms of costs, this mid- to high single digit is for '26, but also for '27 and '28, of course, the confidence I have in '26 by its own nature because it's more difficult to anticipate 3 years than 1 year are more -- are safer than the guidance that we give for '28. But in any case, that's what we are expecting here for Portugal.

For Poland, the interest rate is still going down. So we expect over this year to have a flattish NII on the whole year. So there may be some volatility in terms of the quarters because Poland is growing a lot in terms of volumes and the impact of the volume growth is felt more towards the end of the year than towards the beginning of the year, but we expect the NII in Poland to be flattish because of the interest rate reduction that will occur in Poland and not in Portugal anymore or in Eurozone anymore and then to start growing in the years after.

In terms of costs, the guidance that we gave is that because we are in an extremely competitive cost-to-income position, our objective more than to try to minimize further our cost to income is to prudently invest potential savings that we could have from efficiency and processes to invest in AI, in processes, in innovation so that we can remain competitive in the future. That's always with the target of having an RoTE in the mid-teens area, okay?

So we don't think it makes a lot of sense for banks such as us to try to milk the cow as one would say based on the BCG metrics right now because we have a long-term franchise. So we want to have here the adequate remuneration for our capital -- above the cost of capital and a resilient business model, but we have to make sure that the model continues to be resilient for the long term. So the cost will grow aligned with the income.

We have no further questions at this time. So I will hand back to Mr. Miguel Bragança for closing remarks.

Thank you very much for the time devoted to us. I think really, we appreciate your effort in trying to understand our equity story and trying to understand our effort of value generation. We do think that a franchise such as BCP is in a particularly well-suited position for this new future of serving the society and serving the clients in a differentiated way whereas at the same time, continuing to generate a remuneration of our capital, clearly above the cost of capital. And we expect exactly to continue to generate total shareholder return for our investors and for the market that keeps them as satisfied as they are now. Thank you very much.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

Good day, and thank you for standing by. Welcome to the Millennium BCP 9 Months 2025 Earnings Conference Call and Webcast. [Operator Instructions] Please note that today's conference is being recorded.

I would now like to turn the conference over to your speaker, Mr. Miguel Maya. Please go ahead.

Good afternoon, Miguel Maya. Welcome to BCP earnings conference call. As usual, I will mention the highlights of our performance. And then Miguel Braganca and Bernardo Collaço will follow providing additional detail.

Recent times have been marked by high levels of volatility and instability that ebbed and faded away. The social and economic shock waves in the markets where we operate coming from geopolitical conflicts and tensions demand increased resilience and agility from our side. Our performance in the first 9 months of this year confirms the quality and capability of our business model to overcome adversities while expanding the franchise and generating increased profitability.

Consolidated net income reached EUR 776 million, a year-on-year increase of 8.7, driven by a solid operational performance that supported the core operating profit of EUR 1.8 billion and ROE of 14.6%. In Portugal, net income went up 8%, having reached almost EUR 655 million, supported by a robust business model and a leading position in multiple business fronts. The net income of international operations increased 19.8%, driven by Poland where, despite the costs with the legal risk still being a significant burden, Bank Millennium's net income went up 56% to EUR 202 million, also confirming [ that details ] a high-quality franchise and a profitable business model.

The costs in Poland associated with FX mortgage loan portfolio amounted to EUR 280 million, 31% below the costs over the same period last year, which gives us confidence and is a good indicator that the risk is controlled, has been properly managed and will not compromise the ambitions we have set for the Polish market on the strategic plan.

The economy in Mozambique has been facing a challenging situation dealing with the effect of the slowdown in activity following the social unrest after the outcome of last year's elections. The political situation stabilized, which led to a progressive normalization of the activity and regaining of confidence from international investors, more recently reflected in the last week announcement of the intention to redeploy important energy projects.

We have had a long-standing operation in Mozambique, celebrating this year 30 years of local presence in the country, during which we have developed a resilient and prudent business model, having gained in-depth knowledge and expertise to successfully navigate the various stages of the economic cycle.

In this challenging context, the net income in Mozambique amounted to EUR 25.4 million, a year-on-year decrease of 59%, driven by impairments and provisions mostly related to the downgrade of sovereign debt rating. Despite these additional charge of impairments, the profit before impairments and provisions was aligned with last year's level, supported by our strong commercial franchise.

At the consolidated level, the ability of our business model to organically generate capital is clearly reflected in the Group's strong capital position. Despite significant business growth and the fact that we are only incorporating 25% of the profit generated in line with the approved dividend policy, we have been able to maintain very robust capital ratios with CET1 of 15.9 and total capital of 19.9.

Operating in an increasingly competitive landscape is a quality of our retail banking business model, led to an increase of almost 9% in customer funds, which stood at EUR 109.5 billion and to an increase of nearly 5% in loans to customers which reached EUR 61.5 billion. This performance in customers' loans was driven by our intense commercial activity in Portugal where performing loans went up 8%, having increased significantly both in loans to individuals and to companies.

We keep the trajectory of improvement of the balance sheet quality, continuing to reduce number of [indiscernible] assets. Over the past 12 months, NPE decreased by EUR 332 million, recovery funds by EUR 71 million and foreclosed assets by EUR 19 million. The NPE ratio is now at 2.6% with a total cash coverage of approximately 87%, which stands at 123% when including real estate collateral.

Our rigorous management of balance sheet risks enable us to further improve the cost of risk to 31 basis points, a figure well anchored below the threshold of 50 basis points that we consider reasonable for our business model over the cycle.

At the Group level, the customer base expanded more than 4% in the last 12 months, exceeding 7.2 million, of which almost 2.9 million in Portugal. Most notably, mobile customers grew 9% during the same period, accounting for 74% of the Group's customer base, 66% in Portugal, revealing the success of our digital transformation journey.

Customers' recognition of our digital capabilities is also reflected in the use they make of the app. On the first 9 months, the number of transactions carried out by the customers through the app increased 14%, including a significant growth in the number of accounts opened. In the same period, the number of sales through the mobile app increased 15%, with emphasis on sales of personal loans and investment funds.

The priority we give at the investment we make -- and the investments we make to develop mobile solutions with a clear focus on customer-centric innovation and permanent improvement means that our app continues to lead the rankings and deserved top reviews on the most relevant platforms.

In summary, I would say that the first 9 months of the year have once again demonstrated that the strategic plan we approved enables the Bank to continue evolving at a stronger pace, even in an environment that has proven more unpredictable and challenging that we had anticipated. I would also highlight the acceleration of lending in Portugal already in line with our expectations, both individuals and corporate segments.

Our international operations present distinct challenges, but overall, are converging towards the level of profitability established in the strategic plan. Although we are investing significantly to enhance our commercial capabilities and operational resilience in digital, operational efficiency remains and will continue to be a priority for the Group. We are, therefore, confident in our ability to continue quarter after quarter to successfully implement the strategic plan.

Miguel, the floor is yours.

Thank you very much, ladies and gentlemen. Going now to Page 8. As you see in consolidated terms, we are presenting a core income growing 3% in spite of the general reduction of the interest rate environment in several geographies in which we are. And I will highlight here particularly the growth of commissions of 4%.

In terms of operating costs, a growth of 9%, to a large extent conditioned by the evolution of the salary inflation in Poland. But this means that in spite of the reduction of interest rates, we were able to maintain our core operating profit relatively constant at a high level.

Our -- due to some other income, trading gains recoveries of taxes, we have -- we are able to present the profit before impairment of [ position ] and provisions growing 3%. And due to the improvement in the risk profile of the Bank, mainly in terms of credit risk and legal risk, we were able to reduce the impairments by 14%, which means that, at the end of the day, we were able to present the growth of profit before income tax of 14%.

As you see in terms of some key metrics, we are able to present consequently return on tangible equity above 15%, a growth of book value per share plus dividend per share based on the pro forma numbers of shares that are outstanding of 17%, and a growth of EPS of around 11.5%. So this clearly shows the ability that the Bank has to generate shareholder value even in a scenario of decreasing interest rates.

In terms of general level of profitability in the Bank. In Page 11, you see that the growth of 2.6% in terms of our NII is mainly explained by the growth in the international operations of almost 6%, presenting still a very high NIM, but also by a very prudent, I would say, management of the NII in Portugal that was able to remain broadly flat in spite of the reduction of interest rates.

As I have guided since mid of last year, we were expecting, in spite of the reduction of interest rates, to have a broadly constant NII this year. And this is exactly what is happening. As you may say, if you adjust for the account, this is already the sixth quarter in a row in which our NII is steadily improving in Portugal in spite of the reduction of interest rates.

This broadly flat NII together with the increase of fees and commissions of 6% in Portugal will be able to -- will make it possible for us to show some growth in terms of the core income in Portugal. By core income, I mean NII plus fees and commissions. This increase of 6.3% in Portugal is explained by both market fees and by more transaction-related fees. In terms of the international operation, more challenges in terms of fees, to a large extent also due to the situation in Mozambique.

In terms of other operating income, some important evolution, as you see here. So there are here 2 different tales of the same story. The mandatory contributions in Portugal this year, when you compare with last year, are significantly lower, because there was a recovery of a contribution declared unconstitutional, of which we have already recovered year-to-date around EUR 18 million, of which EUR 12 million in Q3. So this might -- it's possible the mandatory contributions to go down from EUR 40 million to EUR 20 million in Portugal.

On the other hand, in the international operations, what you have is what is with the new situation of the bank in Poland that [ ceased ] to benefit from an extraordinary reduction in the bank tax. This normality has implied that the bank tax in Poland increased by around EUR 60 million. These differences together with a better net trading income due to some transactions that were -- that have occurred, some of them not totally recurrent, have made it possible to grow from minus 24.1 to 29.5 in consolidated terms.

In terms of operating costs, I would here like to highlight the level at which we are. So in terms of in consolidated terms, we are with a cost-to-income of 37%, which is a very healthy cost-to-income in European terms, as we all know. In Portugal, our cost-to-income is 34%. And of course, with this type of cost-to-income, the cost pressures are higher. So we have been able still to maintain this level of cost-to-income.

The level of cost has increased 7.4% in Portugal and 6.4% in terms of salaries and employee compensation. I would here like to highlight that more than 50% of this growth has to do with incentives and variable remuneration. So it is flexible. But it has also to do with the sharing of the good performance of the Bank with all the contributors to it, starting with less skilled workers to the most skilled workers.

The international operations, as we know, the labor market in Poland is quite hot. This has to do with the general growth of productivity in the Polish market. As you may know, Poland has been year after year one of the countries in Europe with the strongest growth in salaries and also in productivity. This affects the whole economy. Of course, our Bank, it is a [ challenger ] bank that is going even more.

As Miguel Maya has commented, our cost of risk really proving the resilience and the acuteness of our credit concession policy, the cost of risk reducing from 38 to 31 basis points. As I had anticipated, also for Portugal, we were expecting cost of risk in this new normal from between 30 and 40 basis points. In this new environment that we are now seeing, it is a more benign environment [indiscernible] now closer to 30 as we are seeing than to 40.

In terms of the international operations, there was also a positive evolution of the cost of risk, but this has also to do with some credit sales that have generated a price that was higher than the net book value of the loans.

In spite of the low level of NPEs, as you see in Portugal, we are already at EUR 800 million, which is a very low level for the size of our balance sheet. And the quite low level of the NPE ratio, so considering only loans 1.9%, and 1.4% if you consider all the exposures that contributes to the EBA ratio, we have been able to continue to reduce the stock of NPEs in Portugal and we have done so year-on-year by EUR 224 million.

In the international operations also, as you see, the level of NPEs is higher, to a large extent because our business in Poland has a higher concentration in cash flows, which are very profitable. So when you compare the spread with the cost of risk are very profitable, but generate a stock of NPEs that is somewhat higher.

In terms of business activity, I think this is really the good news, I would say, that we are growing in terms of customer funds 8.6%. And this has been dispersed throughout the Group, with a growth of 6.3% in Portugal, with a strong contribution also of off-balance sheet funds, and a 13.8% contribution abroad.

I would like to highlight also just in Poland, the funds, so the off-balance sheet funds, have grown almost 40%, which positions the bank particularly well for a scenario of reduced interest rates. In terms of loan portfolio, the change has even been more dramatic to the positive. As we have been telling you already from some quarters, we want to inflect, so to say, a little bit -- or reposition the focus of the Bank more towards the SME and the corporate market, both in Portugal and in Poland. And this has occurred. So we are growing 5% in terms of loan portfolio.

But more than the total loan portfolio, what here I would like to highlight is that, in Portugal, the corporate loan growth in terms of year-on-year, the corporate loan growth has been 6%. But if you take a look at year-to-date, has been 9%. So the corporate loan growth in Portugal has been 9% and, quarter-on-quarter, 2.6%. So this explains, so to say, the growth in terms of exposure, the growth in terms of credit.

But an even more impressive change here has been what has happened in Poland. In Poland, the year-on-year growth of our corporate loan portfolio has been 12%. But not only the year-on-year has been 12%, but the year-to-date has also been 12%. So 12% year-to-date in terms of corporate loan growth, I would say, is a very positive sign of how right we were to design this strategy, mainly coupled with the low level of cost of risk that we are seeing. Of course, this then has an impact in terms of capital, that I will comment then in a couple of slides.

As you see here in Slide 21, our capital ratio is still very comfortable at 15.9%, clearly above what we were expecting, what is our minimum ratio, as you see here, and all the requirements of [ CRRT ]. As you know, for last year, our [ P2I ] has been 2.5%. For next year, it will be 2.25%. So we are clearly above the regulatory minimum.

But what we have seen in this quarter, this quarter, the ratio has decreased around 30 basis points from 16.2% to 15.9%. And we have here 3 very important contributors, so to say. A first contributor, so to say, is a more technical contributor of 15 basis points, that happens each time that our bank in Poland is able to recognize the accumulated profit as part, it's Common Equity Tier 1. This increases the size of the non-eligible minority interests. So each time [ the KNF ] accepts that we incorporate our ratio for capital purposes, this somehow decreases our consolidated ratio, so to say, by this automatical function of decreasing our minority -- our non-eligible minority interest.

So this is a technical issue. It's an intra-month -- or an intra-year issue that we have been seeing over the last quarter. So somehow, the ratio in the last quarter has somehow benefited from this, the fact that we have this for consolidated terms, but not for local terms. The ratio in this quarter has somehow [indiscernible] effect. This effect has been 15 basis points, which explains to a large extent the decrease.

But then there are 2 very positive effects. On a quarter-on-quarter, the growth of the corporate loan book in Poland is responsible for a 10 basis point decrease. So this is a healthy consumption of our capital. And by the way, totally aligned with what we had presented in terms of our strategy. And the growth of our exposure, both credit and committed lines in Portugal, explains another 10 basis points. So the sum of these 3 effects is 35 basis points. Then, of course, this is partly compensated by the accumulated earnings in consolidated terms, of which we are recognizing 25% because, as you know, our distribution policy is to distribute up to 75% in dividends and share buybacks.

The leverage ratio is still very healthy, in Page 22. The MREL requirements clearly fulfilled with an ample comfort. The liquidity position also evolving very well due to the strength of our franchise and the ability to originate and to increase our deposit base.

And now I will pass the floor to Bernardo, commenting Portugal and the international operations.

Okay. Thank you very much, and good afternoon, ladies and gentlemen. I'm starting, as usual, on Page 26 with Portugal, where net income in the first 9 months of 2025 reached EUR 654 million, which is 8% -- which is an 8% increase compared with the same period of the previous year. The favorable performance of net income and activity in Portugal was influenced by resilience -- the resilience of net operating revenues, considering the context of a significant lower interest rate environment, and by the reduction of other impairments and provisions.

On Page 27, net interest income stood at EUR 995 million in the first 9 months of 2025. This is just less than 1% below what was record in the first 9 months of the previous year.

Let me also highlight that on a quarterly basis, NII in Portugal went up almost 1%. And this has been broadly stable is -- I mean, the stability of NII on a quarterly basis over the last 6 quarters. This evolution that we are seeing on NII in Portugal allow us to reinforce what we have been commenting about the resilience of our NII in Portugal.

Regarding year-on-year evolution, as presented in the graph below, NII decrease reflects the lower income generated by the loan portfolio, that was partially offset by the increase of the performing loan book, by the reduction of interest paid on deposits, lower wholesale costs and the positive contribution from securities.

NIM stood at 2.10 at the end of September '25, which is just 14 basis points lower than the level reported in September 2024 where interest rates were much higher. Just to highlight that the average 6-month Euribor until September 2024 was at 371 basis points, and that compares with an average until September 2025 of just 223 basis points.

Moving to Page 28. Commissions reached EUR 465 million in the first 9 months of 2025. That's an increase of 6.3% compared with the amounts recorded in the first 9 months of 2024. Banking fees went up 5.6%, supported by higher bancassurance fees and by commissions related with loans to guarantees -- with loans and guarantees. But I think here, it's also important to highlight that fees from accounts are also growing as our client base is increasing.

Market-related fees went up 10%, supported by the positive evolution on securities and asset management-related fees. Trading results went down from slightly more than EUR 28 million in '24 to around EUR 11 million. And this decrease is mainly related with the reduction of some NPE sales that we have in 2024.

Equity [ accounting ] earnings was broadly stable year-on-year at a level of around EUR 40 million. Other net operating income registered an improvement year-on-year, evolving from minus EUR 27 million to just EUR 9.6 million in the first 9 months of '25. And this is mainly due to lower mandatory contributions that were booked this year compared with the previous one. And as Miguel explained, this is related with some recoveries that we have on the additional solidarity tax that was deemed unconstitutional.

Going to Page 29. Operating costs amounted to almost EUR [ 518 ] million, which is a 7.4% increase compared with the same period of last year. And this evolution, as Miguel stated in the Portuguese operation, reflects mainly an increase of 6.4% in staff costs and also an increase of 7.8% in admin costs. Despite the hiring of new employees with specific skills, namely for digital and also for internal control areas, the number of employees in the activity in Portugal shows a small decrease year-on-year, but it has been stable quarter-on-quarter.

Moving to Page 30, which refers to asset quality. As highlighted before, there was a reduction of NPEs, significant reduction year-on-year. NPE reduction since September 2024 in Portugal was above 23%, meaning a decrease of more than EUR 240 million since September 2024. As of September 2025, it should be also highlighted that 53% of the NPEs in Portugal are UTPs, unlikely to pay, and not 90 days past due.

Cost of risk stood at 33 basis points, September 2025. That compares with the same level registered in September 2024. So the level is similar than 1 year ago. But as you know, in the second quarter of 2024, there was a significant impact in the cost of risk driven by a sizable reversal. Excluding this effect, cost of risk would have stood at 49 basis points in the first 9 months of 2024, and this is the level that should be taken in -- for comparison purpose when you look to the cost of risk of 33 basis points in the first 9 months of 2025.

On Page 31, which presents the NPE coverage breakdown. As you can see, I mean, the level of coverage is still quite high and it stood at 145%. The NPE coverage by loan loss reserves at 95%. And here, I think it's also important to highlight that the company's total coverage is at a very high level, so at a level of more than 140%.

On Page 32, which shows the evolution of foreclosed assets and corporate restructuring funds. Net value of foreclosed assets stood at EUR 38 million, and this compares with EUR 57 million 1 year ago. meaning a reduction of 33% year-on-year. Regarding property sales, there was a decrease in the number of transactions, and this is due to the fact that there's less properties in the portfolio. There was a significant reduction over last years. And to what regards to corporate restructuring funds, the exposure at the end of September was somehow not so sizable, but -- and it stood at EUR 390 million, that compares with EUR 390 million 1 year ago.

Now moving to Page 33. Total customer funds reached EUR 74 billion. That means an increase of 6.3% compared with September 2024. On-balance sheet funds stood at EUR 57.6 billion, and this reflects an increase of 5.1% year-on-year or, if you want, more than EUR 2.6 billion in absolute terms. Off-balance sheet funds went up 10%, meaning an increase of EUR 1.6 billion compared with the same period of last year. And this somehow reflects also the demand from our clients for some alternatives in terms of their savings.

Gross loan book stood at EUR 42.6 billion, and this is an increase, as Miguel clearly mentioned, of 7.2% from previous year. And this increase reflects the strong performance of loans to individuals where mortgages registered an increase of 10%. And regarding companies, I think, once again, it should be highlighted the strong increase on corporate lending, where the corporate gross loan book increased by 4.7% year-on-year. But if we look to the year-to-date evolution, there was an increase -- a significant decrease on the gross loan book of 8% since the beginning of the year.

Going to Page 34 where we present the evolution of the performing loan book by segment. And before going into details, I would like also to highlight, as I usually do, which is something important, is the recognition of BCP as the main bank for Portuguese companies. Now just looking at the performing loan book. In Portugal, it went up 8% compared with 2024, meaning an increase of more than EUR 3 billion.

Loans to individuals grew almost 10% year-on-year with a relevant contribution from mortgages that increased 10%. Performing loans to companies increased 6% year-on-year. And as I said before, we are continuing to see a positive evolution on a quarterly basis. And once again, year-to-date, the company's performing loan book increased more than 9%.

Now moving to international operations and on Page 36. The contribution from international operations over the first 9 months of 2025, sorry, after deducting minorities, reached EUR 121 million. That's 12.4% more than the first 9 months of last year. This evolution reflects the reduction of the contribution from Millennium bim in Mozambique, that partially offset the improvement from Bank Millennium in Poland. Bank Millennium net profit stood at EUR 202 million in the first 9 months of 2025, growing 6% from previous year, while bim in Mozambique recorded a net profit of EUR 25 million at the end of September this year, which is significantly lower than the amount recorded a year before. As you know, Millennium bim performance was offset by the increase in other impairments and provisions associated with local sovereign debt.

Moving to Page 37, which refers to Bank Millennium. Net income went up more than 6%. But as you know, profitability continues to be impacted by costs related with CHF mortgage loans. Despite the strong reduction of global costs related with this topic, as you might know, that we're already above 30% if we compare year-on-year. If we exclude this effect, net income in Poland was broadly aligned with last year.

Net operating revenues went up to almost 8% despite the strong decrease on the reference rates over 2025. Operating costs, including mandatory contributions, went up 14.5%. But if we exclude those contributions, I mean, total costs have increased 11%. CET1 and total capital at 14.4% and 16%, respectively, and well above minimum requirements of 8.3% and 11.8%, respectively.

In Q3, as Miguel mentioned, Bank Millennium got the authorization from the supervisor to include the first half earnings on their capital ratios.

On Page 38, some detailed information about Bank Millennium. And despite the increase on interest rates, NII went up EUR 32 million, compared -- it went up EUR 32 million compared with the first 9 months of 2024. NIM stood at 4.1%; that compares with 4.35% in September -- in the first 9 months of 2024.

And here, once again, it's important to highlight that the National Bank of Poland kept interest rates by 100 basis points since October last year. And this month, there was an additional cut of 25 basis points, bringing the reference rate to -- from 5.75% to 4.5% in a very short period of time.

Fees and commissions went down 2%, and this reduction is mostly related with bancassurance commissions that, as you have seen from Bank Millennium presentation, are already recovering from previous quarters. Costs went up 14% and were highly impacted by mandatory contributions that went up EUR 51.5 million compared with the first 9 months of last year.

Now moving to Page 40 and related with asset quality in Poland. The quality of the loan portfolio remains solid. Cost of risk stood at 32 basis points over total loans in the first 9 months of the year. This quarter, there was no sales of NPLs. And as you know, in the second quarter '25, cost of risk in the Polish subsidiary was impacted by a sale of NPLs. Nonperforming loans more than 90 days past due stood at 2.2% and coverage by loan loss reserves of nonperforming loans stood at 146.

On Page 41, customer funds at Bank Millennium grew more than 14% year-on-year. That means more than EUR 4 billion in this period. This evolution was supported by both retail and retail and corporate deposits that grew at double digits. Investment products grew more than 30%. And now in terms of loans, gross book stood at EUR 18 billion and slightly below September 2024. This evolution that is due, I mean, to the fast amortization or reduction of the CHF mortgage portfolio and also to some contraction of the zloty mortgage portfolio due to a lower origination from previous periods. But it should be also highlighted that new origination in mortgage loans in zlotys in Q3 was higher than previous quarters, and this will support the portfolio.

On companies, there was a strong evolution and the corporate loan book grew 12% year-on-year and 6.5% quarter-on-quarter. Bank Millennium expects these trends to continue, and these will contribute to the gradual change in the mix of the loan portfolio in Poland.

On Page 41, regarding FX mortgage portfolio. You continue to see a fast downward trend of the outstanding portfolio. Year-on-year, Bank Millennium had a decrease of 34% of the portfolio. And currently, the FX mortgage gross exposure after deduction of the allocated risk provisions represent less than 1% of the total gross loan portfolio. Provisions against legal risks were lower in the third quarter versus previous periods. And it is important to highlight that global costs related with the CHF saga have decreased more than 30% compared with the same period of last year. The outstanding balance of legal risk provisions as of September '25 stood at EUR 1.6 billion and represents 150% of the outstanding CHF portfolio.

In this quarter, I think it's important to highlight, there was 2 positive trends. From one side, a continuation of the lower inflow of new court cases, which for the first time in 5 years were below 1,000. And on the other side, the number of settlements that was above 1,200. And once again, it's worth mentioning that, within those settlements, there is a relevant number of in-court settlements. Since the beginning of this process, more or less in 2019, Bank Millennium was able to reach more than 29,000 amicable settlements with clients, and this is reflected also in the decrease of the number of outstanding individual lawsuits.

Turning to Page 42, regarding Millennium bim in Mozambique now. Net income amounted to EUR 25.4 million at the end of the first 9 months of 2025. This level of net income is significantly low last year. And as I already mentioned, this was influenced by the impacts associated with the sovereign debt, which results in an increase of provisions. Although if we look to the pre-provision profit, it is possible to see that Millennium bim has been quite resilient and stood at similar levels than last year.

Net operating revenues went up almost 5% in local currency, and operating costs grew 8.5%. Capital ratio stood above 40%.

Moving to Page 43. NII Mozambique went up around 8%. And for this evolution, Millennium bim benefited from the reduction in the local requirements for nonremunerated cash reserves that has been applied since January '25. Being more stable at the level of 8%, commissions registered a decrease of 6% and other income, that includes mostly the contribution from the trading line, went down less than 6%.

On Page 44, regarding asset quality. Nonperforming loans 90 days past due stood at 3.5% and coverage at 127%.

Regarding volumes on Page 45. As you can see, customer funds registered an increase of almost 6%, driven by the increase on demand deposits, which grew 8.7%. Loans to customers registered a light increase of around 3%.

And let me just finish by thank you for your attention. And before we move to Q&A, we'll return to Mr. Miguel Braganca for some final remarks.

Thank you very much. This is a very important milestone. These are the first 9 months of our new strategic plan. As I commented, this new strategic plan is focused on rebalancing our balance sheet in terms of the mix between individual banking and SME and corporate banking. We are showing you that we are clearly on the right path with a high level of resilience in terms of our core income that is basically stable when we compare with last year in spite of the reduction of interest rates in both Portugal and Poland.

I will now open the floor to questions.

[Operator Instructions] And the questions come from the line of Maks Mishyn from JB Capital.

I have 2 questions, please. The first one is on Portugal. Your loan book growth has accelerated notably in the quarter. You seem to be gaining market share. Can you please touch a bit on every key segment? What kind of demand are you seeing? And do you think it is sustainable for the next years?

And then the second question is a consequence of this. Do you think the cost of risk in Portugal can sustainably remain close to the 35 basis points that we are seeing today or growth in corporate loans may push it up?

Okay. Thank you for your questions, Maks. Yes, I mean, we think that the type of loan growth on mid- to high single digits is possible going forward in Poland, absent a major recession in Europe, clearly. So for our expectation in terms of the macroeconomic environment in Europe, so to say, we do expect our loan growth in Portugal to be around mid-single digit. And we may gain a little bit of market share in some quarters. There will be always some volatility there.

In terms of the cost of risk, the guidance that we gave was the guidance between 30 and 40 basis points. Closer to 30 in the more benign part of the cycle, closer to 40 in less benign part of the cycle, but still under normality conditions. As we look forward, we are not -- in spite of the geopolitical risks that, I mean, we all know of, we are not seeing any trigger to concretely, so to say, that we may enter into a recession in Portugal or in Europe. So there is always a lot of volatility in the market, but our view for the next quarters is relatively benign.

So I would say that 30 to 35 basis points is reasonable for the next 1 or 2 years. Of course, if you speak about 5 or 6 years, I mean, we will have to go through the cycle view, so to say. For the next 2 years, we think this makes sense.

And the questions come from the line of Ignacio Ulargui Lopez from BNP Paribas.

I have 2 questions. The first one is coming back a bit on the NII in Portugal. How should we think about the growth in coming quarters? And once the effect of rates starts to be digested, should we expect volume growth to be kind of the basic driver of the NII? And if you could help us a bit to update on the contribution of the structural hedge that you have, how this could impact the NII in 2026.

The second question is on costs. If I just look to the cost base, particularly in Poland, but looking to the Group as well, the Bank has been not delivering positive operating [ Jos ] which was kind of the DNA of the Bank for a while. While I understand that rate effect and rate cuts have impacted that, should we expect the bank to come back to positive operating [ Jos ] in coming years?

Okay. Two very important questions. I would say it's difficult to separate in terms of NII what is the structural hedge and what is the natural hedge. Once we have some, for instance, mortgages that are fixed rate -- the change in the structure of our balance sheet also contribute to some extent for the hedging of the balance sheet, and we see it as an integrated way, in an integrated way. So it is a little bit artificial because we are constantly adjusting it.

But what I can tell you is, yes, yes, the main trigger going forward for our NII evolution is the volume evolution. And as I commented previously to Maks, we are expecting a volume evolution in the mid-single-digit area. So consequently, this means that we are expecting an NII evolution also in the mid-single-digit area going forward, perhaps even a little bit better, depending on the evolution of the interest rates, we don't have -- we have a very small exposure to interest rate development, but of course, there is some exposure in spite of it being like that. So I would -- our base case is mid-single-digit evolution of the NII going forward.

In terms of the [ Jos ], we are living a special moment in the banking industry, so to say. And the [ Jos ] depend on the starting point as every evolution. So for us, much more important than the [ Jos ] is the cost to income and the resilience of the business model. It is difficult for any industry, so to say, to maintain a very abnormal relationship between cost and income because the employees demand more compensation, a fair compensation. They demand a larger part of the distribution of the value created. Or the suppliers, mainly in IT, also demand it, or there may be also some price pressure when the business is very healthy, so to say, when the income exceeds a lot the costs, the motivation to compete on price is higher.

So I would say that we should focus much more on the cost-to-income, and we clearly see in Portugal the cost-to-income in being able to maintain this cost-to-income around the levels that we have today, around 37%, give or take, so not going materially above this level, which we think is a very good level when we compare it with other geographies. But of course, with this cost-to-income, there will be some years where the operating costs will grow more than the income. Please don't forget that we are having in Portugal also a NIM that is much higher than the NIM that you see in other European countries. So clearly above 2%, so this, of course, creates some pressure.

Also the investments here are important, so to say. When the market is very interesting and when the business opportunity is very interesting, we cannot allow the situation to depreciate our franchise. And when it is interesting for all the industry, for all the competitors, we have to remain competitive. We have to remain the leading edge. And we have to make sure that we continue to increase our customer base and to increase our franchise. This has cost. These costs are more bearable when the business case is interesting than when the business case is not interesting.

So now we are faced with a very interesting business case. We are making more than 2% NIM. We are increasing our customer base. We are having a very interesting ROTE. So it does not make sense to constrain ourselves too much in terms of the digitalization in terms of the new tools of the Bank. So going forward, our focus is the cost-to-income more than the operating [ Jos ].

And the questions come from the line of Sofie Peterzens from Goldman Sachs.

Sofie from Goldman Sachs. So yes, my first question would be around the tax rate. You had a 24% tax rate in this quarter. I think previously, you have guided for a much higher tax rate and consensus is around 27% tax rate. How should we think about that tax rate going forward? And do you have any DTAs that you can kind of utilize? And if so, how should we think also about the capital impact from those DTAs?

And then the second question would be just a clarification on net interest income. So in terms of the mid-single-digit net interest income growth for 2026, I assume it's fair to assume that growth level, kind of in a steady state, is fair to extrapolate also to '27 and '28.

And then the final question would be on capital. You had some capital headwinds this quarter. But could you just kind of outline if you expect any additional capital headwinds to come or tailwinds and how we should think about the core equity Tier 1 evolution going forward?

Starting with the last point. I would not call it capital headwinds. So what we are having here is a growth in RWAs and a growth in credit. When we presented our plan, when we presented our plan, we were -- I was challenged because, by some of you, that were constantly telling me, how will you be able to go to a level that is above 13.5% through organic capital generation? And I said we are going to grow in corporate, and corporate is highly capital intensive.

What happened in the last quarter is that we will not grow in corporate at the speed and with the RWA density that we were expecting in the past, so to say, or when we developed the plan. Now we are in this implementing the plan and having, so to say, the first more concrete results of our growth in the corporate area, and this is happening. And this, I would say, at least the RWA consumption in the corporate area, we hope it's the new normal. So we hope this will be the new normal in terms of our -- of course, in our pricing model, we reflect the capital consumption of our business model. So this is the new model.

There is then another part is just like a seesaw effect that is this impact that I commented on the 15 basis points. That is a situation in which provisionally we are able to account for the P&L of Poland in our capital base without increasing the excess minorities. But when the [ KNF ] authorizes the bank to recognize locally the excess minorities, this then get deducted from our consolidated capital ratio. The seesaw effect that happens in some quarters but then get recognized in other quarters will continue to exist. So there will be some quarters in which I will benefit from this, in other quarters that I will be then adjusting the ratio. This will continue to exist. But over the long term, it's not an effect. So this gets compensated in 1 quarter after the other, in terms of capital.

In terms of NII, if we are, as we expect, totally successful in our plan as we have presented to you, we do expect that our NII will continue to grow in Portugal, speaking about Portugal, mid-single digits in '26, and in '27 and '28, I would say also mid-single digit, but with a bias upwards. So as time goes by, it's not normal in the plan, we expect it to get better and better. But this is for '27, '28, but the mid-single-digit area, I would keep it. But of course, if we are successful, the more time a successful plan is implemented, the better it reflects in the P&L.

In terms of the tax rate, of course, we have to separate here Portugal and Poland. In Poland, as you know, there was a separate conference on Poland. There has been a new tax rate approved in the Polish -- for Polish banks. This is now in the process of being discussed. So the tax rate in Poland will increase as it's public information. So in the first year, the tax rate has increased from 19% to around 30%. So this is something that is in process and is already, so to say, incorporated in the price of our bank in Poland.

In Portugal, we are having the opposite movement. So what we are seeing in Portugal is that the government has approved a reduction of the tax rate in Portugal in the next years to 17%, so to say. The way -- in a gradual way. We expect this decrease of the tax rate in Portugal to feed almost on a one-to-one basis into the effective tax rate that we also pay in Portugal. Every year, in terms of the DTAs, what we do is that we do an evaluation of our DTAs and we recognize or derecognize based on our view of the recoverability of the DTAs.

We have done this in the past. We'll continue to do so going forward. But that's more or less the level that I would expect. So the type of average level that we are expecting for the next years will be closer to the 25%, 26% than the level that we had in the past in Portugal.

And the questions come from the line of Carlos Peixoto from Caixa Bank BPI.

Yes. Just first question on capital, just basically in terms of you did have some consumption this quarter, but there is a clear excess CET1 at the Bank level. Do you see any possibility of looking into the [indiscernible] capital with some sort of announcement take place with full year earnings, just an overview on that?

And then a second question would be basically on the outlook on the other provisions, both for the fourth quarter and into '26, more for Portugal and also for Mozambique, Portugal and Mozambique, whether you expect this level of additional charges related with the sovereign to persist over the coming quarters?

And then finally, if I may, just a quick question on your expectations on the evolution of costs in Portugal. My doubt here is basically last year you had a bit of a hiccup in the fourth Q, which relates somewhat to the variable compensation that wasn't being accrued. I was wondering whether this year we should expect a more flattish quarter-on-quarter evolution into the fourth quarter. Basically the outlook for the fourth quarter.

Oh, sorry. I think I was muted.

No, no. We understood what your questions. Okay. So in terms of capital, we have presented the plan. This plan was based on, to a large extent, on -- in differential terms, on an increased growth of the corporate portfolio in both Portugal and Poland. And as you've seen this year, we have been able to do it.

So in terms of, as it was here explained, in Poland, the corporate loan growth year-to-date has grown 19%. And in Portugal, the year-to-date of the performing loan book has grown 9%. So it has even grown more than what we were expecting. This plan has been approved and it's -- we are basically in execution models.

Having said that, it is normal that when we present the net profit and the final year-end statements to you, that we will look, of course, at the plan, and we will see whether we are generating substantial more capital than what we were envisaging in the plan and whether we should recalibrate any of the distribution decisions and possibly and anything related to our distribution policy. So we will look at it, of course, because the year-end is a moment in which we typically make a balance of our decisions. But before the presentation of the year-end results to you, that will be the next presentation, I mean, there will be -- I'm not expecting any type of decision. One year after our plan, we'll look at it and see whether the plan is totally adjusted, whether it needs to be recalibrated or not.

Now I cannot tell you whether it is -- it needs recalibration or not, especially considering what is happening -- what happened in this quarter. And it depends a lot also on our credit pipeline, both in Portugal and Poland. And I can assure you we have a good pipeline. So depending on the concretization of this pipeline, we may have to recalibrate some of the distribution decisions or not. But the moment will be the moment of the year-end presentation.

In terms of other provisions, as I have commented to you in the past, the other provisions in Portugal are by own nature a little bit also like the trading gains. They are particularly difficult to forecast. They have to do with mark-to-market of real estate assets that we may own. They have to do with litigation provisions and so on. And what I've told you in the past that we were expecting across the cycle to have EUR 10 million to EUR 15 million charge per quarter in Portugal. This year, it has been much better than that.

Looking forward, at least for the next 12 months, we are expecting it to remain more less at the levels of this year. But across the cycle, I mean, by its own nature, it's like trying to project trading gains, so I cannot give any assurance on this type of level.

In Mozambique, we have made a provision that was linked the local current sovereign debt. We do not have any foreign currency sovereign debt of Mozambique. I think that's very important. But of course, when there is a revaluation, when there is a rating change or so, we have to look at the credit to see whether -- how the PDs have changed.

What I can tell you is that in the last weeks, the rating agencies have maintained the rating of Mozambique in local currency. So as of today, we are not expecting any change. But of course, this is a function of the rating of the country.

In terms of costs -- and on the [ contrary ], there are some green shoots even in terms of Mozambique, some of the companies that have exited Mozambique, that have threatened to exit Mozambique, are now coming back, mainly because of the huge gas reserves that Mozambique has that are now proving to be more crucial in this new geopolitical scenario in which Europe wants to be less dependent on the Russian gas.

In terms of variable compensation and so on, I think it is early days to comment on this, but it will be a decision, of course, of the full Board. But if we are able clearly to over-deliver substantially, there may be an adjustment in the fourth quarter. So we'll have to see it. It is still today. But if there is a decision in terms of variable compensation in the fourth quarter, it will be for good reasons. It will be because the Bank will have over-delivered well in the year. So it will be a good sign, I would say. Besides that, I'm not expecting anything especially in this line.

And the next questions come from the line of Francisco Riquel from Alantra.

Yes. I want to ask about corporate lending. Two questions here. First one is if you can give more color about the growth in corporate lending in Portugal, whether you have changed pricing or risk taking at all? Or if the growth is demand driven, what sectors are driving this growth? Whether this is short-term or long-term funding, large small corporates? So what -- any color on what sustainable growth do you see here going forward. You mentioned a good pipeline now.

And the second question is also related to this, because the corporate loan growth is highly capital intensive, as you mentioned. And you also had some SRTs maturing in Poland this Q3. So I wonder if you can update on your plans for SRTs in both Portugal and Poland, how much resort to SRTs embedded in your strategic plan, and I wonder if you could do more to mitigate the RWA inflation?

Starting with your last question. So what I here would like to say is that we do not have any [indiscernible] for against SRTs. So far what is important is that we generate shareholder value, that the SRTs cost less, so to say then the value that we generate for shareholders. So at the end of the day, we can do more of SRTs depending on the cost of equity, implicit on the SRT. So if there are available SRTs with a low cost of equity, we will do more. If they are not, we'll do less. So it is as simple as that.

We do not need SRTs because we have a good capital ratio. So we will resort to it to the extent that the cost of equity is lower than the cost of equity implicit in the -- in our share price, if you know that. And of course, for negotiation purposes, I will not disclose you exactly what is our negotiation limit when I negotiate the SRTs with investors. What I can tell you is that we are involved in SRTs continuously, so we have always a lot of mechanisms to make sure that we have a good capital management and a good capital allocation.

You're right, there are some SRTs in Poland coming to an end. We will be in the market seeing what are the conditions, and depending on the conditions, we may resort to them or not, but we will always be prepared. In terms of -- and we will be in the market, continue to be in the market. It's not something, I would say, abnormal. Something that's part of our business, it's part -- it's like quoting a credit or quoting deposit.

In terms of the credit, we have -- I would say, we are a very focused organization, and we believe very much in discipline and in prioritizing. So we have also very good solutions for some of our clients, both in terms of user experience and in terms of the credit lines, so to say, that can be used, be it government guaranteed, similar to the [ ECO ] that you have in Spain, that we here in Portugal called SGMs. Insurance products sometimes are interesting. So we have here some differentiating products that may allow the customers to finance themselves at a lower cost to some extent because it also consumes some less capital than what they otherwise would cost.

Our competitive advantage in Portugal lies more in -- on the SMEs, both the smaller-sized SMEs and the larger SMEs, than in the large corporate. So we do have relationships with the large corporate. But where we are more different, where we have more differentiating solutions is more on this area. So our growth has been much more gradual, has been diversified and has been more concentrated on the SME sector than on the large corporates. Not any special sector. Of course, we have the sectors. The distribution of sectors of the Portuguese economy. But not any special sector, but more the SMEs, as I'm commenting.

And the question comes from the line of Luis Manuel Grilo Pratas from Autonomous Research.

My first one is on the Group net income in 2025. If I'm not mistaken, when the year started, it was mentioned that it would be possible for the Group to match the EUR 900 million bottom line achieved in 2024. If I apply the quarterly run rate achieved already in the first 9 months of this year, the Bank may run ahead of the record EUR 1 billion in 2025. So I wanted to ask you if this could be possible already or if you are thinking about a different number.

And then my second question is regarding inorganic opportunities in Poland. Could you consider any opportunity to accelerate the corporate growth strategy there? Or could you think about maybe buying the minorities in Poland as well?

Starting with your last question. In terms of minority in Poland, right now, our exposure to Poland is broadly slightly below 20% of our -- 20% of our market cap. We think Poland has a very interesting business case. We are very bullish in Poland. However, there are still some risks that probably would advise us to maintain this type of exposure of 20% of our market cap that we have right now. So it is not our intention, so to say, to increase our exposure to Poland right now, or at least until these more, I would say, political/regulatory risks decrease materially.

This is our risk appetite right now. So we do not have any plan to buy minorities to make a long story short.

Inorganic opportunities in Poland. We could consider inorganic opportunities to accelerate our corporate rate growth. But there are none. I mean there are not any targets that I know of at least that is for sale and that would accelerate our growth in terms of corporate loan growth in Poland. So it is a very theoretical question.

In terms of bottom line, I mean, it is not our policy to give round numbers in terms of bottom line. So we comment on the results. We explain the dynamics of the results. Of course, this is equity, it's not fixed income. So equity is, by so nature, dependent on performance and the macro issues and so on. I mean any one of us may have its own ideas, it's own vision in terms of interest rates -- in terms of interest rate, in terms of the macro environment, in terms of what will happen. So for us, it's much more important to show how we work and how we react to different assumptions than to give a round number that would always be somewhat theoretical. Because this is equity, it's not fixed income.

And the questions come from the line of Alvaro Fernandez from UBS.

I have 2. First, a follow-up on capital. If you could walk us through the different moving parts for Q4. I don't know if you're expecting any regulation, either positive or negative. You mentioned in the past that part of the Basel IV impact could be gradually reversed. Then you also have the DTA impact in Portugal. I don't know if you could quantify that. And also depending on the quarter, you could be active on SRT. I don't know if you have anything in the pipeline at the moment. So basically, your view on capital for Q4 and if we should expect CET1 levels to increase in the last quarter.

And then on Mozambique, when do you expect the unit to recover normalized earnings levels of around EUR 100 million pre-minorities per annum?

Okay. Starting with Mozambique. Mozambique, as you know, had a political change some months ago. The transition, as it sometimes happens in young countries, was more controversial than it is in, so to say, in older democracies. And so this generated some turbulence in the market, some uncertainty. This has also -- it paid its toll in terms of GDP. And now the country is recovering.

Exactly at what speed it will recover totally is particularly difficult to say. But I would say probably that '26 will not be a normal year yet. '27 will already be close to normal, I would say, not -- that's basically what we are working with, the '28 totally normal. That's what we are expecting with all the mitigants that you have to understand that we, and all the disclaimers, that we have to put in such a vision. It's just, so to say, an expert judgment from institution that has been for some decades in the country.

And in terms of capital, we do not give such precise guidance quarter-on-quarter, and especially for the next quarter. What I can tell you is that we have presented the plan. Our plan is to consume our excess capital through growth. This is our plan. So over the plan, this means that our capital ratio will go down. It will not be stable because, I mean, when we say that we will use our capital to finance growth, this means that the capital ratio, instead of growing, will go down. Because also I mean, this would be a contradiction with what we are saying. But this is exactly what is in the plan. So you cannot have the cake and eat it.

So if we were to grow in credit, and we believe that credit is profitable, of course, over the short term, this has a negative impact on capital. Over the longer term, as we know, as the credit starts generating income, this pays for the cost of capital and generates value for the shareholders.

In terms of SRTs, I have already commented the SRTs. So we do an analysis based on the cost of the SRTs versus the cost of equity. So depending on the cost of the SRTs, we may resort to more or less. And I don't think it makes sense to pre-commit to any SRTs right now because it depends on the price.

And in terms of the tax reduction in Portugal, as I commented here in the previous conference, we expect that the present legislation impact on our DTAs will mean an impact in terms of capital of around 15 basis points. Of course, this depends on the size of DTAs, on the projections and so on. But this is around 15 basis points, what we are expecting, as I commented in the last conference year.

And the question comes from the line of Dmitriy Kurgan from Mediobanca.

One question on term deposits. So basically, I've noticed Q2 quarter-on-quarter, there was an uptick in short-term deposits as part of total deposits. And I just want to ask, given that in euro area, rates are stabilizing and we are at the end of rate cutting cycle, do you expect current trend to continue, or do you expect the demand deposits to pick up in the coming years or -- yes.

I mean term deposits and demand deposits address different needs of the customers. When we speak about retail, what we have been seeing already for some time is some stabilization in terms of the mix of term and demand deposits. So we are having a stabilization in terms of term and demand deposits.

When we -- the fact that sometimes that we have more term deposits than demand deposits in any given quarter may be more linked to some special deposits that may come from large corporates than anything else. To give you an idea, our -- in terms of individuals, our current accounts represent more or less 45% to 46% of the total on-balance sheet funding from individuals. And this has been stable since September '24. And in terms of corporate, so to say, it is more or less also 2/3 demand deposits and 1/3 term deposits, also quite stable, but with some volatility in terms of large deposits of large corporates. So I would not read anything special in terms of any quarter-on-quarter evolution because the underlying trend is quite stable. And other thing is whether we want to quote a larger deposit or not on a larger corporate or institutional investor.

And the questions come from the line of Hugo Cruz from KBW.

Just 2 questions. One is on the bank levies leverage in Portugal. There's been some noise in the press. One of the levies have been kind of declared unconstitutional and the government said, I think, that you will find some other way. I think the banks have been fighting the others as well. So what's the latest story there? Do you expect any change, a material change going forward on bank levies in Portugal?

And then secondly, I'm trying to reconcile your comments on the loan growth. It's been very strong in corporates and so on. But if you want to grow in corporate, why shouldn't -- so my question is, why shouldn't we see margin expansion, NIM, so why should the NII grow faster than loans if you basically -- if you're taking more risk by going to corporates? So how do you think about that both in terms of what the corporate growth does for your NIM, but also how front book and back book margins compare, if you want to just talk about Portugal, that would be very helpful.

First, I'm not speaking -- starting with your last question, I'm not speaking about a NIM expansion. On the contrary, what I'm commenting is quite a NIM stabilization. But with the growth of the NII aligns with the volumes. So it's a little bit different. So what I'm saying is that a reasonably stable NIM, so that the NII grows aligned with the volumes.

Nevertheless, there are here multiple parts, but there is a positive part, so to say. The positive part is that as we change the structure of our balance sheet with more credit than we have right now, what we will see is that a part of the -- of our , so to say, sovereign debt portfolio will mature, we will invest it, so to say, in corporate credit that has a higher spread, of course, with slightly more risk if we do it correctly, than the sovereign debt.

So one of the reasons that will contribute positively to our NIM, is this rebalancing, so to say, of our balance sheet with more credit and less, so to say, institutional investment in sovereign debt. Then there, as a negative part, so that the NIM will be broadly constant in Portugal.

In terms of the bank levy, you can have -- I don't want to make it too complex. But in the Portuguese legislation, you can have contributions or you can have taxes, okay? If you have contributions, in theory, you should -- for them to be legal, the sector as a whole has to somehow benefit from him, because else, it's not a contribution, is a tax. If you have a tax, you don't have a special benefit to the sector, but it has to be, so to say, it has to be nondiscriminatory by sector.

And the fact that basically what the previous government had designed was a tax that was discriminatory, and according to the Portuguese constitution, there is the principle of equality, and a tax cannot be discriminatory, okay? So I think that is the principle of the equality. Egalite, as the French say. So this comes from the French Revolution to most of the modern constitutions. So a tax cannot discriminate against a sector. I think this is in principle. So I think this is very important.

So this levy that we had in the past was a tax that was discriminatory, so was judged unconstitutional. And so that's why it was declared null and void. That's why we are receiving back what we paid in the past.

So the situation which we have right now is that the constitutional court has declared it as unconstitutional. So the several processes that we have in court are incorporating the decision of the constitutional court in their final decisions. And as they decide -- and of the 5 decisions that we were expecting, we have already attained 3. We receive the money back and we run on our P&L., okay? This is what happened.

In terms of legal media buzz word, what the government said is that they will try to find another source of revenue. For us, first, this was not a key source of revenue. I think it's important to note, this is not something that affects tremendously the Portuguese government budget. I think it's important. So it's not something that is pretty.

Secondly, I think that if they want to define a new source of revenue, if it is a tax, it has to be in principle nondiscriminatory, let's say, what they came up with. I mean it would be -- also be a little bit contradictory because they are just reducing taxes. So we don't have any additional information, it's not a public information. We think that the most probable scenario for us is that nothing is imminent. But of course, we will have to wait and see.

And the questions come from the line of Borja Ramirez from Citi.

I have 2 questions, please. Firstly, on Poland, if you could kindly update on the -- how should we think about the NII next year? And also if you could maybe provide your views on the Polish [indiscernible] tax impact.

And then secondly, I would like to ask how should we think about costs at the Group level for this year, please?

I'm sorry, your last question is?

Sorry, if you could please provide guidance for costs at Group level, please.

In terms of costs, the guidance in terms of growth will be right now is broadly aligned with the year-on-year evolution that we are having until [ Q9 ]. So that's probably what I would like to say at this moment.

In terms of -- the impact in terms of tax, as you know, they will depend on the final version of the law. It's expected to be published in November, and it will be very dependent also in terms of the time scaling of the law. We are still -- of our time scaling of the PBT. As you know, the tax rate will start increasing from 19% to 30% in '26. But then we go down to 26 -- I'm sorry, 19% to 30% in '26. Then it will go down to 26% in '27 and 23% in '28. So the computation of all of this is quite complex. We are waiting for the final version of the law. And before that, I think it's not correct to comment on this.

Our base case in Poland is for interest rates to continue to decline until reaching 3.5% during '26. In spite of this important decline, we expect the NII to be quite resilient. That's what we are saying right now, to be broadly, I would say, broadly constant, so quite resilient, and that's our base case. This means, as we are going in volumes, of course, that the NIM will compress somewhat. So the NIM will compress somewhat, but the NII will be quite resilient.

And the questions come from the line of Fernando Gil de Santivañes from Intesa Sanpaolo.

Two questions if I may, please. First one is regarding the securities portfolio. There is a nice amount of [indiscernible] maturing this year. And I wonder what is the strategy on the reinvestment? And how far can you increase the portfolio going forward? Because I see it has nicely increased during the last year, especially regarding the [ foreign ] bonds.

Second, related to the Mozambique question that was raised before, I wonder if you can provide us with the allocated capital you have as of today in Mozambique.

So as Mozambique has -- is a different country and has its own regulations and so on, instead of using an economic model of capital allocation, we tend to use, so what is the capital, the real capital that there is in accounting terms. So our allocation of capital to Mozambique is EUR 329 million for [indiscernible] of the bank. So that's the capital that we have at risk. And by the way, there are no intergroup funding lines. There is nothing -- I mean there are not any material additional exposures to our operation in Mozambique.

In terms of the securities portfolio, as you know, we are a very liquid bank. And we -- and at any point in time, we evaluate what is best from a hedging strategy standpoint, whether to use swaps, whether to use government bonds. And if so, of which countries and so on. What I can tell you is that the government bonds that we use of a diversified portfolio.

Our largest exposure is of EU bonds. EU, the ones that were used for the resilience program. And we tend to analyze this vis-a-vis the alternatives that we have to hedge our balance sheet. That is basically interest rate swaps because we look at it more as the hedging of our balance sheet than as a profit center on its own. But we don't have any limitations, so to say, because of our strong liquidity position.

And the questions come from Cecilia Romero from Barclays.

I have 2. The first one is on tax again. I saw Prime Minister Luis Montenegro had proposed a plan to gradually lower the effective tax rate by 3% points through 2028. Shouldn't we see the tax rate in Portugal go from 25% perhaps to 22% by 2028 on this basis? And you were talking before about the impact on DTAs of minus 15 basis points. I just wanted to make sure that we understood the P&L.

And then also, you were mentioning the bank tax in Poland -- sorry, the increase in corporate tax rate in Poland. Should we see also a reduction in bank tax if that increase in corporate tax come through?

And then my final question was on volumes, which has priced positively on the quarter. However, we have seen an NII that has come more or less in line with consensus. I was just wondering, when did this increase in volumes took place? Did it happen at the end of the quarter? And should this be a tailwind into Q4 as you have NII in Q4?

So starting with the last point, the NII. If it were not for the volume growth, of course, with the reduction of interest rate that we have, it will be decreasing, so to say. So the volume growth, together with the management of the balance sheet, is a counterweight to the decrease of the interest rate that we are seeing in the market. So you cannot compare it to only with the past, we have to compare it in terms of the dynamics of the future.

So we -- when I say that we will have our NII stable this year when you compare with last year, of course, this was helped also by the volume growth to some extent. Next year, of course, what we are expecting in Portugal is that the volume will explain the growth in terms of the NII going forward.

In terms of the tax rate in Portugal, the tax rate is a little bit more complex because we, effectively, we have a total tax rate in Portugal of around 29%, okay? So when we are now having a tax rate of around an effective tax rate below this level, this means that there are already some revenues, so to say, and some issues in our P&L that are not taxed at 29%. So we already have a benefit in terms of this level. So it is not a pure accounting mathematical operations just of looking at the PBT and multiplying it for the nominal tax rate, because the nominal tax rate is 29%, so to say. So if it is this way, we will pay 29% and not 25%.

So the fact that we are already having 25% already reflects some benefit in this direction. So when we look forward, this 29%, as you say, will decrease 3 percentage points slowly and over time, so to say. It is, so to say, early days to pre-commit that the tax efficiency that we are able to obtain when we -- by the difference of 29% and -- in the nominal tax rate, and 25% that we are presenting, we'll be able to have exactly the same type of efficiency when it goes down. So that's why I'm saying that this level around 25% is a reasonable level.

If you ask me the risks are more towards a lower rate or towards a higher rate in terms of effective tax rate, I think the risks are more towards the lower rate than towards the higher rates. But it will then depend on the structure, so to say, of the P&L. There are some costs that are not tax deductible, like these contributions, so to say. There are other revenues that are not taxable such as dividends obtained or our participation in the insurance business that is not -- is already net of taxes. So depending on the composition of our -- or capital gain, by the way, some capital gains are not taxable. So depending on the composition, there is a difference between the nominal tax rate and the effective tax rate.

But you're right that the risks -- if -- when the tax rate goes down, it is easier, so to say, to have a 25% tax rate, when the nominal tax rate is 26% than when it is 29%.

And the questions come from the line of Miruna Chirea from Jefferies.

I had 2, please. Firstly, in Portugal, you discussed your expectations for NII growth. But could I also ask you if you can give us a sense of what you expect in terms of fee growth going forward? And what are the drivers behind that? For example, I see in the slide that bancassurance fees are growing at around 14% year-on-year in the first 9 months. Do you think this rate is sustainable going forward? And is this the level at which the market is growing? Or are you actually capturing share in this segment?

And then secondly, this time last year when you presented your strategic plan, you presented a 2028 return on equity target greater than 13.5%. Obviously, things are progressing better than expected this time last year. So when should we expect to receive an update on this long-term return on equity targets that you plan on delivering?

Okay. So as you may recall, when we have presented our plan, when we commented that we were having a target of an ROE above 13.5%, we also presented in the same presentation a target of the sum of book value per share and dividend per share around 15%. And at the time, I commented that these targets [indiscernible] the other is higher than -- is more, how can I say, is more precise than just large than. The larger than is [indiscernible]. It's larger than, it's really larger than. So the larger than is clearly updated. And we are more or less in line with the 15% of book value per share plus dividend per share growth.

In terms of fee growth going forward, there are a lot of moving parts in this issue. In the bancassurance evolution, there is a component that has to do with some review of the division of fees between ourselves and our insurance partners. So I would not see this growth as necessarily as the sustainable growth level into perpetuity. What I would here expect is the fee growth of banking fees and commissions to be aligned with this mid- to high single-digit growth based on our commercial systematic and based on the effectiveness of the client acquisition strategy going forward.

In terms of asset management, it will depend to some extent on the markets and on the level of interest rates. If the level of interest rates remains at this level, we think that this type of growth is normal. If the level of interest rates decreases further and we [ live ] an even more benign market movement, then probably we will have more interest from the clients in asset management products so as to have an alternative to very low-yielding deposits and it may grow somewhat higher. But I would say mid to high single-digit growth in terms of commissions in Portugal is a good starting point.

We have no further questions at this time. So I'll hand back to you for closing remarks.

Okay. Thank you very much. Thank you very much for your interest in our equity story. We remain fully committed in delivering our plan, in creating shareholder value as well as value for all the other constituencies.

This was a very important milestone in terms of client acquisition, client growth, in terms of us being able to deliver on what we have promised in terms of ROTE, in terms of book value per share plus dividend per share growth. And we are really looking forward to '26 and '27 in a quite positive way, showing the resilience of our business model. We really think that the core income will continue to grow at mid-single-digit area, and this will enable -- with cost control, and this will enable us to continue to grow in terms of shareholder value generation, in terms of -- and in terms of earnings per share. Thank you very much for your interest.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a good day.

Good afternoon, Miguel Maya speaking. Welcome to BCP Earnings Conference Call. I will go through the highlights of our performance, followed by Miguel Bragança and Bernard Klas, who will provide additional detail.

In a context marked by high unpredictability, shaped by geopolitical challenges affecting economic agents' confidence, instability and unrest caused by the ongoing wars and the enduro significant reduction in interest rates, BCP achieved positive progress in results and key business and financial indicators in the first half of this year. Once again, we have demonstrated disciplined capital management, constant focus on operational efficiency, commitment to customer orientation, and the ability quarter after quarter to consistently deliver on the strategic plans we presented to the market.

In the first 6 months, the consolidated net income stood at EUR 502 million, an increase of 3.5% year-on-year, supported by a strong operational performance, having achieved an ROE of 14.3%. All of our core markets, despite having different challenges, contributed positively to the results, with the activity in Portugal standing out once again with a net income of EUR 424 million, having increased 3.2% year-on-year. It deserves to be mentioned that the increase in net income in Portugal has been driven by the core capabilities of our business model. We have achieved higher operational revenues, although within the context of a continued reduction in interest rates over the past year, thanks to appropriate interest rate risk management and strong commercial intensity.

These factors led to the expansion of business volumes, combined with a controlled cost of risk. The net income from international operations grew by 11.8% year-on-year, having achieved almost EUR 147 million in the first half of 2025, with special mention to the Bank Millennium in Poland, which recorded a net income of EUR 121 million despite charges above EUR 276 million still associated with the FX mortgage loan portfolio, of which EUR 219 million were provisions. Having already a substantial amount in provisions against the risk associated with the FX mortgage loans, which provides confidence to face the future, Bank Millennium continues to develop its core competencies, expanding the franchise to attract and serve a growing number of customers in an economy that is high value creation potential.

In Mozambique, the net profit in the first half was EUR 24 million, a decrease of 48%, driven by impairments and provisions, mostly related with the downgrade of sovereign debt rating that followed the country's instability between the presidential elections and the inauguration in January this year of President Daniel Chapo. Despite the additional charge of impairments in the first quarter of 2025, Millennium Bim continued to build up its strong franchise and business model, which has enabled intense commercial activity that reflected in a year-on-year increase of 3.7% in the profit before impairments and provisions.

The consistent organic capital generation capacity of our business model is well reflected in BCP's strong capital position. We have capital ratios comfortably above regulatory requirements with CETier 1 at 16.2% and total capital at 20.2%, which in accordance with the shareholders' remuneration policy that we present to the market only includes 25% of the non-audited profit generated in the first half and already considers the impact of the CRR 3. The quality of our retail banking business model across our markets based on a strong commercial skills and lasting relations with our customers led to an increase of 5.5% in customer funds and 3.5% in loan to customers.

Customer funds surpassed EUR 106 million and loans to customers stood at EUR 60 billion at consolidated level, driven by an increase of 4.6% in Portugal, where loans to customers increased EUR 1.8 million year-on-year. We also kept the trajectory of improvement in the quality of the balance sheet. In the last 12 months, we have managed to cut nonproductive assets by an additional EUR 425 million, including EUR 336 million in NPEs and EUR 70 million in restructuring funds.

Operating in a challenging environment, our rigorous management of the balance sheet risks enabled us to also improve the cost of risk to around 30 basis points, a level well below the threshold presented in the strategic plan. Overall, this was a positive first half, which we further strengthened the franchise, the asset quality, the capital ratios and the efficiency of the bank. In this symbiosis between excellent teams and distinctive digital competencies lays the backbone of our competitive edge, which is also reflected in the expansion of customer base.

At group level, our customer base expanded 4% in the last 12 months, reaching 7.1 million, of which more than 2.8 million in Portugal. Most notably, mobile customers grew 9% during the same period, accounting for 73% of the group's customer base and 65% in Portugal being a very good indicator of the preparation and success of BCP to tackle the opportunities in an increasingly digital market. Individual and corporate clients continue to choose Millennium as their preferred bank, and our services were again awarded with prestigious distinctions recognized by the market. Customer recognition of our digital capabilities continues to be reflected in the use they make of the app. In the first half, customers carried out 11% more transactions through the app than in the same period last year, with a significant growth in the number of transfers.

This platform reinforced its relevance in the effort to expand the customer base with an increase of 47% in the number of accounts opened directly in the app. The number of sales through the app increased 13% in the same period, with the emphasis on the sale of personal loans, which increased 42%. The convenient and end-to-end seamless experience provided by the app is driving its use by customers in their acquisition journey of solutions fit for the essential needs, being a relevant tool to have more processes fully digital. For instance, in the sale of mortgage loans, we saw an increase of 76% in the number of customers who received their approval letters through the app and 38% more mortgage de appointments where household scheduled through the app. The investment and priority we give to mobile solutions with a clear focus on customer-centric innovation means that our app continues to lead the rankings and deserve top reviews on the most relevant platforms.

Before handing over the presentation, let me give you a word on the sale of Norbank. As we have always emphasized, our strategic plan is based on organic growth. So the outcome of this matter, which we consider positive for the Portuguese financial system does not affect our strategy and our strategic plan in any way. Our commitment has been to the bank's development focused on commercial intensity, operational efficiency and rigorous capital management, enabling BCP to position itself as a bank that generates and delivers more value. That focus has shaped our approach, creating more value is what we have been doing and what we intend to continue doing.

Miguel, the floor is yours.

Good afternoon, ladies and gentlemen. As always, starting here with an overview of our income statement, we can see that in spite of the reduction in interest rates, we have been able to present a very resilient NII, both in Portugal and in Poland, as we had anticipated, a growth in commissions in the mid-single-digit area also as we had anticipated, with a higher weighting in Portugal than in Poland. The operating costs growing around 8.7% on a pro forma basis and 10.5% on a stated basis, basically because last year, we had finished the agreement with the unions in the second half of the year. So it only affected the accounts in half 2 of the year. So adjusting for this factor, 8.7%. So this means that we have been able to show in spite of the more challenging environment in terms of interest rates, a very, very resilient profitability before impairment and provisions growing by 3% from a level that I think we all agree is quite high level.

The impairments have been reduced in our geographies, both in Portugal and in Poland for different reasons. In Poland, there was a sale of NPLs that generated a gain in impairments because in Poland, we typically only sell the loans after they are fully impaired. And we are seeing here a reduction of the cost of legal risks in Poland when compared with last year. And if we consider not only the cost that is booked in the provision line, but also the cost that is booked on the other income line and on the results of modification line, this reduction is around 1 quarter, around 25%. The profit before income tax growing 16% and after income taxes and noncontrolling interest, we see here a growth rate of 3.5%, mainly because of the high growth rate in Poland, where we have a larger stake of noncontrolling interest.

Just to highlight the main points, the ROE above 14%, the RoTE approaching 15%, the growth in terms of book value per share plus dividend per share, reflecting the number of shares bought until 13th of June, 43.5% and the dividend yield based on the price of last year, so in the last 12 months of 8.9%.

In terms of the group profitability, net interest margin growing 3.3%, as we had commented with some contraction in terms of NIM from 3.08% to 2.97%. And I would here like to highlight the very -- I would say, the very positive growth of the net interest income in international operations. This is mainly because -- but not only, but because of the interest -- the NII -- the lower NII generated by the credit holidays last year in Poland. So Poland -- but in spite of this, even without the effect of the credit holidays, Poland would have grown 5%. And in Portugal, in spite of the reduction of interest rates, a very stable NII. As you may see, our NII has been stable in the last 4 quarters. Of course, last quarter, there was an issue in terms of the account because as we know, February has less months than a typical month of the year. But still, we are showing a very consistent pattern in terms of NII, both in Portugal and in Poland.

Fees and commissions in Portugal growing almost 7%, which is, I think it's an important print, showing clearly the growth of our customer base and our effort to generate profitability also in this line. In Poland, there is a higher challenge because, as you may recall, we have sold our bancassurance broker operations. This is having its impact, of course, in terms of fees when you do not correct -- when you do a pro forma basis. In any case, we expect as the bank develops as time goes by, this gradually to increase.

Other net operating income. We see a very positive evolution in this line in this line. You can see in terms of Portugal, the mandatory contributions being reduced by around EUR 6 million because of a ruling of the constitutional court that declared one of those contributions basically unconstitutional. So this is positive news. And also going forward, this EUR 5 million to EUR 6 million a year that we used to have is something that we expect to continue. In Poland, of course, as the bank becomes normalized, we see a growth in mandatory contributions, basically adjusting the level of mandatory contributions in the bank to the normal level that it was not paying before. In terms of net trading income, there was here in Poland, the mark-to-market of the participation in a payment company that the bank owned that largely explains this value.

Operating costs, I would like to highlight the cost to income of 37%. So in consolidated level, as I commented, there is this growth of 10.5%, but adjusting for the seasonality, I would say, of the negotiation with the unions, it would be 8.7%. And in Portugal, 8.5%, adjusting for the seasonality around 5%, perfectly aligned with the guidance of mid-single digit that we had anticipated. Cost to income in Portugal, 35%, which clearly shows the resilience of our business model.

Cost of risk, cost of risk around 30 basis points. As we see in Portugal, a level of 33 basis points, so around -- hovering around 35 basis points, which I would say, is close to the new normal of the bank, at least for this macro environment in which we are living right now. Cost of risk in Poland benefiting from a credit sale that I had anticipated, I would say, before credit sales, the cost of risk in Poland should hover around the 40 basis points. The continued decrease in NPE. So in spite of the low level of NPEs in the several geographies in which we are, and I would here like to highlight the level of nonperforming loans, really nonperforming loans with more than 90 days past due that is already around 1%, which is a very low level. And with -- if we include the unlikely to file already below 3%, around 2.7%, only focused on loans. If we include the securities and off-balance sheet items, also this total ratio that includes unlikely to sell is also already below 2% -- unlikely to pay already below 2%. And in Portugal, a further reduction of 26% year-on-year with the NPE loans ratio, including the unlikely to only at around 2% as we see in Page 16.

In our international operations, the NPE ratio is higher, but below 5%. And this is, to a large extent, linked to the business model in these geographies. In Mozambique, we have a very small credit portfolio and very low, I would say, exposure to credit of companies. Also a lot of it is to the individuals. And in Poland, we have a high concentration also in unsecured loans. As you know, part of our strategic targets is to diversify our business model also to SMEs and corporates. But in the meantime, we tend to show a higher NPE loan ratio, but still very consistent with a very healthy model because the spread of the unsecured loans is a multiple of the cost of risk.

Activity, solid activity. Customer funds growing 5.5% year-on-year at group level and 4.6% in Portugal in the several lines in our international business growing 7.5%. This shows the strength of our franchise and our business model, and our ability to reinforce our position both as a savings and investments house and the daily banking house. The loan portfolio growing at group level 3.4%. Here, I would like to highlight the important growth in Portugal of the loan portfolio overall of more than EUR 2 billion. As you see here in graph in Slide 19. In the international operations, quite stable. This is, to some extent, linked to the effort that we are doing in Poland of recalibrating, so to say, our balance sheet in Poland so as to have a business model that is more diversified and has a higher share of SMEs and micro business and small corporates, I would say, vis-a-vis the market share in mortgages.

As you may recall, when -- 2 years ago, 1.5 years ago, we had the issue of the credit holidays, and we had the issue of long-term finance ratio. We were particularly affected vis-a-vis our competitors in Poland. We want to converge, I would say, to a ratio of mortgage to total credit that is more aligned with the system exactly to be a more diversified bank.

In terms of capital and liquidity, stability in the capital ratio. I would say this is a particularly good news, and when considered in the context of the growth of the credit portfolio. This is not something that we should expect forever. As you know, on average, we would expect our RWAs to grow aligned with the growth of our credit portfolio, maybe even a little bit higher because we are focusing more on the corporate and SME business, which is typically more RWA-intensive. However, in this specific quarter, we -- because of the composition of our growth and the lower risk asset intensity of our growth, we were able to grow almost without any increase in terms of RWAs, which means that we were able to appropriate the very small 25% accrual of the P&L and considering the 25% accrual, mainly when we consider the last quarter, together with an almost irrelevant growth of RWAs, this has made it possible for us to actually increase our capital ratio when we compare with the 15.9% of the last quarter.

But going forward, as we had commented in the context of our long-term plan, our objective is to continue to grow at this type of levels, around 5%, but with a higher risk asset intensity. And we should expect that a growth of credit of 5% also to contribute to a higher growth of RWAs, and this ratio to slowly, I would say, normalize.

A very strong capital position, as we see here in Page 22, with a leverage ratio that compares very well with the leverage ratios in the main or most of the main European economies. You see 6.4% comparing with 4% in France, 5.6% in Germany, and 5.5% in Spain, which also translates in a high risk weight density, which gives us some comfort in terms of modeling risk going forward.

MREL requirements, clearly above minimum MREL requirements. So very comfortable position as our bond investors are seeing. Also a very good performance of our credit spreads and the ability to access the market, I would say, in a normalized way. Pension fund coverage.

The fund profitability, the fund profitability has been 1.6% as of June '25. So somewhat below, I would say, the reference actuarial rate. However, because of the growth of the long-term interest rates, a quite positive impact in terms of the liabilities of the liabilities, which means that we still maintain an important buffer above the minimum. You see that the pension fund has EUR 3.3 billion of assets for liabilities of EUR 3.05 billion, which means that the difference around EUR 250 million is a buffer to observe potential actuarial differences before having any type of impact in terms of capital. The liquidity position is very robust. I will not enter into it.

And now I'll pass the floor here to Bernardo.

Thank you, Miguel, and good afternoon, ladies and gentlemen. I will start on Page 27, that's related with Portugal, where net income reached EUR 424 million in the first half of '25. That corresponds to an increase of 3.2% compared with the same period of last year. I think that for this favorable contribution or evolution of the Portuguese net income, it should be highlighted the increase of net operating revenues of almost EUR 90 million and the reduction of almost EUR 11 million on impairments and other provisions. Regarding operating costs, and as it was already explained by Miguel, on a pro forma basis, costs increased 5.1%.

On Page 28, net interest income stood at EUR 659 million in the first half of this year. That means 2.2% below what was recorded in the first half of 2024. But once again, I think it's important to highlight if we do a quarter-on-quarter comparison that NII increased 2.2%, and it's broadly stable, as Miguel also mentioned, over the last 4 quarters. And the previous one, there was a small decrease that was related with the calendar effect. Regarding year-on-year evolution, as you can show from the graph, NII decrease reflects the lower income generated by the loan portfolio that was partially offset by the increase of the performing loan book. by the reduction of interest paid on deposits, lower wholesale costs, and the positive contribution from the securities portfolio. NIM stood at 2.12% at the end of June '25, which is the same level reported in March '25 when interest rates were almost 40 basis points higher than they are right now.

Moving to Page 29. Commissions amounted to EUR 307 million in the first half, increasing 6.7% compared with first half '24. Banking fees and commissions went up 7.7%, supported by higher bancassurance fees and by the increase of clients that have BCP as a first bank. Regarding market-related fees, there was an increase of 2.2%, mainly reflecting the higher contribution from asset management. Trading results evolved from minus EUR 4.7 million in the first half '24 to a positive contribution of EUR 7 million in the first half of this year, and equity accounted earnings were broadly stable year-on-year at a level of around EUR 30 million. Other net operating income registered also an improvement, evolving from minus EUR 25 million in the first half of last year to minus EUR 21 million in the first half of this year, and this is mainly due to lower mandatory contributions.

Going to Page 30. Operating costs totaled EUR 342 million, which is 8.5% higher than the EUR 315 million of last year, although as already mentioned twice, if you analyze the cost evolution on a pro forma basis, meaning that, I mean, considering the accrual of the salary increases and the variable remuneration that was booked in the second half of last year, operating costs went up 5.1%. In terms of branches, there was a small reduction. And regarding the number of employees, there was a reduction of 50 employees.

Moving to Page 31, which refers to asset quality. As highlighted before, there was a sizable reduction of NPEs. NPE reduction since June last year was above 26%, meaning almost EUR 290 million, and it should be noticed that from the total figure of EUR 820 million of NPEs, more than 50% are other NPEs and not really 90 days past due exposures. Cost of risk stood at 33 basis points in June, which is a similar level than Q1 of this year. That compares with the stated cost of risk of 28 basis points in June '24. But as it was also mentioned, that was affected by an impairment reversal in Q2 of 2024, which excluding this effect, cost of risk would have stood at 52 basis points in the first half of last year.

Now moving to Page 32, which looks at the NPE coverage breakdown. As you can see, total coverage of NPEs stood above 140%, NPE coverage by loan loss reserves at 94%. And here, I should also highlight that the total coverage for companies stood at 134%.

On Page 33, that shows the evolution of foreclosed assets and corporate restructuring funds. Net value of foreclosed assets stood at EUR 46 million, that compares with EUR 66 million 1 year ago, meaning a reduction of more than 29% or a decrease of almost EUR 20 million. Regarding corporate restructuring funds, exposure at the end of June stood at EUR 323 million. That compares with EUR 393 million in June '24.

Now on Page 34, in terms of total customer funds, we reached in Portugal EUR 72.3 billion, an increase of 4.6% compared with June last year. On-balance sheet funds stood at EUR 56.5 billion, reflecting an increase of 4% year-on-year and off-balance sheet funds went up almost 10%, meaning an increase of EUR 1.4 billion compared with June '24. In terms of the gross loan book, it stood at EUR 41.5 billion in June '25, an increase of 4.6% from previous year. And this increase reflects the strong performance on loans to individuals where mortgages registered an increase of 8% -- and in terms of corporate lending, it should be highlighted the positive trend that becomes even more visible in the quarter-on-quarter comparison, where loans to companies registered an increase of 5%.

Going to Page 35, it is possible to see the new loans origination by segment and the recognition of BCP as the main bank for Portuguese companies. Performing loans in Portugal went up 5.5%, meaning an increase of more than EUR 2.1 billion. Loans to individuals grew 8% year-on-year with a relevant contribution for mortgages that increased 8.2%. And here, once again, it must be highlighted the performing loans to companies that increased 2.5% year-on-year. But as I said before, on a quarter-on-quarter comparison, exposure to companies went up 5%.

Now in terms of international operations, and on Page 37, results from international activity went up 11.8% to EUR 146.6 million. Dynamics were different in Poland and Mozambique. Bank Millennium in Poland net profit stood at EUR 121 million in the first half of '25, up 43% from previous year, while Millennium BB Mozambique recorded a net profit of almost EUR 24 million that is lower than the amount recorded the year before. And as I mentioned -- and as it was mentioned in Q1 '25, the decrease was related with the downgrade of the sovereign debt, leading to an increase on financial assets impairments.

Moving to Page 38, which refers to Bank Millennium. Net income went up more than 43%, but profitability continued to be impacted by costs related with CHF mortgage loans. If we exclude this specific effect, net income grew 6.9% compared with the same period of last year and would have stood above EUR 380 million. Net operating revenues up 13.6% and operating costs, including mandatory contributions, up 15%. If we exclude mandatory contributions from costs, increase of the cost base was 11% CET1 and total capital at 13.8% and 15%, respectively, are clearly above the minimum requirements despite the quarter-on-quarter reduction related with the application of CRR 3 in the second quarter of this year and the fact that Bank Millennium is not considering in their first half capital figures, the earnings of the first half results. Considering the first half '25 net income, CET1 and total capital ratios stood at 15% and 16.8%, respectively.

On Page 39, some detailed information about Bank Millennium. NII increased EUR 32 million compared with the first half of last year. NIM stood at 4.18%, which compares to 4.32% in the first half of '24. And it is important to highlight that National Bank of Poland cut interest rates by 50 basis points in May and already in July, another additional cut of 25 basis points. Fees and commissions were down 5% and the reduction was mostly related, as Miguel said, with bancassurance commissions that are expected to be recovered over the year and somehow aligned with the expectations in terms of volume growth. Trading contribution for P&L from Bank Millennium was influenced by the revaluation of the stake that Bank Millennium has in a local company. And mandatory contributions went up EUR 51 million compared with the first half of '24 as you know, the Bank Millennium started to pay the banking tax in June '24 after exiting the recovery plan.

Moving to Page 40 related with asset quality. Cost of risk stood at 21 basis points. That compares with 50 basis points in June '24. And as it was already mentioned and on the presentation of Bank Millennium, in the second quarter, cost of risk of the Polish subsidiary was impacted by the sale of NPLs. Nonperforming loans more than 90 days past due stood at 2.1% and coverage by loan loss reserves of nonperforming loans stood at 153%.

On Page 41, customer funds in Bank Millennium grew 6.7% year-on-year. Off-balance sheet funds grew more than 34% and total deposits 4.5%. In terms of loans, gross book stood at EUR 18 billion, which is slightly lower than in June 2024. Mortgage loans decreased 4% and personal loans went up almost 4%. And regarding companies where Bank Millennium has a strong focus, exposure to companies increased more than 6.5% compared with June last year.

On Page 42, regarding FX mortgage, it's worth mentioning the continued reduction of the CHF portfolio, which showed a reduction of 31% since June '24 and by 10% since March '25. CHF loan book at the end of June '25 represented only 1.1% of the loan portfolio, which compares with 2.4% 1 year ago. Cumulative provisions for legal risk stood at EUR 1.74 billion, representing 142% of the CHF mortgage portfolio. It is also possible to see, once again in this slide, the downward trend of the new court claims and the capacity and focus of Bank Millennium in reaching amicable settlements. This is another quarter where agreements with CHF agreements regarding CHF mortgage loans with clients were above new individual lawsuits.

Turning to Page 43, with regards to -- now to Mozambique, to Millennium Bim. Performance in Mozambique was impacted by the downgrade of sovereign debt ratings, leading to additional impairments on financial assets at the end of last year and the first quarter of this year. And as a consequence, the net income decreased from EUR 46 million in June '24 to almost EUR 24 million in June '25. Net operating revenues went up almost 7% and costs registered an increase of around 10% compared with previous year. And this could be also partially explained by the increase in terms of the number of employees. Capital ratio stood at a very high level, and it stood at the end of June at 37.2%.

Moving to Page 44. NII went up more than 9%. And for this evolution, Millennium Bim, there was a contribution, let's say, from the reduction in the local currency requirements for non-remunerated cash reserves that has been applied since January '25. NIM was broadly stable, above 8%. Commissions registered a negligible decrease of 2.5% and other income that includes mostly the contribution from the trading line on the Mozambique operation, went up more than 4%.

On Page 45, regarding asset quality, nonperforming loans 90 days past due stood at 3.6%. That compares with 3.8% 1 year ago. And coverage, it's above last year at the level of 125%.

Regarding volumes on Page 46, you can see in Mozambique that customer funds increased 6%, driven mostly by the increase on demand deposits and loans to customers registered an increase of almost 4%, supported by the growth on personal loans, as you can see, that was also registered a decrease in terms of loans to companies.

And thank you for your attention. Before we move to Q&A, I will return to Mr. Miguel Bragança for some final remarks.

As usual, here, we present the key metrics of our plan. As you may see, we are clearly on track to deliver on our plan. The business volumes behaving very positively, clearly on track to achieving business volumes above EUR 190 billion by 2028 in terms of number of customers and number of customers also with a high share of mobile that will enable us to serve them with a high quality and in a cost-efficient way. The cost to -- the common equity Tier 1 ratio behaving also very favorably and consistently with a high ROE, clearly above the targets that we have set.

I will open now the floor to Q&A. Thank you very much.

[Operator Instructions] And now we're going to take our first question, and it comes from the line of Ignacio Ulargui from BNP Paribas.

I have 2 questions, if I may, and one follow-up on a clarification. So the first one is on NII. How should we think about Portuguese NII after the performance of 2Q? Do you see it -- we have seen already the bottom? And do you think, Miguel, the mid-single-digit growth expectation for '26 that you flagged last quarter is still valid?

Second question is on capital. You have had a very good performance on capital. You have still a very big buffer with above 13.5% target that you have. I mean, how should we think about the use of that capital? I know that you have said that the plan has been -- that you had a plan based on organic growth. Is it reasonable -- when should we have a reasonable view when this capital could be distributed or used in any way? And finally, one clarification on the tax rate evolution. I mean, one -- looking to the tax rate, it's very low in Portugal. How should we think about it going forward? And also wanted to get a bit of your sense of the implications from the recent plans of the Portuguese government to reduce the tax rate in Portugal from 20% to 17%.

Okay. Thank you very much. Starting with the last question about the tax rate. The type of tax rate that we are seeing in Portugal, we think they are consistent, and we can expect this type of tax rate on the mid-20s going forward, ex this evolution that we are seeing of the potential changes to the tax rate in Portugal. So first, there is a proposal on our parliament, as some of you may know, of reduction of the tax rate from 20% to 17% in 3 years, but already legislated, so to say. So there is a reduction of 1% a year, so as to reach 17%. Once we get there and as we went there, we would expect a proportional reduction on our tax rate of 1 percentage point a year because this is almost -- I'm speaking about the Portuguese operations. This is almost automatic. And this is good news. So I was here first, of course, having a 3% reduction on taxes for our profitability is good news because this translates immediately into higher profitability and the higher profit, and consequently, in principle into a higher valuation.

Nevertheless, there is a short-term impact in terms of DTAs and in terms of capital. So we don't expect this to have an impact necessarily in terms of profitability. But if this law is approved, and in spite of this being a good news from a value standpoint, -- in terms of capital, we would expect because of the reduction of DTAs, something around, give or take, around 15 basis points of reduction in terms of capital. So I think -- but nevertheless, it's much less in terms of impact than what we would expect in terms of the impact in terms of valuation of the bank.

In terms of capital, as we have presented as a plan, it was -- it is a 4-year plan, a plan until '28. And the base of our plan is growth, growth both in terms of customer funds and in terms of credit, a growth in terms of credit that we expect to have a CAGR more or less around 5% in Portugal a year, in Poland, maybe a little bit more than that. But changing, so to say, somewhat the mix into a portfolio with a somewhat higher risk-weighted asset density because we want to focus more and more in our 2 main geographies in the SMEs and corporate business, with higher risk asset density. So this means a higher RWA consumption. So as we move forward, our plan is to allocate this capital or this generated capital to growth, to organic capital growth.

This quarter, but we cannot see it every quarter, we were able to grow exactly this 5% of the deals and of the origination that we had this quarter and of the amount of government guaranteed credit that we have this quarter and of the risk profile that we have originated this quarter, we were able to grow credit without, I would say, the proportional impact in terms of RWAs, which is very positive. But going forward, looking until '28, what I would expect is that our growth in RWAs will be somewhat larger than our growth in capital. And this means that by distributing 75% of our profits every year through dividends and through share buybacks. This means that we will converge, I would say, to CET1 ratio comfortably above 13.5%, and this is our plan. If, for whatever reason, the environment changes and we are not able to grow, of course, we have to come back to you and present another plan. But as of today, this is the plan, and we are delivering on the plan.

In terms of NII, the message here for this year, both for Portugal and Poland is a message of stability of NII or resilience of the NII, which is in a scenario of decrease of interest rates. Looking to '26, I would say, in Poland, in spite of a further reduction in interest rates, we would expect the margin in Poland to continue relatively resilient.

In Portugal, what we would expect even if the ECB rates goes to as low as 175, but based on the forward rates that then starting next year, our NII will start growing, I would say, low to mid-single digits in Portugal, consistent with the growth of the business volumes of 5% and a marginal margin contraction. So to make a long story short, NII resilience in Portugal, resilience this year, and some growth next year.

Now we'll go and take our next question. And it comes from the line of Alvaro Fernandez from UBS.

I have 2. First, we have seen a strong acceleration in corporate lending in Portugal. So what has driven this performance? What are your expectations for coming quarters? And is the EUR 18 billion book you have right now sustainable towards year-end? Or should we see a reversal? And second, CHF provisions in H1 have declined 8% year-on-year and just 2% compared to the second half of '24, so not significantly. So my question is, how do you see the second half of this year relative to the first? And also if you could give a bit more color on 2026?

So we think that a corporate lending growth around the mid-single digits is sustainable. So I cannot commit that every quarter, this will be gradual because mainly when you speak about corporate loans and about the larger SMEs, there is always some bulkiness there, but we do think it's sustainable. We have pipeline for this. We are seeing also some interest right now finally, also in line with the secondary effects of the PRR of the funds that come from Europe, and the investment in several projects are secondary effects. So we feel comfortable in Portugal that this type of growth rates year-on-year of mid-single digits are sustainable. In terms of the P&L for the rest of the year, the guidance that we have given is maintained. So I would say, a resilient NII. So our NII has been quite stable. We think that in spite of a further reduction in interest rates, we will continue to have a resilient NII, mid-single-digit fees and commissions line evolution, which we think is also still possible, a mid-single-digit cost evolution, and a cost of risk hovering around 35 basis points. We think all these guidance maintains this validity.

And the question comes from the line of Maksym Mishyn from JB Capital.

I have 3. The first one is a follow-up on loan book growth. Given your comments on mid-single-digit growth for corporate loan book, you're growing 8% in mortgages and consumer. What should we expect for overall loan book growth in 2025? Maybe you can grow on top of the mid-single-digit guidance? The second one is on fees. They delivered a notable surprise in Portugal, and I was wondering if you expect momentum to continue in the coming quarters? And what was the driver of the performance? And then the final question is on other provisions. They were almost absent in Portugal and just wanted to update the expectations for the rest of the year.

Okay. Starting with the other provisions. The other provisions as the trading line, by the way, are by its nature, more hard to predict because these provisions are linked to risks that are more difficult to model and harder to predict. So we -- this was effectively, as you comment, a good month in terms of other provisions, but the type of guidance that we have been giving of around EUR 10 million to EUR 15 million per quarter, I would not change it because it is difficult to anticipate what can go wrong and just based on the magnitude of our balance sheet and our magnitude of balance sheet of our -- of the risks the operational risks, not only that are linked to our model, we think it is prudent to assume that, I would say, across the cycle, I would say, this type of other provisions are the reasonable ones.

In terms of loan book and the fees and commissions, up until now, there is always some bulkiness in this area. Let me tell you, for instance, in the fees and commission line, there were some fees that being recurrent, they are not recurrent every quarter. So there were some fees, for instance, that had to do with incentive fees from Visa that are paid once a year. So this means that we cannot assume that the full value of the increase in terms of fees and commissions is total recurrent for the year. So for the time being, we are maintaining a mid-single-digit guidance, albeit maybe with a slight positive bias in the sense that if the markets perform well, there will be more asset management fees and investment fees. Basically, that is, I would say, a slight positive value, but it's still early days to say whether the markets will perform well or not, and whether there will be an accrued interest for investments and asset management products.

And I would say the same goes also for the loan book. The 5% increase year-on-year, we think it makes sense. There's always some bulkiness there, mainly when we speak about corporates. There is also, of course, a trade-off between growth and price, which, I would say, on the short term, there is probably an excessive growth has even a negative impact in terms of NII. So we are very prudent in terms of pricing. We do think that this type of growth is sustainable and accrues value to our shareholders. At this point in time, we would maintain this type of guidance in the mid-single-digit area.

Now we're going to take our next question, and it comes from the line of Francisco Riquel from Alantra.

Two follow-ups in fact. First one is on the margin dynamics and NIM, resilient NIM in Portugal that you mentioned. If you can elaborate a little bit more, please, on the evolution between the customer spread and the NIM, and in particular, the cost of deposits front book versus back book dynamics, and also now that you are accelerating growth in loans, also front book versus back book dynamics there would be useful.

And second is also a follow-up in the corporate loan growth, this mid-single-digit growth that you think is sustainable. So this -- I mean, we know demand in mortgages is strong, but corporate loan book has been lagging in your case. So the question is what has changed? So you previously mentioned that you were impacted by the repayment of COVID lines. Is that fading now? So where do you see corporate loan demand coming from mainly?

Okay. Starting with the corporate loan book. Yes, you're right. I mean, in the last years, we were very, very successful in terms of the COVID lines, the COVID-19 lines. But the other point of this success is that some of these loans were contracted for safety reasons for prudential reasons by the customers. And they effectively -- as the COVID issues did not materialize to the degree that people were concerned about, basically, they have repaid the loans because it was -- to some of them, it was almost an insurance loan. So the success that we have was then counterbalanced, I would say, by a negative dynamics when these loans were repaid. But in the meantime, this was a good business. We made, I would say, an interesting profitability for our bank, and for our shareholders and our customers were adequately served. As you said, I mean, now that this is fading away, this is also helping the situation. So this is one situation.

The other issue is as these European lines and these European investments become or are materialized, so to say, we see customers trying to access this type of lines. We see the customers of these customers also trying to prepare themselves for this type of lines. And this explains to some extent, this renewed interest in terms of loans. So all in all, for the time being, except if there is, I would say, a major macro crisis in the -- I would say, in Europe, which is not clearly not our base case scenario, we feel confident that this is a trend that is -- that will continue.

In terms of the deposits, we do have a deposit -- just check here. Typically, our -- we have been showing, I would say, EBITDA slightly below 50%. So as the interest rate goes down, I would say, in terms of deposits, our deposit cost in terms of term deposits goes down, but only by around 50% of this value. So I think this is the best way to approach it because in this scenario of decreasing interest rates, it is the best way to approach because, of course, as interest rate goes down, mainly when we speak about deposits, the loan -- I'm sorry, the deposit pricing, of course, in a scenario of decreasing interest rates, the front book is lower than the back book, but not by as low as the amount of the decrease in the Euribor rates.

On the other hand, in terms of the spreads, we are seeing resilience in terms of asset spreads. And we are, so to say, hedging the fact that most of our current accounts are non-remunerated and the fact that we have EBITDA of 50% with a portfolio of government debt and with a portfolio of interest rate swaps that allows us even in spite of this reduction of interest rates, to maintain a very resilient margin. So I would say that our -- the hedging of our balance sheet is what allows us to maintain the NII in spite of the fact that our current accounts are fixed rate at 0 and in spite of the fact that our term deposits have EBITDA of around slightly below 50%. So I think this is the best way to explain it. And this is what will allow us to have -- or is allowing us already for 4 quarters in a row to have a very resilient margin. And going forward, once the interest rate hit its bottom, we expect by the end of this year to start growing in terms of NII aligned with the business volume growth.

Now we are going to take our next question, and the question comes from the line of Carlos Peixoto from CaixaBank.

Yes. A couple of questions from my side as well. The first one would actually be on capital. The first one would be in terms of DTAs, how much deductions from DTAs you still have? And how much DTAs are being deducted to CET1 right now? And what is the pace at which you believe that deduction can come down as you use the stock of DTAs? And then -- and still related with that, looking into off-balance sheet DTAs, which I believe you still have somewhat of a significant amount. Are there any changes in your view regarding the recoverability of those DTAs? Or what I'm meaning here is that whether you can you can start bringing back the balance sheet, some of those? And then just a follow-up on the capital and capital distribution that you were discussing before. I was just running here quick maths, but I was running numbers with a 6% growth per annum in RWAs and a 25% retention on net profit, and let's say, net profit around EUR 1 billion. The fact is that I would still be getting to something closer to 15% CET1 ratio at the end of the business plan rather than closer to the 13.5% that you mentioned, Gary. Are there any missing pieces here in terms of CET1 evolution, any relevant ones that we should bear in mind? Or are you just being conservative on your expectations on capital?

Starting with our last question. As you see in our Page 48, where we have presented our targets, there is a reason why we said that we want to have a CET1 ratio above 13.5%. It's not at 13.5%, it's above 3.5%, okay? So the ratio is more than 13.5%. It's not 35%. So of course, there is a buffer above 13.5% that we want to get to. So this is part of the answer. The other part of the answer is the RWA density. So as we grow in businesses, including in Poland, where we almost have -- we have very little in terms of SME credit and corporate credit, but also to some extent, in Portugal with a high RWA density and with less reliance on mortgages, the growth of RWA will tend to be higher than the growth in terms of credit. So this is the part of the answer.

In terms of the -- you will see, by the way, in very much detail, we will publish our semiannual report -- I'm sorry, end of first week of August. And we will see a lot of information and a very intensive note in terms of loss carryforwards about DTAs. I'm seeing here the note now in front of me, 1, 2, 3, 4, 5, 6, 7, 8, 9 pages of a note that we are very transparent and we explain this in very much detail. And if you want to read over your holidays, I think it will make a very interesting reading. But in any case, what I would like to highlight is, yes, we do continue to have off-balance sheet DTAs. These off-balance sheet DTAs are slightly below EUR 800 million, and to be more exact, EUR 772 million, and they have not changed since December. So this is an important point.

It is -- secondly, it is possible that as time goes by, we recognize a part of these DTAs, mainly in the context if the law is approved of a lower tax rate in Portugal. So if the tax rate -- if the risk of the tax rate or the risk of the event of the tax rate coming down materializes, this, of course, has a negative impact on DTAs, a positive impact in terms of valuation. We may, so to say, recognize a part of these DTAs to immunize this impact because it makes sense. In terms of the guaranteed DTAs what we have in June of this year is EUR 1.24 billion, which have been reduced by around EUR 100 million since December. So what we are seeing here, we are seeing more or less, I would say, a rhythm of reduction of guaranteed DTAs of around EUR 100 million per -- for each half year, if you want, EUR 200 million per year, this has been more or less been the rem at which we have been amortizing, so to say, these guaranteed DTAs. But you have a lot of information in the annual report.

Sorry, just one thing. I was actually referring to the amount of DTAs that is actually being deducted from CET1 and the--

No, no. No, I'm commenting the amount of DTAs that are guaranteed and count as capital. The amount of DTAs that are deducted from capital as of today are the tax loss carryforwards, which is around EUR 100 million. I'm sorry -- so the amount that is deducted are the tax loss carryforwards. The amount that is guaranteed as capital are the guaranteed.

And the next question comes from the line of Noemi Peruch from Mediobanca.

I have a clarification on the tax rate. So shall we understand that 15 bps you mentioned, so basically EUR 60 million. So I just would like to ask a clarification on the tax rate. You mentioned 15 bps, so basically EUR 60 million. Shall we increase temporarily the 25% tax rate by this EUR 60 million in the next 3 years? And I understood correctly that you may offset such an impact with the tax loss carryforward write-up, perhaps. And then my second question is on capital again. I understand that organic growth is the priority, but the buffer, like above 13.5% is really meaningful. So I was wondering if there is a chance that you might be in a position to reconsider your distribution policy with the full year results, or maybe if that's too early? And then in here in terms of strategy, would you see M&A options in your current markets? Or would you consider entering a new market perhaps?

So we try not to be victims of what some consultants call the paralysis by analysis. So we have moments to plan and moments to execute, okay? So we were planning during 6 months, we developed a plan. We had all the governance around the plan. We created a consensus around the plan. Now we are in execution mode, so to say. We're not in planning mode. Of course, the life may change. So something may become dramatically different. But if you ask me whether I think it is reasonable for the environment to change so much until year-end that we will have to reconsider our plan. I would say it's highly unlikely. Of course, nobody can foresee the future. But I would say that until year-end, unless there is something very extraordinary that I don't think it's in the base case of anybody, I think it's highly unlikely. Of course, nobody can totally forecast the future, but it's highly unlikely. Let's see next year, whether we are growing at the pace that we expect.

And in this context, let's see. Let's see, we will reconsider. Of course, this is not a decision of any single person. This has to come through all the governance structure of an institution. We have to engage with the different stakeholders, shareholders. We will listen to you as we always do. But to the moment, what we are focusing on is on delivering in the plan.

In terms of the rate for Portugal. The tax rate in Poland is a little bit more complicated because of the fact that the Swiss franc mortgage costs are not tax deductible. The cost of contributions is not tax deductible, and this weigh a lot in the Polish assets. So I will not enter too much into it. But there is an interesting explanation on it on the Q&A of our Polish bank CFO. So I will refer to it, but then we can also take it by side. But commenting to Portugal, what we are seeing is the following. We are presenting a tax rate of around 25%. Last year, we had a tax rate, an effective tax rate of around 26%. And we think that going forward, this is something that we can assume as, I would say, a new normal absent a tax rate change, okay? This is where we stand right now, okay?

If there is a tax rate change, we have to see it in detail. And if the tax rate goes down by 1%, 2%, 3%, this would probably have a proportional effect in terms of this tax rate. Let's see exactly what are the details of it. But I would expect if the tax rate change, the effective income tax rate also to change. So this is what I would like here to highlight. The other question, I don't know exactly what was the other question that you asked, but maybe we can then take it offline to clarify.

I was wondering the 15 bps of common equity impact in--

Okay. Let me just -- okay. So if we -- if there is -- but I would say this is -- the law is in the parliament, but the law has not been approved yet. And by the way, last year, the government tried to come up also with a similar solution. And I would remind you that the government does not have the majority in the parliament. And the second largest party at the time did not agree with this measure, and it was finally not approved. But the law that the main -- the government party is presenting to the parliament that we don't know whether it will be approved or not, foresees a reduction in the tax rate in 3 years of 3%, okay? If this happens, this will have 2 impacts. The first and the largest one in terms of valuation is the one that I had commented, that is a reduction of the effective tax rate over the period. In principle, it goes without saying that it's better for the shareholders and for the companies to have a lower tax rate and to have a higher tax rate. So you should not forget this. So it's -- the net impact is positive. So it reflects immediately in terms of the P&L and in terms of the distribution and so on. So 3% more profits is in principle around 3% more value, I would say. So this is the one that we have commented.

Then there is another impact is, I would say, a short-term impact that is the reduction of the value of the DTAs, okay? The reduction of the value of the DTAs, of course, if the tax rate is lower, the DTAs are worth less. This reduction of the value of the DTAs to the extent that the DTAs count as capital, to the extent that the DTA count as capital, has some impact in the capital ratio. This impact is not very large, mainly when we consider it in the context of the value that may be generated by the reduction of the tax rate, but it's around 15 basis points.

Okay. And sorry, I just have a few clarifications to ask. Are the 15 bps to be taken every year for 1 percentage point of lower number of--

It depends on how the final law is worth, I would say. But it is possible that if the law clearly states that the tax rate goes to 17%, it depends on how the law. If the law clearly states the new tax rate is 17%, but there is a transitional period, it has to be taken upfront. If the law states the new tax rate is 1 percentage point below the current tax rate, but we intend to reduce it over time 1 percentage point per year, it would be over a 3-year period.

And now I'm going to take our final question for today, and it comes from the line of Borja Ramirez from Citi.

I have a couple of quick follow-up questions, please. Firstly is on the hedging portfolio in Portugal, which I understand was EUR 40 billion notional in Q1. I would like to ask if there's any changes in the size and the average maturity, and the yield? And also if you see any opportunity to further reprice? And then my second question would be on Poland. If you could give a bit more detailed guidance on the NII developments in 2025 and 2026 based on the current curve? And lastly, on the RWA growth, if I understood well, it will be higher than the loan growth. But could you give a bit more precise indications on the RWA growth in 2025 and 2026, please?

Starting with your last question. I mean, we have our own objectives. But one thing is the objective. The other thing is what exactly what will be possible and what is the reality, so to say. What I can tell you is that on average, we will try to focus more on the SME and on the corporate market that has a higher RWA growth, almost twice than the RWA -- I'm sorry, RWA weight than the RWA of mortgages. When we go -- the more granular we get, the more difficult it is to be absolutely precise on what will occur in exactly 1 quarter, and we don't think it's very useful because the reality is so -- I mean, it's by its own nature, quite uncertain. So what we should expect is an RWA growth that is higher than the RWA than the credit growth, and I would not go much to go above it.

In terms of the -- our interest rate hedging risk and so on, in our hedging of our interest rate risk, we do have a portfolio that is composed of 3 parts, I would say, of government debt, of unhedged, I would say, fixed rate loans, typically consumer loans or mortgages that have at least an initial period that is fixed rate and interest rate swaps. So we have these 3 elements. So a part of our hedging of interest rate has to do also with our commercial activity. These have not changed very materially since last -- since we published our annual report. You will see also some more detailed information in our semiannual report that we will publish at the end of the first week of August, but these have not changed very much. But what I can tell you is the following. The EUR 80 billion that you comment is not the correct way to look at it because this is only the swap part. It includes the swaps and the swaps that we do to cancel the impact of the swaps.

So as of '25, I would say the value of these 3 legs, I would say, and they are more or less 1/3 each is around EUR 40 billion by heart. And we have the non-remunerated demand deposits around EUR 28 billion. So we have a value of fixed rate that is in excess of the demand deposits. And so this excess is to compensate the fact that the term deposits, so to say, which are around EUR 25 billion, have an EBITDA of 5 -- of around 50%. So the way to look at it, the simplest way to look at it is we have a portfolio of fixed rate instruments, so to say, that hedges us for the fact that our current accounts are fixed rate at 0 and our term deposits are not totally floating rate instruments, but has a fixed rate component. And this is exactly what is making it possible for us to have a very resilient interest NII. So in spite of the reduction of the Euribor, we have been able to present in Portugal already for 4 quarters in a row, a very stable NII, and we expect it to continue so for the foreseeable quarters in '25.

And then assuming that the ECB rate goes to 1.75% at its lower level, that to start to increase because then the part of the absorption of the decrease in interest rates will already have flown through or pass through our NII. In Poland, it is similar. In Poland, we also have fixed-rate instruments -- we also have a portfolio of government debt. And our interest -- our NII, as you see, has been very, very resilient and continues to be very resilient, and we expect until the end of this year to continue this trend.

Dear speakers, there are no further questions for today. I would now like to hand the conference over to Mr. Miguel Maya for any closing remarks.

Okay. It's Maya. We are very pleased to show you these results. Clearly, the market has received them very well. We really would like here to commit to you that we are fully on track to deliver on our plan, a plan based on a very robust business model that translates into a very robust profitability. Thank you very much.